OREANDA-NEWS. McGraw Hill Financial, Inc. (NYSE: MHFI) today reported second quarter 2015 results with revenue of \\$1.34 billion, an increase of 3% compared to the same period last year. Net income and diluted earnings per share from continuing operations were \\$353 million and \\$1.28, respectively.

Adjusted net income from continuing operations increased 17% to \\$335 million and adjusted diluted earnings per share from continuing operations increased 17% to \\$1.21. The adjustments in the second quarter of 2015, which netted to a gain, were primarily related to insurance recoveries related to legal settlements, additional restructuring actions, and a gain on the sale of a legacy construction business asset.

"Excluding the impact of foreign exchange, the Company delivered 6% revenue growth. That, combined with excellent cost control, led to significant margin expansion by every business segment," said

Douglas L. Peterson, President and Chief Executive Officer of McGraw Hill Financial. "This was particularly noteworthy in the face of declining oil prices, as well as turbulent global macroeconomic conditions, largely due to uncertainty surrounding Greece and China, which curtailed debt issuance outside the United States."

Outlook:  The Company is maintaining its full-year guidance for adjusted earnings per share in the range of \\$4.35 to \\$4.45 despite anticipated dilution of \\$0.05 to \\$0.07 from the SNL Financial acquisition.

Standard & Poor's Ratings Services:  The segment produced its second highest quarterly revenue compared to the record set one year ago in the same period. This year-over-year comparison reflects a 1% decline to \\$658 million in the current quarter, primarily due to unfavorable foreign exchange rates and tepid bond issuance outside the United States due to geopolitical concerns.

Transaction revenue grew 1% to \\$329 million compared to the same period last year. Excluding the impact of foreign exchange, transaction revenue growth was 4%. This was primarily due to record U.S. public finance issuance and domestic M&A driven investment-grade issuance.

Non-transaction revenue decreased 2% to \\$329 million in the quarter, due primarily to the strong U.S. dollar. Excluding the impact of foreign exchange, non-transaction revenue increased 3% due primarily to annual fee growth.

Domestic revenue increased 9% while international revenue, impacted by geopolitical events which curtailed debt issuance, decreased 12%. International revenue represented 41% of Standard & Poor's Ratings Services' second-quarter revenue.

Adjusted expenses in the quarter decreased 7% due to reduced legal fees and decreased incentive and compensation costs primarily resulting from the benefit of 2014 restructuring actions, partially offset by increased costs related to Dodd-Frank implementation.

Operating profit increased 17% to \\$361 million with an operating profit margin that increased 860 basis points to 55%.

Adjusted operating profit increased 7% to \\$329 million with an adjusted operating profit margin that increased 370 basis points to 50%.

S&P Capital IQ:  Revenue increased 6% to \\$324 million in the second quarter of 2015 compared to the same period last year. Expenses increased 3% and operating profit increased 15% to \\$63 million. Adjusted expenses decreased 1% and adjusted operating profit increased 37% to \\$74 million.

The S&P Capital IQ Desktop product continues to have the most meaningful impact on revenue with low-teens revenue growth resulting from a similar increase in the number of users.

S&P Capital IQ's international revenue increased 5% to \\$112 million in the second quarter and represented 35% of the business unit's total revenue.

S&P Dow Jones Indices:  Revenue increased 11% to \\$148 million in the second quarter of 2015 compared to the same period last year. Operating profit increased 16% to \\$96 million. Operating profit attributable to the Company increased 16% to \\$71 million.

Top-line growth in the quarter can be attributed to licensing revenue associated with increased exchange-traded fund AUM, derivative trading, and data subscriptions. AUM in exchange-traded funds based on S&P Dow Jones Indices increased 10% to \\$792 billion at the end of the quarter.

Commodities & Commercial Markets:  Revenue increased 7% to \\$234 million. Operating profit grew 13% to \\$87 million and adjusted operating profit grew 15% to \\$88 million in the second quarter of 2015 compared to the same period last year.

Despite depressed oil prices, Platts continued to experience steady revenue growth in the high single-digits as a result of strength in price assessments and market data subscriptions. Based on recent product additions, revenue from the Metals, Agriculture & Petrochemicals group was particularly robust. In addition, licensing revenue from Global Trading Services increased primarily due to The Steel Index derivative activity and record eWindow trading volumes.

J.D. Power delivered a low single-digit increase in revenue with its Power Information Network (PIN) leading the growth.

Two businesses were recently added to the Commodities & Commercial Markets segment. Platts acquired Petromedia Ltd. to add to its petroleum business and J.D. Power added NADA Used Car Guide to complement its PIN offering.

Unallocated Expense:  Unallocated expense includes corporate center functions and certain non-performance related items such as excess real estate. Adjusted unallocated expense decreased by 22% to \\$35 million in the second quarter primarily due to costs associated with the sale of the corporate aircraft and a data center that were incurred in the second quarter of 2014.

Return of Capital:  Second quarter return of capital to shareholders, in the form of share repurchases and dividends, was \\$255 million. During the quarter, the Company repurchased approximately 1.6 million shares. Year-to-date, the Company has returned \\$459 million, which includes \\$274 million for the repurchase of 2.6 million shares. The Company has approximately 42.9 million shares remaining under the existing authorization from the Board of Directors.

Balance Sheet and Cash Flow:  The Company issued \\$700 million of senior notes during the quarter to increase liquidity and improve financial flexibility. Part of the proceeds was used to pay down \\$365 million of short-term debt incurred earlier in the year. Cash and equivalents at the end of the second quarter were \\$1.7 billion, of which approximately \\$1.2 billion was held outside the United States. In the first six months of 2015, cash used for operating activities from continuing operations was \\$897 million. Free cash flow from continuing operations was \\$(988) million, a decrease of \\$1,367 million from the same period in 2014. Free cash flow, excluding the payments associated with legal settlements, was \\$621 million.

Comparison of Adjusted Information to U.S. GAAP Information: Adjusted diluted earnings per share, adjusted diluted earnings per share from continuing operations, adjusted net income, adjusted operating profit and margin, adjusted expense, adjusted unallocated expense, free cash flow, and free cash flow excluding certain items are non-GAAP financial measures contained in this earnings release that are derived from the Company's continuing operations. This information is provided in order to allow investors to make meaningful comparisons of the Company's operating performance between periods and to view the Company's business from the same perspective as Company management. These non-GAAP measures may be different than similar measures used by other companies. Reconciliations for the differences between non-GAAP measures used in this earnings release and comparable financial measures calculated in accordance with U.S. GAAP are attached as Exhibits 5 and 8.