JERSEY CITY, N.J., April 21 /PRNewswire-FirstCall/ -- Knight
Capital Group, Inc. (Nasdaq: NITE) today reported consolidated
earnings of $27.8 million, or
$0.30 per diluted share. The company
reported earnings from continuing operations of $28.1 million, or $0.30 per diluted share, and a loss from
discontinued operations, net of tax, of $0.3
million.
For the first quarter of 2009, the company reported consolidated
earnings of $9.4 million, or
$0.10 per diluted share. The company
reported earnings from continuing operations of $29.9 million, or $0.33 per diluted share, and a loss from
discontinued operations, net of tax, of $20.5 million, or a $0.23 loss per diluted share.
Revenues from continuing operations for the first quarter of
2010 were $284.2 million, compared to
$245.4 million for the first quarter
of 2009.
"Knight recorded solid results in the first quarter of 2010
despite unfavorable market conditions," said Thomas M. Joyce, Chairman and Chief Executive
Officer, Knight Capital Group. "Consolidated revenues increased 16
percent, compared to the first quarter of 2009, reflecting a rise
in contributions from both the Equities and FICC segments. The
gains defied a period of subdued activity among institutional and
retail investors caused by recent economic and political
uncertainty. During the quarter, Knight continued to invest in new
initiatives to expand the offering, increase scale and maximize
efficiencies. In addition, Knight completed a $375 million offering of convertible notes to
repay short-term bank debt, fund new initiatives and enhance the
capital structure."
"Continuing operations" includes the company's Equities, FICC
and Corporate operating segments. Equities includes all global
equities market-making and institutional sales and trading, such as
Knight Direct and Knight Link. FICC includes all global trade
execution services in fixed income, foreign exchange and
commodities, such as fixed income sales, trading and research,
Knight BondPoint and Hotspot FX. Corporate includes strategic
investments primarily in financial services-related ventures,
corporate overhead expenses and all other expenses that are not
attributable to the Equities and FICC segments. Amounts reported as
"discontinued operations" primarily include the company's Asset
Management segment, which, on March 31,
2009, closed the sale of substantially all of Deephaven's
assets to affiliates of Stark & Roth, Inc. As of that
date, Deephaven was replaced as the investment adviser for the
Deephaven funds and the company exited from the Asset Management
business.
|
Q1 2010
|
|
Q1 2009
|
|
|
|
|
|
|
Revenues ($ thousands)
|
284,239
|
|
245,354
|
|
Income from continuing operations, net of tax ($
thousands)
|
28,118
|
|
29,881
|
|
Loss from discontinued operations, net of tax ($
thousands)
|
(306)
|
|
(20,514)
|
|
Net income ($ thousands)
|
27,812
|
|
9,367
|
|
Diluted EPS from continuing operations
($)
|
0.30
|
|
0.33
|
|
Diluted EPS from discontinued operations
($)
|
(0.00)
|
|
(0.23)
|
|
Average daily U.S. equity dollar value traded ($
billions)
|
26.6
|
|
19.9
|
|
Average daily U.S. equity trades
(thousands)
|
3,696.3
|
|
3,842.3
|
|
Nasdaq and Listed equity shares traded
(billions)
|
71.7
|
|
79.3
|
|
OTC Bulletin Board and Pink Sheet shares traded
(billions)
|
553.3
|
|
259.2
|
|
Average revenue capture per U.S. equity dollar
value traded (bps)
|
1.1
|
|
1.5
|
|
Average daily Knight Direct equity shares
(millions)
|
111.2
|
|
52.3
|
|
Average daily Hotspot FX notional dollar value
traded ($ billions)
|
32.6
|
|
17.0
|
|
|
|
|
|
Equities
During the first quarter of 2010, Equities generated total
revenues of $219.4 million, compared
to $198.2 million in the first
quarter of 2009. In the first quarter of 2010, Equities reported
pre-tax income of $56.6 million,
compared to pre-tax income of $59.0
million in the first quarter of 2009. Equities had pre-tax
margins of 26% in the first quarter of 2010, compared to pre-tax
margins of 30% in the first quarter of 2009.
"In Equities, during the first quarter, Knight grew revenues
amid a 20 percent decline in broad U.S. equity market volumes
year-over-year and a decrease in volatility with the VIX dipping
below 17 during intraday trading in mid-March," said Mr. Joyce.
