S&P Global 10-Q 2024-06-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2024

OR

For the transition period from to

Commission File Number: 1-1023

S&P Global Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: 212-438-1000

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑

As of July 19, 2024 (latest practicable date), 313.0 million shares of the issuer's classes of common stock (par value $1.00 per share) were outstanding excluding 7.2 million outstanding common shares held by the Markit Group Holdings Limited Employee Benefit Trust.

S&P Global Inc.

INDEX

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of S&P Global Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of S&P Global, Inc. and subsidiaries (the Company) as of June 30, 2024, the related consolidated statements of income, comprehensive income, and equity for the three- and six-month periods ended June 30, 2024 and 2023, the related consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for the year then ended, and the related notes and schedule (not presented herein); and in our report dated February 8, 2024, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ ERNST & YOUNG LLP

New York, New York

July 30, 2024

PART I — FINANCIAL INFORMATION

S&P Global Inc.

Consolidated Statements of Income

(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Balance Sheets

Showing the first 8K of 141K characters. Open the full section

The following Management’s Discussion and Analysis (“MD&A”) provides a narrative of the results of operations and financial condition of S&P Global Inc. (together with its consolidated subsidiaries, “S&P Global,” the “Company,” “we,” “us” or “our”) for the three and six months ended June 30, 2024. The MD&A should be read in conjunction with the consolidated financial statements, accompanying notes and MD&A included in our Form 10-K for the year ended December 31, 2023 (our “Form 10-K”), which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The MD&A includes the following sections:

• Overview

• Results of Operations — Comparing the Three and Six Months Ended June 30, 2024 and 2023

• Liquidity and Capital Resources

• Reconciliation of Non-GAAP Financial Information

• Critical Accounting Estimates

• Recently Issued or Adopted Accounting Standards

• Forward-Looking Statements

OVERVIEW

We are a provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. The capital markets include asset managers, investment banks, commercial banks, insurance companies, exchanges, trading firms and issuers; the commodity markets include producers, traders and intermediaries within energy, petrochemicals, metals & steel and agriculture; and the automotive markets include manufacturers, suppliers, dealerships, service shops and customers.

Our operations consist of five reportable segments: S&P Global Market Intelligence (“Market Intelligence”), S&P Global Ratings (“Ratings”), S&P Global Commodity Insights (“Commodity Insights”), S&P Global Mobility (“Mobility”) and S&P Dow Jones Indices (“Indices”).

• Market Intelligence is a global provider of multi-asset-class data and analytics integrated with purpose-built workflow solutions.

• Ratings is an independent provider of credit ratings, research, and analytics, offering investors and other market participants information, ratings and benchmarks.

• Commodity Insights is a leading independent provider of information and benchmark prices for the commodity and energy markets.

• Mobility is a leading provider of solutions serving the full automotive value chain including vehicle manufacturers (Original Equipment Manufacturers or OEMs), automotive suppliers, mobility service providers, retailers, consumers, and finance and insurance companies.

• Indices is a global index provider maintaining a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.

As of May 2, 2023, we completed the sale of S&P Global Engineering Solutions (“Engineering Solutions”), a provider of engineering standards and related technical knowledge, and the results are included through that date.

Key results for the periods ended June 30 are as follows:

N/M – Represents a change equal to or in excess of 100% or not meaningful

1 % changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.

2 Operating profit for the three and six months ended June 30, 2024 includes legal costs of $20 million, IHS Markit merger costs of $36 million and $72 million, respectively, a net acquisition-related benefit of $4 million and net acquisition-related costs of $1 million, respectively, employee severance charges of $11 million and $46 million, respectively, disposition-related costs of $3 million and asset write-offs of $2 million. Operating profit for the six months ended June 30, 2024 includes recovery of lease-related costs of $1 million. Operating profit for the three and six months ended June 30, 2023 includes a loss on disposition of $120 million and $69 million, respectively, IHS Markit merger costs of $51 million and $115 million, respectively, employee severance charges of $51 million and $62 million, respectively, lease impairments of $15 million, an asset impairment of $5 million, disposition-related costs of $3 million and $16 million, respectively, and acquisition-related costs of $2 million and $3 million, respectively. Operating profit also includes amortization of intangibles from acquisitions of $281 million and $275 million for the three months ended June 30, 2024 and 2023, respectively, and $560 million and $550 million for the six months ended June 30, 2024 and 2023, respectively.

