S&P Global Inc.

Good morning, and welcome to S&P Global's first quarter 2019 earnings conference call. I'd like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode. We will open the conference to questions and answers after the presentation, and instructions will follow at that time. To access the webcast and slides, go to investor.spglobal.com. If you need any additional technical assistance, Please press star zero, and I will assist you momentarily. I would now like to introduce Mr. Chip Merritt, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.

Good morning. Thanks for joining S&P Global's earnings call. Presenting on this morning's call are Doug Peterson, President and CEO, and Avout Steenbergen, Executive Vice President and Chief Financial Officer. This morning, we issued a news release with our first quarter 2019 results. If you need a copy of the release and financial schedules, they can be downloaded at investor.spglobal.com. In today's earnings release and during the conference call, we're providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management's. The earnings release contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. Before I begin, I need to provide certain cautionary remarks about forward-looking statements. Except for historical information, the matters discussed in the teleconference may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates, and descriptions of future events. Any such statements are based on current expectations and current economic conditions, and are subject to risk of uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. In this regard, we direct listeners to the cautionary statements contained in our Form 10-Ks, 10-Qs, and other periodic reports filed with the U.S. Securities and Exchange Commission. I would also like to call your attention to a European regulation Any investor who has or expects to obtain ownership of 5% or more of SMB Global should give me a call to better understand the impact of this legislation on the investor and potentially the company. We're aware that we do have some media representatives with us on the call. However, this call is intended for investors, and we would ask that questions from the media be directed to Jason Forchwanger at 212-438-1247. At this time, I would like to turn the call over to Doug Peterson. Doug?

