IntercontinentalExchange reports record revenues and net income attributable to ICE

IntercontinentalExchange reports record revenues and net income attributable to ICE

 

02/05/2012

IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for the first quarter of 2012. Consolidated revenues were a record $365 million, up 9% from the first quarter of 2011. Consolidated net income attributable to ICE was a record $148 million, up 15% from the first quarter of 2011, and diluted earnings per share (EPS) increased 16% to a record $2.02. Operating income grew 11% from the prior first quarter to a record $225 million and cash flow from operations increased 19% to $186 million.

Said ICE Chairman and CEO Jeffrey C. Sprecher: "Our results continue to reflect the role that ICE's markets and clearing houses play in enabling companies to manage risks in a dynamic economic and regulatory environment. Our markets are increasingly relevant around the world and continue to attract new participants globally. At the same time, we remain focused on innovation by delivering new products that anticipate and respond to customer demand."

ICE CFO Scott A. Hill added: "2012 is off to a very strong start for ICE, with record revenues and net income in the first quarter, and leading returns on invested capital. Our company and shareholders continue to benefit from strong earnings growth, solid cash flow and financial flexibility, all driven by a culture of operating efficiency and disciplined investment."

First Quarter 2012 Results

First quarter 2012 consolidated revenues grew 9% from the prior first quarter to $365 million and consolidated transaction and clearing revenues increased 8% to $322 million. The increase in transaction and clearing revenues was driven primarily by trading volume growth in ICE's energy OTC markets.

Transaction and clearing revenues in ICE's futures segment totaled $160 million in the first quarter of 2012, up 1% from the same period of 2011. Consolidated average daily volume in ICE's futures segment in the first quarter of 2012 declined 3% compared to the first quarter of 2011 to 1.6 million contracts.

Transaction and clearing revenues in ICE's global OTC segment increased 15% from the first quarter of 2011 to $163 million. Average daily commissions (ADC) for ICE's OTC energy business were a record $1.95 million in the first quarter of 2012, an increase of 20% from the first quarter of 2011. Revenues from ICE's credit default swap (CDS) trade execution and clearing business increased 2% to $40 million in the first quarter of 2012, including $16 million from CDS clearing.

Consolidated market data revenues increased 24% in the first quarter of 2012 compared to the same period in 2011 to a record $36 million. Consolidated other revenues were $7 million.

Consolidated operating expenses were up 7% from the prior first quarter to $140 million, and consolidated operating income grew 11% to a record $225 million. Operating margin was 62%, and the effective tax rate for the quarter was 30%.

Consolidated cash flow from operations increased 19% from the first quarter of 2011 to $186 million. Capital expenditures were $7 million and capitalized software development costs totaled $9 million in the first quarter of 2012.

Unrestricted cash was $968 million as of March 31, 2012. At the end of the quarter, ICE had $875 million in outstanding debt.

Financial and Operating Guidance

  • ICE expects acquisition expense for the second quarter of 2012 in the range of $3 to $4 million.
  • ICE's diluted share count for the second quarter of 2012 is expected to be in the range of 72.9 million to 73.9 million weighted average shares outstanding.

Earnings Conference Call Information

ICE will hold a conference call today, May 2, at 8:30 a.m. ET to review its first quarter 2012 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 begin_of_the_skype_highlighting 877-674-6420 end_of_the_skype_highlighting from the United States, or 708-290-1370 begin_of_the_skype_highlighting 708-290-1370 end_of_the_skype_highlighting 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 OTC commission data can be found at:
http://ir.theice.com/supplemental.cfm

About IntercontinentalExchange

IntercontinentalExchange (NYSE: ICE) is a leading operator of regulated futures exchanges and over-the-counter markets for agricultural, credit, currency, emissions, energy and equity index contracts. ICE Futures Europe hosts trade in half of the world's crude and refined oil futures. ICE Futures U.S. and ICE Futures Canada list agricultural, currencies and Russell Index markets. ICE is also a leading operator of central clearing services for the futures and over-the-counter markets, with five regulated clearing houses across North America and Europe. ICE serves customers in more than 70 countries. www.theice.com

The following are trademarks of IntercontinentalExchange, Inc. and/or its affiliated companies: IntercontinentalExchange, IntercontinentalExchange & Design, ICE, ICE and block design, ICE Futures Canada, ICE Futures Europe, ICE Futures U.S., ICE Clear Credit, ICE Clear Europe, ICE Clear U.S., ICE Clear Canada, The Clearing Corporation, U.S. Dollar Index, ICE Link and Creditex. All other trademarks are the property of their respective owners. For more information regarding registered trademarks owned by IntercontinentalExchange, Inc. and/or its affiliated companies, see https://www.theice.com/terms.jhtml.

