StoneX Group Inc. [SNEX] Filings

10-Q 1 intl-20240630.htm 10-Q intl-20240630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 000-23554

StoneX Group Inc.

(Exact name of registrant as specified in its charter)


Delaware						59-2921318
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

230 Park Ave, 10th Floor

New York, NY 10169

(Address of principal executive offices) (Zip Code)

(212) 485-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

SNEX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer, ” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, there were 31,791,288 shares of the registrant’s common stock outstanding.

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StoneX Group Inc.

Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2024

Table of Contents


		Page
Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Income Statements	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Cash Flows	4

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	61

Item 4.	Controls and Procedures	63

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	63

Item 1A.	Risk Factors	63

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 5.	Other Information	64

Item 6.	Exhibits	64

Signatures		65

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

StoneX Group Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions, except par value and share amounts)	June 30, 2024		September 30, 2023
ASSETS
Cash and cash equivalents	$	1,220.8	$	1,108.3

Cash, securities and other assets segregated under federal and other regulations (including $48.4 million and $5.8 million at fair value at June 30, 2024 and September 30, 2023, respectively)	2,750.4		2,426.3
Collateralized transactions:
Securities purchased under agreements to resell	4,904.8		2,979.5
Securities borrowed	1,155.7		1,129.1


Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $3,740.4 million and $4,248.3 million at fair value at June 30, 2024 and September 30, 2023, respectively)	7,570.2		7,443.8
Receivable from clients, net (including $(0.5) million and $(7.9) million at fair value at June 30, 2024 and September 30, 2023, respectively)	871.4		683.1
Notes receivable, net	—		5.2
Income taxes receivable	28.9		25.1
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $1,751.0 million and $1,466.4 million at June 30, 2024 and September 30, 2023, respectively)	6,155.4		5,044.8
Physical commodities inventory, net (including $344.5 million and $386.5 million at fair value at June 30, 2024 and September 30, 2023, respectively)	587.4		537.3
Deferred tax asset	42.3		45.4
Property and equipment, net	142.2		123.5
Operating right of use assets	157.4		122.1
Goodwill and intangible assets, net	77.1		82.4
Other assets	266.8		182.8
Total assets	$	25,930.8	$	21,938.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and other accrued liabilities (including $1.7 million and $1.5 million at fair value at June 30, 2024 and September 30, 2023, respectively)	$	544.9	$	533.0
Operating lease liabilities	193.7		149.3
Payables to:
Clients (including $387.3 million and $79.8 million at fair value at June 30, 2024 and September 30, 2023, respectively)	10,586.2		9,976.0
Broker-dealers, clearing organizations and counterparties (including $3.6 million and $10.2 million at fair value at June 30, 2024 and September 30, 2023, respectively)	429.2		442.4
Lenders under loans	227.8		341.0
Senior secured borrowings, net	542.8		342.1
Income taxes payable	24.5		38.2
Deferred tax liability	8.2		8.1
Collateralized transactions:
Securities sold under agreements to repurchase	7,071.9		4,526.6
Securities loaned	1,124.0		1,117.3
Financial instruments sold, not yet purchased, at fair value	3,569.8		3,085.6

Total liabilities	24,323.0		20,559.6
Commitments and contingencies (Note 11)
Stockholders' equity:

Preferred stock, $0.01 par value. Authorized 1,000,000 shares; no shares issued or outstanding	—		—
Common stock, $0.01 par value. Authorized 200,000,000 shares; 35,653,070 issued and 31,742,085 outstanding at June 30, 2024 and 35,105,852 issued and 31,194,867 outstanding at September 30, 2023	0.4		0.4
Common stock in treasury, at cost. 3,910,985 shares at June 30, 2024 and September 30, 2023	(69.3)		(69.3)
Additional paid-in-capital	402.0		371.7
Retained earnings	1,312.2		1,128.1
Accumulated other comprehensive loss, net	(37.5)		(51.8)


