Good day, everyone, and welcome to the StoneX Group Inc. Q2 FY '24 Earnings Call. This call is being recorded. I will now hand it over to Bill Dunaway, Chief Financial Officer. You may proceed.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our second quarter ended March 31, 2024. After the market closed yesterday, we issued a press release reporting our results for our second fiscal quarter of 2024. 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 and year-to-date results. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we're 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 filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. 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 could 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'll now turn the call over to Sean O'Connor, the company's CEO.

Thanks, Bill. Good morning, everyone, and thanks for joining our fiscal 2024 second quarter earnings call. The second quarter of fiscal 2024 was a solid result for us, with earnings up 27% and EPS up 25% versus the prior year period. The current quarter includes a $9.1 million or approximately $0.20 per share unrealized loss on derivative positions used to hedge our gold inventory. We don't elect hedge accounting on these inventories, so these losses will be reversed when this inventory is sold. For the 6 months to date, we recorded earnings of $122.2 million or $3.76 per share, excluding acquisition gains in the prior period relating to CDI. This represents an increase of 29% for the year-to-date period. Turning to Slide 3 and a summary of our second quarter and trailing 12 months results. We recorded operating revenues of $818.2 million, up 16% versus the prior year. Our operating revenues include not only interest earned on our client floats, but also carried interest that is related to our fixed income trading activities. Net operating revenues, which net off interest expense as well as introducing broker commissions and clearing costs, were up 6% versus the year ago number and relatively flat versus the immediately prior quarter. Total compensation and other expenses were up 4% for the quarter, with variable compensation up 2%, which was below the net operating revenue growth rate of 6%. Fixed compensation and related costs were flat compared to a year-ago and were up 15% compared to the immediately prior quarter. The prior year amount included a severance amount of $12.1 million versus $1.1 million in the current quarter. Net income was $53.1 million for the current period, up 27% over the prior year quarter; however, it was down 23% on the immediately preceding quarter. This represents a 14.8% ROE on tangible and a 14% ROE on stated book value, which, as a reminder, has increased 53% over the last 2 years with both measures close to our long-term target of 15%. We recorded diluted EPS of $1.63, up 25% over the prior year. Looking now on a 12-month trailing basis, our operating revenues were up 28% versus the prior 12-month period and adjusted net income was $247.9 million, up 21%. EPS came in at $7.50, up 8%. We ended our second quarter in 2024 with book value per share of $48.74, up 21% versus a year ago. Turning to Slide 4 in the earnings deck, which compares quarterly operating revenues by product versus a year ago. In aggregate, our operating revenues were up 16%, with securities and FX and CFDs showing strong gains, up 37% and 30% respectively, partially offset by physical contracts, which were down 15%, primarily due to the gold inventory item I mentioned earlier. OTC operating revenues were down 8%, while listed derivatives and payments were relatively flat. We experienced robust volume growth in listed derivatives, up 29%, and securities up 30%. However, OTC derivatives and payment volumes were down 6% and 2% versus the prior year respectively. While FX and CFD volumes declined 23%, we experienced a significant increase in our revenue capture rate per million, which was up 67%, primarily due to increased client activity in gold, oil and index products as opposed to the relatively higher volume but lower spread FX contracts. Outside of that, with the exception of payments rate per million, which grew modestly, we generally saw lower revenue capture versus the prior year, with OTC rate per contract declining due to lower agricultural commodity volatility and lower rate per contract in listed derivatives, which was primarily due to an increase in volumes from the institutional side of our business relative to the higher rate per million commercial side of our business. Securities related operating revenue was up 37%, although this number is somewhat distorted due to a much higher interest income in our fixed income business. Carried interest in fixed income is reflected in operating revenues while the offsetting interest expense to finance these positions is not. The rate per million numbers have been adjusted to reflect this offsetting expense. Securities continues its trend of strong increase in volumes and a decrease in revenue capture as we continue to see strong growth in lower margin products. Our aggregate client float, which includes both listed derivative client equity and our money market FDIC sweep balances, declined 17% versus relatively high levels experienced in the prior year. Despite this, interest and fee income on these balances increased by 1% to $104.2 million due to us capturing higher interest rates in the current period. Turning now to Slide 5 and looking at the same data over the trailing 12 months, we again see strong double-digit growth across most of our products with the exception of listed derivatives, which was up 2%, and physical contracts up 1% versus the prior year. Again, securities related revenues were up significantly, but part of that is also due to the carried interest component I just mentioned. Volumes, which were up across the board except for FX/CFDs, which were down 17%, and payments, down 1%, are typically important indicators for us on a long-term basis when it comes to measuring client engagements and market penetration. However, we are still somewhat subject to overall market activity. Revenue capture is largely a function of market conditions, and again, we can see a mixed picture as market volatility generally retraced to lower levels as compared to the prior year, with the obvious exception of FX and CFDs, which experienced a significant increase in rate per million revenue capture, up 33% versus the prior year. In addition, we continue to see the effects of the change in product mix and the securities rate per million with increased volumes in lower margin products. Turning now to Slide 6, our segment summary, just to touch on a few brief highlights before Bill gets into more detail. For the quarter, segment operating revenues were up 15% and segment income was up 14% versus the prior year. Our commercial segment was down 17% in segment income off the back of a 9% decrease in operating revenues. On a sequential basis, operating revenues were up 1% and segment income was down 2%. Our institutional segment realized a 28% increase in operating revenues, which translated into a 10% increase in segment income. On a sequential basis, operating revenues were up 6% and segment income was down 6%. Retail was a standout this quarter with operating revenues up 30%, driven by the much-improved revenue capture I mentioned earlier. This growth in operating revenues combined with declines in fixed income fixed expenses led to a $28.4 million increase in segment income to $33.2 million in the current period versus $4.8 million a year ago. On a sequential basis, revenues were up 10% and segment income increased 16%. In our payments business, operating revenues were down 1% while segment income was up 55%, principally due to the prior year, including a severance charge of $10 million. Operating revenues were down 19% and segment income down 30% versus the record immediately prior quarter. On a trailing 12-month basis, we had double-digit operating revenue gains for our Commercial, Institutional and Payment segment, while our Retail segment operating revenues increased 5%. We saw growth in segment income across all of our segments versus the prior year trailing 12-month period, led by the Retail segment, which was up 127%, followed by Payments with a 24% growth. Turning now to Slide 7, which sets out at the top of the page our trailing 12-month financial performance over the last 9 quarters. These numbers have been adjusted for the accounting treatment related to the GAIN and CDI acquisitions as disclosed in our prior filings and which appear in the reconciliation provided in the appendix of this earnings deck. On the left-hand side, the bars represent our trailing 12-month operating revenues over the last 9 quarters. As you can see, this has been a smooth and strongly upward trend as we have steadily expanded our footprint and capabilities. Our operating revenues are up 74% over this period for a 32% CAGR. Our adjusted pretax income, likewise, has grown significantly, also at a 32% CAGR. On the right-hand side, you can see our adjusted net income in the bars, which is up 63% over the 2 years for a 28% CAGR. The dotted line represents our adjusted ROE, which has remained solidly above our 15% target, even though our capital has grown by 53% over this period. On the bottom half of the slide, we set out our long-term performance, both measured in stockholders return from the bottom left graph, in which we have significantly outperformed both indices shown, as well as our financial performance on the bottom right-hand graph, which shows that we have grown our stockholders' equity, operating revenue and market capitalization at nearly 30% CAGR for the last 21 years. With that, I will hand over to Bill Dunaway for a more detailed discussion of the financial results. Bill?

