TD Ameritrade Holding Corporation (AMTD)

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TD Ameritrade Holding (AMTD)

Q4 2012 Earnings Call

November 05, 2012 9:30 am ET


Jeffrey Goeser - Director of Finance & Investor Relations

Fredric J. Tomczyk - Chief Executive Officer, President, Director and Member of Non-Td Directors Committee

William J. Gerber - Chief Financial Officer, Principal Accounting Officer and Executive Vice President


Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division

Roger A. Freeman - Barclays Capital, Research Division

Howard Chen - Crédit Suisse AG, Research Division

Brian Bedell - ISI Group Inc., Research Division

Christopher Harris - Wells Fargo Securities, LLC, Research Division

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Alexander Blostein - Goldman Sachs Group Inc., Research Division

William R. Katz - Citigroup Inc, Research Division



Good day, everyone, and welcome to the TD Ameritrade Holding Corporation September Quarter 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'd like to turn the call over to Jeff Goeser, Director of Finance and Investor Relations.

Jeffrey Goeser

Good morning, everyone, and welcome to the TD Ameritrade September Quarter and Fiscal 2012 Year-End Earnings Call. In a minute, we'll be hearing from Fred and Bill, but first, I'd like to refer you to our press release, slide presentation and fiscal 2013 outlook statement published last Monday. They can be found on

I'd also like to refer you to our Safe Harbor statement, which is on Slide 2 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. Reconciliation of these financial measures to the most comparable GAAP financial measures are in the slide presentation. We would also like you to review our description of risk factors contained in our most recent financial reports, Form 10-Q and 10-K. As usual, the call is intended for investors and analysts, and may not be reproduced in the media in whole or in part without prior consent of TD Ameritrade. We have a large number of covering analysts. [Operator Instructions]

With that, we have Fred Tomczyk, CEO; and Bill Gerber, CFO, here to review our results and major accomplishments. Fred?

Fredric J. Tomczyk

Thanks, Jeff, and good morning, everyone, and welcome to our fourth quarter earnings call. We're getting together a little later this quarter as a result of Hurricane Sandy. And I know that many of you are in the affected areas and we want you to know that our thoughts and well wishes are with you and your families. The unprecedented flooding, power outages and damage have left many of our associates, clients, families and their neighbors in need of ongoing assistance. So I'm pleased to report that we will donate $250,000 to the American Red Cross, and expand our annual match program to raise up to an additional $250,000 to help with relief efforts. We also closed 2 corporate offices and 30 branches heading into the storm, putting the health and safety of our associates first.

We have redundancies throughout the country, and we were able to transition responsibilities as needed. We are designed to maintain seamless operational capabilities even if we completely lose one of our servers or operation centers on short notice. So it was business as usual for us, although, most products were not available for trading while the markets were closed. Call volumes were light as the storm hit parts of the country that typically generate 1/4 to 1/3 of our trading volume. We made the decision to release our official numbers at the normal time, then postpone this call to give you time to tend to what's most important. As a result, we don't plan to spend too much time today in the numbers themselves, instead, we'll focus more on strategy and where we're going in 2013.

You can see the fourth quarter highlights on Slide 3, where we delivered $0.26 per share in earnings, which we feel good about in light of the ongoing challenges in the market during the quarter. On Slide 4, you can see the financial highlights of our fiscal year, which include $1.06 in earnings per share.

In summary, we continue to deliver on our strategy, our financial position remains strong, organic growth continues unabated, and we continue to make strategic investments to strengthen our company and our competitive position.

In each of the last 4 years, we've gathered assets at double-digit rates. No one else in the industry has done that. In 2008, we had $270 billion in client assets, and today, we're closing in on $500 billion. Derivatives have grown from approximately 10% of our trading volume in 2009, to close to 40% today. Our performance in asset gathering and trading position us well to fight through this challenging environment, and for when the environment improves. We have substantial long-term earning power. Our strategy has worked well and we believe it will continue to work well and you should expect the same from us in 2013.

Now let's take a closer look on how we delivered on our growth strategy with a look at asset gathering results and expectations on Slide #5.

In our fourth year of double-digit growth, we gathered, on average, $160 million in client assets each business day. We again had strong client service scores in both retail and institutional channels and as a result, client retention remains high. The $41 billion we gathered in 2012 is a credit to our teams working together to generate leads and deepen relationships with both new and existing clients.

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