Forward-Looking Statements

This press release may contain "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding IntercontinentalExchange's business that are not historical facts are forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. These statements are not guarantees of future performance and actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. The factors that might affect our performance include, but are not limited to: our business environment and industry trends; conditions in global financial markets; domestic and international economic conditions; volatility in commodity prices; changes in laws and regulations; increasing competition and consolidation in our industry; our ability to identify and effectively pursue acquisitions and strategic alliances and successfully integrate the companies we acquire on a cost-effective basis; the success of our clearing houses and our ability to minimize the risks associated with operating multiple clearing houses in multiple jurisdictions; technological developments, including ensuring that the technology we utilize is not vulnerable to security risks; the accuracy of our cost estimates and expectations, including, without limitation, those set forth in this press release under "Guidance and Additional Information"; our belief that cash flows will be sufficient to service our debt and fund our working capital needs and capital expenditures for the foreseeable future; our ability to develop new products and services on a timely and cost-effective basis; leveraging our risk management capabilities; maintaining existing market participants and attracting new ones; protecting our intellectual property rights; not violating the intellectual property rights of others; potential adverse litigation results; our belief in our electronic platform and disaster recovery system technologies; and identification of trends and how they will impact our business. For a discussion of such 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 ICE's most recent Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the SEC on February 8, 2012. These filings are also available in the Investors & Media section of our website. You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release. Except for any obligations to disclose material information under the Federal securities laws, ICE undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date of this press release.

 

Consolidated Unaudited Financial Statements

 

 

IntercontinentalExchange, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

 
       
       
 

Three Months Ended

 

March 31,

 

2012

 

2011

Revenues:

     

Transaction and clearing fees, net

$ 322,072

 

$ 299,010

Market data fees

36,386

 

29,420

Other

6,736

 

5,850

       

Total revenues

365,194

 

334,280

       

Operating expenses:

     

Compensation and benefits

68,076

 

61,638

Technology and communication

11,702

 

11,525

Professional services

9,402

 

7,805

Rent and occupancy

4,462

 

4,359

Acquisition-related transaction costs

3,463

 

3,437

Selling, general and administrative

10,924

 

9,062

Depreciation and amortization

31,983

 

33,131

       

Total operating expenses

140,012

 

130,957

       

Operating income

225,182

 

203,323

       

Other income (expense):

     

Interest and investment income

240

 

988

Interest expense

(10,068 )

 

(7,743 )

Other expense, net

(279 )

 

(276 )

       

Total other expense, net

(10,107 )

 

(7,031 )

       

Income before income taxes

215,075

 

196,292

Income tax expense

65,296

 

66,138

       

Net income

$ 149,779

 

$ 130,154

       

Net income attributable to noncontrolling interest

(1,914 )

 

(1,250 )

       

Net income attributable to IntercontinentalExchange, Inc

$ 147,865

 

$ 128,904

       

Earnings per share attributable to IntercontinentalExchange, Inc. common shareholders:

     

Basic

$ 2.04

 

$ 1.76

       

Diluted

$ 2.02

 

$ 1.74

       

Weighted average common shares outstanding:

     

Basic

72,641

 

73,433

       

Diluted

73,252

 

74,201

       

 

 

IntercontinentalExchange, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
(Unaudited)

       
 

March 31,
2012

 

Dec. 31,
2011

ASSETS

     

Current assets:

     

Cash and cash equivalents

$ 968,385

 

$ 822,949

Short-term restricted cash

53,711

 

52,982

Customer accounts receivable

178,844

 

136,331

Margin deposits and guaranty funds

31,269,459

 

31,555,831

Prepaid expenses and other current assets

36,385

 

37,298

       

Total current assets

32,506,784

 

32,605,391

       

Property and equipment, net

133,247

 

130,962

       

Other noncurrent assets:

     

Goodwill

1,916,483

 

1,902,984

Other intangible assets, net

844,648

 

854,374

Long-term restricted cash

164,498

 

164,496

Long-term investments

523,262

 

451,136

Other noncurrent assets

35,179

 

38,521

       

Total other noncurrent assets

3,484,070

 

3,411,511

       

Total assets

$ 36,124,101

 

$ 36,147,864

       

LIABILITIES AND EQUITY

     

Current liabilities:

     

Accounts payable and accrued liabilities

$ 76,821

 

$ 65,964

Accrued salaries and benefits

24,656

 

58,248

Current portion of licensing agreement

19,248

 

19,249

Current portion of long-term debt

50,000

 

50,000

Income taxes payable

65,515

 

22,614

Margin deposits and guaranty funds

31,269,459

 

31,555,831

Other current liabilities

44,802

 

28,408

       

Total current liabilities

31,550,501

 

31,800,314

       

Noncurrent liabilities:

     

Noncurrent deferred tax liability, net

232,434

 

235,889

Long-term debt

825,000

 

837,500

Noncurrent portion of licensing agreement

74,769

 

80,084

Other noncurrent liabilities

33,500

 

31,736

       

Total noncurrent liabilities

1,165,703

 

1,185,209

       

Total liabilities

32,716,204

 

32,985,523

       
       

EQUITY

     

IntercontinentalExchange, Inc. shareholders' equity:

     

Common stock,

797

 

792

Treasury stock, at cost;

(658,310 )

 

(644,291 )

Additional paid-in capital

1,854,240

 

1,829,181

Retained earnings

2,104,961

 

1,957,096

Accumulated other comprehensive income (loss)

70,948

 

(21,253 )

       

Total IntercontinentalExchange, Inc. shareholders' equity

3,372,636

 

3,121,525

Noncontrolling interest in consolidated subsidiaries

35,261

 

40,816

       

Total equity

3,407,897

 

3,162,341

       

Total liabilities and equity

$ 36,124,101

 

$ 36,147,864

       

ICE-CORP

SOURCE IntercontinentalExchange, Inc.