LPL Sees 14% Jump in Q2 Profits, Topping Estimates

LPL Financial (LPLA) said Wednesday that it boosted its profits 14% in the second quarter: The independent broker-dealer said its net income was $45.1 million, $0.42 a share, up from $39.5 million, of $0.35 a share last year.

Adjusted earnings were $65.9 million, or $0.61 per share, vs. $55.0 million, or $0.49 per share, a year ago–topping analysts’ estimates. Total revenue grew 12% from last year to $1.02 billion, with recurring revenue representing the majority–nearly 66%–of net revenue in the second quarter.

“Our second-quarter top-line results mark the strongest quarter in LPL’s history with net revenues surpassing $1 billion,” said Chairman and CEO Mark Casady in a press release. “We continued to build upon our strong momentum from the first quarter, driven by improving business fundamentals including increased advisor productivity, rising asset levels and excellent production retention … This resulted in adjusted earnings per share increasing 25% year-over-year …”

The number of financial advisors affiliated with the IBD grew by 224–or nearly 2%–year-over-year to 13,409. The firms added 32 reps in the most-recent period.  

Total client assets expanded 12% from last year and nearly 1% from the first quarter to $396.7 billion. Assets in fee-based accounts improved about 19% from a year ago and roughly 2% from last quarter to $132.4 billion.

Advisory assets in the company’s fee-based platforms were $132.4 billion at June 30, 2013, up 18.9% from $111.4 billion at June 30, 2012.

Commission revenue increased close to 14% year over year, “reflecting improved commissions per advisor and the addition of new advisors,” the company says, while advisory revenue grew 11.1%, thanks to “strong net new advisory asset flows and overall improved market levels.”

LPL Financial notes that it expects to spend some $65 million through 2014 for its Service Value Commitment restructuring program, which includes job cuts, outsourcing and technology investments; the company expects to have yearly savings of $30 million to $35 million beginning in 2015. It spent $12 million on the program in the first half of 2013 and should spend about $40 million this year on the restructuring efforts.