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Investor Presentation

1Q 2016

May 10, 2016

Disclaimer
Certain statements contained in this presentation are forward-looking statements and are based on future expectations, plans and
prospects for Moodys business and operations that involve a number of risks and uncertainties. Moodys outlook for 2016 and other
forward-looking statements in this presentation are made as of April 29, 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 are 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 credit quality concerns, changes in interest rates and other volatility in the financial markets; 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 Moodys 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
Moodys rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries 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 Moodys operations and infrastructure; any vulnerabilities to cyber threats or other
cybersecurity concerns; the outcome of any review by controlling tax authorities of the Companys global tax planning initiatives; the
outcome of those Legacy Tax Matters and legal contingencies that relate to the Company, its predecessors and their affiliated
companies for which Moodys has assumed portions of the financial responsibility; exposure to potential criminal sanctions or civil
remedies if the Company fails to comply with foreign and US 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; a decline in the
demand for credit risk management tools by financial institutions; and other risk factors as discussed in the Companys 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 Securities and
Exchange Commission.
May 10, 2016

Table of Contents
1. Financial Overview
2. Capital Markets Overview
3. Moodys Investors Service (MIS)
4. Moodys Analytics (MA)
5. Conclusion
6. Appendix

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Mission: To be the Worlds Most Respected


Authority Serving Risk-Sensitive Financial Markets

Risk Understanding

Risk Understanding

Risk Understanding

Risk
Understanding

Risk
Measurement

Risk
Management

Methodologies
Training & Certification
Analyst Outreach

Ratings
Estimated Default Frequency
Analytics (EDFs)
Market-Implied Ratings
(MIRs)

Research
(from both MIS & MA)
Advisory Services
Stress Testing
Software

Moodys is an essential component of the global capital markets, providing credit ratings,
research, tools and analysis that contribute to open and integrated financial markets

May 10, 2016

Financial Overview

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Corporation Financial Profile*

TTM 1Q16 revenue of $3.4 billion; operating income of $1.4 billion

Independent provider of credit rating opinions and


related information for over 100 years

Research, data and software for financial risk analysis


and related professional services

66% of total MCO revenue

34% of total MCO revenue

83% of total MCO operating income

17% of total MCO operating income

TTM 1Q16 Revenue by Business


MIS

MA
Public,
Project &
Infrastructure
11%
Financial

Institutions
10%
Structured
Finance
13%

Corporate
Finance
31%

TTM 1Q16 Revenue by Geography


US

MIS Other
1%
Research,
Data &
Analytics
20%
Enterprise
Risk
Solutions
11%
Professional
Services
4%

Recurring

Non-US
AsiaPacific
10%

TTM 1Q16 Revenue by Type

MCO

Americas
6%

Transaction

MIS

MA
26%

48%

60%

EMEA
25%

74%
52%

40%

United
States
58%

*All financial data is for the trailing twelve months ended March 31, 2016.

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Long-term Growth Opportunities Intact Despite Nearterm Macro Challenges


Debt market
issuance driven
by global
GDP growth

~2-4%

Disintermediation
of credit markets in both
developed and emerging
economies driving both
issuance and demand for
new products and
services

Growth in Moodys
Analytics driven by
further penetration
of MAs client base and
expansion of bank and
insurance risk regulatory
requirements

~2-3%

~2-3%

MA and MIS pricing


initiatives aligned with
value; affected by
business volumes and
mix

~3-4%

Long-Term Revenue Growth Opportunity: High Single-Digit to Low Double-Digit % (on average)
Potential Selective Acquisitions*
Potential Operating Income Margin Expansion
Ongoing Share Repurchases*

Long-Term EPS Growth Opportunity: Low-Teens to High-Teens % (on average)**


*Subject to market conditions and other ongoing capital allocation decisions.
**Assumes no material change in effective tax rate, foreign exchange rates, leverage profile and/or capital allocation policy.

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys has Consistently Delivered Strong Performance


EPS*

Revenue
Low-singledigit
% growth

$ Billions

$4.0

$4.55
to
$4.65

$5.00
$4.50
$4.00

$3.0

$3.50
$2.0

$3.00

$4.21
$3.65

$2.50

$1.0

$2.00

$4.60

$2.46

$2.99

$1.50

$0.0
2011

2012

2013

2014

2015

2016F**

Operating Margin Performance


50%

Operating Margin

2011

2012

2013

2014

2015

5-year Average Free Cash Flow Conversion****

Adj. Operating Margin***

Moody's
45%

46.0%
44.7%

40%

42.4%
39.0%

43.3%

43.2%
41.5%

45.5%
42.3%

~45%

$1 of
Revenue

2012

Select Peers*****
S&P 500

2013

2014

2015

$0.30
$0.23

~41%

39.5%

35%
2011

2016F**

$0.10

2016F**

*2011-2015 represents non-GAAP EPS. 2016F represents GAAP EPS.


**Guidance as of April 29, 2016.
***Adjusted Operating Margin is a non-GAAP measure. See appendix for reconciliation from non-GAAP to GAAP.
**** As of May 2016, over last five available years. Free Cash Flow is a non-GAAP financial measure. Source: FactSet.
*****Includes CLGX, DNB, EXPN, FDS, IHS, SPGI, MORN, MSCI, TRI, VRSK.

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys has a Disciplined Approach to Capital


Allocation
Investing in Growth Opportunities
Reinvestment

Return of Capital

Acquisitions

Dividends

Aligned with strategy

Invest in existing
businesses to support
organic growth

Opportunistic; ideally able


to use offshore cash

FY 2016 capex guidance:


~$125 million*

Dividends Paid (L)


$1,457

$1,370

$1,200

$1,090

$1,000

$197

215

$800
$600

205

$400

$455
$121

$200

$334

$0
2011

$1,221
$340
$143

$1,098

$893

$334
$72

$1.20
$1.00
$0.80

185

$0.60

175

$0.40

$262

$197
2012

195

$1.48

$1.40

225
$272

(Last 5 Years)
$1.60

235

$236

Average annualized net


share count reduction of
~3% from 2011 to 1Q16

2013

2014

2015

1Q16

Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16

$ Millions

$1,400

Share Count (R)

Millions of Shares

$1,600

Current dividend yield of


1.6% (as of 4/29/16)

FY 2016 share
repurchase guidance:
~$1 billion***

Annualized Dividend Per Share

Share Repurchases and Dividends Paid


Share Repurchases (L)

TTM 1Q 2016 payout ratio


was ~30%**

Share Repurchases

*Guidance as of April 29, 2016.


