LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today
announced results for its first quarter ended March 31, 2024,
reporting net income of $289 million, or $3.83 per share. This
compares with $339 million, or $4.24 per share, in the first
quarter of 2023 and $218 million, or $2.85 per share, in the prior
quarter.
“We remain steadfast in our mission of taking care of our
advisors, so they can take of their clients,” said Dan Arnold,
President and CEO. “Our commitment to our advisors is reflected in
their continued successes, which contributed to another quarter of
solid business results. As we look ahead, we will continue to
invest to enhance the appeal of our model and make progress on our
vision of becoming the leader across the advisor-centered
marketplace.”
"The first quarter of 2024 was marked by continued business and
financial strength," said Matt Audette, CFO and Head of Business
Operations. "We continued to grow assets organically in both our
traditional and new markets, entered into an agreement to acquire
Atria Wealth Solutions, continued to build momentum in our
Liquidity & Succession solution, and are preparing to onboard
the wealth management businesses of Prudential Financial and
Wintrust Financial. We are excited about the opportunities ahead
and look forward to continuing to serve our advisors, invest in our
industry-leading value proposition, and create long-term
shareholder value."
Dividend Declaration
The Company's Board of Directors declared a $0.30 per share
dividend to be paid on June 4, 2024 to all stockholders of record
as of May 21, 2024.
Conference Call and Additional Information
The Company will hold a conference call to discuss its results
at 5:00 p.m. ET on Tuesday, April 30, 2024. The conference call
will be available for replay at investor.lpl.com/events.
Contacts
Investor Relationsinvestor.relations@lplfinancial.com
Media Relationsmedia.relations@lplfinancial.com
About LPL Financial
LPL Financial Holdings Inc. (Nasdaq: LPLA) was founded on the
principle that the firm should work for advisors and institutions,
and not the other way around. Today, LPL is a leader in the markets
we serve(5), serving nearly 23,000 financial advisors, including
advisors at approximately 1,100 institutions and at approximately
570 registered investment advisor ("RIA") firms nationwide. We are
steadfast in our commitment to the advisor-mediated model and the
belief that Americans deserve access to personalized guidance from
a financial professional. At LPL, independence means that advisors
and institution leaders have the freedom they deserve to choose the
business model, services, and technology resources that allow them
to run a thriving business. They have the flexibility to do
business their way. And they have the freedom to manage their
client relationships, because they know their clients best. Simply
put, we take care of our advisors and institutions, so they can
take care of their clients.
Securities and Advisory services offered through LPL Financial
LLC ("LPL Financial"), a registered investment advisor. Member
FINRA/SIPC. LPL Financial and its affiliated companies provide
financial services only from the United States.
Throughout this communication, the terms "financial advisors"
and "advisors" are used to refer to registered representatives
and/or investment advisor representatives affiliated with LPL
Financial.
We routinely disclose information that may be important to
shareholders in the "Investor Relations" or "Press Releases"
section of our website.
Forward-Looking Statements
This press release contains statements regarding:
- the amount and timing of the onboarding of acquired, recruited
or transitioned brokerage and advisory assets;
- the Company's future financial and operating results, growth,
plans, priorities and business strategies, including forecasts and
statements related to the Company's core G&A expenses; and
- future capabilities, future advisor service experience, future
investments and capital deployment, including share repurchase
activity and dividends, if any, and long-term shareholder
value.
These and any other statements that are not related to present
facts or current conditions, or that are not purely historical,
constitute forward-looking statements. They reflect the Company's
expectations and objectives as of April 30, 2024 and are not
guarantees that expectations or objectives expressed or implied
will be achieved. The achievement of such expectations and
objectives involves risks and uncertainties that may cause actual
results, levels of activity or the timing of events to differ
materially from those expressed or implied by forward-looking
statements. Important factors that could cause or contribute
to such differences include:
- the failure to satisfy the closing conditions applicable to the
Company's purchase agreement with Atria, or strategic relationship
agreements with Prudential Financial, Inc. ("Prudential") and
Wintrust, including regulatory approvals;
- difficulties and delays in onboarding the assets of acquired,
recruited or transitioned advisors, including the receipt and
timing of regulatory approvals that may be required;
- disruptions in the businesses of the Company that could make it
more difficult to maintain relationships with advisors and their
clients;
- the choice by clients of acquired or recruited advisors not to
open brokerage and/or advisory accounts at the Company;
- changes in general economic and financial market conditions,
including retail investor sentiment;
- changes in interest rates and fees payable by banks
participating in the Company's client cash programs, including the
Company's success in negotiating agreements with current or
additional counterparties;
- the Company's strategy and success in managing client cash
program fees;
- fluctuations in the levels of advisory and brokerage assets,
including net new assets, and the related impact on revenue;
- effects of competition in the financial services industry and
the success of the Company in attracting and retaining financial
advisors and institutions, and their ability to market financial
products and services effectively;
- whether the retail investors served by newly-recruited advisors
choose to move their respective assets to new accounts at the
Company;
- changes in the growth and profitability of the Company's
fee-based offerings;
- the effect of current, pending and future legislation,
regulation and regulatory actions, including disciplinary actions
imposed by federal and state regulators and self-regulatory
organizations;
- the cost of settling and remediating issues related to
regulatory matters or legal proceedings, including actual costs of
reimbursing customers for losses in excess of our reserves;
- the negotiation of definitive documentation in connection with
the settlement of the industry-wide civil investigation into
compliance with records preservation requirements for
business-related electronic communications stored on personal
devices applicable to broker-dealer firms and investment
advisors;
- changes made to the Company’s services and pricing, including
in response to competitive developments and current, pending and
future legislation, regulation and regulatory actions, and the
effect that such changes may have on the Company’s gross profit
streams and costs;
- execution of the Company's capital management plans, including
its compliance with the terms of the Company's amended and restated
credit agreement, the committed revolving credit facility and LPL
Financial's committed revolving credit facility, and the indentures
governing the Company's senior unsecured notes;
- strategic acquisitions and investments, including pursuant to
the Company’s Liquidity & Succession solution, and the effect
that such acquisitions and investments may have on the Company’s
capital management plans and liquidity;
- the price, availability and trading volumes of shares of the
Company's common stock, which will affect the timing and size of
future share repurchases by the Company, if any;
- the execution of the Company's plans and its success in
realizing the synergies, expense savings, service improvements or
efficiencies expected to result from its investments, initiatives
and acquisitions, expense plans and technology initiatives;
- whether advisors affiliated with Prudential and Wintrust will
transition registration to the Company and whether assets reported
as serviced by such financial advisors will translate into assets
of the Company;
- the performance of third-party service providers to which
business processes have been transitioned;
- the Company's ability to control operating risks, information
technology systems risks, cybersecurity risks and sourcing risks;
and
- the other factors set forth in the Company's most recent Annual
Report on Form 10-K, as may be amended or updated in the Company's
Quarterly Reports on Form 10-Q or other filings with the Securities
and Exchange Commission.
Except as required by law, the Company specifically disclaims
any obligation to update any forward-looking statements as a result
of developments occurring after the date of this earnings release,
and you should not rely on statements contained herein as
representing the Company's view as of any date subsequent to the
date of this press release.
