Attached files
| file | filename |
|---|---|
| 8-K - IBKR 8-K 2014-01-21 - Interactive Brokers Group, Inc. | ibkr_8k-20140121.htm |
Exhibit 99.1
INTERACTIVE BROKERS GROUP ANNOUNCES 2013 RESULTS
— — —
REPORTS COMPREHENSIVE EARNINGS PER SHARE OF $0.67, INCOME BEFORE TAXES OF $451 MILLION ON $1,076 MILLION IN NET REVENUES, AND EARNINGS PER SHARE ON NET INCOME OF $0.73.
DECLARES QUARTERLY DIVIDEND OF $0.10 PER SHARE.
GREENWICH, CONN, January 21, 2014 — Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.67 for the year ended December 31, 2013, compared to diluted earnings per share on a comprehensive basis of $1.13 for 2012.
On a non-comprehensive basis, which excludes the effect of changes in the U.S. dollar value of the Company’s non-U.S. subsidiaries, the Company reported diluted earnings per share on net income of $0.73 for the year ended December 31, 2013, compared to diluted earnings per share of $0.89 for the same period in 2012.
Net revenues were $1,076 million and income before income taxes was $451 million for the year, compared to net revenues of $1,131 million and income before income taxes of $527 million for 2012.
The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2014 to shareholders of record as of February 28, 2014.
Business Highlights
|
·
|
42% pretax profit margin for 2013, or 48% without unusual item.
|
|
·
|
48% Electronic Brokerage pretax profit margin for 2013, or 56% excluding unusual item.
|
|
·
|
26% Market Making pretax profit margin for 2013.
|
|
·
|
Customer equity grew 39% from 2012 to $45.7 billion.
|
|
·
|
Customer accounts increased 14% in 2013 to 239,000.
|
|
·
|
Total DARTs increased 18% from 2012 to 486,000.
|
|
·
|
Brokerage segment equity was $2.5 billion. Total equity was $5.1 billion.
|
1
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes grew 15%, to $391 million, in 2013. Customer accounts grew 14% from the prior year and customer equity increased 39% during 2013(1). Commissions and execution fees increased 22%. Net interest income grew 24% from the prior year, to $228 million. Pretax profit margin was 48% in 2013, down from 51% in 2012. Excluding $64.3 million in expense related to an unusual item (see below), pretax profit margin was 56% in 2013.
Total DARTs(2), for cleared and execution-only customers, increased 18% to 486,000 in 2013, compared to 413,000 during 2012. Cleared DARTs were 441,000 in 2013, 15% higher than in 2012.
Market Making
Market Making segment income before income taxes decreased 62%, to $72 million, in 2013. This decrease was driven by a market making environment with persistent low volatility and low actual-to-implied volatility, and by a greater loss from holding our equity in a basket of currencies, as measured in U.S. dollars. In 2013, our currency diversification strategy resulted in a reported loss of $89 million, compared to a $39 million loss in 2012. Currency translation effects are reported as part of Trading Gains in the Market Making segment. Including balance sheet effects, our currency strategy resulted in a loss of $116 million in 2013, as compared to a loss of $19 million in the prior year. Pretax profit margin decreased to 26% in 2013 from 41% in 2012. Market Making options contract volume decreased 12% in 2013.
Unusual Item
As disclosed in the Company’s Form 10-Q for the quarter ended September 30, 2013, a small number of the Company’s brokerage customers had taken relatively large positions in four securities listed on the Singapore Exchange. In early October, within a very short timeframe, these securities lost over 90% of their value. The customer accounts were margined and fell into deficits prior to the time the Company took possession of their securities positions. At December 31, 2013, the Company has recognized an aggregate loss of approximately $73 million. The maximum aggregate loss, which would occur if the securities’ prices all fell to zero and none of the debts were collected, would be approximately $84 million. The Company is currently pursuing the collection of the debts. The ultimate effect of this incident on the Company’s results will depend upon market conditions and the outcome of the Company’s debt collection efforts.
