6-7
Capital Management Philosophy

S&P Global’s capital management philosophy* is focused on:

  • Responsible stewardship of shareholder capital
  • Business line accountability
  • A capital-light, cash flow generative business model
  • Robust, investment-grade balance sheet
  • A rigorous framework for capital allocation
  • Disciplined acquisition strategy
  • Returning capital to shareholders
  • …Resulting in strong total shareholder returns

*Introduced in 2017

Capital Management Starts with Free Cash Flow Generation

Free Cash Flow Excluding Certain Items

(dollars in millions)

$1,386 $1,578 $1,851 $2,006 $2,583’18’17’16’15’19

Free cash flow, excluding certain items, increased to $2.6 billion in 2019

See page 68 for 11-year Free Cash Flow/Capital Investments table and footnotes

±75% of Annual Free Cash Flow Returned to Shareholders (1)

Cash Returned to Shareholders

(dollars in millions)

line
'15
'16
'17
'18
'19
Share repurchases
$974
$1,123
$1,001
$1,660
$1,240
Regular dividend
$363
$380
$421
$503
$560
Total SPGI
$1,337
$1,503
$1,422
$2,163
$1,800
Free cash flow excluding certain items
$1,386
$1,578
$1,851
$2,006
$2,583

Notes: 

Shares repurchased are reported on a settlement-date basis

Annual free cash flow returned to shareholders in 2019 was 70%

S&P Global has a continued commitment to return capital to shareholders. The capital management philosophy includes a goal of returning at least 75% of free cash flow generation to shareholders through disciplined buybacks, dividends, and dividend growth. In 2019, 70% was returned.  

Dividend Aristocrat

S&P Global has increased its dividend annually for the last 47 years. 

See pages 70 and 71 for the dividend and share repurchase tables

See footnotes at bottom of this page

Setting Clear Financial Metrics for Organic and Inorganic Investments

Key Financial Metrics

  • Net Present Value (NPV)
  • Cash Return on Invested Capital (ROIC)
  • Internal Rate of Return (IRR)
  • Earnings contribution

The Company continuously analyzes a wide range of internal investments and acquisitions to deliver upon strategic goals and enhance competitive positioning, allocating capital to the highest returning projects and holding our management team accountable.

The Company is interested in opportunities that:

  • Augment benchmarks, proprietary data, and tools and analytics capabilities
  • Provide geographic diversification
  • Bolster recurring revenues
  • Provide synergies

Maintaining a Prudent and Flexible Balance Sheet

Capital Position

(dollars in millions)
(years ended December 31)

20182019

Cash and cash equivalents*

$1,958$2,886

Short- and long-term debt

$3,662$3,948

Adjusted gross debt to adjusted EBITDA

1.9x **2.0x ***
20182019

Cash and cash equivalents*

$1,958$2,886

Short- and long-term debt

$3,662$3,948

Adjusted gross debt to adjusted EBITDA

1.9x **2.0x ***

* Cash and cash equivalents include restricted cash

** Adjusted gross debt includes debt, unfunded portion of pension liabilities (~$215 million), S&P DJI put option (~$1.62 billion), and the expected NPV of operating leases (~$655 million)

Adjusted EBITDA includes EBITDA plus net lease expense (~$155 million) less income adjustment on qualified U.S. pension plans (~$28 million)

*** Adjusted gross debt includes debt, unfunded portion of pension liabilities (~$244 million), S&P DJI put option (~$2.27 billion), and the expected NPV of operating leases (~$732 million)

Adjusted EBITDA includes EBITDA plus net lease expense (~$139 million) less income adjustment on qualified U.S. pension plans (~$(26) million)

Financial Health Targets

  • Committed to investment-grade credit rating
  • Target an adjusted gross debt to adjusted EBITDA ratio of 1.75x to 2.25x

Delivering Exceptional Total Shareholder Return

Total Shareholder Return (3)

(years ended December 31)

SPGI $100 $112 $124 $198 $200 $325 S&P 500 Index $100 $199 $109 $130 $122 $157 Peer Group $100 $118 $129 $175 $197 $28885170255$340’19$325’16’15’14’17’18$157$288085170255340

Note:  Total Shareholder Return represents stock price appreciation plus reinvestment of dividends
Source:  S&P Global Market Intelligence

In 2019, S&P Global’s total shareholder return was 62%, compared to a return of 29% for the S&P 500 and 45% for its peer group.(4) As of year-end 2019, SPGl’s total shareholder return has also exceeded the S&P 500 and its peer group over the last five- and three-year periods.

S&P Global is committed to returning excess capital to shareholders while maintaining a strong balance sheet

Notes:
(1)

Free cash flow represents global operating cash flow less capex and certain excluded items

(2)

Calculated using dividend-adjusted closing share price

(3)

Reflects peer group used in the Company’s Form 10-K filed with the SEC on February 10, 2020

(4)

Reflects peer group used in the Company’s Form 10-K filed with the SEC on February 10, 2020