S&P Global (NYSE: SPGI) today reported second-quarter 2020 results with revenue of $1,943 million, an increase of 14% compared to the same period last year. Net income increased 43% to $792 million and diluted earnings per share increased 46% to $3.28 primarily due to revenue growth in S&P Global Ratings and reduced expenses from COVID-19 related management actions.

Adjusted net income increased 37% to $822 million and adjusted diluted earnings per share increased 40% to $3.40 primarily due to revenue growth in S&P Global Ratings and reduced expenses across the Company from COVID-19 related management actions. The adjustments in the second quarter of 2020 were associated with restructurings in Corporate, a gain on a divestment, as well as deal-related amortization and Kensho retention-related expenses.

“Companies, particularly in the U.S., have turned to the bond market to raise liquidity during this COVID-19 pandemic while central banks have initiated bond purchase programs to support market liquidity. The need for our products has increased during these uncertain times and we are proud that our people and our organization have delivered the insights and essential intelligence that the market expects from us.  In fact, all four of our divisions delivered solid growth during the quarter,” said Douglas L. Peterson, President and Chief Executive Officer of S&P Global.  “These are unprecedented times and over 99% of our employees continue to work from home.  I am proud of their efforts not only to ensure that all of our operations continue uninterrupted, but also to innovate with new product launches and advance our investment and productivity programs while supporting the markets and our customers with relevant and timely ratings, benchmarks, research, data and analytics.”

Profit Margin: The Company’s operating profit margin increased 920 basis points to 56.9% and the adjusted operating profit margin increased 740 basis points to 58.7% primarily due to revenue growth in S&P Global Ratings and reduced expenses due to management actions in response to COVID-19.

Return of Capital:  No new share repurchases were made in the second quarter while our existing ASR program was in place.  On July 27, this ASR program was completed.  During the second quarter, the Company paid $162 million in dividends.  During the first half of 2020, the Company has returned $1.47 billion to shareholders consisting of $1.15 billion in share repurchases and $323 million in dividends.

Ratings:  Revenue increased 26% to $1,006 million in the second quarter primarily due to strong global investment-grade issuance, including record quarterly U.S. investment-grade issuance.  Transaction revenue increased 48% to $624 million due primarily to an increase in global bond issuance partially offset by decreased bank loan rating activity.  Non-transaction revenue increased 1% to $382 million.

Operating profit increased 51% to $693 million and the operating profit margin improved 1,150 basis points to 68.9% compared to the second quarter of 2019.  Adjusted operating profit increased 47% to $695 million and the adjusted operating profit margin improved 1,020 basis points to 69.1%.

S&P Dow Jones Indices:  S&P Dow Jones Indices LLC is a majority-owned subsidiary.  The consolidated results are included in S&P Global’s income statement and the portion related to the 27% noncontrolling interest is removed in net income attributable to noncontrolling interests.

Revenue increased 2% to $240 million in the second quarter of 2020 due primarily to a 20% increase in exchange-traded derivative fees and a 6% gain in data and custom subscriptions.

Asset-linked fees include fees associated with ETFs, mutual funds, and certain over-the-counter derivatives.  Revenue from ETFs is the largest component of asset-linked fees, and average ETF AUM associated with the Company’s indices increased 2% year-over-year.  However, quarter-ending ETF AUM associated with our indices was $1,616 billion, a 6% increase from 2Q 2019.

Operating profit increased 5% to $171 million and the operating profit margin increased 220 basis points to 71.4%.  Adjusted operating profit increased 5% to $172 million and the adjusted operating profit margin improved 210 basis points to 71.9%.  Operating profit attributable to the Company increased 5% to $125 million.  Adjusted operating profit attributable to the Company increased 5% to $126 million.

Market Intelligence:  Revenue increased 6% to $516 million in the second quarter of 2020 with growth in Data Management Solutions, Credit Risk Solutions, and Desktop as well as the addition of 451 Research.  Quarterly operating profit increased 16% to $159 million and the operating profit margin improved 280 basis points to 30.8% as increased revenue outpaced modestly higher expenses.  Adjusted operating profit increased 13% to $177 million and adjusted operating profit margin improved 220 basis points to 34.4%.

