lpla-20230427
4/27/20230001397911false00013979112023-04-272023-04-27



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2023
LPL Financial Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware001-3496320-3717839
(State or other jurisdictions of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)
4707 Executive Drive,
San Diego,
California
92121
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(800)877-7210
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - par value $0.001 per shareLPLAThe Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐





Item 2.02Results of Operations and Financial Condition.
On April 27, 2023, LPL Financial Holdings Inc. (collectively with its subsidiaries, the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2023. A copy of the press release is furnished with this Form 8-K and attached hereto as Exhibit 99.1.
Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits
99.1 
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

      LPL FINANCIAL HOLDINGS INC.
By:/s/ Matthew J. Audette
Name: Matthew J. Audette
Title: Chief Financial Officer


Dated: April 27, 2023

    


Document


https://cdn.kscope.io/0d8b8ff6c371637ea0db3e81e84ceff6-lpllogo541largenewnolinesa.jpg
For Immediate Release
LPL Financial Announces First Quarter 2023 Results

Key Financial Results
Net Income was $339 million, translating to diluted earnings per share ("EPS") of $4.24, up 159% from a year ago
Adjusted EPS* increased 130% year-over-year to $4.49
Gross profit* increased 52% year-over-year to $1,020 million
Core G&A* increased 16% year-over-year to $326 million
EBITDA* increased 111% year-over-year to $564 million

Key Business Results
Total advisory and brokerage assets increased 1% year-over-year to $1.18 trillion
Advisory assets decreased 1% year-over-year to $621 billion
Advisory assets as a percentage of total assets decreased to 52.8%, down from 53.7% a year ago
Total organic net new assets were $21 billion, representing 7.5% annualized growth
Organic net new advisory assets were $14 billion, representing 9% annualized growth
Organic net new brokerage assets were $7 billion, representing 5% annualized growth
Recruited assets(1) were $13 billion
Recruited assets over the trailing twelve months were $85 billion, up approximately 12% from a year ago
LPL Services Group had annualized revenue of $38 million in Q1, up 26% from a year ago
Services Group subscriptions were 4,944 at the end of Q1, up 1,415 year-over-year
Advisor count(2) was 21,521, up 246 sequentially and 1,430 year-over-year
Total client cash balances were $55 billion, a decrease of $10 billion sequentially and $7 billion year-over-year
Client cash balances as a percentage of total assets were 4.6%, down from 5.8% in the prior quarter and 5.3% a year ago

Key Capital and Liquidity Results
Corporate cash(3) was $234 million
Leverage ratio(4) was 1.34x
Share repurchases were $275 million and dividends paid of $24 million

Key Updates
BancWest Investment Services ("BWIS"): Following the close of BMO's acquisition of Bank of the West, BMO plans for BWIS to join LPL's Institution Services platform in the second half of 2023. BWIS supports ~85 financial advisors who collectively serve ~$7.8B of brokerage and advisory assets.**
Fixed Rate ICA Update: Added $3 billion of fixed rate ICA contracts, increasing fixed rate balances to ~55% of the ICA portfolio, which is within management's target range of 50 - 75%.
Debt Rating: S&P upgraded LPL to a rating of BBB- on April 5, 2023, establishing us as an investment grade credit with both of our rating agencies.

*See the Non-GAAP Financial Measures section and the endnotes to this release for further details about these non-GAAP financial measures.
**Estimates are based on prior business reported by BWIS, which has not been independently and fully verified by LPL Financial.
1


SAN DIEGO — April 27, 2023LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today announced results for its first quarter ended March 31, 2023, reporting net income of $339 million, or $4.24 per share. This compares with $134 million, or $1.64 per share, in the first quarter of 2022 and $319 million, or $3.95 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. “At the same time, we continued to invest in our model and thus enhance its appeal, which led to another quarter of solid business results and increased market share.”
“As we move into 2023, we remain focused on serving our advisors, growing our business, and delivering shareholder value,” said Matt Audette, CFO and Head of Business Operations. “In Q1, we continued to grow assets organically in both our traditional and new markets, closed two strategic acquisitions, continued our momentum with our liquidity & succession capability, and are preparing to onboard Commerce Bank and Bank of the West in the second half of the 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 $0.30 per share dividend to be paid on June 1, 2023 to all stockholders of record as of May 18, 2023.
Conference Call and Additional Information
The Company will hold a conference call to discuss its results at 5:00 p.m. ET on Thursday, April 27. The conference call will be accessible at investor.lpl.com/events, with a replay available until May 18.
Contacts
Investor Relations
investor.relations@lplfinancial.com
(617) 897-4574

