CHICAGO, Oct. 28, 2020 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported financial results for the third
quarter of 2020.
The company reported revenue of $1.1
billion and operating income of $525
million for the third quarter of 2020. Net income was
$412 million and diluted earnings per
share were $1.15. On an
adjusted basis, net income was $495
million and diluted earnings per share were $1.38. Financial results presented on an
adjusted basis for the third quarter of 2020 and 2019 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
"Despite the many challenges created by the ongoing pandemic,
our metals, equities, agriculture and data services businesses
showed strong performance during the third quarter," said CME Group
Chairman and Chief Executive Officer Terry
Duffy. "Likewise, we continued to innovate amid the
extreme uncertainty, announcing a number of new products and
services across asset classes, including Micro E-mini options and
Nasdaq Veles California Water Index futures. In Q4, we remain
focused on adding new value through the migration of BrokerTec onto
CME Globex later this year, as well as providing risk management
tools to help our global clients as they continue to navigate
through this difficult economic environment."
Third-quarter 2020 ADV was 15.6 million contracts, including
non-U.S. ADV of 4.4 million contracts.
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.
|
Clearing and transaction fees revenue for third-quarter 2020
totaled $835.4 million. The total
average rate per contract was $0.716. Market data revenue totaled
$139.4 million for third-quarter
2020.
As of September 30, 2020, the
company had approximately $1.5
billion in cash (including $166
million deposited with Fixed Income Clearing Corporation
(FICC) and included in other current assets) and $3.4 billion of debt. The company paid
dividends during the third quarter of $304
million. The company has returned approximately
$14.1 billion to shareholders in the
form of dividends since the implementation of the variable dividend
policy in early 2012.
CME Group will hold a Q&A conference call to discuss
Third-quarter 2020 results at 8:30 a.m.
Eastern Time today. A live audio webcast of the
Q&A call will be available on the Investor Relations section of
CME Group's website 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) enables clients to trade futures,
options, cash and OTC markets, optimize portfolios, and analyze
data - empowering market participants worldwide to efficiently
manage risk and capture opportunities. CME Group exchanges offer
the widest range of global benchmark products across all major
asset classes based on interest rates, equity
indexes, foreign exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform, fixed
income trading via BrokerTec and foreign exchange trading on the
EBS platform. In addition, it operates one of the world's leading
central counterparty clearing providers, CME Clearing. With a range
of pre- and post-trade products and services underpinning the
entire lifecycle of a trade, CME Group also offers optimization and
reconciliation services through TriOptima, and trade processing
services through Traiana.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex, and, E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT and Chicago Board
of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are
trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB,
and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial
Average, S&P 500 and S&P are service and/or trademarks of
Dow Jones Trademark Holdings LLC, Standard & Poor's Financial
Services LLC and S&P/Dow Jones Indices LLC, as the case may be,
and have been licensed for use by Chicago Mercantile Exchange
Inc. All other trademarks are the property of their
respective owners.
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 at
substantially similar trading levels, develop strategic
relationships and attract new customers; our ability to expand and
globally offer our products and services; changes in regulations,
including the impact of any changes in laws or government policy
with respect to our products or services or 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 or changes to
regulations in various jurisdictions; 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 credit and liquidity risk
management practices to adequately protect us from the credit risks
of clearing members and other counterparties, and to satisfy the
margin and liquidity requirements associated with the BrokerTec
matched principal business; 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; our dependence on third-party
providers and exposure to risk through third-parties, including
risks related to the performance, reliability and security of
technology used by our third-party providers; volatility in
commodity, equity and fixed income prices, and price volatility of
financial benchmarks and instruments such as interest rates, credit
spreads, equity indices, fixed income instruments and foreign
exchange rates; economic, social, 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; the impact of the (COVID-19)
pandemic and response by governments and other third parties; 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, control the costs and achieve the synergies associated
with our strategy for acquisitions, investments and alliances,
including those associated with the acquisition of NEX; 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; our ability to maintain
our brand and reputation; and the unfavorable resolution of
material legal proceedings. For a detailed discussion and
additional information concerning these and other factors that
might affect our performance, see our other recent periodic
filings, including our Annual Report on Form 10-K for the year
ended December 31, 2019, as filed
with the Securities and Exchange Commission ("SEC") on February 22, 2020, under the caption "Risk
Factors" and in Item 1A of our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2020 as
filed with the SEC on August 5,
2020.
