IntercontinentalExchange, (NYSE: ICE), a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for the second quarter of 2012.
Consolidated revenues increased 8% compared to the second quarter of 2011 to $351 million. Consolidated net income attributable to ICE was $143 million, up 18% versus the second quarter of 2011. Diluted earnings per share (EPS) increased 19% from the prior second quarter to $1.95.
Said ICE Chairman and CEO Jeffrey C. Sprecher: "By continuing to execute across our business amid challenging economic conditions, ICE once again delivered double digit earnings growth for the quarter. We continue to lead in providing solutions for clients to comply with new requirements under financial reform and believe that proactively serving the needs of our customers will continue to distinguish our performance."
ICE SVP and CFO Scott Hill added: "Our company's focus on both growth and efficiency drives our industry-leading results, even as we invest prudently for the future. We continue to work closely with customers and regulators to ensure the integrity of our markets while expanding on key strategic initiatives in clearing, execution and other opportunities to serve markets globally."
Second Quarter 2012 Results
Second quarter 2012 consolidated revenues were $351 million, up 8% from the prior second quarter. Consolidated transaction and clearing revenues increased 6% to $307 million. The increase in transaction and clearing revenues was driven primarily by strong trading volumes in ICE's energy futures markets.
Second quarter transaction and clearing revenues in ICE's futures segment grew 14% to $169 million. Average daily volume (ADV) in ICE's futures segment was a record 1.6 million contracts, up 11% from the prior-year second quarter.
Transaction and clearing revenues in ICE's global OTC segment was $137 million, down 2% compared to the prior second quarter. Average daily commissions (ADC) for ICE's OTC energy business increased 3% to $1.6 million. Revenues from ICE's credit default swap (CDS) trade execution and clearing business totaled $36 million in the second quarter of 2011, including $15 million from CDS clearing.
Consolidated market data revenues in the second quarter increased 21% over the prior second quarter to a record $37 million. Consolidated other revenues were $7 million.
Consolidated operating expenses were $136 million in the second quarter of 2012, up 1% compared to the year-ago quarter. Consolidated operating income grew 13% to $215 million in the quarter. Operating margin improved to 61% in the second quarter of 2012, up 2 points from the prior second quarter.
The effective tax rate for the second quarter of 2012 was 30% compared to 32% in the previous second quarter.
First Half 2012 Results
Consolidated revenues in the first half of 2012 grew 9% to $716 million. Futures volumes in the first six months of the year increased 4% to 199 million contracts, driving futures transaction and clearing revenue of $329 million, up 7% from the first half of 2011. ADV in the first half of the year was 1.6 million contracts, up 4% from the first six months of 2011.
Global OTC segment transaction and clearing revenues were $300 million in the first half of the year, up 7% from the first half of 2011. ADC in ICE's OTC energy markets were $1.8 million in the first half of 2012, up 12% from the same period of 2011. Consolidated market data revenues increased 22% to $74 million and consolidated operating margin was 62% for the first half of 2012.
Cash flows from operations were $366 million in the first half of 2012, up 14% year-over-year. Capital expenditures during the first half of 2012 were $16 million and capitalized software development costs totaled $17 million.
Unrestricted cash was $1.1 billion as of June 30, 2012. At the end of the second quarter, ICE had $863 million in outstanding debt.
Financial Guidance and Additional Information
• ICE's diluted share count for the third 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 in the range of 73.0 million to 74.0 million weighted average shares outstanding. ICE's remaining capacity in its share repurchase program is $331 million.
• ICE expects capital expenditures and capitalized software expenses in the second half of 2012 to be in the range of $35 million to $40 million, including $7 million to $9 million which is attributable to real estate.
• ICE expects acquisition expense in the range of $1 million to $2 million per quarter.
Earnings Conference Call Information