Q1 2020 Earnings Call
Good morning, and welcome to S. and P. Globals first quarter 2020 earnings conference call. I believe this call is being recorded for broadcast all participant sort of listen only moved we will open the conference two questions and answers after the presentation instructions will follow at that time. Access to what <unk>, let's go to invest to a dog.
I believe this call is being recorded for broadcast all participant sort of listen only moved we will open the conference two questions and answers after the presentation instructions will follow at that time.
Access to what <unk>, let's go to invest to a dog.
If you knew any additional technical assistance. Please press star zero almost since two momentarily Oh no. It's introduced Mr. Chit Merit senior Vice President of industry relations for assumption Global search maybe <unk>.
Thank you for joining us today for S.B. Global first quarter earnings call presenting on today's call or Doug Peterson present, see yellow and he about steenbergen executive Vice President and Chief Financial Officer.
Did you expect recall, even remotely instead of posting this call together from the headquarters if you notice any delays. Thank you for your understanding.
We should have news release with our first quarter to sales and 20 results earlier today, if you need a copy of the release in financial schedules. They can be downloaded that investor data speed global Dot com.
Entities 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 corporations operate performance between periods and to view the corporations business from the same perspective as managements.
<unk> release contains exhibits reconcile the difference between nongaap measures and the comparable financial measures calculated in accordance with U.S. gap.
Before him again I need to provide certain cautionary remarks about forward looking statements.
<unk> information the matters discussed the teleconference may contain forward looking statements with a meeting other private Securities Litigation Reform Act of 1995.
<unk> projections estimates and descriptions of future events.
Eddie such statements, especially those relating to Oh look and associate scenarios regarding the impact to cope with Nike and pandemic.
Based on current expectations and current economic conditions under subject. The risks uncertainties that may cause actual results the different materially from result anticipated in these forward looking statements.
In this regard we direct listeners for the cost or statements contained in our form 10, K.'s computers and other periodic reports filed with the U.S. Securities and Exchange Commission.
I would also like to call your attention to European regulation.
That's true has or expects to obtain ownership of five or more.
The global trigger Nicole.
Better standard you Huh, Oh this legislation on investor potentially the company.
Where where do we do have some media representatives with this this call. However, this call is intended for investors and we would ask questions for the media redirected to Dave <unk> 212438.
1471.
At this time I would try to call over the Doug Peterson Doug.
Thank you chip good morning, and welcome to the surroundings Cool I hope everyone has adjustments, you're you're working for and and you stay healthy and safe.
The world is completely different placing it ever seen before.
To start by acknowledging that this was a very challenging for all of them and her thoughts with those most impacted by cobin new cheese.
Especially six first responders, an essential employees, who on the front lines for the crisis.
Today I'd like to share with you what we're doing this one p. global it's it's important employees are sort of the market or communities in our customers in this unprecedented.
Certain toilet.
Prototype quickly we've been able to me remote work from home environment. They will share some of those examples with you today.
He was also share with you Howard companies for neutral could be impacted for the remainder d. or under <unk>.
We are pleased to report strong first quarter financial results revenue increase 14% and adjusting to leave the U.P.S. increased 29%, we had a solid balance sheet to nibble liquidity.
And a great deal with time position current events like Kobe I'd like to play enabling nearly all our employees just seamlessly <unk> putting her people first started keeping unsafe unhealthy uninformed all our decision we continue to actively engage with quiet regulators in government, providing data analytics reading to researchers.
Transparent manner.
We're very pleased that we've been able to deal with it I'm interrupted products access the cross or business.
Tire transition toward employees working from home.
It's an at certain times like these that our data.
Readings in research are most important toward customers usage of many of our products a surge so terribly March.
Well, let us our businesses are consumers they see our business who are impacted by the health and both our corporate customers as well as the financial commodity markets.
They halted many of our customers will be tested your progressive.
The list, we believe that it's essential to continue to dance or grow through those and all going to cost reduction program.
Proactively analysing impact can depend demick or businesses in the management actually to to take a belt review these in the moment.
In response to cope with 19, you start with our employees and putting or people first.
Early adopter work from home policy. They travel restrictions. We also retained a dedicated chief Medical officer consulted increased and that's what emotional health services and even began shipping meals too slowly maybe we're unable to insure them on the road.
No, it's not or attention to fertile were laid off employees because it's cold in there too.
Obviously evaluate that it's <unk>.
We're six actually operating with over 99% of our employees working from home we shipped over 3000 desktops those employees home. He did not have company laptops provided significant technical support and expanded or D.P. into comedy to six school increasing usage.
We have also reached out to help her communities. We've introduced at three Kobe linked to website. She would anyone could access or special research. We provided complimentary access to Penn tree, that's quite true information to hospitals to track of Central I.
Donated 100000 medical great basement.
Responded in various parts of the world.
P Global Foundation donated $4 million, just sports small business and other hoping maybe to Lisa.
<unk> regulators are also critical employees and market Street.
We've had over 40 coping 19 later.
It's roughly 20 different regulators disgusting or views and markets and economic conditions.
Age would count, which state and local government public health officials and University.
<unk> either <unk> cool, that's quite true credit market information any gauge central banks to discuss credit market conditions and emergency lending facilities.
We acutely aware of their clients are facing challenges of working in new ways.
It's been imperative that we continue to serve them during these difficult towards.
Readings, we'd been deploying technologies, which have helped ensure continuity of surveillance facilitated issuance over 2000, you're reading sued quarters.
Since the beginning of the year, we've taken over 1300 negative rating actions, which included grading del great credit watch changes in outlook conditions.
And market intelligence or global operations sensors remains fully operational we've delivered uninterrupted availability across our product suite. In fact, we had 90% plus productivity in all court d. that in Tech operations, which based on certainly information for locations in India is best inquest <unk>.
Working on clothes process 13 somewhere around the world step up to maintain accurate entitled price reporting to spite or employees working from home.
Indices real time systems have maintained 100% uptight as it calculated critical marketing indicators, such it yes, who Pete 500, and the Dow Jones Industrial average all ones are incredibly volatile market <unk>.
We continue to serve the markets with research now <unk>.
Picked it on the writer examples of some of the mini research papers made available much of this content available free covert P. website, I mentioned I would highly recommend you'd visit the site.
Created deep content and now it's just covering it financial commodity markets. We've seen a significant increase and engage roads are insights to webinars digital online or you can see some of the usage statistics on this slide.
We've endured economic downturns in the past most notably the recent financial crisis. In 2008. This chart to picks are ready for the past 15 years.
That's an old data for the entire period, even though we didn't purchase it until 2000 feet.
Also noted jumping rubbing indices in 2000 searching pretty edition Dow Jones indices as part of the court <unk> see joint venture.
Here that is declining revenues depicted in dark blue.
