BGC GROUP, INC. NEW YORK - October 30, 2023 - BGC Group, Inc. (Nasdaq: BGC) ("BGC Group" or "BGC" or the "Company"), a leading global brokerage and financial technology company, today reported its financial results for the quarter ended September 30, 2023.1
Howard W. Lutnick, Chairman and CEO of BGC Group1:
"We had another outstanding quarter, generating revenue growth of 16 percent, reflecting increased volumes across all of our asset classes. BGC is extraordinarily well positioned to benefit from the return of interest rates, which we expect to drive our trading volumes, revenue and profitability higher for the foreseeable future.
Fenics revenue improved by 19 percent, outperforming both its electronic trading platform and exchange peers. This was led by another record quarter for Fenics Growth Platforms, which grew by over 45 percent. Fenics UST, our electronic U.S. Treasury platform, reached a record 25 percent market share of the volume traded on U.S. Treasury exchange marketplaces during the year.
We continue to make significant progress with FMX. We look forward to communicating additional updates and details during the quarter."
SELECT FINANCIAL RESULTS2,3
Highlights of Consolidated Results | 3Q23 | 3Q22 | Change | |||
(USD millions) | ||||||
Revenues | $482.7 | $416.6 | 15.9% | |||
GAAP income from operations before income taxes | 23.9 | 19.0 | 25.4% | |||
GAAP net income for fully diluted shares | 16.0 | 7.4 | 116.9% | |||
Adjusted Earnings before noncontrolling interest in subsidiaries and taxes | 101.9 | 82.8 | 23.1% | |||
Post-tax Adjusted Earnings | 94.1 | 77.5 | 21.4% | |||
Adjusted EBITDA | 135.9 | 107.0 | 27.0% | |||
Per Share Results | 3Q23 | 3Q22 | Change | |||
GAAP fully diluted earnings per share | $0.03 | $0.01 | 200.0% | |||
Post-tax Adjusted Earnings per share | $0.19 | $0.16 | 18.8% |
- This release includes the results of BGC Group, Inc. beginning in Q3 2023, following the completion of BGC's corporate conversion on July 1, 2023. All historic
information prior to Q3 2023 reflects the results of BGC Partners, Inc.
2 U.S. Generally Accepted Accounting Principles is referred to as "GAAP". "GAAP income before income taxes and noncontrolling interests" and "Adjusted Earnings before noncontrolling interests and taxes" may be used interchangeably with "GAAP pre-tax income" and "pre-tax Adjusted Earnings", respectively. See the sections of this document including "Timing of Outlook for Certain GAAP and Non-GAAP Items", "Non-GAAP Financial Measures", "Adjusted Earnings Defined", "Reconciliation of GAAP Income (Loss) from Operations before Income Taxes to Adjusted Earnings and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS", "Fully Diluted Weighted-Average Share Count under GAAP and for Adjusted Earnings", "Adjusted EBITDA Defined", "Reconciliation of GAAP Net Income (Loss) Available to Common Stockholders to Adjusted EBITDA", "Liquidity Analysis", and "Constant Currency Defined", including any footnotes to these sections, for the complete and updated definitions of these non-GAAP terms and how, when and why management uses them, as well as for the differences between results under GAAP
and non-GAAP for the periods discussed herein.
3 For comparative revenue changes in Constant Currency, please see sections in this document titled "Consolidated Revenues in Constant Currency" and "Fenics Revenues in Constant Currency".
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DISCUSSION OF RESULTS
BGC's revenue grew by 15.9 percent to $482.7 million, improving across every geography in the third quarter. This growth was driven by the Americas and EMEA which improved by 19.0 percent and 16.9 percent, respectively, with our Asia Pacific revenues up 5.9 percent.
The Company generated strong double-digit growth across all earnings metrics during the quarter, driven by higher revenues across Fenics and Voice / Hybrid, along with record front office productivity.
