Morningstar, Inc. (Nasdaq: MORN), a leading provider of
independent investment insights, posted solid first-quarter revenue
growth, driven by strength across its business.
“Morningstar celebrates its 40th anniversary next month,” said
Kunal Kapoor, Morningstar's chief executive officer. “We’re proud
of the difference we’ve made on behalf of investors, the long-term
returns we have delivered for our shareholders, and the distinctive
workplace we've built for our colleagues. With a strong start to
2024, we remain focused on our goal of generating durable,
long-term growth."
The Company's quarterly shareholder letter provides more context
on its quarterly results and business and can be found at
shareholders.morningstar.com.
First-Quarter 2024 Financial Highlights
- Reported revenue increased 13.2% to $542.8 million compared to
the prior-year period; organic revenue grew 12.9%.
- Reported operating income increased to $92.6 million from $24.5
million; adjusted operating income increased 113.9%.
- Diluted net income (loss) per share increased to $1.49 versus
$(0.18); adjusted diluted net income per share increased 208.9% to
$1.73.
- Cash provided by operating activities increased 300.0% to $93.6
million. Free cash flow increased to $59.5 million compared to
negative $6.1 million in the prior-year period.
First-Quarter 2024 Results
Revenue increased 13.2% to $542.8 million on a reported basis
and 12.9% on an organic basis versus the prior-year period, driven
by strength across the business. Morningstar Data and Analytics,
PitchBook, and Morningstar Credit were the biggest contributors to
reported revenue growth.
Operating expense decreased 1.1% to $450.2 million. Excluding
the impact of M&A-related expenses, amortization in both
periods, and costs related to the transition of the Company's China
activities in the prior-year period, operating expense increased
1.0% in the quarter.
The largest contributor to the decline in reported operating
expense was professional fees, primarily due to lower expenses for
third-party resources supporting M&A integration-related
activity. This decrease was partially offset by increases in
compensation and benefits.
First-quarter operating income was $92.6 million, compared to
$24.5 million in the prior-year period. Adjusted operating income
was $110.8 million, an increase of 113.9%. First-quarter operating
margin was 17.1%, compared with 5.1% in the prior-year period.
Adjusted operating margin was 20.4% in the first quarter of 2024,
versus 10.8% in the prior-year period.
Net income (loss) in the first quarter of 2024 was $64.2
million, or $1.49 per diluted share, compared with net income
(loss) of $(7.6) million, or $(0.18) per diluted share, in the
first quarter of 2023. Adjusted diluted net income per share
increased 208.9% to $1.73 in the first quarter of 2024, compared
with $0.56 in the prior-year period.
The Company's income tax expense was $21.3 million, an increase
of $12.9 million compared to the prior-year period. The Company's
effective tax rate was 24.9% in the first quarter of 2024. The
Company's prior-year period effective tax rate was not meaningful
due to the low level of pretax income in the period.
Segment Highlights
Morningstar Data and Analytics
Morningstar Data and Analytics contributed $196.7 million to
consolidated revenue and $16.9 million to consolidated revenue
growth, with revenue increasing 9.4% in the first quarter versus
the prior-year period, or 8.9% on an organic basis. Growth was
primarily driven by strength in Morningstar Data and Morningstar
Direct. Both product areas benefited from growth in North America
and Europe, while managed investment data, including mutual fund
data, continued to be a key driver of higher revenue for
Morningstar Data. Morningstar Direct licenses increased 0.7%.
Morningstar Advisor Workstation also made a positive contribution
to growth in the quarter.
Morningstar Data and Analytics adjusted operating income
increased 12.7% to $91.2 million, and adjusted operating margin
increased 1.4 percentage points to 46.4% compared with the
prior-year period.
PitchBook
PitchBook contributed $147.6 million to consolidated revenue and
$16.5 million to consolidated revenue growth, with revenue
increasing 12.6% on a reported and organic basis. Growth was
primarily driven by the PitchBook platform with licensed users
growing 10.5%. With the substantial completion of the Leveraged
Commentary & Data (LCD) integration, LCD's core news, research,
and data are now available on the platform. Legacy LCD clients are
starting to successfully migrate to the PitchBook platform and are
included in PitchBook licensed user counts. PitchBook platform
growth drivers were consistent with recent quarters with revenue
increasing primarily due to strength in PitchBook's core investor
and advisor client groups which offset some softness in
corporates.
