4Q2011 General Investor Presentation
Notes & Disclaimers Discussion of Forward-Looking Statements by BGC Partners This presentation contains forward-looking statements within the meaning of Section 27A of the 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 g g p p for the Company and for its industry as well as statements about its future financial and operating performance. Such statements are based upon 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 include, but are not limited to, the risks and uncertainties identified in BGC Partners’ filings with the U.S. Securities and Exchange Commission. The Company believes that all forward- looking statements are based upon reasonable assumptions when made. However, BGC Partners cautions that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that accordingly you should l h ff f i k i i h f i i d l d h di l h ld not place undue reliance on these statements. Forward-looking statements speak only as of the date when made, and the Company undertakes 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 and the risk factors set forth in BGC Partners’ most recent public filings on Forms 8-K, 10-K and/or 10-Q, which are incorporated into this document by reference. Note Regarding Financial Tables and Metrics Excel files with the Company’s quarterly financial results and metrics from full year 2009 through 3Q2011 are accessible at the “Investor Relations” section of http://www.bgcpartners.com. They are also available directly at http://www.bgcpartners.com/ir-news. Distributable Earnings Compared with GAAP Results This presentation should be read in conjunction with BGC’s most recent financial results press release. Unless otherwise stated, throughout this presentation we refer to our results only on a distributable earnings basis. For a complete description of this term and how, when and why management uses it, see the second to last page of this presentation. For both this description and a reconciliation to GAAP, see the sections of BGC’s most recent financial results press release entitled “Distributable Earnings,” “Distributable Earnings Results Compared with GAAP Results”, and “Reconciliation of GAAP Income to Distributable Earnings”, which are incorporated by reference, and available in the “Financial News” section of our “Investor Relations” website at http://phx corporate irnet/phoenix zhtml?c=209058&p=irol News section of our Investor Relations website at http://phx.corporate-ir.net/phoenix.zhtml?c=209058&p=irol- newsArticle&ID=1622211&highlight= For the tabular form of the reconciliation to GAAP results click “Click Here for Tables – (XLS)” or “Printer Friendly Version – (PDF)”. 2
A Leading Inter-Dealer Broker Corporations Corporations Governments Governments Investors Investors Banks Banks I-Banks I-Banks Trading Firms Trading Firms Banks Banks Banks Banks I Banks I Banks I-Banks I-Banks Trading Firms Trading Firms Trading Firms Trading Firms Corporations Corporations C C i i G Governments Governments I Investors Investors 3
Business Overview Market Data/ Market Data/ Voice / Hybrid Broking Voice / Hybrid Broking Electronic Broking Electronic Broking Software Solutions Software Solutions Key products include: Key products include: Key products include: Key products include: Develops and markets real- Develops and markets real- time proprietary pricing data time proprietary pricing data • • Rates Rates • Interest Rate Derivatives • Interest Rate Derivatives • • Credit Credit • Credit • Credit Provider of customized Provider of customized • • Foreign Exchange Foreign Exchange • FX • FX screen-based solutions which screen-based solutions which • • E E Equities Equities • European & Canadian • European & Canadian C C enable clients to develop enable clients to develop Government Bonds Government Bonds electronic marketplaces electronic marketplaces • • Real Estate Real Estate Proprietary network Proprietary network Co-location services Co-location services ≈ 2,200 brokers & salespeople ≈ 2,200 brokers & salespeople connected to the global connected to the global financial community financial community financial community financial community 220 + desks 220 + d 220 + d 220 + desks k k Substantial investments in Substantial investments in In 35+ cities In 35+ cities creating proprietary creating proprietary technology / network technology / network BGC Trader 4
