McGraw Hill Financial Tops Earnings Expectations, Thanks to Acquisition -- Update
April 26 2016 - 10:47AM
Dow Jones News
By Lisa Beilfuss and Timothy W. Martin
McGraw Hill Financial Inc. logged stronger-than-expected
earnings in its first quarter thanks to its newly acquired SNL
business.
The company, which will change its name to S&P Global Inc.
later this week pending a shareholder vote, has been working to
fold in its acquisition of SNL Financial LC. The companies struck a
$2.2 billion deal last summer, one of a string of pricey deals for
data-driven companies as the market for firms selling obscure
financial intelligence on banks, commodities and real estate
attracted a bigger audience.
New York-based McGraw Hill snapped up SNL as part of a larger
effort to shed its origins as a publishing company and become a
global financial data provider.
On a Tuesday earnings call, Chief Executive Douglas Peterson
called the integration of SNL a key priority. "We made tremendous
strides," he said, noting that progress so far boosted
first-quarter adjusted operating profit in its market intelligence
business by 81%. Revenue in the segment rose by more than a quarter
to $407 million.
The company's Standard & Poor's ratings unit reported a 9%
decline in revenue to $552 million as global bond issuance fell
14%. Mr. Peterson said the company expects global bond issuance to
fall about 2% this year, a more bearish outlook than an earlier
forecast of 1%.
Meanwhile, the company has moved to shed its J.D. Power
business, a $1.1 billion transaction announced earlier this month
and on the heels of the sale of its Standard & Poor's
Securities Evaluation unit. Mr. Peterson on Tuesday called the J.D.
Power divestiture the last one in the foreseeable future.
In all, the company reported a profit of $294 million, down from
$303 million a year earlier. On a per-share basis, earnings were
flat at $1.10 thanks to a lower share count. Excluding items,
earnings per share rose to $1.20 from $1.10.
McGraw Hill maintained its full-year guidance of $5 to $5.15 a
share. The company repurchased around $200 million of stock, after
buying back $224 million in the prior quarter.
Revenue rose 5.3% to $1.34 billion. Analysts had projected $1.15
in adjusted earnings per share on $1.36 billion in revenue,
according to Thomson Reuters.
"The upside for the quarter came primarily from share
repurchases and much stronger-than-expected profit margins," said
Timothy McHugh, an analyst at William Blair, in a Tuesday investor
note.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Timothy W.
Martin at timothy.martin@wsj.com
(END) Dow Jones Newswires
April 26, 2016 11:32 ET (15:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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