IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for the first quarter of 2011.
Consolidated revenues were a record $334 million, up 19% from first quarter 2010. Consolidated net income attributable to ICE was a record $129 million in the quarter, a 27% increase from first quarter 2010. Diluted earnings per share (EPS) in the first quarter grew 28% to a record $1.74.
Certain acquisition-related transaction items were included in ICE's first quarter 2011 and 2010 GAAP operating results that management believes are not indicative of normal operating performance. Excluding these items from results, first quarter 2011 adjusted net income attributable to ICE increased 29% to $131 million and adjusted diluted EPS increased 30% to $1.77.
Said ICE Chairman and CEO Jeffrey C. Sprecher: "By focusing on the needs of our customers and opportunities in our markets, ICE continues to produce consistent financial and operating results. Our own organic growth has been enhanced by our long history of successful acquisitions. ICE's ability to transform acquisitions into opportunities for future growth has been a defining characteristic of ICE and a major point of distinction in the exchange sector."
ICE CFO Scott A. Hill added: "This was a great quarter for ICE - and a typical quarter, as a result of our financial discipline. We continued to execute a number of long-standing strategic initiatives, such as the expansion of our OTC products and clearing services, while also venturing into new, high-potential markets. From the launch of our BRIX partnership in Brazil to growing our global clearing services, ICE continued to pursue attractive opportunities in the first quarter of 2011."
First Quarter 2011 Results
Consolidated revenues grew 19% in the first quarter of 2011 to $334 million. Consolidated transaction and clearing revenues were $299 million, an increase of 19% versus the prior first quarter. The increase in transaction and clearing revenues was driven primarily by growth in commodity trading volume in ICE's eenergy futures and OTC markets.
Transaction and clearing revenues in ICE's futures segment were $157 million in the first quarter of 2011, a 28% increase from the same period of 2010. Consolidated average daily volume in ICE's futures segment in the first quarter of 2011 was 1,596,165 contracts, up 24% from the same period of 2010. This growth was primarily driven by ICE Brent, ICE WTI, ICE Gasoil and ICE ECX emission futures and options.
First quarter 2011 transaction and clearing revenues in ICE's global OTC segment increased 10% to $142 million. Average daily commissions (ADC) for ICE's OTC energy business were a record $1.6 million in the first quarter of 2011, an increase of 18% from the first quarter of 2010. Revenues from ICE's credit default swap (CDS) trade execution and clearing business totaled $39 million in the first quarter of 2011, including $13 million from CDS clearing.
Consolidated market data revenues increased 10% during the first quarter of 2011 to $29 million. Consolidated other revenues were $6 million during the first quarter of 2011.
Consolidated operating expenses were $131 million in the quarter versus $118 million in the first quarter of 2010. Consolidated operating income grew 24% from the prior first quarter to $204 million. First quarter 2011 operating margin increased to 61%, compared to 58% for the same period in 2010. The effective tax rate for the quarter was 34%.
Consolidated cash flow from operations increased 53% from the first quarter of 2010 to $155 million in the first quarter of 2011. Capital expenditures were $5 million and capitalized software development costs totaled $8 million in the first quarter of 2011.
Unrestricted cash was $694 million as of March 31, 2011. At the end of the quarter, ICE had $523 million in outstanding debt.
Financial and Operating Guidance
• ICE's 1Q11 non-cash compensation expense reflected an increased accrual for performance-based compensation plans as a result of ICE's forecast for above-target performance in 2011. ICE expects non-cash compensation expense in the range of $52 million to $56 million in 2011.
• ICE's diluted share count for the second quarter of 2011 is expected to be in the range of 74.2 million to 75.2 million weighted average shares outstanding, and the diluted share count for 2011 is expected to be in the range of 74.1 million to 75.1 million weighted average shares outstanding. ICE's remaining capacity in its share repurchase program is $210 million.
• ICE expects its tax rate to be in the range of 31-34% for the remainder of 2011.