CHICAGO, May 3, 2019 /PRNewswire/ -- Cboe Global
Markets, Inc. (Cboe: CBOE) today reported financial results
for the first quarter of 2019.
"We faced challenging market conditions and difficult financial
comparisons versus last year's record first-quarter results," said
Edward T. Tilly, Cboe Global Markets
Chairman, President and Chief Executive Officer. "As we've
done historically, we used this less volatile period to seed
potential future growth in our proprietary index products
through increased customer outreach and education efforts.
With these efforts, we are confident we are even better
positioned to grow our business. We remain confident in the
strength of our diversified portfolio of exchanges and the utility
of our products, and are embracing the opportunities before us to
continue to define markets globally to deliver value to our
customers and shareholders," Mr. Tilly added.
"Although revenue and earnings declined year-over-year this
quarter, strong expense discipline helped us deliver solid margins,
with an adjusted operating margin of 66.5 percent, unchanged
compared with last year's first quarter," said Brian N. Schell, Cboe Global Markets Executive
Vice President, Chief Financial Officer and Treasurer.
"Additionally, we returned nearly $70
million to shareholders through dividends and share
repurchases in the first quarter. Our ability to return
capital to our shareholders reflects the confidence we have in our
business, its opportunities for growth and its ability to generate
meaningful free cash flow," Mr. Schell added.
*All comparisons are first quarter 2019 compared to the same
period in 2018.
(1)A full reconciliation of our non-GAAP
results to our GAAP results is included in the attached tables. See
"Non-GAAP Information" in the accompanying financial
tables.
Consolidated First Quarter Results -Table 1
Table 1 below presents summary selected unaudited condensed
consolidated financial information for the company as reported and
on an adjusted basis for the three months ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
1
|
Consolidated First Quarter Results
|
|
|
|
|
|
|
|
|
|
|
1Q19
|
|
1Q18
|
|
|
($ in millions except per share)
|
|
1Q19
|
|
1Q18
|
Change
|
Adjusted1
|
|
Adjusted1
|
Change
|
Total Revenues Less
Cost of Revenues
|
|
$
|
280.5
|
|
|
$
|
328.5
|
|
(15)
|
%
|
$
|
280.5
|
|
|
$
|
328.5
|
|
(15)
|
%
|
Total Operating
Expenses
|
|
$
|
134.0
|
|
|
$
|
160.8
|
|
(17)
|
%
|
$
|
94.1
|
|
|
$
|
109.9
|
|
(14)
|
%
|
Operating
Income
|
|
$
|
146.5
|
|
|
$
|
167.7
|
|
(13)
|
%
|
$
|
186.4
|
|
|
$
|
218.6
|
|
(15)
|
%
|
Operating Margin
%
|
|
|
52.2
|
%
|
|
|
51.1
|
%
|
110
|
bps
|
|
66.5
|
%
|
|
|
66.5
|
%
|
-
|
|
Net Income Allocated to
Common Stockholders
|
|
$
|
94.6
|
|
|
$
|
117.3
|
|
(19)
|
%
|
$
|
124.5
|
|
|
$
|
155.2
|
|
(20)
|
%
|
Diluted EPS
|
|
$
|
0.85
|
|
|
$
|
1.04
|
|
(18)
|
%
|
$
|
1.11
|
|
|
$
|
$ 1.38
|
|
(20)
|
%
|
EBITDA1
|
|
$
|
184.3
|
|
|
$
|
222.4
|
|
(17)
|
%
|
$
|
186.6
|
|
|
$
|
231.2
|
|
(19)
|
%
|
EBITDA Margin
% 1
|
|
|
65.7
|
%
|
|
|
67.7
|
%
|
(200)
|
bps
|
|
66.5
|
%
|
|
|
70.4
|
%
|
(390)
|
bps
|
- Total revenues less cost of revenues (referred to as "net
revenue") were $280.5 million, down
15 percent from $328.5 million in the
prior-year period, primarily due to lower trading volume across all
business segments.
- Total operating expenses were $134.0
million versus $160.8 million
in the first quarter of 2018. Adjusted operating expenses¹ of
$94.1 million declined 14 percent
compared with $109.9 million in the
first quarter of 2018, primarily reflecting a decrease in
compensation and benefits as a result of lower incentive-based
compensation.
- Operating income decreased by 13 percent to $146.5 million and adjusted operating income¹
decreased by 15 percent to $186.4
million.
- The operating margin for the first quarter was 52.2 percent.
The adjusted operating margin¹ for the quarter was 66.5 percent,
unchanged from 2018's first quarter, reflecting lower
expenses.
- The effective tax rate for the first quarter of 2019 was 25.5
percent compared with 25.9 percent in the first quarter of 2018.
