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LPL Financial Announces Fourth Quarter and Full Year 2020 Results

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LPL Financial Holdings, Inc.
·43 min read
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Fourth Quarter 2020 Key Financial Results

  • Earnings per share ("EPS") was $1.38, and Net Income was $112 million.
    ° Gross Profit** was $534 million.
    ° Core G&A** was $252 million.
    ° EBITDA** was $217 million and EBITDA** as a percentage of Gross Profit** was 41%.

  • EPS Prior to Amortization of Intangible Assets** was $1.53.

Fourth Quarter 2020 Key Business Results

  • Total Advisory and Brokerage Assets increased 18% year-over-year to $903 billion.
    ° Advisory assets increased by 26% year-over-year to $461 billion.
    ° Advisory assets as a percentage of total assets increased to 51.1%, up from 47.8% a year ago.

  • Total organic net new assets(1) were an inflow of $17.8 billion, translating to an 8.8% annualized growth rate.
    ° Total organic net new asset annualized growth rate was 7.4% in October, 7.3% in November and 10.8% in December.
    ° Organic net new advisory assets were an inflow of $15.9 billion, translating to a 15.6% annualized growth rate.
    ° Organic net new brokerage assets were an inflow of $1.9 billion, translating to a 1.9% annualized growth rate.

  • Acquired net new assets were $4.0 billion, of which $2.5 billion was advisory and $1.5 billion was brokerage.
    ° Acquired net new assets were from Lucia Securities and E.K. Riley as we completed the onboarding of these two acquisitions during the quarter.

  • Recruited Assets(2) were $10.8 billion, contributing to a trailing twelve-month total of $40.9 billion, up 17% year-over-year.
    ° Advisor count(3) was 17,287, up 119 from Q3 2020 and 823 year-over-year.

  • Total client cash balances were $48.9 billion, up $2.3 billion, or 5% sequentially.
    ° Client cash balances as a percentage of total assets were 5.4%.

Fourth Quarter 2020 Key Capital Results

  • Dividends were $20 million.

  • Cash available for corporate use was $280 million.

  • Credit Agreement Net Leverage Ratio(4) was 2.16x.

Full Year 2020 Key Performance Indicators

  • EPS was $5.86, and Net Income was $473 million.
    ° Gross Profit** was $2,103 million.
    ° Core G&A** was $925 million.
    ° EBITDA** was $909 million and EBITDA** as a percentage of Gross Profit** was 43%.

  • EPS Prior to Amortization of Intangible Assets** was $6.46.

  • Total organic net new assets were $56.2 billion, translating to a 7.4% growth rate, up from 5.3% in 2019.
    ° Full-year production retention rate was 97.7%, up from 96.5% a year ago.

  • Dividends were $79 million.

Key Updates

  • 2020 Core G&A** was $925 million, which translates to a 6.5% growth rate year-over-year and within our outlook range of $915 to $940 million.

  • Established 2021 Core G&A** outlook range of ~5.5% to 8% prior to expenses from Waddell & Reed, or $975 to $1,000 million.

  • Signed an agreement to acquire Waddell & Reed’s wealth management business for $300 million, a firm with over 900 advisors and ~$70 billion of client assets as of December 31, 2020.
    ° To date, Waddell & Reed advisors serving ~80% of client assets have already committed to join LPL following the close of the transaction, and we are encouraged by our ongoing progress.

SAN DIEGO, Feb. 04, 2021 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”) today announced results for its fourth quarter ended December 31, 2020, reporting net income of $112 million, or $1.38 per share. This compares with $127 million, or $1.53 per share, in the fourth quarter of 2019 and $104 million, or $1.29 per share, in the prior quarter.

"Throughout 2020, 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 us to enhance our capabilities, service, and technology, which increased the appeal of our model and contributed to new highs for total assets and organic growth. As we look ahead, we aim to continue investing in our model and increasing our market share within the advisor-centered marketplace."

“Looking at 2020, we are proud of what we accomplished within our framework to drive shareholder value,” said Matt Audette, CFO. “We continued to invest through a volatile environment while staying disciplined on expenses, closed on three M&A transactions, reached an agreement to acquire Waddell & Reed's wealth management business, and delivered the highest organic net new assets in our history. Going forward, 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 $0.25 per share dividend to be paid on March 30, 2021 to all stockholders of record as of March 16, 2021.

Conference Call and Additional Information

The Company will hold a conference call to discuss its results at 5:00 p.m. EST on Thursday, February 4. To listen, call 877-677-9122 (domestic) or 708-290-1401 (international); passcode 9671648, or visit investor.lpl.com (webcast). Replays will be available by phone and on investor.lpl.com beginning two hours after the call and until February 11 and February 25, respectively. For telephonic replay, call 855-859-2056 (domestic) or 404-537-3406 (international); passcode 9671648.

About LPL Financial

LPL Financial is a leader in the retail financial advice market, the nation’s largest independent broker-dealer+ and a leading custodian (or provider of custodial services) to RIAs. We serve independent financial advisors and financial institutions, providing them with the technology, research, clearing and compliance services, and practice management programs they need to create and grow their practices. LPL enables them to provide objective guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions. LPL.com

+Based on total revenues, Financial Planning magazine June 1996-2020.

Securities and advisory services offered through LPL Financial LLC, a registered investment advisor. Member FINRA/SIPC. 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 LLC. We routinely disclose information that may be important to shareholders in the “Investor Relations” or “Press Releases” section of our website.

**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.

EPS Prior to Amortization of Intangible Assets is defined as GAAP EPS plus the per share impact of amortization of intangible assets. The per share impact is calculated as amortization of intangible assets expense, net of applicable tax benefit, divided by the number of shares outstanding for the applicable period. The Company presents EPS Prior to Amortization of Intangible Assets because management believes that the metric can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items that management does not believe impact the Company’s ongoing operations. EPS Prior to Amortization of Intangible Assets is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to GAAP EPS or any other performance measure derived in accordance with GAAP. For a reconciliation of EPS Prior to Amortization of Intangible Assets to GAAP EPS, please see footnote 38 on page 19 of this release.

