Investment Technology Group Reports Second Quarter 2010 Results

NEW YORK, July 29 /PRNewswire-FirstCall/ -- Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today reported results for the quarter ended June 30, 2010.  An increase in U.S. volumes drove revenues and pro forma operating earnings higher as compared to the first quarter of 2010.

Net income for the second quarter of 2010 was $7.5 million, or $0.17 per diluted share on revenues of $155.3 million.  Excluding the impacts of a $5.4 million (pre- and post-tax) non-cash write-off of goodwill attributable to ITG's Australian operations and $2.3 million (pre- and post-tax) of restructuring charges, primarily related to the previously announced closing of ITG's onshore Japanese operations, pro forma operating net income was $15.3 million, or $0.35 per diluted share.  For the second quarter of 2009, net income was $20.3 million, or $0.46 per diluted share, on revenues of $168.0 million.

On a sequential basis, while net income was lower than the $8.4 million earned during the first quarter of 2010, pro forma operating net income of $15.3 million exceeded the $11.9 million of pro forma operating net income earned during the first quarter. Revenues for the second quarter were 6% higher than the $146.7 million generated during the first quarter, boosted by an increase in U.S. trading volumes.  

ITG's non-U.S. revenues were $47.2 million in the second quarter of 2010, a 3% increase over $46.0 million in the second quarter of 2009.  Non-U.S. operations incurred a net loss of $6.8 million inclusive of the Australian goodwill write-off and the restructuring charge to close ITG's onshore Japanese operations. Excluding the impacts of these items, pro forma operating net income from non-U.S. operations was $1.1 million during the second quarter of 2010, compared to net income of $2.2 million during the second quarter of 2009.  

"Despite what continues to be a challenging environment for our asset management clients, ITG derived strong benefit during the second quarter from our improved operating efficiency," said Bob Gasser, ITG's Chief Executive Officer and President.  "Growth in our U.S. trading volumes and continued strong performance in Canada led to an improvement over the first quarter in pro forma operating earnings, demonstrating the leverage we've gained in our business model over the past several quarters.  We will continue to focus on capital efficiency and operating discipline while going after a bigger piece of the client wallet through investments in new products and service offerings."

During the second quarter of 2010, ITG repurchased 903,900 shares of its common stock under its authorized share repurchase program, bringing year-to-date repurchases to 1.5 million shares.  In July 2010, ITG's Board of Directors authorized the repurchase of an additional 4.0 million shares, bringing the total number of shares currently available for repurchase under ITG's share repurchase program to 4.6 million shares.

"We are very pleased with the Board's approval of this new authorization as it demonstrates confidence in the value of ITG's platform and franchise, as well as an ongoing commitment to increase stockholder value," said Steve Vigliotti, ITG's Chief Financial Officer.

The discussion above includes pro forma operating 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.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss second quarter results.  Those wishing to listen to the call should dial 866-783-2139 (1-857-350-1598 outside the U.S.) and enter the passcode 45567619 at least 10 minutes prior to the start of the call to ensure connection.  The conference call and webcast will also be accessible through ITG's website at www.itg.com.  For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 888-286-8010 (1-617-801-6888 outside the U.S.) and entering the passcode 12665032.  The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

Investment Technology Group, Inc. is an independent agency broker and financial technology firm that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT® crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity and market-leading execution services, measurement tools, and proprietary data. Asset managers rely on ITG's independence, experience, and intellectual capital to help mitigate risk, improve performance, and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe, and the Asia Pacific region. For more information on ITG, please visit www.itg.com.

In addition to historical information, this press release may contain "forward-looking" statements that reflect management's expectations for the future.  A variety of important factors could cause results to differ materially from such statements.  These factors are noted throughout ITG's 2009 Annual Report, on its Form 10-K, and on its Form 10-Qs and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, changes in commission pricing, potential impairment charges related to goodwill and other long-lived assets, evolving industry regulations, errors or malfunctions in our systems or technology, rapid changes in technology, cash flows into or redemptions from equity funds, effects of inflation, ability to meet liquidity requirements related to the clearing of our customers' trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, changes in tax policy or accounting rules, fluctuations in foreign exchange rates, adverse changes or volatility in interest rates, our ability to attract and retain talented employees, as well as general economic, business, credit and financial market conditions, internationally or nationally. The forward-looking statements included herein represent ITG's views as of the date of this release. ITG undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.

The specific timing and amount of share repurchases will vary based on market conditions and other factors. The share repurchase program may be modified, expanded or terminated by the Board of Directors at any time.

ITG Contact:

J.T. Farley

(212) 444-6259

In evaluating ITG's financial performance, management reviews results from operations which excludes non-operating or one-time charges.  Pro forma operating net income and pro forma diluted earnings per share are non-GAAP (generally accepted accounting principles) performance measures, but the Company believes that they are useful to assist investors in gaining an understanding of the trends and operating results for the Company's core businesses. These measures should be viewed in addition to, and not in lieu of, the Company's reported results under U.S. GAAP.

The following is a reconciliation of U.S. GAAP results to pro forma results for the periods presented (in thousands except per share amounts):

SOURCE Investment Technology Group, Inc.