CHICAGO, July 31, 2019 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported financial results for the second
quarter of 2019.
The company reported revenue of $1.3
billion and operating income of $699
million for the second quarter of 2019. Net income was
$514 million and diluted earnings per
share were $1.43. On an
adjusted basis, net income was $632
million and diluted earnings per share were $1.76. Financial results presented on an
adjusted basis for the second quarter of 2019 and 2018 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
"During the second quarter, our clients turned to CME Group to
manage their risks amid ongoing global trade concerns, geopolitical
unease and Fed policy uncertainty, all of which drove our strong
financial results," said CME Group Chairman and Chief Executive
Officer Terry Duffy. "We
delivered the second-highest quarterly average daily volume in our
history, with 21 million contracts per day, driven in part by
record trading volume outside the U.S. and strong options activity,
while maintaining our focus on expense control. Likewise,
open interest reached an all-time record of 153 million contracts,
illustrating the ongoing need for risk management. Looking
ahead, we remain focused on the successful integration of the NEX
businesses, which we believe will provide additional value for both
clients and shareholders."
Second-quarter 2019 average daily volume (ADV) grew 14% from
second-quarter 2018. Second-quarter 2019 non-U.S. ADV was a
record 5.4 million contracts, up 24% compared with second-quarter
2018.
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.
|
Clearing and transaction fees revenue for second-quarter 2019
totaled $1.1 billion and the total
average rate per contract was $0.693,
down 3% compared with $0.713 in
first-quarter 2019. This was mainly driven by higher discounts and
the introduction of the Micro E-mini equity futures contracts.
Market data revenue totaled $128
million for second-quarter 2019.
As of June 30, 2019, the company
had $1.0 billion in cash (including
$100 million deposited with Fixed
Income Clearing Corporation (FICC) and included in other current
assets) and $4.1 billion in
debt. The company paid dividends during the second quarter of
$268 million. The company has
returned approximately $11.8 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
second-quarter 2019 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 website 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)
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
937.7
|
|
|
$
|
1,374.5
|
|
Marketable
securities
|
|
81.8
|
|
|
72.9
|
|
Accounts receivable,
net of allowance
|
|
593.7
|
|
|
553.3
|
|
Other current assets
(includes $4.1 and $1.5 in restricted cash)
|
|
359.7
|
|
|
430.5
|
|
Performance bonds and
guaranty fund contributions
|
|
32,489.5
|
|
|
39,455.5
|
|
Total current
assets
|
|
34,462.4
|
|
|
41,886.7
|
|
Property, net of
accumulated depreciation and amortization
|
|
500.4
|
|
|
448.7
|
|
Intangible
assets—trading products
|
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
|
5,308.7
|
|
|
5,500.1
|
|
Goodwill
|
|
10,795.3
|
|
|
10,805.3
|
|
Other assets
(includes $1.1 and $1.2 in restricted cash)
|
|
2,107.4
|
|
|
1,659.6
|
|
Total
Assets
|
|
$
|
70,349.5
|
|
|
$
|
77,475.7
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
51.6
|
|
|
$
|
116.0
|
|
Short-term
debt
|
|
—
|
|
|
574.2
|
|
Other current
liabilities
|
|
393.6
|
|
|
1,126.9
|
|
Performance bonds and
guaranty fund contributions
|
|
32,489.5
|
|
|
39,455.5
|
|
Total current
liabilities
|
|
32,934.7
|
|
|
41,272.6
|
|
Long-term
debt
|
|
4,072.9
|
|
|
3,826.8
|
|
Deferred income tax
liabilities, net
|
|
5,645.1
|
|
|
5,665.9
|
|
Other
liabilities
|
|
1,211.9
|
|
|
745.1
|
|
Total
Liabilities
|
|
43,864.6
|
|
|
51,510.4
|
|
CME Group
