Federated Investors, Inc. Reports First Quarter 2007 Earnings; Total Assets Under Management Surpass Record $250 Billion
- Equity and fixed-income assets reach record $64 billion
- Money market assets reach record $186 billion
- Board increases quarterly dividend 17 percent to $0.21 per share
(PITTSBURGH, Pa., ) — Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported earnings per diluted share from continuing operations of $0.50 for the quarter ended March 31, 2007, compared to $0.43 for the quarter ended March 31, 2006, an increase of 16 percent. Federated’s income from continuing operations was $51.8 million for Q1 2007 compared to $46.1 million for Q1 2006. Q1 2007 results include a $1.2 million pre-tax charge, or $0.01 per share after tax, for severance and related expense.
Federated’s total managed assets were a record $250.5 billion at March 31, 2007, up $33.0 billion or 15 percent from $217.5 billion at March 31, 2006 and up $13.1 billion or 6 percent from the $237.4 billion reported at Dec. 31, 2006. Through its mutual funds and separately managed accounts, Federated managed $64.5 billion in equity and fixed-income assets as of March 31, 2007, a 20 percent increase from $53.9 billion as of March 31, 2006. Average managed assets for Q1 2007 were $246.5 billion, up $29.0 billion or 13 percent from $217.5 billion reported for Q1 2006 and up $14.8 billion or 6 percent from $231.7 billion in average managed assets reported for Q4 2006.
“At the end of the quarter, 69 percent of Federated’s domestic stock-fund assets outperformed their Lipper category averages on a one-year basis, which is a noteworthy performance improvement from a year ago,” said J. Christopher Donahue, president and CEO. “Federated continues to strengthen our equity management capacity—most recently through our agreement with Rochdale Investment Management to acquire certain assets related to the strong-performing Rochdale Atlas Portfolio and to hire two members of that fund’s investment management team.”
Federated’s board of directors declared a quarterly dividend of $0.21 per share, an increase of 17 percent from $0.18 per share last quarter. The dividend is payable on May 15, 2007 to shareholders of record as of May 8, 2007. During Q1 2007, Federated purchased 1,229,263 shares of class B common stock for $43.1 million.
Federated’s equity assets were a record $41.3 billion at March 31, 2007, up $9.7 billion or 31 percent from $31.6 billion at March 31, 2006 and up slightly from $40.9 billion at Dec. 31, 2006. Federated’s top-selling equity mutual funds on a net basis were: Federated Strategic Value Fund, Federated Muni and Stock Advantage Fund, Federated MDT All Cap Core Fund and Federated Kaufmann Small Cap Fund. Federated saw solid organic growth in its equity separate account products, which had $225 million in net flows during Q1 2007.
Federated’s fixed-income assets were $23.2 billion at March 31, 2007, up $0.9 billion or 4 percent from $22.3 billion at March 31, 2006 and up slightly from $22.9 billion at Dec. 31, 2006. Federated’s top-selling fixed-income mutual funds on a net basis were: Federated Total Return Bond Fund, Federated Total Return Government Bond Fund and Federated Intermediate Municipal Trust. Federated saw solid organic growth in its fixed-income separate account products, which had $236 million in net flows during Q1 2007.
Money market assets in both funds and separate accounts were a record $186.0 billion at March 31, 2007, up $22.4 billion or 14 percent from $163.6 billion at March 31, 2006 and up $12.4 billion or 7 percent from $173.6 billion at Dec. 31, 2006. Money market mutual fund assets increased to a record $163.8 billion at the end of Q1 2007, up $17.8 billion or 12 percent from $146.0 billion at March 31, 2006 and up $8.6 billion or 6 percent from $155.2 billion at Dec. 31, 2006.
For Q1 2007, revenue increased $25.6 million or 11 percent to $264.4 million compared to $238.8 million for the same quarter last year. The increase in revenue is primarily due to increases in revenue from average money market managed assets ($14.3 million); increases in average equity managed assets due to the MDT acquisition ($9.1 million); and increases in remaining average equity managed assets ($6.2 million). The increases were partially offset by a decrease in revenue from a change in the asset mix of average fixed-income managed assets ($2.6 million). For Q1 2007, Federated derived 48 percent of its revenue from money market assets, 40 percent from equity assets, 11 percent from fixed-income assets and 1 percent from other products and services.
Operating expenses for Q1 2007 increased by $16.0 million or 10 percent to $180.6 million,
compared to $164.6 million for Q1 2006. This increase in operating expenses was caused primarily by marketing and distribution expenses related to increased money market managed assets ($8.8 million) and operating expenses related to MDT ($6.9 million).
Federated will host an earnings conference call at 9 a.m. Eastern on April 27, 2007. Investors are invited to listen to Federated’s Q1 earnings teleconference by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to the 9 a.m. start time for the teleconference. The call may also be accessed in real time on the Internet via the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until May 4, 2007 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering codes 286 and 237770.
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $250.5 billion in assets as of March 31, 2007. With 151 mutual funds and a variety of separately managed account options, Federated provides comprehensive investment management to more than 5,400 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top 2 percent of money market fund managers in the industry, the top 8 percent of equity fund managers and the top 10 percent of fixed-income fund managers1. For more information, visit FederatedInvestors.com.
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1 Strategic Insight, February 28, 2007. Based on assets under management in open-end funds.
Certain statements in this press release, such as those related to strengthening the company’s equity management capacity, 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. Among other risks and uncertainties is the ability of the company to strengthen its equity management capacity and the risk factors discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission. Many of these factors may be impacted as a result of the ongoing threat of terrorism. 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.
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