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TRANSCRIPT
ICE Overview
INTERCONTINENTAL EXCHANGE
A Global Market Infrastructure Provider
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Trading
Data
Clearing
Data
Global Markets Energy, Ags & Metals Rates & FX Equities Fixed Income & Credit Digital Assets
6 clearing houses across the globe; comprehensive risk management solutions
Price, value & analyze: index calculation, reporting & post-trade risk mgmt
Flexible data delivery options through ICE Global Network
World’s deepest and broadest source of mission-critical derived data & analytics critical to pre-trade workflows
Synergies Between Data and Trading Drive a Virtuous Cycle
INTERCONTINENTAL EXCHANGE
ICE is formed to develop a transparent marketplace for OTC
energy
2000
ICE acquires the New York Board of Trade (NYBOT); acquired clearing tech/expertise and expanded global commodity
footprint
20072001
ICE expands into energy futures by acquiring the International Petroleum
Exchange
20082003
ICE Data Services is launched with ICE’s proprietary data and
indices
ICE acquires CDS interdealer broker Creditex, providing a foundation to build ICE Clear
Credit, which today is the largest CDS Clearing House in the world
2013 2015 2017 2018
With ICE’s fixed income pricing & reference data
as a foundation, ICE acquires BofAML’s Index
business, the second largest fixed income index platform in the
world
Leveraging NYBOT clearing knowledge & technology, ICE stands up ICE Clear
Europe, the UK’s first new clearing house in 100 years and today one of the largest
in the world
2019
ICE expands Mortgage Services digital offering, with
acquisition of Simplifile
ICE enters the fixed income markets acquiring IDC, a
leading provider of mission critical fixed income pricing, reference data & analytics
Leveraging trading & clearing infrastructure,
ICE expands presence in the financial futures
space with the acquisition of NYSE Euronext; ICE also expands into cash equities & options
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A History of Innovation Evolution Through Organic Initiatives and Strategic Acquisitions
2009 2010
ICE expands its natural gas footprint into Europe
with the acquisition of Endex
ICE expands into the emissions market by acquiring the Climate
Exchange
ICE acquires full ownership of MERSCorp and established ICE
Mortgage Services
ICE acquires fixed income execution venues BondPoint and TMC
ICE forms Bakkt, a global regulated ecosystem for
digital assets
INTERCONTINENTAL EXCHANGE(1) Net of transaction-based expenses.Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
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14Consecutive Years
of EPS Growth
58%Adjusted
Operating Margins
51%Recurring Revenues
Data Services42%
Global Derivatives
31%
Other12%
Listings9%
2019 Net Revenue(1)
$5.2B, +5% y/y, cc
Balanced Revenue Mix, Leading Margins, Consistent Growth
Cash Equities & Equity Options, Net 6%
Trading & Clearing
49%
INTERCONTINENTAL EXCHANGE
2019 Net Revenue $2.5B
(1) Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures. (2) Peer group consists of CME Group Inc., Deutsche Boerse Ag, and the transaction-based businesses of Nasdaq Inc. and London Stock Exchange Plc. Source: Company’s public filings.
64%
61%
ICE Peer Group
Trading & Clearing Built on Global Benchmarks
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Exchanges & clearing houses in the U.S., Canada, UK, EU and Singapore spanning major asset classes
Flagship Brent, Gasoil, global natural gas, leading UK & European interest rates complex, MSCI and FX
Scaled business with above-peer operating margins
Commercial client base & unique data and clearing infrastructure facilitates organic product development
Diversified Trading & Clearing Revenue MixHigh Margin Business
Trading & Clearing Adj Op Margin2019
(1) (2)
Brent12%
Other Oil10%
Gas, Power & Emissions
17%
Ags & Metals10%Interest Rates
8%
Equity Indices & FX
5%
Cash Equities & Options
12%
Fixed Income & Credit
14%
Other12%
INTERCONTINENTAL EXCHANGE
A Leading Global Energy Ecosystem
BRENT+126 spread
contracts
WTI+107 spread
contracts
PLATTS DUBAI
+ 34 spread contracts
NA Basis Market
TTF GasGasoilNBP Gas
JKM
Japan Naptha
Singapore GasoilFuel OilJet
RBOBHeating OilGC Fuel Oil
Key
ICE Crude Benchmarks
ICE Key LNG Contracts
Key Global Oil & Gas Trade Flows
ICE Key Nat Gas Markets
ICE Key Refined Oil Markets
EU EmissionsUS Emissions
ICE Key Emissions Markets
INTERCONTINENTAL EXCHANGE
A Diversified Suite of Financial Products
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Interest Rates
8%
Equity Indices & FX5%
Cash Equities & Options
12%
Fixed Income & Credit
14%
Fixed Income & Credit
~95% share of global CDS cleared
Multiple electronic execution protocols serving the corporate, muni and UST fixed income markets
Electronic solutions and products facilitating the digitization of the U.S. mortgage market
Cash Equities & Options
5 cash equity and 2 options exchanges
Leading U.S. cash equity market share of 24%
Equity Derivatives
MSCI, FTSE & FAANG index futures & options
MSCI Emerging Markets Futures one of the top 5 largest equity index contracts globally; MSCI volume +28% on average since 2014
Interest Rate Derivatives
Full UK interest rate curve from overnight to 30 years (Short Sterling & Gilts)
Short-term European interest rates (Euribor), as well as a global suite of rate products including: Euroswiss, SONIA, SOFR, SARON & EONIA
INTERCONTINENTAL EXCHANGE
Compounding Growth in Data ServicesData & Analytics Across the Major Asset Classes
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ICE Data Services Revenue
(1) Revenue numbers in chart represent as-reported data services revenue, including businesses that have been acquired, divested or discontinued .(2) Organic growth excludes businesses that have been acquired, divested or discontinued that significantly impact the comparable periods. Revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from the prior year period.
