StoneX Group Inc.

Thank you for standing by, and welcome to the Still Next Group third quarter fiscal year 21 earnings call. At this time, all participants' lines are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star and then 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and then 0. I would now like to hand the conference over to your speaker today, Mr. Bill Dunaway, CFO. Sir, you may begin.

Good morning. This is Bill Dunaway. My apologies to all of you on the call here for starting a little late. The conferencing center was having some technical difficulties, so I appreciate all of you hanging around here a little bit with us. Welcome to our earnings conference call for our third quarter ended June 30th, 2021. After the market closed yesterday, we issued a press release reporting our results for our third fiscal quarter of 2021. This release is available on our website at www.stonex.com. as well as a slide presentation, which we'll refer to on this call, and our discussions of our quarterly results. You'll 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 file 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 Security 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 its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company's actual results will not differ materially from any results expressed 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.

Thanks, Bill. Good morning, everyone, and thanks for joining for our third quarter earnings call. In Q3, we once again reported strong results that exceeded our 15% ROE targets, despite near zero interest rate yields on our client float. During the June quarter, market conditions remained somewhat positive for us, but perhaps less so than in prior quarters, as we started to see a normalization of the markets post the COVID disruption of a year ago. although we did see heightened volatility in commodities, particularly in agricultural markets. So if you could turn to slide four in the earnings deck, we'll go through that. Operating revenues were up a strong 34% for the quarter and 33% for the year-to-date period. Operating revenues significantly increased in all product areas with the exception of securities, which was significant. which were up modestly and physical contracts which declined 5% as compared to very strong prior quarter which benefited from increased demand for precious metals at the outset of the pandemic. Operating revenue growth was driven by strong volumes which were up across the board with the exception of listed derivatives where we saw a small decline of 5% as a result of a 10% reduction in our larger institutional segment which more than offset an 18% increase in our commercial segment. Revenue capture was up a very strong 46% for listed derivatives, with increases in both our commercial segment as well as with our institutional clients where we have been actively repricing our offering. Revenue capture was up 64% for OTC contracts off the back of increased volatility in the commodity sector, but was down 42% for securities, although this was offset by significant volume increases. Revenue capture was down slightly for global payments, although offset by higher volumes, resulting in a record quarter in operating revenue for the global payment segment. Our average client float, both in listed derivatives and securities clearing, experienced strong growth of 31% and 26% respectively, due both to higher client volumes as well as market share gains. and together now stands at $5.6 billion, up 30% from a year ago and up 8% from the immediately preceding quarter. Interest earnings were actually up from a year ago due to the higher client balances, and we are now starting to compare with the post-COVID interest rate environment. On a year-to-date basis, fees on client balances were down 52%, as strong growth in balances was more than offset by significantly lower interest rates. As compared to the immediately preceding quarter, overall operating revenues were down 8% consecutively due to a moderation overall market conditions. OTC derivatives revenues were the standout, up 42% with volume and revenue capture, up for the reasons mentioned earlier, while securities revenues were down 13% due to lower revenue capture as a result of less volatile markets. CFD revenues were down 31% consecutively, with volumes down 13% and revenue capture down 22%. Global payments revenues were up 4% consecutively, and listed derivative revenue was relatively flat. So overall, against our record Q2, a little down, but still a strong result nonetheless. Turning now to slide five, which has the summary of our earnings. We recorded operating revenues of $431.5 million, up 34% versus the prior year. Averaged costs about 43% for the quarter, primarily related to the addition of gain as well as increased incentive compensation due to better performance. Net earnings were $34.2 million, down 7%, and diluted EPS of $1.67, down 11% versus a year ago where we had very positive market conditions. ROU was 15.5% above our long-term target despite a much larger capital base than a year ago. There were a number of notable items. You can see them mentioned there in this quarter. The net impact of this was about $4.3 million pre-tax or about 15 cents per share. Looking at our business over the longer term cycle, for the trailing 12 months, our