BGC Partners Updates Its Outlook for the Second Quarter of 2014
NEW YORK, June 26, 2014
NEW YORK, June 26, 2014 /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 announced that it has
updated its outlook for the second quarter of 2014.
BGC Partners, Inc. logo
The Company expects its financial results for the quarter ending June 30, 2014
to be around the mid-point of the range of its previously stated guidance for
revenues and earnings. BGC's second quarter outlook was originally published
in a press release dated May 1, 2014 as follows:
Second Quarter 2014 Outlook Compared with Second Quarter 2013 Results
* The Company expected to generate distributable earnings revenues of
between approximately $420 million and $440 million compared with $471.1
million. The year earlier figure was approximately $447 million, excluding
* BGC anticipated pre-tax distributable earnings to be between approximately
$47 million and $55 million versus $53.8 million. The prior period amount was
approximately $40 million, excluding eSpeed.
* The Company expected its effective tax rate for distributable earnings to
be around 15 percent, compared with 14.5 percent.^2
This guidance did not include any revenues or earnings from the planned
acquisition of Cornish & Carey Commercial, which is expected to close in the
middle of 2014. BGC intends to report its second quarter financial results
before the market open on July 31, 2014. Further details regarding this
announcement and the related conference call will be forthcoming.
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 financial performance
of the Company and its subsidiaries. BGC Partners 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 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," "net
income (loss) for fully diluted shares," and "fully diluted earnings (loss)
per share," all prepared in accordance with GAAP, distributable earnings
calculations primarily exclude certain non-cash compensation and other
expenses which generally do not involve the receipt or outlay of cash by the
Company, which do not dilute existing stockholders, and which do not have
economic consequences, 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.
Revenues for distributable earnings are defined as GAAP revenues excluding the
impact of BGC Partners, Inc.'s non-cash earnings or losses related to its
equity investments, such as in Aqua Securities, L.P. and ELX Futures, L.P.,
and its holding company general partner, ELX Futures Holdings LLC. Revenues
for distributable earnings include the collection of receivables which would
have been recognized for GAAP other than for the effect of acquisition
accounting. Revenues for distributable earnings also exclude certain one-time
or unusual gains that are recognized under GAAP, because the Company does not
believe such gains are reflective of its ongoing, ordinary operations.
Pre-tax distributable earnings are defined as GAAP income (loss) from
operations before income taxes excluding items that are primarily non-cash,
non-dilutive, and non-economic, such as:
*Non-cash stock-based equity compensation charges for REUs granted or issued
prior to the merger of BGC Partners, Inc. with and into eSpeed, as well as
post-merger non-cash, non-dilutive equity-based compensation related to
partnership unit exchange or conversion.
*Allocations of net income to founding/working partner and other limited
partnership units, including REUs, RPUs, PSUs, LPUs, and PSIs.
*Non-cash asset impairment charges, if any.
Distributable earnings calculations also exclude charges related to purchases,
cancellations or redemptions of partnership interests and certain unusual,
one-time or non-recurring items, if any.
"Compensation and employee benefits" expense for distributable earnings will
also include broker commission payouts relating to the aforementioned
collection of receivables.
BGC's definition of distributable earnings also excludes certain gains and
charges with respect to acquisitions, dispositions, or resolutions of
litigation. This exclusion pertains to the one-time gain related to the NASDAQ
OMX transaction. Management believes that excluding these gains and charges
best reflects the operating performance of BGC. However, because NASDAQ OMX is
expected to pay BGC in an equal amount of stock on a regular basis for 15
years as part of the transaction, the payments associated with BGC's receipt
of such stock are expected to be included in the Company's calculation of
distributable earnings. To make quarter-to-quarter comparisons more
meaningful, one-quarter of the annual contingent earn-out amount will be
included in the Company's calculation of distributable earnings each quarter
as "other revenues."
Since distributable earnings are calculated on a pre-tax basis, management
intends to also report "post-tax distributable earnings" and "post-tax
distributable earnings per fully diluted share":
*"Post-tax distributable earnings" are defined as pre-tax distributable
earnings adjusted to assume that all pre-tax distributable earnings were taxed
at the same effective rate.
*"Post-tax distributable earnings per fully diluted share" are defined as
post-tax distributable earnings divided by the weighted-average number of
fully diluted shares for the period.
