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Moody's Corp. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Moody's Corp. (MCO) filed Quarterly Report for the period ended 2012-09-30.

Moody's Corporation has a market cap of $10.65 billion; its shares were traded at around $46.54 with a P/E ratio of 17.7 and P/S ratio of 4.7. The dividend yield of Moody's Corporation stocks is 1.3%. Moody's Corporation had an annual average earning growth of 9.8% over the past 10 years.
This is the annual revenues and earnings per share of MCO over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of MCO.


Highlight of Business Operations:

Moody’s revenue for the third quarter of 2012 totaled $688.5 million, an increase of $157.2 million compared to the same period in 2011, reflecting strong growth in all LOBs within MIS coupled with strong growth in MA, particularly in the ERS and PS LOBs which included revenue from the fourth quarter 2011 acquisitions of B&H and Copal. Excluding the unfavorable impact from changes in FX translation rates, revenue in the third quarter of 2012 increased $174.7 million compared to 2011. Total expenses were $418.8 million, an increase of $83.6 million compared to the third quarter of 2011. The increase in total expenses reflected higher incentive compensation reflecting greater projected achievement against full-year targeted results compared to the projected achievement in the prior year period coupled with higher accruals for a profit sharing contribution. Additionally, there were both higher compensation and non-compensation costs due to the acquisition of Copal and B&H in the fourth quarter of 2011 as well as headcount growth in the Company’s existing businesses. The expense growth over 2011 also reflects higher costs to support investment in the Company’s IT infrastructure as well as higher legal defense costs related to ongoing matters. Operating income of $269.7 million in the third quarter of 2012 increased $73.6 million compared to the same period in the prior year and resulted in an operating margin of 39.2% compared to 36.9% in the third quarter of 2011. Adjusted Operating Income of $293.8 million increased $78.5 million compared to the same period in 2011 and resulted in an Adjusted Operating Margin of 42.7% compared to 40.5% in 2011. Diluted EPS of $0.81 for the third quarter of 2012, which included a $0.06 benefit related to the favorable resolution of a Legacy Tax Matter, increased $0.24 over the prior year period. Excluding the aforementioned impact relating to the favorable resolution of a Legacy Tax Matters in the third quarter of 2012, diluted EPS in the third quarter of 2012 increased $0.18 compared to the same period in the prior year.

Operating income of $269.7 million increased $73.6 million compared to the same period in 2011 reflecting the increase in revenue in MIS and MA partially offset by the aforementioned increases in operating and SG&A expenses. The third quarter 2012 operating margin was 39.2% compared to 36.9% in the same period of 2011. Adjusted Operating Income in the third quarter of 2012 was $293.8 million and increased $78.5 million compared to the third quarter of 2011 resulting in an Adjusted Operating Margin of 42.7% compared to 40.5% in the prior year. Changes in FX translation rates had an approximate $11 million unfavorable impact on both operating income and Adjusted Operating Income in the three months ended September 30, 2012.

Moody’s revenue for the nine months ended September 30, 2012 totaled $1,976.1 million, an increase of $262.5 million compared to the same period in 2011 and reflected strong growth in both reportable segments. Excluding the unfavorable impact from changes in FX translation rates, revenue in the nine months ended September 30, 2012 increased $302.0 million compared to 2011. Total expenses were $1,158.9 million, and increased $161.6 million compared to the first nine months of 2011 due to both higher compensation and non-compensation costs as well as expenses reflecting the fourth quarter 2011 acquisitions of Copal and B&H. Operating income of $817.2 million in the first nine months of 2012 increased $100.9 million compared to the same period in the prior year and resulted in an operating margin of 41.4% in 2012 compared to 41.8% in the prior year period. Adjusted Operating Income of $886.9 million in the first nine months of 2012 increased $112.0 million compared to the same period in 2011 resulting in an Adjusted Operating Margin of 44.9% compared to 45.2% in the prior year period. Diluted EPS of $2.34 for the first nine months of 2012, which included a $0.06 per share benefit related to the favorable resolution of a Legacy Tax Matter, increased $0.28 over the prior year period, which included a $0.03 per share benefit related to favorable resolutions of Legacy Tax Matters as well as other tax benefits totaling $0.09 per share. Excluding the aforementioned impacts related to the favorable resolutions of Legacy Tax Matters in both years, diluted EPS in the first nine months of 2012 increased $0.25 per share compared to the same period in the prior year.

Operating income of $817.2 million increased $100.9 million from the same period in 2011, reflecting the revenue growth of $262.5 million partially offset by the 16% increase in total expenses. Adjusted Operating Income was $886.9 million in the nine months ended September 30, 2012 and increased $112.0 million compared to the same period in 2011. Operating margin and Adjusted Operating Margin in the first nine months of 2012 of 41.4% and 44.9%, respectively, were flat compared to the same period in the prior year primarily reflecting operating expense growth supporting total revenue growth. Changes in FX translation rates had an approximate $23 million unfavorable impact on operating income in the nine months ended September 30, 2012.

Global SFG revenue of $278.1 million in the first nine months of 2012 increased $20.4 million compared to the same period in 2011, primarily reflecting higher rated issuance volumes across most asset classes in the U.S. These increases were partially offset by revenue declines in the EMEA region. The aforementioned increases in the U.S. resulted in transaction revenue increasing to 57% of total SFG revenue in the first nine months of 2012 compared to 52% in the prior year period. In the U.S., revenue of $147.2 million increased $25.8 million compared to the same period in 2011, reflecting strong growth in REIT, CMBS, collateralized loan obligation and consumer asset-backed securities rated issuance volumes. The growth in these asset classes reflects the current low interest rate environment and narrow credit spreads for these securities. The growth in CMBS rated issuance volumes also reflects increasing activity in bank conduit operations. Non-U.S. revenue in the nine months ended September 30, 2012 of $130.9 million decreased $5.4 million compared to the same period in the prior year. This decrease was primarily due to lower asset-backed securities issuance in EMEA reflecting a strong comparative prior year period when issuers were requesting a second rating for these securities in the first quarter of 2011, which was a new requirement by the ECB for existing asset-backed securities that could be used as collateral in Eurosystem credit operations. The decrease also reflects lower covered bond issuance in the EMEA region reflecting continued macroeconomic uncertainties in Europe as well as European banks increasing their use of the ECB’s Long-Term Refinancing Operations program. These were partially offset by higher rating agency confirmation letter fees relating to RMBS and ABS resulting from banking downgrades in 2012. Unfavorable changes in FX translation rates had an approximate $10 million impact on international SFG revenue in the first nine months of 2012.

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