StoneX Group Inc. Reports Fiscal 2022 Fourth Quarter Financial Results

StoneX Group Inc.

Record Fiscal 2022 Results, with Diluted EPS of $10.01, up 74% and Return on Equity of 21.0%

Quarterly Operating Revenues of $583.4 million, up 50%

Quarterly Net Income of $52.3 million, ROE of 19.8%

Quarterly Diluted EPS of $2.49 per share, up 592%

NEW YORK, Nov. 21, 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 fourth quarter ended September 30, 2022.

Sean M. O’Connor, CEO of StoneX Group Inc., stated, “These results demonstrate the resiliency of our company during times of volatile markets and geo-economic uncertainties, and validates the ongoing investments we’ve made in the business. We realized strong growth across our operating segments resulting from increased client engagement as well as growth in our client base. We benefited from favorable market conditions with elevated volatility and increased interest rates on our growing client float but have not yet realized the full impact of rising interest rates on our earnings. We are confident that StoneX is well-positioned in fiscal 2023 to capitalize on the growing value we believe our franchise can deliver to empower our clients across all asset classes.”

StoneX Group Inc. Summary Financials

Consolidated financial statements for the Company will be included in our Annual Report on Form 10-K to be filed with the Securities and Exchange Commission (“SEC”) which we expect to file on or about November 29, 2022. Upon filing, the Annual Report on Form 10-K will also be made available on the Company’s website at www.stonex.com.

	Three Months Ended September 30,											Year Ended September 30,
(Unaudited) (in millions, except share and per share amounts)	2022				2021				% Change			2022				2021				% Change
Revenues:
Sales of physical commodities	$	15,838.5			$	11,487.9			38	%		$	64,052.6			$	40,961.6			56	%
Principal gains, net		275.4				191.3			44	%			1,145.2				892.0			28	%
Commission and clearing fees		126.3				114.0			11	%			507.9				487.2			4	%
Consulting, management, and account fees		34.1				23.6			44	%			111.3				91.0			22	%
Interest income		106.7				30.0			256	%			219.0				102.4			114	%
Total revenues		16,381.0				11,846.8			38	%			66,036.0				42,534.2			55	%
Cost of sales of physical commodities		15,797.6				11,456.7			38	%			63,928.6				40,861.1			56	%
Operating revenues		583.4				390.1			50	%			2,107.4				1,673.1			26	%
Transaction-based clearing expenses		69.1				64.4			7	%			291.2				271.7			7	%
Introducing broker commissions		37.4				39.7			(6	)%			160.1				160.5			—	%
Interest expense		77.6				14.1			450	%			135.5				49.6			173	%
Interest expense on corporate funding		11.6				10.2			14	%			44.7				41.3			8	%
Net operating revenues		387.7				261.7			48	%			1,475.9				1,150.0			28	%
Compensation and other expenses:
Variable compensation and benefits		129.7				85.0			53	%			478.1				377.7			27	%
Fixed compensation and benefits		80.8				78.2			3	%			316.7				301.4			5	%
Trading systems and market information		17.2				15.9			8	%			66.2				58.8			13	%
Professional fees		15.4				13.1			18	%			54.3				40.9			33	%
Non-trading technology and support		13.7				13.2			4	%			52.4				46.0			14	%
Occupancy and equipment rental		9.4				8.4			12	%			36.1				34.2			6	%
Selling and marketing		14.0				9.9			41	%			55.3				33.3			66	%
Travel and business development		6.1				1.7			259	%			16.9				4.5			276	%
Communications		2.3				2.3			—	%			8.3				9.3			(11	)%
Depreciation and amortization		12.3				9.8			26	%			44.4				36.5			22	%
Bad debts, net of recoveries		4.4				6.7			(34	)%			15.8				10.4			52	%
Other		16.0				12.4			29	%			60.6				46.3			31	%
Total compensation and other expenses		321.3				256.6			25	%			1,205.1				999.3			21	%
Gain on acquisition and other (losses) gains, net		—				(0.2	)		n/m				6.4				3.4			88	%
Income before tax		66.4				4.9			1,255	%			277.2				154.1			80	%
Income tax expense (benefit)		14.1				(2.4	)		n/m				70.1				37.8			85	%
Net income	$	52.3			$	7.3			616	%		$	207.1			$	116.3			78	%
Earnings per share:
Basic	$	2.58			$	0.37			597	%		$	10.27			$	5.90			74	%
Diluted	$	2.49			$	0.36			592	%		$	10.01			$	5.74			74	%
Weighted-average number of common shares outstanding:
Basic		19,690,761				19,214,912			2	%			19,570,403				19,130,643			2	%
Diluted		20,352,682				19,759,984			3	%			20,067,540				19,678,168			2	%
Return on equity (“ROE”)		19.8	%			3.2	%						21.0	%			13.9	%
ROE on tangible book value		21.6	%			3.6	%						23.2	%			15.9	%
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 September 30,											Year Ended September 30,
(in millions)	2022				2021				% Change			2022				2021				% Change
Segment operating revenues represented by:
Commercial	$	185.2			$	132.7			40	%		$	692.1			$	534.8			29	%
Institutional		258.6				138.3			87	%			831.8				668.4			24	%
Retail		101.8				86.4			18	%			426.7				348.0			23	%
Global Payments		44.3				34.4			29	%			172.0				137.3			25	%
Corporate Unallocated		0.9				3.0			(70	)%			7.8				1.7			359	%
Eliminations		(7.4	)			(4.7	)		57	%			(23.0	)			(17.1	)		35	%
Operating revenues	$	583.4			$	390.1			50	%		$	2,107.4			$	1,673.1			26	%