PitchBook segment adjusted operating income increased 31.6% to
$40.0 million, and adjusted operating margin increased 3.9
percentage points to 27.1%.
Morningstar Wealth
Morningstar Wealth contributed $59.0 million to consolidated
revenue and $4.1 million to consolidated revenue growth, with
revenue increasing 7.5% in the first quarter versus the prior-year
period, or 7.7% on an organic basis. Growth was primarily driven by
Investment Management, supported by higher revenue for strategist
model portfolios offered on third-party platforms and revenue
growth for the international wealth platform.
Reported assets under management and advisement (AUMA) increased
12.3% to $57.6 billion compared with the prior-year period, helped
by strong market performance which drove higher asset values.
Positive net flows to Morningstar Managed Portfolios over the
trailing 12 months primarily reflected strong net inflows outside
the United States (U.S.). Those offset lower AUM for Institutional
Asset Management which experienced significant expected outflows
from a large institutional client.
Morningstar Wealth adjusted operating loss was $5.6 million,
compared to a $14.6 million loss in the prior-year period and
adjusted operating margin was negative 9.5%, compared with negative
26.6%. The loss narrowed compared to the prior-year period due in
part to cost containment efforts, including targeted
reorganizations in 2023 and a focus on discretionary expenses.
Morningstar Credit
Morningstar Credit contributed $60.3 million to consolidated
revenue and $13.5 million to consolidated revenue growth, with
revenue increasing 28.8% in the first quarter versus the prior-year
period, or 27.9% on an organic basis. Growth was driven by higher
revenue in the U.S., Canada, and Europe. Ratings-related revenue
increased across asset classes, compared to a relatively soft
prior-year period, with particular strength in U.S. commercial and
residential mortgage-backed securities. Increased revenue from
financial institution ratings also contributed to growth, as did
higher corporate ratings revenue, especially in Europe.
Morningstar Credit adjusted operating income was $12.3 million,
compared with a $4.0 million adjusted operating loss in the
prior-year period and adjusted operating income margin was 20.4%,
compared with negative 8.5% in the prior-year period.
Morningstar Retirement
Morningstar Retirement contributed $28.4 million to consolidated
revenue and $3.2 million to consolidated revenue growth, with
revenue increasing 12.7% in the first quarter versus the prior-year
period on a reported and organic basis. AUMA increased 19.6% to
$235.9 billion compared with the prior-year period, primarily
driven by strong market performance. Net inflows to Managed
Accounts over the trailing 12 months also contributed to higher
AUMA, supported by participant growth and flows to Advisor Managed
Accounts.
Morningstar Retirement adjusted operating income increased 26.8%
to $14.2 million and adjusted operating margin increased 5.6
percentage points to 50.0%.
Corporate and All Other
Revenue attributable to Corporate and All Other contributed
$50.8 million to consolidated revenue and $8.9 million to
consolidated revenue growth, with revenue increasing 21.2% in the
first quarter versus the prior-year period primarily driven by
growth in Morningstar Indexes and Morningstar Sustainalytics.
The increase in Morningstar Indexes revenue was driven primarily
by higher investable product revenue as market performance and net
inflows over the trailing 12 months increased asset value linked to
Morningstar Indexes by 13.3% to $190.2 billion. Morningstar Indexes
licensed data sales also increased.
The increase in Morningstar Sustainalytics revenue was supported
by growth in license-based revenue, primarily driven by regulatory
use cases in Europe. Transaction-based revenue also grew due to
increased issuance of sustainable bonds.
The impact of Corporate and All Other on consolidated adjusted
operating income was negative $41.3 million, compared with negative
$52.1 million in the prior-year period.
Balance Sheet and Capital Allocation
As of March 31, 2024, the Company had cash, cash equivalents,
and investments totaling $409.1 million and $949.4 million of debt,
compared with $389.0 million and $972.4 million, respectively, as
of Dec. 31, 2023.
