Good morning, and welcome to S&P Global’s Second Quarter 2022 Earnings Conference Call. I’d like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode. We will open the conference to questions-and-answer after the presentation and instructions will follow at that time. To access the webcast and slides go to investor.spglobal.com. [Operator Instructions] I would now like to introduce Mr. Mark Grant, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.

Good morning, and thank you for joining today’s S&P Global second quarter 2022 earnings call. Presenting on today’s call are Doug Peterson, President and Chief Executive Officer; and Ewout Steenbergen, Executive Vice President and Chief Financial Officer. We issued a press release with our results earlier today. If you need a copy of the release and financial schedules, they can be downloaded at investor.spglobal.com. The matters discussed in today’s conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. A discussion of these risks and uncertainties can be found in our Forms 10-K, 10-Q and other periodic reports filed with the U.S. Securities and Exchange Commission. In today’s earnings release and during the conference call, we are providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation’s operating performance between periods and to view the corporation’s business from the same perspective as management. The earnings release contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. I would also like to call your attention to European Regulation. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should contact Investor Relations to better understand the potential impact of this legislation on the Investor and the Company. We are aware that we have some media representatives with us on the call. However, this call is intended for investors and we would ask that questions from the media be directed to our Media Relations team whose contact information can be found in the press release. At this time, I would like to turn the call over to Doug Peterson. Doug?

Thank you, Mark. Welcome to today’s second quarter earnings call. Our second quarter results demonstrate the combined efforts of our truly incredible team. After our first 100 days as a combined company, it’s clear than ever that after the merger S&P Global is stronger, more resilient, more diversified and better positioned than ever. We’re maintaining fiscal and operational discipline and controlling what can be controlled, which is allowing us to post aggregate results in a challenging issuance environment that would’ve been inconceivable prior to the merger. Let me start with our financial highlights. As a reminder, the adjusted financial metrics will be discussing today referred to non-GAAP adjusted metrics in the current period and non-GAAP pro forma adjusted metrics in the year ago period. Revenue decreased 5% year-over-year with growth in five of our six divisions providing significant ballast against a 26% decrease in ratings revenue. Recurring revenue increased 5% year-over-year, representing 81% of revenue in the quarter. Adjusted expenses only increased 1% as continued investment in inflation pressures on compensation and technology were almost entirely offset by cost synergies in the quarter. We’re reinstating our guidance, which reflects the challenging macroeconomic environment. Though, we will be able to offset some of the EPS impact is Ewout will discuss in a moment. Importantly, our updated guidance calls for a smaller than 2% decrease in adjusted EPS at the midpoint, illustrating the resilience of the businesses and the positive impact of our capital allocation strategy. I would also like to share a few other highlights from the second quarter. As I mentioned, we are now more than 100 days past the merger close. Our post integration efforts are proceeding on schedule, but very importantly, we’re outperforming on both cost and revenue synergies. Momentum continues on product development with several areas of…

Thank you, Doug. With five of our six divisions, once again, posting revenue growth, we continue to see evidence that we are a stronger, more resilient company. Doug highlighted the headline financial results. I will take a moment to cover a few other items. As Doug mentioned, the adjusted financial metrics that we will be discussing today, refer to non-GAAP adjusted metrics for the current period and non-GAAP pro forma adjusted metrics in the year ago period, unless explicitly called out as GAAP. Adjusted results also exclude a contribution from divested businesses in all periods. Adjusted corporate and allocated expenses declined from a year ago, caused by synergies as well as a combination of reduced incentive and fringe cost, as well as the release of certain accruals. Our net interest expense increased 3%, as we increased gross debt partially offset the lower average rates due to refinancings. The decrease in the adjusted effective tax rate was primarily due to the post merger change in the mix of income by jurisdiction. As most are aware, we exclude the impact of certain items from our adjusted diluted EPS number. Among those items in the second quarter were $220 million in merger-related expenses. The details of which can be found in the appendix. We generated adjusted free cash flow, excluding certain items of $924 million. We remain committed to returning the majority of this cash flow to shareholders through dividends and share purchases. Year-to-date, as Doug mentioned, we have repurchased $8.5 billion in shares, and we expect to launch an additional $2.5 billion in the coming weeks. We expect that $2.5 billion will be completed in October with the final $1 billion to be completed by year-end. We note that U.S. dollar has strengthened against many foreign currencies year-to-date, and we have seen…

Thank you, Ewout. [Operator Instructions] Operator, we will now take our first question.

Thank you. Our first question is from Ashish Sabadra, you may go – with RBC Capital. You may go ahead.

Thanks for taking the question. I was just wondering for the issuance guidance, would it be possible for you to provide some color around how we should think about third versus fourth quarter momentum in the back half of the year? Thanks.

