ATLANTA & NEW YORK--(BUSINESS WIRE)--Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listing services, today reported financial results for the first quarter of 2018. For the quarter ended March 31, 2018, consolidated net income attributable to ICE was $464 million on $1.2 billion of consolidated revenues less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $0.79. Adjusted net income was $525 million in the first quarter and adjusted diluted EPS were a record $0.90, up 22% year-over-year. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on our adjusted operating expenses, adjusted operating margin, adjusted net income and adjusted diluted EPS.
“We are pleased to report on our first quarter performance, delivering strong results across our trading and clearing and our data and listings segments including record revenues," said ICE Chairman and CEO Jeffrey C. Sprecher. "We completed our strategic acquisition of BondPoint while also generating solid organic growth, as customers' demand of our comprehensive suite of multi-asset class workflow and risk management solutions continues to increase."
Scott A. Hill, ICE CFO, added: "Our first quarter performance produced revenue growth, margin expansion and strong cash flow allowing us to return nearly $540 million to stockholders through April, up 28% compared to the prior year. 2018 is off to a promising start and we are well positioned to build on our proven track record of growth, customer service and value creation for our stockholders."
First Quarter 2018 GAAP Results
First quarter 2018 consolidated revenues, less transaction-based expenses, were $1.2 billion. Trading and clearing segment revenues, less transaction-based expenses, were $596 million in the first quarter 2018, up 11% compared to the prior first quarter. Data and listings segment revenues were $629 million in the first quarter of 2018, including data services revenues of $520 million, and listings revenues of $109 million.
Consolidated operating expenses were $575 million for the first quarter of 2018. On an adjusted basis, consolidated operating expenses were $494 million. Consolidated operating income for the first quarter was $650 million and the operating margin was 53%. The effective tax rate for the first quarter was 23%.
Unrestricted cash was $523 million and outstanding debt was $6.9 billion as of March 31, 2018.
- ICE's second quarter 2018 GAAP operating expenses are expected to be in a range of $570 million to $580 million and adjusted operating expenses(1) are expected to be in a range of $500 million to $510 million.
- ICE's full year 2018 GAAP operating expenses are expected to be in a range of $2.28 billion to $2.32 billion and adjusted operating expenses(1) are expected to be in a range of $2.00 billion to $2.04 billion.
- ICE's interest expense is expected to be $55 million in the second quarter.
- ICE's diluted share count for the second quarter is expected to be in the range of 581 million to 583 million weighted average shares outstanding and 580 million to 585 million for the full year.
(1) The 2018 Non-GAAP adjusted operating expense excludes $69 million in amortization of acquisition-related intangibles for the second quarter of 2018 and $274 million for the full year. The GAAP operating expense forecast does not reflect an estimate of acquisition-related transaction and integration costs for the second quarter of 2018.
Earnings Conference Call Information
ICE will hold a conference call today, May 3, at 8:30 a.m. ET to review its first quarter 2018 financial results. A live audio webcast of the earnings call will be available on the company's website at www.theice.com in the investor relations section. Participants may also listen via telephone by dialing 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 5645515 and are recommended to call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.
The conference call for the second quarter 2018 earnings has been scheduled for August 2, 2018 at 8:30 a.m. ET. Please refer to the Investor Relations website at www.ir.theice.com for additional information.
