Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q3 2017 Earnings Presentation
49 slides from Bgc's earnings presentation, October 2017
Slide 1: BGC Partners, Inc. Earnings Presentation 3Q 2017
1 BGC PARTNERS, INC. Earnings Presentation 3Q 2017 NASDAQ: BGCP
Slide 2: Disclaimer
DISCLAIMER 2 Discussion of Forward-Looking Statements by BGC Partners Statements in this document and in the financial results press release for the quarter ended September 30, 2017 regarding BGC that are not historical facts are “forward-looking statements” that involve risks and uncertainties, whi
Slide 3: Disclaimer (Continued)
DISCLAIMER (CONTINUED) 3 Beginning with the third quarter of 2017, BGC will record the receipt of payments from Nasdaq as part of other income in Real Estate Services. As a result, the Nasdaq payment for the third quarter of 2017 was recorded as part of Newmark, while the tables for both segments sh
Slide 4: Disclaimer (Continued) - Liquidity Defined
DISCLAIMER (CONTINUED) 4 Liquidity Defined BGC also uses a non-GAAP measure called “liquidity”. The Company considers liquidity to be comprised of the sum of cash and cash equivalents plus marketable securities that have not been financed, reverse repurchase agreements, and securities owned, less se
Slide 5: General Overview
BGC PARTNERS 5 GENERAL OVERVIEW
Slide 6: Select Consolidated Distributable Earnings Financial Results
SELECT CONSOLIDATED DISTRIBUTABLE EARNINGS FINANCIAL RESULTS 6 Highlights of Consolidated Distributable Earnings Results (USD 3Q 2017 3Q 2016 Change (%) millions, except per share data) Revenues $827.0 $734.8 12.5% Pre-tax distributable earnings before non-controlling interest in 156.6 122.0 28.4% s
Slide 7: Global Revenue Breakdown
GLOBAL REVENUE BREAKDOWN 7 3Q 2017 Global Revenues APAC 8% Americas RE 48% EMEA 28% Americas FS 16% Total Americas revenue up 7% in 3Q 2017 Europe, Middle East & Africa revenue up 26% in 3Q 2017 Asia Pacific revenue up 23% in 3Q 2017 Note: Percentages may not sum to 100% due to rounding, less
Slide 8: 3Q 2017 Segment Data (Distributable Earnings Basis)
3Q 2017 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 8 (In USD millions) 3Q 2017 REVENUES Pre-tax Pre-tax Pre-tax Pre-tax 3Q 20171 Revenues Earnings Margin Earnings Margin Corporate (ex-Nasdaq) (ex-Nasdaq) 1% Financial $416.7 $87.6 21.0% $87.6 21.0% Real Estate $399.4 $66.9 16.8% $86.2 21.6% Corporat
Slide 9: BGC's 3Q 2017 Significant Revenue Diversity
BGC'S 3Q 2017 SIGNIFICANT REVENUE DIVERSITY 9 Corporate, 1% BGC’s Businesses at a Glance Gains from mortgage Management, Servicing Fees BGC maintains a highly diverse banking Rates, 15% activities, net, and Other, 12% revenue base 5% Wholesale Financial Services Corporate 1% Brokerage revenues a
Slide 10: BGC's Front Office Headcount & Productivity
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 10 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (as of period-end) (period-average, USD Thousands) 3,989 4,056 4,033 4,047 3,853 1,498 1,495 1,494 1,532 1,500 533 491 2,353 2,491 2,561 2,539 2,515 168 178 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 3Q 2016
Slide 11: Distributable Earnings Expense & Pre-Tax Margin Trends
DISTRIBUTABLE EARNINGS EXPENSE & PRE-TAX MARGIN TRENDS 11 $2,000 100% 90% $1,500 (USD millions) 80% $1,000 70% 60.6% 58.6% 57.4% 57.2% 60% $500 50% $0 40% FY 2015 FY 2016 3Q 2016 3Q 2017 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 25% 35% 21% 24.7% 23.
