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3Q 2017 Investor Presentation
November 13, 2017
November 13, 2017 2
Certain statements contained in this document 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. The forward-looking statements in this document are made as of the date hereof, and Moody’s 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, Moody’s 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, world-wide credit market disruptions or an economic slowdown, which could 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 U.K.’s referendum vote whereby the U.K. 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 actions affecting world-wide credit markets, international trade and economic policy; 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. Other factors, risks and uncertainties relating to our acquisition of Bureau van Dijk could cause our actual results to differ, perhaps materially, from those indicated by these forward-looking statements, including risks relating to the integration of Bureau van Dijk’s operations, products and employees into Moody’s and the possibility that anticipated synergies and other benefits of the acquisition will not be realized in the amounts anticipated or will not be realized within the expected timeframe; risks that the acquisition could have an adverse effect on the business of Bureau van Dijk or its prospects, including, without limitation, on relationships with vendors, suppliers or customers; claims made, from time to time, by vendors, suppliers or customers; changes in the European or global marketplaces that have an adverse effect on the business of Bureau van Dijk; and other factors, risks and uncertainties relating to the transaction as set forth under the caption “‘Safe Harbor’ Statement under the Private Securities Litigation Reform Act of 1995 ” in Moody’s report on Form 8-K filed on May 15, 2017, which are incorporated by reference herein. 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, 2016, 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.
Disclaimer
November 13, 2017 3
Table of Contents1. Financial Overview2. Capital Markets Overview3. Moody’s Investors Service (MIS)4. Moody’s Analytics (MA)5. Conclusion 6. Appendix
November 13, 2017 4
Moody’s Mission: To be the World’s Most Respected Authority Serving Risk-Sensitive Financial Markets
Risk Understanding
» Methodologies» Training & Certification
» Analyst Outreach
Risk Measurement
» Ratings» Estimated Default Frequency
Analytics (EDFs)» Market-Implied Ratings
(MIRs)
Risk Management
» Research & Data» Advisory Services
» Software
Moody’s is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to open and integrated financial markets.
1 Financial Overview
November 13, 2017 6
Research, data and software for financial risk analysis and related professional services
Customers in 145 countries3
4,600 institutional customers; business with 86 of top 100 global banks3
Independent provider of credit rating opinions and related information for over 100 years
MIS provides ratings in more than 120 countries3
Ratings relationships with ~11,000 corporateissuers, ~18,000 public finance issuers and has rated and currently monitors ~64,000 structured finance obligations3
Leading global provider of credit rating opinions, insight and tools for financial risk measurement and management
Overview of Moody’s Corporation1
1 All financial data is for the trailing twelve months (TTM) ended September 30, 2017.2 Adjusted operating income is an adjusted measure. See appendix for reconciliation from adjusted financial measures to U.S. GAAP.3 As of December 31, 2016. Moody’s Analytics data does not include Bureau van Dijk.
TTM Revenue of $4.0 billion
TTM Adjusted Operating Income2
of $2.0 billion
MIS 83%
MA 17%
MIS 67%
MA 33%
November 13, 2017 7
MIS MA Non-U.S.U.S.
Corporate Finance
33%
Structured Finance
12%
Financial Institutions
10%
Public, Project & Infrastructure
10%
MIS Other1%Research,
Data & Analytics
19%
Enterprise Risk Solutions
11%
Professional Services
4%
Revenue is Diversified by Business, Geography and Type
TTM 3Q17 Revenue by Business
United States57%
EMEA26%
Asia-Pacific11%
Americas6%
TTM 3Q17 Revenue by Geography
TTM 3Q17 Revenue by Type
50%36%
77%
50%64%
23%
MCO MIS MA
Recurring Transaction
Note: All financial data is for the trailing twelve months (TTM) ended September 30, 2017.
November 13, 2017 8
1 Guidance as of November 3, 2017.2 Adjusted diluted EPS is an adjusted measure. This measure now excludes the impact of amortization of all acquisition-related intangible assets. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.3 Excludes $0.36 gain on Bureau van Dijk purchase price hedge, $0.31 CCXI gain, $0.23 related to amortization of all acquisition-related intangibles and $0.11 Bureau van Dijk acquisition-related expenses.4 Adjusted Operating Margin is an adjusted measure. See appendix for reconciliation from adjusted financial measures to U.S. GAAP.5 As of October 2017, over last five available fiscal years. Free Cash Flow is an adjusted financial measure. Source: FactSet.6 Includes: CLGX, DNB, EXPN, FDS, INFO, MORN, MSCI, SPGI, TRI and VRSK.
Operating Margin
Adjusted Diluted EPS2Revenue
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2012 2013 2014 2015 2016 2017F
$ Bi
llions
Low-teens% growth
$1 ofRevenue
$3.08$3.74
$4.31 $4.71 $4.94
$2.00
$3.00
$4.00
$5.00
$6.00
2012 2013 2014 2015 2016 2017F
39.5
%
41.5
%
43.2
%
42.3
%
17.7
%43.3
%
44.7
%
46.0
%
45.5
%
45.5
%
0%10%20%30%40%50%60%
2012 2013 2014 2015 2016 2017F
Operating Margin Adj. Operating Margin~4
7%~
43%
$0.10
$0.23
$0.30
S&P 500
Select Peers
Moody's
5-year Average Free Cash Flow Conversion5
$5.85to
$6.003
1 1
1
4
6
Financial Performance
November 13, 2017 9
Long-Term Growth Opportunities
Note: Long-term growth opportunities presented on this slide are on average over time. 1 Assumes no material change in effective tax rate, foreign exchange rates, leverage profile and/or capital allocation policy. 2 Subject to market conditions and other ongoing capital allocation decisions.
Three Levers to Achieve EPS Growth
November 13, 2017 10
Actively Managing Expense Base
Moody’s Investors Service
» Revised organizational structure» Reengineering analytical support
group» Upgrading IT for improved
system automation
Moody’s Analytics Moody’s Shared Services
» Higher margin product focus » Limited growth of low-margin
services » Salesforce efficiency» Bureau van Dijk cost synergies
» Staffing shift to low-cost locations» Improved process efficiency
through re-engineering and technology enablement
Expense and best practice initiatives to drive operating margin to the mid-40s % range over the next several years
November 13, 2017 11
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Sep
-12
Dec
-12
Mar
-13
Jun-
13S
ep-1
3D
ec-1
3M
ar-1
4Ju
n-14
Sep
-14
Dec
-14
Mar
-15
Jun-
15S
ep-1
5D
ec-1
5M
ar-1
6Ju
n-16
Sep
-16
Dec
-16
Mar
-17
Jun-
17S
ep-1
7
$1.52
Disciplined Approach to Capital AllocationInvesting in Growth Opportunities Return of Capital
Reinvestment Acquisitions Dividends Share Repurchases
» Invest in existing businesses to support organic growth
» FY 2017 capex guidance: ~$100 million1
» Aligned with strategy
» Opportunistic; ideally able to use offshore cash
» Payout ratio potential is 25% - 30% of net income at current leverage2
» TTM 3Q 2017 payout ratio was ~25%3
» FY 2017 share repurchase guidance: ~$200 million4
» Average annualized net share count reduction of ~3% from 2012 to 3Q 2017
» YTD 2017 average repurchase price of $116.70
1 Guidance as of November 3, 2017. 2 Assumes continued balance of return of capital between dividends and share repurchase subject to available cash, market conditions and other ongoing capital allocation decisions.3 Dividend payout ratio is defined as trailing twelve months (TTM) ended September 30, 2017 dividend paid/adjusted net income.4 Guidance as of November 3, 2017 (subject to available cash, market conditions and other ongoing capital allocation decisions).
