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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-33812

 

MSCI INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

13-4038723

(State or other jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

7 World Trade Center

250 Greenwich Street, 49th Floor

New York, New York

 

10007

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212804-3900

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

MSCI

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of April 19, 2022, there were 81,123,043 shares of the registrant’s common stock, par value $0.01, outstanding.

 

 

 


 

 

FOR THE QUARTER ENDED MARCH 31, 2022

TABLE OF CONTENTS

 

 

2


 

 

AVAILABLE INFORMATION

Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at www.msci.com. The contents of our website are not a part of or incorporated by reference in this Quarterly Report on Form 10-Q.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website, these reports, proxy statements and other information as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link found on our Investor Relations homepage (http://ir.msci.com).

We also use our Investor Relations homepage, Corporate Responsibility homepage and corporate Twitter account (@MSCI_Inc) as channels of distribution of Company information. The information we post through these channels may be deemed material.

Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alert Subscription” section of our Investor Relations homepage at http://ir.msci.com/alerts.cfm. The contents of our website, including our Investor Relations homepage, Corporate Responsibility homepage and social media channels are not, however, a part of or incorporated by reference in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

We have included in this Quarterly Report on Form 10-Q, and from time to time may make in our public filings, press releases or other public statements, certain statements that constitute forward-looking statements. In addition, our management may make forward-looking statements to analysts, investors, representatives of the media and others. These forward-looking statements are not historical facts and represent only MSCI’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and beyond our control.

In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology.  Statements concerning our financial position, business strategy and plans or objectives for future operations are forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect our actual results, levels of activity, performance or achievements. Such risks and uncertainties include those set forth under “Risk Factors” in Part I, Item 1A of the 2021 Annual Report on Form 10-K filed with the SEC on February 11, 2022. Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or for any other reason. Therefore, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the SEC.

3


 

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except per share and share data)

 

 

 

As of

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

679,315

 

 

$

1,421,449

 

Accounts receivable, net of allowances

 

 

592,326

 

 

 

664,511

 

Prepaid income taxes

 

 

13,050

 

 

 

5,951

 

Prepaid and other assets

 

 

47,730

 

 

 

51,499

 

Total current assets

 

 

1,332,421

 

 

 

2,143,410

 

Property, equipment and leasehold improvements, net

 

 

64,682

 

 

 

66,715

 

Right of use assets

 

 

134,368

 

 

 

144,584

 

Goodwill

 

 

2,235,199

 

 

 

2,236,386

 

Intangible assets, net

 

 

585,058

 

 

 

593,341

 

Equity method investment

 

 

218,128

 

 

 

218,763

 

Deferred tax assets

 

 

53,612

 

 

 

40,119

 

Other non-current assets

 

 

68,361

 

 

 

63,385

 

Total assets

 

$

4,691,829

 

 

$

5,506,703

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

12,956

 

 

$

13,448

 

Income taxes payable

 

 

83,589

 

 

 

59,635

 

Accrued compensation and related benefits

 

 

70,749

 

 

 

207,640

 

Other accrued liabilities

 

 

160,929

 

 

 

145,302

 

Deferred revenue

 

 

832,203

 

 

 

824,912

 

Total current liabilities

 

 

1,160,426

 

 

 

1,250,937

 

Long-term debt

 

 

4,162,465

 

 

 

4,161,422

 

Long-term operating lease liabilities

 

 

139,895

 

 

 

150,029

 

Deferred tax liabilities

 

 

3,347

 

 

 

3,650

 

Other non-current liabilities

 

 

104,885

 

 

 

104,132

 

Total liabilities

 

 

5,571,018

 

 

 

5,670,170

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (see Note 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock (par value $0.01, 100,000,000 shares authorized; no shares issued)

 

 

 

 

 

 

Common stock (par value $0.01; 750,000,000 common shares authorized; 133,579,809

   and 133,162,178 common shares issued and 81,168,130 and 82,439,449 common

   shares outstanding at March 31, 2022 and December 31, 2021, respectively)

