Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q1 2020 Earnings Presentation
45 slides from Bgc's earnings presentation, 2020
Slide 1: BGC Partners, Inc. Earnings Presentation 1Q2020
BGC PARTNERS, INC. NASDAQ: BGCP Earnings Presentation 1Q2020
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 1Q 2020 1Q 2019 Change (%) data) Revenues $603,167 $544,751 10.7% Pre-tax Adjusted Earnings 112,119 106,194 5.6% Post-tax Adjusted Earnings 99,776 93,472 6.
Slide 6: Dividend Information
DIVIDEND INFORMATION 6 • On May 4, 2020, BGC Partners’ Board of Directors declared a quarterly qualified cash dividend of $0.01 per share payable on June 8, 2020 to Class A and Class B common stockholders of record as of May 22, 2020. The ex-dividend date will be May 21, 2020. • BGC reduced its quar
Slide 7: Revenue Breakdown by Geography
REVENUE BREAKDOWN BY GEOGRAPHY 7 1Q2020 Global Revenues of $603.2 million APAC 15% Americas 28% 4Q 2019 EMEA 57% ▪ Europe, Middle East & Africa revenue up 13% in 1Q2020 ▪ Asia Pacific revenue up 10% in 1Q2020 ▪ Total Americas revenue up 6% in 1Q2020 ▪ 1Q2020 revenues would have been approximately $1
Slide 8: 1Q2020 Revenue Breakdown by Asset Class
1Q2020 REVENUE BREAKDOWN BY ASSET CLASS 8 1Q2020 total revenues were $603.2 million BGC’s Businesses at a Glance ▪ BGC maintains a highly diverse Data, software and revenue base post-trade and other 1, ▪ Overall industry volumes have 6% been typically seasonally Rates 28% strongest in 1st quarter, w
Slide 9: Front Office Headcount & Productivity (Excluding Insurance Brokerage)
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY (EXCLUDING INSURANCE BROKERAGE) 9 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (as of period-end) (period-average, USD Thousands) 748 752 2,574 2,548 2,559 2,573 2,515 197 213 1Q 2019 2Q 2019 3Q 2019 4Q2019 1Q 2020 1Q19 1Q20 TTM TTM 1Q19 1Q20 ▪ As stat
Slide 10: Business Overview 1Q2020 vs. 1Q2019
BUSINESS OVERVIEW 1Q2020 VS. 1Q2019 10 Revenue Highlights Revenue Breakdown ▪ Total revenues increased 11% YoY (USD $000s) $544,751 $603,167 $12,429 $14,603 ▪ Top line driven by organic growth $19,398 Other $17,910 $44,836 ▪ Insurance brokerage revenues up 43%2 $31,404 $82,953 Data, software, and $7
Slide 11: Business Overview: Fenics
BUSINESS OVERVIEW: FENICS 11 Fenics Net Revenue Growth1 1Q2020 Fenics Total Revenue Breakdown (USD millions) $278 $277 $261 Data, software and Data, software $223 and post trade $209 post trade (inter- $192 company) 19% Equities and 26% other2 2% FX $101 9% $78 $81 Rates $71 25% $48 Credit 20% FY10
Slide 12: BGC's Fenics (Fully Electronic) Revenue Growth
BGC’S FENICS (FULLY ELECTRONIC) REVENUE GROWTH 12 Fenics (Fully Electronic) Revenues (USD $000s) 400,000 $357,286 350,000 $325,385 79,493 300,000 64,278 250,000 Fenics net revenues down 3% YoY 73,166 65,185 Fenics total revenues up 8% YoY 200,000 150,000 $93,434 $101,413 100,000 195,922 204,627 16,6
Slide 13: Outlook
ml BGC PARTNERS, INC. OUTLOOK
Slide 14: Outlook (USD Millions)
OUTLOOK (USD MILLIONS) 14 ▪ BGC’s revenues, excluding its insurance brokerage business, increased by approximately 2% YoY for the first 21 trading days of the second quarter. This reflects mixed global industry volumes thus far in the quarter as well as continued dislocation for BGC’s brokers and th
Slide 15: Impact of COVID-19 on Employees
IMPACT OF COVID-19 ON EMPLOYEES 15 As a global intermediary to financial markets, BGC has been considered an essential business in many of its various global locations where key employees are thus able to operate out of its primary offices around the world. The Company has nonetheless taken proactiv
Slide 16: Impact of COVID-19 on the Company's Results
IMPACT OF COVID-19 ON THE COMPANY’S RESULTS 16 BGC has recorded and is likely to record amounts for certain GAAP items that could be higher than they otherwise would have due to the overall impact of the pandemic. Some of these items include: ▪ Non-cash amortization of intangibles with respect to ac
Slide 17: Impact of COVID-19 on the Company's Results - Continued
IMPACT OF COVID-19 ON THE COMPANY’S RESULTS - CONTINUED 17 In addition, the uncertain macroeconomic environment and the overall impact of the pandemic may affect the Company’s revenues in the following ways: • Revenues across rates, credit, FX, equities, energy, and commodities are correlated with c
Slide 18: GAAP Financial Results
ml BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 19: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 19
