MSCI Inc. (NYSE: MSCI), a leading global provider of investment
decision support tools, including indices, portfolio risk and
performance analytics and corporate governance services, today
announced results for the first quarter ended March 31, 2011. For
comparative purposes, selected results excluding the impact of
acquisitions are presented, as are pro forma results as if MSCI had
acquired RiskMetrics Group, Inc. (“RiskMetrics”) on December 1,
2009. In December 2010, MSCI changed its fiscal year end from
November 30 to December 31 of each year, effective with
the calendar year reporting cycle beginning January 1,
2011.
(Note: Percentage changes are referenced to the comparable
period in fiscal year 2010, unless otherwise noted.)
- Operating revenues increased 83.5% to
$223.3 million in first quarter 2011. Compared to pro forma 2010,
revenues grew by 12.7%.
- Net income increased by 21.8% to $33.5
million in first quarter 2011. Compared to pro forma 2010, net
income grew by 17.5%.
- Adjusted EBITDA (defined below) grew by
76.3% to $104.5 million. Compared to pro forma first quarter 2010,
Adjusted EBITDA grew by 23.6%. Compared to pro forma first quarter
2010, Adjusted EBITDA margin expanded to 46.8% from 42.6%.
- Diluted EPS for first quarter 2011 rose
3.8% to $0.27 from $0.26.
- First quarter 2011 Adjusted EPS
(defined below) rose 38.7% to $0.43 from $0.31.
Henry A. Fernandez, Chairman and CEO, said, “MSCI had a strong
start to 2011, delivering double digit top and bottom-line growth.
Our pro forma revenues grew by 12.7% and our pro forma Adjusted
EBITDA grew by 23.6%.
“MSCI continued to benefit from strong demand for our equity
indices and risk management analytics products and services, as
evidenced by double digit annual increases in sales of both product
lines. Our run rate grew 4.9% sequentially and 14.7% versus the pro
forma calendar first quarter of 2010,” added Mr. Fernandez.
Table 1: MSCI Inc. Selected Financial Information
(unaudited) Three
Months Ended Change from March 31, February 28, February 28, In
thousands, except per share data 2011 2010
2010 Operating revenues $ 223,298 $ 121,680 83.5% Operating
expenses 147,869 74,423 98.7% Net income 33,521 27,518 21.8% %
Margin 15.0% 22.6% Diluted EPS $ 0.27 $ 0.26 3.8% Adjusted
EPS1 $ 0.43 $ 0.31 38.7% Adjusted EBITDA2 $ 104,475 $ 59,249
76.3% % Margin 46.8% 48.7%
1 Per share net income before after-tax impact of amortization
of intangibles, non-recurring stock-based compensation,
restructuring costs, third party transaction expenses associated
with the acquisition of RiskMetrics and debt repayment expenses.
See Table 15 titled "Reconciliation of Adjusted Net Income and
Adjusted EPS to Net Income and EPS" and information about the use
of non-GAAP financial information provided under "Notes Regarding
the Use of Non-GAAP Financial Measures.”
2 Net Income before interest income, interest expense, other
expense (income), provision for income taxes, depreciation,
amortization, non-recurring stock-based compensation, restructuring
costs, and third party transaction expenses associated with the
acquisition of RiskMetrics. See Table 13 titled "Reconciliation of
Adjusted EBITDA to Net Income" and information about the use of
non-GAAP financial information provided under "Notes Regarding the
Use of Non-GAAP Financial Measures.”
Summary of Results for First Quarter 2011 compared to First
Quarter 2010
Operating Revenues – See Table 4
Total operating revenues for the three months ended March 31,
2011 (first quarter 2011) increased $101.6 million, or 83.5%, to
$223.3 million compared to $121.7 million for the three months
ended February 28, 2010 (first quarter 2010). The biggest driver of
revenue growth was the acquisition of RiskMetrics, which closed on
June 1, 2010 and contributed revenues of $78.0 million in the first
quarter. Total subscription revenues rose $82.4 million, or 87.5%,
to $176.7 million while asset-based fees increased $8.7 million, or
34.7%, to $33.6 million. Non-recurring revenues, which include $4.3
million of non-recurring asset-based fees, increased $10.5 million
to $13.0 million.
Excluding the impact of the acquisitions of RiskMetrics and
Measurisk (an acquisition completed on July 30, 2010), total
operating revenues grew by $20.5 million, or 16.8%, to $142.2
million. Subscription revenues grew $7.9 million, or 8.3%, to
$102.1 million in first quarter 2011. Non-recurring revenues
increased $4.0 million to $6.4 million, driven by non-recurring
asset-based fees.
By segment, Performance and Risk revenues rose $70.4 million, or
57.8%, to $192.0 million. The Performance and Risk segment is
comprised of index and ESG (defined below) products, risk
management analytics, portfolio management analytics, and energy
and commodity analytics. Revenues for the Governance segment were
$31.3 million.
Index and ESG products: Our index and ESG products
primarily consist of index subscriptions, equity index asset based
fee products and environmental, social and governance (“ESG”)
products. Revenues related to index and ESG products increased
$24.9 million, or 33.1%, to $100.0 million. Index and ESG
subscription revenue grew by $11.9 million, or 23.8%, to $62.2
million, with $4.4 million of that coming from the addition of ESG
products resulting from the acquisition of RiskMetrics. Also
included in the index and ESG revenues were $5.9 million of
non-recurring revenues, which rose $3.5 million largely as the
result of an increase of $4.3 million of non-recurring asset-based
fees.
Revenues attributable to equity index asset based fees rose
$12.9 million, or 51.8%, to $37.9 million. Asset-based fees also
include $4.3 million of non-recurring revenue in first quarter
2011. Recurring asset-based fees rose $8.7 million, or 34.7%, to
$33.6 million. The increase in recurring asset-based fees was
driven primarily by an increase in ETF asset-based fees.
