Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TD AMERITRADE HOLDING CORP | a8k_20171024.htm |
Exhibit 99.1
At the Company | |
Kim Hillyer | Jeff Goeser |
Director, Communications | Director, Investor Relations |
(402) 574-6523 | (402) 597-8464 |
kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com |
TD Ameritrade Reports Record 2017 Earnings
Diluted Earnings per Share of $1.64, up 4% Year-Over-Year
Net Revenues of $3.7B, up 10% Year-Over-Year
Net New Client Assets of $80B, 10% Annualized Growth Rate
OMAHA, Neb., October 24, 2017 – TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for its 2017 fiscal year. The Company’s core operating metrics were at record levels, driven by strong organic growth and the acquisition of Scottrade. The Company also introduced a Non-GAAP earnings per share metric to enhance comparisons to prior periods.
The Company’s results for the fiscal year ended Sept. 30, 2017 include the following:(1)
• | Net new client assets of approximately $80 billion, a growth rate of 10 percent |
• | Record average client trades per day of approximately 511,000, up 10 percent year over year |
• | Net revenues of $3.7 billion, 60 percent of which were asset-based |
• | Client assets of approximately $1.1 trillion, up 45 percent year over year |
• | $1.64 in GAAP earnings per diluted share, up 4 percent year over year, on net income of $872 million |
• | $1.84 in Non-GAAP earnings per diluted share(2), up 10 percent year over year |
• | Pre-tax income of $1.4 billion, or 38 percent of net revenues |
• | Interest rate-sensitive assets(3) of $156 billion, up 31 percent year over year |
“Fiscal 2017 was an outstanding year, enhanced by our acquisition of Scottrade, which we expect will improve the investing experience for millions of investors. Throughout the year, we delivered industry-leading, double-digit organic growth, made significant progress on our core strategic initiatives, and completed critical steps to enable the seamless integration of Scottrade into our business,” said Tim Hockey, TD Ameritrade president and chief executive officer. “We finished the year strong in trading, averaging a record 511,000 trades per day, despite suppressed market volatility. And, we gathered a record $80 billion in net new client assets, driven by record asset gathering from our institutional channel, efficient and effective marketing efforts, and strong new business trends all around.
“We will carry that momentum with us into fiscal 2018 with a strengthened competitive position and increased scale, thanks to Scottrade, that will further accelerate our asset gathering capabilities,” Hockey continued. “Over the next 12 months we will continue to ramp up our technology efficiency and throughput so we can further enhance the client experience, and accelerate and diversify revenue growth.”
“Overall core results remained strong as we exited the fiscal year. Moving forward, we’ve decided to include Non-GAAP results in our reporting, which will enhance comparability by excluding the significant acquisition-related expenses we expect to incur. Both GAAP and Non-GAAP results were strong for the quarter and year,” said Steve Boyle, executive vice president and chief financial officer. “We have good momentum right now and remain focused on delivering a successful integration, which we expect will drive incremental shareholder value. Our game plan is sound, and we expect to deliver better results than we originally modeled.”
Fourth Quarter 2017 Results
TD Ameritrade also released its results for the quarter ended Sept. 30, 2017, which include the following: (1)
• | Net new client assets of approximately $20 billion |
• | Average client trades per day of approximately 529,000, up 19 percent year over year |
• | Net revenues of $983 million, 64 percent of which were asset-based |
• | $0.39 in GAAP earnings per diluted share, up 11 percent year over year, on net income of $211 million |
• | $0.49 in Non-GAAP earnings per diluted share(2), up 29 percent year over year |
• | Pre-tax income of $338 million, or 34 percent of net revenues |
Capital Management
During the 2017 fiscal year, the Company paid $379 million in cash dividends, which included four quarterly dividends of $0.18 per share.
The Company will increase its quarterly cash dividend by $0.03 per share, a 17 percent increase. It has declared a $0.21 per share quarterly cash dividend, payable on Nov. 21, 2017 to all holders of record of common stock as of Nov. 7, 2017.
