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INTL FCStone Inc. Reports Fiscal Fourth Quarter And Full Year 2013 Financial Results

Stocks in this article: INTL

Company to Restate Financial Results for Fiscal Years 2012 and 2011 Reports Aggregate After Tax Charge to Earnings of $5.9 Million in Prior Year Periods

NEW YORK, Jan. 9, 2014 (GLOBE NEWSWIRE) -- INTL FCStone Inc. (the "Company") (Nasdaq:INTL) today announced its financial results for the fiscal year 2013 and fourth quarter ended September 30, 2013. Certain financial metrics discussed in this press release are non-GAAP, reflecting marked-to-market differences in the Company's Commodity & Risk Management Services and Other segments. A reconciliation of those metrics to GAAP equivalents is provided in the table below, and further discussion of the use of non-GAAP metrics will be provided in the Company's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission ("SEC").

Sean O'Connor, CEO of INTL FCStone Inc., stated, "Full year earnings of $12.4 million and a Return on Equity of 4% were below our targeted returns. Fiscal 2013 was a difficult year due to low interest rates, low volatility and commodity prices, increased costs of regulatory change and our exit from the physical base metals business. Nevertheless, we remained profitable in this challenging environment and continued to consolidate our position as a leading provider of financial market access to mid-market customers.

"As detailed below, the Company will restate its previously filed financial statements for the years ended September 30, 2012 and 2011. These corrections resulted in an aggregate reduction in net income of $5.9 million from $57.7 million as reported to $51.8 million for the three years ended September 30, 2012."

INTL FCStone Inc. Summary Financials

Consolidated financial statements will be included in our Annual Report on Form 10-K to be filed with the SEC. The Annual Report on Form 10-K will also be made available on our website at www.intlfcstone.com .

   Three Months Ended September 30,   Fiscal Year Ended September 30, 
(Unaudited) (in millions, except share and per share amounts)  2013 2012   % Change  2013 2012   % Change 
  (As Restated) (As Restated)
Operating revenues   $ 112.6  $ 117.9 (4)%  $ 478.4  $ 454.2 5%
Transaction-based clearing expenses   28.0  26.0 8%  110.1  105.4 4%
Introducing broker commissions   11.5  9.3 24%  40.5  31.0 31%
Interest expense   2.9  3.3 (12)%  12.5  11.6 8%
Net operating revenues   70.2  79.3 (11)%  315.3  306.2 3%
Compensation and other expenses:             
Compensation and benefits   50.7  46.9 8%  201.6  202.4 --%
Communication and data services   6.3  6.1 3%  23.3  22.6 3%
Occupancy and equipment rental   3.0  2.8 7%  12.0  11.0 9%
Professional fees   3.0  3.3 (9)%  13.1  12.9 2%
Travel and business development   2.9  2.6 12%  10.7  11.2 (4)%
Depreciation and amortization   1.9  1.9 --%  8.0  7.2 11%
Bad debts and impairments   0.6  0.9 (33)%  0.8  1.5 (47)%
Other   4.3  4.4 (2)%  23.2  21.6 7%
Total compensation and other expenses   72.7  68.9 6%  292.7  290.4 1%
(Loss) income from operations, before tax   (2.5)  10.4 (a)   22.6  15.8 43%
Income tax (benefit) expense   (3.7)  2.1 (a)   3.3  3.1 6%
Net income   1.2  8.3 (86)%  19.3  12.7 52%
Add: Net loss attributable to noncontrolling interests   --   --  --%  --   0.1 (100)%
Net income attributable to INTL FCStone Inc. common stockholders   $ 1.2  $ 8.3 (86)%  $ 19.3  $ 12.8 51%
             
Basic Earnings per share:             
Net income attributable to INTL FCStone Inc. common stockholders   $ 0.05  $ 0.44 (89)%  $ 1.01  $ 0.67 51%
             