The average value of assets in ETFs linked to MSCI equity
indices increased 41.1% to $337.6 billion for first quarter 2011
compared to $239.3 billion for the three months ended February 28,
2010. As of March 31, 2011, the value of assets in ETFs linked to
MSCI equity indices was $350.1 billion, representing an increase of
49.9% from $233.5 billion as of February 28, 2010 and $16.8
billion, or 5.0%, from $333.3 billion as of December 31, 2010. We
estimate that the $16.8 billion sequential increase in first
quarter 2011 was attributable to $10.1 billion of net asset
appreciation and cash inflows of $6.7 billion.
The three MSCI indices with the largest amount of ETF assets
linked to them as of March 31, 2011 were the MSCI Emerging Markets,
EAFE (an index of stocks in developed markets outside North
America) and U.S. Broad Market indices. The assets linked to these
indices were $102.1 billion, $45.4 billion, and $19.5 billion,
respectively.
Risk management analytics: Our risk management analytics
products offer a consistent risk assessment framework for managing
and monitoring investments in a variety of asset classes and are
based on our proprietary integrated fundamental multi-factor risk
models, value-at-risk methodologies and asset valuation models.
Revenues related to risk management analytics increased $48.0
million, or 442.1%, to $58.9 million. The acquisitions of
RiskMetrics and Measurisk added $45.5 million, or 419.0%, to growth
in the first quarter. Excluding the impact of the acquisitions,
risk management analytics revenues grew by $2.5 million, or
23.1%.
Portfolio management analytics: Our portfolio management
analytics products consist of analytics tools for equity and fixed
income portfolio management. Revenues related to portfolio
management analytics decreased by $2.2 million, or 6.9%, to $29.3
million.
Energy and commodity analytics: Our energy and commodity
analytics products consist of software applications which help
users value and model physical assets and derivatives across a
number of market segments including energy and commodity assets.
Revenues from energy and commodity analytics products declined by
$0.3 million, or 7.7%, to $3.9 million.
Governance: Our governance products consist of corporate
governance products and services, including proxy research,
recommendation and voting services for asset owners and asset
managers as well as governance advisory and compensation services
for corporations. It also includes forensic accounting research as
well as class action monitoring and claims filing services to aid
institutional investors in the recovery of funds from securities
litigation, all of which were acquired as part of our acquisition
of RiskMetrics. Governance revenues were $31.3 million in first
quarter 2011, including $5.5 million of non-recurring revenues.
Operating Expenses – See Table 5
Total operating expense increased $73.4 million, or 98.7%, to
$147.9 million in first quarter 2011 compared to first quarter
2010. The increase is due mainly to the acquisition of RiskMetrics.
Restructuring costs related to the ongoing integration of
RiskMetrics contributed $4.4 million to operating expenses.
Compensation costs: Total compensation costs rose $43.7
million, or 97.0%, to $88.7 million in first quarter 2011.
Excluding non-recurring stock-based compensation expense of $2.8
million, total compensation costs rose $42.9 million, or 99.9%, to
$85.9 million.
Non-recurring stock-based compensation expenses for first
quarter 2011 consisted of $1.0 million related to the founders
grants awarded to certain employees at the time of MSCI’s initial
public offering (“IPO”) and $1.8 million related to the performance
awards granted to certain employees in connection with the
acquisition of RiskMetrics. The aggregate value of the performance
awards of approximately $15.9 million is being amortized through
2012 and the aggregate value of the founders grant of approximately
$68.0 million is being amortized through 2011. As a result of the
vesting of portions of the founders grants, the related expense
decreased $1.1 million, or 51.4%, to $1.0 million.
Non-compensation costs excluding depreciation and
amortization: Total non-compensation operating expenses
excluding depreciation and amortization, transaction costs
associated with the acquisition of RiskMetrics and restructuring
costs rose $13.5 million, or 69.1%, to $32.9 million in first
quarter 2011. The acquisition of RiskMetrics was the biggest driver
behind the increase.
Cost of services: Total cost of services expenses rose by
$40.9 million, or 139.7%, to $70.2 million. Within costs of
services, compensation expenses increased by $29.8 million, or
133.4%, and non-compensation expenses increased by $11.1 million,
or 160.1%. In both cases, the biggest driver behind the increase
was the acquisition of RiskMetrics.
Selling, general and administrative expense (SG&A):
Total SG&A expense rose $14.0 million, or 37.3%, to $51.4
million. Within SG&A, compensation expenses increased by $13.8
million, or 61.0%, and non-compensation expenses excluding
transaction costs increased by $2.4 million, or 18.9%. In both
cases, the biggest driver behind the increase was the acquisition
of RiskMetrics.
Amortization of intangibles: Amortization of intangibles
expense totaled $16.7 million compared to $4.3 million in first
quarter 2010. The $12.4 million increase is associated with the
acquisitions of RiskMetrics and Measurisk.
Adjusted EBITDA – See Table 13
Adjusted EBITDA, which excludes among other things the impact of
non-recurring stock-based compensation and restructuring costs, was
$104.5 million, an increase of $45.2 million, or 76.3%, from first
quarter 2010. Adjusted EBITDA margin declined to 46.8% from 48.7%
as a result of the dilutive impact of the acquisition of the lower
margin RiskMetrics.
By segment, Adjusted EBITDA for the Performance and Risk segment
increased $35.7 million, or 60.3%, to $95.0 million from first
quarter 2010. Adjusted EBITDA margin for this segment rose to 49.4%
from 48.7% in first quarter 2010. Adjusted EBITDA for the
Governance segment was $9.5 million and the Adjusted EBITDA margin
was 30.4%.
See Table 13 titled “Reconciliation of Adjusted EBITDA to Net
Income” and “Notes Regarding the Use of Non-GAAP Financial
Measures” below.