Media Relations
media.relations@lplfinancial.com
(980) 321-1232
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(5), serving more than 21,000 financial advisors, including advisors at approximately 1,100 enterprises and at approximately 500 registered investment advisor ("RIA") firms nationwide. We are steadfast in our commitment to the advisor-mediated model and the belief that investors deserve access to personalized guidance from a financial advisor. We believe advisors should have the freedom to choose the business model, services and technology they need and to manage their client relationships. Simply put, we take care of our advisors, so they can take care of their clients.
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
This press release contains statements regarding:

the amount and timing of the onboarding of acquired or recruited brokerage and advisory assets;
the Company's future financial and operating results, growth, priorities and business strategies; 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



2


April 27, 2023 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:

difficulties and delays in onboarding the assets of acquired or recruited advisors;
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;
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 enterprises;
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; 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.
3


LPL Financial Holdings Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months EndedThree Months Ended
March 31,December 31,March 31,
20232022Change2022Change
REVENUE
Advisory$954,057 $902,440 %$1,047,097 (9 %)
Asset-based:
Client cash418,275 419,215 — %84,716 n/m
Other asset-based203,473 191,797 %211,685 (4 %)
Total asset-based621,748 611,012 %296,401 110 %
Commission:
Trailing317,653 311,194 %345,194 (8 %)
Sales-based286,072 271,089 %240,331 19 %
Total commission603,725 582,283 %585,525 %
Service and fee118,987 120,022 (1 %)112,812 %
Transaction48,935 46,790 %46,726 %
Interest income, net37,358 37,168 %7,745 n/m
Other33,022 33,472 (1 %)(30,613)n/m
Total revenue2,417,832 2,333,187 %2,065,693 17 %
EXPENSE
Advisory and commission1,370,634 1,341,743 %1,374,134 — %
Compensation and benefits233,533 223,952 %192,034 22 %
Promotional98,223 80,455 22 %87,002 13 %
Occupancy and equipment60,173 58,144 %51,112 18 %
Depreciation and amortization56,054 54,241 %45,454 23 %
Interest expense on borrowings39,184 37,082 %27,211 44 %
Brokerage, clearing and exchange26,126 19,251 36 %22,600 16 %
Amortization of other intangibles24,092 22,542 %21,196 14 %
Communications and data processing17,675 18,525 (5 %)15,127 17 %
Professional services14,220 19,336 (26 %)19,022 (25 %)
Other33,421 38,697 (14 %)37,422 (11 %)
Total expense1,973,335 1,913,968 %1,892,314 %
INCOME BEFORE PROVISION FOR INCOME TAXES444,497 419,219 %173,379 156 %
PROVISION FOR INCOME TAXES105,613 100,137 %39,635 166 %
NET INCOME$338,884 $319,082 %$133,744 153 %
EARNINGS PER SHARE
Earnings per share, basic$4.30 $4.01 %$1.67 157 %
Earnings per share, diluted$4.24 $3.95 %$1.64 159 %
Weighted-average shares outstanding, basic78,75079,483(1 %)79,976(2 %)
Weighted-average shares outstanding, diluted79,97480,875(1 %)81,572(2 %)
4


