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TD Ameritrade Delivers 4th Consecutive Year of Double-Digit Net New Client Asset Growth Rate

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OMAHA, Neb.--(BUSINESS WIRE)--

TD Ameritrade Holding Corporation (NYSE: AMTD) has released results for fiscal 2012. Despite a continued difficult economic environment, the Company gathered $41 billion of net new client assets, maintaining its industry-leading, double-digit net new client asset growth rate for the 4th consecutive year.

The Company's results for the fiscal year ended Sept. 30, 2012 include the following: (1)

  • Net income of $586 million, or $1.06 per diluted share
  • Average client trades per day of approximately 360,000, an activity rate of 6.3 percent(2)
  • Net new client assets of $41 billion, an annual growth rate of 11 percent of beginning client assets
  • Net revenues of $2.6 billion, 56 percent of which were asset-based
  • Pre-tax income of $906 million, or 34 percent of net revenues
  • EBITDA of $1.1 billion, or 42 percent of net revenues(3)
  • Record interest rate-sensitive assets of $83 billion(4)
  • Record client assets of approximately $472 billion, up 25 percent year-over-year

“In each of the last four years, TD Ameritrade has delivered industry-leading, double-digit growth in asset gathering,” said Fred Tomczyk, president and chief executive officer. “In 2012 we grew total clients assets to a record $472 billion, up 25 percent year-over-year. We gathered $41 billion in net new client assets, an annual growth rate of 11 percent. We maintained our industry-leading position and again grew our market share in trading. And, we continued to make strategic investments in our client offering. We remain focused on what we can control, executing our strategy and building our long-term earnings power.”

“We're proud of our financial performance given the challenging operating environment,” said Bill Gerber, executive vice president and chief financial officer. “We have increased our quarterly dividend by 50 percent to 9 cents, and we will continue to take a disciplined approach to expense management and process improvement. We remain optimistic for the long term given our business model, dedicated associates and growth momentum.”

Fiscal 2013 Outlook

The Company has also released an updated Outlook Statement which reflects expected earnings of $1.00 to $1.20 per share for its 2013 fiscal year.

More information on the fiscal 2013 forecast is available through the Company's Outlook Statement, located in the “Investor” section of its Web site, www.amtd.com.

Fourth Quarter 2012 Results

In addition, the Company has released its results for the quarter ended Sept. 30, 2012, which include the following: (1)

  • Average client trades per day of approximately 328,000, an activity rate of 5.7 percent(2)
  • Net new client assets of approximately $10 billion, an annualized growth rate of 9 percent
  • Net revenues of $647 million, 58 percent of which were asset-based
  • Pre-tax income of $225 million, or 35 percent of net revenues
  • Net income of $143 million, or $0.26 per diluted share
  • EBITDA of $274 million, or 42 percent of net revenues(3)

Stock Repurchases

During the fourth quarter of fiscal 2012, TD Ameritrade repurchased 1.8 million shares of its common stock at an average price of $16.38 per share, for approximately $30 million. For the full year of fiscal 2012, the Company has used approximately $196 million to repurchase 11.8 million shares at an average price of $16.58 per share.

Quarterly Dividend Increase

The Company has declared a $0.09 per share quarterly cash dividend, an increase of 50 percent, from the previous quarter's dividend. The dividend is payable on Nov. 23, 2012 to all holders of record of common stock as of Nov. 9, 2012.

“In 2012, TD Ameritrade returned 56 percent of our net income to our shareholders,” Tomczyk continued. “Increasing our quarterly dividend by 50 percent to $0.09 per share is another effective way for us to continue returning that capital and expand our investor base. Our financial position and cash flow remain healthy, providing us with the continued flexibility to return capital to our shareholders while investing in future growth in these challenging macroeconomic times.”

Conference Call to discuss results to be rescheduled

The company's conference call discussing these results has been rescheduled for Monday, Nov. 5, 2012 at 8:30 a.m. ET (7:30 a.m. CT). Questions from analysts and the media will be addressed following the formal presentation, and executives will not be available for comment about the results until that time. However, financial information related to this press release, such as monthly operating metrics, an updated Outlook Statement, and the company's standard presentation slides has been posted to the company's corporate web site, www.amtd.com.

“We considered a number of alternatives, given the inclement weather situation on the East coast,” Tomczyk continued. “While we are still open for business, we have a large number of shareholders and analysts in the affected area, and we believe that this was the right decision to make. We will share our comments on the quarter and our fiscal year during Monday's conference call.”

Accessing the Conference Call

Participants may listen to the conference call by dialing 877-881-2595. The Company will also webcast the call through its corporate web site, www.amtd.com. Participants will be able to access the webcast from the Events and Presentations section of the site. A transcript of the webcast will also be available online beginning Tuesday, Nov. 6, 2012.

