EX-99.1 2 a991-2024q1earningspressre.htm EX-99.1 Document

Exhibit 99.1
fhipressreleaseimageq12020.gif
Federated Hermes, Inc. reports first quarter 2024 earnings of $0.89;
Board declares cash dividend of $1.31 ($0.31 quarterly and $1.00 special)
•Total assets under management reach a record $778.7 billion
•Money market assets reach a record $578.8 billion
•Q1 2024 earnings per diluted share of $0.89
•Quarterly dividend increased by 10.7% to $0.31
•Special dividend of $1.00 is the sixth declared since 2008
(PITTSBURGH, Pa., April 25, 2024) — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.89 for Q1 2024, compared to $0.78 for the same quarter last year, on net income of $75.0 million for Q1 2024, compared to $69.6 million for Q1 2023.
Federated Hermes' total managed assets were a record $778.7 billion at March 31, 2024, up $77.7 billion or 11% from $701.0 billion at March 31, 2023 and up $21.1 billion or 3% from $757.6 billion at Dec. 31, 2023. Total average managed assets for Q1 2024 were $776.5 billion, up $97.1 billion or 14% from $679.4 billion reported for Q1 2023 and up $48.5 billion or 7% from $728.0 billion for Q4 2023.
"Investors continued to turn to the attractive yields available in our liquidity products. Our money market asset increases drove Federated Hermes to record assets under management for the sixth consecutive quarter," said J. Christopher Donahue, president and chief executive officer. "Investors also sought to add duration to portfolios, and net sales of fixed-income products were led by our flagship core-plus offering, Federated Hermes Total Return Bond Fund, the Federated Hermes Total Return Bond ETF and ultrashort products. In equities, we saw demand for a range of our Federated Hermes MDT strategies utilizing our proprietary alpha-seeking model."
Federated Hermes' board of directors declared a dividend of $1.31 per share. The dividend, which will be paid from Federated Hermes’ existing cash balance, is considered an ordinary dividend for tax purposes and consists of a $0.31 quarterly dividend and a $1.00 special dividend. The quarterly dividend increased by $0.03 or 10.7%. The dividend is payable on May 15, 2024 to Federated Hermes Class A and Class B common stock shareholders of record as of May 8, 2024. During Q1 2024, Federated Hermes purchased 1,082,120 shares of Federated Hermes class B common stock for $37.0 million.
At Federated Hermes’ annual shareholder meeting held on April 25, 2024, new independent director Karen L. Hanlon, whose nomination was announced on February 23, 2024, was elected to Federated Hermes’ board of directors. Her election increases the board of directors from six to seven members.
Equity assets were $80.2 billion at March 31, 2024, down $3.4 billion or 4% from $83.6 billion at March 31, 2023 and up $0.9 billion or 1% from $79.3 billion at Dec. 31, 2023. Top-selling equity funds during Q1 2024 on a net basis were Federated Hermes MDT Mid Cap Growth Fund, Federated Hermes MDT Large Cap Growth Fund, Federated Hermes U.S. SMID Equity Fund, Federated Hermes MDT All Cap Core Fund and Federated Hermes MDT Small Cap Core Fund.
MEDIA:MEDIA:ANALYSTS:
Ed Costello 412-288-7538Meghan McAndrew 412-288-8103Ray Hanley 412-288-1920
    
