TD Ameritrade Holding Corporation (NYSE: AMTD) has released results for fiscal 2014. The Company gathered approximately $53 billion in net new client assets, maintaining its industry-leading double-digit net new client asset growth rate for the sixth consecutive year.

The Company’s results for the fiscal year ended Sept. 30, 2014 include the following: (1)

  • Record $1.42 earnings per diluted share on net income of $787 million
  • Record net new client assets of approximately $53 billion, an annualized growth rate of 10 percent
  • Record average client trades per day of approximately 427,000, an activity rate of 6.9 percent
  • Record net revenues of $3.1 billion, 55 percent of which were asset-based
  • Record investment product fee revenue of $309 million, up 24 percent year-over-year
  • Record pre-tax income of $1.3 billion, or 41 percent of net revenues
  • Record EBITDA(2) of $1.5 billion, or 47 percent of net revenues
  • Record interest rate sensitive assets(3) of $100 billion, up 5 percent year-over-year
  • Record client assets of approximately $653 billion, up 17 percent year-over-year

“With improved investor sentiment, retail investors returned to the markets in 2014, increasing engagement across our platforms and boosting trading volumes. Asset gathering remained strong, as we gathered a record $53 billion of net new client assets, our sixth consecutive year of double-digit growth. In fact, over the last five years, we have gathered a total of $219 billion of net new client assets, one-third of our total client assets,” said Fred Tomczyk, president and chief executive officer. “We had a strong year and have good momentum as we start 2015. We will continue to adapt and evolve as an organization by optimizing newer technologies like big data, social media and mobile, in order to enhance our clients’ investing and trading experience and drive continued strong organic growth.”

“We have worked through significant interest rate compression over the past five years, and yet we continue to strengthen our earning power,” said Bill Gerber, executive vice president and chief financial officer. “Interest rate-sensitive assets have grown to a record $100 billion, mitigating the impact of the macroeconomic environment and giving us the flexibility to invest in and grow the business. As a result, fiscal 2014 earnings were a record $1.42 per diluted share, client assets are at an all-time high of $653 billion, and we effectively returned more than 90 percent of our net income to shareholders in the form of cash dividends and share repurchases. Our proven growth strategy, combined with prudent investments in our future, will help us continue delivering growth and value for our stakeholders in 2015 and beyond.”

Fourth Quarter 2014 Results
In addition, the Company has released its results for the quarter ended Sept. 30, 2014, which include the following: (1)

  • Net income of $211 million, or $0.38 per diluted share, up 6 percent year-over-year
  • Net new client assets of approximately $13 billion, an annualized growth rate of 8 percent
  • Average client trades per day of approximately 403,000, an activity rate of 6.4 percent
  • Net revenues of $795 million, 57 percent of which were asset-based
  • Investment product fee revenue of $83 million, up 24 percent year-over-year
  • Pre-tax income of $342 million, or 43 percent of net revenues
  • EBITDA(2)of $394 million, or 50 percent of net revenues

Capital Management
During the 2014 fiscal year, the Company paid $540 million, or $0.98 per share, in cash dividends, which included four quarterly dividends of $0.12 per share, and a special dividend of $0.50 per share, paid in December 2013. The Company also repurchased approximately 6 million shares of its common stock at a weighted average share price of $31.37 per share.

The Company has declared a $0.15 per share quarterly cash dividend, an increase of 25 percent year-over-year, payable on Nov. 20, 2014 to all holders of record of common stock as of Nov. 6, 2014.

Additionally, on Oct. 22, 2014, the Company issued $500 million in senior notes, bearing an interest rate of 3.625 percent, that will mature on Apr. 1, 2025. The Company will use the net proceeds from the sale of the notes, together with cash on hand, to repay the $500 million aggregate principal amount of its 4.150 percent senior notes that mature on Dec. 1, 2014.

Fiscal 2015 Outlook
The Company has also released an updated Outlook Statement which reflects expected earnings of $1.45 to $1.70 per diluted share for its 2015 fiscal year.