LPL Financial Holdings Inc.
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)
March 31, 2023December 31, 2022
ASSETS
Cash and equivalents$469,785 $847,519 
Cash and equivalents segregated under federal or other regulations1,807,283 2,199,362 
Restricted cash105,587 90,389 
Receivables from clients, net 582,055 561,569 
Receivables from brokers, dealers and clearing organizations51,596 56,276 
Advisor loans, net1,154,298 1,123,004 
Other receivables, net695,088 677,766 
Investment securities ($36,683 and $36,758 at fair value at March 31, 2023 and December 31, 2022, respectively)50,807 52,610 
Property and equipment, net816,496 780,357 
Goodwill1,765,890 1,642,468 
Other intangibles, net580,063 427,676 
Other assets1,088,857 1,023,230 
Total assets$9,167,805 $9,482,226 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Client payables$2,132,621 $2,694,929 
Payables to brokers, dealers and clearing organizations112,706 147,752 
Accrued advisory and commission expenses payable195,607 203,292 
Corporate debt and other borrowings, net2,850,791 2,717,444 
Accounts payable and accrued liabilities397,735 448,630 
Other liabilities 1,285,412 1,102,627 
Total liabilities6,974,872 7,314,674 
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,085,949 shares and 129,655,843 shares issued at March 31, 2023 and December 31, 2022, respectively
130 130 
Additional paid-in capital1,933,988 1,912,886 
Treasury stock, at cost — 51,748,968 shares and 50,407,844 shares at March 31, 2023 and December 31, 2022, respectively
(3,159,714)(2,846,536)
Retained earnings3,418,529 3,101,072 
Total stockholders’ equity2,192,933 2,167,552 
Total liabilities and stockholders’ equity$9,167,805 $9,482,226 

5


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
Q1 2023Q4 2022ChangeQ1 2022Change
Gross Profit(6)
Advisory$954,057 $902,440 %$1,047,097 (9 %)
Trailing commissions317,653 311,194 %345,194 (8 %)
Sales-based commissions286,072 271,089 %240,331 19 %
Advisory fees and commissions1,557,782 1,484,723 %1,632,622 (5 %)
Production-based payout(7)
(1,342,668)(1,313,026)%(1,405,698)(4 %)
Advisory fees and commissions, net of payout215,114 171,697 25 %226,924 (5 %)
Client cash(8)
438,612 439,181 — %84,721 n/m
Other asset-based(9)
203,473 191,797 %211,991 (4 %)
Service and fee118,987 120,022 (1 %)112,812 %
Transaction48,935 46,790 %46,726 %
Interest income and other, net(10)
20,960 21,957 (5 %)8,385 150 %
Total net advisory fees and commissions and attachment revenue1,046,081 991,444 %691,559 51 %
Brokerage, clearing and exchange expense(26,126)(19,251)36 %(22,600)16 %
Gross Profit(6)
1,019,955 972,193 %668,959 52 %
G&A Expense
Core G&A(11)
326,177 327,040 — %280,907 16 %
Regulatory charges7,732 9,325 (17 %)7,323 %
Promotional (ongoing)(12)(13)
101,163 84,077 20 %87,411 16 %
Acquisition costs(13)
3,092 6,435 (52 %)13,323 (77 %)
Employee share-based compensation17,964 12,232 47 %12,755 41 %
Total G&A456,128 439,109 %401,719 14 %
EBITDA(14)
563,827 533,084 %267,240 111 %
Depreciation and amortization56,054 54,241 %45,454 23 %
Amortization of other intangibles24,092 22,542 %21,196 14 %
Interest expense on borrowings39,184 37,082 %27,211 44 %
INCOME BEFORE PROVISION FOR INCOME TAXES444,497 419,219 %173,379 156 %
PROVISION FOR INCOME TAXES105,613 100,137 %39,635 166 %
NET INCOME$338,884 $319,082 %$133,744 153 %
Earnings per share, diluted$4.24 $3.95 %$1.64 159 %
Weighted-average shares outstanding, diluted79,97480,875(1 %)81,572(2 %)
Adjusted EPS(15)
$4.49 $4.21 %$1.95 130 %
6


