NEW YORK, Sept. 29, 2017 /PRNewswire/ -- BGC Partners,
Inc. (NASDAQ: BGCP) ("BGC Partners", "BGC", or the "Company"), a
leading global brokerage company servicing the financial and real
estate markets, today updated its outlook with respect to its
financial results for the quarter ending September 30, 2017.
Outlook Towards High-end of Previous Range, Excluding
Positive Impact of Berkley Point1
BGC
expects both its revenues and its pre-tax distributable earnings
for the third quarter of 2017 to be towards the high-end of the
range of its previous outlook,2 excluding any effect
related to the Berkeley Point acquisition or the associated
borrowing.
Updated Outlook for the Third Quarter of 2017 Including
Berkeley Point
- Including Berkeley Point's results for both periods, BGC now
anticipates revenues of between approximately $805 million and $820 million in the third
quarter of 2017, an increase of between 10 and 12 percent compared
with $735 million in the year earlier
period.
- On the same basis, BGC expects pre-tax distributable earnings
before noncontrolling interest in subsidiaries and taxes to be in
the range of between approximately $152
million and $158 million, an increase of between 25 and 30
percent compared with $122 million in
the third quarter of 2016.
- BGC's provision for taxes for distributable earnings in the
third quarter of 2017 is expected to be proportionately consistent
with or slightly higher than historical levels.
This new outlook includes the effect of increased interest
expense with respect to the financing of the BPF acquisition. In
addition, BGC's financial statements will be presented to include
the results of Berkeley Point for all periods from April 10, 2014 onward, because the transaction
involved a reorganization of entities under common control.
Conference Call and Webcast Information
BGC plans to
issue an advisory press release regarding the availability of its
consolidated quarterly financial results by 8:00 a.m. ET on Thursday,
October 26, 2017. Please see below for details
regarding this planned release and the subsequent conference
call.
The advisory release will notify the public that a full-text
financial results press release will be accessible at any of the
following pages:
http://ir.bgcpartners.com (an HTML version with Excel financial
tables or PDF)
http://ir.bgcpartners.com/news-releases (an HTML version with
Excel financial tables or PDF)
http://bgcpartners.com/category/bgc-releases/ (PDF only)
BGC will host a conference call on Thursday, October 26, 2017 at 10:00 a.m. ET to discuss these results.
WHO:
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BGC Partners, Inc.
(NASDAQ: BGCP)
|
WHAT:
|
Third Quarter 2017
financial results conference call
|
WHEN:
|
Thursday, October 26,
2017 at 10:00 a.m. ET
|
WHERE:
|
http://ir.bgcpartners.com
|
HOW:
|
A list of minimum
system requirements can be found here:
|
|
|
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http://event.on24.com/view/help/ehelp.html?text_language_id=en&fh=true&flashconsole=true&ngwebcast=true
|
A webcast replay of the conference call is expected to be
accessible at http://ir.bgcpartners.com within 24 hours of the live
call and will be available for 365 days following the call.
Additionally, call participants may dial in with the following
information:
LIVE
CALL:
|
|
Date - Start
Time:
|
10/26/2017 at 10:00
a.m. ET
|
U.S. Dial
In:
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1-844-309-0609
|
International Dial
In:
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1-574-990-9937
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Passcode:
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8852-2767
|
|
|
REPLAY
|
|
Available From –
To:
|
10/26/2017 1:00 p.m.
ET – 11/2/2017 1:00 p.m. ET
|
U.S. Dial
In:
|
1-855-859-2056
|
International Dial
In:
|
1-404-537-3406
|
Passcode:
|
8852-2767#
|
(Note: If clicking on the above links does not open up a new web
page, you may need to cut and paste the above urls into your
browser's address bar.)
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 evaluate the financial performance of the Company
and its consolidated subsidiaries. BGC believes that distributable
earnings best reflect the operating earnings generated by the
Company on a consolidated basis and are the earnings which
management considers available for, among other things,
distribution to BGC Partners, Inc. and its common stockholders, as
well as to holders of BGC Holdings partnership units during any
period.