Most notable take away is that there were no revenue declines in any of the businesses except breeding.
That's the reminder, the vast majority of the decline in reading shouldn't be in 2000 name was related to structured finance, we were serbia's in particular.
Well these may be interesting data point, we're not suggesting that the current pandemic related economic <unk>, we'll have the same impact on revenue pointless.
Stones hurts, because it's circumstances, rather global pandemic, our new for all with it.
Spider resilience with financial Straights, we're not immune to structural wrists arising from code would like to these include refers to the macro economic environment to ball any credit card debt to equity markets until oil markets, we could see low volumes in bond issuance, we knew sales and rewards for subscription data product or further drops.
<unk> amongst many risks that <unk>.
Close to the trend the longer the pandemic continues the greater the risks.
Now turning to the first quarter result, all four divisions delivered revenue adjusted operating profit growth.
<unk> significant margin improvement is revenue growth and productivity initiatives offset stepped up investment spending associated with their growth initiative.
Or just to do the P.S. group 29 per cent in the corridor.
We think that it's important to continue to invest in growth initiatives, such as E.S. cheap, China and marketplace. Despite the economic uncertainty as these projects are important elements of our future growth.
We also lunch several new products during the quarter, which I'll review with you in a moment.
<unk> <unk> <unk> <unk> affected in a joke.
[noise], Alex has been the anchor industry business for the past 12 years. He's industry knowledge is unparalleled and used an instrumental overseen indices transformation you do the growing and leading global index provider. It is today.
And joins us from Invesco distributors, where he served as a company managing director and global credit exchange traded funds.
To recap the financial results for the first quarter revenue increase 14% almost $1.8 billion or just an operating profit increased 28% error adjusted operating profit margin increase 580 basis points to 53.1%.
As you know we measured track adjusted margin on it truly for court, a basis, which increased 260 basis points to 61.5%.
In addition, we we do shares outstanding like 2%, which contributed to the 29% increase in adjusted to the P.S.
Each quarter, we highlighted future drivers toward businesses important projects underway this quarter, let's start with reading dish once trends.
During the first quarter of global bond issuance increased 11% with mixed requirements from various geography than asset classes.
We also includes bank loan readings bowling total global issuance increase 10% or striking was held issuance unfolded with very strong I yield issue. It's for the first seven weeks.
<unk> and then a surgeon liquidity driven investment.
After the federal reserve initially several credit facility to support the economy and companies across industries enhance their cash position.
In the U.S. ball you shouldn't in aggregate increase 34%.
Investment crude increased 54%, Hi, you increase 90% public finance increased 12% well structured finance increased 60% of Cajun Siloed C.N.B.S.R. it'd be a partially offset by a decrease in E.S. points.
European Bond issuance decrease 14% is invested trade decrease 72%.
Increased 20% instructions for news decrease 20% do digit quite do covered boards and seal, partially offset by game to our ideas any ideas.
In Asia bond issuance increase 6% overall during the quarter readings issue five new domestic readings in China, Despite working from home or commercial paper actively interacted with issuers investors intermediaries fold and other digital media the pipeline prospects continues to progress.
Thank while reading activity is not captured initial data. However, since it is important element of weightings ready you like to disclose must think we'll reading really each quarter in the first quarter increased 31% over the prior period to $87 million.
During the quarter, we had some new product launches I want to share with you on the slides.
The plants platform was launched in March digital environment delivers real time information.
Wherever whenever and however, the user needs it.
<unk> content from companies like Fintech and pirates that we have acquired over the years into one location. We already have 130 corporate customers actively using the <unk> and the mobile apps has been downloaded 1300 cards.
<unk> close is the process market reporters used to assess prices for crude oil patrolling products related swaps <unk> has been working with can show to accelerate the assessment prostitutes improve efficiency <unk> pricing porter's well, adding analytical value for customers.
First ever can show powered places.
<unk> to the class production data Big this corridor.
I says launch a new version of its market data platform ice connect.
Which is designed specifically for participants in the global oil markets, providing or d. The onto this site is a way for us to further monetizer, which party existing oil analytics assets.
It must keep watch P.S., two P.G.S.C. carbon emission allowances index, the new and it which is the first of its call. It provides investors with a reliable and publicly available investment performance benchmark for European carbon emission allowances.
Ventured single commodity seafood industry based on the S.P.G.S.
Finally, we watch the market intelligence marketplace, you about we'll discuss at the moment.
But once you give you a brief update our efforts to continue to strengthen footprint in E.S.G. marketplace well there are numerous times on the slide I'll just highlighted phew.
Readings, we've had 65 E.S.G. evaluation to the been completed or in process. This is a combination of both published in private evaluation.
There's a considerable appetite for companies to get an independent forward looking quality that data driven assessments I looked into the E.S. cheaper pulling at preparedness for future is to opportunities.
You have largely completed the integration of E.S.G. rating.
<unk> into our readings <unk>. This is brought a little standing edition countless experience and expertise I'm really pleased with the progress.
We recently entered into E.S.G.P., a partnership with black walk to enable them to create sustainable investing options for us equities based on or indices.
<unk> recently expanded that sweep of daily hydrogen price assessments to meet the needs of the marketplace and the growing interest too independent price references as the energy sector seeks to understand the dynamics of a clean energy future.
Next I'd like to provide additional information about or involving outlooks for 2020.
The longest us economic expansion on record it ended with another record the sharpest contraction economic activity since World War. Two Workovers 19 is restricted to move wouldn't more than 90% of U.S. population or economists said recently updated global G.D.P. broadcast in light of the rapidly.
<unk> declined to follow toil prices, they know expect global G.D.P.C.D. quality, 2.4% of 2020, they know the balance of risk.
Means on the downsides as much can change on the health economic policy.
We have compiled poor cat someone else's from our economic credit oil and other special across it would be cool you can see key drivers the economy or business include that's would be 500 level unemployment issue the fall to the oil prices.
This includes unforecasted drop in U.S. real G.D.P.
35% and the second quarter.
These forecasts too important to the actual scenarios <unk> discussed it alone.
In closing these are trying times for everyone. I can only say that we had was Julia collection of businesses and proud ungrateful to work with a group of exceptionally talented employees, who will support each other or helping to navigate rapidly changing societal an economic landscapes and always looked at turned the color of the email.
Who's going to provide additional insight into our financial performance or no.
Okay.
Thank you dog and good morning to all a few of the cold.
Let me start with all the first quarter financial results Dot corporate highlights all strong revenue and adjusted earnings per share growth I will take a moment to call for a few other items.
Well some of the segments have a difference between reported an organic rubbing your growth in aggregate the artist shame, 14%.
Adjusted operating profit margin improved 580 based orange based on strong revenue growth, an ongoing product or for two programs, partially offset by the impact increased investment engrossed initiatives.
