Intercontinental Exchange Inc. · NYSE:ICE
Intercontinental Exchange — Merger or Acquisition (May 2022)
39 slides from Intercontinental Exchange's merger presentation, May 5, 2022
Slide 1: ICE + Black Knight
ICE + Black Knight Strengthening the overall mortgage ecosystem for the benefit of all consumers May 5, 2022 Exhibit 99.1
Slide 2: GAAP and Non-GAAP Results
GAAP AND NON-GAAP RESULTS This presentation includes non-GAAP measures that exclude certain items we do not consider reflective of our cash operations and core business performance. We believe that the presentation of these non-GAAP measures provides investors with greater transparency and supplemen
Slide 3: Cautionary Statement Regarding Forward Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and
Slide 4: Important Additional Information and Where to Find It
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT ANT ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the Transaction, ICE will file with the SEC a Registration Statement on Form S-4 to register the shares of ICE common stock to be issued in connection with the Transaction. The Re
Slide 5: Call Participants
Jeff Sprecher Chair & CEO Warren Gardiner Chief Financial Officer Ben Jackson President Mary Caroline O'Neal Director, Investor Relations Katia Gonzalez Senior Analyst, Investor Relations Call Participants Joe Tyrrell President, ICE Mortgage Technology
Slide 6: Transaction Overview
Creates a life-of-the-loan platform that will enable lenders to achieve a “customer for life” Opportunity to remove additional friction and expense from the mortgage workflow, accruing to the benefit of all stakeholders, including the end consumer Expands Mortgage Tech TAM to $14 billion & accelerat
Slide 7: About Black Knight
About Black Knight A premier provider of integrated, mission-critical software solutions, data and analytics helping customers realize efficiencies, reduce risk and achieve greater levels of success within the U.S. mortgage and real estate markets Mortgage loan servicing software for approximately 3
Slide 8: Strategic Rationale
Strategic Rationale Expands ICE Mortgage Technology (IMT) TAM to $14 billion Better positions ICE to monetize current $10 billion TAM Net revenue synergies of ~$125 million expected by year 5 largely through cross-selling Expands & Accelerates TAM Continued expansion of end-to-end capabilities creat
Slide 9: Life of Loan Platform Drives Efficiencies Across the Workflow
Life of Loan Platform Drives Efficiencies Across the Workflow Call Center, Web/Mobile, Loan Officer Loan Origination, Services, Verifications Marketing Automation Closing, Funding, Compliance & Recording & Point of Sale Pricing/ Eligibility Realtor Loan Servicing Loan Trading / Secondary Markets Inv
Slide 10: Integration of Unique Data & Analytics Presents Untapped Opportunity
Integration of Unique Data & Analytics Presents Untapped Opportunity MLS listings data Home price appreciation Consumer demand Relocation and geographic preference data Consumer behavior data Lead source data Full loan application data Loan type preference Loan volume data Key loan attribute data: L
Slide 11: Opportunities to Benefit the American Homebuyer
Digitization and automation will reduce friction and help lower costs to originate for all parties, ultimately making getting a loan more affordable and accessible for future borrowers Leveraging data across the mortgage workflow, lenders can help existing homeowners understand new loan programs tha
Slide 12: Efficiencies Across the Workflow Underpin Expanded Opportunity
Efficiencies Across the Workflow Underpin Expanded Opportunity $14 billion Total Addressable Market ~$14 billion Total Addressable Market Adds Servicing TAM of ~$2Bn Highly complementary to origination TAM; highly recurring revenue stream Integration of servicing & origination systems will reduce co
Slide 13: Improve Visibility and Durability of Business Model
Improve Visibility and Durability of Business Model ICE Mortgage Technology Revenue Mix1 Total ICE Revenue Mix1 Increases mix of high-growth recurring revenue IMT recurring revenue mix increases to ~70% Total ICE recurring revenue mix increases to ~55%+ Adds a more stable revenue stream to our curre
Slide 14: Transaction Details and Assumptions
Transaction Details and Assumptions Purchase Price Financing & Balance Sheet Approvals & Closing Transaction valued at a market value of $13.1 billion or $85/share; enterprise value of ~$16 billion Consideration to come in the form of $10.5 billion cash and ~$2.6 billion of stock based on ICE 10-day
Slide 15: Strong Financial Outlook for Combined Company
Strong Financial Outlook for Combined Company Balanced Pro Forma Revenue Mix1 ~$8.6 billion ’21 Pro-forma Revenue ~$5.2 billion ’21 Pro-forma Adj. EBITDA2 Graphs reflect revenue mix for 1Q22 on a pro forma basis. Pro forma adjusted EBITDA includes ICE’s adjusted EBITDA of $4.5Bn plus Black Knight’s
Slide 16: ICE's History of Evolution and Growth
ICE’s History of Evolution and Growth 2013-2021 are adjusted figures which represent non-GAAP measures Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures. ’06 – ’21 Adj. EPS CAGR 17%
Slide 17: Appendix
Appendix
Slide 18: About ICE
About ICE
Slide 19: Overview
ICE is a leading global provider of data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities. By combining our world class technology with our data services and operating expertise, we add transparency and enable cust
Slide 20: Two Decades of Innovation & Growth
Two Decades of Innovation & Growth ICE is formed to develop a transparent network for OTC energy ICE adds to its energy futures network through the acquisition of the International Petroleum Exchange and the Brent Crude Oil contract ICE Data Services is launched with ICE’s proprietary data and indic
Slide 21: A Leading Global Provider of Data and Technology
A Leading Global Provider of Data and Technology Exchanges Fixed Income & Data Mortgage Technology Exchanges across the major asset classes, including energy. Global energy complex enables customers to precisely manage risk amidst the growing complexity of global energy markets and the energy transi
Slide 22: Consistent Growth and Value Creation
Consistent Growth and Value Creation 18% CAGR $s in millions $s in millions 14% CAGR (1) 2013-2021 adjusted figures represent non-GAAP measures. Please refer to the slides in the appendix and our earnings supplement available at www.ir.theice.com for reconciliations to the equivalent GAAP measures.
