Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FEDERATED HERMES, INC. | a8-k2018q4epr.htm |
Exhibit 99.1
Federated Investors, Inc. Reports Fourth Quarter and Full-Year 2018 Earnings
• | Q4 2018 EPS of $0.61; full-year 2018 EPS of $2.18 |
• | Total assets under management reach a record $459.9 billion |
• | Board declares $0.27 per share quarterly dividend |
(PITTSBURGH, Pa., Jan. 24, 2019) — Federated Investors, Inc. (NYSE: FII), one of the world's largest investment managers, today reported earnings per diluted share (EPS) for Q4 2018 of $0.61, down from $1.31 for the same quarter last year, on net income of $61.5 million for Q4 2018, compared to $131.8 million for Q4 2017. Full-year 2018 EPS was $2.18, down from $2.87 for 2017 on net income of $220.3 million for 2018, compared to $291.3 million for 2017. Federated's Q4 2017 and full-year 2017 results included $70.4 million of net income, representing $0.70 and $0.69 per share for Q4 2017 and full-year 2017, respectively, resulting from the enactment of the Tax Cuts and Jobs Act of 2017 (Tax Act). The results in this press release include the acquisition of Hermes Fund Managers Limited (Hermes), beginning July 1, 2018.
Management believes adjusted EPS and adjusted net income for 2017, which are non-GAAP financial measures, are useful measures for investors to evaluate Federated's financial performance as a result of the tax-rate changes resulting from the Tax Act. The adjusted measures reflect what earnings would have been in 2017 had the tax law changes not reduced the federal corporate income tax rate from 35 percent to 21 percent, resulting in a revaluation of Federated's net deferred tax liability in 2017. As such, Federated's Q4 2017 adjusted EPS was $0.61, matching Q4 2018 EPS, and adjusted net income was $61.4 million, compared to net income of $61.5 million for Q4 2018. Full-year 2017 adjusted EPS was $2.18, matching 2018 EPS, and adjusted net income was $220.9 million, compared to net income of $220.3 million for 20181.
Federated's total managed assets were $459.9 billion at Dec. 31, 2018, up $62.3 billion or 16 percent from $397.6 billion at Dec. 31, 2017 and up $22.7 billion or 5 percent from $437.2 billion at Sept. 30, 2018. Average managed assets for Q4 2018 were $443.7 billion, up $61.7 billion or 16 percent from $382.0 billion reported for Q4 2017 and up $9.8 billion or 2 percent from $433.9 billion reported for Q3 2018.
"As the Federal Reserve raised short-term interest rates four times in 2018, Federated’s wide range of liquidity products offered competitive yields for investors seeking cash-management solutions," said J. Christopher Donahue, president and chief executive officer. "Federated’s money market assets increased nearly $38 billion in the fourth quarter, crossing the $300 billion threshold."
Federated's board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Feb. 15, 2019 to shareholders of record as of Feb. 8, 2019. During Q4 2018, Federated purchased 95,298 shares of Federated class B common stock for $2.2 million, bringing the total shares of Class B common stock purchased in 2018 to 1,205,790 shares for $29.1 million.
Federated's equity assets were $72.5 billion at Dec. 31, 2018, up $9.7 billion or 15 percent from $62.8 billion at Dec. 31, 2017 and down $11.6 billion or 14 percent from $84.1 billion at Sept. 30, 2018. Top-selling equity funds on a net basis during Q4 2018 were Hermes SDG Engagement Equity Fund, Federated MDT Small Cap Growth Fund, Federated Kaufmann Small Cap Fund, Hermes Global Equity ESG Fund and Hermes Global Emerging Markets Small and Mid Cap Equity Fund.
MEDIA: | MEDIA: | ANALYSTS: |
Ed Costello 412-288-7538 | Meghan McAndrew 412-288-8103 | Ray Hanley 412-288-1920 |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 2 of 13 | |
"With the 2018 acquisition of a controlling interest in London-based Hermes Investment Management complete, Hermes is integrated into Federated’s performance,” Donahue said. "Hermes’ ESG strategies, which invest with an emphasis on environmental, social and governance factors, were among Federated’s equity fund net-sales leaders in the fourth quarter, which highlights investor interest in these products."
Federated's fixed-income assets were $63.2 billion at Dec. 31, 2018, down $1.0 billion or 2 percent from $64.2 billion at Dec. 31, 2017 and down $2.2 billion or 3 percent from $65.4 billion at Sept. 30, 2018. Top-selling fixed-income funds on a net basis during Q4 2018 included Federated Ultrashort Bond Fund, Federated Municipal Ultrashort Fund, Federated Short-Term Income Fund, Federated Government Ultrashort Duration Fund and Federated Real Return Bond Fund.
Federated's money market assets were $301.8 billion at Dec. 31, 2018, up $36.6 billion or 14 percent from $265.2 billion at Dec. 31, 2017 and up $37.6 billion or 14 percent from $264.2 billion at Sept. 30, 2018. Money market mutual fund assets were $208.5 billion at Dec. 31, 2018, up $23.0 billion or 12 percent from $185.5 billion at Dec. 31, 2017 and up $25.5 billion or 14 percent from $183.0 billion at Sept. 30, 2018. Federated's money market separate account assets were $93.3 billion at Dec. 31, 2018, up $13.6 billion or 17 percent from $79.7 billion at Dec. 31, 2017 and up $12.0 billion or 15 percent from $81.3 billion at Sept. 30, 2018.
