Oct, 28 2014
GFI Group Inc. Announces Third Quarter Results Tue, 28 Oct 2014 16:15:48

(Results relate to the third quarter 2014 and comparisons are versus the third quarter 2013, unless otherwise stated)

NEW YORK, Oct. 28, 2014 /PRNewswire/ — GFI Group Inc. (NYSE: GFIG), a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, reported today its financial results for the three and nine months ended September 30, 2014.

Highlights of Results

Three months ended

September 30,

Nine months ended

September 30,

$ in millions

2014

2013

2014

2013

Total revenues

$

210.3

 

$

212.4

 

$

669.1

 

$

699.1

 

Net revenues

181.0

 

176.2

 

569.7

 

576.2

 

Brokerage revenues

153.8

 

151.2

 

482.5

 

501.9

 

Software, analytics and market data revenue

26.1

 

22.5

 

77.5

 

66.4

 

Compensation ratio (1)

68.5

%

68.4

%

68.7

%

68.4

%

Non-compensation ratio (1)

31.4

%

30.3

%

30.1

%

28.0

%

Non-GAAP net income (1)

$

(0.9)

 

$

1.4

 

$

6.5

 

$

15.7

 

Cash earnings (1)

15.9

 

20.2

 

61.3

 

75.0

 

(1)

Item represents a non-GAAP financial measure; see discussion below, as well as a reconciliation to GAAP in the financial tables attached to this release.

Colin Heffron, Chief Executive Officer, commented: “Volatility and trading activity returned in September after a muted July and August. The increased activity was most noticeable in emerging market financial products. Financial product revenues were at their highest level since the second quarter of 2013.  As a result, brokerage revenues were up 1.7% from the prior year quarter.  We continued to see strong growth in software, analytics and market data revenues which were up 16.1%, with Trayport up 20.5%.  Non-GAAP net revenues increased 1.2% from the prior year quarter.

“We remain focused on providing unique electronic matching protocols in fixed income and financial products globally as well as seeking efficiencies within our cost base.

“GFI’s preliminary October total revenues are tracking up approximately 7.5% year over year.

“GFI’s third quarter cash earnings were $15.9 million, or $0.13 per diluted share.”

GAAP Results: Third Quarter 2014

Net revenues were $181.0 million, compared to $176.2 million in the prior year.  Net loss was $7.7 million, or ($0.06) per diluted share, compared with a net loss of $0.5 million, or $0.00 per diluted share. Compensation and employee benefits expense was 67.8% of net revenues, versus 68.7% in the prior year quarter.  Non-compensation expenses were $65.8 million, or 36.3% of net revenues, compared to $56.3 million, or 31.9%, in the prior year quarter.    

Non-GAAP Results: Third Quarter 2014

Revenues

Net revenues were $179.2 million as compared to $177.0 million in the third quarter of 2013.

Brokerage revenues were $153.8 million compared to $151.2 million in the prior year quarter.  Revenues from financial products were up 21.2%, while revenues from fixed income, commodity and equity products were down 1.0%, 10.5% and 9.2%, respectively.  By geographic region, brokerage revenues increased 6.0% in EMEA and 21.7% in Asia-Pacific, but declined 9.0% in the Americas.

Revenues from trading software, analytics and market data products were $26.1 million, up 16.1% from $22.5 million in the prior year.

Expenses

Compensation and employee benefits expense was $122.7 million, or 68.5% of net revenues, compared with $121.1 million, or 68.4%, in third quarter of 2013.  Non-compensation expenses were $56.3 million, or 31.4% of net revenues, compared with $53.6 million, or 30.3%, in the prior year.

Earnings

GFI’s net loss was $0.9 million, or ($0.01) per diluted share, compared with net income of $1.4 million, or $0.01 per diluted share, in the prior year third quarter.

The effective non-GAAP year to date tax rate was estimated at a negative 8.3% as compared to 36.0% for full-year 2013. The negative 2014 tax rate was a result of regional shifts in taxable incomes.

GAAP Results: Nine Months ended September 30, 2014

Net revenues were $569.7 million for the nine months ended September 30, 2014 compared with $576.2 million in the same period of 2013.  Net loss was $101.5 million, or ($0.82) per diluted share for 2014, compared with $10.9 million net income, or $0.09 per diluted share, in 2013. The compensation and employee benefits ratio in 2014 was 68.5% of net revenues versus 68.2% in 2013.  Non-compensation expenses for the nine months ended September 30, 2014 were $310.3 million, or 54.5% of net revenues, compared with $176.9 million, or 30.7%, in the same period of 2013. Non-compensation expenses in the nine months ended September 30, 2014 include a $121.6 million non-cash pre-tax goodwill impairment charge. 

