ATLANTA & NEW YORK--(BUSINESS WIRE)--Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listing services, today reported financial results for the first quarter of 2019. For the quarter ended March 31, 2019, consolidated net income attributable to ICE was $484 million on $1.3 billion of consolidated revenues, less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $0.85. Adjusted net income attributable to ICE was $527 million in the first quarter and adjusted diluted EPS were $0.92. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on our adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted EPS and free cash flow.
“We are pleased to report another quarter of revenue and earnings per share growth as compounding growth in our subscription-based Data & Listings business helped to offset a quarter of relatively muted trading activity,” said ICE Chairman and Chief Executive Officer, Jeffrey C. Sprecher. “We remain focused on bringing efficiencies to our customers' workflows and creating value for our stockholders.”
Scott A. Hill, ICE Chief Financial Officer, added: “During the first quarter, we once again grew revenues, earnings and cash flows, enabling us to return nearly $600 million to stockholders. Our results are a testament to the diversity and global nature of our business mix, as well as our ability to drive future growth and create value for our stockholders.”
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First Quarter 2019 Business Highlights |
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| $ in millions |
Net |
Op |
Adj Op |
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| Data & Listings | $657 | 43% | 51% | ||||||||||
| Trading & Clearing | $613 | 63% | 67% | ||||||||||
| Consolidated | $1,270 | 52% | 58% | ||||||||||
First quarter consolidated net revenues were $1.3 billion, up 4% year-over-year. Data and listings revenues in the first quarter were $657 million and trading and clearing net revenues were $613 million. Consolidated operating expenses were $605 million for the first quarter of 2019. On an adjusted basis, consolidated operating expenses were $528 million. Consolidated operating income for the first quarter was $665 million and the operating margin was 52%. On an adjusted basis, consolidated operating income for the first quarter was $742 million and the adjusted operating margin was 58%.
Data and Listings Segment Results
First quarter data and listings revenues were $657 million, including data revenues of $546 million, up 5% year-over-year, and listings revenues of $111 million, up 2% year-over-year. On a constant currency basis(1), segment revenues were up 5% with data revenues up 6% year-over-year and listings revenues up 2% year-over-year. Data and listings operating expenses were $377 million and on an adjusted basis, were $323 million in the first quarter. Segment operating income for the first quarter was $280 million and the operating margin was 43%. On an adjusted basis, operating income was $334 million and the adjusted operating margin was 51%.
| $ in millions | 1Q19 | 1Q18 | % Chg |
Const |
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| Revenue: | ||||||||||||||||
| Pricing and Analytics | $266 | $254 | 5% | 6% | ||||||||||||
| Exchange Data and Feeds | 176 | 164 | 7% | 8% | ||||||||||||
| Desktops and Connectivity | 104 | 102 | 2% | 3% | ||||||||||||
| Data Total | 546 | 520 | 5% | 6% | ||||||||||||
| Listings | 111 | 109 | 2% | 2% | ||||||||||||
| Segment Revenue | $657 | $629 | 4% | 5% | ||||||||||||
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(1) |
Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 1Q18, 1.3918 and 1.2292, respectively. |
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Trading and Clearing Segment Results
First quarter trading and clearing net revenues were $613 million, up 3% from one year ago. Trading and clearing operating expenses were $228 million and adjusted operating expenses were $205 million in the first quarter. Segment operating income for the first quarter was $385 million and the operating margin was 63%. On an adjusted basis, operating income was $408 million and the adjusted operating margin was 67%.
| $ in millions | 1Q19 | 1Q18 | % Chg | ||||||||||
| Revenue, net: | |||||||||||||
| Energy | $229 | $235 | (2)% | ||||||||||
| Ags & metals | 62 | 65 | (5)% | ||||||||||
| Financials(1) | 83 | 91 | (9)% | ||||||||||
| Cash equities & equity options | 77 | 83 | (7)% | ||||||||||
| Fixed income & credit(2) | 87 | 56 | 54% | ||||||||||
| OTC & other transaction(3) | 11 | 13 | (14)% | ||||||||||
| Other revenue(4) | 64 | 53 | 21% | ||||||||||
| Segment Revenue | $613 | $596 | 3% | ||||||||||
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(1) |
Financials include interest rates and other financial futures and options. |
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(2) |
Fixed income and credit includes fixed income execution, CDS execution and clearing and ICE Mortgage Services. |
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(3) |
OTC & other transactions include physical energy. |
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(4) |
Other revenue includes interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, exchange member fees, and agriculture grading and certification fees. |
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- Energy futures and options revenue in the first quarter decreased 2% year-over-year reflecting a 12% decline in average daily volume (ADV), partially offset by an 11% increase in rate per contract (RPC).
