Bgc Group, Inc. · NASDAQ:BGC

Bgc — BGC Partners — Q3 2014 Earnings Presentation

32 slides from Bgc's earnings presentation, 2014

  1. Slide 1: BGC Partners, Inc. Q3 2014 Earnings Presentation

    BGC PARTNERS, INC. Q3 2014 EARNINGS PRESENTATION

  2. Slide 2: Disclaimer

    DISCLAIMER Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC Partners’ business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to document an

  3. Slide 3: General Overview

    GENERAL OVERVIEW

  4. Slide 4: Select Q3 2014 Results Compared to Q3 2013

    SELECT Q3 2014 RESULTS COMPARED TO Q3 2013 Highlights of Consolidated Results Change Q3 2014 Q3 2013 (USD millions, except per share data) (%) Revenues for distributable earnings $449.8 $414.4 8.5 Pre-tax distributable earnings before non-controlling interest 65.8 37.4 75.8 in subsidiaries and taxes

  5. Slide 5: Q3 2014 Global Revenue Breakdown

    Q3 2014 GLOBAL REVENUE BREAKDOWN  Americas revenue up 16% Y/Y  Europe, Middle East & Africa revenue down 1% Y/Y  Asia Pacific revenue down 9% Y/Y Q3 2014 Revenues APAC 8% Hong London Kong EMEA 28% Americas 64% New York Paris Date Singapore  IDBs typically seasonally strongest in 1st quarter, wea

  6. Slide 6: Q3 2014 Segment Data (Distributable Earnings Basis)

    Q3 2014 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) Q3 2014 Revenues Corporate Pre‐tax Pre‐tax 2% Q3 2014 Revenues Earnings Margin (In USD millions) Financial $261.2 $55.0 21.1% Real Estate $179.1 $23.9 13.3% Financial Corporate $9.4 ($13.1) NMF Real Estate Services 40% 58% Pre‐tax Pre‐tax Q3 2013 R

  7. Slide 7: BGC's Front Office Overview

    BGC’S FRONT OFFICE OVERVIEW Front Office Headcount Front Office Productivity $155 $153 2,755 2,800 2,432 2,385 2,385 2,398 2,300 $150 (Front Office Employees) 1,135 887 884 888 879 1,800 ($ thousands) 1,300 $145 $144 800 1,545 1,501 1,497 1,519 1,620 300 $140 -200 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3

  8. Slide 8: Announcement of BGC's Tender Offer for GFI Group Inc.

    ANNOUNCEMENT OF BGC’S TENDER OFFER FOR GFI GROUP INC.  On October 22, 2014, BGC Partners commenced a cash tender offer to acquire GFI Group for $5.25 per share  BGC’S offer of $5.25 per share in cash represents a premium of more than 15% to the $4.55 per share all-stock transaction announced by CM

  9. Slide 9: Financial Services Overview

    FINANCIAL SERVICES OVERVIEW

  10. Slide 10: Q3 2014 Financial Services Summary

    Q3 2014 FINANCIAL SERVICES SUMMARY BGC Financial Services Segment Highlights  FS margins improved over 950 bps as a result of increased higher margined fully electronic revenues and ongoing cost management efforts  Energy & Commodities continued to show strong growth, up over 78% year-over-year 

  11. Slide 11: Financial Services Revenue Breakout

    FINANCIAL SERVICES REVENUE BREAKOUT Revenues By Asset Class FS Revenue Composition $261,218 % Change $256,711 Market data, software solutions 14,473 +32% 10,936 Fully and other1 9.6% 6.9% Electronic Equities and 43,429 +25% 34,862 other2 Foreign +19% 47,393 exchange 56,233 54,410 Credit -2% Voice 53

