Attached files
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| 8-K - 8-K - INVESTMENT TECHNOLOGY GROUP, INC. | a15-10438_18k.htm |
Exhibit 99.1
ITG Reports First Quarter 2015 Results
Highest Quarterly EPS in More than Six Years
Earnings Growth Driven by Record Revenues in Europe and Asia Pacific
Declares First Quarterly Dividend of $0.07 per share
NEW YORK, April 30, 2015 — ITG (NYSE: ITG), an independent execution broker and research provider, today reported results for the quarter ended March 31, 2015.
First quarter 2015 highlights included:
· Net income of $16.7 million, or $0.47 per diluted share compared to net income of $13.6 million, or $0.37 per diluted share for the first quarter of 2014.
· Revenues of $149.7 million, compared to revenues of $137.6 million in the first quarter of 2014, including record revenues in Europe and Asia Pacific.
· Expenses of $127.4 million, compared to expenses of $119.2 million in the first quarter of 2014.
· Average daily trading volume in the U.S. of 191 million shares versus 164 million shares in the first quarter of 2014. POSIT® average daily U.S. volume was 93 million shares compared to 70 million shares in the first quarter of 2014. Total average daily volume traded through POSIT Alert® was 17 million shares, consistent with the first quarter of 2014.
· In Europe, average daily value traded in POSIT was $1.3 billion, compared with $990 million in the first quarter of 2014. Total average daily value traded through POSIT Alert rose 9% in the first quarter of 2015 compared with the prior-year period.
· An annualized return on average equity of 16.3%, compared with 13.1% in the first quarter of 2014.
· The repurchase of 692,000 shares of common stock under ITG’s authorized share repurchase program for a total of $16.4 million. Repurchases since the first quarter of 2010 have totaled $205.4 million for a total of 14.0 million shares, resulting in a decrease in shares outstanding, net of issuances, of 22%.
Regional Segment Results
ITG has changed its segment measures and is now presenting regional segment results excluding the impact of Corporate activity. Corporate activity reduced overall net income by $2.6 million in the first quarter of 2015 and by $3.1 million in the first quarter of 2014. Corporate activity includes investment income as well as costs not associated with operating ITG’s regional and product group business lines including, among others, the costs of being a public company, intangible amortization, interest expense and the costs of maintaining a global transfer pricing structure. Previously the majority of these costs were presented in the U.S. segment.
ITG’s North American revenues were $99.3 million in the first quarter of 2015 compared to $94.8 million in the first quarter of 2014. ITG reported net income of $8.9 million in North America in the first quarter of 2015, up from $8.6 million in the first quarter of 2014. U.S. revenues were $80.4 million, up 6% from the first quarter of 2014 while Canada revenues were down 2% to $18.9 million in the first quarter of 2015 due to currency translation. The overall revenue capture rate per share in the U.S. was $0.0045, up from $0.0044 in the fourth quarter of 2014 but down from $0.0047 in the first quarter of 2014. The year-over-year decline in the overall average rate was due in large part to an increase in trading activity from sell-side clients.
ITG’s Europe and Asia Pacific revenues were $50.1 million in the first quarter of 2015 compared to $42.5 million in the first quarter of 2014. European revenues were a record $36.6 million, up 12% from the first quarter of 2014 while Asia Pacific revenues were a record $13.5 million, up 39% from the first quarter of 2014. ITG’s Europe and Asia Pacific operations reported net income of $10.5 million in the first quarter of 2015 versus net income of $8.2 million in the first quarter of 2014.
“Our record revenues in Europe and Asia Pacific are the result of our multi-year program of investment in our international businesses, while our North American results continue to be strong,” said Bob Gasser, ITG’s Chief Executive Officer and President. “Our global portfolio approach to the business, combined with our disciplined expense management, has delivered the highest earnings per share in more than six years, with return on equity of 16%, well above most of our peers,” said Mr. Gasser.
Quarterly Dividend
ITG’s Board of Directors has initiated a dividend program under which the Company intends to pay quarterly cash dividends beginning in the second quarter of 2015, subject to quarterly declarations by the Board of Directors. For the second quarter of 2015, the Board of Directors declared a quarterly dividend of $0.07 per share. The dividend is payable on June 5, 2015, to shareholders of record on May 15, 2015.
“The initiation of this dividend program reflects our strong growth and robust cash flow, as well as the optimism we have about the future prospects of the firm,” said ITG’s Chairman, Maureen O’Hara. “Our previously stated capital return guidance for 2015 remains unchanged and we intend to pursue it through a combination of increased share repurchases and the new quarterly dividend.”
