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CME Group Inc. (NASDAQ: CME) today reported revenues of $719 million and operating income of $406 million for the first quarter of 2013. Net income attributable to CME Group was $236 million and diluted earnings per share were $0.71.
First-quarter 2013 results included a $12 million expense due to foreign exchange transaction losses incurred during the quarter principally, related to cash held in British pounds within foreign entities whose functional currency is the U.S. dollar. On a non-GAAP basis, first-quarter diluted EPS would have been $0.73.1
"We have made progress so far this year as we continue to implement our global strategy," said CME Group Executive Chairman and President Terry Duffy. "Our overall average daily volume was 12.5 million in the first quarter compared with 10.5 million in the second half of last year, driven by strength in our interest rate, foreign exchange and equity products. As the over-the-counter market transitions, we are providing our clients with a variety of tools to help them manage risk. Looking ahead, we will keep investing in the company's growth while also continuing to consistently return capital to shareholders in the most efficient way."
"Our focus on expense discipline during the first quarter equated to stronger operating leverage," said CME Group Chief Executive Officer Phupinder Gill. "At the same time, we are expanding our European presence with the anticipated launch of our European exchange this summer, along with new products to the CME Clearing Europe slate, such as the recently launched interest rate swaps. We also posted record trading volume and revenue from Asia, up 24 percent and 31 percent, respectively. Additionally, we are working with hundreds of customers and many intermediaries to ensure operational readiness ahead of the second wave of the OTC clearing mandate that will take place June 10."
First-quarter 2013 average daily volume was 12.5 million contracts, up 1 percent from first-quarter 2012, and was the highest quarterly average daily volume since third-quarter 2011. Clearing and transaction fee revenues were $593 million, down 4 percent compared with the same period last year. First-quarter total average rate per contract was $0.785 cents, down 3 percent compared with first-quarter 2012.
First-quarter 2013 operating expense was $313 million. During the first quarter, the effective tax rate was 38.8 percent. As of March 31, the company had $1.9 billion of cash and marketable securities and $2.9 billion of debt.
CME Group will hold a conference call to discuss first-quarter 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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CME Group Inc. and Subsidiaries Consolidated Balance Sheets (in millions) |
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March 31, 2013 |
December 31, 2012 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ |
1,843.4 |
$ |
1,604.7 |
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Marketable securities |
60.7 |
56.6 |
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Accounts receivable, net of allowance |
309.2 |
267.5 |
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Other current assets (includes $40.0 in restricted cash) |
172.5 |
204.3 |
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Cash performance bonds and guaranty fund contributions |
9,912.0 |
6,584.8 |
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Total current assets |
12,297.8 |
8,717.9 |
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Property, net of accumulated depreciation and amortization |
709.9 |
724.0 |
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Intangible assets—trading products |
17,175.3 |
17,175.3 |
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Intangible assets—other, net |
2,827.8 |
2,853.7 |
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Goodwill |
7,569.0 |
7,566.9 |
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Other assets (includes $69.7 and $73.0 in restricted cash) |
1,842.0 |
1,825.4 |
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Total Assets |
$ |
42,421.8 |
$ |
38,863.2 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable |
$ |
31.3 |
$ |
41.7 |
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Short-term debt |
1,499.0 |
749.7 |
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Other current liabilities |
344.4 |
240.7 |
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Cash performance bonds and guaranty fund contributions |
9,912.0 |
6,584.8 |
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Total current liabilities |
11,786.7 |
7,616.9 |
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Long-term debt |
1,358.0 |
2,106.8 |
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Deferred income tax liabilities, net |
7,412.1 |
7,413.3 |
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Other liabilities |
227.0 |
220.5 |
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Total Liabilities |
20,783.8 |
17,357.5 |
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Redeemable non-controlling interest |
82.2 |
80.8 |
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CME Group shareholders' equity |
21,549.8 |
21,419.1 |
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Non-controlling interest |
6.0 |
5.8 |
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Total Equity |
21,555.8 |
21,424.9 |
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Total Liabilities and Equity |
$ |
42,421.8 |
$ |
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 |
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March 31, 2013 |
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2013 |
2012 |
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Revenues |
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Clearing and transaction fees |
$ |
593.2 |
$ |
621.1 |
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Market data and information services |
80.9 |
114.2 |
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Access and communication fees |
21.5 |
19.7 |
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Other |
23.0 |
19.6 |
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Total Revenues |
718.6 |
774.6 |
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Expenses |
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Compensation and benefits |
129.4 |
135.1 |
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Communications |
8.9 |
10.3 |
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Technology support services |
12.4 |
12.8 |
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Professional fees and outside services |
21.9 |
32.2 |
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Amortization of purchased intangibles |
25.9 |
32.8 |
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Depreciation and amortization |
32.6 |
34.9 |
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Occupancy and building operations |
