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- $3.06 Adjusted Diluted EPS from Continuing Operations, +26% y/y
- $850 Million Consolidated Revenues, less Transaction-based Expenses, +7% y/y
- 15% Increase in Quarterly Cash Dividend Payment to $0.75 Per Share in 2Q15
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today reported financial results for the first quarter of 2015. For the quarter ended March 31, 2015, consolidated net income attributable to ICE was $315 million on $850 million consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the first quarter were $2.80.
ICE's operating results include amortization of acquisition-related intangibles and acquisition and integration related expenses that are not reflective of ICE's cash operations or core business performance. Excluding these items, net of tax, first quarter 2015 adjusted net income from continuing operations was $344 million and adjusted diluted EPS from continuing operations were $3.06, an increase of 26% over the prior first 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.
"We delivered another record quarter by growing revenues and reducing our expense base, while serving our customers' needs amid a dynamic time,” said ICE Chairman and CEO Jeffrey C. Sprecher. "We grew revenues across each major business line, including data services and listings where we posted record revenues, as well as in cash equities and commodities markets. And again this quarter, NYSE led in total capital raised globally. We continue to innovate across all of our businesses to deliver growth and solid returns for our shareholders.”
Scott Hill, ICE CFO, said: “We maintained strong expense discipline in the quarter and remain on track to achieve our expense synergy goals as well as double digit earnings growth in 2015. In addition, our strong cash generation and balance sheet enabled us to return $269 million of capital to shareholders through dividends and share repurchases. And we expanded our share buyback authorization to $600 million and announced a 15% increase in our dividend starting in the second quarter. Our continued growth and strong cash generation enables us to pursue our strategic objectives, serve our customers and create value for our shareholders."
First Quarter 2015 Results
First quarter 2015 consolidated revenues, less transaction-based expenses, increased 7% to$850 million compared to the same period in 2014. Included in this amount are transaction and clearing revenues, less transaction-based expenses, of $506 million.
Consolidated data services revenues for the first quarter of 2015 were a record $187 million, up 19% year-over-year and listings revenues were a record $101 million, up 12% compared to the prior first quarter. Consolidated other revenues were $56 million.
Consolidated operating expenses were $388 million for the first quarter of 2015, including $19 million in NYSE integration costs. Consolidated operating income for the first quarter was$462 million and operating margin was 54%. The effective tax rate for the first quarter was 27%.
Consolidated cash flows from operations were $465 million in the first three months of 2015. Operational capital expenditures were $30 million and capitalized software development costs totaled $21 million.
ICE had unrestricted cash of $752 million and $3.2 billion in outstanding debt, excluding $1.0 billion reserved for the repayment of the June 2015 Eurobonds as of March 31, 2015.
Financial Guidance
ICE expects second quarter 2015 adjusted operating expenses in the range of $335 million to$340 million.
ICE's diluted share count for the second quarter 2015 is expected to be in the range of 111 million to 113 million weighted average shares outstanding, including share repurchases through April 2015.
Earnings Conference Call Information
ICE will hold a conference call today, May 5, at 8:30 a.m. ET to review its first 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 1436450 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) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Revenues: | 2015 | 2014 | ||||||
| Transaction and clearing fees, net | $ | 812 | $ | 764 | ||||
| Data services fees | 187 | 157 | ||||||
| Listing fees | 101 | 90 | ||||||
| Other revenues | 56 | 52 | ||||||
| Total revenues | 1,156 | 1,063 | ||||||
| Transaction-based expenses: | ||||||||
| Section 31 fees | 92 | 74 | ||||||
| Cash liquidity payments, routing and clearing | 214 | 192 | ||||||
| Total revenues, less transaction-based expenses | 850 | 797 | ||||||
| Operating expenses: | ||||||||
| Compensation and benefits | 151 | 154 | ||||||
| Technology and communication | 51 | 47 | ||||||
| Professional services | 33 | 54 | ||||||
| Rent and occupancy | 16 | 20 | ||||||
