CHICAGO, Feb. 14, 2019 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported financial results for the fourth
quarter and full year of 2018. Consolidated results include
NEX Group plc (NEX) activity for November and December 2018.
The company reported revenue of $1.2
billion and operating income of $650
million for the fourth quarter of 2018. Net income was
$385.5 million and diluted earnings
per share were $1.09. On an
adjusted basis, net income was $625
million and diluted earnings per share were $1.77. Financial results presented on an
adjusted basis for the fourth quarters of 2018 and 2017 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
Total revenue for full-year 2018 was $4.3
billion and operating income was $2.6
billion. Net Income was $2.0
billion and diluted earnings per share were $5.71. On an adjusted basis, net income was
$2.3 billion, and diluted earnings
per share were $6.82.
"During the fourth quarter, elevated volatility and increased
customer demand for our diverse risk management products resulted
in strong trading volumes, exceeding 20 million contracts per day,"
said CME Group Chairman and Chief Executive Officer Terry Duffy. "We set annual average daily volume
records in four of our six asset classes as well as in total
options and demonstrated solid expense control during 2018. In
November, we completed the NEX acquisition, which positions us to
launch innovative new products to an expanding global customer base
across futures, options, cash and OTC markets. Looking ahead to
2019, we're extremely focused on the continued integration of these
two great companies, and expect to unlock additional value for our
customers and shareholders."
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.
|
Fourth-quarter 2018 average daily volume (ADV) was 20.8 million
contracts, up 31 percent compared with fourth-quarter 2017, and
representing the second-highest quarterly ADV on record.
Non-U.S. ADV grew 22 percent to 4.8 million contracts during the
quarter, driven by strong performance in Equity and Interest Rates
products. Clearing and transaction fees revenue for the
fourth-quarter 2018 totaled just over $1.0
billion and the total average rate per contract was
$0.697, down 7 percent compared with
$0.753 in third-quarter 2018. This
decline was driven primarily by product mix. Market data
revenue totaled $130 million for the
fourth-quarter 2018.
As of December 31, 2018, the
company had $1.5 billion in cash
(including $100 million deposited
with Fixed Income Clearing Corporation (FICC) and included in other
current assets) and $4.4 billion in
debt. The company declared dividends during 2018 of
$1.6 billion, including the annual
variable dividend for 2018 of $624
million, which was paid in January 2019. The company
has returned more than $11.2 billion
to shareholders in the form of dividends since the implementation
of the variable dividend policy in early 2012.
CME Group will hold a Q&A conference call to discuss
fourth-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) enables clients to trade futures,
options, cash and OTC markets, optimize portfolios, and analyze
data – empowering market participants worldwide to efficiently
manage risk and capture opportunities. CME Group exchanges offer
the widest range of global benchmark products across all major
asset classes based on interest rates, equity
indexes, foreign exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform, fixed
income trading via BrokerTec and foreign exchange trading on the
EBS platform. In addition, it operates one of the world's
leading central counterparty clearing providers, CME
Clearing. With a range of pre- and post-trade products and
services underpinning the entire lifecycle of a trade, CME Group
also offers optimization and reconciliation services through
TriOptima, and trade processing services through Traiana.