**Dividend payout ratio is defined as TTM 1Q 2016 dividends per share/non-GAAP EPS.
***Guidance as of April 29, 2016 (subject to available cash, market conditions and other ongoing capital allocation decisions).

May 10, 2016

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Capital Return has Supported EPS Growth and Total


Shareholder Return
Key Drivers of EPS Growth (Last 5 Years)*
$2.12
$0.35

$4.60

$2.13
2010

Share count reduction

Business performance

2015

MCO Stock Price and Total Shareholder Return (Last 5 Years)**

19%

163%
144%

Contribution from price appreciation

Contribution from dividend reinvestment

Total Shareholder Return

*2010 and 2015 represents non-GAAP EPS. See appendix for reconciliation from non-GAAP to GAAP. Contribution from share count reduction excludes interest expense from debt
issuance and foregone interest income, both of which are included in business performance.
**As of May 4, 2016. Source: FactSet.

May 10, 2016

10

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics Revenue Growth Moderates


Variability of Moodys Ratings Revenue Growth
Year-over-Year % Change

20%

19%

23%

15%

16%

Global macro concerns

30%

Euro / Greece standoff

40%

Crimean crisis

50%

Oil prices crash

MCO
Fears Euro debt crisis may
spread to Italy & Spain

MA

US debt ceiling standoff

MIS

13%

12%
11%

10%
3%

5%
7%

6%

0%

5%
(6%)

2%
(2%)

-10%

1%

1%
(13%)
Q1'16

Q4'15

Q3'15

Q2'15

Q1'15

Q4'14

Q3'14

Q2'14

Q1'14

Q4'13

Q3'13

Q2'13

Q1'13

Q4'12

Q3'12

Q2'12

Q1'12

Q4'11

Q3'11

Q2'11

Q1'11

Q4'10

Q3'10

Q2'10

Q1'10

-20%

May 10, 2016

11

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys First Quarter 2016 Revenue Performance


Moodys Investors Service

Total

Corporate Finance

Moodys Analytics

(13%)

Total

11%

(20%)
Research, Data &
Analytics

Structured Finance

10%

(11%)
Enterprise Risk
Solutions

Financial Institutions

Public, Project and


Infrastructure Finance

16%

1%

(9%)

Professional Services

0%

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Full Year 2016 Guidance as of April 29, 2016


Revenue:

Increase in the low-single-digit % range

Operating Expenses:

Increase in the mid-single-digit % range

Operating Margin:

Approximately 41%

Adjusted Operating Margin*:

Approximately 45%

Effective Tax Rate:

32% - 32.5%

Earnings Per Share:

$4.55 - $4.65

Share Repurchases:

Approximately $1 billion (subject to available cash, market


conditions and other ongoing capital allocation decisions)

Capital Expenditures:

Approximately $125 million

Depreciation & Amortization:

Approximately $130 million

Free Cash Flow*:

Approximately $1 billion

*Amount is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure to its comparable US GAAP measure.

May 10, 2016

13

Capital Markets Overview

May 10, 2016

14

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Macroeconomic Environment: Interest Rates and Bond


Spreads
Interest Rates

Decline
since peak

800

6%

700

4%
2%

High Yield

900

10 yr. US Treasury Yield %


10 yr. German Bund Yield %

(272) bps

600
500

(181) bps

1.8%

400
0%

0.3%

Feb-16

Mar-16

Apr-16

Spreads peaked in mid-Feb 2016

Bond Spreads
2,150
1,850
1,550
1,250
950
650
350
50

US Investment Grade
US High Yield
Euro Investment Grade
Euro High Yield

250

Investment Grade
Decline
since peak

225
200
175

(87) bps

150
125

(53) bps

100
Feb-16

Mar-16

Apr-16

Source: Moodys Analytics, Barclays. Bond Spreads are for non-financial corporates. All data is through April 29, 2016.

May 10, 2016

15

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Macroeconomic Environment: Default Rates and Credit


Metrics
Default Rates for Global Corporate Rated Issuance
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%

High Yield

Historical Average

4.2% historic average*

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016F

Credit Metrics: North American & European Speculative Grade Companies Median Debt/EBITDA
EU

US

4.9x

4.8x
4.3x

5.0x

4.9x

5.0x

4.5x
4.8x

4.0x

4.0x

4.1x

2009

2010

2011

4.4x

4.5x

2012

2013

2014

4.5x

2015**

*Moodys global speculative grade default historical average of 4.2% since 1983.
**Data for North America covers trailing twelve month period at 3Q 2015; European data is 3Q 2015 only.
Source: Moodys Investors Service. All data is for Moodys rated corporate debt.

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Commodities Sector: Default Rates, Issuance, and Debt


Maturities
US Speculative Grade Default Rates*

Global Commodity Bond Issuance**


$100

High Yield

Investment Grade

$80
1.8%
Total

TTM 1Q16
4.1%

$ Billions

2014
$60
$40
$20

1.9%

$0

Commodities

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16


18.5%

Debt Maturities: Global Moodys Rated Commodity Bonds ***


Investment Grade

1.7%

High Yield
$88

1.9%

$ Billions

$100

NonCommodities

$80
$40
$20

$53

$53

$60

$45

$55 $60

$63

$31
$19

$12

$0
2016

2017

2018

2019

2020

*Source: Moodys Investors Service. Commodities sector includes Oil & Gas and Metals & Mining.
**Source: Moodys Analytics. Commodities sector includes Oil & Gas and Metals & Mining.
***Source: FactSet. As of May 2016. Includes the following FactSet industry groups: Aluminum, Coal, Contract Drilling, Integrated Oil, Oil & Gas Pipelines, Oil & Gas Production, Oil
Refining/Marketing, Oilfield Services/Equipment, Other Metals/Minerals, Precious Metals, and Steel.

May 10, 2016

17

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Disintermediation of Capital Markets: Europe and US


European Non-Financial Corporate
Bonds vs. Bank Loans Outstanding
Bonds

US Non-Financial Corporate
Bonds vs. Bank Loans Outstanding

Loans

Bonds

Loans

$8,000

7,000
6,000

$6,000

4,000
3,000
2,000
1,000
0

80%

4
8
%

$ Billions

Billions

5,000

47%

$4,000

4
8
53%
%

$2,000

20%
$0

European companies have historically relied more on banks than their American counterparts, but are
increasingly turning to the bond market
1Q 2016 Moodys rated European high yield bond and bank loan issuance was split approximately
50% / 50%, respectively
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.
Data is through February 2016.