Stock based compensation activities are sold it they tax benefits for sense during the quarter down from seven cents into first quarter of 2019.
Share repurchase resulted in a 2% decline.
Looted weighted average shares outstanding.
In February we initiated a 1 billion dollar A.S.R.N.A. springing tend to be five one stock purchase plan for up to $100 million.
During the quarter changes in foreign exchange rates had it also takes impact on adjusted T.P.S. six cents, the only meaningful impact all seen ratings for revenue watching negatively impacted by $5 million and adjusted operating profits will also take from the impacted by $11 million.
There were four nongaap adjustments this quarter, but collectively generated <unk> <unk> <unk> $36 million.
$9 million restructuring charges in corporate and markets intelligence.
$7 million in games from the dispensation when <unk> web hosting business in markets intelligence.
Dollar for can show retention related expenses and $29 million.
Related more to say <unk>.
This quarter, all four deficient revenue growth <unk> double digits games on the training for quarter basis, adjusted operating profit margin increased <unk>, except market intelligence, where a large portion of our investment spending is taking place I'll provide.
Color on the individual business results in a moment.
No turning to the balance sheets, our balance sheet has load that friction and pulled liquidity, we have cash in cash equivalent $2 billion.
<unk> overcapacity $1.2 billion no commercial paper outstanding.
We also generate considerable free cash flow <unk> 75 per cent in 2019.
First quarter is generally well weakest free cash flow corridor off the gear due to pay out of our annual incentive compensation.
The picks up on the bottom off the slide is our debt's maturity profile as you can see we do not have any deaths due until 2025 and the amount I rather take fleet evenly distributed.
Looking more closely at the figures our cash in cash equipped for lunch declined by about $900 million from the end of the fourth quarter due primarily to funding. So 1 billion dollar A.S.R. and I were adjusted gross debt to adjusted EBITDA declined slightly.
Free cash flow excluding shorts on items reached 600, an $18 billion into first quarter off this year, it's an increase up $312 million over the prior year periods.
<unk>, one point $15 billion in the first quarter through opening markets <unk> $150 million, an A.S.R. the costs initiated in February in addition, $161 million.
<unk> during the quarter.
<unk> unprecedented times, notwithstanding the strength of our balance sheet and strong cash flow.
<unk> at this site that to just prudent that they're pumping milk to initiate any new share repurchase programs. Following the conclusion of our current repurchase programs in July.
With respect to the remainder of this year because the company initiate that's a 1 billion dollar A.S.R. program in February we still anticipate achieving close to our 75% return of capital targets to shareholders in 2020.
<unk> anticipates, no changes to our existing dividends guidance.
Now, let's turn to the deficient results you will notice that in each of the businesses were reporting March revenue.
Monthly revenue.
Ongoing disclosure, but the costs are altered dramatic change indeed economic environment, we thought that you might find it useful I would caution, though that the individual monkey back in U.S. little variability subscription businesses like market intelligence and plants in fact, we anticipate debts depending on.
The duration of the downturn 2021 will likely be a more challenging year for dish to businesses than 2020.
Ratings revenue increased 19% and excluding the acquisition yeah. She <unk> from real deep Ocean crystals acquisition of Greenwich Associates organic revenue increased 18%.
He's revenue growth Australian bike increase in issuing stepped dark already discussed.
Impact phone calls at 19, and a collection oil prices were sold it in a temporary holds the high you'll markets and they search of liquidity dripping investment grade issue lunch.
Adjusted expenses declines, 7% excluding change in foreign exchange rates expenses declined to persons primarily due to <unk> I G resources. That's we discussed last quarter introduce g. any expenses from the travel freeze.
<unk>, 41% increase and adjust the segments operating profits and 1010 basis point increase and you're just such segments operating profit margin.
Trading for court a basis adjusted segments operating profit margin increased 400 basis points to 16.2%.
No one transaction revenue increased six percentage, primarily due to fees associated with surveillance and rating evaluation surface.
Transaction revenue increased 33% due to very strong bones, raping activity, particularly in <unk> and increase the bank low rating activity.
Disliked depicts ratings revenue bites and markets the largest contributor to the increase in raising traction you. What's the 23% increase incorporates in addition.
Surface, just revenue increased 13% structured finance increased 23% governments increased 16% and the crystal and other category increased 3%.
The right side of this like you can see to change your Saint revenue within structured products. Most notable is to increase and structured credit that these primarily made up of <unk>, they're supposed to isn't by 837% increase in U.S.C.L. old issuance.
<unk> <unk> <unk> <unk> corporate bond issuance discharge that picks the reasons U.S. investment grade issue ours have cited for their issuance the light blue and dark blue or for general corporate purposes, and refinancing <unk> share with <unk>.
But then send emanate represent a minority off issuance.
These are to shame for high yield once again general corporate purposes, and refinancing make up the majority of issuance.
Turning to as a p. doubt Jones induced fish the segment deliver it to 20 per cent revenue growth <unk> each category impact on corporate 19, and the collection oil prices were sold it in large decrease in <unk> in a meaningful increase in exchange traded <unk> activities.
In the first quarter <unk>, 16% adjusted expense grow primarily due to a 4 million dollar catch up charge past loyalties higher all cheese, driven by increased partner activity and additional headcount.
21% adjusted segment operating profit growth and then adjust that segment operating profit margin of 70.6% an increase of 90 basis points.
On the trading for court a basis do you adjusted segment operating profit margin increase to 170 basis points to 69.7%.
Revenue into various categories was up during the quarter as at Lincoln fees increased 11% due to a U.M. growth.
Yes.
<unk> revenue increase 59% on growth in trading for you.
<unk> custom subscriptions increased 15% due to catch up in real time customer reporting and A.C. feet growth.
<unk> indices division over the past year, E.T.F. net inflows well 100 on $1 billion and market declines worth 210 $16 billion. This resulted in quarter, ending G.P.S.U.N. 1.3 trillion dollars, which is 8% lower compared to one year ago. It's interesting.
Noted enclosure into P.T.F. something to all were indices continued in adopt markets this'll correct. During the most recent annual market declines.
15, and 2080 as well.
I want to make it clear distinction between effort J.U.N. and quarter ending a U.M.
Revenue spatial efforts, you win which increased 17% you're over here.
We just close quarter, ending fingers, because flows and market games <unk>, our best to pick that <unk> as shown in the <unk> <unk> <unk>.
<unk> first quarter, ending U.N. over 1.3 trillion dollars and second quarter 2019, <unk> 1.5 trillion recruit experience a reduction in E.P.F. related revenue in the second quarter Oh, That's you wish equity markets continue to recover.
Sequentially versus the fourth quarter of 2009, G.P.T.F. net inflows associated with our indices totaled $31 billion well market declines totalled $387 billion.
Industry inflows <unk> into exchange traded to <unk>, well $110 billion in the first quarter the category with the largest games <unk> alder.
