Forward-Looking Statement and Legends

Transcription

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2 Forward-Looking Statement and Legends CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS This presentation may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of Statements regarding ICE s business that are not historical facts are forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future results, performance, levels of activity or achievements, and actual results may differ materially from what is expressed or implied in any forward-looking statement. The factors that might affect our performance include, but are not limited to: conditions in global financial markets, the economy and political and social conditions; changes in domestic and foreign laws, regulations, rules or government policy with respect to financial markets, or our businesses generally, including increased regulatory scrutiny or enforcement actions and our ability to comply with these requirements; volatility in our markets; our business environment and industry trends; the success of our clearing houses and our ability to minimize the risks associated with operating multiple clearing houses in multiple jurisdictions; the success of our exchanges and their compliance with regulatory and oversight responsibilities; the resilience of our electronic platforms and soundness of our business continuity and disaster recovery plans; continued high renewal rates of subscription-based data revenues; our ability to identify and effectively pursue acquisitions and strategic alliances and successfully integrate the companies we have acquired or acquire in the future; our ability to effectively maintain our growth; performance and reliability of our technology and the technology of our third party service providers; our ability to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; our ability to identify trends and adjust our business to respond to such trends; the accuracy of our estimates and expectations; our belief that cash flows from operations will be sufficient to service our current levels of debt and fund our working capital needs and capital expenditures for the foreseeable future; our ability to maintain existing customers and attract new customers and offer new products; our ability to attract and retain our key talent; our ability to protect our intellectual property rights, including the costs associated with such protection, and our ability to operate our business without violating the intellectual property rights of others; and potential adverse results of litigation and regulatory actions and proceedings. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE s Securities and Exchange Commission (SEC) filings, including, but not limited to ICE s most recent Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 7, These filings are available in the Investors section of our website. We caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. GAAP AND NON-GAAP RESULTS This presentation includes non-gaap measures that exclude certain items we do not consider reflective of our cash operations and core business performance. We believe that the presentation of these non-gaap measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. These adjusted non-gaap measures should be considered in context with our GAAP results. A reconciliation of Adjusted Net Income Attributable to ICE, Adjusted Earnings Per Share, Adjusted Operating Income, Adjusted Operating Margin and Adjusted Operating Expenses to the equivalent GAAP measure and an explanation of why we deem these non-gaap measures meaningful appears in our Form 10-Q and in the appendix to this presentation. The reconciliation of Adjusted Effective Tax Rate, and Adjusted Debt-to-EBITDA to the equivalent GAAP results appear in the appendix to this presentation. Our Form 10-Q, earnings press release and this presentation are available in the Investors and Media section of our website at EXPLANATORY NOTES All net revenue figures represent revenues less transaction based expenses for periods shown. All earnings per share figures represent diluted weighted average share count on continuing earnings. 2

3 ICE Third Quarter 2017 Earnings Call Participants Participants: Jeff Sprecher Chairman & CEO Chairman, NYSE Chuck Vice President & COO Scott Hill Chief Financial Officer Investor Relations: Warren Gardiner, CFA Vice President, Investor Relations Mary Caroline O'Neal, CPA Manager, Investor Relations 3

4 Third Quarter 2017 Highlights in millions except per share amounts INCOME STATEMENT HIGHLIGHTS 3Q17 3Q16 % Chg Net Revenues $1,143 $1,078 6% Net Revenues at CC (1) 6% Adj. Op Expenses $476 $484 (2)% Adj. Op Income $667 $594 13% Adj. Op Margin 58% 55% +3 pts Adj. Diluted EPS $0.73 $ % Adj. Effective Tax Rate 31% 30% +1 pt CASH METRICS YTD '17 YTD '16 % Chg Solid revenue and earnings growth Data revenue (1) +6% y/y, CC Futures ADV +15% y/y OI +14% y/y Disciplined expense management Adj. op margins expanded 3 pts 2017 synergies now expected to be at least $70MM Balanced capital allocation Op Cash Flow $1,410 $1,508 (7)% Cap Ex & Cap Software $240 $254 (5)% $1.15 billion returned to shareholders YTD October (1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q16, and , respectively. Adjusted figures represent non-gaap measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures. 4

