CME Group Inc. Reports Strong Fourth-Quarter and Full-Year 2016 Financial Results
- Annual average daily volume reached a record 15.6 million contracts in 2016, including records in interest rates, energy, agricultural commodities, metals, total options and electronic options
- Fourth-quarter 2016 volume averaged 16.3 million contracts per day, up 24 percent versus fourth-quarter 2015, with quarterly average daily volume records in interest rates, energy and metals
- Annual revenue increased 8 percent compared with 2015 and fourth-quarter revenue 2016 grew 12 percent
CME Group Inc. (NASDAQ: CME) today reported revenue of
Total revenue for full-year 2016 was
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 and earnings presentation materials. |
"Our diverse risk management products and services continue to increase in demand, especially given the unpredictable nature of ongoing geopolitical changes, and our trading volume for the fourth quarter and full-year 2016 increased more than 12 percent, driving double-digit earnings growth over both periods," said
Fourth-quarter 2016 average daily volume was 16.3 million contracts, up 24 percent from fourth-quarter 2015. Clearing and transaction fee revenue was
Full-year 2016 record average daily volume was 15.6 million contracts, up 12 percent from 2015, and included annual records for interest rates, energy, agricultural commodities, metals, total options and electronic options. Clearing and transaction fee revenue was
As of
As the world's leading and most diverse derivatives marketplace,
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
| ||||||||
Consolidated Balance Sheets | ||||||||
(in millions) | ||||||||
|
| |||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ |
1,868.6 |
$ |
1,692.6 |
||||
Marketable securities |
83.3 |
72.5 |
||||||
Accounts receivable, net of allowance |
364.4 |
357.8 |
||||||
Other current assets (includes |
171.7 |
228.6 |
||||||
Performance bonds and guaranty fund contributions |
37,543.5 |
35,553.0 |
||||||
Total current assets |
40,031.5 |
37,904.5 |
||||||
Property, net of accumulated depreciation and amortization |
425.2 |
491.7 |
||||||
Intangible assets—trading products |
17,175.3 |
17,175.3 |
||||||
Intangible assets—other, net |
2,441.8 |
2,537.9 |
||||||
|
7,569.0 |
7,569.0 |
||||||
Other assets (includes |
1,726.6 |
1,681.0 |
||||||
Total Assets |
$ |
69,369.4 |
$ |
67,359.4 |
||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ |
26.2 |
$ |
28.7 |
||||
Other current liabilities |
1,376.7 |
1,242.8 |
||||||
Performance bonds and guaranty fund contributions |
37,542.7 |
35,553.0 |
||||||
Total current liabilities |
38,945.6 |
36,824.5 |
||||||
Long-term debt |
2,231.2 |
2,229.3 |
||||||
Deferred income tax liabilities, net |
7,291.0 |
7,358.3 |
||||||
Other liabilities |
560.9 |
395.5 |
||||||
Total Liabilities |
49,028.7 |
46,807.6 |
||||||
Shareholders' equity |
20,340.7 |
20,551.8 |
||||||
Total Liabilities and Equity |
$ |
69,369.4 |
$ |
67,359.4 |
| ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(dollars in millions, except per share amounts; shares in thousands) | ||||||||||||||||
Quarter Ended |
Year Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Revenues |
||||||||||||||||
Clearing and transaction fees |
$ |
768.5 |
$ |
678.9 |
$ |
3,036.4 |
$ |
2,783.9 |
||||||||
Market data and information services |
100.1 |
99.1 |
406.5 |
399.4 |
||||||||||||
Access and communication fees |
