UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
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Item 7.01. | Regulation FD Disclosure. |
Virtu Financial, Inc. (the “Company”) plans to make a presentation in connection with a potential refinancing transaction (the “Presentation”), a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company may also use the Presentation from time to time separately in connection with presentations to industry analysts and participants, investors and potential investors, clients and potential clients and others. The presentation is available in the “Investor Relations” section of the Company’s website, located at https://ir.virtu.com/investor-relations/default.aspx
The information contained in the Presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Presentation or this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in the Presentation or this report that is required to be disclosed solely by reason of Regulation FD. The Company uses, and will continue to use, its website, public conference calls, and social media channels, including its Twitter account (twitter.com/virtufinancial) and our LinkedIn account (linkedin.com/company/virtu-financial), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company posts on its website and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company posts on its website and on the social media channels identified above.
The information presented in Item 7.01 of this Current Report on Form 8-K and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 8.01. | Other Events. |
On January 4, 2022, the Company issued a press release announcing the commencement of marketing of a potential refinancing transaction. A copy of the Company’s press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Virtu Financial Lender Presentation, dated January 2022. | |
99.2 | Press release of Virtu Financial, Inc., dated January 4, 2022. | |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
2
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Virtu Financial Lender Presentation, dated January 2022. | |
99.2 | Press release of Virtu Financial, Inc., dated January 4, 2022. | |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
VIRTU FINANCIAL, INC. | |||
By: | /s/ JUSTIN WALDIE | ||
Name: | Justin Waldie | ||
Title: | Senior Vice President, Secretary and General Counsel |
Dated: January 4, 2022
4
Exhibit 99.1
Virtu Financial Lender Presentation January 2022 |
Speakers 2 Doug Cifu Chief Executive Officer • Co-founded Virtu in 2008 • Previously was a partner at the international law firm Paul, Weiss, Rifkind, Wharton & Garrison, where he served as a member of the Management Committee, Deputy Chair of the Corporate Department and Co-Head of the Private Equity Group • Serves on the Board of Directors of the U.S. Chamber of Commerce Joe Molluso Co-President and Co-Chief Operating Officer • Joined Virtu in 2013 as Chief Financial Officer • Played a central role in Virtu’s completed merger and integration of KCG Holdings and ITG as well as its initial public offering in 2015 • Previously served as Managing Director at J.P. Morgan in the Investment Banking Department, where he provided strategic advice to financial institutions with a focus on market structure related companies • Served on the Board of Directors of DTCC |
Agenda 3 2 Business Overview 3 Business Update 5 Appendix Questions & Answers 4 1 Transaction Overview |
Transaction Overview 4 |
Executive Summary Virtu Financial, Inc. (“Virtu” or the “Company”) is a leading technology-driven market maker and agency execution provider with superior scale across 235+ venues, 36 countries, and 25,000+ securities and other financial instruments Publically traded on Nasdaq (NASDAQ: VIRT) The Company generated Adjusted Net Trading Income1,2 of $1,880mm and Adjusted EBITDA2 of $1,317mm, reflecting a 70.0% Adjusted EBITDA margin2,3 for last twelve months ended September 30, 2021 The Company is seeking to refinance its existing $1,600mm first lien term loan facility due 2026 with a new $1,800mm first lien term loan facility due 2029 (the “Transaction”) Virtu has already received commitments to refinance its existing $50mm revolving credit facility due 2022 with a $250mm revolving credit facility due 2025 in connection with the Transaction Net proceeds from the Transaction will be used to pay down the existing first lien term loan, fund share repurchases and for general corporate purposes Pro forma for the Transaction, Total and Net Leverage will be 1.4x and 0.9x, respectively The Company is requesting commitments due from lenders by January 11th, 2022 at 5:00pm NYT 5 See endnotes at end of this supplement |
