- Revenue of
$345.9 million , up 16% from$299.1 million in Q1/23 - Diluted earnings per share of
$0.50 , up 56% from$0.32 in Q1/23, including$0.21 gain per share from the acquisition of control of VettaFi in Q1/24 - Adjusted diluted earnings per share1 of
$0.38 , up 3% from$0.37 in Q1/23
Commenting on the first quarter of 2024,
"TMX's first quarter results reflect solid performances from key components of our business, including areas of strategic global expansion, as we continue to push the evolution of TMX to meet the needs of our diverse and growing set of capital markets stakeholders. Overall revenue increased 16% compared to the first quarter of 2023, largely due to the inclusion of TMX VettaFi, our newly-acquired,
Commenting on the performance in the first quarter of 2024,
"TMX continues to benefit from a deep and diverse business model. We reported solid growth in the first quarter, with 3% higher organic revenue excluding TMX VettaFi, and a 3% increase in diluted earnings per share on an adjusted basis, compared to Q1 2023. Despite headwinds in financing and trading activity, income from operations grew 1% year-over-year, as a result of growth in revenue from recurring sources and continued cost management discipline.
_______________________________ |
1 Adjusted diluted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
RESULTS OF OPERATIONS2
Non-GAAP Measures
Adjusted net income is a non-GAAP measure3, and adjusted earnings per share, adjusted diluted earnings per share, and adjusted earnings per share CAGR are non-GAAP ratios4, and do not have standardized meanings prescribed by GAAP and are, therefore, unlikely to be comparable to similar measures presented by other companies.
Management uses these measures, and excludes certain items, because it believes doing so provides investors a more effective analysis of underlying operating and financial performance, including, in some cases, our ability to generate cash. Management also uses these measures to more effectively measure performance over time, and excluding these items increases comparability across periods. The exclusion of certain items does not imply that they are non-recurring or not useful to investors.
We present adjusted earnings per share, adjusted diluted earnings per share, and adjusted net income to indicate ongoing financial performance from period to period, exclusive of a number of adjustments as outlined under the heading "Adjusted Net Income attributable to equity holders of
We have also presented long term adjusted EPS CAGR as a financial objective which is the growth rate in adjusted diluted earnings per share over time, exclusive of adjustments that impact the comparability of adjusted EPS from period to period, including those outlined under the heading "Adjusted Net Income attributable to equity holders of
Similarly, we present the dividend payout ratio based on dividends paid divided by adjusted earnings per share as a measure of
Debt to adjusted EBITDA ratio is a non-GAAP measure defined as total long term debt and debt maturing within one year divided by adjusted EBITDA. Adjusted EBITDA is calculated as net income excluding interest expense, income tax expense, depreciation and amortization, transaction related costs, integration costs, one-time income (loss), and other significant items that are not reflective of
______________________________ |
2 |
3 As defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. |
4 As defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. |
Quarter ended
The information below is derived from the financial statements of
(in millions of dollars, except per | Q1/24 | Q1/23 | $ increase / | % increase / |
Revenue | 16 % | |||
Operating expenses | 204.2 | 159.4 | 44.8 | 28 % |
Income from operations | 141.7 | 139.7 | 2.0 | 1 % |
Net income attributable to equity | 139.5 | 89.0 | 50.5 | 57 % |
Adjusted net income attributable to | 104.5 | 103.6 | 0.9 | 1 % |
Earnings per share attributable to | ||||
Basic | 0.50 | 0.32 | 0.18 | 56 % |
Diluted | 0.50 | 0.32 | 0.18 | 56 % |
Adjusted Earnings per share | ||||
Basic | 0.38 | 0.37 | 0.01 | 3 % |
Diluted | 0.38 | 0.37 | 0.01 | 3 % |
Cash flows from operating activities | 64.6 | 96.6 | (32.0) | (33) % |
Net Income attributable to equity holders of
Net income attributable to equity holders of
The increase in earnings per share was also partially attributable to a decrease in the number of weighted average common shares outstanding from Q1/23 to Q1/24, somewhat offset by higher net finance costs.
