Exhibit 99.1

 

 

Virtu Announces First Quarter 2018 Results

 

NEW YORK, NY,  May 4, 2018  — Virtu Financial, Inc. (NASDAQ: VIRT), a leading technology-enabled market maker and liquidity provider to the global financial markets, today reported results for the first quarter ended March 31, 2018.

 

First Quarter Selected Highlights

 

·                  Net income of $410.0 million, Normalized Adjusted Net Income* of $145.0 million

 

·                  Basic earnings per share of $1.89; Diluted earnings per share of $1.86; Normalized Adjusted EPS* of $0.76

 

·                  Total revenues of $815.1 million; Adjusted Net Trading Income* of $340.3 million

 

·                  Adjusted EBITDA* of $222.7 million; Adjusted EBITDA Margin* of 65.4%

 

·                  Results include $329 million net gain on sale of BondPoint transaction closed on January 2, 2018

 

·                  Expense and capital synergies on track with forecast as integration progresses

 

·                  Made $376 million of pre-payments on the term loan since the beginning of 2018, including $100 million pre-payment made on April 19

 

·                  Total to-date pre-payments of $626 million on the $1.15 billion term loan debt incurred in connection with KCG acquisition

 

·                  Repurchased to date $11 million out of $50 million previously announced share buyback program

 

·                  Quarterly cash dividend of $0.24 per share payable on June 15, 2018

 


* Non-GAAP financial measures. Please see “Non-GAAP Financial Measures and Other Items” for more information.

 

The Virtu Financial, Inc. Board of Directors declared a quarterly cash dividend of $0.24 per share. This dividend is payable on June 15, 2018 to shareholders of record as of June 1, 2018.

 

“Our continued successful integration enabled this quarter’s outstanding performance in this favorable environment. The first quarter of 2018 saw the return of volume and volatility.  Average realized volatility of 19.8 for the quarter was at a multi-year high.  Our profitability and margins this quarter demonstrate the earnings power and competitive advantage of having a scaled and unified firm.  As our integration progresses we see opportunity for continued superior performance,” said Douglas Cifu, Chief Executive Officer of Virtu Financial.

 

First Quarter Financial Results

 

Total revenues increased 453.4% to $815.1 million for this quarter, compared to $147.3 million for the same period in 2017. Trading income, net, increased 191.0% to $406.2 million for this quarter, compared to $139.6 million for the same period in 2017. Net income increased 1,845.6% to $410.0 million for this quarter, compared to $21.1 million for the same period in 2017.

 

Basic and Diluted earnings per share for this quarter were $1.89 and $1.86, respectively, compared to $0.10 each for the same period in 2017.

 

Adjusted Net Trading Income increased 314.0% to $340.3 million for this quarter, compared to $82.2 million for the same period in 2017. Adjusted EBITDA increased 366.9% to $222.7 million for this quarter, compared to $47.7 million for the same period in 2017. Normalized Adjusted Net Income increased 559.1% to $145.0 million for this quarter, compared to $22.0 million for the same period in 2017.

 

Assuming all non-controlling interests had been exchanged for common stock, and the Company’s Normalized Adjusted Net Income before income taxes was subject to corporation taxation, Normalized Adjusted EPS was $0.76 for this quarter and $0.16 for the same period in 2017.

 

1



 

Operating Segment Information

 

Prior to the acquisition of KCG Holdings, Inc. in July 2017, the Company was managed and operated as one business, and, accordingly, operated under one reportable segment.  As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate.

 

Market Making principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions.

 

Execution Services comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers.

 

Corporate contains the Company’s investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses.

 

The following tables show the total revenues and Adjusted Net Trading Income by operating segment for the three months ended March 31, 2018 and 2017.

