BGC Partners Reports First Quarter 2016 Financial Results

BGC records solid growth in first quarter as post-tax distributable earnings increase 24 percent year-over-year to $77 million.

BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage company servicing the financial and real estate markets, today reported its financial results for the quarter ended 31 March, 2016.

The company has reported that its first quarter post-tax distributable earnings grew by 24 percent year-over-year to $77 million, while its distributable earnings revenues increased by 17 percent to $660 million.

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Strong performance

Howard W. Lutnick, Chairman and Chief Executive Officer of BGC, commented on the company’s solid results: “This strong performance was driven by the addition of GFI Group Inc., the ongoing success of Newmark Grubb Knight Frank, our Real Estate Services company, and the 68 percent revenue increase generated by our high margin fully electronic FENICS business.”

BGC said that it expects its results to further improve as it continues to invest the proceeds from the sale of Trayport and the creation of synergies from GFI and its other recent acquisitions.

The company also expects to receive over $765 million in additional Nasdaq stock.

Given the company’s liquidity position and expectations for strong pre-tax distributable earnings growth, the board declared a 16 cent qualified dividend for the first quarter, representing an increase of 14.3 percent both sequentially and year-on-year, translating into a 6.8 percent annualised yield. The company also expects to receive over $765 million in additional Nasdaq stock over time, which has not yet been reflected on the balance sheet.

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Shaun D. Lynn, President of BGC, added: “Our Financial Services revenues improved by 23 percent year-over-year, driven by the addition of GFI, along with solid organic growth from our data, software, and post-trade businesses; energy and commodities; as well equities and other asset classes.”

Operational synergies

“Our quarterly pre-tax distributable earnings increased by 31 percent in Financial Services year-on-year, despite the sale of Trayport, which had pre-tax margins of nearly 45 percent. This improvement was driven by higher overall revenues; expanded margins resulting from synergies with GFI; and the ongoing strength of FENICS.”

FENICS increased its quarterly top line by over 68 percent to $69 million, while its pre-tax distributable earnings grew by 55 percent to $32 million, all compared with a year earlier. The positive FENICS results were once again led by the addition of GFI, as well as strong organic growth generated by the company’s data, software, post-trade, and fully electronic credit businesses.

Barry M. Gosin, Chief Executive Officer of Newmark Grubb Knight Frank, also commented on the results: “NGKF’s distributable earnings revenues increased by 7 percent to $215 million, due mainly to a 15 percent increase in revenues from higher margin real estate capital markets brokerage and 13 percent growth from largely recurring management services fees.”

BGC has continued to invest the proceeds of the Trayport sale by adding a team of revenue-generating professionals. As the newly-hired brokers ramp up their production, NGKF’s revenue and earnings growth is expected to strongly accelerate in the second half of 2016, thus demonstrating the company’s operating leverage.

 

 

 

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