CME Group Inc. Reports Solid First-Quarter 2013 Financial Results

02/05/2013

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.

 

         

CME Group Inc. and Subsidiaries

Consolidated Balance Sheets

(in millions)

         
   

March 31, 2013

 

December 31, 2012

ASSETS

       

Current Assets:

       

Cash and cash equivalents

 

$

1,843.4

   

$

1,604.7

 

Marketable securities

 

60.7

   

56.6

 

Accounts receivable, net of allowance

 

309.2

   

267.5

 

Other current assets (includes $40.0 in restricted cash)

 

172.5

   

204.3

 

Cash performance bonds and guaranty fund contributions

 

9,912.0

   

6,584.8

 

Total current assets

 

12,297.8

   

8,717.9

 

Property, net of accumulated depreciation and amortization

 

709.9

   

724.0

 

Intangible assets—trading products

 

17,175.3

   

17,175.3

 

Intangible assets—other, net

 

2,827.8

   

2,853.7

 

Goodwill

 

7,569.0

   

7,566.9

 

Other assets (includes $69.7 and $73.0 in restricted cash)

 

1,842.0

   

1,825.4

 

Total Assets

 

$

42,421.8

   

$

38,863.2

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

Current Liabilities:

       

Accounts payable

 

$

31.3

   

$

41.7

 

Short-term debt

 

1,499.0

   

749.7

 

Other current liabilities

 

344.4

   

240.7

 

Cash performance bonds and guaranty fund contributions

 

9,912.0

   

6,584.8

 

Total current liabilities

 

11,786.7

   

7,616.9

 

Long-term debt

 

1,358.0

   

2,106.8

 

Deferred income tax liabilities, net

 

7,412.1

   

7,413.3

 

Other liabilities

 

227.0

   

220.5

 

Total Liabilities

 

20,783.8

   

17,357.5

 
         

Redeemable non-controlling interest

 

82.2

   

80.8

 
         

CME Group shareholders' equity

 

21,549.8

   

21,419.1

 

Non-controlling interest

 

6.0

   

5.8

 

Total Equity

 

21,555.8

   

21,424.9

 

Total Liabilities and Equity

 

$

42,421.8

   

$

38,863.2

 
 

 

     

CME Group Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in millions, except per share amounts; shares in thousands)

     
   

Quarter Ended

   

March 31, 2013

   

2013

 

2012

Revenues

       

Clearing and transaction fees

 

$

593.2

   

$

621.1

 

Market data and information services

 

80.9

   

114.2

 

Access and communication fees

 

21.5

   

19.7

 

Other

 

23.0

   

19.6

 

Total Revenues

 

718.6

   

774.6

 

Expenses

       

Compensation and benefits

 

129.4

   

135.1

 

Communications

 

8.9

   

10.3

 

Technology support services

 

12.4

   

12.8

 

Professional fees and outside services

 

21.9

   

32.2

 

Amortization of purchased intangibles

 

25.9

   

32.8

 

Depreciation and amortization

 

32.6

   

34.9

 

Occupancy and building operations

 

18.5

   

20.3

 

Licensing and other fee agreements

 

21.2

   

20.7

 

Other

 

42.3

   

24.3

 

Total Expenses

 

313.1

   

323.4

 

Operating Income

 

405.5

   

451.2

 
         

Non-Operating Income (Expense)

       

Investment income

 

3.6

   

12.1

 

Interest and other borrowing costs

 

(39.0)

   

(29.1)

 

Equity in net gains (losses) of unconsolidated subsidiaries

 

17.5

   

(0.8)

 

Total Non-Operating

 

(17.9)

   

(17.8)

 

Income before Income Taxes

 

387.6

   

433.4

 

Income tax provision

 

150.2

   

167.1

 

Net Income

 

237.4

   

266.3

 

Less: net income (loss) attributable to non-controlling interests

 

1.6

   

(0.3)

 

Net Income Attributable to CME Group

 

$

235.8

   