Thank you, Sean. I'll be starting with Slide #8, which summarizes our consolidated income statement for the second quarter of fiscal '24. Sean covered many of the consolidated highlights relating to operating revenues for the quarter, so I will just cover the consolidated expense fluctuations and then move on to a segment discussion. Transaction based clearing expenses increased 13% to $78.5 million in the current period as a result of the increases in listed derivative and securities volumes as compared to the prior year. Introducing broker commissions were relatively flat with the prior year at $42 million in the current period. Interest expense increased $80.5 million versus the prior year, primarily as a result of the $78.6 million increase in interest expense related to our institutional fixed income business as well as the $5.7 million increase in interest expense related to securities lending activities. Both of these were due to increases in short-term interest rates, and in addition in the case of the fixed income business, increased volumes. Interest paid on client balances on deposits declined $5.8 million as compared to the prior year due to declines in average client float. Interest expense on corporate funding increased $1.3 million versus the prior year as a result of the incremental issuance of our senior secured borrowings, partially offset by lower average borrowings on our revolving credit facility. I will expand on this topic later on this call when I cover the new note issuances. Variable compensation increased $1.9 million versus the prior year and represented 29% of net operating revenues in the current period compared to 30% in the net operating revenues in the prior year. This decline in variable compensation as a percentage of net operating revenues is a result of the increase in net interest and fee income earned on client balances as compared to the prior year as this revenue is typically not included in variable compensation payouts as well as the increase in net operating revenues in our retail segment, which has incrementally lower levels of variable compensation associated with it. Fixed compensation was flat versus the prior year. However, the current period includes $1.1 million in severance costs versus $12.1 million in the prior year. Offsetting this decline in severance costs was an $8.1 million or 12% increase in non-variable salaries due to a 13% increase in headcount resulting from an expansion of our capabilities among our business lines as well as in support areas to facilitate this business growth. Fixed compensation increased 15% versus the immediately preceding quarter. Within this increase in fixed compensation, non-variable salaries increased relatively modest $2.6 million, primarily related to annual marine increases. In addition, we saw seasonally driven increases in payroll taxes, retirement and paid time off accrual expenses of $6.1 million. In addition, share-based compensation expense increased $1.8 million and a reduction of deferred compensation increased overall non-variable compensation by $3.1 million as compared to the immediately preceding fiscal quarter of 2024. Other fixed expenses increased $16.5 million as compared to the prior year, including an $8 million increase in professional fees, primarily due to an increase in legal fees as well as a $3 million increase in occupancy and equipment rental, principally driven by an acquisition of additional space in London and India, as well as a $1.3 million accelerated charge related to consolidation of our offices in London. In addition, selling and marketing and travel and business development combined were up $2.7 million as compared to the prior year, primarily driven by approximately $4 million in expenses related to our biannual Global Sales Summit, which was partially offset by lower direct marketing costs in our Retail segment. Compared to the immediately preceding quarter, other fixed expenses increased $14.8 million, principally driven by a $5.9 million increase in occupancy and equipment rental due to the additional space acquired and accelerated charges I just mentioned, as well as the fact that the immediately preceding quarter included a one-time $3.3 million property tax refund. Finally, to close-up the discussion of expenses, we had favorable variances in bad debt, net of recoveries of $3.4 million and $100,000 versus the prior year and immediately preceding quarters, respectively. The other gain of $6.9 million in the current quarter is a class action settlement received in the commodity exchange, gold futures and options trading matter. Net income for the quarter of fiscal 2024 was $53.1 million, which represents a 27% increase versus the prior year. Net income declined 23% versus the very strong result in the immediately preceding quarter. Moving on to Slide #9, I'll provide some information on our operating segments. Operating revenues in our Commercial segment declined $19.6 million in operating revenues versus the prior year, however it increased $2.1 million versus the immediately preceding quarter. The decline versus the prior year was principally driven by an $8 million decline in operating revenues from physical contracts due to an $8.5 million unrealized loss on derivative positions used to hedge our gold inventory, as Sean mentioned earlier. The remainder of this unrealized loss relates to our Retail segment. In addition, operating revenues from listed and OTC derivatives declined $1.9 million and $4.9 million, respectively, as compared to the prior year. The listed derivative decline was due to lower spreads in LME products as compared to the prior year, which more than offset the 12% increase in listed contract volumes. The OTC decline was primarily due to a decline in activity in the Brazilian market due to lower agricultural volatility. Finally, interest earned on client balances declined $5.3 million as compared to the prior year as a result of the 15% decline in average client equity resulting from reduced margin requirements driven by the lower cut monthly volatility. Fixed compensation and benefits increased $200,000 versus the prior year and $1 million versus the immediately preceding quarter. Other fixed expenses increased $4.7 million versus the prior year, but were relatively flat with the immediately preceding quarter. As compared to the prior year, we had increases in travel and business development, professional fees, depreciation and amortization, bank fees and non-income taxes. We had a positive variance in bad debts, net of recoveries of $2.3 million as compared to the prior year, principally driven by a decline in bad debts in our Physical Ag and Energy business. Segment income was $85.6 million for the period, a decline of 17% versus the prior year period and included the other gain related to the gold class action matter I mentioned earlier. Segment