EX-99.1 2 tm2016901d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

 

Intercontinental Exchange Reports Record First Quarter 2020

 

• Record first quarter revenues of $1.6 billion, +23% y/y

 

• GAAP diluted EPS of $1.17, +38% y/y

 

• Adj. diluted EPS of $1.28, +39% y/y

 

• Operating margin of 57%; Adj. operating margin of 62%

 

• Operating income +32% y/y; Adj. operating income +30% y/y

 

• Through March 31, 2020, returned $865M to stockholders

Jeffrey C. Sprecher,

ICE Chairman & Chief Executive Officer, said,

 

“Amidst these highly uncertain times, we are grateful for both our customers’ business and their trust. The dedication of our employees and our focus on leading technology is what provides the foundation for our global markets to operate smoothly in times of stress. This combination enabled us to generate the strongest quarter in our company’s history, reporting record revenues and double-digit earnings per share growth. As we look to the balance of the year, our focus remains on the safety of our employees, while also continuing to ensure that our markets, clearinghouses and related data services perform to the highest possible standards.”

 

ATLANTA & NEW YORK, April 30, 2020 - 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 first quarter of 2020. For the quarter ended March 31, 2020, consolidated net income attributable to ICE was $650 million on $1.6 billion of consolidated revenues, less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $1.17. Adjusted net income attributable to ICE was $708 million in the first quarter and adjusted diluted EPS were $1.28. 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 and free cash flow.

 

Scott A. Hill, ICE Chief Financial Officer, added: "In the first quarter we generated record revenues, record operating income and double-digit earnings per share growth, which enabled us to return over $850 million to stockholders through our dividend and stock buyback program. This performance also enabled us to continue to invest in our business, ensuring we can continue to provide our customers with critical risk management tools while also creating value for our stockholders."

 

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First Quarter 2020 Business Highlights

 

$ in millions Net
Revenue		 Op
Margin		 Adj Op Margin
       
Data & Listings $676 46% 52%
Trading & Clearing $883 65% 69%
Consolidated $1,559 57% 62%

 

First quarter consolidated net revenues were $1.6 billion, up 23% year-over-year. Data and listings revenues in the first quarter were $676 million and trading and clearing net revenues were $883 million. Consolidated operating expenses were $677 million for the first quarter of 2020. On an adjusted basis, consolidated operating expenses were $597 million. Consolidated operating income for the first quarter was $882 million and the operating margin was 57%. On an adjusted basis, consolidated operating income for the first quarter was $962 million and the adjusted operating margin was 62%.

 

 

Data and Listings Segment Results

 

First quarter data and listings revenues were $676 million, including data revenues of $564 million, up 3% year-over-year, and listings revenues of $112 million. On a constant currency basis(1), segment revenues were up 3% with data revenues up 4% year-over-year. Data and listings operating expenses were $367 million and on an adjusted basis, were $322 million in the first quarter. Segment operating income for the first quarter was $309 million and the operating margin was 46%. On an adjusted basis, operating income was $354 million and the adjusted operating margin was 52%.

 

 

$ in millions 1Q20 1Q19 % Chg Const
Curr(1)
Revenue:        
Pricing and Analytics $276 $266 4% 4%
Exchange Data and Feeds 180 176 2% 2%
Desktops and Connectivity 108 104 4% 5%
Data Total 564 546 3% 4%
Listings 112 111 — —%
Segment Revenue $676 $657 3% 3%

 

(1)Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 1Q19, 1.3021 and 1.1355, respectively.

 

2

 

 

Trading and Clearing Segment Results

 

First quarter trading and clearing net revenues were $883 million, up 44% from one year ago. Trading and clearing operating expenses were $310 million and adjusted operating expenses were $275 million in the first quarter. Segment operating income for the first quarter was $573 million and the operating margin was 65%. On an adjusted basis, operating income was $608 million and the adjusted operating margin was 69%.

 

 

$ in millions 1Q20 1Q19 % Chg
Revenue, net:      
Energy $353 $229 54%
Ags & metals 84 62 36%
Financials(1) 123 83 48%
Cash equities & equity options 113 77 48%
Fixed income & credit(2) 122 87 41%
OTC & other transaction(3) 13 11 11%
Other revenue(4) 75 64 16%
Segment Revenue $883 $613 44%

 

(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, technology development fees, exchange member fees, and agriculture grading and certification fees.

 

•Energy futures and options revenue in the first quarter increased 54% year-over-year driven by a 54% increase in average daily volume (ADV), partially offset by a 2% decrease in rate per contract (RPC).

