Federated(FHI) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company ended Q1 2025 with record assets under management (AUM) of $840 billion, driven by record money market assets of$637 billion [6][20] - Total revenue for Q1 decreased slightly from the prior quarter, with higher revenue from money market assets offset by lower revenue from equity assets [25] - Q1 operating expenses decreased by $22.5 million from the prior quarter, mainly due to lower FX-related expenses [26] Business Line Data and Key Metrics Changes - Equity assets increased by$1.5 billion from year-end, primarily due to net sales of $1.4 billion [6] - Fixed income assets increased by about$1.4 billion in Q1, mainly due to higher market valuations, partially offset by net redemptions [11] - Alternative private markets saw an increase of $562 million in Q1, driven by FX rates and net sales of about$61 million [12] Market Data and Key Metrics Changes - The company’s money market mutual fund market share was approximately 7.10% at the end of Q1, down slightly from 7.22% at the end of 2024 [23] - Managed assets were approximately $828 billion, including$629 billion in money markets, $78.5 billion in equities, and$98 billion in fixed income [24] Company Strategy and Development Direction - The company is focused on developing its private markets business for growth, including the acquisition of a majority interest in a U.K. renewable energy company [17] - The company plans to continue adding active ETFs, with a goal of launching a handful each year [91] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter is typically the worst quarter of the year for the industry, but this year saw positive flows [37] - There are expectations for higher interest rates for a longer period, which is anticipated to continue driving positive flows into money market products [52] Other Important Information - The company declared a $0.34 per share dividend, an increase of nearly 10$120 million during Q1 [30] Q&A Session Summary Question: Comments on money market market-share - Management clarified that the company had $3 billion of increased money market fund AUM, indicating positive inflows despite competitive pressures [32][36] Question: Update on fixed-income outflows - Management attributed elevated fixed-income outflows primarily to the Total Return Bond Fund and High Yield, with performance improving [42][44] Question: Flows since tax date - Management reported an increase of about$5 billion in assets since the tax date, indicating positive flows from both retail and institutional sides [55] Question: Capacity issues with MDT - Management confirmed there are no capacity issues with MDT despite significant organic growth [96]