StoneX Group Inc. Reports Fiscal 2022 Third Quarter Financial Results

StoneX Group Inc.

Quarterly Operating Revenues of $528.8 million, up 23%

Quarterly Net Income of $49.1 million, ROE of 19.1%

Quarterly Diluted EPS of $2.37 per share, up 42%

NEW YORK, Aug. 03, 2022 (GLOBE NEWSWIRE) -- StoneX Group Inc. (the “Company”; NASDAQ: SNEX), a diversified global brokerage and financial services firm providing execution, risk management and advisory services, market intelligence and clearing services across multiple asset classes and markets around the world, today announced its financial results for the fiscal year 2022 third quarter ended June 30, 2022.

Sean M. O’Connor, CEO of StoneX Group Inc., stated, “We continued to see strong performance across all products and segments, resulting in net income for the quarter of $49.1 million, up 44% compared to the prior year, and diluted EPS of $2.37. Standout performance was achieved by our retail business, with segment income up 338%, and our physical commodities businesses performed very well with operating revenues up 37%. Also notable was the increase in interest received on our client float, up 207%. Our financial results generated an ROE of 19.1% on stated book value and a 21.0% ROE on tangible book value for the quarter, and an ROE of 21.2% on stated book value and a 23.5% ROE on tangible book value for the year-to-date period.”

StoneX Group Inc. Summary Financials

Consolidated financial statements for the Company will be included in our Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission (“SEC”). The Quarterly Report on Form 10-Q will also be made available on the Company’s website at www.stonex.com.

	Three Months Ended June 30,										Nine Months Ended June 30,
(Unaudited) (in millions, except share and per share amounts)		2022				2021		% Change				2022			2021		% Change
Revenues:
Sales of physical commodities	$	18,431.0			$	9,785.9		88	%		$	48,214.1		$	29,473.7		64	%
Principal gains, net		295.2				232.1		27	%			869.8			700.7		24	%
Commission and clearing fees		126.9				124.0		2	%			381.6			373.2		2	%
Consulting, management, and account fees		27.7				22.3		24	%			77.2			67.4		15	%
Interest income		50.1				27.8		80	%			112.3			72.4		55	%
Total revenues		18,930.9				10,192.1		86	%			49,655.0			30,687.4		62	%
Cost of sales of physical commodities		18,402.1				9,760.6		89	%			48,131.0			29,404.4		64	%
Operating revenues		528.8				431.5		23	%			1,524.0			1,283.0		19	%
Transaction-based clearing expenses		74.7				67.1		11	%			222.1			207.3		7	%
Introducing broker commissions		41.2				41.8		(1	)%			122.7			120.8		2	%
Interest expense		28.1				14.5		94	%			57.9			35.5		63	%
Interest expense on corporate funding		10.7				10.1		6	%			33.1			31.1		6	%
Net operating revenues		374.1				298.0		26	%			1,088.2			888.3		23	%
Compensation and other expenses:
Variable compensation and benefits		123.9				102.4		21	%			348.4			292.7		19	%
Fixed compensation and benefits		78.3				74.9		5	%			235.9			223.2		6	%
Trading systems and market information		16.0				14.4		11	%			49.0			42.9		14	%
Professional fees		13.2				9.5		39	%			38.9			27.8		40	%
Non-trading technology and support		12.9				11.3		14	%			38.7			32.8		18	%
Occupancy and equipment rental		9.2				9.7		(5	)%			26.7			25.8		3	%
Selling and marketing		16.0				8.1		98	%			41.3			23.4		76	%
Travel and business development		4.9				1.3		277	%			10.8			2.8		286	%
Communications		2.0				2.3		(13	)%			6.0			7.0		(14	)%
Depreciation and amortization		11.7				9.7		21	%			32.1			26.7		20	%
Bad debt (recovery) expense, net		(0.7	)			1.3		n/m				11.4			3.7		208	%
Other		15.8				10.7		48	%			44.6			33.9		32	%
Total compensation and other expenses		303.2				255.6		19	%			883.8			742.7		19	%
Gain on acquisition and other gains		—				3.6		n/m				6.4			3.6		78	%
Income before tax		70.9				46.0		54	%			210.8			149.2		41	%
Income tax expense		21.8				11.8		85	%			56.0			40.2		39	%
Net income	$	49.1			$	34.2		44	%		$	154.8		$	109.0		42	%
Earnings per share:
Basic	$	2.42			$	1.72		41	%		$	7.69		$	5.53		39	%
Diluted	$	2.37			$	1.67		42	%		$	7.52		$	5.38		40	%
Weighted-average number of common shares outstanding:
Basic		19,634,450				19,255,452		2	%			19,529,843			19,102,244		2	%
Diluted		20,109,992				19,855,226		1	%			19,984,898			19,669,397		2	%
n/m = not meaningful to present as a percentage

