穆迪 (MCO) 2012 Q1 法說會逐字稿

Good day, and welcome, ladies and gentlemen, to the Moody's Corporation first quarter 2012 earnings conference call.

At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode.

At the request of the Company, we will open the conference up for questions and answers following the presentation.

I will now turn the conference over to Salli Schwartz, Global Head of Investor Relations.

Please go ahead.

Thank you.

Good morning, everyone, and thank you for joining us on this teleconference to discuss Moody's first quarter results for 2012.

I am Salli Schwartz, Global Head of Investor Relations.

Moody's released its results for the first quarter of 2012 this morning.

The earnings press release and a presentation to accompany this teleconference are both available on our website at ir.moodys.com.

Ray McDaniel, President and Chief Executive Officer of Moody's Corporation, will lead this morning's conference call.

Also making prepared remarks on the call this morning is Linda Huber, Chief Financial Officer of Moody's Corporation.

Before we begin, I call your attention to the Safe Harbor language which can be found toward the end of our earnings release.

Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

In accordance with the Act, I also direct your attention to the Management's Discussion and Analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31, 2011, and in other SEC filings made by the Company which are available on our website and on the Securities and Exchange Commission's website.

These, together with the Safe Harbor statements, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements.

I would also like to point out that members of the media may be on the call this morning in a listen-only mode.

I will now turn the call over to Ray McDaniel.

Thank you, Salli.

Good morning, and thank you to everyone for joining today's call.

I will begin by summarizing Moody's first quarter 2012 results.

Linda will follow with additional financial detail and operating highlights.

I will then speak to recent regulatory developments and finish with comments on our outlook for 2012.

After our prepared remarks, we'd be happy to respond to your questions.

First quarter revenue was $647 million, increased 12% over the prior-year period, primarily reflecting increased corporate and public project and infrastructure debt issuance as well as continued solid performance for Moody's Analytics.

All reporting units at both Moody's Investor Service and Moody's Analytics were in the first quarter of 2012 compared to the prior-year period.

Operating income for the first quarter was $269 million, an 8% increase from the prior-year period.

Diluted earnings per share for the quarter of $0.76 increased 13% year over year.

While the level of issuance activity was strong in the first quarter, we remain cautious about market conditions for the remainder of the year.

As a result, we are reaffirming our 2012 EPS guidance of $2.62 to $2.72, but now expect to be in the upper end of the range.

I will now turn the call back to Linda to provide further commentary on our results and other updates.

Thanks, Ray.

I'll begin with revenue at the Company level.

As Ray mentioned, Moody's total revenue for the quarter increased 12% to $647 million.

US first quarter revenue increased 14% to $344 million, while revenue outside the US grew 10% to $303 million and represented 47% of Moody's total revenue, down slightly from the 48% in the year-ago period.

Recurring revenue of $330 million represented 51% of the total, essentially flat to the prior-year period.

Now looking at each of our businesses starting with Moody's Investor Service, revenue for the quarter was $453 million, a 10% increase year over year.

Foreign currency translation unfavorably impacted Moody's Investor Service revenue by $4 million.

US revenue for MIS increased 13% over the prior-year period while revenue outside the US increased 6% and represented 43% of total ratings revenue.

Global Corporate Finance revenue in the first quarter increased 10% from the year-ago period to $201 million.

Revenue grew 8% in the US, while outside the US, revenue increased 15% year over year.

The growth in Global Corporate Finance revenue reflected stronger investment grade and solid speculative grade bond issuance activity.

Global Structured Finance revenue for the first quarter was $94 million, 5% above the prior-year period.

In the US, revenue increased 15% year over year, primarily due to strength in asset-backed securities and commercial real estate.

Most other areas of the US Structured Finance market remain weak.

International Structured Finance revenue was down 2%, reflecting weaker issuance volume in European asset-backed securities in the first quarter of 2012, as well as demand in the first quarter of 2011 for ratings of outstanding securitization placed in the European government-sponsored facilities.

Global Financial Institutions revenue of $79 million increased 2% from the same quarter of 2011.

US revenue was essentially flat compared to the first quarter of 2011 while non-US revenue grew 4%.

Global revenue for the Public Project and Infrastructure business rose 23% year over year to $79 million.

Revenue was up 37% in the US, reflecting strength in both public finance and project finance.

Non-US revenue increased 4%, primarily due to gains in the infrastructure sector in Latin America and Asia.

