Intercontinental Exchange Reports Record Fourth Quarter 2014 Adjusted EPS from Continuing Operations of $2.59, +30% year over year; Record Full Year 2014 Adjusted EPS from Continuing Operations of $9.63, +15% year over year

ATLANTA--()--Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today reported record financial results for the fourth quarter and full year 2014. For the quarter ended December 31, 2014, consolidated net income attributable to ICE was $288 million on $800 million consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the fourth quarter were $2.54 and for the full year 2014 were $8.55.

ICE's operating results include amortization of acquisition-related intangibles, acquisition and integration related expenses, gain on our Euronext sale and our share of OCC's full year income that are not reflective of ICE's cash operations and core business performance. Excluding these items, net of tax, fourth quarter 2014 adjusted income from continuing operations was $294 million and adjusted diluted EPS from continuing operations were $2.59, an increase of 30% year over year. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted income from continuing operations and adjusted diluted EPS from continuing operations.

“By focusing on the requirements of our customers and delivering on our integration milestones, we achieved record results in 2014,” said ICE Chairman and CEO Jeffrey C. Sprecher. “We strengthened our leadership position in growth markets, including global oil, natural gas and swaps clearing. During the year we also separated Euronext, seamlessly transitioned Liffe's markets to our exchanges and accelerated our synergy realization. We grew revenues at the New York Stock Exchange, increased market share in trading and again led in global capital raising with 129 initial public offerings. We remain focused on delivering growth and solid returns to our investors by putting the needs of our customers first.”

"Our strong cash generation and balance sheet enabled us to pursue strategic growth initiatives this year while returning nearly $1 billion of capital to shareholders through dividends and share buybacks," said ICE CFO, Scott A. Hill. "We recorded our 18th record year in Brent volume and earned nearly $100 million in CDS clearing revenues. We continued to expand our leadership in clearing through product innovation and strategic acquisitions. At the same time, we completed nearly $290 million, or over 50%, of our synergy target by the end of 2014. The strong momentum we have established entering 2015 coupled with continued execution of our strategic initiatives and further expense reductions during 2015 support our target of once again delivering double digit earnings growth, strong cash generation and meaningful capital returns."

Fourth Quarter 2014 Results

Fourth quarter 2014 consolidated revenues, less transaction-based expenses, were $800 million. Included in this amount are transaction and clearing revenues, less transaction-based expenses, of $479 million.

Consolidated data services fee revenues for the fourth quarter of 2014 were $174 million, consolidated listings revenues were $95 million and consolidated other revenues were $52 million.

Consolidated operating expenses were $400 million for the fourth quarter of 2014, including $27 million in integration and deal related expenses. Consolidated operating income for the fourth quarter was $400 million and operating margin was 50%. The effective tax rate for the fourth quarter was 29%.

Full Year 2014 Results

For the year ended December 31, 2014, consolidated revenues, less transaction-based expenses, were $3.1 billion. Included in this amount are transaction and clearing revenues, less transaction-based expenses, of $1.9 billion. Consolidated data services fee revenues for 2014 were $631 million, consolidated listings revenues were $367 million and consolidated other revenues were $210 million.

Consolidated 2014 income from continuing operations was $1.0 billion and diluted EPS from continuing operations were $8.46. Adjusted income from continuing operations was $1.1 billion and adjusted diluted EPS from continuing operations were $9.63 for the year, representing a 15% increase year over year. Please refer to the reconciliation of non-GAAP financial measure included in this press release.

Consolidated operating expenses were $1.6 billion for 2014, including $124 million in integration and deal related expenses. Consolidated operating income for 2014 was $1.4 billion and operating margin was 47%. The effective tax rate for the year was 29%.

Consolidated cash flows from operations were a record $1.5 billion for 2014. Operational capital expenditures were $91 million and capitalized software development costs totaled $78 million in 2014. Dividends paid during 2014 were $299 million and share repurchases totaled $645 million.

As of December 31, 2014, ICE had unrestricted cash of $652 million and $3.2 billion in outstanding debt, excluding $1.1 billion reserved for the repayment of the 2015 Eurobonds.

