- Revenue of $207.6 million, up 6%
from $196.3 million in Q3/19
- Diluted earnings per share of $1.23, up 13% from $1.09 in Q3/19
- Adjusted diluted earnings per share of $1.40, up 12% from $1.25 in Q3/19
- Cash flows from operating activities of $101.7 million, up 5% from $96.9 million in Q3/19
TORONTO, Nov. 4, 2020 /CNW/ - TMX Group Limited (TSX: X)
("TMX Group") today announced results for the third quarter
ended September 30, 2020.
Commenting on the third quarter of 2020 and the company's
outlook, John McKenzie, Chief Executive Officer of TMX Group,
said:
"TMX's third quarter results reflect the continued strength in
our business model, and the value of our consistent, strategic
focus on diversifying revenue streams. Looking ahead, as the
world and our industry continues to navigate each phase of the
ongoing COVID-19 pandemic, we are committed to working alongside
our clients and diverse stakeholder community to ensure that our
world class markets remain responsive, innovative and competitive
into the future. Continuing on into the fourth quarter of the
year, our enterprise-wide focus is on advancing the key tenets of
our long-term global growth strategy and generating sustainable
growth for our shareholders."
Commenting on performance in the third quarter of 2020,
Frank Di Liso, interim Chief
Financial Officer of TMX Group, said:
"As we work through uncertain market conditions, TMX Group
continues to deliver solid revenue and earnings growth highlighting
our streamlined operating model. Increased capital markets
activity during the quarter, including a surge in issuer financings
on Toronto Stock Exchange and TSX Venture Exchange and higher
equities trading and clearing volumes, drove a 6% increase in
overall revenue compared with the third quarter of 2019."
RESULTS OF OPERATIONS
Non-IFRS Financial Measures
Adjusted earnings per share, adjusted diluted earnings per share
and adjusted net income are non-IFRS measures and do not have
standardized meanings prescribed by IFRS and are, therefore,
unlikely to be comparable to similar measures presented by other
companies. 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. These adjustments include amortization
of intangibles related to acquisitions, strategic re-alignment
expenses, gain on sale of interest in Bermuda Stock Exchange, transaction related
costs, change in net deferred income tax liabilities resulting from
decrease in Alberta corporate
income tax rate, increase in deferred income tax liabilities
relating to a change in the U.K. tax rate, net litigation
settlement costs and reduction in commodity tax provision.
Management uses these measures, and excludes certain items, because
it believes doing so results in a more effective analysis of
underlying operating and financial performance, including, in some
cases, our ability to generate cash. Excluding these items
also enables comparability across periods. The exclusion of
certain items does not imply that they are non-recurring or not
useful to investors.
Quarter ended September 30, 2020 (Q3/20) Compared with
Quarter ended September 30, 2019 (Q3/19)
The information below reflects the financial statements of TMX
Group for Q3/20 compared with Q3/19. Certain comparative
information has been reclassified in order to conform with the
financial presentation adopted in the current year.
(in millions of
dollars, except per share amounts)
|
Q3/20
|
Q3/19
|
$
increase
|
%
increase
|
Revenue
|
$207.6
|
$196.3
|
$11.3
|
6%
|
Operating
expenses
|
107.2
|
104.7
|
2.5
|
2%
|
Income from
operations
|
100.4
|
91.6
|
8.8
|
10%
|
Net income
|
70.0
|
61.7
|
8.3
|
13%
|
Adjusted net
income1
|
80.0
|
70.9
|
9.1
|
13%
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic
|
1.24
|
1.10
|
0.14
|
13%
|
Diluted
|
1.23
|
1.09
|
0.14
|
13%
|
Adjusted Earnings per
share2
|
|
|
|
|
Basic
|
1.41
|
1.26
|
0.15
|
12%
|
Diluted
|
1.40
|
1.25
|
0.15
|
12%
|
|
|
|
|
|
Cash flows from
operating activities
|
101.7
|
96.9
|
4.8
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 See
discussion under the heading "Non-IFRS Financial
Measures".
|
2 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Net Income and Earnings per Share
Net income in Q3/20 was $70.0
million, or $1.24 per common
share on a basic and $1.23 on a
diluted basis, compared with a net income of $61.7 million, or $1.10 per common share on a basic and
$1.09 on a diluted basis, for
Q3/19. The increase in net income and earnings per share from
Q3/19 to Q3/20 was largely driven by an increase in revenue
somewhat offset by an increase in operating expenses. There
was also an increase in our share of income from BOX. The
increase in diluted earnings per share was somewhat offset by an
increase in the number of weighted-average common shares
outstanding in Q3/20 compared with Q3/19.
