TD Ameritrade Earnings up on Strong Asset Gathering, Record Trading

Net New Client Assets of $14B, Record Total Client Assets of $711B

Diluted Earnings per Share of $0.38

Record Net Revenues of $846M

OMAHA, Neb.--()--TD Ameritrade Holding Corporation (Nasdaq:AMTD) has released results for the second quarter of fiscal 2016. The Company gathered approximately $14 billion in net new client assets, and reported record client trading activity.

The Company’s results for the quarter ended Mar. 31, 2016 include the following: (1)

  • $0.38 earnings per diluted share, on net income of $205 million, up 9 percent year over year
  • Net new client assets of approximately $14 billion, an annualized growth rate of 8 percent
  • Record average client trades per day of approximately 509,000, an activity rate of 7.6 percent
  • Record net revenues of $846 million, 56 percent of which were asset-based
  • Investment product fee revenue of $88 million, up 4 percent year over year
  • Pre-tax income of $330 million, or 39 percent of net revenues
  • EBITDA(2) of $387 million, or 46 percent of net revenues
  • Record interest rate-sensitive assets(3) of $112 billion, up 11 percent year over year
  • Record client assets of $711 billion, up 2 percent year over year

“We continue to execute well, resulting in solid quarterly performances for each of our major revenue streams,” said Fred Tomczyk, chief executive officer. “Over what was a volatile quarter for the markets, we gathered $14 billion in net new client assets and helped our clients place a record 509,000 trades per day, on average. Our focus for the rest of fiscal 2016 will be maintaining our momentum, our CEO transition, aligning our business model with the Department of Labor Fiduciary Rule, and of course continued investments in our business.”

“Client cash balances grew again this quarter, driven by asset gathering efforts and the ongoing shift in investor sentiment. As a result, interest rate-sensitive assets increased to a record $112 billion,” said Steve Boyle, executive vice president and chief financial officer. “Expenses remain in check, with operating expenses declining 1 percent from last year, and we returned $322 million in capital to our shareholders through cash dividends and share repurchases. We will continue to focus on what we can control to grow our earnings power to the benefit of our clients, associates and shareholders.”

Capital Management

The Company paid $91 million in its second fiscal quarter, or $0.17 per share, in cash dividends. The Company also repurchased approximately 8 million shares of its common stock.

The Company has declared a $0.17 per share quarterly cash dividend, payable on May 17, 2016 to all holders of record of common stock as of May 3, 2016.

Company Hosts Conference Call

TD Ameritrade will host its March Quarter conference call this morning, Apr. 19, 2016, at 8:30 a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference call by dialing 855-238-2333. 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 10081386 beginning at 10:30 a.m. EDT (9:30 a.m. CDT) on Apr. 19, 2016. The replay will be available until 9:00 a.m. EDT (8:00 a.m. CDT) on Apr. 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, Apr. 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 and Paralympic Teams, 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 Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated.

2See attached reconciliation of non-GAAP financial measures.

3Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Mar. 31, 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 Six Months Ended
Mar. 31, 2016 Dec. 31, 2015 Mar. 31, 2015 Mar. 31, 2016 Mar. 31, 2015
Revenues:
Transaction-based revenues:
Commissions and transaction fees $   360 $   328 $   350 $   689 $   708
 
Asset-based revenues:
Insured deposit account fees 235 227 205 462 412
Net interest revenue 147 154 149 300 311
Investment product fees     88     92     85     181     168
Total asset-based revenues 470 473 439 943 891
 
Other revenues     16     11     14     27     22
Net revenues     846     812     803     1,659     1,621
 
Operating expenses:
Employee compensation and benefits 208 201 208 408 406
Clearing and execution costs 37 30 37 67 72
Communications 33 32 30 66 61
Occupancy and equipment costs 43 43 39 85 81
Depreciation and amortization 22 22 23 44 46
Amortization of acquired intangible assets 22 22 22 45 45
Professional services 37 37 41 74 77
Advertising 81 62 82 143 145
Other     20     20     25     40     48
Total operating expenses     503     469     507     972     981
 
Operating income 343 343 296 687 640
 
Other expense:
Interest on borrowings 13 12 9 26 17
Other     -     -     -     -     1
Total other expense     13     12     9     26     18
 
Pre-tax income 330 331 287 661 622
Provision for income taxes     125     119     98     244     221
Net income $   205 $   212 $   189 $   417 $   401
 
