PITTSBURGH, April 28, 2016 /PRNewswire/ -- Federated
Investors, Inc. (NYSE: FII), one of the nation's largest investment
managers, today reported earnings per diluted share (EPS) of
$0.44 for Q1 2016, up 26 percent from
$0.35 for the same quarter last year
on net income of $45.3 million for Q1
2016, compared to $36.3 million for
Q1 2015.
Federated's total managed assets were $369.7 billion at March
31, 2016. Total managed assets were up $13.9 billion or 4 percent from $355.8 billion at March
31, 2015 and up $8.6 billion
or 2 percent from $361.1 billion at
Dec. 31, 2015. All asset classes
increased in Q1 2016 compared to Q4 2015. Average managed assets
for Q1 2016 were $363.9 billion, up
$4.4 billion or 1 percent from
$359.5 billion reported for Q1 2015
and up $9.9 billion or 3 percent from
$354.0 billion reported for Q4
2015.
"Investor demand for high-quality income-oriented equity
products throughout the first quarter fueled strong flows into our
Strategic Value Dividend strategies," said J. Christopher Donahue, president and chief
executive officer. "We also saw continued interest in high-yield
fixed-income products such as Federated High Yield Trust and in
alternative strategies such as Federated Prudent Bear Fund."
Federated's board of directors declared a dividend of
$0.25 per share. The dividend is
payable on May 13, 2016 to
shareholders of record as of May 6,
2016. During Q1 2016, Federated purchased 522,700 shares of
Federated class B common stock for $13.7
million. The board also announced the election of directors
Thomas R. Donahue, who serves as
Federated's chief financial officer and treasurer, and John B. Fisher, who leads Federated's investment
management operation as president and chief executive officer of
the Federated Advisory Companies. J.
Christopher Donahue and John W.
McGonigle also were reelected as management members of the
board. John F. Donahue, co-founder
and chairman since 1955, will now serve Federated as chairman
emeritus and will continue to remain available to the board and
senior management. J. Christopher
Donahue assumed the role of chairman. Federated's seven
current directors also include outside board members Michael J. Farrell, David M. Kelly and Marie
Milie Jones, who bring continuity, expertise and perspective
to the board.
Federated's equity assets were a record $56.5 billion at March 31,
2016, up $2.5 billion or 5
percent from $54.0 billion at
March 31, 2015 and up $2.9 billion or 5 percent from $53.6 billion at Dec. 31,
2015. Top-selling equity funds during Q1 2016 on a net basis
were Federated Strategic Value Dividend Fund, Federated Prudent
Bear Fund, Federated International Leaders Fund, Federated
International Strategic Value Dividend Fund and Federated Muni and
Stock Advantage Fund.
Federated's fixed-income assets were $51.2 billion at March 31,
2016, down $2.4 billion or 4
percent from $53.6 billion at
March 31, 2015 and up slightly from
$51.1 billion at Dec. 31, 2015. Top-selling fixed-income funds
during Q1 2016 on a net basis were Federated High Yield Trust,
Federated Intermediate Corporate Bond Fund, Federated Total Return
Government Bond Fund, Federated Short-Intermediate Duration
Municipal Trust and Federated Municipal High Yield Advantage
Fund.
Money market assets were $262.0
billion at March 31, 2016, up
$13.8 billion or 6 percent from
$248.2 billion at March 31, 2015 and up $5.6
billion or 2 percent from $256.4
billion at Dec. 31, 2015.
Money market mutual fund assets were $224.7
billion at March 31, 2016, up
$10.4 billion or 5 percent from
$214.3 billion at March 31, 2015 and up $3.1
billion or 1 percent from $221.6
billion at Dec. 31, 2015.
Financial Summary
Q1 2016 vs. Q1 2015
Revenue increased by $51.6 million
or 23 percent primarily due to a decrease in voluntary fee waivers
related to certain money market funds in order for those funds to
maintain positive or zero net yields (voluntary yield-related fee
waivers). See additional information about voluntary yield-related
fee waivers in the table at the end of this financial summary.