Sources & Uses / Pro Forma Capitalization Market capitalization3: $5,220mm Sources ($mm) Uses ($mm) New Term Loan B $1,800 Refinance existing Term Loan B $1,600 New $250mm Revolving credit facility - Refinance existing $50mm Revolving credit facility - Share repurchases and general corporate purposes 200 Total sources $1,800 Total uses $1,800 Current capitalization Pro forma As of 9/30/2021 Amount x EBITDA Adj. Amount x EBITDA Cash and equivalents $684 $684 New $250mm Revolving credit facility due 20251 ---- 1st Lien term loan due 2026 1,600 1.2x (1,600) -- New 1st lien term loan due 2029 -- 1,800 1,800 1.4x SBI bonds 31 0.0x 31 0.0x Total debt $1,631 1.2x $1,831 1.4x Total net debt $947 0.7x $1,148 0.9x LTM 3Q2021 Adj. EBITDA2 $1,317 $1,317 6 Note: Excludes fees and expenses; See endnotes at end of this supplement |
Borrower: VFH Parent LLC (the “Borrower”) Guarantors: Virtu Financial LLC and certain of its domestic subsidiaries (same as existing) Existing corporate ratings: Ba2 / B+ / BB- Facility: First Lien Term Loan Amount: $1,800mm Tenor: 7 years Use of proceeds: Refinance existing 1st lien term loan, fund share repurchases and general corporate purposes Financial covenants: None; covenant-lite Amortization: 1% per annum Call protection: 101 soft call for 6 months ECF Sweep: 50% of excess cash flow, with step downs to 25% and 0% at 3.50x and 3.00x Net First Lien Leverage, respectively (includes dollar-for-dollar deductions of ECF payment obligations for cash used for open market repurchases). Begins with the 4Q period ending June 30, 2023 and is payable annually thereafter Negative covenants: Usual and customary for a transaction of this type Summary Terms and Conditions 7 |
Term Loan Execution Timeline Week of: Event: January 3rd Host term loan B lender call on January 4th (12:00pm NYT) January 10th Commitments due on term loan B from lenders on January 11th (5:00pm NYT) Thereafter Closing and funding Key transaction dates January 2022 MTWTF 3 4 5 6 7 10 11 12 13 14 17 18 19 20 21 24 25 26 27 28 31 Bank / market holidays 8 |
Business Overview 9 |
10 Key Credit Highlights Proven, Talented and Aligned Management Team Broad Suite of Industry Leading Products Deeply Embedded in Client Workflows Scaled Service Provider to the Global Financial Markets World-Class Real-Time Risk Management Successful Expansion into Agency, Workflow and Analytics Businesses with Sticky Revenue Characteristics Global Blue-Chip Customer Franchise Disciplined Low-Cost Infrastructure with Modest Leverage Organic Revenue Growth Driven by Technology Integration and Expansion into New Products and Markets |
Public Operating Segments Market Making Execution Services Trading Solutions Financial Technology Products End-to-end world class product suite Customer Market Making Non-Customer Market Making Brokerage Services Liquidity Sourcing Broker Neutral Workflow Analytics Multi-Asset Class Revenue Drivers Principal liquidity and price improvement to customers including retail (605) order flow, FX, equities and ETFs Global liquidity provider in: Equities, ETFs, FX, Fixed Income, Energy, Metals, Options Agency execution services including high touch, algos and smart routing, ETF and portfolio trading Liquidity discovery to achieve client trading objectives Integrated trading tools to manage trading ops, reporting and regulatory requirements Transaction cost analytics (TCA), peer database and portfolio optimization tools Market volumes Installed base fees Volatility Virtu’s Global Offerings 11 Global diversified customer base Broker Dealers Hedge Funds Asset Managers Long Only Mutual Funds Sovereigns & Pensions Investment Companies RIAs Servicing investors’ multi-asset execution, analytics, liquidity and workflow needs with our scalable, low-cost technology platform |
