Intercontinental Exchange Reports Strong Third Quarter 2017 GAAP Diluted EPS of $0.62 on Revenues of $1.1 billion, +6% y/y; Adjusted Diluted EPS of $0.73, +14% y/y
- $1.1 billion of revenues in 3Q17, up 6% from the prior third quarter
- 2017 synergies now expected to be at least $70 million, up from $60
million previously
- Through October 31, 2017, $1.15 billion returned to shareholders
via buybacks and dividends
- $1.2 billion share repurchase program authorized to begin January
1, 2018, 20% increase from prior authorization
ATLANTA & NEW YORK--(BUSINESS WIRE)--
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 third quarter
of 2017. For the quarter ended September 30, 2017, consolidated net
income attributable to ICE was $369 million on $1.1 billion of
consolidated revenues less transaction-based expenses. Third quarter
GAAP diluted earnings per share (EPS) were $0.62, up 9% year-over-year.
On an adjusted basis, net income was $430 million in the third quarter,
and diluted EPS were $0.73, up 14% 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.
“We are pleased to again deliver strong revenue and earnings growth
while executing on our strategic objectives to serve our customers and
shareholders," said ICE Chairman and CEO Jeffrey C. Sprecher. "We are
investing to grow our trading, data and risk management solutions across
geographies and asset classes and continue to see new ways to serve our
customers across their workflow, from capital efficient clearing, to new
trading and data products, to supporting regulatory compliance and
connectivity needs. Our recent acquisitions demonstrate this focus and
we look forward to leveraging our integrated offering to serve global
markets as they evolve."
Scott A. Hill, ICE CFO, added: "Through the first nine months of the
year we have grown revenues and are now on track to exceed our original
2017 synergy target even as we invest for continued growth in 2018. Our
disciplined and balanced approach to shareholder value creation has
enabled us to strategically invest in our business, while also returning
over $1 billion to shareholders through buybacks and dividends so far in
2017."
Third Quarter 2017 GAAP Results
Third quarter 2017 consolidated revenues, less transaction-based
expenses, were $1.1 billion. Trading and clearing segment revenues, less
transaction-based expenses, were $523 million in the third quarter 2017,
up 8% compared to the prior third quarter. Data and listings segment
revenues were $620 million in the third quarter of 2017, up 4% compared
to the prior third quarter, including data services revenues of $518
million, up 6% and listings revenues of $102 million, down 3% over the
prior third quarter.
Consolidated operating expenses were $547 million for the third quarter
of 2017. Consolidated operating income for the third quarter was $596
million and operating margin was 52%. The effective tax rate for the
third quarter was 33%.
Unrestricted cash was $419 million and outstanding debt was $6.1 billion
as of September 30, 2017.
Financial Guidance
-
ICE's fourth quarter 2017 GAAP operating expenses are expected to be
in a range of $540 millionto $550 million and adjusted
operating expenses(1) are expected to be in a range of $475
million to $485 million.
-
ICE's interest expense is expected to be $50 million in the fourth
quarter.
-
ICE's adjusted effective tax rate is expected to be between 30-32% for
the fourth quarter.
-
ICE's diluted share count for the fourth quarter is expected to be in
the range of 585 million to 595 million weighted average shares
outstanding.
(1) The 2017 Non-GAAP adjusted operating expense excludes $65 million in
amortization of acquisition-related intangibles for the fourth quarter
of 2017. The GAAP operating expense forecast does not reflect an
estimate of acquisition-related transaction and integration costs for
the fourth quarter of 2017.
