Record Average Client Trades per Day of
726,000
Record Net New Client Assets of $26.5B
GAAP Diluted EPS $0.52; Non-GAAP Diluted EPS
$0.80 (1)
TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released
results for the first quarter of fiscal 2018. The Company reported
record client trading activity of approximately 726,000 client
trades per day, on average, and gathered a record $26.5 billion in
net new client assets for the quarter. These results further
benefited from continued strong investor engagement and the
Company’s acquisition of Scottrade. Clearing conversion is expected
to be completed in the March quarter.
Financial results for the quarter ended Dec. 31, 2017 include
the following:(2)
- Record net new client assets of
approximately $26.5 billion, a growth rate of 9 percent
- Record average client trades per day of
approximately 726,000, up 49 percent year over year
- Net revenues of $1.3 billion, 63
percent of which were asset-based
- Client assets of approximately $1.2
trillion, up 48 percent year over year
- $0.52 in GAAP earnings per diluted
share, up 27 percent year over year, on net income of $297
million
- $0.80 in Non-GAAP earnings per diluted
share(1), up 86 percent year over year
- Pre-tax income of $303 million, or 24
percent of net revenues
- Interest rate-sensitive assets(3) of
$156 billion, up 25 percent year over year
“We’re off to an outstanding start in 2018, with powerful
momentum and financial strength continuing across all core metrics.
Our enhanced competitive position and increased scale, thanks to
our recent acquisition of Scottrade, is further accelerating our
earnings power, which we expect to continue following the final
clearing conversion,” said Tim Hockey, TD Ameritrade president
and chief executive officer. “Trading was at record levels, and
investor engagement has continued across all client segments as the
market reached new highs. Enhanced consumer interest in blockchain
and cannabis-related securities drove a further surge in engagement
in the final weeks of the quarter, particularly among first-time
investors. New account growth is at record levels, interest in our
digital guidance solutions remains high, and use of our multiple
mobile offerings continues to rise. Our fully-staffed service
centers are busy, providing education to clients and arming them
with the information they need to make informed investment
decisions.”
“While we remain focused on the experience we deliver to these
clients, much more work lies ahead, starting with delivering a
successful Scottrade integration – not just operationally, but
culturally as well,” Hockey continued. "We are a company that wants
to transform lives and investing for the better, and that purpose
will shape our growth strategy for years to come, inspiring the
actions we take to deliver long-term value for our clients,
employees and shareholders. How we earn revenue, how we grow more
agile and efficient, how we invest in employee development and
innovation – it all ladders back to our shared commitment to drive
transformational change, and we are motivated by the opportunities
and potential that lies ahead.”
“It was an eventful quarter as major indices hit all-time highs,
the Fed raised interest rates, and a sweeping tax overhaul was
approved,” said Steve Boyle, executive vice president and chief
financial officer. “These factors – paired with our first full
quarter of Scottrade earnings – further boosted our growth, driving
strong GAAP and Non-GAAP results for the quarter. Furthermore, with
the new tax bill being signed into law before the end of the
calendar year, we were able to realize additional significant
benefits in the quarter, primarily due to a re-measurement of our
deferred tax liability. There are a number of options before us in
putting this incremental revenue to good use, and we plan to look
at each of them, as well as our capital deployment plans, in
greater detail once we’ve successfully completed the Scottrade
clearing conversion.”
Capital ManagementThe Company paid $119
million in its first fiscal quarter, or $0.21 per
share, in cash dividends.
The Company has declared a $0.21 per share quarterly cash
dividend, payable on Feb. 20, 2018 to all holders of
record of common stock as of Feb. 6, 2018.
Fiscal 2018 OutlookThe Company has also updated its
outlook for the 2018 fiscal year to reflect the new U.S. tax
legislation. Using updated tax rates, the company expects GAAP
earnings of $1.85 to $2.45 per diluted share, and
Non-GAAP earnings of $2.55 to $3.05 per diluted
share(1) for its 2018 fiscal year.
More information on the fiscal 2018 forecast is available
through the Company’s Outlook Statement, located in the
“Financial Reports” section of its
corporate website, www.amtd.com.
Company Hosts Conference CallTD Ameritrade will host its
December Quarter conference call tomorrow morning, Jan. 23, 2018,
at 8:30 a.m. EST (7:30 a.m. CST) to discuss results and take
questions from analysts. Participants may listen to the conference
call by dialing 833-235-7646. Prepared remarks and an enhanced
financial fact sheet containing associated details are now
available on the “Financial Reports” page of
www.amtd.com under the header “Investor Relations’
Highlights.” Conference call participants are encouraged to
reference these materials prior to the call.