Virtu has a Global, Diversified Client Franchise 12 Note: Virtu services over 30% of “Rule 605” retail order flow in the U.S., including flow from broker dealers, asset managers, RIAs and banks Virtu’s customer base spans global retail, RIA and institutional firms across the buy-side and sell-side |
Business Update 13 |
Third Quarter Highlights • Strong Market Making performance – results increased 5% compared to 8% decline in U.S. Equity TCV o Realized volatility roughly flat QoQ, which is 10% below 2019 pre-pandemic average o U.S. Equity TCV 11% below FY 2020 average • Execution Services outperformed softening environment – results decreased 5%, a smaller decline than global market volumes in most regions o TCV down 8% in U.S., 21% in Canada, and 6% in Europe4 Adj. NTI1 $354M Normalized Adj. EPS1 $0.70 Adj. EBITDA1 $211M Adj. NTI/day1,2 $5.5M Adj. EBITDA Margin1,3 59.5% Debt to LTM Adj. EBITDA1 1.2x 3Q 2021 Highlights See endnotes at end of this supplement 14 |
15 Key Financial Metrics 2Q 2021 Total Adjusted Net Trading Income2 $975 $2,271 $784 $669 $362 $456 $728 $342 $354 Daily Average Adj. NTI 2 $3.9 $9.0 $12.7 $10.6 $5.7 $7.1 $11.9 $5.4 $5.5 Market Making Adj. NTI2 $605 $1,782 $652 $552 $257 $321 $575 $232 $249 Market Making Daily Average Adj. NTI 2 $2.4 $7.0 $10.5 $8.8 $4.0 $5.0 $9.4 $3.7 $3.9 Execution Services Adj. NTI2,3 $370 $489 $132 $117 $105 $135 $153 $110 $106 Execution Services Daily Average Adj. NTI 2,3 $1.5 $1.9 $2.1 $1.9 $1.6 $2.1 $2.5 $1.7 $1.7 Adjusted Cash Operating Expenses2 $543 $623 $215 $183 $114 $112 $163 $145 $144 - 1% Total Adjusted Operating Expenses2 $608 $690 $232 $200 $130 $128 $180 $161 $160 - 0% Adjusted EBITDA2 $432 $1,648 $570 $486 $249 $344 $565 $197 $211 + 7% Adjusted EBITDA Margin 4 44.3% 72.6% 72.6% 72.6% 68.7% 75.4% 77.6% 57.7% 59.5% + 1.7 pts Long Term Debt (at end of period) $1,957 $1,670 $1,957 $1,769 $1,669 $1,670 $1,667 $1,631 $1,631 + 0.0% Debt / LTM Adjusted EBITDA 2 4.5x 1.0x 2.2x 1.4x 1.2x 1.0x 1.0x 1.2x 1.2x + 3% Normalized Adjusted EPS2 $0.96 $5.76 $2.05 $1.73 $0.81 $1.18 $2.04 $0.63 $0.70 + 11% - 5% + 2% + 5% 1Q 2020 4Q 2020 Full Year 2020 2Q 2021 ($M) Full Year 20191 3Q 2021 2Q 2020 3Q 2020 1Q 2021 3Q 2021 v See endnotes at end of this supplement |
Major Market Metrics 16 While 3Q 2021 exhibited higher volatility but lower volumes QoQ, 4Q 2021 exhibited a strong increase in both volumes and volatility QoQ |
Organic Business Growth • Options Market Making: Growing options business faced with flat market volumes and a decline in realized volatility; continues to demonstrate relative strong performance as we increase symbol and venue coverage and invest in growing the team. • Crypto: Dedicated team trading ~20 products across spot, futures, and ETFs; now connected to all principal venues. • Virtu Capital Markets: Continues to utilize execution and distribution expertise to deliver liquidity to corporate issues. • Block ETF: Increasing competitiveness; we are now a top 5 liquidity provider as measured by winning hit rates and total notional volume dealt. See endnotes at end of this supplement 17 Daily Average Adj. NTI1 from Organic Growth Initiatives Total Adj. NTI 1 $40M $75M $166M $112M $57M $32M $23M % of Firmwide Adj. NTI1 3% 7% 7% 8% 8% 9% 6% + 61% CAGR2 $160k/day $296k/day $656k/day $595k/day $942k/day $503k/day $356k/day FY 2018 FY 2019 FY 2020 YTD 20213 1Q 2021 2Q 2021 3Q 2021 |
Consistent Earnings and Cash Flow 18 • Disciplined expense management results in consistently strong EBITDA margin through the cycle, with additional upside when the market backdrop improves 3Q21 EBITDA margin1 of 60% up from 58% in 2Q21 • Realized synergies from the KCG and ITG acquisitions in excess of original public guidance • Significant cash flow, low leverage and high interest coverage at all observed cyclical levels of revenues • Modest required CapEx and capital needs • Current levels of debt are manageable across various market environments • As long as leverage remains within historical parameters, remaining excess cash flow after the dividend distributed through share repurchases Operating Expense Discipline Opportunistically Return Cash Flow to Shareholders While Remaining Well Capitalized Strong Baseline Cash Flow Generation See endnotes at end of this supplement |
