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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, 2020



☐	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.)

155 East 44th Street, Suite 900

New York, NY 10017

(Address of principal executive offices) (Zip Code)

(212) 485-3500

(Registrant’s telephone number, including area code)

INTL FCStone Inc.

(Former name if changed since last report)

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	o	Accelerated filer	x

Non-accelerated filer	o	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 3, 2020, there were 19,368,297 shares of the registrant’s common stock outstanding.

Table of Contents

Table of Contents

StoneX Group Inc.

Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2020

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	36

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	65

Item 4.	Controls and Procedures	67

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	67

Item 1A.	Risk Factors	67

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68

Item 6.	Exhibits	68

Signatures		69

Table of Contents

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, 2020			September 30, 2019
ASSETS
Cash and cash equivalents	$	465.2		$	471.3
Restricted cash held in escrow	350.0			—
Cash, securities and other assets segregated under federal and other regulations (including $9.8 and $306.0 at fair value at June 30, 2020 and September 30, 2019, respectively)	1,145.2			1,049.9
Collateralized transactions:
Securities purchased under agreements to resell	1,757.3			1,424.5
Securities borrowed	1,467.4			1,423.2
Deposits with and receivables from broker-dealers, clearing organizations and counterparties, net (including $1261.6 and $626.9 at fair value at June 30, 2020 and September 30, 2019, respectively)	3,396.7			2,540.5
Receivable from clients, net	408.8			422.3
Notes receivable, net	4.7			2.9
Income taxes receivable	2.8			5.2
Financial instruments owned, at fair value (includes securities pledged as collateral that can be sold or repledged of $606.4 and $478.8 at June 30, 2020 and September 30, 2019, respectively)	2,831.9			2,175.2
Physical commodities inventory, net (including $173.6 and $151.9 at fair value at June 30, 2020 and September 30, 2019, respectively)	270.2			229.3
Deferred income taxes, net	13.4			18.0
Property and equipment, net	51.6			43.9
Operating right of use assets	75.0			—
Goodwill and intangible assets, net	76.3			67.9
Other assets	73.0			62.0
Total assets	$	12,389.5		$	9,936.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and other accrued liabilities (including $1.6 and $1.8 at fair value at June 30, 2020 and September 30, 2019, respectively)	$	176.4		$	157.5
Operating lease liabilities	87.4			—
Payables to:
Clients	4,443.7			3,589.5
Broker-dealers, clearing organizations and counterparties (including $8.8 and $5.6 at fair value at June 30, 2020 and September 30, 2019, respectively)	430.0			266.2
Lenders under loans	313.8			202.3
Senior secured borrowings, net	518.9			167.6
Income taxes payable	12.1			10.4
Collateralized transactions:
Securities sold under agreements to repurchase	3,530.4			2,773.7
Securities loaned	1,459.7			1,459.9
Financial instruments sold, not yet purchased, at fair value	728.3			714.8
Total liabilities	11,700.7			9,341.9
Commitments and contingencies (Note 13)
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 30,000,000 shares; 21,735,636 issued and 19,313,679 outstanding at June 30, 2020 and 21,297,317 issued and 19,075,360 outstanding at September 30, 2019	0.2			0.2
Common stock in treasury, at cost - 2,421,957 shares at June 30, 2020 and 2,221,957 shares at September 30, 2019	(57.6		)	(50.1		)
Additional paid-in-capital	289.4			276.8
Retained earnings	495.0			402.1
Accumulated other comprehensive loss, net	(38.2		)	(34.8		)
Total equity	688.8			594.2
Total liabilities and stockholders' equity	$	12,389.5		$	9,936.1