<unk> X., if your thumbs <unk> $39 billion.
There's also an excellent quarter for exchange rate <unk> for you with key indicators generally exhibiting large increases in for you.
P. 500 index options activity increased 37% fixed futures and options activity increased at 51% and activity at the <unk> Echo too complex increased 160%.
Okay at the <unk> well due to the successful lounge, the micro <unk> as a p. 500 futures, excluding just product the full <unk> at the she gave me equity complex increased 60%.
Marking intelligence to live with reports of revenue growth, 8% and organic growth of 7%.
The impact from corporate 19, and a collection oil prices at a negligible impact first quarter revenue.
However, going forward it will impact at new shells shorten products like data for each because interpretations are much easier with physical precedence also in an economic downturn renewals become more difficult some customers financial help.
Relates.
Adjusted expenses increased 9% due to increased investment spending for data marketplace, China, an s. a meat initiatives adjust that segment operating profit increased to five per cent and you adjust to check my operating profit margin decreased 80 basis, <unk> 30, 49% on a tray.
For quarter basis adjust to check my operating profit margin declined 100 basis points 31.9 per cent.
That's still revenue group, 4%, excluding acquisitions and <unk> <unk> <unk> ooh eight per cent.
Data management solutions and credit risk solutions continued to actually that's strong growth each gaining 10%.
One of the most exciting defense in market intelligence this quarter, what's the lounge marketplace.
New product allows our customers to excess for the mental an alternative data sets and two seamlessly link data from different data sets.
Product is accessible at marketplace adults S.P. global Dot com.
I know turn into Platts steady revenue growth continued at lunch, increasing 4% on organic basis adjusting for the <unk> Rick's data revenue increased 5%.
<unk> 19, and a collection oil prices, resulting in increasing global trading short possess during the first quarter G.T.S. increased 18% due mainly to increase trading for <unk> LNG Ivan or.
Latched delivered eight 5% increase in core subscriptions with 4% in price reporting 13% in an Olympics.
U.S. sanctions on Iran.
Impacted revenue by about $2 million in the corridor.
Adjusted expensive decreased 2%, leading to and adjust that segment operating profit margin or 52.9% improvement or 320 basis points.
The training for quarter adjust the segments operating profit margin increased to two on that basis points to 53.2%.
Power and gas to live with the largest rate of growth, it's a 12% as our <unk> marker for Ellen G. continues to drive full subscription and cheat T.S. activity.
Petrochemical school four per cent due mostly to growth in subscriptions.
<unk>, 11% due to increased <unk> trading activity.
Petroleum revenue increased 4% on our first quarter earnings School last year, we discussed a lunch hour low soul for marine fuel assessments are pleased to report that we have to come to benchmark as our price if no being widely adopted.
It's your turn to the balance off the gear, where carefully managing the financial impact of to economic slowdown on our results you have a number of management actions that are within our control.
<unk> initiated a global hiring freeze with minimal exceptions trouble and entertainment expenses happy frozen.
Since we will be hosting and attending few work you fence advertising and promotional spend will be reduced.
There won't be a reduction in the usual professional surface.
Scent of compensation and commissions are variable in nature and determined by our results.
And we introduce a 100 million dollar three year cost reduction program at our invest a day. It may of 2018, right now and trek to achieve approximately $120 million and run rate savings by the end of 2020, an increase of $35 million over the ends of 2009 cheap.
What we're not going to do is stop investing in the business as a duck mentioned earlier, it's very important to continue our 150 million dollar investment in 2020 girls programs. These will largely continue with few modest adjustments.
Or some expenses that will increase due to cold fit 90 include your expenses necessary to set up all our employees to be able to six surely work from home and an increase in bad debt proficiency, which all depends on how long did pandemic low oil prices persist.
As we think about the uncertainty that lace ahead, we have developed reach scenarios with different timeframe for when do you calling me will be can so good recover.
Macro and markets assumptions <unk> outlines on dislikes <unk> metrics, which will impact revenue in various parts of our company.
I stuck referenced earlier, we have compiled forecasts from across our economic credits oil and other markets specialist Cross S.M.P. global.
Many of the inputs for D. scenarios can be found an hour divisional research and analytical plus forums and our <unk> accordingly.
In addition to item stuck to her upper fighting at this time to get additional color 40 scenarios.
The first is built issue when she grows into baseline the 9.9% decline in global issuance relates to market issuance in all sectors and issuing stipes, except for international public finance, our built issuance forecasts eliminates the categories that are not major drivers revenue.
<unk> <unk>, China domestic medium term notes and issue instead, there's not a rate it by us into baseline global built issuance is forecast to decline myth single digits.
The second on exchange traded to repetition full you draw the baseline of approximately 30% assumes elevated levels in the first half of this year followed by mid single digit increases in the second half, what we're not predicting but independently and we're using the lake third quarter recover.
Scenario as our baseline and the basis for our new guidance, we think that it's important for all we investors that we make a good faith attempt to provide appropriately Frank Forwardlooking information.
Dislike attempts to outline the financial sensitivities to the company under the various scenarios you can see that we to pick the impacts revenue for each of the segments as well as potential expensive things from management actions and if you all the items.
Modeling, we arrive at a baseline scenario, but just at that lunatics G.P.S. guidance or $9.95 $10.15.
Disliked the <unk> with the typical guidance line items Steffi normally disclose the baseline call them I wouldn't you Twentytwenty gaaped guidance.
And disliked depicts our adjusted figures the baseline call them is our new Twentytwenty adjusted guidance now let me a few our new adjusted guidance, we lost our revenue guidance to a low single bit should increase.
<unk> located expense has been produced by $35 million due to management actions.
Operating profit margin.
<unk> management <unk> offset in fact, some lower revenue growth.
Interest expense net includes both interest income and interest expense. It has been increased by $15 million due to lower interest income on our cash balances.
Sex rate has been produce a half a percent point due to stay for both <unk> <unk>.
These items Hersholt in a new adjusted to dilute it P.P.S. guidance range of $9.95 to $10.15, our expectations for free cash flow or a range of 2.4 $2.5 billion.
In conclusion, we delivered a strong starts to the year with our first quarter results slippery recognize that the world is changing dramatically.
Heading into this uncertainty, we have a solar balance sheets and ample liquidity.
I were disciplined approach over the past few years with respect to productivity programs operating leverage process automation and other initiatives <unk> improved our financial strength, well, we can't be sure about the length or debt economic downturn will continue to <unk> macro economic environment.
<unk>, our scenario planning and take pro active management positions in the best interest of our employees shareholders customers and other relevant stakeholders.
Would that let me turn to call back over to chip.
<unk>.
Thank you just a couple of instruction for a phone participants.
To indicate that you wished ask a question. Please press star one and record your name cancer or withdraw your question simply press start to.