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. BrokerTec, EBS, TriOptima,
and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD,
TriOptima AB, and Traiana, Inc., respectively. 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 globally offer our products and services;
changes in regulations, including the impact of any changes in laws
or government policy with respect to our products or services
or 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 or changes to regulations in various
jurisdictions; 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
credit and liquidity risk management practices to adequately
protect us from the credit risks of clearing members and other
counterparties, and to satisfy the margin and liquidity
requirements associated with the BrokerTec matched principal
business; 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; volatility in commodity, equity and fixed income
prices, and price volatility of financial benchmarks and
instruments such as interest rates, credit spreads, equity indices,
fixed income instruments and foreign exchange rates; 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,
control the costs and achieve the synergies associated with our
strategy for acquisitions, investments and alliances, including
those associated with the acquisition of NEX; 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 ability to maintain our
reputation; and the unfavorable resolution of material legal
proceedings. 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)
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,374.5
|
|
|
$
|
1,903.6
|
|
Marketable
securities
|
|
72.9
|
|
|
90.1
|
|
Accounts receivable,
net of allowance
|
|
553.3
|
|
|
359.7
|
|
Other current assets
(includes $1.5 and $0 in restricted cash)
|
|
430.5
|
|
|
367.8
|
|
Performance bonds and
guaranty fund contributions
|
|
39,455.5
|
|
|
44,185.3
|
|
Total current
assets
|
|
41,886.7
|
|
|
46,906.5
|
|
Property, net of
accumulated depreciation and amortization
|
|
448.7
|
|
|
399.7
|
|
Intangible
assets—trading products
|
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
|
5,500.1
|
|
|
2,346.3
|
|
Goodwill
|
|
10,805.3
|
|
|
7,569.0
|
|
Other assets
(includes $1.2 and $2.4 in restricted cash)
|
|
1,659.6
|
|
|
1,394.4
|
|
Total
Assets
|
|
$
|
77,475.7
|
|
|
$
|
75,791.2
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
116.0
|
|
|
$
|
31.3
|
|
Short-term
debt
|
|
574.2
|
|
|
—
|
|
Other current
liabilities
|
|
1,126.9
|
|
|
1,456.3
|
|
Performance bonds and
guaranty fund contributions
|
|
39,455.5
|
|
|
44,185.3
|
|
Total current
liabilities
|
|
41,272.6
|
|
|
45,672.9
|
|
Long-term
debt
|
|
3,826.8
|
|
|
2,233.1
|
|
Deferred income tax
liabilities, net
|
|
5,665.9
|
|
|
4,857.7
|
|
Other
liabilities
|
|
745.1
|
|
|
615.7
|
|
Total
Liabilities
|
|
51,510.4
|
|
|
53,379.4
|
|
CME Group
Shareholders' Equity
|
|
25,918.5
|
|
|
22,411.8
|
|
Non-controlling
interest
|
|
46.8
|
|
|
—
|
|
Total
Equity
|
|
25,965.3
|
|
|
22,411.8
|
|
Total Liabilities and
Equity
|
|
$
|
77,475.7
|
|
|
$
|
75,791.2
|
|
CME Group Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
Quarter
Ended December 31,
|
|
Year
Ended December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
$
|
1,034.8
|
|
|
$
|
758.4
|
|
|
$
|
3,667.0
|
|
|
$
|
3,098.6
|
|
Market data and
information services
|
130.2
|
|
|
