CHICAGO, Oct. 27, 2016 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported revenue of $842
million and operating income of $525
million for the third quarter of 2016. Net income was
$473 million and diluted earnings per
share were $1.39. On an
adjusted basis, net income was $357
million and diluted earnings per share were $1.05. Financial results presented on an
adjusted basis for the third quarter of 2016 and 2015 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
"Our solid third-quarter results included 22 percent
year-over-year growth in metals average daily volume and 17 percent
growth in energy," said CME Group Executive Chairman and President
Terry Duffy. "We are pleased
with the overall results this quarter considering there was a
significant reduction in market volatility, primarily in financial
products, from the same period last year. That was our best
quarter during 2015, and represented the second-highest quarterly
revenue in our history at that time. From a year-to-date
perspective, we have driven record volume levels and our adjusted
expenses have remained essentially flat. As a result, we have
been able to grow adjusted earnings per share by double digits,
while also returning $1.6 billion of
dividends to our shareholders."
"We continue to focus on globalizing our business, growing our
options franchise and providing innovative product extensions to
solve challenges our customers face," said CME Group Chief
Executive Officer Phupinder
Gill. "We made progress during the quarter, as
evidenced by the continued expansion of volume from outside
the United States – most
significantly in Asia in both
energy and metals. The proportion of average daily options
volume traded electronically hit an all-time high in the third
quarter, which has already been surpassed so far in the fourth
quarter. During the third quarter, average daily volume of
our highly successful Ultra 10-year Treasury futures contract
expanded by 17 percent compared with the second quarter. In
addition, our new Wednesday Weekly Equity Options, launched in
September, have averaged more than 25,000 contracts per day."
Third-quarter 2016 average daily volume was 14.3 million
contracts, flat compared with an exceptionally strong third-quarter
2015. Clearing and transaction fee revenue was $704 million, down 2 percent compared with
third-quarter 2015. Third-quarter 2016 total average rate per
contract was 75.0 cents, down from
78.2 cents in second-quarter 2016,
driven by a mix shift in venue as well as member/non-member
proportion primarily within equities and energy. Market data
revenue was $101 million, up 2
percent compared with the third quarter last year.
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.
|
As of September 30, 2016, the
company had $1.5 billion of cash and
marketable securities and $2.2
billion of long-term debt. The company paid the
regular third-quarter dividend of approximately $203 million at the end of September, bringing
the amount paid in dividends to shareholders to date in 2016 to
$1.6 billion. The company has
returned more than $6 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
third-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 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. 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)
|
|
|
|
September
30, 2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,420.5
|
|
|
$
|
1,692.6
|
|
Marketable
securities
|
|
83.3
|
|
|
72.5
|
|
Accounts receivable,
net of allowance
|
|
395.7
|
|
|
357.8
|
|
Other current assets
(includes $29.5 and $32.0 in restricted cash)
|
|
269.4
|
|
|
228.6
|
|
Performance bonds and
guaranty fund contributions
|
|
31,607.1
|
|
|
35,553.0
|
|
Total current
assets
|
|
33,776.0
|
|
|
37,904.5
|
|
Property, net of
accumulated depreciation and amortization
|
|
426.7
|
|
|
491.7
|
|
Intangible
