8-K: Federated Hermes Reports Record Assets Under Management in Q4 and Full-Year 2024 Earnings

Federated Hermes achieved record assets under management of $829.6 billion, driven by strong money market inflows, while reporting Q4 2024 EPS of $1.04 and full-year 2024 EPS of $3.23.

Summary

• Federated Hermes reported Q4 2024 earnings per diluted share of $1.04, compared to $0.96 in Q4 2023, with net income of $84.7 million, up from $82.2 million.
• Full-year 2024 EPS was $3.23, down from $3.40 in 2023, with net income of $268.3 million, compared to $299.0 million.
• The full-year results include a $66.3 million non-cash expense related to the impairment of an intangible asset.
• Total managed assets reached a record $829.6 billion at the end of 2024, a 10% increase from $757.6 billion at the end of 2023.
• Money market assets were a record $630.3 billion, up 13% year-over-year.
• The company's board declared a quarterly dividend of $0.31 per share.
• During Q4 2024, Federated Hermes repurchased 552,533 shares of Class B common stock for $22.1 million.
• Revenue increased by 8% in Q4 2024 compared to Q4 2023, primarily due to higher average money market and equity assets.
• Operating expenses increased by 9% in Q4 2024 compared to Q4 2023, mainly due to higher compensation and distribution expenses.
• For the full year, revenue increased by 1%, while operating expenses increased by 4%, impacted by the intangible asset impairment.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to record assets under management and strong money market inflows, but tempered by a decrease in full-year earnings and an intangible asset impairment.

Positives

• Total assets under management reached a record high of $829.6 billion.
• Money market assets saw significant growth, reaching a record $630.3 billion.
• Q4 2024 earnings per diluted share increased to $1.04 from $0.96 in the same quarter of the previous year.
• The company's board declared a quarterly dividend of $0.31 per share.
• There was a 10% increase in average managed assets for Q4 2024 compared to Q4 2023.

Negatives

• Full-year 2024 EPS decreased to $3.23 from $3.40 in 2023.
• Full-year net income decreased to $268.3 million from $299.0 million in 2023.
• The full-year results were impacted by a $66.3 million non-cash expense related to an intangible asset impairment.
• Alternative/private markets assets decreased by 8% year-over-year.
• Equity assets decreased by 5% from the previous quarter.

Risks

• The company's performance is subject to market conditions, investment performance, and investor behavior.
• Fluctuations in foreign currency exchange rates can impact operating expenses.
• The company's ability to predict fee waivers, expenses, and performance fees can affect future results.
• There is a risk of not sustaining product demand and the timing of product sales and redemptions.
• The company is exposed to risks related to market appreciation or depreciation.

Future Outlook

The document includes forward-looking statements regarding performance, investment strategies, investor preferences, asset flows, and asset mix, which are subject to various risks and uncertainties.

Management Comments

• Federated Hermes' record assets at year-end were driven by another quarter of money market asset increases.
• All segments of our liquidity products offered exceptional cash management resources, as well as opportunities for attractive returns in balanced client portfolios.
• We also continued to see investor interest in a range of fixed-income strategies.
• In equities, we saw net positive flows into the full range of our quantitative MDT equity products.

Industry Context

The results reflect the current market environment where money market assets are seeing strong inflows, while there is continued interest in fixed-income strategies. The company's performance is also influenced by broader market conditions and investor behavior.

Comparison to Industry Standards

• Federated Hermes ranks in the top 7% of equity fund managers, the top 9% of money market fund managers, and the top 10% of fixed-income fund managers according to Morningstar.
• While specific competitor data is not provided, the document highlights Federated Hermes' strong position in the industry based on these rankings.
• The company's record AUM suggests a strong competitive position compared to other asset managers, particularly in money market funds.
• The document does not provide specific comparisons to other companies' results, but the rankings indicate a strong performance relative to industry benchmarks.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.31 per share.
• The company's performance impacts investor confidence and the value of their investments.
• Employees may be affected by changes in compensation and company performance.
• Customers benefit from the company's investment solutions and management of their assets.

Next Steps

• Federated Hermes will host an earnings conference call on January 31, 2025.
• The company will continue to monitor market conditions and investor behavior.

Key Dates

Keywords

assets under management, earnings per share, money market assets, fixed-income, equity, dividends, financial results, investment management, alternative investments, revenue, operating expenses