Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q4 2014 Earnings Presentation
36 slides from Bgc's earnings presentation, Feb 10, 2015
Slide 1: BGC Partners, Inc. Q4 2014 Earnings Presentation
BGC PARTNERS, INC. Q4 2014 EARNINGS PRESENTATION
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 release any
Slide 3: General Overview
GENERAL OVERVIEW
Slide 4: Select Q4 2014 Results Compared to Q4 2013
SELECT Q4 2014 RESULTS COMPARED TO Q4 2013 Highlights of Consolidated Results Change Q4 2014 Q4 2013 (USD millions, except per share data) (%) Revenues for distributable earnings $515.5 $432.9 19.1 Pre-tax distributable earnings before non-controlling interest 72.6 46.0 57.8 in subsidiaries and taxe
Slide 5: Q4 2014 Global Revenue Breakdown
Q4 2014 GLOBAL REVENUE BREAKDOWN Americas revenue up 31% Y/Y Europe, Middle East & Africa revenue down 2% Y/Y Asia Pacific revenue down 1% Y/Y Q4 2014 Revenues APAC 7% Hong London Kong EMEA 23% Americas 70% New York Paris Date Singapore Strengthening U.S. dollar reduced non-U.S. revenues by
Slide 6: FY 2014 Global Revenue Breakdown
FY 2014 GLOBAL REVENUE BREAKDOWN Americas revenue up 12% Y/Y Europe, Middle East & Africa revenue down 6% Y/Y Asia Pacific revenue down 11% Y/Y FY 2014 Revenues APAC 8% Hong London Kong EMEA 28% Americas 64% New York Paris Date Singapore IDBs typically seasonally strongest in 1st quarter, we
Slide 7: Q4 2014 Segment Data (Distributable Earnings Basis)
Q4 2014 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) Q4 2014 Revenues Corporate Pre‐tax Pre‐tax 1% Q4 2014 Revenues Earnings Margin (In USD millions) Financial $260.8 $52.8 20.3% Real Estate $247.4 $38.3 15.5% Financial Services 51% Corporate $7.3 ($18.6) NMF Pre‐tax Pre‐tax Real Estate Q4 2013 Reven
Slide 8: FY 2014 Segment Data (Distributable Earnings Basis)
FY 2014 SEGMENT DATA (DISTRIBUTABLE EARNINGS BASIS) FY 2014 Revenues Corporate Pre‐tax Pre‐tax 2% FY 2014 Revenues Earnings Margin (In USD millions) Financial $1,080.7 $216.8 20.1% Real Estate $725.4 $92.8 12.8% Corporate $35.4 ($62.1) NMF Financial Real Estate Services 39% 59% Pre‐tax Pre‐tax FY 20
Slide 9: BGC's Front Office Productivity Growth
BGC’S FRONT OFFICE PRODUCTIVITY GROWTH Front Office Headcount Front Office Productivity $700 $636 $619 2,863 2,755 $600 2,800 2,385 2,385 2,398 (Front Office Employees) 2,300 1,244 $500 1,135 884 888 879 1,800 $400 ($ thousands) 1,300 $300 800 1,501 1,497 1,519 1,620 1,619 $200 $164 $152 300 $100 -2
Slide 10: Status of BGC's Tender Offer for GFI Group Inc.