Share Repurchases and Dividends Paid Annualized Dividend Per Share
$197
$893$1,221 $1,098
$739
$164
$143
$197
$236$272
$285
$218
$0
$400
$800
$1,200
$1,600
150
170
190
210
230
2012 2013 2014 2015 2016 YTD 3Q2017
$ Millions
Mill
ions
of S
hare
s
Share Repurchases (R) Dividends Paid (R)Shares Outstanding (L)
$340
$1,090
$1,457$1,370
$1,024
$381
November 13, 2017 12
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 2013 2014 2015 2016 TTM 3Q2017
$ M
illion
s
Adjusted EBITDA (L)Gross Debt/Adjusted EBITDA (R)
Moody’s Plan is to Maintain a Solid Investment Grade Rating
» Issued $1.8 billion of debt to partially finance the Bureau van Dijk acquisition:– $1 billion of notes– $500 million term loan – $300 million of commercial paper– Combined blended interest rate of approximately 2.6%
» Moody’s is reducing its debt over the course of the next 18 – 24 months
1 Amount is an adjusted measure. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2012 2013 2014 2015 2016 3Q2017
$ M
illion
s
Cash and Cash Equivalents (L) Total Debt Outstanding (L)
1
Debt / Adjusted EBITDADebt Outstanding
November 13, 2017 13
Full Year 2017 Guidance as of November 3, 2017
1 These metrics are adjusted measures. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.2 Excludes $0.36 gain on Bureau van Dijk purchase price hedge, $0.31 CCXI gain, $0.23 for acquisition-related intangible amortization expenses and $0.11 Bureau van Dijk acquisition-related expenses.3 Includes payment of the settlement charge related to an agreement with the U.S. Department of Justice and the attorneys general of 21 U.S. states and the District of Columbia.
» Revenue: Increase in the low-teens % range
» Operating Expense: Decrease in the 20% - 25% range
» Adjusted Operating Expense1: Increase in the low-double-digit % range
» Operating Margin: Approximately 43%
» Adjusted Operating Margin1: Approximately 47%
» Effective Tax Rate: Approximately 30%
» Earnings Per Share $6.18 - $6.33
» Adjusted Earnings Per Share1,2: $5.85 - $6.00
» Share Repurchases: Approximately $200 million (subject to available cash, market conditions and other ongoing capital allocation decisions)
» Capital Expenditures: Approximately $100 million
» Depreciation & Amortization: Approximately $160 million
» Operating Cash Flow: Approximately $700 million
» Free Cash Flow1,3: Approximately $600 million
November 13, 2017 14
Drivers of FY 2017 Adjusted Diluted EPS Guidance Increase
1 Legacy MCO Business Performance includes $0.04 from adoption of ASU 2016-09.2 Bureau van Dijk Business Performance excludes amortization of acquisition-related intangibles and Acquisition-Related Expenses. Net impact of Bureau van Dijk on adjusted diluted EPS also includes ($0.14) for deal-related financing, which was already included in old adjusted diluted EPS guidance as of July 21, 2017.3 Guidance as of November 3, 2017.
23
1
2 Capital Markets Overview
November 13, 2017 16
Historically, Rising Rates Have not had a Significant Impact on Moody’s Revenue
1 10-yr U.S. Treasury Yields are represented by the rate at the end-of-period.2 10-yr U.S. Treasury Yields are represented by the rate as of November 9, 2017.Source: www.treasury.gov.
+200bps
+120bps
+100bps
+180bps
MCO Revenue and Interest Rates
» Despite recent Fed rate hikes in December 2016 and March and June 2017, the 10-year U.S. Treasury yield eased from mid-December’s 2.6% to ~2.3%2
5.8%
7.8%
4.7%
6.5%
2.3%
3.3%
1.8%
3.0%2.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
$ M
illion
s
MIS Revenue (L) MA Revenue (L) MCO Revenue (L) 10-yr U.S. Treasury Yield (R) 1
November 13, 2017 17
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
U.S. TreasuryGerman BundJapanese Government Bond
Potential Moderators to Rising Rates in the U.S.
Source: Moody’s Analytics. 10-year government bond yield data as of November 7, 2017. 30-year mortgage yield data through October 2017.
2.33%
0.36%0.04% 0%
1%
2%
3%
4%
5%
Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
10-Year U.S. Treasury Yield30-Year Mortgage Yield
3.90%
2.36%
1) The gap between U.S. and international government bond yields2) The impact of 10-year U.S. Treasury yields on mortgage rates
10-Year Government Bond Yields 10-Year U.S. Treasury vs. 30-Year Mortgage Yield
November 13, 2017 18
Debt Leverage up in North America, down in Europe; Interest Coverage Remains SteadyCredit Metrics: North American Speculative Grade Companies
Source: Moody’s Investors Service.
1.7x 1.6x 1.4x 1.3x 1.6x 1.9x 1.7x 1.7x 1.6x 1.7x 1.7x 1.8x 1.9x
4.2x 4.2x 4.5x 4.5x 4.4x 4.2x 4.3x 4.6x 4.8x 4.9x 5.1x 5.2x 5.1x
0.0x1.0x2.0x3.0x4.0x5.0x6.0x
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q 2017
Inte
rest
Cov
erag
e
(EBITDA - Capex) / Interest Expense Debt / EBITDA
Credit Metrics: European Speculative Grade Companies
1.4x 1.8x 1.6x 1.5x 1.5x 1.5x 1.8x 1.6x
4.9x4.3x 4.5x 4.8x 5.0x 4.9x
4.1x 4.5x
0.0x1.0x2.0x3.0x4.0x5.0x6.0x
2009 2010 2011 2012 2013 2014 2015 2016
Inte
rest
Cov
erag
e
(EBITDA - Capex) / Interest Expense Debt / EBITDA
November 13, 2017 19
1.9%2.3%
1.3%1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
2012 2013 2014 2015 2016 2017F 2018F
Global U.S. Europe
Global Default Rates Remain Under Historic Average
Default Rates for Corporate Rated Issuance1
4.3% global historic average1
1 Moody’s rated corporate global speculative grade default historical average of 4.3% since 1998. 2018 forecast for trailing twelve months ended September 30, 2018.Source: Moody’s Investors Service.
