Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q2 2015 Earnings Presentation
38 slides from Bgc's earnings presentation, July 2015
Slide 1: Earnings Presentation Q2 2015
1 BGC PARTNERS, INC. Earnings Presentation Q2 2015 Date NASDAQ: BGCP
Slide 2: Disclaimer
DISCLAIMER 2 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 G
Slide 3: General Overview
BGC PARTNERS 3 GENERAL OVERVIEW Date
Slide 4: Select Q2 2015 Results Compared to Q2 2014
SELECT Q2 2015 RESULTS COMPARED TO Q2 2014 4 Highlights of Consolidated Results (USD millions, except per share data) Q2 2015 Q2 2014 Change (%) Revenues for distributable earnings $684.6 $430.3 59.1 Pre-tax distributable earnings before non-controlling interest in subsidiaries and taxes 77.5 53.0 4
Slide 5: Global Revenue Breakdown
GLOBAL REVENUE BREAKDOWN 5 Q2 2015 Revenues APAC 9% Americas 60% EMEA 32% Americas revenue up 58% yr/yr Date Europe, Middle East & Africa revenue up 61% yr/yr Asia Pacific revenue up 59% yr/yr Strengthening of the U.S. dollar reduced non-U.S. Financial Services revenues by more than $27 mill
Slide 6: Q2 2015 Segment Data (Distributable Earnings Basis)
Q2 2015 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 6 (In USD millions) Q2 2015 REVENUES Q2 2015 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $435.0 $68.4 15.7% 1% Real Estate $239.7 $29.9 12.5% Corporate $9.8 ($20.8) NMF Real Estate 35% Financial (In USD millions) Services 64% Q2 20
Slide 7: BGC's Business at a Glance
BGC'S BUSINESS SHOWS STRONG REVENUE DIVERSITY 7 Corporate 1% Real Estate Management & Other 7% BGC’s Business at a Glance BGC maintains a diverse revenue Rates 19% base with no one asset class or Real Estate Capital Markets product group generating more 9% Corporate than 20% of total revenues 1% R
Slide 8: BGC's Front Office Productivity Growth
BGC’S FRONT OFFICE PRODUCTIVITY GROWTH 8 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY ($ Thousands) 3,872 3,851 2,863 1,293 1,308 2,755 2,398 1,135 1,244 879 619 636 2,579 2,543 -1% 1,519 1,620 1,619 155 154 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q2 2014 Q2 2015 FY 2013 FY 2014 Financial Broker
Slide 9: Financial Services
9 Overview FINANCIAL SERVICES Date
Slide 10: Q2 2015 Financial Services Summary
Q2 2015 FINANCIAL SERVICES SUMMARY 10 BGC Financial Services Segment Highlights Quarterly Drivers Revenues up over 60% Acquisitions of GFI, R.P. Martin, and Remate Pre-tax profit up over 37% Increased activity across FX, energy, and commodities; reflected strong demand from Fully electroni
Slide 11: Industry Volumes Mixed; Volatility Up
INDUSTRY VOLUMES MIXED; VOLATILITY UP 11 Yr/Yr Change in Capital Markets Activity Yr/Yr Change in Average Daily Volatility (ADV, except Eurex and credit derivatives outstanding) -28% Dealer-Dealer CDS Outstanding U.S. Equities (VIX) 8% -24% Interest Rate Futures (ICE) -17% Equity Derivatives (ICE) U
Slide 12: Financial Services Revenue Breakout
FINANCIAL SERVICES REVENUE BREAKOUT 12 FINANCIAL SERVICES REVENUE COMPOSITION % Change $435,041 +60% Trayport 17,822 NMF 25,459 +70% 54,001 +77% $271,500 54,815 +317% Market data, software and other1 14,984 Equity & Other 30,483 74,194 +26% Energy & commodities2 13,154 Credit 58,923 82,404 +67% Fore
Slide 13: BGC's Fully Electronic (FENICS) Growth (Excluding Trayport)
BGC’S FULLY ELECTRONIC (FENICS) GROWTH (EXCLUDING TRAYPORT) 13 Fully Electronic Brokerage Volumes Fully Electronic Revenues1 ($ Billions) ($ Millions) $63.7 $5,886.1 $5,642.6 $4,909.3 $40.8 $3,919.4 $3,538.3 $27.9 $25.1 $22.6 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2