Fiscal 2018 Outlook
The Company has also released its outlook for the 2018 fiscal year, which reflects expected GAAP earnings of $1.50 to $2.00 per diluted share, or Non-GAAP earnings of $2.10 to $2.50 per diluted share(2) for its 2018 fiscal year.
More information on the fiscal 2018 forecast is available through the Company’s Outlook Statement, located in the “Financials and Reports” section of its corporate website, www.amtd.com.
Company Hosts Conference Call
TD Ameritrade will host its September Quarter conference call this morning, Oct. 24, 2017, 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 website. A replay of the phone call will be available by dialing 855-859-2056 and entering the Conference ID 86495491 beginning at 11:30 a.m. EDT (10:30 a.m. CDT) on Oct. 24, 2017. The replay will be available until 11:59 p.m. EDT (10:59 p.m. CDT) on Oct. 31, 2017. 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. 25, 2017.
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. Website 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. 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 Fresh Accounts.
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, stock price or any projections or expectations regarding the acquisition of Scottrade Financial Services, Inc., 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, difficulties and delays in integrating the Scottrade business or fully realizing cost savings and other benefits from the acquisition; business disruption following the Scottrade acquisition, changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, customer disintermediation, the introduction, withdrawal, success and timing of business initiatives, competitive conditions, disruptions due to Scottrade integration-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities, the inability to realize synergies or to implement integration plans and other consequences associated with mergers, acquisitions and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 18, 2016, in our Quarterly Reports on Form 10-Q filed thereafter and in our other filings with the SEC. 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 September 30, 2017.
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, 2017 | June 30, 2017 | Sept. 30, 2016 | Sept. 30, 2017 | Sept. 30, 2016 | |||||||||||||||
Revenues: | |||||||||||||||||||
Transaction-based revenues: | |||||||||||||||||||
Commissions and transaction fees | $ | 330 | $ | 335 | $ | 336 | $ | 1,384 | $ | 1,372 | |||||||||
Asset-based revenues: | |||||||||||||||||||
Bank deposit account fees | 307 | 286 | 230 | 1,107 | 926 | ||||||||||||||
Net interest revenue | 210 | 175 | 151 | 690 | 595 | ||||||||||||||
Investment product fees | 115 | 112 | 98 | 423 | 374 | ||||||||||||||
Total asset-based revenues | 632 | 573 | 479 | 2,220 | 1,895 | ||||||||||||||
Other revenues | 21 | 23 | 14 | 72 | 60 | ||||||||||||||
Net revenues | 983 | 931 | 829 | 3,676 | 3,327 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Employee compensation and benefits | 285 | 234 | 222 | 962 | 839 | ||||||||||||||
Clearing and execution costs | 37 | 38 | 34 | 149 | 136 | ||||||||||||||
Communications | 33 | 34 | 38 | 131 | 137 | ||||||||||||||
Occupancy and equipment costs | 49 | 44 | 43 | 181 | 171 | ||||||||||||||
Depreciation and amortization | 28 | 25 | 24 | 102 | 92 | ||||||||||||||