Please leave yourself to two questions the door to allow time for other callers during today's q. and a session.
If you'd be listening through a speaker phone, but would you like question. We ask that you lift your handset prior to perfect Star one and remain on the handset into your question as they answered this what's your better sound quality operator.
Take our first question.
Thank you. The first question comes from Michael Cho with J.P. Morgan you Master question.
Hi, Good morning things for take my question, then certainly appreciate all the the detail or on the 2020 outlook scenarios I I guess I'll just start there. My first question is wrong ratings, rather than just when I look at the base.
Case scenario of the 270 million Kobe 19 impact for ratings is there any of that included in the first quarter and I'm, just giving the strength of first quarter ratings revenue I mean, how can we frame the primary sources of stuff revenue headwind.
Ratings.
[noise] Michael This is Doug let me take that question first of all welcome to the call I Hope everybody is a safe as I said at the beginning of the call and finding ways to be able to work from home. So when we look at the full year issue is is you know we had a very very strong first quarter April was also has some interesting transit.
She when it comes to invest so crazy shorts, and so high yield of the companies that are just recently been downgraded.
Well, we look at the full year, we take into account a whole series of factors as you saw all slide 20, we gave you some of the information about the forecast that are chief economist for the U.S. has looked up for the U.S. market as well as other markets around the world. We think that the G.D.P. is the main driver.
Of a of issuance in the long run that we see a lot of headwinds. We see we asked the question is are going to be major capital expenditures is they're going to be major in the name taking place.
Because they're going to be business expansion are people going to be fancy dividends are they going to be financing Sherry purchases will there be structured finance business, what's gonna happen with the leverage load work in this yellow market. So based on taking a look at all of those different markets under what we believe are gonna be stressed scenarios, we have lower.
Word or different forecast for the rest of the year of issuance and that's what you see flowing through in these different scenarios, which either just went through.
Okay.
Great color just for my second question just more on on market intelligence.
Klatt, specifically I mean, when when you talk about economic disruptions impacting will be the end markets. I mean, just outside of fewer companies. I mean can we talk through the nuances of house subscription renewals would impact revenue growth.
Yeah, <unk>, let me take that one as well so when we look at subscription businesses of course, one of the one of the advantages of subscription businesses is that they've got got some steadiness to their performance and you can see the top one grocers Stadium you saw this this quarter through the rest of the year.
Steady approach those businesses, but at the same time, you think about some of the stress.
Clients are going under right now is an example in class you're going to see both the oil side, the oil producers oil and gas producers.
As well as many of the users Ah companies like Airlines et cetera are all sorted a lot of stress.
So we think that the the sales cycle is linked to me.
In plants in particular, there's customers are already under stress that are approaching us to see if there's ways, we could negotiate throughout the year as we look at their contracts rules et cetera, and market intelligence, we haven't seen as much of the customers coming to us to start ask about considerations other country.
But we're expecting it they also have a lot of corporate customers. They do embroiling guess customers with financial institutions customers and so we're expecting that throughout the year there could be interaction with the customers that could lead to slower sales to lower renewals. It could flow into that later periods is your could flow into the next.
<unk>.
<unk>.
Selling by the phone selling remotely is not as easy.
Renewals as a as easy we also have some types of products, which required training or installations and those are all so much harder to do when we're working in this kind of work from home environment, but we but we're very pleased with the performance last quarter. These are strong businesses. We've seen very strong increase in the usage of both plants in there.
Over the last few weeks as people are working from home and they're also looking for knowledge about what they see happening the markets, but anyway back to the your court question. We do think that there's going to be some slow down in sales and renewals, it's a longer cycle and we're expect that to follow through the rest of the year.
<unk>.
Thanks.
Next question comes from Tony Kaplan with Morgan Stanley Your let us know open.
Thank you.
Strong corridor and glad to hear your all safe.
Wanted to ask follow up on issuance.
You know very strong corner and and very strong start to April.
Understand if he thinks that there's any sort of Paul sword as companies look to gain liquidity right now and sort of how you see I g. strings going forward and also just from the ratings that we've seen from the impact we've seen and.
Options you know is is that already.
You're you're ratings results or how much how much.
Should we expect from that.
Into then next quarter.
Yeah. So first of all you saw that the first quarter ended with a a really strong issues from investment grade in fact, the U.S. investment grade was up almost 50% core a quarter of financial institutions is 40% well Europe at the time wasn't nearly as strong a Europe corporate <unk>, 16%.
First quarter, but we seem very strong useful into the investment grade coming back to market. It in the.
April that's partially because of the liquidity facilities from that fed as well as the U.C.B. in Europe.
Although Europe isn't as strong as the U.S., we see right now that most of the issuance undertakings in the investment grade space. It's it's a ford liquidity purposes, we don't see as much necessarily being used for m. layers investments as it might be in the future. We did as you saw overall I can't speak.
Specifically the investment grade, but we do expect the corporate issue. It's for the entire year will be down for the rest of year. We do is you see and you know or latest forecast for issuance, we see that investment grade corporate investment grade was going to go down for the rest of your so I think that when we look at this we're we're.
Very conscious that investment grade has been very strong for us this quarter, but overall, though it's it's going to be an area that we're we're watching very closely but one one fact, which we can share with you is that.
In a in the late most recent surge at the end of March there about 20, nonfinancial corporations that issued over $3 billion enlarge the total those 20 companies as 121 billion and that was twice as much as the debt they had coming to this year. So clearly if they did raise this for for free.
So it wasn't they they raised a much more than that but anyway investment grade has been on fire. It's been very hot but we don't expect that for the rest of the year.
Got it right and then just as a follow up.
Wondering how you're thinking about long term impacts on a business in the aftermath of cover 19, but you expect anything to change meaningfully in terms of either industry trends or any changes strategically within your company as resulting situation and this could be you know corporate real estate.
Or any sort of how they're just maybe less obvious changes as well.
Let me start on the business side, and then have email address a little bit the kind of the real estate and so the operating aspects to it on the business site. In fact, we see this is at the time with a company like ours can really showing clearly we could be impacted there's a lot of risks out there and a lot of negative factors, which could impact us but when.
It comes to the source of knowledge that were <unk>, providing about ratings about the credit markets about what's happening with with oil markets with oil risk et cetera. We see that are that traffic tour websites is way up we don't see any need for us to pull back on the strategic investments were making now.
China marketplace in E.S.G. and other technology areas. We think this is a time for us to continue to invest so we we don't see any major impact tour business going forward. In fact, we see this is it's hard for us to take advantage of the strength of our businesses the quality of our people and continue to grow in it.
But let me handed over to either because we've also been doing some thinking about what could could be some impact till or longer term operating models.
Yeah. Good morning, Tony if we think about our expense save <unk> definitely there is an underlying assumption that going forward to will be a change with respect to the way we work behaviour <unk> and the way we need to think about treble going forward and less needs for travel.
