IntercontinentalExchange Inc. (ICE) posted a first-quarter profit of $101.2 million or $1.36 per share in contrast to a net income of $72.2 million or 98 cents per share in the year-ago period. This apart, earnings surpassed the Zacks Consensus Estimate of $1.31 per share. After excluding $13 million in pre-tax acquisition costs recorded in the first quarter of 2009, consolidated adjusted net income was $80 million in the year-ago quarter. However, no such one-time items were recorded in the reported quarter.
 
The quarterly results benefited from favorable OTC execution, sweeping regulatory reforms, expense control and record futures trading. The upside was also attributable to growth in the company’s core businesses, significant progress from new initiatives and stronger margins. However, this was partially offset by higher interest and tax expenses.
 
Net revenues increased 21.6% year over year to $281.6 million. The growth was mainly attributable to 23.4% increase in consolidated transaction and clearing fee revenues to $251.1 million in the quarter, primarily driven by strong trading volumes in ICE’s futures and OTC markets. Moreover, consolidated market data revenues grew 3.1% year over year to $26.9 million while consolidated other revenues increased to $3.7 million as compared to $2 million in the year-ago quarter.
 
Average daily futures volume increased 28% year over year whereas, average daily commissions in ICE’s OTC energy business jumped 27% in the quarter boosting total transaction and clearing fees in global OTC segment by 22% from the year-ago period.
 
Total operating expenses were almost flat at $117.8 million. Operating margin rose to 58% from 49% in the year-ago period. The effective tax rate was 34% for both the quarters of 2010 and 2009.
 
As of Mar 31, 2010, the company recorded unrestricted cash and investments of $614 million (up from $554 million as of Dec 31, 2009) while total outstanding debt totaled to $285 million (down from $308 million as of Dec 31, 2009). Consolidated cash flow from operations grew 50% year-over-year to a record $102 million in the reported quarter. Capital expenditures totaled $5 million while capitalized software development costs totaled $6 million during the reported quarter.
 
Guidance
 
As of Mar 31, 2010, ICE had 843 employees, which it expects to increase by 5-7% by the end of 2010. ICE’s diluted weighted average outstanding share count for the second quarter of 2010 is expected to be in the range of 74.5-75.1 million shares outstanding and for fiscal year 2010 is expected to be in the range of 74.5-75.5 million shares.
 
At the end of the reported quarter, ICE had $300 million remaining in share repurchase capacity according to the share repurchase program that was approved during the fourth quarter of 2009.
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