Revenue of $367.1 million, up 20% from $306.2 million in Q2/23 Diluted earnings per share of $0.36, up 3% from $0.35 in Q2/23 Adjusted diluted earnings per share1 of $0.43, up 13% from $0.38 in Q2/23 TORONTO, July 31, 2024 /CNW/ - TMX Group Limited (TSX:X) ("TMX Group") announced results for the quarter ended June 30, 2024. Commenting on the first six months of 2024 and the company's outlook, John McKenzie, Chief Executive Officer of TMX Group, said: "TMX delivered excellent results for the first half of the year, reflecting strong performances across our franchise. First half revenue increased 18% compared to 2023, driven by recent areas of expansion, including TMX VettaFi and TMX Trayport as well as foundational business areas, partially offset by lower revenue from Capital Formation due to the impact of challenging capital raising conditions on TSX Venture Exchange. As outlined in our recent Investor Day, our people are firmly committed to serving our stakeholders, executing a long-term strategy to diversify, innovate and globalize, and accelerating the growth of our great company into the future."  Commenting on the company's performance in the second quarter of 2024, David Arnold, Chief Financial Officer of TMX Group, said: "TMX's high-performance business model continued to deliver in the second quarter, with a 9% year-over-year increase in organic revenue excluding TMX VettaFi, highlighted by double-digit revenue growth from TMX Trayport, Derivatives Trading and Clearing, and Equities and Fixed Income Trading and Clearing, partially offset by lower revenue from Capital Formation. Strong results included 12% growth in income from operations, and 13% growth in adjusted diluted earnings per share, compared with Q2/23. The second quarter also featured important signs of recovery in equity trading and financing activity, with year-over-year and sequential growth. TMX continued to make progress in our deleveraging plan and the integration of TMX VettaFi. Looking ahead, we remain well positioned to seize on both organic and inorganic opportunities to accelerate enterprise growth." __________ 1 Adjusted diluted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". Key Highlights for the Second Quarter of 2024 Organic revenue excluding TMX VettaFi grew by 9% in the second quarter driven by an 18% increase in equity trading volumes, a 21% increase in derivatives trading volumes, 20% increase in BOX volumes, and a 24% increase in Trayport's total licencees partially offset by lower capital raising activity on TSX Venture Exchange. Comparable operating expense (operating expenses excluding TMX VettaFi, integration costs, costs related to the U.S. expansion initiative, and estimate of increased expenses for services provided by BOX Exchange LLC which were not included in Q2/23) increased 7% and included higher employee performance incentive plan costs largely driven by the increase in our share price. There were also higher headcount and payroll costs reflecting investment in various growth areas of our business, higher revenue related expenses, and increased IT operating costs. In the second quarter, we issued $300.0 million of Series J Debentures due in May 2026, and repaid the Term B and C facilities. Total debt including debentures and commercial paper was $2,242.5 million with a weighted average cost of debt of 4.17% as at June 30, 2024. RESULTS OF OPERATIONS Non-GAAP Measures Adjusted net income is a non-GAAP measure2, and adjusted earnings per share, adjusted diluted earnings per share, and adjusted earnings per share CAGR are non-GAAP ratios3, 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 TMX Group and Adjusted Earnings Per Share Reconciliation for Q2/24 and Q2/23" and "Adjusted Net Income attributable to equity holders of TMX Group and Adjusted Earnings Per Share Reconciliation for 1H/24 and 1H/23". 