MSCI Inc. Reports Second Quarter 2013 Financial Results and Announces Additional $100 Million Accelerated Share Repurchase
(Note: Percentage changes are referenced to the comparable period in 2012, unless otherwise noted.)
-
Operating revenues increased 8.1% to
$257.9 million in second quarter 2013 and 9.0% to$509.8 million for six months 2013. -
Net income increased 62.6% to
$61.1 million in second quarter 2013 and net income grew 47.2% to$120.0 million for six months 2013. -
Diluted EPS for second quarter 2013 rose 66.7% to
$0.50 and six months 2013 Diluted EPS increased 48.5% to$0.98 . -
Adjusted EBITDA1 grew by 8.0% to
$116.6 million in second quarter 2013. For six months 2013, Adjusted EBITDA1 grew by 8.0% to$226.7 million . Second quarter 2013 Adjusted EBITDA margin was flat at 45.2% and six months 2013 Adjusted EBITDA margin fell slightly to 44.5% from 44.9%. -
Second quarter 2013 Adjusted EPS2 rose
16.0% to
$0.58 . Six months 2013 Adjusted EPS2 rose 21.3% to$1.14 . -
MSCI's Run Rate grew by 7.9% to
$992.6 million in second quarter 2013, driven by organic3 subscription growth of 3.7%, organic asset-based fee growth of 2.1% and the acquisitions of IPD and InvestorForce. -
MSCI announced that it will enter into a$100.0 million accelerated share repurchase ("ASR") agreement as of the market-close today. The prior agreement, which was announced inDecember 2012 and concluded inJuly 2013 , resulted in the repurchase of 3.0 million shares.
Table 1: |
|||||||||||||||||||||||
Three Months Ended | Change from | Six Months Ended | Change From | ||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||
In thousands, except per share data | 2013 | 2012 | 2012 | 2013 | 2012 | 2012 | |||||||||||||||||
Operating revenues | $ | 257,898 | $ | 238,565 | 8.1 | % | $ | 509,807 | $ | 467,617 | 9.0 | % | |||||||||||
Operating expenses | $ | 160,726 | $ | 151,444 | 6.1 | % | $ | 322,108 | $ | 299,517 | 7.5 | % | |||||||||||
Net income | $ | 61,053 | $ | 37,546 | 62.6 | % | $ | 119,990 | $ | 81,512 | 47.2 | % | |||||||||||
% Margin | 23.7 | % | 15.7 | % | 23.5 | % | 17.4 | % | |||||||||||||||
Diluted EPS | $ | 0.50 | $ | 0.30 | 66.7 | % | $ | 0.98 | $ | 0.66 | 48.5 | % | |||||||||||
Adjusted EPS2 | $ | 0.58 | $ | 0.50 | 16.0 | % | $ | 1.14 | $ | 0.94 | 21.3 | % | |||||||||||
Adjusted EBITDA1 | $ | 116,562 | $ | 107,912 | 8.0 | % | $ | 226,655 | $ | 209,819 | 8.0 | % | |||||||||||
% Margin | 45.2 | % | 45.2 | % | 44.5 | % | 44.9 | % |
1 Net Income before income taxes, other net expense and income, depreciation, amortization, non-recurring stock-based compensation, the lease exit charge and restructuring costs. See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income (unaudited)" and information about the use of non-GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures." |
2 Per share net income before after-tax impact of amortization of intangibles, non-recurring stock-based compensation, restructuring costs, the lease exit charge and debt repayment and refinancing expenses. See Table 14 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited)" and information about the use of non-GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures." |
3 For the purposes of analyzing revenue and Run Rate
trends, organic growth comparisons exclude the impact of the
acquisitions of |
"MSCI's revenues and run rate continued to grow in the second quarter of
2013, aided by the acquisitions of IPD and InvestorForce, continued
strength in our retention rates and a modest increase in new sales. We
are working hard to bring the full value of MSCI's unique products and
services to our clients and I am excited by the opportunities we see to
add value to our clients' investment processes. We will continue to make
investments in our business over the second half of 2013 and beyond in
order to realize that potential,"
"The new
Summary of Results for Second Quarter 2013 Compared to Second Quarter 2012
Operating Revenues — See Table 4
Operating revenues for the three months ended
Second quarter 2013 recurring subscription revenues rose
Performance and Risk segment revenues rose
• |
Index and ESG products: Index and ESG product revenues
increased |
|
IPD contributed |
||
Revenues attributable to equity index asset-based fees rose |
||
• |
Risk management analytics: Revenues related to risk
management analytics products increased |
|
• |
Portfolio management analytics: Revenues related to
portfolio management analytics products declined |
|
• |
Energy and commodity analytics: Revenues from energy and
commodity analytics products were |
Governance segment revenues fell
Operating Expenses — See Table 6
Total operating expenses rose
• |
Compensation costs: Total compensation costs rose |
|
• |
Non-compensation costs excluding depreciation and amortization,
the lease exit charge and restructuring costs:
Non-compensation costs rose |
|
• |
Depreciation and amortization: Amortization of intangibles
expense totaled |
Other Expense (Income), Net
Other expense (income), net for second quarter 2013 was
Provision for Income Taxes
Income tax expense was
Net Income and Earnings per Share — See Table 14
Net income rose
See Table 14 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited)" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.
