Italia markets open in 4 hours 15 minutes
  • Dow Jones

    29.225,61
    -458,13 (-1,54%)
     
  • Nasdaq

    10.737,51
    -314,13 (-2,84%)
     
  • Nikkei 225

    25.952,13
    -469,92 (-1,78%)
     
  • EUR/USD

    0,9810
    -0,0010 (-0,10%)
     
  • BTC-EUR

    19.780,74
    -166,76 (-0,84%)
     
  • CMC Crypto 200

    443,50
    -2,48 (-0,56%)
     
  • HANG SENG

    17.105,98
    -59,89 (-0,35%)
     
  • S&P 500

    3.640,47
    -78,57 (-2,11%)
     

LPL Financial Announces Second Quarter 2022 Results

·39 minuto per la lettura
LPL Financial Holdings, Inc.
LPL Financial Holdings, Inc.

Key Financial Results

  • Net Income was $161 million, translating to diluted earnings per share ("EPS") of $1.97, up 35% from a year ago

  • EPS prior to amortization of intangible assets and acquisition costs* increased 21% year-over-year to $2.24

    • Gross profit* increased 18% year-over-year to $711 million

    • Core G&A* increased 14% year-over-year to $286 million

    • EBITDA* increased 28% year-over-year to $311 million

Key Business Results

  • Total advisory and brokerage assets decreased 4% year-over-year to $1.06 trillion

    • Advisory assets decreased 3% year-over-year to $559 billion

    • Advisory assets as a percentage of total assets increased to 52.5%, up from 51.9% a year ago

  • Total organic net new assets were $37 billion, representing 13% annualized growth, and $108 billion over the past twelve months, representing 10% annualized growth

    • Organic net new advisory assets were $11 billion, representing 7% annualized growth

    • Organic net new brokerage assets were $26 billion, representing 19% annualized growth

  • Recruited assets(1) were $44 billion

    • Recruited assets over the trailing twelve months were $84 billion, up approximately 5% from a year ago

  • LPL Services Group had annualized revenue of $32 million in Q2, up approximately 60% from a year ago

    • Services Group subscriptions were 3,871 at the end of Q2, up 1,786 year-over-year

  • Advisor count(2) was 20,871, up 780 sequentially and 1,757 year-over-year(2)

  • Total client cash balances were $70 billion, an increase of $8 billion sequentially and $21 billion year-over-year

    • Client cash balances as a percentage of total assets were 6.5%, up from 5.3% in the prior quarter, and 4.3% a year ago

Key Capital and Liquidity Results

  • Corporate cash(3) was $241 million

  • Leverage ratio(4) was 2.09x

  • Share repurchases were $50 million for 272 thousand shares at an average price of $184 per share

  • Dividends paid of $20 million

Key Updates

  • CUNA Brokerage Services, Inc. ("CBSI"): Onboarded the retail brokerage and advisory business of CBSI, with $30 billion of total assets, of which $25 billion transitioned onto our platform in Q2

  • Boenning & Scattergood: Entered into an agreement to acquire the Private Client Group business of Boenning & Scattergood, a firm with approximately 40 financial advisors who serve approximately $5 billion of advisory and brokerage assets

  • Cash Sweep Program: Announced that work is underway to implement the client cash account as our primary sweep overflow vehicle by the end of Q3 2022

  • Core G&A*: Given our improved earnings profile, we are accelerating investments to drive and support organic growth, and anticipate up to $20 million of additional Core G&A* in 2022. This increases our Core G&A* outlook range to $1,170 million to $1,195 million.

SAN DIEGO, Aug. 02, 2022 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today announced results for its second quarter ended June 30, 2022, reporting net income of $161 million, or $1.97 per share. This compares with $119 million, or $1.46 per share, in the second quarter of 2021 and $134 million, or $1.64 per share, in the prior quarter.

“Over the past quarter, we remained focused on our mission of taking care of our advisors, so they can take of their clients,” said Dan Arnold, President and CEO. “Amid persistent market volatility, this focus led to another quarter of solid business outcomes, as our advisors continue to reinforce the value they provide to their clients. As we look ahead, we aim to continue investing in our model and increasing our market share within the advisor-centered marketplace.”

“We delivered another quarter of solid results," said Matt Audette, CFO. "We recorded double-digit organic growth, while successfully onboarding CUNA, substantially completing the integration of Waddell & Reed, and signing an agreement to acquire Boenning & Scattergood. Additionally, we are looking forward to onboarding People’s United Bank later this year. As we look ahead, 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 August 31, 2022 to all stockholders of record as of August 17, 2022.

Conference Call and Additional Information

The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Tuesday, August 2. The conference call will be accessible at investor.lpl.com/events, with a replay available until August 23.

Contacts

Investor Relations
investor.relations@lplfinancial.com
(617) 897-4574

Media Relations
media.relations@lplfinancial.com
(980) 321-1232

*See the Non-GAAP Financial Measures section and the endnotes to this release for further details about these non-GAAP financial measures

About LPL Financial

LPL Financial Holdings Inc. (Nasdaq: LPLA) was founded on the principle that the firm should work for the advisor, and not the other way around. Today, LPL is a leader in the markets we serve, supporting nearly 21,000 financial advisors, including advisors at approximately 1,100 institution-based investment programs and at approximately 500 registered investment advisor ("RIA") firms nationwide. We are steadfast in our commitment to the advisor-centered model and the belief that Americans deserve access to personalized guidance from a financial advisor. At LPL, independence means that advisors have the freedom they deserve to choose the business model, services, and technology resources that allow them to run their perfect practice. And they have the freedom to manage their client relationships, because they know their clients best. Simply put, we take care of our advisors, so they can take care of their clients.

Top RIA custodian (Cerulli Associates, 2020 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S. (Based on total revenues, Financial Planning magazine 1996-2021); No. 1 provider of third-party brokerage services to banks and credit unions (2020-2021 Kehrer Bielan Research & Consulting Annual TPM Report); Fortune 500 as of June 2021.

LPL and its affiliated companies provide financial services only from the United States.

Securities and Advisory services offered through LPL Financial LLC ("LPL Financial"), an SEC-registered broker-dealer and investment advisor. Member FINRA/SIPC. We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.

Forward-Looking Statements

Statements in this press release regarding:

  • the amount and timing of the onboarding of brokerage and advisory assets from CBSI and People's United Bank ("People's");

  • the expected timing, costs and benefits of the shift of our sweep overflow to the client cash account;

  • the Company's future financial and operating results, growth, priorities and business strategies, including forecasts and statements relating to future expenses (including 2022 Core G&A* outlook);

  • future capabilities, future advisor service experience, future investments and capital deployment, long-term shareholder value; and

  • any other statements that are not related to present facts or current conditions or that are not purely historical, constitute forward-looking statements. 

