fxcm q3 2013 earnings presentation
TRANSCRIPT
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UnsavedDocument/9/18/2010/13:49
Third Quarter 2013Financial and Operating ResultsOctober 2013 Operating Metrics
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This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCMs current views with respect to,among other things, its operations and financial performance. You can identify these forward-looking statements bythe use of words such as outlook, believes,expects, potential, continues, may, will, should, seeks,approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words orother comparable words. Such forward-looking statements are subject to various risks and uncertainties.
Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materiallyfrom those indicated in these statements. FXCM believes these factors include but are not limited to evolving legaland regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to theprotection of its proprietary technology, risks related to its dependence on FX market makers, market conditionsand those other risks described under Risk Factors as such factors may be updated from time to time in FXCMInc.s most recent Annual Report on Form 10-K, FXCM Inc.s quarterly reports on Form 10-Q and other SEC filings,which are accessible on the SECs website at sec.gov.
FXCM undertakes no obligation to publicly update or review any forward-looking statement, whether as a result ofnew information, future developments or otherwise.
Non-GAAP Financial Measures: This presentation presents certain non-GAAP financial measures. Thesemeasures should not be considered in isolation from, or as a substitute for, measures prepared in accordance withgenerally accepted accounting principles. See the appendix to this presentation for reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP.
Safe Harbor
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Highlights Third Quarter 2013
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Revenues of 113.2 million, -1% from Q3/12 Adjusted Pro Forma EBITDA(1)of 33.0 million, -11% from Q3/12 Adjusted Pro Forma EPS(1)of 0.13 per diluted share, -24% from Q3/12 GAAP EPS loss of ( 0.15) per fully diluted share, vs. 0.17/share in Q3/12
$15.0 million reserve established for longstanding regulatory matter in UK relating to tradeexecution practices prior to August 2010
Retail revenue per million: 89 / million, consistent with recent results Another strong quarter of cash generation 9 month cash flow from operating activitiesnow 138% of cash flow for full year 2012
Cash flows from operating activities of $45.8 million in Q3/13 YTD 2013 cash flows from operating activities of $140.8 million versus $53.4 million for the
same period 2012
Significant financial flexibility - 577 million in liquidity $422 million cash balance at 9/30/13 vs. $103 million of capital requirements $155 million available under undrawn credit facility
(1) Adjusted Pro Forma EBITDA and Adjusted Pro Forma EPS are non-GAAP financial measures that excludes certain items; reconciliations of these measures to the most directly comparable GAAP measures
are available in the appendix to this presentation.* Definitions of certain operating metrics are available in the appendix to this presentation. 3
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Market Environment
4
Q3/13 trading conditions muted CVIX finished at lows not seen since Q4/12 Daily high/low ranges in many major pairs took sharp turn downwards Eurodollar atmulti-year lows in volatility
(1) JPMorgan Global FX Volatili ty Index
CVIX(1)
70
120
170
220
270
320
EURUSD Avg. Daily Range(2)
7
9
11
13
15
17
19
21
2009 2010 2011 2012 2013
(2) 20 day average range in pips
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Retail FX
5* Definitions of certain operating metrics are available in the appendix to this presentation.
