Intercontinental Exchange Inc. · NYSE:ICE
Intercontinental Exchange — Q2 2010 Earnings Presentation
23 slides from Intercontinental Exchange's earnings presentation, Aug 4, 2010
Slide 1: Second Quarter 2010 Earnings Presentation
IntercontinentalExchange Second Quarter 2010 Earnings Presentation August 4, 2010 www.theice.com
Slide 2: Forward-Looking Statement
Forward-Looking Statement Forward-Looking Statements This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding our business that are not historical facts are forward-looking sta
Slide 3: Earnings Conference Call - 2Q 2010
Earnings Conference Call - 2Q 2010 Jeffrey C. Sprecher Chairman and Chief Executive Officer Scott A. Hill Senior Vice President, Chief Financial Officer Charles A. Vice President, Chief Operating Officer Kelly L. Loeffler, CFA Melanie A. Shale Vice President, Investor Relations & Director, Investor
Slide 4: Consistent Growth and Outperformance
Consistent Growth and Outperformance SLIDE 4 1H10 Financial Performance1 ICE – REVENUES $1,200 Revenues +20%, net income attributable to ICE +32% $995 $1,000 $813 60% operating margins vs. 54% in 1H09 $800 +20% yty $574 $578 Disciplined approach to investment; expenses +6% $600 Operating cash flow +
Slide 5: ICE Financial Highlights – 2Q10
ICE Financial Highlights – 2Q10 SLIDE 5 In millions, except per share amounts 7th consecutive quarterly revenue record, Change INCOME STATEMENT 2Q10 2Q09 best-ever operating income & adj. EPS yty Total Revenues $296 $250 18% Record revenues driven by record futures and OTC segments Total Expenses $1
Slide 6: Revenue & Expense Detail – 2Q10
Revenue & Expense Detail – 2Q10 SLIDE 6 2Q10 Consolidated Revenues by Segment 2Q10 Consolidated Expenses 43% Futures SG&A 18% D&A 24% Prof Services Market Data 11% & Acq. Costs 8% & Other 12% Non-Cash Comp OTC 38% Cash Comp 46% Adj. 1 1 (In millions) 2Q10 2Q09 yty% (In millions) Adj. 2Q10 Adj. 2Q09
Slide 7: ICE Futures – 2Q10
ICE Futures – 2Q10 SLIDE 7 FUTURES & OPTIONS VOLUME1 Record $130 MM in revenues, + 23% yty 300 262 Record ADV of 1.4 MM contracts, + 36% yty 250 237 200 194 +31% yty Strong growth in Brent, Gasoil, WTI, Emissions, 166 Coffee, USDX and Russell 150 137 Strong activity from Asia continues 100 Open inte
Slide 8: ICE OTC – 2Q10
ICE OTC – 2Q10 SLIDE 8 OTC ENERGY AVERAGE DAILY COMMISSIONS Record $135 MM in revenues, + 15% yty $1,500 $1,373 $1,429 $1,338 Quarterly OTC energy revenue of $92 MM, + 26% yty $1,252 $1,130 o Energy ADC of $1.4MM in 2Q10, + 26% yty o $1.4 MM in July 2010 $1,000 $43 MM in CDS revenues in 2Q10, - 3% y
Slide 9: Product, Customer & Geographic Diversification
Product, Customer & Geographic Diversification SLIDE 9 CUSTOMER DIVERSITY (OTC ENERGY REVENUES) 100% PRODUCT DIVERSITY 25% 25% 30% 80% 24% 23% 60% 23% OTC Credit 15% Market Data/Other 40% 11% 47% 51% 52% 20% 0% 12% 2008 2009 1H10 Soft/Ag Futures 1H10 Commercial Banks & Financial Liquidity Providers
Slide 10: CLE Growth Drivers and Volume Trends
CLE Growth Drivers and Volume Trends SLIDE 10 Long-term Growth Drivers European Market Opportunity Global focus on emissions, risk management and energy alternatives ICE ECX Futures and Options Contract Volume (000s) Phase III in EU-ETS in 2011; auctioning may 2,000 ICE ECX Contracts: increase hedgi
Slide 11: Solid Operating Cash & Returns
Solid Operating Cash & Returns SLIDE 11 Strong fundamentals in place driving revenue growth coupled with margin expansion 1H10 operating cash flow of $259 MM, +42% yty ICE – RETURN ON INVESTED CAPITAL (ROIC) vs. PEERS1 20% CME NYX ICE $309 MM in unrestricted cash at 6/30/10 18% 16% o Net of cash use
Slide 12: Regulatory Reform Overview
