NYSE Euronext Fourth Quarter & Full-Year 2011 g Presentation Earnings February 10, 2012
Š NYSE Euronext. All Rights Reserved.
Legal Disclaimers Non-GAAP Financial Measures To supplement NYSE Euronext’s consolidated financial statements prepared in accordance with GAAP and to better reflect period-overperiod comparisons, NYSE Euronext uses non-GAAP financial measures of performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure, calculated and presented in accordance with GAAP. Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results results, but are provided to (i) present the effects of certain merger expenses, expenses exit costs, costs disposal activities and discrete tax items, and (ii) improve overall understanding of NYSE Euronext’s current financial performance and its prospects for the future. Specifically, NYSE Euronext believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to financial condition and operating results. In addition, management uses these measures for reviewing financial results and evaluating financial performance. The non-GAAP adjustments for all periods presented are based upon information and assumptions available as of the date of this release. Disclaimer and Cautionary Note Regarding Forward-Looking Statements This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking forward looking statements statements. Factors that could cause NYSE Euronext Euronext's s results to differ materially from current expectations include, but are not limited to: NYSE Euronext's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext's reference document for 2010 ("document de référence") filed with the French Autorité des Marchés Financiers (Filed on April 19, 2011 under No. D.11-0333), 2010 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés Financiers. In addition, these statements are based on a number of assumptions that are subject to change. change Accordingly, Accordingly actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.
2
FY 2011 Highlights Financial Results • Net Revenues1 +$161M (+6% YoY) • Expenses declined $70M constant $ $, constant portfolio • Operating Income2 +$173M (+21% YoY) • Operating margin2 of 38% • EBITDA2 of $1,286M +$172M (+15% YoY) • FY 2011 EBITDA2 margin g of 48%
Financial Highlights • Results for the year driven by strong trading volumes, continued cost discipline and higher contribution from new initiatives • Achieved double-digit growth in NYXT segment revenue, up 10% on the year
Strategic • Launched full suite of interest rate products on NYSE Liffe U.S. Surpassed 1 million contracts in open interest in December
• FY 2011 diluted EPS2 of $2.48 (+19% YoY)
• Strong year for global listings as NYX was the #1 exchange globally for IPOs and increased share of technology IPOs
• CAPEX of $170M for 2011 below guidance of <$200M
• Completed Amex stake sale, grew market share & maintained i t i d leadership l d hi position iti in i U.S. U S equity it options
• Completed $100M stock buyback in Q4 Notes: 1. Net revenues defined as total revenues, less transaction-based expenses comprised of Section 31 fees, liquidity payments, routing and clearing fees. 2. Excludes the impact of merger expenses, exit costs, the BlueNext tax settlement, disposal activities and discrete tax items.
• Footprint in Asia expanded with Metabit acquisition • Mi Migration ti off ttrading di engines i to t Basildon B ild & Mahwah data centers complete 3
Affirming And Focusing Our Community Strategy Targeted Growth Opportunities • New products & services • Post trade / OTC • NYXT • NYSE Liffe U.S. / NYPC
$2 48 $2.48 Revs $2,672 OpEx $1,666
$2.04 Revs $ $2,478 , OpEx $1,676
2009
Cost Efficiency • Organizational efficiency • Investment rationalization • Infrastructure / support
Strategic Capital Deployment
$2.09
• Return of capital to shareholders
Revs $2,511 OpEx $1,678
• Review R i off b business i portfolio tf li • Disciplined approach to M&A
2010
2011
