Net Revenues of $763M, up 5% Year-Over-Year
Diluted Earnings per Share of $0.34, up 3%
Year-Over-Year
Net New Client Assets of $13.4B, 9% Annualized
Growth Rate
Average Client Trades per Day of 401,000
TD Ameritrade Holding Corporation (NYSE: AMTD) has released
operating results for the third quarter of fiscal 2014.
The Company’s results for the quarter ended Jun. 30, 2014
include the following:(1)
- Net income of $190 million, or $0.34
per diluted share
- Net new client assets of approximately
$13.4 billion, an annualized growth rate of 9 percent
- Average client trades per day of
approximately 401,000, an activity rate of 6.5 percent
- Net revenues of $763 million, up 5
percent year-over-year, 56 percent of which were asset-based
- Investment product fee revenues of $79
million, up 22 percent year-over-year
- Pre-tax income of $310 million, or 41
percent of net revenues
- EBITDA(2) of $362 million, or 47
percent of net revenues
- Interest rate sensitive assets(3) of
$97 billion, up 3 percent year-over-year
- Record client assets of approximately
$650 billion, up 24 percent year-over-year
“TD Ameritrade’s earnings per share is up 21 percent
year-to-date, driven primarily by strong revenue growth. We’re
seeing strong demand for guidance-based solutions, increased
adoption of mobile platforms and our distribution channels continue
to perform well resulting in more than $40 billion in net new
client assets, a 10 percent annualized growth rate,” said Fred
Tomczyk, president and chief executive officer. “While the markets
are experiencing low volatility and summer seasonality, retail
investors have remained bullish. We have good momentum to finish
out the year and we’re well positioned going forward.”
“TD Ameritrade delivered strong results in the third quarter and
we are on pace for another solid year of asset growth.
Year-to-date, revenue is $2.3 billion, up 13 percent
year-over-year. Net new assets for the third quarter were up 24
percent year-over-year, and interest rate-sensitive assets were up
3 percent. Investment product fees now account for 10 percent of
revenues and fee-based investment balances were once again at a
record high for the quarter,” said Bill Gerber, executive vice
president and chief financial officer. “We also continue to deliver
value to our shareholders through a robust return of capital
strategy. We returned $155 million to shareholders this quarter
through a mix of dividends and stock repurchases.”
Capital DeploymentDuring the third quarter of fiscal
2014, TD Ameritrade repurchased 2.9 million shares of its common
stock at an average price of $30.48 per share for approximately $89
million.
The Company has also declared a $0.12 per share quarterly cash
dividend, payable on Aug. 15, 2014 to all holders of record of
common stock as of Aug. 1, 2014.
Company Hosts Conference CallTD Ameritrade will host its
June Quarter conference call this morning, July 22, 2014, at 8:30
a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference
call by dialing 888-317-6003. The Company will webcast the
conference call through www.amtd.com, via the “Presentations &
Events” page of the web site. A replay of the phone call will be
available by dialing 877-344-7529 and entering the Conference ID
10048473 beginning at 10:30 a.m. EDT (9:30 a.m. CDT) on July 22,
2014. The replay will be available until 9:00 a.m. EDT (8:00 a.m.
CDT) on July 30, 2014. A transcript of the call will be available
on the Company’s corporate web site, www.amtd.com, via either the
“Investor Relations” page or the “Presentations & Events” page
beginning Wednesday, July 23, 2014.
Interested parties can visit or subscribe to newsfeeds at
www.amtd.com for the most up-to-date corporate financial
information, presentation announcements, transcripts and archives.
The company also communicates this information via Twitter,
@TDAmeritradePR. Web site links, corporate titles and telephone
numbers provided in this release, although correct when published,
may change in the future.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding CorporationMillions of
investors and independent registered investment advisors (RIAs)
have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and
education to help make investing and trading easier to understand
and do. Online or over the phone. In a branch or with an
independent RIA. First-timer or sophisticated trader. Our clients
want to take control, and we help them decide how – bringing Wall
Street to Main Street for more than 39 years. An official sponsor
of the 2014 and 2016 U.S. Olympic and Paralympic Teams, TD
Ameritrade has time and again been recognized as a leader in
investment services. Please visit TD Ameritrade’s newsroom or
www.amtd.com, or follow @TDAmeritradePR for more information.
