IntercontinentalExchange. William Blair & Company 28 th Annual Growth Stock Conference June 2008

Transcription

1 IntercontinentalExchange William Blair & Company 28 th Annual Growth Stock Conference

2 Forward-Looking Statements 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 our business that are not historical facts are forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. These statements are not guarantees of future performance and actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. For a discussion of certain risks and uncertainties that could cause actual results to differ from those contained in the forwardlooking statements see our filings with the Securities and Exchange Commission (the "SEC"), including, but not limited to, the "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2007 as filed with the SEC on February 13. This and other SEC filings are also available in the Investors & Media section of our website. All forward-looking statements in this presentation are based on information known to us on the date hereof, and we undertake no obligation to publicly update any forward-looking statements. 2

3 ICE: Global Derivatives Markets ICE operates global commodity marketplaces. Through its leading technology platform, ICE offers benchmark futures and options contracts for energy, soft and agricultural commodities, equity indexes and currencies, as well as the leading electronic global OTC energy marketplace. Global reach Screens distributed in 55+ countries Futures exchanges in the U.S., Europe and Canada Diverse products and markets Energy, agricultural, financial products Futures, OTC and options Superior technology Sophisticated, scalable & widely distributed platform Significant growth opportunities Organic growth, including global clearing strategy Proven M&A capabilities and strategic partnerships Strong management team and financial model Focus on innovation, customers and technology ICE offices in Asia, Canada, Europe and the U.S. Operating leverage driven by lean model 3

4 ICE: Diverse Products and Technology Expertise ICE FUTURES ICE OTC ICE DATA & SERVICES U.S. & Canada Agricultural Cocoa Coffee Cotton Sugar Orange Juice Barley Canola Oil Feed Wheat Financial Currency Pairs US Dollar Index Russell Equity Indexes EUROPE Brent Crude WTI Crude Sour Crude Gas Oil Natural gas Electricity Coal Emissions OTC Oil and refined products Financial gas Physical gas Financial power Physical power Natural gas liquids Hundreds of Swaps, Spreads and Options contracts MARKET DATA Real-time prices/screens Indices and end of day reports Tick-data, time and sales Market price validations SERVICES ICE econfirm ecops Coffee grading facility ICE Clear U.S. ICE Clear Europe TECHNOLOGY Connect via traditional exchange telecom hubs in US, Europe and Asia, via the Internet, co-location and direct connection Fastest matching engine for commodity markets, 3ms for futures; sophisticated spread implication functionality Leading electronic OTC energy markets, including credit filter and cleared/bilateral functionality ICE engineers develop and maintain proprietary exchange software and matching engine, front-end GUI and global infrastructure 4

5 ICE: Growth Drivers $74 BUSINESS FUNDAMENTALS $207 Fast growing, global commodity markets Technology and distribution advantages Ability to add new products & asset classes Demonstrated M&A strategy and ability to integrate futures and OTC businesses Enhanced global risk management capabilities through clearing 2008 PRIORITIES Execute on clearing strategy Complete integration/transfer Facilitate Russell Index transition Strong value proposition through pricing, liquidity and relationships Complete Creditex transaction and integrate businesses Sustain organic growth through continued customer and product additions Grow ICE Futures U.S. electronic business, deliver additional synergies Expand options business through YellowJacket, Chatham and technology New M&A opportunities; leverage recent acquisitions 5

6 Regulatory and Legislative Update ICE has a strong track record of operating transparent markets. As a result of the 2008 Farm Bill, ICE s OTC markets are now feature CFTC oversight. With an enhanced agreement between the CFTC and the FSA, ICE s energy futures markets offer the highest levels of transparency. OTC The 2008 Farm Bill, included the CFTC Reauthorization Act and related to ICE s OTC markets. The new requirements impact futures look-alike contracts, such as ICE s Henry Hub swap, that serve a significant price discovery function, including: Those with material liquidity Contracts priced off a U.S. Designated Contract Market Contracts that serve a significant price discovery function on their own Energy Futures The CFTC and the FSA have entered into an expanded MOU, providing for large trader reports by ICE. The agreement includes: Expanded information sharing and large trader reports for US oil contracts The provision of trading data for all contract months in a US oil contract The provision of more detailed information of market end users Modified data formatting for ease of use by the CFTC Notification to the CFTC when traders exceed position accountability limits in a US oil contract 6

7 ICE Futures Europe Europe s leading energy exchange, ICE Futures Europe trades nearly half of the world s crude oil and refined oil products. HISTORY Formed by oil market participants in 1980 Acquired in 2001, fully electronic in 2005 Regulated by the UK s FSA, with CFTC reporting and position monitoring CUSTOMERS Energy majors, refiners, distributors Financial Institutions Funds, proprietary and algorithmic traders PRODUCTS GROWTH DRIVERS Oil and refined oil products Natural gas Electricity Coal Emissions Crude Oil open interest +1MM contracts Deep liquidity in Brent and WTI futures Increasing volume in European nat gas, coal and emissions products 7