Global Technology Harmonization Contribution from New Initiatives Data Center Build Out Cost Efficiency Cost Efficiency While investing in Future Growth Balance Sheet Strength
2012/2013 Step-Up in Underlying Earnings Power
4
Compelling Opportunities for Core Growth Our Strategy Compass Index Products Issuer Services
Sample High Potential Projects Underway •1 Developing a clearing solution for NYSE Liffe and European cash
Information Services
•2 GCF Repo and other new product opportunities through NYPC
Analytics
5
Market Data
Listings
•3 Continued build out of NYSE Liffe U.S. and NYSE Amex Options Risk Management
Advocacy
1
Markets
Client Connectivity Partnerships i N in New Markets
Clearing
6
Capital Efficiency
3 4
Global Exchange Links
Technology Infrastructure
Settlement and Custody Collateral Management
7 Managed & Hosted Services
Minor Presence
2
•4 Build out of liquidity hubs and order routing agreements •5 Continued investment in listings services •6 New product opportunities in derivatives, continued market structure innovation in core markets •7 Enhancement of NYSE Technologies’ managed services capabilities
Asset Servicing
Expanding Presence
Strong Presence
5
Post-Trade Strategy: Stability, Innovation, Efficiency
Clearing Bclear
Listed Derivatives 9Create full - service CCP (NYSE Liffe Clearing) 9Deliver operational & capital efficiencies for clients
OTC
European Cash
9Leverage existing & expanded clearing capabilities • Liffe Clearing • Bclear • NYPC
9Accelerate review of strategic options 9Support core markets and stakeholders
6
NYSE Technologies: Facilitator of the Capital Markets Community
Constant innovation in products and services
Examples of key deals signed in 2011
9New liquidity q y centers in Chicago, g Toronto and Tokyo y 9Expanded SFTI to Mexico and the UK in November 9Acquired Metabit to support expansion in Asia
9Agreement to create a connection between TSE’s arrownetTM and SFTI®
Extend data services
9Launched SuperFeed in Europe with 30 markets with access centers in London and Frankfurt y Inside Market Data 9Named “Best Data Provider” by
9Build & manage a full market data platform for a global financial services firm
Build service platform
9Launched the first capital markets cloud platform: the Capital Markets Community Platform 9Launched a vendor neutral OpenMAMA platform
9Provide a global Tier - 1 bank with managed Infrastructure as a Service 9Launch the New Tdex+ System at the Tokyo Stock Exchange (TSE)
9Developed a model for fully hosted MTF & ATS solutions
9Develop and manage a pan - European MTF for a global Tier-1 bank
Build out network
Attractt other Att th market venues
Combined with our organic growth, the execution of our four strategic themes will enable NYXT to reach the target of $1B revenues with 25-30% margins in 2015
7
Growth Through Partnership with our Clients NYSE Liffe U.S. US • Migrated 100% of open interest in MSCI EM, EAFE stock index futures (June 2011). Open Interest in these products has nearly doubled since the migration • Secured exclusive license to launch GCF Repo Index Futures, planned for Q2 2012 • Surpassed 1ml lot open interest threshold led by the Eurodollar complex with approx. 840k open interest representing approximately 10% market share • Additional new products / initiatives to be announced shortly, leveraging strength of single pot 16%
NYSE Amex Market Share
14% 12%
(volume)
NYSE Liffe Liff US: US 2011 Monthly M thl ADV and d OI
(open interest)
160,000
1,200,000
140,000
1,050,000
120,000
900,000
100,000
750,000
80,000
600,000
60,000
450,000
40,000
300,000
20,000
150,000
0
0
Metals
MSCI
Rates
Total Exchange OI
(Source: NYSE Euronext)
NYSE Amex Options p • NYSE Amex options market share was 15.3% in 4Q11 • Closed semi-mutualization - Partners own 47.5%
10% 8%
• Launched Qualified Contingent Cross functionality with floor broker incentive pricing
6% 4% 2%
• Added complex p order auction functionality y
0% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
• Group One Trading added to the community
(Source: NYSE Euronext)
8