| Acquisition-related transaction and integration costs | 19 | 25 | ||||||
| Selling, general and administrative | 29 | 26 | ||||||
| Depreciation and amortization | 89 | 80 | ||||||
| Total operating expenses | 388 | 406 | ||||||
| Operating income | 462 | 391 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (23 | ) | (27 | ) | ||||
| Other income (expense), net | 2 | (2 | ) | |||||
| Other expense, net | (21 | ) | (29 | ) | ||||
| Income from continuing operations before income tax expense | 441 | 362 | ||||||
| Income tax expense | 118 | 101 | ||||||
| Income from continuing operations | 323 | 261 | ||||||
| Income from discontinued operations, net of tax | — | 13 | ||||||
| Net income | $ | 323 | $ | 274 | ||||
| Net income attributable to non-controlling interest | (8 | ) | (13 | ) | ||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 315 | $ | 261 | ||||
| Basic earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | ||||||||
| Continuing operations | $ | 2.81 | $ | 2.16 | ||||
| Discontinued operations | — | 0.12 | ||||||
| Basic earnings per share | $ | 2.81 | $ | 2.28 | ||||
| Diluted earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | ||||||||
| Continuing operations | $ | 2.80 | $ | 2.15 | ||||
| Discontinued operations | — | 0.12 | ||||||
| Diluted earnings per share | $ | 2.80 | $ | 2.27 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 112 | 115 | ||||||
| Diluted | 112 | 116 | ||||||
| Dividend per share | $ | 0.65 | 0.65 | |||||
| Consolidated Balance Sheets | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| March 31, 2015 | December 31, 2014 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 752 | $ | 652 | ||||
| Short-term investments | 1,073 | 1,200 | ||||||
| Short-term restricted cash and investments | 298 | 329 | ||||||
| Customer accounts receivable, net | 608 | 471 | ||||||
| Margin deposits and guaranty funds | 45,600 | 47,458 | ||||||
| Prepaid expenses and other current assets | 155 | 135 | ||||||
| Total current assets | 48,486 | 50,245 | ||||||
| Property and equipment, net | 879 | 874 | ||||||
| Other non-current assets: | ||||||||
| Goodwill | 8,504 | 8,535 | ||||||
| Other intangible assets, net | 7,724 | 7,780 | ||||||
| Long-term restricted cash and investments | 295 | 297 | ||||||
| Long-term investments | 309 | 379 | ||||||
| Other non-current assets | 231 | 169 | ||||||
| Total other non-current assets | 17,063 | 17,160 | ||||||
| Total assets | $ | 66,428 | $ | 68,279 | ||||
| Liabilities and Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 392 | $ | 337 | ||||
| Section 31 fees payable | 92 | 137 | ||||||
| Accrued salaries and benefits | 112 | 205 | ||||||
| Deferred revenue | 367 | 69 | ||||||
| Short-term debt | 1,946 | 2,042 | ||||||
| Margin deposits and guaranty funds | 45,600 | 47,458 | ||||||
| Other current liabilities | 289 | 291 | ||||||
| Total current liabilities | 48,798 | 50,539 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred tax liability, net | 1,913 | 1,938 | ||||||
| Long-term debt | 2,247 | 2,247 | ||||||
| Accrued employee benefits | 502 | 516 | ||||||
| Other non-current liabilities | 474 | 482 | ||||||
| Total non-current liabilities | 5,136 | 5,183 | ||||||
| Total liabilities | 53,934 | 55,722 | ||||||
| Redeemable non-controlling interest | 169 | 165 | ||||||
| Equity: | ||||||||
| ICE shareholders' equity: | ||||||||
| Preferred Stock | — | — | ||||||
| Common Stock | 1 | 1 | ||||||
| Treasury stock, at cost | (975 | ) | (743 | ) | ||||
| Additional paid-in capital | 9,983 | 9,938 | ||||||
| Retained earnings | 3,441 | 3,210 | ||||||
| Accumulated other comprehensive loss | (153 | ) | (46 | ) | ||||
| Total ICE shareholders’ equity | 12,297 | 12,360 | ||||||
| Non-controlling interest in consolidated subsidiaries | 28 | 32 | ||||||
| Total equity | 12,325 | 12,392 | ||||||
| Total liabilities and equity | $ | 66,428 | $ | 68,279 | ||||
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):
| Three Months Ended | ||||
| March 31, 2015 | ||||
| Income from continuing operations | $ | 323 | ||
| Add: NYSE integration costs | 19 | |||
| Add: Amortization of acquisition-related intangibles | 33 | |||
| Less: Income tax effect for the items above | (19 | ) | ||
| Less: Deferred tax adjustment on acquisition related intangibles | (4 | ) | ||
| Less: Net income from continuing operations attributable to non-controlling interest | (8 | ) | ||
| Adjusted net income from continuing operations: | $ | 344 | ||
| Earnings per share from continuing operations: | ||||
| Basic | $ | 2.81 | ||
| Diluted | $ | 2.80 | ||
| Adjusted earnings per share from continuing operations: | ||||
| Adjusted basic | $ | 3.07 | ||
| Adjusted diluted | $ | 3.06 | ||
| Weighted average common shares outstanding: | ||||
| Basic | 112 | |||
| Diluted | 112 | |||
