News Release

CME Group Inc. Reports Strong Second-Quarter 2015 Financial Results

Thu Jul 30 2015

CHICAGO, July 30, 2015 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME) today reported revenues of $820 million and operating income of $495 million for the second quarter of 2015.  Net income attributable to CME Group was $265 million and diluted earnings per share were $0.78. Excluding the items noted in the reconciliation, adjusted net income attributable to CME Group would have been $320 million and adjusted diluted earnings per share would have been $0.951.

"The organic revenue growth of 12 percent we achieved in the second quarter is a testament to the strength and diversity of our business model," said CME Group Executive Chairman and President Terry Duffy.  "During the quarter, revenue from agricultural commodities, foreign exchange and energy each rose by more than 20 percent.  Total average daily volume improved steadily after a slow April, and we set quarterly volume records in weekly treasury options and heating oil, along with wheat and soybean products.  In addition, options volume continued to expand, with volumes up 13 percent during the quarter, and options on our CME Globex platform up 29 percent."

"Total expenses decreased during the second quarter, which boosted our operating margin from the mid 50 percent range a year ago to over 60 percent," said CME Group Chief Executive Officer Phupinder Gill.  "We remain focused on driving efficiency throughout the organization and eliminating redundancy to improve agility and customer responsiveness.  As part of this effort, we have closed most of our futures trading pits, reduced overall headcount and consolidated data centers.  Our investments to expand our business around the world continue to gain traction, with 22 percent volume growth in Asia, 10 percent in Europe and 6 percent in Latin America.  In summary, strong top-line growth coupled with expense discipline resulted in adjusted earnings per share growth of 23 percent."

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.

Second-quarter 2015 average daily volume was 13.3 million contracts, up 6 percent from second-quarter 2014, and included average daily volume records in agricultural commodities and weekly treasury options.  Clearing and transaction fee revenues were $682 million, up 12 percent compared with second-quarter 2014. Market data revenue was $103 million, up 15 percent.  Second-quarter 2015 total average rate per contract was 77.7 cents, up from 75.3 cents in first-quarter 2015, driven primarily by a higher proportion of total volume coming from commodities products, which have higher average fees.

As of June 30, 2015, the company had $1.2 billion of cash and marketable securities and $2.2 billion of long-term debt.  In June, the company paid out $168 million in its regular quarterly dividend of 50 cents per share.

CME Group will hold a conference call to discuss second-quarter 2015 results at 8:30 a.m. Eastern Time today.  A live audio Webcast of the call will be available on the Investor Relations section of CME Group's Web site 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) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform, its trading facilities in New York and Chicago, and through its London-based CME Europe derivatives exchange. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc.  CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc.  KCBOT, KCBT and Kansas City Board of Trade are trademarks of The Board of Trade of Kansas City, Missouri, Inc.  All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

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, develop strategic relationships and attract new customers; our ability to expand and offer our products outside the United States; changes in domestic and non-U.S. regulations, including the impact of any changes in domestic and foreign laws or government policy with respect to 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; 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 financial safeguards package to adequately protect us from the credit risks of clearing members; 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; changes in price levels and volatility in the derivatives markets and in underlying equity, foreign exchange, interest rate and commodities markets; economic, 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; 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 and control the costs associated with our strategy for acquisitions, investments and alliances;  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; the unfavorable resolution of material legal proceedings; and the seasonality of the futures business.  For a detailed discussion of these and other factors that might affect our performance, see our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q.

 

CME Group Inc. and Subsidiaries

Consolidated Balance Sheets

(in millions)




June 30, 2015


December 31, 2014

ASSETS





Current Assets:





Cash and cash equivalents


$

1,151.0


$

1,366.1

Marketable securities


76.3


74.7

Accounts receivable, net of allowance


399.9


341.2

Other current assets (includes $32.0 and $37.0 in restricted cash)


260.0


196.5

Performance bonds and guaranty fund contributions


42,167.9


40,566.8

Total current assets


44,055.1


42,545.3

Property, net of accumulated depreciation and amortization


499.2


508.9

Intangible assets—trading products


17,175.3


17,175.3

Intangible assets—other, net


2,587.6


2,637.4

Goodwill


7,569.0


7,569.0

Other assets (includes $73.5 and $72.4 in restricted cash)


1,776.9


1,805.6

Total Assets


$

73,663.1


$

72,241.5

LIABILITIES AND EQUITY





Current Liabilities:





Accounts payable


$

22.1


$

36.9

Other current liabilities


242.6


927.5

Performance bonds and guaranty fund contributions


42,167.9


40,566.8

Total current liabilities


42,432.6


41,531.2

Long-term debt


2,241.0


2,107.9

Deferred income tax liabilities, net


7,339.8


7,302.7

Other liabilities


390.9


376.2

Total Liabilities


52,404.3


51,318.0

CME Group shareholders' equity


21,258.8


20,923.5

Total Liabilities and Equity


$

73,663.1


$

72,241.5

 

CME Group Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in millions, except per share amounts; shares in thousands)




