Double Digit Growth:  For the full year, revenue increased 7% to $6.70 billion.  2019 net income increased 8% to $2.12 billion and diluted earnings per share increased 11% to $8.60.  2019 adjusted net income increased 9% to $2.35 billion and adjusted diluted earnings per share increased 12% to $9.53.

Impressive Profit Margin: For the full year, the Company’s operating profit margin improved by 360 basis points to 48.2% as the Company continued to achieve revenue growth and successfully deliver productivity improvements.  The adjusted operating profit margin improved by 140 basis points to 50.2% in 2019.

Strategy Update: At our Investor Day in May 2018, the Company initiated several medium-term aspirational  targets.  The first was a $100 million target for cost reduction savings.  The Company estimates that, on a run-rate basis, $85 million in savings was achieved by year-end 2019.  The second was to improve the adjusted operating profit margin for the Company from 46.5% at the end of 2017 to the low-50’s over the next few years.  After achieving 230 basis points of improvement in 2018, the Company achieved an additional 140 basis points of improvement in 2019, reaching 50.2%.  The Company will continue to work toward full achievement of these aspirational targets.

Ratings:

4th Quarter, 2019: Revenue increased 24% to $820 million.  Non-transaction revenue increased 2% to $391 million during the quarter primarily due to increased fees associated with surveillance and intersegment royalties.  Transaction revenue increased 55% to $429 million in the fourth quarter primarily due to strong bond rating activity offset partially by lower bank loan rating revenue.

Operating profit increased 33% to $473 million due to increased revenue.  Operating profit margin increased 370 basis points to 57.7% in the quarter primarily due to increased revenue and productivity improvements offset partially by increased incentive compensation in the current period.  Adjusted operating profit increased 29% to $473 million and adjusted operating profit margin improved 220 basis points to 57.7% in the quarter.

2019:  Revenue increased 8% to $3.11 billion due primarily to increased global bond issuance offset partially by lower bank loan rating revenue.  Operating profit increased 15% to $1.76 billion and operating profit margin improved 380 basis points to 56.8% primarily due to revenue growth and productivity improvements offset partially by increased incentive compensation.  Adjusted operating profit increased 10% to $1.78 billion compared to 2018 and adjusted operating profit margin improved 120 basis points to 57.2%.

S&P Dow Jones Indices:

S&P Dow Jones Indices LLC is a majority-owned subsidiary.  The consolidated results are included in S&P Global’s income statement and the portion related to the 27% noncontrolling interest is removed in net income attributable to noncontrolling interests.

Industry inflows into exchange-traded products reached $509 billion in 2019, of which $58 billion was added to ETFs associated with our indices.  Year-end 2019 ETF AUM associated with our indices increased 30% from year-end 2018 to $1.7 trillion as a result of both stock market gains and fund inflows.   Market volatility was lower in 2019 than 2018 resulting in decreased revenue associated with exchange-traded derivatives.

4th Quarter, 2019:  Revenue increased 9% to $233 million in the fourth quarter of 2019.  Revenue improved primarily due to increased asset-linked fees offset partially by decreased derivatives trading activity.  Average AUM in exchange-traded funds based on SPDJI’s indices was $1.6 trillion in the quarter, an increase of 16% versus the fourth quarter of 2018.

Operating profit increased 10% to $157 million and operating profit margin increased 80 basis points to 67.2% primarily due to stronger revenue.  Operating profit attributable to the Company increased 9% to $115 million.  Adjusted operating profit increased 10% to $158 million.  Adjusted operating profit margin increased 70 basis points to 67.8%.  Adjusted operating profit attributable to the Company increased 9% to $116 million.

2019:  Revenue increased 10% to $918 million and operating profit increased 12% to $630 million.   Operating profit margin increased 130 basis points to 68.6%.  Operating profit attributable to the Company increased 12% to $460 million.  Adjusted operating profit increased 12% to $635 million.  Adjusted operating profit margin increased 120 basis points to 69.2%.   Adjusted operating profit attributable to the Company increased 12% to $465 million.

Market Intelligence:

4th Quarter, 2019:  Reported revenue increased 5% to $502 million in the fourth quarter led by growth in Data Management Solutions and Credit Risk Services.  Organic revenue grew 6%.  Operating profit decreased 10% to $145 million and operating profit margin declined 480 basis points to 28.9%, primarily due to increased investment spending.  Adjusted operating profit decreased 6% to $172 million and adjusted operating profit margin declined 410 basis points to 34.4%.

2019:  Revenue increased 7% to $1.96 billion.  Operating profit increased 11% to $607 million and operating profit margin increased 120 basis points to 31.0% primarily due to revenue gains and productivity improvements offset partially by investment spending.  Adjusted operating profit grew 7% to $670 million and adjusted operating profit margin improved 10 basis points to 34.2%.

Platts:

4th Quarter, 2019:  Reported revenue increased 1% to $213 million in the fourth quarter and organic revenue increased 2%.  Operating profit increased 8% to $105 million and operating profit margin increased 310 basis points to 49.3% primarily due to cost reductions.  Adjusted operating profit increased 6% to $107 million and adjusted operating profit margin improved 220 basis points to 50.4%.

2019:  Revenue increased 4% to $844 million.  Operating profit increased 15% to $438 million and operating profit margin increased 490 basis points to 51.9%.  Adjusted operating profit increased 6% to $424 million and adjusted operating profit margin improved 110 basis points to 50.2%.

Outlook:  The Company is introducing 2020 guidance with reported revenue expected to increase mid to high single-digits.  On a U.S. GAAP basis, diluted EPS is expected to be in the range of $10.00 to $10.20 and adjusted diluted EPS is expected to be in the range of $10.40 to $10.60.  Adjusted diluted EPS excludes amortization of intangibles related to acquisitions and Kensho retention plans.  Free cash flow excluding certain items is expected to be in a range of $2.6 billion to $2.7 billion.

Source: S&P Global