Federated Investors, Inc. Reports First Quarter 2014 Earnings
PR Newswire Association LLC |
Federated's total managed assets were
"Federated's strong gross equity sales reflect our multi-strategy investment approach where 70 percent of our fund assets outperformed the majority of their peers over the last three years," said J. Christopher Donahue, president and chief executive officer. "Federated saw continued success with our dividend income and balanced strategies, the
Federated's board of directors declared a quarterly dividend of
Federated's equity assets were a record
Federated's fixed-income assets were
Money market assets in both funds and separate accounts were
Financial Summary
Q1 2014 vs. Q1 2013
Revenue decreased by
During Q1 2014, Federated derived 65 percent of its revenue from equity and fixed-income assets (42 percent from equity assets and 23 percent from fixed-income assets), 34 percent from money market assets and 1 percent from other products and services.
Operating expenses decreased
Q1 2014 vs. Q4 2013
Revenue decreased by
Operating expenses were flat.
Nonoperating income, net, decreased
Federated's level of business activity and financial results are dependent upon many factors including market conditions, investment performance and investor behavior. These factors and others including asset levels, product sales and redemptions, market appreciation or depreciation, revenues, fee waivers and expenses can significantly impact Federated's activity levels and financial results. Risk factors and uncertainties that can influence Federated's financial results are discussed in the company's annual and quarterly reports as filed with the
Fee waivers to maintain positive or zero net yields and the resulting negative impact of these waivers could vary significantly in the future as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the
Unaudited Money Market Fund Yield Waiver Impact to Consolidated Statements of Income (in millions) |
||||||||||||||
Quarter Ended |
Change |
Quarter Ended |
Change |
|||||||||||
|
|
Q1 2013 to |
|
Q4 2013 to |
||||||||||
2014 |
2013 |
Q1 2014 |
2013 |
Q1 2014 |
||||||||||
Investment advisory fees |
$ |
(73.1) |
$ |
(54.9) |
$ |
(18.2) |
$ |
(70.9) |
$ |
(2.2) |
||||
Other service fees |
(33.6) |
(32.4) |
(1.2) |
(33.7) |
0.1 |
|||||||||
Total revenue |
(106.7) |
(87.3) |
(19.4) |
(104.6) |
(2.1) |
|||||||||
Less: Reduction in distribution expense |
74.3 |
64.8 |
9.5 |
73.3 |
1.0 |
|||||||||
Operating income |
(32.4) |
(22.5) |
(9.9) |
(31.3) |
(1.1) |
|||||||||
Less: Reduction in noncontrolling interest |
2.7 |
0.8 |
1.9 |
2.0 |
0.7 |
|||||||||
Pre-tax impact |
$ |
(29.7) |
$ |
(21.7) |
$ |
(8.0) |
$ |
(29.3) |
$ |
(0.4) |
||||
Federated will host an earnings conference call at
1) Strategic Insight,
Separately managed accounts are made available through
Certain statements in this press release, such as those related to the level of fee waivers and expenses incurred by the company, product demand and performance, investor interest, asset flows and mix, fee arrangements with customers and market conditions constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Other risks and uncertainties include the ability of the company to predict the level of fee waivers and expenses in future quarters, which could vary significantly depending on a variety of factors identified above, and include the ability of the company to sustain product demand and asset flows and mix, which could vary significantly depending on market conditions, investment performance and investor behavior. Other risks and uncertainties also include the risk factors discussed in the company's annual and quarterly reports as filed with the