The effective tax rate on adjusted earnings¹ in the first quarter
of 2019 was 25.4 percent compared with 25.8 percent in last year's
first quarter. The decrease in the tax rate was primarily due to
excess tax benefits related to equity awards.
- Diluted EPS for the first quarter of 2019 was $0.85. Adjusted diluted EPS1 was
$1.11, down 20 percent compared to
2018's record first-quarter results. First quarter EPS also
includes a charge of $0.06 due to the
SEC disapproval of the OCC capital plan, which resulted in the
reversal of $8.8 million in OCC
dividend revenue recognized in the fourth quarter of 2018.
Business Segment Information:
|
|
|
|
|
|
|
|
|
|
|
Table
2
|
Total Revenues
Less Cost of Revenues by
|
|
|
|
|
|
|
|
|
|
|
Business
Segment
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
1Q19
|
|
1Q18
|
Change
|
Options
|
|
$
|
138.5
|
|
$
|
167.1
|
|
|
(17)
|
%
|
U.S.
Equities
|
|
|
75.8
|
|
|
79.7
|
|
|
(5)
|
%
|
Futures
|
|
|
29.5
|
|
|
42.3
|
|
|
(30)
|
%
|
European
Equities
|
|
|
22.8
|
|
|
24.6
|
|
|
(7)
|
%
|
Global FX
|
|
|
13.9
|
|
|
14.6
|
|
|
(5)
|
%
|
Corporate
|
|
|
-
|
|
|
0.2
|
|
|
(100)
|
%
|
Total
|
|
$
|
280.5
|
|
$
|
328.5
|
|
|
(15)
|
%
|
(1)A full reconciliation of our
non-GAAP results to our GAAP results is included in the attached
tables. See "Non-GAAP Information" in the accompanying financial
tables.
|
Discussion of Results by Business Segment:
Options:
- Options net revenue of $138.5
million was down $28.6 million
or 17 percent from the first quarter of 2018, primarily due to
lower net transaction fees resulting from lower trading volume in
both index options and multiply-listed options.
- Net transaction fees¹ decreased $39.9
million or 28 percent, as total options average daily volume
(ADV) decreased 22 percent and revenue per contract (RPC) declined
7 percent compared to the first quarter 2018. While both index
options and multiply-listed options reported higher RPC, a mix
shift lowered the total options RPC, with index options accounting
for a lower percentage of the overall volume. Index options RPC was
up 3 percent, reflecting a shift in the mix of index products
traded, with S&P 500 Index (SPX) options accounting for a
higher percentage of volume in the first quarter 2019 versus the
same period in 2018. The RPC for multiply-listed options increased
13 percent, primarily due to lower volume-based rebates versus the
first quarter of 2018.
- Cboe's Options business had market share of 36.8 percent for
the first quarter of 2019 compared to 40.6 percent in the first
quarter of 2018.
U.S. Equities:
- U.S. Equities net revenue of $75.8
million was down $3.9 million
or 5 percent, primarily due to lower net transaction fees as a
result of lower market share.
- Cboe's U.S. Equities business had market share of 16.0 percent
for the first quarter of 2019 compared to 19.4 percent in the first
quarter of 2018.
Futures:
- Futures net revenue of $29.5
million decreased $12.8
million or 30 percent, primarily due to lower net
transaction fees.
- Net transaction fees¹ decreased $14.2
million or 37 percent, primarily due to a 37 percent
decrease in VIX futures ADV.
European Equities:
- European Equities net revenue of $22.8
million decreased by 7 percent, reflecting a decline in net
transaction fees, offset by a slight increase in non-transaction
revenue. Average daily notional value (ADNV) traded during the
quarter was €9.2 billion, down 15 percent from last year's first
quarter, with net capture up 11 percent.
- For the first quarter of 2019, Cboe Europe Equities retained
its position as the largest Pan-European stock exchange with 22.1
percent market share, up from 21.2 percent in the first quarter of
2018.
Global FX:
- Global FX net revenue of $13.9
million decreased $0.7 million
or 5 percent, primarily due to lower net transaction fees compared
with the first quarter of 2018. ADNV traded on the Cboe FX platform
was $36.5 billion for the quarter,
down 12 percent from last year's first quarter.
- Cboe FX market share increased to 15.8 percent in the first
quarter, setting a new high and net capture increased $0.16, or 7 percent, per one million shares
traded to $2.61 for first quarter
2019 compared to first quarter 2018.
(1)A full reconciliation of our
non-GAAP results to our GAAP results is included in the attached
tables. See "Non-GAAP Information" in the accompanying financial
tables.
2019 Fiscal Year Financial Guidance
The company updated or reaffirmed its financial guidance for the
2019 fiscal year as follows:
- Adjusted operating expenses are now expected to be in a range
of $415 to $423 million, a $5
million decrease from previous guidance of $420 to $428
million. The guidance excludes the amortization of acquired
intangible assets of $138 million,
which the company plans to include in its non-GAAP
reconciliation.¹
- Reaffirmed that depreciation and amortization expense, which is
included in adjusted operating expenses above, are expected to be
in the range of $35 to $40 million, excluding the amortization of
acquired intangible assets of $138
million.