Thank you, Chip. Good morning and welcome to our first quarter earnings call. 2019 began on shaky footing on the heels of the volatility and certainty in the fourth quarter. The markets have come a long way since the depths of December. The main development of the past quarter has been the recovery of both equity and debt markets. In the meantime, our baseline forecast of slower but healthy growth for 2019 remains intact. But the most notable change has been a coordinated stand-down by major central banks, an across-the-board shift in monetary policy bias from gradual tightening to neutral. Markets have responded very positively, although risks related to politics and trade still linger. Our subscription businesses, Market Intelligence and Platts, led revenue growth in the first quarters. It took several weeks in January for markets and, more importantly, ETF AUM and debt issuance to recover. Let me review some of the highlights from the quarter. Market intelligence led all segments with 8% organic revenue growth. We achieved a 40 basis point improvement in adjusted operating profit margin, and as I will show in a few moments, an even larger increase in our trailing four-quarter figure. We continued a long track record of reducing average diluted shares outstanding with a decline of 6 million shares. Based primarily on a lower tax rate and lower share count, we delivered 5% adjusted diluted EPS growth. In a period when markets weren't ideal, we were pleased to still be able to grow adjusted diluted EPS. We generated approximately $306 million in free cash flow, excluding certain items, in a seasonally low cash flow quarter. We're reaffirming 2019 adjusted guidance, and finally, we launched two landmark ESG offerings that I'll review in a few minutes. Revenue is largely unchanged versus the prior period as the decline in ratings revenue is offset by growth in the other three segments. Our adjusted operating profit increased 1%, and our adjusted operating profit margin increased 40 basis points to 47.3%. But please recall, we measure and track adjusted margins on a trailing four-quarter basis, which increased 230 basis points. In addition, we continue to reduce shares outstanding, which contributed to the 5% increase in adjusted diluted EPS. Each quarter, we take an opportunity to highlight key drivers to our business and important projects underway. This quarter, let's start with the data feeds business within market intelligence. When most investors think about market intelligence, they think about the Capital IQ or market intelligence desktop, Data management solutions in Rating Express, however, offer products that are ingested by our customers as data feeds. This data feed business has grown about 11% annually for the last two years and is on track to deliver revenue of more than $600 million this year. Historically, data feeds have primarily been made up of Ratings Express, which is the reselling of ratings information, Compustat, and QSIP, along with other offerings including GICS, cross-reference services, and earnings estimates. In the past year, we've had a 40% increase in the number of data packages available through our data feeds. These have included alternative data such as machine-readable transcripts, Pangeva shipping data, and SNL asset level data. We expect that true cost ESG data, transcript sentiment scores, and other unique data sets in the near future. The key is to deliver unique data to our customers in the form in which they need it. Now turning to ratings, during the first quarter, global bond issuance decreased 3%, with mixed performance in various geographies and asset classes. If we also include all bank loan ratings volume, total global issuance declined 13%. In the U.S., bond issuance declined 7% as investment grade decreased 8%, high yield increased 6%, public finance improved 17%, and structured finance declined 20%, with drops in CLOs, ABS, and CMBS partially offset by gains in RMBS. In Europe, bond issuance decreased 9%, as investment grade decreased 13%, high yield declined 26%, and structured finance increased 10% due to strength in covered bonds, a category where we have very little presence. In Asia, bond issuance increased 12%. Last quarter, we introduced this chart to attempt to track debt issuance and global cash balances of those companies with the most overseas cash at the end of 2017. We're pleased that the cash balances of these companies continue to decline and that the issuance among these companies is showing signs of recovery after an anemic 2018. The latest 2019 global issuance forecast is largely unchanged from the previous forecast. Excluding international public finance, which has minimal impact on our financial results, issuance is expected to decrease less than 1%. Leveraged loan activity has become an important source of revenue as these loans are increasingly rated. This chart depicts new leveraged loan volume for the past six years and excludes repricing and amend to extend volume. First quarter volume is down 26%. primarily due to less M&A activity as well as a dramatic reduction in leveraged loan fund assets. This chart shows that for the past 23 weeks, US leveraged loan funds have experienced significant outflows. In fact, since peaking at $109 billion in October 2018, loan funds have had net outflows totaling over $25 billion. Investing in leveraged loans is more appealing when rates were rising because loans have variable rates. Now that expectations for a rate increase have subsided, high yield debt looks relatively more attractive. Remember when doing your analysis, leveraged loan activity is not included in bond issuance data. And so our bank loan ratings revenue decreased in the first quarter to $67 million versus $99 million in the first quarter of 2018. During Investor Day, we introduced the framework Powering the Markets of the Future, including six foundational capabilities. We use this framework to set our goals and allocate resources. During our fourth quarter call, I shared projects underway in each of these categories with particular emphasis on global with our ratings opportunity in China. Let me start there and then highlight some new opportunities under innovation and customer orientation. After receiving approval to enter the domestic Chinese bond market in January, our official launch event took place on March 26th. We hosted a half-day seminar in Beijing with 170 participants from issuing companies, fixed income investors, banks, and other participants in China's financial markets. This was an opportunity to showcase our new team as well as our strong commitment to bring more transparency and insights to China's financial markets. also outlining a vision that goes beyond our ratings business and across all of our divisions. ESG is a major focus in the areas of customer orientation and innovation. Our ESG efforts at S&P Global span every business segment. In 2019, we anticipate ESG revenue will approach $50 million. We recognize that different clients have different needs, and are trying to tailor products specific to those needs. To that end, we have created the ESG Data Factory to centralize the data collected across the company, which can be used in any of our ESG offerings. This ensures consistency of inputs across the various products, as well as scale. We're expanding on our ESG heritage in S&P Dow Jones Indices. Twenty years ago, we launched the Dow Jones Sustainability Indices, arguably the best-known ESG indices in the market. We're now introducing an enhanced ESG scoring methodology designed for the new S&P 500 ESG index and the upcoming country-specific and regional ESG indices. The scores are used as inputs to evaluate companies in the indices. The S&P DJI ESG scores are available to the market as a standalone product and can be used as a tool for a broad range of research, indexing, and investment purposes. The first of the new ESG indices to launch is the S&P 500 ESG Index. An increasing number of investors require indices that are aligned not only with their investment goals, but also their individual and institutional values. The S&P 500 ESG Index is constructed with both of these in mind. The S&P 500 ESG index targets 75% of the traditional S&P 500's market capitalization at the industry level based on their GIX code. The index offers diversification and a profile that is close in line with that of the U.S. large cap market. UBS is the first firm to license this product for ETFs that launched last month on several European exchanges. S&P Global Ratings launched ESG evaluations to serve issuers and fixed income investors. Our ESG evaluation is a cross-sector relative analysis of an entity's ability to operate successfully in the future and optimize long-term stakeholder value in light of its natural and social environment and the quality of its governance. In addition to leveraging the ESG data factory, the engagement that our ratings analysts have with client company management coupled with the judgment of our analysts, add unique insights to this product. Delivering innovative new products and updating existing products is an important emphasis at S&P Global. Our indices business recently launched the Global Small Cap Select Indices. This series of new indices is designed to improve long-term risk-adjusted performance of small caps by excluding companies without a consistent track record of positive earnings. In addition, PLACS launched assessments of low sulfur marine fuel in response to International Maritime Organization's 0.5% sulfur cap on marine fuel that begins in January 2020. Our new assessments are for daily cargo and barge prices of marine fuel 0.5%, reflecting global pricing of IMO 2020 compliant residual marine fuels. Based on these new assessments, ICE launched six marine fuel 0.5% future contracts on February 19th, which traded 84 lots, equaling over 500,000 barrels on the first day. In March, S&P Dow Jones indices benchmarks, including the iconic S&P 500 and the Dow Jones Industrial Average, became the first benchmarks to be endorsed under the EU benchmark regulation and included in the ESMA register, enabling supervised entity in the EU to continue to use them. And finally, Platts recently announced a change to the dated Brent benchmark. The proposal moves to a SIF-CIF Rotterdam basis, which means it will be a landed cost. With FOB supply in the North Sea gradually falling, this proposal will ensure ample liquidity of grades in the dated Brent basket for the foreseeable future. And last, I'd like to share the early success of two new price assessments that we featured in previous earnings calls. These charts depict the volume of options and futures contracts that are based on Platt's JKM marker and Black Sea wheat. As you can see in these charts, both price assessments are gaining great adoption in the marketplace. And now, I'd like to turn the call over to Avout Steenbergen, our CFO, who will provide additional insights into our capital plans and financial performance. Avout?