3Q 2018 Investor Presentation - s21.q4cdn.com€¦ · November 6, 2018 9 $893 $1,221 $1,098 $739...

3Q 2018 Investor Presentation

November 6, 2018

November 6, 2018 2

Disclaimer

Certain statements contained in this release are forward-looking statements and are based on future expectations, plans and prospects for the Company’s business and operations

that involve a number of risks and uncertainties. The forward-looking statements and other information in this release are made as of the date hereof (except where noted otherwise),

and the Company undertakes no obligation (nor does it intend) to publicly 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

examples of factors, risks and uncertainties that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks

and uncertainties include, but are not limited to, credit market disruptions or economic slowdowns, which could affect the volume of debt and other securities issued in domestic

and/or global capital markets; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, credit

quality concerns, changes in interest rates and other volatility in the financial markets such as that due to the U.K.’s referendum vote whereby the U.K. citizens voted to withdraw from

the EU; the level of merger and acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions

affecting credit markets, international trade and economic policy; concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility

of independent credit agency ratings; the introduction of competing products or technologies by other companies; pricing pressure from competitors and/or customers; the level of

success of new product development and global expansion; the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations, including

provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and regulations resulting from Dodd-Frank; the potential for increased competition and

regulation in the EU and other foreign jurisdictions; exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings,

investigations and inquires to which the Company may be subject from time to time; provisions in the Dodd-Frank legislation modifying the pleading standards, and EU regulations

modifying the liability standards, applicable to credit rating agencies in a manner adverse to credit rating agencies; provisions of EU regulations imposing additional procedural and

substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; the possible loss of key

employees; failures or malfunctions of our operations and infrastructure; any vulnerabilities to cyber threats or other cybersecurity concerns; the outcome of any review by controlling

tax authorities of the Company’s global tax planning initiatives; exposure to potential criminal sanctions or civil remedies if the Company fails to comply with foreign and U.S. laws and

regulations that are applicable in the jurisdictions in which the Company operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws

prohibiting corrupt payments to government officials; the impact of mergers, acquisitions or other business combinations and the ability of the Company to successfully integrate

acquired businesses; currency and foreign exchange volatility; the level of future cash flows; the levels of capital investments; and a decline in the demand for credit risk management

tools by financial institutions. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those

contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of the Company’s

annual report on Form 10-K for the year ended December 31, 2017, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or

therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from

those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business,

results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess

the potential effect of any new factors on it.

November 6, 2018 3

Table of Contents

1. Financial Overview

2. Capital Markets Overview

3. Moody’s Investors Service (MIS)

4. Moody’s Analytics (MA)

5. Conclusion

6. Appendix

November 6, 2018 4

» Ratings

» Estimated Default Frequency

Analytics (EDFs)

» Market-Implied

Ratings (MIRs)

Ratings

EDFs

MIRs

Credit Risk

Measurement

Specialized Use Cases,

e.g., ESG, KYC / AML,

Transfer Pricing, etc.

Other Financial

Risk

Assessments

Information

Aggregation &

Harmonization

Gather and Curate

Widest Range of

Financial and Credit

Risk Data

Methodologies

Company Data

Research

Training & Certification

Analyst Outreach

Risk

Understanding

Curated Data & Technology

Advisory Services

Stress Testing

Software

Risk

Management

» Defend and enhance our core

ratings & research businesses

– Ratings: predictive, predictable and

transparent

– Research: timely and insightful

» Pursue strategic growth

opportunities

– Leverage the brand to extend our reach

in financial markets

– More broadly occupy credit / financial risk

management and information vertical

– Extend both thought leadership footprint

and presence as a recognized standard

– Move upstream in emerging financial

markets

Moody’s Mission: To be the World’s Most Respected

Authority Serving Risk-Sensitive Financial Markets

1 Financial Overview

November 6, 2018 6

Provides financial

intelligence and analytical

tools supporting our clients’

growth, efficiency and risk

management objectives

Solutions address diverse

needs and customers

Extending brand into new

markets and deepening

customer relationship

Leading global provider of

credit rating opinions,

insight and tools for

financial risk

measurement and

management

Independent provider of

credit rating opinions and

related information for over

100 years

Proven ratings accuracy

and deeply experienced

analysts

Expanded sales and

marketing activities in

Commercial group

Revenue of

$4.5 billion

Operating Income

of $2.0 billion

MIS

84%

MA

16%

MIS

62%

MA

38%

Note: Financial data for the trailing twelve months ended September 30, 2018.

Overview of Moody’s Corporation

November 6, 2018 7

Operating Margin4

Adjusted Diluted EPS2Revenue

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

2013 2014 2015 2016 2017 2018F

$ B

illio

ns

High-single-digit

% growth

$1 of

Revenue

$3.74$4.31 $4.71 $4.94

$6.07

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

2013 2014 2015 2016 2017 2018F

42

.0%

43

.5%

42

.8%

18

.1%

43

.3%

45

.1%

46

.3%

46

.0%

45

.9%

47

.6%

0%

10%

20%

30%

40%

50%

60%

2013 2014 2015 2016 2017 2018F

Operating Margin Adj. Operating Margin

~ 4

8%

~ 4

3%

$0.13

$0.21

$0.27

S&P 500

Select Peers

Moody's

5-year Average Free Cash Flow Conversion6

$7.50

to

$7.653

11

1

5

7

Financial Performance

1. Guidance as of October 26, 2018.

2. Adjusted diluted EPS is an adjusted measure. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.

3. Includes an approximate $0.60 benefit resulting from the lower U.S. statutory tax rate.

4. 2013 – 2017 operating and adjusted operating margins have been restated to conform to the new presentation for pension expenses.

5. Adjusted Operating Margin is an adjusted measure. See appendix for reconciliation from adjusted financial measures to U.S. GAAP.

6. As of October 2018, over the last five available fiscal years ended 2017. Free Cash Flow is an adjusted financial measure. See appendix for reconciliation from adjusted financial

measures to U.S. GAAP. Source: FactSet.