Financial Summary
Q4 2018 vs. Q4 2017
Revenue increased $28.9 million or 10 percent primarily due to the consolidation of Hermes’ revenue, which included performance fees of $5.8 million and higher average money market assets. This increase in revenue was partially offset by a decrease in revenue from lower average equity assets, a decrease in revenue due to the adoption of the new revenue recognition accounting standard and higher voluntary fee waivers for certain money market funds for competitive purposes.
During Q4 2018, Federated derived 63 percent of its revenue from long-term assets (41 percent from equity assets, 14 percent from fixed-income assets and 8 percent from alternative/private markets and multi-asset), 36 percent from money market assets, and 1 percent from sources other than managed assets.
Operating expenses increased $31.8 million or 17 percent primarily due to the consolidation of Hermes' expenses. This increase was partially offset by a decrease in expense due to the adoption of the new revenue recognition accounting standard.
Nonoperating (expenses) income, net decreased $8.5 million primarily due to a decrease in the market value of investments, fewer gains realized from the redemption of investments and a decrease in the market value of derivatives used to hedge foreign exchange risk.
Q4 2018 vs. Q3 2018
Revenue decreased $1.4 million primarily due to a decrease in revenue from lower average equity assets. This decrease was partially offset by an increase in revenue from higher average money market assets and an increase in performance fees.
Operating expenses decreased by $7.5 million or 3 percent primarily due to a decrease in transaction-related costs associated with the acquisition of Hermes.
Nonoperating (expenses) income, net decreased $8.0 million primarily due to private equity carried interest income received in Q3 2018 on assets managed by a nonconsolidated entity, a decrease in the market value of derivatives used to hedge foreign exchange risk and a decrease in the market value of investments, primarily from securities held by consolidated investment companies.
Federated Reports Q4 and Full-Year 2018 Earnings | Page 3 of 13 | |
2018 vs. 2017
Revenue increased $32.8 million or 3 percent primarily due to the Hermes acquisition. This increase in revenue included performance fees of $8.6 million that were recorded in 2018, compared to $0.3 million in 2017. This increase in revenue was offset by a decrease in revenue due to the adoption of the new revenue recognition accounting standard, higher voluntary fee waivers for certain money market funds for competitive purposes, and a previously disclosed Q1 2017 change in a customer relationship.
During 2018, Federated derived 62 percent of its revenue from long-term assets (41 percent from equity assets, 16 percent from fixed-income assets and 5 percent from multi-asset and alternative/private markets), 37 percent from money market assets and 1 percent from sources other than managed assets.
Operating expenses increased by $44.0 million or 6 percent primarily due to the consolidation of Hermes' expenses. This increase was partially offset by a decrease in expense due to the adoption of the new revenue recognition accounting standard and a change in the mix of average money market fund assets.
Nonoperating (expenses) income, net decreased $44.6 million primarily due to a loss recorded in Q2 2018 from two foreign currency forward derivative instruments entered into in connection with the Hermes acquisition, a decrease in the market value of investments, primarily from securities held by consolidated investment companies, and fewer gains realized from the redemption of investments in 2018 as compared to 2017.
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 and mix, 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).
Federated will host an earnings conference call at 9 a.m. Eastern on Jan. 25, 2019. 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 via the About Federated section of FederatedInvestors.com. A replay will be available from approximately 12:30 p.m. Eastern on Jan. 25, 2019 until Feb. 1, 2019 by calling 877-481-4010 (domestic) or 919-882-2331 (international) and entering access code 41747. An online replay will be available via FederatedInvestors.com for one year.
Federated Investors, Inc. is a leading global investment manager with $459.9 billion in assets under management as of Dec. 31, 2018. Our investment solutions span 130 equity, fixed-income, alternative/private markets, multi-asset and money market funds and a range of separately managed account strategies. Providing comprehensive investment management to more than 9,500 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated’s nearly 1,900 employees include those in New York, Boston, London and several other offices worldwide. In 2018, Federated acquired a majority interest in Hermes Investment Management, which provides world-class active management and stewardship services.
Federated ranks in the top 6 percent of equity fund managers in the industry, the top 7 percent of money market fund managers and the top 11 percent of fixed-income fund managers2. Federated also ranks as the 10th-largest SMA manager3. Information regarding Hermes is available at Hermes-Investment.com. An analyst presentation that includes information about Hermes also is available. For more information, visit FederatedInvestors.com.
###
Federated Reports Q4 and Full-Year 2018 Earnings | Page 4 of 13 | |
1) Reconciliation of Non-GAAP Financial Measures (Adjusted EPS and Adjusted Net Income): For Q4 2017, GAAP EPS of $1.31, less $0.70 resulting from the revaluation of Federated's net deferred tax liability, results in an adjusted EPS of $0.61 and GAAP net income of $131.8 million, less $70.4 million resulting from the revaluation of Federated's deferred tax liability, results in an adjusted net income of $61.4 million. For full-year 2017, GAAP EPS of $2.87, less $0.69 resulting from the revaluation of Federated's net deferred tax liability, results in an adjusted EPS of $2.18, and GAAP net income of $291.3 million, less $70.4 million resulting from the revaluation of Federated's deferred tax liability, results in adjusted net income of $220.9 million.