» Global speculative-grade default rate at 2.8% as of September 30, 2017; expected to decline to 1.9% by September 2018
November 13, 2017 20
North America and EMEA Non-Financial Corporates Have Significant Refunding Needs1
Debt Maturities: North America Moody’s-Rated Corporate Bonds and Loans
$196 $199 $193$220
$57$87
$130$162
$46
$122
$221$260
$0$50
$100$150$200$250$300
2018 2019 2020 2021
$ Bi
llions
Source: MIS, February 2017.Note: Data represents U.S. & Canadian MIS rated corporate bonds & loans.
Debt Maturities: EMEA Moody’s-Rated Corporate Bonds and Loans
$188 $193 $179 $186
$45 $49 $65 $65$52 $58 $59 $66
$0$50
$100$150$200$250$300
2018 2019 2020 2021
$ Bi
llions
Source: MIS, July 2017.
2018 – 2021 CAGRInvestment Grade Bonds: 4%Speculative Grade Bonds: 42%Speculative Grade Bank Loans: 78%
1 Amount reflects total maturities identified in the above sources.
Investment Grade Bonds Speculative Grade Bonds Speculative Grade Bank Loans
2018 – 2021 CAGRInvestment Grade Bonds: flatSpeculative Grade Bonds: 13%Speculative Grade Bank Loans: 8%
November 13, 2017 21
Debt Refinancing and M&A are Most Frequently Stated Uses of Proceeds
1 Percent of mentions for each respective period in bond issue or bank loan program tranche documents. Excludes issues of less than $25 million and general corporate purposes. An issue can have multiple purposes and, as a result, percentages do not sum to 100%.Source: Moody’s Analytics.
Uses of Funds from USD High Yield Bonds and Bank Loans1
62% 52%
83%
71% 74% 78%71%
65%54%
64%71%
63% 53%
19%
31% 30% 25%31%
41% 54%41%
39%
22% 17%11%
7% 8% 8% 7% 8%5% 6%
5%
12% 9% 4%18% 17% 18% 22% 20% 16% 17% 13%
1999 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 3Q2017
% o
f Men
tions
Debt Refinancing M&A Capital Spending Shareholder Payments
November 13, 2017 22
Disintermediation of Credit is an Ongoing Trend in the Global Capital Markets
Sources: ECB, Federal Reserve, BarCap Indices. Europe bank loan data includes Eurozone and UK bank loans. Europe bond data includes euro and sterling denominated bonds. European and U.S. data is through September 2017.
European Non-Financial Corporate Bonds vs. Bank Loans Outstanding
48%
€0
€1,000
€2,000
€3,000
€4,000
€5,000
€6,000
€7,000
€Bi
llions
Bonds Loans
U.S. Non-Financial Corporate Bonds vs. Bank Loans Outstanding
48%
$0
$1,500
$3,000
$4,500
$6,000
$7,500
$9,000
$ Bi
llions
Bonds Loans
77%
23%
48%
52%
November 13, 2017 23
Disintermediation is a Key Driver of Moody’s Global New Rating Mandates
0
400
800
1,200
2012 2013 2014 2015 2016 YTD 3Q 2016
YTD 3Q2017
# of
New
Man
date
s
EMEA United States Rest of World
Global New Rating Mandates1
1 Rated by Moody’s Investors Service.Source: Moody’s Investors Service.
» YTD 3Q 2017 new rating mandate count of ~780 has surpassed 2015 and 2016 annual activity
» Expect over 900 new mandates in 2017
854
1,026 990
771 738
561
781+39%
November 13, 2017 24
» Tightening leveraged loan (and CLO) spreads have contributed to very strong 3Q 2017 loan refinancing and repricing activity
» Investor demand remains elevated as rising rate concerns persist
Moody’s Rated Corporate Speculative-Grade Bank Loans1
Rising Rates are Supporting Leveraged Loan Activity
1 Speculative-Grade Bank Loans represent Moody’s rated new bank loan programs. Non-U.S. Speculative-Grade Bank Loans data available starting in 2016. Sources: Moody’s Analytics, Dealogic.
$0
$200
$400
$600
$800
2009 2010 2011 2012 2013 2014 2015 2016 3Q YTD2016
3Q YTD2017
U.S. Rated Non-U.S. Rated
$ Bi
llions
2009 – 2016 CAGR 27%
+96%
3 Moody’s Investors Service
November 13, 2017 26
Moody’s Investors Service: A Leading Provider of Credit Ratings, Research and Risk Analysis
Proven ratings accuracy and deeply experienced analysts
Expanded sales and marketing activities in Commercial Group
Focus on research leadership
Improving the issuer / investor experience
November 13, 2017 27
Illustrative Value of a Moody’s Rating
Example: 10 year $500 million corporate bond
$15 million in total interest expensevs.
lifetime cost of a rating
Note: Illustrative spread differential based on feedback from syndicate desks and FBR & Co. research on Moody’s Corporation (January 2014) which stated that obtaining a Moody’s rating typically saves approximately 30 basis points per year for investment grade issuers. Many factors go into the pricing of a bond.
$500,000,000x 4.3%
= $21,500,000x 10 years
= $215,000,000
Unrated Rated by Moody’s$500,000,000
x 4.0%= $20,000,000
x 10 years= $200,000,000
BondInterest rate
Annual interest paymentsTenor
Lifetime interest expense
November 13, 2017 28
Moody’s Continues to Invest in Key International Markets
$100
$150
$200
$250
$300
$350
$ Bi
llions
Emerging Markets Rated Corporate Bond Issuance1
Moody’s-Rated Chinese Issuers2
1 Moving twelve month sum; includes rated investment grade and high yield corporate bond issuance (financial and non-financial). Chart is through September 2017.2 Includes rated issuers where major operations or headquarters are in Mainland China. Hong Kong, Macau and Taiwan are not included.Sources: Dealogic, Moody’s Analytics, Moody’s Investors Service.
China» Successful joint venture with CCXI,
leading domestic rating agency» Cross border market rated via MIS
Hong Kong office» China recently announced it will allow
foreign firms to provide credit rating services in part of the domestic market
Latin America» Deepens Moody’s presence in a
dynamic and expanding market
Rest of World» Acquired full ownership of KIS, a
leading provider of domestic credit ratings
» Increased majority stake in ICRA to serve growing domestic bond market60
84 96128
156187
213253
050
100150200250300
Sep2010
Sep2011
Sep2012
Sep2013
Sep2014
Sep2015
Sep2016
Sep2017
Num
ber o
f Iss
uers
November 13, 2017 29
36%
64%
Recurring Transaction
TTM 3Q 2017 Revenue: $2.7 billion
Moody’s Investors Service Financial Profile
Public, Project, &
Infrastructure Finance
16%
Financial Institutions
15%
CorporateFinance
50%
StructuredFinance
18%
MIS Other 1%
62%
38%
U.S. Non-U.S.
