GAIN Capital Reports 2012 Fourth Quarter & Full Year Results
"In 2012, we made significant progress in our diversification strategy through both organic initiatives and targeted acquisitions," said
"In
"These initiatives and acquisitions have positioned GAIN to capitalize on improved market conditions in 2013. While remaining low by historical levels, FX volatility rose the first two months of the year, and we are seeing a sequential growth across our business lines. As we move through 2013, our focus is to offer market-leading technology and service in our retail OTC business, scale up our institutional and futures offering and seek out additional acquisition opportunities to further scale our business," Mr. Stevens concluded.
Retail business
For the full year 2012, GAIN's retail OTC business generated revenue of
"The full year 2012 saw volatility measures drop to multi-year lows, with short upticks of volatility interrupting an overall downward trend. During the year, we took measures to grow our retail business in terms of products, geographic footprint and client assets, while cutting
For the fourth quarter, GAIN reported retail trading revenue of
Institutional and futures businesses
For the full year 2012, GAIN's institutional business generated revenue of
"This was a landmark year for our GTX institutional business, which rapidly gained traction among key institutional customers, including banks, hedge funds and high frequency traders, even as many of our competitors saw declining volumes," said
In the fourth quarter, the institutional business reported revenue of
OEC, GAIN's exchange-traded futures business which was acquired in
"OEC is already making a significant contribution to GAIN's overall revenue, highlighting the potential of the futures market," said
Full Year Metrics
(Comparisons below are referenced to 2011)
- Net revenue of
$151.4 million , compared to$181.5 million - Net income of
$2.6 million , compared to$15.7 million - Adjusted EBITDA* of
$11.1 million , compared to$36.6 million - Adjusted net income* of
$5.5 million , compared to$21.7 million - Diluted EPS of
$0.07 , compared to$0.40 - Adjusted diluted EPS* of
$0.14 , compared to$0.56 - Total retail trading volume of
$1.3 trillion , compared to$1.6 trillion - Total institutional trading volume of
$2.0 trillion , compared to$853.9 billion - Total retail client assets of
$446.3 million , compared with$310.4 million .
(*See below for reconciliation of non-GAAP financial measures)
Fourth Quarter Metrics
(Comparisons below are referenced to 4Q11)
- Net revenue of
$32.4 million , compared to$31.6 million - Net (loss) of
$(3.8) million , compared to$(3.3) million - Adjusted EBITDA* of
$(5.0) million , compared to$(3.1) million - Adjusted net (loss)* of
$(3.3) million , compared to$(1.6) million - Diluted EPS of
$(0.11) , compared to$(0.10) - Adjusted diluted EPS* of
$(0.09) , compared to$(0.05) - Total retail trading volume of
$298.8 billion , compared to$366.4 billion - Total institutional trading volume of
$538.4 billion , compared to$386.4 billion - Daily average revenue trades of approximately 13,000 in our futures business
(*See below for reconciliation of non-GAAP financial measures)
Conference Call
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About
GAIN's businesses include FOREX.com, which provides retail traders around the world access to a variety of global OTC financial markets, including forex, precious metals and CFDs on commodities and indices; GTX, a fully independent FX ECN for hedge funds and institutions; OEC, an innovative online futures broker; and GAIN Securities, Inc. (member FINRA/
