Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q3 2016 Earnings Presentation
47 slides from Bgc's earnings presentation, Oct 25, 2016
Slide 1: BGC Partners, Inc. Earnings Presentation 3Q 2016
1 BGC PARTNERS, INC. Earnings Presentation 3Q 2016 Date NASDAQ: BGCP
Slide 2: Disclaimer
DISCLAIMER 2 Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC's businesses that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to release any rev
Slide 3: Disclaimer (Continued)
DISCLAIMER (CONTINUED) 3 Distributable Earnings This presentation should be read in conjunction with BGC’s most recent financial results press release. Unless otherwise stated, throughout this document BGC refers to its income statement results only on a distributable earnings basis. For a complete
Slide 4: General Overview
BGC PARTNERS 4 GENERAL OVERVIEW Date
Slide 5: Select Consolidated Distributable Earnings Financial Results
SELECT CONSOLIDATED DISTRIBUTABLE EARNINGS FINANCIAL RESULTS 5 Highlights of Consolidated Distributable Earnings Results (USD millions, except 3Q 2016 3Q 2015 Change (%) per share data) Revenues $643.5 $685.3 (6.1)% Pre-tax distributable earnings before non-controlling interest in subsidiaries and 1
Slide 6: Global Revenue Breakdown
GLOBAL REVENUE BREAKDOWN 6 3Q 2016Q3 Global Revenues APAC 8% Americas RE 44% EMEA 28% Americas FS 20% Date 3Q 2015 Total Americas revenue down 2% from Europe, Middle East & Africa revenue down 13% (down 4% excluding Trayport) Asia Pacific revenue down 12% Note: percentages may not sum to 100%
Slide 7: 3Q 2016 Segment Data (Distributable Earnings Basis)
3Q 2016 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 7 (In USD millions) 3Q 2016 REVENUES 3Q 2016 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $352.1 $84.9 24.1% 1% Real Estate $284.0 $38.3 13.5% Corporate $7.4 ($16.4) NMF Real Estate (In USD millions) Financial Services Services 3Q 2
Slide 8: BGC's Businesses at a Glance
BGC'S 3Q 2016 SIGNIFICANT REVENUE DIVERSITY 8 Corporate 1% Real Estate Management and Other BGC’s Businesses at a Glance 8% BGC maintains a highly diverse Rates 17% revenue base Real Estate Capital Corporate Wholesale Financial Services Markets 1% Brokerage revenues and 15% earnings typically se
Slide 9: BGC's Front Office Headcount & Productivity
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 9 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (USD Thousands) Yr/Yr change: -1% -2% 3,845 3,855 3,858 3,812 3,800 1,347 1,401 1,417 1,421 1,447 628 614 -3% 2,498 2,454 2,441 2,391 2,353 158 154 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Q3 2015 Q3 2016 F
Slide 10: Distributable Earnings Expense & Pre-Tax Margin Trends
DISTRIBUTABLE EARNINGS EXPENSE & PRE-TAX MARGIN TRENDS 10 $2,000 100% 90% $1,500 1,620 (USD millions) 80% $1,000 62.9% 70% 62.6% 62.9% 61.9% 60% $500 1,119 50% 431 398 $0 40% FY 2014 FY 2015 3Q 2015 3Q 2016 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 1
Slide 11: Recently Announced / Completed BGC & NGKF Acquisitions
RECENTLY ANNOUNCED / COMPLETED BGC & NGKF ACQUISITIONS 11 Sunrise Brokers Group: On July 19, 2016, BGC announced an agreement to acquire Sunrise Brokers Group, a privately owned financial brokerage with a leading reputation in worldwide equity derivatives. . This transaction is expected to close
Slide 12: Financial Services Overview
12 Overview FINANCIAL SERVICES Date
Slide 13: 3Q 2016 Financial Services Summary
3Q 2016 FINANCIAL SERVICES SUMMARY 13 BGC Financial Services Segment Highlights Quarterly Drivers General: Lower global volumes across foreign Pre-tax distributable earnings up over 2% exchange, cash equities, equity derivatives, Pre-tax distributable earnings margin shipping, and certain comm
Slide 14: Financial Services Revenue Breakout by Asset Class
FINANCIAL SERVICES REVENUE BREAKOUT BY ASSET CLASS 14 FINANCIAL SERVICES REVENUE COMPOSITION (USD $000s) % Change Total Financial Services (13)% $403,356 3,895 $352,141 NMF 18,911 Trayport1 10,213 1,374 Interest, fees from related parties, (65)% and other revenue 46,314 11,834 Data, software, post-t
Slide 15: Business Overview: FENICS