LPL Financial Holdings Inc.
Operating Metrics
(Dollars in billions, except where noted)
(Unaudited)
Q1 2023Q4 2022ChangeQ1 2022Change
Market Drivers
S&P 500 Index (end of period)4,109 3,840 7%4,530 (9%)
Russell 2000 Index (end of period)1,802 1,761 2%2,070 (13%)
Fed Funds daily effective rate (average bps)452 366 86bps12 440bps
Advisory and Brokerage Assets(16)
Advisory assets$620.9 $583.1 6%$624.3 (1%)
Brokerage assets554.3 527.7 5%538.8 3%
Total Advisory and Brokerage Assets$1,175.2 $1,110.8 6%$1,163.1 1%
Advisory as a % of Total Advisory and Brokerage Assets52.8%52.5%30bps53.7%(90bps)
Assets by Platform
Corporate advisory assets(17)
$415.3 $389.1 7%$415.8 —%
Independent RIA advisory assets(17)
205.6 194.0 6%208.5 (1%)
Brokerage assets554.3 527.7 5%538.8 3%
Total Advisory and Brokerage Assets$1,175.2 $1,110.8 6%$1,163.1 1%
Centrally Managed Assets
Centrally managed assets(18)
$94.6 $89.2 6%$93.8 1%
Centrally Managed as a % of Total Advisory Assets15.2%15.3%(10bps)15.0%20bps
7


LPL Financial Holdings Inc.
Operating Metrics
(Dollars in billions, except where noted)
(Unaudited)
Q1 2023Q4 2022ChangeQ1 2022Change
Net New Assets (NNA)(19)
Net new advisory assets$14.6 $12.6 n/m$17.4 n/m
Net new brokerage assets9.9 8.6 n/m0.2 n/m
Total Net New Assets$24.5 $21.3 n/m$17.6 n/m
Organic Net New Assets
Organic net new advisory assets$13.7 $12.6 n/m$17.4 n/m
Organic net new brokerage assets7.1 8.6 n/m0.2 n/m
Total Organic Net New Assets $20.8 $21.3 n/m$17.6 n/m
Net brokerage to advisory conversions(20)
$2.1 $1.5 n/m$2.9 n/m
Organic advisory NNA annualized growth(21)
9.4%9.3%n/m10.8%n/m
Total organic NNA annualized growth(21)
7.5%8.2%n/m5.8%n/m
Net New Advisory Assets(19)
Corporate RIA net new advisory assets$10.4 $8.4 n/m$10.6 n/m
Independent RIA net new advisory assets4.2 4.3 n/m6.8 n/m
Total Net New Advisory Assets$14.6 $12.6 n/m$17.4 n/m
Centrally managed net new advisory assets(19)
$1.7 $1.3 n/m$3.3 n/m
Client Cash Balances(22)
Insured cash account sweep$39.7 $46.8 (15%)$32.6 22%
Deposit cash account sweep10.2 11.5 (11%)9.4 9%
Total Bank Sweep 49.9 58.4 (15%)42.0 19%
Money market sweep2.6 3.0 (13%)18.2 (86%)
Total Client Cash Sweep Held by Third Parties52.5 61.4 (14%)60.2 (13%)
Client cash account2.1 2.7 (22%)1.6 31%
Total Client Cash Balances$54.6 $64.1 (15%)$61.7 (12%)
Client Cash Balances as a % of Total Assets4.6%5.8%(120bps)5.3%(70bps)
Client Cash Balances Average Yields - bps(23)
Insured cash account sweep320 291 29102 218
Deposit cash account sweep318 254 6424 294
Money market sweep30 32 (2)23
Client cash account(24)
400 322 7813 387
Total Client Cash Balances Average Yield - bps308 273 3559 249
Net buy (sell) activity(25)
$36.9 $25.0 n/m$11.0 n/m