During Q1 2016, Federated derived 53 percent of its revenue from
equity and fixed-income assets (36 percent from equity assets and
17 percent from fixed-income assets) and 47 percent from money
market assets.
Operating expenses increased by $36.1
million or 22 percent primarily due to an increase in
distribution expenses as a result of a decrease in voluntary
yield-related fee waivers.
Q1 2016 vs. Q4 2015
Revenue increased by $28.5 million
or 12 percent primarily due to a decrease in voluntary
yield-related fee waivers.
Operating expenses increased by $30.8
million or 18 percent primarily due to an increase in
distribution expenses as a result of a decrease in voluntary
yield-related fee waivers. Compensation and related expense
increased primarily due to higher incentive compensation and
seasonality of payroll taxes.
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).
Voluntary yield-related fee waivers 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 customer relationships, 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
|
Quarter
Ended
|
Change
|
|
March
31, 2016
|
March
31, 2015
|
Q1 2015
to Q1
2016
|
Dec. 31,
2015
|
Q4 2015
to Q1
2016
|
Investment advisory
fees
|
$
(15.0)
|
$ (62.3)
|
$ 47.3
|
$
(37.5)
|
$ 22.5
|
Other service
fees
|
(22.5)
|
(31.8)
|
9.3
|
(34.5)
|
12.0
|
Total
revenue
|
(37.5)
|
(94.1)
|
56.6
|
(72.0)
|
34.5
|
Less: Reduction in
distribution expense
|
27.9
|
64.6
|
(36.7)
|
54.5
|
(26.6)
|
Operating
income
|
(9.6)
|
(29.5)
|
19.9
|
(17.5)
|
7.9
|
Less: Reduction in
noncontrolling interest
|
0.2
|
2.5
|
(2.3)
|
1.1
|
(0.9)
|
Pre-tax
impact
|
$
(9.4)
|
$ (27.0)
|
$ 17.6
|
$
(16.4)
|
$
7.0
|
Federated will host an earnings conference call at 9 a.m. Eastern on April
29, 2016. 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 6, 2016 by calling 877-660-6853 (domestic) or
201-612-7415 (international) and entering access code 13634616.
Federated Investors, Inc. is one of the largest investment
managers in the United States,
managing $369.7 billion in assets as
of March 31, 2016. With 124 funds and
a variety of separately managed account options, Federated provides
comprehensive investment management to approximately 8,400
institutions and intermediaries including corporations, government
entities, insurance companies, foundations and endowments, banks
and broker/dealers. Federated ranks in the top 4 percent of money
market fund managers in the industry, the top 5 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. 29, 2016. 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 customer relationships, changes in
product structure, fee arrangements with customers, distribution
expense, regulatory changes, market conditions and the availability
of officers 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
|
Quarter
Ended
|
%
Change
|
|
March 31,
2016
|
March 31,
2015
|
Q1 2015 to
Q1 2016
|
Dec. 31,
2015
|
Q4 2015 to
Q1 2016
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