Adjusted EBITDA — See Table 13
Adjusted EBITDA, which excludes income taxes, other net expense and
income, depreciation, amortization, non-recurring stock-based
compensation, the lease exit charge and restructuring costs, was
By segment, Adjusted EBITDA for the Performance and Risk segment
increased
See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income (unaudited)" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.
Summary of Results for Six Months Ended
Operating Revenues — See Table 5
Total operating revenues for the six months ended
Performance and Risk segment revenues rose
Governance revenues were
Operating Expenses — See Table 7
Total operating expenses increased
Other Expense (Income), Net
Other expense (income), net for six months 2013 was
Provision for Income Taxes
The provision for income tax expense was
Net Income and Earnings per Share — See Table 14
Net income increased
Adjusted net income, which excludes the after-tax impact of amortization
of intangibles, non-recurring stock-based compensation expense, debt
repayment and refinancing expenses, the lease exit charge and
restructuring costs totaling
See Table 14 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited)" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.
Adjusted EBITDA — See Table 13
Adjusted EBITDA was
By segment, Adjusted EBITDA for the Performance and Risk segment
increased
See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income (unaudited)" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.
Key Operating Metrics —
Total Run Rate grew by
Performance and Risk segment Run Rate grew by
• |
Index and ESG products: Index and ESG subscription Run Rate
grew by |
|
Run Rate attributable to asset-based fees rose |
||
As of |
||
During second quarter 2013, |
||
• |
Risk management analytics: Run Rate related to risk
management analytics products increased |
|
• |
Portfolio management analytics: Run Rate related to
portfolio management analytics products declined |
|
• |
Energy and commodity analytics: Run Rate from energy and
commodity analytics products declined to |
Governance Run Rate declined by
Accelerated Share Repurchase Agreements
On
Both of the ASR agreements were authorized pursuant to a
Conference Call Information
Investors will have the opportunity to listen to
An audio recording of the conference call will be available on our
website approximately two hours after the conclusion of the live event
and will be accessible through
About
The company's flagship product offerings are: the
1As of
For further information on
Forward-Looking Statements
This earnings release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," or "continue," or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.
Other factors that could materially affect actual results, levels of
activity, performance or achievements can be found in
Website and Social Media Disclosure
Notes Regarding the Use of Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income before provision for income taxes, other net expense and income, depreciation and amortization, non-recurring stock-based compensation expense, the lease exit charge and restructuring costs.
Adjusted net income and Adjusted EPS are defined as net income and EPS, respectively, before provision for non-recurring stock-based compensation expenses, amortization of intangible assets, restructuring costs, the lease exit charge and the accelerated amortization or write-off of deferred financing and debt discount costs as a result of debt repayment (debt repayment and refinancing expenses), as well as for any related tax effects.
We believe that adjustments related to the lease exit charge, restructuring costs and debt repayment and refinancing expenses are useful to management and investors because it allows for an evaluation of MSCI's underlying operating performance. Additionally, we believe that adjusting for non-recurring stock-based compensation expenses, debt repayment and refinancing expenses and depreciation and amortization may help investors compare our performance to that of other companies in our industry as we do not believe that other companies in our industry have as significant a portion of their operating expenses represented by these items. We believe that the non-GAAP financial measures presented in this earnings release facilitate meaningful period-to-period comparisons and provide a baseline for the evaluation of future results.