 

Total Revenues by operating segment

 

(in thousands, except percentages)

 

 

 

Three Months Ended March 31, 2018

 

 

 

Market

 

Execution

 

 

 

 

 

 

 

Making

 

Services

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

405,709

 

$

453

 

$

 

$

406,162

 

Commissions, net and technology services

 

8,501

 

45,343

 

 

53,844

 

Interest and dividends income

 

17,769

 

145

 

35

 

17,949

 

Other, net

 

557

 

337,838

 

(1,297

)

337,098

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

432,536

 

$

383,779

 

$

(1,262

)

$

815,053

 

 

 

 

Three Months Ended March 31, 2017

 

 

 

Market

 

Execution

 

 

 

 

 

 

 

Making

 

Services

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

139,574

 

$

 

$

 

$

139,574

 

Commissions, net and technology services

 

 

2,779

 

 

2,779

 

Interest and dividends income

 

4,874

 

 

 

4,874

 

Other, net

 

 

 

60

 

60

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

144,448

 

$

2,779

 

$

60

 

$

147,287

 

 

Reconciliation of trading income, net to Adjusted Net Trading Income by operating segment

(in thousands, except percentages)

 

2



 

 

 

Three Months Ended March 31, 2018

 

 

 

Market

 

Execution

 

 

 

 

 

 

 

Making

 

Services

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

405,709

 

$

453

 

$

 

$

406,162

 

Commissions, net and technology services

 

8,501

 

45,343

 

 

53,844

 

Interest and dividends income

 

17,769

 

145

 

35

 

17,949

 

Brokerage, exchange and clearance fees, net

 

(69,072

)

(18,752

)

 

(87,824

)

Payments for order flow

 

(16,196

)

(60

)

 

(16,256

)

Interest and dividends expense

 

(33,207

)

(417

)

 

(33,624

)

Adjusted Net Trading Income

 

$

313,504

 

$

26,712

 

$

35

 

$

340,251

 

 

 

 

Three Months Ended March 31, 2017

 

 

 

Market

 

Execution

 

 

 

 

 

 

 

Making

 

Services

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

139,574

 

$

 

$

 

$

139,574

 

Commissions, net and technology services

 

 

2,779

 

 

2,779

 

Interest and dividends income

 

4,874

 

 

 

4,874

 

Brokerage, exchange and clearance fees, net

 

(52,770

)

 

 

(52,770

)

Interest and dividends expense

 

(12,280

)

 

 

(12,280

)

Adjusted Net Trading Income

 

$

79,398

 

$

2,779

 

$

 

$

82,177

 

 

Reconciliation of trading income, net to Adjusted Net Trading Income by category — Market Making segment

(in thousands, except percentages)

 

 

 

Three Months Ended March 31, 2018

 

 

 

Americas

 

ROW

 

Global FICC,

 

 

 

Total

 

 

 

Equities

 

Equities

 

Options and Other

 

Unallocated

 

Market Making

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

273,188

 

$

51,694

 

$

82,070

 

$

(1,243

)

$

405,709

 

Commissions, net and technology services

 

8,522

 

 

(21

)

 

8,501

 

Brokerage, exchange and clearance fees, net

 

(41,085

)

(15,949

)

(12,539

)

501

 

(69,072

)

Payments for order flow

 

(16,196

)

 

 

 

(16,196

)

Interest and dividends, net

 

(8,733

)

(2,394

)

(3,251

)

(1,060

)

(15,438

)

Adjusted Net Trading Income

 

$

215,696

 

$

33,351

 

$

66,259

 

$

(1,802

)

$

313,504

 

 

 

 

Three Months Ended March 31, 2017

 

 

 

Americas

 

ROW

 

Global FICC,

 

 

 

Total

 

 

 

Equities

 

Equities

 

Options and Other

 

Unallocated

 

Market Making

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading income, net

 

$

49,831

 

$

38,749

 

$

51,572

 

$

(578

)

$

139,574

 

Brokerage, exchange and clearance fees, net

 

(20,216

)

(17,090

)

(15,076

)

(388

)

(52,770

)

Interest and dividends, net

 

(1,564

)

(2,925

)

(2,366

)

(551

)

(7,406

)

Adjusted Net Trading Income

 

$

28,051

 

$

18,734

 

$

34,130

 

$

(1,517

)

$

79,398

 

 

3



 

The following tables show our Adjusted Net Trading Income and average daily Adjusted Net Trading Income by category for the three months ended March 31, 2018 and 2017 (in thousands, except percentages).

