ITG Reports Second Quarter 2005 EPS of $0.41
Earnings Per Share Increase 86 Percent
NEW YORK, July 28 /PRNewswire-FirstCall/ -- Investment Technology Group, Inc. (NYSE:ITG), a leading provider of technology-based equity trading services and
transaction research, today announced that for the second quarter ended June
30, 2005, net income was $17.4 million, 83 percent higher than net income of
$9.5 million in the second quarter of 2004. Earnings were $0.41 per diluted
share, an increase of 86 percent versus earnings of $0.22 per diluted share in
the second quarter of last year. ITG's total revenues for the second quarter of
2005 were $102.2 million, 26 percent higher than total revenue of $81.0 million
for the second quarter of 2004. Net income included $1.0 million, or $0.02 per
share, of recognized tax benefits from certain capital loss carry-forwards.
On a pro forma operating basis, net income was $15.8 million, 98 percent higher
than operating income of $8.0 million in the second quarter of 2004. Operating
earnings were $0.38 per diluted share, an increase of 100 percent versus
operating earnings of $0.19 per diluted share in the second quarter of last
year. Operating results exclude a pre-tax gain of $2.7 million, or $0.03 per
diluted share, on investment securities sold in the second quarter of 2005. The
second quarter 2004 operating results exclude a one-time pre-tax gain of $2.4
million, or $0.03 per diluted share, from the sale of the company's interest in
KTG Technologies Corp. Pre-tax operating margins were 24.9 percent, up from 18.2
percent in the second quarter of 2004.
"ITG's strong performance and continued market share gain this quarter
demonstrate the progress we've made in successfully executing ITG's corporate
growth strategy," stated Ray Killian, ITG's Chairman, President and Chief
Executive Officer. "The Macgregor acquisition will be an important step forward
and we remain committed to offering customers superior service and solutions
across the trading spectrum." Domestically, ITG's trading volume for the second quarter of 2005 was 6.4
billion shares (averaging 100 million shares per trading day) compared to 5.8
billion shares in the first quarter of 2005 (averaging 96 million shares per
trading day) and 5.0 billion in the second quarter of 2004 (averaging 81
million shares per trading day).
ITG's International business posted a record quarter with revenues of $22.9
million, 15 percent higher than revenues of $19.9 million in the second quarter
of 2004. Excluding the impact of the second quarter of 2004 non-recurring pretax
gain of $2.4 million, International revenues increased by 31 percent from second
quarter 2004 operating revenues of $17.5 million. International pre-tax
operating profits grew from $0.3 million in the second quarter of 2004 to $2.0
million in the second quarter of 2005.
"We have continued to make progress in our international expansion, and I look
forward to continued revenue growth and contribution to ITG earnings in 2005
and beyond," stated Mr. Killian.
Year to date - US GAAP Results For the six months ended June 30, 2005, revenues increased 22 percent from the
prior year period to $193.8 million, net income increased 73 percent to $30.7
million and diluted earnings per share increased 78 percent to $0.73.
Conference Call ITG has scheduled a conference call today at 11:00 a.m. ET to discuss second
quarter results. Those wishing to listen to the call should dial 1-888-208-1812
at least 10 minutes prior to the start of the call to ensure connection. A
listen-only webcast will also be available on ITG's website at
http://www.itginc.com/investor. For those unable to listen to the live
broadcast of the call, a replay will be available for one week by dialing
1-888-203-1112 and entering the pass code 7728774. A replay will be available
for two weeks on ITG's website. Both methods of listening to 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 to trading that combines pre-trade analysis, trade execution, and
post-trade evaluation 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 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, 2004, and other documents
filed with the Securities and Exchange Commission and available on the
company's web site.