Conference Call
A conference call to discuss the firm’s results will be held at 11:00 am ET on April 30, 2015. Those wishing to listen to the call should dial 1-877-317-6789 (1-412-317-6789 outside the U.S.) at least 15 minutes prior to the start of the call to ensure connection. The webcast and accompanying slideshow presentation will be available on ITG’s website at investor.itg.com. For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-877-344-7529 (1-412-317-0088 outside the U.S.) and entering conference number 10063846. The replay will be available starting approximately one hour after the completion of the conference call.
ABOUT ITG
ITG is an independent execution broker and research provider that partners with global portfolio managers and traders to provide unique data-driven insights throughout the investment process. From investment decision through settlement, ITG helps clients understand market trends, improve performance, mitigate risk and navigate increasingly complex markets. ITG is headquartered in New York with offices in North America, Europe, and Asia Pacific. For more information, please visit www.itg.com.
In addition to historical information, this press release may contain “forward-looking” statements that reflect management’s expectations for the future. A variety of important factors could cause results to differ materially from such statements. Certain of these factors are noted throughout ITG’s 2014 Annual Report on Form 10-K, and its Form 10-Qs (as amended, if applicable) and include, but are not limited to, general economic, business, credit and financial market conditions, both internationally and nationally, financial market volatility, fluctuations in market trading volumes, effects of inflation, adverse changes or volatility in interest rates, fluctuations in foreign exchange rates, evolving industry regulations and regulatory scrutiny, changes in tax policy or accounting rules, the actions of both current and potential new competitors, changes in commission pricing, rapid changes in technology, errors or malfunctions in our systems or technology, cash flows into or redemptions from equity mutual funds, ability to meet liquidity requirements related to the clearing of our customers’ trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate acquired companies and our ability to attract and retain talented employees. The forward-looking statements included herein represent ITG’s views as of the date of this release. ITG undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.
ITG Media/Investor Contact:
J.T. Farley
1-212-444-6259
corpcomm@itg.com
INVESTMENT TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
|
|
|
Three Months Ended |
| ||||
|
|
|
2015 |
|
2014 |
| ||
|
Revenues: |
|
|
|
|
| ||
|
Commissions and fees |
|
$ |
118,926 |
|
$ |
108,424 |
|
|
Recurring |
|
26,932 |
|
25,577 |
| ||
|
Other |
|
3,869 |
|
3,608 |
| ||
|
Total revenues |
|
149,727 |
|
137,609 |
| ||
|
|
|
|
|
|
| ||
|
Expenses: |
|
|
|
|
| ||
|
Compensation and employee benefits |
|
57,408 |
|
51,177 |
| ||
|
Transaction processing |
|
24,573 |
|
20,496 |
| ||
|
Occupancy and equipment |
|
14,372 |
|
15,078 |
| ||
|
Telecommunications and data processing services |
|
12,772 |
|
12,697 |
| ||
|
Other general and administrative |
|
17,757 |
|
19,105 |
| ||
|
Interest expense |
|
505 |
|
636 |
| ||
|
Total expenses |
|
127,387 |
|
119,189 |
| ||
|
Income before income tax expense |
|
22,340 |
|
18,420 |
| ||
|
Income tax expense |
|
5,607 |
|
4,800 |
| ||
|
Net income |
|
$ |
16,733 |
|
$ |
13,620 |
|
|
|
|
|
|
|
| ||
|
Earnings per share: |
|
|
|
|
| ||
|
Basic |
|
$ |
0.49 |
|
$ |
0.38 |
|
|
Diluted |
|
$ |
0.47 |
|
$ |
0.37 |
|
|
|
|
|
|
|
| ||
|
Basic weighted average number of common shares outstanding |
|
34,268 |
|
36,081 |
| ||
|
Diluted weighted average number of common shares outstanding |
|
35,451 |
|
37,185 |
| ||
INVESTMENT TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
Supplemental Financial Data (unaudited)
(In thousands)
|
|
|
Three months ended March 31, |
| ||||
|
|
|
2015 |
|
2014 |
| ||
|
Revenues by Geographic Region: |
|
|
|
|
| ||
|
U.S Operations |
|
$ |
80,454 |
|
$ |
75,607 |
|
|
Canadian Operations |
|
18,913 |
|
19,218 |
| ||
|
European Operations |
