ATLANTA & NEW YORK--(BUSINESS WIRE)--Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today reported financial results for the second quarter of 2015. For the quarter ended June 30, 2015, consolidated net income attributable to ICE was $283 million on $797 million of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the second quarter were $2.54.
ICE's operating results include amortization of acquisition-related intangibles, acquisition and integration related expenses and other adjustments that are not reflective of ICE's cash operations or core business performance. Excluding these items, net of tax, second quarter 2015 adjusted net income from continuing operations was $323 million and adjusted diluted EPS from continuing operations were $2.90, an increase of 27% over the prior second quarter. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income from continuing operations and adjusted diluted EPS from continuing operations.
"Our focus on achieving our objectives resulted in another record quarter. This was driven by diverse contributions across commodities, cash equities, data services and listings,” said ICE Chairman and CEO Jeffrey C. Sprecher. "We are executing on many strategic growth initiatives across our derivatives and equity markets, and are focused on innovation to better serve our customers while delivering strong returns for our shareholders.”
Scott A. Hill, ICE CFO, said: “We again grew revenues and reduced expenses while taking a disciplined approach to investing in growth. All of this enabled us to grow adjusted earnings 27% year on year. We continue to generate strong cash flow and maintain a strong balance sheet with low leverage. We retired $1 billion in debt and returned $288 million to shareholders through dividends and share repurchases during the quarter."
Second Quarter 2015 Results
Second quarter 2015 consolidated revenues, less transaction-based expenses, increased 6% to $797 million compared to the same period in 2014. Included in this amount are $448 million of transaction and clearing revenues, less transaction-based expenses.
Consolidated data services revenues for the second quarter of 2015 were a record $191 million, up 29% year-over-year and listings revenues were a record $101 million, up 12% compared to the prior second quarter. Consolidated other revenues were $57 million.
Consolidated operating expenses were $367 million for the second quarter of 2015, including $6 million in NYSE integration costs. Consolidated operating income for the second quarter was $430 million and operating margin was 54%. The effective tax rate for the second quarter was 27%.
First Half 2015 Results
Consolidated revenues, less transaction-based expenses, in the first half increased 6% to $1.6 billion compared to the same period in 2014. Included in this amount are $954 million of transaction and clearing revenues, less transaction-based expenses.
Consolidated data services revenues for the first half of 2015 were a record $378 million, up 24% year-over-year and listings revenues were a record $202 million, up 12% compared to the prior first half. Consolidated other revenues were $113 million.
Consolidated operating expenses were $755 million for the first half of 2015, including $25 million in NYSE integration costs. Consolidated operating income for the first half of 2015 was $892 million and operating margin was 54%. The effective tax rate for the first half was 27%.
Consolidated cash flows from operations were $770 million in the first half of 2015. Operational capital expenditures were $52 million and capitalized software development costs totaled $44 million.
Unrestricted cash and short-term investments were $700 million as of June 30, 2015. With the repayment of $1.0 billion in Euronotes, outstanding debt was $3.3 billion as of June 30, 2015.
Financial Guidance
- ICE expects third and fourth quarter 2015 adjusted operating expenses in the range of $330 million to $335 million per quarter.
- ICE expects second half 2015 consolidated tax rate in the range of 28% to 31%.
- ICE's diluted share count for the third quarter and full year 2015 is expected to be in the range of 110 million to 112 million weighted average shares outstanding, including share repurchases through July 2015.