In turning now to Moody's Analytics, global revenue from Moody's Analytics was $194 million.

It was up 18% from the first quarter of 2011.

The impact of foreign currency translation was negligible.

US revenue grew by 19% year over year to $85 million.

Non-US revenue increased by 17% to $109 million and represented 56% of total Moody's Analytics revenue.

Globally, revenue from Research, Data and Analytics of $120 million increased 9% from the prior-year period due primarily to increased sales of credit research and related data and represented 62% of total MA revenue.

Revenue from Enterprise Risk Solutions, formerly known as Risk Management Software, $48 million grew 11% from last year driven by the December 2011 acquisition at Barrie & Hibbert.

Due to the variable nature of project timing, Enterprise Risk Solution revenue remains subject to quarterly volatility.

Professional Services revenue more than doubled to $27 million, reflecting both the acquisition of the majority stake in Copal Partners in November, 2011 and growth in our existing training and education business.

Turning now to expenses.

Moody's first quarter expenses were $378 million, an increase of 16% compared to the first quarter of 2011.

Incremental compensation expense, which accounted for over 50% of the growth, was primarily driven by additional headcount in the operating businesses and from the acquisition.

Other incremental expenses were largely composed of non-compensation expenses related to the acquisition including purchase price amortization and IT-related costs.

The impact of foreign currency translation on first quarter expenses was negligible.

Moody's reported operating margin for the quarter was 41.6%, down from 43.3% in the first quarter of 2011.

Our effective tax rate for the quarter was 32.1% compared to 33.2% for the prior-year period.

The decrease in the effective tax rate was primarily due to benefits derived from international tax initiatives and tax audit settlements, partially offset by miscellaneous discrete items.

Now, I'll provide an update on capital allocation.

During the first quarter of 2012, Moody's did not repurchase any shares but did issue 2.6 million shares under employee stock-based compensation plans.

Outstanding shares as of March 31, 2012 totaled 225 million representing a 1% decline from a year ago.

As of quarter-end, Moody's had 900 million share repurchase authority remaining under its current program, and as we have previously noted, we still expect to repurchase approximately $200 million of Moody's shares over the course of 2012 subject to available cash flow, market conditions, and other ongoing capital allocation positions.

As of March 31, Moody's had $1.2 billion of outstanding debt and $1 billion additional of additional debt capacity available under our revolving credit facility.

Additionally, on April 18, 2012, we renewed our $1 billion credit facility for another five-year term.

Cash and cash equivalents were $815 million, an increase of $95 million from a year earlier.

Approximately 80% of our cash holdings are maintained outside the US.

We remain committed to using our strong cash flow to create value for shareholders while maintaining sufficient liquidity.

And, with that, I'll turn the call back over to Ray.

Thanks, Linda.

I'll continue with an update on regulatory developments.

Starting in the US, regulatory authorities are moving forward on implementing the various parts of the Dodd-Frank Act.

Following the SEC's summer 2011 comment deadline for rule proposals relevant to NRSRO, the SEC revised its timetable and is expected to adopt final rules by year-end 2012.

Within this same time, the SEC is also expected to publish it feasibility study on establishing an alternative system for allocating rating assignments for structured finance products, otherwise known as the Franken Amendment.

Turning to Europe, Moody's was registered in the European Union late October, 2011, and as I've indicated on previous calls, the transfer of oversight of registered credit rating agencies to the European Securities and Market Authority, or ESMA, became effective in July, 2011.

Our European operations are therefore under the full examination and oversight authority of ESMA, and ESMA published its first inspection report in March.

ESMA's report did not identify any breaches of the current regulations by Moody's.

As discussed on previous calls, in November, 2011, the European Commission released new regulatory reform proposals for the rating agency industry known as CRA3 that sought to address, among other ideas, the use of ratings in regulation, business models, competition, rotation of rating agencies, and liability.

If implemented as currently constructed, the Commission's suggested measures are likely to have significant negative implications for Europe's credit markets.

Consequently, the debate on CRA3, which began the European Parliament and the European Council of Finance Ministers in mid-January, has involved a growing number of market participants.

The focus of the debate has been on the potential negative impact of CRA3 on the broader European economy and the ability of European issuers to access funds.

Because of the tone of the debate thus far, it is possible that during the coming months, the Commission's proposals will be amended.

The next stages of the legislative process include deliberation and potential amendments by both the European Parliament and the Council of European Finance Ministers.

The Parliament Council and Commission must all confer and agree on the final text.