Slide 23: Strong Capital Return
Strong Capital Return IDC acquired in 2015 Ellie Mae acquired in 2020 Capital Return Philosophy Dividend Growth Grow the dividend as the company grows Double-digit increase on avg. since 2013; 1Q22 dividend +15% y/y Share Repurchases 100% of excess FCF, net of strategic M&A & dividends, allocated to
Slide 24: Proven Track Record of Deleveraging Following Acquisitions
Proven Track Record of Deleveraging Following Acquisitions History of realizing synergies on or ahead of schedule Demonstrated ability to efficiently and effectively integrate acquisitions while growing core business Proven record of driving further growth and generating premium value for all stakeh
Slide 25: ICE Mortgage Technology Overview
ICE Mortgage Technology Overview
Slide 26: Overview of IMT Products and Revenue Model
Overview of IMT Products and Revenue Model All-in-one SaaS-based mortgage management system providing workflow management and vendor connectivity Encompass Loan Origination System Ellie Mae Network Other Solutions Services Processing Risk Management and Business Reporting Connectivity and Integratio
Slide 27: Overview of Black Knight Products and Revenue Model
Overview of Black Knight Products and Revenue Model Product Description Revenue Model Servicing Software Data and Analytics Primarily subscription-based revenues Data and Analytics provides extensive solutions that help lenders and servicers make more informed decisions, improve performance, identif
Slide 28: Mortgage and Housing Market Data
Mortgage and Housing Market Data
Slide 29: Home Ownership Remarkably Consistent Over the Long Term
Home Ownership Remarkably Consistent Over the Long Term Steady and consistent expansion over the longer term Housing stock has more than doubled since 1970, growing roughly in line with population Declines in homes for sale per capita over the last decade has triggered a recent uptick in housing sta
Slide 30: The Millennial Generation is Approaching an Inflection Point in Homeownership
The Millennial Generation is Approaching an Inflection Point in Homeownership Homeownership rate consistently increases with age, with a 30% increase between 29 and 44 years The largest generational cohort centers around ~30 years old (millennial generation) Demand for home ownership is projected to
Slide 31: Historical and Projected Purchase Originations
Historical and Projected Purchase Originations Are a Long-Term Indicator of Favorable Housing and Mortgage Finance Trends Purchase origination volumes reflect the overall direction of the mortgage finance market, rising consistently as housing stock expands and younger generations become homeowners
Slide 32: Mortgage Debt Outstanding Mirrors Growth in Housing Stock
Mortgage Debt Outstanding Mirrors Growth in Housing Stock and a Proliferation of the Mortgage Product Black Knight’s servicing revenue is largely driven by loan count with limited exposure to origination volumes Servicing solutions provide a consistent foundation and partial mitigant to natural cred
Slide 33: Increasing Cost to Originate a Loan
Increasing Cost to Originate a Loan Existing Industry Costs Largely Personnel-Related In $US Loan Origination Costs Rising Source: MBA Annual Performance Report as of April 11,2022, ICE estimates. ~$4,000/loan ~$9,000/loan Targeted customer savings on IMT platform
Slide 34: Extensive Regulatory Oversight Driving Increased Costs
Extensive Regulatory Oversight Driving Increased Costs Truth In Lending – Reg Z Calculation of Annual Percentage Rate (APR) Calculation of Amount Financed / Finance Charge Amount / Total Payments / Total Interest Percentage Generate Loan Estimate and Closing Disclosure Generate Amortization Schedule
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 36: Black Knight Adjusted EBITDA Reconciliation
Black Knight Adjusted EBITDA Reconciliation in millions 2016 2017 2018 2019 2020 2021 Net earnings $133 $ 254 $169 $109 $264 $208 Depreciation and amortization 208 207 217 236 271 365 Interest expense, net 68 58 52 64 63 84 Income tax expense (benefit) 26 (62) 38 42 42 36 Other expense (income), net
Slide 37: in millions Twelve Months Ended 12/31/2021 Twelve Months Ended 12/31/2020 Net income attributable to
in millions Twelve Months Ended 12/31/2021 Twelve Months Ended 12/31/2020 Net income attributable to ICE common stockholders $4,058 $2,089 Add: Amortization of acquisition-related intangibles 622 388 Add: Transaction and integration costs and acquisition-related success fees 98 101 Less: Gain on val
Slide 38: in millions except per share amounts Twelve Months Ended 12/31/19 Twelve Months Ended 12/31/18
in millions except per share amounts Twelve Months Ended 12/31/19 Twelve Months Ended 12/31/18 Twelve Months Ended 12/31/17 Twelve Months Ended 12/31/16 Twelve Months Ended 12/31/15 Twelve Months Ended 12/31/14 Twelve Months Ended 12/31/13 Net income attributable to ICE $1,933 $1,988 $2,526 $1,429 $
Slide 39: Free Cash Flow Calculation
Free Cash Flow Calculation in millions Twelve Months Ended 12/31/2021 Twelve Months Ended 12/31/2016 Twelve Months Ended 12/31/2011 Cash flow from operations $3,123 $2,149 $713 Less: Capital expenditures and capitalized software development costs (452) (365) (88) Add/(Less): Section 31 fees, net 150
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