Exhibit 99.1
 
cmegpressrelease1a01a14.jpg
 
 
Media contact
Investor contact
 
Anita Liskey, 312.466.4613
John Peschier, 312.930.8491
 
William Parke, 312.930.3467
CME-G
 
news@cmegroup.com
 
 
www.cmegroup.mediaroom.com
 

FOR IMMEDIATE RELEASE

CME Group Inc. Reports Third-Quarter 2018 Financial Results
GAAP diluted earnings per share increased 33 percent and adjusted diluted earnings per share were up 22 percent compared with third-quarter 2017
CHICAGO, October 25, 2018 - 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


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.



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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.

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 ratesequity indexesforeign exchangeenergyagricultural 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. 

    















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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.


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