income decreased 2% versus the immediately preceding quarter. As a reminder, in the first quarter of fiscal 2024, we started to allocate a portion of our corporate expenses to each of our 4 operating segments, including costs associated with compliance, technology, credit and risk, human resources and occupancy. We have provided this allocation in each of our segments for the current period and will continue to do so prospectively. However, we have not calculated similar allocations for previously reported periods. For the current period, this allocation of corporate costs for our Commercial segment was $8.9 million. Moving on to Slide 10. Operating revenues in our institutional segment increased $100.9 million versus the prior year, primarily driven by an $88.1 million increase in securities operating revenues compared to the prior year period as the result of a 30% increase in the average daily volume of securities transactions as well as the increase in interest rates. The increase in securities ADV was driven by an increase in client volumes in both equity and fixed income markets. As Sean mentioned earlier, the increase in interest rates also led to a significant increase in securities-related interest expense for the period, which I will touch on momentarily. Interest and fee income earned on client balances increased $6.2 million versus the prior year as a result of the increase in short-term rates, which was partially offset by 17% and 24% declines in average client equity and average money market and FDIC client sweep balances, respectively, versus the prior year. Interest and fee incomes earned on client balance was up $4.9 million versus the immediately preceding quarter. The rise in short-term interest rates drove an $83.4 million increase in interest expense versus the prior year. Interest expense related to fixed income trading and securities lending activities increased $78.6 million and $5.7 million, respectively, as compared to the prior year, while interest paid to clients decreased $6 million due to the decline in client balances. Segment income increased 10% to $61.3 million in the current period, primarily as a result of the $11.9 million increase in net operating revenues, which was partially offset by a $4.3 million increase in fixed compensation and benefits as well as a $4.9 million increase in other fixed expenses. The increase in other fixed expenses was primarily driven by a $4.1 million increase in professional fees and a $600,000 increase in trade systems and market information. These increases were partially offset by a $1.5 million favorable variance in bad debt expenses versus the prior year quarter. Segment income declined $3.9 million versus the immediately preceding quarter. For the current period, the allocation of corporate costs for our Institutional segment was $13.3 million. Moving on to the next slide, operating revenues in our retail segment increased $23.4 million versus the prior year, driven by a $20.2 million increase in FX and CFD revenues as the result of an 82% increase in rate per million as compared to the prior year, which more than offset a 24% decline in FX and CFD average daily volume. The increase in RPM was primarily due to higher client activity in gold, oil and index CFD products, which generally have a higher RPM in relation to FX products, while the decline in ADV was driven by lower FX market volatility. Operating revenue increased 10% versus the immediately preceding quarter. Segment income was $33.2 million, which represents a 592% increase over the prior year period and a 16% increase compared to the immediately preceding quarter. This was a result of the 30% increase in operating revenues as well as a $6.7 million decline in other fixed expenses as compared to the prior year. For the current period, the allocation of corporate costs for our Retail segment was $12 million. Closing out the segment discussion on the next slide, operating revenues in our Payments segment declined 1% versus the prior year, driven by a 1% decline in average daily volume, which more than offset a 3% increase in the rate per million as compared to the prior year. Segment income increased 55% to $24.6 million in the current period as a result of a $10.3 million decline in fixed compensation as the prior year included the $10 million of severance charges, as Sean mentioned earlier. Segment income decreased $10.4 million versus the immediately preceding record first quarter. For the current period, the allocation of corporate costs for our Payments segment was $5.2 million. Finally, before passing it back to Sean for a strategy discussion, I wanted to give an update on long-term capital following our recent note offerings. As Sean highlighted in the past, long-term capital is integral to the success of StoneX as it supports our client activity in our regulated subsidiaries and supports the growth of our franchise. Our fundamental focus is on compounding our internally generated equity, accessing capital markets in a thoughtful manner when appropriate, and deploying a centralized disciplined approach to capital allocation in order to drive results for our stockholders. To that end, on March 1st, we issued $550 million of new 7-year secured notes, which allowed us to extend our debt maturity profile and bolster our liquidity. The proceeds of these notes were used to defease our existing $348 million of senior secured notes, which were scheduled to mature in June of 2025, as well as to pay down existing borrowings on our revolving credit facility. The $348 million in senior secured notes will remain on our balance sheet as well as the $363 million in restricted cash, which represents principal plus accrued interest through June 15, 2024, as part of this defeasement, at which time we will call these notes at par. Ultimately, while having the new notes and previously issued notes both outstanding for 3.5 months will result in incremental interest costs of approximately $900,000 per month net of the interest earned on restricted cash that will ultimately save us $4.5 million in call premium. For the new issuance, we're very pleased with how the process unfolded, with the issuance being nearly 2.5x oversubscribed and pricing at a much tighter spread to treasuries at 377 basis points compared to our previous issuance done during the onset of COVID, and ultimately, at an effective interest rate 155 basis points lower than that offering. Overall, this will be leverage neutral for us while extending our maturity profile by 6 years. Following this transaction, we have approximately $2.1 million in long-term capital available to support our clients and our growth. Finally, we are pleased to announce that S&P recently revised their rating outlook for StoneX to positive from stable, reflecting our focus on long-term capital, retained earnings and diversified franchise.