Total equity	1,607.8		1,379.1
Total liabilities and stockholders' equity	$	25,930.8	$	21,938.7

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Income Statements

(Unaudited)


	Three Months Ended June 30,				Nine Months Ended June 30,
(in millions, except share and per share amounts)	2024		2023		2024		2023
Revenues:
Sales of physical commodities	$	26,196.2	$	14,319.2	$	66,339.0	$	42,228.8
Principal gains, net	305.6		300.0		881.2		810.8
Commission and clearing fees	143.0		126.8		408.9		375.5
Consulting, management, and account fees	45.3		39.2		124.0		119.7
Interest income	379.6		262.7		995.7		685.7
Total revenues	27,069.7		15,047.9		68,748.8		44,220.5
Cost of sales of physical commodities	26,156.0		14,271.0		66,232.7		42,084.4
Operating revenues	913.7		776.9		2,516.1		2,136.1
Transaction-based clearing expenses	81.0		66.7		233.8		203.2
Introducing broker commissions	43.1		43.4		124.2		122.4
Interest expense	297.0		216.0		792.2		549.0
Interest expense on corporate funding	24.1		14.9		53.5		44.2
Net operating revenues	468.5		435.9		1,312.4		1,217.3
Compensation and other expenses:
Compensation and benefits	257.5		226.6		710.0		658.1
Trading systems and market information	20.1		19.4		58.2		54.9
Professional fees	20.0		13.9		55.0		41.1
Non-trading technology and support	18.7		13.7		53.6		44.7
Occupancy and equipment rental	13.5		10.0		34.8		29.5
Selling and marketing	12.8		13.7		40.1		40.8
Travel and business development	6.9		6.2		21.1		17.7
Communications	1.9		2.4		6.4		6.7
Depreciation and amortization	12.3		13.8		35.8		39.6
Bad debts (recoveries), net	0.5		6.3		(0.2)		10.0
Other	18.1		15.4		50.3		50.1
Total compensation and other expenses	382.3		341.4		1,065.1		993.2
Gain on acquisition and other gains	1.8		—		8.7		23.5
Income before tax	88.0		94.5		256.0		247.6
Income tax expense	26.1		25.0		71.9		59.8
Net income	$	61.9	$	69.5	$	184.1	$	187.8
Earnings per share:
Basic	$	1.95	$	2.24	$	5.83	$	6.09
Diluted	$	1.88	$	2.17	$	5.64	$	5.88
Weighted-average number of common shares outstanding:
Basic	30,643,270		30,060,251		30,449,286		29,870,136
Diluted	31,743,032		30,981,451		31,487,370		30,867,473

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended June 30,				Nine Months Ended June 30,
(in millions)	2024		2023		2024		2023
Net income	$	61.9	$	69.5	$	184.1	$	187.8
Other comprehensive (loss)/gain, net of tax:
Foreign currency translation adjustment	(9.2)		4.1		(6.9)		15.5
Cash flow hedges	1.3		2.6		21.2		31.6








Total other comprehensive (loss)/gain, net of tax	(7.9)		6.7		14.3		47.1
Comprehensive income	$	54.0	$	76.2	$	198.4	$	234.9

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended June 30,
(in millions)	2024		2023
Cash flows from operating activities:
Net income	$	184.1	$	187.8
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization	35.8		39.6
Amortization of right of use assets	16.4		7.9
Bad debts (recoveries), net	(0.2)		10.0

Deferred income taxes	(3.6)		3.2
Amortization of debt issuance costs	7.9		4.3

Amortization of share-based compensation	27.8		21.3

Gain on acquisition	—		(23.5)
Changes in operating assets and liabilities, net:
Securities and other assets segregated under federal and other regulations	(42.6)		600.6
Securities purchased under agreements to resell	(1,925.3)		(970.0)
Securities borrowed	(26.6)		115.5
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net	(183.8)		(1,072.7)
Receivables from clients, net	(188.1)		(89.8)
Notes receivable, net	—		(0.2)
Income taxes receivable	(3.8)		(5.3)
Financial instruments owned, at fair value	(1,106.8)		(1,112.6)
Physical commodities inventory, net	(50.1)		91.3