Different each for office space requirements. If you look at the expense shapes into sensitivity table that we show to you you see that there is a number definitely cold permanent incremental that's actually an hour Pew, perhaps <unk> assumption of conservative for some shouldn't because we have put an assumption.
In that 50% of our discretionary say things induced periods will continue into future because of that different way of working but that the impact might potentially be larger depending on how things will level play out and to read a sign off so the company and the way you work in our operational processes.
An old old those elements going forward, so definitely from that angle, we think there's going to be a permanent benefits that will come out of this.
Thanks, a lot.
Yeah.
Next question comes from model, but not with the Barclays. Your line isn't open.
Thank you good morning, gentlemen, I. Just my question was you know to dog in terms of you know at the beginning you talked a lot about your economic forecasting you mentioned the balance of risk, but to the downside. When I was just wondering was bad incorporated in your baseline scenario all could that you know if that materialises does that.
Too you know to it that lead okay. It would probably just some color in that.
Yeah, we we decided that it was very important for us to either old cooking and so when we have economists and research at laws that are some of the best in the world of our U.S. economists global recording this they're doing forecast our oil economists and the other people equity markets and U.T.F. it issue.
Set or that we wanted to take the best knowledge of that entire team and incorporate that into our into our forecasting eight outs finance team along with it all of the president of our businesses in their finance teams really worked hard to incorporate forecasts. We went back to see what had been somebody impacts on prayer periods.
When we see disruptions in the market before it's it's rare that we've ever seen so much disruption at once across so many different markets and so the teams came together with these forecasts as as the word means they are forecast. These are predictions and we we put these together in a way that we can we can understand.
Yeah, that's our best efforts to come up with with an approach to this and as we put these together we used our own information, but since these forecasts were put together in a way that they have a lot of different assumptions that let me handed over to eat out who can give a little bit more color on the forecasting itself.
<unk> I I, just want to be clear that our updated guidance and baseline is middle So <unk>. It's a good faith at them to to show you some different sensitivities under different scenarios, the rangers outcomes could be either higher or lower so I.
Don't think you should only look at the downside to waste are also upset race. So this is mid also wrote and it could be Ida higher or lower with the same level of probability at once we have tried to do was clearly show you go sensitivities for the most important assumptions that'd be put in there, but also to make sure that all of our invest.
<unk> can pick and choose the elements. They think it's most likely if you believe that certain elements in an early third quarter recall, we are more likely or you believe that salt Lake fourth quarter recovery assumptions are most likely you can take those elements and build your own own assumptions, but again with respect to the risks either.
Higher or lower I think dependability <unk> Ethan.
Okay. That's helpful. And then just you know in terms of your energy expose show across you avoid it gives you already sort of addressed at you know the customers stress and apply outside but I was hoping you'd just help us.
Understand you know how much in market intelligence and beatings and so forth the has that explosion risks backwards.
I don't have that number off the top of my head I know that we do have the ratings exposure from some we've got some market intelligence corporate treasurers, C.F.O.s et cetera, but overall, it's it's very little but the most important exposure the company to oil and gas industry.
<unk> is in class.
And might have you may recall back in 2015, and 16 awkward to decline pretty dramatically.
Requested back then I don't recall, the exact percentage, but the reality or some issues perspective, there's no one particular sector the dominant issuance perspective in the races either.
Alright, Thank you guys.
<unk>.
Next question comes from Alex Cram with U.B.S. realize open.
Hey, good morning, everyone, just want to to get a little bit more into the high yield outlook here I mean that seems to be on their ratings site. The biggest swing factor. So I'm, just just flush out a little bit why you are looking for such a significant dropping issuance I mean, if you look at April you know high yield actually has come back there's obviously.
These set programs applied to high yield as well and and then obviously please also underlevered loaned side is that included in your high yields forecast or is it just on bonds because if not can you just talk about 11 should go inside a little bit as well.
Yeah. So thanks <unk> when you look at the high yield work at a a minute break it up into two pieces <unk>, but one is that recently there were a set of triple be companies that were downgraded into being non investment grades and so those companies, which are now the the single double b.
Range companies have been accepted into liquidity programs by the fed and at U.C.B. So for example last week Ford issue $8 billion worth of Securities on Monday Delta Yesterday Delta Airlines issued three and a half billion dollars of bonds another billions of dollars.
Secured loans to the markets and both of them had recently been downgraded from the triple be range for the double B. range. So that type of high yield is having a lot of activity. It's supported by that U.C.D. and that said programs. There's actually a lot of appetite for that risk. It's it's similar risk that was priced recently and now it sort of.
So those types of those types of securities.
<unk> no being very active now there's another side of high yield which is the which is the leverage loan market delivered slowed market has become quite a slow there's very little activity in it right. Now we have seen the few days here and there were a leverage loads or are moving and there is some leverage alone activity, but it's.
She's very weak, we're expecting that leverage loads, which had been very high for awhile had been had been active and <unk> leverage slowed market had been include had been up it'd been quite had been very active last year into the first quarter, but right now the leverage old market is really.
Looking for repricing, probably higher level of covenants, maybe more collateral et cetera. So I think that leverage loans market is going to be down about 5%. We're seeing that it's see the market is probably going to be much weaker. So that's kind of an overall look I I'd split the market into a couple of different pieces.
Okay. Thank you and then I guess secondarily more for <unk> <unk> <unk> on the index site. You just helped me a little bit what the cost of that business I mean at the beginning of the year you actually raised your margin expansion for that business, but I I I view that as a pretty fixed costs costs <unk>.
We just remind me if there's some variability in <unk> come from and and in particular I'm asking because when I look at your scenarios you kinda assuming D.U.M. sites is down but then it's all getting offset by derivatives trading, which obviously, we seen in the first quarter, but you know there's also the scenario what some points trading dries up and you get the double whammy, where.
He will Miss law, when actually trading slows down to what we see this in some parts already in the second quarter to convict. So just curious what opportunities on the index costs site. They are you getting into a pretty poor revenue environment, which could happen.
The morning, Alex we definitely have many lever <unk> indie index business as well to offset any pressure on deriving you lying.
So let me first take your question about how much variability if they are there's many different elements. They artificial course discretionary spent there were so of course I've ever Bowl spent with respect to coastal sales. So commissions variable compensation and then we also have <unk> royalties royalties or approximately.
15% to 17% of the overall expense space actually royalties, we're the largest strike or off the expense increase in divorce court or so the expenses were up 11 million, which 3 million war royalties and 4 million was actually a one time catch up in royalties stuff you don't expect to rip her two two went up.
<unk> <unk> also partner, so 7 billion Outdoorsy 11 million into first quarter wants to to most due to loyalties. So definitely the index business is working very hard to offset any revenue pressure on their expense line, we expect a modest reduction in margins.