As compared with "income (loss) from operations before income
taxes", and "net income (loss) per fully diluted share", all
prepared in accordance with GAAP, distributable earnings
calculations primarily exclude certain non-cash compensation and
other expenses that generally do not involve the receipt or outlay
of cash by the Company and/or which do not dilute existing
stockholders, as described below. In addition, distributable
earnings calculations exclude certain gains and charges that
management believes do not best reflect the ordinary operating
results of BGC.
Adjustments Made to Calculate Pre-Tax Distributable
Earnings
Pre-tax distributable earnings are defined as GAAP
income (loss) from operations before income taxes and
noncontrolling interest in subsidiaries excluding items, such
as:
- Non-cash equity-based compensation charges related to limited
partnership unit exchange or conversion.
- Non-cash asset impairment charges, if any.
- Non-cash compensation charges for items granted or issued
pre-merger with respect to certain mergers or acquisitions by BGC
Partners, Inc. To date, these mergers have only included those with
and into eSpeed, Inc. and the back-end merger with GFI Group
Inc.
Distributable earnings calculations also exclude certain
unusual, one-time or non-recurring items, if any. These charges are
excluded from distributable earnings because the Company views
excluding such charges as a better reflection of the ongoing,
ordinary operations of BGC.
In addition to the above items, allocations of net income to
founding/working partner and other limited partnership units are
excluded from calculations of pre-tax distributable earnings. Such
allocations represent the pro-rata portion of pre-tax earnings
available to such unit holders. These units are in the fully
diluted share count, and are exchangeable on a one-to-one basis
into common stock. As these units are exchanged into common shares,
unit holders become entitled to cash dividends rather than cash
distributions. The Company views such allocations as intellectually
similar to dividends on common shares. Because dividends paid to
common shares are not an expense under GAAP, management believes
similar allocations of income to unit holders should also be
excluded when calculating distributable earnings performance
measures.
BGC's definition of distributable earnings also excludes certain
gains and charges with respect to acquisitions, dispositions, or
resolutions of litigation. This includes the one-time gains related
to the Nasdaq and Trayport transactions. Management believes that
excluding such gains and charges also best reflects the ongoing
operating performance of BGC.
However, the payments associated with BGC's expected annual
receipt of Nasdaq stock and related mark-to-market gains or losses
are anticipated to be included in the Company's calculation of
distributable earnings for the following reasons:
- Nasdaq is expected to pay BGC in an equal amount of stock on a
regular basis for a 15 year period beginning in 2013 as part of
that transaction;
- The Nasdaq earn-out largely replaced the generally recurring
quarterly earnings BGC generated from eSpeed; and
- The Company intends to pay dividends and distributions to
common stockholders and/or unit holders based on all other income
related to the receipt of the earn-out.
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
calculation of distributable earnings each quarter as "other
income".
The Company also treats gains or losses related to
mark-to-market movements and/or hedging with respect to any
remaining shares of Intercontinental Exchange, Inc. ("ICE") in a
consistent manner with the treatment of Nasdaq shares when
calculating distributable earnings.
Investors and analysts should note that, due to the large gain
recorded with respect to the Trayport sale in December 2015, and the closing of the back-end
merger with GFI in January 2016,
non-cash charges related to the amortization of intangibles with
respect to acquisitions are also excluded from the calculation of
pre-tax distributable earnings. In order to present results in a
consistent manner, this adjustment was made with respect to all
acquisitions completed for the periods from the first quarter of
2015 onward.
Adjustments Made to Calculate Post-Tax Distributable
Earnings
Since distributable earnings are calculated on a
pre-tax basis, management intends to also report post-tax
distributable earnings to fully diluted shareholders. Post-tax
distributable earnings to fully diluted shareholders are defined as
pre-tax distributable earnings, less noncontrolling interest in
subsidiaries, and reduced by the provision for taxes as described
below.
The Company's calculation of the provision for taxes on an
annualized basis starts with the GAAP income tax provision,
adjusted to reflect tax-deductible items. Management uses this
non-GAAP provision for taxes in part to help it to evaluate, among
other things, the overall performance of the business, make
decisions with respect to the Company's operations, and to
determine the amount of dividends paid to common shareholders.