Effects of Foreign Currency Diversification
In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of 16 major currencies in which we hold our equity. In 2013, our currency diversification program decreased our comprehensive earnings by $116 million, as the U.S. dollar value of the GLOBAL decreased by approximately 2.4%. The effects of currency diversification are reported as components of (1) Market Making Trading Gains and (2) Other Comprehensive Income (“OCI”). In this year 76% of the GLOBAL effect was captured in Market Making Trading Gains in the Net Income section of the Statement of Comprehensive Income, with the remainder reported as OCI in the separate Comprehensive Income section of the Statement of Comprehensive Income.
|
(1)
|
Approximately 9% of the increase in customer equity was due to the reclassification of certain related accounts from “non-customer” to “customer”, which are regulatory distinctions.
|
|
(2)
|
Daily average revenue trades (DARTs) are based on customer orders.
|
2
_____________________
Conference Call Information:
Interactive Brokers Group will hold a conference call with investors today, January 21, 2014, at 4:30 p.m. ET to discuss its quarterly results. Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers Conference Call.”
The conference call will also be accessible simultaneously, and through replays, as an audio webcast through the Investor Relations section of the Interactive Brokers web site, www.interactivebrokers.com/ir.
About Interactive Brokers Group, Inc.:
Interactive Brokers Group, Inc., together with its subsidiaries, is an automated global electronic broker that specializes in catering to financial professionals by offering state-of-the-art trading technology, superior execution capabilities, worldwide electronic access, and sophisticated risk management tools at exceptionally low costs. The brokerage trading platform utilizes the same innovative technology as the Company’s market making business, which specializes in routing orders and executing and processing trades in securities, futures, foreign exchange instruments, bonds and funds on more than 100 electronic exchanges and trading venues around the world. As a market maker, we provide liquidity at these marketplaces and, as a broker, we provide professional traders and investors with electronic access to stocks, options, futures, forex, bonds and mutual funds from a single IB Universal AccountSM. Employing proprietary software on a global communications network, Interactive Brokers is continuously integrating its software with a growing number of exchanges and trading venues into one automatically functioning, computerized platform that requires minimal human intervention.
Cautionary Note Regarding Forward-Looking Statements:
The foregoing information contains certain forward-looking statements that reflect the company's current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment which may cause the company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. 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. Additional information on risk factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.
For Interactive Brokers Group, Inc. Media: Caitlin Duffy, 203-913-1369 or Investors: Deborah Liston, 203-618-4070.
3
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA
|
TRADE VOLUMES:
|
|||||||||
|
(in 000's, except %)
|
Brokerage
|
|
|||||||
|
Market
|
Brokerage |
|
Non
|
Avg. Trades
|
|||||
|
Making
|
%
|
Cleared
|
%
|
Cleared
|
%
|
Total
|
%
|
per U.S.
|
|
|
Period
|
Trades
|
Change
|
Trades
|
Change
|
Trades
|
Change
|
Trades
|
Change
|
Trading Day
|
|
2009
|
93,550
|
127,338
|
13,636
|
234,524