Shareholders' Equity
|
|
26,455.2
|
|
|
25,918.5
|
|
Non-controlling
interests
|
|
29.7
|
|
|
46.8
|
|
Total
Equity
|
|
26,484.9
|
|
|
25,965.3
|
|
Total Liabilities and
Equity
|
|
$
|
70,349.5
|
|
|
$
|
77,475.7
|
|
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,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
|
$
|
1,051.8
|
|
|
$
|
906.1
|
|
|
$
|
2,004.4
|
|
|
$
|
1,879.7
|
|
Market data and
information services
|
|
128.3
|
|
|
113.8
|
|
|
258.4
|
|
|
208.7
|
|
Other
|
|
92.6
|
|
|
39.7
|
|
|
189.5
|
|
|
80.2
|
|
Total
Revenues
|
|
1,272.7
|
|
|
1,059.6
|
|
|
2,452.3
|
|
|
2,168.6
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
227.3
|
|
|
150.8
|
|
|
457.6
|
|
|
303.5
|
|
Technology
|
|
48.6
|
|
|
25.2
|
|
|
95.7
|
|
|
50.7
|
|
Professional fees and
outside services
|
|
41.7
|
|
|
31.9
|
|
|
81.1
|
|
|
74.5
|
|
Amortization of
purchased intangibles
|
|
76.1
|
|
|
23.6
|
|
|
156.8
|
|
|
47.3
|
|
Depreciation and
amortization
|
|
46.3
|
|
|
27.5
|
|
|
79.2
|
|
|
55.6
|
|
Licensing and other
fee agreements
|
|
44.8
|
|
|
39.9
|
|
|
85.3
|
|
|
89.4
|
|
Other
|
|
89.3
|
|
|
93.8
|
|
|
167.0
|
|
|
139.8
|
|
Total
Expenses
|
|
574.1
|
|
|
392.7
|
|
|
1,122.7
|
|
|
760.8
|
|
Operating
Income
|
|
698.6
|
|
|
666.9
|
|
|
1,329.6
|
|
|
1,407.8
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
|
139.3
|
|
|
241.9
|
|
|
318.0
|
|
|
398.3
|
|
Interest and other
borrowing costs
|
|
(45.1)
|
|
|
(33.1)
|
|
|
(93.2)
|
|
|
(63.2)
|
|
Equity in net
earnings (losses) of unconsolidated subsidiaries
|
|
43.8
|
|
|
36.4
|
|
|
84.3
|
|
|
76.5
|
|
Other non-operating
income (expense)
|
|
(134.5)
|
|
|
(155.3)
|
|
|
(296.4)
|
|
|
(273.9)
|
|
Total
Non-Operating Income (Expense)
|
|
3.5
|
|
|
89.9
|
|
|
12.7
|
|
|
137.7
|
|
Income before
Income Taxes
|
|
702.1
|
|
|
756.8
|
|
|
1,342.3
|
|
|
1,545.5
|
|
Income tax provision
(benefit)
|
|
187.5
|
|
|
190.7
|
|
|
331.8
|
|
|
380.6
|
|
Net
Income
|
|
514.6
|
|
|
566.1
|
|
|
1,010.5
|
|
|
1,164.9
|
|
Less: net (income)
loss attributable to non-controlling interests
|
|
(0.8)
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Net Income
Attributable to CME Group
|
|
$
|
513.8
|
|
|
$
|
566.1
|
|
|
$
|
1,010.7
|
|
|
$
|
1,164.9
|
|
Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.44
|
|
|
$
|
1.67
|
|
|
$
|
2.83
|
|
|
$
|
3.43
|
|
Diluted
|
|
1.43
|
|
|
1.66
|
|
|
2.82
|
|
|
3.42
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
357,060
|
|
|
339,465
|
|
|
356,973
|
|
|
339,386
|
|
Diluted
|
|
358,155
|
|
|
340,872
|
|
|
358,103
|
|
|
340,838
|
|
CME Group Inc. and
Subsidiaries
|
Quarterly
Operating Statistics
|
|
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
|
1Q
2019
|
|
2Q
2019
|
Trading
Days
|
|
|
64
|
|
|
63
|
|
|
64
|
|
|
61
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Daily Volume (ADV)(1)
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
|
1Q
2019
|
|
2Q
2019
|
Interest
rates
|
|
9,200
|
|
|
7,798
|
|
|
10,919
|
|
|
10,313
|
|
|
11,593
|
|
Equity
indexes
|
|
3,086
|
|
|
2,671
|
|
|
4,510
|
|
|
3,161
|
|
|
3,480
|
|
Foreign
exchange
|
|
1,035
|
|
|
944
|
|
|
942
|
|
|
885
|
|
|
874
|
|
Energy
|
|
2,630
|
|
|
2,199
|
|
|
2,665
|
|
|
2,331
|
|
|
2,498
|
|
Agricultural
commodities
|
|
1,734
|
|
|
1,348
|
|
|
1,248
|
|
|
1,381
|
|
|
1,839
|
|
Metals
|
|
674
|
|
|
623
|
|
|
547
|
|
|
561
|
|
|
633
|
|
Total
|
|
18,359
|
|
|
15,584
|
|
|
20,831
|
|
|
18,633
|
|
|
20,918
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
CME Globex
|
|
16,644
|
|
|
14,082
|
|
|
19,024
|
|
|
16,576
|
|
|
18,505
|
|
Open
outcry
|
|
1,066
|
|
|
938
|
|
|
1,128
|
|
|
1,284
|
|
|
1,501
|
|
Privately
negotiated
|
|
649
|
|
|
564
|
|
|
680
|
|
|
773
|
|
|
912
|
|
Total
|
|
18,359
|
|
|
15,584
|
|
|
20,831
|
|
|
18,633
|
|
|
20,918
|
|
|
|
|
|
|
|
|
|
|
|
|
1. ADV includes
futures and options on futures only.
