Moody's Corporation (NYSE: MCO) today announced new full year 2007
guidance.
Revised Assumptions and Outlook for Full Year 2007
Moody's outlook for 2007 is based on assumptions about many
macroeconomic and capital market factors, including interest rates,
corporate profitability and business investment spending, merger and
acquisition activity, consumer spending, residential mortgage
borrowing and refinancing activity and securitization levels. There is
an important degree of uncertainty surrounding these assumptions and,
if actual conditions differ from these assumptions, Moody's results
for the year may differ from our current outlook.
For Moody's overall, we now project mid- to high-teens percent
revenue growth for the full year 2007. This growth assumes foreign
currency translation for the remainder of 2007 at current exchange
rates. We continue to expect the full-year operating margin, excluding
the one-time gain on the sale of Moody's 99 Church Street building
from 2006 results, to decline by up to 150 basis points in 2007
compared with 2006. This reflects investments to sustain business
growth including: international expansion, improving our analytical
processes, pursuing ratings transparency and compliance initiatives,
introducing new products, improving our technology infrastructure and
relocating Moody's headquarters in New York City. We expect our
quarterly spending pattern to differ from previous years, which could
result in quarterly operating margins that differ materially from our
full-year expectations. On a GAAP basis, diluted earnings per share in
2007 are still projected to be modestly lower compared to 2006.
However, excluding the one-time gain on the building sale from 2006
results, we now project low to mid-teens percent growth in 2007
diluted earnings per share.
In the U.S., we now project mid-teens percent revenue growth for
the Moody's Investors Service ratings and research business for the
full year 2007. In the U.S. structured finance business, we now expect
revenue for the year to rise in the low-double-digit percent range,
including strong double-digit year-over-year percent growth in revenue
from credit derivatives and commercial mortgage-backed securities
ratings, partially offset by a decline in revenue from residential
mortgage-backed securities ratings, including home equity
securitization, in the low- to mid-teens percent range, which is
unchanged from our previous forecast.
In the U.S. corporate finance business, we still expect revenue
growth in the mid-twenties percent range for the year, as the pipeline
for leveraged transactions continues to be in line with our previous
expectations.
In the U.S. financial institutions sector, we continue to expect
revenue to grow in the low-teens percent range. For the U.S. public
finance sector, we continue to forecast revenue for 2007 to grow
modestly despite better performance in the first quarter, due to an
expected softening of issuance in certain sectors, including
healthcare, higher education and infrastructure. We continue to expect
growth in the U.S. research business to be about twenty percent.
Outside the U.S. we now expect ratings revenue to grow in the
high-teens to 20% range with high-teens to 20% growth across all major
business lines, led by financial institutions revenue growth in
Europe, corporate finance revenue growth in Europe and Asia, and
structured finance revenue growth in Europe. We continue to project
growth in the low twenties percent range for international research
revenue.
For Moody's KMV globally, we continue to expect growth in sales
and revenue from credit risk assessment subscription products, credit
decision processing software, and professional services. This should
result in low-double-digit percent growth in revenue with greater
growth in profitability.
Moody's is holding its 2007 Investor Day conference today at the
Waldorf=Astoria in New York City.
The event will take place from 8:30 AM to 3:00 PM (Eastern Time)
and will feature presentations by members of Moody's management team.
A copy of the management presentations will be posted on Moody's
Shareholder Relations website, http://ir.moodys.com, prior to the
conference.
Attendance at the conference is by invitation only; however, the
event will be webcast live on Moody's Shareholder Relations website,
http://ir.moodys.com. In addition, the event will be available through
a live conference call. Individuals within the United States and
Canada can listen by dialing (800) 591-6945. Other callers should dial
(617) 614-4911. The passcode for the call is 11230051.
An on-demand replay of the event will be available on Moody's
Shareholder Relations website, http://ir.moodys.com or can be accessed
by phone until midnight (Eastern Time), June 19, 2007. The replay can
be accessed from within the United States and Canada by dialing (888)
286-8010. Other callers can dial (617) 801-6888. The replay passcode
is 50576169.
Moody's is an essential component of the global capital markets.
It provides credit ratings, research, tools and analysis that help to
protect the integrity of credit. Moody's Corporation (NYSE: MCO) is
the parent company of Moody's Investors Service, which provides credit
ratings and research covering debt instruments and securities; Moody's
KMV, a provider of quantitative credit analysis tools; Moody's
Economy.com, which provides economic research and data services, and
Moody's Wall Street Analytics, a provider of software tools and
analysis for the structured finance industry. The corporation, which
reported revenue of $2.0 billion in 2006, employs approximately 3,500
people worldwide and maintains a presence in 27 countries. Further
information is available at www.moodys.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
Certain statements contained in this release are forward-looking
statements and are based on future expectations, plans and prospects
for Moody's business and operations that involve a number of risks and
uncertainties. The forward-looking statements and other information
are made as of June 5, 2007, and the Company disclaims any duty to
supplement, update or revise such statements on a going-forward basis,
whether as a result of subsequent developments, changed expectations
or otherwise. In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company is
identifying certain factors that could cause actual results to differ,
perhaps materially, from those indicated by these forward-looking
statements. Those factors include, but are not limited to, changes in
the volume of debt securities issued in domestic and/or global capital
markets; changes in interest rates and other volatility in the
financial markets; possible loss of market share through competition;
introduction of competing products or technologies by other companies;
pricing pressures from competitors and/or customers; the potential
emergence of government-sponsored credit rating agencies; proposed
U.S., foreign, state and local legislation and regulations, including
those relating to Nationally Recognized Statistical Rating
Organizations; possible judicial decisions in various jurisdictions
regarding the status of and potential liabilities of rating agencies;
the possible loss of key employees to investment or commercial banks
or elsewhere and related compensation cost pressures; the outcome of
any review by controlling tax authorities of the Company's global tax
planning initiatives; the outcome of those tax and legal contingencies
that relate to Old D&B, its predecessors and their affiliated
companies for which the Company has assumed portions of the financial
responsibility; the outcome of other legal actions to which the
Company, from time to time, may be named as a party; the ability of
the Company to successfully integrate acquired businesses; a decline
in the demand for credit risk management tools by financial
institutions; and other risk factors as discussed in the Company's
annual report on Form 10-K for the year ended December 31, 2006 and in
other filings made by the Company from time to time with the
Securities and Exchange Commission.