GAIN Capital Reports First Quarter 2015 Results
"We are extremely pleased with our performance in the first quarter," said
"We had record retail trading volume in the quarter, although much of the customer trading activity was focused on one-way trading in euro/dollar, which muted our revenue capture for the quarter. We also saw strong growth in other key operating metrics, including record futures contracts and a strong quarter-over-quarter increase in active accounts," added
"In the period we also continued actively planning for the acquisition of City Index, which closed on
First Quarter Highlights
(Comparisons are to the first quarter of 2014)
- Net revenue of
$92.9 million , up 14% from$81.4 million - Net income of
$8.3 million , up 118% from$3.8 million - Earnings per diluted share of
$0.18 , up 100% from$0.09 - Adjusted earnings per diluted share* of
$0.23 , up 77% from$0.13 - Cash earnings per diluted share* of
$0.27 , up 69% from$0.16 - Adjusted EBITDA* of
$19.7 million , up 63% from$12.1 million - Retail OTC trading volume of
$798.6 billion , up 40% from$572.3 billion - GTX trading volume of
$1.23 trillion , up 2% from$1.21 trillion - Total futures contracts of 2.4 million, up 51% from 1.6 million
(*See below for reconciliation of non-GAAP financial measures)
Retail OTC Business
In the first quarter of 2015, GAIN's retail OTC business generated trading revenue of
In the first quarter of 2015, the retail OTC business generated
Institutional Businesses
In the first quarter of 2015, revenue from the GTX business increased to
Futures
The exchange-traded futures business generated revenue of
City Index
City Index's preliminary results for the first quarter of 2015, under
Pro forma** results for GAIN and City Index for the first quarter of 2015 include net revenue of
Having completed the acquisition of City Index on
(*City Index adjusted EBITDA is calculated on a basis consistent with GAIN's calculation)
(**Represents the simple addition of GAIN and City Index results)
Dividend
GAIN's Board of Directors declared a quarterly cash dividend of
Conference Call
GAIN will host a conference call
A live audio webcast of the call and a copy of the accompanying presentation will also be available on the Investor Relations section of the GAIN website (http://ir.gaincapital.com). A PDF copy of the earnings presentation will also be available on the Investor Relations website.
An audio replay will be made available for one month starting approximately two hours after the call by dialing +1-877-344-7529 in the U.S. or +1-412-317-0088 from abroad, and entering passcode 10064847#.
About GAIN
Condensed Consolidated Statements of Operations |
|||||||
In millions except share data |
|||||||
(unaudited) |
|||||||
Three Months Ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
REVENUE: |
|||||||
Trading revenue |
$ |
66.1 |
$ |
51.2 |
|||
Commission revenue |
28.2 |
29.8 |
|||||
Other revenue |
(1.4) |
0.1 |
|||||
Total non-interest revenue |
92.9 |
81.1 |
|||||
Interest revenue |
0.3 |
0.4 |
|||||
Interest expense |
0.3 |
0.1 |
|||||
Total net interest revenue |
— |
0.3 |
|||||
Total net revenue |
92.9 |
81.4 |
|||||
EXPENSES: |
|||||||
Employee compensation and benefits |
22.1 |
21.8 |
|||||
Selling and marketing |
4.6 |
6.1 |
|||||
Referral fees |
26.6 |
20.7 |
|||||
Trading expense |
7.0 |
6.9 |
|||||
General and administrative |
9.3 |
9.2 |
|||||
Depreciation and amortization |
2.0 |
2.2 |
|||||
Purchased intangible amortization |
2.2 |
1.0 |
|||||
Communication and technology |
2.8 |
4.0 |
|||||
Bad debt provision |
3.3 |
0.6 |
|||||
Acquisition expense |
— |
0.4 |
|||||
Restructuring |
— |
0.4 |
|||||
Integration |
0.1 |
1.5 |
|||||
Total operating expense |
80.0 |
74.8 |
|||||
Operating income |
12.9 |
6.6 |
|||||
Interest on long term borrowings |
1.5 |
1.4 |
|||||
Income before tax expense |
11.4 |
5.2 |
|||||
Income tax expense |
2.8 |
1.3 |
|||||
Net income |
$ |
8.6 |
$ |
3.9 |
|||
Net income attributable to non-controlling interest |
$ |
0.3 |
$ |
0.1 |
|||
Net income applicable to |
$ |
8.3 |
$ |
3.8 |
|||
Earnings per common share(1) |
|||||||
Basic |
$ |
0.19 |
$ |
0.10 |
|||
Diluted |
$ |
0.18 |
$ |
0.09 |
|||
Weighted averages common shares outstanding used |
|||||||
in computing earnings per common share: |
|||||||
Basic |
43,206,628 |
39,543,586 |
|||||
Diluted |
44,150,505 |
42,627,628 |
|||||
(1) Adjusted for the impact of the GAA/TT put option. |
Condensed Consolidated Balance Sheet |
|||||||
In millions |
|||||||
(unaudited) |
|||||||
|
|
||||||
2015 |
2014 |
||||||
ASSETS: |
|||||||
Cash and cash equivalents |
$ |
90.1 |
$ |
139.4 |
|||
Cash and securities held for customers |
826.8 |
759.6 |
|||||
Short term investments |
0.2 |
0.2 |
|||||
