2014

IntercontinentalExchange Reports 18% Increase in Second Quarter Earnings; Diluted EPS of $1.95, up 19% - Revenues up 8% to $351MM

- Operating Income up 13% to $215MM

- Net Income Attributable to ICE of $143MM, up 18%

ATLANTA, Aug. 1, 2012 /PRNewswire/ -- 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 second quarter of 2012. Consolidated revenues increased 8% compared to the second quarter of 2011 to $351 million. Consolidated net income attributable to ICE was $143 million, up 18% versus the second quarter of 2011. Diluted earnings per share (EPS) increased 19% from the prior second quarter to $1.95.

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Said ICE Chairman and CEO Jeffrey C. Sprecher: "By continuing to execute across our business amid challenging economic conditions, ICE once again delivered double digit earnings growth for the quarter. We continue to lead in providing solutions for clients to comply with new requirements under financial reform and believe that proactively serving the needs of our customers will continue to distinguish our performance."

ICE SVP and CFO Scott Hill added: "Our company's focus on both growth and efficiency drives our industry-leading results, even as we invest prudently for the future. We continue to work closely with customers and regulators to ensure the integrity of our markets while expanding on key strategic initiatives in clearing, execution and other opportunities to serve markets globally."

Second Quarter 2012 Results
Second quarter 2012 consolidated revenues were $351 million, up 8% from the prior second quarter. Consolidated transaction and clearing revenues increased 6% to $307 million. The increase in transaction and clearing revenues was driven primarily by strong trading volumes in ICE's energy futures markets.

Second quarter transaction and clearing revenues in ICE's futures segment grew 14% to $169 million. Average daily volume (ADV) in ICE's futures segment was a record 1.6 million contracts, up 11% from the prior-year second quarter.

Transaction and clearing revenues in ICE's global OTC segment was $137 million, down 2% compared to the prior second quarter. Average daily commissions (ADC) for ICE's OTC energy business increased 3% to $1.6 million. Revenues from ICE's credit default swap (CDS) trade execution and clearing business totaled $36 million in the second quarter of 2012, including $15 million from CDS clearing.

Consolidated market data revenues in the second quarter increased 21% over the prior second quarter to a record $37 million. Consolidated other revenues were $7 million.

Consolidated operating expenses were $136 million in the second quarter of 2012, up 1% compared to the year-ago quarter. Consolidated operating income grew 13% to $215 million in the quarter. Operating margin improved to 61% in the second quarter of 2012, up 2 points from the prior second quarter.

The effective tax rate for the second quarter of 2012 was 30% compared to 32% in the previous second quarter.

First Half 2012 Results
Consolidated revenues in the first half of 2012 grew 9% to $716 million. Futures volumes in the first six months of the year increased 4% to 199 million contracts, driving futures transaction and clearing revenue of $329 million, up 7% from the first half of 2011. ADV in the first half of the year was 1.6 million contracts, up 4% from the first six months of 2011.

Global OTC segment transaction and clearing revenues were $300 million in the first half of the year, up 7% from the first half of 2011. ADC in ICE's OTC energy markets were $1.8 million in the first half of 2012, up 12% from the same period of 2011. Consolidated market data revenues increased 22% to $74 million and consolidated operating margin was 62% for the first half of 2012.

Cash flows from operations were $366 million in the first half of 2012, up 14% year-over-year. Capital expenditures during the first half of 2012 were $16 million and capitalized software development costs totaled $17 million.

Unrestricted cash was $1.1 billion as of June 30, 2012. At the end of the second quarter, ICE had $863 million in outstanding debt.

Financial Guidance and Additional Information

  • ICE's diluted share count for the third quarter of 2012 is expected to be in the range of 72.9 million to 73.9 million weighted average shares outstanding, and the diluted share count for fiscal year 2012 in the range of 73.0 million to 74.0 million weighted average shares outstanding. ICE's remaining capacity in its share repurchase program is $331 million.
  • ICE expects capital expenditures and capitalized software expenses in the second half of 2012 to be in the range of $35 million to $40 million, including $7 million to $9 million which is attributable to real estate.
  • ICE expects acquisition expense in the range of $1 million to $2 million per quarter.

Earnings Conference Call Information
ICE will hold a conference call today, August 1, at 8:30 a.m. ET to review its second 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 if calling from the United States, or 708-290-1370 if dialing 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 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, and ICE's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, as filed with the SEC on August 1, 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)


 

 

Six Months Ended
June 30,


 

 

Three Months Ended

June 30,

2012


 

2011


 

2012


 

2011

Revenues:


 

 

 

 

 

 

 

Transaction and clearing fees, net

$ 628,880


 

$ 587,550


 

$ 306,808


 

$ 288,540

Market data fees

73,557


 

60,119


 

37,171


 

30,699

Other

13,970


 

11,829


 

7,234


 

5,979


 

 

 

 

 

 

 

 

Total revenues

716,407


 

659,498


 

351,213


 

325,218


 

 

 

 

 

 

 

 

Operating expenses:


 

 

 

 

 

 

 

Compensation and benefits

132,776


 

123,814


 

64,700


 

62,176

Technology and communications

23,462


 

23,570


 

11,760


 

