Moody's Corp (NYSE:MCO) Q3 2020 Earnings Conference Call October 29, 2020 11:30 AM ET Company Participants Shivani Kak - Head, IR Raymond McDaniel - President, CEO & Director Robert Fauber - EVP, COO & Director Mark Kaye - SVP & CFO Conference Call Participants Kevin McVeigh - Crédit Suisse Manav Patnaik - Barclays Bank Toni Kaplan - Morgan Stanley Alexander Kramm - UBS Investment Bank Judah Sokel - JPMorgan Chase & Co. Craig Huber - Huber Research Partners Jeffrey Silber - BMO Capital Markets Jake Williams ...

[Glossary of Terms and Abbreviations](index=5&type=section&id=GLOSSARY%20OF%20TERMS%20AND%20ABBREVIATIONS) This section provides definitions for key terms, abbreviations, and acronyms used throughout the report to ensure clarity and understanding - This section defines key terms, abbreviations, and acronyms, including the two main business segments, **Moody's Investors Service (MIS)** and **Moody's Analytics (MA)**, along with various financial instruments and accounting standards[3](index=3&type=chunk)[5](index=5&type=chunk)[7](index=7&type=chunk) [PART I. FINANCIAL INFORMATION](index=17&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls [Item 1. Financial Statements](index=17&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020, and 2019, along with detailed explanatory notes [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,435 | $1,214 | $2,725 | $2,356 | | **Operating Income** | $710 | $483 | $1,302 | $945 | | **Net Income Attributable to Moody's** | $509 | $310 | $997 | $683 | | **Diluted EPS** | $2.69 | $1.62 | $5.27 | $3.56 | Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $3,963 | $3,679 | | **Total Assets** | $11,298 | $10,265 | | **Total Liabilities** | $10,061 | $9,428 | | **Total Shareholders' Equity** | $1,232 | $831 | Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $977 | $755 | | **Net Cash used in Investing Activities** | ($823) | ($53) | | **Net Cash from (used in) Financing Activities** | $123 | ($1,186) | [Notes to Condensed Consolidated Financial Statements](index=26&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates in two reportable segments: **Moody's Investors Service (MIS)** for credit ratings and assessments, and **Moody's Analytics (MA)** for financial intelligence and analytical tools[36](index=36&type=chunk)[37](index=37&type=chunk) - On January 1, 2020, the company adopted new accounting standards for credit losses (ASU 2016-13) and internal-use software (ASU 2018-15), which did not have a material impact on the financial statements[38](index=38&type=chunk) Revenue by Segment (Six Months Ended June 30, in millions) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | **MIS External Revenue** | $1,732 | $1,409 | | **MA External Revenue** | $993 | $947 | | **Total MCO Revenue** | $2,725 | $2,356 | - On February 13, 2020, the company acquired **100% of Regulatory DataCorp Inc. (RDC)**, a provider of anti-money laundering and know-your-customer data services, for a total consideration of **$702 million**[94](index=94&type=chunk)[95](index=95&type=chunk) - The acquisition resulted in **$494 million of goodwill** assigned to the MA segment[96](index=96&type=chunk) - Total long-term debt increased to **$6.33 billion** as of June 30, 2020, from **$5.58 billion** at year-end 2019[148](index=148&type=chunk) - This was primarily due to the issuance of **$700 million in 3.75% senior notes due 2025** and **$300 million in 3.25% senior notes due 2050** during the first half of 2020[150](index=150&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on the company's financial condition and operational results, covering COVID-19 impact, critical accounting estimates, segment performance, liquidity, and non-GAAP measures [The Company and COVID-19 Impact](index=70&type=section&id=The%20Company%20and%20COVID-19%20Impact) - Moody's operates through two segments: **MIS (credit ratings)** and **MA (financial intelligence)**[183](index=183&type=chunk) - The company is actively monitoring the impact of the COVID-19 pandemic, noting that while it has operated effectively with a remote workforce, the crisis creates significant uncertainty for future financial results[185](index=185&type=chunk)[189](index=189&type=chunk) - In response to COVID-19 uncertainty, the company took steps to maximize liquidity, including adding **$700 million in long-term borrowings** and suspending its share repurchase program[191](index=191&type=chunk) - It also plans to utilize tax deferrals permitted under the **CARES Act**[192](index=192&type=chunk) [Results of Operations](index=74&type=section&id=Results%20of%20Operations) Q2 