Adjusted EBITDA, Adjusted net income and Adjusted EPS are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies.
Table 2: |
||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
|
|
|
|
|
||||||||||||||||
In thousands, except per share data | 2013 | 2012 | 2013 | 2013 | 2012 | |||||||||||||||
Operating revenues | $ | 257,898 | $ | 238,565 | $ | 251,909 | $ | 509,807 | $ | 467,617 | ||||||||||
Operating expenses | ||||||||||||||||||||
Cost of services | 83,359 | 73,243 | 80,185 | 163,544 | 145,534 | |||||||||||||||
Selling, general and administrative | 57,612 | 57,602 | 61,631 | 119,243 | 113,038 | |||||||||||||||
Restructuring costs | - | (22 | ) | - | - | (51 | ) | |||||||||||||
Amortization of intangible assets | 14,509 | 15,959 | 14,486 | 28,995 | 31,918 | |||||||||||||||
Depreciation and amortization of property, | ||||||||||||||||||||
equipment and leasehold improvements | 5,246 | 4,662 | 5,080 | 10,326 | 9,078 | |||||||||||||||
Total operating expenses | $ | 160,726 | $ | 151,444 | $ | 161,382 | $ | 322,108 | $ | 299,517 | ||||||||||
Operating income | $ | 97,172 | $ | 87,121 | $ | 90,527 | $ | 187,699 | $ | 168,100 | ||||||||||
Operating margin | 37.7 | % | 36.5 | % | 35.9 | % | 36.8 | % | 35.9 | % | ||||||||||
Interest income | (237 | ) | (237 | ) | (268 | ) | (505 | ) | (460 | ) | ||||||||||
Interest expense | 6,504 | 29,581 | 7,020 | 13,524 | 41,936 | |||||||||||||||
Other expense (income) | (354 | ) | 516 | 224 | (130 | ) | 1,124 | |||||||||||||
Other expenses (income), net | $ | 5,913 | $ | 29,860 | $ | 6,976 | $ | 12,889 | $ | 42,600 | ||||||||||
Income before taxes | 91,259 | 57,261 | 83,551 | 174,810 | 125,500 | |||||||||||||||
Provision for income taxes | 30,206 | 19,715 | 24,614 | 54,820 | 43,988 | |||||||||||||||
Net income | $ | 61,053 | $ | 37,546 | $ | 58,937 | $ | 119,990 | $ | 81,512 | ||||||||||
Net income margin | 23.7 | % | 15.7 | % | 23.4 | % | 23.5 | % | 17.4 | % | ||||||||||
Earnings per basic common share | $ | 0.50 | $ | 0.31 | $ | 0.49 | $ | 0.99 | $ | 0.66 | ||||||||||
Earnings per diluted common share | $ | 0.50 | $ | 0.30 | $ | 0.48 | $ | 0.98 | $ | 0.66 | ||||||||||
Weighted average shares outstanding used | ||||||||||||||||||||
in computing earnings per share | ||||||||||||||||||||
Basic | 121,149 | 122,030 | 120,746 | 120,949 | 121,892 | |||||||||||||||
Diluted | 122,069 | 123,295 | 121,702 | 121,887 | 123,204 | |||||||||||||||
Table 3: |
||||||||||||||||||||
As of | ||||||||||||||||||||
|
|
|
||||||||||||||||||
In thousands | 2013 | 2013 | 2012 | |||||||||||||||||
Cash and cash equivalents | $ | 334,701 | $ | 263,029 | $ | 183,309 | ||||||||||||||
Short-term investments | - | - | 70,898 | |||||||||||||||||
Accounts receivable, net of allowances | 160,101 | 166,915 | 153,557 | |||||||||||||||||
Deferred revenue | $ | 347,470 | $ | 350,470 | $ | 308,022 | ||||||||||||||
Current maturities of long-term debt | 43,118 | 43,106 | 43,093 | |||||||||||||||||
Long-term debt, net of current maturities | 775,072 | 785,856 | 811,623 |
Table 4: Quarterly Operating Revenues by Product Category and Revenue Type (unaudited) |
|||||||||||||||||
Three Months Ended |
% Change from |
||||||||||||||||
|
|
|
|
|
|||||||||||||
In thousands | 2013 |
2012 |
2013 |
2012 |
2013 |
||||||||||||
Index and ESG products | |||||||||||||||||
Subscriptions | $ | 95,200 | $ | 75,829 | $ | 84,888 | 25.5 | % | 12.1 | % | |||||||
Asset-based fees | 36,970 | 34,094 | 36,515 | 8.4 | % | 1.2 | % | ||||||||||
Index and ESG products total | 132,170 | 109,923 | 121,403 | 20.2 | % | 8.9 | % | ||||||||||
Risk management analytics | 67,099 | 64,547 | 67,274 | 4.0 | % | (0.3 | %) | ||||||||||
Portfolio management analytics | 26,089 | 29,326 | 27,646 | (11.0 | %) | (5.6 | %) | ||||||||||
Energy and commodity analytics | 3,065 | 3,780 | 3,146 | (18.9 | %) | (2.6 | %) | ||||||||||
Total Performance and Risk revenues | $ | 228,423 | $ | 207,576 | $ | 219,469 | 10.0 | % | 4.1 | % | |||||||
Total Governance revenues | 29,475 | 30,989 | 32,440 | (4.9 | %) | (9.1 | %) | ||||||||||
Total operating revenues | $ | 257,898 | $ | 238,565 | $ | 251,909 | 8.1 | % | 2.4 | % | |||||||