Crosswinds in Macro Environment Macro Variables Derivatives reform implementation in US and EU
Clouds
Silver Linings
• Continued uncertainty delays investment
• New opportunities in derivatives products and services
• Major adjustments to bank business models
• Sell-side cost cutting provides opportunity for NYSE Technologies
• Increased focus on capital efficiency
• Ability for new client types to enter derivatives market • NYPC and other post-trade initiatives can offer major capital relief
Lower volatility / low growth environment g
• Dampens volumes
• Eases IPO pipeline
• Increases internalization
• Highlights value of our increasingly diversified model
Continued Euro uncertainty
• Dampens investment
• Periodic spikes in volatility drive higher volumes
Specter of financial transaction tax (FTT)
• Potential to permanently reduce volume levels
• New product opportunities to help manage risks and d exposures • Move towards stamp-duty like proposal would mitigate risks
• Potential for regulatory g y arbitrage 9
GAAP 4Q & FY 2011 Financials ($ in millions millions, except per share data)
4Q11 $1,054
3Q11 $1,258
4Q10 $1,045
FY2011 $4,552
FY2010 $4,425
Operating Income
$124
$259
$170
$850
$745
Net Income
$110
$200
$135
$619
$577
Diluted EPS
$0.43
$0.76
$0.51
$2.36
$2.20
Pre-tax Adjustments BlueNext Tax Settlement (net) Severance and Exit Costs DB1/NYX Merger Expenses Total
4Q11 ($25) ($8) ($38) ($71)
3Q11 ($10) ($19) ($29)
4Q10 ($18) ($18)
FY2011 ($25) ($29) ($85) ($139)
FY2010 ($88) ($88)
Total Revenueยน
Notes: 1. Includes activity assessment fees.
10
Non-GAAP 4Q & FY 2011 Financial Results ($ in millions millions, except per share data)
4Q11 $1,054
3Q11 $1,258
4Q10 $1,045
% ∆ 4Q11 vs. 4Q10 1%
$426
$554
$432
(1%)
$1,880
$1,914
(2%)
Total Revenues, Less Transaction-based Expenses
$628
$704
$613
2%
$2,672
$2,511
6%
Fixed Operating Expenses 3
$416
$416
$425
(2%)
$1,666
$1,678
(1%)
Operating Income3
$212
$288
$188
13%
$1,006
$833
21%
Net Income4
$130
$186
$120
8%
$653
$548
19%
Diluted EPS4
$0.50
$0.71
$0.46
9%
$2.48
$2.09
19%
Diluted Share Count (in millions)
262
263
262
263
262
Operating Margin 3 EBITDA Margin g 3
34% 45%
41% 51%
31% 44%
38% 48%
33% 44%
Total Revenue¹ Transaction-based Expenses²
3 ppts 1 pp ppts
Full-Year 2011 2010 $4,552 $4,425
% ∆ FY11 vs. FY10 3%
5 ppts 4 pp ppts
Incremental Margins > 100% N t Notes: 1. IIncludes 1 l d activity ti it assessmentt ffees. 2. Transaction-based expenses include Section 31 fees, liquidity payments, routing and clearing fees. 3. Results exclude the impact of merger expenses, exit costs and the BlueNext tax settlement. 4. Results exclude the impact of merger expenses, exit costs, the BlueNext tax settlement, disposal activities and discrete tax items.
11
Derivatives Segment Highlights ($ in millions) 4Q11
3Q11
4Q10
% ∆ 4Q11 vs. 4Q10
Total Revenue
$244
$308
$242
1%
Net Revenues¹ % of total
$186 30%
$226 32%
$188 31%
Fixed Operating Expenses²
$100
$97
Operating Income² % of total 3
$86 36%
Operating Margin ² EBITDA Margin ²
46% 52%
FY2011
FY2010
% ∆ FY11 vs. FY10
$1,135
$1,088
4%
(1%)
$861 32%
$826 33%
4%
$97
3%
$388
$372
4%
$129 41%
$91 42%
(5%)
$473 42%
$454 47%
4%
57% 62%
48% 57%
(2 ppts) (5 ppts)
55% 61%
55% 62%
0 ppts (1 ppts)
NYSE Liffe / U.S. •
European derivatives ADV down 3% YoY, down 6% for FY 2011; Challenging environment; Low rates/risk off
•
NYSE Liffe U.S. - Crossed 1 million lots of OI; Breadth of client activity continues to expand; Open interest developments solid
U.S. Options •
ADV up 15% YoY, up 20% for FY 2011
•
Market share at 28% in 4Q11, highest quarterly level of share for U.S. equity options; NYSE Amex at 15.3%, highest level ever
•
Profit attributable to non-controlling interest in NYSE Amex Options of $9 million in 4Q11; Partner stake at 47.5% Notes: 1. Net revenues defined as total revenues, less transaction-based expenses comprised of Section 31 fees, liquidity payments, routing and clearing fees. 2. Excludes the impact of merger expenses and exit costs. 3. Grossed-up to exclude impact of Corporate and Eliminations segment.