Amortization of acquired intangible assets | 22 | 19 | 20 | 79 | 86 | ||||||||||||||
Professional services | 82 | 67 | 57 | 260 | 178 | ||||||||||||||
Advertising | 59 | 58 | 59 | 254 | 260 | ||||||||||||||
Other | 27 | 18 | 49 | 92 | 110 | ||||||||||||||
Total operating expenses | 622 | 537 | 546 | 2,210 | 2,009 | ||||||||||||||
Operating income | 361 | 394 | 283 | 1,466 | 1,318 | ||||||||||||||
Other expense: | |||||||||||||||||||
Interest on borrowings | 23 | 20 | 13 | 71 | 53 | ||||||||||||||
Loss on debt refinancing | — | 1 | — | 1 | — | ||||||||||||||
Total other expense | 23 | 21 | 13 | 72 | 53 | ||||||||||||||
Pre-tax income | 338 | 373 | 270 | 1,394 | 1,265 | ||||||||||||||
Provision for income taxes | 127 | 142 | 85 | 522 | 423 | ||||||||||||||
Net income | $ | 211 | $ | 231 | $ | 185 | $ | 872 | $ | 842 | |||||||||
Earnings per share - basic | $ | 0.40 | $ | 0.44 | $ | 0.35 | $ | 1.65 | $ | 1.59 | |||||||||
Earnings per share - diluted | $ | 0.39 | $ | 0.44 | $ | 0.35 | $ | 1.64 | $ | 1.58 | |||||||||
Weighted average shares outstanding - basic | 534 | 528 | 526 | 529 | 531 | ||||||||||||||
Weighted average shares outstanding - diluted | 536 | 530 | 529 | 531 | 534 | ||||||||||||||
Dividends declared per share | $ | 0.18 | $ | 0.18 | $ | 0.17 | $ | 0.72 | $ | 0.68 | |||||||||
TD AMERITRADE HOLDING CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
In millions | |||||||||
(Unaudited) | |||||||||
Sept. 30, 2017 | Sept. 30, 2016 | ||||||||
Assets: | |||||||||
Cash and cash equivalents | $ | 1,472 | $ | 1,855 | |||||
Segregated cash and investments | 10,446 | 8,729 | |||||||
Broker/dealer receivables | 1,334 | 1,190 | |||||||
Client receivables, net | 17,151 | 11,941 | |||||||
Investments available-for-sale, at fair value | 746 | 757 | |||||||
Goodwill and intangible assets | 5,683 | 3,042 | |||||||
Other | 1,795 | 1,304 | |||||||
Total assets | $ | 38,627 | $ | 28,818 | |||||
Liabilities and stockholders' equity: | |||||||||
Liabilities: | |||||||||
Broker/dealer payables | $ | 2,504 | $ | 2,040 | |||||
Client payables | 25,107 | 19,055 | |||||||
Long-term debt | 2,555 | 1,817 | |||||||
Other | 1,214 | 855 | |||||||
Total liabilities | 31,380 | 23,767 | |||||||
Stockholders' equity | 7,247 | 5,051 | |||||||
Total liabilities and stockholders' equity | $ | 38,627 | $ | 28,818 | |||||
NOTE: The Condensed Consolidated Balance Sheet as of September 30, 2017 includes provisional estimates related to the assets acquired and liabilities assumed in the Scottrade acquisition. These provisional estimates may be adjusted in the event new information becomes available regarding facts and circumstances which existed at the date of acquisition. | |||||||||
TD AMERITRADE HOLDING CORPORATION | |||||||||||||||||||
SELECTED OPERATING DATA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarter Ended | Fiscal Year Ended | ||||||||||||||||||
Sept. 30, 2017 | June 30, 2017 | Sept. 30, 2016 | Sept. 30, 2017 | Sept. 30, 2016 | |||||||||||||||
Key Metrics: | |||||||||||||||||||
Net new assets (in billions) | $ | 19.9 | $ | 22.0 | $ | 15.1 | $ | 80.1 | $ | 60.3 | |||||||||
Net new asset growth rate (annualized) | 9 | % | 10 | % | 8 | % | 10 | % | 9 | % | |||||||||
Average client trades per day | 528,741 | 510,358 | 444,281 | 510,710 | 462,918 | ||||||||||||||
Profitability Metrics: | |||||||||||||||||||
Operating margin | 36.7 | % | 42.3 | % | 34.1 | % | 39.9 | % | 39.6 | % | |||||||||