GAIN Capital is headquartered in Bedminster, New Jersey, with a global presence across
Consolidated Statements of Operations |
|||||||
In millions, except per share data |
|||||||
(unaudited)
|
|||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||
2012 |
2011 |
2012 |
2011 |
||||
REVENUE: |
|||||||
Trading revenue |
$ 22.9 |
$ 29.8 |
$ 127.5 |
$ 175.9 |
|||
Commission revenue |
7.8 |
1.4 |
21.4 |
4.6 |
|||
Other revenue |
1.6 |
0.4 |
2.3 |
1.8 |
|||
Total non-interest revenue |
32.3 |
31.6 |
151.2 |
182.3 |
|||
Interest revenue |
0.2 |
0.3 |
0.6 |
0.6 |
|||
Interest expense |
(0.1) |
(0.3) |
(0.4) |
(1.4) |
|||
Total net interest revenue / (expense) |
0.1 |
- |
0.2 |
(0.8) |
|||
Net revenue |
32.4 |
31.6 |
151.4 |
181.5 |
|||
EXPENSES: |
|||||||
Employee compensation and benefits |
12.0 |
11.5 |
47.5 |
46.4 |
|||
Selling and marketing |
6.9 |
8.2 |
27.0 |
36.2 |
|||
Trading expenses and commissions |
11.2 |
7.5 |
38.0 |
33.0 |
|||
General and administrative |
5.1 |
5.5 |
20.1 |
21.8 |
|||
Depreciation and amortization |
1.7 |
1.0 |
4.9 |
3.9 |
|||
Purchased intangible amortization |
0.7 |
2.5 |
4.1 |
8.9 |
|||
Communications and technology |
2.1 |
2.0 |
7.7 |
7.1 |
|||
Bad debt provision |
0.1 |
0.1 |
0.4 |
0.9 |
|||
Restructuring (1) |
- |
- |
0.6 |
- |
|||
Total |
39.8 |
38.3 |
150.3 |
158.2 |
|||
Income / (loss) before tax expense |
(7.4) |
(6.7) |
1.1 |
23.3 |
|||
Income tax expense / (benefit) |
(3.6) |
(3.4) |
(1.5) |
7.6 |
|||
Net income / (loss) |
$ (3.8) |
$ (3.3) |
$ 2.6 |
$ 15.7 |
|||
Earnings / (loss) per common share: |
|||||||
Basic |
$ (0.11) |
$ (0.10) |
$ 0.08 |
$ 0.46 |
|||
Diluted |
$ (0.11) |
$ (0.10) |
$ 0.07 |
$ 0.40 |
|||
Weighted average common shares outstanding used in computing earnings per common share: |
|||||||
Basic |
35,081,311 |
34,205,991 |
34,940,800 |
34,286,840 |
|||
Diluted |
35,081,311 |
34,205,991 |
37,880,208 |
38,981,792 |
(1) Non-recurring expenses relating to cost-savings effected in 2Q 2012.
Consolidated Balance Sheet |
|||
In millions, except share data |
|||
(unaudited) |
|||
As of December 31, |
|||
2012 |
2011(1) |
||
ASSETS: |
|||
Cash and cash equivalents |
$ 36.8 |
$ 60.3 |
|
Cash and securities held for customers |
446.3 |
310.4 |
|
Short term investments |
1.4 |
0.1 |
|
Receivables from banks and brokers |
89.9 |
85.4 |
|
Property and equipment - net of accumulated depreciation |
11.0 |
7.5 |
|
Prepaid assets |
7.7 |
9.9 |
|
Goodwill |
9.0 |
3.1 |
|
Intangible assets, net |
9.9 |
10.8 |
|
Other assets |
17.9 |
18.1 |
|
Total assets |
$ 629.9 |
$ 505.6 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|||
Payables to customers, brokers, dealers, FCMs and other regulated entities |
$ 446.3 |
$ 310.4 |
|
Accrued compensation and benefits |
6.1 |
4.9 |
|
Accrued expenses and other liabilities |
12.5 |
14.9 |
|
Income tax payable |
1.3 |
2.6 |
|
Notes payable |
- |
7.9 |
|
Total liabilities |
466.2 |
340.7 |
|
Shareholders' Equity |
163.7 |
164.9 |
|
Total liabilities and shareholders' equity |
$ 629.9 |
$ 505.6 |
(1) Previously the Company presented all of its cash and cash equivalents in "Cash and cash equivalents" on the Consolidated Balance Sheet. However, in an effort to improve clarity of presentation and reflect the separation between the cash on hand which correlates to amounts held on behalf of customers and free cash, the Company has separated all cash and cash equivalents into "Cash and cash equivalents" and "Cash and securities held for customers".