Financial Guidance and Additional Information

  • ICE expects full year 2015 combined Data Services and Listings revenue growth of approximately $100 million, excluding acquisitions.
  • ICE expects fourth quarter 2014 acquisitions to contribute $50 million to $55 million in incremental 2015 revenues and $40 million to $45 million in incremental 2015 expenses.
  • ICE expects a full year 2015 operating expense reduction of ~$90 million, including $110 million to $115 million of synergies and $20 million to $25 million of incremental investments, excluding fourth quarter 2014 acquisitions.
  • ICE expects first quarter and full year 2015 operating expenses, excluding amortization of acquisition-related intangibles, in the range of $335 million to $340 million and $1.335 billion to $1.355 billion, respectively. Full year operating expense guidance includes synergies, investments and acquisitions.
  • ICE expects first quarter and second quarter 2015 interest expense in the range of $23 million to $25 million, declining to the range of $20 million to $22 million in the second half of 2015.
  • ICE expects full year 2015 operational capital expenditures in the range of $165 million to $175 million. ICE expects full year 2015 real estate capital expenditures in the range of $70 million to $80 million.
  • ICE expects full year 2015 consolidated tax rate in the range of 28% to 31%.
  • ICE's diluted share count for the first quarter 2015 is expected to be in the range of 112 million to 113 million weighted average shares outstanding. Full year 2015 diluted share count is expected to be in the range of 112 million to 114 million weighted average shares outstanding, in each case including share repurchases through January 2015.
  • ICE declared a quarterly cash dividend of $0.65 per share for the first quarter of 2015 with a record date of March 17, 2015 and a payment date of March 31, 2015. The ex-dividend date is March 13, 2015.

Earnings Conference Call Information

ICE will hold a conference call today, February 5th, at 8:30 a.m. ET to review its fourth quarter and full year 2014 financial results. A live audio webcast of the earnings call will be available on the company's website at www.theice.com in the investor relations section. Participants may also listen via telephone by dialing 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 2502670 and are recommended to call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.

Historical futures, options and cash ADV, rate per contract, open interest data and CDS cleared information can be found at: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx.

   
Consolidated Statements of Income
(In millions, except per share amounts)
 
Year Ended December 31,   Three months ended December 31,
2014   2013   2014   2013
Revenues:    
Transaction and clearing fees, net $ 3,013 $ 1,379 $ 811 $ 480
Data services fees 631 229 174 100
Listing fees 367 33 95 33
Other revenues 210     75     52     41  
Total revenues 4,221 1,716 1,132 654
Transaction-based expenses:
Section 31 fees 359 32 107 32
Cash liquidity payments, routing and clearing 770     86     225     86  
Total revenues, less transaction-based expenses 3,092     1,598     800     536  
Operating expenses:
Compensation and benefits 592 302 144 109
Technology and communication 188 63 53 27
Professional services 181 54 31 31
Rent and occupancy 78 39 17 16
Acquisition-related transaction and integration costs 129 143 27 111
Selling, general and administrative 143 51 39 23
Depreciation and amortization 333     156     89     56  
Total operating expenses 1,644     808     400     373  
Operating income 1,448     790     400     163  
Other income (expense):
Interest expense (96 ) (56 ) (23 ) (27 )
Other income (expense), net 55     (230 )   35     (233 )
Other income (expense), net (41 )   (286 )   12     (260 )
Income from continuing operations before income tax expense 1,407 504 412 (97 )
Income tax expense 402     184     118     23  
Income (loss) from continuing operations 1,005 320 294 (120 )
Income (loss) from discontinued operations, net of tax 11     (50 )       (50 )
Net income (loss) $ 1,016     $ 270     $ 294     $ (170 )
Net income attributable to non-controlling interest (35 )   (16 )   (6 )   (6 )
Net income (loss) attributable to Intercontinental Exchange, Inc. $ 981     $ 254     $ 288     $ (176 )
Basic earnings (loss) per share attributable to Intercontinental Exchange, Inc. common shareholders:
Continuing operations $ 8.50 $ 3.88 $ 2.56 $ (1.32 )
Discontinued operations 0.10     (0.64 )       (0.53 )
Basic earnings per share $ 8.60     $ 3.24     $ 2.56     $ (1.85 )
Diluted earnings (loss) per share attributable to Intercontinental Exchange, Inc. common shareholders:
Continuing operations $ 8.46 $ 3.84 $ 2.54 $ (1.31 )
Discontinued operations 0.09     (0.63 )       (0.52 )
Diluted earnings per share $ 8.55     $ 3.21     $ 2.54     $ (1.83 )
Weighted average common shares outstanding:
Basic 114     78     113     95  
Diluted 115     79     113     96  
Dividend per share $ 2.60     $ 0.65     $ 0.65     $ 0.65  

   

Consolidated Balance Sheets (in millions)