Non-GAAP Results: Nine Months ended September 30, 2014

Net revenues for the nine months ended September 30, 2014 were $565.2 million compared to $574.2 million in the same period of 2013. Net income was $6.5 million, or $0.05 per diluted share, for the nine months ended September 30, 2014, compared with $15.7 million, or $0.12 per diluted share, in 2013. 

Non-GAAP Financial Measures

To supplement GFI’s unaudited financial statements presented in accordance with GAAP, the Company uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies.  In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by GFI include non-GAAP total revenues, non-GAAP net revenues, non-GAAP provision for, or benefit from, income taxes, non-GAAP net income, non-GAAP diluted earnings per share, cash earnings and cash earnings per share.  These non-GAAP financial measures currently exclude from the Company’s statement of income amortization of acquired intangibles and certain other items that management views as non-operating, non-recurring or non-cash as detailed in the reconciliation included in the financial tables attached to this release.

In addition, GFI may consider whether other significant non-operating, non-recurring or non-cash items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.  The non-GAAP financial measures also take into account estimated adjustments to income tax expense with respect to the excluded items.

GFI believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook. GFI’s management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company’s operating results, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods.

In addition to the reasons stated above, which are generally applicable to each of the items GFI excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude amortization of acquired intangibles because when analyzing the operating performance of an acquired business, GFI’s management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity, as compared to the purchase price paid) without taking into consideration any charges for allocations made for accounting purposes. Further, because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets, when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of acquired intangible assets on its financial results. GFI believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.

A reconciliation of these non-GAAP financial measures to GAAP is included in the financial tables attached to this release.

Conference Call

GFI has scheduled an investor conference call to discuss its third quarter results at 8:30 a.m. (Eastern Time) on Wednesday, October 29, 2014. Those wishing to listen to the live conference call via telephone should dial 1-877-870-4263 in North America and +1-412-317-0790 outside of North America, and ask for “GFI”.

A live audio web cast of the conference call will be available on the Investor Relations section of GFI’s Website. For web cast registration information, please visit: http://www.gfigroup.com. Following the conference call, an archived recording will be available.

Supplementary Financial Information

GFI has posted details of its historical monthly brokerage revenues on the Investor Relations page of its web site under the heading “Quarterly Tool Kit”. The Company currently plans to post this information quarterly in conjunction with its announcement of earnings, but does not undertake a responsibility to continue to provide or update such information.

About GFI Group Inc.

GFI Group Inc. (NYSE: GFIG) is a leading intermediary in the global OTC and Listed markets offering an array of sophisticated trading technologies and products to a broad range of financial market participants.  More than 2,500 institutional clients benefit from GFI’s know-how and experience in operating electronic and hybrid markets for cash and derivative products across multiple asset classes, including fixed income, interest rates, foreign exchange, equities, energy and commodities.  GFI’s brands include Trayport®, a leading provider of trading solutions for energy markets worldwide and FENICS ®, a market leader in FX options software. 

Founded in 1987 and headquartered in New York, GFI employs over 2,000 people globally, with additional offices in London, Paris, Brussels, Nyon, Dublin, Madrid, Sugar Land (TX), Hong Kong, Tel Aviv, Dubai, Manila, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Bogota, Buenos Aires, Lima and Mexico City.

Important Information for Investors and Stockholders

In connection with the proposed transaction between GFI Group Inc. (the “Company”) and CME Group Inc. (“CME“), CME filed on October 16, 2014 a registration statement on Form S-4 that includes a preliminary proxy statement of the Company that also constitutes a preliminary prospectus of CME. These materials are not yet final and may be amended. The definitive proxy statement/prospectus will be mailed to stockholders of the Company. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT/PROSPECTUS AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AS WELL AS OTHER DOCUMENTS FILED WITH SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free copies of the registration statement and the proxy statement/prospectus and other documents filed with the SEC by CME and the Company through the website maintained by the SEC at http://www.sec.gov or at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC’s website for further information on its public reference room. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at http://www.gfigroup.com or by contacting the Company’s Investor Relations Department at (212) 968-4167. Copies of the documents filed with the SEC by CME will be available free of charge on CME’s website at http://www.cmegroup.com or by contacting CME’s Investor Relations Department at (312) 930-8491.

