BGCP - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the BGC Partners' Third Quarter 2017 Conference Call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. turn Relations. over now Head Jason will Investor of I the to call McGruder, And may you Sir, begin.

Jason McGruder

morning. Good

be this third Our quarter These issued summarizing XXXX release ir.bgcpartners.com. can morning. press and financial presentation results these found at results were

XXXX statement period. call Newmark Form also third compare same Unless only SX this results the of on otherwise Grubb the on filed stated, available with provided will earlier recently website. Inc's the registration year be on quarter today's

definitions this on also terms call on will see reconciliation in Please the EBITDA. of management be Accounting results We the today's GAAP. otherwise to the for may to earnings Principles such section press distributable them. non-GAAP why GAAP when of We Please release and unless Accepted of how, refer terms, results the only uses basis under press referring and a these also adjusted Generally results or back any see corresponding stated. today's complete to release for

the services and Services. For as today's because began payments Point segment. part include data, of offerings control. BGC's call quarter solutions financial call, involve entities Nasdaq Lucera offerings receipt market fully Also transactions recording for Company's and the services. Berkeley with prior Estate synonymous results the brokerage These FENICS. referred of to all discussed XXXX, NKF Beginning the financial businesses of recast third under have of all are today's Real Real call these Frank, Estate as been reorganizations results the fully periods as electronic in Newmark or well BGC to from electronic include software common products, Newmark as of on is with post-trade segment, purposes today's Knight Services of

historical, ended as but you distributable for segments. our BGC's financial the part that the only As does recorded Securities to presentation the result, XXA business not regarding the forward-looking amended of XXE except of income the any law, they're GAAP This as also risks Section rather Newmark Company's or amended. as as Act of earnings, the services. either Act obligation information payment affect uncertainties, by remind statements. consolidated no update statements XXXX of was on other results of for than and consolidated quarter of XXXX involve today's BGC just forward-looking of call, change Exchange meaning as statements Nasdaq the for Section Such are the Securities not adjusts undertakes and required within I

cause of or now in but forth set uncertainties subsequent including, contained results to, statements, additional XX-Q to turn Chairman Howard am can discussion the and Lutnick, Exchange and those the risk recent CEO in and limited contained to any not differ risk factors Form and SEC, most X-K risks updates actual I call BGC which in see filings, from a the Commission happy forward-looking filings. For Partners. such BGC's Form to Securities XX-K Form factors the to of over

Howard Lutnick

XXXX quarter Inc, thank IPO. Earlier Officer. Thank its Chief joining our are week President, Lynn; with us our me BGC's you, subsidiary Steve this Sean you and Officer, Newmark our Shaun morning an to Financial third Operating our call. conference Jason. for and Windeatt Good With respect SX Group McMurray, for today Chief filed

questions will it regarding planned today's not this We answer on discuss call. offering nor

$XXX by XX% BGC's view $XXX our to SX the grew mentioned, to website. post tax nearly earnings revenues were on Jason you XX% up while can million. our As million, by

revenues Our in were Newmark by exchange improved our rates and led foreign businesses.

stock yield. additional also share. benefit last Newmark our third fully its pleased for $X.XX price Our is hire, will to will to quarter, to yesterday's XX.X% into our that electronic annualized to report this business. driven solid I'll that call now growth translates the up as make from give which closing profitably qualified performance compared shareholders, believe FENICS With also of by X.X% that declared was the Board a I'm our year. they Newmark grow continue dividend inclusion resources market to in over turn the payments accretive Shaun. NASDAQ We acquisitions and At

Shaun Lynn

Thanks Howard Besso. more to and everyone. and good business, Sunrise and additions due In asset the equities, mainly services financial from other the classes doubled, of day, insurance revenues than

organic while up Our increase earnings revenues by improvement XX% growth, from overall generated were rates, to approximately the million, XX% expanded FENICS $XXX NASDAQ excluding from fully increased when Services XX% Financial business including basis period. Rates over by top-line nearly of by the an points, our $XX year for margin by a prior driven electronic Services all to XX% pre-tax million. pre-tax XXX approximately payment Financial

was the the the up NASDAQ in approximately up by segment. two in years payment, continued of cost to front it was year-on-year the including by by quarterly services year which we were Excluding X% year, million last financial services pre-tax last in productivity, delivered this for over and XX% office improved profitability earnings synergies course operating led improvement the financial by and $XX

our Estate and Services, capital for generated leasing, we Real results strong markets in management and to fees. servicing Moving growth

up were to Newmark's X% for by $XXX overall revenues the quarter million.