These forward-looking statements are based on the Company's historical performance and its plans, estimates and expectations as of August 2, 2022. Forward-looking statements are not guarantees that the future results, plans, intentions or expectations expressed or implied will be achieved. Matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause actual financial or operating results, levels of activity or the timing of events to be materially different from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include:

  • difficulties and delays in onboarding the assets of CBSI's or People's advisors;

  • disruptions in the businesses of the Company, CBSI or People's that could make it more difficult to maintain relationships with their respective advisors and their clients;

  • the choice by clients of CBSI's or People's 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 strategy and success in managing client cash program fees;

  • changes in the growth and profitability of the Company's fee-based offerings;

  • fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenues;

  • effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions;

  • whether the retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company;

  • 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 costs of settling and remediating issues related to regulatory matters or legal proceedings, including actual costs of reimbursing customers for losses in excess of our reserves;

  • changes made to the Company’s services and pricing, and the effect that such changes may have on the Company’s gross profit streams and costs;

  • the execution of the Company's plans and its success in realizing the synergies, expense savings, service improvements and efficiencies expected to result from its initiatives, acquisitions and programs;

  • the effects of the COVID-19 pandemic, including efforts to contain it; and

  • the other factors set forth in Part I, “Item 1A. Risk Factors” in the Company's 2021 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, even if its estimates change, and you should not rely on statements contained herein as representing the Company's views as of any date subsequent to the date of this press release.


LPL Financial Holdings Inc.
Condensed Consolidated Statements of Income(5)
(In thousands, except per share data)
(Unaudited)

 

 

Three Months Ended

 

 

 

Three Months Ended

 

 

 

 

June 30,

 

March 31,

 

 

 

June 30,

 

 

 

 

 

2022

 

 

 

2022

 

 

Change

 

 

2021

 

Change

REVENUE

 

 

 

 

 

 

 

 

 

 

Advisory

 

$

1,001,851

 

 

$

1,047,097

 

 

(4

%)

 

$

846,313

 

18

%

Commission

 

 

573,376

 

 

 

585,525

 

 

(2

%)

 

 

598,233

 

(4

%)

Asset-based

 

 

363,597

 

 

 

296,401

 

 

23

%

 

 

279,620

 

30

%

Service and fee

 

 

112,802

 

 

 

112,812

 

 

%

 

 

99,473

 

13

%

Transaction

 

 

44,416

 

 

 

46,726

 

 

(5

%)

 

 

37,627

 

18

%

Interest income

 

 

10,121

 

 

 

7,745

 

 

31

%

 

 

6,914

 

46

%

Other

 

 

(67,276

)

 

 

(30,613

)

 

n/m

 

 

 

30,078

 

n/m

 

Total revenue

 

 

2,038,887

 

 

 

2,065,693

 

 

(1

%)

 

 

1,898,258

 

7

%

EXPENSE

 

 

 

 

 

 

 

 

 

 

Advisory and commission

 

 

1,304,422

 

 

 

1,374,134

 

 

(5

%)

 

 

1,273,202

 

2

%

Compensation and benefits

 

 

196,699

 

 

 

192,034

 

 

2

%

 

 

183,853

 

7

%

Promotional

 

 

78,027

 

 

 

87,002

 

 

(10

%)

 

 

64,349

 

21

%

Occupancy and equipment

 

 

55,906

 

 

 

51,112

 

 

9

%

 

 

41,452

 

35

%

Depreciation and amortization

 

 

48,453

 

 

 

45,454

 

 

7

%

 

 

36,704

 

32

%

Interest expense on borrowings

 

 

28,755

 

 

 

27,211

 

 

6

%

 

 

25,171

 

14

%

Brokerage, clearing and exchange

 

 

23,362

 

 

 

22,600

 

 

3

%

 

 

23,459

 

%

Amortization of other intangibles

 

 

21,168

 

 

 

21,196

 

 

%

 

 

19,925

 

6

%

Professional services

 

 

17,290

 

 

 

19,022

 

 

(9

%)

 

 

22,500

 

(23

%)

Communications and data processing

 

 

16,223

 

 

 

15,127

 

 

7

%

 

 

14,930

 

9

%

Other

 

 

36,261

 

 

 

37,422

 

 

(3

%)

 

 

31,064

 

17

%

Total expense

 

 

1,826,566

 

 

 

1,892,314

 

 

(3

%)

 

 

1,736,609

 

5

%

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

212,321

 

 

 

173,379

 

 

22

%

 

 

161,649

 

31

%

PROVISION FOR INCOME TAXES

 

 

51,776

 

 

 

39,635

 

 

31

%

 

 

42,548

 

22

%

NET INCOME

 

$

160,545

 

 

$

133,744

 

 

20

%

 

$

119,101

 

35

%

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

2.01

 

 

$

1.67

 

 

20

%

 

$

1.49

 

35

%

Earnings per share, diluted

 

$

1.97

 

 

$

1.64

 

 

20

%

 

$

1.46

 

35

%

Weighted-average shares outstanding, basic

 

 

79,947

 

 

 

79,976

 

 

%

 

 

80,063

 

%

Weighted-average shares outstanding, diluted

 

 

81,410

 

 

 

81,572

 

 

%

 

 

81,728

 

%

 

 

LPL Financial Holdings Inc.
Condensed Consolidated Statements of Income(5)
(In thousands, except per share data)
(Unaudited)

 

 

Six Months Ended

 

 

 

 

June 30,

 

 

 

 

 

2022

 

 

 

2021

 

Change

REVENUE

 

 

 

 

 

 

Advisory

 

$

2,048,948

 

 

$

1,568,359

 

31

%

Commission

 

 

1,158,901

 

 

 

1,155,462

 

%

Asset-based

 

 

659,998

 

 

 

544,326

 

21

%

Service and fee

 

 

225,614

 

 

 

196,297

 

15

%

Transaction

 

 

91,142

 

 

 

81,747

 

11

%

Interest income

 

 

17,866

 

 

 

13,432

 

33

%

Other

 

 

(97,889

)

 

 

46,252

 

n/m

 

Total revenue

 

 

4,104,580

 

 

 

3,605,875

 

14

%

EXPENSE

 

 

 

 

 

 

Advisory and commission

 

 

2,678,556

 

 

 

2,382,101

 

12

%

Compensation and benefits

 

 

388,733

 

 

 

345,393

 

13

%

Promotional

 

 

165,029

 

 

 

118,530

 

39

%

Occupancy and equipment

 

 

107,018

 

 

 

85,036

 

26

%

Depreciation and amortization

 

 

93,907

 

 

 

72,203

 

30

%

Interest expense on borrowings

 

 

55,966

 

 

 

50,230

 

11

%

Brokerage, clearing and exchange

 

 

45,962

 

 

 

42,823

 

7

%

Amortization of other intangibles

 

 

42,364

 

 

 

37,356

 

13

%

Professional services

 

 

36,312

 

 

 

38,125

 

(5

%)

Communications and data processing

 

 

31,350

 

 

 

26,923

 

