Tags: McGraw Hill | Profit | Earnings | Bond

McGraw Hill Profit Jumps as Bond Issues Spike

Thursday, 25 July 2013 09:00 AM

A busy quarter for corporate bond issuance helped lift profit for Standard & Poor's parent McGraw Hill Financial by 18 percent in the April-to-June period. The results easily topped Wall Street expectations, and the New York company raised its earnings forecast for the full year.

The financial information services provider said Thursday its net income for the second quarter rose 18 percent, to $254 million, or 91 cents per share. That compared with $216 million, or 76 cents per share, in the 2012 second quarter.

Excluding one-time costs, McGraw Hill said its adjusted net income was 92 cents per share.

Revenue rose 17 percent to $1.25 billion, from $1.07 billion last year.

Analysts, on average, were expecting profit of 81 cents per share, on revenue of $1.19 billion, according to FactSet.

Revenue at its Standard & Poor's Ratings Services jumped 24 percent to $599 million, reflecting increased issuance of corporate bonds and bank loan ratings, along with the ongoing recovery in structured finance, or complex securities like collateralized debt obligations.

Its data and research service, S&P Capital IQ, saw revenue rise 3 percent to $287 million.

The S&P Dow Jones Indices unit produced a 39 percent revenue gain, to $123 million. And its commodities and commercial markets unit, which includes energy and agricultural markets information provider Platts, posted an 8 percent bump in revenue, to $259 million.

McGraw Hill noted that a court in California last week declined its motion for dismissal of a federal lawsuit that accuses the company of giving falsely high ratings to mortgage investments that helped trigger the financial crisis. "The court's decision was not on the merits of the case," the company said in a statement, maintaining that it will have the chance to "demonstrate the independence of our ratings and the lack of merit to the Department of Justice's complaint" as the matter proceeds.

The government may seek up to $5 billion — several years' worth of profits for McGraw-Hill — in the case in Los Angeles. In February after the case was filed, McGraw Hill pledged to "vigorously defend" itself, a process likely to take several years to conclude.

McGraw Hill also noted that several pending actions taken by state attorneys general were consolidated and transferred to a single judge in New York City. Oral arguments in this case are slated to begin Oct. 4.

The legal issues aside, McGraw Hill raised its guidance for 2013 adjusted earnings per share to a range of $3.15 to $3.25, up from $3.10 to $3.20. Wall Street was expecting full-year profit of $3.21 per share, on average, with estimates ranging from $3.15 to $3.36.

Wednesday, the company announced the sale of Aviation Week to Penton for undisclosed terms. McGraw Hill said the sale is part of its strategy to sell non-core assets and invest in high growth businesses.

Shares of McGraw Hill Financial Inc. closed Wednesday at $59.48, up about 9 percent since the start of the year.

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A busy quarter for corporate bond issuance helped lift profit for Standard Poor's parent McGraw Hill Financial by 18 percent in the April-to-June period.
McGraw Hill,Profit,Earnings,Bond
Thursday, 25 July 2013 09:00 AM
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