ITG EPS Increases 18% in the Third Quarter
ITG EPS Increases 18% in the Third Quarter
“Despite the double-digit percentage drops reported in other trading businesses, ITG grew its volumes, revenues and profitability,” said Robert Russel, ITG's Chief Executive Officer. “While the comparisons are to the low-volume period last year that was most affected by September 11th, we achieved strong results relative to the industry.”
“The diversification strategy we have put in place over the past few years has been the key to helping us through these difficult markets. Our growing international operations and Client-Site Trading Products have played a major role this year in helping to offset the sharp downturn in the traditional U.S. trading markets. As time progresses, we expect to see an increased contribution from the diversification of our client base into the hedge fund sector through Hoenig, our recently acquired subsidiary.”
Average daily revenues increased in our Client-Site Trading Products by 31% and in our Electronic Trading Desk by 25%. Excluding the Hoenig revenues discussed below, ITG's Electronic Trading Desk daily revenues increased 11% over last year's third quarter. POSIT® revenues per day declined 29%. Combined third quarter 2002 volume through ITG's Volume Weighted Average Price (VWAP) and Short-Term Price Improvement (SPI) SmartServers(TM) was 7.3 million shares per day, a 22% increase over last year's third quarter volume of 6.0 million shares per day. There were 4 fewer trading days in last year's third quarter reflecting the September 11th related stock market closings.
In the U.S., ITG's trading volume for the third quarter of 2002 was 6.3 billion shares (averaging 100.0 million shares per trading day) compared to 6.5 billion shares in the second quarter of 2002 (averaging 100.9 million shares per trading day) and 5.4 billion shares in the third quarter of 2001 (averaging 91.4 million shares per trading day). On a consolidated basis including international operations, third quarter 2002 trading volume was approximately 8.8 billion shares compared to 7.6 billion shares in third quarter 2001.
Third quarter results include only one month's contribution from the recently acquired Hoenig operations, including $3.3 million in revenues ($2.8 million within the U.S.) which are classified under Electronic Trading Desk revenues and $367,000 of pre-tax earnings.
For ITG overall, pre-tax margins were 34.1% compared to 31.2% in third quarter 2001. In the US, ITG's pre-tax margins increased to 41.4% from 35.8% a year ago, primarily due to economies in transaction processing costs and lower general and administrative expenses.
International revenues increased 16% to $10.8 million compared to $9.3 million in the third quarter of 2001.
ITG's revenues in Canada increased 82% to $4.6 million compared to the third quarter of 2001 and increased 25% compared to second quarter 2002. ITG Canada, which started operations in October 2000, gained share in a difficult market this year and achieved profitability in the third quarter.
ITG Europe's revenues were $4.5 million compared with $5.6 million in last year's third quarter. The decline reflects weaker trading conditions in Europe and the spike in revenue ITG Europe reported from transition business in last year's third quarter.
ITG's revenues in Australia increased by 6% to $1.3 million compared with the third quarter of 2001, while revenues from our start-up Asian operations were $400,000, of which $300,000 related to Hoenig.
For the nine months ended September 27, 2002, revenues increased 6% over the prior year period to $294 million, net income increased 10% to $61.7 million and diluted earnings per share increased 8% to $1.25. Excluding the one-time gain of $1.9 million ($0.04 per share) related to the sale of shares in the London Stock Exchange in last year's second quarter, for the first nine months of 2002, ITG's net income increased 14% and earnings per share grew 12%.
Given the continued low level of institutional trading activity in U.S. and overseas markets, ITG expects it can generate earnings per share in 2002 approximating $1.68-$1.73.
ITG has scheduled a conference call today at 10:30 a.m. EDT to discuss third quarter results and the outlook for 2002. Those wishing to listen to the call should dial (877) 888-4034 at least 10 minutes prior to the start of the call to ensure connection. For those unable to listen to the live broadcast of the call, a week-long replay will be available by dialing 888-203-1112 and entering the pass code 598802, and a two week-long replay will be available on ITG's website at http://www.itginc.com starting approximately 2 hours after the completion of the call.
ITG is headquartered in New York with offices in Boston, Los Angeles, Dublin, Hong Kong, London, Melbourne, Sydney, Tel Aviv and Toronto. As a leading provider of technology-based equity-trading services and transaction research to institutional investors and brokers, ITG services help clients to access liquidity, execute trades more efficiently, and make better trading decisions. ITG generates superior trading results for its clients through three lines of business. POSIT®, the world's largest equity matching system, allows clients to trade confidentially. The Electronic Trading Desk is recognized as one of the leading program trading operations in the U.S. ITG's leading-edge Client Site Trading Products allow users to implement their own trading strategies by providing direct electronic access to most sources of market liquidity. For additional information, visit http://www.itginc.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, internationally or nationally; 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 filings with the Securities and Exchange Commission including those on forms 10-K and 10-Q.
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