The following table presents our consolidated operating revenues by segment for the periods indicated.

	Three Months Ended June 30,											Nine Months Ended June 30,
(in millions)		2022				2021			% Change				2022				2021			% Change
Segment operating revenues represented by:
Commercial	$	170.2			$	152.2			12	%		$	506.9			$	402.1			26	%
Institutional		209.1				173.0			21	%			573.2				530.1			8	%
Retail		108.5				77.7			40	%			324.9				261.6			24	%
Global Payments		44.3				35.0			27	%			127.7				102.9			24	%
Corporate Unallocated		2.9				(2.0	)		n/m				6.9				(1.3	)		n/m
Eliminations		(6.2	)			(4.4	)		41	%			(15.6	)			(12.4	)		26	%
Operating revenues	$	528.8			$	431.5			23	%		$	1,524.0			$	1,283.0			19	%

The following table presents our consolidated income by segment for the periods indicated.

	Three Months Ended June 30,											Nine Months Ended June 30,
(in millions)		2022				2021			% Change				2022				2021			% Change
Segment income represented by:
Commercial	$	72.5			$	60.4			20	%		$	208.1			$	148.1			41	%
Institutional		47.7				46.5			3	%			129.6				143.3			(10	)%
Retail		26.3				6.0			338	%			95.2				55.9			70	%
Global Payments		24.6				20.3			21	%			73.0				60.1			21	%
Total segment income	$	171.1			$	133.2			28	%		$	505.9			$	407.4			24	%
Reconciliation of segment income to income before tax:
Segment income	$	171.1			$	133.2			28	%		$	505.9			$	407.4			24	%
Net costs not allocated to operating segments		(100.2	)			(90.8	)		10	%			(295.1	)			(261.8	)		13	%
Gain on acquisition and other gains		—				3.6			n/m				—				3.6			n/m
Income before tax	$	70.9			$	46.0			54	%		$	210.8			$	149.2			41	%

Key Operating Metrics

The tables below display operating revenues disaggregated across the key products we provide to our clients and select operating data and metrics used by management in evaluating our performance, for the periods indicated.