LPL Financial Holdings
Inc.Condensed Consolidated
Statements of Income(In
thousands, except per share
data)(Unaudited) |
|
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
|
|
March 31, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2023 |
|
|
Change |
REVENUE |
|
|
|
|
|
Advisory |
$ |
1,199,811 |
|
|
$ |
1,085,497 |
|
|
|
11 |
% |
|
$ |
954,057 |
|
|
|
26 |
% |
Commission: |
|
|
|
|
|
Sales-based |
|
385,235 |
|
|
|
355,958 |
|
|
|
8 |
% |
|
|
286,072 |
|
|
|
35 |
% |
Trailing |
|
361,211 |
|
|
|
326,454 |
|
|
|
11 |
% |
|
|
317,653 |
|
|
|
14 |
% |
Total commission |
|
746,446 |
|
|
|
682,412 |
|
|
|
9 |
% |
|
|
603,725 |
|
|
|
24 |
% |
Asset-based: |
|
|
|
|
|
Client cash |
|
352,382 |
|
|
|
352,661 |
|
|
|
— |
% |
|
|
418,275 |
|
|
|
(16 |
%) |
Other asset-based |
|
248,339 |
|
|
|
228,473 |
|
|
|
9 |
% |
|
|
203,473 |
|
|
|
22 |
% |
Total asset-based |
|
600,721 |
|
|
|
581,134 |
|
|
|
3 |
% |
|
|
621,748 |
|
|
|
(3 |
%) |
Service and fee |
|
132,172 |
|
|
|
130,680 |
|
|
|
1 |
% |
|
|
118,987 |
|
|
|
11 |
% |
Transaction |
|
57,258 |
|
|
|
53,858 |
|
|
|
6 |
% |
|
|
48,935 |
|
|
|
17 |
% |
Interest income, net |
|
43,525 |
|
|
|
43,312 |
|
|
|
— |
% |
|
|
37,358 |
|
|
|
17 |
% |
Other |
|
52,660 |
|
|
|
66,936 |
|
|
|
(21 |
%) |
|
|
33,022 |
|
|
|
59 |
% |
Total revenue |
|
2,832,593 |
|
|
|
2,643,829 |
|
|
|
7 |
% |
|
|
2,417,832 |
|
|
|
17 |
% |
EXPENSE |
|
|
|
|
|
Advisory and commission |
|
1,733,487 |
|
|
|
1,607,978 |
|
|
|
8 |
% |
|
|
1,370,634 |
|
|
|
26 |
% |
Compensation and benefits |
|
274,369 |
|
|
|
270,709 |
|
|
|
1 |
% |
|
|
233,533 |
|
|
|
17 |
% |
Promotional |
|
126,619 |
|
|
|
126,800 |
|
|
|
— |
% |
|
|
98,223 |
|
|
|
29 |
% |
Depreciation and amortization |
|
67,158 |
|
|
|
67,936 |
|
|
|
(1 |
%) |
|
|
56,054 |
|
|
|
20 |
% |
Occupancy and equipment |
|
66,264 |
|
|
|
62,103 |
|
|
|
7 |
% |
|
|
60,173 |
|
|
|
10 |
% |
Interest expense on borrowings |
|
60,082 |
|
|
|
54,415 |
|
|
|
10 |
% |
|
|
39,184 |
|
|
|
53 |
% |
Brokerage, clearing and exchange |
|
30,532 |
|
|
|
25,917 |
|
|
|
18 |
% |
|
|
26,126 |
|
|
|
17 |
% |
Amortization of other intangibles |
|
29,552 |
|
|
|
28,618 |
|
|
|
3 |
% |
|
|
24,092 |
|
|
|
23 |
% |
Communications and data processing |
|
19,744 |
|
|
|
17,814 |
|
|
|
11 |
% |
|
|
17,675 |
|
|
|
12 |
% |
Professional services |
|
13,279 |
|
|
|
21,572 |
|
|
|
(38 |
%) |
|
|
14,220 |
|
|
|
(7 |
%) |
Other |
|
37,315 |
|
|
|
66,180 |
|
|
|
(44 |
%) |
|
|
33,421 |
|
|
|
12 |
% |
Total expense |
|
2,458,401 |
|
|
|
2,350,042 |
|
|
|
5 |
% |
|
|
1,973,335 |
|
|
|
25 |
% |
INCOME BEFORE PROVISION FOR
INCOME TAXES |
|
374,192 |
|
|
|
293,787 |
|
|
|
27 |
% |
|
|
444,497 |
|
|
|
(16 |
%) |
PROVISION FOR INCOME
TAXES |
|
85,428 |
|
|
|
76,232 |
|
|
|
12 |
% |
|
|
105,613 |
|
|
|
(19 |
%) |
NET INCOME |
$ |
288,764 |
|
|
$ |
217,555 |
|
|
|
33 |
% |
|
$ |
338,884 |
|
|
|
(15 |
%) |
EARNINGS PER SHARE |
|
|
|
|
|
Earnings per share, basic |
$ |
3.87 |
|
|
$ |
2.89 |
|
|
|
34 |
% |
|
$ |
4.30 |
|
|
|
(10 |
%) |
Earnings per share, diluted |
$ |
3.83 |
|
|
$ |
2.85 |
|
|
|
34 |
% |
|
$ |
4.24 |
|
|
|
(10 |
%) |
Weighted-average shares outstanding, basic |
|
74,562 |
|
|
|
75,228 |
|
|
|
(1 |
%) |
|
|
78,750 |
|
|
|
(5 |
%) |
Weighted-average shares outstanding, diluted |
|
75,463 |
|
|
|
76,240 |
|
|
|
(1 |
%) |
|
|
79,974 |
|
|
|
(6 |
%) |
LPL Financial Holdings Inc.Condensed
Consolidated Statements of Financial Condition(In
thousands, except share
data)(Unaudited) |
|
|
March 31, 2024 |
|
December 31, 2023 |
ASSETS |
Cash and equivalents |
$ |
1,102,270 |
|
|
$ |
465,671 |
|
Cash and equivalents
segregated under federal or other regulations |
|
1,610,996 |
|
|
|
2,007,312 |
|
Restricted cash |
|
114,006 |
|
|
|
108,180 |
|
Receivables from clients,
net |
|
591,503 |
|
|
|
588,585 |
|
Receivables from brokers,
dealers and clearing organizations |
|
103,236 |
|
|
|
50,069 |
|
Advisor loans, net |
|
1,573,774 |
|
|
|
1,479,690 |
|
Other receivables, net |
|
863,119 |
|
|
|
743,317 |
|
Investment securities ($43,428
and $76,088 at fair value at March 31, 2024 and December 31, 2023,
respectively) |
|
57,451 |
|
|
|
91,311 |
|
Property and equipment,
net |
|
987,308 |
|
|
|
933,091 |
|
Goodwill |
|
1,840,972 |
|
|
|
1,856,648 |
|
Other intangibles, net |
|
690,767 |
|
|
|
671,585 |
|
Other assets |
|
1,482,137 |
|
|
|
1,390,021 |
|
Total assets |
$ |
11,017,539 |
|
|
$ |
10,385,480 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
LIABILITIES: |
|
|
Client payables |
$ |
2,486,605 |
|
|
$ |
2,266,176 |
|
Payables to brokers, dealers
and clearing organizations |
|
190,419 |
|
|
|
163,337 |
|
Accrued advisory and
commission expenses payable |
|
232,084 |
|
|
|
216,541 |
|
Corporate debt and other
borrowings, net |
|
3,853,794 |
|
|
|
3,734,111 |
|
Accounts payable and accrued
liabilities |
|
369,244 |
|
|
|
485,963 |
|
Total liabilities |
|
1,615,512 |
|
|
|
1,440,373 |
|
|
|
8,747,658 |
|
|
|
8,306,501 |
|
STOCKHOLDERS’ EQUITY: |
|
|
Common stock, $0.001 par
value; 600,000,000 shares authorized; 130,704,541 shares and
130,233,328 shares issued at March 31, 2024 and December 31, 2023,
respectively |
|
131 |
|
|
|
130 |
|
Additional paid-in
capital |
|
2,016,666 |
|
|
|
1,987,684 |
|
Treasury stock, at cost —
55,998,999 shares and 55,576,970 shares at March 31, 2024 and
December 31, 2023, respectively |
|
(4,101,055 |
) |
|
|
(3,993,949 |
) |
Retained earnings |
|
4,354,139 |
|
|
|
4,085,114 |
|
Total stockholders’ equity |
|
2,269,881 |
|
|
|
2,078,849 |
|
Total liabilities and
stockholders’ equity |
$ |
11,017,539 |
|
|
$ |
10,385,350 |
|
LPL Financial Holdings Inc.Management's
Statements of Operations(In thousands, except per
share data)(Unaudited) |
|
Certain
information in this release is presented as reviewed by the
Company’s management and includes information derived from the
Company’s unaudited condensed consolidated statements of income,
non-GAAP financial measures and operational and performance
metrics. For information on non-GAAP financial measures, please see
