CME GROUP INC. CHICAGO, July 30, 2015 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME) today reported revenues of $820 million and operating income of $495 million for the second quarter of 2015. Net income attributable to CME Group was $265 million and diluted earnings per share were $0.78. Excluding the items noted in the reconciliation, adjusted net income attributable to CME Group would have been $320 million and adjusted diluted earnings per share would have been $0.95(1).
"The organic revenue growth of 12 percent we achieved in the second quarter is a testament to the strength and diversity of our business model," said CME Group Executive Chairman and President Terry Duffy. "During the quarter, revenue from agricultural commodities, foreign exchange and energy each rose by more than 20 percent. Total average daily volume improved steadily after a slow April, and we set quarterly volume records in weekly treasury options and heating oil, along with wheat and soybean products. In addition, options volume continued to expand, with volumes up 13 percent during the quarter, and options on our CME Globex platform up 29 percent."
"Total expenses decreased during the second quarter, which boosted our operating margin from the mid 50 percent range a year ago to over 60 percent," said CME Group Chief Executive Officer Phupinder Gill. "We remain focused on driving efficiency throughout the organization and eliminating redundancy to improve agility and customer responsiveness. As part of this effort, we have closed most of our futures trading pits, reduced overall headcount and consolidated data centers. Our investments to expand our business around the world continue to gain traction, with 22 percent volume growth in Asia, 10 percent in Europe and 6 percent in Latin America. In summary, strong top-line growth coupled with expense discipline resulted in adjusted earnings per share growth of 23 percent."
1. A reconciliation of the non-GAAP
financial results mentioned to the
respective GAAP figures can be found
within the Reconciliation of GAAP to
non-GAAP Measures chart at the end
of the financial statements.
Second-quarter 2015 average daily volume was 13.3 million contracts, up 6 percent from second-quarter 2014, and included average daily volume records in agricultural commodities and weekly treasury options. Clearing and transaction fee revenues were $682 million, up 12 percent compared with second-quarter 2014. Market data revenue was $103 million, up 15 percent. Second-quarter 2015 total average rate per contract was 77.7 cents, up from 75.3 cents in first-quarter 2015, driven primarily by a higher proportion of total volume coming from commodities products, which have higher average fees.
As of June 30, 2015, the company had $1.2 billion of cash and marketable securities and $2.2 billion of long-term debt. In June, the company paid out $168 million in its regular quarterly dividend of 50 cents per share.
CME Group will hold a conference call to discuss second-quarter 2015 results at 8:30 a.m. Eastern Time today. A live audio Webcast of the call will be available on the Investor Relations section of CME Group's Web site at www.cmegroup.com. An archived recording will be available for up to two months after the call.
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform, its trading facilities in New York and Chicago, and through its London-based CME Europe derivatives exchange. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. KCBOT, KCBT and Kansas City Board of Trade are trademarks of The Board of Trade of Kansas City, Missouri, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.
Statements in this press release that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that might affect our performance are increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities; our ability to keep pace with rapid technological developments, including our ability to complete the development, implementation and maintenance of the enhanced functionality required by our customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services, including our ability to provide effective services to the swaps market; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to maintain existing customers, develop strategic relationships and attract new customers; our ability to expand and offer our products outside the United States; changes in domestic and non-U.S. regulations, including the impact of any changes in domestic and foreign laws or government policy with respect to our industry, such as any changes to regulations and policies that require increased financial and operational resources from us or our customers; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; decreases in revenue from our market data as a result of decreased demand; changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure; the ability of our financial safeguards package to adequately protect us from the credit risks of clearing members; the ability of our compliance and risk management methods to effectively monitor and manage our risks, including our ability to prevent errors and misconduct and protect our infrastructure against security breaches and misappropriation of our intellectual property assets; changes in price levels and volatility in the derivatives markets and in underlying equity, foreign exchange, interest rate and commodities markets; economic, political and market conditions, including the volatility of the capital and credit markets and the impact of economic conditions on the trading activity of our current and potential customers; our ability to accommodate increases in contract volume and order transaction traffic and to implement enhancements without failure or degradation of the performance of our trading and clearing systems; our ability to execute our growth strategy and maintain our growth effectively; our ability to manage the risks and control the costs associated with our strategy for acquisitions, investments and alliances; our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business; industry and customer consolidation; decreases in trading and clearing activity; the imposition of a transaction tax or user fee on futures and options on futures transactions and/or repeal of the 60/40 tax treatment of such transactions; the unfavorable resolution of material legal proceedings; and the seasonality of the futures business. For a detailed discussion of these and other factors that might affect our performance, see our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q.
