CHICAGO, Oct. 25, 2018 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported revenue of $904
million and operating income of $550
million for the third quarter of 2018. Net income was
$412 million and diluted earnings per
share were $1.21, up from
$0.91 in third-quarter 2017. On
an adjusted basis, net income was $495
million and diluted earnings per share were $1.45, up from $1.19 in third-quarter 2017. Financial
results presented on an adjusted basis for the third quarters of
2018 and 2017 exclude certain items, which are detailed in the
reconciliation of non-GAAP results.1
"The third quarter improved steadily from July to September,
driven by strength in our interest rate, equities and metals
product lines," said CME Group Chairman and Chief Executive Officer
Terry Duffy. "Our solid
expense management contributed to adjusted diluted earnings per
share growth of more than 20 percent in the third quarter. Open
interest has continued to rise to more than 128 million contracts,
which illustrates the growing need for risk management
globally. In addition, we have had an exceptional start to
the fourth quarter, with growth in all six product areas and total
volume up more than 40 percent compared with the same period a year
ago."
Third-quarter 2018 average daily volume was 15.6 million
contracts, down 1 percent compared with third-quarter 2017.
Clearing and transaction fee revenue was $753 million, flat compared with third-quarter
2017. Third-quarter 2018 total average rate per contract was
$0.753, compared with $0.757 in second-quarter 2018. Market data
revenue was $111 million, up 14
percent compared with the third quarter last year.
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 and earnings presentation materials.
|
As of September 30, 2018, the
company had $1.5 billion of cash and
marketable securities, excluding $1.6
billion held in escrow related to the potential NEX Group
plc acquisition, and $3.4 billion of
long-term debt. The company paid dividends during the third
quarter of $237.7 million. The
company has returned more than $10.3
billion to shareholders in the form of dividends since
implementing the variable dividend policy in early 2012.
CME Group will hold a Q&A conference call to discuss
third-quarter 2018 results at 8:30 a.m.
Eastern Time today. A live audio Webcast of the
Q&A 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
products and metals. Around the world, CME Group
brings buyers and sellers together through its CME Globex®
electronic trading platform. CME Group also operates one of
the world's leading central counterparty clearing providers
through CME Clearing, which offers clearing and settlement
services across asset classes for exchange-traded and
over-the-counter derivatives. CME Group products and services
ensure that businesses around the world can effectively manage risk
and achieve growth.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex and E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT and Chicago Board
of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. Dow Jones, Dow Jones Industrial Average,
S&P 500 and S&P are service and/or trademarks of Dow Jones
Trademark Holdings LLC, Standard & Poor's Financial Services
LLC and S&P/Dow Jones Indices LLC, as the case may be, and have
been licensed for use by Chicago Mercantile Exchange Inc. All
other trademarks are the property of their respective owners.
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 regulations,
including the impact of any changes in 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; our failure to maintain our brand's reputation;
the unfavorable resolution of material legal proceedings and the
uncertainties of the ultimate impact of the Tax Cuts and Jobs
Act. 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)
|
|
|
September 30,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,406.3
|
|
|
$
|
1,903.6
|
|
Marketable
securities
|
82.8
|
|
|
90.1
|
|
Accounts receivable,
net of allowance
|
386.3
|
|
|
359.7
|
|
Other current assets