________________________________ |
5 |
6 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
7 Reflects an adjustment increasing the income tax effect for Q1/23 by |
8 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
9 Reflects an adjustment increasing the income tax effect for Q1/23 by |
Adjusted Net Income attributable to equity holders of
The following tables present reconciliations of net income attributable to equity holders of
- The amortization expenses of intangible assets in Q1/23 and Q1/24 related to the 2012 Maple transaction (TSX, TSXV, MX, Alpha, Shorcan),
TSX Trust , TMX Trayport (including VisoTech and Tradesignal), AST Canada, BOX, and WSH, and the amortization of intangibles related to TMX VettaFi in Q1/24. These costs are a component of Depreciation and amortization expenses. - Acquisition and related costs in Q1/23 and Q1/24 related to VettaFi (equity-accounted on
January 9, 2023 prior to the acquisition of control onJanuary 2, 2024 ). Q1/23 also includes acquisition related costs for SigmaLogic (equity-accounted prior to the acquisition of control onFebruary 16, 2023 and divested onApril 21, 2023 ) and WSH (acquiredNovember 9, 2022 ). These costs are included in Selling, general and administration and Net Finance Costs. - Change in fair value related to contingent considerations, reflecting a reduction in the earn-out liability assumed as part of the WSH acquisition in 2023, and an increase to a prior earn-out liability assumed as part of the VettaFi acquisition in Q1/24. These changes are included in Net Finance Costs.
- Integration costs related to integrating the VettaFi acquisition in Q1/24. This cost is included in Compensation and benefits, Selling, general and administration, and Depreciation and amortization.
- Gain on fair value revaluation of VettaFi resulting from the remeasurement of our previously held minority interest in VettaFi (fully acquired
January 2, 2024 ), included in Other income in Q1/24. - Gain on foreign exchange (FX) forward, loss on translation of USD-denominated debt raised under Term Credit Facilities, and gain on translation of USD-denominated intercompany loans; all of which are in connection with the VettaFi acquisition, and included in Net Finance Costs in Q1/24.
___________________________________ |
10 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
11 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
12 |
Pre-tax | Tax | After-tax | ||||||
(in millions of dollars) | Q1/24 | Q1/23 | Q1/24 | Q1/23 | Q1/24 | Q1/23 | $ increase / | % increase / |
Net income attributable to equity | 57 % | |||||||
Adjustments related to: | ||||||||
Amortization of intangibles | 26.8 | 15.2 | 8.8 | 4.4 | 18.0 | 10.8 | 7.2 | 67 % |
Acquisition and related costs15 | 7.1 | 3.8 | 1.5 | — | 5.6 | 3.8 | 1.8 | 47 % |
Integration costs | 1.6 | — | 0.4 | — | 1.1 | — | 1.1 | n/a |
Gain on fair value revaluation of | (57.1) | — | — | — | (57.1) | — | (57.1) | n/a |
Net fair value loss (gain) on | 0.3 | — | — | — | 0.3 | — | 0.3 | n/a |
Net gain on FX forward and | (3.5) | — | 0.5 | — | (3.1) | — | (3.1) | n/a |
Adjusted net income attributable to | 0.9 | 1 % |
Adjusted net income attributable to equity holders of
_______________________________ |
13 Includes amortization expense of acquired intangibles including TMX VettaFi in Q1/24. |
14 Reflects an adjustment increasing the income tax effect for Q1/23 by |
15 For additional information, see discussion under the heading "Initiatives and Accomplishments" in our Q1/24 MD&A. |
16 For additional information, see discussion under the heading "Additional Information - Other Income". |
17 For additional information, see discussion under the heading "Additional Information - Net Finance Costs". |
18 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". The reconciliation for Adjusted Net Income in Q1/24 is presented without a rounding adjustment to ensure accuracy. |
