Marex Group plc Announces Third Quarter 2024 Results
NEW YORK, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Marex Group plc ((‘Marex' or the ', Group', NASDAQ:MRX), a diversified global financial services platform, announces strong results for the third quarter (Q3) and nine months (9M) ended 30 September 2024, and upgraded outlook for the full year.
Financial Highlights
Financial Highlights: ($m)
3 months ended 30 September 2024
3 months ended 30 September 2023
Change1
9 months ended 30 September 2024
9 months ended 30 September 2023
Change1
Reported
Revenue
391.2
296.6
32%
1,179.1
919.0
28%
Profit Before Tax
79.0
47.6
66%
218.0
157.1
39%
Profit Before Tax Margin (%)
20%
16%
400 bps
18%
17%
100 bps
Profit After Tax
58.4
32.4
80%
161.3
113.2
42%
Profit After Tax Margin (%)
15%
11%
400 bps
14%
12%
200 bps
Return on Equity (%)
25%
18%
700 bps
25%
21%
400 bps
Basic Earnings per Share ($)2
0.78
0.44
77%
2.20
1.57
40%
Diluted Earnings per Share ($)2
0.73
0.41
78%
2.05
1.47
39%
Adjusted3
Operating Profit3
80.5
52.9
52%
239.7
177.4
35%
Operating Profit Margin (%)3
21%
18%
300 bps
20%
19%
100 bps
Operating Profit after Tax Attributable to Common Equity3
57.5
34.6
66%
173.2
124.7
39%
Return on Operating Profit after Tax Attributable to Common Equity (%)3
28%
22%
600 bps
31%
27%
400 bps
Adjusted Earnings per Share($)2,3
0.82
0.53
55%
2.51
1.90
32%
Adjusted Diluted Earnings per Share ($)2,3
0.76
0.49
55%
2.35
1.78
32%
% Change is calculated on numbers presented to the nearest tenth of a million.
Weighted average number of shares have been restated as applicable for the Group's reverse share split (refer to Appendix 1 for further detail).
These are non-IFRS financial measures. See Appendix 1 "Non-IFRS Financial Measures and Key Performance Indicators" for additional information and for a reconciliation of each such IFRS measure to its most directly comparable non-IFRS measure.
Delivered strong performance in Q3 2024: Continued positive momentum across all business segments during the third quarter supported by a positive market backdrop and continued growth in exchange volumes in both commodities and financials.
Upgraded guidance for full year 2024: Due to the strong performance in the third quarter, we anticipate our Adjusted Operating Profit to be approximately $300 million to $305 million for the full year ending 31 December 2024 (previously $280 million to $290 million).
Strategic growth investments: We announced four investments in line with our strategy to expand our geographic footprint and build out our product capabilities. We are expanding our footprint in the Middle East through the acquisition of Aarna Capital and our FX capabilities through the acquisition of Hamilton Court Group. We are also investing to further build out our environmental products capabilities through the acquisition of biogas specialist, Dropet and a carbon credit partnership with Key Carbon.
Successful secondary equity placement: Upsized deal resulted in existing shareholders placing 9.7 million shares with institutional shareholders in October 2024, increasing public float to approximately 52%.
Prudent approach to capital and funding: Successfully issued $600 million 5-year senior unsecured notes, further diversifying our funding sources and increasing our liquidity headroom, to support future growth of our franchise and growing our client base, particularly in clearing and prime services.
Dividend: Dividend of $0.14 per share to be paid in the fourth quarter of 2024.
Ian Lowitt, Group Chief Executive Officer, commented:
"This has been another strong quarter for Marex as we continue to deliver double digit revenue growth in all our business segments, thanks to continued positive momentum across all our businesses and supportive market conditions. Our strategy to bring new clients to our platform and deepen existing client relationships by offering additional capabilities has delivered significant growth and increases our confidence in our ability to deliver through various market conditions including a lower interest rate environment.
In the last few months, we have invested to further diversify our global platform, expanding our capabilities and geographic footprint, in line with our strategy to add new clients and increase the services we can provide them. We have continued to grow our capital base and diversify our funding sources with a successful senior debt issuance, and we were pleased to see strong investor demand for the recent share placement launched by our shareholders, which increased liquidity in our stock.
Thanks to the strong performance so far this year and continued momentum across our business segments, we have increased our guidance for the full year."