Trailing 12 Month Data Services Revenues(1)
49%
32%
19%
Pricing & Analytics Exchange Data & Feeds
Desktops & Connectivity
$2.2BFY 2019
$1,900
$1,950
$2,000
$2,050
$2,100
$2,150
$2,200
$2,250
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
Consistent, subscription-based
revenue growth
$s in millions
INTERCONTINENTAL EXCHANGE
▪ Evaluative Pricing: real-time & end of day prices on nearly 3 million fixed income & other hard to value securities globally
▪ Reference Data: terms and conditions on 33 million instruments across 210 markets to inform an array of risk management & compliance functions, index construction and improved operational efficiency
▪ Indices: fixed income, equity, commodity and currency indices; Second largest fixed income index provider, with over $1 trillion benchmarked AUM including $200 billion of fixed income ETF AUM, ~20% of industry AUM
▪ Analytics: best execution services, ICE Liquidity Indicators™ and fixed income and equity portfolio analytics
Mission Critical Proprietary ContentData & Analytics for Risk Management Workflows
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Exchange Data & Feeds
▪ Exchange Data: real-time, historical, and derived pricing data as well as order book and transaction information related to our trading venues, spanning global commodity and financial markets.
▪ Consolidated Feeds: data from a 150+ third-party trading venues and data/news feeds from 750 sources.
Pricing & Analytics
INTERCONTINENTAL EXCHANGE
Distributed Across A Global Network
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Depth and Breadth of Content & Community
Choice of Delivery
Ultra-High Security
▪ Reduced latency, increased resilience and flexibility, scalable bandwidth
▪ Fiber, wireless, co-location and hosted delivery options
▪ Private network that avoids operational and security vulnerabilities present with Internet connectivity
▪ Direct connectivity to 150+ global markets
▪ Access to 750+ proprietary and other sources, including ICE Data Services content
ICE GLOBAL
NETWORK
Flexible & Secure Connectivity & Content Distribution
INTERCONTINENTAL EXCHANGE
Applying Expertise to New & Evolving Markets
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Leveraging Core Infrastructure & Expertise to Drive Growth
▪ Leveraging core pricing & reference data, ICE is building new analytics, indices and other front-office tools to drive transparency across the fixed income workflow
▪ Launched ETF Hub, a platform that standardizes and brings efficiency to the ETF create redeem process
▪ ICE Bonds trading platforms now integrated with leading institutional order management systems (OMS), such as Aladdin & Charles River
Digital AssetsFixed Income Electronification
▪ Partnering with Starbucks, Microsoft and others, Bakkt is building a trading, payment & storage ecosystem that serves the $1 trillion digital asset marketplace
▪ Bolt-on acquisition of Bridge2Solutions, and launch of consumer app, expands ability to manage, convert and transact an array of digital assets on a single platform, ranging from crypto to air miles
▪ Physical Bitcoin futures & options trading launched in 2019
Digital Mortgage Solutions
▪ Building solutions to streamline the mortgage workflow
▪ MERS database home to ~75% of newly originated U.S. mortgages
▪ Simplifle is one of the largest e-recording networks covering U.S. counties accounting for 80% of the population
▪ Adoption of digital mortgage solutions is expanding with record eNote and record eRecording volume in 2019
Scalable Technology & Global Distribution
INTERCONTINENTAL EXCHANGE
A Proven Model for Long-Term Growth
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▪ 51% of total revenue is recurring
▪ Transaction business supported by leading global benchmarks and liquidity pools
▪ 2019 adj. op margin of 58%, above peer group average(1)
▪ Integrated and innovative technology platform supports cost-efficient business expansion
▪ Goal to return 100% of free cash flow to shareholders via dividends and buybacks, net of M&A
▪ 2019 Cap Ex/Software $305M
▪ Record capital return of nearly $2.1B in 2019, +19% y/y
▪ $2.7B operating cash flow in 2019