Gross Profit is calculated as total net revenues, which were $1,581 million for the three months ended December 31, 2020, less advisory and commission expenses and brokerage, clearing and exchange fees, which were $1,030 million and $18 million, respectively for the three months ended December 31, 2020. All other expense categories, including depreciation and amortization of fixed assets and amortization of intangible assets, 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 footnote 6 on page 16 of this release.

Core G&A consists of total operating expenses, which were $1,410 million for the three months ended December 31, 2020, excluding the following expenses: advisory and commission, regulatory charges, promotional, employee share-based compensation, depreciation and amortization, amortization of intangible assets, and brokerage, clearing and exchange. Management presents Core G&A because it believes Core G&A reflects the corporate operating 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 expenses, 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 operating expenses as calculated in accordance with GAAP. For a reconciliation of Core G&A to the Company’s total operating expenses, please see footnote 10 on page 17 of this release. The Company does not provide an outlook for its total operating expenses because it contains expense components, such as advisory and commission expenses, that are market-driven and over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for Core G&A to an outlook for total operating expenses cannot be made available without unreasonable effort.

EBITDA is defined as net income plus interest and other expense, income tax expense, depreciation and amortization, and amortization of intangible assets. 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, or as an alternative to cash flows from operating activities as a measure of profitability or liquidity. In addition, the Company’s EBITDA can differ significantly from EBITDA calculated by other companies, depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments. For a reconciliation of EBITDA to net income, please see footnote 27 on page 18 of this release.

Credit Agreement EBITDA is defined in, and calculated by management in accordance with, the Company's credit agreement (“Credit Agreement”) as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense, tax expense, depreciation and amortization, and amortization of intangible assets, and is further adjusted to exclude certain non-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, or as an alternative to cash flows from operating activities as a measure of profitability or liquidity. In addition, the Company’s calculation of Credit Agreement EBITDA can differ significantly from adjusted EBITDA calculated by other companies, depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, capital investments, and types of adjustments made by such companies. For a reconciliation of Credit Agreement EBITDA to net income, please see footnote 27 on page 18 of this release.

Forward-Looking Statements

Statements in this press release regarding the Company's future financial and operating results, growth, priorities and business strategies, including forecasts and statements relating to future expenses (including 2020 Core G&A** outlook), future capabilities, future advisor service experience, future investments and capital deployment, long-term shareholder value and the planned acquisition of Waddell & Reed's wealth management business, as well as any other statements that are not related to present facts or current conditions or that are not purely historical, constitute forward-looking statements. These forward-looking statements are based on the Company's historical performance and its plans, estimates and expectations as of February 4, 2021. Forward-looking statements are not guarantees that the future results, plans, intentions or expectations expressed or implied will be achieved. Matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause actual financial or operating results, levels of activity or the timing of events to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: 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; the Company's strategy and success in managing client cash program fees; changes in the growth and profitability of the Company's fee-based business; fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue; the effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions; 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 and the implementation of Regulation BI (Best Interest); 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; the effects of the COVID-19 pandemic; the successful onboarding of advisors and client assets in connection with the acquisition of Waddell & Reed's wealth management business; and the other factors set forth in Part I, “Item 1A. Risk Factors” in the Company's 2019 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, even if its estimates change, and you should not rely on statements contained herein as representing the Company's views as of any date subsequent to the date of this press release.

Investor Relations - Chris Koegel, (617) 897-4574

Media Relations - Jeff Mochal, (704) 733-3589

investor.lpl.com/contactus.cfm

LPL Financial Holdings Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

Three Months Ended December 31,

Years Ended December 31,

2020

2019

% Change

2020

2019

% Change

REVENUES

Advisory

$

638,181

$

533,259

20

%

$

2,327,519

$

1,982,869

17

%

Commission

503,020

476,920

5

%

1,906,560

1,892,407

1

%

Asset-based

258,393

288,925

(11

%)

1,044,517

1,165,979

(10

%)

Transaction and fee

129,750

118,291

10

%

506,071

480,328

5

%

Interest income, net of interest expense

6,707

10,966

(39

%)

29,412

46,508

(37

%)

Other

45,232

19,534

n/m

57,561

56,765

n/m

Total net revenues

1,581,283

1,447,895

9

%

5,871,640

5,624,856

4

%

EXPENSES

Advisory and commission

1,029,739

893,831

15

%

3,697,147

3,388,186

9

%

Compensation and benefits

167,864

149,128

13

%

609,257

556,128

10

%

Promotional

48,342

51,050

(5

%)

208,250

205,537

1

%

Depreciation and amortization

28,650

25,663

12

%

109,732

95,779

15

%

Amortization of intangible assets

17,270

16,631

4

%

67,358

65,334

3

%

Occupancy and equipment

41,903

35,320

19

%

166,389

136,163

22

%

Professional services

16,541

17,772

(7

%)

57,067

73,887

(23

%)

Brokerage, clearing and exchange

17,762

15,927

12

%

71,185

64,445

10

%

Communications and data processing

14,656

12,465

18

%

52,399

49,859

5

%

Other

27,744

30,569

(9

%)

101,018

114,546

(12

%)

Total operating expenses

1,410,471

1,248,356

13

%

5,139,802

4,749,864

8

%

Non-operating interest expense and other

24,979

31,384

(20

%)

105,765

130,001

(19

%)

Loss on extinguishment of debt

3,156

n/m

3,156

n/m

INCOME BEFORE PROVISION FOR INCOME TAXES

145,833

164,999

(12

%)

