- Revenue of
$301.5 million , up 9% from$275.7 million in Q4/22 - Income tax expense decreased in Q4/22 related to a reversal of a prior year tax provision (
7 cents ), which drove a 16% decrease in diluted earnings per share of$0.31 in Q4/23 compared with$0.37 in Q4/22 - Adjusted diluted earnings per share1 of
$0.37 , up 6% from$0.35 in Q4/22
Commenting on the organization's performance for 2023,
"In a year of impressive performance milestones, we took definitive steps to strengthen TMX's ability to deliver modern solutions to a growing global client base, highlighted by the acquisition of VettaFi, a
Commenting on the performance in the fourth quarter of 2023,
"Overall revenue for the fourth quarter grew 9% year-over-year, driven by increases across all our key business areas. In addition to a demonstrated ability to deliver solid core business performance and increased cash flow, TMX remains firmly committed to investing for long-term growth. The strategic acquisition of VettaFi was funded with debt, and enabled by the strength of our balance sheet. TMX has a proven track record of de-leveraging following transactions and we are confident in our ability to achieve our targeted leverage range two years post-close, as planned."
_________________________________ |
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 headings "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 headings "Adjusted Earnings Per Share Reconciliation for Q4/23 and Q4/22" and "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 TMX Group completed a five-for-one split of its common shares outstanding (the Stock Split) effective at the close of business on |
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 reflects the financial statements of
(in millions of dollars, except per | Q4/23 | Q4/22 | $ increase / | % increase / |
Revenue | 9 % | |||
Operating expenses | 173.3 | 154.8 | 18.5 | 12 % |
Income from operations | 128.2 | 120.9 | 7.3 | 6 % |
Net income attributable to equity | 84.4 | 102.2 | (17.8) | (17) % |
Adjusted net income attributable to | 101.9 | 97.4 | 4.5 | 5 % |
Earnings per share | ||||
Basic | 0.31 | 0.37 | (0.06) | (16) % |
Diluted | 0.31 | 0.37 | (0.06) | (16) % |
Adjusted Earnings per share7 | ||||
Basic | 0.37 | 0.35 | 0.02 | 6 % |
Diluted | 0.37 | 0.35 | 0.02 | 6 % |
Cash flows from operating activities | 140.1 | 100.9 | 39.2 | 39 % |
_________________________________ |
5 TMX Group completed a five-for-one split of its common shares outstanding (the Stock Split) effective at the close of business on |
6 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
7 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
Net Income attributable to equity holders of TMX Group and Earnings per Share
Net income attributable to equity holders of TMX Group in Q4/23 was $84.4 million, or
_________________________________ |
8 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment" in our 2023 Annual MD&A. |
9 |
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 Q4/22 and Q4/23 related to the 2012 Maple transaction (TSX, TSXV, MX, CDS, Alpha, Shorcan),
TSX Trust , TMX Trayport (including VisoTech and Tradesignal), AST Canada, and BOX, and the amortization of intangibles related to WSH in Q4/23. These costs are a component of Depreciation and amortization expenses. - Acquisition and related costs in Q4/22 and Q4/23 related to VettaFi (equity-accounted on
January 9, 2023 prior to the acquisition of control onJanuary 2, 2024 ). Q4/22 includes acquisition related costs for WSH (acquiredNovember 9, 2022 ). These costs are included in Selling, general and administration. - Fair value gain on contingent consideration, reflecting a reduction in the earn-out liability assumed as part of the WSH acquisition in Q4/23. The gain is included in Net Finance Costs.
- Integration costs related to integrating the WSH acquisition in Q4/22 and Q4/23. Q4/22 includes integration costs related to the AST Canada acquisition. These costs are included in Selling, general and administration, Depreciation and amortization, Compensation and benefits, and Information and trading systems.
- Strategic re-alignment expenses related to organizational changes in Q4/23 are primarily included in Compensation and benefits in 2023.
- In Q4/22, we reversed a prior year tax provision resulting in a decrease to income tax expense.