Safe HarborThis document contains forward-looking
statements within the meaning of the federal securities laws. We
intend these forward-looking statements to be covered by the safe
harbor provisions of the federal securities laws. In particular,
any projections regarding our future revenues, expenses, earnings,
capital expenditures, effective tax rates, client trading activity,
accounts or stock price, as well as the assumptions on which such
expectations are based, are forward-looking statements. These
statements reflect only our current expectations and are not
guarantees of future performance or results. These statements
involve risks, uncertainties and assumptions that could cause
actual results or performance to differ materially from those
contained in the forward-looking statements. These risks,
uncertainties and assumptions include, but are not limited to:
general economic and political conditions and other securities
industry risks, fluctuations in interest rates, stock market
fluctuations and changes in client trading activity, credit risk
with clients and counterparties, increased competition, systems
failures, delays and capacity constraints, network security risks,
liquidity risks, new laws and regulations affecting our business,
regulatory and legal matters and uncertainties and other risk
factors described in our latest Annual Report on Form 10-K, filed
with the SEC on Nov. 22, 2013 and our latest Quarterly Report on
Form 10-Q filed thereafter. These forward-looking statements speak
only as of the date on which the statements were made. We undertake
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, except to the extent required by the federal
securities laws.
1 Please see the Glossary of Terms, located in “Investor”
section of www.amtd.com for more information on how these metrics
are calculated.
2 See attached reconciliation of non-GAAP financial
measures.
3 Interest rate-sensitive assets consist of spread-based assets
and money market mutual funds. Ending balances as of June 30,
2014.
Brokerage services provided by TD Ameritrade, Inc., member
FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA
(www.nfa.futures.org).
TD AMERITRADE HOLDING CORPORATION CONSOLIDATED STATEMENTS
OF INCOME In millions, except per share amounts (Unaudited)
Quarter Ended Nine
Months Ended June 30, 2014 Mar. 31, 2014 June
30, 2013 June 30, 2014 June 30, 2013 Revenues:
Transaction-based revenues: Commissions and transaction fees $ 317
$ 374 $ 321 $ 1,019 $ 865 Asset-based revenues: Interest
revenue 150 148 122 426 356 Brokerage interest expense (1 )
(2 ) (2 ) (5 ) (5 ) Net interest
revenue 149 146 120 421 351
Insured deposit account fees
202 202 199 612 604 Investment product fees 79
75 65 226 182
Total asset-based revenues 430 423 384 1,259 1,137 Other
revenues 16 15 20
49 53 Net revenues 763
812 725 2,327 2,055
Operating expenses: Employee compensation and
benefits 189 193 176 565 522 Clearing and execution costs 35 34 30
98 81 Communications 29 28 28 84 85 Occupancy and equipment costs
39 40 42 116 121 Depreciation and amortization 24 24 22 71 63
Amortization of acquired intangible assets 22 22 23 68 68
Professional services 42 37 36 117 103 Advertising 48 94 56 205 184
Other 19 17 14 57
