- FY 2016 GAAP EPS guidance of $4.70 to
$4.80
- FY 2016 non-GAAP EPS guidance of $4.55
to $4.65
Moody’s Corporation (NYSE:MCO) today updated its guidance for
the full year ending December 31, 2016.
Full year 2016 GAAP EPS is currently expected to be $4.70 to
$4.80, which now includes an anticipated non-cash foreign exchange
gain of approximately $0.18 related to a subsidiary reorganization,
offset in part by an approximate $0.04 restructuring charge
associated with cost management initiatives. Excluding these items,
the Company expects full year 2016 non-GAAP EPS of $4.55 to $4.65.
The Company expects to record the foreign exchange gain in its
fourth quarter results and the restructuring charge in its third
quarter results.
“Increased issuance activity combined with a greater impact from
our cost savings initiatives has resulted in a modestly improved
outlook,” said Raymond McDaniel, President and Chief Executive
Officer of Moody’s. “Excluding the impact of the specific items
noted above, we expect 2016 EPS of $4.55 to $4.65.”
To reflect the Company’s current view of business conditions as
well as the impact of the aforementioned foreign exchange gain and
restructuring charge, the Company is updating certain components of
Moody’s 2016 revenue and expense guidance.
Full year global MIS revenue is still expected to decrease in
the low-single-digit-percent range, while US revenue is now
expected to be approximately flat and public, project and
infrastructure finance revenue is now expected to increase
approximately 10%.
The effective tax rate is now expected to be 31% to 31.5%,
including an approximate one percentage point favorable change due
to the foreign exchange gain noted above which is not taxable.
A full summary of Moody’s guidance as of September 28, 2016 is
included in the table at the end of this press release. Moody’s
outlook for 2016 is based on assumptions about many geopolitical
conditions and macroeconomic and capital market factors, including
interest rates, foreign currency exchange rates, corporate
profitability and business investment spending, mergers and
acquisitions, consumer borrowing and securitization, and the amount
of debt issued. These assumptions are subject to uncertainty, and
results for the year could differ materially from our current
outlook. Our guidance assumes foreign currency translation at
August 31, 2016 exchange rates. Specifically, our forecast reflects
exchange rates for the British pound (£) of $1.31 to £1 and for the
euro (€) of $1.11 to €1.
Moody’s will host its Investor Day conference today in New York
City.
The event will start at 8:30 a.m. Eastern Time and is expected
to conclude at 12:00 p.m. The event will feature presentations from
Moody's management team and showcase important aspects of the
business. A copy of the presentation will be posted on Moody’s
Investor Relations website, http://ir.moodys.com, at the start of
the event.
In-person attendance is by invitation only; however, the event
will be webcast live and can be accessed on Moody’s Investor
Relations website at http://ir.moodys.com. The event will also be
accessible through a live conference call. Individuals within the
U.S. and Canada can access the call by dialing 1-855-309-1713
toll-free. Other callers should dial 804-419-7747. Please dial into
the call by 8:20 a.m. Eastern Time. The participant access code for
the call is 61523561.
A replay of the event will be available approximately one week
following the event on Moody’s Investor Relations website,
http://ir.moodys.com, until 11:59 p.m. Eastern Time, December 28,
2016.
*****
ABOUT MOODY'S CORPORATION
Moody's is an essential component of the global capital markets,
providing credit ratings, research, tools and analysis that
contribute to transparent and integrated financial markets. Moody’s
Corporation (NYSE: MCO) is the parent company of Moody's Investors
Service, which provides credit ratings and research covering debt
instruments and securities, and Moody's Analytics, which offers
leading-edge software, advisory services and research for credit
and economic analysis and financial risk management. The
corporation, which reported revenue of $3.5 billion in 2015,
employs approximately 10,800 people worldwide and maintains a
presence in 36 countries. Further information is available at
www.moodys.com.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995
Certain statements contained in this release are forward-looking
statements and are based on future expectations, plans and
prospects for Moody’s business and operations that involve a number
of risks and uncertainties. Moody’s outlook for 2016 and other
forward-looking statements in this release are made as of September
28, 2016, and the Company disclaims any duty to supplement, update
or revise such statements on a going-forward basis, whether as a
result of subsequent developments, changed expectations or
otherwise. In connection with the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995, the Company is
identifying certain factors that could cause actual results to
differ, perhaps materially, from those indicated by these
forward-looking statements. Those factors, risks and uncertainties
include, but are not limited to, the current world-wide credit
market disruptions and economic slowdown, which is affecting and
could continue to affect the volume of debt and other securities
issued in domestic and/or global capital markets; other matters
that could affect the volume of debt and other securities issued in
domestic and/or global capital markets, including regulation,
credit quality concerns, changes in interest rates and other
volatility in the financial markets such as that due to the UK’s
referendum vote whereby the UK citizens voted to withdraw from the
EU; the level of merger and acquisition activity in the U.S. and
