* Established 2006 earnings guidance of $1.30 - $1.45 per share excluding
$0.05 per share in acquisition-related integration expenses
* Retail Daily Average Revenue Trades (DARTs) increase 8.3 percent month
over month
NEW YORK, Dec. 14 /PRNewswire-FirstCall/ -- E*TRADE FINANCIAL Corporation
(NYSE: ET) today established 2006 earnings guidance of $1.30 - $1.45 per share
on Total Net Revenue of $2.2 - $2.4 billion. This guidance range excludes the
impact of an expected $35 million, or approximately $0.05 per share, of
integration-related expenses associated with the Company's recent acquisitions
of Harrisdirect and BrownCo. Of the $0.05 in expected integration-related
expense, management anticipates that $0.03 will be realized in the first
quarter of 2006, $0.01 in the second quarter and the remaining $0.01 in the
third quarter. Including these integration-related expenses, the Company
expects GAAP EPS of $1.25 - $1.40 in 2006.
"We expect 2006 to be a year of accelerated growth for E*TRADE FINANCIAL,"
said Mitchell H. Caplan, CEO, E*TRADE FINANCIAL Corporation. "The strength of
strategic acquisitions along with our continued ability to leverage our retail
customer base against our institutional business positions our differentiated
model to deliver strong performance in net revenue and earnings with operating
margins over 40 percent."
E*TRADE FINANCIAL now expects earnings accretion from its recent
acquisitions, included in its guidance, to be $0.19 in 2006, up from $0.15 at
the time of announcement. The Company was able to finance and close both the
Harrisdirect and the BrownCo acquisitions ahead of plan. The Harrisdirect
conversion is expected to be completed in early Q1 '06 -- six months ahead of
plan -- and the BrownCo conversion to be completed in early Q2 '06 -- a full
quarter ahead of plan.
As part of its ongoing disciplined review, the Company has made the
decision to exit the remaining portion of E*TRADE Professional and is in
negotiations to sell the business to its current management team. This action
does not impact the Company's 2005 guidance. The change eliminates 30,955
daily average revenue trades from the Company's total trade volume in
November. Excluding the Professional DARTs, the Company expects its average
commission rate in the fourth quarter to be in a range of $12.85 - $13.10 per
trade.
The Company also reported November Retail Daily Average Revenue Trades of
123,506, an increase of 8.3 percent from October and 29.8 percent from a year
ago. Gross new accounts totaled 91,338 with 52,582 new investing/trading
accounts and 38,756 new deposit/lending accounts added during the month.
Average margin debt balances were up slightly versus October and increased 65
percent from a year ago to $3.3 billion. The Company also reported total
client assets of $144.0 billion, representing a 4.6 percent increase from
October and a 54.5 percent increase over the year ago period.
2006 GAAP EARNINGS GUIDANCE
Key Driver Assumptions 2006 Estimates
Low High
DARTs(1) (in thousands) 135 150
Average commission per revenue trade $12.25 $12.40
Average margin debt ($B) $6.0 $6.6
Enterprise cash, end of period ($B) $28.5 $30.5
Average enterprise interest rate spread
(basis points) 270 285
Average enterprise interest earning assets(2) ($B) $41 $44
Total net revenues ($MM) $2,200 $2,400
Total expenses excluding interest 1,250 1,350
Segment income (3) $950 $1,050
Consolidated operating margin (4) 43% 44%
Total other income ($110) ($110)
Effective tax rate 37% 37%
Net income $530 $595
GAAP EPS Guidance $1.25 $1.40
Acquisition-related integration costs(5) $0.05 $0.05
EPS, excluding acquisition-related integration
costs $1.30 $1.45
Average diluted shares outstanding (MM) 425 425
(1) Excludes Professional DARTs.
(2) Includes margin debt balances.
(3) Income before other income, income taxes and discontinued operations.
(4) Income before other income, income taxes and discontinued operations
divided by total net revenues.
(5) Expected one-time costs related to the integration of Harrisdirect and
BrownCo.
KEY PERFORMANCE METRICS (1)
Q405
QTD *
vs.
Nov-05 Qtr Qtr
vs. Q405 Ended Ended
Nov-05 Oct-05 Oct-05 QTD * 9/30/05 9/30/05
Trading days 20.5 21.0 N.M. 41.5 64.0 N.M.
