Intercontinental Exchange Inc. · NYSE:ICE
Intercontinental Exchange — Q3 2014 Earnings Presentation
26 slides from Intercontinental Exchange's earnings presentation, Nov 4, 2014
Slide 1: Third Quarter 2014 Earnings Presentation
Intercontinental Exchange (NYSE: ICE) Third Quarter 2014 Earnings Presentation November 4, 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 - Third Quarter 2014
Earnings Conference Call - Third 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 R
Slide 4: Commitment to Execution and Growth
Commitment to Execution and Growth Net Revenues Solid Financial Performance YTD Sep '14 ▪ Net revenue of $2.3B 2,500 ▪ Adj. operating margin of 50%(1) % 2,000 G R 14 9 - ' 13 CA ▪ Adj. EPS +5% y/y to $6.53(1) '0 $ (Millions) 1,500 ▪ Record operating cash flow of $922MM 1,000 YTD Sep '14 Operational
Slide 5: Third Quarter 2014 Financial Performance
Third Quarter 2014 Financial Performance INCOME STATEMENT (in millions except per share amounts) 3Q14 3Q13 Financial Highlights Net revenues $745 $338 ▪ Consolidated 3Q14 net revenues of $745MM Operating Expenses $415 $136 ◦ Volume impacted by low volatility (1) Adj. Operating Expenses $377 $131 Ope
Slide 6: Third Quarter 2014 Revenue and Expense Detail
Third Quarter 2014 Revenue and Expense Detail Net Revenue Mix Adjusted Expenses(3) U.S. Cash Non-Cash Listings Cash Comp. Equities Comp. & Benefits 6% 12% 33% 6% Market Data 14% Prof. Services & 14% Acquisition Exp. 14% 12% Global 54% Other Tech & Deprec. & 22% Derivatives 13% Communications Amortiz
Slide 7: Futures & Options - Third Quarter 2014
Futures & Options - Third Quarter 2014 ICE & Liffe Futures & Options ADV 3Q14 Futures and options rev of $320MM 6,000 ▪ Brent rev +7% y/y to $62MM -13% y/y 5,000 ▪ Nat Gas rev -1% y/y to $44MM 4,000 ▪ Ag & Metals +21% y/y to $48MM (000s) -19% y/y 3,000 ▪ Interest Rate rev of $60MM 2,000 1,000 Rate P
Slide 8: Volumes Rebound in October
Volumes Rebound in October Brent ADV & OI Other Oil ADV & OI OI (000s) ADV (000s) OI (000s) ADV (000s) 5,000 5,000 800 300 4,000 4,000 600 3,000 3,000 200 2,000 400 2,000 100 1,000 200 1,000 0 0 0 0 1Q14 2Q14 3Q14 Oct-14 1Q14 2Q14 3Q14 Oct-14 Brent OI Brent ADV Other Oil OI Other Oil ADV Sterling AD
Slide 9: Credit Derivatives - Third Quarter 2014
Credit Derivatives - Third Quarter 2014 CDS Clearing Revenue $72MM, 3Q14 CDS revenues of $38MM, flat y/y 80 +21% y/y 70 ▪ $23MM from CDS clearing, +3% y/y 60 ▪ $15MM from Creditex & ICE Swap Trade, -6% y/y $ (Millions) 50 40 Through Oct 31, $59T in CDS cleared, $1.7T open 30 interest 20 10 ▪ ICE Cle
Slide 10: NYSE Trading & Listing - Third Quarter 2014
NYSE Trading & Listing - Third Quarter 2014 NYSE Volume & Market Share NYSE Trading 25 ▪ 3Q ADV -4% y/y; Oct ADV +32% y/y Volume (shares in millions) 23 1,500 ▪ Solid share and revenue capture Market Share (%) ▪ Advocating for market structure change 21 1,000 ◦ Rationalizing order types 19 ◦ Streaml
Slide 11: Cash Flow and Capital Structure
Cash Flow and Capital Structure Operating Cash Flow 2014 Cash Flow 900 11% ▪ Euronext IPO & NYSE Tech businesses divestitures GR 800 1 3 CA '09-' ▪ Returned $738MM of capital to shareholders through 700 October 2014 $ (Millions) 600 500 ◦ Paid $225MM in dividends YTD Sep '14 400 300 ◦ Repurchased $5
Slide 12: Financial Reporting & Guidance Update
Financial Reporting & Guidance Update Strong Cash Generation to be Reflected in Adjusted EPS Metric: ▪ Starting in 4Q14, ICE's adjusted EPS will exclude amortization of acquisition-related intangibles, net of tax ◦ D&A guidance excludes amortization of acquisition-related intangibles ▪ Adjusted EPS
Slide 13: Significant Progress on NYSE Liffe Integration
Significant Progress on NYSE Liffe Integration 3Q14 End of 2014 2015 2016 Divested NYSE NYSE Liffe Optimize Business Complete NYSE Tech Businesses Integration with Platforms & Tech Platform ICE Futures Rationalization 11/13/13 Mid 2014 End 2014 1Q16 1Q17 Closed NYSE Euronext Liffe: Expect Realized E
Slide 14: Interest Rate Futures & Options
