Good day, everyone, and welcome to the INTL FCStone First Quarter Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to Bill Dunaway. Please go ahead, sir.

Good morning. My name is Bill Dunaway, CFO of INTL FCStone, Inc. Welcome to our earnings conference call for our fiscal first quarter ending December 31, 2012. After the market closed yesterday, we issued a press release reporting our results for the fiscal first quarter. The press release is available on our website at www.intlfcstone.com, as well as a slide presentation which we will refer to on this call in our discussions of the quarterly results. This slide presentation is available by clicking on the Investor Relations link on the website and then going into the Events & Presentations page. You'll need to sign on to the live webcast in order to view the presentation. Both the presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, I'd just like to cover a couple of housekeeping items. On these conference calls and in the management discussion portions of our SEC filings, we present financial information on a non-GAAP basis in order to take into account mark-to-market adjustments in our physical commodity product lines, which are included in both our CRM and Other segment. As discussed on previous conference calls and in our filings, the requirements of accounting principles generally accepted in the U.S., which I'll refer to as GAAP, to carry derivatives at fair market value but physical commodities inventory at the lower of cost or market value may have a significant temporary impact on our reported earnings. Under GAAP, gains and losses on commodities inventory and derivatives, which the company intends to be offsetting, are often recognized in different periods. Additionally, in certain circumstances, GAAP does not require us to reflect changes in estimated values of forward commitments to purchase and sell commodities. For this reason, we believe…

Thanks, Bill, and good morning, everyone, and thanks for joining the call. Our Q1 2013 fiscal results were significantly better than the prior year, when we recorded an adjusted net loss, due largely to the collapse of MF Global and the impact of that event on the markets, our customers and our revenues. This year, we saw year-over-year revenue growth and continued cost containment, which produced an encouraging bottom line profit. Our revenues and bottom line also benefited from material non-recurring revenue items. Paul will deal with these items in more detail in his section. The most significant of which was the profit on our LME shares, which we mentioned on the last call. Our adjusted operating revenues, net of these non-recurring items, were 15% above last year, but 14% or $17 million below our record result for Q4 2012. We achieved a 9.2% ROE on an adjusted basis as compared to a negative 3.1% return for the prior year period. Both Bill and I will be referring, later, to the earnings presentation which has been posted on our website. This format has been changed, slightly, to include some additional information, which I will discuss shortly. All of our business lines, except FX, showed positive revenue growth in a difficult environment. On the FX side, our Payments business did very well, but was overshadowed by declines in our Arbitrage business due to reduced market volatility. Our OTC Structured Product business also had a difficult quarter, especially when compared to Q4 2012, due to a lack of market volatility and customer demand for their products. Generally, we believe that market condition remain tough for us and most of the external proxies such as market volumes, performance by competitors and such indicators. We are critically dependent on customer volumes, generally, and market…

Thank you, Sean. I'd like to start my discussion with the review of the quarterly results, and will refer to the fifth page of the slide presentation titled Quarterly Financial Dashboard. This slide lays out the quarterly operating results, as well as some related balance sheet information in comparison to the prior year period, as well as, in some cases, the internal target which management has for our operating results. Adjusted operating revenues were $116.5 million for the current period, up 25% from $93.1 million in the first quarter of 2012. Adjusted operating revenues were a record $124.8 million in the fourth quarter of 2012. Adjusted operating revenues in the current period include $9.2 million in realized gains on the sale of our London Metal Exchange and Kansas City Board of Trade shares, in conjunction with the closing of the sale of those exchanges to the Hong Kong Exchanges and Clearing Limited, and the CME, respectively. Every segment of the company experienced growth in adjusted operating revenues in the first quarter, as compared to the prior year, with the exception of the Foreign Exchange segment. Looking at our revenues on a segmental basis, adjusted operating revenues in our Core Commodity and Risk Management Services segment increased 10%, from $46.8 million in the prior year period to $51.4 million -- or $51.4 million in the first quarter of 2013. Adjusted operating revenues decreased $17.8 million as compared to the record fourth quarter revenues of $69.2 million, primarily as a result of lower structure OTC volumes, as Sean mentioned earlier, and lower market volatility. Our CRM segment is further broken down into 3 product lines: Soft commodities, precious metals and base metals. Starting with soft commodities, operating revenues were relatively flat in the first quarter of 2013, at $40.5 million, as compared…

