January 22, 2013

TD Profits Soften as Assets, Margins Improve

Net client inflows topped $15.5 billion in the period ending Dec. 31 as trading company beats estimates

TD Ameritrade (AMTD) said it brought in $15.6 billion of net new client assets in the quarter ending Dec. 31, up more than 50% from the same quarter a year ago and the period ending Sept. 30, when net new clients assets were $10.2 billion and $10.1 billion respectively.

The company also said it had net income of $147 million, or $0.27 per share, versus $152 million, or $0.27 per share, a year ago and $147 million of $0.26 per share, in the prior quarter.

Sales were $651 million in its fiscal first quarter, down from $653 million a year ago but up a bit from $647 million in the prior period.

Analysts surveyed by Thomson Reuters had forecast earnings of $0.24 Fred Tomczyka share on revenue of $636 million.

"Record net new client assets of $16 billion and earnings per share of 27 cents is a significant achievement in this environment, and a strong start to our fiscal year," said Fred Tomczyk (left), president and CEO of TD Ameritrade, in a press release. "In the face of continued investor uncertainty, we maintained our strong organic growth momentum and had record sales of guidance and advice solutions, all while keeping our expenses in check."

The brokerage company says that average client trades per day of about $334,000 in the recent quarter vs. $328,000 in the prior quarter and $367,500 in the year-ago period.

Asset-based revenues, which represent close to 60% of total sales, were $377 million, up from both the earlier quarter ($375 million) and the same quarter of 2011 ($358 million).

Transaction-based sales were $257 million, up a tad from last quarter ($256 million) and down somewhat from a year ago ($273 million).

Client assets grew to almost $481 billion, up from $472 billion in the quarter ending September 2012 and from $406 million in December 2011.

The company’s pretax margin of $237 million, or 36% of net revenues, topped last quarter’s 35% margin and last year’s 34% figure. Its operating margin was 37% in the recent quarter versus 36% in the prior quarter and 35% in the year-ago period.

"TD Ameritrade continues to benefit from strong organic growth and disciplined management of our balance sheet," said Bill Gerber, executive vice president and chief financial officer, in a statement.

"In addition, market fee-based revenue is up 28% year over year, driven by our effective referral and sales processes,” he noted. “We remain focused on maintaining our momentum as we move forward."

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See the Q4 2012 Earnings Calendar for more earnings season coverage.

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