Bgc Group, Inc. · NASDAQ:BGC

Bgc — BGC Partners — Q2 2014 Earnings Presentation

29 slides from Bgc's earnings presentation, 2014

  1. Slide 1: BGC Partners, Inc. Q2 2014 Earnings Presentation

    BGC PARTNERS, INC. Q2 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 Q2 2014 Results Compared to Q2 2013

    SELECT Q2 2014 RESULTS COMPARED TO Q2 2013 Highlights of Consolidated Results Change Q2 2014 Q2 2013 ($ millions, except per share data) (%) Revenues for distributable earnings $430.3 $471.1 (8.7) Pre-tax distributable earnings before non-controlling interest 53.0 53.8 (1.6) in subsidiaries and taxe

  5. Slide 5: Q2 2014 Global Revenue Breakdown

    Q2 2014 GLOBAL REVENUE BREAKDOWN  Americas revenue, ex. eSpeed, up 2% Y/Y (incl. eSpeed, Americas revenue down 7%)  Europe, Middle East & Africa revenue down 8% Y/Y  Asia Pacific revenue down 23% Y/Y Q2 2014 Revenues APAC 9% Hong London Kong EMEA 32% Americas 60% New York Paris Date Singapore  I

  6. Slide 6: Q2 2014 Segment Data (Distributable Earnings Basis)

    Q2 2014 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) Q2 2014 Revenues Corporate Pre‐tax Pre‐tax 2% Q2 2014 Revenues Earnings Margin (In USD millions) Financial $271.5 $49.9 18.4% Real Estate $149.1 $15.5 10.4% Real Estate Corporate $9.7 ($12.3) NMF 35% Financial Pre‐tax Pre‐tax Services 63% Q2 2013 R

  7. Slide 7: BGC's Front Office Overview

    BGC’S FRONT OFFICE OVERVIEW Front Office Headcount Front Office Productivity (ex. eSpeed) $800 Y-o-Y change: (3.5%) 2,485 2,500 2,432 2,385 2,385 2,398 $603 $601 $600 (Front Office Employees) 2,000 898 887 884 888 879 1,500 ($ thousands) $400 1,000 1,587 1,545 1,501 1,497 1,519 500 $200 $160 $155 0

  8. Slide 8: Financial Services Overview

    FINANCIAL SERVICES OVERVIEW

  9. Slide 9: Financial Services Revenue Breakout (ex eSpeed)

    FINANCIAL SERVICES REVENUE BREAKOUT (EX ESPEED) Revenues By Asset Class FS Revenue Composition1 $293,452 % Change $271,500 1,970 Fully Market data, +661% 8.3% 7.5% Electronic Software solutions 40,692 and Other1 14,984 Equities and 43,637 +7% Other2 60,692 Foreign 49,279 -19% Exchange 67,343 Voice 5

  10. Slide 10: Q2 2014 Financial Services Summary

    Q2 2014 FINANCIAL SERVICES SUMMARY BGC FS Highlights  Energy & Commodities continued to show strong growth, up 72% year-over-year  Fully electronic Credit notional volumes up 113%; revenues up 29% year-over-year  Fully electronic Spot FX notional volumes up 55%; revenues up 25% year-over-year  R

  11. Slide 11: Industry Volumes and Volatility Remained Challenging in 2Q'14

    INDUSTRY VOLUMES AND VOLATILITY REMAINED CHALLENGING IN 2Q’14 Year-over-Year Change in Capital Markets Activity (ADV, except credit derivatives outstanding) Year-over-Year Change in Avg. Daily Volatility - 43% EBS (FX) -35% FX (CVIX) - 29% MBS - 25.0% Energy (ICE) - 22% European Eqty. Derivatives -2

  12. Slide 12: BGC's Retained Fully Electronic Brokerage Metrics

    BGC’S RETAINED FULLY ELECTRONIC BROKERAGE METRICS Retained Fully Electronic Brokerage Volumes1 Retained Technology Revenues2 $25 $4,000 $23.5 $3,488.7 $22.6 $3,500 $21.9 $3,116.3 $3,000 $2,755.1 $20 $2,416.3 $2,500 $18.2 $2,167.0 $17.8 ($ millions) ($ billions) $2,000 $1,500 $15 $1,000 $500 $0 $10 Q