Pre-tax margin | 34.4 | % | 40.1 | % | 32.6 | % | 37.9 | % | 38.0 | % | |||||||||
Return on average stockholders' equity (annualized) | 14.2 | % | 17.2 | % | 14.7 | % | 16.0 | % | 17.0 | % | |||||||||
Net profit margin | 21.5 | % | 24.8 | % | 22.3 | % | 23.7 | % | 25.3 | % | |||||||||
EBITDA(1) as a percentage of net revenues | 41.8 | % | 46.9 | % | 39.4 | % | 44.8 | % | 45.0 | % | |||||||||
Liquidity Metrics: | |||||||||||||||||||
Interest on borrowings (in millions) | $ | 23 | $ | 20 | $ | 13 | $ | 71 | $ | 53 | |||||||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) | 17.9 | 21.9 | 25.2 | 23.2 | 28.2 | ||||||||||||||
Cash and cash equivalents (in billions) | $ | 1.5 | $ | 2.9 | $ | 1.9 | $ | 1.5 | $ | 1.9 | |||||||||
Liquid assets available for corporate investing and financing activities(1) (2) (in billions) | $ | 0.2 | $ | 1.8 | $ | 0.7 | $ | 0.2 | $ | 0.7 | |||||||||
Transaction-Based Revenue Metrics: | |||||||||||||||||||
Total trades (in millions) | 33.0 | 32.2 | 28.4 | 127.7 | 116.7 | ||||||||||||||
Average commissions per trade(3) | $ | 7.72 | $ | 7.83 | $ | 9.17 | $ | 8.33 | $ | 9.20 | |||||||||
Trading days | 62.5 | 63.0 | 64.0 | 250.0 | 252.0 | ||||||||||||||
Order routing revenue (in millions) | $ | 75 | $ | 83 | $ | 75 | $ | 320 | $ | 299 | |||||||||
Spread-Based Asset Metrics: | |||||||||||||||||||
Average bank deposit account balances (in billions) | $ | 95.0 | $ | 92.3 | $ | 87.1 | $ | 93.9 | $ | 83.7 | |||||||||
Average interest-earning assets (in billions) | 26.7 | 25.5 | 23.8 | 25.3 | 22.7 | ||||||||||||||
Average spread-based balance (in billions) | $ | 121.7 | $ | 117.8 | $ | 110.9 | $ | 119.2 | $ | 106.4 | |||||||||
Bank deposit account fee revenue (in millions) | $ | 307 | $ | 286 | $ | 230 | $ | 1,107 | $ | 926 | |||||||||
Net interest revenue (in millions) | 210 | 175 | 151 | 690 | 595 | ||||||||||||||
Spread-based revenue (in millions) | $ | 517 | $ | 461 | $ | 381 | $ | 1,797 | $ | 1,521 | |||||||||
Avg. annualized yield - bank deposit account fees | 1.26 | % | 1.23 | % | 1.03 | % | 1.16 | % | 1.09 | % | |||||||||
Avg. annualized yield - interest-earning assets | 3.08 | % | 2.71 | % | 2.48 | % | 2.69 | % | 2.59 | % | |||||||||
Net interest margin (NIM) | 1.66 | % | 1.55 | % | 1.35 | % | 1.49 | % | 1.41 | % | |||||||||
Fee-Based Investment Metrics: | |||||||||||||||||||
Money market mutual fund fees: | |||||||||||||||||||
Average balance (in billions) | $ | 3.6 | $ | 3.6 | $ | 5.3 | $ | 3.6 | $ | 5.7 | |||||||||
Average annualized yield | 0.43 | % | 0.43 | % | 0.28 | % | 0.42 | % | 0.19 | % | |||||||||
Fee revenue (in millions) | $ | 4 | $ | 4 | $ | 4 | $ | 16 | $ | 11 | |||||||||
Market fee-based investment balances: | |||||||||||||||||||
Average balance (in billions) | $ | 196.2 | $ | 186.1 | $ | 163.7 | $ | 181.5 | $ | 155.0 | |||||||||
Average annualized yield | 0.22 | % | 0.23 | % | 0.22 | % | 0.22 | % | 0.23 | % | |||||||||
Fee revenue (in millions) | $ | 111 | $ | 108 | $ | 94 | $ | 407 | $ | 363 | |||||||||
Average fee-based investment balances (in billions) | $ | 199.8 | $ | 189.7 | $ | 169.0 | $ | 185.1 | $ | 160.7 | |||||||||
Average annualized yield | 0.22 | % | 0.23 | % | 0.23 | % | 0.23 | % | 0.23 | % | |||||||||
Investment product fee revenue (in millions) | $ | 115 | $ | 112 | $ | 98 | $ | 423 | $ | 374 | |||||||||
(1) See attached reconciliation of non-GAAP financial measures. | |||||||||||||||||||