- Reaffirmed that the effective tax rate¹on adjusted earnings for
the full year is expected to be in the range of 27 to 29 percent.
Significant changes in trading volume, expenses, federal, state and
local tax laws or rates and other items could materially impact
this expectation.
- Reaffirmed that capital expenditures are expected to be in the
range of $50 to $55 million.
(1)Specific quantifications of the
amounts that would be required to reconcile the company's adjusted
operating expenses guidance and the effective tax rate on adjusted
earnings guidance are not available. The company believes that
there is uncertainty and unpredictability with respect to certain
of its GAAP measures, primarily related to acquisition-related
expenses that would be required to reconcile to GAAP operating
expenses and GAAP effective tax rate, which preclude the company
from providing accurate guidance on certain forward-looking GAAP to
non-GAAP reconciliations. The company believes that providing
estimates of the amounts that would be required to reconcile the
range of the company's adjusted operating expenses and the
effective tax rate on adjusted earnings would imply a degree of
precision that would be confusing or misleading to investors for
the reasons identified above.
Capital Management
The company paid cash dividends of $34.8
million, or $0.31 per share,
during the first quarter of 2019 and utilized $35.0 million to repurchase 0.4 million shares of
its common stock under its share repurchase program at an average
price of $95.36 per share. As
of March 31, 2019, the company had
approximately $171.1 million of
availability remaining under its existing share repurchase
authorizations.
At March 31, 2019, the company had
adjusted cash and financial investments¹ of $347.8 million. Total debt as of
March 31, 2019 was $1.2 billion.
Earnings Conference Call
Executives of Cboe Global Markets will host a conference call to
review its first-quarter financial results today, May 3, 2019, at 8:30 a.m. ET/7:30 a.m.
CT. The conference call and any accompanying slides will be
publicly available via live webcast from the Investor Relations
section of the company's website at www.cboe.com under
Events & Presentations. Participants may also listen via
telephone by dialing (877) 255‑4313 from the United States, (866) 450‑4696 from
Canada or (412) 317‑5466 for
international callers. Telephone participants should place calls 10
minutes prior to the start of the call. The webcast will be
archived on the company's website for replay. A telephone replay of
the earnings call also will be available from approximately
11:00 a.m. CT, May 3, 2019,
through 11:00 p.m. CT, May 10,
2019, by calling (877) 344‑7529 from the U.S., (855)
669‑9658 from Canada or (412)
317‑0088 for international callers, using replay code 10129417.
(2)A full reconciliation of our non-GAAP
results to our GAAP results is included in the attached tables. See
"Non-GAAP Information" in the accompanying financial
tables.
About Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE) is one of the
world's largest exchange holding companies, offering cutting-edge
trading and investment solutions to investors around the world. The
company is committed to relentless innovation, connecting global
markets with world-class technology, and providing seamless
solutions that enhance the customer experience.
Cboe offers trading across a diverse range of products in
multiple asset classes and geographies, including options, futures,
U.S. and European equities, exchange-traded products (ETPs), global
foreign exchange (FX) and multi-asset volatility products based on
the Cboe Volatility Index (VIX Index), the world's barometer for
equity market volatility.
Cboe's trading venues include the largest options exchange in
the U.S. and the largest stock exchange by value traded in
Europe. In addition, the company
is one of the largest stock exchange operators in the U.S. and a
leading market globally for ETP trading.
The company is headquartered in Chicago with offices in Kansas City, New
York, London, Amsterdam, San
Francisco, Singapore,
Hong Kong and Ecuador. For more information, visit
www.cboe.com.
Cautionary Statements Regarding Forward-Looking
Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve a number of risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "might,"
"should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential" or "continue," and the negative of these
terms and other comparable terminology. All statements that reflect
our expectations, assumptions or projections about the future other
than statements of historical fact are forward-looking statements.
These forward-looking statements, which are subject to known and
unknown risks, uncertainties and assumptions about us, may include
projections of our future financial performance based on our growth
strategies and anticipated trends in our business. These statements
are only predictions based on our current expectations and
projections about future events. There are important factors that
could cause our actual results, level of activity, performance or
achievements to differ materially from those expressed or implied
by the forward-looking statements.
We operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time,
and it is not possible to predict all risks and uncertainties, nor
can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
Some factors that could cause actual results to differ include:
the loss of our right to exclusively list and trade certain index
options and futures products; economic, political and market
conditions; compliance with legal and regulatory obligations; price
competition and consolidation in our industry; decreases in trading
volumes, market data fees or a shift in the mix of products traded
on our exchanges; legislative or regulatory changes; potential
difficulties in our migration of trading platforms and our ability
to retain employees as a result of the acquisition of Bats Global
Markets, Inc.; our ability to protect our systems and communication
networks from security risks, cybersecurity risks, insider threats
and unauthorized disclosure of confidential information; increasing
competition by foreign and domestic entities; our dependence on and
exposure to risk from third parties; fluctuations to currency
exchange rates; our index providers' ability to maintain the
quality and integrity of their indexes and to perform under our
agreements; our ability to operate our business without violating
the intellectual property rights of others and the costs associated
with protecting our intellectual property rights; our ability to
attract and retain skilled management and other personnel,
including those experienced with post-acquisition integration; our
ability to accommodate trading volume and transaction traffic,
including significant increases, without failure or degradation of
performance of our systems; misconduct by those who use our markets
or our products; challenges to our use of open source software
code; our ability to meet our compliance obligations, including
managing potential conflicts between our regulatory
responsibilities and our for-profit status; damage to our
reputation; the ability of our compliance and risk management
methods to effectively monitor and manage our risks; our ability to
manage our growth and strategic acquisitions or alliances
effectively; restrictions imposed by our debt obligations; our
ability to maintain an investment grade credit rating; impairment
of our goodwill, investments or intangible assets; and the accuracy
of our estimates and expectations. More detailed information about
factors that may affect our actual results to differ may be found
in our filings with the SEC, including in our Annual Report on Form
10-K for the year ended December 31,
2018 and other filings made from time to time with the
SEC.
We do not undertake, and we expressly disclaim, any duty to
update any forward-looking statement whether as a result of new
information, future events or otherwise, except as required by law.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof.
The condensed consolidated statements of income and balance
sheets are unaudited and subject to reclassification.
|
|
|
|
|
|
|
Cboe Media
Contacts:
|
|
|
|
|
|
Analyst
Contact:
|
Suzanne
Cosgrove
|
|
Stacie
Fleming
|
|
Angela Tu
|
|
Debbie
Koopman
|
(312)
786‑7123
|
|
44‑20‑7012‑8950
|
|
(646)
856‑8734
|
|
(312)
786‑7136
|
scosgrove@cboe.com
|
|
sfleming@cboe.com
|
|
atu@cboe.com
|
|
dkoopman@cboe.com
|
CBOE-F
Trademarks:
Cboe®, Cboe Global Markets®, Bats®, BZX®, BYX®, EDGX®, EDGA®, Cboe
Volatility Index® and VIX® are registered trademarks and
SPXSM is a service mark of Cboe Global
Markets, Inc. and its subsidiaries. All other trademarks and
service marks are the property of their respective owners.
Cboe Global
Markets, Inc.
|
Key Performance
Statistics by Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q
2019
|
|
4Q
2018
|
|
3Q
2018
|
|
2Q
2018
|
|
1Q
2018
|
|
Options (ADV
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total industry
ADV
|
|
|
19,193
|
|
|
22,450
|
|
|
18,292
|
|
|
18,807
|
|
|
22,407
|
|
Total company
Options ADV
|
|
|
7,063
|
|
|
8,610
|
|
|
6,733
|
|
|
7,095
|
|
|
9,092
|
|
Multiply-listed
options
|
|
|
5,215
|
|
|
6,067
|
|
|
4,965
|
|
|
5,264
|
|
|
6,286
|
|
Index
options
|
|
|
1,848
|
|
|
2,543
|
|
|
1,768
|
|
|
1,831
|
|
|
2,806
|
|
Total Options
Market Share
|
|
|
36.8
|
%
|
|
38.4
|
%
|
|
36.8
|
%
|
|
37.7
|
%
|
|
40.6
|
%
|
Total Options
RPC:
|
|
$
|
0.243
|
|
$
|
0.280
|
|
$
|
0.244
|
|
$
|
0.241
|
|
$
|
0.261
|
|
Multiply-listed
options
|
|
$
|
0.069
|
|
$
|
0.083
|
|
$
|
0.068
|
|
$
|
0.063
|
|
$
|
0.061
|
|
Index
options
|
|
$
|
0.733
|
|
$
|
0.750
|
|
$
|
0.737
|
|
$
|
0.753
|
|
$
|
0.710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Equities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total industry ADV
(shares in billions)
|
|
|
7.5
|
|
|
8.5
|
|
|
6.3
|
|
|
6.9
|
|
|
7.6
|
|
Market share
%
|
|
|
16.0
|
%
|
|
17.8
|
%
|
|
17.5
|
%
|
|
18.9
|
%
|
|
19.4
|
%
|
Net capture (per 100
touched shares)
|
|
$
|
0.029
|
|
$
|
0.027
|
|
$
|
0.026
|
|
$
|
0.023
|
|
$
|
0.023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADV (in
thousands)
|
|
|
231
|
|
|
338
|
|
|
239
|
|
|
258
|
|
|
368
|
|
RPC
|
|
$
|
1.739
|
|
$
|
1.697
|
|
$
|
1.709
|
|
$
|
1.633
|
|
$
|
1.727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European
Equities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total industry ADNV
(Euros - in billions)
|
|
€
|
41.7
|
|
€
|
46.7
|
|
€
|
41.4
|
|
€
|
47.4
|
|
€
|
50.8
|
|
Market share
%
|
|
|
22.1
|
%
|
|
22.7
|
%
|
|
23.1
|
%
|
|
22.2
|
%
|
|
21.2
|
%
|
Net capture
(bps)
|
|
|
0.210
|
|
|
0.200
|
|
|
0.195
|
|
|
0.183
|
|
|
0.190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
FX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market share
%
|
|
|
15.8
|
%
|
|
15.3
|
%
|
|
14.8
|
%
|
|
14.9
|
%
|
|
15.3
|
%
|
ADNV ($ in
billions)
|
|
$
|
36.5
|
|
$
|
35.1
|
|
$
|
34.6
|
|
$
|
38.4
|
|
$
|
41.6
|
|
Net capture (per one
million shares traded)
|
|
$
|
2.61
|
|
$
|
2.63
|
|
$
|
2.63
|
|
$
|
2.56
|
|
$
|
2.45
|
|
|
ADV = average daily
volume; ADNV = average daily notional value.