16

%

Loss on extinguishment of debt

 

 

 

 

 

24,400

 

(100

%)

Other

 

 

73,683

 

 

 

55,964

 

32

%

Total expense

 

 

3,718,880

 

 

 

3,279,084

 

13

%

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

385,700

 

 

 

326,791

 

18

%

PROVISION FOR INCOME TAXES

 

 

91,411

 

 

 

78,070

 

17

%

NET INCOME

 

$

294,289

 

 

$

248,721

 

18

%

EARNINGS PER SHARE

 

 

 

 

 

 

Earnings per share, basic

 

$

3.68

 

 

$

3.11

 

18

%

Earnings per share, diluted

 

$

3.61

 

 

$

3.05

 

18

%

Weighted-average shares outstanding, basic

 

 

79,961

 

 

 

79,880

 

%

Weighted-average shares outstanding, diluted

 

 

81,493

 

 

 

81,608

 

%

 

 

LPL Financial Holdings Inc.
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)

 

 

June 30,
2022

 

March 31,
2022

 

December 31,
2021

ASSETS

Cash and equivalents

 

$

700,395

 

 

$

1,009,693

 

 

$

495,246

 

Cash segregated under federal or other regulations

 

 

863,500

 

 

 

644,986

 

 

 

1,496,463

 

Restricted cash

 

 

89,833

 

 

 

92,393

 

 

 

80,655

 

Receivables from clients, net

 

 

695,405

 

 

 

624,188

 

 

 

578,889

 

Receivables from brokers, dealers and clearing organizations

 

 

71,555

 

 

 

154,398

 

 

 

102,503

 

Advisor loans, net

 

 

1,035,158

 

 

 

970,368

 

 

 

963,869

 

Other receivables, net

 

 

600,906

 

 

 

587,601

 

 

 

581,483

 

Investment securities ($35,377, $32,619, and $39,274 at fair value at June 30, 2022, March 31, 2022 and December 31, 2021, respectively)

 

 

47,695

 

 

 

43,709

 

 

 

49,192

 

Property and equipment, net

 

 

726,224

 

 

 

685,771

 

 

 

658,841

 

Goodwill

 

 

1,642,468

 

 

 

1,642,468

 

 

 

1,642,443

 

Other intangibles, net

 

 

433,485

 

 

 

433,925

 

 

 

455,028

 

Other assets

 

 

829,862

 

 

 

883,831

 

 

 

886,988

 

Total assets

 

$

7,736,486

 

 

$

7,773,331

 

 

$

7,991,600

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:

 

 

 

 

 

 

Client payables

 

$

1,498,374

 

 

$

1,568,025

 

 

$

1,712,224

 

Payables to brokers, dealers and clearing organizations

 

 

154,909

 

 

 

149,237

 

 

 

170,119

 

Accrued advisory and commission expenses payable

 

 

199,691

 

 

 

210,884

 

 

 

222,379

 

Corporate debt and other borrowings, net

 

 

2,720,747

 

 

 

2,722,396

 

 

 

2,814,044

 

Accounts payable and accrued liabilities

 

 

363,768

 

 

 

331,333

 

 

 

384,025

 

Other liabilities

 

 

954,937

 

 

 

1,056,450

 

 

 

1,018,276

 

Total liabilities

 

 

5,892,426

 

 

 

6,038,325

 

 

 

6,321,067

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

Common stock, $0.001 par value; 600,000,000 shares authorized; 129,365,714 shares, 129,220,710 shares, and 128,758,086 shares issued at June 30, 2022, March 31, 2022 and December 31, 2021, respectively

 

 

129

 

 

 

129

 

 

 

129

 

Additional paid-in capital

 

 

1,879,312

 

 

 

1,861,019

 

 

 

1,841,402

 

Treasury stock, at cost — 49,427,892 shares, 49,160,358 shares and 48,768,145 shares at June 30, 2022, March 31, 2022 and December 31, 2021, respectively

 

 

(2,620,798

)

 

 

(2,569,035

)

 

 

(2,498,600

)

Retained earnings

 

 

2,585,417

 

 

 

2,442,893

 

 

 

2,327,602

 

Total stockholders’ equity

 

 

1,844,060

 

 

 

1,735,006

 

 

 

1,670,533

 

Total liabilities and stockholders’ equity

 

$

7,736,486

 

 

$

7,773,331

 

 

$

7,991,600

 

 

 

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

 

 

Q2 2022

 

Q1 2022

 

Change

 

Q2 2021

 

Change

Gross Profit(6)

 

 

 

 

 

 

 

 

 

 

Advisory

 

$

1,001,851

 

 

$

1,047,097

 

 

(4

%)

 

$

846,313

 

 

18

%

Sales-based commissions

 

 

252,493

 

 

 

240,331

 

 

5

%

 

 

249,596

 

 

1

%

Trailing commissions

 

 

320,883

 

 

 

345,194

 

 

(7

%)

 

 

348,637

 

 

(8

%)

Advisory fees and commissions

 

 

1,575,227

 

 

 

1,632,622

 

 

(4

%)

 

 

1,444,546

 

 

9

%

Production-based payout(7)

 

 

(1,370,046

)

 

 

(1,405,698

)

 

(3

%)

 

 

(1,247,321

)

 

10

%

Advisory fees and commissions, net of payout

 

 

205,181

 

 

 

226,924

 

 

(10

%)

 

 

197,225

 

 

4

%

Client cash(8)

 

 

156,219

 

 

 

84,721

 

 

84

%

 

 

90,344

 

 

73

%

Other asset-based(9)

 

 

208,489

 

 

 

211,991

 

 

(2

%)

 

 

189,576

 

 

10

%

Service and fee

 

 

112,802

 

 

 

112,812

 

 

%

 

 

99,473

 

 

13

%

Transaction

 

 

44,416

 

 

 

46,726

 

 

(5

%)

 

 

37,627

 

 

18

%

Interest income and other, net(10)

 

 

7,358

 

 

 

8,385

 

 

(12

%)

 

 

10,811

 

 

(32

%)

Total net advisory fees and commissions and attachment revenue

 

 

734,465

 

 

 

691,559

 

 

6

%

 

 

625,056

 

 

18

%

Brokerage, clearing and exchange expense

 

 

(23,362

)

 

 

(22,600

)

 

3

%

 

 

(23,459

)

 

%

Gross Profit(6)

 

 

711,103

 

 

 

668,959

 

 

6

%

 

 

601,597

 

 

18

%

 

 

 

 

 

 

 

 

 

 

 

G&A Expense

 

 

 

 

 

 

 

 

 

 

Core G&A(11)

 

 

285,973

 

 

 

280,907

 

 

2

%

 

 

251,679

 

 

14

%

Regulatory charges

 

 

8,069

 

 

 

7,323

 

 

10

%

 

 

7,416

 

 

9

%

Promotional (ongoing)(12)(13)

 

 

83,791

 

 

 

