CME GROUP INC. CHICAGO, April 28, 2016 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME) today reported record revenue of $934 million and record operating income of $574 million for the first quarter of 2016. Net income was $368 million and diluted earnings per share were $1.09. Adjusted for non-recurring items, net income would have been $390 million and diluted earnings per share would have been $1.15(1).
"Our record first-quarter financial performance was driven by our highest quarterly average daily volume to date, including record volumes in energy, overall options and electronic options," said CME Group Executive Chairman and President Terry Duffy. "We delivered record revenue and operating income, and 17 percent growth in adjusted diluted earnings per share. These strong results reflect our continued progress in executing on our long-term growth initiatives. At the same time, we are committed to returning cash to our shareholders, as evidenced by $1.2 billion in dividends being paid out during the quarter."
"Strong, balanced performance across our diverse product portfolio, coupled with a continued focus on expense discipline, allowed us to expand our operating margin in the first quarter," said CME Group Chief Executive Officer Phupinder Gill. "We saw a significant increase in global participation in our markets, with average daily volume of 3.7 million contracts traded from outside of the United States, up 24 percent from first-quarter 2015. The solid quarterly activity was underscored by continued momentum in open interest, as we reached a record daily level of 116 million contracts in the first quarter, and open interest remains elevated."
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.
First-quarter 2016 average daily volume was a record 16.9 million contracts, up 13 percent from first-quarter 2015, and included quarterly records in energy, total options and electronic options. Clearing and transaction fee revenue was $796 million, up 12 percent compared with first-quarter 2015. First-quarter 2016 total average rate per contract was 75.6 cents, down from 78.9 cents in fourth-quarter 2015, driven primarily by a sequential product mix shift with an increased proportion of the volume from financial contracts which capture lower fees. Market data revenue was $102 million, up 5 percent compared with the first quarter last year.
As of March 31, 2016, the company had $1.2 billion of cash and marketable securities and $2.2 billion of long-term debt. The quarter-end cash balance includes $130 million from the company's sale/leaseback transaction with CyrusOne, Inc. related to the company's suburban Chicago data center. The company paid dividends during the first quarter of nearly $1.2 billion, consisting of the annual variable dividend for 2015 of $977 million and the regular first-quarter dividend of $203 million. The company has returned more than $5.8 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.
CME Group will hold a conference call to discuss first-quarter 2016 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 products and metals. Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its exchanges based in Chicago, New York and London. 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 and over-the-counter derivatives. CME Group's products and services ensure that businesses around the world can effectively manage risk and achieve growth.
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, the Chicago Board of Trade, KCBOT, KCBT and Kansas City 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 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; and the unfavorable resolution of material legal proceedings. 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)
March 31, 2016 December 31, 2015
-------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents $1,146.0 $1,692.6
Marketable securities 79.2 72.5
Accounts receivable, net of
allowance 389.3 357.8
Other current assets (includes
$32.0 in restricted cash in both
periods) 141.5 228.6
Performance bonds and guaranty
fund contributions 37,497.3 35,553.0
-------- --------
Total current assets 39,253.3 37,904.5
Property, net of accumulated
depreciation and amortization 449.8 491.7
Intangible assets-trading
products 17,175.3 17,175.3
Intangible assets-other, net 2,513.9 2,537.9
Goodwill 7,569.0 7,569.0
Other assets (includes $69.1 and
$70.5 in restricted cash) 1,806.9 1,681.0
