Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q3 2020 Earnings Presentation
37 slides from Bgc's earnings presentation, November 2020
Slide 1: BGC Partners Earnings Presentation 3Q 2020
BGC PARTNERS, INC. NASDAQ: BGCP E A R N I N G S P R E S E N TAT I O N 3 Q 2 0 2 0
Slide 2: Disclaimer
DISCLAIMER 2 DISCUSSION OF FORWARD-LOOKING STATEMENTS ABOUT BGC 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 statem
Slide 3: Highlights of Consolidated Results: Q3'20
HIGHLIGHTS OF CONSOLIDATED RESULTS: Q3’ 20 3 Highlights of Consolidated Results 3Q 2020 3Q 2019 Change (USD millions, except per share data) Revenues $455.0 $521.1 (12.7)% GAAP income (loss) from operations before income taxes 28.7 8.7 228.2% GAAP net income (loss) for fully diluted shares 29.6 (3.5
Slide 4: General Overview
BGC PARTNERS, INC. GENERAL OVERVIEW
Slide 5: Business Overview: 3Q'20
BUSINESS OVERVIEW: 3Q’20 5 BUSINESS OVERVIEW REVENUE BY ASSET CLASS & GEOGRPAHY FENICS REVENUE: $455.0M Americas EMEA 28% 55% Data, software & post-trade, and Electronic other1 Brokerage 8% NET REVENUE: Voice/Hybrid Equity derivatives 13% Brokerage and cash equities Rates (EXCLUDING INTER-COMPANY) 6
Slide 6: Business Overview: Fenics
BUSINESS OVERVIEW: FENICS 6 FENICS OVERVIEW: 3Q’20 SELECT PLATFORM HIGHLIGHTS NET REVENUE1,2: $79.5M +86% VOLUME GROWTH YTD SEP 20 vs. YTD SEP 19 > 200% GROWTH EURO STOXX 50 OPTION VOLUMES Equities and 3Q’20 VS. 1Q’20 (launched 3Q’19) Data, software & Energy & post trade Commodities DOUBLED MARKET >
Slide 7: Fenics UST Highlights
FENICS UST HIGHLIGHTS 7 UST NOTIONAL TRADING VOLUMES UST CLOB MARKET SHARE1 FENICS UST CLOB MARKET SHARE1 YTD SEP 20 (Yr/Yr) SEP 20 13% Nasdaq CME Nasdaq Fixed 8% Fenics UST BrokerTec Income SIFMA 12% 12% Dealerweb 86% 10% 10% 10% 11% 10% 10% 9% 9% 9% 8% 8% 13% 4% CME BrokerTec 69% -22% Sep-19 Nov-1
Slide 8: Fenics GO Highlights
FENICS GO HIGHLIGHTS 8 EURO STOXX 50 (EUREX)1 NIKKEI 225 (OSE)1 FENICS GO EST. MARKET SHARE FENICS GO EST. MARKET SHARE (IDB Block Size Trades) (IDB Block Size Trades) 6.3% 13.6% 4.4% 4.1% 10.0% 3.7% 8.7% 4.7% 0.5% 0.3% 0.2% 0.1% Mar 20 Jun 20 Sept 20 Mar 20 Jun 20 Sept 20 Front Month Short-dated Fr
Slide 9: Fenics Market Data Opportunity
FENICS MARKET DATA OPPORTUNITY 9 FENICS MARKET DATA OVERVIEW Estimated Global Market Data 1 Wallet: AT AN ESTIMATED $32 BILLION PER ANNUM, THE GLOBAL CONSUMPTION OF MARKET DATA CONTINUES TO REACH RECORD LEVELS; $32B ANNUALLY BGC CONTINUES TO EXPECT DOUBLE-DIGIT GROWTH ACROSS DATA, SOFTWARE AND POST-
Slide 10: Business Overview: Insurance Brokerage
BUSINESS OVERVIEW: INSURANCE BROKERAGE 10 INSURANCE BROKERAGE OVERVIEW INTEGRATED GLOBAL PLATFORM INSURANCE BROKERAGE REVENUE: ($ in millions) 3Q’20: > $50.0 $43.3 $39.7 +9% YR/YR $19.2 +125% VS. 3Q’18 3Q'18 3Q'19 3Q'20 4Q'20E Expected revenue growth of around 20% in 4Q’20 as previous front office h
Slide 11: Insurance Brokerage Opportunity
INSURANCE BROKERAGE OPPORTUNITY 11 Insurance brokerage provides a significant global opportunity with high levels of fragmentation despite recent industry consolidation GLOBAL PROPERTY & CASULATY COMMERCIAL PROPERTY & GROSS WRITTEN PREMIUMS1: CASUALTY MARKET SHARE1,2 14% 26% 29% 11% 12% AON + Willis
Slide 12: Corporate Considerations
CORPORATE CONSIDERATIONS 12 ▪ Investment Grade Credit Rated: • Fitch: BBB- (Outlook: Stable) INVESTMENT • S&P: BBB- (Outlook: Stable) GRADE CREDIT • Kroll Bond Rating Agency: BBB (Outlook: Stable) RATING • Japanese Credit Rating Agency (JCR): BBB+ (Outlook: Stable) ▪ Strong balance sheet and liquidi