Investment advisory
fees, net
|
$
181,847
|
$
146,559
|
24%
|
$
166,441
|
9%
|
Administrative service
fees, net—affiliates
|
53,473
|
53,017
|
1
|
53,561
|
0
|
Other service fees,
net
|
35,898
|
19,787
|
81
|
22,896
|
57
|
Other, net
|
891
|
1,159
|
(23)
|
741
|
20
|
Total
Revenue
|
272,109
|
220,522
|
23
|
243,639
|
12
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
Distribution
|
88,381
|
53,495
|
65
|
66,069
|
34
|
Compensation and
related
|
76,770
|
76,498
|
0
|
68,870
|
11
|
Professional service
fees
|
8,881
|
7,882
|
13
|
6,100
|
46
|
Systems and
communications
|
7,865
|
6,870
|
14
|
7,096
|
11
|
Office and
occupancy
|
6,888
|
6,853
|
1
|
6,591
|
5
|
Advertising and
promotional
|
3,442
|
3,471
|
(1)
|
3,645
|
(6)
|
Travel and
related
|
2,906
|
2,759
|
5
|
3,935
|
(26)
|
Other
|
2,421
|
3,656
|
(34)
|
4,448
|
(46)
|
Total Operating
Expenses
|
197,554
|
161,484
|
22
|
166,754
|
18
|
Operating
Income
|
74,555
|
59,038
|
26
|
76,885
|
(3)
|
|
|
|
|
|
|
Nonoperating Income
(Expenses)
|
|
|
|
|
|
Investment income,
net
|
2,664
|
890
|
199
|
1,541
|
73
|
Debt
expense
|
(1,059)
|
(1,373)
|
(23)
|
(974)
|
9
|
Other, net
|
(5)
|
(13)
|
(62)
|
4
|
(225)
|
Total
Nonoperating Income (Expenses), net
|
1,600
|
(496)
|
(423)
|
571
|
180
|
Income before income
taxes
|
76,155
|
58,542
|
30
|
77,456
|
(2)
|
Income tax
provision
|
27,381
|
22,124
|
24
|
28,287
|
(3)
|
Net income including
the noncontrolling interests in subsidiaries
|
48,774
|
36,418
|
34
|
49,169
|
(1)
|
Less: Net income
attributable to the noncontrolling interests in
|
|
|
|
|
|
subsidiaries
|
3,516
|
111
|
NM
|
1,559
|
NM
|
Net Income
|
$
45,258
|
$
36,307
|
25%
|
$
47,610
|
(5)%
|
|
|
|
|
|
|
Amounts
Attributable to Federated Investors, Inc.
|
|
|
|
|
|
Earnings Per
Share1
|
|
|
|
|
|
Basic and
diluted
|
$
0.44
|
0.35
|
26%
|
$
0.46
|
(4)%
|
Weighted-average
shares outstanding
|
|
|
|
|
|
Basic
|
99,802
|
100,641
|
|
100,088
|
|
Diluted
|
99,803
|
100,642
|
|
100,090
|
|
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 $1.8 million, $1.5 million and $1.8
million available to unvested restricted shareholders for the
quarterly periods ended March 31, 2016, March 31, 2015 and Dec. 31,
2015, respectively, was excluded from the computation of earnings
per share.
|
Unaudited
Condensed Consolidated Balance Sheets
(in
thousands)
|
March 31,
2016
|
Dec. 31,
2015
|
Assets
|
|
|
Cash and other
investments
|
$
342,018
|
346,815
|
Other current
assets
|
56,572
|
49,013
|
Intangible assets, net
and goodwill
|
734,188
|
734,492
|
Other long-term
assets
|
57,836
|
56,883
|
Total
Assets
|
$
1,190,614
|
$ 1,187,203
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests and Equity
|
|
|
|
Current
liabilities
|
$
131,626
|
$
159,208
|
Long-term
debt
|
184,875
|
191,250
|
Other long-term
liabilities
|
185,383
|
179,039
|
Redeemable
noncontrolling interests
|
25,905
|
8,734
|
Equity excluding
treasury stock
|
856,525
|
840,911
|
Treasury