CME-G
CME Group Inc. and
Subsidiaries
Consolidated Balance Sheets
(in millions)
|
|
|
|
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,332.1
|
|
|
$
|
1,551.4
|
|
Marketable
securities
|
|
92.4
|
|
|
83.2
|
|
Accounts receivable,
net of allowance
|
|
490.9
|
|
|
491.8
|
|
Other current assets
(includes $4.5 and $4.3 in restricted cash)
|
|
350.1
|
|
|
364.4
|
|
Performance bonds and
guaranty fund contributions
|
|
88,083.8
|
|
|
37,077.0
|
|
Total current
assets
|
|
90,349.3
|
|
|
39,567.8
|
|
Property, net of
accumulated depreciation and amortization
|
|
547.2
|
|
|
544.0
|
|
Intangible
assets—trading products
|
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
|
4,893.8
|
|
|
5,117.7
|
|
Goodwill
|
|
10,755.8
|
|
|
10,742.5
|
|
Other assets
(includes $0.7 and $0.9 in restricted cash)
|
|
2,037.4
|
|
|
2,068.0
|
|
Total
Assets
|
|
$
|
125,758.8
|
|
|
$
|
75,215.3
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
99.5
|
|
|
$
|
61.9
|
|
Other current
liabilities
|
|
448.0
|
|
|
1,384.8
|
|
Performance bonds and
guaranty fund contributions
|
|
88,083.4
|
|
|
37,075.8
|
|
Total current
liabilities
|
|
88,630.9
|
|
|
38,522.5
|
|
Long-term
debt
|
|
3,442.2
|
|
|
3,743.2
|
|
Deferred income tax
liabilities, net
|
|
5,620.8
|
|
|
5,635.2
|
|
Other
liabilities
|
|
1,054.5
|
|
|
1,155.1
|
|
Total
Liabilities
|
|
98,748.4
|
|
|
49,056.0
|
|
CME Group
Shareholders' Equity
|
|
26,979.6
|
|
|
26,128.9
|
|
Non-controlling
interests
|
|
30.8
|
|
|
30.4
|
|
Total
Equity
|
|
27,010.4
|
|
|
26,159.3
|
|
Total Liabilities and
Equity
|
|
$
|
125,758.8
|
|
|
$
|
75,215.3
|
|
CME Group Inc. and
Subsidiaries
Consolidated Statements of Income
(dollars in millions, except per share amounts; shares in
thousands)
|
|
|
|
|
|
|
|
Quarter
Ended
September 30,
|
|
Nine Month
Ended,
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
|
$
|
835.4
|
|
|
$
|
1,040.7
|
|
|
$
|
3,054.4
|
|
|
$
|
3,045.1
|
|
Market data and
information services
|
|
139.4
|
|
|
129.8
|
|
|
405.6
|
|
|
388.2
|
|
Other
|
|
105.9
|
|
|
106.8
|
|
|
325.1
|
|
|
296.3
|
|
Total
Revenues
|
|
1,080.7
|
|
|
1,277.3
|
|
|
3,785.1
|
|
|
3,729.6
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
216.4
|
|
|
223.5
|
|
|
640.9
|
|
|
681.1
|
|
Technology
|
|
48.1
|
|
|
52.7
|
|
|
144.9
|
|
|
148.4
|
|
Professional fees and
outside services
|
|
48.4
|
|
|
43.2
|
|
|
141.3
|
|
|
124.3
|
|
Amortization of
purchased intangibles
|
|
78.3
|
|
|
79.8
|
|
|
232.2
|
|
|
236.6
|
|
Depreciation and
amortization
|
|
39.7
|
|
|
41.4
|
|
|
111.7
|
|
|
120.6
|
|
Licensing and other
fee agreements
|
|
57.7
|
|
|
45.6
|
|
|
187.0
|
|
|
130.9
|
|
Other
|
|
67.1
|
|
|
105.9
|
|
|
204.7
|
|
|
272.9
|
|
Total
Expenses
|
|
555.7
|
|
|
592.1
|
|
|
1,662.7
|
|
|
1,714.8
|
|
Operating
Income
|
|
525.0
|
|
|
685.2
|
|
|
2,122.4
|
|
|
2,014.8
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
|
23.6
|
|
|
172.3
|
|
|
151.6
|
|
|
490.3
|
|
Interest and other
borrowing costs
|
|
(41.7)
|
|
|
(42.8)
|
|
|
(124.5)
|
|
|
(136.0)
|
|
Equity in net earnings
(losses) of unconsolidated subsidiaries