52 Total operating expenses 447
489 427 1,381
1,279 Operating income 316 323 298 946 776
Other expense (income): Interest on borrowings 6 6 6 18 19 Gain on
sale of investments - - (6 )
- (8 ) Total other expense (income) 6
6 - 18 11
Pre-tax income 310 317 298 928 765 Provision for
income taxes 120 123 114
352 291 Net income $ 190
$ 194 $ 184 $ 576 $ 474 Earnings
per share - basic $ 0.34 $ 0.35 $ 0.33 $ 1.05 $ 0.86 Earnings per
share - diluted $ 0.34 $ 0.35 $ 0.33 $ 1.04 $ 0.86 Weighted
average shares outstanding - basic 551 551 550 551 548 Weighted
average shares outstanding - diluted 555 556 554 555 553
Dividends declared per share $ 0.12 $ 0.12 $ 0.09 $ 0.86 $ 0.77
TD AMERITRADE HOLDING CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS In millions (Unaudited)
June 30, 2014 Sept. 30, 2013
Assets: Cash and cash equivalents $ 1,260 $ 1,062 Segregated cash
and investments 5,258 5,894 Broker/dealer receivables 1,315 1,348
Client receivables, net 11,231 8,984 Goodwill and intangible assets
3,240 3,308 Other 1,275 1,240 Total assets $ 23,579 $
21,836 Liabilities and stockholders' equity: Liabilities:
Broker/dealer payables $ 2,537 $ 1,973 Client payables 14,265
13,183 Notes payable 150 - Long-term debt 1,041 1,052 Other
888 952 Total liabilities 18,881 17,160 Stockholders' equity
4,698 4,676 Total liabilities and stockholders'
equity $ 23,579 $ 21,836
TD AMERITRADE HOLDING
CORPORATION SELECTED OPERATING DATA (Unaudited)
Quarter Ended Nine Months
Ended June 30, 2014 Mar. 31, 2014 June 30,
2013 June 30, 2014 June 30, 2013
Key
Metrics:
Net new assets (in billions) $13.4 $12.2 $10.8 $40.0 $39.4 Net new
asset growth rate (annualized) 9% 8% 8% 10% 11% Average client
trades per day 401,468 491,963 399,216 435,123 370,874
Profitability
Metrics:
Operating margin 41.4% 39.8% 41.1% 40.7% 37.8% Pre-tax margin 40.6%
39.0% 41.1% 39.9% 37.2% Return on average stockholders' equity
(annualized) 16.2% 16.9% 16.4% 16.5% 14.3% EBITDA(1) as a
percentage of net revenues 47.4% 45.4% 48.1% 46.6% 44.5%
Liquidity
Metrics:
Interest on borrowings (in millions) $6 $6 $6 $18 $19 Interest
coverage ratio (EBITDA(1)/interest on borrowings) 60.3 61.5 58.2
60.3 48.2 Liquid assets - management target(1) (in billions) $0.8
$0.7 $0.7 $0.8 $0.7 Cash and cash equivalents (in billions) $1.3
$0.9 $1.0 $1.3 $1.0
Transaction-Based
Revenue Metrics:
Total trades (in millions) 25.3 30.0 25.5 81.4 68.6 Average
commissions and transaction fees per trade(2) $12.52 $12.47 $12.57
$12.51 $12.60 Average client trades per funded account (annualized)
16.2 20.2 16.8 17.9 15.7 Activity rate - funded accounts 6.5% 8.1%
6.7% 7.1% 6.3% Trading days 63.0 61.0 64.0 187.0 185.0 Order
routing revenue (in millions) $72 $84 $64 $226 $174
Spread-Based
Asset Metrics:
Average interest-earning assets (in billions) $18.8 $18.5 $16.1
$18.3 $15.5 Average insured deposit account balances (in billions)
72.4 73.0 68.6 72.7 66.6 Average spread-based balance (in billions)
$91.2 $91.5 $84.7 $91.0 $82.1 Net interest revenue (in
millions) $149 $146 $120 $421 $351 Insured deposit account fee
revenue (in millions) 202 202 199 612 604 Spread-based revenue (in
millions) $351 $348 $319 $1,033 $955 Avg. annualized yield -
interest-earning assets 3.13% 3.17% 2.95% 3.04% 2.97% Avg.
