Company Conference Call Moved to Monday (7/22)
at 5:00 p.m. EDT GAAP Diluted EPS $1.00; Non-GAAP Diluted EPS
$1.04(1) Net New Client Assets of $19.5B Average Client Trades per
Day of 825,000
TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released
results for the third quarter of fiscal 2019.
Financial results for the quarter ended June 30, 2019 include
the following:(2)
- Net revenues of $1.5 billion, up 8 percent year-over-year
- $1.00 in GAAP earnings per diluted share, up 27 percent year
over year, on net income of $555 million
- $1.04 in Non-GAAP earnings per diluted share,(1) up 17 percent
year over year
- Pre-tax GAAP income of $743 million, or 50 percent of net
revenues
- Net new client assets of approximately $19.5 billion, an
annualized growth rate of 6 percent
- Average client trades per day of approximately 825,000, up 5
percent year over year
“After markets hit new record highs early in the quarter and
then pulled back sharply in May, the S&P 500 posted its
strongest June return in more than 60 years. Investors are pleased
with the market’s strong 2019 performance although they are mindful
of persisting uncertainty related to U.S. trade relations and
global economic growth,” said Tim Hockey, president and chief
executive officer, TD Ameritrade. “One sign of optimism and a
driver of investor engagement this quarter was a robust season of
high profile IPOs which reinforces the broad-based desire of retail
investors to invest in the brands they know and trust.
“Our business fundamentals are solid and we’re pleased with our
year-to-date performance that reflects the strength and diversity
of our business model,” Hockey continued. “Client satisfaction
scores are on the rise as our focused efforts to transform the
client experience are gaining momentum. At TD Ameritrade, the
client is at the center of everything we do, and we’re well
positioned to deliver an easy, personal and enlightening experience
for them in any macroeconomic environment.”
“We delivered strong results in the quarter which were further
enhanced as we recognized some notable items that were net
favorable to earnings,” said Steve Boyle, executive vice president
and chief financial officer, TD Ameritrade. “Both revenue and
pre-tax margins rose, buoying our strong balance sheet. As we have
demonstrated in the past, our sound financial position, disciplined
expense management and long-term view will help us successfully
navigate through various market cycles and deliver on our financial
targets.”
Capital Management The company paid $166 million in cash
dividends its third fiscal quarter, or $0.30 per share.
The company has declared a $0.30 per share quarterly cash
dividend, payable on August 20, 2019 to all holders of record of
common stock as of August 6, 2019.
During the June quarter, the company paid $242 million in cash
to repurchase 4.7 million shares. As of June 30, 2019, the company
has approximately 7 million shares remaining for share repurchases
under its stock repurchase program.
*NEW* Company Updates Time of Conference Call TD
Ameritrade will hold a conference call to discuss these financial
results, as well as a special leadership announcement, and to take
questions from analysts today, July 22, 2019, at 5:00 p.m. EDT
(4:00 p.m. CDT). Participants may listen to the conference call
by dialing 866-393-4306.
A replay of the phone call will be available by dialing
855-859-2056 and entering the Conference ID 9195175 beginning at
8:00 p.m. EDT (7:00 p.m. CDT) on July 22, 2019. The replay will be
available until 11:59 p.m. EDT (10:59 p.m. CDT) on July 29, 2019. A
transcript of the call will be available on the company’s corporate
web site, www.amtd.com, via the “Earnings" page beginning Friday,
July 26, 2019.