stock
|
(193,700)
|
(191,939)
|
Total Liabilities,
Redeemable Noncontrolling Interests and Equity
|
$
1,190,614
|
$ 1,187,203
|
Unaudited
Changes in Equity and Fixed-Income Fund and Separate Account
Assets
|
(in
millions)
|
|
|
|
|
|
Quarter
Ended
|
|
March 31,
2016
|
Dec. 31,
2015
|
March 31,
2015
|
Equity
funds
|
Beginning
assets
|
$
34,125
|
$
33,273
|
$
33,141
|
Sales
|
3,439
|
2,143
|
2,805
|
Redemptions
|
(2,520)
|
(2,279)
|
(1,914)
|
Net sales
(redemptions)
|
919
|
(136)
|
891
|
Net
exchanges
|
(37)
|
(23)
|
39
|
Market gains and
losses/reinvestments1
|
(72)
|
1,011
|
880
|
Ending
assets
|
$
34,935
|
$
34,125
|
$
34,951
|
Equity separate
accounts2
|
|
|
|
Beginning
assets
|
$
19,431
|
$
18,683
|
$
18,285
|
Sales3
|
2,350
|
1,192
|
1,693
|
Redemptions3
|
(1,229)
|
(1,187)
|
(954)
|
Net
sales3
|
1,121
|
5
|
739
|
Net
exchanges
|
0
|
4
|
0
|
Market gains and
losses4
|
998
|
739
|
62
|
Ending
assets
|
$
21,550
|
$
19,431
|
$
19,086
|
Total equity2
|
Beginning
assets
|
$
53,556
|
$
51,956
|
$
51,426
|
Sales3
|
5,789
|
3,335
|
4,498
|
Redemptions3
|
(3,749)
|
(3,466)
|
(2,868)
|
Net sales
(redemptions)3
|
2,040
|
(131)
|
1,630
|
Net
exchanges
|
(37)
|
(19)
|
39
|
Market gains and
losses/reinvestments1
|
926
|
1,750
|
942
|
Ending
assets
|
$
56,485
|
$
53,556
|
$
54,037
|
Fixed-income
funds
|
|
|
|
Beginning
assets
|
$
37,989
|
$
38,982
|
$
40,456
|
Sales
|
3,334
|
3,477
|
4,491
|
Redemptions
|
(4,080)
|
(4,218)
|
(4,193)
|
Net (redemptions)
sales
|
(746)
|
(741)
|
298
|
Net
exchanges
|
(49)
|
2
|
(37)
|
Market gains and
losses/reinvestments1
|
632
|
(254)
|
322
|
Ending
assets
|
$
37,826
|
$
37,989
|
$
41,039
|
Fixed-income
separate accounts2
|
Beginning
assets
|
$
13,130
|
$
13,083
|
$
12,251
|
Sales3
|
197
|
332
|
239
|
Redemptions3
|
(328)
|
(244)
|
(204)
|
Net (redemptions)
sales3
|
(131)
|
88
|
35
|
Market gains and
losses4
|
353
|
(41)
|
237
|
Ending
assets
|
$
13,352
|
$
13,130
|
$
12,523
|
Total fixed
income2
|
|
|
|
Beginning
assets
|
$
51,119
|
$
52,065
|
$
52,707
|
Sales3
|
3,531
|
3,809
|
4,730
|
Redemptions3
|
(4,408)
|
(4,462)
|
(4,397)
|
Net (redemptions)
sales3
|
(877)
|
(653)
|
333
|
Net
exchanges
|
(49)
|
2
|
(37)
|
Market gains and
losses/reinvestments1
|
985
|
(295)
|
559
|
Ending
assets
|
$
51,178
|
$
51,119
|
$
53,562
|
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, 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
|
|
|
March 31,
2016
|
Dec. 31,
2015
|
March 31,
2015
|
Funds
|
|
|
|
Beginning
assets
|
$
72,114
|
$
72,255
|
$
73,597
|
Sales
|
6,773
|
5,620
|
7,296
|
Redemptions
|
(6,600)
|
(6,497)
|
(6,107)
|
Net sales
(redemptions)
|
173
|
(877)
|
1,189
|
Net
exchanges
|
(86)
|
(21)
|
2
|
Market gains and
losses/reinvestments1
|
560
|
757
|
1,202
|
Ending
assets
|
$
72,761
|
$
72,114
|
$
75,990
|
Separate
accounts2
|
|
|
|
Beginning
assets
|
$
32,561
|
$
31,766
|
$
30,536
|
Sales3
|
2,547
|
1,524
|
1,932
|
Redemptions3
|
(1,557)
|
(1,431)
|
(1,158)
|
Net
sales3
|
990
|