Hi, Ashish. This is Doug. Thanks for the question. Let me just give you first of all, some overall view of what we've given you today. We provided you with information starting with our ratings credit research team, and then gave you some new disclosure about how we look at the difference between that research report and what we call our build issuance assumptions. We see right now, the beginning of the third quarter was actually quite weak. One month doesn't make a quarter, but at the beginning of July, there was issuance of high yield loans and high yield debt was down overall in the high-80%, low-90% range. Investment grade issuance was up actually for the month, but the quarter is off to a, what I'd say is still a pretty weak start, answering your question specifically.

That that's very helpful color. And then on the cost synergies, obviously pretty strong execution on that front with almost a $260 million run rate achieved in the quarter. I understand you expect to achieve at the high end of that 40% range being realized by 2022, but I was also wondering if you could only provide any color on how we should think about the run rate of cost synergies exiting 2022. Thanks.

Ashih Good morning. This is Ewout. So 40% of $600 million, so we expect therefore in year 2022, approximately $240 million benefit from cost synergies. We think that's phenomenal that we're already having that pace of execution and integration of our organizations. We don't have a precise number for you in terms of the run rate exit, but you should expect that it is a significant amount above the $240 million, because obviously the more we execute this year, the better we are positioned for 2023. So I can't give you a precise number on that, but that will be a number significantly north of that $240 million.

That's very helpful color. Thanks.

Thanks Ashish.

Thank you. Our next question is from Manav Patnaik, you may go – with Barclays. You may go ahead.

Thank you. Good morning guys. My first question was just broadly on guidance, I think, Ewout said that the non-ratings businesses should help offset the ratings weakness, but I think in the guidance summary, you pretty much lowered some of the non-ratings businesses, at least to the lower end. So can you just talk about, that gap and perhaps your level of conserve you've taken in this attempted guidance today?

Manav, good morning. Yes. We have always said that our businesses are very resilient, but of course they're not immune to an external environment. So is some slight impact you are seeing in terms of, for example the Index business, the assumption for the second half of the year is that assets under management will remain flat from the June 30 point. So that will have an impact on the index business. So there's several of those. Another example is the Russia impact on Commodity Insights. But overall these impacts are relatively minimal and modest. So let me give you a few other data points with respect to the assumptions that have gone into the guidance. So as already mentioned, build issuance negative 37%, then for the market appreciation flat to the June 30 level, exchange traded derivative, we expect those to be up about 10% from the second half of 2021 that is lower growth than you have seen in the first half of the year. And the reason is that the comps become more difficult, but also when there is a period of extended volatility, we expect this trading to taper off at some point. And then the brand overall[ph] price to remain in range bound until end of the year. Having said that if you look at the overall performance of the company, we're actually really pleased with the outlook for five of our six division. They are expected to perform very well to be very strong, expenses to be more or less flat year-over-year, which we think is really a phenomenal outcome in a high inflationary environment. And then margins excluding ratings to be up for the full year 180 basis points. So overall we think these are actually really strong outlooks for the company, taking aside of course the market impact for ratings.

Got it. And then maybe if I can ask you a similar question on the margin front, I mean, you talked about obviously a lot of the cost synergies being ahead of schedule, et cetera, but I think you've still taken the margin outlook down mostly. So is that just maybe being conservative or the run rate doesn't kick in for a while, I guess?

Well we are seeing a lot of dynamics in the overall expenses of the company. We have pointed at some inflationary pressures on compensation, on some of our procurement, elements and other parts of the company, but we are in a very fortunate position that we have so many levers as a company, particularly the levers that are being given to us due to the merger with respect to the cost synergies, duplication of roles that we can eliminate, the volume benefits in terms of synergies in the procurement and the sourcing area, some of the consolidation of real estate and many other areas, plus the decisive management actions we're taking at this moment. So being flat with expenses as I just said, in this environment we think is a very strong outcome. The non ratings businesses were achieving about $200 million or north of $200 million of margin expansion in the second quarter. And we think 180 basis points margin expansion for the full year would be a very strong outcome and would position us very well for 2023.

Okay. Got it. Thank you.

Thanks Manav.

Thank you. Our next question is from Alex Kramm with UBS. You may go ahead.

Yeah. Hey, good morning, everyone. Just following up on Manav’s margin questionnaire for a little bit, maybe this is nitpicking, but if I look at two of the segments, Commodity Insights and Mobility you did basically leave your adjusted revenue growth and forecast unchanged from the prior guidance, but the margins are actually now lower. So with everything you just changed as I said, it does seem like some costs are higher. So maybe you can flush it out specifically to those two segments because not sure why the margins would be lower if the revenues unchanged.

