1) (NYSE: ICE)
Third Quarter 2015 Earnings Supplement
October 28, 2015
2) Forward-Looking Statement and Legends
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding ICE’s
business that are not historical facts are forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations
reflected in these forward-looking statements are reasonable, these statements are not guarantees of future results, performance, levels of activity or achievements, and actual results
may differ materially from what is expressed or implied in any forward-looking statement. The factors that might affect our performance include, but are not limited to: our business environment
and industry trends; general economic conditions and conditions in global financial markets; volatility in commodity prices, equity prices, and price volatility of financial benchmarks and
instruments such as interest rates, credit spreads, equity indexes and foreign exchange rates; changes in domestic and foreign laws, regulations, rules or government policy with respect
to financial markets, or our businesses generally, including increased regulatory scrutiny or enforcement actions; the success of our clearing houses and our ability to minimize the risks
associated with operating multiple clearing houses in multiple jurisdictions; the performance and reliability of our technology and the technology of our third party service providers; our
ability to identify and effectively pursue acquisitions and strategic alliances and successfully integrate the companies we acquire; increasing competition and consolidation in our industry;
our ability to continue to realize the synergies and benefits of the NYSE acquisition within the expected time frame, and continue to integrate NYSE’s operations with our business; our
ability to keep pace with rapid technological developments and to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; the soundness of our
electronic platform and disaster recovery system technologies; the accuracy of our cost estimates and expectations; our belief that cash flows from operations will be sufficient to service
our current levels of debt and fund our working capital needs and capital expenditures for the foreseeable future; our ability, on a timely and cost-effective basis, to offer additional products
and services, leverage our risk management capabilities and enhance our technology; our ability to maintain existing market participants and attract new ones; our ability to protect our
intellectual property rights, including the costs associated with such protection, and our ability to operate our business without violating the intellectual property rights of others; our ability
to identify trends and adjust our business to respond to such trends; potential adverse results of litigation and regulatory actions and proceedings; and our ability to complete the acquisition
of Interactive Data Holdings Corporation on a timely basis or at all and achieve the anticipated benefits and synergies. For a discussion of such 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 ICE’s most recent
Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on February 5, 2015. These filings are available in the Investors & Media section of our website.
We caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we
undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence
of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management
cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
GAAP AND NON-GAAP RESULTS
This presentation includes non-GAAP measures that exclude certain items we do not consider reflective of our cash operations and core business performance. We believe that the
presentation of these non-GAAP measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. These adjusted
non-GAAP measures should be considered in context with our GAAP results. A reconciliation of Adjusted Net Income from Continuing Operations, Adjusted Earnings Per Share from
Continuing Operations, Adjusted Operating Income, Adjusted Operating Margin and Adjusted Operating Expenses to the equivalent GAAP measure and an explanation of why we deem
these non-GAAP measures meaningful appears in our September 30, 2015 Quarterly Report on Form 10-Q filed with the SEC on October 28, 2015 and in the appendix to this presentation.
The reconciliation of Adjusted Tax Rate and Adjusted Debt-to-EBITDA to the equivalent GAAP results appear in the appendix to this presentation. Our Form 10-Q, earnings press release
and this presentation are available in the Investors and Media section of our website at www.theice.com.
EXPLANATORY NOTES
All net revenue figures represent revenues less transaction based expenses for periods shown. All earnings per share figures represent diluted weighted average share count on continuing
earnings.
2
3) ICE Third Quarter 2015 Results
Participants:
Jeff Sprecher
Chairman & CEO
Chairman, NYSE
Chuck Vice
President & COO
Scott Hill
Chief Financial Officer
Investor Relations:
Kelly Loeffler, CFA
SVP, Corporate Comm., Marketing & Investor Relations
kelly.loeffler@theice.com
Isabel Janci
Senior Director, Investor Relations
isabel.janci@theice.com
3
4) YTD September 2015 Financial Performance
Diverse, Growing Revenue Streams
Data Services
Transactions, net
2014
600
500
400
300
200
100
0
$ (Millions)
$ (Millions)
$ (Millions)
1,400
1,200
1,000
800
600
400
200
0
2014
2015
Expense Discipline
$303MM
+11% y/y
300
250
200
150
100
50
0
2015
2014
2015
Consistent EPS Growth
Adj. Operating Margin
Adj. EPS
59%
+5 pts y/y
60
Listings
$614MM
+22% y/y
$1.4B
+1% y/y
$8.87
+26% y/y
9
40
6
30
$
(Percent)
50
20
3
10
0
0
2014
2015
2014
2015
Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
4
5) Third Quarter 2015 Financial Performance
INCOME STATEMENT HIGHLIGHTS
(in millions except per share amounts)
3Q15
3Q14
% Chg
Net revenues
$816
$745
10%
Adj. Operating Expenses
$337
$344
(2)%
Adj. Operating Income
$479
$401
19%
Adj. Operating Margin
59%
54%
+5 pts
Adj. Net Income from Cont. Ops attributable to ICE
$323
$267
21%
Adj. Diluted EPS from Continuing Ops
$2.91
$2.34
24%
Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
5
6) Third Quarter 2015 Revenue
Total Net Revenue +10% y/y, $816MM
Transaction
6%
13%
24%
Global Derivatives/Cash Equities
7%
• Diversified across 9 asset classes
• Secular and cyclical growth drivers
• Energy Rev +5% y/y, Oil OI +21% y/y
Subscription
56%
44%
Data Services
26%
• Subscription-based, proprietary data
• Growth driven by new users & products,
SuperDerivatives and IBA
Listings
12%
• NYSE extends lead in global proceeds
raised for 5th consecutive year
Other
6%
• Includes interest income on certain
margin deposits, trading license fees,
regulatory fees, etc.
