Moody's Corporation Updates Full Year 2016 Guidance

Moody’s Corporation (NYSE:MCO) today updated its guidance for the full year ending December 31, 2016.

Full year 2016 GAAP EPS is currently expected to be $4.70 to $4.80, which now includes an anticipated non-cash foreign exchange gain of approximately $0.18 related to a subsidiary reorganization, offset in part by an approximate $0.04 restructuring charge associated with cost management initiatives. Excluding these items, the Company expects full year 2016 non-GAAP EPS of $4.55 to $4.65. The Company expects to record the foreign exchange gain in its fourth quarter results and the restructuring charge in its third quarter results.

“Increased issuance activity combined with a greater impact from our cost savings initiatives has resulted in a modestly improved outlook,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “Excluding the impact of the specific items noted above, we expect 2016 EPS of $4.55 to $4.65.”

To reflect the Company’s current view of business conditions as well as the impact of the aforementioned foreign exchange gain and restructuring charge, the Company is updating certain components of Moody’s 2016 revenue and expense guidance.

Full year global MIS revenue is still expected to decrease in the low-single-digit-percent range, while US revenue is now expected to be approximately flat and public, project and infrastructure finance revenue is now expected to increase approximately 10%.

The effective tax rate is now expected to be 31% to 31.5%, including an approximate one percentage point favorable change due to the foreign exchange gain noted above which is not taxable.

A full summary of Moody’s guidance as of September 28, 2016 is included in the table at the end of this press release. Moody’s outlook for 2016 is based on assumptions about many geopolitical conditions and macroeconomic and capital market factors, including interest rates, foreign currency exchange rates, corporate profitability and business investment spending, mergers and acquisitions, consumer borrowing and securitization, and the amount of debt issued. These assumptions are subject to uncertainty, and results for the year could differ materially from our current outlook. Our guidance assumes foreign currency translation at August 31, 2016 exchange rates. Specifically, our forecast reflects exchange rates for the British pound (£) of $1.31 to £1 and for the euro (€) of $1.11 to €1.

Moody’s will host its Investor Day conference today in New York City.

The event will start at 8:30 a.m. Eastern Time and is expected to conclude at 12:00 p.m. The event will feature presentations from Moody's management team and showcase important aspects of the business. A copy of the presentation will be posted on Moody’s Investor Relations website, http://ir.moodys.com, at the start of the event.

In-person attendance is by invitation only; however, the event will be webcast live and can be accessed on Moody’s Investor Relations website at http://ir.moodys.com. The event will also be accessible through a live conference call. Individuals within the U.S. and Canada can access the call by dialing 1-855-309-1713 toll-free. Other callers should dial 804-419-7747. Please dial into the call by 8:20 a.m. Eastern Time. The participant access code for the call is 61523561.

A replay of the event will be available approximately one week following the event on Moody’s Investor Relations website, http://ir.moodys.com, until 11:59 p.m. Eastern Time, December 28, 2016.

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ABOUT MOODY'S CORPORATION

Moody's is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. Moody’s Corporation (NYSE: MCO) is the parent company of Moody's Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody's Analytics, which offers leading-edge software, advisory services and research for credit and economic analysis and financial risk management. The corporation, which reported revenue of $3.5 billion in 2015, employs approximately 10,800 people worldwide and maintains a presence in 36 countries. Further information is available at www.moodys.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this release are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Moody’s outlook for 2016 and other forward-looking statements in this release are made as of September 28, 2016, and the Company disclaims any duty to supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks and uncertainties include, but are not limited to, the current world-wide credit market disruptions and economic slowdown, which is affecting and could continue to affect the volume of debt and other securities issued in domestic and/or global capital markets; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, credit quality concerns, changes in interest rates and other volatility in the financial markets such as that due to the UK’s referendum vote whereby the UK citizens voted to withdraw from the EU; the level of merger and acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives to respond to the current world-wide credit market disruptions and economic slowdown; concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; the introduction of competing products or technologies by other companies; pricing pressure from competitors and/or customers; the level of success of new product development and global expansion; the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations, including provisions in the Financial Reform Act and regulations resulting from that Act; the potential for increased competition and regulation in the EU and other foreign jurisdictions; exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquires to which the Company may be subject from time to time; provisions in the Financial Reform Act legislation modifying the pleading standards, and EU regulations modifying the liability standards, applicable to credit rating agencies in a manner adverse to credit rating agencies; provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services; the possible loss of key employees; failures or malfunctions of our operations and infrastructure; any vulnerabilities to cyber threats or other cybersecurity concerns; the outcome of any review by controlling tax authorities of the Company’s global tax planning initiatives; exposure to potential criminal sanctions or civil remedies if the Company fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which the Company operates, including sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; the impact of mergers, acquisitions or other business combinations and the ability of the Company to successfully integrate acquired businesses; currency and foreign exchange volatility; the level of future cash flows; the levels of capital investments; and a decline in the demand for credit risk management tools by financial institutions. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2015, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it.

2016 Outlook:

Moody’s outlook for 2016 is based on assumptions about many geopolitical conditions and macroeconomic and capital market factors, including interest rates, foreign currency exchange rates, corporate profitability and business investment spending, merger and acquisition activity, consumer borrowing and securitization, and the amount of debt issued. These assumptions are subject to some degree of uncertainty, and results for the year could differ materially from our current outlook. Moody’s guidance assumes foreign currency translation at August 31, 2016 exchange rates. Specifically, our forecast reflects exchange rates for the British pound (£) of $1.31 to £1 and for the euro (€) of $1.11 to €1.

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