_________________________________ |
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) | Q4/23 | Q4/22 | Q4/23 | Q4/22 | Q4/23 | Q4/22 | $ increase / | % increase / |
Net income attributable to equity | ( | (17) % | ||||||
Adjustments related to: | ||||||||
Amortization of intangibles | 15.1 | 14.5 | 5.6 | 3.3 | 9.5 | 11.2 | (1.7) | (15) % |
Acquisition and related costs14 | 5.1 | 1.4 | — | — | 5.1 | 1.4 | 3.7 | 264 % |
Integration costs15 | 0.4 | 4.1 | 0.1 | 1.1 | 0.3 | 3.0 | (2.7) | (90) % |
Strategic re-alignment expenses16 | 5.7 | — | 1.5 | — | 4.2 | — | 4.2 | n/a |
Fair value gain on contingent | (1.6) | — | — | — | (1.6) | — | (1.6) | n/a |
Reversal of a prior year tax | — | — | — | 20.4 | — | (20.4) | 20.4 | (100) % |
Adjusted net income attributable to | 5 % |
Adjusted net income attributable to equity holders of
_________________________________ |
13 Includes amortization expense of acquired intangibles including BOX, AST Canada, and Tradesignal in Q4/22 and Q4/23 and WSH in Q4/23 |
14 Includes costs related to the acquisition of VettaFi (acquired |
15 Q4/22 and Q4/23 includes costs related to the integration of WSH (acquired |
16 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment" in our 2023 Annual MD&A. |
17 For additional information, see discussion under the heading "Additional Information - Net Finance Costs". |
18 Relates to a prior year tax reserve no longer required. |
19 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
Q4/23 | Q4/22 | |||
(unaudited) | Basic | Diluted | Basic | Diluted |
Earnings per share attributable to equity holders of TMX Group | ||||
Adjustments related to: | ||||
Amortization of intangibles related to acquisitions20 | 0.03 | 0.03 | 0.04 | 0.04 |
Acquisition and related costs21 | 0.02 | 0.02 | 0.01 | 0.01 |
Strategic re-alignment expenses22 | 0.02 | 0.02 | — | — |
Fair value gain on contingent consideration23 | (0.01) | (0.01) | — | — |
Reversal of a prior year tax provision24 | — | — | (0.08) | (0.07) |
Integration costs25 | — | — | 0.01 | 0.01 |
Adjusted earnings per share attributable to equity holders | ||||
Weighted average number of common shares outstanding | 276,982,929 | 277,890,131 | 278,236,245 | 279,323,185 |
Adjusted diluted earnings per share increased by
_________________________________ |
20 Includes amortization expense of acquired intangibles including BOX, AST Canada, and Tradesignal in Q4/22 and Q4/23, and WSH in Q4/23. |
21 Includes costs related to the acquisition of VettaFi (acquired |
22 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment" in our 2023 Annual MD&A. |
23 For additional information, see discussion under the heading "Additional Information - Net Finance Costs". |
24 Relates to a prior year tax reserve no longer required. |
25 Q4/22 and Q4/23 includes costs related to the integration of WSH (acquired |
26 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
27 The reconciliations for Diluted adjusted EPS in Q4/23 and Q4/22 are presented without a rounding adjustment to ensure accuracy. |
Revenue
(in millions of dollars) | Q4/23 | Q4/22 | $ increase / | % increase / |
Capital Formation | 3 % | |||
Equities and Fixed Income Trading and Clearing | 59.7 | 57.0 | 2.7 | 5 % |
Derivatives Trading and Clearing | 71.3 | 63.5 | 7.8 | 12 % |
107.4 | 93.6 | 13.8 | 15 % | |
Other | 0.0 | 0.1 | (0.1) | (100) % |
9 % |
Revenue was
Capital Formation
(in millions of dollars) | Q4/23 | Q4/22 | $ increase / | % increase / |
Initial listing fees | (31) % | |||
Additional listing fees | 17.0 | 14.0 | 3.0 | 21 % |
Sustaining listing fees | 19.8 | 20.1 | (0.3) | (1) % |
Other issuer services | 24.1 | 24.2 | (0.1) | 0 % |
3 % |
- Initial listing fees in Q4/23 decreased from Q4/22 due to lower revenue in TSX and TSXV. We recognized
$1.9 million in initial listing fees received in 2022 and 2023 in Q4/23 compared with$3.0 million in initial listing fees received in 2021 and 2022 in Q4/22. - Based on initial listing fees billed in 2023, the following amounts have been deferred to be recognized in Q1/24, Q2/24, Q3/24, and Q4/24:
$1.6 million ,$1.1 million ,$0.6 million and$0.1 million respectively. Total initial listing fees revenue for future quarters will also depend on listing activity in those quarters. - Additional listing fees in Q4/23 increased compared to Q4/22 reflecting an increase in TSX revenue primarily from an 63% increase in the number of transactions billed at the maximum listing fee of
$250,000 from Q4/22 to Q4/23, and an increase of 10% in the number of transactions billed below the maximum fee. There were also increases in the total number of financings on TSX. - Issuers listed on TSX and TSXV pay annual sustaining listing fees primarily based on their market capitalization at the end of the prior calendar year, subject to minimum and maximum fees. There was a decrease in sustaining listing fees on both TSX and TSXV from Q4/22 to Q4/23, reflecting a decrease in the market capitalization of issuers on TSX and TSXV at
December 31, 2022 compared withDecember 31, 2021 . This was somewhat offset by the price changes, as well as an increase in total number of listed issuers on TSX. - Other issuer services revenue, which mainly consists of
TSX Trust , including AST Canada, was slightly lower in Q4/23 compared to Q4/22 primarily due to lower transfer agent fees, and lower net interest income mostly offset by higher corporate trust and other revenue.
Equities and Fixed Income Trading and Clearing
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
Equities and fixed income trading | 2 % | |||
Equities and fixed income clearing, | 30.9 | 28.8 | 2.1 | 7 % |
5 % |
- Equities Trading revenue decreased in Q4/23 compared with Q4/22 driven by lower volumes partially offset by a favourable product mix. The overall volume of securities traded on our equities marketplaces decreased by 13% (30.0 billion securities in Q4/23 versus 34.6 billion securities in Q4/22). There was a decrease in volumes of 14% on TSX, 13% on TSXV, and 9% on Alpha in Q4/23 compared with Q4/22.
- There was higher fixed income trading revenue from Q4/22 to Q4/23 reflecting increased activity in
Government of Canada bonds and swaps. - CDS revenue increased from Q4/22 to Q4/23 mainly due to higher interest income on clearing funds which included a year to date re-class of approximately
$0.7 million from finance income, event management fees, custodial and eligibility volumes, partially offset by lower exchange trading volumes. - Excluding intentional crosses, for TSX and TSXV listed issues, our combined domestic equities trading market share was approximately 63% in Q4/23, down 3% from approximately 66% from Q4/22. We only trade securities that are listed on TSX or TSXV.