<unk> as much as being assumed in the in the scenarios with respect to your question about the D. overall top line and the exchange traded to <unk>, we have as an assumption in our <unk> 30 per cent increase year over year first quarter was 60% up.
In exchange traded <unk>, we expect to also elevated levels and the second quarter, and then indeed well level off in the second half of all this year, because we don't expect that.
To be elevated to afford it for the cool year, so, but yes, there will be a bit of decline all exchange moved away, but again, we expect that we have many opportunities also too many <unk>.
Alright very helpful. Thank you.
<unk> with Jeffries or let us know open.
Hey, good morning, Thank you hope to see if it has the out there. My my first question was just to follow up on on plots <unk>.
If you look at the last down for <unk>. It ruined the last hour burn it shared with a couple of basis points off of the growth rate. The that was coming in the growth with that you hard going into their downturn <unk> talk about you know.
As as being negative this year, given <unk> seems pretty different.
Thoughts on what your customers are saying today I know you touched on this <unk> and and also your diversified that business, rather <unk> do a few years ago that does that diversification help you if this downturn or or it's just not it's still very much <unk>.
Yeah homes are good morning, I hope you are well unsafe too.
With respect to the plot stop line, we have about 80% off the top line subscription relate. It's 10% is an Olympics and 10% is global trading surfaces, which actually soul a nice increase of 17 <unk> in the first in the first quarter. So cleanly because it is largely subscription.
Based there is a nice protection with respect to the revenue lines coal plants in the near term. So we expect flats. If you look at the sense that typically table that we provide it Andy original direction that'd be mentions during the fourth quarter earnings School.
It's too high sorry mix single digits revenue growth <unk>, we're still at a level mid single digit growth in terms of revenue for 2020 and again, that's because all the basis. All the revenue components that are largely subscription based I do have to say that if.
The duration of the downturn takes longer that that might be a larger pressure on the revenue lying for <unk> next year and 2020, you want but <unk>, we expect still mitt single digit revenue lines under the assumption step we have laid out.
Okay, <unk> pretty helpful and and just to follow up question on on market intelligence.
How are you thinking about execution risk in that second part in this environment, there's been a lot a competitive changes the landscape you know you've you've hired to move to work.
Prize White collar cracks from a commercial sites you you have higher investments find <unk>.
Is that going to be disruptive or at all or or how how are you thinking about just execution risk and and that type where did this environment. Thank you.
Hi home. So we don't see those factors, which could end up slowing down or or develop buttons that are deployment to the news and my platforms. We've got our teams are dedicated his as I mentioned earlier remarks, with 99% of our employees working from home, they're very engaged they're working hard we've got.
Really good acceptance of our customers of the new systems, a new new capabilities the as they see it we've been able to move the capabilities of cap I Q data services modeling different capabilities over to them like platform and we have a plan during the year to be moving over customers. So they can have dual act.
Throughout the year or development programming is on track. So we we don't have any that's not a concerted bars right now.
Okay wonderful. Thank you feel watch thank you.
Next question comes from Jeff Silver with B.N.O. capital markets, you, let us know open.
Thanks, So much and also glad to everybody do it okay and I just wanted to thank you all for the detailed guidance. It's it's actually really appreciated one of the slides you had a new presentation. I think it was like 43 talked about some of the management actual that you've taken it will take.
What are you looking for either increase these kind of actions are on the flip side ratchet them down the environment improves.
Yes. Most of these actions are are already put in place. So obviously, there's a lot of travel that anyone can do into current period of time, we have already stopped hiring although of course currently interviewing any candidates so hard to do.
In a <unk> environments.
And then several all the other elements as well all of that has already put in place so the impact into modeling and into sensitivities really depends on the duration <unk> takes longer the economic downturn last longer than also the impact is going to be large for for for the companies.
King ads, what does it mean in terms of recovery and when we expect things to start to look better and some of these actions might go away.
I think we are looking at restart of economic activity increase off the bat. It's if we see more people going back to the employment market stroke with other employment to pick up with G.D.P. All of these elements will look at in terms. So when are we going to <unk> otherwise overseas.
<unk> be put in place if you all skiing, what could be the next step in terms of layer of actions you Hope you don't need to go there because we believe that's with all the actions were taken over the last few v. or with respect to productivity programs and efficiency and process automation and capturing the operating left which we build.
If we have already managed to company in a very disciplined way and so we are taking clearly the benefits in the current environment the out of that.
Okay, Great. That's helpful. And then switching gears you talked about the strength in both class in markets intelligence being more of a subscription based focus can you just remind us the cadence ups subscription renewals when they typically occur throughout the year is it back and loaded is it more either any color would be great.
Yeah. Just said this is Doug the yeah. The subscription renewals are really throughout the year. They range from one year to two year to three year contracts. There's there's no rhyme or reason that I could really give you about those that they're they're all it's sort of an ongoing process.
Okay, great. Thanks, so much.
Thank you.
<unk>.
Next question comes from George talk with Goldman Sachs. Your line is open.
I think <unk> good morning.
You are expected mid single digit decline in global Bill debt issuance volumes. This year can you talk about how much pricing you expect to add to ratings W. performance and also discuss any mix impact from various categories that could affect how industry issuance translates into ratings revenue performance at S. and P.
<unk>, we normally I don't really speak about pricing for obvious reasons, but I think you can <unk> elements together. If you look at the original guidance that we provide it's in <unk> in the fourth quarter earnings.
Scroll with respect to mid to high single digits revenue growth expectation for Ray thing <unk>. The current sensitivity and then you look at the overall issuance expectation of built issue inch I think you can probably poodles specious together and make an estimate hope that the other guidance and direction I can provide.
You do is look at our list pricing that there's old being published you can take some elements out of that as a as well. So if you put those species together you probably get a good good insights and what is assumed with respect to pricing for this year, but especially if it really I would like to afford kicking you those numbers at this at this moment.
Got it you've indicated plants to make 150 million enough invested some 2020 growth programs can you elaborate on which segments and products those growth investments will be going to and what you'd expect to see returns on those investments.
Yeah. George this is a good morning of first of all the the hundred and $50 million that we've talked about in the past. This is for US we believe very critical for a long term growth. It it builds the ability to have new products, which are relevant to the marketplace. It also allows us to invest in new technology, which would be a combination of processing.
Data link and delivery mechanisms to or claims they're really spread out across the businesses. China is one of those that we're very pleased with the progress on that's that's one that's important then it's principally right now a reduced.
Opportunity there will be some fall for market intelligence, there's also going to be an investment in E.S.G.E.S.G. is across all the divisions. All the geography is and this is one that you saw recently, we completed the integration of the real because Sam's business.
