Moody’s Earned $2.04 per Share

This morning, Moody’s (MCO) reported Q2 earnings of $2.04 per share. Wall Street had been looking for $1.89 per share. Here are some details:

2Q18 revenue of $1.2 billion up 17% from 2Q17
2Q18 operating income up 16% from 2Q17; adjusted operating income up 17%1
2Q18 diluted EPS of $1.94 up 20% from 2Q17; adjusted diluted EPS of $2.04, up 32%
Reaffirming FY 2018 diluted EPS and adjusted diluted EPS guidance ranges of $7.20 to $7.40 and $7.65 to $7.85, respectively

“Moody’s second quarter revenue increased 17%, reflecting strong performance at Moody’s Analytics, driven by contribution from Bureau van Dijk, as well as record revenue for Moody’s Investors Service, primarily due to robust bank loan and collateralized loan obligation market activity,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “Additionally, we are reaffirming our full year 2018 guidance of $7.20 to $7.40 for diluted EPS and $7.65 to $7.85 for adjusted diluted EPS.”

SECOND QUARTER HIGHLIGHTS

Moody’s Corporation reported record revenue of $1.2 billion for the three months ended June 30, 2018, up 17% from the second quarter of 2017, including eight percentage points of growth attributable to Bureau van Dijk.

Operating expenses totaled $641.1 million, up 19% from the prior-year period, including 11 percentage points attributable to Bureau van Dijk operating expenses, amortization of acquired intangible assets, as well as non-recurring acquisition and integration expenses associated with the Bureau van Dijk acquisition (“Acquisition-Related Expenses”).

Operating income was $534.0 million, up 16% from the second quarter of 2017. Adjusted operating income, which excludes depreciation and amortization, as well as Acquisition-Related Expenses, was $584.4 million, up 17% from the prior-year period. Operating margin for the second quarter was 45.4% and the adjusted operating margin was 49.7%.

Diluted EPS of $1.94 was up 20% from the second quarter of 2017. Adjusted diluted EPS of $2.04 was up 32%. Second quarter 2018 adjusted diluted EPS excludes $0.10 per share related to amortization of acquired intangible assets and Acquisition-Related Expenses. Second quarter 2017 adjusted diluted EPS primarily excludes a $0.13 foreign currency hedge gain. Both second quarter 2018 diluted EPS and adjusted diluted EPS include a $0.02 per share tax benefit related to the adoption of accounting standard update ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” compared to a $0.05 per share tax benefit in the second quarter of 2017.

Despite the earnings beat, shares of MCO lost 4.9% on Friday.

Posted by on July 27th, 2018 at 9:27 am


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