5 Increasing Capital Return Year-to-date operating cash flows of $1.4B; strong contribution of U.S. cash flow from the NYSE $1.15 billion returned to shareholders through buybacks and dividends YTD October $709MM of shares repurchased through 9/30/17; additional $83MM repurchased in October $358MM in dividends, +16% y/y Board authorized $1.2B share repurchase program effective 2018, +20% vs. prior authorization Leverage of 2.1x debt-to-ebitda (1) $ (Millions) $693 $618 Capital Returns Increasing with Cash Flow $944 $991 IDC acquired in 2015 $645 $660 $459 > $1,400 $792 Expected Share Repurchases Expected Dividends $299 $331 $409 $ E Dividends Shares Repurchased (1) Adjusted debt-to-ebitda reflects the ratio of adjusted debt to adjusted EBITDA for the trailing twelve months. This reflects a non-gaap measure. Please refer to slides in the appendix for reconciliation to the equivalent GAAP measure. 5

6 Third Quarter 2017 Data & Listings Segment Data revenue +6% y/y in constant currency (1) ; +5% y/y organic, constant currency (1)(2) 3Q17 adj. operating margin +5 pts y/y; adj. operating income +14% y/y NYSE remains #1 in listings globally with over $23B in proceeds raised via 65 IPOs through 3Q17 $ (in millions) 3Q17 3Q16 % Chg Revenue: Const Curr (1) Organic CC (1)(2) Pricing and Analytics $242 $209 16% 15% 5% Exchange Data % 1% 1% Desktops and Connectivity (4)% (4)% 9% Data Total % 6% 5% Listings (3)% (3)% 3% Segment Revenue $620 $595 4% 4% 5% Adj. Operating Expenses $280 $296 (6)% 3Q17 Data & Listings Revenue NYSE Real-Time Proprietary <4% Total Exchange Data 22% Desktops & Connectivity Listings 17% $620MM (1) +4% y/y 39% 22% Pricing & Analytics (P&A) Adj. Operating Margin 55% 50% +5 pts (1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q16, and , respectively. (2) Organic growth excludes material businesses that have been acquired, divested or discontinued and significantly impact the comparable periods. For 3Q17 and 3Q16, $26MM and $21MM of data revenues were excluded, respectively. Adjusted figures represent non-gaap measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures 6

7 Growth and Opportunity Across Global Data Demand Data revenue expected to grow 6% in CC (1) for FY 2017; continued confidence in long-term growth objective Annual subscription value, or ASV, +6% (2) y/y entering 4Q AMERICAS (3) EMEA APAC 74% of 3Q17 data revenue 3Q17 Revenue y/y (1)(4) 22% of 3Q17 data revenue 3Q17 Revenue y/y (1)(4) 4% of 3Q17 data revenue 3Q17 Revenue y/y (1)(4) +3% YTD P&A signings +4% y/y +10% YTD P&A signings +8% y/y +11% YTD P&A signings +13% y/y Impacted by declining realtime cash equities data revenue Strength in pricing & analytics solutions driven by Mifid II Increasing demand for desktop and connectivity solutions and exchange data Integrated sales team & expanded solutions suite yielding positive results Increased demand for Best Ex., Continuous Evaluated Pricing and Liquidity Indicators GoWest relationship to further ICE's expansion in the region (1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q16, which was and , respectively. (2) Organic ASV is defined as the annual value of subscriptions under contract entering 4Q17 compared to the subscriptions under contract entering 4Q16 excluding material businesses that have been acquired, divested or discontinued and significantly impact the comparable periods. (3) The Americas region also includes "other" regions that represent an immaterial portion of our total data revenues (4) Organic growth excludes material businesses that have been acquired, divested or discontinued and significantly impact the comparable periods. For 3Q17 and 3Q16, $26MM and $21MM of data revenues were excluded, respectively. 7

8 Third Quarter 2017 Trading & Clearing Segment Revenue +8% y/y in constant currency (1)(2) Futures ADV +15% y/y, Energy +13% y/y, EU interest rates +35% y/y; Open Interest (OI) +14% y/y Record daily volumes for MSCI; Record OI in Gasoil Adj. operating margin expanded to 62%; adj. operating income +11% y/y Record CDS clearing revenue through September +9% y/y; YTD gross notional cleared $8.9T $ (in millions) 3Q17 3Q16 % Chg Const Curr (1) 3Q17 Trading & Clearing Revenue Revenue, net: Commodities $284 $262 8% 8% Financials (2) % 5% Other (4) % 23% Segment Revenue $523 $483 8% 8% Adj. Operating Expenses $196 $188 4% Adj. Operating Margin 62% 61% +1 pt Other 10% 9% (2) Cash Equities $186 $275 9% $171 $523MM (1)(2) +8% y/y Rates & 16% 45% Equity Index $374 11% $941 Other Financials (4) (3) Ags & Metals Energy (1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q16, which was and , respectively. (2) Net of transaction based expenses. (3) Other financials includes equity options, net and credit transactions (4) Other revenue includes interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, exchange member fees, and agriculture grading and certification fees. Adjusted figures represent non-gaap measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures. 8