Unaudited Condensed Consolidated Statements of Income |
||||||||
(in thousands, except per share data) |
||||||||
Quarter Ended |
% Change |
Quarter Ended |
% Change |
|||||
Q1 2013 to Q1 |
Q4 2013 to Q1 |
|||||||
|
|
2014 |
|
2014 |
||||
Revenue |
||||||||
Investment advisory fees, net |
$ |
135,093 |
$ |
150,763 |
(10)% |
$ |
138,051 |
(2)% |
<span class="prnews_span">Administrative service fees, net |
54,727 |
56,828 |
(4) |
55,354 |
(1) |
|||
Other service fees, net |
20,780 |
19,332 |
7 |
20,399 |
2 |
|||
Other, net |
896 |
1,049 |
(15) |
918 |
(2) |
|||
Total Revenue |
211,496 |
227,972 |
(7) |
214,722 |
(2) |
|||
Operating Expenses |
||||||||
Compensation and related |
71,759 |
66,937 |
7 |
68,725 |
4 |
|||
Distribution |
48,558 |
58,240 |
(17) |
49,802 |
(2) |
|||
|
8,381 |
8,844 |
(5) |
9,241 |
(9) |
|||
Office and occupancy |
6,915 |
6,432 |
8 |
6,838 |
1 |
|||
Systems and communications |
6,404 |
6,623 |
(3) |
6,628 |
(3) |
|||
Advertising and promotional |
3,439 |
3,422 |
0 |
3,760 |
(9) |
|||
Travel and related |
2,861 |
2,686 |
7 |
4,108 |
(30) |
|||
Other |
6,534 |
6,589 |
(1) |
5,862 |
11 |
|||
Total Operating Expenses |
154,851 |
159,773 |
(3) |
154,964 |
0 |
|||
Operating Income |
56,645 |
68,199 |
(17) |
59,758 |
(5) |
|||
Nonoperating Income (Expenses) |
||||||||
Investment income, net |
3,613 |
4,428 |
(18) |
8,089 |
(55) |
|||
Debt expense |
(2,812) |
(3,253) |
(14) |
(2,996) |
(6) |
|||
Other, net |
(5) |
(40) |
(88) |
(636) |
(99) |
|||
Total Nonoperating Income, net |
796 |
1,135 |
(30) |
4,457 |
(82) |
|||
Income before income taxes |
57,441 |
69,334 |
(17) |
64,215 |
(11) |
|||
Income tax provision |
21,796 |
24,646 |
(12) |
22,039 |
(1) |
|||
Net income including the noncontrolling interest in subsidiaries |
35,645 |
44,688 |
(20) |
42,176 |
(15) |
|||
Less: Net income attributable to the noncontrolling interest in subsidiaries |
451 |
1,694 |
(73) |
1,105 |
(59) |
|||
Net Income |
$ |
35,194 |
$ |
42,994 |
(18)% |
$ |
41,071 |
(14)% |
Amounts Attributable to Federated |
||||||||
Earnings Per Share1 |
||||||||
Basic and diluted |
$ |
0.34 |
$ |
0.41 |
(17)% |
$ |
0.39 |
(13)% |
Weighted-average shares outstanding |
||||||||
Basic |
100,725 |
100,518 |
100,760 |
|||||
Diluted |
100,727 |
100,518 |
100,762 |
|||||
Dividends declared per share |
$ |
0.25 |
$ |
0.24 |
$ |
0.25 |
||
1) Unvested share-based payment awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of earnings per share under the "two-class method." As such, total net income of |
Unaudited Condensed Consolidated Balance Sheets |
||||
(in thousands) |
March 31, 2014 |
Dec 31, 2013 |
||
Assets |
||||
Cash and other investments |
$ |
256,709 |
$ |
292,178 |
Other current assets |
43,651 |
47,140 |
||
Intangible assets, net and goodwill |
734,807 |
735,345 |
||
Other long-term assets |
59,706 |
61,134 |
||
Total Assets |
$ |
1,094,873 |
$ |
1,135,797 |
Liabilities, Redeemable Noncontrolling Interests and Equity |
||||
Current liabilities |
$ |
186,180 |
$ |
214,205 |
Long-term debt |
170,000 |
198,333 |
||
Other long-term liabilities |
146,173 |
141,398 |
||
Redeemable noncontrolling interests |
16,573 |
15,517 |
||
Equity excluding treasury stock |
1,321,068 |
1,317,583 |
||
Treasury stock |
(745,121) |
(751,239) |
||
Total Liabilities, Redeemable Noncontrolling Interests and Equity |
<p class="prnews_p">$ |
1,094,873 |
$ |
1,135,797 |
Unaudited Changes in (in millions) |
||||||||
Quarter Ended |
||||||||
|
|
|
||||||
Equity funds |
||||||||
Beginning assets |
$ |
28,097 |
$ |
25,930 |
$ |
23,152 |
||
Sales |
2,292 |
1,913 |
1,752 |
|||||
Redemptions |
(1,833) |
(1,740) |
(2,388) |
|||||
Net sales (redemptions) |
459 |
173 |
(636) |