All $ amounts are U.S. dollar or U.S. dollar equivalents	Three Months Ended June 30,											Nine Months Ended June 30,
		2022				2021			% Change				2022				2021			% Change
Operating Revenues (in millions):
Listed derivatives	$	106.1			$	101.8			4	%		$	329.7			$	297.9			11	%
Over-the-counter (“OTC”) derivatives		50.2				49.7			1	%			159.3				109.0			46	%
Securities		154.6				137.1			13	%			428.6				421.5			2	%
FX / Contract For Difference (“CFD”) contracts		86.8				51.8			68	%			257.9				186.3			38	%
Global payments		42.8				34.1			26	%			124.2				100.5			24	%
Physical contracts		50.8				37.2			37	%			132.4				110.5			20	%
Interest / fees earned on client balances		21.5				7.0			207	%			40.2				18.1			122	%
Other		19.3				19.2			1	%			60.4				52.9			14	%
Corporate Unallocated		2.9				(2.0	)		n/m				6.9				(1.3	)		n/m
Eliminations		(6.2	)			(4.4	)		41	%			(15.6	)			(12.4	)		26	%
	$	528.8			$	431.5			23	%		$	1,524.0			$	1,283.0			19	%
Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents):
Listed derivatives (contracts, 000’s)		41,049				35,756			15	%			119,796				110,097			9	%
Listed derivatives, average rate per contract (1)	$	2.41			$	2.75			(12	)%		$	2.60			$	2.59			—	%
Average client equity - listed derivatives (millions)	$	6,145			$	3,967			55	%		$	5,362			$	3,735			44	%
OTC derivatives (contracts, 000’s)		730				771			(5	)%			2,231				1,889			18	%
OTC derivatives, average rate per contract	$	69.16			$	64.17			8	%		$	71.64			$	57.27			25	%
Securities average daily volume (“ADV”) (millions)	$	6,602			$	2,901			128	%		$	4,252			$	2,687			58	%
Securities rate per million (“RPM”) (2)	$	314			$	603			(48	)%		$	434			$	681			(36	)%
Average money market / FDIC sweep client balances (millions)	$	1,863			$	1,611			16	%		$	1,730			$	1,431			21	%
FX / CFD contracts ADV (millions)	$	13,147			$	9,650			36	%		$	13,615			$	10,490			30	%
FX / CFD contracts RPM	$	102			$	83			23	%		$	98			$	93			5	%
Global Payments ADV (millions)	$	66			$	55			20	%		$	61			$	53			15	%
Global Payments RPM	$	10,652			$	9,786			9	%		$	10,952			$	10,041			9	%

(1)	Give-up fees as well as cash and voice brokerage revenues are excluded from the calculation of listed derivatives, average rate per contract.
(2)	Interest income related to securities lending is excluded from the calculation of Securities RPM.

Operating Revenues

Operating revenues increased $97.3 million, or 23%, to $528.8 million in the three months ended June 30, 2022 compared to $431.5 million in the three months ended June 30, 2021.

Operating revenues derived from listed derivatives increased $4.3 million, or 4%, to $106.1 million in the three months ended June 30, 2022 compared to $101.8 million in the three months ended June 30, 2021. This increase was principally due to a 15% increase in listed derivative contract volumes, which was partially offset by a 12% decline in the average rate per contract compared to the three months ended June 30, 2021.

Operating revenues derived from OTC derivatives increased $0.5 million, or 1%, to $50.2 million in the three months ended June 30, 2022 compared to $49.7 million in the three months ended June 30, 2021. This was the result of an 8% increase in the OTC derivative average rate per contract, which was partially offset by a 5% decline in OTC derivative contract volumes compared to the three months ended June 30, 2021.

Operating revenues derived from securities transactions increased $17.5 million, or 13%, to $154.6 million in the three months ended June 30, 2022 compared to $137.1 million in the three months ended June 30, 2021. This increase was principally due to a 128% increase in ADV, which was partially offset by a 48% decline in RPM compared to the three months ended June 30, 2021.

Operating revenues derived from FX/CFD contracts increased $35.0 million, or 68%, to $86.8 million in the three months ended June 30, 2022 compared to $51.8 million in the three months ended June 30, 2021, principally due to a 36% increase in FX/CFD contracts ADV as well as a 23% increase in FX/CFD contracts RPM.

Operating revenues from global payments increased $8.7 million, or 26%, to $42.8 million in the three months ended June 30, 2022 compared to $34.1 million in the three months ended June 30, 2021, principally driven by a 20% increase in ADV and a 9% increase in global payments RPM.

Operating revenues derived from physical contracts increased $13.6 million, or 37%, to $50.8 million in the three months ended June 30, 2022 compared to $37.2 million in the three months ended June 30, 2021. This increase was principally due to increased activity in our physical precious metals businesses compared to the three months ended June 30, 2021.