See accompanying notes to 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)	2020		2019		2020		2019
Revenues:
Sales of physical commodities	$	7,944.5	$	7,599.3	$	38,939.4	$	20,824.6
Principal gains, net	161.0		102.3		442.0		305.4
Commission and clearing fees	96.1		97.5		299.9		282.1
Consulting, management, and account fees	19.4		20.7		63.3		58.9
Interest income	22.4		53.2		110.1		146.4
Total revenues	8,243.4		7,873.0		39,854.7		21,617.4
Cost of sales of physical commodities	7,920.8		7,589.6		38,888.5		20,798.2
Operating revenues	322.6		283.4		966.2		819.2
Transaction-based clearing expenses	55.3		45.7		165.4		138.5
Introducing broker commissions	24.0		29.6		79.8		87.0
Interest expense	15.4		42.5		79.2		113.9
Net operating revenues	227.9		165.6		641.8		479.8
Compensation and other expenses:
Compensation and benefits	132.5		100.9		373.2		287.9
Trading systems and market information	11.8		9.8		33.4		28.5
Occupancy and equipment rental	5.4		5.0		15.3		14.4
Professional fees	6.1		5.8		16.8		16.1
Travel and business development	0.7		4.0		8.4		11.8
Non-trading technology and support	6.9		5.8		18.8		15.0
Depreciation and amortization	4.4		3.5		12.5		9.6
Communications	1.7		1.6		4.8		4.9
Bad debts	1.8		0.5		6.2		1.5
Recovery of bad debt on physical coal	—		—		—		(2.4		)
Other	7.6		7.1		25.7		21.0
Total compensation and other expenses	178.9		144.0		515.1		408.3
Other gain	—		—		0.1		5.4
Income before tax	49.0		21.6		126.8		76.9
Income tax expense	12.4		5.3		34.6		19.0
Net income	$	36.6	$	16.3	$	92.2	$	57.9
Earnings per share:
Basic	$	1.90	$	0.85	$	4.78	$	3.04
Diluted	$	1.87	$	0.84	$	4.71	$	2.99
Weighted-average number of common shares outstanding:
Basic	18,807,104		18,781,401		18,809,823		18,731,203
Diluted	19,103,166		19,011,526		19,122,681		19,003,720

See accompanying notes to 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)	2020		2019		2020			2019
Net income	$	36.6	$	16.3	$	92.2		$	57.9
Other comprehensive income (loss):
Foreign currency translation adjustment	—		0.3		(2.7		)	0.6
Other comprehensive income (loss)	—		0.3		(2.7		)	0.6
Comprehensive income	$	36.6	$	16.6	$	89.5		$	58.5

See accompanying notes to 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)	2020			2019
Cash flows from operating activities:
Net income	$	92.2		$	57.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12.5			9.6
Bad debts	6.2			1.5
Recovery of bad debt on physical coal	—			(2.4		)
Deferred income taxes	(0.7		)	0.3
Amortization of debt issuance costs	1.3			1.2
Amortization of share-based compensation	7.4			5.9
Bargain purchase gain on acquisition	—			(5.4		)
Changes in operating assets and liabilities, net:
Securities and other assets segregated under federal and other regulations	296.2			584.4
Securities purchased under agreements to resell	(332.8		)	(662.2		)
Securities borrowed	(44.2		)	(948.6		)
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties, net	55.9			(238.7		)
Receivables from clients, net	8.3			5.9
Notes receivable, net	(1.8		)	(0.6		)
Income taxes receivable	7.7			(0.6		)
Financial instruments owned, at fair value	(656.7		)	(368.0		)
Physical commodities inventory, net	(40.9		)	(115.5		)
Operating right of use assets	6.0			—
Other assets	(7.0		)	(7.8		)
Accounts payable and other accrued liabilities	20.5			(4.0		)
Operating lease liabilities	(6.7		)	—
Payables to clients	848.4			(7.3		)
Payables to broker-dealers, clearing organizations and counterparties	163.8			100.9
Income taxes payable	1.6			1.8
Securities sold under agreements to repurchase	756.7			964.0
Securities loaned	(0.2		)	963.0
Financial instruments sold, not yet purchased, at fair value	13.5			(9.7		)
Net cash provided by operating activities	1,207.2			325.6
Cash flows from investing activities:
Cash paid for acquisitions, net	(9.8		)	(28.0		)
Purchase of property and equipment	(5.5		)	(10.3		)
Net cash used in investing activities	(15.3		)	(38.3		)
Cash flows from financing activities:
Net change in payables to lenders under loans with maturities 90 days or less	150.4			(16.9		)
Proceeds from payables to lenders under loans with maturities greater than 90 days	521.5			—
Repayments of payables to lenders under loans with maturities greater than 90 days	(560.0		)	—
Proceeds from issuance of senior secured term loan	21.5			175.0
Repayments of senior secured term loan	(7.4		)	(4.4		)
Proceeds from issuance of senior secured notes	344.8			—
Repayments of note payable	(0.4		)	(0.6		)
Deferred payments on acquisitions	(0.6		)	—
Repurchase of common stock	(7.5		)	—
Debt issuance costs	(9.2		)	(3.3		)
Exercise of stock options	5.2			0.8
Net cash provided by financing activities	458.3			150.6
Effect of exchange rates on cash, segregated cash, cash equivalents, and segregated cash equivalents	(2.7		)	0.6
Net increase in cash, segregated cash, cash equivalents, and segregated cash equivalents	1,647.5			438.5
Cash, segregated cash, cash equivalents, and segregated cash equivalents at beginning of period	2,451.3			2,190.1
Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period	$	4,098.8		$	2,628.6
Supplemental disclosure of cash flow information:
Cash paid for interest	$	78.0		$	110.1
Income taxes paid, net of cash refunds	$	25.7		$	17.5
Supplemental disclosure of non-cash investing and financing activities:
Identified intangible assets and goodwill on acquisitions	$	11.5		$	2.7
Acquisition of business:
Assets acquired	$	357.8		$	40.9
Liabilities assumed	(359.5		)	(7.7		)
Total net (liabilities) assets assumed	$	(1.7	)	$	33.2