Other assets	(84.7)		(44.5)
Accounts payable and other accrued liabilities	20.6		23.5
Operating lease liabilities	(7.3)		(0.5)
Payables to clients	610.2		(170.7)
Payables to broker-dealers, clearing organizations, and counterparties	(13.2)		(26.6)
Income taxes payable	(13.6)		18.8
Securities sold under agreements to repurchase	2,545.3		1,833.9
Securities loaned	6.7		(96.2)
Financial instruments sold, not yet purchased, at fair value	509.2		260.1
Net cash provided by/(used in) operating activities	314.3		(394.8)
Cash flows from investing activities:
Proceeds from notes receivable	5.2		—
Acquisition of businesses and assets, net of cash received	(0.7)		(6.1)

Purchase of exchange memberships and common stock	(1.0)		—

Purchases of property and equipment	(48.5)		(32.8)
Net cash used in investing activities	(45.0)		(38.9)
Cash flows from financing activities:
Net change in payables to lenders under loans with maturities 90 days or less	(113.2)		(37.7)
Proceeds from payables to lenders under loans with maturities greater than 90 days	10.0		170.0
Repayments of payables to lenders under loans with maturities greater than 90 days	(10.0)		(205.0)


Proceeds from issuance of senior secured notes	550.0		—
Repayment of senior secured notes	(347.9)		—


Deferred payments on acquisitions	(9.6)		(18.5)


Debt issuance costs	(7.6)		—
Shares withheld to cover taxes on vesting of equity awards	(2.0)		—
Exercise of stock options	4.5		3.6


Net cash provided by/(used in) financing activities	74.2		(87.6)
Effect of exchange rates on cash, segregated cash, cash equivalents, and segregated cash equivalents	(6.9)		14.8
Net increase/(decrease) in cash, segregated cash, cash equivalents, and segregated cash equivalents	336.6		(506.5)
Cash, segregated cash, cash equivalents, and segregated cash equivalents at beginning of period	6,041.7		6,285.1
Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period	$	6,378.3	$	5,778.6
Supplemental disclosure of cash flow information:
Cash paid for interest	$	848.7	$	550.8
Income taxes paid, net of cash refunds	$	89.1	$	41.9
Supplemental disclosure of non-cash investing and financing activities:
Additional consideration payable related to acquisition of customer list	$	0.6	$	—
Identified intangible assets and goodwill on acquisitions	$	—	$	10.6
Additional consideration payable related to acquisitions, net	$	3.5	$	28.7

Acquisition of business:
Assets acquired	$	—	$	141.6
Liabilities assumed	—		84.1
Total net assets acquired	$	—	$	57.5

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Statements of Cash Flows - Continued

(Unaudited)

The following table provides a reconciliation of cash, segregated cash, cash equivalents, and segregated cash equivalents reported within the Condensed Consolidated Balance Sheets.


	June 30,
(in millions)	2024		2023
Cash and cash equivalents	$	1,220.8	$	1,401.3

Cash segregated under federal and other regulations(1)	2,702.0		2,487.5
Securities segregated under federal and other regulations(1)	—		0.1
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)(2)	1,535.1		1,499.2
Securities segregated and pledged to exchange-clearing organizations(2)	920.4		390.5
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the condensed consolidated statements of cash flows	$	6,378.3	$	5,778.6

(1) Represents segregated client cash held at third-party banks. Excludes segregated commodity warehouse receipts, segregated U.S. Treasury obligations with original or acquired maturities of greater than 90 days, and other assets of $48.4 million and $4.8 million as of June 30, 2024 and 2023, respectively, included within Cash, securities and other assets segregated under federal and other regulations on the Condensed Consolidated Balance Sheets.