Pre-tax Adjusted Earnings grew by 23.1 percent to $101.9 million. Pre-tax Adjusted Earnings margins improved by 125 basis points to 21.1 percent, our twelfth consecutive quarter of year-over-year margin expansion. Our Post-tax Adjusted Earnings increased by 21.4 percent to $94.1 million, or $0.19 per share, an 18.8 percent improvement. Adjusted EBITDA improved by 27.0 percent to $135.9 million for the third quarter.
BGC completed its conversion to a Full C-Corporation on July 1, 2023. These third quarter 2023 results represent the first quarter of operations as a Full C-Corporation.
CONSOLIDATED REVENUES4
Consolidated Revenues | 3Q23 | 3Q22 | Change | |||
(USD millions) | ||||||
Rates | $145.7 | $130.0 | 12.1% | |||
Foreign Exchange | 79.8 | 73.5 | 8.6% | |||
Credit | 63.7 | 58.2 | 9.6% | |||
Energy and Commodities | 93.1 | 69.0 | 35.0% | |||
Equities | 52.7 | 48.4 | 8.8% | |||
Total Brokerage Revenues | $435.0 | $379.0 | 14.8% | |||
Data, Network, and Post-trade | 27.8 | 23.8 | 16.8% | |||
Interest and dividend income, Fees from related parties and Other revenues | 19.9 | 13.8 | 44.4% | |||
Total Revenues | $482.7 | $416.6 | 15.9% |
BGC's total revenues improved by $66.1 million, or 15.9 percent compared to last year. Total brokerage revenues grew by 14.8 percent, driven by strong growth across all of our asset classes. Data, Network and Post- trade revenues improved by 16.8 percent, led by Lucera, Capitalab, and Fenics Market Data.
Our fixed income brokerage volumes were significantly higher during the period, as interest rates and wider credit spreads continued to provide favorable macro trading conditions across Rates, Credit and FX. Rates and Credit revenues improved by 12.1 percent and 9.6 percent, respectively, while FX revenues were 8.6 percent higher.
- Beginning in the second quarter of 2023, "Data, Software, and Post-trade" was renamed to "Data, Network, and Post-trade."
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Energy and Commodities revenues grew by 35.0 percent, driven by strong double-digit growth across our energy complex and our environmental products. BGC's Equities business increased by 8.8 percent, reflecting higher volumes across equity derivatives, and European cash equities.
FENICS
Fenics Revenues | 3Q23 | 3Q22 | Change | ||||
(USD millions) | |||||||
Fenics Markets | $107.0 | $92.9 | 15.1% | ||||
Fenics Growth Platforms | 18.4 | 12.7 | 45.4% | ||||
Fenics Revenues | $125.4 | $105.6 | 18.7% |
Fenics generated industry-leading revenue growth of 18.7 percent compared to last year. These higher-margin, technology driven businesses generated total revenues of $125.4 million in the third quarter and represented approximately 26 percent of BGC's total revenue.
Fenics' revenue growth was led by electronic Rates and Credit products, as well as Data, Network and Post- trade businesses. Fenics Growth Platforms had another record quarter, generating revenue of $18.4 million, a 45.4 percent improvement versus last year. Fenics Markets had strong revenue growth of 15.1 percent.
Fenics UST revenue increased by over 55 percent on 26 percent higher average daily volumes and its market share5 increased to over 25 percent for the third quarter, up from 23 percent in the second quarter of 2023, and 18 percent a year ago. Fenics UST is the second largest and fastest growing Treasury marketplace globally.
Portfolio Match grew its U.S. credit volumes over nine-fold compared to the year ago period. Portfolio Match continues to win market share in electronic credit portfolio trading, a rapidly growing segment of the credit market.
Fenics GO, the only fully electronic block-sized equity options exchange platform, saw year-over-year revenue growth of 65 percent, driven by strong growth across Delta One products and Euro Stoxx 50 index options.
Data, Network, and Post-trade revenues grew by 16.8 percent, led by strong double-digit improvement across Lucera, our network and infrastructure business, and Capitalab, our post-trade business. Fenics Market Data also recorded double-digit revenue growth and had record third quarter sales, further adding to its subscription revenue pipeline. Our data and network businesses have long-term, recurring revenue contracts.