Cash provided by operating activities increased 300.0% to $93.6
million for the first quarter of 2024, compared to the prior-year
period. Free cash flow increased to $59.5 million, compared to
negative $6.1 million in the prior-year period. The increases in
cash provided by operating activities and free cash flow were
driven primarily by higher cash earnings. As previously disclosed,
operating cash flows were negatively impacted in the prior-year
period by certain items totaling $11.4 million. In addition, the
Company paid $17.3 million in dividends in the quarter.
2024 Annual Meeting of Shareholders
The Company's 2024 Annual Meeting of Shareholders will be held
at 9 a.m. Central time on Friday, May 10, at Morningstar's
corporate headquarters at 22 W. Washington St. in Chicago. If you
would like to attend, either in person or virtually, please
register here. The meeting will cover the official business
described in Morningstar's 2024 proxy statement and include
presentations from Morningstar's management team, along with a live
question and answer session open to participants both in-person and
online.
Use of Non-GAAP Financial Measures
The tables at the end of this press release include a
reconciliation of the non-GAAP financial measures used by the
Company to comparable GAAP measures and an explanation of why the
Company uses them.
Investor Communication
Morningstar encourages all interested parties — including
securities analysts, current shareholders, potential shareholders,
and others — to submit questions in writing. Investors and others
may send questions about Morningstar’s business to
investors@morningstar.com. Morningstar will make written responses
to selected inquiries available to all investors at the same time
in Form 8-Ks furnished to the SEC, periodically.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment insights in North America, Europe, Australia, and Asia.
The Company offers an extensive line of products and solutions that
serve a wide range of market participants, including individual and
institutional investors in public and private capital markets,
financial advisors and wealth managers, asset managers, retirement
plan providers and sponsors, and issuers of fixed-income
securities. Morningstar provides data and research insights on a
wide range of investment offerings, including managed investment
products, publicly listed companies, private capital markets, debt
securities, and real-time global market data. Morningstar also
offers investment management services through its investment
advisory subsidiaries, with approximately $294 billion in AUMA as
of March 31, 2024. The Company operates through wholly- or
majority-owned subsidiaries in 32 countries. For more information,
visit www.morningstar.com/company. Follow Morningstar on X
(formerly known as Twitter) @MorningstarInc.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements as that
term is used in the Private Securities Litigation Reform Act of
1995. These statements are based on our current expectations about
future events or future financial performance. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, and often contain words such as “consider,”
“future,” “maintain,” “may,” “expect,” “potential,” “anticipate,”
“believe,” “continue,” “will,” or the negative thereof, and similar
expressions. These statements involve known and unknown risks and
uncertainties that may cause the events we discuss not to occur or
to differ significantly from what we expect. For us, these risks
and uncertainties include, among others, failing to maintain and
protect our brand, independence, and reputation; failure to prevent
and/or mitigate cybersecurity events and the failure to protect
confidential information, including personal information about
individuals; compliance failures, regulatory action, or changes in
laws applicable to our credit ratings operations, investment
advisory, environmental, social, and governance (ESG) and index
businesses; failing to innovate our product and service offerings,
or anticipate our clients’ changing needs; the impact of artificial
intelligence (AI) and related technologies on our business, legal
and regulatory exposure profile and reputation; failing to detect
errors in our products or the failure of our products to perform
properly due to defects, malfunctions or similar problems; failing
to recruit, develop, and retain qualified employees; prolonged
volatility or downturns affecting the financial sector, global
financial markets, and the global economy and its effect on our
revenue from asset-based fees and our credit ratings business;
failing to scale our operations and increase productivity in order
to implement our business plans and strategies; liability for any
losses that result from errors in our automated advisory tools or
errors in the use of the information and data we collect;
inadequacy of our operational risk management, business continuity
programs and insurance coverage in the event of a material
disruptive event; failing to efficiently integrate and leverage
acquisitions and other investments, which may not realize the
expected business or financial benefits, to produce the results we
anticipate; failing to maintain growth across our businesses in
today's fragmented geopolitical, regulatory and cultural world;
liability relating to the information and data we collect, store,
use, create, and distribute or the reports that we publish or are
produced by our software products; the potential adverse effect of
our indebtedness on our cash flows and financial and operational
flexibility; challenges in accounting for tax complexities in the
global jurisdictions which we operate in and their effect on our
tax obligations and tax rates; and failing to protect our
intellectual property rights or claims of intellectual property
infringement against us. A more complete description of these risks
and uncertainties, among others, can be found in our filings with
the Securities and Exchange Commission (SEC), including our most
recent Reports on Forms 10-K and 10-Q. If any of these risks and
uncertainties materialize, our actual future results and other
future events may vary significantly from what we expect. We do not
undertake to update our forward-looking statements as a result of
new information, future events or otherwise, except as may be
required by law. You are, however, advised to review any further
disclosures we make on related subjects, and about new or
additional risks, uncertainties and assumptions in our future
filings with the SEC on Forms 10-K, 10-Q and 8-K.
