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IntercontinentalExchange Reports 3Q13 Adjusted Diluted EPS of $1.97, +10% yty; Adjusted Net Income Attributable to ICE of $145MM

Released : 05 November 2013

IntercontinentalExchange Reports 3Q13 Adjusted Diluted EPS of $1.97, +10% yty; Adjusted Net Income Attributable to ICE of $145MM

November 5, 2013

ATLANTA, Nov. 5, 2013 /PRNewswire/ -- IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of global markets and clearing houses, today reported financial results for the third quarter of 2013. Consolidated revenues were $338 million, an increase of 5% from the third quarter of 2012. Consolidated net income attributable to ICE was $141 million, up 8% from the third quarter of 2012, and diluted earnings per share (EPS) increased 7% over the third quarter to $1.92 on a GAAP basis.

For the third quarter ended September 30, 2013, certain items were included in ICE's operating results that are not indicative of its core business performance, including transaction costs related to ICE's acquisition of NYSE Euronext. Excluding these items, third quarter 2013 adjusted net income attributable to ICE increased 10% over the prior third quarter to $145 million and adjusted diluted EPS rose 10% to $1.97. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income attributable to ICE and adjusted diluted EPS.

"ICE delivered another solid quarter with significant operational and strategic initiatives that provide for continued long-term growth. The pending completion of our acquisition of NYSE Euronext will expand our reach to serving customers in important asset classes including interest rates and equities," said Jeffrey C. Sprecher , ICE Chairman and CEO. "We have a clear set of objectives for achieving synergies along with a range of opportunities across rapidly evolving global markets. We will maintain our focus on meeting our customers' needs and on disciplined growth and industry-leading returns for shareholders."

ICE SVP and CFO Scott A. Hill added: "Throughout 2013 we have demonstrated our ability to grow our business through responsive market solutions that serve our customers' risk management needs. In October, we successfully completed a $1.4 billion offering of senior notes to help finance the NYSE Euronext acquisition. Together with our disciplined approach to capital allocation and investment, we will first focus on reducing our debt levels and instituting an annual dividend, while ensuring we maintain the flexibility to consider further investments and share repurchases over time." 

Third Quarter 2013 Results

Third quarter 2013 consolidated revenues increased 5% from the prior third quarter to $338 million with consolidated transaction and clearing revenues of $280 million.

Futures average daily volume (ADV) was 3.1 million contracts, down 1% compared to the third quarter of 2012. Revenues from ICE's credit default swap (CDS) trade execution, processing and clearing business were $38 million, up 15% from the third quarter of 2012, and included $22 million in CDS clearing revenues.

Consolidated market data revenues increased 12% to $40 million in the third quarter of 2013 compared to the prior third quarter. Consolidated other revenues were $18 million in the third quarter of 2013.

Consolidated operating expenses were up 5% from the prior third quarter to $136 million, and consolidated operating income rose 4% to $202 million. Operating margin was 60%, and the effective tax rate for the quarter was 25%.

First Nine Months of 2013 Results

Consolidated revenues in the first nine months of 2013 grew 2% to $1.1 billion. Futures ADV in the nine months of the year was 3.4 million contracts down 1% from the first nine months of 2012, with consolidated transaction and clearing revenues of $898 million, down 1% from the prior year's first nine months.

Consolidated market data revenues increased 11% to $121 million and consolidated operating margin was 59% for the first nine months of 2013.

Cash flows from operations were $562 million in the nine months of 2013, down 2% year-over-year. Capital expenditures during the first nine months of 2013 were $76 million and capitalized software development costs totaled $28 million.

Unrestricted cash and short term investments were $1.6 billion as of September 30, 2013, and outstanding debt was $791 million.

Guidance

  • ICE expects 2013 adjusted consolidated expenses to increase in the range of 1% to 2% compared to 2012 adjusted consolidated expenses, versus prior guidance of an increase in the range of 2% to 3%.
  • ICE's diluted share count for the fourth quarter of 2013 is expected to be in the range of 73.2 million to 74.2 million weighted average shares outstanding.
  • The ICE Board of Directors declared a quarterly cash dividend of an aggregate $75 million for the fourth quarter of 2013, which is contingent on the closing of the NYSE Euronext acquisition, with a record date of December 16, 2013 and a payment date of December 31, 2013. The anticipated ex-dividend date will be December 12, 2013.

Earnings Conference Call Information

ICE will hold a conference call today, November 5, at 8:30 a.m. ET to review its third quarter 2013 financial results. A live audio webcast of the earnings call will be available on the company's website at www.theice.com under About ICE/Investors & Media. Participants may also listen via telephone by dialing (877) 674-6420 from the United States, or (708) 290-1370 from outside of the United States. Telephone participants should call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.

Historical futures volume, rate per contract and open interest data can be found at: http://ir.theice.com/supplemental.cfm

Volume for the prior-year periods, has been adjusted to include OTC swap contracts that were transitioned to energy futures contracts on October 15, 2012.

ICE Conference Call - Strategy & Financial Update

Following the closure of the NYSE Euronext transaction, ICE will host a conference call to discuss the Company's strategy and financials.

 

IntercontinentalExchange, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)










Nine Months Ended
September 30,


Three Months Ended
September 30,

2013


2012


2013


2012

Revenues:








Transaction and clearing fees, net

$            898,465


$        908,057


$            279,882


$            279,177

Market data fees

121,246


109,504


40,213


35,947

Other

41,666


22,033


17,776


8,063









Total revenues

1,061,377


1,039,594


337,871


323,187









Operating expenses:








Compensation and benefits

192,396


194,596


59,550


61,820

Technology and communications

36,124


34,535


12,927


11,073

Professional services

22,979


25,741


7,392


7,813

Rent and occupancy

22,721


14,544


5,154


5,167

Acquisition-related transaction costs

32,387


9,994


6,073


2,285

Selling, general and administrative

28,229


28,580


10,238


8,114

Depreciation and amortization

99,625


96,955


34,391


32,864









Total operating expenses

434,461


404,945


135,725


129,136









Operating income

626,916


634,649


202,146


194,051









Other income (expense):








Interest and investment income

2,122


1,014


700


332

Interest expense

(29,751)


(29,112)


(9,902)


(9,445)

Other income (expense), net

1,258


(253)


(389)


(279)









Total other expense, net

(26,371)


(28,351)


(9,591)


(9,392)









Income before income taxes

600,545


606,298