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| 8-K - FORM 8-K - Intercontinental Exchange, Inc. | v472118_8k.htm |
Exhibit 99.1
Intercontinental Exchange Reports Strong Second Quarter 2017 GAAP Diluted EPS of $0.70 on Record Revenues of $1.2 billion, +4% y/y; Record Adjusted Diluted EPS of $0.75
ATLANTA & NEW YORK, August 3, 2017 - Intercontinental Exchange (NYSE: ICE), a leading operator of global network of exchanges and clearing houses and provider of global data and listing services, today reported financial results for the second quarter of 2017. For the quarter ended June 30, 2017, consolidated net income attributable to ICE was $418 million on $1.2 billion of consolidated revenues less transaction-based expenses. Second quarter GAAP diluted earnings per share (EPS) were $0.70, up 17% year-over-year. On an adjusted basis, net income was $448 million in the second quarter, and diluted EPS were $0.75, up 9% year-over-year. Please refer to the reconciliation of non-GAAP financial measures included in the press release for more information on our adjusted net income and adjusted diluted EPS.
“Our record second quarter performance resulted in our seventeenth consecutive quarter of revenue growth," said ICE Chairman and CEO Jeffrey C. Sprecher. "This was driven by strength in both our data and listings and our trading and clearing segments, demonstrating the ability of our integrated business model to capture opportunities across global markets. We are focused on expanding our comprehensive trading, data and risk management solutions for our customers and creating strong value for shareholders."
Scott A. Hill, ICE CFO, added: “In the second quarter, we built on our track record of consistent revenue growth, expense discipline and margin expansion. This performance generated strong cash flows which allowed us to return over $700 million to shareholders in the first half of 2017 and has us on track to return around $1.4 billion this year. We are well positioned to achieve our growth objectives in 2017 and are investing to strengthen the foundation for continued growth in the future."
Second Quarter 2017 GAAP Results
Second quarter 2017 consolidated revenues, less transaction-based expenses, were $1.2 billion. Trading and clearing segment revenues, less transaction-based expenses, were $550 million in the second quarter 2017, up 4% compared to the prior second quarter. Data and listings segment revenues were $628 million in the second quarter of 2017, up 4% compared to the prior second quarter, including data services revenues of $521 million, up 5% and listings revenues of $107 million, up 2% over the prior second quarter.
Consolidated operating expenses were $569 million for the second quarter of 2017. Consolidated operating income for the second quarter was $609 million and operating margin was 52%. The effective tax rate for the second quarter was 25%.
Unrestricted cash was $398 million and outstanding debt was $5.9 billion as of June 30, 2017.
Financial Guidance
| • | ICE's third quarter 2017 GAAP operating expenses are expected to be in a range of $545 million to $555 million and adjusted operating expenses(1) are expected to be in a range of $480 million to $490 million. |
| • | ICE's interest expense is expected to be $47 million in the third quarter and $49 million in the fourth quarter, including the effect of refinancing ICE's October bond maturity. |
| • | ICE's adjusted effective tax rate is expected to be approximately 31% for the third quarter. |
| • | ICE's diluted share count for the third quarter is expected to be in the range of 590 million to 595 million weighted average shares outstanding. |
(1) The 2017 Non-GAAP adjusted operating expense excludes $67 million in amortization of acquisition-related intangibles for the third quarter of 2017. The GAAP operating expense forecast does not reflect an estimate of acquisition-related transaction and integration costs for the third quarter of 2017.
Earnings Conference Call Information
ICE will hold a conference call today, August 3, at 8:30 a.m. ET to review its second quarter 2017 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 4399343 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.
The conference call for the third quarter 2017 earnings has been scheduled for November 2, 2017 at 8:30 a.m. ET. Please refer to the Investor Relations website at www.ir.theice.com for additional information.