Note: Totals may not foot due to rounding.
8



LPL Financial Holdings Inc.
Monthly Metrics
(Dollars in billions, except where noted)
(Unaudited)
March 2023February 2023ChangeJanuary 2023December 2022
Advisory and Brokerage Assets(16)
Advisory assets$620.9 $606.1 2%$615.2 $583.1 
Brokerage assets554.3 541.7 2%549.7 527.7 
Total Advisory and Brokerage Assets$1,175.2 $1,147.8 2%$1,164.9 $1,110.8 
Net New Assets (NNA)(19)
Net new advisory assets$6.3 $4.3 n/m$4.0 $7.4 
Net new brokerage assets4.3 1.0 n/m4.6 4.2 
Total Net New Assets$10.6 $5.2 n/m$8.6 $11.7 
Net brokerage to advisory conversions(20)
$0.7 $0.8 n/m$0.6 $0.5 
Organic Net New Assets (NNA)
Net new advisory assets$6.3 $4.3 n/m$3.1 $7.4 
Net new brokerage assets3.9 1.0 n/m2.2 4.2 
Total Organic Net New Assets $10.1 $5.2 n/m$5.4 $11.7 
Client Cash Balances(22)
Insured cash account sweep$39.7 $40.7 (2%)$43.5 $46.8 
Deposit cash account sweep10.2 10.3 (1%)10.8 11.5 
Total Bank Sweep 49.9 51.0 (2%)54.3 58.4 
Money market sweep2.6 2.8 (7%)2.9 3.0 
Total Client Cash Sweep Held by Third Parties52.5 53.8 (2%)57.2 61.4 
Client cash account2.1 2.4 (13%)2.5 2.7 
Total Client Cash Balances$54.6 $56.2 (3%)$59.7 $64.1 
Net buy (sell) activity(25)
$13.4 $12.4 n/m$11.1 $7.9 
Market Drivers
S&P 500 index (end of period)4,109 3,970 4%4,077 3,840 
Russell 2000 Index (end of period)1,802 1,897 (5%)1,932 1,761 
Fed funds effective rate (average bps)465 457 8bps433 409 
Note: Totals may not foot due to rounding.
9


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

Q1 2023Q4 2022ChangeQ1 2022Change
Commission Revenue by Product
Annuities$344,061 $331,251 4%$299,734 15%
Mutual funds165,038 157,961 4%189,527 (13%)
Fixed income35,267 32,249 9%25,205 40%
Equities25,890 25,626 1%34,633 (25%)
Other33,469 35,196 (5%)36,426 (8%)
Total commission revenue$603,725 $582,283 4%$585,525 3%
Commission Revenue by Sales-based and Trailing
Sales-based commissions
Annuities$162,176 $153,863 5%$106,733 52%
Mutual funds37,477 33,601 12%47,545 (21%)
Fixed income35,267 32,249 9%25,205 40%
Equities25,890 25,626 1%34,633 (25%)
Other25,262 25,750 (2%)26,215 (4%)
Total sales-based commissions$286,072 $271,089 6%$240,331 19%
Trailing commissions
Annuities$181,885 $177,388 3%$193,001 (6%)
Mutual funds127,561 124,360 3%141,982 (10%)
Other8,207 9,446 (13%)10,211 (20%)
Total trailing commissions$317,653 $311,194 2%$345,194 (8%)
Total commission revenue$603,725 $582,283 4%$585,525 3%
Payout Rate(7)
86.19%88.44%(225bps)86.10%9bps

10


LPL Financial Holdings Inc.
Capital Management Measures
(Dollars in thousands, except where noted)
(Unaudited)
Q1 2023Q4 2022
Cash and equivalents$469,785 $847,519 
Cash at regulated subsidiaries(408,288)(392,571)
Excess cash at regulated subsidiaries per the Credit Agreement172,705 4,439 
Corporate Cash(3)
$234,202 $459,387 
Corporate Cash(3)
Cash at Parent$54,603 $448,180 
Excess cash at regulated subsidiaries per the Credit Agreement172,705 4,439 
Cash at non-regulated subsidiaries6,894 6,768 
Corporate Cash$234,202 $459,387 
Leverage Ratio
Total debt$2,870,225 $2,737,900 
Total corporate cash234,202 459,387 
Credit Agreement Net Debt$2,636,023 $2,278,513 
Credit Agreement EBITDA (trailing twelve months)(26)
$1,963,737 $1,639,114 
Leverage Ratio1.34x1.39x

March 31, 2023
Total DebtBalanceCurrent Applicable
Margin
Interest RateMaturity
Revolving Credit Facility(a)(b)
$135,000 ABR+25 bps8.250 %3/15/2026
Broker-Dealer Revolving Credit Facility(c)
— SOFR+135 bps6.220 %8/3/2023
Senior Secured Term Loan B(b)
1,035,225 
LIBOR+175 bps(d)
6.412 %11/12/2026
Senior Unsecured Notes400,000 4.625% Fixed4.625 %11/15/2027
Senior Unsecured Notes900,000 4.000% Fixed4.000 %3/15/2029
Senior Unsecured Notes400,000 4.375% Fixed4.375 %5/15/2031
Total / Weighted Average$2,870,225 5.209 %