6
7) Third Quarter 2015 Revenue
Net revenues (in millions)
3Q15
3Q14
% Chg
Commodities
$255
$243
5%
Financials
$119
$126
(7)%
$86
$78
11 %
$460
$447
3%
10%
$209
$170
24 %
4%
$101
$92
10 %
$46
$36
27 %
Subscription Revenues
$356
$298
20 %
Total Net Revenue(1)
$816
$745
10 %
U.S. Cash Equities & Equity Options
Transaction & Clearing Revenues, net(1)
Data Services(2)
Listings
44%
Other
(1) Net revenues include transaction-based expenses of $335MM in 3Q15 and $265MM in 3Q14.
(2) During the quarter, we reclassified certain connectivity fees from other revenues into data services revenues and restated previous periods. This information can be found
in the September 30, 2015 10-Q.
7
8) Expense Discipline & Margin Expansion
Adjusted Expenses (in millions)
3Q15
3Q14
% Chg
Comp & Benefits
$150
$144
4%
Tech & Communications
$49
$45
8%
Prof Services & Adj. Acquisition-Related Costs
$39
$49
(24)%
SG&A and Rent
$38
$56
(31)%
Adj. Depreciation & Amortization
$61
$50
22 %
$337
$344
(2)%
59%
54%
+5 pts
Adj. Operating Expenses
Adj. Operating Margin
Note: Figures may not foot due to rounding.
Adjusted figures represent non-GAAP measures. Please refer to slides in the appendix for reconciliations to the equivalent GAAP measures.
8
9) Solid Cash Generation & Capital Return
• $708MM in unrestricted cash & short-term investments at Sep. 30; includes $187MM EMIR
required future regulatory capital
• Adjusted Debt-to-EBITDA(1) of 1.6x
• With October buybacks & dividends paid in 4Q15, 2015 capital return of ~$1B
Capital Return
Operating Cash Flow
$944
$1,463
1,500
900
$847
750
$890
900
$714
$ (Millions)
$ (Millions)
1,200
600
Dividends
450
Buybacks
600
300
300
150
0
$75
0
2013
2014
YTD Sep '15
2013
2014
YTD Sep '15
(1) Adjusted debt-to-EBITDA reflects the ratio of total net debt for the trailing twelve months to adjusted EBITDA. This reflects a non-GAAP measure. Please refer to slides in the
appendix for reconciliation to the equivalent GAAP measure.
9
10) Diverse Revenue and Earnings Growth Drivers
Organic and acquired growth, secular drivers and regulation all drive opportunities
Leading Energy
Contracts
Cash Equities
& Listings
Diverse Natural
Gas Markets
Near-Term
Expanding in
Asia
Long-Term
Growing Data
Services
Global Clearing
Strong Rates
Franchise
10
11) ICE is Uniquely Positioned in Global Data Services
• Rich data offering & analytics across multiple asset classes: Energy and ag commodities,
EU interest rates, equity index, FX, U.S. cash equities and equity options, and credit
derivatives
6%
13%
• Data offerings based on data unique to our markets and value-added services, such as
24%
analytics, valuations, forward curves and indexes
50%
7%
• Subscription-based, recurring revenue across ICE, NYSE, SuperDerivatives and IBA; soon
to include Interactive Data Corp.
