Manning & Napier, Inc. Reports Second Quarter 2019 Earnings Results
Summary Highlights
- Assets under management ("AUM") at June 30, 2019 were
$21.3 billion , compared to$21.1 billion at March 31, 2019 - Revenue for the second quarter was
$34.3 million , a decrease of 1% and 17% from the first quarter of 2019 and the second quarter of 2018, respectively - Second quarter income before taxes was
$3 .6 million; the net income attributable toManning & Napier, Inc. for the second quarter was$0.4 million , or$0.03 per diluted share - On a non-GAAP basis, as defined in the Non-GAAP Financial Measures section below, economic net income for the quarter was
$2.5 million , or$0.03 per adjusted share - On
June 28, 2019 , the Company entered into an agreement to sellPerspective Partners, LLC , toManning Partners, LLC , which is wholly owned byWilliam Manning , Chairman of the Company's Board of Directors - The Company's Board of Directors declared a quarterly dividend of
$0.02 per share of Class A common stock at itsApril 2019 board meeting
"During the second quarter, our competitive absolute results, fueled by excellent stock selection, continued to advance our goal of helping clients achieve their financial objectives while managing risk. While defensive positioning within our blended portfolios impacted relative performance during the quarter, we believe our clients will benefit from our valuation-conscious investment strategies over time. Our commitment to active management remains strong as we look to achieve investment excellence for our clients," commented
Mr. Mayer added, "Our strategic review is focused on improving efficiency, reducing expenses, and modernizing our client experience.
Second Quarter 2019 Financial Review
Manning & Napier reported second quarter 2019 revenue of
Operating expenses for the second quarter 2019 were
Compensation and related costs were
Distribution, servicing and custody expenses for the second quarter of 2019 decreased by
Other operating costs increased by less than
Operating income was
Non-operating income was
Income before provision for income taxes was
Net income attributable to the controlling and the non-controlling interests for the second quarter of 2019 was
As defined in the Non-GAAP Financial Measures section below, the Company uses economic net income and economic net income per adjusted share to provide greater clarity regarding the cash earnings of the business. On this basis, Manning & Napier reported second quarter 2019 economic net income of
Six-months ended June 30, 2019 Financial Review
Manning & Napier reported 2019 year-to-date revenue of
Operating expenses for 2019 year-to-date were
Compensation and related costs for 2019 year-to-date decreased by
Distribution, servicing and custody expenses for 2019 decreased by
Other operating costs for 2019 year-to-date increased by
Operating income was
Non-operating income for 2019 year-to-date was
Income before provision for income taxes was
Net income attributable to the controlling and the non-controlling interests was
On a Non-GAAP basis, as defined in the Non-GAAP Financial Measures section of this release, economic net income was
Assets Under Management
As of June 30, 2019, AUM was
Since March 31, 2019, AUM increased by nearly
When compared to June 30, 2018, AUM decreased by approximately
Balance Sheet
Cash and cash equivalents were
During the quarter ended June 30, 2019,
Other Business Updates
On
Pursuant to the Agreement, the purchase price will consist of payments based on historical expenses of PPI from
Upon closing, the Company will no longer incur costs associated with PPI. During the three and six month periods ended
Conference Call
Manning & Napier will host a conference call to discuss its 2019 second quarter financial results on Tuesday, July 30, 2019, at
If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion and available through
Non-GAAP Financial Measures
To provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, the Company supplements its consolidated statements of income presented on a GAAP basis with non-GAAP financial measures of earnings. Please refer to the schedule in this release for a reconciliation of non-GAAP financial measures to GAAP measures.
Management uses economic net income and economic net income per adjusted share as financial measures to evaluate the profitability and efficiency of the Company's business. Economic net income and economic net income per adjusted share are not presented in accordance with GAAP.
Economic net income is a non-GAAP measure of after-tax operating performance and equals the Company's income before provision for income taxes less adjusted income taxes. Adjusted income taxes are estimated assuming the exchange of all outstanding units of Manning &
Economic net income per adjusted share is equal to economic net income divided by the total number of adjusted Class A common shares outstanding. The number of adjusted Class A common shares outstanding for all periods presented is determined by assuming the weighted average exchangeable units of Manning &
Investors should consider the non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, the Company's non-GAAP financial measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures.