Alex these are really small changes and movements on the revenue line and with respect to the expense line for those two segments, which could drive that, for example, you're just staying within the range on revenues, but just having a slight adjustment with respect to the expected margins for that segment. So let me take as an example Commodity Insights, as we have highlighted, this is the segment where we have some impact of the Russian situation, but then that is offset by very positive momentum commercially in the Commodity Insights businesses. So we can offset a part of it. And as a result, you see a little bit of impact on revenue and margins and that is being reflected in those changes. But overall, I wouldn't read too much into it. These are just really minor impacts that we are seeing on those businesses.

Okay. Helpful. Thank you. And then just second just on the Market Intelligence side, hoping that you can give us a little bit more color around the commercial success you're having so far, what I'm asking specifically is I've had some client conversations and it sounds like for at least for some clients, you're not really integrating the sales force, yes. And they are operating basically at two organizations until next year. So I don't know if those are one-offs or this representative of the whole book of business, but I would've expect with all the planning that basically you're going to be operating at as one company. And so maybe just flush out what's been done and why maybe we're hearing that it's not fully integrated quite yet?

Yeah. Alex, thanks for that. And we're actually fully integrated. Market Intelligence is the division that's absolutely the furthest ahead on that. We have done full training of all of the products across the two divisions. We have seen the ability to now go out with joint planning for all customers across the financial services and the Market Intelligence to prior segments. We have a lot of early wins both with clients as well as with products, a couple of examples, some of the early wins have come by moving more and more data sets from financial services into what we talked about earlier on the call to marketplace. We've also seen some early wins on selling products, which would've been traditionally financial service products into the corporate client base of Market Intelligence. And then we have some new products which have also been launched. We talked about one of them, the PVR which is responsive to some new SEC rules, which are coming out later this year. So that must be anecdotal. I'm not sure you were speaking with, but we are really excited about the integration and the speed that we're able to develop a cross-sell. We mentioned that we have over 2,000 cross-sell ideas and leads, and we're following up on those very, very quickly. And as you saw, we're also ahead of our prior assumptions about how we'd be doing with synergy. So this is one of the areas that I think we're actually doing the best on.

Okay. Very good. Thank you.

Thanks Alex.

Thank you. The next question is from Toni Kaplan with Morgan Stanley. You may go ahead.

Perfect, thanks. Wanted to ask another one on synergies. It looks like you're making really great progress on the cost side, on the revenue side. It makes sense that it'll take a longer time just given the need to create new products. But I guess, are you aware you thought you'd be on the revenue synergy side or is it taking longer and do you still feel good about the 2024 target there?

Yeah. Thanks Toni. Well, I feel actually really positive about the projections that we have on the revenue synergies. It's something that we've always known that would take a while to understand the customers, to be able to integrate data sets to have a fully integrated sales force. But to have the ability to already be running it at $15 million run rate which we announced this quarter for me is ahead of what we would've thought we would've been. We still haven't changed the view that a lot of the revenue synergies will be more back-ended in the next two to three years. But the early projections in the early progress is excellent.

That sounds great. And then just on Market Intelligence, the Enterprise Solutions piece only up 2% year-over-year, just want to clarify, is this the legacy IHS Solutions business? I think it used to be comprised of enterprise software and managed services. I just – I wasn't as familiar, I guess, with the volume based offerings that are in there, which is driving maybe the slow down, just any additional color on that thing?

Yeah. Thanks Toni. Yeah, you're right about, what's comprised of that solutions group. It includes IPO as well. But there's a portion of the revenues in that business which come from IPOs and as you know, the IPO market has been incredibly weak. So that's the main issue which has seen slowed down of growth, but the underlying business is doing quite well. We're delivering software, we're delivering solutions. This is one of the areas where we've seen some of the early wins on being able to position products, which traditionally have been sold to financial services into the corporate sector. So off to a great start, but having some impact from the very, very weak capital markets in IPO positioning.

Makes sense. Thank you.

Thanks Toni.

Thank you. Our next question is from Hamzah Mazari with Jefferies. You may go ahead.

Hey, good morning. My question is on the non-transactional side of the ratings business, maybe you could just comment on how stable is that business through the cycle and what are your sort of assumptions there for the balance of the year?

Good morning Hamzah, of course I will give you some further insights on that. As you know non-transaction revenues is a bucket of different elements and they are not all pointing in the same direction. So let me give you a little bit further insight in what we're expecting here. So what is looking strong is annual fees as well as CRISIL. So we would expect those to continue to do well for the remainder of the year, in-line of what you have seen for the second quarter. And that will be offset by some impact of FX, ratings evaluation services, which is more linked to M&A and initial credit ratings, which is also down. So I think best to expect a low single digit decline for non-transaction revenue this year, but that is of course in the bigger scheme for ratings providing some offset and stability for the transaction revenue declines.