Thanks, Bill. While the quarter's results were amplified by non-recurring items, we were encouraged to see continued revenue growth, while at the same time seeing good cost containment. Management is focused on achieving operational efficiencies and revenue synergies, and this is now starting to show up in the numbers. Our margin on incremental revenues is very high, and this operational leverage can provide a strong ongoing push to earnings. We are now in the thick Dodd-Frank regulatory changes that we spent almost a year preparing for. The changes are extensive and expensive, and will have lots of knock-on effects for our business and industry. Some negative and some positive, and some potentially unintended. We suspect that many in our industry are not fully prepared. They may be in denial or just unwilling to change. While costly and disruptive, this is our new reality, and we are trying to embrace it and use it to our advantage. It is certain to me that this creates a barrier-to-entry, and ultimately will drive small players from the business and force consolidations as customers look for better capitalized and regulatory-compliant firms to deal with. We have to be a recognized and preferred destination for midsized customers, and believe this will be a positive for us in the medium and long term. We were interested to see that we were the only nonbank to register the swap deal on December 31, 2012, which may result in us having an interesting and unique position in the market. With that, I'd like to turn it back to the operator and open the question-and-answer session, if there are any. Operator?

[Operator Instructions] We'll take our first question from Justin Hughes from Philadelphia Financial.

I was just wondering, if we look at Slide 3, where it shows the progression of your income from continuing operations, does that include the gain on the LME shares that were sold this quarter?

Yes.

Okay. and they were - I mean, just to be clear on that, and I think Bill has given you some of the numbers in there, and they'll certainly be laid out in our 10-Q. They were positive and negative non-recurring items that netted down to, Bill, about a $5 million number?

Yes, that's correct.

That was a $5 million benefit or $5 million...

A net $5 million benefit.

Okay. So, I mean, really, the kind of one-timers really could take out $5 million from that number? I mean, I assume, next year, when you look at this for a comparison you'll take out $5 million?

Correct.

Correct. That will be a good assumption, what you just said.

Okay. What were the other non-recurring items?

Do you want to run through them quickly?

Yes. I mean, the other 2 that we're kind of looking at was a $1.5 million loss contingency and then the $400,000 payment for a premerger acquisition that -- because it was premerger, we have -- we just expressed it when it's certain that the payment's going to be made. That's about $1.9 million netted off.

Okay. And there was no comp or anything against the LME gain, was there?

No, there was not.

We could just tax effect that number?

Correct.

Some of the -- sorry, Justin, on the $1.5 million loss provision, there was no tax shield on that either. So it was a pre and post-tax number effected there.

Okay. And you filed an 8-K a couple of weeks ago, about the ruling in the Sentinel case. Is there any charges, in this current quarter, to account for that?

No. There's no current charge against that. We reviewed that matter and determined it's not probable at this point, that a loss has occurred there, and we're going through the appeals process now.

Okay. So there's no accrual for -- there wasn't one in previous quarters either?

No, there's nothing in the current quarter nor has there been anything in prior quarters. Unless you go all the way back to 2007, FCStone, when it originally happened there was a $5 million charge then.

But we can't make a charge on accrual unless everyone believes we have a probable loss, and we didn't cross that threshold by our attorney's judgment.

Okay. And then my last question. Your 10-K mentioned that you received a Well's notice. Can you just update on that? And if any employees are taking a leave of absence?

Okay, Brian, I think our Chief Legal Officer's on. Brian, do you want to take that?