|
|
44.0
|
|
|
48.0
|
|
|
144.0
|
|
|
132.3
|
|
Other non-operating
income (expense)
|
|
(14.4)
|
|
|
(139.5)
|
|
|
(106.4)
|
|
|
(435.9)
|
|
Total Non-Operating
Income (Expense)
|
|
11.5
|
|
|
38.0
|
|
|
64.7
|
|
|
50.7
|
|
Income before
Income Taxes
|
|
536.5
|
|
|
723.2
|
|
|
2,187.1
|
|
|
2,065.5
|
|
Income tax
provision
|
|
125.0
|
|
|
86.9
|
|
|
505.5
|
|
|
418.7
|
|
Net
Income
|
|
411.5
|
|
|
636.3
|
|
|
1,681.6
|
|
|
1,646.8
|
|
Less: net (income)
loss attributable to non-controlling interests
|
|
0.2
|
|
|
—
|
|
|
(0.4)
|
|
|
0.2
|
|
Net Income
Attributable to CME Group
|
|
$
|
411.7
|
|
|
$
|
636.3
|
|
|
$
|
1,681.2
|
|
|
$
|
1,647.0
|
|
Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.15
|
|
|
$
|
1.78
|
|
|
$
|
4.70
|
|
|
$
|
4.61
|
|
Diluted
|
|
1.15
|
|
|
1.78
|
|
|
4.69
|
|
|
4.60
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
357,791
|
|
|
357,211
|
|
|
357,669
|
|
|
357,054
|
|
Diluted
|
|
358,590
|
|
|
358,369
|
|
|
358,492
|
|
|
358,201
|
|
CME Group Inc. and
Subsidiaries
Quarterly Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q
2019
|
|
4Q
2019
|
|
1Q
2020
|
|
2Q
2020
|
|
3Q
2020
|
Trading
Days
|
|
64
|
|
|
64
|
|
|
62
|
|
|
63
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Daily Volume (ADV)(1)
CME Group ADV (in thousands)
|
|
Product
Line
|
|
3Q
2019
|
|
4Q
2019
|
|
1Q
2020
|
|
2Q
2020
|
|
3Q
2020
|
Interest
rates
|
|
10,868
|
|
|
8,638
|
|
|
13,813
|
|
|
6,890
|
|
|
5,315
|
|
Equity
indexes
|
|
3,931
|
|
|
3,252
|
|
|
6,498
|
|
|
5,568
|
|
|
5,410
|
|
Foreign
exchange
|
|
850
|
|
|
839
|
|
|
1,079
|
|
|
725
|
|
|
829
|
|
Energy
|
|
2,456
|
|
|
2,213
|
|
|
3,228
|
|
|
2,586
|
|
|
1,852
|
|
Agricultural
commodities
|
|
1,320
|
|
|
1,278
|
|
|
1,506
|
|
|
1,311
|
|
|
1,372
|
|
Metals
|
|
821
|
|
|
652
|
|
|
889
|
|
|
519
|
|
|
825
|
|
Total
|
|
20,247
|
|
|
16,872
|
|
|
27,013
|
|
|
17,599
|
|
|
15,603
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
CME Globex
|
|
18,282
|
|
|
15,356
|
|
|
24,582
|
|
|
16,992
|
|
|
15,054
|
|
Open outcry
(2)
|
|
1,177
|
|
|
867
|
|
|
1,281
|
|
|
—
|
|
|
108
|
|
Privately
negotiated
|
|
788
|
|
|
650
|
|
|
1,149
|
|
|
607
|
|
|
441
|
|
Total
|
|
20,247
|
|
|
16,872
|
|
|
27,013
|
|
|
17,599
|
|
|
15,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Rate Per Contract (RPC)(1)
CME Group RPC
|
|
Product
Line
|
|
3Q
2019
|
|
4Q
2019
|
|
1Q
2020
|
|
2Q
2020
|
|
3Q
2020
|
Interest
rates
|
|
$
|
0.500
|
|
|
$
|
0.507
|
|
|
$
|
0.488
|
|
|
$
|
0.510
|
|
|
$
|
0.506
|
|
Equity
indexes
|
|
0.612
|
|
|
0.654
|
|
|
0.616
|
|
|
0.574
|
|
|
0.525
|
|
Foreign
exchange
|
|
0.720
|
|
|
0.732
|
|
|
0.721
|
|
|
0.786
|
|
|
0.763
|
|
Energy
|
|
1.137
|
|
|
1.133
|
|
|
1.108
|
|
|
1.191
|
|
|
1.171
|
|
Agricultural
commodities
|
|
1.234
|
|
|
1.242
|
|
|
1.260
|
|
|
1.316
|
|
|
1.284
|
|
Metals
|
|
1.414
|
|
|
1.344
|
|
|
1.429
|
|
|
1.518
|
|
|
1.309
|
|
Average
RPC
|
|
$
|
0.693
|
|
|
$
|
0.717
|
|
|
$
|
0.676
|
|
|
$
|
0.731
|
|
|
$
|
0.716
|
|
|
|
|
|
|
|
|
|
|
|
|
1. ADV and RPC
includes futures and options on futures only.
