Federated Hermes (FHI) Q4 2024 earnings summary

Executive summary

• Ended 2024 with record assets under management (AUM) of $829.6 billion, up 10% year-over-year, including $630.3 billion in money market assets, both all-time highs.

• Q4 2024 EPS was $1.04, up from $0.96 in Q4 2023; full-year 2024 EPS was $3.23, down from $3.40 in 2023 due to a $66.3 million non-cash impairment expense.

• Q4 2024 revenue was $424.7 million, up 8% year-over-year, and a dividend of $0.31 per share was declared.

• Business mix and global distribution provide growth, stability, and sustainability, with a diversified client base and strong S&P 400 MidCap Index presence.

• Net income for Q4 2024 was $84.7 million, up 3% year-over-year; full-year net income was $268.3 million, down 10% from 2023.

Financial highlights

• Q4 total revenue increased by $16.2 million (4%) from the prior quarter, driven by higher equity and money market asset revenues.

• Q4 2024 operating income was $110.4 million, up 8% year-over-year; full-year operating income was $361.5 million, down 7%.

• Q4 2024 operating expenses increased 9% year-over-year, mainly due to higher compensation and distribution costs.

• Q4 carried interest and performance fees were $4.8 million, up from $3.5 million in Q3.

• Cash and investments at year-end were $641 million; long-term debt was $348 million.

Outlook and guidance

• Expect Q1 revenues to be about $9.2 million lower due to fewer days, with $2 million lower distribution expenses.

• Compensation and related expenses in Q1 expected to be higher by about $7 million due to seasonal stock compensation and payroll taxes.

• Tax rate for 2025 projected in the 26%-28% range.

• Net institutional mandates yet to fund at the start of 2025 total $3.7 billion, with strong expected inflows in equities, private markets, and fixed income.

• Forward-looking statements highlight potential for business growth, stability, and sustainability, but note significant market, economic, and regulatory risks.