Participants in the Solicitation for the Proposed Merger Between the Company and CME

The Company and its directors, executive officers and certain of its employees may be considered participants in the solicitation of proxies in connection with the proposed transactions involving the Company and CME. Investors and security holders may obtain more detailed information regarding the names, affiliates and interests of the Company’s directors and executive officers by reading the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 13, 2014, its proxy statement for its 2014 annual meeting of stockholders, which was filed with the SEC on April 22, 2014, and its Current Report on Form 8-K filed with the SEC on July 25, 2014. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is or will be contained in the proxy statement/prospectus and other relevant materials filed with the SEC. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Cautionary Statement Regarding Forward-Looking Statements

Certain matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to (i) plans, objectives, expectations and intentions; (ii) other statements contained in this communication that are not historical facts; and (iii) other statements identified by words such as “anticipate,” “believe,” “estimate,” “may,” “might,” “intend,” “expect” and similar expressions. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements involving the Company and CME; the inability to complete the proposed merger involving the Company and CME due to the failure to obtain the required stockholder approval; the inability to satisfy the other conditions to the closing of the proposed merger involving the Company and CME or the tender offer by BGC Partners, Inc. (“BGC”), including without limitation the receipt of necessary governmental or regulatory approvals required to complete either transaction; the risk that either transaction disrupts current plans and operations and/or increases operating costs and the potential difficulties in customer loss and employee retention as a result of the announcement and consummation of either transaction; the outcome of any legal proceedings that may be instituted against the Company, CME, BGC or others following announcement of either transaction; economic, political and market factors affecting trading volumes; securities prices or demand for the Company’s brokerage services; competition from current and new competitors; the Company’s ability to attract and retain key personnel, including highly-qualified brokerage personnel; the Company’s ability to identify and develop new products and markets; changes in laws and regulations governing the Company’s business and operations or permissible activities; the Company’s ability to manage its international operations; financial difficulties experienced by the Company’s customers or key participants in the markets in which the Company focuses its services; the Company’s ability to keep up with technological changes; and uncertainties relating to litigation and the Company’s ability to assess and integrate acquisition prospects. Further information about factors that could affect the financial and other results of the Company is included in its filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

These forward-looking statements speak only as of the date hereof. Except for the ongoing obligations of the Company to disclose material information under the federal securities laws, the Company undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law. Other factors that may impact the forward-looking statements are described in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2013 and Forms 10-Q. For additional information on the Company, please visit the Company’s website at http://www.gfigroup.com.

– FINANCIAL TABLES FOLLOW –

 

 

 

GFI Group Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(In thousands except share and per share data)

                 
         
   

Three Months Ended

 

Nine Months Ended

   

September 30,

 

September 30,

   

2014

 

2013

 

2014

 

2013

Revenues

             
 

Agency commissions 

$        112,303

 

$        109,365

 

$        343,410

 

$        358,413

 

Principal transactions 

41,453

 

41,841

 

139,090

 

143,468

 

 Total brokerage revenues

153,756

 

151,206

 

482,500

 

501,881

 

Clearing services revenues

26,373

 

32,722

 

89,139

 

110,225

 

Interest income from clearing services

579

 

455

 

1,679

 

1,623

 

Equity in net earnings of unconsolidated businesses

639

 

1,566

 

4,686

 

6,925

 

Software, analytics and market data

26,095

 

22,472

 

77,455

 

66,438

 

Other income, net

2,859

 

4,012

 

13,686

 

12,011

 

    Total revenues

210,301

 

212,433

 

669,145

 

699,103

                 

Interest and transaction-based expenses

             
 

Transaction fees on clearing services

24,786

 

31,620

 

84,362

 

106,952

 

Transaction fees on brokerage services

4,330

 

4,430

 

14,488

 

15,572

 

Interest expense from clearing services

206

 

143

 

560

 

390

 

Total interest and transaction-based expenses

29,322

 

36,193

 

99,410

 

122,914

 

Revenues, net of interest and transaction-based expenses

180,979

 

176,240

 

569,735

 

576,189

                 

Expenses

             
 

Compensation and employee benefits

122,720

 

121,109

 

390,420

 

392,737

 

Communications and market data

13,335

 

13,747

 

40,202

 

41,077

 

Travel and promotion

7,184

 

7,380

 

22,924

 

23,298

 

Rent and occupancy

7,835

 

7,901

 

23,811

 

22,152

 

Depreciation and amortization

8,480

 

8,320

 

25,873

 

24,962

 

