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Investment Technology Group Reports First Quarter 2009 Results

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NEW YORK--(BUSINESS WIRE)--Apr. 30, 2009-- Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today announced that for the first quarter ended March 31, 2009, net income was $12.8 million, or $0.29 per diluted share, down from net income of $33.0 million and earnings of $0.75 per diluted share in the first quarter of 2008. ITG’s total revenue for the first quarter of 2009 was $155.7 million, versus $204.3 million for the first quarter of 2008. Pre-tax margins in the first quarter of 2009 were 15.1 percent, a decrease from the 28.9 percent realized in the first quarter of 2008. Included in this quarter’s operating results were pre-tax charges of $5.7 million, or approximately $0.10 per diluted share of earnings, related to severance costs, versus pre-tax charges of $1.2 million, or approximately $0.02 per diluted share of earnings in the first quarter of 2008.

“The first quarter was challenging with light trading volumes from our long-only institutional constituents who utilize our full range of product offerings, which impacted our average commission rate,” said Bob Gasser, ITG's Chief Executive Officer and President. “Despite these recent pressures, we remain confident that when markets recover and institutional fund managers experience net inflows of assets, ITG’s best-in-class desktop, algorithmic, crossing, and analytical products combined with our global reach should enable us to return to a more typical mix of business and enhance shareholder returns.”

ITG’s non-US revenues were $38.3 million in the first quarter of 2009, a decrease from revenues of $49.9 million in the first quarter of 2008. Non-US operations generated a $2.1 million loss in the first quarter of 2009, compared to $2.0 million of net income in the first quarter of 2008.

“The global recession’s impact on international share prices has affected our results due to ad valorem pricing conventions outside North America,” said Mr. Gasser. “However, we continue to invest in our international operations to gain share in these markets and generate up-side leverage in operating performance when the global economy recovers.”

Conference Call

ITG has scheduled a conference call today at 11:00 am ET to discuss first quarter results. Those wishing to listen to the call should dial 1-866-788-0543 and enter the pass code 51447492. 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 16987443. The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

Investment Technology Group, Inc., is a specialized agency brokerage and financial technology firm that partners with asset managers globally to provide innovative solutions spanning the investment continuum. A leader in electronic trading since launching POSIT in 1987, ITG’s integrated approach now includes a range of products from portfolio management and pre-trade analysis to trade execution and post-trade evaluation. Asset managers rely on ITG’s independence, experience, and agility to help mitigate risk, improve performance and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe and the Asia Pacific region. For more information on ITG, please visit www.itg.com.

In addition to historical information, this press release may contain "forward-looking" statements that reflect management’s expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors are noted throughout ITG’s 2008 Annual Report, on its Form 10-K, and on its Form 10-Qs and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, changes in commission pricing, evolving industry regulations, errors or malfunctions in our systems or technology, rapid changes in technology, cash flows into or redemptions from equity funds, effects of inflation, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, changes in tax policy or accounting rules, fluctuations in foreign exchange rates, adverse changes or volatility in interest rates, as well as general economic, business, credit and financial market conditions, internationally or nationally.

 

INVESTMENT TECHNOLOGY GROUP, INC.

Condensed Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

 
Three Months Ended
March 31,
2009   2008 (1)
Revenues:
Commissions $ 129,045 $ 176,227
Recurring 21,162 21,645
Other 5,460 6,406
Total revenues 155,667 204,278
 
Expenses:
Compensation and employee benefits 60,178 69,224
Transaction processing 22,916 24,349
Occupancy and equipment 14,838 13,100
Telecommunications and data processing services 13,970 12,750
Other general and administrative 19,055 23,589
Interest expense 1,212 2,213
Total expenses 132,169 145,225
Income before income tax expense 23,498 59,053
Income tax expense 10,660 26,065
Net income $ 12,838 $ 32,988
 
Earnings per share:
Basic $ 0.30 $ 0.76
Diluted $ 0.29 $ 0.75
 
Basic weighted average number of common shares outstanding 43,337 43,629
Diluted weighted average number of common shares outstanding 43,606 44,231
 
(1) Certain expenses previously included in other general and administrative were reclassified to compensation and employee benefits for comparability.
 

INVESTMENT TECHNOLOGY GROUP, INC.

Condensed Consolidated Statements of Financial Condition

(In thousands, except share amounts)

 
March 31,
2009
December 31,
2008
(unaudited)
Assets
Cash and cash equivalents $ 296,028 $ 352,960
Cash restricted or segregated under regulations and other 62,324 73,218
Deposits with clearing organizations 58,638 43,241
Securities owned, at fair value 5,297 6,399
Receivables from brokers, dealers and clearing organizations 565,416 328,528
Receivables from customers 921,132 300,158
Premises and equipment, net 44,822 48,321
Capitalized software, net 65,167 62,821
Goodwill 425,507 423,896
Other intangibles, net 30,169 31,094
Deferred taxes 3,925 2,591
Other assets 14,185 12,226
Total assets $ 2,492,610 $ 1,685,453
 
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses $ 170,684 $ 221,582
Short-term bank loans 24,900
Payables to brokers, dealers and clearing organizations 338,261 232,527
Payables to customers 1,058,862 287,515
Securities sold, not yet purchased, at fair value 92 2,479
Income taxes payable 24,540 25,646
Deferred taxes 15,926 8,924
Long term debt 82,600 94,500
Total liabilities 1,690,965 898,073
 
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; 51,608,738 and 51,582,306 shares issued at March 31, 2009 and December 31, 2008, respectively, and; 43,370,312 and 43,244,184 shares outstanding at March 31, 2009 and December 31, 2008, respectively 516 516
Additional paid-in capital 222,539 219,830
Retained earnings 779,157 766,319
Common stock held in treasury, at cost; 8,238,426 and 8,338,122 shares at March 31, 2009 and December 31, 2008, respectively (190,835 ) (193,206 )
Accumulated other comprehensive income (net of tax) (9,732 ) (6,079 )
Total stockholders’ equity 801,645 787,380
Total liabilities and stockholders’ equity $ 2,492,610 $ 1,685,453

Source: Investment Technology Group, Inc.

ITG:
Maureen Murphy, 212-444-6323

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