LPL Financial Announces Third Quarter 2024 Results
Key Financial Results
Net Income was $255 million, translating to diluted earnings per share ("EPS") of $3.39, up 16% from a year ago
Adjusted EPS* increased 11% year-over-year to $4.16
Gross profit* increased 12% year-over-year to $1,128 million
Core G&A* increased 5% year-over-year to $359 million
Adjusted EBITDA* increased 12% year-over-year to $566 million
Key Business Results
Total advisory and brokerage assets increased 29% year-over-year to $1.6 trillion
Advisory assets increased 35% year-over-year to $892 billion
Advisory assets as a percentage of total assets increased to 56.0%, up from 53.5% a year ago
Total organic net new assets were $27 billion, representing 7% annualized growth
Excluding a $6 billion outflow related to a planned separation from misaligned large OSJs, total organic net new assets were $33 billion, translating to a 9% annualized growth rate
Organic net new advisory assets were $23 billion, representing 11% annualized growth. Excluding the impact of the planned separations, total organic net new advisory assets were $28 billion, translating to a 14% annualized growth rate.
Recruited assets(1) were $26 billion
Recruited assets over the trailing twelve months were $87 billion, up approximately 12% from a year ago
Advisor count(2) was 23,686, up 224 sequentially and 1,282 year-over-year
Total client cash balances were $46 billion, an increase of $2 billion sequentially and a decrease of $1 billion year-over-year
Client cash balances as a percentage of total assets were 2.9%, in-line with the prior quarter and down from 3.8% a year ago
Key Capital and Liquidity Results
Corporate cash(3) was $708 million
Leverage ratio(4) was 1.61x
Dividends paid were $22.4 million
Key Updates
M&A:
Atria Wealth Solutions, Inc. ("Atria"): In October 2024, closed the acquisition of Atria, a wealth management solutions holding company. Atria supports ~2,200 advisors and ~160 banks and credit unions, managing ~$110 billion of brokerage and advisory assets. Conversion is expected to be completed in mid-2025.
Estimated run-rate EBITDA has increased from $140 million at announcement to $150 million
The Investment Center, Inc. ("The Investment Center"): Announced a definitive agreement to acquire The Investment Center, a firm with ~240 advisors serving ~$9 billion of brokerage and advisory assets. We expect to close and convert the acquisition in the first half of 2025.
Liquidity & Succession: Deployed approximately $34 million of capital to close six deals, including our first three external practices
Prudential Advisors ("Prudential"): On track to onboard the retail wealth management business of Prudential during Q4
Estimated run-rate EBITDA has increased from $60 million at announcement to $70 million
Core G&A*:
While there are variable costs associated with supporting our strong levels of organic growth, given our ongoing focus on efficiency, we are tightening our 2024 Core G&A* outlook to a range of $1,475 million to $1,485 million
Additionally, we are increasing the range by $35 million to $40 million to include costs related to the acquisition of Atria and onboarding of Prudential, resulting in an updated range of $1,510 million to $1,525 million
Share Repurchases: We plan to resume our share repurchase program in Q4 2024, with an estimated $100 million of repurchases planned during the fourth quarter
*See the Non-GAAP Financial Measures section and the endnotes to this release for further details about these non-GAAP financial measures
SAN DIEGO, Oct. 30, 2024 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (NASDAQ:LPLA) (the "Company") today announced results for its third quarter ended September 30, 2024, reporting net income of $255 million or $3.39 per share. This compares with $224 million, or $2.91 per share, in the third quarter of 2023 and $244 million, or $3.23 per share, in the prior quarter.
"I joined LPL with the mandate to accelerate our growth, and for the past six years, have worked closely with Matt Audette and the rest of our leadership team, to set our strategic vision, and to build and execute on the plan to achieve that vision," said Rich Steinmeier, CEO. "Looking forward, our opportunity is clear, to assert our leadership and shape both the advisor and institutional markets. Our focus is on creating the culture, workplace environment, and capabilities, to achieve sustainable outperformance through becoming an indispensable partner to our advisors and institutions, while delivering long-term value to shareholders."
"We're operating from a position of strength with a leadership team that is focused on supporting our advisors' success through innovative solutions," said Matt Audette, President and CFO. "In my expanded role, I look forward to the opportunity to help extend our leadership position in the advisor-mediated markets and to enhance value for our shareholders. Specific to the third quarter, we delivered strong organic growth in both our traditional and new markets. As a complement, we announced our acquisition of The Investment Center, and early in the fourth quarter we closed our acquisition of Atria. As we look ahead, we remain excited by the opportunities we have to serve and support our advisors, while continuing to deliver an industry leading value proposition."