Three Months

Revenue increased 14% driven by increases at Ratings, Market Intelligence, Commodity Insights, Indices and Mobility, partially offset by a decrease at Engineering Solutions due to its sale on May 2, 2023. The increase at Ratings was driven by growth in both transaction revenue and non-transaction revenue. Transaction revenue increased primarily due to growth in corporate bond ratings revenue and bank loan ratings revenue driven by increased issuance volumes due to higher refinancing activity. Non-transaction revenue increased due to an increase in surveillance revenue and an increase in new entity credit ratings revenue. The increase at Market Intelligence was primarily due to subscription revenue growth for work flow solutions at Enterprise Solutions, data feed products within Data and Advisory Solutions, Market Intelligence Desktop products, and RatingsXpress®, RatingsDirect® within Credit & Risk Solutions. Revenue growth at Commodity Insights was primarily due to continued demand for market data and market insights products. The increase at Indices was primarily due to higher asset-linked fees revenue, higher data subscription revenue and higher exchange-traded derivative revenue.The increase at Mobility was primarily due to new business growth within the Dealer business and strong underwriting volumes within the Financial business. Foreign exchange rates had an unfavorable impact of 1 percentage point.

Operating profit increased 59%. Excluding the impact of a loss on disposition in 2023 of 23 percentage points, higher employee severance charges in 2023 of 8 percentage points, higher IHS Markit merger costs in 2023 of 3 percentage points, lease impairments in 2023 of 3 percentage points and an asset impairment in 2023 of 1 percentage point, partially offset by legal costs in 2024 of 4 percentage points and higher amortization of intangibles from acquisitions in 2024 of 1 percentage point, operating profit increased 26%. The increase was primarily due to revenue growth, partially offset by higher compensation costs driven by annual merit increases, increased incentives as a result of financial performance and higher technology costs. Foreign exchange rates had a favorable impact of 1 p

Showing the first 8K of 124K characters. Open the full section

Our exposure to market risk includes changes in foreign exchange rates and interest rates. We have operations in foreign countries where the functional currency is primarily the local currency. For international operations that are determined to be extensions of the parent company, the U.S. dollar is the functional currency. We typically have naturally hedged positions in most countries from a local currency perspective with offsetting assets and liabilities. As of June 30, 2024 and December 31, 2023, we have entered into foreign exchange forward contracts in order to mitigate the change in fair value of specific assets and liabilities in the consolidated balance sheet. These forward contracts are not designated as hedges and do not qualify for hedge accounting. As of June 30, 2024 and December 31, 2023, we have entered into foreign exchange forward contracts to hedge the effect of adverse fluctuations in foreign exchange rates and held cross-currency swap contracts to hedge a portion of our net investment in a foreign subsidiary against volatility in foreign exchange rates. As of December 31, 2023, we held positions in a series of interest rate swaps to mitigate or hedge the adverse fluctuations in interest rates. We have not entered into any derivative financial instruments for speculative purposes. See Note 5 - Derivative Instruments to the consolidated financial statements of this Form 10-Q for further discussion.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed so that information required to be disclosed in our reports filed with the U.S. Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Interim Chief Financial Officer (“Interim CFO”), as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2024, an evaluation was performed under the supervision and with the participation of management, including the CEO and Interim CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, management, including the CEO and Interim CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 – Commitments and Contingencies - Legal & Regulatory Matters to the consolidated financial statements of this Form 10-Q for information on our legal proceedings.