2020 vs. Q2 2019 Performance Summary (in millions, except per share data) | Metric | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,435 | $1,214 | 18% | | **Operating Income** | $710 | $483 | 47% | | **Diluted EPS** | $2.69 | $1.62 | 66% | | **Adjusted Diluted EPS** | $2.81 | $2.07 | 36% | H1 2020 vs. H1 2019 Performance Summary (in millions, except per share data) | Metric | H1 2020 | H1 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $2,725 | $2,356 | 16% | | **Operating Income** | $1,302 | $945 | 38% | | **Diluted EPS** | $5.27 | $3.56 | 48% | | **Adjusted Diluted EPS** | $5.55 | $4.14 | 34% | - **MIS Segment:** Q2 revenue grew **27% to $938 million**, driven by a **47% increase in Corporate Finance (CFG) revenue** from strong corporate debt issuance[235](index=235&type=chunk) - This was partially offset by a **28% decline in Structured Finance (SFG) revenue** due to lower CLO and CMBS activity[241](index=241&type=chunk) - Q2 Adjusted Operating Margin expanded to **64.0%** from **60.1%**[242](index=242&type=chunk) - **MA Segment:** Q2 revenue grew **5% to $497 million (6% organic growth)**, led by **16% growth in Research, Data & Analytics (RD&A)** and **12% in Enterprise Risk Solutions (ERS)**[253](index=253&type=chunk)[254](index=254&type=chunk) - Growth was driven by demand for KYC/compliance solutions and inorganic contributions from acquisitions[256](index=256&type=chunk) - Q2 Adjusted Operating Margin was **28.7%**, slightly up from **28.2%**[256](index=256&type=chunk) [Liquidity and Capital Resources](index=108&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary (Six Months Ended June 30, in millions) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $977 | $755 | $222 | | **Net Cash used in Investing Activities** | ($823) | ($53) | ($770) | | **Net Cash from (used in) Financing Activities** | $123 | ($1,186) | $1,309 | | **Free Cash Flow** | $915 | $716 | $199 | - The increase in operating cash flow was driven by higher Adjusted Operating Income and deferred tax payments[310](index=310&type=chunk) - The increase in cash used for investing reflects the **~$700 million acquisition of RDC**[311](index=311&type=chunk) - The shift in financing cash flow was due to **$700 million in net debt issuance in H1 2020** versus a **$450 million repayment in H1 2019**, and **$362 million lower share repurchases**[312](index=312&type=chunk) - The company suspended its share repurchase program late in Q1 2020 to preserve liquidity amid COVID-19 uncertainty[318](index=318&type=chunk) - As of June 30, 2020, approximately **$81 million** remained under the October 2018 authorization, with an additional **$1.0 billion program** authorized for future use[319](index=319&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=119&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details changes in the company's derivative portfolio since year-end 2019, including new interest rate and cross-currency swaps to manage financial risks - In Q1 2020, the company entered into interest rate swaps with a notional amount of **$500 million** to convert fixed-rate debt to a floating rate based on 3-month USD LIBOR[354](index=354&type=chunk) - The company also entered into new cross-currency swaps in Q1 2020 to exchange **€450 million for $500 million**, designated as net investment hedges to mitigate FX exposure on its euro-denominated net investments[355](index=355&type=chunk) [Controls and Procedures](index=119&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2020, with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of **June 30, 2020**[357](index=357&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls, despite the workforce shifting to remote work[358](index=358&type=chunk) [PART II. OTHER INFORMATION](index=120&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, other significant information, and a list of exhibits filed with the report [Legal Proceedings](index=120&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on legal matters, referring the reader to Note 19, "Contingencies," in the Notes to Condensed Consolidated Financial Statements - The company directs investors to **Note 19** of the financial statements for information regarding ongoing legal proceedings and contingencies[360](index=360&type=chunk) [Risk Factors](index=120&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the significant risk factors and uncertainties previously disclosed in its Annual Report on Form 10-K and Q1 2020 Form 10-Q - There have been no material changes from the significant risk factors previously disclosed in the **2019 Form 