Good day, ladies and gentlemen, and welcome to INTL FCStone Q4 Fiscal Year-End Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, today's conference is being recorded. I would now like to turn the call over to Bill Dunaway, CFO. Sir, you may begin.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our fiscal fourth quarter ended September 30, 2018. After the market closed yesterday, we issued a press release reporting our results for our fourth fiscal quarter 2018. This release is available on our website at www.intlfcstone.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. You'll need to sign on to the live webcast in order to view the presentation. The presentation and an archive of the webcast will be available on our website after the call's conclusion. Before getting underway, we're required to advise you, and all the 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-K filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve 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 can 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 will now turn the call over to Sean O'Connor, the company's CEO.

Thanks, Bill. Good morning, everyone. And thanks for joining our fiscal 2018 year-end earnings call. We had another good performance in the fourth quarter of fiscal 2018, with operating revenues up 19% over the prior year quarter with all of our segments showing revenue growth for the quarter. Segment net income was roughly similar to a year ago, excluding the coal matter. Please note that on this call, all my references to the fourth quarter of last year or fiscal 2017 as a whole will exclude the impact of the coal matter. These adjusted figures are non-GAAP measures and the reconciliation of these non-GAAP measures to GAAP are detailed in our earnings release, which is posted on our Investor Relations page of our website. Segment net income was down across the board versus the immediately preceding Q3, due to a combination of more muted volatility in the commodities of the older tariff activity in Q3 as well as reduced margins in the debt capital markets due to a flat yield curve and tough conditions in Argentina, which affected both Debt Capital Markets and Asset Management businesses. Our net earnings for the quarter were $15.7 million or $0.81 per share, roughly in line with the adjusted results a year ago. ROE for the quarter was 12.7% after the two preceding quarters of exceptionally strong 20% ROEs. On an annual basis, operating revenues were a record $975.8 million, up 24% from a year ago. Every one of our segments achieved record revenues for the year over the back of generally strong transactional volume increases. All of which we think are growing greater than industry growth implying increased market share across the board. Against the strong revenue growth, we are able to hold fixed cost to a 6% annual increase, driving operational leverage…

Thank you, Sean. I'll be referring to slide in the information we have made available as part of the webcast, specifically starting with slide number 3, which shows our performance over the last five fiscal quarters. The top of Slide 3 of the chart which depicts our reported net income, earnings per share and ROE over the last five quarters or the bottom of the slide shows the same metrics on an adjusted basis removing the effective tax reform in the previously disclosed bad debt on physical coal. The only difference within our GAAP net income and adjusted net income for the fourth quarter of fiscal 2018 was a $300,000 reduction of income tax related to tax reform. Moving on to Slide number 4, which represents a bridge between operating revenues for the fourth quarter and last year to the current fiscal fourth quarter, operating revenues were $243.2 million in the current period, up $38.1 million, or 19% versus the prior year. As shown, all operating segments showed revenue growth over the prior year led by our Clearing & Execution Services segment which added $16.7 million or 25% in operating revenues driven by a $17 million increase in Exchange-Traded revenues, which was offset slightly by lower FX Prime Brokerage revenues. The growth in Exchange-Traded revenues was driven by both a 27% increase in client volumes and a $3.9 million increase in interest income. Increase in interest income was a result of an increase in short-term interest rates and a 17% increase in average client equity to $1.3 billion in this segment. Our Securities segment added $11.4 million or 31% in operating revenues versus the prior year. Our Equity Capital Markets business which we have previously referred to as Equity Market-Making increased operating revenues by $9.5 million or 74% versus the…