Slide 14: BGC's Electronic Businesses Compare Favorably to Other Highly Valuable Electronic Platforms
BGC’S ELECTRONIC BUSINESSES COMPARE FAVORABLY TO OTHER HIGHLY VALUABLE ELECTRONIC PLATFORMS 14 Recent Sale / Current Market Cap of Fully Electronic Peers MarketAxess 360T Announced Sale (2015) Market Cap $3,656mm3 KCG HotSpot • FY14 Revenues: $286mm Sold (2015): $435mm $795mm / (€725mm) • MR Qtr. Vo
Slide 15: Strong Growth Seen in Fully Electronic Business
STRONG GROWTH SEEN IN FULLY ELECTRONIC BUSINESS 15 Q2 2015 Yr/Yr Change Fully Voice / Hybrid Corporate / Fully Voice / Hybrid Corporate / 1 1 Electronic / Other Real Estate Other Total Electronic / Other Real Estate Other Total Revenue $63.7 $371.4 $239.7 $9.8 $684.6 182.3% 49.2% 60.8% 1.0% 59.1% Pr
Slide 16: Recent Developments Regarding the BGC / GFI Merger
RECENT DEVELOPMENTS REGARDING THE BGC / GFI MERGER 16 Following the issuance of new GFI shares in Q1 2015, BGC now owns approximately 67% of GFI’s outstanding common stock; full merger expected by Q1 2016 Numerous serious parties are participating in the Trayport sales process at a valuation tha
Slide 17: Expected GFI Cost Synergies Update
EXPECTED GFI COST SYNERGIES UPDATE 17 Planned GFI Integration Cost Savings / Synergies: Network infrastructure Telephone lines Disaster recovery Vendors Interest expense Data centers Duplicative real estate Year 1 Other support expenses Year 2 Date $50 Million $90 Million (annualized
Slide 18: Volumes Generally Up; Volatility Up From a Year Ago
VOLUMES GENERALLY UP; VOLATILITY UP FROM A YEAR AGO 18 Q3 2015TD Volume Change Y/Y Q3 2015TD Implied Volatility Change Y/Y 07/01/2015 – 07/24/2015 07/01/2015 – 07/24/2015 - 27% U.S. Agency (Primary Dealer) - - 24% ICE Equity Derivatives U.S. Equities (VIX) 26% -6% U.S. Corp. Bonds (Primary Dealer) U
Slide 19: Real Estate
Newmark Grubb Knight Frank Overview REAL ESTATE SST
Slide 20: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES 20 NGKF Highlights Q2 2015 Real Estate Segment Breakdown Q2 2015 Real Estate Services revenues increased by 61% as compared to last year Real estate Management Capital markets revenues increased over 193% capital markets services & 26% from Q2 2014 other r
Slide 21: NGKF Brokerage Revenues Outpace Industry Trends
NGKF BROKERAGE REVENUES OUTPACE INDUSTRY TRENDS 21 NGKF vs. Industry Trends 75% 30% 23% +/- 3% Leasing Activity Sales Volumes U.S. CMBS Issuance NGKF Brokerage (TTM) Revenue Source: Commercial Mortgage Alert, Moody’s RCA, and NGKF Research Date NGKF brokerage revenue growth continued to outpace in
Slide 22: Vacancy Rates Continue Trend Down Signaling Strong Demand for Commercial Real Estate
VACANCY RATES CONTINUE TREND DOWN SIGNALING STRONG DEMAND FOR COMMERCIAL REAL ESTATE 22 18.0% 16.0% 14.0% Office 12.0% 10.0% 8.0% Industrial 6.0% Retail Multifamily 4.0% 2.0% Source: CoStar, REIS, and NGKF Research 0.0% Date 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 Vacancy rates cont
Slide 23: NGKF Announced Acquisitions in Q2 2015
NGKF ANNOUNCED ACQUISITIONS IN Q2 2015 23 Computer Facilities Integration (CFI) Excess Space Retail Services CFI provides corporate real estate, facilities Excess Space is a premier consulting and advisory firm management, and enterprise asset management dedicated to real estate disposition and
Slide 24: Recent NGKF Highlights