About Manning &
Safe Harbor Statement
This press release and other statements that the Company may make may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the Company's current views with respect to, among other things, its operations and financial performance. Words like "believes," "expects," "may," "estimates," "will," "should," "intends," "plans," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, are used to identify forward-looking statements, although not all forward-looking statements contain these words. Although the Company believes that it is basing its expectations and beliefs on reasonable assumptions within the bounds of what it currently knows about its business and operations, there can be no assurance that its actual results will not differ materially from what the Company expects or believes. Some of the factors that could cause the Company's actual results to differ from its expectations or beliefs include, without limitation: changes in securities or financial markets or general economic conditions; a decline in the performance of the Company's products; client sales and redemption activity; changes of government policy or regulations; and other risks discussed from time to time in the Company's filings with the
Contacts
Investor Relations:
Prosek Partners
646-818-9122
ssilva@prosek.com
Public Relations:
Manning &
585-325-6880
nbrunner@manning-napier.com
Source Manning & Napier
Manning & Napier, Inc. |
||||||||||
Consolidated Statements of Operations |
||||||||||
(in thousands, except share data) |
||||||||||
(unaudited) |
||||||||||
Three Months Ended |
Six Months Ended |
|||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||
Revenues |
||||||||||
Management Fees |
||||||||||
Separately managed accounts |
$ 21,738 |
$ 21,475 |
$ 24,483 |
$ 43,213 |
$ 49,838 |
|||||
Mutual funds and collective investment trusts |
7,403 |
8,228 |
11,030 |
15,631 |
22,010 |
|||||
Distribution and shareholder servicing |
2,566 |
2,624 |
3,033 |
5,190 |
6,211 |
|||||
Custodial services |
1,750 |
1,745 |
1,895 |
3,495 |
3,817 |
|||||
Other revenue |
837 |
725 |
679 |
1,562 |
1,468 |
|||||
Total revenue |
34,294 |
34,797 |
41,120 |
69,091 |
83,344 |
|||||
Expenses |
||||||||||
Compensation and related costs |
20,161 |
21,448 |
21,689 |
41,609 |
45,462 |
|||||
Distribution, servicing and custody expenses |
3,019 |
3,758 |
4,502 |
6,777 |
9,283 |
|||||
Other operating costs |
8,639 |
8,307 |
8,579 |
16,946 |
15,033 |
|||||
Total operating expenses |
31,819 |
33,513 |
34,770 |
65,332 |
69,778 |
|||||
Operating income |
2,475 |
1,284 |
6,350 |
3,759 |
13,566 |
|||||
Non-operating income (loss) |
||||||||||
Non-operating income, net |
1,075 |
1,875 |
332 |
2,950 |
867 |
|||||
Income before provision for income taxes |
3,550 |
3,159 |
6,682 |
6,709 |
14,433 |
|||||
Provision for income taxes |
331 |
242 |
492 |
573 |
970 |
|||||
Net income attributable to the controlling and the noncontrolling interests |
3,219 |
2,917 |
6,190 |
6,136 |
13,463 |
|||||
Less: net income attributable to the noncontrolling interests |
2,805 |
2,356 |
5,424 |