- Excluding intentional crosses, in all listed issues in
Canada , our combined domestic equities trading market share was approximately 57% in Q4/23, down 2% from approximately 59% in Q4/22.
Derivatives Trading and Clearing
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
Derivatives Trading and Clearing | 11 % | |||
BOX | 31.5 | 27.5 | 4.0 | 15 % |
12 % |
Derivatives Trading and Clearing (excl. BOX)
The increase in revenue in Derivatives Trading and Clearing (excl. BOX) was driven by a 9% and 14% increase in MX and CDCC revenue respectively. The increase in MX revenue reflected an increase in volumes from Q4/22 to Q4/23 of 20% (45.4 million contracts traded in Q4/23 vs. 37.7 million contracts traded in Q4/22), as well as a positive impact from the pricing changes which came into effect
BOX
BOX revenue increased by 4.0 million or 15% in Q4/23 compared to Q4/22 driven by higher volumes. Volumes on BOX were up approximately 21% from Q4/22 to Q4/23 (200.8 million contracts traded in Q4/23 versus 165.8 million contracts traded in Q4/22), and BOX market share in equity options was 8% in Q4/23, up 1% from Q4/22. These increases were partially offset by lower rate per contract due to the implementation of a new pricing structure in Q3/23 which increased volumes and market share at lower yields.
The following table summarizes the BOX volume and the equity option market share since acquisition of control:
Q4/23 | Q3/23 | Q2/23 | Q1/23 | Q4/22 | Q3/22 | Q2/22 | Q1/22 | |
Volume (million contracts) | 201 | 177 | 155 | 160 | 166 | 169 | 127 | 149 |
Market Share (equity options) | 8 % | 7 % | 6 % | 6 % | 7 % | 7 % | 6 % | 6 % |
Revenue (in millions of CAD) | ||||||||
Average CAD-USD FX rate | 1.36 | 1.34 | 1.34 | 1.35 | 1.35 | 1.31 | 1.28 | 1.26 |
Revenue (in millions of USD) |
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
TMX Trayport | 24 % | |||
TMX Datalinx including Co-location | 57.0 | 52.8 | 4.2 | 8 % |
15 % |
The increase in
TMX Trayport
The following table summarizes the average number of TMX Trayport subscribers over the last eight quarters:
Q4/2023 | Q3/23 | Q2/23 | Q1/23 | Q4/22 | Q3/22 | Q2/22 | Q1/22 | |
Trader Subscribers | 7,443 | 7,101 | 7,030 | 6,932 | 6,804 | 6,615 | 6,410 | 6,366 |
Total Subscribers | 33,890 | 33,031 | 32,480 | 31,771 | 30,472 | 30,186 | 30,573 | 30,475 |
Revenue (in millions of CAD) | ||||||||
Average CAD-GBP FX rate | 1.70 | 1.69 | 1.70 | 1.65 | 1.62 | 1.53 | 1.59 | 1.68 |
Revenue (in millions of GBP) | £29.6 | £29.0 | £28.2 | £27.8 | £25.2 | £24.4 | £24.2 | £24.3 |
Total Subscribers means all chargeable licenses of core TMX Trayport products in core customer segments including Traders, Brokers and Exchanges. Trader Subscribers are a subset of Total Subscribers. Trader Subscribers revenue represents over 50% of total TMX Trayport revenue.
Revenue from TMX Trayport increased by 24% from Q4/22 to Q4/23. In GBP, revenue from TMX Trayport was £29.6 million (based on CAD-GBP FX rate of 1.70) in Q4/23 up 17% over Q4/22. The increase in TMX Trayport revenue from Q4/22 to Q4/23 was primarily driven by a 9% increase in trader subscribers, annual price adjustments, revenue from data analytics and algorithmic trading products, and favourable FX impact of
TMX Datalinx including Co-location
Revenue from TMX Datalinx including Co-location increased by 8% from Q4/22 to Q4/23. The Q4/23 TMX Datalinx revenue included
- The average number of professional market data subscriptions for TSX and TSXV products was down 5% in Q4/23 from Q4/22 (97,972 professional market data subscriptions in Q4/23 compared with 103,036 in Q4/22).
- The average number of MX professional market data subscriptions was up 1% in Q4/23 compared with Q4/22 (21,250 MX professional market data subscriptions in Q4/23 compared with 20,961 in Q4/22).
Operating expenses
(in millions of dollars) | Q4/23 | Q4/22 | $ | % |
Compensation and benefits | 25 % | |||
Information and trading systems | 23.8 | 26.3 | (2.5) | (10) % |
Selling, general and administration | 33.8 | 29.9 | 3.9 | 13 % |
Depreciation and amortization | 28.4 | 29.0 | (0.6) | (2) % |
12 % |
Operating expenses in Q4/23 were
Somewhat offsetting these increases was
_________________________________ |
28 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment" in our 2023 Annual MD&A. |
Compensation and benefits
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
25 % |
- Compensation and benefits expenses increased in Q4/23 reflecting increased severance costs of approximately
$5 .7 million related to strategic re-alignment, as well as higher headcount and payroll costs, including increased employee performance incentive plan costs of$6.0 million , and merit increases of$2.4 million . There were also higher expenses related to WSH of approximately$1.4 million , and an increase of$0 .6 million in Q4/23 due to a reclassification of expenses from Information and trading systems to Compensation and benefits for BOX. These increases were somewhat offset by$0.4 million in integration costs related to AST Canada incurred In Q4/22. - There were 1,803 TMX Group full-time equivalent employees at
December 31, 2023 versus 1,731 employees atDecember 31, 2022 , excluding BOX, reflecting a 4% increase in headcount attributable to investing in the various growth areas of our business.