Platts:  Revenue increased 2% to $217 million with growth in both the core subscription business and Global Trading Services.  Quarterly operating profit increased 12% to $124 million and the operating profit margin increased 500 basis points to 57.3% due to revenue growth and lower expenses.  Adjusted operating profit increased 9% to $127 million and adjusted operating profit margin increased 400 basis points to 58.3%.

Corporate Unallocated Expense:  This expense decreased from $58 million in the prior period to $42 million in the second quarter of 2020 due primarily to a reduction in restructuring expenses versus the prior period.  Adjusted Corporate Unallocated expense declined from $35 million in the prior period to $30 million due primarily to lower rental expense from a reduction in the Company’s real estate footprint and lower professional fees, partially offset by a contribution to the S&P Global Foundation made in 2020.

Provision for Income Taxes:  The Company’s effective tax rate decreased to 21.7% in the second quarter of 2020 compared to 23.0% in the same period last year and the Company’s adjusted effective tax rate decreased to 21.7% in the second quarter of 2020 compared to 23.1% in the same period last year.   Both declines were due primarily to the successful resolution of tax examinations in various jurisdictions.

Balance Sheet and Cash Flow:  Cash, cash equivalents, and restricted cash at the end of the second quarter were $2.7 billion. In the first six months of 2020, cash provided by operating activities was $1,617 million, cash used for investing activities was $186 million, and cash used for financing activities was $1,610 million.  Free cash flow in the first six months of 2020 was $1,507 million, an increase of $602 million from the same period in 2019, primarily due to an increase in net income and the timing of U.S. federal estimated tax payments.

Outlook:  Due to the uncertainties associated with COVID-19, S&P Global has analyzed several scenarios that are contingent on the depth and duration of the COVID-19 pandemic and its resulting impact on economic and market-specific drivers that may impact the Company’s businesses.  This quarter,  S&P Global has disclosed two specific scenarios as part of its second quarter 2020 earnings materials, with the “late 3Q recovery” being the baseline scenario at this point in time and the basis for the following revised guidance.  GAAP diluted EPS guidance is increased from a range of $9.50 to $9.70 to a new range of $10.25 to $10.45.  Adjusted diluted EPS guidance is increased from a range of $9.95 to $10.15 to a new range of $10.75 to $10.95. Additional details for these scenarios are presented on slides 43-47 of the second quarter 2020 earnings materials which are available at http://investor.spglobal.com/Quarterly-Earnings.

Comparison of Adjusted Information to U.S. GAAP Information:  The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G under the Securities Exchange Act of 1934. These measures are: adjusted diluted earnings per share, adjusted net income, adjusted operating profit and margin, organic revenue, adjusted Corporate Unallocated expense, adjusted effective tax rates, adjusted diluted EPS guidance, free cash flow, and free cash flow excluding certain items. The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP on Exhibits 5, 7 and 8. Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP measures are not available due to the challenges and impracticability with estimating some of the items. The Company is not able to provide reconciliations of such forward-looking non-GAAP financial measures because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted. Because of those challenges, reconciliations of such forward-looking non-GAAP financial measures are not available without unreasonable effort.

The Company’s non-GAAP measures include adjustments that reflect how management views our businesses. The Company believes these non-GAAP financial measures provide useful supplemental information that, in the case of non-GAAP financial measures other than free cash flow and free cash flow excluding certain items, enables investors to better compare the Company’s performance across periods, and management also uses these measures internally to assess the operating performance of its business, to assess performance for employee compensation purposes and to decide how to allocate resources. The Company believes that the presentation of free cash flow and free cash flow excluding certain items allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management and that such measures are useful in evaluating the cash available to us to prepay debt, make strategic acquisitions and investments, and repurchase stock. However, investors should not consider any of these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports.

Conference Call/Webcast Details:  The Company’s senior management will review the second quarter 2020 earnings results on a conference call scheduled for today, July 28, at 8:30 a.m. EDT.  Additional information presented on the conference call may be made available on the Company’s Investor Relations Website at http://investor.spglobal.com.

The Webcast will be available live and in replay at http://investor.spglobal.com/Quarterly-Earnings.

