INTL FCStone reports 7% downturn QoQ in net operating revenues for quarter ending June 30

INTL FCStone Inc (NASDAQ:INTL) has today announced its financial results for the fiscal year 2014 third quarter ended June 30, 2014.

Sean M. O’Connor, CEO of INTL FCStone Inc., stated “Despite generally improving conditions over the last year or so, we did experience slightly more difficult markets and lower volatility during the current quarter. Customer activity was lower in the structured OTC and physical commodities markets and a lack of volatility drove a sharp decline in our Clearing and Execution Service segment. The exceptions to these declines were continued strong activity in LME metals, a recovery in our Securities segment and continued growth in Global Payments.”

“While year-to-date net income decreased versus the prior year, the results are not directly comparable, due to the nonrecurring after-tax gain of $5.8 million realized last year on the sale of our LME and Kansas City Board of Trade shares. Excluding these items, net income from continuing operations increased by 24%. On a year-to-date basis we recorded strong revenue growth in our Global Payments (31%) and Securities (20%) segments, offset by a sharp reduction in Physical Commodities segment revenues and a relatively small decline in Clearing and Execution Services.”

“We continue to believe that the overall environment for our business is generally improving and believe we are well placed to benefit from industry consolidation as smaller players are squeezed out of the market and larger players re-focus and deal with regulatory constraints. We have the ability to scale our infrastructure so that increases in our revenues are expected to have a leveraged impact on our net earnings.”

INTL FCStone has pointed out that historically, certain financial metrics disclosed in its publication of volume figures were on a non-GAAP basis, reflecting marked-to-market differences in the Company’s Physical Commodities segment. Following the discontinuance of the company’s physical base metals business, INTL FCStone believes that the effects of these mark-to-market differences on our results are no longer material, and therefore will no longer be disclosing these non-GAAP financial results.

Of note within these results is a 7% decline in net operating revenues compared with the previous quarter.

The company has reported basic earnings per share of $0.20 for the three months ended June 30, 2014, representing a reduction of 23% from the $0.26 per share relating to the same period in 2013.

Of benefit to INTL FCStone during recent times was its successful appeal against a court decision by Illinois District Court against a decision made in January 2013 with regard to the bankruptcy of Sentinel Management Group.

In that particular case, the US Court of Appeals for the Seventh Circuit handed down its reversal of the trial court’s decision in March this year, resulting in INTL FCStone not being liable for $15.6 million in customer funds.


(The leftmost columns represent a quarter-on-quarter comparison, whereas the rightmost columns represent a year-on-year comparison.)

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