TD Ameritrade Holding Corp. (AMTD)
Q4 2010 Earnings Call Transcript
October 26, 2010 5:00 p.m. ET

Executives

William Murray – Managing Director, Investor Relations
Fredric J. Tomczyk – President and Chief Executive Officer
William J. Gerber – Executive Vice President and Chief Financial Officer

Analysts

Patrick O''Shaughnessy – Raymond James
Michael Vinciquerra – BMO Capital Markets
Richard Repetto – Sandler O''Neill
Daniel Harris – Goldman Sachs
Michael Carrier – Deutsche Bank
Eric Bertrand – Barclays Capital
Howard Chen – Credit Suisse
Mac Sykes – Gabelli & Company
Matt Snowling – FBR Capital Markets
David Trone – JMP Securities
Brian Bedell – ISI Group
Matthew Fischer – Credit Agricole Securities
Michael Grondahl – Northland Capital Markets
Joel Jeffrey – Keefe, Bruyette & Woods
Faye Elliot – Bank of America/Merrill Lynch
Brennan Hawken – Collins Stewart

Presentation

Operator

Good day, everyone and welcome to the TD Ameritrade Holding Corporation''s September quarter 2010 earnings results conference call. This call is being recorded. With us today from the company is President and Chief Executive Officer, Fred Tomczyk, and Chief Financial Officer, Bill Gerber. At this time, I would like to turn the call over to Bill Murray, Managing Director of Investor Relations. Please go ahead, sir.

William Murray

Thank you, operator. Good morning, everyone and welcome to the TD Ameritrade September quarter earnings call. If you haven''t seen it already, our press release and today''s presentation can be found on amtd.com. As is usual with our year-end call, we will be covering the fourth quarter and full year 2010 results as well as our outlook and strategy for 2011. As such, we anticipate using the full hour but we will leave ample time to cover your questions.

Before we begin, I would like you to refer you to our Safe Harbor statement which is on slide two of the presentation as we will be referring to forward-looking statements. We will also be discussing some non-GAAP financial measures such as EBITDA. You can find a reconciliation of these financial measures to the most comparable GAAP financial measures in the slide presentation.

We would also like to you review our description of risk factors contained in our most recent annual and quarterly reports, forms 10-Q and 10-K. As usual, the call is intended for investors and analysts and may be reproduced in the media in whole or in part without prior consent to TD Ameritrade. Once again, we have a large number of covering analysts, so if you can keep your questions to two, we will try to get to all of you in the allotted time.

With that, we have Fred Tomczyk and Bill Gerber here to review our September quarter results and major accomplishments, et cetera. With that, Fred?

Fredric J. Tomczyk

Thank you, Bill and good morning, everyone. And thank you for joining us today to discuss our September quarter and fiscal 2010 year end results. We will also spend some time talking about our strategy and plans for 2011.

Many of our comments this morning shouldn''t come as any surprise to you. We have been clear on our strategy throughout this challenging environment and about our thoughts on capital deployment. We have said for some time now that with our strong balance sheet combined with our unique business model that generates a significant amount of annual cash flow, that a dividend would make sense at some point.

Well, we believe that now is a good time for us to introduce a quarterly dividend to our shareholders of $0.05 per quarter. While we continue to see a challenging and uncertain environment as we look forward, we believe our business model has demonstrated its resiliency in a very difficult environment and we continue to take an opportunistic approach to invest in some growth, acquisitions, share buybacks and now a dividend as a way to build long-term core earnings power and to enhance value for our shareholders.

On our June quarter earnings call, we said this summer was looking like a more typical slow summer season and it was. Our earnings per share came in at $0.20 per share due to lower trading and some one-time expenses we accrued during the quarter. Now, let''s turn to slide three to talk about our full-year 2010 results.

While the economic environment certainly continues to put pressure on short-term earnings, I think you will agree that we have executed well on the things within our control. Organic growth was very strong with a record $34 billion in net new assets and an 11% annualized growth rate.

This was our third consecutive year of record asset gathering and at the very high end of our target range. Trades, despite the slower summer season, came in at 372,000 trades per day, matching our results for fiscal 2009. Through October 22nd, trades per day were at 367,000 trades per day, an increase of 49,000 trades per day from the September quarter trading levels.