Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q2 2020 Earnings Presentation
41 slides from Bgc's earnings presentation, July 2020
Slide 1: BGC Partners, Inc. Earnings Presentation 2Q2020
BGC PARTNERS, INC. NASDAQ: BGCP Earnings Presentation 2Q2020
Slide 2: Disclaimer
DISCLAIMER 2 Discussion of Forward-Looking Statements about BGC Statements in this document regarding BGC that are not historical facts are “forward-looking statements” that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statem
Slide 3: Disclaimer (Continued)
DISCLAIMER (CONTINUED) 3 Non-GAAP Financial Measures This presentation should be read in conjunction with BGC’s most recent financial results press releases and filings or reports on Form 10-K, Form 10-Q or Form 8- K. Throughout this presentation, BGC refers to certain non-GAAP financial measures, i
Slide 4: General Overview
ml BGC PARTNERS, INC. 7 bge (5 %F' Fenics GENERAL OVERVIEW
Slide 5: Select Consolidated Adjusted Earnings Financial Results
SELECT CONSOLIDATED ADJUSTED EARNINGS FINANCIAL RESULTS 5 Highlights of Consolidated Adjusted Earnings Results (USD thousands, except per share 2Q 2020 2Q 2019 Change (%) data) Revenues $519,088 $551,187 (5.8)% Pre-tax Adjusted Earnings 92,062 102,276 (10.0)% Post-tax Adjusted Earnings 80,138 89,826
Slide 6: Revenue Breakdown by Geography
REVENUE BREAKDOWN BY GEOGRAPHY 6 2Q2020 Global Revenues of $519.1 million APAC 14% Americas 29% 4Q 2019 EMEA 57% ▪ Europe, Middle East & Africa revenue down 1% in 2Q2020 ▪ Total Americas revenue down 7% in 2Q2020 ▪ Asia Pacific revenue down 19% in 2Q2020 reflecting a sharp decline of money market fl
Slide 7: 2Q2020 Revenue Breakdown by Asset Class
2Q2020 REVENUE BREAKDOWN BY ASSET CLASS 7 2Q2020 total revenues BGC’s Revenues at a Glance were $519.1 million ▪ BGC maintains a highly diverse revenue base Data, software and ▪ BGC’s revenues generally correlated post-trade and other 1 with industry notional volumes but 7% tend to have low correlat
Slide 8: BGC's Front Office Headcount & Productivity
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY (EXCLUDING INSURANCE BROKERAGE) 8 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (as of period-end) (period-average, USD Thousands) 744 749 2,548 2,559 2,573 2,491 2,388 192 187 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q19 2Q20 TTM TTM 2Q19 2Q20 ▪ BGC’s
Slide 9: Business Overview 2Q2020 vs. 2Q2019
BUSINESS OVERVIEW 2Q2020 VS. 2Q2019 9 Revenue Highlights Revenue Breakdown ▪ Credit business grew by 23% (USD $000s) $551,187 $19,040 $519,088 ▪ Insurance brokerage revenues up 11%2 $18,741 $16,856 $20,139 Other 4 ▪ Data, software, and post-trade revenues were 7% higher $41,417 $65,078 $45,783 ▪ Imp
Slide 10: Business Overview: Fenics
BUSINESS OVERVIEW: FENICS 10 Fenics Net Revenue Growth1,2 2Q2020 Fenics Total Revenue Breakdown2 $278 $283 $261 Data, software and Data, software $223 post trade (inter- and post trade $209 company) 20% Equities and $192 22% other3 2% FX 9% $101 $71 $78 $81 $48 Rates Credit 30% 18% FY10 FY11 FY12 FY
Slide 11: BGC's Fenics Revenue Growth
BGC’S FENICS REVENUE GROWTH 11 Fenics Revenues (USD $000s) 400,000 $357,286 350,000 $325,385 79,493 300,000 64,278 250,000 73,166 Fenics net revenues up 9% YoY 65,185 Fenics total revenues up 8% YoY 200,000 150,000 100,000 195,922 204,627 $92,949 $100,188 21,161 21,653 20,139 50,000 18,741 53,047 58
Slide 12: Outlook
ml BGC PARTNERS, INC. OUTLOOK
Slide 13: Outlook (USD Millions)
OUTLOOK (USD MILLIONS) 13 ▪ BGC’s revenues declined by approximately 10% YoY for the first 18 trading days of 3Q2020. ▪ Fenics revenues, for the same period, however increased by over 10%. ▪ This guidance reflects lower global industry volumes thus far in the quarter across rates, FX, commodities, a