87,411

 

 

(4

%)

 

 

64,135

 

 

31

%

Acquisition costs(13)

 

 

8,909

 

 

 

13,323

 

 

(33

%)

 

 

23,782

 

 

(63

%)

Employee share-based compensation

 

 

13,664

 

 

 

12,755

 

 

7

%

 

 

11,136

 

 

23

%

Total G&A

 

 

400,406

 

 

 

401,719

 

 

%

 

 

358,148

 

 

12

%

EBITDA(14)

 

 

310,697

 

 

 

267,240

 

 

16

%

 

 

243,449

 

 

28

%

Depreciation and amortization

 

 

48,453

 

 

 

45,454

 

 

7

%

 

 

36,704

 

 

32

%

Amortization of other intangibles

 

 

21,168

 

 

 

21,196

 

 

%

 

 

19,925

 

 

6

%

Interest expense on borrowings

 

 

28,755

 

 

 

27,211

 

 

6

%

 

 

25,171

 

 

14

%

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

212,321

 

 

 

173,379

 

 

22

%

 

 

161,649

 

 

31

%

PROVISION FOR INCOME TAXES

 

 

51,776

 

 

 

39,635

 

 

31

%

 

 

42,548

 

 

22

%

NET INCOME

 

$

160,545

 

 

$

133,744

 

 

20

%

 

$

119,101

 

 

35

%

Earnings per share, diluted

 

$

1.97

 

 

$

1.64

 

 

20

%

 

$

1.46

 

 

35

%

Weighted-average shares outstanding, diluted

 

 

81,410

 

 

 

81,572

 

 

%

 

 

81,728

 

 

%

EPS prior to amortization of intangible assets and acquisition costs(15)

 

$

2.24

 

 

$

1.95

 

 

15

%

 

$

1.85

 

 

21

%

 

 

LPL Financial Holdings Inc.
Operating Metrics
(Dollars in billions, except where noted)
(Unaudited)

 

 

Q2 2022

 

Q1 2022

 

Change

 

Q2 2021

 

Change

Market Drivers

 

 

 

 

 

 

 

 

 

 

S&P 500 Index (end of period)

 

 

3,785

 

 

 

4,530

 

 

(16

%)

 

 

4,298

 

 

(12

%)

Russell 2000 Index (end of period)

 

 

1,708

 

 

 

2,070

 

 

(17

%)

 

 

2,311

 

 

(26

%)

Fed Funds daily effective rate (average bps)

 

 

73

 

 

 

12

 

 

61bps

 

 

 

7

 

 

66bps

 

 

 

 

 

 

 

 

 

 

 

 

Advisory and Brokerage Assets

 

 

 

 

 

 

 

 

 

 

Advisory assets(16)

 

$

558.6

 

 

$

624.3

 

 

(11

%)

 

$

577.6

 

 

(3

%)

Brokerage assets(17)

 

 

506.0

 

 

 

538.8

 

 

(6

%)

 

 

534.7

 

 

(5

%)

Total Advisory and Brokerage Assets

 

$

1,064.6

 

 

$

1,163.1

 

 

(8

%)

 

$

1,112.3

 

 

(4

%)

Advisory as a % of Total Advisory and Brokerage Assets

 

 

52.5

%

 

 

53.7

%

 

(120bps)

 

 

 

51.9

%

 

60bps

 

 

 

 

 

 

 

 

 

 

 

 

Assets by Platform

 

 

 

 

 

 

 

 

 

 

Corporate platform advisory assets(18)

 

$

372.1

 

 

$

415.8

 

 

(11

%)

 

$

383.6

 

 

(3

%)

Independent RIA advisory assets(19)

 

 

186.5

 

 

 

208.5

 

 

(11

%)

 

 

194.0

 

 

(4

%)

Brokerage assets

 

 

506.0

 

 

 

538.8

 

 

(6

%)

 

 

534.7

 

 

(5

%)

Total Advisory and Brokerage Assets

 

$

1,064.6

 

 

$

1,163.1

 

 

(8

%)

 

$

1,112.3

 

 

(4

%)

 

 

 

 

 

 

 

 

 

 

 

Centrally Managed Assets

 

 

 

 

 

 

 

 

 

 

Centrally managed assets(20)

 

$

85.6

 

 

$

93.8

 

 

(9

%)

 

$

84.7

 

 

1

%

Centrally Managed as a % of Total Advisory Assets

 

 

15.3

%

 

 

15.0

%

 

30bps

 

 

 

14.7

%

 

60bps

 

 

 

LPL Financial Holdings Inc.
Operating Metrics
(Dollars in billions, except where noted)
(Unaudited)

 

 

Q2 2022

 

Q1 2022

 

Change

 

Q2 2021

 

Change

Net New Assets (NNA)

 

 

 

 

 

 

 

 

 

 

Net new advisory assets(21)

 

$

11.4

 

 

$

17.4

 

 

n/m

 

$

54.9

 

 

n/m

Net new brokerage assets(22)

 

 

25.8

 

 

 

0.2

 

 

n/m

 

 

51.1

 

 

n/m

Total Net New Assets

 

$

37.2

 

 

$

17.6

 

 

n/m

 

$

106.0

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

Organic Net New Assets(23)

 

 

 

 

 

 

 

 

 

 

Organic net new advisory assets

 

$

11.4

 

 

$

17.4

 

 

n/m

 

$

21.4

 

 

n/m

Organic net new brokerage assets

 

 

25.8

 

 

 

0.2

 

 

n/m

 

 

15.6

 

 

n/m

Total Organic Net New Assets

 

$

37.2

 

 

$

17.6

 

 

n/m

 

$

37.1

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

Net brokerage to advisory conversions(24)

 

$

1.8

 

 

$

2.9

 

 

n/m

 

$

3.2

 

 

n/m

Organic advisory NNA annualized growth(25)

 

 

7.3

%

 

 

10.8

%

 

n/m

 

 

17.3

%

 

n/m

Total organic NNA annualized growth(25)

 

 

12.8

%

 

 

5.8

%

 

n/m

 

 

15.5

%

 

n/m

 

 

 

 

 

 

 

 

 

 

 

Net New Advisory Assets

 

 

 

 

 

 

 

 

 

 

Corporate platform net new advisory assets(26)

 

$

8.3

 

 

$

10.6

 

 

n/m

 

$

49.0

 

 

n/m

Independent RIA net new advisory assets(27)

 

 

3.1

 

 

 

6.8

 

 

n/m

 

 

6.0

 

 

n/m

Total Net New Advisory Assets

 

$

11.4

 

 

$

17.4

 

 

n/m

 

$

54.9

 

 

n/m

Centrally managed net new advisory assets(28)

 

$

3.2

 

 

$

3.3

 

 

n/m

 

$

4.0

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

Client Cash Balances(29)

 

 

 

 

 

 

 

 

 

 

Insured cash account sweep

 

$

40.8

 

 

$

32.6

 