(includes $1,622.1 and $0 in restricted cash)
|
1,795.5
|
|
|
367.8
|
|
Performance bonds and
guaranty fund contributions
|
37,843.9
|
|
|
44,185.3
|
|
Total current
assets
|
41,514.8
|
|
|
46,906.5
|
|
Property, net of
accumulated depreciation and amortization
|
362.7
|
|
|
399.7
|
|
Intangible
assets—trading products
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
2,268.4
|
|
|
2,346.3
|
|
Goodwill
|
7,569.0
|
|
|
7,569.0
|
|
Other assets
(includes $1.3 and $2.4 in restricted cash)
|
1,473.9
|
|
|
1,394.4
|
|
Total
Assets
|
$
|
70,364.1
|
|
|
$
|
75,791.2
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
53.9
|
|
|
$
|
31.3
|
|
Other current
liabilities
|
256.3
|
|
|
1,456.3
|
|
Performance bonds and
guaranty fund contributions
|
37,843.9
|
|
|
44,185.3
|
|
Total current
liabilities
|
38,154.1
|
|
|
45,672.9
|
|
Long-term
debt
|
3,419.6
|
|
|
2,233.1
|
|
Deferred income tax
liabilities, net
|
4,882.7
|
|
|
4,857.7
|
|
Other
liabilities
|
612.0
|
|
|
615.7
|
|
Total
Liabilities
|
47,068.4
|
|
|
53,379.4
|
|
Shareholders'
Equity
|
23,295.7
|
|
|
22,411.8
|
|
Total Liabilities and
Equity
|
$
|
70,364.1
|
|
|
$
|
75,791.2
|
|
CME Group Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
Quarter
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
$
|
752.5
|
|
|
$
|
756.2
|
|
|
$
|
2,632.2
|
|
|
$
|
2,340.2
|
|
Market data and
information services
|
110.7
|
|
|
96.9
|
|
|
319.4
|
|
|
289.8
|
|
Access and
communication fees
|
26.2
|
|
|
25.7
|
|
|
78.4
|
|
|
74.9
|
|
Other
|
14.8
|
|
|
12.0
|
|
|
42.8
|
|
|
39.8
|
|
Total
Revenues
|
904.2
|
|
|
890.8
|
|
|
3,072.8
|
|
|
2,744.7
|
|
Expenses
|
|
|
|
|
|
|
|
Compensation and
benefits
|
144.9
|
|
|
141.7
|
|
|
448.4
|
|
|
424.0
|
|
Communications
|
6.5
|
|
|
6.1
|
|
|
18.3
|
|
|
18.4
|
|
Technology support
services
|
18.2
|
|
|
19.3
|
|
|
57.1
|
|
|
56.2
|
|
Professional fees and
outside services
|
31.3
|
|
|
25.8
|
|
|
105.8
|
|
|
83.0
|
|
Amortization of
purchased intangibles
|
23.7
|
|
|
23.8
|
|
|
71.0
|
|
|
71.8
|
|
Depreciation and
amortization
|
30.2
|
|
|
26.9
|
|
|
85.8
|
|
|
85.1
|
|
Occupancy and
building operations
|
21.0
|
|
|
19.8
|
|
|
61.2
|
|
|
59.1
|
|
Licensing and other
fee agreements
|
33.4
|
|
|
41.5
|
|
|
122.8
|
|
|
108.2
|
|
Other
|
45.1
|
|
|
18.3
|
|
|
144.7
|
|
|
65.2
|
|
Total
Expenses
|
354.3
|
|
|
323.2
|
|
|
1,115.1
|
|
|
971.0
|
|
Operating
Income
|
549.9
|
|
|
567.6
|
|
|
1,957.7
|
|
|
1,773.7
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
Investment
income
|
161.5
|
|
|
139.9
|
|
|
559.8
|
|
|
391.2
|
|
Interest and other
borrowing costs
|
(45.0)
|
|
|
(29.1)
|
|
|
(108.2)
|
|
|
(87.9)
|
|
Equity in net
earnings of unconsolidated subsidiaries
|
37.1
|
|
|
33.9
|
|
|
113.6
|
|
|
96.5
|
|
Other non-operating
income (expense)
|
(141.7)
|
|
|
(105.0)
|
|
|
(415.6)
|
|
|
(221.9)
|
|
Total
Non-Operating Income (Expense)
|
11.9
|
|
|
39.7
|
|
|
149.6
|
|
|
177.9
|
|
Income before
Income Taxes
|
561.8
|
|
|
607.3
|
|
|
2,107.3
|
|
|
1,951.6
|
|
Income tax
provision
|
150.0
|
|
|
298.7
|
|
|
530.6
|
|
|
827.4
|
|
Net
Income
|
$
|
411.8
|
|
|
$
|
308.6
|
|
|
$
|
1,576.7
|
|
|
$
|
1,124.2
|
|
Earnings per
Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.21
|
|
|
$
|
0.91
|
|
|
$
|
4.64
|
|
|
$
|
3.32
|
|
Diluted
|
1.21
|
|
|
0.91
|
|
|
4.62
|
|
|
3.31
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
Basic
|
339,586
|
|
|
338,771
|
|
|
339,453
|
|
|
338,557
|
|
Diluted
|
341,035
|
|
|
340,329
|
|
|
340,907
|
|
|
340,114
|
|
CME Group Inc. and
Subsidiaries
|
Quarterly
Operating Statistics
|
|
|
3Q
2017
|
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
Trading
Days
|
63
|
|
|
63
|
|
|
61
|
|
|
64
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Daily Volume (ADV)
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
3Q
2017
|
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
Interest
rate
|
7,424
|
|
|
7,970
|
|
|
11,948
|
|
|
9,200
|
|
|
7,798
|
|
Equity
|
2,624
|
|
|
2,632
|
|
|
4,096
|
|
|
3,086
|
|
|
2,671
|
|
Foreign
exchange
|
971
|
|
|
941
|
|
|