|
|
RPC, average revenue
per contract, for options and futures represents total net
transaction fees recognized for the period divided by total
contracts traded during the period.
|
|
U.S. Equities, "net
capture per 100 touched shares" refers to transaction fees less
liquidity payments and routing and clearing costs divided by the
product of one-hundredth ADV of touched shares on BZX, BYX, EDGX
and EDGA and the number of trading days.
|
|
European Equities,
"net capture per matched notional value" refers to transaction fees
less liquidity payments in British pounds divided by the product of
matched ADNV in British pounds and the number of
trading days.
|
|
Global FX, "net
capture per one million dollars traded" refers to net transaction
fees divided by the product of one-millionth of ADNV traded on the
Cboe FX market, the number of trading days, and two, which
represents the buyer and seller that are both charged on the
transaction. Market Share represents Cboe FX volume divided by the
total volume of publicly reporting spot FX venues (Cboe FX, EBS,
Refinitiv, and FastMatch).
|
|
Average transaction
fees per contract can be affected by various factors, including
exchange fee rates, volume-based discounts and transaction mix by
contract type and product type.
|
Cboe Global
Markets, Inc. and Subsidiaries
|
Consolidated
Statements of Income (Unaudited)
|
Three Months Ended
March 31, 2019 and 2018
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
(in millions, except
per share amounts)
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
Transaction
fees
|
|
$
|
430.4
|
|
$
|
547.1
|
Access and
capacity fees
|
|
|
54.4
|
|
|
50.6
|
Market data
fees
|
|
|
51.6
|
|
|
54.2
|
Regulatory
fees
|
|
|
58.7
|
|
|
116.3
|
Other
revenue
|
|
|
7.5
|
|
|
9.5
|
Total
Revenues
|
|
|
602.6
|
|
|
777.7
|
Cost of
Revenue
|
|
|
|
|
|
|
Liquidity
payments
|
|
|
243.7
|
|
|
302.9
|
Routing and
clearing
|
|
|
9.2
|
|
|
10.3
|
Section 31
fees
|
|
|
48.2
|
|
|
108.8
|
Royalty fees
|
|
|
21.0
|
|
|
27.2
|
Total Cost of
Revenue
|
|
|
322.1
|
|
|
449.2
|
Revenues Less Cost
of Revenues
|
|
|
280.5
|
|
|
328.5
|
Operating
Expenses:
|
|
|
|
|
|
|
Compensation and
benefits
|
|
|
48.1
|
|
|
58.9
|
Depreciation and
amortization
|
|
|
47.2
|
|
|
54.2
|
Technology support
services
|
|
|
11.9
|
|
|
12.1
|
Professional fees and
outside services
|
|
|
16.2
|
|
|
18.0
|
Travel and promotional
expenses
|
|
|
2.6
|
|
|
3.7
|
Facilities
costs
|
|
|
2.1
|
|
|
2.4
|
Acquisition-related
costs
|
|
|
2.3
|
|
|
8.8
|
Other
expenses
|
|
|
3.6
|
|
|
2.7
|
Total Operating
Expenses
|
|
|
134.0
|
|
|
160.8
|
Operating
Income
|
|
|
146.5
|
|
|
167.7
|
Other
Income/(Expense):
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(9.9)
|
|
|
(9.6)
|
Other (expense)
income
|
|
|
(8.8)
|
|
|
1.3
|
Total Other
Income/(Expense)
|
|
|
(18.7)
|
|
|
(8.3)
|
Income Before Income
Taxes
|
|
|
127.8
|
|
|
159.4
|
Income tax
provision
|
|
|
32.6
|
|
|
41.3
|
Net
Income
|
|
|
95.2
|
|
|
118.1
|
Net loss attributable
to redeemable noncontrolling interest
|
|
|
0.2
|
|
|
0.3
|
Net Income Excluding
Redeemable Noncontrolling Interest
|
|
|
95.4
|
|
|
118.4
|
Change in redemption
value of redeemable noncontrolling interest
|
|
|
(0.2)
|
|
|
(0.3)
|
Net income allocated to
participating securities
|
|
|
(0.6)
|
|
|
(0.8)
|