» 37% recurring revenue
» 58% recurring revenue
» 36% recurring revenue
2017 Revenue Guidance as of November 3, 2017Global low-teens % range
U.S. low-double-digit % range
Non-U.S. high-teens % range
Corporate Finance low-twenties % range
Structured Finance approximately 10%
Financial Institutions low-double-digit % range
Public, Project & Infrastructure Finance approximately flat
» 28% recurring revenue
Note: All financial data, except guidance, is for the trailing twelve months (TTM) ended September 30, 2017.
4 Moody’s Analytics
November 13, 2017 31
Enterprise Risk SolutionsCredit risk & actuarial analytics
Software that automates credit risk & actuarial activitySolutions that facilitate compliance with regulation & accounting standards
Platforms that improve portfolio & capital strategy
Moody’s Analytics Provides Essential Insight Serving Financial Markets
» Data and data visualization
» Models
» Software and software-as-a-service
» Advisory services
Professional ServicesOutsourced research & consulting
Professional certificationsIn-house training
eLearning
Research Data & AnalyticsCredit research, data & ratings feeds
Global private company dataEconomic research, data & modelsStructured finance analytics & data
November 13, 2017 32
Research, Data and Analytics
56%Enterprise Risk
Solutions33%
Professional Services
11%
Moody’s Analytics Financial Profile
77%
23%
Recurring Transaction
48%
52%
U.S. Non-U.S.» > 95% recurring revenue» 95% retention rate
» 69% recurring revenue
» Combination of one-off contracts and semi-recurring revenue
2017 Revenue Guidance as of November 3, 2017Global low-teens % range
U.S. mid-single-digit % range
Non-U.S. low-twenties % range
Research, Data & Analytics low-twenties % range
Enterprise Risk Solutions mid-single-digit % range
Professional Services low-single-digit % range
Note: All financial data, except guidance, is for the trailing twelve months (TTM) ended September 30, 2017.
TTM 3Q 2017 Revenue: $1.3 billion
November 13, 2017 33
Moody’s Analytics has Several Platforms for Growth
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illion
s
Moody’s Analytics
2016 Revenue: $1,233m
2008 – 2016 CAGR: +11%(~65% organic)
Professional Services
2016 Revenue: $147m
2008 – 2016 CAGR: +37% (~15% organic)
Enterprise Risk Solutions
2016 Revenue: $419m
2008 – 2016 CAGR: +17% (~65% organic)
Research, Data & Analytics
2016 Revenue: $668m
2008 – 2016 CAGR: +6%(>90% organic)
Added ~$700 Million in Revenue Since Inception
November 13, 2017 34
» €3 billion acquisition closed on August 10, 2017» Strong and consistent financial performance. Revenue
growth CAGR of 9.3%, with demonstrated operating leverage over last ten years (EBITDA margin expansion from 38% to 51%)
» Powerful cash flow generator. Subscription business; 90%+ recurring revenue and renewal rates
» Combination anticipated to deliver significant synergies. Expect ~$45 million in annual revenue and expense synergies by 2019, increasing to ~$80 million by 2021
» Rapid positive impact on earnings. Expected to be accretive to GAAP EPS in 2019 and to adjusted EPS in 20182
» Increases Moody’s long-term growth outlook. Revenue and EPS growth rates now expected to be "High Single Digit" and "Low Teens", respectively
» Efficiently financed. Productive use of $1.4 billion of offshore cash and $1.8 billion of debt issuance
Bureau van Dijk AcquisitionBureau van Dijk aggregates, standardizes and distributes an extensive private company data set
Note: All expectations are as of November 3, 2017.1 Full year ended December 31st, based on IFRS. € in millions.2 Adjusted EPS excludes amortization of all acquisition-related intangible assets and one-time integration costs.
€10
6
€25
8
€41
€13
2
Revenue EBITDA
Long History of Profitable Growth1
November 13, 2017 35
Expansion of ratings coverage
Production of insightful credit analysis
New customers in geographies with developing debt capital markets
Expansion of data sets and delivery options
Strong customer retention
RD&A: Subscription Growth Driven by Retention, Upgrades and Pricing & New Sales
Full
Year
201
5Fu
ll Ye
ar 2
016
95.4% 110.2%8.0% 6.8%
Retained Base Upgrades and Price New Sales Business Base
96.3% 110.5%7.2% 7.0%
Retained Base Upgrades and Price New Sales Business Base
Note: The sales growth attributions presented on this slide are related to RD&A subscription sales on a constant currency basis. Upgrades reflect amendments to existing customer contracts. New Sales reflect new contracts with new and existing customers.
Subscription Sales Growth(constant currency)
1H20
17 94.6% 110.1%9.0% 6.5%
Retained Base Upgrades and Price New Sales Business Base
November 13, 2017 36
ERS Solutions Address Diverse Needs and Customers
Credit Risk & Actuarial AnalyticsHelps risk managers assess and manage current and future exposures across all asset classes
Accounting Calculation & ReportingProduces key calculations and reports required by many of the world’s accounting standards
Regulatory Calculation & ReportingGenerates key calculations and reports required by many of the world’s financial regulations
Credit Assessment & Origination
Automates financial spreading and credit scoring, decision
making and monitoring
Portfolio & Capital StrategyHelps firms to improve portfolio
performance and meet regulatory and economic capital requirements
Asset & Liability ManagementIntegrates ALM, liquidity risk management,
funds transfer pricing and regulatory reporting capabilities into a seamless enterprise platform
Banks Insurers Asset Managers Corporates
November 13, 2017 37
$0
$50
$100
$150
$200
$250
$300
$350
$400
$ M
illion
s
Services Products 1
ERS Business and Technology Drivers Shifting Mix to Higher Margin Product Sales
ERS: TTM Revenue
Technology DriversNew technologies are giving rise to changing client requirements and expectations, opportunities for innovation and new sources of growth.
Cloud Big Data Technologies
Blockchain Data Visualization
Artificial Intelligence
Business DriversEnd user objectives are shifting to efficiency and business growth, while regulatory and accounting requirements continue to drive investment.