2) Strategic Insight as of Dec. 31, 2018. Based on assets under management in U.S. open-end funds.
3) Money Management Institute/Cerulli Associates, Q3 2018.
Federated Securities Corp. is distributor of the Federated funds.
Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Investment Management Limited and Hermes European Equities Limited, 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, performance, investor preferences and demand, asset flows and mix, and expenses 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, predict whether performance fees or carried interest will be earned, sustain product demand, and asset flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties 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.
Federated Reports Q4 and Full-Year 2018 Earnings | Page 5 of 13 | |
Unaudited Condensed Consolidated Statements of Income | |||||||||||||
(in thousands, except per share data) | |||||||||||||
Quarter Ended | % Change Q4 2017 to Q4 2018 | Quarter Ended | % Change Q3 2018 to Q4 2018 | ||||||||||
Dec. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2018 | |||||||||||
Revenue | |||||||||||||
Investment advisory fees, net | $ | 213,990 | $ | 186,145 | 15 | % | $ | 217,036 | (1 | )% | |||
Administrative service fees, net | 52,022 | 49,051 | 6 | 49,855 | 4 | ||||||||
Other service fees, net | 41,204 | 43,116 | (4 | ) | 41,725 | (1 | ) | ||||||
Total Revenue | 307,216 | 278,312 | 10 | 308,616 | 0 | ||||||||
Operating Expenses | |||||||||||||
Compensation and related | 99,153 | 71,990 | 38 | 103,092 | (4 | ) | |||||||
Distribution | 73,482 | 80,408 | (9 | ) | 72,153 | 2 | |||||||
Systems and communications | 11,528 | 7,713 | 49 | 12,213 | (6 | ) | |||||||
Professional service fees | 10,461 | 8,922 | 17 | 13,535 | (23 | ) | |||||||
Office and occupancy | 10,384 | 7,453 | 39 | 9,332 | 11 | ||||||||
Advertising and promotional | 5,174 | 2,771 | 87 | 4,502 | 15 | ||||||||
Travel and related | 4,627 | 3,496 | 32 | 4,622 | 0 | ||||||||
Other | 4,453 | 4,725 | (6 | ) | 7,269 | (39 | ) | ||||||
Total Operating Expenses | 219,262 | 187,478 | 17 | 226,718 | (3 | ) | |||||||
Operating Income | 87,954 | 90,834 | (3 | ) | 81,898 | 7 | |||||||
Nonoperating (Expenses) Income | |||||||||||||
Investment (loss) income, net | (1,666 | ) | 3,601 | (146 | ) | 1,199 | (239 | ) | |||||
Debt expense | (1,522 | ) | (1,239 | ) | 23 | (1,602 | ) | (5 | ) | ||||
Other, net | (2,972 | ) | (9 | ) | NM | 2,240 | (233 | ) | |||||
Total Nonoperating (Expenses) Income, net | (6,160 | ) | 2,353 | (362 | ) | 1,837 | (435 | ) | |||||
Income before income taxes | 81,794 | 93,187 | (12 | ) | 83,735 | (2 | ) | ||||||
Income tax provision (benefit)1 | 20,162 | (38,787 | ) | (152 | ) | 21,741 | (7 | ) | |||||
Net income including the noncontrolling interests in subsidiaries | 61,632 | 131,974 | (53 | ) | 61,994 | (1 | ) | ||||||
Less: Net income attributable to the noncontrolling interests in subsidiaries | 96 | 164 | (41 | ) | 2,386 | (96 | ) | ||||||
Net Income | $ | 61,536 | $ | 131,810 | (53 | )% | $ | 59,608 | 3 | % | |||
Amounts Attributable to Federated Investors, Inc. | |||||||||||||
Earnings Per Share2,3 | |||||||||||||
Basic and Diluted | $ | 0.61 | $ | 1.31 | (53 | )% | $ | 0.59 | 3 | % | |||
Weighted-Average Shares Outstanding | |||||||||||||
Basic | 96,758 | 97,084 | 96,664 | ||||||||||
Diluted | 96,758 | 97,086 | 96,664 | ||||||||||
Dividends Declared Per Share | $ | 0.27 | $ | 0.25 | $ | 0.27 | |||||||
1) | Dec. 31, 2017 includes a reduction of $70.4 million resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. |
2) | Dec. 31, 2017 includes an increase of $0.70 per share resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. |