Slide 20: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 20
Slide 21: Condensed Consolidated Statements of Operations - Continued
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 21
Slide 22: Appendix
ml BGC PARTNERS, INC. APPENDIX
Slide 23: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 23 (USD $000s) BGC Partners, Inc. As of 3/31/2020 Cash and Cash Equivalents $455,016 Repurchase Agreements (512) Securities Owned 57,529 Marketable Securities 245 Total Liquidity $512,278 Maturity Unsecured senior revolving credit agreement 02/26
Slide 24: BGC's Fully Diluted Share Count Summary as of March 31, 2020
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF MARCH 31, 2020 24 (share count in millions) BGC Partners, Inc. Fully Diluted Share Count Summary Fully-diluted Ownership (as of March 31, 2020) Shares (MN) (%) Class A owned by Public 293.0 54% Class A owned by executives, board members and employees (1)
Slide 25: Fenics Revenues
FENICS REVENUES 25 Quarterly Fenics Revenues1 (1Q2017-1Q2020) (USD millions) 110 101 93 93 86 85 87 84 90 80 73 75 71 67 66 56 70 59 53 48 44 53 53 46 50 46 43 45 40 38 19 30 19 18 18 15 15 17 18 18 13 13 14 14 10 21 20 21 26 14 13 13 14 18 16 15 15 17 -10 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3
Slide 26: Acquisition of Algomi
ACQUISITION OF ALGOMI 26 ▪ Fenics acquired Algomi in March this year.1 ▪ Algomi provides technology aggregating buy-side clients’ access to venues, trading counterparties and exchanges. ▪ This subscription software as a service – or “SaaS” improves their workflow and liquidity through data aggregati
Slide 27: 1Q2020 Industry Volumes Were Generally Up
1Q2020 INDUSTRY VOLUMES WERE GENERALLY UP 27 2020 2QTD Change in Capital Markets Activity 1Q2020: Yr/Yr Change in Capital Markets Activity1,2 (4/1/20-4/27/20)2,3 (ADV excl. Eurex Equity Derivatives) (ADV) Refinitiv (Thomson Reuters) FX Spot 6% FX Futures (CME) (23%) U.S. Corp. Bonds (Primary Dealer)
Slide 28: Average Exchange Rates
AVERAGE EXCHANGE RATES 28 April 1 – April 24, April 1 – April 24, Currency 1Q2020 1Q2019 2020 2019 US Dollar 1.000 1.000 1.000 1.000 British Pound 1.281 1.302 1.241 1.301 Euro 1.103 1.136 1.088 1.125 Hong Kong Dollar 0.129 0.127 0.129 0.127 Singapore Dollar 0.723 0.738 0.701 0.738 Japanese Yen 108.9
Slide 29: Correlation Between BGC's Brokerage Revenues and Certain Industry Metrics
CORRELATION BETWEEN BGC’S BROKERAGE REVENUES AND CERTAIN INDUSTRY METRICS 29 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 30: 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 30 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 31: BGC's Revenues Negatively Correlated with Those of the Large Banks
BGC’S REVENUES HAVE BEEN NEGATIVELY CORRELATED WITH THOSE OF THE LARGE BANKS 31 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 32: Traditional IDB Revenues Negatively Correlated with Large Banks
TRADITIONAL IDB REVENUES HAVE BEEN NEGATIVELY CORRELATED WITH THOSE OF THE LARGE BANKS 32 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 33: Non-GAAP Definitions and Reconciliation Tables
NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 34: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 34 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 35: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 35 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 36: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 36 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 37: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 37 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 38: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 38 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 39: Differences Between Non-GAAP and GAAP Consolidated Results [Continued]
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS [CONTINUED] 39 ▪ 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 40: Reconciliation of GAAP Income (Loss) Before Income Taxes to Adjusted Earnings
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) 40 Please see footnotes to this table on the next page.
Slide 41: Reconciliation of GAAP Income (Loss) Before Income Taxes to Adjusted Earnings
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) 41
Slide 42: Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 42
Slide 43: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 43
Slide 44: 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) 44
Slide 45: Media and Investor Contacts
45 45 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