Morningstar, Inc. and
Subsidiaries
Unaudited Condensed Consolidated
Statements of Income
Three months ended March
31,
(in millions, except per share
amounts)
2024
2023
Change
Revenue
$
542.8
$
479.7
13.2
%
Operating expense:
Cost of revenue
218.1
218.8
(0.3
)%
Sales and marketing
104.6
107.6
(2.8
)%
General and administrative
80.3
84.0
(4.4
)%
Depreciation and amortization
47.2
44.8
5.4
%
Total operating expense
450.2
455.2
(1.1
)%
Operating income
92.6
24.5
278.0
%
Operating margin
17.1
%
5.1
%
12.0 pp
Non-operating expense, net:
Interest expense, net
(11.5
)
(13.3
)
(13.5
)%
Expense from equity method transaction,
net
—
(11.8
)
NMF
Other income, net
5.9
2.7
118.5
%
Non-operating expense, net
(5.6
)
(22.4
)
(75.0
)%
Income before income taxes and equity in
investments of unconsolidated entities
87.0
2.1
NMF
Equity in investments of unconsolidated
entities
(1.5
)
(1.3
)
15.4
%
Income tax expense
21.3
8.4
153.6
%
Consolidated net income (loss)
$
64.2
$
(7.6
)
NMF
Net income (loss) per share:
Basic
$
1.50
$
(0.18
)
NMF
Diluted
$
1.49
$
(0.18
)
NMF
Weighted average shares outstanding:
Basic
42.7
42.5
Diluted
43.0
42.5
_________________________________________________________________
NMF - Not meaningful, pp - percentage
points
Morningstar, Inc. and
Subsidiaries
Unaudited Condensed Consolidated
Balance Sheets
(in millions)
As of March 31, 2024
As of December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
353.7
$
337.9
Investments
55.4
51.1
Accounts receivable, net
326.2
343.9
Income tax receivable, net
—
0.6
Other current assets
95.3
82.2
Total current assets
830.6
815.7
Goodwill
1,574.1
1,578.8
Intangible assets, net
463.4
484.4
Property, equipment, and capitalized
software, net
210.8
207.7
Operating lease assets
156.5
163.9
Investments in unconsolidated entities
96.1
100.2
Deferred tax assets, net
19.7
14.6
Other assets
38.2
38.1
Total assets
$
3,389.4
$
3,403.4
Liabilities and equity
Current liabilities:
Deferred revenue
$
565.2
$
517.7
Accrued compensation
122.9
214.4
Accounts payable and accrued
liabilities
72.0
78.4
Operating lease liabilities
34.7
36.4
Current portion of long-term debt
32.1
32.1
Other current liabilities
19.9
1.8
Total current liabilities
846.8
880.8
Operating lease liabilities
143.8
151.4
Accrued compensation
23.3
23.7
Deferred tax liabilities, net
32.8
35.6
Long-term debt
917.3
940.3
Other long-term liabilities
42.3
43.8
Total liabilities
2,006.3
2,075.6
Total equity
1,383.1
1,327.8
Total liabilities and equity
$
3,389.4
$
3,403.4
Morningstar, Inc. and
Subsidiaries
Unaudited Condensed Consolidated
Statements of Cash Flows
Three months ended March
31,
(in millions)
2024
2023
Operating activities
Consolidated net income (loss)
$
64.2
$
(7.6
)
Adjustments to reconcile consolidated net
income (loss) to net cash flows from operating activities
43.0
9.0
Changes in operating assets and
liabilities, net
(13.6
)
22.0
Cash provided by operating activities
93.6
23.4
Investing activities
Capital expenditures
(34.1
)
(29.5
)
Purchases of investments in unconsolidated
entities
(2.8
)
(0.1
)
Other, net
10.2
28.9
Cash used for investing activities
(26.7
)
(0.7
)
Financing activities
Dividends paid
(17.3
)
(15.9
)
Repayments of debt
