IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for fourth quarter and full year 2011.
Consolidated revenues rose 15% from the prior fourth quarter to $327 million. Consolidated net income attributable to ICE for the quarter grew 28% to $127 million. Diluted earnings per share (EPS) in the quarter increased 29% to $1.73.
For the fourth quarters ended December 31, 2011 and 2010, certain items were included in ICE's operating results that are not indicative of our core business performance. Excluding these items, fourth quarter 2011 adjusted net income attributable to ICE increased 29% to $129 million and adjusted diluted EPS grew 30% to $1.76. 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.
For the year ended December 31, 2011, ICE reported consolidated revenues of $1.33 billion, the eighth consecutive year of record revenues and up 15% from 2010. Consolidated 2011 net income attributable to ICE rose 28% to a record $510 million, and diluted EPS increased 29% to $6.90. Consolidated cash flow from operations grew 34% to a record $713 million in 2011.
ICE Chairman and CEO Jeffrey C. Sprecher said: "For the eighth consecutive year, ICE's markets grew by serving the risk management needs of global markets. Despite broader market uncertainty, we achieved record results while building upon our existing business to serve more customers and markets. We continue to deliver value for shareholders through growth and innovation."
"From investments in Brazil, to refinements of our most important benchmark contracts, to significant enhancements of our trading platform and clearing services, the ICE team delivered numerous initiatives to strengthen our platform for growth," said Scott Hill, ICE SVP and CFO. "With a focus on disciplined investment and capital deployment, we continue to produce solid operating leverage and deliver very strong returns on invested capital."
Fourth th Quarter 2011 Results
Fourth quarter 2011 consolidated revenues grew 15% from the prior fourth quarter to $327 million. Consolidated transaction and clearing fee revenues increased 14% in the quarter to $287 million. Growth in transaction and clearing fee revenues was driven primarily by record trading volume in the futures and OTC energy segments.
Transaction and clearing fee revenues in ICE's futures segment totaled $143 million in the fourth quarter of 2011, up 13% compared to the same period of 2010. Average daily volume (ADV) in ICE's futures segment was 1.4 million contracts, an increase of 12% from the fourth quarter of 2010.
Transaction and clearing fee revenues in ICE's global OTC segment increased 16% to $144 million in the quarter. Average daily commissions (ADC) for ICE's OTC energy business in the fourth quarter were $1.6 million, up 21% compared to the fourth quarter of 2010. Revenues from ICE's credit default swap (CDS) trade execution, processing and clearing business were $41 million in the quarter, up 10% from the fourth quarter of 2010, and included $18 million in CDS clearing revenues.
Consolidated market data revenues increased 18% from the fourth quarter of 2010 to a record $33 million, and consolidated other revenues were $7 million.
Consolidated operating expenses were $132 million in the fourth quarter, up 5% from the prior fourth quarter. Consolidated operating income increased 23% from the fourth quarter of 2010 to $195 million. Operating margin was 60%, and the effective tax rate for the quarter was 29%.
Full-Year 2011 Results
For the year ended December 31, 2011, consolidated revenues increased 15% to $1.33 billion. Consolidated transaction and clearing fee revenues totaled $1.18 billion in 2011, up 15% year-over-year. Transaction and clearing fee revenues in ICE's futures segment grew 20% to $604 million. Futures volume and ADV for the year grew 16% to 381 million contracts and 1.5 million contracts, respectively. ICE Futures Europe established its fourteenth consecutive annual volume record. ICE Futures Canada also established a new volume record, and volume at ICE Futures U.S. was flat.
Global OTC segment transaction and clearing fee revenues were $572 million in 2011, an increase of 10% from 2010. ADC in ICE's OTC energy business was a record $1.6 million, up 15% from 2010. Revenues from ICE's CDS execution and clearing businesses totaled $167 million, comprised of $100 million from Creditex and $67 million from global CDS clearing. Through February 3, 2012, ICE's CDS clearing houses have cleared $27.3 trillion in gross notional value, including nearly $12 trillion cleared during 2011.
Consolidated market data revenues increased 14% to a record $125 million in 2011.
Consolidated operating expenses increased 7% in 2011 to $534 million, and consolidated operating income was $793 million, up 22%. Operating margin was 60% for the year ended December 31, 2011, up from 57% in 2010.
The effective tax rates for 2011 and 2010 were 31% and 33%, respectively.
Consolidated cash flow from operations grew 34% to $713 million. Capital expenditures were $57 million in 2011, and capitalized software development costs were $30 million.
Unrestricted cash and cash equivalents were $823 million as of December 31, 2011. At the end of 2011, ICE had $888 million in outstanding debt.
Expense Guidance and Additional Information
• ICE expects 2012 expenses in line with 2011 expenses, and up in the range of 3% to 6% on an adjusted expense basis, including compensation expense up in the range of 6% to 7%.
• ICE expects 2012 operational capital expenditures and capitalized software development costs in the range of $60 million to $65 million. In addition, ICE expects $30 million to $35 million in capital expenditures on real estate costs associated with consolidating multiple locations in London and in New York, respectively, into combined offices.
• ICE expects depreciation and amortization expense for 2012 in the range of $127 million to $133 million.
• ICE expects quarterly interest expense during 2012 in the range of $10 million to $11 million, which includes interest expenses associated with our debt facility and Russell index license.
• ICE's consolidated tax rate is expected to be in the range of 28% to 31% for 2012.
• ICE's diluted share count for the first quarter of 2012 is expected to be in the range of 72.9 million to 73.9 million weighted average shares outstanding, and the diluted share count for fiscal year 2012 is expected to be in the range of 73.0 million to 74.2 million weighted average shares outstanding.
• ICE repurchased $47 million in common stock in the fourth quarter of 2011. Approximately $334 million remains in ICE's existing share repurchase program.
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