•Ags and metals futures and options revenue in the first quarter increased 36% year-over-year driven by a 31% increase in ADV and a 2% increase in RPC.

•Financials futures and options revenue in the first quarter increased 48% year-over-year reflecting a 31% increase in ADV and an 11% increase in RPC.

•U.S. cash equities and equity options revenue in the first quarter increased 48% year-over-year reflecting a 45% increase in cash equities ADV, a 41% increase in equity options ADV and a 9% increase in cash equities RPC.

 

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ADV

(lots in thousands)

 RPC
  1Q20 % Chg 1Q20 % Chg
Energy 3,938 54% $1.45 (2)%
Ags & metals 588 31% $2.29 2%
Financials 3,511 31% $0.54 11%
Interest Rates 2,865 28% $0.39 5%
Other Financials 646 46% $1.23 15%
Total Futures & Options 8,037 42% $1.11 4%
         
Cash Equities (in millions) 2,734 45% $0.049 9%
Equity Options 4,681 41% $0.10 (15)%

 

The first quarter of 2020 included 62 trading days for commodities, other financials and cash equities and equity options and 64 days for interest rates. The first quarter of 2019 included 61 trading days for commodities, other financials and cash equities and equity options and 63 days for interest rates.

 

Other Matters

•The effective tax rate for the first quarter of 2020 was 21%.
•Operating cash flow for the first quarter was $520 million and free cash flow was $434 million.
•Unrestricted cash was $583 million and outstanding debt was $8.3 billion as of March 31, 2020.
•Through the first quarter of 2020, ICE repurchased $699 million of its common stock and paid $166 million in dividends.

 

Financial Guidance

•ICE's second quarter 2020 data revenues are expected to be in a range of $565 million to $570 million.
•ICE's second quarter 2020 GAAP operating expenses are expected to be in a range of $646 million to $656 million and adjusted operating expenses(1) are expected to be in a range of $575 million to $585 million.
•ICE's full year 2020 GAAP operating expenses are expected to be in a range of $2.607 billion to $2.657 billion and adjusted operating expenses(1) are expected to be in a range of $2.320 billion to $2.370 billion.
•ICE's second quarter 2020 non-operating expense(2) is expected to be in the range of $50 million to $55 million.
•ICE's full year 2020 capital expenditures are expected to be in a range of $300 million to $330 million.
•ICE's diluted share count for the second quarter is expected to be in the range of 546 million to 552 million weighted average shares outstanding.

 

(1)2020 and 2Q20 non-GAAP operating expenses exclude amortization of acquisition-related intangibles. 2020 non-GAAP operating expenses also exclude acquisition-related success fees.
(2)Non-operating expense includes interest income, interest expense and net other income.

 

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Earnings Conference Call Information

 

ICE will hold a conference call today, April 30, 2020, at 8:30 a.m. ET to review its first quarter 2020 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 4506597 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 second quarter 2020 earnings has been scheduled for July 30, 2020 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)

(Unaudited)

 

  Three Months Ended
 March 31,
Revenues: 2020   2019
Transaction and clearing, net $ 1,364     $ 862  
Data services 564     546  
Listings 112     111  
Other revenues 75     64  
Total revenues 2,115     1,583  
Transaction-based expenses:      
Section 31 fees 166     69  
Cash liquidity payments, routing and clearing 390     244  
Total revenues, less transaction-based expenses 1,559     1,270  
Operating expenses:      
Compensation and benefits 278     248  
Professional services 29     33  
Acquisition-related transaction and integration costs 12     —  
Technology and communication 131     107  
Rent and occupancy 21     17  
Selling, general and administrative 49     42  
Depreciation and amortization 157     158  
Total operating expenses 677     605  
Operating income 882     665  
Other income (expense):      
Interest income 6     9  
Interest expense (72 )   (71 )
Other income, net 20     23  
Other income (expense), net (46 )   (39 )
Income before income tax expense 836     626  
Income tax expense 178     134  
Net income $ 658     $ 492  
Net income attributable to non-controlling interest (8 )   (8 )
Net income attributable to Intercontinental Exchange, Inc. $ 650     $ 484  
       
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:      
Basic $ 1.18     $ 0.85  
Diluted $ 1.17     $ 0.85  
Weighted average common shares outstanding:      
Basic 552     568  
Diluted 555     570  

 

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Consolidated Balance Sheets

(In millions)

(Unaudited)

 

 

As of

March 31, 2020

  