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

	Three Months Ended September 30,											Year Ended September 30,
(in millions)	2022				2021				% Change			2022				2021				% Change
Segment income represented by:
Commercial	$	80.2			$	44.1			82	%		$	288.3			$	192.2			50	%
Institutional		45.0				24.4			84	%			174.6				167.7			4	%
Retail		20.2				11.9			70	%			115.4				67.8			70	%
Global Payments		24.4				18.4			33	%			97.4				78.5			24	%
Total segment income	$	169.8			$	98.8			72	%		$	675.7			$	506.2			33	%
Reconciliation of segment income to income before tax:
Segment income	$	169.8			$	98.8			72	%		$	675.7			$	506.2			33	%
Net costs not allocated to operating segments		(103.4	)			(93.7	)		10	%			(398.5	)			(355.5	)		12	%
Gain on acquisition and other (losses) gains, net		—				(0.2	)		(100	)%			—				3.4			(100	)%
Income before tax	$	66.4			$	4.9			1,255	%		$	277.2			$	154.1			80	%

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 September 30,											Year Ended September 30,
	2022				2021				% Change			2022				2021				% Change
Operating Revenues (in millions):
Listed derivatives	$	100.8			$	89.7			12	%		$	430.5			$	387.6			11	%
Over-the-counter (“OTC”) derivatives		49.0				34.4			42	%			208.3				143.4			45	%
Securities		181.8				112.1			62	%			610.4				533.6			14	%
FX / Contracts for difference (“CFD”) contracts		81.4				55.7			46	%			339.3				242.0			40	%
Global payments		43.6				33.3			31	%			167.8				133.8			25	%
Physical contracts		61.9				42.1			47	%			194.3				152.6			27	%
Interest / fees earned on client balances		49.1				7.9			522	%			89.3				26.0			243	%
Other		22.3				16.6			34	%			82.7				69.5			19	%
Corporate Unallocated		0.9				3.0			(70	)%			7.8				1.7			359	%
Eliminations		(7.4	)			(4.7	)		57	%			(23.0	)			(17.1	)		35	%
	$	583.4			$	390.1			50	%		$	2,107.4			$	1,673.1			26	%
Volumes and Other Select Data (all $ amounts are U.S. dollar or U.S. dollar equivalents):
Listed derivatives (contracts, 000’s)		40,813				36,004			13	%			160,609				146,101			10	%
Listed derivatives, average rate per contract (1)	$	2.31			$	2.41			(4	)%		$	2.53			$	2.55			(1	)%
Average client equity - listed derivatives (millions)	$	6,697			$	4,164			61	%		$	5,696			$	3,842			48	%
OTC derivatives (contracts, 000’s)		737				667			10	%			2,968				2,557			16	%
OTC derivatives, average rate per contract	$	67.02			$	51.25			31	%		$	70.49			$	55.70			27	%
Securities average daily volume (“ADV”) (millions)	$	3,599			$	3,040			18	%		$	3,459			$	2,776			25	%
Securities rate per million (“RPM”) (2)	$	684			$	427			60	%		$	579			$	610			(5	)%
Average money market / FDIC sweep client balances (millions)	$	1,946			$	1,592			22	%		$	1,784			$	1,471			21	%
FX / CFD contracts ADV (millions)	$	12,263			$	11,063			11	%		$	13,273			$	10,636			25	%
FX / CFD contracts RPM	$	103			$	77			34	%		$	99			$	89			11	%
Global Payments ADV (millions)	$	64			$	54			19	%		$	62			$	54			15	%
Global Payments RPM	$	10,680			$	9,573			12	%		$	10,880			$	9,921			10	%

(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 $193.3 million, or 50%, to $583.4 million in the three months ended September 30, 2022 compared to $390.1 million in the three months ended September 30, 2021.

Operating revenues derived from listed derivatives increased $11.1 million, or 12%, to $100.8 million in the three months ended September 30, 2022 compared to $89.7 million in the three months ended September 30, 2021. This increase was principally due to a 13% increase in listed derivative contract volumes, which was partially offset by a 4% decline in the average rate per contract compared to the three months ended September 30, 2021.

Operating revenues derived from OTC derivatives increased $14.6 million, or 42%, to $49.0 million in the three months ended September 30, 2022 compared to $34.4 million in the three months ended September 30, 2021. This increase was principally due to a 31% increase in the OTC derivative average rate per contract as well as a 10% increase in OTC derivative contract volumes compared to the three months ended September 30, 2021.