8 ICE Futures U.S. and ICE Futures Canada ICE Futures U.S is the leading global soft commodity exchange, with diverse agricultural and financial contracts. ICE Futures Canada is Canada s leading agricultural exchange. HISTORY Acquired in Jan 07; added electronic trading Feb 07 Transitioned to all electronic futures trading in Feb 08 Regulated by the CFTC CUSTOMERS PRODUCTS Producers, growers, distributors, processors and industrials Financial Institutions Funds, proprietary and algorithmic traders Agricultural and Soft commodities: sugar, cotton, coffee, cocoa, orange juice, canola, barley, feed wheat Russell Index futures GROWTH DRIVERS Currency pairs, US Dollar Index All futures markets now electronic Exclusive on Russell Equity Indexes at end of 3Q 2008 Commodities, foreign exchange, USDX and options (1) Volumes include pro-forma 2007 data for both ICE Futures U.S. and ICE Futures Canada which were purchased by ICE on 1/12/07 and 8/27/07, respectively. 8

9 ICE Global OTC Energy Markets ICE operates the leading electronic OTC marketplace for natural gas and power, offering price transparency and cleared/bilateral markets in the same price stream. HISTORY Cleared OTC market created by ICE in 2002; products include forwards and swaps, differentials and spreads, and options Operates as an Exempt Commercial Market and engages in regular reporting to the CFTC Commercial energy companies ~53% CUSTOMERS Banks/Financial institution ~22% Liquidity providers (prop/algo/funds) ~25% PRODUCTS GROWTH DRIVERS Over 800 products listed; approx. 100 cleared: Oil and refined oil products Financial gas swaps & options; Physical gas Financial power; Physical power Natural gas liquids Leading market share for cleared OTC natural gas contracts Product growth largely organic Chatham, YJ acquisition brings OTC options opportunity 9

10 Key Growth Opportunity: ICE Clear Europe ICE Clear Europe will be the first major London derivatives clearing house in 120+ years. ICE is investing in clearing to bring enhanced, around-the-clock, multiple-asset class clearing services to meet the underserved risk management needs of its customers in the global marketplace. Regulatory Update Complete application filed July 07 FSA approval as Recognised Clearing House received May 13 Risk controls, funding levels, rule book, member committees and governance established and in place On track for July 08 launch Engaged with regulators on operational requirements postrecognition Operational Update World-class clearing operations team Completed technology systems and testing in 1Q08 with 44 clearing firms; Testing of new billing module near completion TRS/CPS in place, ECS integration complete, SWIFT connections Guaranty fund structure and clearing economics completed Next steps through July 08: complete memberships, establish guaranty fund, transfer positions 10

11 Key Growth Opportunity: Russell Index Futures ICE Russell Index Mini Futures: ICE Russell Index Mini Futures: Total Market Contract Volume Contract Volume Daily volume records achieved throughout April, May and 20 market makers, tight markets, and roll opportunities approaching in June Significant interest by commercial users and active traders Stronger value proposition for all classes of customers and faster matching engine Existing Russell 2000 mini futures volume demonstrates increasingly attractive market opportunity Growth opportunity for Russell 1000 Index volume; primary liquidity exists today on ICE Cross margining arrangement in place with OCC 11

12 Creditex Transaction Overview Landmark Strategic Combination Creditex acquisition diversifies ICE into the expanding $62 trillion Credit Default Swaps (CDS) market in partnership with a market leader Enhances ICE s leadership among peers in the over-the-counter (OTC) markets Based on annualized 1Q08, Creditex revenue in excess of $200 million; EBITDA nearly $50 million Addresses regulatory and industry calls for improved risk management and infrastructure within the CDS market Financial Consideration $625 million purchase price, plus a working capital adjustment to be determined at closing $565 million in stock; $60 million in cash (on hand) 13x multiple based on annualized 1Q 2008 EBITDA The stock consideration represents approximately 6% of ICE shares post-closing Closing expected late 3Q 2008 Expect to be accretive in months from closing 12

13 ICE: Innovation and Technology Unparalleled system speed and reliability 3 millisecond roundtrip time in futures Multi-generational implied engine Completed transition of U.S. futures markets to electronic platform in March Successful transition of NGX markets and customers to the ICE platform in February Relocation of data center to Chicago Integration of YellowJacket underway Launch of ICE Risk integrated, real-time energy risk management tool ICE Clear Europe development on track Key technology and infrastructure in place Successful connectivity and system testing with 40+ clearing firms ICE Platform Speed Relative to Futures ADV ICE Technology CapEx 13

14 ICE: Summary Financials 1Q08 (In Millions, except EPS data) Record transaction revenues Futures +57% yty OTC +69% yty Data +76% yty Record OTC commissions ADC $1.3 MM; +70% yty Record contract volume exceeded 130 MM contracts Futures ADV +49% yty Energy ADV +16% yty Ags/FX/Index ADV +77% yty Operating income up 81% 70% operating margin Strong cash flow and financial flexibility Continued inflow of investment to commodities asset class 14

15 ICE: Leading Global Derivatives Markets High growth markets addressing risk management needs on a global scale Organic growth and M&A Diversification into 6 unique asset classes New customers & markets Industry-leading trading platform Broad distribution Fastest futures platform Proven management team Innovation and Growth Solid operations Integrate new businesses Diverse customer base Commercial Financial institutions Algorithmic & prop 15