93
|
774
|
Net
exchanges
|
0
|
4
|
0
|
Market gains and
losses4
|
1,351
|
698
|
299
|
Ending
assets
|
$
34,902
|
$
32,561
|
$
31,609
|
Total
assets 2
|
Beginning
assets
|
$
104,675
|
$
104,021
|
$
104,133
|
Sales3
|
9,320
|
7,144
|
9,228
|
Redemptions3
|
(8,157)
|
(7,928)
|
(7,265)
|
Net sales
(redemptions)3
|
1,163
|
(784)
|
1,963
|
Net
exchanges
|
(86)
|
(17)
|
2
|
Market gains and
losses/reinvestments1
|
1,911
|
1,455
|
1,501
|
Ending
assets
|
$
107,663
|
$
104,675
|
$
107,599
|
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, 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,
2016
|
Dec. 31,
2015
|
Sept. 30,
2015
|
June 30,
2015
|
March 31,
2015
|
By Asset
Class
|
|
|
|
|
|
Equity
|
$
56,485
|
$
53,556
|
$
51,956
|
$
54,789
|
$
54,037
|
Fixed-income
|
51,178
|
51,119
|
52,065
|
52,904
|
53,562
|
Money
market
|
262,030
|
256,437
|
246,937
|
241,982
|
248,160
|
Total Managed
Assets
|
$
369,693
|
$
361,112
|
$
350,958
|
$
349,675
|
$
355,759
|
By Product
Type
|
|
|
|
|
|
Funds:
|
Equity
|
$
34,935
|
$
34,125
|
$
33,273
|
$
35,533
|
$
34,951
|
Fixed-income
|
37,826
|
37,989
|
38,982
|
40,042
|
41,039
|
Money
market
|
224,681
|
221,615
|
216,252
|
208,786
|
214,310
|
Total Fund
Assets
|
$
297,442
|
$
293,729
|
$
288,507
|
$
284,361
|
$
290,300
|
Separate
accounts:
|
|
|
|
|
|
Equity
|
$
21,550
|
$
19,431
|
$
18,683
|
$
19,256
|
$
19,086
|
Fixed-income
|
13,352
|
13,130
|
13,083
|
12,862
|
12,523
|
Money
market
|
37,349
|
34,822
|
30,685
|
33,196
|
33,850
|
Total Separate
Accounts
|
$
72,251
|
$
67,383
|
$
62,451
|
$
65,314
|
$
65,459
|
Total Managed
Assets
|
$
369,693
|
$
361,112
|
$
350,958
|
$
349,675
|
$
355,759
|
AVERAGE MANAGED
ASSETS
|
|
|
Quarter
Ended
|
|
(in
millions)
|
March 31,
2016
|
Dec. 31,
2015
|
Sept. 30,
2015
|
June 30,
2015
|
March 31,
2015
|
By Asset
Class
|
|
|
|
|
|
Equity
|
$
52,786
|
$
54,097
|
$
54,238
|
$
55,476
|
$
52,784
|
Fixed-income
|
50,880
|
51,922
|
52,577
|
53,319
|
53,405
|
Money
market
|
260,203
|
247,986
|
245,133
|
239,774
|
253,261
|
Total Avg.
Assets
|
$
363,869
|
$
354,005
|
$
351,948
|
$
348,569
|
$
359,450
|
By Product
Type
|
|
|
|
|
|
Funds:
|
Equity
|
$
32,921
|
$
34,726
|
$
35,181
|
$
35,998
|
$
34,162
|
Fixed-income
|
37,776
|
38,779
|
39,526
|
40,574
|
41,013
|
Money
market
|
221,848
|
217,031
|
213,633
|
205,943
|
218,168
|
Total Avg. Fund
Assets
|
$
292,545
|
$
290,536
|
$
288,340
|
$
282,515
|
$
293,343
|
Separate
accounts:
|
|
|
|
|
|
Equity
|
$
19,865
|
$
19,371
|
$
19,057
|
$
19,478
|
$
18,622
|
Fixed-income
|
13,104
|
13,143
|
13,051
|
12,745
|
12,392
|
Money
market
|
38,355
|
30,955
|
31,500
|
33,831
|
35,093
|
Total Avg. Separate
Accounts
|
$
71,324
|
$
63,469
|
$
63,608
|
$
66,054
|
$
66,107
|
Total Avg. Managed
Assets
|
$
363,869
|
$
354,005
|
$
351,948
|
$
348,569
|
$
359,450
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/federated-investors-inc-reports-first-quarter-2016-earnings-300259694.html
SOURCE Federated Investors, Inc.