Q3 2021 S&P Global Inc Earnings Call
Good morning.
Welcome to S&P Global's third quarter 2021 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 accomplished a question and answers after the presentation and instructions will follow at that time.
To access the webcast and slides go to Investor <unk> S. P Global Dot com.
If you need any 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 for joining S&P Global's third quarter 2021 earnings call.
Today's call are Doug Peterson, President and CEO, Hey, Betsy Bergen Executive Vice President and Chief Financial Officer.
We issued a news release with our results earlier today, if you need a copy of the release and financial schedules. They can be downloaded at investor <unk> Global Dot com.
Before we begin I need to provide certain cautionary remarks about forward looking statements except for historical information. The matters discussed in today's conference call 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.
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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 Exchange Commission.
In addition, as announced late last year.
The global and I, just market entered into definitive merger agreement and.
In March shareholders of both companies overwhelmingly voted in favor of the merger the <unk>.
Merger is pending regulatory approval and we currently expect to close in the first quarter of 2022.
This call will touch on the merger, but does not constitute an offer to sell or buy.
Or the solicitation of any offer to buy or sell any securities.
Nor shall there be any sale of securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such jurisdiction.
No offering of securities shall be made except by means of prospectus may requirements of section 10 of the Securities Act of $90 33.
Connection with the proposed transaction S&P global and I just market has filed a registration statement on form S. Four with the SEC.
Which includes a joint proxy statement and prospectus STP.
<unk> global at IHS market, if all other documents regarding the proposed transaction with the SEC.
Investors and security holders of S&P global or IHS Markit stock are urged to carefully read the entire registration statement and joint proxy statement prospectus, which is available on our website and SEC Gov.
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.
The earnings release, and the slides contain exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U S. GAAP.
This call, especially the discussion of our outlook contains statements about expected future events that are forward looking and are subject to risks and uncertainties.
Factors that could cause actual results to differ materially from expectations can be found in our filings with the SEC and on our website.
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 Ola sort of healthy at two one to 4382 to 96.
At this time I would like to turn the call over to Doug Peterson Doug.
Thank you chip welcome to today's third quarter earnings call.
I'd like to start with some of the highlights of the quarter, we reported exceptional financial results with revenue, increasing 13% and all four businesses delivering strong revenue and adjusted operating profit growth indices delivered the strongest revenue growth for the second straight quarter due to large gains in ETF AUM.
Adjusted expenses increased 7% largely due to investment spending commissions and royalties.
After raising guidance on both the first quarter and second quarter earnings calls, we are raising 2021 guidance again based on these strong results and our expectations for the remainder of the year, Hey, Bill will provide details in a moment.
I'd also like to share some additional highlights from the third quarter.
The most important initiative of the year continues to be our upcoming merger with IHS market. This is an incredibly transformative opportunity for our company and our customers the regulatory path to closing the merger is now becoming clear.
We launched S&P capital IQ Pro and Platts dimensions pro.
And sustainable one our ESG business is gaining momentum as we build internal capabilities and product offerings expand I'll come back to all of these highlights in more detail, but let's start with the merger.
When we announced the merger in November 2020, we noted that we needed regulatory approval in five jurisdictions, Canada, the European Union, Taiwan, the United Kingdom, and the United States. We've made substantial progress with all of these regulators and there are a number of remedies, we must undertake in order to complete the merger.
<unk> market less divest the opus, the coal metals and mining and the pet Chem wire businesses. The sale of these assets to news Corp has already been announced.
In addition, IHS Markit must divestitures base chemicals business S&P global must of the CUSIP Global services and leveraged commentary and data together with related family of leveraged loan indices.
S&P global and IHS Markit will begin the process of selling these additional businesses. Shortly in order to provide time to undertake these sales processes. We now expect to close the merger in the first quarter of 2022 collectively the revenue from all of the businesses being divested is approximately $425 million and the margins.
For each of these businesses are higher than the margins for each of the divisions here in in a moment Eva will provide an update on our merger synergy expectations and you'll see that despite these divestitures, we are raising both our cost and revenue synergy targets.
To recap the financial results for the third quarter revenue increased 13% to $2 1 billion. Our adjusted operating profit increased 18% and our adjusted operating profit margin increased 250 basis points to 55, 4%.
As you know, we measure and track adjusted operating profit margin on a trailing four quarter basis, which increased to 130 basis points to 55, 1% as a result, our adjusted diluted EPS increased 24%.
Each quarter, we highlight a few key business drivers and important projects underway. This quarter, let's start with ratings bond issuance trends during the third quarter global bond issuance increased 3% in the U S bond issuance in aggregate increased 6% as investment grade decreased 12% high yield decreased 16.
Percent public finance decreased 24%, while structured finance increased to 105% due to large increases in every category, particularly clo's, which increased 340%.
European Bond issuance increased 4% as investment grade decreased 7% high yield decreased 4% and structured finance increased 70% with gains in every asset class, except our MBS of particular note C. M Dias increased 375%.
In Asia bond issuance decreased 2% overall.
The data on this slide only depicts bond issuance will include new bank loan volumes overall global issuance increased 9%.
The next two slides look at the combined high yield issuance and leverage loan volume for the U S and Europe.
Data is not readily available for the rest of the world.
This slide shows that the combination of global leverage loan and high yield issuance in the third quarter continued to be very strong surpassing every quarter in 2018, 19 and 20.
This slide depicts the combination of high yield issuance in leveraged loan volume by the use of proceeds of the funds raised this quarter, both general corporate purpose and refinancing related issuance was lower than the third quarter of 2020.
The surgeon activities entirely due to M&A <unk> buybacks and dividends. These are opportunistic categories that arent pull forward. The surgeon issuance is not pulling forward issuance from future years, and it is additive to future financing needs.
Since bank loan ratings are an important element of ratings revenue, we like to disclose our bank loan ratings revenue each quarter. The unprecedented strength of bank loan ratings revenue continued in the third quarter and year to date revenues already surpassed any of the previous 10 full years.
The leveraged loan market in the CLO market are dependent on one another as many of the leveraged loans and up in Clo's as you can see here CLO issuance continued to accelerate in the third quarter.
During the third quarter, we rebranded our market intelligence platform as S&P capital IQ Pro this recognizes the value of the capital IQ brand as we continue to upgrade the platform with additional content and functionality. We currently have approximately 290000 active desktop users of which 90.