A replay of the phone call will be available by dialing
800-585-8367 and entering the Conference ID 4094307 beginning at
11:30 a.m. EST (10:30 a.m. CST) on Jan. 23, 2018. The replay will
be available until 11:59 p.m. EST (10:59 p.m. CST) on Jan. 30,
2018. A transcript of the call, including management remarks and
Q&A, will be available on the Company’s corporate web site,
www.amtd.com, via the “Financial Reports” page beginning Wednesday,
Jan. 24, 2018.
More information about TD Ameritrade’s upcoming corporate events
and management speaking engagements, such as quarterly earnings
conference calls, are available on the Company’s Corporate Event
Calendar. Look for the link “Where are we?” on the “Investor
Relations” page of www.amtd.com.
Interested parties should visit or subscribe to newsfeeds at
www.amtd.com for the most up-to-date information on corporate
financial reports, press releases, SEC filings and events. The
Company also communicates this information via Twitter,
@TDAmeritradePR. Website 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 CorporationTD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling more than $1 trillion in assets, and
custodial services to more than 6,000 registered investment
advisors. We are a leader in U.S. retail trading, executing more
than 700,000 trades per day for our clients, nearly a quarter of
which come from mobile devices. We have a proud history of
innovation, dating back to our start in 1975, and today our team of
10,000-strong is committed to carrying it forward. Together, we are
leveraging the latest in cutting edge technologies and one-on-one
client care to transform lives, and investing, for the better.
Learn more by visiting TD Ameritrade’s newsroom at www.amtd.com, or
read our stories at Fresh Accounts.
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, stock price or any projections or expectations regarding
the acquisition of Scottrade Financial Services, Inc., 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, difficulties and delays in
integrating the Scottrade business or fully realizing cost savings
and other benefits from the acquisition; business disruption
following the Scottrade acquisition, changes in asset quality and
credit risk, the inability to sustain revenue and earnings growth,
changes in interest rates and capital markets, inflation, customer
borrowing, repayment, investment and deposit practices, customer
disintermediation, the introduction, withdrawal, success and timing
of business initiatives, competitive conditions, disruptions due to
Scottrade integration-related uncertainty or other factors making
it more difficult to maintain relationships with employees,
customers, other business partners or governmental entities, the
inability to realize synergies or to implement integration plans
and other consequences associated with mergers, acquisitions and
uncertainties and other risk factors described in our latest Annual
Report on Form 10-K, filed with the SEC on Nov. 17, 2017, and in
other filings with the SEC. 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 See attached reconciliation of non-GAAP financial measures
2 Please see the Glossary of Terms, located in “Investor”
section of www.amtd.com for more information on how these metrics
are calculated.
3 Interest rate-sensitive assets consist of spread-based
assets and money market mutual funds. Ending balances as of
December 31, 2017.
Brokerage services provided by TD Ameritrade, Inc., member
FINRA (www.FINRA.org) /SIPC (www.SIPC.org).
TD AMERITRADE HOLDING CORPORATION CONSOLIDATED
STATEMENTS OF INCOME In millions, except per share amounts
(Unaudited)
Quarter Ended Dec. 31,
2017 Sept. 30, 2017 Dec. 31, 2016 Revenues:
Transaction-based revenues: Commissions and transaction fees $ 440
$ 330 $ 355 Asset-based revenues: Bank deposit account fees 381 307
245 Net interest revenue 276 210 151 Investment product fees
133 115 94 Total asset-based revenues 790 632 490
Other revenues 27 21 14 Net revenues
1,257 983 859 Operating expenses: Employee
compensation and benefits 415 285 214 Clearing and execution costs
47 37 36 Communications 53 33 35 Occupancy and equipment costs 80
49 44 Depreciation and amortization 34 28 24 Amortization of
acquired intangible assets 38 22 19 Professional services 74 82 53
Advertising 64 59 57 Other 116 27 24 Total
operating expenses 921 622 506
Operating income 336 361 353 Other expense: Interest on
borrowings 20 23 14 Loss on sale of investments 11 - - Loss on
early extinguishment of debt 2 - - Total other
expense 33 23 14 Pre-tax income 303 338
339 Provision for income taxes(1) 6 127
123 Net income $ 297 $ 211 $ 216 Earnings per share -
basic $ 0.52 $ 0.40 $ 0.41 Earnings per share - diluted $ 0.52 $
0.39 $ 0.41 Weighted average shares outstanding - basic 567
534 527 Weighted average shares outstanding - diluted 569 536 530
Dividends declared per share $ 0.21 $ 0.18 $ 0.18 (1)
The provision for income taxes was lower during the December 2017
quarter due to the realization of approximately $78 million of
after-tax benefits, primarily as a result of the enactment of the
Tax Cuts and Jobs Act for which we recorded a provisional estimate
for the remeasurement of our deferred income tax balances.
