Cboe Global Markets, Inc. · CBOE:CBOE
Cboe Global Markets — CBOE Holdings — Raymond James 37th Annual Institutional Investors Conference (March 2016)
35 slides from Cboe Global Markets's conference presentation, Mar 7, 2016
Slide 1: Raymond James 37th Annual Institutional Investors Conference
Raymond James 37th Annual Institutional Investors Conference Edward Tilly, CEO March 7, 2016 CBOE HOLDINGS 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those statements that reflect our expectations, assumptions or projections about the future and involve a nu
Slide 3: Translating our Mission and Strategic Initiatives into Value
Translating our Mission and Strategic Initiatives into Value Our mission is to be the market leader in providing innovative products that facilitate and enhance trading in a global marketplace Strategic Initiatives • Develop unique products • Expand our customer base globally • Form alliances that l
Slide 4: Fifth Consecutive Year of Record Financial Results for CBOE in 2015
Fifth Consecutive Year of Record Financial Results for CBOE in 2015 Product innovation is central to our value proposition and enables CBOE to offer the world’s widest array of options and volatility products Posted record ADV in index complex in 2015 Lead by record trading in SPX options and VIX fu
Slide 5: Further Developing Current Products to Grow Index Product Line
Further Developing Current Products to Grow Index Product Line S&P 500 Index (SPX) options, the most actively traded U.S. index option SPX ADV up 15% YTD 2016 versus same period in 2015 SPX Weeklys have attracted a fast- growing base of retail investors Introduced SPX Weeklys with Wednesday Expirati
Slide 6: Leveraging VIX Methodology to Create New Products and Grow Index Product Line
Leveraging VIX Methodology to Create New Products and Grow Index Product Line CBOE Volatility Index (VIX Index) is considered the world’s barometer of equity market volatility Launched VIX Weeklys futures in July, options in October of 2015 Plan to begin overnight dissemination of “spot” VIX Index A
Slide 7: Leveraging Partnerships With Index Providers to Grow Index Product Line
Leveraging Partnerships With Index Providers to Grow Index Product Line Sole U. S. provider of major FTSE Russell Products beginning with Russell 2000 Index (RUT) on April 1 Focused on further developing RUT marketplace On October 20, began rollout of new FTSE Russell products: Russell 1000 Index (t
Slide 8: Leveraging Partnerships With Index Providers to Grow Index Product Line
Leveraging Partnerships With Index Providers to Grow Index Product Line CBOE exclusive U.S. exchange for trading several MSCI Index options December 2014 licensing agreement with MSCI First CBOE MSCI options launched April 21: MSCI EAFE Index (Europe, Australasia, Far East) MSCI Emerging Markets Ind
Slide 9: Expanding Our Global Customer Base
Expanding Our Global Customer Base Expanding outreach and investor education around the world Launched the first extension of CBOE’s Options Institute with Singapore Exchange (SGX) in December In 2015, expanded CBOE Risk Management Conference (RMC) to include Asia First RMC Asia held in Hong Kong in
Slide 10: Enhancing Customers Trading Experience
Enhancing Customers Trading Experience CBOE acquired the market data services and trading analytics platforms of Livevol, Inc. Livevol is a leading provider of equity and index options technology and market data services for professional and retail traders Livevol’s trade analysis and volatility mod
Slide 11: Expanding Options and Volatility Trading
Expanding Options and Volatility Trading CBOE made a majority equity investment in Vest Financial (VEST), an investment advisor that provides options-centric products Vest through its subsidiaries provides: Options-based investment advisory services through packaged products Develops technology solu
Slide 12: Forming Alliances that Leverage our Strengths
Forming Alliances that Leverage our Strengths Teamed with London Stock Exchange Group (LSEG) and major dealer banks to form CurveGlobal, a new interest rate derivatives platform Products will trade on the LSE Derivatives Market and clear through LCH.Clearnet Expected to provide more product choices,
Slide 13: Forming Alliances to Develop New Products and Markets
Forming Alliances to Develop New Products and Markets Teamed with Environmental Financial Products (EFP) to launch American Financial Exchange (AFX), an interbank lending exchange AFX is an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds CBOE hosts and operat
Slide 14: Strong Track Record of Creating Value for Shareholders
Strong Track Record of Creating Value for Shareholders Focused on executing strategic initiatives while prudently managing expenses and deploying capital CBOE remains the market leader of the industry it created 43 years ago CBOE’s goal is to continue to shape and define our industry ¹Adjusted to re
Slide 15: Focused on Growing Proprietary Products
Focused on Growing Proprietary Products Proprietary products account for a growing percentage of transaction fees: 82.9% in 2015 versus 50.6% in 2010 ¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.” CBOE HOLDINGS 15
Slide 16: Committed to Returning Capital to Shareholders