------- -------
Total Assets $68,768.2 $67,359.4
========= =========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $32.2 $28.7
Other current liabilities 321.6 1,242.8
Performance bonds and guaranty
fund contributions 37,494.3 35,553.0
-------- --------
Total current liabilities 37,848.1 36,824.5
Long-term debt 2,229.8 2,229.3
Deferred income tax liabilities,
net 7,330.8 7,358.3
Other liabilities 518.1 395.5
----- -----
Total Liabilities 47,926.8 46,807.6
--------
Shareholders' equity 20,841.4 20,551.8
Total Liabilities and Equity $68,768.2 $67,359.4
========= =========
CME Group Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in millions, except per share amounts; shares in thousands)
Quarter Ended
March 31,
---------
2016 2015
---- ----
Revenues
Clearing and transaction
fees $796.1 $708.2
Market data and
information services 102.4 98.0
Access and communication
fees 21.6 21.3
Other 14.1 15.2
---- ----
Total Revenues 934.2 842.7
Expenses
Compensation and benefits 131.9 141.3
Communications 6.7 7.6
Technology support
services 17.4 15.6
Professional fees and
outside services 31.7 29.1
Amortization of purchased
intangibles 24.0 24.9
Depreciation and
amortization 33.9 31.8
Occupancy and building
operations 21.3 22.8
Licensing and other fee
agreements 39.0 30.6
Other 54.4 31.7
---- ----
Total Expenses 360.3 335.4
----- -----
Operating Income 573.9 507.3
Non-Operating Income
(Expense)
Investment income 17.6 5.7
Gains (losses) on
derivative investments - (1.8)
Interest and other
borrowing costs (29.8) (31.6)
Equity in net earnings
(losses) of
unconsolidated
subsidiaries 26.8 22.5
Other non-operating
income (expense) (10.0) 21.7
----- ----
Total Non-Operating 4.6 16.5
--- ----
Income before Income Taxes 578.5 523.8
Income tax provision 210.7 193.4
Net Income 367.8 330.4
===== =====
Earnings per Common Share:
Basic $1.09 $0.98
Diluted 1.09 0.98
Weighted Average Number of
Common Shares:
Basic 337,014 335,680
Diluted 338,549 337,416
CME Group Inc. and Subsidiaries
Quarterly Operating Statistics
1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016
------- ------- ------- ------- -------
Trading Days 61 64 64 64 61
Quarterly Average Daily Volume (ADV)
CME Group ADV (in thousands)
Product Line 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016
------- ------- ------- ------- -------
Interest rate 7,564 6,599 6,658 6,097 8,246
Equity 2,772 2,364 3,287 2,743 3,557
Foreign exchange 954 903 855 779 944
Energy 2,142 1,749 1,965 2,032 2,536
Agricultural
commodity 1,189 1,400 1,267 1,200 1,206
Metal 369 331 353 326 454
--- --- --- --- ---
Total 14,990 13,347 14,384 13,178 16,944
Venue
-----
Electronic 13,034 11,705 12,620 11,420 14,713
Open outcry 1,291 1,108 1,110 1,055 1,423
Privately negotiated 665 534 653 704 807
--- --- --- --- ---
Total 14,990 13,347 14,384 13,178 16,944
Average Rate Per Contract (RPC)
CME Group RPC
Product Line 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016
------- ------- ------- ------- -------
Interest rate $0.480 $0.502 $0.506 $0.517 $0.501
Equity 0.721 0.725 0.708 0.718 0.726
Foreign exchange 0.831 0.816 0.785 0.813 0.767
Energy 1.250 1.277 1.197 1.232 1.203
Agricultural
commodity 1.324 1.311 1.290 1.339 1.321
Metal 1.662 1.634 1.600 1.644 1.597
----- ----- ----- ----- -----
Average RPC $0.753 $0.777 $0.759 $0.789 $0.756
CME Group Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Measures
(dollars in millions, except per share amounts; shares in thousands)
Quarter Ended
March 31,
2016 2015
---- ----
Net Income $367.8 $330.4
Restructuring and
severance - 5.5
Loss on disposal of
building assets 1.3 -
Loss and expenses related
to sale-leaseback of
data center 28.6 -
Acquisition-related costs - 0.9
Foreign exchange
transaction losses(1) 3.9 10.0
Loss on derivatives and
debt costs for
refinancing - 2.3
GFI termination fee -net
of the portion paid to
outside advisers - (22.5)
Income tax effect related
to above (11.7) 2.9
Adjusted Net Income $389.9 $329.5
====== ======
GAAP Earnings per Common
Share:
Basic $1.09 $0.98
Diluted 1.09 0.98
Adjusted Earnings per
Common Share:
Basic $1.16 $0.98
Diluted 1.15 0.98
Weighted Average Number of
Common Shares:
Basic 337,014 335,680
Diluted 338,549 337,416
1. Results include foreign
exchange transaction net
losses principally related
to cash held in British
pounds within foreign
entities whose functional
currency is the U.S. dollar.
CME-G
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SOURCE CME Group Inc.
