Bgc Group, Inc. · NASDAQ:BGC

Bgc — BGC Partners — Q1 2014 Earnings Presentation

35 slides from Bgc's earnings presentation, 2014

  1. Slide 1: BGC Partners, Inc. Q1 2014 Earnings Presentation

    BGC PARTNERS, INC. Q1 2014 EARNINGS PRESENTATION

  2. Slide 2: Disclaimer

    DISCLAIMER Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC Partners’ business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to document an

  3. Slide 3: General Overview

    GENERAL OVERVIEW

  4. Slide 4: Select Q1 2014 Results Compared to Q1 2013

    SELECT Q1 2014 RESULTS COMPARED TO Q1 2013 Highlights of Consolidated Results Change Q1 2014 Q1 2013 ($ millions, except per share data) (%) Revenues for distributable earnings $445.9 $449.8 (0.9) Pre-tax distributable earnings before non-controlling interest 56.2 45.1 24.7 in subsidiaries and taxes

  5. Slide 5: Q1 2014 Global Revenue Breakdown

    Q1 2014 GLOBAL REVENUE BREAKDOWN  Americas Revenue up 6% Y-o-Y (excluding eSpeed Americas Revenue up 18%)  Europe, Middle East & Africa Revenue down 10% Y-o-Y  Asia Pacific Revenue down 8% Y-o-Y 1Q2014 Revenues Hong London Kong APAC 9.9% Americas EMEA 58.8% 31.3% New York Paris Date Singapore  I

  6. Slide 6: BGC's Front Office Overview

    BGC’S FRONT OFFICE OVERVIEW Front Office Headcount Front Office Productivity (in thousands) $800 Y-o-Y change: (5.9%) $646 $619 2,535 2,485 2,500 2,432 2,385 (Front Office Employees) 2,385 $600 894 898 2,000 887 884 888 ($ thousands) 1,500 $400 1,000 1,641 1,587 1,545 1,501 1,497 500 $162 $200 $154

  7. Slide 7: Q1 2014 Product Diversity

    Q1 2014 PRODUCT DIVERSITY Date Note: percentages may not sum to 100% due to rounding. 7

  8. Slide 8: Q1 2014 Segment Data (Distributable Earnings Basis)

    Q1 2014 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) Q1 2014 Revenues Q1 2014 Revenues Pre‐tax Earnings Pre‐tax Margin In USD millions Corporate Financial $287.1 $59.1 20.6% 2% Real Estate $149.8 $15.2 10.1% Real Estate Services 34% Corporate $9.0 ($18.0) NMF Financial Services 64% Pre‐tax Pre‐tax Q1

  9. Slide 9: Current Monetary Policy Likely to Remain Accommodative

    CURRENT MONETARY POLICY LIKELY TO REMAIN ACCOMMODATIVE Global Monetary Policy Global Monetary Policy Effect On BGC Operations • Fed tapering its quantitative easing ("QE") program at • Current easy monetary policy expected to support a rate of $10 billion per FOMC meeting – 8 meetings continued reco

  10. Slide 10: Financial Services Overview

    FINANCIAL SERVICES OVERVIEW

  11. Slide 11: Business Overview: Rates

    BUSINESS OVERVIEW: RATES Example of Products % of Q1 2014 Total Distributable Earnings Revenue  Interest Rate Derivatives  US Treasuries (off-the-run)  Global Government Bonds Rates 25%  Agencies  Interest Rate Futures  Dollar Derivatives  Repurchase Agreements  Non-Deliverable Swaps  Inter

  12. Slide 12: Business Overview: Credit

    BUSINESS OVERVIEW: CREDIT Example of Products % of Q1 2014 Total Distributable Earnings Revenue  Credit Derivatives  Asset-Backed Securities  Convertibles Credit 15%  Corporate Bonds  High-Yield Bonds  Emerging Market Bonds Drivers Credit Revenue Growth  Regulatory uncertainty resulting in lo

  13. Slide 13: Business Overview: Foreign Exchange

    BUSINESS OVERVIEW: FOREIGN EXCHANGE Example of Products % of Q1 2014 Total Distributable Earnings Revenue In virtually all currency pairs:  Options FX 12%  Exotics  Spot  Forwards  Non-deliverable forwards Drivers Foreign Exchange Revenue Growth 2.0%  FX volumes tracked significant lower globa

  14. Slide 14: Business Overview: Equities & Other Asset Classes

    BUSINESS OVERVIEW: EQUITIES & OTHER ASSET CLASSES Example of Products % of Q1 2014 Total Distributable Earnings Revenue  Equity Derivatives  Cash Equities 10%  Index Futures Equities & Other  Commodities  Energy Derivatives  Other Derivatives and Futures Drivers Equities & Other Asset Classes

  15. Slide 15: Industry Volumes and Volatility Remained Challenging in 1Q'14

    INDUSTRY VOLUMES AND VOLATILITY REMAINED CHALLENGING IN 1Q’14 Year-over-Year Change in Capital Markets Activity (ADV, except credit derivatives outstanding) Year-over-Year Change in Avg. Daily Volatility -35% -35% U.S. MBSMBS -20% FX (realized) -34% -34% EBS Spot EBS Spot FX FX -30% -30% Credit Deal

  16. Slide 16: 2Q'14 To-Date Volumes Remain Challenging Across Financial Services

    2Q’14 TO-DATE VOLUMES REMAIN CHALLENGING ACROSS FINANCIAL SERVICES ADV – Capital European Cash Equities 21% Markets (April 1st – April 24th) U.S. Rates Futures 15% U.S. Cash Equities 2% -18% Energy Futures -27% European Long-term Rates Futures -38% European Short-term Rates Futures -44% FX Options -