Berkley some in year. the due agency originations industry Point of multifamily declines activities quarter to while mortgage XX% decreased XX% points. pre-tax pre-tax earnings loan quarter lost] from Newmark's XXXX, third record XXX the in had by payments, pre-tax last And real the Gains up nearly $XX.X [particular expanded Including estate banking basis transactions to third earnings in margin payments, from lending NASDAQ by the million. [ph] approximately Excluding Nasdaq overall service, were of the XXXX. for because increased by

broking multifamily XX% vary However, time we in company's the and and to XX, Steve. sales lending our a With that agency low-end timing turn Berkley the scale September synergy. of originations The loan combination the with scope of increase were real by multifamily estate the compared of business period. and period agency business, can up months multifamily substantial significantly - will revenue that will earlier call to Point Berkley year now originations ended nine period. Point's over services from of generate to I'd XXXX, believe mortgage the addition the Over

Steve McMurray

and BGC everyone. Shaun revenues generated XX.X%. $XXX hello, quarterly up consolidated you, of million Thank

from approximately grew by revenues Europe, X%, while revenues Middle the Africa XX%. America's from by Our East up and were

Asia With by XX.X% the respect by percentage XX%. declines Pacific of expenses, revenues increase in compensation increased to revenue. with

slightly XX.X%. increased ratio to compensation Our

at Our a to ago. non-compensation expenses $XXX.X $XXX.X million, million were year compared

our interest of expense XX.X% year the with XX.X% ago a associated expenses reflects which of As percentage revenue impact increased the versus non-compensation acquisition. were the Point in period, Berkeley

the were expenses quarter million. $XXX.X overall million XXXX, to compared third in Our $XXX.X

Our subsidiaries by taxes earnings in million. before interest were non-controlling pre-tax up $XXX.X and XX.X% to

earnings than margin by were pre-tax XX.X%. Our more million. up expanded basis by $XXX.X BGC's to XX.X% post points tax to XXX

Our XX.X%, post was of tax expansion more an than margin basis XXX points.

was hires Our by quarter in BGC's front share post was weighted million. count compensation, distributable based grew the share diluted At of XXX.X $X.XX. spot issued acquisitions. due GAAP. and earnings per shares fully diluted were XXXX, The to to equity XX% fully the with million, tax respective average earnings third our count office XXX.X with share to of end increases

per cost and/or X.X million the net nine during of to redeemed share first months $XX.XX shares repurchased or million the or BGC BGC of units units XXXX. of $XX Additionally, and/or

respectively. issuances. common book common reverse $XXX Point total define the loan. entities value Because agreements, to had intangible balance interest, items on reversed The with Moving transaction, non credit our a unsecured of we per equity interest company acquisition. $XXX.X on been not into and expected with senior including increasing arrangements, as otherwise execute controlling repay total to in as Berkeley existing net is to the Upon impacted involves Notes book total partnership by assets would to it million reduces entered and a capital our and future In were cash subsidiaries the securities acquisition or and from to which are in $XXX all senior the goodwill the value quarter goodwill, proceeds capital securities of respect capital repaid marketable record by the by closing future effect liquidity have agreements borrowings sheet year and Berkeley of Point redeemable the sources, and respect does million million, securities, which stockholder's The share cash-on-hand financing recast related balance At control, which million. financing were would purposes per share total for equivalence, balance define number sheet, Point under cash $X.XX This approximately recast acquisition. to total and the book be liquidity were owned term the that equity our the previous financing from the for expected $X.XX was end, used loan. and of have be is less we $XXX Berkeley collateralized the Newmark $XXX approximately re-purchase loan the repurchase and per unsecured $XXXX.X to the acquisition, that capital term held order was facility share XXXX $XXX.X value million. increase capital million. otherwise two-year or million we and end revolving IPO payable results

generating million gross Nasdaq and/or year years, office a the at capital paid upon In investments shares does Nasdaq cash the annually. sheet receipt addition, units, redemption all of working We not $XX paid approximately revenues million you'll hires. and/or remind primarily previously respect BGC's once. at are new acquisitions, If next and get use front in end movements of in the of our stock described to since additional as that XXXX Nasdaq control, shares worth various least undergoes of liquidity the these over to reflect balance change expected in XX with related ordinary you contingent repurchase $XXX

I'm turn generated call to of over the in put context, to Nasdaq contingency billion back million gross Let's that Howard. With approximately happy in revenues $XX XXXX. $X.X the

Howard Lutnick

Thank you, Steve.