102.0
|
|
|
449.6
|
|
|
391.8
|
|
Other
|
71.6
|
|
|
39.6
|
|
|
192.8
|
|
|
154.3
|
|
Total
Revenues
|
1,236.6
|
|
|
900.0
|
|
|
4,309.4
|
|
|
3,644.7
|
|
Expenses
|
|
|
|
|
|
|
|
Compensation and
benefits
|
223.8
|
|
|
139.9
|
|
|
672.2
|
|
|
563.9
|
|
Technology
|
41.8
|
|
|
27.0
|
|
|
117.2
|
|
|
101.6
|
|
Professional fees and
outside services
|
60.3
|
|
|
34.6
|
|
|
166.1
|
|
|
117.6
|
|
Amortization of
purchased intangibles
|
59.0
|
|
|
23.7
|
|
|
130.0
|
|
|
95.5
|
|
Depreciation and
amortization
|
32.9
|
|
|
27.9
|
|
|
118.7
|
|
|
113.0
|
|
Licensing and other
fee agreements
|
47.8
|
|
|
38.1
|
|
|
170.6
|
|
|
146.3
|
|
Other
|
121.1
|
|
|
71.9
|
|
|
327.0
|
|
|
196.2
|
|
Total
Expenses
|
586.7
|
|
|
363.1
|
|
|
1,701.8
|
|
|
1,334.1
|
|
Operating
Income
|
649.9
|
|
|
536.9
|
|
|
2,607.6
|
|
|
2,310.6
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
Investment
income
|
185.3
|
|
|
140.5
|
|
|
745.1
|
|
|
531.7
|
|
Interest and other
borrowing costs
|
(49.5)
|
|
|
(29.1)
|
|
|
(157.7)
|
|
|
(117.0)
|
|
Equity in net
earnings (losses) of unconsolidated subsidiaries
|
39.2
|
|
|
32.7
|
|
|
152.8
|
|
|
129.2
|
|
Other non-operating
income (expense)
|
(154.4)
|
|
|
(106.3)
|
|
|
(570.0)
|
|
|
(328.2)
|
|
Total
Non-Operating Income (Expense)
|
20.6
|
|
|
37.8
|
|
|
170.2
|
|
|
215.7
|
|
Income before
Income Taxes
|
670.5
|
|
|
574.7
|
|
|
2,777.8
|
|
|
2,526.3
|
|
Income tax provision
(benefit)
|
283.5
|
|
|
(2,364.5)
|
|
|
814.1
|
|
|
(1,537.1)
|
|
Net
Income
|
$
|
387.0
|
|
|
$
|
2,939.2
|
|
|
$
|
1,963.7
|
|
|
$
|
4,063.4
|
|
Less: net income
(loss) attributable to non-controlling interests
|
(1.5)
|
|
|
—
|
|
|
(1.5)
|
|
|
—
|
|
Net Income
Attributable to CME Group
|
385.5
|
|
|
2,939.2
|
|
|
1,962.2
|
|
|
4,063.4
|
|
Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.10
|
|
|
$
|
8.67
|
|
|
$
|
5.73
|
|
|
$
|
12.00
|
|
Diluted
|
1.09
|
|
|
8.63
|
|
|
5.71
|
|
|
11.94
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
Basic
|
350,921
|
|
|
339,153
|
|
|
342,344
|
|
|
338,707
|
|
Diluted
|
352,132
|
|
|
340,490
|
|
|
343,737
|
|
|
340,226
|
|
CME Group Inc. and
Subsidiaries
|
Quarterly
Operating Statistics
|
|
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
Trading
Days
|
63
|
|
|
61
|
|
|
64
|
|
|
63
|
|
|
64
|
|
|
|
Quarterly Average
Daily Volume (ADV)
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
Interest
rates
|
7,970
|
|
|
11,948
|
|
|
9,200
|
|
|
7,798
|
|
|
10,919
|
|
Equity
indexes
|
2,632
|
|
|
4,096
|
|
|
3,086
|
|
|
2,671
|
|
|
4,510
|
|
Foreign
exchange
|
941
|
|
|
1,100
|
|
|
1,035
|
|
|
944
|
|
|
942
|
|
Energy
|
2,489
|
|
|
2,754
|
|
|
2,630
|
|
|
2,199
|
|
|
2,665
|
|
Agricultural
commodities
|
1,278
|
|
|
1,593
|
|
|
1,734
|
|
|
1,348
|
|
|
1,248
|
|
Metals
|
616
|
|
|
713
|
|
|
674
|
|
|
623
|
|
|
547
|
|
Total
|
15,925
|
|
|
22,204
|
|
|
18,359
|
|
|
15,584
|
|
|
20,831
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Globex
|
14,265
|
|
|
19,796
|
|
|
16,644
|
|
|
14,082
|
|
|
19,024
|
|
Open
outcry
|
1,066
|
|
|
1,556
|
|
|
1,066
|
|
|
938
|
|
|
1,128
|
|
Privately
negotiated
|
594
|
|
|
851
|
|
|
649
|
|
|
564
|
|
|
680
|
|
Total
|
15,925
|
|
|
22,204
|
|
|
18,359
|
|
|
15,584
|
|
|
20,831
|
|
|
|
Average Rate Per
Contract (RPC)
|
CME Group
RPC
|
|
Product
Line
|
4Q
2017
|
|
1Q
2018
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
Interest
rates
|
$
|