More information about TD Ameritrade’s upcoming corporate events
and management speaking engagements, such as quarterly earnings
conference calls, is available via the company’s Calendar which is
located 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 Corporation TD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling approximately $1.3 trillion in assets, and
custodial services to more than 7,000 registered investment
advisors. We are a leader in U.S. retail trading, executing an
average of approximately 800,000 trades per day for our clients,
more than 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.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) / SIPC (www.SIPC.org)
Safe Harbor This 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,
forward-looking statements contained in this discussion include our
expectations regarding: the effect of client trading activity on
our results of operations; the effect of changes in interest rates
on our net interest spread; the amount of net revenues; average
commissions per trade; the amounts of total operating expenses and
advertising expense; our effective income tax rate; our capital and
liquidity needs and our plans to finance such needs; and our plans
to return capital to stockholders through cash dividends and share
repurchases. 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:
economic, social and political conditions and other securities
industry risks; interest rate risks; liquidity risks; credit risk
with clients and counterparties; risk of liability for errors in
clearing functions; systemic risk; systems failures, delays and
capacity constraints; network security risks; competition; reliance
on external service providers; new laws and regulations affecting
our business; net capital requirements; extensive regulation,
regulatory uncertainties and legal matters; difficulties and delays
in integrating the Scottrade Financial Services, Inc. ("Scottrade")
business or fully realizing cost savings and other benefits from
the acquisition; disruptions from the Scottrade acquisition; or
other factors making it more difficult to maintain relationships
with employees, customers, other business partners or governmental
entities; the inability to achieve synergies or to implement
integration plans and other consequences associated with other
acquisitions; and the other risks and uncertainties set forth under
Item 1A. – Risk Factors of the Company's annual report on Form 10-K
for the fiscal year ended September 30, 2018. These forward-looking
statements speak only as of the date on which the statements were
made. We undertake no obligation to publicly update or revise these
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 the “Investor
relations” section of www.amtd.com under the “Financial Reports”
heading for more information on how these metrics are
calculated.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) / SIPC (www.SIPC.org).
Advisory services are provided by TD Ameritrade Investment
Management, LLC (“TD Ameritrade Investment Management”), a
registered investment advisor. Brokerage services provided by TD
Ameritrade, Inc. TD Ameritrade Investment Management provides
discretionary advisory services for a fee. Risks applicable to any
portfolio are those associated with its underlying securities. For
more information, please see the Disclosure Brochure (Form ADV Part
2A) http://www.tdameritrade.com/forms/TDA4855.pdf
TD AMERITRADE HOLDING CORPORATION CONSOLIDATED STATEMENTS
OF INCOME In millions, except per share amounts (Unaudited)
Quarter Ended Nine Months Ended June 30,
2019 Mar. 31, 2019 June 30, 2018 June 30,
2019 June 30, 2018
Revenues:
Transaction-based revenues: Commissions and transaction fees
$
477
$
487
$
490
$
1,500
$
1,487
Asset-based revenues: Bank deposit account fees
421
430
387
1,280
1,149
Net interest revenue
383
362
332
1,120
916
Investment product fees
151
137
140
431
414
Total asset-based revenues
955
929
859
2,831
2,479
Other revenues
59
35
33
126
88
Net revenues
1,491
1,451
1,382
4,457
4,054
Operating expenses:
Employee compensation and
benefits
325
340
352
982
1,228
Clearing and execution costs
59
53
46
161
149
Communications
39
38
42
119
141
Occupancy and equipment costs
67
65
67
199
226
Depreciation and amortization
38
36
37
109
106
Amortization of acquired intangible assets
31
31
32
93
107
Professional services
71
74
70
218
230
Advertising
80
74
63
213
218
Other
61
35
42
142
286
Total operating expenses
771
746
751
2,236
2,691
Operating income
720
705
631
2,221
1,363
Other expense (income): Interest on borrowings
37
37
28
107
72
Gain on business-related divestiture
(60
)
-
-
(60
)
-
Loss on sale of investments
-
-
-
-
11
Other
-
-
-
(14
)
2
Total other expense (income)
(23
)
37
28
33
85
Pre-tax income
743
668
603
2,188
1,278
Provision for income taxes(1)
188
169
152
530
259
Net income
$
555
$
499
$
451
$
1,658
$
1,019
Earnings per share - basic
$
1.01
$
0.89
$
0.79
$
2.97
$
1.80
Earnings per share - diluted
$
1.00
$
0.89
$
0.79
$
2.96
$
1.79
Weighted average shares outstanding - basic
552
560
568
558
567
Weighted average shares outstanding - diluted
554
562
570
560
570
Dividends declared per share
$
0.30
$
0.30
$
0.21
$
0.90
$
0.63
(1) The provision for income taxes was lower for the nine
months ended June 30, 2018, primarily due to the realization of
approximately $78 million of after-tax benefits recognized during
the quarter ended December 31, 2017. These after-tax benefits were
primarily attributable to the enactment of the Tax Cuts and Jobs
Act.
