PITTSBURGH, April 23, 2015 /PRNewswire/ -- Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported earnings per diluted share (EPS) of $0.35 for Q1 2015, up 3 percent from $0.34 for the same quarter last year on net income of $36.3 million for Q1 2015, compared to $35.2 million for Q1 2014.

Federated's total managed assets were $355.8 billion at March 31, 2015.  Total managed assets were down $10.4 billion or 3 percent from $366.2 billion at March 31, 2014 and down $7.1 billion or 2 percent from $362.9 billion at Dec. 31, 2014.  Both equity and fixed-income managed assets increased, offset by decreased money market assets.  Average managed assets for Q1 2015 were $359.5 billion, down $14.9 billion or 4 percent from $374.4 billion reported for Q1 2014 and up $7.6 billion or 2 percent from $351.9 billion reported for Q4 2014.

"During the first quarter, Federated saw strong gross and net sales in a range of strategies—from growth and dividend-oriented equity offerings to balanced funds," said J. Christopher Donahue, president and chief executive officer.  "Federated's clients also sought fixed-income strategies such as the Federated Total Return Bond Fund and our high-yield products."

Federated's board of directors declared a dividend of $0.25 per share. The dividend is payable on May 15, 2015 to shareholders of record as of May 8, 2015. During Q1 2015, Federated purchased 305,269 shares of Federated class B common stock for $9.9 million.

Federated's equity assets were a record $54.0 billion at March 31, 2015, up $8.1 billion or 18 percent from $45.9 billion at March 31, 2014 and up $2.6 billion or 5 percent from $51.4 billion at Dec. 31, 2014. Top-selling equity funds during Q1 2015 on a net basis were Federated Kaufmann Large Cap Fund, Federated Strategic Value Dividend Fund, Federated Capital Income Fund, Federated Muni and Stock Advantage Fund and Federated International Leaders Fund.

Federated's fixed-income assets were $53.6 billion at March 31, 2015, up $2.6 billion or 5 percent from $51.0 billion at March 31, 2014 and up $0.9 billion or 2 percent from $52.7 billion at Dec. 31, 2014.  Top-selling fixed-income funds during Q1 2015 on a net basis were Federated Total Return Bond Fund, Federated Institutional High Yield Bond Fund, Federated Municipal Ultrashort Fund, Federated High Yield Trust and Federated Ultrashort Bond Fund. 

Money market assets were $248.2 billion at March 31, 2015, down $15.4 billion or 6 percent from $263.6 billion at March 31, 2014 and down $10.6 billion or 4 percent from $258.8 billion at Dec. 31, 2014. Money market mutual fund assets were $214.3 billion at March 31, 2015, down $13.2 billion or 6 percent from $227.5 billion at March 31, 2014 and down $11.2 billion or 5 percent from $225.5 billion at Dec. 31, 2014.

Financial Summary

Q1 2015 vs. Q1 2014

Revenue increased by $9.0 million or 4 percent primarily due to an increase in revenue from higher average equity assets and a decrease in voluntary fee waivers related to certain money market funds in order for those funds to maintain positive or zero net yields, partially offset by a decrease in revenue from lower average money market assets.  See additional information about voluntary fee waivers in the table at the end of this financial summary.

During Q1 2015, Federated derived 68 percent of its revenue from equity and fixed-income assets (46 percent from equity assets and 22 percent from fixed-income assets) and 32 percent from money market assets.

Operating expenses increased $6.6 million or 4 percent primarily due to an increase in compensation and related expenses, mainly from higher incentive compensation.  Distribution expenses increased due to a decrease in fee waivers related to the low-yield environment for money market funds, as well as higher average equity assets.  These increases were partially offset by lower average money market assets.

Q1 2015 vs. Q4 2014

Revenue increased by $2.7 million or 1 percent primarily due to a decrease in voluntary fee waivers and an increase in revenue from higher average equity assets, partially offset by a decrease in revenue due to fewer days in Q1 2015.

Operating expenses increased $5.3 million or 3 percent primarily due to an increase in compensation and related expense, driven by seasonally higher payroll taxes and higher incentive compensation.

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, expenses and regulatory changes, can significantly impact Federated's business 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 Securities and Exchange Commission (SEC).

