TD Ameritrade Holding Corporation |
(Exact name of registrant as specified in its charter) |
Delaware | 1-35509 | 82-0543156 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
200 South 108th Avenue Omaha, Nebraska | 68154 | |
(Address of principal executive offices) | (Zip Code) |
(Former name or former address, if changed since last report) |
99.1 | News Release issued by the Registrant on July 19, 2016 |
Dated: July 19, 2016 | TD AMERITRADE HOLDING CORPORATION |
By: /s/ STEPHEN J. BOYLE | |
Stephen J. Boyle | |
Executive Vice President, Chief Financial Officer | |
At the Company | |
Kim Hillyer | Jeff Goeser |
Director, Communications | Director, Investor Relations and Finance |
(402) 574-6523 | (402) 597-8464 |
kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com |
• | 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 |
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 balance (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 web site 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, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | June 30, 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 |
(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. |