A phone replay of the call will be available by dialing 855-859-2056 and entering the Conference ID 14145637 beginning at 11:30 a.m. ET (10:30 a.m. CT) on Nov. 5, 2012. This replay will be available until 11:59 p.m. ET (10:59 p.m. CT) on Nov. 12, 2012. Interested parties may also view an archived version of the webcast, which will be available on www.amtd.com immediately following the call.

The Company asks that interested parties visit or subscribe to newsfeeds at www.amtd.com for the most up-to-date corporate financial information, presentation announcements, transcripts and archives. You can also follow the Company on Twitter, @TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.

AMTD-E

About TD Ameritrade Holding Corporation

Millions 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 37 years. An official sponsor of the 2012 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit the TD Ameritrade newsroom or www.amtd.com for more information.

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. 18, 2011 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 Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period.

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 September 30, 2012.

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 Fiscal Year Ended
Sept. 30, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 256 $ 266 $ 315 $ 1,087 $ 1,228
 
Asset-based revenues:
Interest revenue 117 120 125 456 497
Brokerage interest expense   (1 )   (2 )   (1 )   (6 )   (5 )
Net interest revenue 116 118 124 450 492
 
Insured deposit account fees 207 206 200 828 763
Investment product fees   52     54     41     196     166  
Total asset-based revenues 375 378 365 1,474 1,421
 
Other revenues   16     23     24     80     114  
 
Net revenues   647     667     704     2,641     2,763  
 
Operating expenses:
Employee compensation and benefits 167 176 174 690 675
Clearing and execution costs 23 22 28 89 100
Communications 28 29 25 111 107
Occupancy and equipment costs 38 36 38 150 142
Depreciation and amortization 19 18 17 72 67
Amortization of acquired intangible assets 23 23 24 92 97
Professional services 39 40 47 168 170
Advertising 58 50 49 248 253
Other   20     19     33     87     104  
Total operating expenses   415     413     435     1,707     1,715  
 
Operating income 232 254 269 934 1,048
 
Other expense (income):
Interest on borrowings 7 7 7 28 32
Loss on debt refinancing - - - - 1
Gain on sale of investments   -     -     (2 )   -     (2 )
Total other expense (income)   7     7     5     28     31  
 
Pre-tax income 225 247 264 906 1,017
 
Provision for income taxes   82     93     100     320     379  
 
Net income $ 143   $ 154   $ 164   $ 586   $ 638  
 
Earnings per share - basic $ 0.26 $ 0.28 $ 0.29 $ 1.07 $ 1.12
Earnings per share - diluted $ 0.26 $ 0.28 $ 0.29 $ 1.06 $ 1.11
 
Weighted average shares outstanding - basic 546 548 562 548 570
Weighted average shares outstanding - diluted 551 553 568 554 576
 
Dividends declared per share $ 0.06 $ 0.06 $ 0.05 $ 0.24 $ 0.20
 
 
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
       
Sept. 30, 2012 Sept. 30, 2011
Assets:
Cash and cash equivalents $ 915 $ 1,032
Short-term investments 154 4
Segregated cash and investments 4,030 2,519
Broker/dealer receivables 1,110 834
Client receivables, net 8,647 8,059
Goodwill and intangible assets 3,399 3,491
Other   1,258   1,187
Total assets $ 19,513 $ 17,126
 
Liabilities and stockholders' equity:
 
Liabilities:
Broker/dealer payables $ 1,992 $ 1,710
Client payables 10,728 8,979
Long-term debt 1,345 1,337
Other   1,023   984
Total liabilities 15,088 13,010
 
Stockholders' equity   4,425   4,116
 
Total liabilities and stockholders' equity $ 19,513 $ 17,126
 
 
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
                   
Quarter Ended Fiscal Year Ended
Sept. 30, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011

Key Metrics:

Net new assets (in billions) $10.1 $9.7 $12.4 $40.8 $41.5
Net new asset growth rate (annualized) 9% 9% 12% 11% 12%
Average client trades per day 328,280 355,449 415,739 359,631 398,986
 

Profitability Metrics:

Operating margin 35.9% 38.1% 38.1% 35.4% 37.9%
Pre-tax margin 34.9% 37.0% 37.5% 34.3% 36.8%
Return on client assets (annualized) 0.20% 0.22% 0.26% 0.21% 0.26%
Return on average stockholders' equity (annualized) 13.1% 14.3% 15.7% 13.8% 15.7%
EBITDA(1) as a percentage of net revenues 42.5% 44.3% 44.3% 41.6% 43.9%
 

Debt and Liquidity Metrics:

Interest on borrowings (in millions) $7 $7 $7 $28 $32
Average debt outstanding (in billions) $1.3 $1.3 $1.3 $1.3 $1.3
Leverage ratio (average debt/annualized EBITDA(1)) 1.1 1.1 1.0 1.1 1.0
Interest coverage ratio (EBITDA(1)/interest on borrowings) 40.0 41.8 45.9 38.9 37.9
Liquid assets - management target(1) (in billions) $1.1 $1.0 $0.9 $1.1 $0.9
Liquid assets - regulatory threshold(1) (in billions) $1.6 $1.6 $1.4 $1.6 $1.4
Cash and cash equivalents (in billions) $0.9 $0.9 $1.0 $0.9 $1.0
 

Transaction-Based Revenue Metrics:

Total trades (in millions) 20.5 22.4 26.6 89.9 100.7
Average commissions and transaction fees per trade(2) $12.47 $11.88 $11.85 $12.09 $12.18
Average client trades per funded account (annualized) 14.3 15.5 18.7 15.8 18.2
Activity rate - funded accounts 5.7% 6.2% 7.4% 6.3% 7.2%
Trading days 62.5 63.0 64.0 250.0 252.5
 

Spread-Based Asset Metrics:

Average interest-earning assets (in billions) $14.8 $15.2 $13.5 $14.9 $13.8
Average insured deposit account balances (in billions) 61.4 59.0 54.0 59.4 48.5
Average spread-based balance (in billions) $76.2 $74.2 $67.5 $74.3 $62.3
 
Net interest revenue (in millions) $116 $118 $124 $450 $492
Insured deposit account fee revenue (in millions) 207 206 200 828 763
Spread-based revenue (in millions) $323 $324 $324 $1,278 $1,255
 
Avg. annualized yield - interest-earning assets 3.06% 3.08% 3.57% 2.97% 3.52%
Avg. annualized yield - insured deposit account fees 1.32% 1.38% 1.45% 1.37% 1.55%
Net interest margin (NIM) 1.66% 1.73% 1.87% 1.69% 1.99%
 
Interest days 92 91 92 366 365
 

Fee-Based Investment Metrics:

Money market mutual fund fees:

Average balance (in billions) $4.9 $4.9 $8.5 $5.1 $8.7
Average annualized yield 0.05% 0.09% 0.06% 0.07% 0.10%
Fee revenue (in millions) $1 $1 $1 $3 $8
 

Market fee-based investment balances:

Average balance (in billions) $88.7 $83.3 $71.7 $81.0 $69.6
Average annualized yield 0.23% 0.25% 0.22% 0.23% 0.22%
Fee revenue (in millions) $51 $53 $40 $193 $158
 
Average fee-based investment balances (in billions) $93.6 $88.2 $80.1 $86.1 $78.3
Average annualized yield 0.22% 0.24% 0.20% 0.22% 0.21%
Investment product fee revenue (in millions) $52 $54 $41 $196 $166
 

Client Account and Client Asset Metrics:

New accounts opened 190,000 171,000 150,000 684,000 645,000
 
Funded accounts (beginning of period) 5,736,000 5,703,000 5,592,000 5,617,000 5,455,000
Funded accounts (end of period) 5,764,000 5,736,000 5,617,000 5,764,000 5,617,000
Percentage change during period 0% 1% 0% 3% 3%
 
Client assets (beginning of period, in billions) $445.0 $452.4 $413.7 $378.7 $354.8
Client assets (end of period, in billions) $472.3 $445.0 $378.7 $472.3 $378.7
Percentage change during period 6% (2%) (8%) 25% 7%
 
(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 Fiscal Year Ended
Sept. 30, 2012 June 30, 2012   Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011

Net Interest Revenue:

Segregated cash:

Average balance (in billions) $3.7 $4.0 $2.9 $4.4 $3.0
Average annualized yield 0.14% 0.10% 0.01% 0.08% 0.07%
Interest revenue (in millions) $1 $1 $0 $4 $2
 

Client margin balances:

Average balance (in billions) $8.4 $8.7 $8.5 $8.2 $8.8
Average annualized yield 4.04% 4.13% 4.35% 4.13% 4.39%
Interest revenue (in millions) $87 $91 $94 $345 $390
 

Securities borrowing/lending

Average securities borrowing balance (in billions) $1.0 $0.9 $0.6 $0.8 $0.8
Average securities lending balance (in billions) $2.0 $2.3 $1.8 $2.0 $1.9
 
Interest revenue (in millions) $29 $28 $30 $106 $104
Interest expense (in millions) (1) (2) (1) (5) (3)
Net interest revenue - securities borrowing/lending (in millions) $28 $26 $29 $101 $101
 

Other cash and interest-earning investments:

Average balance (in billions) $1.7 $1.6 $1.5 $1.5 $1.2
Average annualized yield 0.07% 0.06% 0.10% 0.09% 0.10%
Interest revenue - net (in millions) $0 $0 $1 $1 $1
 

