OVERLAND PARK, Kan.–(BUSINESS WIRE)–Waddell & Reed Financial, Inc. (NYSE: WDR) today reported first quarter
2019 net income1 of $32.1 million, or $0.42 per diluted
share, compared to net income of $46.5 million, or $0.60 per diluted
share, during the prior quarter and net income of $46.3 million, or
$0.56 per diluted share, during the first quarter of 2018.
Revenues of $259.4 million during the quarter decreased $12.8 million
and $38.2 million compared to the fourth and first quarters of 2018,
respectively. Operating expenses of $223.9 million declined $3.9 million
compared to the prior quarter and declined $13.8 million compared to the
same quarter in 2018. The operating margin was 13.7% during the current
quarter, compared to 16.3% and 20.1% during the fourth and first
quarters of 2018, respectively.
Assets under management ended the quarter at $71.7 billion, a 9%
increase compared to the prior quarter and a decrease of 11% compared to
the first quarter of 2018. Net outflows of $1.8 billion during the
current quarter improved compared to net outflows of $3.8 billion in the
fourth quarter of 2018 and were higher than the first quarter of 2018.
Sales of $2.5 billion during the current quarter declined 8% and 34%
compared to the prior quarter and the first quarter of 2018,
respectively. Sales for the quarter were challenged, in part by
carryover effects from volatility experienced in the fourth quarter of
2018 and investors’ preference for short duration fixed income products
over equity products. Redemption rates improved 12% compared to the
prior quarter as redemptions in our unaffiliated channel improved
meaningfully. Redemption rates were relatively comparable with the first
quarter of 2018, improving 1%.
Wealth management assets under administration ended the quarter at $56.1
billion, a 9% increase compared to the fourth quarter of 2018, due to
market appreciation. Compared to the same quarter in 2018, assets under
administration decreased slightly as outflows from non-advisory assets
were only partially offset by net new advisory assets and market
appreciation. Average productivity per associated independent financial
advisor (“Advisor”), measured as average trailing twelve-month revenue
per Advisor, was $400 thousand for the current quarter, rising 6%
compared to the prior quarter and 40% compared to the same quarter in
the prior year.
“Despite a challenging market environment as we began 2019, our team
remained focused on executing our plans through improved investment
performance, ongoing product development and the continued evolution of
our wealth management platform. We made progress in each of these areas
during the quarter, as we continued to improve short- and
intermediate-term investment performance rankings across the complex,
introduced a new investment vehicle for our existing strategies and made
further progress on our commitment to improved technology and practice
development for our Advisors, “ said Philip J. Sanders, Chief Executive
Officer of Waddell & Reed Financial, Inc.
Mr. Sanders continued, “While we were encouraged by the rebound in
markets after the volatile end to last year, the sales environment is
challenging. Nevertheless, we remain steadfast in our commitment towards
improving our Company’s long-term competitive positioning.”
________________________________________
1 Net income represents net income attributable to Waddell &
Reed Financial, Inc.
Revenues Analysis
Investment management fees declined $4.8 million, or 4%, compared to the
fourth quarter of 2018, primarily due to two fewer days in the quarter
and lower average assets under management. The effective management fee
rate of 63.5 basis points was consistent with the prior quarter.
Compared to the first quarter of 2018, investment management fees
declined $23.9 million, or 18%, due to lower average assets under
management and a lower effective management fee rate. The effective
management fee rate was approximately 2 basis points lower due to
previously announced fee reductions in selected mutual funds, consistent
with the expected reduction. Average assets under management were $70.1
billion during the current quarter, compared to $71.6 billion during the
prior quarter and $82.4 billion during the first quarter of 2018.
Underwriting and distribution fees decreased $7.5 million, or 6%
sequentially, primarily due to two fewer days in the quarter and a
reduction in average assets under administration during the period. The
lower asset levels early in the quarter were a result of market declines
in the fourth quarter of 2018. In addition, sales of insurance-related
products were lower across the comparative periods. Compared to the same
quarter in 2018, fees decreased $11.8 million, or 9%, due to lower
service and distribution fees and lower sales of insurance-related
products.