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

2017

 

% Change

 

Adjusted Net Trading Income by Category:

 

 

 

 

 

 

 

Market Making:

 

 

 

 

 

 

 

Americas Equities

 

$

215,696

 

$

28,052

 

668.9

%

ROW Equities

 

33,351

 

18,734

 

78.0

%

Global FICC, Options and Other

 

66,259

 

34,130

 

94.1

%

Unallocated(1)

 

(1,802

)

(1,518

)

NM

 

Total Market Making

 

$

313,504

 

$

79,398

 

294.9

%

 

 

 

 

 

 

 

 

Execution Services

 

26,712

 

3,114

 

757.8

%

 

 

 

 

 

 

 

 

Corporate

 

35

 

 

NM

 

Adjusted Net Trading Income

 

$

340,251

 

$

82,512

 

312.4

%

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

2017

 

% Change

 

Average Daily

 

 

 

 

 

 

 

Adjusted Net Trading Income by Category:

 

 

 

 

 

 

 

Market Making:

 

 

 

 

 

 

 

Americas Equities

 

$

3,536

 

$

452

 

681.5

%

ROW Equities

 

547

 

302

 

80.9

%

Global FICC, Options and Other

 

1,086

 

550

 

97.3

%

Unallocated(1)

 

(30

)

(24

)

NM

 

Total Market Making

 

$

5,139

 

$

1,281

 

301.3

%

 

 

 

 

 

 

 

 

Execution Services

 

438

 

50.23

 

772.1

%

 

 

 

 

 

 

 

 

Corporate

 

1

 

 

NM

 

Adjusted Net Trading Income

 

$

5,578

 

$

1,331

 

319.2

%

 

4



 


(1) Under our methodology for recording “trading income, net” in our condensed consolidated statements of comprehensive income, we recognize revenues based on the exit price of assets in accordance with applicable U.S. GAAP rules, and when we calculate Adjusted Net Trading Income for corresponding reporting periods, we start with trading income, net. By contrast, when we calculate Adjusted Net Trading Income by category, we recognize revenues on a daily basis, and as a result prices used in recognizing revenues may differ. Because we provide liquidity on a global basis, across asset classes and time zones, the timing of any particular Adjusted Net Trading Income calculation can defer or accelerate the amount in a particular asset class from one day to another, and, at the end of a reporting period, from one reporting period to another. The purpose of the Unallocated category is to ensure that Adjusted Net Trading Income by category sums to total Adjusted Net Trading Income, which can be reconciled to Trading Income, Net, calculated in accordance with GAAP. We do not allocate any resulting differences based on the timing of revenue recognition.

 

BondPoint Sale

 

On January 2, 2018, the Company completed the sale of BondPoint to Intercontinental Exchange (NYSE: ICE) for $400 million in cash. The Company recorded a gain on the sale of $337.5 million, which is recorded as other, net on the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018. The net gain on the sale of BondPoint was $329 million including direct costs associated with the sale which comprised professional fees of $7.1 million and compensation of $1.4 million.

 

On January 8, 2018, the Company completed a repricing transaction of its 1st Lien Senior Secured Term Loan along with a principal repayment of $276 million from the proceeds from the sale of BondPoint to ICE. The repriced term loan bears interest at LIBOR + 325 bps, reflecting a reduction of 50 bps compared to its prior rate.

 

5



 

Financial Condition

 

As of March 31, 2018, Virtu had $637.3 million in cash and cash equivalents, and total long-term debt outstanding in an aggregate principal amount of $1.157 billion.

 

Non-GAAP Financial Measures and Other Items

 

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), we use the following non-GAAP measures of financial performance:

 

·                  “Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities, or trading income, net, plus commissions, net and technology services, plus interest and dividends income and expense, net, less direct costs associated with those revenues, including brokerage, exchange and clearance fees, net and payments for order flow. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our market making activities.

 

·                  “EBITDA”, which measures our operating performance by adjusting Net Income to exclude financing interest expense on our long-term borrowings, debt issue cost related to debt refinancing, depreciation and amortization, amortization of purchased intangibles and acquired capitalized software, and income tax expense, and “Adjusted EBITDA”, which measures our operating performance by further adjusting EBITDA to exclude severance, reserve for legal matter, transaction advisory fees and expenses, termination of office leases, acquisition related retention bonus, trading related settlement income, gain on sale of business, connectivity early termination, other, net, equipment write-off, share based compensation, charges related to share based compensation at IPO, 2015 Management Incentive Plan, and charges related to share based compensation at IPO.