(113.1
)
(73.1
)
Proceeds from debt
90.0
95.0
Payment of acquisition-related
earn-outs
—
(45.5
)
Other, net
(3.1
)
(9.3
)
Cash used for financing activities
(43.5
)
(48.8
)
Effect of exchange rate changes on cash
and cash equivalents
(7.6
)
1.7
Net increase (decrease) in cash and cash
equivalents
15.8
(24.4
)
Cash and cash equivalents-beginning of
period
337.9
376.6
Cash and cash equivalents-end of
period
$
353.7
$
352.2
Morningstar, Inc. and
Subsidiaries
Supplemental Data (Unaudited)
Three months ended March
31,
(in millions)
2024
2023
Change
Organic (1)
Morningstar Data and Analytics
Revenue
$
196.7
$
179.8
9.4
%
8.9
%
Adjusted Operating Income
91.2
80.9
12.7
%
Adjusted Operating Margin
46.4
%
45.0
%
1.4 pp
PitchBook
Revenue
$
147.6
$
131.1
12.6
%
12.6
%
Adjusted Operating Income
40.0
30.4
31.6
%
Adjusted Operating Margin
27.1
%
23.2
%
3.9 pp
Morningstar Wealth
Revenue
$
59.0
$
54.9
7.5
%
7.7
%
Adjusted Operating Income (Loss)
(5.6
)
(14.6
)
(61.6
)%
Adjusted Operating Margin
(9.5
)%
(26.6
)%
17.1 pp
Morningstar Credit
Revenue
$
60.3
$
46.8
28.8
%
27.9
%
Adjusted Operating Income (Loss)
12.3
(4.0
)
NMF
Adjusted Operating Margin
20.4
%
(8.5
)%
28.9 pp
Morningstar Retirement
Revenue
$
28.4
$
25.2
12.7
%
12.7
%
Adjusted Operating Income
14.2
11.2
26.8
%
Adjusted Operating Margin
50.0
%
44.4
%
5.6 pp
Consolidated Revenue
Total Reportable Segments
$
492.0
$
437.8
12.4
%
Corporate and All Other (2)
50.8
41.9
21.2
%
Total Revenue
$
542.8
$
479.7
13.2
%
12.9
%
Consolidated Adjusted Operating
Income
Total Reportable Segments
$
152.1
$
103.9
46.4
%
Less: Corporate and All Other (3)
(41.3
)
(52.1
)
(20.7
)%
Adjusted Operating Income
$
110.8
$
51.8
113.9
%
Adjusted Operating Margin
20.4
%
10.8
%
9.6 pp
_________________________________________________________________
(1) Organic revenue is a non-GAAP measure
that excludes acquisitions, divestitures, the impacts of the
adoption of new accounting standards or revisions to accounting
practices, and the effect of foreign currency translations. In
addition, the calculation of organic revenue growth by product
revenue type compares the three months ended March 31, 2024 revenue
to the prior periods on the basis of the updated
classifications.
(2) Corporate and All Other provides a
reconciliation between revenue from our Total Reportable Segments
and consolidated revenue amounts. Corporate and All Other includes
Morningstar Sustainalytics and Morningstar Indexes as sources of
revenues. Revenue from Morningstar Sustainalytics was $30.8 million
and $27.3 million for the three months ended March 31, 2024 and
2023, respectively. Revenue from Morningstar Indexes was $20.0
million and $14.6 million for the three months ended March 31, 2024
and 2023, respectively.
(3) Corporate and All Other includes
unallocated corporate expenses of $40.9 million and $36.1 million
for the three months ended March 31, 2024 and 2023, respectively,
as well as adjusted operating income (loss) from Morningstar
Sustainalytics and Morningstar Indexes. Unallocated corporate
expenses include certain finance, human resources, legal,
marketing, and other management-related costs that are not
considered when segment performance is evaluated.