Slide 12: Financial Services Overview
12 Overview FINANCIAL SERVICES
Slide 13: Business Overview: Financial Services Summary (3Q 2017)
BUSINESS OVERVIEW: FINANCIAL SERVICES SUMMARY (3Q 2017) 13 Highlights 3Q 2017 Revenue Breakdown $416,657 $1,920 Total revenues increased 18% YoY $13,776 $353,587 $1,388 40% increase in FENICS rates revenues $13,266 $79,657 Other $39,076 $48,231 Data, software, and post- Pre-tax distributable e
Slide 14: Our Rates Business Continues to Do Well Despite Increases in G-4 Balance Sheets
OUR RATES BUSINESS CONTINUES TO DO WELL DESPITE INCREASES IN G-4 BALANCE SHEETS 14 G-4* Balance Sheet as % of GDP YoY Change (pp) in G-4* Balance Sheet as % of GDP 1 40% 8 7 35% 6 30% 5 25% 4 3 20% 2 15% 1 0 10% -1 5% -2 0% -3 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan
Slide 15: Business Overview: FENICS
BUSINESS OVERVIEW: FENICS 15 FENICS Net Revenue Growth1 3Q 2017 FENICS Breakdown2 (USD $000s) 240,000 16% Data, software and 180,000 12% post trade Data, (inter- software and company) post trade 20% 21% 120,000 8% F/X 11% 60,000 4% Rates - 0% 25% FY10 FY11 FY12 FY13 FY14 FY15 FY16 TTM Credit 3Q17 24
Slide 16: BGC's FENICS (Fully Electronic) Revenue Growth
BGC’S FENICS (FULLY ELECTRONIC) REVENUE GROWTH 16 FENICS (Fully Electronic) Revenues1 (USD 000s) 300,000 $271,326 $261,005 250,000 52,807 51,421 200,000 53,134 56,031 150,000 100,000 153,553 165,385 $66,700 $61,454 12,619 13,275 50,000 13,776 13,266 35,569 39,649 - TTM 3Q16 TTM 3Q17 3Q16 3Q17 Electr
Slide 17: FENICS in Review
FENICS IN REVIEW 17 (USD millions) 3Q 2017 TTM 3Q 2017 Voice / H ybrid / Real Voice / H ybrid / Real FEN ICS Other Estate Corporate Total FEN ICS Other Estate Corporate Total Revenue $66.7 $350.0 $399.4 $11.0 $827.0 $271.3 $1,378.1 $1,528.0 $37.4 $3,214.9 Pre-tax DE $27.6 $60.0 $86.2 ($17.1) $156.6
Slide 18: Real Estate Overview
Newmark = Cornish & Carey esis = Newmark = Knight Frank os A Newmark Company Overview REAL ESTATE SSN Th hi
Slide 19: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES 19 Highlights 3Q 2017 Revenue Growth1 (USD millions) 3Q 2017 management and servicing fees 373.9 399.4 Management, increased 25% YoY 97.1 servicing fees and 78.3 other revenues Gains from mortgage 45.5 3Q 2017 leasing and other services revenue 65.4 bankin
Slide 20: Newmark's Continued Strong Revenue Growth
NEWMARK'S CONTINUED STRONG REVENUE GROWTH 20 Newmark Revenue (USD 000’s) 1,600,000 1,400,000 1,200,000 Revenues 1,000,000 800,000 600,000 400,000 200,000 - FY FY FY FY FY TTM 3Q17 2012 2013 2014 2015 2016 Revenue Newmark’s revenues have grown from $455 million for the year ended December 31, 2012
Slide 21: Industry Fundamentals Remain Strong
INDUSTRY FUNDAMENTALS REMAIN STRONG 21 Historical U.S. Cap Rate Yield Spread Over 10-Year U.S. Treasuries 10% 500 3Q 2017 Yield Spread: 357 bps 8% 400 SPREAD (BPS) CAP RATE 6% 300 4% 200 2% 100 0% 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Yield Spread Cap Rate
Slide 22: Outlook
22 BGC PARTNERS OUTLOOK
Slide 23: Outlook Comparison
OUTLOOK COMPARISON 23 Outlook Compared with a Year Ago Results BGC anticipates fourth quarter 2017 revenues of between $800 million and $850 million, compared with 2016 recast revenues of $755.8 million a year earlier – Historical revenues for the fourth quarter of 2016 before the recast were $673
Slide 24: GAAP Financials Results
GAAPFINANCIAL GAAP Financials RESULTS
Slide 25: Select Consolidated GAAP Financial Results
SELECT CONSOLIDATED GAAP FINANCIAL RESULTS 25 Highlights of Consolidated GAAP Results (USD millions, except per share 3Q 2017 3Q 2016 Change (%) data) Revenues under both U.S. Generally Accepted Accounting Principles $827.0 $734.8 12.5% (“GAAP”) and Distributable Earnings Income from operations befo