We expect this process to be completed by year-end, and we will continue to consult with relevant authorities and market participants as to the impact of the specific proposals.

While new rules could entail various changes in our rating processes and operations to require us to adapt our business, we will not abandon our fundamental objective to provide the highest quality independent credit opinions, research, and analysis.

We will also continue to advocate for globally consistent approaches that align with the G-20 statements and directives.

I'll conclude this morning's prepared remarks by discussing our full-year guidance.

Moody's outlook for 2012 is based on assumptions about many macroeconomic and capital market factors, including interest rates, corporate profitability, and business investment spending, merger and acquisition activities, consumer borrowing and securitization, and the amount of debt issued.

There is an important degree of uncertainty surrounding these assumptions, and if actual conditions differ from these assumptions, Moody's results for the year may differ materially from the current outlook.

Our guidance assumes foreign currency translation at end of quarter exchange rates.

As I mentioned earlier, we are reaffirming our 2012 EPS guidance of $2.62 to $2.72 but now expect to be toward the upper end of the range.

While we have reaffirmed our EPS guidance, certain components of 2012 guidance have been modified to reflect our current view credit market conditions.

For Moody's overall, the Company now expects full-year 2012 revenue to grow in the low double-digit percent range.

Full-year 2012 expenses are also projected to increase in the low double-digit percent range.

Full-year 2012 operating margin is still projected to be approximately 39% which includes the full-year impact of our fourth quarter 2011 acquisition.

Our effective tax rate is still projected to be approximately 33%.

As Linda mentioned earlier, we still expect approximately $200 million of share repurchase over the course of 2012, subject to available cash flow, market conditions, and other ongoing capital allocation decisions.

For the global MIS business, revenue for full-year 2012 is now expected to increase in the mid- to high single-digit percent range.

Within the US, MIS revenue is expected to increase in the low double-digit percent range while non-US revenue is now expected to increase in the low single-digit percent range.

Corporate Finance revenue is now forecasted to grow in the low double-digit percent range.

Revenue from each of Structured Finance and Financial Institutions is now projected to be flat to slightly up while Public Project and Infrastructure Finance is now expected to increase in the mid-teen percent range.

For Moody's Analytics, the full-year 2012 revenue is still expected to increase in the high teens percent range both inside and out the US.

Revenue growth is still projected in the mid-single-digit percent range for Research, Data and Analytics, and in the low 20% range for Enterprise Risk Solutions, reflecting growth in the core business as well as the December, 2011 acquisition of Barrie & Hibbert.

Professional Services revenue is now projected to grow by approximately 80%, inclusive of revenue from the late 2011 acquisition of a majority stake in Copal Partners and continued growth in our existing training and education businesses.

This concludes our prepared remarks, and joining us for the question-and-answer session is Michel Madelain, President and Chief Operating Officer of Moody's Investor Service, and Mark Almeida, President of Moody's Analytics.

We would be pleased to take any questions you may have.

(Operator Instructions) Peter Appert, Piper Jaffray.

Thanks.

Linda, I was hoping you might give us a little more color on what's driving the rate of cost growth?

I ask this in the context of trying to understand why perhaps we're not seeing a little bit more margin leverage in the ratings business given the strength in revenues?

The last part of this question is, where has your thoughts evolved in terms of where you think margins can go in the ratings business over the next couple of years?

Thank you.

Sure, Peter.

Let me try to tackle your question by comparing margins this quarter which is 41.6% as compared to first quarter of last year which was 43.3%.

So, our margin is lower in the first quarter of 2012 by 170 basis points.

As we noted in the script, about 50% of that is acquisition-related, or 90 basis points.

Of that, the purchase price amortization for the acquisition was about 50% of the 90 basis points, or 45.

The other piece of that 80 basis points was IT-related costs.

We have a little bit of an anomalous situation here on the IT front as we're getting ready for Dodd-Frank Act implementation because we are not building permanent systems but rather making enhancements to our existing systems.

We have to expense those costs.

So, expenses are running a little bit higher on the IT front than they might usually for this couple of quarters.

If you want to think about that, you might have certainly 120 basis points or so that would normally go back to the margin that would not be doing so for the first quarter of this year.

Looking forward, I think the longer-term, we do expect our margin to be back over 40%, but I think we have to get through this period of expense ramp relating to these regulatory changes as we have talked about.

Peter, it's Ray.

Just to add to that.