(a)Secured borrowing capacity of $1 billion at LPL Holdings, Inc. (the "Parent").
(b)In March 2023, we amended our Credit Agreement to transition our Parent Revolving Credit Facility and Term Loan B from LIBOR-based to SOFR-based interest rates, which became effective in March and April 2023, respectively.
(c)Unsecured borrowing capacity of $1 billion at LPL Financial LLC.
(d)The LIBOR rate option is one-month LIBOR rate and subject to an interest rate floor of 0 basis points.
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LPL Financial Holdings Inc.
Key Business and Financial Metrics
(Dollars in thousands, except where noted)
(Unaudited)
Q1 2023Q4 2022ChangeQ1 2022Change
Advisors
Advisors21,521 21,275 1%20,091 7%
Net new advisors246 231 n/m215 n/m
Annualized advisory fees and commissions per advisor(27)
$291 $281 4%$327 (11%)
Average total assets per advisor ($ in millions)(28)
$54.6 $52.2 5%$57.9 (6%)
Transition assistance loan amortization ($ in millions)(29)
$46.7 $45.4 3%$41.4 13%
Total client accounts (in millions)8.0 7.9 1%7.3 10%
Employees6,648 6,415 4%6,051 10%
Services Group
Services Group subscriptions(30)
Professional Services1,753 1,484 18%1,328 32%
Business Optimizers2,955 2,802 5%2,138 38%
Planning and Advice236 193 22%63 n/m
Total Services Group subscriptions4,944 4,479 10%3,529 40%
Services Group advisor count3,324 3,039 9%2,481 34%
AUM retention rate (quarterly annualized)(31)
98.7%98.2%50bps98.3%40bps
Capital Management
Capital expenditures ($ in millions)(32)
$101.3 $74.4 36%$73.5 38%
Share repurchases ($ in millions)$275.0 $150.0 83%$50.0 n/m
Dividends ($ in millions)23.6 19.9 19%20.0 18%
Total Capital Returned ($ in millions)$298.6 $169.9 76%$70.0 n/m

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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.
Adjusted EPS and Adjusted net income
Adjusted EPS 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 adjusted EPS 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 adjusted EPS 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 adjusted EPS, please see the endnote disclosures in this release.
Gross profit
Gross profit is calculated as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation. 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; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs. 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 the Company's total expense to core G&A, please see the endnote disclosures in 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 total expense to an outlook for core G&A 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 net income to EBITDA, 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-
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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 net income to Credit Agreement EBITDA, 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 primary broker-dealer subsidiary, LPL Financial, in connection 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 562 advisors from CUNA Brokerage Services, Inc. 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, Financial Resources Group Investment Services, 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 and Financial Resources Group Investment Services, LLC, is net capital in excess of 10% of their 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) The Company was named Top RIA custodian (Cerulli Associates, 2022 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S. (based on total revenues, Financial Planning magazine 1996-2022); and, among third-party providers of brokerage services to banks and credit unions, No. 1 in AUM Growth from Financial Institutions; No. 1 in Market Share of AUM from Financial Institutions; No. 1 in Market Share of Revenue from Financial Institutions; No. 1 on Financial Institution Market Share; No. 1 on Share of Advisors (2021-2022 Kehrer Bielan Research and Consulting Annual TPM Report). Fortune 500 as of June 2021.
(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):
Q1 2023Q4 2022Q1 2022
Total revenue$2,417,832 $2,333,187 $2,065,693 
Advisory and commission expense1,370,634 1,341,743 1,374,134 
Brokerage, clearing and exchange expense26,126 19,251 22,600 
Employee deferred compensation(33)
1,117 — — 
Gross profit$1,019,955 $972,193 $668,959 