Regulatory Reform Overview SLIDE 12 ICE Leadership in Derivatives Selected U.S. Derivatives Provisions Growing client base and solid fundamentals Clearing requirement for standardized contracts Five futures and OTC clearing houses o Major swap participants / swap dealers o 97% of ICE OTC energy cont
Slide 13: Consistent Strategy & Results
Consistent Strategy & Results SLIDE 13 Strategic Approach: Focus on new and existing opportunities in global derivatives markets ICE GLOBAL MARKETS & RISK MANAGEMENT SOLUTIONS Expand on risk management leadership to respond to regulatory reform opportunity Leverage leading OTC, clearing and technolo
Slide 14: Appendix
14 APPENDIX IntercontinentalExchange
Slide 15: ICE Financial Highlights – 1H10
ICE Financial Highlights – 1H10 In millions, except per share amounts Change 1H10 revenues up 20%; expenses flat INCOME STATEMENT 1H10 1H09 yty Record revenues driven by record Total Revenues $578 $482 20% futures and OTC segments Total Expenses $236 $233 1% o Fut. rev: $252MM,+24% yty Operating Inc
Slide 16: ICE Summary Balance Sheet
ICE Summary Balance Sheet In millions Strong operating cash flow BALANCE SHEET 6/30/10 12/31/09 CHANGE o $158 MM in 2Q10 Assets Including CLE transaction, debt to trailing twelve-month EBITDA of 0.6x Cash & ST Investments $309 $554 ($245) Other Current Assets 24,753 18,905 5,847 Cash and unrestricte
Slide 17: ICE Average Daily Volume History
ICE Average Daily Volume History 2010 January February March April May June July August September October November December ICE Futures Europe 811,477 893,151 839,652 939,957 983,100 831,487 760,765 ICE Futures U.S. 387,680 458,107 434,530 431,498 446,542 492,636 378,078 ICE Futures Canada 12,129 18
Slide 18: ICE Futures Rate Per Contract History
ICE Futures Rate Per Contract History Rolling Three-Month Average Rate per Contract 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ICE Futures Europe Futures $ 1.57 $ 1.54 $ 1.53 $ 1.51 $ 1.51 $ 1.49 $ 1.51 ICE Futures U.S. Agricultural Futures & Options $ 2.10 $ 2.15 $ 2.13 $ 2.17 $ 2.13 $ 2.
Slide 19: ICE Track Record of Growth & Innovation
ICE Track Record of Growth & Innovation 2009: CDS 2008: clearing Acquired launched in U.S. Creditex & & Europe ‘04-’09 Revenue CAGR: 56% launched $1,200 ICE Clear Over 220 new OTC Europe energy contracts launched 2000: ICE 2010: Fastest matching founded to engine for $995 Completed $1,000 increase O
Slide 20: Climate Exchange Overview
Climate Exchange Overview Climate Exchange (CLE) London-based, 8 employees European Climate Exchange Chicago Climate Futures Chicago Climate Exchange (ECX) Exchange (CCFE) (CCX) Business European emissions futures markets U.S. futures exchange for emissions U.S. OTC emissions markets Clients Europea
Slide 21: Non-GAAP Net Income Attributable to ICE & EPS Reconciliation
Non-GAAP Net Income Attributable to ICE & EPS Reconciliation In thousands, except per share amounts 6 Months 3 Months 6 Months 3 Months Ended Ended Ended Ended 6/30/10 6/30/10 6/30/09 6/30/09 Net income attributable to ICE $202,851 $101,688 $144,280 $72,058 Add: NCDEX impairment costs - - 9,276 9,27
Slide 22: Non-GAAP EBITDA Reconciliation
Non-GAAP EBITDA Reconciliation In thousands 6 Months 3 Months 6 Months 3 Months Ended Ended Ended Ended 6/30/2010 6/30/2010 6/30/2009 6/30/2009 Net income attributable to ICE $202,851 $101,688 $144,280 $72,058 Plus income tax expense 106,506 53,289 82,618 45,764 Less interest and investment income (
Slide 23: Non-GAAP Operating Income, Operating Margin & Operating Expense Reconciliation
Non-GAAP Operating Income, Operating Margin & Operating Expense Reconciliation In thousands, except operating margins 6 Months 3 Months 6 Months 3 Months Ended Ended Ended Ended 6/30/10 6/30/10 6/30/09 6/30/09 Total Revenues $577,775 $296,155 $481,970 $250,417 Total operating expenses $ 235,665 $ 11
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