Got it. Very helpful. And just my follow-up is just on the Indices side of the business, I think the SEC was looking at whether Indices businesses should be treated as investment advisors versus data publishers. Is there anything, I guess on the regulatory front on the Indices side that you are looking at or that investors should be cracking or is this just not really material? Thank you.

Yeah. Hamzah, as you know our business has already run as if we're regulated and we are regulated in some jurisdictions like the European jurisdiction under what's called the BMR. The SEC has a request for comment out about – for about index providers. We will file a response. As you know, there's a long term trend from active to passive. It's an industry that has very low cost independence, a lot of transparency. We have a very strong performance over the last 65 years, and we'll obviously highlight all of that in our response to the SEC. But as of now, this is just a request for comment. There's nothing related to it. That is any regulatory proposals. And we were not surprised given the size of the growth of the index industry.

Got it. Thank you.

Thanks Hamzah.

Thank you. Our next question is from Jeff Silber with BMO Capital Markets. You may go ahead.

Thanks so much. In looking at Slide 23 where you have your economic assumptions, you’re forecasting obviously slower growth in real GDP, but not really forecasting a recession. We can argue what the definition of a recession is later. But let me play devil’s advocate. Let’s assume that the U.S. more importantly the global economy might be going into a recession in the second half of this year. What would be the impact on your different business segments?

Let me start, and then I’m going to hand it over to Ewout to give you some more color. But first of all, we have the assumptions that you saw on Slide 23. We have seen a significant slowdown in growth in the United States, the Eurozone and globally, and China being one of those markets, which is also seemed substantial slowdown given their current policies. This has also been matched with a higher inflation. Each of our businesses have different types of impact in this scenario with the ratings business you’ve already seen is being directly impacted already by the increase in inflation, by the weak issuance environment, by the uncertainty in the markets. If you looked at our commodity insight business, we could see some growth in the volatility from the higher cost of oil, which you saw here, we have a projected that the crude price will be at $106 and a range that’s much higher than it had been in the prior years. That leads to some increase in interest in trading information for risk information and then the overall energy industry does quite well in that positioning. So we could see some benefits from that. Our other businesses market intelligence should see some benefits from people interested in information and data about the risk environment, but at the same time, if we – if our customers start going under stress, we might have to think about how we negotiate with them to accompany them in their – in if they have difficult times. I’m going to hand it over to Ewout to mention a little bit more about indices impact as well as the other businesses.

Jeff of course, immediately thinking at the more market sensitive businesses, ratings transaction revenue, the AUM fees in the index business, but offset by of course a higher ETD volumes. And as Doug mentioned before, the capital markets platform business in the enterprise solutions part of market intelligence, but the offset is that we are seeing other parts of the businesses doing well when we have higher volatility for example global trading services and commodity insight just to mention one area. On top of it, we are then having the opportunity to take further actions. You could say to some extent, we’re already executing on our downturn playbook at this moment and taking those actions for the second half of this year, and that is to protect our margins. And we can of course pull those levers even harder. I would like to point out that actually the merger gives us a very good basis and a strong benefit to deal with a more uncertain environment and future. The resiliency of the business, the higher level of recurring revenues that we are having, the diversification benefit and then also of course, all the synergies that we can achieve. And those gives us levers in terms of offsetting an environment that we think is a clear benefit and is a differentiator for us compared to many others.

Okay. That’s really helpful. If I could shift back to the ratings business, we saw a pretty large bond sale yesterday from Apple. I don’t know if there were a frequent issue or not. I don’t know if you were involved, if that’ll impact your transactional revenues, but more importantly, they seem to be a pretty good timer over the market. Do you think that might be a bellwether that we’ll see other companies come to market that we might not have expected a few weeks ago?

Yes. Jeff, we’ve actually seen pretty strong issuance from the investment grade sector. A lot of those large issuers, especially financial institutions tend to be on frequent issuer programs, where we really see the biggest impact on the downdraft of issuances in the non-investment grade, the high yield sector, you’re looking at the B, CCC, BB sectors. So there’s been very low formation of CLOs. In fact, we’ve seen the retail sector have withdrawals from risk positions and so we’ve seen a decrease in funding for CLOs. So there – the real part of the issuance curve, which we’re not seeing any life at all is really the high yield sector. But on the on the investment grade, there has been a lot of activity, we’ve seen in particular financial institutions very active, and then people like Apple, you’ve seen there, but the real story, we need to look deeper across all of the different segments. And it’s the high yield sector both for loans and bonds that we’ve seen the biggest weakness.

Okay. Really helpful. Thanks so much.

Thanks, Jeff.

Thank you. Our next question is from Faiza Alwy with Deutsche Bank. You may go ahead.

Yes. Hi, thank you, and good morning. I was hoping to follow-up on revenue synergies. And curious if you could give us some examples of areas where you’re seeing the most traction at this point.