3) | 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 $2.3 million, $5.0 million and $2.4 million available to unvested restricted Federated shareholders for the quarterly periods ended Dec. 31, 2018, Dec. 31, 2017 and Sept. 30, 2018, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income of $0.3 million and $0.5 million available to unvested shareholders of a nonpublic consolidated subsidiary for the quarterly periods ended Dec. 31, 2018 and Sept. 30, 2018, respectively. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 6 of 13 | |
Unaudited Condensed Consolidated Statements of Income | |||||||||||
(in thousands, except per share data) | |||||||||||
Year Ended | |||||||||||
Dec. 31, 2018 | Dec. 31, 2017 | % Change | |||||||||
Revenue | |||||||||||
Investment advisory fees, net | $ | 773,418 | $ | 731,670 | 6 | % | |||||
Administrative service fees, net | 199,269 | 188,814 | 6 | ||||||||
Other service fees, net | 162,990 | 182,440 | (11 | ) | |||||||
Total Revenue | 1,135,677 | 1,102,924 | 3 | ||||||||
Operating Expenses | |||||||||||
Compensation and related | 354,765 | 289,215 | 23 | ||||||||
Distribution | 287,580 | 342,779 | (16 | ) | |||||||
Professional service fees | 42,903 | 29,064 | 48 | ||||||||
Systems and communications | 39,925 | 31,971 | 25 | ||||||||
Office and occupancy | 34,622 | 29,258 | 18 | ||||||||
Advertising and promotional | 16,141 | 11,166 | 45 | ||||||||
Travel and related | 15,594 | 12,646 | 23 | ||||||||
Other | 13,867 | 15,317 | (9 | ) | |||||||
Total Operating Expenses | 805,397 | 761,416 | 6 | ||||||||
Operating Income | 330,280 | 341,508 | (3 | ) | |||||||
Nonoperating (Expenses) Income | |||||||||||
Investment income, net | 1,628 | 15,308 | (89 | ) | |||||||
Debt expense | (5,885 | ) | (4,772 | ) | 23 | ||||||
Other, net | (29,849 | ) | (42 | ) | NM | ||||||
Total Nonoperating (Expenses) Income, net | (34,106 | ) | 10,494 | (425 | ) | ||||||
Income before income taxes | 296,174 | 352,002 | (16 | ) | |||||||
Income tax provision1 | 73,875 | 57,101 | 29 | ||||||||
Net income including the noncontrolling interests in subsidiaries | 222,299 | 294,901 | (25 | ) | |||||||
Less: Net income attributable to the noncontrolling interests in subsidiaries | 2,002 | 3,560 | (44 | ) | |||||||
Net Income | $ | 220,297 | $ | 291,341 | (24 | )% | |||||
Amounts Attributable to Federated Investors, Inc. | |||||||||||
Earnings Per Share2,3 | |||||||||||
Basic and Diluted | $ | 2.18 | $ | 2.87 | (24 | )% | |||||
Weighted-Average Shares Outstanding | |||||||||||
Basic | 96,949 | 97,411 | |||||||||
Diluted | 96,949 | 97,412 | |||||||||
Dividends Declared Per Share | $ | 1.06 | $ | 1.00 | |||||||
1) | Dec. 31, 2017 includes a reduction of $70.4 million resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. |
2) | Dec. 31, 2017 includes an increase of $0.69 per share resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. |
3) | 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 $8.6 million and $11.4 million available to unvested restricted shareholders for the years ended Dec. 31, 2018 and Dec. 31, 2017, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income of $0.8 million available to unvested shareholders of a nonpublic consolidated subsidiary for the year ended Dec 31, 2018. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 7 of 13 | |
Unaudited Condensed Consolidated Balance Sheets | ||||||
(in thousands) | Dec. 31, 2018 | Dec. 31, 2017 | ||||
Assets | ||||||
Cash and other investments | $ | 190,490 | $ | 369,538 | ||
Other current assets | 113,611 | 67,736 | ||||
Intangible assets, net, including goodwill | 1,149,247 | 736,915 | ||||
Other long-term assets | 90,335 | 57,221 | ||||
Total Assets | $ | 1,543,683 | $ | 1,231,410 | ||
Liabilities, Redeemable Noncontrolling Interests and Equity | ||||||
Current liabilities | $ | 181,180 | $ | 128,849 | ||
Long-term debt | 135,000 | 170,000 | ||||
Other long-term liabilities | 187,869 | 141,183 | ||||
Redeemable noncontrolling interests | 182,513 | 30,163 | ||||
Equity excluding treasury stock | 1,144,458 | 1,039,947 | ||||
