Intercontinental Exchange Reports Fourth Quarter 2018
- Fourth quarter revenues of $1.3 billion, +14% y/y
- GAAP diluted EPS of $1.07
- Adj. diluted EPS of $0.94, +25% y/y
- Operating margin of 52%; Adj. operating margin of 58%
- Nearly $1.8 billion returned to stockholders in 2018, +23% y/y
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 fourth quarter and full year of
2018. For the quarter ended December 31, 2018, consolidated net income
attributable to ICE was $611 million on $1.3 billion of consolidated
revenues less transaction-based expenses. Fourth quarter GAAP diluted
earnings per share (EPS) were $1.07. Adjusted net income attributable to
ICE was $536 million in the fourth quarter and adjusted diluted EPS were
$0.94, up 25% year-over-year.
For the full year of 2018 consolidated net income attributable to ICE
was $2.0 billion on $5.0 billion of consolidated revenues less
transaction-based expenses. Full year 2018 GAAP diluted EPS were $3.43.
On an adjusted basis, net income attributable to ICE for the year was
$2.1 billion and adjusted diluted EPS were $3.59, up 21% year-over-year.
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, organic data revenue
and free cash flow.
“2018 marked our 13th consecutive year of record revenues - a
track record directly attributable to customer demand for our risk
management solutions and the investments we've made to enhance our
technology, expand our content and broaden our distribution,” said ICE
Chairman & Chief Executive Officer, Jeffrey C. Sprecher. “As we look to
2019, we remain focused on bringing mission-critical solutions to our
customers and delivering value to our stockholders."
Scott A. Hill, ICE Chief Financial Officer, added: "In addition to
record revenues, we generated record cash flows in 2018, enabling us to
return nearly $1.8 billion in capital to stockholders, more than any
year in our history. As we enter 2019, we remain committed to prudent
capital management and a disciplined approach to investment to support
continued growth and to enhance long-term stockholder value."
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Fourth Quarter and Full Year 2018 Business Highlights |
| | | | | | | | | | | |
|
| | Net | | Op | | Adj Op | | Net | | Op | | Adj Op |
|
$ (in millions)
| | Revenue | | Margin | | Margin | | Revenue | | Margin | | Margin |
| | Full Year 2018 | | 4Q18 |
|
Data and Listings
| |
$
|
2,559
| |
42
|
%
| |
51
|
%
| |
$
|
651
| |
42
|
%
| |
51
|
%
|
|
Trading and Clearing
| |
$
|
2,420
|
|
62
|
%
|
|
66
|
%
|
|
$
|
657
|
|
61
|
%
|
|
65
|
%
|
| Consolidated | | $ | 4,979 | | 52 | % | | 58 | % | | $ | 1,308 | | 52 | % | | 58 | % |
| | | | | | | | | | | |
|
Fourth quarter consolidated net revenues were $1.3 billion, up 14%
year-over-year. Data and listings revenues in the fourth quarter were
$651 million and trading and clearing net revenues were $657 million, up
4% and 27% year-over-year, respectively. Consolidated operating expenses
were $632 million for the fourth quarter of 2018. On an adjusted basis,
consolidated operating expenses were $553 million. Consolidated
operating income for the fourth quarter was $676 million and the
operating margin was 52%. On an adjusted basis, consolidated operating
income for the fourth quarter was $755 million and the adjusted
operating margin was 58%.
Full year 2018 consolidated net revenues were $5.0 billion, up 7%
year-over-year. Full year 2018 data and listings revenues were $2.6
billion and trading and clearing net revenues were $2.4 billion, up 2%
and 14% year-over-year, respectively. Consolidated operating expenses
were $2.4 billion for 2018. On an adjusted basis, consolidated operating
expenses were $2.1 billion. Consolidated operating income for the year
was $2.6 billion and the operating margin was 52%. On an adjusted basis,
consolidated operating income for the year was $2.9 billion and the
adjusted operating margin was 58%.
Data and Listings Segment Results
Fourth quarter data and listings revenues were $651 million, including
data revenues of $539 million, up 3% year-over-year, negatively impacted
by the divestiture of Trayport in the fourth quarter of 2017, and
listings revenues of $112 million, up 8% year-over-year. On an organic,
constant currency basis(1), segment revenues were up 6% with
data revenues up 6% year-over-year and listings revenues up 8%
year-over-year. Data and listings operating expenses were $376 million
and on an adjusted basis, were $321 million in the fourth quarter.