Daily Average Revenue
Trades (DARTs)
US 107,821 98,787 9.1 % 103,250 79,257 30.3 %
International 15,685 15,265 2.8 % 15,472 14,619 5.8 %
Total Retail DARTs 123,506 114,052 8.3 % 118,722 93,876 26.5 %
Market Making
Equity shares
traded (MM) 9,677 10,154 (4.7)% 19,831 35,125 N.M.
Average revenue
capture per 1,000
shares $0.658 $0.634 3.8 % $0.646 $0.535 20.7 %
Gross New Accounts
Investing/Trading
accounts 52,582 484,423 N.M. 537,005 155,304 N.M.
Deposit/Lending
accounts 38,756 15,557 N.M. 54,313 68,560 N.M.
Total gross new
accounts 91,338 499,980 N.M. 591,318 223,864 N.M.
Active Accounts
Investing/Trading
accounts 3,440,576 3,426,892 0.4 % 3,440,576 3,014,467 14.1 %
Deposit/Lending
accounts 681,854 679,921 0.3 % 681,854 678,449 0.5 %
Total active
accounts end of
period 4,122,430 4,106,813 0.4 % 4,122,430 3,692,916 11.6 %
End of period
margin debt ($MM) $3,327 $3,341 (0.4)% $3,327 $2,426 37.1 %
Average margin
debt ($MM) $3,326 $3,323 0.1 % $3,324 $2,268 46.6 %
Retail Assets /
Deposits ($MM)
Retail client
assets in
investing
accounts $129,004 $123,543 4.4 % $129,004 $92,320 39.7 %
Retail deposits in
customer accounts $15,012 $14,088 6.6 % $15,012 $14,031 7.0 %
Total retail
assets / deposits
in customer
accounts $144,016 $137,631 4.6 % $144,016 $106,351 35.4 %
*Q405 quarter-to-date (QTD) includes results for the two months ended
November 30, 2005
(1) November data includes accounts, DARTs, assets and margin debt from
the acquisition of Harrisdirect, but does not include the 186,000 accounts,
$3.1B in margin debt, 30,000 DARTs, or $33.5B in assets resulting from the
BrownCo acquisition.
Historical monthly metric data from January 2003 to November 2005 can be
found on the E*TRADE FINANCIAL investor relations site at http://www.etrade.com.
About E*TRADE FINANCIAL
The E*TRADE FINANCIAL family of companies provides financial services
including trading, investing, banking and lending for retail and institutional
customers. Securities products and services are offered by E*TRADE Securities
LLC (Member NASD/SIPC). Bank and lending products and services are offered by
E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries.
Important Notice
E*TRADE FINANCIAL and the E*TRADE FINANCIAL logo are registered trademarks
or trademarks of E*TRADE FINANCIAL Corporation. The statements contained in
this news release that are forward-looking are based on current expectations
that are subject to a number of uncertainties and risks, and actual results
may differ materially. The uncertainties and risks include, but are not
limited to, changes in market activity, anticipated increases in the rate of
new customer acquisition, the conversion of new visitors to the site to
customers, the activity of customers and assets held at the institution,
seasonality, the development and enhancement of products and services,
competitive pressures (including price competition), system failures, economic
and political conditions, changes in consumer behavior and the introduction of
competing products having technological and/or other advantages. Further
information about these risks and uncertainties can be found in the
information included in the annual reports previously filed by E*TRADE Group,
Inc. or E*TRADE FINANCIAL Corporation with the SEC on Form 10-K (including
information under the caption "Risk Factors") and quarterly reports on Form
10-Q.
E*TRADE FINANCIAL Media Contact
Pam Erickson
E*TRADE FINANCIAL Corporation
617-296-6080
pam.erickson@etrade.com
E*TRADE FINANCIAL Investor Relations Contact
Adam Townsend
E*TRADE FINANCIAL Corporation
703-236-8719
adam.townsend@etrade.com
SOURCE E*TRADE FINANCIAL Corporation
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Related links:
http://www.etrade.com
CONTACT:
media, Pam Erickson, +1-617-296-6080, or
pam.erickson@etrade.com, or investors, Adam Townsend,
+1-703-236-8719, or adam.townsend@etrade.com, both of E*TRADE
FINANCIAL Corporation
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