Treasury stock | (287,337 | ) | (278,732 | ) | ||
Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ | 1,543,683 | $ | 1,231,410 | ||
Federated Reports Q4 and Full-Year 2018 Earnings | Page 8 of 13 | |
Unaudited Changes in Long-Term Assets - By Asset Class | ||||||||||||||||
(in millions) | Quarter Ended | Year Ended | ||||||||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||||||||||||
Equity | ||||||||||||||||
Beginning assets | $ | 84,143 | $ | 57,973 | $ | 61,721 | $ | 62,816 | $ | 56,759 | ||||||
Sales1 | 4,274 | 3,757 | 2,483 | 13,955 | 11,614 | |||||||||||
Redemptions1 | (6,777 | ) | (5,288 | ) | (3,220 | ) | (22,401 | ) | (14,806 | ) | ||||||
Net redemptions1 | (2,503 | ) | (1,531 | ) | (737 | ) | (8,446 | ) | (3,192 | ) | ||||||
Net exchanges | (180 | ) | (11 | ) | 42 | (116 | ) | (11 | ) | |||||||
Acquisition-related | 0 | 24,700 | 0 | 24,700 | 287 | |||||||||||
Market gains and losses2 | (8,963 | ) | 3,012 | 1,790 | (6,457 | ) | 8,973 | |||||||||
Ending assets | $ | 72,497 | $ | 84,143 | $ | 62,816 | $ | 72,497 | $ | 62,816 | ||||||
Fixed Income | ||||||||||||||||
Beginning assets | $ | 65,369 | $ | 61,435 | $ | 52,701 | $ | 64,160 | $ | 51,314 | ||||||
Sales1 | 5,330 | 5,163 | 15,771 | 20,156 | 27,549 | |||||||||||
Redemptions1 | (7,424 | ) | (4,418 | ) | (4,617 | ) | (23,370 | ) | (17,032 | ) | ||||||
Net (redemptions) sales1 | (2,094 | ) | 745 | 11,154 | (3,214 | ) | 10,517 | |||||||||
Net exchanges | 214 | 2 | (50 | ) | 136 | (123 | ) | |||||||||
Acquisition-related | 0 | 2,732 | 0 | 2,732 | 148 | |||||||||||
Market gains and losses2 | (331 | ) | 455 | 355 | (656 | ) | 2,304 | |||||||||
Ending assets | $ | 63,158 | $ | 65,369 | $ | 64,160 | $ | 63,158 | $ | 64,160 | ||||||
Alternative / Private Markets3 | ||||||||||||||||
Beginning assets | $ | 18,621 | $ | 292 | $ | 407 | $ | 366 | $ | 458 | ||||||
Sales1 | 437 | 757 | 38 | 1,250 | 132 | |||||||||||
Redemptions1 | (530 | ) | (674 | ) | (74 | ) | (1,315 | ) | (251 | ) | ||||||
Net (redemptions) sales 1 | (93 | ) | 83 | (36 | ) | (65 | ) | (119 | ) | |||||||
Net exchanges | 1 | (2 | ) | (1 | ) | (2 | ) | 57 | ||||||||
Acquisition-related | 0 | 18,509 | 0 | 18,509 | 0 | |||||||||||
Market gains and losses2 | (211 | ) | (261 | ) | (4 | ) | (490 | ) | (30 | ) | ||||||
Ending assets | $ | 18,318 | $ | 18,621 | $ | 366 | $ | 18,318 | $ | 366 | ||||||
Multi-asset | ||||||||||||||||
Beginning assets | $ | 4,790 | $ | 4,730 | $ | 4,998 | $ | 5,014 | $ | 5,164 | ||||||
Sales1 | 119 | 120 | 112 | 493 | 483 | |||||||||||
Redemptions1 | (369 | ) | (211 | ) | (257 | ) | (1,044 | ) | (1,166 | ) | ||||||
Net redemptions1 | (250 | ) | (91 | ) | (145 | ) | (551 | ) | (683 | ) | ||||||
Net exchanges | (23 | ) | 4 | (7 | ) | (21 | ) | (28 | ) | |||||||
Acquisition-related | 0 | 45 | 0 | 45 | 0 | |||||||||||
Market gains and losses2 | (424 | ) | 102 | 168 | (394 | ) | 561 | |||||||||
Ending assets | $ | 4,093 | $ | 4,790 | $ | 5,014 | $ | 4,093 | $ | 5,014 | ||||||
Total Long-term Assets3 | ||||||||||||||||
Beginning assets | $ | 172,923 | $ | 124,430 | $ | 119,827 | $ | 132,356 | $ | 113,695 | ||||||
Sales1 | 10,160 | 9,797 | 18,404 | 35,854 | 39,778 | |||||||||||
Redemptions1 | (15,100 | ) | (10,591 | ) | (8,168 | ) | (48,130 | ) | (33,255 | ) | ||||||
Net (redemptions) sales1 | (4,940 | ) | (794 | ) | 10,236 | (12,276 | ) | 6,523 | ||||||||
Net exchanges | 12 | (7 | ) | (16 | ) | (3 | ) | (105 | ) | |||||||
Acquisition-related | 0 | 45,986 | 0 | 45,986 | 435 | |||||||||||
Market gains and losses2 | (9,929 | ) | 3,308 | 2,309 | (7,997 | ) | 11,808 | |||||||||
Ending assets | $ | 158,066 | $ | 172,923 | $ | 132,356 | $ | 158,066 | $ | 132,356 | ||||||
1) | For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return. |
2) | 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. |
3) | Includes $8.3 billion and $8.4 billion at Dec. 31, 2018 and Sept. 30, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 9 of 13 | |
