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Third quarter revenue was $112.2 million, up from $93.6 million in the third quarter of 2004. Exchange and clearing fee revenue in the third quarter grew 21 percent to $82.7 million compared with $68.3 million in the third quarter of 2004. Third quarter operating income was $32.9 million, rising 66 percent from $19.8 million in the same period during the prior year.
CBOT Holdings President and CEO Bernard W. Dan said, “We added significant trading platform enhancements over the past year, which contributed to the recent growth in reported trading volume. Global market participants have benefited from more effective risk management via increased use of reduced tick spreads and enhanced trading and matching algorithms. In addition, on October 9, 2005, we implemented an additional major upgrade to our electronic trading platform, and concurrently expanded the number of trading hours from 21 hours per day to 22, which are collectively intended to drive additional volume in our products.”
Third quarter trading volume rose nine percent over the same period during the prior year to 165.2 million contracts. Average daily volume in the third quarter of 2005 increased to 2.6 million contracts, also up nine percent from the third quarter of 2004. In addition, average daily volume on the CBOT’s electronic trading platform, e-cbot powered by LIFFE CONNECT®, during the third quarter rose 20 percent from the same period last year.
Third quarter earnings benefited from trading volume growth along with an increase in the average rate per contract, which rose 11 percent above last year’s third quarter level. The average rate per contract represents total exchange and clearing fee revenue divided by total reported trading volume.
Separately, on Monday, October 24, 2005, CBOT Holdings closed the initial public offering of 3,191,489 shares of its Class A common stock, which included 2,940,486 shares offered by CBOT Holdings and 251,003 shares offered by selling stockholders. The initial public offering price was $54.00 per share. CBOT Holdings also sold an additional 478,723 shares of Class A common stock pursuant to the exercise in full by the underwriters of their over-allotment option.
| Key Financial Metrics (in millions, except rate per contract) | |||
| Quarter Ended | Sept 30 2005 |
Sep. 30 2004 |
June 30 2005 |
| Average Daily Volume | 2.6 | 2.4 | 2.9 |
| Reported Trading Volume | 165.2 | 151.5 | 184.9 |
| Average Rate per Contract | $0.501 | $0.451 | $0.499 |
| Revenue | $112.2 | $93.6 | $120.6 |
| Operating Income | $32.9 | $19.8 | $33.7 |
| Operating Margin | 29% | 21% | 28% |
| Net Income | $19.8 | $12.2 | $18.2 |
| Depreciation & Amortization | $13.1 | $11.5 | $14.2 |
| Capital Expenditures | $7.8 | $17.0 | $14.7 |
CBOT Third Quarter Operational Highlights
- CBOT announced upgrades to e-cbot, along with increases in exchange fee rates for certain transactions on e-cbot, effective October 1, 2005. New functionality on e-cbot includes order book management, stop orders at the host level that expand order type access via e-cbot, nine inter-commodity spread strategies for financial products and an expansion of trading hours per day from 21 to 22.
- CBOT and Singapore Exchange announced an effort to jointly explore the establishment of a commodity derivatives exchange in Singapore .
Outlook
Given current market conditions and what is known today, the CBOT currently expects the following for the fourth quarter 2005:
- Baseline expenses, which equals total operating expenses less volume based expenses, of about $66 million to $69 million, including $1.8 million to $2.0 million of non-cash stock compensation expense.
- Volume based expenses, which include clearing costs and contracted license fees, of about $0.105 per reported contract.
- The exchange fee rate increase implemented October 1, 2005 is currently expected to raise the overall rate per contract in the fourth quarter of 2005 about seven to ten percent from the rate during the third quarter of 2005.
The company does not provide an outlook for trading volume or revenue, but does report the trading volume daily on its website at http://www.cbot.com/cbot/pub/page/0,3181,541,00.html.