of year the recast for with the quarter Our last is XXXX for compared follows. outlook as figures fourth

recast We $XXX.X between expect with revenues of and million. to compared $XXX million of our $XXX revenues generate

the $XXX to pre-tax of be fourth and million, million million. recast, recast before compared quarter of We XXXX of pre-tax in for million. revenues historical $XXX.X as our the $XXX.X $XXX with a Now, range earnings anticipate the was earnings

quarter pre-tax of XXXX $XXX.X Our the recast million. for earnings fourth were before historical

not earnings for acquisition XXXX. of includes, included was interest million Our expense Berkeley related the the in debt recast outlook Point that quarter our for fourth additional to pre-tax $X.X an new of

be of approximately our towards taxes company fourth for December. earnings anticipate consolidating $XX million, quarter from on at distributable of fourth the expect range of guidance taxes our on provision recast provision quarter with million our the to compared million updating the earnings We for $XX.X to $XX in XXXX. We distributable end

the please. like open we So to for now call questions operator

Operator

this at Thank I'd instructions] And to time. questions question-and-answer back [Operator am you, we remarks. Lutnick, call CEO session. turn showing will now Howard currently over closing begin Mr. Chairman the like to and I for no the

Howard Lutnick.

No, another you question. have

Operator

Looks from with begin. may like you question Sandler we Repetto have Rich O'Neill, a

Rich Repetto

granularity given far like bit XXX? October quarter, into XQ and I and - what your normally the that don't into up, seasonality actually in little XXX. XXX here. am Howard. the built Anyway, know of fourth how so the to shaping XQ of XXX of give to financial in how give in us you the versus get being seen - the real Could trying out businesses us only in queue Sorry, is to the the more can services you goes estate to a what's understand I seasonally given you've outlook guy down

Howard Lutnick

let for about real to and to answer we'll going talk then I'm with Sure, quarter estate. services Shaun financial the respect

Shaun Lynn

guide services, Wee The see. we October, in we last guidance you what guide what remember, also this was quarter. the what we implied spoke about or know in financial may

has stronger October October. far the So been than previous

year However, also November number. election, the included mentioned, exaggerates as US which we last November the

about] So, which first quarters. year-on-year. just our of has XX% softer slightly three [round overall because guidance an in revenues the our election This is is included by up the expectation, than [ph]

Howard Lutnick

just tends horrible, anomaly horrible one and Point, to is which to in combination is fact a less real this Florida financing dealt respect a in but, hurricanes And that with do the softens across and Texas don't of they how moving so of the and guess, what fourth I commenting And off people business, to the mean with in of without is cleaning hurricanes talk these real mitigating just and those the up effectively I for the true estate clean they about that on seat, and business take the to course and forward. be quarter, have a year, have now but our a get Texas up Berkeley of right more to in two Puerto it for also horrible, is both work is, the of ordinary with and quarter to a the the the circumstance balanced estate, business Rico, really in difficult both happens dreadful as we back Florida, that's best sort and things respect year again. multifamily is transactions markets make quarter the and people is

the happened The on. September slowing a start a things that probably be is is excellent year the dissipate, as in you impact, those will affected and everybody’s otherwise people it in fourth our softer we quarter when a people view the seen create in creating markets may than effect dissipate, to I hardly spectacular just as as impact harmed third lasting those So, a have do definitely with quarter and markets two of will a in the first view this two conditions. And the that the up, by that will a goes what little for reality really as affected being I would hurricanes, of do just quarter markets fourth We softer bit by slows think clean month. that that I down quarter And think, them, it they have through in two of be timing business. would them, weather so be. was terrible just not

Rich Repetto

real same in both And fourth estate the the on how basis, impact? the quarter impact Point that business like Berkeley overall be as would felt percentage at

Howard Lutnick

than the instance whole taken I those than as two for are a are a for more they Newmark business markets just as comparatively Point think multifamily in Berkeley there's taken particular larger whole. because for markets those

more Berkeley equation. would it slightly that So, in Point, the side it would of be more exaggerated exaggerated, be

wish will simply whatsoever. have up multifamily so and those However, do It'll or we then do the any will stock view financing they'll multifamily be impact having their take who the we not market buildings participation. finance clean re-finance sell or the our afterward, long-term in and to

business So, bullish the business of very very and disappointed ARA in organization communities. our events Point; buildings we a it's together business to very else. for at the Berkeley we with are time horrible that two are to we the minimize very-very on on Berkeley mean Point at sales are bullish I happened issue And, don't these multifamily and it, nothing but our

Rich Repetto

Understood, that's very helpful.

think and around could the back said it's business? this, I real the Shaun was services into to Berkley for quarter probably combined year-over-year. Point have sort of be that guidance, same financial for estate, think the fourth going I but Would was up that XX% the the you XX%, of or whether I percentage rest

Howard Lutnick

into As ahead, we just you back it math, the go I didn't if do don't want so to have my on fingertips. it,

