Bgc Group, Inc. · NASDAQ:BGC

Bgc — BGC Partners — Q2 2016 Earnings Presentation

40 slides from Bgc's earnings presentation, Jul 28, 2016

1. Slide 1: BGC Partners, Inc. Earnings Presentation 2Q 2016

   1 BGC PARTNERS, INC. Earnings Presentation 2Q 2016 Date NASDAQ: BGCP

2. Slide 2: Disclaimer

   DISCLAIMER 2 Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC's businesses that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to release any rev

3. Slide 3: Disclaimer (Continued)

   DISCLAIMER (CONTINUED) 3 Distributable Earnings This presentation should be read in conjunction with BGC’s most recent financial results press release. Unless otherwise stated, throughout this document we refer to our results only on a distributable earnings basis. For a complete and revised descrip

4. Slide 4: General Overview

   BGC PARTNERS 4 GENERAL OVERVIEW Date

5. Slide 5: Select 2Q 2016 vs. 2Q 2015 Consolidated Financial Results

   SELECT 2Q 2016 vs. 2Q 2015 Consolidated Financial Results 5 Highlights of Consolidated Results (USD millions, except per share data) 2Q 2016 2Q 2015 Change (%) Revenues $652.0 $669.1 (2.6)% Pre-tax distributable earnings before non-controlling interest in subsidiaries and taxes 93.9 88.0 6.7% Pre-ta

6. Slide 6: Global Revenue Breakdown

   GLOBAL REVENUE BREAKDOWN 6 2Q 2016Q1 Global Revenues APAC 8% EMEA 32% Americas 60%  Date Americas revenue down 1% from 2Q 2015  Europe, Middle East & Africa revenue down 3%  Asia Pacific revenue down 10% Note: percentages may not sum to 100% due to rounding *Includes GFI offices

7. Slide 7: 2Q 2016 Segment Data (Distributable Earnings Basis)

   2Q 2016 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 7 (In USD millions) 2Q 2016 REVENUES 2Q 2016 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $390.9 $83.0 21.2% 1% Real Estate $253.8 $25.5 10.0% Corporate $7.3 ($14.5) NMF Real Estate 39% (In USD millions) 2Q 2015 Revenues Pre-tax Ear

8. Slide 8: BGC's Businesses at a Glance

   BGC'S 2Q 2016 BUSINESS STRONG REVENUE DIVERSITY 8 Corporate 1% Real Estate Management and Other BGC’s Businesses at a Glance 7%  BGC maintains a highly diverse Rates 18% revenue base Real Estate Capital Markets Corporate  Wholesale Financial Services 13% 1% Brokerage revenues and earnings typicall

9. Slide 9: BGC's Front Office Headcount & Productivity

   BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 9 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (USD Thousands) Yr/Yr change: Flat -2% 3,827 3,845 3,855 3,858 3,812 1,308 1,347 1,401 1,417 1,421 628 614 2,519 2,498 2,454 2,441 2,391 154 156 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 Q2 2015 Q2 2016 FY 2

10. Slide 10: BGC Partners Expenses & Pre-tax Margins

    BGC PARTNERS EXPENSES & PRE-TAX MARGINS 10 $2,000 100% 90% $1,500 1,620 (USD millions) 80% $1,000 62.9% 63.6% 70% 62.6% 62.7% 60% $500 1,119 50% 420 415 $0 40% FY 2014 FY 2015 Q2 2015 Q2 2016 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 15% 30% 25.9% 25

11. Slide 11: Recently Announced BGC & NGKF Acquisitions

    RECENTLY ANNOUNCED BGC & NGKF ACQUISITIONS 11 Sunrise Brokers Group:  On July 19, 2016, BGC announced an agreement to acquire Sunrise Brokers Group (“Sunrise”), a privately owned financial brokerage with a leading reputation in worldwide equity derivatives.  Sunrise is based in London with offices

12. Slide 12: Financial Services Overview

    12 Overview FINANCIAL SERVICES Date

13. Slide 13: 2Q 2016 Financial Services Summary

    2Q 2016 FINANCIAL SERVICES SUMMARY 13 BGC Financial Services Segment Highlights Quarterly Drivers General:  Continued successful integration of GFI  Pre-tax profits up 6%  Increased activity across energy and  Pre-tax margins expanded 260 basis points, commodities and credit; decreased activity

14. Slide 14: Financial Services Revenue Breakout by Asset Class

    FINANCIAL SERVICES REVENUE BREAKOUT BY ASSET CLASS 14 FINANCIAL SERVICES REVENUE COMPOSITION (USD $000s) % Change $421,721 Total Financial Services (7)% $390,930 17,822 Trayport1 NMF 12,139 13,188 Data, software, post-trade and other +9% 50,329 45,593 (9)% Equity & other 54,843 57,306 Energy & commo