Conference Call Information:Marex's management will host a conference call to discuss the Group's financial results today, 7 November 2024, at 9am Eastern Time. A live webcast of the call can be accessed from Marex's Investor Relations website. An archived version will be available on the website after the call. To participate in the Conference Call, please register at the link here https://edge.media-server.com/mmc/p/t9jtdki9Enquiries please contact:MarexInvestors - Robert Coates +44 7880 486 329 / - Nicola Ratchford, Marex / FTI Consulting US / UK+ 44 7786 548 889 / / +1 919 609 9423 / +44 7776 111 222 |
Financial Review
The following table presents summary financial results and other data as of the dates and for the periods indicated:
Summary Financial Results
3 months ended 30 September 2024
3 months ended 30 September 2023
9 months ended 30 September 2024
9 months ended 30 September 2023
$m
$m
Change
$m
$m
Change
– Net commission income
202.8
176.3
15%
630.1
523.5
20%
– Net trading Income
121.6
87.4
39%
364.3
299.9
21%
– Net interest income
63.5
31.4
102%
164.5
91.4
80%
– Net physical commodities income
3.3
1.5
120%
20.2
4.2
381%
Revenue
391.2
296.6
32%
1,179.1
919.0
28%
Front office costs
(214.8)
(167.3)
28%
(649.7)
(502.5)
29%
Control and support costs
(92.5)
(71.1)
30%
(276.0)
(218.1)
27%
Recovery/(provision) for credit losses
0.6
(0.2)
(400)%
2.8
(4.7)
(160)%
Depreciation and amortisation
(5.6)
(5.5)
2%
(18.6)
(19.7)
(6)%
Other Income and share of results of associates
1.6
0.4
300%
2.1
3.4
(38)%
Adjusted Operating Profit1
80.5
52.9
52%
239.7
177.4
35%
Adjusted Operating Profit Margin1
21%
18%
300 bps
20%
19%
100 bps
Adjusting items2
(1.5)
(5.3)
(72)%
(21.7)
(20.3)
7%
Reported Profit Before Tax
79.0
47.6
66%
218.0
157.1
39%
Tax
(20.6)
(15.2)
36%
(56.7)
(43.9)
29%
Reported Profit After Tax
58.4
32.4
80%
161.3
113.2
42%
These are non-IFRS financial measures. See Appendix 1 "Non-IFRS Financial Measures and Key Performance Indicators" for additional information and for a reconciliation of each such IFRS measure to its most directly comparable IFRS measure.
Refer to Appendix 1 "Non-IFRS Financial Measures and Key Performance Indicators" for additional information.
Performance for the three months ended 30 September 2024
Reported Profit Before Tax increased by $31.4m, 66%, to $79.0m for Q3 2024, from $47.6m in the same period of 2023 reflecting strong revenue growth at improved operating margins.
Revenue grew by 32% to $391.2m in Q3 2024 from $296.6m in the same period in 2023, reflecting a combination of favourable market conditions, strong underlying growth and the benefits of our acquisitions.
Net commission income increased by 15% to $202.8m in Q3 2024 from $176.3m in Q3 2023. The increase occurred mainly in Agency and Execution, which increased by 21% to $141.9m in Q3 2024 from $117.6m in Q3 2023 reflecting increased customer activity in Energy, as well as in Securities primarily driven by our acquisition of Cowen's prime services business in December 2023.
Net trading income rose by 39% to $121.6m in Q3 2024 from $87.4m for Q3 2023. This was driven by our Metals business within our Market Making segment, where market conditions normalised but remained positive, and a comparatively subdued operating environment in Q3 2023. Net trading income in Hedging and Investment Solutions also increased by 12% to $45.7m in Q3 2024 as demand grew for commodity hedging and financial product services, and by 60% to $20.3m in Agency and Execution driven by increased activity in Capital Markets business.
Net interest income increased by 102% to $63.5m for Q3 2024 from $31.4m for Q3 2023. This growth reflected the benefit of higher balances, re-investment of maturing assets at higher yields and the acquisition of Cowen's prime services business in December 2023.
Net physical commodities income increased by 120% to $3.3m for Q3 2024 from $1.5m for Q3 2023. This increase was primarily due to an increase in sales volumes from physical recycled metal and physical oil sales, driven by growth in our recycled metals business and the addition of physical oil broking capabilities.