Federated Hermes reports Q1 2024 earnings
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Fixed-income assets were $96.3 billion at March 31, 2024, up $8.8 billion or 10% from $87.5 billion at March 31, 2023 and up $1.4 billion or 1% from $94.9 billion at Dec. 31, 2023. Top-selling fixed-income funds during Q1 2024 on a net basis were Federated Hermes Total Return Bond Fund, Federated Hermes Ultrashort Bond Fund, Federated Hermes Government Ultrashort Bond Fund, Federated Hermes Total Return Bond ETF and Federated Hermes Institutional High Yield Bond Fund.
Alternative/private markets assets were $20.5 billion at March 31, 2024, down $0.7 billion or 3% from $21.2 billion at March 31, 2023 and down $0.1 billion or less than 1% from $20.6 billion at Dec. 31, 2023.
Money market assets were a record $578.8 billion at March 31, 2024, up $73.0 billion or 14% from $505.8 billion at March 31, 2023 and up $18.8 billion or 3% from $560.0 billion at Dec. 31, 2023. Money market fund assets were a record $417.1 billion at March 31, 2024, up $59.8 billion or 17% from $357.3 billion at March 31, 2023 and up $10.9 billion or 3% from $406.2 billion at Dec. 31, 2023.
Financial Summary
Q1 2024 vs. Q1 2023
Revenue increased $14.2 million or 4% primarily due to an increase in revenue due to higher average money market assets. This increase was partially offset by a decrease in revenue due to lower average equity assets.
During Q1 2024, Federated Hermes derived 48% of its revenue from long-term assets (30% from equity, 12% from fixed-income, and 6% from alternative/private markets and multi-asset), 51% from money market assets, and 1% from sources other than managed assets.
Operating expenses increased $0.8 million.
Nonoperating income (expenses), net decreased $1.9 million or 26% due primarily to a smaller increase in the market value of investments in Q1 2024 compared to the increase in the market value of investments in Q1 2023. This decrease was partially offset by an increase in investment yields due to higher interest rates.
Q1 2024 vs. Q4 2023
Revenue increased $4.9 million or 1% primarily due to an increase in revenue from higher average money market, equity and fixed-income assets. These increases were partially offset by a decrease in carried interest and performance fees of $9.3 million, including a decrease of $4.9 million of carried interest from consolidated carried interest vehicles, which is offset in compensation expense, and a decrease in revenue due to one less day in Q1 2024.
Operating expenses increased $8.9 million or 3% due to increased compensation expense primarily due to higher incentive compensation, higher payroll taxes and an increase in distribution expense resulting primarily from higher average managed fund assets offset by a decrease in advertising and promotional expenses.
Nonoperating income (expenses), net decreased $9.3 million or 63% due primarily to a smaller increase in the market value of investments in Q1 2024 as compared to the increase in the market value of investments in Q4 2023.





    
Federated Hermes reports Q1 2024 earnings
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Earnings call information
Federated Hermes will host an earnings conference call at 9 a.m. Eastern on Friday, April 26, 2024. Investors are invited to listen to the earnings teleconference by calling 888-506-0062 (domestic) or 973-528-0011 (international) prior to the 9 a.m. start time. To listen online, go to the About section of FederatedHermes.com/us at least 15 minutes prior to register and join the call. A replay will be available at approximately 12:30 p.m. Eastern on April 26, 2024. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 50336. The online replay will be available via FederatedHermes.com/us for one year.
About Federated Hermes
Federated Hermes, Inc. is a global leader in active, responsible investment management, with $778.7 billion in assets under management1. We deliver investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 10,000 institutions and intermediaries worldwide. Our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated Hermes has more than 2,000 employees in London, New York, Boston and offices worldwide.
Federated Hermes ranks in the top 7% of equity fund managers in the industry, the top 8% of money market fund managers and the top 11% of fixed-income fund managers2. Federated Hermes also ranks as the 8th-largest manager of model-delivered separately managed accounts3. For more information, including an analyst presentation, which is updated periodically, visit FederatedHermes.com/us.
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1) As of March 31, 2024.
2) Morningstar, March 31, 2024. Based on U.S. fund flows rankings.
3) Money Management Institute/Cerulli,Q4 2023.
Federated Securities Corp. is distributor of the Federated Hermes funds.
Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Fund Managers Ireland Limited, Hermes Investment Management Limited, and Hermes GPE LLP, each a registered investment advisor in one or more of the U.S., U.K. or Ireland.

Cautionary statements
Certain statements in this press release, such as those related to performance, investor preferences and demand, asset flows, asset mix, interest rates and fee waivers 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. Forward-looking statements can include statements that do not relate strictly to historical or current facts and are typically identified by words or phrases such as “trend,” “forecast,” “project,” “predict,” “potential,” “approximate,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “projection,” “plan,” “assume,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “can,” “may” and similar expressions. Any forward-looking statement, and Federated Hermes' level of business activity and financial results, are inherently subject to significant business, market, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond Federated Hermes’ control. Other risks and uncertainties include the ability of the company to predict the level of fee waivers and expenses in future quarters, predict whether performance fees or carried interest will be earned and retained, the ability of the company to sustain product demand, the timing and level of product sales and redemptions, market appreciation or depreciation, revenues, and asset levels, flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the company's annual and quarterly reports as filed with the Securities and Exchange Commission. 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, or updating, of such statements in the future.

