Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q1 2015 Earnings Presentation
34 slides from Bgc's earnings presentation, 2015
Slide 1: BGC Partners Q1 2015 Earnings Presentation
BGC PARTNERS, INC. NASDAQ: BGCP Q1 2015 EARNINGS PRESENTATION
Slide 2: Disclaimer
DISCLAIMER Discussion of Forward-Looking Statements by BGC Partners and GFI Group Statements in this document regarding BGC Partners' and GFI Group’s businesses that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC and GFI
Slide 3: Note on revised Q1 2015 Global Revenue Breakdown page
Note: Page 6 of this presentation titled “Q1 2015 Global Revenue Breakdown” has been revised to correct a prior version of this presentation with respect to the Company’s Q1 2015 revenues by geography Date 3
Slide 4: General Overview
T bge ¢-% GFi >4 GENERAL OVERVIEW
Slide 5: Select Q1 2015 Results Compared to Q1 2014
SELECT Q1 2015 RESULTS COMPARED TO Q1 2014 Highlights of Consolidated Results Change Q1 2015 Q1 2014 (USD millions, except per share data) (%) Revenues for distributable earnings $563.9 $445.9 26.5 Pre-tax distributable earnings before non-controlling interest 75.2 56.2 33.7 in subsidiaries and taxe
Slide 6: Q1 2015 Global Revenue Breakdown
Q1 2015 GLOBAL REVENUE BREAKDOWN Americas revenue up 28% Y/Y Europe, Middle East & Africa revenue up 28% Y/Y Asia Pacific revenue up 10% Y/Y Q1 2015 Revenues APAC 9% EMEA 32% Americas 60% Date Strengthening of the U.S. dollar reduced non-U.S. Financial Services revenues by over $20 million d
Slide 7: Q1 2015 Segment Data (Distributable Earnings Basis)
Q1 2015 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) Q1 2015 Revenues Pre-tax Pre-tax Corporate Q1 2015 Revenues Earnings Margin 1% (In USD millions) Financial $355.7 $78.3 22.0% Real Estate $200.4 $19.6 9.8% Real Estate Corporate $7.8 ($22.6) NMF 36% Pre-tax Pre-tax Financial Services Q1 2014 Revenu
Slide 8: BGC's Front Office Productivity Growth
BGC’S FRONT OFFICE PRODUCTIVITY GROWTH Front Office Headcount Front Office Productivity $700 $636 4,000 3,872 $619 $600 3,500 1,293 2,863 $500 (Front Office Employees) 3,000 2,755 2,500 2,385 2,398 $400 ($ thousands) 1,135 1,244 2,000 888 879 $300 1,500 (1)% 2,579 $200 $162 $160 1,000 1,497 1,519 1,
Slide 9: Financial Services Overview
FINANCIAL SERVICES OVERVIEW
Slide 10: Q1 2015 Financial Services Summary
Q1 2015 FINANCIAL SERVICES SUMMARY BGC Financial Services Segment Highlights Energy & Commodities revenues increased over 125% Fully electronic FX revenues up 80%; overall FX revenues up over 40% Fully electronic credit and rates up 67% and 54%, respectively Excluding Trayport, overall fully
Slide 11: BGC and GFI Combination Adds to Brokerage Revenue Diversity
BGC AND GFI COMBINATION ADDS TO BROKERAGE REVENUE DIVERSITY BGC Standalone BGC + GFI (USD 000’s) FY 2014 FY 2014 % Change Total Brokerage Revenues 1,579,435 2,214,369 +40.2 BGC & GFI (FY 2014) RATES REAL ESTATE 23% 25% BGC (FY 2014) REAL ESTATE RATES 35% 25% ENERGY & ENERGY & CREDIT COMMODITIES COMM
Slide 12: Expected GFI Cost Synergies and Annual Run Rate Savings
EXPECTED GFI COST SYNERGIES AND ANNUAL RUN RATE SAVINGS Planned GFI Integration Cost Savings / Synergies Network infrastructure Disaster recovery Telephone lines Interest expense Vendors Data centers Duplicative real estate Other support expenses Year 1 Year 2 Date $50 Million $90 Mi
