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)

Federated Hermes, Inc.’s (FHI) first-quarter 2024 earnings per share of 89 cents met the Zacks Consensus Estimate. The bottom line increased from 78 cents in the year-ago quarter.An increase in net investment advisory fees and net administrative service fees are the major driving factors. However, higher expense levels were headwinds.Net income was $75 million, up 8% from the year-ago quarter.Revenues Improve, Operating Expenses RiseTotal revenues improved 4% year over year to $396.4 million. The top line s ...

Federated Hermes (FHI) reported $396.37 million in revenue for the quarter ended March 2024, representing a year-over-year increase of 3.7%. EPS of $0.89 for the same period compares to $0.78 a year ago.The reported revenue represents a surprise of +22.00% over the Zacks Consensus Estimate of $324.89 million. With the consensus EPS estimate being $0.89, the company has not delivered EPS surprise.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they ...

Federated Hermes (FHI) came out with quarterly earnings of $0.89 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.78 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this one of the nation's largest managers of money market funds would post earnings of $0.84 per share when it actually produced earnings of $0.96, delivering a surprise of 14.29%.Over the last four quarters, the company has surpassed consensus EPS ...

[Q1 2024 Earnings Release](index=1&type=section&id=Q1%202024%20Earnings%20Release) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Federated Hermes reported strong Q1 2024 results with record managed assets and increased diluted EPS, alongside significant capital returns to shareholders | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | **Earnings Per Diluted Share (EPS)** | $0.89 | $0.78 | +14% | | **Net Income** | $75.0 million | $69.6 million | +8% | - Total managed assets reached a record **$778.7 billion** at March 31, 2024, marking the sixth consecutive quarter of record assets under management[3](index=3&type=chunk)[4](index=4&type=chunk) - The Board of Directors declared a total dividend of **$1.31** per share, consisting of a **$0.31** quarterly dividend (a **10.7%** increase) and a **$1.00** special dividend[2](index=2&type=chunk)[4](index=4&type=chunk) - During Q1 2024, the company purchased **1,082,120** shares of its class B common stock for **$37.0 million**[4](index=4&type=chunk) - The CEO highlighted that growth was driven by attractive yields in liquidity products and investor demand for fixed-income products to add duration, particularly the Federated Hermes Total Return Bond Fund and ETF[4](index=4&type=chunk) [Assets Under Management (AUM) Analysis](index=1&type=section&id=Assets%20Under%20Management%20(AUM)%20Analysis) Total AUM grew **11%** YoY to a record **$778.7 billion**, driven by money market and fixed-income growth, despite declines in equity and alternative assets | AUM Category | March 31, 2024 | March 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | **Total Managed Assets** | $778.7 billion | $701.0 billion | +11% | | Money Market | $578.8 billion | $505.8 billion | +14% | | Fixed-Income | $96.3 billion | $87.5 billion | +10% | | Equity | $80.2 billion | $83.6 billion | -4% | | Alternative/Private Markets | $20.5 billion | $21.2 billion | -3% | [AUM by Asset Class](index=1&type=section&id=AUM%20by%20Asset%20Class) Money market assets were the primary growth driver, reaching a record **$578.8 billion**, while fixed-income grew, and equity and alternative assets declined - **Money Market:** Assets reached a record **$578.8 billion**, up **14%** YoY, with money market fund assets also hitting a record **$417.1 billion**[10](index=10&type=chunk) - **Fixed-Income:** Assets grew **10%** YoY to **$96.3 billion**, with top-selling products including the Federated Hermes Total Return Bond Fund and ETF, and ultrashort bond funds[8](index=8&type=chunk) - **Equity:** Assets decreased **4%** YoY to **$80.2 billion**, despite positive net sales primarily from the Federated Hermes MDT strategy lineup, including Mid Cap Growth and Large Cap Growth funds[6](index=6&type=chunk) - **Alternative/Private Markets:** Assets declined **3%** YoY to **$20.5 billion**[9](index=9&type=chunk) [Long-Term Asset Flows](index=7&type=section&id=Long-Term%20Asset%20Flows) Total long-term assets experienced **$2.3 billion** in net redemptions in Q1 2024, primarily due to equity outflows, partially offset by fixed-income inflows | Asset Class (Q1 2024) | Net Sales (Redemptions) | | :--- | :--- | | Equity | ($3,436 million) | | Fixed Income | $1,188 million | | Alternative/Private Markets | $21 million | | Multi-asset | ($68 million) | | **Total Long-term Assets** | **($2,295 million)** | - By product type, Funds saw net redemptions of **$1.1 billion**, while Separate Accounts experienced net redemptions of **$1.2 billion** in long-term assets[27](index=27&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) Federated Hermes' Q1 2024 revenue increased **4%** to **$396.4 million**, with operating income up **16%** to **$98.6 million** and net income rising **8%** to **$75.0 million** - Revenue increased **4%** YoY, mainly from higher average money market assets, which was partially offset by lower average equity assets, with money market assets contributing **51%** of total revenue[11](index=11&type=chunk) - Compared to Q4 2023, revenue increased **1%** due to higher average assets, but this was partially offset by a **$9.3 million** decrease in carried interest and performance fees[13](index=13&type=chunk) - Operating expenses were nearly flat YoY but increased **3%** QoQ due to higher incentive compensation and payroll taxes[12](index=12&type=chunk)[14](index=14&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2024 income statement shows total revenue of **$396.4 million**, operating income of **$98.6 million**, and diluted EPS of **$0.89** | (in thousands, except per share) | Q1 2024 | Q1 2023 | Q4 2023 | | :--- | :--- | :--- | :--- | | **Total Revenue** | $396,371 | $382,189 | $391,497 | | **Total Operating Expenses** | $297,790 | $297,023 | $288,927 | | **Operating Income** | $98,581 | $85,166 | $102,570 | | **Net Income** | $75,033 | $69,601 | $82,178 | | **Diluted EPS** | $0.89 | $0.78 | $0.96 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were **$2.09 billion**, with cash and investments at **$558.5 million** and long-term debt at **$347.9 million** | (in thousands) | March 31, 2024 | Dec. 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $2,086,972 | $2,101,844 | | Cash and other investments | $558,532 | $560,675 | | Total Liabilities | $866,415 | $947,747 | | **Total Equity** | $1,147,427 | $1,128,252 | [Corporate Updates & Shareholder Information](index=1&type=section&id=Corporate%20Updates%20%26%20Shareholder%20Information) The company announced the election of a new independent director, expanding the board, and provided details for the Q1 2024 earnings conference call - At the annual shareholder meeting on April 25, 2024, Karen L. Hanlon was elected as a new independent director, expanding the board to seven members[5](index=5&type=chunk) - An earnings conference call was scheduled for 9 a.m. Eastern on Friday, April 26, 2024, with details provided for participation via phone or online[16](index=16&type=chunk)

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it ...

One stock that might be an intriguing choice for investors right now is Federated Hermes (FHI) . This is because this security in the Financial - Investment Management space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place ...

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Federated Hermes (FHI) , which belongs to the Zacks Financial - Investment Management industry, could be a great candidate to consider.This one of the nation's largest managers of money market funds has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for th ...