(2) Represents segregated client cash and U.S. Treasury obligations on deposit with, or pledged to, exchange clearing organizations and other FCMs. Excludes non-segregated cash, segregated U.S. Treasury obligations pledged to exchange-clearing organizations with original or acquired maturities greater than 90 days, and other assets of $5,114.7 million and $5,408.0 million as of June 30, 2024 and 2023, respectively, included within Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net on the Condensed Consolidated Balance Sheets.

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Three Months Ended June 30, 2023
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of March 31, 2023	$	0.4	$	(69.3)	$	358.5	$	1,007.9	$	(50.2)	$	1,247.3


Net income	—		—		—		69.5		—		69.5
Other comprehensive gain, net of tax	—		—		—		—		6.7		6.7
Exercise of stock options	—		—		—		—		—		—
Share-based compensation	—		—		6.4		—		—		6.4

Balances as of June 30, 2023	$	0.4	$	(69.3)	$	364.9	$	1,077.4	$	(43.5)	$	1,329.9


	Three Months Ended June 30, 2024
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of March 31, 2024	$	0.4	$	(69.3)	$	390.8	$	1,250.3	$	(29.6)	$	1,542.6
Net income	—		—		—		61.9		—		61.9
Other comprehensive loss, net of tax	—		—		—		—		(7.9)		(7.9)
Exercise of stock options	—		—		1.0		—		—		1.0
Shares withheld to cover taxes on vesting of equity awards	—		—		(0.8)		—		—		(0.8)
Share-based compensation	—		—		11.0		—		—		11.0

Balances as of June 30, 2024	$	0.4	$	(69.3)	$	402.0	$	1,312.2	$	(37.5)	$	1,607.8


	Nine Months Ended June 30, 2023
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of September 30, 2022	$	0.4	$	(69.3)	$	340.0	$	889.6	$	(90.6)	$	1,070.1


Net income	—		—		—		187.8		—		187.8
Other comprehensive gain, net of tax	—		—		—		—		47.1		47.1
Exercise of stock options	—		—		3.6		—		—		3.6
Share-based compensation	—		—		21.3		—		—		21.3

Balances as of June 30, 2023	$	0.4	$	(69.3)	$	364.9	$	1,077.4	$	(43.5)	$	1,329.9


	Nine Months Ended June 30, 2024
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net		Total
Balances as of September 30, 2023	$	0.4	$	(69.3)	$	371.7	$	1,128.1	$	(51.8)	$	1,379.1
Net income	—		—		—		184.1		—		184.1
Other comprehensive gain, net of tax	—		—		—		—		14.3		14.3
Exercise of stock options	—		—		4.5		—		—		4.5
Shares withheld to cover taxes on vesting of equity awards	—		—		(2.0)		—		—		(2.0)
Share-based compensation	—		—		27.8		—		—		27.8

Balances as of June 30, 2024	$	0.4	$	(69.3)	$	402.0	$	1,312.2	$	(37.5)	$	1,607.8

See accompanying notes to the condensed consolidated financial statements.

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StoneX Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation and Consolidation and Accounting Standards Adopted

StoneX Group Inc., a Delaware corporation, and its consolidated subsidiaries (collectively “StoneX” or “the Company”), is a global financial services network that connects companies, organizations, traders and investors to the global market ecosystem through a unique blend of digital platforms, end-to-end clearing and execution services, high touch service, and deep expertise. The Company strives to be the one trusted partner to its clients, providing its network, products and services to allow them to pursue trading opportunities, manage their market risks, make investments and improve their business performance. The Company offers a vertically integrated product suite, beginning with high-touch and electronic access to nearly all major financial markets worldwide, as well as numerous liquidity venues. The Company delivers access and services through the entire lifecycle of a trade, by delivering deep market expertise and on-the-ground intelligence, best execution, and finally post-trade clearing, custody, as well as settlement services. The Company has created revenue streams, diversified by asset class, client type and geography, that earn commissions, spreads, and principal revenue as clients execute transactions across its financial network, while monetizing non-trading client activity including interest and fee earnings on client balances as well as earning consulting fees for market intelligence and risk management services.