19 Virtu Has Multiple Levers to Drive Growth Organic Business Growth Virtu Through- the-Cycle Earnings Pro forma results for Virtu + KCG + ITG result in through- the-cycle Adj. NTI per day of ~$5.5M annually -- before the benefits of growth initiatives and integration Organic growth initiatives, together with our stable cost structure, result in an estimated $76 to $227 of incremental Adj. EBITDA annually, or ~18% growth from median EBITDA (based on midpoint of ranges) Illustrative leverage pro-forma for the contemplated debt transaction See endnotes at end of this supplement 7Figures are shown for illustrative purposes only to illustrate range of potential outcomes for a full year (consisting of 252 trading days) assuming the Company performs in accordance with 2021 Adj. Operating Expense guidance, with nominally higher cash compensation estimates when Adjusted Net Trading Income per Day is in excess of $6.0M. Figures do not represent affirmation of such prior guidance nor do they represent the view of the Company. The Company’s actual fourth quarter results are expected to be announced on or around February 9, 2022. |
20 Analyst Coverage Q4 20211 Firm Daily Average Adj. NTI 4Q 2021E (mm) Citi Research 5.32 Compass Point 5.62 Evercore 5.75 Goldman Sachs 5.40 Jefferies 5.70 JP Morgan 4.81 Morgan Stanley 5.20 Piper Sandler 5.55 Rosenblatt 5.34 UBS 5.23 Analyst Mean $5.39 Q4 results are anticipated to reflect the overall positive operating environment, consistent core business performance and further progress on organic growth initiatives. 1The fourth quarter estimates reflected on this slide are the opinions of research analysts associated with the financial institutions named above as published on or prior to January 3, 2022 which may be updated or amended from time to time, and do not represent the views of the Company. The Company’s actual fourth quarter results are expected to be announced on or around February 9, 2022. |
Questions and Answers 21 |
Appendix 22 |
Income Statement 23 See endnotes at end of this supplement |
Adjusted Net Trading Income $975 $784 $669 $362 $456 $2,271 $724 Adjusted EBITDA & Normalized Adjusted EPS 24 See endnotes at end of this supplement Adj. EBITDA / Normalized Adj. EPS ($M) FY 2018 FY 2019 1 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 1Q 2021 2Q 2021 3Q 2021 Income (Loss) Before income taxes $696 ($116) $466 $405 $253 $260 $1,383 $490 $135 $145 (+) Financing interest expense 72 122 26 22 20 20 88 19 20 20 (+) Debt issue cost related to debt refinancing and prepayment 12 41 4 13 10 2 29 2 2 1 (+) Depreciation and amortization 61 66 17 17 17 16 67 17 16 17 (+) Amortization of purchased intangibles and acquired capitalized software 26 71 19 19 18 18 74 18 18 17 EBITDA $867 $183 $532 $475 $318 $315 $1,640 $546 $192 $200 EBITDA Margin 85.0% 18.8% 67.9% 71.1% 87.7% 69.1% 72.2% 75.0% 56.0% 56.5% (+) Severance 11 103 4 (0) 3 3 10 2 1 2 (+) Transaction fees and expenses 11 26 0 0 2 0 3 (0) (0) 0 (+) Termination of office leases 23 66 0 0 0 9 10 1 4 0 (+) Share-based compensation 35 51 26 17 (5) 22 60 13 13 13 (+) Reserve for legal matters 2 1 4 (1) (0) 0 3 4 -- (+) Coronavirus one time costs & donations -- 3 0 0 1 5 0 - 0 (-) Other (340) 2 (1) (5) (70) (8) (83) (1) (11) (4) Adjusted EBITDA $620 $432 $570 $486 $249 $344 $1,648 $565 $197 $211 Adjusted EBITDA Margin 60.8% 44.3% 72.6% 72.6% 68.7% 75.4% 72.6% 77.6% 57.7% 59.5% (-) Financing interest expense 72 122 26 22 20 20 88 19 20 20 (-) Depreciation and amortization 61 66 17 17 17 16 67 17 16 17 Normalized Adjusted Pre-Tax Income $487 $244 $527 $447 $212 $308 $1,494 $528 $161 $174 (-) Normalized provision for income taxes 112 59 126 107 51 74 358 127 39 42 Normalized Adjusted Net Income $375 $186 $400 $340 $161 $234 $1,135 $402 $122 $132 Weighted average fully diluted shares outstanding 191.3 192.6 195.0 197.1 198.1 197.5 196.9 197.0 194.8 190.1 Normalized Adjusted EPS $1.96 $0.96 $2.05 $1.73 $0.81 $1.18 $5.76 $2.04 $0.63 $0.70 |
Debt Capitalization 25 See endnotes at end of this supplement Debt Structure at September 30, 2021 Debt Description ($M) Maturity Rate Balance First Lien Debt - Floating Mar 2026 L + 3.00% $75 First Lien Debt - Fixed with 4.565% swap3 Mar 2026 4.565% $1,000 First Lien Debt - Fixed with 4.465% swap4 Mar 2026 4.465% $525 Japannext5 Jan 2023 5.00% $32 Total6 4.47% $1,631 LTM Adjusted EBITDA2 $1,317 Debt / LTM Adjusted EBITDA2 1.2x $73.0 Annual Interest $2.3 $45.7 $23.4 $1.6 2 3 4 5 1 1 |