<unk> thousand are utilizing S&P capital IQ probe.
Inaugural release of S&P capital IQ Pro includes a number of capabilities not found in the market intelligence platform.
A new can show enabled document viewer incorporates AI based search to speed up users discovery of text based insights across filings and transcripts. It's based on technology that can show originally developed for U S security and military agencies and is now re engineered for S&P capital IQ probe for example, it gives investors the ability.
Billety to quickly screen comments made over years of earnings calls within minutes.
The new platform features prequels coverage of private markets, including data around fundraising trends dry powder fund performance and L. P. Investor allocations. Also included is the ability for users to screen on non traditional industry criteria, such as crypto therapeutics and clean Tech.
Capital IQ Pro also includes ratings direct coverage of corporates and financial institutions are users can now incorporate a full suite of S&P capital IQ pro tools and functionality and interact with S&P global ratings content in ways not previously possible.
Platts has been on a long journey to consolidate its product platforms as well with the acquisitions have been tech eclipse see flow Petro media and others. There's been a tremendous effort to consolidate all of these capabilities into a single platform. This quarter Platts introduced platts dimensions pro which provides users with a seamless.
One stop shop experience across Platts benchmark price assessments news and analytics spanning 13 commodities, including energy transition and like S&P capital IQ Pro this content is available on our web based portal this mobile friendly via machine to machine delivery and as an XL add in.
Periodically we like to provide updates on new product launches.
The first two charts on this slide depict the acceptance by market participants of our J Cam marker for liquefied natural gas and our low sulfur marine fuel assessment, both have exhibited very strong growth recently.
The chart on the right shows the cumulative number of new assessments, we've launched in the energy transition space in the last four years. These include a new suite of Australian hydrogen prices company, what is expected to be one of the key producers of this future fuel.
The methane performance certificate, which reflects production of natural gas in the U S with zero methane emissions and upstream values for the measured carbon emissions associated with crude oil production and transportation covering the initial suite of 14 crudes from around the world and aiming to provide the backbone for low carbon crude trading.
Buyers can start to make active choices based on the relative carbon impact of different crude sources with this crude carbon intensity product.
Turning to our investments in ESG or sustainable one milestones and product launches continued to build third quarter sustainable one revenue increased 58% to $24 million versus the prior period.
With the launch of a second party opinions ratings now has five products overall ratings completed 10, ESG evaluations 13, Green evaluations, 13th Sam benchmark engagements and 11, social and sustainability framework alignment opinions in the quarter.
In market intelligence, we're close to wrapping up the annual CSA survey and so far in 2021 corporate participation increased 34% over 1800 companies on the back of these surveys we relaunched our S&P global ESG scores on 8000 companies during the quarter were.
We're targeting to have scores of more than 11000 companies by the end of this year's assessment cycle in the first quarter of 2022.
In indices, we had $26 $5 billion of ESG ETF AUM at the end of the third quarter. This is an increase of 178% since the end of the third quarter of last year. Our indices business also added to its ESG indices offerings with the launch of the S&P in CX 50, tilted index with the new zeal.
Stock exchange.
Platts added products to both its suite of carbon assessments and its recycled plastic offerings and finally S&P global as a founding member of Nevada, Our new technology platform designed to provide private equity firms and the private markets with ESG measurement data collection and benchmarking capabilities to help.
Improve the management and tracking of ESG performance.
By providing rich detailed data on a wide array of ESG topics. The corporate sustainability assessment is an integral part of our ESG scores since we purchased the capability for Ob Cosi them in late 2019, we've expanded the number of corporate participants by about 500 companies and the group has almost doubled corporate participation.
In the last four years today's participating companies represent 45% of global market capitalization. In addition, you can see this is a global endeavor, we view the CSE input as a key differentiator to our sustainable one efforts.
Let me now turn to our outlook for global issuance and GDP.
The 2021 issuance forecast continue to creep higher and is now relatively flat versus 2020 issuance. The latest forecast was issued early this week and also covers 2022 issuance for the first time.
2022 issuance is forecast to decline 2%. This is based on a 7% decrease in nonfinancial corporates, a 1% increase in financial services, a 3% increase in structured finance and a 2% increase in U S public finance.
Looking forward inflation concerns prospects for raising rates high cash balances and possible tax reform all translate to headwinds for issuance in 'twenty 'twenty. Two we expect that they will lead to a second year of contraction in issuance totals.
Please note that this is a bond issuance forecast. This is not a revenue forecast for example, it doesn't address non transaction revenue and doesn't include leveraged loan activity.
The macro outlook is little changed from three months ago, our economists expect growth to moderate in 2022 with growth in Europe, and many emerging markets improving while growth rates drop in the U S and China.
Commodity prices have rebound due to strong retail sales weather events and supply chain imbalances, however, inflation pressures appear to be peaking with some emerging market central banks raising rates U S. Federal reserve moving up its tapering timeline and the ECB firmly on hold for now.
Finally, platts analytics believes the current fundamentals should remain supportive of oil prices in the mid seventies. This is positive for the health of the oil industry I will now turn the call over to Eva Steenbergen, who is going to provide additional insights into our financial performance and outlook <unk> out. Thank.
Thank you duck, while we have excellent third quarter results and then exciting merger pending I would like to start my discussion today with our latest thinking around our merger synergy targets. There has been an extensive effort throughout the company to identify and validate potential merger synergies while the initial <unk>.
Energy targets that we introduced at the time of the merger announcement were developed by a very limited number of senior managers. The latest figures take into consideration in depth planning and analysis by countless employees across both companies. We have increased our total synergy targets and now estimate that there will.
B $530 million to $580 million of cost synergies and $330 million to $360 million of revenue synergies as you can see in the slides. This takes into consideration new synergies identified as well as dose we will no longer be able to achieve due to required.
The first to church correspondingly the proceeds of the divestitures will contribute to additional capacity for share repurchases.
I will also want to point out that on a run rate basis, we have already achieved approximately $25 million of dis synergies. This is primarily from not back filling open positions created through normal attrition.
Today, we're only providing an update on the merger synergy targets, we'll give you a full update on the financial targets of the merge company. After we complete the transaction.