|
934
|
||||
|
2010
|
75,169
|
-20%
|
133,658
|
5%
|
18,732
|
37%
|
227,559
|
-3%
|
905
|
|
2011
|
63,602
|
-15%
|
160,567
|
20%
|
19,187
|
2%
|
243,356
|
7%
|
968
|
|
2012
|
60,421
|
-5%
|
150,000
|
-7%
|
16,118
|
-16%
|
226,540
|
-7%
|
904
|
|
2013
|
65,320
|
8%
|
173,849
|
16%
|
18,489
|
15%
|
257,658
|
14%
|
1,029
|
|
4Q2012
|
14,477
|
37,300
|
3,532
|
55,309
|
878
|
||||
|
4Q2013
|
14,437
|
0%
|
45,167
|
21%
|
4,585
|
30%
|
64,189
|
16%
|
1,019
|
|
CONTRACT AND SHARE VOLUMES:
|
||||||
|
(in 000's, except %)
|
||||||
|
TOTAL
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
2009
|
643,380
|
82,345
|
75,449,891
|
|||
|
2010
|
678,856
|
6%
|
96,193
|
17%
|
84,469,874
|
12%
|
|
2011
|
789,370
|
16%
|
106,640
|
11%
|
77,730,974
|
-8%
|
|
2012
|
698,140
|
-12%
|
98,801
|
-7%
|
65,872,960
|
-15%
|
|
2013
|
659,673
|
-6%
|
121,776
|
23%
|
95,479,739
|
45%
|
|
4Q2012
|
159,048
|
25,591
|
17,278,459
|
|||
|
4Q2013
|
155,216
|
-2%
|
28,724
|
12%
|
27,042,356
|
57%
|
|
MARKET MAKING
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
2009 **
|
428,810
|
15,122
|
26,205,229
|
|||
|
2010 **
|
435,184
|
1%
|
15,371
|
2%
|
19,165,000
|
-27%
|
|
2011 **
|
503,053
|
16%
|
15,519
|
1%
|
11,788,769
|
-38%
|
|
2012 **
|
457,384
|
-9%
|
12,660
|
-18%
|
9,339,465
|
-21%
|
|
2013 **
|
404,490
|
-12%
|
18,184
|
44%
|
12,849,729
|
38%
|
|
4Q2012 **
|
102,703
|
3,203
|
2,361,442
|
|||
|
4Q2013 **
|
87,498
|
-15%
|
4,245
|
33%
|
2,776,564
|
18%
|
|
BROKERAGE TOTAL
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
2009
|
214,570
|
67,223
|
49,244,662
|
|||
|
2010
|
243,672
|
14%
|
80,822
|
20%
|
65,304,874
|
33%
|
|
2011
|
286,317
|
18%
|
91,121
|
13%
|
65,942,205
|
1%
|
|
2012
|
240,756
|
-16%
|
86,141
|
-5%
|
56,533,495
|
-14%
|
|
2013
|
255,183
|
6%
|
103,592
|
20%
|
82,630,010
|
46%
|
|
4Q2012
|
56,345
|
22,388
|
14,917,017
|
|||
|
4Q2013
|
67,718
|
20%
|
24,479
|
9%
|
24,265,792
|
63%
|
|
* Includes options on futures
|
||||||
|
** In Brazil, an equity option contract typically represents 1 share of the underlying stock; however, the typical minimum
|
||||||
|
trading quantity is 100 contracts. To make a fair comparison to volume at other exchanges, we have adopted a policy
|
||||||
|
of reporting Brazilian equity options contracts divided by their trading quantity of 100.
|
||||||
4
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
|
CONTRACT AND SHARE VOLUMES, continued:
|
||||||
|
(in 000's, except %)
|
||||||
|
BROKERAGE CLEARED
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
2009
|
93,868
|
66,241
|
46,627,344
|
|||
|
2010
|
103,054
|
10%
|
79,144
|
19%
|
62,077,741
|
33%
|
|
2011
|
145,993
|
42%
|
89,610
|
13%
|
63,098,072
|
2%
|
|
2012
|
144,539
|
-1%
|
84,794
|
-5%
|
54,371,351
|
-14%
|
|
2013
|
180,660
|
25%
|
101,732
|
20%
|
78,829,785
|
45%
|
|
4Q2012
|
36,602
|
21,952
|
14,348,785
|
|||
|
4Q2013
|
49,181
|
34%
|
24,020
|
9%
|
23,208,208
|
62%
|
| * Includes options on futures | ||||||
|
BROKERAGE STATISTICS
|
|||
|
(in 000's, except % and where noted)
|
|||
|
4Q2013
|
4Q2012
|
% Change
|
|
|
Total Accounts
|
239
|
210
|
14%
|
|
Customer Equity (in billions) *
|
$45.7
|
$32.9
|
39%
|
|
Cleared DARTs
|
453
|
378
|
20%
|
|
Total Customer DARTs
|
499
|
407
|
23%
|
|
Cleared Customers (in $'s, except DART per account)
|
|||
|
Commission per DART
|
$4.23
|
$4.24
|
0%
|
|
DART per Avg. Account (Annualized)
|
483
|
457
|
6%
|
|
Net Revenue per Avg. Account (Annualized)
|
$3,375
|
$3,233
|
4%
|
|
* Excludes non-customers. Approximately 9% of the increase in customer equity was due to the reclassification of certain related accounts
|
|||
|
from “non-customer” to “customer”, which are regulatory distinctions.
