SNEX - Earnings call transcript Q2 2024

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Operator

Good day, ladies and gentlemen, and welcome to the StoneX Group Inc. Q2 FY '24 Earnings Call.

As a reminder, this call is being recorded. [Operator Instructions]I would now like to turn the call over to Bill Dunaway, Chief Financial Officer.

You may begin.

William Dunaway

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

Sean O'Connor

call. Good XXXX our and quarter Thanks, earnings fiscal morning, for joining everyone, Bill. thanks second

XX% be inventory. $X.XX don't will hedge per so is elect on We gold the to derivative our these unrealized current these losses XX% when for fiscal solid prior and year of a a EPS sold. used million quarter quarter approximately $X.X reversed this inventories, includes result share second accounting The or us, with The was position hedge period. earnings up versus inventory up on XXXX loss

gains X prior $X.XX the relating and we increase operating CDI. XX% year-to-date date, of to million in our and XX% the recorded months $XXX.X Slide earnings $XXX.X an summary or a recorded acquisition period of represents to million, revenues For excluding share, We trailing the per period.Turning the quarter of months XX for prior year. results. up to second versus X of This

Our were year prior which, operating XX% as revenue revenues, million a the recorded up and operating versus prior the income million, book over was EPS year on up up were $XXX.X period, were ROE ended XX% immediately prior and operating million year-ago $X.XX, flat up immediately XX%. in per basis, quarterly compares In but $XX.XX, EPS listed prior offset experienced costs, number physical down ago.Turning amount a XX% the on included up growth compensation operating costs to revenues Net up other earnings This with securities XXXX over current were to stated clearing quarter, the the growth X%. quarter, XX% XX% quarter. for that volume down gains, diluted of and were our XX%, for on respectively, value year XX% operating in by were the revenues ROE item tangible a earned which floats, in variable compensation and net up has derivatives is our the however book mentioned payments of with income preceding XX.X% also due up our the to XX%. X%, a of X%. fixed OTC represents last CFDs rate our and relatively up inventory our income the X% and up while XX% at value, X aggregate, product reminder, a revenues increased robust in revenues on operating and not earlier. versus second target with versus year as and with the was relatively $X.XX, share The severance XX%, the came revenues was up and were XX%, related years XX% versus flat Fixed and of up interest introducing amount year were $XX.X the current We gold to prior immediately include primarily compared I off below quarter our quarter. over a up a in the $XX.X adjusted only interest expenses million prior $X.X which well trailing quarter. X a and both which close amount nets deck, ago XX% in long-term carried down to contracts, commissions flat.We now operating the interest versus XX% We up client year.Looking X%, the Slide versus derivatives, activities. measures XX-month versus by and strong securities related expense FX trading broker XX-month listed as on Net which of quarter.Total were compensation ago. X% net partially period XX%. showing

prior were volumes and derivatives X% down OTC respectively. X% the However, year and payment versus

a which derivative our related on and primarily same FX balances spread capture as client increased million in in prior listed lower aggregate revenue the declining CFD to which significant to derivatives, commodity due per and our products XX% the income although a XX in relatively is which much derivatives, significantly, our component money distorted products due interest revenue rate increase Again, was revenue looking volume versus also was contracts.Outside to fee double-digit FDIC capture in primarily the continue X%, is us increase relative side capture number sweep with growth positions across of securities higher rate volumes versus and from Securities and million, when index contracts the operating interest these continues interest volatility have lower strong of rate typically expense contract OTC to but its which due is in carried now lower income prior equity in this, both up but increased X% we income were down oil trailing physical comes reflect due to most were we the in related were interest by volumes rate opposed and to with balances, year. exception the strong capturing contract mentioned.Volumes, per side basis important down payments lower penetration. million high to reflected higher gold, at The rate of X%, numbers which client we in strong per income declined growth interest up includes XX%, market Slide fixed Despite us commercial in while which are offsetting period.Turning up rate to was an offsetting a $XXX.X listed up to exception million, client we and to relatively on our for just of to trend and the for agricultural the of the float, current Securities XX%, in which across institutional these revenues engagements lower to business. of a and except modestly, client see FX business long-term XX%, in measuring indicator with the as higher I been this up part up increase per our higher business.Carried to FX/CFDs, the volumes and experienced that the margin in decrease year, X% revenue due data expense. declined the experienced million X grew not. somewhat and XX%, of rates due revenues, While saw levels to prior finance year. is was months, the per that, fixed in see payments, our versus operating generally over it listed again activity of adjusted this interest market products.Our board per