Segment operating income for the fourth quarter was $275 million and the
operating margin was 42%. On an adjusted basis, operating income was
$330 million and the adjusted operating margin was 51%.
|
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| |
| | | | | | | | | | Organic |
| | | | | | | | | | Const |
|
$ (in millions)
| | 4Q18 | | 4Q17 | | % Chg | | Organic | | Curr(1) |
|
Revenue:
| | | | | | | | | | |
|
Pricing and Analytics
| |
$
|
264
| |
$
|
248
| | 6 | % | | 7 | % | | 7 | % |
|
Exchange Data and Feeds
| | |
174
| | |
160
| | 9 | % | | 7 | % | | 7 | % |
|
Desktops and Connectivity
| |
|
101
|
|
|
117
|
| (13 | )% |
| — |
|
| 1 | % |
| Data Total | |
| 539 |
|
| 525 |
| 3 | % |
| 6 | % |
| 6 | % |
|
Listings
| |
|
112
|
|
|
104
|
| 8 | % |
| 8 | % |
| 8 | % |
| Segment Revenue | | $ | 651 | | $ | 629 | | 4 | % | | 6 | % | | 6 | % |
| | | | | | | | | |
|
|
(1)
|
|
Net revenues in constant currency are calculated holding both the
pound sterling and euro at the average exchange rate from 4Q17,
1.3279 and 1.1779, respectively. References to organic growth
excludes businesses that have been acquired, divested or
discontinued that significantly impact the comparable periods. For
4Q18 and 4Q17, $6 million and $21 million of data revenues were
excluded from organic growth, respectively.
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|
Full year 2018 data and listings revenues were $2.6 billion, including
data revenues of $2.1 billion, up 1% year-over-year, negatively impacted
by the divestiture of Trayport in the fourth quarter of 2017, and
listings revenues of $444 million, up 4% year-over-year, negatively
impacted by the sale of NYSE Governance Services in the second quarter
of 2017. On an organic, constant currency basis(1), segment
revenues were up 5% with data revenues up 5% year-over-year and listings
revenues up 6% year-over-year. Data and listings operating expenses were
$1.5 billion and on an adjusted basis, were $1.2 billion for the year.
Segment operating income for the full year was $1.1 billion and the
operating margin was 42%. On an adjusted basis, operating income was
$1.3 billion and the adjusted operating margin was 51%.
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| |
| | | | | | | | | | Organic |
| | | | | | | | | | Const |
|
$ (in millions)
| | FY18 | | FY17 | | % Chg | | Organic | | Curr(1) |
|
Revenue:
| | | | | | | | | | |
|
Pricing and Analytics
| |
$
|
1,043
| |
$
|
970
| | 7 | % | | 7 | % | | 7 | % |
|
Exchange Data and Feeds
| | |
670
| | |
632
| | 6 | % | | 5 | % | | 5 | % |
|
Desktops and Connectivity
| |
|
402
|
|
|
482
|
| (17 | )% |
| 2 | % |
| 2 | % |
| Data Total | |
| 2,115 |
|
| 2,084 |
| 1 | % |
| 5 | % |
| 5 | % |
|
Listings
| |
|
444
|
|
|
426
|
| 4 | % |
| 6 | % |
| 6 | % |
| Segment Revenue | | $ | 2,559 | | $ | 2,510 | | 2 | % | | 6 | % | | 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 2017,
$1.2890 and $1.1297, respectively. References to organic growth
excludes businesses that have been acquired, divested or
discontinued that significantly impact the comparable periods. For
2018, $39 million of data revenues were excluded from organic
growth. For 2017, $116 million of data revenues and $8 million of
listings revenues were excluded from organic growth.
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Trading and Clearing Segment Results
Fourth quarter trading and clearing net revenues were $657 million, up
27% from one year ago. Trading and clearing operating expenses were $256
million and adjusted operating expenses were $232 million in the fourth
quarter. Segment operating income for the fourth quarter was $401
million and the operating margin was 61%. On an adjusted basis,
operating income was $425 million and the adjusted operating margin was
65%.
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$ (in millions)
| | 4Q18 | | 4Q17 | | % Chg |
|
Revenue, net:
| | | | | | |
|
Energy
| |
$
|
257
| |
$
|
227
| | 13 | % |
|
Ags and Metals
| | |
54
| | |
49
| | 13 | % |
|
Financials(1) | | |
92
| | |
72
| | 28 | % |
|
Cash Equities and Equity Options
| | |
93
| | |
70
| | 35 | % |
|
Fixed Income and Credit(2) | | |
83
| | |
32
| | 152 | % |
|
OTC and Other Transactions(3) | | |
13
| | |
13
| | — | |
|
Other Revenue(4) |
|
|
65
|
|
|
54
|
| 21 | % |
| Segment Revenue | | $ | 657 | | $ | 517 | | 27 | % |
| | | | | | | | |
|
|
(1)
|
|
Financials include interest rates and other financial futures and
options.
|
|
(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.
|
|
(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 fourth quarter increased 13%
year-over-year driven by a 10% increase in average daily volume (ADV)
and a 1% increase in rate per contract (RPC).
-
Ags and metals futures and options revenue in the fourth quarter
increased 13% year-over-year driven by a 12% increase in ADV and
partially offset by a 1% decrease in RPC.