Earnings Conference Call Information
ICE will hold a conference call today, August 5, at 8:30 a.m. ET to review its second quarter 2015 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 0468462 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) (Unaudited) | ||||||||||||||||||
| Six Months Ended | Three Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| Revenues: | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Transaction and clearing fees, net | $ | 1,536 | $ | 1,490 | $ | 724 | $ | 726 | ||||||||||
| Data services fees | 378 | 305 | 191 | 148 | ||||||||||||||
| Listing fees | 202 | 180 | 101 | 90 | ||||||||||||||
| Other revenues | 113 | 104 | 57 | 52 | ||||||||||||||
| Total revenues | 2,229 | 2,079 | 1,073 | 1,016 | ||||||||||||||
| Transaction-based expenses: | ||||||||||||||||||
| Section 31 fees | 171 | 161 | 79 | 87 | ||||||||||||||
| Cash liquidity payments, routing and clearing | 411 | 371 | 197 | 179 | ||||||||||||||
| Total revenues, less transaction-based expenses | 1,647 | 1,547 | 797 | 750 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Compensation and benefits | 295 | 304 | 144 | 150 | ||||||||||||||
| Technology and communication | 98 | 90 | 47 | 43 | ||||||||||||||
| Professional services | 65 | 103 | 32 | 49 | ||||||||||||||
| Rent and occupancy | 31 | 42 | 15 | 22 | ||||||||||||||
| Acquisition-related transaction and integration costs | 26 | 62 | 7 | 37 | ||||||||||||||
| Selling, general and administrative | 58 | 67 | 29 | 41 | ||||||||||||||
| Depreciation and amortization | 182 | 161 | 93 | 81 | ||||||||||||||
| Total operating expenses | 755 | 829 | 367 | 423 | ||||||||||||||
| Operating income | 892 | 718 | 430 | 327 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest expense | (46 | ) | (51 | ) | (23 | ) | (23 | ) | ||||||||||
| Other income (expense), net | (7 | ) | 15 | (9 | ) | 16 | ||||||||||||
| Other expense, net | (53 | ) | (36 | ) | (32 | ) | (7 | ) | ||||||||||
| Income from continuing operations before income tax expense | 839 | 682 | 398 | 320 | ||||||||||||||
| Income tax expense | 227 | 194 | 109 | 93 | ||||||||||||||
| Income from continuing operations | 612 | 488 | 289 | 227 | ||||||||||||||
| Income from discontinued operations, net of tax | — | 21 | — | 8 | ||||||||||||||
| Net income | $ | 612 | $ | 509 | $ | 289 | $ | 235 | ||||||||||
| Net income attributable to non-controlling interest | (14 | ) | (22 | ) | (6 | ) | (9 | ) | ||||||||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 598 | $ | 487 | $ | 283 | $ | 226 | ||||||||||
| Basic earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | ||||||||||||||||||
| Continuing operations | $ | 5.37 | $ | 4.05 | $ | 2.55 | $ | 1.89 | ||||||||||
| Discontinued operations | — | 0.19 | — | 0.07 | ||||||||||||||
| Basic earnings per share | $ | 5.37 | $ | 4.24 | $ | 2.55 | $ | 1.96 | ||||||||||
| Diluted earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | ||||||||||||||||||
| Continuing operations | $ | 5.34 | $ | 4.03 | $ | 2.54 | $ | 1.88 | ||||||||||
| Discontinued operations | — | 0.19 | — | 0.07 | ||||||||||||||
| Diluted earnings per share | $ | 5.34 | $ | 4.22 | $ | 2.54 | $ | 1.95 | ||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||
| Basic | 112 | 115 | 111 | 115 | ||||||||||||||
| Diluted | 112 | 116 | 112 | 116 | ||||||||||||||
| Dividend per share | $1.40 | $1.30 | $0.75 | $0.65 | ||||||||||||||
| Consolidated Balance Sheets | ||||||||||
| (In millions) | ||||||||||
| (Unaudited) | ||||||||||
| As of | As of | |||||||||
| June 30, 2015 | December 31, 2014 | |||||||||
| Assets: | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 678 | $ | 652 | ||||||
| Short-term investments | 22 | 1,200 | ||||||||
| Short-term restricted cash and investments | 361 | 329 | ||||||||
| Customer accounts receivable | 541 | 445 | ||||||||
| Margin deposits and guaranty funds | 43,351 | 47,458 | ||||||||
| Prepaid expenses and other current assets | 180 | 135 | ||||||||