7. Includes: CLGX, DNB, EXPN, FDS, INFO, MORN, MSCI, SPGI, TRI and VRSK.

November 6, 2018 8

Long-Term Growth Opportunities

Three Levers to Achieve EPS Growth

Note: Long-term growth opportunities presented on this slide are on average over time.

1. Assumes no material change in effective tax rate, foreign exchange rates, leverage profile and/or capital allocation policy.

2. Subject to market conditions and other ongoing capital allocation decisions.

November 6, 2018 9

$893

$1,221$1,098

$739

$200 $147

$197

$236$272

$285

$290$253

$0

$400

$800

$1,200

$1,600

150

170

190

210

230

2013 2014 2015 2016 2017 YTD 3Q2018

$ M

illions

Mill

ion

s o

f S

ha

res

Share Repurchases (R) Dividends Paid (R)

Shares Outstanding (L)

$1,090

$1,457$1,370

Disciplined Approach to Capital Allocation

Share Repurchases and Dividends Paid Annualized Dividend Per Share

$1,024

Investing in Growth Opportunities Return of Capital

Reinvestment

Invest in existing

businesses to

support organic

growth

Acquisitions

Evaluate carefully to

make sure aligned

with strategy and

market evolution

Dividends

Grow dividend in line

with earnings; target

25% - 30% payout1

Share Repurchase

Follow reinvestment,

dividends and

acquisitions in capital

allocation prioritization

$0.90

$1.12

$1.36$1.48 $1.52

$1.76

2013 2014 2015 2016 2017 20182

$490$400

1. Dividend payout ratio is defined as dividends per share paid/adjusted net income.

2. Annualized dividend total, based on first, second, third and fourth quarter dividend of $0.44 declared on January 24, April 24, July 10 and October 22, 2018, respectively.

November 6, 2018 10

Large

Entities

Emerging

Markets

Smaller Public

Companies w/o

Public Bonds

Larger Private

Companies, SMEs

and Tier 2 & 3 Banks

Smaller SMEs

Pursuing Organic and Inorganic Investments to

Execute on Moody’s Mission

Private

Co. Data /

SME

China

Domestic

Ratings

Expansion

Cyber

RiskCREESG

Risk

Analytics

Economics,

Structured Data &

Analytics

AI / Big Data

Technology

Enablement

Deepen Moody’s Role in Credit:

Expand Down the Credit Pyramid

Strategic Focus Areas to Increase

Breadth and Depth

November 6, 2018 11

» Current long-term credit ratings from S&P and Fitch are each BBB+ (stable)

» Solid investment-grade rating provides reliable, cost-effective access to capital in a

variety of market environments

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2010 2011 2012 2013 2014 2015 2016 2017 3Q 2018

$ M

illio

ns

Gross Debt Outstanding (L) Net Debt/TTM Adj. Operating Income (R)

De-leveraging in 2018 to Maintain Current BBB+

Credit Rating

1

1. Trailing twelve months adjusted operating income. Amounts are adjusted measures. See Appendix for reconciliations from adjusted financial measures to U.S. GAAP and gross

debt to net debt.

2. Negative net debt / TTM adjusted operating income calculation shown as 0.0x.

2

November 6, 2018 12

Guidance as of October 26, 20181

Revenue High-single-digit % growth

Operating Expenses High-single-digit % growth

Operating Margin ~43%

~48% (Adjusted2)

Effective Tax Rate 22% - 23%

EPS $6.95 - $7.10

$7.50 - $7.65 (Adjusted2)

Free Cash Flow2 ~$1.5 billion

2018 Outlook

1. See press release titled “Moody's Corporation Reports Results for Third Quarter 2018” from October 26, 2018 for Moody’s full 2018 guidance.

2. These metrics are adjusted measures. See Appendix for reconciliations from adjusted financial measures to U.S. GAAP.

2 Capital Markets Overview

November 6, 2018 14

Historically, Rising Rates Have not had a Significant

Impact on Moody’s Revenue

+200bps

+120bps

+100bps

+180bps

MCO Revenue and Interest Rates

5.8%

7.8%

4.7%

6.5%

2.3%

3.3%

1.8%

3.0%2.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

$ M

illio

ns

MIS Revenue (L) MA Revenue (L) MCO Revenue (L) 10-yr U.S. Treasury Yield (R)1

1. 10-yr U.S. Treasury Yields are represented by the rate at the end-of-period.

Source: www.treasury.gov.

http://www.treasury.gov/

November 6, 2018 15

Debt Leverage and Interest Coverage Remain Stable

in North America and Europe

Credit Metrics: North American Speculative Grade Companies

1. Trailing twelve months as of September 10, 2018.

Source: Moody’s Investors Service.

4.6x 4.6x 4.7x 4.5x 4.3x 4.4x 4.6x 4.8x 5.0x 5.1x 5.2x 5.3x 5.3x

2.9x 2.6x 2.4x 2.7x 3.0x 3.1x 3.0x 3.0x 3.0x 2.9x 3.0x 3.0x 3.1x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Inte

rest

Covera

ge

Debt / EBITDA EBITDA / Interest Expense

Credit Metrics: European Speculative Grade Companies

4.8x4.1x 4.1x

4.5x4.0x 4.0x 4.2x 4.4x 4.6x 4.5x 4.5x 4.5x 4.6x

3.0x 3.0x 2.9x 3.1x 3.4x 3.4x 3.2x 3.1x 3.2x 3.3x 3.6x 3.9x 3.9x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Inte

rest

Covera

ge

Debt / EBITDA EBITDA / Interest Expense

1

1

November 6, 2018 16

1.8%

2.0%

2.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2012 2013 2014 2015 2016 2017 2018 2019F

Global U.S. Europe

Global Default Rates Remain Under Historic Average

Default Rates for Corporate Rated Issuance1

4.2% global historic average1

» Global speculative-grade default rate at 2.6% as of September 30, 2018; expected to

decline to 1.8% by September 2019

1. Moody’s rated corporate global speculative grade default historical average of 4.2% since 1983. 2019 forecast for trailing twelve months ended September 30, 2019.