Fee waivers to maintain positive or zero net yields on money market funds 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, yields on instruments available for purchase by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the SEC, the Financial Stability Oversight Council and other governmental entities, changes in fees and expenses of the money market funds, changes in the mix of money market customer assets, changes in the money market product structures and offerings, demand for competing products, changes in the distribution fee arrangements with third parties, Federated's willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties.

 

Unaudited Money Market Fund Yield Waiver Impact to the Consolidated Statements of Income

(in millions)










Quarter Ended


Change
Q1 2014 to Q1 2015


Quarter Ended


Change
Q4 2014 to Q1 2015


March 31, 2015


March 31, 2014



Dec. 31, 2014


Investment advisory fees

$

(62.3)



$

(73.1)



$

10.8



$

(67.4)



$

5.1


Other service fees

(31.8)



(33.6)



1.8



(32.4)



0.6


Total revenue

(94.1)



(106.7)



12.6



(99.8)



5.7


Less: Reduction in distribution expense

64.6



74.3



(9.7)



67.6



(3.0)


Operating income

(29.5)



(32.4)



2.9



(32.2)



2.7


Less: Reduction in noncontrolling interest

2.5



2.7



(0.2)



2.7



(0.2)


Pre-tax impact

$

(27.0)



$

(29.7)



$

2.7



$

(29.5)



$

2.5


 

Federated will host an earnings conference call at 9 a.m. Eastern on April 24, 2015. Investors are invited to listen to Federated's earnings teleconference by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to the 9 a.m. start time.  The call may also be accessed in real time on the Internet via the About Federated section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and through May 1, 2015 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering access code 13605702.

Federated Investors, Inc. is one of the largest investment managers in the United States, managing $355.8 billion in assets as of March 31, 2015. With 130 funds and a variety of separately managed account options, Federated provides comprehensive investment management to more than 7,700 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers.  Federated ranks in the top 3 percent of money market fund managers in the industry, the top 6 percent of equity fund managers and the top 9 percent of fixed-income fund managers1.  For more information, visit FederatedInvestors.com.

1) Strategic Insight, Feb. 28, 2015.  Based on assets under management in open-end funds.
Federated Securities Corp. is distributor of the Federated funds.
Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling and Federated MDTA LLC, each a registered investment adviser.

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 and preferences, asset flows and mix, changes in product structure, fee arrangements with customers, distribution expense, regulatory changes 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 SEC.  As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.

 


Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)








Quarter Ended

% Change
Q1 2014 to
Q1 2015


Quarter Ended

 % Change
Q4 2014 to
Q1 2015


March 31, 2015

March 31, 2014


Dec. 31, 2014

Revenue







Investment advisory fees, net

$

146,559


$

135,093


8%



$

143,587


2%


Administrative service fees, net—affiliates

53,017


54,727


(3)



53,427


(1)


Other service fees, net

19,787


20,780


(5)



19,562


1


Other, net

1,159


896


29



1,282


(10)


Total Revenue

220,522


211,496


4



217,858


1









Operating Expenses







Compensation and related

76,498


71,759


7



72,161


6


Distribution

53,495


51,197


4



53,764


(1)


Professional service fees

7,882


8,381


(6)



5,714


38


Systems and communications

6,870


6,404


7



6,773


1


Office and occupancy

6,853


6,915


(1)



7,526


(9)


Advertising and promotional

3,471


3,439


1



3,661


(5)


Travel and related

2,759


2,861


(4)



3,792


(27)


Other

3,656


3,895


(6)



2,833


29


Total Operating Expenses

161,484


154,851


4



156,224


3


Operating Income

59,038


56,645


4



61,634


(4)









Nonoperating (Expenses) Income







Investment income, net

890


3,613


(75)



2,325


(62)


Debt expense

(1,373)


(2,812)


(51)



(1,787)


(23)


Other, net

(13)


(5)


160



(15)


(13)


Total Nonoperating (Expenses) Income, net

(496)


796


(162)



523


(195)


Income before income taxes

58,542


57,441


2



62,157


(6)


Income tax provision

22,124


21,796


2



22,552


(2)


Net income including the noncontrolling interests in subsidiaries

36,418


35,645


2



39,605


(8)


Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries

111


451


(75)



(8)


1,488


Net Income

$

36,307


$

35,194


3%



$

39,613


(8)%









Amounts Attributable to Federated Investors, Inc.







