2018 annual shareholders meeting · the company utilized the non-gaap calculation of net i ncome...
TRANSCRIPT
February 16, 2018
TD Ameritrade Holding Corporation (Nasdaq: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corp. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
2018 Annual Shareholders Meeting
Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. In particular, any projections regarding our future revenues, expenses, earnings, capital expenditures, effective tax rates, client trading activity, accounts, stock price or any projections or expectations regarding the acquisition of Scottrade Financial Services, Inc., as well as the assumptions on which such expectations are based, are forward-looking statements. These statements reflect only our current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results of performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: economic, social and political conditions and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; difficulties and delays in integrating the Scottrade business or fully realizing cost savings and other benefits from the acquisition; business disruption following the Scottrade acquisition; disruptions due to Scottrade integration-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with other acquisitions; and the other risks and uncertainties set forth in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 17, 2017 and our latest Quarterly Report on Form 10-Q filed thereafter and in other filings with the SEC. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
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Use of Non-GAAP Financial Measures The term “GAAP” refers to U.S. generally accepted accounting principles. The Company utilized the non-GAAP calculation of net income and earnings per share (EPS) excluding amortization of intangible assets and acquisition-related expenses, as an additional measure to aid in understanding and analyzing the Company’s financial results. Specifically, the Company believes that the non-GAAP measure provides useful information by excluding certain items that may not be indicative of the Company’s core operating results and business outlook. The Company believes this non-GAAP measure may be useful in evaluating the operating performance of the business and facilitating a meaningful comparison of the Company’s results in the current period to those in the prior and future periods. Reference to this non-GAAP financial measure should not be considered as a substitute for results that are presented in a manner consistent with GAAP. This non-GAAP measure is provided to enhance investors’ overall understanding of the Company’s financial performance.
*Certain totals may not foot due to rounding. **Changes based on rounding numbers to the nearest $ millions.
***See Appendix for footnotes descriptions. 3
Chairman of the Board
JOE MOGLIA 4
BOARD OF DIRECTORS
In Memory
Dan Cook 1935-2018
• 40 years with Goldman Sachs • Board of Directors, 2005-2016 • Chairman, OID • HR/Comp Committee • Corporate Governance Committee
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BOARD OF DIRECTORS
Up for Election 2018
Brian Levitt • Since 2016 • Chairman of the Board,
TD Bank Group • 40+ year legal career • TD designee • HR/Comp Committee
Karen Maidment • Since 2010 • 30+ years in financial
services • TD Bank designee • Audit (Chr.) and Risk
Committees
Mark Mitchell • Since 1996 • Univ. Chicago and Harvard • Fmr. Sr. Financial Economist for SEC • Independent director • Risk (Chr.), Audit, HR/Comp and OID
Committees
Tim Hockey • President and CEO • Director since 2016 • 33+ years in retail banking
and wealth management
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General Counsel
Ellen Koplow 6
ANNUAL MEETING
Election of four nominees recommended by the board of directors to the board
Advisory vote on executive compensation
Ratification of the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for the fiscal year ending Sept. 30, 2018
Business to be Considered
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BOARD OF DIRECTORS
Re-elected 2018
Brian Levitt Karen Maidment Mark Mitchell Tim Hockey
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BOARD OF DIRECTORS
2018
Ann Hailey Since 2016
Bharat Masrani Vice Chairman
Since 2013
Larry Bettino Since 2014
Irene Miller Since 2015
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BOARD OF DIRECTORS
2018
Bill Prezzano Since 2006
Joe Moglia CEO 2001-2008
Chairman Since 2009
Allan Tessler Since 2006