| Total current assets | 45,133 | 50,219 | ||||||||
| Property and equipment, net | 911 | 874 | ||||||||
| Other non-current assets: | ||||||||||
| Goodwill | 8,532 | 8,535 | ||||||||
| Other intangible assets, net | 7,700 | 7,780 | ||||||||
| Long-term restricted cash and investments | 255 | 297 | ||||||||
| Long-term investments | 341 | 379 | ||||||||
| Other non-current assets | 232 | 169 | ||||||||
| Total other non-current assets | 17,060 |
|
17,160 | |||||||
| Total assets | $ | 63,104 | $ | 68,253 | ||||||
| Liabilities and Equity: | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 324 | $ | 311 | ||||||
| Accrued salaries and benefits | 121 | 205 | ||||||||
| Section 31 fees payable | 168 | 137 | ||||||||
| Deferred revenue | 294 | 69 | ||||||||
| Short-term debt | 1,016 | 2,042 | ||||||||
| Margin deposits and guaranty funds | 43,351 | 47,458 | ||||||||
| Other current liabilities | 306 | 291 | ||||||||
| Total current liabilities | 45,580 | 50,513 | ||||||||
| Non-current liabilities: | ||||||||||
| Non-current deferred tax liability, net | 1,902 | 1,938 | ||||||||
| Long-term debt | 2,247 | 2,247 | ||||||||
| Accrued employee benefits | 499 | 516 | ||||||||
| Other non-current liabilities | 393 | 482 | ||||||||
| Total non-current liabilities | 5,041 | 5,183 | ||||||||
| Total liabilities | 50,621 | 55,696 | ||||||||
| Redeemable non-controlling interest | 40 | 165 | ||||||||
| Equity: | ||||||||||
| Intercontinental Exchange, Inc. shareholders’ equity: | ||||||||||
| Preferred stock | — | — | ||||||||
| Common stock | 1 | 1 | ||||||||
| Treasury stock, at cost | (1,181 | ) | (743 | ) | ||||||
| Additional paid-in capital | 10,017 | 9,938 | ||||||||
| Retained earnings | 3,641 | 3,210 | ||||||||
| Accumulated other comprehensive loss | (68 | ) | (46 | ) | ||||||
| Total Intercontinental Exchange, Inc. shareholders’ equity | 12,410 | 12,360 | ||||||||
| Non-controlling interest in consolidated subsidiaries | 33 | 32 | ||||||||
| Total equity | 12,443 | 12,392 | ||||||||
| Total liabilities and equity | $ | 63,104 | $ | 68,253 | ||||||
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 Quarterly Report on Form 10-Q, 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 net income from continuing operations and calculates adjusted earnings per share from continuing operations for the period presented below (in millions except per share amounts):
| Six Months Ended | Three Months Ended | |||||||||
| June 30, 2015 | June 30, 2015 | |||||||||
| Income from continuing operations | $ | 612 | $ | 289 | ||||||
| Add: NYSE integration costs | 25 | 6 | ||||||||
| Add: Amortization of acquisition-related intangibles | 66 | 33 | ||||||||
| Add: Litigation accruals | 19 | 19 | ||||||||
| Less: Income tax effect for the items above | (34 | ) | (15 | ) | ||||||
| Less: Other tax adjustments | (7 | ) | (3 | ) | ||||||
| Less: Net income from continuing operations attributable to non-controlling interest | (14 | ) | (6 | ) | ||||||
| Adjusted net income from continuing operations | $ | 667 | $ | 323 | ||||||
| Earnings per share from continuing operations: | ||||||||||
| Basic | $ | 5.37 | $ | 2.55 | ||||||
| Diluted | $ | 5.34 | $ | 2.54 | ||||||
| Adjusted earnings per share from continuing operations: | ||||||||||
| Adjusted basic | $ | 5.98 | $ | 2.91 | ||||||
| Adjusted diluted | $ | 5.96 | $ | 2.90 | ||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 112 | 111 | ||||||||
| Diluted | 112 | 112 | ||||||||
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) operates the leading network of regulated exchanges and clearing houses. ICE’s futures exchanges and clearing houses serve global commodity and financial markets, providing risk management and capital efficiency. The New York Stock Exchange is the world leader in capital raising and equities trading.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. 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