Professional fees

13,650

 

5,712

 

29,928

 

18,824

 

Interest on borrowings

8,466

 

7,612

 

24,393

 

22,475

 

Impairment of goodwill

 

 

121,619

 

 

Other expenses

6,825

 

5,615

 

21,526

 

24,138

 

   Total other expenses

188,495

 

177,396

 

700,696

 

569,663

                 

(Loss) income before benefit from income taxes

(7,516)

 

(1,156)

 

(130,961)

 

6,526

                 

Benefit from income taxes

(56)

 

(1,127)

 

(30,239)

 

(5,267)

                 

Net (loss) income before attribution to non-controlling stockholders

(7,460)

 

(29)

 

(100,722)

 

11,793

                 

Less: Net income attributable to non-controlling interests

231

 

432

 

762

 

889

GFI’s net (loss) income

$           (7,691)

 

$               (461)

 

$       (101,484)

 

$           10,904

                 
                 

Basic (loss) earnings per share 

$              (0.06)

 

$               0.00

 

$              (0.82)

 

$               0.09

Diluted (loss) earnings per share

$              (0.06)

 

$               0.00

 

$              (0.82)

 

$               0.09

                 

Weighted average shares outstanding – basic

125,407,225

 

120,331,179

 

124,237,643

 

118,138,756

                 

Weighted average shares outstanding – diluted

125,407,225

 

120,331,179

 

124,237,643

 

126,858,459

 

GFI Group Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

As a Percentage of Net Revenues

                 
             
   

Three Months Ended

 

Nine Months Ended

   

September 30,

 

September 30,

   

2014

 

2013

 

2014

 

2013

Revenues

             
 

Agency commissions 

62.1%

 

62.1%

 

60.3%

 

62.2%

 

Principal transactions 

22.9%

 

23.7%

 

24.4%

 

24.9%

 

 Total brokerage revenues

85.0%

 

85.8%

 

84.7%

 

87.1%

 

Clearing services revenues

14.6%

 

18.5%

 

15.6%

 

19.1%

 

Interest income from clearing services

0.3%

 

0.3%

 

0.3%

 

0.3%

 

Equity in net earnings of unconsolidated businesses

0.3%

 

0.9%

 

0.8%

 

1.2%

 

Software, analytics and market data

14.4%

 

12.7%

 

13.6%

 

11.5%

 

Other income, net

1.6%

 

2.3%

 

2.4%

 

2.1%

 

    Total revenues

116.2%

 

120.5%

 

117.4%

 

121.3%

                 

Interest and transaction-based expenses

             
 

Transaction fees on clearing services

13.7%

 

17.9%

 

14.8%

 

18.5%

 

Transaction fees on brokerage services

2.4%

 

2.5%

 

2.5%

 

2.7%

 

Interest expense from clearing services

0.1%

 

0.1%

 

0.1%

 

0.1%

 

Total interest and transaction-based expenses

16.2%

 

20.5%

 

17.4%

 

21.3%

 

Revenues, net of interest and transaction-based expenses

100.0%

 

100.0%

 

100.0%

 

100.0%

                 

Expenses

             
 

Compensation and employee benefits

67.8%

 

68.7%

 

68.5%

 

68.2%

 

Communications and market data

7.3%

 

7.8%

 

7.1%

 

7.1%

 

Travel and promotion

4.0%

 

4.2%

 

4.0%

 

4.0%

 

Rent and occupancy

4.3%

 

4.5%

 

4.2%

 

3.9%

 

Depreciation and amortization

4.7%

 

4.7%

 

4.5%

 

4.3%

 

Professional fees

7.5%

 

3.3%

 

5.3%

 

3.3%

 

Interest on borrowings

4.7%

 

4.3%

 

4.3%

 

3.9%

 

Impairment of goodwill

0.0%

 

0.0%

 

21.3%

 

0.0%

 

Other expenses

3.8%

 

3.2%

 

3.8%

 

4.2%

 

   Total other expenses

104.1%

 

100.7%

 

123.0%

 

98.9%

                 

(Loss) income before benefit from income taxes

-4.1%

 

-0.7%

 

-23.0%

 

1.1%

                 

Benefit from income taxes

0.0%

 

-0.6%

 

-5.3%

 

-0.9%

                 

Net (loss) income before attribution to non-controlling stockholders

-4.1%

 

-0.1%

 

-17.7%

 

2.0%

                 

Less: Net income attributable to non-controlling interests

0.1%

 

0.2%

 

0.1%

 

