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

Feb 05, 2015 • 08:30 am ET

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

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Q & A
Operator
Operator

Yes, thank you. [Operator Instructions] And the first question comes from Rich Repetto with Sandler O'Neill.

Analyst
Richard Repetto

Yes, good morning Jeff. Good morning Scott. And congratulations on the super strong quarter, Jeff. I guess, Jeff, I got to congratulate you. Last time, when -- last quarter's call, oil was going through -- crude oil was going through $80 [phonetic] and we talked about whether that was good or bad and you emphasized the volatility side and it's certainly playing out in volumes now. But I guess I'll update the question. As oil, it's highly volatile, but it's now at $50, and I know you spent a fair amount in the prepared remarks, but does that -- the question continues to come up, does a low oil price, is it going to dampen hedging demand? Or is it offset by the volatility you've spoken about last quarter?

Executive
Jeffrey C. Sprecher

Thanks for the question, Rich. I believe that we're going to go through a really volatile time here based on talking to our customers, particularly many of the drilling and integrated oil firms trying to figure out the dynamic for the next few years. So we see a strong volatility ahead which should drive volume growth. I think underpinning your question is a concern that price in US natural gas has been at historically low levels and volumes on ICE are reduced in the US, and I think people sort of somehow try to correlate that. But what many don't recognize is that the US natural gas business is really a regulated business where the end product, natural gas, goes through local distribution companies that are regulated or electric utilities to make electric power, which are regulated, and have the ability to pass through costs, in many cases, to their customers.

And therefore, only hedged when there is extreme volatility and work with their Public Utility Commissions to come up with a program that they know that can be passed through. That is very different than the oil industry, where oil products become petroleum fuels, chemicals, other things that go into the free market. And therefore, the supply chain all along there has gotten used to hedging. And in fact, we continue to see increased hedging activity to the point that Scott Hill and I have been meeting with senior managements of consumer driven firms that here before hadn't hedged and actually, even at the senior level, want to talk about how to do that. So we see great differences between the oil business and the natural gas business, which I think caused us some of that concern.

Analyst
Richard Repetto

Got it. Understood. The volumes have been certainly super strong here to date this year. I guess, and my one follow-up, and this would be more for Scott, I guess. You're guiding to significant growth in data services and listing revenue. And could you be -- I guess, or could you quantify the contribution from benchmark, ICE Benchmark Administration, Scott? Because that -- is that the significant driver