Slide 14: GAAP Financial Results
ml BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 15: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) June 30, December 31, 2020 2019 15 Assets Cash and cash equivalents $ 463,554 $ 415,379 Cash segregated under regulatory requirements 223,446 220,735 Securities
Slide 16: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended June 30, Six Months Ended June 30, 16 Revenues: 2020 2019 2020 2019 Commissions $ 382,640 $ 422,974 $ 838,495 853,156 Principal transactions 99,453 90,
Slide 17: Condensed Consolidated Statements of Operations - Continued
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 17 Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Per share data: Basic earnings (loss) per share Net income (loss) available to co
Slide 18: Appendix
ml BGC PARTNERS, INC. APPENDIX
Slide 19: BGC's Fully Diluted Share Count Summary as of June 30, 2020
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF JUNE 30, 2020 19 (share count in millions) BGC Partners, Inc. Fully Diluted Share Count Summary Fully-diluted Ownership (as of June 30, 2020) Shares (MN) (%) Class A owned by Public 295.8 54% Class A owned by executives, board members and employees (1) 1
Slide 20: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 20 (USD $000s) BGC Partners, Inc. As of 6/30/2020 Cash and Cash Equivalents $463,554 Securities Owned 58,685 Marketable Securities 278 Total Liquidity $522,517 Maturity Unsecured senior revolving credit agreement 02/26/2023 222,598 5.125% Senior
Slide 21: Fenics Revenues
FENICS REVENUES 21 Quarterly Fenics Revenues1 (2Q2017-2Q2020) (USD millions) 110 101 100 93 93 90 86 85 87 84 80 75 71 67 56 58 70 66 59 53 48 44 53 53 46 43 50 45 40 38 19 30 19 18 18 20 15 15 17 18 18 13 14 14 21 21 26 22 10 18 16 15 17 20 13 13 14 15 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 4Q20
Slide 22: 2Q2020 Industry Volumes Were Generally Mixed
2Q2020 INDUSTRY VOLUMES WERE GENERALLY MIXED 22 2020 3QTD Change in Capital Markets Activity 2Q2020: Yr/Yr Change in Capital Markets Activity1,2 (7/1/20 – 7/24/20)2,3 (ADV excl. Eurex Equity Derivatives) (ADV) Interest Rate Futures (CME) (41%) Interest Rate Futures (CME) (64%) Interest Rate Futures
Slide 23: Average Exchange Rates
AVERAGE EXCHANGE RATES 23 July 1 – July 15, July 1 – July 15, Currency 2Q2020 2Q2019 2020 2019 US Dollar 1.000 1.000 1.000 1.000 British Pound 1.242 1.285 1.253 1.255 Euro 1.101 1.123 1.130 1.126 Hong Kong Dollar 0.129 0.128 0.129 0.128 Singapore Dollar 0.708 0.734 0.718 0.737 Japanese Yen1 107.548
Slide 24: Record Levels of Quantitative Easing by Major Central Banks
RECORD LEVELS OF QUANTITATIVE EASING BY MAJOR CENTRAL BANKS 24 ▪ According to Fitch Ratings, global QE asset purchases are likely to reach $6 trillion in 2020. Specifically, Robert Sierra, Director of Fitch's Economics Team said: “Six trillion dollars is a staggering amount that is equal to more tha
Slide 25: Correlation Between BGC's Brokerage Revenues and Certain Industry Metrics
CORRELATION BETWEEN BGC’S BROKERAGE REVENUES AND CERTAIN INDUSTRY METRICS 25 Asset Class Industry Metric Correlation R2 BGC Rates Revenues vs. Fed UST Primary Dealer Volume 60.4% 36.5% Rates BGC Rates Revenues vs. EUREX Interest Rate Derivatives 62.8% 39.4% BGC Rates Revenues vs. BrokerTec (NEX/CME)
Slide 26: Traditional IDB Revenues Less Volatile and More Predictable Than Large Banks
TRADITIONAL IDB REVENUES HAVE BEEN LESS VOLATILE AND MORE PREDICTABLE THAN THOSE OF THE LARGE BANKS 26 IDB Revenues vs. Bulge Bracket “Core” Sales & Trading Revenues 40% FICC Sales and Trading FICC and Equity Sales and Trading IDB Revenues (BGCP+TCAP+CFT) 30% 20% 10% 0% -10% -20% -30% -40% 1H10 2H10