Information and trading systems
(in millions of dollars) | Q4/23 | Q4/22 | $ (decrease) | % (decrease) |
(10) % |
- Information and trading systems expenses decreased from Q4/22 to Q4/23 primarily reflecting
$1.8 million in integration costs incurred for AST Canada in Q4/22, as well as decreases of$0 .6 million in Q4/23 due to a reclassification of expenses from Information and trading systems to Compensation and benefits for BOX.
Selling, general and administration
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
13 % |
- Selling, general and administration expenses increased in Q4/23 compared with Q4/22 reflecting an increase of approximately
$4.4 million related to acquisition and related costs for VettaFi,$3 .4 million related to BOX's estimate of increased expenses for services provided byBOX Exchange LLC , and$0.3 million related to a timing related credit for AST integration incurred in Q4/22. In addition, there were higher legal and regulatory filing fees in Q4/23 compared to Q4/22. Partially offsetting these increases were lower expenses related to WSH of approximately$0.8 million , and lower commodity tax expenses in Q4/23 compared to Q4/22.
Depreciation and amortization
(in millions of dollars) | Q4/23 | Q4/22 | $ (decrease) | % (decrease) |
(2) % |
- Depreciation and amortization expenses decreased by
$0.6 million from Q4/22 to Q4/23, primarily due to$2.1 million in integration costs related to AST Canada incurred in Q4/22, somewhat offset by$0.4 million related to the amortization of intangibles for WSH in Q4/23, and increased amortization on new intangible assets. - The Depreciation and amortization costs in Q4/23 of
$28.4 million included$15.1 million , net of NCI, related to amortization of intangibles related to acquisitions (3 cents per basic and diluted share). - The Depreciation and amortization costs in Q4/22 of
$29.0 million included$14.4 million , net of NCI, related to amortization of intangibles related to acquisitions (4 cents per basic and diluted share).
Additional Information
Share of income (loss) from equity-accounted investments
(in millions of dollars) | Q4/23 | Q4/22 | $ increase | % increase |
380 % |
- In Q4/23, our share of income from equity-accounted investments increased by
$1.9 million . For Q4/23, our share of income from equity-accounted investments includes VettaFi29, Ventriks, and other equity accounted investments, compared with our share of loss from Q4/22, which included SigmaLogic and Ventriks.
_________________________________ |
29 Equity-accounted investment as of |
Net finance costs
(in millions of dollars) | Q4/23 | Q4/22 | $ (decrease) | % (decrease) |
(35) % |
- The decrease in net finance costs from Q4/22 to Q4/23 reflected higher interest income on funds invested of
$1.4 million as a result of higher interest rates, and a$1.6 million fair value gain on contingent consideration, reflecting a reduction in the earn-out liability assumed as part of the WSH acquisition, somewhat offset by higher interest expense on borrowings, and higher foreign exchange losses of $1.6 million.
Income tax expense and effective tax rate
Income Tax Expense (in millions of dollars) | Effective Tax Rate (%)30 | ||
Q4/23 | Q4/22 | Q4/23 | Q4/22 |
27 % | 3 % |
The effective tax rate excluding below adjustments would have been approximately 27% for Q4/23 and 26% for Q4/22. The 1% increase in the effective tax rate was primarily due to an increase in the
_________________________________ |
30 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 25% in Q4/23 and 2% in Q4/22. |
Q4/23
- In Q4/23,
Massachusetts enacted a change in their corporate tax effective 2025. This change resulted in a decrease in net deferred income tax liabilities and a corresponding decrease in income tax expense on intangibles related to acquisitions, and a -1.1% impact on our effective tax rate. - In Q4/23, there was decrease in income tax expense due to a prior year tax adjustment related to TMX Trayport which had a -0.8% impact on our effective tax rate.
- In Q4/23, there were acquisition costs primarily related to VettaFi that are non-deductible for tax purposes which increased income tax expense and had a +1.3% impact on our effective tax rate.
- In Q4/23, we wrote-down deferred tax assets relating to non-capital losses related to TMX Investor Solutions resulting in an increase to income tax expense and had a +1.1% impact on our effective tax rate.
Q4/22
- In Q4/22, we reversed a prior year tax provision resulting in a decrease to income tax expense of
$20.4 million .
Net income attributable to non-controlling interests
(in millions of dollars) | Q4/23 | Q4/22 | $ increase |
- The increase in net income attributable to non-controlling interests (NCI) for Q4/23 compared to Q4/22 is primarily due to higher net income in BOX driven by higher revenue, partially offset by higher operating expenses, including an increase in BOX's estimate of expenses for services provided by
BOX Exchange LLC .
Summary of Cash Flows
Q4/23 compared with Q4/22
(in millions of dollars) | Q4/23 | Q4/22 | $ increase / |
Cash flows from operating activities | |||
Cash flows used in financing activities | (362.3) | (58.1) | (304.2) |
Cash flows used in investing activities | (27.8) | (68.6) | 40.8 |
- In Q4/23, Cash flows from operating activities increased compared with Q4/22 reflecting higher income from operations (excluding depreciation and amortization), increases in cash related to higher trade and other payables. These increases were offset by higher other assets and liabilities, increased income taxes paid, and trade and other receivables, and prepaid expenses.
