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Portfolio > Asset Managers

LPL Misses Earnings Estimates as Profits Sink 45%

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LPL Financial (LPLA) said its net income fell about 45% year over year to  roughly $26.8 million, or $0.28 per share, in the final quarter of 2015, from $48.5 million, or $0.49 per share, a year earlier.

Fourth quarter 2015 adjusted earnings were $36 million, or $0.37 per share, down about 32% from the year-ago quarter. Revenue dropped about 8% to $1.02 billion.

Analysts had expected adjusted earnings to be $0.51 per share and sales to hit $1.05 billion.

“The market environment was volatile and challenging in 2015, particularly for brokerage sales,” said Chairman & CEO Mark Casady in a statement. “So we focused on bringing assets onto our platform and executing on our operational, efficiency and capital plans.”

Total assets on the platform are $476 billion, up 3% from a year ago. Net new assets in Q4 were $3.1 billion. For the full-year 2015, net new assets were close to $17 billion.

Casady warned that things do not look sunny for the months to come. “As we move into 2016, market volatility has only increased, and we expect continued pressure on brokerage sales,” he explained.

Still, the independent broker-dealer executive stated, LPL believe its “scale and stability give us an advantage in markets like this. We remain focused on growth, delivering on our expense and capital plans, and managing the [Department of Labor fiduciary] rule transition.”

On the plus side, expenses were pushed slightly lower than planned, according to CFO Matt Audette. Additionally, the firm completed several efficiency initiatives “to position us for lower [general & administrative expense] growth in 2016,” the CFO says.

“We also completed our debt transaction and the first $250 million of our $500 million share repurchase plan in the fourth quarter. In the first quarter of 2016 to date, we have repurchased another $25 million of our shares. Given the volatile start to the year, we will be flexible and dynamic going forward in our expense and capital plans,” Audette explained in a statement. 

The IBD says its affiliated-advisor count was 14,054 as of Dec. 31, down 19 from the third quarter.

Lower Fees, G&A 

Advisor commissions were $464 million, down 4% from the prior quarter. Advisory fees fell 5% from Q3’15 to $324 million, and asset-based fees were flat sequentially at $124 million. Transaction and fee revenues decreased about 8% from the prior quarter to $97 million.

Core G&A expenses rose 8% from the earlier period to $179 million. The company says $4 million of this increase was related to non-recurring costs, which were mostly severance.

“The remaining increase was primarily due to annual disclosures and investments in service and technology offset by lower performance-based compensation,” it explained in a statement. “For 2015, core G&A expenses were $695 million, below LPL’s expected range of $697 to $703 million.”

Regulatory-related charges for Q4’15 were $8 million, flat sequentially. For the full-year 2015, though, regulatory related expenses dropped $2 million from 2014 to $34 million.


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