CME Group Inc. (NASDAQ: CME) today reported revenues of $687 million and operating income of $323 million for the fourth quarter of 2013. Net income attributable to CME Group was $193 million and diluted earnings per share was $0.58. Excluding the items noted in the reconciliation, adjusted earnings per share would have been $0.64.1
"This was a year of progress," said CME Group Executive Chairman and President Terry Duffy. "Throughout 2013 we faced many challenges as we worked with regulators and industry participants to successfully navigate the three waves of the Dodd-Frank clearing mandate. Our response to a dynamically changing landscape inside and outside the U.S. has been exceptional. In addition, the economy showed signs of incremental improvement and the Federal Reserve began taking steps to reduce quantitative easing. We have been successful at not only building our own business for the future, but also in contributing to the regulatory process and laying the groundwork for our customers to move their businesses forward under the new and evolving market structure debate."
"I am very pleased with fourth-quarter results, highlighted by double-digit average daily volume growth in our futures and options complex when compared with last year," said CME Group Chief Executive Officer Phupinder Gill. "This strong performance was driven by a 29 percent increase in interest rate volume. Innovative new interest rate futures and options product extensions launched in the last few years represented 4 percent of the total interest rate volume in the fourth quarter. The new year is off to a good start, with increased volatility in interest rate, equity, and energy markets resulting in an increase of 13 percent in average daily volume in January. Looking ahead, we will continue to build on the most extensive product offering available today to deliver innovative solutions to meet our customers' needs."
Fourth-quarter 2013 average daily volume was 11.3 million contracts, up 11 percent from fourth-quarter 2012, and included 29 percent growth in interest rate volume. Clearing and transaction fee revenues were $577 million, up 6 percent compared with the same period last year. Fourth-quarter total average rate per contract was 78.0 cents, up from 76.2 cents in third-quarter 2013, driven primarily by a higher proportion of total volume coming from energy and agricultural products, which have higher average fees.
As of December 31, 2013, the company had $2.5 billion of cash and marketable securities and $2.9 billion of debt. The company declared dividends associated with 2013 of $1.5 billion, including the annual variable dividend for 2013 which was paid in January 2014. The annual variable dividend associated with 2013 totaled approximately $870 million and was twice the size of the annual variable dividend associated with 2012.
CME Group will hold a conference call to discuss fourth-quarter and full year 2013 results at 8:30 a.m. Eastern Time today. A live audio Webcast of the call will be available on the Investor Relations section of CME Group's Web site at www.cmegroup.com. An archived recording will be available for up to two months after the call.
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1. |
A reconciliation of the non-GAAP financial results mentioned to the respective GAAP figures can be found within the Reconciliation of GAAP to Non-GAAP Measures chart at the end of the financial statements. |
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CME Group Inc. and Subsidiaries Consolidated Balance Sheets (in millions) |
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December 31, 2013 |
December 31, 2012 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ |
2,469.7 |
$ |
1,604.7 |
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Marketable securities |
68.4 |
56.6 |
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Accounts receivable, net of allowance |
302.7 |
267.5 |
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Other current assets (includes $40.0 in restricted cash) |
209.7 |
204.3 |
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Cash performance bonds and guaranty fund contributions |
21,355.1 |
6,584.8 |
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Total current assets |
24,405.6 |
8,717.9 |
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Property, net of accumulated depreciation and amortization |
513.4 |
724.0 |
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Intangible assets—trading products |
17,175.3 |
17,175.3 |
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Intangible assets—other, net |
2,741.2 |
2,853.7 |
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Goodwill |
7,569.0 |
7,566.9 |
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Other assets (includes $74.0 and $73.0 in restricted cash) |
1,873.3 |
1,825.4 |
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Total Assets |
$ |
54,277.8 |
$ |
38,863.2 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable |
$ |
36.2 |
$ |
41.7 |
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Short-term debt |
749.9 |
749.7 |
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Other current liabilities |
1,169.8 |
240.7 |