TD AMERITRADE HOLDING CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS In millions (Unaudited)
June 30, 2019 Sept. 30, 2018 Assets: Cash and cash
equivalents
$
2,953
$
2,690
Segregated cash and investments
7,124
3,185
Broker/dealer receivables
1,780
1,374
Client receivables, net
20,847
22,616
Investments available-for-sale, at fair value
1,129
484
Goodwill and intangible assets
5,463
5,556
Other
1,823
1,615
Total assets
$
41,119
$
37,520
Liabilities and stockholders' equity: Liabilities: Broker/dealer
payables
$
3,210
$
2,980
Client payables
24,588
22,884
Long-term debt and other borrowings
3,574
2,535
Other
1,254
1,118
Total liabilities
32,626
29,517
Stockholders' equity
8,493
8,003
Total liabilities and stockholders' equity
$
41,119
$
37,520
TD AMERITRADE HOLDING CORPORATION SELECTED OPERATING
DATA (Unaudited)
Quarter Ended Nine Months Ended
June 30, 2019 Mar. 31, 2019 June 30, 2018
June 30, 2019 June 30, 2018 Key Metrics: Net new assets (in billions)
$
19.5
$
19.6
$
19.8
$
71.0
$
68.4
Net new asset growth rate (annualized)
6
%
7
%
7
%
7
%
8
%
Average client trades per day
824,600
860,359
783,665
870,744
816,445
Profitability Metrics:
Operating margin
48.3
%
48.6
%
45.7
%
49.8
%
33.6
%
Pre-tax margin
49.8
%
46.0
%
43.6
%
49.1
%
31.5
%
Return on average stockholders' equity (annualized)
26.5
%
23.7
%
23.3
%
26.5
%
18.0
%
Net profit margin
37.2
%
34.4
%
32.6
%
37.2
%
25.1
%
EBITDA(1) as a percentage of net revenues
56.9
%
53.2
%
50.7
%
56.0
%
38.6
%
Liquidity Metrics: Interest on
borrowings (in millions)
$
37
$
37
$
28
$
107
$
72
Interest coverage ratio (EBITDA(1)/interest on borrowings)
22.9
20.9
25.0
23.3
21.7
Cash and cash equivalents (in billions)
$
3.0
$
2.7
$
1.3
$
3.0
$
1.3
Liquid assets(1) (in billions)
$
2.8
$
2.6
$
0.9
$
2.8
$
0.9
Transaction-Based Revenue
Metrics: Total trades (in millions)
51.9
52.5
50.2
162.0
153.1
Average commissions per trade
$
6.92
$
7.01
$
7.40
$
7.01
$
7.48
Trading days
63.0
61.0
64.0
186.0
187.5
Order routing revenue (in millions)
$
117
$
119
$
119
$
365
$
341
Spread-Based Asset Metrics:
Average bank deposit account balances (in billions)
$
110.3
$
114.7
$
116.3
$
113.1
$
117.9
Average interest-earning assets (in billions)
32.6
31.0
30.3
31.2
31.3
Average spread-based balances (in billions)
$
142.9
$
145.7
$
146.6
$
144.3
$
149.2
Bank deposit account fee revenue (in millions)
$
421
$
430
$
387
$
1,280
$
1,149
Net interest revenue (in millions)
383
362
332
1,120
916
Spread-based revenue (in millions)
$
804
$
792
$
719
$
2,400
$
2,065
Avg. annualized yield - bank deposit account fees
1.51
%
1.50
%
1.32
%
1.49
%
1.28
%
Avg. annualized yield - interest-earning assets
4.65
%
4.66
%
4.34
%
4.73
%
3.86
%
Net interest margin (NIM)
2.23
%
2.17
%
1.94
%
2.19
%
1.83
%
(1) See attached reconciliation of non-GAAP financial
measures. 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 Nine Months Ended June 30, 2019
Mar. 31, 2019 June 30, 2018 June 30, 2019