  13. Slide 13: Fully Electronic Products Continue to Have Much Higher Margins

    FULLY ELECTRONIC PRODUCTS CONTINUE TO HAVE MUCH HIGHER MARGINS (INCLUDES ESPEED) Q2 2014 Q2 2013 Fully Voice / Corporate / Fully Voice / Corporate / Electronic Hybrid Other Total Electronic Hybrid Other Total Revenue $23 $398 $10 $430 $45 $415 $11 $471 Pre-Tax DE $12 $53 ($13) $53 $23 $44 ($13) $54

  14. Slide 14: Real Estate Overview

    REAL ESTATE OVERVIEW

  15. Slide 15: Business Overview: Real Estate Services

    BUSINESS OVERVIEW: REAL ESTATE SERVICES NGKF Highlights % of Q2 2014 Total Distributable Earnings Revenue  Real Estate Services pre-tax distributable earnings increased by 39% as compared to last year  Pre-tax margins up 270 bps year-over- year  Brokerage revenues up 6% year-over-year  Improved

  16. Slide 16: Newmark Grubb Knight Frank 2Q14 Business Highlights

    NEWMARK GRUBB KNIGHT FRANK 2Q14 BUSINESS HIGHLIGHTS NEW OFFICES  Expands into South America, adding 50 senior-level advisors in Argentina, Brazil, Chile, Colombia and Peru  Opens an office in Raleigh, N.C., well known as a hub for life sciences, pharmaceutical, technology and research and developm

  17. Slide 17: Real Estate Leasing Trends Continue to Gain Momentum

    REAL ESTATE LEASING TRENDS CONTINUE TO GAIN MOMENTUM U.S. Office Market Second Quarter Performance (preliminary) 30 18% 20 17% SF Completed Million Sq/Ft SF Absorbed 10 16% % Vacant 0 15% -10 14% '10 '11 '12 '13 '14 Source: CoStar, NGKF Date  13th consecutive quarter of positive net absorption in U

  18. Slide 18: Outlook

    Tr bgc OUTLOOK

  19. Slide 19: Third Quarter 2014 Outlook Compared with Third Quarter 2013 Results

    THIRD QUARTER 2014 OUTLOOK COMPARED WITH THIRD QUARTER 2013 RESULTS  The Company expects distributable earnings revenues to be between approximately $410 million and $435 million compared with $414.4 million a year earlier.  BGC Partners expects pre-tax distributable earnings to increase by betwee

  20. Slide 20: Appendix

    Tr bgc APPENDIX

  21. Slide 21: 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 $749.8 61.7% 61.4% 59.2% 56.2% 53.8% ($ millions) 60% $600 50% 40% $538.3 $400 30% 20% $200 10% $0 0% 2010 2011 2012 2013 1H 2014 Compensation and Employee Benefits Compensation and Employee Benefits as % of

  22. Slide 22: Non-Compensation Expenses & Pre-Tax Margin

    NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 50% 40% 29.6% 30% 30.0% 30.2% 26.1% 28.0% 20% 16.1% 13.8% 12.5% 11.2% 10.3% 10% 0% FY 2010 FY 2011 FY 2012 FY 2013 1H 2014 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date  Non-comp expenses were 26.6% of

  23. Slide 23: BGC's Economic Ownership as of 6/30/2014

    BGC’S ECONOMIC OWNERSHIP AS OF 6/30/2014 Employees, Executives, & Directors 33% Public Cantor 44% 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

  24. Slide 24: Average Exchange Rates

    AVERAGE EXCHANGE RATES Average Q2 2014 Q2 2013 July 1 - July 30, 2014 July 1 - July 30, 2013 US Dollar 1 1 1 1 British Pound 1.683 1.536 1.709 1.517 Euro 1.372 1.306 1.356 1.307 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.798 0.801 0.805 0.789 Japanese Yen* 102.130 98.770 101.630 99.

  25. Slide 25: 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

  26. Slide 26: 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 depreciation

  27. Slide 27: 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) Q2 2014 Q2 2013 GAAP Income from continuing operations before income taxes $ 14,915 $ 208,251 Add back: Employee loan amortization 7,194 10

  28. Slide 28: 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) Q2 2014 Q2 2013 GAAP income before income taxes $ 14,915 $ 208,251 Pre-tax adjustments: Non-cash losses related t

  29. Slide 29: 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) Q2 2014 Q2 2013 GAAP Revenue $ 417,581 $ 1,193,167 Adjustments: Gain on divestiture - (723,147) NASDAQ OMX Earn-out Revenue

BGC Partners — Q2 2014 Earnings Presentation on 6ix