operating revenues were $1.6 billion, up 30%. Our net income was $186.4 million, up 56%, and our EPS was $9.28, up 52%, and our ROE was over 23%. Although it should be noted these numbers included the bargain purchase gain on the acquisition of the gain business in Q4 of last year. Reflecting on our year-to-date results through the nine months, I'm tremendously pleased that these results outpaced the exceptional results of last year, where we were assisted by the market volatility and increased volumes accompanying the onset of COVID-19. For the year-to-date period, our net income is $109 million, up 18%, and earnings per share were $5.38, up 14%, versus the very strong comparative period a year ago. Turning now to slide six, our quarterly performance trend. We think the best way is to evaluate our results by looking at the longer-term performance, which shows how our business performed through short-term market cycles. I'd like to point out that the attached chart includes only our gap numbers. We have not adjusted our Q1 EPS, which in our estimate was $1.43 on an adjusted basis, and also the Q4 2020 number includes the purchase, accounting of gain, which largely reflects the accumulated 2020 earnings that accrue to StoneX shareholders on the date of the acquisition. The trailing 12-month ROE, which encompasses the last eight quarters results, has risen from 19% to just over 23% for the current trailing 12 months. This trailing 12-month ROE significantly exceeds our long-term target and was achieved during some pretty unusual market conditions, which include the acquisition accounting of gain as well. It is likely, as we have seen in our most recent quarter, that our ROE is likely to trend a bit lower as market conditions moderate and normalize. It's worth noting that eight quarters ago, our shareholder equity was $570 million and now stands at just over $900 million. So it's grown nearly 60%, making the ROE target much more challenging in absolute dollar terms. Our trailing 12-month gap diluted EPS is currently $9.28, and our current year-to-date EPS, if you adjust for Q1, would indicate that annual EPS run rate of around $7.75. Turning to slide seven, which is our segment summary, just to touch on some highlights before Bill gets into more detail. I was pleased to see that once again, and despite challenging comparative period, aggregate segment operating revenues were up 35% for the quarter and segment income up 20% for the quarter. The standout here was the commercial segment, which had operating revenues up 46% and segment income up 62%. despite near zero interest rates on our substantial client float. This was driven by both volume and revenue capture gains in listed and OTC derivatives, as well as continued growth in our customer footprint. We have mentioned a few times that we believe we have the best set of products and capabilities to assist our commercial clients in hedging their risk. This includes listed derivatives, bespoke OTC derivative contracts, as well as the ability to provide physical commodities and logistics support to and even in bad price protection into physical contracts. This is evidenced by the fact that the physical revenues are now a meaningful 21% of the aggregate commercial segment operating revenues. The institutional segment operating revenues were essentially flat and segment income was down 14% as revenue gains on the listed derivative side were offset by a small decline in securities revenue as a result of the lower revenue capture compared to the very volatile prior quarter, as well as lower FX revenues. Retail was up for both operating revenue and segment income, but largely due to the acquisition of gain, which happened in the fourth quarter of last year. In the immediately preceding quarter, our retail segment recorded segment income of $32 million versus only $6 million in the current quarter, a significant decrease. This was due to the gain business, which experienced tougher market conditions with less volatility and trending markets in many of its products, which made spread internalization harder to achieve. Average daily volume was down 16% to $8.2 billion versus the immediately prior quarter, and revenue capture was $90 per million, down 21% versus the immediately preceding quarter. As we discussed when we announced the transaction, the GAIN retail business has a fair amount of quarterly volatility, which should even out over the longer term. This is caused by both market conditions as well as how we hedge and internalize the spreads from this trading flow. This quarter was much weaker than the immediately prior quarter, but that quarter was probably above trend. we would anticipate revenue capture, all things being equal, to average around $100 per million over the longer term, which is exactly where we are for the year to date. I think the key takeaway here is the diversity and resilience we have within our business and even within our segments. The strong results from the commercial segment offset weakness within the retail segment, allowing us to still report a solid overall result in excess of our target. And, of course, in the immediately prior quarter, we saw a very strong result from the retail segment, which has offset some weakness elsewhere. So with that, I'll now hand you over to Bill Dunaway for a more detailed discussion. Bill, over to you.