Virtu Financial, Inc. · NYSE:VIRT
Virtu Financial — Debt Investor Presentation (January 2022)
33 slides from Virtu Financial's debt investor presentation, Jan 4, 2022
Slide 1: Virtu Financial Lender Presentation January 2022
Virtu Financial Lender Presentation January 2022
Slide 2: Speakers
Speakers 2 Doug Cifu Chief Executive Officer • Co-founded Virtu in 2008 • Previously was a partner at the international law firm Paul, Weiss, Rifkind, Wharton & Garrison, where he served as a member of the Management Committee, Deputy Chair of the Corporate Department and Co-Head of the Private Equi
Slide 3: Agenda
Agenda 3 2 Business Overview 3 Business Update 5 Appendix Questions & Answers 4 1 Transaction Overview
Slide 4: Transaction Overview
VIRTU FINANCIAL Transaction Overview
Slide 5: Executive Summary
Executive Summary Virtu Financial, Inc. (“Virtu” or the “Company”) is a leading technology-driven market maker and agency execution provider with superior scale across 235+ venues, 36 countries, and 25,000+ securities and other financial instruments Publically traded on Nasdaq (NASDAQ: VIRT) The Com
Slide 6: Sources & Uses / Pro Forma Capitalization
Sources & Uses / Pro Forma Capitalization Market capitalization3: $5,220mm Sources ($mm) Uses ($mm) New Term Loan B $1,800 Refinance existing Term Loan B $1,600 New $250mm Revolving credit facility - Refinance existing $50mm Revolving credit facility - Share repurchases and general corporate purpose
Slide 7: Summary Terms and Conditions
Borrower: VFH Parent LLC (the “Borrower”) Guarantors: Virtu Financial LLC and certain of its domestic subsidiaries (same as existing) Existing corporate ratings: Ba2 / B+ / BB- Facility: First Lien Term Loan Amount: $1,800mm Tenor: 7 years Use of proceeds: Refinance existing 1st lien term loan, fund
Slide 8: Term Loan Execution Timeline
Term Loan Execution Timeline Week of: Event: January 3rd Host term loan B lender call on January 4th (12:00pm NYT) January 10th Commitments due on term loan B from lenders on January 11th (5:00pm NYT) Thereafter Closing and funding Key transaction dates January 2022 MTWTF 3 4 5 6 7 10 11 12 13 14 17
Slide 9: Business Overview
VIRTU FINANCIAL Business Overview
Slide 10: Key Credit Highlights
10 Key Credit Highlights Proven, Talented and Aligned Management Team Broad Suite of Industry Leading Products Deeply Embedded in Client Workflows Scaled Service Provider to the Global Financial Markets World-Class Real-Time Risk Management Successful Expansion into Agency, Workflow and Analytics Bu
Slide 11: Virtu's Global Offerings
Public Operating Segments Market Making Execution Services Trading Solutions Financial Technology Products End-to-end world class product suite Customer Market Making Non-Customer Market Making Brokerage Services Liquidity Sourcing Broker Neutral Workflow Analytics Multi-Asset Class Revenue Drivers
Slide 12: Virtu has a Global, Diversified Client Franchise
Virtu has a Global, Diversified Client Franchise 12 Note: Virtu services over 30% of “Rule 605” retail order flow in the U.S., including flow from broker dealers, asset managers, RIAs and banks Virtu’s customer base spans global retail, RIA and institutional firms across the buy-side and sell-side
Slide 13: Business Update
VIRTU FINANCIAL Business Update
Slide 14: Third Quarter Highlights
Third Quarter Highlights • Strong Market Making performance – results increased 5% compared to 8% decline in U.S. Equity TCV o Realized volatility roughly flat QoQ, which is 10% below 2019 pre-pandemic average o U.S. Equity TCV 11% below FY 2020 average • Execution Services outperformed softening en
Slide 15: Key Financial Metrics
15 Key Financial Metrics 2Q 2021 Total Adjusted Net Trading Income2 $975 $2,271 $784 $669 $362 $456 $728 $342 $354 Daily Average Adj. NTI 2 $3.9 $9.0 $12.7 $10.6 $5.7 $7.1 $11.9 $5.4 $5.5 Market Making Adj. NTI2 $605 $1,782 $652 $552 $257 $321 $575 $232 $249 Market Making Daily Average Adj. NTI 2 $2
Slide 16: Major Market Metrics
Major Market Metrics 16 While 3Q 2021 exhibited higher volatility but lower volumes QoQ, 4Q 2021 exhibited a strong increase in both volumes and volatility QoQ
Slide 17: Organic Business Growth
Organic Business Growth • Options Market Making: Growing options business faced with flat market volumes and a decline in realized volatility; continues to demonstrate relative strong performance as we increase symbol and venue coverage and invest in growing the team. • Crypto: Dedicated team tradin