Unaudited Changes in Long-Term Assets - By Asset Class and Product Type | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2018 | ||||||||||||||||||||||||||||||
Equity | Fixed Income | Alternative / Private Markets | Multi-asset | Total | ||||||||||||||||||||||||||
Funds | Separate Accounts1 | Funds | Separate Accounts1 | Funds2 | Separate Accounts1 | Funds | Separate Accounts1 | Funds2 | Separate Accounts1 | |||||||||||||||||||||
Beginning assets | $ | 43,578 | $ | 40,565 | $ | 41,817 | $ | 23,552 | $ | 11,457 | $ | 7,164 | $ | 4,585 | $ | 205 | $ | 101,437 | $ | 71,486 | ||||||||||
Sales | 2,645 | 1,629 | 4,777 | 553 | 348 | 89 | 98 | 21 | 7,868 | 2,292 | ||||||||||||||||||||
Redemptions | (3,909 | ) | (2,868 | ) | (5,698 | ) | (1,726 | ) | (409 | ) | (121 | ) | (359 | ) | (10 | ) | (10,375 | ) | (4,725 | ) | ||||||||||
Net (redemptions) sales | (1,264 | ) | (1,239 | ) | (921 | ) | (1,173 | ) | (61 | ) | (32 | ) | (261 | ) | 11 | (2,507 | ) | (2,433 | ) | |||||||||||
Net exchanges | (180 | ) | 0 | 215 | (1 | ) | 1 | 0 | (23 | ) | 0 | 13 | (1 | ) | ||||||||||||||||
Market gains and losses3 | (5,550 | ) | (3,413 | ) | (621 | ) | 290 | (32 | ) | (179 | ) | (381 | ) | (43 | ) | (6,584 | ) | (3,345 | ) | |||||||||||
Ending assets | $ | 36,584 | $ | 35,913 | $ | 40,490 | $ | 22,668 | $ | 11,365 | $ | 6,953 | $ | 3,920 | $ | 173 | $ | 92,359 | $ | 65,707 | ||||||||||
Year Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2018 | ||||||||||||||||||||||||||||||
Equity | Fixed Income | Alternative / Private Markets | Multi-asset | Total | ||||||||||||||||||||||||||
Funds | Separate Accounts1 | Funds | Separate Accounts1 | Funds2 | Separate Accounts1 | Funds | Separate Accounts1 | Funds2 | Separate Accounts1 | |||||||||||||||||||||
Beginning assets | $ | 33,008 | $ | 29,808 | $ | 41,144 | $ | 23,016 | $ | 366 | $ | 0 | $ | 4,783 | $ | 231 | $ | 79,301 | $ | 53,055 | ||||||||||
Sales | 8,408 | 5,547 | 16,594 | 3,562 | 1,127 | 123 | 472 | 21 | 26,601 | 9,253 | ||||||||||||||||||||
Redemptions | (12,192 | ) | (10,209 | ) | (18,366 | ) | (5,004 | ) | (790 | ) | (525 | ) | (1,013 | ) | (31 | ) | (32,361 | ) | (15,769 | ) | ||||||||||
Net (redemptions) sales | (3,784 | ) | (4,662 | ) | (1,772 | ) | (1,442 | ) | 337 | (402 | ) | (541 | ) | (10 | ) | (5,760 | ) | (6,516 | ) | |||||||||||
Net exchanges | (115 | ) | (1 | ) | 138 | (2 | ) | (2 | ) | 0 | (21 | ) | 0 | 0 | (3 | ) | ||||||||||||||
Acquisition-related | 11,131 | 13,569 | 1,565 | 1,167 | 10,823 | 7,686 | 45 | 0 | 23,564 | 22,422 | ||||||||||||||||||||
Market gains and losses3 | (3,656 | ) | (2,801 | ) | (585 | ) | (71 | ) | (159 | ) | (331 | ) | (346 | ) | (48 | ) | (4,746 | ) | (3,251 | ) | ||||||||||
Ending assets | $ | 36,584 | $ | 35,913 | $ | 40,490 | $ | 22,668 | $ | 11,365 | $ | 6,953 | $ | 3,920 | $ | 173 | $ | 92,359 | $ | 65,707 | ||||||||||
1) | Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return. |
2) | Includes $8.3 billion at Dec. 31, 2018 of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |
3) | 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. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 10 of 13 | |
Unaudited Changes in Long-Term Assets - By Product Type
(in millions)
Quarter Ended | Year Ended | |||||||||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||||||||||||
Total Fund Assets1 | ||||||||||||||||
Beginning assets | $ | 101,437 | $ | 76,389 | $ | 78,955 | $ | 79,301 | $ | 75,665 | ||||||
Sales | 7,868 | 7,168 | 5,050 | 26,601 | 20,579 | |||||||||||
Redemptions | (10,375 | ) | (7,405 | ) | (5,831 | ) | (32,361 | ) | (24,261 | ) | ||||||
Net redemptions | (2,507 | ) | (237 | ) | (781 | ) | (5,760 | ) | (3,682 | ) | ||||||
Net exchanges | 13 | (4 | ) | (16 | ) | 0 | (49 | ) | ||||||||
Acquisition-related | 0 | 23,564 | 0 | 23,564 | 435 | |||||||||||
Market gains and losses2 | (6,584 | ) | 1,725 | 1,143 | (4,746 | ) | 6,932 | |||||||||
