Moody's Q4 Profit Up 29%, Revenues Beat View

(RTTNews) - Credit ratings agency Moody's Corp. (MCO) on Friday reported a 29 percent increase in profit for the fourth quarter from last year, reflecting higher revenues and margins as well as a tax benefit.

Revenues for the quarter beat analysts' expectations. Looking ahead, the company forecast financial results for fiscal 2014 in line with analysts' estimates.

The New York-based company reported net income for the fourth quarter of $206.7 million or $0.94 per share, up from $160.1 million or $0.70 per share in the prior-year quarter.

Excluding a legacy tax benefit of $0.09 per share, adjusted earnings for the quarter was $0.85 per share, compared to $0.70 per share in the year-ago period.

Revenues for the quarter grew 3 percent to $779.2 million from $754.2 million in the same quarter last year. Analysts polled by Thomson Reuters expected the company to report revenues of $743.87 million. Analysts' estimates typically exclude special items.

The company's U.S. revenue for the quarter rose 3 percent from the year-ago period to $417.2 million, while revenue generated outside the U.S. increased 3 percent to $362 million. Revenue generated outside the U.S. represented 46 percent of Moody's total revenue for the quarter, down from 47 percent in the year-ago period.

Total expenses for the quarter declined 5 percent to $467.3 million from $494.0 million in the year-ago period. Operating margin expanded 550 basis points to 40 percent from 34.5 percent last year.

Moody's effective tax rate for the quarter was 30.6 percent, compared with 31.5 percent for the prior-year period. The decline in the effective tax rate was primarily due to lower U.S. taxes on foreign income.

Total Moody's Investors Service or MIS global revenues for the quarter edged up 1 percent from last year to $522.8 million. Of this, global structured finance revenue rose 6 percent and financial institutions revenue grew 3 percent.

Meanwhile, corporate finance revenue edged down 1 percent, due to a decline in U.S. bond issuance. Public, project and infrastructure finance revenue declined 3 percent.

Total global revenue for Moody's Analytics rose 9 percent from last year to $256.4 million. Of this, research, data and analytics revenue increased 9 percent, enterprise risk solutions revenue rose 7 percent, and professional services revenue grew 16 percent.

For fiscal 2013, Moody's net income was $804.5 million or $3.60 per share, up from $690 million or $3.05 per share, in the prior year. Excluding items, adjusted earnings was $3.65 per share, compared to $2.99 per share last year.

Revenues for the year grew 9 percent to $2.97 billion from $2.73 billion in the previous year.

Street expected the company to report revenues of $2.94 billion for the year.

Looking ahead to fiscal 2014, Moody's forecasts earnings per share of $3.90 to $4.00 on revenue growth in the high single-digit percent range. Analysts expect the company to earn $3.91 per share for the year on revenue growth of 6.70 percent to $3.14 billion.

The company expects share repurchases for the year to be about $1 billion.

MCO closed Thursday's regular trading session at $76.77, up $2.22 or 2.98 percent on a volume of 1.24 million shares. In Friday's pre-market, the stock is adding $4.95 or 6.64 percent to $79.50.