▪ Invest in new product development to expand range of content and distribution solutions
▪ Strategic M&A and alliances to leverage our core strengthsand drive growth
Balanced Recurring & Transaction-based
Revenue Growth
Strong Operating Margins
Strong Cash Flow & ROIC
Invest in Business and Rising Capital
Return
(1) Peer group consists of CME Group Inc., Deutsche Boerse Ag, Nasdaq Inc., London Stock Exchange Plc ., S&P Global Inc., MSCI Inc., IHS Markit LtdAdjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
INTERCONTINENTAL EXCHANGE
Rising Capital Return
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Capital Return PhilosophyDividend Growth
Grow the dividend as the company grows
Double-digit increase on avg. since 2013
Share Repurchases
100% of excess FCF, net of strategic M&A & dividends, allocated to share repurchases
Rising Capital Return
Nearly $2.1B returned to shareholders in 2019, +19% y/y
2.3x gross leverage – within target range to maintain A / A2 rating
$75 $299 $331 $409 $476 $555 $621
$618
$645 $660
$50
$949
$1,198
$1,460
$693
$944 $991
$459
$1,425
$1,753
$2,081
2008 -2013
2014 2015 2016 2017 2018 2019
Share Repurchases Dividends
INTERCONTINENTAL EXCHANGE
A Disciplined Approach to Strategic M&A
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Systematic, repeatable process for evaluating and valuing acquisitions
Rigorous Financial Criteria & Strict Valuation Principles
• Target returns greater than 10%
• ROIC above the cost of capital, with consistent growth after year 1
• 90%+ synergies achieved in first 3 years
• Accelerate growth of target company
Strategic Benefits Requirements
• Deepen moats
• Gain intellectual property
• Increase customer wallet-share
• Possess technology opportunity at its core
• Expand content / distribution
Disciplined Analytical ProcessProactive Approach to Identifying
Potential Targets
Leverage deep relationships with customers to gain insights
Monitor emerging technology
Conduct independent research on sector trends
INTERCONTINENTAL EXCHANGE
Consistent Track Record of GrowthAdj. EPS Growth Every Year as a NYSE-listed Company
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$0.48 $0.68
$0.83 $0.85 $1.07
$1.38 $1.50
$1.68 $1.92
$2.43
$2.79 $2.97
3.59
3.88
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(1)
(1)
(1)
(1)
(1)
(1)
(1) Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
(1)
INTERCONTINENTAL EXCHANGE
For Additional Information
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Investor Relations website:
www.ir.theice.com
Investor Relations contacts:
Warren Gardiner, CFAVice President, Investor [email protected]
Mary Caroline O'Neal, CPAManager, Investor [email protected]
Appendix
INTERCONTINENTAL EXCHANGE 18
Adjusted Net Income From Continuing Ops and EPS From Continuing Ops
Twelve Months Ended 12/31/2019
Twelve Months Ended 12/31/2018
Net income attributable to ICE common stockholders $ 1,933 $ 1,988
Add: Interactive Data transaction and integration costs and acquisition-related success fees — 30
Add: Amortization of acquisition-related intangibles 309 287
Add: Impairment of CAT promissory notes 16 —
Add: Impairment of exchange registration intangible assets on ICE Futures Singapore 31 —
Less: Gain on acquisition of MERS — (110)
Add: Impairment of exchange registration intangible assets on closure of ICE Futures Canada and ICE Clear Canada — 4
Add: Employee severance costs related to ICE Futures Canada and ICE Clear Canada operations — 4
Add: Gain on divestiture of Trayport, net — 1
Less: Income tax effect for the above items (90) (98)
Add/(Less): Tax adjustments from U.S. tax reform — (11)
Add/(Less): Deferred tax adjustments on acquisition-related intangibles (8) (5)
Add/(Less): Other tax adjustments 3 (13)
Adjusted net income attributable to ICE $ 2,194 $ 2,077
Diluted earnings per share attributable to ICE $ 3.42 $ 3.43
Adjusted diluted earnings per share attributable to ICE $ 3.88 $ 3.59
Diluted weighted average common shares outstanding 565 579
INTERCONTINENTAL EXCHANGE 19
Adjusted Net Income From Continuing Ops and EPS From Continuing Opsin millions except per share amounts
Twelve Months Ended
12/31/17
Twelve Months Ended
12/31/16
Twelve Months Ended
12/31/15
Twelve Months Ended
12/31/14