Adjusted Earnings per Share3 Reconciliation
for Q3/20 and Q3/19
The following is a reconciliation of earnings per share to
adjusted earnings per share:
|
Q3/20
|
Q3/19
|
(unaudited)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Earnings per
share
|
$1.24
|
$1.23
|
$1.10
|
$1.09
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
0.17
|
0.17
|
0.16
|
0.16
|
Transaction related
costs4
|
0.02
|
0.02
|
—
|
—
|
Reduction in commodity
tax provision
|
(0.02)
|
(0.02)
|
—
|
—
|
Adjusted earnings per
share5
|
$1.41
|
$1.40
|
$1.26
|
$1.25
|
Weighted average
number of common shares outstanding
|
56,552,578
|
57,080,780
|
56,121,234
|
56,757,236
|
Adjusted diluted earnings per share increased by 12% from
$1.25 in Q3/19 to $1.40 in Q3/20 largely driven by higher revenue,
somewhat offset by higher operating expenses. There was
also an increase in our share of income from BOX. The
increase in adjusted diluted earnings per share was somewhat
reduced by an increase in the number of weighted-average common
shares outstanding in Q3/20 compared with Q3/19.
|
|
|
|
|
|
|
|
|
|
|
|
3 See
discussion under the heading "Non-IFRS Financial
Measures".
|
4 Includes
costs related to the AST Canada transaction in 2020. Please refer
to "Initiatives and Accomplishments" in Q3/20 MD&A for more
details.
|
5 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Adjusted Net Income6 Reconciliation for Q3/20
and Q3/19
The following is a reconciliation of net income to adjusted net
income:
(in millions of
dollars)
(unaudited)
|
Q3/20
|
Q3/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Net income
|
$70.0
|
$61.7
|
$8.3
|
13%
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
9.5
|
9.2
|
0.3
|
3%
|
Transaction related
costs7
|
1.4
|
—
|
1.4
|
n/a
|
Reduction in commodity
tax provision
|
(0.9)
|
—
|
(0.9)
|
n/a
|
Adjusted net
income8
|
$80.0
|
$70.9
|
$9.1
|
13%
|
Adjusted net income increased by 13% from $70.9 million in Q3/19 to $80.0 million in Q3/20 largely driven by higher
revenue, somewhat offset by higher operating expenses.
There was also an increase in our share of income from BOX.
|
|
|
|
|
|
|
|
|
|
|
|
6 See
discussion under the heading "Non-IFRS Financial
Measures".
|
7 Includes
costs related to the AST Canada transaction in 2020. Please refer
to "Initiatives and Accomplishments" in Q3/20 MD&A for more
details.
|
8 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Revenue
(in millions of
dollars)
|
Q3/20
|
Q3/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Capital
Formation
|
$50.2
|
$43.7
|
$6.5
|
15%
|
Equities and Fixed
Income Trading and Clearing
|
52.2
|
45.3
|
6.9
|
15%
|
Derivatives Trading
and Clearing
|
24.9
|
33.5
|
(8.6)
|
(26)%
|
Global Solutions,
Insights and Analytics
|
80.3
|
73.6
|
6.7
|
9%
|
Other
|
—
|
0.2
|
(0.2)
|
(100)%
|
|
$207.6
|
$196.3
|
$11.3
|
6%
|
Revenue was $207.6 million in
Q3/20, up $11.3 million or 6% from
$196.3 million in Q3/19 attributable
to increases in revenue from Capital Formation, Equities and
Fixed Income Trading and Clearing as well as Global
Solutions, Insights and Analytics offset by a decrease in
Derivatives Trading and Clearing revenue.