26 Assets ($M) 9/30/2021 Liabilities and Equity ($M) 9/30/2021 Cash and cash equivalents 684 Short-term borrowings 313 Cash and securities segregated under regulations and other 70 Securities loaned 1,017 Securities borrowed 1,278 Securities sold under agreement to repurchase 583 Securities purchased under agreements to resell 170 Payables to broker dealers and clearing organizations 1,095 Receivables from broker dealers and clearing organizations 1,452 Payables to customers 183 Financial instruments owned, at market 3,978 Financial instruments sold, not yet purchased, at market 2,872 Receivables from customers 414 Accounts payable and accrued expenses and other liabilities 414 Property, equipment and capitalized software, net 104 Operating lease liabilities 293 Operating lease right-to-use of assets 248 TRA payment liability 255 Goodwill 1,149 Long-term borrowings 1,604 Intangibles, net of accumulated amortization 403 Total Liabilities $ 8,629 Deferred tax assets 176 Other assets 303 Equity 1,801 Total Assets $ 10,429 Total Liabilities and Equity $ 10,429 Invested Capital ($M) As of: 3/31/191 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 Trading Capital2 1,714 1,631 1,637 1,604 1,997 2,141 1,981 2,075 2,266 2,089 1,984 (-) Cash reserved for operations, taxes payable, and other accrued and unpaid liabilities3 (20) (35) (56) (77) (496) (463) (303) (338) (418) (246) (170) Invested Capital 1,694 1,596 1,581 1,527 1,501 1,678 1,678 1,737 1,848 1,843 1,814 Balance Sheet & Trading Capital See endnotes at end of this supplement |
27 GAAP Income Statement Income Statement ($mm) FY 2018 FY 20191 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net $1,267 $912 $802 $744 $441 $505 $2,493 $813 $385 $394 Commissions, net and technology services 184 499 171 148 134 148 601 192 143 136 Interest and dividends income 88 109 27 9 11 15 62 7 10 10 Other, net 340 (2) 1 5 70 8 83 1 11 4 Total Revenues $1,879 $1,517 $1,001 $906 $656 $677 $3,239 $1,013 $549 $544 Brokerage, exchange, clearance fees and payments for order flow, net 376 387 174 204 196 185 759 259 171 159 Communications and data processing 176 209 55 56 52 51 214 52 53 56 Employee compensation and payroll taxes 216 384 170 121 36 66 394 105 84 85 Interest and dividends expense 142 158 41 29 27 28 126 24 25 27 Operations and administrative 67 104 27 22 25 21 95 26 22 18 Depreciation and amortization 61 66 17 17 17 16 67 17 16 17 Amortization of purchased intangibles and acquired capitalized software 26 71 19 19 18 18 74 18 18 17 Termination of office leases 23 66 0 0 0 9 10 1 4 0 Debt issue cost related to debt refinancing and prepayment 12 41 4 13 10 2 29 2 2 1 Transaction fees and expenses 11 26 0 0 2 0 3 (0) (0) 0 Financing interest expense 72 122 26 22 20 20 88 19 20 20 Total Operating Expenses $1,182 $1,633 $534 $501 $404 $417 $1,856 $523 $414 $399 Income (Loss) Before income taxes $696 ($116) $466 $405 $253 $260 $1,383 $490 $135 $145 Provision for income taxes (benefit) 76 (12) 78 69 53 62 262 81 26 22 Net Income (Loss) $620 ($104) $388 $335 $200 $198 $1,121 $409 $109 $123 See endnotes at end of this supplement |
28 Adjusted Net Trading Income Reconciliation Operating Segments 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net 802 744 441 505 813 385 394 Commissions, net and technology services 171 148 134 148 192 143 136 Brokerage, exchange, clearance fees and payment for order flow, net (174) (204) (196) (185) (259) (171) (159) Interest and dividends, net (15) (20) (16) (13) (17) (15) (17) Adjusted Net Trading Income 784 669 362 456 728 342 354 Adjusted Net Trading Income Reconciliation ($M) Total 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net 803 745 442 466 801 381 389 Commissions, net and technology services 1 (1) 9 43 14 9 9 Brokerage, exchange, clearance fees and payment for order flow, net (137) (173) (178) (176) (223) (145) (135) Interest and dividends, net (15) (19) (16) (12) (17) (13) (15) Adjusted Net Trading Income 652 552 257 321 575 232 249 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net (0) (1) (1) 39 11 4 5 Commissions, net and technology services 170 148 124 105 178 134 127 Brokerage, exchange, clearance fees and payment for order flow, net (37) (31) (19) (9) (36) (26) (24) Interest and dividends, net (0) (0) (0) (0) 0 (3) (2) Adjusted Net Trading Income 132 117 105 135 153 110 106 Adjusted Net Trading Income Reconciliation ($M) Adjusted Net Trading Income Reconciliation ($M) Market Making Execution Services |