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(7) Production-based payout is a financial measure calculated as advisory and commission expense plus (less) advisor deferred compensation. 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):
Q1 2023Q4 2022Q1 2022
Advisory and commission expense$1,370,634 $1,341,743 $1,374,134 
(Less) Plus: Advisor deferred compensation(27,966)(28,717)31,564 
Production-based payout$1,342,668 $1,313,026 $1,405,698 
Advisory and commission revenue$1,557,782 $1,484,723 $1,632,622 
Payout rate86.19%88.44%86.10%
(8) Client cash revenue as presented in Management's Statements of Operations is calculated as client cash revenue, which is a component of asset-based revenue on the Company's condensed consolidated statements of income, plus interest income on client cash account ("CCA") balances segregated under federal or other regulations, less revenue from purchased money market funds. Below is a reconciliation of client cash revenue per the condensed consolidated statements of income to client cash revenue per Management's Statements of Operations for the periods presented (in thousands):
Q1 2023Q4 2022Q1 2022
Client cash$418,275 $419,215 $84,716 
Plus: Interest income on CCA balances segregated under federal or other regulations(10)
20,337 19,966 311 
(Less): Revenue from purchased money market funds(9)
— — (306)
Total client cash revenue$438,612 $439,181 $84,721 
(9)     Consists of revenue from the Company's sponsorship programs with financial product manufacturers, omnibus processing and networking services, and revenue from purchased money market funds but does not include fees from client cash programs.
(10) Interest income and other, net is a financial measure calculated as interest income, net plus (less) other revenue, plus (less) deferred compensation, less interest income on CCA balances segregated under federal or other regulations. Below is a reconciliation of interest income, net and other revenue to interest income and other, net for the periods presented (in thousands):
Q1 2023Q4 2022Q1 2022
Interest income, net$37,358 $37,168 $7,745 
Plus (Less): Other revenue33,022 33,472 (30,613)
(Less) Plus: Deferred compensation(33)
(29,083)(28,717)31,564 
(Less): Interest income on CCA balances segregated under federal or other regulations(20,337)(19,966)(311)
Interest income and other, net $20,960 $21,957 $8,385 
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(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):
Q1 2023Q4 2022Q1 2022
Core G&A Reconciliation
Total expense$1,973,335 $1,913,968 $1,892,314 
Advisory and commission(1,370,634 )(1,341,743 )(1,374,134 )
Depreciation and amortization(56,054 )(54,241 )(45,454 )
Interest expense on borrowings(39,184 )(37,082 )(27,211 )
Brokerage, clearing and exchange(26,126 )(19,251 )(22,600 )
Amortization of other intangibles(24,092 )(22,542 )(21,196 )
Employee deferred compensation(33)
(1,117 )— — 
Total G&A456,128 439,109 401,719 
Promotional (ongoing)(12)(13)
(101,163 )(84,077 )(87,411 )
Employee share-based compensation(17,964 )(12,232 )(12,755 )
Regulatory charges(7,732 )(9,325 )(7,323 )
Acquisition costs(13)
(3,092 )(6,435 )(13,323 )
Core G&A$326,177 $327,040 $280,907 
(12) Promotional (ongoing) includes $3.2 million, $3.6 million and $2.3 million of support costs related to full-time employees that are classified within Compensation and benefits expense in the condensed consolidated statements of income for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively, and excludes costs that have been incurred as part of acquisitions that have been classified within acquisition costs for the same periods.
(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):
Q1 2023Q4 2022Q1 2022
Acquisition costs
Professional services$1,606 $2,434 $5,558 
Compensation and benefits875 3,543 5,651 
Promotional(12)
210 54 1,904 
Other401 404 210 
Acquisition costs$3,092 $6,435 $13,323 
(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 net income to EBITDA for the periods presented (in thousands):
Q1 2023Q4 2022Q1 2022
EBITDA Reconciliation
Net income$338,884 $319,082 $133,744 
Interest expense on borrowings39,184 37,082 27,211 
Provision for income taxes105,613 100,137 39,635 
Depreciation and amortization56,054 54,241 45,454 
Amortization of other intangibles24,092 22,542 21,196 
EBITDA$563,827 $533,084 $267,240 
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(15) Adjusted net income and adjusted EPS are non-GAAP financial measures. Please see a description of adjusted net income and adjusted EPS 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 adjusted EPS for the periods presented (in thousands, except per share data):
Q1 2023Q4 2022Q1 2022