Operating expenses
(in millions of
dollars)
|
Q3/20
|
Q3/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Compensation and
benefits
|
$57.0
|
$55.8
|
$1.2
|
2%
|
Information and
trading systems
|
13.9
|
13.3
|
0.6
|
5%
|
Selling, general and
administration
|
15.9
|
16.1
|
(0.2)
|
(1)%
|
Depreciation and
amortization
|
20.4
|
19.5
|
0.9
|
5%
|
|
$107.2
|
$104.7
|
$2.5
|
2%
|
Operating expenses in Q3/20 were $107.2
million, up $2.5 million or
2%, from $104.7 million in
Q3/19. The increase in costs was primarily attributable to
higher short term employee performance incentive costs and
increased headcount, higher software licensing and
information technology professional services costs, higher
consulting fees, a write-off of leasehold improvement costs as well
as increased costs related to managing our business during the
COVID-19 pandemic. In addition, we incurred $1.4 million (2
cents per basic and diluted share) in transaction related
costs related to the proposed AST Canada transaction. There was
also an increase in recoverable costs related to CDS.
Recoverable costs of $1.2 million
related to CDS's clearing operation, netted in Q3/19, were included
in both CDS revenue and Selling, general and administration
expenses in Q3/20. The increases were somewhat offset by a
decline in long term employee performance incentive plan costs as
well as travel and entertainment expenses. In addition, there
was a reduction of $1.3 million in a
commodity tax provision (2 cents per
basic and diluted share), which reduced Selling, general and
administration expenses.
Additional Information
Income tax expense and effective tax
rate
Income Tax
Expense (in millions of dollars)
|
Effective Tax
Rate (%)
|
Q3/20
|
Q3/19
|
Q3/20
|
Q3/19
|
$25.2
|
$22.0
|
26%
|
26%
|
- There were no significant adjustments for Q3/20 or Q3/19,
and the effective tax rate was 26% for both periods.
Nine months ended September 30,
2020 Compared with Nine months ended September 30, 2019
The information below reflects the financial statements of TMX
Group for the nine months ended September
30, 2020 compared with the nine months ended September 30, 2019. Certain comparative
information has been reclassified in order to conform with the
financial presentation adopted in the current year.
(in millions of
dollars, except per share amounts)
|
Nine months
ended September
30, 2020
|
Nine months
ended September
30, 2019
|
$
increase
|
%
increase
|
Revenue
|
$645.6
|
$604.1
|
$41.5
|
7%
|
Operating
expenses
|
335.8
|
318.2
|
17.6
|
6%
|
Income from
operations
|
309.8
|
285.9
|
23.9
|
8%
|
Net income
|
207.9
|
200.1
|
7.8
|
4%
|
Adjusted net
income9
|
253.6
|
225.9
|
27.7
|
12%
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic
|
3.69
|
3.57
|
0.12
|
3%
|
Diluted
|
3.65
|
3.54
|
0.11
|
3%
|
Adjusted Earnings per
share10
|
|
|
|
|
Basic
|
4.50
|
4.02
|
0.48
|
12%
|
Diluted
|
4.44
|
3.99
|
0.45
|
11%
|
|
|
|
|
|
Cash flows from
operating activities
|
311.6
|
260.9
|
50.7
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
9 See
discussion under the heading "Non-IFRS Financial
Measures".
|
10 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Net Income and Earnings per Share
Net income in the nine months ended September 30, 2020 was $207.9 million, or $3.69 per common share on a basic and
$3.65 per common share on a diluted
basis, compared with a net income of $200.1
million, or $3.57 per common
share on a basic and $3.54 on a
diluted basis, for the nine months ended September 30, 2019. The increase in net
income reflected an increase in income from operations of
$23.9 million. The increase in
income from operations from the first nine months of September 30, 2019 to the first nine months of
September 30, 2020 was driven by an
increase in revenue of $41.5 million,
offset by an increase in operating expenses of $17.6 million. The increase in operating
expenses was largely attributable to net litigation settlement
costs of $12.4 million (16 cents per basic and diluted common share) in
Q2/20. There was also an increase in our share of
income from BOX.
The increase in net income and earnings per share was reduced by
significantly higher income tax expense, and a higher effective
income tax rate, in the nine months ended September 30, 2020 compared with the nine months
ended September 30, 2019.