November 6, 2018 17

North America and EMEA Non-Financial Corporates

Have Significant Refunding Needs1

Debt Maturities: North America Moody’s-Rated Corporate Bonds and Loans

$206$226 $225 $239

$60$90

$121

$180

$49

$101

$181$223

$0

$50

$100

$150

$200

$250

$300

2019 2020 2021 2022

$ B

illio

ns

Source: MIS, February 2018.

Note: Data represents U.S. & Canadian MIS rated corporate bonds & loans.

Debt Maturities: EMEA Moody’s-Rated Corporate Bonds and Loans

$247 $248 $246$263

$33 $37 $52$88

$40 $50 $59 $75

$0

$50

$100

$150

$200

$250

$300

2019 2020 2021 2022

$ B

illio

ns

Source: MIS, July 2018.

2019 – 2022 CAGR

Investment Grade Bonds: 5%

Speculative Grade Bonds: 44%

Speculative Grade Bank Loans: 66%

Investment Grade Bonds Speculative Grade Bonds Speculative Grade Bank Loans

2019 – 2022 CAGR

Investment Grade Bonds: 2%

Speculative Grade Bonds: 39%

Speculative Grade Bank Loans: 23%

1. Amount reflects total maturities identified in the above sources.

November 6, 2018 18

Debt Refinancing and M&A are Most Frequently

Stated Uses of Proceeds

Uses of Funds from USD High Yield Bonds and Bank Loans1

62% 52%

83%

71% 74% 78%71%

65%54%

64%71%

63%

63% 53%

19%

31% 30% 25%31%

41% 54%41%

39%

52%

22% 17%11%

7% 8% 8%7% 8%

5% 6%5% 4%

12% 9% 4%

18% 17% 18% 22% 20% 16% 17% 13% 17%

1999 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 3Q2018

% o

f M

entions

Debt Refinancing M&A Capital Spending Shareholder Payments

1. Percent of mentions for each respective period in bond issue or bank loan program tranche documents. Excludes issues of less than $25 million and general corporate purposes.

An issue can have multiple purposes and, as a result, percentages do not sum to 100%.

Source: Moody’s Analytics.

November 6, 2018 19

Disintermediation of Credit is an Ongoing Trend in the Global Capital Markets

European Non-Financial Corporate

Bonds vs. Bank Loans Outstanding

4

8

%

€0

€1,000

€2,000

€3,000

€4,000

€5,000

€6,000

€7,000

€B

illio

ns

Bonds Loans

U.S. Non-Financial Corporate

Bonds vs. Bank Loans Outstanding

4

8

%

$0

$1,500

$3,000

$4,500

$6,000

$7,500

$9,000

$ B

illio

ns

Bonds Loans

76%

24%

49%

51%

Sources: ECB, Federal Reserve, BarCap Indices. Europe bank loan data includes Eurozone and UK bank loans. Europe bond data includes euro and sterling denominated bonds.

European data is through August 2018 and U.S. data is through September 2018.

November 6, 2018 20

+6%

Robust Growth of New Rating Mandates

0

400

800

1,200

2012 2013 2014 2015 2016 2017 YTD 3Q2017

YTD 3Q2018

# o

f N

ew

Mandate

s

EMEA United States Rest of World

1,044

Global New Rating Mandates1

» Expect ~1,000 new mandates in 20182

854

1,026990

771 738 783832

1. Rated by Moody’s Investors Service.

2. New mandates estimate as of October 26, 2018.

November 6, 2018 21

$0

$200

$400

$600

$800

$1,000

$1,200

2013 2014 2015 2016 2017 YTD 3Q 2017 YTD 3Q 2018

$ M

illio

ns

Corporate Finance Structured FinanceFinancial Institutions Public, Project, & Infrastructure FinanceMIS Other

» MIS recurring revenue growth primarily driven by increased monitoring fees from recent new mandates

» Recurring revenue ~35% of total MIS revenue

MIS Recurring Revenue

As a % of MIS

revenue38% 39% 39% 39% 36%

New Rating Mandates Provide Recurring Revenue1

Growth

35% 35%

1. MIS recurring revenue is typically billed annually and recognized ratably over 12 months. Recurring revenue can also be billed upfront and recognized over the life of the security.

3 Moody’s Investors Service

November 6, 2018 23

36%

64%

Recurring Transaction

TTM 3Q 2018 Revenue: $2.8 billion

Moody’s Investors Service Financial Profile

Public,

Project, &

Infrastructure

Finance

15%

Financial

Institutions

16%

Corporate

Finance

49%

Structured

Finance

19%

MIS Other

1%

60%

40%

U.S. Non-U.S.

» 37% recurring revenue



2018 Revenue Guidance as of October 26, 2018

Global low-single-digit % range

U.S. approximately flat

Non-U.S. mid-single-digit % range

Corporate Finance approximately flat

Structured Finance high-single-digit % range

Financial Institutions mid-single-digit % range

Public, Project & Infrastructure Finance mid-single-digit % range


November 6, 2018 24

Americas APACEMEA

» 32,500 rated

companies and

structured deals

» $34+ trillion total

debt rated

» 19,500 research

publications

» Offices in 5

countries

» 4,600 rated

companies and

structured deals


debt rated

» 6,300 research

publications

» Offices in 12

countries

» 2,000 rated

companies and

structured deals


debt rated

» 3,500 research

publications

» Offices in 7

countries

$72+ trillionof Total Rated Debt

4,700Rated Non-Financial

Corporates

4,100Rated Financial Institutions

138Rated Sovereigns

47Rated Supranational

Institutions

450Rated Sub-Sovereigns

17,700Rated Public

Finance Issuers

1,000Rated Infrastructure &

Project Finance Issuers

11,000Rated Structured

Deals

213Rating

Methodologies

Broad Coverage Serves Global Needs

Note: Data as of December 31, 2017.

Numbers of rated entities (other than sovereigns and supranational institutions) and structured deals, research publications and event participants/activities rounded to nearest hundred.