Dividend Declaration
The Company's Board of Directors declared a $0.30 per share dividend to be paid on December 2, 2024 to all stockholders of record as of November 14, 2024.
Conference Call and Additional Information
The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Wednesday, October 30, 2024. The conference call will be accessible and available for replay at investor.lpl.com/events.
Contacts
Investor
Media
About LPL Financial
LPL Financial Holdings Inc. (NASDAQ:LPLA) was founded on the principle that the firm should work for advisors and institutions, and not the other way around. Today, LPL is a leader in the markets we serve(5), serving more than 23,000 financial advisors, including advisors at approximately 1,000 institutions and at approximately 580 registered investment advisor ("RIA") firms nationwide. We are steadfast in our commitment to the advisor-mediated model and the belief that Americans deserve access to personalized guidance from a financial professional. At LPL, independence means that advisors and institution leaders have the freedom they deserve to choose the business model, services, and technology resources that allow them to run a thriving business. They have the flexibility to do business their way. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors and institutions, so they can take care of their clients.
Securities and Advisory services offered through LPL Financial LLC ("LPL Financial"), a registered investment advisor. Member FINRA/SIPC. LPL Financial and its affiliated companies provide financial services only from the United States.
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.
We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.
Forward-Looking Statements
This press release contains statements regarding:
the amount and timing of the onboarding of acquired, recruited or transitioned brokerage and advisory assets, including Atria, Prudential and The Investment Center;
the Company's future financial and operating results, growth, plans, priorities and business strategies, including forecasts and statements related to the Company's core G&A expenses; and
future capabilities, future advisor service experience, future investments and capital deployment, including share repurchase activity and dividends, if any, and long-term shareholder value.
These and any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements. They reflect the Company's expectations and objectives as of October 30, 2024 and are not guarantees that expectations or objectives expressed or implied will be achieved. The achievement of such expectations and objectives involves risks and uncertainties that may cause actual results, levels of activity or the timing of events to differ materially from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include:
the failure to satisfy the closing conditions applicable to the Company's strategic relationship agreement with Prudential, or the Company's purchase agreement with The Investment Center, including regulatory approvals;
difficulties and delays in onboarding the assets of acquired, recruited or transitioned advisors, including the receipt and timing of regulatory approvals that may be required;
disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients;
the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company;
changes in general economic and financial market conditions, including retail investor sentiment;
changes in interest rates and fees payable by banks participating in the Company's client cash programs, including the Company's success in negotiating agreements with current or additional counterparties;
the Company's strategy and success in managing client cash program fees;
fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue;
effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to provide financial products and services effectively;
whether the retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;
changes in the growth and profitability of the Company's fee-based offerings and asset-based revenues;
the effect of current, pending and future legislation, regulation and regulatory actions, including disciplinary actions imposed by federal and state regulators and self-regulatory organizations;
the cost of defending, settling and remediating issues related to regulatory matters or legal proceedings, including civil monetary penalties or actual costs of reimbursing customers for losses in excess of our reserves or insurance;
changes made to the Company's services and pricing, including in response to competitive developments and current, pending and future legislation, regulation and regulatory actions, and the effect that such changes may have on the Company's gross profit streams and costs;
execution of the Company's capital management plans, including its compliance with the terms of the Company's amended and restated credit agreement, the committed revolving credit facilities of the Company and LPL Financial, and the indentures governing the Company's senior unsecured notes;
strategic acquisitions and investments, including pursuant to the Company's Liquidity & Succession solution, and the effect that such acquisitions and investments may have on the Company's capital management plans and liquidity;
the price, availability and trading volumes of shares of the Company's common stock, which will affect the timing and size of future share repurchases by the Company, if any;
the execution of the Company's plans and its success in realizing the synergies, expense savings, service improvements or efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives;
whether advisors affiliated with Atria, Prudential, and The Investment Center will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;
the performance of third-party service providers to which business processes have been transitioned;
the Company's ability to control operating risks, information technology systems risks, cybersecurity risks and sourcing risks; and
the other factors set forth in the Company's most recent Annual Report on Form 10-K, as may be amended or updated in the Company's Quarterly Reports on Form 10-Q or other filings with the Securities and Exchange Commission.
Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this earnings release, and you should not rely on statements contained herein as representing the Company's view as of any date subsequent to the date of this press release.
LPL Financial Holdings Inc.Condensed Consolidated Statements of Income(In thousands, except per share data)(Unaudited)
Three Months Ended
Three Months Ended
September 30,
June 30,
September 30,
2024
2024
Change
2023
Change
REVENUE
Advisory
$
1,378,050
$
1,288,163
7
%
$
1,081,562
27
%
Commission:
Sales-based
429,132
423,070
1
%
311,792
38
%
Trailing
377,400
363,976
4
%
331,808
14
%
Total commission
806,532
787,046
2
%
643,600
25
%
Asset-based:
Client cash
353,855
341,475
4
%
360,518
(2
%)
Other asset-based
272,336
259,533
5
%
224,614
21
%
Total asset-based
626,191
601,008
4
%
585,132
7
%
Service and fee
145,729
135,000
8
%
135,648
7
%
Transaction
58,546
58,935
(1
%)
50,210
17
%
Interest income, net
49,923
47,478
5
%
40,773
22
%
Other
43,423
14,139
n/m
(14,542
)
n/m
Total revenue
3,108,394
2,931,769
6
%
2,522,383
23
%
EXPENSE
Advisory and commission
1,948,065
1,819,027
7
%
1,488,432
31
%
Compensation and benefits
266,415
274,000
(3
%)
243,759
9
%
Promotional
164,538
136,125
21
%
131,645
25
%
Depreciation and amortization
78,338
70,999
10
%
64,627
21
%
Occupancy and equipment
69,879
69,529
1
%
61,339
14
%
Interest expense on borrowings
67,779
64,341
5
%
48,363
40
%
Amortization of other intangibles
32,461
30,607
6
%
27,760
17
%
Brokerage, clearing and exchange
29,636
32,984
(10
%)
24,793
20
%
Professional services
26,295
22,100
19
%
18,699
41
%
Communications and data processing
17,916
19,406
(8
%)
19,634
(9
%)
Other
59,724
62,580
(5
%)
75,660
(21
%)
Total expense
2,761,046
2,601,698
6
%
2,204,711
25
%
INCOME BEFORE PROVISION FOR INCOME TAXES
347,348
330,071
5
%
317,672
9
%
PROVISION FOR INCOME TAXES
92,045
86,271
7
%
93,381
(1
%)
NET INCOME
$
255,303
$
243,800
5
%
$
224,291
14
%
EARNINGS PER SHARE
Earnings per share, basic
$
3.41
$
3.26
5
%
$
2.95
16
%
Earnings per share, diluted
$
3.39
$
3.23
5
%
$
2.91
16
%
Weighted-average shares outstanding, basic
74,776
74,725
—
%
76,062
(2
%)
Weighted-average shares outstanding, diluted
75,405
75,548
—
%
77,147
(2
%)
LPL Financial Holdings Inc.Condensed Consolidated Statements of Income(In thousands, except per share data)(Unaudited)
Nine Months Ended
September 30,
2024
2023
Change
REVENUE
Advisory
$
3,866,024
$
3,050,184
27
%
Commission:
Sales-based
1,237,437
896,825
38
%
Trailing
1,102,587
973,386
13
%
Total commission
2,340,024
1,870,211
25
%
Asset-based:
Client cash
1,047,712
1,157,208
(9
%)
Other asset-based
780,208
639,387
22
%
Total asset-based
1,827,920
1,796,595
2
%
Service and fee
412,901
377,757
9
%
Transaction
174,739
146,081
20
%
Interest income, net
140,926
116,103
21
%
Other
110,222
52,088
112
%
Total revenue
8,872,756
7,409,019
20
%
EXPENSE
Advisory and commission
5,500,579
4,307,829
28
%
Compensation and benefits
814,784
708,972
15
%
Promotional
427,282
332,433
29
%
Depreciation and amortization
216,495
179,058
21
%
Occupancy and equipment
205,672
186,517
10
%
Interest expense on borrowings
192,202
132,389
45
%
Brokerage, clearing and exchange
93,152
80,067
16
%
Amortization of other intangibles
92,620
78,593
18
%
Professional services
61,674
51,011
21
%
Communications and data processing
57,066
57,903
(1
%)
Other
159,619
143,259
11
%
Total expense
7,821,145
6,258,031
25
%
INCOME BEFORE PROVISION FOR INCOME TAXES
1,051,611
1,150,988
(9
%)
PROVISION FOR INCOME TAXES
263,744
302,293
(13
%)
NET INCOME
$
