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Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses and provider of global data and listing services, today reported financial results for the first quarter of 2016. For the quarter ended March 31, 2016, consolidated net income attributable to ICE was $369 million on $1.2 billion of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the first quarter were $3.08.
ICE's operating results include amortization of acquisition-related intangibles, NYSE and Interactive Data transaction 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, first quarter 2016 adjusted net income was $441 million and adjusted diluted EPS were $3.68, an increase of 20% 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 and adjusted diluted EPS.
"This was the best quarter in the company’s history, and was driven by growth across our global markets and data services business," said ICE Chairman and CEO Jeffrey C. Sprecher. "Our solid top-line growth combined with our strong expense management, including the acceleration of synergies, resulted in our seventh consecutive quarter of double-digit earnings growth. This strong performance reflects our team's ability to deliver strong operational results, even as we consider potential strategic opportunities. Our focus on executing on our objectives for our customers and shareholders will continue to drive our growth.”
Scott A. Hill, ICE CFO, said: “We generated nearly $600 million of operating cash in the quarter, which enabled us to invest in growth, reduce our debt by over $500 million and return over $100 million to shareholders through dividends in the first quarter. Our dividends continue to grow as the company grows, with the dividend payout representing a 14% increase compared to the payout in the fourth quarter of last year. And we demonstrated that we have the ability to rapidly reduce our leverage as we integrate our businesses, ultimately providing greater flexibility to increase capital returns to our shareholders sooner."
First Quarter 2016 Results
First quarter 2016 consolidated revenues, less transaction-based expenses, were $1.2 billion, including $260 million in revenues from Interactive Data and Trayport during the quarter.
Transaction and clearing segment revenues were $574 million, with transaction and clearing revenues, less transaction-based expenses, of $529 million in the first quarter 2016, up 4% compared to the prior first quarter. Other revenues were $45 million.
Data and listings segment revenues were $580 million, including record data services revenues of $477 million for the first quarter 2016 and record listings revenues of $103 million, up 3% compared to the prior first quarter.
Consolidated operating expenses were $570 million for the first quarter of 2016, including $17 million in NYSE and Interactive Data transaction and integration expenses. Consolidated operating income for the first quarter was $584 million and operating margin was 51%. The effective tax rate for the first quarter was 30%.
Consolidated cash flows from operations were $597 million for the first three months of 2016, up 28% compared to the prior first quarter. Operational capital expenditures were $25 million and capitalized software development costs totaled$25 million.
Unrestricted cash and short-term investments were $493 million and outstanding debt was $6.8 billion as of March 31, 2016.
Financial Guidance
- ICE expects full year 2016 data services revenues to increase in the range of 6% to 7% compared to 2015 pro forma data services revenues.
- ICE expects full year 2016 adjusted operating expenses in the range of $1.97 billion to $2.0 billion, including second quarter 2016 adjusted operating expenses in the range of $495 million to $505 million.
- ICE expects to realize expense synergies in the range of $85 million to $90 million in 2016.
- ICE's diluted share count for the second quarter and full year 2016 is expected to be in the range of 118 million to 121 million weighted average shares outstanding.