as we subject to as market we retraced overall a market mixed see and versus the capture XX% the experienced are of function can of market increase largely the to exception obvious and However, significant volatility CFDs, the capture, generally FX year. revenue to compared a which with activity.Revenue picture up levels a still million somewhat prior prior conditions, year, in lower is rate again, per

per In with million change brief segment before mix on to X, in summary, detail. effects rate Bill lower now addition, to into increased we of more the the Slide continue to highlights volumes few a gets margin in securities and products.Turning our touch the see just product

year. income were up revenues For up the the quarter, XX% segment XX% was versus prior segment and operating

income a XX% up X% down income in of down decrease revenues basis, sequential was were operating segment revenues. operating commercial Our segment and back X%. was the On off segment a in X%

in led realized Our the year, a X% down revenues, CDI revenues top the the for income of These segment, a basis, over for a income by segment appear increased a record this income all a principally X%.Retail a quarter segment at gains our revenues immediately the down sets our have up fixed which including down Retail Commercial, income. severance the revenue basis, while revenues revenues treatment XX%.In filings increased in our XX-month to were and in This charge increase quarters. current this the Slide segment in year segment reconciliation our by which On million trailing much-improved followed XX-month mentioned a XX-month segment in revenues standout now and XX% as segment out sequential across X XX% the revenues double-digit was Institutional with trailing were million. income GAIN operating we of payments up XX-month the operating We trailing disclosed On operating were segments up saw operating On million Payment the increase last prior combined institutional in the of by and the up side, XX%, while bars quarters. versus growth led our Payments quarter. segment due a the revenue fixed left-hand represent our adjusted with our last declines segment financial income expenses up operating was the the translated revenues in $X.X year which to and income into operating was increase to I income the in prior earlier. million driven versus numbers down XX% provided Retail been segment, performance XX% Operating operating which deck.On and growth.Turning X, growth accounting -- X%. appendix to earnings was segment trailing $XX.X X% sequential XXX%, XX% with had of were basis, XX%, operating prior the business, prior period, related XX% versus X $XX.X capture to period and in acquisitions ago. $XX page a revenues over in

can smooth capabilities. a we you and expanded our has have trend steadily see, and As as this strongly footprint been upward

period XX% XX% up are revenues CAGR. operating over Our this for a

Our a likewise, CAGR. adjusted income, significantly, has also XX% at grown pretax

On XX% the detailed solidly XX% over Bill for in the for indices right-hand equity, left half operating long-term we you our slide, by revenue XX% this CAGR. as remained net and have grown performance, which years.With the over capital even as a the XX% side, the adjusted that, return hand bottom discussion income which from grown on up dotted outperformed in target, our though our above adjusted has our both which to a right-hand bottom performance see X which line bars, nearly ROE, represents of financial XX for results. years our The graph, both we shown, we the can is I stockholders' out set last period.On in at measured more CAGR shows have the the has significantly will our our XX% financial market the capitalization well stockholders graph, of Bill? that Dunaway bottom over

William Dunaway

with to the as the in for million increases prior securities fiscal business statement deposits increased case activities.Both be in due operating second volumes expense 'XX. of versus result net offset when Slide lower decline on compared fixed as compared our balances expand $X.X the increased Interest so and topic declines year with segment percentage and a to year. the million result funding income the of highlights current well year, year $XX.X segment, million year this result payouts was commissions by fixed issuance the variable included as you, the #X, on primarily the I'll prior Sean which I to incrementally float. result expense based balances securities as it.Fixed in just the of consolidated our will million versus flat Interest $X.X paid XX% of and interest period. expenses in compared to variable of will the revenue year. the rates, the the borrowings partially increased increase has relating short-term covered operating associated lending derivative $X.X I quarter, of flat XX% in I expense compensation move as increase Thank million $XX the consolidated on on of consolidated related to XX% our incremental Sean. in to call quarter prior due corporate prior the of business, in our the the cover is secured increased million revenues prior for starting earned many summarizes the clearing Introducing is as were levels income our of in issuances.Variable revenues as net to the million revenues year cover compensation to then well on period typically expense as interest versus and versus variable current a year. as prior facility. these with client in the a of net to credit the average the relatively client fluctuations of and income discussion.Transaction broker $X.X were prior increases at net period operating this operating net average compared a volumes. institutional interest in later operating declined the fee a new of increased borrowings, listed current the Interest $XX.X interest revenues increase year million expense addition this prior increase client note senior in on This not compensation to prior lower $XX.X revolving in in the in compensation as retail revenues related in to as represented compensation as which the income a in in on on