19 The reconciliation for adjusted net income in Q1/24 is presented without a rounding adjustment to ensure accuracy. |
Q1/24 | Q1/23 | |||
(unaudited) | Basic | Diluted | Basic | Diluted |
Earnings per share attributable to equity holders of | ||||
Adjustments related to: | ||||
Amortization of intangibles related to acquisitions20 | 0.07 | 0.07 | 0.04 | 0.04 |
Acquisition and related costs21 | 0.02 | 0.02 | 0.01 | 0.01 |
Gain on fair value revaluation of VettaFi | (0.21) | (0.21) | — | — |
Net gain on FX forward and translation of USD- | (0.01) | (0.01) | — | — |
Adjusted earnings per share attributable to equity holders | 0.38 | 0.38 | ||
Weighted average number of common shares outstanding | 276,844,997 | 278,049,984 | 278,666,465 | 279,541,445 |
Adjusted diluted earnings per share increased by
____________________________ |
20 Includes amortization expense of acquired intangibles including TMX VettaFi in Q1/24. |
21 For additional information, see discussion under "Initiatives and Accomplishments" in our Q1/24 MD&A. |
22 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". In Q1/24, "Fair Value Loss (Gain) on Contingent Consideration" and "Integration Costs" were not presented in the reconciliation due to the size of the adjustment being less than a penny. |
23 The reconciliations for Basic and Diluted adjusted earnings per share in Q1/24 is presented without a rounding adjustment to ensure accuracy. |
Revenue
(in millions of dollars) | Q1/24 | Q1/23 | $ increase / | % increase / |
Capital Formation | (5) % | |||
Equities and Fixed Income Trading | 60.6 | 61.5 | (0.9) | (1) % |
Derivatives Trading and Clearing | 72.6 | 71.5 | 1.1 | 2 % |
| 152.1 | 102.6 | 49.5 | 48 % |
16 % |
Revenue was
Operating expenses
(in millions of dollars) | Q1/24 | Q1/23 | $ increase | % increase |
Compensation and benefits | 22 % | |||
Information and trading systems | 25.7 | 23.2 | 2.5 | 11 % |
Selling, general and administration | 44.3 | 31.1 | 13.2 | 42 % |
Depreciation and amortization | 40.4 | 28.0 | 12.4 | 44 % |
28 % |
Operating expenses in Q1/24 were
The comparable operating expense increase of 4% reflects higher headcount and payroll costs, employee performance incentive plan costs, and increased IT operating costs somewhat offset by lower revenue related expenses, facility fees, consulting and director fees.
Additional Information
Share of loss from equity-accounted investments
(in millions of dollars) | Q1/24 | Q1/23 | $ decrease | % decrease |
60 % |
- In Q1/24, our share of loss from equity-accounted investments decreased by
$0.3 million . For Q1/24, our share of loss from equity-accounted investments includes Ventriks and other equity accounted investments, compared with Q1/23, which included VettaFi24, SigmaLogic25, and Ventriks.
Other income
(in millions of dollars) | Q1/24 | Q1/23 | $ increase | % increase |
— | n/a |
- In Q1/24, we recognized a non-cash gain of
$57.1 million from the fair value revaluation resulting from the remeasurement of our previously held minority interest in TMX VettaFi (equity-accounted fromJanuary 9, 2023 to the acquisition of control onJanuary 2 , 2024).
Net finance costs
(in millions of dollars) | Q1/24 | Q1/23 | $ increase | % increase |
126 % |
- The increase in net finance costs for Q1/24 compared to Q1/23 primarily reflected higher interest expense of
$19.4 million mainly due to increased debt levels following the VettaFi acquisition, and higher net foreign exchange loss of$2.0 million (Q1/24 net foreign exchange loss of$4.5 million reflects FX losses for USD-denominated external debt, partially offset by FX gains on USD-denominated intercompany loans). This increase to net finance costs was somewhat offset by$9.1 million fair value gain on foreign exchange forwards26, and higher interest income on funds invested of$1.2 million as a result of higher interest rates in Q1/24.