Yes. So first of all, we’re – as I said earlier, we’re really excited that we’re off to such a fast start on the cross-sell. And so the initial opportunities have are on cross-sell and the two biggest areas we’ve seen the growth is in the market intelligence business, it’s been with the sales of what had traditionally been financial services products for example, products which are used for Investor Relations teams and finding the corporate segment, which market intelligence had a lot of penetration with being able to open that door and bring those types of products to the corporate sector. In the commodity insights world, we see a lot of opportunities for data and research products, which were coming from the ENR side from IHS Markit that are now being marketed to the traditional plats clients that were benchmark clients. And so we’ve seen a lot of upside there. A third area would be within the index business. As you know, we brought the IHS Markit’s fixed income index business over, and there’s a lot of opportunities. These are not necessarily in our run rate yet, but they’re in our pipeline related to ESG Indices that will be on fixed income indices. So that’s a big theme that we haven’t seen necessarily the revenue coming in yet, but a lot of interest in that, but those would be the three largest areas so far.

Great. Thanks. And then just a follow-up on the rating side of the business, you were just talking about high yield. And I’m curious as we look at your refinancing study, assuming the volatility eases as we get into 2023. And I know you said you won’t comment on 2023, but I just wanted to get just a holistic view around how you think about the high yield market normalizing from here.

Yes. The high yield market we look at in a few ways, one of them is obviously there’s a large amount of firepower of capital that’s available for the private equity in the sponsor industry. We estimate that that’s well north of $1 trillion somewhere around $1.3 trillion to $1.4 trillion of capital be deployed. We also look at the M&A pipeline, the M&A pipeline right now there’s a lot of deals to be completed, but they’re actually taking a lot of time. So there’s a slow realization of M&A, which has already been announced, but not completed. So that’s another one of the levers we look at quite closely. And then there’s going to be a refinancing requirement, they’ll be start coming in over, which relates to 2023, 2024, 2025. Traditionally, we’ve seen some of that pull forward into earlier times as people look at how the interest rate market is playing out what their growth prospects are, et cetera, but those would be the key factors we’re looking at the what’s happening with rates, what’s happening with the private equity industry, with M&A, with refinancing. And then just generally speaking, as you know, I mentioned earlier to one of the other answers, there’s kind of a risk off approach, especially from the retail and the wealth management sectors. They have not been participating in the formation of new CLOs. And in fact, have been withdrawing their liquidity from the high yield products. So we think that we will start seeing people go back into that when there’s some more uncertainty and stability in the markets as well.

Great. Thank you so much.

Thanks, Faiza.

Thank you. Our next question is from Andrew Nicholas with William Blair. You may go ahead.

Hi, good morning. This is actually Trevor Romeo on for Andrew. Thank you so much for taking the questions. Just two quick ones for me. First of all, the ESG revenue growth of 66% in a quarter, it’s encouraging to see that accelerate kind of even further. Just wondering if there’s anything in the current environment that’s kind of boosting that ESG growth above trend or if there’s kind of any evidence that even higher growth rates might be sustainable over a longer period of time.

Yes. Good morning. So let me give you a little bit more color on the ESG growth, which is of course phenomenal and we’re very happy because we have been guiding to a 46% CAGR for a multi-year period and to be coming in at this kind of a level of growth of 66% is of course really great. So a couple of underlying elements, we’re seeing nice growth in commodity insights that’s written by clean energy technology, energy transition activities, as well as new price assessments around ESG. Also market intelligence doing well, particularly around climate and the true cost offerings and the ESG data sales. If we look at the Indices business, we have been investing a lot in new ESG Indices, and that is also clearly starting to payoff. And then in ratings, although coming from a small base, we see some positive momentum in second party or opinion, so good momentum. We’re clearly investing in it. There’s a lot of market demands and we would expect that positive momentum in ESG to continue.

That’s great. Thanks. And then maybe a somewhat related follow-up. The Inflation Reduction Act that’s been proposed out there has pretty significant climate investments and tax credits for the clean energy industry. So would you see something like that if it actually were to get past kind of having any demand on either the commodity insights business or the ESG business? Thanks.

It’s something that’s still obviously in discussion in Washington. Generally speaking, infrastructure bills something like this, which is going to be geared towards the climate sector could see some benefit as it – as the financing gets into the market, but this could take a while before we really start seeing it layer into the market.

Okay. Understood. Thank you very much.

Thanks, Trevor.

Thank you. The next question is from Craig Huber with Huber Research Partners. You may go ahead.

