This summary is based on the first quarter fiscal 2009 earnings call conducted by TD AMERITRADE Holding Corp. (AMTD) on January 20, 2009.
Management:
President and CEO: Fredric J. Tomczyk
CFO: William J. Gerber
MD, Investor Relations, Communications & Public Affairs: Bill Murray
Key Investor Issues:
- Quarter-to-quarter EPS increased from 29 cents to 31 cents.
- Net new assets grew from $2.8 billion last year quarter to $7.8 billion in the current year quarter.
- The management anticipates fiscal 2009 EPS in the range of 90 cents to $1.15.
First Quarter Financial Highlights:
The company earned 31 cents per share, one of the better quarters in TD AMERITRADE''s history.
- This is a decrease from 40 cents a share a year ago, which was a record and included a 3 cents one-time tax benefit.
- Excluding the tax benefit, EPS is down 16% from the same time a year ago.
The fundamentals of the business remain strong.
- This is evidenced by the 49% pre-tax margins and $234 billion in client assets, including $52 billion in client cash.
- Client assets were down 22%, but this is at the same time that the NASDAQ and the S&P 500 were down about 40% from a year ago.
- The combination of asset gathering and increased levels of client cash helped cushion the impact of the market downturn.
Strong organic growth is evident in the basic operating metrics.
- Net new assets were just under $8 billion or 11% of beginning assets on an annualized basis.
- The management gave a range of 7% to 11% on net new assets and hence the company is at the top end of the range.
- The company continues to see good traction on the asset gathering strategy.
- Trades per day averaged 357,000 per day for the quarter, up 15% over the same quarter last year.
- The strong brand and investments in advertising helped open 217,000 new accounts in the quarter.
- Prudent management of the firm''s balance sheet and the ability to generate cash has allowed the company not only to produce strong quarterly results, but also to reach $1.3 billion in liquid assets at the end of the quarter.
Net new assets in the December quarter were $7.8 billion.
- This is an increase of about $1 billion from a year ago excluding the approximately $2.3 billion attributed to E*TRADE''s dislocation last December.
- The net new assets were 11% of total beginning assets on an annualized basis.
The management advised that the increased marketing and share of wallet campaigns have really paid off.
- New accounts were up 46% from 149,000 a year ago to 217,000 for the December quarter.
- The cost per new account was down to $215 from $304 for the same quarter last year.
- The strong asset gathering results are despite a $2 billion year-over-year decrease in dividends and interest.
Trades per day for the quarter firmed 15% year-over-year and rose 50% from December 2006 quarter to an average of 357,000 trades per day.
- Maintaining the leadership position in trades per day remains a key focus.
- The management reported that active traders will continue to trade in volatile markets.
- The company recorded an 80% increase in conditional orders from last quarter due to a continued focus on and delivery of risk management tools to help clients manage their portfolios.
- Education is another important component of the organization strategy.
- During the quarter, the investment company had 30,000 clients take advantage of education opportunities.
- The management believes this also plays a role in keeping clients engaged.
The January trades per day are 310,000 month-to-date.
- The new administration in Washington and the resulting new programs are expected to help stimulate the economy and create continued activity in the market.
- This should help the company maintain a healthy level of trades per day and the addition of thinkorswim will add further to trading volumes.