Thanks, Bill. We are aware that there has been some renewed investor interest and some activity in our market sector, and we thought it might be worthwhile to touch on our strategy and what is driving our results currently, particularly for any new shareholders that may be listening. Slide 14 sets out our high-level strategic objectives that we are focused on. This basic approach and strategy has been unchanged for over 15 years and has served us well. Before dealing with the strategy, perhaps it would be helpful to give our views on how we have seen the market structure and our competitive environment changing, and how our strategy aligns with that. Following the financial crisis 15 years ago, there was a comprehensive and significant response from the regulators around the world to create a more robust and durable financial market. The key impacts of this were a massive increase in costs due to more complex processes and oversight, as well as dramatically increased capital requirements. This made it difficult for smaller firms and those with narrow product offerings to generate sufficient revenue to remain viable given the cost and capital requirements. As a result, there has been a fairly dramatic consolidation in our industry. This can be evidenced by looking at clearing FCMs or broker dealers, which have massively reduced in numbers over this period. We have directly participated in this process through some of the acquisitions we have made. We have made over 30 acquisitions over this period. And we've also benefited indirectly as clients have been forced to find new firms to deal with. In addition, we have seen a fairly significant withdrawal from our market by the big banks as capital requirements have forced them to reevaluate their strategy. The large banks in aggregate still account for the majority share of the market, but they are retreating, which has created significant opportunities for us. As we speak, currently U.S. banks are potentially facing increased capital requirements of over $7 billion for their U.S. derivative clearing operations if proposed rules are enacted by the U.S. bank regulators. Generally speaking, the Basel capital rules are very punitive to trading-type operations, and if adopted, I’m certain the banks' withdrawal from our market will accelerate as they increasingly focus on their Tier 1 clients. Both of these factors, the lower-end consolidation and the withdrawal by larger banks, have directly and positively impacted StoneX and have allowed us to post CAGRs close to 30% over the last 20 years. We think there is still a long way to go in the reordering of the market structure, and with our broad and unparalleled capability and product set, we are ideally placed to continue to take advantage of this trend. The most significant strategic priority in the context of the market dynamics I've just mentioned is to keep building our ecosystem. We want to be the most relevant firm in the space by having the best ecosystem to connect clients to the global financial markets. This makes us an attractive destination for new clients looking for a single partner to satisfy their trading needs and allows us to also remain relevant to our existing clients. I believe StoneX is becoming known as a growing and best-in-class financial services franchise. We continue to invest in our ecosystem by acquiring talent, either individuals or teams, as well as investing in technology to expand our product and capabilities to better serve our clients. While these investments result in increased costs and expenditures, oftentimes well in advance of the ultimate benefit being achieved, they are essential to achieve the strategic objective. None of these projects in isolation will result in significant change to our current growth trajectory, and certain of these initiatives may not be viable in the long run. However, in the aggregate and over time, we believe that these initiatives will bend our growth curve upwards. In addition, because many of these are digital in nature, we should see operational leverage and scalability starting to kick in, as well as steady improvement in margins. We also continue to look at acquisition opportunities, and indeed, over the last 15 years, have completed close to 30 acquisitions. Some of these have been large and transformational, such as the FCStone acquisition in 2009 and the GAIN acquisition in 2020. Many, however, have been small or below-scale operations that needed to be part of a bigger ecosystem given the dramatic change in the operating environment I mentioned post the financial crisis. While these acquisitions were not large, many have thrived and become significant franchises for StoneX. We believe that the market structure is not favorable for these smaller businesses and we will continue to see a wide range of opportunities to acquire businesses that offer new capabilities or products for our franchise. We believe that business valuations are now returning to more reasonable levels after becoming elevated in the aftermath of the COVID crisis. And we will remain disciplined in evaluating these opportunities to ensure that any acquisition adds value to our franchise and is accretive to our shareholders. Second key part of our strategy is we are a client-centric business and we need to consistently work at growing our client footprint into new markets and expanding market share where we have existing clients. We also seek to serve new client segments and channels. We have capabilities to service clients of all types and have large addressable market in front of us with very low market penetration currently. Unlike many other firms, we already have deep and significant client footprints with not only institutional clients but also corporate clients, retail clients, and financial institutions. And in each of these segments, we have a global representation of clients. Each of these client segments represents a large opportunity, but in the aggregate and globally, the addressable market for us is massive. We have grown our client footprint significantly over the last 10 years, assisted by the positive industry environment and the fact that we have a unique ecosystem. We see this trend continuing, and many clients will be looking for new brokerage and trading relationships. We believe that our unique global financial ecosystem allows us to be the counterparty of choice and places us in a strong position to win market share. Third part of our strategy, we will not achieve the necessary growth and scale unless we continue to embrace technology to digitize our offerings. This will not only enhance client engagement but increase scalability and margins. This initiative requires a rethink of our processes from front to back, which has been underway for some years but has accelerated with the acquisition of GAIN. We see technology playing a role in 3 key areas for us. Firstly, we have a large number of initiatives