 


About S&P Global
S&P Global is the world’s foremost provider of credit ratings, benchmarks and analytics in the global capital and commodity markets, offering ESG solutions, deep data, and insights on critical business factors. We’ve been providing essential intelligence that unlocks opportunity, fosters growth, and accelerates progress for more than 160 years. Our divisions include S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices, and S&P Global Platts. For more information, visit www.spglobal.com.

Investor Relations:  http://investor.spglobal.com

Exhibit 1

S&P Global

Condensed Consolidated Statements of Income

Three and six months ended June 30, 2020 and 2019

(dollars in millions, except per share data)

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Revenue

$

1,943

$

1,704

14%

$

3,729

$

3,275

14%

Expenses

839

891

(6)%

1,720

1,757

(2)%

Gain on disposition

(1)

N/M

(8)

N/M

Operating profit

1,105

813

36%

2,017

1,518

33%

Other (income) expense, net

(10)

(6)

(61)%

(9)

97

N/M

Interest expense, net

40

37

8%

74

73

1%

Income before taxes on income

1,075

782

38%

1,952

1,348

45%

Provision for taxes on income

233

180

29%

421

293

44%

Net income

842

602

40%

1,531

1,055

45%

Less: net income attributable to noncontrolling interests

(50)

(47)

(6)%

(100)

(90)

(11)%

Net income attributable to S&P Global Inc.

$

792

$

555

43%

$

1,431

$

965

48%

Earnings per share attributable to S&P Global Inc. common shareholders:

Net income:

Basic

$

3.29

$

2.25

46%

$

5.92

$

3.92

51%

Diluted

$

3.28

$

2.24

46%

$

5.90

$

3.89

51%

Weighted-average number of common shares outstanding:

Basic

240.9

246.1

241.5

246.4

Diluted

241.9

247.4

242.6

247.9

Actual shares outstanding at period end

241.0

246.3

N/M – not meaningful

Note – % change in the tables throughout the exhibits are calculated off of the actual number, not the rounded number presented.

Exhibit 2

S&P Global

Condensed Consolidated Balance Sheets

June 30, 2020 and December 31, 2019

(dollars in millions)

(unaudited)

June 30,

December 31,

2020

2019

Assets:

Cash, cash equivalents, and restricted cash

$

2,684

$

2,886

Other current assets

1,775

1,826

Total current assets

4,459

4,712

Property and equipment, net

299

320

Right of use assets

626

676

Goodwill and other intangible assets, net

5,107

4,999

Other non-current assets

614

641

Total assets

$

11,105

$

11,348

Liabilities and Equity:

Unearned revenue

1,850

1,928

Other current liabilities

1,190

1,165

Long-term debt

3,950

3,948

Lease liabilities — non-current

578

620

Pension, other postretirement benefits and other non-current liabilities

866

883

Total liabilities

8,434

8,544

Redeemable noncontrolling interest

2,403

2,268

Total equity

268

536

Total liabilities and equity

$

11,105

$

11,348

Exhibit 3

S&P Global

Condensed Consolidated Statements of Cash Flows

Six months ended June 30, 2020 and 2019

(dollars in millions)

(unaudited)

2020

2019

Operating Activities:

Net income

$

1,531

$

1,055

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation

39

41

Amortization of intangibles

61

63

Deferred income taxes

3

30

Stock-based compensation

22

33

Gain on disposition

(8)

Pension settlement charges, net of taxes

2

85

Other

41

50

Net changes in other operating assets and liabilities

(74)

(347)

Cash provided by operating activities

1,617

1,010

Investing Activities:

Capital expenditures

(18)

(46)

Acquisitions, net of cash acquired

(185)

(4)

Changes in short-term investments and other

17

(3)

Cash used for investing activities

(186)

(53)

Financing Activities:

Dividends paid to shareholders

(323)

(281)

Distributions to noncontrolling interest holders, net

(92)

(59)

Repurchase of treasury shares

(1,153)

(644)

Exercise of stock options and employee withholding tax on share-based payments, and other

(42)

(24)

Cash used for financing activities

(1,610)

(1,008)

Effect of exchange rate changes on cash

(23)

13

Net change in cash, cash equivalents, and restricted cash

(202)

(38)