The Company provides its services to a diverse group of clients in more than 180 countries. These clients include more than 54,000 commercial, institutional, and payments clients and over 400,000 retail clients. The Company’s clients include commercial entities, asset managers, regional, national and introducing broker-dealers, insurance companies, brokers, institutional investors and professional traders, commercial and investment banks and government and non-governmental organizations (“NGOs”).

The Company’s common stock trades on The NASDAQ Global Select Market under the symbol “SNEX”.

Basis of Presentation and Consolidation

The accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2023, which has been derived from the audited consolidated balance sheet of September 30, 2023, and the unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The Company believes that the included disclosures clearly and fairly present the information within. In management’s opinion, all adjustments, generally consisting of normal accruals, considered necessary to fairly present the condensed consolidated financial statements for the interim periods presented have been reflected as required by Rule 10-01 of Regulation S-X.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as filed with the SEC.

These condensed consolidated financial statements include the accounts of StoneX Group Inc. and all entities in which the Company has a controlling financial interest. All material intercompany transactions and balances have been eliminated in consolidation.

The Company’s fiscal year end is September 30, and its fiscal quarters end on December 31, March 31, June 30 and September 30. Unless otherwise stated, all dates refer to fiscal years and fiscal interim periods.

Preparing condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to fair value measurement for financial instruments, revenue recognition, valuation of inventories, and income taxes. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. The Company reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to financial statement issuance. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. Estimates and assumptions were considered and made in context with the information reasonably available to the Company as of June 30, 2024 and through the date of this Form 10-Q.

In the Condensed Consolidated Income Statements, the total revenues reported combine gross revenues for the physical commodities business and net revenues for all other businesses. The subtotal Operating revenues in the Condensed

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Consolidated Income Statements is calculated by deducting Cost of sales of physical commodities from Total revenues. The subtotal Net operating revenues in the Condensed Consolidated Income Statements is calculated as Operating revenues less Transaction-based clearing expenses, Introducing broker commissions, Interest expense, and Interest expense on corporate funding. Transaction-based clearing expenses represent variable expenses paid to executing brokers, exchanges, clearing organizations and banks in relation to transactional volumes. Introducing broker commissions include commission paid to certain non-employee third parties that have introduced clients to the Company. Net operating revenues represent revenues available to pay variable compensation to risk management consultants and traders, direct non-variable expenses, as well as variable and non-variable expenses to operational and administrative employees.

Common Stock Split

On November 7, 2023, the Company’s Board of Directors approved a three-for-two split of its common stock, to be effected as a stock dividend. The stock split was effective on November 24, 2023, and entitled each shareholder of record as of November 17, 2023 to receive one additional share of common stock for every two shares owned and cash in lieu of fractional shares.

The stock split increased the number of shares of common stock outstanding. All share and per share amounts contained herein have been retroactively adjusted for the stock split.

The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from Additional paid-in-capital to Common stock.

Gain on Acquisition

In October 2022, the Company’s wholly owned subsidiary, StoneX Netherlands B.V., acquired CDI-Societe Cotonniere De Distribution S.A. The fair value of identifiable net assets acquired was approximately $66.2 million and the purchase price was approximately $42.7 million. The value that the Company acquired in excess of consideration paid resulted in a gain on acquisition of $23.5 million for the nine months ended June 30, 2023.

Accounting Standards

The Company did not adopt any new accounting standards during the three and nine months ended June 30, 2024.

Note 2 – Earnings per Share

The Company presents basic and diluted earnings per share (“EPS”) using the two-class method, which requires all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends and therefore participate in undistributed earnings with common stockholders be included in computing earnings per share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. Restricted stock awards granted to certain employees and directors contain non-forfeitable rights to dividends at the same rate as common stock and are considered participating securities. Basic EPS has been computed by dividing net income by the weighted-average number of common shares outstanding.