-
Financials futures and options revenue in the fourth quarter increased
28% year-over-year driven by a 35% increase in ADV and partially
offset by a 5% decrease in RPC.
- U.S. cash equities and equity options revenue in the fourth quarter
increased 35% year-over-year driven by a 45% increase in U.S. cash
equities ADV and a 44% increase in equity options ADV.
-
Fixed income and credit revenue in the fourth quarter increased 152%
year-over-year driven by a 25% increase in CDS clearing revenue and
the addition of BondPoint, TMC Bonds and MERS.
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| | ADV | | |
| | (lots in thousands) | | RPC |
| | 4Q18 |
| % Chg |
| 4Q18 |
| % Chg |
|
Energy
| |
2,900
|
| 10 | % | |
$
|
1.38
|
| 1 | % |
|
Ags & Metals
| |
379
| | 12 | % | |
$
|
2.24
| | (1 | )% |
|
Financials
| |
2,933
| | 35 | % | |
$
|
0.48
| | (5 | )% |
|
Interest Rates
| |
2,456
| | 37 | % | |
$
|
0.37
| | (3 | )% |
|
Other Financials
| |
477
|
| 23 | % |
|
$
|
1.02
|
| (4 | )% |
|
Total Futures and Options
| |
6,212
| | 21 | % | |
$
|
1.00
| | (6 | )% |
| | | | | | | |
|
|
Cash Equities
| |
2,106
| | 45 | % | |
$
|
0.048
| | (7 | )% |
|
Equity Options
| |
3,866
| | 44 | % | |
$
|
0.12
| | (6 | )% |
| | | | | | | |
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|
The fourth quarter of 2018 included 64 trading days for commodities
and other financials, 63 trading days for cash equities and equity
options and 65 trading days for interest rates. The fourth quarter
of 2017 included 63 trading days for commodities, other financials,
cash equities and equity options and 64 trading days for interest
rates.
|
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Full year 2018 trading and clearing net revenues were $2.4 billion, up
14% from one year ago. Trading and clearing operating expenses were $911
million and adjusted operating expenses were $824 million in 2018.
Segment operating income for the year was $1.5 billion and the operating
margin was 62%. On an adjusted basis, operating income was $1.6 billion
and the adjusted operating margin was 66%.
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$ (in millions)
| | 2018 | | 2017 | | % Chg |
|
Revenue, net:
| | | | | | |
|
Energy
| |
$
|
965
| |
$
|
909
| | 6 | % |
|
Ags and Metals
| | |
251
| | |
216
| | 16 | % |
|
Financials(1) | | |
354
| | |
326
| | 9 | % |
|
Cash Equities and Equity Options
| | |
327
| | |
286
| | 14 | % |
|
Fixed Income and Credit(2) | | |
240
| | |
139
| | 72 | % |
|
OTC and Other Transactions(3) | | |
49
| | |
50
| | (2 | )% |
|
Other Revenue(4) |
|
|
234
|
|
|
202
|
| 16 | % |
| Segment Revenue | | $ | 2,420 | | $ | 2,128 | | 14 | % |
| | | | | |
|
|
(1)
|
|
Financials include interest rates and other financial futures and
options.
|
|
(2)
| |
Fixed income and credit includes fixed income execution, CDS
execution and clearing and ICE Mortgage Services.
|
|
(3)
| |
OTC & other transactions include physical energy.
|
|
(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.
|
| |
|
-
Energy futures and options revenue for the full year 2018 increased 6%
year-over-year driven by a 5% increase in RPC and a 1% increase in ADV.
-
Ags and metals futures and options revenue for the full year 2018
increased 16% year-over-year driven by a 14% increase in ADV and a 2%
increase in RPC.
-
Financials futures and options revenue for the full year 2018
increased 9% year-over-year driven by a 9% increase in ADV.
- U.S. cash equities and equity options revenue for the full year 2018
increased 14% year-over-year driven by a 43% increase in equity
options ADV and a 14% increase in U.S. cash equities.
-
Fixed income and credit revenue for the full year 2018 increased 72%
year-over-year driven by a 22% increase in CDS clearing revenue and
the addition of BondPoint, TMC Bonds and MERS.
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| |
| | ADV | | |
| | (lots in thousands) | | RPC |
| | 2018 |
| % Chg |
| 2018 |
| % Chg |
|
Energy
| |
2,747
|
| 1 | % | |
$
|
1.39
|
| 5 | % |
|
Ags and Metals
| |
427
| | 14 | % | |
$
|
2.34
| | 2 | % |
|
Financials
| |
2,770
| | 9 | % | |
$
|
0.49
| | — | % |
|
Interest Rates
| |
2,330
| | 14 | % | |
$
|
0.38
| | 4 | % |
|
Other Financials
| |
440
|
| (10 | )% |
|
$
|
1.05
|
| 6 | % |
|
Total Futures and Options
| |
5,944
| | 5 | % | |
$
|
1.03
| | 2 | % |
| | | | | | | |
|
|
Cash Equities
| |
1,734
| | 14 | % | |
$
|
0.050
| | (2 | )% |
|
Equity Options
| |
3,386
| | 43 | % | |
$
|
0.12
| | (17 | )% |
| | | | | | | |
|
|
2018 included 252 trading days for commodities and other financials,
251 trading days for cash equities and equity options and 257
trading days for interest rates. 2017 included 251 trading days for
commodities, other financials, cash equities and equity options and
256 trading days for interest rates.