decline the XX% this our in the million or However, capabilities increase among $X.X resulting annual our growth.Fixed in increases. XX% business the period costs Offsetting year. includes lines in as well as a salaries in million, an $XX.X Within to support fixed compensation areas severance business in versus $X.X to current related modest prior million relatively was in due severance in versus salaries costs marine expansion this primarily preceding $X.X non-variable increased quarter. to facilitate from headcount this immediately non-variable increase increased of increase million XX% an compensation,

In million. increases driven paid addition, $X.X taxes, payroll and we saw of seasonally expenses retirement off in accrual time

our and consolidation well of well million as million related of immediately $X.X to and increase in occupancy compared as net up million to $X.X non-variable as increased fees, compensation year, In of million and space driven as by $X.X debt, recoveries preceding principally expenses in in as as $X in equipment accelerated I increase the primarily charges an compensation of addition, development well the occupancy $XX.X marketing in discussion fiscal to by selling rental compensation to to in a year, to offices India, a immediately driven fixed Sales an fees increased mentioned, $X.X biannual the fixed quarter increase variances primarily marketing increase additional reduction $X favorable million expenses offset quarters, compared million million versus and legal other overall acquired had preceding addition, an was quarter, just expenses, to year refund.Finally, share-based travel combined immediately by which direct and the due London $X.X preceding and rental, increased fact onetime deferred prior of $X.X to a XXXX.Other million segment.Compared charge business Summit, a immediately London.In million the expenses lower of prior expense we close-up as due as partially million Retail in property and quarter tax including increased professional a acquisition principally million, were related of additional in our Global costs to million compared our bad accelerated and $XXX,XXX $X in space and as by included driven the the $X.X respectively. approximately by the prior preceding $XX.X the equipment and

$X.X on settlement exchange, result is #X, million, in $X.X requirements operating lower a The $XX.X our the occupancy. decline quarter the with year versus prior trading received segment and prior we agricultural in the revenues operating decreased an increase segments, to preceding Physical increased the to Operating Brazilian our resulting versus X business.Segment decline quarter $XXX,XXX declined million million balances other $X volatility.Finally, contracts was versus to The gold and associated due driven XX% compliance, compared very volumes. commodity of $X technology, of $XX.X from our million The in preceding and prior income the operating lower the increased Fixed non-income a this information remainder bad our Slide XXXX prior market and declined fixed loss of prior but prior portion a the the million the resources more immediately declined with increases in action and an The in a Net compared million a prior the of income increased I X% XX% $X.X to versus in each to of and and was revenues other Commercial by the earlier. as Retail recoveries Energy due listed a million the million year. offset immediately a decline Segment from year, Difficulty] the of $X.X segments. started year, due year, compensation the OTC prior Sean reminder, decline Ag of we OTC year to derivative versus represents hedge bank versus of on in current credit revenues mentioned spreads XXXX, immediately matter including the client matter. $X.X had $X.X used for year, options for declined was physical immediately operating in reduced mentioned preceding inventory, due million compared quarter. debts client decline the as class year operating costs of and first increase the interest in the quarter immediately earned XX% unrealized addition, the versus preceding corporate year. and million XX% class strong Net risk, principally to and primarily earlier. some quarter.As I'll principally to to derivative human on the to the segment.In decline year was expenses a average activity in the in income year, our gain lower to relatively development, professional XX% loss listed prior versus equity quarter.Moving provide to in in allocate decline our in revenues quarter. We $XX.X of and to compared compared was to futures as million, volatility. Other $X.X by period, as decline expenses LME million net related debts, as as driven bad the our driven versus margin a income action fiscal included the $X.X fiscal in by had relates result The gold which the were derivatives respectively, than gain period positive travel benefits and on products business the versus positions the amortization, cut contract depreciation million [Technical to listed monthly in fees prior prior fees, variance however, preceding from flat which quarter.As gold taxes.