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Disintermediation of Capital Markets: Moodys New


Rating Mandates
Global New Rating Mandates*
EMEA

United States

Rest of World

1,200

# of new mandates

1,026

990

854
771

800

400
179

153

0
2012

2013

2014

2015

1Q15

1Q16

Lowered pace of new mandate activity in 1Q 2016 was due to wide and volatile high yield
credit spreads and reduced global issuance
*Rated by Moodys Investors Service.
Source: Moodys Investors Service.

May 10, 2016

19

Moodys Investors Service

May 10, 2016

20

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Investors Service: A Leading Provider of Credit


Ratings, Research, and Risk Analysis
Dedicated, experienced
analytical teams

A common language of
credit risk

A process that brings


together analytical views

A long institutional memory


of credit

A comprehensive view of credit risk in the capital markets based on


unparalleled coverage

For issuers, MIS ratings may provide tangible financing benefits, broaden access to
global capital markets, and help inform the formulation of internal capital plans and
funding strategies
For other market participants, MIS provides independent, globally comparable,
transparent and industry-leading analysis of credit risk

May 10, 2016

21

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Investors Service Financial Profile


TTM 1Q16 Revenue: $2.3 billion*
33% recurring revenue
Recurring

Transaction

US

Non-US

36%
60%

Corporate
Finance
47%

MIS Other
1%
Public,
Project, &
Infrastructure
Finance
16%
Financial
Institutions
16%

64%
40%

41% recurring revenue

63% recurring revenue

Structured
Finance
20%

37% recurring revenue

2016 Revenue Guidance as of April 29, 2016


Global

flat

US

low-single-digit % range

Non-US

low-single-digit % range

Corporate Finance

low-single-digit % range

Financial Institutions

mid-single-digit % range

Structured Finance

mid-single-digit % range

Public, Project & Infrastructure Finance

mid-single-digit % range

*All financial data for this section is for the trailing twelve months ended March 31, 2016.

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Non-Financial Corporates have Refunding Needs of


Approximately $3.4 Trillion*
$ Billions

Debt Maturities: North America Moodys-Rated Corporate Bonds and Loans


$300
$250
$200
$150
$100
$50
$0

$264
$202

$185

$178

$144

$111
$19

$41

$9

2016

Source: MIS,
Feb-16.
Note: Data
represents US
& Canadian MIS
rated corporate
bonds & loans.

IG: 8%

$159

$104

$71

$43

$196

$176

2016 2020 CAGR

SG: 71%
BL: 130%

2017

2018

2019

2020

$ Billions

Debt Maturities: EMEA Moodys-Rated Corporate Bonds and Loans


$250
$200
$150
$100
$50
$0

$189

$167

$173

2016 2019 CAGR

$147

IG: (4%)
$35

$58

$40

$35

$30

$40

$65

$50

Source: MIS,
Jul-15.

SG: 23%
BL: 19%

2016

2017

2018

2019

$ Billions

Debt Maturities: Asia Pacific Moodys-Rated Corporate Entities


$250
$200
$150
$100
$50
$0

$122

$105

$97

2016

$18

$17

$14

2017
Investment Grade Bonds

2018
Speculative Grade Bonds

Sources: MIS &


Bloomberg,
2016 2019 CAGR Jul-15.
Note: Data shows
$82
rated & unrated
IG: (8%)
bonds of rated
$20
SG: 13%
corporates in Asia
ex-Japan, Australia
2019
& New Zealand.
Data does not
Speculative Grade Bank Loans
include loans.

*Amount reflects total maturities identified in the above sourced reports.

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

M&A Activity has Increased as a Stated Use of Proceeds


Uses of Funds from USD High Yield Bonds and Bank Loans*
Debt Refinancing
9%

12%

M&A

Capital Spending
9%

Shareholder Payments
4%
11%

24%

22%

18%

17%

18%

7%

8%

8%

31%

30%

25%

% of mentions

63%

20%

7%

8%

17%
19%

45%

22%

31%

41%

53%

16%

15%

5%

9%

54%
59%

83%
71%

74%

78%

73%

1998

62%

52%

1999

2008

2009

2010

2011

2012

71%

2013

65%

2014

54%

2015

49%

1Q16

*% 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, %s do not sum to 100%.
Source: Moodys Capital Markets Research Group (CMRG).

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Investors Services Recurring Revenue*


Provides Stability
MIS Recurring Revenue
Corporate Finance

Structured Finance

Financial Institutions

Public, Project, & Infrastructure Finance

MIS Other

$1,000
$900
$800

$ Millions

$700
$600
$500
$400
$300
$200
$100
$0
As a % of MIS revenue

2011

2012

2013

2014

2015

TTM 1Q16

43%

38%

38%

39%

39%

40%

Drivers of MIS recurring revenue include growth in monitoring fees and select elements
of pricing
Recurring revenue averages ~40% of total MIS revenue
*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.

May 10, 2016

25

Moodys Analytics

May 10, 2016

26

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Product Offering Relevant to Multiple Functions Within


Banks, Insurance Companies and Asset Managers
Loan Markets

RD&A

Comml
Lending

Consumer
Lending

ERS

Other

Investment
Management

Investment
Banking

Sales &
Trading

Risk Mgmt

MIS research & data

Credit market
analysis & data

Economic research,
data, & modeling

Structured finance
analytics

Prof.
Svcs.

Securities Markets

Software

Risk modeling

Training

Offshore analytical
resources

Treasury

Centrally managed sales organization leverages established customer relationships


which facilitates distribution of new product

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics Financial Profile


TTM 1Q16 Revenue: $1.2 billion*
Recurring

Transaction

US

Non-US

26%
53%

> 95% recurring revenue


96% retention rate
Research,
Data and
Analytics
54%

74%
47%

Enterprise
Risk
Solutions
33%

Professional
Services
13%

Combination of one-off contracts and


semi-recurring revenue

Operating Margin

2016 Revenue Guidance as of April 29, 2016


Global

high-single-digit % range

US

low-double-digit % range

71% recurring revenue

Expect operating margin to grow to the mid-20s percent


range over the next several years
2015

Non-US

mid-single-digit % range

Research, Data & Analytics

high-single-digit % range

2013

Enterprise Risk Solutions

high-single-digit % range

2012

Professional Services

low-single-digit % range

19.9%
19.5%

2014

2011

18.1%
15.3%
17.5%

*All financial data for this section is for the trailing twelve months ended March 31, 2016.