RECENT NGKF HIGHLIGHTS 24 NEW OFFICES: Acquired Computerized Facility Integration, LLC ("CFI") A premier real estate strategic consulting and systems integration firm that manages over three billion square feet globally for Fortune 500 companies, owner-occupiers, government agencies, healthcare an
Slide 25: Outlook
25 BGC PARTNERS OUTLOOK Date
Slide 26: Outlook Comparison
OUTLOOK COMPARISON 26 Third Quarter 2015 Outlook Compared with Third Quarter 2014 Results The Company expects to produce its fourth consecutive record quarter of distributable earnings revenues and its fifth quarter in a row of record pre-tax distributable earnings. BGC anticipates distributable
Slide 27: Appendix
27 APPENDIX Date
Slide 28: BGC Partners Compensation Ratio
BGC PARTNERS COMPENSATION RATIO 28 $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% 62.3% 59.2% 61.1% $400 60% 53.8% $200 $426.4 50% $262.9 $0 40% 2011 2012 2013 2014 Q2 2014 Q2 2015 Compensation and Employee Benefits Compensation and Employee Benef
Slide 29: Non-Compensation Expenses & Pre-Tax Margin
NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 29 50% 40% 30% 30.2% 28.0% 29.6% 26.4% 20% 25.3% 16.1% 10% 13.4% 11.2% 10.3% 11.3% 0% FY 2011 FY 2012 FY 2013 FY 2014 Q2 2015 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date Non-comp expenses were 26.4%
Slide 30: BGC's Economic Ownership as of June 30, 2015
BGC’S ECONOMIC OWNERSHIP AS OF JUNE 30, 2015 30 Cantor 26% Public Employees, 43% Executives, & Directors 31% 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
Slide 31: Average Exchange Rates
AVERAGE EXCHANGE RATES 31 Q2 2015 Q2 2014 July 1 – July 24, 2015 July 1 – July 24, 2014 US Dollar 1 1 1 1 British Pound 1.531 1.683 1.557 1.711 Euro 1.106 1.372 1.102 1.359 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.745 0.798 0.737 0.804 Japanese Yen (Inverted) 121.320 102.130 123.1
Slide 32: Distributable Earnings Defined
DISTRIBUTABLE EARNINGS DEFINED 32 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 th
Slide 33: Distributable Earnings Defined (continued)
DISTRIBUTABLE EARNINGS DEFINED (continued) 33 BGC’s distributable earnings per share calculations assume either that: The fully diluted share count includes the shares related to the dilutive instruments, such as the Convertible Senior Notes, but excludes the associated interest expense, net of tax,
Slide 34: Adjusted EBITDA Defined
ADJUSTED EBITDA DEFINED 34 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 depr
Slide 35: Reconciliation of GAAP Income to Adjusted EBITDA
RECONCILIATION OF GAAP INCOME TO ADJUSTED EBITDA 35 BGC PARTNERS, INC. Reconciliation of GAAP Income to Adjusted EBITDA (and Comparison to Pre-Tax Distributable Earnings) (in thousands) (unaudited) Q2 2015 Q2 2014 GAAP Income from continuing operations before income taxes $ 17,289 $ 14,915 Add back:
Slide 36: Reconciliation of Income Under GAAP to Distributable Earnings
RECONCILIATION OF INCOME UNDER GAAP TO DISTRIBUTABLE EARNINGS 36 BGC PARTNERS, INC. RECONCILIATION OF GAAP INCOME TO DISTRIBUTABLE EARNINGS (in thousands, except per share data) (unaudited) Q2 2015 Q2 2014 GAAP income before income taxes $ 17,289 $ 14,915 Pre-tax adjustments: Non-cash (gains) losses
Slide 37: Reconciliation of Revenues Under GAAP and Distributable Earnings
RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS 37 BGC PARTNERS, INC. RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q2 2015 Q2 2014 GAAP Revenue $ 669,131 $ 417,202 Plus: Other Income (losses), net 3,058 379 Adjusted GAAP 672,189 417,581
Slide 38: bgcpartners.com
38 bgcpartners.com Date