STATUS OF BGC’S TENDER OFFER FOR GFI GROUP INC. BGC’S current offer of $6.10 per share all-cash offer represents a premium of more than 96% to the price of GFI Group shares on July 29, 2014, the last day prior to the announcement of the now terminated CME transaction As of February 3, 2015 appro
Slide 11: Financial Services Overview
FINANCIAL SERVICES OVERVIEW
Slide 12: Q4 2014 Financial Services Summary
Q4 2014 FINANCIAL SERVICES SUMMARY BGC Financial Services Segment Highlights FS margins improved over 700 bps as a result of increased higher margined fully electronic revenues and cost management efforts Energy & Commodities revenues continued to outpace the industry, up over 83% year-over-year
Slide 13: Financial Services Revenue Breakout
FINANCIAL SERVICES REVENUE BREAKOUT Revenues By Asset Class FS Revenue Composition % Change $260,803 Market data, software solutions $246,323 +42% 19,083 Fully and other1 7.4% 10.7% Electronic 13,442 Equities and +32% other2 46,475 35,204 Foreign exchange 44,687 +29% 57,590 Credit 53,651 Voice -11%
Slide 14: Industry Volumes and Volatility Picked Up in Q4 2014
INDUSTRY VOLUMES AND VOLATILITY PICKED UP IN Q4 2014 Year-over-Year Change in Capital Markets Activity Year-over-Year Change (ADV, except credit derivatives outstanding) Average Daily (realized) Volatility -26% Dealer-Dealer CDS Outstanding U.S. Rates (MOVE) 1% -5% ICE Equity Derivatives -3% U.S. Co
Slide 15: January Volumes & Volatility-to-Date Trending Up
JANUARY VOLUMES & VOLATILITY-TO-DATE TRENDING UP FROM A YEAR AGO 1Q15TD Volume Change Y/Y 1Q15TD Implied Volatility Change -5% U.S. Corp. Bonds (Primary Dealer) 01/1/2015 – 01/31/2015 Y/Y 01/1/2015 – 01/31/2015 U.S. Rates (MOVE) 28% -5% ICE Equity Derivatives Energy (ICE) 8% FX (CVIX) 33% U.S. Treas
Slide 16: BGC's Fully Electronic Growth
BGC’S FULLY ELECTRONIC GROWTH Fully Electronic Brokerage Volumes Fully Electronic Revenues1 $27.9 $6,000 $25.1 $4,897.0 $25 $5,000 $23.5 $22.6 $3,919.4 $4,000 $3,538.3 ($ millions) $20 $3,116.3 ($ billions) $2,755.1 $18.2 $3,000 $2,000 $15 $1,000 $0 $10 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Date Q4 2014 Q
Slide 17: Expanding Margins Aided by Growing Fully Electronic Business
EXPANDING MARGINS AIDED BY GROWING FULLY ELECTRONIC BUSINESS All Results Exclude eSpeed Q414 and FY14 Fully electronic revenues increased 54% and 23%, respectively Fully electronic Pre-tax distributable earnings up 79% and 48%, respectively Q414 Fully electronic margins have expanded ~800 bps
Slide 18: Real Estate Overview
REAL ESTATE OVERVIEW
Slide 19: Business Overview: Real Estate Services
BUSINESS OVERVIEW: REAL ESTATE SERVICES NGKF Highlights % of Q4 2014 Total Distributable Earnings Revenue Q414 Real Estate Services revenues increased by 40% as compared to last year Pre-tax distributable earnings increased by 41% Higher margin RE brokerage revenues up 53% Revenue per broker
Slide 20: NGKF Brokerage Revenues Outpace Industry Trends
NGKF BROKERAGE REVENUES OUTPACE INDUSTRY TRENDS Commercial Real Estate Landscape Q4 2014 to Q4 2013 Change 60% 53% 50% 40% 30% 23% 20% 9% 10% 5% 0% Sales Volumes U.S. CMBS Net Absorption NGKF Brokerage Originations (TTM) (TTM) Revenues Date Source: Commercial Mortgage Alert, CoStar, Moody’s RCA NG
Slide 21: Newmark Grubb Knight Frank 2014 Highlights
NEWMARK GRUBB KNIGHT FRANK 2014 HIGHLIGHTS NEW OFFICES: Acquired Apartment Realty Advisors (ARA) The nation’s largest full-service investment advisory firm focusing exclusively on the multi-housing industry. Approximately 100 brokers with offices nationwide and expected to contribute in excess of
Slide 22: NGKF's Key 2014 Wins