Ending assets | $ | 92,359 | $ | 101,437 | $ | 79,301 | $ | 92,359 | $ | 79,301 | ||||||
Total Separate Accounts Assets3 | ||||||||||||||||
Beginning assets | $ | 71,486 | $ | 48,041 | $ | 40,872 | $ | 53,055 | $ | 38,030 | ||||||
Sales4 | 2,292 | 2,629 | 13,354 | 9,253 | 19,199 | |||||||||||
Redemptions4 | (4,725 | ) | (3,186 | ) | (2,337 | ) | (15,769 | ) | (8,994 | ) | ||||||
Net (redemptions) sales4 | (2,433 | ) | (557 | ) | 11,017 | (6,516 | ) | 10,205 | ||||||||
Net exchanges | (1) | (3) | 0 | (3) | (56 | ) | ||||||||||
Acquisition-related | 0 | 22,422 | 0 | 22,422 | 0 | |||||||||||
Market gains and losses2 | (3,345 | ) | 1,583 | 1,166 | (3,251 | ) | 4,876 | |||||||||
Ending assets | $ | 65,707 | $ | 71,486 | $ | 53,055 | $ | 65,707 | $ | 53,055 | ||||||
Total Long-term Assets1,3 | ||||||||||||||||
Beginning assets | $ | 172,923 | $ | 124,430 | $ | 119,827 | $ | 132,356 | $ | 113,695 | ||||||
Sales4 | 10,160 | 9,797 | 18,404 | 35,854 | 39,778 | |||||||||||
Redemptions4 | (15,100 | ) | (10,591 | ) | (8,168 | ) | (48,130 | ) | (33,255 | ) | ||||||
Net (redemptions) sales 4 | (4,940 | ) | (794 | ) | 10,236 | (12,276 | ) | 6,523 | ||||||||
Net exchanges | 12 | (7 | ) | (16 | ) | (3 | ) | (105 | ) | |||||||
Acquisition-related | 0 | 45,986 | 0 | 45,986 | 435 | |||||||||||
Market gains and losses2 | (9,929 | ) | 3,308 | 2,309 | (7,997 | ) | 11,808 | |||||||||
Ending assets | $ | 158,066 | $ | 172,923 | $ | 132,356 | $ | 158,066 | $ | 132,356 | ||||||
1) | Includes $8.3 billion and $8.4 billion at Dec. 31, 2018 and Sept. 30, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |
2) 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.
3) Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
4) For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
Federated Reports Q4 and Full-Year 2018 Earnings | Page 11 of 13 | |
Unaudited Managed Assets (in millions) | Dec. 31, 2018 | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | Dec. 31, 2017 | ||||||||||
By Asset Class | |||||||||||||||
Equity | $ | 72,497 | $ | 84,143 | $ | 57,973 | $ | 58,830 | $ | 62,816 | |||||
Fixed-income | 63,158 | 65,369 | 61,435 | 62,205 | 64,160 | ||||||||||
Alternative / private markets1 | 18,318 | 18,621 | 292 | 343 | 366 | ||||||||||
Multi-asset | 4,093 | 4,790 | 4,730 | 4,843 | 5,014 | ||||||||||
Total long-term assets | 158,066 | 172,923 | 124,430 | 126,221 | 132,356 | ||||||||||
Money market | 301,794 | 264,233 | 255,247 | 265,944 | 265,214 | ||||||||||
Total Managed Assets | $ | 459,860 | $ | 437,156 | $ | 379,677 | $ | 392,165 | $ | 397,570 | |||||
By Product Type | |||||||||||||||
Funds: | |||||||||||||||
Equity | $ | 36,584 | $ | 43,578 | $ | 31,699 | $ | 31,507 | $ | 33,008 | |||||
Fixed-income | 40,490 | 41,817 | 39,877 | 40,529 | 41,144 | ||||||||||
Alternative / private markets1 | 11,365 | 11,457 | 292 | 343 | 366 | ||||||||||
Multi-asset | 3,920 | 4,585 | 4,521 | 4,620 | 4,783 | ||||||||||
Total long-term assets | 92,359 | 101,437 | 76,389 | 76,999 | 79,301 | ||||||||||
Money market | 208,480 | 182,966 | 172,671 | 182,437 | 185,536 | ||||||||||
Total Fund Assets | $ | 300,839 | $ | 284,403 | $ | 249,060 | $ | 259,436 | $ | 264,837 | |||||
Separate Accounts: | |||||||||||||||
Equity | $ | 35,913 | $ | 40,565 | $ | 26,274 | $ | 27,323 | $ | 29,808 | |||||
Fixed-income | 22,668 | 23,552 | 21,558 | 21,676 | 23,016 | ||||||||||
Alternative / private markets | 6,953 | 7,164 | 0 | 0 | 0 | ||||||||||
Multi-asset | 173 | 205 | 209 | 223 | 231 | ||||||||||
Total long-term assets | 65,707 | 71,486 | 48,041 | 49,222 | 53,055 | ||||||||||
Money market | 93,314 | 81,267 | 82,576 | 83,507 | 79,678 | ||||||||||
Total Separate Account Assets | $ | 159,021 | $ | 152,753 | $ | 130,617 | $ | 132,729 | $ | 132,733 | |||||
Total Managed Assets | $ | 459,860 | $ | 437,156 | $ | 379,677 | $ | 392,165 | $ | 397,570 | |||||