- In Q4/23, Cash flows used in financing activities increased compared with Q4/22 reflecting
$250.0 million for repayment of debentures relating to the Series B dentures that matured onOctober 3, 2023 . In addition there was an increase in cash used to repurchase shares under our normal course issuer bid of$38.7 million , an increase of$21.9 million relating to net credit and liquidity facilities drawn, increased interest paid of$9.6 million , and a decrease in proceeds from exercised options of$5.3 million . These increases to cash flows used in financing activities were partially offset by a$25.1 million net movement in commercial paper. - In Q4/23, Cash flows used in investing activities decreased compared with Q4/22 reflecting a decrease in cash used in the net purchase of marketable securities in Q4/23 compared Q4/22 as well as a decrease in cash related to the acquisition of a subsidiary, net of cash.
Year ended
The information below reflects the financial statements of
(in millions of dollars, except per share amounts) | 2023 | 2022 | $ increase / | % increase / |
Revenue | 7 % | |||
Operating expenses | 654.1 | 592.1 | 62.0 | 10 % |
Income from operations | 540.0 | 522.8 | 17.2 | 3 % |
Net income attributable to equity | 356.0 | 542.7 | (186.7) | (34) % |
Adjusted net income attributable to | 407.8 | 399.1 | 8.7 | 2 % |
Earnings per share attributable to | ||||
Basic | 1.28 | 1.95 | (0.67) | (34) % |
Diluted | 1.28 | 1.94 | (0.66) | (34) % |
Adjusted Earnings per share attributable to | ||||
Basic | 1.47 | 1.43 | 0.04 | 3 % |
Diluted | 1.46 | 1.43 | 0.03 | 2 % |
Cash flows from operating activities | 524.9 | 444.1 | 80.8 | 18 % |
_________________________________ |
31 |
32 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
33 Reflects an adjustment increasing the income tax effect for the 1H/23 by |
34 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
35 Reflects an adjustment increasing the income tax effect for the 1H/23 by |
Net Income attributable to equity holders of TMX Group and Earnings per Share
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 2022 to 2023, as well as lower net finance costs.
_________________________________ |
36 |
37 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment" in our 2023 MD&A. |
Adjusted Net Income38 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 2022 and 2023 related to the 2012 Maple transaction (TSX, TSXV, MX, CDS, Alpha, Shorcan),
TSX Trust , TMX Trayport (including VisoTech and Tradesignal), AST Canada, and BOX, and the amortization of intangibles related to WSH in 2023. These costs are a component of Depreciation and amortization expenses. - Acquisition and related costs in 2022 and 2023 related to VettaFi (equity-accounted on
January 9, 2023 prior to the acquisition of control onJanuary 2, 2024 ), SigmaLogic (equity-accounted prior to the acquisition of control onFebruary 16, 2023 and divested onApril 21, 2023 ) and WSH (acquiredNovember 9, 2022 ), 2022 includes acquisition related costs for the equity investment in Ventriks (June 15, 2022 ). These costs are included in Selling, general and administration and Net Finance Costs. - Gain resulting from the sale of 100% of our interest in SigmaLogic to VettaFi (effective
April 21, 2023 ), net of divestiture costs in 2023. This gain is included in Other Income while the costs are included in Selling, general and administration. - Fair value gain on contingent consideration, reflecting a reduction in the earn-out liability assumed as part of the WSH acquisition in 2023. This gain is included in Net Finance Costs.
- Integration costs related to integrating the WSH acquisition in 2022 and 2023. 2022 includes integration costs related to the AST Canada acquisition. These costs are included in Selling, general and administration, Depreciation and amortization, Compensation and benefits, and Information and trading systems.
- Strategic re-alignment expenses related to organizational changes in Q4/23 included in Compensation and benefits in 2023.
- Gain resulting from the remeasurement of our interest in BOX upon acquisition of voting control (effective
January 3, 2022 ) in 2022. This gain is included in Other Income. - A decrease in deferred income tax liabilities which decreased income tax expenses in 2022 relating to a decrease in the
Pennsylvania andNebraska future income tax rates. - In 2022, we reversed a prior year tax provision resulting in a decrease to income tax expense.