June 30, 2018 Client Account and
Client Asset Metrics: Funded accounts (beginning of
period)
11,763,000
11,630,000
11,266,000
11,514,000
11,004,000
Funded accounts (end of period)
11,876,000
11,763,000
11,399,000
11,876,000
11,399,000
Percentage change during period
1
%
1
%
1
%
3
%
4
%
Client assets (beginning of period, in billions)
$1,297.1
$1,161.6
$1,185.7
$1,297.5
$1,118.5
Client assets (end of period, in billions)
$1,306.6
$1,297.1
$1,229.6
$1,306.6
$1,229.6
Percentage change during period
1
%
12
%
4
%
1
%
10
%
Net Interest Revenue:
Segregated cash: Average balance (in
billions)
$5.7
$5.8
$5.6
$4.8
$8.1
Average annualized yield
2.37
%
2.26
%
1.61
%
2.25
%
1.29
%
Interest revenue (in millions)
$34
$33
$23
$82
$79
Client margin balances: Average
balance (in billions)
$20.6
$19.4
$20.6
$20.7
$19.1
Average annualized yield
5.19
%
5.28
%
4.69
%
5.19
%
4.47
%
Interest revenue (in millions)
$271
$257
$244
$816
$648
Securities borrowing/lending: Average
securities borrowing balance (in billions)
$1.3
$0.9
$0.8
$0.9
$0.9
Average securities lending balance (in billions)
$3.0
$2.3
$3.1
$2.7
$2.9
Net interest revenue - securities borrowing/lending (in millions)
$54
$49
$55
$158
$168
Other cash and interest-earning
investments: Average balance (in billions)
$5.0
$4.9
$3.3
$4.8
$3.2
Average annualized yield
2.03
%
2.03
%
1.49
%
1.97
%
1.12
%
Interest revenue - net (in millions)
$26
$25
$12
$71
$27
Client credit balances: Average
balance (in billions)
$19.0
$19.2
$19.6
$19.2
$20.8
Average annualized cost
0.05
%
0.05
%
0.04
%
0.05
%
0.03
%
Interest expense (in
millions)
($2
)
($2
)
($2
)
($7
)
($6
)
Average interest-earning assets (in billions)
$32.6
$31.0
$30.3
$31.2
$31.3
Average annualized yield
4.65
%
4.66
%
4.34
%
4.73
%
3.86
%
Net interest revenue (in millions)
$383
$362
$332
$1,120
$916
Investment Product Fee Revenue:
Fee-based investment balances: Average
balance (in billions)
$290.6
$273.7
$256.8
$275.9
$246.1
Average annualized yield
0.21
%
0.20
%
0.22
%
0.21
%
0.22
%
Investment product fee revenue (in millions)
$151
$137
$140
$431
$414
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 Nine Months
Ended June 30, 2019 Mar. 31, 2019 June 30,
2018 June 30, 2019 June 30, 2018 Non-GAAP Net Income and Non-GAAP Diluted EPS
(1) Amount Diluted EPS Amount
Diluted EPS Amount Diluted EPS Amount
Diluted EPS Amount Diluted EPS Net
income and diluted EPS - (GAAP)
$
555
$
1.00
$
499
$
0.89
$
451
$
0.79
$
1,658
$
2.96
$
1,019
$
1.79
Non-GAAP adjustments: Amortization of acquired intangible assets
31
0.06
31
0.06
32
0.06
93
0.17
107
0.19
Acquisition-related expenses
-
-
-
-
46
0.08
-
-
384
0.67
Income tax effect of above adjustments
(8
)
(0.02
)
(8
)
(0.02
)
(21
)
(0.04
)
(24
)
(0.05
)
(133
)
(0.23
)
Non-GAAP net income and non-GAAP diluted EPS
$
578
$
1.04
$
522
$
0.93
$
508
$
0.89
$
1,727
$
3.08
$
1,377
$
2.42
Quarter Ended Nine Months Ended June
30, 2019 Mar. 31, 2019 June 30, 2018 June 30,
2019 June 30, 2018
$
% of Net Rev.