• Secular trends driving data demand, including passive investing and indexation, and
regulatory requirements for using and reporting data
10%
44%
• Expect consistent annual growth over the long-term with strategic focus on data
4%
11
12) Interactive Data Corp (IDC) Strategic Rationale: Growth
• Provides critical pricing, reference data and trading solutions to over 5,000 customers,
including nearly all of the 50 largest US mutual funds, banks and global asset managers
Industry Leader
• Market leader in evaluated pricing with approximately 2.7MM daily valuations of a broad
range of hard-to-value, thinly traded securities
• Global fixed income data collection and distribution network
• Builds on ICE's market data growth strategy with a leading provider in fixed income
Strategic Fit
• Capitalizes on secular trends driving for greater demand for data and related services,
including valuation as capital efficiency becomes increasingly important
• State of the art technology platform supporting new and existing products
• ICE has a proven track record of integrating acquisitions, realizing synergies & driving
growth
Proven Innovator
• Consistently executing on new initiatives & effective solutions based on customer
needs and evolving regulatory environment
• Proven ability to grow through product and technology innovation
• Attractive subscription-based business model with ~98% recurring revenue
Value Creation
• Significant opportunities to leverage ICE’s global platform to accelerate IDC’s growth
• Pricing & reference data represents ~70% of revenues and trading solutions ~30%
• Corporate efficiencies and cost reductions
12
13) Interactive Data Corp Transaction Summary
Terms
• ICE will acquire IDC for $5.2 billion; IDC shareholders receive $3.65 billion in
cash and $1.55 billion in ICE stock
• ICE will finance the cash portion with debt
• ICE will not assume IDC's debt, which will be repaid through proceeds
• Approximately $150 million in annual cost synergies
Synergies
• Approximately 25% of expense savings realizable within first year of closing;
90% by the end of year 3
• Adjusted earnings >5% accretive in 2016
• Robust pro forma cash flow profile
Strong Cash Flow
• Ability to reduce leverage back towards 1.5x target in two years
• Capital return to shareholders via continued dividend payments
Synergies of $150MM; 25% in Year 1
Corporate Expenses
$40MM
Operational Efficiencies
$110MM
13
14) Record YTD Sep. 2015 EPS Performance
• Record adjusted EPS(1) +26% y/y on net revenues +7% y/y YTD Sep '15
• Executing on strategic growth initiatives, while continuing investments to drive returns
• Returned ~$850 million to shareholders YTD; ~$1.9 billion to shareholders since 4Q13
$9.63
$8.87
$8.38
'06
'14
9%
R1
G
$6.90
CA
$7.52
$5.35
$4.17
$4.27
2008
2009
$3.39
$2.40
2006
2007
2010
2011
2012
2013
(1)
(1)
2014 YTD Sep '15
(1)
(1) These represent non-GAAP measures. Adjusted EPS refers to adjusted earnings per share from continuing operations. Please refer to slides in the appendix for reconciliations to the equivalent
GAAP measures.
14
15) APPENDIX
15
16) Expect IDC Transaction to be >5% Accretive in First Year
2016 Pro-Forma Adj. Earnings and Adj. EPS (MM)
IDC Standalone Earnings1
$223
ICE Standalone Adjusted Earnings2
$1,487
After-tax additional interest expense3
After-tax year 1 expense synergies
($70)
$25
Pro-forma Adjusted Earnings
$1,665
Pro-forma Fully Diluted Shares Outstanding4
117.5
Pro-forma Adjusted EPS ($)
ICE Standalone Adjusted EPS ($)5
Adjusted EPS Accretion
$14.17
$13.40
5.7%
1. LTM IDC Standalone EBITDA including stock compensation and fx was $367 million. $367MM - $48MM of depreciation + 5% growth and on a taxeffected basis = $223M.
2. Based on October 22, 2015 Factset consensus estimates of $13.76 and average analyst models share count of 108.1 million.
3. Based on weighted average cost of debt of ~2.75%.
4. Includes 6.5 million shares to be issued for IDC transaction
5. ICE Standalone Adjusted Earnings divided by 111 million shares outstanding.
16
17) ICE Summary Balance Sheet
In millions
BALANCE SHEET
09/30/2015
12/31/2014
CHANGE
Assets
Unrestricted Cash & ST Inv
•
$1,852
47,344
48,367
48,052
50,219
874
16,900
17,160
$ 68,253
•
TTM ROIC(2) of 8.4%, above our cost of
capital
(260)
$ 65,856
$192MM 3Q15 capex & cap software
â—¦ Op capex & cap software $137MM
â—¦ Real estate capex $55MM
(2,167)
904
Total debt of $3.5B; Adj. Debt-toEBITDA(1) of 1.6x
(1,023)
Current Assets
•
$(1,144)
Other Current Assets
$708MM unrestricted cash and shortterm investments, including $187MM
EMIR regulatory capital requirement for
ICEU
•
$708
$(2,397)
PPE (net)
Other Assets
Total Assets
30
Liabilities & Equity
Current Liabilities
$48,458
$50,513
$(2,055)
Long-Term Debt
2,247
2,247
—
Other Liabilities
2,741
2,936
(195)
Total Liabilities
53,446
55,696
(2,250)
40
165
(125)
12,370
12,392
(22)
$ 65,856
$ 68,253
$(2,397)
Redeemable Noncontrolling Int
Total Equity
Total Liabilities & Equity
Note: Figures may not foot due to rounding.