Cash, cash equivalents, and restricted cash at beginning of period

2,886

1,958

Cash, cash equivalents, and restricted cash at end of period

$

2,684

$

1,920

Exhibit 4

S&P Global

Operating Results by Segment

Three and six months ended June 30, 2020 and 2019

(dollars in millions)

(unaudited)

Three Months

Six Months

Revenue

Revenue

2020

2019

% Change

2020

2019

% Change

Ratings

$

1,006

$

801

26%

$

1,831

$

1,497

22%

Market Intelligence

516

487

6%

1,034

969

7%

Platts

217

213

2%

433

420

3%

Indices

240

235

2%

499

452

10%

Intersegment Elimination

(36)

(32)

(11)%

(68)

(63)

(8)%

Total revenue

$

1,943

$

1,704

14%

$

3,729

$

3,275

14%

Expenses

Expenses

2020

2019

% Change

2020

2019

% Change

Ratings (a)

$

313

$

341

(8)%

$

618

$

669

(8)%

Market Intelligence (b)

357

350

2%

728

698

4%

Platts (c)

93

102

(9)%

197

209

(6)%

Indices (d)

69

72

(5)%

146

140

5%

Corporate Unallocated expense (e)

42

58

(28)%

91

104

(13)%

Intersegment Elimination

(36)

(32)

(11)%

(68)

(63)

(8)%

Total expenses

$

838

$

891

(6)%

$

1,712

$

1,757

(3)%

Operating Profit

Operating Profit

2020

2019

% Change

2020

2019

% Change

Ratings (a)

$

693

$

460

51%

$

1,213

$

828

47%

Market Intelligence (b)

159

137

16%

306

271

13%

Platts (c)

124

111

12%

236

211

12%

Indices (d)

171

163

5%

353

312

13%

Total reportable segments

1,147

871

32%

2,108

1,622

30%

Corporate Unallocated expense (e)

(42)

(58)

28%

(91)

(104)

13%

Total operating profit

$

1,105

$

813

36%

$

2,017

$

1,518

33%

(a)

The three and six months ended June 30, 2019 includes employee severance charges of $11 million. Additionally, amortization of intangibles from acquisitions of $2 million is included for the three and six months ended June 30, 2020, and $1 million for the three and six months ended June 30, 2019.

(b)

The three and six months ended June 30, 2020 includes a gain on disposition of $1 million and  $8 million, respectively, and the six months ended June 30, 2020 includes employee severance charges of $2 million. The three and six months ended June 30, 2019 includes employee severance charges of $1 million. Additionally, amortization of intangibles from acquisitions of $20 million and $19 million is included for the three months ended June 30, 2020 and 2019, respectively, and $39 million and $37 million for the six months ended June 30, 2020 and 2019, respectively.

(c)

The three and six months ended June 30, 2019 includes employee severance charge of $1 million. Additionally, amortization of intangibles from acquisitions of $2 million and $3 million is included for the three months ended June 30, 2020 and 2019, respectively, and $4 million and $7 million for the six months ended June 30, 2020 and 2019, respectively.

(d)

Amortization of intangibles from acquisitions of $1 million is included for the three months ended June 30, 2020 and 2019 and $3 million for the six months ended June 30, 2020 and 2019.

(e)

The three and six months ended June 30, 2020 includes employee severance charges of $3 million and $10 million, respectively, and Kensho retention related expense of $2 million and $7 million, respectively. The three and six months ended June 30, 2019 includes Kensho retention related expense of $5 million and $11 million, respectively, employee severance charges of $7 million, and a lease impairment of $5 million. Additionally, amortization of intangibles from acquisitions of $7 million and $13 million is included for the three and six months ended June 30, 2020, respectively, and $7 million and $14 million for the three and six months ended June 30, 2019, respectively.