November 6, 2018 25

» We remain focused on analytical expertise and the continuous refinement of our

credit methodologies to provide predictive, predictable and transparent ratings

» Reinforces investor “demand pull”

Three-Year Cumulative Default Rates of Fundamental Rated Universe1

0%

10%

20%

30%

40%

50%

60%~15 Years

Lead/Senior Analyst

tenure

Rating Performance Drives Investor Confidence

#1 U.S. Credit

Rating Agency

2012-20182

1. The data in the chart above shows the three-year cumulative default rates by rating from January 1998, through December 2017 of fundamental Moody’s rated universe globally.

Rating category is based on senior unsecured rating (or equivalent) of the issuer. Source: Moody’s Investors Service.

2. Institutional Investor Survey.

November 6, 2018 26

Illustrative Value of a Moody’s Rating

Example: 10 year $500 million corporate bond

$15 million in total interest expense

vs.

lifetime cost of a rating

$500,000,000

x 4.3%

= $21,500,000

x 10 years

= $215,000,000

Unrated Rated by Moody’s

$500,000,000

x 4.0%

= $20,000,000

x 10 years

= $200,000,000

Bond

Interest rate

Annual interest payments

Tenor

Lifetime interest expense

Note: Illustrative spread differential based on feedback from syndicate desks and FBR & Co. research on Moody’s Corporation (January 2014) which stated that obtaining a Moody’s

rating typically saves approximately 30 basis points per year for investment grade issuers. Many factors go into the pricing of a bond.

November 6, 2018 27

60 8496

128156

187213

253286

0

50

100

150

200

250

300

350

Num

ber

of

Issuers

Continue to Invest in Key International Markets

Moody’s-Rated Chinese Issuers1

China» Successful joint venture with CCXI,

leading domestic rating agency

» CCXI provides >1,000 domestic

Chinese ratings; 34% coverage in

20172

» Cross border market rated via MIS

Hong Kong office

» In 2017, China announced it will allow

foreign firms to provide credit rating

services in part of the domestic market

Latin America

» Deepens Moody’s presence in a

dynamic and expanding market

Rest of World

» Acquired full ownership of KIS, a

leading provider of domestic credit

ratings

» Increased majority stake in ICRA to

serve growing domestic bond market

2007 2017

Emerging Asia Latin AmericaMiddle East CEE/CISAfrica

Revenue in Emerging Markets

» Opened Saudi Arabia office

$81M

$313M

1. Includes rated issuers where major operations or headquarters are in Mainland China. Hong Kong, Macau and Taiwan are not included.

2. Based on full year 2017 rated bond issuance (deal count) in China’s Interbank Market. Source: CCXI.

Sources: Dealogic, Moody’s Analytics, Moody’s Investors Service.

November 6, 2018 28

Analysis

» Develop systematic and transparent incorporation

of ESG issues into analytical process

» Expand global Green Bond Assessment (GBA)

franchise

Outreach

» Elevate Moody’s voice in ESG sphere as a

thought leader

» Collaborate with key organizations and

influencers in the market

Research

» Expand MIS research focused on ESG risks and

opportunities to meet growing market demand

Moody’s Investors Service ESG InitiativeThree Primary Objectives

10

18 17

0

10

20

2016 2017 YTD 2018

Num

ber

of

GB

As

1

1. As of September 30, 2018.

4 Moody’s Analytics

November 6, 2018 30

Research, Data and Analytics

64%

Enterprise Risk Solutions

27%

Professional Services

9%

Moody’s Analytics Financial Profile

82%

18%


40%

60%

U.S. Non-U.S.


» > 95% retention rate1


» Combination of one-off contracts and

semi-recurring revenue

2018 Revenue Guidance as of October 26, 2018

Global2 low-twenties % range

U.S. approximately 10%

Non-U.S. low-thirties % range

Research, Data & Analytics2 high-thirties % range

Enterprise Risk Solutions low-single-digit % range

Professional Services high-single-digit % range

TTM 3Q 2018 Revenue: $1.7 billion

1. Excludes Bureau van Dijk.

2. Organic MA global revenue is expected to increase in the high-single-digit percent range and organic RD&A revenue is expected to increase in the low-teens percent range.

November 6, 2018 31

Moody’s Analytics has Several Platforms for Growth

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illio

ns

Moody’s Analytics

2017 Revenue: $1,430m

2008 – 2017 CAGR: +11%

(~62% organic)


2017 Revenue: $149m

2008 – 2017 CAGR: +32%

(~15% organic)


2017 Revenue: $449m

2008 – 2017 CAGR: +16%

(~67% organic)

Research, Data & Analytics

2017 Revenue: $833m

2008 – 2017 CAGR: +8%

(~74% organic)

Revenue More Than Doubled Since Inception

Note: Individual line of business revenues may not foot due to rounding.

November 6, 2018 32

Expansion of ratings coverage

Production of insightful credit

analysis

New customers in

geographies with developing

debt capital markets

Expansion of data sets and

delivery options

Strong customer retention

RD&A: Subscription Growth Driven by Retention, Upgrades and Pricing & New Sales

1H

201

8F

ull

Ye

ar

201

6

95.4% 110.2%8.0%6.8%

Retained Base Upgrades and Price New Sales Business Base

94.6% 110.1%9.0%6.5%


Subscription Sales Growth(constant currency)

Full

Ye

ar

2017

95.5% 109.4%8.2%5.7%


Note: The sales growth attributions presented on this slide are related to RD&A subscription sales on a constant currency basis and excludes Bureau van Dijk. Upgrades reflect

amendments to existing customer contracts. New Sales reflect new contracts with new and existing customers.