the section titled"Non-GAAP Financial Measures"in this
release. |
|
|
Quarterly Results |
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Gross
Profit(6) |
|
|
|
|
|
Advisory |
$ |
1,199,811 |
|
|
$ |
1,085,497 |
|
|
|
11 |
% |
|
$ |
954,057 |
|
|
|
26 |
% |
Trailing commissions |
|
361,211 |
|
|
|
326,454 |
|
|
|
11 |
% |
|
|
317,653 |
|
|
|
14 |
% |
Sales-based commissions |
|
385,235 |
|
|
|
355,958 |
|
|
|
8 |
% |
|
|
286,072 |
|
|
|
35 |
% |
Advisory fees and commissions |
|
1,946,257 |
|
|
|
1,767,909 |
|
|
|
10 |
% |
|
|
1,557,782 |
|
|
|
25 |
% |
Production-based payout(7) |
|
(1,686,332 |
) |
|
|
(1,548,540 |
) |
|
|
9 |
% |
|
|
(1,342,668 |
) |
|
|
26 |
% |
Advisory fees and commissions, net of payout |
|
259,925 |
|
|
|
219,369 |
|
|
|
18 |
% |
|
|
215,114 |
|
|
|
21 |
% |
Client cash(8) |
|
373,408 |
|
|
|
373,979 |
|
|
|
— |
% |
|
|
438,612 |
|
|
|
(15 |
%) |
Other asset-based(9) |
|
248,339 |
|
|
|
228,473 |
|
|
|
9 |
% |
|
|
203,473 |
|
|
|
22 |
% |
Service and fee |
|
132,172 |
|
|
|
130,680 |
|
|
|
1 |
% |
|
|
118,987 |
|
|
|
11 |
% |
Transaction |
|
57,258 |
|
|
|
53,858 |
|
|
|
6 |
% |
|
|
48,935 |
|
|
|
17 |
% |
Interest income, net(10) |
|
22,482 |
|
|
|
21,975 |
|
|
|
2 |
% |
|
|
17,015 |
|
|
|
32 |
% |
Other revenue(11) |
|
3,382 |
|
|
|
4,636 |
|
|
|
(27 |
%) |
|
|
3,945 |
|
|
|
(14 |
%) |
Total net advisory fees and commissions and attachment
revenue |
|
1,096,966 |
|
|
|
1,032,970 |
|
|
|
6 |
% |
|
|
1,046,081 |
|
|
|
5 |
% |
Brokerage, clearing and exchange expense |
|
(30,532 |
) |
|
|
(25,917 |
) |
|
|
18 |
% |
|
|
(26,126 |
) |
|
|
17 |
% |
Gross
Profit(6) |
|
1,066,434 |
|
|
|
1,007,053 |
|
|
|
6 |
% |
|
|
1,019,955 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G&A
Expense |
|
|
|
|
|
Core G&A(12) |
|
363,513 |
|
|
|
364,469 |
|
|
|
— |
% |
|
|
326,177 |
|
|
|
11 |
% |
Regulatory charges |
|
7,469 |
|
|
|
8,905 |
|
|
|
(16 |
%) |
|
|
7,732 |
|
|
|
(3 |
%) |
Promotional (ongoing)(13)(14) |
|
132,311 |
|
|
|
138,457 |
|
|
|
(4 |
%) |
|
|
101,163 |
|
|
|
31 |
% |
Acquisition costs(14) |
|
9,524 |
|
|
|
34,931 |
|
|
|
(73 |
%) |
|
|
3,092 |
|
|
n/m |
Employee share-based compensation |
|
22,633 |
|
|
|
15,535 |
|
|
|
46 |
% |
|
|
17,964 |
|
|
|
26 |
% |
Total G&A |
|
535,450 |
|
|
|
562,297 |
|
|
|
(5 |
%) |
|
|
456,128 |
|
|
|
17 |
% |
EBITDA(15) |
|
530,984 |
|
|
|
444,756 |
|
|
|
19 |
% |
|
|
563,827 |
|
|
|
(6 |
%) |
Depreciation and amortization |
|
67,158 |
|
|
|
67,936 |
|
|
|
(1 |
%) |
|
|
56,054 |
|
|
|
20 |
% |
Amortization of other intangibles |
|
29,552 |
|
|
|
28,618 |
|
|
|
3 |
% |
|
|
24,092 |
|
|
|
23 |
% |
Interest expense on borrowings |
|
60,082 |
|
|
|
54,415 |
|
|
|
10 |
% |
|
|
39,184 |
|
|
|
53 |
% |
INCOME BEFORE
PROVISION FOR INCOME TAXES |
|
374,192 |
|
|
|
293,787 |
|
|
|
27 |
% |
|
|
444,497 |
|
|
|
(16 |
%) |
PROVISION FOR INCOME
TAXES |
|
85,428 |
|
|
|
76,232 |
|
|
|
12 |
% |
|
|
105,613 |
|
|
|
(19 |
%) |
NET
INCOME |
$ |
288,764 |
|
|
$ |
217,555 |
|
|
|
33 |
% |
|
$ |
338,884 |
|
|
|
(15 |
%) |
Earnings per share,
diluted |
$ |
3.83 |
|
|
$ |
2.85 |
|
|
|
34 |
% |
|
$ |
4.24 |
|
|
|
(10 |
%) |
Weighted-average shares
outstanding, diluted |
|
75,463 |
|
|
|
76,240 |
|
|
|
(1 |
%) |
|
|
79,974 |
|
|
|
(6 |
%) |
Adjusted EBITDA(15) |
$ |
540,508 |
|
|
$ |
479,687 |
|
|
|
13 |
% |
|
$ |
566,919 |
|
|
|
(5 |
%) |
Adjusted EPS(16) |
$ |
4.21 |
|
|
$ |
3.51 |
|
|
|
20 |
% |
|
$ |
4.49 |
|
|
|
(6 |
%) |
LPL Financial Holdings
Inc.Operating Metrics(Dollars in
billions, except where
noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Market
Drivers |
|
|
|
|
|
S&P 500 Index (end of period) |
|
5,254 |
|
|
|
4,770 |
|
|
|
10 |
% |
|
|
4,109 |
|
|
|
28 |
% |
Russell 2000 Index (end of period) |
|
2,125 |
|
|
|
2,027 |
|
|
|
5 |
% |
|
|
1,802 |
|
|
|
18 |
% |
Fed Funds daily effective rate (average bps) |
|
533 |
|
|
|
533 |
|
|
—bps |
|
|
452 |
|
|
81bps |
|
|
|
|
|
|
Advisory and Brokerage
Assets(17) |
|
|
|
|
|
Advisory assets |
$ |
793.0 |
|
|
$ |
735.8 |
|
|
|
8 |
% |
|
$ |
620.9 |
|
|
|
28 |
% |
Brokerage assets |
|
647.9 |
|
|
|
618.2 |
|
|
|
5 |
% |
|
|
554.3 |
|
|
|
17 |
% |
Total Advisory and Brokerage Assets |
$ |
1,440.9 |
|
|
$ |
1,354.1 |
|
|
|
6 |
% |
|
$ |
1,175.2 |
|
|
|
23 |
% |
Advisory as a % of Total Advisory and Brokerage Assets |
|
55.0 |
% |
|
|
54.3 |
% |
|
70bps |
|
|
52.8 |
% |
|
220bps |
|
|
|
|
|
|
Assets by
Platform |
|
|
|
|
|
Corporate advisory assets(18) |
$ |
537.6 |
|
|
$ |
496.5 |
|
|
|
8 |
% |
|
$ |
415.3 |
|
|
|
29 |
% |
Independent RIA advisory assets(18) |
|
255.4 |
|
|
|
239.3 |
|
|
|
7 |
% |
|
|
205.6 |
|
|
|
24 |
% |
Brokerage assets |
|
647.9 |
|
|
|
618.2 |
|
|
|
5 |
% |
|
|
554.3 |
|
|
|
17 |
% |
Total Advisory and Brokerage Assets |
$ |
1,440.9 |
|
|
$ |
1,354.1 |
|
|
|
6 |
% |
|
$ |
1,175.2 |
|
|
|
23 |
% |
|
|
|
|
|
|
Centrally Managed
Assets |
|
|
|
|
|
Centrally managed assets(19) |
$ |
121.7 |
|
|
$ |
112.1 |
|
|
|
9 |
% |
|
$ |
94.6 |
|
|
|
29 |
% |
Centrally Managed as a % of Total Advisory Assets |
|
15.3 |
% |
|
|
15.2 |
% |
|
10bps |
|
|
15.2 |
% |
|
10bps |
LPL Financial Holdings Inc.Operating
Metrics(Dollars in billions, except where
noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Net New Assets
(NNA)(20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new advisory assets |
$ |
16.2 |
|
|
$ |
20.5 |
|
|
|
n/m |
|
|
$ |
14.6 |
|
|
|
n/m |
|
Net new brokerage assets |
|
0.5 |
|
|
|
4.2 |
|
|
|
n/m |
|
|
|
9.9 |
|
|
|
n/m |
|
Total Net New Assets |
$ |
16.7 |
|
|
$ |
24.7 |
|
|
|
n/m |
|
|
$ |
24.5 |
|
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Net New
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Organic net new advisory assets |
$ |
16.2 |
|
|
$ |
20.5 |
|
|
|
n/m |
|
|
$ |
13.7 |
|
|
|
n/m |
|
Organic net new brokerage assets |
|
0.5 |
|
|
|
4.2 |
|
|
|
n/m |
|
|
|
7.1 |
|
|
|
n/m |
|
Total Organic Net New Assets |
$ |
16.7 |
|
|
$ |
24.7 |
|
|
|
n/m |
|
|
$ |
20.8 |
|
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net brokerage to advisory conversions(21) |
$ |
3.6 |