Slide 13: Outlook: 4Q'20
OUTLOOK: 4Q’20 13 13 Metric Guidance Actual (USD millions) 4Q 2020 4Q 2019 Revenues $440-490 $487.2 Pre-tax Adjusted Earnings $65-85 $73.2 FY 2020 FY 2019 Adjusted Earnings Tax Rate (%) 10-12% 11.4% ▪ BGC’s revenues decreased by approximately 4.4 percent year-on-year for the first 17 trading days of
Slide 14: GAAP Financial Results
BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 15: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 15 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) September 30, December 31, 2020 2019 Assets Cash and cash equivalents $ 492,303 $ 415,379 Cash segregated under regulatory requirements 244,230 220,735 Securi
Slide 16: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 16 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended September 30, Nine Months Ended September 30, Revenues: 2020 2019 2020 2019 Commissions $ 352,027 $ 409,765 $ 1,190,522 1,262,921 Principal transact
Slide 17: Condensed Consolidated Statements of Operations - Continued
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - 17 CONTINUED (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Per share data: Basic earnings (lo ss) per share Net income (loss) ava
Slide 18: Appendix
MMMM BGC PARTNERS, INC. + bgc (SF! Fenics
Slide 19: Front Office Headcount & Productivity
FRONT OFFICE HEADCOUNT & PRODUCTIVITY 19 FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s) (Excludes Insurance Brokerage) $748 $744 $747 $736 $753 $735 2,600 $749 $800 2,550 2,500 2,450 2,400 2,350 2,300 $750 FENICS IS EXPECTED TO 2,250 2,200 2,150 2,100 2,050 DRIVE INCREASED 2,000
Slide 20: BGC's Fully Diluted Share Count Summary as of September 30, 2020
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF SEPTEMBER 30, 2020 20 (share count in millions) 20 BGC Partners, Inc. Fully Diluted Share Count Summary Fully-diluted Ownership (%) (as of September 30, 2020) Shares Class A owned by Public 298.1 54% (1) Class A owned by executives, board members and emp
Slide 21: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT 21 PROFILE BGC Partners, Inc. (USD $000s) As of 9/30/2020 Cash and Cash Equivalents $492,303 21 Repurchase Agreements (2,089) Securities Owned 58,547 Marketable Securities 303 Total Liquidity $549,064 Maturity 5.125% Senior Notes 05/27/2021 255,308 Colla
Slide 22: Correlation Between BGC's Brokerage Revenues and Certain Industry Metrics
CORRELATION BETWEEN BGC’S BROKERAGE REVENUES AND CERTAIN 22 INDUSTRY METRICS Asset Class Industry Metric Correlation 22 BGC Rates Revenues vs. Fed UST Primary Dealer Volume 60.4% Rates BGC Rates Revenues vs. EUREX Interest Rate Derivatives 62.8% BGC Rates Revenues vs. BrokerTec (NEX/CME) Volume 47.4
Slide 23: BGC Financial Asset Class Breakdown
BGC FINANCIAL ASSET CLASS BREAKDOWN 23 Revenue by Asset Class & Comparison to Secondary Trading Volumes: 3Q’20 Rates Credit FX Energy & Equity Derivatives Commodities and Cash Equities 3Q’20 BGC Financial Revenues Revenue: $119 million $68 million $73 million $66 million $47 million % Change (Yr/Yr)
Slide 24: Industry Volumes
INDUSTRY VOLUMES 24 3Q’20 CHANGE IN TRADING VOLUMES1,2 4 Q ’ 2 0 T D C H A N G E I N T R A D I N G V O L U M E S 2,3 24 -51% Interest Rate Futures (CME) -41% Interest Rate Futures (CME) -28% U.S. Treasuries (Primary Dealer) -24% CDS Notional Turnover (ISDA) -27% Interest Rate Futures (ICE) -19% FX F
Slide 25: Fenics Ecosystem Powering the Capital Markets