- Central limit order book ("CLOB") market share. Source: Coalition Greenwich Page 3
CONSOLIDATED EXPENSES AND TAXES AND
Consolidated Expenses
(USD millions)
Compensation and employee benefits under GAAP
Equity-based compensation, dividend equivalents and allocations of net income to limited partnership units and FPUs
Non-compensation expenses under GAAP
Total expenses under GAAP
NONCONTROLLING INTEREST6,7
3Q23 3Q22 Change
$233.1 $202.4 15.2%
69.357.7 20.0%
162.5 146.0 11.3%
$464.9 $406.1 14.5%
Compensation and employee benefits for Adjusted Earnings
Non-compensation expenses for Adjusted Earnings
Total expenses for Adjusted Earnings
Taxes and Noncontrolling Interest
(USD millions)
GAAP provision for income taxes
Provision for income taxes for Adjusted Earnings
GAAP net income attributable to noncontrolling interest in subsidiaries
Net income attributable to noncontrolling interest in subsidiaries for Adjusted Earnings
$233.2 | $200.0 | 16.6% | ||
147.9 | 133.4 | 10.8% | ||
$381.1 | $333.5 | 14.3% | ||
3Q23 | 3Q22 | Change | ||
$5.3 | $10.8 | (50.9)% | ||
6.3 | 5.0 | 26.9% | ||
1.5 | 2.5 | (38.9)% | ||
1.5 | 0.3 | 451.6% |
CONSOLIDATED SHARE COUNT8
Consolidated Share Count
(USD millions)
Fully diluted weighted-average share count under GAAP
Fully diluted weighted-average share count for Adjusted Earnings
3Q23 | 3Q22 | Change | 2Q23 | Change | ||||
(QoQ) | ||||||||
477.5 | 497.0 | (3.9)% | 391.7 | 21.9% | ||||
490.1 | 497.0 | (1.4)% | 505.5 | (3.0)% |
BGC's fully diluted weighted average share count for Adjusted Earnings was 490.1 million during the third quarter, a 15.4 million share decrease compared to the second quarter of 2023. This significant share reduction was primarily driven by our July 1, 2023 corporate conversion and related unit redemptions, as well as share repurchases during the quarter.
BGC's fully diluted weighted-average share count under GAAP may differ from the fully diluted weighted average share count for Adjusted Earnings to avoid anti-dilution in certain periods.
-
For additional information on "Equity-based compensation, dividend equivalents and allocations of net income to limited partnership units and FPUs", please see the section of this document titled "Adjusted Earnings Defined" and the footnotes to the table titled "Reconciliation of GAAP Income (Loss) from Operations before Income Taxes to Adjusted Earnings and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS".
7 Beginning in the third quarter of 2023, "Equity-based compensation and allocations of net income to limited partnership units and FPUs" was renamed to "Equity-
based compensation, dividend equivalents and allocations of net income to limited partnership units and FPUs.
8 BGC's fully diluted weighted-average share count under GAAP may differ from the fully diluted weighted average share count for Adjusted Earnings to avoid anti- dilution in certain periods. This also impacts GAAP net income (loss) for fully diluted shares in such periods.
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OUTLOOK
Metric (USD millions) | Guidance | Actual | ||
4Q 2023 | 4Q 2022 | |||
Revenues | $450 - $500 | $436.5 | ||
Pre-tax Adjusted Earnings | $88 - $108 | $87.1 |
DIVIDEND INFORMATION
On October 27, 2023, BGC's Board of Directors declared a quarterly qualified cash dividend of $0.01 per share payable on December 1, 2023 to Class A and Class B common stockholders of record as of November 17, 2023. The ex-dividend date will be November 16, 2023.