1,100
|
|
|
1,035
|
|
|
944
|
|
Energy
|
2,693
|
|
|
2,489
|
|
|
2,754
|
|
|
2,630
|
|
|
2,199
|
|
Agricultural
commodity
|
1,381
|
|
|
1,278
|
|
|
1,593
|
|
|
1,734
|
|
|
1,348
|
|
Metal
|
611
|
|
|
616
|
|
|
713
|
|
|
674
|
|
|
623
|
|
Total
|
15,704
|
|
|
15,925
|
|
|
22,204
|
|
|
18,359
|
|
|
15,584
|
|
Venue
|
|
|
|
|
|
|
|
|
|
Electronic
|
14,264
|
|
|
14,265
|
|
|
19,796
|
|
|
16,644
|
|
|
14,082
|
|
Open
outcry
|
889
|
|
|
1,066
|
|
|
1,556
|
|
|
1,066
|
|
|
938
|
|
Privately
negotiated
|
551
|
|
|
594
|
|
|
851
|
|
|
649
|
|
|
564
|
|
Total
|
15,704
|
|
|
15,925
|
|
|
22,204
|
|
|
18,359
|
|
|
15,584
|
|
|
|
Average Rate Per
Contract (RPC)
|
CME Group
RPC
|
|
Product
Line
|
3Q
2017
|
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
Interest
rate
|
$
|
0.485
|
|
|
$
|
0.467
|
|
|
$
|
0.464
|
|
|
$
|
0.491
|
|
|
$
|
0.493
|
|
Equity
|
0.738
|
|
|
0.768
|
|
|
0.781
|
|
|
0.797
|
|
|
0.761
|
|
Foreign
exchange
|
0.796
|
|
|
0.785
|
|
|
0.762
|
|
|
0.741
|
|
|
0.743
|
|
Energy
|
1.072
|
|
|
1.133
|
|
|
1.140
|
|
|
1.142
|
|
|
1.187
|
|
Agricultural
commodity
|
1.251
|
|
|
1.251
|
|
|
1.246
|
|
|
1.274
|
|
|
1.258
|
|
Metal
|
1.376
|
|
|
1.315
|
|
|
1.367
|
|
|
1.403
|
|
|
1.379
|
|
Average
RPC
|
$
|
0.749
|
|
|
$
|
0.736
|
|
|
$
|
0.706
|
|
|
$
|
0.757
|
|
|
$
|
0.753
|
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
Quarter
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net
Income
|
$
|
411.8
|
|
|
$
|
308.6
|
|
|
$
|
1,576.7
|
|
|
$
|
1,124.2
|
|
|
|
|
|
|
|
|
|
Restructuring and
severance
|
0.2
|
|
|
—
|
|
|
1.9
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
Amortization of
purchased intangibles
|
23.7
|
|
|
23.8
|
|
|
71.0
|
|
|
71.8
|
|
|
|
|
|
|
|
|
|
Litigation
matters
|
—
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs(1)
|
6.7
|
|
|
—
|
|
|
21.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Foreign exchange
transaction (gains) losses(2)
|
15.6
|
|
|
(2.9)
|
|
|
64.5
|
|
|
(10.0)
|
|
|
|
|
|
|
|
|
|
Acceleration of
contractual commitments
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Unrealized and
realized (gains) losses on CME Ventures investments
|
3.4
|
|
|
—
|
|
|
(85.9)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Gains on sale of
BM&FBOVESPA & Bolsa Mexicana shares
|
—
|
|
|
(2.0)
|
|
|
—
|
|
|
(88.5)
|
|
|
|
|
|
|
|
|
|
Intangible and fixed
asset impairments
|
9.5
|
|
|
—
|
|
|
9.5
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Loss on disposal of
assets
|
1.5
|
|
|
—
|
|
|
1.5
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
Loss on
derivatives
|
14.5
|
|
|
—
|
|
|
51.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Debt costs related to
acquisition
|
13.3
|
|
|
—
|
|
|
16.8
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Income tax effect
related to above
|
(17.1)
|
|
|
(7.4)
|
|
|
(32.6)
|
|
|
(25.4)
|
|
|
|
|
|
|
|
|
|
Other income tax
items
|
11.9
|
|
|
86.1
|
|
|
13.1
|
|
|
164.0
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
$
|
495.0
|
|
|
$
|
406.2
|
|
|
$
|
1,719.9
|
|
|
$
|
1,240.6
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per
Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.21
|
|
|
$
|
0.91
|
|
|
$
|
4.64
|
|
|
$
|
3.32
|
|
Diluted
|
1.21
|
|
|
0.91
|
|
|
4.62
|
|
|
3.31
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.46
|
|
|
$
|
1.20
|
|
|
$
|
5.07
|
|
|
$
|
3.66
|
|
Diluted
|
1.45
|
|
|
1.19
|
|
|
5.05
|
|
|
3.65
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
Basic
|
339,586
|
|
|
338,771
|
|
|
339,453
|
|
|
338,557
|
|
Diluted
|
341,035
|
|
|
340,329
|
|
|
340,907
|
|
|
340,114
|
|
|
1.
Acquisition-related costs include professional fees related to the
proposed acquisition of NEX Group plc.
|
2. Results include
foreign exchange transaction net gains and losses principally
related to cash held in British pounds within entities whose
functional currency is the U.S. dollar.
|
CME-G
View original
content:http://www.prnewswire.com/news-releases/cme-group-inc-reports-third-quarter-2018-financial-results-300737622.html
SOURCE CME Group