Front office costs increased by 28% to $214.8m in Q3 2024, largely reflecting a 16% increase in average front office headcount driven by recent acquisitions, as well as organic growth.
Control and Support costs increased 30% to $92.5m in Q3 2024, primarily reflecting investment in our Finance, Risk and Compliance functions, to ensure we continually invest in our systems and processes to support future sustainable growth, as well as integrating additional Control & Support employees as part of recent acquisitions.
Adjusting items reduced by 72% to $1.5m in Q3 2024 from $5.3m in Q3 2023. These costs are primarily related to corporate activities and are recognised within our corporate segment. Adjusting items reduced mainly due to the non-recurrence of costs incurred in preparation for and associated with our successful IPO and owner fees in the prior period.
As a result of the revenue and cost trends noted above, Adjusted Operating Profit increased 52% to $80.5m for Q3 2024 from $52.9m in Q3 2023 and Adjusted Operating Profit Margins improved to 21% in Q3 2024, up from 18% in Q3 2023. In addition, as a result of the revenue, cost trends and adjusting items noted above, Profit After Tax Margins increased to 15% in Q3 2024 from 11% in Q3 2023.
Performance for the nine months ended 30 September 2024
Reported Profit Before Tax for the nine months ended 30 September, 2024 ("9M 2024") increased 39% to $218.0m from $157.1m in the nine months ended 30 September 2023 ("9M 2023") reflecting continued strong year-on-year performance.
Year to date revenue grew by 28% to $1179.1m in 9M 2024 from $919.0m in 9M 2023, reflecting a combination of favourable market conditions, strong underlying growth and the benefits of our acquisitions.
Revenue growth was driven by Net commission income which increased by 20% to $630.1m in 9M 2024 from $523.5m in 9M 2023. The increase occurred mainly in Agency and Execution, which increased by 28%, reflecting increased customer activity in Energy, as well as from our acquisition of Cowen's prime services business. Net commission income also notably increased in our Clearing segment which increased by 7% versus 2023, driven by our Metals and Agriculturals businesses.
Net trading income rose by 21% to $364.3m in 9M 2024 from $299.9m in 9M 2023. This was driven by our Hedging and Investment Solutions business, which increased by 28% to $157.7m, as demand grew for commodity hedging and financial product services. Net trading income was also significantly higher within our Market Making segment, primarily from Metals reflecting exceptional market conditions and market sentiment in the second quarter across Copper, Aluminium and Nickel, following revised guidance on Russian metals from the LME.
Net interest income increased by 80% to $164.5m in 9M 2024 from $91.4m in 9M 2023. This growth reflected the benefit of higher average investment returns, re-investment of maturing assets at higher yields and the acquisition of Cowen's prime services business in December 2023.
3 months ended 30 September 2024
3 months ended 30 September 2023
Change
9 months ended 30 September 2024
9 months ended 30 September 2023
Change
Average Fed Funds %
5.27%
5.25%
2bps
5.31%
4.92%
39 bps
Average daily balances ($bn)1
13.8
11.2
2.6
12.9
12.9
—
Interest income ($m)
187.2
141.2
46.0
518.7
392.3
126.4
Interest paid out ($m)
(69.3)
(61.7)
(7.6)
(195.3)
(173.1)
(22.2)
Interest on balances ($m)
117.9
79.5
38.4
323.4
219.2
104.2
Net Yield on balances %
3.4%
2.8%
60 bps
3.3%
2.3%
100 bps
Average notional debt securities ($bn)
2.7
2.3
0.4
2.6
2.1
0.5
Yield on debt securities %
8.0%
8.4%
(40 bps)
8.1%
8.1%
—
Interest expense ($m)
(54.4)
(48.1)
(6.3)
(158.9)
(127.8)
(31.1)
Net Interest Income ($m)
63.5
31.4
32.1
164.5
91.4
73.1
Average daily balances are calculated using an average of the daily holdings in exchanges, banks and other investments over the period. Previously, average balances were calculated as the average month end amount of segregated and non-segregated client balances that generated interest income over a given period.
Net physical commodities income increased by 381% to $20.2m in 9M 2024 from $4.2m for 9M 2023. This increase was primarily due to an increase in sales volumes from physical recycled metal and physical oil sales, largely driven by growth in our recycled metals business and the addition of physical oil broking capabilities.
