Virtu Financial, Inc. · NYSE:VIRT
Virtu Financial — Investor Presentation (March 2019)
30 slides from Virtu Financial's investor presentation, Mar 13, 2019
Slide 1: Cautionary Statement Regarding Forward Looking Statements
Disclaimer Cautionary Statement Regarding Forward Looking Statements This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s” or “our”) busin
Slide 2: Virtu Financial: Transparent trading solutions meet advanced technology
Virtu Financial Transparent trading solutions meet advanced technology As a leading financial technology firm, we leverage cutting-edge technology to deliver liquidity to global markets as well as innovative, transparent trading solutions and industry standard-setting analytics tools to our clients.
Slide 3: Global Footprint
Global Footprint Extend your reach • Local support teams in New York, Toronto, London and Hong Kong Client service and consulting teams provide first-level support Data processing and product management provide second- level support and expertise • • 60+ Accessible global markets 8 Client trading se
Slide 4: Complete Suite of Agency Solutions
Complete Suite of Agency Solutions Reducing the end-to-end cost of implementing investments Execution Services Workflow Technology Liquidity Sourcing Trading Analytics Global algo suite Triton EMS Broker-neutral execution management (OMS, Compliance) POSIT1 ATS/MTF (36 countries) Transaction Cost An
Slide 5: End-to-End Technology-Enabled Trading Solutions
End-to-End Technology-Enabled Trading Solutions Execution Services Improvements you can quantify Workflow Technology Integrated, broker-neutral trading tools delivered across the globe High-touch, electronic, liquidity and portfolio trading teams Adding value at every stage of the investment process
Slide 6: Transparent Trading Solutions Meet Advanced Technology
Transparent Trading Solutions Meet Advanced Technology Liquidity Sourcing Deep quality liquidity Trading Analytics Know more, trade smarter POSIT Alert Our global and anonymous block indications network, delivering block liquidity each day to subscribers’ desktops in 37 countries. Buy-side traders u
Slide 7: Market Making Solutions
Market Making Solutions Client Market Making At our core we are market-making experts Customized Liquidity Liquidity to fit your needs Uniquely qualified Our global footprint combined with our deep market making expertise uniquely positions us to provide institutional and retail clients with the bes
Slide 8: Virtu Financial: Transparency in Practice
VIRTU FINANCIAL Transparency in Practice 9 March 19
Slide 9: Virtu Enhanced TCA and Transparency Report
Virtu Enhanced TCA and Transparency Report Empower your best execution We believe that transparency helps market participants make better, more informed trading decisions while supporting market efficiency and cost management. Our goal is simple—employ cutting-edge technology to deliver deep and dif
Slide 10: Virtu Enhanced TCA and Transparency Report
Virtu Enhanced TCA and Transparency Report View fills by execution price (at or inside the NBBO), liquidity flag (provide vs take), and venue type (lit vs. dark) Detail by execution price and market capitalization, highlights Virtu’s proprietary order routing logic which adjusts based on a stock’s c
Slide 11: Virtu Enhanced TCA and Transparency Report
Virtu Enhanced TCA and Transparency Report Detailed metrics on child level order intention with enhanced transparency on why an order was routed and the venue that was selected Compare child level order intention usage across algo strategies and stock characteristics View post-fill price move by int
Slide 12: Algo Scorecard
Algo Scorecard The Scorecard provides traders with an easy to understand, detailed algo summary for in-depth execution performance exploration: • Convenient, on-line access when you need it Available for all Virtu algos: Fan, Oasis, Covert, Catch and Opportunistic strategies Access comprehensive met
Slide 13: Virtu Acquires ITG
Virtu Acquires ITG Acquisition combines Virtu’s best-in-class trading and world-class technology platform with ITG’s customer franchises 14 March 19
Slide 14: Combination of ITG & Virtu Creates Global, Scaled Leader
Combination of ITG & Virtu Creates Global, Scaled Leader in Agency Solutions and Market Making ITG’s Leading Suite of Agency Offerings to Benefit from Virtu’s Technology earnings volatility streams sources, and the addition of ITG’s Workflow Technology offering bolsters Virtu’s ability to Operating
Slide 15: Virtu's & ITG's Capabilities are Highly Complementary
Virtu’s & ITG’s Business and Technological Capabilities are Highly Complementary Combination of Virtu’s continuously improving trading technology and dense liquidity with ITG’s global client reach and industry-leading products creates a truly one-of-a-kind leader in the marketplace Technology Effici