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics Has Multiple Platforms for Growth


2015 Revenue and
2007 2015 CAGR

$1,200

BlackBox

Jan 2008:
Moodys
Analytics
established

WebEquity,
Lewtan

Professional Services
$149.9m, 42% CAGR

$1,000

Revenue $ millions

Amba

$800

$600

KMV*,
Economy.com,
Wall Street
Analytics

Canadian
Securities
Institute

Enterprise Risk Solutions


$374.0m, 18% CAGR

Barrie & Hibbert


Copal

Fermat

$400

Research, Data & Analytics


$626.4m, 7% CAGR

$200

$0
2007

2008

2009

2010

2011

2012

2013

2014

2015

*KMV acquired in 2002.


Note: Listed companies above have been acquired by Moodys Analytics in the respective year. In 2016 Moodys Analytics has acquired GGY and made an investment in Finagraph.

May 10, 2016

29

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

RD&A Revenue Has Grown Despite Flat Financial


Services Employment
RD&A Revenue vs. Financial Services Employment
US and UK Financial Services Employment* (L)

TTM RD&A Revenue (R)

$650

7.9

$600
$550

6.9
$500
6.4

$ Millions

Millions of jobs

7.4

$450
5.9

Q1'08
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
Q3'10
Q4'10
Q1'11
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

5.4

$400
$350

*Source: US Bureau of Labor Statistics and the UK Office for National Statistics. Available data through September 30, 2015.

May 10, 2016

30

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

ERS: Solid Track Record of Growth


Overall CAGR Since 2011 of 14%

Growth drivers
Regulation and accounting
standards driving demand for
automated software tools

Recurring Revenue: Subscriptions & Maintenance


Non-Recurring Revenue: License and Services
$250

TTM Revenue $ millions

16% CAGR
$200

$150

13% CAGR

$100

$50

$0

Reminder: While ~2/3 of revenue base is


renewable, results are affected by large projects
timing may impact sales, revenues, and margin in
any one period

Financial institutions adopting


standard approaches and best
practices in risk management
Expense management pressure
shifting FIs away from home-grown
technology solutions

Investment in common code


base offering rich functionality
and streamlined configuration
options will drive sales and
simplify customer adoption
Focus on higher-value, more
profitable business supports
margin expansion; some top-line
offset due to slower growth in
low-margin services
May 10, 2016

31

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Professional Services Overview


Knowledge process outsourcing
Leading provider of offshore research and analytic services
2,400 employees; 9 delivery centers
200+ institutional clients in global financial and corporate sectors

Certificates, designations & accreditations


Canadas leading provider of financial services education and designations
270+ courses taken by 800,000+ financial professionals
Endorsed by the Investment Industry Regulatory Organization of Canada
(IIROC), Canadas stock exchanges and Canadas securities regulatory commissions

Financial services training


Provider of global learning capabilities to banks, asset managers, regulators and non-bank financial institutions
Multiple delivery channels, including classroom instruction, web classes and e-learning
Signature Commercial Lending program available in universal and IFRS; translated and localized for several regions

May 10, 2016

32

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics: Well-Positioned to Drive Growth


Strong operating track record
33 consecutive quarters of year/year revenue growth
11% revenue CAGR since inception of Moodys Analytics
22 quarters of double-digit revenue growth
2015 operating margin of 19.9%
Solid market position supporting risk management at financial institutions
Rich product portfolio supported by unique, differentiating features
Product offering focused on delivering need-to-have products and services
Good penetration of customer base, with plenty of opportunity ahead

May 10, 2016

33

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Extensive, Global Recognition for Industry Leadership


American Banker

Year(s)

Insurance Risk

Year(s)

FinTech Forward

2014, 2015

Best Solvency II Solution

2014, 2015

Asia Risk Technology Rankings

Year(s)

Best Data Management Solution

2013, 2014

Overall Vendor Ranking

2011, 2012, 2014, 2015

Best Economic Scenario Generation Solution

2011, 2012, 2015

Risk Management

2011, 2014, 2015

Best Regulatory Reporting Software

2013

Liquidity Risk Management

2011, 2012, 2013, 2014, 2015

Pulsenomics

Year(s)

Regulatory Capital Calculation & Management

2011, 2012, 2013, 2014, 2015

Crystal Ball

2012, 2015, 2016

Economic Capital Calculation & Management

2011, 2013, 2014, 2015

Risk Technology Rankings

Year(s)

Asset Liability & Management

2011, 2012, 2014, 2015

Overall Vendor Ranking

2011, 2012, 2013, 2014

Overall: Enterprise-wide Risk Management

2011, 2012, 2013, 2014, 2015

Celent XCelent Awards

Year(s)

Enterprise-wide Credit Risk

2011, 2012, 2013, 2014, 2015

Client Base/Presence: CCAR & Stress Testing

2016

Enterprise-wide Basel III Compliance

2011, 2012, 2013, 2014, 2015

Depth of Client Service: CCAR & Stress Testing

2016

Risk Capital Calculation Regulatory

2011, 2012, 2013, 2014, 2015

Functionality, Basel III & Liquidity Risk Management

2013

Risk Capital Calculation Economic

2011, 2012, 2013, 2014, 2015

Regulatory Compliance & Reporting

2011, 2012, 2013, 2014

Chartis

Year(s)
Pricing & Analytics Credit

2015

RiskTech100 - Overall Ranking

2011, 2012/2013, 2014, 2015,


2016

Asset & Liability

2015

Enterprise Stress Testing Category Win

2016

Stevie

Year(s)

Credit Risk Category Win

2012/2013, 2015

Best Front-Line Customer Service Team Fin Svcs

2016

Organizational Strength Category Win

2012/2013, 2014

Structured Products Technology Rankings

Year(s)

IDC

Year(s)

America Technology Vendor Non Bank

2015

Risk Management Credit

2013

FinTech 100

2011, 2012, 2013, 2014, 2015


Risk Management Limits

2014, 2015

Risk Management - Regulatory/Economic Capital

2012, 2013, 2014, 2015

May 10, 2016

34

Conclusion

May 10, 2016

35

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Why Invest in Moodys?