378,837 367,051345,790 366,015
438,063
516,960
417,845
-
100,000
200,000
300,000
400,000
500,000
600,000
Q1 20 12 Q2 20 12 Q3 20 12 Q4 20 12 Q1 20 13 Q2 20 13 Q3 20 13
DARTs
490387 421 401
476 519 462
272
275260 283
311360
293
95101 92 86
138148
123
128
106 89 116
116
124
101
-
200
400
600
800
1,000
1,200
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 20 13 Q2 2013 Q3 2013
Volume by Region ($ Billion)
Asia EMEA US ROW
$94$90
$99 $95
$88$90 $89
$-
$20
$40
$60
$80
$100
$120
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Retail $ / Million
15.2
13.4 13.3
13.8
16.5
17.7
14.8
9
10
11
12
13
14
15
16
17
18
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Retail ADV
USBillions
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Institutional FX
6
FXCM institutional volumes showingcontinued progress despite trading conditions
$156
$223
$373
$558$576
$-
$100
$200
$300
$400
$500
$600
$700
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Institutional Volume (Billions)
$22.2
$16.0
$23.0
$25.5
$17.6$15.9
$10.9
$16.2$18.0
$12.7
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Lucid Revenues & EBITDA (Millions) (1)
Revenues EBITDA
Lucid comparables/primary venues where
Lucid trades all had significant declinessequentially
Q3/13 vs. Q2/13:
ICAP (34%) CME (23%) Reuters (19%)
Lucid also tends to outperform in highvolatility periods and underperform in lowvolatility periods
(1) Adjusted pro forma EBITDA for Lucid further excluding the $781K /quarter in amortization of the value of liquidity restrictions put on the FXCM Class A common shares issuable to the Lucid sellersrecorded under US GAAP as compensation expense.
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October 2013 Operating Metrics
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$315B in retail monthly trading volume11% higher than September 2013 but3% lower than Q3/13 average
Retail DARTs of 379,280 1% lowerthan September 2013 and 9% lowerthan Q3/13 average
Active accounts up 1% from September2013 and up 8% year-to-date
$176B in institutional monthly volume 3% lower than September 2013 and 8%lower than Q3/13 average
$7.7B in institutional ADV 10% lower thanSeptember 2013 and 11% lower than Q3/13average
$287$295
$347
$384
$326 $315
$200
$250
$300
$350
$400
Q3 12 Q4 12 Q1 13 Q2/13 Q3/13 Oct-13
Retail Monthly Trading Volume
USBillions
345,790366,015
438,063
516,960
417,845 379,280
200,000
300,000
400,000
500,000
600,000
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct-13
Retail DARTs
171,274 170,930173,265
182,225 182,146
184,059
160,000
170,000
180,000
190,000
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct-13
Retail Active Accounts
$13.3 $13.8
$16.5
$17.7
$14.8
$13.7
$10.0
$12.0
$14.0
$16.0
$18.0
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct-13
Retail ADV
USBillions
$52
$74
$124
$186$192
$176
$-
$50
$100
$150
$200
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct-13
Institutional Monthly Trading Volume
$2.4
$3.5
$5.9
$8.6 $8.7
$7.7
$2.0
$4.0
$6.0
$8.0
$10.0
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Oct-13
Institutional ADV
USB
illions
USBillions
7
$13.7B in retail ADV 1% higher thanSeptember 2013 but 7% lower than Q3/13average
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M&A Update Concluded three transactions during Third Quarter 2013:
50.1% of Faros Trading
Assumption of Alpari US accounts
Together with Lucid principals, acquired a note in Infinium Capital Markets LLC
FXCM has proven track record as disciplined acquirer Four major acquisitions since 2010 at attractive prices and accretion rates
ODL (UK)
FXCM Japan (Japan)
Foreland (Japan)
Lucid (UK)
Low volatility conditions should propel M&A8
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Cost Discipline
9
* On an Adjusted Pro Forma basis; see attached reconcil iation of non-GAAP financial measures and a reconciliation of Adjusted Pro Forma income to U.S. GAAP results. Certain totals may not foot due torounding.
9
FXCM Inc. Operating Costs
Adjusted pro forma b asis & excluding referring
broker fees and depreciation & amortization
(US$ 000's)
9/30/2013 6/30/2013 3/31/2013 12/31/2012
Compensation and benefits 23,194$ 24,529$ 21,471$ 21,591$
Advertising and marketing 6,305 6,157 7,351 7,594
Communication and technology 10,111 9,765 8,355 10,522
Trading costs, prime brokerage and clearing fees 6,809 8,961 7,938 6,748
General and administrative 12,949 13,423 12,471 14,152
59,368$ 62,835$ 57,586$ 60,607$
Three Months Ended
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Adjusted Pro Forma Income3 and 9 Months Ended September 30, 2013 and 2012(unaudited)
10
* On an Adjusted Pro Forma basis; see attached reconcil iation of non-GAAP financial measures and a reconciliation of Adjusted Pro Forma income to U.S. GAAP results. Certain totals may not foot due torounding.