 

25%

 

$

34.1

 

 

20%

Deposit cash account sweep

 

 

12.3

 

 

 

9.4

 

 

31%

 

 

7.6

 

 

62%

Total Bank Sweep

 

 

53.1

 

 

 

42.0

 

 

26%

 

 

41.7

 

 

27%

Money market sweep

 

 

15.0

 

 

 

18.2

 

 

(18%)

 

 

5.0

 

 

n/m

Total Client Cash Sweep Held by Third Parties

 

 

68.1

 

 

 

60.2

 

 

13%

 

 

46.7

 

 

46%

Client cash account

 

 

1.5

 

 

 

1.6

 

 

(6%)

 

 

1.5

 

 

—%

Total Client Cash Balances

 

$

69.6

 

 

$

61.7

 

 

13%

 

$

48.2

 

 

44%

Client Cash Balances as a % of Total Assets

 

 

6.5

%

 

 

5.3

%

 

120bps

 

 

4.3

%

 

220bps

 

 

 

 

 

 

 

 

 

 

 

Client Cash Balance Average Yields - bps(30)

 

 

 

 

 

 

 

 

 

 

Insured cash account sweep

 

 

134

 

 

 

102

 

 

32

 

 

98

 

 

36

Deposit cash account sweep

 

 

63

 

 

 

24

 

 

39

 

 

24

 

 

39

Money market sweep

 

 

44

 

 

 

7

 

 

37

 

 

1

 

 

43

Client cash account(31)

 

 

52

 

 

 

13

 

 

39

 

 

15

 

 

37

Total Client Cash Balance Average Yield - bps

 

 

98

 

 

 

59

 

 

39

 

 

78

 

 

20

 

 

 

 

 

 

 

 

 

 

 

Net buy (sell) activity(32)

 

$

5.3

 

 

$

11.0

 

 

n/m

 

$

18.1

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LPL Financial Holdings Inc.
Financial Measures
(Dollars in thousands, except where noted)
(Unaudited)

 

 

Q2 2022

 

Q1 2022

 

Change

 

Q2 2021

 

Change

Commission Revenue by Product

 

 

 

 

 

 

 

 

 

 

Annuities

 

$

311,263

 

 

$

299,734

 

 

4%

 

$

305,100

 

 

2%

Mutual funds

 

 

168,234

 

 

 

189,527

 

 

(11%)

 

 

195,688

 

 

(14%)

Fixed income

 

 

29,013

 

 

 

25,205

 

 

15%

 

 

34,862

 

 

(17%)

Equities

 

 

29,909

 

 

 

34,633

 

 

(14%)

 

 

30,517

 

 

(2%)

Other

 

 

34,957

 

 

 

36,426

 

 

(4%)

 

 

32,066

 

 

9%

Total commission revenue

 

$

573,376

 

 

$

585,525

 

 

(2%)

 

$

598,233

 

 

(4%)

 

 

 

 

 

 

 

 

 

 

 

Commission Revenue by Sales-based and Trailing

 

 

 

 

 

 

Sales-based commissions

 

 

 

 

 

 

 

 

 

 

Annuities

 

$

129,371

 

 

$

106,733

 

 

21%

 

$

112,619

 

 

15%

Mutual funds

 

 

39,522

 

 

 

47,545

 

 

(17%)

 

 

50,250

 

 

(21%)

Fixed income

 

 

29,013

 

 

 

25,205

 

 

15%

 

 

34,862

 

 

(17%)

Equities

 

 

29,909

 

 

 

34,633

 

 

(14%)

 

 

30,517

 

 

(2%)

Other

 

 

24,678

 

 

 

26,215

 

 

(6%)

 

 

21,348

 

 

16%

Total sales-based commissions

 

$

252,493

 

 

$

240,331

 

 

5%

 

$

249,596

 

 

1%

Trailing commissions

 

 

 

 

 

 

 

 

 

 

Annuities

 

$

181,892

 

 

$

193,001

 

 

(6%)

 

$

192,481

 

 

(6%)

Mutual funds

 

 

128,712

 

 

 

141,982

 

 

(9%)

 

 

145,438

 

 

(12%)

Other

 

 

10,279

 

 

 

10,211

 

 

1%

 

 

10,718

 

 

(4%)

Total trailing commissions

 

$

320,883

 

 

$

345,194

 

 

(7%)

 

$

348,637

 

 

(8%)

Total commission revenue

 

$

573,376

 

 

$

585,525

 

 

(2%)

 

$

598,233

 

 

(4%)

 

 

 

 

 

 

 

 

 

 

 

Payout Rate(7)

 

 

86.97

%

 

 

86.10

%

 

87bps

 

 

86.35

%

 

62bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LPL Financial Holdings Inc.
Capital Management Measures
(Dollars in thousands, except where noted)
(Unaudited)

 

 

Q2 2022

 

Q1 2022

 

Q4 2021

Cash and equivalents

 

$

700,395

 

 

$

1,009,693

 

 

$

495,246

 

Cash at regulated subsidiaries

 

 

(546,299

)

 

 

(828,079

)

 

 

(284,105

)

Excess cash at regulated subsidiaries per the Credit Agreement

 

 

87,400

 

 

 

88,551

 

 

 

25,846

 

Corporate Cash(3)

 

$

241,496

 

 

$

270,165

 

 

$

236,987

 

 

 

 

 

 

 

 

Corporate Cash(3)

 

 

 

 

 

 

Cash at Parent

 

$

144,358

 

 

$

172,924

 

 

$

202,407

 

Excess cash at regulated subsidiaries per the Credit Agreement

 

 

87,400

 

 

 

88,551

 

 

 

25,846

 

Cash at non-regulated subsidiaries

 

 

9,738

 

 

 

8,690

 

 

 

8,734

 

Corporate Cash

 

$

241,496

 

 

$

270,165

 

 

$

236,987

 

 

 

 

 

 

 

 

Leverage Ratio

 

 

 

 

 

 

Total debt

 

$

2,743,250

 

 

$

2,745,925

 

 

$

2,838,600

 

Total corporate cash

 

 

241,496

 

 

 

270,165

 

 

 

236,987

 

Credit Agreement Net Debt

 

$

2,501,754

 

 

$

2,475,760

 

 

$

2,601,613

 

Credit Agreement EBITDA (trailing twelve months)(33)

 

$

1,194,944

 

 

$

1,147,662

 

 

$

1,150,691

 

Leverage Ratio

 

 

2.09

x

 

 

2.16

x

 

 

2.26

x

 

 


 

 

June 30, 2022

 

 

Total Debt

 

Balance

 

Current Applicable Margin

 

Interest Rate

 

Maturity

Revolving Credit Facility(a)

 

$

 

LIBOR+125bps

 

3.037

%

 

3/15/2026

Broker-Dealer Revolving Credit Facility(b)

 

 

 

FFR+125bps

 

2.830

%

 

7/31/2024

Senior Secured Term Loan B

 