Exhibit 5

S&P Global

Operating Results – Reported vs. Adjusted

Non-GAAP Financial Information

Three and six months ended June 30, 2020 and 2019

(dollars in millions, except per share amounts)

Adjusted Operating Profit

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Ratings

Operating profit

$

693

$

460

51%

$

1,213

$

828

47%

Non-GAAP Adjustments (a)

11

11

Deal-related amortization

2

1

2

1

Adjusted operating profit

$

695

$

472

47%

$

1,216

$

841

45%

Market Intelligence

Operating profit

$

159

$

137

16%

$

306

$

271

13%

Non-GAAP Adjustments (b)

(1)

1

(7)

1

Deal-related amortization

20

19

39

37

Adjusted operating profit

$

177

$

157

13%

$

338

$

310

9%

Platts

Operating profit

$

124

$

111

12%

$

236

$

211

12%

Non-GAAP Adjustments (c)

1

1

Deal-related amortization

2

3

4

7

Adjusted operating profit

$

127

$

116

9%

$

241

$

218

10%

Indices

Operating profit

$

171

$

163

5%

$

353

$

312

13%

Deal-related amortization

1

1

3

3

Adjusted operating profit

$

172

$

164

5%

$

355

$

315

13%

Total segments

Operating profit

$

1,147

$

871

32%

$

2,108

$

1,622

30%

Non-GAAP Adjustments (a) (b) (c)

(1)

14

(7)

14

Deal-related amortization

26

24

48

48

Adjusted segment operating profit

$

1,171

$

909

29%

$

2,149

$

1,683

28%

Corporate Unallocated expense

Corporate Unallocated expense

$

(42)

$

(58)

(28)%

$

(91)

$

(104)

(13)%

Non-GAAP adjustments (d)

5

16

17

23

Deal-related amortization

7

7

13

14

Adjusted Corporate Unallocated expense

$

(30)

$

(35)

(14)%

$

(60)

$

(67)

(10)%

Total SPGI

Operating profit

$

1,105

$

813

36%

$

2,017

$

1,518

33%

Non-GAAP adjustments (a) (b) (c) (d)

4

30

11

37

Deal-related amortization

32

31

61

63

Adjusted operating profit

$

1,141

$

874

31%

$

2,089

$

1,617

29%

Adjusted Other (Income) Expense, Net

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Other (income) expense, net

$

(10)

$

(6)

(61)%

$

(9)

$

97

N/M

Non-GAAP Adjustments (e)

(3)

(3)

(113)

Adjusted other income, net

$

(13)

$

(6)

N/M

$

(12)

$

(16)

23%

Adjusted Provision for Income Taxes

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Provision for income taxes

$

233

$

180

29%

$

421

$

293

44%

Non-GAAP adjustments (a) (b) (c) (d) (e)

1

7

4

37

Deal-related amortization

7

7

14

15

Adjusted provision for income taxes

$

242

$

195

24%

$

440

$

345

28%

Adjusted Effective Tax Rate

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Adjusted operating profit

$

1,141

$

874

31%

$

2,089

$

1,617

29%

Adjusted other income, net

(13)

(6)

(12)

(16)

Interest expense, net

40

37

74

73

Adjusted income before taxes on income

$

1,114

$

843

32%

$

2,027

$

1,560

30%

Adjusted provision for income taxes

$

242

$

195

$

440

$

345

Adjusted effective tax rate 1

21.7

%

23.1

%

21.7

%

22.1

%

1 The adjusted effective tax rate is calculated by dividing the adjusted provision for income taxes by the adjusted income before taxes on income.

Adjusted Net Income attributable to SPGI and Adjusted Diluted EPS

(unaudited)

2020

2019

% Change

Net Income attributable to SPGI

Diluted EPS

Net Income attributable to SPGI

Diluted EPS

Net Income attributable to SPGI

Diluted EPS

Three Months

As reported

$

792

$

3.28

$

555

$

2.24

43%

46%

Non-GAAP adjustments (a) (b) (c) (d) (e)

5

0.02

23

0.09

Deal-related amortization

25

0.10

23

0.09

Adjusted

$

822

$

3.40

$

601

$

2.43

37%

40%

Six Months

As Reported

$

1,431

$

5.90

$

965

$

3.89

48%

51%

Non-GAAP adjustments (a) (b) (c) (d) (e)

9

0.04

113

0.45

Deal-Related Amortization

47

0.19

47

0.19

Adjusted

$

1,487

$

6.13

$

1,125

$

4.54

32%

35%

N/M – not meaningful

Note – Totals presented may not sum due to rounding.