10
(In thousands, except per share data) 2013 2012 % Change 2013 2012 % Change
Revenues
Retail trading revenues 86,974$ 85,237$ 2% 282,296$ 255,833$ 10%
Institutional trading revenues 22,856 25,868 -12% 82,204 42,908 92%
Trading revenue 109,830 111,105 -1% 364,500 298,741 22%
Interest income 537 990 -46% 1,886 2,910 -35%
Brokerage interest expense (63) (66) -5% (187) (235) -20%
Net interest income 474 924 -49% 1,699 2,675 -36%
Other operating income 2,944 2,919 1% 10,046 7,805 29%
Total net revenues 113,248 114,948 -1% 376,245 309,221 22%
20,709 18,708 11% 64,481 58,865 10%
Net revenues 92,539 96,240 -4% 311,764 250,356 25%
ExpensesCompensation and benefits 23,194 21,778 7% 69,193 62,717 10%
Advertisin g and marketin g 6,305 7,509 -16% 19,813 23,266 -15%
Communication and technology 10,111 9,600 5% 28,231 26,591 6%
Trading costs, prime brokerage and clearing fees 6,809 6,981 -2% 23,708 10,187 133%
General and administrative 12,949 13,180 -2% 38,843 44,465 -13%
Loss on equity method investments, net 183 - - 728 - -
59,551 59,048 1% 180,516 167,226 8%
EBITDA 32,988 37,192 -11% 131,248 83,130 58%
Net EBITDA Margin 35.6% 38.6% -3.0% 42.1% 33.2% 8.9%
Depreciation and amortization 12,849 11,717 10% 37,304 24,761 51%
Interest on borrowings 2,869 1,158 148% 4,976 1,698 193%
Income before income taxes 17,270 24,317 -29% 88,968 56,671 57%
Income tax provision 5,136 7,397 -31% 24,096 18,489 30%
Net income 12,134 16,920 -28% 64,872 38,182 70%
- - - -
2,466 4,381 -44% 14,387 5,254 174%
Net income attributable to FXCM Inc. 9,668$ 12,539$ -23% 50,485$ 32,928$ 53%
76,374 75,103 2% 75,952 73,548 3%
$0.13 $0.17 -24% $0.66 $0.45 47%
Pro Forma fully exchanged, diluted weighted
average s hares outstanding
Net income attributable to non-controlling interest in
FXCM Holdings, LLC
Adjust ed Pro Forma net inc ome per full y
exchanged, fully diluted weighted average shares
Net income attributable to non-controlling interest in
Lucid Markets Trading Limited and Faros Trading
LLC
Referring broker fees
Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjust ed Pro Forma (Unaudi ted)
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Balance SheetAs of September 30, 2013 and December 31, 2012 (Condensed)
11* Under U.S. GAAP. Certain totals may not foot due to rounding. See accompanying notes to the condensed consolidated financial statements that will be filed with our 10-Q on or before November 8,2013.