Morningstar, Inc. and
Subsidiaries
Supplemental Data (Unaudited)
As of March 31,
AUMA (approximate) ($bil)
2024
2023
Change
Morningstar Retirement
Managed Accounts
$
136.1
$
111.7
21.8
%
Fiduciary Services
57.8
50.6
14.2
%
Custom Models/CIT
42.0
34.9
20.3
%
Morningstar Retirement (total)
$
235.9
$
197.2
19.6
%
Investment Management
Morningstar Managed Portfolios
$
40.6
$
34.0
19.4
%
Institutional Asset Management
7.3
9.7
(24.7
)%
Asset Allocation Services
9.7
7.6
27.6
%
Investment Management (total)
$
57.6
$
51.3
12.3
%
Asset value linked to Morningstar Indexes
($bil)
$
190.2
$
167.8
13.3
%
Three months ended March
31,
2024
2023
Change
Average AUMA ($bil)
$
289.7
$
247.0
17.3
%
Morningstar, Inc. and Subsidiaries
Reconciliations of Non-GAAP Measures with the Nearest
Comparable GAAP Measures (Unaudited)
To supplement Morningstar’s condensed consolidated financial
statements presented in accordance with U.S. Generally Accepted
Accounting Principles (GAAP), Morningstar uses the following
measures considered as non-GAAP by the Securities and Exchange
Commission, including:
- consolidated revenue, excluding acquisitions, divestitures,
adoption of new accounting standards or revisions to accounting
practices (accounting changes), and the effect of foreign currency
translations (organic revenue);
- consolidated operating income, excluding intangible
amortization expense, all merger and acquisition (M&A)-related
expenses (including M&A-related earn-outs), and expenses
related to the significant reduction and shift of the Company's
operations in China (adjusted operating income);
- consolidated operating margin, excluding intangible
amortization expense, all M&A-related expenses (including
M&A-related earn-outs), and expenses related to the significant
reduction and shift of the Company's operations in China (adjusted
operating margin);
- consolidated diluted net income (loss) per share, excluding
intangible amortization expense, all M&A-related expenses
(including M&A-related earn-outs), items related to the
significant reduction and shift of the Company's operations in
China, and certain non-operating gains/losses (adjusted diluted net
income per share); and
- cash provided by or used for operating activities less capital
expenditures (free cash flow).
These non-GAAP measures may not be comparable to similarly
titled measures reported by other companies and should not be
considered an alternative to any measure or performance as
promulgated under GAAP.
Morningstar presents organic revenue because the Company
believes this non-GAAP measure helps investors better compare
period-over-period results, and Morningstar’s management team uses
this measure to evaluate the performance of the business.
Morningstar excludes revenue from acquired businesses from its
organic revenue growth calculation for a period of 12 months after
it completes the acquisition. For divestitures, Morningstar
excludes revenue in the prior-year period for which there is no
comparable revenue in the current period.
Morningstar presents adjusted operating income, adjusted
operating margin, and adjusted diluted net income per share to show
the effect of significant acquisition activity, better compare
period-over-period results, and improve overall understanding of
the underlying performance of the business absent the impact of
M&A and the shift of Morningstar's operations in China.
In addition, Morningstar presents free cash flow solely as
supplemental disclosure to help investors better understand how
much cash is available after making capital expenditures.
Morningstar's management team uses free cash flow to evaluate the
health of its business. Free cash flow should not be considered an
alternative to any measure required to be reported under GAAP (such
as cash provided by (used for) operating, investing, and financing
activities).