    
Federated Hermes reports Q1 2024 earnings
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Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Quarter Ended% Change Q1 2023 to Q1 2024Quarter Ended% Change Q4 2023 to Q1 2024
March 31, 2024March 31, 2023Dec. 31, 2023
Revenue
Investment advisory fees, net$264,294 $263,982 0 %$264,693 0  %
Administrative service fees, net—affiliates94,786 79,180 20 90,930 4 
Other service fees, net37,291 39,027 (4)35,874 4 
Total Revenue396,371 382,189 4 391,497 1 
Operating Expenses
Compensation and related136,546 136,878 0 127,504 7 
Distribution94,894 93,333 2 90,940 4 
Systems and communications21,823 19,972 9 20,944 4 
Professional service fees18,352 16,220 13 16,632 10 
Office and occupancy9,969 12,874 (23)10,159 (2)
Advertising and promotional4,306 4,342 (1)9,684 (56)
Travel and related3,273 3,231 1 4,308 (24)
Intangible asset related3,235 3,326 (3)3,676 (12)
Other5,392 6,847 (21)5,080 6 
Total Operating Expenses297,790 297,023 0 288,927 3 
Operating Income98,581 85,166 16 102,570 (4)
Nonoperating Income (Expenses)
Investment income (loss), net8,483 10,312 (18)17,418 (51)
Debt expense(3,149)(3,125)1 (3,142)0 
Other, net103 122 (16)461 (78)
Total Nonoperating Income (Expenses), net5,437 7,309 (26)14,737 (63)
Income before income taxes104,018 92,475 12 117,307 (11)
Income tax provision29,008 21,009 38 31,260 (7)
Net income including the noncontrolling interests in subsidiaries75,010 71,466 5 86,047 (13)
Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries(23)1,865 (101)3,869 (101)
Net Income$75,033 $69,601 8 %$82,178 (9) %
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic and diluted$0.89 $0.78 14 %$0.96 (7) %
Weighted-Average Shares Outstanding
Basic80,709 84,875 81,961 
Diluted80,710 84,875 81,973 
Dividends Declared Per Share$0.28 $0.27 $0.28 
1) Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of earnings per share under the "two-class method." As such, total net income of $3.4 million, $3.5 million and $3.6 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended March 31, 2024, March 31, 2023 and Dec. 31, 2023, respectively, was excluded from the computation of earnings per share.

    
Federated Hermes reports Q1 2024 earnings
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Unaudited Condensed Consolidated Balance Sheets
(in thousands)March 31, 2024Dec. 31, 2023
Assets
  Cash and other investments$558,532 $560,675 
  Other current assets161,124 160,054 
  Intangible assets, net, including goodwill1,210,073 1,216,605 
  Other long-term assets157,243 164,510 
  Total Assets$2,086,972 $2,101,844 
Liabilities, Redeemable Noncontrolling Interests and Equity
  Current liabilities$212,499 $287,343 
  Long-term debt347,909 347,843 
  Other long-term liabilities306,007 312,561 
  Redeemable noncontrolling interests73,130 25,845 
Equity excluding treasury stock1,695,050 1,649,655 
Treasury stock(547,623)(521,403)
  Total Liabilities, Redeemable Noncontrolling Interests and Equity$2,086,972 $2,101,844 