Twelve Months Ended
12/31/13
Net income attributable to ICE $2,526 $1,429 $1,274 $981 $254Add: Interactive Data and NYSE transaction and integration costs and acquisition-related success fees 31 46 83 124 140
Add: Impairment on divestiture of NYSE Governance Services 6 — — — —
Add: Accruals relating to investigations and inquiries 14 — — — —
Add: Employee severance costs related to Creditex U.K. brokerage operations — 4 — — —
Add: Creditex customer relationship intangible asset impairment — 33 — — —Add: Litigation settlements and accruals, net of insurance proceeds — — 15 — —Add: Amortization of acquisition-related intangibles 261 302 140 131 56Less: Gain on divestiture of Trayport, net (110) — — — —Add / (Less): Cetip impairment loss / investment gain, net (167) — — — 190Add: Duplicate rent expense and lease termination costs — — — — 7
Add: Early payoff of outstanding debt — — — — 51Add: Pre-acquisition interest expense on debt issued for Interactive Data acquisition — — 5 — —
Less: Income from OCC equity investment — — — (26) —
Less: Net gain of sale of 6% remaining ownership in Euronext — — — (4) —
Less: Income tax effect for the above items (43) (143) (83) (89) (85)
Less: Deferred tax adjustment from U.S. tax rate reduction (764) — — — —
Add / (Less): Deferred tax adjustment on acquisition-related intangibles 10 (22) (82) (14) —
Add: Other tax adjustments — 23 7 12 —
Add/(Less): Income (loss) from discontinued operations, net of tax — — — (11) 50
Adjusted net income attributable to ICE $1,764 $1,672 $1,359 $1,104 $663
Diluted EPS $ 4.25 $ 2.39 $ 2.28 $ 1.69 $ 0.77
Adjusted Diluted EPS $2.97 $2.79 $2.43 $1.92 $1.68
Diluted weighted average common shares outstanding 594 599 559 573 396
INTERCONTINENTAL EXCHANGE 20
Adjusted Operating Income, Operating Margin & Operating Expense Reconciliation
Trading and Clearing Segment Data and Listings Segment Consolidated
Twelve Months EndedDecember 31,
Twelve Months EndedDecember 31,
Twelve Months EndedDecember 31,
2019 2018 2019 2018 2019 2018
Total revenues, less transaction-based expenses $2,542 $2,420 $2,660 $2,559 $5,202 $4,979
Operating expenses $1,033 $911 $1,496 $1,485 $2,529 $2,396
Less: Interactive Data transaction and integration costs and acquisition-related success fees — 6 — 24 — 30
Less: Amortization of acquisition-related intangibles 94 73 215 214 309 287
Less: Impairment of exchange registration intangible assets on ICE Futures Singapore 31 — — — 31 —
Less: Impairment of exchange registration intangible assets on closure of ICE Futures Canada and ICE Clear Canada — 4 — — — 4
Less: Employee severance costs related to ICE Futures Canada and ICE Clear Canada operations — 4 — — — 4
Adjusted operating expenses $908 $824 $1,281 $1,247 $2,189 $2,071
Operating income $1,509 $1,509 $1,164 $1,074 $2,673 $2,583
Adjusted operating income $1,634 $1,596 $1,379 $1,312 $3,013 $2,908
Operating margin 59% 62% 44% 42% 51% 52%
Adjusted operating margin 64% 66% 52% 51% 58% 58%
INTERCONTINENTAL EXCHANGE 21
Free Cash Flow Calculation
in millionsTwelve Months Ended
12/31/2019Twelve Months Ended
12/31/2018
Cash flow from operations $2,659 $2,533
Less: Capital expenditures and capitalized software development costs (305) (280)
Add/(Less): Section 31 fees, net (34) 33
Free cash flow $2,320 $2,286
INTERCONTINENTAL EXCHANGE
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company formed in the year 2000 to modernize markets. ICE serves customers by operating the exchanges, clearing houses and information services they rely upon to invest, trade and manage risk across global financial and commodity markets. A leader in market data, ICE Data Services serves the information and connectivity needs across virtually all asset classes. As the parent company of the New York Stock Exchange, the company raises more capital than any other exchange in the world, driving economic growth and transforming markets.
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Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at http://www.intercontinentalexchange.com/terms-of-use. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key information Documents (KIDS)”.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 6, 2020.