We strive to be the worlds most respected authority serving risk-sensitive
financial markets
We have had strong revenue and earnings growth, as well as strong cash
flow conversion
2011 2015 Revenue CAGR of 11%
2011 2015 non-GAAP EPS* CAGR of 17%
2011 2015 free cash flow conversion rate of ~30%

We are committed to returning capital to our shareholders


Current annualized dividend of $1.48
Anticipate 2016 share repurchases of approximately $1.0 billion**

We will selectively invest in strategic growth opportunities


Leverage brand to extend our relevance in financial markets
Expand our product offerings and geographic influence
*See appendix for reconciliation of non-GAAP EPS to GAAP EPS.
**Guidance as of April 29, 2016. Subject to market conditions and other ongoing capital allocation decisions.

May 10, 2016

36

Appendix

May 10, 2016

37

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Corporate Finance: Revenue and Issuance


Historical Revenue* Mix: By Quarter

Global Rated Non-Financial Bonds and


US Speculative Grade Bank Loans (Quarterly)***

$350
Issuance $ Billions

$600

Revenue $ Millions

$300
$250
$200
$150
$100

$500
$400
$300
$200
$100

$50

$0

$0
1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q14

1Q16

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

US Speculative-Grade Bank Loan Origination


Other**

Investment Grade

Speculative Grade

Bank Loans

Global Non-Financial Speculative-Grade Bond Issuance


Global Non-Financial Investment-Grade Bond Issuance

Historical Revenue* Mix: By Year

$1,200

Global Rated Non-Financial Bonds and


US Speculative Grade Bank Loans (Annually)***
$2,000
Issuance $ Billions

Revenue $ Millions

$1,000
$800
$600
$400

$1,500

$1,000

$500

$200
$0

$0
2007
Other**

2008

2009

2010

Investment Grade

2011

2012

2013

Speculative Grade

2014

2015

Bank Loans

2007

2008

2009

2010

2011

2012

2013

2014

2015

US Speculative-Grade Bank Loan Origination


Global Non-Financial Speculative-Grade Bond Issuance
Global Non-Financial Investment-Grade Bond Issuance

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Other includes: monitoring, CP, MTNs, and ICRA.
***Sources: Moodys Capital Markets Research Group, Dealogic; US Speculative-Grade Bank Loan Origination represents Moodys rated new US bank loan programs. Note: Debt
issuance categories do not directly correspond to Moodys revenue categorization.

May 10, 2016

38

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Corporate Finance: Revenue Diversification


Revenue* Distribution: Recurring vs. Transaction

Revenue* Distribution: Geography


100%

100%

80%

80%
65%

66%

62%

62%

64%

60%

68%

70%

70%

68%

72%

40%
35%

34%

38%

38%

36%

32%

30%

30%

32%

26%

27%

30%

28%

27%

71%

74%

73%

70%

72%

73%

35%

35%

31%

37%

65%

65%

69%

63%

60%

40%
20%

29%

20%
28%

0%

0%

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US

US

Transaction

Recurring

Revenue* Distribution: Product


100%
18%

18%

18%

23%

15%

21%

21%

22%

23%

20%

23%

19%

21%

29%

26%

36%

36%

38%

35%

34%

80%

21%

19%

60%
21%

40%
20%

42%

19%

18%

18%

17%

13%

11%

16%

13%

25%

29%

43%

42%

27%

39%

28%

43%

0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Other**

Investment Grade

Speculative Grade

Bank Loans

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Other includes: monitoring, CP, MTNs, and ICRA.
Percentages have been rounded and may not total to 100%.

May 10, 2016

39

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Structured Finance: Revenue and Issuance


Historical Revenue* Mix: By Quarter

Global Rated Structured Finance


(Quarterly)**
$350

$100

Issuance $ Billions

Revenue $ Millions

$120

$80
$60
$40
$20

$300
$250
$200
$150
$100
$50

$0

$0
1Q14

2Q14
ABS

3Q14
RMBS

4Q14
CREF

1Q15

2Q15

3Q15

Structured Credit

4Q15

1Q16

1Q14

Other

ABS

Historical Revenue* Mix: By Year

$1,000

Issuance $ Billions

$800
$600
$400
$200

3Q14

4Q14

RMBS

1Q15
CREF

2Q15

3Q15

4Q15

1Q16

Structured Credit

Global Rated Structured Finance


(Annually)**

$3,000
Revenue $ Millions

2Q14

$2,500
$2,000
$1,500
$1,000
$500
$0

$0
2007

2008
2009
ABS
RMBS

2010
CREF

2011
2012
2013
2014
Structured Credit
Other

2015

2007

2008
ABS

2009
RMBS

2010

2011

CREF

2012

2013

2014

2015

Structured Credit

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: AB Alert, CM Alert, Moodys Corporation. Debt issuance categories do not directly correspond to Moodys 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, and commercial real estate CDOs. Structured Credit
includes CLOs and CDOs.

May 10, 2016

40

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Structured Finance: Revenue Diversification


Revenue* Distribution: Recurring vs. Transaction

Revenue* Distribution: Geography


100%

100%
80%

47%

80%
54%

64%

66%

60%

70%

70%

72%

66%

66%

69%

40%

38%

39%

38%

33%

36%

58%

60%

62%

61%

66%

62%

67%

52%

64%

45%

60%
40%

40%
20%

42%

34%

48%

53%

46%

36%

34%

30%

30%

28%

34%

20%

34%

31%

55%

0%

0%

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - U.S.

U.S.

Transaction

Recurring

Revenue* Distribution: by Product


100%

0%

0%

0%

23%

24%

25%

80%
20%

60%
40%
20%

26%

31%

25%

22%

29%

0%

0%

0%

0%

0%

0%

32%

28%

34%

32%

26%

31%

28%

33%

27%

33%

18%

18%

18%

22%

21%

21%

30%

19%
26%

17%
18%

33%

0%
24%

31%
31%

20%

18%

21%

20%

23%

22%

0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
ABS

RMBS

CREF

Structured Credit

Other

*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 and commercial real estate CDOs. Structured Credit includes
CLOs and CDOs.

