StoneX Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the StoneX Second Quarter Earnings Conference Call. Please note that today's call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask your question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker for today, Bill Dunaway, company CFO. Bill, the floor is yours.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for the second quarter ended March 31st, 2021. After the market closed yesterday, we issued a press release reporting our results for our second fiscal quarter of 2021. This release is available on our website at www.stonex.com. as well as a slideshow presentation we will refer to on this call in our discussions of our quarterly results. You will need to sign on to the live webcast in order to view the presentation. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we are required to advise you, and all participants should note, that the following discussion should be taken in conjunction with the most recent financial statements and notes thereto, as well as the Form 10-Q filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that the forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I'll now turn the call over to Sean O'Connor, the company's CEO. Sean?

Thanks, Phil. Good morning, everyone, and thanks for joining our second quarter earnings calls. In the second quarter, we reported very strong results across the board, despite near zero interest rates on our client floats. We handily beat the prior year record quarter where we benefited from unprecedented market volatility due to the onset of COVID. Our trailing 12 month results are also very strong as our company has grown its capabilities, expanded its client footprint, gained market share, and has made significant progress in the integration of the gain transaction. During the March quarter, the market environment was positive for us with buoyant equity markets, increased volatility in many of the commodity markets, including copper and grains, which hit multi-year highs. So turning to the slide deck and starting on slide four, dealing with our product results and the key metrics, the key takeaway here is we managed to increase operating revenues 29% in aggregate, despite comparing against last year's exceptional results, where volume spiked and volatility and market dislocation increased revenue capture, all due to the onset of COVID. Operating revenue increased in all product areas, except OTC derivatives. Volumes were up across the board, except for listed derivatives, where we saw a large decline from the institutional segment. This declined again against the very strong prior quarter. Revenue capture was down in OTC derivatives as well as securities due largely to lower market volatility versus the prior year quarter. The notable exception here was listed derivatives where revenue capture increased as a result of a change in the business mix as well as a successful effort to reprice our lower margin institutional business upwards because of the decline in interest rates. Securities was again a standout, with average daily volume up 34%, although partially offset by a 7% decline in revenue capture. Our FX and CFD revenues were up significantly due to the addition of GAIN, which was not in the comparable quarter last year. GAIN had a very good quarter overall. Global payments operating revenues were up 14%, due to increases in both volumes and revenue capture. Physical trading was, again, very strong, largely metals, which continue to have very positive market conditions, as well as on the ag and biodiesel side. Our average client floats, both on the derivative side and the security securing side, experienced strong growth, up 56% and 42% respectively. due to both higher client volumes as well as market share gains. And in aggregate, our float now stands at $5.2 billion, up nearly 10% from the immediately prior quarter. Unfortunately, the strong growth in balances was more than offset by significantly lower interest rates, leading to a 62% decline in interest and fee income on these client balances. Looking at the immediately prior quarter, Overall revenues were up 24% on a consecutive basis, and up across all products except global payments, which was down marginally. Listed derivatives operating revenues were up 6%, OTC derivatives up 45%, securities up 25%, and global payments down 2%. FX and CFDs were up 25%, and physical contracts up 108%. Even interest revenue was up on a consecutive basis due to the increase in the client float. Overall, a very strong performance compared to the immediately prior Q1. Turning now to slide five and the summary of our earnings, we recorded operating revenues of $471.4 million, up 29% for the quarter. Aggregate costs were up 38% for the quarter, primarily related to the addition of gain, as well as increased incentive compensation due to better performance. Net earnings were 55.3 million, up 41%, and diluted EPS was $2.73, up 37%. ROE was an exceptional 26.7%, and this despite a much larger capital base than we had a year ago. There are a number of notable items again this quarter, although in aggregate they were insignificant. GAIN had a very good quarter and on an incremental basis, including the related financing costs of the high yield note, this acquisition is now accretive to earnings in only its second full quarter. Looking again on a consecutive basis versus Q1 of fiscal 2021, EPS versus the Q1 number, which adjusted number of $1.43, was up 91%. ROE was 26.7% versus the adjusted 14.5% in the immediately preceding quarter. Turning now to slide six, our quarterly performance trend, we think the best way to evaluate our results is by looking at the longer-term performance, which It shows how our business performs through short-term market cycles. I'd like to point out that the attached chart includes only our gap numbers. We have not adjusted the Q1 EPS, which in our estimate was $1.43, and the Q4 2020 number includes the purchase accounting of gain, which largely reflects their 2020 earnings that accrued to the Stonet shareholders. The trailing 12-month ROE, which encompasses the last eight quarters results, has steadily climbed from 14%, which was just below our long-term target of 15%, to the current 24%. It's worth noting that eight quarters ago, our shareholder equity was $552 million, and so has grown over 50% in the last two years, making the ROE target more challenging in absolute terms. Our training 12-month gap diluted EPS is currently $9.48, and if you annualize our year-to-date performance, again, just using the gap numbers, is $7.62. Turning to slide seven, the segment summary, just to touch on a few highlights before Bill gets into more detail. I was pleased to see once again that despite the challenging comparative period, All of our client segments were up in terms of segment operating revenue as well as segment income. Up arrows across the page. On a quarterly basis, the standouts are the commercial client segment with segment income up 33% and retail up 357% as gain was included and on top of that had a very good quarter. On a trailing 12-month basis, institutional was the standoff with segment income up 50% and, of course, gain for the reasons mentioned earlier. I'll now hand it over to Bill Dunaway for discussion of the financial results in more detail. Bill, over to you.