Federated Hermes Inc.

10/24/2024 | Press release | Distributed by Public on 10/24/2024 14:17

Q3 2024 Financials

Income Statement QTD

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Quarter Ended % Change Q3 2023 to Q3 2024 Quarter Ended % Change Q2 2024 to Q3 2024
September 30, 2024 September 30, 2023 June 30, 2024
Revenue
Investment advisory fees, net $ 274,621 $ 276,771 (1)% $ 270,622 1 %
Administrative service fees, net-affiliates 97,687 88,023 11 % 95,346 2 %
Other service fees, net 36,148 37,862 (5)% 36,615 (1)%
Total Revenue 408,456 402,656 1 % 402,583 1 %
Operating Expenses
Compensation and related 136,027 139,123 (2)% 130,748 4 %
Distribution 95,859 89,838 7 % 93,503 3 %
Systems and communications 23,656 21,213 12 % 23,194 2 %
Professional service fees 19,849 17,561 13 % 19,845 - %
Office and occupancy 9,884 10,632 (7)% 9,765 1 %
Advertising and promotional 5,378 3,857 39 % 6,621 (19)%
Travel and related 4,221 4,034 5 % 3,847 10 %
Intangible asset related 3,504 3,451 2 % 69,392 (95)%
Other (1,664) 11,523 (114)% 4,951 (134)%
Total Operating Expenses 296,714 301,232 (1)% 361,866 (18)%
Operating Income 111,742 101,424 10 % 40,717 174 %
Nonoperating Income (Expenses)
Investment income (loss), net 14,015 2,722 415 % 5,132 173 %
Debt expense (3,170) (3,133) 1 % (3,159) - %
Other, net 16 (8) 300 % (34) 147 %
Total Nonoperating Income (Expenses), net 10,861 (419) NM 1,939 460 %
Income before income taxes 122,603 101,005 21 % 42,656 187 %
Income tax provision 32,262 26,739 21 % 23,431 38 %
Net income including the noncontrolling interests in subsidiaries 90,341 74,266 22 % 19,225 370 %
Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries 2,803 (760) 469 % (1,802) 256 %
Net Income $ 87,538 $ 75,026 17 % $ 21,027 316 %
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic and diluted $ 1.06 $ 0.86 23 % $ 0.20 430 %
Diluted $ 1.06 $ 0.86 23 % $ 0.2 430 %
Weighted-Average Shares Outstanding
Basic 78,690 83,710 80,026
Diluted 78,706 83,710 80,026
Dividends Declared Per Share $ 0.31 $ 0.28 $ 1.31
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 $3.7 million, $3.3 million and $4.7 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended Sept. 30, 2024, Sept. 30, 2023 and June 30, 2024, respectively, was excluded from the computation of earnings per share.

Income Statement YTD

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Nine Months Ended
Sept. 30, 2024 Sept. 30, 2023 % Change
Revenue
Investment advisory fees, net $ 809,537 $ 851,089 (5)%
Administrative service fees, net-affiliates 287,819 252,402 14 %
Other service fees, net 110,054 114,586 (4)%
Total Revenue 1,207,410 1,218,077 (1)%
Operating Expenses
Compensation and related 403,321 435,884 (7)%
Distribution 284,257 280,258 1 %
Intangible asset related 76,131 10,194 NM
Systems and communications 68,672 63,259 9 %
Professional service fees 58,046 52,881 10 %
Office and occupancy 29,617 34,910 (15)%
Advertising and promotional 16,306 13,308 23 %
Travel and related 11,341 11,101 2 %
Other 8,679 31,303 (72)%
Total Operating Expenses 956,370 933,098 2 %
Operating Income 251,040 284,979 (12)%
Nonoperating Income (Expenses)
Investment income (loss), net 27,630 18,322 51 %
Debt expense (9,478) (9,377) 1 %
Other, net 85 101 (16)%
Total Nonoperating Income (Expenses), net 18,237 9,046 102 %
Income before income taxes 269,277 294,025 (8)%
Income tax provision 84,701 75,291 12 %
Net income including the noncontrolling interests in subsidiaries $ 184,576 $ 218,734 (16)%
Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries 978 1,932 (49)%
Net Income $ 183,598 $ 216,802 (15)%
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic and diluted $ 2.20 $ 2.44 (10)%
Diluted $ 2.2 $ 2.44 (10)%
Weighted-Average Shares Outstanding
Basic 79.804 84,499
Diluted 79,809 84,502
Dividends Declared Per Share $ 1.90 $ 0.83
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 basic earnings per share under the "two-class method." As such, total net income of $8.0 million and $10.3 million available to unvested restricted Federated Hermes shareholders for the nine months ended Sept. 30, 2024 and Sept. 30, 2023, respectively, was excluded from the computation of earnings per share.