Turning to our third quarter financial results, Doug covered the highlights of strong revenue and adjusted earnings per share growth I will take a moment to cover a few other items adjusted corporate unallocated expenses increased 18% due to company owned life insurance proceeds in the prior year period our.
Net interest expense improved 13% due to the refinancing of a substantial portion of our debt last year. The decrease in the adjusted effective tax rate was primarily due to a refinement of tax accruals on foreign operations related to both a prior and current periods.
During the quarter changes in foreign exchange rates had a positive impact on adjusted EPS of two sets the only meaningful impact was in ratings, where adjusted operating profit was positively impacted by $5 million.
In the second quarter, we introduced three new categories to provide insights into a type of expenses that are going to be incurred related to the pending merger. The first category is transaction cost. These are costs related to completing the merger. They include legal fees investment banking fees and filing fees.
The second category is integration cost these are costs to operationalize the integration they include consulting infrastructure and retention cost.
The third category is cost to achieve these are costs needed to enable expense and revenue synergies. They include the lease terminations severance contract exit fees and investments related to product development marketing and distribution enhancements during the third quarter the non-GAAP adjustments.
Collectively totaled to a net pre tax loss of $73 million. They include at $9 million for merger transaction costs, primarily legal fees $45 million from merger integration cost primarily consulting fees, a 3 million dollar gain on the sale of an office building in <unk>.
India and $21 million in deal related amortization.
This quarter all four divisions delivered solid gains in revenue and adjusted operating profit with indices delivering the largest gains on a trailing four quarter basis. Adjusted operating profit margin increased in all four divisions. Within this is leading with a gain of 170 basis points alper.
<unk> color on the individual business results in a moment.
Now turning to the balance sheet, our balance sheet continues to be very strong with low leverage and ample liquidity, we have cash and cash equivalents of $5 $9 billion and debt of $4 $1 billion. Our adjusted gross debt to adjusted EBITA improved since the end of last year to one eight times.
Free cash flow, excluding certain items was $2 $6 billion in the first nine months of 2021, an increase of more than $300 million or 15% over the prior year period.
Due to the pending merger with IHS market share repurchases have been suspended.
Now, let's turn to the deficient results and begin with S&P, Dow Jones indices, which delivered extraordinary revenue growth of 28% primarily due to gains in AUM linked to our indices. Please note that the ETF revenue included a 5 million dollar breakup fee due to determination of our indices.
<unk> is the basis for several Etfs.
In the third quarter adjusted expenses increased 4% largely due to royalties and compensation, partially offset by reduced legal costs. The adjusted segment operating profit increased a whopping, 40% and adjusted segment operating profit margin increased 660 basis points to 70.
One 8% on a trailing four quarter basis do you adjusted segment operating profit margin increased 170 basis points to 77%.
Every category increased revenue this quarter asset linked fees increased 36% primarily from gains in Etfs augmented by gains in mutual funds and insurance and over the counter to re certificate safety that exceeded 20% exchange traded derivative revenue increased 15% on increase.
Trading volumes at the CBOE data and custom subscriptions increased 8%.
For our indices deficient over the past year ETF net inflows were $223 billion and market appreciation totaled $524 billion. This resulted in quarter ending ETF AUM of two and a half trillion dollars, which is 43% higher co pay.
Two one year ago.
Our ETF revenue is based on average AUM, which increased 48% year over year.
Sequentially for the end of the second quarter ETF net inflows associated with our indices totaled $55 billion in market depreciation totaled $16 billion.
Exchange traded derivative activity was mixed during the quarter activity at the CBOE increased with S&P 500 index options activity, increasing 39% and fixed futures and options activity, increasing 31% activity at the CME equity complex deal.
Kris 6% due primarily to a 22% decrease in micro E mini volumes.
Ratings delivered very strong revenue growth, increasing 14% with strength in bank loan ratings structure finance and non transaction activity adjusted expenses increased 9%, primarily due to increased salaries headcounts at crystal growth initiatives and incentives. This was sold it in.
A 17% increase in adjusted segment operating profit and a 160 basis points increase in adjusted segment operating profit margin on a trailing four quarter basis. Adjusted segment operating profit margin increased 40 basis points to 63, 8%.
In China, we see continued momentum and interest in our ratings, we completed 15 ratings in the third quarter, bringing the year to date total to 46 compared to 22 and all last year no.
Non transaction revenue increased 15%, primarily due to growth in fees associated with surveillance increased new entity ratings activity Crystal and ratings evaluation services revenue transaction revenue increased as a 150% increase in bank loan ratings activity and strong.
<unk> structured products issuance more than offset a decline in corporate bond issuance.
This slide depicts ratings revenue by its end markets the largest contributor to the increase in ratings revenue was the 48% increase in structured finance driven by Clo's see MBS and ABS. In addition, corporates increased 14% financial services increased 8%.
<unk> decreased 12% and the Crystal and other category increased 14%.
Market intelligence delivered reported revenue growth of 7% and 8% on an organic basis more than one third of the revenue growth was from recent product investments, which increased by 40% led by ESG and the S&P global marketplace adjusted expenses increased 4%.
Primarily due to higher investment spending, particularly in ESG S&P global marketplace, SME and China additional infrastructure spending supporting our cloud initiatives and S&P capital IQ Pro and data, which is primarily license fees tied to after market research revenue.
Adjusted segment operating profit increased 13% and adjusted segment operating profit margin increased 190 basis points to 35, 7% on a trailing four quarter basis adjusted segment operating profit margin increased 90 basis points to 33.8.
Percent.
Looking across market intelligence, there was solid growth in each category desktop revenue grew 6% data management solutions revenue grew 12% credit risk solutions revenue grew 7%.
And now turning to Platts reported revenue increased 8% our core subscriptions increased 7%. It's notable that more than one third of the growth came from new products, primarily ESG and LNG global trading services had a great quarter, increasing 14%.
Mainly due to strong LNG and petroleum volumes GTS activity, often picks up when commodity prices become more volatile adjust.
Adjusted expenses increased 11%, primarily due to growth initiatives incentives and commissions. In addition expenses in the third quarter last year were aided by management actions adjusted segment operating profit increased 5% and adjusted segment operating profit margin decreased 110 base.
<unk> points to 54, 6% the trailing four quarter adjusted segment operating profit margin increased 70 basis points to 55, 6%.
