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MarketScreener Homepage  >  Equities  >  Nasdaq  >  BGC Partners, Inc.    BGCP

BGC PARTNERS, INC.

(BGCP)
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BGC Partners : 3Q 2020 Earnings Call

10/28/2020 | 07:05am EST

BGC PARTNERS, INC.

NASDAQ: BGCP

E A R N I N G S P R E S E N TAT I O N 3 Q 2 0 2 0

© 2020 BGC Partners, Inc. All rights reserved.

DISCLAIMER

2

DISCUSSION OF FORWARD-LOOKING STATEMENTS ABOUT BGC

Statements in this document regarding BGC that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. These include statements about the effects of the COVID-19 pandemic on the Company's business, results, financial position, liquidity and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, BGC undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's Securities and Exchange Commission filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.

NOTE REGARDING FINANCIAL TABLES AND METRICS

Excel versions of certain tables in this document are available for download online. The Excel tables may include other useful information that may not be contained herein, including certain of BGC's financial results and metrics from the current period to as far back as the first quarter of 2018. These excel tables are accessible in the various financial results press releases at the "Investor Relations" section of http://www.bgcpartners.com. They are also available directly at http://ir.bgcpartners.com/news- releases/news-releases.

OTHER ITEMS OF NOTE

Unless otherwise stated, all results provided in this document compare the third quarter of 2020 with the year-earlier period. Certain reclassifications may have been made to previously reported amounts to conform to the current presentation and to show results on a consistent basis across periods. With the exception of reporting Newmark as a discontinued operation and the previously announced non-GAAP presentation, any such reclassifications would have had no impact on consolidated revenues or earnings under GAAP and would leave consolidated pre- and post-tax Adjusted Earnings for the prior periods essentially unchanged all else being equal. Certain numbers and percentage changes listed throughout this document may not sum due to rounding.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires lessees to recognize a right-of-use ("ROU") asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures. These impacts were approximately $157.8 million and $179.7 million in Total Assets and Total Liabilities, respectively, as of September 30, 2020. These impacts were approximately $169.1 million and $187.4 million in Total Assets and Total Liabilities, respectively, as of December 31, 2019. For additional information regarding the adoption of ASC 842, please see the section titled "New Accounting Pronouncements" in BGC's Annual Reports on Form 10-K as filed with the Securities and Exchange Commission.

Please see the sections titled "Impact of COVID-19 on Employees" and "Impact of COVID-19 on the Company's Results" in the Company's most recent report on Form 10-Q for the impact of the pandemic on the Company's employees, clients, and results.

NEWMARK SPIN-OFF

The Spin-Off included the shares of Newmark Class A and Class B common stock owned by BGC, as well as the shares of Newmark common stock into which the limited partnership units of Newmark Holdings, L.P. and Newmark Partners, L.P. owned by BGC were exchanged prior to and in connection with the Spin-Off. For more information, see the press release titled "BGC Partners Announces Completion of Spin-Off of Newmark" dated November 30, 2018, and the related filing on Form 8-K filed before market open on December 6, 2018. Unless otherwise stated, all the tables and financial results in this document through the Outlook section reflect continuing operations of BGC. The financial results from continuing operations of BGC do not present a distinct corporate segment and are generally comparable to the stand-alone results for BGC Partners excluding Newmark Group, referred to as "post-spin BGC" in previous documents. Post-spin BGC represented what BGC financial results would have been had the Spin-Off of Newmark occurred prior to the Distribution date of November 30, 2018. Post-spin BGC can also be defined as the results for BGC's Financial Services segment plus its pro-rata portion of corporate items.

NON-GAAP FINANCIAL MEASURES

This presentation should be read in conjunction with BGC's most recent financial results press releases and filings or reports on Form 10-K, Form 10-Q or Form 8-K. Throughout this presentation, BGC refers to certain non-GAAP financial measures,

including Adjusted Earnings, Adjusted EBITDA and Liquidity. All non-GAAP results discussed herein are comparable to and reconciled with the most directly comparable GAAP figures. For an updated complete description of Adjusted Earnings, Adjusted EBITDA and Liquidity, and how, when, and why management uses these and other non-GAAP measures, as well as reconciliations of these measures to the comparable GAAP measures, and more information regarding GAAP and non-GAAP results, see the "Appendix" section of this presentation. Below under "Highlights of Consolidated Results" is a summary of certain GAAP and non-GAAP results for BGC. Results on a GAAP and non-GAAP basis are included towards the end of this presentation, with appropriate reconciliations provided in the "Appendix" section noted above and in our most recent financial results press release and/or are available at http://ir.bgcpartners.com.

2

2

HIGHLIGHTS OF CONSOLIDATED RESULTS: Q3' 20

3

Highlights of Consolidated Results

(USD millions, except per share data)

Revenues

GAAP income (loss) from operations before income taxes

GAAP net income (loss) for fully diluted shares

Adjusted Earnings before noncontrolling interest in subsidiaries and taxes

Post-tax Adjusted Earnings

Adjusted EBITDA

GAAP fully diluted earnings (loss) per share

Post-tax Adjusted Earnings per share

3Q 2020

3Q 2019

Change

$455.0

$521.1

(12.7)%

28.7

8.7

228.2%

29.6

(3.5)

938.1%

69.2

87.7

(21.1)%

61.9

77.3

(19.9)%

101.2

84.2

20.2%

$0.05

($0.01)

600.0%

$0.11

$0.15

(26.7)%

3

BGC PARTNERS, INC.