annualized yield - insured deposit account fees 1.10% 1.10% 1.15%
1.11% 1.19% Net interest margin (NIM) 1.52% 1.52% 1.49% 1.50% 1.53%
Fee-Based
Investment Metrics:
Money market mutual
fund fees:
Average balance (in billions) $5.2 $5.2 $5.1 $5.2 $5.1 Average
annualized yield 0.00% 0.00% 0.00% 0.00% 0.02% Fee revenue (in
millions) $0 $0 $0 $0 $1
Market fee-based
investment balances:
Average balance (in billions) $133.3 $128.4 $113.0 $129.0 $104.5
Average annualized yield 0.24% 0.23% 0.23% 0.23% 0.23% Fee revenue
(in millions) $79 $75 $65 $226 $181 Average fee-based
investment balances (in billions) $138.5 $133.6 $118.1 $134.2
$109.6 Average annualized yield 0.23% 0.22% 0.22% 0.22% 0.22%
Investment product fee revenue (in millions) $79 $75 $65 $226 $182
(1) See attached reconciliation of non-GAAP financial
measures. (2) Average commissions and transaction fees per trade
excludes TD Waterhouse UK business.
NOTE: See Glossary of Terms on the
Company's web site at www.amtd.com for definitions of the above
metrics.
TD AMERITRADE HOLDING CORPORATION SELECTED
OPERATING DATA (Unaudited)
Quarter Ended Nine Months Ended June 30, 2014
Mar. 31, 2014 June 30, 2013 June 30, 2014
June 30, 2013
Client Account
and Client Asset Metrics:
Funded accounts (beginning of period) 6,146,000 6,048,000 5,880,000
5,993,000 5,764,000 Funded accounts (end of period) 6,237,000
6,146,000 5,943,000 6,237,000 5,943,000 Percentage change during
period 1% 2% 1% 4% 3% Client assets (beginning of period, in
billions) $617.1 $596.5 $516.8 $555.9 $472.3 Client assets (end of
period, in billions) $650.2 $617.1 $523.5 $650.2 $523.5 Percentage
change during period 5% 3% 1% 17% 11%
Net Interest
Revenue:
Segregated
cash:
Average balance (in billions) $5.2 $5.3 $4.7 $5.3 $4.3 Average
annualized yield 0.14% 0.14% 0.11% 0.13% 0.13% Interest revenue (in
millions) $2 $2 $1 $5 $4
Client margin
balances:
Average balance (in billions) $11.0 $10.5 $8.6 $10.3 $8.6 Average
annualized yield 3.79% 3.85% 3.91% 3.85% 3.97% Interest revenue (in
millions) $105 $101 $85 $299 $259
Securities
borrowing/lending:
Average securities borrowing balance (in billions) $1.0 $1.1 $1.2
$1.1 $1.0 Average securities lending balance (in billions) $2.6
$2.8 $2.3 $2.5 $2.1 Net interest revenue - securities
borrowing/lending (in millions) $42 $43 $34 $117 $88
Other cash and
interest-earning investments:
Average balance (in billions) $1.6 $1.6 $1.6 $1.6 $1.6 Average
annualized yield 0.06% 0.09% 0.11% 0.07% 0.08% Interest revenue -
net (in millions) $0 $0 $0 $1 $1
Client credit
balances:
Average balance (in billions) $11.5 $11.0 $9.4 $11.1 $9.2 Average
annualized cost 0.01% 0.01% 0.01% 0.01% 0.01% Interest expense (in
millions) ($0) ($0) ($0) ($1) ($1) Average interest-earning
assets (in billions) $18.8 $18.5 $16.1 $18.3 $15.5 Average
annualized yield 3.13% 3.17% 2.95% 3.04% 2.97% Net interest revenue
(in millions) $149 $146 $120 $421 $351
NOTE: See Glossary of Terms on the
Company's web site at www.amtd.com for definitions of the above
metrics.
TD AMERITRADE HOLDING CORPORATION RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)
Quarter Ended Nine Months Ended June
30, 2014 Mar. 31, 2014 June 30, 2013 June 30,
2014 June 30, 2013 $ % of Net Rev.
$ % of Net Rev. $ % of Net Rev.
$ % of Net Rev. $ % of Net Rev.