- During the nine months ended September
30, 2020, there was a change in the U.K. corporate income
tax rate. This resulted in an increase in deferred income tax
liabilities and a corresponding increase in income tax expense of
$7.4 million, which reduced net
income.
- In the nine months ended September 30,
2019, the Alberta general
corporate income tax rate decreased. This change resulted in a
decrease in net deferred income tax liabilities and a corresponding
decrease in income tax expense of $4.3
million.
The increase in diluted earnings per share was somewhat reduced
by an increase in the number of weighted-average common shares
outstanding in the nine months ended September 30, 2020 compared with the nine months
ended September 30, 2019.
Adjusted Earnings per Share11 Reconciliation
for Nine months ended September 30,
2020 and Nine months ended September
30, 2019
The following is a reconciliation of earnings per share to
adjusted earnings per share:
|
Nine months
ended
September 30, 2020
|
Nine months ended
September 30, 2019
|
(unaudited)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Earnings per
share
|
$3.69
|
$3.65
|
$3.57
|
$3.54
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
0.51
|
0.50
|
0.50
|
0.50
|
Strategic re-alignment
expenses12
|
—
|
—
|
0.06
|
0.06
|
Net litigation
settlement costs
|
0.16
|
0.16
|
—
|
—
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
—
|
(0.04)
|
(0.04)
|
Transaction related
costs13
|
0.03
|
0.02
|
0.01
|
0.01
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
—
|
(0.08)
|
(0.08)
|
Increase in deferred
income tax liabilities relating to change in U.K. tax
rate
|
0.13
|
0.13
|
—
|
—
|
Reduction in commodity
tax provision
|
(0.02)
|
(0.02)
|
—
|
—
|
Adjusted earnings per
share14
|
$4.50
|
$4.44
|
$4.02
|
$3.99
|
Weighted average
number of common shares outstanding
|
56,406,341
|
56,955,817
|
55,990,577
|
56,489,973
|
Adjusted diluted earnings per share increased by 11% from
$3.99 in the nine months ended
September 30, 2019 to $4.44 in the nine months ended September 30, 2020 largely driven by increased
revenue, somewhat offset by higher operating expenses, excluding
net litigation settlement costs of $12.4
million. There was also an increase in our share of
income from BOX.
The increase in adjusted diluted earnings per share was somewhat
offset by an increase in the number of weighted-average common
shares outstanding in the nine months ended September 30, 2020 compared with the nine months
ended September 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
11 See
discussion under the heading "Non-IFRS Financial
Measures".
|
12 Please
refer to "Initiatives and Accomplishments - Strategic re-alignment"
in 2019 MD&A for more details.
|
13
Includes costs related to the AST Canada transaction in 2020 and
costs related to the acquisition of Visotech in 2019. Please refer
to "Initiatives and Accomplishments" in Q3/20 MD&A and 2019
MD&A for more details.
|
14 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Adjusted Net Income15 Reconciliation for Nine
months ended September 30, 2020 and
Nine months ended September 30,
2019
The following is a reconciliation of net income
to adjusted net income:
(in millions of
dollars)
(unaudited)
|
Nine
months
ended
September
30, 2020
|
Nine months
ended September
30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Net income
|
$207.9
|
$200.1
|
$7.8
|
4%
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
28.7
|
28.1
|
0.6
|
2%
|
Strategic re-alignment
expenses16
|
—
|
3.4
|
(3.4)
|
(100)%
|
Net litigation
settlement costs
|
9.1
|
—
|
9.1
|
n/a
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
(2.0)
|
2.0
|
(100%)
|
Transaction related
costs17
|
1.4
|
0.6
|
0.8
|
133%
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
(4.3)
|
4.3
|
(100%)
|
Increase in deferred
income tax liabilities relating to change in U.K. tax
rate
|
7.4
|
—
|
7.4
|
n/a
|
Reduction in commodity
tax provision
|
(0.9)
|
—
|
(0.9)
|
n/a
|
Adjusted net
income18
|
$253.6
|
$225.9
|
$27.7
|
12%
|
Adjusted net income increased by 12% from $225.9 million in the nine months ended
September 30, 2019 to $253.6 million in the nine months ended
September 30, 2020 largely driven by
increased revenue, somewhat offset by higher operating expenses,
excluding net litigation settlement costs of $12.4 million. There was also an increase
in our share of income from BOX.