Interest and fee income earned on client balances, which is associated with our listed and OTC derivatives, correspondent clearing, and independent wealth management product offerings, increased $14.5 million, or 207%, to $21.5 million in the three months ended June 30, 2022 compared to $7.0 million in the three months ended June 30, 2021. This was principally driven by an increase in average client equity and average money-market/FDIC sweep client balances of 55% and 16%, respectively, as well as an increase in short-term interest rates.

Gain on Acquisition and Other Gains

Other Gains

The results of the nine months ended June 30, 2022 include a nonrecurring gain of $6.4 million related to a foreign exchange antitrust class action settlement received in March 2022.

The results of the three and nine months ended June 30, 2021 include a gain of $3.3 million related to the acquisition of Gain Capital Holdings, Inc. (“Gain”) in the fourth quarter of fiscal 2020, due to an adjustment to the final liabilities assumed, resulting in an adjustment from the initially determined values as of August 1, 2020. We also recognized a net gain on the disposal of fixed assets in the three and nine months ended June 30, 2021.

Impact of the Gain on Acquisition

The Company acquired Gain, effective August 1, 2020. When evaluating the acquisition of Gain, management also considers the amortization expense related to the intangible assets identified and recorded as part of the acquisition and the net loss on the internal merger of the operations of Gain’s U.K. subsidiaries.

The following table presents income before tax, income tax expense, and net income as reported in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The following table also presents adjusted income before tax, adjusted income tax expense, and adjusted net income, which are non-GAAP financial measures. The “adjusted” non-GAAP financial measures reflect each item after removing the impact of the related transaction costs and other expenses for the three and nine months ended June 30, 2022 and 2021, respectively. Management believes that presenting our results excluding the transaction costs and other expenses is meaningful, as it increases the comparability of period-to-period results.

	Three Months Ended June 30,											Nine Months Ended June 30,
(in millions)		2022				2021			% Change				2022				2021			% Change
As reported, GAAP:
Income before tax	$	70.9			$	46.0			54	%		$	210.8			$	149.2			41	%
Income tax expense		21.8				11.8			85	%			56.0				40.2			39	%
Net income	$	49.1			$	34.2			44	%		$	154.8			$	109.0			42	%
Return on equity		19.1	%			15.5	%						21.2	%			17.4	%
Adjusted (non-GAAP)(a):
Adjusted income before tax	$	73.5			$	45.3			62	%		$	218.7			$	158.3			38	%
Adjusted income tax expense		22.5				12.5			80	%			58.1				43.6			33	%
Adjusted net income	$	51.0			$	32.8			55	%		$	160.6			$	114.7			40	%
Adjusted return on equity		19.9	%			14.9	%						21.9	%			18.3	%

(a) Adjusted income before tax, adjusted income tax expense, adjusted net income, and adjusted return on equity are non-GAAP financial measures. A reconciliation between the GAAP and non-GAAP amounts listed above is provided in Appendix A.

Variable vs. Fixed Expenses
The table below sets forth our variable expenses and non-variable expenses as a percentage of total non-interest expenses for the periods indicated.

	Three Months Ended June 30,													Nine Months Ended June 30,
(in millions)		2022			% of Total				2021		% of Total				2022		% of Total				2021		% of Total
Variable compensation and benefits	$	123.9			29	%		$	102.4		28	%		$	348.4		28	%		$	292.7		27	%
Transaction-based clearing expenses		74.7			18	%			67.1		19	%			222.1		19	%			207.3		20	%
Introducing broker commissions		41.2			10	%			41.8		11	%			122.7		10	%			120.8		11	%
Total variable expenses		239.8			57	%			211.3		58	%			693.2		57	%			620.8		58	%
Fixed compensation and benefits		78.3			19	%			74.9		21	%			235.9		19	%			223.2		21	%
Other fixed expenses		101.7			24	%			77.0		21	%			288.1		23	%			223.1		21	%
Bad debt (recovery) expense, net		(0.7	)		—	%			1.3		—	%			11.4		1	%			3.7		—	%
Total non-variable expenses		179.3			43	%			153.2		42	%			535.4		43	%			450.0		42	%
Total non-interest expenses	$	419.1			100	%		$	364.5		100	%		$	1,228.6		100	%		$	1,070.8		100	%

Our variable expenses include variable compensation paid to traders and risk management consultants, bonuses paid to operational, administrative and executive employees, transaction-based clearing expenses and introducing broker commissions. We seek to make non-interest expenses variable to the greatest extent possible, and to keep our fixed costs as low as possible.