Slide 27: BGC's Revenues Negatively Correlated with Those of Large Banks
BGC’S REVENUES HAVE BEEN NEGATIVELY CORRELATED WITH THOSE OF THE LARGE BANKS 27 BGCP Revenues vs. Bulge Bracket “Core” Sales & Trading Revenues 80% FICC Sales and Trading FICC and EquitySales and Trading BGC Revenues from Continuing Operations 60% 40% 20% 0% -20% -40% -60% 1Q10 3Q10 1Q11 3Q11 1Q12 3
Slide 28: Traditional IDB Revenues Negatively Correlated with Large Banks
TRADITIONAL IDB REVENUES HAVE BEEN NEGATIVELY CORRELATED WITH THOSE OF THE LARGE BANKS 28 IDB Revenues vs. Bulge Bracket “Core” Sales & Trading Revenues 40% FICC Sales and Trading FICC and Equity Sales and Trading IDB Revenues (BGCP+TCAP+CFT) 30% 20% 10% 0% -10% -20% -30% -40% 1H10 2H10 1H11 2H11 1H
Slide 29: Non-GAAP Definitions and Reconciliation Tables
NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 30: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 30 Non-GAAP Financial Measures This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United State
Slide 31: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 31 The amounts of certain quarterly equity-based compensation charges are based upon the Company’s estimate of such expected charges during the annual period, as described further below under “Methodology for Calculating Adjusted
Slide 32: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 32 Methodology for Calculating Adjusted Earnings Taxes Although Adjusted Earnings are calculated on a pre-tax basis, BGC also reports post-tax Adjusted Earnings to fully diluted shareholders. The Company defines post-tax Adjusted
Slide 33: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 33 Calculations of Pre- and Post-Tax Adjusted Earnings per Share BGC’s pre- and post-tax Adjusted Earnings per share calculations assume either that: ▪ The fully diluted share count includes the shares related to any dilutive ins
Slide 34: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 34 Adjusted EBITDA Defined BGC also provides an additional non-GAAP financial performance measure, “Adjusted EBITDA”, which it defines as GAAP “Net income (loss) available to common stockholders”, adjusted to add back the followi
Slide 35: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 35 ▪ Certain equity-based compensation charges that may be determined at the discretion of management throughout and up to the period-end; ▪ Unusual, one-time, non-ordinary, or non-recurring items; ▪ The impact of gains or losses
Slide 36: Reconciliation of GAAP Income Before Taxes to Adjusted Earnings and EPS
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 36 Q2 2020 Q2 2019 GAAP income (loss) from operations before income taxes $ 48,200 $ 36,758 Pre-tax adju
Slide 37: Reconciliation of GAAP Income Before Taxes to Adjusted Earnings (Footnotes)
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 37 (1) The components of equity-based compensation and allocations of net income to limited partnership
Slide 38: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 38
Slide 39: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 39 June 30, 2020 December 31, 2019 Cash and cash equivalents $ 463,554 $ 415,379 Securities owned 58,685 57,525 Marketable securities (1) 278 326 Total Liquidity $ 522,517 $ 473,230 (1) As of December 31, 2019, $13.9 million of Marketable securities on o
Slide 40: Fully Diluted Weighted-Average Share Count Under GAAP and for Adjusted Earnings
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT UNDER GAAP AND FOR ADJUSTED EARNINGS (IN THOUSANDS) (UNAUDITED) 40
Slide 41: Media and Investor Contacts
41 41 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: Ujjal Basu Roy or Jason McGruder ir.bgcpartners.com twitter.com/bgcpartners +1 212-610-2426 linkedin.com/company/bgc-partners