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 Q2/24 and Q2/23" and "Adjusted Net Income attributable to equity holders of TMX Group and Adjusted Earnings Per Share Reconciliation for 1H/24 and 1H/23". The adjusted EPS CAGR is based on the assumptions outlined under the heading "Caution Regarding Forward Looking Information - Assumptions related to long term financial objectives". Similarly, we present the dividend payout ratio based on dividends paid divided by adjusted earnings per share as a measure of TMX Group's ability to make dividend payments, exclusive of a number of adjustments as outlined under the heading "Adjusted Net Income attributable to equity holders of TMX Group and Adjusted Earnings Per Share Reconciliation for Q2/24 and Q2/23" and "Adjusted Net Income attributable to equity holders of TMX Group and Adjusted Earnings Per Share Reconciliation for 1H/24 and 1H/23". 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 TMX Group's underlying business operations. __________ 2 As defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. 3 As defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Quarter ended June 30, 2024 (Q2/24) Compared with Quarter ended June 30, 2023 (Q2/23)4 The information below is derived from the financial statements of TMX Group for Q2/24 compared with Q2/23. (in millions of dollars, except per share amounts) Q2/24 Q2/23 $ increase % increase Revenue $367.1 $306.2 $60.9 20 % Operating expenses 203.2 159.4 43.8 27 % Income from operations 163.9 146.8 17.1 12 % Net income attributable to equity holders of TMX Group 100.0 97.3 2.7 3 % Adjusted net income attributable to equity holders of TMX Group5 120.5 107.1 13.4 13 % Earnings per share attributable to equity holders of TMX Group Basic 0.36 0.35 0.01 3 % Diluted 0.36 0.35 0.01 3 % Adjusted Earnings per share attributable to equity holders of TMX Group6 Basic 0.43 0.38 0.05 13 % Diluted 0.43 0.38 0.05 13 % Cash flows from operating activities 209.6 172.7 36.9 21 % Net Income attributable to equity holders of TMX Group and Earnings per Share Net income attributable to equity holders of TMX Group in Q2/24 was $100.0 million, or $0.36 per common share on a basic and diluted basis, compared with a net income attributable to equity holders of TMX Group of $97.3 million, or $0.35 per common share on a basic and diluted basis for Q2/23. The increase in net income attributable to equity holders of TMX Group reflects an increase in Income from operations of $17.1 million from Q2/23 to Q2/24 driven by an increase in revenue of $60.9 million, partially offset by an increase in operating expenses of $43.8 million. The increase in revenue from Q2/23 to Q2/24 is largely attributable to increases in revenue from Global Solutions, Insights and Analytic, of which $32.0 million reflects the inclusion of revenue from TMX VettaFi (fully acquired January 2, 2024), as well as higher revenue from Derivatives Trading and Clearing, and Equities and Fixed Income Trading and Clearing, somewhat offset by lower Capital Formation revenue. The higher expenses reflected approximately $12.8 million of operating expenses related to TMX VettaFi, $11.9 million related to amortization of acquired VettaFi intangibles, $4.0 million in integration costs, approximately $1.7 million related to our U.S. expansion initiative, and $2.3 million related to BOX's estimate of increased expenses for services provided by BOX Exchange LLC.  There were also higher expenses reflecting higher headcount and payroll costs, employee performance incentive plan costs, higher revenue related expenses, and increased IT operating costs. The increase in earnings per share was also partially attributable to a decrease in the number of weighted average common shares outstanding from Q2/23 to Q2/24, somewhat offset by higher net finance costs. __________ 4 TMX Group completed a five-for-one split of its common shares outstanding (the Stock Split) effective at the close of business on June 13, 2023. 