TMX Earnings Beat Views




Toronto Stock Exchange operator TMX Group Inc., which supports a 3.8 billion Canadian dollar (US$3.75 billion) plan to be taken over by a group of Canada’s largest financial institutions, posted a 21% improvement in third-quarter earnings, beating analyst expectations.

TMX said results in its latest quarter were fueled by higher revenue from trading and clearing in the derivatives markets, issuer services, and information services, but were partly affected by higher compensation and benefits expenses and C$2.4 million of pretax merger-related costs.

The exchange operator earned C$67 million, or 90 Canadian cents a share, in its latest quarter, up from C$55.2 million, or 74 Canadian cents a year earlier. Adjusted earnings improved to 92 Canadian cents from 74 Canadian cents, beating the Thomson Reuters mean estimate of 87 Canadian cents.

Overall revenue was up 15% to C$167.8 million, including a 15% improvement in issuer-services revenue to C$51.6 million. Trading, clearing and related revenue was also up 15%, while information-services revenue rose 7%. Analysts polled by Thomson Reuters had projected revenue of C$165 million for the quarter.

Operating expenses were 6% higher at C$72.3 million.

At the end of October, TMX’s board unanimously backed an offer from Maple Group, a deal that still faces stiff review by Canadian regulators. The bid from Maple, whose 13 members include some of Canada’s biggest banks and pension funds, surfaced after TMX announced plans in February to merge with London Stock Exchange Group PLC. The LSE deal was abandoned in late June.

In its earnings release Tuesday, TMX said the approval process for the Maple deal has started, “and we are working in close collaboration with Maple investors towards obtaining approval of a transaction that enhances and strengthens Canadian capital markets and all of its participants.” The Maple deal is set to expire Jan. 31.


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