Other Expense (Income), Net
Other expense (income), net for first quarter 2011 was $22.1
million, an increase of $18.7 million from first quarter 2010. Part
of the increase results from $11.9 million of higher interest
expense resulting from the increased levels of indebtedness
incurred in connection with the acquisition of RiskMetrics. The
remaining increase in other expense (income), net primarily
reflects $6.4 million of expenses resulting from the repricing of
our term loan facility and the concurrent repayment of $88.0
million of our pre-existing term loan.
On March 14, 2011, MSCI completed the repricing of its
pre-existing term loan. The repricing was effected through an
amendment to MSCI’s credit agreement, which provided for the
incurrence of a new senior secured loan with an aggregate principal
amount of $1.125 billion. The proceeds from the new term loan,
together with $88 million of cash on hand, were used to repay the
existing $1.213 billion term loan facility in full. The amendment
resulted in a decrease of the applicable margin above LIBOR to
2.75% from 3.25% as well as a decrease in the LIBOR floor to 1.00%
from 1.50%. MSCI also amended certain other covenants in its senior
secured loan facility.
Provision for Income Taxes
The provision for income tax expense was $19.8 million for first
quarter 2011, an increase of $3.5 million, or 21.5%, compared to
$16.3 million for the same period in 2010. The effective tax rate
was 37.2% for first quarter 2011. The effective tax rate benefited
from several discrete items that lowered the rate. The effective
tax rate for the first quarter of 2010 was also 37.2%. Excluding
the impact of transaction costs, the effective tax rate in the
first quarter of 2010 was 36.0%. The effective tax rate in the
first quarter of 2010 benefited from several discrete items that
lowered the rate.
Net Income and Earnings per Share – See Table 15
Net income increased $6.0 million, or 21.8%, to $33.5 million
for first quarter 2011. The net income margin decreased to 15.0%
from 22.6% as a result of the impact of the acquisition of the
lower margin RiskMetrics business as well as the additional
amortization of intangibles, restructuring costs and higher
interest expense related to the same acquisition. Diluted EPS
increased 3.8% to $0.27.
Adjusted net income, which excludes the after-tax impact of
amortization of intangibles, non-recurring stock-based compensation
expense, restructuring costs and debt repayment and refinancing
expenses totaling $19.1 million, rose $19.1 million, or 56.8%, to
$52.6 million. Adjusted EPS, which excludes the after-tax, per
share impact of amortization of intangibles, non-recurring
stock-based compensation expense, restructuring costs and debt
repayment and refinancing expenses totaling $0.16, rose 38.7% to
$0.43.
See table 15 titled “Reconciliation of Adjusted Net Income and
Adjusted EPS to Net Income and EPS.”
Summary of Results for First Quarter 2011 compared to Pro
Forma First Quarter 2010
Operating Revenues – See Table 7
Compared to pro forma first quarter 2010, total operating
revenues increased $25.1 million, or 12.7%, to $223.3 million. By
segment, Performance and Risk revenues rose $26.3 million, or
15.8%, to $192.0 million. Governance revenue trends are described
further below. Subscription revenues rose by $11.6 million, or
7.0%, to $176.7 million. Asset-based fees increased $8.7 million,
or 34.7%, to $33.6 million. Non-recurring revenues increased $4.9
million to $13.0 million, driven by $4.3 million of non-recurring
asset-based fees.
Index and ESG products: Compared to pro forma first
quarter 2010, total index and ESG revenues rose $20.4 million, or
25.5%, to $100.0 million. Index and ESG subscription revenues rose
by $7.4 million, or 13.6%, to $62.2 million from $54.7 million. The
strong growth was driven by higher revenues from MSCI’s core
benchmark indices and higher usage fees. Revenues from asset-based
fees increased $12.9 million, or 51.8%, to $37.9 million, compared
to pro forma first quarter 2010.
Total index and ESG revenues also include $5.9 million of
non-recurring revenues, up from $2.9 million in pro forma first
quarter. The increase was driven primarily by an increase of $4.3
million of non-recurring asset-based fees.
Risk management analytics: Compared to pro forma first
quarter 2010, risk management analytics revenues rose $8.4 million,
or 16.7%, to $58.9 million, driven by growth in revenues from both
BarraOne and RiskManager products. The acquisition of Measurisk
contributed $3.1 million, or 6.2%, to growth in the first
quarter.
Governance: Compared to pro forma first quarter 2010,
governance revenues declined $1.1 million, or 3.5%, to $31.3
million. Revenues from institutional governance and forensic
accounting services declined. Non-recurring governance revenues
were $5.5 million in first quarter 2011 versus $4.4 million in the
pro forma first quarter 2010.
The acquisition of RiskMetrics did not impact the revenues
attributable to the asset-based fees sub-category of index and ESG
products, portfolio management analytics and energy and commodity
analytics and comparisons for these products are not presented.
Comparisons to first quarter 2010 revenues are discussed in the
Summary of Results for First Quarter 2011 compared to First Quarter
2010 above.
Operating Expenses – See Table 8
Compared to pro forma first quarter 2010, total operating
expenses excluding restructuring costs rose $6.0 million to $143.4
million.
Compensation costs: Compared to pro forma first quarter
2010, compensation costs excluding non-recurring stock-based
compensation expense rose $7.3 million, or 9.2%, to $85.9 million.
Total non-recurring stock-based compensation expense rose by $0.7
million, or 35.9%, to $2.8 million.
Non-compensation costs excluding depreciation and
amortization: Compared to pro forma first quarter 2010, total
non-compensation costs excluding depreciation and amortization,
transaction expenses related to the acquisition of RiskMetrics and
restructuring costs decreased $2.1 million, or 5.9%, to $32.9
million, led by declines in market data expense, occupancy costs
and travel and entertainment expenses.
Cost of services: Compared to pro forma first quarter
2010, total cost of services rose $4.6 million, or 7.0%, to $70.2
million. Compensation expenses excluding non-recurring stock-based
compensation expense rose $2.9 million, or 6.1%, to $51.1 million.
Non-compensation expenses rose by $1.2 million, or 7.2%, to $18.0
million, driven by higher market data and information technology
expenses.