_________________________________ |
38 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
39 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". |
Pre-tax | Tax | After-tax | ||||||
(in millions of dollars) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | $ increase / | % increase / |
Net income attributable to equity | (34) % | |||||||
Adjustments related to: | ||||||||
Amortization of intangibles | 60.4 | 57.7 | 18.1 | 14.2 | 42.3 | 43.5 | (1.2) | (3) % |
Acquisition and related costs42 | 9.0 | 1.8 | — | — | 9.0 | 1.8 | 7.2 | 400 % |
Integration costs43 | 0.3 | 13.7 | 0.1 | 3.6 | 0.2 | 10.1 | (9.9) | (98) % |
Gain on sale of SigmaLogic, net | (1.2) | — | 0.2 | — | (1.0) | — | (1.0) | n/a |
Fair value gain on contingent | (2.8) | — | — | — | (2.8) | — | (2.8) | n/a |
Gain on BOX46 | — | (177.9) | — | — | — | (177.9) | 177.9 | (100) % |
Reversal of a prior year tax | — | — | — | 20.4 | — | (20.4) | 20.4 | (100) % |
Strategic re-alignment costs48 | 5.7 | — | 1.5 | — | 4.2 | — | 4.2 | n/a |
Change in deferred income tax | — | — | — | 0.7 | — | (0.7) | 0.7 | (100) % |
Adjusted net income attributable | 8.7 | 2 % |
Adjusted net income attributable to equity holders of
_________________________________ |
40 Includes amortization expense of acquired intangibles including BOX, AST Canada, and Tradesignal in 2022 and 2023, and WSH in 2023. |
41 Reflects an adjustment increasing the income tax effect for the 1H/23 by |
42 2022 and 2023 includes transaction costs for VettaFi (equity-accounted |
43 2022 and 2023 includes costs related to the integration of WSH (acquired |
44 Gain resulting from the sale of SigmaLogic (effective |
45 For additional information, see discussion under the heading "Additional Information - Net Finance Costs" in our 2023 Annual MD&A. |
46 Gain resulting from the remeasurement of our interest in BOX upon acquisition of voting control (effective |
47 Relates to a prior year tax reserve no longer required. |
48 For additional information, see discussion under the heading "Initiatives and Accomplishments - Strategic Re-Alignment". |
49 2022 includes a decrease in deferred income tax liabilities due to future reductions in income tax rates in |
50 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". |
51 The reconciliation for Adjusted Net Income in 2023 is presented without a rounding adjustment to ensure accuracy. |
2023 | 2022 | |||
(unaudited) | Basic | Diluted | Basic | Diluted |
Earnings per share attributable to equity holders of TMX Group | ||||
Adjustments related to: | ||||
Amortization of intangibles related to acquisitions52 | 0.15 | 0.15 | 0.16 | 0.16 |
Acquisition and related costs53 | 0.03 | 0.03 | 0.01 | 0.01 |
Fair value gain on contingent consideration54 | (0.01) | (0.01) | — | — |
Integration costs55 | — | — | 0.04 | 0.04 |
Gain on BOX56 | — | — | (0.64) | (0.64) |
Strategic re-alignment costs57 | 0.02 | 0.01 | — | — |
Reversal of prior year tax provision58 | — | — | (0.08) | (0.07) |
Adjusted earnings per share attributable to equity holders of | 1.47 | 1.46 | ||
Weighted average number of common shares outstanding | 278,154,881 | 279,043,599 | 278,729,125 | 279,971,505 |
Adjusted diluted earnings per share increased by
_________________________________ |
52 Includes amortization expense of acquired intangibles including BOX, AST Canada, and Tradesignal in 2022 and 2023, and WSH in 2023. |
53 2022 and 2023 includes transaction costs for VettaFi (equity-accounted |
54 For additional information, see discussion under the heading "Additional Information - Net Finance Costs". |
55 2022 and 2023 includes costs related to the integration of WSH (acquired |
56 Gain resulting from the remeasurement of our interest in BOX upon acquisition of voting control (effective |
57 For additional information, see discussion under the heading "Strategic re-alignment". |
58 Relates to prior year tax reserve no longer required. |
59 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". In 2023, "Integration Costs" and "Gain on Sale of SigmaLogic, Net of Divestiture Costs" were not presented in the reconciliation due to the size of the adjustment being less than a penny. In 2022, "Change in Deferred Income Tax Liabilities Relating to Changes in Future Tax Rates" was not presented in the reconciliation. |
60 Reflects an adjustment increasing the income tax effect for amortization of acquired intangibles related to acquisitions for the 1H/23 by |
61 The reconciliations for Diluted adjusted earnings per share in 2023, and Basic and Diluted adjusted earnings per share in 2022 are presented without a rounding adjustment to ensure accuracy. |
FINANCIAL STATEMENTS GOVERNANCE PRACTICE
CONSOLIDATED FINANCIAL STATEMENTS