5,161 |
11,483 |
|||||
Net income attributable to Manning & Napier, Inc. |
$ 414 |
$ 561 |
$ 766 |
$ 975 |
$ 1,980 |
|||||
Net income per share available to Class A common stock |
||||||||||
Basic |
$ 0.03 |
$ 0.04 |
$ 0.05 |
$ 0.07 |
$ 0.13 |
|||||
Diluted |
$ 0.03 |
$ 0.03 |
$ 0.05 |
$ 0.06 |
$ 0.13 |
|||||
Weighted average shares of Class A common stock outstanding |
||||||||||
Basic |
15,267,762 |
14,927,265 |
14,691,928 |
15,098,454 |
14,503,784 |
|||||
Diluted |
15,613,939 |
78,581,169 |
14,709,403 |
78,317,986 |
14,530,398 |
|||||
Manning & Napier, Inc. |
||||||||||
Reconciliation of Non-GAAP Financial Measures to GAAP Measures |
||||||||||
(in thousands, except share data) |
||||||||||
(unaudited) |
||||||||||
Three Months Ended |
Six Months Ended |
|||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
||||||
Net income attributable to Manning & Napier, Inc. |
$ 414 |
$ 561 |
$ 766 |
$ 975 |
$ 1,980 |
|||||
Add back: Net income attributable to the noncontrolling interests |
2,805 |
2,356 |
5,424 |
5,161 |
11,483 |
|||||
Add back: Provision for income taxes |
331 |
242 |
492 |
573 |
970 |
|||||
Income before provision for income taxes |
3,550 |
3,159 |
6,682 |
6,709 |
14,433 |
|||||
Adjusted income taxes (Non-GAAP) |
1,030 |
916 |
2,053 |
1,946 |
4,185 |
|||||
Economic net income (Non-GAAP) |
$ 2,520 |
$ 2,243 |
$ 4,629 |
$ 4,763 |
$ 10,248 |
|||||
Weighted average shares of Class A common stock outstanding - Basic |
15,267,762 |
14,927,265 |
14,691,928 |
15,098,454 |
14,503,784 |
|||||
Assumed vesting, conversion or exchange of: |
||||||||||
Weighted average Manning & Napier Group, LLC units outstanding (noncontrolling |
62,482,345 |
63,349,721 |
63,349,721 |
62,913,637 |
63,632,363 |
|||||
Weighted average unvested restricted stock units and stock awards |
1,819,952 |
1,791,683 |
709,863 |
1,805,896 |
791,248 |
|||||
Weighted average vested stock options |
- |
- |
- |
- |
- |
|||||
Weighted average adjusted shares (Non-GAAP) |
79,570,059 |
80,068,669 |
78,751,512 |
79,817,987 |
78,927,395 |
|||||
Economic net income per adjusted share (Non-GAAP) |
$ 0.03 |
$ 0.03 |
$ 0.06 |
$ 0.06 |
$ 0.13 |
|||||
Manning & Napier, Inc. |
|||||||||||||
Assets Under Management ("AUM") |
|||||||||||||
(in millions) |
|||||||||||||
(unaudited) |
|||||||||||||
For the three months ended: |
Investment Vehicle |
Portfolio |
|||||||||||
Separate |
Mutual funds |
Total |
Blended |
Equity |
Fixed |
Total |
|||||||
As of March 31, 2019 |
$ 14,667.2 |
$ 6,470.6 |
$ 21,137.8 |
$ 13,834.7 |
$ 6,227.2 |
$ 1,075.9 |
$ 21,137.8 |
||||||
Gross client inflows (1) |
301.2 |
249.2 |
550.4 |
327.0 |
161.7 |
61.7 |
550.4 |
||||||
Gross client outflows (1) |
(613.2) |
(509.6) |
(1,122.8) |
(745.7) |
(308.2) |
(68.9) |
(1,122.8) |
||||||
Market appreciation/ |
458.9 |
226.5 |
685.4 |
428.3 |
228.8 |
28.3 |
685.4 |
||||||
As of June 30, 2019 |
$ 14,814.1 |
$ 6,436.7 |
$ 21,250.8 |
$ 13,844.3 |
$ 6,309.5 |
$ 1,097.0 |
$ 21,250.8 |
||||||
Average AUM for period |
$ 14,647.1 |
$ 6,383.4 |
$ 21,030.5 |
$ 13,718.9 |
$ 6,200.7 |
$ 1,110.9 |
$ 21,030.5 |
||||||
As of December 31, 2018 |