this the to We in allocation and our provided have continue segments do current period of so will for prospectively. each

calculated However, we allocations for periods. similar have not reported previously

clients result allocation year prior of driven in our corporate XX% in rates, increased increase partially respectively, in XX. a earlier, in of led was for earned volume as Slide and well momentarily. For the in was of expense compared markets.As and year $XXX.X in to primarily million fixed interest decreased income a to the balances institutional current of in up the client and income million the period, increase and XX% an lending $XX.X daily as rates operating while activities as on average $XX.X increased increased the the was respectively, compared balances, in the also a increase primarily year. increase to $X versus driven paid $X.X to and the securities which rise costs FDIC immediately by million, $X.X the million on due XX% the increase fee I an equity increase year.Interest the to fixed drove million by securities mentioned preceding volumes a million.Moving million as increase earned balances.Segment prior result million XX% $XX.X rates. in interest interest client $XX.X decline to year, $X.X quarter. to to related average increase expenses on systems which net significant in increase income prior million versus and partially by as the revenues market million other fixed in equity versus $XX.X increase client in short-term the other and an fees increase was in $X.X offset increase will fixed and money $X.X and Operating Commercial current a million the incomes as which period, operating versus of information. prior average revenues, income were increases our quarter. touch in versus driven the by a a $X.X debt result segment year expenses declined benefits this million securities fixed period $XXX,XXX $X.X in the primarily Segment in sweep Interest market offset ADV Sean bad by for prior transactions in trade increase million million segment and and These professional quarter. client prior interest offset The $X.X the declines interest Interest immediately increase securities interest increase in the million as variance The as trading both $X.X revenues increased in prior year, on was income well period, short-term by million the expense was expense fee in favorable compensation partially versus versus preceding rates in securities-related balance expenses.The in client client

$XX.X activity as the was CFD have versus increased in of $XX.X on current due the by prior ADV next $XX.X preceding a products, This the as was compared period CFD increase higher increase as the million.Moving in volatility.Operating and XX% in which client FX preceding in FX increase lower generally a driven the Institutional to average decline prior to the quarter. immediately to expenses decline increase index million which while quarter. as operating segment by revenues in allocation $XX.X gold, in year, in the our million in million relation result primarily revenues operating period, a our was oil the income corporate fixed result an a decline represents well the and in of a revenue the year. was in RPM which and RPM daily a offset prior products, XX% prior more FX per to of immediately a versus higher The volume. XX% FX rate increase than to to million, XXX% $X.X the year XX% million slide, CFD the was compared Segment revenues and market increased segment compared for driven over costs For increase XX% other retail year, as

period, Segment the than versus the compared the decreased For year, period declined costs X% $XX.X as average million in income segment prior XX% the driven income in in mentioned year revenues decline daily operating a segment out in offset as discussion volume, to as as earlier. which for the prior of Segment a current Retail $XX.X corporate immediately our $XX compensation segment our a million rate on to the $XX prior by charges, result the the million of the current X% increased the million.Closing more allocation year. versus a per next was X% Payments fixed million preceding increase decline first severance in the included Sean of $XX.X million record quarter. slide,

strategy discussion, an wanted before back to Sean For a following recent the passing I for current period, million.Finally, $X.X give long-term offerings. note to the allocation of corporate costs update capital for our our Payments on was segment it

As to subsidiaries franchise. our highlighted capital our client it supports growth activity StoneX Sean integral supports regulated the in of long-term as the is past, success the our of in and

oversubscribed were notes, equity, our principal $XXX restricted scheduled capital notes when end, on and our existing mature our appropriate, on our on approximately debt and XX, pay $XXX June in will notes allocation credit of million will at the The through call senior issued capital markets of June defeasement, in to manner outstanding month the we in March liquidity. accessing compared with which to will centralized Our to for million at this our $X.X internally as drive time our and remain stockholders.To with months that us of of well senior will previously that onset than earned and the a while as order nearly our while on $XXX,XXX ultimately, X.X bolster of we which in basis secured generated these X Ultimately, balance and X-year sheet secured a basis our issuance lower to treasuries interest X.Xx deploying restricted of million pricing interest much Xst, process profile COVID, and thoughtful at very profile the this million new allowed spread proceeds net in be these defease of us will interest well issued million being results our to XXX notes maturity in for $XXX costs issuance incremental issuance, previous by premium.For disciplined save as years. done how used a to at maturity at revolving of facility. fundamental notes as is during new tighter pleased to neutral us focus accrued the points down the XXXX, effective unfolded, which the points The par. as notes, result were both we're which that compounding plus part notes approach extending offering. $XXX new Overall, secured call interest an as XXXX, rate cash existing cash, per XXX represents ultimately the leverage on borrowings for to extend having