The following is a reconciliation of the numerator and denominator of the diluted earnings per share computations for the periods presented below.


	Three Months Ended June 30,				Nine Months Ended June 30,
(in millions, except share amounts)	2024		2023		2024		2023
Numerator:
Net income	$	61.9	$	69.5	$	184.1	$	187.8
Less: Allocation to participating securities	(2.2)		(2.4)		(6.5)		(6.3)
Net income allocated to common stockholders	$	59.7	$	67.1	$	177.6	$	181.5






Denominator:
Weighted average number of:
Common shares outstanding	30,643,270		30,060,251		30,449,286		29,870,136
Dilutive potential common shares outstanding:
Share-based awards	1,099,762		921,200		1,038,084		997,337
Diluted weighted-average common shares	31,743,032		30,981,451		31,487,370		30,867,473

The dilutive effect of share-based awards is reflected in diluted net income per share by applying the treasury stock method, which includes consideration of unamortized share-based compensation expense.

Options to purchase 1,766,358 and 433,118 shares of common stock for the three months ended June 30, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per share as they would have been anti-dilutive. Options to

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purchase 1,550,164 and 374,816 shares of common stock for the nine months ended June 30, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per share as they would have been anti-dilutive.

Note 3 – Assets and Liabilities, at Fair Value

Fair value is defined by U.S. GAAP as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Even when market assumptions are not readily available, the Company is required to develop a set of assumptions that reflect those that market participants would use in pricing an asset or liability at the measurement date. The Company uses prices and inputs that are current as of measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.

The Company has designed independent price verification controls to mitigate risks related to the reasonableness of such prices.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A market is active if there are sufficient transactions on an ongoing basis to provide current pricing information for the asset or liability, pricing information is released publicly, and price quotations do not vary substantially either over time or among market participants. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.

Relevant guidance requires the Company to consider counterparty credit risk of all parties to outstanding derivative instruments that would be considered by a market participant in the transfer or settlement of such contracts (exit price). The Company’s exposure to credit risk on derivative financial instruments principally relates to the portfolio of Over-the-counter (“OTC”) derivative contracts as all exchange-traded contracts held can be settled on an active market with a credit guarantee from the respective exchange. The Company requires each counterparty to deposit margin collateral for all OTC instruments and is also required to deposit margin collateral with counterparties. The Company has assessed the nature of these deposits and used its discretion to adjust each based on the underlying credit considerations for the counterparty and determined that the collateral deposits minimize the exposure to counterparty credit risk in the evaluation of the fair value of OTC instruments as determined by a market participant.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, the Company groups its assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Valuation is based upon unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 1 consists of financial assets and liabilities whose fair values are estimated using quoted market prices.

Level 2 - Valuation is based upon quoted prices for identical or similar assets or liabilities in markets that are less active, that is, markets in which there are few transactions for the asset or liability that are observable for substantially the full term. Included in Level 2 are those financial assets and liabilities for which fair values are estimated using models or other valuation methodologies. These models are primarily industry-standard models that consider various observable inputs, including time value, yield curve, volatility factors, observable current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures.

Level 3 - Valuation is based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Level 3 comprises financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are not readily observable from objective sources. Level 3 includes contingent liabilities that have been valued using an income approach based upon management developed discounted cash flow projections, which are an unobservable input.

Fair value of financial and nonfinancial assets and liabilities that are carried on the Condensed Consolidated Balance Sheets at fair value on a recurring basis

Cash and cash equivalents reported at fair value on a recurring basis includes certificates of deposit and money market mutual funds, which are stated at cost plus accrued interest, which approximates fair value.

Cash, securities and other assets segregated under federal and other regulations reported at fair value on a recurring basis include the value of pledged investments, primarily U.S. Treasury obligations and commodities warehouse receipts.

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Deposits with and receivables from broker-dealers, clearing organizations and counterparties and payable to clients and broker-dealers, clearing organizations and counterparties includes the fair value of pledged investments, primarily U.S. Treasury obligations and foreign government obligations. These balances also include the fair value of exchange-traded options on futures and OTC forwards, swaps and options.

