Ladies and gentlemen, thank you for standing by and welcome to the StoneX Group Inc. Q1 FY21 Earnings Conference Call. At this time all participants lines are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker, Bill Dunaway, CFO. Thank you, please go ahead sir.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our first quarter ended December 31, 2020. After the market closed yesterday, we issued a press release reporting our results for the first fiscal quarter of 2021. This release is available on our website at www.stonex.com as well as a slide presentation, which we will refer to on this call in our discussions of our quarterly results. You will need to sign on to the live webcast in order to view the presentation. The presentation and an archive of the webcast will also be available on our website after the call’s conclusion. Before getting underway, we are required to advise you and all participants should note that the following discussion should be taken in conjunction with the most recent financial statements and notes thereto as well as the Form 10-Q with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company’s actual results will not differ materially from any results expressed or implied by the company’s forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to Sean O’Connor, the company’s CEO. Sean O’Connor: Thanks, Bill. Good morning, everyone and thanks…

Thank you, Sean. I will be starting with Slide Number 8, which shows our consolidated income statement for the first quarter of fiscal 2021. Sean covered many of the consolidated highlights for the quarter so I will just highlight a few and then move on to a segment discussion. Interest expense, which is primarily related to our fixed income, securities lending, and physical commodity activities declined 21.2 million versus the prior year, primarily as a result of the decline in short-term interest rates, which was partially offset by increased borrowings in our physical business. Interest expense on corporate funding increased 7.8 million versus the prior year, primarily as a result of the senior secured note issuance in the third quarter of fiscal 2020 related to the GAIN acquisition. Variable compensation increased 29.7 million versus the prior year, with 26.5 million of the increase being front office variable incentive compensation related to the growth in operating revenues. Fixed compensation increased 19.9 million versus the prior year, with 14 million of the increase being related to acquisitions completed subsequent to the end of the prior year quarter, with the remainder related to strategic initiatives including a build out of our product offering and geographic footprint, as well as growth in support areas to support these initiatives. Other fixed expenses increased 29.2 million versus the prior year, with 29.1 million of the increase being related to acquisitions completed subsequent to the end of the prior year period. Bad debt expense increased 1.5 million versus the prior year, with 1 million of this related to the retail FX CFD business. Finally, we closed out the quarter with net asset value per share at $40.78, which represents a 28% increase versus the prior year. Moving on to Slide Number 9, I will provide some more…

[Operator Instructions]. Your first question comes from the line of Dan Fannon with Jefferies.

Thanks. Good morning and appreciate the new slide, they are very helpful. So a couple of questions. I was hoping, Sean you could expand upon your comments about what's going on in the global payments and some of the recovery you're seeing in terms of activity and re-engagement, if you could expand upon that, that would be helpful? Sean O’Connor: Sure. So, I would say a lot of it was related to the pandemic, sort of the flattening out that we saw last year and in two ways, our core underlying payments volumes generally continued but on the margin where we saw changes was the larger payments that we get from banks and their corporate clients related to capital investments and M&A activity really stopped dead in its tracks. I mean, I think as the pandemic hits, people sort of delayed plans, weren't making capital investments, and certainly weren’t making acquisitions. So, although those payments are relatively few in nature, they tend to be much larger and obviously the dollars we make on those payments can be significant. So that we definitely noticed a dramatic slowdown. And I think we called that out in our prior quarters. That now seems to be kind of getting back on track. So that certainly has a good impact for us. The other thing we did notice in some of our smaller payment corridors is that some of the banks really was struggling to provide service to us and that meant that some of our customers couldn't execute some of the payments they wanted because of COVID, right, the banks closed down and we had to go to the second or third level providers, sometimes not getting exactly the pricing we want and so on. So that also seems to have worked its way…

Yes, yes, that's helpful. And then just kind of going to the retail side and some of the things that you have going on, and frankly what's happened in the market, obviously, a lot of retail participation broadly. You mentioned the precious metals components and silver has been in the headlines a lot here more recently. So maybe talk about how that benefits your business and how you're able to capture some of that and then I assume the cash equities build out with the index and ultimately in the U.S. it is just a function of kind of again trying to get some of that retail participation we're seeing elsewhere in the market? Sean O’Connor: So let me start with the last part first. So, on the equity offering, I think that's someone -- something we identified as strategically important when we started the sort of due diligence process with GAIN, and I think Glenn has always wanted to do that. So, it's a priority. I think the benefit for us, particularly in the U.S. where it's slightly more complicated, because of regulatory environment, right. In the UK, they can do this through CFDs and clients can trade equities, but here in the U.S. to be in the cash equity business, it's different -- a separate regulatory regime that requires real investment. And I think as we've seen with sort of Robin Hood and some of these other trading platforms, with commissions going to zero, the only way you can compete in equity trading is if you're clearer. I mean, Robin Hood became a clearer for that reason, because that allows you to monetize stuff, stop lending, you can capture the flow, you can in their case, they sell their flow obviously to Citadel and others for payment for…