BUSINESS OVERVIEW: FENICS 15 FENICS Net Revenue Growth1 3Q 2016 FENICS Breakdown2 (USD $000s) 240,000 16% Data, software and 180,000 12% post trade Data, (inter- software and company) post trade 20% 120,000 8% 21% F/X 60,000 4% 11% Rates 19% - 0% FY10 FY11 FY12 FY13 FY14 FY15 TTM Credit 3Q16 29% Fen
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 $255,005 250,000 51,662 $193,076 200,000 25,562 49,790 150,000 28,113 change -1% 100,000 139,401 153,553 $60,682 $60,022 12,562 12,619 50,000 10,213 11,834 37,907 35,569 - TTM 3Q15 TTM Date 3Q16
Slide 17: FENICS in Review
FENICS IN REVIEW 17 (USD millions) 3Q 2016 TTM 3Q 2016 Voice / Hybrid Corporate / Voice / Hybrid Corporate / FENICS / Other Real Estate Other Total FENICS / Other Real Estate Other Total Revenue $60.0 $292.1 $284.0 $7.4 $643.5 $255.0 $1,280.8 $1,039.6 $32.6 $2,607.9 Pre-Tax DE $28.3 $56.6 $38.3 ($16
Slide 18: Real Estate Overview
Newmark Grubb Knight Frank Overview REAL ESTATE SST
Slide 19: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES 19 NGKF Highlights 3Q 2016 Real Estate Segment Breakdown 3Q 2016 Real Estate Services revenue Real estate increased by 4% compared to 3Q 2015 capital markets Management services & 33% other revenues Real estate capital markets revenue increased 18% by 17%
Slide 20: NGKF's Continued Strong Revenue Growth
NGKF'S CONTINUED STRONG REVENUE GROWTH 20 NGKF Revenue (USD 000’s) 1,000,000 800,000 Revenues 600,000 400,000 200,000 - TTM FY Date TTM FY TTM 3Q14 2014 3Q15 2015 3Q16 Revenue TTM = trailing twelve months NGKF revenues have grown from $648 million for the trailing twelve months ended September 201
Slide 21: Outlook
21 BGC PARTNERS OUTLOOK Date
Slide 22: Outlook Comparison
OUTLOOK COMPARISON 22 Outlook Compared with a Year Ago Results BGC anticipates fourth quarter 2016 revenues of between $630 million and $675 million, compared with $673.4 million a year earlier, which included approximately $16 million related to Trayport. BGC anticipates generating pre-tax earn
Slide 23: GAAP Financial Results
GAAPFINANCIAL GAAP Financials RESULTS Date
Slide 24: Select Consolidated GAAP Financial Results
SELECT CONSOLIDATED GAAP FINANCIAL RESULTS 24 Highlights of Consolidated GAAP Results (USD millions, except per share data) 3Q 2016 3Q 2015 Change (%) Revenues under both U.S. Generally Accepted Accounting Principles (“GAAP”) $643.5 $685.3 (6.1)% and Distributable Earnings Income from operations bef
Slide 25: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 25 Three Months Ended September 30, Nine Months Ended September 30, Revenues: 2016 2015 2016 2015 Commissions $ 496,265 $ 521,264 $ 1,469,940 $ 1,424,357 Principal transa
Slide 26: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 26 September 30, December 31, 2016 2015 Assets Cash and cash equivalents $ 448,515 $ 461,207 Cash segregated under regulatory requirements 6,911 3,199 Securities
Slide 27: Appendix
APPENDIX TMNT ANTI INT ss 1
Slide 28: BGC's Economic Ownership as of September 30, 2016
BGC’S ECONOMIC OWNERSHIP AS OF SEPTEMBER 30, 2016 28 Cantor 20% Public 48% Employees, Executives, & Directors 32% 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
Slide 29: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 29 ($ in '000s) BGC Partners, Inc. 9/30/2016 Cash and Cash Equivalents $448,515 Securities Owned 212,056 Marketable Securities (net) 179,904 Total Liquidity $840,475 BGC Partners, Inc. and Subsidiaries Issuer Maturity 9/30/2016 8.375% Senior Note
Slide 30: 3Q16 Industry Volumes Mixed; Volatility Mostly Down
3Q16 INDUSTRY VOLUMES MIXED; VOLATILITY MOSTLY DOWN 30 3Q16: Yr/Yr Change in Capital Markets Activity 3Q16: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) -17% Thomson Reuters FX Spot Eurex Equity Derivatives -31% U.S. Equities (VIX) -16% -10% FX Futures (CME) -1% Euro
Slide 31: Volumes Generally Up; Volatility Generally Down From a Year Ago
VOLUMES GENERALLY UP; VOLATILITY GENERALLY DOWN FROM A YEAR AGO 31 4Q16TD Change in Capital Markets Activity 4Q16TD Change in Average Daily Volatility (10/1/2016 – 10/26/2016) (10/1/2016 – 10/26/2016) -12% European Equities -23% European Equities (V2X) -11% U.S Equities U.S. Corp. Bonds (Primary Dea
