Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q1 2018 Earnings Presentation
47 slides from Bgc's earnings presentation, May 2018
Slide 1: BGC Partners, Inc. Earnings Presentation 1Q 2018
1 BGC PARTNERS, INC. Earnings Presentation 1Q 2018 NASDAQ: BGCP
Slide 2: Disclaimer
DISCLAIMER 2 Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC that are not historical facts are “forward-looking statements” that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking
Slide 3: Disclaimer (Continued)
DISCLAIMER (CONTINUED) 3 For the purposes of this document, all of the Company’s fully electronic businesses in the Financial Services segment may be referred to interchangeably as “Fenics.” This includes fees from fully electronic brokerage, as well as data, software, and post-trade services (forme
Slide 4: Disclaimer (Continued)
DISCLAIMER (CONTINUED) 4 Liquidity Defined BGC also uses a non-GAAP measure called “liquidity”. The Company considers liquidity to be comprised of the sum of cash and cash equivalents plus marketable securities that have not been financed, reverse repurchase agreements, and securities owned, less se
Slide 5: General Overview
BGC PARTNERS 5 GENERAL OVERVIEW
Slide 6: Select Consolidated Adjusted Earnings Financial Results
SELECT CONSOLIDATED ADJUSTED EARNINGS FINANCIAL RESULTS 6 Highlights of Consolidated Distributable Earnings Results (USD 1Q 2018 1Q 2017 Change (%) millions, except per share data) Revenues $956.6 $783.2 22.1% Pre-tax Adjustable Earnings before non-controlling interest in 184.7 119.3 54.8% subsidiar
Slide 7: Global Revenue Breakdown
GLOBAL REVENUE BREAKDOWN 7 1Q 2018 1Q18 Global Revenues APAC Americas RE 7% 45% EMEA 31% Americas FS 17% Total Americas revenues up 23% in 1Q 2018 RE Services revenues up 28% and FS revenues up 12% in Americas Europe, Middle East & Africa revenues up 22% in 1Q 2018 Asia Pacific revenues up 1
Slide 8: BGC's Businesses at a Glance
BGC'S 1Q 2018 REVENUE BREAKUP 8 Corporate, 1% BGC’s Businesses at a Glance Gains from mortgage Management, BGC maintains a highly diverse banking Servicing Fees activities/originations, and Other, 14% Rates, 17% revenue base net, 4% Wholesale Financial Services Corporate 1% revenues and earnings
Slide 9: BGC's Front Office Headcount & Productivity
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 9 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (as of period-end) (period-average, USD Thousands) Yr/Yr change: (1%) 4,056 4,033 4,047 4,045 4,033 1,495 1,494 1,532 1,554 1,565 725 660 2,561 2,539 2,515 2,491 2,468 172 201 1Q 2017 2Q 2017 3Q 2017 4Q 20
Slide 10: Adjusted Earnings Expense & Pre-Tax Margin Trends
ADJUSTED EARNINGS EXPENSE & PRE-TAX MARGIN TRENDS 10 $2,500 100% $2,000 90% (USD millions) 80% $1,500 70% $1,000 58.6% 57.4% 58.7% 55.8% 60% $500 50% $0 40% FY 2016 FY 2017 1Q 2017 1Q 2018 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 30% 35% 25% 30% 23.
