The McGraw-Hill Companies has reported revenue of $1,547 million in the second quarter, a decrease of 1% compared to the same period last year, as a result of a 5% increase at McGraw-Hill Financial and a 12% decline at McGraw-Hill Education. Net income from continuing operations increased 2% to $216 million and diluted earnings per share increased 11% to $0.76.
Excluding the impact of one-time costs related to the Growth and Value Plan, adjusted net income from continuing operations increased 15% to $243 million and adjusted diluted earnings per share increased 25% to a second quarter record of $0.85. This increase, similar to the first quarter, was primarily due to strong growth at Commodities & Commercial and S&P Capital IQ / S&P Indices.
“We are pleased by the continuing progress of our Growth and Value Plan in establishing two powerful companies, McGraw-Hill Financial and McGraw-Hill Education, by the end of the year,” said Harold McGraw III, chairman, president, and chief executive officer of The McGraw-Hill Companies. “Our employees are to be applauded for delivering stellar results while simultaneously advancing the separation and implementing major cost reductions. We are delivering record adjusted earnings despite the challenging global macro-economic environment, including both the impact of the European debt crisis on global debt issuance and reduced state budgets on textbook spending.”
“We now expect to be near the high end of our previous 2012 adjusted diluted earnings per share guidance of $3.25 to $3.35,” said Mr. McGraw. “We will revisit our guidance again after we report the third quarter, traditionally the largest of the year.
McGraw-Hill Financial: Businesses that make up what will be the new McGraw-Hill Financial reported revenue of $1,073 million and adjusted operating profit of $394 million, an increase of 5% and 9%, respectively, compared to the same period a year ago. McGraw-Hill Financial will include the following lines of business:
– Standard & Poor’s Ratings Services: Revenue increased 1% to $483 million and operating profit decreased 2% to $208 million in the second quarter compared to 2Q 2011—the strongest quarter of 2011 for this segment. Operating profit margins in the quarter were 43%.
– S&P Capital IQ / S&P Indices: Revenue increased 10% to $366 million and adjusted operating profit increased 17% to $115 million.
Credit Market Analysis Limited (CMA) was acquired from the CME Group at the end of the second quarter. The business will become part of S&P Capital IQ — broadening its existing pricing and data businesses and bolstering its asset-class coverage of OTC securities.
– Commodities & Commercial: Revenue increased 9% to $241 million and operating profit grew by 45% to $71 million in the second quarter, compared to the same period last year.
Platts continued its record performance resulting in 19% revenue growth at Commodities to $121 million for the period. Excluding the acquisition of Steel Business Briefing Group, which was not included in second quarter 2011 results, Commodities’ revenue grew 15% to $117 million.
Commercial’s revenue was down 1% as gains by J.D. Power and Associates, which is on track to record its best year ever, were offset by modest declines at McGraw-Hill Construction and Aviation Week.
McGraw-Hill Education: Revenue for the segment declined 12% to $474 million while operating profit improved by 36% to $57 million in the second quarter, compared to the same period last year. The improvement in operating income was primarily the result of restructuring actions and ongoing tight expense management.
– Higher Education, Professional and International Group (HPI): Revenue decreased 2% to $241 million in the second quarter compared to the same period last year.
– School Education Group (SEG): Revenue decreased 20% to $233 million for the quarter.
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