Selling, general and administrative expense (SG&A):
Compared to pro forma first quarter 2010, total SG&A expense
rose $1.3 million, or 2.7%, to $51.4 million. Within SG&A,
compensation expenses excluding non-recurring stock-based
compensation rose $4.3 million, or 14.2%, to $34.8 million.
Non-compensation expenses fell $3.3 million, or 18.1%, to $14.9
million. The decrease in non-compensation expenses was driven by
lower information technology expenses and lower taxes and license
fees.
Adjusted EBITDA – See Table 14
Compared to pro forma first quarter 2010, Adjusted EBITDA
increased $20.0 million, or 23.6%, to $104.5 million and the margin
expanded to 46.8% from 42.6%. Performance and Risk segment Adjusted
EBITDA grew by $19.1 million, or 25.1%, to $95.0 million and the
margin increased to 49.4% from 45.8%. Governance Adjusted EBITDA
rose by $0.9 million, or 10.7%, to $9.5 million and the margin
increased to 30.4% from 26.5%.
Compared to pro forma first quarter 2010, net income increased
$5.0 million, or 17.4%, to $33.5 million from $28.5 million.
See Table 14 titled “Reconciliation of Pro Forma Adjusted EBITDA
to Pro Forma Net Income” and “Notes Regarding the Use of Non-GAAP
Financial Measures” below.
Conference Call Information
Investors will have the opportunity to listen to MSCI Inc.'s
senior management review first quarter 2011 results on Thursday,
May 5, 2011 at 11:00 am Eastern Time. To listen to the live event,
visit the investor relations section of MSCI's website,
http://ir.msci.com/events.cfm, or dial 1-877-312-9206 within the
United States. International callers dial 1-408-774-4001.
An audio recording of the conference call will be available on
our website approximately two hours after the conclusion of the
live event and will be accessible through May 19, 2011. To listen
to the recording, visit http://ir.msci.com/events.cfm, or dial
1-800-642-1687 (passcode: 60691003) within the United States.
International callers dial 1-706-645-9291 (passcode: 60691003).
About MSCI Inc.
MSCI Inc. is a leading provider of investment decision support
tools to investors globally, including asset managers, banks, hedge
funds and pension funds. MSCI products and services include
indices, portfolio risk and performance analytics, and governance
tools.
The company’s flagship product offerings are: the MSCI indices
which include more than 145,000 daily indices covering more than 70
countries; Barra portfolio risk and performance analytics covering
global equity and fixed income markets; RiskMetrics market and
credit risk analytics; ISS governance research and outsourced proxy
voting and reporting services; MSCI environmental, social and
governance research; FEA valuation models and risk management
software for the energy and commodities markets; and CFRA forensic
accounting risk research, legal/regulatory risk assessment, and
due-diligence. MSCI is headquartered in New York, with research and
commercial offices around the world. MSCI#IR
For further information on MSCI Inc. or our products please
visit www.msci.com.
Forward-Looking Statements
This press release contains forward-looking statements. These
statements relate to future events or to future financial
performance and involve known and unknown risks, uncertainties and
other factors that may cause our actual results, levels of
activity, performance, or achievements to be materially different
from any future results, levels of activity, performance, or
achievements expressed or implied by these forward-looking
statements. In some cases, you can identify forward-looking
statements by the use of words such as “may,” “could,” “expect,”
“intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” or “continue” or the negative of these
terms or other comparable terminology. You should not place undue
reliance on forward-looking statements because they involve known
and unknown risks, uncertainties and other factors that are, in
some cases, beyond our control and that could materially affect
actual results, levels of activity, performance, or
achievements.
Other factors that could materially affect actual results,
levels of activity, performance or achievements can be found in
MSCI's Annual Report on Form 10-K for the fiscal year ended
November 30, 2010 and filed with the Securities and Exchange
Commission (SEC) on January 31, 2011, and in quarterly reports on
Form 10-Q and current reports on Form 8-K filed with the SEC. If
any of these risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may
vary significantly from what we projected. Any forward-looking
statement in this release reflects our current views with respect
to future events and is subject to these and other risks,
uncertainties and assumptions relating to our operations, results
of operations, growth strategy and liquidity. We assume no
obligation to publicly update or revise these forward-looking
statements for any reason, whether as a result of new information,
future events, or otherwise.
Notes Regarding the Use of Non-GAAP Financial
Measures
MSCI has presented supplemental non-GAAP financial measures as
part of this earnings release. A reconciliation is provided below
that reconciles each non-GAAP financial measure with the most
comparable GAAP measure. The presentation of non-GAAP financial
measures should not be considered as alternative measures for the
most directly comparable GAAP financial measures. These measures
are used by management to monitor the financial performance of the
business, inform business decision making and forecast future
results.
Adjusted EBITDA is defined as net income before provision for
income taxes, other net expense and income, depreciation and
amortization, non-recurring stock-based compensation expense,
restructuring costs, and third party transaction costs related to
the acquisition of RiskMetrics.
Adjusted net income and Adjusted EPS are defined as net income
and EPS, respectively, before provision for non-recurring
stock-based compensation expenses, amortization of intangible
assets, third party transaction costs related to the acquisition of
RiskMetrics, restructuring costs, and the accelerated interest
expense resulting from the termination of an interest rate swap and
the accelerated amortization of deferred financing and debt
discount costs (debt repayment expenses), as well as for any
related tax effects.
We believe that adjustments related to transaction costs and
debt repayment expenses are useful to management and investors
because it allows for an evaluation of MSCI’s underlying operating
performance by excluding the costs incurred in connection with the
acquisition of RiskMetrics. Additionally, we believe that adjusting
for non-recurring stock-based compensation expenses and the
amortization of intangible assets may help investors compare our
performance to that of other companies in our industry as we do not
believe that other companies in our industry have as significant a
portion of their operating expenses represented by one-time
non-recurring stock-based compensation expenses and amortization of
intangible assets. We believe that the non-GAAP financial measures
presented in this earnings release facilitate meaningful
period-to-period comparisons and provide a baseline for the
evaluation of future results.
