ITG (NYSE: ITG), an independent execution and research broker, today reported results for the quarter ended September 30, 2012.
Third quarter 2012 highlights included:
- Net income of $0.2 million, or $0.01 per diluted share compared to net income of $10.5 million, or $0.25 per diluted share for the third quarter of 2011. Net income for the third quarter of 2012 included a $1.3 millionincome tax benefit, or $0.03 per diluted share, from resolving a contingency in the U.S. The reserves related to this income tax contingency were not excluded from adjusted results when they were established in previous reporting periods.
- Revenues of $119.6 million, compared to $149.4 million in the third quarter of 2011.
- Expenses of $119.4 million compared to expenses of $132.2 million in the third quarter of 2011.
- Average daily trading volume in the U.S. of 172.3 million shares, down 18% from the third quarter of 2011. POSIT® average daily U.S. volume was 81.3 million shares, down 16% from the third quarter of 2011. Total combined NYSE and NASDAQ average daily trading volume was down 27% in the third quarter of 2012 compared with the prior year period. In Europe, average daily value traded in POSIT was $317 million, up 19% from the third quarter of 2011.
- The repurchase of 500,000 shares of common stock under ITG's authorized share repurchase program for a total of $4.4 million. Repurchases since the first quarter of 2010 have totaled $106.8 million for 7.9 million shares, resulting in a decrease in shares outstanding, net of new issuances, of more than 13%.
Revenues from U.S. operations were $77.8 million in the third quarter of 2012 compared to $98.0 million in the third quarter of 2011. ITG's U.S. operations posted net income of $1.2 million in the third quarter of 2012, compared to net income of $6.9 million in the third quarter of 2011. Sell-side client volume represented 51% of total U.S. volumes, up from 50% in the second quarter of 2012. The overall revenue capture rate per share in the U.S. was $0.0044, unchanged since the fourth quarter of 2011.
ITG's International revenues were $41.8 million in the third quarter of 2012 compared to $51.4 million in the third quarter of 2011. ITG's International operations posted a net loss of $1.0 million in the third quarter of 2012, compared to net income of $3.6 million in the third quarter of 2011.
"We faced very trying conditions in the third quarter, with lower market volumes in the U.S. and in all our international regions," said Bob Gasser, ITG's Chief Executive Officer and President. "Despite that, we managed to maintain our U.S. average rate per share, even as the overall percentage of sell-side volume increased slightly, and we continue to focus on controlling expenses in this environment."
Year-to-Date Results
For the first nine months of 2012, revenues were $382.9 million, GAAP net loss was $241.4 million, or $6.24per diluted share, and adjusted net income was $7.6 million, or $0.19 per diluted share. For the first nine months of 2011, revenues were $442.1 million, GAAP net loss was $176.1 million, or $4.29 per diluted share, and adjusted net income was $25.9 million, or $0.62 per diluted share.
The discussion of year-to-date results above includes adjusted net income and related per share amounts, which are non-GAAP financial measures that are described in the attached tables along with a reconciliation of these non-GAAP financial measures to GAAP results.
Conference Call
ITG has scheduled a conference call today at 11:00 am ET to discuss third quarter results. Those wishing to listen to the call should dial 1-800-215-2410 (1-617-597-5410 outside the U.S.) and enter the passcode 79076050 at least 10 minutes prior to the start of the call to ensure connection. The webcast and accompanying slideshow presentation can be downloaded from ITG's website at investor.itg.com. For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-286-8010 (1-617-801-6888 outside the U.S.) and entering the passcode 24355464. The replay will be available starting approximately two hours after the completion of the conference call.