29 Adjusted Net Trading Income Reconciliation Organic Growth Initiatives 2018 2019 2020 1Q 2021 2Q 2021 3Q 2021 Trading income, net 36 77 246 62 35 28 Commissions, net and technology services 7 11 23 13 7 7 Brokerage, exchange, clearance fees and payment for order flow, net (2) (9) (88) (12) (7) (7) Interest and dividends, net (1) (4) (15) (6) (4) (5) Adjusted Net Trading Income 40 75 166 57 32 23 Adjusted Net Trading Income Reconciliation ($M) Organic Growth Initiatives |
30 Adjusted Operating Expense Reconciliation See endnotes at end of this supplement Adjusted Operating Expense Reconciliation ($M) 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 FY 2019 1 FY 2020 Employee compensation and payroll taxes $170 $121 $36 $66 $105 $84 $85 $384 $394 Operations and administrative $27 $22 $25 $21 $26 $22 $18 $104 $95 Communications and data processing $55 $56 $52 $51 $52 $53 $56 $209 $214 Depreciation and amortization $17 $17 $17 $16 $17 $16 $17 $66 $67 Less: Severance ($4) $0 ($3) ($3) ($2) ($1) ($2) ($103) ($10) Share-based compensation ($26) ($17) $5 ($22) ($13) ($13) ($13) ($51) ($60) Other ($8) $1 ($0) ($1) ($4) -($0) ($1) ($8) Adjusted Operating Expense $232 $200 $130 $128 $180 $161 $160 $608 $690 |
Disclaimer 31 Cautionary Statement Regarding Forward Looking Statements This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the “Company’s” or “our”) business that are not historical facts are forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, if at all. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, and if the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties, some or all of which are not predictable or within Virtu’s control, that could cause actual performance or results to differ materially from those expressed in the statements. Those risks and uncertainties include, without limitation: fluctuations in trading volume and volatilities in the markets in which we operate; the ability of our trading counterparties and various clearing houses to perform their obligations to us; the performance and reliability of our customized trading platform; the risk of material trading losses from our market making activities; swings in valuations in securities or other instruments in which we hold positions; increasing competition and consolidation in our industry; the effect of the acquisition of Investment Technology Group, Inc. (“ITG”) on existing business relationships, operating results, and ongoing business operations generally; the significant costs and significant indebtedness that we have incurred in connection with the acquisition of ITG; the anticipated benefits, cost savings and synergies or capital release may not be achieved; the assumption of potential liabilities relating to ITG's business; the risk that cash flow from our operations and other available sources of liquidity will not be sufficient to fund our various ongoing obligations, including operating expenses, capital expenditures, debt service and dividend payments; regulatory and legal uncertainties and potential changes associated with our industry, particularly in light of increased attention from media, regulators and lawmakers to market structure and related issues; potential adverse results from legal or regulatory proceedings; our ability to remain technologically competitive and to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; risks associated with third party software and technology infrastructure. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Virtu’s Securities and Exchange Commission filings, including but not limited to Virtu’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. GAAP and Non-GAAP Results This presentation includes certain non-GAAP financial measures, including Normalized Adjusted EPS, Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Pre-Tax Income, EBITDA, Adjusted EBITDA, Adjusted Operating Expense, LTM Debt / Adjusted EBITDA Ratio, and Adjusted EBITDA Margin. Non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Other companies may use similarly titled