|
|
$ |
2.6 |
|
|
|
n/m |
|
|
$ |
2.1 |
|
|
|
n/m |
|
Organic advisory NNA annualized growth(22) |
|
8.8 |
% |
|
|
12.4 |
% |
|
|
n/m |
|
|
|
9.4 |
% |
|
|
n/m |
|
Total organic NNA annualized growth(22) |
|
4.9 |
% |
|
|
8.0 |
% |
|
|
n/m |
|
|
|
7.5 |
% |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net New Advisory
Assets(20) |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate RIA net new advisory assets |
$ |
13.9 |
|
|
$ |
15.9 |
|
|
|
n/m |
|
|
$ |
10.4 |
|
|
|
n/m |
|
Independent RIA net new advisory assets |
|
2.3 |
|
|
|
4.6 |
|
|
|
n/m |
|
|
|
4.2 |
|
|
|
n/m |
|
Total Net New Advisory Assets |
$ |
16.2 |
|
|
$ |
20.5 |
|
|
|
n/m |
|
|
$ |
14.6 |
|
|
|
n/m |
|
Centrally managed net new advisory assets(20) |
$ |
3.6 |
|
|
$ |
3.0 |
|
|
|
n/m |
|
|
$ |
1.7 |
|
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net buy (sell)
activity(23) |
$ |
37.8 |
|
|
$ |
32.8 |
|
|
|
n/m |
|
|
$ |
36.9 |
|
|
|
n/m |
|
LPL Financial Holdings Inc.Client Cash
Data(Dollars in thousands, except where
noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Client Cash Balances
(in
billions)(24) |
|
|
|
|
|
Insured cash account sweep |
$ |
32.6 |
|
|
$ |
34.5 |
|
|
|
(6 |
%) |
|
$ |
39.7 |
|
|
|
(18 |
%) |
Deposit cash account sweep |
|
9.2 |
|
|
|
9.3 |
|
|
|
(1 |
%) |
|
|
10.2 |
|
|
|
(10 |
%) |
Total Bank Sweep |
|
41.8 |
|
|
|
43.8 |
|
|
|
(5 |
%) |
|
|
49.9 |
|
|
|
(16 |
%) |
Money market sweep |
|
2.4 |
|
|
|
2.4 |
|
|
|
— |
% |
|
|
2.6 |
|
|
|
(8 |
%) |
Total Client Cash Sweep Held by Third Parties |
|
44.2 |
|
|
|
46.2 |
|
|
|
(4 |
%) |
|
|
52.5 |
|
|
|
(16 |
%) |
Client cash account(25) |
|
2.1 |
|
|
|
2.0 |
|
|
|
5 |
% |
|
|
1.6 |
|
|
|
31 |
% |
Total Client Cash
Balances |
$ |
46.3 |
|
|
$ |
48.2 |
|
|
|
(4 |
%) |
|
$ |
54.0 |
|
|
|
(14 |
%) |
Client Cash Balances as a % of Total Assets |
|
3.2 |
% |
|
|
3.6 |
% |
|
(40bps) |
|
|
4.6 |
% |
|
(140bps) |
Note: Totals may not foot due to rounding.
|
Three Months Ended |
|
March 31, 2024 |
December 31, 2023 |
March 31, 2023 |
Interest-Earnings Assets |
Average Balance(in billions) |
Revenue |
|
Net Yield
(bps)(26) |
Average Balance(in billions) |
Revenue |
|
Net Yield
(bps)(26) |
Average Balance(in billions) |
Revenue |
|
Net Yield
(bps)(26) |
Insured cash account sweep |
$ |
33.2 |
|
$ |
266,792 |
|
|
323 |
$ |
33.3 |
|
$ |
266,058 |
|
|
317 |
$ |
42.3 |
|
$ |
333,218 |
|
|
320 |
Deposit cash account
sweep |
|
8.9 |
|
|
83,978 |
|
|
378 |
|
8.9 |
|
|
84,901 |
|
|
379 |
|
10.6 |
|
|
82,981 |
|
|
318 |
Total Bank
Sweep |
|
42.1 |
|
|
350,770 |
|
|
335 |
|
42.2 |
|
|
350,959 |
|
|
330 |
|
52.8 |
|
|
416,199 |
|
|
319 |
Money market sweep |
|
2.3 |
|
|
1,612 |
|
|
28 |
|
2.4 |
|
|
1,702 |
|
|
28 |
|
2.8 |
|
|
2,076 |
|
|
30 |
Total Client Cash Held
ByThird Parties |
|
44.4 |
|
|
352,382 |
|
|
319 |
|
44.6 |
|
|
352,661 |
|
|
314 |
|
55.6 |
|
|
418,275 |
|
|
305 |
Client cash account(25) |
|
1.8 |
|
|
21,026 |
|
|
467 |
|
1.8 |
|
|
21,318 |
|
|
475 |
|
2.1 |
|
|
20,337 |
|
|
400 |
Total Client
Cash |
|
46.2 |
|
|
373,408 |
|
|
325 |
|
46.4 |
|
|
373,979 |
|
|
320 |
|
57.7 |
|
|
438,612 |
|
|
308 |
Margin receivables |
|
0.5 |
|
|
10,249 |
|
|
890 |
|
0.5 |
|
|
10,874 |
|
|
878 |
|
0.5 |
|
|
9,413 |
|
|
802 |
Other interest revenue |
|
0.9 |
|
|
12,233 |
|
|
535 |
|
0.9 |
|
|
11,101 |
|
|
507 |
|
0.9 |
|
|
7,602 |
|
|
343 |
Total Client Cash
andInterest Income, Net |
$ |
47.6 |
|
|
395,890 |
|
|
334 |
$ |
47.7 |
|
|
395,954 |
|
|
329 |
$ |
59.1 |
|
|
455,627 |
|
|
313 |
Note: Totals may not foot due to rounding.
LPL Financial Holdings Inc.Monthly
Metrics(Dollars in billions, except where
noted)(Unaudited) |
|
|
March 2024 |
|
February 2024 |
|
Change |
|
January 2024 |
|
December 2023 |
Advisory and Brokerage
Assets(17) |
|
|
|
|
|
Advisory assets |
$ |
793.0 |
|
|
$ |
768.4 |
|
|
|
3 |
% |
|
$ |
740.7 |
|
|
$ |
735.8 |
|
Brokerage assets |
|
647.9 |
|
|
|
634.9 |
|
|
|
2 |
% |
|
|
621.1 |
|
|
|
618.2 |
|
Total Advisory and Brokerage Assets |
$ |
1,440.9 |
|
|
$ |
1,403.3 |
|
|
|
3 |
% |
|
$ |
1,361.8 |
|
|
$ |
1,354.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net New Assets
(NNA)(20) |
|
|
|
|
|
Net new advisory assets |
$ |
7.5 |
|
|
$ |
6.4 |
|
|
n/m |
|
$ |
2.4 |
|
|
$ |
8.1 |
|
Net new brokerage assets |
|
0.4 |
|
|
|
0.4 |
|
|
n/m |
|
|
(0.4 |
) |
|
|
1.1 |
|
Total Net New Assets |
$ |
7.9 |
|
|
$ |
6.8 |
|
|
n/m |
|
$ |
2.0 |
|
|
$ |
9.2 |
|
Net brokerage to advisory conversions(21) |
$ |
1.3 |
|
|
$ |
1.3 |
|
|
n/m |
|
$ |
1.0 |
|
|
$ |
1.0 |
|
|
|
|
|
|
|
Organic Net New Assets
(NNA) |
|
|
|
|
|
Net new advisory assets |
$ |
7.5 |
|
|
$ |
6.4 |
|
|
n/m |
|
$ |
2.4 |
|
|
$ |
8.1 |
|
Net new brokerage assets |
|
0.4 |
|
|
|
0.4 |
|
|
n/m |
|
|
(0.4 |
) |
|
|
1.1 |
|
Total Organic Net New Assets |
$ |
7.9 |
|
|
$ |
6.8 |
|
|
n/m |
|
$ |
2.0 |
|
|
$ |
9.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client Cash
Balances(24) |
|
|
|
|
|
Insured cash account sweep |
$ |
32.6 |
|
|
$ |
33.2 |
|
|
|
(2 |
%) |
|
$ |
33.7 |
|
|
$ |
34.5 |
|
Deposit cash account sweep |
|
9.2 |
|
|
|
9.0 |
|
|
|
2 |
% |
|
|
8.9 |
|
|
|
9.3 |
|
Total Bank Sweep |
|
41.8 |
|
|
|
42.2 |
|
|
|
(1 |
%) |
|
|
42.6 |
|
|
|
43.8 |
|
Money market sweep |
|
2.4 |
|
|
|
2.3 |
|
|
|
4 |
% |
|
|
2.4 |
|
|
|
2.4 |
|
Total Client Cash Sweep Held by Third Parties |
|
44.2 |
|
|
|
44.5 |
|
|
|
(1 |
%) |
|
|
45.0 |
|
|
|
46.2 |
|
Client cash account(25) |
|
2.1 |
|
|
|
1.5 |
|
|
|
40 |
% |
|
|
1.9 |
|
|
|
2.0 |
|
Total Client Cash
Balances |
$ |
46.3 |
|
|
$ |
46.0 |
|
|
|
1 |
% |
|
$ |
46.9 |
|
|
$ |
48.2 |
|
|
|
|
|
|
|
Net buy (sell)
activity(23) |
$ |
12.9 |
|
|
$ |
13.0 |
|
|
n/m |
|
$ |
12.0 |
|
|
$ |
10.8 |
|
|
|
|
|
|
|
Market
Drivers |
|
|
|
|
|
S&P 500 Index (end of period) |
|
5,254 |
|
|
|
5,096 |
|
|
|
3 |
% |
|
|
4,846 |
|
|
|
4,770 |
|
Russell 2000 Index (end of period) |
|
2,125 |
|
|
|
2,055 |
|
|
|
3 |
% |
|
|
1,947 |
|
|
|
2,027 |
|
Fed Funds effective rate (average bps) |
|
533 |
|
|
|
533 |
|
|
—bps |
|
|
533 |
|
|
|
533 |
|
Note: Totals may not foot due to rounding.
