Net New Client Assets of $14B
Record Diluted Earnings per Share of
$0.45(1)
Net Revenues of $838M
TD Ameritrade Holding Corporation (Nasdaq:AMTD) has released
results for the third quarter of fiscal 2016. The Company gathered
approximately $14 billion in net new client assets, and reported
462,000 client trades per day, on average, resulting in growth for
each of its core revenue streams.
The Company’s results for the quarter ended June 30, 2016
include the following: (2)
- Record $0.45 in earnings per diluted
share, on net income of $240 million, up 25 percent year over year
and inclusive of a favorable $33 million, or $0.06 per share, tax
liability adjustment(1)
- Net new client assets of approximately
$14 billion, an annualized growth rate of 8 percent
- Average client trades per day of
approximately 462,000, an activity rate of 6.8 percent
- Net revenues of $838 million, 56
percent of which were asset-based
- Record investment product fee revenue
of $96 million, up 13 percent year over year
- Pre-tax income of $334 million, or 40
percent of net revenues
- EBITDA(3) of $393 million, or 47
percent of net revenues
- Record interest rate-sensitive
assets(4) of $113 billion, up 10 percent year over year
- Record client assets of $736 billion,
up 5 percent year over year
“During the quarter we remained focused on what we could control
and delivered strong organic growth,” said Fred Tomczyk, chief
executive officer. “Net new client assets were up 16 percent year
over year at $14 billion, client trading remained strong at an
average of 462,000 trades per day, and investment product fees from
guidance and advice products were a record $96 million. As we enter
our final quarter of fiscal 2016, our focus will be on finishing
the year strongly, completing our CEO transition and positioning
ourselves for 2017.”
“Results this quarter reflected mixed investor sentiment.
Long-term investors expressed some reticence to move new money,
while traders increased their equity exposure. Both segments were
opportunistic, using events like the historic Brexit vote, to lean
into the market decline,” said Tim Hockey, president. “We expect
these bouts of volatility to continue, underscoring the importance
of our client value proposition. So, we must continue to innovate
and provide our clients with powerful tools, a variety of products
and mobility through cutting-edge apps to help them respond to
potential opportunities.”
“We are reporting a record $0.45 in earnings per share for the
quarter, which is reflective of solid organic growth and includes a
$0.06 benefit we realized as the result of a tax liability
adjustment,” said Steve Boyle, executive vice president and chief
financial officer. “Interest rate-sensitive assets, now at $113
billion, continue to rise, we remain disciplined on expenses, and
we returned nearly $140 million in capital to our shareholders
through cash dividends and share repurchases. It was a good
quarter, and our core business remains well-positioned for the
future.”
Capital Management
The Company paid $90 million in its third fiscal quarter, or
$0.17 per share, in cash dividends. The Company also repurchased
approximately 1.7 million shares of its common stock.
The Company has declared a $0.17 per share quarterly cash
dividend, payable on Aug. 18, 2016 to all holders of record of
common stock as of Aug. 4, 2016.
Company Hosts Conference Call
TD Ameritrade will host its June Quarter conference call this
morning, July 19, 2016, at 8:30 a.m. EDT (7:30 a.m. CDT).
Participants may listen to the conference call by dialing
877-648-7976. 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
855-859-2056 and entering the Conference ID 38225239 beginning at
11:30 a.m. EDT (10:30 a.m. CDT) on July 19, 2016. The replay will
be available until 11:59 p.m. EDT (10:59 p.m. CDT) on July 27,
2016. 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 20, 2016.
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 Corporation
Millions of investors and independent registered investment
advisors (RIAs) have turned to TD Ameritrade’s (Nasdaq: 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 40 years. An
official sponsor of the 2016 U.S. Olympic Team, as well as an
official sponsor of the National Football League,
TD Ameritrade has time and again been recognized as a leader
in investment services. Please visit TD Ameritrade's newsroom
or www.amtd.com for more information, or read our stories at
http://freshaccounts.amtd.com.