10-K** and **Q1 2020 Form 10-Q**[361](index=361&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=120&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's purchases of its own equity securities during Q2 2020, primarily shares surrendered by employees for tax obligations, and notes remaining share repurchase authorization - During Q2 2020, a total of **2,302 shares** were purchased, all of which were surrendered by employees to satisfy tax withholding obligations related to vested restricted stock[362](index=362&type=chunk) - As of June 30, 2020, approximately **$81 million** remained under the October 2018 share repurchase program[362](index=362&type=chunk) - An additional **$1 billion program** was approved in December 2019 to commence after the current one is completed[362](index=362&type=chunk) [Other Information](index=120&type=section&id=Item%205.%20Other%20Information) The company discloses a new restructuring program approved on July 29, 2020, primarily in response to the COVID-19 pandemic, involving real estate lease rationalization and expected savings - On **July 29, 2020**, a new restructuring program was approved to rationalize real estate leases in response to the COVID-19 pandemic[364](index=364&type=chunk) - The program is expected to result in total pre-tax charges of **$25 to $35 million**, primarily non-cash, and generate annualized savings of approximately **$5 to $6 million**[364](index=364&type=chunk) [Exhibits](index=121&type=section&id=Item%206.%20Exhibits) This section lists all the exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files in Inline XBRL format - The report includes certifications from the CEO and CFO pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[366](index=366&type=chunk) - Interactive data files (**Inline XBRL**) are also filed as exhibits with this report[366](index=366&type=chunk)

Moody's Corporation (NYSE:MCO) Q2 2020 Earnings Conference Call July 30, 2020 11:30 AM ET Company Participants Shivani Kak - Head of Investor Relations Ray McDaniel - President & Chief Executive Officer Mark Kaye - Chief Financial Officer Rob Fauber - Chief Operating Officer Conference Call Participants Judah Sokel - JP Morgan Alexander Kramm - UBS Toni Kaplan - Morgan Stanley Kevin McVeigh - Credit Suisse Manav Patnaik - Barclays Bill Warmington - Wells Fargo Craig Huber - Huber Research Partners Owen Lau ...

Financial Performance - Moody's reported a net income of $487 million for the three months ended March 31, 2020, compared to $374 million for the same period in 2019, reflecting a year-over-year increase of 30.3%[15]. - Comprehensive income attributable to Moody's was $373 million for the three months ended March 31, 2020, up from $363 million in the prior year, representing a 2.8% increase[15]. - Total revenue for the first quarter of 2020 reached $1,290 million, an increase of 13% compared to $1,142 million in the same period of 2019[50]. - Total revenue for the three months ended March 31, 2020, was $1.29 billion, an increase from $1.14 billion in the same period of 2019, representing a growth of approximately 12.3%[57]. - Adjusted Operating Income for the consolidated entity was $649 million, compared to $519 million in the prior year, reflecting a 25.1% increase[156]. - Operating income for Q1 2020 was $592 million, reflecting a 28% increase from $462 million in Q1 2019[193]. - Diluted EPS increased by 33% to $2.57, compared to $1.93 in the same quarter of 2019, driven by higher operating income[191]. - The operating margin improved to 45.9%, up 540 basis points from 40.5% in the prior year, reflecting strong revenue growth[191]. Revenue Breakdown - Ratings revenue totaled $783 million, up 17.7% from $665 million year-over-year[52]. - Corporate finance (CFG) revenue increased to $453 million, a 27.7% rise from $355 million in the prior year[54]. - Research, data and analytics (RD&A) revenue grew to $358 million, representing a 16.3% increase from $308 million in the same quarter of 2019[52]. - Total external revenue for the MA segment was $496 million, up 5.1% from $472 million year-over-year[54]. - The U.S. contributed $503 million to the MIS segment, a 22.4% increase from $411 million in the same quarter of 2019[54]. - Non-U.S. revenue for the MIS segment was $291 million, up 12.3% from $259 million year-over-year[54]. - The United States accounted for $714 million of total revenue, an increase from $612 million in the same period of 2019[157]. - The EMEA region generated $363 million in revenue, up from $333 million year-over-year[157]. - The Asia-Pacific region's revenue increased