Slide 1: Second Quarter 2014 Earnings Presentation
Intercontinental Exchange (NYSE: ICE) Second Quarter 2014 Earnings Presentation August 7, 2014
Slide 2: Forward-Looking Statement and Legends
Forward-Looking Statement and Legends CAUTIONARY STATEMENT REGARDING 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 ICE’s business that are
Slide 3: Earnings Conference Call - Second Quarter 2014
Earnings Conference Call - Second Quarter 2014 Jeffrey C. Sprecher Chairman and Chief Executive Officer Scott A. Hill Chief Financial Officer Charles A. Vice President, Chief Operating Officer Kelly Loeffler, CFA Isabel Janci Melanie Skijus, CFA SVP, Corporate Communications, Sr. Director, Investor
Slide 4: Solid Financial Performance in 1H14
Commitment to Execution and Growth Solid Financial Performance in 1H14 Net Revenues ▪ Net revenue of $1.5B 1,750 14% ▪ Record operating cash flow of $836MM GR -1% y/y '1 3 CA 1,500 '09- 1,250 ▪ Adjusted operating margin of 50%, 2 pt $ (Millions) 1,000 improvement from prior year(1),(2) 750 ▪ Adjuste
Slide 5: Second Quarter 2014 Financial Performance
Second Quarter 2014 Financial Performance INCOME STATEMENT (in millions except per Financial Highlights share amounts) 2Q14 2Q13 Net revenues $750 $372 ▪ Consolidated 2Q14 net revenues of $750MM Operating Expenses $423 $147 ◦ Volume impacted by low volatility Adj. Operating Expenses(1) $387 $135 ◦ D
Slide 6: Second Quarter 2014 Revenue and Expense Detail
Second Quarter 2014 Revenue and Expense Detail Net Revenue Mix Adjusted Expenses(3) U.S. Cash Equities Cash Comp. CDS Listings & Benefits Non-Cash Comp. 5% 6% 11% Market Data 6% 33% 12% Prof. Services & 13% Acquisition Exp. 15% 11% Global 51% Other Tech & Deprec. & 21% Derivatives 16% Communications
Slide 7: Futures & Options - Second Quarter 2014
Futures & Options - Second Quarter 2014 ICE & Liffe Futures & Options ADV* Futures and options rev of $329MM ▪ Brent rev of $55MM, -13% y/y 6,000 -20% y/y ▪ Nat Gas rev of $40MM, -27% y/y ▪ Ag & Metals rev of $50MM, flat y/y (000s) 4,000 -17% y/y ▪ Interest Rate rev of $75MM 2,000 Rate Per Contract
Slide 8: Credit Derivatives - Second Quarter 2014
Credit Derivatives - Second Quarter 2014 CDS Revenue 50 2Q14 CDS revenues of $41MM, +3% y/y +3% y/y 40 ▪ $17MM from ICE Swap Trade & Creditex, -2% y/y $ (Millions) 30 ▪ $24MM from CDS clearing, +6% y/y 20 Through July 31, $55T in CDS cleared, $1.6T 10 open interest 0 ▪ ICE Clear Credit leader in buy
Slide 9: U.S. Cash Equity & U.S. Equity Options - Second Quarter 2014
U.S. Cash Equity & U.S. Equity Options - Second Quarter 2014 U.S. Cash Equity 2Q14 U.S. Cash Equities 35 1,500 ▪ ADV of 1.4B, -12% y/y; net revenue of $44MM Market Share (%) 30 1,200 ADV (000s) 900 ▪ Market share up versus prior year and sequentially 25 600 ▪ Net revenue capture steady at $0.048 20
Slide 10: Cash Flow and Debt Profile
Cash Flow and Debt Profile Operating Cash Flow Solid Cash Position 900 AGR 1 1% +1% y/y ▪ $836MM in operating cash flow in 1H14 '13 C 800 '09- 700 ▪ TTM cash EPS(3) of $9.64, +6% y/y 600 ▪ $2.1B in unrestricted cash, including $1.3B set aside $ (Millions) 500 to repay 2015 EUR Notes 400 300 2014 Sou
Slide 11: Capital Return to Shareholders
Capital Return to Shareholders Targeted uses of cash going forward will be based on maintaining investment grade debt rating, strategic growth plans, and growing return on invested capital (ROIC) and earnings ▪ Paid $150MM in dividends in 1H14 ▪ Resumed share repurchases under $450MM authorization;
Slide 12: TTM Expense Base & Synergy Progression
TTM Expense Base & Synergy Progression ▪ Additional synergies of $50MM via efficiencies related primarily to our cash equities and equity options businesses ▪ Total synergies of $550MM represents target combined expense base reduction of 30% (>40% reduction of NYSE Liffe expense base) Synergies Expe
Slide 13: Guidance Update
Guidance Update Key Metric(1) 3Q14 2014 Operating Expenses(2) $390-395MM $1.55-1.56B Interest Expense $23-24MM $23-24MM in 4Q14 D&A $80-85MM $330-335MM Tax Rate 27-30% 27-30% Operational Cap Exp and Cap Software $40-45MM $165-175MM Real Estate Cap Exp $75-85MM Weighted Average Diluted Share Count(3)