|
36,605 |
|
32,790 |
| ||
|
Asia Pacific Operations |
|
13,522 |
|
9,697 |
| ||
|
Corporate |
|
233 |
|
297 |
| ||
|
Total Revenues |
|
$ |
149,727 |
|
$ |
137,609 |
|
|
|
|
Three months ended March 31, |
| ||||
|
|
|
2015 |
|
2014 |
| ||
|
Revenues by Product Group: |
|
|
|
|
| ||
|
Electronic Brokerage |
|
$ |
80,454 |
|
$ |
72,884 |
|
|
Research Sales and Trading |
|
32,513 |
|
29,245 |
| ||
|
Trading Platforms |
|
25,073 |
|
23,733 |
| ||
|
Analytics |
|
11,454 |
|
11,450 |
| ||
|
Corporate |
|
233 |
|
297 |
| ||
|
Total Revenues |
|
$ |
149,727 |
|
$ |
137,609 |
|
INVESTMENT TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In thousands, except share amounts)
|
|
|
March 31, |
|
December 31, |
| ||
|
|
|
(unaudited) |
|
|
| ||
|
Assets |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
205,762 |
|
$ |
275,210 |
|
|
Cash restricted or segregated under regulations and other |
|
37,876 |
|
38,080 |
| ||
|
Deposits with clearing organizations |
|
89,674 |
|
72,527 |
| ||
|
Securities owned, at fair value |
|
12,204 |
|
12,073 |
| ||
|
Receivables from brokers, dealers and clearing organizations |
|
881,887 |
|
644,614 |
| ||
|
Receivables from customers |
|
110,225 |
|
107,935 |
| ||
|
Premises and equipment, net |
|
56,967 |
|
60,306 |
| ||
|
Capitalized software, net |
|
38,650 |
|
38,333 |
| ||
|
Goodwill |
|
12,041 |
|
12,803 |
| ||
|
Intangibles, net |
|
30,789 |
|
31,595 |
| ||
|
Income taxes receivable |
|
2,114 |
|
105 |
| ||
|
Deferred taxes |
|
28,270 |
|
37,209 |
| ||
|
Other assets |
|
22,992 |
|
20,059 |
| ||
|
Total assets |
|
$ |
1,529,451 |
|
$ |
1,350,849 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
|
Liabilities: |
|
|
|
|
| ||
|
Accounts payable and accrued expenses |
|
$ |
163,795 |
|
$ |
199,211 |
|
|
Short-term bank loans |
|
107,269 |
|
78,360 |
| ||
|
Payables to brokers, dealers and clearing organizations |
|
788,964 |
|
600,041 |
| ||
|
Payables to customers |
|
29,775 |
|
11,132 |
| ||
|
Securities sold, not yet purchased, at fair value |
|
8,552 |
|
8,253 |
| ||
|
Income taxes payable |
|
10,795 |
|
19,772 |
| ||
|
Deferred taxes |
|
— |
|
703 |
| ||
|
Term debt |
|
14,612 |
|
17,781 |
| ||
|
Total liabilities |
|
1,123,762 |
|
935,253 |
| ||
|
Commitments and contingencies |
|
|
|
|
| ||
|
Stockholders’ Equity: |
|
|
|
|
| ||
|
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding |
|
— |
|
— |
| ||
|
Common stock, $0.01 par value; 100,000,000 shares authorized; 52,265,654 and 52,229,962 shares issued at March 31, 2015 and December 31, 2014, respectively |
|
522 |
|
522 |
| ||
|
Additional paid-in capital |
|
231,273 |
|
240,135 |
| ||
|
Retained earnings |
|
504,195 |
|
487,462 |
| ||
|
Common stock held in treasury, at cost; 18,038,374 and 18,000,756 shares at March 31, 2015 and December 31, 2014, respectively |
|
(313,560 |
) |
(306,629 |
) | ||
|
Accumulated other comprehensive income (net of tax) |
|
(16,741 |
) |
(5,894 |
) | ||
|
Total stockholders’ equity |
|
405,689 |
|
415,596 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
1,529,451 |
|
$ |
1,350,849 |
|
INVESTMENT TECHNOLOGY GROUP, INC.
Non-GAAP Financial Measures
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP performance measure, that the Company believes is useful to assist investors in gaining an understanding of the trends and operating results for ITG’s core businesses. This measure should be viewed in addition to, and not in lieu of, ITG’s reported results under GAAP.
Reconciliation of Adjusted Earnings
Before Interest, Taxes, Depreciation, and Amortization
(In thousands)
|
|
|
Three Months Ended |
| ||||
|
|
|
2015 |
|
2014 |
| ||
|
Net Income (1) |
|
$ |
16,733 |
|
$ |
13,620 |
|
|
|
|
|
|
|
| ||
|
Deduct: |
|
|
|
|
| ||
|
Investment income |
|
(222 |
) |
(288 |
) | ||
|
|
|
|
|
|
| ||
|
Add Back: |
|
|
|
|
| ||
|
Interest expense |
|
505 |
|
636 |
| ||
|
Provision for income taxes |
|
5,607 |
|
4,800 |
| ||
|
Depreciation and Amortization |
|
11,161 |
|
13,034 |
| ||
|
Adjusted earnings before interest, taxes, depreciation, and amortization |
|
$ |
33,784 |
|
$ |
31,802 |
|
Notes:
(1) Net income includes pre-tax charges for non-cash stock-based compensation of $4.9 million and $3.8 million for the three months ended March 31, 2015 and 2014, respectively.
###