(Unaudited)
September 30, Dec em ber 31,
(In Thousands ) 2013 2012 $ Change
Ass ets
Current assets
Cash and cash equivalents 421,945$ 272,332$ 149,613$
Cash and cash equivalents, held for customers 1,264,265 1,190,762 73,503
Other current assets 24,240 30,126 (5,886)
Total current assets 1,710,450 1,493,220 217,230
Office, communication and computer equipment, net 51,743 50,316 1,427
Goodwill and Intangible assets, net 389,095 383,446 5,649
Other assets 183,199 138,188 45,011
Total assets 2,334,487$ 2,065,170$ 269,317$
Liabilities and Equity
Current liabilities
Customer account liabil ities 1,264,265$ 1,190,762$ 73,503$
Credit agreement - 85,000 (85,000)
Note payable 15,300 22,867 (7,567)
Other current liabilities 129,142 87,798 41,344
Total current liabilities 1,408,707 1,386,427 22,280
Senior convertible notes 145,043 - 145,043
Other liabilities 143,029 103,828 39,201
Total liabilities 1,696,779 1,490,255 206,524
Commitm ents and Contingencies
Stockholders ' Equity
Total stockholders' equity FXCM Inc. 254,340 181,559 72,781
Non-controlling interest 383,368 393,356 (9,988)
Total stockholders' equity 637,708 574,915 62,793
Total liabilities and stockholders' equity 2,334,487$ 2,065,170$ 269,317$
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Strong Cash Generation
12
($ Millions)Depreciation & Amort. 6.5 9.3 20.1 36.8 12.0 12.5 12.8 37.3Equity-based Comp - 0.7 9.5 23.0 3.2 3.3 3.4 9.9
After-tax cash flow from operations of
$141M for first 9 months 2013 vs.$102M for full year 2012
FXCM Inc. Nine Months Ended September 30,2013($ Millions)
After-Tax Cash Flow from Operations $ 140.8
Less: Capital Expenditures 16.8$ 124.0
Other Sources (Uses):Issuance of Convertible Bond $ 166.5Option Exercises 21.9Investments ( 6.9)Dividends and member distributions (17.5)Common Stock Repurchases (16.3)
Convertible Bond Hedge, net (10.5)Repayment of Credit Facility (85.0)Repayment of Lucid Note (22.9)Other ( 3.6)Total Other Sources $ 25.7
Net Change in Cash $ 149.7
Net Cash Flow f rom Operating Activiti es
$79
$90$84
$102
$33
$62
$46
$141
$-
$20
$40
$60
$80
$100
$120
$140
$160
($ in Millions, Unaudited)
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Summary
Solid results in muted trading environment
Expense discipline
With over 422 million in cash and 155 million undrawn on credit facility,FXCM has the firepower to pursue meaningful acquisitions
Cash flow generation strong
13
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Appendix
1414
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Operating Metrics
15
(1) Net account additions represents new accounts funded less accounts closed by our customers.
(2) A tradable account represents an account with sufficient funds to place a trade in accordance with firm policies.
(3) An active account represents an account that has traded at least once in the previous 12 months.
(4) Daily average trades per active account represents the total da ily average trades per average active account in the period.
Three Months EndedSeptember30, 2013 June 30,2013 March 31,2013 December31, 2012 September30, 2012 June 30,2012 March 31,2012 December31, 2011 September30, 2011
(Dollars in thousands, except as noted)Net Account Additions (1) (2,010) 4,631 5,412 (12,177) (2,717) 4,401 2,104 23,287 181
Total Tradable Accounts (2) 188,988 190,998 195,629 190,217 202,394 205,111 196,710 194,606 171,319
Total Active Accounts (3) 182,146 182,225 173,265 170,930 171,274 174,218 171,296 163,094 156,053
Total Customer Trading Volume (dollarsin billions)
980 1,151 1,041 886 861 869 985 973 1,042
Trading Days in Period 66 65 63 64 65 65 65 65 66
Daily Average Trades 417,845 516,960 438,065 366,015 345,790 367,051 379,289 423,413 438,599
Daily Average Trades per ActiveAccount (4)
2.3 2.8 2.5 2.1 2.0 2.1 2.2 2.7 2.8
Retail Trading Revenue per MillionTraded