CME Group Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions)
June 30, 2015 December 31,
2014
------------- -------------
ASSETS
Current Assets:
Cash and cash
equivalents $1,151.0 $1,366.1
Marketable
securities 76.3 74.7
Accounts
receivable, net
of allowance 399.9 341.2
Other current
assets (includes
$32.0 and $37.0
in restricted
cash) 260.0 196.5
Performance bonds
and guaranty
fund
contributions 42,167.9 40,566.8
-------- --------
Total current
assets 44,055.1 42,545.3
Property, net of
accumulated
depreciation and
amortization 499.2 508.9
Intangible
assets-trading
products 17,175.3 17,175.3
Intangible
assets-other,
net 2,587.6 2,637.4
Goodwill 7,569.0 7,569.0
Other assets
(includes $73.5
and $72.4 in
restricted cash) 1,776.9 1,805.6
------- -------
Total Assets $73,663.1 $72,241.5
========= =========
LIABILITIES AND
EQUITY
Current
Liabilities:
Accounts payable $22.1 $36.9
Other current
liabilities 242.6 927.5
Performance bonds
and guaranty
fund
contributions 42,167.9 40,566.8
-------- --------
Total current
liabilities 42,432.6 41,531.2
Long-term debt 2,241.0 2,107.9
Deferred income
tax liabilities,
net 7,339.8 7,302.7
Other liabilities 390.9 376.2
----- -----
Total Liabilities 52,404.3 51,318.0
--------
CME Group
shareholders'
equity 21,258.8 20,923.5
Total Liabilities
and Equity $73,663.1 $72,241.5
========= =========
CME Group Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in millions, except per share amounts; shares in thousands)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Revenues
Clearing and transaction fees $681.8 $609.3 $1,390.0 $1,261.5
Market data and information services 102.8 89.6 200.8 179.0
Access and communication fees 21.5 20.4 42.8 40.8
Other 13.9 12.3 29.1 27.7
---- ---- ---- ----
Total Revenues 820.0 731.6 1,662.7 1,509.0
Expenses
Compensation and benefits 141.5 139.7 282.8 275.2
Communications 6.6 8.3 14.2 16.5
Technology support services 16.1 14.6 31.7 28.5
Professional fees and outside services 27.7 37.5 56.8 67.1
Amortization of purchased intangibles 25.0 25.2 49.9 50.4
Depreciation and amortization 33.3 34.3 65.1 68.4
Occupancy and building operations 23.5 23.2 46.3 46.4
Licensing and other fee agreements 28.8 25.7 59.4 54.7
Other 22.4 11.1 54.1 35.3
---- ---- ---- ----
Total Expenses 324.9 319.6 660.3 642.5
----- ----- ----- -----
Operating Income 495.1 412.0 1,002.4 866.5
Non-Operating Income (Expense)
Investment income 18.5 15.1 24.2 18.3
Gains (losses) on derivative investments - - (1.8) -
Interest and other borrowing costs (28.6) (28.3) (60.2) (62.0)
Equity in net earnings (losses) of
unconsolidated subsidiaries 26.0 21.5 48.5 43.9
Other non-operating income (expense) (62.9) 1.8 (41.2) 1.8
----- --- ----- ---
Total Non-Operating (47.0) 10.1 (30.5) 2.0
----- ---- ----- ---
Income before Income Taxes 448.1 422.1 971.9 868.5
Income tax provision 183.1 158.3 376.5 338.1
----- ----- ----- -----
Net Income 265.0 263.8 595.4 530.4
Less: net income (loss) attributable to non-
controlling interests - - - (0.2)
--- --- --- ----
Net Income Attributable to CME Group $265.0 $263.8 $595.4 $530.6
====== ====== ====== ======
Earnings per Common Share Attributable to
CME Group:
Basic $0.79 $0.79 $1.77 $1.59
Diluted 0.78 0.79 1.76 1.58