$
% of Net Rev.
$
% of Net Rev.
$
% of Net Rev.
$
% of Net Rev.
EBITDA (2) Net income - (GAAP)
$
555
37.2
%
$
499
34.4
%
$
451
32.6
%
$
1,658
37.2
%
$
1,019
25.1
%
Add: Depreciation and amortization
38
2.5
%
36
2.5
%
37
2.7
%
109
2.4
%
106
2.6
%
Amortization of acquired intangible assets
31
2.1
%
31
2.1
%
32
2.3
%
93
2.1
%
107
2.6
%
Interest on borrowings
37
2.5
%
37
2.5
%
28
2.0
%
107
2.4
%
72
1.8
%
Provision for income taxes
188
12.6
%
169
11.6
%
152
11.0
%
530
11.9
%
259
6.4
%
EBITDA - (non-GAAP)
$
849
56.9
%
$
772
53.2
%
$
700
50.7
%
$
2,497
56.0
%
$
1,563
38.6
%
As of June 30, Mar. 31, Dec.
31, Sept. 30, June 30,
2019
2019
2018
2018
2018
Liquid Assets (3) Cash and cash
equivalents - (GAAP)
$
2,953
$
2,674
$
5,117
$
2,690
$
1,343
Less: Non-corporate cash and cash equivalents
(2,004
)
(2,020
)
(4,247
)
(2,307
)
(1,044
)
Corporate cash and cash equivalents
949
654
870
383
299
Corporate investments
1,129
894
884
386
388
Excess regulatory net capital over management targets
689
1,061
862
296
166
Liquid assets - (non-GAAP)
$
2,767
$
2,609
$
2,616
$
1,065
$
853
Note: The term "GAAP" in the following explanation refers to
generally accepted accounting principles in the United States.
(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
may be useful in evaluating the operating performance of the
business and facilitating 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 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 to be 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 is considered a non-GAAP financial measure as defined
by SEC Regulation G. Liquid assets represents available capital,
including any capital from our regulated subsidiaries in excess of
established management operational targets. We include the excess
capital of our regulated subsidiaries in the calculation of liquid
assets, rather than simply including 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 should be
considered as a supplemental measure of liquidity, rather than as a
substitute for GAAP cash and cash equivalents. Liquid assets
may be utilized for general corporate purposes and is defined as
the sum of (a) corporate cash and cash equivalents, (b) corporate
investments, less securities sold under agreements to repurchase,
and (c) our regulated subsidiaries' net capital in excess of
minimum operational targets established by management. Corporate
cash and cash equivalents includes cash and cash equivalents from
our investment advisory subsidiaries. Liquid assets 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: https://www.businesswire.com/news/home/20190722005657/en/
At the Company Becky Niiya
Director, Corporate Communications (402) 574-6652
rebecca.niiya@tdameritrade.com
Jeff Goeser Managing Director, Investor Relations (402) 597-8464
jeffrey.goeser@tdameritrade.com
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