Slide 11: Financial Services Overview
11 Overview FINANCIAL SERVICES
Slide 12: Business Overview: Financial Services Summary (1Q 2018)
BUSINESS OVERVIEW: FINANCIAL SERVICES SUMMARY (1Q 2018) 12 Highlights 1Q 2018 Revenue Breakdown Total revenues increased 17% YoY $516,621 $1,747 $15,099 Double-digit percentage increase in brokerage $441,178 $1,592 Other $97,754 revenues across rates, foreign exchange, equities, $13,087 Data, so
Slide 13: Business Overview: Fenics
BUSINESS OVERVIEW: FENICS 13 Fenics Net Revenue Growth1 1Q 2018 Fenics Revenue Breakdown2 (USD $000s) 240,000 Data, software and 180,000 post trade Data, (inter- software and company) post trade 120,000 F/X 21% 18% 8% 60,000 - Credit Rates 27% 27% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 TTM 1Q18 Fen
Slide 14: BGC's Fenics (Fully Electronic) Revenue Growth
BGC’S FENICS (FULLY ELECTRONIC) REVENUE GROWTH 14 Fenics (Fully Electronic) Revenues1 (USD 000s) 350,000 $289,377 300,000 $263,732 57,533 250,000 52,403 200,000 56,522 53,462 150,000 100,000 $85,922 157,867 175,322 $73,364 14,038 17,556 15,099 50,000 13,087 46,239 53,267 - TTM 1Q17 TTM 1Q18 1Q17 1Q1
Slide 15: Newmark Overview
NEWMARK 232 Newmark = Cornish & Carey AA A Newmark Company Overview NEWMARK SST we = 9 NAMA h x 4
Slide 16: Business Overview: Newmark
BUSINESS OVERVIEW: NEWMARK 16 Highlights Newmark stand-alone revenues increased by 29% YoY in 1Q 2018 Stand-alone pre-tax Adjusted Earnings increased by 83% in 1Q 2018 See Newmark’s stand-alone financial results press release and Powerpoint presentation for more details Details regarding New
Slide 17: Outlook
17 BGC PARTNERS OUTLOOK
Slide 18: Outlook Comparison
OUTLOOK COMPARISON 18 Outlook Compared with a Year Ago Results BGC anticipates second quarter 2018 consolidated revenues of between $890 million and $940 million, or 5 percent to 11 percent higher compared with $849 million a year earlier. BGC expects consolidated pre-tax Adjusted Earnings befor
Slide 19: GAAP Financial Results
GAAPFINANCIAL GAAP Financials RESULTS
Slide 20: Select Consolidated GAAP Financial Results
SELECT CONSOLIDATED GAAP FINANCIAL RESULTS 20 Highlights of Consolidated GAAP Results (USD millions, except per share 1Q 2018 1Q 2017 Change (%) data) Revenues under both U.S. Generally Accepted Accounting Principles $956.6 $783.2 22.1% (“GAAP”) and Adjusted Earnings Income (loss) from operations be
Slide 21: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 21 Three Months Ended March 31, 2018 2017 Revenues: Commissions $ 668,599 $ 545,720 Principal transactions 91,918 85,743 Total brokerage revenues 760,517 631,463 Gains fr
Slide 22: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 22 March 31, December 31, 2018 2017 Assets Cash and cash equivalents $ 362,613 $ 634,333 Cash segregated under regulatory requirements 330,126 162,457 Securities
Slide 23: Appendix
APPENDIX TMNT ANTI INT ss 1
Slide 24: Our Rates Business Continues to Do Well Despite Increases in G-4 Balance Sheets
OUR RATES BUSINESS CONTINUES TO DO WELL DESPITE INCREASES IN G-4 BALANCE SHEETS 24 G-4* Balance Sheet as % of GDP YoY Change (pp) in G-4 Balance Sheet as % of GDP 8 1 40% percentage points 7 35% 6 30% 5 4 25% 3 20% 2 15% 1 0 10% -1 5% -2 0% -3 Source: Bloomberg Source: Bloomberg Despite the end of
Slide 25: BGC's Fully Diluted Share Count Summary
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF MARCH 31, 2018 25 1. Class A shares owned by employees only includes restricted shares. Any Class A share owned by an employee without restriction is included in the “Class A owned by Public” 2. Partnership units owned by employees include founding/worki
Slide 26: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 26 ($ in '000s) BGC Partners, Inc. 3/31/2018 Cash and Cash Equivalents $362,613 Repurchase Agreements (985) Securities Owned 89,357 Marketable Securities (net) 3,496 1 Total Liquidity $454,481 BGC Partners, Inc. and Subsidiaries Issuer Maturity 3
Slide 27: 1Q 2018 Industry Volumes Up; Volatility Mixed
1Q 2018 INDUSTRY VOLUMES UP; VOLATILITY MIXED 27 1Q 2018: Yr/Yr Change in Capital Markets Activity 1Q 2018: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) Equity Indices (ICE) (10%) Commodity Volatility Index (BofAML) (31%) U.S. Corp. Bonds (Primary Dealer) (9%) U.S. T
Slide 28: Volumes Generally Mixed; Volatility Down from a Year Ago
VOLUMES GENERALLY MIXED; VOLATILITY DOWN FROM A YEAR AGO 28 2Q 2018TD Change in Capital Markets Activity 2Q 2018TD Change in Average Daily Volatility (4/1/2018 – 4/30/2018) (4/1/2018 – 4/27/2018) U.S. Treasuries (Primary Dealer) (12%) Commodity Volatility Index (BofAML) (35%) European Equities (7%)
Slide 29: Average Exchange Rates
AVERAGE EXCHANGE RATES 29 1Q 2018 1Q 2017 April 1 – April 19, 2018 April 1 – April 19, 2017 US Dollar 1 1 1 1 British Pound 1.391 1.239 1.415 1.253 Euro 1.229 1.065 1.232 1.065 Hong Kong Dollar 0.128 0.129 0.127 0.129 Singapore Dollar 0.758 0.706 0.762 0.714 Japanese Yen 108.363 113.616 106.982 109.