ONLINE AVAILABILTY OF INVESTOR PRESENTATION AND ADDITIONAL FINANCIAL INFORMATION
An investor presentation as well as Excel versions of the tables at the end of this document are available for download at http://ir.bgcg.com. Additional detail on overall Fenics revenues is available in the supplemental Excel financial tables that accompany this press release athttp://ir.bgcg.com. The Excel tables and earnings presentation contain the results discussed in this document as well as other useful information that may not be contained herein.
BGC CONFERENCE CALL AND INVESTOR PRESENTATION
BGC will hold a conference call on the date of this release starting at 8:30 a.m. ET. A live webcast of the call, along with an investor presentation summarizing BGC's consolidated non-GAAP results, will be accessible at http://ir.bgcg.com. Alternatively, interested parties can access the call by dialing +1 877-407-0312 (U.S.) or +1 201-389-0899 (international) and be answered by an operator. After the conference call, an archived recording will be available at http://ir.bgcg.com.
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BGC GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share data)
(unaudited)
September 30, | December 31, | ||||
Assets | 2023 | 2022 | |||
Cash and cash equivalents | $ | 559,587 | $ | 484,989 | |
Cash segregated under regulatory requirements | 16,407 | 17,021 | |||
Financial instruments owned, at fair value | 45,453 | 39,319 | |||
Receivables from broker-dealers, clearing organizations, customers and related broker-dealers | 1,175,253 | 559,680 | |||
Accrued commissions and other receivables, net | 320,521 | 288,471 | |||
Loans, forgivable loans and other receivables from employees and partners, net | 348,484 | 319,612 | |||
Fixed assets, net | 176,399 | 183,478 | |||
Investments | 35,718 | 38,575 | |||
Goodwill | 500,797 | 486,585 | |||
Other intangible assets, net | 196,532 | 192,783 | |||
Receivables from related parties | 6,083 | 1,444 | |||
Other assets | 477,024 | 463,014 | |||
Total assets | $ | 3,858,258 | $ | 3,074,971 | |
Liabilities, Redeemable Partnership Interest, and Equity | |||||
Short-term borrowings | $ | - | $ | 1,917 | |
Accrued compensation | 174,476 | 176,781 | |||
Payables to broker-dealers, clearing organizations, customers and related broker-dealers | 1,002,912 | 404,675 | |||
Payables to related parties | 14,574 | 10,550 | |||
Accounts payable, accrued and other liabilities | 627,194 | 683,104 | |||
Notes payable and other borrowings | 1,183,443 | 1,049,217 | |||
Total liabilities | 3,002,599 | 2,326,244 | |||
Redeemable partnership interest | - | 15,519 | |||
Equity | |||||
Stockholders' equity: | |||||
Class A common stock, par value $0.01 per share; 750,000 shares authorized; | |||||
397,201 and 471,934 shares issued at September 30, 2023 and December 31, | |||||
2022, respectively; and 389,868 and 325,858 shares outstanding at | |||||
September 30, 2023 and December 31, 2022, respectively | 3,972 | 4,719 | |||
Class B common stock, par value $0.01 per share; 150,000 shares authorized; | |||||
109,453 and 45,884 shares issued and outstanding at September 30, 2023 and | |||||
December 31, 2022, respectively, convertible into Class A common stock | 1,095 | 459 | |||
Additional paid-in capital | 2,059,436 | 2,559,418 | |||
Treasury stock, at cost: 7,333 and 146,076 shares of Class A common stock at | (40,335) | (711,454) | |||
September 30, 2023 and December 31, 2022, respectively | |||||
Retained deficit | (1,134,204) | (1,138,066) | |||
Accumulated other comprehensive income (loss) | (45,819) | (45,431) | |||
Total stockholders' equity | 844,145 | 669,645 | |||
Noncontrolling interest in subsidiaries | 11,514 | 63,563 | |||
Total equity | 855,659 | 733,208 | |||
Total liabilities, redeemable partnership interest and equity | $ | 3,858,258 | $ | 3,074,971 | |