May 10, 2016

41

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Financial Institutions: Revenue and Issuance


Historical Revenue* Mix: By Quarter

$500
Issuance $ Billions

$100

Revenue $ Millions

Global Rated Financial Bonds


(Quarterly)**

$80
$60
$40

$400
$300
$200
$100

$20

$0

$0
1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q14

1Q16

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

Global Speculative Grade Financial Corporate Bond Issuance


Banking

Insurance

Managed Investments

Other

Global Investment Grade Financial Corporate Bond Issuance

Historical Revenue* Mix: By Year

$400

$2,000
Issuance $ Billions

$350
Revenue $ Millions

Global Rated Financial Bonds


(Annually)**

$300
$250
$200
$150
$100

$1,600
$1,200
$800
$400

$50
$0

$0
2007

2008
Banking

2009

2010

Insurance

2011

2012

2013

Managed Investments

2014
Other

2015

2007

2008

2009

2010

2011

2012

2013

2014

2015

Global Spec Grade Corporate Bond Issuance


Global Inv Grade Corporate Bond Issuance

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: Moodys Capital Markets Research Group, Dealogic. Note: Debt issuance categories do not directly correspond to Moodys revenue categorization.

May 10, 2016

42

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Financial Institutions: Revenue Diversification


Revenue* Distribution: Recurring vs. Transaction

Revenue* Distribution: Geography


100%

100%
80%

40%

41%

42%

40%

44%

42%

45%

39%

43%

80%

42%

66%

63%

65%

65%

60%

64%

65%

62%

63%

61%

34%

37%

35%

35%

40%

36%

35%

38%

37%

39%

60%

60%

40%

40%
60%

59%

58%

60%

56%

58%

55%

61%

57%

58%

20%

20%

0%

0%

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US

US

Transaction

Recurring

Revenue* Distribution: Product


100%

0%
6%

0%
6%

0%
5%

1%
5%

2%
4%

3%
5%

2%
4%

3%
5%

3%
4%

3%
4%

80%

25%

24%

26%

26%

27%

23%

29%

26%

26%

31%

69%

70%

69%

68%

67%

69%

65%

66%

67%

62%

60%
40%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Banking

Insurance

Managed Investments

Other

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.

May 10, 2016

43

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Public, Project and Infrastructure: Revenue and Issuance


Historical Revenue* Mix: By Quarter

$120

Long-Term Rated US Municipal Bond Issuance


(Quarterly)**

$120
Issuance $ Billions

Revenue $ Millions

$100
$80
$60
$40
$20

$80
$60
$40
$20

$0
-$20

$100

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16
$0
1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

Public Finance and Sovereign


Project & Infrastructure Finance
Other

Historical Revenue* Mix: By Year

$400

Issuance $ Billions

$350
Revenue $ Millions

Long-Term Rated US Municipal Bond Issuance


(Annually)**

$500

$300
$250
$200
$150

$400
$300
$200

$100
$100
$50
$0

$0
2007

2008

2009
2010
2011
2012
2013
Public Finance and Sovereign
Project & Infrastructure Finance
Other

2014

2015

2007

2008

2009

2010

2011

2012

2013

2014

2015

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
**Sources: Thomson SDC, Moodys Corporation. Note: Debt issuance categories do not directly correspond to Moodys revenue categorization.

May 10, 2016

44

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Public, Project and Infrastructure: Revenue Diversification


Revenue* Distribution: Recurring vs. Transaction

Revenue* Distribution: Geography


100%

100%

80%

80%
64%

65%

63%

63%

65%

60%

68%

64%

63%

65%

67%

39%

40%

42%

36%

38%

44%

44%

40%

41%

58%

61%

60%

58%

64%

62%

56%

56%

60%

59%

60%
40%

40%
20%

42%

36%

35%

37%

37%

35%

32%

36%

37%

35%

20%

33%

0%

0%

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non - US

US

Transaction

Recurring

Revenue* Distribution: Product


100%

0%

0%

0%

0%

80%

44%

44%

49%

51%

56%

56%

51%

49%

0%

0%

0%

0%

0%

0%

44%

46%

49%

46%

46%

40%

56%

54%

51%

54%

54%

60%

60%
40%
20%
0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Public Finance and Sovereign

Project & Infrastructure Finance

Other

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.

May 10, 2016

45

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics: Financial Overview


Historical Revenue* Mix: By Quarter

$350

$1,200

Professional Services
Enterprise Risk Solutions
Research, Data and
Analytics

$250
$200
$150
$100
$50

$1,000
Revenue $ Millions

Revenue $ Millions

$300

Historical Revenue* Mix: By Year

$800
$600
$400
$200

$0

$0
1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2008 2009 2010 2011 2012 2013 2014 2015

Revenue* Distribution: Product


100%

9%

80%

28%

13%

13%

16%

14%

14%

13%

12%

13%

13%

29%

29%

31%

29%

30%

32%

38%

33%

31%

58%

58%

54%

57%

56%

55%

50%

54%

57%

60%
40%
63%

20%
0%

FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16

Revenue* Distribution: Geography

100%
80%

100%
42%

43%

45%

44%

49%

48%

45%

44%

46%

49%

60%

20%

80%
60%

40%
58%

57%

55%

56%

51%

52%

55%

56%

54%

51%

Revenue* Distribution: Recurring vs. Transaction

80%

77%

77%

73%

77%

76%

75%

70%

74%

76%

20%

23%

23%

27%

23%

24%

25%

30%

26%

24%

40%
20%

0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Non-US

US

*Historical data has been adjusted to conform with current information and excludes intercompany revenue.
Percentages have been rounded and may not total to 100%.

0%
FY11 FY12 FY13 FY14 1Q15 2Q15 3Q15 4Q15 FY15 1Q16
Transaction

Recurring

May 10, 2016

46

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Historically, Rising Rates have not had a Significant


Impact on Moodys Revenue
MCO Revenue and Interest Rates
MIS Revenue

MA Revenue

MCO Revenue

10-yr U.S. Treasury Yield (R)*


9%

$4,000
+120bps

7.8%

$3,500

7%

$3,000
$ Millions

8%

6.5%

6%
$2,500

5.8%
+100bps

$2,000

+200bps

5%

4.7%

4%
$1,500

+180bps

3.3%

3.0%

3%
2.2%

$1,000

2%

2.3%
1.8%

$500

1%

$0

0%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

*10-yr Treasury Yields are represented by the rate at the end-of-period. Source: www.treasury.gov

May 10, 2016

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

MIS Revenue vs. Rated Issuance*


Year-over-Year
Percent Change

2011

2012

2013

2014

2015

2011-2015
CAGR

1Q16

Issuance

2%

11%

1%

5%

-5%

3%

-12%

Revenue

12%

20%

9%

9%

3%

10%

-13%

Global Non-Financial Bonds and US HY Bank Loans (L)


Global Structured Finance (L)

Issuance $ Trillions

$1.9
$4.0

U.S. Municipal Bonds (L)

MIS Revenue (R)

$2.1

$2.3

$2.3

$2.5

$1.6

$2.0

$3.0

Revenue $ Billions

$5.0

Global Financial Bonds (L)

$1.5

$2.0

$1.0

$0.6

$0.5

$1.0

$0.5

$0.0

$0.0
2011

2012

2013

2014

2015

1Q15

1Q16

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
*Rated global investment grade bonds, global high yield bonds, US high yield bank loans, global structured finance, and US municipal issuance.
Source: Moodys Capital Markets Research Group, Dealogic, AB Alert, CM Alert, Thomson SDC. US High Yield Bank Loans represent Moodys rated new US bank loan programs.

