) third-quarter 2013 operating earnings of $1.97 per share
modestly exceeded the Zacks Consensus Estimate of $1.83 and the
year-ago quarter figure of $1.79. Accordingly, operating net
income increased 10.3% to $144.6 million.
Operating net income excluded after-tax extraordinary items of
$3.3 million comprising merger costs and banker fee relating to
ICE Endex acquisition. However, no such items were recorded in
the year-ago quarter. Including these items, reported net income
stood at $141.3 million or $1.92 per share in the quarter under
The quarterly results of IntercontinentalExchange reflected
and other businesses that drove the top line, while higher
expenses deterred margin expansion. Meanwhile, transaction
and clearing fee revenues stood flat due to weak volumes.
Total revenues grew 4.5% year over year to $337.9 million, and
breezed past the Zacks Consensus Estimate of $335 million. The
upside was mainly attributable to a 0.3% improvement in
transaction and clearing fee
revenues which stood at $279.9 million. Furthermore, consolidated
revenues increased 12% year over year to $40.2 million, whereas
revenues escalated about 120% to $17.8 million.
Additionally, average daily futures volume dipped 1% year over
year to 3.1 million contracts. Revenue from
IntercontinentalExchange's CDS business totaled $38 million,
climbing 15% from the prior-year quarter.
On the other hand, total operating expenses rose 5.1% year
over year to $135.7 million, primarily due to increase in
expenses related to depreciation and amortization, selling,
general and administration, along with acquisition-related
transaction costs based on the recent merger deal with
NYSE Euronext Inc.
). These were partially offset by a decline in rent and occupancy
expenses, compensation and benefits as well as lower professional
Subsequently, operating income climbed 4.2% year over year to
$202.1 million. However, reported operating margin stood at
59.8%, marginally lower than 60% in the year-ago period. The
effective tax rate was 25%, lower than 27% in the year-ago
At the end of Sep 2013, consolidated operating cash flow
inched down 2% year over year to $562 million. Capital
expenditures totaled $76 million, while capitalized software
development costs increased to $28 million, both higher than the
first nine months of 2012.
As of Sep 30, 2013, the company recorded unrestricted cash and
investments of $1.57 billion (down from $1.61 billion at 2012-end
level), while total outstanding debt improved to $791 million
from $1.13 billion at 2012-end.
In Oct 2013, IntercontinentalExchange raised $1.4 billion from
long-term notes in order to fund the NYSE acquisition. No shares
were bought back in the first nine months of 2013.
Guidance for 2013
Management revised expense guidance for 2013, anticipating
operating expense to be up by 1-2% over 2012, lower than the
prior band of 2-3%. Shares outstanding are now estimated in the
range of 73.2-74.2 million.
Previously, IntercontinentalExchange projected depreciation
and amortization expense within $130-135 million. Moreover,
quarterly interest expense was projected to be higher at $10-11
million in the second half of 2013, while tax rate is expected in
the band of 27-30% in 2013.
Meanwhile, IntercontinentalExchange had maintained capital
expenditures and capitalized software expenses projection within
$60-70 million, including $20-30 million related to real estate
costs in 2013.
Both IntercontinentalExchange and NYSE carry a Zacks Rank #3
(Hold). Other strong performers in the financial sector include
Fleetcor Tech Inc.
HCI Group Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).
FLEETCOR TECH (FLT): Free Stock Analysis
HCI GROUP INC (HCI): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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