Financial instruments owned and sold, not yet purchased include the fair value of equity securities, which includes common, preferred, and foreign ordinary shares, American Depository Receipts (“ADRs”), Global Depository Receipts (“GDRs”), and exchange-traded funds (“ETFs”), corporate and municipal bonds, U.S. Treasury obligations, U.S. government agency obligations, foreign government obligations, agency mortgage-backed obligations, asset-backed obligations, derivative financial instruments, commodities warehouse receipts, exchange firm common stock, and investments in managed funds. The fair value of exchange firm common stock is determined by quoted market prices.

Cash equivalents, debt and equity securities, commodities warehouse receipts, physical commodities inventory, derivative financial instruments and contingent liabilities are carried at fair value, on a recurring basis, and are classified and disclosed into three levels in the fair value hierarchy.

The following section describes the valuation methodologies used by the Company to measure classes of financial instruments at fair value and specifies the level within the fair value hierarchy where various financial instruments are classified.

The Company uses quoted prices in active markets, where available, and classifies instruments with such quotes within Level 1 of the fair value hierarchy. Examples include U.S. Treasury obligations, foreign government obligations, commodities warehouse receipts, certain equity securities traded in active markets, physical precious metals inventory held by a regulated broker-dealer subsidiary, exchange firm common stock, investments in managed funds, as well as options on futures contracts traded on national exchanges. The fair value of exchange firm common stock is determined by recent sale transactions and is included within Level 1.

When instruments are traded in secondary markets and observable prices are not available for substantially the full term, the Company generally relies on internal valuation techniques based upon observable inputs for comparable financial instruments, or prices obtained from third-party pricing services or brokers or a combination thereof, and accordingly, classified these instruments as Level 2. Examples include corporate and municipal bonds, U.S. government agency obligations, agency-mortgage backed obligations, asset-backed obligations, certain equity securities traded in less active markets, and OTC derivative contracts, which include purchase and sale commitments related to the Company’s foreign exchange, agricultural, and energy commodities.

Certain derivatives without a quoted price in an active market and derivatives executed OTC are valued using internal valuation techniques, including pricing models which utilize significant inputs observable to market participants. The valuation techniques and inputs depend on the type of derivative and the nature of the underlying instrument. The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest yield curves, foreign exchange rates, commodity prices, volatilities and correlation. These derivative instruments are included within Level 2 of the fair value hierarchy.

Physical commodities inventory includes precious metals that are a part of the trading activities of a regulated broker-dealer subsidiary and is recorded at fair value using exchange-quoted prices. Physical commodities inventory also includes agricultural commodities that are a part of the trading activities of a non-broker dealer subsidiary and are recorded at net realizable value using exchange-quoted prices. The fair value of precious metals physical commodities inventory is based upon unadjusted exchange-quoted prices and is, therefore, classified within Level 1 of the fair value hierarchy. The fair value of agricultural physical commodities inventory and the related OTC firm sale and purchase commitments are generally based upon exchange-quoted prices, adjusted for basis or differences in local markets, broker or dealer quotations or market transactions in either listed or OTC markets. Exchange-quoted prices are adjusted for location and quality because the exchange-quoted prices for agricultural and energy related products represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis or local market adjustments are observable inputs or have an insignificant impact on the measurement of fair value and, therefore, the agricultural physical commodities inventory, as well as the related OTC forward firm sale and purchase commitments have been included within Level 2 of the fair value hierarchy.

