Core Viewpoint - Federated Hermes, Inc. is experiencing growth in assets under management (AUM) through strategic acquisitions in the money market sector, but rising expenses and reliance on net investment advisory fees present challenges [1][3][7]. Group 1: AUM Growth and Strategic Acquisitions - The acquisition of money market assets indicates Federated's strong position in the money market business, with significant growth in money market AUM in the first half of 2024 [3]. - The company has engaged in strategic deals, including the buyout of C.W. Henderson and Associates, Inc., which enhances its separately managed account business [4]. - Federated's average AUM has shown a five-year compound annual growth rate (CAGR) of 11.9% as of 2023, with continued growth expected in the first half of 2024 [4]. Group 2: Capital Distribution Activities - Federated's capital distribution activities are positive, with a share repurchase program authorized for up to five million shares in June 2022 and an additional five million shares in October 2023 [5]. - The company has consistently paid dividends since its IPO in 1998, increasing its quarterly dividend by 10.7% to 31 cents per share in April 2024 [6]. - As of June 30, 2024, Federated's long-term debt was $348 million, and cash and other investments totaled $452.95 million, indicating a strong liquidity position [6]. Group 3: Challenges to Growth - Rising expenses are a concern for Federated, with expectations of increased distribution costs and new hires potentially escalating the cost base [7]. - Management anticipates higher advertising and promotion costs in the second half of 2024 compared to the first half, which may pressure profitability [7]. - Net investment advisory fees accounted for 66.2% of total revenues as of June 30, 2024, making the company vulnerable to fluctuations in the fair value of securities and fund redemptions [8].

PITTSBURGH, July 31, 2024 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a global leader in investment management, today announced the launch of four actively managed ETFs that take a quantitative approach to stock selection. The new products offer investors another way to access the disciplined Federated Hermes MDT investment process, crafted and refined for more than 30 years and now available in an ETF structure. Federated Hermes MDT Large Cap Core ETF (FLCC) Federated Hermes MDT Large Cap Growth ET ...

(a) not applicable. The following exhibits required to be filed or furnished by Item 601 of Regulation S-K are filed or furnished herewith and incorporated by reference herein: Net income decreased $45.7 million for the six-month period ended June 30, 2024, as compared to the same period in 2023, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the six-month period ended June 30, 2024 decreased $0.47, as c ...

Core Viewpoint - Federated Hermes reported a mixed financial performance for the quarter ended June 2024, with a decline in revenue but an increase in earnings per share (EPS) compared to the previous year [2]. Financial Performance - Revenue for the quarter was $402.58 million, down 7.1% year-over-year, but exceeded the Zacks Consensus Estimate by 1.31% [2]. - EPS was reported at $0.96, an increase from $0.81 in the same quarter last year, representing a surprise of 7.87% over the consensus estimate of $0.89 [2]. Managed Assets Overview - Managed Assets in Alternative/private markets were $20.06 billion, slightly below the average estimate of $20.64 billion [4]. - Managed Assets in Multi-asset were $2.88 billion, slightly above the average estimate of $2.84 billion [4]. - Total long-term assets managed were $196.08 billion, exceeding the average estimate of $195.26 billion [4]. - Money market managed assets were $586.65 billion, surpassing the average estimate of $560.22 billion [4]. Revenue Breakdown - Administrative service fees, net, were $95.35 million, exceeding the average estimate of $91.47 million, with a year-over-year increase of 11.9% [4]. - Other service fees, net, were $36.62 million, slightly below the average estimate of $36.99 million, reflecting a year-over-year decline of 2.9% [4]. - Investment advisory fees, net, were $270.62 million, above the average estimate of $267.01 million, but showed a year-over-year decrease of 12.8% [4].

Exhibit 99.1 Federated Hermes, Inc. reports record assets under management with second quarter 2024 earnings (PITTSBURGH, Pa., July 25, 2024) — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.20 for Q2 2024, compared to $0.81 for the same quarter last year, on net income of $21.0 million for Q2 2024, compared to $72.2 million for Q2 2023. Federated Hermes' Q2 2024 results include a $66.3 million non- cash expense, or ...

The earnings report, which is expected to be released on July 25, 2024, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. Zacks Consensus Estimate Revenues are expected to be $397.56 million, down 8.2% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.71% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collect ...

A telephone replay of the call will begin at approximately 12:30 p.m. Eastern on July 26, 2024. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter the access code 50846. The online replay will be available via FederatedHermes.com/us for one year. SOURCE Federated Hermes, Inc. Investors interested in listening to the conference call should dial 888-506-0062 (domestic) or 973-528-0011 (international) or visit FederatedHermes.com/us for real-time Internet acc ...

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its ...