BGC's distributable earnings per share calculations assume either that:
*The fully diluted share count includes the shares related to the 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.
Each quarter, the dividend to common stockholders is expected to be determined
by the Company's Board of Directors with reference to 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, including REUs, RPUs, LPUs, PSUs and PSIs, and to
Cantor for its noncontrolling interest. The amount of all of these payments is
expected to be determined using the above definition of pre-tax distributable
earnings per share.
Certain employees who are holders of RSUs are granted pro-rata payments
equivalent to the amount of dividends paid to common stockholders. Under GAAP,
a portion of the dividend equivalents on RSUs is required to be taken as a
compensation charge in the period paid. However, to the extent that they
represent cash payments made from the prior period's distributable earnings,
they do not dilute existing stockholders and are therefore excluded from the
calculation of distributable earnings.
Distributable earnings is not meant to be an exact measure of cash generated
by operations and available for distribution, nor should it be considered in
isolation or as an alternative to cash flow from operations or GAAP net income
(loss). The Company views distributable earnings as a metric that is not
necessarily indicative of liquidity or the cash available to fund its
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.
Management does not anticipate providing an outlook for GAAP "revenues,"
"income (loss) from operations before income taxes," "net income (loss) for
fully diluted shares," and "fully diluted earnings (loss) per share," because
the items previously identified as excluded from pre-tax distributable
earnings and post-tax distributable earnings are difficult to forecast.
Management will instead provide its outlook only as it relates to revenues for
distributable earnings, pre-tax distributable earnings and post-tax
For more information on this topic, please see the tables in the most
recentearnings releaseentitled "Reconciliation of Revenues Under GAAP and
Distributable Earnings," and "Reconciliation of GAAP Income to Distributable
Earnings" which provide a summary reconciliation between pre- and post-tax
distributable earnings and the corresponding GAAP measures for the Company in
the periods discussed in this document.
About BGC Partners, Inc.
BGC Partners is a leading global brokerage company servicing the financial and
real estate markets. Products include fixed income securities, interest rate
swaps, foreign exchange, equities, equity derivatives, credit derivatives,
commercial real estate, commodities, futures, and structured products. BGC
also provides a wide range of services, including trade execution,
broker-dealer services, clearing, processing, information, and other
back-office services to a broad range of financial and non-financial
institutions. Through its BGC Trader and BGC Market Data brands, BGC offers
financial technology solutions, market data, and analytics related to numerous
financial instruments and markets. Through the Newmark Grubb Knight Frank
brand, the Company offers a wide range of commercial real estate services
including leasing and corporate advisory, investment sales and financial
services, consulting, project and development management, and property and
facilities management. 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 Partners is led by Chairman and Chief Executive Officer
Howard W. Lutnick. For more information, please visit www.bgcpartners.com.
BGC, BGC Trader, Grubb & Ellis, Grubb and Newmark are trademarks and service
marks of BGC Partners, Inc. and its affiliates. Knight Frank is a service
mark of Knight Frank Limited Corp., used with permission.
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 revisions to 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 set forth in our public filings, including our most recent Form 10-K
and any updates to such risk factors contained in subsequent Form 10-Q or Form
^1 On June 28, 2013, BGC sold its fully electronic trading platform for
benchmark U.S. Treasury Notes and Bonds to NASDAQ OMX Group, Inc ("NASDAQ
OMX"). For the purposes of this document, the assets sold are referred to as
^2 Investors and analysts should note that BGC's post-tax distributable
earnings per share calculations assume either that the fully diluted share
count includes the shares related to the dilutive instruments, such as the
Convertible Senior Notes, but excludes the associated interest expense when
the impact would be dilutive, or that the fully diluted share count excludes
the shares related to these instruments, but includes the associated interest
expense. In the second quarter of 2014, the pre-tax interest expense
associated with the Convertible Senior Notes was expected to be $6.2 million
while the post-tax interest expense was expected to be $5.3 million, and the
associated weighted-average share count was expected to be 40.1 million, all
based on distributable earnings.
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SOURCE BGC Partners, Inc.
Contact: Media, Hannah Sloane, 212-294-7938, Sarah Laufer, 212-915-1008,
Investors, Jason McGruder, 212-829-4988, Jason Chryssicas, 212-915-1987
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