626,073

741,835

(16

%)

PROVISION FOR INCOME TAXES

34,285

38,323

(11

%)

153,433

181,955

(16

%)

NET INCOME

$

111,548

$

126,676

(12

%)

$

472,640

$

559,880

(16

%)

EARNINGS PER SHARE

Earnings per share, basic

$

1.41

$

1.57

(10

%)

$

5.96

$

6.78

(12

%)

Earnings per share, diluted

$

1.38

$

1.53

(10

%)

$

5.86

$

6.62

(11

%)

Weighted-average shares outstanding, basic

79,353

80,701

(2

%)

79,244

82,552

(4

%)

Weighted-average shares outstanding, diluted

80,904

82,695

(2

%)

80,702

84,624

(5

%)

LPL Financial Holdings Inc.
Condensed Consolidated Statements of Income Trend
(In thousands, except per share data)
(Unaudited)

Quarterly Results

Q4 2020

Q3 2020

Q2 2020

REVENUES

Advisory

$

638,181

$

586,941

$

523,370

Commission

503,020

472,643

427,453

Asset-based

258,393

253,551

247,067

Transaction and fee

129,750

119,747

119,478

Interest income, net of interest expense

6,707

6,623

6,540

Other

45,232

20,796

42,751

Total net revenues

1,581,283

1,460,301

1,366,659

EXPENSES

Advisory and commission

1,029,739

936,766

859,847

Compensation and benefits

167,864

151,271

143,320

Promotional

48,342

57,970

44,540

Depreciation and amortization

28,650

27,548

26,890

Amortization of intangible assets

17,270

16,829

16,689

Occupancy and equipment

41,903

41,874

43,066

Professional services

16,541

12,301

13,620

Brokerage, clearing and exchange expense

17,762

17,834

18,565

Communications and data processing

14,656

12,547

14,361

Other

27,744

24,852

22,194

Total operating expenses

1,410,471

1,299,792

1,203,092

Non-operating interest expense and other

24,979

25,179

26,289

INCOME BEFORE PROVISION FOR INCOME TAXES

145,833

135,330

137,278

PROVISION FOR INCOME TAXES

34,285

31,541

35,616

NET INCOME

$

111,548

$

103,789

$

101,662

EARNINGS PER SHARE

Earnings per share, basic

$

1.41

$

1.31

$

1.29

Earnings per share, diluted

$

1.38

$

1.29

$

1.27

Weighted-average shares outstanding, basic

79,353

79,176

78,940

Weighted-average shares outstanding, diluted

80,904

80,550

80,127

LPL Financial Holdings Inc.
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)

December 31, 2020

September 30, 2020

December 31, 2019

ASSETS

Cash and cash equivalents

$

808,612

$

800,799

$

590,209

Cash segregated under federal and other regulations

923,158

667,121

822,697

Restricted cash

67,264

75,295

58,872

Receivables from:

Clients, net of allowance

405,106

424,131

433,986

Product sponsors, broker-dealers and clearing organizations

233,192

205,508

177,654

Advisor loans, net of allowance

547,372

509,124

441,743

Others, net of allowance

306,640

306,952

298,790

Securities owned:

Trading — at fair value

29,252

28,215

46,447

Held-to-maturity — at amortized cost

13,235

13,058

11,806

Securities borrowed

30,130

23,510

17,684

Fixed assets, net of accumulated depreciation and amortization

582,868

570,592

533,044

Operating lease assets

101,921

99,565

102,477

Goodwill

1,513,866

1,503,648

1,503,648

Intangible assets, net of accumulated amortization

397,486

409,427

439,838

Deferred income taxes, net

24,112

744

Other assets

539,357

453,038

401,343

Total assets

$

6,523,571

$

6,090,727

$

5,880,238

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:

Drafts payable

$

178,403

$

176,916

$

218,636

Payables to clients

1,356,083

1,153,014

1,058,873

Payables to broker-dealers and clearing organizations

89,743

84,405

92,002

Accrued advisory and commission expenses payable

187,040

175,278

174,330

Accounts payable and accrued liabilities

681,554

586,432

557,969

Income taxes payable

28,145

14,619

20,129

Unearned revenue

95,328

99,694

82,842

Securities sold, but not yet purchased — at fair value

206

337

176

Long-term and other borrowings, net

2,345,414

2,347,517

2,398,818

Operating lease liabilities

139,377

137,569

141,900

Finance lease liabilities

107,424

107,498

108,592

Deferred income taxes, net

2,098

Total liabilities

5,208,717

4,883,279

4,856,365

STOCKHOLDERS’ EQUITY:

Common stock, $0.001 par value; 600,000,000 shares authorized; 127,585,764 shares issued at December 31, 2020 and 126,494,028 shares issued at December 31, 2019

127

127

126

Additional paid-in capital

1,762,770

1,748,310

1,703,973

Treasury stock, at cost — 48,115,037 shares at December 31, 2020 and 46,259,989 shares at December 31, 2019

(2,391,062

)

(2,391,449

)

(2,234,793

)

Retained earnings

1,943,019

1,850,460

1,554,567

Total stockholders’ equity

1,314,854

1,207,448

1,023,873

Total liabilities and stockholders’ equity

$

6,523,571

$

6,090,727

$

5,880,238

LPL Financial Holdings Inc.
Management's Statements of Operations(5)
(In thousands, except per share data)
(Unaudited)

Certain information presented on pages 8-15 of 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" that begins on page 3 of this release.

