McGraw Hill Financial, Inc.
) posted third-quarter 2013 adjusted earnings per share of 80
cents, which rose 13% from the year-ago quarter figure and
surpassed the Zacks Consensus Estimate by two cents.
Including non-recurring items, McGraw Hill Financial posted
earnings per share of 84 cents, up 58% year over year.
Total revenue of this Zacks Rank #2 (Buy) stock increased 7% year
over year to $1,194 million, reflecting strong performance across
all business segments. Moreover, the reported revenues surpassed
the Zacks Consensus Estimate of $1,180 million.
Buoyed by strong results, McGraw Hill Financial raised its 2013
earnings guidance. The company now expects earnings in the range
of $3.25-$3.30 per share compared with its earlier projection of
$3.15-$3.25. The current Zacks Consensus Estimate stands at $3.30
per share for 2013.
Standard & Poor's Ratings Services
segment revenues increased 8% to $540 million, attributable to
strength witnessed across entity credit ratings, bank loan
ratings and rating evaluation services. Adjusted operating profit
rose 5% to $227 million.
Transaction revenues, which include ratings of publicly issued
debt and bank loan as well as corporate credit estimates, rose 6%
to $227 million. Alongside, non-transaction revenues, which
include annual contracts, surveillance fees and subscriptions,
S&P Capital IQ
segment revenues grew 3% to $293 million. Excluding ongoing
portfolio restructuring, organic revenues grew 5%. S&P
Capital IQ's international revenues increased 8% to $100 million.
Moreover, the segment's adjusted operating income rose 10% to $59
S&P Dow Jones Indices
revenue rose 14% to $124 million in the said quarter, driven by
robust performance of Exchange-traded funds and exchange-traded
derivatives, partly offset by tepid growth in mutual funds and
data subscription business. The segment's adjusted operating
income rose 23% to $80 million.
The company noted that assets under management in exchange-traded
funds rose 29% to $585 billion on S&P Dow Jones
Commodities & Commercial Markets
segment revenues increased 7% to $255 million, reflecting strong
performance at Platts, which witnessed a 17% revenue increase to
$142 million. Revenues at Commercial Markets fell 4%. J.D.
Power registered mid single-digit growth, due to its robust auto
business in China. Adjusted segment operating income increased
24% to $82 million.
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McGraw-Hill Financial ended the quarter with cash and cash
equivalents of $1,577 million and long-term debt of $799 million.
For the nine months ended Sep 30, 2013, the company incurred
capital expenditures of $55 million and generated free cash flow
of $388 million.
During the quarter, McGraw-Hill Financial bought back 5.7 million
shares and 15 million shares for the nine months ended Sep 30,
2013. It has another 1.9 million shares remaining under the
existing share repurchase authorization.
McGraw-Hill Financial remains well-positioned in major market
sectors, and will likely benefit from its strategic investments
in businesses to generate long-term profitability. The company is
restructuring its portfolio of businesses to concentrate more on
high growth operations, thereby enhancing shareholder value
through proper capital allocation.
On Aug 6, 2013 the company concluded a voluntary tender offer for
additional shares of CRISIL Limited, whereby its ownership in
CRISIL increased from 52.8% to 67.8% (for an investment of $214
Despite these measures, rising competition from peers such as
FactSet Research Systems Inc
Dun & Bradstreet
) remains a concern.