Our 2023 audited annual consolidated 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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Consolidated Balance Sheets
(In millions of Canadian dollars) (Unaudited) | ||
Assets | ||
Current Assets: | ||
Cash and cash equivalents | $ 301.1 | $ 375.7 |
Restricted cash and cash equivalents | 231.7 | 234.1 |
Marketable securities | 118.5 | 117.4 |
Trade and other receivables | 191.0 | 156.5 |
Balances of Participants and Clearing Members | 57,498.8 | 49,340.8 |
Other current assets | 47.3 | 38.0 |
Total Current Assets | 58,388.4 | 50,262.5 |
Non-Current assets: | ||
5,499.5 | 5,517.6 | |
Right-of-use assets | 77.0 | 79.7 |
Deferred income tax assets | 15.3 | 23.6 |
Equity-accounted investments | 255.4 | 10.0 |
Other non-current assets | 101.8 | 89.7 |
Total Non-Current Assets | $ 5,949.0 | $ 5,720.6 |
Total Assets | $ 64,337.4 | $ 55,983.1 |
Liabilities and Equity | ||
Current Liabilities: | ||
Trade and other payables | $ 182.6 | $ 131.4 |
Participants' tax withholdings | 231.7 | 234.1 |
Balances of Participants and Clearing Members | 57,498.8 | 49,340.8 |
Debt | 594.0 | 249.9 |
Credit and liquidity facilities drawn | 12.6 | 14.1 |
Other current liabilities | 45.0 | 42.1 |
Total Current Liabilities | 58,564.7 | 50,012.4 |
Non-Current liabilities: | ||
Debt | 448.5 | 747.8 |
Lease liabilities | 85.1 | 87.6 |
Deferred income tax liabilities | 869.9 | 876.8 |
Other non-current liabilities | 47.5 | 51.1 |
Total Non-Current Liabilities | 1,451.0 | 1,763.3 |
Total Liabilities | 60,015.7 | 51,775.7 |
Equity: | ||
Share capital | 2,769.1 | 2,831.1 |
Contributed surplus | 11.1 | 10.9 |
Retained earnings | 1,340.1 | 1,178.3 |
Accumulated other comprehensive income | (12.7) | (33.1) |
Total Equity attributable to equity holders of the Company | 4,107.6 | 3,987.2 |
Non-controlling interests | 214.1 | 220.2 |
Total Equity | 4,321.7 | 4,207.4 |
Total Liabilities and Equity | $ 64,337.4 | $ 55,983.1 |
Consolidated Income Statements
(In millions of Canadian dollars, except per share | For the three months ended | For the year ended | ||
(Unaudited) | 2023 | 2022 | 2023 | 2022 |
Revenue | $ 301.5 | $ 275.7 | $ 1,194.1 | $ 1,114.9 |
REPO and collateral interest: | ||||
Interest income | 476.6 | 350.7 | 1,704.2 | 747.8 |
Interest expense | (476.6) | (350.7) | (1,704.2) | (747.8) |
Net REPO and collateral interest | — | — | — | — |
Total revenue | 301.5 | 275.7 | 1,194.1 | 1,114.9 |
Compensation and benefits | 87.3 | 69.6 | 321.9 | 274.7 |
Information and trading systems | 23.8 | 26.3 | 92.1 | 90.9 |
Selling, general and administration | 33.8 | 29.9 | 127.6 | 112.7 |
Depreciation and amortization | 28.4 | 29.0 | 112.5 | 113.8 |
Total operating expenses | 173.3 | 154.8 | 654.1 | 592.1 |
Income from operations | 128.2 | 120.9 | 540.0 | 522.8 |
Share of income from equity accounted investees | 1.4 | (0.5) | 0.4 | (1.3) |
Other income | — | — | 1.3 | 177.9 |
Net finance costs | (4.6) | (7.1) | (24.3) | (29.1) |
Income before income tax expense | 125.0 | 113.3 | 517.4 | 670.3 |
Income tax expense | 30.6 | 2.8 | 129.2 | 88.5 |
Net income | $ 94.4 | $ 110.5 | $ 388.2 | $ 581.8 |
Net income attributable to: | ||||
Equity holders of the Company | $ 84.4 | $ 102.2 | $ 356.0 | $ 542.7 |
Non-controlling interests | 10.0 | 8.3 | 32.2 | 39.1 |
$ 94.4 | $ 110.5 | $ 388.2 | $ 581.8 | |
Earnings per share: | ||||
Basic | $ 0.31 | $ 0.37 | $ 1.28 | $ 1.95 |
Diluted | $ 0.31 | $ 0.37 | $ 1.28 | $ 1.94 |
Consolidated Statements of Comprehensive Income
(In millions of Canadian dollars) | For the three months ended | For the year ended December 31 | ||
(Unaudited) | 2023 | 2022 | 2023 | 2022 |
Net income | $ 94.4 | $ 110.5 | $ 388.2 | $ 581.8 |
Other comprehensive loss: | ||||
Items that will not be reclassified to the consolidated income statements: | ||||
Actuarial gain on defined benefit pension and other | 2.7 | (8.1) | 2.7 | 3.6 |
Gain on equity investment at fair value through other | 1.4 | — | 1.4 | — |
Total items that will not be reclassified to the consolidated income statements | 4.1 | (8.1) | 4.1 | 3.6 |
Items that may be reclassified subsequently to the | ||||
Unrealized loss on translating financial statements of | 4.4 | 42.2 | 14.0 | (21.9) |
Total items that may be reclassified subsequently to | 4.4 | 42.2 | 14.0 | (21.9) |
Total comprehensive income | $ 102.9 | $ 144.6 | $ 406.3 | $ 563.5 |
Total comprehensive income attributable to: | ||||
Equity holders of the Company | $ 98.9 | $ 140.6 | $ 379.1 | $ 511.8 |
Non-controlling interests | 4.0 | 4.0 | 27.2 | 51.7 |
$ 102.8 | $ 144.6 | $ 406.3 | $ 563.5 |
Consolidated Statements of Changes in Equity
(In millions of Canadian | |||||||
For the year ended | |||||||