5 Adjusted net income attributable to equity holders of TMX Group 6 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". Adjusted Net Income attributable to equity holders of TMX Group7 and Adjusted Earnings per Share8 Reconciliation for Q2/24 and Q2/239 The following tables present reconciliations of net income attributable to equity holders of TMX Group to adjusted net income attributable to equity holders of TMX Group and earnings per share to adjusted earnings per share. The financial results have been adjusted for the following: The amortization expenses of intangible assets in Q2/23 and Q2/24 related to the 2012 Maple transaction (TSX, TSXV, MX, Alpha, Shorcan), TSX Trust, TMX Trayport (including VisoTech and Tradesignal), AST Canada,  BOX, and WSH, and the amortization of intangibles related to TMX VettaFi in Q2/24. These costs are a component of Depreciation and amortization. Integration costs related to integrating the VettaFi acquisition in Q2/24. These costs are included in Compensation and benefits, Information and trading systems, and Selling, general and administration. Acquisition and related costs in Q2/24 related to VettaFi (equity-accounted on January 9, 2023 prior to the acquisition of control on January 2, 2024). Q2/23 also includes acquisition related costs for SigmaLogic (equity-accounted prior to the acquisition of control on February 16, 2023 and divested on April 21, 2023). These costs are included in Selling, general and administration. Change in fair value related to contingent considerations, reflecting a reduction in the earn-out liability in Q2/23 assumed as part of the WSH acquisition, and an increase to a prior earn-out liability assumed as part of the VettaFi acquisition in Q1/24. These changes are included in Net Finance Costs. Net gain on foreign exchange (FX) forwards and translation of monetary assets and liabilities denominated in foreign currencies, including USD-denominated debt raised to facilitate the VettaFi acquisition. These changes are included in Net Finance Costs in Q2/24. Gain resulting from the sale of 100% of our interest in SigmaLogic to VettaFi (effective April 21, 2023), net of divestiture costs. This gain is included in Other Income while the costs are included in Selling, general and administration. __________ 7 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". 8 Adjusted earnings per share is a non-GAAP ratio, see discussion under the heading "Non-GAAP Measures". 9 TMX Group completed a five-for-one split of its common shares outstanding  (the Stock Split) effective at the close of business on June 13, 2023.  All common share numbers and per share amounts in this release, including comparative figures, have been adjusted to reflect the Stock Split. Pre-tax Tax After-tax (in millions of dollars)(unaudited) Q2/24 Q2/23 Q2/24 Q2/23 Q2/24 Q2/23 $ increase / (decrease) % increase /(decrease) Net income attributable to equity holders of TMX Group $100.0 $97.3 $2.7 3 % Adjustments related to: Amortization of intangibles related to acquisitions10 26.9 15.0 6.8 3.2 20.1 11.8 8.3 70 % Integration costs 3.9 — 1.0 — 2.9 — 2.9 n/a Acquisition and related costs11 0.1 0.1 — — 0.1 0.1 — — % Fair value loss (gain) on contingent considerations12 0.5 (1.1) — — 0.5 (1.1) 1.6 (145) % Net gain from FX forwards and translation of monetary    assets and liabilities denominated in foreign currencies (3.4) — 0.4 — (3.0) — (3.0) n/a Gain on sale of SigmaLogic, net of divestiture costs13 — (1.2) — 0.2 — (1.0) 1.0 (100) % Adjusted net income attributable to equity holders of TMX Group14 $120.5 $107.1 $13.4 13 %   Adjusted net income attributable to equity holders of TMX Group increased by 13% from $107.1 million in Q2/23 to $120.5 million in Q2/24 driven by an increase in income from operations, partially offset by higher net finance costs. __________ 10 Includes amortization expense of acquired intangibles including TMX VettaFi in Q2/24 . 11 For additional information, see discussion under the heading "Initiatives and Accomplishments" for more details. 12 For additional information, see discussion under the heading "Additional Information - Net Finance Costs". 13 Gain resulting from the sale of SigmaLogic (effective April 21, 2023) in Q2/23. 14 Adjusted net income is a non-GAAP measure, see discussion under the heading "Non-GAAP Measures". The reconciliation for Adjusted Net Income in Q2/24 is presented without rounding adjustments for better accuracy. Q2/24 Q2/23 (unaudited) Basic Diluted Basic Diluted Earnings per share attributable to equity holders of TMX Group $0.36 $0.36 $0.35 $0.35 Adjustments related to: Amortization of intangibles related to acquisitions15 0.07 0.07 0.04 0.04 Integration costs 0.01 0.01 —