The McGraw-Hill Companies (NYSE: MHP) reported record revenue of $1,331 million in the first quarter, an increase of 6% compared to the same period last year. 

McGraw-Hill Financial:  Businesses that make up what will be McGraw-Hill Financial reported revenue of $1,035 million and operating profit of $357 million, an increase of 8% and 10%, respectively, compared to the same period a year ago.  McGraw-Hill Financial will include the following lines of business:

  • S&P Capital IQ / S&P Indices: 

Total Revenue increased 9% to $353 million and operating profit increased 11% to $107 million.  

Revenue of S&P Capital IQ, which includes Integrated Desktop Solutions, Enterprise Solutions, and Research & Analytics, increased by 10% to $274 million.  Growth in subscription and platform enhancements enabled S&P Capital IQ to gain share and increase its number of clients to more than 4,000, up 11% compared to 2011.  Also, with the continued integration of TheMarkets.com and the Global Credit Portal into the S&P Capital IQ platform, cross-selling opportunities are being created to offer new capabilities to existing customers.  Enterprise Solutions benefited from regulations which increased the demand for securities identifiers such as CUSIP and ratings data.

Revenue for S&P Indices grew 5% to $79 million as growth in ETF assets under management more than offset a decline in exchange-traded derivatives.  Year-over-year ETF assets under management based on S&P’s indices increased 11% to $358 billion.  Looking forward, S&P Indices continues to expect regulatory approval of its joint venture with CME Group by mid-year.  International revenue increased 16% to $108 million in the first quarter and represented 30% of total revenue for this segment.

  • Standard & Poor’s Ratings Services: Revenue increased 5% to $466 million and operating profit decreased 2% to $186 million.  Transaction revenue increased 10% to $194 million compared to the same period last year driven by an increase in U.S. public finance issuance of 61%.  U.S. corporate issuance increased 8% benefitting from record speculative-grade issuance.  European corporate issuance declined 10% as non-financial corporate issuance growth of 31% was offset by a 27% decline in financial services issuance.  Worldwide structured finance issuance declined 14%.  Non-transaction revenue grew by 2% to $272 million in the first quarter compared to the same period last year.  Non-transaction revenue represented 58% of S&P Ratings’ total revenue compared to 60% for the same period last year.  Non-transaction revenue includes annual contracts, surveillance fees, and a royalty from S&P Capital IQ / S&P Indices for the right to use and distribute S&P Ratings’ content.  International revenue, benefitting from strong European non-financial corporate issuance and continued growth atCRISIL, grew 7%, outpacing domestic growth of 4%.  International revenue represented 47% of total revenue.  Foreign currency negatively impacted revenue by $5 million.

Operating profit was down slightly due to targeted investments in new employees to support the growth of Corporate and Government ratings and growth in emerging markets.  Legal expenses, while down sequentially, were also up versus a year ago.

  • Commodities & Commercial: Revenue increased 13% to $233 million and operating profit grew by 64% to $64 million in the first quarter compared to the same period last year.  The business includes brands that have great recognition within their respective industries including Platts, J.D. Power and Associates, McGraw-Hill Construction, and Aviation Week.  Platts is one of the premier brands within the Corporation and drove the Commodities business’ revenue to $118 million and 22% growth during the period.  Excluding the acquisition of Steel Business Briefing, which was not included in first quarter 2011 results, the Commodities business revenue was $115 million and grew 18%.  Growth in Commercial was led by J.D. Power and Associates which realized greater penetration of its syndicated research studies as well as increased proprietary research and consulting services.
  • McGraw-Hill Education:  Revenue for the segment declined 2% to $296 million and operating loss improved 13% to ($65) million in the first quarter compared to the same period last year.  The first quarter is the seasonally weakest each year.  The improvement in operating loss was in part the result of restructuring actions that were implemented in the fourth quarter of 2011.

The Corporation continues to make progress on the Growth and Value Plan and remains on track to establish two separate industry leaders by year-end. The Corporation has received a ruling from the Internal Revenue Service agreeing to the tax-free status for the spin-off of McGraw-Hill Education.

Source: McGraw-Hill Press Release