Shareholder service fees declined $0.5 million, or 2%, compared to the
fourth quarter of 2018 due to two fewer days in the quarter and a slight
decrease in average assets. Compared to the first quarter of 2018,
shareholder service fees declined $2.5 million, or 10%, primarily due to
a 9% decrease in average assets.
Operating Expenses Analysis
Distribution expenses decreased $1.7 million, or 1%, compared to the
prior quarter and decreased $4.7 million, or 4%, compared to the first
quarter of 2018. For both comparative periods, distribution expenses
decreased primarily due to the decrease in underwriting and distribution
revenues and were partially offset by an increase in the compensation
grid for Advisors, effective January 1, 2019.
Compensation and benefits expenses increased $0.7 million, or 1%,
compared to the prior quarter. Share-based compensation increased $3.7
million primarily due to mark-to-market adjustments of cash-settled
restricted stock unit awards, lower forfeiture activity and a shifting
of the grant date from April to January in 2017. The increase was
largely offset by a decrease in severance charges and lower incentive
compensation. Compared to the first quarter of 2018, expenses improved
$3.9 million, or 6%, due to lower share-based compensation costs and
lower base salary costs due to lower headcount.
General and administrative expenses improved $2.7 million, or 16%,
compared to the fourth quarter of 2018 primarily due to lower
consulting, legal and travel costs. Compared to the first quarter in
2018, expenses improved $4.8 million, or 25%, due to lower contractor,
legal and consulting costs as significant projects were completed in
early 2018.
Occupancy expenses increased $0.6 million, or 10%, compared to the
fourth quarter of 2018 due to early lease termination charges related to
the ongoing transition of Advisors to personal branch offices. Compared
to the first quarter of 2018, expenses improved $0.2 million, or 4%, as
we realized cost savings from field offices closed during 2018.
Depreciation expense declined slightly from the prior quarter and
increased $0.7 million, or 13%, compared to the first quarter of 2018
primarily due to an adjustment in the useful life on certain internally
developed software assets.
Investment and other income decreased $7.9 million compared to the prior
quarter primarily due to a $16.1 million pension-related gain in the
fourth quarter of 2018, which was partially offset by market
appreciation on our investment portfolio during the current period.
Compared to the first quarter of 2018, investment and other income
increased $6.6 million primarily due market appreciation of our
investment portfolio and increased interest income from our corporate
investment portfolio.
|
Assets Under Management (in millions) |
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| Three Months Ended | |||||||||||||||||||||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | Prior Qtr. | Year-over-Year Qtr. | |||||||||||||||||||||||||||||||
| 2019 | 2018 | 2018 | Change | % | Change | % | |||||||||||||||||||||||||||||
| Unaffiliated 1 | |||||||||||||||||||||||||||||||||||
| Beginning assets | $ | 24,977 | $ | 31,172 | $ | 31,133 | $ | (6,195 | ) | (20 | ) | % | $ | (6,156 | ) | (20 | ) | % | |||||||||||||||||
| Sales 2 | 1,593 | 1,673 | 2,245 | (80 | ) | (5 | ) | % | (652 | ) | (29 | ) | % | ||||||||||||||||||||||
