S&P Global Inc.

Good morning and welcome to S&P Global's fourth quarter and full year 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 thank you for joining us today for S&P Global's fourth quarter earnings call. Presenting on today's call are Doug Peterson, President and CEO, and Adolph Steenburgen, Executive Vice President and Chief Financial Officer. We issued a news release with our fourth quarter and full year 2019 results earlier today. If you need to copy the release and financial schedules, they can be downloaded online at investor.svglobal.com. New this quarter, we've added an appendix at the end of the slide deck. These slides will not be addressed during the webcast. However, you may access them by downloading a PDF of the slides from the webcast viewer or from the quarterly earnings page on our investor relations website. 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. Earnings release contains exhibits that reconcile the difference between non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. Before we 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 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 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 we would ask that questions from the media be directed to Dave Guerino at 212-438-1471. At this time, I'd like to turn the call over to Doug Peterson.

Doug? Thank you, Chip. Welcome to today's earnings call. I'm going to review our full-year highlights, and Eval will review the fourth quarter results in a moment. 2019 was a notable year for the company with solid financial results while we invested for future growth. In 2019, we delivered 7% revenue growth and 12% adjusted diluted EPS growth. We generated margin improvement in every business, reported $2.6 billion in free cash flow, excluding certain items, a 29% increase year over year. We returned $1.8 billion through share repurchases and dividends, and we'll initiate a of $1 billion ASR in the next few days. We also advanced significantly on key initiatives. We made great strides towards our Investor Day targets. We launched a number of new products with very encouraging early success. As we continue to build for the future, we made substantial progress on our 2018 growth investments. In China, we launched a rating agency and started a market intelligence franchise. And across the company, we substantially expanded our ESG activities and applied automation and AI. We added unique benchmarks, data, and analytics with acquisitions of 451 Research, Live Rice Index, Enerdata, and the pending acquisition of Greenwich Associates. We also bolstered our ESG capabilities with the acquisition of the ESG rating business from Robico SAM. With the progress achieved in 2019, we're well positioned to advance our strategic initiatives and financial targets in 2020. On this slide, we summarize our full year 2019 results. This year, we delivered solid revenue growth of 7%, exceptional margin improvement 140 basis points to 50.2%, a 2% reduction in shares outstanding, and solid EPS growth. Every business delivered revenue growth and margin improvement in 2019. Indices led the way with 10% revenue growth, and three of our four businesses delivered improvement of more than 100 basis points of adjusted operating profit margin. As we indicated on the first quarter 2018 earnings call, market intelligence investment spending in new initiatives increased during 2019, which impacted adjusted profit margin expansion for MI. Our 2019 performance extended our succession of solid revenue and exceptional adjusted operating margin growth. We've delivered a 6% four-year TAGR for revenue and improved our adjusted operating profit margin by more than 1,000 basis points over the past four years. We're very proud of the collective efforts of our employees to deliver such meaningful financial progress year after year. a remarkable 19% compound annual growth rate of adjusted diluted EPS over the last four years. 2019 adjusted diluted EPS growth was lower than the four-year CAGR due to the increased investment spending that we outlined for you a year ago. This is a slide that we shared on Investor Day in May 2018, Powering the Markets of the Future. It's the framework we use to allocate investments to where we can most deliver growth. We'll continue to invest in our core businesses and adjacencies to fuel revenue momentum through improving our products, adding new data sets, and entering new geographies. And we'll continue to invest in our foundational capabilities that are necessary for our long-term results. We're particularly pleased with the success of a number of products that we launched in 2019. Our launch of a ratings franchise in the Chinese domestic bond market was the most publicized new product, We're building a business from scratch, and the education of market participants is pivotal to its success. To that end, we met with over 1,600 investors and issuers. During these meetings, we've consistently found a genuine demand for high-quality, objective, transparent, and reliable ratings in China. With six ratings issued to date, we expect adoption to steadily increase in the coming years. Ratings ESG evaluations were launched as 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. Once again, education is important, and we've been meeting with potential issuers around the world to discuss our ESG evaluation. To date, we've published six ESG evaluations and expect adoption to increase quickly in 2020. After S&P Dow Jones indices introduced ESG versions of our most recognized indices, there was considerable interest among our partners to create ETFs based on these indices. UBS, DWS, and State Street have each launched an ETF based on the S&P 500 ESG index. As of the end of 2019, these ETFs have collectively surpassed $450 million in AUM. The micro e-mini futures have been touted as one of CME's most successful launches with over 44 million contracts traded by year end. After introduction of low sulfur marine fuel prices, both CME and ICE have launched new futures contracts. 667,000 contracts traded in 2019. And momentum is building as more than half of those contracts were traded in the fourth quarter. On the third quarter conference call, we introduced textual data analytics for earnings conference calls. The team has analyzed 214,000 earnings calls for more than 10,000 companies, providing over 680 million sentiment behavioral scores with history that goes back to 2004. TrueCost launched their climate change physical risk data set in the fourth quarter to help companies' investors understand their exposure to physical risks and report in line with TCFD recommendations. The data set covers six climate change physical risk indicators, such as heat waves and coastal flooding, from more than 15,000 companies and 500,000 underlying assets with analytics supporting various climate change scenarios. In 2019, we continued to invest in ESG benchmarks, data, and analytics. We announced acquisitions of one of the most widely recognized leaders in ESG data with the ESG ratings business firm Robico SAMS. Unique intelligence, expertise, and data covering high-growth emerging technology segments with 451 Research. A global provider of information and benchmark price assessments for the rice industry with Live Rice Index. Benchmark prices, news, and analysis on the Canadian natural gas market with Enerdata. And data and analytics and insights to the financial services industry with CRISL's pending acquisition of Greenwich