Quarterly Results

Q4 2020

Q3 2020

% Change

Q4 2019

% Change

Gross Profit(6)

Advisory

$

638,181

$

586,941

9

%

$

533,259

20

%

Sales-based commissions

202,504

180,357

12

%

193,980

4

%

Trailing commissions

300,516

292,286

3

%

282,940

6

%

Advisory and commission fees

1,141,201

1,059,584

8

%

1,010,179

13

%

Production based payout(7)

(987,882

)

(917,831

)

8

%

(876,654

)

13

%

Advisory and commission fees, net of payout

153,319

141,753

8

%

133,525

15

%

Client cash

105,019

108,705

(3

%)

155,322

(32

%)

Other asset-based(8)

153,374

144,846

6

%

133,603

15

%

Transaction and fee

129,750

119,747

8

%

118,291

10

%

Interest income and other, net(9)

10,082

8,484

19

%

13,323

(24

%)

Total net advisory and commission fees and attachment revenue

551,544

523,535

5

%

554,064

%

Brokerage, clearing and exchange expense

(17,762

)

(17,834

)

%

(15,927

)

12

%

Gross Profit(6)

533,782

505,701

6

%

538,137

(1

%)

G&A Expense

Core G&A(10)

252,391

227,099

11

%

230,182

10

%

Regulatory charges

8,775

8,326

n/m

7,893

n/m

Promotional

48,342

57,970

(17

%)

51,050

(5

%)

Employee share-based compensation

7,542

7,420

2

%

7,179

5

%

Total G&A

317,050

300,815

5

%

296,304

7

%

EBITDA(5)

216,732

204,886

6

%

241,833

(10

%)

Depreciation and amortization

28,650

27,548

4

%

25,663

12

%

Amortization of intangible assets

17,270

16,829

3

%

16,631

4

%

Non-operating interest expense and other

24,979

25,179

(1

%)

31,384

(20

%)

Loss on extinguishment of debt

n/m

3,156

n/m

INCOME BEFORE PROVISION FOR INCOME TAXES

145,833

135,330

8

%

164,999

(12

%)

PROVISION FOR INCOME TAXES

34,285

31,541

9

%

38,323

(11

%)

NET INCOME

$

111,548

$

103,789

7

%

$

126,676

(12

%)

Earnings per share, diluted

$

1.38

$

1.29

7

%

$

1.53

(10

%)

Weighted-average shares outstanding, diluted

80,904

80,550

%

82,695

(2

%)

EPS Prior to Amortization of Intangible Assets(5)(38)

$

1.53

$

1.44

6

%

$

1.68

(9

%)

LPL Financial Holdings Inc.
Management's Statements of Operations Trend(5)
(In thousands, except per share data)
(Unaudited)

Quarterly Results

Q4 2020

Q3 2020

Q2 2020

Gross Profit(6)

Advisory

$

638,181

$

586,941

$

523,370

Sales-based commissions

202,504

180,357

159,512

Trailing commissions

300,516

292,286

267,941

Advisory and commission fees

1,141,201

1,059,584

950,823

Production based payout(7)

(987,882

)

(917,831

)

(819,953

)

Advisory and commission fees, net of payout

153,319

141,753

130,870

Client cash

105,019

108,705

116,266

Other asset-based(8)

153,374

144,846

130,801

Transaction and fee

129,750

119,747

119,478

Interest income and other, net(9)

10,082

8,484

9,397

Total net advisory and commission fees and attachment revenue

551,544

523,535

506,812

Brokerage, clearing and exchange expense

(17,762

)

(17,834

)

(18,565

)

Gross Profit(6)

533,782

505,701

488,247

G&A Expense

Core G&A(10)

252,391

227,099

222,406

Regulatory charges

8,775

8,326

6,115

Promotional

48,342

57,970

44,540

Employee share-based compensation

7,542

7,420

8,040

Total G&A

317,050

300,815

281,101

EBITDA(5)

216,732

204,886

207,146

Depreciation and amortization

28,650

27,548

26,890

Amortization of intangible assets

17,270

16,829

16,689

Non-operating interest expense and other

24,979

25,179

26,289

INCOME BEFORE PROVISION FOR INCOME TAXES

145,833

135,330

137,278

PROVISION FOR INCOME TAXES

34,285

31,541

35,616

NET INCOME

$

111,548

$

103,789

$

101,662

Earnings per share, diluted

$

1.38

$

1.29

$

1.27

Weighted-average shares outstanding, diluted

80,904

80,550

80,127

EPS Prior to Amortization of Intangible Assets(5)(38)

$

1.53

$

1.44

$

1.42

LPL Financial Holdings Inc.
Operating Metrics(5)
(Dollars in billions, except where noted)
(Unaudited)

Q4 2020

Q3 2020

Change

Q4 2019

Change

Market Drivers

S&P 500 Index (end of period)

3,756

3,363

12%

3,231

16%

Fed Funds Daily Effective Rate (FFER) (average bps)

9

9

—bps

165

(156bps)

Assets

Advisory Assets(11)

$

461.2

$

405.9

14%

$

365.8

26%

Brokerage Assets(12)

441.9

404.4

9%

398.6

11%

Total Advisory and Brokerage Assets

$

903.1

$

810.4

11%

$

764.4

18%

Advisory % of Total Advisory and Brokerage Assets

51.1

%

50.1

%

100bps

47.8

%

330bps

Assets by Platform

Corporate Platform Advisory Assets(13)

$

291.9

$

253.9

15%

$

228.3

28%

Hybrid Platform Advisory Assets(14)

169.3

152.0

11%

137.5

23%

Brokerage Assets

441.9

404.4

9%

398.6

11%

Total Advisory and Brokerage Assets

$

903.1

$

810.4

11%

$

764.4

18%

Centrally Managed Assets

Centrally Managed Assets(15)

$

67.1

$

59.0

14%

$

52.4

28%

Centrally Managed % of Total Advisory Assets

14.6

%

14.5

%

10bps

14.3

%

30bps

LPL Financial Holdings Inc.
Operating Metrics(5)
(Dollars in billions, except where noted)
(Unaudited)