9 Strong Futures Volume and Open Interest Growth All figures in thousands ADV 5,400 ICE Futures Total ADV & OI OI ADV 70,000 1,800 Global Oil ADV & OI OI 12,000 3,600 1,800 ADV +15% y/y OI +14% y/y 52,500 35,000 17,500 1, ADV +22% y/y OI +6% y/y 8,000 4, Q16 3Q Q16 3Q17 0 Total ADV Total OI Oil ADV Oil OI EU & UK Interest Rates ADV & OI ADV OI ADV OI 2,000 22, ,200 1,600 1, ADV +35% y/y OI +46% y/y 16,500 11,000 5, MSCI ADV & OI ADV +16% y/y OI +37% y/y 1,650 1, Q16 3Q Q16 3Q17 0 Interest Rates ADV Interest Rates OI MSCI ADV MSCI OI 9

10 Leading Global Market Infrastructure Provider Enhancing content and distribution through strategic investments BondPoint Expands fixed income market solutions to all-to-all platform Engage new client segments Leverage pricing, reference data & analytics for customer value proposition Euroclear Facilitates closer relationship with key post-trade infrastructure provider Enhance ICE risk management & clearing expertise Data Trading Clearing Data BofAML Indices ICE now the #2 fixed income index provider with over $1 trillion of AUM benchmarked Comprehensive index and data solutions - equity, fixed income, and commodities NGX & Shorcan Adds physical clearing capabilities and direct clearing model Broader client distribution and cross-selling opportunities Innovation opportunities across NGX exchange, clearing and data offerings 10

11 Comprehensive Index Solutions Building a differentiated and scaled index platform Over $1 trillion of assets are benchmarked to ICE BofAML Indices ICE BofAML is the second largest fixed income index provider; established 1973 Offering solutions for both index licensing and self-indexing ICE BofAML Indices will use ICE Data Services reference data & evaluated pricing A bundled but tailored offering serving a client base focused on efficiency ICE Index Solutions Reference Data Real-time & end of day pricing Listing Services Secure data delivery Index Calculation Services (inav) Multi-asset class analytics Reference data on +10mm instruments globally Leading global fixed income pricing provider NYSE Arca is #1 listing & trading venue for ETFs Low-latency, cyber-secure and reliable Calculate inav of ~75%+ of fixed income ETFs Innovative selfindex solutions Performance measurement (TCA, Best Ex.) New product development Regulatory compliance tools 11

12 Expanding Distribution to Growing Customer Base BondPoint's all-to-all platform will expand ICE's fixed income solutions Opportunity to engage with expanded customer base Will leverage ICE's leading pricing and reference data, analytics, technology and distribution Opportunity for enhanced value and new product development in data services over time Rising automation in fixed income market creates opportunity for trading and data Average Daily Par Value Traded on BondPoint Revenue Composition (YTD 7/31/17) (1) in millions % CAGR $134 $141 $202 $294 Execution Revenue 87% Retail Brokers Wealth Managers 31% 37% 12% Sell-Side 7% Institutional 13% Data Services YTD (7/31/17) (1) Revenue by client segment is allocated to the liquidity taker. BondPoint transaction subject to regulatory approvals and expected to close 1Q18. Corporate 56% 35% Muni Treasury 4% CDs 4% Agency 1% 12

13 A Leading Global Energy Marketplace Breadth of products positions ICE as the "go-to" venue for global energy risk management Brent 3Q17 ADV +20% y/y and on track for 21 st record volume year Brent curve in backwardation, WTI in contango Record refined oil OI +13% y/y, ADV +26% y/y NGX and Shorcan will enhance ICE s position as a leading global energy marketplace ICE Brent vs. ICE WTI Historical Term Structure Oil ADV & OI Backwardation ADV 2,000 1,500 (lots in thousands) 3Q17 ICE Crude OI Share 55% OI +15% vs. Dec 16 OI 4,000 06/16 12/16 6/17 9/17 1,000 2, Contango ICE Brent Front Month Spread ICE WTI Front Month Spread NGX/Shorcan transaction subject to regulatory approvals and expected to close 4Q17 or 1Q18. Gasoil, Brent WTI Other and Oil Other Oil Brent OI 13