Earnings Per Share1







Basic and diluted

$

0.35


$

0.34


3%



$

0.38


(8)%


Weighted-average shares outstanding







Basic

100,641


100,725




100,642



Diluted

100,642


100,727




100,643



Dividends declared per share

$

0.25


$

0.25




$

0.25



1) Unvested share-based 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 $1.5 million, $1.4 million and $1.5 million available to unvested restricted shareholders for the quarterly periods ended March 31, 2015, March 31, 2014 and Dec. 31, 2014, respectively, was excluded from the computation of earnings per share.

 

Unaudited Condensed Consolidated Balance Sheets



(in thousands)

March 31, 2015

Dec. 31, 2014

Assets



Cash and other investments

$

279,630


$

297,338


Other current assets

43,261


44,717


Intangible assets, net and goodwill

733,400


733,847


Other long-term assets

62,816


64,617


Total Assets

$

1,119,107


$

1,140,519





Liabilities, Redeemable Noncontrolling Interests and Equity



Current liabilities

$

114,346


$

149,321


Long-term debt

210,375


216,750


Other long-term liabilities

165,376


161,099


Redeemable noncontrolling interests

8,582


3,697


Equity excluding treasury stock

783,343


774,910


Treasury stock

(162,915)


(165,258)


Total Liabilities, Redeemable Noncontrolling Interests and Equity

$

1,119,107


$

1,140,519


 

Unaudited Changes in Equity and Fixed-Income Fund and Separate Account Assets

(in millions; excludes liquidation portfolio)



Quarter Ended


March 31, 2015

Dec. 31, 2014

March 31, 2014

Equity funds




Beginning assets

$

33,141


$

32,088


$

28,097


Sales

2,805


2,650


2,292


Redemptions

(1,914)


(1,844)


(1,833)


Net sales

891


806


459


Net exchanges

39


(7)


32


Market gains and losses/reinvestments1

880


254


620


Ending assets

$

34,951


$

33,141


$

29,208






Equity separate accounts2




Beginning assets

$

18,285


$

18,247


$

16,051


Sales3

1,693


1,392


845


Redemptions3

(954)


(1,622)


(778)


Net sales (redemptions)3

739


(230)


67


Market gains and losses4

62


268


553


Ending assets

$

19,086


$

18,285


$

16,671






Total equity2




Beginning assets

$

51,426


$

50,335


$

44,148


Sales3

4,498


4,042


3,137


Redemptions3

(2,868)


(3,466)


(2,611)


Net sales3

1,630


576


526


Net exchanges

39


(7)


32


Market gains and losses/reinvestments1

942


522


1,173


Ending assets

$

54,037


$

51,426


$

45,879






Fixed-income funds




Beginning assets

$

40,456


$

40,435


$

39,606


Sales

4,491


4,631


4,248


Redemptions

(4,193)


(4,411)


(4,025)


Net sales

298


220


223


Net exchanges

(37)


(285)


(59)


Market gains and losses/reinvestments1

322


86


467


Ending assets

$

41,039


$

40,456


$

40,237






Fixed-income separate accounts2




Beginning assets

$

12,251


$

10,752


$

10,520


Sales3

239


1,499


254


Redemptions3

(204)


(306)


(232)


Net sales3

35


1,193


22


Net exchanges

0


229


0


Market gains and losses4

237


77


204


Ending assets

$

12,523


$

12,251


$

10,746






Total fixed income2




Beginning assets

$

52,707


$

51,187


$

50,126


Sales3

4,730


6,130


4,502


Redemptions3

(4,397)


(4,717)


(4,257)


Net sales3

333


1,413


245


Net exchanges

(37)


(56)


(59)


Market gains and losses/reinvestments1

559


163


671


Ending assets

$

53,562


$

52,707


$

50,983


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; excludes liquidation portfolio)



Quarter Ended


March 31, 2015

Dec. 31, 2014

March 31, 2014





Funds




Beginning assets

$

73,597


$

72,523


$

67,703


Sales

7,296


7,281


6,540


Redemptions

(6,107)


(6,255)


(5,858)


Net sales

1,189


1,026


682


Net exchanges

2


(292)