Thanks, Bill. It is clear that our core earnings have been accelerating for a number of quarters now as we have scaled our business by increasing our capabilities and growing our client footprint which has driven operational leverage to our bottom-line and to our ROE. Our business model offers vertically integrated execution and clearing in all major asset classes and markets for our clients. This is a unique and increasingly valuable platform in the mid market space because of the large clients to efficiently access many markets and asset classes through one provider, which is generally only available with bulge bracket banks. This is has drawn clients to our platform as consolidation continues and enables us to create sticky client relationships and increase clearing and execution revenues while also growing our client balances. We continue to see gains in market share and attract new clients that are underserved by large global banks capitalizing on our position as one of the few publicly listed mid-sized financial service companies offering our clients futures and options products through a well-capitalized independent FCM, structured products through our swap dealer and broker dealer. Management's emphasis is to remain laser-focused on our goal of becoming a best-in-class financial franchise by doing the following: Adding products and capabilities either organically or through disciplined acquisition to make us a counterparty of choice for commercial and institutional clients looking to access markets with efficient execution as well as post trade clearing, settlement and custody services. Two, aggressively expanding into client segments and geographies where we are underrepresented by acquiring suitable talent through recruitment or disciplined acquisition of teams. Three, improving our ability to extend our growing product and capability set by more tightly integrating our offerings, platforms, marketing strategy and client experience to make the relationship more meaningful for the clients, stickier for the company and more valuable for both of us. Next, investing in client-facing technology through an efficient mix of proprietary and industry standard platforms to better leverage our intellectual capital in driving revenue growth and providing clients an easier and more efficient access to our products and services. Investing in technology to create a scalable execution and clearing infrastructure with cost per transaction are decreasing in absolute terms. Also create a robust environment to dynamically allocate capital and resources to maximize the long-term value for our shareholders. And lastly, continue to invest in our risk management to ensure that we achieve best risk adjusted returns for our business. We believe that we have made significant strides in all of these objectives over the last couple of years as evidenced by our strong financial performance and we are becoming increasingly recognized as the broker and counterparty of choice globally. We are well-positioned and we are excited about the prospects ahead. We also are very pleased to have achieved some important milestones during the 2018 year. With that, I'd like to hand back to the operator and open the question-and-answer session. Operator?

Thank you. [Operator Instructions] Our first question comes from Russell Mollen from Nine Ten Capital. You may now ask your question.

The rating of business from S&P is BB minus. Where -- is that where you guys thought it would come in at and where you hope it to be or where would you like it to be, one year, three years into future?

Okay, so obviously this -- the whole ratings game is new to us. So we wished through an extensive process with BMO and they did a great job of educating us how this all works as did the various rating agencies. We obviously did this in anticipation of our debt offerings and that was what -- that's what induced us to do this. I think just before I start this, these ratings are quite complicated and I'm certainly not an expert on how the rating agencies look at all the factors, although they did try to educate us on this. I think the thing you should realize is what was rated was the issuer which is a holding company entity, so they rates both the issuer and then they rated the prospect of debt issue, okay? Now the debt issue did not happen. So that's gone away. So we're left with the issuer rating, which is a holding company. And bear in mind the holding company is structurally subordinated to all of operating entities. So within that context that rating was done, right? We would probably get a different rating or maybe the same, I'm not sure, if we rated operating entities, because that's where the assets actually sit. So there's sort of a structure subordinated issue. Honestly, I -- we spoke to a variety of banks before we headed down this path and we ended up with a higher rating than we anticipated. So we were pleased with the results of the rating. And honestly I think as I structurally subordinated hold co, I don't think that there will be material change to that rating upwards and hopefully not downwards. That would be my anticipation.

So in regards to these recent events of all the nat gas in this very public option group that went under, I guess how surprised or how worried were you and are you with that whole situation? I mean I know you've kind of gave a bunch of detail on that in your prepared remarks but just kind of wanted to get a little bit more.

Well, as I said in my comments, in the financial markets, doing what we do, we always have to consider and always do consider the impact of highly improbable outlier events. I mean, if anyone is not doing that, I think they're mistaken in our industry. So we spend a lot of time looking at these outlier events. And oftentimes when we lay out kind of how we value that outlier events, we get a lot of incredulity from the clients and they -- and the front office people, because I believe we've been way too conservative, and that sequence of events can never happen. But as we've seen, they do happen. So we're very cognizant, I mean I would say that this was something we measured, I think the outlier events for the customer was sort of in the range of what we expected as a Black Swan event, we looked at that outcome and we looked at 300 accounts from highly qualified people who had financial means, and we looked at the collateral pool and supported that event. And in our conclusion, that was kind of acceptable to us. Now, we think we have a strong case to collect that money. I mean, obviously, lawyers have got involved and it's become very public. So we'll have to see how that goes. But if we had to sort of calibrate our business to take single-digits of millions outlier risk, that means, that we could almost not do any business with any of our clients, right? So we've got to balance sort of these extreme events, the probability that may happen, that can happen and try and make sure that we sort of balance all of that out with the rational sort of risk reward type approach to our business.…

Yes. It makes a lot of sense. Thank you.

Okay, alright. Thank you.

Thank you. [Operator Instructions]. I'm not showing any additional questions. I would now like to turn the call back to Sean O'Connor for any closing remarks.

Alright. So thanks everyone for your attendance and all that leaves me to do is to wish everyone happy holidays, enjoy the family time and we'll see you early next year. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may all disconnect. Everyone, have a great day.