15. Slide 15: 2Q16 Industry Volumes Mixed to Up; Volatility Mostly Up

    2Q16 INDUSTRY VOLUMES MIXED TO UP; VOLATILITY MOSTLY UP 15 2Q16: Yr/Yr Change in Capital Markets Activity 2Q16: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) -9% Thomson Reuters FX Spot -7% FX Futures (CME) U.S. Rates (MOVE) -16% U.S. Treasuries (Primary Dealer) 0% In

16. Slide 16: BGC's FENICS (Fully Electronic) Growth

    BGC’S FENICS (FULLY ELECTRONIC) GROWTH 16 FENICS (Fully Electronic) Revenues1 (USD 000s) 300,000 $255,665 250,000 200,000 99,774 $157,446 150,000 33,269 100,000 $67,213 155,891 $63,687 124,177 50,000 22,871 26,129 40,816 41,084 - TTM 2Q15 TTM Date 2Q16 2Q15 2Q16 Electronic Brokerage Data, software a

17. Slide 17: Strong Growth and New Records Across FENICS

    STRONG GROWTH AND NEW RECORDS ACROSS FENICS 17 (USD millions) 2Q 2016 TTM 2Q 2016 Voice / Hybrid Corporate / Voice / Hybrid Corporate / FENICS / Other Real Estate Other Total FENICS / Other Real Estate Other Total Revenue $67.2 $323.7 $253.8 $7.3 $652.0 $255.7 $1,331.3 $1,029.6 $33.1 $2,649.7 Pre-Ta

18. Slide 18: Real Estate Overview

    Newmark Grubb Knight Frank Overview REAL ESTATE SST

19. Slide 19: Business Overview: Real Estate Services

    BUSINESS OVERVIEW: REAL ESTATE SERVICES 19 NGKF Highlights 2Q 2016 Real Estate Segment Breakdown  2Q 2016 Real Estate Services revenue increased by over 6% compared to 2Q 2015 Real estate Management  Real estate capital markets revenue increased capital markets 33% services & other revenues over 3

20. Slide 20: NGKF Revenue and Earnings Continue Strong Growth

    NGKF REVENUE AND EARNINGS CONTINUE STRONG GROWTH 20 NGKF Revenue & Pre-tax Distributable Earnings (USD 000’s) 160,000 1,000,000 140,000 Pre-tax Distributable Earnings 120,000 800,000 100,000 Revenues 600,000 80,000 400,000 60,000 40,000 200,000 20,000 - - FY TTM Date FY TTM FY TTM 2013 2Q14 2014 2Q1

21. Slide 21: Historically Low Global Interest Rates: Bad for Financial Services, Good for Real Estate

    HISTORICALLY LOW GLOBAL INTEREST RATES: BAD FOR FINANCIAL SERVICES, GOOD FOR REAL ESTATE 21  Historically low interest rates continue to drive global investors into alternative asset classes, such as U.S. commercial real estate, as U.S. cap rates offer significant upside to local bond yields 5.50%

22. Slide 22: Vacancy Rates Continue to Improve Signaling Strong Demand for Commercial Real Estate

    VACANCY RATES CONTINUE TO IMPROVE SIGNALING STRONG DEMAND FOR COMMERCIAL REAL ESTATE 22 20.0% U.S. Vacancy Rates by Asset Class 16.0% 12.0% 8.0% 4.0% 0.0% 2Q11 2Q12 2Q13 2Q14 1Q15 2Q15 2Q16 Date Office Industrial Retail Unweighted Average Source: CoStar, REIS, and NGKF Research  Vacancy rates conti

23. Slide 23: Outlook

    23 BGC PARTNERS OUTLOOK Date

24. Slide 24: Outlook Comparison

    OUTLOOK COMPARISON 24 Outlook Compared with a Year Ago Results  BGC anticipates third quarter 2016 revenues of between $655 million and $695million, compared with $685.3 million a year earlier, which included over $19 million related to Trayport.  BGC anticipates generating pre-tax earnings of bet

25. Slide 25: Appendix

    APPENDIX TMNT ANTI INT ss 1

26. Slide 26: BGC's Economic Ownership as of June 30, 2016

    BGC’S ECONOMIC OWNERSHIP AS OF JUNE 30, 2016 26 Cantor 21% Public 48% Employees, Executives, & Directors 31% Date Note: Employees, Executives, and Directors ownership figure attributes all units (PSUs, FPUs, RSUs, etc.) and distribution rights to founding partners & employees and also includes all A

27. Slide 27: Strongly Capitalized; Investment Grade Credit Profile

    STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 27 ($ in '000s) BGC Partners, Inc. 6/30/2016 Cash and Cash Equivalents $427,558 Securities Owned 318,580 Marketable Securities (net) 152,995 Total Liquidity $899,133 BGC Partners, Inc. and Subsidiaries Issuer Maturity 6/30/2016 4.50% Convertible