While we are working our way and are fairly well through the Dodd-Frank processes at this point and expect that that's going to be finalized by the SEC this year.

We do have the uncertainty around Europe.

That's going to be something we're going to have to address as the CRA3 deliberations become more clear.

We hope over the next few months.

Ray, do think there are some cost implications potentially associated with that?

It depends on what the final proposals are.

But yes, I think we have to assume that there are some cost implications associated with that legislation -- or legislative proposals.

On the regulatory stuff, Ray.

I think -- I'm not sure if I heard this correctly.

But, I thought maybe in your prepared comments you were implying that you're feeling that the Franken amendment is, in fact, going to happen.

Am I interpreting that correctly?

No, I think we are just following the expected timetable for the SEC to produce its study, and we don't know what their findings will be from that study.

Okay.

Got it.

Last thing, Ray.

Any comments on the pipeline in terms of what you're seeing currently in terms of near-term trends in issuance?

Then, associated with that, your revenue performance the last several quarters has been very strong, obviously.

It looks like you may be picking up some market share relative to other competitors.

Can you comment on that, please?

Yes.

I'd be happy to make some high-level comments on the pipeline, and I think Linda have some information as well.

The pipeline -- obviously, the first quarter was a strong quarter, particularly in the Corporate and Public Project and Infrastructure Finance areas.

We do believe that that has incorporated some pull-forward.

So, issuance that we were expecting later in the year has been pulled into the early part of the year.

For Moody's Investor Service, I think at this point, we now expect to see a stronger first half than second half of the year.

For Moody's Analytics, we still expect to see a stronger second half than first half of the year.

That being said, most of the activity we've seen has been refinancing.

We have not seen an active market particularly in the corporate area around mergers and acquisitions-based financing, share repurchase, business investment spending.

Depending on how confidence evolves throughout this year, we may have a stronger second half than would be implied from a more purely refinanced-based environment.

The only -- before turning this over to Linda on what the pipeline looks like.

The only other comment I would make here is that we -- as we've seen over the last 18 months, we expect to see periods of optimism and pessimism really related to the macroeconomic conditions and the European sovereign debt crisis.

So, the pipelines are going to be subject to whether those period of optimism and pessimism are causing investors to move away from risk.

Just, expect some volatility in issuance, both positively and negatively.

Peter, it's Linda.

Let me give you some specifics, and I want to speak first to the US high-grade market, and then I'm going to speak to the high-yield market.

As you know, we've just come off a gangbusters first quarter in which average monthly US high-grade volume issuance was about $95 billion.

Then, we came into April, and April high-grade volume is expected to be about $30 billion for the month.

If we had looked at recent trends, we would have expected $42 billion.

That would be the 10-year average for April.

So, April is running light.

Last week, we saw about $5 billion of issuance.

This year -- this week, we have seen about $5 billion to $10 billion of issuance.

April is quite a bit of softening coming off a very strong first quarter.

May is calling for $70 billion to $80 billion of high-grade issuance, and we're starting to see pipeline rebuild.

Again, we are concerned about the situation in Europe, and any sort of weak debt auctions coming out of Europe can throw a wrench into the process pretty quickly.

2012, according to some of the banks here, we are still looking at $850 billion of issuance.

That's up 15% from last year.

As Ray said, we have seen some pull-forward.

It's going to be interesting to see what happens for the rest of the year.

Turning to high-yield, a bit of a different story.

This is actually quite interesting because the high-yield pipeline is still reasonably strong.

For second quarter 2011, the entire leveraged market was about $27 billion of pipeline.

High-yield financing was about $6 billion of that.

Leveraged loans about $21 billion.

That is the next highest after second quarter of last year where we saw $64 billion of pipeline.

High-yield looks pretty good, and if it all keeps coming that would be very helpful to us.

As Ray mentioned, we are very conscious about the risk on, risk off sort of phenomenon that we have been seeing.

With respect to your market share question, Peter.

I think it's as much a mix issue as anything else.

Some areas of the market where Moody's is particularly strong have been active such as the commercial real estate area in the US.

But, there are some other areas where our coverage has been weaker, such as in European structured finance where some of the rating actions that relate to sovereigns and how that impacts the structured portions of the structured market have not been helpful to share.

Great.

Thank you.

Craig Huber.

Huber Research Partners.

Good morning.

First, Linda.

Can you give us what the incentive compensation was in the quarter?

Yes.

Hang on just one second while we get that for you, Craig.