Diluted Earnings per share:             
Net income attributable to INTL FCStone Inc. common stockholders   $ 0.04  $ 0.42 (90)%  $ 0.97  $ 0.64 52%
             
Weighted average number of common shares outstanding:             
Basic   18,643,722  18,285,504 2%  18,443,233  18,282,939 1%
Diluted   19,312,901  19,026,758 2%  19,068,497  19,156,899 -- %
             
Segmental operating revenues (non-GAAP) reconciliation:             
Operating revenues, as reported (GAAP)   $ 112.6  $ 117.9 (4)%  $ 478.4  $ 454.2 5%
Marked-to-market adjustment   1.2  6.8 (a)   (11.1)  6.8 (a) 
Adjusted operating revenues (non-GAAP) (b)   $ 113.8  $ 124.7 (9)%  $ 467.3  $ 461.0 1%
             
Represented by:             
Commodity and Risk Management Services   $ 48.1  $ 69.1 (30)%  $ 208.2  $ 248.4 (16)%
Foreign Exchange   15.6  15.2 3%  66.9  62.6 7%
Securities   18.4  11.1 66%  61.1  39.9 53%
Clearing and Execution Services   25.3  23.0 10%  100.8  93.8 7%
Other   6.7  6.0 12%  23.1  16.5 40%
Corporate unallocated   (0.3)  0.3 (a)   7.2  (0.2) (a) 
Adjusted operating revenues (non-GAAP) (b)   $ 113.8  $ 124.7 (9)%  $ 467.3  $ 461.0 1%
             
Net income attributable to INTL FCStone Inc. common stockholders             
 (non-GAAP) reconciliation:             
Net income attributable to INTL FCStone Inc. common stockholders, as reported (GAAP)   $ 1.2  $ 8.3 (86)%  $ 19.3  $ 12.8 51 %
Marked-to-market adjustment (non-GAAP)   1.2  6.8 (a)   (11.1)  6.8 (a) 
Tax effect on marked-to-market adjustment at blended rate of 37.5%             
(non-GAAP)   (0.4)  (2.6) (a)   4.2  (2.6) (a) 
Adjusted net income attributable to INTL FCStone Inc. common stockholders (non-GAAP) (c)   $ 2.0  $ 12.5 (84)%  $ 12.4  $ 17.0 (27)%
 
(a)  Comparison not meaningful.
(b)  Adjusted operating revenue is a non-GAAP measure that represents operating revenues adjusted by marked-to-market differences in our Commodity and Risk Management Services and Other segments, as shown in the table. The table above reflects all reconciling items between the GAAP operating revenues and non-GAAP adjusted operating revenues. For a full discussion of management's reasons for disclosing these adjustments, see 'Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations' in the Form 10-K for the fiscal year ended September 30, 2012.
(c)  Adjusted net income attributable to INTL FCStone Inc. common stockholders is a non-GAAP measure that represents net income attributable to INTL FCStone Inc. common stockholders adjusted by the after-tax marked-to-market differences in our Commodity and Risk Management Services and Other segments. The table above reflects all reconciling items between the GAAP net income attributable to INTL FCStone Inc. common stockholders and non-GAAP adjusted net income attributable to INTL FCStone Inc. common stockholders.

Financial Reporting Update

Overview

In connection with the preparation of its consolidated financial statements for the fiscal year ended September 30, 2013, the Company identified errors in the reconciliation of the Company's subsidiary INTL FCStone Markets, LLC's accounting records to its back office system which occurred in 2012, 2011 and 2010. These corrections resulted in a reduction in net income of $5.9 million for the years ended September 30, 2012, 2011 and 2010 in aggregate, from $57.7 million as reported to $51.8 million, which is in line with our announcement dated December 17, 2013. As a result, the Audit Committee of the Board of Directors in conjunction with management has determined that it is necessary to restate the previously filed consolidated financial statements for the fiscal years ended September 30, 2012 and 2011 and the unaudited consolidated financial statements included in interim reports filed for such periods.

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