Asia Pacific restructuring charge dents ITG Q4 earnings

Source: Investment Technology Group

Investment Technology Group, (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the fourth quarter ended December 31, 2006, net income was $22.1 million, compared to net income of $21.4 million in the fourth quarter of 2005.

Earnings were $0.49 per diluted share, a decrease of 2 percent versus earnings of $0.50 per diluted share in the fourth quarter of last year. ITG's total revenue for the fourth quarter of 2006 was $153.1 million, 37 percent higher than total revenue of $112.1 million for the fourth quarter of 2005. Net income for the fourth quarter of 2006 included an after-tax charge of $0.6 million, or approximately $0.015 per share, for restructuring costs in ITG's Asia Pacific region. International pre-tax operating income, exclusive of this restructuring charge, increased to $3.4 million in the fourth quarter of 2006 from $0.4 million in the fourth quarter of 2005.

Excluding the impact of the restructuring charge, operating earnings were $0.51 per diluted share in the fourth quarter of 2006 versus operating earnings of $0.50 per diluted share in the fourth quarter of last year. Pre-tax operating margins in the fourth quarter of 2006 were 23.4 percent, compared to 28.2 percent in the fourth quarter of 2005. For the full year 2006, pre-tax operating margins were 25.6 percent, compared to 26.2 percent in 2005.

For the year ended December 31, 2006, revenues were $599.5 million, net income was $97.9 million, and diluted earnings per share were $2.21. Compared to 2005, revenues increased 47 percent, net income grew 45 percent and diluted earnings per share increased 38 percent. Excluding non-operating items, 2006 revenues increased 45 percent, net income grew 38 percent, and earnings per share increased 32 percent over 2005.

"In 2006, ITG sustained volume and market share growth across all product lines as we continued to execute our strategy of providing clients with solutions that span the trading continuum while also reinvesting in the business," said Bob Gasser, ITG's Chief Executive Officer and President. "Broader distribution of our Radical and Triton direct market access products continues to feed growth in both the institutional demand for our POSIT anonymous block crossing suite, and algorithmic trading offerings. POSIT 2006 average daily executed volume was 46.9 million shares resulting in a 37% increase over 2005."

ITG's International revenues were $33.1 million in the fourth quarter of 2006, 35 percent higher than revenues of $24.5 million in the fourth quarter of 2005. For the full year, international operating revenues were $118.1 million, representing 28 percent growth over 2005. In 2006, international pre-tax operating income was $9.9 million, up 94 percent from $5.1 million in 2005.

"ITG's Canadian revenues grew significantly in 2006, increasing 45 percent over 2005," said Mr. Gasser. "In addition, ITG's European revenues were also a highlight this year, growing 19 percent over 2005 as we moved forward with the globalization of our product line," said Mr. Gasser.

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