Cboe Global Markets (CBOE) Tops Q4 EPS by 13c, Revenues Beat

Cboe Global Markets (NASDAQ: CBOE) reported Q4 EPS of $1.23, $0.13 better than the analyst estimate of $1.10. Revenue for the quarter came in at $334.4 million versus the consensus estimate of $274.64 million.

"Our fourth quarter results reflect lower year-over-year trading volumes industrywide as lower volatility dampened trading, particularly in our suite of proprietary products, which experienced exceptionally strong trading in 2018's fourth quarter," said Edward T. Tilly, Cboe Global Markets Chairman, President and Chief Executive Officer. "I am pleased to note, however, that in 2019 we significantly strengthened our foundation for further growth by investing in initiatives aimed at growing our proprietary products; completing our technology migration while delivering on our synergy targets; and launching new initiatives, such as our plan to acquire EuroCCP and launch pan-European derivatives trading and clearing. Additionally, we further enhanced our foundation for growth through this week's acquisitions of Hanweck, a real-time risk analytics company, and FT Options, a portfolio management platform provider. Our forward momentum leaves us well positioned for ongoing growth and to continue to deliver increased value to our customers and our shareholders in 2020 and beyond," Mr. Tilly added.

"We faced difficult comparisons this quarter versus last year\'s record fourth quarter results; however, we continued to exercise prudent expense management, with adjusted operating expenses down 14 percent, in line with the fourth quarter revenue decline," said Brian N. Schell, Cboe Global Markets Executive Vice President, Chief Financial Officer and Treasurer. "During the quarter, we also maintained our ongoing commitment to returning capital to shareholders in a disciplined and consistent manner with $70 million of share repurchases and $40 million of dividends. During the year, we returned nearly $157 million to shareholders through share repurchases and over $150 million through dividends, increasing our dividend by 15 percent with the third quarter dividend payment, used $350 million to reduce debt and continued to fund investments in our business," Mr. Schell added.

2020 Fiscal Year Financial Guidance

The company provided guidance as noted below for the 2020 fiscal year. This guidance does not take into account the company's planned acquisition of EuroCCP and its investment in launching pan-European trading and clearing. The company plans to update its guidance for 2020 after the acquisition closes, which is expected in the first half of this year.

• Adjusted operating expenses are expected to be in the range of $435 to $443 million, up from the previous guidance of $420 to $428 million, reflecting the company\'s recent acquisitions of Hanweck and FT Options, announced February 4, 2020. The guidance excludes the expected amortization of acquired intangible assets of $120 million, which the company plans to include in its non-GAAP reconciliation.¹
• Depreciation and amortization expense, which is included in adjusted operating expenses above, are expected to be in the range of $34 to $38 million, excluding the expected amortization of acquired intangible assets of $120 million.
• The effective tax rate¹ on adjusted earnings for the full year is expected to be in the range of 26.5 to 28.5 percent. Significant changes in trading volume, expenses, federal, state and local tax laws or rates and other items could materially impact this expectation.
• Capital expenditures are expected to be in the range of $65 to $70 million, which includes expenditures associated with the company's Chicago headquarters relocation occurring later this year and its trading floor relocation planned for 2021.

For earnings history and earnings-related data on Cboe Global Markets (CBOE) click here.

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