Earnings per share - basic $ 0.38 $ 0.39 $ 0.35 $ 0.78 $ 0.74
Earnings per share - diluted $ 0.38 $ 0.39 $ 0.35 $ 0.78 $ 0.73
 
Weighted average shares outstanding - basic 533 537 544 535 544
Weighted average shares outstanding - diluted 535 540 547 538 547
 
Dividends declared per share $ 0.17 $ 0.17 $ 0.15 $ 0.34 $ 0.30
 
               
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
 
Mar. 31, 2016 Sept. 30, 2015
Assets:
Cash and cash equivalents $     2,476 $     1,978
Segregated cash and investments 7,733 6,305
Broker/dealer receivables 1,307 862
Client receivables, net 11,396 12,770
Goodwill and intangible assets 3,083 3,128
Other       1,159       1,332
Total assets $     27,154 $     26,375
 
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $ 2,362 $ 2,707
Client payables 17,094 16,035
Long-term debt 1,814 1,800
Other       1,012       930
Total liabilities 22,282 21,472
Stockholders' equity       4,872       4,903
Total liabilities and stockholders' equity $     27,154 $     26,375
 
 
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
        Quarter Ended       Six Months Ended

  Mar. 31, 2016  

     

  Dec. 31, 2015  

     

  Mar. 31, 2015  

  Mar. 31, 2016  

     

  Mar. 31, 2015  

Key Metrics:

Net new assets (in billions) $14.1 $17.5 $16.3 $31.6 $35.1
Net new asset growth rate (annualized) 8% 10% 10% 10% 11%
Average client trades per day 509,120 438,108 476,590 473,041 466,761
 

Profitability Metrics:

Operating margin 40.5% 42.2% 36.9% 41.4% 39.5%
Pre-tax margin 39.0% 40.8% 35.7% 39.8% 38.4%
Return on average stockholders' equity (annualized) 16.6% 17.1% 15.7% 16.9% 16.8%
EBITDA(1) as a percentage of net revenues 45.7% 47.7% 42.5% 46.8% 45.0%
 

Liquidity Metrics:

Interest on borrowings (in millions) $13 $12 $9 $26 $17
Interest coverage ratio (EBITDA(1)/interest on borrowings) 29.8 32.3 37.9 29.8 42.9

Liquid assets available for corporate investing
  and financing activities(1) (in billions)

 

$0.7 $0.6 $0.7 $0.7 $0.7
Cash and cash equivalents (in billions) $2.5 $1.7 $1.3 $2.5 $1.3
 

Transaction-Based Revenue Metrics:

Total trades (in millions) 31.1 27.6 29.1 58.7 57.9
Average commissions and transaction fees per trade $11.60 $11.90 $12.02 $11.74 $12.23
Average client trades per funded account (annualized) 19.1 16.6 18.6 17.8 18.4
Activity rate - funded accounts 7.6% 6.6% 7.4% 7.1% 7.3%
Trading days 61.0 63.0 61.0 124.0 124.0
Order routing revenue (in millions) $76 $70 $75 $147 $153
 

Spread-Based Asset Metrics:

Average insured deposit account balances (in billions) $84.0 $80.3 $74.9 $82.2 $74.9
Average interest-earning assets (in billions) 21.8 22.2 19.4 22.0 19.4
Average spread-based balances (in billions) $105.8 $102.5 $94.3 $104.2 $94.3
 
Insured deposit account fee revenue (in millions) $235 $227 $205 $462 $412
Net interest revenue (in millions) 147 154 149 300 311
Spread-based revenue (in millions) $382 $381 $354 $762 $723
 
Avg. annualized yield - insured deposit account fees 1.11% 1.10% 1.09% 1.11% 1.09%
Avg. annualized yield - interest-earning assets 2.66% 2.71% 3.09% 2.69% 3.16%
Net interest margin (NIM) 1.43% 1.45% 1.50% 1.44% 1.51%
 

Fee-Based Investment Metrics:

Money market mutual fund fees:

Average balance (in billions) $5.8 $5.7 $5.6 $5.8 $5.6
Average annualized yield 0.18% 0.06% 0.00% 0.12% 0.00%
Fee revenue (in millions) $2 $1 $0 $4 $0

Market fee-based investment balances:

Average balance (in billions) $147.3 $152.9 $149.5 $150.1 $147.3
Average annualized yield 0.23% 0.23% 0.23% 0.23% 0.23%
Fee revenue (in millions) $86 $91 $85 $177 $168
 