Quarter Ended
June 30,


Six Months Ended
June 30,



2015


2014


2015


2014

Revenues









Clearing and transaction fees


$

681.8


$

609.3


$

1,390.0


$

1,261.5

Market data and information services


102.8


89.6


200.8


179.0

Access and communication fees


21.5


20.4


42.8


40.8

Other


13.9


12.3


29.1


27.7

Total Revenues


820.0


731.6


1,662.7


1,509.0

Expenses









Compensation and benefits


141.5


139.7


282.8


275.2

Communications


6.6


8.3


14.2


16.5

Technology support services


16.1


14.6


31.7


28.5

Professional fees and outside services


27.7


37.5


56.8


67.1

Amortization of purchased intangibles


25.0


25.2


49.9


50.4

Depreciation and amortization


33.3


34.3


65.1


68.4

Occupancy and building operations


23.5


23.2


46.3


46.4

Licensing and other fee agreements


28.8


25.7


59.4


54.7

Other


22.4


11.1


54.1


35.3

Total Expenses


324.9


319.6


660.3


642.5

Operating Income


495.1


412.0


1,002.4


866.5

Non-Operating Income (Expense)









Investment income


18.5


15.1


24.2


18.3

Gains (losses) on derivative investments




(1.8)


Interest and other borrowing costs


(28.6)


(28.3)


(60.2)


(62.0)

Equity in net earnings (losses) of unconsolidated subsidiaries


26.0


21.5


48.5


43.9

Other non-operating income (expense)


(62.9)


1.8


(41.2)


1.8

Total Non-Operating


(47.0)


10.1


(30.5)


2.0

Income before Income Taxes


448.1


422.1


971.9


868.5

Income tax provision


183.1


158.3


376.5


338.1

Net Income


265.0


263.8


595.4


530.4

Less: net income (loss) attributable to non-controlling interests





(0.2)

Net Income Attributable to CME Group


$

265.0


$

263.8


$

595.4


$

530.6

Earnings per Common Share Attributable to CME Group:









Basic


$

0.79


$

0.79


$

1.77


$

1.59

Diluted


0.78


0.79


1.76


1.58

Weighted Average Number of Common Shares:









Basic


336,036


334,097


335,859


334,002

Diluted


337,796


335,800


337,574


335,705




CME Group Inc. and Subsidiaries

Quarterly Operating Statistics




2Q 2014


3Q 2014


4Q 2014


1Q 2015


2Q 2015

Trading Days


63


64


64


61


64























Quarterly Average Daily Volume (ADV)

CME Group ADV (in thousands)


Product Line


2Q 2014


3Q 2014


4Q 2014


1Q 2015


2Q 2015

Interest rate


6,668


7,181


7,445


7,564


6,599

Equity


2,465


2,586


3,114


2,772


2,364

Foreign exchange


638


797


959


954


903

Energy


1,457


1,562


1,797


2,142


1,749

Agricultural commodity


1,084


1,058


1,173


1,189


1,400

Metal


323


308


361


369


331

Total


12,636


13,493


14,848


14,990


13,347

Venue











Electronic


10,888


11,627


12,982


13,034


11,705

Open outcry


1,100


1,208


1,218


1,291


1,108

Privately negotiated


647


657


648


665


534

Total


12,636


13,493


14,848


14,990


13,347























Average Rate Per Contract (RPC)

CME Group RPC












Product Line


2Q 2014


3Q 2014


4Q 2014


1Q 2015


2Q 2015

Interest rate


$

0.473


$

0.473


$

0.472


$

0.480


$

0.502

Equity


0.714


0.687


0.697


0.721


0.725

Foreign exchange


0.861


0.788


0.760


0.831


0.816

Energy


1.298


1.291


1.279


1.250


1.277

Agricultural commodity


1.430


1.362


1.321


1.324


1.311

Metal


1.715


1.707


1.664


1.662


1.634

Average RPC


$

0.749


$

0.725


$

0.731


$

0.753


$

0.777

 




CME Group Inc. and Subsidiaries

Reconciliation of GAAP to non-GAAP Measures

(dollars in millions, except per share amounts; shares in thousands)








Quarter Ended


Quarter Ended



June 30, 2015


June 30, 2014

GAAP Net Income Attributable to CME Group


$

265.0


$

263.8






Foreign exchange transaction gains1


(11.1)


(5.5)






Real estate taxes and fees2


10.0







Restructuring, severance and voluntary exit incentive plan


1.9


5.8






Debt prepayment costs


61.8







Gain on sale of BM&FBOVESPA shares


(5.9)







MF Global bankruptcy claim



(14.5)






Acquisition-related costs



4.7






Income tax effect related to above


(19.1)


3.6






Other income tax items3


17.4







Adjusted Net Income Attributable to CME Group


$

320.0


$

257.9






GAAP Earnings per Common Share Attributable to CME Group:





     Basic


$

0.79


$

0.79

     Diluted


0.78


0.79






Adjusted Earnings per Common Share Attributable to CME Group:





     Basic


$

0.95


$

0.77

     Diluted


0.95


0.77






Weighted Average Number of Common Shares:





     Basic


336,036


334,097

     Diluted


337,796


335,800












1.  Second-quarter 2015 results included foreign exchange transaction net gains principally related to cash held in British pounds within foreign entities whose functional currency is the U.S. dollar.


2.  In the second quarter of 2015, the company recognized additional real estate taxes and fees related to the transfer of ownership of the NYMEX building, which was acquired by CME Group in 2008 and sold in 2013.


3. Other income tax items include the impact of deferred tax expense recognized for a rate change due to a state and local tax law change in the second quarter of 2015.

CME-G

SOURCE CME Group Inc.

Media, Anita Liskey, 312-735-8012 or William Parke, 312-930-3467, news@cmegroup.com, www.cmegroup.mediaroom.com; Investor Relations, John Peschier, 312-930-8491

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