| Redemptions | (2,306 | ) | (3,637 | ) | (2,692 | ) | 1,331 | 37 | % | 386 | 14 | % | |||||||||||||||||||||||
| Net exchanges | 276 | (131 | ) | 247 | 407 | 311 | % | 29 | 12 | % | |||||||||||||||||||||||||
| Net Flows | (437 | ) | (2,095 | ) | (200 | ) | 1,658 | 79 | % | (237 | ) | (119 | ) | % | |||||||||||||||||||||
| Market action | 2,966 | (4,100 | ) | 122 | 7,066 | 172 | % | 2,844 | 2,331 | % | |||||||||||||||||||||||||
| Ending assets | $ | 27,506 | $ | 24,977 | $ | 31,055 | $ | 2,529 | 10 | % | $ | (3,549 | ) | (11 | ) | % | |||||||||||||||||||
| Annualized organic growth rate | (7.0 | ) | % | (26.9 | ) | % | (2.6 | ) | % | ||||||||||||||||||||||||||
| Annualized redemption rate 3 | 35.7 | % | 53.8 | % | 35.8 | % | |||||||||||||||||||||||||||||
| Institutional | |||||||||||||||||||||||||||||||||||
| Beginning assets | $ | 3,655 | $ | 5,187 | $ | 6,289 | $ | (1,532 | ) | (30 | ) | % | $ | (2,634 | ) | (42 | ) | % | |||||||||||||||||
| Sales 2 | 141 | 85 | 552 | 56 | 66 | % | (411 | ) | (74 | ) | % | ||||||||||||||||||||||||
| Redemptions | (357 | ) | (1,316 | ) | (604 | ) | 959 | 73 | % | 247 | 41 | % | |||||||||||||||||||||||
| Net exchanges | — | 511 | — | (511 | ) | (100 | ) | % | — | NM | |||||||||||||||||||||||||
| Net Flows | (216 | ) | (720 | ) | (52 | ) | 504 | 70 | % | (164 | ) | (315 | ) | % | |||||||||||||||||||||
| Market action | 614 | (812 | ) | 212 | 1,426 | 176 | % | 402 | 190 | % | |||||||||||||||||||||||||
| Ending assets | $ | 4,053 | $ | 3,655 | $ | 6,449 | $ | 398 | 11 | % | $ | (2,396 | ) | (37 | ) | % | |||||||||||||||||||
| Annualized organic growth rate | (23.6 | ) | % | (55.5 | ) | % | (3.3 | ) | % | ||||||||||||||||||||||||||
| Annualized redemption rate 3 | 36.6 | % | 117.3 | % | 37.8 | % | |||||||||||||||||||||||||||||
| Broker-Dealer | |||||||||||||||||||||||||||||||||||
| Beginning assets | $ | 37,177 | $ | 43,183 | $ | 43,660 | $ | (6,006 | ) | (14 | ) | % | $ | (6,483 | ) | (15 | ) | % | |||||||||||||||||
| Sales 2 | 754 | 958 | 1,001 | (204 | ) | (21 | ) | % | (247 | ) | (25 | ) | % | ||||||||||||||||||||||
| Redemptions | (1,626 | ) | (1,547 | ) | (1,958 | ) | (79 | ) | (5 | ) | % | 332 | 17 | % | |||||||||||||||||||||
| Net exchanges | (276 | ) | (380 | ) | (247 | ) | 104 | 27 | % | (29 | ) | (12 | ) | % | |||||||||||||||||||||
| Net Flows | (1,148 | ) | (969 | ) | (1,204 | ) | (179 | ) | (18 | ) | % | 56 | 5 | % | |||||||||||||||||||||
| Market action | 4,066 | (5,037 | ) | 251 | 9,103 | 181 | % | 3,815 | 1,520 | % | |||||||||||||||||||||||||
| Ending assets | $ | 40,095 | $ | 37,177 | $ | 42,707 | $ | 2,918 | 8 | % | $ | (2,612 | ) | (6 | ) | % | |||||||||||||||||||
| Annualized organic growth rate | (12.4 | ) | % | (9.0 | ) | % | (11.0 | ) | % | ||||||||||||||||||||||||||
| Annualized redemption rate 3 | 14.5 | % | 13.1 | % | 15.1 | % | |||||||||||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||||||||||||||
| Beginning assets | $ | 65,809 | $ | 79,542 | $ | 81,082 | $ | (13,733 | ) | (17 | ) | % | $ | (15,273 | ) | (19 | ) | % | |||||||||||||||||
| Sales 2 | 2,488 | 2,716 | 3,798 | (228 | ) | (8 | ) | % | (1,310 | ) | (34 | ) | % | ||||||||||||||||||||||
| Redemptions | (4,289 | ) | (6,500 | ) | (5,254 | ) | 2,211 | 34 | % | 965 | 18 | % | |||||||||||||||||||||||
| Net exchanges | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Net Flows | (1,801 | ) | (3,784 | ) | (1,456 | ) | 1,983 | 52 | % | (345 | ) | (24 | ) | % | |||||||||||||||||||||