14 Consistent Track Record of Growth YTD September Highlights Net revenues +5% y/y (2) Data revenue +7% y/y (2) ADV +15% y/y, OI +14% y/y Adj. EPS +7% y/y (1) Adjusted EPS '06 - '16 CAGR 19% $1.50 $1.38 $1.68 (1) $1.92 (1) $2.43 (1) $2.78 (1) $2.07 (1) $2.22 (1) $1.07 $0.48 $0.68 $0.83 $ YTD 17 (1) Adjusted figures represent non-gaap measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures. (2) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from YTD16, which was and , respectively. 14

15 APPENDIX 15

16 Impact of Acquisitions and Divestitures Figures represent TTM as of 6/30/2017 and are for illustrative purposes only Further guidance will be provided upon the closing of BondPoint, NGX and Shorcan $s in millions ICE Acq & Div Reconciliation (TTM as of 6/30/2017) Add: BP, NGX & BAML Less: Trayport Net Impact Data Services $18 $(74) $(56) Trading & Clearing Total Revenue 93 (74) 19 Adj. Expenses (1) 48 (36) 12 Adj. Operating Income (1) $45 $(38) $7 (1) Adjusted figures exclude amortization of acquisition related intangibles 16

17 Third Quarter & YTD 2017 GAAP Results INCOME STATEMENT HIGHLIGHTS (In millions except per share amounts) GAAP 3Q17 GAAP 3Q16 % Chg GAAP YTD Sept '17 GAAP YTD Sept '16 % Chg Net revenues $1,143 $1,078 6% $3,485 $3,361 4% Operating Expenses $547 $604 (10)% $1,698 $1,752 (3)% Operating Income $596 $474 26% $1,787 $1,609 11% Operating Margin 52% 44% +8 pts 51% 48% +3 pts Net Income attributable to ICE $369 $344 7% $1,289 $1,070 21% Diluted EPS $0.62 $0.57 9% $2.17 $ % 17

18 Third Quarter 2017 Balance Sheet In millions 09/30/ /31/2016 CHANGE Assets Unrestricted Cash $419 $407 $12 Other Current Assets 54,820 56,726 (1,906) Current Assets 55,239 57,133 (1,894) PPE (net) 1,192 1, Other Assets 22,687 23,741 (1,054) Total Assets $ 79,118 $ 82,003 $(2,885) Liabilities & Equity Short-Term Debt 1,197 $ 2,493 $(1,296) Other Current Liabilities 53,403 56,124 $(2,721) Long-Term Debt 4,865 3, Other Long-Term Liabilities 3,634 3,725 (91) Total Liabilities 63,099 66,213 (3,114) $419MM unrestricted cash Total debt of $6.1B; Adj. Debt-to- EBITDA (1) of 2.1x $1.2B CP at 1.23% per annum (2) $4.9B fixed at an average of 3.17% per annum $240MM YTD 2017 capex Op capex & cap software $205MM Non op capex $35MM TTM ROIC (3) of 7.6%; WACC 6.3% Redeemable Noncontrolling Int 36 (36) Total Equity 16,019 15, Total Liabilities & Equity $ 79,118 $ 82,003 $(2,885) (1) Adjusted debt-to-ebitda reflects the ratio of adjusted debt to adjusted EBITDA for the trailing twelve months. This reflects a non-gaap measure. Please refer to slides in the appendix for reconciliation to the equivalent GAAP measure. (2) Based on 9/30/2017 CP rates (3) ROIC = LTM (Operating Income x (1-Tax Rate) ) / (Avg Debt + Avg Shareholders Equity + Avg Minority Interest - Avg Cash, Cash Equiv, & ST Investments). ICE ROIC excludes $176 million Cetip realized investment gain. 18

19 Adjusted Net Income Attributable to ICE and EPS In millions (except per share amounts) 3 Months Ended 9/30/17 3 Months Ended 9/30/16 9 Months Ended 9/30/ Months Ended 9/30/2016 Net income attributable to ICE $369 $344 $1,289 $1,070 Add: Interactive Data and NYSE transaction and integration costs Add: Employee severance costs related to Creditex U.K. brokerage operations 4 4 Add: Creditex customer relationship intangible asset impairment Add: Amortization of acquisition-related intangibles Add: Net loss on divestiture of NYSE Governance Services 6 Add: Accruals relating to ongoing investigations and inquiries 4 14 (Less): Cetip investment gain (176) Add: Foreign exchange loss and transaction expenses on sale of Cetip 9 (Less): Income tax effect for the above items (22) (45) (54) (111) Add: Deferred tax adjustment on acquisition-related intangibles (Less): Other tax adjustments (34) (34) Adjusted net income attributable to ICE $430 $385 $1,319 $1,237 Diluted EPS from continuing operations $0.62 $0.57 $2.17 $ 1.79 Adjusted Diluted EPS from continuing operations $0.73 $0.64 $2.22 $2.07 Diluted weighted average common shares outstanding