Slide 26: Condensed Consolidated Statements of Operations (GAAP)
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 26 Three Months Ended September 30, Nine Months Ended September 30, Revenues: 2017 2016 2017 2016 Commissions $ 582,106 $ 492,808 $ 1,704,998 $ 1,465,293 Principal transa
Slide 27: Condensed Consolidated Statements of Financial Condition (GAAP)
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 27 September 30, December 31, 2017 2016 Assets Cash and cash equivalents $ 545,981 $ 535,613 Cash segregated under regulatory requirements 139,962 57,822 Reverse
Slide 28: Appendix
APPENDIX TMNT ANTI INT ss 1
Slide 29: BGC's Economic Ownership as of September 30, 2017
BGC’S ECONOMIC OWNERSHIP AS OF SEPTEMBER 30, 2017 29 Cantor 19% Public 46% Employees, Executives, & Directors 35% 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 30: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 30 ($ in '000s) BGC Partners, Inc. 9/30/2017 Cash and Cash Equivalents $545,981 Repurchase Agreements (1,803) Securities Owned 32,121 Marketable Securities (net) 124,372 1 T otal Liquidity $700,671 BGC Partners, Inc. and Subsidiaries Issuer Matur
Slide 31: 3Q17 Industry Volumes Mixed; Volatility Down
3Q17 INDUSTRY VOLUMES MIXED; VOLATILITY DOWN 31 3Q17: Yr/Yr Change in Capital Markets Activity 3Q17: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) Equity Indices (ICE) (17%) European Equities (V2X) (30%) Eurex Equity Derivatives (10%) U.S. Treasuries (Primary Dealer)
Slide 32: Volumes Generally Mixed; Volatility Down from a Year Ago
VOLUMES GENERALLY MIXED; VOLATILITY DOWN FROM A YEAR AGO 32 4Q17TD Change in Capital Markets Activity 4Q17TD Change in Average Daily Volatility (10/1/2017 – 10/06/2017) (10/1/2017 – 10/13/2017) Investment Grade Credit (15%) Commodity Volatility Index (BofAML) (59%) Energy (ICE) (10%) European Equiti
Slide 33: Vacancy Rates Remain Flat as New Inventory Deliveries Offset by Demand
VACANCY RATES REMAIN FLAT AS NEW INVENTORY DELIVERIES ARE OFFSET BY SUSTAINED DEMAND FOR COMMERCIAL REAL ESTATE 33 20.00% U.S. Vacancy Rates by Asset Class 16.00% 12.00% 8.00% 4.00% 0.00% 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17 Office Industrial Retail Unweighted Average Source: CoStar, REIS, and Newmark
Slide 34: Average Exchange Rates
AVERAGE EXCHANGE RATES 34 October 1 – October 16, October 1 – October 16, 3Q 2017 3Q 2016 2017 2016 US Dollar 1 1 1 1 British Pound 1.309 1.314 1.321 1.245 Euro 1.175 1.116 1.178 1.112 Hong Kong Dollar 0.128 0.129 0.128 0.129 Singapore Dollar 0.73 0.739 0.736 0.727 Japanese Yen 110.996 102.381 112.5
Slide 35: Differences Between Consolidated Results for Distributable Earnings and GAAP
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP 35 Differences between Consolidated Results for Distributable Earnings and GAAP The following sections describe the main differences between results as calculated for distributable earnings and GAAP for the periods discusse
Slide 36: Differences Between Distributable Earnings and GAAP (Continued)
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP (CONTINUED) 36 Differences between Compensation Expenses for Distributable Earnings and GAAP In the third quarter of 2017, the difference between compensation expenses as calculated for GAAP and distributable earnings inclu
Slide 37: Distributable Earnings Defined
DISTRIBUTABLE EARNINGS DEFINED 37 Distributable Earnings Defined BGC Partners uses non-GAAP financial measures including, but not limited to, “pre-tax distributable earnings” and “post-tax distributable earnings”, which are supplemental measures of operating results that are used by management to ev