Client credit balances:

Average balance (in billions) $8.7 $9.1 $8.3 $9.2 $8.4
Average annualized cost 0.01% 0.01% 0.02% 0.01% 0.02%
Interest expense (in millions) ($0) ($0) ($0) ($1) ($2)
 
Average interest-earning assets (in billions) $14.8 $15.2 $13.5 $14.9 $13.8
Average annualized yield 3.06% 3.08% 3.57% 2.97% 3.52%
Net interest revenue (in millions) $116 $118 $124 $450 $492
 
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
In millions, except percentages
(Unaudited)
                                       
Quarter Ended Fiscal Year Ended
Sept. 30, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011
$ % of Net Rev.   $ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev.

EBITDA (1)

EBITDA $ 274 42.5 % $ 295 44.3 % $ 312 44.3 % $ 1,098 41.6 % $ 1,213 43.9 %
Less:
Depreciation and amortization (19 ) (3.0 %) (18 ) (2.7 %) (17 ) (2.4 %) (72 ) (2.7 %) (67 ) (2.4 %)
Amortization of acquired intangible assets (23 ) (3.5 %) (23 ) (3.4 %) (24 ) (3.5 %) (92 ) (3.5 %) (97 ) (3.5 %)
Interest on borrowings (7 ) (1.1 %) (7 ) (1.1 %) (7 ) (1.0 %) (28 ) (1.1 %) (32 ) (1.2 %)
Provision for income taxes   (82 ) (12.7 %)   (93 ) (14.0 %)   (100 ) (14.2 %)   (320 ) (12.1 %)   (379 ) (13.7 %)
Net income $ 143   22.2 % $ 154   23.1 % $ 164   23.3 % $ 586   22.2 % $ 638   23.1 %
 
As of
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2012 2012 2012 2011 2011

Liquid Assets - Management Target (2)

Liquid assets - management target $ 1,054 $ 993 $ 917 $ 918 $ 852
Plus: Broker-dealer cash and cash equivalents 406 387 507 444 656
Trust company cash and cash equivalents 95 74 75 62 109
Investment advisory cash and cash equivalents 11 25 18 11 7
 
Less: Corporate short-term investments (150 ) (126 ) (50 ) - -
Excess broker-dealer regulatory net capital   (501 )   (443 )   (441 )   (517 )   (592 )
Cash and cash equivalents $ 915   $ 910   $ 1,026   $ 918   $ 1,032  
 
As of
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2012 2012 2012 2011 2011

Liquid Assets - Regulatory Threshold (2)

Liquid assets - regulatory threshold $ 1,611 $ 1,554 $ 1,485 $ 1,422 $ 1,408
Plus: Broker-dealer cash and cash equivalents 406 387 507 444 656
Trust company cash and cash equivalents 95 74 75 62 109
Investment advisory cash and cash equivalents 11 25 18 11 7
 
Less: Corporate short-term investments (150 ) (126 ) (50 ) - -
Excess trust company Tier 1 capital (10 ) (10 ) (10 ) (9 ) (9 )
Excess broker-dealer regulatory net capital   (1,048 )   (994 )   (999 )   (1,012 )   (1,139 )
Cash and cash equivalents $ 915   $ 910   $ 1,026   $ 918   $ 1,032  
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) Our liquid assets metrics are considered non-GAAP financial measures as defined by SEC Regulation G. We include the excess capital of our broker-dealer and trust company subsidiaries in the calculation of our liquid assets metrics, rather than simply including broker-dealer and trust company cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer and trust company subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer and trust company subsidiaries to the parent company. We consider our liquid assets metrics to be important measures of our liquidity and of our ability to fund corporate investing and financing activities. The liquid assets metrics should be considered as supplemental measures of liquidity, rather than as substitutes 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 “liquid assets – regulatory threshold” (defined below) because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries than the regulatory thresholds require. We consider "liquid assets - management target" to be a measure that reflects our liquidity that would be readily available for corporate investing or financing activities under normal operating circumstances.
 
We define "liquid assets - regulatory threshold" as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments, (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 5% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of the applicable "early warning" net capital requirement and (d) Tier 1 capital of our trust company in excess of the minimum dollar requirement. We consider "liquid assets - regulatory threshold" to be a measure that reflects our liquidity that would be available for corporate investing or financing activities under unusual operating circumstances, such as the need to provide funding for significant strategic business transactions.

TD Ameritrade Holding Corporation
Kim Hillyer, 402-574-6523
Director, Communications
kim.hillyer@tdameritrade.com
or
Jeff Goeser, 402-597-8464
Director, Investor Relations and Finance
jeffrey.goeser@tdameritrade.com

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