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Intercontinental Exchange Reports Record First Quarter 2016 Adj. Diluted EPS of $3.68, +20% y/y; $1.2B Revenues, less Transaction-based Expenses

May 4, 2016 7:30 AM

ATLANTA & NEW YORK--(BUSINESS WIRE)-- Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses and provider of global data and listing services, today reported financial results for the first quarter of 2016. For the quarter ended March 31, 2016, consolidated net income attributable to ICE was $369 million on $1.2 billion of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the first quarter were $3.08.

ICE's operating results include amortization of acquisition-related intangibles, NYSE and Interactive Data transaction and integration-related expenses and other adjustments that are not reflective of ICE's cash operations or core business performance. Excluding these items, net of tax, first quarter 2016 adjusted net income was $441 million and adjusted diluted EPS were $3.68, an increase of 20% over the prior first quarter. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income and adjusted diluted EPS.

"This was the best quarter in the company’s history, and was driven by growth across our global markets and data services business," said ICE Chairman and CEO Jeffrey C. Sprecher. "Our solid top-line growth combined with our strong expense management, including the acceleration of synergies, resulted in our seventh consecutive quarter of double-digit earnings growth. This strong performance reflects our team's ability to deliver strong operational results, even as we consider potential strategic opportunities. Our focus on executing on our objectives for our customers and shareholders will continue to drive our growth.”

Scott A. Hill, ICE CFO, said: “We generated nearly $600 million of operating cash in the quarter, which enabled us to invest in growth, reduce our debt by over $500 million and return over $100 million to shareholders through dividends in the first quarter. Our dividends continue to grow as the company grows, with the dividend payout representing a 14% increase compared to the payout in the fourth quarter of last year. And we demonstrated that we have the ability to rapidly reduce our leverage as we integrate our businesses, ultimately providing greater flexibility to increase capital returns to our shareholders sooner."

First Quarter 2016 Results

First quarter 2016 consolidated revenues, less transaction-based expenses, were $1.2 billion, including $260 million in revenues from Interactive Data and Trayport during the quarter.

Transaction and clearing segment revenues were $574 million, with transaction and clearing revenues, less transaction-based expenses, of $529 million in the first quarter 2016, up 4% compared to the prior first quarter. Other revenues were $45 million.

Data and listings segment revenues were $580 million, including record data services revenues of $477 million for the first quarter 2016 and record listings revenues of $103 million, up 3% compared to the prior first quarter.

Consolidated operating expenses were $570 million for the first quarter of 2016, including $17 million in NYSE and Interactive Data transaction and integration expenses. Consolidated operating income for the first quarter was $584 million and operating margin was 51%. The effective tax rate for the first quarter was 30%.

Consolidated cash flows from operations were $597 million for the first three months of 2016, up 28% compared to the prior first quarter. Operational capital expenditures were $25 million and capitalized software development costs totaled $25 million.

Unrestricted cash and short-term investments were $493 million and outstanding debt was $6.8 billion as of March 31, 2016.

Financial Guidance

Earnings Conference Call Information

ICE will hold a conference call today, May 4, at 8:30 a.m. ET to review its first quarter 2016 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 6427393 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.

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)
Three Months Ended March 31,
Revenues: 2016 2015
Transaction and clearing, net $ 929 $ 836
Data services 477 200
Listings 103 101
Other revenues 45 43
Total revenues 1,554 1,180
Transaction-based expenses:
Section 31 fees 98 92
Cash liquidity payments, routing and clearing 302 238
Total revenues, less transaction-based expenses 1,154 850
Operating expenses:
Compensation and benefits 236 151
Technology and communication 92 51
Professional services 32 33
Rent and occupancy 18 16
Acquisition-related transaction and integration costs 27 19
Selling, general and administrative 22 29
Depreciation and amortization 143 89
Total operating expenses 570 388
Operating income 584 462
Other income (expense):
Interest expense (46 ) (23 )
Other income, net 2 2
Other expense, net (44 ) (21 )
Income before income tax expense 540 441
Income tax expense 163 118
Net income $ 377 $ 323
Net income attributable to non-controlling interest (8 ) (8 )
Net income attributable to Intercontinental Exchange, Inc. $ 369 $ 315
Earnings per share attributable to Intercontinental Exchange, Inc. common shareholders:
Basic $ 3.10 $ 2.81
Diluted $ 3.08 $ 2.80
Weighted average common shares outstanding:
Basic 119 112
Diluted 120 112
Dividend per share $ 0.85 $ 0.65