|
|
|
|
|
|
|
|
|
|
|
|
15 See
discussion under the heading "Non-IFRS Financial
Measures".
|
16 Please
refer to "Initiatives and Accomplishments - Strategic re-alignment"
in 2019 MD&A for more details.
|
17
Includes costs related to the AST Canada transaction in 2020 and
costs related to the acquisition of Visotech in 2019. Please refer
to "Initiatives and Accomplishments" in Q3/20 MD&A and 2019
MD&A for more details.
|
18 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Revenue
(in millions of
dollars)
|
Nine months
ended September
30, 2020
|
Nine months
ended September
30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Capital
Formation
|
$138.4
|
$138.1
|
$0.3
|
0%
|
Equities and Fixed
Income Trading and Clearing
|
169.9
|
142.4
|
27.5
|
19%
|
Derivatives Trading
and Clearing
|
95.4
|
99.9
|
(4.5)
|
(5)%
|
Global Solutions,
Insights and Analytics
|
241.1
|
223.8
|
17.3
|
8%
|
Other
|
0.8
|
(0.1)
|
0.9
|
900%
|
|
$645.6
|
$604.1
|
$41.5
|
7%
|
Revenue was $645.6 million in the
nine months ended September 30, 2020,
up $41.5 million or 7% compared with
$604.1 million in the nine months
ended September 30, 2019 attributable
to increases in revenue from Capital Formation, Equities and
Fixed Income Trading and Clearing as well as Global
Solutions, Insights and Analytics offset by a decrease in
Derivatives Trading and Clearing revenue.
Operating expenses
(in millions of
dollars)
|
Nine months
ended September
30, 2020
|
Nine months
ended September
30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Compensation and
benefits
|
$168.4
|
$160.9
|
$7.5
|
5%
|
Information and
trading systems
|
39.9
|
38.0
|
1.9
|
5%
|
Selling, general and
administration
|
67.8
|
55.5
|
12.3
|
22%
|
Depreciation and
amortization
|
59.7
|
59.2
|
0.5
|
1%
|
Strategic
re-alignment expenses
|
—
|
4.6
|
(4.6)
|
(100)%
|
|
$335.8
|
$318.2
|
$17.6
|
6%
|
Operating expenses in the nine months ended September 30, 2020 were $335.8 million, up $17.6
million or 6%, from $318.2
million in the nine months ended September 30, 2019. The increase in costs
was primarily attributable to net litigation settlement costs of
$12.4 million (16 cents per basic and diluted shares) included
within Selling, general and administration expenses in
Q2/20. There were higher costs related to our short
term employee performance incentive plan and increased headcount,
software licensing and information technology professional
services, a write-off of leasehold improvements, bad debt expense
as well as increased costs related to managing our business during
the COVID-19 pandemic. In addition, we incurred $1.4 million (3
cents per basic and 2 cents
per diluted share) in transaction related costs related to the
proposed AST Canada transaction. There was also an increase
in recoverable costs related to CDS. Recoverable costs of
$4.2 million related to CDS's
clearing operation, netted in the nine months ended September 30, 2019, were included in both CDS
revenue and Selling, general and administration expenses in
the nine months ended September 30,
2020.
The increases were somewhat offset by a decline in long term
employee performance incentive plan costs, travel and entertainment
expenses, consulting fees and marketing costs. There
was also a reduction of $1.3
million in a commodity tax provision (2 cents per basic and diluted share), which
reduced Selling, general and administration expenses.
Lastly, there were Strategic re-alignment expenses of
$4.6 million in the nine months ended
September 30, 2019 with no similar
costs in the nine months ended September 30,
2020.
Additional Information
Income tax expense and effective tax
rate
Income Tax
Expense (in millions of dollars)
|
Effective Tax
Rate (%)
|
Nine months
ended
September 30, 2020
|
Nine months ended
September 30, 2019
|
Nine months
ended
September 30, 2020
|
Nine months ended
September 30, 2019
|
$83.7
|
$64.1
|
29%
|
24%
|
Excluding adjustments, primarily related to the items noted
below, the effective tax rate would have been approximately 26% for
both the nine months ended September 30,
2020 and the nine months ended September 30, 2019.
