Moody's Q1 Profit Rises, Beats View; Affirms 2014 Outlook

(RTTNews) - Credit ratings agency Moody's Corp. (MCO) on Friday reported a 16 percent increase in profit for the first quarter from last year, reflecting strong revenue growth at its analytics segment.

Earnings per share beat analysts' expectations, while revenues missed their estimates. The company also said its board of directors declared a regular quarterly dividend.

Raymond McDaniel, President and Chief Executive Officer of Moody's said, "Moody's results for the first quarter reflected continued strength in Moody's Analytics, as well as modest growth in Moody's Investors Service despite variable market conditions."

First-quarter net income attributable to the New York-based company rose to $218.0 million or $1.00 per share from $188.4 million or $0.83 per share in the year-ago period. Excluding a litigation settlement charge of $0.14, adjusted earnings per share for the prior-year quarter were $0.97.

On average, twelve analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share for the latest quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter grew 5 percent to $767.2 million from $731.8 million in the same period last year, but missed analysts' consensus revenue estimate of $770.18 million.

The company's U.S. revenue for the quarter rose 4 percent from the year-ago period to $425.6 million, while non-U.S. revenue increased 6 percent to $341.6 million. Revenue generated outside the U.S. represented 45 percent of Moody's total revenue for the quarter, consistent with the year-ago period.

Total operating expenses for the quarter declined 4 percent from the year-ago quarter to $434.2 million. Operating margin expanded to 43.4 percent from 38.3 percent in the same period last year.

Total Moody's Investors Service or MIS global revenues for the first quarter edged up 1 percent from last year to $525.8 million.

Of this, corporate finance revenue rose 2 percent, reflecting increased U.S. investment grade bond issuance as well as higher revenue from U.S. and European bank loans, in addition to increased monitoring revenue across all regions.

Global structured finance revenue increased 2 percent, while financial institutions revenue declined 1 percent and public, project and infrastructure finance revenue decreased 3 percent.

Total global revenue for Moody's Analytics rose 15 percent from last year to $241.4 million. Of this, research, data and analytics revenue increased 9 percent and enterprise risk solutions revenue rose 13 percent.

Professional services revenue grew 45 percent, primarily reflecting the December 2013 acquisition of Amba Investment Services and continued growth in Copal Partners.

Looking ahead to fiscal 2014, Moody's reaffirmed its outlook for earnings per share in a range of $3.90 to $4.00, on revenue growth in the high-single-digit percent revenue growth range. Street currently is looking for earnings of $3.95 per share for the year on revenues of $3.22 billion.

The company continues to expect total share repurchases for the year to be about $1 billion, subject to available cash, market conditions and other ongoing capital allocation decisions.

In a separate statement, Moody's said that on April 15, its board of directors declared a regular quarterly dividend of 28 cents per share of MCO Common Stock. The dividend will be payable on June 10, 2014 to stockholders of record at the close of business on May 20, 2014.

MCO is trading at $79.67, up $0.02 or 0.03 percent on a volume of 757,560 shares.