12
Derivatives Trading Volumes and Revenue Capture ($ in millions millions, except capture and currency data) European Derivatives ADV Contracts in thousands
4Q10
8,000 6,000 4,000 2,000
4,633 3,737
771
4,349 2,125
861 2,876
Total Revenue
5,294 826
3,862
3,169
3,523
1Q11
2Q11
3Q11
3,616 868 2,748
0 4Q10
4Q11
= Bclear
1Q11
2Q11
3Q11
4Q11
$ 160 $ 216 $ 187 $ 208 $ 154
Liquidity Payments
(32)
(45)
(39)
(50)
(32)
Routing and Clearing
-
-
-
-
-
Net Revenue
$ 128 $ 171 $ 148 $ 158 $ 123
Revenue Capture1 Net Revenue Currency Neutral GBP/USD
$0.674 $0.692 $0.741 $0.679 $0.698 2
$ 127 $ 168 $ 143 $ 154 $ 123 $ 1.58 $ 1.60 $ 1.63 $ 1.61 $ 1.57
U.S. Derivatives ADV Contracts in thousands 6,000 4,408 4,000
3,715
4,866 4,052
4Q10 Total Revenue
$
Liquidity Payments Routing and Clearing
0 1Q11
2Q11
3Q11
2Q11
3Q11
4Q11
4,286
2,000
4Q10
1Q11
4Q11
62 $
71 $
65 $
80 $
66
(20)
(23)
(20)
(28)
(23)
(2)
(3)
(3)
(4)
(3)
40 $
45 $
42 $
48 $
40
Net Revenue3
$
Revenue Capture
$0.168 $0.165 $0.165 $0.154 $0.148
N t Notes: 1. R 1 Revenue capture t excludes l d Bclear B l volumes. l 2. Currency neutral results for NYSE Liffe are based on average 4Q11 currency rates for GBP/USD. 3. Revenue capture excludes NYSE Liffe U.S. volumes, but includes associated revenue. Revenue capture may vary slightly from prior periods due to reclassifications based on new segment reporting.
13
Cash Trading and Listings Segment Highlights ($ in millions) 4Q11
3Q11
4Q10
% ∆ 4Q11 vs. 4Q10
FY2011
FY2010
% ∆ FY11 vs. FY10
Total Revenue¹
$683
$825
$688
(1%)
$2,929
$2,893
1%
Net Revenues² % of total
$315 50%
$353 50%
$310 51%
2%
$1,323 50%
$1,241 49%
7%
Fixed Operating Expenses3
$190
$198
$211
(10%)
$790
$809
(2%)
Operating Income3 % of total 4
$125 52%
$155 49%
$99 45%
26%
$533 47%
$432 44%
23%
Operating Margin 3 EBITDA Margin 3
40% 53%
44% 57%
32% 49%
8 ppts 4 ppts
40% 54%
35% 50%
5 ppts 4 ppts
European Cash •
4Q11 ADV up 13% YoY; FY2011 ADV up 17%; Market share decreases to 65%
U.S. Cash •
Avg. g net revenue capture p up p 21%;; Continued focus on p profitability y and stability y
Listings •
# 1 in global IPOs for 2011
•
16 companies transferred in 2011 $30.4 billion, building on 14 transfers in 2010
•
Market share of technology IPOs approximately 44% N t Notes: 1. IIncludes 1 l d activity ti it assessmentt ffees. 2. Net revenues defined as total revenues, less transaction-based expenses comprised of Section 31 fees, liquidity payments, routing and clearing fees. 3. Excludes the impact of merger expenses and exit costs. 4. Grossed-up to exclude impact of Corporate and Eliminations segment.