 
December 31, December 31,
2014   2013
Assets:
Current assets:
Cash and cash equivalents $ 652 $ 961
Short-term investments 1,200 74
Short-term restricted cash and investments 329 277
Customer accounts receivable, net 471 546
Margin deposits and guaranty funds 47,458 42,216
Prepaid expenses and other current assets 135     195  
Total current assets 50,245     44,269  
Property and equipment, net 874     889  
Other non-current assets:
Goodwill 8,535 9,189
Other intangible assets, net 7,780 9,323
Long-term restricted cash and investments 297 161
Long-term investments 379 324
Other non-current assets 169     267  
Total other non-current assets 17,160     19,264  
Total assets $ 68,279     $ 64,422  
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities $ 337 $ 392
Section 31 fees payable 137 85
Accrued salaries and benefits 205 304
Deferred revenue 69 58
Short-term debt 2,042 1,135
Margin deposits and guaranty funds 47,458 42,216
Other current liabilities 291     131  
Total current liabilities 50,539     44,321  
Non-current liabilities:
Non-current deferred tax liability, net 1,938 2,594
Long-term debt 2,247 3,923
Accrued employee benefits 516 412
Other non-current liabilities 482     469  
Total non-current liabilities 5,183     7,398  
Total liabilities 55,722     51,719  
Redeemable non-controlling interest 165     322  
Equity:
ICE shareholders’ equity:
Common stock 1 1
Treasury stock, at cost (743 ) (53 )
Additional paid-in capital 9,938 9,794
Retained earnings 3,210 2,482
Accumulated other comprehensive income (loss) (46 )   125  
Total ICE shareholders’ equity 12,360 12,349
Non-controlling interest in consolidated subsidiaries 32     32  
Total equity 12,392     12,381  
Total liabilities and equity $ 68,279     $ 64,422  
 

Non-GAAP Financial Measures and Reconciliation

We use non-GAAP measures internally to evaluate our performance and in making financial and operational decisions. When viewed in conjunction with our U.S. generally accepted accounting principles, or GAAP, results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. We strongly recommend that investors review the U.S. GAAP financial measures included in this press release and in our Annual Report on Form 10-K, including our consolidated financial statements and the notes thereto.

Adjusted income from continuing operations for the periods presented below are calculated by adding income from continuing operations, the adjustments described below, which are not reflective of our cash operations and core business performance, and the related income tax effect. The following table reconciles income from continuing operations to adjusted income from continuing operations and calculates adjusted earnings per share from continuing operations for the period presented below (in millions except per share amounts):

       
Three months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, December 31,
2014   2013   2014   2013
Income (loss) from continuing operations $ 1,005 $ 320 $ 294 $ (120 )
Add: NYSE integration costs and banker fees 124 140 27 109
Add: Amortization of acquisition-related intangibles 131 56 33 20
Add: Cetip impairment loss 190 190
Add: Early payoff of outstanding debt 51 51
Add: Duplicate rent expenses 7
Less: Net gain on sale of 6% remaining ownership in Euronext (4 ) (4 )
Less: Income from OCC equity investment (26 ) (26 )
Less: Income tax effect related to the items above (91 ) (85 ) (24 ) (53 )
Less: Net income from continuing operations attributable to non-controlling interest (35 )   (16 )   (6 )   (6 )
Adjusted income from continuing operations: $ 1,104     $ 663     $ 294     $ 191  
 
Earnings (loss) per share from continuing operations:
 
Basic $ 8.50     $ 3.88     $ 2.56     $ (1.32 )
Diluted $ 8.46     $ 3.84     $ 2.54     $ (1.31 )
 
Adjusted earnings per share from continuing operations:
 
Adjusted basic $ 9.67     $ 8.45     $ 2.60     $ 2.02  
Adjusted diluted $ 9.63     $ 8.38     $ 2.59     $ 2.00  
 
Weighted average common shares outstanding:
Basic 114     78     113     95  
Diluted 115     79     113     96  
 

About Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE) is the leading network of regulated exchanges and clearing houses for financial and commodity markets. ICE delivers transparent, reliable and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures and Liffe.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE, New York Stock Exchange and LIFFE. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 - Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in Intercontinental Exchange, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on February 5, 2015. We caution you not to place undo reliance on these forward looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SOURCE: Intercontinental Exchange

ICE-CORP

Contacts

Intercontinental Exchange
Media Contact:
Brookly McLaughlin, Senior Director Communications
+1 312 836 6728
brookly.mclaughlin@theice.com
or
Investor Contact:
Kelly Loeffler, SVP Investor Relations & Corp. Communications
+1 770 857 4726
kelly.loeffler@theice.com
or
Isabel Janci, Senior Director, Investor Relations
+1 770 857 0363
isabel.janci@theice.com
or
Melanie Skijus, Director, Investor Relations
+1 770 857 2532
melanie.skijus@theice.com

Contacts

Intercontinental Exchange
Media Contact:
Brookly McLaughlin, Senior Director Communications
+1 312 836 6728
brookly.mclaughlin@theice.com
or
Investor Contact:
Kelly Loeffler, SVP Investor Relations & Corp. Communications
+1 770 857 4726
kelly.loeffler@theice.com
or
Isabel Janci, Senior Director, Investor Relations
+1 770 857 0363
isabel.janci@theice.com
or
Melanie Skijus, Director, Investor Relations
+1 770 857 2532
melanie.skijus@theice.com