Consolidated Balance Sheets2

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Condensed Consolidated Balance Sheets
(in thousands) Sept. 30, 2024 Dec. 31, 2023
Assets
Cash and other investments $ 565,028 $ 560,675
Other current assets 158,158 160,054
Intangible assets, net, including goodwill 1,156,135 1,216,605
Other long-term assets 158,230 164,510
Total Assets $ 2,037,551 $ 2,101,844
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities $ 263,138 $ 287,343
Long-term debt 348,040 347,843
Other long-term liabilities 289,449 312,561
Redeemable noncontrolling interests 53,408 25,845
Equity excluding treasury stock 1,706,212 1,649,655
Treasury stock (622,696) (521,403)
Total Liabilities, Redeemable Noncontrolling Interests and Equity $ 2,037,551 $ 2,101,844

NEW Fund & Sep Acct Flows

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Changes in Long-Term Assets - By Asset Class
(in millions) Quarter Ended Nine Months Ended
Sept. 30, 2024 June 30, 2024 Sept. 30, 2023 Sept. 30, 2024 Sept. 30, 2023
Equity
Beginning assets $ 77,851 $ 80,157 $ 82,992 $ 79,291 $ 81,523
Sales1 3,607 3,811 3,897 11,333 14,397
Redemptions1 (5,046) (7,071) (6,304) (19,468) (16,737)
Net sales (redemptions)1 (1,439) (3,260) (2,407) (8,135) (2,340)
Net exchanges (4) 9 18 10 126
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange2 725 12 (532) 170 (353)
Market gains and (losses)3 6,476 933 (2,756) 12,273 (1,641)
Ending assets $ 83,609 $ 77,851 $ 77,315 $ 83,609 $ 77,315
Fixed Income
Beginning assets $ 95,294 $ 96,325 $ 87,425 $ 94,920 $ 86,743
Sales1 7,345 5,262 8,277 19,190 19,215
Redemptions1 (5,942) (6,699) (5,133) (18,036) (17,223)
Net sales (redemptions)1 1,403 (1,437) 3,144 1,154 1,992
Net exchanges (12) (179) (25) (198) (120)
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange2 98 (8) (96) 19 (15)
Market gains and (losses)3 3,388 593 (683) 4,276 1,165
Ending assets $ 100,171 $ 95,294 $ 89,765 $ 100,171 $ 89,765
Alternative/Private Markets
Beginning assets $ 20,061 $ 20,465 $ 21,602 $ 20,551 $ 20,802
Sales1 558 647 660 1,966 2,568
Redemptions1 (881) (1,177) (866) (2,798) (2,403)
Net sales (redemptions)1 (323) (530) (206) (832) 165
Net exchanges 12 174 (3) 188 (6)
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange2 1,017 21 (762) 812 145
Market gains and (losses)3 (84) (69) (294) (36) (769)
Ending assets $ 20,683 $ 20,061 $ 20,337 $ 20,683 $ 20,337
Multi-asset
Beginning assets $ 2,876 $ 2,928 $ 2,922 $ 2,867 $ 2,989
Sales1 38 42 30 124 110
Redemptions1 (94) (113) (119) (319) (406)
Net sales (redemptions)1 (56) (71) (89) (195) (296)
Net exchanges 4 1 0 5 3
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange2 0 0 0 0 0
Market gains and (losses)3 134 18 (105) 281 32
Ending assets $ 2,958 $ 2,876 $ 2,728 $ 2,958 $ 2,728
Total Long-term Assets
Beginning assets $ 196,082 $ 199,875 $ 194,941 $ 197,629 $ 192,057
Sales1 11,548 9,762 12,864 32,613 36,290
Redemptions1 (11,963) (15,060) (12,422) (40,621) (36,769)
Net sales (redemptions)1 (415) (5,298) 442 (8,008) (479)
Net exchanges 0 5 (10) 5 3
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange2 1,840 25 (1,390) 1,001 (223)
Market gains and (losses)3 9,914 1,475 (3,838) 16,794 (1,213)
Ending assets $ 207,421 $ 196,082 $ 190,145 $ 207,421 $ 190,145
1) For certain accounts, including separately managed accounts, institutional accounts, certain sub-advised funds and other managed products, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return. 2) Reflects the impact of translating non-U.S. dollar denominated assets under management (AUM) into U.S. dollars for reporting purposes. 3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