TD AMERITRADE HOLDING CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS In millions (Unaudited)
Dec. 31, 2017 Sept. 30, 2017 Assets: Cash and
cash equivalents $ 1,644 $ 1,472 Segregated cash and investments
10,136 10,446 Broker/dealer receivables 1,291 1,334 Client
receivables, net 18,578 17,151 Investments available-for-sale, at
fair value 99 746 Goodwill and intangible assets 5,629 5,683 Other
2,035 1,795 Total assets $ 39,412 $ 38,627
Liabilities and stockholders' equity: Liabilities:
Broker/dealer payables $ 3,064 $ 2,504 Client payables 25,286
25,107 Long-term debt 2,531 2,555 Other 1,098 1,214
Total liabilities 31,979 31,380 Stockholders' equity
7,433 7,247 Total liabilities and stockholders'
equity $ 39,412 $ 38,627 NOTE: The Condensed Consolidated
Balance Sheets include provisional estimates related to the assets
acquired and liabilities assumed in the Scottrade acquisition.
These provisional estimates may be prospectively adjusted in the
event new information becomes available regarding facts and
circumstances which existed at the date of acquisition.
TD AMERITRADE HOLDING CORPORATION SELECTED
OPERATING DATA (Unaudited)
Quarter Ended Dec.
31, 2017 Sept. 30, 2017 Dec. 31,
2016
Key
Metrics:
Net new assets (in billions) $26.5 $19.9 $18.7 Net new asset growth
rate (annualized) 9 % 9 % 10 % Average client trades per day
726,438 528,741 486,801
Profitability
Metrics:
Operating margin 26.7 % 36.7 % 41.1 %
Pre-tax margin
24.1 % 34.4 % 39.5 % Return on average stockholders' equity
(annualized) 16.2 % 14.2 % 16.9 % Net profit margin 23.6 % 21.5 %
25.1 %
EBITDA(1) as a percentage of net
revenues
31.4 % 41.8 % 46.1 %
Liquidity
Metrics:
Interest on borrowings (in millions) $20 $23 $14 Interest coverage
ratio (EBITDA(1)/interest on borrowings) 19.8 17.9 28.3 Cash and
cash equivalents (in billions) $1.6 $1.5 $1.7
Liquid assets available for corporate
investing and financing activities(1)(2) (in billions)
$0.1
$0.2
$0.8
Transaction-Based
Revenue Metrics:
Total trades (in millions) 45.4 33.0 30.4 Average commissions per
trade(3) $7.54 $7.72 $9.06 Trading days 62.5 62.5 62.5 Order
routing revenue (in millions) $98 $75 $79
Spread-Based
Asset Metrics:
Average bank deposit account balances (in billions) $119.1 $95.0
$93.3 Average interest-earning assets (in billions) 31.6
26.7 24.4 Average spread-based balances (in billions)
$150.7 $121.7 $117.7 Bank deposit
account fee revenue (in millions) $381 $307 $245 Net interest
revenue (in millions) 276 210 151 Spread-based
revenue (in millions) $657 $517 $396
Avg. annualized yield - bank deposit account fees 1.25 % 1.26 %
1.03 % Avg. annualized yield - interest-earning assets 3.42 % 3.08
% 2.42 % Net interest margin (NIM) 1.71 % 1.66 % 1.32 %
Fee-Based
Investment Metrics:
Money market mutual
fund fees:
Average balance (in billions) $3.8 $3.6 $3.7 Average annualized
yield 0.43 % 0.43 % 0.38 % Fee revenue (in millions) $4 $4
$3
Market fee-based
investment balances:
Average balance (in billions) $226.2 $196.2 $166.7 Average
annualized yield 0.22 % 0.22 % 0.21 % Fee revenue (in millions)
$129 $111 $91 Average fee-based
investment balances (in billions) $230.0 $199.8 $170.4 Average
annualized yield 0.23 % 0.22 % 0.22 % Investment product fee
revenue (in millions) $133 $115 $94 (1)
See attached reconciliation of non-GAAP financial measures. (2)
Effective in March 2017, the liquid assets available for corporate
investing and financing activities metric was revised. Prior
periods have been updated to conform to the current presentation.