non‐GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non‐GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non‐GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non‐GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP. A reconciliation of non‐GAAP measures to the most directly comparable financial measure prepared in accordance with GAAP is included at the end of this presentation. Industry and other statistical data Industry and market data contained in this presentation were obtained through company research, surveys and studies conducted by third parties and industry and general publications. Certain information is based on studies, analyses and surveys prepared by the Bank for International Settlements, Bloomberg, Cboe Global Markets, Inc., the Futures Industry Association, the Investment Industry Regulatory Organization of Canada and the World Federation of Exchanges. While we are not aware of any misstatements regarding the industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors. |
32 End Notes Slide 5 Executive Summary 1. LTM 3Q 2021 Adj. Net Trading Income per day calculated using 252 trading days. 2. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 3. Adj. EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Net Trading Income. Slide 6 Sources & Uses / Pro Forma Capitalization 1. Virtu has already received commitments for the new $250mm RCF associated with this transaction 2. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 3. Based on VIRT 12/30/2021 closing price of $28.65 and ~182.2mm shares outstanding Slide 14 Third Quarter Highlights 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 2. 3Q 2021 Adj. Net Trading Income per day calculated using 64 trading days. 3. Adj. EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Net Trading Income. 4. US TCV refers to US Equity Consolidated Share Volume; Canada TCV refers to IIROC All Trade All Listing Total Share Volume; Europe TCV refers to Pan-European € Notional Value (including Auctions). Slide 15 Key Financial Metrics 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. 2. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 3. Includes MatchNow revenues prior to sale in July 2020. 4. Adj. EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Net Trading Income. Note: # of trading days used in Adj. Net Trading Income per day calculations: 252, 253, 62, 63, 64, 64, 61, 63, and 64 for FY 2019, FY 2020, 1Q20, 2Q20, 3Q20, 4Q20, 1Q21, 2Q21, and 3Q21, respectively. Slide 17 Organic Business Growth 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 2. Organic Growth Initiatives CAGR measures the annually-compounded rate of return of Organic Growth Initiatives Daily Average Adjusted Net Trading Income over the 2.75-year period from FY 2018 to YTD September 30, 2021. 3. YTD as of September 30, 2021. Note: # of trading days used in Adj. Net Trading Income per day calculations: 251, 252, 253, 188, 61, 63, and 64 for FY 2018, FY 2019, FY 2020, YTD 2021, 1Q 2021, 2Q 2021, and 3Q 2021, respectively. Slide 18 Consistent Earnings and Cash Flow 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. These notes refer to metrics and/or defined terms presented on: |
33 End Notes—continued Slide 19 Virtu Has Multiple Levers to Drive Growth 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 2. Normalized Historical Pro Forma ANTI/Day calculated as actual Pro Forma ANTI/Day less ANTI/day from GQS, BondPoint, MatchNow, and Organic Growth Initiatives. Median Normalized Historical Pro Forma ANTI/Day calculated as the median of Normalized Historical Pro Forma ANTI/Day from 2015 through 2020. 3. Normalized Historical Adjusted EBITDA calculated as Median Normalized Historical Pro Forma ANTI/Day multiplied by 252 trading days less midpoint of 2021 Adjusted Cash Operating Expense Guidance ($560M). 4. The range of Incremental ANTI/Day from Growth Initiatives reflects a Virtu management estimate of long-term steady-state ANTI from Growth Initiatives. 5. Incremental Adj. EBITDA from Growth Initiatives uses a trading day count of 252 to calculate full-year Incremental ANTI from Growth Initiatives and a 60% EBITDA margin. 6. Combined Pro Forma ANTI/Day calculated as the sum of Median Normalized Historical Pro Forma ANTI/Day and Median Incremental ANTI/Day from Growth Initiatives. Combined Pro Forma Adj. EBITDA calculated as the sum of Normalized Historical Adj. EBITDA and Median Incremental Adj. EBITDA from Growth Initiatives. Implied Growth compares Combined Pro Forma results to Normalized Historical results. 