underway to ensure that we can engage digitally with our clients. Increasingly, ease of use and digital access is a key differentiator for clients. In addition, if done right, technology can drive wallet share and embed us deeply with our clients for the long-term, making them stickier to us. We offer the full spectrum of digital solutions from mobile-based low latency trading platforms to enterprise integrated bespoke offerings for our large corporate clients. The advantage of digital offerings is that it dramatically expands your addressable market. Every client everywhere becomes a potential client. And it offers scalability and operational leverage to enhance margins. Secondly, we are increasingly using technology on the trading side. All of our trading platforms are designed to aggregate trading and internalize spreads so we can maximize the client revenue opportunity and minimize hedging costs. As we gain critical mass in trading volumes, the impact on revenue capture can be significant and should drive additional margin. And thirdly, we have a number of projects underway throughout many of our support areas to better use technology to create efficiency and scalability in our infrastructure, which over time should drive operational leverage. Success on the technology side should allow us to accelerate revenue growth by more effectively gaining market share, drive margin through better revenue capture on the trading and execution side, and allow us to achieve operational leverage on the operational side. These 3 factors together could and should be powerful drivers of our bottom line and net margins. Finally, our business is supported by long-term capital and we need to underpin our growth with internally generated capital, access the capital markets when appropriate, and approach acquisitions in a disciplined manner. Our business requires regulatory capital to support the client activity we take on. We believe that most of this capital should be in the form of permanent equity capital to provide the fortress balance sheet that will define a long-term client franchise. The most important thing we can do is to continue to create our own internal capital runway for continued growth. This is why we focus on our ROE. It is interesting to note that 10 years ago, we had a little over $300 million in stockholder equity and only slightly lower number of shares outstanding than we do now. Over this 10-year period, we have more than tripled our shareholder funds, acquired 15 businesses, significantly expanded our client footprint, largely financed organically from retained earnings and the unbelievable power of compounding. During this growth, we have largely achieved our 15% ROE target; certainly not every year, but on average over the period, it’s pretty close. This has happened despite the investments we’ve made in technology and infrastructure, the cost of developing new capabilities, the integration of a large number of acquisitions, and despite low interest rates for extended periods. Achieving our ROE target continues to be our North Star, and we believe that as we digitize our platform and gain scale that our margins and our ROE should start to increase. Now turning to Slide 15, which gives you some sense of the scale and breadth of our ecosystem, which we believe is unique other than in bulge bracket banks. We provide global execution, clearing, and custody across equities, fixed income, FX, listed derivatives, swaps, and commodities. To do this, we have a regulated platform aligned to these activities in all the global financial markets, the U.S., the U.K., Europe, Singapore, Hong Kong, Brazil, and Argentina. As you will note, we are members of only 40 exchanges. We trade over 18,000 over-the-counter swap products and trade almost every currency on the planet. In terms of clients, we have over 54,000 institutional and commercial clients, over 400,000 retail clients, and deal with over 600 financial institutions as clients. We have $7.1 billion of client funds and support this with $1.5 billion of permanent equity capital, as well as $550 million of term debt and over 4,300 professionals around the world. The next slide gives you some sense of the breadth of our products and how they match our client segments. As you can see, we have a very broad fixed income and equities offering, as well as an expanded derivatives capability. Also unique is our payments platform, which provides efficient and fast payments into over 180 countries, something no one else can do. We provide the service to most of the large and medium sized banks around the world to charities, NGOs, and commercial clients, as well as to other payment platforms that do not have this last-mile capability. We can clearly and transparently demonstrate to clients the significant savings realized by using our payments platform, and the addressable market for this business is immense. Moving on to wrap up, let's move to the last Slide 17. We achieved solid results in this second fiscal quarter 2024, delivering growth in operating revenues and income, despite the short-term mark-to-market adjustment on the gold inventories and elevated fixed expense for the quarter. We delivered operating revenue of $818.2 million, up 16%, earnings of $53.1 million, and diluted EPS of $1.63, up 27% and 25% respectively. This represents a 14% ROE on stated book and excluding any mark-to-market adjustment would have been 15.8% ahead of our long-term 15% target. In some ways, the clearest and best measure of financial performance is the growth in book value per share, which for the last year is up 21%. We are pleased to see that our business continues to generate strong long-term returns for our stockholders despite moderating volatility, which demonstrates the multiple drivers of our results and the diversification of our business. When our performance is viewed through a slightly longer-term lens, such as the trailing 12 months over the last two years, which evens out quarterly anomalies, our results continue to show a strong upward trajectory, growing our operating revenues at 30% CAGR and our adjusted earnings at a 28% CAGR. Over these last 12 months, we continue to see growth in client trading volumes across most of our products and in our operating revenues across all of our segments, which speaks to growth in our underlying client base and client engagements. As a reminder, in our 2024 year, we celebrate our 100-year anniversary of our namesake legacy company, Saul Stone & Co. Remarkable to think that what started as a door-to-door egg wholesaler has grown into a global financial franchise spanning over 80 offices and across 6 continents. Our long-standing track record sets a standard we believe is largely unmatched in our industry. Yet we recognize we are far from realizing the full scope of opportunities and market share available to us. Operator, with that, let's move to some questions if there are any.