While there was revenue growth in every category petrochemicals natural gas power and renewables and shipping all delivered double digits growth.
Because the company now anticipates closing the merger with IHS market in the first quarter of 2022, we're able to provide 2021 GAAP guidance for the first time. This slide depicts our new GAAP guidance.
And this slide depicts our adjusted guidance the third column shows our new 2021 adjusted guidance with all the line items to changed highlighted we're making these changes primarily due to greater revenue growth in ratings and indices. Therefore, our revenue guidance is increased from highest.
Got it should increase to a low double digit increase.
Unallocated is increased by $5 million to a new range of $140 million to $150 million due to increased incentives and a charitable contribution operating profit margin has increased by a range of 40 to 60 basis points to a new range of 55 to 55 and a half per se.
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This results in a 50% to 55% increase to adjusted diluted EPS guidance to a new range of $13.50.
The $13.65.
And finally free cash flow generation has been increased by $100 million to a range of three six to $3 $7 billion.
In conclusion 2021 is turning out to be an exceptionally strong year for the company all of our businesses are delivering solid growth. We continue to expand our ESG product offerings, and we're making great progress on the upcoming merger with IHS Markit and with that let me turn the call back over to.
Chip for your questions.
Just a couple of instructions for our phone participants to indicate that you wish to ask a question. Please press star one and record your name.
To cancel or withdraw your question simply press star two.
Please limit yourself to two questions in order to allow time for other callers during today's Q&A session.
Operator, we will now take our first question.
Thank you. Our first question comes from Manav Patnaik with Barclays. Your line is open ma'am.
Thank you.
I just had a question on the capital IQ Pro platform that you talked about you know it seems like that's been at.
In the works for some time, perhaps it's out a little bit later than you guys had anticipated, but just talk about how you think that improves your competitive positioning and is there any changes in that side of the market from the competitive angle.
Thank you Manav. This is Doug well first of all welcome everyone to the call. We had a lot to report today and I'm pleased that you picked up that we've been able to launch the capital IQ probe platform. It what it brings is the ability to first of all consolidate of many many different.
Information sources that we've had in the company across the years. It has a much better interface of you've seen if you've started using it.
Also incorporates new Tien Chau capabilities with improved search. It also has the data for ESG, it's easier to use for our risk services data so across the board. It provides us with a competitive advantage of comprehensive data ease of use as well as new tools that make it easier to download data to move them into spreadsheet.
<unk> for charging et cetera. So we think it's an incremental a leap forward and gives us a much more competitive platform for the market.
Got it and then Doug just on the issuance forecast for next year I know you gave us the moving pieces by category, but just high level from a macro standpoint, I mean down 2% volume doesn't sound that bad compared to the strong two years that we've had but just curious on where you think the <unk>.
Positives and negatives could be to that number.
Yes. This is something as you know we've seen.
Really interesting mix of the issuance. This year you saw the very strong issuance in loans, which is driven by M&A are we seeing so far in the quarter. We saw a drop of corporate skew us a 30% while we saw an increase in structured finance of over 100%. So those are really big swing, we do see that the M&A active.
The T should continue forward Theres, a theres a lot of M&A activity in the pipeline, which would bode well for loan issuance, that's not something that's in the bond forecast itself, but in the bond forecast, we see that incorporates its going to be down about 7%. A there continues to be strong liquidity for those types of issuers the <unk>.
Trend is right now there's not a very big pipeline of issuance of corporates that we see financial services had have strength.
Last couple of quarters as you saw this quarter financial institutions was up about 5% in the U S. It was actually up about 30% so.
So you did see some strength in that so we do think that there's going to be some continuation up about 1% sorry, it's a 1% for 2022.
For structured finance.
We do think that theres going to be some continuation of interest in CLO, but I'm not sure if that will continue across all asset classes with about a 3% increase U S public finance close to flat around 2% up and then finally total when you look across all of those given the volume of corporates, which were down 7%.
That would that would bring the total down about 2% in 2022 and as we said on the call. This is a initial issuance forecast of bonds, it's not a revenue forecast.
Understood. Thank you.
Thanks Manav.
Thank you for your question. Our next question is from Kevin Kevin Mcveigh with Credit Suisse. Your line is open please.
Great. Thanks, so much a congratulations on the results.
Doug you talked about ESG, just within the context of longer term opportunities I mean, you're scaling it seems like the revenue was 24 million up from 22, and I think in the past you've talked about $100 million target and exceeding kind of 300 million by 2024, you're still comfortable with that and is your potential.
It just puts and takes on that as we think about bringing.
Bringing in IHS had to the extent you can talk about that.
Good morning, Kevin This is Eva let me first take the first part of your question and then I will hand, it over to Doug.
First with respect to the revenue outlook for <unk> for the full year, yes, we're still expecting to come in at approximately $100 million of revenues for the full year and one of the reasons is that there is.
Some seasonality with respect to semi revenues, usually it's a bit higher in the fourth quarter. So we're year to date at 67 million opening your street revenues and again, we expect it to go up in the fourth quarter to approximately $100 million for the full year. So we are on track with respect to our forecast.
40% CAGR that we expect over the next few years and you'll see that we have a lot of positive momentum a lot of new product launches a lot of new initiatives going on a lot of investments in ESG initiatives. So let me hand, it over here to duck.
Thank you, Kevin and just a couple of points strategically positioning we have been able to put together the sustainability one group under the leadership of a Martina Cheung.
And this is this has provided us with the ability to look across the entire organization for ways that we can link data and put together the latest needs for the market. As you saw we launched the partnership with the Ford Foundation Hamilton Lane and O'meara are four of the Nevada platform for the private markets in private equity. So we're looking across.
Ross all the different types of opportunities to bring ESG data into the market. So you have the most transparency the most comprehensive consistent approach to providing those ESG solutions to the market. So this is something that we're looking at across the board in all the different aspects of how markets are starting to you use ESG data.
You should expect that we're going to continue to invest in this area you should hear from US every quarter that we've spent some money or invested in a different division to increase our sales force our technical capabilities and if you ask the question about where might we still.
Still be targeting some longer term look at acquisitions ESG would clearly be on that list.
Super Helpful. And then just real quick it seems like Youre able to walk up the the cost synergies and even the upper end of the revenue synergies. Despite some additional divestments.
To get the deal over the goal line any thoughts on kind of.
