MSCI Inc. (NYSE:MSCI) Q2 2020 Earnings Conference Call - Final Transcript

Jul 28, 2020 • 11:00 am ET

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MSCI Inc. (NYSE:MSCI) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Linda S. Huber

The balance of our adjusted earnings per share growth was driven by favorable tax and foreign currency impacts and a lower share count. These were offset by higher interest expense associated with the higher debt balance during the second quarter as well as lower interest income on cash balances.

And turning now to our balance sheet. We ended the second quarter with a cash balance of approximately $1.4 billion. And in May, we issued $1 billion of notes due 2031 at a coupon of 3.875% and used $800 million of the proceeds to redeem our 2025 notes that had a coupon of 5.75%. We remain very confident in our capital position, which continues to enable us to invest selectively and strategically in our businesses and to return capital to our shareholders. In the second quarter, we repurchased $31 million of stock and paid approximately $57 million in dividends to our shareholders. And yesterday, the MSCI Board also approved a dividend increase of 15% to $0.78 per share for the third quarter. This is in line with our payout target of 40% to 50% of adjusted EPS.

Now moving on to our outlook for full year 2020. As we announced in our earnings release earlier today, we are reiterating most of our lines of guidance as we continue to invest in our business for growth and operating efficiencies. We do now expect a lower effective tax rate for 2020 in the range of 16% to 19%. And for free cash flow, we now expect to be toward the upper end of our guidance range of $540 million to $600 million, primarily reflecting the lower effective tax rate range as well as stronger cash collections. Full year interest expense is still expected to be approximately $158 million. However, the current low-rate environment is also likely to drive quarterly interest income earned on cash balances to be at similar levels as this quarter for the foreseeable future.

In closing, I want to reiterate Henry and Baer's confidence in our business model, people, operations and opportunities. We have a solid balance sheet and ample liquidity. While the range of economic and macroeconomic outlooks remain broad, we will continue to take proactive management decisions in the best interest of our employees, shareholders, clients and other stakeholders.

And with that, operator, please open the line for questions.