Incentive compensation was $27.5 million.

That was 11% of total compensation, and total comp expenses for the first quarter are running about $250 million, Craig.

Okay, great.

And then also, within that MIS, could you break down a percentage basis transaction versus non-transactions?

I typically ask you across Structured Finance, Corporate Financial, PPIF, if you would?

Sure.

Absolutely.

First quarter, for Corporate Finance, we're looking at 73% transaction and 27% relationship.

So, quite heavy on the transaction side for the first quarter given the way that the markets have been running.

Structured Finance is 56% transaction and 44% relationship.

Financial Institutions, 38% transaction and 62% relationship.

Public Projects and Infrastructure, 62% transaction and 38% relationship.

With, total MIS is 62% and 38%.

Moody's Analytics, of course, runs sort of the reverse of that -- 20% transaction and 80% relationship.

For the Company as a whole, first quarter 2012 -- 49% transaction and 51% relationship.

My other question -- if you could break down a percentage basis within Structured Finance, ABS, RMBS, et cetera.

Do the same for Corporate Financial and PPIF.

Sure.

Hang on just a second.

In terms of Corporate Finance revenue, investment grade -- and again, as we have said earlier in the call, we are looking at a total line of $200 million for Corporate for the first quarter 2012.

Investment grade was 22% of that, or $44 million.

High-yield was 26% of that, or $51 million.

Bank loans, 17% at $34.7 million, and other was 35%, or $70 million.

Again, the dramatic swing for us was the change in high-yield revenues from -- for example, the fourth quarter of 2011 which was only $15 million.

So, $36.5 million increase in high-yield is obviously very helpful to us.

Let me go on to Structured.

Let's see if we can get those for you.

Total Structured line was $94.3 million.

After-tax, 29% of that revenue, or $27 million.

RMBS was 25% at $23.3 million.

Again, that does include covered bonds.

Commercial real estate, 26%, or $24 million.

And, derivatives 21%, $19.6 million.

We are seeing some good interest and good pipeline around CLOs which would be another of the bright spots in Structured Finance.

Then, could you do it for Financial and PPIF, if you would?

Sure.

For FIG, total Iine was $78.8 million.

Banking was $55.9 million of that, or 71%.

Insurance was $18.1 million, or 23%, and Managed Investments, almost $5 million, or 6%.

For Public Projects and Infrastructure, public finance and sovereigns, $39 million which is 50%.

MUNIs, just about $5 million, which is 6%, and Project and Infrastructure, $35 million which was 44% of the PPIF revenue line.

As we had noted earlier, again -- nice pickup in the Project and Infrastructure line.

Lastly, if I could, if one of you could just update us on the various lawsuits out there?

Please, thanks.

Sure.

In terms of an overview in ratings-related litigation.

We still have 20 open cases in the US and a little over 30 cases have been closed, dismissed, or withdrawn.

Outside the US, we have about a dozen open cases and about a half dozen cases that have been closed.

As far as probably the most notable litigations -- the CalPERS case --we filed an appeal to the Court's decision on the anti-SLAPP statute in March.

We don't know when that appeal will be argued or decided.

And in Abu Dhabi, we have filed -- first of all, the discovery has been completed in Abu Dhabi, and we filed a motion for summary judgment in January.

But again, we don't know when that will be argued or decided.

Okay, thank you.

Doug Arthur.

Evercore Partners.

A quick question on public finance in the quarter.

Ray, do you think that's more of a one-off in the sense that last year the market was sort of paralyzed over bankruptcy concerns.

So, this is sort of the snap-back, and then, going forward things will settle down?

Or, do you think with state finances improving, this could -- you could have a pretty good run here for the rest of the year, particularly in the US.

We think public finance issuance is probably going to be fairly steady for the rest of the year.

We did have a good first quarter, but we're not anticipating a big drop-off for full-year.

And, Project Infrastructure is the general source of the strength?

No.

Well, Project and Infrastructure has been strong.

But, we've also seen an increase in issuance at the regional government level, below the state level.

Okay.

Thank you.

(Operator Instructions) Jennifer Huang, UBS.

I was wondering just to follow up to Peter's question.

Expenses?

Maybe for the rest of the year in terms of the guidance.

How much of that do you think is driven by maybe investments into the Moody's Analytics, particularly the Enterprise Solutions business versus just the credit rating business?

Sure, Jen.

It's Linda.

I'll take a shot at that.