$

266.6

 
         

Earnings per Common Share Attributable to CME Group:

       

Basic

 

$

0.71

   

$

0.81

 

Diluted

 

0.71

   

0.80

 

Weighted Average Number of Common Shares:

       

Basic

 

331,953

   

330,814

 

Diluted

 

333,372

   

331,851

 
         
 
 

 

CME Group Inc. and Subsidiaries

Quarterly Operating Statistics

                   
 

1Q 2012

 

2Q 2012

 

3Q 2012

 

4Q 2012

 

1Q 2013

Trading Days

62

   

64

   

63

   

64

   

60

 
                   

Quarterly Average Daily Volume (ADV)

                   

CME Group ADV (in thousands)

                   

Product Line

1Q 2012

 

2Q 2012

 

3Q 2012

 

4Q 2012

 

1Q 2013

Interest rates

5,613

   

5,136

   

4,514

   

4,094

   

5,656

 

Equities

2,390

   

2,919

   

2,391

   

2,532

   

2,608

 

Foreign exchange

846

   

920

   

846

   

767

   

1,010

 

Energy

1,952

   

1,741

   

1,590

   

1,489

   

1,730

 

Agricultural commodities

1,122

   

1,288

   

1,171

   

982

   

1,084

 

Metals

385

   

372

   

327

   

324

   

396

 

Total

12,308

   

12,376

   

10,839

   

10,188

   

12,484

 
                   

Venue

                 

Electronic

10,177

   

10,595

   

9,293

   

8,899

   

10,908

 

Open outcry

1,348

   

1,109

   

979

   

751

   

885

 

Privately negotiated

229

   

238

   

208

   

210

   

275

 

Exchange-traded Total

11,754

   

11,942

   

10,481

   

9,859

   

12,068

 

CME ClearPort

554

   

434

   

358

   

329

   

416

 

Total

12,308

   

12,376

   

10,839

   

10,188

   

12,484

 
                   
                   

Average Rate Per Contract (RPC)

                   

CME Group RPC

                   

Product Line

1Q 2012

 

2Q 2012

 

3Q 2012

 

4Q 2012

 

1Q 2013

Interest rates

$

0.475

   

$

0.485

   

$

0.481

   

$

0.494

   

$

0.468

 

Equities

0.692

   

0.674

   

0.685

   

0.697

   

0.691

 

Foreign exchange

0.841

   

0.807

   

0.808

   

0.835

   

0.848

 

Energy

1.517

   

1.496

   

1.473

   

1.487

   

1.390

 

Agricultural commodities

1.216

   

1.264

   

1.301

   

1.298

   

1.318

 

Metals

1.647

   

1.649

   

1.693

   

1.709

   

1.656

 

Average RPC

$

0.811

   

$

0.812

   

$

0.822

   

$

0.831

   

$

0.785

 
                   

Venue

                 

Exchange-traded

$

0.737

   

$

0.750

   

$

0.757

   

$

0.771

   

$

0.730

 

CME ClearPort

2.388

   

2.510

   

2.719

   

2.646

   

2.360

 
 
 

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.

 

 

 

CME Group Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(dollars in millions, except per share amounts; shares in thousands)

       
   

Quarter Ended

 
   

March 31, 2013

 

GAAP Net Income Attributable to CME Group

 

$

235.8

   
       

Add: Foreign exchange transaction losses

 

12.0

   
       

Less: Income tax effect related to above

 

(3.4)

   
       

Adjusted Net Income Attributable to CME Group

 

$

244.4

   
       

GAAP Earnings per Common Share Attributable to CME Group:

 

   

Basic

 

$

0.71

   

Diluted

 

0.71

   
       

Adjusted earnings per Common Share Attributable to CME Group:

     

Basic

 

$

0.74

   

Diluted

 

0.73

   
       

Weighted Average Number of Common Shares:

     

Basic

 

331,953

   

Diluted

 

333,372

   
       
 

CME-G

SOURCE CME Group Inc.