"During the first quarter, Knight increased industry-leading market
share among U.S. broker-dealers in the face of heightened
competition and electronic trading products Knight Link, Knight
Direct and Knight Match grew trade volumes. We also experienced a
modest increase in market share among U.S. institutions and
continued to add clients in Europe
and the Asia-Pacific region. In
aggregate, Knight increased average daily volumes from the first
quarter 2009 and maintained the number one AutEx rankings in
Listed, NASDAQ, Bulletin Boards and ETFs among securities firms.
Algorithmic principal trading models performed well despite the low
volatility."
FICC
During the first quarter of 2010, FICC generated total revenues
of $67.8 million, compared to
$52.0 million in the first quarter of
2009. In the first quarter of 2010, FICC reported pre-tax income of
$8.1 million, compared to pre-tax
income of $10.2 million in the first
quarter of 2009. FICC had pre-tax margins of 12% in the first
quarter of 2010, compared to pre-tax margins of 20% in the first
quarter of 2009.
"In FICC, during the first quarter, Knight continued the rapid
expansion of fixed income and foreign exchange," said Mr. Joyce.
"Knight's fixed income business grew revenues even as credit
spreads tightened, offsetting a rise in broad market volumes of
Corporate bonds. The performance is attributable to the experienced
team, product coverage and in-depth research. The pending
acquisition of Urban Financial will create an integrated
origination-securitization-trading model for Ginnie Mae HMBS, a
reverse-mortgage MBS guaranteed by the U.S. government. During the
quarter, FICC pre-tax margins were impacted by narrowing credit
spreads as well as expenses from hiring and retention activities.
In foreign exchange, Hotspot FX turned in a record quarter in terms
of average daily notional value traded, revenues and pre-tax income
as a result of market conditions and continued gains in market
share."
Corporate
In the first quarter of 2010, the Corporate segment reported a
pre-tax loss of $18.7 million,
compared to a pre-tax loss of $18.1
million in the first quarter of 2009.
The company's corporate investment in funds formerly managed by
Deephaven recognized a pre-tax gain of $0.3
million during the first quarter of 2010, compared to a
pre-tax loss of $3.9 million during
the first quarter of 2009.
Headcount from continuing operations at March 31, 2010 was 1,150 full-time employees, as
compared to 966 full-time employees at March
31, 2009, resulting from our international expansion and
expanded product offerings.
"During the first quarter of 2010, Knight continued to perform
well due to diversification across clients, products and services,
and asset classes," said Mr. Joyce. "As a firm, we've demonstrated
an ability to compete in any environment against an array of
competitors. During the quarter, Knight also made further progress
in important new initiatives including self clearing and options
market making."
As of March 31, 2010, the company
had $513.2 million in cash and cash
equivalents. The company had $1.25
billion in stockholders' equity as of March 31, 2010, equivalent to a book value of
$13.41 per diluted share. The company
had a book value of $11.50 per
diluted share as of March 31,
2009.
In March 2010, the company issued
$375 million in Cash Convertible
Senior Subordinated Notes, which mature in five years and carry a
3.5% coupon.
During the first quarter of 2010, the company repurchased
502,000 shares for approximately $7.7
million under the company's $1.0
billion stock repurchase program. To date, the company has
repurchased 68.8 million shares for $778.1
million. The company has approximately $221.9 million of availability to repurchase
shares under the program. The company cautions that there are no
assurances that any further repurchases may actually occur.
Discontinued operations
In the first quarter of 2010, the company reported a loss from
discontinued operations of $0.3
million, net of tax, compared to a loss of $20.5 million, net of tax in the first quarter of
2009. These losses primarily relate to the wind-down of the Asset
Management segment which was designated a discontinued operation
for financial reporting purposes as of the close of business on
March 31, 2009.
Copies of this earnings release and other company information
can be obtained on Knight's website, http://www.knight.com. The
company will conduct its first quarter 2010 earnings conference
call for analysts, investors and the media at 9:00 a.m. Eastern Time (ET) today, April 21, 2010. To access Knight's earnings
conference call, please dial 800-967-7138 for domestic callers
or 719-457-1529 for international callers. When prompted,
please enter passcode 6426154. A replay of the first quarter
2010 earnings conference call will be available by dialing
888-203-1112 for domestic callers or 719-457-0820 for
international callers. When prompted, please enter passcode
6426154. The conference call will be webcast live at 9:00 a.m. ET for all investors and interested
parties on Knight's website. In addition, the company will release
its monthly volume statistics for March
2010 on its website at
http://www.knight.com/ourfirm/volumestats.asp before the start of
trading today.