- Ags and metals futures and options revenue in the first quarter decreased 5% year-over-year reflecting a 1% decrease in ADV and 3% decline in RPC.
- Financials futures and options revenue in the first quarter decreased 9% year-over-year reflecting an 8% decline in ADV.
- U.S. cash equities and equity options revenue in the first quarter decreased 7% year-over-year reflecting a 15% decline in cash equities RPC and a 5% decrease in equity options ADV.
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ADV
(lots in thousands) |
RPC | |||||||||||||||
| 1Q19 | % Chg | 1Q19 | % Chg | |||||||||||||
| Energy | 2,552 | (12)% | $1.47 | 11% | ||||||||||||
| Ags & metals | 449 | (1)% | $2.25 | (3)% | ||||||||||||
| Financials | 2,672 | (8)% | $0.49 | — | ||||||||||||
| Interest Rates | 2,230 | (9)% | $0.38 | (3)% | ||||||||||||
| Other Financials | 442 | (7)% | $1.07 | 5% | ||||||||||||
| Total Futures & Options | 5,673 | (9)% | $1.06 | 6% | ||||||||||||
| Cash Equities (in millions) | 1,886 | 9% | $0.045 | (15)% | ||||||||||||
| Equity Options | 3,331 | (5)% | $0.12 | (3)% | ||||||||||||
The first quarter of 2019 included 61 trading days for commodities, other financials, cash equities and equity options and 63 trading days for interest rates. The first quarter of 2018 included 61 trading days for commodities, other financials, cash equities and equity options and 63 trading days for interest rates.
Other Matters
- In the first quarter, ICE repurchased $440 million of its common stock and paid $157 million in dividends.
- Unrestricted cash was $653 million and outstanding debt was $7.5 billion as of March 31, 2019.
- Operating cash flow in the first quarter was $654 million, up 14% from $573 million one year ago. In the first quarter of 2019, free cash flow was $624 million, up 18% from $530 million one year ago.
- The effective tax rate for the first quarter of 2019 was 21%.
Financial Guidance
- ICE's second quarter 2019 data revenues are expected to be in a range of $550 million to $555 million.
- ICE's second quarter 2019 GAAP operating expenses are expected to be in a range of $615 million to $625 million and adjusted operating expenses(1) are expected to be in a range of $537 million to $547 million.
- ICE's full year 2019 GAAP operating expenses are expected to be in a range of $2.46 billion to $2.49 billion and adjusted operating expenses(1) are expected to be in a range of $2.15 billion to $2.18 billion.
- ICE's interest expense is expected to be $71 million in the second quarter.
- ICE's diluted share count for the second quarter is expected to be in the range of 563 million to 569 million weighted average shares outstanding.