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)
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| Revenues: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Transaction and clearing, net | $ | 1,615 | $ | 1,789 | $ | 817 | $ | 860 | ||||||||
| Data services | 1,041 | 974 | 521 | 497 | ||||||||||||
| Listings | 213 | 208 | 107 | 105 | ||||||||||||
| Other revenues | 94 | 87 | 49 | 42 | ||||||||||||
| Total revenues | 2,963 | 3,058 | 1,494 | 1,504 | ||||||||||||
| Transaction-based expenses: | ||||||||||||||||
| Section 31 fees | 183 | 196 | 92 | 98 | ||||||||||||
| Cash liquidity payments, routing and clearing | 438 | 579 | 224 | 277 | ||||||||||||
| Total revenues, less transaction-based expenses | 2,342 | 2,283 | 1,178 | 1,129 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Compensation and benefits | 479 | 472 | 234 | 236 | ||||||||||||
| Professional services | 64 | 69 | 32 | 37 | ||||||||||||
| Acquisition-related transaction and integration costs | 23 | 47 | 9 | 20 | ||||||||||||
| Technology and communication | 195 | 184 | 97 | 92 | ||||||||||||
| Rent and occupancy | 35 | 35 | 17 | 17 | ||||||||||||
| Selling, general and administrative | 79 | 52 | 38 | 30 | ||||||||||||
| Depreciation and amortization | 276 | 289 | 142 | 146 | ||||||||||||
| Total operating expenses | 1,151 | 1,148 | 569 | 578 | ||||||||||||
| Operating income | 1,191 | 1,135 | 609 | 551 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (90 | ) | (90 | ) | (45 | ) | (44 | ) | ||||||||
| Other income, net | 187 | 11 | 1 | 9 | ||||||||||||
| Other income (expense), net | 97 | (79 | ) | (44 | ) | (35 | ) | |||||||||
| Income before income tax expense | 1,288 | 1,056 | 565 | 516 | ||||||||||||
| Income tax expense | 352 | 316 | 139 | 153 | ||||||||||||
| Net income | $ | 936 | $ | 740 | $ | 426 | $ | 363 | ||||||||
| Net income attributable to non-controlling interest | (16 | ) | (14 | ) | (8 | ) | (6 | ) | ||||||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 920 | $ | 726 | $ | 418 | $ | 357 | ||||||||
| Earnings per share attributable to Intercontinental Exchange, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 1.55 | $ | 1.22 | $ | 0.71 | $ | 0.60 | ||||||||
| Diluted | $ | 1.54 | $ | 1.21 | $ | 0.70 | $ | 0.60 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 593 | 595 | 591 | 595 | ||||||||||||
| Diluted | 597 | 598 | 595 | 599 | ||||||||||||
| Dividend per share | $ | 0.40 | $ | 0.34 | $ | 0.20 | $ | 0.17 | ||||||||
Consolidated Balance Sheets
(In millions)
(Unaudited)
| As of | As of | |||||||
| June 30, 2017 | December 31, 2016 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 398 | $ | 407 | ||||
| Short-term investments | 17 | 23 | ||||||
| Short-term restricted cash and investments | 769 | 679 | ||||||
| Customer accounts receivable, net | 912 | 777 | ||||||
| Margin deposits and guaranty funds | 53,585 | 55,150 | ||||||
| Prepaid expenses and other current assets | 767 | 97 | ||||||
| Total current assets | 56,448 | 57,133 | ||||||
| Property and equipment, net | 1,161 | 1,129 | ||||||
| Other non-current assets: | ||||||||
| Goodwill | 12,001 | 12,291 | ||||||
| Other intangible assets, net | 10,103 | 10,420 | ||||||
| Long-term restricted cash and investments | 264 | 264 | ||||||
| Long-term investments | — | 432 | ||||||
| Other non-current assets | 347 | 334 | ||||||
| Total other non-current assets | 22,715 | 23,741 | ||||||
| Total assets | $ | 80,324 | $ | 82,003 | ||||
| Liabilities and Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 415 | $ | 388 | ||||
| Section 31 fees payable | 181 | 131 | ||||||
| Accrued salaries and benefits | 140 | 230 | ||||||
| Deferred revenue | 338 | 114 | ||||||
| Short-term debt | 2,023 | 2,493 | ||||||
| Margin deposits and guaranty funds | 53,585 | 55,150 | ||||||
| Other current liabilities | 137 | 111 | ||||||
| Total current liabilities | 56,819 | 58,617 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred tax liability, net | 2,915 | 2,958 | ||||||
| Long-term debt | 3,874 | 3,871 | ||||||