  17. Slide 17: BGC's Fully Electronic Brokerage Metrics

    BGC’S FULLY ELECTRONIC BROKERAGE METRICS Fully Electronic Brokerage Notional Volumes (in billions)1 Retained Technology Revenues (in millions)2 $25 $3,500 $23.5 $3,116.3 $22.7 $21.9 $3,000 $2,755.1 $2,621.5 $2,416.3 $2,500 $20 $2,167.0 $18.2 ($ millions) $17.8 ($ billions) $2,000 $1,500 $15 $1,000 $

  18. Slide 18: Tech-Based Products Have Much Higher Margins

    TECH-BASED PRODUCTS HAVE MUCH HIGHER MARGINS Q1 2014 Q1 2013 Technology Voice / Corporate / Technology Voice / Corporate / - Based Hybrid Other Total - Based Hybrid Other Total Revenue $24 $413 $9 $446 $46 $392 $12 $450 Pre-Tax DE $12 $61 ($18) $56 $25 $41 ($21) $45 Pre-tax DE Margin 53% 15% NMF 13%

  19. Slide 19: Real Estate Overview

    REAL ESTATE OVERVIEW

  20. Slide 20: Business Overview: Real Estate Services

    BUSINESS OVERVIEW: REAL ESTATE SERVICES Example of Products % of Q1 2014 Total Distributable Earnings Revenue  Leasing Advisory  Capital Markets (Includes: Sales, Debt & Equity Raising)  Global Corporate Services  Retail and Industrial Services  Property & Facilities Management  Consulting  P

  21. Slide 21: Real Estate Leasing Trends Continue to Gain Momentum

    REAL ESTATE LEASING TRENDS CONTINUE TO GAIN MOMENTUM U.S. Office Market Leasing First Quarter Performance Net Absorption and Vacancy Rates Improve 30 17% SF Completed 20 16% (Left Hand Axis) Million Square Feet SF Absorbed (Left Hand Axis) 10 15% % Vacant (Right Hand Axis) 0 14% -10 13% '10 '11 '12

  22. Slide 22: NGKF Brokerage Revenue Growth Outpaces Industry

    NGKF BROKERAGE REVENUE GROWTH OUTPACES INDUSTRY Year-over-Year Change Across Commercial Real Estate Sector 0% 10% 20% 30% 40% 50% - SF Absorption (net) 15% Investment Sales 15% NGKF Brokerage Revenues 47% Date • NGKF Capital Markets includes investment sales brokerage and broking of mortgages and ot

  23. Slide 23: Outlook

    Tr bgc OUTLOOK

  24. Slide 24: Second Quarter 2014 Outlook

    SECOND QUARTER 2014 OUTLOOK COMPARED WITH SECOND QUARTER 2013 RESULTS  BGC revenues for April, including NGKF, but excluding eSpeed are tracking down around 2 percent compared with a year earlier.  The Company expects to generate distributable earnings revenues of between approximately $420 millio

  25. Slide 25: Appendix

    Tr bgc APPENDIX

  26. Slide 26: BGC Partners Compensation Ratio

    BGC PARTNERS COMPENSATION RATIO $1,200 100% $1,091.2 $1,036.8 90% $1,000 80% $793.5 70% $800 $749.8 61.7% 61.8% 59.2% 56.2% 53.8% ($ millions) 60% $600 50% 40% $400 30% $275.4 20% $200 10% $0 0% 2010 2011 2012 2013 1Q'14 Compensation and Employee Benefits Compensation and Employee Benefits as % of T

  27. Slide 27: Non-Compensation Expenses & Pre-Tax Margin

    NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 50% 40% 30.0% 30.2% 29.6% 28.0% 30% 25.6% 20% 16.1% 13.8% 11.2% 12.6% 10.3% 10% 0% FY 2010 FY 2011 FY 2012 FY 2013 1Q’14 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date  Non-comp expenses were 25.6% of di

  28. Slide 28: Monthly Revenue Excluding Real Estate Services

    MONTHLY REVENUE EXCLUDING REAL ESTATE SERVICES ($MM) BGC Monthly Distributable Earnings Revenues ($MM) Date Notes: Figures from before 3Q2013 include eSpeed revenues. Monthly revenue prior to 2011 is available in previous earnings presentations at www.ir.bgcpartners.com 28

  29. Slide 29: BGC's Economic Ownership as of 3/31/2014

    BGC’S ECONOMIC OWNERSHIP AS OF 3/31/2014 Employees, Executives, & Directors 34% Public 43% Cantor 23% 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 shares

  30. Slide 30: Average Exchange Rates

    AVERAGE EXCHANGE RATES Average Q1 2014 Q1 2013 April 1 - April 28, 2014 April 1 - April 28, 2013 US Dollar 1 1 1 1 British Pound 1.655 1.554 1.673 1.529 Euro 1.370 1.321 1.380 1.301 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.788 0.808 0.797 0.808 Japanese Yen* 102.840 92.210 102.510

  31. Slide 31: Distributable Earnings

    DISTRIBUTABLE EARNINGS 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 financial

  32. Slide 32: Adjusted EBITDA

    ADJUSTED EBITDA 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;  Fixed asset depreciatio

  33. Slide 33: 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 2014 Q1 2013 GAAP Income from continuing operations before income taxes $ 11,246 $ 13,697 Add back: Employee loan amortization 7,090 9,4

  34. Slide 34: 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 2014 Q1 2013 GAAP income before income taxes $ 11,246 $ 13,697 Pre-tax adjustments: Dividend equivalents to RS

  35. Slide 35: Reconciliation of Revenues Under GAAP and Distributable Earnings

    RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q1 2014 Q1 2013 GAAP Revenue $ 440,291 $ 444,969 Adjustments: NASDAQ OMX Earn-out Revenue (1) 11,612 - Other revenue with re

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