Slide 13: Recent Developments Regarding the BGC / GFI Merger
RECENT DEVELOPMENTS REGARDING THE BGC / GFI MERGER BGC has retained Cantor Fitzgerald to assist in the sale of Trayport; The Company expects numerous parties to be interested in acquiring this business at a valuation that reflects its high margins, growth rate, leading technology, and importance i
Slide 14: Financial Services Revenue Breakout
FINANCIAL SERVICES REVENUE BREAKOUT Financial Services Revenue Composition FS Revenue Composition % Change $355,716 +24% 8.2% Fully 11.7% Trayport Electronic2 6,077 NMF Market data, software 21,893 +66% solutions and other1 $287,145 Energy and 29,404 +125% commodities 13,211 Equities and 36,215 +22%
Slide 15: Industry Volumes Mixed; Volatility Improved from Prior Period
INDUSTRY VOLUMES MIXED; VOLATILITY IMPROVED FROM PRIOR PERIOD Year-over-Year Change in Capital Markets Activity Year-over-Year Change (ADV, except credit derivatives outstanding) Average Daily Volatility -46% Dealer-Dealer CDS Outstanding U.S. Rates (MOVE) 41% -19% ICE Equity Derivatives -5% U.S. Co
Slide 16: Volumes Mixed; Volatility Mostly Up from a Year Ago
VOLUMES MIXED; VOLATILITY MOSTLY UP FROM A YEAR AGO Q2 2015TD Volume Change Y/Y Q2 2015TD Implied Volatility Change Y/Y 04/01/2015 – 04/23/2015 04/01/2015 – 04/23/2015 -27% ICE Equity Derivatives U.S. Corp. Bonds (Primary Dealer) -5% U.S. Equities (VIX) -21% -14% U.S. Treasuries (Primary Dealer) Eur
Slide 17: BGC's Fully Electronic Growth (Excluding Trayport)
BGC’S FULLY ELECTRONIC GROWTH (EXCLUDING TRAYPORT) Fully Electronic Brokerage Volumes Fully Electronic Revenues1 (excluding GFI) (including GFI) $50 $6,000 $5,642.6 $40.8 $4,897.0 $5,000 $40 $3,919.4 $4,000 $3,538.3 $30 $27.9 ($ millions) $3,116.3 $25.1 $23.5 ($ billions) $22.6 $3,000 $20 $2,000 $10
Slide 18: Strong Growth Seen in Fully Electronic Business
STRONG GROWTH SEEN IN FULLY ELECTRONIC BUSINESS Revenue and Pre-Tax DE amounts denoted in USD millions Q1 2015 fully electronic revenues and pre-tax distributable earnings marked a record quarter for BGC Excluding Trayport, fully electronic revenues increased 73.7% in Q1 2015, while fully electr
Slide 19: Real Estate Overview
REAL ESTATE OVERVIEW
Slide 20: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES NGKF Highlights Q1 2015 Real Estate Segment Breakdown Q1 2015 Real Estate Services revenues Real estate increased by 34% as compared to last capital markets Management year services and 27% 21% other revenues Capital markets revenues increased 149% from Q1
Slide 21: NGKF Brokerage Revenues Outpace Industry Trends
NGKF BROKERAGE REVENUES OUTPACE INDUSTRY TRENDS Commercial Real Estate Landscape 50% Q1 2015 to Q1 2014 Change 45% 40% 30% 20% 20% 17% 10% 0% Sales Volumes U.S. CMBS Issuance Gross Absorption NGKF Brokerage (TTM) Revenues -10% -6% Source: Commercial Mortgage Alert, Moody’s RCA, NGKF Research Datet
Slide 22: Commercial Real Estate Capital Markets Continue Trend Higher
COMMERCIAL REAL ESTATE CAPITAL MARKETS CONTINUE TREND HIGHER 500,000 TTM U.S. Commercial Property Sales Volumes 35,000 450,000 30,000 400,000 25,000 Property Count 350,000 (USD millions) $ Volume 300,000 20,000 250,000 15,000 200,000 150,000 10,000 100,000 5,000 50,000 - - Q109 Q110 Q111 Q112 Q113 Q
Slide 23: BGC Partners' Outlook