 

·                  “Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items and other non-cash items, assuming that all vested and unvested Virtu Financial LLC units have been exchanged for Class A Common Stock, and applying a corporate tax rate between 35.5% and 37%. As a result of the Tax Act, our corporate tax rate is estimated to be approximately 23% beginning January 1, 2018 due to the decrease in the U.S. federal corporate income tax rate.

 

Total Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS are non-GAAP financial measures used by management in evaluating operating performance and in making strategic decisions. Additional information provided regarding the breakdown of Total Adjusted Net Trading Income by category is also a non-GAAP financial measure but is not used by the Company in evaluating operating performance and in making strategic decisions. In addition, these non-GAAP financial measures or similar non-GAAP measures are used by research analysts, investment bankers and lenders to assess our operating performance. Management believes that the presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide useful information to investors regarding our results of operations because they assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide indicators of general economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period. Furthermore, our credit agreement contains covenants and other tests based on metrics similar to Adjusted EBITDA. Other companies may define Adjusted Net Trading Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before

 

6



 

income taxes, Normalized provision for income taxes and Normalized Adjusted EPS differently, and as a result our measures of Adjusted Net Trading Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS may not be directly comparable to those of other companies. Although we use these non-GAAP financial measures as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.

 

Adjusted Net Trading Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income should be considered in addition to, and not as a substitute for, Net Income in accordance with U.S. GAAP as a measure of performance. Our presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted EPS and our EBITDA-based measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

 

·                  they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;

 

·                  our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;

 

·                  although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;

 

·                  they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;

 

·                  they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and

 

·                  they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.

 

Because of these limitations, Adjusted Net Trading Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income are not intended as alternatives to Net Income as indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Net Trading Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include Net Income, cash flows from operations and cash flow data. See below a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure.

 

7



 

Virtu Financial, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

Three Months Ended March 31,

 

(in thousands, except share and per share data)

 

2018

 

2017

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

Trading income, net

 

$

406,162

 

$

139,574

 

Commissions, net and technology services

 

53,844

 

2,779

 

Interest and dividends income

 

17,949

 

4,874

 

Other, net

 

337,098

 

60

 

 

 

 

 

 

 

Total revenues

 

815,053

 

147,287

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Brokerage, exchange and clearance fees, net

 

87,824

 

52,770

 

Communication and data processing

 

49,486

 

18,207

 

Employee compensation and payroll taxes

 

64,670

 

21,347

 

Payments for order flow

 

16,256

 

 

Interest and dividends expense

 

33,624

 

12,280

 

Operations and administrative

 

19,919

 

4,846

 

Depreciation and amortization

 

15,339

 

6,757

 

Amortization of purchased intangibles and acquired capitalized software

 

6,851

 

53

 

Termination of office leases

 

19,970

 

 

Debt issue cost related to debt refinancing

 

6,021

 

 

Transaction advisory fees and expenses

 

7,496

 

132

 

Charges related to share based compensation at IPO

 

14

 

185

 

Financing interest expense on long-term borrowings

 

19,047

 

6,828

 

 

 

 

 

 

 

Total operating expenses

 

346,517

 

123,405

 

 

 

 

 

 

 

Income before income taxes and noncontrolling interest

 

468,536

 

23,882

 

Provision for income taxes

 

58,514

 

2,808

 

 

 

 

 

 

 

Net income

 

$

410,022

 

$

21,074

 

 

 

 

 

 

 

Noncontrolling interest

 

(235,271

)

(16,494

)

 

 

 

 

 

 

Net income available for common stockholders

 

$

174,751

 

$

4,580

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

 

$

1.89

 

$

0.10

 

Diluted

 

$

1.86

 

$

0.10

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

Basic

 

90,699,321

 

40,398,381

 

Diluted

 

92,406,318

 

40,398,381

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

Net income

 

$

410,022

 

$

21,074

 

Other comprehensive income (loss)

 

 

 

 

 

Foreign exchange translation adjustment, net of taxes

 

2,529

 

785

 

 

 

 

 

 

 

Comprehensive income

 

$

412,551

 

$

21,859

 

Less: Comprehensive income attributable to noncontrolling interest

 

(236,559

)

(17,044

)

 

 

 

 

 

 

Comprehensive income available for common stockholders

 

$

175,992

 

$

4,815

 

 

8



 

Virtu Financial, Inc. and Subsidiaries

Reconciliation to Non-GAAP Operating Data (Unaudited)

 

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, and selected Operating Margins.