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Cash performance bonds and guaranty fund contributions |
21,355.1 |
6,584.8 |
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Total current liabilities |
23,311.0 |
7,616.9 |
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Long-term debt |
2,107.2 |
2,106.8 |
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Deferred income tax liabilities, net |
7,249.7 |
7,413.3 |
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Other liabilities |
449.4 |
220.5 |
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Total Liabilities |
33,117.3 |
17,357.5 |
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Redeemable non-controlling interest |
— |
80.8 |
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CME Group shareholders' equity |
21,154.8 |
21,419.1 |
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Non-controlling interest |
5.7 |
5.8 |
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Total Equity |
21,160.5 |
21,424.9 |
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Total Liabilities and Equity |
$ |
54,277.8 |
$ |
38,863.2 |
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CME Group Inc. and Subsidiaries Consolidated Statements of Income (dollars in millions, except per share amounts; shares in thousands) |
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Quarter Ended |
Year Ended December 31, |
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2013 |
2012 |
2013 |
2012 |
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Revenues |
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Clearing and transaction fees |
$ |
576.8 |
$ |
544.6 |
$ |
2,460.4 |
$ |
2,371.5 |
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Market data and information services |
76.5 |
79.3 |
315.4 |
387.1 |
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Access and communication fees |
20.8 |
23.3 |
83.2 |
88.8 |
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Other |
12.9 |
13.7 |
77.3 |
67.2 |
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Total Revenues |
687.0 |
660.9 |
2,936.3 |
2,914.6 |
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Expenses |
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Compensation and benefits |
126.6 |
113.0 |
518.9 |
496.7 |
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Communications |
8.6 |
9.3 |
35.3 |
40.1 |
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Technology support services |
14.0 |
14.0 |
53.6 |
50.7 |
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Professional fees and outside services |
44.9 |
27.6 |
130.3 |
126.8 |
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Amortization of purchased intangibles |
25.6 |
25.9 |
103.0 |
116.2 |
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Depreciation and amortization |
34.3 |
33.9 |
135.1 |
136.9 |
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Occupancy and building operations |
21.6 |
19.2 |
78.3 |
77.0 |
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Licensing and other fee agreements |
24.1 |
19.4 |
97.9 |
82.6 |
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Other |
64.1 |
23.0 |
146.9 |
95.6 |
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Total Expenses |
363.8 |
285.3 |
1,299.3 |
1,222.6 |
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Operating Income |
323.2 |
375.6 |
1,637.0 |
1,692.0 |
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Non-Operating Income (Expense) |
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Investment income |
10.0 |
7.4 |
44.9 |
38.7 |
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Gains (losses) on derivative investments |
— |
(0.1) |
— |
(0.1) |
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Interest and other borrowing costs |
(38.6) |
(44.0) |
(151.4) |
(132.2) |
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Equity in net gains (losses) of unconsolidated subsidiaries |
12.4 |
15.9 |
70.5 |
30.7 |
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Other non-operating income (expense) |
— |
(1.3) |
— |
64.3 |
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Total Non-Operating |
(16.2) |
(22.1) |
(36.0) |
1.4 |
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Income before Income Taxes |
307.0 |
353.5 |
1,601.0 |
1,693.4 |
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Income tax provision |
113.9 |
185.4 |
622.9 |
786.7 |
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Net Income |
193.1 |
168.1 |
978.1 |
906.7 |
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Less: net income (loss) attributable to non-controlling interests |
— |
1.3 |
1.3 |
10.4 |
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Net Income Attributable to CME Group |
$ |
193.1 |
$ |
166.8 |
$ |
976.8 |
$ |
896.3 |
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Earnings per Common Share Attributable to CME Group: |
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Basic |
$ |
0.58 |
$ |
0.50 |
$ |
2.94 |
$ |
2.71 |
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Diluted |
0.58 |
0.50 |
2.92 |
2.70 |
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Weighted Average Number of Common Shares: |
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Basic |
333,636 |
331,734 |
332,678 |
331,252 |
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Diluted |