Slide 16: Acquisition Provides Significant Benefits
Acquisition Provides Significant Benefits Clients benefit from Virtu’s single R&D plant and common infrastructure that supports its scaled, multi-asset class, global trading platform ITG’s Workflow Technology and TCA products, enhanced by Virtu’s technological expertise, will continue to provide cli
Slide 17: Safeguards to Protect Client Information
Safeguards to Protect Client Information Physical and logical safeguards of client information Virtu has established policies and procedures designed to safeguard sensitive client information Logical security • Technology access controls to segregate sensitive information • Review of approved person
Slide 18: Acquisition Creates a Diverse and Stable Revenue Base
Acquisition Creates a Diverse and Stable Revenue Base About 38% of Virtu’s Adjusted Net Trading Income Will Come from Commissions and Fees 4% Tech and Execution 9% Tech and Execution 100% Tech and Execution 38% Tech and Execution 18% 9% 40% 12% 4% 28% 9% 9% + = 22% 6% 7% 3% 32% 69% 63% 43% 25% 96% M
Slide 19: Terms, Financing and Leadership
Combination of ITG & Virtu Creates Global, Scaled Leader in Agency Solutions and Market Making ITG’s Leading Suite of Agency Offerings to Benefit from Virtu’s Technology senior term loan • Total leverage 2.5x based full-year 2018– target leverage 2.0x to 2.25x by year-end 2020 Leadership regional le
Slide 20: Significant Expense & Capital Synergies
Significant Expense & Capital Synergies Combination Reduces Operating Expense and Releases Excess Capital Virtu anticipates $123 million of annual net cost savings and $125 million of capital synergies • Consolidation of ITG’s trading applications, execution tools, and post-trade operations to Virtu
Slide 21: Highly Accretive to Virtu
Highly Accretive to Virtu ¹ Represents Consensus Adjusted Net Income estimates, per Bloomberg ² Assumes a 23% effective tax rate 3 Net cost savings assumed fully phased in; excludes savings related to stock-based compensation 22 March 19 ($mm) ITG standalone net income – FY 2020 public consensus1 ~$
Slide 22: Revenue Opportunities from the Combination
Combination of ITG & Virtu Creates Global, Scaled Leader in Agency Solutions and Market Making ITG’s Leading Suite of Agency Offerings to Benefit from Virtu’s Technology • Increased order volumes provide additional opportunities to cross natural buyers and sellers opportunities • Combination of Virt
Slide 23: Identified Capital Release and Meaningful Synergies
Identified Capital Release and Meaningful Synergies Anticipated $125 million in capital releases • To be obtained by combining and rationalizing legal entities and regions, consolidating excess capital buffers while retaining significant capital Enhanced EBITDA and Free Cash Flow • Post-integration
Slide 24: Pro-Forma Leverage
Pro-Forma Leverage Current Pro Forma ($mm) Current Debt Amount FY 2018 Adjusted EBITDA $931 620 Pro Forma Debt Amount FY 2018 Adjusted EBITDA after Synergies $2,031 829 1Q 2018 Adjusted EBITDA 2Q 2018 Adjusted EBITDA 3Q 2018 Adjusted EBITDA 4Q 2018 Adjusted EBITDA 224 112 88 195 Pro Forma Adjusted E
Slide 25: Virtu Has Deployed Capital Via Acquisitions to Generate Superior Returns
Virtu Has Deployed Capital Via Acquisitions to Generate Superior Returns KCG ($mm) Acquisition Price (Equity Value) $1,400 Capital Synergies Asset Sale Proceeds After Tax 455 295 Capital Return $750 Cost Savings (Pre Tax) 359 Cost Savings (After Tax) 276 Incremental Equity 750 Cost of Equity (Ke=10%
Slide 26: Appendix
VIRTU FINANCIAL Appendix 27 March 19
Slide 27: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation Trading income, net Commissions, net and technology services Less: Brokerage, exchange and clearance fees, net Interest and dividends, net 95 - 83 - 99 - - 6 (39) (4) (35) (7) (30) (4) - - Trading income, net Commissions, net and technology services Less: B
Slide 28: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation Trading income, net Commissions, net and technology services Less: Brokerage, exchange and clearance fees, net Payment for order flow Interest and dividends, net 294 96 252 100 218 60 286 67 406 54 259 46 236 39 366 46 (126) (17) (18) (122) (15) (21) (76) (
Slide 29: Disclaimer
Disclaimer © 2019 Virtu Financial, Inc. All rights reserved. Not to be reproduced or retransmitted without permission. ITG, Triton, ITG Net, RFQ-hub, POSIT, POSIT Alert, Best Market Server are registered trademarks and Prism, Global Peer, Algo Wheel, Single-Ticket Clearing and Trade Ops are trademar
Slide 30: Disclaimer
Disclaimer G (© 2019 Vitu Financial, Inc. Al rights reserved. Not tobe reproduced or etransmited without permission. TG, Titon, ITG Net, RFQ-hub, POSIT, POSIT Alert, ‘Best Market Server are registered trademarks and Prism, Global Peer, Algo Wheel, Single-Ticket Clearing and Trade Ops are trademarks