2010 Q4 Earnings: LPL Financial Posts Big Jumps in Revenue, Adjusted Net Income

Costs related to IPO results in net loss of $57 million for the year; $116 million for Q4

LPL CEO Mark Casady (right) and CFO Robert Moore on LPL's IPO day in November 2010. LPL CEO Mark Casady (right) and CFO Robert Moore on LPL's IPO day in November 2010.

LPL Financial announced its first quarterly and FY results on Monday as a public company, and other than significant charges related to its IPO in the fourth quarter of 2010, it posted more than solid gains in revenue and profitability.

For the fourth quarter, the largest independent broker-dealer posted a net loss of $116.6 million, or $1.20 per diluted share, on an 11.6% increase in net revenue of $820 million.

For 2010, LPL had a net loss of $56.9 million, or $0.64 per diluted share, on a 13.2% rise in net revenue of $3.1 billion.

Absent the charge of $220 million taken in the fourth quarter, partly representing the offering price of LPL’s $30.00/share multiplied by 7.4 million shares that were issued to advisors under a 2000 stock bonus plan, the company had a 33% rise in adjusted net income for 2010 to a  record $172.7 million, or $1.71 per diluted share. Absent the IPO and other charges for the fourth quarter, adjusted net income rose 6.2% for the fourth quarter to $44.7 million, or $0.42 per diluted share.

These adjusted quarterly earnings beat the consensus estimates of equity analysts by $0.02, while revenues came in ahead of estimates by roughly $23 million.

In a statement, CEO Mark Casady (left), said “the commitment of our financial advisors to help their clients meet their financial goals, coupled with the strength of our business model and breadth of support we provide our customers, enabled us to deliver record profitability to shareholders despite the challenging operating environment of 2010."

At year-end 2010, LPL had 12,444 registered representatives, or 494 net new advisors. Total advisory and brokerage assets rose 13% in the year to a record level of $315.6 billion. LPL said 206 of those advisors had transferred their licenses from National Retirement Partners (NRP) during the fourth quarter. LPL announced last July that it would acquire parts of NRP and give NRP advisors the opportunity of joining LPL; 206 did so in the fourth quarter, along with 3,800 client accounts and brokerage and advisory assets of $564.3 million.

LPL’s RIA custody operations grew assets to $13.5 billion at year-end from 114 advisory firms, compared to $7.3 billion in assets under custody from 92 RIA firms at year-end 2009.

Also, assets in the Company’s fee-based platforms rose 20.5% for the year to $93.0 billion as of Dec. 31, 2010, and net new advisory assets rose 21.4% during the year, closing at $8.5 billion, which the company said was primarily driven by strong new business development in 2009 and shift toward a higher percentage of advisory business.  

Also in a statement, CFO Robert Moore said the record "Adjusted EBITDA and Adjusted Net Income, were achieved through a combination of factors that include diverse sources of revenues, the majority of which are recurring; growth in advisory and brokerage assets; a continued focus on disciplined expense management; and instituting operational efficiencies across the organization."

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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