Earnings Conference Call Information
ICE will hold a conference call today, May 4, at 8:30 a.m. ET to review its first quarter 2016 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 fromCanada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 6427393 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: | 2016 | 2015 | |||||
| Transaction and clearing, net | $ | 929 | $ | 836 | |||
| Data services | 477 | 200 | |||||
| Listings | 103 | 101 | |||||
| Other revenues | 45 | 43 | |||||
| Total revenues | 1,554 | 1,180 | |||||
| Transaction-based expenses: | |||||||
| Section 31 fees | 98 | 92 | |||||
| Cash liquidity payments, routing and clearing | 302 | 238 | |||||
| Total revenues, less transaction-based expenses | 1,154 | 850 | |||||
| Operating expenses: | |||||||
| Compensation and benefits | 236 | 151 | |||||
| Technology and communication | 92 | 51 | |||||
| Professional services | 32 | 33 | |||||
| Rent and occupancy | 18 | 16 | |||||
| Acquisition-related transaction and integration costs | 27 | 19 | |||||
| Selling, general and administrative | 22 | 29 | |||||
| Depreciation and amortization | 143 | 89 | |||||
| Total operating expenses | 570 | 388 | |||||
| Operating income | 584 | 462 | |||||
| Other income (expense): | |||||||
| Interest expense | (46 | ) | (23 | ) | |||
| Other income, net | 2 | 2 | |||||
| Other expense, net | (44 | ) | (21 | ) | |||
| Income before income tax expense | 540 | 441 | |||||
| Income tax expense | 163 | 118 | |||||
| Net income | $ | 377 | $ | 323 | |||
| Net income attributable to non-controlling interest | (8 | ) | (8 | ) | |||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 369 | $ | 315 | |||
| Earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | |||||||
| Basic | $ | 3.10 | $ | 2.81 | |||
| Diluted | $ | 3.08 | $ | 2.80 | |||
| Weighted average common shares outstanding: | |||||||
| Basic | 119 | 112 | |||||
| Diluted | 120 | 112 | |||||
| Dividend per share | $ | 0.85 | $ | 0.65 | |||
| Consolidated Balance Sheets | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| As of | As of | |||||||
| March 31, 2016 | December 31, 2015 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 468 | $ | 627 | ||||
| Short-term investments | 25 | 29 | ||||||
| Short-term restricted cash and investments | 657 | 657 | ||||||
| Customer accounts receivable, net | 941 | 700 | ||||||
| Margin deposits and guaranty funds | 52,329 | 51,169 | ||||||
| Prepaid expenses and other current assets | 134 | 131 | ||||||
| Total current assets | 54,554 | 53,313 | ||||||
| Property and equipment, net | 1,018 | 1,037 | ||||||
| Other non-current assets: | ||||||||
| Goodwill | 12,104 | 12,079 | ||||||
| Other intangible assets, net | 10,630 | 10,758 | ||||||
| Long-term restricted cash and investments | 262 | 263 | ||||||
| Long-term investments | 352 | 299 | ||||||
| Other non-current assets | 240 | 238 | ||||||
| Total other non-current assets | 23,588 | 23,637 | ||||||
| Total assets | $ | 79,160 | $ | 77,987 | ||||
| Liabilities and Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 399 | $ | 398 | ||||
| Section 31 fees payable | 97 | 116 | ||||||
| Accrued salaries and benefits | 107 | 215 | ||||||
| Deferred revenue | 429 | 98 | ||||||
| Short-term debt | 2,048 | 2,591 | ||||||
| Margin deposits and guaranty funds | 52,329 | 51,169 | ||||||
| Other current liabilities | 227 | 156 | ||||||
| Total current liabilities | 55,636 | 54,743 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred tax liability, net | 2,893 | 2,837 | ||||||
| Long-term debt | 4,718 | 4,717 | ||||||
| Accrued employee benefits | 470 | 478 | ||||||
| Other non-current liabilities | 329 | 337 | ||||||
| Total non-current liabilities | 8,410 | 8,369 | ||||||
| Total liabilities | 64,046 | 63,112 | ||||||
| Redeemable non-controlling interest | 34 | 35 | ||||||
| Equity: | ||||||||
| Intercontinental Exchange, Inc. shareholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 1 | 1 | ||||||
| Treasury stock, at cost | (1,494 | ) | (1,448 | ) | ||||
| Additional paid-in capital | 12,334 | 12,295 | ||||||
| Retained earnings | 4,415 | 4,148 | ||||||
| Accumulated other comprehensive loss | (208 | ) | (188 | ) | ||||
| Total Intercontinental Exchange, Inc. shareholders’ equity | 15,048 | 14,808 | ||||||
| Non-controlling interest in consolidated subsidiaries | 32 | 32 | ||||||
| Total equity | 15,080 | 14,840 | ||||||
| Total liabilities and equity | $ | 79,160 | $ | 77,987 | ||||