14
Cash Trading Volumes and Revenue Capture ($ in millions millions, except capture and currency data) European Cash ADV Trades in thousands 2,000 1,500
4Q10
1,803
1 585 1,585
1,000
Total Revenue
$
4Q11
2Q11
3Q11
4Q11
66 $
77 $
72 $
80 $
59
-
-
-
-
-
Routing and Clearing
-
-
-
-
-
$
R Revenue C Capture t
0 1Q11
3Q11
Liquidity Payments
Net Revenue
500
4Q10
2Q11
1,907 1,540
1,400
1Q11
66 $
77 $
$0 714 $0.714
Net Revenue Currency Neutral EUR/USD
1
$
$0 667 $0.667
65 $
72 $
$0 742 $0.742
76 $
$ 1.36 $
80 $
59
$0 635 $0.635
$0 582 $0.582
67 $
77 $
59
1.37 $ 1.44 $
1.41 $
1.35
U.S. Cash ADV Shares in million 4,000 3,000
4Q10 2,233
2,309
2,608 2,133
2,075
Total Revenue
$
2 000 2,000
Li idit P Liquidity Payments t
1,000
Routing and Clearing Net Revenue
0 4Q10
1Q11
2Q11
3Q11
4Q11
$ 2
Revenue Capture
1Q11
349 $
2Q11
362 $
3Q11
329 $
4Q11
425 $
336
(271)
(277)
(248)
(327)
(253)
(32)
(32)
(30)
(34)
(30)
47 $
$0.0326
53 $
51 $
$0.0370 $0.0390
64 $
$0.0383
53
$0.0394
Notes: 1. Currency neutral results for European cash are based on average 4Q11 currency rates for EUR/USD. 2. Revenue capture per 100 shares handled. Revenue capture may vary slightly from prior periods due to reclassifications based on new segment reporting.
15
Info. Services and Tech. Solutions Highlights ($ in millions)
4Q11 Total Revenue % of total
3Q11
4Q10
% ∆ 4Q11 vs. 4Q10
FY2011
FY2010
% ∆ FY11 vs. FY10
$127 20%
$125 18%
$114 19%
11%
$490 18%
$444 18%
10%
$96
$94
$86
12%
$364
$355
3%
Operating Income1 % of total 2
$31 13%
$31 10%
$28 13%
11%
$126 11%
$89 9%
42%
Operating Margin 1 EBITDA Margin 1
24% 36%
25% 36%
25% 32%
26% 36%
20% 28%
Fixed Operating Expenses1
(1 ppts) 4 ppts
6 ppts 8 ppts
• Highest level of quarterly revenue generation, with operating margin of 24% • Liquidity hub expansion underway with opening of center in Japan • Launch of New Tdex+ System by TSE • Launch of SuperFeed product in Europe; Named best data provider by Inside Market Data • Increasing momentum with “infrastructure infrastructure as service service” product offering Notes: 1. Excludes the impact of merger expenses and exit costs. 2. Grossed-up to exclude impact of Corporate and Eliminations segment.
16
Fixed Operating Expense Reconciliation ($ in millions)
Other Operating Expenses Expensesš
4Q11 vs. 4Q10
FY11 vs. FY10
Current Period
($416)
($1,666)
Comparable Period
($425)
($1,678)
(I (Increase)/Decrease )/D in i Fixed Fi d Op. O Expenses E
$9
$12
8 (1)
31 27
$7
$58
$16
$70
Excluding Impact of: M&A² FX Impact Total Adjustments Underlying Fixed Expense Savings
Notes: 1. Fixed operating expenses exclude merger expenses, exit costs and the BlueNext tax settlement. 2. Includes the contribution of APX, Corporate Board Member, Metabit and other new business initiatives.
