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Press Release: Cboe Global Markets Reports 2020 -5-

· 02/05/2021 07:30
Table 5 Three Months Ended Twelve Months Ended (in millions) December 31, December 31, Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA -------------------- (Per Table 1) 2020 2019 2020 2019 -------------------- Net income allocated to common stockholders $ 87.1 $ 86.1 $ 467.0 $372.7 Interest expense, net 13.5 7.8 37.6 35.9 Income tax provision 35.6 27.9 192.2 130.6 Depreciation and amortization 40.5 42.8 158.5 176.6 EBITDA $ 176.7 $ 164.6 $ 855.3 $715.8 EBITDA Margin 57.5 % 58.7 % 68.2 % 63.0 % Non-GAAP adjustments not included in above line items Acquisition-related expenses 28.8 8.7 45.2 48.5 Provision for notesThree Months Ended Twelve Months Ended Table 4 December 31, December 31, (in millions, except per share amounts) 2020 2019 2020 2019 Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP -------------------- (As shown on Table 1) -------------------- Net income allocated to common stockholders $87.1 $86.1 $467.0 $372.7 Non-GAAP adjustments Acquisition-related expenses (1) 28.8 8.7 45.2 48.5 Provision for notes receivable (2) -- 23.4 6.7 23.4 Bargain purchase gain (3) -- -- (32.6) -- Amortization of acquired intangible assets (4) 31.3 33.4 124.7 138.5 Change in redemption value of noncontrolling interest -- -- -- 0.5 Total Non-GAAP adjustments 60.1 65.5 144.0 210.9 Income tax expense related to the items above (13.1) (16.5) (38.0) (50.7) Deferred tax re-measurements (3.6) -- 4.1 -- Impairment charges attributed to noncontrolling interest -- -- -- (3.6) Net income allocated to participating securities - effect on reconciling items (0.1) (0.2) (0.6) (0.7) Adjusted net income allocated to common stockholders $130.4 $134.9 $576.5 $528.6 Reconciliation of Diluted EPS to Non-GAAP -------------------- Diluted earnings per common share $0.81 $0.77 $4.27 $3.34 Per share impact of non-GAAP adjustments noted above 0.40 0.44 1.00 1.39 Adjusted diluted earnings per common share $1.21 $1.21 $5.27 $4.73 Reconciliation of Operating Margin to Non-GAAP -------------------- Revenue less cost of revenue $307.1 $280.3 $1,254.3 $1,136.9 Non-GAAP adjustments noted above -- -- -- -- Adjusted revenue less cost of revenue $307.1 $280.3 $1,254.3 $1,136.9 Operating expenses (5) $172.3 $161.1 $592.1 $599.7 Non-GAAP adjustments noted above 60.1 65.5 176.6 210.4 Adjusted operating expenses $112.2 $95.6 $415.5 $389.3 Operating income $134.8 $119.2 $662.2 $537.2 Non-GAAP adjustments noted above 60.1 65.5 176.6 210.4 Adjusted operating income $194.9 $184.7 $838.8 $747.6 Adjusted operating margin (6) 63.5 % 65.9 % 66.9 % 65.8 % Reconciliation of Income Tax Rate to Non-GAAP -------------------- Income before income taxes 122.9 114.2 660.4 501.4 Non-GAAP adjustments noted above 60.1 65.5 144.0 210.9 Adjusted income before income taxes $183.0 $179.7 $804.4 $712.3 Income tax expense 35.6 27.9 192.2 130.6 Non-GAAP adjustments noted above 16.7 16.5 33.9 50.7 Adjusted income tax expense $52.3 $44.4 $226.1 $181.3 Adjusted income tax rate 28.6 % 24.7 % 28.1 % 25.5 % (1) This amount includes professional fees and outside services, severance, facilities expenses, impairment charges and other costs related to the company's acquisitions. (2) This amount represents the provision for notes receivable, recorded in other expenses on the consolidated statements of income, associated with the funding for the development of the consolidated audit trail ("CAT"). (3) This amount represents the bargain purchase gain related to the acquisition of EuroCCP on July 1, 2020. (4) This amount represents the amortization of acquired intangible assets related to the company's acquisitions. (5) The company sponsors deferred compensation plans held in a rabbi trust. The expenses or income related to the deferred compensation plans are included in "Compensation and benefits" ($1.5 million and $1.2 million in expense for the three months ended December 31, 2020 and 2019, respectively, and $2.5 million and $5.0 million in the year ended December 31, 2020 and 2019, respectively), and are directly offset by deferred compensation income, expenses and dividends included within "Other expense, net" ($1.5 million and $1.2 million in income, expense and dividends in the three months ended December 31, 2020 and 2019, respectively, and $2.5 million and $5.0 million in the year ended December 2020 and 2019, respectively), on the consolidated statements of income. The deferred compensation plans' expenses are not excluded from "adjusted operating expenses" and do not have an impact on "Income before income taxes." (6) Adjusted operating margin represents adjusted operating income divided by adjusted revenue less cost of revenue.Table 3 Three Months Ended Year Ended (in millions) December 31, December 31, Reconciliation of Revenue Less Cost of Revenue to Organic 2020 2019 2020 2019 ----------------- Net Revenue ----------------- Revenues less cost of revenues (net revenue) $ 307.1 $280.3 $1,254.3 $1,136.9 Less acquisitions: Acquisition revenues less cost of revenues $ (18.1) $-- $(41.4) $-- Organic net revenue $ 289.0 $280.3 $1,212.9 $1,136.9

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 acquisitions, 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.

Organic Net Revenue Reconciliation

Reconciliation of GAAP and non-GAAP Information

EBITDA Reconciliations

EBITDA (earnings before interest, income taxes, depreciation and amortization) and Adjusted EBITDA are widely used non-GAAP financial measures 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. Adjusted EBITDA is calculated by adding back to EBITDA acquisition-related expenses, provision for notes receivable, bargain purchase gain, and impairment charges attributed to noncontrolling interest. EBITDA and Adjusted 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 and Adjusted EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA margin represents Adjusted EBITDA divided by net revenue.

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February 05, 2021 07:30 ET (12:30 GMT)