$89 $90 $88 $ 95 $ 99 $ 90 $ 94 $ 98 $93
Total Customer Equity (dollars inmillions)
$1,264.3 $1,171.5 $1,190.4 $ 1,190.8 $ 1,278.4 $ 1,254.7 $ 1,135.9 $ 1,047.0 $828.2
Customer Trading Volume by Region(dollars in billions)
-Asia 462 519 476 401 421 387 490 $ 459 $ 461
-EMEA 293 360 311 283 260 275 272 271 316
-United States 123 148 138 86 92 101 95 112 124
-Rest of World 101 124 116 116 89 106 128 131 141
Total 980 1,151 1,041 886 861 869 985 973 1,042
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Reconciliation of Adjusted Pro Forma Results toU.S. GAAP Quarter Ended September 30, 2013 (000sexcept per share amounts, unaudited)
16
* See footnotes following
16
As Adjusted As Adjusted
Reported Adjustments Pro Forma Reported Adjustments Pro Forma
Revenues
Retail trading revenue 86,974$ - 86,974$ 85,237$ - 85,237$
Institutional trading revenue 22,856 - 22,856 25,868 - 25,868
Trading revenue 109,830 - 109,830 111,105 - 111,105
Interest income 537 - 537 990 - 990
Brokerage interest expense (63) - (63) (66) - (66)
Net interest income 474 - 474 924 - 924
Other operating income 2,944 - 2,944 2,919 - 2,919
Total net revenues 113,248 - 113,248 114,948 - 114,948
Operating Expenses
Compensation and benefits 28,809 (5,615)(1)
23,194 24,156 (2,378)(5)
21,778
Allocation of net income to Lucid m embers for
services provided 2,996 (2,996)(2)
- - - -
Total compensation and benefits 31,805 (8,611) 23,194 24,156 (2,378) 21,778
Referring broker fees 20,709 - 20,709 18,708 - 18,708
Advertising a nd marketing 6,305 - 6,305 7,509 - 7,509
Communication and technology 10,111 - 10,111 9,600 - 9,600
Trading costs , prime brokerage and c lear ing fees 6,809 6,809 6,981 - 6,981
General and administrative 27,949 (15,000) (8) 12,949 13,681 (501) (6) 13,180
Depreciation and amortization 12,849 - 12,849 11,717 - 11,717
Total operating expenses 116,537 (23,611) 92,926 92,352 (2,879) 89,473
Total operating income (loss) (3,289) 23,611 20,322 22,596 2,879 25,475
Loss on equity method investments, net 183 - 183 - - -
Interest on borrowings 2,869 - 2,869 1,158 - 1,158
Income (loss) before income taxes (6,341) 23,611 17,270 21,438 2,879 24,317
Income tax provision 2,444 2,692 (3) 5,136 3,598 3,799 (3) 7,397
Net income (loss) (8,785) 20,919 12,134 17,840 (920) 16,920
Net income (loss) attributable to non-controlling
interest in FXCM Holdings, LLC (3,133) 3,133 (4) - 8,946 (8,946) (4) -
(530) 2,996(2)
2,466 4,381 - 4,381
Net incom e (los s) attributable to FXCM Inc. (5,122)$ 14,790$ 9,668$ 4,513$ 8,026$ 12,539$
34,469 76,374 (7) 26,913 75,103 (7)
(0.15)$ 0.13$ 0.17$ 0.17$
Diluted net income (loss) per share as reported and
adjusted pro forma net income per fully exchanged,
fully diluted weighted average shares outstanding
Three Months Ended September 30,
2013 2012
Net income (loss) attributable to non-controlling
interest in Lucid Markets Trading Limited and
Faros Trading LLC
Diluted weighted average shares outstanding as
reported and pro forma fully exchanged, fully diluted
weighted average shares outstanding
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Reconciliation of Adjusted Pro Forma Results to U.S.GAAP Quarter Ended September 30, 2013(Footnotes)
1717
(7)
Fully diluted shares ass uming all unitholders had fully exchanged their Holdings units for shares of Class A comm on stock of the Company.
(8) Represents an adjus tment to reflect a reserve establis hed relating to ongoing discus sions with the Financial Conduct Authority (the "FCA") in the United Kingdom
("UK") regarding pre August 2010 trade execution practices.
(6) Represents the elimination of certain acquisition-related costs and the elim ination of costs (including client reimbursements) as sociated with settling
his torical trade execution iss ues wi th the Financial Services Agency of Japan.