November 6, 2018 33

Diversified IP Network1 High Value Customer Solutions

Data from 160+

Information Providers

Publicly Available Data

Other Data Sourced

By Bureau van Dijk

280 Million Private Companies

67 Thousand Public Companies

170 Million Director Contacts

Bureau van Dijk Collects and Enhances Information

to Deliver a Market Leading Global Dataset

Compliance and Financial Crime

Corporate Finance and M&A

Credit Risk

Transfer Pricing

Business Development

Data Management

1. Data as of December 31, 2017.

November 6, 2018 34

ERS Solutions Address Diverse Needs and

Customers

Credit Risk & Actuarial

AnalyticsHelps risk managers assess and

manage current and future exposures

across all asset classes

Accounting Calculation &

ReportingProduces key calculations and reports

required by many of the world’s accounting

standards

Regulatory Calculation &

ReportingGenerates key calculations and reports

required by many of the world’s financial

regulations

Credit Assessment &

Origination Automates financial spreading

and credit scoring, decision

making and monitoring

Portfolio & Capital StrategyHelps firms to improve portfolio

performance and meet regulatory and

economic capital requirements

Asset & Liability ManagementIntegrates ALM, liquidity risk management,

funds transfer pricing and regulatory reporting

capabilities into a seamless enterprise platform

November 6, 2018 35

ERS Subscription Products Drive Growth

Prior: Growth from installed software

» One-time projects – installed software & services

» Bespoke projects accelerated development of IP

» 61% of revenue from renewable products in 2015

Now: SaaS & subscriptions driving growth

» Expanding SaaS and subscription product array

» Subscriptions generate lower Annual Contract Value in

short run, but better Lifetime Customer Value

» ~70% of revenue from subscription products over TTM1

Key Growth Drivers

» New accounting standards require Moody’s expertise at

banks and Insurance companies

– CECL, IFRS17

» Moody’s software and analytics enable customers’ to

realize digitization and automation initiativesTTM1 as of 3Q18:

» Subscriptions:

– Sales +9%; Revenues +11%

» Non-recurring (one-time):

– Sales -11%; Revenues -6%

$200

$250

$300

$350

$400

$450

$500

$ M

illio

ns

Total Subscription

TTM1 Revenue2

1. Trailing twelve months (TTM) as of September 30, 2018.

2. Subscription revenue includes subscriptions and maintenance.

5 Conclusion

November 6, 2018 37

Why Invest in Moody’s?

We strive to be the world’s most respected authority serving risk-sensitive financial

markets

We have had strong revenue and earnings growth, as well as cash flow conversion

– 2013 – 2017 revenue CAGR of 9%

– 2013 – 2017 adjusted diluted EPS1 CAGR of 15%

– 2013 – 2017 free cash flow1 conversion rate of ~28%

We are committed to returning capital to our shareholders

– 2013 – 2017 returned $5.4 billion, or 114% of free cash flow, to shareholders via share

repurchases and dividends

We will selectively invest in strategic growth opportunities

– Leverage brand to extend our relevance in financial markets

– Expand our product offerings and geographic influence

1. Adjusted diluted EPS is an adjusted measure. See appendix for reconciliations from adjusted financial measures to U.S. GAAP.

6 Appendix

November 6, 2018 40

Corporate Finance: Revenue and Issuance

$109 $108 $113 $116 $124 $126 $131 $134 $131

$61 $56 $72 $85 $79 $66 $81 $67 $51

$59$41

$64$63 $63 $64

$58 $59$38

$71$73

$104 $92 $85 $78$108 $118

$76

$0

$50

$100

$150

$200

$250

$300

$350

$400

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ M

illio

ns

Revenue1: Mix by Quarter

Other Investment Grade Speculative Grade Bank Loans

$178 $216 $275 $312 $363 $420 $421 $425 $478$119 $109$137

$197$193

$230 $305 $262$301

$84$143

$120

$194$229

$219$183 $181

$254

$28$96

$120

$155

$212$242 $204 $254

$359

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illio

ns

Revenue1: Mix by Year


$320$215

$348 $332 $322 $269 $312 $310$240

$91

$65

$123 $104 $99$100

$98 $94

$64

$120

$124

$206$160 $138

$134$165 $210

$123

$39

$48

$84

$60$44

$59

$65$72

$39

$0

$200

$400

$600

$800

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ B

illi

on

s

Issuance3: Mix by Quarter

Non-U.S. Speculative-Grade Bank Loans

U.S. Speculative-Grade Bank Loans

Global Non-Financial Speculative-Grade Bonds

Global Non-Financial Investment-Grade Bonds

$1,129

$641 $750$1,125 $1,073 $1,043 $1,120 $1,192 $1,270

$221

$293 $250

$329 $411 $405 $329 $311$422$79

$273$330

$353$504 $425 $354 $414

$638$120

$ 247

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ B

illi

on

s

Issuance3: Mix by Year

Non-U.S. Speculative-Grade Bank LoansU.S. Speculative-Grade Bank LoansGlobal Non-Financial Speculative-Grade BondsGlobal Non-Financial Investment-Grade Bonds

2

2

1. Historical data has been adjusted to conform with current information and excludes intercompany revenue.

2. Other includes: monitoring, commercial paper, medium term notes, and ICRA.

3. Sources: Moody’s Analytics, Dealogic. U.S. and Non-U.S. Speculative-Grade Bank Loans represent only Moody’s rated speculative-grade bank loans. Non-U.S. Speculative-

Grade Bank Loan Origination data available starting 2016. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.

November 6, 2018 41

36% 38% 39% 38% 32% 32% 35% 38% 34% 35% 35%44%

19% 21%27% 23%

20% 24% 22% 20% 22% 21% 18%

17%

23% 20%16%

16%

18%18% 18% 19% 18% 15% 16%

13%

21% 22% 18% 23%29% 26% 24% 23% 26% 29% 31% 26%

0%

20%

40%

60%

80%

100%

FY13 FY14 FY15 FY16 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18


73% 70% 69% 68% 74% 74% 73% 70% 73% 73% 73%65%

27% 30% 31% 32% 26% 26% 27% 30% 27% 27% 27%35%

0%

20%

40%

60%

80%

100%


Revenue1: Distribution by Recurring vs. Transaction

Transaction Recurring

Corporate Finance: Revenue Diversification

38% 38% 32% 32% 31%38% 33% 37% 35% 35% 36% 38%

62% 62% 68% 68% 69%62% 67% 63% 65% 65% 64% 62%

0%

20%

40%

60%

80%

100%


Revenue1: Distribution by Geography

Non - U.S. U.S.