We will now begin the question-and-answer session. Your first question comes from the line of Dan Fannon with Jefferies.

I guess to start, you touched on this topic, but volumes were generally strong across the board in the quarter, but the rate per contract or fee for million outside of FX was generally lighter. So I was hoping you could talk about the trends within the Commercial and Institutional segments. And I believe you indicated some mix of lower agricultural in certain segments. So just would be to get a little more color around that trend on the capture rates and how you think about that prospectively?

Well, I think our capture rates, as you know, probably reflect sort of market conditions in terms of volatility, right? When markets become more volatile, we tend to see revenue capture expand. And when markets become sort of either trending or sort of flatlined and volatility declines, we tend to see them narrow in. And I think this is probably the same as what we've seen for the last two or three quarters, actually, if you go back, which is generally speaking, with some exceptions, volumes continue to go up, but revenue capture tends to be a little bit more, kind of, I guess, varied up and down depending on what product. And I guess that just speaks to sort of a normalization in volatility across the board. I mean, we now see the mix in sort of the low teens, which is sort of back where it was in '19. And that's starting to play through into some other markets. But the one thing I know for sure, having been in this business for over 40 years is volatility doesn't stay low for long, and it also doesn't stay at peak for long. So I think it is a volatility itself is volatile, and it's hard, I think, to determine a long-term trend on that because it really depends on short-term market conditions is all I can say. I don't know, Bill, if you have anything to add on that.

