Thursday, IntercontinentalExchange, Inc. (ICE), a derivatives and over the counter exchange operator, announced a 12% increase in net income for the third quarter, driven by 33% growth in revenues.
Third Quarter Results
The Atlanta, Georgia-based company reported net income for the third quarter of $75 million or $1.04 per share, up 12% from $67 million or $0.93 per share for the year-ago quarter.
On average, 17 analysts polled by First Call/Thomson Financial expected the company to earn of $1.04 per share for the quarter.
Consolidated revenues for the quarter rose 33% to $201 million from $152 million for the prior-year quarter, but missed analysts' consensus revenue estimate of $201.66 million. Revenues for the quarter were indicated as the second highest quarterly revenues in the company's history.
Consolidated transaction revenues were $171 million, 30% higher than $131 million recorded in the year-ago quarter as a result of new products, strong trading volume in futures and global OTC segments apart from the entry of new participants in all markets and the Creditex acquisition, which closed during the third quarter.
The company indicated that combined volume for its futures exchanges witnessed an increase of 13% to 56.2 million contracts. IntercontinentalExchange said its average daily volume or ADV for its Futures Europe was 568,761 contracts, while ADV for ICE Futures U.S. was 280,177 contracts. ADV for ICE Futures Canada was 9,526 contracts. Average daily commissions or ADC for ICE's global OTC segment climbed 25% to $1.1 million in the quarter.
Commenting on the results, Scott Hill, Chief Financial Officer, IntercontinentalExchange said, "Our operational discipline allows us to invest strategically to position the business for long-term growth, while continuing to deliver strong profits and cash flows. By leveraging the strengths of our core execution and clearing business, our healthy balance sheet and excellent operating cash flow, we see continued opportunity for expansion and value generation for our shareholders."
Consolidated market data revenues surged 50% to $25.8 million from $17.2 million in the same quarter of 2007. Consolidated other revenues increased to $4.7 million from $3.4 million in the year-ago quarter.
Consolidated operating expenses for the quarter were $82 million, up 62% from $51 million in the same period in 2007, driven by $16.2 million of expenses related to Creditex's business following ICE's acquisition and continued investment in key growth initiatives.
Third quarter consolidated operating income grew 18% to $119 million from $101 million in the last year quarter, while operating margin declined to 59% from 66% for the same period in 2007.
Nine-Month Results
For the nine-month period, IntercontinentalExchange revealed consolidated revenues that increased 46% to $606 million over the same nine-month period of 2007. Futures volumes grew 21% to 177 million contracts, fuelled by consolidated futures transaction revenues growth of 29% from the corresponding period in 2007. The company's consolidated global OTC transaction revenues increased 64%, helped by ADC for OTC energy of $1.2 million per day, representing a growth of 52% over 2007 period. Consolidated net income increased 41% to $3.51 per share and consolidated operating margins improved to 65%.
Stock Buyback
The company noted that it has bought back approximately 3.2 million shares or $300 million in stock since the inception of its stock buyback program announced on August 4. The buyback authorization under this program is up to $500 million through August 6, 2009.
Stock Movement
Shares of IntercontinentalExchange are currently trading at $80.69, up $18.90 or 30.59%. The stock hit a 52-week high of $194.92 and a low of $53.02.
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