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, 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. 20, 2015 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 Diluted earnings per share for the third quarter ended June
30, 2016 includes a favorable $33 million tax liability
remeasurement, or a $0.06 per share impact. Accounting rules for
uncertain tax positions require that any change in measurement of a
tax position taken in a prior year be recognized as a discrete
event in the period in which the change occurs. These measurement
changes may cause some volatility in our effective income tax rate
and affect the comparability of our results of operations from
period to period.
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 See attached reconciliation of non-GAAP financial
measures.
4 Interest rate-sensitive assets consist of spread-based assets
and money market mutual funds. Ending balances as of June 30,
2016.
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 Nine Months Ended June 30, 2016
Mar. 31, 2016 June 30, 2015 June 30, 2016
June 30, 2015 Revenues: Transaction-based revenues:
Commissions and transaction fees $ 347 $ 360 $ 328 $ 1,035 $ 1,036
Asset-based revenues: Insured deposit account fees 234 235
209 696 620 Net interest revenue 143 147 156 444 467 Investment
product fees 96 88 85 276
253 Total asset-based revenues 473 470 450 1,416 1,340
Other revenues 18 16 16
46 39 Net revenues 838 846 794
2,497 2,415 Operating expenses:
Employee compensation and benefits 209 208 202 617 608 Clearing and
execution costs 35 37 36 102 108 Communications 33 33 31 99 92
Occupancy and equipment costs 43 43 40 128 121 Depreciation and
amortization 23 22 23 67 69 Amortization of acquired intangible
assets 22 22 22 66 67 Professional services 47 37 43 121 120
Advertising 58 81 54 202 199 Other 20 20 18
61 66 Total operating expenses
490 503 469 1,463 1,450
Operating income 348 343 325 1,034 965 Other expense
(income): Interest on borrowings 14 13 13 39 30 Gain on sale of
investments - - (7 ) - (7 ) Other - - -
- 1 Total other expense (income) 14
13 6 39 24 Pre-tax
income 334 330 319 995 941 Provision for income taxes 94
125 122 338 344 Net
income $ 240 $ 205 $ 197 $ 657 $ 597 Earnings
per share - basic $ 0.45 $ 0.38 $ 0.36 $ 1.23 $ 1.10 Earnings per
share - diluted $ 0.45 $ 0.38 $ 0.36 $ 1.23 $ 1.09 Weighted
average shares outstanding - basic 529 533 544 533 544 Weighted
average shares outstanding - diluted 531 535 547 536 547
Dividends declared per share $ 0.17 $ 0.17 $ 0.15 $ 0.51 $ 0.45
TD AMERITRADE HOLDING
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS In
millions (Unaudited)
June 30, 2016 Sept. 30,
2015 Assets: Cash and cash equivalents $ 1,917 $ 1,978
Short-term investments 404 4 Segregated cash and investments 7,064
6,305 Broker/dealer receivables 1,293 862 Client receivables, net
12,162 12,770 Goodwill and intangible assets 3,062 3,128 Other
1,205 1,328 Total assets $ 27,107 $ 26,375
Liabilities and stockholders' equity: Liabilities: Broker/dealer
payables $ 1,932 $ 2,707 Client payables 17,504 16,035 Long-term
debt 1,828 1,800 Other 871 930 Total liabilities
22,135 21,472 Stockholders' equity 4,972 4,903 Total
liabilities and stockholders' equity $ 27,107 $ 26,375
TD
AMERITRADE HOLDING CORPORATION SELECTED OPERATING DATA
(Unaudited)
Quarter Ended Nine Months Ended
June 30, 2016
Mar. 31, 2016 June 30, 2015 June 30, 2016
June 30, 2015
Key
Metrics:
Net new assets (in billions) $13.6 $14.1 $11.7 $45.2 $46.8 Net new
