Bgc Group, Inc. · NASDAQ:BGC

Bgc — BGC Partners — Q4 2016 Earnings Presentation

51 slides from Bgc's earnings presentation, February 2017

  1. Slide 1: BGC Partners, Inc. Earnings Presentation 4Q 2016

    1 BGC PARTNERS, INC. Earnings Presentation 4Q 2016 NASDAQ: BGCP

  2. 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

  3. 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

  4. Slide 4: General Overview

    BGC PARTNERS 4 GENERAL OVERVIEW

  5. Slide 5: Select Consolidated Distributable Earnings Financial Results

    SELECT CONSOLIDATED DISTRIBUTABLE EARNINGS FINANCIAL RESULTS 5 Highlights of Consolidated Distributable Earnings Results 4Q 2016 4Q 2015 Change (%) FY 2016 FY 2015 Change (%) (USD millions, except per share data) Revenues $673.2 $674.9 (0.2)% $2,612.6 $2,580.4 1.2% Pre-tax distributable earnings bef

  6. Slide 6: Global Revenue Breakdown

    GLOBAL REVENUE BREAKDOWN 6 FY16 & 4Q16 Global Revenues Americas RE 40% APAC 8% FY16 Americas RE APAC 8% 45% 4Q16 EMEA EMEA 31% 31% Americas FS 17% Americas FS 20%  Total Americas revenue down 3% in 4Q16 and up 2% in FY16  Europe, Middle East & Africa revenue up 5% (up 14% excluding Trayport) in 4Q

  7. Slide 7: 4Q 2016 Segment Data (Distributable Earnings Basis)

    4Q 2016 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 7 (In USD millions) 4Q 2016 REVENUES 4Q 2016 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $359.3 $87.7 24.4% 1% Real Estate $306.1 $49.5 16.2% Corporate $7.8 ($8.2) NMF Real Financial Estate Services (In USD millions) Services 53% 4

  8. Slide 8: FY 2016 Segment Data (Distributable Earnings Basis)

    FY 2016 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) 8 (In USD millions) FY 2016 REVENUES FY 2016 Revenues Pre-tax Earnings Pre-tax Margin Corporate Financial $1,523.2 $351.8 23.1% 1% Real Estate $1,058.3 $130.5 12.3% Corporate $31.1 ($56.9) NMF Real Financial Estate (In USD millions) Services Servic

  9. Slide 9: BGC's 4Q 2016 Significant Revenue Diversity

    BGC'S 4Q 2016 SIGNIFICANT REVENUE DIVERSITY 9 Corporate 1% Real Estate Management and Other BGC’s Businesses at a Glance 8%  BGC maintains a highly diverse Rates 17% revenue base Corporate  Wholesale Financial Services Real Estate Capital 1% Brokerage revenues and Markets 16% earnings typically se

  10. Slide 10: BGC's FY 2016 Business Shows Strong Revenue Diversity

    BGC'S FY 2016 BUSINESS SHOWS STRONG REVENUE DIVERSITY 10 Corporate 1% BGC’s Businesses at a Glance Real Estate Management and Other 8%  BGC maintains a highly diverse Rates 18% revenue base Real Estate Capital Markets Corporate  Wholesale Financial Services 13% 1% Brokerage revenues and earnings t

  11. Slide 11: BGC's Front Office Headcount & Productivity

    BGC’S FRONT OFFICE HEADCOUNT & PRODUCTIVITY 11 FRONT OFFICE HEADCOUNT FRONT OFFICE PRODUCTIVITY (USD Thousands) Yr/Yr change: 0% 1% 3,855 3,858 3,812 3,800 3,860 1,401 1,417 1,421 1,447 1,444 615 620 3% 2,454 2,441 2,391 2,353 2,416 154 159 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Q4 2015 Q4 2016 FY

  12. Slide 12: Distributable Earnings Expense & Pre-Tax Margin Trends

    DISTRIBUTABLE EARNINGS EXPENSE & PRE-TAX MARGIN TRENDS 12 $2,000 100% 90% $1,500 1,625 1,625 (USD millions) 80% $1,000 70% 63.0% 62.2% 63.0% 59.8% 60% $500 50% 425 403 $0 40% FY 2015 FY 2016 4Q 2015 4Q 2016 Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue 2