Slide 30: Differences Between Consolidated Results for Adjusted Earnings and GAAP
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR ADJUSTED EARNINGS AND GAAP 30 Differences between Other income (losses), net, for Adjusted Earnings and GAAP In the first quarters of 2018 and 2017, non-cash gains of $2.6 million and $0.2 million, respectively, related to BGC’s investments accounted for
Slide 31: Differences Between Consolidated Results for Adjusted Earnings and GAAP (Continued)
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR ADJUSTED EARNINGS AND GAAP (CONTINUED) 31 Differences between Certain Non-compensation Expenses for Adjusted Earnings and GAAP The difference between non-compensation expenses in the first quarters of 2018 and 2017 as calculated for GAAP and Adjusted Earn
Slide 32: Adjusted Earnings Defined
ADJUSTED EARNINGS DEFINED 32 Adjusted Earnings Defined BGC Partners uses non-GAAP financial measures including, but not limited to, “pre-tax Adjusted Earnings” and “post-tax Adjusted Earnings,” which are supplemental measures of operating results that are used by management to evaluate the financial
Slide 33: Adjusted Earnings Defined (Continued)
ADJUSTED EARNINGS DEFINED (CONTINUED) 33 Additionally, Adjusted Earnings calculations exclude certain unusual, one-time, non-ordinary or non-recurring items, if any. These items are excluded from Adjusted Earnings because the Company views excluding such items as a better reflection of the ongoing o
Slide 34: Adjusted Earnings Defined (Continued)
ADJUSTED EARNINGS DEFINED (CONTINUED) 34 Adjusted Earnings Attributable to Noncontrolling Interest in Subsidiaries Adjusted Earnings attributable to noncontrolling interest in subsidiaries is calculated based on the relevant noncontrolling interest existing on the balance sheet date. Until the propo
Slide 35: Adjusted Earnings Defined (Continued)
ADJUSTED EARNINGS DEFINED (CONTINUED) 35 BGC anticipates providing forward-looking guidance for GAAP revenues and for certain Adjusted Earnings measures from time to time. However, the Company does not anticipate providing an outlook for other GAAP results. This is because certain GAAP items, which
Slide 36: Adjusted EBITDA Defined
ADJUSTED EBITDA DEFINED 36 Adjusted EBITDA and Adjusted EBITDA Before Allocations to Units Defined BGC also provides an additional non-GAAP financial performance measure, “Adjusted EBITDA”, which it defines as GAAP “Net income (loss) available to common stockholders”, adjusted to add back the follow
Slide 37: Impact of ASC 606 on Newmark's Future Results
IMPACT OF ASC 606 NEWMARK’S FUTURE RESULTS 37 Impact of ASC 606 on Newmark’s Future Results As was discussed in BGC’s financial results press release dated February 9, 2017: From 2014 through 2016, the Financial Accounting Standards Board (“FASB”) issued several accounting standard updates, which to
Slide 38: Proposed Spin-Off of Newmark
PROPOSED SPIN-OFF OF NEWMARK 38 Proposed Spin-Off of Newmark BGC expects to pursue a distribution to its stockholders of all of the Class A common shares and Class B common shares of Newmark (collectively, the “Newmark common shares”) that BGC then owns in a manner that is intended to qualify as gen