 

 

 

Three Months Ended March 31,

 

(in thousands, except percentages)

 

2018

 

2017

 

 

 

 

 

 

 

Reconciliation of Trading income, net to Adjusted Net Trading Income

 

 

 

 

 

Trading income, net

 

$

406,162

 

$

139,574

 

Commissions, net and technology services

 

53,844

 

2,779

 

Interest and dividends income

 

17,949

 

4,874

 

Brokerage, exchange and clearance fees, net

 

(87,824

)

(52,770

)

Payments for order flow

 

(16,256

)

 

Interest and dividends expense

 

(33,624

)

(12,280

)

 

 

 

 

 

 

Adjusted Net Trading Income

 

$

340,251

 

$

82,177

 

 

 

 

 

 

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

 

 

 

 

Net income

 

$

410,022

 

$

21,074

 

Financing interest expense on long-term borrowings

 

19,047

 

6,828

 

Debt issue cost related to debt refinancing

 

6,021

 

 

Depreciation and amortization

 

15,339

 

6,757

 

Amortization of purchased intangibles and acquired capitalized software

 

6,851

 

53

 

Provision for income taxes

 

58,514

 

2,808

 

 

 

 

 

 

 

EBITDA

 

$

515,794

 

$

37,520

 

 

 

 

 

 

 

Severance

 

3,744

 

877

 

Transaction advisory fees and expenses

 

7,496

 

132

 

Termination of office leases

 

19,970

 

 

Connectivity early termination

 

2,500

 

 

Gain on sale of business

 

(337,549

)

 

Other, net

 

451

 

(60

)

Equipment write-off

 

936

 

 

Share based compensation

 

7,902

 

7,579

 

Charges related to share based compensation at IPO, 2015 Management Incentive Plan

 

1,398

 

1,425

 

Charges related to share based compensation awards at IPO

 

14

 

185

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

222,656

 

$

47,658

 

 

 

 

 

 

 

Selected Operating Margins

 

 

 

 

 

Net Income Margin(1)

 

120.5

%

25.6

%

EBITDA Margin(2)

 

151.6

%

45.7

%

Adjusted EBITDA Margin(3)

 

65.4

%

58.0

%

 


(1) Calculated by dividing net income by Adjusted Net Trading Income.

(2) Calculated by dividing EBITDA by Adjusted Net Trading Income.

(3) Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.

 

9



 

Virtu Financial, Inc. and Subsidiaries

Reconciliation to Non-GAAP Operating Data (Unaudited)

(Continued)

 

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS.

 

 

 

Three Months Ended March 31,

 

(in thousands, except share and per share data)

 

2018

 

2017

 

 

 

 

 

 

 

Reconciliation of Net Income to Normalized Adjusted Net Income

 

 

 

 

 

Net income

 

$

410,022

 

$

21,074

 

Provision for income taxes

 

58,514

 

2,808

 

 

 

 

 

 

 

Income before income taxes

 

$

468,536

 

$

23,882

 

 

 

 

 

 

 

Amortization of purchased intangibles and acquired capitalized software

 

6,851

 

53

 

Debt issue cost related to debt refinancing

 

6,021

 

 

Severance

 

3,744

 

877

 

Transaction advisory fees and expenses

 

7,496

 

132

 

Termination of office leases

 

19,970

 

 

Connectivity early termination

 

2,500

 

 

Gain on sale of business

 

(337,549

)

 

Equipment write-off

 

936

 

 

Other, net

 

451

 

(60

)

Share based compensation

 

7,902

 

7,579

 

Charges related to share based compensation at IPO, 2015 Management Incentive Plan

 

1,398

 

1,425

 

Charges related to share based compensation awards at IPO

 

14

 

185

 

 

 

 

 

 

 

Normalized Adjusted Net Income before income taxes

 

$

188,270

 

$

34,073

 

 

 

 

 

 

 

Normalized provision for income taxes(1)

 

43,302

 

12,096

 

 

 

 

 

 

 