    
Federated Hermes reports Q1 2024 earnings
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Unaudited Changes in Long-Term Assets - By Asset Class
(in millions)Quarter Ended
March 31, 2024Dec. 31, 2023March 31, 2023
Equity
Beginning assets$79,291 $77,315 $81,523 
Sales1
3,915 3,335 5,631 
Redemptions1
(7,351)(8,005)(4,736)
Net sales (redemptions)1
(3,436)(4,670)895 
Net exchanges5 (6)103 
Impact of foreign exchange2
(567)891 108 
Market gains and (losses)3
4,864 5,761 1,000 
Ending assets$80,157 $79,291 $83,629 
Fixed Income
Beginning assets$94,920 $89,765 $86,743 
Sales1
6,583 7,594 6,047 
Redemptions1
(5,395)(6,669)(7,127)
Net sales (redemptions)1
1,188 925 (1,080)
Net exchanges(7)7 (101)
Impact of foreign exchange2
(71)143 38 
Market gains and (losses)3
295 4,080 1,861 
Ending assets$96,325 $94,920 $87,461 
Alternative/Private Markets
Beginning assets$20,551 $20,337 $20,802 
Sales1
761 700 1,265 
Redemptions1
(740)(755)(792)
Net sales (redemptions)1
21 (55)473 
Net exchanges2 (3)1 
Impact of foreign exchange2
(226)836 368 
Market gains and (losses)3
117 (564)(470)
Ending assets$20,465 $20,551 $21,174 
Multi-asset
Beginning assets$2,867 $2,728 $2,989 
Sales1
44 34 47 
Redemptions1
(112)(142)(144)
Net sales (redemptions)1
(68)(108)(97)
Net exchanges0 8 2 
Market gains and (losses)3
129 239 79 
Ending assets$2,928 $2,867 $2,973 
Total Long-term Assets
Beginning assets$197,629 $190,145 $192,057 
Sales1
11,303 11,663 12,990 
Redemptions1
(13,598)(15,571)(12,799)
Net sales (redemptions)1
(2,295)(3,908)191 
Net exchanges0 6 5 
Impact of foreign exchange2
(864)1,870 514 
Market gains and (losses)3
5,405 9,516 2,470 
Ending assets$199,875 $197,629 $195,237 
1)     For certain accounts, including separately managed accounts, institutional accounts, certain sub-advised funds and other managed products, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2) Reflects the impact of translating non-U.S. dollar denominated assets under management (AUM) into U.S. dollars for reporting purposes.
3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.




    
Federated Hermes reports Q1 2024 earnings
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Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions)
Quarter Ended
March 31, 2024
EquityFixed IncomeAlternative / Private MarketsMulti-assetTotal
Funds
Separate Accounts1
Funds
Separate Accounts1
Funds
Separate Accounts1
Funds
Separate Accounts1
Funds.
Separate Accounts1
Beginning assets$42,513 $36,778 $43,908 $51,012 $12,379 $8,172 $2,730 $137 $101,530 $96,099 
Sales2,419 1,496 4,049 2,534 654 107 44 0 7,166 4,137 
Redemptions(4,069)(3,282)(3,484)(1,911)(569)(171)(108)(4)(8,230)(5,368)
Net sales (redemptions)(1,650)(1,786)565 623 85 (64)(64)(4)(1,064)(1,231)
Net exchanges5 0 (5)(2)2 0 0 0 2 (2)
Impact of foreign exchange2
(235)(332)(46)(25)(139)(87)0 0 (420)(444)
Market gains and (losses)3
2,782 2,082 59 236 131 (14)123 6 3,095 2,310 
Ending assets$43,415 $36,742 $44,481 $51,844 $12,458 $8,007 $2,789 $139 $103,143 $96,732 
1)    Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2)    Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
3)    Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.









    
Federated Hermes reports Q1 2024 earnings
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Unaudited Changes in Long-Term Assets - By Product Type
(in millions)
Quarter Ended
March 31, 2024Dec. 31, 2023March 31, 2023
Total Fund Assets
Beginning assets$101,530 $98,378 $102,423 
Sales7,166 5,999 8,317 
Redemptions(8,230)(9,578)(8,491)
Net sales (redemptions)(1,064)(3,579)(174)
Net exchanges2 (7)15 
Impact of foreign exchange1
(420)1,002 334 
Market gains and (losses)2
3,095 5,736 1,622 
Ending assets$103,143 $101,530 $104,220 
Total Separate Account Assets3
Beginning assets$96,099 $91,767 $89,634 
Sales4
4,137 5,664 4,673 
Redemptions4
(5,368)(5,993)(4,308)
Net sales (redemptions)4
(1,231)(329)365 
Net exchanges(2)13 (10)
Impact of foreign exchange1
(444)868 180 
Market gains and (losses)2
2,310 3,780 848 
Ending assets$96,732 $96,099 $91,017 
Total Long-term Assets3
Beginning assets$197,629 $190,145 $192,057 
Sales4
11,303 11,663 12,990 
Redemptions4
(13,598)(15,571)(12,799)
Net sales (redemptions)4
(2,295)(3,908)191 
Net exchanges0 6 5 
Impact of foreign exchange1
(864)1,870 514 
Market gains and (losses)2
5,405 9,516 2,470 
Ending assets$199,875 $197,629 $195,237 
1) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
2) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.
3) Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products.
4)    For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.




