Revenue1: Distribution by Product

2


2. Other includes: monitoring, commercial paper, medium term notes, and ICRA.

Percentages have been rounded and may not total to 100%.

November 6, 2018 42

Structured Finance: Revenue and Issuance

$23 $24 $23 $24 $23 $27 $28 $28 $25

$19 $25 $20 $22 $22$25 $24 $27

$24

$33$40

$29$30 $38

$46$33 $32

$26

$29

$42

$27$42

$46

$50

$43$55

$51$0

$1

$0

$1$1

$1

$1$1

$1

$0

$20

$40

$60

$80

$100

$120

$140

$160

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ M

illio

ns


ABS RMBS CREF Structured Credit Other

$101 $91 $107 $110 $98 $92 $91 $94 $97

$59 $65$90 $85

$73 $76 $81 $85 $90$46 $53

$70 $95 $116 $122 $140 $133 $143$99 $82

$78$91 $96

$137$135 $122

$165

$0 $0

$0$0 $0

$0$2 $2

$2

$0

$200

$400

$600

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illio

ns



$296 $220$319 $335 $317 $319 $292 $298 $337

$355$396

$371$231 $189 $238

$200 $204$254

$30 $24$36

$73

$120$114

$117 $94$120

$93

$59 $39 $65

$94$159

$132 $116

$136

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ B

illi

on

s


ABS RMBS CREF Structured Credit

$68 $80 $74 $88$67

$107 $102 $89 $79

$36$48 $47

$75

$59

$73$62 $74

$64$25

$33$18

$26

$34

$41$26 $27

$26$25

$56$14

$32$42

$48

$36$64

$51

$0

$50

$100

$150

$200

$250

$300

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ B

illi

on

s


ABS RMBS CREF Structured Credit


2. Sources: AB Alert, CM Alert, Moody’s Corporation. Debt issuance categories do not directly correspond to Moody’s revenue categorization.

Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization)

includes covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance, commercial real estate CDOs, and real estate

investment trusts (REITs). Structured Credit includes CLOs and CDOs.

November 6, 2018 43

Structured Finance: Revenue Diversification

60% 62% 64% 62% 57% 63% 66% 70% 65% 64% 67% 65%

40% 38% 36% 38% 43% 37% 34% 30% 35% 36% 33% 35%

0%

20%

40%

60%

80%

100%




36% 34% 31% 33% 35% 32% 30% 29% 31% 35% 34% 35%

64% 66% 69% 67% 65% 68% 70% 71% 69% 65% 66% 65%

0%

20%

40%

60%

80%

100%



Non - U.S. U.S.

26% 22% 20% 22% 23% 20% 18% 18% 19% 22% 20% 20%

19%18% 18% 19% 20%

19%17% 17% 18% 19% 19% 19%

30%28% 31% 31% 29%

25% 29% 31% 29% 26%22% 21%

25%32% 31% 28% 27%

35% 36% 33% 33% 33% 38% 40%

0% 0% 0% 1% 0% 1% 0% 0% 0% 0% 1% 0%

0%

20%

40%

60%

80%

100%






Notes: ABS (Asset Backed Securitization) includes asset-backed commercial paper and long-term asset-backed securities. RMBS (Residential Mortgage Backed Securitization)

includes covered bonds. CREF (Commercial Real Estate Finance) includes commercial mortgage-backed securities, real estate finance, commercial real estate CDOs, and real estate

investment trusts (REITs). Structured Credit includes CLOs and CDOs.

November 6, 2018 44

Financial Institutions: Revenue and Issuance

$63 $59$79 $70 $70

$80 $77 $77 $73

$26$23

$25$23 $24

$30 $28 $33 $38$4$4

$5$6 $5

$6 $6$7 $6

$3$3

$3$3 $4

$3 $3$3 $3

$0

$20

$40

$60

$80

$100

$120

$140

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ M

illio

ns


Banking Insurance Managed Investments Other

$176 $192 $205 $228 $234 $242 $244 $240$300

$66$69 $73

$79 $89 $92 $96 $102

$102

$16$18

$17$19 $16 $19 $16 $17

$22

$0$0

$0$0 $0 $2 $9 $10

$13

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illio

ns



$1,764

$1,340 $1,266 $1,312$1,072

$1,247 $1,194 $1,187 $1,230

$80

$87 $79$137

$161

$197$136 $112

$180

$0

$400

$800

$1,200

$1,600

$2,000

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ B

illi

on

s


Global Speculative Grade Financial Corporate Bonds

Global Investment Grade Financial Corporate Bonds

$284$216

$419

$294 $278$241

$411$339 $327

$38

$19

$45

$49$39

$49

$39

$24 $20

$0

$100

$200

$300

$400

$500

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ B

illi

on

s


Global Speculative Grade Financial Corporate Bonds

Global Investment Grade Financial Corporate Bonds


2. Sources: Moody’s Analytics, Dealogic. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.

November 6, 2018 45

Financial Institutions: Revenue Diversification

35% 35% 37% 37%48% 43% 40%

48% 45% 44% 47% 47%

65% 65% 63% 63%52% 57% 60%

52% 55% 56% 53% 53%

0%

20%

40%

60%

80%

100%




58% 60% 57% 57% 55% 57% 60% 57% 57% 58% 55% 50%

42% 40% 43% 43% 45% 43% 40% 43% 43% 42% 45% 50%

0%

20%

40%

60%

80%

100%



Non - U.S. U.S.