EBITDA
(1)
EBITDA $ 362 47.4 % $ 369 45.4 % $ 349 48.1 % $ 1,085 46.6 % $ 915
44.5 % Less: Depreciation and amortization (24 ) (3.1 %) (24 ) (3.0
%) (22 ) (3.0 %) (71 ) (3.1 %) (63 ) (3.1 %) Amortization of
acquired intangible assets (22 ) (2.9 %) (22 ) (2.7 %) (23 ) (3.2
%) (68 ) (2.9 %) (68 ) (3.3 %) Interest on borrowings (6 ) (0.8 %)
(6 ) (0.7 %) (6 ) (0.8 %) (18 ) (0.8 %) (19 ) (0.9 %) Provision for
income taxes (120 ) (15.7 %) (123 ) (15.1 %)
(114 ) (15.7 %) (352 ) (15.1 %) (291 ) (14.2 %) Net
income $ 190 24.9 % $ 194 23.9 % $ 184 25.4 %
$ 576 24.8 % $ 474 23.1 %
As of
June 30, Mar. 31, Dec. 31, Sept. 30,
June 30, 2014 2014 2013 2013
2013
Liquid Assets -
Management Target (2)
Liquid assets - management target $ 767 $ 706 $ 707 $ 874 $ 728
Plus:
Broker-dealer cash and cash equivalents 871 508 926 540 555 Trust
company cash and cash equivalents 54 64 60 74 39 Investment
advisory cash and cash equivalents 9 14 25 19 28 Less: Excess
broker-dealer regulatory net capital (441 ) (359 )
(409 ) (445 ) (387 ) Cash and cash equivalents
$ 1,260 $ 933 $ 1,309 $ 1,062 $ 963
Note: The term "GAAP" in the following explanation
refers to generally accepted accounting principles in the United
States. (1) EBITDA (earnings before interest, taxes,
depreciation and amortization) is considered a non-GAAP financial
measure as defined by SEC Regulation G. We consider EBITDA an
important measure of our financial performance and of our ability
to generate cash flows to service debt, fund capital expenditures
and fund other corporate investing and financing activities. EBITDA
is used as the denominator in the consolidated leverage ratio
calculation for covenant purposes under our holding company's
senior revolving credit facility. EBITDA eliminates the non-cash
effect of tangible asset depreciation and amortization and
intangible asset amortization. EBITDA should be considered in
addition to, rather than as a substitute for, pre-tax income, net
income and cash flows from operating activities. (2) Liquid
assets - management target is considered a non-GAAP financial
measure as defined by SEC Regulation G. We include the excess
capital of our broker-dealer subsidiaries in the calculation of
liquid assets - management target, rather than simply including
broker-dealer cash and cash equivalents, because capital
requirements may limit the amount of cash available for dividend
from the broker-dealer subsidiaries to the parent company. Excess
capital, as defined below, is generally available for dividend from
the broker-dealer subsidiaries to the parent company. We consider
liquid assets - management target to be an important measure of our
liquidity and of our ability to fund corporate investing and
financing activities. Liquid assets - management target should be
considered a supplemental measure of liquidity, rather than a
substitute for cash and cash equivalents. We define liquid
assets - management target as the sum of (a) corporate cash and
cash equivalents, (b) corporate short-term investments and (c)
regulatory net capital of (i) our clearing broker-dealer subsidiary
in excess of 10% of aggregate debit items and (ii) our introducing
broker-dealer subsidiaries in excess of a minimum operational
target established by management ($50 million in the case of our
primary introducing broker-dealer, TD Ameritrade, Inc.). Liquid
assets - management target is based on more conservative measures
of broker-dealer net capital than regulatory thresholds require
because we prefer to maintain significantly more conservative
levels of net capital at the broker-dealer subsidiaries. We
consider liquid assets - management target to be a measure that
reflects our liquidity that would be readily available for
corporate investing and financing activities under normal operating
circumstances.
TD Ameritrade Holding CorporationKim Hillyer,
402-574-6523Director,
Communicationskim.hillyer@tdameritrade.comorJeff Goeser,
402-597-8464Director, Investor Relations and
Financejeffrey.goeser@tdameritrade.com
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