Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q1 2017 Earnings Presentation
46 slides from Bgc's earnings presentation, May 2017
Slide 1: BGC Partners, Inc. Earnings Presentation 1Q 2017
1 BGC PARTNERS, INC. Earnings Presentation 1Q 2017 NASDAQ: BGCP
Slide 2: Disclaimer
DISCLAIMER 2 Discussion of Forward-Looking Statements by BGC Partners Statements in this document regarding BGC that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to update any forward-looking s
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
Slide 5: Select Consolidated Distributable Earnings Financial Results
SELECT CONSOLIDATED DISTRIBUTABLE EARNINGS FINANCIAL RESULTS 5 Highlights of Consolidated Distributable Earnings Results (USD 1Q 2017 1Q 2016 Change (%) millions, except per share data) Revenues $707.4 $640.7 10.4% Pre-tax distributable earnings before non-controlling interest in 121.5 88.3 37.6% su
Slide 6: Global Revenue Breakdown
GLOBAL REVENUE BREAKDOWN 6 1Q17 Q1 Global Revenues APAC Americas RE 9% 36% EMEA 35% Americas FS 20% Total Americas revenue up 8% in 1Q17 Europe, Middle East & Africa revenue up 16% in 1Q17 Asia Pacific revenue up 8% in 1Q17 Note: Percentages may not sum to 100% due to rounding, Real Estate Ser
Slide 7: 1Q 2017 Segment Data (Distributable Earnings Basis)
1Q 2017 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 7 (In USD millions) 1Q 2017 REVENUES 1Q 2017 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $441.2 $113.5 25.7% 1% Real Estate $258.0 $22.7 8.8% Corporate $8.3 ($14.8) NMF Real Estate Services (In USD millions) 36% Financial 1Q 2016 R
Slide 8: BGC's 1Q 2017 Significant Revenue Diversity
BGC'S 1Q 2017 SIGNIFICANT REVENUE DIVERSITY 8 Corporate 1% BGC’s Businesses at a Glance Real Estate Management and Other BGC maintains a highly diverse 7% Rates revenue base 19% Real Estate Capital Markets Corporate Wholesale Financial Services 11% 1% Brokerage revenues and earnings typically se
Slide 9: BGC's Front Office Headcount & Productivity
BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 9 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (as of period-end) (period-average, USD Thousands) +1% 3,858 3,812 3,800 3,935 4,004 1,444 1,443 1,417 1,421 1,447 615 620 2,441 2,391 2,353 2,491 2,561 150 163 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 Q1 2
Slide 10: Distributable Earnings Expense & Pre-tax Margin Trends
DISTRIBUTABLE EARNINGS EXPENSE & PRE-TAX MARGIN TRENDS 10 $2,000 100% 90% $1,500 1,625 1,625 (USD millions) 80% $1,000 63.0% 70% 62.2% 63.4% 61.7% 60% $500 406 436 50% $0 40% FY 2015 FY 2016 1Q 2016 1Q 2017 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 2
Slide 11: Financial Services Overview
11 Overview FINANCIAL SERVICES
Slide 12: Business Overview: Financial Services Summary
BUSINESS OVERVIEW: FINANCIAL SERVICES SUMMARY 12 BGC Financial Services Segment Highlights Quarterly Drivers General: Increased activity across rates; decreased Pre-tax distributable earnings up activity across cash equities, foreign approximately 13% exchange, and certain IDB energy and Pre-t
Slide 13: Financial Services Revenue Breakout by Asset Class
FINANCIAL SERVICES REVENUE BREAKOUT BY ASSET CLASS 13 FINANCIAL SERVICES REVENUE COMPOSITION (USD $000s) % Change $441,178 Total Financial Services 6% $417,607 1,592 Other NMF 3,907 13,087 Data, software, and post-trade (6)% 13,934 Equity, insurance, and 75,706 57% 48,366 other asset classes 53,145
Slide 14: Business Overview: FENICS
BUSINESS OVERVIEW: FENICS 14 FENICS Net Revenue Growth1 1Q 2017 FENICS Breakdown2 (USD $000s) 240,000 16% Data, software and 180,000 12% post trade Data, (inter- software and company) post trade F/X 19% 18% 120,000 8% 10% 60,000 4% Rates - 0% Credit 25% FY10 FY11 FY12 FY13 FY14 FY15 FY16 TTM 28% 1Q1
Slide 15: BGC's FENICS (Fully Electronic) Revenue Growth
BGC’S FENICS (FULLY ELECTRONIC) REVENUE GROWTH 15 FENICS (Fully Electronic) Revenues1 (USD 000s) 300,000 $257,669 $263,973 250,000 50,924 52,644 200,000 51,122 53,462 150,000 100,000 155,623 157,867 $70,242 $73,364 13,613 14,038 50,000 13,087 13,934 42,695 46,239 - TTM 1Q16 TTM 1Q17 1Q16 1Q17 Electr
Slide 16: FENICS in Review
FENICS IN REVIEW 16 (USD millions) Q1 2017 TTM Q1 2017 Voice / Hybrid / Voice / Hybrid / FENICS Other Real Estate Corporate Total FENICS Other Real Estate Corporate Total Revenue $73.4 $367.8 $258.0 $8.3 $707.4 $264.0 $1,282.8 $1,101.8 $30.8 $2,679.4 Pre-tax DE $31.7 $81.8 $22.7 ($14.8) $121.5 $111.