Recurring subscriptions | $ | 213,502 | $ | 198,104 | $ | 208,625 | 7.8 | % | 2.3 | % | |||||||
Asset-based fees | 36,970 | 34,094 | 36,515 | 8.4 | % | 1.2 | % | ||||||||||
Non-recurring revenue | 7,426 | 6,367 | 6,769 | 16.6 | % | 9.7 | % | ||||||||||
Total operating revenues | $ | 257,898 | $ | 238,565 | $ | 251,909 | 8.1 | % | 2.4 | % | |||||||
Table 5: Six Months Operating Revenues by Product Category and Revenue Type (unaudited) |
|||||||||||||||||
Six Months Ended | % Change from | ||||||||||||||||
|
|
|
|||||||||||||||
In thousands | 2013 | 2012 | 2012 | ||||||||||||||
Index and ESG products | |||||||||||||||||
Subscriptions | $ | 180,088 | $ | 147,468 | 22.1 | % | |||||||||||
Asset-based fees | 73,485 | 68,703 | 7.0 | % | |||||||||||||
Index and ESG products total | 253,573 | 216,171 | 17.3 | % | |||||||||||||
Risk management analytics | 134,373 | 128,624 | 4.5 | % | |||||||||||||
Portfolio management analytics | 53,735 | 58,389 | (8.0 | %) | |||||||||||||
Energy and commodity analytics | |||||||||||||||||
Recurring Energy and commodity analytics | 6,211 | 7,684 | (19.2 | %) | |||||||||||||
Correction1 | - | (5,203 | ) | (100.0 | %) | ||||||||||||
Net energy and commodity analytics | 6,211 | 2,481 | 150.3 | % | |||||||||||||
Total Performance and Risk revenues | $ | 447,892 | $ | 405,665 | 10.4 | % | |||||||||||
Total Governance revenues | 61,915 | 61,952 | (0.1 | %) | |||||||||||||
Total operating revenues | $ | 509,807 | $ | 467,617 | 9.0 | % | |||||||||||
Recurring subscriptions | $ | 422,127 | $ | 384,740 | 9.7 | % | |||||||||||
Asset-based fees | 73,485 | 68,703 | 7.0 | % | |||||||||||||
Non-recurring revenue | 14,195 | 14,174 | 0.1 | % | |||||||||||||
Total operating revenues | $ | 509,807 | $ | 467,617 | 9.0 | % |
1 In first quarter 2012, n/m = not meaningful |
Table 6: Quarterly Operating Expense Detail (unaudited) |
|||||||||||||||||
Three Months Ended | % Change from | ||||||||||||||||
|
|
|
|
|
|||||||||||||
In thousands | 2013 | 2012 | 2013 | 2012 | 2013 | ||||||||||||
Cost of services | |||||||||||||||||
Compensation | $ | 61,768 | $ | 55,492 | $ | 61,149 | 11.3 | % | 1.0 | % | |||||||
Non-recurring stock based compensation | - | 94 | - | (100.0 | %) | n/m | |||||||||||
Total compensation | $ | 61,768 | $ | 55,586 | $ | 61,149 | 11.1 | % | 1.0 | % | |||||||
Non-compensation | 21,734 | 17,657 | 19,036 | 23.1 | % | 14.2 | % | ||||||||||
Lease exit charge1 | (143 | ) | - | - | n/m | n/m | |||||||||||
Total non-compensation | 21,591 | 17,657 | 19,036 | 22.3 | % | 13.4 | % | ||||||||||
Total cost of services | $ | 83,359 | $ | 73,243 | $ | 80,185 | 13.8 | % | 4.0 | % | |||||||
Selling, general and administrative | |||||||||||||||||
Compensation | $ | 39,890 | $ | 38,025 | $ | 45,656 | 4.9 | % | (12.6 | %) | |||||||
Non-recurring stock based compensation | - | 98 | - | (100.0 | %) | n/m | |||||||||||
Total compensation | $ | 39,890 | $ | 38,123 | $ | 45,656 | 4.6 | % | (12.6 | %) | |||||||
Non-compensation | 17,944 | 19,479 | 15,975 | (7.9 | %) | 12.3 | % | ||||||||||
Lease exit charge1 | (222 | ) | - | - | n/m | n/m | |||||||||||
Total non-compensation | 17,722 | 19,479 | 15,975 | (9.0 | %) | 10.9 | % | ||||||||||
Total selling, general and administrative | $ | 57,612 | $ | 57,602 | $ | 61,631 | 0.0 | % | (6.5 | %) | |||||||
Restructuring costs | - | (22 | ) | - | (100.0 | %) | n/m | ||||||||||
Amortization of intangible assets | 14,509 | 15,959 | 14,486 | (9.1 | %) | 0.2 | % | ||||||||||
Depreciation and amortization of property, | |||||||||||||||||
equipment and leasehold improvements | 5,246 | 4,662 | 5,080 | 12.5 | % | 3.3 | % | ||||||||||
Total operating expenses | $ | 160,726 | $ | 151,444 | $ | 161,382 | 6.1 | % | (0.4 | %) | |||||||
Compensation | $ | 101,658 | $ | 93,517 | $ | 106,805 | 8.7 | % | (4.8 | %) | |||||||
Non-recurring stock-based compensation | - | 192 | - | (100.0 | %) | n/m | |||||||||||
Non-compensation expenses | 39,678 | 37,136 | 35,011 | 6.8 | % | 13.3 | % | ||||||||||
Lease exit charge1 | (365 | ) | - | - | n/m | n/m | |||||||||||
Restructuring costs | - | (22 | ) | - | (100.0 | %) | n/m | ||||||||||
Amortization of intangible assets | 14,509 | 15,959 | 14,486 | (9.1 | %) | 0.2 | % | ||||||||||
Depreciation and amortization of property, | |||||||||||||||||
