Lpl Financial Holdings Inc. · NASDAQ:LPLA
Lpl Financial — Non-Deal Roadshow (December 2012)
18 slides from Lpl Financial's roadshow presentation, December 2012
Slide 1: Q4 2012 Investor Meetings
Q4 2012 Investor Meetings December 2012 Member FINRA/SIPC
Slide 2: Safe harbor disclosure
Safe harbor disclosure Statements in this presentation regarding the Company's future financial and operating results, growth, business strategy, projected costs, plans, liquidity, and ability and plans to repurchase shares and pay dividends in the f t future, as wellll as any other th statements t
Slide 3: Overview of LPL Financial
Overview of LPL Financial We provide over 17,000 US based financial advisors with the most versatile and cost effective business platform for delivering personal, personal conflict conflict-free free financial advice to a range of clients from the mass market to high-net-worth individuals What we do
Slide 4: Serving Advisors through a conflict-free business model
Serving g Advisors through g a conflict-free business model No Supports Integrated No No No Market Direct-to- Independent Fully Open RIA & Proprietary Investment Making Consumer Financial Architecture Brokerage Products g Banking B i Business Ad i Advisors Pl tf Platform LPL Financial Member FINRA/S
Slide 5: Industry leader with scale and growing share
Industry y leader with scale and g growing g share Clear Market Leader Consistent Growth Select Competitors p as of 09/30/12 byy Number of Advisors(1) LPL Advisors 13,170 17,533 Independent B/D Insurance Wirehouse Regional B/D 12,847 16,829 12,444 11,920 11,950 15,167 4,593(4) Total Industry FAs 316
Slide 6: Distinct value proposition to our advisors
Distinct value p proposition p to our advisors Provide consulting, training, service and t h l technology th thatt helps h l advisors d i grow Advisor Superior economics and build equity Differentiated from other independents ervices ent and and Comp liance dent Technology Researc h Independ E
Slide 7: Strategy for growth
Strategy gy for growth… g Diversify Advisor Base Expanding Addressable Assets (1) Recruiting across all channels Now serving >90% of retail assets Wide range of businesses, including Total of $24.1 Total of $27.5 large enterprises Trillion Trillion 17,763 Independent p Middle 15 571 15,571 M M
Slide 8: Drives asset accumulation
…Drives asset accumulation Growth in AUM and AUM per Advisor Index AUM Growth versus Market Brokerage AUM ($ billions) S&P 500 400 Advisory AUM ($ billions) 23.0 $21 22.0 AUM 9.8 350 AUM per Advisor ($ millions) $18 $19 $19 21.0 20.0 AUM per Advisor 8.7 19.0 8.3 $16 $17 $353 18.0 300 $330 17.0 7.4 7
Slide 9: Multiple levers of growth
Multiple p levers of growth g Growth Drivers Expected Impact Benefit Benefit Increases production revenue Same Store Sales Increasing AUM per advisor Grows fee-based business New and maturing advisors 7 – 12% net new advisory asset flows Drives high margin attachment New Capabilities 400 net new adv
Slide 10: Proven track record across market cycles
Proven track record across market cycles y Net Revenue, $ in millions Adjusted EBITDA, $ in millions Adjusted EBITDA Margin % 500 16.00% 4000 14.3% 12.6% $3,546 450 13.4% 13.3% $3,479 12.9% 13.2% 14.00% 12.5% 3500 12.1% $3,116 $3,114 400 11.2% 11 1% 11.1% 10.6% 10.5% 12.00% 3000 $2,717 $2,750 350 8.
Slide 11: Operational update
Operational p update p Cautious retail investor sentiment against a volatile market environment and unresolved fiscal cliff Advisor pipeline remains strong Production retention of 95% YTD Sequential decline in Adjusted G&A of ~$12 $ million for Q4 Expand and accelerate Service Value Commit
Slide 12: Strong cash generation enables reinvestment and returns
Strong g cash g generation enables reinvestment and returns Strong Cash Flow Generation Capital Deployment Since 12/31/10 ($664 million) C it l Capital Cash Available for Corporate Use Cash Reserve Expenditure(1) $193 Debt 10% Repayment Dividends Quarterly 12% 36% dividend $223 $129 $13 Share Cash F
Slide 13: LPL is a unique investment opportunity
LPL is a unique q investment opportunity pp y Industry leader with scale and growing share Distinct value p proposition p to our advisors Proven track record across market cycles Strong cash generation and return of capital Highly attractive secular growth trends Experienced and committed management
Slide 14: Appendix
Appendix _
Slide 15: Highly attractive secular growth trends
Highly g y attractive secular growth g trends Rising needs of retail investors Growth in Addressable Growth in Retirement Assets(1) ($ trillions) Assets(2) ($ trillions) – Expanding household investable assets $ $28 $21 – Growth in retirement savings $22 $16 $17 – Increasing demand for independent
Slide 16: Attractive financial model
Attractive financial model Diverse revenue sources with embedded growth – 95%+ retention – No advisor concentration greater than 3% – Recurring revenue of 66% – High margin attachment revenue driven by self-clearing capability Expenses are primarily variable (~80% of the cost base) – Production
Slide 17: Cyclicality in advisor productivity impacts quarters
Cyclicality y y in advisor p productivity y impacts p q quarters Annualized Commissions per Advisor Net New Advisory Assets(1) ($ thousands) (($ billions)) S&P 500 Daily Average 15% $4.0 Annualized Net Flow 16% $155 15% $160.0 $151 $143 $145 $146 $144 $3.5 12% 14% $140 $139 $138 $137 $134 12% 12% 12
Slide 18: Business and Financial Metrics Supplement
LPL Financial Business and Financial Metrics Supplement ($ billions) unless otherwise noted YoY Seq Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Growth Growth Brokerage and Advisory Assets Under Custody Brokerage $220.1 $228.7 $243.3 $241.6 $252.8 14.9% 4.6% Advisory 96.3 101.6 110.8 111.4 118.6 23.2% 6.5% Total A
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