(2) Effective in March 2017, the liquid assets available for corporate investing and financing activities metric was revised. Prior periods have been updated to conform to the current presentation. | |||||||||||||||||||
(3) Effective in September 2017, the average commissions per trade metric was revised to exclude order routing revenue. Prior periods have been updated to conform to the current presentation. | |||||||||||||||||||
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 | Fiscal Year Ended | ||||||||||||||||||
Sept. 30, 2017 | June 30, 2017 | Sept. 30, 2016 | Sept. 30, 2017 | Sept. 30, 2016 | |||||||||||||||
Client Account and Client Asset Metrics: | |||||||||||||||||||
Funded accounts (beginning of period) | 7,279,000 | 7,189,000 | 6,872,000 | 6,950,000 | 6,621,000 | ||||||||||||||
Funded accounts (end of period) | 11,004,000 | 7,279,000 | 6,950,000 | 11,004,000 | 6,950,000 | ||||||||||||||
Percentage change during period | 51 | % | 1 | % | 1 | % | 58 | % | 5 | % | |||||||||
Client assets (beginning of period, in billions) | $ | 882.4 | $ | 846.7 | $ | 736.3 | $ | 773.8 | $ | 667.4 | |||||||||
Client assets (end of period, in billions) | $ | 1,118.5 | $ | 882.4 | $ | 773.8 | $ | 1,118.5 | $ | 773.8 | |||||||||
Percentage change during period | 27 | % | 4 | % | 5 | % | 45 | % | 16 | % | |||||||||
Net Interest Revenue: | |||||||||||||||||||
Segregated cash: | |||||||||||||||||||
Average balance (in billions) | $ | 7.7 | $ | 8.0 | $ | 8.0 | $ | 8.3 | $ | 7.0 | |||||||||
Average annualized yield | 0.93 | % | 0.67 | % | 0.27 | % | 0.58 | % | 0.21 | % | |||||||||
Interest revenue (in millions) | $ | 18 | $ | 14 | $ | 5 | $ | 49 | $ | 15 | |||||||||
Client margin balances: | |||||||||||||||||||
Average balance (in billions) | $ | 13.8 | $ | 12.6 | $ | 11.7 | $ | 12.5 | $ | 11.8 | |||||||||
Average annualized yield | 4.08 | % | 3.81 | % | 3.60 | % | 3.79 | % | 3.65 | % | |||||||||
Interest revenue (in millions) | $ | 144 | $ | 121 | $ | 107 | $ | 482 | $ | 436 | |||||||||
Securities borrowing/lending: | |||||||||||||||||||
Average securities borrowing balance (in billions) | $ | 1.1 | $ | 1.0 | $ | 1.2 | $ | 1.0 | $ | 0.9 | |||||||||
Average securities lending balance (in billions) | $ | 2.4 | $ | 2.1 | $ | 1.9 | $ | 2.0 | $ | 2.1 | |||||||||
Net interest revenue - securities borrowing/lending (in millions) | $ | 41 | $ | 34 | $ | 37 | $ | 139 | $ | 141 | |||||||||
Other cash and interest-earning investments: | |||||||||||||||||||
Average balance (in billions) | $ | 4.1 | $ | 3.9 | $ | 2.9 | $ | 3.5 | $ | 3.0 | |||||||||
Average annualized yield | 0.79 | % | 0.67 | % | 0.28 | % | 0.63 | % | 0.18 | % | |||||||||
Interest revenue - net (in millions) | $ | 8 | $ | 6 | $ | 2 | $ | 22 | $ | 5 | |||||||||
Client credit balances: | |||||||||||||||||||
Average balance (in billions) | $ | 16.6 | $ | 15.9 | $ | 15.5 | $ | 16.2 | $ | 14.7 | |||||||||
Average annualized cost | 0.02 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | |||||||||
Interest expense (in millions) | $ | (1 | ) | $ | (0 | ) | $ | (0 | ) | $ | (2 | ) | $ | (2 | ) | ||||
Average interest-earning assets (in billions) | $ | 26.7 | $ | 25.5 | $ | 23.8 | $ | 25.3 | $ | 22.7 | |||||||||
Average annualized yield | 3.08 | % | 2.71 | % | 2.48 | % | 2.69 | % | 2.59 | % | |||||||||
Net interest revenue (in millions) | $ | 210 | $ | 175 | $ | 151 | $ | 690 | $ | 595 | |||||||||