The provision for taxes with respect to distributable earnings
includes additional tax-deductible items including limited
partnership unit exchange or conversion, employee loan
amortization, charitable contributions, and certain net-operating
loss carryforwards.
BGC incurs income tax expenses based on the location, legal
structure and jurisdictional taxing authorities of each of its
subsidiaries. Certain of the Company's entities are taxed as U.S.
partnerships and are subject to the Unincorporated Business Tax
("UBT") in New York City. Any U.S.
federal and state income tax liability or benefit related to the
partnership income or loss, with the exception of UBT, rests with
the unit holders rather than with the partnership entity. The
Company's consolidated financial statements include U.S. federal,
state and local income taxes on the Company's allocable share of
the U.S. results of operations. Outside of the U.S., BGC operates
principally through subsidiary corporations subject to local income
taxes. For these reasons, taxes for distributable earnings are
presented to show the tax provision the consolidated Company would
expect to pay if 100 percent of earnings were taxed at global
corporate rates.
Calculations of Pre-tax and Post-Tax Distributable Earnings
per Share
BGC's distributable earnings per share
calculations assume either that:
- The fully diluted share count includes the shares related to
any dilutive instruments, such as the Convertible Senior Notes, but
excludes the associated interest expense, net of tax, when the
impact would be dilutive; or
- The fully diluted share count excludes the shares related to
these instruments, but includes the associated interest expense,
net of tax.
The share count for distributable earnings excludes shares
expected to be issued in future periods but not yet eligible to
receive dividends and/or distributions.
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's
quarterly dividend to common stockholders, BGC Partners expects to
pay a pro-rata distribution of net income to BGC Holdings
founding/working partner and other limited partnership units, as
well as to Cantor for its non-controlling interest. The amount of
this net income, and therefore of these payments, is expected to be
determined using the above definition of pre-tax distributable
earnings per share.
Other Matters with Respect to Distributable Earnings
The term "distributable earnings" should not be considered in
isolation or as an alternative to GAAP net income (loss). The
Company views distributable earnings as a metric that is not
indicative of liquidity or the cash available to fund its
operations, but rather as a performance measure.
Pre- and post-tax distributable earnings are not intended to
replace the Company's presentation of GAAP financial results.
However, management believes that they help provide investors with
a clearer understanding of BGC Partners' financial performance and
offer useful information to both management and investors regarding
certain financial and business trends related to the Company's
financial condition and results of operations. Management believes
that distributable earnings and the GAAP measures of financial
performance should be considered together.
BGC anticipates providing forward-looking quarterly guidance for
GAAP revenues and for certain distributable earnings measures from
time to time. However, the Company does not anticipate providing a
quarterly outlook for other GAAP results. This is because certain
GAAP items, which are excluded from distributable earnings, are
difficult to forecast with precision before the end of each
quarter. The Company therefore believes that it is not possible to
forecast quarterly GAAP results or to quantitatively reconcile GAAP
results to non-GAAP results with sufficient precision unless BGC
makes unreasonable efforts.
The items that are difficult to predict on a quarterly basis
with precision and which can have a material impact on the
Company's GAAP results include, but are not limited, to the
following:
- Allocations of net income and grants of exchangeability to
limited partnership units and founding partner units, which are
determined at the discretion of management throughout and up to the
period-end.
- The impact of certain marketable securities, as well as any
gains or losses related to associated mark-to-market movements
and/or hedging. These items are calculated using period-end closing
prices.
- Non-cash asset impairment charges, which are calculated and
analyzed based on the period-end values of the underlying assets.
These amounts may not be known until after period-end.
- Acquisitions, dispositions and/or resolutions of litigation
which are fluid and unpredictable in nature.