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BGC GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
Revenues: | 2023 | 2022 | 2023 | 2022 | |||||||
Commissions | $ | 350,305 | $ | 299,430 | $ | 1,076,313 | $ | 965,636 | |||
Principal transactions | 84,725 | 79,568 | 294,537 | 283,338 | |||||||
Total brokerage revenues | $ | 435,030 | $ | 378,998 | $ | 1,370,850 | $ | 1,248,974 | |||
Fees from related parties | 3,723 | 3,896 | 11,742 | 10,838 | |||||||
Data, network and post-trade | 27,797 | 23,808 | 81,919 | 71,326 | |||||||
Interest and dividend income | 10,150 | 4,110 | 28,836 | 15,506 | |||||||
Other revenues | 5,994 | 5,755 | 15,294 | 12,143 | |||||||
Total revenues | $ | 482,694 | $ | 416,567 | $ | 1,508,641 | $ | 1,358,787 | |||
Expenses: | |||||||||||
Compensation and employee benefits | $ | 233,087 | $ | 202,353 | $ | 743,688 | $ | 671,494 | |||
Equity-based compensation, dividend equivalents and | |||||||||||
allocations of net | |||||||||||
income to limited partnership units and FPUs | 69,268 | 57,730 | 277,285 | 161,739 | |||||||
Total compensation and employee benefits | $ | 302,355 | $ | 260,083 | $ | 1,020,973 | $ | 833,233 | |||
Occupancy and equipment | 40,028 | 38,710 | 121,681 | 117,294 | |||||||
Fees to related parties | 7,046 | 6,551 | 23,477 | 18,285 | |||||||
Professional and consulting fees | 13,734 | 15,048 | 44,254 | 44,489 | |||||||
Communications | 29,222 | 26,802 | 84,974 | 81,859 | |||||||
Selling and promotion | 14,939 | 11,373 | 44,875 | 34,754 | |||||||
Commissions and floor brokerage | 14,755 | 13,104 | 46,181 | 44,686 | |||||||
Interest expense | 20,780 | 14,499 | 56,436 | 43,144 | |||||||
Other expenses | 22,030 | 19,951 | 47,759 | 60,736 | |||||||
Total non-compensation expenses | $ | 162,534 | $ | 146,038 | $ | 469,637 | $ | 445,247 | |||
Total expenses | $ | 464,889 | $ | 406,121 | $ | 1,490,610 | $ | 1,278,480 | |||
Other income (losses), net: | |||||||||||
Gains (losses) on divestitures and sale of investments | - | (183) | - | (183) | |||||||
Gains (losses) on equity method investments | 2,094 | 3,230 | 6,568 | 8,762 | |||||||
Other income (loss) | 3,967 | 5,545 | 1,221 | 6,958 | |||||||
Total other income (losses), net | $ | 6,061 | $ | 8,592 | $ | 7,789 | $ | 15,537 | |||
Income (loss) from operations before income taxes | 23,866 | 19,038 | 25,820 | 95,844 | |||||||
Provision (benefit) for income taxes | 5,314 | 10,813 | 8,308 | 40,575 | |||||||
Consolidated net income (loss) | $ | 18,552 | $ | 8,225 | $ | 17,512 | $ | 55,269 | |||
Less: Net income (loss) attributable to noncontrolling | |||||||||||
interest in subsidiaries | 1,506 | 2,463 | 1,192 | 8,773 | |||||||
Net income (loss) available to common stockholders | $ | 17,046 | $ | 5,762 | $ | 16,320 | $ | 46,496 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Continued
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Per share data: | |||||||||||
Basic earnings (loss) per share | |||||||||||
Net income (loss) attributable to common | $ | 15,974 | $ | 5,762 | $ | 15,248 | $ | 46,496 | |||
stockholders (1) | |||||||||||
Basic earnings (loss) per share | |||||||||||
$ | 0.03 | $ | 0.02 | $ | 0.04 | $ | 0.13 | ||||
Basic weighted-average shares of common stock | |||||||||||
468,544 | 371,108 | 412,178 | 371,692 | ||||||||
outstanding | |||||||||||
Fully diluted earnings (loss) per share | |||||||||||
Net income (loss) for fully diluted shares | $ | 15,989 | $ | 7,370 | $ | 15,107 | $ | 60,718 | |||
Fully diluted earnings (loss) per share | |||||||||||
$ | 0.03 | $ | 0.01 | $ | 0.03 | $ | 0.12 | ||||
Fully diluted weighted-average shares of common | |||||||||||
477,545 | 496,985 | 494,545 | 501,958 | ||||||||
stock outstanding | |||||||||||
- Represents Net income (loss) available to common stockholders less $1.1 million of net income allocated to participating RSUs and restricted stock awards for the three and nine months ended September 30, 2023.
