Federated Investors, Inc. Reports First Quarter 2016 Earnings

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.

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.

SOURCE Federated Investors, Inc.