Federated Hermes (FHI) Q3 2024 earnings summary

Executive summary

• Assets under management reached $800.5 billion as of September 30, 2024, up 12% year-over-year and 2% sequentially, led by $593 billion in money market assets and $100.2 billion in fixed income assets.

• Q3 2024 diluted EPS was $1.06, up from $0.86 in Q3 2023; net income rose 17% to $87.5 million year-over-year.

• Revenue for Q3 2024 was $408.5 million, up 1% year-over-year, reflecting a diversified business mix and global client base.

• Board declared a $0.31 per share dividend and authorized a new 5 million share repurchase program in October 2024.

• The company maintains a pure-play asset management model with financial strength and flexibility.

Financial highlights

• Q3 2024 revenue increased 1% year-over-year to $408.5 million, driven by higher average money market assets.

• Operating expenses decreased 1% year-over-year and 18% sequentially, reflecting lower other expenses and the absence of a prior quarter impairment charge.

• Q3 2024 net income attributable to shareholders was $87.5 million, up from $75.0 million in Q3 2023.

• Cash and investments at Q3 end were $565 million.

• YTD 2024 net income attributable to Federated Hermes was $183.6 million, down 15% year-over-year; YTD diluted EPS was $2.20, down 10%.

Outlook and guidance

• Management expects continued strong flows into money market and fixed income products, with positive net flows in key equity funds.

• Selective acquisitions and organic growth are expected to drive future expansion.

• Regulatory changes, especially in the U.S. and Europe, are expected to increase compliance costs and complexity.

• The company anticipates sufficient liquidity to meet both short- and long-term cash needs, supported by strong cash flow and available credit.

• Tax rate expected in the 26%-28% range for Q4 and 2025.