IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global exchanges and over-the-counter (OTC) markets, today reported record financial results for the first quarter of 2010, including consolidated revenues of $282 million, an increase of 22% over first quarter 2009 revenues of $232 million.
First quarter 2010 consolidated net income attributable to ICE was a record $101 million, a 40% increase from first quarter 2009 net income of $72 million. Diluted earnings per share (EPS) in the first quarter rose 39% to $1.36, compared to first quarter 2009 EPS of $0.98. Adjusted net income attributable to ICE and adjusted diluted EPS increased 26% and 25%, respectively, excluding $13 million in pre-tax acquisition and restructuring charges incurred during the first quarter of 2009. For further details, please refer to the reconciliation of first quarter 2009 non-GAAP financial measures included in this press release.
Said ICE Chairman and CEO Jeffrey C. Sprecher: "ICE once again achieved solid growth on top of the industry-leading performance we delivered throughout the difficult market environment of the past two years. We have positioned the company to serve the needs of the OTC and futures markets globally and we remain intensely focused on building our business for our customers and shareholders. Our successful expansion into new markets, clearing and continued product innovation demonstrates our leadership in delivering industry solutions. Against a backdrop of increasing demand for transparency and clearing, we believe ICE is well positioned to continue to outperform its peers."
ICE CFO Scott Hill added: "With our strong start to 2010, we have built upon our track record of consistently delivering solid financial results and increasing shareholder value. Our strategy is to leverage our industry leading technology, depth of OTC execution, processing and clearing capabilities, diverse product and geographic profile and strong financial position. As a result, we have consistently delivered revenue and profit growth, margin expansion and industry leading returns on capital. The successful execution of our strategy is enabled by a disciplined approach to expense management and a focus on efficient capital deployment."
First Quarter 2010 Results
Consolidated revenues in the first quarter of 2010 increased 22% to $282 million, compared to $232 million in the first quarter of 2009. Consolidated transaction and clearing revenues increased 23% to $251 million, from $203 million during the same period in 2009. The increase in transaction and clearing revenue was driven primarily by growth in commodity trading volume in ICE's futures and OTC markets.
Transaction and clearing revenues in ICE's futures segment totaled $123 million in the first quarter of 2010, a 25% increase from $98 million in the same period of 2009. Consolidated average daily volume in ICE's futures segment in the first quarter of 2010 was 1,289,160 contracts, up 28% from the same period of 2009. This growth was primarily driven by ICE Brent Crude and ICE Gasoil futures, as well as increases in sugar and cotton futures and options contract volume.
First quarter 2010 transaction and clearing revenues in ICE's global OTC segment increased 22% to $128 million, compared to $105 million for the same period in 2009. Average daily commissions (ADC) for ICE's OTC energy business were a record $1.4 million in the first quarter of 2010, an increase of 27% from $1.1 million in the first quarter of 2009. Cleared energy contracts accounted for 97% of OTC energy contract volume during the first quarter of 2010, compared to 96% in the prior first quarter. Revenues from ICE's credit default swap (CDS) trade execution and clearing business totaled $43 million, including $12 million from CDS clearing in the first quarter of 2010, up 13% from the first quarter of 2009 and up 8% from the fourth quarter of 2009.
Consolidated market data revenues increased 3% during the first quarter of 2010 to $27 million, compared to $26 million in the same period in 2009. Consolidated other revenues were $4 million during the first quarter of 2010, compared to $2 million in the prior first quarter.
First quarter 2010 consolidated operating expenses were $118 million, in line with the first quarter of 2009, which included $13 million in pre-tax acquisition and restructuring charges, as detailed in the non-GAAP reconciliation table in this press release.
First quarter 2010 consolidated operating income rose 44% from the prior first quarter, to $164 million. First quarter 2010 operating margin rose to 58%, compared to 49% for the same period in 2009.
The effective tax rate was 34% in the first quarter of 2010 and the prior first quarter.
Consolidated cash flow from operations increased 50% from the first quarter of 2009 to $102 million in the first quarter of 2010. Capital expenditures were $5 million and capitalized software development costs totaled $6 million in the first quarter of 2010.
Unrestricted cash and short-term investments were $614 million as of March 31, 2010. At the end of the quarter, ICE had $285 million in outstanding debt.
Financial and Operating Guidance
• ICE had 843 employees as of March 31, 2010. Headcount is expected to increase between 5% and 7% by the end of the year, excluding any personnel additions relating to merger and acquisition activity.
• ICE's diluted share count for the second quarter of 2010 is expected to be in the range of 74.5 million to 75.1 million weighted average shares outstanding, and the diluted share count for fiscal year 2010 is expected to be in the range of 74.5 million to 75.5 million weighted average shares outstanding. ICE's remaining capacity in its share repurchase program is $300 million.