Great. Thank you. My first question, on commodity insights, curious in the second quarter, what percent of the revenues there were fossil fuel based about by the end customer? And then along the same lines there, when are you guys expecting peak oil use globally? Then I have a follow-up

On the first question about the fossil fuel based, I don’t have the answer. We’ll have to get back to you on that. But just remember that across the business, a large part of our complex relates to – it relates to energy. But in addition, we’ve seen some great opportunities to increase our knowledge across the group. As an example, we issued a special study on copper, which even though copper isn’t a fossil fuel, copper is going to be necessary component for the energy transition. So we’ll have to get back to you to the answer on the fossil fuel question.

And then also can you talk a little bit about the your market intelligence area that the health of the – of your customers there right now given the market volatility. What’s the sales pipeline looking like? Just talk about that, please. Thank you.

Yes. The commodity insights business actually despite knowing that the price of oil is quite high is a healthy pipeline right now. There’s a lot of demand for information. As I mentioned, the special copper study we’ve done, we have been deploying a whole new set of energy transition products. So even if there’s been some concern, some of the traditional areas of some of the consumers of oil and gas might have a little bit more stress. The overall market is still very robust with the energy industry itself in a strong position, the commodity industries are looking for a lot new insights, information and data. And then we’re being able to find new opportunities to mix and match our data across the entire company. As an example, we’ve launched some new indices through the index business, which relate to commodities data. So we’re finding a lot of opportunities across the company to mix and match products. We see a strong growth pipeline.

Great. Thanks, Doug.

Thanks. Thanks, Craig.

Thank you. Our next question is from Owen Lau with Oppenheimer. You may go ahead.

Good morning, and thank you for taking my questions. Could you please give us an update on your ability to pass through some of the inflationary cost to your customers through with pricing in each segment. Thank you.

Hello, Owen, and let me give you some further insights on that. So when we think about pricing, we always first start to think about the value we generate for our customers. So that’s the starting point. And as you know, our products are very valuable. They’re important, particularly in an current environment with high volatility, lot of economic uncertainty, our research, our datasets, our insights, all the consumption of it is even higher in the current period of times. And then we also know our base products itself are very valuable for our customers. So that is always the starting point before we start to think about pricing. Obviously in an high inflationary environment, it’s fair to consider passing on a part of our cost price increases to our customers, if that is appropriate and balanced in relation to what I said before. And we’re doing that selectively. So think about custom and data subscriptions in index, there we have made some changes and also we have made a list price change in the ratings business now starting on August 1. So a mid-year change also for the ratings fees. So those are a couple of examples, but always in the context of finding the right balance for the company and thinking about the health of the company, the retention levels and the interest of our customers from a medium and long-term perspective.

Got it. That’s helpful. And then on the dealer revenue in your Mobility segment, I think it was quite strong up 10% year-over-year. Could you please talk about maybe the drive of that strength from CARFAX and also the sustainability of this growth? And then more broadly, could you please also talk about the retention rate of the Mobility business? Thank you.

Yeah. Thanks, Owen. This is a business that is benefiting tremendously from all of the disruption in the supply chain and the automotive manufacturing sector. The dealers right now are really in a high need for information about the used car sector, which is where the most movement is going. They’re working very closely with the manufacturers and the OEMs on programs about providing discounts, providing incentives for new car sales. So the dealers right now are in the middle of a very high demand low product environment. And so CARFAX has been benefiting across the board. So all the CARFAX businesses, as well as Automotive Mastermind, there were a couple of new products that were launched. One that’s called – it’s called an EyeQ, spelled E-Y-E-Q product, which provides a balance between the manufacturing and the dealer segment to look at how incentives and discounts are provided. So this is an area where CARFAX has been tremendously benefited by this difficult environment. And it’s really the dealers that have the highest demand.

Got it. Thank you very much.

Yes. Thanks Owen.

Thank you. The next question is from Jeff Meuler with Baird. You may go ahead.

Yes. Thank you. I see that you have your third straight quarter of upstream data ACV growth adjusted for Russia-Ukraine. I guess my question, is it continuing to accelerate or can you just give us any sense of the order of the magnitude of the growth in that business, given obviously revenue is lagging.

Jeff, in fact, this is the third consecutive quarter that we’re seeing ACV growth in the upstream business. Of course, a bit impacted by the Russia situation. So think about it more in the revenue growth of around 3.5%, if you exclude that Russia impact for the quarter itself for revenues in the upstream business. So I would call this a turnaround. This is a business that had a very difficult period for the last few years, but coming out of it in a very strong way, clearly, the overall situation in the energy markets are helping this business. The levels of CapEx that are going into this industry are going up. So very positive momentum and we would expect that also to continue in the near future.

Okay. And then Ewout, I get that you’re saying the adjustments in terms of segment margin guidance are small. I get that, I guess, are the adjustments driven by the pricing or the inflationary pressure that you’re seeing. Or is there also some reallocation of corporate cost, because of the lower revenue outlook in the rating segment that get absorbed into those other segments? Thank you.