equipment and leasehold improvements | 5,246 | 4,662 | 5,080 | 12.5 | % | 3.3 | % | ||||||||||
Total operating expenses | $ | 160,726 | $ | 151,444 | $ | 161,382 | 6.1 | % | (0.4 | %) |
1Second quarter 2013 included a benefit of n/m = not meaningful |
Table 7: Six Months Operating Expense Detail (unaudited) |
|||||||||||
Six Months Ended | % Change from | ||||||||||
|
|
|
|||||||||
In thousands | 2013 | 2012 | 2012 | ||||||||
Cost of services | |||||||||||
Compensation | $ | 122,917 | $ | 109,041 | 12.7 | % | |||||
Non-recurring stock based compensation | - | 362 | (100.0 | %) | |||||||
Total compensation | $ | 122,917 | $ | 109,403 | 12.4 | % | |||||
Non-compensation | 40,770 | 36,131 | 12.8 | % | |||||||
Lease exit charge1 | (143 | ) | - | n/m | |||||||
Total non-compensation | 40,627 | 36,131 | 12.4 | % | |||||||
Total cost of services | $ | 163,544 | $ | 145,534 | 12.4 | % | |||||
Selling, general and administrative | |||||||||||
Compensation | $ | 85,546 | $ | 76,517 | 11.8 | % | |||||
Non-recurring stock based compensation | - | 412 | (100.0 | %) | |||||||
Total compensation | $ | 85,546 | $ | 76,929 | 11.2 | % | |||||
Non-compensation | 33,919 | 36,109 | (6.1 | %) | |||||||
Lease exit charge1 | (222 | ) | - | n/m | |||||||
Total non-compensation | 33,697 | 36,109 | (6.7 | %) | |||||||
Total selling, general and administrative | $ | 119,243 | $ | 113,038 | 5.5 | % | |||||
Restructuring costs | - | (51 | ) | (100.0 | %) | ||||||
Amortization of intangible assets | 28,995 | 31,918 | (9.2 | %) | |||||||
Depreciation and amortization of property, | |||||||||||
equipment and leasehold improvements | 10,326 | 9,078 | 13.7 | % | |||||||
Total operating expenses | $ | 322,108 | $ | 299,517 | 7.5 | % | |||||
Compensation | $ | 208,463 | $ | 185,558 | 12.3 | % | |||||
Non-recurring stock-based compensation | - | 774 | (100.0 | %) | |||||||
Non-compensation expenses | 74,689 | 72,240 | 3.4 | % | |||||||
Lease exit charge1 | (365 | ) | - | n/m | |||||||
Restructuring costs | - | (51 | ) | (100.0 | %) | ||||||
Amortization of intangible assets | 28,995 | 31,918 | (9.2 | %) | |||||||
Depreciation and amortization of property, | |||||||||||
equipment and leasehold improvements | 10,326 | 9,078 | 13.7 | % | |||||||
Total operating expenses | $ | 322,108 | $ | 299,517 | 7.5 | % |
1Six months ended 2013 included a benefit of n/m = not meaningful |
Table 8: Summary Quarterly Segment Information (unaudited) |
|||||||||||||||
Three Months Ended | % Change from | ||||||||||||||
|
|
|
|
|
|||||||||||
In thousands | 2013 | 2012 | 2013 | 2012 | 2013 | ||||||||||
Revenues: | |||||||||||||||
Performance and Risk | $ | 228,423 | $ | 207,576 | $ | 219,469 | 10.0% | 4.1% | |||||||
Governance | 29,475 | 30,989 | 32,440 | (4.9%) | (9.1%) | ||||||||||
Total Operating revenues | $ | 257,898 | $ | 238,565 | $ | 251,909 | 8.1% | 2.4% | |||||||
Operating Income: | |||||||||||||||
Performance and Risk | 93,574 | 85,980 | 86,699 | 8.8% | 7.9% | ||||||||||
Margin | 41.0% | 41.4% | 39.5% | ||||||||||||
Governance | 3,598 | 1,141 | 3,828 | 215.3% | (6.0%) | ||||||||||
Margin | 12.2% | 3.7% | 11.8% | ||||||||||||
Total Operating Income | $ | 97,172 | $ | 87,121 | $ | 90,527 | 11.5% | 7.3% | |||||||
Margin | 37.7% | 36.5% | 35.9% | ||||||||||||
Adjusted EBITDA: | |||||||||||||||
Performance and Risk | 108,816 | 102,595 | 101,954 | 6.1% | 6.7% | ||||||||||
Margin | 47.6% | 49.4% | 46.5% | ||||||||||||
Governance | 7,746 | 5,317 | 8,139 | 45.7% | (4.8%) | ||||||||||
Margin | 26.3% | 17.2% | 25.1% | ||||||||||||
Total Adjusted EBITDA | $ | 116,562 | $ | 107,912 | $ | 110,093 | 8.0% | 5.9% | |||||||
Margin | 45.2% | 45.2% | 43.7% | ||||||||||||
Table 9: Summary Six Months Segment Information (unaudited) |
|||||||||||||||
Six Months Ended | % Change from | ||||||||||||||
|
|
|
|||||||||||||
In thousands | 2013 | 2012 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Performance and Risk | $ | 447,892 | $ | 405,665 | 10.4% | ||||||||||
Governance | 61,915 | 61,952 | (0.1%) | ||||||||||||
Total Operating revenues | $ | 509,807 | $ | 467,617 | 9.0% | ||||||||||
Operating Income: | |||||||||||||||
Performance and Risk | 180,273 | 163,455 | 10.3% | ||||||||||||
Margin | 40.2% | 40.3% | |||||||||||||
Governance | 7,426 | 4,645 | 59.9% | ||||||||||||
