Moody’s(US:MCO)2021-02-12 22:30Financial Data and Key Metrics Changes - Moody's achieved record financial results in 2020, with revenue growth of 11% and an increase in adjusted diluted EPS of 22% [9] - Adjusted operating income rose 16% to $2.7 billion, and adjusted operating margin expanded by 230 basis points to 49.7% [11] - For 2021, Moody's projects revenue to increase in the mid-single digit percent range, with adjusted diluted EPS forecasted to be between $10.30 and $10.70 [10][32] Business Line Data and Key Metrics Changes - Moody's Investors Service (MIS) generated $3.3 billion in revenue, up 15% from the prior year, while Moody's Analytics (MA) revenue totaled $2.1 billion, up 6% [9] - MA's recurring revenue now comprises over 90% of its total, driven by a strategic focus on subscription-based business [15] - In Q4 2020, MIS revenue increased by 2%, while MA revenue grew by 8% [24] Market Data and Key Metrics Changes - Credit market activity reached record levels in 2020, particularly for non-financial corporate issuance, which grew over 16% from its previous high in 2017 [14] - Investment grade issuance is projected to decline approximately 30% in 2021, while leveraged loan issuance is expected to grow by about 10% [33] - The global high-yield default rate is expected to decline below 5% by year-end 2021 [30] Company Strategy and Development Direction - Moody's aims to integrate and leverage data and analytic capabilities while investing in innovation to meet evolving customer needs [10] - The company is focused on expanding its presence in risk assessment markets, particularly in KYC and compliance solutions [19] - Recent acquisitions, including Cortera, are expected to enhance Moody's data offerings and support growth in various markets [22] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of resilience in scenario planning and the need for a holistic view of risk management in a complex environment [17] - The outlook for 2021 reflects assumptions regarding economic conditions, including a projected U.S. GDP increase of approximately 4% to 5% [30] - Management expressed confidence in the long-term growth opportunities driven by high demand for data analytics and insights [36] Other Important Information - Moody's plans to return approximately $2 billion to stockholders in 2021 through dividends and share repurchases [10] - The company made significant contributions to diversity and inclusion initiatives, as well as environmental sustainability efforts [12] Q&A Session All Questions and Answers Question: Margin outlook for 2021 - Management is focused on balancing margin expansion with necessary investments, projecting margins to remain around 49% to 50% for the year [38][40] Question: Issuance forecasts and flat revenue forecasts - Management expects issuance to be down modestly year-over-year, with a high single-digit percent decline, while recurring revenue growth is projected in the low to mid-single digits [44][50] Question: Thoughts on M&A strategy - Management remains open to both large and small acquisitions, focusing on opportunities that advance their strategic goals [56][58] Question: ESG revenue growth - ESG revenue is projected to grow by around 25% in 2021, with additional revenue expected from integrating ESG data into existing products [60] Question: Growth opportunities beyond KYC and compliance - Management sees strong demand for data and analytics on private companies, as well as growth in commercial real estate content and economic data [66]