(1) This is a non-GAAP measure. Please refer to slides in the appendix for reconciliation to the equivalent GAAP
measure.
(2) ROIC = LTM (Operating Income x (1-Tax Rate) ) / (Avg Debt + Avg Shareholders Equity + Avg Minority Interest Avg Cash, Cash Equiv, & ST Investments).
17
18) Adjusted Net Income from Continuing Ops and EPS from
Continuing Ops
In millions (except per share amounts)
12 Month
Ended
12/31/14
12 Month
Ended
12/31/13
3 Months
Ended 9/30/15
Income from continuing operations
Add: NYSE integration costs and banker fees
Add: Amortization of acquisition-related
intangibles
3 Months
Ended 9/30/14
9 Months
Ended 9/30/15
9 Months
Ended 9/30/14
$310
$223
$922
$711
$1,005
$320
6
38
31
98
124
140
33
33
99
98
131
56
Add: Litigation accruals, net
Add: Duplicate rent expense and lease
termination costs
(4)
—
15
—
—
—
—
—
—
—
—
7
Add: Cetip Impairment
—
—
—
—
—
190
Add: Early payoff of outstanding debt
—
—
—
—
—
51
Less: Income from OCC equity investment
—
—
—
—
(26)
—
Less: Net gain of sale of 6% remaining
ownership in Euronext
—
—
—
—
(4)
—
(18)
(25)
(52)
(70)
(89)
(85)
—
5
(7)
3
(2)
—
Less: Income tax effect for the items above
Less: Other tax adjustments
Less: Net income from continuing operations
attributable to non-controlling interest
Adjusted net income from continuing
operations
(4)
(7)
(18)
(29)
(35)
(16)
$323
$267
$990
$811
$1,104
$663
EPS from continuing operations
$2.76
$1.89
$ 8.10
$ 5.93
$ 8.46
$ 3.84
Adjusted EPS from continuing operations
$2.91
$2.34
$8.87
$7.04
$9.63
$8.38
111
114
112
115
115
79
Diluted weighted average common shares
outstanding
18
19) Adjusted Operating Income, Operating Margin & Operating
Expense Reconciliation
In millions
3 Months
Ended 9/30/15
Total revenues, less transaction-based expenses
Total operating expenses
Less: NYSE integration costs and banker fees
Less: Amortization of acquisition-related intangibles
Adjusted total operating expenses
Adjusted operating income
Operating margin
Adjusted operating margin
$816
376
6
33
$337
$479
54%
59%
3 Months
Ended 9/30/14
$745
415
38
33
$344
$401
44%
54%
9 Months
Ended 9/30/15
$2,463
1,131
31
99
$1,001
$1,462
54%
59%
9 Months
Ended 9/30/14
$2,292
1,244
98
98
$1,048
$1,244
46%
54%
19
20) Adjusted EBITDA Reconciliation
In millions
Trailing 12 Months
Ended 9/30/15
Adjusted net income from Continuing Ops
Add: Income tax expense
Add: Income tax expense adjustment on Non-GAAP Items
Less: Other income, net
Add: Interest expense
Add: Depreciation and amortization
$1,283
458
83
(17)
90
233
Adjusted EBITDA from Continuing Ops
$2,130
Debt, as reported
$3,500
Less: Balance of unamortized premiums/discounts, net
Principal amount of debt outstanding (Adjusted Debt)
Adjusted Debt-to-EBITDA leverage ratio
3
$3,503
1.6x
20
21) Adjusted Effective Tax Rate Reconciliation
In millions
3 Months
Ended 9/30/15
Income from continuing operations before income taxes
Less: Income tax expense
Net Income from continuing operations
Effective tax rate
Income from continuing operations before income taxes
Add: Amortization of acquisition-related intangibles
Add: NYSE transaction and integration costs and banker success fees
Add: Litigation accruals
3 Months
Ended 9/30/14
$423
$313
(113)
(90)
$310
$223
27%
29%
$423
$313
33
33
6
38
(4)
—
Adjusted Income from continuing operations before income taxes
$458
$384
Income tax expense
$113
$90
18
25
0
(5)
Adjusted income tax expense
$131
$110
Adjusted Income from continuing operations before income taxes
$458
$384
Adjusted income tax expense
$131
$110
Adjusted Net Income
$327
$274
Add: Income tax effect for the above items
Add: Other tax adjustments
Adjusted effective tax rate
28%
29%
21