As of

December 31, 2019

Assets:      
Current assets:      
Cash and cash equivalents $ 583     $ 841  
Short-term restricted cash and cash equivalents 999     943  
Customer accounts receivable, net 1,569     988  
Margin deposits, guaranty funds and delivery contracts receivable 108,863     64,987  
Prepaid expenses and other current assets 239     220  
Total current assets 112,253     67,979  
Property and equipment, net 1,503     1,536  
Other non-current assets:      
Goodwill 13,527     13,342  
Other intangible assets, net 10,212     10,258  
Long-term restricted cash and cash equivalents 404     404  
Other non-current assets 1,002     974  
Total other non-current assets 25,145     24,978  
Total assets $ 138,901     $ 94,493  
       
Liabilities and Equity:      
Current liabilities:      
Accounts payable and accrued liabilities $ 548     $ 505  
Section 31 fees payable 165     138  
Accrued salaries and benefits 127     291  
Deferred revenue 504     129  
Short-term debt 3,071     2,569  
Margin deposits, guaranty funds and delivery contracts payable 108,863     64,987  
Other current liabilities 248     197  
Total current liabilities 113,526     68,816  
Non-current liabilities:      
Non-current deferred tax liability, net 2,312     2,314  
Long-term debt 5,252     5,250  
Accrued employee benefits 191     198  
Non-current operating lease liability 272     281  
Other non-current liabilities 286     270  
Total non-current liabilities 8,313     8,313  
Total liabilities 121,839     77,129  
Commitments and contingencies      
Redeemable non-controlling interest in consolidated subsidiaries 97     78  
       
Equity:      
Intercontinental Exchange, Inc. stockholders’ equity:      
Common stock 6     6  
Treasury stock, at cost (4,647 )   (3,879 )
Additional paid-in capital 11,810     11,742  
Retained earnings 10,103     9,629  
Accumulated other comprehensive loss (333 )   (243 )
Total Intercontinental Exchange, Inc. stockholders’ equity 16,939     17,255  
Non-controlling interest in consolidated subsidiaries 26     31  
Total equity 16,965     17,286  
Total liabilities and equity $ 138,901     $ 94,493  

 

7

 

 

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 operating expenses, adjusted operating income, adjusted operating margin, adjusted net income attributable to ICE common stockholders, adjusted diluted earnings per share 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):

 

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Adjusted Operating Income, Operating Margin and Operating Expense Reconciliation

(In millions)

(Unaudited)

 

   Trading and Clearing
Segment		  Data and Listings
Segment		  Consolidated
   Three Months Ended
March 31,		  Three Months Ended
March 31,		  Three Months Ended
March 31,
   2020  2019  2020  2019  2020  2019
Total revenues, less transaction-based expenses  $883   $613   $676   $657   $1,559   $1,270 
Total operating expenses   310    228    367    377    677    605 
Less: Amortization of acquisition-related intangibles   25    23    45    54    70    77 
Less: Acquisition-related success fee   10    —    —    —    10    — 
Adjusted total operating expenses  $275   $205   $322   $323   $597   $528 
Operating income  $573   $385   $309   $280   $882   $665 
Adjusted operating income  $608   $408   $354   $334   $962   $742 
Operating margin   65%   63%   46%   43%   57%   52%
Adjusted operating margin   69%   67%   52%   51%   62%   58%

 

 

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

 

  Three Months Ended
March 31, 2020		  Three Months Ended
March 31, 2019
Net income attributable to ICE $650   $484 
Add: Amortization of acquisition-related intangibles  70    77 
Add: Acquisition-related success fee  10    — 
Less: Income tax effect for the above items  (21)   (20)
Less: Deferred tax adjustments on acquisition-related intangibles  (1)   (17)
Add: Other tax adjustments  —    3 
Adjusted net income attributable to ICE $708   $527 
          
Diluted earnings per share attributable to ICE $1.17   $0.85 
          
Adjusted diluted earnings per share attributable to ICE $1.28   $0.92 

 

9

 

 

Free Cash Flow Calculation

(In millions)

(Unaudited)

 

  Three months ended
March 31, 2020		   Three months ended
March 31, 2019		 
Cash flow from operations $520   $654 
Less: Capital expenditures and capitalized software development costs  (59)   (65)
Add/(Less): Section 31 fees, net  (27)   35 
Free cash flow $434   $624 

 

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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 is the premier venue for raising capital 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, 2019, as filed with the SEC on February 6, 2020. 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

 

ICE Investor Relations Contact:

Warren Gardiner

+1 770 835 0114

warren.gardiner@theice.com

 

investors@theice.com

 

ICE Media Contact:

Josh King

+1 212 656 2490

josh.king@theice.com

 

media@theice.com

 

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