Slide 32: Historically Low Interest Rates: Challenging for Financial Services, Good for Real Estate
HISTORICALLY LOW INTEREST RATES: CHALLENGING FOR FINANCIAL SERVICES, GOOD FOR REAL ESTATE 32 Historical U.S. Cap Rate Yield Spread Over 10-Year U.S. Treasuries 10% 3Q 2016 Yield Spread: 500 437 bps 2002 – YTD 2016 (At a 4-year High) Avg. Yield Spread: 335 bps 8% 400 6% 300 SPREAD (BPS) CAP RATE 4% 2
Slide 33: Vacancy Rates Continue to Improve
VACANCY RATES CONTINUE TO IMPROVE SIGNALING SUSTAINED DEMAND FOR COMMERCIAL REAL ESTATE 33 20.0% U.S. Vacancy Rates by Asset Class 16.0% 12.0% 8.0% 4.0% 0.0% 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 Date Office Industrial Retail Unweighted Average Source: CoStar, REIS, and NGKF Research Vacancy rates continu
Slide 34: Average Exchange Rates
AVERAGE EXCHANGE RATES 34 Q3 2016 Q3 2015 Oct 1 – Oct 26, 2016 Oct 1 – Oct 26, 2015 US Dollar 1 1 1 1 British Pound 1.314 1.549 1.239 1.532 Euro 1.116 1.113 1.105 1.127 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.739 0.720 0.724 0.713 Japanese Yen 102.380 122.160 103.550 122.010 Sour
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 Certain Non-compensation Expenses for Distributable Earnings and GAAP The difference between non-compensation expenses in the third quarter of 2016 as calculated for GAAP and distributable
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 To make period-to-period comparisons more meaningful, one-quarter of each annual Nasdaq contingent earn-out amount, as well as gains or losses with respect to associated mark-to-market movements and/or hedging, will be included in the Company’s calculati
Slide 39: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 39 Each quarter, the dividend to BGC’s common stockholders is expected to be determined by the Company’s Board of Directors with reference to a number of factors, including post-tax distributable earnings per fully diluted share. In addition to the Company’
Slide 40: Adjusted EBITDA Defined
ADJUSTED EBITDA DEFINED 40 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 41: Reconciliation of GAAP Income to Adjusted EBITDA
RECONCILIATION OF GAAP INCOME TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 41 Q3 2016 Q3 2015 GAAP Net income (loss) available to common stockholders $ 60,882 $ 38,371 Add back: Provision (benefit) for income taxes 30,263 28,737 Net income (loss) attributable to noncontrolling interest in subsidiar
Slide 42: 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) 42 Q3 2016 Q3 2015 GAAP income (loss) before income taxes $ 104,529 $ 83,322 Pre-tax adjustments: Non-cash (gains) losses related
Slide 43: 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) 43 Q3 2016 Q3 2015 TTM Q3 2016 TTM Q3 2015 FENICS GAAP income before income taxes (1) $ 26,822 $ 24,774 $ 112,615 $ 84,456 Pre-tax adjustments: Grant of exchangeability to limited partnersh
Slide 44: Fully Diluted Weighted-Average Share Count
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT FOR GAAP AND DISTRIBUTABLE EARNINGS (IN THOUSANDS) (UNAUDITED) 44 Q3 2016 Q3 2015 Common stock outstanding 278,601 252,354 Limited partnership units 80,804 57,726 Cantor units 50,558 48,783 Founding partner units 14,519 16,712 4.50% Convertible debt shares
Slide 45: Segment Disclosure – Q3 2016 vs Q3 2015
SEGMENT DISCLOSURE – Q3 2016 VS Q3 2015 (IN THOUSANDS) (UNAUDITED) 45 Q3 2016 Q3 2015 Financial Real Corporate GAAP Pre-tax Financial Real Corporate GAAP Pre-tax Services Estate Services Items Earnings Services Estate Services Items Earnings Total revenues $ 352,141 $ 283,982 $ 7,382 $ 643,505 $ 403
Slide 46: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 46 September 30, 2016 December 31, 2015 Cash and cash equivalents $ 448,515 $ 461,207 Securities owned (1) 212,056 32,361 Marketable securities (2) (3) 179,904 532,510 Total $ 840,475 $ 1,026,078 (1) As of September 30, 2016, Securities owned primarily c
Slide 47: Media and Investor Contacts
47 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Date Investor Contact: Jason McGruder bgcpartners.com twitter.com/bgcpartners +1 212-829-4988 linkedin.com/company/bgc-partners