assets—trading products
|
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
|
2,465.9
|
|
|
2,537.9
|
|
Goodwill
|
|
7,569.0
|
|
|
7,569.0
|
|
Other assets
(includes $64.4 and $70.5 in restricted cash)
|
|
1,838.4
|
|
|
1,681.0
|
|
Total
Assets
|
|
$
|
63,251.3
|
|
|
$
|
67,359.4
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
34.5
|
|
|
$
|
28.7
|
|
Other current
liabilities
|
|
247.0
|
|
|
1,242.8
|
|
Performance bonds and
guaranty fund contributions
|
|
31,604.9
|
|
|
35,553.0
|
|
Total current
liabilities
|
|
31,886.4
|
|
|
36,824.5
|
|
Long-term
debt
|
|
2,230.7
|
|
|
2,229.3
|
|
Deferred income tax
liabilities, net
|
|
7,317.7
|
|
|
7,358.3
|
|
Other
liabilities
|
|
551.6
|
|
|
395.5
|
|
Total
Liabilities
|
|
41,986.4
|
|
|
46,807.6
|
|
Shareholders'
equity
|
|
21,264.9
|
|
|
20,551.8
|
|
Total Liabilities and
Equity
|
|
$
|
63,251.3
|
|
|
$
|
67,359.4
|
|
CME Group Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
|
$
|
704.2
|
|
|
$
|
715.0
|
|
|
$
|
2,267.9
|
|
|
$
|
2,105.0
|
|
Market data and
information services
|
|
101.1
|
|
|
99.5
|
|
|
306.4
|
|
|
300.3
|
|
Access and
communication fees
|
|
23.8
|
|
|
21.6
|
|
|
67.7
|
|
|
64.4
|
|
Other
|
|
12.6
|
|
|
14.2
|
|
|
40.3
|
|
|
43.3
|
|
Total
Revenues
|
|
841.7
|
|
|
850.3
|
|
|
2,682.3
|
|
|
2,513.0
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
130.6
|
|
|
136.4
|
|
|
394.2
|
|
|
419.2
|
|
Communications
|
|
6.9
|
|
|
7.1
|
|
|
19.9
|
|
|
21.3
|
|
Technology support
services
|
|
17.3
|
|
|
15.4
|
|
|
52.4
|
|
|
47.1
|
|
Professional fees and
outside services
|
|
33.5
|
|
|
33.8
|
|
|
104.2
|
|
|
90.6
|
|
Amortization of
purchased intangibles
|
|
24.0
|
|
|
24.9
|
|
|
72.0
|
|
|
74.8
|
|
Depreciation and
amortization
|
|
31.2
|
|
|
32.4
|
|
|
95.5
|
|
|
97.5
|
|
Occupancy and
building operations
|
|
19.6
|
|
|
23.1
|
|
|
65.3
|
|
|
69.4
|
|
Licensing and other
fee agreements
|
|
31.5
|
|
|
33.1
|
|
|
103.3
|
|
|
92.5
|
|
Other
|
|
21.8
|
|
|
27.7
|
|
|
113.0
|
|
|
81.8
|
|
Total
Expenses
|
|
316.4
|
|
|
333.9
|
|
|
1,019.8
|
|
|
994.2
|
|
Operating
Income
|
|
525.3
|
|
|
516.4
|
|
|
1,662.5
|
|
|
1,518.8
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
|
36.5
|
|
|
2.5
|
|
|
71.3
|
|
|
26.7
|
|
Gains (losses) on
derivative investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.8)
|
|
Interest and other
borrowing costs
|
|
(31.1)
|
|
|
(28.3)
|
|
|
(91.9)
|
|
|
(88.5)
|
|
Equity in net
earnings (losses) of unconsolidated subsidiaries
|
|
28.6
|
|
|
26.6
|
|
|
82.4
|
|
|
75.1
|
|
Other non-operating
income (expense)
|
|
(10.5)
|
|
|
(0.8)
|
|
|
(30.9)
|
|
|
(42.0)
|
|
Total
Non-Operating
|
|
23.5
|
|
|
—
|
|
|
30.9
|
|
|
(30.5)
|
|
Income before
Income Taxes
|
|
548.8
|
|
|
516.4
|
|
|
1,693.4
|
|
|
1,488.3
|
|
Income tax
provision
|
|
76.0
|
|
|
156.5
|
|
|
532.7
|
|
|
533.0
|
|
Net
Income
|
|
$
|
472.8
|
|
|
$
|
359.9
|
|
|
$
|
1,160.7
|
|
|
$
|
955.3
|
|
Earnings per
Common Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.40
|
|
|
$
|
1.07
|
|
|
$
|
3.44
|
|
|
$
|
2.84
|
|
Diluted
|
|
1.39
|
|
|
1.06
|
|
|
3.43
|
|
|
2.83
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
337,592
|
|
|
336,323
|
|
|
337,299
|
|
|
336,015
|
|
Diluted
|
|
339,143
|
|
|
338,139
|
|
|
338,834
|
|
|
337,804
|
|
CME Group Inc. and
Subsidiaries
|
Quarterly
Operating Statistics
|
|
|
|
3Q
2015
|
|
4Q
2015
|
|
1Q
2016
|
|
2Q
2016
|
|
3Q
2016
|
Trading
Days
|
|
64
|
|
|
64
|
|
|
61
|
|
|
64
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Daily Volume (ADV)
|
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
|
3Q
2015
|
|
4Q
2015
|
|
1Q
2016
|
|
2Q
2016
|
|
3Q
2016
|
Interest
rate
|
|
6,658
|
|
|
6,097
|
|
|
8,246
|
|
|
6,776
|
|
|
6,791
|
|
Equity
|
|
3,287
|
|
|
2,743
|
|
|
3,557
|
|
|
2,957
|
|
|
2,876
|
|
Foreign
exchange
|
|
855
|
|
|
779
|
|
|
944
|
|
|
838
|
|
|
772
|
|
Energy
|
|
1,965
|
|
|
2,032
