PR Newswire | Oct 27, 2021 07:01AM EDT

10/27 06:00 CDT

CME Group Inc. Reports Third-Quarter 2021 Financial Results CHICAGO, Oct. 27, 2021

CHICAGO, Oct. 27, 2021 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME) today reported financial results for the third quarter of 2021.

The company reported revenue of $1.1 billion and operating income of $614 million for the third quarter of 2021. Net income was $927 million and diluted earnings per share were $2.58. On an adjusted basis, net income was $574 million and diluted earnings per share were $1.60. Financial results presented on an adjusted basis for the third quarter of 2021 and 2020 exclude certain items, which are detailed in the reconciliation of non-GAAP results.1

"We saw robust volume growth in Q3 as clients continued to manage a variety of risks during these times of ongoing economic uncertainty," said CME Group Chairman and Chief Executive Officer Terry Duffy. "Average daily volume grew 14% year over year during the quarter, led by double-digit growth in interest rates, energy and options products, as well as strong non-U.S. volumes, which increased 13% to 5 million contracts per day. We remained focused on meeting the evolving needs of our clients through product innovation. Since the beginning of the year we have delivered 70 new products and solutions, including the introduction of Micro Treasury futures and new ESG-focused products in Q3. Additionally, we made significant progress executing against our long-term strategy by completing the joint venture with IHS Markit and together launching OSTTRA, our new post-trade services company."

Third-quarter 2021 ADV was 17.8 million contracts, including non-U.S. ADV of 5.0 million contracts. Clearing and transaction fees revenue for third-quarter 2021 totaled $879 million. The total average rate per contract was $0.677. Market data revenue totaled $145 million for third-quarter 2021.

1. A reconciliation of the non-GAAP financial results mentioned to therespective GAAP figures can be found within the Reconciliation of GAAP tonon-GAAP Measures chart at the end of the financial statements and earningspresentation materials.

As of September 30, 2021, the company had approximately $1.6 billion in cash (including $100 million deposited with Fixed Income Clearing Corporation (FICC) and included in other current assets) and $3.4 billion of debt (including $749 million in short-term debt). The company paid dividends during the third quarter of $323 million. The company has returned approximately $16.3 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 third-quarter 2021 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(r) 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.

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, and EBS are trademarks of BrokerTec Europe LTD, EBS Group LTD, 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 at substantially similar trading levels, 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 policies 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; our dependence on third-party providers and exposure to risk through third parties, including risks related to the performance, reliability and security of technology used by our third-party providers; 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, social, 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; the impact of the COVID-19 pandemic and response by governments and other third parties; 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 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 transactions and/or repeal of the 60/40 tax treatment of such transactions; our ability to maintain our brand and reputation; and the unfavorable resolution of material legal proceedings. For a detailed discussion and additional information concerning these and other factors that might affect our performance, see our other recent periodic filings, including our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission ("SEC") on February 26, 2021, under the caption "Risk Factors".

CME Group Inc. and Subsidiaries

Consolidated Balance Sheets

(in millions)



September 30, 2021December 31, 2020

ASSETS

Current Assets:

Cash and cash equivalents $1,459.4 $1,633.2

Marketable securities 110.3 100.9

Accounts receivable, net of allowance 470.4 461.3

Other current assets (includes $4.8 362.7 306.7 and $4.7 in restricted cash)

Performance bonds and guaranty fund 149,191.6 86,781.8 contributions

Total current assets 151,594.4 89,283.9

Property, net of accumulated 521.3 579.2 depreciation and amortization

Intangible assets-trading products 17,175.3 17,175.3

Intangible assets-other, net 3,592.6 4,865.3

Goodwill 10,529.0 10,798.8

Other assets (includes $2.8 and $0.6 3,361.7 1,957.1 in restricted cash)

Total Assets $186,774.3 $124,659.6

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable $71.0 $69.3

Short-term debt 749.2 -

Other current liabilities 405.3 1,346.8

Performance bonds and guaranty fund 149,191.6 86,781.8 contributions

Total current liabilities 150,417.1 88,197.9

Long-term debt 2,695.7 3,443.8

Deferred income tax liabilities, net 5,392.4 5,607.0

Other liabilities 987.0 1,059.4

Total Liabilities 159,492.2 98,308.1

CME Group Shareholders' Equity 27,282.1 26,319.9

Non-controlling interests - 31.6

Total Equity 27,282.1 26,351.5

Total Liabilities and Equity $186,774.3 $124,659.6

CME Group Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in millions, except per share amounts; shares in thousands)



Quarter Ended Nine Months Ended, September 30, September 30,

2021 2020 2021 2020

Revenues

Clearing and transaction fees $878.9$835.4$2,815.8$3,054.4

Market data and information 145.4 139.4 434.8 405.6 services

Other 85.6 105.9 291.8 325.1

Total Revenues 1,109.91,080.73,542.4 3,785.1

Expenses

Compensation and benefits 198.6 216.4 635.3 640.9

Technology 49.3 48.1 146.8 144.9

Professional fees and outside 45.2 48.4 119.4 141.3 services

Amortization of purchased 59.0 78.3 179.0 232.2 intangibles

Depreciation and amortization 37.2 39.7 111.9 111.7

Licensing and other fee 57.6 57.7 176.5 187.0 agreements

Other 49.3 67.1 160.0 204.7

Total Expenses 496.2 555.7 1,528.9 1,662.7

Operating Income 613.7 525.0 2,013.5 2,122.4

Non-Operating Income (Expense)

