Growth Stock Conference June 11,

Transcription

1 William Blair Growth Stock Conference June 11,

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 forward-looking 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, 2008, as filed with the SEC on February 11, 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. GAAP and Non-GAAP Results This presentation includes non-gaap measures that exclude certain charges the company considers non-operating. We believe that the presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. These non-gaap measures should be considered in context with our GAAP results. A reconciliation of Adjusted Net Income and Adjusted Earnings Per Common Share to the equivalent GAAP measure and an explanation of why we deem these non-gaap measures meaningful appears in our earnings press releases dated February 10 and May 5, 2009 and in the appendix to this presentation. The reconciliation of Adjusted EBITDA and Adjusted Operating Expenses to the equivalent GAAP results appears in the appendix to this presentation. Our earnings press releases and this presentation are available in the Investors section of our website at Our earnings press releases are also available in our Current Reports on Form 8-K filed with the Securities and Exchange Commission on February 10 and May 5,

3 DIVERSE GLOBAL DERIVATIVES MARKETS ICE Strategic Vision Leading global marketplace with integrated technology, execution and clearing Focus on organic growth, new products, M&A and innovation Create efficiencies and risk management solutions for customers Leverage technology to create integrated front- to back-office service offering ICE Integrated Marketplace 3

4 UNIQUE EXECUTION, CLEARING & DATA MODEL FUTURES & OTC MARKETS IntercontinentalExchange (ICE) is the leading operator of integrated futures and over-thecounter (OTC) markets, clearing, trade processing and data services for the global derivatives markets. Key Differentiators The only offering of futures, options and OTC markets on a single screen Five clearing houses covering futures and OTC in U.S., Europe & Canada Industry-leading innovation in products and technology Market, customer and geographic diversity Proven execution of strategic initiatives and effective M&A integration Track record of delivering EPS growth, margin expansion and operating cash flow 4

5 FOCUS ON PROFITABLE GROWTH Track record of growth 1Q09 revenues +12% yty 1Q09 contract volume 113 million Core energy markets expanding M&A activity fueling revenue diversification Expansion into equity index futures and OTC credit in 2008 Expansion into agricultural l & currency futures 2007 Market data business over $100 MM per year, approximately 12% of revenues Annual Revenue ICE Total 1 $900 $813 $800 $700 $600 $574 $500 $400 $314 $300 $232 $200 $156 $100 $ mos 2009 Annual Contract Volume ICE Total mos 2009 (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 5

6 ICE MARKET OVERVIEW ENERGY AGRICULTURAL FINANCIAL CREDIT PRIMARY FUTURES CONTRACTS Brent Crude WTI Crude Gas Oil Emissions Sugar Coffee Cotton Cocoa Russell indexes U.S. Dollar Index FX 40 currency pairs N/A PRIMARY OTC CONTRACTS Natural Gas Power Refined Oil Sugar Coffee Cocoa N/A Index & single-name CDS N. America, Europe & Asia CLEARING ICE Clear Europe (94% cleared; 6% bilateral) ICE Clear U.S./ Canada (100% cleared) ICE Clear U.S. (100% cleared) ICE Trust (100% cleared) VOLUME 400 million contracts 64 million contracts 21 million contracts $1.06 billion notional 2 % GROWTH vs % 27% 492% N/A* 2008 TRANSACTION REVENUES/ % OF TOTAL TRANS. REVENUES $485 million 70% $136 million 20% $20 million 3% $52 million 2 7% (1) ICE Trust currently clears CDS for 12 member firms; figure is not representative ti of contracts t directly linked to ICE s Creditex subsidiary. (2) Figures represents notional value brokered via Creditex and Creditex revenues. ICE purchased Creditex on 8/29/08, figures represent the period 9/1/08-12/31/08. 6

7 ASSET CLASS DIVERSITY MARKET DATA/OTHER 13% ENERGY FUTURES 39% ENERGY FUTURES 25% 2006 MARKET DATA/OTHER 15% OTC ENERGY 48% OTC CREDIT 6% 2008 SOFT/AG FUTURES 16% OTC ENERGY 35% FX/INDEX FUTURES 3% Reaching large, addressable markets Developing new asset classes in advance of trends Diversifying from 1 major asset class (energy) in 2006 to 5 today (energy, agricultural, equity index, foreign exchange and credit) 7

8 GEOGRAPHIC AND CLIENT DIVERSITY Geographic Diversification OTC Energy Market Participants Broad distribution to 55+ countries Commercial participants represent majority of ICE users Only exchange with front-end connectivity Number of new users continues to grow % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 21% 30% 32% 31% 30% 22% 21% 21% 23% 23% 57% 49% 47% 46% 47% Commercial Banks & Financial Liquidity Providers 8