17
Continued Cost Efficiency ($ in millions)
Pulling Costs out of the Platform to Fund New Business Initiatives $2,500 $ $134 $2,300
$670 In Cost Savings
$160 $1,844
$1,700 $1,500
FX ($30)
$193
$2,100 $1,900
$35
$1,666
Pre NYSE Pre-NYSE Group/ENXT merger (April 2007)
2008 Investment 2009 Investment 2010 Investment 2011 Investment • Amex & Wombat • Capacity build for Co-Lo and global SFTI g network • NYSE Liffe U.S. development
• NYSE Liffe Clearing • Mahway and Basildon construction • AEMS insourcing
• NYFIX acquisition • EU Clearing build • Corporate B Board dM Member b (CBM) acquisition
• NYSE Blue • CBM • Metabit acquisition
Savings 2008 - 2011 Consisting of: • Euronext merger: $349M (vs. $275M promised) • AMEX: $140M vs. $100M promised i d • Additional Efficiencies: $181M
18
Strong Balance Sheet and Liquidity Position ($ in billions)
Cash & Investment Securities
Key Balance Sheet Indicators as of 12/31/2011
Highlights
$0.4
Total Debt ► 5.375% €1bn notes due June 2015 ► 4.8% $750m notes due June 2013
$2.0 $1.3 $0.7
Net Debt
$1.6
Total Debt/EBITDA
1.6X
Credit Ratings (S&P/Moody's)
A+/A3
•
Debt /EBITDA at 1.6x in 4Q11 down from 2.2x at end of 2010
•
CapEx in 4Q11 of $54 million; FY $170 million; Below FY 2011 guidance
•
1Q12 cash dividend of $0.30 per share
•
Dividend yield >4%
•
Buy-back of $100 million completed; resumption of $1 billion existing authorization th i ti with ith $550 million illi remaining i i
19
Preliminary Guidance for 2012 Revenue •
NYXT is expected to have double-digit revenue growth in 2012 & improve on FY 2011 operating margin of 26%
•
NYSE Liffe U.S. U S expects to be profitable in 2013
Costs •
On a constant $ basis (ex. NBI and M&A) FY 2012 expenses anticipated to be below FY 2011 p level of $1,666 , million expense •
•
Includes anticipated incremental costs from NYXT revenue growth noted above
Incremental new business initiatives include build out of European clearing & OTC, portion will be capitalized
Capital •
CAPEX is expected to be above FY 2011 ($170 million) due to clearing build out, but still below $200 million level
•
$550 million buy buy-back back is expected to be completed in 2012
•
Long-term financial policy remains between 2 and 2.25X Debt-to-EBITDA
Taxes •
Anticipate FY 2012 non non-GAAP GAAP effective tax rate to be ~26%
20
APPENDIX
21
F/X Impact by Segment ($ in millions)
Select Financial Highlights
Net Revenue
1
Operating Expenses Operating Income
2
2
$ Variance Attribution Total FX Specific Operational % Operational
4Q11
4Q10
$628
$613
$15
($2)
$17
3%
($416)
($425)
$9
$1
$8
(2%)
$212
$188
$24
($1)
$25
13%
F/X Impact by Segment $V Variance i Attribution Att ib ti 1
Net Revenue Derivatives Cash Trading and Listings Info Services and Tech Solutions
4Q11 $186 $315 $127
4Q10 $188 $310 $114
$86 $125 $31
$91 $99 $28
Total FX Specific ($2) ($1) $5 ($1) $13 ($0)
Operational % Operational ($1) (1%) $6 2% $13 12%
2
Operating Income Derivatives Cash Trading and Listings Info Services and Tech Solutions
($5) $26 $3
($0) ($0) ($0)
($5) $26 $3
(5%) 27% 11%
Notes: 1. Defined as total revenues, less transaction-based expenses comprised of Section 31 fees, liquidity payments and routing and clearing fees. 2. Results exclude the impact of merger expenses, exit costs and the BlueNext tax settlement.
22