The broader I guess categories of what did the expense synergies are and then maybe where some of that revenue comes in as well is that just you know as you're kind of coming together. It just any thoughts as to what drove that upside there.
Kevin The short answer here is that based on a lot of bottoms up work by large groups of people with a lot of rigor subsequent shading synergy opportunities, we have been able to find a higher opportunities than we thought before so let me expand on.
It's on depth and you'll recall, when we announced the transaction.
We said that we had $350 million of revenue synergies and $480 million of cost synergies that was based on very thorough process. During due diligence. However that was done by a smaller group of senior executives because of course, a smaller group of people were aware that we're working on that transaction. Since then we have had work stream.
In place and for ship mission, Brian with respect to synergies through a very rigorous process and we have been able to move much deeper into all the synergy categories from integrating corporate functions to optimizing real estate and technology going very deep in procurement.
Clean room activities procurements I already mentioned.
Eliminating duplicative costs. So many of those areas and based on all of that's very detailed work. We're confident now that we can raise those synergy targets both for costs and revenues.
Thank you so much congrats again.
Thanks, Kevin for your question. Our next question is from Andrew Nicholas with William Blair. Your line is open Sir.
Great. Thank you maybe I'll start with a follow up to the last question, which is just on on the timing of cost synergies.
I believe of the 480 that you'd outlined initially 390 were expected in the first two years.
This additional 100 or so is that kind of a first two year opportunity or is that part of a longer tail.
Good morning, Andrew what we're looking at is very similar trajectories with respect to expense synergies and revenue synergies that we told you before so three year cost synergy ramp which is more front end loaded and then five year ramp for revenue synergies, which is more <unk>.
<unk> opened a five year period of time.
Understood. Thank you and then.
My next question I appreciate you taking them. It was just on the implied guidance for fourth quarter spend mm. Obviously after a really good quarter it still looks like you're expecting more acceleration.
And so I'm just wondering one what the major drivers of that increased spend are in.
In the fourth quarter, and then also as a jumping off point for 2022.
Sure well I have to be careful about 2022, because we are not providing guidance on that at this point in time, but let me give you some more details about our outlook for the remainder of the year. So what you see Andrew it's a bit of a direction of different initiatives going in opposite opposite.
<unk> so.
First we have the productivity program, where we take benefit so far this year from an expense growth perspective, as well as the realized synergies on the S&P Global site that we mentioned in the prepared remarks and of course, we're also taking benefit from the operating leverage but what goes in the opposite direction as the strategic investments were made.
King into strategic initiatives for example in ESG for example in the energy transition in plants and they'll also our variable expenditures are going up I considered those good expenses because they are directly linked to our sales levels and our revenue levels, So think about incentive compensation commissions.
And cost of sales. So we expect those underlying trends to continue in the fourth quarter, specifically I would like to call out flat because the plants expenses might be a little higher in the fourth quarter similar to what you saw in the third quarter because here you see particularly those variable expenses.
Being a bit higher as well as the investments in the new initiatives.
That is also paying off because as we mentioned one third of the revenue growth and flex is coming from those new products.
That's helpful.
Yes. It is thanks a lot.
Thanks, Andrew.
Thank you for your question. Our next question is from Hamzah <unk> with Jefferies. Your line is open.
Hi, Good morning. My My question was just around if you could just update us on you know the capital allocation framework.
Going forward I know.
The deal timeline as sort of Q1.
You also are planning how much free cash you're generating this year.
Just update us on your thoughts on return of cash post deal closing and then have the costs to achieve synergies changed at all with the updated cost synergy figures.
I'm sorry, good morning, So let me first stake.
Capital return philosophy, you are absolutely right that we are building up significant cash as a company and our thinking about returning that because obviously this is temporarily elevated returning that cash and thinking about that is the following so first we have to catch up to do.
<unk> for the last one and a half years, we have not been able to do share buybacks and the same applies by the way for IHS Markit. So IHS market can also not do share buyback. So it's also building up its cash position and what we should add is some of the proceeds of the divestitures that will help with the capital return capacity.
And then very quickly after the completion of the transaction, we would like to move to our new capital return target of at least 85% of free cash flow. So if you add up all of those pieces. Then we're speaking about a very meaningful capital return number that we will.
Be able to achieve after the completion of the transaction I cannot give you a numerical answer on that right now that's what we're planning to do it. It gives you the financial targets of the combined company in the first quarter again after we complete the merger.
With respect to your second part of the question the cost to achieve so we are looking still at three different categories with respect to our merger related cost. So we have transaction cost integration cost and cost to achieve cost to achieve a knife. You are of course, the best Guy degree of cost because it's in there.
And to ultimately achieve those synergies and what we are looking at in terms of the overall best estimates with respect to the spend.
The integration cost and the cost to achieve combined we're looking at approximately one one times the overall cost and revenue synergy. So that's our best estimate in terms of what we expect to spend for integration and cost to achieve but again, that's just in the investments in order to achieve ultimately.
It was how your synergy numbers.
Very very helpful and my follow up question I'll turn it over is just around the China ratings business I know you outlined sort of completing 15 domestic ratings, but where do you view that the environment is as having changed for your business or.
Or are not really a lot of the headlines around China are are are a little more.
It seems like it's tougher, but maybe it doesn't impact your business domestically. So just any thoughts there.
Yeah. Thanks, Hamzah nice to hear from you and as you mentioned, we did complete 15 ratings in the third quarter, It's actually 46 year to date and that compares to 2020 'twenty two in all of 2020. So we know that growth isn't going to be a straight line. There's a lot of interest in our ratings is you see theres some credit events, taking place in China right now.
And those are bringing a lot of attention to our ratings and our methodology. How we think about informing the market, we see a big uptick in people attending our Webinars are downloading our research and we've also been pleased that we've been able to right companies across the entire credit sector from AAA to.
Triple B and then different types of companies financial structured products and our first nonfinancial corporate but more to your question about the environment. We continue to see the financial regulators are very interested in reforming and updating their financial markets. We would see that when it comes to the ratings industry. There is interest.
And seeing more from us they're talking about some reforms that would make the ratings industry more transparent and make it.
Change some of the floors for what would be defined as a non investment grade ratings, but very importantly, we also see a whole slew of international financial firms getting licenses to operate 100% owned or more than 51% owned operations in China recently Goldman Sachs received approval.
