ITG Reports Second Quarter Results
ITG Reports Second Quarter Results
An improved institutional trading environment in May and June led to an increase of 21% in revenues, 82% in net income and 79% in diluted earnings per share compared to the first quarter of 2003. However, compared to last year's second quarter during which ITG achieved record U.S. trading volumes (and which preceded ITG's acquisition of Hoenig in September 2002), revenues, net income and diluted earnings per share decreased 11%, 43% and 40% respectively.
"While we are encouraged by the recent increase in trading volumes, we maintain a cautious outlook in the current environment as significant economic uncertainty remains," said Robert J. Russel, ITG President and Chief Executive Officer. "Our second quarter profit growth reflects improvement over first quarter performance in all domestic and international business units, and clearly illustrates the leverage built into our business model which can benefit us as the market recovers. In the meantime, we will continue to enhance our product offering to maintain strong market share, diversify our client base and manage our cost structure."
Compared to the first quarter of 2003, revenues per trading day were up in all three business lines. POSIT® increased by 32%, the Electronic Trading Desk by 11% and Client-Site Trading Products by 1%. Revenue per trading day compared to last year's second quarter declined 16% for POSIT and 35% for Client-Site Trading Products, while increasing 35% for the Electronic Trading Desk due to ITG's acquisition of Hoenig in September 2002.
Performance of ITG's international operations was significantly improved. Record revenues of $14.5 million represented a 41% increase over the $10.3 million for the prior year period. European revenues climbed to $6.2 million in the second quarter of 2003 versus $5.1 million in the second quarter of 2002. Second quarter revenues in Canada were a record $5.6 million compared to $3.7 million in the prior year period. Revenues in Australia were $1.5 million, unchanged from the prior year period while revenues in Asia (where ITG commenced trading in the second quarter of 2002) were $1.2 million.
Pre-tax losses from international operations were reduced by more than 50% to $1.2 million for the second quarter of 2003 ($0.03 per share) versus $2.7 million ($0.06 share) in the previous quarter. International pre-tax losses in the second quarter of 2002 were $2.3 million ($0.05 per share).
Excluding Hoenig, ITG's total U.S. trading volume was almost 5.0 billion shares (averaging 79.1 million shares per trading day) compared to 4.3 billion shares in the first quarter of 2003 (averaging 71.0 million shares per trading day) and 6.5 billion shares in the second quarter of 2002 (averaging 100.9 million shares per trading day). On a consolidated basis including both Hoenig and international operations, ITG's total trading volume was 10.2 billion shares for the second quarter of 2003 compared to 8.7 billion shares for the second quarter of 2002 and 8.2 billion shares in the first quarter of 2003.
For ITG overall, pre-tax margins were 23% compared to 17% in the first quarter of 2003 and 36% in second quarter 2002. In the U.S., ITG's pre-tax margins of 29% were up from the trailing quarter's level of 26% but down from 43% a year ago due to the reduction in trading activity. Reflecting operating leverage similar to that of ITG, Hoenig's pre-tax margins increased to 30% versus 12% in the first quarter of 2003.
For the six months ended June 27, 2003, revenues decreased 18% over the prior year period to $162.2 million, net income decreased 57% to $18 million and diluted earnings per share decreased 55% to $0.39.
ITG has scheduled a conference call today at 11:00 a.m. EDT to discuss second quarter results. Those wishing to listen to the call should dial (800) 314-7867 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 246504, 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 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, 2002 and other documents filed with the Securities and Exchange Commission and available on the company's web site.
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