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Press Release: LPL Financial Announces Fourth Quarter and Full Year 2020 Results

· 02/04/2021 16:05
-- 2020 Core G&A** was $925 million, which translates to a 6.5% growth rate year-over-year and within our outlook range of $915 to $940 million. -- Established 2021 Core G&A** outlook range of 5.5% to 8% prior to expenses from Waddell & Reed, or $975 to $1,000 million. -- Signed an agreement to acquire Waddell & Reed's wealth management business for $300 million, a firm with over 900 advisors and $70 billion of client assets as of December 31, 2020. deg To date, Waddell & Reed advisors serving 80% of client assets have already committed to join LPL following the close of the transaction, and we are encouraged by our ongoing progress.-- EPS was $5.86, and Net Income was $473 million. deg Gross Profit** was $2,103 million.deg Core G&A** was $925 million.deg EBITDA** was $909 million and EBITDA** as a percentage of Gross Profit** was 43%. -- EPS Prior to Amortization of Intangible Assets** was $6.46. -- Total organic net new assets were $56.2 billion, translating to a 7.4% growth rate, up from 5.3% in 2019. deg Full-year production retention rate was 97.7%, up from 96.5% a year ago. -- Dividends were $79 million.-- Dividends were $20 million. -- Cash available for corporate use was $280 million. -- Credit Agreement Net Leverage Ratio(4) was 2.16x.-- Total Advisory and Brokerage Assets increased 18% year-over-year to $903 billion. deg Advisory assets increased by 26% year-over-year to $461 billion.deg Advisory assets as a percentage of total assets increased to 51.1%, up from 47.8% a year ago. -- Total organic net new assets(1) were an inflow of $17.8 billion, translating to an 8.8% annualized growth rate. deg Total organic net new asset annualized growth rate was 7.4% in October, 7.3% in November and 10.8% in December.deg Organic net new advisory assets were an inflow of $15.9 billion, translating to a 15.6% annualized growth rate.deg Organic net new brokerage assets were an inflow of $1.9 billion, translating to a 1.9% annualized growth rate. -- Acquired net new assets were $4.0 billion, of which $2.5 billion was advisory and $1.5 billion was brokerage. deg Acquired net new assets were from Lucia Securities and E.K. Riley as we completed the onboarding of these two acquisitions during the quarter. -- Recruited Assets(2) were $10.8 billion, contributing to a trailing twelve-month total of $40.9 billion, up 17% year-over-year. deg Advisor count(3) was 17,287, up 119 from Q3 2020 and 823 year-over-year. -- Total client cash balances were $48.9 billion, up $2.3 billion, or 5% sequentially. deg Client cash balances as a percentage of total assets were 5.4%.-- Earnings per share ("EPS") was $1.38, and Net Income was $112 million.deg Gross Profit** was $534 million.deg Core G&A** was $252 million.deg EBITDA** was $217 million and EBITDA** as a percentage of Gross Profit** was 41%. -- EPS Prior to Amortization of Intangible Assets** was $1.53.

LPL Financial Announces Fourth Quarter and Full Year 2020 Results

Fourth Quarter 2020 Key Financial Results

Fourth Quarter 2020 Key Business Results

Fourth Quarter 2020 Key Capital Results

Full Year 2020 Key Performance Indicators

Key Updates

SAN DIEGO, Feb. 04, 2021 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the "Company") today announced results for its fourth quarter ended December 31, 2020, reporting net income of $112 million, or $1.38 per share. This compares with $127 million, or $1.53 per share, in the fourth quarter of 2019 and $104 million, or $1.29 per share, in the prior quarter.

"Throughout 2020, we remained focused on our mission of taking care of our advisors, so they can take care of their clients," said Dan Arnold, President and CEO. "This focus led us to enhance our capabilities, service, and technology, which increased the appeal of our model and contributed to new highs for total assets and organic growth. As we look ahead, we aim to continue investing in our model and increasing our market share within the advisor-centered marketplace."

"Looking at 2020, we are proud of what we accomplished within our framework to drive shareholder value," said Matt Audette, CFO. "We continued to invest through a volatile environment while staying disciplined on expenses, closed on three M&A transactions, reached an agreement to acquire Waddell & Reed's wealth management business, and delivered the highest organic net new assets in our history. Going forward, our business momentum and financial strength position us well to continue creating long-term shareholder value."

Dividend Declaration

The Company's Board of Directors declared a $0.25 per share dividend to be paid on March 30, 2021 to all stockholders of record as of March 16, 2021.

Conference Call and Additional Information

The Company will hold a conference call to discuss its results at 5:00 p.m. EST on Thursday, February 4. To listen, call 877-677-9122 (domestic) or 708-290-1401 (international); passcode 9671648, or visit investor.lpl.com (webcast). Replays will be available by phone and on investor.lpl.com beginning two hours after the call and until February 11 and February 25, respectively. For telephonic replay, call 855-859-2056 (domestic) or 404-537-3406 (international); passcode 9671648.

About LPL Financial

LPL Financial is a leader in the retail financial advice market, the nation's largest independent broker-dealer(+) and a leading custodian (or provider of custodial services) to RIAs. We serve independent financial advisors and financial institutions, providing them with the technology, research, clearing and compliance services, and practice management programs they need to create and grow their practices. LPL enables them to provide objective guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions. LPL.com

(+) Based on total revenues, Financial Planning magazine June 1996-2020.

Securities and advisory services offered through LPL Financial LLC, a registered investment advisor. Member FINRA/SIPC. Throughout this communication, the terms "financial advisors" and "advisors" are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial LLC. We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.

**Non-GAAP Financial Measures

Management believes that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use this information to analyze the Company's current performance, prospects and valuation. Management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. Management believes that the non-GAAP financial measures and metrics discussed below are appropriate for evaluating the performance of the Company.

EPS Prior to Amortization of Intangible Assets is defined as GAAP EPS plus the per share impact of amortization of intangible assets. The per share impact is calculated as amortization of intangible assets expense, net of applicable tax benefit, divided by the number of shares outstanding for the applicable period. The Company presents EPS Prior to Amortization of Intangible Assets because management believes that the metric can provide investors with useful insight into the Company's core operating performance by excluding non-cash items that management does not believe impact the Company's ongoing operations. EPS Prior to Amortization of Intangible Assets is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to GAAP EPS or any other performance measure derived in accordance with GAAP. For a reconciliation of EPS Prior to Amortization of Intangible Assets to GAAP EPS, please see footnote 38 on page 19 of this release.

Gross Profit is calculated as total net revenues, which were $1,581 million for the three months ended December 31, 2020, less advisory and commission expenses and brokerage, clearing and exchange fees, which were $1,030 million and $18 million, respectively for the three months ended December 31, 2020. All other expense categories, including depreciation and amortization of fixed assets and amortization of intangible assets, are considered general and administrative in nature. Because the Company's Gross Profit amounts do not include any depreciation and amortization expense, the Company considers Gross Profit to be a non-GAAP financial measure that may not be comparable to similar measures used by others in its industry. Management believes that Gross Profit can provide investors with useful insight into the Company's core operating performance before indirect costs that are general and administrative in nature. For a calculation of Gross Profit, please see footnote 6 on page 16 of this release.

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February 04, 2021 16:05 ET (21:05 GMT)