Adjusted EBITDA, Adjusted net income and Adjusted EPS are not
defined in the same manner by all companies and may not be
comparable to other similarly titled measures of other
companies.
Table 2: MSCI Inc. Consolidated Statements of Income
(unaudited)
Three Months Ended March 31, February 28, November 30, In
thousands, except per share data 2011
2010 2010 Operating revenues $ 223,298 $ 121,680 $ 213,318
Operating expenses Cost of services 70,218 29,291 69,131 Selling,
general and administrative 51,418 37,461 49,300 Restructuring costs
4,431 - 1,943 Amortization of intangible assets 16,692 4,278 16,694
Depreciation and amortization of property, equipment, and leasehold
improvements 5,110 3,393 5,530
Total operating expenses $ 147,869 $ 74,423 $
142,598 Operating income 75,429 47,257 70,720
Interest income (143 ) (408 ) (128 ) Interest expense 16,587 4,436
17,495 Other expense (income) 5,641 (608 )
2,274 Other expense, net $ 22,085 $ 3,420
$ 19,641 Income before income taxes 53,344
43,837 51,079 Provision for income taxes 19,823 16,319
20,813 Net income $ 33,521 $ 27,518
$ 30,266 Earnings per basic common share $
0.28 $ 0.26 $ 0.25 Earnings per diluted common
share $ 0.27 $ 0.26 $ 0.25 Weighted
average shares outstanding used in computing earnings per share
Basic 120,282 105,235 119,309
Diluted 122,013 105,844
121,172
Table 3: MSCI Inc. Selected Balance Sheet
Items (unaudited) As of March 31, November
30, In thousands 2011 2010 Cash and cash
equivalents $ 127,640 $ 226,575 Short-term investments 50,161
73,891 Trade receivables, net of allowances 185,714 147,662
Deferred revenue $ 284,119 $ 271,300 Current maturities of
long-term debt 10,329 54,916 Long-term debt, net of current
maturities 1,109,284 1,207,881
Table 4:
First Quarter 2011 Operating Revenues by Product Category
Three Months Ended % Change from
March 31, February 28, November 30, February 28, November 30, In
thousands 2011 2010 2010 2010 2010 Index and ESG products
Subscriptions $ 62,159 $ 50,224 $ 61,143 23.8 % 1.7 % Asset-based
fees 37,869 24,946 30,045 51.8 % 26.0 % Index
and ESG products total 100,028 75,170 91,188 33.1 % 9.7 % Risk
management analytics 58,866 10,859 57,980 442.1 % 1.5 % Portfolio
management analytics 29,284 31,459 30,993 (6.9 %) (5.5 %) Energy
and commodity analytics 3,870 4,192 4,871 (7.7
%) (20.5 %) Total Performance and Risk revenues $ 192,048 $ 121,680
$ 185,032 57.8 % 3.8 % Total Governance revenues 31,250 -
28,286 n/m 10.5 % Total operating revenues $ 223,298 $ 121,680 $
213,318 83.5 % 4.7 % Subscriptions $ 176,724 $ 94,276 $
176,791 87.5 % (0.0 %) Asset-based fees 33,607 24,946 28,330 34.7 %
18.6 % Non-recurring revenues 12,967 2,458
8,197 427.5 % 58.2 % Total operating revenues $ 223,298 $ 121,680 $
213,318 83.5 % 4.7 %
Table 5: Additional
First Quarter 2011 Operating Expenses Detail
Three Months Ended % Change from March 31, February
28, November 30, February 28, November 30, In thousands 2011 2010
2010 2010 2010 Cost of services Compensation $ 51,082 $ 21,685 $
48,849 135.6 % 4.6 % Non-Recurring Stock Based Comp 1,130
682 1,617 65.8 % (30.1 %) Total Compensation $ 52,212
$ 22,367 $ 50,466 133.4 % 3.5 % Non-Compensation 18,006
6,924 18,665 160.1 % (3.5 %) Total cost of services $
70,218 $ 29,291 $ 69,131 139.7 % 1.6 % Selling, general and
administrative Compensation 34,805 21,270 29,508 63.6 % 17.9 %
Non-Recurring Stock Based Comp 1,683 1,389
2,410 21.2 % (30.2 %) Total Compensation $ 36,488 $ 22,659 $ 31,918
61.0 % 14.3 % Transaction expenses - 2,250 - n/m n/m
Non-compensation excl. transaction expenses 14,930
12,552 17,382 18.9 % (14.1 %) Total selling, general and
administrative $ 51,418 $ 37,461 $ 49,300 37.3 % 4.3 %
Restructuring costs 4,431 - 1,943 n/m 128.0 % Amortization of
intangible assets 16,692 4,278 16,694 290.2 % (0.0 %) Depreciation
and amortization 5,110 3,393 5,530 50.6 % (7.6
%) Total operating expenses $ 147,869 $ 74,423 $ 142,598 98.7 % 3.7
% In thousands Total
non-recurring stock based comp $ 2,813 $ 2,071 $ 4,027 35.8 % (30.1
%) Compensation excluding non-recurring comp 85,887 42,955 78,357
99.9 % 9.6 % Transaction expenses - 2,250 - n/m n/m
Non-compensation excluding transaction expenses 32,936 19,476
36,047 69.1 % (8.6 %) Restructuring charges 4,431 - 1,943 n/m 128.0
% Amortization of intangible assets 16,692 4,278 16,694 290.2 %
(0.0 %) Depreciation and amortization 5,110 3,393
5,530 50.6 % (7.6 %) Total operating expenses $
147,869 $ 74,423 $ 142,598 98.7 % 3.7 %
Table 6: Summary
First Quarter 2011 Segment Information
Three Months Ended % Change from
March 31, February 28, November 30, February 28, November
30, In thousands 2011 2010 2010 2010 2010
Revenues: Performance and Risk $ 192,048 $ 121,680 $ 185,032
57.8 % 3.8 % Governance 31,250 -
28,286 n/m 10.5 %
Total Operating revenues $
223,298 $ 121,680 $ 213,318
83.5 % 4.7 % Operating
Income Performance and Risk 72,646 47,257 67,743 53.7 % 7.2 %
Margin 37.8 % 38.8 % 36.6 % Governance 2,783 - 2,977 n/m (6.5 %)
Margin 8.9 % 10.5 %
Total Operating Income $
75,429 $ 47,257 $ 70,720
59.6 % 6.7 % Margin 33.8 % 38.8 % 33.2