Receivables from banks and brokers |
176.2 |
134.9 |
|||||
Property and equipment - net of accumulated depreciation |
17.9 |
18.8 |
|||||
Prepaid assets |
3.0 |
2.5 |
|||||
Goodwill |
33.7 |
34.6 |
|||||
Intangible assets, net |
58.5 |
60.8 |
|||||
Other assets |
33.0 |
35.1 |
|||||
Total assets |
$ |
1,239.4 |
$ |
1,185.9 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|||||||
Payables to customer, brokers, dealers, FCM'S and other regulated entities |
$ |
826.8 |
$ |
759.6 |
|||
Accrued compensation & benefits |
5.8 |
16.9 |
|||||
Accrued expenses and other liabilities |
54.4 |
64.4 |
|||||
Income tax payable |
0.9 |
1.5 |
|||||
Senior convertible notes |
69.0 |
68.4 |
|||||
Total liabilities |
$ |
956.9 |
$ |
910.8 |
|||
Non-controlling interest |
10.5 |
10.2 |
|||||
Shareholders' Equity |
272.0 |
264.9 |
|||||
Total liabilities and shareholders' equity |
$ |
1,239.4 |
$ |
1,185.9 |
(*) Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted EPS
Adjusted net income is a non-GAAP financial measure and represents our net income excluding restructuring, acquisition and integration related expenses and bad debt expense related to the SNB event in January of 2015. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted net income assists investors in evaluating our operating performance. However, because adjusted net income is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.
Net Income to Adjusted Net Income and Adjusted EPS |
|||||||
In millions, except per share data |
|||||||
(unaudited) |
|||||||
Three Months Ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
Net income applicable to |
$ |
8.3 |
$ |
3.8 |
|||
Add back, net of tax: |
|||||||
Acquisition expense |
— |
0.3 |
|||||
Restructuring |
— |
0.3 |
|||||
Integration |
0.1 |
1.1 |
|||||
Bad debt related to SNB event in January of 2015 |
1.9 |
— |
|||||
Adjusted net income |
$ |
10.3 |
$ |
5.5 |
|||
Adjusted earnings per common share: |
|||||||
Basic |
$ |
0.24 |
$ |
0.14 |
|||
Diluted |
$ |
0.23 |
$ |
0.13 |
|||
Weighted averages common shares outstanding used |
|||||||
in computing earnings per common share: |
|||||||
Basic |
43,206,628 |
39,543,586 |
|||||
Diluted |
44,150,505 |
42,627,628 |
(*) Reconciliation of GAAP Net Income to Cash Net Income and Cash EPS
Cash net income is a non-GAAP financial measure and represents our net income excluding depreciation and amortization, purchased intangible amortization and non-cash interest expense. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of cash net income assists investors in evaluating our operating performance. However, because cash net income is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.
Net Income to Cash Net Income and Cash EPS |
|||||||
In millions, except per share data |
|||||||
(unaudited) |
|||||||
Three Months Ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
Net income applicable to |
$ |
8.3 |
$ |
3.8 |
|||
Add back, net of tax: |
|||||||
Depreciation and amortization |
1.5 |
1.7 |
|||||
Purchased intangible amortization |
1.7 |
0.8 |
|||||
Non-cash interest expense |
0.5 |
0.4 |
|||||
Cash net income |
$ |
12.0 |
$ |
6.7 |
|||
Cash earnings per common share: |
|||||||
Basic |
$ |
0.28 |
$ |
0.17 |
|||
Diluted |
$ |
0.27 |
$ |
0.16 |
|||
Weighted averages common shares outstanding used |
|||||||
in computing earnings per common share: |
|||||||
Basic |
43,206,628 |
39,543,586 |
|||||
Diluted |
44,150,505 |
42,627,628 |
Reconciliation of GAAP Net Income to Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation and amortization, restructuring, acquisition and integration-related expenses, non-controlling interest and bad debt expense related to the SNB event in January of 2015. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted EBITDA assists investors in evaluating our operating performance. However, because adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.
Reconciliation of GAAP Net Income to Adjusted EBITDA |
|||||||
In millions |
|||||||
(unaudited) |
|||||||
Three Months Ended |
|||||||
|
|||||||
2015 |
2014 |
||||||
Net income applicable to |
8.3 |
3.8 |
|||||
Depreciation and amortization |
2.0 |
2.2 |
|||||
Purchased intangible amortization |
2.2 |
1.0 |
|||||
Interest expense |
1.5 |
1.4 |
|||||
Income tax expense |
2.8 |
1.3 |
|||||
Acquisition expense |
— |
0.4 |
|||||
Restructuring |
— |
0.4 |
|||||
Integration |
0.1 |
1.5 |
|||||
Bad debt related to SNB event in January of 2015 |
2.5 |
— |
|||||
Net income attributable to non-controlling interest |
0.3 |
0.1 |
|||||
Adjusted EBITDA |
$ |
19.7 |
$ |
12.1 |
|||
Forward-Looking Statements:
The forward-looking statements contained herein include, without limitation, statements relating to
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