Consolidated Balance Sheets
(In millions)
(Unaudited)
As of As of
March 31, 2016 December 31, 2015
Assets:
Current assets:
Cash and cash equivalents $ 468 $ 627
Short-term investments 25 29
Short-term restricted cash and investments 657 657
Customer accounts receivable, net 941 700
Margin deposits and guaranty funds 52,329 51,169
Prepaid expenses and other current assets 134 131
Total current assets 54,554 53,313
Property and equipment, net 1,018 1,037
Other non-current assets:
Goodwill 12,104 12,079
Other intangible assets, net 10,630 10,758
Long-term restricted cash and investments 262 263
Long-term investments 352 299
Other non-current assets 240 238
Total other non-current assets 23,588 23,637
Total assets $ 79,160 $ 77,987
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities $ 399 $ 398
Section 31 fees payable 97 116
Accrued salaries and benefits 107 215
Deferred revenue 429 98
Short-term debt 2,048 2,591
Margin deposits and guaranty funds 52,329 51,169
Other current liabilities 227 156
Total current liabilities 55,636 54,743
Non-current liabilities:
Non-current deferred tax liability, net 2,893 2,837
Long-term debt 4,718 4,717
Accrued employee benefits 470 478
Other non-current liabilities 329 337
Total non-current liabilities 8,410 8,369
Total liabilities 64,046 63,112
Redeemable non-controlling interest 34 35
Equity:
Intercontinental Exchange, Inc. shareholders’ equity:
Preferred stock — —
Common stock 1 1
Treasury stock, at cost (1,494 ) (1,448 )
Additional paid-in capital 12,334 12,295
Retained earnings 4,415 4,148
Accumulated other comprehensive loss (208 ) (188 )
Total Intercontinental Exchange, Inc. shareholders’ equity 15,048 14,808
Non-controlling interest in consolidated subsidiaries 32 32
Total equity 15,080 14,840
Total liabilities and equity $ 79,160 $ 77,987

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 U.S. generally accepted accounting principles, or GAAP, results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. We strongly recommend that investors review the U.S. GAAP financial measures included in this press release and in our Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes.

Adjusted net income attributable to ICE presented below is calculated by adding net income attributable to ICE, the adjustments described below, which are not reflective of our cash operations and core business performance, and the related income tax effect. The following table reconciles net income attributable to ICE to adjusted net income attributable to ICE and calculates adjusted earnings per share for the periods presented below (in millions except per share amounts):

Three Months Ended Three Months Ended
March 31, 2016 March 31, 2015
Net income attributable to ICE $ 369 $ 315
Add: NYSE and Interactive Data transaction and integration costs 17 19
Add: Amortization of acquisition-related intangibles 77 33
Less: Income tax effect for the items above (35 ) (19 )
Add/(Less): Deferred tax adjustments on acquisitions-related intangibles 13 (4 )
Adjusted net income attributable to ICE $ 441 $ 344
Basic earnings per share attributable to ICE $ 3.10 $ 2.81
Diluted earnings per share attributable to ICE $ 3.08 $ 2.80
Adjusted basic earnings per share attributable to ICE $ 3.71 $ 3.07
Adjusted diluted earnings per share attributable to ICE $ 3.68 $ 3.06

About Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE) operates the leading network of regulated exchanges and clearing houses. ICE’s futures exchanges and clearing houses serve global commodity and financial markets, providing risk management and capital efficiency. The New York Stock Exchange is the world leader in capital raising 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, 2015, as filed with the SEC on February 4, 2016. We caution you not to place undo 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

Intercontinental Exchange

Media Contact:

Carol Schumacher, VP Corporate Affairs

+1 678 589 1834

[email protected]

or

Investor Contact:

Kelly Loeffler, SVP Investor Relations & Corp. Communications

+1 770 857 4726

[email protected]

or

Isabel Janci, Senior Director, Investor Relations

+1 770 857 0363

[email protected]

Source: Intercontinental Exchange

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