Slide 17: Real Estate Overview
Newmark Grubb Knight Frank Overview REAL ESTATE SST
Slide 18: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES 18 NGKF Highlights 1Q 2017 Real Estate Segment Breakdown 1Q 2017 leasing and other services revenue increased 21% compared to 1Q 2016 Real estate Management capital markets services & 31% 1Q 2017 real estate capital markets revenue other revenues 20% incre
Slide 19: NGKF's Continued Strong Revenue Growth
NGKF'S CONTINUED STRONG REVENUE GROWTH 19 NGKF Revenue (USD 000’s) 1,200,000 1,000,000 800,000 Revenues 600,000 400,000 200,000 - FY FY FY FY FY TTM 1Q17 2012 2013 2014 2015 2016 Revenue NGKF revenues have grown from $455 million for the year ended December 31, 2012 to $1,102 million for the trail
Slide 20: Industry Fundamentals Remain Strong
INDUSTRY FUNDAMENTALS REMAIN STRONG 20 Historical U.S. Cap Rate Yield Spread Over 10-Year U.S. Treasuries 10% 500 1Q 2017 Yield Spread: 354 bps 8% 400 SPREAD (BPS) 6% 300 CAP RATE 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 21: Outlook
21 BGC PARTNERS OUTLOOK
Slide 22: Outlook Comparison
OUTLOOK COMPARISON 22 Outlook Compared with a Year Ago Results BGC anticipates second quarter 2017 revenues of between $675 million and $720 million, compared with $653.8 million a year earlier BGC anticipates generating pre-tax earnings of between $108 million and $132 million, as compared to $
Slide 23: GAAP Financial Results
GAAPFINANCIAL GAAP Financials RESULTS
Slide 24: Select Consolidated GAAP Financial Results
SELECT CONSOLIDATED GAAP FINANCIAL RESULTS 24 Highlights of Consolidated GAAP Results (USD millions, except per share 1Q 2017 1Q 2016 Change (%) data) Revenues under both U.S. Generally Accepted Accounting Principles $707.4 $640.7 10.4% (“GAAP”) and Distributable Earnings Income from operations befo
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 March 31, Revenues: 2017 2016 Commissions $ 547,126 $ 475,087 Principal transactions 85,743 92,439 Total brokerage revenues 632,869 567,526 Real est
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 March 31, 2017 December 31, 2016 Assets Cash and cash equivalents $ 428,852 $ 502,024 Cash segregated under regulatory requirements 94,118 6,895 Reverse repur
Slide 27: Appendix
APPENDIX TMNT ANTI INT ss 1
Slide 28: BGC's Economic Ownership as of March 31, 2017
BGC’S ECONOMIC OWNERSHIP AS OF MARCH 31, 2017 28 Cantor 20% Public 48% Employees, Executives, & Directors 32% 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 sha
Slide 29: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 29 ($ in '000s) BGC Partners, Inc. 3/31/2017 Cash and Cash Equivalents $428,852 Repurchase Agreements (4,869) Securities Owned 34,088 Marketable Securities (net of securities loaned) 75,915 1 Total Liquidity $533,986 BGC Partners, Inc. and Subsid
Slide 30: 1Q17 Industry Volumes Mixed; Volatility Down
1Q17 INDUSTRY VOLUMES MIXED; VOLATILITY DOWN 30 1Q17: Yr/Yr Change in Capital Markets Activity 1Q17: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) - 27% CDS Notional Turnover (ISDA) European -46% - 24% Equity Indices (ICE) Equities (V2X) - 20% Energy & Commodities Fut
Slide 31: Volumes and Volatility Generally Mixed From a Year Ago
VOLUMES AND VOLATILITY GENERALLY MIXED FROM A YEAR AGO 31 2Q17TD Change in Capital Markets Activity 2Q17TD Change in Average Daily Volatility (4/1/2017 – 4/28/2017) (4/1/2017 – 4/28/2017) - 8% U.S Equities -22% Commodity Volatility Index (BofAML) FX Futures (CME) 4% European Equities -20% FX (CVIX)
Slide 32: Vacancy Rates Continue to Improve Signaling Sustained Demand