$ 13,792.1 |
$ 6,371.5 |
$ 20,163.6 |
$ 13,532.2 |
$ 5,501.9 |
$ 1,129.5 |
$ 20,163.6 |
||||||
Gross client inflows (1) |
316.1 |
404.6 |
720.7 |
302.1 |
379.3 |
39.3 |
720.7 |
||||||
Gross client outflows (1) |
(664.9) |
(908.0) |
(1,572.9) |
(1,065.9) |
(382.7) |
(124.3) |
(1,572.9) |
||||||
Market appreciation/ |
1,223.9 |
602.5 |
1,826.4 |
1,066.3 |
728.7 |
31.4 |
1,826.4 |
||||||
As of March 31, 2019 |
$ 14,667.2 |
$ 6,470.6 |
$ 21,137.8 |
$ 13,834.7 |
$ 6,227.2 |
$ 1,075.9 |
$ 21,137.8 |
||||||
Average AUM for period |
$ 14,324.0 |
$ 6,343.7 |
$ 20,667.7 |
$ 13,634.7 |
$ 5,927.8 |
$ 1,105.2 |
$ 20,667.7 |
||||||
As of March 31, 2018 |
$ 15,960.1 |
$ 7,473.4 |
$ 23,433.5 |
$ 14,998.4 |
$ 7,214.2 |
$ 1,220.9 |
$ 23,433.5 |
||||||
Gross client inflows (1) |
331.1 |
349.7 |
680.8 |
432.6 |
231.2 |
17.0 |
680.8 |
||||||
Gross client outflows (1) |
(899.7) |
(654.5) |
(1,554.2) |
(718.3) |
(776.7) |
(59.2) |
(1,554.2) |
||||||
Market appreciation/ |
214.4 |
63.2 |
277.6 |
265.2 |
2.7 |
9.7 |
277.6 |
||||||
As of June 30, 2018 |
$ 15,605.9 |
$ 7,231.8 |
$ 22,837.7 |
$ 14,977.9 |
$ 6,671.4 |
$ 1,188.4 |
$ 22,837.7 |
||||||
Average AUM for period |
$ 15,689.8 |
$ 7,394.2 |
$ 23,084.0 |
$ 14,973.6 |
$ 6,909.2 |
$ 1,201.2 |
$ 23,084.0 |
||||||
For the six months ended: |
Investment Vehicle |
Portfolio |
|||||||||||
Separate |
Mutual funds |
Total |
Blended |
Equity |
Fixed |
Total |
|||||||
As of December 31, 2018 |
$ 13,792.1 |
$ 6,371.5 |
$ 20,163.6 |
$ 13,532.2 |
$ 5,501.9 |
$ 1,129.5 |
$ 20,163.6 |
||||||
Gross client inflows (1) |
617.3 |
653.8 |
1,271.1 |
629.1 |
541.0 |
101.0 |
1,271.1 |
||||||
Gross client outflows (1) |
(1,278.1) |
(1,417.6) |
(2,695.7) |
(1,811.6) |
(690.9) |
(193.2) |
(2,695.7) |
||||||
Market appreciation/ |
1,682.8 |
829.0 |
2,511.8 |
1,494.6 |
957.5 |
59.7 |
2,511.8 |
||||||
As of June 30, 2019 |
$ 14,814.1 |
$ 6,436.7 |
$ 21,250.8 |
$ 13,844.3 |
$ 6,309.5 |
$ 1,097.0 |
$ 21,250.8 |
||||||
Average AUM for period |
$ 14,459.6 |
$ 6,361.7 |
$ 20,821.3 |
$ 13,661.0 |
$ 6,048.8 |
$ 1,111.5 |
$ 20,821.3 |
||||||
As of December 31, 2017 |
$ 16,856.6 |
$ 8,256.6 |
$ 25,113.2 |
$ 15,666.6 |
$ 8,120.6 |
$ 1,326.0 |
$ 25,113.2 |
||||||
Gross client inflows (1) |
749.7 |
831.0 |
1,580.7 |
891.8 |
586.7 |
102.2 |
1,580.7 |
||||||
Gross client outflows (1) |
(2,225.5) |
(1,685.5) |
(3,911.0) |
(1,821.0) |
(1,843.2) |
(246.8) |
(3,911.0) |
||||||
Acquired/(disposed) assets |
- |
(251.6) |
(251.6) |
- |
(251.6) |
- |
(251.6) |
||||||
Market appreciation/ |
225.1 |
81.3 |
306.4 |
240.5 |
58.9 |
7.0 |
306.4 |
||||||
As of June 30, 2018 |
$ 15,605.9 |
$ 7,231.8 |
$ 22,837.7 |
$ 14,977.9 |
$ 6,671.4 |
$ 1,188.4 |
$ 22,837.7 |
||||||
Average AUM for period |
$ 16,087.8 |
$ 7,640.0 |
$ 23,727.8 |
$ 15,216.4 |
$ 7,262.9 |
$ 1,248.5 |
$ 23,727.8 |
||||||
(1) Transfers of client assets between portfolios are included in gross client inflows and gross client outflows. |
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(2) Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends. |
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