Interest Rate Futures & Options ▪ Total interest rate (IR) ADV -31% 3Q y/y, revenue of $60MM in 3Q, -17% y/y on a pro-forma basis ▪ Excluding Euribor, 3Q14 IR ADV -3% y/y; OI up 47% y/y ◦ Other EU interest rates ADV up in 3Q14; Gilt +14% y/y, Swiss +3% y/y, GCF Repo +17% y/y EU Interest Rate ADV & O
Slide 15: Leading Position in World's Oil Markets
Leading Position in World's Oil Markets ▪ Global oil benchmark ICE Brent ADV +8% y/y in 3Q, +28% y/y in Oct. to 817k ADV ▪ Brent OI surpassed 2Q's record levels at 3.8MM contracts, +20% YTD Oct '14 ▪ Combined ICE Brent & WTI futures market share of 55% YTD Sep '14 ▪ Secular trends, geopolitical risk
Slide 16: Natural Gas Futures & Options
Natural Gas Futures & Options ▪ Total nat gas ADV declined 19% in 3Q y/y while revenues declined only 1% y/y due to mix ◦ EU nat gas volumes nearly double FY2013 volumes ▪ U.S. nat gas volatility and volume remains muted, EU nat gas volume benefiting from move to exchange trading and clearing Total
Slide 17: Extending ICE's Global Clearing & Data Services
Extending ICE's Global Clearing & Data Services ICE Clear Singapore Holland Clearing House SuperDerivatives Expand clearing network into Asia Expand clearing network to Continental EU Multi-faceted data provider offering multiple growth avenues • Closed February 2014 • Expected to close 4Q14 • $350M
Slide 18: Diverse Long-term Growth and Earnings Drivers
Diverse Long-term Growth and Earnings Drivers Demand for Risk Management Grow Clearing & Global Opportunities ▪ New products >1000 since 2008 ▪ Develop rates franchise, including swaps clearing alongside CDS ▪ Rising open interest and normalized volatility create volume growth ▪ ICE Futures Singapor
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: ICE: Consistent Growth through Cycles
ICE: Consistent Growth through Cycles Net Income from Cont. Ops 800 $752 700 $637 600 R 24% $552 C AG $510 3 -’1 500 ’06 $ (millions) $398 400 $316 $301 300 $241 200 $143 100 0 (1) (1) 2006 2007 2008 2009 2010 2011 2012 2013 YTD Sep '14 (1) These figures represent non-GAAP results. Please refer to s
Slide 21: APPENDIX
SI EE APPENDIX 21
Slide 22: ICE Summary Balance Sheet
ICE Summary Balance Sheet In millions BALANCE SHEET 09/30/2014 12/31/2013 CHANGE Assets ▪ $0.7B unrestricted cash and Unrestricted Cash & ST Inv $1,879 $1,035 $844 short-term investments, Other Current Assets 47,499 43,224 4,275 excluding $1.2B set aside for the Current Assets 49,378 44,259 5,119 re
Slide 23: Adjusted Net Income from Continuing Ops and EPS from Continuing Ops
Adjusted Net Income from Continuing Ops and EPS from Continuing Ops In millions (except per share amounts) 12 Months 9 Months 9 Months 3 Months 3 Months Ended Ended 9/30/14 Ended 9/30/13 Ended 9/30/14 Ended 9/30/13 12/31/13 Income from continuing operations $711 $440 $223 $145 $261 Add: NYSE Euronex
Slide 24: Adjusted Operating Income, Operating Margin & Operating Expense Reconciliation
Adjusted Operating Income, Operating Margin & Operating Expense Reconciliation In millions 9 Months 9 Months 3 Months 3 Months Ended 9/30/14 Ended 9/30/13 Ended 9/30/14 Ended 9/30/13 Total revenues, less transaction-based expenses $2,292 $1,062 $745 $338 Total operating expenses 1,244 435 415 136 Le
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation In millions Trailing 12 Months Ended 9/30/14 Adjusted net income from Continuing Ops $934 Add: Income tax expense 345 Add: Income tax expense adjustment on Non-GAAP Items 32 Less: Other expense, net (24) Add: Interest expense 99 Add: Depreciation and amortization 301 A
Slide 26: Adjusted Operating Income, Adjusted Net Income and EPS from Cont. Ops
Adjusted Operating Income, Adjusted Net Income and EPS from Cont. Ops (excluding amortization of acquisition-related intangibles) In millions (except per share amounts) 3 Months 3 Months 3 Months Ended 9/30/14 Ended 6/30/14 Ended 3/31/14 Total revenue, less transaction based fees $745 $750 $797 Tota
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