Investment income 145.8 23.6 239.1 151.6

Interest and other borrowing (41.8) (41.7) (125.0) (124.5) costs

Equity in net earnings of 66.4 44.0 178.3 144.0 unconsolidated subsidiaries

Other non-operating income 311.8 (14.4) 268.4 (106.4) (expense)

Total Non-Operating Income 482.2 11.5 560.8 64.7 (Expense)

Income before Income Taxes 1,095.9536.5 2,574.3 2,187.1

Income tax provision 169.6 125.0 562.6 505.5

Net Income 926.3 411.5 2,011.7 1,681.6

Less: net (income) loss attributable to non-controlling 0.2 0.2 (0.5) (0.4) interests

Net Income Attributable to CME $926.5$411.7$2,011.2$1,681.2Group

Earnings per Common Share Attributable to CME Group:

Basic $2.59 $1.15 $5.61 $4.70

Diluted 2.58 1.15 5.60 4.69

Weighted Average Number of Common Shares:

Basic 358,363357,791358,258 357,669

Diluted 358,988358,590358,894 358,492

CME Group Inc. and Subsidiaries

Quarterly Operating Statistics



3Q 20204Q 20201Q 20212Q 20213Q 2021

Trading Days64 64 61 63 64



Quarterly Average Daily Volume (ADV)^(1)

CME Group ADV (in thousands)



Product Line 3Q 20204Q 20201Q 20212Q 20213Q 2021

Interest rates 5,315 6,273 10,3498,581 8,111

Equity indexes 5,410 5,148 6,117 4,926 5,100

Foreign exchange 829 818 852 769 776

Energy 1,852 1,940 2,363 1,963 2,179

Agricultural commodities1,372 1,478 1,471 1,631 1,141

Metals 825 568 675 568 480

Total 15,60316,22521,82718,43817,786

Venue

CME Globex 15,05415,46920,43617,22316,652

Open outcry ^(2) 108 273 678 646 598

Privately negotiated 441 483 713 569 536

Total 15,60316,22521,82718,43817,786





Quarterly Average Rate Per Contract (RPC)^(1)

CME Group RPC



Product Line 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021

Interest rates $0.506$0.490$0.475$0.491$0.483

Equity indexes 0.525 0.523 0.532 0.555 0.555

Foreign exchange 0.763 0.739 0.779 0.805 0.803

Energy 1.171 1.165 1.097 1.140 1.127

Agricultural commodities1.284 1.301 1.343 1.343 1.319

Metals 1.309 1.389 1.415 1.438 1.463

Average RPC $0.716$0.699$0.658$0.695$0.677



1. ADV and RPC includes futures and options on futures only.

2. Due to the COVID-19 pandemic, in March 2020 we closed our open outcry trading floor. We began a limited reopening of the trading floor in the third quarter of 2020. Only the Eurodollar options trading pit (where options on One-Month and Three-Month Secured Overnight Financing Rate (SOFR) futures also trade) remains open.

CME Group Inc. and Subsidiaries

Reconciliation of GAAP to non-GAAP Measures

(dollars in millions, except per share amounts; shares in thousands)



Quarter Ended Nine Months Ended, September 30, September 30,

2021 2020 2021 2020

Net Income Attributable to CME $926.5$411.7$2,011.2$1,681.2Group



Restructuring and severance 6.6 6.0 25.8 16.6



Amortization of purchased 63.1 78.3 183.1 232.2 intangibles^(1)



Acquisition-related costs^(2) 18.7 9.2 36.0 26.4



Foreign exchange transaction (3.2) 6.1 0.2 2.4 (gains) losses



Unrealized and realized (gains) (434.5)3.8 (455.5) 6.3 losses on investments



(Gains) on derivatives - - - (1.5)



Realized and unrealized losses on0.5 2.7 1.7 28.8 assets^(3)



Litigation matters - 3.4 (3.1) 7.4



Trading floor enhancements 1.4 1.5 1.4 2.5



Income tax effect related to (0.8) (26.1) (34.1) (85.7) above



Other income tax items (3.9) (1.6) 37.5 (2.6)



Adjusted Net Income Attributable $574.4$495.0$1,804.2$1,914.0to CME Group



GAAP Earnings per Common Share Attributable to CME Group:

Basic $2.59 $1.15 $5.61 $4.70

Diluted 2.58 1.15 5.60 4.69



Adjusted Earnings per Common Share Attributable to CME Group:

Basic $1.60 $1.38 $5.04 $5.35

Diluted 1.60 1.38 5.03 5.34



Weighted Average Number of Common Shares:

Basic 358,363357,791358,258 357,669

Diluted 358,988358,590358,894 358,492

1. Includes $4.1 million of amortization of purchased intangibles (net of tax) at OSTTRA, reported in Equity in net earnings of unconsolidated subsidiaries.

2. Acquisition-related costs primarily include professional fees related to the NEX integration and IHS Markit transaction.

3. Results include net gains and losses on intangible assets and fixed assets.

CME-G

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SOURCE CME Group