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Intercontinental Exchange (NYSE: ICE) continues to perpetuate the headlines today as the venue has reported financial results for the second quarter of 2014. For the quarter ended June 30, 2014, consolidated net income attributable to ICE was $226 million on consolidated revenues less transaction-based expenses of $750 million. On a GAAP basis, diluted earnings per share (EPS) in the second quarter were $1.95.
Certain items were included in ICE’s operating results that were not indicative of the company’s core business performance for the second quarter of 2014. Excluding these items, net of tax, second quarter 2014 adjusted net income from continuing operations attributable to ICE was $243 million and adjusted diluted continuing operations EPS were $2.10.
Adjusted figures exclude NYSE integration costs of $36 million and the related tax impact, and certain tax impacts associated with Euronext’s initial public offering (IPO). Euronext’s financial results are now included in discontinued operations. Discontinued operations also includes the NYSE technologies businesses that have been and are being divested.
The company advises reference to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income from continuing operations attributable to ICE and adjusted diluted EPS from continuing operations.
“In the second quarter, we successfully executed on several customer and growth driven initiatives while integrating the NYSE and Liffe operations,” said ICE Chairman and CEO Jeffrey C. Sprecher .
“In addition to raising capital through the sale of non-core businesses, we transitioned Liffe US to ICE Futures and continued to make solid progress on our strategic initiatives. NYSE grew its leading roster of listed companies and ICE launched new interest rate and energy products to meet global demand for risk management services and provide regulatory compliant solutions” concluded Mr. Sprecher.
Scott Hill , ICE CFO, said: “In our second full quarter post-closing, we announced the sale of non-core NYSE technologies businesses and completed the successful IPO of the Euronext business, which enabled us to pay down debt, de-lever, and increase our return of capital to shareholders. On June 30 we paid a $75 million dividend, and during the month of July, we repurchased $350 million in common stock. Amid a challenging market environment, we remain focused on realizing cost synergies and we have identified an additional $50 million, increasing our total expense synergies from the NYSE acquisition to $550 million. Our strong cash generation, even in a tepid volume environment, will allow us to invest in future growth opportunities and products to better serve our customers while continuing to enable strong returns to our shareholders.”
Second Quarter 2014 Results
Second quarter 2014 consolidated revenues, less transaction-based expenses, were $750 million. Included in this amount are net transaction and clearing revenues, less transaction-based expenses, of $460 million.
Consolidated market data revenues for the second quarter of 2014 were $96 million and listings revenues were $83 million. Consolidated other revenues were $111 million, which includes technology services, trading license fees, regulatory and listed company service fees, among others.
Consolidated operating expenses were $423 million for the second quarter of 2014, including $36 million in NYSE integration costs. Consolidated operating income for the quarter was $327 million and operating margin was 44%. The effective tax rate for the second quarter was 29%.
First Half 2014 Results
Consolidated revenues, less transaction-based expenses, in the first half of 2014 were $1.5 billion. Included in this amount are net transaction and clearing revenues, less transaction-based expenses, of $958 million.
Consolidated market data revenues for the first half of 2014 were $199 million and listings revenues were $165 million. Consolidated other revenues were $225 million.
Consolidated operating expenses were $829 million for the first half of 2014, including $59 million in Singapore Mercantile Exchange acquisition-related transaction expenses and NYSE integration costs. Consolidated operating income for the first half of 2014 was $718 million and operating margin was 46%. The effective tax rate for the first half was 28%.
Consolidated cash flows from operations were $836 million in the first half of 2014. Operational capital expenditures were $47 million and capitalized software development costs totaled $40 million.
Unrestricted cash and short-term investments were $2.1 billion as of June 30, 2014, of which $1.3 billion is reserved for the repayment of the 2015 Eurobonds, and the Company had $3.9 billion in outstanding debt as of June 30, 2014.
Despite the positive results in terms of revenues, basic earnings per share decreased from $2.11 during the second quarter of 2013 to $1.89 for the second quarter of 2014. The company announced also that a $0.65 per share dividend will be payable for the third quarter of 2014. The dividend is payable on September 30, 2014 to shareholders of record as of September 16, 2014. The ex-dividend date will be September 12, 2014.