StoneX(US:SNEX)2021-02-08 21:34Financial Performance - Average client equity increased by 52% to $3.4 billion, and average money-market/FDIC sweep balances increased by 35% to $1.3 billion compared to the prior year[178]. - Operating revenues increased by $103.3 million to $380.1 million in the three months ended December 31, 2020, with all segments recording increases in operating revenues[180]. - Segment income in the Institutional segment increased by $19.5 million, or 77%, driven by a 63% increase in net operating revenues[181]. - Segment income in the Retail segment increased by $15.0 million, or 517%, primarily due to the acquisition of Gain Capital Holdings, Inc.[182]. - Net income increased by $3.2 million to $19.5 million in the three months ended December 31, 2020, with diluted earnings per share rising to $0.98[188]. - Total assets increased by 38% to $13,974.8 million as of December 31, 2020, compared to $10,129.3 million in the prior year[191]. - Operating revenues increased by 37% to $380.1 million for the three months ended December 31, 2020, compared to $276.8 million in the same period of 2019[194]. - Net operating revenues grew by 50% to $256.1 million, up from $170.5 million in the prior year[208]. - Total revenues decreased to $9,257.6 million for the three months ended December 31, 2020, from $11,246.4 million in the same period of 2019[230]. - Operating revenues increased by 39% to $387.2 million for the three months ended December 31, 2020, compared to $278.2 million in the same period of 2019[230]. Revenue Sources - Listed derivatives revenue rose by $22.8 million to $95.0 million, driven by increased volumes in domestic grain markets and the acquisition of Gain[195]. - Securities transaction revenues increased by $36.3 million to $126.6 million, attributed to heightened volatility in global equity and fixed income markets due to COVID-19[197]. - FX/CFD contracts revenue surged by $55.2 million to $59.8 million, largely due to the acquisition of Gain[198]. - Operating revenues from securities transactions increased 48%, with average daily volume (ADV) of securities traded rising 74% due to heightened market volatility[247]. - Operating revenues derived from listed derivatives increased 37%, with contract volumes up 39% in Q4 2020 compared to Q4 2019[248]. Expenses and Costs - Interest expense related to corporate funding increased by $7.8 million to $10.5 million due to the issuance of senior secured notes[186]. - Variable expenses accounted for 57% of total expenses in the current period, compared to 58% in the prior year[187]. - Total compensation and benefits expense increased by 48% to $153.6 million, representing 40% of operating revenues[212]. - Transaction-based clearing expenses rose by 41% to $65.4 million, reflecting higher listed derivative contract volumes[203]. - Introducing broker commissions increased by 46% to $38.2 million, driven by increased activity in listed derivatives[204]. - Other non-compensation expenses rose by $30.7 million, or 68%, to $75.6 million for the three months ended December 31, 2020, compared to $44.9 million in the same period of 2019[214]. - Fixed compensation and benefits increased by $19.9 million, or 40%, to $69.3 million for the three months ended December 31, 2020, compared to $49.4 million in the same period of 2019[213]. Client and Market Activity - The acquisition of Gain Capital added over 130,000 new retail clients and contributed $60.5 million to revenues compared to the prior year period[179]. - The average client equity for listed derivatives increased by 52% to $3,426 million, compared to $2,257 million in the previous year[208]. - The average money market/FDIC sweep client balances increased by 35% to $1,325 million in Q4 2020[245]. - The number of employees remained relatively unchanged at 2,946 at the end of the three months ended December 31, 2020, compared to 2,950 at the beginning of the same period[213]. Financial Position and Liquidity - The company had $75.5 million of committed funds available under its credit facility for general working capital requirements[172]. - As of December 31, 2020, total equity capital stood at $799.5 million, with outstanding loans under revolving credit facilities at $364.7 million[280]. - As of December 31, 2020, total assets were $14.0 billion, up from $13.5 billion as of September 30, 2020, reflecting growth in client activity and market conditions[293]. - The company issued $350 million in Senior Secured Notes with an interest rate of 8.625%, maturing on June 15, 2025[297][298]. - The company has liquidity and funding policies in place to maintain flexibility for both company-specific and industry liquidity needs[295]. - The company is in compliance with all financial covenants under its outstanding facilities as of December 31, 2020[303]. Risk Management - The company employs a variety of risk management techniques, including daily monitoring of positions and mark-to-market profitability, to mitigate market risk[338]. - The company does not initiate market positions for its own account in anticipation of future price movements, focusing instead on managing net exposure[337]. - Derivative instruments are utilized to manage risk exposures in trading inventory, including futures and TBA securities[341]. - The company is exposed to foreign currency risk due to fluctuations in exchange rates affecting earnings and asset values, with potential hedging strategies considered[344]. - The risk management policies require continuous monitoring of risk exposure by senior traders and regular updates to senior management[337]. Regulatory and Compliance - The Dodd-Frank Act has imposed new regulatory requirements on swap dealers, which may increase operational costs for the company[309]. - The company is currently evaluating the impact of new accounting guidance on its consolidated financial statements, which is expected to be adopted in the first quarter of fiscal year 2022[333].