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(1) |
The 2019 Non-GAAP adjusted operating expense excludes $78 million in amortization of acquisition-related intangibles for the second quarter of 2019 and $306 million for the full year. The GAAP operating expense forecast does not reflect an estimate of acquisition-related transaction and integration costs for the second quarter of 2019. |
Earnings Conference Call Information
ICE will hold a conference call today, May 2, 2019, at 8:30 a.m. ET to review its first quarter 2019 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 6842994 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 second quarter 2019 earnings has been scheduled for August 1, 2019 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
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Consolidated Statements of Income (In millions, except per share amounts) (Unaudited) |
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Three Months Ended March 31, |
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| Revenues: | 2019 | 2018 | ||||||||
| Transaction and clearing, net | $ | 862 | $ | 898 | ||||||
| Data services | 546 | 520 | ||||||||
| Listings | 111 | 109 | ||||||||
| Other revenues | 64 | 53 | ||||||||
| Total revenues | 1,583 | 1,580 | ||||||||
| Transaction-based expenses: | ||||||||||
| Section 31 fees | 69 | 121 | ||||||||
| Cash liquidity payments, routing and clearing | 244 | 234 | ||||||||
| Total revenues, less transaction-based expenses | 1,270 | 1,225 | ||||||||
| Operating expenses: | ||||||||||
| Compensation and benefits | 248 | 240 | ||||||||
| Professional services | 33 | 30 | ||||||||
| Acquisition-related transaction and integration costs | — | 12 | ||||||||
| Technology and communication | 107 | 105 | ||||||||
| Rent and occupancy | 17 | 17 | ||||||||
| Selling, general and administrative | 42 | 33 | ||||||||
| Depreciation and amortization | 158 | 138 | ||||||||
| Total operating expenses | 605 | 575 | ||||||||
| Operating income | 665 | 650 | ||||||||
| Other income (expense): | ||||||||||
| Interest income | 9 | 4 | ||||||||
| Interest expense | (71 | ) | (52 | ) | ||||||
| Other income, net | 23 | 15 | ||||||||
| Other income (expense), net | (39 | ) | (33 | ) | ||||||
| Income before income tax expense | 626 | 617 | ||||||||
| Income tax expense | 134 | 143 | ||||||||
| Net income | $ | 492 | $ | 474 | ||||||
| Net income attributable to non-controlling interest | (8 | ) | (10 | ) | ||||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 484 | $ | 464 | ||||||
| Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders: | ||||||||||
| Basic | $ | 0.85 | $ | 0.80 | ||||||
| Diluted | $ | 0.85 | $ | 0.79 | ||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 568 | 582 | ||||||||
| Diluted | 570 | 586 | ||||||||
| Dividend per share | $ | 0.275 | $ | 0.24 | ||||||
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Consolidated Balance Sheets (In millions) (Unaudited) |
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| As of | As of | |||||||||
| March 31, 2019 | December 31, 2018 | |||||||||
| Assets: | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 653 | $ | 724 | ||||||
| Short-term restricted cash and cash equivalents | 868 | 818 | ||||||||
| Customer accounts receivable, net | 1,181 | 953 | ||||||||
| Margin deposits, guaranty funds and delivery contracts receivable | 64,564 | 63,955 | ||||||||
| Prepaid expenses and other current assets | 219 | 242 | ||||||||
| Total current assets | 67,485 | 66,692 | ||||||||
| Property and equipment, net | 1,538 | 1,241 | ||||||||
| Other non-current assets: | ||||||||||
| Goodwill | 13,098 | 13,085 | ||||||||
| Other intangible assets, net | 10,406 | 10,462 | ||||||||
| Long-term restricted cash and cash equivalents | 370 | 330 | ||||||||
| Other non-current assets | 960 | 981 | ||||||||
| Total other non-current assets | 24,834 | 24,858 | ||||||||
| Total assets | $ | 93,857 | $ | 92,791 | ||||||
| Liabilities and Equity: | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 509 | $ | 521 | ||||||
| Section 31 fees payable | 70 | 105 | ||||||||
| Accrued salaries and benefits | 125 | 280 | ||||||||
| Deferred revenue | 479 | 135 | ||||||||
| Short-term debt | 1,005 | 951 | ||||||||
| Margin deposits, guaranty funds and delivery contracts payable | 64,564 | 63,955 | ||||||||
| Other current liabilities | 283 | 161 | ||||||||
| Total current liabilities | 67,035 | 66,108 | ||||||||
| Non-current liabilities: | ||||||||||
| Non-current deferred tax liability, net | 2,308 | 2,337 | ||||||||
| Long-term debt | 6,492 | 6,490 | ||||||||
| Accrued employee benefits | 203 | 204 | ||||||||
| Operating lease liability-non-current | 306 | — | ||||||||
| Other non-current liabilities | 312 | 350 | ||||||||
| Total non-current liabilities | 9,621 | 9,381 | ||||||||