|||||
Net exchanges |
32 </td> |
47 |
47 |
|||||
Market gains and losses/reinvestments1 |
620 |
1,947 |
1,928 |
|||||
Ending assets |
$ |
29,208 |
$ |
28,097 |
$ |
24,491 |
||
Equity separate accounts2 |
||||||||
Beginning assets |
$ |
16,051 |
$ |
14,353 |
$ |
11,858 |
||
Sales3 |
845 |
1,337 |
1,106 |
|||||
Redemptions3 |
(778) |
(701) |
(568) |
|||||
Net sales3 |
67 |
636 |
538 |
|||||
Market gains and losses4 |
553 |
1,062 |
965 |
|||||
Ending assets |
$ |
16,671 |
$ |
16,051 |
$ |
13,361 |
||
Total equity2 |
||||||||
Beginning assets |
$ |
44,148 |
$ |
40,283 |
$ |
35,010 |
||
Sales3 |
3,137 |
3,250 |
2,858 |
|||||
Redemptions3 |
(2,611) |
(2,441) |
(2,956) |
|||||
Net sales (redemptions)3 |
526 |
809 |
(98) |
|||||
Net exchanges |
32 |
47 |
47 |
|||||
Market gains and losses/reinvestments1 |
1,173 |
3,009 |
2,893 |
|||||
Ending assets |
$ |
45,879 |
$ |
44,148 |
$ |
37,852 |
||
Fixed-income funds |
||||||||
Beginning assets |
$ |
39,606 |
$ |
39,944 |
$ |
42,478 |
||
Sales |
4,248 |
3,944 |
5,148 |
|||||
Redemptions |
(4,025) |
(4,400) |
(5,009) |
|||||
Net sales (redemptions) |
223 |
(456) |
139 |
|||||
Net exchanges |
(59) |
(131) |
(42) |
|||||
Market gains and losses/reinvestments1 |
467 |
249 |
37 |
|||||
Ending assets |
$ |
40,237 |
$ |
39,606 |
$ |
42,612 |
||
Fixed-income separate accounts2 |
||||||||
Beginning assets |
$ |
10,520 |
$ |
10,018 |
$ |
10,233 |
||
Sales3 |
254 |
751 |
531 |
|||||
Redemptions3 |
(232) |
(368) |
(645) |
|||||
Net sales (redemptions)3 |
22 |
383 |
(114) |
|||||
Net exchanges |
0 |
7 |
0 |
|||||
Market gains and losses4 |
204 |
112 |
39 |
|||||
Ending assets |
$ |
10,746 |
$ |
10,520 |
$ |
10,158 |
||
Total fixed income2 |
||||||||
Beginning assets |
$ |
50,126 |
$ |
49,962 |
$ |
52,711 |
||
Sales3 |
4,502 |
4,695 |
5,679 |
|||||
Redemptions3 |
(4,257) |
(4,768) |
(5,654) |
|||||
Net sales (redemptions)3 |
245 |
(73) |
25 |
|||||
Net exchanges |
(59) |
(124) |
(42) |
|||||
Market gains and losses/reinvestments1 |
671 |
361 |
76 |
|||||
Ending assets |
$ |
50,983 |
$ |
50,126 |
$ |
52,770 |
1) |
Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates. |
2) |
Includes separately managed accounts, institutional accounts and sub-advised funds and other managed products. |
3) |
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses. |
4) |
Reflects the approximate changes in the fair value of the securities held by the portfolios. |
Unaudited Total Changes in Equity and Fixed-Income Assets (in millions) |
||||||||
Quarter Ended |
||||||||
|
|
|
||||||
Funds |
||||||||
Beginning assets |
$ |
67,703 |
$ |
65,874 |
$ |
65,630 |
||
Sales |
6,540 |
5,857 |
6,900 |
|||||
Redemptions |
(5,858) |
(6,140) |
(7,397) |
|||||
Net sales (redemptions) |
682 |
(283) |
(497) |
|||||
Net exchanges |
(27) |
(84) |
5 |
|||||
Market gains and losses/reinvestments1 |
1,087 |
2,196 |
1,965 |
|||||
Ending assets |
$ |
$ |
67,703 |
$ |
67,103 |
|||
Separate accounts2 |
||||||||
Beginning assets |
$ |
26,571 |
$ |
24,371 |
$ |
22,091 |
||
Sales3 |
1,099 |
2,088 |
1,637 |
|||||
Redemptions3 |
(1,010) |
(1,069) |
(1,213) |
|||||
Net sales3 |
89 |
1,019 |
424 |
|||||
Net exchanges |
0 |
7 |
0 |
|||||
Market gains and losses4 |
757 |
1,174 |
1,004 |
|||||
|
$ |
27,417 |
$ |
26,571 |
$ |
23,519 |
||
Total assets 2 |
||||||||
Beginning assets |
$ |
94,274 |
$ |
90,245 |
$ |
87,721 |
||
Sales3 |
7,639 |
7,945 |
8,537 |
|||||
Redemptions3 |
(6,868) |
(7,209) |
(8,610) |
|||||
Net sales (redemptions)3 |
771 |
736 |
(73) |
|||||
Net exchanges |
(27) |
(77) |
5 |
|||||
Market gains and losses/reinvestments1 |
1,844 |
3,370 |
2,969 |
|||||
Ending assets |
$ |
96,862 |
$ |
94,274 |
$ |
90,622 |
1) |
Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates. |
2) |
Includes separately managed accounts, institutional accounts and sub-advised funds and other managed products. |
3) |
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses. |
4) |
Reflects the approximate changes in the fair value of the securities held by the portfolios. |
(unaudited) |
||||||||||||||
MANAGED ASSETS (in millions) |
March 31, 2014 |
|
|
June 30, 2013 |
March 31, 2013 |
|||||||||
By Asset Class |
||||||||||||||
Equity |
$ |
45,879 |
$ |
44,148 |
$ |
40,283 |
$ |
38,705 |
$ |
37,852 |
||||
Fixed-income |
50,983 |
50,126 |
49,962 |
50,005 |
52,770 |
|||||||||
Money market |
263,648 |
275,952 |
270,293 |
268,532 |
279,668 |
|||||||||
Liquidation portfolio1 |
5,690 |
5,858 |
6,177 |
6,561 |
7,019 |
|||||||||
Total Managed Assets |
$ |
366,200 |
$ |
376,084 |
$ |
366,715 |
$ |
363,803 |
$ |
377,309 |
||||
By Product Type |
||||||||||||||
Funds: |
||||||||||||||
Equity |
$ |
29,208 |
$ |
28,097 |
$ |
25,930 |
$ |
25,030 |
$ |
24,491 |
||||
Fixed-income |
40,237 |
39,606 |
39,944 |
40,188 |
42,612 |
|||||||||
Money market |
227,470 |
240,048 |
237,949 |
232,874 |
242,734 |
|||||||||
Total Fund Assets |
$ |
296,915 |
$ |
307,751 |
$ |
303,823 |
$ |
298,092 |
$ |
309,837 |
||||
Separate accounts: |
||||||||||||||
Equity |
$ |
16,671 |
$ |
16,051 |
$ |
14,353 |
$ |
13,675 |
$ |
13,361 |
||||
Fixed-income |
10,746 |
10,520 |
10,018 |
9,817 |
10,158 |
|||||||||
Money market |
36,178 |
35,904 |
32,344 |
35,658 |
36,934 |
|||||||||
Total Separate Accounts |
$ |
63,595 |
$ |
62,475 |
$ |
56,715 |
$ |
59,150 |
$ |
60,453 |
||||
Total Liquidation Portfolio1 |
$ |
5,690 |
$ |
5,858 |
$ |
6,177 |
$ |
6,561 |
$ |
7,019 |
||||
Total Managed Assets |
$ |
366,200 |
$ |
376,084 |
$ |
366,715 |
$ |
363,803 |
$ |
377,309 |
||||
AVERAGE MANAGED ASSETS |
Quarter Ended |
|||||||||||||
(in millions) |
|
|
|
June 30, 2013 |
March 31, 2013 |
|||||||||
By Asset Class |
||||||||||||||
Equity |
$ |
44,693 |
$ |
42,539 |
$ |
39,910 |
$ |
38,762 |
$ |
36,685 |
||||
Fixed-income |
50,658 |
50,268 |
49,983 |
52,375 |
52,732 |
|||||||||
Money market |
273,233 |
267,351 |
267,881 |
274,899 |
284,588 |
|||||||||
Liquidation portfolio1 |
5,791 |
6,050 |
6,434 |
6,834 |
7,215 |
|||||||||
Total Avg. Assets |
$ |
374,375 |
$ |
366,208 |
$ |
364,208 |
$ |
372,870 |
$ |
381,220 |
||||
By Product Type |
||||||||||||||
Funds: |
||||||||||||||
Equity |
$ |
28,516 |
$ |
27,157 |
$ |
25,761 |
$ |
25,094 |
$ |
24,037 |
||||
Fixed-income |
39,987 |
39,883 |
39,987 |
42,258 |
42,581 |
|||||||||
Money market |
235,228 |
234,788 |
234,528 |
237,790 |
250,652 |
|||||||||
Total Avg. Fund Assets |
$ |
303,731 |
$ |
301,828 |
$ |
300,276 |
$ |
305,142 |
$ |
317,270 |
||||
Separate accounts: |
||||||||||||||
Equity |
$ |
16,177 |
$ |
15,382 |
$ |
14,149 |
$ |
13,668 |
$ |
12,648 |
||||
Fixed-income |
10,671 |
10,385 |
9,996 |
10,117 |
10,151 |
|||||||||
Money market |
38,005 |
32,563 |
33,353 |
37,109 |
33,936 |
|||||||||
Total Avg. Separate Accounts |
$ |
64,853 |
$ |
58,330 |
$ |
57,498 |
$ |
60,894 |
$ |
56,735 |
||||
Total Avg. Liquidation Portfolio1 |
$ |
5,791 |
$ |
6,050 |
|
6,434 |
$ |
6,834 |
$ |
7,215 |
||||
Total Avg. Managed Assets |
$ |
374,375 |
$ |
366,208 |
$ |
364,208 |
$ |
372,870 |
$ |
381,220 |
||||
1) Liquidation portfolio represents a portfolio of distressed bonds at cost. Federated has been retained by a third party to manage these assets through an orderly liquidation process that will generally occur over a multi-year period. Management-fee rates earned from this portfolio are lower than those of traditional separate account mandates. |
SOURCE
Wordcount: | 2975 |
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