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys Analytics Global Banking Regulatory Radar


EMEA
Revised SA
operational risk

Concentration &
Large Exposures

Restrictions use
internal models for
CR RWA
Concentration
Large Exposures
NSFR

TLAC2
Revised SA
approach CR
Revised SA
operational risk

IFRS 9
Leverage
Ratio
IRRBB review
New securitization
framework

CVA review
FRTB

Revised SA
approach CR

BoE/PRA ST

CVA review

FRTB

Restrictions use
internal models for
CR RWA

Leverage
Ratio

BoE/PRA ST

TLAC2
IRRBB review
Restrictions use internal
models for CR RWA

NSFR
IFRS 9
Vickers reform

New securitization
framework

LCR1
ECB Anacredit

NCUA RBC rule for


large credit unions
FRTB

Enhanced P3
disclosures

CVA review

CCAR /
Reg cap CCP
DFAST
TLAC2
3
SA-CCR
exposures
Enhanced P3
LCR1
disclosures Leverage
BoE/PRA ST
SA-CCR3
CCAR /
Ratio
EBA Liquidity
DFAST
G-SIB
Revised SA
Enhanced P3
monitoring
NSFR
Reg
cap
CCP
2
Surcharge
approach CR
disclosures
Financial
exposures
CECL
D-SIB
conglomerates
FSB Data
3
BCBS
239
SA-CCR
framework4
CCAR /
Initiative5
ST
IFRS 9
BoE/PRA ST
Reporting fin.
DFAST
SEC
Liquidity
rules
FSB Data
conglomerates
Supplementary
Capital rules to
EU-wide ST
5
(ETF,
mutual
funds)
Initiative
CA res. mortgage
leverage ratio
large foreign banks
SSFA
for
CCAR /DFA ST
PRA CAD/Pillar 2
IRRBB
BCBS
Concentration
Reg cap CCP
securitizations
1
LCR
review
FBO ST
239
Large Exposures
exposures
LCR1
BCBS 239
FDSF
G-SIB
FSB Data
Revised SA
New
securitization
1
LCR,
G-SIB
LCR
2
Surcharge
Initiative5
operational risk
framework
NSFR
Surcharge2

2020 and beyond


2019
2018
2017
2016
2017
2018
2019 2020 and beyond
Source: Moodys Analytics market research as of May 2016.
1. The implementation of the LCR in the EU will be: 60% in 2015, 70% in 2016, 80% in 2017 and 100% in 2018. In the US, advanced-approach banks will have to meet 80% of the
LCR by January 1, 2015 and 100% of the ratio by Jan. 2017.
2. The G-SIB surcharge will expand the conservation buffer, subject to a 3 year phase in period. G-SIBs will be required to hold a minimum Total Loss-Absorbing Capacity (TLAC)
of at least 16% from 2019 and 18% by 2022.
3. The new standardized approach (SA-CCR) replaces both the Current Exposure Method (CEM) and the Standardized Method (SM) in the capital adequacy framework.
4. Regulatory framework for domestic systemically important banks in Australia
5. Phase 2 was implemented in 2015, focused on liquidity and Phase 3 will be implemented in 2016 and will focus on additional balance sheet data. banks (G-SIBs).

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Moodys is a Seasoned Capital Markets Issuer


Public Bond Offerings
2010: $500m 10yr bond
2012: $500m 10yr bond
2013: $500m 10yr bond
2014: $450m 5yr bond
$300m 30yr bond
2015: 500m 12yr bond
$300m 30yr bond****

Private Placement
2007: $300m 10yr note

$4,000
$3,500

2.5x
2.0x

$ in millions

$3,000
$2,500

1.5x

$2,000
1.0x

$1,500
$1,000

0.5x

$500
$0

0.0x
2005

2006

2007

2008

EBITDA** (L)

2009

2010

2011

Debt Outstanding*** (L)

2012

2013

2014

2015 TTM*
1Q16
Gross Debt/EBITDA (R)

Successfully issued across the maturity curve and in multiple currencies


Initial maturities ranging from 5-year to 30-year
Debt denominated in USD and EUR
*Trailing twelve months.
**Amount is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure to its comparable US GAAP measure.
***Debt outstanding at end of period.
****On November 13, 2015, Moodys issued $300 million of 5.25% senior unsecured notes due 2044 in a reopening of its existing series of such notes.

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

2015

2016

Moodys Global Presence

3,441

7,311

10,752

US employees

non-US employees

total employees*

3,202

6,768

9,970

US employees

non-US employees

total employees**

*As of March 31, 2016.


**As of March 31, 2015.

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51

Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Reconciliation of Non-GAAP Financial Measures to


GAAP
Adjusted Operating Income and Adjusted Operating Margin Reconciliation
(in $ millions)

2011

2012

2013

2014

2015

$888.4

$1,077.4

$1,234.6

$1,439.1

$1,473.4

39.0%

39.5%

41.5%

43.2%

42.3%

79.2

93.5

93.4

95.6

113.5

Restructuring

Goodwill Impairment Charge

12.2

$967.6

$1,183.1

$1,328.0

$1,534.7

$1,586.9

42.4%

43.3%

44.7%

46.0%

45.5%

As Reported Operating Income


Operating Margin
Add Adjustment:
Depreciation & Amortization

Adjusted Operating Income


Adjusted Operating Margin

Moody's Corporation Operating Margin


Guidance Reconciliation
2016F*
Approximately
41%
Projected Operating Margin - GAAP
Projected impact from Depreciation
Approximately 4%
& Amortization
Projected Adjusted Operating
Approximately 45%
Margin

Moody's Corporation Free Cash Flow


Guidance Reconciliation
(in $ millions)
Cash Flow from Operations

2016F*
Approximately $1.1 billion

Less Capital Expenditures

Approximately $125 million

Free Cash Flow

Approximately $1.0 billion

*Guidance as of April 29, 2016.