Yes, there are a few aspects to consider, Dan. As we've discussed, this comes from the interaction between the commercial and institutional segments. On the commercial side, particularly during the COVID era and around the time of the Russian invasion of Ukraine, there was a noticeable spread in the London market related to unlisted derivatives, which was quite wide. We've observed that trend decline and eventually stabilize. For the past three or four quarters, we've seen a slight further decrease on the commercial side, mainly due to acquiring significant large commodity intermediaries that handle higher volume but at lower rates. Recently, commodity volatility has diminished somewhat, leading to a slight reduction in activity, though there is generally higher volume from some intermediaries. On the institutional side, we’ve experienced similar trends in client acquisition, with volumes increasing, especially in that sector. We are capturing more ETFs and larger groups that are engaging in significant volume through us, which tends to be lower volume and lower rates per contract. Overall, this is positive as we aim to increase the volume flowing through our systems, even though it results in a marginally lower revenue per contract. However, it has stabilized in this latest quarter compared to the previous one on the institutional side, so I don’t anticipate any significant decline from here.

Okay, great. That's helpful. And then on the retail side, where clearly the fee per million for the second quarter in a row has been well above the trends. I think you also cited mix there. I guess as you look underneath the hood a little bit at the customer base or I don't know channels for where that's coming like sustainability, is that anything you could speak to or is it still obviously again volatility being a big component of that business, but curious about maybe an outlook there?

Yes. I think there's volatility in product mix clearly, but I would say sort of revenue capture at the $120 level, honestly, is probably unsustainable for a significant period of time. Our view is that it probably normalizes at around sort of $90-ish, is sort of our 90% to 100% is our expectation. But sometimes these trends can go on longer than you think. So obviously, we'll take as much as we can get when we can get it. I would say another comment on the retail business is, and if you remember when we did the acquisition of GAIN, our thought was that, if we could intelligently combine the retail flow we had in things like gold and oils and corn and even FX with the flows we're getting from our commercial and institutional clients that would provide us a more efficient internalization mechanism because there's A, just greater flow and B, the different nature of the flows allows you for greater opportunity for spread capture internally. And I think as we sort of build those pipes out and as that's happened, my sense is we are driving to a slightly higher average over time. I mean, it will still be somewhat volatile, but I think we are starting to see sort of tangible signs of the success of that strategy we laid out a couple of years ago that we are now sort of having all of that flow centralized through one pipe. And I think we are starting to see sort of an increase in the average. But I don't think $120 is going to be the average. So, I mean, I still think we above trend there. Does that make sense?

Yes, I understand. I was hoping to connect some of your comments about the long-term technology strategies with expenses and the possibility of margin expansion in the next one to two years, even though I know your comments were more long-term. Considering our current expenses on the fixed side, do you think these are sustainable rates as we look at the rest of the year? When do you anticipate seeing some operational leverage from the investments you're making today?

Yes. I'll provide a high-level overview and then pass it to Bill for more details. We've made significant progress in our infrastructure over the past two to three years, particularly after our acquisition. We experienced a substantial increase in our volumes during this time, which necessitated investment in our infrastructure and technology rather than just hiring more staff. Most of that spending has already occurred. I don't expect costs to decrease right away, as they typically don't. We're working hard to stabilize our costs. However, the infrastructure enhancements we've made—from compliance to risk management to technology development—should allow us to achieve much greater scalability moving forward. If our volumes continue to increase as we anticipate, we should see a significantly higher incremental margin, as we can maintain our current cost levels. That's our plan. You can observe our growth rates, and if we maintain those and keep our expenses in the low single digits while targeting over 15% growth in revenue, we should quickly start to see that operational leverage emerge. Bill, do you agree?

