StoneX Group (NasdaqGS:SNEX) Q4 2025 Earnings Call November 25, 2025 09:00 AM ET Company ParticipantsSean O'Connor - CEOAbby Perkins - CIOBill Dunaway - CFOConference Call ParticipantsDan Fannon - Managing Director and Research AnalystNone - AnalystOperatorGood day, and thank you for standing by. Welcome to the StoneX Group Q4 FY 2025 earnings conference call. 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 a que ...

StoneX Group (NasdaqGS:SNEX) Q4 2025 Earnings Call November 25, 2025 09:00 AM ET Speaker0Good day, and thank you for standing by. Welcome to the StoneX Group Q4 FY 2025 earnings conference call. 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 a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To try your question, ...

Financial Data and Key Metrics Changes - The merger with First Foundation Inc. was announced, which is expected to significantly enhance the company's growth and risk profile [2][4] - The pro forma CET1 capital level after closing is projected at 10.5%, with no new capital required as part of the deal [18] - The company anticipates a significant improvement in net interest margin (NIM) from a recent run rate of 1.60% to nearly 4% by 2027 [19] Business Line Data and Key Metrics Changes - The merger will allow for a dramatic acceleration of the business plan, particularly in Southern California, enhancing the wealth management platform with over $5.3 billion in assets under management [15][16] - The repositioning plan includes downsizing $3.4 billion in total liabilities, focusing on reducing non-relationship rate-sensitive elements [16][19] Market Data and Key Metrics Changes - The company will operate in eight of the top 10 largest metropolitan statistical areas (MSAs) in the Central and Western regions of the U.S. and five of the top 10 fastest-growing markets [15] - The Southern California market is highlighted as having a better lower-cost mix of deposits compared to other regions [11] Company Strategy and Development Direction - The company aims to transform First Foundation's balance sheet to align more closely with its own, focusing on core funding and enhancing fee income [12][19] - The strategy includes leveraging existing teams in Southern California to drive organic growth and improve the overall business mix [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger's ability to reduce risk while enhancing growth opportunities in attractive markets [22] - The management team noted that the current economic environment presents unique opportunities due to disruptions faced by larger banks, particularly in the middle market [65] Other Important Information - The company expects to achieve a 35% cost savings post-merger, primarily through personnel reductions and professional services [80] - The company is focused on improving its credit risk profile and has a detailed plan to address liquidity, interest rate, and credit risks [17][18] Q&A Session Summary Question: Can you walk us through the mechanics of the $3.4 billion repositioning plan? - The repositioning is expected to be completed around the closing date, with some activities already in progress [25][26] Question: What are the expectations for capital management long-term? - The company anticipates a significant amount of capital accretion, providing flexibility for future growth and M&A opportunities [32][33] Question: How do the EPS projections compare to street estimates? - Internal projections indicate a significant improvement in net interest income (NII) and expense reductions, leading to a positive outlook for EPS [40][42] Question: What gives confidence in the regulatory approval of the merger? - Extensive discussions with regulators have been held, and the company has taken lessons from past experiences to ensure a smoother process this time [46][47] Question: What are the sources of the expected cost savings? - Approximately 70% of the cost savings are expected to come from personnel reductions, with additional savings from professional services and back-office efficiencies [80][82]

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Core Viewpoint - StoneX Group Inc. has successfully completed the acquisition of R.J. O'Brien, making it the largest non-bank Futures Commission Merchant in the U.S. and enhancing its position in the global derivatives market [1][4]. Company Overview - StoneX Group Inc. operates a global financial services network, connecting various market participants through digital platforms and execution services [6][7]. - The company serves over 54,000 commercial and institutional clients, along with more than 260,000 self-directed retail accounts [7]. Acquisition Details - R.J. O'Brien, founded in 1914, supports over 75,000 client accounts and has generated $766 million in revenue and approximately $170 million in EBITDA during 2024 [2][8]. - The acquisition is expected to create significant revenue synergies through cross-selling opportunities in OTC derivatives, physical commodity trading, and fixed income products [4]. Financial Impact - StoneX targets $50 million in expense savings and aims to unlock at least $50 million in capital synergies through operational consolidation [4]. - The acquisition is projected to expand StoneX's client float by nearly $6 billion, enhancing margins and return on equity while being accretive to earnings [4]. Strategic Benefits - The combined company will provide clients access to nearly every major global derivatives exchange and a comprehensive multi-asset platform [3]. - The integration of technologies and tools from both companies is expected to deliver significant benefits in risk management and trading execution across multiple asset classes [5].