More information on the fiscal 2015 forecast is available through the Company’s Outlook Statement, located in the “Financials & reports” section of its corporate web site, www.amtd.com.

Company Hosts Conference Call
TD Ameritrade will host its September Quarter conference call this morning, Oct. 28, 2014, at 8:30 a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference call by dialing 866-270-1533. 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 beginning at 10:30 a.m. EDT (9:30 a.m. CDT) on Oct. 28, 2014 by dialing 877-344-7529 and entering the Conference ID 10052174. The replay will be available until 9:00 a.m. EDT (8:00 a.m. CDT) on Nov. 5, 2014. 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, Oct. 29, 2014.

Information about the Company’s corporate events, including earnings conference calls and webcasts, can be found by visiting www.amtd.com and clicking on “Investor Relations” and “Presentations & Events.” Click on the date of the event to access all pertinent links and resources. A high speed Internet connection is required in order to view the webcast.

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. 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.

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 39 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.

Source: TD Ameritrade Holding Corporation

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. 22, 2013 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 See attached reconciliation of non-GAAP financial measures.

3 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Sept. 30, 2014.

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 Fiscal Year Ended
Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 332 $ 317 $ 306 $ 1,351 $ 1,171
 
Asset-based revenues:
Interest revenue 161 150 120 587 476
Brokerage interest expense   (2 )   (1 )   (1 )   (6 )   (7 )
Net interest revenue 159 149 119 581 469
 
Insured deposit account fees 208 202 201 820 804
Investment product fees   83     79     67     309     250  
Total asset-based revenues 450 430 387 1,710 1,523
 
Other revenues   13     16     16     62     70  
Net revenues   795     763     709     3,123     2,764  
 
Operating expenses:
Employee compensation and benefits 195 189 170 760 692
Clearing and execution costs 36 35 29 134 109
Communications 31 29 27 116 113
Occupancy and equipment costs 41 39 40 156 160
Depreciation and amortization 23 24 23 95 86
Amortization of acquired intangible assets 23 22 23 90 91
Professional services 38 42 41 155 145
Advertising 45 48 55 250 239
Other   25     19     22     82     73  
Total operating expenses   457     447     430     1,838     1,708  
Operating income 338 316 279 1,285 1,056
 
Other expense (income):
Interest on borrowings 6 6 6 25 25
Gain on investments, net   (10 )   -     (49 )   (10 )   (57 )
Total other expense (income)   (4 )   6     (43 )   15     (32 )
 
Pre-tax income 342 310 322 1,270 1,088
Provision for income taxes   131     120     122     483     413  
Net income $ 211   $ 190   $ 200   $ 787   $ 675  
 
Earnings per share - basic $ 0.39 $ 0.34 $ 0.36 $ 1.43 $ 1.23
Earnings per share - diluted $ 0.38 $ 0.34 $ 0.36 $ 1.42 $ 1.22
 
Weighted average shares outstanding - basic 547 551 550 550 549
Weighted average shares outstanding - diluted 551 555 555 554 554
 
Dividends declared per share $ 0.12 $ 0.12 $ 0.09 $ 0.98 $ 0.86
 
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)

 

   
    Sept. 30, 2014 Sept. 30, 2013
Assets:
Cash and cash equivalents $ 1,460 $ 1,062
Segregated cash and investments 5,116 5,894
Broker/dealer receivables 1,108 1,348
Client receivables, net 11,639 8,984
Goodwill and intangible assets 3,218 3,308
Other   1,290   1,240
Total assets $ 23,831 $ 21,836
 
Liabilities and stockholders' equity:
 
Liabilities:
Broker/dealer payables $ 2,421 $ 1,973
Client payables 14,497 13,183
Notes payable 150 -
Long-term debt 1,101 1,052
Other   914   952
Total liabilities 19,083 17,160
 
