McGraw Hill Financial Results Helped By Strength at Indexes Division -- Update

By Dow Jones Business News, 
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By Timothy W. Martin and Erin McCarthy

McGraw Hill Financial Inc. said first-quarter earnings from continuing operations grew 9%, as strength in its fast- growing indexes division helped offset declines in Standard & Poor's Ratings Services.

The New York-based company earned $248 million or 89 cents a share, versus $735 million or $2.59 a share in the year-prior quarter, which included a $612 million gain from the sale of discontinued operations.

Excluding special items, earnings from continuing operations were 89 cents a share, up from 80 cents a year earlier. McGraw Hill's first-quarter revenue rose 4.7% to $1.2 billion. Analysts polled by Thomson Reuters expected adjusted earnings of 87 cents a share on revenue of $1.24 billion.

The company also reaffirmed its full-year earnings outlook of $3.75 to $3.85 a share.

The S&P Ratings segment reported revenue growth of 1% to $569 million as global debt issuance started slowly this year. Overall company revenue was driven by financial information divisions S&P Dow Jones Indices and Platts, which grew 18% and 14%, respectively.

"The robust performance of these businesses more than offset the impact of tough year-over-year bond issuance comparisons at Standard & Poor's Ratings Services," McGraw Hill Chief Executive Douglas L. Peterson said in the earning news release.

"Indices was the standout," Douglas Arthur, an analyst with Evercore Group LLC, wrote in a note to investors following the quarterly report.

Formerly called McGraw-Hill Cos., the company has streamlined its operations, selling its education unit to private-equity firm Apollo Global Management LLC for $2.4 billion in 2013. It has also sold off trade publication Aviation Week and a broadcasting unit.

The company said last month it plans to sell its construction division, which provides commercial-real-estate information to developers and manufacturers.

McGraw Hill also said it would target $100 million in cost cuts over the next three years, focusing on its real- estate portfolio and consolidating technology, data acquisition and finance costs

S&P, which is facing a $5 billion fraud lawsuit brought by the federal government, said it had $1.5 billion in cash and equivalents at the end of the first quarter.

S&P and other ratings firms had been expected to post robust profits for the latest quarter as they continue to benefit from a global spike in bond sales. S&P rival, Moody's Corp., said last week its earnings rose 16% from the year- ago quarter, exceeding analysts' expectations with a boost from its analytics division.

Write to Timothy W. Martin at timothy.martin@wsj.com and Erin McCarthy at erin.mccarthy@wsj.com

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