About Knight
Knight Capital Group, Inc. (Nasdaq: NITE) is a global financial
services firm that provides market access and trade execution
services across multiple asset classes to buy- and sell-side firms.
Knight's hybrid market model features complementary electronic and
voice trade execution services in global equities and fixed income
as well as foreign exchange, futures and options. The firm is the
leading source of liquidity in U.S. equities by share volume.
Knight also offers capital markets services to corporate issuers.
Knight is headquartered in Jersey City,
NJ with a growing global presence across North America, Europe and the Asia-Pacific region. For more information,
please go to www.knight.com.
Certain statements contained herein may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are not historical facts and are based on current
expectations, estimates and projections about the Company's
industry, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, readers are
cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict
including, without limitation, risks associated with changes in
market structure, legislative or regulatory rule changes, the
costs, integration, performance and operation of businesses
recently acquired or developed organically, or that may be acquired
in the future, by the Company, and risks related to the costs and
expenses associated with the Company's exit from the Asset
Management business. Since such statements involve risks and
uncertainties, the actual results and performance of the Company
may turn out to be materially different from the results expressed
or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Unless otherwise required by law,
the Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the result of
any revisions to the forward-looking statements made herein.
Readers should carefully review the risks and uncertainties
disclosed in the Company's reports with the U.S. Securities and
Exchange Commission (SEC), including, without limitation, those
detailed under the headings "Certain Factors Affecting Results of
Operations" and "Risk Factors" in the Company's Annual Report on
Form 10-K for the year-ended December 31,
2009, and in other reports or documents the Company files
with, or furnishes to, the SEC from time to time. This information
should also be read in conjunction with the Company's Consolidated
Financial Statements and the Notes thereto contained in the
Company's Annual Report on Form 10-K for the year-ended
December 31, 2009, and in other
reports or documents the Company files with, or furnishes to, the
SEC from time to time.
KNIGHT CAPITAL GROUP, INC.
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the three months
ended
March
31,
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(In thousands, except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Commissions and fees
|
$
|
159,513
|
|
$
|
150,710
|
|
|
Trading revenue
|
|
124,964
|
|
|
99,460
|
|
|
Interest, net
|
|
624
|
|
|
(597)
|
|
|
Investment loss and other, net
|
|
(862)
|
|
|
(4,219)
|
|
|
|
Total revenues
|
|
284,239
|
|
|
245,354
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
138,350
|
|
|
109,187
|
|
|
Execution and clearance fees
|
|
42,462
|
|
|
29,091
|
|
|
Communications and data processing
|
|
16,058
|
|
|
13,788
|
|
|
Payments for order flow
|
|
11,025
|
|
|
17,027
|
|
|
Depreciation and amortization
|
|
9,235
|
|
|
8,187
|
|
|
Occupancy and equipment rentals
|
|
6,341
|
|
|
5,361
|
|
|
Professional fees
|
|
4,753
|
|
|
2,902
|
|
|
Business development
|
|
4,228
|
|
|
4,346
|
|
|
Interest expense
|
|
2,474
|
|
|
981
|
|
|
Writedown of assets and lease loss
accrual
|
|
-
|
|
|
699
|
|
|
Other
|
|
3,355
|
|
|
2,756
|
|
|
|
Total expenses
|
|
238,281
|
|
|
194,325
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income
taxes
|
|
45,958
|
|
|
51,029
|
|
Income tax expense
|
|
17,840
|
|
|
21,148
|
|
Income from continuing operations, net of
tax
|
|
28,118
|
|
|
29,881
|
|
Loss from discontinued operations, net of
tax
|
|
(306)
|
|
|
(20,514)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
27,812
|
|
$
|
9,367
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from continuing
operations
|
$
|
0.31
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing
operations
|
$
|
0.30
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from discontinued
operations
|
$
|
(0.00)
|
|
$
|
(0.24)
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from discontinued
operations
|
$
|
(0.00)
|
|
$
|
(0.23)
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
0.31
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
$
|
0.30
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation of basic earnings per
share
|
|
89,463
|
|
|
86,911
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation of diluted earnings per
share
|
|
93,478
|
|
|
91,309
|
|
|
|
|
|
|
|
|
|
KNIGHT CAPITAL GROUP, INC.