| Accrued employee benefits | 407 | 430 | ||||||
| Other non-current liabilities | 376 | 337 | ||||||
| Total non-current liabilities | 7,572 | 7,596 | ||||||
| Total liabilities | 64,391 | 66,213 | ||||||
| Redeemable non-controlling interest | — | 36 | ||||||
| Equity: | ||||||||
| Intercontinental Exchange, Inc. shareholders’ equity: | ||||||||
| Common stock | 6 | 6 | ||||||
| Treasury stock, at cost | (590 | ) | (40 | ) | ||||
| Additional paid-in capital | 11,381 | 11,306 | ||||||
| Retained earnings | 5,468 | 4,789 | ||||||
| Accumulated other comprehensive loss | (367 | ) | (344 | ) | ||||
| Total Intercontinental Exchange, Inc. shareholders’ equity | 15,898 | 15,717 | ||||||
| Non-controlling interest in consolidated subsidiaries | 35 | 37 | ||||||
| Total equity | 15,933 | 15,754 | ||||||
| Total liabilities and equity | $ | 80,324 | $ | 82,003 | ||||
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 GAAP results and the accompanying reconciliation,
we believe that our presentation of these measures provides investors with greater transparency and a greater understanding of
factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation
of these measures is useful to investors for period-to-period comparison of results because the items described below as adjustments
to GAAP are not reflective of our core business performance. These financial measures are not in accordance with, or an alternative
to, GAAP financial measures and may be different from non-GAAP measures used by other companies. We use these adjusted results
because we believe they more clearly highlight trends in our business that may not otherwise be apparent when relying solely on
GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our
core operating performance. We strongly recommend that investors review the GAAP financial measures and additional non-GAAP information
included in our Quarterly Report on Form 10-Q, including our consolidated financial statements and the notes thereto.
Adjusted net income attributable to ICE common shareholders and adjusted diluted earnings per share for the periods presented below are calculated by adding or subtracting the adjustments described below, which are not reflective of our cash operations and core business performance, and their related income tax effect and other tax adjustments (in millions, except for per share amounts):
| Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | |||||||
| Net income attributable to ICE | $ | 418 | $ | 357 | ||||
| Add: Interactive Data and NYSE transaction and integration costs | 8 | 7 | ||||||
| Add: Amortization of acquisition-related intangibles | 67 | 77 | ||||||
| Add: Net loss on divestiture of NYSE Governance Services | 6 | — | ||||||
| Add: Foreign exchange loss and transaction expenses on sale of Cetip | 9 | — | ||||||
| (Less): Income tax effect for the above items | (60 | ) | (30 | ) | ||||
| Adjusted net income attributable to ICE | $ | 448 | $ | 411 | ||||
| Diluted earnings per share attributable to ICE | $ | 0.70 | $ | 0.60 | ||||
| Adjusted diluted earnings per share attributable to ICE | $ | 0.75 | $ | 0.69 | ||||
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company that operates a leading network of regulated exchanges and clearing houses, and is a provider of global data and listing services. ICE’s futures exchanges and clearing houses serve global commodity and financial markets, providing risk management and capital efficiency. The New York Stock Exchange is the world leader in capital raising and equities trading.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 - Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in Intercontinental Exchange, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 7, 2017. We caution you not to place undue reliance on these forward looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
SOURCE: Intercontinental Exchange
ICE-CORP
Investor & Media Contact:
Kelly Loeffler, SVP Investor Relations & Corp. Communications
+1 770 857 4726
kelly.loeffler@theice.com