S&P Global Inc.

Good morning and welcome to S&P Global's third 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.

Thank you, and good morning. Welcome to S&P Global's third quarter earnings call. Presenting on this morning's call are Doug Peterson, President and CEO, and Adolph Steenbergen, Executive Vice President and Chief Financial Officer. This morning we issued a news release with our third 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 non-GAAP measures, and the comparable financial measures calculated in accordance with US 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 risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. In this regard, we direct listeners to our 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 European regulation. Any investor who has or expects to obtain ownership of 5% or more of S&P 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 would ask a question from the media be directed to Jason Forshwanger at 212-438-1247. At this time, I'd like to turn the call over to Doug Peterson. Doug?

Thank you, Chip. Good morning and welcome to today's earnings call. We're pleased to report very strong third quarter financial results with all four divisions delivering revenue growth. We continue to generate significant margin improvement due to top-line growth in the ongoing execution of our productivity programs, and this margin improvement is occurring despite the increase in investment spending. During the third quarter, we delivered a 16% increase in adjusted diluted EPS, Based on this performance and our expectations for the rest of the year, we're raising our 2019 adjusted EPS guidance, which Aval will discuss in a moment. Share repurchases are an important component of capital return, and we recently completed our $500 million ASR initiated in August. And, of course, we're always excited to talk about our new products. We recently launched unique technology innovations, including textual data analytics, Kensho Scribe, and several ESG-related offerings. I'll cover these in more detail in a moment. To recap the financial results for the third quarter, revenue increased 9% to almost $1.7 billion. Organic revenue, excluding revenue from the divestment of SPIAs and RIC data, increased 10%. Our adjusted operating profit increased 14%, and our adjusted operating profit margin increased 230 basis points to 51.9%. As you know, we measure and track adjusted margin on a trailing four-quarter basis, which increased 200 basis points to 50.1%. In addition, we reduced shares outstanding by 3%, which contributed to the 16% increase in adjusted diluted EPS. Each quarter, we highlight the key drivers to our business and important projects underway. This quarter, let's start with ratings issuance trends. During the third quarter, global bond issuance increased 12%, with mixed performance in various geographies and asset classes. We also include bank loan ratings volume. Total global issuance increased 14%. U.S. bond issuances in aggregate increased 16% as investment grade increased 33%. High yield vaulted 43%. Public finance increased 15%, while structured finance decreased 11% with a large decline in CLOs partially offset by gains in RMBS and ABS. Investors frequently assume that lower interest rates drive increased issuance. That certainly was not the case in Europe this quarter. Despite historically low rates, European bond issuance decreased 7% as investment grade decreased 10%, high-yield soared 61%, and structured finance decreased 20% due to declines in CLOs, covered bonds, and RMBS partially offset by gains in ABS and CMBS. In Asia, bond issuance increased 24% overall. On the fourth quarter 2018 earnings call, we introduced this chart to track debt issuance and global cash balances of the 50 companies with the most overseas cash at the end of 2017. As you see on this slide, the cash balances of these companies have stabilized while bond issuance among these companies is rebounding compared to an anemic 2018. There have been 15 unique issuers that have come to market this year so far. Even Apple returned to the market, issuing $7 billion of bonds in September. Our latest global bond issuance forecast includes an update for 2019 and the initial 2020 forecast. Excluding international public finance, which has minimal impact on our financial results, We now forecast 2019 issuance to increase 9%. This is up from our previous forecast of a 1% increase. This change was driven primarily by an increase in corporate issuance. On that same basis, 2020 issuance is expected to increase 5% with growth in each issuance category. After year-over-year declines in bank loan rating activity in the first half of 2019, Bank loan rating revenue increased in the third quarter to $80 million from $73 million in the third quarter of 2018. We're frequently asked by investors if maturities have lengthened as corporate treasurers seek to stretch low interest rates further into the future. This chart depicts average U.S. bond maturities for the past 19 years. While investment-grade maturities have lengthened slightly in the past year, Both investment grade and high yield average maturities have been virtually unchanged since 2010. During our 2018 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. I'm pleased to share great progress on a number of the new initiatives in our areas of global, customer orientation, innovation, and technology. Kensho has created a new product called Scribe. It's a speech recognition solution that transcribes earnings conference