Financial Data and Key Metrics Changes - Total Q1 carried interest and performance fees were $400,000 compared to $9.7 million in Q4 [1] - Q1 total revenue increased by $4.9 million from the prior quarter, primarily due to higher average money market assets, which increased revenue by $13.7 million [19] - Operating expenses increased by $8.9 million from the prior quarter, mainly due to higher compensation expenses [1] Business Line Data and Key Metrics Changes - MDT strategies showed accelerated sales and net sales in Q1, particularly in the growth space, with 56% of equity funds beating peers [4] - Fixed income funds had positive net sales of $565 million in Q1, a significant recovery from negative sales of $988 million in Q4 [15] - The strategic value dividend domestic strategy had Q1 net redemptions of $1.3 billion, an improvement from $2.2 billion in Q4 [14] Market Data and Key Metrics Changes - Managed assets reached approximately $775 billion, including $579 billion in money markets, $77 billion in equities, and $96 billion in fixed income [8] - Total money market assets increased by $19 billion during Q1 from year-end, reaching record highs [7] - The company's estimate of money market mutual fund market share was about 7.35% at the end of Q1, down slightly from 7.40% at the end of 2023 [18] Company Strategy and Development Direction - The company is focused on expanding its businesses, particularly in the real estate sector in the U.S., and is open to acquisitions that align with this strategy [24] - The company plans to continue to leverage its strong cash flow for potential M&A opportunities while also returning capital to shareholders through dividends and share repurchases [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the favorable market conditions for money market strategies, anticipating continued strength in retail flows despite institutional challenges [45] - The company expects net additions in fixed income of about $866 million, driven by various strategies, while acknowledging some offsetting losses in high yield [17] - Management noted that the current environment remains conducive for money market funds, with a preference for a measured approach to interest rate changes [86] Other Important Information - The company declared a dividend of $1.31 per share, which includes a $1 special dividend and a $0.31 quarterly dividend, marking the sixth special dividend since 2008 [48] - The effective tax rate for Q1 was 27.9%, with expectations to remain in the 26% to 28% range throughout 2024 [47] Q&A Session Summary Question: What is the company's approach to capital return? - The company prioritizes M&A opportunities, followed by special dividends and share buybacks, indicating a strong balance sheet and cash flow [52] Question: How does the company view the current money market environment? - Management believes that measured interest rate changes will benefit money market funds, with strong retail flows expected [86] Question: What is driving the equity net outflows in the quarter? - Elevated redemptions in specific funds like the strategic value dividend and Kaufmann were noted, but there are positive flows in other areas like MDT [102] Question: Can you provide insights on the performance of fixed income funds? - Fixed income funds have shown solid sales, particularly in ultrashorts, and the company expects continued growth in this area [108]

[Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements as of March 31, 2024, detail the company's financial position, performance, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly decreased to $2.09 billion while total liabilities declined, resulting in an increase in total permanent equity Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$2,086,972** | **$2,101,844** | | Total Current Assets | $719,656 | $720,729 | | Goodwill | $805,925 | $807,156 | | **Total Liabilities** | **$866,415** | **$947,747** | | Total Current Liabilities | $212,499 | $287,343 | | Long-Term Debt | $347,909 | $347,843 | | **Total Permanent Equity** | **$1,147,427** | **$1,128,252** | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) Revenue and net income increased year-over-year for the first quarter, driving higher earnings per share Q1 2024 vs Q1 2023 Income Statement (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Total Revenue** | **$396,371** | **$382,189** | | Total Operating Expenses | $297,790 | $297,023 | | **Operating Income** | **$98,581** | **$85,166** | | Income Before Income Taxes | $104,018 | $92,475 | | **Net Income** | **$75,033** | **$69,601** | | **Earnings Per Share (Diluted)** | **$0.89** | **$0.78** | | Cash Dividends Per Share | $0.28 | $0.27 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations increased, while financing activities, including share buybacks and dividends, led to a net decrease in cash Cash Flow Summary for Three Months Ended March 31 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $14,031 | $5,420 | | Net Cash Provided by Investing Activities | $27,587 | $1,838 | | Net Cash Used by Financing Activities | ($63,526) | ($22,016) | | **Net (Decrease) in Cash** | **($23,320)** | **($12,711)** | [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Disclosures detail revenue recognition, concentration risks, debt structure, and the declaration of a special dividend Q1 Revenue by Asset Class (in thousands) | Asset Class | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Money market | $202,640 | $179,536 | | Equity | $116,515 | $124,653 | | Fixed-income | $48,675 | $47,890 | | Other | $28,541 | $30,110 | | **Total Revenue** | **$396,371** | **$382,189** | - Revenue from money market assets constituted **51% of total revenue** in Q1 2024, up from 47% in Q1 2023, highlighting its growing importance[30](index=30&type=chunk) - A single intermediary, The Bank of New York Mellon Corporation, accounted for approximately **11% of total revenue** in Q1 2024[32](index=32&type=chunk) - On April 25, 2024, the board declared a total dividend of **$1.31 per share**, consisting of a $0.31 quarterly dividend and a $1.00 special dividend, payable on May 15, 2024[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total managed assets grew 11% year-over-year to $778.7 billion, driven by strong inflows into money market assets [Business Developments](index=26&type=section&id=Business%20Developments) Significant developments include new domestic regulations, international fund regime progress, and a special cash dividend declaration - Key domestic regulatory developments include the SEC's climate-related disclosure rules, the DOL's final "Fiduciary Rule" broadening the definition of investment advice, and the FTC's ban on new post-employment non-compete agreements[99](index=99&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Internationally, there has been progress on the UK's Overseas Fund Regime (OFR) for non-UK funds, and the EU has adopted AIFMD II, which amends rules for alternative and mutual funds concerning delegation, liquidity risk, and reporting[107](index=107&type=chunk)[115](index=115&type=chunk) - On April 25, 2024, the board declared a **special cash dividend of $1.00 per share**, in addition to a regular quarterly dividend of $0.31 per share, to be paid on May 15, 2024[127](index=127&type=chunk) [Asset Highlights](index=32&type=section&id=Asset%20Highlights) Total managed assets grew to $778.7 billion, led by a 14% increase in money market assets, while long-term assets saw net redemptions Managed Assets at Period End (in millions) | Asset Class | March 31, 2024 | March 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | Equity | $80,157 | $83,629 | (4)% | | Fixed-Income | $96,325 | $87,461 | 10% | | Alternative / Private Markets | $20,465 | $21,174 | (3)% | | Money Market | $578,811 | $505,800 | 14% | | **Total Managed Assets** | **$778,686** | **$701,037** | **11%** | Q1 2024 Changes in Long-Term Assets (in millions) | Asset Class | Beginning Assets | Net Sales (Redemptions) | Market Gains (Losses) & Other | Ending Assets | | :--- | :--- | :--- | :--- | :--- | | Equity | $79,291 | ($3,436) | $4,302 | $80,157 | | Fixed-Income | $94,920 | $1,188 | $217 | $96,325 | | **Total Long-Term** | **$197,629** | **($2,295)** | **$4,541** | **$199,875** | - Money market assets continued to benefit from favorable market conditions, attractive yields compared to alternatives like bank deposits, and high liquidity levels in the financial system[147](index=147&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Revenue growth from money market assets and flat operating expenses drove higher net income and diluted EPS - Revenue increased primarily due to higher average money market fund assets, which was partially offset by lower average equity assets[149](index=149&type=chunk) - The **effective tax rate increased to 27.9%** in Q1 2024 from 22.7% in Q1 2023, mainly due to a valuation allowance on foreign deferred tax assets and a smaller tax benefit from share-based compensation vesting[153](index=153&type=chunk) - **Diluted EPS increased by $0.11 YoY**, with $0.07 from increased net income and $0.04 from a reduction in shares outstanding via buybacks[155](index=155&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with $605.7 million in liquid assets and an undrawn $350 million credit facility - The company has **$350 million in unsecured senior notes** due in 2032 and an undrawn **$350 million revolving credit facility** expiring in 2026[162](index=162&type=chunk)[163](index=163&type=chunk) - The company was in compliance with all debt covenants, with an **interest coverage ratio of 40 to 1** (vs required 4 to 1) and a **leverage ratio of 0.72 to 1** (vs required maximum of 3 to 1)[164](index=164&type=chunk) - Future cash needs include funding acquisitions, global expansion, dividends, debt obligations, share repurchases, and a planned technology investment of approximately **$310 million through 2026**[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposures were reported compared to the 2023 year-end filing - There were **no material changes** to Federated Hermes' market risk exposures as of March 31, 2024, compared to the year-end 2023 report[180](index=180&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2024[184](index=184&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's **internal control over financial reporting**[184](index=184&type=chunk) [Part II. Other Information](index=43&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company does not anticipate any material loss from current legal claims asserted in the ordinary course of business - As of March 31, 2024, the company does not believe that a **material loss** related to any claims asserted against it in the ordinary course of business is reasonably possible[86](index=86&type=chunk)[182](index=182&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors disclosed in the 2023 Annual Report on Form 10-K - **No material changes** were reported to the risk factors from the company's 2023 Form 10-K[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased over 1 million shares in Q1 2024, with 3.5 million shares remaining under the buyback program Q1 2024 Share Repurchases | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January | 64,399 | $28.25 | | February | 585,000 | $35.06 | | March | 432,721 | $33.91 | | **Total** | **1,082,120** | **$34.20** | - The share repurchase program, authorized in October 2023 for up to 5.0 million shares, had **3,492,415 shares remaining** for purchase at the end of the quarter[186](index=186&type=chunk) [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) Seven directors were elected at the Annual Meeting, and no Rule 10b5-1 trading plan changes were made by insiders - **Seven directors were elected** to the Board at the Annual Meeting on April 25, 2024, including Joseph C. Bartolacci, J. Christopher Donahue, and Thomas R. Donahue[188](index=188&type=chunk)[189](index=189&type=chunk) - No director or officer adopted, modified, or terminated a Rule 10b5-1(c) or non-Rule 10b5-1(c) trading arrangement during the quarter ended March 31, 2024[190](index=190&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and various Inline XBRL documents for interactive data[191](index=191&type=chunk)[193](index=193&type=chunk)