GENERAL OVERVIEW

BUSINESS OVERVIEW: 3Q'20

5

B U S I N E S S O V E R V I E W

REVENUE:

$455.0M

Electronic

Voice/Hybrid

Brokerage

13%

Brokerage

Data, Software

69%

& Post-Trade

5%

Insurance

Brokerage

10%

Other

4% 1

PRE-TAX ADJ. EARNINGS:

$69.2M

(PRE-TAX ADJ. EARNINGS MARGIN: 15.2%)

R E V E N U E B Y A S S E T C L A S S & G E O G R P A H Y

Americas

EMEA

28%

56%

Data, software &

post-trade, and

other1

Equity derivatives 8%

and cash equities

Rates

11%

26%

Insurance

10%

Energy &

Foreign

Exchange

Commodities

16%

14%

Credit

15%

APAC

17%

F E N I C S

NET REVENUE:

(EXCLUDING INTER-COMPANY)

$79.5M

NET REVENUE GROWTH:

(Yr/Yr)

+19%

B U S I N E S S H I G H L I G H T S ( 3 Q 2 0 2 0 )

19% Fenics growth despite a challenging

Insurance brokerage continues strong growth

Fenics and Insurance revenues represent over

macro environment and subdued

trajectory driven by investment in new hires

a quarter of company-wide revenues providing

secondary trading volumes

and business lines

diversification to BGC's combined business

BGC expects a $65M improvement in pre-tax Adj. Earnings from Fenics and insurance brokerage in 2021

1.

Fees from related parties, interest and dividend income, and other revenues

5

BUSINESS OVERVIEW: FENICS

6

F E N I C S O V E R V I E W : 3 Q ' 2 0

S E L E C T P L A T F O R M H I G H L I G H T S

NET REVENUE1,2:

$79.5M

Equities and

Data, software &

Energy &

post trade

Commodities

27%

Rates

1%

34%

FX

19%Credit

18%

+19% yr/yr

+86% VOLUME GROWTH

YTD SEP 20 vs. YTD SEP 19

DOUBLED MARKET

SHARE TO 12%3

AMONGST UST CLOBs 3Q 20 YR/YR

#2 LARGEST

UST CLOB PLATFORM

AS OF SEP 2020

~$115 MILLION3

ESTIMATED CLIENT SAVINGS SINCE JAN 19 DRIVEN BY TIGHTER FENICS UST PRICING

  • 200% GROWTH

EURO STOXX 50 OPTION VOLUMES

3Q'20 VS. 1Q'20 (launched 3Q'19)

  • 6% MARKET SHARE4

ESTIMATED FOR EURO STOXX 50 FRONT-MONTH OPTIONS, SEP 20

  • 150% GROWTH

NIKKEI 225 OPTION VOLUMES

3Q'20 VS. 2Q'20 (launched Q1'20)

  • 13% MARKET SHARE4

ESTIMATED FOR NIKKEI 225 FRONT MONTH OPTIONS, SEP 20

ELECTRONIC BROKERAGE

QUARTERLY OVERVIEW

DATA, SOFTWARE AND POST-TRADE5

$58

+20%

Electronic brokerage growth of 20% driven by Rates, FX and Fenics

$22

+17%

Integrated

MILLION

GROWTH

Over 17% growth in Data, Software and Post-trade powered by

MILLION

GROWTH

REVENUE

YR/YR

REVENUE

YR/YR

Lucera Connect, Algomi, and strong client demand for Capitalab's

Initial Margin Optimization and NDF Match businesses

1. Inter-company revenues are eliminated in consolidation. 2. Net revenue includes Fenics Integrated revenue starting in 2Q'20. Desks are categorized as "Fenics Integrated" if they utilize sufficient levels of technology such that significant amounts of their transactions can be or are executed

without broker intervention and have expected pre-tax Adjusted Earnings margins of at least 25%. 3. Central limit order book ("CLOB") market share is based on data from Greenwich Associates and BGC's internal estimates. Including these CLOB platforms as well as those using other

fully electronic US Treasury trading protocols, Fenics UST increased its overall market share from 4.3 percent to 5.8 percent year-on-year in September 2020, per Greenwich Associates. BGC internal estimates based on savings per tick (1/16 of 1/32 = $19.53125) adjusted for tenor

multiplied by the quantity of the trade (single counted). 4. GO's market share is based on estimated Euro Stoxx 50 and Nikkei 225 IDB block-sized transactions for "front-month" option volume, which refers to the nearest expiration date for an options contract (within 32 days of

6

expiration). 5. Total revenue as of Q3 2020 and excludes $14.1 million of inter-company data, software and post-trade.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

BGC Partners Inc. published this content on 28 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 12:04:10 UTC


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Financials (USD)
Sales 2020 2 038 M - -
Net income 2020 103 M - -
Net Debt 2020 - - -
P/E ratio 2020 27,7x
Yield 2020 -
Capitalization 1 505 M 1 505 M -
Capi. / Sales 2020 0,74x
Capi. / Sales 2021 0,69x
Nbr of Employees 5 200
Free-Float 70,7%
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Technical analysis trends BGC PARTNERS, INC.
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 2
Average target price 7,00 $
Last Close Price 4,15 $
Spread / Highest target 68,7%
Spread / Average Target 68,7%
Spread / Lowest Target 68,7%
EPS Revisions
Managers
NameTitle
Howard William Lutnick Chairman & Chief Executive Officer
Sean Anthony Windeatt Chief Operating Officer
Steven Bisgay Chief Financial Officer & Executive MD
Steven Sadoff Chief Information Officer
Stephen T. Curwood Independent Director
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