20 Adjusted Net Income Attributable to ICE and EPS In millions (except per share amounts) 12 Months Ended 12/31/16 12 Months Ended 12/31/15 12 Months Ended 12/31/14 12 Months Ended 12/31/13 Net income attributable to ICE $1,422 $1,274 $981 $254 Add: Interactive Data and NYSE transaction and integration costs and acquisition-related success fees Add: Amortization of acquisition-related intangibles Add: Litigation settlements and accruals, net of insurance proceeds 15 Add: Employee severance costs related to Creditex U.K. brokerage operations 4 Add: Creditex customer relationship intangible asset impairment 33 Add: Cetip impairment loss 190 Add: Duplicate rent expense and lease termination costs 7 Add: Early payoff of outstanding debt 51 Add: Pre-acquisition interest expense on debt issued for Interactive Data acquisition 5 (Less): Income from OCC equity investment (26) (Less): Net gain of sale of 6% remaining ownership in Euronext (4) (Less): Income tax effect for the above items (143) (83) (89) (85) (Less) Deferred tax adjustment on acquisition-related intangibles (22) (82) (14) Add: Other tax adjustments Add/(Less): Income (loss) from discontinued operations, net of tax (11) 50 Adjusted net income attributable to ICE $1,665 $1,359 $1,104 $663 Diluted EPS from continuing operations $ 2.37 $ 2.28 $ 1.69 $ 0.77 Adjusted Diluted EPS from continuing operations $2.78 $2.43 $1.92 $1.68 Diluted weighted average common shares outstanding

21 Adjusted Operating Income, Operating Margin & Operating Expense Reconciliation In millions Trading and Clearing Segment Data and Listings Segment Consolidated Three Months Ended Sept. 30, Three Months Ended Sept. 30, Three Months Ended Sept. 30, Total revenues, less transaction-based expenses $523 $483 $620 $595 $1,143 $1,078 Total operating expenses $213 $245 $334 $359 $547 $604 Less: Interactive Data and NYSE transaction and integration costs Less: Employee severance costs related to Creditex U.K. brokerage operations 4 4 Less: Creditex customer relationship intangible asset impairment Less: Accrual relating to ongoing investigations and inquiries 4 4 Less: Amortization of acquisition-related intangibles Adjusted total operating expenses $196 $188 $280 $296 $476 $484 Operating income $310 $238 $286 $236 $596 $474 Adjusted operating income $327 $295 $340 $299 $667 $594 Operating margin 59% 49% 46% 40% 52% 44% Adjusted operating margin 62% 61% 55% 50% 58% 55% 21

22 Adjusted EBITDA Reconciliation In millions Trailing 12 Months Ended 9/30/17 Adjusted net income $1,747 Add: Income tax expense 708 Add: Income tax expense adjustment on Non-GAAP Items 53 Add: Interest expense 181 Add: Depreciation and amortization (1) 270 Adjusted EBITDA from Continuing Ops $2,959 Debt, as reported 6,062 Add: Balance of unamortized premiums/discounts and debt issuance costs, net 37 Principal amount of debt outstanding (Adjusted Debt) $6,099 Adjusted Debt-to-EBITDA leverage ratio 2.1x (1) Excludes adjustments already included in Non-GAAP financial measures. 22

23 Adjusted Effective Tax Rate Reconciliation In millions 3 Months Ended 9/30/17 3 Months Ended 9/30/16 Income before income taxes $560 $443 Income tax expense Effective tax rate 33% 21% Income before income taxes $560 $443 Add: Interactive Data and NYSE transaction and integration costs 3 7 Add: Amortization of acquisition-related intangibles Add: Accruals relating to ongoing investigations and inquiries 4 Add: Employee severance costs related to Creditex U.K. brokerage option 4 Add: Creditex customer relationship intangible asset impairment 33 Adjusted income before income taxes $631 $563 Income tax expense $185 $93 Add: Income tax effect for the above items (Less): Deferred tax adjustments on acquisition related intangibles (12) Add: Other tax adjustments 34 Adjusted income tax expense $195 $172 Adjusted effective tax rate 31% 30% 23