Earnings Conference Call Information
ICE will hold a conference call today, November 2, 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 1801297 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 fourth quarter 2017 earnings has been
scheduled for February 7, 2018 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) |
|
| Nine Months Ended
September 30, |
| Three Months Ended
September 30, |
| Revenues: | | 2017 | 2016 |
| 2017 | 2016 |
|
Transaction and clearing, net
| |
$
|
2,373
| |
$
|
2,566
| |
|
$
|
758
| |
$
|
777
| |
|
Data services
| |
1,559
| |
1,463
| | |
518
| |
489
| |
|
Listings
| |
315
| |
314
| | |
102
| |
106
| |
|
Other revenues
| |
148
|
|
131
|
|
|
54
|
|
44
|
|
|
Total revenues
| |
4,395
| |
4,474
| | |
1,432
| |
1,416
| |
|
Transaction-based expenses:
| | | | | | |
|
Section 31 fees
| |
275
| |
290
| | |
92
| |
94
| |
|
Cash liquidity payments, routing and clearing
| |
635
|
|
823
|
|
|
197
|
|
244
|
|
|
Total revenues, less transaction-based expenses
| |
3,485
|
|
3,361
|
|
|
1,143
|
|
1,078
|
|
| Operating expenses: | | | | | | |
|
Compensation and benefits
| |
710
| |
708
| | |
231
| |
236
| |
|
Professional services
| |
94
| |
101
| | |
30
| |
32
| |
|
Acquisition-related transaction and integration costs
| |
27
| |
61
| | |
4
| |
14
| |
|
Technology and communication
| |
294
| |
277
| | |
99
| |
93
| |
|
Rent and occupancy
| |
52
| |
52
| | |
17
| |
17
| |
|
Selling, general and administrative
| |
117
| |
83
| | |
38
| |
31
| |
|
Depreciation and amortization
| |
404
|
|
470
|
|
|
128
|
|
181
|
|
|
Total operating expenses
| |
1,698
|
|
1,752
|
|
|
547
|
|
604
|
|
|
Operating income
| |
1,787
|
|
1,609
|
|
|
596
|
|
474
|
|
|
Other income (expense):
| | | | | | |
|
Interest expense
| |
(137
|
)
|
(134
|
)
| |
(47
|
)
|
(44
|
)
|
|
Other income, net
| |
198
|
|
24
|
|
|
11
|
|
13
|
|
|
Other income (expense), net
| |
61
|
|
(110
|
)
|
|
(36
|
)
|
(31
|
)
|
|
Income before income tax expense
| |
1,848
| |
1,499
| | |
560
| |
443
| |
|
Income tax expense
| |
537
|
|
409
|
|
|
185
|
|
93
|
|
|
Net income
| |
$
|
1,311
|
|
$
|
1,090
|
|
|
$
|
375
|
|
$
|
350
|
|
|
Net income attributable to non-controlling interest
| |
(22
|
)
|
(20
|
)
| |
(6
|
)
|
(6
|
)
|
|
Net income attributable to Intercontinental Exchange, Inc.
| |
$
|
1,289
|
|
$
|
1,070
|
|
|
$
|
369
|
|
$
|
344
|
|
| | | | | |
|
|
Earnings per share attributable to Intercontinental Exchange, Inc.
common shareholders:
| | | | | | |
|
Basic
| |
$
|
2.18
|
|
$
|
1.80
|
|
|
$
|
0.63
|
|
$
|
0.58
|
|
|
Diluted
| |
$
|
2.17
|
|
$
|
1.79
|
|
|
$
|
0.62
|
|
$
|
0.57
|
|
|
Weighted average common shares outstanding:
| | | | | | |
|
Basic
| |
591
|
|
595
|
|
|
588
|
|
596
|
|
|
Diluted
| |
595
|
|
599
|
|
|
592
|
|
600
|
|
|
Dividend per share
| |
$
|
0.60
|
|
$
|
0.51
|
|
|
$
|
0.20
|
|
$
|
0.17
|
|
| | | | | | | | | | | | | |
|
|
|
Consolidated Balance Sheets (In millions) (Unaudited) |
|
| As of |
| As of |
| | September 30, 2017 |
| December 31, 2016 |
| Assets: | | | | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| |
$
|
419
| | |
$
|
407
| |
|
Short-term investments
| |
16
| | |
23
| |
|
Short-term restricted cash and investments
| |
762
| | |
679
| |
|
Customer accounts receivable, net
| |
897
| | |
777
| |
|
Margin deposits and guaranty funds
| |
52,401
| | |
55,150
| |
|
Prepaid expenses and other current assets
| |
744
|
|
|
97
|
|
Total current assets
| |
55,239
|
|
|
57,133
|
|
|
Property and equipment, net
| |
1,192
|
|
|
1,129
|
|
|
Other non-current assets:
| | | | |
|
Goodwill
| |
12,016
| | |
12,291
| |
|