Slide 18: Consistent Earnings and Cash Flow
Consistent Earnings and Cash Flow 18 • Disciplined expense management results in consistently strong EBITDA margin through the cycle, with additional upside when the market backdrop improves 3Q21 EBITDA margin1 of 60% up from 58% in 2Q21 • Realized synergies from the KCG and ITG acquisitions in exce
Slide 19: Virtu Has Multiple Levers to Drive Growth
19 Virtu Has Multiple Levers to Drive Growth Organic Business Growth Virtu Through- the-Cycle Earnings Pro forma results for Virtu + KCG + ITG result in through- the-cycle Adj. NTI per day of ~$5.5M annually -- before the benefits of growth initiatives and integration Organic growth initiatives, tog
Slide 20: Analyst Coverage Q4 2021
20 Analyst Coverage Q4 20211 Firm Daily Average Adj. NTI 4Q 2021E (mm) Citi Research 5.32 Compass Point 5.62 Evercore 5.75 Goldman Sachs 5.40 Jefferies 5.70 JP Morgan 4.81 Morgan Stanley 5.20 Piper Sandler 5.55 Rosenblatt 5.34 UBS 5.23 Analyst Mean $5.39 Q4 results are anticipated to reflect the ove
Slide 21: Questions and Answers
VIRTU FINANCIAL Questions and Answers
Slide 22: Appendix
VIRTU FINANCIAL Appendix
Slide 23: Income Statement
Income Statement 23 See endnotes at end of this supplement
Slide 24: Adjusted EBITDA & Normalized Adjusted EPS
Adjusted Net Trading Income $975 $784 $669 $362 $456 $2,271 $724 Adjusted EBITDA & Normalized Adjusted EPS 24 See endnotes at end of this supplement Adj. EBITDA / Normalized Adj. EPS ($M) FY 2018 FY 2019 1 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 1Q 2021 2Q 2021 3Q 2021 Income (Loss) Before income ta
Slide 25: Debt Capitalization
Debt Capitalization 25 See endnotes at end of this supplement Debt Structure at September 30, 2021 Debt Description ($M) Maturity Rate Balance First Lien Debt - Floating Mar 2026 L + 3.00% $75 First Lien Debt - Fixed with 4.565% swap3 Mar 2026 4.565% $1,000 First Lien Debt - Fixed with 4.465% swap4
Slide 26: Balance Sheet
26 Assets ($M) 9/30/2021 Liabilities and Equity ($M) 9/30/2021 Cash and cash equivalents 684 Short-term borrowings 313 Cash and securities segregated under regulations and other 70 Securities loaned 1,017 Securities borrowed 1,278 Securities sold under agreement to repurchase 583 Securities purchase
Slide 27: GAAP Income Statement
27 GAAP Income Statement Income Statement ($mm) FY 2018 FY 20191 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net $1,267 $912 $802 $744 $441 $505 $2,493 $813 $385 $394 Commissions, net and technology services 184 499 171 148 134 148 601 192 143 136 Interest and div
Slide 28: Adjusted Net Trading Income Reconciliation: Operating Segments
28 Adjusted Net Trading Income Reconciliation Operating Segments 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net 802 744 441 505 813 385 394 Commissions, net and technology services 171 148 134 148 192 143 136 Brokerage, exchange, clearance fees and payment for order flow
Slide 29: Adjusted Net Trading Income Reconciliation: Organic Growth Initiatives
29 Adjusted Net Trading Income Reconciliation Organic Growth Initiatives 2018 2019 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net 36 77 246 62 35 28 Commissions, net and technology services 7 11 23 13 7 7 Brokerage, exchange, clearance fees and payment for order flow, net (2) (9) (88) (12) (7) (7)
Slide 30: Adjusted Operating Expense Reconciliation
30 Adjusted Operating Expense Reconciliation See endnotes at end of this supplement Adjusted Operating Expense Reconciliation ($M) 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 FY 2019 1 FY 2020 Employee compensation and payroll taxes $170 $121 $36 $66 $105 $84 $85 $384 $394 Operations and
Slide 31: Disclaimer
Disclaimer 31 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”, the “Compan
Slide 32: End Notes
32 End Notes Slide 5 Executive Summary 1. LTM 3Q 2021 Adj. Net Trading Income per day calculated using 252 trading days. 2. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations availab
Slide 33: End Notes—continued
33 End Notes—continued Slide 19 Virtu Has Multiple Levers to Drive Growth 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/
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