Margin | 12.0% | 7.5% | |||||||||||||
Total Operating Income | $ | 187,699 | $ | 168,100 | 11.7% | ||||||||||
Margin | 36.8% | 35.9% | |||||||||||||
Adjusted EBITDA: | |||||||||||||||
Performance and Risk | 210,770 | 196,779 | 7.1% | ||||||||||||
Margin | 47.1% | 48.5% | |||||||||||||
Governance | 15,885 | 13,040 | 21.8% | ||||||||||||
Margin | 25.7% | 21.0% | |||||||||||||
Total Adjusted EBITDA | $ | 226,655 | $ | 209,819 | 8.0% | ||||||||||
Margin | 44.5% | 44.9% |
Table 10: Key Operating Metrics1 (unaudited) |
|||||||||||||||||||
As of | % Change from | ||||||||||||||||||
|
|
|
|
|
|||||||||||||||
Dollars in thousands | 2013 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||
Run Rates1 | |||||||||||||||||||
Index and ESG products | |||||||||||||||||||
Subscription | $ | 350,833 | $ | 285,604 | $ | 344,267 | 22.8 | % | 1.9 | % | |||||||||
Asset-based fees | 131,716 | 129,045 | 134,186 | 2.1 | % | (1.8 | %) | ||||||||||||
Index and ESG products total | 482,549 | 414,649 | 478,453 | 16.4 | % | 0.9 | % | ||||||||||||
Risk management analytics | 281,022 | 258,995 | 274,524 | 8.5 | % | 2.4 | % | ||||||||||||
Portfolio management analytics | 104,524 | 117,153 | 106,091 | (10.8 | %) | (1.5 | %) | ||||||||||||
Energy and commodity analytics | 12,794 | 14,839 | 13,030 | (13.8 | %) | (1.8 | %) | ||||||||||||
Total Performance and Risk | 880,889 | 805,636 | 872,098 | 9.3 | % | 1.0 | % | ||||||||||||
Governance | 111,686 | 113,976 | 110,174 | (2.0 | %) | 1.4 | % | ||||||||||||
Total Run Rate | $ | 992,575 | $ | 919,612 | $ | 982,272 | 7.9 | % | 1.0 | % | |||||||||
Subscription total | $ | 860,859 | $ | 790,567 | $ | 848,086 | 8.9 | % | 1.5 | % | |||||||||
Asset-based fees total | 131,716 | 129,045 | 134,186 | 2.1 | % | (1.8 | %) | ||||||||||||
Total Run Rate | $ | 992,575 | $ | 919,612 | $ | 982,272 | 7.9 | % | 1.0 | % | |||||||||
New Recurring Subscription Sales | $ | 31,133 | $ | 28,453 | $ | 30,928 | 9.4 | % | 0.7 | % | |||||||||
Subscription Cancellations | (16,082 | ) | (17,229 | ) | (16,691 | ) | (6.7 | %) | (3.6 | %) | |||||||||
Net New Recurring Subscription Sales | $ | 15,051 | $ | 11,224 | $ | 14,237 | 34.1 | % | 5.7 | % | |||||||||
Non-recurring sales | $ | 6,664 | $ | 5,099 | $ | 8,935 | 30.7 | % | (25.4 | %) | |||||||||
Employees | 2,957 | 2,384 | 2,844 | 24.0 | % | 4.0 | % | ||||||||||||
% Employees by location | |||||||||||||||||||
Developed Market Centers | 56 | % | 58 | % | 59 | % | |||||||||||||
Emerging Market Centers | 44 | % | 42 | % | 41 | % |
1 The Run Rate at a particular point in time represents the forward-looking revenues for the next 12 months from all subscriptions and investment product licenses we currently provide to our clients under renewable contracts or agreements assuming all contracts or agreements that come up for renewal are renewed and assuming then-current currency exchange rates. For any license where fees are linked to an investment product's assets or trading volume, the Run Rate calculation reflects an annualization of the most recent periodic fee earned under such license or subscription. The Run Rate for IPD products was approximated using the trailing 12 months of revenues primarily adjusted for estimates for non-recurring sales, new sales and cancellations. The Run Rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we remove from the Run Rate the fees associated with any subscription or investment product license agreement with respect to which we have received a notice of termination or non-renewal during the period and determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though such notice is not effective until a later date. |
Table 11: ETF Assets Linked to MSCI Indices1 (unaudited) |
||||||||||||||||||||||||||||||
Three Months Ended 2012 | Three Months Ended 2013 | Six Months Ended | ||||||||||||||||||||||||||||
In Billions |
March | June | September | December | March | June |
|
|
||||||||||||||||||||||
Beginning Period AUM in ETFs linked to MSCI Indices | $ | 301.6 | $ | 354.7 | $ | 327.4 | $ | 363.7 | $ | 402.3 | $ | 357.3 | $ | 301.6 | $ | 402.3 | ||||||||||||||
Cash Inflow/Outflow2 | 15.2 | 0.3 | 15.2 | 25.9 | (61.0 | ) | (74.4 | ) | 15.5 | (135.4 | ) | |||||||||||||||||||