(3) Effective in September 2017, the average commissions per trade
metric was revised to exclude order routing revenue. Prior periods
have been updated to conform to the current presentation.
NOTE: See Glossary of Terms on the
Company's website at www.amtd.com for definitions of the above
metrics.
TD AMERITRADE HOLDING CORPORATION SELECTED
OPERATING DATA (Unaudited)
Quarter Ended Dec.
31, 2017 Sept. 30, 2017 Dec. 31,
2016
Client Account
and Client Asset Metrics:
Funded accounts (beginning of period) 11,004,000 7,279,000
6,950,000 Funded accounts (end of period) 11,129,000 11,004,000
7,046,000 Percentage change during period 1 % 51 % 1 %
Client assets (beginning of period, in billions) $1,118.5 $882.4
$773.8 Client assets (end of period, in billions) $1,178.8 $1,118.5
$797.0 Percentage change during period 5 % 27 % 3 %
Net Interest
Revenue:
Segregated
cash:
Average balance (in billions) $9.9 $7.7 $8.7 Average annualized
yield 1.09 % 0.93 % 0.30 % Interest revenue (in millions) $28
$18 $7
Client margin
balances:
Average balance (in billions) $17.6 $13.8 $11.9 Average annualized
yield 4.25 % 4.08 % 3.56 % Interest revenue (in millions) $191
$144 $108
Securities
borrowing/lending:
Average securities borrowing balance (in billions) $1.1 $1.1 $0.9
Average securities lending balance (in billions) $2.6 $2.4
$1.9 Net interest revenue - securities
borrowing/lending (in millions) $53 $41 $33
Other cash and
interest-earning investments:
Average balance (in billions) $3.0 $4.1 $2.9 Average annualized
yield 0.82 % 0.79 % 0.44 % Interest revenue - net (in millions) $6
$8 $3
Client credit
balances:
Average balance (in billions) $21.4 $16.6 $16.1 Average annualized
cost 0.03 % 0.02 % 0.01 % Interest expense (in millions) ($2 ) ($1
) ($0 ) Average interest-earning assets (in billions) $31.6
$26.7 $24.4 Average annualized yield 3.42 % 3.08 % 2.42 % Net
interest revenue (in millions) $276 $210 $151
NOTE: See Glossary of Terms on the
Company's website at www.amtd.com for definitions of the above
metrics.
TD AMERITRADE HOLDING CORPORATION RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES Dollars in millions, except per
share amounts (Unaudited)
Quarter Ended Fiscal Year Ending
Dec. 31, 2017 Sept. 30, 2017 Dec. 31, 2016
Sept. 30, 2018*
Non-GAAP Net
Income and Non-GAAP Diluted EPS (1)
Amount Diluted EPS Amount Diluted EPS
Amount Diluted EPS Diluted EPS Range
Net income and diluted EPS - GAAP $ 297 $ 0.52 $ 211 $ 0.39 $ 216 $
0.41 $ 1.85 $ 2.45 Non-GAAP adjustments: Amortization of acquired
intangible assets 38 0.07 22 0.04 19 0.03 0.25 0.25
Acquisition-related expenses 179 0.31 61 0.11 3 0.01 0.72 0.56
Income tax effect of above adjustments (59 ) (0.10 )
(31 ) (0.05 ) (8 ) (0.02 ) (0.27
) (0.21 ) Non-GAAP net income and non-GAAP diluted EPS $ 455
$ 0.80 $ 263 $ 0.49 $ 230 $ 0.43
$ 2.55 $ 3.05
Quarter
Ended Dec. 31, 2017 Sept. 30, 2017 Dec. 31,
2016 $ % of Net Rev. $ % of Net
Rev. $ % of Net Rev.