Slide 39: Reconciliation of GAAP Income (Loss) to Adjusted EBITDA
RECONCILIATION OF GAAP INCOME (LOSS) TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 39 Q1 2018 Q1 2017 GAAP Net income (loss) available to common stockholders $ 58,774 $ 36,825 Add back: Provision (benefit) for income taxes 35,763 6,678 Net income (loss) attributable to noncontrolling interest in sub
Slide 40: Reconciliation of GAAP Income to Adjusted Earnings and Post-Tax Adjusted EPS
RECONCILIATION OF GAAP INCOME (LOSS) TO ADJUSTED EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 40 Q1 2018 Q1 2017 GAAP income (loss) before income taxes $ 133,194 $ 57,794 Pre-tax adjustments: Non-cash (gains) losses related to equity
Slide 41: Fully Diluted Weighted-Average Share Count for GAAP and Adjusted Earnings
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT FOR GAAP AND ADJUSTED EARNINGS (IN THOUSANDS) (UNAUDITED) 41 Q1 2018 Q1 2017 Common stock outstanding 307,728 283,399 Limited partnership units 104,892 94,298 Cantor units 51,815 51,183 Founding partner units 12,511 13,790 RSUs 604 677 Other 1,385 1,479 Ful
Slide 42: Segment Disclosure – 1Q 2018 vs 1Q 2017
SEGMENT DISCLOSURE – 1Q 2018 VS 1Q 2017 (IN THOUSANDS) (UNAUDITED) 42 Q1 2018 Q1 2017 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 516,621 $ 431,871 $ 8,154 $ 956,646 $ 441,178 $ 333,720 $ 8,295 $ 783,193
Slide 43: Reconciliation of BGC Real Estate Segment Revenues to Newmark Stand-Alone Revenues
RECONCILIATION OF BGC REAL ESTATE SEGMENT REVENUES TO NEWMARK GROUP, INC. STAND-ALONE REVENUES (IN THOUSANDS) (UNAUDITED) 43 Q1 2018 Q1 2017 BGC Real Estate segment revenues 431,871 333,720 Interest income (1) (1,411) (1,138) Newmark Group, Inc. stand-alone revenues 430,460 332,582 (1) This is not i
Slide 44: Reconciliation of BGC Real Estate Segment to Newmark Stand-Alone Pre-Tax Income
RECONCILIATION OF BGC REAL ESTATE SEGMENT TO NEWMARK GROUP, INC. STAND-ALONE FOR GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES (IN THOUSANDS) (UNAUDITED) 44 Q1 2018 Q1 2017 BGC Real Estate segment income (loss) from operations before income taxes 82,361 52,554 BGC Corporate Items: Compensat
Slide 45: Reconciliation of BGC Real Estate Segment to Newmark Stand-Alone Pre-Tax Adjusted Earnings
RECONCILIATION OF BGC REAL ESTATE SEGMENT TO NEWMARK GROUP, INC. STAND-ALONE FOR PRE-TAX ADJUSTED EARNINGS (IN THOUSANDS) (UNAUDITED) 45 Q1 2018 Q1 2017 BGC Real Estate segment pre-tax adjusted earnings 80,626 38,475 BGC Corporate Items: Compensation and employee benefits (783) (560) Fees to related
Slide 46: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 46 March 31, 2018 December 31, 2017 Cash and cash equivalents $ 362,613 $ 634,333 Repurchase agreements (985) - Securities owned 89,357 33,007 Marketable securities (1) 3,496 5,833 Total $ 454,481 $ 673,173 (1) As of March 31, 2018 and December 31, 2017,
Slide 47: Media and Investor Contacts
47 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: Ujjal Basu Roy (BGC), Kelly Collar (Newmark), ir.bgcpartners.com twitter.com/bgcpartners or Jason McGruder (BGC and Newmark) linkedin.com/company/bgc-partners +1 212-610-2426