Appreciation/Depreciation | 37.9 | (27.6 | ) | 21.1 | 12.7 | 16.0 | (13.2 | ) | 10.3 | 2.8 | ||||||||||||||||||||
Period End AUM in ETFs linked to |
$ | 354.7 | $ | 327.4 | $ | 363.7 | $ | 402.3 | $ | 357.3 | $ | 269.7 | $ | 327.4 | $ | 269.7 | ||||||||||||||
Period Average AUM in ETFs linked to |
$ | 341.0 | $ | 331.6 | $ | 344.7 | $ | 376.6 | $ | 369.0 | $ | 324.1 | $ | 336.4 | $ | 346.6 |
1 ETF assets under management calculation methodology is
ETF net asset value multiplied by shares outstanding. Source:
|
2 Cash Inflow/Outflow for the first and second quarter of
2013 includes the migration of |
Table 12: Supplemental Operating Metrics (unaudited) |
||||||||||||||||||||||||||||
Sales & Cancellations | ||||||||||||||||||||||||||||
Three Months Ended 2012 | Three Months Ended 2013 | Six Months Ended | ||||||||||||||||||||||||||
In thousands | March | June | September | December | March | June |
|
|
||||||||||||||||||||
New Recurring Subscription Sales |
|
|
|
|
|
|
|
|
||||||||||||||||||||
Subscription Cancellations | (13,498 | ) | (17,229 | ) | (19,134 | ) | (28,725 | ) | (16,691 | ) | (16,082 | ) | (30,727 | ) | (32,773 | ) | ||||||||||||
Net New Recurring Subscription Sales |
|
|
|
|
|
|
|
|
||||||||||||||||||||
Non-recurring sales | 9,338 | 5,099 | 3,878 | 7,443 | 8,935 | 6,664 | 14,437 | 15,599 | ||||||||||||||||||||
Total Sales |
|
|
|
|
|
|
|
|
||||||||||||||||||||
Aggregate & Core Retention Rates | ||||||||||||||||||||||||||||
Three Months Ended 2012 | Three Months Ended 2013 | Six Months Ended | ||||||||||||||||||||||||||
March | June | September | December | March | June |
|
|
|||||||||||||||||||||
Aggregate Retention Rate 1 | ||||||||||||||||||||||||||||
Index and ESG products | 94.5 | % | 94.9 | % | 94.0 | % | 90.4 | % | 95.0 | % | 94.0 | % | 94.7 | % | 94.5 | % | ||||||||||||
Risk management analytics | 93.9 | % | 90.0 | % | 88.5 | % | 84.4 | % | 93.5 | % | 92.5 | % | 91.9 | % | 93.0 | % | ||||||||||||
Portfolio management analytics | 91.9 | % | 84.2 | % | 84.9 | % | 78.0 | % | 81.7 | % | 87.0 | % | 88.0 | % | 84.3 | % | ||||||||||||
Energy & commodity analytics | 90.2 | % | 85.5 | % | 76.6 | % | 60.4 | % | 90.1 | % | 86.0 | % | 87.8 | % | 88.0 | % | ||||||||||||
Total Performance and Risk | 93.7 | % | 90.9 | % | 89.8 | % | 85.2 | % | 92.4 | % | 92.3 | % | 92.2 | % | 92.3 | % | ||||||||||||
Total Governance | 88.7 | % | 92.1 | % | 91.1 | % | 83.6 | % | 90.0 | % | 92.9 | % | 90.4 | % | 91.5 | % | ||||||||||||
Total Aggregate Retention Rate | 93.0 | % | 91.0 | % | 90.0 | % | 84.9 | % | 92.1 | % | 92.3 | % | 92.0 | % | 92.2 | % | ||||||||||||
Core Retention Rate 1 | ||||||||||||||||||||||||||||
Index and ESG products | 94.6 | % | 95.0 | % | 94.0 | % | 90.5 | % | 95.0 | % | 94.1 | % | 94.8 | % | 94.6 | % | ||||||||||||
Risk management analytics | 94.0 | % | 92.0 | % | 89.3 | % | 84.4 | % | 93.9 | % | 93.1 | % | 92.9 | % | 93.5 | % | ||||||||||||
Portfolio management analytics | 92.2 | % | 87.0 | % | 86.5 | % | 83.6 | % | 82.8 | % | 87.5 | % | 89.6 | % | 85.1 | % | ||||||||||||
Energy & commodity analytics | 90.7 | % | 85.5 | % | 77.1 | % | 60.4 | % | 90.1 | % | 86.0 | % | 88.1 | % | 88.0 | % | ||||||||||||
Total Performance and Risk | 93.8 | % | 92.2 | % | 90.5 | % | 86.2 | % | 92.7 | % | 92.6 | % | 93.0 | % | 92.6 | % | ||||||||||||
Total Governance | 88.7 | % | 92.2 | % | 91.2 | % | 83.8 | % | 90.2 | % | 92.9 | % | 90.4 | % | 91.6 | % | ||||||||||||
Total Core Retention Rate | 93.1 | % | 92.2 | % | 90.6 | % | 85.9 | % | 92.4 | % | 92.6 | % | 92.6 | % | 92.5 | % |
1The Aggregate Retention Rates are calculated by annualizing the cancellations for which we have received a notice of termination or non-renewal during the applicable period and have determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though such notice is not effective until a later date. This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Aggregate Retention Rate for the applicable period. The Aggregate Retention Rate is computed on a product-by-product basis. Therefore, if a client reduces the number of products to which it subscribes or switches between our products, we treat it as a cancellation. In addition, we treat any reduction in fees resulting from renegotiated contracts as a cancellation in the calculation to the extent of the reduction. For the calculation of the Core Retention Rate, the same methodology is used except the cancellations in the applicable period are reduced by the amount of product swaps. |