23.7 |
21.7 |
91.4 |
86.1 |
||||||||||||
Other |
20.6 |
14.1 |
60.9 |
57.4 |
||||||||||||
Total Revenues |
912.9 |
813.8 |
3,595.2 |
3,326.8 |
||||||||||||
Expenses |
||||||||||||||||
Compensation and benefits |
146.8 |
134.5 |
541.0 |
553.7 |
||||||||||||
Communications |
6.9 |
6.5 |
26.8 |
27.8 |
||||||||||||
Technology support services |
18.4 |
17.4 |
70.8 |
64.5 |
||||||||||||
Professional fees and outside services |
40.2 |
32.2 |
144.4 |
122.8 |
||||||||||||
Amortization of purchased intangibles |
24.1 |
24.6 |
96.1 |
99.4 |
||||||||||||
Depreciation and amortization |
33.7 |
31.7 |
129.2 |
129.2 |
||||||||||||
Occupancy and building operations |
21.4 |
23.1 |
86.7 |
92.5 |
||||||||||||
Licensing and other fee agreements |
32.5 |
31.3 |
135.8 |
123.8 |
||||||||||||
Other |
48.7 |
42.6 |
161.7 |
124.4 |
||||||||||||
Total Expenses |
372.7 |
343.9 |
1,392.5 |
1,338.1 |
||||||||||||
Operating Income |
540.2 |
469.9 |
2,202.7 |
1,988.7 |
||||||||||||
Non-Operating Income (Expense) |
||||||||||||||||
Investment income |
70.5 |
3.4 |
141.8 |
30.1 |
||||||||||||
Gains (losses) on derivative investments |
— |
— |
— |
(1.8) |
||||||||||||
Interest and other borrowing costs |
(31.6) |
(28.9) |
(123.5) |
(117.4) |
||||||||||||
Equity in net earnings (losses) of unconsolidated subsidiaries |
27.8 |
24.9 |
110.2 |
100.0 |
||||||||||||
Other non-operating income (expense) |
(12.7) |
(0.8) |
(43.6) |
(42.8) |
||||||||||||
Total Non-Operating |
54.0 |
(1.4) |
84.9 |
(31.9) |
||||||||||||
Income before Income Taxes |
594.2 |
468.5 |
2,287.6 |
1,956.8 |
||||||||||||
Income tax provision |
220.8 |
176.8 |
753.5 |
709.8 |
||||||||||||
Net Income |
$ |
373.4 |
$ |
291.7 |
$ |
1,534.1 |
$ |
1,247.0 |
||||||||
Earnings per Common Share: |
||||||||||||||||
Basic |
$ |
1.10 |
$ |
0.87 |
$ |
4.55 |
$ |
3.71 |
||||||||
Diluted |
1.10 |
0.86 |
4.53 |
3.69 |
||||||||||||
Weighted Average Number of Common Shares: |
||||||||||||||||
Basic |
338,083 |
336,844 |
337,496 |
336,224 |
||||||||||||
Diluted |
339,338 |
338,253 |
338,966 |
337,894 |
| |||||||||||||||
Quarterly Operating Statistics | |||||||||||||||
4Q 2015 |
1Q 2016 |
2Q 2016 |
3Q 2016 |
4Q 2016 | |||||||||||
Trading Days |
64 |
61 |
64 |
64 |
63 | ||||||||||
Quarterly Average Daily Volume (ADV) | |||||||||||||||
CME Group ADV (in thousands) | |||||||||||||||
Product Line |
4Q 2015 |
1Q 2016 |
2Q 2016 |
3Q 2016 |
4Q 2016 | ||||||||||
Interest rate |
6,097 |
8,246 |
6,776 |
6,791 |
8,300 |
||||||||||
Equity |
2,743 |
3,557 |
2,957 |
2,876 |
2,875 |
||||||||||
Foreign exchange |
779 |
944 |
838 |
772 |
883 |
||||||||||
Energy |
2,032 |
2,536 |
2,322 |
2,294 |
2,586 |
||||||||||
Agricultural commodity |
1,200 |
1,206 |
1,722 |
1,156 |
1,193 |
||||||||||
Metal |
326 |
454 |
468 |
431 |
488 |
||||||||||
Total |
13,178 |
16,944 |
15,082 |
14,319 |
16,325 |
||||||||||
Venue |
|||||||||||||||
Electronic |
11,420 |
14,713 |
13,355 |
12,672 |
14,375 |
||||||||||
Open outcry |
1,055 |
1,423 |
1,075 |
982 |
1,130 |
||||||||||
Privately negotiated |
704 |
807 |
651 |
665 |
820 |
||||||||||
Total |
13,178 |
16,944 |
15,082 |
14,319 |
16,325 |
Average Rate Per Contract (RPC) | |||||||||||||||||||||||
CME Group RPC | |||||||||||||||||||||||
Product Line |
4Q 2015 |
1Q 2016 |
2Q 2016 |
3Q 2016 |
4Q 2016 | ||||||||||||||||||
Interest rate |
$ |
0.517 |
$ |
0.501 |
$ |
0.496 |
$ |
0.508 |
$ |
0.491 |
|||||||||||||
Equity |
0.718 |
0.726 |
0.709 |