Stockholders' equity   4,748   4,676
Total liabilities and stockholders' equity $ 23,831 $ 21,836
 
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
         

 

Quarter Ended Fiscal Year Ended
Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013

Key Metrics:

Net new assets (in billions) $13.4 $13.4 $10.1 $53.4 $49.5
Net new asset growth rate (annualized) 8% 9% 8% 10% 10%
Average client trades per day 402,638 401,468 381,657 426,888 373,630
 

Profitability Metrics:

Operating margin 42.5% 41.4% 39.4% 41.1% 38.2%
Pre-tax margin 43.0% 40.6% 45.4% 40.7% 39.4%
Return on average stockholders' equity (annualized) 17.8% 16.2% 17.3% 16.8% 15.1%
EBITDA(1) as a percentage of net revenues 49.6% 47.4% 52.8% 47.4% 46.7%
 

Liquidity Metrics:

Interest on borrowings (in millions) $6 $6 $6 $25 $25
Interest coverage ratio (EBITDA(1)/interest on borrowings) 65.7 60.3 62.3 59.2 51.6
Liquid assets - management target(1) (in billions) $0.8 $0.8 $0.9 $0.8 $0.9
Cash and cash equivalents (in billions) $1.5 $1.3 $1.1 $1.5 $1.1
 

Transaction-Based Revenue Metrics:

Total trades (in millions) 25.6 25.3 24.2 106.9 92.8
Average commissions and transaction fees per trade(2) $12.97 $12.52 $12.61 $12.62 $12.61
Average client trades per funded account (annualized) 16.1 16.2 15.9 17.4 15.8
Activity rate - funded accounts 6.4% 6.5% 6.4% 6.9% 6.3%
Trading days 63.5 63.0 63.5 250.5 248.5
Order routing revenue (in millions) $77 $72 $62 $304 $236
 

Spread-Based Asset Metrics:

Average interest-earning assets (in billions) $19.3 $18.8 $16.8 $18.6 $15.8
Average insured deposit account balances (in billions) 73.6 72.4 72.0 72.9 68.0
Average spread-based balance (in billions) $92.9 $91.2 $88.8 $91.5 $83.8
 
Net interest revenue (in millions) $159 $149 $119 $581 $469
Insured deposit account fee revenue (in millions) 208 202 201 820 804
Spread-based revenue (in millions) $367 $351 $320 $1,401 $1,273
 
Avg. annualized yield - interest-earning assets 3.23% 3.13% 2.77% 3.09% 2.92%
Avg. annualized yield - insured deposit account fees 1.11% 1.10% 1.09% 1.11% 1.17%
Net interest margin (NIM) 1.55% 1.52% 1.41% 1.51% 1.50%
 

Fee-Based Investment Metrics:

Money market mutual fund fees:

Average balance (in billions) $5.5 $5.2 $5.3 $5.3 $5.1
Average annualized yield 0.00% 0.00% 0.00% 0.00% 0.02%
Fee revenue (in millions) $0 $0 $0 $0 $1
 

Market fee-based investment balances:

Average balance (in billions) $138.5 $133.3 $117.0 $131.4 $107.7
Average annualized yield 0.23% 0.24% 0.22% 0.23% 0.23%
Fee revenue (in millions) $83 $79 $67 $309 $249
 
Average fee-based investment balances (in billions) $144.0 $138.5 $122.3 $136.7 $112.8
Average annualized yield 0.23% 0.23% 0.21% 0.22% 0.22%
Investment product fee revenue (in millions) $83 $79 $67 $309 $250
 
(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, 2014 June 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013

Client Account and Client Asset Metrics:

Funded accounts (beginning of period) 6,237,000 6,146,000 5,943,000 5,993,000 5,764,000
Funded accounts (end of period) 6,301,000 6,237,000 5,993,000 6,301,000 5,993,000
Percentage change during period 1% 1% 1% 5% 4%
Client assets (beginning of period, in billions) $650.2 $617.1 $523.5 $555.9 $472.3
Client assets (end of period, in billions) $653.1 $650.2 $555.9 $653.1 $555.9
Percentage change during period 0% 5% 6% 17% 18%
 