(*) Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS
Adjusted net income is a non-GAAP financial measure and represents our net income excluding the after-tax impact of amortization of purchased intangibles. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted net income assists investors in evaluating our operating performance. However, because adjusted net income is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.
Reconciliation of GAAP Net Income to Adjusted Net Income |
||||||||
In millions except per share data |
||||||||
(unaudited) |
||||||||
Three Months Ended |
Year Ended December 31, |
|||||||
2012 |
2011 |
2012 |
2011 |
|||||
Net (loss) / income applicable to GAIN Capital Holdings, Inc. |
$ (3.8) |
$ (3.3) |
$ 2.6 |
$ 15.7 |
||||
Add back of purchased intangible amortization, net of tax |
0.5 |
1.7 |
2.9 |
6.0 |
||||
Adjusted net (loss) / income |
$ (3.3) |
$ (1.6) |
$ 5.5 |
$ 21.7 |
||||
Adjusted (loss) / earnings per common share: |
||||||||
Basic |
$ (0.09) |
$ (0.05) |
$ 0.16 |
$ 0.63 |
||||
Diluted |
$ (0.09) |
$ (0.05) |
$ 0.14 |
$ 0.56 |
Reconciliation of GAAP Net Income to Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation, amortization and non-recurring expenses. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted EBITDA assists investors in evaluating our operating performance. However, because adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.
Adjusted EBITDA Margin is Adjusted EBITDA over revenue excluding interest on our note payable.
Reconciliation of GAAP Net Income to EBITDA and EBITDA Margin Reconciliation |
||||||||
In millions |
||||||||
(unaudited) |
||||||||
Three Months Ended |
Year Ended December 31, |
|||||||
2012 |
2011 |
2012 |
2011 |
|||||
Net revenue |
$ 32.4 |
$ 31.6 |
$ 151.4 |
$ 181.5 |
||||
Interest expense (on note) |
- |
0.1 |
0.4 |
0.5 |
||||
Net revenue (Ex. interest expense on note) |
$ 32.4 |
$ 31.7 |
$ 151.8 |
$ 182.0 |
||||
Net (loss) / income applicable to GAIN Capital Holdings, Inc. |
$ (3.8) |
$ (3.3) |
$ 2.6 |
$ 15.7 |
||||
Add back: |
||||||||
Depreciation and amortization |
1.7 |
1.0 |
4.9 |
3.9 |
||||
Purchased intangible amortization |
0.7 |
2.5 |
4.1 |
8.9 |
||||
Interest expense (on note) |
- |
0.1 |
0.4 |
0.5 |
||||
Restructuring(1) |
- |
- |
0.6 |
- |
||||
Income tax (benefit) / expense |
(3.6) |
(3.4) |
(1.5) |
7.6 |
||||
Adjusted EBITDA |
$ (5.0) |
$ (3.1) |
$ 11.1 |
$ 36.6 |
||||
Adjusted EBITDA Margin(2) |
(15.4) % |
(9.8)% |
7.3% |
20.1% |
||||
(1) Non-recurring expenses related to cost savings effected in 2Q 2012 |
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(2) Adjusted EBITDA Margin calculated as Adjusted EBITDA / Net revenue (Ex. Interest expense)
|
Forward-Looking Statements:
In addition to historical information, this earnings release contains "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
SOURCE
Investor Relations: MBS Value Partners, Hugh Collins, hugh.collins@mbsvalue.com, orLynn Morgen, lynn.morgen@mbsvalue.com, +1-212-750-5800; or Public Relations: Edelman, Mike Geller, mike.geller@edelman.com, +1-212-729-2163, or Chris Mittendorf, chris.mittendorf@edelman.com, +1-212-704-8134