Regulation Accounting StandardsEfficiency Business
Growth
End User Requirements
Third Party Requirements
1 Products revenue include subscriptions, license and maintenance.
November 13, 2017 38
Professional Services: Extending the Brand Into New Markets and Deepening Customer Relationships
Knowledge Process Outsourcing
Certificates, Designations & Accreditations
Financial Services Training
» Leading provider of research, analytics and business intelligence services that help global financial institutions improve processes, enhance profitability and drive revenues
» Bespoke solutions delivered by client-dedicated analyst teams for over 150 clients
» More than 2,600 employees, with client delivery centers in India, China, Sri Lanka and Costa Rica
» Exclusive provider of licensing courses and exams to meet regulatory standards set by the Investment Industry Regulatory Organization of Canada (IIROC)
» Approved by Reserve Bank of India (RBI) to provide banking professionals with mandatory credit certifications
» Partnered with National Institute of Securities Markets (NISM) to provide Indian securities professionals with advanced capital markets certifications
» Artificial Intelligence-powered scalable personalized learning solutions
» Deliver targeted online training to address individual behavioral deficiencies
» Focus on developing markets:- Africa- Asia- Middle East
5 Conclusion
November 13, 2017 40
Why Invest in Moody’s?
» We strive to be the world’s most respected authority serving risk-sensitive financial markets
» We have had strong revenue and earnings growth, as well as cash flow conversion
– 2012 – 2016 revenue CAGR of 7%
– 2012 – 2016 adjusted diluted EPS1 CAGR of 13%
– 2012 – 2016 free cash flow conversion rate of ~30%
» We are committed to returning capital to our shareholders
– 2012 – 2016 returned $5.3 billion, or 110% of free cash flow, to shareholders via share repurchases and dividends
» We will selectively invest in strategic growth opportunities
– Leverage brand to extend our relevance in financial markets
– Expand our product offerings and geographic influence
1 Adjusted diluted EPS is an adjusted measure. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.
6 Appendix
November 13, 2017 43
Corporate Finance: Revenue and Issuance
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.2 Other includes: monitoring, commercial paper, medium term notes, and ICRA.3 Sources: Moody’s Analytics, Dealogic;. U.S. and Non-U.S. Speculative-Grade Bank Loans represent only Moody’s rated speculative-grade bank loans. Non-U.S. Speculative-Grade Bank Loan Origination data available starting 2016. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.
$105 $104 $103 $105 $109 $108 $113 $116 $124
$63 $71 $66 $79 $61 $56 $72 $85 $79$33 $27 $30
$51 $59 $41$64 $63 $63$48 $44 $41
$69 $71$73
$104 $92 $85
$0
$50
$100
$150
$200
$250
$300
$350
$400
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ M
illio
ns
Revenue1: Mix by Quarter
Other Investment Grade Speculative Grade Bank Loans
$179 $178 $216 $275 $312 $363 $420 $421 $425$66 $119 $109$137
$197$193
$230 $305 $262
$27
$84$143
$120
$194$229
$219$183 $181
$36
$28
$96$120
$155
$212$242 $204 $254
$0
$200
$400
$600
$800
$1,000
$1,200
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illio
ns
Revenue1: Mix by Year
Other Investment Grade Speculative Grade Bank Loans
$237 $209$317 $339 $320
$215$348 $332
$254
$62$48
$53$103 $91
$64
$123 $99$99
$95$75
$71$99 $120
$124
$206$160
$138$8
$25 $32
$47
$77
$59
$56
$0$100$200$300$400$500$600$700$800
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ B
illio
ns
Issuance3: Mix by Quarter
Non-U.S. Speculative-Grade Bank LoansU.S. Speculative-Grade Bank LoansGlobal Non-Financial Speculative-Grade BondsGlobal Non-Financial Investment-Grade Bonds
$763$1,129
$641 $750$1,125 $1,073 $1,043 $1,120 $1,191
$65 $221
$293 $250
$329 $411 $405 $329 $311$134
$79
$273 $330
$353 $504 $425 $354 $414
$112
$0
$500
$1,000
$1,500
$2,000
$2,500
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ B
illio
ns
Issuance3: Mix by Year
Non-U.S. Speculative-Grade Bank LoansU.S. Speculative-Grade Bank LoansGlobal Non-Financial Speculative-Grade BondsGlobal Non-Financial Investment-Grade Bonds
2
2
November 13, 2017 44
36% 36% 38% 39% 43% 35% 36% 39% 38% 32% 32% 35%
23% 19% 21% 27% 27%26% 20% 20% 23%
20% 24% 22%
23% 23% 20%16% 13%
17% 20% 15% 16%18% 18% 18%
18% 21% 22% 18% 17% 22% 23% 26% 23% 29% 26% 24%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Other Investment Grade Speculative Grade Bank Loans
74% 73% 70% 69% 63% 71% 70% 68% 68% 74% 74% 73%
26% 27% 30% 31% 37% 29% 30% 32% 32% 26% 26% 27%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Recurring vs. Transaction
Transaction Recurring
Corporate Finance: Revenue Diversification
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.2 Other includes: monitoring, commercial paper, medium term notes, and ICRA.Percentages have been rounded and may not total to 100%.
34% 38% 38% 32% 28% 32% 33% 34% 32% 31% 38% 33%
66% 62% 62% 68% 72% 68% 67% 66% 68% 69% 62% 67%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Geography
Non - U.S. U.S.
Revenue1: Distribution by Product
2
November 13, 2017 45
Structured Finance: Revenue and Issuance
$21 $24 $20 $27 $23 $24 $23 $24 $23
$19 $23 $21$21 $19 $25 $20 $22 $22
$37$38
$28$33 $33
$40$29 $30 $38
$36 $30
$22
$30$29
$42
$27$42
$46$0 $0
$1
$1$0
$1
$0
$1$1
$0
$20
$40
$60
$80
$100
$120
$140
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ M
illio
ns
Revenue1: Mix by Quarter
ABS RMBS CREF Structured Credit Other
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.2 Sources: AB Alert, CM Alert, Moody’s Corporation. Debt issuance categories do not directly correspond to Moody’s revenue categorization.Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization) includes covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance, commercial real estate CDOs, and real estate investment trusts (REITs). Structured Credit includes CLOs and CDOs.