Normalized Adjusted Net Income

 

$

144,968

 

$

21,977

 

 

 

 

 

 

 

Weighted Average Adjusted shares outstanding(2)

 

190,056,747

 

140,837,161

 

 

 

 

 

 

 

Normalized Adjusted EPS

 

$

0.76

 

$

0.16

 

 


(1)    Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 23% for 2018 and 35.5% for 2017

(2)    Assumes that (1) holders of all vested and unvested Virtu Financial LLC Units (together with corresponding shares of Class C common stock), have exercised their right to exchange such Virtu Financial LLC Units for shares of Class A common stock on a one-for-one basis,  (2) holders of all Virtu Financial LLC Units (together with corresponding shares of Class D common stock), have exercised their right to exchange such Virtu Financial LLC Units for shares of Class B common stock on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B common stock into shares of Class A common stock on a one-for-one basis. Includes1,706,996 additional shares from dilutive impact of options and restricted stock units outstanding under the 2015 Management Incentive Plan during the three months ended March 31, 2018.

 

10



 

Virtu Financial, Inc. and Subsidiaries

Condensed Consolidated Statements of Financial Condition (Unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

(in thousands, except share data)

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

637,308

 

$

532,887

 

Securities borrowed

 

1,232,048

 

1,471,172

 

Securities purchased under agreements to resell

 

602

 

 

Receivables from broker-dealers and clearing organizations

 

1,434,039

 

972,018

 

Trading assets, at fair value

 

2,907,606

 

2,712,622

 

Property, equipment and capitalized software, net

 

128,675

 

137,018

 

Goodwill

 

836,583

 

844,883

 

Intangibles (net of accumulated amortization)

 

104,387

 

111,224

 

Deferred taxes

 

123,289

 

125,760

 

Assets of business held for sale

 

 

55,070

 

Other assets

 

353,394

 

357,352

 

Total assets

 

$

7,757,931

 

$

7,320,006

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

Liabilities

 

 

 

 

 

Short-term borrowings, net

 

$

20,944

 

$

27,883

 

Securities loaned

 

936,061

 

754,687

 

Securities sold under agreements to repurchase

 

265,401

 

390,642

 

Payables to broker-dealers and clearing organizations

 

648,788

 

716,205

 

Trading liabilities, at fair value

 

2,846,453

 

2,384,598

 

Tax receivable agreement obligations

 

147,040

 

147,040

 

Accounts payable and accrued expenses and other liabilities

 

313,305

 

358,825

 

Long-term borrowings, net

 

1,121,464

 

1,388,548

 

Total liabilities

 

$

6,299,456

 

$

6,168,428

 

 

 

 

 

 

 

Total equity

 

1,458,475

 

1,151,578

 

 

 

 

 

 

 

Total liabilities and equity

 

$

7,757,931

 

$

7,320,006

 

 

 

 

As of March 31, 2018

 

 

 

Interests

 

%

 

Ownership of Virtu Financial LLC Interests:

 

 

 

 

 

Virtu Financial, Inc. - Class A Common Stock and Restricted Stock Units

 

93,379,693

 

49.1

%

Non-controlling Interests (Virtu Financial LLC)

 

96,677,054

 

50.9

%

Total Virtu Financial LLC Interests

 

190,056,747

 

100.0

%

 

11



 

About Virtu Financial, Inc.

 

Virtu is a leading financial firm that leverages cutting edge technology to deliver liquidity to the global markets and innovative, transparent trading solutions to our clients. As a market maker, Virtu provides deep liquidity that helps to create more efficient markets around the world. Our market structure expertise, broad diversification, and execution technology enables us to provide competitive bids and offers in over 25,000 securities, at over 235 venues, in 36 countries worldwide.

 

Cautionary Note Regarding Forward-Looking Statements

 

The foregoing information and certain oral statements made from time to time by representatives of the Company contain certain forward-looking statements that reflect the company’s current views with respect to certain current and future events and financial performance, including with respect to integration of KCG and synergy realization. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company’s financial results may be found in the Company’s filings with the Securities and Exchange Commission.

 

CONTACT

 

Investor Relations

Andrew Smith

Virtu Financial, Inc.

(212) 418-0195

investor_relations@virtu.com

 

Media Relations

media@virtu.com

 

12


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