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Non-GAAP Financial Measures
The non-GAAP definitions below include references to certain equity-based compensation instruments, such as restricted stock awards and/or restricted stock units ("RSUs"), that the Company has issued and outstanding following its corporate conversion on July 1, 2023. Although BGC is retaining certain defined terms and references, including references to partnerships or partnership units, for purposes of comparability before and after the corporate conversion, such references may not be applicable following the period ended June 30, 2023.
The Company has clarified its practice in an updated definition of its "Calculation of Non-CompensationAdjustments for Adjusted Earnings". BGC has not modified any prior period non-GAAP measures related to this clarification.
This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). Non-GAAP financial measures used by the Company include "Adjusted Earnings before noncontrolling interests and taxes", which is used interchangeably with "pre-tax Adjusted Earnings"; "Post-tax Adjusted Earnings to fully diluted shareholders", which is used interchangeably with "post-tax Adjusted Earnings"; "Adjusted EBITDA"; "Liquidity"; and "Constant Currency". The definitions of these terms are below.
Adjusted Earnings Defined
BGC uses non-GAAP financial measures, including "Adjusted Earnings before noncontrolling interests and taxes" and "Post-tax Adjusted Earnings to fully diluted shareholders", which are supplemental measures of operating results used by management to evaluate the financial performance of the Company and its consolidated subsidiaries. BGC believes that Adjusted Earnings best reflect the operating earnings generated by the Company on a consolidated basis and are the earnings which management considers when managing its business.
As compared with "Income (loss) from operations before income taxes" and "Net income (loss) for fully diluted shares", both prepared in accordance with GAAP, Adjusted Earnings calculations primarily exclude certain non-cash items and other expenses that generally do not involve the receipt or outlay of cash by the Company and/or which do not dilute existing stockholders. In addition, Adjusted Earnings calculations exclude certain gains and charges that management believes do not best reflect the underlying operating performance of BGC. Adjusted Earnings is calculated by taking the most comparable GAAP measures and adjusting for certain items with respect to compensation expenses, non-compensation expenses, and other income, as discussed below.
Calculations of Compensation Adjustments for Adjusted Earnings and Adjusted EBITDA
Treatment of Equity-Based Compensation Line Item for Adjusted Earnings and Adjusted EBITDA
The Company's Adjusted Earnings and Adjusted EBITDA measures exclude all GAAP charges included in the line item "Equity- based compensation, dividend equivalents and allocations of net income to limited partnership units and FPUs" (or "equity-based compensation" for purposes of defining the Company's non-GAAP results) as recorded on the Company's GAAP Consolidated Statements of Operations and GAAP Consolidated Statements of Cash Flows. These GAAP equity-based compensation charges reflect the following items:
- Charges related to amortization of RSUs, restricted stock awards, other equity-based awards, and limited partnership units;
- Charges with respect to grants of exchangeability, which reflect the right of holders of limited partnership units with no capital accounts, such as LPUs and PSUs, to exchange these units into shares of common stock, or into partnership units with capital accounts, such as HDUs, as well as cash paid with respect to taxes withheld or expected to be owed by the unit holder upon such exchange. The withholding taxes related to the exchange of certain non-exchangeable units without a capital account into either common shares or units with a capital account may be funded by the redemption of preferred units such as PPSUs;
- Charges with respect to preferred units and RSU tax accounts. Any preferred units and RSU tax accounts would not be included in the Company's fully diluted share count because they cannot be made exchangeable into shares of common stock and are entitled only to a fixed distribution or dividend. Preferred units are granted in connection with the grant of certain limited partnership units that may be granted exchangeability or redeemed in connection with the grant of shares of common stock, and RSU tax accounts are granted in connection with the grant of RSUs. The preferred units and RSU tax accounts are granted at ratios designed to cover any withholding taxes expected to be paid. This is an alternative to the common practice among public companies of issuing the gross amount of shares to employees, subject to cashless withholding of shares, to pay applicable withholding taxes;
- GAAP equity-based compensation charges with respect to the grant of an offsetting amount of common stock or partnership units with capital accounts in connection with the redemption of non-exchangeable units, including PSUs and LPUs;
Page 9
- Charges related to grants of equity awards, including common stock, RSUs, restricted stock awards or partnership units with capital accounts;
- Allocations of net income to limited partnership units and FPUs. Such allocations represent the pro-rata portion of post-tax GAAP earnings available to such unit holders; and
- Charges related to dividend equivalents earned on RSUs and any preferred returns on RSU tax accounts.