  13. Slide 13: Recently Announced / Completed BGC & NGKF Acquisitions

    RECENTLY ANNOUNCED / COMPLETED BGC & NGKF ACQUISITIONS 13 Regency Capital Partners:  On February 8, 2017, NGKF announced that it acquired the assets of Regency Capital Partners, a real estate capital advisory firm regarded for its specialized financing expertise, headquartered in San Francisco  Ov

  14. Slide 14: Financial Services Overview

    14 Overview FINANCIAL SERVICES

  15. Slide 15: 4Q 2016 Financial Services Summary

    4Q 2016 FINANCIAL SERVICES SUMMARY 15 BGC Financial Services Segment Highlights Quarterly Drivers General:  Increased activity across rates; decreased  Pre-tax distributable earnings up over 25% activity across cash equities and foreign  Pre-tax distributable earnings margin exchange expanded aro

  16. Slide 16: Financial Services Revenue Breakout by Asset Class

    FINANCIAL SERVICES REVENUE BREAKOUT BY ASSET CLASS 16 FINANCIAL SERVICES REVENUE COMPOSITION (USD $000s) % Change $378,206 $359,301 Total Financial Services (5)% 15,834 Trayport1 NMF 16,091 14,013 Data, software, post-trade and other (13)% 42,594 41,950 Equity & other (2)% 57,061 54,111 Energy & com

  17. Slide 17: Business Overview: FENICS

    BUSINESS OVERVIEW: FENICS 17 FENICS Net Revenue Growth1 4Q 2016 FENICS Breakdown2 (USD $000s) 240,000 16% Data, software and Data, 180,000 12% post trade software and (inter- post trade company) 21% 20% 120,000 8% F/X 10% 60,000 4% Rates 21% - 0% Credit FY10 FY11 FY12 FY13 FY14 FY15 FY16 27% Fenics

  18. Slide 18: BGC's FENICS (Fully Electronic) Revenue Growth

    BGC’S FENICS (FULLY ELECTRONIC) REVENUE GROWTH 18 FENICS (Fully Electronic) Revenues1 (USD 000s) 300,000 $260,851 250,000 $229,336 52,219 37,310 200,000 54,309 43,728 150,000 100,000 change -1% 148,298 154,323 $60,625 $60,230 11,749 12,306 50,000 14,671 12,949 34,205 34,975 - FY15 FY16 4Q15 4Q16 Ele

  19. Slide 19: FENICS in Review

    FENICS IN REVIEW 19 (USD millions) Q4 2016 FY 2016 Voice / Hybrid / Voice / Hybrid / FENICS Other Real Estate Corporate Total FENICS Other Real Estate Corporate Total Revenue $60.2 $299.1 $306.1 $7.8 $673.2 $260.9 $1,262.4 $1,058.3 $31.1 $2,612.6 Pre-tax DE $24.9 $62.8 $49.5 ($8.2) $129.1 $111.0 $24

  20. Slide 20: Real Estate: Newmark Grubb Knight Frank Overview

    Newmark Grubb Knight Frank Overview REAL ESTATE SST

  21. Slide 21: Business Overview: Real Estate Services

    BUSINESS OVERVIEW: REAL ESTATE SERVICES 21 NGKF Highlights 4Q 2016 Real Estate Segment Breakdown  4Q 2016 Real Estate Services revenue increased 7% compared to 4Q 2015 Real estate Management capital markets services & 34%  4Q 2016 Real estate capital markets revenue other revenues 19% increased 43

  22. Slide 22: NGKF's Continued Strong Revenue Growth

    NGKF'S CONTINUED STRONG REVENUE GROWTH 22 NGKF Revenue (USD 000’s) 1,000,000 800,000 Revenues 600,000 400,000 200,000 - FY FY FY FY 2013 2014 2015 2016 Revenue  NGKF revenues have grown from $577 million for the year ended December 31, 2013 to $1,058 million for the year ended December 31, 2016 rep

  23. Slide 23: Industry Fundamentals Remain Strong

    INDUSTRY FUNDAMENTALS REMAIN STRONG 23 Historical U.S. Cap Rate Yield Spread Over 10-Year U.S. Treasuries 10% 500 4Q 2016 Yield Spread: 376 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 Yield Spread Cap Rates, Al