|
Average Rate Per
Contract (RPC)
|
CME Group
RPC
|
|
Product
Line
|
|
2Q
2018
|
|
3Q
2018
|
|
4Q
2018
|
|
1Q
2019
|
|
2Q
2019
|
Interest
rates
|
|
$
|
0.491
|
|
|
$
|
0.493
|
|
|
$
|
0.475
|
|
|
$
|
0.481
|
|
|
$
|
0.476
|
|
Equity
indexes
|
|
0.797
|
|
|
0.761
|
|
|
0.715
|
|
|
0.757
|
|
|
0.676
|
|
Foreign
exchange
|
|
0.741
|
|
|
0.743
|
|
|
0.720
|
|
|
0.763
|
|
|
0.713
|
|
Energy
|
|
1.142
|
|
|
1.187
|
|
|
1.150
|
|
|
1.159
|
|
|
1.139
|
|
Agricultural
commodities
|
|
1.274
|
|
|
1.258
|
|
|
1.261
|
|
|
1.246
|
|
|
1.222
|
|
Metals
|
|
1.403
|
|
|
1.379
|
|
|
1.428
|
|
|
1.488
|
|
|
1.455
|
|
Average
RPC
|
|
$
|
0.757
|
|
|
$
|
0.753
|
|
|
$
|
0.697
|
|
|
$
|
0.713
|
|
|
$
|
0.693
|
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net Income
Attributable to CME Group
|
|
$
|
513.8
|
|
|
$
|
566.1
|
|
|
$
|
1,010.7
|
|
|
$
|
1,164.9
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
severance
|
|
7.0
|
|
|
0.3
|
|
|
10.3
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
Amortization of
purchased intangibles
|
|
76.1
|
|
|
23.6
|
|
|
156.8
|
|
|
47.3
|
|
|
|
|
|
|
|
|
|
|
Litigation
matters
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs(1)
|
|
6.6
|
|
|
4.8
|
|
|
14.5
|
|
|
14.3
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
transaction (gains) losses(2)
|
|
(5.2)
|
|
|
47.3
|
|
|
2.4
|
|
|
48.9
|
|
|
|
|
|
|
|
|
|
|
Acceleration of
contractual commitments
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
Unrealized and
realized (gains) losses on investments
|
|
23.3
|
|
|
(88.2)
|
|
|
26.7
|
|
|
(89.3)
|
|
|
|
|
|
|
|
|
|
|
Loss on real estate
sublease and related costs
|
|
5.0
|
|
|
—
|
|
|
5.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Loss on
derivatives
|
|
2.3
|
|
|
36.9
|
|
|
16.7
|
|
|
36.9
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on
assets held for sale
|
|
21.6
|
|
|
—
|
|
|
21.6
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of
assets
|
|
10.6
|
|
|
—
|
|
|
10.6
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Debt costs related to
acquisition
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
Income tax effect
related to above
|
|
(29.5)
|
|
|
(6.2)
|
|
|
(57.3)
|
|
|
(15.5)
|
|
|
|
|
|
|
|
|
|
|
Other income tax
items
|
|
—
|
|
|
1.2
|
|
|
(7.6)
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income Attributable to CME Group
|
|
$
|
631.6
|
|
|
$
|
591.4
|
|
|
$
|
1,210.8
|
|
|
$
|
1,224.9
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.44
|
|
|
$
|
1.67
|
|
|
$
|
2.83
|
|
|
$
|
3.43
|
|
Diluted
|
|
1.43
|
|
|
1.66
|
|
|
2.82
|
|
|
3.42
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.77
|
|
|
$
|
1.74
|
|
|
$
|
3.39
|
|
|
$
|
3.61
|
|
Diluted
|
|
1.76
|
|
|
1.74
|
|
|
3.38
|
|
|
3.59
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
357,060
|
|
|
339,465
|
|
|
356,973
|
|
|
339,386
|
|
Diluted
|
|
358,155
|
|
|
340,872
|
|
|
358,103
|
|
|
340,838
|
|
|
|
|
|
|
|
|
|
|
1.
Acquisition-related costs primarily include professional
fees.
|
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-second-quarter-2019-financial-results-300893721.html
SOURCE CME Group