|
|
|
2. The trading floor
was temporarily closed in March 2020 in response to the Illinois
stay-at-home order. We began a limited re-opening of the trading
floor in the third quarter of 2020.
|
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,
|
|
Nine Month
Ended,
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net Income
Attributable to CME Group
|
|
$
|
411.7
|
|
|
$
|
636.3
|
|
|
$
|
1,681.2
|
|
|
$
|
1,647.0
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
severance
|
|
6.0
|
|
|
4.1
|
|
|
16.6
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
.
|
Amortization of
purchased intangibles
|
|
78.3
|
|
|
79.8
|
|
|
232.2
|
|
|
236.6
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs(1)
|
|
9.2
|
|
|
8.2
|
|
|
26.4
|
|
|
22.7
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
transaction (gains) losses(2)
|
|
6.1
|
|
|
(0.7)
|
|
|
2.4
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
Acceleration of
contractual commitments
|
|
—
|
|
|
(1.3)
|
|
|
—
|
|
|
(1.3)
|
|
|
|
|
|
|
|
|
|
|
Unrealized and
realized (gains) losses on investments
|
|
3.8
|
|
|
(6.6)
|
|
|
6.3
|
|
|
20.1
|
|
|
|
|
|
|
|
|
|
|
Loss on real estate
sublease and related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on
derivatives
|
|
—
|
|
|
1.2
|
|
|
(1.5)
|
|
|
17.9
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized (gains) losses on assets(3)
|
|
2.7
|
|
|
46.6
|
|
|
28.8
|
|
|
78.8
|
|
|
|
|
|
|
|
|
|
|
Litigation
matters
|
|
3.4
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Trading floor
enhancements
|
|
1.5
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Income tax effect
related to above
|
|
(26.1)
|
|
|
(36.0)
|
|
|
(85.7)
|
|
|
(93.3)
|
|
|
|
|
|
|
|
|
|
|
Other income tax
items
|
|
(1.6)
|
|
|
(52.4)
|
|
|
(2.6)
|
|
|
(60.0)
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income Attributable to CME Group
|
|
$
|
495.0
|
|
|
$
|
679.2
|
|
|
$
|
1,914.0
|
|
|
$
|
1,890.0
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.15
|
|
|
$
|
1.78
|
|
|
$
|
4.70
|
|
|
$
|
4.61
|
|
Diluted
|
|
1.15
|
|
|
1.78
|
|
|
4.69
|
|
|
4.60
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.38
|
|
|
$
|
1.90
|
|
|
$
|
5.35
|
|
|
$
|
5.29
|
|
Diluted
|
|
1.38
|
|
|
1.90
|
|
|
5.34
|
|
|
5.28
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
357,791
|
|
|
357,211
|
|
|
357,669
|
|
|
357,054
|
|
Diluted
|
|
358,590
|
|
|
358,369
|
|
|
358,492
|
|
|
358,201
|
|
|
|
|
|
|
|
|
|
|
1.
Acquisition-related costs primarily include professional fees
related to the NEX transaction.
|
2. Results include
foreign exchange transaction net gains and losses principally
related to cash held in British pounds within entities whose
functional currency is the U.S. dollar.
|
3. Results include
net gains and losses on intangible assets, fixed assets and assets
held for sale.
|
View original
content:http://www.prnewswire.com/news-releases/cme-group-inc-reports-third-quarter-2020-financial-results-301161476.html
SOURCE CME Group