Note – Adjusted operating margin for Ratings, Market Intelligence, Platts and Indices was 69%, 34%, 58% and 72% for the three months ended June 30, 2020. Adjusted operating margin for the Company was 59% for the three months ended June 30, 2020. Adjusted operating margin for Ratings, Market Intelligence, Platts and Indices was 66%, 33%, 56% and 71% for the six months ended June 30, 2020. Adjusted operating margin for the Company was 56% for the six months ended June 30, 2020.

(a)

The three and six months ended June 30, 2019 includes employee severance charges of $11 million ($9 million after-tax).

(b)

The three and six months ended June 30, 2020 includes a gain on disposition of $1 million ($1 million after-tax) and $8 million ($8 million after-tax), respectively, and the six months ended June 30, 2020 includes employee severance charges of $2 million ($2 million after-tax). The three and six months ended June 30, 2019 includes employee severance charges of $1 million ($1 million after-tax).

(c)

The three and six months ended June 30, 2019 includes employee severance charge of $1 million ($1 million after-tax).

(d)

The three and six months ended June 30, 2020 includes employee severance charges of $3 million ($2 million after-tax) and $10 million ($8 million after-tax), respectively, and Kensho retention related expense of $2 million ($2 million after-tax) and $7 million ($5 million after-tax), respectively. The three and six months ended June 30, 2019 includes Kensho retention related expense of $5 million ($4 million after-tax) and $11 million ($9 million after-tax), respectively, employee severance charges of $7 million ($5 million after-tax), and a lease impairment of $5 million ($4 million after-tax).

(e)

The three and six months ended June 30, 2020 includes a pension related charge of $3 million ($2 million after-tax). The six months ended June 30, 2019 includes a pension related charge of $113 million ($85 million after-tax).

Exhibit 6

S&P Global

Revenue Information

Three and six months ended June 30, 2020 and 2019

(dollars in millions)

Revenue by Type

(unaudited)

Ratings

Market Intelligence

Platts

Indices

Intersegment Elimination

2020

2019

% Change

2020

2019

% Change

2020

2019

% Change

2020

2019

% Change

2020

2019

% Change

Three Months

Non-Subscription / Transaction (a)

624

422

48%

13

12

12%

1

3

(66)%

N/M

N/M

Non-Transaction (b)

382

379

1%

N/M

N/M

N/M

(36)

(32)

(11)%

Subscription (c)

N/M

503

471

7%

201

195

3%

43

40

6%

N/M

Asset-Linked Fees (d)

N/M

4

(97)%

N/M

153

159

(4)%

N/M

Sales Usage-Based Royalties (e)

N/M

N/M

15

15

5%

44

36

20%

N/M

Total revenue

$

1,006

$

801

26%

$

516

$

487

6%

$

217

$

213

2%

$

240

$

235

2%

$

(36)

$

(32)

(11)%

Six Months

Non-Subscription / Transaction (a)

1,056

746

42%

26

21

25%

3

5

(40)%

N/M

N/M

Non-Transaction (b)

775

751

3%

N/M

N/M

N/M

(68)

(63)

(8)%

Subscription (c)

N/M

1,007

939

7%

398

386

3%

89

80

11%

N/M

Asset-Linked Fees (d)

N/M

1

9

(92)%

N/M

312

302

4%

N/M

Sales Usage-Based Royalties (e)

N/M

N/M

32

29

12%

98

70

39%

N/M

Total revenue

$

1,831

$

1,497

22%

$

1,034

$

969

7%

$

433

$

420

3%

$

499

$

452

10%

$

(68)

$

(63)

(8)%

N/M – not meaningful

(a)

Non-subscription / transaction revenue is primarily related to ratings of publicly-issued debt, bank loan ratings and corporate credit estimates.

(b)

Non-transaction revenue is primarily related to surveillance of a credit rating, annual fees for customer relationship-based pricing programs, fees for entity credit ratings and global research and analytics at CRISIL. Non-transaction revenue also includes an intersegment revenue elimination, which mainly consists of the royalty of $31 million and $63 million for the three and six months ended June 30, 2020, respectively, and $29 million and $58 million for the three and six months ended June 30, 2019 respectively, charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.

(c) 

Subscription revenue is related to credit ratings-related information products, Market Intelligence Desktop products, investment research products and other data subscriptions, real-time news, market data and price assessments, along with other information products.