Net Income Allocated
to Common Stockholders
|
|
$
|
94.6
|
|
$
|
117.3
|
Net Income Per Share
Allocated to Common Stockholders:
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.85
|
|
$
|
1.04
|
Diluted earnings per
share
|
|
|
0.85
|
|
|
1.04
|
Weighted average shares
used in computing income per share:
|
|
|
|
|
|
|
Basic
|
|
|
111.5
|
|
|
112.4
|
Diluted
|
|
|
111.7
|
|
|
112.7
|
Cboe Global
Markets, Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
March 31, 2019 and
December 31, 2018
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
(in
millions)
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
346.2
|
|
$
|
275.1
|
Financial
investments
|
|
|
30.2
|
|
|
35.7
|
Accounts receivable,
net
|
|
|
251.0
|
|
|
287.3
|
Income taxes
receivable
|
|
|
40.3
|
|
|
70.4
|
Other current
assets
|
|
|
15.5
|
|
|
15.2
|
Total Current
Assets
|
|
|
683.2
|
|
|
683.7
|
|
|
|
|
|
|
|
Investments
|
|
|
63.4
|
|
|
86.2
|
Land
|
|
|
4.9
|
|
|
4.9
|
Property and
equipment, net
|
|
|
68.5
|
|
|
71.7
|
Operating lease right
of use assets
|
|
|
56.5
|
|
|
—
|
Goodwill
|
|
|
2,697.5
|
|
|
2,691.4
|
Intangible assets,
net
|
|
|
1,690.3
|
|
|
1,720.2
|
Other assets,
net
|
|
|
66.1
|
|
|
62.9
|
Total
|
|
$
|
5,330.4
|
|
$
|
5,321.0
|
|
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interest and Stockholders'
Equity
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
135.8
|
|
$
|
198.5
|
Section 31 fees
payable
|
|
|
48.7
|
|
|
81.1
|
Current portion of
long-term debt
|
|
|
299.9
|
|
|
299.8
|
Deferred
revenue
|
|
|
18.2
|
|
|
8.5
|
Income taxes
payable
|
|
|
4.1
|
|
|
4.1
|
Contingent
consideration liabilities
|
|
|
4.7
|
|
|
3.9
|
Total Current
Liabilities
|
|
|
511.4
|
|
|
595.9
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
916.1
|
|
|
915.6
|
Income tax
liability
|
|
|
121.2
|
|
|
114.9
|
Deferred income
taxes
|
|
|
433.4
|
|
|
436.8
|
Non-current operating
lease liabilities
|
|
|
50.1
|
|
|
—
|
Other non-current
liabilities
|
|
|
3.4
|
|
|
7.4
|
Total
Liabilities
|
|
|
2,035.6
|
|
|
2,070.6
|
|
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
|
9.4
|
|
|
9.4
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common
stock
|
|
|
1.2
|
|
|
1.2
|
Treasury stock at
cost
|
|
|
(764.3)
|
|
|
(720.1)
|
Additional
paid-in-capital
|
|
|
2,673.7
|
|
|
2,660.2
|
Retained
earnings
|
|
|
1,348.6
|
|
|
1,288.2
|
Accumulated other
comprehensive income (loss), net
|
|
|
26.2
|
|
|
11.5
|
Total
Stockholders' Equity
|
|
|
3,285.4
|
|
|
3,241.0
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,330.4
|
|
$
|
5,321.0
|
Non-GAAP Information
In addition to disclosing results determined in accordance with
GAAP, Cboe Global Markets has disclosed certain non-GAAP measures
of operating performance. These measures are not in accordance
with, or a substitute for, GAAP, and may be different from or
inconsistent with non-GAAP financial measures used by other
companies. The non-GAAP measures provided in this press release
include net transaction fees, adjusted operating expenses, adjusted
operating income, adjusted operating margin, adjusted net income
allocated to common stockholders and adjusted diluted earnings per
share, effective tax rate on adjusted earnings, adjusted cash and
financial investments, EBITDA, EBITDA margin, adjusted EBITDA and
adjusted EBITDA margin.