9 ICE ENERGY FUTURES ICE s energy and emissions futures and options contracts are listed on ICE Futures Europe, where half of the world s crude oil and refined oil contracts are traded. KEY STATS CUSTOMERS 5-mos 09 Average Daily Volume: 614,816 3-month Rate per Contract (May): $1.61 Open interest record of 2.6 million contracts as of May 31, 2009 Gas Oil, coal and emissions futures demonstrate continued growth Energy majors, refiners, distributors, utilities Financial institutions Funds, proprietary and algorithmic traders ENERGY FUTURES & OPTIONS REVENUE $200 $200 $179 $150 $123 $100 $64 $50 $ mos 2009 Brent Futures WTI Futures Gas Oil Futures Other Futures & Options ENERGY FUTURES & OPTIONS CONTRACT VOLUME Brent Crude is a global benchmark for crude 20 GROWTH DRIVERS Growth in European emissions, coal & utility markets 10 New contracts launching via ICE Clear Europe 0 1Q08 2Q08 3Q08 4Q08 1Q09 9

10 ICE ENERGY OTC ICE operates the leading electronic OTC marketplace for natural gas, power and oil. $300 OTC ENERGY REVENUE $285 1Q09 Average Daily Commissions: $1.1 M $250 $200 $212 1Q09 contract volume: 50 million $150 $150 KEY STATS Over 200 cleared contracts listed; over 800 total contracts available Approximately 96% of contract volume is cleared $100 $50 $ $67 3-mos 2009 CUSTOMERS 1 Commercial companies: 50% Banks and financials: 24% 70 Natural Gas Power Oil & Other OTC ENERGY CONTRACT VOLUME Liquidity providers: 26% Continued launch of new cleared contracts though ICE Clear Europe GROWTH DRIVERS OTC automation and electronification Strategic partnerships and acquisitions provide incremental benefit Q08 2Q08 3Q08 4Q08 1Q09 (1) Statistics for 1Q09. 10

11 ICE ENERGY OTC ICE s OTC energy marketplace provides transparency and risk management tools, as well as the ability to hedge unique contracts in liquid markets. Trades may be executed electronically on the ICE platform or blocked in by brokers for clearing. Straight-through-processing & clearing, including mark-tomarket, daily and variation margin, functions in same manner as futures markets Numerous contract variations to meet the needs of OTC market: Commodity/product type/quantity Delivery hubs/locations Settlement terms & date Oversight by the CFTC Significant price discovery contracts are subject to futures-style regulatory and reporting requirements 11

12 ICE AGRICULTURAL & FINANCIAL FUTURES ICE offers diverse agricultural and financial futures, options and swaps contracts through its regulated U.S. and Canadian exchanges. KEY STATS CUSTOMERS 5-mos 09 Average Daily Volume: 374,979 3-month Rate per Contract (May): $2.23 (agricultural) / $0.77 (financial) First exchange to offer cleared agricultural swaps for sugar, coffee and cocoa Producers, growers, distributors, processors and industrials Financial institutions Liquidity providers AG & FINANCIAL FUTURES & OPTIONS REVENUE $160 $156 $140 $120 $100 $100 $80 $70 $60 $40 $34 $20 $ mos 2009 Sugar Cotton Russell Other AG & FINANCIAL FUTURES & OPTIONS CONTRACT VOLUME GROWTH DRIVERS Expect to launch Russell Index Growth and Value products in 2009 Continued uptake of electronic markets 10 5 Expansion of FX suite & agricultural swaps 0 1Q08 2Q08 3Q08 4Q08 1Q09 12

13 ICE CREDIT DERIVATIVES ICE is the only entity worldwide offering a full suite of transaction execution, processing and clearing services for credit default swaps (CDS). KEY STATS CUSTOMERS 1Q09 Creditex Revenues: $36M (47% electronic) T-Zero profitable Over $730B in notional cleared with open interest of $118B at ICE Trust Execution - Creditex brokerage clients include primarily CDS dealers Processing - T-Zero connected to all major dealers and over 350 buy-side clients CREDITEX TRANSACTION REVENUE 1 $200 $180 $173 $159 $160 $140 $120 $100 $83 $80 $60 $40 $20 $ ICE TRUST NOTIONAL CLEARED $800 $700 $36 3-mos 2009 $730 GROWTH DRIVERS Clearing - 12 clearing members of ICE Trust Clearing and standardization of single-name contracts provides opportunity for volume acceleration and automation T-Zero services, such as re-couponing and straight-through-processing, increasingly demanded by industry & regulators (1) ICE purchased Creditex on 8/29/08. Transaction revenue prior to this date is pro-forma. $600 $500 $400 $300 $200 $100 $0 $575 $110 $45 March h09 April il09 May 09 Aggregate 13