To take full ownership of its securities a JV of others include Fidelity JP Morgan City, Blackrock et cetera. So we do think that in the financial markets. We see a very different rhetoric, and then willingness to open the reform of the markets compared to what you see sometimes in other parts of the markets.
Thank you.
Thanks Hamzah.
Thank you for your question. Our next question comes from <unk> <unk> with RBC capital markets. Your line is open.
Thanks for taking my question.
Just on the on the divestiture and the $420 million of revenues for the divestitures I believe.
The ones that are already announced to Opus see amendment Petro Chem those $129 million.
I just wanted to confirm that that number is still right and.
I was wondering if you could provide any incremental details on the other businesses any further details on revenues what other businesses. Thanks.
Good morning, Ashish, Indeed that number is still correct approximately $125 million revenue for opus and its related business businesses like the Kohl's coal metals and mining and as Doug said in his prepared remarks $425 million for all of the divestitures.
<unk> Opus combined.
Yeah.
Okay. That's helpful and then.
Just a question on the cap IQ Peru.
Obviously, that's getting pretty good traction with the rollout of that my question was how does that help you boost the integration with IHS market does it make it easier for you to cross sell of IHS data into the cap IQ customer base with the rollout of the IQ, Peru, a pretty solid rules.
Out of the IQ cap IQ pro platform, yes.
Yes.
Definitely does having the capital IQ Pro are developed and delivered is important to us it gives us confidence of our ability to integrate new datasets. It also is something that's on the desktop of already 90000 users, which is growing rapidly. We believe that that gives us the ability to integrate new data.
As you know related to the market intelligence business. We also have the data marketplace, which.
How's the tiles for different datasets majority curated have the contracts around them. That's another aspect of the market intelligence business that is going incredibly well that will help us integrate the data lake and the data our products also have IHS markit. So the the progress technologically how we've moved our operations to the cloud.
The upgrades and updates we have been doing to the backend as well as now the ability to deliver that front end of the of S&P capital IQ Pro we're all going to help fulfill facilitate the integration.
Thanks Ashish.
Sorry go ahead.
Well, thank you very much.
Excellent. Thank you.
Thank you for your question. Our next question is from Jeff Silber with BMO capital markets. Your line is open Sir.
Thanks, So much I wanted to switch over to the indices business. The performance has really been remarkable the past few quarters.
You've got three straight quarters.
Adjusted operating margin above 70% is that the new bar going forward is that sustainable.
Hello, Jeff This is Dave out with respect to the outlook for margins for indices I can only give you the outlook for 2021 and that is approximately 70% margin for the full year and we will get back to you in the first quarter. When we do our fourth quarter earnings call with respect.
Some specific guidance for 2022.
Okay, I thought I'd try but thank you anyhow.
And then just moving back to the merger can you just remind us where we stand in terms of milestones in terms of.
What we're looking for over the next few months.
But let me take that and what we're looking over the next few months is to continue to meet the requirements that we agreed with the regulators on.
Where we're going to be divesting of some businesses. So that we can close the transaction as you saw this week or.
Last week, we were able to.
Reach some agreements with the EC for the approval of some conditions and what they call remedies, which include the divestiture of Opus.
Did they include what's now the divestiture of CUSIP and then also LCD in loan indices, we have about six months from now to close the LCD and the.
<unk> alone into season, those are not conditions to close the transaction CUSIP is and then with the CMA in the U K. We also have the condition of the Opus transaction and now something else that's being added it's called base chemicals, and we heard from them. This morning.
In general they approve of that is the remedy that they would expect meets the needs. We also want to make sure that over the next three or four months, we have time to follow through on a very thorough and robust process to get full value for all of these divestitures. So in a sense right now getting those divestitures meeting the rig.
<unk> of those regulators are the remedies that they saw the created competitive positions that they thought it would be too strong, including completing those divestitures is going to be the gating factor, but we also wanted to do it as I said in a way that's professional robust and we get full value. So you should be watching that we'll be providing more information as things crop up.
We can talk about but be assured that this is something that's on the top of our list right now things we have to get done.
Okay really appreciate the color. Thanks, so much.
If I may build on Doug's answer.
We expect two milestones. We also have of course, the milestones around the merger planning process and I think we're well underway a lot of positive initiatives that are going on in both organizations and we are looking at for example, getting ready for day, one and being able to operate as one combined company on day one system.
Since people planning synergies anzalone. So also a lot of milestones that we are working on on the more overall planning process.
Thank you.
Thanks, Jeff.
Thank you for your question. Our next question is from Toni Kaplan with Morgan Stanley You May proceed with your question.
Thank you I wanted to ask about the recurring revenue within the ratings business, it's very strong again at 15% our fourth quarter of double digit growth.
Forward should we expect sort of a similar growth rate there and just broadly has there been any change from issuers when deciding whether to enter a frequent issuer program, especially as debt balances continue to rise or has that not really changed at this point.
Good morning, Tony.
Very positive continued closer to revenue growth in the non transaction category for ratings and we also expect that to continue for the full year for the outlook for non transaction revenue is now low double digits growth. What you see is underneath is a couple of developments first we are seeing.
Being that surveillance fees are going up that is being helped last year, but a very high level of bond issuance activity. In this year of course by bank loan ratings activity, where we also are receiving a surveillance fee. So indeed, some part of that you may expect to also continue in the future beyond 2021.
Then what we also see is a lot of activity with respect to initial credit ratings to shear ratings evaluation surface, which is held by the M&A environment and then Chris will also is doing very well and its ultra showing very healthy growth. So all of your underlying categories and non transaction revenue doing very well.
That's really helpful color and just for my follow up.
Given that I know, you're less exposed to sort of some of the labor pressures, we're seeing across some of our diversified names but.
That being said can you comment on if you're seeing any headwinds on the labor side is it harder to find people just wanted to understand what's going on with your employment.
Absolutely Tony we're monitoring this very closely both indeed from a quality of people that we can attract and retain as well as overall from a cost perspective because of course, the largest cost category. We have a staff cost as a company it's about 70%.
<unk> of our overall cost base, we by the way I see this both as a risk as and as an opportunity because it's there are a lot of people on the move in the labor market is also a clear opportunity to pick up some really good talent as a company below par with the hybrid more working model that we are introducing we also think that it is attractive.