Management believes that the non-GAAP financial measures
presented in this press release, including adjusted operating
income and adjusted operating expenses, provide additional and
comparative information to assess trends in our core operations and
a means to evaluate period-to-period comparisons. Non-GAAP
financial measures disclosed by management are provided as
additional information to investors in order to provide them with
an alternative method for assessing our financial condition and
operating results.
Amortization expense of acquired intangible assets: We
amortize intangible assets acquired in connection with various
acquisitions. Amortization of intangible assets is inconsistent in
amount and frequency and is significantly affected by the timing
and size of our acquisitions. As such, if intangible asset
amortization is included in performance measures, it is more
difficult to assess the day-to-day operating performance of the
businesses, the relative operating performance of the businesses
between periods and the earnings power of the company. Therefore,
we believe performance measures excluding intangible asset
amortization expense provide investors with an additional basis for
comparison across accounting periods.
Acquisition-related expenses: From time to time, we have
pursued small bolt-on acquisitions and in 2017 completed a larger
transformative acquisition, which have resulted in expenses which
would not otherwise have been incurred in the normal course of the
company's business operations. These expenses include integration
costs, as well as legal, due diligence and other third party
transaction costs. The frequency and the amount of such expenses
vary significantly based on the size, timing and complexity of the
transaction. Accordingly, we exclude these costs for purposes of
calculating non-GAAP measures which provide an additional analysis
of Cboe's ongoing operating performance or comparisons in Cboe's
performance between periods.
The tables below show the reconciliation of each financial
measure from GAAP to non-GAAP. The non-GAAP financial measures
exclude the impact of those items detailed below and are referred
to as adjusted financial measures.
Reconciliation of
GAAP and non-GAAP Information
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Table
4
|
|
March 31,
|
|
(in millions, except
per share amounts)
|
|
2019
|
|
2018
|
|
Reconciliation of
Net Income Allocated to Common Stockholders to Non-GAAP (As shown
on Table 1)
|
|
|
|
|
|
|
|
Net income allocated
to common stockholders
|
|
$
|
94.6
|
|
$
|
117.3
|
|
Non-GAAP
adjustments
|
|
|
|
|
|
|
|
Acquisition-related
expenses (1)
|
|
|
2.3
|
|
|
8.8
|
|
Amortization of
acquired intangible assets (2)
|
|
|
37.6
|
|
|
42.1
|
|
Change in redemption
value of noncontrolling interests
|
|
|
0.2
|
|
|
0.3
|
|
Total Non-GAAP
adjustments
|
|
|
40.1
|
|
|
51.2
|
|
Income tax expense
related to the items above
|
|
|
(10.0)
|
|
|
(13.0)
|
|
Net income allocated
to participating securities - effect on reconciling
items
|
|
|
(0.2)
|
|
|
(0.3)
|
|
Adjusted net
income allocated to common stockholders
|
|
$
|
124.5
|
|
$
|
155.2
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Diluted EPS to Non-GAAP
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
|
$
|
0.85
|
|
$
|
1.04
|
|
Per share impact of
non-GAAP adjustments noted above
|
|
|
0.26
|
|
|
0.34
|
|
Adjusted diluted
earnings per common share
|
|
$
|
1.11
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Margin to Non-GAAP
|
|
|
|
|
|
|
|
Revenue less cost of
revenue
|
|
$
|
280.5
|
|
$
|
328.5
|
|
Non-GAAP adjustments
noted above
|
|
|
—
|
|
|
—
|
|
Adjusted revenue
less cost of revenue
|
|
$
|
280.5
|
|
$
|
328.5
|
|
Operating
expenses
|
|
$
|
134.0
|
|
$
|
160.8
|
|
Non-GAAP adjustments
noted above
|
|
|
39.9
|
|
|
50.9
|
|
Adjusted operating
expenses
|
|
$
|
94.1
|
|
$
|
109.9
|
|
Operating
income
|
|
$
|
146.5
|
|
$
|
167.7
|
|
Non-GAAP adjustments
noted above
|
|
|
39.9
|
|
|
50.9
|
|
Adjusted operating
income
|
|
$
|
186.4
|
|
$
|
218.6
|
|
Adjusted operating
margin (3)
|
|
|
66.5
|
%
|
|
66.5
|
%
|
|
|
|
|
|
|
|
|
Reconciliation of
Income Tax Rate to Non-GAAP
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
127.8
|
|
|
159.4
|
|
Non-GAAP adjustments
noted above
|
|
|
40.1
|
|
|
51.2
|
|
Adjusted income
before income taxes
|
|
$
|
167.9
|
|
$
|
210.6
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
32.6
|
|
|
41.3
|
|
Non-GAAP adjustments
noted above
|
|
|
10.0
|
|
|
13.0
|
|
Adjusted income
tax expense
|
|
$
|
42.6
|
|
$
|
54.3
|
|
Adjusted income
tax rate
|
|
|
25.4
|
%
|
|
25.8
|
%
|
|
(1) This amount
includes professional fees and outside services, severance, and
other costs related to the company's acquisition of
Bats.