14 ICE SUMMARY FINANCIALS 1Q09 Record revenues amid challenging global markets Transaction revenues up yty: Futures +1% OTC +32% Data +6% Futures & OTC volume 113 MM contracts Record quarter for energy futures ADV and open interest OTC Energy ADC $1.1 MM Market data revenues $26 MM Adjusted operating margin 55% 65% margin excluding brokerage Solid cash flow generation, low leverage & new debt facility in place INCOME STATEMENT 1Q09 1Q08 yty% Total Revenues $232 $207 12% Total Expenses $118 $63 87% Operating Income $114 $144-21% Operating Margin 49% 70% (21) points Adjusted Op. Margin 1 55% 70% (15) points Tax Rate 33.8% 35.2% (1) points GAAP Net Income $72 $92-22% Non-GAAP Net Income 1 $80 $92-13% GAAP EPS (Diluted) $0.98 $ % Non-GAAP EPS (Diluted) 1 $1.09 $ % CASH METRICS 1Q09 1Q08 yty% Adjusted EBITDA 2 $130 $146-11% Operating Cash Flow $68 $79-15% Cap Ex & Cap Software $8 $6 24% (1) These are non-gaap measures. Please see slide 22 of this presentation for a reconciliation to the equivalent GAAP measure. (2) This is a non-gaap measure. Please see slide 23 of this presentation for a reconciliation to the equivalent GAAP measure. 14

15 POSITIONED FOR GROWTH CORE BUSINESS Leading global exchange across futures & OTC with integrated clearing, processing and execution Core market opportunities in cleared OTC energy and commodity futures markets Strong track record of successful M&A, integration & innovation Energy markets remain stable, agricultural markets demonstrating growth in 1H09 GROWTH DRIVERS Opportunities exist in equity indices, emissions, FX and credit Russell 1000 Growth & Value to launch in 2009 Accelerating automation in CDS brings margin improvements for Creditex & T-Zero CLEARING Significant progress made in North American CDS clearing Over $730B in notional cleared at ICE Trust with open interest of $118B European initiative expected to launch by end of 2Q09 Buy side access and single-name clearing expected 3Q09 ICE Clear Europe continues to offer new products; over 100 launched in 1H09 15

16 IR CONTACTS & INFORMATION More information at: ir.theice.com Press releases & ICE articles Earnings & conference presentations Daily and historical ICE volume Sarah Stashak Director, Investor & Public Relations +1 (770) Kelly Loeffler, CFA VP, Investor Relations & Corp. Communications +1 (770)

17 APPENDIX 17

18 ICE SUMMARY FINANCIALS FY 2008 Growth amid challenging global market environment Transaction revenue increases yty: Futures +26% OTC +61% Data +46% yty OTC Energy ADC $1.1 M Record market data revenues $103 MM Operating income up 40% Solid cash flow generation Successful launch of ICE Clear Europe Creditex acquisition and entry into CDS clearing INCOME STATEMENT FY 2008 FY 2007 yty% Total Revenues $813 $574 42% Total Expenses $320 $221 45% Operating Income $494 $354 40% Operating Margin 61% 62% (1) point Tax Rate 36.4% 32.9% 4 points GAAP Net Income $301 $241 25% Non-GAAP Net Income 1 (excluding NCDEX impairment charge) $312 $241 30% GAAP EPS Diluted $4.17 $ % Non-GAAP EPS Diluted 1 (excluding NCDEX impairment charge) $4.33 $ % CASH METRICS FY 2008 FY 2007 yty% Operating Cash Flow $375 $288 30% Cap Ex & Cap Software $49 $43 13% (1) These are non-gaap measures. Please see slide 24 of this presentation for a reconciliation to the equivalent GAAP measure. 18

19 ICE SUMMARY BALANCE SHEET 1Q09 BALANCE SHEET & CASH FLOW HIGHLIGHTS Continued strong operating cash flow generation $68 MM in 1Q09 Debt to trailing twelve-month EBITDA ratio remains <1.0x Cash and short-term investments $233 MM; $370 MM debt outstanding 1Q09 capital expenditures: CapEx of $4 MM Capitalized software of $4 MM Credit facilities restructured in 1Q09 Net $200 MM increase of borrowing capacity to $775 MM BALANCE SHEET 3/31/09 12/31/08 CHANGE Assets Cash & ST Investments $233 $287 ($54) Other Current Assets 12,905 12, Other Current Assets 13,138 12, PPE (net) (2) Other Assets 2,400 2, Total Assets $15,625 $14,960 $665 Liabilities & Equity Current Liabilities $12,911 $12,312 $600 Long Term Debt (53) Other Liabilities Total Liabilities 13,499 12, Other - 1 n/a Total lshareholders h Equity 2,126 2, Total Liabilities & Shareholders Equity $15,625 $14,960 $665 Note: Figures may not foot due to rounding. Please see press release, dated May 5, 2009 for more detail available on 19