 

1,043,250

 

LIBOR+175 bps(c)

 

2.812

%

 

11/12/2026

Senior Unsecured Notes(d)

 

 

400,000

 

4.625% Fixed

 

4.625

%

 

11/15/2027

Senior Unsecured Notes(e)

 

 

900,000

 

4.000% Fixed

 

4.000

%

 

3/15/2029

Senior Unsecured Notes(f)

 

 

400,000

 

4.375% Fixed

 

4.375

%

 

5/15/2031

Total / Weighted Average

 

$

2,743,250

 

 

 

3.694

%

 

 

(a) Secured borrowing capacity of $1 billion at LPL Holdings, Inc. (the "Parent").
(b) Unsecured borrowing capacity of $300 million at LPL Financial LLC.
(c) The LIBOR rate option is one-month LIBOR rate and subject to an interest rate floor of 0 basis points.
(d) The Senior Unsecured Notes were issued in November 2019 at par.
(e) The Senior Unsecured Notes were issued in March 2021 at par.
(f) The Senior Unsecured Notes were issued in May 2021 at par.


LPL Financial Holdings Inc.
Key Business and Financial Metrics
(Dollars in thousands, except where noted)
(Unaudited)

 

 

Q2 2022

 

Q1 2022

 

Change

 

Q2 2021

 

Change

Advisors

 

 

 

 

 

 

 

 

 

 

Advisors

 

 

20,871

 

 

 

20,091

 

 

4

%

 

 

19,114

 

 

9

%

Net new advisors

 

 

780

 

 

 

215

 

 

n/m

 

 

 

1,442

 

 

n/m

 

Annualized advisory fees and commissions per advisor(34)

 

$

308

 

 

$

327

 

 

(6

%)

 

$

314

 

 

(2

%)

Average total assets per advisor ($ in millions)(35)

 

$

51.0

 

 

$

57.9

 

 

(12

%)

 

$

58.2

 

 

(12

%)

Transition assistance loan amortization ($ in millions)(36)

 

$

42.7

 

 

$

41.4

 

 

3

%

 

$

34.7

 

 

23

%

Total client accounts (in millions)

 

 

7.6

 

 

 

7.3

 

 

4

%

 

 

6.7

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

Employees

 

 

6,099

 

 

 

6,026

 

 

1

%

 

 

5,265

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

Services Group

 

 

 

 

 

 

 

 

 

 

Services Group subscriptions(37)

 

 

 

 

 

 

 

 

 

 

Professional Services

 

 

1,377

 

 

 

1,328

 

 

4

%

 

 

897

 

 

54

%

Business Optimizers

 

 

2,425

 

 

 

2,138

 

 

13

%

 

 

1,188

 

 

104

%

Planning and Advice

 

 

69

 

 

 

63

 

 

10

%

 

 

 

 

100

%

Total Services Group subscriptions

 

 

3,871

 

 

 

3,529

 

 

10

%

 

 

2,085

 

 

86

%

 

 

 

 

 

 

 

 

 

 

 

AUM retention rate (quarterly annualized)(38)

 

 

98.0

%

 

 

98.3

%

 

(30bps)

 

 

 

98.4

%

 

(40bps)

 

 

 

 

 

 

 

 

 

 

 

 

Capital Management

 

 

 

 

 

 

 

 

 

 

Capital expenditures ($ in millions)(39)

 

$

76.3

 

 

$

73.5

 

 

4

%

 

$

43.9

 

 

74

%

 

 

 

 

 

 

 

 

 

 

 

Share repurchases ($ in millions)

 

$

50.0

 

 

$

50.0

 

 

%

 

$

 

 

100

%

Dividends ($ in millions)

 

 

20.0

 

 

 

20.0

 

 

%

 

 

20.0

 

 

%

Total Capital Returned ($ in millions)

 

$

70.0

 

 

$

70.0

 

 

%

 

$

20.0

 

 

n/m

 

Weighted-average share count, diluted

 

 

81.4

 

 

 

81.6

 

 

%

 

 

81.7

 

 

%

Total Capital Returned per Share(40)

 

$

0.86

 

 

$

0.86

 

 

%

 

$

0.25

 

 

n/m

 

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 and acquisition costs and Adjusted net income

EPS prior to amortization of intangible assets and acquisition costs is defined as adjusted net income, a non-GAAP measure defined as net income plus the after-tax impact of amortization of other intangibles and acquisition costs, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and EPS prior to amortization of intangible assets and acquisition costs because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items and acquisition costs that management does not believe impact the Company’s ongoing operations. Adjusted net income and EPS prior to amortization of intangible assets and acquisition costs are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP. For a reconciliation of net income and earnings per diluted share to adjusted net income and EPS prior to amortization of intangible assets and acquisition costs, please see the endnote disclosures in this release.

Gross profit

Gross profit is calculated as total revenue less advisory and commission expense and brokerage, clearing and exchange expense. All other expense categories, including depreciation and amortization of property and equipment and amortization of other intangibles, 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 the endnote disclosures in this release.

Core G&A

Core G&A consists of total expense less the following expenses: advisory and commission; depreciation and amortization; amortization of other intangibles; brokerage, clearing and exchange; interest expense on borrowings; loss on extinguishment of debt; promotional; acquisition costs; employee share-based compensation; and regulatory charges. Management presents core G&A because it believes core G&A reflects the corporate expense categories over which management can generally exercise a measure of control, compared with expense items over which management either cannot exercise control, such as advisory and commission, or which management views as promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company’s total expense as calculated in accordance with GAAP. For a reconciliation of core G&A to the Company’s total expense, please see the endnote disclosures of this release. The Company does not provide an outlook for its total expense because it contains expense components, such as advisory and commission, that are market-driven and over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for core G&A to an outlook for total expense cannot be made available without unreasonable effort.

EBITDA

EBITDA is defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. The Company presents EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations. EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of EBITDA to net income, please see the endnote disclosures in this release.

Credit Agreement EBITDA

Credit Agreement EBITDA is defined in, and calculated by management in accordance with, the Company's amended and restated credit agreement (“Credit Agreement”) as “Consolidated EBITDA,” which is consolidated net income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, including unusual or non-recurring charges and gains, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. The Company presents Credit Agreement EBITDA because management believes that it can be a useful financial metric in understanding the Company’s debt capacity and covenant compliance under its Credit Agreement. Credit Agreement EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. For a reconciliation of Credit Agreement EBITDA to net income, please see the endnote disclosures in this release.

Endnote Disclosures

(1) Represents the estimated total advisory and brokerage assets expected to transition to the Company's broker-dealer subsidiary, LPL Financial, associated with advisors who transferred their licenses to LPL Financial during the period. The estimate is based on prior business reported by the advisors, which has not been independently and fully verified by LPL Financial. The actual transition of assets to LPL Financial generally occurs over several quarters and the actual amount transitioned may vary from the estimate.