|
|||
5
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
|
Three Months
|
Twelve Months
|
||||||||||||
|
Ended December 31,
|
Ended December 31,
|
||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||
| (in millions) | |||||||||||||
|
Electronic Brokerage
|
Net revenues
|
$211.5
|
$172.1
|
$814.0
|
$670.4
|
||||||||
|
Non-interest expenses
|
162.9
|
84.8
|
422.7
|
328.7
|
|||||||||
|
Income (loss) before income taxes
|
$48.6
|
$87.3
|
$391.3
|
$341.7
|
|||||||||
|
Pre-tax profit margin
|
23%
|
51%
|
48%
|
51%
|
|||||||||
|
Market Making
|
Net revenues
|
$52.6
|
$71.8
|
$274.5
|
$459.6
|
||||||||
|
Non-interest expenses
|
46.8
|
63.4
|
202.6
|
271.0
|
|||||||||
|
Income (loss) before income taxes
|
$5.8
|
$8.4
|
$71.9
|
$188.6
|
|||||||||
|
Pre-tax profit margin
|
11%
|
12%
|
26%
|
41%
|
|||||||||
|
Corporate*
|
Net revenues
|
($14.2
|
) |
$3.2
|
($12.3
|
) |
$0.5
|
||||||
|
Non-interest expenses
|
1.4
|
2.7
|
(0.4
|
) |
3.8
|
||||||||
|
Income (loss) before income taxes
|
($15.6
|
) |
$0.5
|
($11.9
|
) |
|
($3.3
|
) | |||||
|
Total
|
Net revenues
|
$249.9
|
$247.1
|
$1,076.2
|
$1,130.5
|
||||||||
|
Non-interest expenses
|
211.1
|
150.9
|
624.9
|
603.5
|
|||||||||
|
Income (loss) before income taxes
|
$38.8
|
$96.2
|
$451.3
|
$527.0
|
|||||||||
|
Pre-tax profit margin
|
16%
|
39%
|
42%
|
47%
|
|||||||||
|
* Corporate includes corporate related activities as well as inter-segment eliminations.
|
|||||||||||||
6
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
Three Months
|
Twelve Months
|
|||||||||||
|
Ended December 31,
|
Ended December 31,
|
|||||||||||
|
2013
|
2012
|
2013
|
2012
|
|||||||||
|
(in millions, except share and per share data)
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Trading gains
|
$43.8
|
$63.1
|
$245.2
|
$435.1
|
||||||||
|
Commissions and execution fees
|
124.1
|
103.1
|
502.1
|
412.6
|
||||||||
|
Interest income
|
79.1
|
67.8
|
299.7
|
268.4
|
||||||||
|
Other income
|
15.9
|
25.6
|
80.9
|
76.4
|
||||||||
|
Total revenues
|
262.9
|
259.6
|
1,127.9
|
1,192.5
|
||||||||
|
Interest expense
|
13.0
|
12.5
|
51.7
|
62.0
|
||||||||
|
Total net revenues
|
249.9
|
247.1
|
1,076.2
|
1,130.5
|
||||||||
|
Non-interest expenses:
|
||||||||||||
|
Execution and clearing
|
62.2
|
58.5
|
242.5
|
251.0
|
||||||||
|
Employee compensation and benefits
|
56.7
|
64.3
|
205.3
|
244.5
|
||||||||
|
Occupancy, depreciation and amortization
|
10.3
|
9.9
|
38.9
|
38.8
|
||||||||
|
Communications
|
5.7
|
6.1
|
23.1
|
23.3
|
||||||||
|
General and administrative
|
76.2
|
12.1
|
115.1
|
45.9
|
||||||||
|
Total non-interest expenses
|
211.1
|
150.9
|
624.9
|
603.5
|
||||||||
|
Income before income taxes
|
38.8
|
96.2
|
451.3
|
527.0
|
||||||||
|
Income tax expense
|
2.5
|
(4.4
|
) |
33.7
|
30.0
|
|||||||
|
Net income
|
36.3
|
100.6
|
417.6
|
497.0
|
||||||||
|
Net income attributable to noncontrolling interests
|
32.7
|
91.5
|
380.6
|
456.3
|
||||||||
|
Net income (loss) attributable to common stockholders
|
$3.6
|
$9.1
|
$37.0
|
$40.7
|
||||||||
|
Earnings (loss) per share:
|
||||||||||||
|
Basic
|
$0.07
|
$0.19
|
$0.74
|
$0.89
|
||||||||
|
Diluted
|
$0.07
|
$0.19
|
$0.73
|
$0.89
|
||||||||
|
Weighted average common shares outstanding:
|
||||||||||||
|
Basic
|
52,517,259
|
47,489,141
|
49,742,428
|
46,814,676
|
||||||||
|
Diluted
|
53,729,140
|
47,680,329
|
50,924,736
|
47,070,522