2020
- In the nine months ended September 30,
2020, there was an increase in deferred income tax
liabilities and a corresponding increase in income tax expense of
$7.4 million relating to the U.K.
corporate income tax rate. In Q1/20, it was announced that the U.K.
corporate income tax rate would not decline as previously
anticipated; therefore, we were required to revalue deferred income
tax liabilities related to acquired intangible assets.
2019
- In the nine months ended September 30,
2019, the Alberta general
corporate income tax rate decreased. This change resulted in a
decrease in net deferred income tax liabilities and a corresponding
decrease in income tax expense of $4.3
million.
FINANCIAL STATEMENTS GOVERNANCE PRACTICE
The Finance & Audit Committee of the Board of Directors of
TMX Group (Board) reviewed this press release as well as the Q3/20
unaudited condensed consolidated interim financial statements and
related Management's Discussion and Analysis (MD&A) and
recommended they be approved by the Board. Following review
by the full Board, the Q3/20 unaudited condensed consolidated
interim financial statements, MD&A and the contents of this
press release were approved.
CONSOLIDATED FINANCIAL STATEMENTS
Our Q3/20 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 IFRS, unless
otherwise specified and are in Canadian dollars unless otherwise
indicated.
ACCESS TO MATERIALS
TMX Group has filed its Q3/20 unaudited condensed consolidated
interim financial statements and MD&A with Canadian securities
regulators. This press release should be read together with our
Q3/20 unaudited condensed consolidated interim financial statements
and MD&A. These documents may be accessed through
www.sedar.com, or on the TMX Group website at www.tmx.com. We
are not incorporating information contained on the website in this
press release. In addition, copies of these documents will be
available upon request, at no cost, by contacting TMX Group
Investor Relations by phone at (416) 947-4277 or by e-mail at
TMXshareholder@tmx.com.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release of TMX Group contains "forward-looking
information" (as defined in applicable Canadian securities
legislation) that is based on expectations, assumptions, estimates,
projections and other factors that management believes to be
relevant as of the date of this press release. Often, but not
always, such forward-looking information can be identified by the
use of forward-looking words such as "plans," "expects," "is
expected," "budget," "scheduled," "targeted," "estimates,"
"forecasts," "intends," "anticipates," "believes," or variations or
the negatives of such words and phrases or statements that certain
actions, events or results "may," "could," "would," "might," or
"will" be taken, occur or be achieved or not be taken, occur or be
achieved. Forward-looking information, by its nature, requires us
to make assumptions and is subject to significant risks and
uncertainties which may give rise to the possibility that our
expectations or conclusions will not prove to be accurate and that
our assumptions may not be correct.
Examples of forward-looking information in this press release
include, but are not limited to, growth objectives; the proposed
relaunch of the Two-Year Government of Canada Bond Futures; our
target dividend payout ratio; the ability of TMX Group to
de-leverage and the timing thereof; the modernization of clearing
platforms, including the expected cash expenditures related to the
modernization of our clearing platforms and the timing of the
modernization; other statements related to cost reductions; the
impact of the market capitalization of TSX and TSXV issuers overall
(from 2019 to 2020) on TMX Group's revenue; future changes to TMX
Group's anticipated statutory income tax rate for 2020; factors
relating to stock, and derivatives exchanges and clearing houses
and the business, strategic goals and priorities, market
conditions, pricing, proposed technology and other initiatives, the
proposed timing for the completion of the acquisition of AST
Canada, including the ability to obtain the required regulatory
approvals and financing required to complete this acquisition, the
composition of AST Canada's client base and the products and
services it will provide, the anticipated benefits and synergies of
the AST Canada acquisition, including the expected impact on TMX
Group's earnings and adjusted earnings per share and the
timing thereof, financial results or financial condition,
operations and prospects of TMX Group which are subject to
significant risks and uncertainties.