  24. Slide 24: Outlook

    24 BGC PARTNERS OUTLOOK

  25. Slide 25: Outlook Comparison

    OUTLOOK COMPARISON 25 Outlook Compared with a Year Ago Results  BGC anticipates first quarter 2017 revenues of between $655 million and $700 million, compared with $640.7 million a year earlier  BGC anticipates generating pre-tax earnings of between $94 million and $120 million, as compared to $88

  26. Slide 26: GAAP Financial Results

    GAAPFINANCIAL GAAP Financials RESULTS

  27. Slide 27: Select Consolidated GAAP Financial Results

    SELECT CONSOLIDATED GAAP FINANCIAL RESULTS 27 Highlights of Consolidated GAAP Results (USD millions, 4Q 2016 4Q 2015 Change (%) FY16 FY15 Change (%) except per share data) Revenues under both U.S. Generally Accepted Accounting $673.2 $674.9 (0.2)% $2,612.6 $2,580.4 1.2% Principles (“GAAP”) and Distr

  28. Slide 28: Condensed Consolidated Statements of Operations

    BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 28 Three Months Ended December 31, Year Ended December 31, Revenues: 2016 2015 2016 2015 Commissions $ 524,287 $ 507,503 $ 1,994,227 $ 1,931,860 Principal transactions 70

  29. Slide 29: Condensed Consolidated Statements of Financial Condition

    BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) 29 December 31, December 31, 2016 2015 Assets Cash and cash equivalents $ 502,024 $ 462,134 Cash segregated under regulatory requirements 6,895 3,199 Reverse rep

  30. Slide 30: Appendix

    APPENDIX TMNT ANTI INT ss 1

  31. Slide 31: BGC's Economic Ownership as of December 31, 2016

    BGC’S ECONOMIC OWNERSHIP AS OF DECEMBER 31, 2016 31 Cantor 20% Public 49% Employees, Executives, & Directors 31% 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

  32. Slide 32: 2016 NGKF Highlights

    2016 NGKF HIGHLIGHTS 32 EXPANSION HIGHLIGHTS:  Acquired Continental Realty Ltd. Headquartered in Columbus and one of the largest commercial brokerage operations in Central Ohio. Acquisition bolsters NGKF’s presence in the Midwest  Acquired Newmark Grubb Mexico City One of the premier tenant adviso

  33. Slide 33: Strongly Capitalized; Investment Grade Credit Profile

    STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 33 ($ in '000s) BGC Partners, Inc. 12/31/2016 Cash and Cash Equivalents $502,024 Reverse Repurchase Agreements 54,659 Securities Owned 35,357 Marketable Securities (net) 164,820 Total Liquidity $756,860 BGC Partners, Inc. and Subsidiaries Issuer

  34. Slide 34: 4Q16 Industry Volumes Up; Volatility Mixed

    4Q16 INDUSTRY VOLUMES UP; VOLATILITY MIXED 34 4Q16: Yr/Yr Change in Capital Markets Activity 4Q16: Yr/Yr Change in Average Daily Volatility (ADV excl. Eurex Equity Derivatives) -2% Thomson Reuters FX Spot U.S. Corp. Bonds -18% U.S. Equities (VIX) (Primary Dealer) 2% Eurex Equity Derivatives 5% -17%

  35. Slide 35: Volumes and Volatility Generally Mixed From a Year Ago

    VOLUMES AND VOLATILITY GENERALLY MIXED FROM A YEAR AGO 35 1Q17TD Change in Capital Markets Activity 1Q17TD Change in Average Daily Volatility (1/1/2017 – 1/30/2017) (1/1/2017 – 1/30/2017) - 29% U.S Equities - 50% U.S. Equities (VIX) - 27% European Equities -13% Energy (ICE) - 45% European Equities (

  36. Slide 36: Vacancy Rates Continue to Improve

    VACANCY RATES CONTINUE TO IMPROVE SIGNALING SUSTAINED DEMAND FOR COMMERCIAL REAL ESTATE 36 20.0% U.S. Vacancy Rates by Asset Class 16.0% 12.0% 8.0% 4.0% 0.0% 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 Office Industrial Retail Unweighted Average Source: CoStar, REIS, and NGKF Research  Vacancy rates continue to