For a discussion of our risk factors please see Item 1A, Risk Factors in our most recent Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 22, 2022, the Board of Directors approved a share repurchase program authorizing the purchase of 30 million shares (the “2022 Repurchase Program”), which was approximately 9% of the total shares of our outstanding common stock at that time. During the second quarter of 2024, we received 0.2 million shares from our accelerated share repurchase (“ASR”) agreement that we entered into on February 12, 2024. Further discussion relating to our ASR agreements can be found in Note 8 - Equity. As of June 30, 2024, 17.2 million shares remained under the 2022 Repurchase Program.

Repurchased shares may be used for general corporate purposes, including the issuance of shares for stock compensation plans and to offset the dilutive effect of the exercise of employee stock options. Our 2022 Repurchase Program has no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

The following table provides information on our purchases of our outstanding common stock during the second quarter of 2024 pursuant to the 2022 Repurchase Program (column c). In addition to these purchases, the number of shares in column (a) include shares of common stock that are tendered to us to satisfy our employees’ tax withholding obligations in connection with the vesting of awards of restricted shares (we repurchase such shares based on their fair market value on the vesting date).

There were no other share repurchases during the quarter outside the repurchases noted below.

1 Includes 0.2 million shares received from the conclusion of our ASR agreement that we entered into on February 12, 2024.

IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT DISCLOSURE

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which amended the Securities Exchange Act of 1934, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether, during the reporting period, it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable laws and regulations.

During the second quarter of 2024, the Company engaged in limited transactions or dealings related to the purchase or sale of information and informational materials, which are generally exempt from U.S. economic sanctions, with persons that are owned or controlled, or appear to be owned or controlled, by the Government of Iran or are otherwise subject to disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012. Commodities Insights provided subscribers access to proprietary data, analytics, and industry information that enable commodities markets to perform with greater transparency and efficiency. Market Intelligence sourced certain trade data from Iran. The Company will continue to

monitor such activities closely. During the second quarter of 2024, the Company recorded no revenue or net profit attributable to the Commodities Insights transactions or dealings described above, which reflects the uncertainty of collection. The Company attributes a de minimis amount of gross revenues and net profits to the data sourced from Iran by Market Intelligence.

RULE 10b5-1 PLAN ELECTIONS

No Rule 10b5-1 trading arrangements or “non-Rule 10b5-1 trading arrangements” (as defined by S-K Item 408(c)) were entered into or terminated by our directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) during the second quarter of 2024.

COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

The following disclosure is intended to satisfy the Company’s obligation to provide disclosure pursuant to Item 5.02(e) of Form 8-K.

On June 27, 2024, the Company announced that Douglas L. Peterson will be retiring as Chief Executive Officer and President of the Company, effective as of November 1, 2024 (the “Transition Date”), and thereafter is expected to serve as an employee and Senior Advisor until December 31, 2025.

On July 29, 2024, the Company and Mr. Peterson entered into an agreement (the “Peterson Advisor Agreement”) setting forth the terms of Mr. Peterson’s non-executive role as a Senior Advisor and employee. Under the Peterson Advisor Agreement, on the Transition Date, Mr. Peterson will cease to serve as the Chief Executive Officer and President of the Company and will assume the role of Senior Advisor, and he will not stand for re-election to the Board of Directors of the Company (the “Board”) at the Company’s 2025 annual meeting.