_________________________ |
24 Equity-accounted |
25 Consolidated |
26 For additional information, see discussion under the heading "Financial Instruments" in our Q1/24 MD&A. |
Income tax expense and effective tax rate
Income Tax Expense (in millions of dollars) | Effective Tax Rate (%)27 | ||
Q1/24 | Q1/23 | Q1/24 | Q1/23 |
16 % | 27 % |
The effective tax rate excluding below adjustments would have been approximately 27% for Q1/24 and Q1/23.
Q1/24
- In Q1/24, there was a fair value revaluation from the remeasurement of our previously held minority interest in VettaFi (Equity-accounted
January 9, 2023 prior to the acquisition of controlJanuary 2, 2024 ) that resulted in a non-taxable gain of$57.1 million which decreased our effective tax rate by 9.4%. - In Q1/24, there was a net decrease in deferred income tax liabilities and a corresponding decrease in income tax expense on intangibles related to acquisitions mainly due to the acquisition of VettaFi which decreased our effective tax rate by 1.0%.
Net income attributable to non-controlling interests
(in millions of dollars) | Q1/24 | Q1/23 | $ increase |
- The increase in net income attributable to non-controlling interests (NCI) for Q1/24 compared to Q1/23 is primarily due to higher net income in BOX driven by higher revenue and lower operating expenses.
____________________________ |
27 Effective Tax Rate is based on Income tax expense divided by Income before income tax expense less Non-controlling interests. Effective tax rate, including NCI, calculated from total Income before Income Tax Expense was 15% in Q1/24 and 26% in Q1/23. |
FINANCIAL STATEMENTS GOVERNANCE PRACTICE
CONSOLIDATED FINANCIAL STATEMENTS
Our Q1/24 unaudited condensed consolidated interim financial statements are prepared in accordance with IFRS and are reported in Canadian dollars unless otherwise indicated. Financial measures contained in the MD&A and this press release are based on financial statements prepared in accordance with
ACCESS TO MATERIALS
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release of
Examples of forward-looking information in this Press Release include, but are not limited to, our long-term revenue growth CAGR and adjusted EPS CAGR objectives; our target dividend payout ratio; our target debt to adjusted EBITDA ratio; our objectives regarding growing recurring revenue, revenue outside
These risks include, but are not limited to: competition from other exchanges or marketplaces, including alternative trading systems and new technologies and alternative sources of financing, on a national and international basis; dependence on the economy of
Forward-looking information is based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions in connection with the ability of
Assumptions related to long term financial objectives
In addition to the assumptions outlined above, forward looking information related to long term revenue cumulative average annual growth rate (CAGR) objectives, long term adjusted earnings per share CAGR objectives are based on assumptions that include, but not limited to:
TMX Group's success in achieving growth initiatives and business objectives;- continued investment in growth businesses and in transformation initiatives including next generation technology and systems;
- no significant changes to our effective tax rate, and number of shares outstanding;
- organic and inorganic growth in recurring revenue;
- moderate levels of market volatility over the long term;
- level of listings, trading, and clearing consistent with historical activity;
- economic growth consistent with historical activity;
- no significant changes in regulations;
- continued disciplined expense management across our business;
- continued re-prioritization of investment towards enterprise solutions and new capabilities;
- free cash flow generation consistent with historical run rate; and
- a limited impact from inflation, rising interest rates and supply chain constraints on our plans to grow our business over the long term including on the ability of our listed issuers to raise capital.
While we anticipate that subsequent events and developments may cause our views to change, we have no intention to update this forward-looking information, except as required by applicable securities law. This forward-looking information should not be relied upon as representing our views as of any date subsequent to the date of this press release. We have attempted to identify important factors that could cause actual actions, events or results to differ materially from those current expectations described in forward-looking information. However, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended and that could cause actual actions, events or results to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect us. A description of the above-mentioned items is contained in the section "Enterprise Risk Management" of our 2023 annual MD&A.
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