10-QPeriod: Q3 FY2013

CME GROUP INC. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 8, 2013For Securities:CME

Summary

CME Group Inc. reported solid financial performance for the nine months ended September 30, 2013, with total revenues of $2,249.3 million, remaining flat compared to the prior year. While clearing and transaction fees saw a 3% increase driven by higher contract volumes, this was offset by a notable 22% decline in market data and information services revenue. This decline was primarily attributed to the de-consolidation of its index business into the S&P/Dow Jones Indices LLC joint venture and the sale of Credit Market Analysis Ltd. Operating expenses remained largely stable year-over-year, benefiting from the aforementioned de-consolidation and sale, which offset increased compensation and benefits. Net income attributable to CME Group rose by 7% to $783.7 million for the nine-month period, translating to diluted earnings per share of $2.35, an increase from $2.20 in the prior year. The company also maintained a strong liquidity position with $2.1 billion in cash and cash equivalents. Despite some revenue pressures in specific segments, the core clearing and transaction business demonstrated resilience, supported by increased contract volumes, particularly in interest rate and metal products.

Financial Highlights

48 data points
Beta

Revenue

$714.60M

Net Income

$236.70M

33.1% Net Margin

EPS (Diluted)

$0.71

Total Assets

$48.98B

Cash & Equivalents

$2.06B

Free Cash Flow

$90.90M

Financial Statements
Beta
Revenue$714.60M
Operating Expenses$314.10M
Operating Income$400.50M
Net Income$236.70M
EPS (Basic)$0.71
EPS (Diluted)$0.71
Shares Outstanding (Basic)332.76M
Shares Outstanding (Diluted)334.67M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2013, were $2,249.3 million, flat compared to the prior year, primarily due to increased clearing and transaction fees offset by lower market data revenues.
  • 2Clearing and transaction fees increased by 3% year-over-year for the nine-month period, driven by a 9% rise in total contract volume, with interest rate products showing significant growth.
  • 3Market data and information services revenue decreased by 22% for the nine months, largely due to the de-consolidation of the index business and the sale of CMA.
  • 4Operating expenses remained stable for the nine months, as cost savings from the index business and CMA sale offset increased compensation and benefits.
  • 5Net income attributable to CME Group increased by 7% to $783.7 million for the nine months, with diluted EPS rising to $2.35 from $2.20.
  • 6The company maintained a strong liquidity position, with cash and cash equivalents totaling $2.1 billion at September 30, 2013.
  • 7CME Group issued $750 million in new long-term debt (5.30% notes due 2043) and repaid maturing debt, managing its debt profile effectively.

Frequently Asked Questions

Total revenues remained flat year-over-year. The primary driver for this stability was an increase in clearing and transaction fees, which grew due to higher contract volumes. However, this was offset by a significant decrease in market data and information services revenue, largely due to the de-consolidation of CME's index business into a joint venture and the sale of Credit Market Analysis Ltd.

Operating expenses remained relatively flat year-over-year. This was achieved by leveraging cost savings from the de-consolidation of the index business and the sale of CMA, which helped to offset increases in compensation and benefits expenses driven by salary increases and higher headcount.

The company reported a 3% increase in clearing and transaction fees for the nine-month period, driven by a 9% increase in contract volume. The growth was particularly strong in interest rate and metal products. This indicates resilience in the core business, despite some sector-specific revenue pressures.

CME Group successfully issued $750 million in new long-term debt (5.30% notes due 2043) and repaid maturing debt. The company has a strong credit rating and maintains significant liquidity and credit facilities to support its operations and debt management.