With the exception of certain derivative instruments where the valuation approach is disclosed above, financial instruments owned and sold are primarily valued using third-party pricing sources. Third-party pricing vendors compile prices from various sources and often apply matrix pricing for similar securities when market-observable transactions for the instruments are not observable for substantially the full term. The Company reviews the pricing methodologies used by third-party pricing vendors in order to evaluate the fair value hierarchy classification of vendor-priced financial instruments and the accuracy of vendor pricing, which typically involves comparing of primary vendor prices to internal trader prices or secondary vendor prices. When evaluating the propriety of vendor-priced financial instruments using secondary prices, considerations include the range and quality of vendor prices, level of observable transactions for identical and similar instruments, and judgments based upon

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knowledge of a particular market and asset class. If the primary vendor price does not represent fair value, justification for using a secondary price, including source data used to make the determination, is subject to review and approval by authorized personnel prior to using a secondary price. Financial instruments owned and sold that are valued using third party pricing sources are included within either Level 1 or Level 2 of the fair value hierarchy based upon the observability of the inputs used and the level of activity in the market.

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2024 and September 30, 2023. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these condensed consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

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The following tables set forth the Company’s financial and nonfinancial assets and liabilities accounted for at fair value, on a recurring basis, as of June 30, 2024 and September 30, 2023 by level in the fair value hierarchy. All fair value measurements were performed on a recurring basis as of June 30, 2024 and September 30, 2023.


	June 30, 2024
(in millions)	Level 1		Level 2		Level 3		Netting (1)		Total
Assets:
Certificates of deposit	$	12.4	$	—	$	—	$	—	$	12.4
Money market mutual funds	35.6		—		—		—		35.6
Cash and cash equivalents	48.0		—		—		—		48.0
Commodities warehouse receipts	48.4		—		—		—		48.4

Securities and other assets segregated under federal and other regulations	48.4		—		—		—		48.4
U.S. Treasury obligations	3,227.7		—		—		—		3,227.7
To be announced and forward settling securities	—		25.4		—		(21.4)		4.0
Foreign government obligations	17.3		—		—		—		17.3
Derivatives	4,710.5		1,748.8		—		(5,967.9)		491.4
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net	7,955.5		1,774.2		—		(5,989.3)		3,740.4
Receivables from clients, net - Derivatives	76.7		614.8		—		(692.0)		(0.5)
Equity securities	440.3		16.4		—		—		456.7
Corporate and municipal bonds	—		361.1		—		—		361.1
U.S. Treasury obligations	721.8		—		—		—		721.8
U.S. government agency obligations	—		373.9		—		—		373.9
Foreign government obligations	150.5		—		—		—		150.5
Agency mortgage-backed obligations	—		3,469.7		—		—		3,469.7
Asset-backed obligations	—		219.4		—		—		219.4
Derivatives	0.1		732.8		—		(416.2)		316.7

Commodities warehouse receipts	43.0		—		—		—		43.0
Exchange firm common stock	11.8		—		—		—		11.8
Cash flow hedges	—		5.5		—		—		5.5
Mutual funds and other	22.5		—		2.8		—		25.3
Financial instruments owned	1,390.0		5,178.8		2.8		(416.2)		6,155.4
Physical commodities inventory	193.8		150.7		—		—		344.5
Total assets at fair value	$	9,712.4	$	7,718.5	$	2.8	$	(7,097.5)	$	10,336.2
Liabilities:
Accounts payable and other accrued liabilities	$	—	$	—	$	1.7	$	—	$	1.7
Payables to clients - Derivatives	4,418.5		292.5		—		(4,323.7)		387.3
TBA and forward settling securities	—		26.2		—		(20.2)		6.0
Derivatives	371.6		1,963.8		—		(2,337.8)		(2.4)
Payable to broker-dealers, clearing organizations and counterparties	371.6		1,990.0		—		(2,358.0)		3.6
Equity securities	272.0		5.1		—		—		277.1
Foreign government obligations	130.6		—		—		—		130.6
Corporate and municipal bonds	—		141.3		—		—		141.3
U.S. Treasury obligations	2,662.3		—		—		—		2,662.3
U.S. government agency obligations	—		13.7		—		—		13.7
Agency mortgage-backed obligations	—		12.1		—		—		12.1
Asset-backed obligations	—		4.0		—		—		4.0
Derivatives