Yes, Dan. Regarding Sean's point about costs, it's important to note that the growth in the non-variable salary component from Q1 to Q2 was quite modest. While we're up from last year, we have discussed this in previous calls. The actual headcount seems to be leveling off. This quarter featured some unusual expenses, some of which are seasonal, as we mentioned last year regarding benefits, taxes, retirements, and PTOs that reset at the beginning of the year, estimating around $3 million to $4 million. Additionally, there were fluctuations in deferred compensation, adding another couple of million on the compensation side. Overall, I expect compensation to trend down by approximately $4 million to $6 million from its current level due to this seasonal activity. Also, we reorganized our office in London, which contributed about $1.8 million in total for recharges, office consolidation, and write-offs of some leaseholds. Therefore, I anticipate the occupancy run rate to be about $1.5 million lower in the current quarter. Furthermore, professional fees seem to be a couple of million dollars higher this quarter. In terms of sales, we discussed around $4 million in that area. Overall, it appears we're looking at a net difference of approximately $11 million to $12 million higher this quarter than what we anticipate going forward. However, we know things can change, and that reflects our current expectation.

I guess, Dan, one other thing to mention on that is sort of strategically and long-term, we've turned a point now where we pushing a lot of our incremental hires into the lower-cost or more efficient jurisdictions. It's something we've done for a while, but we think we've got a critical mass. We now have about 400 people in India. We have 350 people in Krakow, Poland. We're spinning up centers in Colombia, where we're finding lots of great talent at sort of fractions of U.S. prices. Our Birmingham office is a great office for us and sort of becoming our operational center, moving people out of expensive Chicago and New York real estate and price points. So, we're really pushing that hard now. And I think you might not see it show up in heads, but you should see it show up in dollars. So that's something we're working towards as well.

Great. That's helpful. And then I guess, Bill, just looking at the cash balances and client balances and interest income sensitivities we get. But also wanted to get some color around the hedges that you have in place and as they roll off. How we should think about what the sensitivity is or the duration of those contracts and maybe the impact on a prospective basis?

Sure. Yes, Dan, the significant ones we've discussed before have rolled off, which contributed positively from Q1 to Q2. Currently, our gross yield is slightly under 5%, and net of client payouts, it's around 3.30%. We experienced roughly a 50 basis point increase as some of those hedges rolled off, and on a net basis, it was about a 75 basis point improvement. This is our current situation. We still have some hedges in place, but they are rolling off, and we've been cautious about entering the market due to the current Fed cycle and the inverted market conditions. So, generally, we are aligned with the 3-month rate, tracking the 3 to 6-month maturities for the few positions we still hold.

But they're not going to make a material difference.

They should make a significant impact on the rate. Regarding the balances, we have seen a slight decrease, which I mentioned earlier due to reduced commodity volatility leading to lower margin requirements on the commercial side. This has contributed to lower balances. On the institutional side, we experienced a peak early in the last fiscal year when many institutional clients were engaged in interest rate strategies that attracted substantial funds. However, many of those opportunities have diminished, and margin requirements have also influenced them. This is why there has been a reduction in balances.

But we weren't retaining much interest.

Correct. Yes. Ultimately, we are paying a considerable amount of interest on some of those clients. Overall, the net margin has improved compared to a year ago, even with those lower balances.

Great. Okay, that's helpful. And then just lastly for me, Sean, just to clarify some of the comments or expand upon around M&A in the current environment, you mentioned valuations coming down a bit. I guess as you think about your current backlog discussions, how does that compare to say this time last year? And maybe in terms of the appetite for small versus large, where does it sit today based on those conversations?

I would say that over the past year, there has been a trend towards more normalized valuations. We went through the upheaval caused by COVID, and it takes time for people to adjust to what is considered normal. I believe that adjustment is starting to take place, and we are seeing a good number of opportunities coming our way that appear to be more reasonably priced. If this trend continues, it suggests that the likelihood of us pursuing something is higher than it was two years ago. However, with mergers and acquisitions, it's quite challenging. We remain disciplined and do not pursue deals or prices impulsively, as we have learned that negative outcomes can occur when we do. Nevertheless, the outlook seems more promising than it did a year ago. This doesn't guarantee that we will take action, but the situation is definitely more encouraging.

It seems to be more reasonably priced. If that remains the case, it likely suggests a higher probability that we may take action compared to two years ago. However, with mergers and acquisitions, it’s really challenging. We maintain a disciplined approach and do not pursue deals or chase prices, as we’ve experienced negative outcomes when doing so. Nonetheless, the situation appears more promising than it did a year ago. This does not guarantee that we will take any action, but it is definitely encouraging.

All right. Well, I don't see any questions popping up. So just like to say thanks to everyone for attending our conference call. Appreciate all the support and we will speak to you in 3 months' time. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.