Financial Data and Key Metrics Changes - In Q2 2025, rental revenue increased by 13.7% and adjusted EBITDA rose by 12.8% to $406 million [32] - The company recorded a net loss in Q2, which included $73 million of transaction costs related to the H and E acquisition and a $49 million loss on assets held for sale [32] - On an adjusted basis, net income was $56 million [32] Business Line Data and Key Metrics Changes - Excluding Cinelese, Herc legacy branches saw a 4% increase in rental revenue, driven by strong mega project activity and moderated growth in the local market [33] - H and E's rental revenue declined by approximately 15% due to workforce disruptions and limited product offerings [34] Market Data and Key Metrics Changes - Local accounts represented 53% of rental revenue in Q2, down from 56% a year ago, while national accounts remained strong [21] - The company is targeting a revenue split of 60% local and 40% national, which provides growth and resiliency [22] Company Strategy and Development Direction - The integration of H and E is the primary focus, with plans to pause other M&A initiatives temporarily [17] - The company aims to capitalize on the shift from ownership to rental, particularly in the specialty market, and to repurpose general rental branches into ProSolutions facilities [18] Management's Comments on Operating Environment and Future Outlook - Management noted that local markets are under pressure due to interest-sensitive commercial construction, while mega project activity remains robust [21] - The company has not experienced cancellations on mega projects, although delays are typical due to design revisions and regulatory reviews [22] Other Important Information - The company expects to generate equipment rental revenue of $3.7 billion to $3.9 billion in 2025, which includes six months of forecasted H and E results [39] - Adjusted EBITDA is projected to be between $1.8 billion and $1.9 billion, implying an adjusted EBITDA margin of 42% to 43% [40] Q&A Session Summary Question: Comments on fleet setup and future CapEx - Management indicated that it is early in the integration process and adjustments to the fleet will occur primarily in the latter half of 2025 [44][46] Question: Confidence in stabilizing revenue base post-acquisition - Management confirmed that they have stabilized the revenue base and are seeing synergies occur since the acquisition [50][51] Question: Timing of overseas sales and used market conditions - Management expects approximately $750 million in dispositions in the second half of the year, with the used equipment market stabilizing [54][55] Question: Free cash flow guidance and baseline for next year - Management anticipates free cash flow generation of 10% to 15% off the revenue base, with a pro forma basis suggesting $500 million to $600 million for the year [60] Question: Cost synergies related to headcount - A significant portion of the $125 million in cost synergies is related to headcount reductions, which have been identified and planned [66][68] Question: Revenue synergy from cross-selling specialty products - Early synergy wins are being tracked, with training for the sales team expected to be completed by early 2026 [78] Question: EBITDA outlook and impact of employee turnover - Management indicated that the transition period will require adjustments to the business, including rightsizing the fleet and workforce [96]