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, except per share amounts | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarter Ended | Fiscal Year Ended | Fiscal Year Ending Sept. 30, 2018* | |||||||||||||||||||||||||||||||||||||
Sept. 30, 2017 | Sept. 30, 2016 | Sept. 30, 2017 | Sept. 30, 2016 | ||||||||||||||||||||||||||||||||||||
Amount | Diluted EPS | Amount | Diluted EPS | Amount | Diluted EPS | Amount | Diluted EPS | Diluted EPS Range | |||||||||||||||||||||||||||||||
Non-GAAP Net Income and Non-GAAP Diluted EPS (1) | |||||||||||||||||||||||||||||||||||||||
Net income and diluted EPS - GAAP | $ | 211 | $ | 0.39 | $ | 185 | $ | 0.35 | $ | 872 | $ | 1.64 | $ | 842 | $ | 1.58 | $ | 1.50 | $ | 2.00 | |||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 22 | 0.04 | 20 | 0.04 | 79 | 0.15 | 86 | 0.16 | 0.25 | 0.25 | |||||||||||||||||||||||||||||
Acquisition-related expenses | 61 | 0.11 | 6 | 0.01 | 88 | 0.17 | 6 | 0.01 | 0.72 | 0.56 | |||||||||||||||||||||||||||||
Income tax effect of above adjustments | (31 | ) | (0.05 | ) | (10 | ) | (0.02 | ) | (63 | ) | (0.12 | ) | (35 | ) | (0.07 | ) | (0.37 | ) | (0.31 | ) | |||||||||||||||||||
Non-GAAP net income and non-GAAP diluted EPS | $ | 263 | $ | 0.49 | $ | 201 | $ | 0.38 | $ | 976 | $ | 1.84 | $ | 899 | $ | 1.68 | $ | 2.10 | $ | 2.50 | |||||||||||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||||||||||||||||||||||||||
Sept. 30, 2017 | June 30, 2017 | Sept. 30, 2016 | Sept. 30. 2017 | Sept. 30, 2016 | ||||||||||||||||||||||||||||||
$ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||
EBITDA (2) | ||||||||||||||||||||||||||||||||||
Net Income - GAAP | $ | 211 | 21.5 | % | $ | 231 | 24.8 | % | $ | 185 | 22.3 | % | $ | 872 | 23.7 | % | $ | 842 | 25.3 | % | ||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | 28 | 2.8 | % | 25 | 2.7 | % | 24 | 2.9 | % | 102 | 2.8 | % | 92 | 2.8 | % | |||||||||||||||||||
Amortization of acquired intangible assets | 22 | 2.2 | % | 19 | 2.0 | % | 20 | 2.4 | % | 79 | 2.1 | % | 86 | 2.6 | % | |||||||||||||||||||
Interest on borrowings | 23 | 2.3 | % | 20 | 2.1 | % | 13 | 1.6 | % | 71 | 1.9 | % | 53 | 1.6 | % | |||||||||||||||||||
Provision for income taxes | 127 | 12.9 | % | 142 | 15.3 | % | 85 | 10.3 | % | 522 | 14.2 | % | 423 | 12.7 | % | |||||||||||||||||||
EBITDA - non-GAAP | $ | 411 | 41.8 | % | $ | 437 | 46.9 | % | $ | 327 | 39.4 | % | $ | 1,646 | 44.8 | % | $ | 1,496 | 45.0 | % | ||||||||||||||
TD AMERITRADE HOLDING CORPORATION | |||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
Dollars in millions, except per share amounts | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
As of | |||||||||||||||||||
Sept. 30, 2017 | June 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sept. 30, 2016 | |||||||||||||||
Liquid Assets Available for Corporate Investing and Financing Activities (3) | |||||||||||||||||||
Cash and cash equivalents - GAAP | $ | 1,472 | $ | 2,880 | $ | 2,231 | $ | 1,662 | $ | 1,855 | |||||||||
Less: Non-corporate cash and cash equivalents | (1,174 | ) | (973 | ) | (1,286 | ) | (1,203 | ) | (1,363 | ) | |||||||||
Corporate cash and cash equivalents | 298 | 1,907 | 945 | 459 | 492 | ||||||||||||||
Corporate investments | 714 | 747 | 747 | 747 | 757 | ||||||||||||||
Less: Corporate liquidity maintained for operational contingencies | (723 | ) | (723 | ) | (723 | ) | (773 | ) | (773 | ) | |||||||||