(2) The terms “Financial Advisors” and “Advisors” refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial, an SEC-registered broker-dealer and investment advisor. Year-over-year figure reflects the addition of 282 advisors from Waddell & Reed, LLC in Q3 2021 and 562 advisors from CBSI in Q2 2022.

(3) Corporate cash, a component of cash and equivalents, is the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company's Credit Agreement, which include LPL Financial LLC and The Private Trust Company N.A., in excess of the capital requirements of the Company's Credit Agreement (which, in the case of LPL Financial LLC, is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with Exchange Act Rule 15c3-1), and (3) cash and equivalents held at non-regulated subsidiaries.

(4) Compliance with the Leverage Ratio is only required under the Company's revolving credit facility.

(5) Certain financial statement line items in the condensed consolidated statements of income have been reclassified to more closely align with industry practice and the Company's business, and to better serve financial statement users. Prior period amounts have been reclassified to conform to current presentation; however, these reclassifications did not impact total net income.

(6) Gross profit is a non-GAAP financial measure. Please see a description of gross profit under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a calculation of gross profit for the periods presented (in thousands):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Total revenue

 

$

2,038,887

 

$

2,065,693

 

$

1,898,258

Advisory and commission expense

 

 

1,304,422

 

 

1,374,134

 

 

1,273,202

Brokerage, clearing and exchange expense

 

 

23,362

 

 

22,600

 

 

23,459

Gross profit

 

$

711,103

 

$

668,959

 

$

601,597

(7) Production-based payout is a financial measure calculated as advisory and commission expense plus (less) advisor deferred compensation expense. The payout rate is calculated by dividing the production-based payout by total advisory and commission revenue. Below is a reconciliation of the Company’s advisory and commission expense to the production-based payout and a calculation of the payout rate for the periods presented (in thousands, except payout rate):       

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Advisory and commission expense

 

$

1,304,422

 

 

$

1,374,134

 

 

$

1,273,202

 

Plus (Less): Advisor deferred compensation expense

 

 

65,624

 

 

 

31,564

 

 

 

(25,881

)

Production-based payout

 

$

1,370,046

 

 

$

1,405,698

 

 

$

1,247,321

 

 

 

 

 

 

 

 

Advisory and commission revenue

 

$

1,575,227

 

 

$

1,632,622

 

 

$

1,444,546

 

 

 

 

 

 

 

 

Payout rate

 

 

86.97

%

 

 

86.10

%

 

 

86.35

%

(8) Consists of revenue from advisors' clients' cash balances in insured bank sweep accounts, money market sweep accounts and interest income on cash that has been segregated under federal or other regulations for the benefit of clients. Interest income on cash segregated under federal or other regulations is classified within Interest income in the condensed consolidated statements of income.

(9) Consists of revenue from the Company's sponsorship programs with financial product manufacturers and omnibus processing and networking services and revenue from purchased money market funds but does not include fees from client cash programs. Other asset-based revenue is a component of asset-based revenue and is derived from the Company's condensed consolidated statements of income.

(10) Interest income and other, net is a financial measure calculated as interest income plus (less) other revenue, plus (less) advisor deferred compensation expense, less interest income on cash segregated under federal or other regulations. Below is a reconciliation of interest income and other, net to the Company’s interest income and other revenue for the periods presented (in thousands):       

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Interest income

 

$

10,121

 

 

$

7,745

 

 

$

6,914

 

(Less) Plus: Other revenue

 

 

(67,276

)

 

 

(30,613

)

 

 

30,078

 

Plus (Less): Advisor deferred compensation expense

 

 

65,624

 

 

 

31,564

 

 

 

(25,881

)

(Less): Interest income on cash segregated under federal or other regulations

 

 

(1,111

)

 

 

(311

)

 

 

(300

)

Interest income and other, net

 

$

7,358

 

 

$

8,385

 

 

$

10,811

 

(11) Core G&A is a non-GAAP financial measure. Please see a description of core G&A under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a reconciliation of the Company's total expense to core G&A for the periods presented (in thousands):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Core G&A Reconciliation

 

 

 

 

 

 

Total expense

 

$

1,826,566

 

$

1,892,314

 

$

1,736,609

Advisory and commission

 

 

1,304,422

 

 

1,374,134

 

 

1,273,202

Depreciation and amortization

 

 

48,453

 

 

45,454

 

 

36,704

Interest expense on borrowings

 

 

28,755

 

 

27,211

 

 

25,171

Brokerage, clearing and exchange

 

 

23,362

 

 

22,600

 

 

23,459

Amortization of other intangibles

 

 

21,168

 

 

21,196

 

 

19,925

Total G&A

 

 

400,406

 

 

401,719

 

 

358,148

Promotional (ongoing)(12)(13)

 

 

83,791

 

 

87,411

 

 

64,135

Employee share-based compensation

 

 

13,664

 

 

12,755

 

 

11,136

Acquisition costs(13)

 

 

8,909

 

 

13,323

 

 

23,782

Regulatory charges

 

 

8,069

 

 

7,323

 

 

7,416

Core G&A

 

$

285,973

 

$

280,907

 

$

251,679

(12) Promotional (ongoing) for the three months ended June 30, 2022 and March 31, 2022 includes $5.8 million and $2.3 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the condensed consolidated statements of income and excludes $1.9 million of expenses incurred as a result of acquisitions during the three months ended March 31, 2022, which are included in the Acquisition costs line item.

(13) Acquisition costs include the costs to setup, onboard and integrate acquired entities. The below table summarizes the primary components of acquisition costs for the periods presented (in thousands):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Acquisition costs

 

 

 

 

 

 

Compensation and benefits

 

$

6,661

 

$

5,651

 

$

13,873

Professional services

 

 

1,898

 

 

5,558

 

 

6,277

Promotional(12)

 

 

31

 

 

1,904

 

 

214

Other

 

 

319

 

 

210

 

 

3,418

Acquisition costs

 

$

8,909

 

$

13,323

 

$

23,782

(14) EBITDA is a non-GAAP financial measure. Please see a description of EBITDA under the "Non-GAAP Financial Measures" section of this release for additional information. Below is a reconciliation of EBITDA to the Company's net income for the periods presented (in thousands):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

EBITDA Reconciliation

 

 

 

 

 

 

Net income

 

$

160,545

 

$

133,744

 

$

119,101

Interest expense on borrowings

 

 

28,755

 

 

27,211

 

 

25,171

Provision for income taxes

 

 

51,776

 

 

39,635

 

 

42,548

Depreciation and amortization

 

 

48,453

 

 

45,454

 

 

36,704

Amortization of other intangibles

 

 

21,168

 

 

21,196

 

 

19,925

EBITDA

 

$

310,697

 

$

267,240

 

$

243,449

(15) Adjusted net income and EPS prior to amortization of intangible assets and acquisition costs are non-GAAP financial measures. Please see a description of adjusted net income and EPS prior to amortization of intangible assets and acquisition costs under the “Non-GAAP Financial Measures” section of this release for additional information. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and EPS prior to amortization of intangible assets and acquisition costs (in thousands, except per share data):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