Weighted Average Number of Common Shares:
Basic 336,036 334,097 335,859 334,002
Diluted 337,796 335,800 337,574 335,705
CME Group Inc. and Subsidiaries
Quarterly Operating Statistics
2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
------- ------- ------- ------- -------
Trading Days 63 64 64 61 64
Quarterly Average Daily Volume (ADV)
CME Group ADV (in thousands)
Product Line 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
------- ------- ------- ------- -------
Interest rate 6,668 7,181 7,445 7,564 6,599
Equity 2,465 2,586 3,114 2,772 2,364
Foreign exchange 638 797 959 954 903
Energy 1,457 1,562 1,797 2,142 1,749
Agricultural commodity 1,084 1,058 1,173 1,189 1,400
Metal 323 308 361 369 331
--- --- --- --- ---
Total 12,636 13,493 14,848 14,990 13,347
Venue
-----
Electronic 10,888 11,627 12,982 13,034 11,705
Open outcry 1,100 1,208 1,218 1,291 1,108
Privately negotiated 647 657 648 665 534
--- --- --- --- ---
Total 12,636 13,493 14,848 14,990 13,347
Average Rate Per Contract (RPC)
CME Group RPC
Product Line 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
------- ------- ------- ------- -------
Interest rate $0.473 $0.473 $0.472 $0.480 $0.502
Equity 0.714 0.687 0.697 0.721 0.725
Foreign exchange 0.861 0.788 0.760 0.831 0.816
Energy 1.298 1.291 1.279 1.250 1.277
Agricultural commodity 1.430 1.362 1.321 1.324 1.311
Metal 1.715 1.707 1.664 1.662 1.634
----- ----- ----- ----- -----
Average RPC $0.749 $0.725 $0.731 $0.753 $0.777
CME Group Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Measures
(dollars in millions, except per share amounts; shares in thousands)
Quarter Quarter
Ended Ended
June 30, June 30,
2015 2014
--------- ---------
GAAP Net Income
Attributable to CME
Group $265.0 $263.8
Foreign exchange
transaction gains(1) (11.1) (5.5)
Real estate taxes and
fees(2) 10.0 -
Restructuring, severance
and voluntary exit
incentive plan 1.9 5.8
Debt prepayment costs 61.8 -
Gain on sale of
BM&FBOVESPA shares (5.9) -
MF Global bankruptcy
claim - (14.5)
Acquisition-related
costs - 4.7
Income tax effect
related to above (19.1) 3.6
Other income tax
items(3) 17.4 -
Adjusted Net Income
Attributable to CME
Group $320.0 $257.9
====== ======
GAAP Earnings per Common
Share Attributable to
CME Group:
Basic $0.79 $0.79
Diluted 0.78 0.79
Adjusted Earnings per
Common Share
Attributable to CME
Group:
Basic $0.95 $0.77
Diluted 0.95 0.77
Weighted Average Number
of Common Shares:
Basic 336,036 334,097
Diluted 337,796 335,800
1. Second-quarter 2015
results included foreign
exchange transaction net
gains principally related to
cash held in British pounds
within foreign entities whose
functional currency is the
U.S. dollar.
2. In the second quarter of
2015, the company recognized
additional real estate taxes
and fees related to the
transfer of ownership of the
NYMEX building, which was
acquired by CME Group in 2008
and sold in 2013.
3. Other income tax items
include the impact of
deferred tax expense
recognized for a rate change
due to a state and local tax
law change in the second
quarter of 2015.
CME-G
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cme-group-inc-reports-strong-second-quarter-2015-financial-results-300121016.html
SOURCE CME Group Inc.