  37. Slide 37: Average Exchange Rates

    AVERAGE EXCHANGE RATES 37 Q4 2016 Q4 2015 Jan 1 – Jan 30, 2017 Jan 1 – Jan 30, 2016 US Dollar 1 1 1 1 British Pound 1.243 1.517 1.234 1.442 Euro 1.079 1.096 1.062 1.087 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.709 0.711 0.700 0.699 Japanese Yen 109.500 121.420 115.020 118.390 Sour

  38. Slide 38: Differences Between Consolidated Results for Distributable Earnings and GAAP

    DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP 38 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

  39. Slide 39: Differences Between Consolidated Results for Distributable Earnings and GAAP (Continued)

    DIFFERENCES BETWEEN CONSOLIDATED RESULTS FOR DISTRIBUTABLE EARNINGS AND GAAP (CONTINUED) 39 Differences between Compensation Expenses for Distributable Earnings and GAAP In the fourth quarter of 2016, the difference between compensation expenses as calculated for GAAP and distributable earnings incl

  40. Slide 40: Distributable Earnings Defined

    DISTRIBUTABLE EARNINGS DEFINED 40 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

  41. Slide 41: Distributable Earnings Defined (Continued)

    DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 41 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

  42. Slide 42: Distributable Earnings Defined (Continued)

    DISTRIBUTABLE EARNINGS DEFINED (CONTINUED) 42 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’

  43. Slide 43: Adjusted EBITDA Defined

    ADJUSTED EBITDA DEFINED 43 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

  44. Slide 44: Reconciliation of GAAP Income to Adjusted EBITDA

    RECONCILIATION OF GAAP INCOME TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) 44 Q4 2016 Q4 2015 FY 2016 FY 2015 GAAP Net income (loss) available to common stockholders $ 16,080 $ 63,406 $ 102,477 $ 121,318 Add back: Provision (benefit) for income taxes 14,601 79,441 60,252 120,496 Net income (loss) a

  45. Slide 45: Reconciliation of GAAP Income (Loss) to Distributable Earnings

    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) 45 Q4 2016 Q4 2015 FY 2016 FY 2015 GAAP income (loss) before income taxes $ 37,352 $ 249,497 $ 188,260 $ 380,611 Pre-tax adjustmen

  46. Slide 46: 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) 46 Q4 2016 Q4 2015 FY 2016 FY 2015 FENICS GAAP income before income taxes (1) $ 23,289 $ 22,224 $ 104,773 $ 86,931 Pre-tax adjustments: Grant of exchangeability to limited partnership units

  47. Slide 47: 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) 47 Q4 2016 Q4 2015 FY 2016 FY 2015 Common stock outstanding 279,833 254,155 277,073 243,460 Limited partnership units 86,290 65,926 79,727 - Cantor units 50,932 49,902 50,653 49,065 Founding par

  48. Slide 48: Segment Disclosure – Q4 2016 vs Q4 2015

    SEGMENT DISCLOSURE – Q4 2016 VS Q4 2015 (IN THOUSANDS) (UNAUDITED) 48 Q4 2016 Q4 2015 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 359,301 $ 306,098 $ 7,849 $ 673,248 $ 378,206 $ 287,384 $ 9,334 $ 674,924

  49. Slide 49: Segment Disclosure – FY 2016 vs FY 2015

    SEGMENT DISCLOSURE – FY 2016 VS FY 2015 (IN THOUSANDS) (UNAUDITED) 49 FY 2016 FY 2015 Financial Real Corporate Financial Real Corporate Services Estate Services Items Total Services Estate Services Items Total Total revenues $ 1,523,235 $ 1,058,322 $ 31,066 $ 2,612,623 $ 1,548,159 $ 998,450 $ 33,830

  50. Slide 50: Liquidity Analysis

    LIQUIDITY ANALYSIS (IN THOUSANDS) (UNAUDITED) 50 December 31, 2016 December 31, 2015 Cash and cash equivalents $ 502,024 $ 462,134 Reverse repurchase agreements 54,659 - Securities owned 35,357 32,361 Marketable securities (1) (2) 164,820 532,510 Total $ 756,860 $ 1,027,005 (1) As of December 31, 20

  51. Slide 51: Media and Investor Contact

    51 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: Jason McGruder bgcpartners.com twitter.com/bgcpartners +1 212-829-4988 linkedin.com/company/bgc-partners

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