The Well's notice we received, I think, that you're referring to is the one in connection with the CFTC matter that we've disclosed for quite a few quarters now. And that is something that we're in discussions with the CFTC at the moment. That disclosure will be appearing in the 10-Q.

Can you give us a little more color about what it's regarding?

It is to do with the energy account which has been the subject of lawsuits and has been disclosed in all of our Qs over the last 3 years since the merger. It's an old FCStone matter which occurred back in 2008, 2009. The loss that was incurred by FCStone gave rise to that. So we had a shareholder lawsuit, a class-action lawsuit, there was a derivative lawsuit, there was an SEC investigation. Those 2 lawsuits are currently settled, in principle, just awaiting sign-off by the court. The SEC has completed its investigations without any further comment and this, if you like, is the last shoe to drop.

And just, Justin, just to be specific at this point. We don't believe it's going to impact any of our employees.

Okay. None of the former FCStone employees have taken a leave of absence, anything, from this?

No one has taken a leave of absence at this point. But we have accrued for a potential enforcement action and fine, although that matter is not finalized yet.

Justin, one thing to add to that. Since this was a 2008, 2009 matter, there were certain employees who left FCStone back at that time. No current date.

[Operator Instructions] We'll take our next question from Bill Jones with Singular.

Just to be clear, can you remind us on the $9.2 million gain on the sale of the shares from the LME? Remind us how that transpired, because you picked up these assets, LME assets, at pretty much a bargain price.

Yes, just the high-level overview of that. About 18 months ago, we decided to join LME and become a member of that exchange. We were in the metals business, we were never a member of the LME. It was kind of a missing piece of our portfolio. We decided to go ahead and join the LME. And while in process of doing that, we picked up Ambrian's license. And if you remember, you saw an announcement about us acquiring Ambrian and a small team resulting from that acquisition, which was really done at kind of cash value. We didn't really pay anything for it. With that acquisition, we picked up some LME shares. And at the time, these were traded, not on an official market, so it was sort of traded OTC. We didn't particularly want the shares at that point, as it happens. But we did take over the shares, the price point we used for that was the last trade in the market. We took those shares over, and within a couple of months, the LME announced it was for sale, and obviously, the value of those shares increased dramatically. Now that has been a year-long process. We had taken some marks up through to APEC [ph], which is what we're required to do in our September quarter. But we were only permitted to show the gain through the income statement when we received the cash. And that happened just before Christmas. So that's, really, the genesis of that story. So not something we did. I have to acknowledge up front, not any great foresight we had as management. Sometimes you get lucky. I think we got lucky in this instance. But, certainly, it's not in our business to find and sell exchanges or try and enter into that game. This was incidental to an acquisition we made, which happened to kind of work out great for us.

Excellent. And then you mentioned in -- Bill had mentioned in Q1, you're still buying back shares, about 110,000. You spent about $2 million. So that's $18 per share?

Well, I think that's about right.

Yes, it's right around there, Bill.

I mean, as always, with stock buybacks, we have a very disciplined approach as to price. And over and above that, we put a factor in the company's liquidity and growth prospects and figure out how much surplus cash we have. So, the first decision point is, do we have surplus cash we want to spend on this. If we do have surplus cash, are the shares at the price where think it's accretive to our shareholders to buy those shares.

Right. And that, with an adjusted book value of $17.26, you're getting your share back now?

I mean, we don't want to pay any meaningful premium to book value, because as you start to do that, it doesn't become very accretive. So we have kind of our very scaled approach where we've put internal guidelines on how we're going to do that. We just want to make sure that we don't fall into the trap where I think some management teams fall in of trying to second-guess the market price, trying to support the share price, trying to send a message. We're not trying to do any of that. We are trying to exercise control and make transactions that we feel are accretive for us, the shareholders, not to try and second guess the market.

[Operator Instructions]

Operator, if there are no other questions, I think we can probably wrap up.

Very good. There are no further questions at this time.

Okay. Well thanks, everyone, for joining us. We will speak with you in about 3 months. Thank you.

That concludes today's conference. We thank you for your participation.