LPLA - LPL Financial Announces Second Quarter 2024 Results

Key Financial Results

• Net Income was $244 million, translating to diluted earnings per share ("EPS") of $ 3.23, down 12% from a year ago
• Adjusted EPS* decreased 2% year-over-year to $3.88
  • Gross profit* increased 9% year-over-year to $1,079 million
  • Core G&A* increased 10% year-over-year to $371 million
  • Adjusted EBITDA* increased 2% year-over-year to $533 million
    

Key Business Results

• Total advisory and brokerage assets increased 21% year-over-year to $1.5 trillion
  • Advisory assets increased 25% year-over-year to $829 billion
  • Advisory assets as a percentage of total assets increased to 55.4%, up from 53.3% a year ago
• Total organic net new assets were $29 billion , representing 8% annualized growth
  • Organic net new advisory assets were $27 billion, representing 13% annualized growth
• Recruited assets ⁽¹⁾ were $24 billion
  • Recruited assets over the trailing twelve months were $93 billion, up approximately 55% from a year ago
• Advisor count ⁽²⁾ was 23,462 , up 578 sequentially and 1,520 year-over-year
• Total client cash balances were $ 44 billion , a decrease of $ 2 billion sequentially and $6 billion y ear-over-year
  • Client cash balances as a percentage of total assets were 2.9%, down from 3.2% in the prior quarter and 4.0% a year ago

Key Capital and Liquidity Results

• Corporate cash ^{( 3 )} was $684 million
• Leverage ratio ⁽⁴⁾ was 1.68x
• Dividends paid wer e $22.4 million
  

Key Updates

• Completed debt issuance: Issued $1 billion of senior unsecured notes, including $500 million of 5.700% notes due 2027 and $500 million of 6.000% notes due 2034. Net proceeds will be used for general corporate purposes, including financing the acquisition of Atria Wealth Solutions, Inc. ("Atria").
• Large OSJs : Announced a planned separation from two misaligned large OSJs on our platform that collectively have ~$20 billion of client assets, which began to off-board in July.

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

SAN DIEGO, July 25, 2024 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today announced results for its second quarter ended June 30, 2024, reporting net income of $244 million, or $3.23 per share. This compares with $286 million, or $3.65 per share, in the second quarter of 2023 and $289 million, or $3.83 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 care of their clients," said Dan Arnold, President and CEO. "This focus led to another quarter of solid business and financial results, reinforcing our momentum and the building appeal of our model. As we look ahead, we remain committed to delivering an industry-leading value proposition to advisors, as we strive to become the leader across the advisor-mediated marketplace."

"We delivered another quarter of solid results," said Matt Audette, CFO and Head of Business Operations. "We recorded strong organic growth across our affiliation models, closed the acquisition of Crown Capital, continued to build momentum in our Liquidity & Succession solution, and are preparing to onboard the wealth management businesses of Prudential Financial and Wintrust Financial. 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 $0.30 per share dividend to be paid on August 23, 2024 to all stockholders of record as of August 9, 2024.

Conference Call and Additional Information

The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Thursday, July 25, 2024. The conference call will be available for replay at investor.lpl.com/events .

Contacts

Investor Relations
investor.relations@lplfinancial.com

Media Relations
media.relations@lplfinancial.com

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 Financial, Inc. ("Prudential") and Wintrust Financial Corporation ("Wintrust");
• the amount and timing of offboarding of client assets associated with the planned separation of misaligned large OSJs;
• 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 client cash programs; 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 July 25, 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 agreements with Prudential and Wintrust, or the Company's purchase agreement with Atria, 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;
• the negotiation of definitive terms of separation with misaligned large OSJs;
• 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 market 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;
• 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 settling and remediating issues related to regulatory matters or legal proceedings, including actual costs of reimbursing customers for losses in excess of our reserves;
• the SEC's approval of the settlement agreement in connection with the settlement of the industry-wide civil investigation into compliance with records preservation requirements for business-related electronic communications stored on personal devices applicable to broker-dealer firms and investment advisors;
• 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 facility and LPL Financial's committed revolving credit facility, 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 Wintrust 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.

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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.

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(a) Secured borrowing capacity of $2.25 billion at LPL Holdings, Inc. (the "Parent").
(b) The SOFR rate option is a one-month SOFR rate and subject to an interest rate floor of 0 bps.

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