Intercontinental Exchange (NYSE: ICE), the operator of global exchanges and clearing houses and provider of data and listing services, has reported financial results for the first quarter of 2018.
For the quarter ended March 31, 2018, consolidated net income attributable to ICE was $464 million on $1.2 billion of consolidated revenues less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $0.79. Adjusted net income was $525 million in the first quarter and adjusted diluted EPS were a record $0.90, up 22% year-over-year.
We are pleased to report on our first quarter performance, delivering strong results across our trading and clearing and our data and listings segments including record revenues,” said ICE Chairman and CEO Jeffrey C. Sprecher. “We completed our strategic acquisition of BondPoint while also generating solid organic growth, as customers’ demand of our comprehensive suite of multi-asset class workflow and risk management solutions continues to increase.
Scott A. Hill, ICE CFO, added:
Our first quarter performance produced revenue growth, margin expansion and strong cash flow allowing us to return nearly $540 million to stockholders through April, up 28% compared to the prior year. 2018 is off to a promising start and we are well positioned to build on our proven track record of growth, customer service and value creation for our stockholders.
First Quarter 2018 GAAP Results
First quarter 2018 consolidated revenues, less transaction-based expenses, were $1.2 billion. Trading and clearing segment revenues, less transaction-based expenses, were $596 million in the first quarter 2018, up 11% compared to the prior first quarter. Data and listings segment revenues were $629 million in the first quarter of 2018, including data services revenues of $520 million, and listings revenues of $109 million.
Consolidated operating expenses were $575 million for the first quarter of 2018. On an adjusted basis, consolidated operating expenses were $494 million. Consolidated operating income for the first quarter was $650 million and the operating margin was 53%. The effective tax rate for the first quarter was 23%.
Unrestricted cash was $523 million and outstanding debt was $6.9 billion as of March 31, 2018.
Financial Guidance
- ICE’s second quarter 2018 GAAP operating expenses are expected to be in a range of $570 million to $580 million and adjusted operating expenses are expected to be in a range of $500 million to $510 million.
- ICE’s full year 2018 GAAP operating expenses are expected to be in a range of $2.28 billion to $2.32 billion and adjusted operating expenses are expected to be in a range of $2.00 billion to $2.04 billion.
- ICE’s interest expense is expected to be $55 million in the second quarter.
- ICE’s diluted share count for the second quarter is expected to be in the range of 581 million to 583 million weighted average shares outstanding and 580 million to 585 million for the full year.
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Consolidated Statements of Income (In millions, except per share amounts) (Unaudited) |
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| Three Months Ended March 31, |
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| Revenues: | 2018 | 2017 | |||||||
| Transaction and clearing, net | $ | 898 | $ | 798 | |||||
| Data services | 520 | 520 | |||||||
| Listings | 109 | 108 | |||||||
| Other revenues | 53 | 45 | |||||||
| Total revenues | 1,580 | 1,471 | |||||||
| Transaction-based expenses: | |||||||||
| Section 31 fees | 121 | 91 | |||||||
| Cash liquidity payments, routing and clearing | 234 | 214 | |||||||
| Total revenues, less transaction-based expenses | 1,225 | 1,166 | |||||||
| Operating expenses: | |||||||||
| Compensation and benefits | 240 | 247 | |||||||
| Professional services | 30 | 32 | |||||||
| Acquisition-related transaction and integration costs | 12 | 14 | |||||||
| Technology and communication | 105 | 98 | |||||||
| Rent and occupancy | 17 | 18 | |||||||
| Selling, general and administrative | 33 | 41 | |||||||
| Depreciation and amortization | 138 | 134 | |||||||
| Total operating expenses | 575 | 584 | |||||||
| Operating income | 650 | 582 | |||||||
| Other income (expense): | |||||||||
| Interest expense | (52 | ) | (45 | ) | |||||
| Other income, net | 19 | 188 | |||||||
| Other income (expense), net | (33 | ) | 143 | ||||||
| Income before income tax expense | 617 | 725 | |||||||
| Income tax expense | 143 | 214 | |||||||
| Net income | $ | 474 | $ | 511 | |||||
| Net income attributable to non-controlling interest | (10 | ) | (8 | ) | |||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 464 | $ | 503 | |||||
| Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders: | |||||||||
| Basic | $ | 0.80 | $ | 0.85 | |||||
| Diluted | $ | 0.79 | $ | 0.84 | |||||
| Weighted average common shares outstanding: | |||||||||
| Basic | 582 | 594 | |||||||
| Diluted | 586 | 599 | |||||||
| Dividend per share | $ | 0.24 | $ | 0.20 | |||||
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Consolidated Balance Sheets (In millions) (Unaudited) |
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| As of | As of | |||||||
| March 31, 2018 | December 31, 2017 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 523 | $ | 535 | ||||
| Short-term restricted cash and cash equivalents | 804 | 769 | ||||||
| Customer accounts receivable, net | 1,167 | 903 | ||||||
| Margin deposits, guaranty funds, and delivery contracts receivable | 53,979 | 51,222 | ||||||
| Prepaid expenses and other current assets | 161 | 133 | ||||||
| Total current assets | 56,634 | 53,562 | ||||||
| Property and equipment, net | 1,235 | 1,246 | ||||||
| Other non-current assets: | ||||||||
| Goodwill | 12,514 | 12,216 | ||||||
| Other intangible assets, net | 10,326 | 10,269 | ||||||
| Long-term restricted cash and cash equivalents | 331 | 264 | ||||||
| Other non-current assets | 1,022 | 707 | ||||||
| Total other non-current assets | 24,193 | 23,456 | ||||||
| Total assets | $ | 82,062 | $ | 78,264 | ||||
| Liabilities and Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 476 | $ | 462 | ||||
| Section 31 fees payable | 120 | 128 | ||||||
| Accrued salaries and benefits | 104 | 227 | ||||||
| Deferred revenue | 468 | 125 | ||||||
| Short-term debt | 2,623 | 1,833 | ||||||
| Margin deposits, guaranty funds, and delivery contracts payable | 53,979 | 51,222 | ||||||
| Other current liabilities | 176 | 178 | ||||||
| Total current liabilities | 57,946 | 54,175 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred tax liability, net | 2,292 | 2,298 | ||||||
| Long-term debt | 4,269 | 4,267 | ||||||
| Accrued employee benefits | 240 | 243 | ||||||
| Other non-current liabilities | 309 | 296 | ||||||
| Total non-current liabilities | 7,110 | 7,104 | ||||||
| Total liabilities | 65,056 | 61,279 | ||||||
| Equity: | ||||||||
| Intercontinental Exchange, Inc. stockholders’ equity: | ||||||||
| Common stock | 6 | 6 | ||||||
| Treasury stock, at cost | (1,448 | ) | (1,076 | ) | ||||
| Additional paid-in capital | 11,428 | 11,392 | ||||||
| Retained earnings | 7,182 | 6,858 | ||||||
| Accumulated other comprehensive loss | (190 | ) | (223 | ) | ||||
| Total Intercontinental Exchange, Inc. stockholders’ equity | 16,978 | 16,957 | ||||||
| Non-controlling interest in consolidated subsidiaries | 28 | 28 | ||||||
| Total equity | 17,006 | 16,985 | ||||||
| Total liabilities and equity | $ | 82,062 | $ | 78,264 | ||||