Intercontinental Exchange, Inc. (NYSE:ICE) Q4 2014 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 08:30 am ET


Intercontinental Exchange, Inc. (NYSE:ICE) Q4 2014 Earnings Conference Call - Final Transcript


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Hello, and welcome to the Intercontinental Exchange Fourth Quarter 2014 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kelly Loeffler. Ms. Loeffler, please go ahead.

Kelly L. Loeffler

Good morning. ICE's Fourth Quarter and Full Year 2014 Earnings Release and Presentation can be found in the Investor section of the These items will be archived, and our call will be available for replay.

Today's call may contain forward-looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions and uncertainties. For a description of the risks that could cause our results to differ materially from those described in forward-looking statements, please refer to our 2014 Form 10-K, which we filed this morning.

In addition to GAAP results, we also refer to certain non-GAAP measures, including adjusted income, adjusted operating margin, adjusted expenses and adjusted EPS. We believe our non-GAAP measures are more reflective of our cash operations and core business performance. You'll find a reconciliation to the GAAP term in the earnings materials, an explanation of why we deem this information to be meaningful and how management uses these measures. When used on the call, net revenue refers to revenue net of transaction base expenses. Adjusted net income refers to adjusted income from continuing operations, and adjusted EPS refers to adjusted diluted continuing operations earnings per share.

With us on the call are Jeff Sprecher, Chairman and CEO Scott Hill, Chief Financial Officer and Chuck Vice, President and Chief Operating Officer. I'll now turn the call over to Scott.

Scott A. Hill

Thank you, Kelly. Good morning, everyone, and thank you for joining our call today. I'll begin on Slide 4. Which highlights our 2014 performance. During 2014, we achieved our 9th consecutive year of record revenues and adjusted earnings. While volume declined 16% over the prior year, net revenues grew 3% on a pro forma basis to $3.1 billion, thanks to growth and trading and listings revenues at the New York Stock Exchange, as well as growth in data services and CDS clearing. In addition, we achieved over 50% of our synergy target by the end of 2014, and adjusted operating margin expanded to 55%. This combination of revenue growth and margin expansion enabled ICE to deliver 15% adjusted earnings growth in 2014 and helped us generate operating cash flows of $1.5 billion, more than double 2013. These record earnings and cash flows combined with the IPO of Euronext enabled us to significantly reduce our leverage, return nearly $1 billion of capital to the shareholders and invest over $0.5 billion in strategic acquisitions.

Now let's turn to Slide 5. Where I'll briefly highlight our fourth quarter results. Adjusted earnings per share for the fourth quarter rose 30% to $2.59 per share. Net revenues grew 10% on a pro-forma basis to $800 million, including record data services revenues, strong CDS clearing revenues and double-digit growth from our NYSE trading and listings business.