Slide 38: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 38 However, the payments associated with BGC’s expected annual receipt of Nasdaq stock and related mark-to-market gains or losses are anticipated to be included in the Company’s calculation of distributable earnings for the following reasons: • Nasdaq is ex
Slide 39: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 39 Calculations of Pre-tax and Post-Tax Distributable Earnings per Share BGC’s distributable earnings per share calculations assume either that: • The fully diluted share count includes the shares related to any dilutive instruments, such as the Convertible
Slide 40: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 40 For more information on this topic, please see certain tables in BGC’s most recent quarterly financial results press release including “Reconciliation of GAAP Income (Loss) to Distributable Earnings”. These tables provide summary reconciliations between
Slide 41: Adjusted EBITDA Defined
ADJUSTED EBITDA DEFINED 41 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 following items: • Interest expense; • Fixed asset dep
Slide 42: Reconciliation of GAAP Income (Loss) to Adjusted EBITDA
RECONCILIATION OF GAAP INCOME (LOSS) TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 42 Q3 2017 Q3 2016 GAAP Net income (loss) available to common stockholders $ 81,529 $ 87,211 Add back: Provision (benefit) for income taxes 31,854 30,273 Net income (loss) attributable to noncontrolling interest in su
Slide 43: Reconciliation of GAAP Income to Distributable Earnings and EPS
RECONCILIATION OF GAAP INCOME (LOSS) TO DISTRIBUTABLE EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX DISTRIBUTABLE EPS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 43 Q3 2017 Q3 2016 GAAP income (loss) before income taxes $ 142,402 $ 144,576 Pre-tax adjustments: Non-cash (gains) losses related
Slide 44: Reconciliation of FENICS GAAP Income Before Taxes to Pre-Tax Distributable Earnings
RECONCILIATION OF FENICS GAAP INCOME BEFORE TAXES TO PRE-TAX DISTRIBUTABLE EARNINGS (IN THOUSANDS) (UNAUDITED) 44 TTM Ended TTM Ended Q3 2017 Q3 2016 September 30, 2017 September 30, 2016 FENICS GAAP income before income taxes (1) $ 26,156 $ 22,584 $ 107,608 $ 101,729 Pre-tax adjustments: Grant of e
Slide 45: Fully Diluted Weighted-Average Share Count for GAAP and Distributable Earnings
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT FOR GAAP AND DISTRIBUTABLE EARNINGS (IN THOUSANDS) (UNAUDITED) 45 Q3 2017 Q3 2016 Common stock outstanding 288,308 278,601 Limited partnership units 102,591 80,804 Cantor units 51,183 50,558 Founding partner units 13,513 14,519 4.50% Convertible debt shares
Slide 46: Segment Disclosure – 3Q 2017 vs 3Q 2016
SEGMENT DISCLOSURE – 3Q 2017 VS 3Q 2016 (IN THOUSANDS) (UNAUDITED) 46 Q3 2017 Q3 2016 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 416,657 $ 399,416 $ 10,955 $ 827,028 $ 353,587 $ 373,851 $ 7,382 $ 734,82
Slide 47: Segment Disclosure – TTM 3Q 2017 vs TTM 3Q 2016
SEGMENT DISCLOSURE – TTM 3Q 2017 VS TTM 3Q 2016 (IN THOUSANDS) (UNAUDITED) 47 TTM Ended September 30, 2017 TTM Ended September 30, 2016 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 1,649,453 $ 1,527,985 $
Slide 48: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 48 September 30, 2017 December 31, 2016 Cash and cash equivalents $ 545,981 $ 535,613 Reverse repurchase agreements - 54,659 Repurchase agreements (1,803) - Securities owned 32,121 35,357 Marketable securities (1) 124,372 164,820 Total $ 700,671 $ 790,44
Slide 49: Media and Investor Contacts
49 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: Jason McGruder Ujjal Basu Roy ir.bgcpartners.com twitter.com/bgcpartners +1 212-610-2426 +1 212-610-2426 linkedin.com/company/bgc-partners