Table 13: Reconciliation of Adjusted EBITDA to Net Income (unaudited) |
|||||||||||||||||||||||||
Three Months Ended |
Three Months Ended |
||||||||||||||||||||||||
In thousands |
Performance |
Governance | Total |
Performance |
Governance | Total | |||||||||||||||||||
Net Income | $ | 61,053 | $ | 37,546 | |||||||||||||||||||||
Plus: | Provision for income taxes | 30,206 | 19,715 | ||||||||||||||||||||||
Plus: | Other expense (income), net | 5,913 | 29,860 | ||||||||||||||||||||||
Operating income | $ | 93,574 | $ | 3,598 | $ | 97,172 | $ | 85,980 | $ | 1,141 | $ | 87,121 | |||||||||||||
Plus: | Non-recurring stock-based compensation | - | - | - | 172 | 20 | 192 | ||||||||||||||||||
Plus: | Depreciation and amortization of property, | ||||||||||||||||||||||||
equipment and leasehold improvements | 4,329 | 917 | 5,246 | 3,817 | 845 | 4,662 | |||||||||||||||||||
Plus: | Amortization of intangible assets | 11,221 | 3,288 | 14,509 | 12,639 | 3,320 | 15,959 | ||||||||||||||||||
Plus: | Lease exit charge | (308 | ) | (57 | ) | (365 | ) | - | - | - | |||||||||||||||
Plus: | Restructuring costs |
- |
- | - | (13 | ) | (9 | ) | (22 | ) | |||||||||||||||
Adjusted EBITDA | $ | 108,816 | $ | 7,746 | $ | 116,562 | $ | 102,595 | $ | 5,317 | $ | 107,912 | |||||||||||||
Six Months Ended |
Six Months Ended |
||||||||||||||||||||||||
In thousands | Performance and Risk | Governance | Total | Performance and Risk | Governance | Total | |||||||||||||||||||
Net Income | $ | 119,990 | $ | 81,512 | |||||||||||||||||||||
Plus: | Provision for income taxes | 54,820 | 43,988 | ||||||||||||||||||||||
Plus: | Other expense (income), net | 12,889 | 42,600 | ||||||||||||||||||||||
Operating income | $ | 180,273 | $ | 7,426 | $ | 187,699 | $ | 163,455 | $ | 4,645 | $ | 168,100 | |||||||||||||
Plus: | Non-recurring stock-based compensation | - | - | - | 696 | 78 | 774 | ||||||||||||||||||
Plus: | Depreciation and amortization of property, | ||||||||||||||||||||||||
equipment and leasehold improvements | 8,418 | 1,908 | 10,326 | 7,382 | 1,696 | 9,078 | |||||||||||||||||||
Plus: | Amortization of intangible assets | 22,387 | 6,608 | 28,995 | 25,278 | 6,640 | 31,918 | ||||||||||||||||||
Plus: | Lease exit charge | (308 | ) | (57 | ) | (365 | ) | - | - | - | |||||||||||||||
Plus: | Restructuring costs | - | - | - | (32 | ) | (19 | ) | (51 | ) | |||||||||||||||
Adjusted EBITDA | $ | 210,770 | $ | 15,885 | $ | 226,655 | $ | 196,779 | $ | 13,040 | $ | 209,819 |
Table 14: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited) |
|||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
In thousands, except per share data | 2013 | 2012 | 2013 | 2013 | 2012 | ||||||||||||||||
Net Income | $ | 61,053 | $ | 37,546 | $ | 58,937 | $ | 119,990 | $ | 81,512 | |||||||||||
Plus: | Non-recurring stock-based compensation | - | 192 | - | - | 774 | |||||||||||||||
Plus: | Amortization of intangible assets | 14,509 | 15,959 | 14,486 | 28,995 | 31,918 | |||||||||||||||
Plus: | Debt repayment and refinancing expenses | - | 20,639 | - | - | 20,639 | |||||||||||||||
Plus: | Lease exit charge | (365 | ) | - | - | (365 | ) | - | |||||||||||||
Plus: | Restructuring costs | - | (22 | ) | - | - | (51 | ) | |||||||||||||
Less: | Income tax effect | (4,711 | ) | (12,775 | ) | (4,268 | ) | (8,979 | ) | (18,648 | ) | ||||||||||
Adjusted net income | $ | 70,486 | $ | 61,539 | $ | 69,155 | $ | 139,641 | $ | 116,144 | |||||||||||
Diluted EPS | $ | 0.50 | $ | 0.30 | $ | 0.48 | $ | 0.98 | $ | 0.66 | |||||||||||
Plus: | Non-recurring stock-based compensation | - | - | - | - | 0.01 | |||||||||||||||
Plus: | Amortization of intangible assets | 0.12 | 0.13 | 0.12 | 0.24 | 0.26 | |||||||||||||||
Plus: | Debt repayment and refinancing expenses | - | 0.17 | - | - | 0.17 | |||||||||||||||
Plus: | Lease exit charge | - | - | - | - | - | |||||||||||||||
Plus: | Restructuring costs | - | - | - | - | (0.01 | ) | ||||||||||||||
Less: | Income tax effect | (0.04 | ) | (0.10 | ) | (0.03 | ) | (0.08 | ) | (0.15 | ) | ||||||||||
Adjusted EPS | $ | 0.58 | $ | 0.50 | $ | 0.57 | $ | 1.14 | $ | 0.94 |
Media Inquiries:
Source:
News Provided by Acquire Media