Committed to Returning Capital to Shareholders Capital allocation philosophy Reinvest in our business to fund growth Sustainable dividends and steady growth Opportunistic share repurchases ¹Excludes special dividends ²Starting in 2016, dividend declarations may not align with quarterly earnings anno
Slide 17: Questions & Answers
Questions & Answers
Slide 18: Appendix Materials
Appendix Materials
Slide 19: 2016 Full-Year Guidance
2016 Full-Year Guidance 2016 Full-Year As of February 3, 2016¹ ($ in millions) Guidance 2015 Actual Core operating expenses $211 to $215 $195 Continuing stock-based compensation² $13.5 $12 Depreciation and amortization $46 to $48 $46 Capital expenditures $47 to $49 $39 Effective tax rate 38.5% to 39
Slide 20: 4Q15 Financial Overview
4Q15 Financial Overview Adjusted Basis¹ 4Q15 4Q14 $ Change % Change (in millions, except EPS and RPC) Adjusted Operating Revenues $154.0 $166.5 $(12.5) -8% Adjusted Operating Expenses 80.1 77.7 2.4 3% Adjusted Operating Income $ 73.9 $ 88.8 $(14.9) -17% Adjusted Operating Margin % 48.0% 53.4% -540 b
Slide 21: 2015 Financial Overview
2015 Financial Overview Adjusted Basis¹ 2015 2014 $ Change % Change (in millions, except EPS and RPC) Adjusted Operating Revenues $632.5 $617.2 $ 15.3 2% Adjusted Operating Expenses 314.6 299.0 15.6 5% Adjusted Operating Income $317.9 $318.2 $ ( 0.3) -- Operating Margin % 50.3% 51.6% -130 bps Adjust
Slide 22: Optimistic About Long-Term Growth Prospects
Optimistic About Long-Term Growth Prospects Adjusted Operating Revenue and Adjusted Diluted EPS¹ ($ in millions, except EPS) $0.80 $180 $0.75 $160 $0.70 $140 $0.65 $0.60 $120 $0.55 $100 $0.50 $80 $0.45 $60 $0.40 $0.35 $40 $0.30 $20 $0.25 $0 $0.20 1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142
Slide 23: Well Positioned to Gain Additional Leverage
Well Positioned to Gain Additional Leverage Adjusted Operating Income and Margin¹ ($ in millions) $110 55% $100 $90 53% $80 $70 51% $60 $50 49% $40 $30 $20 47% $10 $0 45% 1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q15 Adjusted Operating Income Adjusted Operating Mar
Slide 24: Proprietary Products Account for Growing Percentage of Transaction Fee Revenue
Proprietary Products Account for Growing Percentage of Transaction Fee Revenue Index options and futures contracts accounted for 82.1% of transaction fees in 4Q15 versus 83.7% in 4Q14 CBOE HOLDINGS 24
Slide 25: Proprietary Products Account for Growing Percentage of Transaction Fee Revenue
Proprietary Products Account for Growing Percentage of Transaction Fee Revenue Index options and futures contracts account for 82.9% of transaction fees in 2015, up from 50.6% in 2010 CBOE HOLDINGS 25
Slide 26: Increase in Rate Per Contract Primarily Reflects Favorable Shift in Mix of Products Traded
Increase in Rate Per Contract (RPC) Primarily Reflects Favorable Shift in Mix of Products Traded CBOE HOLDINGS 26
Slide 27: Quarterly Options ADV
Quarterly Options ADV CBOE and C2 Quarterly Options ADV (in millions) ¹Through February 29, 2016 CBOE HOLDINGS 27
Slide 28: CBOE Holdings Rolling 3-Month RPC
CBOE Holdings Rolling 3-Month RPC 2016 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.095 Indexes 0.738 Exchange-traded products 0.138 Total options RPC 0.351 Futures 1.636 Total RPC $0.412 2015 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.069 $0.070 $0.077 $0.077 $0.087
Slide 29: Quarterly Core Operating Expenses
Quarterly Core Operating Expenses¹ ($ in thousands) 4Q 2015 % rev 3Q 2015 % rev 2Q 2015 % rev 1Q 2015 % rev 4Q 2014 % rev Total Operating Expenses $80,052 52% $85,925 43% $75,355 51% $73,286 51% $79,525 48% Less: Depreciation and amortization 12,202 8% 12,394 7% 11,275 8% 10,402 7% 11,053 7% Severan
Slide 30: Annual Core Operating Expenses
Annual Core Operating Expenses¹ ($ in thousands) 2015 % rev 2014 % rev 2013 % rev 2012 % rev 2011 % rev Total Operating Expenses $314,617 50% $303,424 51% $286,236 50% $268,241 52% $266,512 52% Less: Depreciation and amortization 46,274 7% 39,913 7% 34,488 6% 31,485 6% 34,094 7% Accelerated stock-ba
Slide 31: GAAP to Non-GAAP Reconciliation For 2010 and 2011
GAAP to Non-GAAP Reconciliation For 2010 and 2011 GAAP to Non-GAAP Reconciliation (in thousands, except per share amounts) 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 FY2010 FY2011 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common stockholders $ 20,0
Slide 32: GAAP to Non-GAAP Reconciliation For 2012 and 2013
GAAP to Non-GAAP Reconciliation For 2012 and 2013 GAAP to Non-GAAP Reconciliation (in thousands, except per share amounts) 1Q12 2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 3Q13 4Q13 FY2013 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common stockhold
Slide 33: GAAP to Non-GAAP Reconciliation For 2014 and 2015
GAAP to Non-GAAP Reconciliation For 2014 and 2015 GAAP to Non-GAAP Reconciliation (in thousands, except per share amounts) 1Q14 2Q14 3Q14 4Q14 FY2014 1Q15 2Q15 3Q15 4Q15 FY2015 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common stockhold
Slide 34: Non-GAAP Information
Non-GAAP Information In addition to disclosing results determined in accordance with GAAP, CBOE Holdings has disclosed certain non-GAAP measures of operating performance. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP fin
Slide 35: CBOE, 400 South LaSalle Street, Chicago, Illinois
CBOE 400 South LaSalle Street Chicago, Illinois 60605 www.cboe.com
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