NEW Asset Class and Product Typ

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions)
Quarter Ended
September 30, 2024
Equity Fixed Income Alternative / Private Markets Multi-asset Total
Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1
Beginning assets $ 42,404 $ 35,447 $ 43,842 $ 51,452 $ 12,258 $ 7,803 $ 2,743 $ 133 $ 101,247 $ 94,835
Sales 2,261 1,346 3,876 3,469 476 82 33 5 6,646 4,902
Redemptions (2,874) (2,172) (3,571) (2,371) (699) (182) (90) (4) (7,234) (4,729)
Net sales (redemptions) (613) (826) 305 1,098 (223) (100) (57) 1 (588) 173
Net exchanges (4) 0 2 (14) 12 0 4 0 14 (14)
Acquisition-related 0 0 0 0 0 0 0 0 0 0
Impact of foreign exchange2 397 328 75 23 588 429 0 0 1,060 780
Market gains and losses3 3,207 3,269 1,803 1,585 (77) (7) 133 1 5,066 4,848
Ending assets $ 45,391 $ 38,218 $ 46,027 $ 54,144 $ 12,558 $ 8,125 $ 2,823 $ 135 $ 106,799 $ 100,622
Nine Months Ended
September 30, 2024
Equity Fixed Income Alternative / Private Markets Multi-asset Total
Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1 Funds Separate Accounts1
Beginning assets $ 42,513 $ 36,778 $ 43,908 $ 51,012 $ 12,379 $ 8,172 $ 2,730 $ 137 $ 101,530 $ 96,099
Sales 7,093 4,240 11,251 7,939 1,667 299 119 5 20,130 12,483
Redemptions (10,537) (8,931) (11,012) (7,024) (2,366) (432) (306) (13) (24,221) (16,400)
Net sales (redemptions) (3,444) (4,691) 239 915 (699) (133) (187) (8) (4,091) (3,917)
Net exchanges 10 0 (181) (17) 188 0 5 0 22 (17)
Acquisition-related 0 0 0 0 0 0 0 0 0 0
Impact of foreign exchange2 151 19 28 (9) 456 356 0 0 635 366
Market gains and losses3 6,161 6,112 2,033 2,243 234 (270) 275 6 8,703 8,091
Ending assets $ 45,391 $ 38,218 $ 46,027 $ 54,144 $ 12,558 $ 8,125 $ 2,823 $ 135 $ 106,799 $ 100,622
1) Includes separately managed accounts, institutional accounts, certain 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) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. 3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

NEW Fund & Sep Acct Flows Total

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Total Changes in Long-Term Assets - By Product Type
(in millions) Quarter Ended Nine Months Ended
Sept. 30, 2024 June 30, 2024 Sept. 30, 2023 Sept. 30, 2024 Sept. 30, 2023
Total Fund Assets
Beginning assets $ 101,247 $ 103,143 $ 104,387 $ 101,530 $ 102,423
Sales 6,646 6,318 5,413 20,130 20,192
Redemptions (7,234) (8,757) (8,018) (24,221) (24,425)
Net sales (redemptions) (588) (2,439) (2,605) (4,091) (4,233)
Net exchanges 14 6 0 22 10
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange1 1,060 (5) (798) 635 23
Market gains and (losses)2 5,066 542 (2,606) 8,703 155
Ending assets $ 106,799 $ 101,247 $ 98,378 $ 106,799 $ 98,378
Total Separate Account Assets3
Beginning assets $ 94,835 $ 96,732 $ 90,554 $ 96,099 $ 89,634
Sales4 4,902 3,444 7,451 12,483 16,098
Redemptions4 (4,729) (6,303) (4,404) (16,400) (12,344)
Net sales (redemptions)4 173 (2,859) 3,047 (3,917) 3,754
Net exchanges (14) (1) (10) (17) (7)
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange1 780 30 (592) 366 (246)
Market gains and (losses)2 4,848 933 (1,232) 8,091 (1,368)
Ending assets $ 100,622 $ 94,835 $ 91,767 $ 100,622 $ 91,767
Total Long-term Assets3
Beginning assets $ 196,082 $ 199,875 $ 194,941 $ 197,629 $ 192,057
Sales4 11,548 9,762 12,864 32,613 36,290
Redemptions4 (11,963) (15,060) (12,422) (40,621) (36,769)
Net sales (redemptions)4 (415) (5,298) 442 (8,008) (479)
Net exchanges 0 5 (10) 5 3
Acquisitions/(dispositions) 0 0 0 0 0
Impact of foreign exchange1 1,840 25 (1,390) 1,001 (223)
Market gains and (losses)2 9,914 1,475 (3,838) 16,794 (1,213)
Ending assets $ 207,421 $ 196,082 $ 190,145 $ 207,421 $ 190,145
1) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. 2) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income. 3) Includes separately managed accounts, institutional accounts, certain 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.

