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Global network of exchanges and clearing houses Intercontinental Exchange (NYSE:ICE) today reported financial results for the third quarter of 2014. For the quarter ended September 30, 2014, consolidated net income attributable to ICE was $206 million on $745 million consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the third quarter were $1.80.
As far as net revenue is concerned, this figure represents a decrease compared to the second quarter of 2014, during which net income attributable to ICE was $226 million, thus depicting a 9.2% reduction in net income compared with the second quarter of the year, with $750 million consolidated revenues having been achieved during the previous quarter.
ICE’s operating results include acquisition and integration related expenses that are not indicative of the company’s core business performance. Excluding these items, net of tax, third quarter 2014 adjusted net income from continuing operations was $245 million and adjusted diluted EPS from continuing operations were $2.15. Adjusted figures exclude NYSE integration costs of $38 million and the related tax impact. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income from continuing operations and adjusted diluted EPS from continuing operations.
“In the third quarter, we grew earnings while integrating the NYSE Liffe operations and announcing strategic investments in SuperDerivatives and the Holland Clearing House, which will accelerate our growth initiatives related to risk management and data services,” said ICE Chairman and CEO Jeffrey C. Sprecher. “We have seamlessly transitioned most of Liffe’s markets to ICE’s futures exchanges and NYSE achieved a quarterly record in initial public offerings and capital raising. We remain focused on serving customers across our global markets while delivering growth and solid returns to our investors.”
Scott Hill, ICE CFO, said: “Our strong cash generation and balance sheet enabled us to acquire strategic assets while returning capital to shareholders. In the third quarter, we paid a $74 million dividend and repurchased approximately $449 million of our stock. In October, we repurchased an additional $64 million of stock and have $537 million remaining in our current buyback authorization. Importantly, we now expect to realize $265 million in synergies during 2014.”
Third Quarter 2014 Results
Third quarter 2014 consolidated revenues, less transaction-based expenses, were $745 million. Included in this amount are transaction and clearing revenues, less transaction-based expenses, of $447 million.
Consolidated market data revenues for the third quarter of 2014 were $105 million and listings revenues were $86 million. Consolidated other revenues were $107 million, which includes technology and other services.
Consolidated operating expenses were $415 million for the third quarter of 2014, including $38 million in NYSE integration costs. Consolidated operating income for the third quarter was $330 million and operating margin was 44%. The effective tax rate for the third quarter was 29%.
First Nine Months of 2014 Results
Consolidated revenues, less transaction-based expenses, in the first nine months of 2014 were $2.3 billion. Included in this amount are transaction and clearing revenues, less transaction-based expenses, of $1.4 billion.
Consolidated market data revenues for the first nine months of 2014 were $304 million and listings revenues were $251 million. Consolidated other revenues were $332 million.
Consolidated operating expenses were $1.2 billion for the first nine months of 2014, including $98 million in acquisition-related transaction expenses, NYSE integration costs and banker success fees. Consolidated operating income for the first nine months of 2014 was $1.0 billion and operating margin was 46%. The effective tax rate for the first nine months was 29%.
Consolidated cash flows from operations were a record $922 million in the first nine months of 2014. Operational capital expenditures were $66 million and capitalized software development costs totaled $56 million.
ICE had unrestricted cash and short-term investments of $0.7 billion and $2.9 billion in outstanding debt, excluding $1.2 billion reserved for the repayment of the 2015 Eurobonds as of September 30, 2014.
For the full announcement from ICE, click here.