slightly to $136 million from $132 million in the prior year[157]. Expenses and Liabilities - The company reported total expenses of $698 million for the three months ended March 31, 2020, up from $680 million in the prior year[156]. - Total current liabilities increased to $2,351 million as of March 31, 2020, compared to $1,912 million at December 31, 2019, an increase of 23.0%[18]. - Long-term debt increased to $6,303 million as of March 31, 2020, up from $5,581 million at December 31, 2019, representing a rise of 12.9%[18]. - The company reported an increase in salaries and benefits liabilities to $160 million as of March 31, 2020, from $152 million at the end of 2019[117]. - The amortization expense for acquired intangible assets was $28 million for the first quarter of 2020, compared to $26 million for the same period in 2019[106]. Cash Flow and Investments - Net cash provided by operating activities was $345 million for the three months ended March 31, 2020, compared to $367 million for the same period in 2019, a decrease of 6.0%[20]. - Net cash used in investing activities totaled $772 million for the three months ended March 31, 2020, compared to $7 million for the same period in 2019, indicating a significant increase in investment outflows[20]. - The company issued $700 million in notes during the financing activities for the three months ended March 31, 2020[20]. - Cash and cash equivalents rose to $2,141 million at the end of the period, up from $1,832 million at the beginning of the period, marking an increase of 16.9%[20]. Strategic Initiatives - Moody's continues to focus on expanding its subscription-based revenue streams, which are critical for long-term growth and stability[8]. - The company has made strategic acquisitions, including Regulatory DataCorp Inc. and Vigeo Eiris, to enhance its risk and compliance intelligence offerings[8]. - The Company completed acquisitions of RiskFirst, ABS Suite, and Regulatory DataCorp, which will impact year-over-year comparative results[187]. - The company is closely monitoring the impact of COVID-19, particularly in the MIS segment, where significant market disruption has been observed[186]. Accounting and Compliance - Moody's is adapting to new accounting standards, including updates to revenue recognition and credit loss measurement, which may impact future financial reporting[8]. - The company recorded a provision for expected credit losses of $24 million, primarily due to the estimated effects of COVID-19[44]. - The company has implemented policies to comply with the "expected credit loss" impairment model, refining the grouping of receivables based on risk characteristics[33]. - The effective tax rate (ETR) for the three months ended March 31, 2020, was 13.7%, an increase from 9.2% in the prior year, primarily due to changes in IRS regulations[70]. Market and Economic Impact - Moody's is closely monitoring the impact of COVID-19 on its business, with potential material impacts on revenue and cash flows[37]. - The company has suspended its share repurchase program to conserve cash amid the ongoing uncertainty[38]. - The company faced a penalty of approximately $35,000 imposed by SEBI related to credit ratings, which is currently under appeal[108]. - The company is addressing ongoing inquiries and allegations from SEBI, which may impact future operating results and goodwill[108].

Moody's Corporation (NYSE:MCO) Q1 2020 Earnings Conference Call April 30, 2020 11:30 AM ET Company Participants Shivani Kak - Head of IR Ray McDaniel - President & CEO Mark Kaye - CFO Rob Fauber - COO Steve Tulenko - President of MA Mike West - President of MIS Conference Call Participants Alex Cram - UBS Michael Cho - JPMorgan Bill Warmington - Wells Fargo Andrew Nicholas - William Blair Toni Kaplan - Morgan Stanley George Tong - Goldman Sachs Jeff Silber - BMO Capital Markets Craig Huber - Huber Research ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . COMMISSION FILE NUMBER 1-14037 MOODY'S CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 13-3998945 (STATE OF INCORPORATION) (I.R.S. ...

Moody's Corporation (NYSE:MCO) Q4 2019 Earnings Conference Call February 12, 2020 11:30 AM ET Company Participants Shivani Kak - Head of IR Ray McDaniel - President & CEO Mark Kaye - CFO Rob Fauber - COO Conference Call Participants Manav Patnaik - Barclays Michael Cho - JPMorgan Alex Cram - UBS Toni Kaplan - Morgan Stanley Andrew Nicholas - William Blair Jeff Silber - BMO Capital Markets George Tong - Goldman Sachs Craig Huber - Huber Research Partners Shlomo Rosenbaum - Stifel Steven Chang - Cantor Fitzge ...