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February 6, 2013

LPL Financial Announces Fourth Quarter and 2012 Year-End Financial Results

- Generated Record Revenue of $3.7 Billion and Added 505 Net New Advisors in 2012 -
- Service Value Commitment Accelerated to Improve Advisor Experience and Gain Operating Efficiencies -
- Quarterly Dividend Approved, Raised 12.5% to $0.135 Per Share -

BOSTON, Feb. 6, 2013 /PRNewswire/ -- LPL Financial Holdings Inc. (NASDAQ: LPLA) (the "Company"), parent company of LPL Financial LLC ("LPL Financial"), today announced net revenue of $944.2 million for the fourth quarter of 2012, up 13.9% compared to fourth quarter 2011 net revenue of $828.7 million. Net revenue for the year ended December 31, 2012 was $3.7 billion, an increase of 5.2% over the comparable year of 2011.


Three Months Ended December 31,



Year Ended December 31,



2012


2011


%
Change


2012


2011


%
Change

Financial Highlights (unaudited)

(dollars in thousands, except per share data )


GAAP Measures:












Net Revenue

$

944,244



$

828,653



13.9

%


$

3,661,088



$

3,479,375



5.2

%

Net Income

$

36,938



$

39,448



(6.4)

%


$

151,918



$

170,382



(10.8)

%

Earnings Per Share — diluted

$

0.34



$

0.35



(2.9)

%


$

1.37



$

1.50



(8.7)

%

Non-GAAP Measures:












Adjusted Earnings

$

53,858



$

48,838



10.3

%


$

225,029



$

218,585



2.9

%

Adjusted Earnings Per Share

$

0.50



$

0.44



13.6

%


$

2.03



$

1.95



4.1

%

Adjusted EBITDA

$

109,948



$

100,796



9.1

%


$

454,482



$

459,720



(1.1)

%

____________________
A full reconciliation of GAAP measures to non-GAAP measures, along with an explanation of these metrics, follows later in this release.

"The uncertain economic and political environment in 2012 led individual investors to take a cautious approach to engaging in the markets.  As a result advisor productivity levels remained flat for the year and we generated moderate revenue growth of 5%," stated Mark Casady, chairman and CEO of LPL Financial. "However, through our ongoing investment in our business we experienced strong growth in our fundamental business drivers in 2012 by leading the industry in attracting new advisors, producing excellent retention, and delivering additional capabilities to our advisors.  In the fourth quarter, we experienced improved advisor activity, as LPL Financial advisors continued to build client relationships through increased financial planning sessions and the addition of new accounts and cash deposits. These activities are the seeds for future growth."

Mr. Casady continued: "We are excited to share our plan for the next phase of our Service Value Commitment, which will drive efficiencies in our operating model and ultimately enhance advisor productivity. We plan to reposition our labor force by transitioning select non-advisor-facing functions to a leading global services provider, enabling us to focus on our core strengths that make us distinctive. This effort is not simply a cost-reduction exercise, but an initiative to implement changes to our foundational technology, enhance the quality of our work and improve the speed of our delivery." Mr. Casady added: "Our Service Value Commitment will further our efforts to make more targeted investments in people and technology in areas that support our growth and create value for shareholders."

Dan Arnold, chief financial officer of LPL Financial noted: "Although we are focused on what lies ahead, we are proud of our accomplishments in 2012. We continued to deliver value to our shareholders by expanding upon our market-leading position and generating strong free cash flow. We remained flexible in allocating our capital resources, as we invested $55 million in capital expenditures, paid $249 million in total dividends, repurchased $199 million in stock, and reduced debt by $15 million in 2012." Mr. Arnold concluded: "Looking forward to 2013, we remain committed to balancing investment in our business with increasing our efficiency to position LPL Financial for long-term growth."


As of December 31,



2012


2011



Change

Metric Highlights (unaudited)






Advisors(1)

13,352



12,847



3.9

%

Advisory and Brokerage Assets (billions)(2)

$

373.3



$

330.3



13.0

%

Advisory Assets Under Custody (billions)(3)

$

122.1



$

101.6



20.2

%

___________________

(1)

Advisors are defined as those independent financial advisors and financial advisors at financial institutions who are licensed to do  business with the Company's broker-dealer subsidiary.

(2)

Advisory and brokerage assets are comprised of assets that are custodied, networked, and non-networked and reflect market movement in addition to new assets, inclusive of new business development and net of attrition. 

(3)

Advisory assets under custody are components of advisory and brokerage assets. 

Financial Highlights

  • Rising Advisory and Brokerage Assets. Total advisory and brokerage assets ended at $373.3 billion as of December 31, 2012, up 13.0% compared to $330.3 billion as of December 31, 2011. Key drivers of this trend include:
    • Advisory assets in the Company's fee-based platforms were $122.1 billion at December 31, 2012, up 20.2% from $101.6 billion at December 31, 2011.
    • Net new advisory assets, which exclude market movement, were $2.7 billion for the three months ended December 31, 2012.


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