asset growth rate (annualized) 8% 8% 7% 9% 10% Average client
trades per day 461,941 509,120 433,759 469,262 455,642
Profitability
Metrics:
Operating margin 41.5% 40.5% 40.9% 41.4% 40.0% Pre-tax margin 39.9%
39.0% 40.2% 39.8% 39.0% Return on average stockholders' equity
(annualized) 19.5% 16.6% 15.9% 17.7% 16.5% Net profit margin 28.6%
24.2% 24.8% 26.3% 24.7% EBITDA(1) as a percentage of net revenues
46.9% 45.7% 47.5% 46.7% 45.8%
Liquidity
Metrics:
Interest on borrowings (in millions) $14 $13 $13 $39 $30 Interest
coverage ratio (EBITDA(1)/interest on borrowings) 28.1 29.8 29.0
29.9 36.9 Cash and cash equivalents (in billions) $1.9 $2.5 $2.2
$1.9 $2.2
Liquid assets available for corporate
investing and financing activities(1) (in billions)
$0.7 $0.7 $0.6 $0.7 $0.6
Transaction-Based
Revenue Metrics:
Total trades (in millions) 29.6 31.1 27.3 88.2 85.2 Average
commissions and transaction fees per trade $11.72 $11.60 $11.99
$11.74 $12.16 Average client trades per funded account (annualized)
17.0 19.1 16.7 17.6 17.8 Activity rate - funded accounts 6.8% 7.6%
6.7% 7.0% 7.1% Trading days 64.0 61.0 63.0 188.0 187.0 Order
routing revenue (in millions) $77 $76 $71 $223 $223
Spread-Based
Asset Metrics:
Average insured deposit account balances (in billions) $83.4 $84.0
$74.8 $82.6 $74.9 Average interest-earning assets (in billions)
22.7 21.8 20.5 22.2 19.8 Average spread-based balances (in
billions) $106.1 $105.8 $95.3 $104.8 $94.7 Insured deposit
account fee revenue (in millions) $234 $235 $209 $696 $620 Net
interest revenue (in millions) 143 147 156 444 467 Spread-based
revenue (in millions) $377 $382 $365 $1,140 $1,087 Avg.
annualized yield - insured deposit account fees 1.11% 1.11% 1.10%
1.11% 1.09% Avg. annualized yield - interest-earning assets 2.50%
2.66% 3.02% 2.62% 3.11% Net interest margin (NIM) 1.41% 1.43% 1.51%
1.43% 1.51%
Fee-Based
Investment Metrics:
Money market mutual
fund fees:
Average balance (in billions) $5.8 $5.8 $5.6 $5.8 $5.6 Average
annualized yield 0.26% 0.18% 0.00% 0.16% 0.00% Fee revenue (in
millions) $4 $2 $0 $7 $0
Market fee-based
investment balances:
Average balance (in billions) $156.3 $147.3 $155.7 $152.2 $150.1
Average annualized yield 0.23% 0.23% 0.22% 0.23% 0.22% Fee revenue
(in millions) $92 $86 $85 $269 $253 Average fee-based
investment balances (in billions) $162.1 $153.1 $161.3 $158.0
$155.7 Average annualized yield 0.23% 0.23% 0.21% 0.23% 0.21%
Investment product fee revenue (in millions) $96 $88 $85 $276 $253
(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, 2016 Mar. 31, 2016 June 30, 2015
June 30, 2016 June 30, 2015
Client Account
and Client Asset Metrics:
Funded accounts (beginning of period) 6,777,000 6,686,000 6,467,000
6,621,000 6,301,000 Funded accounts (end of period) 6,872,000
6,777,000 6,551,000 6,872,000 6,551,000 Percentage change during
period 1% 1% 1% 4% 4% Client assets (beginning of period, in
billions) $711.2 $695.3 $695.3 $667.4 $653.1 Client assets (end of
period, in billions) $736.3 $711.2 $702.3 $736.3 $702.3 Percentage
change during period 4% 2% 1% 10% 8%
Net Interest
Revenue:
Segregated
cash:
Average balance (in billions) $7.4 $6.5 $4.0 $6.7 $4.6 Average
annualized yield 0.25% 0.19% 0.11% 0.18% 0.13% Interest revenue (in
millions) $5 $3 $1 $9 $4
Client margin
balances:
Average balance (in billions) $11.5 $11.6 $12.5 $11.8 $12.0 Average
annualized yield 3.69% 3.79% 3.56% 3.67% 3.62% Interest revenue (in
millions) $107 $111 $112 $329 $328
Securities
borrowing/lending:
Average securities borrowing balance (in billions) $1.0 $0.7 $1.0