|
||||||||
|
Comprehensive income:
|
||||||||||||
|
Net income (loss) attributable to common stockholders
|
$3.6
|
$9.1
|
$37.0
|
$40.7
|
||||||||
|
Other comprehensive income:
|
||||||||||||
|
Cumulative translation adjustment, before income taxes
|
0.8
|
0.9
|
(3.2
|
) |
2.2
|
|||||||
|
Income taxes related to items of other comprehensive income
|
(0.2
|
) |
(9.6
|
) |
(0.5
|
) |
(9.1
|
) | ||||
|
Other comprehensive income (loss), net of tax
|
1.0
|
10.5
|
(2.7
|
) |
11.3
|
|||||||
|
Comprehensive income (loss) attributable to common stockholders
|
$4.6
|
$19.6
|
$34.3
|
$52.0
|
||||||||
|
Comprehensive income attributable to noncontrolling interests:
|
||||||||||||
|
Net income attributable to noncontrolling interests
|
32.7
|
$91.5
|
$380.6
|
$456.3
|
||||||||
|
Other comprehensive income (loss) - cumulative translation adjustment
|
4.9
|
7.1
|
(24.7
|
) |
17.0
|
|||||||
|
Comprehensive income attributable to noncontrolling interests
|
$37.6
|
$98.6
|
$355.9
|
$473.3
|
||||||||
7
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
December 31,
|
December 31,
|
||
|
2013
|
2012
|
||
|
(in millions)
|
|||
|
Assets
|
|||
|
Cash and cash equivalents
|
$1,909.0
|
$1,614.6
|
|
|
Cash and securities - segregated for regulatory purposes
|
13,296.0
|
12,482.4
|
|
|
Securities purchased under agreements to resell
|
386.3
|
428.9
|
|
|
Securities borrowed
|
2,751.5
|
2,833.1
|
|
|
Trading assets, at fair value
|
4,448.8
|
4,544.7
|
|
|
Receivables from customers, net of allowance
|
13,596.7
|
9,851.0
|
|
|
Receivables from brokers, dealers and clearing organizations
|
858.2
|
844.6
|
|
|
Other assets
|
624.2
|
600.3
|
|
|
Total assets
|
$37,870.7
|
$33,199.6
|
|
|
Liabilities and equity
|
|||
|
Liabilities
|
|||
|
Trading liabilities - financial instruments sold but not yet purchased, at fair value
|
$3,153.7
|
$4,286.3
|
|
|
Securities loaned
|
2,563.7
|
1,839.3
|
|
|
Short-term borrowings
|
24.6
|
110.4
|
|
|
Other payables:
|
|||
|
Customers
|
26,319.4
|
21,422.0
|
|
|
Brokers, dealers and clearing organizations
|
331.0
|
361.8
|
|
|
Other payables
|
386.2
|
366.7
|
|
|
27,036.6
|
22,150.5
|
||
|
Senior notes payable and senior secured credit facility
|
0.0
|
0.0
|
|
|
Equity
|
|||
|
Stockholders' equity
|
707.3
|
598.5
|
|
|
Noncontrolling interests
|
4,384.8
|
4,214.6
|
|
|
Total equity
|
5,092.1
|
4,813.1
|
|
|
Total liabilities and equity
|
$37,870.7
|
$33,199.6
|
|
8
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
EARNINGS PER SHARE ON COMPREHENSIVE INCOME
(UNAUDITED)
|
Three Months
|
Twelve Months
|
||||||
|
Ended December 31,
|
Ended December 31,
|
||||||
|
2013
|
2012
|
2013
|
2012
|
||||
|
(in millions, except share and per share data)
|
|||||||
|
Comprehensive income attributable to common stockholders, net of tax
|
$4.6
|
$19.6
|
$34.3
|
$52.0
|
|||
|
Add (deduct) net income attributable to non-fair value redemption rights
|
0.0
|
0.0
|
0.0
|
1.1
|
|||
|
Comprehensive income available for common stockholders
|
$4.6
|
$19.6
|
$34.3
|
$53.1
|
|||
|
Comprehensive income (loss) per share:
|
|||||||
|
Basic
|
$0.09
|
$0.41
|
$0.69
|
$1.13
|
|||
|
Diluted
|
$0.09
|
$0.41
|
$0.67
|
$1.13
|
|||
|
Weighted average common shares outstanding:
|
|||||||
|
Basic
|
52,517,259
|
47,489,141
|
49,742,428
|
46,814,676
|
|||
|
Diluted
|
53,729,140
|
47,680,329
|
50,924,736
|
47,070,522
|
|||
9