787,867
$
848,695
(7
%)
EARNINGS PER SHARE
Earnings per share, basic
$
10.55
$
10.97
(4
%)
Earnings per share, diluted
$
10.45
$
10.82
(3
%)
Weighted-average shares outstanding, basic
74,688
77,339
(3
%)
Weighted-average shares outstanding, diluted
75,424
78,439
(4
%)
LPL Financial Holdings Inc.Condensed Consolidated Statements of Financial Condition(In thousands, except share data)(Unaudited)
September 30, 2024
June 30, 2024
December 31, 2023
ASSETS
Cash and equivalents
$
1,474,954
$
1,318,894
$
465,671
Cash and equivalents segregated under federal or other regulations
1,382,867
1,530,150
2,007,312
Restricted cash
104,881
109,618
108,180
Receivables from clients, net
622,015
563,923
588,585
Receivables from brokers, dealers and clearing organizations
53,763
74,432
50,069
Advisor loans, net
1,913,363
1,757,727
1,479,690
Other receivables, net
802,186
763,632
743,317
Investment securities ($94,694, $73,463 and $76,088 at fair value at September 30, 2024, June 30, 2024 and December 31, 2023, respectively)
111,096
89,853
91,311
Property and equipment, net
1,144,676
1,066,395
933,091
Goodwill
1,868,193
1,860,062
1,856,648
Other intangibles, net
782,426
783,031
671,585
Other assets
1,681,455
1,586,010
1,390,021
Total assets
$
11,941,875
$
11,503,727
$
10,385,480
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Client payables
$
2,039,140
$
1,963,988
$
2,266,176
Payables to brokers, dealers and clearing organizations
211,054
212,394
163,337
Accrued advisory and commission expenses payable
252,881
240,370
216,541
Corporate debt and other borrowings, net
4,441,913
4,442,840
3,734,111
Accounts payable and accrued liabilities
485,927
461,277
485,963
Other liabilities
1,739,209
1,667,511
1,440,373
Total liabilities
9,170,124
8,988,380
8,306,501
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,779,259, 130,746,590 shares and 130,233,328 shares issued at September 30, 2024, June 30, 2024 and December 31, 2023, respectively
131
131
130
Additional paid-in capital
2,059,207
2,038,216
1,987,684
Treasury stock, at cost, 55,968,552, 55,985,188 shares and 55,576,970 shares at September 30, 2024, June 30, 2024 and December 31, 2023, respectively
(4,102,319
)
(4,101,955
)
(3,993,949
)
Retained earnings
4,814,732
4,578,955
4,085,114
Total stockholders' equity
2,771,751
2,515,347
2,078,979
Total liabilities and stockholders' equity
$
11,941,875
$
11,503,727
$
10,385,480
LPL Financial Holdings Inc.Management's Statements of Operations(In thousands, except per share data)(Unaudited)
Certain information in this release is presented as reviewed by the Company's management and includes information derived from the Company's unaudited condensed consolidated statements of income, non-GAAP financial measures and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures" in this release.
Quarterly Results
Q3 2024
Q2 2024
Change
Q3 2023
Change
Gross Profit(6)
Advisory
$
1,378,050
$
1,288,163
7
%
$
1,081,562
27
%
Trailing commissions
377,400
363,976
4
%
331,808
14
%
Sales-based commissions
429,132
423,070
1
%
311,792
38
%
Advisory fees and commissions
2,184,582
2,075,209
5
%
1,725,162
27
%
Production-based payout(7)
(1,910,634
)
(1,812,050
)
5
%
(1,506,080
)
27
%
Advisory fees and commissions, net of payout
273,948
263,159
4
%
219,082
25
%
Client cash(8)
372,333
361,316
3
%
377,782
(1
%)
Other asset-based(9)
272,336
259,533
5
%
224,614
21
%
Service and fee
145,729
135,000
8
%
135,648
7
%
Transaction
58,546
58,935
(1
%)
50,210
17
%
Interest income, net(10)
31,428
27,618
14
%
23,485
34
%
Other revenue(11)
3,392