Amounts maintained for corporate working capital | (87 | ) | (87 | ) | (87 | ) | (87 | ) | (87 | ) | |||||||||
Amounts held as collateral for derivative contracts | (40 | ) | (34 | ) | (40 | ) | (32 | ) | (93 | ) | |||||||||
Excess corporate cash and cash equivalents and investments | 162 | 1,810 | 842 | 314 | 296 | ||||||||||||||
Excess regulatory net capital over management targets | 46 | 8 | 122 | 478 | 357 | ||||||||||||||
Liquid assets available for corporate investing and financing activities - non-GAAP | $ | 208 | $ | 1,818 | $ | 964 | $ | 792 | $ | 653 | |||||||||
Note: The term "GAAP" in the following explanation refers to generally accepted accounting principles in the United States.
* Represents the range of the Non-GAAP Diluted EPS included within the October 24, 2017 Outlook Statement.
(1) | Non-GAAP net income and non-GAAP diluted earnings per share (EPS) are non-GAAP financial measures as defined by SEC Regulation G. We define non-GAAP net income as net income adjusted to remove the after-tax effect of amortization of acquired intangible assets and acquisition-related expenses. We consider non-GAAP net income and non-GAAP diluted EPS as important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of our results in the current period to those in prior and future periods. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of our underlying business performance. Acquisition-related expenses are excluded as these costs are directly related to our acquisition of Scottrade Financial Services, Inc. and are not representative of the costs of running the Company’s on-going business. Non-GAAP net income and non-GAAP diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net income and diluted EPS. |
(2) | 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 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, GAAP pre-tax income, net income and cash flows from operating activities. |
(3) | 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 regulated subsidiaries in the calculation of liquid assets available for corporate investing and financing activities, rather than simply including the regulated subsidiaries' cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the regulated subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the regulated 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 GAAP cash and cash equivalents. |
We define liquid assets available for corporate investing and financing activities as the sum of (a) excess corporate cash and cash equivalents and investments, less securities sold under agreements to repurchase and (b) our regulated subsidiaries net capital in excess of minimum operational targets established by management. Excess corporate cash and cash equivalents and investments includes cash and cash equivalents from our investment advisory subsidiaries and excludes (i) amounts being maintained to provide liquidity for operational contingencies, including lending to our broker-dealer and FCM/FDM subsidiaries under intercompany credit agreements, (ii) amounts maintained for corporate working capital and (iii) amounts held as collateral for derivative contracts. Liquid assets available for corporate investing and financing activities is based on more conservative measures of net capital than regulatory requirements because we generally manage to higher levels of net capital at our regulated subsidiaries than the regulatory thresholds require. | |