No changes with respect to financial reporting allocations and so on, actually allocations are coming down, because of the synergies, of course, also helped by the management actions that we highlighted. So what you are seeing is actually a really a very mix shift of reasons what is happening in the different businesses. So I was speaking about the assumptions, for example, in the Index business, with respect to the AUM level, staying flat in our assumption for the second half of the year, the impact of Russia in Commodity Insights offset by strong commercial momentum. So a very different set of reasons for each of the segments. But I think overall, these impacts are relatively small. I think the main area, of course, that you are seeing is the impact of the outlook for ratings, where we are not assuming any improvements in the issuance environment for the second half of the year compared to what we’ve seen in the more recent past. But five of our six divisions from our perspective, performing very well, quite resilient are seeing good, healthy revenue growth and strong margin expansion. And we think margin expansion in this environment is actually a really positive that we can deliver to our shareholders.

Okay. Thank you.

Thank you. The next question is from George Tong with Goldman Sachs. You may go ahead.

Hi. Thanks. Good morning. I wanted to go back to your issuance outlook. You’re forecasting a 30% to 45% decline in build issuance for this year. Can you clarify if your updated guidance assumes that issuance trends will mirror performance we’ve seen in June and July? Or if you’re assuming issuance over the remaining five months will be similar to the first seven months of the year effectively calling up bottoming in issuance performance year-to-date.

Yes. George, the second half of the year’s assumption is that it’s similar to June and July. If you actually look at any year, the second half of the year is always has lower level of issuance in the first half of the year. If you think about it, you’ve got the summer months in there, you’ve got July and August, which are always quite slow. And then you’ve got some holidays towards the end of the year in the U.S. market, which are also quite slow. So we’re expecting that there will be the issuance level will be similar to what it’s been the last couple months.

Okay. And is that on an absolute dollar basis of issuance or is that seasonally adjusted looking at year-over-year growth trends?

Both.

Okay. Got it. And then a as a follow-up, maybe going back to Commodity Insights, you’re calling for mid-single-digit growth and that outlook was unchanged from your prior outlook. You mentioned Russia, of course, being a headwind, but can you talk about other moving pieces in the business? I would’ve expect Commodity Insights potentially to benefit more from some of the commodity prices we’ve seen.

George. So if we look at the underlying components and the sales activity, we’re actually seeing record sales levels of the last few quarters for Commodity Insights, clearly highlighting the benefit of the combined business. We are now having the benefit are the commodity prices today net-net, that’s a good situation for our customers. The benefit we are seeing from some of the revenue synergies, although, it’s early and the numbers are low that is clearly benefit. And then of course, on top of that, also the focus on energy transition, which leads to additional investments. And we have of course, an incredible level of expertise around that, that we can help our customers. So across the Board, in each of the categories, if it is advisory and transactional, if it is upstream, price assessments and the resource data and insights, I think all of that is looking very positive. Yes, there is a little bit of the impact of Russia 10 months of impact this year, because that impact started more or less in March. Then you will see a little bit of impact for two months next year, then we will be lapping that and then I think all the underlying drivers of positive momentum will continue.

Got it. Thank you.

Thanks George.

Thank you. Our next question is from Shlomo Rosenbaum with Stifel. You may go ahead.

Hi, thank you. I cut out a little bit, and so I’m not sure if you addressed this in prior discussions. But in the Mobility segment, dealing with very strong demand in CARFAX because of used cars in the like. If you would see – if we start to see some improvement in supply chain over the next year or so, do you expect that we’re going to see a little bit of a balancing out in some of the other areas we’ll do better? Or do you expect that we’re going to start to see just not seeing the same kind of growth that we saw beforehand in terms of CARFAX.

Yes. Thanks, Shlomo. We think that this Mobility segment has a many – has a very high growth trajectory ahead of it. If you look at a couple of different factors, one that I described earlier relates to the used car environment, where right now there’s very low production of new automobiles, which is taking place, which means that there is a need for dealers to have product. They don’t have product right now. So when they get it, they can sell it, they can sell it at premium. They need the data in the analytics, whether it’s from Automotive Mastermind or it’s the CARFAX product. So there’s a high demand right now for that. And the dealer’s approach to working with customers is not going to go away even as the global production starts coming back. And there’s going to be a revolution taking place in the transmission system such will move toward electric vehicles. So the dealer approach is going to stay quite important. We think the manufacturing approach could actually benefit from much higher growth of production. You see that we think that the global production will start continuing to increase over the next few years going up – even up to 9% in 2023 in the Slide that we produced. There’s another area which we think has some opportunities for growth, which is financials. And we’ve been producing some new products for the financial sector. We talked about one of them earlier, which is some credit information for the insurance industry, as well as the financial services industry on the automotive sector. So across the board, we think this is a segment, which is going through a lot of change. There’s a lot of disruption taking place and it’s an opportunity for us to be at the middle of that to provide the data and the insights and analytics, the dealers and audit manufacturers and financial institutions need to make informed decisions.

