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Annual stockholders meeting presentation
- 1. TD Ameritrade, Inc.,member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2013 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
- 5. TD Ameritrade, Inc.,member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2013 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
- 6. TD Ameritrade, Inc.,member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2013 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
- 7. This document containsforward-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 or stock price, 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 or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: general economic and political conditions and other securities industry risks, fluctuations in interest rates, stock market fluctuations and changes in client trading activity, credit risk with clients and counterparties, increased competition, systems failures, delays and capacity constraints, network security risks, liquidity risks, new laws and regulations affecting our business, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report, as amended, on Form 10-K/A, filed with the SEC on Feb. 4, 2013, and our latest Quarterly Report on Form 10-Q filed thereafter. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
- 8. Operating Environment in2012 Continued uncertainty – Macroeconomic environment – Geo-political environment Weaker retail investor sentiment Sluggish trading – low volatility Continued near-zero interest rates and flattened yield curve Operating Environment – what’s changed in 2013 Improving retail investor sentiment Improving economic indicators Uncertainty continues – Macroeconomic – Geo-political
- 9. 2012 Strategy: 1. Maintainstrong organic growth momentum 2. Develop a third revenue stream 3. Focus on process and expense management 4. Adapt IDA investment strategy to the environment 5. Maintain a strong balance sheet and return of capital strategy 2012 Objectives: 1. Continue building long-term earnings power 2. Return or deploy capital to further enhance shareholder value
- 10. Refreshed brandand advertising – Updated look/feel – 2012 U.S. Olympic Team Sponsor New Marketing web site and account opening process Client Satisfaction at 90% – Retail & Institutional Continued innovation – New thinkorswim &Trade Architect® features – Redesigned TD Ameritrade mobile app – Improved and expanded AmerivestTM offering – Veo® Open Access – Options Market Center
- 11. 355 Average Client TradesPer Day (K) Forecasted Range (K) % Derivatives(2) of Total 14% 28% 32% 36% Fiscal 2012 – Activity rate 6.3% – Continued derivatives(2) growth – Mobile nearly 8% of DARTs Fiscal 2013 Outlook – Continued growth in derivatives(2) – Enhanced trading capabilities for RIAs – Investor Movement IndexSM (1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab. (2) Derivatives include options, futures and foreign exchange (Forex) trades per day. (3) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (4) Pro-forma combined with thinkorswim: funded activity rate (trades per day): FY09 - 8.1% (419K); % Derivatives (trades per day): FY09 - 20%. (5) FY13 forecast per 10/29/12 outlook statement. 7.3%(4) 6.9% 7.2% 6.3% 6.0-7.0%Activity Rate(3) (5)
- 12. $33 NNA ($B) Forecasted Range($B) Fiscal 2012 – $160M/day on average – Strong growth in Retail & Institutional – Strong cross-selling internally and via TD Bank(3) partnership – Strong Breakaway Broker trends Fiscal 2013 Outlook – Maintain momentum – Expand retail distribution capacity – Continue improving Institutional offering – Develop new channels of growth (1) Net new assets (NNA) consists 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. (2) FY13 forecast per 10/29/12 outlook statement. (3) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. (4) NNA growth rate is annual net new assets as a % of client assets as of the beginning of the period. 10% 11% 12% 11% 7-11%(2)Annual Growth Rate(4) (1)
- 13. $220 Market Fee-Based Revenue($M) Forecasted Range ($M) Fiscal 2012 – “Appetite” for guidance and advice – Increased distribution capacity – Principal sources: AmerivestTM AdvisorDirectTM Mutual Funds Fiscal 2013 Outlook – Revenue target: 15-25% annual growth – Enhanced product set, sales, process and training – AmerivestTM /AdvisorDirectTM now aligned with target markets (1) Investment product fee revenue less money market mutual fund revenue. (2) FY13 forecast per 10/29/12 outlook statement. CAGR: 36% (2)
- 14. Lean Methodsto remove obstacles – 1/3 of Associate base – 700 improvement opportunities solved – Better referrals, service – New resources to reinvest in growth Expenses flat from Fiscal 2011 – Down $8M year over year – Q4 2012 down 5% from Q4 2011 – Q1 2013 down 4% from Q1 2012 2013 Outlook – Continued expansion of Lean – Renewed focus on sourcing – Maintain tight expense management and self-fund investments in the future
- 15. 20% 40% 60% 80% 100% 120% 140% Net Income Returned/Deployed(%) Fiscal 2012 – Target: 40-60% of net income – Increased dividend by 20% – 56% returned to shareholders $196M to buyback 2% outstanding shares $132M to pay $0.24/share in cash dividends Fiscal 2013 Outlook – Increased dividend by 50% – Paid special cash dividend of $0.50/share – Maintain flexibility (1) Cash used for M&A, debt repayments, share repurchases and dividends divided by net income. Excludes shares repurchased for payroll taxes or equity award distributions.. (1)
- 16. -80% -60% -40% -20% 0% 20% 40% S&P 500 +10% AMTD +13% Peer Group -55% Source:Bloomberg. Last 5 years for period from 9/28/2007 to 1/31/2013. Returns represent total daily shareholder returns including dividends (assumes dividends are reinvested). Peer group includes Schwab & E*Trade. Weighting assumes equal dollar investment at the beginning of the period.
- 17. -60% -40% -20% 0% 20% 40% 60% Last 3 Years,Period Ending 1/31/13 S&P 500 +52% AMTD +5% Peer Group -24% Source: Bloomberg. Last 3 years for period from 9/30/2009 to 1/31/2013. Returns represent total daily shareholder returns including dividends (assumes dividends are reinvested). Peer group includes Schwab & E*Trade. Weighting assumes equal dollar investment at the beginning of the period.
- 18. -10% 10% 30% 50% -10% 0% 10% 20% 30% 40% 50% S&P 500 +30% AMTD +6% Peer Group +6% Source:Bloomberg. Last 12 months for period ended 9/30/2012. Returns represent total daily shareholder returns including dividends (assumes dividends are reinvested). Peer group includes Schwab & E*Trade. Weighting assumes equal dollar investment at the beginning of the period.
- 19. 2013 Strategy: 1. Maintainstrong organic growth momentum – Asset Gathering – Trading 2. Grow third revenue stream: Market Fee-based Revenue(1) 3. Remain disciplined on expenses while investing in future 4. Maintain a strong balance sheet and robust return of capital strategy 2013 Priorities: 1. Continue building long-term earnings power 2. Return or deploy capital to further enhance shareholder value (1) Investment product fee revenue less money market mutual fund revenue.
- 20. Diluted earningsper share (EPS) of $0.27 Average client trades per day of 334,000 (387,000 in January ‘13) Record net new assets(1) of $16B, record annualized growth rate(2) of 13% Record market fee-based revenue(3) up 28% year-over-year – Bolstered by record guidance and advice solution sales Total operating expenses down 4% year-over-year Capital deployment: – $250M debt repayment upon maturity – $273M special dividend ($0.50/share) funded with revolving credit line – $49M quarterly dividend ($0.09/share) (1) 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. (2) Annualized NNA growth rate as a % of client assets as of the beginning of the period. (3) Investment product fee revenue less money market mutual fund revenue.
- 21. -10% 0% 10% 20% 30% 40% S&P 500 +5% AMTD +31% Peer Group +25% Source:Bloomberg. Fiscal year to date represents the period from 9/28/2012 to 1/31/2013. Returns represent total daily shareholder returns including dividends (assumes dividends are reinvested). Peer group includes Schwab & E*Trade. Weighting assumes equal dollar investment at the beginning of the period.
- 22. 2013 Annual Meetingof Stockholders