(d)

Asset-linked fees is primarily related to fees based on assets underlying exchange-traded funds, mutual funds and insurance products.

(e)

Sales usage-based royalty revenue is primarily related to trading based fees from exchange-traded derivatives and licensing of its proprietary market price data and price assessments to commodity exchanges.

Revenue by Geographic Area

(unaudited)

U.S.

International

2020

2019

% Change

2020

2019

% Change

Three Months

Ratings

$

618

$

454

36%

$

388

$

347

12%

Market Intelligence

331

304

9%

185

183

1%

Platts

71

71

(1)%

146

142

3%

Indices

199

201

(1)%

41

34

19%

Intersegment elimination

(19)

(16)

16%

(17)

(16)

6%

Total revenue

$

1,200

$

1,014

18%

$

743

$

690

8%

Six Months

Ratings

$

1,112

$

852

30%

$

719

$

645

12%

Market Intelligence

669

611

9%

365

358

2%

Platts

142

141

1%

291

279

4%

Indices

422

384

10%

77

68

14%

Intersegment elimination

(37)

(31)

18%

(31)

(32)

(2)%

Total revenue

$

2,308

$

1,957

18%

$

1,421

$

1,318

8%

Exhibit 7

S&P Global

Non-GAAP Financial Information

Three and six months ended June 30, 2020 and 2019

(dollars in millions)

Computation of Free Cash Flow and Free Cash Flow Excluding Certain Items

(unaudited)

2020

2019

Cash provided by operating activities

$

1,617

$

1,010

Capital expenditures

(18)

(46)

Distributions to noncontrolling interest holders, net

(92)

(59)

Free cash flow

$

1,507

$

905

Settlements of prior-year tax audits

50

Payment of legal settlements

1

Free cash flow excluding certain items

$

1,507

$

956

S&P Global Organic Revenue

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Total revenue

$

1,943

$

1,704

14%

$

3,729

$

3,275

14%

Ratings acquisitions

(7)

(9)

Market Intelligence acquisition and divestitures

(10)

(8)

(20)

(15)

Platts acquisitions and divestiture

(2)

(1)

(5)

Total adjusted revenue

$

1,926

$

1,694

14%

$

3,699

$

3,255

14%

Organic revenue constant currency basis

$

1,933

$

1,694

14%

$

3,712

$

3,255

14%

Ratings Organic Revenue

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Ratings revenue

$

1,006

$

801

26%

$

1,831

$

1,497

22%

Acquisitions

(7)

(9)

Adjusted Ratings revenue                           

$

999

$

801

25%

$

1,822

$

1,497

22%

Market Intelligence Organic Revenue

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Market Intelligence revenue

$

516

$

487

6%

$

1,034

$

969

7%

Acquisition and divestitures

(10)

(8)

(20)

(15)

Adjusted Market Intelligence revenue        

$

506

$

479

5%

$

1,014

$

954

6%

Platts Organic Revenue

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Platts revenue

$

217

$

213

2%

$

433

$

420

3%

Acquisitions and divestiture

(2)

(1)

(5)

Adjusted Platts revenue                               

$

217

$

211

3%

$

432

$

415

4%

Indices Organic Revenue

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Indices revenue

$

240

$

235

2%

$

499

$

452

10%

Acquisitions and divestitures

Adjusted Indices revenue                            

$

240

$

235

2%

$

499

$

452

10%

Adjusted Indices Net Operating Profit

(unaudited)

Three Months

Six Months

2020

2019

% Change

2020

2019

% Change

Adjusted operating profit

$

172

$

164

5%

$

355

$

315

13%

Less: income attributable to NCI

46

44

94

84

Adjusted Indices Net Operating Profit       

$

126

$

120

5%

$

261

$

231

13%

Exhibit 8

S&P Global

Non-GAAP Guidance

Reconciliation of 2020 Non-GAAP Guidance

(unaudited)

Low

High

GAAP Diluted EPS

$

10.25

$

10.45

Deal-related amortization

0.40

0.40

Compensation for replacement equity awards and retention plans

0.04

0.04

Restructuring

0.05

0.05

Gain on disposition

(0.03)

(0.03)

Tax rate

0.04

0.04

Non-GAAP Diluted EPS

$

10.75

$

10.95

SOURCE S&P Global

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