Todd Ricketts Since 2011
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Bull Market Dow Jones Industrial Average
11
23 years 1,000 to 5,000
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
Bull Market Dow Jones Industrial Average
11
23 years 1,000 to 5,000
4 years 10,000
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
Bull Market Dow Jones Industrial Average
11
23 years 1,000 to 5,000
14 years 15,000
4 years 10,000
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
Bull Market Dow Jones Industrial Average
11
4 years 20,000
23 years 1,000 to 5,000
14 years 15,000
4 years 10,000
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
Bull Market Dow Jones Industrial Average
11
4 years 20,000
23 years 1,000 to 5,000
14 years 15,000
4 years 10,000
12 months 25,000
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
Bull Market Dow Jones Industrial Average
12
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
23 years 1,000 to 5,000
400%
Bull Market Dow Jones Industrial Average
12
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
4 years 10,000
100%
23 years 1,000 to 5,000
400%
Bull Market Dow Jones Industrial Average
12
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
4 years 10,000
100%
23 years 1,000 to 5,000
400% 14 years
15,000
50%
Bull Market Dow Jones Industrial Average
12
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
4 years 10,000
100%
23 years 1,000 to 5,000
400% 14 years
15,000
50%
4 years 20,000
33%
Bull Market Dow Jones Industrial Average
12
30,000
25,000
20,000
15,000
10,000
5,000
1972 1995 1999 2013 2017 2018
12 months 25,000
25%
4 years 10,000
100%
23 years 1,000 to 5,000
400% 14 years
15,000
50%
4 years 20,000
33%
2017 IN REVIEW
Year of Headlines 1. New Administration
2. Trade Agreements
3. Climate change/Paris Accord
4. Election investigation
5. Terrorist attacks at home/abroad
6. Hurricane devastation
7. Congress takes on healthcare
8. Tax reform passes
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2017 IN REVIEW
And yet volatility remained low
208 239
165 142 147
83 63
110 111
19 0
50
100
150
200
250
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Days with S&P Volatility > 1%
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2018 ENVIRONMENT
New year brings volatility back
0
2
4
6
8
10
Jan '18 Feb '18 MTD
Days with S&P Volatility > 1%
15
2/21 trading days
8/9 trading days
2018 ENVIRONMENT
1. Well-positioned for further rate hikes, increased investor engagement
2. Investments in distribution and scale (Scottrade)
3. Increasing operational efficiency
4. Technology and innovation driving future opportunities
Trends provide tailwinds for future growth
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Chief Executive Officer
TIM HOCKEY 17
Welcome to Southlake
OUR GOAL
Win on the client experience.
2017 STRATEGY
Delivering on our goals
Enhance our scale
Simplify how we operate
Increase our speed to market
Encourage innovation
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2017 STRATEGY
Delivering on our goals
Enhance our scale
Simplify how we operate
Increase our speed to market
Encourage innovation
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2017 STRATEGY
Integrating Scottrade
End Client Assets(2)
End Funded Accounts(1)
Full Year DARTS(3) Pro-forma
End Client Cash
11.0M 10.1M
$1,119B $944B
658K 600K
$149.2B $149.0B
+0.9M
+$175B
+58K
$0.2B
Variance Combined FY17
Pro-forma
Combined FY16 (10/24/16 announcement)
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2017 STRATEGY
Enhanced size and scale
87% of clients within 25 miles
of a branch
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2017 STRATEGY
Delivering a successful integration
Branch mapping, talent decisions
Opening St. Louis service center
Transitioning new account flows
Managing Client and Associate experiences
Executing clearing conversion
Phasing out Scottrade infrastructure
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The Way Forward
WE EXIST:
to transform lives and investing for the better.
THE WAY FORWARD
Turning our Funnel into a Pipe
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CLIENTS & ASSOCIATES
CLIENTS & ASSOCIATES
THE WAY FORWARD
Software deliverables by Quarter 4,000
3,000
2,000
1,000
0 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17
3x THROUGHPUT AT HALF THE COST (Q4’16 vs. Q4’17)
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High Tech, Right Touch
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TECH FOR RETAIL:
“Robo” advisor(4)
Digital guidance app
Earnings analysis tool
