GFI Group Overview Raymond James Institutional Investor Conference March 6, 2013 Colin Heffron, Chief Executive Officer

Transcription

1 GFI Group Overview Raymond James Institutional Investor Conference March 6, 2013 Colin Heffron, Chief Executive Officer 0

2 Disclaimer & Forward Looking Statements The enclosed information is considered to be confidential and proprietary and by accepting such information you agree to holditin trust and confidence and will not disclose such information to any third party except as expressly authorized in writing by GFI. Such information is being provided solely and exclusively for your internal review and for general discussion purposes. This information shall not be considered investment advice or an offer (or solicitation of an offer) to buy or sell any securities. No representations, warranties or other assurances are given with respect to the completeness or accuracy of any information or materials contained herein and GFI does not undertake to update or revise anyof the information, whether as a result of new information, future events or otherwise. Certain matters discussed in this presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of When used in this presentation, the words "anticipate,""believe,""estimate,""may," might, "intend,""expect" and similar expressions identify such forward-looking statements. 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 at the time of this presentation and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: 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 brokerage services; the Company s ability to keep up with technological changes; and uncertainties relating to litigation. Further information about factors that could affect the Company s financial and other results is included in the Company s filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation contains trade names, trademarks and service marks of other companies. We do not intend our use or display of other parties trade names, trademarks and service marks to imply a relationship with, or endorsement or sponsorship of, these other parties. 1

3 Leading Wholesale Broker Company Founded Listing Market Capitalization Headquarters Offices Employees Offerings Clients GFI Group Inc GFIG (NYSE) $424.6 Million New York New York, London, Paris, Nyon, Singapore, Hong Kong, Seoul, Manila, Sydney, Cape Town, Santiago, Bogota, Buenos Aires, Lima, Dubai, Dublin, Tel Aviv, Los Angeles, and Sugar Land (TX) 2,000+, including over 1,100 of brokerage personnel Wholesale brokerage services, clearing services, electronic execution, market data, trading platform and analytics software products to institutional clients in markets for a range of fixed income, financials, equity and commodity instruments. >2,600 Clients Globally 2

4 About GFI Pre-Trade Trade Post-Trade Clearing GFI Software, Analytics and Market Data GFI Hybrid Brokerage Platform Technology E-Ticket / STP Position Management Clearing Links Clearing and Settlement Services As wholesale broker, GFI specializes in a wide variety of complex and illiquid global markets. Its hybrid brokerage service combines the expertise of the voice broker with the efficiencies of online trade execution. Cash Fixed Income & Fixed Income Derivatives FX & Financial Derivatives Cash Equity & Equity Derivatives Energy & Commodity Derivatives Software, Analytics and Market Data Trayport GFI Fenics Hybrid Brokerage Platform Technology Trayport GlobalVision CreditMatch GFI ForexMatch EnergyMatch Clearing and Settlement Services Kyte Group 3

5 Global Presence and Diversified Product Revenues 4

6 Our Commitment to a Hybrid Brokerage Strategy Trading Platform Functionality Major Trends Future Goals CreditMatch Electronic trading platform for fixed income derivatives and bonds Offersstraight through processing through a real-time API Clearingand increased transparency Redefining customer base Electronic trading getting increased traction in the U.S EstablishGFI as a preferred electronic hub for CDS trading Grow electronic tradingand customer baseof CDSand Cash Bonds ForexMatch State-of-the-artelectronic trading system for FX derivatives Won Best FX Options Trading Platform 5 years running by Profit & Loss Magazine Continued uptake onboth FX Options and NDFs/EM Forwards Banks are continuing to develop their connections to GFI Electronicquoting of NDF s by banks to ForexMatch Greater streamlining of posttrade process Allow for Cleared Markets Integration to central clearing and swap data repository using Markitwire FENICS Price discoverysoftware to currency derivative markets Foreign exchange option pricing analysis, bilateral trading and risk management tool FENICSgateway central hub for connecting third party systems Expansion of our client base, particularly in Asia Provide industry wide connectivity in FX Options Offer the latest exotic models Hosting a lite version for new market segments EnergyMatch Combines liquidity pools of multiple brokeragefirms, electronic trading participants and many clearing options in an open access web based platform Adaptedto providecustomers with both swap and future block functionality Matchingsessions in natural gas, east power, zonal power and ERCOT power Ready for SEF compliance Increase OTC clearing Attracting new customers US and algo traders Leveragingtechnology to promote liquidity Expand our matching business 5

