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NYSE Euronext (NYX)

Q4 2012 Earnings Call

February 05, 2013 8:00 am ET


Stephen Davidson - Vice President of Investor Relations

Duncan L. Niederauer - Chief Executive Officer and Director

Michael S. Geltzeiler - Chief Financial Officer and Group Executive Vice President

Lawrence E. Leibowitz - Chief Operating Officer


Howard Chen - Crédit Suisse AG, Research Division

Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division

Alex Kramm - UBS Investment Bank, Research Division

Roger A. Freeman - Barclays Capital, Research Division

Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division

Brian Bedell - ISI Group Inc., Research Division

Christopher J. Allen - Evercore Partners Inc., Research Division



Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2012 NYSE Euronext Earnings Conference Call. My name is Shequanna, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the call over to Mr. Stephen Davidson, Head of Investor Relations at NYSE Euronext. Please proceed, sir.

Stephen Davidson

Thanks, Shequanna. Good morning, and welcome to the NYSE Euronext Fourth Quarter and Full year 2012 Earnings Conference Call. Before I introduce today's speakers, let me remind you that comments on the call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause NYSE Euronext's actual results to differ materially from those in the statements. These forward-looking statements speak as of today and you should not rely on them as representing our views in the future. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements.

Except for any obligation to disclose material information under the federal securities laws, NYSE Euronext undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after this conference call.

We will discuss non-GAAP financial measures during this call. These non-GAAP measures are fully reconciled in the tables attached to the text of the earnings press release that we issued earlier today. We believe that these tables provide investors useful information about our business trends. However, our non-GAAP measures do not replace and are not superior to GAAP measures.

Duncan Niederauer, Chief Executive Officer, will review the highlights for the quarter, update you on key developments in our businesses and conclude with an update on the acquisition by ICE. Michael Geltzeiler, Chief Financial Officer, will then review the financial results for the fourth quarter and full year 2012. We will then open the line for your questions.

Also in the room for the Q&A session is Larry Leibowitz, Chief Operating Officer.

We are incorporating slides for the call today, which are available for viewing on our website, and Duncan and Mike will refer to the slides during their remarks.

With that, let me turn the call over to Duncan.

Duncan L. Niederauer

All right. Thanks, Stephen. Good morning, everybody, and thanks for joining today's call. I'm going to be starting on Slide 4 in the deck that we distributed to everybody online. And what we're really going to talk today is the progress we made in the fourth quarter to conclude 2012, which we really view as a table-setting year for driving improved operating results in 2013.

To start where I know everybody wants us to start, our announced transaction with ICE presents the opportunity to create a worldwide leader in trading markets and risk management, focused on the high-growth derivatives markets with world-class clearing capabilities supporting it, alongside the world's premiere listing venue.

I'll provide you with an update on the combination in a later slide, but I can tell you now we're very pleased with the progress we've made so far. We've filed our joint proxy statement and U.S. antitrust filings in late January. We hope to hold shareholder meetings in the early spring, and integration planning and regulatory processes have begun.

I'm going to start first with the macroeconomy. And while challenging conditions remain, we're seeing many encouraging signs. The U.S. markets are performing well and the U.S. economy is poised for growth in 2013. Capital flows into U.S. mutual funds are at their highest level in quite some time. And while one month doesn't make a trend, we're hopeful that this is an indicator of the reemergence of the retail investor and resurgence of interest in the U.S. equity markets. Corporate profits are strong, balance sheets are healthy and unemployment is slowly improving.

In Europe, the worst of our fears about a messy breakup of the euro have begun to subside. And lastly, the health of European financial institutions has improved as many banks have quickened the pace of repayments from the ECB's 3-year tender.

So in our mind, all of these are positive indicators for our business as well. Trading volumes in our interest rate complex in Europe for January were up around 40% year-over-year. Consolidated average daily volume in U.S. equities and options markets are showing slight signs of improvement. And our listings franchise is poised to capitalize on the improved market tenor and lower volatility.

As financial institutions continue to focus on getting stronger, we also believe that our technology services business is well positioned to partner with banks and brokers to develop the next generation of technology solutions to help them run their businesses more efficiently.

Now turning to the quarter. We reported $0.43 on $562 million in revenue compared to $0.50 on $628 million in revenue in the prior year's fourth quarter. The lackluster trading environment continued to impact our results, but the recent trends I just discussed give us reasons to be encouraged for 2013.

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