%
Adjusted EBITDA Performance and Risk 94,962 59,249
90,552 60.3 % 4.9 % Margin 49.4 % 48.7 % 48.9 % Governance 9,513 -
8,362 n/m 13.8 % Margin 30.4 % 29.6 %
Total Adjusted EBITDA
$ 104,475 $ 59,249 $
98,914 76.3 % 5.6 % Margin 46.8
% 48.7 % 46.4 %
Table 7: Pro Forma Operating Revenues by
Product Category % Change
from First Quarter
First Quarter
In thousands 2011
2010 1
2010 Index and ESG products Subscriptions $ 62,159 $ 54,730 13.6 %
Asset-based fees 37,869 24,946 51.8 % Index
and ESG products total 100,028 79,676 25.5 % Risk management
analytics 58,866 50,449 16.7 % Portfolio management analytics
29,284 31,459 (6.9 %) Energy and commodity analytics 3,870
4,192 (7.7 %) Total Performance and Risk revenues $
192,048 $ 165,776 15.8 % Total Governance revenues 31,250
32,376 (3.5 %) Total operating revenues $ 223,298 $ 198,152
12.7 % Subscriptions $ 176,724 $ 165,132 7.0 % Asset-based
fees 33,607 24,946 34.7 % Non-recurring revenues 12,967
8,074 60.6 % Total operating revenues $ 223,298 $
198,152 12.7 %
1 MSCI's first quarter ended February 28, 2010 and RiskMetrics'
fourth quarter ended December 31, 2009
Table 8: Pro forma Operating Expenses Detail
% Change from First Quarter
First Quarter
In thousands 2011
2010 1
2010 Cost of services Compensation $ 51,082 $ 48,161 6.1 %
Non-Recurring Stock Based Comp 1,130 682 65.8
% Total Compensation $ 52,212 $ 48,843 6.9 % Non-compensation
18,006 16,795 7.2 % Total cost of services $
70,218 $ 65,638 7.0 % Selling, general and administrative
Compensation 34,805 30,473 14.2 % Non-Recurring Stock Based Comp
1,683 1,389 21.2 % Total Compensation $ 36,488
$ 31,862 14.5 % Transaction expenses - - - Non-compensation excl.
transaction expenses 14,930 18,223 (18.1 %)
Total selling, general and administrative $ 51,418 $ 50,085 2.7 %
Restructuring costs 4,431 - n/m Amortization of intangible assets
16,692 16,180 3.2 % Depreciation and amortization 5,110
5,489 (6.9 %) Total operating expenses $ 147,869 $
137,392 7.6 % In thousands
Total non-recurring stock based comp $ 2,813 $ 2,071 35.9 %
Compensation excluding non-recurring comp 85,887 78,634 9.2 %
Transaction expenses - - - Non-compensation excluding transaction
expenses 32,936 35,018 (5.9 %) Restructuring charges 4,431 - n/m
Amortization of intangible assets 16,692 16,180 3.2 % Depreciation
and amortization 5,110 5,489 (6.9 %)
Total operating expenses $ 147,869 $ 137,392 7.6 %
1 MSCI's first quarter ended February 28, 2010 and RiskMetrics'
fourth quarter ended December 31, 2009
Table 9: Pro Forma Summary Segment
% Change from First Quarter
First Quarter
In thousands 2011
2010 1
2010
Revenues: Performance and Risk $ 192,048 $
165,776 15.8 % Governance 31,250 32,376
(3.5 %)
Total Operating revenues $ 223,298
$ 198,152 12.7 % Operating
Income Performance and Risk 72,646 56,533 28.5 % Margin 37.8 %
34.1 % Governance 2,783 4,227 (34.2 %) Margin 8.9 % 2.1 %
Total
Operating Income $ 75,429 $ 60,760
24.1 % Margin 33.8 % 30.7 %
Adjusted
EBITDA Performance and Risk 94,962 75,910 25.1 % Margin 49.4 %
45.8 % Governance 9,513 8,590 10.7 % Margin 30.4 % 26.5 %
Total
Adjusted EBITDA $ 104,475 $ 84,500
23.6 % Margin 46.8 % 42.6 %
1 MSCI's first quarter ended February 28, 2010 and RiskMetrics'
fourth quarter ended December 31, 2009
Table 10: Key
Operating Metrics1 As of or For the Quarter Ended
% Change from March December March December Dollars in thousands
2011 2010 2010 2010 2010 Run Rates 2 Index and ESG
products Subscriptions $ 247,870 $ 212,572 $ 236,157 16.6 % 5.0 %
Asset-based fees 134,257 100,254
117,866 33.9 % 13.9 % Index and ESG products total 382,127
312,826 354,023 22.2 % 7.9 % Risk management analytics 243,853
196,523 233,504 24.1 % 4.4 % Portfolio management analytics 116,839
121,530 115,158 (3.9 %) 1.5 % Energy and commodity analytics
15,047 15,453 15,288 (2.6 %)
(1.6 %) Total Performance and Risk Run Rate $ 757,866 $ 646,332 $
717,973 17.3 % 5.6 % Governance Run Rate 105,870
106,686 105,036 (0.8 %) 0.8 %
Total Run Rate $ 863,736 $ 753,018 $ 823,009
14.7 % 4.9 % Subscription total 729,479 652,764 705,143 11.8
% 3.5 % Asset-based fees total 134,257 100,254
117,866 33.9 % 13.9 % Total Run Rate $ 863,736
$ 753,018 $ 823,009 14.7 % 4.9 %
Subscription Run Rate by region % Americas 52 % 52 % 53 % %
non-Americas 48 % 48 % 47 % Subscription Run Rate by client
type % Asset Management 56 % 57 % 56 % % Banking & Trading 17 %
16 % 16 % % Alternative Invt Mgmt 11 % 10 % 11 % % Asset Owners
& Consultants 9 % 8 % 9 % % Corporate 2 % 2 % 3 % % Others 5 %
7 % 5 % New Recurring Sales $ 34,612 $ 26,831 $ 33,742 29.0
% 2.6 % Subscription Cancellations (14,402 ) (19,379
) (30,174 ) (25.7 %) (52.3 %) Net New Recurring Subscription
Sales $ 20,210 $ 7,452 $ 3,568 171.2 % 466.4 % Non-recurring sales
13,648 11,851 11,819 15.2 % 15.5 % Employees 2,049 2,056
2,099 (0.3 %) (2.4 %) % Employees by location Developed
Market Centers 68 % 75 % 70 % Emerging Market Centers 32 % 25 % 30
%
1 MSCI Inc. (including Measurisk) in March 2011 and December
2010 quarters and for combined legacy MSCI and RiskMetrics results
in March 2010.