Historical futures, options and cash ADV, rate per contract, open interest data and CDS cleared information can be found at: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx
Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended
|Transaction and clearing, net||$||898||$||798|
|Section 31 fees||121||91|
|Cash liquidity payments, routing and clearing||234||214|
|Total revenues, less transaction-based expenses||1,225||1,166|
|Compensation and benefits||240||247|
|Acquisition-related transaction and integration costs||12||14|
|Technology and communication||105||98|
|Rent and occupancy||17||18|
|Selling, general and administrative||33||41|
|Depreciation and amortization||138||134|
|Total operating expenses||575||584|
|Other income (expense):|
|Other income, net||19||188|
|Other income (expense), net||(33||)||143|
|Income before income tax expense||617||725|
|Income tax expense||143||214|
|Net income attributable to non-controlling interest||(10||)||(8||)|
|Net income attributable to Intercontinental Exchange, Inc.||$||464||$||503|
|Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:|
|Weighted average common shares outstanding:|
|Dividend per share||$||0.24||$||0.20|
Consolidated Balance Sheets
|As of||As of|
|March 31, 2018||December 31, 2017|
|Cash and cash equivalents||$||523||$||535|
|Short-term restricted cash and cash equivalents||804||769|
|Customer accounts receivable, net||1,167||903|
|Margin deposits, guaranty funds, and delivery contracts receivable||53,979||51,222|
|Prepaid expenses and other current assets||161||133|
|Total current assets||56,634||53,562|
|Property and equipment, net||1,235||1,246|
|Other non-current assets:|
|Other intangible assets, net||10,326||10,269|
|Long-term restricted cash and cash equivalents||331||264|
|Other non-current assets||1,022||707|
|Total other non-current assets||24,193||23,456|
|Liabilities and Equity:|
|Accounts payable and accrued liabilities||$||476||$||462|
|Section 31 fees payable||120||128|
|Accrued salaries and benefits||104||227|
|Margin deposits, guaranty funds, and delivery contracts payable||53,979||51,222|
|Other current liabilities||176||178|
|Total current liabilities||57,946||54,175|
|Non-current deferred tax liability, net||2,292||2,298|
|Accrued employee benefits||240||243|
|Other non-current liabilities||309||296|
|Total non-current liabilities||7,110||7,104|
|Intercontinental Exchange, Inc. stockholders’ equity:|
|Treasury stock, at cost||(1,448||)||(1,076||)|
|Additional paid-in capital||11,428||11,392|
|Accumulated other comprehensive loss||(190||)||(223||)|
|Total Intercontinental Exchange, Inc. stockholders’ equity||16,978||16,957|
|Non-controlling interest in consolidated subsidiaries||28||28|
|Total liabilities and equity||$||82,062||$||78,264|
Non-GAAP Financial Measures and Reconciliation
We use non-GAAP measures internally to evaluate our performance and in making financial and operational decisions. When viewed in conjunction with our GAAP results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparison of results because the items described below as adjustments to GAAP are not reflective of our core business performance. These financial measures are not in accordance with, or an alternative to, GAAP financial measures and may be different from non-GAAP measures used by other companies. We use these adjusted results because we believe they more clearly highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our core operating performance. We strongly recommend that investors review the GAAP financial measures and additional non-GAAP information included in our Quarterly Report on Form 10-Q, including our consolidated financial statements and the notes thereto.
Adjusted operating expenses, adjusted operating margin, adjusted net income attributable to ICE common stockholders and adjusted diluted earnings per share for the periods presented below are calculated by adding or subtracting the adjustments described below, which are not reflective of our cash operations and core business performance, and their related income tax effect and other tax adjustments (in millions, except for per share amounts):
Three Months Ended
Three Months Ended
|Total Revenues, less transaction- based expenses||$||1,225||$||1,166|
|Less: Interactive Data transaction and integration costs||12||12|
|Less: Accruals relating to investigations and inquiries||—||10|
|Less: Amortization of acquisition-related intangibles||69||65|
|Adjusted operating expenses||$||494||$||497|
|Adjusted operating income||$||731||$||669|
|Adjusted operating margin||60||%||57||%|
Three Months Ended
Three Months Ended
|Net income attributable to ICE||$||464||$||503|
|Add: Interactive Data transaction and integration costs||12||12|
|Add: Adjustment to reduce net gain on Trayport divestiture||1||—|
|Add: Amortization of acquisition-related intangibles||69||65|
|Add: Accruals relating to investigations and inquiries||—||10|
|Less: Cetip investment gain||—||(176||)|
|Add / (Less): Income tax effect for the above items||(21||)||28|
|Adjusted net income attributable to ICE||$||525||$||442|
|Diluted earnings per share attributable to ICE||$||0.79||$||0.84|
|Adjusted diluted earnings per share attributable to ICE||$||0.90||$||0.74|
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500 and Fortune Future 50 company formed in the year 2000 to modernize markets. ICE serves customers by operating the exchanges, clearing houses and information services they rely upon to invest, trade and manage risk across global financial and commodity markets. A leader in market data, ICE Data Services serves the information and connectivity needs across virtually all asset classes. As the parent company of the New York Stock Exchange, the company raises more capital than any other exchange in the world, driving economic growth and transforming markets.
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 http://www.intercontinentalexchange.com/terms-of-use. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
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, 2017, as filed with the SEC on February 7, 2018. We caution you not to place undue 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