Front office costs represent staff, systems and infrastructure costs associated with running our revenue generating operations. These costs increased 29% to $649.7m in 9M 2024, largely reflecting a 25% increase in average front office headcount driven by recent acquisitions, as well as organic growth.
Control and Support costs primarily reflect staff and property related costs, along with professional fees and other administrative expenses associated with the support functions. These costs increased 27% to $276.0m in 9M 2024, primarily reflecting investment in our Finance, Risk and Compliance functions, to ensure we continually invest in our systems and processes to support future sustainable growth, as well as integrating additional Control and Support employees as part of recent acquisitions. Total control and support average FTE grew 23% to 1,063 for 9M 2024.
Adjusting items increased by 7% to $21.7m for 9M 2024 from $20.3m the year earlier. These costs are primarily related to corporate activities and are recognised within our corporate segment. Adjusting items increased mainly due to costs incurred in preparation for and associated with our successful IPO, including accounting treatment for growth shares, as well as activities related to our shareholders representing dividend like contributions made to participants within share based payment schemes and higher amortisation of acquired brands and customer lists, these were partly offset by the non-recurrence of goodwill impairment recognised in 2023 and lower owner fees reflecting the shorter period of ownership.
As a result of the revenue and cost trends noted above, Adjusted Operating Profit increased 35% to $239.7m in 9M 2024 and Adjusted Operating Profit Margins improved to 20% in 9M 2024, from 19% in 9M 2023. In addition, as a result of the revenue, cost trends and adjusting items noted above, Profit after Tax Margins increased to 14% in 9M 2024 from 12% in 9M 2023.
Segmental performance
Clearing
Marex provides clearing services across the range of energy, commodity and financial markets. We act as principal for our clients and provide access to 60 exchanges globally.
Performance for the three months ended 30 September 2024
Our Clearing business performed well in Q3 2024, and Revenue increased 22% to $116.7m, up from $95.6m in Q3 2023. This was driven by net interest income which rose by 54% to $54.7m in Q3 2024 from $35.6m in Q3 2023 primarily reflecting higher average balances.
Adjusted Operating Profit increased by 32% to $62.4m in Q3 2024, from $47.2m in Q3 2023. Adjusted Operating Profit Margins which have increased by 400bps to 53% from 49% in the prior period.
Performance for the nine months ended 30 September 2024
Our Clearing business performed well in 9M 2024, benefiting from higher levels of client activity on our platform, with 826m contracts cleared in 9M 2024 which is 31% higher than in 9M 2023.
Revenue increased 18% to $341.6m in 9M 2024, up from $289.5m in 9M 2023, driven by net interest income which rose by 35% to $141.7m in 9M 2024 from $105.0m in 9M 2023 reflecting the benefit of higher interest rates and higher average balances. Net commission income also grew by 7% to $197.4m. Revenue growth was generated from our mature businesses, notably in Metals thanks to favourable market conditions in the second quarter, as well as benefiting from our growth initiatives, notably in Australia, Singapore and in our Prime Services offerings.
Revenue growth was supported by investment in staff with average headcount increasing by 12% to 299.
Adjusted Operating Profit increased by 24% to $181.4m for 9M 2024, from $145.8m in 9M 2023. Adjusted Operating Profit Margins have increased by 300bps to 53% from 50% in the prior period.
3 months ended 30 September 2024
3 months ended 30 September 2023
9 months ended 30 September 2024
9 months ended 30 September 2023
$m
$m
Change
$m
$m
Change
Net commission income
61.8
59.6
4%
197.4
183.7
7%
Net interest income
54.7
35.6
54%
141.7
105.0
35%
Net trading income
0.2
0.4
(50%)
2.5
0.8
213%
Revenue
116.7
95.6
22%
341.6
289.5
18%
Front office costs
(36.6)
(31.2)
17%
(109.0)
(87.9)
24%
Control and support costs
(17.6)
(17.2)
2%
(51.0)
(52.0)
(2%)
Recovery/(provision) for credit losses
—
—
—%
0.1
(3.7)
(103%)
Depreciation and amortisation
(0.1)
(0.1)
—%
(0.3)
(0.2)
50%
Other Income and share of results of associates
—
0.1
n.m.3
—
0.1
