Virtu Financial, Inc. (NASDAQ:VIRT) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 08:30 am ET

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Virtu Financial, Inc. (NASDAQ:VIRT) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Alex Ioffe

6.75% to 4.8% or 195 basis points lower fixed for five years and we extended the maturity of this debt from 2022 to 2026. This will reduce our interest expense by approximately $8.6 billion per year. The interest rate environment continues to be favorable. And attention bankers we are evaluating options for additional optimization of the $1.5 billion in floating rate term debt maturing in 2026. As Doug mentioned after the end of the third quarter we prepaid $50 million of outstanding debt. However we included $10 million of accrued interest in the refinancing of the $500 million notes. Consequently the net debt paydown since the third quarter was $40 million. Adjusted EBITDA for the third quarter was $104 million. Net interest expense was $34 million. Debt to trailing 12 months EBITDA stood at 3.4x. Integration with ITG is proceeding well. Through the third quarter we realized $96 million of synergies or 72% of the original target $133 million.

For the full year we expect to realize $134 million in expense synergies or 101% of the original target.To be fair on the last quarterly call we raised total synergies target from $133 million to $167 million a 25% increase. We are on track to achieve total synergies of $167 million midpoint of the higher second quarter guidance or better by the end of 2020. As we are working through the integration we think $10 million better or $177 million in savings is reasonable. This would put us on an operating expense run rate of $156 million for the quarter compared to a premerger combined run rate for Virtu and ITG of $200 million per quarter. I would like to point out that the $200 million quarterly expense run rate was already reduced for Virtu as a result of synergies from the KCG acquisition. We continue to be within the expense guidance range for 2019 but we are at the higher end of the range. This is mostly due to do with timing and does not impact 2020 projected savings. The 2 main components for the timing were: sub leases for the space that is no longer needed and the timing of staff reductions which reduced the expense run rate in future periods. Finally we declared a customary $0.24 dividend for the quarter which will be paid on December 16.

Now I would like to turn the call over to the operator for Q&A.