(5) Represents the elimination of equity-based compens ation ass ociated with the IPO, severance and equity-based compens ation in connection with the
renegotiation of certain employment contracts in the Company's institutional and retail businesses.
(1)Represents the elimination of equity-based com pensation ass ociated with the IPO and a charge incurred in connection with the termination of an employment
contract in the Company's retail business.
(3)Represents an adjus tment to reflect an effective corporate tax rate of approximately 29.7% and 30.4% for the three months ended September 30, 2013 and 2012,
respectively ass uming a full exchange of existing unitholders FXCM Holdings, LLC ("Holdings ") units for shares of Class A common stock of the Company and the
tax effect of any pro forma ad jus tments.
(4)Represents the elimination of the non-controlling interes t associa ted with the ownership by existing uni tholders of Holdings (excluding FXCM, Inc.), as if theunitholders had fully exchanged their Holdings units for shares of Class A common s tock of the Company.
(2)Represents the reclass ification of the portion of the 49.9% of Lucids earnings attributed to non-controlling interes t recorded as compens ation for U.S. GAAP
purposes to Net income attributable to non-controlling interest in Lucid Markets Trading Lim ited.
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Reconciliation of Adjusted Pro Forma Results toU.S. GAAP 9 Months Ended September 30, 2013(000s except per share amounts, unaudited)
18
* See footnotes following
18
As Adjusted As Adjusted
Reported Adjustments Pro Forma Reported Adjustments Pro Forma
Revenues
Retail trading revenue 282,296$ - 282,296$ 255,833$ - 255,833$
Institutional trading revenue 82,204 - 82,204 42,908 - 42,908
Trading revenue 364,500 - 364,500 298,741 - 298,741
Interest income 1,886 - 1,886 2,910 - 2,910
Brokerage interest expense (187) - (187) (235) - (235)
Net interest income 1,699 - 1,699 2,675 - 2,675
Other operating income 10,046 - 10,046 7,805 - 7,805
Total net revenues 376,245 - 376,245 309,221 - 309,221
Operating Expenses
Compensation and benefits 78,929 (9,736)(1)
69,193 81,175 (18,458)(5)
62,717
Allocation of net income to L ucid mem bers forservices provided 18,000 (18,000)
(2)- - - -
Total compensation and benefits 96,929 (27,736) 69,193 81,175 (18,458) 62,717
Referring broker fees 64,481 - 64,481 58,865 - 58,865
Advertising and mar keting 19,813 - 19,813 23,266 - 23,266
Communication and technology 28,231 - 28,231 26,591 - 26,591
Trading costs , p rime brokerage and c lear ing fees 23,708 - 23,708 10,187 - 10,187
General and administrative 53,843 (15,000)(8)
38,843 48,891 (4,426)(6)
44,465
Depreciation and amortization 37,304 37,304 24,761 - 24,761
Total operating expenses 324,309 (42,736) 281,573 273,736 (22,884) 250,852
Total operating income 51,936 42,736 94,672 35,485 22,884 58,369
Loss on equity method investments, net 728 - 728 - - -
Interest on borrowings 4,976 - 4,976 1,698 - 1,698
Income before income taxes 46,232 42,736 88,968 33,787 22,884 56,671
Income tax provision 16,793 7,303(3)
24,096 4,856 13,633(3)
18,489
Net income 29,439 35,433 64,872 28,931 9,251 38,182
21,190 (21,190)(4)
- 17,717 (17,717)(4)
-
(3,613) 18,000(2)
14,387 5,254 - 5,254
Net income attributable to FXCM Inc. 11,862$ 38,623$ 50,485$ 5,960$ 26,968$ 32,928$
32,009 75,952(7)
22,416 73,548(7)
0.37$ 0.66$ 0.27$ 0.45$
Nine Months Ended September 30,
Net income (loss) attributable to non-controlling interest
in Lucid Markets Trading Limited and Faros Trading
LLC
Net income attributable to non-controlling interest in
FXCM Holdings, LLC
20122013
Diluted weighted average shares outstanding as
reported and pro forma fully exchanged, fully diluted
weighted average shares outstanding
Diluted net income per share as reported and adjusted
pro forma net income per fully exchanged, fully diluted
weighted average shares outstanding
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Reconciliation of Adjusted Pro Forma Results to U.S.GAAP 9 Months Ended September 30, 2013(Footnotes)
1919
(5) Represents the elimination of equity-based com pensation associated with the IPO, severance and equity-based compens ation in connection with the
renegotiation of certain employment contracts in the Company's institutional and retail businesses.