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Other Matters
-
ICE repurchased $1.2 billion of its common stock and paid $555 million
in dividends in 2018.
-
Unrestricted cash was $724 million and outstanding debt was $7.4
billion as of December 31, 2018.
-
Operating cash flow for 2018 was $2.5 billion, up 21% from $2.1
billion one year ago. 2018 free cash flow was $2.3 billion, up 32%
from $1.7 billion one year ago.
-
The effective tax rate for the fourth quarter was 16%.
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Financial Guidance | | | | |
| | | |
|
|
|
| GAAP |
| Non-GAAP |
| 2019 Data Revenue |
| $2.19 - $2.24 billion |
| 1Q19 Data Revenue |
| $540 - $545 million |
| 2019 Operating Expenses |
| $2.45 - $2.50 billion |
| $2.15 - $2.20 billion(1) |
| 1Q19 Operating Expenses |
| $610 - $620 million |
| $535 - $545 million(1) |
| 1Q19 Interest Expense |
| $71 million |
| 2019 Expense Synergies |
| $30 million |
| 2019 Capital Expenditures |
| $290 - $320 million for operational, non-operational capital
expenditures and capitalized development
|
| 2019 Effective Tax Rate |
|
22.5% - 24.5%(2) |
| 1Q19 Weighted Average Shares Outstanding |
|
568 - 574 million shares reflecting January 2019 share repurchases
|
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|
|
(1)
|
|
2019 and 1Q19 non-GAAP operating expenses exclude amortization of
acquisition-related intangibles.
|
|
(2)
| |
This represents 2019 full year guidance for both the GAAP and
non-GAAP effective tax rates but note that the GAAP effective tax
rate is more susceptible to diverging from this guidance based on
items outside the normal course of business that are adjusted for to
derive our non-GAAP results. Such items can be unknown,
unpredictable or uncertain, requiring unreasonable efforts to
determine with any precision and which could potentially be
confusing or misleading.
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Earnings Conference Call Information
ICE will hold a conference call today, February 7, at 8:30 a.m. ET to
review its fourth quarter 2018 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 8241674 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 first quarter 2019 earnings has been
scheduled for May 2, 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) |
| | | |
|
| | Twelve Months Ended | | Three Months Ended |
| | December 31, | | December 31, |
| Revenues: | | 2018 |
| 2017 |
| 2018 |
| 2017 |
|
Transaction and clearing, net
| |
$
|
3,483
| |
|
$
|
3,131
| | |
$
|
961
| |
|
$
|
758
| |
|
Data services
| |
2,115
| | |
2,084
| | |
539
| | |
525
| |
|
Listings
| |
444
| | |
426
| | |
112
| | |
104
| |
|
Other revenues
| |
234
|
|
|
202
|
|
|
65
|
|
|
54
|
|
|
Total revenues
| |
6,276
| | |
5,843
| | |
1,677
| | |
1,441
| |
|
Transaction-based expenses:
| | | | | | | | |
|
Section 31 fees
| |
357
| | |
372
| | |
85
| | |
97
| |
|
Cash liquidity payments, routing and clearing
| |
940
|
|
|
833
|
|
|
284
|
|
|
198
|
|
|
Total revenues, less transaction-based expenses
| |
4,979
|
|
|
4,638
|
|
|
1,308
|
|
|
1,146
|
|
| Operating expenses: | | | | | | | | |
|
Compensation and benefits
| |
994
| | |
946
| | |
262
| | |
229
| |
|
Professional services
| |
131
| | |
121
| | |
40
| | |
27
| |
|
Acquisition-related transaction and integration costs
| |
34
| | |
36
| | |
1
| | |
9
| |
|
Technology and communication
| |
432
| | |
397
| | |
112
| | |
103
| |
|
Rent and occupancy
| |
68
| | |
69
| | |
18
| | |
17
| |
|
Selling, general and administrative
| |
151
| | |
155
| | |
42
| | |
38
| |
|
Depreciation and amortization
| |
586
|
|
|
535
|
|
|
157
|
|
|
131
|
|
|
Total operating expenses
| |
2,396
|
|
|
2,259
|
|
|
632
|
|
|
554
|
|
|
Operating income
| |
2,583
|
|
|
2,379
|
|
|
676
|
|
|
592
|
|
|
Other income (expense):
| | | | | | | | |
|
Interest income
| |
22
| | |
8
| | |
7
| | |
3
| |
|
Interest expense
| |
(244
|
)
| |
(187
|
)
| |
(71
|
)
| |
(50
|
)
|
|
Other income, net
| |
159
|
|
|
326
|
|
|
126
|
|
|
126
|
|
|
Other income (expense), net
| |
(63
|
)
|
|
147
|
|
|
62
|
|
|
79
|
|
|
Income before income tax expense
| |
2,520
| | |
2,526
| | |
738
| | |
671
| |
|
Income tax expense (benefit)
| |
500
|
|
|
(28
|
)
|
|
119
|
|
|
(568
|
)
|
|
Net income
| |
$
|
2,020
|
|
|
$
|
2,554
|
|
|
$
|
619
|
|
|
$
|
1,239
|
|
|
Net income attributable to non-controlling interest
| |
(32
|
)
|
|
(28
|
)
|
|
(8
|
)
|
|
(6
|
)
|
|
Net income attributable to Intercontinental Exchange, Inc.