BGC PARTNERS’ OUTLOOK
Slide 24: Second Quarter 2015 Outlook Compared with Second Quarter 2014 Results
SECOND QUARTER 2015 OUTLOOK COMPARED WITH SECOND QUARTER 2014 RESULTS The Company expects distributable earnings revenues to increase by between approximately 51 percent and 58 percent and to be between approximately $650 million and $680 million, compared with $430.3 million Revenue guidance wo
Slide 25: Appendix
APPENDIX
Slide 26: BGC Partners Compensation Ratio
BGC PARTNERS COMPENSATION RATIO $1,200 100% $1,128.5 $1,091.2 $1,036.8 $1,000 90% $800 $793.5 80% ($ millions) $600 70% 61.7% 61.3% 59.2% 61.8% $400 61.7% 60% 53.8% $275.4 $200 50% $348.1 $0 40% 2011 2012 2013 2014 Q1 2014 Q1 2015 Compensation and Employee Benefits Compensation and Employee Benefits
Slide 27: Non-Compensation Expenses & Pre-Tax Margin
NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 50% 40% 30% 30.2% 28.0% 29.6% 24.9% 25.3% 20% 16.1% 11.2% 13.4% 13.3% 10.3% 10% 0% FY 2011 FY 2012 FY 2013 FY 2014 Q1 2015 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date Non-comp expenses were 24.9% of
Slide 28: BGC's Economic Ownership as of March 31, 2015
BGC’S ECONOMIC OWNERSHIP AS OF MARCH 31, 2015 Cantor 21% Public Employees, 46% Executives, & Directors 33% 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 s
Slide 29: Average Exchange Rates
AVERAGE EXCHANGE RATES Average Q1 2015 Q1 2014 April 1 - April 24, 2015 April 1 - April 24, 2014 USDollar 1 1 1 1 British Pound 1.516 1.655 1.484 1.671 Euro 1.129 1.370 1.077 1.380 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.737 0.788 0.737 0.797 Japanese Yen* 119.170 102.840 119.600
Slide 30: Distributable Earnings Defined
DISTRIBUTABLE EARNINGS DEFINED BGC Partners uses non-GAAP financial measures including "revenues for distributable earnings," "pre-tax distributable earnings" and "post-tax distributable earnings," which are supplemental measures of operating performance that are used by management to evaluate the f
Slide 31: Adjusted EBITDA
ADJUSTED EBITDA Adjusted EBITDA Defined BGC also provides an additional non-GAAP financial measure, “adjusted EBITDA,” which it defines as GAAP income from operations before income taxes, adjusted to add back interest expense as well as the following non-cash items: Employee loan amortization; F
Slide 32: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA BGC Partners, Inc. Reconciliation of GAAP Income to Adjusted EBITDA (and Comparison to Pre-Tax Distributable Earnings) (in thousands) (unaudited) Q1 2015 Q1 2014 GAAP Income from continuing operations before income taxes $ 36,270 $ 11,246 Add back: Employee loan amortization 8,066 7,
Slide 33: Reconciliation of Income Under GAAP to Distributable Earnings
RECONCILIATION OF INCOME UNDER GAAP TO DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF GAAP INCOME TO DISTRIBUTABLE EARNINGS (in thousands, except per share data) (unaudited) Q1 2015 Q1 2014 GAAP income before income taxes $ 36,270 $ 11,246 Pre-tax adjustments: Dividend equivalents to RS
Slide 34: Reconciliation of Revenues Under GAAP and Distributable Earnings
RECONCILIATION OF REVENUES UNDER U.S. GAAP AND DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q1 2015 Q1 2014 GAAP Revenue $ 547,567 $ 444,789 Plus: Other Income (losses), net 32,561 (4,498) Adjusted GAAP 580,128