2 The run rate at a particular point in time represents the
forward-looking fees for the next 12 months from all subscriptions
and investment product licenses we currently provide to our clients
under renewable contracts assuming all contracts that come up for
renewal are renewed and assuming then-current exchange rates. For
any subscription or license whose fees are linked to an investment
product’s assets or trading volume, the run rate calculation
reflects an annualization of the most recent periodic fee earned
under such license or subscription. The run rate does not include
fees associated with “one-time” and other non-recurring
transactions. In addition, we remove from the run rate the fees
associated with any subscription or investment product license
agreement with respect to which we have received a notice of
termination or non-renewal during the period and we have determined
that such notice evidences the client's final decision to terminate
or not renew the applicable subscription or agreement, even though
the notice is not effective until a later date.
Table 11:
Supplemental Operating Metrics
Recurring Subscription Sales &
Subscription Cancellations
2010 2011 March June
September December CY 2010 March New Recurring Subscription
Sales $26,831 $33,847 $35,373 $33,742 $129,793 $34,612 Subscription
Cancellations (19,379 ) (18,222 ) (19,654 ) (30,174 ) (87,429 )
(14,402 ) Net New Recurring Subscription Sales $7,452
$15,625 $15,719 $3,568 $42,364 $20,210
Aggregate & Core Retention Rates
2010 2011 March June
September December CY 2010 March
Aggregate Retention Rate 1 Index and ESG products 94.4 % 90.2 %
92.4 % 89.8 % 91.7 % 95.0 % Risk management analytics 83.4 %
92.0 % 87.7 % 85.6 % 87.5 % 94.2 % Portfolio management
analytics 88.9 % 84.5 % 82.2 % 63.1 % 79.7 % 88.6 % Energy
& commodity analytics 80.7 % 86.8 % 90.3 % 81.7 % 84.9 % 76.9 %
Total Performance and Risk 88.7 %
89.4 % 88.3 % 82.1 %
87.3 % 93.0 % Total
Governance 84.8 % 85.6 %
87.1 % 80.1 % 84.4 %
85.0 %
Total
Aggregate Retention Rate
88.1 % 88.8
% 88.1 % 81.8 %
86.8 % 91.8 %
Core Retention Rate 1
Index and ESG products 95.1 % 90.7 % 92.6 % 90.1 % 92.1 % 95.2 %
Risk management analytics 85.2 % 92.5 % 90.0 % 85.6 % 88.6 %
94.2 % Portfolio management analytics 90.9 % 86.7 % 86.0 %
64.1 % 81.9 % 89.9 % Energy & commodity analytics 80.7 %
86.8 % 90.3 % 81.2 % 84.7 % 76.9 %
Total Performance and
Risk 90.1 % 90.3 % 90.1
% 82.4 % 88.3 % 93.4
% Total Governance 84.8 %
85.6 % 87.1 % 80.1 %
84.4 % 85.0 %
Total Core Retention Rate
89.2 %
89.5 % 89.6 % 82.0
% 87.7 % 92.1 %
1 The quarterly Aggregate Retention Rates are calculated by
annualizing the cancellations for which we have received a notice
of termination or non-renewal during the quarter and we have
determined that such notice evidences the client’s final decision
to terminate or not renew the applicable subscription or agreement,
even though such notice is not effective until a later date. This
annualized cancellation figure is then divided by the subscription
Run Rate at the beginning of the year to calculate a cancellation
rate. This cancellation rate is then subtracted from 100% to derive
the annualized Retention Rate for the quarter. The
Aggregate Retention Rate is computed on a product-by-product basis.
Therefore, if a client reduces the number of products to which it
subscribes or switches between our products, we treat it as a
cancellation. In addition, we treat any reduction in fees resulting
from renegotiated contracts as a cancellation in the calculation to
the extent of the reduction. Aggregate Retention Rates are
generally higher during the first three quarters and lower in the
fourth quarter. For the calculation of the Core Retention Rate the
same methodology is used except the amount of cancellations in the
quarter is reduced by the amount of product swaps.
