ICE Publishes Record Earnings and Revenues for 2012 – Q4 Increase of 5%, Net Income For Year Up 8%

Following the publication of January’s trading volumes, US-based IntercontinentalExchange (ICE) have produced their report for both fourth quarter and full

Following the publication of January’s trading volumes, US-based IntercontinentalExchange (ICE) have produced their report for both fourth quarter and full year 2012.

IntercontinentalExchange operates global OTC markets and clearing houses in North America and Europe, with trading firms in 70 countries worldwide along with market data customers in 120 countries. The majority of instruments on the exchange are in the energy, agriculture, foreign exchange and equity index categories. As far as the energy sector is concerned, ICE has more than half of the world’s crude oil and refined petroleum product futures volume.

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Consolidated net income attributable to ICE for the quarter grew 2% to $129 million on consolidated revenues of $323 million, down 1% compared to the prior fourth quarter. Diluted earnings per share (EPS) in the quarter increased 2% to $1.76.

For the fourth quarters ended December 31, 2012 and 2011, certain items were included in ICE’s operating results that are not indicative of our core business performance, including transaction costs related to ICE’s proposed acquisition of NYSE Euronext. Excluding these items, fourth quarter 2012 adjusted net income attributable to ICE increased 5% to $135 million and adjusted diluted EPS grew 5% to $1.84.

Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income attributable to ICE and adjusted diluted EPS.

For the year ended December 31, 2012, ICE reported a 3% increase over 2011 in consolidated revenues to $1.36 billion, the ninth consecutive year of record revenues. Consolidated 2012 net income attributable to ICE rose 8% to a record $552 million, and diluted EPS increased 9% to $7.52 for the year. Consolidated cash flow from operations grew 3% to a record $733 million in 2012.

ICE Chairman and CEO Jeffrey C. Sprecher said: “We made tremendous strides operationally and strategically in 2012, again delivering on industry requirements amid continued regulatory change, including helping to bring greater regulatory certainty to our customers and markets. At the same time, we delivered record financial results and growth on top of growth, while investing to position our company for the many opportunities ahead. I want to thank and recognize our team for their continued leadership in serving our customers and driving results for our shareholders.”

Scott Hill, ICE SVP and CFO said: “As the needs of our customers evolve, they increasingly rely upon our markets to manage risk and comply with regulatory requirements. We are expanding our services to meet their needs while also investing prudently for best in class growth and returns. As we look to 2013, we continue our strong commitment to growth and innovation.”

Fourth Quarter 2012 Results

Fourth quarter 2012 consolidated revenues were $323 million, a 1% decline from the prior fourth quarter. Transaction and clearing fee revenues totaled $277 million in the fourth quarter of 2012, down 4% compared to the same period of 2011. Average daily volume (ADV) in ICE’s futures business was 3.1 million contracts, down 1% from the fourth quarter of 2011(1). Revenues from ICE’s credit default swap (CDS) trade execution, processing and clearing business were $36 million in the quarter, down 14% from the fourth quarter of 2011, and included $19 million in CDS clearing revenues.

Consolidated market data revenues increased 14% from the fourth quarter of 2011 to $37 million, and consolidated other revenues were $9 million.

Consolidated operating expenses were $131 million in the fourth quarter, down 1% from the prior fourth quarter. Consolidated operating income was slightly down from the fourth quarter of 2011 at $192 million. Operating margin was 59%, and the effective tax rate for the quarter was 28%.

Full-Year 2012 Results

For the year ended December 31, 2012, consolidated revenues increased 3% to $1.36 billion. Consolidated transaction and clearing fee revenues totaled $1.19 billion in 2012, up 1% year-over-year. Futures volume and ADV for the year grew 10% to 847 million contracts and 3.4 million contracts, respectively (1). ICE Futures Europe established its fifteenth consecutive annual volume record. ICE Futures Canada also established a new volume record. ICE Brent crude futures volume reached a record in 2012 and became the world’s largest crude oil futures contract in terms of ADV.

Revenues from ICE’s CDS execution and clearing businesses totaled $144 million, comprised of $78 million from Creditex and $66 million from global CDS clearing. Through February 1, 2013, ICE’s CDS clearing houses have cleared $37 trillion in gross notional value, including more than $10 trillion cleared during 2012.

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Consolidated market data revenues increased 17% to a record $147 million in 2012.

Consolidated operating expenses were flat at $536 million in 2012. Consolidated operating income grew 4% to $827 million. Operating margin rose to 61% for 2012 from 60% in 2011. 2012 diluted EPS increased 9% over 2011 to $7.52.

The effective tax rates for 2012 and 2011 were 29% and 31%, respectively.

Consolidated cash flow from operations grew 3% to $733 million. Capital expenditures were $32 million in 2012, and capitalized software development costs were $35 million.

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Unrestricted cash and cash equivalents were $1.61 billion as of December 31, 2012. At the end of 2012, ICE had $1.13 billion in outstanding debt.

Expense Guidance and Additional Information

• ICE expects 2013 adjusted consolidated expenses to increase in the range of 3% to 5% from 2012 adjusted consolidated expenses.

• ICE expects acquisition-related transaction costs for Q1 2013 in the range of $10 million to $12 million, primarily relating to the NYSE Euronext transaction, which will be excluded from non-GAAP results.

• ICE expects 2013 operational capital expenditures and capitalized software development costs to be in the range of $60 million to $70 million.

• In addition, ICE expects to make $20 million to $30 million in capital expenditures related to real estate costs due to consolidating multiple locations in New York. ICE expects duplicate rent expenses and lease termination costs in the range of $4 million to $5 million in both Q1 2013 and Q2 2013, which will be excluded from non-GAAP results.

• ICE expects depreciation and amortization expense for 2013 in the range of $135 million to $140 million.

• ICE expects quarterly interest expense for 2013 to be in the range of $9 million to $10 million.

• ICE’s consolidated tax rate is expected to be in the range of 27% to 30% for 2013.

• ICE’s diluted share count for the first quarter of 2013 is expected to be in the range of 72.6 million to 73.8 million weighted average shares outstanding, and the diluted share count for fiscal year 2013 is expected to be in the range of 72.8 million to 74.0 million weighted average shares outstanding.

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