1) | Alternative/private markets at Dec. 31, 2018 and Sept. 30, 2018 includes $8.3 billion and $8.4 billion, respectively, of fund assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 12 of 13 | |
Unaudited Average Managed Assets | Quarter Ended | ||||||||||||||
(in millions) | Dec. 31, 2018 | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | Dec. 31, 2017 | ||||||||||
By Asset Class | |||||||||||||||
Equity | $ | 78,084 | $ | 84,262 | $ | 58,818 | $ | 61,555 | $ | 62,140 | |||||
Fixed-income | 63,881 | 64,750 | 61,648 | 63,538 | 64,280 | ||||||||||
Alternative / private markets1 | 18,410 | 18,504 | 319 | 355 | 397 | ||||||||||
Multi-asset | 4,449 | 4,805 | 4,824 | 4,979 | 5,000 | ||||||||||
Total long-term assets | 164,824 | 172,321 | 125,609 | 130,427 | 131,817 | ||||||||||
Money market | 278,885 | 261,571 | 260,371 | 267,546 | 250,197 | ||||||||||
Total Avg. Managed Assets | $ | 443,709 | $ | 433,892 | $ | 385,980 | $ | 397,973 | $ | 382,014 | |||||
By Product Type | |||||||||||||||
Funds: | |||||||||||||||
Equity | $ | 39,871 | $ | 43,473 | $ | 31,911 | $ | 32,680 | $ | 32,829 | |||||
Fixed-income | 41,088 | 41,501 | 40,199 | 41,022 | 41,169 | ||||||||||
Alternative / private markets1 | 11,351 | 11,109 | 319 | 355 | 397 | ||||||||||
Multi-asset | 4,268 | 4,598 | 4,604 | 4,749 | 4,771 | ||||||||||
Total long-term assets | 96,578 | 100,681 | 77,033 | 78,806 | 79,166 | ||||||||||
Money market | 194,009 | 179,562 | 175,885 | 181,856 | 176,918 | ||||||||||
Total Avg. Fund Assets | $ | 290,587 | $ | 280,243 | $ | 252,918 | $ | 260,662 | $ | 256,084 | |||||
Separate Accounts: | |||||||||||||||
Equity | $ | 38,213 | $ | 40,789 | $ | 26,907 | $ | 28,875 | $ | 29,311 | |||||
Fixed-income | 22,793 | 23,249 | 21,449 | 22,516 | 23,111 | ||||||||||
Alternative / private markets | 7,059 | 7,395 | 0 | 0 | 0 | ||||||||||
Multi-asset | 181 | 207 | 220 | 230 | 229 | ||||||||||
Total long-term assets | 68,246 | 71,640 | 48,576 | 51,621 | 52,651 | ||||||||||
Money market | 84,876 | 82,009 | 84,486 | 85,690 | 73,279 | ||||||||||
Total Avg. Separate Account Assets | $ | 153,122 | $ | 153,649 | $ | 133,062 | $ | 137,311 | $ | 125,930 | |||||
Total Avg. Managed Assets | $ | 443,709 | $ | 433,892 | $ | 385,980 | $ | 397,973 | $ | 382,014 | |||||
1) | Alternative/private markets for the quarter ended Dec. 31, 2018 and Sept. 30, 2018 includes $8.3 billion and $8.2 billion, respectively, of fund assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |
Federated Reports Q4 and Full-Year 2018 Earnings | Page 13 of 13 | |
Unaudited Average Managed Assets | Year Ended | |||||||
(in millions) | Dec. 31, 2018 | Dec. 31, 2017 | ||||||
By Asset Class | ||||||||
Equity | $ | 70,680 | $ | 60,255 | ||||
Fixed-income | 63,454 | 55,204 | ||||||
Alternative / private markets1 | 9,397 | 441 | ||||||
Multi-asset | 4,764 | 5,062 | ||||||
Total long-term assets | 148,295 | 120,962 | ||||||
Money market | 267,093 | 245,459 | ||||||
Total Avg. Managed Assets | $ | 415,388 | $ | 366,421 | ||||
By Product Type | ||||||||
Funds: | ||||||||
Equity | $ | 36,984 | $ | 32,160 | ||||
Fixed-income | 40,952 | 40,676 | ||||||
Alternative / private markets1 | 5,784 | 441 | ||||||
Multi-asset | 4,554 | 4,841 | ||||||
Total long-term assets | 88,274 | 78,118 | ||||||
Money market | 182,828 | 176,580 | ||||||
Total Avg. Fund Assets | $ | 271,102 | $ | 254,698 | ||||
Separate Accounts: | ||||||||
Equity | $ | 33,696 | $ | 28,095 | ||||
Fixed-income | 22,502 | 14,528 | ||||||
Alternative / private markets | 3,613 | 0 | ||||||
Multi-asset | 210 | 221 | ||||||
Total long-term assets | 60,021 | 42,844 | ||||||
Money market | 84,265 | 68,879 | ||||||
Total Avg. Separate Account Assets | $ | 144,286 | $ | 111,723 | ||||
Total Avg. Managed Assets | $ | 415,388 | $ | 366,421 | ||||
1) | Alternative/private markets for the year ended Dec. 31, 2018 includes $4.1 billion of fund assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment. |