| |
$
|
1,988
|
|
|
$
|
2,526
|
|
|
$
|
611
|
|
|
$
|
1,233
|
|
| | | | | | | |
|
|
Earnings per share attributable to Intercontinental Exchange, Inc.
common stockholders:
| | | | | | | | |
|
Basic
| |
$
|
3.46
|
|
|
$
|
4.29
|
|
|
$
|
1.07
|
|
|
$
|
2.11
|
|
|
Diluted
| |
$
|
3.43
|
|
|
$
|
4.25
|
|
|
$
|
1.07
|
|
|
$
|
2.09
|
|
|
Weighted average common shares outstanding:
| | | | | | | | |
|
Basic
| |
575
|
|
|
589
|
|
|
569
|
|
|
584
|
|
|
Diluted
| |
579
|
|
|
594
|
|
|
573
|
|
|
589
|
|
|
Dividend per share
| |
$
|
0.96
|
|
|
$
|
0.80
|
|
|
$
|
0.24
|
|
|
$
|
0.20
|
|
| | | | | | | | | | | | | | | |
|
|
| |
| |
| Consolidated Balance Sheets |
| (In millions) |
| | | |
|
| | As of | | As of |
| | December 31, 2018 | | December 31, 2017 |
| Assets: | | | | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| |
$
|
724
| | |
$
|
535
| |
|
Short-term restricted cash and cash equivalents
| |
818
| | |
769
| |
|
Customer accounts receivable, net
| |
953
| | |
903
| |
|
Margin deposits, guaranty funds and delivery contracts receivable
| |
63,955
| | |
51,222
| |
|
Prepaid expenses and other current assets
| |
242
|
|
|
133
|
|
|
Total current assets
| |
66,692
|
|
|
53,562
|
|
|
Property and equipment, net
| |
1,241
|
|
|
1,246
|
|
|
Other non-current assets:
| | | | |
|
Goodwill
| |
13,085
| | |
12,216
| |
|
Other intangible assets, net
| |
10,462
| | |
10,269
| |
|
Long-term restricted cash and cash equivalents
| |
330
| | |
264
| |
|
Other non-current assets
| |
981
|
|
|
707
|
|
|
Total other non-current assets
| |
24,858
|
|
|
23,456
|
|
|
Total assets
| |
$
|
92,791
|
|
|
$
|
78,264
|
|
| | | |
|
| Liabilities and Equity: | | | | |
|
Current liabilities:
| | | | |
|
Accounts payable and accrued liabilities
| |
$
|
521
| | |
$
|
462
| |
|
Section 31 fees payable
| |
105
| | |
128
| |
|
Accrued salaries and benefits
| |
280
| | |
227
| |
|
Deferred revenue
| |
135
| | |
125
| |
|
Short-term debt
| |
951
| | |
1,833
| |
|
Margin deposits, guaranty funds and delivery contracts payable
| |
63,955
| | |
51,222
| |
|
Other current liabilities
| |
161
|
|
|
178
|
|
|
Total current liabilities
| |
66,108
|
|
|
54,175
|
|
|
Non-current liabilities:
| | | | |
|
Non-current deferred tax liability, net
| |
2,337
| | |
2,298
| |
|
Long-term debt
| |
6,490
| | |
4,267
| |
|
Accrued employee benefits
| |
204
| | |
243
| |
|
Other non-current liabilities
| |
350
|
|
|
296
|
|
|
Total non-current liabilities
| |
9,381
|
|
|
7,104
|
|
|
Total liabilities
| |
75,489
|
|
|
61,279
|
|
|
Commitments and contingencies
| | | | |
|
Redeemable non-controlling interests in consolidated subsidiaries
| |
71
| | |
—
| |
| Equity: | | | | |
|
Intercontinental Exchange, Inc. stockholders’ equity:
| | | | |
|
Common stock
| |
6
| | |
6
| |
|
Treasury stock, at cost
| |
(2,354
|
)
| |
(1,076
|
)
|
|
Additional paid-in capital
| |
11,547
| | |
11,392
| |
|
Retained earnings
| |
8,317
| | |
6,858
| |
|
Accumulated other comprehensive loss
| |
(315
|
)
|
|
(223
|
)
|
|
Total Intercontinental Exchange, Inc. stockholders’ equity
| |
17,201
| | |
16,957
| |
|
Non-controlling interest in consolidated subsidiaries
| |
30
|
|
|
28
|
|
|
Total equity
| |
17,231
|
|
|
16,985
|
|
|
Total liabilities and equity
| |
$
|
92,791
|
|
|
$
|
78,264
|
|
| | | | | | | |
|
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
Annual Report on Form 10-K, 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, organic data revenue
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):
|
| | | |
| | | |
| | | |
