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McGraw-Hill Companies Q2 Revenues Decreased by 1% – EPS Increased by 11% Driven by Cost Reduction

The McGraw-Hill Companies (NYSE: MHP) 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.

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.
  • Commodities & Commercial: Revenue increased 9% to $241 million and operating profit grew by 45% to $71 million in the second quarter.
    • 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.  The company is committing itself to a cost reduction of US$100 million by year end.

Outlook: Harold McGrawIII,  chairman, president and chief executive officer of The McGraw-Hill Companies stated: “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.”

Source:  McGraw-Hill Companies Press Release

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