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Reconciliation of Non-GAAP Financial Measures to


GAAP (cont.)
Moody's Corporation EPS Reconciliation

Diluted EPS - GAAP

2010
$2.15

2011
$2.49

2012
$3.05

2013
$3.60

2014
$4.61

2015
$4.63

2016F*
$4.55 - $4.65

Legacy Tax

(0.02)

(0.03)

(0.06)

(0.09)

(0.03)

(0.03)

0.14

(0.37)

$2.13

$2.46

$2.99

$3.65

$4.21

$4.60

$4.55 - $4.65

Impact of litigation settlement


ICRA Gain
Diluted EPS Non-GAAP

*Guidance as of April 29, 2016.


Note: Table may not sum to total due to rounding.

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Introduction | Financial Overview | Capital Markets Overview | Moodys Investors Service | Moodys Analytics | Conclusion | Appendix

Reconciliation of Non-GAAP Financial Measures to


GAAP (cont.)
Moody's Corporation EBITDA Reconciliation
($ Millions)

2006

2007

2008

2009

2010

2011

2012

2013

2014

Net Income attributable to Moody's

$753.9

$701.5

$457.6

$402.0

$507.8

$571.4

$690.0

$804.5

$988.7

$506.6 $415.0
($3.0)
$24.3
$39.5
$42.9
$1,297.0 $1,183.7

$268.2
$52.2
$75.1
$853.1

$239.1
$33.4
$64.1
$738.6

$201.0
$52.5
$66.3
$827.6

$261.8 $324.3 $353.4 $455.0


$430.0
$62.1
$63.8
$91.8 $116.8
$115.1
$79.2
$93.5
$93.4
$95.6
$113.5
$974.5 $1,171.6 $1,343.1 $1,656.1 $1,599.9

Provision for Income Taxes


Interest Expense, Net
Depreciation & Amortization
EBITDA

2015
$941.3

Note: Table may not sum to total due to rounding.

May 10, 2016

54

Website: http://ir.moodys.com
Email:

ir@moodys.com

May 10, 2016

55

2016 Moodys Corporation, Moodys Investors Service, Inc., Moodys Analytics, Inc. and/or their licensors
and affiliates (collectively, MOODYS). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES
(MIS) ARE MOODYS CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES,
CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND
RESEARCH PUBLICATIONS PUBLISHED BY MOODYS (MOODYS PUBLICATIONS) MAY INCLUDE
MOODYS CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT
COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODYS DEFINES CREDIT RISK AS THE
RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY
COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS
DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET
VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODYS OPINIONS INCLUDED IN
MOODYS PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODYS
PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK
AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODYS ANALYTICS, INC. CREDIT
RATINGS AND MOODYS PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR
FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODYS PUBLICATIONS ARE NOT AND DO NOT
PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES.
NEITHER CREDIT RATINGS NOR MOODYS PUBLICATIONS COMMENT ON THE SUITABILITY OF AN
INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODYS ISSUES ITS CREDIT RATINGS AND
PUBLISHES MOODYS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH
INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY
THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODYS CREDIT RATINGS AND MOODYS PUBLICATIONS ARE NOT INTENDED FOR USE
BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL
INVESTORS TO USE MOODYS CREDIT RATINGS OR MOODYS PUBLICATIONS WHEN MAKING AN
INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER
PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO,
COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE
REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED,
REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY
PERSON WITHOUT MOODYS PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODYS from sources believed by it to be accurate and
reliable. Because of the possibility of human or mechanical error as well as other factors, however, all
information contained herein is provided AS IS without warranty of any kind. MOODY'S adopts all necessary
measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources
MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,
MOODYS is not an auditor and cannot in every instance independently verify or validate information received
in the rating process or in preparing the Moodys Publications.
To the extent permitted by law, MOODYS and its directors, officers, employees, agents, representatives,
licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or
incidental losses or damages whatsoever arising from or in connection with the information contained herein
or the use of or inability to use any such information, even if MOODYS or any of its directors, officers,
employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such
losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or
damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned
by MOODYS.

To the extent permitted by law, MOODYS and its directors, officers, employees, agents, representatives,
licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any
person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any
other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any
contingency within or beyond the control of, MOODYS or any of its directors, officers, employees, agents,
representatives, licensors or suppliers, arising from or in connection with the information contained herein or
the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR
OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODYS IN ANY FORM OR MANNER
WHATSOEVER.
Moodys Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moodys Corporation
(MCO), hereby discloses that most issuers of debt securities (including corporate and municipal bonds,
debentures, notes and commercial paper) and preferred stock rated by Moodys Investors Service, Inc. have,
prior to assignment of any rating, agreed to pay to Moodys Investors Service, Inc. for appraisal and rating
services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain
policies and procedures to address the independence of MISs ratings and rating processes. Information
regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities
who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more
than 5%, is posted annually at www.moodys.com under the heading Investor Relations Corporate
Governance Director and Shareholder Affiliation Policy.
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian
Financial Services License of MOODYS affiliate, Moodys Investors Service Pty Limited ABN 61 003 399
657AFSL 336969 and/or Moodys Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as
applicable). This document is intended to be provided only to wholesale clients within the meaning of section
761G of the Corporations Act 2001. By continuing to access this document from within Australia, you
represent to MOODYS that you are, or are accessing the document as a representative of, a wholesale
client and that neither you nor the entity you represent will directly or indirectly disseminate this document or
its contents to retail clients within the meaning of section 761G of the Corporations Act 2001.
MOODYS credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the
equity securities of the issuer or any form of security that is available to retail investors. It would be reckless
and inappropriate for retail investors to use MOODYS credit ratings or publications when making an
investment decision. If in doubt you should contact your financial or other professional adviser.
Additional terms for Japan only: Moody's Japan K.K. (MJKK) is a wholly-owned credit rating agency
subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moodys Overseas Holdings Inc., a
wholly-owned subsidiary of MCO. Moodys SF Japan K.K. (MSFJ) is a wholly-owned credit rating agency
subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (NRSRO).
Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings
are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for
certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the
Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2
and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and
municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as
applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for
appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

May 10, 2016

56