During the period commencing on the Transition Date and ending on the earliest of December 31, 2025 or Mr. Peterson’s resignation, death or termination of employment due to disability or cause (the “Transition Period”), Mr. Peterson will not be an officer of the Company, and will report to Martina L. Cheung (who, as previously announced, will become Chief Executive Officer and President of the Company as of the Transition Date) and to the Board, supporting the transition of responsibilities to Ms. Cheung and providing counsel to Ms. Cheung and the Board. Mr. Peterson will devote his full business time to the Company and its affiliates during the Transition Period (excepting time spent on certain outside board memberships and charitable, civic, industry and similar activities), and will perform the duties enumerated in the Peterson Advisor Agreement, including providing counsel and transition support to Ms. Cheung and the Board with respect to Company operations and strategic opportunities, facilitating the transition of relationships with customers, investors, regulators, central bankers, and domestic and international forums to Ms. Cheung, supporting and promoting the Company with respect to public policy and government relations, assisting with the development and implementation of the Company’s key strategic initiatives, supporting the review of the Company’s existing venture capital portfolio and strategy, and assisting with senior talent development. Mr. Peterson’s employment with the Company will cease automatically at the end of the Transition Period.

Pursuant to the Peterson Advisor Agreement, during the Transition Period Mr. Peterson will receive a base salary at a rate of $1,500,000 per year, and he will be eligible for a 2025 annual bonus (the “2025 Bonus”) on the same terms and conditions as other senior executives of the Company, provided that (i) the target amount of his 2025 Bonus will be $3,500,000, (ii) the amount actually payable in respect of his 2025 Bonus will not exceed $7,000,000, (iii) up to 30% of his 2025 Bonus will be determined by the Compensation and Leadership Development Committee of the Board based on its assessment of Mr. Peterson’s performance under the Peterson Advisor Agreement, and (iv) the payment of any 2025 Bonus will be conditioned on Mr. Peterson’s execution of a general release of claims against the Company and its affiliates in a customary form prescribed by the Company (a “General Release”) and to such release becoming irrevocable within 30 days following the end of 2025. The Peterson Advisor Agreement will not alter Mr. Peterson’s eligibility for a 2024 annual bonus, the target amount of such bonus or the other terms thereof.

Subject to Mr. Peterson’s continued employment by the Company through January 1, 2025, the Company will grant to Mr. Peterson on January 1, 2025 a restricted stock unit award with a value of $5,000,000. Such restricted stock unit award will vest on December 31, 2025 (or, if earlier, Mr. Peterson’s death or termination due to disability), subject to Mr. Peterson’s continued employment through the vesting date, to Mr. Peterson’s execution of a General Release, and to such release becoming irrevocable within 30 days following the vesting date. Mr. Peterson’s outstanding equity awards will continue to vest in accordance with their terms during the Transition Period.

During the Transition Period and except as otherwise provided in this paragraph, Mr. Peterson will continue to participate in the same employee benefit plans and programs that cover him presently. Mr. Peterson will cease participation in the Company’s Senior Executive Severance Plan on the Transition Date and will not participate in any other severance plan of the Company or its affiliates. Mr. Peterson will not participate in the 401(k) Savings and Profit Sharing Plan Supplement after 2024 (but he will continue to participate in that plan for 2024, subject to its terms). Personal use of corporate aircraft by Mr. Peterson will not be permitted during the Transition Period. During the Transition Period, Mr. Peterson will be reimbursed for all reasonable business expenses incurred in connection with providing the services under the Peterson Advisor Agreement, and he will be provided with an office and administrative support during the Transition Period and for four years thereafter.

Mr. Peterson is subject to restrictive covenants with the Company and its affiliates relating to non-competition, non-solicitation and confidentiality, and intellectual property assignment, among other provisions, and he reaffirmed those restricted covenants in the Peterson Advisor Agreement. The Peterson Advisor Agreement also includes a general release of claims by Mr. Peterson against the Company and its affiliates.

The foregoing description of the Peterson Advisor Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Peterson Advisor Agreement, a copy of which is attached to this Form 10-Q as Exhibit 10.1.

In addition, on July 24, 2024, the Company agreed to pay $75,000 in legal fees and expenses incurred by Mr. Peterson in connection with the documentation of the Peterson Advisor Agreement.

• These exhibits relate to management contracts or compensatory plan arrangements.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.