LPL Financial Holdings Inc.Financial
Measures(Dollars in thousands, except where
noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Commission Revenue by
Product |
|
|
|
|
|
Annuities |
$ |
436,473 |
|
|
$ |
408,480 |
|
|
|
7 |
% |
|
$ |
344,061 |
|
|
|
27 |
% |
Mutual funds |
|
186,540 |
|
|
|
167,392 |
|
|
|
11 |
% |
|
|
165,038 |
|
|
|
13 |
% |
Fixed income |
|
48,641 |
|
|
|
40,441 |
|
|
|
20 |
% |
|
|
35,267 |
|
|
|
38 |
% |
Equities |
|
35,451 |
|
|
|
29,920 |
|
|
|
18 |
% |
|
|
25,890 |
|
|
|
37 |
% |
Other |
|
39,341 |
|
|
|
36,179 |
|
|
|
9 |
% |
|
|
33,469 |
|
|
|
18 |
% |
Total commission revenue |
$ |
746,446 |
|
|
$ |
682,412 |
|
|
|
9 |
% |
|
$ |
603,725 |
|
|
|
24 |
% |
|
|
|
|
|
|
Commission
Revenue by Sales-based and Trailing |
|
|
|
Sales-based commissions |
|
|
|
|
|
Annuities |
$ |
229,077 |
|
|
$ |
221,070 |
|
|
|
4 |
% |
|
$ |
162,176 |
|
|
|
41 |
% |
Mutual funds |
|
43,496 |
|
|
|
37,016 |
|
|
|
18 |
% |
|
|
37,477 |
|
|
|
16 |
% |
Fixed income |
|
48,641 |
|
|
|
40,441 |
|
|
|
20 |
% |
|
|
35,267 |
|
|
|
38 |
% |
Equities |
|
35,451 |
|
|
|
29,920 |
|
|
|
18 |
% |
|
|
25,890 |
|
|
|
37 |
% |
Other |
|
28,570 |
|
|
|
27,511 |
|
|
|
4 |
% |
|
|
25,262 |
|
|
|
13 |
% |
Total sales-based commissions |
$ |
385,235 |
|
|
$ |
355,958 |
|
|
|
8 |
% |
|
$ |
286,072 |
|
|
|
35 |
% |
Trailing commissions |
|
|
|
|
|
Annuities |
$ |
207,396 |
|
|
$ |
187,410 |
|
|
|
11 |
% |
|
$ |
181,885 |
|
|
|
14 |
% |
Mutual funds |
|
143,044 |
|
|
|
130,376 |
|
|
|
10 |
% |
|
|
127,561 |
|
|
|
12 |
% |
Other |
|
10,771 |
|
|
|
8,668 |
|
|
|
24 |
% |
|
|
8,207 |
|
|
|
31 |
% |
Total trailing commissions |
$ |
361,211 |
|
|
$ |
326,454 |
|
|
|
11 |
% |
|
$ |
317,653 |
|
|
|
14 |
% |
Total commission revenue |
$ |
746,446 |
|
|
$ |
682,412 |
|
|
|
9 |
% |
|
$ |
603,725 |
|
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout
Rate(7) |
|
86.64 |
% |
|
|
87.59 |
% |
|
(95bps) |
|
|
86.19 |
% |
|
45bps |
LPL
Financial Holdings Inc.Capital Management
Measures(Dollars in thousands, except where
noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
Cash and equivalents |
$ |
1,102,270 |
|
|
$ |
465,671 |
|
Cash at regulated subsidiaries |
|
(1,038,241 |
) |
|
|
(410,313 |
) |
Excess cash at regulated subsidiaries per the Credit Agreement |
|
247,033 |
|
|
|
128,327 |
|
Corporate
Cash(3) |
$ |
311,062 |
|
|
$ |
183,685 |
|
|
|
|
Corporate
Cash(3) |
|
|
Cash at the Parent |
$ |
30,781 |
|
|
$ |
26,587 |
|
Excess cash at regulated subsidiaries per the Credit Agreement |
|
247,033 |
|
|
|
128,327 |
|
Cash at non-regulated subsidiaries |
|
33,248 |
|
|
|
28,771 |
|
Corporate Cash |
$ |
311,062 |
|
|
$ |
183,685 |
|
|
|
|
Leverage
Ratio |
|
|
Total debt |
$ |
3,875,525 |
|
|
$ |
3,757,200 |
|
Total corporate cash |
|
311,062 |
|
|
|
183,685 |
|
Credit Agreement Net Debt |
$ |
3,564,463 |
|
|
$ |
3,573,515 |
|
Credit Agreement EBITDA (trailing twelve months)(27) |
$ |
2,160,464 |
|
|
$ |
2,194,807 |
|
Leverage Ratio |
1.65x |
1.63x |
|
March 31, 2024 |
|
Total Debt |
Balance |
Current ApplicableMargin |
Interest Rate |
Maturity |
Revolving Credit Facility(a) |
$ |
401,000 |
|
ABR+37.5 bps / SOFR+147.5 bps |
6.852 |
% |
3/15/2026 |
Broker-Dealer Revolving Credit
Facility |
|
— |
|
SOFR+135 bps |
6.690 |
% |
7/16/2024 |
Senior Secured Term Loan
B |
|
1,024,525 |
|
SOFR+185 bps(b) |
7.176 |
% |
11/12/2026 |
Senior Unsecured Notes |
|
400,000 |
|
4.625% Fixed |
4.625 |
% |
11/15/2027 |
Senior Unsecured Notes |
|
750,000 |
|
6.750% Fixed |
6.750 |
% |
11/17/2028 |
Senior Unsecured Notes |
|
900,000 |
|
4.000% Fixed |
4.000 |
% |
3/15/2029 |
Senior Unsecured Notes |
|
400,000 |
|
4.375% Fixed |
4.375 |
% |
5/15/2031 |
Total / Weighted
Average |
$ |
3,875,525 |
|
|
5.770 |
% |
|
|
|
|
|
|
|
|
|
(a) Secured
borrowing capacity of $2.0 billion at LPL Holdings, Inc. (the
"Parent"). The Parent’s outstanding balance at March 31, 2024
was comprised of an ABR-based balance of $10.0 million with the
applicable margin of ABR + 37.5 bps (8.875%) and a SOFR-based
balance of $391.0 million with the applicable margin of SOFR +
147.5 bps (6.800%). (b) The SOFR rate option is a one-month
SOFR rate and subject to an interest rate floor of 0 bps.
