Investment Technology Group Reports Third Quarter 2008 Results
PDF format NEW YORK--(BUSINESS WIRE)--Oct. 30, 2008--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the third quarter ended September 30, 2008, net income was $27.2 million, down seven percent from net income of $29.2 million in the third quarter of 2007. Earnings were $0.62 per diluted share, down five percent versus earnings of $0.65 per diluted share in the third quarter of last year. ITG's total revenue for the third quarter of 2008 was $188.3 million, one percent less than total revenue of $189.8 million for the third quarter of 2007. Pre-tax margins in the third quarter were 24.2 percent in 2008, down from 26.0 percent realized in 2007.
"ITG's diversified product suite drove solid results in the third quarter, despite the combination of seasonality and unprecedented volatility that permeated the market," said Bob Gasser, ITG's Chief Executive Officer and President. "In this type of environment, clients rely on our agency model and broad product suite to help them manage and mitigate risk. We are confident in our ability to grow the business as clients increasingly turn to us for neutrality, technology and leadership in best execution."
ITG's non-US revenues were $47.2 million in the third quarter of 2008, a two percent decline over revenues of $48.3 million in the third quarter of 2007. Non-US pre-tax income decreased to $3.0 million in the third quarter of 2008 from $5.8 million in the third quarter of 2007.
"While current market conditions have not been favorable in Europe and Asia, ITG remains optimistic about our long term prospects for growth," said Mr. Gasser. "ITG's non-US businesses were able to maintain nearly flat sequential revenues in a difficult global environment where many markets were down double digits from the previous year."
Year to Date Results
For the nine months ended September 30, 2008, revenues increased seven percent from the prior year period to $572.9 million, net income increased six percent to $85.9 million and diluted earnings per share increased eight percent to $1.95.
Conference Call
ITG has scheduled a conference call today at 11:00 a.m. ET to discuss third quarter results. Those wishing to listen to the call should dial 1-866-713-8307 and enter the pass code 64892603 at least 10 minutes prior to the start of the call to ensure connection. The conference call and webcast will also be accessible through ITG's web site at www.itg.com. For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-286-8010 and entering the pass code 35264997. The replay will be available starting approximately two hours after the completion of the conference call.
About ITG
Investment Technology Group, Inc. (ITG), is a specialized brokerage firm that partners with clients globally to provide innovative solutions spanning the entire trading process. A pioneer in electronic trading, ITG has a unique approach that combines pre-trade, order management, trade execution, and post-trade tools to provide continuous improvements in trading and cost efficiency. The firm is headquartered in New York and maintains offices in North America, Europe and the Asia Pacific regions. For additional information, visit www.itg.com.
In addition to historical information, this press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, that reflect management's expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors include the company's ability to achieve expected future levels of sales; the actions of both current and potential new competitors; rapid changes in technology; financial market volatility; general economic conditions in the United States and elsewhere; evolving industry regulation; cash flows into or redemption from equity funds; effects of inflation; customer trading patterns; and new products and services. These and other risks are described in greater detail in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and other documents filed with the Securities and Exchange Commission and available on the company's web site.
INVESTMENT TECHNOLOGY GROUP, INC.
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- -------- --------
Revenues:
Commissions $162,083 $161,700 $491,527 $454,451
Recurring 21,958 21,122 65,888 61,255
Other 4,237 7,013 15,498 18,708
--------- -------- -------- --------
Total revenues 188,278 189,835 572,913 534,414
--------- -------- -------- --------
Expenses:
Compensation and employee
benefits 64,640 63,754 194,038 184,381
Transaction processing 24,421 29,188 73,103 78,844
Occupancy and equipment 14,986 11,913 42,741 34,353
Telecommunications and data
processing services 14,026 10,937 39,214 29,971
Other general and
administrative 23,004 22,105 69,537 60,582
Interest expense 1,637 2,579 5,593 8,028
--------- -------- -------- --------
Total expenses 142,714 140,476 424,226 396,159
--------- -------- -------- --------
Income before income tax expense 45,564 49,359 148,687 138,255
Income tax expense 18,393 20,179 62,788 57,154
--------- -------- -------- --------
Net income $ 27,171 $ 29,180 $ 85,899 $ 81,101
========= ======== ======== ========
Earnings per share:
Basic $ 0.63 $ 0.66 $ 1.97 $ 1.84
========= ======== ======== ========
Diluted $ 0.62 $ 0.65 $ 1.95 $ 1.81
========= ======== ======== ========
Basic weighted average number of
common shares outstanding 43,463 44,100 43,598 44,171
Diluted weighted average number
of common shares outstanding 43,869 44,813 44,122 44,884
INVESTMENT TECHNOLOGY GROUP, INC.
Consolidated Statements of Financial Condition
(In thousands, except share amounts)
September 30, December 31,
2008 2007
------------- ------------
(unaudited)
Assets
Cash and cash equivalents $ 291,369 $ 183,757
Cash restricted or segregated under
regulations and other 73,446 71,300
Deposits with clearing organizations 41,703 43,284
Securities owned, at fair value 8,813 8,022
Receivables from brokers, dealers and
clearing organizations 1,487,293 551,059
Receivables from customers 955,973 676,522
Premises and equipment, net 46,557 45,886
Capitalized software, net 63,706 50,892
Goodwill 424,246 422,774
Other intangibles, net 32,035 31,318
Deferred taxes 2,595 2,282
Other assets 14,120 13,791
------------- ------------
Total assets $ 3,441,856 $ 2,100,887
--------------------------
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses $ 205,463 $ 186,463
Short-term bank loans 60,000 101,400
Payables to brokers, dealers and clearing
organizations 929,558 497,124
Payables to customers 1,342,923 457,105
Securities sold, not yet purchased, at
fair value 584 859
Income taxes payable 25,240 18,320
Deferred taxes 2,735 2,821
Long term debt 104,000 132,500
------------- ------------
Total liabilities 2,670,503 1,396,592
------------- ------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value;
1,000,000 shares authorized; no shares
issued or outstanding -- --
Common stock, $0.01 par value; 100,000,000
shares authorized; 51,582,306 and
51,503,221 shares issued at September 30,
2008 and December 31, 2007, respectively,
and; 43,201,345 and 43,462,885 shares
outstanding at September 30, 2008 and
December 31, 2007, respectively 516 515
Additional paid-in capital 217,664 210,071
Retained earnings 737,576 651,677
Common stock held in treasury, at cost;
8,380,961 and 8,040,336 shares at
September 30, 2008 and December 31, 2007,
respectively (194,188) (177,928)
Accumulated other comprehensive income
(net of tax) 9,785 19,960
------------- ------------
Total stockholders' equity 771,353 704,295
------------- ------------
Total liabilities and stockholders' equity $ 3,441,856 $ 2,100,887
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CONTACT:
Investor and Media Relations:
Investment Technology Group, Inc.
Alicia Curran, 212-444-6130
SOURCE: Investment Technology Group, Inc.