Net Interest Revenue:

Segregated cash:

Average balance (in billions) $5.3 $5.2 $5.5 $5.3 $4.6
Average annualized yield 0.13% 0.14% 0.09% 0.13% 0.12%
Interest revenue (in millions) $2 $2 $1 $7 $6
 

Client margin balances:

Average balance (in billions) $11.2 $11.0 $8.5 $10.5 $8.6
Average annualized yield 3.69% 3.79% 3.95% 3.81% 3.97%
Interest revenue (in millions) $105 $105 $86 $405 $345
 

Securities borrowing/lending:

Average securities borrowing balance (in billions) $1.1 $1.0 $1.1 $1.1 $1.0
Average securities lending balance (in billions) $2.4 $2.6 $2.2 $2.5 $2.1
Net interest revenue - securities borrowing/lending (in millions) $52 $42 $31 $169 $118
 

Other cash and interest-earning investments:

Average balance (in billions) $1.7 $1.6 $1.7 $1.7 $1.6
Average annualized yield 0.05% 0.06% 0.09% 0.07% 0.08%
Interest revenue - net (in millions) $0 $0 $1 $1 $1
 

Client credit balances:

Average balance (in billions) $11.8 $11.5 $10.1 $11.2 $9.5
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) $19.3 $18.8 $16.8 $18.6 $15.8
Average annualized yield 3.23% 3.13% 2.77% 3.09% 2.92%
Net interest revenue (in millions) $159 $149 $119 $581 $469
 

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 Fiscal Year Ended
Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013
$ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev.

EBITDA (1)

EBITDA $ 394 49.6 % $ 362 47.4 % $ 374 52.8 % $ 1,480 47.4 % $ 1,290 46.7 %
Less:
Depreciation and amortization (23 ) (2.9 %) (24 ) (3.1 %) (23 ) (3.2 %) (95 ) (3.0 %) (86 ) (3.1 %)
Amortization of acquired intangible assets (23 ) (2.9 %) (22 ) (2.9 %) (23 ) (3.2 %) (90 ) (2.9 %) (91 ) (3.3 %)
Interest on borrowings (6 ) (0.8 %) (6 ) (0.8 %) (6 ) (0.8 %) (25 ) (0.8 %) (25 ) (0.9 %)
Provision for income taxes   (131 ) (16.5 %)   (120 ) (15.7 %)   (122 ) (17.2 %)   (483 ) (15.5 %)   (413 ) (14.9 %)
Net income $ 211   26.5 % $ 190   24.9 % $ 200   28.2 % $ 787   25.2 % $ 675   24.4 %
 
 
As of
Sept. 30 June 30, Mar. 31, Dec. 31, Sept. 30,
2014 2014 2014 2013 2013

Liquid Assets - Management Target (2)

Liquid assets - management target $ 762 $ 767 $ 706 $ 707 $ 874

Plus: 

Broker-dealer cash and cash equivalents 1,090 871 508 926 540
Trust company cash and cash equivalents 53 54 64 60 74
Investment advisory cash and cash equivalents 19 9 14 25 19
Less: Excess broker-dealer regulatory net capital   (464 )   (441 )   (359 )   (409 )   (445 )
Cash and cash equivalents $ 1,460   $ 1,260   $ 933   $ 1,309   $ 1,062  
 
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 - management target is considered a non-GAAP financial measure as defined by SEC Regulation G. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assets - management target, 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. We consider liquid assets - management target to be an important measure of our liquidity and of our ability to fund corporate investing and financing activities. Liquid assets - management target should be considered a supplemental measure of liquidity, rather than a substitute 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 regulatory thresholds require because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries. We consider liquid assets - management target to be a measure that reflects our liquidity that would be readily available for corporate investing and financing activities under normal operating circumstances.