 

 

1,336

 

 

 

1,332

 

Treasury shares, at cost (52,411,679 and 50,722,729 common shares held at March 31, 2022

   and December 31, 2021, respectively)

 

 

(5,417,822

)

 

 

(4,540,144

)

Additional paid in capital

 

 

1,480,454

 

 

 

1,457,623

 

Retained earnings

 

 

3,117,660

 

 

 

2,976,517

 

Accumulated other comprehensive loss

 

 

(60,817

)

 

 

(58,795

)

Total shareholders’ equity (deficit)

 

 

(879,189

)

 

 

(163,467

)

Total liabilities and shareholders’ equity (deficit)

 

$

4,691,829

 

 

$

5,506,703

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

4


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2022

 

 

2021

 

 

 

 

(unaudited)

Operating revenues

 

$

559,945

 

 

$

478,423

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization)

 

 

102,771

 

 

 

85,780

 

 

Selling and marketing

 

 

66,053

 

 

 

56,467

 

 

Research and development

 

 

28,322

 

 

 

24,862

 

 

General and administrative

 

 

45,567

 

 

 

34,728

 

 

Amortization of intangible assets

 

 

21,720

 

 

 

15,068

 

 

Depreciation and amortization of property, equipment and

   leasehold improvements

 

 

6,534

 

 

 

7,143

 

 

Total operating expenses

 

 

270,967

 

 

 

224,048

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

288,978

 

 

 

254,375

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(298

)

 

 

(386

)

 

Interest expense

 

 

40,714

 

 

 

37,584

 

 

Other expense (income)

 

 

(381

)

 

 

1,149

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

 

40,035

 

 

 

38,347

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

248,943

 

 

 

216,028

 

 

Provision for income taxes

 

 

20,520

 

 

 

19,209

 

 

Net income

 

$

228,423

 

 

$

196,819

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

2.80

 

 

$

2.38

 

 

Diluted

 

$

2.78

 

 

$

2.36

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

81,591

 

 

 

82,640

 

 

Diluted

 

 

82,286

 

 

 

83,493

 

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

5


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2022

 

 

2021

 

 

 

 

(unaudited)

Net income

 

$

228,423

 

 

$

196,819

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,950

)

 

 

(1,705

)

 

Income tax effect

 

 

862

 

 

 

612

 

 

Foreign currency translation adjustments, net

 

 

(2,088

)

 

 

(1,093

)

 

 

 

 

 

 

 

 

 

 

 

Pension and other post-retirement adjustments

 

 

110

 

 

 

256

 

 

Income tax effect

 

 

(44

)

 

 

(120

)

 

Pension and other post-retirement adjustments, net

 

 

66

 

 

 

136

 

 

Other comprehensive (loss) income, net of tax

 

 

(2,022

)

 

 

(957

)

 

Comprehensive income

 

$

226,401

 

 

$

195,862

 

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

6


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Treasury

 

 

Paid in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Total

 

 

 

(unaudited)

 

Balance at December 31, 2021

 

$

1,332

 

 

$

(4,540,144

)

 

$

1,457,623

 

 

$

2,976,517

 

 

$

(58,795

)

 

$

(163,467

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

228,423

 

 

 

 

 

 

 

228,423

 

Dividends declared ($1.04 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(87,280

)

 

 

 

 

 

 

(87,280

)

Dividends paid in shares

 

 

 

 

 

 

 

 

 

 

77

 

 

 

 

 

 

 

 

 

 

 

77

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,022

)

 

 

(2,022

)

Common stock issued

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Shares withheld for tax withholding and exercises

 

 

 

 

 

 

(105,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(105,000

)

Compensation payable in common stock

 

 

 

 

 

 

 

 

 

 

22,754

 

 

 

 

 

 

 

 

 

 

 

22,754

 

Common stock repurchased and held in treasury

 

 

 

 

 

 

(772,657

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(772,657

)

