FX Alliance Inc. Reports Second Quarter 2012 Financial Results

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NEW YORK, August 2, 2012 - FX Alliance Inc. ("FXall") FX, the leading independent global provider of electronic foreign exchange trading solutions, today reported financial results for the second quarter of 2012.

For the second quarter of 2012, revenues increased 7% to $31.4 million from $29.4 million in the second quarter of 2011. Adjusted Net Income decreased 3% to $6.9 million, or $0.23 per share, from $7.1 million or $0.25 per share for the same period last year.  Net Income of $6.2 million was consistent with the same period last year.  For the six months ended June 30, 2012, revenues increased 8% to $61.4 million from $56.8 million in the same period in 2011.  Adjusted Net Income decreased 7% to $12.0 million for the six months ended June 30, 2012, compared to $13.0 million in the same period last year.  Net Income for the six months ended June 30, 2012 decreased 5% to $10.8 million from $11.4 million in the same period last year.  A full reconciliation of GAAP to non-GAAP financial measures is included with this release.

Total average daily volume (counting one side of each trade) was $92.4 billion, an increase of 8% from the second quarter of 2011, driven by growth across both Relationship and Active trading.  Average daily volume for Relationship Trading was $71.5 billion, 5% higher than the second quarter of 2011, while average daily volume for Active Trading increased 18% from the second quarter of 2011 to $20.8 billion.  The average transaction fee per million in the second quarter of 2012 was $4.06, reflecting $3.51 for Relationship Trading and $5.94 for Active Trading.

Operating expenses were $20.9 million, 13% higher than Q2 2011.  Adjusted EBITDA was $14.2 million, down from $14.8 million in Q2 2011.  The Adjusted EBITDA margin was 45% compared to 50% in the second quarter of 2011.

The effective tax rate for the second quarter was 39.8% compared to 42.8% in the second quarter of 2011.

Capital expenditures for the quarter ended June 30, 2012 were $3.9 million, consistent with the same period in 2011.

At June 30, 2012, cash, cash equivalents and investments available-for-sale were $68.8 million.  

Financial Measures

Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures.  The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in understanding the Company's operating results.  See the attached schedule for a full reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP.

About FXall

FXall is the leading independent global provider of electronic foreign exchange trading solutions, with over 1,000 institutional clients worldwide. FXall's offices in New York, Boston, Washington, London, Zurich, Hong Kong, Tokyo, Singapore, Sydney and Mumbai serve the needs of active traders, asset managers, corporate treasurers, banks, broker-dealers and prime brokers.

Contacts:
Investor contact:
Andrew Posen
Head of Investor Relations
Telephone: (646) 268-9952
andrew.posen@fxall.com

News media contact:
Dafina Grapci-Penney
Greentarget
Telephone: +44 20 7324 5486
Mobile: + 44 752 533 5733
dafina.grapci-penney@greentarget.co.uk

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "forecast" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results, including all statements related to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth, initiatives, or strategies are forward-looking statements.

Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, any failure to successfully execute our growth strategy, including failing to increase our FX trading volumes, or failing to grow and maximize our existing institutional client relationships or effectively cross-sell our products to our clients; economic conditions, such as the current Eurozone crisis, including their effect on the FX, financial and capital markets, our vendors and business partners, employment levels, and inflation; our loss of key personnel or our inability to hire additional personnel; damage or interruption to our electronic trading platform or information systems; the impact of governmental laws and regulations; changes in the competitive environment in our industry and the markets in which we operate; natural disasters, unusually adverse weather conditions, pandemic outbreaks, boycotts and geo-political events; and our failure to maintain effective internal controls. Other unknown or unpredictable factors also could have material adverse effects on our performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in FX Alliance Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011, included under headings such as "Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in other filings and furnishings made by the Company with the SEC from time to time. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.

FX ALLIANCE INC.

Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)

Three Months EndedSix Months Ended
June 30, June 30,
2012201120122011
Revenues
Transaction fees$23,987 $22,821 $46,792 $43,336
User, settlement, and license fees7,409 6,608 14,625 13,477
     Total revenues 31,396 29,429  61,417 56,813
Operating Expenses
Salaries and benefits 12,703 12,460 26,814 24,590
Technology 1,940 1,448 3,838 3,032
General and administrative 1,989 1,523 4,100 2,992
Marketing 355 356 696 789
Professional fees 1,295 351 2,640 778
Depreciation and amortization 2,657 2,434 5,227 4,866
     Total operating expenses 20,939 18,572 43,315 37,047
Operating income10,457 10,857 18,102 19,766
Interest and other income (expense), net (122)51  (80)141
Income before income taxes10,335 10,908 18,022 19,907
Provision for income taxes4,116 4,673 7,179 8,527
Net income 6,219 6,235 10,843 11,380
Accretion and allocated earnings of preferred stock -   2,954 1,276 5,604
Net income allocated to common stockholders $6,219 $3,281 $9,567  $5,776
Earnings per common share:
     Basic $0.22 $0.16 $0.36 $0.27
     Diluted $0.21 $0.15 $0.35 $0.27
Weighted-average common shares outstanding:
     Basic 28,336,566 21,043,899 26,769,958 21,043,899
     Diluted 29,433,797 21,582,989 27,712,678 21,517,390
Net Income per common share including
conversion of preferred at beginning of period:
     Basic[1]$0.22 $0.22 $0.38 $0.40
     Diluted[1]$0.21 $0.22 $0.37 $0.40
Adjusted Net Income per common share
including conversion of preferred at beginning of period:
     Basic[1]$0.24 $0.25 $0.43  $0.46
     Diluted[1]$0.23 $0.25 $0.41  $0.45
Adjusted Weighted-average common shares outstanding
including conversion of preferred at beginning of period:
     Basic[1]28,336,566 28,284,637 28,321,545 28,284,637
     Diluted[1]29,433,797 28,823,727 29,264,265 28,758,128