Operating revenues derived from securities transactions increased $69.7 million, or 62%, to $181.8 million in the three months ended September 30, 2022 compared to $112.1 million in the three months ended September 30, 2021. This increase was principally due to a 60% increase in RPM as well as an 18% increase in ADV compared to the three months ended September 30, 2021.

Operating revenues derived from FX/CFD contracts increased $25.7 million, or 46%, to $81.4 million in the three months ended September 30, 2022 compared to $55.7 million in the three months ended September 30, 2021, principally due to a 34% increase in FX/CFD contracts RPM as well as an 11% increase in FX/CFD contracts ADV.

Operating revenues from global payments increased $10.3 million, or 31%, to $43.6 million in the three months ended September 30, 2022 compared to $33.3 million in the three months ended September 30, 2021, principally driven by a 19% increase in ADV and a 12% increase in global payments RPM.

Operating revenues derived from physical contracts increased $19.8 million, or 47%, to $61.9 million in the three months ended September 30, 2022 compared to $42.1 million in the three months ended September 30, 2021. This increase was principally due to increased client activity in both our physical precious metals and physical agricultural and energy businesses compared to the three months ended September 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 $41.2 million, or 522%, to $49.1 million in the three months ended September 30, 2022 compared to $7.9 million in the three months ended September 30, 2021. This was principally driven by an increase in short-term interest rates as well as increases in average client equity and average money-market/FDIC sweep client balances of 61% and 22%, respectively.

Interest expense

	Three Months Ended September 30,									Year Ended September 30,
(in millions)	2022			2021			% Change			2022			2021			% Change
Interest expense attributable to:
Trading activities:
Institutional dealer in fixed income securities	$	45.9		$	3.4		n/m			$	62.3		$	9.6		549	%
Securities borrowing		6.7			4.7		43	%			23.0			17.6		31	%
Client balances on deposit		14.0			0.3		n/m				17.4			1.5		n/m
Short-term financing facilities of subsidiaries and other direct interest of operating segments		11.0			5.7		93	%			32.8			20.9		57	%
		77.6			14.1		450	%			135.5			49.6		173	%
Corporate funding		11.6			10.2		14	%			44.7			41.3		8	%
Total interest expense	$	89.2		$	24.3		267	%		$	180.2		$	90.9		98	%

During the three months ended September 30, 2022, the increase in interest expense attributable to trading activities is principally due to the increase in fixed income business activities within our Institutional segment, an increase in interest expense on client balances principally due to higher average client equity, and increase in average borrowings within our Commercial segment, along with the impact of the increases in short-term interest rates during the year ended September 30, 2022.

Gain on Acquisition and Other (Losses) Gains, net

The results of the year ended September 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 year ended September 30, 2021 included 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.

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 September 30,												Year Ended September 30,
(in millions)	2022			% of Total			2021			% of Total			2022			% of Total			2021			% of Total
Variable compensation and benefits	$	129.7		30	%		$	85.0		23	%		$	478.1		29	%		$	377.7		26	%
Transaction-based clearing expenses		69.1		16	%			64.4		18	%			291.2		17	%			271.7		19	%
Introducing broker commissions		37.4		9	%			39.7		11	%			160.1		10	%			160.5		11	%
Total variable expenses		236.2		55	%			189.1		52	%			929.4		56	%			809.9		56	%
Fixed compensation and benefits		80.8		19	%			78.2		22	%			316.7		19	%			301.4		21	%
Other fixed expenses		106.4		25	%			86.7		24	%			394.5		24	%			309.8		22	%
Bad debts, net of recoveries		4.4		1	%			6.7		2	%			15.8		1	%			10.4		1	%
Total non-variable expenses		191.6		45	%			171.6		48	%			727.0		44	%			621.6		44	%
Total non-interest expenses	$	427.8		100	%		$	360.7		100	%		$	1,656.4		100	%		$	1,431.5		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 Annual Report on Form 10-K to be filed with the SEC.

Commercial

	Three Months Ended September 30,									Year Ended September 30,
(in millions)	2022			2021			% Change			2022			2021			% Change
Revenues:
Sales of physical commodities	$	15,610.8		$	10,940.9		43	%		$	63,162.7		$	39,420.3		60	%
Principal gains, net		82.8			58.5		42	%			343.0			245.5		40	%
Commission and clearing fees		38.9			42.1		(8	)%			168.8			178.3		(5	)%
Consulting, management and account fees		5.7			4.9		16	%			21.9			19.7		11	%
Interest income		20.2			6.4		216	%			46.8			20.2		132	%
Total revenues		15,758.4			11,052.8		43	%			63,743.2			39,884.0		60	%
Cost of sales of physical commodities		15,573.2			10,920.1		43	%			63,051.1			39,349.2		60	%
Operating revenues		185.2			132.7		40	%			692.1			534.8		29	%
Transaction-based clearing expenses		13.6			13.7		(1	)%			55.9			54.0		4	%
Introducing broker commissions		7.3			8.5		(14	)%			31.5			34.7		(9	)%
Interest expense		5.2			3.2		63	%			18.2			13.0		40	%
Net operating revenues		159.1			107.3		48	%			586.5			433.1		35	%
Variable direct compensation and benefits		46.0			33.1		39	%			171.2			133.4		28	%
Net contribution