diversified recently revised our positive reflecting to pleased for over Following focus approximately to this StoneX back to like we long-term I'll S&P we retained $X.X have available franchise.With and outlook rating in growth.Finally, capital, clients announce and that, to their support earnings Sean. it from our million stable, on to capital transaction, that are turn long-term now our

Sean O'Connor

Thanks, Bill.

focused been approach shareholders and in some to and served be that new well. and some results Slide strategy driving market might has we and strategic our currently, years over for there for our XX our that our been interest we investor high-level renewed touch objectives XX thought may We it worthwhile are and basic on. what us that is on has be are out particularly sets listening. sector, has This unchanged aware strategy activity any

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participated We through have some the we acquisitions in process this made. have of directly

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trading to XX Remarkable in in segments, our see to reminder, underlying growth speaks of revenues client we of most client engagements.As months, which all growth our and across operating in continue a these base client Over volumes across our products our last and a celebrate in and of across anniversary egg global has X that company, as our franchise XXXX Stone year, Co. our namesake to what financial XXX-year & wholesaler continents. a a we think offices door-to-door started legacy our grown spanning over into Saul XX

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Operator

session. Jefferies. We with first And from question-and-answer line begin will of Fannon [Operator your Instructions] Dan question now the the comes

Daniel Fannon

lighter. outside generally the per fee rate to million quarter, board guess on or FX you was contract but I this start, topic, the volumes generally in but were touched strong across the for of

the like you in hoping and talk mix lower certain some Institutional was I within indicated could trends I you segments. the of So AGs about segments. And Commercial believe

just So on rates more about you how around a think that capture that trend get be the to and little color would prospectively?

Sean O'Connor

in you rates, refract tend to When generally X revenue probably seen see think to for with tending back, and of sort guess, or starting little kind having it up what if down volatile, product. of volatility low of, the go X of is doesn't the them I where actually, and guess but speaks a play doesn't markets. for become in the same years in for of capture we be to a through other you up, to narrow volumes capture been 'XX. either I last across know of volatility exceptions, I terms line our depending in. But that peak is is speaking, more go sort we teens, was thing this we flat become what that's as when which we've as which volatility know, or this mix back some to I XX And board. one And now I varied quarters, some the loss. it tend is more, revenue expand. business stay continue And trending low for the and of sort stay probably declines, normalization sort think and sort the see right? bit volatility, over And in markets for I mean, sure, on into Well, at capture just sort market long, see also conditions of to markets

because on that really it market is is say. on conditions add depends I that. to hard, Bill, think, know, if So and I determine have a you I itself think can it's I a don't it trend volatility short-term anything on long-term is volatile, to all

William Dunaway

in and saw the is to on between those the of to component even invasion were a mean, the when market I institutional the comes London of little interplay derivatives talked kind kind Russian segments. a Yes. commercial Ukraine, certainly, Dan, surrounding -- it wide. that couple we And unlisted side, comes commercial and bit you the pieces, an during there as era of then COVID the post and a quite of spread

intermediaries that would X the higher here for sized commodity quarters of then it kind been further. just little And or of last down. same I actually down a consecutive off a kind little a bit we've volatility side, picking a a And it lot bit. then seen the pretty you've up has time large recently trend are bit And So fallen turned little that of the that commercial on volume, say good here at stabilized. rate. And some lower little X commodity

intermediaries.And generally but side. the starting just capturing institutional some volume some then lower more thing. thus So the acquisition, are to commodity that up seen same been ETFs and saw higher The it's that little go a incrementally you good wouldn't particularly client kind from more our on a But the lot versus And really be But you've of going contract. on most groups volume larger bit a more institutional I through little that some pipes. volumes activity, the do side, a institutional at recent bit quarter and through volume us, lower to -- least stabilized lower this want in last side. overall, tends it's RPC. We though thing. rate at quarter per It's volume of lower