  12. Slide 12: Industry Volumes and Volatility Picked Up in September After Slower Summer Months

    INDUSTRY VOLUMES AND VOLATILITY PICKED UP IN SEPTEMBER AFTER SLOWER SUMMER MONTHS Year-over-Year Change Year-over-Year Change in Capital Markets Activity (ADV, except credit derivatives outstanding) Average Daily (realized) Volatility -27% Dealer-Dealer CDS Outstanding -35% U.S. Rates (MOVE) -24% Eu

  13. Slide 13: Q414 Volumes & Volatility-to-Date Trending Up From a Year Ago

    Q414 VOLUMES & VOLATILITY-TO-DATE TRENDING UP FROM A YEAR AGO 4Q14TD Implied Volatility Change Y/Y -7% FX (CVIX) 10/1/2014 – 10/27/2014 0% U.S. Rates (MOVE) U.S. Equities (VIX) 20% European Equities (V2X) 24% Energy (VXXLE) 50% -10% 0% 10% 20% 30% 40% 50% 60% Source: Bloomberg, Goldman Sachs Investm

  14. Slide 14: BGC's Fully Electronic Brokerage Metrics

    BGC’S FULLY ELECTRONIC BROKERAGE METRICS Fully Electronic Brokerage Volumes Fully Electronic Revenues1 $4,500 $3,919.4 $25.1 $4,000 $25 $3,538.3 $23.5 $3,500 $22.6 $3,116.3 $3,000 $2,755.1 ($ millions) $20 $2,500 $2,167.0 ($ billions) $18.2 $17.8 $2,000 $1,500 $15 $1,000 $500 $0 $10 Q3 2013 Q4 2013

  15. Slide 15: Expanding Margins Aided by Fully Electronic

    EXPANDING MARGINS AIDED BY FULLY ELECTRONIC Q3 2014 Q3 2013 YOY Change Voice / Voice / Voice / Fully Hybrid / Fully Hybrid / Fully Hybrid / Electronic Other Corporate Total Electronic Other Corporate Total Electronic Other Corporate Total Revenue $25 $415 $9 $450 $18 $387 $10 $414 40% 7% -2% 9% Pre-

  16. Slide 16: Real Estate Overview

    REAL ESTATE OVERVIEW

  17. Slide 17: Business Overview: Real Estate Services

    BUSINESS OVERVIEW: REAL ESTATE SERVICES NGKF Highlights % of Q3 2014 Total Distributable Earnings Revenue  Real Estate Services pre-tax distributable earnings increased by 54% as compared to last year  Pre-tax margins up 285 bps  Brokerage revenues up approx. 29%  Revenue per broker/salesperson

  18. Slide 18: Newmark Grubb Knight Frank Recent Business Highlights

    NEWMARK GRUBB KNIGHT FRANK RECENT BUSINESS HIGHLIGHTS NEW OFFICES  NGKF closed on its acquisition of Cornish & Carey Commercial on August 13, 2014  Cornish & Carey has more than 275 brokers in thirteen strategically located offices throughout Northern California, including in San Francisco, Palo A

  19. Slide 19: NGKF Brokerage Revenues Outpace Industry Trends

    NGKF BROKERAGE REVENUES OUTPACE INDUSTRY TRENDS Commercial Real Estate Q3 2014 to Q3 2013 Change 35% 30% 29% 25% 20% 15% 12% 11% 10% 6% 5% 0% CMBS Sales Volumes Net Absorption NGKF Brokerage Originations Revenues Date Source: Commercial Mortgage Alert, CoStar, Moody’s RCA  NGKF brokerage revenue gr

  20. Slide 20: U.S. Economic Trends Positive for Commercial Real Estate

    U.S. ECONOMIC TRENDS POSITIVE FOR COMMERCIAL REAL ESTATE Economists Expect Favorable Conditions to Continue for the U.S. GDP Growth Unemployment Rate 5.0% 7.0% 4.6% 4.0% 3.0% 3.0% 3.0% 6.2% 6.2% 2.9% 6.1% 3.0% 2.2% 6.0% 5.9% 2.0% 5.6% 5.4% 1.0% 0.0% 5.0% 2Q14A 3Q2014E 4Q14E FY/YE14E FY/YE15E FY/YE16