| Total liabilities | 76,656 | 75,489 | ||||||||
| Commitments and contingencies | ||||||||||
| Redeemable non-controlling interests in consolidated subsidiaries | 71 | 71 | ||||||||
| Equity: | ||||||||||
| Intercontinental Exchange, Inc. stockholders’ equity: | ||||||||||
| Common stock | 6 | 6 | ||||||||
| Treasury stock, at cost | (2,851 | ) | (2,354 | ) | ||||||
| Additional paid-in capital | 11,597 | 11,547 | ||||||||
| Retained earnings | 8,644 | 8,317 | ||||||||
| Accumulated other comprehensive loss | (290 | ) | (315 | ) | ||||||
| Total Intercontinental Exchange, Inc. stockholders’ equity | 17,106 | 17,201 | ||||||||
| Non-controlling interest in consolidated subsidiaries | 24 | 30 | ||||||||
| Total equity | 17,130 | 17,231 | ||||||||
| Total liabilities and equity | $ | 93,857 | $ | 92,791 | ||||||
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 operating expenses, adjusted operating income, adjusted operating margin, adjusted net income attributable to ICE common stockholders, adjusted diluted earnings per share and free cash flow 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):
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Adjusted Operating Income, Operating Margin and Operating Expense Reconciliation (In millions) (Unaudited) |
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| Trading and Clearing Segment | Data and Listings Segment | Consolidated | ||||||||||||||||
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Three Months Ended |
Three Months Ended |
Three Months Ended |
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| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Total revenues, less transaction-based expenses | $613 | $596 | $657 | $629 | $1,270 | $1,225 | ||||||||||||
| Total operating expenses | $228 | $207 | $377 | $368 | $605 | $575 | ||||||||||||
| Less: Interactive Data integration costs | — | — | — | 12 | — | 12 | ||||||||||||
| Less: Amortization of acquisition-related intangibles | 23 | 16 | 54 | 53 | 77 | 69 | ||||||||||||
| Adjusted total operating expenses | $205 | $191 | $323 | $303 | $528 | $494 | ||||||||||||
| Operating income | $385 | $389 | $280 | $261 | $665 | $650 | ||||||||||||
| Adjusted operating income | $408 | $405 | $334 | $326 | $742 | $731 | ||||||||||||
| Operating margin | 63% | 65% | 43% | 42% | 52% | 53% | ||||||||||||
| Adjusted operating margin | 67% | 68% | 51% | 52% | 58% | 60% | ||||||||||||
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Adjusted Net Income Attributable to ICE and EPS (In millions) (Unaudited) |
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Three Months Ended |
Three Months Ended |
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| Net income attributable to ICE | $ | 484 | $ | 464 | ||||||
| Add: Interactive Data integration costs | — | 12 | ||||||||
| Add: Amortization of acquisition-related intangibles | 77 | 69 | ||||||||
| Add: Adjustment to reduce net gain on Trayport divestiture | — | 1 | ||||||||
| Less: Income tax effect for the above items | (20 | ) | (21 | ) | ||||||
| Less: Deferred tax adjustments on acquisition-related intangibles | (17 | ) |
— |
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| Add: Other tax adjustments | 3 | — | ||||||||
| Adjusted net income attributable to ICE | $ | 527 | $ | 525 | ||||||
| Diluted earnings per share attributable to ICE | $ | 0.85 | $ | 0.79 | ||||||
| Adjusted diluted earnings per share attributable to ICE | $ | 0.92 | $ | 0.90 | ||||||
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Free Cash Flow Calculation (In millions) (Unaudited) |
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Three months ended |
Three months ended |
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| Cash flow from operations | $654 | $573 | ||||||
| Less: Capital expenditures and capitalized software development costs | (65 | ) | (51 | ) | ||||
| Add: Section 31 fees, net | 35 | 8 | ||||||
| Free cash flow | $624 | $530 | ||||||
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company formed in the year 2000 to modernize markets. ICE serves customers by operating the exchanges, clearing houses and information services they rely upon to invest, trade and manage risk across global financial and commodity markets. A leader in market data, ICE Data Services serves the information and connectivity needs across virtually all asset classes. As the parent company of the New York Stock Exchange, the company is the premier venue for raising capital in the world, driving economic growth and transforming markets.
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 http://www.intercontinentalexchange.com/terms-of-use. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
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, 2018, as filed with the SEC on February 7, 2019. 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