$0.8 $0.9 Average securities lending balance (in billions) $2.1
$1.9 $2.2 $2.1 $2.2 Net interest revenue - securities
borrowing/lending (in millions) $30 $32 $43 $104 $135
Other cash and
interest-earning investments:
Average balance (in billions) $2.8 $3.0 $3.0 $2.9 $2.3 Average
annualized yield 0.21% 0.17% 0.03% 0.14% 0.04% Interest revenue -
net (in millions) $1 $1 $0 $3 $1
Client credit
balances:
Average balance (in billions) $14.7 $14.4 $12.2 $14.4 $12.1 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) $22.7 $21.8 $20.5 $22.2 $19.8 Average
annualized yield 2.50% 2.66% 3.02% 2.62% 3.11% Net interest revenue
(in millions) $143 $147 $156 $444 $467
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 (Unaudited)
Quarter
Ended Nine Months Ended June 30, 2016 Mar. 31,
2016 June 30, 2015 June 30, 2016 June 30,
2015 $ % of Net Rev. $ % of Net
Rev. $ % of Net Rev. $ % of Net
Rev. $ % of Net Rev.
EBITDA
(1)
EBITDA $ 393 46.9 % $ 387 45.7 % $ 377 47.5 % $ 1,167 46.7 % $
1,107 45.8 % Less: Depreciation and amortization (23 ) (2.7 %) (22
) (2.6 %) (23 ) (2.9 %) (67 ) (2.7 %) (69 ) (2.9 %) Amortization of
acquired intangible assets (22 ) (2.6 %) (22 ) (2.6 %) (22 ) (2.8
%) (66 ) (2.6 %) (67 ) (2.8 %) Interest on borrowings (14 ) (1.7 %)
(13 ) (1.5 %) (13 ) (1.6 %) (39 ) (1.6 %) (30 ) (1.2 %) Provision
for income taxes (94 ) (11.2 %) (125 ) (14.8 %)
(122 ) (15.4 %) (338 ) (13.5 %) (344 ) (14.2
%) Net income $ 240 28.6 % $ 205 24.2 % $ 197
24.8 % $ 657 26.3 % $ 597 24.7 %
As
of June 30, Mar. 31, Dec. 31, Sept.
30, June 30, 2016 2016 2015
2015 2015
Liquid Assets
Available for Corporate Investing and Financing Activities
(2)
Liquid assets available for corporate investing and financing
activities $ 728 $ 713 $ 584 $ 530 $ 581
Plus:
Non-corporate cash and cash
equivalents
1,088 1,430 934 909 1,116 Corporate liquidity maintained for
operational contingencies 764 764 764 750 750
Less:
Corporate short-term investments
(400 ) - (201 ) - - Excess broker-dealer regulatory net capital
(263 ) (431 ) (346 ) (211 ) (214
) Cash and cash equivalents $ 1,917 $ 2,476 $ 1,735
$ 1,978 $ 2,233 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
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 broker-dealer
subsidiaries in the calculation of liquid assets available for
corporate investing and financing activities, 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. Liquid assets
available for corporate investing and financing activities should
be considered as a supplemental measure of liquidity, rather than
as a substitute for cash and cash equivalents. We define
liquid assets available for corporate investing and financing
activities as the sum of (a) corporate cash and cash equivalents
and short-term investments, excluding an amount that is being
maintained to provide liquidity for operational contingencies,
including lending to our broker-dealer, futures commission merchant
and forex dealer member subsidiaries under intercompany credit
agreements and (b) 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 available for corporate investing
and financing activities is based on more conservative measures of
broker-dealer net capital than regulatory requirements because we
generally manage to higher levels of net capital at the
broker-dealer subsidiaries than the regulatory thresholds require.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160719005461/en/
At the CompanyTD 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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