Contacts:
Howard C. Naphtali Maureen Murphy
Chief Financial Officer Investor Relations
(212) 444-6160 (212) 444-6323
INVESTMENT TECHNOLOGY GROUP, INC. Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts) Three Months Ended Six Months Ended
June 30, June 25, June 30, June 25,
2005 2004 2005 2004
Revenues:
Commissions $95,688 $75,673 $183,221 $150,182
Other 6,494 5,314 10,623 8,377
Total revenues 102,182 80,987 193,844 158,559 Expenses:
Compensation and
employee benefits 38,106 29,370 71,971 58,542
Transaction
processing 14,013 12,171 27,209 23,751
Software royalties - 3,288 1,088 7,104
Occupancy and
equipment 7,220 7,449 14,473 14,790
Telecommunications
and data
processing services 4,935 4,338 9,800 8,975
Other general and
administrative 10,398 7,697 19,582 14,876
Total expenses 74,672 64,313 144,123 128,038 Income before income
tax expense 27,510 16,674 49,721 30,521 Income tax expense 10,070 7,190 19,045 12,783 Net income $17,440 $9,484 $30,676 $17,738 Earnings per share: Basic $ 0.41 $ 0.22 $0.73 $0.41 Diluted $ 0.41 $ 0.22 $0.73 $0.41 Basic weighted average
number of common
shares outstanding 42,040 43,138 42,025 43,726 Diluted weighted
average number of
common shares
outstanding 42,204 43,144 42,183 43,734
INVESTMENT TECHNOLOGY GROUP, INC. Consolidated Statements of Financial Condition
(In thousands, except share amounts) June 30, December 31,
2005 2004
(unaudited)
Assets
Cash and cash equivalents $ 198,960 $ 206,465
Cash restricted or segregated 8,999 7,287
Securities owned, at fair value 9,090 32,530
Receivables from brokers,
dealers and other, net 569,003 198,642
Investments in limited partnerships 10,427 20,311
Premises and equipment, net 19,931 24,023
Capitalized software, net 10,947 8,926
Goodwill 175,946 86,550
Other Intangibles 12,650 2,657
Deferred taxes 8,769 10,226
Other assets 12,228 14,841
Total assets $1,036,950 $ 612,458 Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses $100,625 $ 82,821
Payables to brokers, dealers and other 525,174 142,446
Software royalties payable - 3,350
Securities sold, not yet purchased,
at fair value 299 30
Income taxes payable 8,248 13,310
Total liabilities 634,346 241,957 Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $0.01;
shares authorized: 1,000,000; shares
issued: none - -
Common stock, par value $0.01; shares
authorized: 100,000,000; shares issued:
51,363,873 and 51,327,388 at June 30,
2005 and December 31, 2004, respectively
and 42,040,874 and 41,950,670 shares
outstanding at June 30, 2005 and
December 31, 2004, respectively 514 513
Additional paid-in capital 164,945 161,169
Retained earnings 405,637 374,961
Common stock held in treasury, at cost;
shares: 9,322,999 and 9,376,718 at
June 30, 2005 and December 31,
2004, respectively (176,081) (177,095)
Accumulated other comprehensive income:
Currency translation adjustment 7,589 10,953 Total stockholders' equity 402,604 370,501 Total liabilities and
stockholders' equity $1,036,950 $ 612,458
INVESTMENT TECHNOLOGY GROUP, INC. Reconciliation of US GAAP Results to Pro Forma Operating Results (unaudited) In evaluating the Company's financial performance, management reviews results
from operations which excludes non-operating or one-time charges. Pro forma
earnings per share is a non-GAAP (generally accepted accounting principles)
performance measure, but the Company believes that it is useful to assist
investors in gaining an understanding of the trends and operating results for
the Company's core businesses. Pro forma earnings per share should be viewed in
addition to, and not in lieu of, the Company's reported results under US GAAP.
The following is a reconciliation of US GAAP results to pro forma results for
the periods presented (in thousands except per share amounts): Three Months Ended Six Months Ended
June 30, June 25, June 30, June 25,
2005 2004 2005 2004 Total revenues $102,182 $80,987 $193,844 $158,559
Less:
Non-recurring
revenue (1) (2,699) (2,391) (2,824) (2,391)
Pro forma revenues 99,483 78,596 191,020 156,168 Total expenses 74,672 64,313 144,123 128,038 Income before income
tax expense 27,510 16,674 49,721 30,521
Effect of pro forma
adjustments (2,699) (2,391) (2,824) (2,391)
Pro forma income
before income tax
expense 24,811 14,283 46,897 28,130 Income tax expense 10,070 7,190 19,045 12,783
Tax effect of pro
forma adjustments (1,106) (909) (1,158) (909)
Pro forma income
tax expense 8,964 6,281 17,887 11,874 Net income 17,440 9,484 30,676 17,738
Net effect of pro
forma adjustments (1,593) (1,482) (1,666) (1,482)
Pro forma net income $15,847 $8,002 $29,010 $16,256 Diluted earnings
per share $0.41 $0.22 $0.73 $0.41
Net effect of pro
forma adjustments (0.03) (0.03) (0.04) (0.04)
Pro forma diluted
earnings per share $0.38 $0.19 $0.69 $0.37 Notes: (1) 2005 non-recurring revenue is comprised of gains from our shares of
Archipelago Holdings common stock that we received as part of an equity
entitlement program, of which $2.7 million was recognized in the Second Quarter
of 2005, as well as a recovery against previous investment write-downs of $0.4
million in First Quarter 2005. 2004 non-recurring revenue is comprised of a
gain of $2.4 million on the sale of 50% of Investment Technology Group, Inc.'s
("ITG") Canadian subsidiary, KTG Technology Corp. in the Second Quarter 2004. DATASOURCE: Investment Technology Group, Inc.
CONTACT: Howard C. Naphtali, Chief Financial Officer, +1-212-444-6160, or Maureen Murphy, Investor Relations, +1-212-444-6323 Web site: http://www.itginc.com/
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