As an employer that we can offer that and it also offers the possibility to look at talent and a much wider geographical area that we're looking at before so we're closely monitoring dish at this point in time, our economists believe that the inflation pressure should be transitory. So that's more our base case, but we're at.
Definitely running stress test to think about inflation would be more permanent what that would mean for the company and what management actions we can take.
That's great. Thank you so much thanks Tony.
Thank you for your question. Our next question is from Craig Huber with Huber Research Partners. Your line is open Sir.
Yes, Hi, My first question Tim.
Typically you guys raised prices on average 3% to 4% per year.
For your legacy business this year or is that a reasonable range and is there any areas around either significantly higher or lower than that and I'll have a follow up thank you.
Craig.
As you know, we typically will price somewhere around two 3%. We tried to look at what are the trends in the markets on inflation, but that would continue to be our expectation going forward, but we don't have any further guidance or update on that right now.
Okay. Then my other question Doug on your outlook for debt issuance. This upcoming years like it's down 2% excludes bank loans. If I heard you right can you just comment if you would what's your best assessment of how you think bank loan issuance will do next year and keeping the huge strength you guys have seen this year. Thank you.
I don't have the bank loan issuance forecast from the team and I do I would only say that we do see a very strong pipeline for M&A and L. B OS that is always one of the most important elements that figures into that but we will be providing more guidance on that at our next earnings call.
Thank you.
Thanks, Craig.
Thank you for your question. Our next question is from Andrew Steinman with J P. Morgan. Your line is open Sir Hi, I'll be quick.
Could you just help us a little bit more understanding of the fourth quarter.
You know just a comment about the four segments and how they're likely to do on our organic revenue growth basis deposit linked to the full year 'twenty. One guide that you gave on slide 43.
Sure Andrew we're looking now at outlook with respect to revenue growth for our divisions.
Index business double digits revenue growth ratings low double digits, we have plots at high single digits and we have am I at mid to high single digits, and then with respect to the margin outlook for the full year, we have as I said before in this is around 70% ratings mid six.
These labs mid fifties and then in my mid thirties.
The continued positive momentum and healthy top line growth and healthy margins for all of our segments perfect. Thank you. So much that's for the full year correct Dave.
Those are full year, correct, Oh, okay, what puzzle into fourth quarter. Thanks for highlighting that I appreciate that.
Thank you for your question. Our next question is from George Tong with Goldman Sachs. Your line is open.
Hi, Thanks, good morning.
You've not increased your guidance for debt issuance in the ratings revenue.
Three quarters in a row, well why shouldn't the factors that drove outperformance persist into 2022.
I don't have any reason whatsoever to try to give a forecast in 2022 right now that goes beyond what our own team who are the people in the markets every day I've looked at clearly the Theres a lot of factors, which go into the decision of organizations to issue debt or to undertake an M&A deal and what.
Sort of instrument that they undertake to finance it with whether it's alone how's it gets packaged in the CLO etcetera. There is a lot of liquidity in the market, we do see a strong M&A.
Pipeline right now and so those are things that will factor in when we bring you the full update in our guidance on our next earnings call.
Okay got it but you increased your synergy target associated with the info merger, which businesses do you expect these incremental synergies to come from predominantly or is it relatively evenly spaced across the business.
But georgia it will be across the board in many different categories in all of the segments as well as also in the functional areas.
Let me give you a couple examples of that so that you can get to more of a feel behind it. So first a lot of work has been underway in what we call the procurement clean room, so about two and a half a billion dollars of spend of both companies has been end of life. They are 25000 active contracts and that has led to some opportunities.
Further opportunities that have been identified also there is a clean room for cross sell and we have found about 200 synergies with respect to cross sell who that clean room activity and then what we did not expect before work shortly and synergy benefits from segments that we basically.
I did not have the list before so we now have synergies, although being identified in ratings in transportation in CNS and in Crystal. So those are a couple of examples but I would say in general really more opportunities in all of the areas across both organizations and of course and the combined company in the few.
<unk>.
Great. Thank you.
Thanks George.
Thank you for your question. Our next question is from Owen Lau with Oppenheimer. Your line is open Sir.
I'll be quick could you. Please talk about the rationale behind how do you come down to the conclusion to divest oculus treatment L. C. D. And then all these divestitures contingent to the completion of the info deal. Thank you.
Yeah.
Thank you Owen well as you know these are these are businesses that the EC and the CMA have looked at with a lot of depth. They go to the market. They go to market participants to ask them.
To look at the businesses as we bring them together and to give them feedback as to what would look what would be the competitiveness of those businesses. So when it comes to the discussion with the.
E C. They determined that CUSIP and LCD.
And the loan indices would create some sort of an additional competitive advantage and in the discussions with them and looking at their understanding and belief that the market position. We agree that that would be a remedy that would meet their needs to ensure that we didn't have a dominant position in the markets. So this is a this is something that <unk>.
They looked at you can actually read their letter that has been published that they have the they have a very.
Very short a couple of paragraphs described their views of that and how they how they feel about it but they've also given us what they call an approval with conditions, which we think was a very positive aspect.
Emily with the CMA they go to the markets they listen to market participants and they came back with the discussion about the base chemicals business that would also create a competitive issue in the UK and in discussions and negotiations with them. We also agreed that that would be a condition that we would meet in order to get approval on the transaction.
So these are or what the regulators do they look at the market. They speak with market participants and then we'll discuss these with them and in these cases, we've agreed that we would make these divestitures in order to close the deal you asked about conditionality.
Our understanding in the case of the of the CMA, we would need to have a buyer identified that they would debt of the base chemicals business and also the opus business in which we already have a buyer and in the case of the EC we'd have to have a buyer identified for opus and related businesses, which we already have and then four CUSIP we'd have to have a bar.
Higher.
We have identified embedded before we can close the deal but for LCD and loan indices. We have six months from now and we could close the deal without having that without having a buyer for that transaction.
That's very helpful. Thank you very much.
Thanks Owen.
Thank you for your question. Our next question is from Geoff Miller with Baird. Your line is open Sir.
Yeah. Thank you on the cap IQ and platts upgraded platforms.
As you upgrade to an existing client is there incremental revenue at the point of upgrade or is this all about driving usage and then you capture the better monetization on the backend and then on the expense side is there a sizable opportunity to.