[1] Figures reflect non-GAAP financial measures

FX ALLIANCE INC.
Consolidated Balance Sheets
(in thousands)
(unaudited)

June 30,
2012
December 31,
2011
   Assets
   Current assets
     Cash and cash equivalents $61,526 $127,722
     Investments available-for-sale 7,241 7,077
     Accounts receivable, net16,531 13,122
     Income taxes receivable 5,979 7,748
     Deferred income taxes 5,010 5,390
     Prepaid expenses and other current assets 2,323 2,284
       Total current assets 98,610  163,343
     Software development costs, net 22,756 19,746
     Property and equipment, net12,334 11,379
     Deferred income taxes, net of current portion 9,858 11,298
     Intangible assets, net 1,819 2,016
     Goodwill 2,999 2,999
     Other assets 2,546 1,730
       Total assets $150,922 $212,511
Liabilities, Reedemable Convertible
Preferred Stock and Stockholders' Equity
   Current liabilities
     Accounts payable and accrued expenses$3,670 $5,985
     Accrued compensation 9,870 13,575
     Income taxes payable 1,722 924
     Deferred revenues 226 287
       Total current liabilities 15,488 20,771
   Long term liabilities
     Deferred rent 2,743 3,011
   Commitments and Contingencies
   Redeemable Convertible Series A Preferred stock-   109,276
   Stockholders' Equity
     Preferred stock-   -  
     Common stock3 2
     Additional paid-in capital  123,051 17,144
     Accumulated other comprehensive
     income, net of tax
78 33
     Retained earnings 9,559 62,274
     Total stockholders' equity 132,691 79,453
       Total liabilities, redeemable convertible
       preferred stock and stockholders' equity
$150,922 $212,511

FX ALLIANCE INC.
Key Operating Metrics
(unaudited)

Three Months EndedSix Months Ended
June 30, June 30,
2012201120122011
Total Trading Volume (in millions)(1)
  Relationship Trading$4,577,826$4,355,764$8,928,708$8,405,290
  Active Trading1,334,048 1,131,427 2,538,318 2,017,738
    Total$5,911,874$5,487,191$ 11,467,026 $ 10,423,028
Trading Days (2)64 64 128 128
Average Daily Volume (in millions)
  Relationship Trading$71,529$68,059$69,755$65,666
  Active Trading20,845 17,678 19,831 15,764
    Total$92,374$$85,737$ 89,586 $ 81,430
Transaction Fees (in thousands)
  Relationship Trading  $16,067  $15,798  $31,641  $30,553
  Active Trading7,920 7,023 15,151 12,783
    Total$23,987$22,821$46,792$43,336
Average Transaction Fee per Million
  Relationship Trading$3.51$3.63$3.54$3.63
  Active Trading$5.94$6.21$5.97$6.34
    Total$4.06$4.16$4.08$4.16

(1) Notional U.S. dollar-equivalent (calculated at the time of trade) of trades executed on FXall generating transaction fees (counting one side of the transaction)
(2) Trading days include each Monday through Friday excluding New Year's Day, Good Friday and Christmas Day.

FX ALLIANCE INC.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except share data)
(unaudited)

Three Months EndedSix Months Ended
June 30, June 30,
2012201120122011
Adjusted EBITDA:
Net income$6,219$6,235 $10,843  $11,380
Interest and other income122  (51)80  (141)
Depreciation and amortization2,657 2,434 5,227 4,866
Stock-based compensation expense1,061 1,522 1,947 2,817
Provision for income taxes4,116 4,673 7,179 8,527
Adjusted EBITDA$14,175$14,813$25,276 $27,449
Adjusted Net Income:
Net income$6,219$6,235$10,843 $11,380
Stock-based compensation expense, net of tax652  865 1,197 1,601
Adjusted Net Income$6,871$7,100$12,040  $12,981
Adjusted Weighted-average basic
common shares outstanding including
conversion of preferred at beginning of period:
Weighted-average basic common shares outstanding28,336,566 21,043,899 26,769,958 21,043,899
Conversion of preferred shares into common shares-7,240,738 1,551,587 7,240,738
Adjusted Weighted-average basic common shares
outstanding including conversion of preferred
28,336,566 28,284,637 28,321,545 28,284,637
Adjusted Weighted-average fully diluted
common shares outstanding including
conversion of preferred at beginning of period:
Weighted-average fully diluted common shares outstanding29,433,797 21,582,989 27,712,678  21,517,390
Conversion of preferred shares into common shares-7,240,738 1,551,587 7,240,738
Adjusted Weighted-average fully diluted common shares
outstanding including conversion of preferred
29,433,797 28,823,727 29,264,265 28,758,128




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: FX Alliance, Inc via Thomson Reuters ONE

HUG#1631301
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