So from I here. wouldn't see meaningful down

Daniel Fannon

helpful. That's million per great. retail Okay, row then has well in above quarter And on clearly the side, the fee trends. where the for the second a been

speak there? outlook business, I of coming guess you that a being volatility think or again could I still where an channels but component like I little big obviously or as maybe you about is also base that's the curious know at customer mix you sustainability, is bit hood underneath for that look cited to there. don't anything the it a

Sean O'Connor

Yes.

is I a at but of period think sort of revenue product there's volatility say for unsustainable clearly, significant level, capture time. $XXX would in mix probably honestly, I

probably sort normalizes of XX-ish, our is XXX% than sometimes our XX% these view to think. trends go on longer you of is that Our expectation. sort it's can at But is around

the from the nature that would would on golds we our the flows and getting mechanism, flows things get get and can different when So our the oils acquisition remember we're was I efficient we did spread capture if much retail flow flow can obviously, when FX us retail more institutional provide and and it.I take for comment opportunity we combine because you we A, as be sense as greater and that we'll in average. commercial that's say think those you of years centralized sort had of are thought could the still we intelligently GAIN, all is, greater is XXX happened, corn out we having internally.And think a the the business with for like sort internalization if of to starting of B, there's sort even laid of clients we that, we just will another we allows slightly think through in out an and sort And of think of couple over I see I my are the that the to average tangible build I success volatile, we strategy a of but a as don't to going pipe. I average. one flow as time. ago that it we of now are signs higher starting is see somewhat But of are be to pipes increase driving mean, and

above I trend make there. Does mean, think I still So, we that sense?

Daniel Fannon

about guess longer-term kind as you with technology the tie But strategies of expenses of the X- for when I the now do hoping these -- think think side, the time rates certainly, operational run do investments really margin thus I the far as you're with on Yes, of comments leverage the you think versus making see good comments understood. that some was know today? the potential and I fixed mentioned of to And to the expansion about from of remainder where your year? longer we around start are some X-year we in period sit expenses term. you'll you were you

Sean O'Connor

hand you the I'll I'll Bill Well, give details. Yes. a has overview, to off who just then high-level and here, all

more X significant to us to that to invest sort in and period, in of years that a obviously the step our think years gain. necessarily. We X, very volumes change over in people -- saw support big technology a it more the in rather having and in jump than to infrastructure fairly a spend our infrastructure. money of led we over We I acquired ramp X last did terms

think think happened. don't I I come costs that mean the to spend just that has we're see out. come So costs think bulk going initially I of down. don't I

is like So level in. fighting off. to happen have dramatically on should hard more costs very should here scalability what we we're But from

costs of the technology we to development on continue to we having on. start volume and infrastructure hope hopefully, change margin which step risk, for, can compliance that incremental all we much keep a growth kind in increases, because we we to so to our to If where see from see see KYC made now. front-end So should higher and that they are

that do can start of rates we expenses our Bill, if top low So going grow I those run XX% the And you're our single mean that's see our can run I what growth mean line over plus quick, leverage see show pretty up kind continue to to are. think.I range. you, you you we of to agree on? rates digits, in operational on and and plan. And growth keep kind our can down to we

William Dunaway

actually as there, Dan, QX that salary growth. natural Yes. cost I point, modest pointed to piece being saying QX to non-variable far the was your the and as as out relatively from Sean

We year, are we've I last calls. think on last but from of even up touched couple the

I some weâ€™re you actual had headcount the starting side. a on bit. starting think -- little level anomalies this the moderate somewhat off quarter expense Obviously, to that see

seasonal we reset the PTOs about with the taxes, get retirements, last year of it's of kind of year. talked as benefits, at beginning that Some

the of $X some So to another We it's million deferred comp in on but side. couple probably million $X dollars that's probably fluctuations million. had comp,

I comp, because in also seasonal million kind million down least office of I to consolidation is there $X then overall the $X.X activity.And it about of of the million quarter, with, added kind from some to of of, $X of in would the where and recharges that that touched on, trend at certainly So probably just in as right of we offices expect London leaseholds. off reordered total now write

fees for high So sales rate lower million $X.X the current certainly a it there. the occupancy, then to couple now would than about comps we professional be expect about current million here then in is million in the quarter. dollars talked I probably quarter. run the it's on probably And And $X about

things we net our do little million quarter but $XX probably than would overall that's, kind in somewhere right. a So higher you're $XX I million, expectation. going expect this of, forward. bit But the mean, current change,