| Market action | 7,646 | (9,949 | ) | 585 | 17,595 | 177 | % | 7,061 | 1,207 | % | |||||||||||||||||||||||||
| Ending assets | $ | 71,654 | $ | 65,809 | $ | 80,211 | $ | 5,845 | 9 | % | $ | (8,557 | ) | (11 | ) | % | |||||||||||||||||||
| Annualized organic growth rate | (10.9 | ) | % | (19.0 | ) | % | (7.2 | ) | % | ||||||||||||||||||||||||||
| Annualized redemption rate 3 | 23.9 | % | 35.4 | % | 24.8 | % | |||||||||||||||||||||||||||||
| (1) |
Unaffiliated includes National channel (home office and wholesale), Defined Contribution Investment Only “DCIO”, Registered Investment Advisor “RIA” and Variable Annuity “VA”. |
|
| (2) |
Sales is primarily gross sales (net of sales commissions). This amount also includes net reinvested dividends and capital gains, and investment income. |
|
| (3) | Excludes Money Market. | |
| MorningStar Fund Rankings 1 | 1 Year | 3 Years | 5 Years | |||||||
| Funds ranked in top half | 59 | % | 37 | % | 34 | % | ||||
| Assets ranked in top half | 59 | % | 46 | % | 54 | % | ||||
| MorningStar Ratings 1 | Overall | 3 Years | 5 Years | |||||||
| Funds with 4/5 stars | 29 | % | 29 | % | 28 | % | ||||
| Assets with 4/5 stars | 39 | % | 39 | % | 30 | % |
| (1) |
Based on class I share, which reflects sales and asset concentrations. |
|
| Three Months Ended | |||||||||||||||||||||||||||||||||
| Wealth Management | Mar. 31, | Dec. 31, | Mar. 31, | Prior Qtr. | Year-over-Year Qtr. | ||||||||||||||||||||||||||||
| (in millions) | 2019 | 2018 | 2018 | Change | % | Change | % | ||||||||||||||||||||||||||
| Assets under administration (AUA) | |||||||||||||||||||||||||||||||||
| Advisory assets | $ | 23,671 | $ | 21,207 | $ | 22,050 | $ | 2,464 | 12 | % | $ | 1,621 | 7 | % | |||||||||||||||||||
| Non-advisory assets | 32,418 | 30,059 | 34,216 | 2,359 | 8 | % | (1,798 | ) | (5 | ) | % | ||||||||||||||||||||||
| Total assets under administration | 56,089 | 51,266 | 56,266 | 4,823 | 9 | % | (177 | ) | – | % | |||||||||||||||||||||||
| Net new advisory assets 1 | $ | 220 | $ | (45 | ) | $ | 392 | $ | 265 | 588 | % | $ | (172 | ) | (44 | ) | % | ||||||||||||||||
| Net new non-advisory assets 1, 2 | (820 | ) | (840 | ) | (983 | ) | 20 | 2 | % | 163 | 17 | % | |||||||||||||||||||||
| Total net new AUA 1, 2 | (600 | ) | (885 | ) | (591 | ) | 285 | 32 | % | (9 | ) | (2 | ) | % | |||||||||||||||||||
| Annualized advisory AUA growth 3 | 4.2 | % | (0.8 | ) | % | 7.3 | % | ||||||||||||||||||||||||||
| Annualized AUA growth 3 | (4.7 | ) | % | (6.1 | ) | % | (4.2 | ) | % | ||||||||||||||||||||||||
| Advisors and advisor associates | 1,367 | 1,403 | 1,497 | (36 | ) | (3 | ) | % | (130 | ) | (9 | ) | % | ||||||||||||||||||||
|
Avg. trailing 12-month revenue per advisor 4 (in thousands) |
$ | 400 | $ | 378 | $ | 285 | $ | 22 | 6 | % | $ | 115 | 40 | % | |||||||||||||||||||
| (1) |
Net new assets are calculated as total client deposits and net transfers less client withdrawals. |
|
| (2) |
Excludes activity related to products held outside of our wealth management platform. These assets represent less than 10% of total AUA. |
|
| (3) |
Annualized growth is calculated as annualized quarterly net new assets divided by beginning assets under administration. |
|
| (4) |
Production per Advisor is calculated as trailing 12- month Total underwriting and distribution fees less “other” underwriting and distribution fees divided by the average number of Advisors. “Other” underwriting and distribution fees predominantly includes fees paid by Advisors for programs and services. |