69% 68% 67% 65%70% 69% 69% 67% 69% 67% 64% 61%

26% 26% 26% 28%22% 23% 23% 25% 23% 25% 27% 32%

5% 5% 4% 5% 5% 6% 5% 5% 5% 5% 6% 5%

0% 1% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%

0%

20%

40%

60%

80%

100%






November 6, 2018 46

$142 $159 $156 $181 $174 $177 $202 $225 $218

$104$113 $121

$142 $167 $181$174

$188 $213

$0$0 $0

$0$0

$0$0

$0$0

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illi

on

s


Public Finance and SovereignProject & Infrastructure FinanceOther

$355 $374 $248

$313 $302 $307 $364 $408 $375

$207 $266

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ B

illi

on

s


Rated Global Project & Infrastructure Finance Bonds

Long-Term Rated U.S. Muni Bonds

Public, Project and Infrastructure: Revenue and Issuance

$105 $95 $82 $95 $80

$127

$59$82 $78

$50 $59 $57

$68 $75

$66

$57

$66 $57

$0

$50

$100

$150

$200

$250

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ B

illi

on

s


Rated Global Project & Infrastructure Finance Bonds

Long-Term Rated U.S. Muni Bonds

$60 $54 $53 $53 $49$62

$47 $52 $45

$45 $49 $45 $51 $60

$57

$46$56

$54

$0 $0$0

$0$0

$0

$0

$0

$0

$20

$40

$60

$80

$100

$120

$140

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ M

illio

ns


Public Finance and SovereignProject & Infrastructure FinanceOther


2. Global Rated Project & Infrastructure Finance available starting in 2016 and represents Moody’s rated issuance.

Sources: Thomson SDC, Moody’s Corporation. Note: Debt issuance categories do not directly correspond to Moody’s revenue categorization.

November 6, 2018 47

60% 58% 60% 63% 60% 64% 65% 68% 65%58% 64% 61%

40% 42% 40% 37% 40% 36% 35% 32% 35%42% 36% 39%

0%

20%

40%

60%

80%

100%




37% 37% 35% 33% 36% 37% 42% 38% 38% 43% 43% 40%

63% 63% 65% 67% 64% 63% 58% 62% 62% 57% 57% 60%

0%

20%

40%

60%

80%

100%



Non - U.S. U.S.

51% 49% 54% 54% 54% 51% 45%52% 51% 50% 48% 46%

49% 51% 46% 46% 46% 49% 55%48% 49% 50% 52% 54%

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0%

20%

40%

60%

80%

100%


Public Finance and Sovereign Project & Infrastructure Finance Other


Public, Project and Infrastructure: Revenue Diversification



November 6, 2018 48

Moody’s Analytics: Financial Overview

$168 $167 $175 $181$218

$258 $269 $280 $283

$102 $130 $96 $97

$113

$143 $100 $106 $113

$36$37

$36 $36

$38

$40$38 $37 $40

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

$ M

illio

ns


$411 $419 $445 $483 $520 $572 $626 $668$833

$151 $181 $196$243 $263

$329$374

$419

$449

$11 $19 $62 $108$119

$168$150

$147

$149

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ M

illio

ns




Research, Data and

Analytics

23% 27% 26% 25% 21% 20% 21% 24% 22% 15% 16% 16%

77% 73% 74% 75% 79% 80% 79% 76% 78% 85% 84% 84%

0%

20%

40%

60%

80%

100%



55% 56% 54% 51% 49% 50% 56% 56% 55% 60% 59% 60%

45% 44% 46% 49% 51% 50% 44% 44% 45% 40% 41% 40%

0%

20%

40%

60%

80%

100%



Non-U.S. U.S.

58% 54% 54% 54% 57% 58% 59% 59% 58%66% 66% 65%

29% 31% 33% 34% 31% 31% 31% 32% 31%25% 25% 26%

13% 16% 13% 12% 12% 11% 10% 9% 10% 9% 9% 9%

0%

20%

40%

60%

80%

100%




1. Historical data has been adjusted to conform with current information and excludes intercompany revenue. Research, Data and Analytics includes Bureau van Dijk revenue

beginning from the acquisition close date, August 10, 2017.


November 6, 2018 49

MIS MA Non-U.S.U.S.

Corporate Finance

31%

Structured Finance

12%

Financial Institutions

10%

Public, Project & Infrastructure

9%

MIS Other1%

Research, Data &

Analytics24%


10%


3%

Revenue is Diversified by Business, Geography and Type

TTM 3Q18 Revenue by Business

United States53%

EMEA31%

Asia-Pacific11%

Americas5%

TTM 3Q18 Revenue by Geography

TTM 3Q18 Revenue by Type

53%36%

82%

47%64%

18%

MCO MIS MA


November 6, 2018 50

Moody’s Corporate Speculative Grade Credit Cycle

Gauge

Improving Neutral Trending Worse

1. North America long-term average: LSI: from 2002, B3-Neg: from 2007, Refunding: from 2007, Downgrade / Update Ratio: from 2008, Bond CQ score: from 2011, Loan CQ: from

2012, Default rate: from 1990.

2. Europe long-term average: LSI: from 2012, CQ Score: from 2011, B3-Neg: from 2011, Downgrade / Update Ratio: from 2009, Default rate: from 1999.

3. Trailing twelve months (TTM) ended September 30, 2018.


Latest

Metric

1-Year

Ago

Long-Term

Average1

Record

Worst

Latest

Metric

1-Year

Ago

Long-Term

Average2

Record

Worst

Liquidity Stress Index 3.3% 3.0% 6.4% 20.8% 5.6% 8.6% 11.1% 18.5%

B3-Neg / Lower 188 214 194 291 39 48 44 60

% B3-Neg / Lower 12.3% 15.1% 15.0% 26.1% 8.1% 10.8% 11.4% 17.2%

3-Year Refunding Index 3.2x 4.6x 6.1x 1.5x N/A N/A N/A N/A

Downgrade / Upgrade Ratio3 0.6x 0.8x 3.3x 11.7x 2.4x 0.4x 2.3x 20.5x

Bond Covenant Quality Score 4.30 4.47 4.07 4.52 3.79 3.69 3.40 4.85

Loan Covenant Quality Score 4.09 4.08 3.79 4.10 N/A N/A N/A N/A

Default Rate (forecast) 2.0% 3.1% 4.7% 14.7% 2.0% 2.0% 3.7% 13.0%

North America Europe

November 6, 2018 51

Moody’s Global Presence

U.S. employees non-U.S. employees total employees2

U.S. employees non-U.S. employees total employees1

3,743 8,878 12,621

2018

3,566 8,182 11,748

2017

AmericasArgentina Mexico

Brazil Panama

Canada Peru

Costa Rica United States

Europe, Middle East & AfricaAustria Poland

Belgium Portugal

Cyprus Russia

Czech Republic Saudi Arabia

Denmark Slovakia

France South Africa

Germany Spain

Ireland Sweden

Israel Switzerland

Italy UAE

Mauritius United Kingdom

Netherlands

Asia-PacificAustralia Malaysia

China Nepal

Hong Kong Singapore

India Sri Lanka

Japan Thailand

Korea



November 6, 2018 52

CSR: Reshape Tomorrow PartnersGlobal Initiative Empowering Entrepreneurs to Overcome the Challenges of Expanding