Associates. In aggregate, during 2019, we invested approximately $260 million on these acquisitions. We also streamlined our operations with a couple of small divestitures. As we increasingly embed technology into the fabric of the company, we want to not only improve our product offerings, but also increase operational excellence. Automation is a large part of this effort. This slide lists some of the key projects implemented. I'll discuss two of these today. Kensho Scribe, which we highlighted on the third quarter earnings call, will now process preliminary transcripts for nearly all of the 33,000 calls posted to the global platform each year. Human editors refine and approve the final version to meet our customers' needs. Scribe has enabled us to increase our coverage by 1,500 companies for 2020, with no headcount increase and expected production cost savings of about 35%. compared to 2018, before Scribe was launched. Robotic process automation is a company-wide program. Employees across the company were challenged to see if RPA could be used to automate routine tasks. And by working with a small team of RPA experts, projects identified by employees have saved an estimated 247,000 human hours by automating 218 processes in 2019. Both our ratings business and our indices business can be impacted by short-term market movements, and I'd like to put some of these movements into perspective, starting with 2019 debt issuance. Global issuance increased 6% in 2019. The most noteworthy gains were the 51% increase in high yield and the 21% increase in U.S. public finance. Leveraged loan new issuance activity declined 23% as many issuers chose to utilize the high yield market rather than take out a bank loan. This slide puts high yield and leveraged loan issuance into perspective. While high yield issuance was up considerably in 2019, the combination of high yield and leveraged loan issuance was consistent with the 10-year average. The bars on these charts depict the volatility of leveraged loan volumes in both the U.S. and Europe. The lines depict the percentage of these loans that we rate. In 2019, we rated 89% of U.S. leverage loans and 92% of European leverage loans. Turning to industry trends affecting our indices business, this chart depicts the continuing outflows from actively managed U.S. mutual funds into index-based ETFs and mutual funds. There are several reasons for this trend, including growing institutional retail adoption, search for transparent, lower-fee investments, globalization of passive investing, and the growing need for more complex passive solutions. We continue to work with the markets to provide the most comprehensive collection of index solutions. Specifically to the ETF AUM associated with our indices, we saw an increase in 2019 due to significant market appreciation combined with product inflows. For the full year, market appreciation added $333 billion and inflows added $58 billion, bringing our year-end AUM to over $1.7 trillion. AUM is up more than 150% since the end of 2013. Now I'd like to shift to our 2020 outlook. Our latest GDP forecast was developed in December 2019. Our economists expect 2020 global GDP growth of 3.3%. slightly higher than the 2019 forecast of 3.2%. Lower growth in the U.S., Europe, and China is expected to be more than offset by growth in Russia, Turkey, Mexico, and Brazil. Please note that this doesn't take into account any potential impact from the outbreak of the coronavirus. The latest global refinancing study was issued earlier this week. The total amount of global debt maturing in this study is $10.8 trillion over the next five years. This is up slightly from the $10.6 trillion highlighted in last year's study. The chart on the right depicts the global high-yield debt maturing over the next five years. It totals to $2.5 trillion, up from $2.3 trillion in last year's study. The report notes that maturities appear largely manageable in the near term as monetary easing by multiple central banks contributing to favorable funding conditions for companies, particularly those with higher credit quality, and about 77% of the debt through 2024's investment grade. The company updated its 2020 bond issuance forecast in a report issued last week. Excluding international public finance, issuance is expected to increase 5%. This is unchanged from the previous forecast that we shared with you on the third quarter earnings call. As you saw in an earlier slide, we use our framework powering the marks of the future, including six foundational capabilities to set our goals and allocate resources. For 2020, here are some of the top initiatives aligned to this framework. Some of these are new for 2020, while many are multi-year initiatives that we discussed in 2019. Under global, we believe that we're in a unique position to bring additional transparency and independent analytics to the capital markets in China. Both ratings and market intelligence will continue their efforts in this important market. Outside China, both Platts and ratings will be extending their commercial presence in Asia. Under customer orientation, we continue building the market intelligence platform. In ratings, we want to make the vast array of models and data that are created during the ratings process available to issuers through Ratings360 and to fixed-income investors through RatingsDirect and RatingsExpress. We're simplifying Platts' 300-plus product offerings and grouping them into about a dozen commodity classes. This will help customers better understand the full breadth and depth of our offerings within a commodity class. Under innovation, after acquiring the ESG ratings business from Robico SAM, we're now integrating their data and methodologies with ours. This will bolster our ESG product offerings. Our data marketplace will help clients navigate and link increasing volumes of new and unstructured data. In 2020, we'll introduce weather, satellite, foot traffic, and FDA data, amongst others, linked to market intelligence and PLATS data. In addition, our customers are demanding increased private company and SME coverage on the desktop. We're also working to launch an expanding suite of proprietary climate analytics covering both physical risk and transition risk on the desktop and express feed. And we're integrating true cost data with our equity portfolio analytics and our credit analytics products. Under technology, we're increasingly utilizing technology to improve the customer experience in 2020. An example is the success that Platts and Kensho achieved in 2019 to dramatically accelerate the market-on-close process for dated Brent, while unleashing best-in-class real-time analytical and data visualization tools for our customers. Another Kensho project is OmniSearch. After beta testing with 1,300 customers, we plan to bring OmniSearch into production on the market intelligence platform in 2020. Under operational excellence, we want to expand our successes with Kensho in data ingestion and continue to leverage in-house RPA and third-party technologies to expand automation. Under people, we want to continue to raise the technological acumen of every employee through our essential tech program and expand the capabilities of our technologists through our data science academies. and will maintain our foundational commitment to diversity and inclusion. And now I'd like to turn the call over to Evald Steenbergen, who will provide additional insights into our capital plans and financial performance. Evald?