Summary of Flowserve and Chart Industries Conference Call Industry and Companies Involved - **Companies**: Flowserve Corporation and Chart Industries - **Industry**: Industrial Process Technologies Core Points and Arguments 1. **Merger Announcement**: The merger between Chart and Flowserve is described as transformational, creating a leader in industrial process technologies with a comprehensive portfolio of flow and thermal management solutions [4][5][6] 2. **Ownership Structure**: The merger is structured as an all-stock merger of equals, with Chart shareholders owning approximately 53.5% and Flowserve shareholders owning approximately 46.5% of the combined company [7][8] 3. **Cost Synergies**: The merger is expected to drive approximately $300 million in annual cost synergies, primarily from materials and procurement savings, roofline consolidation, and organization efficiencies [7][21] 4. **Revenue Synergies**: An additional 2% growth in revenue is anticipated from commercial revenue synergies over time [21][52] 5. **Financial Profile**: The combined company is projected to have combined revenue of $800 million and $1.8 billion in cash flow over the twelve months ended March 31, 2025 [9][25] 6. **Market Opportunities**: The merger positions the companies to capitalize on macro trends such as energy intensity, energy security, and decarbonization, with a focus on high-growth end markets [10][11] 7. **Aftermarket Business**: The combined aftermarket business is expected to generate significant recurring revenue, with a global installed base of nearly 5.5 million assets, creating a $4 billion aftermarket franchise [19][61] 8. **Digital Integration**: The merger will enhance digital capabilities, allowing for better monitoring and predictive maintenance of assets, which is expected to drive further growth in the aftermarket segment [62][63] 9. **Geographic Expansion**: The merger will allow both companies to leverage each other's geographic strengths, particularly in regions where one company has a stronger presence [48][49] 10. **Cultural Integration**: Both companies emphasize a shared commitment to safety, innovation, and community, which will be integral to the combined company's culture [27][28] Important but Overlooked Content 1. **Regulatory Considerations**: The merger is expected to face minimal regulatory concerns, with no significant overlap in product offerings that could raise antitrust issues [95] 2. **LNG Market Role**: LNG is projected to account for 9% of the combined company's revenues, highlighting its importance in the overall strategy [116] 3. **Leverage and Financial Strategy**: The combined company aims for a conservative leverage ratio of 2 times net debt to adjusted EBITDA at close, with plans for future shareholder returns through dividends and share buybacks [25][121] 4. **Integration Management**: An integration management office will be established to ensure effective synergy realization post-merger [85] This summary encapsulates the key points discussed during the conference call, providing a comprehensive overview of the merger's implications for both companies and the industry at large.

Financial Data and Key Metrics Changes - Second quarter net income was $71,700,000 with diluted earnings per share of $1.41, representing a 3529% growth year-over-year but down 1617% from the previous quarter [6] - Record operating revenues reached $956,000,000, up 17% year-over-year and up 1% from the previous quarter [6] - Return on equity was 15.7% despite a 51% increase in book value over the last two years [6] Business Line Data and Key Metrics Changes - Operating revenues from physical contracts increased by 58% year-over-year, driven by strong growth in precious metals and physical agriculture and energy businesses [9] - Operating revenues from listed derivatives were up 15% year-over-year and quarter-over-quarter, primarily from the commercial segment [10] - Operating revenues from OTC derivatives increased by 14% year-over-year and 65% from the previous quarter, particularly in Brazil and European markets [10] - Payments operating revenues were up 2% year-over-year but down 13% from the previous quarter [10] - FX and CFD revenues decreased by 12% despite a 10% increase in average daily volume, due to a 19% decline in rate per million [11] Market Data and Key Metrics Changes - The commercial segment saw an 18% increase in net operating revenues, driven by strong performance in physical contracts [12] - The institutional segment experienced record net operating revenues and segment income growth of 28% and 41% respectively [13] - The self-directed retail segment reported a 14% decline in net operating revenues and a 34% decline in segment income [14] Company Strategy and Development Direction - The company announced a planned acquisition of RJ O'Brien, which is expected to enhance its position in global derivatives and improve its market access and service capabilities [18][19] - The acquisition is anticipated to provide significant revenue synergies and enhance margins, EPS, and return on equity [24] - The company is also expanding its ecosystem through partnerships, such as with Bamboo Payment Systems for local payment services in Latin America [27] Management's Comments on Operating Environment and Future Outlook - Management anticipates higher volatility in the next twelve months due to geopolitical tensions and regulatory changes, which could benefit the company's performance [56] - The company is optimistic about its growth trajectory following the acquisition of RJ O'Brien and believes it is well-positioned to capitalize on industry transformations [49] - Management emphasized the importance of maintaining a strong risk management framework during periods of high volatility [80] Other Important Information - The company received CME approval for its New York-based metals vault, enhancing its capabilities in the metals market [30] - The company completed the acquisition of JBR Recovery, a silver recycler, which strengthens its position in the metals ecosystem [31] Q&A Session Summary Question: Health of the markets and near-term outlook - Management noted that while volatility had declined over the past year, recent geopolitical events have led to increased volatility, which is expected to continue [54][56] Question: Prospects for the payments business - Management discussed recent technology upgrades that have improved capacity and efficiency, leading to increased volumes in the payments segment [62][64] Question: Retail segment performance and fee per million - Management explained that the decline in fee per million was due to a normalization from previously high levels and a product mix that included tighter spreads [73][74]