12,045

Professional services

17,928


 

16,227


 

8,526


 

8,422

Rent and occupancy

9,377


 

8,821


 

4,915


 

4,462

Acquisition-related transaction costs

7,709


 

9,314


 

4,246


 

5,877

Selling, general and administrative

20,466


 

17,579


 

9,542


 

8,517

Depreciation and amortization

64,091


 

65,968


 

32,108


 

32,837


 

 

 

 

 

 

 

 

Total operating expenses

275,809


 

265,293


 

135,797


 

134,336


 

 

 

 

 

 

 

 

Operating income

440,598


 

394,205


 

215,416


 

190,882


 

 

 

 

 

 

 

 

Other income (expense):


 

 

 

 

 

 

 

Interest and investment income

682


 

1,831


 

442


 

843

Interest expense

(19,667)


 

(15,495)


 

(9,599)


 

(7,752)

Other income (expense), net

26


 

(561)


 

305


 

(285)


 

 

 

 

 

 

 

 

Total other expense, net

(18,959)


 

(14,225)


 

(8,852)


 

(7,194)


 

 

 

 

 

 

 

 

Income before income taxes

421,639


 

379,980


 

206,564


 

183,688

Income tax expense

126,562


 

125,454


 

61,266


 

59,316


 

 

 

 

 

 

 

 

Net income

$ 295,077


 

$ 254,526


 

$ 145,298


 

$ 124,372


 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest

(4,055)


 

(4,257)


 

(2,141)


 

(3,007)


 

 

 

 

 

 

 

 

Net income attributable to IntercontinentalExchange, Inc

$ 291,022


 

$ 250,269


 

$ 143,157


 

$ 121,365


 

 

 

 

 

 

 

 

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


 

 

 

 

 

 

 

Basic

$       4.00


 

$       3.41


 

$       1.97


 

$       1.65


 

 

 

 

 

 

 

 

Diluted

$       3.97


 

$       3.37


 

$       1.95


 

$       1.64


 

 

 

 

 

 

 

 

Weighted average common shares outstanding:


 

 

 

 

 

 

 

Basic

72,698


 

73,435


 

72,755


 

73,437


 

 

 

 

 

 

 

 

Diluted

73,303


 

74,169


 

73,343


 

74,138

 

IntercontinentalExchange, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)


 

June 30,

2012


 

December 31,

2011

ASSETS


 

 

 

Current assets:


 

 

 

Cash and cash equivalents

$    1,082,018


 

$     822,949

Short-term restricted cash

81,377


 

52,982

Customer accounts receivable

175,186


 

136,331

Margin deposits and guaranty funds

34,686,716


 

31,555,831

Prepaid expenses and other current assets

33,157


 

37,298


 

 

 

 

Total current assets

36,058,454


 

32,605,391


 

 

 

 

Property and equipment, net

137,678


 

130,962


 

 

 

 

Other noncurrent assets:


 

 

 

Goodwill

1,907,338


 

1,902,984

Other intangible assets, net

822,447


 

854,374

Long-term restricted cash

164,499


 

164,496

Long-term investments

381,170


 

451,136

Other noncurrent assets

33,182


 

38,521


 

 

 

 

Total other noncurrent assets

3,308,636


 

3,411,511


 

 

 

 

Total assets

$  39,504,768


 

$ 36,147,864


 

 

 

 

LIABILITIES AND EQUITY


 

 

 

Current liabilities:


 

 

 

Accounts payable and accrued liabilities

$         73,604


 

$       65,964

Accrued salaries and benefits

37,982


 

58,248

Current portion of licensing agreement

19,249


 

19,249

Current portion of long-term debt

50,000


 

50,000

Income taxes payable

36,139


 

22,614

Margin deposits and guaranty funds

34,686,716


 

31,555,831

Other current liabilities

51,859


 

28,408


 

 

 

 

Total current liabilities

34,955,549


 

31,800,314


 

 

 

 

Noncurrent liabilities:


 

 

 

Noncurrent deferred tax liability, net

220,451


 

235,889

Long-term debt

812,500


 

837,500

Noncurrent portion of licensing agreement

71,149


 

80,084

Other noncurrent liabilities

37,792


 

31,736


 

 

 

 

Total noncurrent liabilities

1,141,892


 

1,185,209


 

 

 

 

Total liabilities

36,097,441


 

32,985,523


 

 

 

 

EQUITY


 

 

 

IntercontinentalExchange, Inc. shareholders' equity:


 

 

 

Common stock

797


 

792

Treasury stock, at cost

(662,822)


 

(644,291)

Additional paid-in capital

1,871,136


 

1,829,181

Retained earnings

2,248,118


 

1,957,096

Accumulated other comprehensive loss

(81,481)


 

(21,253)


 

 

 

 

Total IntercontinentalExchange, Inc. shareholders' equity

3,375,748


 

3,121,525

Noncontrolling interest in consolidated subsidiaries

31,579


 

40,816


 

 

 

 

Total equity

3,407,327


 

3,162,341


 

 

 

 

Total liabilities and equity

$  39,504,768


 

$ 36,147,864

ICE-CORP

 

SOURCE IntercontinentalExchange, Inc.



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