7 Fixing & Matching Sessions Fixing Sessions = Price Discovery Matching = Price Discovery GFI globally operates around 200 sessions a day Technology designed to the nuances of each market Asset Class Region Desks Credit Default Swaps Global Indicies, US Corporate CDS, EM Corporate and Sovereign CDS Repurchase Agreements Americas, Europe Emerging Markets FX Derivatives Global FX Options, Exotics Interest Rate Swaps Americas, Asia MXN, HKD, SGD, CNY, AUD, THB, INR, BRL, CLP, COP, PEN, PLN Interest Rate Options Global AUD, BRL, EUR, GBP, USD, SGD, KRW, JPY, NZD, HKD, ILS, TRY, ZAR, SAR, AED, PLN, HUF, CZK, RUB, MXN, Interest Rates Spread Options USA, Europe EUR Basis Swaps Europe EURUSD, GBPUSD, JPYUSD, CHFUSD Non-Deliverable Forwards Americas ARS, BRL, CLP, COP, MXN, PEN, KRW, PHP, MYR, IDR, INR, TWD, CNY, CNH Credit Bonds Americas, Europe IG US Corporates, HY US Corporates, Distressed, Emerging Market Corporate and Sovereigns US Bank Debt Americas Par and Distressed Loans Equity Derivatives Asia Index Forwards, Index Options, Variance Swaps (NIKKEI, KOSPI, HIS, HSCEI, NIFTY), Single Stocks (HK, JPN) Commodities Europe, Americas Emissions, Eastern Europe power, Coal, US Coal, Dry and Wet Freight, US Power, US Gas 6

8 GFI Fenics SM RFQ RFQs Received Trades RFQs Received Trades Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 7

9 S.A.M. (Sponsored Access Model) GFI D2D4C CreditMatch GUI Eligible Contract Participant Swap Dealers + Major Swap Participants CreditMatch API Dealer-to- Dealer-to- Dealer Dealer (SEF-A) (SEF-A) Dealer-to- Client (SEF-B) CM GUI CM API Dealers as Agents Matching Sessions Request For Quote Order Routing Trade Execution Eligible Contract Participant Eligible Contract Participant GFI D2D model: GFI serves the Dealer community Expected limited number of Major Swaps Participants Access via GUI and trading API Multiple trading protocols Hybrid brokerage Constant innovation GFI Extended D2D4C model: GFI does not target ECPs directly GFI works through the dealers Selectively connect D2D and D2C flows Dealers to offer ECPs access to GFI liquidity pool Access and liquidity can be rebranded for the dealer s client base 8

10 Trayport - An Essential Trading Network Banks / Dealers Funds / Traders Utilities Traders All major European power, gas and coal trading entities Resource companies FCMs / GCMs Acquired by GFI in Jan 2008, 20%+ revenue CAGR ( ) Essential trading and broking platform for the following commodities UK Gas (NBP) Euro Gas (TTF, NGC, etc) Coal (API 2, API 4, NEWC) Emissions (EUA, CER) Freight Refined oil products (new) Trayport Energy Network Enables organized, efficient and electronic trading across broker and exchange venues-while enabling value add of broker facilitation and volume discovery Brokers 15+ brokers including all major IDBs in European power, gas, and coal Exchanges Access to futures markets for trading and clearing venues for trade submission 90%+ recurring software service and license revenue, key levers: Growth in number of traders Growth in number of brokers New services/products to existing clients 9

11 Potential Positive Impacts from Dodd-Frank and Volcker Rule A significant portion of GFI s businesses are currently operating in a cleared environment Anonymous clearing will expand customer base Changing landscape of market makers and liquidity providers Equity derivative market provides a model for the likely evolution of SEFs Increased agency trading model at the banks: Reduction in the size of the average trade Increase in volumes More transactions flowing through low cost execution environments like GFI 10