Q4 2020

Q3 2020

Change

Q4 2019

Change

Net New Assets (NNA)

Net New Advisory Assets(16)

$

18.4

$

10.4

n/m

$

11.5

n/m

Net New Brokerage Assets(17)

3.4

0.7

n/m

1.0

n/m

Total Net New Assets

$

21.8

$

11.1

n/m

$

12.5

n/m

Net New Assets (NNA) Prior to Acquisitions(18)

Net New Advisory Assets

$

15.9

$

10.4

n/m

$

11.5

n/m

Net New Brokerage Assets

1.9

0.7

n/m

1.0

n/m

Total Net New Assets Prior to Acquisitions

$

17.8

$

11.1

n/m

$

12.5

n/m

Net Brokerage to Advisory Conversions(19)

$

2.6

$

2.0

n/m

$

1.9

n/m

Advisory NNA Annualized Growth Prior to Acquisitions(20)

15.6

%

11.0

%

n/m

13.7

%

n/m

Total NNA Annualized Growth Prior to Acquisitions(20)

8.8

%

5.8

%

n/m

6.9

%

n/m

Net New Advisory Assets

Corporate Platform Net New Advisory Assets(21)

$

15.0

$

7.8

n/m

$

8.7

n/m

Hybrid Platform Net New Advisory Assets(22)

3.3

2.6

n/m

2.9

n/m

Total Net New Advisory Assets

$

18.4

$

10.4

n/m

$

11.5

n/m

Centrally Managed Net New Advisory Assets(23)

$

2.5

$

1.9

n/m

$

2.3

n/m

Client Cash Balances

Insured Cash Account Balances

$

37.3

$

34.7

7%

$

24.4

53%

Deposit Cash Account Balances

8.2

8.0

2%

5.0

64%

Total Bank Sweep Balances

45.5

42.7

7%

29.4

55%

Money Market Account Cash Balances

1.5

1.5

—%

1.9

(21%)

Purchased Money Market Funds

1.9

2.3

(17%)

2.4

(21%)

Total Money Market Balances

3.3

3.9

(15%)

4.3

(23%)

Total Client Cash Balances

$

48.9

$

46.6

5%

$

33.7

45%

Client Cash Balances % of Total Assets

5.4

%

5.7

%

(30bps)

4.4

%

100bps

Client Cash Balance Average Fees(24)

Insured Cash Account Average Fee - bps

108

118

(10)

222

(114)

Deposit Cash Account Average Fee - bps

30

38

(8)

184

(154)

Money Market Account Average Fee - bps

5

9

(4)

69

(64)

Purchased Money Market Fund Average Fee - bps

13

20

n/m

29

n/m

Total Client Cash Balance Average Fee - bps

87

95

(8)

193

(106)

Net Buy (Sell) Activity(25)

$

12.2

$

9.3

n/m

$

9.8

n/m

LPL Financial Holdings Inc.
Monthly Metrics(5)
(Dollars in billions, except where noted)
(Unaudited)

December 2020

November 2020

Nov to December Change

October 2020

September 2020

Assets

Advisory Assets(11)

$

461.2

$

442.0

4.3%

$

406.0

$

405.9

Brokerage Assets(12)

441.9

431.3

2.5%

401.6

404.4

Total Advisory and Brokerage Assets

$

903.1

$

873.3

3.4%

$

807.6

$

810.4

Net New Assets (NNA)

Net New Advisory Assets(16)

$

6.8

$

5.8

n/m

$

5.7

$

4.4

Net New Brokerage Assets(17)

1.1

1.6

n/m

0.8

0.7

Total Net New Assets

$

7.9

$

7.4

n/m

$

6.5

$

5.1

Net Brokerage to Advisory Conversions(19)

$

1.0

$

0.7

n/m

$

0.9

$

0.7

Net New Assets (NNA) Prior to Acquisitions(18)

Net New Advisory Assets

$

6.8

$

4.2

n/m

$

4.8

$

4.4

Net New Brokerage Assets

1.1

0.7

n/m

0.2

0.7

Total Net New Assets Prior to Acquisitions

$

7.9

$

4.9

n/m

$

5.0

$

5.1

Client Cash Balances

Insured Cash Account Balances

$

37.3

$

36.1

3.3%

$

36.0

$

34.7

Deposit Cash Account Balances

8.2

8.3

(1.2%)

8.6

8.0

Total Bank Sweep Balances

45.5

44.5

2.2%

44.6

42.7

Money Market Account Cash Balances

1.5

1.5

—%

1.6

1.5

Purchased Money Market Funds

1.9

2.1

(9.5%)

2.2

2.3

Total Money Market Balances

3.3

3.6

(8.3%)

3.8

3.9

Total Client Cash Balances

$

48.9

$

48.1

1.7%

$

48.3

$

46.6

Net Buy (Sell) Activity(25)

$

5.6

$

4.2

n/m

$

2.5

$

2.9

Market Indices

S&P 500 Index (end of period)

3,756

3,622

3.7%

3,270

3,363

Fed Funds Effective Rate (average bps)

9

9

—bps

9

9

LPL Financial Holdings Inc.
Financial Measures(5)
(Dollars in thousands, except where noted)
(Unaudited)

Q4 2020

Q3 2020

Change

Q4 2019

Change

Commission Revenue by Product

Annuities

$

262,235

$

250,823

5%

$

244,249

7%

Mutual funds

153,330

146,788

4%

150,697

2%

Fixed income

24,395

16,731

46%

28,642

(15%)

Equities

31,231

30,283

3%

21,233

47%

Other

31,829

28,018

14%

32,099

(1%)

Total commission revenue

$

503,020

$

472,643

6%

$

476,920

5%

Commission Revenue by Sales-based and Trailing Commission

Sales-based commissions

Annuities

$

89,125

$

81,475

9%

$

86,141

3%

Mutual funds

36,715

33,871

8%

37,611

(2%)