20 ICE TRACK RECORD OF INNOVATION The most innovative and uniquely positioned company in the exchange sector. $900 $800 $700 $600 $500 $400 $300 $200 $100 May-2000: ICE founded to provide more transparent and efficient market structure for OTC energy commodities trading 2001: Launched industry s first cleared OTC energy contracts Jun-2001: ICE s business expands into futures trading through IPE acquisition $ : Transition to fully electronic energy futures trading completed $94 $108 Jan/Feb-2007: Completed acquisition of NYBOT & listed soft commodity futures and options electronically for first time in history Jul-2006: Launched first electronic contract for WTI Crude $156 Aug-2008: ICE acquires Creditex, a leader in CDS execution and processing $314 Nov-2008: Launched ICE Clear Europe, first major new clearing house in U.K. in over 100 years $574 $813 Jun-2008: Fastest matching engine for commodity markets, 3ms for futures; sophisticated spread implication functionality 2009: ICE launches ICE Trust, first clearing house globally to process credit default swaps $232 $ mos

21 OTC CLEARING: MARKET OPPORTUNITIES The OTC market is approximately 8 times the nominal value of the on- exchange derivatives es market $800 Nominal Derivatives Outstanding Substantial need and demand exists for OTC clearing in a range of asset classes where none is available today $700 $600 $500 $400 $415 $595 $684 Currently, vast majority of OTC derivatives are never cleared $300 $200 ICE has been the market leader in offering cleared OTC products due to our ability to aggregate opaque, brokered markets on a global trading platform $100 $ OTC Dec 2006 Futures Dec 2006 OTC Dec 2007 Futures Dec 2007 OTC June 2008 Futures June 2008 Interest Rate FX Equity linked Commodities CDS Other Data source (chart): Bank for International Settlements 21

22 Non-GAAP Net Income, EPS & Operating Margin - 1Q09 In thousands, except per share amounts 3 Months Ended 3/31/09 Net income $72,222 Add:Transaction costs incurred from TCC acquisition 5,609 Add: Employee termination costs 2,902 3 Months Ended 3/31/08 $92, Add: Costs incurred to vacate office space 2,980 Add: Start-up costs relating to ICE Trust 1,370 Less: Income tax benefit for non-recurring charges (5,071) - Non-GAAP net income $80, $92,290 Earnings per common share on net income: Basic $0.99 Diluted $0.98 $1.31 $1.29 Non-GAAP earnings per common share on adjusted net income: Non-GAAP basic $1.10 Non-GAAP diluted $1.09 $1.31 $1.29 Weighted average common shares outstanding: Basic 72,671 70,361 Diluted 73,606 71,348 3 Months Ended 3/31/09 Operating income $113,799 Add: Transaction costs incurred for the TCC acquisition 5,609 Add: Employee termination costs 2,902 Add: Costs incurred to vacate office space 2,980 Add: Start-up costs relating to the formation of ICE Trust 1,370 Adjusted Operating income $126,660 Revenues $231,553 Adjusted Operating Margin 55% 22

23 Non-GAAP Adjusted EBITDA - 1Q09 3 Months Ended 3 Months Ended 3/31/2009 3/31/2008 Net income $72,222 $92,290 Plus income tax expense 36,854 50,129 Less interest and investment income (610) (2,919) Plus interest expense 5,254 5,134 Plus depreciation and amortization expense 27,303 10,946 Non-GAAP EBITDA 141, ,580 (Less) plus other (income) expense, net 79 (354) Less capital expenditures (3,728) (3,132) Less capitalized software development costs (4,202) (3,267) Less Russell license charges (3,000) (2,500) Non-GAAP Adjusted EBITDA $130,172 $146,327 23

24 Non-GAAP Net Income & EPS - FY 2008 Year Ended 12/31/08 Net income $300,972 Add: NCDEX impairment charge 15,700 Less: Income tax benefit of NCDEX impairment charge (4,477) Non-GAAP net income $312,195 Earnings per common share on net income: Basic $4.23 Diluted $ Months Ended 12/31/08 $48,855 15,700 (4,477) $60,078 $0.68 $0.67 Non-GAAP earnings per common share on adjusted net income: Non-GAAP Basic $4.39 $0.83 Non-GAAP Diluted $4.33 $0.82 Weighted average common shares outstanding: Basic 71,184 72,280 Diluted 72,164 73,465 24