|
|
|
2,536
|
|
|
2,322
|
|
|
2,294
|
|
Agricultural
commodity
|
|
1,267
|
|
|
1,200
|
|
|
1,206
|
|
|
1,722
|
|
|
1,156
|
|
Metal
|
|
353
|
|
|
326
|
|
|
454
|
|
|
468
|
|
|
431
|
|
Total
|
|
14,384
|
|
|
13,178
|
|
|
16,944
|
|
|
15,082
|
|
|
14,319
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
|
12,620
|
|
|
11,420
|
|
|
14,713
|
|
|
13,355
|
|
|
12,672
|
|
Open
outcry
|
|
1,110
|
|
|
1,055
|
|
|
1,423
|
|
|
1,075
|
|
|
982
|
|
Privately
negotiated
|
|
653
|
|
|
704
|
|
|
807
|
|
|
651
|
|
|
665
|
|
Total
|
|
14,384
|
|
|
13,178
|
|
|
16,944
|
|
|
15,082
|
|
|
14,319
|
|
Average Rate Per
Contract (RPC)
|
|
CME Group
RPC
|
|
Product
Line
|
|
3Q
2015
|
|
4Q
2015
|
|
1Q
2016
|
|
2Q
2016
|
|
3Q
2016
|
Interest
rate
|
|
$
|
0.506
|
|
|
$
|
0.517
|
|
|
$
|
0.501
|
|
|
$
|
0.496
|
|
|
$
|
0.508
|
|
Equity
|
|
0.708
|
|
|
0.718
|
|
|
0.726
|
|
|
0.709
|
|
|
0.676
|
|
Foreign
exchange
|
|
0.785
|
|
|
0.813
|
|
|
0.767
|
|
|
0.798
|
|
|
0.806
|
|
Energy
|
|
1.197
|
|
|
1.232
|
|
|
1.203
|
|
|
1.168
|
|
|
1.097
|
|
Agricultural
commodity
|
|
1.290
|
|
|
1.339
|
|
|
1.321
|
|
|
1.291
|
|
|
1.335
|
|
Metal
|
|
1.600
|
|
|
1.644
|
|
|
1.597
|
|
|
1.562
|
|
|
1.542
|
|
Average
RPC
|
|
$
|
0.759
|
|
|
$
|
0.789
|
|
|
$
|
0.756
|
|
|
$
|
0.782
|
|
|
$
|
0.750
|
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended September 30,
2016
|
|
Nine Months
Ended September 30,
2016,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
Income
|
|
$
|
472.8
|
|
|
$
|
359.9
|
|
|
$
|
1,160.7
|
|
|
$
|
955.3
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
severance
|
|
—
|
|
|
13.6
|
|
|
—
|
|
|
21.0
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
Amortization of
purchased intangibles
|
|
24.0
|
|
|
24.9
|
|
|
72.0
|
|
|
74.8
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of
building assets
|
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
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
|
|
1.0
|
|
|
7.2
|
|
|
16.5
|
|
|
6.1
|
|
|
|
|
|
|
|
|
|
|
Net (gains) losses on
CME Venture investments
|
|
(5.2)
|
|
|
—
|
|
|
(1.4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on
sale of BM&FBOVESPA shares
|
|
(6.4)
|
|
|
2.5
|
|
|
(6.4)
|
|
|
(3.4)
|
|
|
|
|
|
|
|
|
|
|
Debt prepayment
costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64.1
|
|
|
|
|
|
|
|
|
|
|
GFI termination fee -
net of the portion paid to outside advisers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.5)
|
|
|
|
|
|
|
|
|
|
|
Income tax effect
related to above
|
|
(3.2)
|
|
|
(16.9)
|
|
|
(37.3)
|
|
|
(51.4)
|
|
|
|
|
|
|
|
|
|
|
Other income tax
items2
|
|
(126.4)
|
|
|
(31.4)
|
|
|
(89.0)
|
|
|
(14.0)
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
356.6
|
|
|
$
|
359.8
|
|
|
$
|
1,149.0
|
|
|
$
|
1,040.9
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per
Common Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.40
|
|
|
$
|
1.07
|
|
|
$
|
3.44
|
|
|
$
|
2.84
|
|
Diluted
|
|
1.39
|
|
|
1.06
|
|
|
3.43
|
|
|
2.83
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Common Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.06
|
|
|
$
|
1.07
|
|
|
$
|
3.41
|
|
|
$
|
3.10
|
|
Diluted
|
|
1.05
|
|
|
1.06
|
|
|
3.39
|
|
|
3.08
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
337,592
|
|
|
336,323
|
|
|
337,299
|
|
|
336,015
|
|
Diluted
|
|
339,143
|
|
|
338,139
|
|
|
338,834
|
|
|
337,804
|
|
|
|
|
|
|
|
|
|
|
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.
|
2. Income tax benefit
recognized from historical losses in our investment in
BM&FBOVESPA in the third quarter of 2016 and income tax expense
related to the remeasurement of tax positions resulting from state
and local income tax law changes in second-quarter 2016.
|
CME-G
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cme-group-inc-reports-strong-third-quarter-2016-financial-results-300352305.html
SOURCE CME Group