NEW AUM

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Managed Assets
(in millions) Sept. 30, 2024 June 30, 2024 March 31, 2024 Dec. 31, 2023 Sept. 30, 2023
By Asset Class
Equity $ 83,609 $ 77,851 $ 80,157 $ 79,291 $ 77,315
Fixed-income 100,171 95,294 96,325 94,920 89,765
Alternative / private markets 20,683 20,061 20,465 20,551 20,337
Multi-asset 2,958 2,876 2,928 2,867 2,728
Total long-term assets 207,421 196,082 199,875 197,629 190,145
Money market 593,030 586,647 578,811 559,993 525,085
Total Managed Assets $ 800,451 $ 782,729 $ 778,686 $ 757,622 $ 715,230
By Product Type
Funds:
Equity $ 45,391 $ 42,404 $ 43,415 $ 42,513 $ 40,801
Fixed-income 46,027 43,842 44,481 43,908 42,569
Alternative / private markets 12,558 12,258 12,458 12,379 12,409
Multi-asset 2,823 2,743 2,789 2,730 2,599
Total long-term assets 106,799 101,247 103,143 101,530 98,378
Money market 440,397 425,627 417,102 406,166 384,896
Total Fund Assets $ 547,196 $ 526,874 $ 520,245 $ 507,696 $ 483,274
Separate Accounts:
Equity $ 38,218 $ 35,447 $ 36,742 $ 36,778 $ 36,514
Fixed-income 54,144 51,452 51,844 51,012 47,196
Alternative / private markets 8,125 7,803 8,007 8,172 7,928
Multi-asset 135 133 139 137 129
Total long-term assets 100,622 94,835 96,732 96,099 91,767
Money market 152,633 161,020 161,709 153,827 140,189
Total Separate Account Assets $ 253,255 $ 255,855 $ 258,441 $ 249,926 $ 231,956
Total Managed Assets $ 800,451 $ 782,729 $ 778,686 $ 757,622 $ 715,230

NEW Avg AUM

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Average Managed Assets Quarter Ended
(in millions) Sept. 30, 2024 June 30, 2024 March 31, 2024 Dec. 31, 2023 Sept. 30, 2023
By Asset Class
Equity $ 80,220 $ 78,137 $ 78,969 $ 76,009 $ 82,203
Fixed-income 97,563 95,484 95,791 91,927 88,677
Alternative / private markets 20,455 20,306 20,485 20,623 21,413
Multi-asset 2,910 2,889 2,874 2,744 2,861
Total long-term assets 201,148 196,816 198,119 191,303 195,154
Money market 592,304 582,758 578,383 536,727 516,046
Total Avg. Managed Assets $ 793,452 $ 779,574 $ 776,502 $ 728,030 $ 711,200
By Product Type
Funds:
Equity $ 43,632 $ 42,274 $ 42,355 $ 40,296 $ 43,687
Fixed-income 44,977 43,910 43,857 42,705 43,437
Alternative / private markets 12,451 12,331 12,377 12,571 13,184
Multi-asset 2,775 2,737 2,739 2,615 2,724
Total long-term assets 103,835 101,252 101,328 98,187 103,032
Money market 436,418 419,999 414,902 392,946 373,088
Total Avg. Fund Assets $ 540,253 $ 521,251 $ 516,230 $ 491,133 $ 476,120
Separate Accounts:
Equity $ 36,588 $ 35,863 $ 36,614 $ 35,713 $ 38,516
Fixed-income 52,586 51,574 51,934 49,222 45,240
Alternative / private markets 8,004 7,975 8,108 8,052 8,229
Multi-asset 135 152 135 129 137
Total long-term assets 97,313 95,564 96,791 93,116 92,122
Money market 155,886 162,759 163,481 143,781 142,958
Total Avg. Separate Account Assets $ 253,199 $ 258,323 $ 260,272 $ 236,897 $ 235,080
Total Avg. Managed Assets $ 793,452 $ 779,574 $ 776,502 $ 728,030 $ 711,200

NEW AUM YTD

FEDERATED HERMES, INC.
Excel version of financial statements provided for informational purposes only.
Please consult full press release for a complete review of quarterly earnings.
Unaudited Average Managed Assets Nine Months Ended
(in millions) Sept. 30, 2024 Sept. 30, 2023
By Asset Class
Equity $ 79,108 $ 83,128
Fixed-income 96,280 88,130
Alternative / private markets1 20,415 21,254
Multi-asset 2,891 2,934
Total long-term assets 198,694 195,446
Money market 584,482 503,182
Total Avg. Managed Assets $ 783,176 $ 698,628
By Product Type
Funds:
Equity $ 42,754 $ 44,320
Fixed-income 44,248 43,741
Alternative / private markets1 12,386 13,143
Multi-asset 2,751 2,794
Total long-term assets 102,139 103,998
Money market 423,773 356,351
Total Avg. Fund Assets $ 525,912 $ 460,349
Separate Accounts:
Equity $ 36,354 $ 38,808
Fixed-income 52,032 44,389
Alternative / private markets 8,029 8,111
Multi-asset 140 140
Total long-term assets 96,555 91,448
Money market 160,709 146,831
Total Avg. Separate Account Assets $ 257,264 $ 238,279
Total Avg. Managed Assets $ 783,176 $ 698,628