Three months ended March
31,
(in millions)
2024
2023
Change
Reconciliation from consolidated revenue
to organic revenue:
Consolidated revenue
$
542.8
$
479.7
13.2
%
Less: acquisitions
—
—
—
%
Less: accounting changes
—
—
—
%
Effect of foreign currency
translations
(1.2
)
—
NMF
Organic revenue
$
541.6
$
479.7
12.9
%
Reconciliation from consolidated operating
income to adjusted operating income:
Consolidated operating income
$
92.6
$
24.5
278.0
%
Add: Intangible amortization expense
(1)
17.7
17.5
1.1
%
Add: M&A-related expenses (2)
0.5
4.2
(88.1
)%
Add: M&A-related earn-outs (3)
—
—
—
%
Add: Severance and personnel expenses
(4)
—
1.1
NMF
Add: Transformation costs (4)
—
4.2
NMF
Add: Asset impairment costs (4)
—
0.3
NMF
Adjusted operating income
$
110.8
$
51.8
113.9
%
Reconciliation from consolidated operating
margin to adjusted operating margin:
Consolidated operating margin
17.1
%
5.1
%
12.0 pp
Add: Intangible amortization expense
(1)
3.2
%
3.6
%
(0.4) pp
Add: M&A-related expenses (2)
0.1
%
0.9
%
(0.8) pp
Add: M&A-related earn-outs (3)
—
%
—
%
0.0 pp
Add: Severance and personnel expenses
(4)
—
%
0.2
%
(0.2) pp
Add: Transformation costs (4)
—
%
0.9
%
(0.9) pp
Add: Asset impairment costs (4)
—
%
0.1
%
(0.1) pp
Adjusted operating margin
20.4
%
10.8
%
9.6 pp
Reconciliation from consolidated diluted
net income (loss) per share to adjusted diluted net income per
share:
Consolidated diluted net income (loss) per
share
$
1.49
$
(0.18
)
NMF
Add: Intangible amortization expense
(1)
0.30
0.30
—
%
Add: M&A-related expenses (2)
0.01
0.07
(85.7
)%
Add: M&A-related earn-outs (3)
—
—
—
%
Add: Severance and personnel expenses
(4)
—
0.02
NMF
Add: Transformation costs (4)
—
0.07
NMF
Add: Asset impairment costs (4)
—
0.01
NMF
Less: Non-operating (gains) losses (5)
(0.07
)
0.27
NMF
Adjusted diluted net income per share
$
1.73
$
0.56
208.9
%
Reconciliation from cash provided by
operating activities to free cash flow:
Cash provided by operating activities
$
93.6
$
23.4
300.0
%
Capital expenditures
(34.1
)
(29.5
)
15.6
%
Free cash flow
$
59.5
$
(6.1
)
NMF
______________________________________________________________________
NMF - Not meaningful, pp - percentage
points
(1) Excludes finance lease amortization
expense of $0.3 million and $0.1 million for the three months ended
March 31, 2024 and 2023, respectively.
(2) Reflects non-recurring expenses
related to M&A activity including pre-deal due diligence,
transaction costs, and post-close integration costs.
(3) Reflects the impact of M&A-related
earn-outs included in operating expense.
(4) Reflects costs associated with the
significant reduction of the Company's operations in Shenzhen,
China, and the shift of work related to its global business
functions to other Morningstar locations.
Severance and personnel expenses include
severance charges, incentive payments related to early signing of
severance agreements, transition bonuses, and stock-based
compensation related to the accelerated vesting of restricted stock
unit and market share unit awards. In addition, the reversal of
accrued sabbatical liabilities is included in this category.
Transformation costs include professional
fees and the temporary duplication of headcount. As the Company
hired replacement roles in other markets and shifted capabilities,
it employed certain Shenzhen-based staff through the transition
period, which resulted in elevated compensation costs on a
temporary basis.
Asset impairment costs include the
write-off or accelerated depreciation of fixed assets in the
Shenzhen, China office that were not redeployed, in addition to
lease abandonment costs as the Company downsized its office space
prior to the lease termination date.
(5) Non-operating (gains) losses in the
three months ended March 31, 2024 and March 31, 2023, related to
realized and unrealized gains and losses on investments. In
addition, non-operating (gains) losses as of March 31, 2023 also
includes expense from an equity method transaction, net.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423497985/en/
Media Relations Contact: Stephanie Lerdall, +1 312-244-7805,
stephanie.lerdall@morningstar.com Investor Relations Contact: Sarah
Bush, +1 312-384-3754, sarah.bush@morningstar.com ©2024
Morningstar, Inc. All Rights Reserved. MORN-E
Grafico Azioni Morningstar (NASDAQ:MORN)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Morningstar (NASDAQ:MORN)
Storico
Da Gen 2024 a Gen 2025