Okay, great. And then, Ewout, this is just maybe a housekeeping one. But what was the ending share count? Not the average share count in the quarter, but kind of the ending share count. And should we expect that to be very different next quarter in terms of kind of finishing up the ASRs. Just trying to figure out, make sure we’re – at least our modeling the share count appropriately.

Shlomo, we put a specific slide in the appendix to help you with your question and where you can see the decline of the overall share count over the period of this year. So we started with 360 – sorry, 356 million of combined shares after the issuance of shares for the IHS Markit shareholders. That has come down to 339 million most recently. We expect about 5 million of shares to be delivered as a true up for the $8.5 billion ASR that will be ended soon. Then we will enter into the new $2.5 billion ASR, the upfront delivery of that would be something like 6 million of share, so somewhere later this month, we all have those also taken out. So you could say about 25% of the shares that were issued for the IHS Markit have already been removed in a period of six months, which we think is phenomenal. And then of course, we get the true up of the new ASR of $2.5 billion and shares that will be delivered for the 1 million at the end of the year. So that is the decline, but more details you can find in the appendix of the slide to help you and all your colleagues with the mobile link.

Thank you.

Thanks, Shlomo.

Thank you. The next question is from Andrew Steinerman with JPMorgan. You may go ahead.

Hi. I just wanted to go back to Slide 31 Market Intelligence, where desktop, which is where I want to focus was up 6%. And you did mention strong new sales and renewals. I know this is an area where you’re adding content and data to Cap IQ Pro, I just wanted to know how much of this is kind of market driven versus your kind of product upgrade driven. And do you expect momentum in your desktop business in the second half of the year?

Good morning, Andrew. We are very pleased with the trends we’re seeing with respect to desktop, very stable business, growing in a steady way. We see good commercial momentum. We see good user satisfaction levels, and that is translating in high retention, nice growth of annualized contract value, pickup of price increases based on the enterprise approach we are doing with respect to our contracts. And then also [indiscernible] of the products is going up. Satisfaction level also better think about page loads that are going much faster than we had in the past. So overall, we like what we are seeing in desktop growing nicely steadily and good commercial momentum and great customer satisfaction around it.

Thank you. Appreciate it.

Thanks Andrew.

Thank you. We will take our final question from Russell Quelch with Redburn. You may go ahead.

Yes. Thank you for having me and appreciate it. To be on the current catch up buyback, can you just lay out your priorities for use of excess capital? Should we be expecting our phones in the second half of this year? And if we should, perhaps, what areas do you believe you are light in terms of data and product suite? Thanks.

So I would say this in the following way and by the way, thank you for joining the call and thank you for initiating your coverage on S&P Global. We are looking at continued return of capital. We have our specific targets with respect to our capital management philosophies, and we will continue to execute on that. We’re very happy that we will continue with the 12 billion share buyback, despite lowering our adjusted free cash flow for the full year. We have sufficient ability to complete to 12 billion, and then we’ll continue with returning capital to our shareholders next year with the at least 85% of free cash flow. We have no plans with respect to large M&A at this moment, maybe some small tuck-in and bolt-ons where we can find some nice additions to our propositions. Think about ESG, but otherwise no changes with respect to the plans, the philosophy and the targets will continue on the path that you’re used to see from us.

Thanks, Ewout. I’ll leave it there. Thanks for your comments.

Thanks, Russell. Well, as we close the call, I want to thank everyone again for joining it for your questions and for your support. As I said at the beginning of the call, it’s incredible to see that within just five months, how much stronger and resilient we are as a new company with S&P Global and IHS Markit. We have a very robust integration management office in place, we call it the IMO. We’re partnering with all of the businesses together with a new management team to create value and to ensure that we can create this unified vision to deliver S&P Global. None of the progress would be possible without the commitment and really hard work of our people. They’ve done a fantastic job and I do want to thank them again for their effort as they’ve been working for over 1.5 years, two years to get ready for this deal. And now the last five months to really make sure it’s moving along. I’m really pleased that all of us have come together to do such a great job so far, and we want to continue to deliver. I hope that everyone has an enjoyable summer and want to thank everybody for joining the call today. Thank you very much.

That concludes this morning’s call. A PDF version of the presenter slides is available now for downloading from investor.spglobal.com. Replays of the entire call will be available in about two hours. The webcast with audio and slides will be maintained on S&P Global’s website for one year. The audio-only telephone replay will be maintained for one month. On behalf of S&P Global, we thank you for participating and wish you a good day.