The amounts of certain quarterly equity-based compensation charges are based upon the Company's estimate of such expected charges during the annual period, as described further below under "Methodology for Calculating Adjusted Earnings Taxes."
Virtually all of BGC's key executives and producers have equity stakes in the Company and its subsidiaries and generally receive deferred equity as part of their compensation. A significant percentage of BGC's fully diluted shares are owned by its executives, partners and employees. The Company issues RSUs, restricted stock, limited partnership units (prior to July 1, 2023) as well as other forms of equity-based compensation, including grants of exchangeability into shares of common stock (prior to July 1, 2023), to provide liquidity to its employees, to align the interests of its employees and management with those of common stockholders, to help motivate and retain key employees, and to encourage a collaborative culture that drives cross-selling and revenue growth.
All share equivalents that are part of the Company's equity-based compensation program, including REUs, PSUs, LPUs, HDUs, and other units that may be made exchangeable into common stock, as well as RSUs (which are recorded using the treasury stock method), are included in the fully diluted share count when issued or at the beginning of the subsequent quarter after the date of grant.
Compensation charges are also adjusted for certain other cash and non-cash items.
Certain Other Compensation-Related Adjustments for Adjusted Earnings
BGC also excludes various other GAAP items that management views as not reflective of the Company's underlying performance in a given period from its calculation of Adjusted Earnings. These may include compensation-related items with respect to cost- saving initiatives, such as severance charges incurred in connection with headcount reductions as part of broad restructuring and/or cost savings plans.
Calculation of Non-Compensation Adjustments for Adjusted Earnings
Adjusted Earnings calculations may also exclude items such as:
- Non-cashGAAP charges related to the amortization of intangibles with respect to acquisitions;
- Acquisition related costs;
- Non-cashGAAP asset impairment charges;
- Resolutions of litigation, disputes, investigations, or enforcement matters that are generally non-recurring, exceptional, or unusual, or similar items that management believes do not best reflect BGC's underlying operating performance, including related unaffiliated third-party professional fees and expenses; and
- Various other GAAP items that management views as not reflective of the Company's underlying performance in a given period, including non-compensation-related charges incurred as part of broad restructuring and/or cost savings plans. Such GAAP items may include charges for professional fees and expenses, exiting leases and/or other long-term contracts as part of cost-saving initiatives, as well as non-cash impairment charges related to assets, goodwill and/or intangible assets created from acquisitions.
Calculation of Adjustments for Other (income) losses for Adjusted Earnings
Adjusted Earnings calculations also exclude gains from litigation resolution and certain other non-cash,non-dilutive, and/or non- economic items, which may, in some periods, include:
- Gains or losses on divestitures;
- Fair value adjustment of investments;
- Certain other GAAP items, including gains or losses related to BGC's investments accounted for under the equity method; and
- Any unusual, non-ordinary, or non-recurring gains or losses.
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BGC Group Inc. published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 10:30:10 UTC.