12 Financial Review James A. Peers, Chief Financial Officer 11

13 Non-GAAP P&L GFI Group Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited) (In thousands except share and per share data) Year Ended Three Months Ended December 31, December 31, December 31, September 30, June 30, March 31, GAAP Income before provision for income taxes $ (1,257) $82 $ (9,426) ($7,167) $7,617 $7,719 Non-GAAP revenues adjustments Mark-to-market loss (gain) on forward hedges of future foreign currency revenues 1, (1,625) 1,304 Other investment or acquisition related revenue adjustments (7,070) (5,895) 191 (372) (5,378) (1,511) Trading losses (revenues) from start-up operations Recovery of previously reserved balances - (609) Total Non-GAAP revenues adjustment (5,510) (6,265) 1, (7,003) (207) Non-GAAP other expense adjustments Amortization of intangibles (11,293) (12,190) (2,531) (2,922) (2,934) (2,906) Debt redemption costs - (5,975) - - Adjustment of sublease loss accrual 3,215 3,215 Costs associated with Hurricane Sandy (904) (904) Other invesment or acquisition related expense adjustments (6,691) (12,758) (1,329) (2,662) - (2,700) Closure of certain desks in Asia (1,578) - (637) (941) - Severance and other restructuring - (19,732) Total Non-GAAP other expense adjustments (17,251) (50,655) (1,549) (6,221) (3,875) (5,606) Non-GAAP pre-tax income 10,484 44,472 (6,413) (710) 4,489 13,118 Non-GAAP provision for income taxes adjustments Non-operating adjustment for the recognition of a tax benefit related to the repatriation of international profits (7,097) - (1,813) (5,284) - - Non-operating adjustment for the recognition of a tax benefit related to interest income between international affiliates (2,655) - (44) (2,611) - - Non-GAAP provision for income taxes 1,251 17,344 (3,818) (1,270) 1,748 4,591 Net income attributable to non-controlling interests (112) GFI's Non-GAAP net income $ 8,924 $ 26,512 $ (2,853) $ 672 $ 2,726 $ 8,379 Non-GAAP diluted net income per share $ 0.07 $ 0.21 $ (0.02) $ 0.01 $ 0.02 $

14 Non-GAAP Cash Earnings GFI Group Inc. and Subsidiaries Non-GAAP Financial Data (unaudited) (In thousands except share and per share data) Year Ended Three Months Ended December 31, December 31, December 31, September 30, June 30, March 31, December 31, Non-GAAP pre-tax income 10,484 44,472 (6,413) (710) 4,489 13,118 (4,881) Tax benefit related to repatriation of international profits (7,097) - (1,813) (5,284) Tax benefit related to interest income between international affiliates (2,655) - (44) (2,611) Income tax impact on Non-GAAP items 2,616 14,697 (3,649) 4,987 (534) 1,812 7,483 Non-GAAP (benefit from) provision for income taxes 1,251 17,344 (3,818) (1,270) 1,748 4,591 2,538 Net (loss) income attributable to non-controlling interests (112) GFI's Non-GAAP net income $ 8,924 $ 26,512 $ (2,853) $ 672 $ 2,726 $ 8,379 $ (7,477) Non-GAAP diluted net income per share $ 0.07 $ 0.21 $ (0.02) $ 0.01 $ 0.02 $ 0.07 $ (0.06) Pre-tax adjustments to arrive at cash earnings Amortization of RSU's 32,365 30,831 7,732 7,751 7,830 9,052 7,645 Amortization of cash sign-on bonuses 25,472 23,281 6,540 6,296 6,041 6,595 5,984 Depreciation and other amortization 25,331 26,732 6,591 6,324 6,174 6,242 6,302 Total pre-tax adjustments to cash earnings 83,168 80,844 20,863 20,371 20,045 21,889 19,931 Non-GAAP pre-tax cash earnings from ongoing operations 93, ,316 14,450 19,661 24,534 35,007 15,050 Non-GAAP provision for income taxes 1,251 17,344 (3,818) (1,270) 1,748 4,591 2,538 Net income loss attributable to non-controlling interests (112) GFI's Non-GAAP net cash earnings from ongoing operations $ 92,092 $ 107,356 $ 18,010 $ 21,043 $ 22,771 $ 30,268 $ 12,454 Non-GAAP cash earnings per share $ 0.75 $ 0.85 $ 0.16 $ 0.17 $ 0.19 $ 0.24 $ 0.11 Weighted average shares outstanding- Diluted 123,455, ,608, ,837, ,394, ,978, ,350, ,804,367 Note: The tax provision used for cash earnings are equal to the tax provision calculated for Non-GAAP earnings. Adjustments to arrive at cash earnings are treated as permanent differences in the tax provision calculation. 13

15 Run-off of Unrecognized Compensation Expense Relating to Sign-ons and Forgivable Loans In $000s Amortization ex xpense (in $ thousands) * The graph above shows unrecognized amortization expense, excluding taxes, of sign on bonuses and forgivable loans in connection to their corresponding grant dates. This graph assumes $10M will be paid in cash for sign-ons and forgivable loans (assuming sign-ons are given mid-quarter) with an amortization period of 36 months in each year from 2013 through

16 2012 Cash Flow 15

17 Thank You 16