28. Slide 28: Volumes Generally Up; Volatility Generally Down From a Year Ago

    VOLUMES GENERALLY UP; VOLATILITY GENERALLY DOWN FROM A YEAR AGO 28 3Q16TD Change in Capital Markets Activity 3Q16TD Change in Average Daily Volatility (7/1/2016 – 7/22/2016) (7/1/2016 – 7/22/2016) -6% European Equities -40% Commodity Volatility Index (BofAML) FX Futures (CME) 0% Energy (ICE) 0% -12%

29. Slide 29: Average Exchange Rates

    AVERAGE EXCHANGE RATES 29 Q2 2016 Q2 2015 Jul 1 – Jul 22, 2016 Jul 1 – Jul 22, 2015 US Dollar 1 1 1 1 British Pound 1.435 1.533 1.315 1.556 Euro 1.130 1.111 1.107 1.101 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.737 0.745 0.741 0.737 Japanese Yen 108.050 121.340 103.880 123.080 Sour

30. Slide 30: Distributable Earnings Defined

    DISTRIBUTABLE EARNINGS DEFINED 30 Distributable Earnings Defined BGC Partners uses non-GAAP financial measures including, but not limited to, "pre-tax distributable earnings before noncontrolling interest in subsidiaries and taxes" and "post-tax distributable earnings", which are supplemental measur

31. Slide 31: Distributable Earnings Defined (Continued)

    DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 31 To make period-to-period comparisons more meaningful, one-quarter of each annual Nasdaq contingent earn-out amount, as well as gains or losses with respect to associated mark-to-market movements and/or hedging, will be included in the Company’s calculati

32. Slide 32: Distributable Earnings Defined (Continued)

    DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 32 Each quarter, the dividend to BGC’s common stockholders is expected to be determined by the Company’s Board of Directors with reference a number of factors, including post-tax distributable earnings per fully diluted share. In addition to the Company’s q

33. Slide 33: Adjusted EBITDA Defined

    ADJUSTED EBITDA DEFINED 33 Adjusted EBITDA 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 following items: • Interest expense; • Net income (los

34. Slide 34: Liquidity Defined

    LIQUIDITY DEFINED 34 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, and Securities owned. BGC considers this an important metric for

35. Slide 35: Reconciliation of GAAP Income to Adjusted EBITDA

    RECONCILIATION OF GAAP INCOME TO ADJUSTED EBITDA 35 BGC PARTNERS, INC. Reconciliation of GAAP Income (Loss) to Adjusted EBITDA (in thousands) (unaudited) Q2 2016 Q2 2015 GAAP Net income (loss) available to common stockholders $ 15,725 $ 9,347 Add back: Provision (benefit) for income taxes 10,548 2,2

36. Slide 36: Reconciliation of Income Under GAAP to Distributable Earnings

    RECONCILIATION OF INCOME UNDER GAAP TO DISTRIBUTABLE EARNINGS 36 BGC PARTNERS, INC. RECONCILIATION OF GAAP INCOME (LOSS) TO DISTRIBUTABLE EARNINGS (in thousands, except per share data) (unaudited) Q2 2016 Q2 2015 GAAP income (loss) before income taxes $ 31,111 $ 17,289 Pre-tax adjustments: Non-cash

37. Slide 37: Reconciliation of FENICS GAAP Income Before Taxes to Pre-tax Distributable Earnings

    RECONCILIATION OF FENICS GAAP INCOME BEFORE TAXES TO PRE-TAX DISTRIBUTABLE EARNINGS 37 BGC PARTNERS, INC. RECONCILIATION OF FENICS GAAP INCOME BEFORE TAXES TO PRE-TAX DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q2 2016 Q2 2015 FENICS GAAP income before income taxes $ 30,515 $ 25,736 Pre-tax ad

38. Slide 38: Reconciliation of Fully Diluted Shares Under GAAP and Distributable Earnings

    RECONCILIATION OF FULLY DILUTED SHARES UNDER GAAP AND DISTRIBUTABLE EARNINGS 38 BGC PARTNERS, INC. RECONCILIATION OF FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT FOR GAAP AND DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q2 2016 Q2 2015 Common stock outstanding 275,997 244,862 Limited partnership

39. Slide 39: Liquidity Analysis

    LIQUIDITY ANALYSIS 39 BGC PARTNERS, INC. LIQUIDITY ANALYSIS (in thousands) (unaudited) June 30, 2016 December 31, 2015 Cash and cash equivalents $ 427,558 $ 461,207 Securities owned (1) 318,580 32,361 Marketable securities (2) (3) 152,995 532,510 Total $ 899,133 $ 1,026,078 (1) As of June 30, 2016,

40. Slide 40: bgcpartners.com

    40 bgcpartners.com Date

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