abroad; the uncertain effectiveness and possible collateral
consequences of U.S. and foreign government initiatives to respond
to the current world-wide credit market disruptions and economic
slowdown; concerns in the marketplace affecting our credibility or
otherwise affecting market perceptions of the integrity or utility
of independent credit agency ratings; the introduction of competing
products or technologies by other companies; pricing pressure from
competitors and/or customers; the level of success of new product
development and global expansion; the impact of regulation as an
NRSRO, the potential for new U.S., state and local legislation and
regulations, including provisions in the Financial Reform Act and
regulations resulting from that Act; the potential for increased
competition and regulation in the EU and other foreign
jurisdictions; exposure to litigation related to our rating
opinions, as well as any other litigation, government and
regulatory proceedings, investigations and inquires to which the
Company may be subject from time to time; provisions in the
Financial Reform Act legislation modifying the pleading standards,
and EU regulations modifying the liability standards, applicable to
credit rating agencies in a manner adverse to credit rating
agencies; provisions of EU regulations imposing additional
procedural and substantive requirements on the pricing of services;
the possible loss of key employees; failures or malfunctions of our
operations and infrastructure; any vulnerabilities to cyber threats
or other cybersecurity concerns; the outcome of any review by
controlling tax authorities of the Company’s global tax planning
initiatives; exposure to potential criminal sanctions or civil
remedies if the Company fails to comply with foreign and U.S. laws
and regulations that are applicable in the jurisdictions in which
the Company operates, including sanctions laws, anti-corruption
laws, and local laws prohibiting corrupt payments to government
officials; the impact of mergers, acquisitions or other business
combinations and the ability of the Company to successfully
integrate acquired businesses; currency and foreign exchange
volatility; the level of future cash flows; the levels of capital
investments; and a decline in the demand for credit risk management
tools by financial institutions. These factors, risks and
uncertainties as well as other risks and uncertainties that could
cause Moody’s actual results to differ materially from those
contemplated, expressed, projected, anticipated or implied in the
forward-looking statements are described in greater detail under
“Risk Factors” in Part I, Item 1A of the Company’s annual report on
Form 10-K for the year ended December 31, 2015, and in other
filings made by the Company from time to time with the SEC or in
materials incorporated herein or therein. Stockholders and
investors are cautioned that the occurrence of any of these
factors, risks and uncertainties may cause the Company’s actual
results to differ materially from those contemplated, expressed,
projected, anticipated or implied in the forward-looking
statements, which could have a material and adverse effect on the
Company’s business, results of operations and financial condition.
New factors may emerge from time to time, and it is not possible
for the Company to predict new factors, nor can the Company assess
the potential effect of any new factors on it.
2016 Outlook:
Moody’s outlook for 2016 is based on assumptions about many
geopolitical conditions and macroeconomic and capital market
factors, including interest rates, foreign currency exchange rates,
corporate profitability and business investment spending, merger
and acquisition activity, consumer borrowing and securitization,
and the amount of debt issued. These assumptions are subject to
some degree of uncertainty, and results for the year could differ
materially from our current outlook. Moody’s guidance assumes
foreign currency translation at August 31, 2016 exchange rates.
Specifically, our forecast reflects exchange rates for the British
pound (£) of $1.31 to £1 and for the euro (€) of $1.11 to €1.
Full-year 2016 Moody's Corporation
guidance
MOODY'S CORPORATION Current guidance as of
September 28, 2016
Last publicly disclosed guidance on
July 22, 2016
Revenue increase in the low-single-digit percent
range NC Operating expense increase in the
mid-single-digit percent range NC Depreciation & amortization
Approximately $130 million NC Operating margin Approximately 41% NC
Adjusted operating margin Approximately 45% NC Effective tax rate
31% - 31.5% 32-32.5% GAAP EPS $4.70 to $4.80 $4.55 to $4.651
Non-GAAP EPS $4.55 to $4.65 N/A Capital expenditures Approximately
$125 million NC Free cash flow Approximately $1 billion NC Share
repurchases2 Approximately $1 billion
NC
Full-year 2016 revenue guidance
MIS Current guidance as of September 28,
2016
Last publicly disclosed guidance
on
July 22, 2016
MIS global decrease in the low-single-digit percent range NC MIS
U.S. Approximately flat decrease in the low-single-digit percent
range MIS Non-U.S. decrease in the low-single-digit percent range
NC CFG decrease in the low-single-digit percent range NC SFG
decrease in the high-single-digit percent range NC FIG increase in
the mid-single-digit percent range NC PPIF increase
approximately 10% increase in the mid-single-digit
percent range
MA
MA global increase in the mid-single-digit percent range NC MA U.S.
increase in the low-double-digit percent range NC MA Non-U.S.
increase in the low-single-digit percent range NC RD&A increase
in the high-single-digit percent range NC ERS increase in the
high-single-digit percent range NC PS decrease in the
low-single-digit percent range NC
NC- There is no difference between
the Company's current guidance and the last publicly disclosed
guidance for this item.