Solid Business with Significant Opportunities Diversified revenues by geography & product category Well positioned to take advantage of current market dynamics Accretively hiring and acquiring Investing for broker productivity & fully electronic trading Intermediary-oriented low-risk business model Intermediary-oriented, low-risk business model Deep and experienced management team with ability to attract and retain key talent retain key talent Attractive dividend yield 5
Diversified Revenue by Product Fees from related parties, Market data & interest & other interest & other software software Foreign income 1.8% Exchange 4.5% 16.1% Fully Electronic y Equities and Trading * = 10.2% of Other Asset total revenues in 3Q2011 Rates Classes 3Q2011 vs. 9.3% in 39.9% 15.8% Revenues Revenues 3Q2010 Q Credit Credit 21.9% Up 28.5% y-o-y in 3Q2011 Newmark closed in 4Q2011 * This includes fees captured in both the “total brokerage revenues” and “ fees from related party” line items related to fully electronic trading. Note: percentages may not sum to 100% due to rounding. 6
A Growing Global Presence… 3Q2011 Revenues APAC 16.8% Americas Americas EMEA 29.5% 53.7% Europe, Middle East & Africa Revenue up 23.4% y-o-y E Middl E & Af i R 23 4% Americas Revenue flat y-o-y Asia Pacific Revenue up 30.3% y-o-y 7
Significant Leverage Through Scale and Technology Pre-Tax Distributable Earnings Contribution 60% 30% 45-75% or More Incremental Incremental Incremental Incremental Incremental Margin Margin Margin Hybrid Brokerage: Fully Electronic: Market Data & Software: Hire and Acquire Convert Distribute Note: Incremental margin estimates based on BGC’s historical financial performance. 8
Strong Performance from Strong Performance from Risk-Averse Business Model
Strong Growth Across Most Businesses & Geographies 3Q11 3Q11 Y Y -O-Y Revenue Growth -O-Y Revenue Growth 57% 60% 60% 50% lions) 38% (USD mil 40% 30% 29% 30% 23% 16% 20% 13% 12% 10% Flat Flat 0% 10
Solid Distributable Earnings Growth Post-tax Distributable Earnings Growth Post-tax Distributable Earnings Growth Pre-tax Distributable Earnings Growth Pre-tax Distributable Earnings Growth Up 3% - 16% y-o-y Up 6% - 19% y-o-y $60 $70 $62.6 $52.3 $65 $55 Outlook Outlook $60 $50 $46 $54 $55 $45 $45 $48 $48 $39.8 $39.8 $41 $41 $47.3 $47 3 $39.5 $39 5 $45.4 $50 $40 $45 ($ millions) $ millions) $35 $40 $30 $35 ($ ( $25 $30 $20 $25 $20 $15 $15 $10 $10 $5 $5 $0 $0 3Q10 3Q11 4Q10 4Q11 4Q11 3Q10 3Q11 4Q10 4Q11 4Q11 Low High Low High Third quarter post-tax distributable earnings per fully diluted share were up 19.4% y-o-y Thi d t t t di t ib t bl i f ll dil t d h 19 4% BGC Partners anticipates its effective tax rate for distributable earnings to be approximately 15 percent in 4Q11 versus 10.9 percent in 4Q10 11
Dividend Growth and Attractive Yield Dividend yield currently ≈ 11.3%* $0.18 $0.17 $0.17 $0.17 $0.16 $0.14 $0.14 $0.14 $0.14 $0 14 $0.14 $0.12 $0.10 $0 08 $0.08 $0.06 $0.04 $0.02 $0.00 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 * Based on stock price as of 11/28/11 close. 12
Risk-Averse Business Model Simple balance sheet with low leverage Transactions are either “name-give-up”, or “matched principal” We generally do not engage in proprietary trading, have margin accounts with customers, or otherwise use balance sheet for trading purposes ith t th i b l h t f t di No hidden or material off balance sheet exposures Unlike banks, BGC has minimal “mark to market” or “bid-ask spread” risk Our market dynamics, like exchanges, are almost entirely volume-driven BGC can and has grown regardless of bank trading results 13
Bi-lateral Brokerage (“Commissions”) - Low Risk For BGC Brokering Brokering Clearing & Settlement Banks settle and clear with each other In general, BGC takes no position and has no inventory or market risk 14
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