0.676 |
0.691 |
||||||||||||||||||
Foreign exchange |
0.813 |
0.767 |
0.798 |
0.806 |
0.804 |
||||||||||||||||||
Energy |
1.232 |
1.203 |
1.168 |
1.097 |
1.099 |
||||||||||||||||||
Agricultural commodity |
1.339 |
1.321 |
1.291 |
1.335 |
1.336 |
||||||||||||||||||
Metal |
1.644 |
1.597 |
1.562 |
1.542 |
1.486 |
||||||||||||||||||
Average RPC |
$ |
0.789 |
$ |
0.756 |
$ |
0.782 |
$ |
0.750 |
$ |
0.731 |
| |||||||||||||||||||||||||||||||||||
Reconciliation of GAAP to non-GAAP Measures | |||||||||||||||||||||||||||||||||||
(dollars in millions, except per share amounts; shares in thousands) | |||||||||||||||||||||||||||||||||||
Quarter Ended |
Year Ended |
||||||||||||||||||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||||||||||||||||||||
Net Income |
$ |
373.4 |
$ |
291.7 |
$ |
1,534.1 |
$ |
1,247.0 |
|||||||||||||||||||||||||||
Restructuring, severance and retirement |
12.9 |
— |
12.9 |
21.0 |
|||||||||||||||||||||||||||||||
Acquisition-related costs |
— |
— |
— |
0.9 |
|||||||||||||||||||||||||||||||
Amortization of purchased intangibles |
24.1 |
24.6 |
96.1 |
99.4 |
|||||||||||||||||||||||||||||||
Loss on disposal of building assets |
4.0 |
— |
9.3 |
— |
|||||||||||||||||||||||||||||||
Loss and expenses related to sale-leaseback of data center |
— |
— |
28.6 |
— |
|||||||||||||||||||||||||||||||
Real estate taxes and fees |
— |
— |
— |
10.0 |
|||||||||||||||||||||||||||||||
Foreign exchange transaction losses (gains)1 |
8.0 |
5.2 |
24.5 |
11.3 |
|||||||||||||||||||||||||||||||
Net (gains) losses on CME Venture investments |
— |
— |
(1.4) |
— |
|||||||||||||||||||||||||||||||
(Gains) losses on sale of BM&FBOVESPA shares |
(42.0) |
11.9 |
(48.4) |
8.5 |
|||||||||||||||||||||||||||||||
Debt prepayment costs |
— |
— |
— |
64.1 |
|||||||||||||||||||||||||||||||
GFI termination fee - net of the portion paid to outside advisers |
— |
— |
— |
(22.5) |
|||||||||||||||||||||||||||||||
Income tax effect related to above |
7.2 |
(12.0) |
(30.1) |
(63.4) |
|||||||||||||||||||||||||||||||
Other income tax items2 |
(0.3) |
5.6 |
(89.3) |
(8.4) |
|||||||||||||||||||||||||||||||
Adjusted Net Income |
$ |
387.3 |
$ |
327.0 |
$ |
1,536.3 |
$ |
1,367.9 |
|||||||||||||||||||||||||||
GAAP Earnings per Common Share: |
|||||||||||||||||||||||||||||||||||
Basic |
$ |
1.10 |
$ |
0.87 |
$ |
4.55 |
$ |
3.71 |
|||||||||||||||||||||||||||
Diluted |
1.10 |
0.86 |
4.53 |
3.69 |
|||||||||||||||||||||||||||||||
Adjusted Earnings per Common Share: |
|||||||||||||||||||||||||||||||||||
Basic |
$ |
1.15 |
$ |
0.97 |
$ |
4.55 |
$ |
4.07 |
|||||||||||||||||||||||||||
Diluted |
1.14 |
0.97 |
4.53 |
4.05 |
|||||||||||||||||||||||||||||||
Weighted Average Number of Common Shares: |
|||||||||||||||||||||||||||||||||||
Basic |
338,083 |
336,844 |
337,496 |
336,224 |
|||||||||||||||||||||||||||||||
Diluted |
339,338 |
338,253 |
338,966 |
337,894 |
1. Results include foreign exchange transaction net losses principally related to cash held in British pounds within foreign entities whose functional currency is the |
|||||||||||||||||||||||||||||||||||
2. Income tax benefit recognized from historical losses in our investment in BM&FBOVESPA in the third quarter of 2016 and income tax impacts related to the remeasurement of tax positions resulting from state and local income tax changes. |
CME-G
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SOURCE CME Group Inc.
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