LPL Financial Holdings Inc.Key Business
and Financial Metrics(Dollars in thousands, except
where noted)(Unaudited) |
|
|
Q1 2024 |
|
Q4 2023 |
|
Change |
|
Q1 2023 |
|
Change |
Advisors |
|
|
|
|
|
Advisors |
|
22,884 |
|
|
|
22,660 |
|
|
|
1 |
% |
|
|
21,521 |
|
|
|
6 |
% |
Net new advisors |
|
224 |
|
|
|
256 |
|
|
|
(13 |
%) |
|
|
246 |
|
|
|
(9 |
%) |
Annualized advisory fees and commissions per advisor(28) |
$ |
342 |
|
|
$ |
314 |
|
|
|
9 |
% |
|
$ |
291 |
|
|
|
18 |
% |
Average total assets per advisor ($ in millions)(29) |
$ |
63.0 |
|
|
$ |
59.8 |
|
|
|
5 |
% |
|
$ |
54.6 |
|
|
|
15 |
% |
Transition assistance loan amortization ($ in millions)(30) |
$ |
58.3 |
|
|
$ |
55.1 |
|
|
|
6 |
% |
|
$ |
46.7 |
|
|
|
25 |
% |
Total client accounts (in millions) |
|
8.4 |
|
|
|
8.3 |
|
|
|
1 |
% |
|
|
8.0 |
|
|
|
5 |
% |
|
|
|
|
|
|
Employees |
|
7,413 |
|
|
|
7,372 |
|
|
|
1 |
% |
|
|
6,648 |
|
|
|
12 |
% |
|
|
|
|
|
|
Services
Group |
|
|
|
|
|
Services Group subscriptions(31) |
|
|
|
|
|
Professional Services |
|
1,824 |
|
|
|
1,895 |
|
|
|
(4 |
%) |
|
|
1,753 |
|
|
|
4 |
% |
Business Optimizers |
|
3,487 |
|
|
|
3,363 |
|
|
|
4 |
% |
|
|
2,955 |
|
|
|
18 |
% |
Planning and Advice |
|
624 |
|
|
|
548 |
|
|
|
14 |
% |
|
|
236 |
|
|
|
164 |
% |
Total Services Group subscriptions |
|
5,935 |
|
|
|
5,806 |
|
|
|
2 |
% |
|
|
4,944 |
|
|
|
20 |
% |
Services Group advisor count |
|
4,035 |
|
|
|
3,850 |
|
|
|
5 |
% |
|
|
3,324 |
|
|
|
21 |
% |
|
|
|
|
|
|
AUM retention rate (quarterly annualized)(32) |
|
97.4 |
% |
|
|
98.4 |
% |
|
(100bps) |
|
|
98.7 |
% |
|
(130bps) |
|
|
|
|
|
|
Capital
Management |
|
|
|
|
|
Capital expenditures ($ in millions)(33) |
$ |
121.0 |
|
|
$ |
105.9 |
|
|
|
14 |
% |
|
$ |
101.3 |
|
|
|
19 |
% |
Acquisitions, net ($ in millions)(34) |
$ |
10.2 |
|
|
$ |
92.9 |
|
|
|
(89 |
%) |
|
$ |
251.3 |
|
|
|
(96 |
%) |
|
|
|
|
|
|
Share repurchases ($ in millions) |
$ |
70.0 |
|
|
$ |
225.0 |
|
|
|
(69 |
%) |
|
$ |
275.0 |
|
|
|
(75 |
%) |
Dividends ($ in millions) |
|
22.4 |
|
|
|
22.7 |
|
|
|
(1 |
%) |
|
|
23.6 |
|
|
|
(5 |
%) |
Total Capital Returned ($ in millions) |
$ |
92.4 |
|
|
$ |
247.7 |
|
|
|
(63 |
%) |
|
$ |
298.6 |
|
|
|
(69 |
%) |
Non-GAAP Financial Measures
Management believes that presenting certain
non-GAAP financial measures by excluding or including certain items
can be helpful to investors and analysts who may wish to use this
information to analyze the Company’s current performance, prospects
and valuation. Management uses this non-GAAP information internally
to evaluate operating performance and in formulating the budget for
future periods. Management believes that the non-GAAP financial
measures and metrics discussed below are appropriate for evaluating
the performance of the Company.
Adjusted EPS and Adjusted net
income
Adjusted EPS is defined as adjusted net income, a
non-GAAP measure defined as net income plus the after-tax impact of
amortization of other intangibles and acquisition costs, divided by
the weighted average number of diluted shares outstanding for the
applicable period. The Company presents adjusted net income and
adjusted EPS because management believes that these metrics can
provide investors with useful insight into the Company’s core
operating performance by excluding non-cash items and acquisition
costs that management does not believe impact the Company’s ongoing
operations. Adjusted net income and adjusted EPS are not measures
of the Company's financial performance under GAAP and should not be
considered as alternatives to net income, earnings per diluted
share or any other performance measure derived in accordance with
GAAP. For a reconciliation of net income and earnings per diluted
share to adjusted net income and adjusted EPS, please see the
endnote disclosures in this release.
Gross profit
Gross profit is calculated as total revenue less
advisory and commission expense; brokerage, clearing and exchange
expense; and market fluctuations on employee deferred compensation.
All other expense categories, including depreciation and
amortization of property and equipment and amortization of other
intangibles, are considered general and administrative in nature.
Because the Company’s gross profit amounts do not include any
depreciation and amortization expense, the Company considers gross
profit to be a non-GAAP financial measure that may not be
comparable to similar measures used by others in its industry.
Management believes that gross profit can provide investors with
useful insight into the Company’s core operating performance before
indirect costs that are general and administrative in nature. For a
calculation of gross profit, please see the endnote disclosures in
this release.
Core G&A
Core G&A consists of total expense less the
following expenses: advisory and commission; depreciation and
amortization; interest expense on borrowings; brokerage, clearing
and exchange; amortization of other intangibles; market
fluctuations on employee deferred compensation; promotional
(ongoing); employee share-based compensation; regulatory charges;
and acquisition costs. Management presents core G&A because it
believes core G&A reflects the corporate expense categories
over which management can generally exercise a measure of control,
compared with expense items over which management either cannot
exercise control, such as advisory and commission, or which
management views as promotional expense necessary to support
advisor growth and retention, including conferences and transition
assistance. Core G&A is not a measure of the Company’s total
expense as calculated in accordance with GAAP. For a reconciliation
of the Company's total expense to core G&A, please see the
endnote disclosures in this release. The Company does not provide
an outlook for its total expense because it contains expense
components, such as advisory and commission, that are market-driven
and over which the Company cannot exercise control. Accordingly, a
reconciliation of the Company’s outlook for total expense to an
outlook for core G&A cannot be made available without
unreasonable effort.
EBITDA and Adjusted EBITDA
EBITDA is defined as net income plus interest
expense on borrowings, provision for income taxes, depreciation and
amortization and amortization of other intangibles. Adjusted EBITDA
is defined as EBITDA, a non-GAAP measure, plus acquisition costs.
The Company presents EBITDA and adjusted EBITDA because management
believes that they can be useful financial metrics in understanding
the Company’s earnings from operations. EBITDA and adjusted EBITDA
are not measures of the Company's financial performance under GAAP
and should not be considered as alternatives to net income or any
other performance measure derived in accordance with GAAP. For a
reconciliation of net income to EBITDA and adjusted EBITDA, please
see the endnote disclosures in this release.
Credit Agreement EBITDA
Credit Agreement EBITDA is defined in, and
calculated by management in accordance with, the Company's amended
and restated credit agreement (“Credit Agreement”) as “Consolidated
EBITDA,” which is Consolidated Net Income (as defined in the Credit
Agreement) plus interest expense on borrowings, provision for
income taxes, depreciation and amortization, and amortization of
other intangibles, and is further adjusted to exclude certain
non-cash charges and other adjustments, and to include future
expected cost savings, operating expense reductions or other
synergies from certain transactions. The Company presents Credit
Agreement EBITDA because management believes that it can be a
useful financial metric in understanding the Company’s debt
capacity and covenant compliance under its Credit Agreement. Credit
Agreement EBITDA is not a measure of the Company's financial
performance under GAAP and should not be considered as an
alternative to net income or any other performance measure derived
in accordance with GAAP. For a reconciliation of net income to
Credit Agreement EBITDA, please see the endnote disclosures in this
release.
Endnote Disclosures
(1) Represents the estimated total advisory
and brokerage assets expected to transition to the Company's
primary broker-dealer subsidiary, LPL Financial, in connection with
advisors who transferred their licenses to LPL Financial during the
period. The estimate is based on prior business reported by the
advisors, which has not been independently and fully verified by
LPL Financial. The actual transition of assets to LPL Financial
generally occurs over several quarters and the actual amount
transitioned may vary from the estimate.
(2) The terms “Financial Advisors” and
“Advisors” refer to registered representatives and/or investment
advisor representatives affiliated with LPL Financial, an
SEC-registered broker-dealer and investment advisor.
(3) Corporate cash, a component of cash and
equivalents, is the sum of cash and equivalents from the following:
(1) cash and equivalents held at LPL Holdings, Inc., (2) cash and
equivalents held at regulated subsidiaries as defined by the
Company's Credit Agreement, which include LPL Financial and The
Private Trust Company, N.A., in excess of the capital requirements
of the Company's Credit Agreement (which, in the case of LPL
Financial is net capital in excess of 10% of its aggregate debits,
or five times the net capital required in accordance with Exchange
Act Rule 15c3-1) and (3) cash and equivalents held at non-regulated
subsidiaries.