0.1%

GFI’s net (loss) income

-4.2%

 

-0.3%

 

-17.8%

 

1.9%

 

 

GFI Group Inc. and Subsidiaries

Selected Financial Data (unaudited)

(Dollars in thousands except per share data)

                         
                     
       

Three Months Ended

     

Nine Months Ended

       

September 30,

     

September 30,

       

2014

 

2013

     

2014

 

2013

                         

Brokerage Revenues by Product Categories:

                 
 

Fixed Income

   

$            41,154

 

$            41,583

     

$          136,747

 

$          136,903

 

Financial

   

54,175

 

44,700

     

152,373

 

151,030

 

Equity

   

23,475

 

25,866

     

79,205

 

90,188

 

Commodity

   

34,952

 

39,057

     

114,175

 

123,760

                         
 

   Total brokerage revenues

 

$         153,756

 

$         151,206

     

$          482,500

 

$          501,881

                         
                         

Brokerage Revenues by Geographic Region:

                   
 

Americas

   

$            54,645

 

$            60,035

     

$          171,235

 

$          201,518

 

Europe, Middle East, and Africa

 

79,695

 

75,213

     

255,582

 

244,467

 

Asia-Pacific

   

19,416

 

15,958

     

55,683

 

55,896

                         
 

   Total brokerage revenues

 

$         153,756

 

$         151,206

     

$          482,500

 

$          501,881

                         
                         
                         
                         
       

September 30,

 

December 31,

           
       

2014

 

2013

           
                         

Consolidated Statement of Financial Condition Data:

                 
 

Cash and cash equivalents

 

$         165,850

 

$         174,606

           
 

Cash held at clearing organizations, net of customer cash

57,001

 

52,414

           
 

GFI’s total balance sheet cash

   

222,851

 

227,020

           
 

Balance sheet cash per share

 

1.75

 

1.84

           
                         
 

Total assets (1)

   

1,474,061

 

1,161,542

           
 

Total debt

   

250,000

 

250,000

           
 

Stockholders’ equity

   

300,918

 

407,276

           
                         
                         

Selected Statistical Data:

                     
 

Brokerage personnel headcount(2) (4)

1,058

 

1,121

           
 

Employees

   

2,037

 

2,087

           
 

Broker productivity for the period(3) (4)

$                 145

 

$                 127

           
                         
                         
                         
                         

(1)

Total assets include receivables from brokers, dealers and clearing organizations of $723.9 million and $295.7 million at September 30, 2014 and December 31, 2013, respectively. These receivables primarily represent securities transactions entered into in connection with our matched principal business which have not settled as of their stated settlement dates, as well as balances with clearing organizations. These receivables are substantially offset by corresponding payables to brokers, dealers and clearing organizations and to clearing customers, for these unsettled transactions.

       

(2)

Brokerage personnel headcount includes brokers, traders, trainees and clerks.

       

(3)

Broker productivity is calculated as brokerage revenues divided by average monthly brokerage personnel headcount for the quarter.

       

(4)

In the quarter ending March 31, 2014, GFI reclassified certain employees that had previously been included in “Brokerage personnel headcount” to back-office support roles.  The impact to broker productivity was immaterial in all periods presented.  

       

 

GFI Group Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)

(In thousands except share and per share data)

                 
         
   

Three Months Ended

 

Nine Months Ended

   

September 30,

 

September 30,

   

2014

 

2013

 

2014

 

2013

                 

GAAP revenues

 

$     210,301

 

$     212,433

 

$     669,145

 

$     699,103

Mark-to-market (gain) loss on forward hedges of future foreign currency revenues

 

(1,671)

 

804

 

(1,698)

 

154

Net loss on available-for-sale investments

 

 

 

48

 

Fair value mark-to-market gain on contingent consideration/future purchase commitment 

(151)

 

 

(2,860)

 

(2,203)

Fair value mark-to-market loss on warrants on investee shares

 

 

 

 

22

Total Non-GAAP Revenues

 

208,479

 

213,237

 

664,635

 

697,076

                 

GAAP interest and transaction-based expenses

 

29,322

 

36,193

 

99,410

 

122,914

                 

Non-GAAP revenues, net of interest and transaction-based expenses

 

179,157

 

177,044

 

565,225

 

574,162

                 

GAAP other expenses

 

188,495

 

177,396

 

700,696

 

569,663

Amortization of intangibles

 

(2,438)

 

(2,339)

 

(7,355)

 

(7,308)

