- Second-quarter 2015 revenues rose 12 percent to $820 million
- Second-quarter 2015 adjusted net income attributable to CME Group of $320 million and adjusted diluted earnings per share of $0.95 both grew more than 20 percent(1)
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 $0.951.
"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 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 |
|||||||||||
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 Ended |
Quarter Ended |
||||||||||||||||||||||||||||
June 30, 2015 |
June 30, 2014 |
||||||||||||||||||||||||||||
GAAP Net Income Attributable to CME Group |
$ |
265.0 |
$ |
263.8 |
|||||||||||||||||||||||||
Foreign exchange transaction gains1 |
(11.1) |
(5.5) |
|||||||||||||||||||||||||||
Real estate taxes and fees2 |
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 items3 |
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. |