The McGraw-Hill Companies (NYSE: MHP) today reported third quarter revenue of $1,953 million, an increase of 2% compared to the same period last year. McGraw-Hill Financial reported a 15% increase and McGraw-Hill Education reported an 11% decline. Net income from continuing operations decreased 14% to $314 million and diluted earnings per share decreased 9% to $1.10.
McGraw-Hill Financial: Businesses that make up what will be the new McGraw-Hill Financial reported revenue of $1,117 million and adjusted segment operating profit of $402 million, an increase of 15% and 21%, respectively, compared to the same period a year ago. McGraw-Hill Financial will include the following lines of business:
- Standard & Poor’s Ratings Services: Quarterly revenue exceeded $500 million for the first time in 19 quarters, increasing 22% to $502 million. This growth was almost entirely organic as the impact from the acquisition of Coalition Development Ltd. in July 2012 was minimal. Operating profit, which includes Growth and Value Plan costs, increased 24%.
- S&P Capital IQ / S&P Indices: Revenue increased 13% to $393 million. Organic growth accounted for 2% and new revenue from the Dow Jones Indexes as well as the acquisitions of QuantHouse, R2 Financial Technologies, and Credit Market Analysis Limited accounted for the balance. Operating profit, which includes Growth and Value Plan costs, decreased 11%. Adjusted operating profit increased 5% to $119 million.
- Commodities & Commercial Markets: Revenue increased 5% to $239 million. Operating profit, which includes Growth and Value Plan costs, increased 17%. Adjusted operating profit increased by 29% to $66 million in the third quarter, compared to the same period last year. Platts continued its record performance resulting in 13% revenue growth at Commodities to $121 million for the period. Petroleum product subscriptions, global trading services, and Bentek Energy® all contributed to double-digit growth. Commercial Markets’ revenue decreased 2% as gains at J.D. Power and Associates, which is on track to record its best year ever, were offset by modest declines in the rest of the segment.
McGraw-Hill Education: Revenue for the segment decreased 11% to $836 million. The growth in sales of digital products, which continues across all product lines, is impacting reported revenues. Approximately one third of the reported revenue decline during the third quarter is attributable to the deferral of revenue associated with digital and other subscription-based products. Excluding the impact of increased deferred revenue associated with the migration to a more subscription-centric business model, third quarter revenue decreased 7%.