BGC Partners Reports Fourth Quarter and Full Year 2015 Financial Results
- The Company Generated Record Quarterly Post-tax Distributable Earnings
- Declares Quarterly Dividend of 14 Cents
Global brokerage company BGC Partners, Inc. has issued an announcement to make publish its financial results for the quarter and year ended December 31, 2015. According the comapny, unless otherwise stated, the financial results and other metrics for the Company’s division, GFI Group Inc. (“GFI Group” or “GFI,”) are consolidated with those of BGC for all periods from February 27, 2015 onward.
Select Results Compared to the Year-Earlier Period
Management Comments
“BGC’s fourth quarter post-tax distributable earnings grew by more than 26 percent yearover-year to $76.7 million, while our revenues increased by 34 percent to $692 million,” said Howard W. Lutnick, Chairman and Chief Executive Officer of BGC. “This marks our sixth consecutive quarter of record profits. This strong performance was driven by the addition of GFI, the ongoing success of Newmark Grubb Knight Frank,3 our Real Estate Services company, and the 112 percent year-on-year revenue increase generated by our high margin fully electronic FENICS4 business. BGC’s record results came despite the stronger U.S. dollar reducing our reported Financial Services revenues by $18 million and $91 million during the fourth quarter and full year 2015, respectively.
“In January of this year, we closed the back-end merger with GFI. The combination dramatically increases the scale and scope of the Company, and we expect the resulting improvement in BGC’s economics to produce tremendous value for our investors. The total purchase consideration for all shares of GFI purchased by BGC was approximately $750 million.5
“In December, we sold Trayport to Intercontinental Exchange, Inc. for approximately 2.5 million ICE common shares issued with respect to the $650 million purchase price.6
We have sold over 80 percent of these shares to date, and the expected cash tax rate related to the purchase price is 10 percent or less.
“The proceeds from the Trayport sale contributed to our more than $1 billion of balance sheet liquidity as of the end of the year. In addition to our strong current liquidity position, we expect to receive over $730 million in additional Nasdaq stock over time, which is not yet reflected on our balance sheet.7
This means that we have over $1.7 billion of dry powder available to us to drive substantial returns for our investors. We expect to use our considerable financial resources to repay debt, profitably hire, make accretive acquisitions, pay dividends, and/or repurchase shares and units of BGC, all while maintaining or improving our investment grade rating.
“BGC’s Adjusted EBITDA increased by more than 250 percent in 2015 to $876 million, aided by the gain on sale of Trayport and by our strong revenue growth. We expect to have strong Adjusted EBITDA and distributable earnings margins going forward as we increase the profitability of GFI, continue to grow revenues from our highly profitable FENICS business, and benefit from the strength of NGKF.
Mr. Lutnick concluded: “I am happy to report that our board declared a 14 cent qualified dividend for the fourth quarter, which is consistent with the prior three quarters, and represents an increase of 16.7 percent year-over-year. At yesterday’s closing stock price, this translates into a 6.6 percent annualized yield.”
1 See the sections of this document entitled “Distributable Earnings Defined,” “Differences Between Consolidated Results for Distributable
Earnings and GAAP,” “Reconciliation of Revenues Under GAAP And Distributable Earnings,” and “Reconciliation of GAAP Income (loss) to Distributable Earnings” for a complete and updated definition of these non-GAAP terms and how, when and why management uses them, as well as for the differences between results under GAAP and distributable earnings for the periods discussed in this document.
2 See the sections of this document titled “Adjusted EBITDA Defined” and “”Reconciliation of GAAP Income (loss) to Adjusted EBITDA (and Comparison to Pre-Tax Distributable Earnings).”
3 “NGKF” and the Company’s Real Estate Services segment are used interchangeably with “Newmark Grubb Knight Frank.”
4 For the purposes of this document, all of the Company’s fully electronic businesses may be referred to interchangeably as “FENICS” or “ebusinesses.”
These offerings are only in the Financial Services segment and include fees from fully electronic brokerage, market data and software solutions, and post-trade services across both BGC and GFI. FENICS results do not include the results of Trayport, which are reported separately due to its sale.
5 This amount is net of the $250.0 million note previously issued to GFI by BGC, which is eliminated in consolidation. This figure also excludes the $29.0 million gain under GAAP recorded in the first quarter of 2015 with respect to the appreciation of the 17.1 million shares of GFI held by BGC prior to the successful completion of the tender offer. Including this gain, the GAAP calculation of purchase consideration and noncontrolling interest totaled $779.5 million.
6 Intercontinental Exchange, Inc. and “ICE” are used interchangeably. The $650 million figure reflects the price, which was adjusted at closing.
7 See the “Consolidated Balance Sheet” section of this document for the items that make up liquidity. On June 28, 2013, BGC sold its fully electronic trading platform for benchmark U.S. Treasury Notes and Bonds to Nasdaq, Inc. (NASDAQ: NDAQ or “Nasdaq.”) For the purposes of this document, the assets sold may be referred to as “eSpeed.” The value of these shares is based on NDAQ’s closing price on February 9, 2016. These shares are expected to be received ratably over the next approximately 12 years.
Source: BGC – BGC Partners Reports Fourth Quarter and Full Year 2015 Financial Results