ETF Market Center
TD Ameritrade Network
Automated deposits & transfers
Enhanced, free education
TECH FOR ADVISORS:
VeoOne
Model Market Center
ETF Market Center
Automated account opening & money movement
Automated service solutions
NEWER TECH ADDITIONS:
Alexa “skill”
First chat bot with trading and education, available via Facebook Messenger and Twitter
First 24/5 trading
Blockchain pilots
HIGH TECH, RIGHT TOUCH
Associate Engagement
Sustainable Engagement
87%
RECOGNITION
“Better Begins with Me” 800 peer nominations
DEVELOPMENT
Financial Consultant Development Academy Second Class
DIVERSITY & INCLUSION
“Best Places to Work” Corporate Equality Index
#1
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19k HOURS SERVED IN OUR COMMUNITIES
9 HOMES BUILT FOR HABITAT FOR HUMANITY
HIGH TECH, RIGHT TOUCH
Community Giving
$1.2M RAISED FOR AMERICAN RED CROSS RELIEF EFFORTS
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Delivering Results
511,000 AVERAGE CLIENT TRADES PER DAY
(UP 10% YOY)
DELIVERING RESULTS
Fiscal 2017
$3.7B NET REVENUES
(UP 10% YOY)
$1.64
GAAP EARNINGS PER DILUTED SHARE
(UP 4% YOY)
$1.84 NON-GAAP EARNINGS PER DILUTED SHARE(5)
(UP 10% YOY)
$80B NET NEW CLIENT
ASSETS(6) (UP 33% YOY)
$379M PAID IN CASH
DIVIDENDS
$1.1T TOTAL CLIENT
ASSETS(2) (UP 45% YOY)
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726,000 AVERAGE CLIENT TRADES PER DAY
(UP 49% YOY)
DELIVERING RESULTS
Q1 Fiscal 2018
$1.3B NET REVENUES
(UP 46% YOY)
$0.52 GAAP EARNINGS PER
DILUTED SHARE (UP 27% YOY)
$0.80 NON-GAAP EARNINGS PER DILUTED SHARE(5)
(UP 86% YOY)
$26.5B NET NEW CLIENT
ASSETS(6) (UP 42% YOY)
$1.2T TOTAL CLIENT
ASSETS(2) (UP 48% YOY)
$119M PAID IN CASH
DIVIDENDS
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DELIVERING RESULTS
Shareholder Return (9/30/16 through 1/31/18)
-10%
0%
10%
20%
30%
40%
50%
60%
70%
AMTD (+62%)
S&P 500 (+34%)
XBD (+64%)
S&P 500 Financials (+57%)
38
DELIVERING RESULTS
Looking Ahead
1 2 3
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WE EXIST
to transform lives and investing for the better.
Questions
Appendix
APPENDIX FOOTNOTES
1) End funded accounts are all open client accounts with a total liquidation value greater than zero.
2) End client assets are the total value of cash and securities in brokerage accounts.
3) DARTS are the total trades divided by the number of trading days in the period.
4) Essential Portfolios was noted as having the best one-year taxable return. Research provided by Condor Capital (www.condorcapital.com) in “The Robo Report,” fourth quarter 2017 edition. More information can be found by subscription at https://theroboreport.com.
5) Please see our reconciliation of non-GAAP financial measures on the following slide.
6) Net new assets (NNA) consist of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows.
APPENDIX NON-GAAP RECONCILIATION
Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Amount Diluted EPSNet income and diluted EPS - GAAP 297$ 0.52$ 216$ 0.41$ 872$ 1.64$ 842$ 1.58$ Non-GAAP adjustments:
Amortization of acquired intangible assets 38 0.07 19 0.03 79 0.15 86 0.16 Acquisition-related expenses 179 0.31 3 0.01 88 0.17 6 0.01 Income tax effect of above adjustments (59) (0.10) (8) (0.02) (63) (0.12) (35) (0.07)
Non-GAAP net income and non-GAAP diluted EPS 455$ 0.80$ 230$ 0.43$ 976$ 1.84$ 899$ 1.68$
Note: The term "GAAP" in the following explanations refers to generally accepted accounting principles in the United States.
(1) Non-GAAP net income and non-GAAP diluted earnings per share (EPS) are non-GAAP financial measures as defined by SEC Regulation G. We define non-GAAP net income as net income adjusted to remove the after-tax effect of amortization of acquired intangible assets and acquisition-related expenses. We consider non-GAAP net income and non-GAAP diluted EPS as important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of our underlying business performance. Acquisition-related expenses are excluded as these costs are directly related to our acquisition of Scottrade Financial Services, Inc. and are not representative of the costs of running the Company’s on-going business. Non-GAAP net income and non-GAAP diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net income and diluted EPS.
Non-GAAP Net Income and Non-GAAP Diluted EPS (1)Sept. 30, 2016
RECONCILIATION OF NON-GAAP FINANCIAL MEASURESDollars in millions, except per share amounts(Unaudited)
TD AMERITRADE HOLDING CORPORATION
Dec. 31, 2017 Sept. 30, 2017Dec. 31, 2016
Fiscal Year EndedQuarter Ended
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