(4) Compliance with the Leverage Ratio is
only required under the Company's revolving credit facility.
(5) The Company was named Top RIA custodian
(Cerulli Associates, 2023 U.S. RIA Marketplace Report); No. 1
Independent Broker-Dealer in the U.S. (based on total revenues,
Financial Planning magazine 1996-2022); and, among third-party
providers of brokerage services to banks and credit unions, No. 1
in AUM Growth from Financial Institutions; No. 1 in Market Share of
AUM from Financial Institutions; No. 1 in Market Share of Revenue
from Financial Institutions; No. 1 on Financial Institution Market
Share; No. 1 on Share of Advisors (2021-2022 Kehrer Bielan Research
and Consulting Annual TPM Report). Fortune 500 as of June 2021.
(6) Gross profit is a non-GAAP financial
measure. Please see a description of gross profit under the
"Non-GAAP Financial Measures" section of this release for
additional information. Below is a calculation of gross profit for
the periods presented (in thousands):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Total revenue |
$ |
2,832,593 |
|
|
$ |
2,643,829 |
|
|
$ |
2,417,832 |
|
Advisory and commission expense |
|
1,733,487 |
|
|
|
1,607,978 |
|
|
|
1,370,634 |
|
Brokerage, clearing and exchange expense |
|
30,532 |
|
|
|
25,917 |
|
|
|
26,126 |
|
Employee deferred compensation |
|
2,140 |
|
|
|
2,881 |
|
|
|
1,117 |
|
Gross profit |
$ |
1,066,434 |
|
|
$ |
1,007,053 |
|
|
$ |
1,019,955 |
|
|
(7) Production-based payout is a financial
measure calculated as advisory and commission expense plus (less)
advisor deferred compensation. The payout rate is calculated by
dividing the production-based payout by total advisory and
commission revenue. Below is a reconciliation of the Company’s
advisory and commission expense to the production-based payout and
a calculation of the payout rate for the periods presented (in
thousands, except payout rate):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Advisory and commission expense |
$ |
1,733,487 |
|
|
$ |
1,607,978 |
|
|
$ |
1,370,634 |
|
(Less) Plus: Advisor deferred compensation |
|
(47,155 |
) |
|
|
(59,438 |
) |
|
|
(27,966 |
) |
Production-based payout |
$ |
1,686,332 |
|
|
$ |
1,548,540 |
|
|
$ |
1,342,668 |
|
|
|
|
|
Advisory and commission revenue |
$ |
1,946,257 |
|
|
$ |
1,767,909 |
|
|
$ |
1,557,782 |
|
|
|
|
|
Payout rate |
|
86.64 |
% |
|
|
87.59 |
% |
|
|
86.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(8) Below is a reconciliation of client cash
revenue per Management's Statements of Operations to client cash
revenue, a component of asset-based revenue, on the Company's
condensed consolidated statements of income for the periods
presented (in thousands):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Client cash on Management's Statement of Operations |
$ |
373,408 |
|
|
$ |
373,979 |
|
|
$ |
438,612 |
|
Interest income on CCA balances segregated under federal or other
regulations(10) |
|
(21,026 |
) |
|
|
(21,318 |
) |
|
|
(20,337 |
) |
Client cash on Condensed Consolidated Statements of
Income |
$ |
352,382 |
|
|
$ |
352,661 |
|
|
$ |
418,275 |
|
|
(9) Consists of revenue from the Company's
sponsorship programs with financial product manufacturers, omnibus
processing and networking services but does not include fees from
client cash programs.
(10) During the first quarter of 2024, the Company
disaggregated the activity previously reported in the interest
income and other, net line item into its interest income, net and
other revenue components. Prior period amounts have been
reclassified to conform to the current presentation. Below is a
reconciliation of interest income, net per Management's Statements
of Operations to interest income, net on the Company's condensed
consolidated statements of income for the periods presented (in
thousands):
|
Q1 2024 |
|
|
Q4 2023 |
|
|
Q1 2023 |
Interest income, net on Management's Statement of Operations |
$ |
22,482 |
|
|
$ |
21,975 |
|
|
$ |
17,015 |
|
Interest income on CCA balances segregated under federal or other
regulations |
|
21,026 |
|
|
|
21,318 |
|
|
|
20,337 |
|
Interest income on deferred compensation |
|
17 |
|
|
|
19 |
|
|
|
6 |
|
Interest income, net on Condensed Consolidated Statements
of Income |
$ |
43,525 |
|
|
$ |
43,312 |
|
|
$ |
37,358 |
|
|
(11) During the first quarter of 2024, the
Company disaggregated the activity previously reported in the
interest income and other, net line item into its interest income,
net and other revenue components. Prior period amounts have been
reclassified to conform to the current presentation. Below is a
reconciliation of other revenue per Management's Statements of
Operations to other revenue on the Company's condensed consolidated
statements of income for the periods presented (in thousands):
|
Q1 2024 |
|
|
Q4 2023 |
|
|
Q1 2023 |
Other revenue on Management's Statement of Operations |
$ |
3,382 |
|
|
$ |
4,636 |
|
|
$ |
3,945 |
|
Interest income on deferred compensation |
|
(17 |
) |
|
|
(19 |
) |
|
|
(6 |
) |
Deferred compensation |
|
49,295 |
|
|
|
62,319 |
|
|
|
29,083 |
|
Other revenue on Condensed Consolidated Statements of
Income |
$ |
52,660 |
|
|
$ |
66,936 |
|
|
$ |
33,022 |
|
|
(12) Core G&A is a non-GAAP financial
measure. Please see a description of core G&A under the
“Non-GAAP Financial Measures” section of this release for
additional information. Below is a reconciliation of the Company's
total expense to core G&A for the periods presented (in
thousands):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Core G&A Reconciliation |
|
|
|
Total expense |
$ |
2,458,401 |
|
|
$ |
2,350,042 |
|
|
$ |
1,973,335 |
|
Advisory and commission |
|
(1,733,487 |
) |
|
|
(1,607,978 |
) |
|
|
(1,370,634 |
) |
Depreciation and amortization |
|
(67,158 |
) |
|
|
(67,936 |
) |
|
|
(56,054 |
) |
Interest expense on borrowings |
|
(60,082 |
) |
|
|
(54,415 |
) |
|
|
(39,184 |
) |
Brokerage, clearing and exchange |
|
(30,532 |
) |
|
|
(25,917 |
) |
|
|
(26,126 |
) |
Amortization of other intangibles |
|
(29,552 |
) |
|
|
(28,618 |
) |
|
|
(24,092 |
) |
Employee deferred compensation |
|
(2,140 |
) |
|
|
(2,881 |
) |
|
|
(1,117 |
) |
Total G&A |
|
535,450 |
|
|
|
562,297 |
|
|
|
456,128 |
|
Promotional (ongoing)(13)(14) |
|
(132,311 |
) |
|
|
(138,457 |
) |
|
|
(101,163 |
) |
Employee share-based compensation |
|
(22,633 |
) |
|
|
(15,535 |
) |
|
|
(17,964 |
) |
Acquisition costs(14) |
|
(9,524 |
) |
|
|
(34,931 |
) |
|
|
(3,092 |
) |
Regulatory charges |
|
(7,469 |
) |
|
|
(8,905 |
) |
|
|
(7,732 |
) |
Core G&A |
$ |
363,513 |
|
|
$ |
364,469 |
|
|
$ |
326,177 |
|
|
(13) Promotional (ongoing) includes $8.0
million, $12.5 million and $3.2 million for the three months ended
March 31, 2024, December 31, 2023 and March 31, 2023, respectively,
of support costs related to full-time employees that are classified
within Compensation and benefits expense in the condensed
consolidated statements of income and excludes costs that have been
incurred as part of acquisitions that have been classified within
acquisition costs for the same periods.
