Overview: 6–7Capital Management Philosophy
S&P Global’s capital management philosophy* is focused on:
- Responsible stewardship of shareholder capital
- Business line accountability
- A capital-light, cash flow generative business model
- Robust, investment-grade balance sheet
- A rigorous framework for capital allocation
- Disciplined acquisition strategy
- Returning capital to shareholders
…resulting in strong total shareholder returns
*Introduced in 2017
Capital Management Starts with Free Cash Flow Generation
Non-GAAP pro forma adjusted free cash flow excluding certain items increased to approximately $4.0 billion in 2022
See page 73 for 11-year Free Cash Flow table and footnotes
Annual Free Cash Flow Returned to Shareholders(1)
Upon the close of the merger on February 28, 2022, S&P Global announced a $12 billion accelerated share repurchase program. The ASR was completed by December 2022 with the final delivery of shares in 1Q 2023. Additionally, the Company paid dividends of $1,024 million in 2022.
See pages 75 and 76 for the dividend and share repurchase tables
See footnotes at bottom of this page
Setting Clear Financial Metrics for Organic and Inorganic Investments
Key Financial Metrics
- Net Present Value (NPV)
- Cash Return on Invested Capital (ROIC)
- Internal Rate of Return (IRR)
- Earnings contribution
The Company continuously analyzes a wide range of internal investments and acquisitions to deliver upon strategic goals and enhance competitive positioning, allocating capital to the highest returning projects and holding our management team accountable.
The Company is interested in opportunities that:
- Augment benchmarks, proprietary data, and tools and analytics capabilities
- Provide geographic diversification
- Bolster recurring revenues
- Provide synergies
Maintaining a Prudent and Flexible Balance Sheet
| Capital Position | ||
| (dollars in millions) (years ended December 31) | 2021 | 2022 |
| Cash and cash equivalents* | $6,505 | $ 1,287 |
| Short- and Long-term debt | $4,114 | $10,956 |
| Adjusted gross debt to adjusted EBITDA | 1.8x(2) | 2.7x(3) |
* Cash and cash equivalents include restricted cash
Financial Health Targets
- Committed to investment-grade credit rating
- Targeting a post-merger adjusted gross debt to adjusted EBITDA ratio of 2.0x to 2.5x
Delivering Strong Total Shareholder Return
The value of $100 invested on December 31, 2017 is $207 at the end of 2022. Total return includes all reinvestment of dividends through December 31, 2022.
S&P Global is committed to returning excess capital to shareholders while maintaining a strong balance sheet
Notes:
Free cash flow represents operating cash flow less capex, distributions to noncontrolling interest holders, and certain excluded items. Target includes both dividends and share repurchases
2021 adjusted gross debt includes debt, unfunded portion of pension liabilities (~$250 million), S&P DJI put option (~$3.4 billion), and the expected NPV of operating leases (~$588 million)
2022 adjusted gross debt includes debt, unfunded portion of pension liabilities (~$190 million), S&P DJI put option (~$3.3 billion), and the expected NPV of operating leases (~$695 million)
Calculated using dividend-adjusted closing share price
Reflects the peer group used in the Company’s Form 10-K filed with the SEC on February 10, 2023, consisting of: Moody’s Corporation, CME Group Inc., MSCI Inc., FactSet Research Systems Inc., Verisk Analytics, Inc., and Intercontinental Exchange, Inc.