Writedown of investment in unconsolidated affiliate

 

 

 

(611)

 

Impairment of goodwill

 

 

 

(121,619)

 

Modification of compensation arrangements for departing executive

 

 

 

(2,289)

 

Expenses from start-up operations

 

 

 

 

(8,573)

Duplicate rent

 

 

(345)

 

 

(345)

Professional fees related to restructuring

 

(7,087)

 

 

(10,337)

 

Non-GAAP other expenses

 

178,970

 

174,712

 

558,485

 

553,437

                 

Non-GAAP pre-tax income

 

187

 

2,332

 

6,740

 

20,725

                 

Income tax impact on Non-GAAP items

 

945

 

1,593

 

29,677

 

6,757

Plus: Non-operating adjustment for the recognition of a tax benefit related to interest
income between international affiliates

 

 

 

 

2,655

Non-GAAP provision for (benefit from) income taxes

 

889

 

466

 

(562)

 

4,145

                 

Less: Net income attributable to non-controlling interests

 

231

 

432

 

762

 

889

                 

GFI’s Non-GAAP net (loss) income

 

$           (933)

 

$          1,434

 

$          6,540

 

$       15,691

                 

Non-GAAP diluted net (loss) income per share

 

$          (0.01)

 

$            0.01

 

$            0.05

 

$            0.12

                 

Pre-tax adjustments to arrive at cash earnings

               

Amortization of RSUs

 

5,516

 

6,870

 

18,726

 

22,372

Amortization of prepaid sign-on and retention bonuses

 

5,233

 

5,938

 

17,561

 

19,328

Depreciation and other amortization (excluding intangibles)

 

6,042

 

5,981

 

18,518

 

17,654

Total pre-tax adjustments to cash earnings

 

16,791

 

18,789

 

54,805

 

59,354

                 

Non-GAAP pre-tax cash earnings from ongoing operations

 

16,978

 

21,121

 

61,545

 

80,079

                 

Non-GAAP provision for (benefit from) income taxes

 

889

 

466

 

(562)

 

4,145

                 

Less: Net income attributable to non-controlling interests

 

231

 

432

 

762

 

889

                 

GFI’s Non-GAAP net cash earnings from ongoing operations

 

$       15,858

 

$       20,223

 

$       61,345

 

$       75,045

                 

Non-GAAP cash earnings per share

 

$            0.13

 

$            0.16

 

$            0.47

 

$            0.59

                 

Weighted average shares outstanding – diluted

 

125,407,225

 

128,389,013

 

131,865,145

 

126,858,459

 

GFI Group Inc.

                     

Adjusted EBITDA

                     
                       

($ in thousands, except share and per share amounts)

3Q13

 

4Q13

 

1Q14

 

2Q14

 

3Q14

 

Last twelve months (LTM)

                       

Net (loss) income per U.S. GAAP before attribution to non-controlling interests

$             (29)

 

$      (30,865)

 

$          4,409

 

$      (97,671)

 

$        (7,460)

   
                       

Plus: Net income attributable to non-controlling interests

(432)

 

(37)

 

(406)

 

(125)

 

(231)

   

GFI’s net (loss) income

(461)

 

(30,902)

 

4,003

 

(97,796)

 

(7,691)

   
                       

Plus: Extraordinary and other non-recurring pretax items (i.e., non-GAAP adjustments)

3,488

 

22,751

 

2,770

 

127,228

 

7,703

   
                       

Plus: Interest expense

7,755

 

8,002

 

7,953

 

8,328

 

8,672

   
                       

Less: Interest income

(630)

 

(773)

 

(651)

 

(704)

 

(746)

   
                       

Plus: Income tax (benefit) expense

(1,127)

 

2,994

 

1,094

 

(31,277)

 

(56)

   
                       

Plus: Depreciation and amortization expense (excluding intangibles)

5,981

 

6,001

 

6,127

 

6,349

 

6,042

   
                       

Plus: Amortization of RSUs

6,870

 

6,951

 

7,355

 

5,855

 

5,516

   
                       

Plus: Amortization of prepaid sign-on and retention bonuses

5,938

 

6,038

 

6,593

 

5,735

 

5,233

   
                       

Adjusted EBITDA

$        27,814

 

$        21,062

 

$        35,244

 

$        23,718

 

$        24,673

 

$         104,697

                       

Weighted average shares outstanding – diluted

                   

131,865,145

                       

Adjusted EBITDA per share (pre-tax)

                   

$               0.79

                       

SOURCE GFI Group Inc.