(14) Acquisition costs include the costs to
setup, onboard and integrate acquired entities and other costs that
were incurred as a result of the acquisitions. The below table
summarizes the primary components of acquisition costs for the
periods presented (in thousands):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Acquisition costs |
|
|
|
Compensation and benefits |
$ |
3,850 |
|
|
$ |
2,829 |
|
|
$ |
875 |
|
Professional services |
|
3,246 |
|
|
|
3,664 |
|
|
|
1,606 |
|
Promotional(13) |
|
2,268 |
|
|
|
863 |
|
|
|
210 |
|
Fair value mark on contingent consideration(35) |
|
— |
|
|
|
26,712 |
|
|
|
— |
|
Other |
|
160 |
|
|
|
863 |
|
|
|
401 |
|
Acquisition costs |
$ |
9,524 |
|
|
$ |
34,931 |
|
|
$ |
3,092 |
|
|
(15) EBITDA and adjusted EBITDA are non-GAAP
financial measures. Please see a description of EBITDA and adjusted
EBITDA under the "Non-GAAP Financial Measures" section of this
release for additional information. Below is a reconciliation of
net income to EBITDA and adjusted EBITDA for the periods presented
(in thousands):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
EBITDA and adjusted EBITDA Reconciliation |
|
|
|
Net income |
$ |
288,764 |
|
|
$ |
217,555 |
|
|
$ |
338,884 |
|
Interest expense on borrowings |
|
60,082 |
|
|
|
54,415 |
|
|
|
39,184 |
|
Provision for income taxes |
|
85,428 |
|
|
|
76,232 |
|
|
|
105,613 |
|
Depreciation and amortization |
|
67,158 |
|
|
|
67,936 |
|
|
|
56,054 |
|
Amortization of other intangibles |
|
29,552 |
|
|
|
28,618 |
|
|
|
24,092 |
|
EBITDA |
$ |
530,984 |
|
|
$ |
444,756 |
|
|
$ |
563,827 |
|
Acquisition costs(14) |
|
9,524 |
|
|
|
34,931 |
|
|
|
3,092 |
|
Adjusted EBITDA |
$ |
540,508 |
|
|
$ |
479,687 |
|
|
$ |
566,919 |
|
|
(16) Adjusted net income and adjusted EPS are
non-GAAP financial measures. Please see a description of adjusted
net income and adjusted EPS under the “Non-GAAP Financial Measures”
section of this release for additional information. Below is a
reconciliation of net income and earnings per diluted share to
adjusted net income and adjusted EPS for the periods presented (in
thousands, except per share data):
|
Q1 2024 |
Q4 2023 |
Q1 2023 |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
Net income / earnings per diluted share |
$ |
288,764 |
|
|
$ |
3.83 |
|
|
$ |
217,555 |
|
|
$ |
2.85 |
|
|
$ |
338,884 |
|
|
$ |
4.24 |
|
Amortization of other intangibles |
|
29,552 |
|
|
|
0.39 |
|
|
|
28,618 |
|
|
|
0.38 |
|
|
|
24,092 |
|
|
|
0.30 |
|
Acquisition costs(14) |
|
9,524 |
|
|
|
0.13 |
|
|
|
34,931 |
|
|
|
0.46 |
|
|
|
3,092 |
|
|
|
0.04 |
|
Tax benefit |
|
(10,340 |
) |
|
|
(0.14 |
) |
|
|
(13,789 |
) |
|
|
(0.18 |
) |
|
|
(7,152 |
) |
|
|
(0.09 |
) |
Adjusted net income / adjusted
EPS |
$ |
317,500 |
|
|
$ |
4.21 |
|
|
$ |
267,315 |
|
|
$ |
3.51 |
|
|
$ |
358,916 |
|
|
$ |
4.49 |
|
Diluted share count |
|
75,463 |
|
|
|
|
76,240 |
|
|
|
|
|
79,974 |
|
|
|
Note: Totals may not foot due
to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(17) Consists of total advisory and brokerage
assets under custody at the Company's primary broker-dealer
subsidiary, LPL Financial.
(18) Assets on the Company's corporate
advisory platform are serviced by investment advisor
representatives of LPL Financial. Assets on the Company's
independent RIA advisory platform are serviced by investment
advisor representatives of separate registered investment advisor
firms rather than representatives of LPL Financial.
(19) Consists of advisory assets in LPL
Financial’s Model Wealth Portfolios, Optimum Market Portfolios,
Personal Wealth Portfolios and Guided Wealth Portfolios
platforms.
(20) Consists of total client deposits into
advisory or brokerage accounts less total client withdrawals from
advisory or brokerage accounts, plus dividends, plus interest,
minus advisory fees. The Company considers conversions from
and to brokerage or advisory accounts as deposits and withdrawals,
respectively.
(21) Consists of existing custodied assets
that converted from brokerage to advisory, less existing custodied
assets that converted from advisory to brokerage.
(22) Calculated as annualized current period
organic net new assets divided by preceding period assets in their
respective categories of advisory assets or total advisory and
brokerage assets.
(23) Represents the amount of securities
purchased less the amount of securities sold in client accounts
custodied with LPL Financial.
(24) Client cash balances include CCA and
exclude purchased money market funds. CCA balances include cash
that clients have deposited with LPL Financial that is included in
Client payables in the condensed consolidated balance sheets. The
following table presents purchased money market funds for the
periods presented (in billions):
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Purchased money market funds |
$ |
32.6 |
|
|
$ |
29.5 |
|
|
$ |
15.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(25) During the first quarter of 2024, the
Company updated its definition of client cash account balances to
exclude other client payables. Prior period disclosures have been
updated to reflect this change as applicable.
(26) Calculated by dividing revenue for the
period by the average balance during the period.
(27) EBITDA and Credit Agreement EBITDA are
non-GAAP financial measures. Please see a description of EBITDA and
Credit Agreement EBITDA under the “Non-GAAP Financial Measures”
section of this release for additional information. Under the
Credit Agreement, management calculates Credit Agreement EBITDA for
a trailing twelve month period at the end of each fiscal quarter
and in doing so may make further adjustments to prior quarters.
Below are reconciliations of trailing twelve month net income to
trailing twelve month EBITDA and Credit Agreement EBITDA for the
periods presented (in thousands):
|
Q1 2024 |
|
Q4 2023 |
EBITDA and Credit
Agreement EBITDA Reconciliations |
|
|
Net income |
$ |
1,016,130 |
|
|
$ |
1,066,250 |
|
Interest expense on borrowings |
|
207,702 |
|
|
|
186,804 |
|
Provision for income taxes |
|
358,340 |
|
|
|
378,525 |
|
Depreciation and amortization |
|
258,098 |
|
|
|
246,994 |
|
Amortization of other intangibles |
|
112,671 |
|
|
|
107,211 |
|
EBITDA |
$ |
1,952,941 |
|
|
$ |
1,985,784 |
|
Credit Agreement Adjustments: |
|
|
Acquisition costs and other(14)(36) |
$ |
117,246 |
|
|
$ |
110,170 |
|
Employee share-based compensation |
|
70,693 |
|
|
|
66,024 |
|
M&A accretion(37) |
|
17,024 |
|
|
|
30,268 |
|
Advisor share-based compensation |
|
2,560 |
|
|
|
2,561 |
|
Credit Agreement
EBITDA |
$ |
2,160,464 |
|
|
$ |
2,194,807 |
|
|
(28) Calculated based on the average advisor
count from the current period and prior periods.
(29) Calculated based on the end of period
total advisory and brokerage assets divided by end of period
advisor count.
(30) Represents amortization expense on
forgivable loans for transition assistance to advisors and
institutions.
(31) Refers to active subscriptions related
to professional services offerings (CFO Solutions, Marketing
Solutions, Admin Solutions, Advisor Institute, Bookkeeping, Partial
Book Sales and CFO Essentials) and business optimizer offerings
(M&A Solutions, Digital Office, Resilience Plans and Assurance
Plans), as well as planning and advice services (Paraplanning, Tax
Planning, and High Net Worth Services) for which subscriptions are
the number of advisors using the service.
(32) Reflects retention of total advisory and
brokerage assets, calculated by deducting quarterly annualized
attrition from total advisory and brokerage assets, divided by the
prior quarter total advisory and brokerage assets.
(33) Capital expenditures represent cash
payments for property and equipment during the period.
(34) Acquisitions, net represent cash paid
for acquisitions, net of cash acquired during the period.
(35) Represents a fair value adjustment to
our contingent consideration liabilities that is reflected in other
expense in the condensed consolidated statements of income.
(36) In 2023, the SEC proposed a potential
settlement with the Company to resolve its civil investigation of
the Company's compliance with records preservation requirements for
business-related electronic communications stored on personal
devices or messaging platforms that have not been approved by the
Company. Under the SEC's proposed resolution, the Company would pay
a $50.0 million civil monetary penalty. As a result, the Company
recorded $40.0 million in regulatory charges during the three
months ended September 30, 2023 to reflect the amount of the
penalty that is not covered by the Company's captive insurance
subsidiary. On March 22, 2024, the Company reached a settlement in
principle with the staff of the SEC to resolve its civil
investigation. The Company expects to pay the civil monetary
penalty of $50 million during the second quarter of 2024. The
settlement in principle remains subject to the negotiation of
definitive documentation and approval by the SEC.
(37) M&A accretion is an adjustment to
reflect the annualized expected run rate EBITDA of an acquisition
as permitted by the Credit Agreement for up to eight fiscal
quarters following the close of the transaction.
LPL Financial (NASDAQ:LPLA)
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De Abr 2024 a May 2024
LPL Financial (NASDAQ:LPLA)
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