NGKF’S KEY 2014 WINS Confidential Client Harrison Street Real Confidential Client Northern Bronx Estate Capital Leading Media and Marketing New York Multiple Locations Information Company North America Global Portfolio Represented a family office in Represented seller Harrison Selected as a full-ser
Slide 23: NGKF Expands Capital Markets Business into Multi-Housing with ARA
NGKF EXPANDS ITS CAPITAL MARKETS BUSINESS INTO MULTI-HOUSING WITH Q4 2014 ACQUISITION OF ARA NGKF announced its acquisition Apartment Real Advisors (ARA), the Construction Pipeline as a % of Prior Peak nation’s largest privately held, full service multi-housing investment brokerage in December 201
Slide 24: Macroeconomic Indicators Point Toward Favorable Real Estate Environment
MACROECONOMIC INDICATORS CONTINUE TO POINT TOWARD A SUSTAINED FAVORABLE REAL ESTATE ENVIRONMENT Macroeconomic indications 2.5% continue to point toward a sustained low interest rate Fed Target = 2% environment, which benefits Commercial Real Estate 2.0% Inflation has receded due to falling 1.5%
Slide 25: Outlook
Tr bgc OUTLOOK
Slide 26: First Quarter 2015 Outlook Compared with First Quarter 2014 Results
FIRST QUARTER 2015 OUTLOOK COMPARED WITH FIRST QUARTER 2014 RESULTS The Company expects distributable earnings revenues to increase by between approximately 10 percent and 17 percent and to be between approximately $490 million and $520 million, compared with $445.9 million BGC Partners anticipa
Slide 27: Appendix
Tr bgc APPENDIX
Slide 28: BGC Partners Compensation Ratio
BGC PARTNERS COMPENSATION RATIO $1,200 100% $1,128.5 $1,091.2 $1,036.8 $1,000 90% $793.5 $800 $749.8 80% ($ millions) $600 70% 61.7% 61.3% 59.2% $400 62.1% 60% 56.2% 53.8% 61.8% $200 50% $318.4 $268.9 $0 40% 2010 2011 2012 2013 2014 Q4 2013 Q4 2014 Compensation and Employee Benefits Compensation and
Slide 29: Non-Compensation Expenses & Pre-Tax Margin
NON-COMPENSATION EXPENSES & PRE-TAX MARGIN 50% 40% 29.6% 30% 30.0% 30.2% 25.3% 28.0% 20% 16.1% 13.8% 13.4% 11.2% 10.3% 10% 0% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue Date Non-comp expenses were 24.1% of
Slide 30: BGC's Economic Ownership as of 12/31/2014
BGC’S ECONOMIC OWNERSHIP AS OF 12/31/2014 Employees, Executives, & Directors 33% Public Cantor 46% 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 share
Slide 31: Average Exchange Rates
AVERAGE EXCHANGE RATES Average Q4 2014 Q4 2013 January 1 - February 10, 2015 January 1 - February 10, 2014 US Dollar 1 1 1 1 British Pound 1.583 1.619 1.518 1.645 Euro 1.249 1.361 1.159 1.361 Hong Kong Dollar 0.129 0.129 0.129 0.129 Singapore Dollar 0.772 0.800 0.747 0.786 Japanese Yen* 114.440 100.
Slide 32: 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
Slide 33: 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
Slide 34: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA BGC Partners, Inc. Reconciliation of GAAP Income (Loss) to Adjusted EBITDA (and Comparison to Pre-Tax Distributable Earnings) (in thousands) (unaudited) Q4 2014 Q4 2013 FY 2014 FY 2013 GAAP Income (loss) from continuing operations before income taxes $ (59,286) $ 1,310 $ (3,188) $ 26
Slide 35: Reconciliation of Income Under GAAP to Distributable Earnings
RECONCILIATION OF INCOME UNDER GAAP TO DISTRIBUTABLE EARNINGS BGC Partners, Inc. RECONCILIATION OF GAAP INCOME (LOSS) TO DISTRIBUTABLE EARNINGS (in thousands, except per share data) (unaudited) Q4 2014 Q4 2013 YTD 2014 YTD 2013 GAAP income (loss) before income taxes $ (59,286) $ 1,310 $ (3,188) $ 26
Slide 36: 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) Q4 2014 Q4 2013 YTD 2014 YTD 2013 GAAP Revenue $ 489,283 $ 421,291 $ 1,787,490 $ 1,744,981 Plus: Other Income (losses),