Federated Investors, Inc. (FHI) Q3 Earnings Report

Federated Investors, Inc. (FHI) experienced mixed financial results in its third-quarter earnings call. They reported record assets under management (AUM) of $800 billion, driven largely by contributions from money market and fixed income assets.

Key Highlights

• Record AUM: $800 billion, with money market assets at $593 billion and fixed income at $100 billion.
• Equity Growth: Equity assets increased to $83.6 billion despite $1.4 billion in net redemptions.
• New Product Launches: Introduction of four active ETFs and a collective investment trust.
• Alternative Private Markets Growth: This category grew to $20.7 billion.
• Revenue and Expenses: Q3 revenue rose by 1% to $5.9 million, while operating expenses declined due to non-recurring charges.
• Future Projections: Tax rate for Q4 2025 projected between 26% and 28%.

Company Outlook

• An increase in institutional flows is expected with further Fed rate cuts.
• Industry assets projected to reach $7 trillion by year-end 2023.
• Growth opportunities noted in alternative funds as clients increase investments.

Challenges

• $1.4 billion in net redemptions in equity assets and a $700 million decline in AUM in alternatives.
• Outflows continue in the Strategic Value Dividend fund.

Positive Indicators

• Money market fund assets peaked at $447 billion, with strong client retention post-SEC reforms.
• Prime funds grew by 25% year-over-year, outperforming industry growth of 17%.

Financial Insights

• Total revenue for the past twelve months stood at $1.6 billion, with a solid gross profit margin of 66.8%.
• Continuing strong dividend payments for 27 years with current yield at 3.21%.

Market Analysis

• Insight into the evolving market and competitive landscape.
• Anticipated ongoing interest from institutional clients with trillions in capital available for investment.

Full Transcript

The full transcript includes remarks from key executives, including President Ray Hanley and CEO Chris Donahue, covering detailed performance metrics, challenges, and opportunities moving forward.

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