$133 $101 $91 $107 $110 $98 $92 $91 $94
$74$59 $65
$90 $85 $73 $76 $81 $85
$55$46 $53
$70 $95 $116 $122 $140 $133
$142
$99 $82$78
$91 $96 $137 $135 $122$0
$0 $0$0
$0 $0$0 $2 $2
$0
$200
$400
$600
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illio
ns
Revenue1: Mix by Year
ABS RMBS CREF Structured Credit Other
$346 $296 $220 $319 $335 $317 $319 $292 $298
$766
$355 $396$371 $231 $189 $238 $200 $204
$36
$30 $24$36
$73
$120 $114 $117 $94
$107
$93
$59 $39 $65
$94$159
$132 $116
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ B
illio
ns
Issuance2: Mix by Year
ABS RMBS CREF Structured Credit
$64 $74 $62$88 $68 $80 $79 $89 $68
$58 $63$58
$61
$36$48 $48
$75$59
$27$28
$21$16
$25$33 $18
$26
$34$32
$30
$12
$24
$25
$56
$14
$32$41
$0
$50
$100
$150
$200
$250
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ B
illio
ns
Issuance2: Mix by Quarter
ABS RMBS CREF Structured Credit
November 13, 2017 46
Structured Finance: Revenue Diversification
58% 60% 62% 64% 55% 61% 60% 68% 62% 57% 63% 66%
42% 40% 38% 36% 45% 39% 40% 32% 38% 43% 37% 34%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Recurring vs. Transaction
Transaction Recurring
46%36% 34% 31% 34% 35% 31% 32% 33% 35% 32% 30%
54%64% 66% 69% 66% 65% 69% 68% 67% 65% 68% 70%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Geography
Non - U.S. U.S.
29% 26% 22% 20% 22% 24% 22% 19% 22% 23% 20% 18%
22%19%
18% 18% 23% 19% 18% 19% 19% 20% 19% 17%
25% 30%28% 31%
30% 30% 31% 30% 31% 29%25% 29%
24% 25% 32% 31% 24% 26% 27% 32% 28% 27% 35% 36%
0% 0% 0% 0% 1% 1% 0% 0% 1% 0% 1% 0%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
ABS RMBS CREF Structured Credit Other
Revenue1: Distribution by Product
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.Percentages have been rounded and may not total to 100%.Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization) includes covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance, commercial real estate CDOs, and real estate investment trusts (REITs). Structured Credit includes CLOs and CDOs.
November 13, 2017 47
Financial Institutions: Revenue and Issuance
$58 $61 $59 $60 $63 $59$79 $70 $70
$26 $24 $30 $24 $26 $23
$25$23 $24$3 $4 $4 $4 $4
$4
$5$6 $5$2 $2 $3 $3
$3$3
$3$3 $4
$0
$20
$40
$60
$80
$100
$120
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ M
illio
ns
Revenue1: Mix by Quarter
Banking Insurance Managed Investments Other
$175 $176 $192 $205 $228 $234 $242 $244 $240
$71 $66$69 $73
$79 $89 $92 $96 $102$17 $16
$18 $17$19 $16 $19 $16 $17
$0 $0$0 $0
$0 $0 $2 $9 $10
$0
$50
$100
$150
$200
$250
$300
$350
$400
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illio
ns
Revenue1: Mix by Year
Banking Insurance Managed Investments Other
$1,779 $1,764$1,340 $1,266 $1,312
$1,072 $1,247 $1,194 $1,186
$32 $80
$87 $79 $137$161
$197 $136 $113
$0
$400
$800
$1,200
$1,600
$2,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ B
illio
ns
Issuance2: Mix by Year
Global Speculative Grade Financial Corporate BondsGlobal Investment Grade Financial Corporate Bonds
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue. 2 Sources: Moody’s Analytics, Dealogic. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.
$262 $268$369
$318 $284$216
$419$294
$190
$28 $24
$26$29
$38$19
$45
$46
$23
$0
$100
$200
$300
$400
$500
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ B
illio
ns
Issuance2: Mix by Quarter
Global Speculative Grade Financial Corporate BondsGlobal Investment Grade Financial Corporate Bonds
November 13, 2017 48
Financial Institutions: Revenue Diversification
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.Percentages have been rounded and may not total to 100%.
37% 35% 35% 37% 39% 33% 41% 35% 37%48% 43% 40%
63% 65% 65% 63% 61% 67% 59% 65% 63%52% 57% 60%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Recurring vs. Transaction
Transaction Recurring
59% 58% 60% 57% 58% 55% 57% 58% 57% 55% 57% 60%
41% 42% 40% 43% 42% 45% 43% 42% 43% 45% 43% 40%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Geography
Non - U.S. U.S.
70% 69% 68% 67% 62% 66% 65% 66% 65% 70% 69% 69%
24% 26% 26% 26% 31% 26% 27% 26% 28% 22% 23% 23%
6% 5% 5% 4% 4% 5% 6% 5% 5% 5% 6% 5%0% 0% 1% 3% 3% 3% 3% 3% 3% 3% 3% 3%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Banking Insurance Managed Investments Other
Revenue1: Distribution by Product
November 13, 2017 49
$143 $142 $159 $156 $181 $174 $177 $202 $225
$87 $104$113 $121
$142 $167 $181$174
$188
$0 $0$0 $0
$0$0 $0
$0$0
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illio
ns
Revenue1: Mix by Year
Public Finance and SovereignProject & Infrastructure FinanceOther
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue. 2 Global Rated Project & Infrastructure Finance available starting in 2016 and represents Moody’s rated issuance. Sources: Thomson SDC, Moody’s Corporation. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.
$350 $355 $374$248
$302 $307$364 $358 $408
$190
$0
$100
$200
$300
$400
$500
$600
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ B
illio
ns
Issuance2: Mix by Year
Rated Global Project & Infrastructure Finance Bonds
Long-Term Rated U.S. Muni Bonds
Public, Project and Infrastructure: Revenue and Issuance
$84 $74 $94 $114 $105 $95 $82 $95 $80
$22
$66 $48 $54
$111 $128
$129
$0
$50
$100
$150
$200
$250
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ B
illio
ns
Issuance2: Mix by Quarter
Rated Global Project & Infrastructure Finance BondsLong-Term Rated U.S. Muni Bonds
$46 $46 $55 $55 $60 $54 $53 $53 $49
$45 $40$37
$57 $45 $49 $45 $51 $60$0 $0
$0
$0$0 $0 $0
$0 $0
$0
$20
$40
$60
$80
$100
$120
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ M
illio
ns
Revenue1: Mix by Quarter
Public Finance and SovereignProject & Infrastructure FinanceOther
November 13, 2017 50
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.Percentages have been rounded and may not total to 100%.
61% 60% 58% 60% 59% 65% 63% 62% 63% 60% 64% 65%
39% 40% 42% 40% 41% 35% 37% 38% 37% 40% 36% 35%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Recurring vs. Transaction
Transaction Recurring
35% 37% 37% 35% 33% 33% 28% 37% 33% 36% 37% 42%
65% 63% 63% 65% 67% 67% 72% 63% 67% 64% 63% 58%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Geography
Non - U.S. U.S.