(27)


Market gains and losses/reinvestments1

1,202


340


1,087


Ending assets

$

75,990


$

73,597


$

69,445






Separate accounts2




Beginning assets

$

30,536


$

28,999


$

26,571


Sales3

1,932


2,891


1,099


Redemptions3

(1,158)


(1,928)


(1,010)


Net sales3

774


963


89


Net exchanges

0


229


0


Market gains and losses4

299


345


757


Ending assets

$

31,609


$

30,536


$

27,417






Total assets 2




Beginning assets

$

104,133


$

101,522


$

94,274


Sales3

9,228


10,172


7,639


Redemptions3

(7,265)


(8,183)


(6,868)


Net sales3

1,963


1,989


771


Net exchanges

2


(63)


(27)


Market gains and losses/reinvestments1

1,501


685


1,844


Ending assets

$

107,599


$

104,133


$

96,862


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, 2015

Dec. 31, 2014

Sept. 30, 2014

June 30, 2014

March 31, 2014

By Asset Class






Equity

$

54,037


$

51,426


$

50,335


$

49,888


$

45,879


Fixed-income

53,562


52,707


51,187


51,129


50,983


Money market

248,160


258,772


245,536


245,201


263,648


Liquidation portfolio1

0


0


5,197


5,408


5,690


Total Managed Assets

$

355,759


$

362,905


$

352,255


$

351,626


$

366,200


By Product Type






Funds:






Equity

$

34,951


$

33,141


$

32,088


$

31,673


$

29,208


Fixed-income

41,039


40,456


40,435


40,357


40,237


Money market

214,310


225,471


215,237


212,434


227,470


Total Fund Assets

$

290,300


$

299,068


$

287,760


$

284,464


$

296,915


Separate accounts:






Equity

$

19,086


$

18,285


$

18,247


$

18,215


$

16,671


Fixed-income

12,523


12,251


10,752


10,772


10,746


Money market

33,850


33,301


30,299


32,767


36,178


Total Separate Accounts

$

65,459


$

63,837


$

59,298


$

61,754


$

63,595


Total Liquidation Portfolio1

$

0


$

0


$

5,197


$

5,408


$

5,690


Total Managed Assets

$

355,759


$

362,905


$

352,255


$

351,626


$

366,200



AVERAGE MANAGED ASSETS

Quarter Ended

(in millions)

March 31, 2015

Dec. 31, 2014

Sept. 30, 2014

June 30, 2014

March 31, 2014

By Asset Class






Equity

$

52,784


$

50,901


$

50,207


$

47,466


$

44,693


Fixed-income

53,405


52,782


51,115


50,774


50,658


Money market

253,261


246,698


242,537


254,575


273,233


Liquidation portfolio1

0


1,563


5,307


5,569


5,791


Total Avg. Assets

$

359,450


$

351,944


$

349,166


$

358,384


$

374,375


By Product Type






Funds:






Equity

$

34,162


$

32,705


$

32,060


$

30,154


$

28,516


Fixed-income

41,013


41,072


40,275


40,130


39,987


Money market

218,168


216,235


211,571


219,936


235,228


Total Avg. Fund Assets

$

293,343


$

290,012


$

283,906


$

290,220


$

303,731


Separate accounts:






Equity

$

18,622


$

18,196


$

18,147


$

17,312


$

16,177


Fixed-income

12,392


11,710


10,840


10,644


10,671


Money market

35,093


30,463


30,966


34,639


38,005


Total Avg. Separate Accounts

$

66,107


$

60,369


$

59,953


$

62,595


$

64,853


Total Avg. Liquidation Portfolio1

$

0


$

1,563


$

5,307


$

5,569


$

5,791


Total Avg. Managed Assets

$

359,450


$

351,944


$

349,166


$

358,384


$

374,375


1)

The liquidation portfolio represented a portfolio of distressed bonds at cost. Federated had been retained by a third party to manage these assets through an orderly liquidation process that was completed during the fourth quarter of 2014. Management-fee rates earned from this portfolio were lower than those of traditional separate account mandates.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/federated-investors-inc-reports-first-quarter-2015-earnings-300071395.html

SOURCE Federated Investors, Inc.

Copyright 2015 PR Newswire

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