AmountPer ShareAmountPer ShareAmountPer Share
Net income / earnings per diluted share$338,884 $4.24 $319,082 $3.95 $133,744 $1.64 
Amortization of other intangibles24,092 0.30 22,542 0.28 21,196 0.26 
Acquisition costs3,092 0.04 6,435 0.08 13,323 0.16 
Tax benefit(7,152)(0.09)(7,659)(0.10)(9,078)(0.11)
Adjusted net income / adjusted EPS$358,916 $4.49 $340,400 4.21 $159,185 $1.95 
Diluted share count79,974 80,875 81,572 
(16) Consists of total advisory and brokerage assets under custody at the Company's primary broker-dealer subsidiary, LPL Financial.
(17) Assets on the Company's corporate advisory platform are serviced by investment advisor representatives of LPL Financial or Allen & Company of Florida, LLC. Assets on the Company's independent RIA advisory platform are serviced by investment advisor representatives of separate registered investment advisor firms rather than representatives of LPL Financial.
(18) Consists of advisory assets in LPL Financial’s Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.
(19) Consists of total client deposits into advisory or brokerage accounts less total client withdrawals from advisory or brokerage accounts, plus dividends, plus interest, minus advisory fees. The Company considers conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively.
(20) Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.
(21) 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.
(22) During the second quarter of 2022, the Company updated its definition of client cash balances to include CCA and exclude purchased money market funds. CCA balances 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):
Q1 2023Q4 2022Q1 2022
Purchased money market funds$15.0 $8.8 $1.6 
(23) Calculated by dividing revenue for the period by the average balance during the period.
(24) Calculated by dividing interest income earned on cash held in the CCA for the period by the average CCA balance, excluding cash held in CCA that has been used to fund margin lending, during the period. The remaining cash is primarily held in cash segregated under federal or other regulations in the condensed consolidated balance sheets. Cash held in the CCA that has been used to fund margin lending is as follows for the periods presented (in billions):
Q1 2023Q4 2022Q1 2022
CCA balances that have been used to fund margin$0.5 $0.5 $0.5 
(25) Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.
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(26) 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 net income to trailing twelve month EBITDA and Credit Agreement EBITDA for the periods presented (in thousands):
Q1 2023Q4 2022
EBITDA and Credit Agreement EBITDA Reconciliations
Net income$1,050,842 $845,702 
Interest expense on borrowings138,207 126,234 
Provision for income taxes331,929 265,951 
Depreciation and amortization210,417 199,817 
Amortization of other intangibles90,456 87,560 
 EBITDA$1,821,851 $1,525,264 
Credit Agreement Adjustments:
Acquisition costs and other$41,979 $50,685 
Employee share-based compensation55,259 50,050 
M&A accretion(34)
42,031 10,570 
Advisor share-based compensation2,617 2,545 
Credit Agreement EBITDA$1,963,737 $1,639,114 
(27) Calculated based on the average advisor count from the current period and prior periods.
(28)    Calculated based on the end of period total advisory and brokerage assets divided by end of period advisor count.
(29) Represents amortization expense on forgivable loans for transition assistance to advisors and enterprises.
(30) Refers to active subscriptions related to professional services offerings (CFO Solutions, Marketing Solutions, Admin Solutions, Advisor Institute, Bookkeeping and Partial Book Sales) 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.
(31) Reflects retention of total advisory and brokerage assets, calculated by deducting quarterly annualized attrition from total advisory and brokerage assets, divided by the prior quarter total advisory and brokerage assets.
(32) Capital expenditures represent cash payments for property and equipment during the period.
(33) During the first quarter of 2023, the Company updated its presentation of employee deferred compensation to be consistent with its presentation of advisor deferred compensation. As a result, gains or losses related to market fluctuations on advisor and employee deferred compensation plans are presented in the same line item as the related increase or decrease in compensation expense for purposes of Management's Statements of Operations. This change has not been applied retroactively as the impact on prior periods was not material.
(34)     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.



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