Rich Repetto

the we guidance. color can ratio, on compensation question next in the guess, any you Then the given these know movements quarter, XQ? expenses I overall in the, your next okay. you Okay, back the is But would expect into given

Howard Lutnick

carries this the guess Point compensation of should I a ratio lower is because that accompanies lower be this ratio, it, business. kind with will number lower range the And, different new be Now, it. it's the a because competition therefore Berkeley

Rich Repetto

or the I they treasury over big of talked to that to any de-regulation for in Got be same, be much, paper out, report you guess guess umbrella question read guess, about come you've tailwind on front, as - given incrementally it, given been pretty the the banks I a the the like, were or what's may sort sort in XXX-page I recommendations, of okay. about the And white would making? theme expect what report be treasury would broader and regulatory I tailwind a you've then has

Howard Lutnick

But their for period doing - still have framework balance follow years underlying still shrinks, European e just baseline that starting we the still Yeah, the the of of it's resource suit, and might reasonable you with combination, within of that growing. outside scale coupled with easing and probability reduce think I the the granted think sheet, in the are stabilizes its a longer United time, outlook a regulatory no to behind US and not the seen Central States slowly Bank it's quantitative have our But business. sheet. of It's global growing years is combination tailwind as you still and really and banks treasure that and years. balance

that quantitative seen easing low are wind as just You the backs, know, you've of know you behind and see headwind to company. from subsides into were that shift and run our you'll successfully this to better a numbers volatility, company

underlying I economics and are just excellent, our improving. think was of the quarter This business

Rich Repetto

that's one Okay, system, questions color of or to give ICE, how with day yesterday or you on electronic of you a bond on a couple Howard, does the that, the businesses predominantly retail guess, trading But that you've BondPoint I stated another - a a - example have but as could out last spun businesses. also corporate, corporate thing municipal us before. what announced sale the any

As far there. first it up anything mean the you? I'll question, well to from as follow automation, that's Does

Howard Lutnick

revenues we've made a small Trayport we in at What that's the around BondPoint seen around sale of at E-speed together, started the a And, times XX price. XX of XX and XXXX. times are then of sale now and a revenue times we a business. near fraction Its with sales

myself us these own and see tremendously time, businesses a revenues E-speed the once higher inside would are we sold, point billion profits which there. I you like help quarter time I upon of but a once does time transactions to that happens, a that wildly a in that had we each business that inside is tremendously, than maybe revenue has valuable. we Trayport us what times of out that And point these BondPoint when we [Indiscernible] three had four which over And separated dollars of are So, can't one called sold. the we upon out

us So, just our our think. think maybe of is on that us, buy value there to out the businesses think and those that a these of are I think because buy they building value the build this the more in. live like points than model and just happy I in these operate kind and I that is for of I their we’re benefit exchanges firms them is well, and and assets think of to businesses make them they the assets ours them place we them building shareholders and so very objective I we that firms them, an these future, build we exchanges ecosystem valuable nice build assets and and are that's operate like of work and this these side them, great

New As up, these York you know, to business we Exchange. NASDAQ exchanges, the we but one we for things end these sold Stock them. business the great they built sold operators and they We place to are and another are to like healthy

Rich Repetto

Understood transparency to the you more is question trying be keep and any FENICS dominant talked information is ask, or may but for would there that guess platforms right that give that eventually that, are businesses more you now us I that not prepared I know you - - highlight guess? within would the questions. you're house. you've I And I'll I asking about on electronic some other

Howard Lutnick

of a I number we there's mean businesses. have,

business. businesses XX% Our grew and FENICS business those Data, software prostrate I XX%, the business was our business. trade, brand those benchmark and of guess credit a mature of as are we are XX%, the the FX group about businesses non-benchmark rates is - XX% rates bigger business, so XX% and We're well about rates treasury the FENICS. - business building our we're a to within these get exchange and them. spot All foreign within that continue of US building areas electronically we'll of at as business

answering trade, respect doing as various all regards pre-trade, to We continue to and regulators to things execution, with the questions continue and to with expand innovate footprint a invest, and them too. we global post company to through contributors,

we going I excited continue well of announced next we about on to FENICS so it future. of course live, over the the week as was think invest, this saw, Monday. You - we're the But the proposition

Rich Repetto

Thank for thanks the information guys. okay, Understood, you. all

Operator

Thank you.

for further no at back I'll have over turn Lutnick Howard time. this We the questions call closing remarks. to to like

Howard Lutnick

Thank and end the you look of you everybody. a we very year. us to all great much Thank the day and for forward joining you have updating today around

Operator

and gentlemen, concludes for conference. this Ladies participating. today's Thanks

You may disconnect. now

BGC (BGC) 26 Oct 172017 Q3 Earnings call transcript