Pre-Tax Distributable Earnings Following the Berkeley Point
Transaction
Following the closing of the Berkeley Point
transaction, additional GAAP items are now excluded in order to
calculate pre-tax distributable earnings for the Real Estate
Services segment and the consolidated Company. The most material
items excluded for both historical and future period results are
non-cash GAAP gains attributable to originated mortgage servicing
rights ("OMSRs") and non-cash GAAP amortization of mortgage
servicing rights ("MSRs"). BPF recognizes OMSR gains equal to the
fair value of servicing rights retained on mortgage loans
originated and sold. BPF amortizes MSRs in proportion to the net
servicing revenue expected to be earned. Subsequent to the initial
recording, MSRs are amortized and carried at the lower of amortized
cost or fair value. However, it is expected that cash received with
respect to these servicing rights, net of associated expenses, will
increase pre-tax distributable earnings in future periods.
In addition, pre-tax distributable earnings for the Real Estate
Services Business and for the consolidated Company will exclude any
non-cash provision or benefit related to risk-sharing obligations,
net of charge-offs.
Additional Information about Distributable
Earnings
For more information on this topic, please see
certain tables in BGC's most recent quarterly financial results
press release including "Reconciliation of GAAP Income (Loss) to
Distributable Earnings". These tables provide summary
reconciliations between pre- and post-tax distributable earnings
and the corresponding GAAP measures for the Company.
About BGC Partners, Inc.
BGC Partners is a leading
global brokerage company servicing the financial and real estate
markets. BGC owns GFI Group Inc., a leading intermediary and
provider of trading technologies and support services to the global
OTC and listed markets. The Company's Financial Services offerings
include fixed income securities, interest rate swaps, foreign
exchange, equities, equity derivatives, credit derivatives,
commodities, futures, insurance brokerage, and structured products.
BGC provides a wide range of services, including trade execution,
broker-dealer services, clearing, trade compression, post trade,
information, and other services to a broad range of financial and
non-financial institutions. Through brands including FENICS, BGC
Trader, Capitalab, Lucera, and FENICS Market Data, BGC offers
financial technology solutions, market data, and analytics related
to numerous financial instruments and markets.
Real Estate Services are offered through brands including
Newmark Knight Frank, Newmark Cornish & Carey, Berkeley Point,
ARA, Computerized Facility Integration, Newmark Knight Frank
Valuation & Advisory, and Excess Space. Under these names and
others, the Company provides a wide range of commercial real estate
services, including leasing and corporate advisory, investment
sales and financial services, consulting, project and development
management, property and facilities management, the origination and
sale of multifamily loans through government-sponsored and
government-funded loan programs, as well as the servicing of
commercial real estate loans, including those it originates.
BGC's customers include many of the world's largest banks,
broker-dealers, investment banks, trading firms, hedge funds,
governments, corporations, property owners, real estate developers,
and investment firms. BGC's common stock trades on the NASDAQ
Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC
also has an outstanding bond issuance of Senior Notes due
June 15, 2042, which trade on the New
York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is
led by Chairman and Chief Executive Officer Howard W. Lutnick. For
more information, please visit http://www.bgcpartners.com. You can
also follow the Company at https://twitter.com/bgcpartners and/or
https://www.linkedin.com/company/bgc-partners.
BGC, BGC Trader, GFI, FENICS, FENICS.COM, Besso, Sunrise,
Capitalab, Swaptioniser, ColleX, Newmark, Grubb & Ellis,
Berkeley Point, ARA, Computerized Facility Integration, Landauer,
Lucera, Excess Space, Excess Space Retail Services, Inc., and Grubb
are trademarks/service marks, and/or registered trademarks/service
marks and/or service marks of BGC Partners, Inc. and/or its
affiliates. Knight Frank is a service mark of Knight Frank
(Nominees) Limited.
1 The acquisition of Berkeley Point Financial LLC
included its wholly owned subsidiary Berkeley Point Capital LLC,
which together may be referred to as "Berkeley Point" or "BPF". See
the Company's press release and Current Report on Form 8-K filed
with the Securities and Exchange Commission (the "SEC"), both dated
September 8, 2017, for previously
disclosed information about the closing of the BPF and related
transactions and financing.
2 See the Company's financial results press release
and related Current Report on Form 8-K filed with the SEC, both
dated July 26, 2017, for BGC's
previous outlook.
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SOURCE BGC Partners, Inc.