FENICS ECOSYSTEM POWERING THE CAPITAL MARKETS CONNECTIVITY TRADE EXECUTION Stand-alone Fully Electronic Platforms: ▪ Co-located Infrastructure and PRE-TRADE EXECUTION Fenics Integrated: Connectivity EXECUTION ▪ Smart Order Routing ▪ Liquidity & Price Aggregation ▪ Rates: USTs, EGBs, Gilts, EM, IRDs
Slide 26: Fenics Stand-Alone Electronic Platforms
FENICS STAND-ALONE ELECTRONIC PLATFORMS 26 Fully Lit Central Limit Order Book MidFX, Spot, FX Options, and Non- Fully electronic end-to-end platform Web-delivered FX Options platform (“CLOB”) plus bespoke Directed Deliverable Forwards (“NDF”) and for the arrangement of block trades providing aggrega
Slide 27: Fenics Data, Software and Post-Trade Offerings
FENICS DATA, SOFTWARE AND POST-TRADE OFFERINGS 27 ▪ Comprehensive market data ▪ Independent software vendor ▪ Lucera is BGC’s software defined ▪ Derivatives optimization service solution providing unique & providing gateway access, analytics, network enabling the trading providing portfolio compress
Slide 28: Non-GAAP Definitions and Reconciliation Tables
BGC PARTNERS, INC. NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 29: Reconciliation of GAAP Income Before Income Taxes to Adjusted Earnings
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS 29 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Q3 2020 Q3 2019 GAAP income (loss) from operations before income taxes $ 28,708 $ 8,746 Pre-tax adjus
Slide 30: Reconciliation of GAAP Income Before Income Taxes to Adjusted Earnings (Notes)
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES 30 TO ADJUSTED EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (1) The components of equity-based compensation and allocations of net income to limited partnership
Slide 31: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA 31 (IN THOUSANDS) (UNAUDITED) Q3 2020 Q3 2019 31 GAAP net income (loss) available to common stockholders $ 19,381 $ (3,529) Add back: Provision (benefit) for income taxes 3,778 6,186 Net income (loss) attrib
Slide 32: Fully Diluted Weighted-Average Share Count and Liquidity Analysis
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT UNDER GAAP AND FOR ADJUSTED EARNINGS & LIQUIDITY ANALYSIS 32 (IN THOUSANDS) (UNAUDITED) 32 FULLY DILUTED WEIGHTED AVERAGE SHARE COUNT LIQUIDITY ANALYSIS Q3 2020 Q3 2019 September 30, 2020 December 31, 2019 Common stock outstanding 363,244 346,060 Limited pa
Slide 33: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 33 NON-GAAP FINANCIAL MEASURES 33 This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United St
Slide 34: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 34 (CONTINUED) All share equivalents that are part of the Company’s equity-based compensation program, including REUs, PSUs, LPUs, HDUs, and other units that may be made exchangeable into common stock, as well as RSUs (which are recorded usi
Slide 35: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 35 (CONTINUED) After application of these adjustments, the result is the Company’s taxable income for its pre-tax Adjusted Earnings, to which BGC then applies the statutory tax rates to determine its non-GAAP tax provision. BGC views the eff
Slide 36: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 36 (CONTINUED) 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 followi
Slide 37: Media and Investor Contacts
37 37 37 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: ir.bgcpartners.com Jason Chryssicas twitter.com/bgcpartners +1 212-610-2426 linkedin.com/company/bgc-partners 37