calls. Using deep learning techniques, Scribe parsed thousands of hours of audio files from market intelligence archives to develop its capabilities. It essentially teaches itself to become more accurate. Scribe's capabilities enable complexities like enumeration, capitalization, and identification of sentences. Market Intelligence produces approximately 33,000 conference call transcripts each year. We recently put Scribe into production. It produced more than 2,000 calls in the third quarter, and we're ramping it up to transform our transcription business. Scribe is capable of handling 100 concurrent conference calls without any degradation in quality. There are several benefits to Scribe. First is productivity, with an average time savings of 1.25 hours per call. Second is improved accuracy. Scribe is considerably more accurate than the leading transcription services that we have tested. And third is reduction in turnaround time of approximately 15 minutes per one-hour call. This means that the complete conference call is available to our market intelligence clients sooner, 83 minutes versus 97 minutes. While investors have used earnings call transcripts as a reference for many years, Market Intelligence has launched a new product to glean additional insights from conference calls. The product is called Textual Data Analytics, or TDA. We've published two papers which provide empirical evidence that the stock price of companies whose executives exhibited the most positive sentiment or provided the most transparency during their earnings calls outperformed the broad U.S. equity market by at least 2% per year between 2010 and 2017. Our analysis shows that the textual analytics derived from earnings calls, such as positive versus negative words, language complexity, analysts selected for Q&A, et cetera, provide additional stock selection power. PDA provides intraday delivery covering more than 9,000 companies with 40 different metrics on each call. We've included an example of textual data analytics for a major U.S. bank versus its peers on their third quarter earnings call held earlier this month. This slide depicts the scores for five of the 40 metrics. Net positivity calculates the difference between positive and negative words. Here the bank scored worse than its peers. Numerical transparency evaluates the proportion of numbers versus words. The bank provided a higher level of transparency by using more numbers than its peers to show rather than use words to tell. Language complexity was lower for the bank. Conference calls with more complex language are generally associated with either poor results or other negative issues. Analyst favoritism assesses which analysts had buy, hold, or sell ratings and which were selected to ask questions. The bank here showed less favoritism than its peers by including more analysts who were bearish. Sentiment differential analyzes the difference between the net positivity score and the prepared remarks versus the Q&A session. Here, the bank sentiment differential is more negative during the Q&A responses relative to the prepared remarks than its peers. There are several other interesting new product launches underway. Over the past five years, Platts has seen significant expansion of our coverage of seaborne freight rates. The team covers tanker, dry bulk, and container freight markets, which are used in physical contracts and as a settlement basis for forward freight agreement derivative contracts. The latest addition is the CAPE T4 index for dry freight rates. The Platts CAPE T4 index is based on trade flow volume and captures the movement of widely consumed commodities such as iron ore and coal to highlight physical spot market trading activity. Next, in advance of the implementation of the 0.5 sulfur cap by the International Maritime Organization or IMO in January 2020, the ICE and CME exchanges launched a total of more than a dozen new marine fuel 0.5% futures contracts that settle against price assessments recently launched by Platts. TrueCost has launched climate and physical risk analytics, a combination of voluntary initiatives such as TCFD and regulations in certain countries are driving investor demand for increasingly sophisticated portfolio-level climate analytics covering all asset classes. Climate risk analytics adds new scenario analysis around two principal areas. The first is carbon, where true cost data helps evaluate the earnings at risk from future carbon pricing scenarios. The second is a two-degree alignment assessment. Since portfolios are not homogeneously exposed to carbon price risk, it's necessary to better understand the individual portfolio variations from a two-degree scenario. In addition, true cost climate change physical risk data set helps companies and investors understand their exposure to physical risks and report in line with TCFD recommendations. Our coverage extends to more than 15,000 companies and includes six climate change physical risk indicators, including heat waves, cold waves, droughts, hurricanes, wildfires, and river and coastal flooding. And last is the upcoming launch of e-mini S&P 500 ESG futures at CME. We highlighted the creation of this index on our first quarter earnings call. It's great to see that so soon after its introduction, a new futures contract is already being launched, utilizing the S&P 500 ESG index as its benchmark. Now I'd like to turn the call over to Avout Steenbergen, who is going to provide additional insights into our financial performance and our outlook.