IntercontinentalExchange (NYSE:ICE - News), a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for the third quarter of 2011.
Consolidated revenues increased 19% from the third quarter of 2010 to a record $341 million. Consolidated net income attributable to ICE grew 38% to a record $133 million. Diluted earnings per share (EPS) increased 40% to $1.80.
Third quarter 2011 adjusted consolidated net income attributable to ICE, excluding acquisition-related transaction costs that are not indicative of our core business performance, increased 30% to $138 million and adjusted diluted EPS grew 32% to $1.87. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income attributable to ICE and adjusted diluted EPS.
Said ICE Chairman and CEO Jeffrey C. Sprecher: "By recognizing the demand for market transparency, clearing and automation well in advance of regulatory requirements, ICE continues to deliver strong results. With a global reach and an innovative and diverse suite of products and risk management solutions, ICE is committed to continuing to lead in creating value for our customers and shareholders."
ICE SVP and CFO Scott Hill added: "This was another outstanding quarter for ICE, with record revenues, earnings and operating cash flow. Importantly, embedded within these strong results are on-going strategic investments that will enable us to continue to grow and outperform over the long term."
Third Quarter 2011 Results
Third quarter 2011 consolidated revenues totaled $341 million, up 19% from the prior-year third quarter. Consolidated transaction and clearing revenues grew 18% to $302 million. The increase in transaction and clearing revenues was driven primarily by volume growth in the Brent, Gasoil, ECX emissions and Russell Index futures and options contracts, as well as growth in OTC North American natural gas, power and global oil volume.
Transaction and clearing revenues in ICE's futures segment grew 24% to $155 million in the third quarterr. Average daily volume (ADV) in ICE's futures segment was 1.6 million contracts, an increase of 23% from the third quarter of 2010.
Transaction and clearing revenues in ICE's global OTC segment increased 11% to a record $147 million in the third quarter of 2011. Average daily commissions (ADC) for ICE's OTC energy business grew 14% to $1.55 million. Revenues from ICE's credit default swap (CDS) trade execution, processing and clearing business was $46 million in the quarter, up 8% from the third quarter of 2010, and included $19 million in CDS clearing revenues.
Consolidated market data revenues were a record $32 million in the third quarter of 2011, an increase of 17% from the prior third quarter. Consolidated other revenues were $7 million.
Consolidated operating expenses totaled $137 million in the quarter, an increase of 1% from the third quarter of 2010. Consolidated operating income grew 35% to $204 million. Operating margin in the third quarter was 60%, and the effective tax rate for the quarter was 30%, compared to 32% for the prior third quarter.
First Nine Months of 2011 Results
Consolidated revenues in the first nine months of 2011 grew 16% to $1 billion. Futures volumes in the first three quarters grew 18% to 291 million contracts, driving futures transaction and clearing revenues to $461 million, up 22% year-over-year. ADV in the first nine months of 2011 was 1.5 million contracts, up 17% from the year-ago period.
Global OTC segment transaction and clearing revenues were $428 million in the first nine months of the year, an increase of 8% from the same period in 2010. ADC in ICE's OTC energy business were $1.57 million, up 13% from the first nine months of 2010. Consolidated market data revenues increased 13% to $92 million and consolidated operating margin was 60% for the first nine months of 2011.
Cash flow from operations were $541 million in the first nine months of 2011, up 43% from the same period of 2010. Capital expenditures in the first nine months of 2011 were $19 million and capitalized software development costs totaled $23 million.
Unrestricted cash was $497 million as of September 30, 2011. As previously announced, ICE repurchased $103 million of its common stock at an average price of $109.95 in the third quarter of 2011 as part of its existing stock repurchase program. At the end of the quarter, ICE had $602 million in outstanding debt.
Financial Guidance and Additional Information
ICE's diluted share count for the fourth quarter of 2011 is expected to be in the range of 73 million to 74 million weighted average shares outstanding, and the diluted share count for fiscal year 2011 in the range of 73.5 million to 74.5 million weighted average shares outstanding.