|
|
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
December 31,
2009
|
|
|
|
|
|
(In thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
513,161
|
|
$
|
427,106
|
|
|
Financial instruments owned, at fair
value
|
|
1,052,858
|
|
|
926,589
|
|
|
Securities borrowed
|
|
943,800
|
|
|
394,417
|
|
|
Receivable from brokers and dealers
|
|
491,962
|
|
|
500,143
|
|
|
Fixed assets and leasehold improvements, at cost,
less accumulated depreciation and amortization
|
|
101,539
|
|
|
98,696
|
|
|
Investments
|
|
78,049
|
|
|
110,120
|
|
|
Goodwill
|
|
266,530
|
|
|
265,530
|
|
|
Intangible assets, less accumulated
amortization
|
|
76,168
|
|
|
77,812
|
|
|
Other assets
|
|
195,002
|
|
|
213,611
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
3,719,069
|
|
$
|
3,014,024
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & EQUITY
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Financial instruments sold, not yet purchased, at
fair value
|
$
|
965,695
|
|
$
|
639,259
|
|
|
Securities loaned
|
|
690,208
|
|
|
550,226
|
|
|
Payable to brokers and dealers
|
|
288,987
|
|
|
155,148
|
|
|
Accrued compensation expense
|
|
74,599
|
|
|
205,282
|
|
|
Accrued expenses and other liabilities
|
|
143,735
|
|
|
109,987
|
|
|
Credit facility
|
|
-
|
|
|
140,000
|
|
|
Long-term debt
|
|
301,736
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
2,464,960
|
|
|
1,799,902
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Knight Capital Group, Inc. stockholders'
equity
|
|
|
|
|
|
|
|
Class A common stock
|
|
1,613
|
|
|
1,586
|
|
|
Additional paid-in capital
|
|
779,115
|
|
|
746,778
|
|
|
Retained earnings
|
|
1,256,924
|
|
|
1,229,112
|
|
|
Treasury stock, at cost
|
|
(779,825)
|
|
|
(763,974)
|
|
|
Cumulative translation adjustment
|
|
(4,338)
|
|
|
-
|
|
Total Knight Capital Group, Inc. stockholders'
equity
|
|
1,253,489
|
|
|
1,213,502
|
|
Noncontrolling interests
|
|
620
|
|
|
620
|
|
Total equity
|
|
1,254,109
|
|
|
1,214,122
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
3,719,069
|
|
$
|
3,014,024
|
|
|
|
|
|
|
|
|
|
KNIGHT CAPITAL GROUP, INC.
|
|
|
|
|
|
|
PRE-TAX EARNINGS BY BUSINESS
SEGMENT*
|
|
Amounts in millions
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
For the three months ended
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
Equities
|
|
|
|
|
|
|
Revenues
|
$
|
219.4
|
|
$
|
198.2
|
|
Expenses
|
|
162.8
|
|
|
139.2
|
|
Pre-tax earnings
|
|
56.6
|
|
|
59.0
|
|
|
|
|
|
|
|
|
FICC
|
|
|
|
|
|
|
Revenues
|
|
67.8
|
|
|
52.0
|
|
Expenses
|
|
59.7
|
|
|
41.9
|
|
Pre-tax earnings
|
|
8.1
|
|
|
10.2
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
Revenues
|
|
(2.9)
|
|
|
(4.9)
|
|
Expenses
|
|
15.8
|
|
|
13.2
|
|
Pre-tax earnings
|
|
(18.7)
|
|
|
(18.1)
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
Revenues
|
|
284.2
|
|
|
245.4
|
|
Expenses
|
|
238.3
|
|
|
194.3
|
|
Pre-tax earnings
|
$
|
46.0
|
|
$
|
51.0
|
|
|
|
|
|
|
|
|
* Totals may not add due to rounding.
|
|
|
|
|
|
|
|
SOURCE Knight Capital Group, Inc.