|
(2) This amount
represents the amortization of acquired intangible assets for
Bats.
|
(3) Adjusted
operating margin represents adjusted operating income divided by
adjusted revenue less cost of revenue.
|
EBITDA Reconciliations
EBITDA (earnings before interest, income taxes, depreciation and
amortization) is a widely used non-GAAP financial measure of
operating performance. EBITDA margin represents EBITDA divided by
revenues less cost of revenues (net revenue). It is presented as
supplemental information that the company believes is useful to
investors to evaluate its results because it excludes certain items
that are not directly related to the company's core operating
performance. EBITDA is calculated by adding back to net income
interest expense, income tax expense, depreciation and
amortization. EBITDA should not be considered as substitutes either
for net income, as an indicator of the company's operating
performance, or for cash flow, as a measure of the company's
liquidity. In addition, because EBITDA may not be calculated
identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies.
EBITDA margin represents EBITDA divided by net revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
5
|
|
Three Months Ended
|
|
(in
millions)
|
|
March 31,
|
|
Reconciliation of
Net Income Allocated to Common Stockholders to EBITDA and Adjusted
EBITDA (Per Table 1)
|
|
2019
|
|
2018
|
|
Net income
allocated to common stockholders
|
|
$
|
94.6
|
|
$
|
117.3
|
|
Interest expense,
net
|
|
|
9.9
|
|
|
9.6
|
|
Income tax
provision
|
|
|
32.6
|
|
|
41.3
|
|
Depreciation and
amortization
|
|
|
47.2
|
|
|
54.2
|
|
EBITDA
|
|
$
|
184.3
|
|
$
|
222.4
|
|
EBITDA
Margin¹
|
|
|
65.7
|
%
|
|
67.7
|
%
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments not included in above line items
|
|
|
|
|
|
|
|
Acquisition-related
expenses
|
|
|
2.3
|
|
|
8.8
|
|
Adjusted
EBITDA
|
|
$
|
186.6
|
|
$
|
231.2
|
|
Adjusted EBITDA
Margin¹
|
|
|
66.5
|
%
|
|
70.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
6
|
|
|
|
|
|
|
|
(in
millions)
|
|
March 31,
|
|
|
December 31,
|
|
Reconciliation of
Cash and cash equivalents to Adjusted Cash
|
|
2019
|
|
2018
|
|
Cash and cash
equivalents
|
|
$
|
346.2
|
|
$
|
275.1
|
|
Financial
investments
|
|
|
30.2
|
|
|
35.7
|
|
Less cash collected
for Section 31 Fees
|
|
|
(28.6)
|
|
|
(53.1)
|
|
Adjusted
Cash
|
|
$
|
347.8
|
|
$
|
257.7
|
|
|
|
|
|
|
|
|
|
(1) EBITDA margin
represents the respective EBITDA divided by the respective net
revenue as shown in the non-GAAP reconciliations
provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Transaction Fees –Three Months Ended March 31, 2019 and
2018
|
|
Consolidated
|
|
Options
Segment
|
|
U.S. Equities
Segment
|
|
Futures
Segment
|
|
European Equities
Segment
|
|
Global FX
Segment
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Transaction
fees
|
$
|
430.4
|
|
$
|
547.1
|
|
$
|
173.8
|
|
$
|
235.8
|
|
$
|
198.9
|
|
$
|
233.8
|
|
$
|
24.6
|
|
$
|
38.8
|
|
$
|
21.1
|
|
$
|
25.7
|
|
$
|
12.0
|
|
$
|
13.0
|
Liquidity
payments
|
|
(243.7)
|
|
|
(302.9)
|
|
|
(65.5)
|
|
|
(87.6)
|
|
|
(170.7)
|
|
|
(205.5)
|
|
|
—
|
|
|
—
|
|
|
(7.5)
|
|
|
(9.8)
|
|
|
—
|
|
|
—
|
Routing and
clearing
|
|
(9.2)
|
|
|
(10.3)
|
|
|
(3.5)
|
|
|
(3.5)
|
|
|
(5.7)
|
|
|
(6.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Net transaction
fees
|
$
|
177.5
|
|
$
|
233.9
|
|
$
|
104.8
|
|
$
|
144.7
|
|
$
|
22.5
|
|
$
|
21.5
|
|
$
|
24.6
|
|
$
|
38.8
|
|
$
|
13.6
|
|
$
|
15.9
|
|
$
|
12.0
|
|
$
|
13.0
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/cboe-global-markets-reports-results-for-first-quarter-2019-300843298.html
SOURCE Cboe Global Markets, Inc.