Fixed income

24,395

16,731

46%

28,642

(15%)

Equities

31,231

30,283

3%

21,233

47%

Other

21,038

17,997

17%

20,353

3%

Total sales-based commissions

$

202,504

$

180,357

12%

$

193,980

4%

Trailing commissions

Annuities

$

173,110

$

169,348

2%

$

158,108

9%

Mutual funds

116,615

112,917

3%

113,086

3%

Other

10,791

10,021

8%

11,746

(8%)

Total trailing commissions

$

300,516

$

292,286

3%

$

282,940

6%

Total commission revenue

$

503,020

$

472,643

6%

$

476,920

5%

Payout Rate

Base Payout Rate

82.57

%

82.97

%

(40bps)

82.82

%

(25bps)

Production Based Bonuses

3.99

%

3.65

%

34bps

3.96

%

3bps

Total Payout Ratio

86.57

%

86.62

%

(5bps)

86.78

%

(21bps)

LPL Financial Holdings Inc.
Capital Management Measures(5)
(Dollars in thousands, except where noted)
(Unaudited)

Q4 2020

Q3 2020

Cash Available for Corporate Use(26)

Cash at Parent

$

201,385

$

162,035

Excess Cash at Broker-Dealer subsidiary per Credit Agreement

67,574

78,739

Other Available Cash

10,960

11,337

Total Cash Available for Corporate Use

$

279,919

$

252,111

Credit Agreement Net Leverage

Total Debt (does not include unamortized premium)

$

2,359,300

$

2,361,975

Cash Available

279,919

252,111

Credit Agreement Net Debt

$

2,079,381

$

2,109,864

Credit Agreement EBITDA (trailing twelve months)(27)

$

961,225

$

980,827

Credit Agreement Net Leverage Ratio

2.16

x

2.15

x


December 31, 2020

Total Debt

Balance

Current Applicable
Margin

Yield At Issuance

Interest Rate

Maturity

Revolving Credit Facility(a)

$

ABR+25bps

%

11/12/2024

Broker-Dealer Revolving Credit Facility(b)

FFR+125bps

%

7/31/2024

Senior Secured Term Loan B

1,059,300

LIBOR+175 bps(c)

1.898

%

11/12/2026

Senior Unsecured Notes(d)

500,000

5.75% Fixed

5.750

%

5.750

%

9/15/2025

Senior Unsecured Notes(d)

400,000

(e)

5.75% Fixed

5.115

%

5.750

%

9/15/2025

Senior Unsecured Notes(f)

400,000

4.625% Fixed

4.625

%

4.625

%

11/15/2027

Total / Weighted Average

$

2,359,300

3.830

%

(a) The Revolving Credit Facility is secured and has a borrowing capacity of $750 million.
(b) The Broker-Dealer Revolving Credit Facility is unsecured and at LPL Financial LLC, the Company’s broker-dealer subsidiary, and has a borrowing capacity of $300 million.
(c) The LIBOR rate option is one-month LIBOR rate and subject to an interest rate floor of 0 basis points.
(d) The Senior Unsecured Notes were issued in two separate transactions; $500 million in notes were issued in March 2017 at par; the remaining $400 million were issued in September 2017 and priced at 103% of the aggregate principal amount.
(e) Does not include unamortized premium of approximately $7.1 million as of December 31, 2020.
(f) The Senior Unsecured Notes were issued in November 2019 at par.

LPL Financial Holdings Inc.
Key Business and Financial Metrics(5)
(Dollars in thousands, except where noted)
(Unaudited)

Q4 2020

Q3 2020

Change

Q4 2019

Change

Advisors

Advisors

17,287

17,168

1

%

16,464

5

%

Net New Advisors

119

195

n/m

115

n/m

Annualized advisory and commission fees per Advisor(28)

$

265

$

248

7

%

$

246

8

%

Average Total Assets per Advisor ($ in millions)(29)

$

52.2

$

47.2

11

%

$

46.4

13

%

Transition assistance loan amortization ($ in millions)(30)

$

29.7

$

30.4

(2

%)

$

26.1

14

%

Total client accounts (in millions)

6.0

5.9

2

%

5.7

5

%

Employees - period end

4,756

4,658

2

%

4,343

10

%

Productivity Metrics

Advisory Revenue as a % of Corporate Advisory Assets(31)

1.02

%

1.02

%

bps

1.02

%

bps

Gross Profit ROA(32)

26.8

bps

27.9

bps

(1.1

bps)

30.7

bps

(3.9

bps)

OPEX as a % of Advisory and Brokerage Assets(33)

17.5

bps

17.8

bps

(0.3

bps)

18.3

bps

(0.8

bps)

EBIT ROA(34)

9.3

bps

10.1

bps

(0.8

bps)

12.4

bps

(3.1

bps)

Production Retention Rate (YTD annualized)(35)

97.7

%

98.1

%

(40

bps)

96.5

%

120

bps

Recurring Gross Profit Rate(36)

84.8

%

86.1

%

(130

bps)

85.9

%

(110

bps)

EBITDA as a % of Gross Profit

40.6

%

40.5

%

10

bps

44.9

%

(430

bps)

Capital Expenditure ($ in millions)

$

43.6

$

40.1

9

%

$

52.1

(16

%)

Share Repurchases ($ in millions)

$

$

%

$

120.0

(100

%)

Dividends ($ in millions)

19.8

19.8

%

20.2

(2

%)

Total Capital Allocated ($ in millions)

$

19.8

$

19.8

%

$

140.2

(86

%)

Weighted-average Share Count, Diluted

80.9

80.6

%

82.7

(2

%)

Total Capital Allocated per Share(37)

$

0.25

$

0.25

%

$

1.70

(85

%)

Endnote Disclosures

(1) In April 2020, the Company updated its definition of net new assets to include Dividends plus Interest, minus Advisory Fees. See FNs 16, 17, 21, 22 and 23.