EBITDA
(2)
Net income - GAAP $ 297 23.6 % $ 211 21.5 % $ 216 25.1 % Add:
Depreciation and amortization 34 2.7 % 28 2.8 % 24 2.8 %
Amortization of acquired intangible assets 38 3.0 % 22 2.2 % 19 2.2
% Interest on borrowings 20 1.6 % 23 2.3 % 14 1.6 % Provision for
income taxes 6 0.5 % 127 12.9 %
123 14.3 % EBITDA - non-GAAP $ 395 31.4 % $ 411
41.8 % $ 396 46.1 %
As of
Dec. 31, Sept. 30, June 30, Mar. 31,
Dec. 31, 2017 2017 2017 2017
2016
Liquid Assets
Available for Corporate Investing and Financing Activities
(3)
Cash and cash equivalents - GAAP $ 1,644 $ 1,472 $ 2,880 $ 2,231 $
1,662
Less:
Non-corporate cash and cash equivalents (844 ) (1,174
) (973 ) (1,286 ) (1,203 ) Corporate cash and
cash equivalents 800 298 1,907 945 459 Corporate investments - 714
747 747 747
Less:
Corporate liquidity maintained for operational contingencies (723 )
(723 ) (723 ) (723 ) (773 ) Amounts maintained for corporate
working capital (65 ) (87 ) (87 ) (87 ) (87 ) Amounts held as
collateral for derivative contracts, net (8 ) (40 )
(34 ) (40 ) (32 ) Excess corporate cash and
cash equivalents and investments 4 162 1,810 842 314 Excess
regulatory net capital over management targets 85
46 8 122 478
Liquid assets available for corporate investing and
financing activities - non-GAAP $ 89 $ 208 $ 1,818
$ 964 $ 792 Note: The term "GAAP" in
the following explanation refers to generally accepted accounting
principles in the United States. * Represents the range of
the Non-GAAP Diluted EPS included within the January 22, 2018
Outlook Statement. (1) Non-GAAP net income and non-GAAP
diluted earnings per share (EPS) are non-GAAP financial measures as
defined by SEC Regulation G. We define non-GAAP net income as net
income adjusted to remove the after-tax effect of amortization of
acquired intangible assets and acquisition-related expenses. We
consider non-GAAP net income and non-GAAP diluted EPS as important
measures of our financial performance because they exclude certain
items that may not be indicative of our core operating results and
business outlook and will allow for a better evaluation of the
operating performance of the business and facilitate a meaningful
comparison of our results in the current period to those in prior
and future periods. Amortization of acquired intangible assets is
excluded because management does not believe it is indicative of
our underlying business performance. Acquisition-related expenses
are excluded as these costs are directly related to our acquisition
of Scottrade Financial Services, Inc. and are not representative of
the costs of running the Company’s on-going business. Non-GAAP net
income and non-GAAP diluted EPS should be considered in addition
to, rather than as a substitute for, GAAP net income and diluted
EPS. (2) 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 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, GAAP pre-tax income, net income and cash flows from
operating activities. (3) Liquid assets available for
corporate investing and financing activities is considered a
non-GAAP financial measure as defined by SEC Regulation G. We
consider "liquid assets available for corporate investing and
financing activities" to be an important measure of our liquidity.
We include the excess capital of our regulated subsidiaries in the
calculation of liquid assets available for corporate investing and
financing activities, rather than simply including the regulated
subsidiaries' cash and cash equivalents, because capital
requirements may limit the amount of cash available for dividend
from the regulated subsidiaries to the parent company. Excess
capital, as defined below, is generally available for dividend from
the regulated subsidiaries to the parent company. Liquid assets
available for corporate investing and financing activities should
be considered as a supplemental measure of liquidity, rather than
as a substitute for GAAP cash and cash equivalents. We
define liquid assets available for corporate investing and
financing activities as the sum of (a) excess corporate cash and
cash equivalents and investments, less securities sold under
agreements to repurchase and (b) our regulated subsidiaries' net
capital in excess of minimum operational targets established by
management. Excess corporate cash and cash equivalents and
investments includes cash and cash equivalents from our investment
advisory subsidiaries and excludes (i) amounts being maintained to
provide liquidity for operational contingencies, including lending
to our broker-dealer and FCM/FDM subsidiaries under intercompany
credit agreements, (ii) amounts maintained for corporate working
capital and (iii) the net amounts held as collateral for derivative
contracts. Liquid assets available for corporate investing and
financing activities is based on more conservative measures of net
capital than regulatory requirements because we generally manage to
higher levels of net capital at our regulated subsidiaries than the
regulatory thresholds require.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180122006548/en/
TD Ameritrade Holding CorporationKim Hillyer,
402-574-6523Director,
Communicationskim.hillyer@tdameritrade.comorJeff Goeser,
402-597-8464Director, Investor
Relationsjeffrey.goeser@tdameritrade.com
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