56% 51% 49% 54% 60%49% 57% 53% 54% 54% 51% 45%
44% 49% 51% 46% 40%51% 43% 47% 46% 46% 49% 55%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Public Finance and Sovereign Project & Infrastructure Finance Other
Revenue1: Distribution by Product
Public, Project and Infrastructure: Revenue Diversification
November 13, 2017 51
Moody’s Analytics: Financial Overview
$158 $161 $165 $168 $168 $167 $175 $181 $218
$92 $122 $90 $98 $102 $130 $96 $97$113$37
$38$37 $38 $36
$37$36 $36
$38
$0$50
$100$150$200$250$300$350$400
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$ M
illio
ns
Revenue1: Mix by Quarter
1 Historical data has been adjusted to conform with current information and excludes intercompany revenue.Percentages have been rounded and may not total to 100%.
$413 $411 $419 $445 $483 $520 $572 $626 $668$119 $151 $181 $196 $243 $263
$329$374 $419
$12 $11 $19 $62 $108 $119$168
$150$147
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016
$ M
illio
ns
Revenue1: Mix by Year
Professional ServicesEnterprise Risk SolutionsResearch, Data and Analytics
23% 23% 27% 26% 24% 24% 24% 29% 25% 21% 20% 21%
77% 77% 73% 74% 76% 76% 76% 71% 75% 79% 80% 79%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17Transaction Recurring
57% 55% 56% 54% 51% 52% 51% 53% 51% 49% 50% 56%
43% 45% 44% 46% 49% 48% 49% 47% 49% 51% 50% 44%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Geography
Non-U.S. U.S.
58% 58% 54% 54% 57% 55% 55% 50% 54% 57% 58% 59%
29% 29% 31% 33% 31% 32% 33% 39% 34% 31% 31% 31%
13% 13% 16% 13% 13% 12% 12% 11% 12% 12% 11% 10%
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17
Revenue1: Distribution by Product
Revenue1: Distribution by Recurring vs. Transaction
November 13, 2017 52
Moody’s Corporate Speculative Grade Credit Cycle Gauge
1 North America long-term average: LSI: from 2002, B3-Neg: from 2007, Refunding: from 2007, Downgrade / Update Ratio: from 2008, CQ score: from 2011, Default rate: from 1990.2 Europe long-term average: LSI: from 2012, CQ Score: from 2011, B3-Neg: from 2010, Downgrade / Update Ratio: from 2009, Default rate: from 1999.3 Trailing twelve months (TTM) ended September 30, 2017.Source: Moody’s Investors Service.
Improving Neutral Trending Worse
Latest Metric
1-YearAgo
Long-Term Average1
RecordWorst
Latest Metric
1-YearAgo
Long-Term Average2
RecordWorst
Liquidity Stress Index 3.0% 7.1% 6.7% 20.8% 8.6% 12.4% 12.0% 18.5%
B3-Neg / Lower 214 269 194 291 48 60 40 60
% B3-Neg / Lower 14.6% 19% 15% 26% 10.8% 13.8% 11.9% 17.2%
3-Year Refunding Index 4.2x 3.4x 6.3x 1.5x N/A N/A N/A N/A
Downgrade / Upgrade Ratio3 0.8x 0.9x 3.5x 11.7x 0.4x 0.9x 2.5x 20.5x
Covenant Quality Score 4.48 4.32 4.05 4.52 3.59 3.53 3.47 4.85
Default Rate (forecast) 2.3% 3.3% 4.7% 15.0% 1.3% 2.4% 3.8% 13.0%
North America Europe
November 13, 2017 53
-20%
-10%
0%
10%
20%
30%
40%
50%
Q2'
11
Q3'
11
Q4'
11
Q1'
12
Q2'
12
Q3'
12
Q4'
12
Q1'
13
Q2'
13
Q3'
13
Q4'
13
Q1'
14
Q2'
14
Q3'
14
Q4'
14
Q1'
15
Q2'
15
Q3'
15
Q4'
15
Q1'
16
Q2'
16
Q3'
16
Q4'
16
Q1'
17
Q2'
17
Q3'
17
MIS MA MCO
Revenue Growth by Quarter: MCO, MIS and MAYear-over-Year % Change
(2%)
3%
16%
1%
6%
19%
15%
5%
1%
23%
13%
7%
12%
5%
2%
U.S
. deb
t cei
ling
stan
doff
Fear
s E
uro
debt
cris
is m
ay
spre
ad to
Ital
y &
Spa
in
Crim
ean
cris
is
Oil
pric
es c
rash
Euro
/ G
reec
e st
ando
ff
Glo
bal m
acro
con
cern
s
(13%)
(6%)
11%9%
1%
(2%)
13%
16%
21%
November 13, 2017 54
$1.90 $2.07$2.27 $2.33 $2.37
$1.76$2.05
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2012 2013 2014 2015 2016 YTD 3Q2016
YTD 3Q2017
Revenue $ BillionsIs
suan
ce $
Tril
lions
Global Non-Financial Bonds and HY Bank Loans (L) Global Financial Bonds (L)
Global Structured Finance (L) U.S. Municipal Bonds (L)
MIS Revenue (R)
MIS Revenue vs. Rated Issuance1
» In addition to issuance activity levels, MIS revenue is impacted by (i) the mix of issuance activity, (ii) pricing and (iii) growth in monitored credits
1 Rated global investment grade bonds, global high yield bonds, high yield bank loans, global structured finance, and U.S. municipal issuance.2 Annual HY bank loan data includes U.S. rated issuance only. YTD 3Q 2016 and YTD 3Q 2017 data includes U.S. and Non-U.S. rated issuance. Non-U.S. HY bank loan data available starting in 2016. Source: Moody’s Analytics, Dealogic, AB Alert, CM Alert, Thomson SDC. U.S. High Yield Bank Loans represent Moody’s rated new U.S. bank loan programs.
Year-over-Year Percent Change 2012 2013 2014 2015 2016 2012-2016
CAGRYTD 3Q
2017Issuance 16% 0% 6% -6% 2% 3% 14%
Revenue 20% 9% 9% 3% 2% 6% 16%2
November 13, 2017 551 MIS recurring revenue is typically billed annually and recognized ratably over 12 months. Recurring revenue can also be billed upfront and recognized over the life of the security.
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2012 2013 2014 2015 2016 TTM 3Q 2016 TTM 3Q 2017
$ M
illion
s
Corporate Finance Structured FinanceFinancial Institutions Public, Project, & Infrastructure FinanceMIS Other
» Drivers of MIS recurring revenue include growth in monitoring fees and select elements of pricing» Recurring revenue averages ~40% of total MIS revenue» 3Q 2017 recurring revenue up 6%
MIS Recurring Revenue
As a % of MIS revenue
38% 38% 39% 39% 39% 36%40%
MIS’s Recurring Revenue1 Provides Stability
November 13, 2017 56
Moody’s Global Presence
1 As of September 30, 2017.2 As of September 30, 2016.
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix
U.S. employees non-U.S. employees total employees2
U.S. employees non-U.S. employees total employees1
3,566 8,182 11,748
2017
3,417 7,440 10,857
2016
November 13, 2017 57
Bureau van Dijk: Accounting Adjusted EBITDA Margin Reconciliation for FY 2016: IFRS to U.S. GAAP1
(in $ millions) IFRS Adjustments2 U.S. GAAP
Revenue $ 285.7 (5.8) $ 279.9 Operating Expenses (excluding D&A) 141.2 14.4 155.6 Adjusted EBITDA $ 144.5 - $ 124.3
Adjusted EBITDA Margin 50.6% 44.4%
1 As reported in Form 8-K/A filed on October 26, 2017. Adjusted EBITDA is an adjusted measure. See Appendix for reconciliation from adjusted financial measures to U.S. GAAP.2 Adjustments were primarily due to U.S. GAAP revenue recognition policies and the expensing of software development costs required under U.S. GAAP.