Segment Results

Our business activities are managed as operating segments and organized into reportable segments consisting of Commercial, Institutional, Retail and Global Payments.

The tables below present the financial performance, a disaggregation of operating revenues, and select operating data and metrics used by management in evaluating the performance of our segments, for the periods indicated. Additional information on the performance of our segments will be included in our Quarterly Report on Form 10-Q to be filed with the SEC.

Commercial

	Three Months Ended June 30,										Nine Months Ended June 30,
(in millions)		2022				2021		% Change				2022			2021		% Change
Revenues:
Sales of physical commodities	$	18,224.3			$	9,315.9		96	%		$	47,551.9		$	28,479.4		67	%
Principal gains, net		84.4				75.6		12	%			260.2			187.0		39	%
Commission and clearing fees		41.9				47.8		(12	)%			129.9			136.2		(5	)%
Consulting, management and account fees		5.8				4.8		21	%			16.2			14.8		9	%
Interest income		12.3				5.2		137	%			26.6			13.8		93	%
Total revenues		18,368.7				9,449.3		94	%			47,984.8			28,831.2		66	%
Cost of sales of physical commodities		18,198.5				9,297.1		96	%			47,477.9			28,429.1		67	%
Operating revenues		170.2				152.2		12	%			506.9			402.1		26	%
Transaction-based clearing expenses		14.8				13.1		13	%			42.3			40.3		5	%
Introducing broker commissions		8.4				10.7		(21	)%			24.2			26.2		(8	)%
Interest expense		5.1				3.4		50	%			13.0			9.8		33	%
Net operating revenues		141.9				125.0		14	%			427.4			325.8		31	%
Variable direct compensation and benefits		40.0				38.1		5	%			125.2			100.3		25	%
Net contribution		101.9				86.9		17	%			302.2			225.5		34	%
Fixed compensation and benefits		13.0				12.6		3	%			37.6			37.3		1	%
Other fixed expenses		16.8				12.7		32	%			47.7			37.5		27	%
Bad debt (recovery) expense, net		(0.4	)			1.2		n/m				8.8			2.6		238	%
Non-variable direct expenses		29.4				26.5		11	%			94.1			77.4		22	%
Segment income	$	72.5			$	60.4		20	%		$	208.1		$	148.1		41	%

	Three Months Ended June 30,									Nine Months Ended June 30,
(in millions)		2022			2021		% Change				2022			2021		% Change
Operating revenues (in millions):
Listed derivatives	$	56.9		$	60.6		(6	)%		$	187.6		$	169.8		10	%
OTC derivatives		50.2			49.7		1	%			159.3			108.9		46	%
Physical contracts		46.1			32.5		42	%			120.7			97.7		24	%
Interest / fees earned on client balances		11.4			4.2		171	%			23.1			9.7		138	%
Other		5.6			5.2		8	%			16.2			16.0		1	%
	$	170.2		$	152.2		12	%		$	506.9		$	402.1		26	%
Select data (all $ amounts are U.S. dollar or U.S. dollar equivalents):
Listed derivatives (contracts, 000’s)		7,482			7,882		(5	)%			22,986			23,885		(4	)%
Listed derivatives, average rate per contract (1)	$	7.26		$	7.44		(2	)%		$	7.75		$	6.77		14	%
Average client equity - listed derivatives (millions)	$	2,585		$	1,780		45	%		$	2,104		$	1,600		32	%
Over-the-counter (“OTC”) derivatives (contracts, 000’s)		730			771		(5	)%			2,231			1,889		18	%
OTC derivatives, average rate per contract	$	69.16		$	64.17		8	%		$	71.64		$	57.27		25	%