Slide 14: ICE Global Markets: Evolution and Innovation
ICE Global markets: Evolution and Innovation Diverse Leading Markets Global markets serving customers when and where they need to manage risk ▪ 11 exchanges serving 9 asset classes ◦ Interest rates - extending rates franchise ◦ Oil - benefiting from secular trends, geopolitcs, Brent benchmark ◦ Nat
Slide 15: Leading Position in World's Oil Markets
Leading Position in World's Oil Markets ▪ Global benchmark Brent Crude ADV +18% y/y in June, +26% y/y in July ▪ Brent futures open interest reached record levels in 2Q14; record July Brent futures volume ▪ Combined ICE Brent & WTI crude futures market share of 55% in 1H14 ▪ Volatility at relatively
Slide 16: Natural Gas Futures & Options
Natural Gas Futures & Options ▪ Tale of two markets: U.S. nat gas volatility and volume remains muted, EU nat gas volume benefiting from move to exchange trading and demand for risk management ▪ Total nat gas ADV declined 43% in 2Q y/y while revenues declined 27%; OI down 27% y/y ◦ Volatility at mul
Slide 17: Financial Futures & Options
Financial Futures & Options EU Interest Rates ADV & OI ▪ Continued low interest rate levels and volatility in EU 25 ▪ 2Q interest rate ADV -26% y/y 2,500 20 ▪ Launched 21 new interest rates products in 2Q14; 2,000 OI (millions) most comprehensive rates offering in Europe ADV (000s) 15 1,500 ▪ 2Q ADV
Slide 18: NYSE Listings - Global Leader in Capital Raising
NYSE Listings - Global Leader in Capital Raising ▪ Global Leader in capital raising with $83B in proceeds from IPOs and follow-ons in 1H14 ▪ Continued leadership in technology IPO's with 52% share of tech IPOs ▪ Sustained momentum with 14 IPOs since end of June; $7.5B raised, strong pipeline balance
Slide 19: 2014 Integration & Strategic Initiatives Update
2014 Integration & Strategic Initiatives Update Strategic Initiative Status Implemented quarterly dividend policy Completion of SMX/SMXCC acquisition Liffe/Euronext separation IBA assumed administration of LIBOR and ISDAFIX® Launched Liffe 30-Year Ultra Long Gilt Exited certain technology business l
Slide 20: Appendix
SI EE APPENDIX 20
Slide 21: ICE Summary Balance Sheet
ICE Summary Balance Sheet In millions BALANCE SHEET 6/30/14 12/31/13 CHANGE Assets ▪ $3.9B debt outstanding as of Unrestricted Cash & ST Inv $2,083 $1,035 $1,048 6/30/14 Other Current Assets 48,108 43,224 4,884 Current Assets 50,191 44,259 5,932 ▪ Net of $1.3B cash set aside, debt is $2.6B PPE (net)
Slide 22: Non-GAAP Adjusted Net Income from Continuing Ops and EPS
Non-GAAP Adjusted Net Income from Continuing Ops Attributable to ICE and EPS from Continuing Ops In millions (except per share amounts) 12 Months 6 Months 6 Months 3 Months 3 Months Ended Ended 6/30/14 Ended 6/30/13 Ended 6/30/14 Ended 6/30/13 12/31/13 Income from continuing operations $488 $295 $22
Slide 23: Non-GAAP Operating Income, Operating Margin & Operating Expense Reconciliation
Non-GAAP Operating Income, Operating Margin & Operating Expense Reconciliation In millions 6 Months 6 Months 3 Months 3 Months Ended 6/30/14 Ended 6/30/13 Ended 6/30/14 Ended 6/30/13 Total revenues, less transaction-based expenses $1,547 $724 $750 $372 Total operating expenses 829 299 423 147 Less:
Slide 24: Adjusted Non-GAAP EBITDA Reconciliation
Adjusted Non-GAAP EBITDA Reconciliation In millions Trailing 12 Months Ended 6/30/14 Adjusted Non-GAAP net income from Continuing Ops attributable to ICE $832 Add: Income tax expense 303 Add: Income tax expense adjustment on Non-GAAP Items 25 Add (Less): Other income (expense), net (20) Add: Interes
Slide 25: Non-GAAP Pro-forma Adjusted Net Income and Diluted EPS
Non-GAAP Pro-forma Adjusted Net Income from Cont. Ops Attributable to ICE and Pro-forma Adjusted Diluted Cont. Ops EPS In millions (except per share amounts) 6 Months 3 Months Ended 6/30/13 Ended 6/30/13 Pro-forma income from continuing operations attributable to ICE (1) $481 $250 Add: NYSE Euronext