    
Federated Hermes reports Q1 2024 earnings
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Unaudited Managed Assets

(in millions)
March 31, 2024Dec. 31, 2023Sept. 30, 2023June 30, 2023March 31, 2023
By Asset Class
Equity$80,157 $79,291 $77,315 $82,992 $83,629 
Fixed-income96,325 94,920 89,765 87,425 87,461 
Alternative / private markets20,465 20,551 20,337 21,602 21,174 
Multi-asset2,928 2,867 2,728 2,922 2,973 
Total long-term assets199,875 197,629 190,145 194,941 195,237 
Money market578,811 559,993 525,085 509,017 505,800 
Total Managed Assets$778,686 $757,622 $715,230 $703,958 $701,037 
By Product Type
Funds:
Equity$43,415 $42,513 $40,801 $44,383 $44,732 
Fixed-income44,481 43,908 42,569 43,884 43,616 
Alternative / private markets12,458 12,379 12,409 13,338 13,040 
Multi-asset2,789 2,730 2,599 2,782 2,832 
Total long-term assets103,143 101,530 98,378 104,387 104,220 
Money market417,102 406,166 384,896 364,014 357,346 
Total Fund Assets$520,245 $507,696 $483,274 $468,401 $461,566 
Separate Accounts:
Equity$36,742 $36,778 $36,514 $38,609 $38,897 
Fixed-income51,844 51,012 47,196 43,541 43,845 
Alternative / private markets8,007 8,172 7,928 8,264 8,134 
Multi-asset139 137 129 140 141 
Total long-term assets96,732 96,099 91,767 90,554 91,017 
Money market161,709 153,827 140,189 145,003 148,454 
Total Separate Account Assets$258,441 $249,926 $231,956 $235,557 $239,471 
Total Managed Assets$778,686 $757,622 $715,230 $703,958 $701,037 

    
Federated Hermes reports Q1 2024 earnings
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Unaudited Average Managed AssetsQuarter Ended
(in millions)
March 31, 2024Dec. 31, 2023Sept. 30, 2023June 30, 2023March 31, 2023
By Asset Class
Equity$78,969 $76,009 $82,203 $83,025 $84,155 
Fixed-income95,791 91,927 88,677 87,504 88,209 
Alternative / private markets20,485 20,623 21,413 21,411 20,938 
Multi-asset2,874 2,744 2,861 2,929 3,012 
Total long-term assets198,119 191,303 195,154 194,869 196,314 
Money market578,383 536,727 516,046 510,418 483,083 
Total Avg. Managed Assets$776,502 $728,030 $711,200 $705,287 $679,397 
By Product Type
Funds:
Equity$42,355 $40,296 $43,687 $44,218 $45,055 
Fixed-income43,857 42,705 43,437 43,827 43,961 
Alternative / private markets12,377 12,571 13,184 13,181 13,062 
Multi-asset2,739 2,615 2,724 2,787 2,869 
Total long-term assets101,328 98,187 103,032 104,013 104,947 
Money market414,902 392,946 373,088 362,608 333,358 
Total Avg. Fund Assets$516,230 $491,133 $476,120 $466,621 $438,305 
Separate Accounts:
Equity$36,614 $35,713 $38,516 $38,807 $39,100 
Fixed-income51,934 49,222 45,240 43,677 44,248 
Alternative / private markets8,108 8,052 8,229 8,230 7,876 
Multi-asset135 129 137 142 143 
Total long-term assets96,791 93,116 92,122 90,856 91,367 
Money market163,481 143,781 142,958 147,810 149,725 
Total Avg. Separate Account Assets$260,272 $236,897 $235,080 $238,666 $241,092 
Total Avg. Managed Assets$776,502 $728,030 $711,200 $705,287 $679,397