(2) Represents the estimated total advisory and brokerage assets expected to transition to the Company's broker-dealer subsidiary, LPL Financial LLC ("LPL Financial"), associated 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, including the initial quarter of the transition, and the actual amount transitioned may vary from the estimate.

(3) 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 adviser. Q4 2020 advisor count included 32 advisors from the acquisition of E.K. Riley.

(4) Compliance with the Credit Agreement Net Leverage Ratio is only required under our revolving credit facility.

(5) Certain information presented on pages 8-15 includes non-GAAP financial measures and operational and performance metrics. For more information on non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures” that begins on page 3 of this release.

(6) Gross Profit is a non-GAAP financial measure. Please see a description of Gross Profit under "Non-GAAP Financial Measures" on page 3 of this release for additional information. Below is a calculation of Gross Profit for the periods presented (in millions):

Q4 2020

Q3 2020

Q2 2020

Q4 2019

Total net revenues

$

1,581

$

1,460

$

1,367

$

1,448

Advisory and commission expense

1,030

937

860

894

Brokerage, clearing and exchange fees

18

18

19

16

Gross profit(+)

$

534

$

506

$

488

$

538

(+) Balances may not foot due to rounding.

(7) Production based payout is an operating measure calculated as an advisory and commission expense less advisor deferred compensation expense. Below is a reconciliation of production based payout against the Company’s advisory and commission expense for the periods presented (in thousands):

Q4 2020

Q3 2020

Q2 2020

Q4 2019

Production based payout

$

987,882

$

917,831

$

819,953

$

876,654

Advisor deferred compensation expense

41,857

18,935

39,894

17,177

Advisory and commission expense

$

1,029,739

$

936,766

$

859,847

$

893,831

(8) Consists of revenues from the Company's sponsorship programs with financial product manufacturers and omnibus processing and networking services, but does not include fees from client cash programs. Other asset-based revenues are a component of asset-based revenues and are derived from the Company's Unaudited Condensed Consolidated Statements of Income.

(9) Interest income and other, net is an operating measure calculated as interest income, net of interest expense plus other revenue, less advisor deferred compensation expense. Below is a reconciliation of interest income and other, net against the Company’s interest income, net of interest expense and other revenue for the periods presented (in thousands):

Q4 2020

Q3 2020

Q2 2020

Q4 2019

Interest income, net of interest expense

$

6,707

$

6,623

$

6,540

$

10,966

Plus: Other revenue

45,232

20,796

42,751

19,534

Less: Advisor deferred compensation expense

(41,857

)

(18,935

)

(39,894

)

(17,177

)

Interest income and other, net

$

10,082

$

8,484

$

9,397

$

13,323

(10) Core G&A is a non-GAAP financial measure. Please see a description of Core G&A under “Non-GAAP Financial Measures” on page 3 of this release for additional information. Below is a reconciliation of Core G&A against the Company’s total operating expenses for the periods presented:

Q4 2020

Q3 2020

Q2 2020

Q4 2019

Operating Expense Reconciliation (in thousands)

Core G&A

$

252,391

$

227,099

$

222,406

$

230,182

Regulatory charges

8,775

8,326

6,115

7,893

Promotional

48,342

57,970

44,540

51,050

Employee share-based compensation

7,542

7,420

8,040

7,179

Total G&A

317,050

300,815

281,101

296,304

Advisory and commission

1,029,739

936,766

859,847

893,831

Depreciation and amortization

28,650

27,548

26,890

25,663

Amortization of intangible assets

17,270

16,829

16,689

16,631

Brokerage, clearing and exchange

17,762

17,834

18,565

15,927

Total operating expenses

$

1,410,471

$

1,299,792

$

1,203,092

$

1,248,356

(11) Consists of total advisory assets under custody at LPL Financial. Q4 2019 also included advisory assets serviced by investment advisor representatives of Allen & Company of Florida, LLC ("Allen & Company") that were onboarded to LPL Financial's custodial platform in Q4 2019.

(12) Consists of brokerage assets serviced by advisors licensed with LPL Financial. Q4 2019 also included brokerage assets serviced by advisors licensed with Allen & Company that were onboarded to LPL Financial's custodial platform in Q4 2019.

(13) Consists of total assets on LPL Financial's corporate advisory platform serviced by investment advisor representatives of LPL Financial or Allen & Company.

(14) Consists of total assets on LPL Financial's independent advisory platform serviced by investment advisor representatives of separate registered investment advisor firms ("Hybrid RIAs"), rather than of LPL Financial.

(15) Represents those advisory assets in LPL Financial’s Model Wealth Portfolios, Optimum Market Portfolios, Personal Wealth Portfolios and Guided Wealth Portfolios platforms.

(16) Consists of total client deposits into advisory accounts, including advisory assets serviced by Allen & Company advisors, less total client withdrawals from advisory accounts, plus dividends, plus interest, minus advisory fees. The Company considers conversions from and to brokerage accounts as deposits and withdrawals, respectively. Figures for Net New Advisory Assets reported prior to April 2020 did not include dividends and interest or subtract advisory fees. The figure previously reported for Q4 2019 was an inflow of $9.6 billion. See FN 1.

(17) Consists of total client deposits into brokerage accounts, including brokerage assets serviced by Allen & Company advisors, less total client withdrawals from brokerage accounts, plus dividends, plus interest. The Company considers conversions from and to advisory accounts as deposits and withdrawals, respectively. Figures for Net New Brokerage Assets reported prior to April 2020 did not include dividends and interest. The figure previously reported for Q4 2019 was an outflow of $0.8 billion. See FN 1.