| Adjusted Operating Income, Operating Margin and Operating Expense
Reconciliation |
| (In millions) |
| (Unaudited) |
| | | | | | | | | | | |
|
| | Trading and Clearing | | Data and Listings | | | | |
| | Segment | | Segment | | Consolidated |
| | Twelve Months Ended | | Twelve Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, | | December 31, |
| | 2018 |
| 2017 | | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Total revenues, less transaction-based expenses
| |
$
|
2,420
|
|
|
$
|
2,128
|
| |
$
|
2,559
|
|
|
$
|
2,510
|
| |
$
|
4,979
|
|
|
$
|
4,638
|
|
|
Total operating expenses
| |
$
|
911
| |
|
$
|
781
| | |
$
|
1,485
| |
|
$
|
1,478
| | |
$
|
2,396
| |
|
$
|
2,259
| |
|
Less: Interactive Data transaction and integration costs and
acquisition-related success fees
| | |
6
| | | |
—
| | | |
24
| | | |
31
| | | |
30
| | | |
31
| |
|
Less: Amortization of acquisition-related intangibles
| | |
73
| | | |
53
| | | |
214
| | | |
208
| | | |
287
| | | |
261
| |
|
Less: Accruals relating to investigations and inquiries
| | |
—
| | | |
14
| | | |
—
| | | |
—
| | | |
—
| | | |
14
| |
|
Less: Impairment on divestiture of NYSE Governance Services
| | |
—
| | | |
—
| | | |
—
| | | |
6
| | | |
—
| | | |
6
| |
|
Less: Impairment of exchange registration intangible assets on
closure of ICE Futures Canada and ICE Clear Canada
| | |
4
| | | |
—
| | | |
—
| | | |
—
| | | |
4
| | | |
—
| |
|
Less: Employee severance costs related to ICE Futures Canada and ICE
Clear Canada operations
| |
|
4
|
|
|
|
—
|
| |
|
—
|
|
|
|
—
|
| |
|
4
|
|
|
|
—
|
|
|
Adjusted total operating expenses
| |
$
|
824
|
|
|
$
|
714
|
| |
$
|
1,247
|
|
|
$
|
1,233
|
| |
$
|
2,071
|
|
|
$
|
1,947
|
|
|
Operating income
| |
$
|
1,509
|
|
|
$
|
1,347
|
| |
$
|
1,074
|
|
|
$
|
1,032
|
| |
$
|
2,583
|
|
|
$
|
2,379
|
|
|
Adjusted operating income
| |
$
|
1,596
|
|
|
$
|
1,414
|
| |
$
|
1,312
|
|
|
$
|
1,277
|
| |
$
|
2,908
|
|
|
$
|
2,691
|
|
|
Operating margin
| |
|
62
|
%
|
|
|
63
|
%
| |
|
42
|
%
|
|
|
41
|
%
| |
|
52
|
%
|
|
|
51
|
%
|
|
Adjusted operating margin
| |
|
66
|
%
|
|
|
66
|
%
| |
|
51
|
%
|
|
|
51
|
%
| |
|
58
|
%
|
|
|
58
|
%
|
| | | | | | | | | | | | | | | | | |
|
|
| | | |
| | | |
| | | |
| Adjusted Operating Income, Operating Margin and Operating Expense
Reconciliation |
| (In millions) |
| (Unaudited) |
| | | | | | | | | | | |
|
| | Trading and Clearing | | Data and Listings | | | | |
| | Segment | | Segment | | Consolidated |
| | Three Months Ended | | Three Months Ended | | Three Months Ended |
| | December 31, | | December 31, | | December 31, |
| | 2018 |
| 2017 | | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Total revenues, less transaction-based expenses
| |
$
|
657
|
|
|
$
|
517
|
| |
$
|
651
|
|
|
$
|
629
|
| |
$
|
1,308
|
|
|
$
|
1,146
|
|
|
Total operating expenses
| |
$
|
256
| |
|
$
|
186
| | |
$
|
376
| |
|
$
|
368
| | |
$
|
632
| |
|
$
|
554
| |
|
Less: Interactive Data transaction and integration costs and
acquisition-related success fees
| | |
1
| | | |
—
| | | |
—
| | | |
8
| | | |
1
| | | |
8
| |
|
Less: Amortization of acquisition-related intangibles
| |
|
23
|
|
|
|
12
|
| |
|
55
|
|
|
|
53
|
| |
|
78
|
|
|
|
65
|
|
|
Adjusted total operating expenses
| |
$
|
232
|
|
|
$
|
174
|
| |
$
|
321
|
|
|
$
|
307
|
| |
$
|
553
|
|
|
$
|
481
|
|
|
Operating income
| |
$
|
401
|
|
|
$
|
331
|
| |
$
|
275
|
|
|
$
|
261
|
| |
$
|
676
|
|
|
$
|
592
|
|
|
Adjusted operating income
| |
$
|
425
|
|
|
$
|
343
|
| |
$
|
330
|
|
|
$
|
322
|
| |
$
|
755
|
|
|
$
|
665
|
|
|
Operating margin
| |