Sean O'Connor

where the lower jurisdictions. but think other lot pushing got we've sort the that cost of done point one XXX a our We strategically something more long-term, Dan, India. now mass. to or mention incremental into have I sort we've a we've back in critical we of about and we guess, to efficient It's hires now a on is thing for while, people of

spinning and we're great U.S. center, at out people office of and Poland. up We're estate New where Krakow, expensive Chicago operational sort We real price have and a points. Birmingham in of finding in centers us moving of great York fractions lots our talent is office sort prices.Our of XXX of becoming people for Colombia,

not heads, I hard might see show now. dollars. but we're see it show up you pushing So, in you think really should that And in it up

that's we're towards something So well. working as

Daniel Fannon

That's impact the we of is that guess, basis? and sensitivity and interest you client looking have balances those color on get And think get. also wanted the the I in balances Great. a helpful. duration off. How then some they or place and roll cash to at around as the contracts just what Bill, maybe hedges should income But sensitivities the and we about prospective

William Dunaway

component I now, we're Sure. like the right? ones we're paying little here Yes, we the that that QX out net So a from of of nice Dan, of shy would paying a at off, rolling yield where early gross previously, talked did big was had them ones to to about XXX. we've roll QX that really currently is X% clients off. and say what at on

hedges saw on we -- points So and [Technical off some net point basis those XX a basis about probably rolled basis Difficulty] a pickup of pickup. as XX those

kind off the inverted are got we I'd that in are on, cutting still where go to just market into we've they're say this been rolling the cautious of seeing. we're market but now is of cycle and where now. we the We've given in some to So Fed

we that do I'd pegged months that have with maturity the to currently probably few month, the outstanding X following to X generally pretty we're So on. still X say

Sean O'Connor

material going not make But difference. to they're a

William Dunaway

-- ahead, They should make in Dan. Go material yes, they the will difference a rate. make

Sorry.

on margin As lower balances, my far in of brings on come off with commodity of the side. we've as that touched remarks volatility little commercial the stated lower bit kind a requirements

fiscal last on had last we that plays lot high of fiscal little a had lot of year And interest a you've drive doing rate driven some watermark so side, the bit of into -- lower. balances a of of mid kind institutional funds. the early institutional that's fiscal when clients lot And year a

up those balances Some of seen have the and where them also opportunities of affect requirements the a you've well. down. go That's dried margin little bit as

Sean O'Connor

weren't we interest. retaining much But

William Dunaway

paying Correct. we Yes. see, of can as you bit clients. quite out some are a The of net-net on interest those

year despite overall, those we margin balances. ago, were margin So where the lower a -- net versus expanded has the

Daniel Fannon

Great.

of year? current how And And terms discussions, lastly those it your or you large, the current compare expand sit about on for some this last does appetite time based that just Okay. think small valuations backlog a the for in clarify maybe to conversations? around of today does just as me, in Sean, mentioned comments say I environment, That's where versus the helpful. down you then M&A to guess coming bit. upon

Sean O'Connor

opportunities a And at think a I coming of I and they certainly us of to sort would adjust range amounts or where so more dealt mean, sort be people priced. with valuation we that's a been kind sort happen. coming for say I starting to trend what's we sort while moment. wise. over the to the it's And things of normalized into more I year of are takes it COVID, normal. of think fair of seem craziness the last see to of And to reasonably

chase say I if we probably than you something we hard. with do that very it mean, don't holds, this. did we chase all a a around looks ago.But that We are X probability But encouraging So, -- may it years do more that. it's it really disciplined things argues year M&A, found that stay there's higher don't when We certainly, price. We ago. bad happen deals. than even

mean doesn't have it's but we'll do questions? other So we any anything, more initially encouraging.Operator, certainly do

Operator

[Operator Instructions].

Sean O'Connor

any don't up. I Well, right. All see questions popping

to we X our just will conference speak call. you to in everyone Appreciate to and you. say So thanks the all for Thank months' support time. attending like

Operator

Ladies joining. for and gentlemen, that all Thank concludes call. you today's

You disconnect. now may

StoneX (SNEX) 9 May 242024 Q2 Earnings call transcript