Their Enterprises

Shanghai-based program helping migrant

women access capital and credit through

tailored training, coaching and networking.

Providing strategic and operational

assistance for global social entrepreneurs

to scale their businesses serving low-

income consumers and lifting them out of

poverty.

Global program to improve social

entrepreneurs’ ability to access credit.

Moody’s will sponsor while cultivating a

community of early stage lenders

committed to social impact.

Training program to help women

business owners access capital and

markets in Canada, Germany and

Nigeria by building more inclusive

global value chains.

Helping 1,000 retail shop owners in

Kenya by providing working capital to

youth and women entrepreneurs in

South Africa to reduce unemployment

and boost local economies.

Capacity building program in Latin

America to give entrepreneurs the

tools to grow successful businesses,

such as team management and

financial planning.

Learn more at moodys.com/csr

https://csr.moodys.io/

November 6, 2018 53

Reconciliation of Adjusted Financial Measures to

GAAPAdjusted Operating Income and Adjusted Operating Margin Reconciliation1

(in $ millions) 2013 2014 2015 2016 2017 TTM 3Q18

Operating Income $1,248.0 $1,449.8 $1,490.7 $650.9 $1,820.8 $1,957.1

Operating Margin 42.0% 43.5% 42.8% 18.1% 43.3% 43.0%

Add Adjustment:

Depreciation & Amortization 93.4 95.6 113.5 126.7 158.3 193.5

Acquisition-Related Expenses - - - - 22.5 9.9

Restructuring - - - 12.0 - -

Goodwill Impairment Charge - - - - - -

Settlement Charge - - - 863.8 - -

Adjusted Operating Income $1,341.4 $1,545.4 $1,604.2 $1,653.4 $2,001.6 $2,160.5

Adjusted Operating Margin 45.1% 46.3% 46.0% 45.9% 47.6% 47.5%

Moody's Corporation Net Debt Reconciliation

1. 2013 - 2017 operating and adjusted operating income have been restated to conform to the new presentation of pension accounting.

(in $ millions) 2010 2011 2012 2013 2014 2015 2016 2017 3Q 2018

Gross debt $1,239.6 $1,243.8 $1,663.5 $2,091.3 $2,532.1 $3,380.6 $3,363.0 $5,540.5 $4,954.5

Less: Cash, cash equivalents and

short-term investments672.3 774.8 1,773.3 2,106.3 1,677.6 2,232.2 2,224.9 1,183.3 1,145.5

Net debt $567.3 $469.0 ($109.8) ($15.0) $854.5 $1,148.4 $1,138.1 $4,357.2 $3,809.0

November 6, 2018 54


GAAP (cont.)

Moody's Corporation Operating Margin Guidance Reconciliation

2018F1

Projected Operating Margin - GAAP Approximately 43%

Projected impact from Depreciation & Amortization Approximately 4%

Restructuring Approximately 1%

Projected impact from Acquisition-Related Expenses Negligible

Projected Adjusted Operating Margin Approximately 48%

Free Cash Flow Reconciliation2

(in $ millions) 2013 2014 2015 2016 2017 2018F1

Net cash flows from operating activities $965.6 $1,077.3 $1,198.1 $1,259.2 $740.40 ~$1,600

Less: Capital expenditures 42.3 74.6 89.0 115.2 90.6 ~$85

Free Cash Flow $923.3 $1002.7 $1,109.1 $1,144.0 $649.80 ~$1,500

1. Guidance as of October 26, 2018.

2. In 2017, the Company adopted ASU 2016-09 “Improvements to Employee Share-Based Payment Accounting” on a retrospective basis. In Q1 2018, the Company adopted ASU No. 2016-

15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)” on a retrospective basis.

November 6, 2018 55


GAAP (cont.)Moody's Corporation Diluted EPS Reconciliation

2013 2014 2015 2016 2017 2018F1

Diluted EPS - GAAP $3.60 $4.61 $4.63 $1.36 $5.15 $6.95 - $7.10

Legacy Tax (0.09) (0.03) (0.03) - - -

Impact of Litigation Settlement 0.14 - - $3.59 - -

ICRA Gain - (0.37) - - - -

FX Gain due to Subsidiary Liquidation - - - ($0.18) - -

Restructuring - - - $0.04 - $0.10 - $0.15

CCXI Gain - - - - ($0.31) -

Acquisition-Related Expenses - - - - $0.10 $0.02 - $0.03

Purchase Price Hedge Gain - - - - ($0.37) -

Net Acquisition-Related Intangible

Amortization Expenses$0.09 $0.10 $0.11 $0.13 $0.23 ~$0.40

Impact of U.S. tax reform - - - - $1.28 ($0.33)

Net Impact of U.S./European tax change

on deferred taxes - - - - ($0.01) -

Increase to non-U.S. UTPs - - - - - $0.33

Adjusted Diluted EPS $3.74 $4.31 $4.71 $4.94 $6.07 $7.50 - $7.65

1. Note: Table may not sum to total due to rounding.

Guidance as of October 26, 2018.

Investor Relations

ir.moodys.com

[email protected]

moodys.com

http://ir.moodys.com/

mailto:[email protected]

November 6, 2018 57

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