18.5 |
20.3 |
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Licensing and other fee agreements |
21.2 |
20.7 |
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Other |
42.3 |
24.3 |
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Total Expenses |
313.1 |
323.4 |
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Operating Income |
405.5 |
451.2 |
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Non-Operating Income (Expense) |
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Investment income |
3.6 |
12.1 |
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Interest and other borrowing costs |
(39.0) |
(29.1) |
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Equity in net gains (losses) of unconsolidated subsidiaries |
17.5 |
(0.8) |
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Total Non-Operating |
(17.9) |
(17.8) |
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Income before Income Taxes |
387.6 |
433.4 |
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Income tax provision |
150.2 |
167.1 |
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Net Income |
237.4 |
266.3 |
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Less: net income (loss) attributable to non-controlling interests |
1.6 |
(0.3) |
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Net Income Attributable to CME Group |
$ |
235.8 |
$ |
266.6 |
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Earnings per Common Share Attributable to CME Group: |
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Basic |
$ |
0.71 |
$ |
0.81 |
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Diluted |
0.71 |
0.80 |
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Weighted Average Number of Common Shares: |
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Basic |
331,953 |
330,814 |
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Diluted |
333,372 |
331,851 |
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CME Group Inc. and Subsidiaries |
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Quarterly Operating Statistics |
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1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
1Q 2013 |
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Trading Days |
62 |
64 |
63 |
64 |
60 |
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Quarterly Average Daily Volume (ADV) |
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CME Group ADV (in thousands) |
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Product Line |
1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
1Q 2013 |
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Interest rates |
5,613 |
5,136 |
4,514 |
4,094 |
5,656 |
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Equities |
2,390 |
2,919 |
2,391 |
2,532 |
2,608 |
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Foreign exchange |
846 |
920 |
846 |
767 |
1,010 |
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Energy |
1,952 |
1,741 |
1,590 |
1,489 |
1,730 |
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Agricultural commodities |
1,122 |
1,288 |
1,171 |
982 |
1,084 |
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Metals |
385 |
372 |
327 |
324 |
396 |
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Total |
12,308 |
12,376 |
10,839 |
10,188 |
12,484 |
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Venue |
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Electronic |
10,177 |
10,595 |
9,293 |
8,899 |
10,908 |
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Open outcry |
1,348 |
1,109 |
979 |
751 |
885 |
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Privately negotiated |
229 |
238 |
208 |
210 |
275 |
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Exchange-traded Total |
11,754 |
11,942 |
10,481 |
9,859 |
12,068 |
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CME ClearPort |
554 |
434 |
358 |
329 |
416 |
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Total |
12,308 |
12,376 |
10,839 |
10,188 |
12,484 |
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Average Rate Per Contract (RPC) |
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CME Group RPC |
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Product Line |
1Q 2012 |
2Q 2012 |
3Q 2012 |
4Q 2012 |
1Q 2013 |
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Interest rates |
$ |
0.475 |
$ |
0.485 |
$ |
0.481 |
$ |
0.494 |
$ |
0.468 |
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Equities |
0.692 |
0.674 |
0.685 |
0.697 |
0.691 |
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Foreign exchange |
0.841 |
0.807 |
0.808 |
0.835 |
0.848 |
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Energy |
1.517 |
1.496 |
1.473 |
1.487 |
1.390 |
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Agricultural commodities |
1.216 |
1.264 |
1.301 |
1.298 |
1.318 |
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Metals |
1.647 |
1.649 |
1.693 |
1.709 |
1.656 |
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Average RPC |
$ |
0.811 |
$ |
0.812 |
$ |
0.822 |
$ |
0.831 |
$ |
0.785 |
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Venue |
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Exchange-traded |
$ |
0.737 |
$ |
0.750 |
$ |
0.757 |
$ |
0.771 |
$ |
0.730 |
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CME ClearPort |
2.388 |
2.510 |
2.719 |
2.646 |
2.360 |
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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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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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March 31, 2013 |
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GAAP Net Income Attributable to CME Group |
$ |
235.8 |
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Add: Foreign exchange transaction losses |
12.0 |
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Less: Income tax effect related to above |
(3.4) |
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Adjusted Net Income Attributable to CME Group |
$ |
244.4 |
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GAAP Earnings per Common Share Attributable to CME Group: |
— |
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Basic |
$ |
0.71 |
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Diluted |
0.71 |
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Adjusted earnings per Common Share Attributable to CME Group: |
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Basic |
$ |
0.74 |
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Diluted |
0.73 |
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Weighted Average Number of Common Shares: |
|||||
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Basic |
331,953 |
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Diluted |
333,372 |
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CME-G
SOURCE CME Group Inc.