To the ratings business. So we we have a much stronger yes, she business or but all of the businesses a benefit from things like real because sam's or readings business. What we when we have true cost on board et cetera. So these are intended to be a investments that benefit all of our divisions. They benefit all geography and you hear about.
Three or four of them that are more visible ones, but across the board. This is gonna be benefiting the entire country.
Very helpful.
Bill to on the on the answer off duck approximately half of the investments are going to market intelligence.
<unk>, we'll see different different by different category, but different project overtime, so might be more short term so might be more myth or long term think about China ratings, we have set from the beginning that that there's a long term investment. So this will call me at different points in time.
Very helpful. Thank you.
My next question comes from Andrew Nicholas from William Blair. Your line is no.
Like the morning of sexually Trevor Romeo and for Andrew Thanks for taking my call and for all the details that provided in the slides first I just wanted to ask on a ratings margins and a quarter in a way out called out a couple of factors such as the insourcing of I.T. and the the teeny freeze.
Given the magnitude of the improvement there in the quarter I thought I would just ask if there were any other one time items that helped such as maybe incentive <unk> and then did the coolest grow less than they might have than a normal environment because of the uncertainty of me I'll look for the rest of the year.
Boarding Trevor no there wasn't built a impacts eight and first quarter with respect to incentive compensation with our cooling at 100% the same as a year ago. So that that didn't happen in fact in terms of the expenses for ratings during the first quarter two main elements.
I'd like to <unk> F.X., the expenses came down 7%, including foreign exchange and of course down 2%, excluding foreign exchange still two per cent <unk> is of course, a very strong results in terms of expense reduction for ratings. The other reason is what.
We already mentioned during to prepare to March they're supposed to ensure saying Oh shorten technology engineering capabilities that were previously outsourced to provide or you have shut up a technology at telling censored in India, and we are taking dare it clear benefit not only from talents perspective, but.
Also from a cost perspective. So those are the main the main items <unk>, but clearly unhappy I'm very happy to see <unk> off the ratings business in the first quarter and indeed, the margin improvements is quite impressive.
Interest at one quick thing the the the the the <unk> the Eva was making about the the changes and headcount you may remember on our fourth quarter earnings call was showing that slide with headcount and alluded to those changes.
Okay, great. Thank you. That's that's very helpful. And then just wanted to follow up I guess on the.
The next business believe you guys recently announced the collaboration with I just market to develop multi yeah Psych class index benchmarks.
Just wondering if you can <unk> discussed the strategy there and how that partnership came together, maybe how you view the potential size and girls and have the opportunity for multicast that class indices.
Trevor let me I'm going to give you a little bit brought her answer. Thank you for that first of all we have as you know that fixed income area and there's other types of blended funds blended E.T.S. blended into season et cetera ups and we felt that H.S. market. They have some very attractive indices some data.
Analytics that we're not being deployed into some different types of indices and that we could work together with him to really attacks on the market opportunities. We see emerging in the same way that we had recently signed an agreement last year on Earth day with Black rock for E.S. cheats indices. So we see that.
As many opportunities for us to partner, we don't always have to go alone to build indices and market relevant products and so in both cases with H. as markets and now with Black rock on E.S.T. for we believe that there's opportunities for us to address market market growth and market needs not just on a road. So this was.
Something that we're very pleased with both of those something that we're going to be working on will report going forward, how we do.
Okay, great. Thank you very much for all the color.
What else like our final question from Craig Huber from Huber Research partners realign isn't open.
Yes, I think you.
If I heard you right I think you said the debt issuance market forecasts for yourselves for the year is down did single digits.
Bill revenues of lines up that way down did single to just I'm curious.
Embedded within that.
What are you expecting the two middle quarters to be down year over year <unk>. What's the number of you said this what's the number in the first quarter the lines up with that.
Craig This is Doug I don't have something that is by quarter.
Terms of our in terms of art issuance outlook. This is something that our our teams are economists credit specialist they they go out and they look at what is the amount of debt, which is the <unk>. They look at what's happening wouldn't it I mean in the market with them and they would.
Debt repayments for bridge loans companies that want to pay out and pay back draw down some revolvers et cetera. So I don't really have the forecast that I could give you buy quarter.
Do you have the numbers are comparable number for the first quarter.
The first quarter issuance was up let me give you the the.
<unk> credit for getting to build if she wants we're not going to share build issuance numbers with you we share with the street.
The actual issuance numbers in a duck with that turned out build if she wants is the one time shot <unk> sharing information would do well, we're not totally looking mono and telling you build this was this quarter to quarter, so far about that.
[noise] art fair enough and then.
Who question on what to ask you.
[laughter].
The cost within your your readings <unk>. If this environment gets worse worse than we're forecasting right now do you feel there's a lot more costs you can take out of there. If you use a good explanation on what you've done so far but if it was more leeway on cost side there.
<unk> good morning to say about yes, absolutely because if you look at the expense reduction in ratings doing to first quarter. The impact all the management actions have rather be minimal because most of those management actions have been taken into month old March so.
Maybe a little bit all travel benefits has been incorporated in the first quarter, but most of the benefits <unk> management actions will actually come in do <unk> quarter show from that perspective.
Very good expense developments in ratings, but that's all based on actions, where I've taken into past and all the good work that has been done in terms of our productivity programs that we have been talking to you about before and the management actions related to Kobe to do real benefits will call me into future. So definitely there is.
Or opportunities cultivate expression is with respect to air expense nice.
Great. Thank you.
<unk>.
Okay Chip if you don't let let me make a couple of closing comments first of all I'd like to think everyone for joining us today on the S. and P. Global first quarter 2020 calls and for all of your questions. We know that this is a very difficult time for the markets also for everyone. On this call you've had to find new ways to adjust to working from home.
Some sort of alternative working environment, we we're very pleased though with our first quarter and in particular with the way our employees working at 99% no at home and really stepped up to support each other.
Continue to produce valuable ratings research analytics for our customers and for the markets, but as you saw in the call today and are prepared remarks, and then or a follow up we also recognized the outlook for the next quarter and for the rest of years very difference in how we started the year.
We have incorporated some of the knowledge and research from our own teens and what we're picking up in the markets to come up with a a broad set of assumptions that introduce new levels of risk and uncertainty those reflected in what we've given you wouldn't guidance for the rest two year.
And obviously when it clearly monitor the market conditions worked very hard to react and to be able to be prepared for what comes up and we look forward to working with all of you throughout the year and thank you again for joining the call I hope everybody stays healthy stay safe and we will see you throughout the year. Thank you very much.
That concludes this morning's call a P.D.F. refers to the presenter slides is available now for downloading from investors speak mobile Dot com.
These are the entire call it would be available in about two hours the web cast with audio and slides will be maintained on some people mobiles website for one year. The audio only telephone replay will be maintained for one month on behalf of S. and P. Global we thank you for participating and wish you a good day.