0.467
|
|
|
$
|
0.464
|
|
|
$
|
0.491
|
|
|
$
|
0.493
|
|
|
$
|
0.475
|
|
Equity
indexes
|
0.768
|
|
|
0.781
|
|
|
0.797
|
|
|
0.761
|
|
|
0.715
|
|
Foreign
exchange
|
0.785
|
|
|
0.762
|
|
|
0.741
|
|
|
0.743
|
|
|
0.720
|
|
Energy
|
1.133
|
|
|
1.140
|
|
|
1.142
|
|
|
1.187
|
|
|
1.150
|
|
Agricultural
commodities
|
1.251
|
|
|
1.246
|
|
|
1.274
|
|
|
1.258
|
|
|
1.261
|
|
Metals
|
1.315
|
|
|
1.367
|
|
|
1.403
|
|
|
1.379
|
|
|
1.428
|
|
Average
RPC
|
$
|
0.736
|
|
|
$
|
0.706
|
|
|
$
|
0.757
|
|
|
$
|
0.753
|
|
|
$
|
0.697
|
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net Income
Attributable to CME Group
|
$
|
385.5
|
|
|
$
|
2,939.2
|
|
|
$
|
1,962.2
|
|
|
$
|
4,063.4
|
|
|
|
|
|
|
|
|
|
Restructuring and
severance
|
2.5
|
|
|
2.9
|
|
|
4.4
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
Amortization of
purchased intangibles
|
59.0
|
|
|
23.7
|
|
|
130.0
|
|
|
95.5
|
|
|
|
|
|
|
|
|
|
Litigation
matters
|
—
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs(1)
|
88.7
|
|
|
—
|
|
|
109.7
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Foreign exchange
transaction (gains) losses(2)
|
9.1
|
|
|
0.6
|
|
|
73.6
|
|
|
(9.4)
|
|
|
|
|
|
|
|
|
|
Acceleration of
contractual commitments
|
(2.3)
|
|
|
8.3
|
|
|
(1.6)
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
Unrealized and
realized (gains) losses on CME Ventures investments
|
(11.6)
|
|
|
0.5
|
|
|
(97.5)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
Gains on sale of
BM&FBOVESPA & Bolsa Mexicana shares
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
(88.8)
|
|
|
|
|
|
|
|
|
|
Intangible and fixed
asset impairments
|
3.9
|
|
|
—
|
|
|
13.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(Gain) loss on
disposal of assets
|
(0.4)
|
|
|
—
|
|
|
1.1
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
Loss on
derivatives
|
10.9
|
|
|
—
|
|
|
62.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Debt costs related to
acquisition
|
5.1
|
|
|
—
|
|
|
21.9
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Income tax effect
related to above
|
(26.2)
|
|
|
(17.7)
|
|
|
(58.8)
|
|
|
(43.1)
|
|
|
|
|
|
|
|
|
|
Other income tax
items(3)
|
100.3
|
|
|
(2,574.2)
|
|
|
113.4
|
|
|
(2,410.2)
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income Attributable to CME Group
|
$
|
624.5
|
|
|
$
|
383.0
|
|
|
$
|
2,344.4
|
|
|
$
|
1,623.6
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.10
|
|
|
$
|
8.67
|
|
|
$
|
5.73
|
|
|
$
|
12.00
|
|
Diluted
|
1.09
|
|
|
8.63
|
|
|
5.71
|
|
|
11.94
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.78
|
|
|
$
|
1.13
|
|
|
$
|
6.85
|
|
|
$
|
4.79
|
|
Diluted
|
1.77
|
|
|
1.12
|
|
|
6.82
|
|
|
4.77
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
Basic
|
350,921
|
|
|
339,153
|
|
|
342,344
|
|
|
338,707
|
|
Diluted
|
352,132
|
|
|
340,490
|
|
|
343,737
|
|
|
340,226
|
|
|
1.
Acquisition-related costs include professional fees, acceleration
of stock-based compensation and transfer taxes related to the
acquisition of NEX.
|
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.
|
3. Other income tax
items is primarily driven by the revaluation of our deferred tax
liability related to the acquisition of NEX.
|
CME-G
View original
content:http://www.prnewswire.com/news-releases/cme-group-inc-reports-fourth-quarter-and-full-year-2018-financial-results-300795538.html
SOURCE CME Group