Other intangible assets, net
| |
10,056
| | |
10,420
| |
|
Long-term restricted cash and investments
| |
264
| | |
264
| |
|
Long-term investments
| |
—
| | |
432
| |
|
Other non-current assets
| |
351
|
|
|
334
|
|
|
Total other non-current assets
| |
22,687
|
|
|
23,741
|
|
|
Total assets
| |
$
|
79,118
|
|
|
$
|
82,003
|
|
| | | |
|
| Liabilities and Equity: | | | | |
|
Current liabilities:
| | | | |
|
Accounts payable and accrued liabilities
| |
$
|
427
| | |
$
|
388
| |
|
Section 31 fees payable
| |
32
| | |
131
| |
|
Accrued salaries and benefits
| |
184
| | |
230
| |
|
Deferred revenue
| |
228
| | |
114
| |
|
Short-term debt
| |
1,197
| | |
2,493
| |
|
Margin deposits and guaranty funds
| |
52,401
| | |
55,150
| |
|
Other current liabilities
| |
131
|
|
|
111
|
|
|
Total current liabilities
| |
54,600
|
|
|
58,617
|
|
|
Non-current liabilities:
| | | | |
|
Non-current deferred tax liability, net
| |
2,989
| | |
2,958
| |
|
Long-term debt
| |
4,865
| | |
3,871
| |
|
Accrued employee benefits
| |
264
| | |
430
| |
|
Other non-current liabilities
| |
381
|
|
|
337
|
|
|
Total non-current liabilities
| |
8,499
|
|
|
7,596
|
|
|
Total liabilities
| |
63,099
|
|
|
66,213
|
|
|
Redeemable non-controlling interest
| |
—
|
|
|
36
|
|
| Equity: | | | | |
|
Intercontinental Exchange, Inc. shareholders’ equity:
| | | | |
|
Common stock
| |
6
| | |
6
| |
|
Treasury stock, at cost
| |
(833
|
)
| |
(40
|
)
|
|
Additional paid-in capital
| |
11,423
| | |
11,306
| |
|
Retained earnings
| |
5,718
| | |
4,789
| |
|
Accumulated other comprehensive loss
| |
(322
|
)
|
|
(344
|
)
|
|
Total Intercontinental Exchange, Inc. shareholders’ equity
| |
15,992
| | |
15,717
| |
|
Non-controlling interest in consolidated subsidiaries
| |
27
|
|
|
37
|
|
|
Total equity
| |
16,019
|
|
|
15,754
|
|
|
Total liabilities and equity
| |
$
|
79,118
|
|
|
$
|
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 September
30, 2017 |
| Three Months
Ended September
30, 2016 |
|
|
Net income attributable to ICE
|
$
|
369
| |
$
|
344
| |
|
Add: Interactive Data and NYSE transaction and integration costs
|
3
| |
7
| |
|
Add: Employee severance costs related to Creditex U.K. brokerage
operations
|
—
| |
4
| |
|
Add: Creditex customer relationship intangible asset impairment
|
—
| |
33
| |
|
Add: Amortization of acquisition-related intangibles
|
64
| |
76
| |
|
Add: Accruals relating to ongoing investigations and inquiries
|
4
| |
—
| |
|
Less: Income tax effect for the above items
|
(22
|
)
|
(45
|
)
|
|
Add: Deferred tax adjustments on acquisition-related intangibles
|
12
| |
—
| |
|
Less: Other tax adjustments
|
—
|
|
(34
|
)
|
|
Adjusted net income attributable to ICE
|
$
|
430
|
|
$
|
385
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to ICE
|
$
|
0.62
|
|
$
|
0.57
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share attributable to ICE
|
$
|
0.73
|
|
$
|
0.64
|
|
About Intercontinental Exchange
Intercontinental
Exchange (NYSE:ICE) is a Fortune 500 company that operates a leading
network of global futures,
equity and equity options exchanges, as well as global
clearing and data
services across financial and commodity markets. The New
York Stock Exchange is the world leader in capital raising, listings
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
View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005627/en/
ICE Investor Relations Contact:
Warren Gardiner
+1 770 835 0114
warren.gardiner@theice.com
investors@theice.com
or
ICE
Media Contact:
Kelly Loeffler
+1 770 857 4726
kelly.loeffler@theice.com
media@theice.com
Source: Intercontinental Exchange