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S&P Global (SPGI) Q1 Earnings Miss Estimates, Decrease Y/Y

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S&P Global Inc. (SPGI - Free Report) reported lower-than-expected first-quarter 2022 results.

Adjusted earnings per share (excluding $1.58 from non-recurring items) of $2.89 missed the consensus mark by 3.7% and decreased 14.8% year over year. Revenues of $2.39 billion missed the consensus estimate by 15.7% but improved 18.5% year over year, backed by strength across every segment, except the Ratings division.

Over the past year, shares of S&P Global have lost 7.5% compared with 20.1% decline of the industry it belongs to.  

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s check out the numbers in detail.

Segmental Revenues                     

Ratings revenues decreased 15% year over year to $868 million. Transaction revenues fell 31% year over year to $404 million due to a decrease in debt issuance across all categories. Non-transaction revenues improved 7% year over year to $464 million owing to growth in annual fees and CRISIL revenues.

Market Intelligence revenues were up 39% year over year to $727 million, primarily driven by growth in Data & Advisory Solutions, Desktop, Credit, Risk Solutions and Enterprise Solutions.

Commodity Insights revenues increased 51% to $363 million in the first quarter of 2022, primarily driven by Advisory & Transactional Services, Price Assessments,Energy, Resources Data & Insights.

S&P Dow Jones Indices revenues grew 19% to $322 million, backed by strength across asset-linked fees and exchange-traded derivative activity.

S&P Global Inc. Price, Consensus and EPS Surprise

S&P Global Inc. Price, Consensus and EPS Surprise

S&P Global Inc. price-consensus-eps-surprise-chart | S&P Global Inc. Quote

Operating Results

Segment wise, Ratings’ adjusted operating profit decreased 25% to $513 million while adjusted operating profit margin decreased 820 bps to 59.1%.

Market Intelligence’s adjusted pro forma operating profit increased 5% to $295 million while adjusted pro forma operating profit margin decreased 60 bps to 29%.

Commodity Insights adjusted pro forma operating profit increased 8% to $200 million and adjusted pro forma operating profit margin decreased 210 bps to 43%.

S&P Dow Jones’ adjusted pro forma operating profit increased 16% to $235 million. Adjusted pro forma operating profit margin improved 130 bps to 69.3%.

Balance Sheet and Cash Flow    

S&P Global exited first-quarter 2022 with cash, cash equivalents and restricted cash of $4.40 billion compared with $6.5 billion at the end of the prior quarter. Long-term debt was $11.33 billion compared with $4.1 billion reported at the end of fourth-quarter 2021.

SPGI generated $222 million of cash from operating activities in the reported quarter. Capital expenditures were $2 million. Free cash flow was $151 million.

During the first quarter, S&P Global returned $7.3 billion to its shareholders through a combination of $7 billion in the form of an accelerated share repurchase (ASR) agreement and $265 million of cash dividends paid out by SPGI and IHS Markit pre-merge.  

Currently, S&P Global carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2022 Outlook

Adjusted pro forma revenues are now expected to grow in low single digits from the prior guidance of mid-single-digit growth.

Adjusted pro forma  EPS guidance was updated to $13.00-$13.25 (prior view: $13.30-$13.50). The Zacks Consensus Estimate for the same is pegged at $13.31.

Guidance for adjusted pro forma free cash flow (excluding certain items) was also revised to a new range of $4.8-$4.9 billion (prior view: $4.9-$5.0 billion).

Earnings Snapshots

Within the broader Business Services sector, ManpowerGroup Inc. (MAN - Free Report) , Omnicom Group Inc. (OMC - Free Report) and Equifax Inc. (EFX - Free Report) recently reported first-quarter 2022 results.

ManpowerGroup reported impressive first-quarter 2022 results, with both earnings and revenues beating the Zacks Consensus Estimate. Quarterly adjusted earnings of $1.88 per share beat the consensus mark by 20.5% and improved 69.4% year over year. Revenues of $5.14 billion surpassed the consensus mark by 0.7% and inched up 4.5% year over year on a reported basis and 9.8% on a constant-currency (cc) basis.

Omnicom reported impressive first-quarter 2022 results as both earnings and revenues surpassed the Zacks Consensus Estimate. Earnings of $1.39 per share beat the consensus mark by 8.6% and increased 4.5% year over year, driven by a strong margin performance. Total revenues of $3.4 billion surpassed the consensus estimate by 5.4% but declined slightly year over year.

Equifax reported better-than-expected first-quarter 2022 results. Adjusted earnings of $2.22 per share beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. Revenues of $1.36 billion outpaced the consensus estimate by 2.4% and improved 12.4% year over year on a reported basis and 13% on a local-currency basis.


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