N/A – Not applicable.
1 Expected to be toward the lower end of
the range.
2 Subject to available cash, market
conditions and other ongoing capital allocation decisions
Non-GAAP Financial Measures:
In addition to the non-GAAP financial measures presented and
reconciled in the text of this press release, the tables below
reflect certain adjusted results that the SEC defines as "non-GAAP
financial measures" as well as a reconciliation of each non-GAAP
measure to its most directly comparable GAAP measure. Management
believes that such non-GAAP financial measures, when read in
conjunction with the Company's reported results, can provide useful
supplemental information for investors analyzing period-to-period
comparisons of the Company's performance, facilitate comparisons to
competitors' operating results and provide greater transparency to
investors of supplemental information used by management in its
financial and operational decision-making. These non-GAAP measures,
as defined by the Company, are not necessarily comparable to
similarly defined measures of other companies. Furthermore, these
non-GAAP measures should not be viewed in isolation or used as a
substitute for other GAAP measures in assessing the operating
performance or cash flows of the Company.
Adjusted Operating Income and Adjusted
Operating Margin:
The table below reflects a reconciliation
of the Company’s operating margin to adjusted operating margin. The
Company defines adjusted operating income as operating income
excluding depreciation and amortization and restructuring charges.
The Company utilizes adjusted operating income because management
deems this metric to be a useful measure for assessing the
operating performance of Moody’s, measuring the Company's ability
to service debt, fund capital expenditures, and expand its
business. Adjusted operating income excludes depreciation and
amortization because companies utilize productive assets of
different ages and use different methods of both acquiring and
depreciating productive assets. Adjusted Operating Income also
excludes restructuring charges as the frequency and magnitude of
these charges may vary widely across periods and companies.
Management believes that the exclusion of these items, detailed in
the reconciliation below, allows for a more meaningful comparison
of the Company’s results from period to period and across
companies. The Company defines adjusted operating margin as
adjusted operating income divided by revenue.
Year Ended December
31,2016 Operating margin guidance
Approximately 41% Depreciation and amortization Approximately 4%
Restructuring Negligible impact Adjusted operating
margin guidance Approximately 45%
Free Cash Flow:
The table below reflects a reconciliation of the Company’s
net cash flows from operating activities to free cash flow. The
Company defines free cash flow as net cash provided by operating
activities minus payments for capital additions. Management
believes that free cash flow is a useful metric in assessing the
Company’s cash flows to service debt, pay dividends and to fund
acquisitions and share repurchases. Management deems capital
expenditures essential to the Company’s product and service
innovations and maintenance of Moody’s operational capabilities.
Accordingly, capital expenditures are deemed to be a recurring use
of Moody’s cash flow.
Year Ended December
31,2016
Net cash flows from operating activities guidance
Approximately $1.1 billion Capital additions guidance
(Approximately $125 million) Free cash flow guidance
Approximately $1.0 billion
Non-GAAP EPS:
The Company presents this non-GAAP measure to exclude the
impact of foreign exchange gains related to the liquidation of a
finance subsidiary as well as restructuring charges to allow for a
more meaningful comparison of Moody’s diluted earnings per share
from period to period. Management believes that the exclusion of
these items, detailed in the reconciliation below, allows for a
more meaningful comparison of the Company’s Diluted EPS from
period-to-period. Below is a reconciliation of these measures to
their most directly comparable U.S. GAAP amount (amounts do not
total due to rounding):
Year
Ended December 31,2016 Diluted EPS attributable
to Moody's common shareholders-GAAP $4.70 to $4.80 FX gain due to a
subsidiary reorganization (Approximately $0.18) Restructuring
Approximately $0.04 Diluted EPS attributable to
Moody's common shareholders - Non-GAAP $4.55 to $4.65
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160928005331/en/
Salli SchwartzGlobal Head of Investor Relations andCorporate
Communications212.553.4862sallilyn.schwartz@moodys.comorMichael
AdlerSenior Vice PresidentCorporate
Communications212.553.4667michael.adler@moodys.com
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