The precious metals component, in terms of silver and some of the headlines we've seen more recently and how that kind of flows through to you? Sean O’Connor: Okay. Yeah. So, in fact the -- well just backing up a little bit. So, in fact the just backing up a little bit, we acquired a small retail platform about a year and a half ago called Coin Invest. It was a very small outfit, funded by an individual. He basically couldn't support it any further and a little bit like the GIROXX conversation it needed some real support that had to hold inventories in gold and that required money and access to minutes and so on, which are struggling. So we acquired that business. Honestly our view was, it was sort of a very tentative and very cheap. I mean, it was single digits of millions of dollars, the acquisition price, sort of a tentative step into sort of the retail side of the precious metals business. As luck would have it, the pandemic hit and we sort of received back in earnings in one quarter around our entire investments in that business. So obviously we sort of got lucky there and then GAIN happened. And obviously, we now have sort of two retail platforms and I think we will -- if we can combine those capabilities and that's in flight right now, we can offer physical gold to all of the GAIN customers and they have a much bigger customer base than our platform has. So I think that'll be a fantastic add and it will be a differentiator from IG and some of the other places. I think we can also say to people, if you buy gold from us, you can store it with us and we…

Yes, yes, very helpful. And then maybe Bill, I think previously you had a charge in there to talk about kind of interest rates sensitivity, and obviously balance has continued to rise and rates remain low. So is there a way to kind of think about the under earning that's happening today based on the current rate backdrop versus, I don't know what time period you want to use, based on where balances are now?

Yeah Dan, if you look at, like we noted before, I mean, you've got about 12.7 million decline versus the similar period a year ago right now. We probably retain roughly 80% of that kind of interest revenue, falls to the bottom line, 75% maybe of that. And so if you look at that, we're about 150 basis points down from where we were a year ago. So I think the last time we put out that slide was the fall of last year. So about a 100 basis points was roughly $19.9 million worth of kind of net income effect or roughly $1 a share for every 100 basis points. So, you're probably talking that's where -- just shy of about 150% of that. So about $35 million probably shy on an annualized basis. Sean O’Connor: I would say Dan, the way I think about it and if you go back to, I guess, Slide 4 that we've put out, which shows our product revenue, our revenue by product, if you have a look at the sort of decline year-on-year in the interest earned, it's pretty significant. And I would say sort of the one simple way I thought about it is if you just look at what the EPS impact of that is, it's around $0.50. So, just the decline in the absolute interest revenue, has made a $0.50 per share difference. So, I guess if we had the same interest rate environment as a year ago and the safe balances, we would be closer to I don’t know $2, I guess. What's more interesting is if you said, if we had a year ago interest rates on today's client balance sheets, which are 45% higher, obviously that $0.50 impact is higher. It's not exactly 45% because we don't keep all of that interest and it's a sort of a complicated math, but it's certainly significantly higher than $0.50 right if we had sort of a year ago interest rates on today's balances.

Right, right, makes sense. I guess this is last one for me as you've mentioned several times the expanded product offering in the securities business and that being part of the success. So could you expand upon that in terms of what specific products those are, what's actually gaining traction, and how are you segmenting that just obviously versus higher overall volumes just generally in the market?

Yeah. Well, some of this has been sort of entrapped for a while, so let me sort of try and back it into maybe three separate sections. So, I think people who have been with us for a longer period, remember that about two years ago we made a series of acquisitions and as we want to do, we tend to buy cheap and somewhat distressed businesses and additionally we started up some activities. And all of that in I think it was two years ago, all of that had a pretty big drag on our earnings, which is why we called it out, right. We had a couple of million dollars on the bottom line because we hired a team, who we liked very much. And they started the prime brokerage business for us. Obviously we had all the costs and the revenue for about a year. We then subsequently acquired an outsource trading business called Fillmore, as of that offering. And in addition, we acquired a fixed income business called GMP, which broadened our fixed income offering into new products. So all of that was a pretty big drag on our bottom line for about a year. The good news is all of those acquisitions have not only broadened their capabilities, but have now started to sort of add materially to the bottom line. I mean, dealing with the prime brokerage business, I mean, they are now expanding, they have significant balances under management and probably the star of the show there is really the outsource trading business, which has gone from zero and could be at a sort of a $20 million run rate at some point. So, that's a pretty significant change in that whole offering and we think we have a good opportunity to further…

Yeah. Thank you. Appreciate you taking all my questions. Sean O’Connor: Yeah. Okay. Thank you Dan. Operator is there anyone else.

At this time there are no further questions. Sean O’Connor: Alright. Well, thanks everyone. Thanks for attending the call. And we will speak to you in three months’ time, thank you.

Ladies and gentlemen, that does conclude today's conference. Thank you for participating. You may now disconnect.