As we've said before, we expect our expenses to ramp up by about $40 million over the course of the year, and we would continue to expect that to happen.

The ramp may be a little bit deeper in the second and third quarters than some of the analysts have noticed.

So, just something to look at in terms of the quarter-by-quarter spread on that.

There are a number of things that we are doing in terms of our investments, and more than 50% of the growth in those expenses are due to headcount growth and those are in the revenue areas, as you noted.

For the rating agency, it's Corporate Finance, Public Projects and Infrastructure, and for Moody's Analytics, in Enterprise Risk Solutions and sales.

Of the expense growth that we are projecting, about 50% of it is headcount growth to drive the revenue lines in those growing businesses.

About $7 million is acquisition-related costs.

Some of that is the amortization from intangibles.

We've mentioned this on the last quarter call, we said this would be something that we would be working with that would take up expenses.

Lastly, as I mentioned to Peter, we are seeing a bit of a bump up in the expense side of our IT budget of running a little bit more heavily toward expense rather than capitalization as we get things ready for Dodd-Frank.

That would explain the majority of the cost ramp coming in 2012.

Does that help you?

Yes.

Maybe just a quick follow-up on the headcount growth.

Maybe just provide some color on to what extent you can -- or, in terms of the employees -- maybe switch from -- allow them to switch from one area of credit ratings to another?

So, for example, from [base] Structured Finance to PPIF area?

Is that possible at all?

Ray will answer that part, and then, I will talk more generally about headcount additions.

Go ahead.

Yes, there is some ability to move professional staff between areas in MIS.

But, I would note that their lines of business are growing.

And so, that's does provide a constraint in terms of at least the financial ability to make moves as opposed to for just developmental purposes.

The other thing I would just note is that a good portion of the headcount increase, obviously, is related to the acquisitions that we did make.

We have increased in headcount for the existing businesses that are themselves growing, but then as well, from the acquisitions.

Jen, let me give you some quick details.

This first quarter '12 versus first quarter '11, we've added about 430 people in the existing businesses.

About 200 of those, Moody's Analytics -- again to support the sales efforts.

The Enterprise Risk Solutions business.

And, some of the other things you'll note that the top line growth is Moody's Analytics has been quite stellar, and we do need people to support that.

In the rating agency, we've added 156 people.

We're supporting those higher volumes, particularly as I said, in Corporate and PPIF.

We have not added heads in Structured Finance.

We have added some people as we get ready for Dodd-Frank into some of the regulatory functions.

For Shared Services, we have about 70 headcount, and some of those folks just compliance, various business support initiatives, and recruiting.

We are cautious to add people on the revenue driving side, and we think that what you're seeing on the top line reflects that we've invested pretty well in order to have that happen.

Okay, great.

Thanks so much for the color.

Sure.

(Operator Instructions) Peter Appert, Piper Jaffray.

Linda, I was just wondering specifically if there's any reason you chose not to buy back stock in the first quarter?

Sure, Peter.

As I think we said we had $815 million of total cash at the end of the quarter.

80% of it is offshore, and a lot of that is permanently reinvested offshore.

We do that because it has dropped down our tax rate nicely from above 40% a bunch of years ago to -- we're guiding to 33% for this year.

We've made real progress on the tax line which helps the shareholders quite a bit.

Perhaps the other side of that is, we have about $180 million in cash in the US here.

The first quarter is, as you heard from McGraw-Hill earlier in the week, our seasonally heavy cash outflow quarter.

We have bonuses to pay.

We have taxes to pay.

We have dividends to pay.

It's nothing more than available cash, and we are looking to get back into the market, as Ray said, to do $200 million of repurchases for the rest of the year.

Got it.

Thank you.

Craig Huber.

Huber Research Partners.

Back on the MIS for a second.

You are up internationally 6% in the quarter.

Can you break apart how Asia did there versus how Europe did please?

Yes.

We can talk generally about Europe versus other international.

I won't be able to give you a detailed breakout within Asia.

But, Europe, for the first quarter overall, was down about 4%, and other international was up about 30%.

So, the overall was up about 6% for MIS outside the US.

Great.

Thank you.

Okay.

There are no further questions at this time.

Okay.

I'd just like to thank everyone for joining us, and we will talk to you after the second quarter.

Thank you.

This concludes Moody's first quarter earnings call.

As a reminder, a replay of this call will be available after 3.30 PM Eastern Time on Moody's Investor Relations website.

Thank you.

You may now disconnect.