To save on cost as you Sunset some of the legacy platforms eventually.
There's a few aspects to this one one is related to something you mentioned and that is that as we improve our capabilities to make it easier to find data to searches to charted the downloaded et cetera that makes the products more sticky. It makes more people use the product that brings more people to the platform, which is a virtuous cycle, which then allows.
US to have a stronger negotiations when it comes to price increases. So there is not necessarily a direct.
Increase that comes from the launch of these platforms, but it does give us that virtual cycle. In addition, it makes it easier for us to plug in and add new datasets, which do sometimes bring new contracts and new revenue along with those.
In addition, you asked about the expense side of this as we redeploy resources from turning off and changing older platforms. It allows us to either have an expense save or in many cases it allows us to redeploy those.
The programmers and developers into areas, where the highest growth opportunities like what we've talked about earlier something on ESG private markets are the areas that we're quite excited about with the with the merger with IHS market, how we're going to be able to bring energy transition products further credit and risk products et cetera. So we can get some savings.
But also look at how we're going to redeploy our development talent to the highest opportunities for the future growth.
Okay got it thank you.
Thank you thanks, Jeff.
Thank you for your question. Our next question is from Shlomo Rosenbaum of Stifel. Your line is open Sir.
Hi, Good morning, Thank you for taking my questions, Hey, even out I apologize if I missed this but the divested businesses are going to be $425 million in revenue, but what.
What would the EBIT or EBITDA of those businesses be on a collective basis.
That slo-mo good morning, no we haven't mentioned that specifically.
But what Doug said during his prepared remarks is that the margins on these businesses are higher than the margins of the respective segments, where these businesses are reported to date. So these are businesses with a bit higher margins than you see on average.
However, if you think about it the revenues of those four businesses is approximately 4% of the revenues of the pro forma combined company. So therefore, the overall impact on the margins of the company is relatively modest and then also take into consideration that the overall synergy numbers.
We have moved up with this announcement.
So.
If the synergies are moving up so does that going to offset it.
In other words, how should I think of the offset should I think of it in terms of the.
The share repurchases is going to be the primary offset or or some of the increased synergies. How how are you guys thinking about that in terms of the lost EBIT.
Yeah, the way to think about it is maybe three elements. So you could say the starting point for the combined company. The margins are slightly modestly lower based on these divestments, but then we will see two positives coming out of it one is higher synergy opportunity, which will help.
To drive the margins down further up in the future as well as the proceeds of these divestments will help with additional buyback capacity, which is also of course, a positive Ben for the EPS in order to offset the lost earnings.
Okay. Thank you if you wanted to follow up just one thing I haven't heard before was kind of a termination fee on Etfs could you just elaborate on that a little bit more or is it are you going to internal.
Oh indices that they're creating on their own or you know what happened all of a sudden.
Yeah.
As you know in the index business occasionally.
Organizationally will rebalance or maybe they might bring together some indices and switch to another party and when we have a contract in place with the with an index provider.
Sorry, an ETF provider thats using our index if they switch it could be built in the contract. There is early cancellation fee and that would be the case that we saw during this quarter.
Thank you.
Thank you.
Thank you for your question, we will now take our final question from Alex Kramm with UBS, Sir you May ask your question.
Yes, Hey, good morning, everyone. Just one quick follow up on the on the ups upside to synergies can you I know you've given a lot of color, but can you give a little bit more detail in terms of what you were able to look into now given that the deal's not closed and what is still prevented I guess, what I'm, asking and I know I'm getting ahead of myself here.
What further synergy opportunities may be out there that you haven't been able to tackle as for example, you may look at the IHS Markit Standalone cost base, a little bit further and once you own the company or the things that you already have in your mind that you're just not willing to put numbers around yet and I again, I know I'm getting ahead of myself a little bit. Thank you.
Yeah.
Thanks, Alex.
Really appreciate your joining the call today.
I think you should see this in the following way we do have of course certain restrictions legally with respect to how far we can look into short in details with respect to financials in terms of commercial agreements in terms of procurement agreements because the two companies are.
Still run as Standalone entities at this point in time, so the way how you can sulfur that's partially through so called clean rooms, where you have a separate segregated area where people can look into those specific details, but that can never be sure art with any of their respective organizations.
So definitely after we are able to complete the transaction, we have an opportunity to look even more deeper into all of that and further make those synergy numbers more robust compared to what we have now but again as I said before we think that we have a very rigorous process in place we have already.
<unk> four submission rounds bump them up substantiation of all of the synergies will have a fifth round before the ultimate completion of the transaction and then definitely of course will then learn more after we can start to operate as a combined company.
Alright, well. Thank you very much that's it for me.
Great. Thanks, Thank you, Alex and I'm going to make some closing remarks and first of all I want to thank everyone for joining the call today and as you saw we had very strong performance in the third quarter, we delivered delivered exceptional financial results for the 13% topline growth.
Adjusted diluted EPS of 24% growth, we launched new product platforms, we advanced our ESG propositions and many many more things going on and as we were able to talk about we're moving forward on the IHS Markit merger. This is something that we're very excited about the path towards regulatory approval is getting clear.
We now have to execute on the divestitures that we discussed today to achieve the full value, but also we don't want to rush, we won't have time to close and also to make sure that we can execute those transactions well.
Yeah. As you know we also have the integration planning going on which is identifying synergies, but more importantly, it's also identifying strategies for our businesses. How we're going to work together how are we going to address the needs of our customers, how we're going to be bringing together technology and very importantly data and then most importantly, our people and our culture and all of this work is.
Going extremely well.
But today on this call I also want to thank our people are they've been working now for 600 days. It sounds like a lot. It's 600 days people who've been working from home and working remotely are starting to come back to the offices and when they do I'd love to welcome them, depending on which offices where around the world, but our people have been dedicated they've been working hard.
They may be able to deliver the kind of results that you saw earlier as well as work on this exciting transformation for the company with the merger they've been diligent there, helping rethink and re imagine the future of the work and I want to thank them for all of their dedication and commitment to making this company what it is and I'm looking forward to the future for building.
But even better company and then finally I want to thank everyone on the call of the analysts for your questions and also the shareholders for your support and thank you very much looking forward to a great fourth quarter and holidays at the end of the year. Thanks, everyone.
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