These risks include: competition from other exchanges or
marketplaces, including alternative trading systems and new
technologies, on a national and international basis; dependence on
the economy of Canada; adverse
effects on our results caused by global economic conditions
(including COVID-19) or uncertainties including changes in business
cycles that impact our sector; failure to retain and attract
qualified personnel; geopolitical and other factors which could
cause business interruption (including COVID-19); dependence on
information technology; vulnerability of our networks and third
party service providers to security risks, including cyber-attacks;
failure to properly identify or implement our strategies;
regulatory constraints; constraints imposed by our level of
indebtedness, risks of litigation or other proceedings; dependence
on adequate numbers of customers; failure to develop, market or
gain acceptance of new products; failure to effectively integrate
acquisitions to achieve planned economics, or divest
underperforming businesses; currency risk; adverse effect of new
business activities; adverse effects from business divestitures;
not being able to meet cash requirements because of our holding
company structure and restrictions on paying dividends; dependence
on third-party suppliers and service providers; dependence of
trading operations on a small number of clients; risks associated
with our clearing operations; challenges related to international
expansion; restrictions on ownership of TMX Group common shares;
inability to protect our intellectual property; adverse effect of a
systemic market event on certain of our businesses; risks
associated with the credit of customers; cost structures being
largely fixed; the failure to realize cost reductions in the amount
or the time frame anticipated; dependence on market activity that
cannot be controlled; the regulatory constraints that apply to the
business of TMX Group and its regulated subsidiaries, costs of on
exchange clearing and depository services, trading volumes (which
could be higher or lower than estimated) and revenues; future
levels of revenues being lower than expected or costs being higher
than expected.
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 TMX Group to
successfully compete against global and regional marketplaces;
business and economic conditions generally; exchange rates
(including estimates of exchange rates from Canadian dollars to the
U.S. dollar or GBP), commodities prices, the level of trading and
activity on markets, and particularly the level of trading in TMX
Group's key products; business development and marketing and sales
activity; the continued availability of financing on appropriate
terms for future project, including the acquisition of AST Canada;
the amount of revenue and cost synergies resulting from the
AST Canada acquisition; productivity at TMX Group, as well as that
of TMX Group's competitors; market competition; research and
development activities; the successful introduction and client
acceptance of new products; successful introduction of various
technology assets and capabilities; the impact on TMX Group and its
customers of various regulations; TMX Group's ongoing relations
with its employees; and the extent of any labour, equipment or
other disruptions at any of its operations of any significance
other than any planned maintenance or similar shutdowns.
In addition to the assumptions outlined above, forward looking
information related to long term revenue cumulative average annual
growth rate (CAGR) objectives, and 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 post-trade systems;
- no significant changes to our effective tax rate, recurring
revenue, and number of shares outstanding;
- moderate levels of market volatility;
- 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 the COVID-19 pandemic 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
2019 Annual MD&A which is incorporated by reference into our
Q3/20 MD&A, and also in the section "Update to Enterprise
Risk Management" in our Q3/20 MD&A.
About TMX Group (TSX:X)
TMX Group operates global markets, and builds digital
communities and analytic solutions that facilitate the funding,
growth and success of businesses, traders and investors. TMX
Group's key operations include Toronto Stock Exchange, TSX Venture
Exchange, TSX Alpha Exchange, The Canadian Depository for
Securities, Montréal Exchange, Canadian Derivatives Clearing
Corporation, and Trayport which provide listing markets, trading
markets, clearing facilities, depository services, technology
solutions, data products and other services to the global financial
community. TMX Group is headquartered in Toronto and operates offices across
North America (Montréal,
Calgary, Vancouver and New
York), as well as in key international markets including
London and Singapore. For more information about TMX
Group, visit our website at www.tmx.com. Follow TMX Group on
Twitter: @TMXGroup.
Teleconference / Audio Webcast
TMX Group will host a teleconference / audio webcast to discuss
the financial results for Q3/20.
Time: 8:00 a.m. - 9:00 a.m. ET on
Thursday, November 5, 2020.
To teleconference participants: Please call the following number
at least 15 minutes prior to the start of the event.
The audio webcast of the conference call will also be available
on TMX Group's website at www.tmx.com, under Investor
Relations.
Teleconference Number: 647-427-7450 or 1-888-231-8191
Audio Replay: 416-849-0833 or 1-855-859-2056
The pass code for the replay is 8099338.
SOURCE TMX Group Limited