|
3Q |
2Q |
1Q |
4Q |
3Q |
2Q |
1Q |
|
|
2005 |
2005 |
2005 |
2004 |
2004 |
2004 |
2004 |
|
|
Trading Days |
64 |
64 |
61 |
64 |
64 |
63 |
62 |
AVERAGE RATE PER CONTRACT
|
3Q |
2Q |
1Q |
4Q |
3Q |
2Q |
1Q |
|
|
PRODUCT: |
2005 |
2005 |
2005 |
2004 |
2004 |
2004 |
2004 |
|
Interest Rate |
0.469 |
0.467 |
0.482 |
0.386 |
0.417 |
0.408 |
0.484 |
|
Agriculture |
0.631 |
0.643 |
0.641 |
0.640 |
0.637 |
0.673 |
0.678 |
|
Equity Index |
0.672 |
0.630 |
0.578 |
0.560 |
0.564 |
0.550 |
0.525 |
|
Metals, Energy & Other |
1.360 |
1.312 |
0.855 |
0.654 |
0.848 |
0.870 |
0.851 |
|
Overall average rate per contract |
0.501 |
0.499 |
0.507 |
0.424 |
0.451 |
0.455 |
0.519 |
|
VENUE: |
|||||||
|
Open-Auction |
0.485 |
0.483 |
0.491 |
0.441 |
0.490 |
0.506 |
0.525 |
|
Electronic |
0.411 |
0.397 |
0.400 |
0.315 |
0.330 |
0.319 |
0.429 |
|
Off-Exchange |
2.117 |
2.404 |
2.131 |
1.786 |
1.880 |
1.668 |
1.597 |
|
Overall average rate per contract |
0.501 |
0.499 |
0.507 |
0.424 |
0.451 |
0.455 |
0.519 |
AVERAGE DAILY VOLUME (Round Turns, in thousands)
|
3Q |
2Q |
1Q |
4Q |
3Q |
2Q |
1Q |
|
|
PRODUCT: |
2005 |
2005 |
2005 |
2004 |
2004 |
2004 |
2004 |
|
Interest Rate |
2,123 |
2,368 |
2,356 |
2,006 |
1,974 |
2,028 |
1,735 |
|
Agriculture |
350 |
404 |
373 |
287 |
295 |
391 |
375 |
|
Equity Index |
103 |
115 |
105 |
99 |
96 |
94 |
90 |
|
Metals, Energy & Other |
5 |
3 |
4 |
5 |
2 |
2 |
2 |
|
Total |
2,582 |
2,889 |
2,838 |
2,398 |
2,367 |
2,516 |
2,203 |
|
VENUE: |
|||||||
|
Open-Auction |
773 |
940 |
940 |
780 |
843 |
1,007 |
913 |
|
Electronic |
1,707 |
1,843 |
1,772 |
1,507 |
1,426 |
1,395 |
1,194 |
|
Off-Exchange |
102 |
106 |
126 |
110 |
97 |
115 |
96 |
|
Total |
2,582 |
2,889 |
2,838 |
2,398 |
2,367 |
2,516 |
2,203 |
TRANSACTION FEES (in thousands)
|
3Q |
2Q |
1Q |
4Q |
3Q |
2Q |
1Q |
|
|
PRODUCT: |
2005 |
2005 |
2005 |
2004 |
2004 |
2004 |
2004 |
|
Interest Rate |
$63,741 |
$70,733 |
$69,327 |
$49,524 |
$52,666 |
$52,199 |
$52,092 |
|
Agriculture |
14,150 |
16,604 |
14,598 |
11,761 |
12,037 |
16,558 |
15,777 |
|
Equity Index |
4,439 |
4,627 |
3,687 |
3,562 |
3,453 |
3,270 |
2,942 |
|
Metals, Energy & Other |
393 |
252 |
184 |
202 |
127 |
135 |
130 |
|
Total |
$82,722 |
$92,216 |
$87,796 |
$65,050 |
$68,284 |
$72,163 |
$70,940 |
|
VENUE: |
|||||||
|
Open-Auction |
$23,979 |
$29,085 |
$28,185 |
$22,038 |
$26,458 |
$32,067 |
$29,742 |
|
Electronic |
44,872 |
46,883 |
43,285 |
30,413 |
30,123 |
28,011 |
31,726 |
|
Off-Exchange |
13,871 |
16,247 |
16,325 |
12,598 |
11,702 |
12,084 |
9,473 |
|
Total |
$82,722 |
$92,216 |
$87,796 |
$65,050 |
$68,284 |
$72,163 |
$70,940 |
Quarterly Conference Call
Executives of CBOT Holdings Inc. will host a conference call to review its third quarter results today, October 28, at 8:00 am ET 7:00 am CT. The conference call and any accompanying slides will be publicly available via live web cast from the investor relations section of the CBOT Holdings web site at http://www.cbot.com. The web cast will be available for replay at the same address approximately two hours following its conclusion. Those wishing to listen to the live conference via telephone should dial 866.362.5158 (U.S. callers) and 617.597.5397 (International callers) at least 10 minutes before the call begins.
About the CBOT
As one of the leading global derivative exchanges, the Chicago Board of Trade provides a diverse mix of financial, equity, and commodity futures and options-on-futures products. Building on its 157-year history, the CBOT continues to advance into the future using the strength of deep liquidity, market integrity and member-trader expertise. Using superior trading technology in both electronic and open-auction trading platforms, the CBOT provides premier customer service to risk managers and investors worldwide. For more information visit our web site at www.cbot.com.
Forward Looking Statements
In this release, our use of the words “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or other comparable terminology is intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in filings made by CBOT Holdings, Inc. with the Securities and Exchange Commission, which can be obtained at its web site at www.sec.gov. Except for any obligation to disclose material information under Federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