Table 12: ETF Assets Linked to MSCI Indices1
2010 2011
In Billions March June
September December CY 2010 March
Quarterly Average AUM in ETFs linked to MSCI Indices $ 242.8 $
249.6 $ 263.7 $ 317.0 $ 268.3 $ 337.6 Quarter-End AUM in ETFs
linked to MSCI Indices 255.4 236.8 290.7 333.3 333.3 350.1
Sequential Change ($ Growth in Billions)
Appreciation/Depreciation $ 7.5 $ (30.5 ) $ 39.0 $ 20.7 $ 36.7 $
10.1 Cash Inflow/ Outflow 4.9 11.8
14.9 21.9
53.5 6.7 Total Change
$ 12.4
$ (18.7 ) $ 53.9
$ 42.6 $ 90.2 $
16.8
1 Our ETF assets under management calculation methodology is ETF
net asset value (NAV) multiplied by shares outstanding.Source:
Bloomberg and MSCI
Table 13: Reconciliation of Adjusted EBITDA to Net
Income
Three Months Ended March 31, 2011 Three Months Ended February 28,
2010
Performance
and Risk
Governance Total
Performance
and Risk
Governance Total
Net Income $
33,521 $ 27,518 Plus: Provision for income
taxes 19,823 16,319 Plus: Other expense (income), net
22,085
3,420
Operating income $ 72,646
$ 2,783 $ 75,429 $
47,257 $ - $
47,257 Plus: Non-recurring stock based comp 2,679 134 2,813
2,071 - 2,071 Plus: Transaction costs - - - 2,250 - 2,250 Plus:
Depreciation and amortization 3,979 1,131 5,110 3,393 - 3,393 Plus:
Amortization of intangible assets 13,342 3,350 16,692 4,278 - 4,278
Plus: Restructuring costs 2,316 2,115
4,431 - - -
Adjusted
EBITDA $ 94,962 $ 9,513
$ 104,475 $ 59,249
$ - $ 59,249 Table 14:
Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net
Income
Three Months Ended March 31, 2011
First Quarter 2010
Performance
and Risk
Governance Total
Performance
and Risk
Governance Total
Net Income $
33,521 $ 28,534 Plus: Provision for income
taxes 19,823 15,181 Plus: Other expense (income), net
22,085
17,045
Operating income $ 72,646
$ 2,783 $ 75,429 $
56,533 $ 4,227 $
60,760 Plus: Non-recurring stock based comp 2,679 134 2,813
2,071 - 2,071 Plus: Transaction costs - - - - - - Plus:
Depreciation and amortization 3,979 1,131 5,110 4,476 1,013 5,489
Plus: Amortization of intangible assets 13,342 3,350 16,692 12,830
3,350 16,180 Plus: Restructuring costs 2,316
2,115 4,431 - - -
Adjusted EBITDA $ 94,962 $
9,513 $ 104,475 $ 75,910
$ 8,590 $ 84,500
Table 15: Reconciliation of Adjusted Net Income and Adjusted EPS
to Net Income and EPS Three Months
Ended March 31, February 28, November 30, 2011 2010 2010
GAAP - Net income $ 33,521 $ 27,518 $ 30,266 Plus: Non-recurring
stock based comp 2,813 2,071 4,027 Plus: Amortization of intangible
assets 16,692 4,278 16,694 Plus: Transaction costs1 - 2,250 - Plus:
Debt repayment and refinancing expenses2 6,404 - - Plus:
Restructuring costs $ 4,431 $ - $ 1,943 Less: Income tax effect3
(11,275 ) (2,581 ) (8,610 )
Adjusted net
income $ 52,586 $ 33,536
$ 44,320 GAAP - EPS $ 0.27 $
0.26 $ 0.25 Plus: Non-recurring stock based comp 0.02 0.02 0.03
Plus: Amortization of intangible assets 0.14 0.04 0.14 Plus:
Transaction costs1 0.00 0.02 0.00 Plus: Debt repayment and
refinancing expenses2 0.05 0.00 0.00 Plus: Restructuring costs 0.04
0.00 0.02 Less: Income tax effect3 (0.09 ) (0.03 )
(0.08 )
Adjusted EPS $ 0.43
$ 0.31 $ 0.36
1 For the first quarter of 2010, includes $2.2 million in third
party transaction expense.
2 In the first quarter of 2011, MSCI repaid $88.0 million of its
outstanding term loan. At the same time, MSCI repriced the
remaining $1.125 million loan. As a result, MSCI recorded $6.1
million of underwriting fees in conjunction with the repricing and
$0.3 million of accelerated deferred financing expense related to
the $88 million repayment.
3 For the purposes of calculating Adjusted EPS, non-recurring
stock based compensation, amortization of intangible assets, debt
repayment and refinancing expenses, and restructuring costs are
assumed to be taxed at the effective tax rate excluding transaction
costs. For the first quarter 2011, the rate is 37.2%. For the first
quarter 2010, the effective tax rate excluding transaction costs
was 36.0%.
Table 16: Results for the One Month
Ended December 31, 2010
One Month Ended December 31, In thousands 2010
Revenues Index and ESG products Subscriptions $ 20,551
Asset-based fees 9,939 Index and ESG products total
30,490 Risk management analytics 19,996 Portfolio management
analytics 10,147 Energy and commodity analytics 1,208
Total Performance and Risk revenues 61,841 Total Governance
revenues 10,683
Total operating revenues
$ 72,524 Operating Expenses Cost of
services Compensation $ 15,014 Non-Recurring Stock Based Comp
339 Total Compensation 15,353 Non-Compensation
5,633 Total cost of services 20,986 Selling, general and
administrative Compensation 11,021 Non-Recurring Stock Based Comp
479 Total Compensation 11,500 Transaction expenses -
Non-compensation excl. transaction expenses 5,981
Total selling, general and administrative 17,481 Restructuring
costs 26 Amortization of intangible assets 5,564 Depreciation and
amortization 1,798
Total operating expenses
$ 45,855 Operating income 26,669
Interest income (68 ) Interest expense 6,054 Other expense (income)
127
Other expense, net $ 6,113
Income before income taxes 20,556 Provision
for income taxes 6,732
Net income $
13,824 Earnings per basic common share $ 0.11
Earnings per diluted common share $ 0.11
Weighted average shares outstanding used in computing earnings per
share Basic 119,943 Diluted 121,803
MSCI (NYSE:MSCI)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
MSCI (NYSE:MSCI)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024