(1)Represents the elimination of equity-based com pensation ass ociated with the IPO and a charge incurred in connection with the termination of an employment
contract in the Company's retail business.
(3)Represents an adjustment to reflect an effective corporate tax rate of approximately 27.1% and 32.6% for the nine months ended September 30, 2013 and
2012, respectively assuming a full exchange of existing un itholders Holdings units for shares of Clas s A common stock of the Company and the tax effect of any
pro forma adjustments.
(4)
Represents the elimination of the non-controlling in terest associated with the ownership by existing un itholders of Holdings (excluding FXCM, Inc.), as if theunitholders had fully exchanged their Holdings units for shares of Class A common s tock of the Company.
(2)Represents the reclass ification of the portion of the 49.9% of Lucids earnings attributed to non-controlling interes t recorded as com pensation for U.S. GAAP
purposes to Net income attributable to non-controlling interest in Lucid Markets Trading Lim ited.
(6) Represents the elimination of certain acquisition-related costs and the elim ination of costs (including client reimbursements) as sociated with settling
his torical trade execution issues with the Financial Services Agency of Japan.
(7)Fully diluted shares ass uming all unitholders had fully exchanged their Holdings units for shares of Class A comm on stock of the Company.
(8) Represents an adjustment to reflect a reserve establis hed relating to ongoing discus sions with the FCA in the UK regarding pre Augus t 2010 trade execution
practices.
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7/27/2019 FXCM Q3 2013 Earnings Presentation
20/21
2020
Reconciliation of EBITDA to U.S. GAAP Net Income 3and 9 Months Ended September 30, 2013 (000s exceptper share amounts, unaudited)
2013 2012 2013 2012 2013 2012 2013 2012
Revenues 113,248$ 114,948$ 113,248$ 114,948$ 376,245$ 309,221$ 376,245$ 309,221$
Net income (loss ) attributable to FXCM
Inc. 9,668$ 12,539$ (5,122)$ 4,513$ 50,485$ 32,928$ 11,862$ 5,960$Net income (los s) attributable to non-
controlling interes t in FXCM Holdings,
LLC - - (3,133) 8,946 - - 21,190 17,717
2,466 4,381 (530) 4,381 14,387 5,254 (3,613) 5,254
Provision for income taxes 5,136 7,397 2,444 3,598 24,096 18,489 16,793 4,856
Depreciation and amortization 12,849 11,717 12,849 11,717 37,304 24,761 37,304 24,761
Interest on borrowings 2,869 1,158 2,869 1,158 4,976 1,698 4,976 1,698
EBITDA 32,988$ 37,192$ 9,377$ 34,313$ 131,248$ 83,130$ 88,512$ 60,246$
Net income (los s) attributable to non-
controlling interest in Lucid Markets
Trading Limited and Faros Trading LLC
Three Months Ended Septem ber 30, Nine Months Ended September 30,
Ad jus ted Pro For ma Ad jus ted Pro For ma U.S. GAAPU.S. GAAP
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7/27/2019 FXCM Q3 2013 Earnings Presentation
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Shares Outstanding / Market Capitalization
2121
As of 9/30/13:
FXCM Inc. had 43,886,834 Class A shares outstanding
FXCM Inc. owns 53.5% of FXCM Holdings LLC
With non-FXCM Inc. FXCM Holdings Units exchangeable 1-1 into FXCM Class A shares, there are effectively82,177,455 shares outstanding
At $19.75 closing price on 9/30/13 would imply a market capitalization of $1.62 billion