 

 

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income / earnings per diluted share

 

$

160,545

 

$

1.97

 

 

$

133,744

 

$

1.64

 

 

$

119,101

 

$

1.46

 

Amortization of other intangibles

 

 

21,168

 

 

0.26

 

 

 

21,196

 

 

0.26

 

 

 

19,925

 

 

0.24

 

Acquisition costs

 

 

8,909

 

 

0.11

 

 

 

13,323

 

 

0.16

 

 

 

23,782

 

 

0.29

 

Tax benefit

 

 

(7,880

)

 

(0.10

)

 

 

(9,078

)

 

(0.11

)

 

 

(11,700

)

 

(0.14

)

Adjusted net income / EPS prior to amortization of intangible assets and acquisition costs

 

$

182,742

 

$

2.24

 

 

$

159,185

 

 

1.95

 

 

$

151,108

 

$

1.85

 

Diluted share count

 

 

81,410

 

 

 

 

81,572

 

 

 

 

81,728

 

 

(16) Consists of total advisory assets under custody at the Company's broker-dealer subsidiary, LPL Financial, and Waddell & Reed, LLC. As of June 30, 2022, there were no advisory assets under custody at Waddell & Reed, LLC.

(17) Consists of total brokerage assets under custody at the Company's broker-dealer subsidiary, LPL Financial, and Waddell & Reed, LLC. As of June 30, 2022, there were no brokerage assets under custody at Waddell & Reed, LLC.

(18) Consists of total assets on LPL Financial's corporate advisory platform serviced by investment advisor representatives of LPL Financial or Allen & Company of Florida, LLC.

(19) Consists of total assets on LPL Financial's independent RIA advisory platform serviced by investment advisor representatives of separate registered investment advisor firms rather than of LPL Financial.

(20) Consists of advisory assets in LPL Financial’s Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.

(21) Consists of total client deposits into advisory accounts less total client withdrawals from advisory accounts, plus dividends, plus interest, minus advisory fees. The Company considers conversions from and to brokerage accounts as deposits and withdrawals, respectively.

(22) Consists of total client deposits into brokerage accounts, less total client withdrawals from brokerage accounts, plus dividends, plus interest. The Company considers conversions from and to advisory accounts as deposits and withdrawals, respectively.

(23) Prior to Q4 2021, net new assets and net new assets growth rates do not include the addition of Waddell & Reed, LLC.

(24) Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.

(25) Calculated as annualized current period organic net new assets divided by preceding period assets in their respective categories of advisory assets or total advisory and brokerage assets.

(26) Consists of total client deposits into advisory accounts on LPL Financial's corporate advisory platform less total client withdrawals from advisory accounts on its corporate advisory platform, plus dividends, plus interest, minus advisory fees.

(27) Consists of total client deposits into advisory accounts on LPL Financial's independent RIA advisory platform less total client withdrawals from advisory accounts on its independent RIA advisory platform, plus dividends, plus interest, minus advisory fees.

(28) Consists of total client deposits into centrally managed assets accounts less total client withdrawals from centrally managed assets accounts, plus dividends, plus interest, minus advisory fees.

(29) During the second quarter of 2022, the Company updated its definition of client cash balances to include client cash accounts and exclude purchased money market funds. Client cash accounts include cash that clients have deposited with LPL Financial that is included in Client payables in the condensed consolidated balance sheets. Prior period disclosures have been updated to reflect this change as applicable. The following table presents the Company's purchased money market funds for the periods presented (in billions):

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

Purchased money market funds

 

$

1.9

 

$

1.6

 

$

1.7

(30) Calculated by dividing revenue for the period by the average balance during the period.

(31) Calculated by dividing interest income on cash held in client accounts that has been segregated under federal or other regulations for the period by the average client cash account balance, excluding cash held in client cash accounts that has been used to fund margin lending, during the period.

(32) Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.

(33) EBITDA and Credit Agreement EBITDA are non-GAAP financial measures. Please see a description of EBITDA and Credit Agreement EBITDA under the “Non-GAAP Financial Measures” section of this release for additional information. Under the Credit Agreement, management calculates Credit Agreement EBITDA for a trailing twelve month period at the end of each fiscal quarter, and in doing so may make further adjustments to prior quarters. Below are reconciliations of trailing twelve month EBITDA and Credit Agreement EBITDA to net income for the periods presented (in thousands):

 

 

Q2 2022

 

Q1 2022

 

Q4 2021

EBITDA and Credit Agreement EBITDA Reconciliations

 

 

 

 

 

 

Net income

 

$

505,434

 

$

463,990

 

$

459,866

Interest expense on borrowings

 

 

110,150

 

 

106,566

 

 

104,414

Provision for income taxes

 

 

154,804

 

 

145,576

 

 

141,463

Depreciation and amortization

 

 

173,131

 

 

161,382

 

 

151,428

Amortization of other intangibles

 

 

84,268

 

 

83,025

 

 

79,260

EBITDA

 

$

1,027,787

 

$

960,539

 

$

936,431

Credit Agreement Adjustments:

 

 

 

 

 

 

Acquisition costs and other

 

$

86,944

 

$

101,215

 

$

92,142

Employee share-based compensation expense

 

 

45,771

 

 

43,243

 

$

41,844

M&A accretion(41)

 

 

32,103

 

 

40,372

 

 

53,550

Advisor share-based compensation expense

 

 

2,339

 

 

2,293

 

 

2,324

Loss on extinguishment of debt

 

 

 

 

 

 

24,400

Credit Agreement EBITDA

 

$

1,194,944

 

$

1,147,662

 

$

1,150,691

(34) Calculated based on the average advisor count from the current period and prior periods.

(35) Calculated based on the end-of-period total advisory and brokerage assets divided by end-of-period advisor count.

(36) Represents amortization expense on forgivable loans for transition assistance to advisors and financial institutions.

(37) Refers to active subscriptions related to professional services offerings (Business Strategy Services (formerly CFO Solutions), Marketing Solutions, and Admin Solutions) and business optimizer offerings (M&A Solutions, Digital Office, Resilience Plans, and Assurance Plans), as well as planning and advice services (Paraplanning) for which subscriptions are the number of advisors using the service.

(38) Reflects retention of total advisory and brokerage assets, calculated by deducting quarterly annualized attrition from total advisory and brokerage assets, over the prior-quarter total advisory and brokerage assets.

(39) Capital expenditures represent cash payments for property and equipment during the period.

(40) Total capital returned per share equals the amount of capital allocated for share repurchases and cash dividends divided by the diluted weighted-average shares outstanding.

(41) M&A accretion is an adjustment to reflect the annualized expected run rate EBITDA of an acquisition as permitted by the Credit Agreement for up to eight fiscal quarters following the close of the transaction.