  21. Slide 21: Outlook

    Tr bgc OUTLOOK

  22. Slide 22: Fourth Quarter 2014 Outlook Compared with Fourth Quarter 2013 Results

    FOURTH QUARTER 2014 OUTLOOK COMPARED WITH FOURTH QUARTER 2013 RESULTS  The Company expects distributable earnings revenues to increase by between approximately 10 percent and 18 percent and to be between approximately $475 million and $510 million, compared with $432.9 million.  BGC Partners antic

  23. Slide 23: Appendix

    Tr bgc APPENDIX

  24. Slide 24: BGC Partners Compensation Ratio

    BGC PARTNERS COMPENSATION RATIO $1,200 100% $1,091.2 $1,036.8 $1,000 90% $793.5 $810.1 $800 $749.8 80% ($ millions) $600 70% 61.7% 61.1% 62.0% 59.2% $400 60% 56.2% 53.8% 60.4% $200 50% $257.0 $271.8 $0 40% 2010 2011 2012 2013 YTD 2014 Q3 2013 Q3 2014 Compensation and Employee Benefits Compensation a

  25. Slide 25: Non-Compensation Expenses & Pre-Tax Margin

    NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 50% 40% 29.6% 30% 30.0% 30.2% 25.7% 28.0% 20% 16.1% 13.8% 13.2% 11.2% 10.3% 10% 0% FY 2010 FY 2011 FY 2012 FY 2013 YTD 2014 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date  Non-comp expenses were 24.9% of

  26. Slide 26: BGC's Economic Ownership as of 9/30/2014

    BGC’S ECONOMIC OWNERSHIP AS OF 9/30/2014 Employees, Executives, & Directors 34% Public Cantor 45% 21% 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 shares

  27. Slide 27: Average Exchange Rates

    AVERAGE EXCHANGE RATES Average Q3 2014 Q3 2013 October 1 - October 29, 2014 October 1 - October 29, 2013 US Dollar 1 1 1 1 British Pound 1.671 1.550 1.608 1.610 Euro 1.327 1.325 1.267 1.363 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.799 0.789 0.784 0.804 Japanese Yen* 103.880 98.900

  28. Slide 28: Distributable Earnings Defined

    DISTRIBUTABLE EARNINGS DEFINED 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 the f

  29. Slide 29: Adjusted EBITDA

    ADJUSTED EBITDA 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 depreciation

  30. Slide 30: Adjusted EBITDA Reconciliation

    ADJUSTED EBITDA BGC Partners, Inc. Reconciliation of GAAP Income to Adjusted EBITDA (and Comparison to Pre-Tax Distributable Earnings) (in thousands) (unaudited) Q3 2014 Q3 2013 GAAP Income from continuing operations before income taxes $ 29,937 $ 42,663 Add back: Employee loan amortization 7,133 7,

  31. Slide 31: Reconciliation of Income Under GAAP to Distributable Earnings

    RECONCILIATION OF INCOME UNDER GAAP TO DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF GAAP INCOME TO DISTRIBUTABLE EARNINGS (in thousands, except per share data) (unaudited) Q3 2014 Q3 2013 GAAP income before income taxes $ 29,937 $ 42,663 Pre-tax adjustments: Non-cash losses related to

  32. Slide 32: Reconciliation of Revenues Under GAAP and Distributable Earnings

    RECONCILIATION OF REVENUES UNDER U.S. GAAP AND DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF REVENUES UNDER GAAP AND DISTRIBUTABLE EARNINGS (in thousands) (unaudited) Q3 2014 Q3 2013 GAAP Revenue $ 436,216 $ 404,189 Plus: Other Income (losses), net 43,252 29,156 Adjusted GAAP 479,468 4

BGC Partners — Q3 2014 Earnings Presentation on 6ix