Financial Data and Key Metrics Changes - Total client assets increased to $176.1 billion, up $9.5 billion or 6% from the end of the previous year [6] - Adjusted earnings per diluted share rose more than 7% to $1.45 in the fourth quarter, a record high, and up 26% from $1.15 in the same quarter last year [7] - Year-over-year adjusted earnings per diluted share increased 19% from $4.51 in 2023 to $5.36 in 2024 [7] - Adjusted EBITDA reached $125.5 million in the fourth quarter, a 3% increase from the third quarter, with an adjusted EBITDA margin of 54% [18][26] Business Line Data and Key Metrics Changes - VictoryShares ETF platform saw significant growth, with AUM increasing to nearly $12 billion from less than $200 million since its acquisition in 2015 [12] - Victory Income Investors posted its fourth consecutive quarter of positive net flows, contributing to the overall positive long-term net flows in various franchises [21] - Active ETFs, particularly in fixed income, showed strong performance, with several products driving net inflows [82] Market Data and Key Metrics Changes - Amundi's U.S. business reported net long-term flows of $2.6 billion in 2024, with strong performance across its institutional and non-U.S. businesses [9][71] - The non-U.S. AUM is projected to exceed $45 billion post-acquisition, with a consistent record of positive net flows since Amundi's acquisition in 2017 [10][11] Company Strategy and Development Direction - The company is on track to close the acquisition of Amundi by the end of the current quarter, expecting to realize $100 million in cost synergies by the end of the second year of ownership [8] - The focus remains on leveraging the combined strengths of both companies to enhance growth opportunities, particularly in the institutional channel and through the VictoryShares ETF platform [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about organic growth prospects, citing a strong start to 2025 and a robust pipeline of opportunities [22][72] - The company anticipates continued growth in its ETF business, driven by market demand for active and solutions-oriented products [13][85] Other Important Information - The company returned $132.4 million to shareholders in the fourth quarter through share repurchases and cash dividends, with a new $200 million share repurchase program authorized [14][19] - A 7% increase in the quarterly cash dividend was announced, raising it to $0.47 per share [19] Q&A Session Summary Question: What strategies do you expect to be most in favor and contribute the most to organic growth in 2025? - Management highlighted the strong performance of the VictoryShares ETF platform and opportunities in the institutional channel as key growth drivers [30] Question: What sort of revenue synergies do you expect from the Amundi deal? - Management noted the establishment of a 15-year exclusive distribution agreement with Amundi, which is expected to enhance revenue through the addition of Victory products to Amundi's distribution network [32][33] Question: Can you discuss margin differences across different products? - Management explained that over two-thirds of expenses are variable, allowing for significant scale and strong margins across all product lines, including ETFs [40][41] Question: Can you provide context on the one but not yet funded pipeline? - Management indicated that the pipeline is the largest in the company's history, diversified across various franchises and channels, with expectations for most funding in 2025 [42][44] Question: How rapidly can you introduce Victory products in the Non-U.S. distribution? - Management expects to introduce products throughout 2025 and into 2026, leveraging Amundi's existing infrastructure [50][52] Question: What is the outlook for potential M&A this year? - Management expressed confidence in participating in industry consolidation, with compelling discussions ongoing and a strong balance sheet post-Amundi acquisition [55][56] Question: How should we think about capital allocation going forward? - Management emphasized the priority of accretive acquisitions while balancing share repurchases and dividends, with a focus on being opportunistic [89][92]