Share | Contributed | Accumulated | Retained | Total | Non- | Total | |
Balance at | $ 2,831.1 | $ 10.9 | $ (33.1) | $ 1,178.3 | $ 3,987.2 | $ 220.2 | $ 4,207.4 |
Net income | — | — | — | 356.0 | 356.0 | 32.2 | 388.2 |
Other comprehensive income | |||||||
Unrealized gain (loss) on | — | — | 19.0 | — | 19.0 | (5.0) | 14.0 |
Actuarial gain on defined | — | — | — | 2.7 | 2.7 | — | 2.7 |
Gain on equity investment at | — | — | 1.4 | — | 1.4 | 1.4 | |
Total comprehensive income | — | — | 20.4 | 358.7 | 379.1 | 27.2 | 406.3 |
Dividends to equity holders | — | — | — | (196.9) | (196.9) | — | (196.9) |
Dividend to non-controlling | — | — | — | — | — | (33.3) | (33.3) |
Proceeds from exercised | 16.1 | — | — | — | 16.1 | — | 16.1 |
Cost of exercised share | 1.8 | (1.8) | — | — | — | — | — |
Cost of share option plan | — | 2.0 | — | — | 2.0 | — | 2.0 |
Shares repurchased under | (79.9) | — | — | — | (79.9) | — | (79.9) |
Balance at | $ 2,769.1 | $ 11.1 | $ (12.7) | $ 1,340.1 | $ 4,107.6 | $ 214.1 | $ 4,321.7 |
Consolidated Statements of Changes in Equity
(In millions of Canadian | ||||||||
For the year ended | ||||||||
Share | Contributed | Accumulated | Retained | Total | Non- | Total | ||
Balance at | $ 11.8 | $ 1.4 | $ 817.1 | $ 3,706.1 | $ — | $ 3,706.1 | ||
Acquisition of non-controlling | — | — | — | — | — | 194.0 | 194.0 | |
Net income | — | — | — | 542.7 | 542.7 | 39.1 | 581.8 | |
Other comprehensive income (loss): | ||||||||
Unrealized loss on translating | — | — | (34.5) | — | (34.5) | 12.6 | (21.9) | |
Actuarial losses on defined | — | — | — | 3.6 | 3.6 | — | 3.6 | |
Total comprehensive (loss) income | — | — | (34.5) | 546.3 | 511.8 | 51.7 | 563.5 | |
Dividends to equity holders | — | — | — | (185.1) | (185.1) | — | (185.1) | |
Dividend to non-controlling | — | — | — | — | — | (25.5) | (25.5) | |
Proceeds from exercised | 26.6 | — | — | — | 26.6 | — | 26.6 | |
Cost of exercised share | 3.0 | (3.0) | — | — | — | — | — | |
Cost of share option plan | — | 2.1 | — | — | 2.1 | — | 2.1 | |
Shares repurchased under | (74.3) | — | — | — | (74.3) | — | (74.3) | |
Balance at | $ 10.9 | $ (33.1) | $ 3,987.2 | $ 220.2 | $ 4,207.4 |
Consolidated Statements of Cash Flows
(In millions of Canadian dollars) | For the three months ended | For the year ended | ||
(Unaudited) | 2023 | 2022 | 2023 | 2022 |
Cash flows from (used in) operating activities: | ||||
Income before income taxes | $ 125.0 | $ 113.3 | $ 517.4 | $ 670.3 |
Adjustments to determine net cash flows: | ||||
Depreciation and amortization | 28.4 | 29.0 | 112.5 | 113.8 |
Net finance costs | 5.7 | 6.2 | 24.3 | 29.1 |
Other income | — | — | (1.3) | (177.9) |
Share of income from equity accounted investees | (1.4) | 0.5 | (0.4) | 1.3 |
Cost of share option plan | 0.5 | 0.6 | 2.0 | 2.1 |
Changes in: | ||||
Trade and other receivables, and prepaid expenses | (6.5) | 3.1 | (41.8) | (3.3) |
Trade and other payables | 54.9 | (0.7) | 50.5 | (57.9) |
Provisions | (0.5) | 0.5 | (1.0) | 2.8 |
Deferred revenue | (18.2) | (22.2) | 2.5 | (7.3) |
Other assets and liabilities | (15.7) | (0.7) | (8.4) | 6.9 |
Income taxes paid | (32.1) | (28.7) | (131.4) | (135.8) |
140.1 | 100.9 | 524.9 | 444.1 | |
Cash flows from (used in) financing activities: | ||||
Interest paid | (19.0) | (9.4) | (47.2) | (37.0) |
Repayment of lease liabilities | (2.6) | (2.5) | (10.6) | (9.7) |
Proceeds from exercised options | 0.6 | 5.9 | 16.1 | 26.6 |
Shares repurchased under normal course issuer bid | (39.4) | (0.6) | (79.9) | (74.3) |
Dividends paid to equity holders | (49.8) | (46.2) | (196.9) | (185.1) |
Dividend paid to non-controlling interests | — | — | (33.3) | (25.5) |
Repayment of debenture | (250.0) | — | (250.0) | — |
Net movement of Commercial Paper | 25.1 | — | 294.2 | — |
Credit and liquidity facilities drawn, net | (27.2) | (5.3) | (1.6) | 12.1 |
(362.3) | (58.1) | (309.2) | (292.9) | |
Cash flows from (used in) investing activities: | ||||
Interest received | 5.0 | 3.0 | 19.1 | 5.6 |
Dividends received | — | — | 2.8 | — |
Additions to premises and equipment and intangible assets | (15.8) | (15.3) | (65.2) | (51.9) |
Acquisition of subsidiary, net of cash | — | (18.7) | (5.1) | 56.2 |
Acquisition of equity accounted investment | — | — | (239.8) | (11.2) |
Marketable securities, net | (17.0) | (37.6) | (1.1) | (40.1) |
(27.8) | (68.6) | (289.3) | (41.4) | |
Increase (decrease) in cash and cash equivalents | (250.0) | (25.8) | (73.6) | 109.8 |
Cash and cash equivalents, beginning of the period | 552.4 | 401.0 | 375.7 | 264.3 |
Unrealized foreign exchange gain (loss) on cash and cash | (1.3) | 0.5 | (1.0) | 1.6 |
Cash and cash equivalents, end of the period | $ 301.1 | $ 375.7 | $ 301.1 | $ 375.7 |
SOURCE
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