|
61
|
%
|
|
|
64
|
%
| |
|
42
|
%
|
|
|
41
|
%
| |
|
52
|
%
|
|
|
52
|
%
|
|
Adjusted operating margin
| |
|
65
|
%
|
|
|
67
|
%
| |
|
51
|
%
|
|
|
51
|
%
| |
|
58
|
%
|
|
|
58
|
%
|
| | | | | | | | | | | | | | | | | |
|
|
| |
| |
| Adjusted Net Income Attributable to ICE and EPS |
| (In millions) |
| (Unaudited) |
| | | |
|
| | Twelve Months Ended | | Twelve Months Ended |
| | December 31, 2018 | | December 31, 2017 |
|
Net income attributable to ICE
| |
$
|
1,988
| | |
$
|
2,526
| |
|
Add: Interactive Data transaction and integration costs and
acquisition-related success fees
| |
30
| | |
31
| |
|
Add: Amortization of acquisition-related intangibles
| |
287
| | |
261
| |
|
Less: Gain on acquisition of MERS
| |
(110
|
)
| |
—
| |
|
Add: Accruals relating to investigation and inquiries
| |
—
| | |
14
| |
|
Add: Impairment on divestiture of NYSE Governance Services
| |
—
| | |
6
| |
|
Add: Impairment of exchange registration intangible assets on
closure of ICE Futures Canada and ICE Clear Canada
| |
4
| | |
—
| |
|
Add: Employee severance costs related to ICE Futures Canada and ICE
Clear Canada operations
| |
4
| | |
—
| |
|
Add/ (Less): Gain on divestiture of Trayport, net
| |
1
| | |
(110
|
)
|
|
Less: Cetip investment gain, net
| |
—
| | |
(167
|
)
|
|
Less: Income tax effect for the above items
| |
(98
|
)
| |
(43
|
)
|
|
Less: Deferred tax adjustments from U.S. tax rate reduction
| |
(11
|
)
| |
(764
|
)
|
|
Add/ (Less): Deferred tax adjustments on acquisition-related
intangibles
| |
(5
|
)
| |
10
| |
|
Less: Other tax adjustments
| |
(13
|
)
|
|
—
|
|
|
Adjusted net income attributable to ICE
| |
$
|
2,077
|
|
|
$
|
1,764
|
|
| | | |
|
|
Diluted earnings per share attributable to ICE
| |
$
|
3.43
|
|
|
$
|
4.25
|
|
| | | |
|
|
Adjusted diluted earnings per share attributable to ICE
| |
$
|
3.59
|
|
|
$
|
2.97
|
|
| | | | | | | |
|
|
| |
| |
| Adjusted Net Income Attributable to ICE and EPS |
| (In millions) |
| (Unaudited) |
| | | |
|
| | Three Months Ended | | Three Months Ended |
| | December 31, 2018 | | December 31, 2017 |
|
Net income attributable to ICE
| |
$
|
611
| | |
$
|
1,233
| |
|
Add: Interactive Data transaction and integration costs and
acquisition-related success fees
| |
1
| | |
8
| |
|
Add: Amortization of acquisition-related intangibles
| |
78
| | |
65
| |
|
Less: Gain on acquisition of MERS
| |
(110
|
)
| |
—
| |
|
Less: Gain on divestiture of Trayport, net
| |
—
| | |
(110
|
)
|
|
Add/ (Less): Income tax effect for the above items
| |
(35
|
)
| |
11
| |
|
Add/ (Less): Tax adjustments from U.S. tax rate reduction
| |
1
| | |
(764
|
)
|
|
Less: Deferred tax adjustment on acquisition-related intangibles
| |
(10
|
)
|
|
(2
|
)
|
|
Adjusted net income attributable to ICE
| |
$
|
536
|
|
|
$
|
441
|
|
| | | |
|
|
Diluted earnings per share attributable to ICE
| |
$
|
1.07
|
|
|
$
|
2.09
|
|
| | | |
|
|
Adjusted diluted earnings per share attributable to ICE
| |
$
|
0.94
|
|
|
$
|
0.75
|
|
| | | | | | | |
|
|
| | | |
| | | |
| GAAP to Organic Data Revenue |
| (In millions) |
| (Unaudited) |
| | | | | | | |
|
| | 2018 | | 2017 |
|
Data Revenue (as reported)
| |
$
|
2,115
| | |
$
|
2,084
| |
|
Adjusted for:
| | | | |
|
2017 Divestitures & wind down of acq. businesses(1) | | |
—
| | | |
(116
|
)
|
|
Acquisitions(2) | |
|
(39
|
)
|
|
|
—
|
|
|
Organic Data Revenue
| |
$
|
2,076
| | |
$
|
1,968
| |
| | | |
|
|
FX Impact(3) | |
|
(8
|
)
|
|
|
—
|
|
|
Organic, constant currency revenue
| |
$
|
2,068
| | |
$
|
1,968
| |
| | | | | | | |
|
|
(1)
|
|