Deferred Revenue Adjustment: Impact on 2H 2017 & FY 2018
Amortization of Acquisition-Related Intangibles» Approximate $70 million in annual amortization expense from Bureau van Dijk acquisition » Approximate $95 million in annual amortization expense from all acquisitions (including Bureau van Dijk)» Refer to 3Q 2017 10-Q page 30 for estimated future amortization expense for acquired intangible assets
» The adjustment is required by acquisition accounting and will reduce reported revenue over the remaining contractual period of in-progress customer arrangements assumed as of the acquisition date
» Total estimated impact is expected to be approximately $53 million - $39 million for FY 2017 ($14 million in 3Q 2017 and $25 million in 4Q 2017)- $14 million for FY 2018 (through August 2018)
November 13, 2017 58
Adjusted Operating Income and Adjusted Operating Margin Reconciliation
Reconciliation of Adjusted Financial Measures to GAAP
(in $ millions) 2012 2013 2014 2015 2016TTM 3Q 20171
As Reported Operating Income $1,077.4 $1,234.6 $1,439.1 $1,473.4 $638.7 $873.2Operating Margin 39.5% 41.5% 43.2% 42.3% 17.7% 21.9%
Add Adjustment:Depreciation & Amortization 93.5 93.4 95.6 113.5 126.7 141.3
Acquisition-Related Expenses - - - - - 16.7
Restructuring - - - - 12.0 -
Goodwill Impairment Charge 12.2 - - - - -
Settlement Charge - - - - 863.8 863.8
Adjusted Operating Income $1,183.1 $1,328.0 $1,534.7 $1,586.9 $1,641.2 $1,895.0Adjusted Operating Margin 43.3% 44.7% 46.0% 45.5% 45.5% 47.6%
Moody's Corporation Operating Margin Guidance Reconciliation
Moody's Corporation Free Cash Flow Guidance Reconciliation
1 Trailing twelve months (TTM) ended September 30, 2017.2 Guidance as of November 3, 2017. This guidance includes revenue and operating expense estimates related to the acquisition of Bureau van Dijk.
2017F2
Projected Operating Margin - GAAP Approximately 43%Projected impact from Depreciation & Amortization Approximately 3%
Projected impact from Acquisition-Related Expenses Approximately 1%Projected Adjusted Operating Margin Approximately 47%
(in $ millions) 2017F2
Cash Flow from Operations Approximately $700 million
Less Capital Expenditures Approximately $100 million
Free Cash Flow Approximately $600 million
November 13, 2017 59
Reconciliation of Adjusted Financial Measures to GAAP (cont.)
Moody's Corporation Diluted EPS Reconciliation2012 2013 2014 2015 2016 2017F1
Diluted EPS - GAAP $3.05 $3.60 $4.61 $4.63 $1.36 $6.18 - $6.33
Legacy Tax (0.06) (0.09) (0.03) (0.03) - -Impact of Litigation Settlement - 0.14 - - $3.59 -ICRA Gain - - (0.37) - - -FX Gain due to SubsidiaryLiquidation ($0.18) -Restructuring $0.04 -CCXI Gain - - - - - ($0.31)
Acquisition-Related Expenses - - - - - $0.11
Purchase Price Hedge Gain - - - - - ($0.36)Net Acquisition-Related Intangible Amortization Expenses $0.09 $0.09 $0.10 $0.11 $0.13 $0.23
Adjusted Diluted EPS $3.08 $3.74 $4.31 $4.71 $4.94 $5.85 - $6.001 Guidance as of November 3, 2017.Note: Table may not sum to total due to rounding.
Moody's Corporation Adjusted Operating Expense Reconciliation2017F1
Operating Expense Guidance Decreased in the 20% to 25% rangeImpact of 2016 settlement and restructuring chargesand 2017 Bureau van Dijk acquisition-related costs
Adjusted Operating Expense Guidance Increase in the low-double-digit percent range
November 13, 2017 60
Reconciliation of Adjusted Financial Measures to GAAP (cont.)Moody's Corporation Adjusted EBITDA Reconciliation
($ Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016TTM
3Q 20171
Net Income Attributable to Moody's $753.9 $701.5 $457.6 $402.0 $507.8 $571.4 $690.0 $804.5 $988.7 $941.3 $266.6 $546.5
Provision for Income Taxes $506.6 $415.0 $268.2 $239.1 $201.0 $261.8 $324.3 $353.4 $455.0 $430.0 $282.2 $359.9Interest Expense, Net ($3.0) $24.3 $52.2 $33.4 $52.5 $62.1 $63.8 $91.8 $116.8 $115.1 $137.8 $169.5Depreciation & Amortization $39.5 $42.9 $75.1 $64.1 $66.3 $79.2 $93.5 $93.4 $95.6 $113.5 $126.7 $141.3EBITDA $1,297.0 $1,183.7 $853.1 $738.6 $827.6 $974.5 $1,171.6 $1,343.1 $1,656.1 $1,599.9 $813.3 $1,217.2Net Settlement2 - - - - - - - - - - $700.7 $700.7Net Restructuring3 - $29.9 ($1.6) $10.9 - - - - - - $8.1 -Adjusted EBITDA $1,297.0 $1,213.6 $851.5 $749.5 $827.6 $974.5 $1,171.6 $1,343.1 $1,656.1 $1,599.9 $1,522.1 $1,917.9
1 Trailing twelve months (TTM) ended September 30, 2017.2 Net of $163.1m tax on settlement charge. 3 Net of $20.1m, ($0.9m), $6.6m, and $3.9m tax on restructuring charges for full-years 2007, 2008, 2009 and 2016, respectively.Note: Tables may not sum to total due to rounding.
Bureau van Dijk Adjusted EBITDA Reconciliation
($ Millions) 2016Net Income (Loss) Attributable to Bureau van Dijk ($175.6) Provision for Income Taxes $35.7 Interest Expense, Net $219.2Depreciation & Amortization $53.7 EBITDA $133.0Non-operating Income, Net ($8.7)Adjusted EBITDA $124.3
November 13, 2017 62
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