See accompanying notes to 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)	2020		2019
Cash and cash equivalents	$	465.2	$	345.0
Restricted cash held in escrow	350.0		—
Cash segregated under federal and other regulations⁽¹⁾	1,135.4		721.0
Securities segregated under federal and other regulations⁽¹⁾	—		299.6
Cash segregated and deposited with or pledged to exchange-clearing organizations and other futures commission merchants (“FCMs”)⁽²⁾	1,218.7		1,223.8
Securities segregated and pledged to exchange-clearing organizations⁽²⁾	929.5		39.2
Total cash, segregated cash, cash equivalents, and segregated cash equivalents shown in the condensed consolidated statements of cash flows	$	4,098.8	$	2,628.6

⁽¹⁾ Represents segregated client cash and United States (“U.S.”) Treasury obligations 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 $9.8 million and $58.8 million as of June 30, 2020 and 2019, 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 $1,248.5 million and $1,398.6 million as of June 30, 2020 and 2019, 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 condensed consolidated financial statements.

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StoneX Group Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)



	Three months ended June 30, 2019
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of March 31, 2019	$	0.2	$	(46.3	)	$	272.1	$	358.6	$	(32.8	)	$	551.8
Net income								16.3					16.3
Other comprehensive income										0.3			0.3
Share-based compensation						2.1							2.1
Balances as of June 30, 2019	$	0.2	$	(46.3	)	$	274.2	$	374.9	$	(32.5	)	$	570.5



	Three months ended June 30, 2020
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of March 31, 2020	$	0.2	$	(57.6	)	$	285.8	$	458.4	$	(38.2	)	$	648.6
Net income								36.6					36.6
Exercise of stock options						1.2							1.2
Share-based compensation						2.4							2.4
Balances as of June 30, 2020	$	0.2	$	(57.6	)	$	289.4	$	495.0	$	(38.2	)	$	688.8



	Nine Months Ended June 30, 2019
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of September 30, 2018	$	0.2	$	(46.3	)	$	267.5	$	317.0	$	(33.1	)	$	505.3
Net income								57.9					57.9
Other comprehensive income										0.6			0.6
Exercise of stock options						0.8							0.8
Share-based compensation						5.9							5.9
Balances as of June 30, 2019	$	0.2	$	(46.3	)	$	274.2	$	374.9	$	(32.5	)	$	570.5



	Nine Months Ended June 30, 2020
(in millions)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, net			Total
Balances as of September 30, 2019	$	0.2	$	(50.1	)	$	276.8	$	402.1	$	(34.8	)	$	594.2
ASU 2018-02 cumulative transition adjustment								0.7		(0.7		)	—
Adjusted Balances as of September 30, 2019	0.2		(50.1		)	276.8		402.8		(35.5		)	594.2
Net income								92.2					92.2
Other comprehensive loss										(2.7		)	(2.7		)
Exercise of stock options						5.2							5.2