VACANCY RATES CONTINUE TO IMPROVE SIGNALING SUSTAINED DEMAND FOR COMMERCIAL REAL ESTATE 32 20.0% U.S. Vacancy Rates by Asset Class 16.0% 12.0% 8.0% 4.0% 0.0% 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Office Industrial Retail Unweighted Average Source: CoStar, REIS, and NGKF Research Vacancy rates continu
Slide 33: Average Exchange Rates
AVERAGE EXCHANGE RATES 33 Q1 2017 Q1 2016 Apr 1 – Apr 28, 2017 Apr 1 – Apr 28, 2016 US Dollar 1 1 1 1 British Pound 1.239 1.433 1.264 1.430 Euro 1.065 1.104 1.071 1.134 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.706 0.714 0.715 0.741 Japanese Yen 113.667 115.307 110.106 109.867 Sour
Slide 34: Differences Between Consolidated Results for Distributable Earnings and GAAP
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP 34 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 35: Differences Between Consolidated Results for Distributable Earnings and GAAP (Continued)
DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP (CONTINUED) 35 Differences between Compensation Expenses for Distributable Earnings and GAAP In the first quarter of 2017, the difference between compensation expenses as calculated for GAAP and distributable earnings inclu
Slide 36: Distributable Earnings Defined
DISTRIBUTABLE EARNINGS DEFINED 36 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 37: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 37 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 38: Distributable Earnings Defined (Continued)
DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 38 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 39: Adjusted EBITDA Defined
ADJUSTED EBITDA DEFINED 39 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 40: Reconciliation of GAAP Income (Loss) to Adjusted EBITDA
RECONCILIATION OF GAAP INCOME (LOSS) TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 40 Q1 2017 Q1 2016 GAAP Net income (loss) available to common stockholders $ 18,215 $ 12,505 Add back: Provision (benefit) for income taxes 6,659 4,840 Net income (loss) attributable to noncontrolling interest in subs
Slide 41: 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) 41 Q1 2017 Q1 2016 GAAP income (loss) before income taxes $ 28,751 $ 19,390 Pre-tax adjustments: Non-cash (gains) losses related t
Slide 42: 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) 42 TTM Ended TTM Ended Q1 2017 Q1 2016 March 31, 2017 March 31, 2016 FENICS GAAP income before income taxes (1) $ 30,136 $ 28,419 $ 103,805 $ 97,486 Pre-tax adjustments: Grant of exchangeab
Slide 43: 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) 43 Q1 2017 Q1 2016 Common stock outstanding 283,399 273,780 Limited partnership units 94,298 74,390 Cantor units 51,183 50,558 Founding partner units 13,790 14,877 4.50% Convertible debt shares
Slide 44: Segment Disclosure – Q1 2017 vs Q1 2016
SEGMENT DISCLOSURE – Q1 2017 VS Q1 2016 (IN THOUSANDS) (UNAUDITED) 44 Q1 2017 Q1 2016 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 441,178 $ 257,957 $ 8,295 $ 707,430 $ 417,607 $ 214,480 $ 8,567 $ 640,654
Slide 45: Liquidity Analysis
LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 45 March 31, 2017 December 31, 2016 Cash and cash equivalents $ 428,852 $ 502,024 Reverse repurchase agreements - 54,659 Repurchase agreements (4,869) - Securities owned 34,088 35,357 Marketable securities (1) 75,915 164,820 Total $ 533,986 $ 756,860 (1)
Slide 46: Media and Investor Contacts
46 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: Jason McGruder ir.bgcpartners.com twitter.com/bgcpartners +1 212-829-4988 linkedin.com/company/bgc-partners