Common stock issued to Directors and

  (held in)/released from treasury

 

 

 

 

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

Balance at March 31, 2022

 

$

1,336

 

 

$

(5,417,822

)

 

$

1,480,454

 

 

$

3,117,660

 

 

$

(60,817

)

 

$

(879,189

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

$

1,328

 

 

$

(4,342,535

)

 

$

1,402,537

 

 

$

2,554,295

 

 

$

(58,859

)

 

$

(443,234

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

196,819

 

 

 

 

 

 

 

196,819

 

Dividends declared ($0.78 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65,947

)

 

 

 

 

 

 

(65,947

)

Dividends paid in shares

 

 

 

 

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

 

 

66

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(957

)

 

 

(957

)

Common stock issued

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Shares withheld for tax withholding and exercises

 

 

 

 

 

 

(52,814

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,814

)

Compensation payable in common stock

 

 

 

 

 

 

 

 

 

 

18,842

 

 

 

 

 

 

 

 

 

 

 

18,842

 

Common stock repurchased and held in treasury

 

 

 

 

 

 

(134,340

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(134,340

)

Common stock issued to Directors and

  (held in)/released from treasury

 

 

 

 

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

Balance at March 31, 2021

 

$

1,331

 

 

$

(4,529,709

)

 

$

1,421,445

 

 

$

2,685,167

 

 

$

(59,816

)

 

$

(481,582

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

7


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

228,423

 

 

$

196,819

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

21,720

 

 

 

15,068

 

Stock-based compensation expense

 

 

22,857

 

 

 

18,910

 

Depreciation and amortization of property, equipment and leasehold improvements

 

 

6,534

 

 

 

7,143

 

Amortization of right of use assets

 

 

6,292

 

 

 

6,128

 

Amortization of debt origination fees

 

 

1,403

 

 

 

1,107

 

Deferred taxes

 

 

(12,961

)

 

 

1,142

 

Other adjustments

 

 

933

 

 

 

3,363

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

70,417

 

 

 

50,630

 

Prepaid income taxes

 

 

(7,170

)

 

 

6,312

 

Prepaid and other assets

 

 

3,062

 

 

 

5,611

 

Other non-current assets

 

 

(5,005

)

 

 

23

 

Accounts payable

 

 

(2,060

)

 

 

(7,901

)

Accrued compensation and related benefits

 

 

(135,148

)

 

 

(94,323

)

Income taxes payable

 

 

24,257

 

 

 

1,709

 

Other accrued liabilities

 

 

15,161

 

 

 

12,888

 

Deferred revenue

 

 

10,932

 

 

 

(2,790

)

Long-term operating lease liabilities

 

 

(5,542

)

 

 

(5,898

)

Other non-current liabilities

 

 

1,695

 

 

 

2,300

 

Other

 

 

(1,616

)

 

 

(2,784

)

Net cash provided by operating activities

 

 

244,184

 

 

 

215,457

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Capitalized software development costs

 

 

(14,084

)

 

 

(9,696

)

Capital expenditures

 

 

(1,254

)

 

 

(664

)

Other

 

 

28

 

 

 

 

Net cash used in investing activities

 

 

(15,310

)

 

 

(10,360

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from borrowings, inclusive of premium

 

 

5,000

 

 

 

503,750

 

Repayment of borrowings

 

 

(5,000

)

 

 

 

Repurchase of common stock held in treasury

 

 

(877,657

)

 

 

(187,154

)

Payment of dividends

 

 

(87,769

)

 

 

(66,087

)

Payment of debt issuance costs in connection with debt

 

 

(559

)

 

 

(4,967

)

Payment of contingent consideration

 

 

(132

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(966,117

)

 

 

245,542

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes

 

 

(4,891

)

 

 

(4,013

)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(742,134

)

 

 

446,626

 

Cash and cash equivalent, beginning of period

 

 

1,421,449

 

 

 

1,300,521

 

Cash and cash equivalent, end of period

 

$

679,315

 

 

$

1,747,147