7. Figures are shown for illustrative purposes only to illustrate range of potential outcomes for a full year (consisting of 252 trading days) assuming the Company performs in accordance with 2021 Adj. Operating Expense guidance, with nominally higher cash compensation estimates when Adjusted Net Trading Income per Day is in excess of $6.0M. Figures do not represent affirmation of such prior guidance nor do they represent the view of the Company. The Company’s actual fourth quarter results are expected to be announced on or around February 9, 2022. 8. Assumes Debt of $1,831 million. Slide 20 Analyst Coverage 4Q 2021 1. The fourth quarter estimates reflected on this slide are the opinions of research analysts associated with the financial institutions named above as published on or prior to January 3, 2022 which may be updated or amended from time to time, and do not represent the views of the Company. The Company’s actual fourth quarter results are expected to be announced on or around February 9, 2022. Slide 23/24 Income Statement / Adjusted EBITDA & Normalized Adjusted EPS 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. Prior period reconciliations available at ir.virtu.com. Slide 25 Debt Capitalization 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 2. Virtu entered into a fixed-for-floating interest rate swap ending February 2025. 3. Virtu entered into a fixed-for-floating interest rate swap ending October 2024. 4. 3.5 billion JPY. 5. Blended rate. Slide 26 Balance Sheet and Trading Capital 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. 2. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 3. Comprises cash anticipated to be used in the operations of the business, including cash anticipated to be paid to satisfy tax and compensation liabilities, payments of debt pursuant to debt covenants, as well as dividends and other distributions to equity owners. Slide 27/30 GAAP Income Statement / Adjusted Operating Expense Reconciliation 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. Prior period reconciliations available at ir.virtu.com. These notes refer to metrics and/or defined terms presented on: |
Exhibit 99.2
Virtu Financial, Inc. Commences Marketing of New Senior Secured First Lien Term Loan
January 4, 2022
NEW YORK, Jan. 04, 2022 (GLOBE NEWSWIRE) -- Virtu Financial, Inc. (NASDAQ: VIRT) (the “Company”) a global market maker, broker and leading provider of global financial services technology, today announced that its subsidiaries commenced marketing of a $1.80 billion senior secured first lien term loan (the “Term Loan”) due in 2029. The proceeds of the Term Loan will be used to repay its existing senior secured term loan in connection with a refinancing of its existing credit facilities, to fund share repurchases under the Company’s authorized repurchase program and for general corporate purposes. The Term Loan will be guaranteed by Virtu Financial LLC, a subsidiary of the Company, and certain of its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements are subject to numerous uncertainties and factors relating to the Company’s operations and business environment, as well as uncertainties relating to the Term Loan. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized.
About Virtu Financial, Inc.:
Virtu is a leading provider of financial services and products that leverages cutting-edge technology to deliver liquidity to the global markets and innovative, transparent trading solutions to its clients. Leveraging its global market making expertise and infrastructure, Virtu provides a robust product suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology. Virtu’s product offerings allow clients to trade on hundreds of venues across 50+ countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and myriad other commodities. In addition, Virtu’s integrated, multi-asset analytics platform provides a range of pre- and post-trade services, data products and compliance tools that clients rely upon to invest, trade and manage risk across global markets.
Contact:
Investor Relations and Media Contact:
Andrew Smith
Virtu Financial, Inc.
(212) 418-0195
investor_relations@virtu.com
media@virtu.com