Includes $74 million of revenue related to the divestiture of
Trayport, $16 million for the sale of IDMS and $26 million of
revenue related to the wind down of acquired businesses. Wind down
of acquired businesses includes the discontinuation of certain
businesses acquired as part of larger acquisitions that are no
longer strategic for the company. These include the anticipated 2018
erosion of legacy SPSE customers who can no longer use IDC & SPSE as
their primary and secondary source of data and the impact of exiting
certain non-strategic components of the legacy IDC 7-Ticks business.
|
|
(2)
| |
Includes revenues from TMX, ICE BofAML, NGX, BondPoint, TMC and CHX.
|
|
(3)
| |
Net revenues in constant currency are calculated holding both the
pound sterling and euro at the average exchange rate from 2017,
1.2890 and 1.1297, respectively. For the year ending December 31,
2018, 6% of our data revenues were billed in pounds sterling and 3%
in euros. For the year ending December 31, 2017, 9% of our data
revenues were billed in pounds sterling and 3% in euros.
|
| |
|
|
| |
| |
| GAAP to Organic Data Revenue |
| (In millions) |
| (Unaudited) |
| | | |
|
| | 4Q18 | | 4Q17 |
|
Data Revenue (as reported)
| |
$
|
539
| | |
$
|
525
| |
|
Adjusted for:
| | | | |
|
2017 Divestitures & wind down of acq. businesses(1) | | |
—
| | | |
(21
|
)
|
|
Acquisitions(2) | |
|
(6
|
)
|
|
|
—
|
|
|
Organic Data Revenue
| |
$
|
533
| | |
$
|
504
| |
| | | |
|
|
FX Impact(3) | |
|
1
|
|
|
|
—
|
|
|
Organic, constant currency revenue
| |
$
|
534
| | |
$
|
504
| |
| | | |
|
|
(1)
|
|
Includes $16 million of revenue related to the divestiture of
Trayport in the fourth quarter of 2017 and $5 million of revenue
related to the wind down of acquired businesses. Wind down of
acquired businesses includes the discontinuation of certain
businesses acquired as part of larger acquisitions that are no
longer strategic for the company. These include the anticipated 2018
erosion of legacy SPSE customers who can no longer use IDC & SPSE as
their primary and secondary source of data and the impact of exiting
certain non-strategic components of the legacy IDC 7-Ticks business.
|
|
(2)
| |
Includes revenues from ICE BofAML, NGX, BondPoint, TMC and CHX.
|
|
(3)
| |
Net revenues in constant currency are calculated holding both the
pound sterling and euro at the average exchange rate from 4Q17,
1.3279 and 1.1779, respectively. For the three months ending
December 31, 2018, 6% of our data revenues were billed in pounds
sterling and 3% in euros. For the three months ending December 31,
2017, 9% of our data revenues were billed in pounds sterling and 3%
in euros.
|
| |
|
|
| | |
| | |
| Free Cash Flow Calculation |
| (In millions) |
| (Unaudited) |
| | | | | |
|
| | Twelve months ending | | Twelve months ending |
| | December 31, 2018 | | December 31, 2017 |
|
Cash flow from operations
| |
$
|
2,533
| | |
$
|
2,085
| |
|
Less: Capital expenditures and capitalized software development costs
| | |
(280
|
)
| | |
(357
|
)
|
|
Add: Section 31 fees, net
| |
|
33
|
|
|
|
2
|
|
|
Free cash flow
| |
$
|
2,286
| | |
$
|
1,730
| |
| | | | | |
|
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 raises
more capital than any other exchange 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20190207005272/en/
ICE Investor Relations Contact:
Warren Gardiner
+1 770 835 0114
warren.gardiner@theice.com
investors@theice.com
ICE Media Contact:
Damon Leavell
+1 212 323 8587
damon.leavell@theice.com
media@theice.com
Source: Intercontinental Exchange