(18) Consists of net new assets excluding the acquisitions of Lucia Securities, LLC and E.K. Riley Investments, LLC. Acquired assets include $2.5 billion of net new assets related to E.K. Riley Investments, LLC in November 2020, and $1.5 billion of net new assets from Lucia Securities, LLC in October 2020.

(19) Consists of existing custodied assets that converted from brokerage to advisory, less existing custodied assets that converted from advisory to brokerage.

(20) Calculated as annualized current period net new assets divided by preceding period assets in their respective categories of advisory assets or total advisory and brokerage assets. (See FN 18)

(21) Consists of total client deposits into advisory accounts on LPL Financial's corporate advisory platform (FN 13) less total client withdrawals from advisory accounts on its corporate advisory platform, plus dividends, plus interest, minus advisory fees. Figures for Corporate Platform Net New Advisory Assets reported prior to April 2020 did not include dividends and interest or subtract advisory fees. The figure previously reported for Q4 2019 was an inflow of $7.5 billion. See FN 1.

(22) Consists of total client deposits into advisory accounts on LPL Financial's independent advisory platform (FN 14) less total client withdrawals from advisory accounts on its independent advisory platform, plus dividends, plus interest, minus advisory fees. Figures for Hybrid Platform Net New Advisory Assets reported prior to April 2020 did not include dividends and interest or subtract advisory fees. The figure previously reported for Q4 2019 was an inflow of $2.1 billion. See FN 1.

(23) Consists of total client deposits into centrally managed assets accounts (FN 15) less total client withdrawals from centrally managed assets accounts, plus dividends, plus interest, minus advisory fees. Figures for Centrally Managed Net New Advisory Assets reported prior to April 2020 did not include dividends and interest or subtract advisory fees. The figure previously reported for Q4 2019 was an inflow of $2.0 billion. See FN 1.

(24) Calculated by dividing revenue for the period by the average balance during the period.

(25) Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial. Reported activity does not include any other cash activity, such as deposits, withdrawals, dividends received or fees paid.

(26) Consists of cash unrestricted by the Credit Agreement and other regulations available for operating, investing and financing uses.

(27) EBITDA and Credit Agreement EBITDA are non-GAAP financial measures. Please see a description of EBITDA and Credit Agreement EBITDA under “Non-GAAP Financial Measures” on page 3 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 EBITDA and Credit Agreement EBITDA to net income for the periods presented (dollars in thousands):

Q4 2020

Q3 2020

EBITDA and Credit Agreement EBITDA Reconciliations

Net income

$

472,640

$

487,768

Non-operating interest expense and other

105,765

112,170

Provision for income taxes

153,433

157,471

Loss on extinguishment of debt

3,156

Depreciation and amortization

109,732

106,745

Amortization of intangible assets

67,358

66,719

EBITDA

$

908,928

$

934,029

Credit Agreement Adjustments:

Employee share-based compensation expense

$

31,650

$

31,287

Advisor share-based compensation expense

2,321

2,404

Other

18,326

13,107

Credit Agreement EBITDA (trailing twelve months)

$

961,225

$

980,827

(28) Calculated based on the average advisor count from the current period and prior period.

(29) Calculated based on the end-of-period total advisory and brokerage assets divided by end-of-period advisor count.

(30) Represents the amortization expense amount of forgivable loans for transition assistance to advisors and financial institutions.

(31) Represents advisory revenue as a percentage of Corporate Platform Advisory Assets (FN 13) for the trailing twelve month period.

(32) Represents Gross Profit (FN 6), a non-GAAP financial measure, for the trailing twelve month period, divided by average month-end total advisory and brokerage assets for the trailing twelve month period.

(33) Represents operating expenses for the trailing twelve month period, excluding production-related expense, divided by average month-end total advisory and brokerage assets for the period. Production-related expense includes commissions and advisory expense and brokerage, clearing and exchange expense. For purposes of this metric, operating expenses includes Core G&A (FN 10), a non-GAAP financial measure, as well as regulatory charges, promotional, employee share-based compensation, depreciation and amortization, and amortization of intangible assets.

(34) EBIT ROA is calculated as Gross Profit ROA (FN 32) less OPEX as a percentage of Total Advisory and Brokerage Assets. (See FN 33)

(35) Reflects retention of advisory and commission revenues, calculated by deducting the prior year production of the annualized year-to-date attrition rate, over the prior year total production.

(36) Recurring Gross Profit Rate refers to the percentage of the Company’s Gross Profit, a non-GAAP financial measure, that was recurring for the trailing twelve month period. Management tracks Recurring Gross Profit, a characterization of Gross Profit and a statistical measure, which is defined to include the Company’s revenues from asset-based fees, advisory fees, trailing commissions, client cash programs and certain other fees that are based upon client accounts and advisors, less the expenses associated with such revenues and certain other recurring expenses not specifically associated with a revenue line. Management allocates such other recurring expenses on a pro-rata basis against specific revenue lines at its discretion.

(37) Capital Allocated per Share equals the amount of capital allocated for share repurchases and cash dividends divided by the diluted weighted-average shares outstanding.

(38) EPS Prior to Amortization of Intangible Assets is a non-GAAP financial measure. Please see a description of EPS Prior to Amortization of Intangible Assets under “Non-GAAP Financial Measures” on page 3 of this release for additional information. Below is a reconciliation of EPS Prior to Amortization of Intangible Assets to the Company’s GAAP EPS for the periods presented:

EPS Reconciliation (in thousands, except per share data)

Q4 2020

EPS

$

1.38

Amortization of Intangible Assets

17,270

Tax Benefit

(4,836

)

Amortization of Intangible Assets Net of Tax Benefit

$

12,434

Diluted Share Count

80,904

EPS Impact

$

0.15

EPS Prior to Amortization of Intangible Assets

$

1.53