BGCP Partners ( BGCP)

Q3 2010 Earnings Call

November 3, 2010 08:30 am ET

Executives

Jason McGruder - Head, IR

Howard Lutnick - Chairman & CEO

Shaun Lynn - President

Graham Sadler - CFO

Sean Windeatt - COO

Analysts

Richard Repetto - Sandler O’Neill

Daniel Harris - Goldman Sachs

Rob Rutschow – CLSA

Justin Hughes - Philadelphia Financial

Niamh Alexander - KBW

P resentation

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2010 BGC Partners, Inc. Earnings Conference Call. My name is Lumide and I will be your operator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today’s call, Mr. Jason McGruder Head of Investor Relations. Please proceed, sir.

Jason McGruder

Good morning. Before we begin I want to make sure that you know that our third quarter 2010 financial results press release was issued earlier today. It can be found at either the news center or investor relations section of our website at www.bgcpartners.com.

During this call, we will also be referring to a PowerPoint presentation that summarize our results and which includes other useful information. These can also be found in our Investor Relations website.

Throughout today's call, we will be referring to our results only on a distributable earnings basis. Please see the sections of yesterday’s financial results release entitled Distributable Earnings and Reconciliation of GAAP Income to Distributable Earnings for a definition of these terms and how, when and why management uses it.

Unless otherwise stated whenever we refer to income statement items such as revenues, expenses, pretax earnings or posttax earnings, we are doing so only on a distributable earnings basis. I’ll also refer to the statement entitled Discussion of Forward-Looking Statements contained in our press release.

I remind you that the information in the release and on this call contain forward-looking statements within the meaning of section 27A of Securities Act of 1933 as amended and section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include statements about the outlook and prospects for BGC and opportunities as well as statements about our future financial and operating performance.

Those statements are based on current expectations that involve risks and uncertainties. Actual results performance or achievements could differ materially from those contemplated, expressed or implied because of a number of risks and uncertainties that are included, but limited to risks and uncertainties identified in the earnings release in BGC Partners’ filings with the US Securities and Exchange Commission.

We believe that our forward-looking statements are based upon reasonable assumptions when made. However, precaution it is impossible to take actual results or outcomes or the effect of risks and uncertainties of other factors on expected results or outcomes that accordingly you should not place undue reliance on these statements.

The forward-looking statements speak only as of the date when made and we undertake no obligation to update these statements in light of subsequent events or developments. Please refer to the complete disclaimer with respect to forward-looking statements set forth in today’s earnings release and the risk factors set forth in our public filings which we incorporate by reference.

I'm now happy to turn the call over to our host, Howard Lutnick, Chairman and CEO of BGC.

Howard Lutnick

Good morning and thank you for joining us for our third quarter conference call. With me today are BGC’s President, Shaun Lynn, our Chief Operating Officer, Sean Windeatt, and our Chief Financial Officer, Graham Sadler.

BGC once again outperformed our industry in terms of top- and bottom-line growth. Our revenues were up 12.3% to $327 million from the third quarter of 2010. Pretax distributable earnings were up 57.5% to $47.3 million or $0.20 per fully diluted share. Our post-tax distributable earnings were up by 87.3 % to $39.5 million or $0.17 per fully diluted share.

BGC had strong performance across most of our products and geographies during the quarter. We again generated substantial top-line growth in the Americas and the Asian Pacific region as well as in fully electronic trading, rates, foreign exchange, equities and other asset

classes.

The combination of our continued top-line growth increasing proportion of our revenues related to fully electronic trading as well as our partnership enhancement program contributed to the expansion of our post tax profit margin by 483 basis points. Our pretax distributable earnings per share increased by 42.9 %, while our post-tax distributable earnings per share increased by 70%.

We are therefore pleased to announce that BGC board of directors has declared a quarterly dividend of $0.14 an increase of 75% compared to last year and remained consistent for the first two quarters of the year. It is our intention to maintain this dividend for the fourth quarter.

With respect to the dot frank bill recently enacted in the US and similar laws pending in the EU while the specific aspects of the rules are still being ironed out on both sides of the Atlantic, we believe that the net impact of the legislation will be positive for BGC.

I would now like to turn the call over to Shaun Lynn.

Shaun Lynn

Thanks, Howard and hello to everyone. I would like to highlight the key drivers of the continued growth of our brokerage revenues and they are BGC’s growing strength in fully electronic trading, our continued growth with front office headcount expansion, our market share growing and overall positive market dynamics in many of BGC’s product categories.

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