335,311 |
332,804 |
334,398 |
332,319 |
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CME Group Inc. and Subsidiaries Quarterly Operating Statistics |
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4Q 2012 |
1Q 2013 |
2Q 2013 |
3Q 2013 |
4Q 2013 |
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Trading Days |
64 |
60 |
64 |
64 |
64 |
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Quarterly Average Daily Volume (ADV) CME Group ADV (in thousands) |
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Product Line |
4Q 2012 |
1Q 2013 |
2Q 2013 |
3Q 2013 |
4Q 2013 |
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Interest rate |
4,094 |
5,656 |
6,828 |
5,839 |
5,274 |
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Equity |
2,532 |
2,608 |
3,079 |
2,408 |
2,471 |
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Foreign exchange |
767 |
1,010 |
1,042 |
792 |
705 |
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Energy |
1,489 |
1,730 |
1,796 |
1,609 |
1,571 |
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Agricultural commodity |
982 |
1,084 |
1,106 |
1,009 |
992 |
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Metal |
324 |
396 |
471 |
360 |
317 |
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Total |
10,188 |
12,484 |
14,323 |
12,018 |
11,331 |
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Venue |
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Electronic |
8,899 |
10,908 |
12,457 |
10,199 |
9,723 |
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Open outcry |
751 |
885 |
1,134 |
1,173 |
957 |
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Privately negotiated* |
539 |
691 |
731 |
646 |
651 |
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Total |
10,188 |
12,484 |
14,323 |
12,018 |
11,331 |
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Average Rate Per Contract (RPC) CME Group RPC |
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Product Line |
4Q 2012 |
1Q 2013 |
2Q 2013 |
3Q 2013 |
4Q 2013 |
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Interest rate |
$ |
0.494 |
$ |
0.468 |
$ |
0.455 |
$ |
0.484 |
$ |
0.504 |
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Equity |
0.697 |
0.691 |
0.714 |
0.695 |
0.702 |
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Foreign exchange |
0.835 |
0.848 |
0.826 |
0.819 |
0.835 |
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Energy |
1.487 |
1.390 |
1.260 |
1.300 |
1.279 |
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Agricultural commodity |
1.298 |
1.318 |
1.378 |
1.323 |
1.327 |
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Metal |
1.709 |
1.656 |
1.613 |
1.626 |
1.682 |
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Average RPC |
$ |
0.831 |
$ |
0.785 |
$ |
0.748 |
$ |
0.762 |
$ |
0.780 |
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Note: Fourth-quarter 2012 and first-quarter 2013 volume and RPC data does not include volume and revenue from our acquisition of the Kansas City Board of Trade completed on November 30, 2012. Kansas City Board of Trade average daily volume for first-quarter 2013 totaled 24,579. |
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*The privately negotiated venue average daily volume includes both traditional block trades as well as what was historically categorized as CME ClearPort. Going forward there will no longer be a break out for CME ClearPort. |
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CME Group Inc. and Subsidiaries |
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Reconciliation of GAAP to Non-GAAP Measures |
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(dollars in millions, except per share amounts; shares in thousands) |
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Quarter Ended |
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December 31, 2013 |
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GAAP Net Income Attributable to CME Group |
$ |
193.1 |
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Add: Loss on sale of NYMEX building |
27.1 |
|||
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Add: Intangible asset write-off by unconsolidated subsidiary |
6.9 |
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Less: Tax effect of loss on sale of NYMEX building and intangible asset write-off |
(12.8) |
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Adjusted Net Income Attributable to CME Group |
$ |
214.3 |
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GAAP Earnings per Common Share Attributable to CME Group: |
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Basic |
$ |
0.58 |
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Diluted |
0.58 |
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Adjusted earnings per Common Share Attributable to CME Group: |
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Basic |
$ |
0.64 |
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Diluted |
0.64 |
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Weighted Average Number of Common Shares: |
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Basic |
333,636 |
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Diluted |
335,311 |
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