Average fee-based investment balances (in billions) $153.1 $158.6 $155.1 $155.9 $152.9
Average annualized yield 0.23% 0.23% 0.22% 0.23% 0.22%
Investment product fee revenue (in millions) $88 $92 $85 $181 $168
 
(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       Six Months Ended
Mar. 31, 2016       Dec. 31, 2015       Mar. 31, 2015 Mar. 31, 2016       Mar. 31, 2015

Client Account and Client Asset Metrics:

Funded accounts (beginning of period) 6,686,000 6,621,000 6,371,000 6,621,000 6,301,000
Funded accounts (end of period) 6,777,000 6,686,000 6,467,000 6,777,000 6,467,000
Percentage change during period 1% 1% 2% 2% 3%
 
Client assets (beginning of period, in billions) $695.3 $667.4 $672.4 $667.4 $653.1
Client assets (end of period, in billions) $711.2 $695.3 $695.3 $711.2 $695.3
Percentage change during period 2% 4% 3% 7% 6%
 

Net Interest Revenue:

Segregated cash:

Average balance (in billions) $6.5 $6.2 $4.4 $6.4 $4.8
Average annualized yield 0.19% 0.09% 0.13% 0.14% 0.13%
Interest revenue (in millions) $3 $1 $1 $4 $3

Client margin balances:

Average balance (in billions) $11.6 $12.3 $11.9 $11.9 $11.7
Average annualized yield 3.79% 3.54% 3.60% 3.66% 3.65%
Interest revenue (in millions) $111 $111 $107 $222 $215

Securities borrowing/lending:

Average securities borrowing balance (in billions) $0.7 $0.8 $1.0 $0.7 $0.9
Average securities lending balance (in billions) $1.9 $2.4 $2.2 $2.2 $2.2
Net interest revenue - securities borrowing/lending (in millions) $32 $41 $41 $73 $93

Other cash and interest-earning investments:

Average balance (in billions) $3.0 $2.9 $2.1 $3.0 $2.0
Average annualized yield 0.17% 0.05% 0.04% 0.11% 0.05%
Interest revenue - net (in millions) $1 $1 $0 $2 $1

Client credit balances:

Average balance (in billions) $14.4 $14.0 $12.0 $14.2 $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) $21.8 $22.2 $19.4 $22.0 $19.4
Average annualized yield 2.66% 2.71% 3.09% 2.69% 3.16%
Net interest revenue (in millions) $147 $154 $149 $300 $311
 
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 Six Months Ended
Mar. 31, 2016 Dec. 31, 2015 Mar. 31, 2015 Mar. 31, 2016 Mar. 31, 2015
$ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev.

EBITDA (1)

EBITDA $     387 45.7 % $     387 47.7 % $     341 42.5 % $     776 46.8 % $     730 45.0 %
Less:
Depreciation and amortization (22 ) (2.6 %) (22 ) (2.7 %) (23 ) (2.9 %) (44 ) (2.7 %) (46 ) (2.8 %)
Amortization of acquired intangible assets (22 ) (2.6 %) (22 ) (2.7 %) (22 ) (2.7 %) (45 ) (2.7 %) (45 ) (2.8 %)
Interest on borrowings (13 ) (1.5 %) (12 ) (1.5 %) (9 ) (1.1 %) (26 ) (1.6 %) (17 ) (1.0 %)
Provision for income taxes       (125 ) (14.8 %)       (119 ) (14.7 %)       (98 ) (12.2 %)       (244 ) (14.7 %)       (221 ) (13.6 %)
Net income $     205   24.2 % $     212   26.1 % $     189   23.5 % $     417   25.1 % $     401   24.7 %
 
 
As of
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2016 2015 2015 2015 2015

     Liquid Assets Available for Corporate Investing and
Financing Activities (2)

Liquid assets available for corporate investing and financing activities $ 713 $ 584 $ 530 $ 581 $ 740
Plus: Non-corporate cash and cash equivalents 1,430 934 909 1,116 662
Corporate liquidity maintained for operational contingencies 764 764 750 750 750
Less: Corporate short-term investments - (201 ) - - (501 )
Excess broker-dealer regulatory net capital       (431 )   (346 )       (211 )   (214 )       (371 )
Cash and cash equivalents $     2,476   $ 1,735   $     1,978   $ 2,233   $     1,280  
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.
 
 

Contacts

At the Company
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

$Cashtags

Contacts

At the Company
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