|
|
Unaudited Consolidated Statements of Income (in thousands, except per share data and margin) |
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| Three Months Ended | |||||||||||||||||||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | Prior Qtr. | Year-over-Year Qtr. | |||||||||||||||||||||||||||||
| 2019 | 2018 | 2018 | Change | % | Change | % | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||
| Investment management fees | $ | 109,762 | $ | 114,521 | $ | 133,692 | $ | (4,759 | ) | (4 | ) | % | $ | (23,930 | ) | (18 | ) | % | |||||||||||||||
| Underwriting and distribution fees | 126,245 | 133,788 | 138,041 | (7,543 | ) | (6 | ) | % | (11,796 | ) | (9 | ) | % | ||||||||||||||||||||
| Shareholder service fees | 23,403 | 23,921 | 25,882 | (518 | ) | (2 | ) | % | (2,479 | ) | (10 | ) | % | ||||||||||||||||||||
| Total | 259,410 | 272,230 | 297,615 | (12,820 | ) | (5 | ) | % | (38,205 | ) | (13 | ) | % | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||
| Distribution 1 | 109,794 | 111,456 | 114,470 | (1,662 | ) | (1 | ) | % | (4,676 | ) | (4 | ) | % | ||||||||||||||||||||
|
Compensation and benefits (including share-based compensation of $12,693, $9,039 and $14,768, respectively) |
64,843 | 64,155 | 68,785 | 688 | 1 | % | (3,942 | ) | (6 | ) | % | ||||||||||||||||||||||
| General and administrative | 14,704 | 17,403 | 19,538 | (2,699 | ) | (16 | ) | % | (4,834 | ) | (25 | ) | % | ||||||||||||||||||||
| Technology | 16,308 | 15,982 | 16,644 | 326 | 2 | % | (336 | ) | (2 | ) | % | ||||||||||||||||||||||
| Occupancy | 6,715 | 6,116 | 6,964 | 599 | 10 | % | (249 | ) | (4 | ) | % | ||||||||||||||||||||||
| Marketing and advertising | 1,964 | 2,685 | 2,281 | (721 | ) | (27 | ) | % | (317 | ) | (14 | ) | % | ||||||||||||||||||||
| Depreciation | 6,001 | 6,387 | 5,302 | (386 | ) | (6 | ) | % | 699 | 13 | % | ||||||||||||||||||||||
| Subadvisory fees | 3,557 | 3,647 | 3,708 | (90 | ) | (2 | ) | % | (151 | ) | (4 | ) | % | ||||||||||||||||||||
| Total | 223,886 | 227,831 | 237,692 | (3,945 | ) | (2 | ) | % | (13,806 | ) | (6 | ) | % | ||||||||||||||||||||
| Operating income | 35,524 | 44,399 | 59,923 | (8,875 | ) | (20 | ) | % | (24,399 | ) | (41 | ) | % | ||||||||||||||||||||
| Investment and other income | 9,453 | 17,351 | 2,816 | (7,898 | ) | (46 | ) | % | 6,637 | 236 | % | ||||||||||||||||||||||
| Interest expense | (1,548 | ) | (1,553 | ) | (1,802 | ) | 5 | 0 | % | 254 | 14 | % | |||||||||||||||||||||
| Income before provision for income taxes | 43,429 | 60,197 | 60,937 | (16,768 | ) | (28 | ) | % | (17,508 | ) | (29 | ) | % | ||||||||||||||||||||
| Provision for income taxes | 10,671 | 14,125 | 14,966 | (3,454 | ) | (24 | ) | % | (4,295 | ) | (29 | ) | % | ||||||||||||||||||||
| Net income | 32,758 | 46,072 | 45,971 | (13,314 | ) | (29 | ) | % | (13,213 | ) | (29 | ) | % | ||||||||||||||||||||
| Net income (loss) attributable to redeemable noncontrolling interests | 705 | (396 | ) | (366 | ) | 1,101 | 278 | % | 1,071 | 293 | % | ||||||||||||||||||||||
| Net income attributable to Waddell & Reed Financial, Inc. | $ | 32,053 | $ | 46,468 | $ | 46,337 | $ | (14,415 | ) | (31 | ) | % | $ | (14,284 | ) | (31 | ) | % | |||||||||||||||
| Net income per share, basic and diluted: | $ | 0.42 | $ | 0.60 | $ | 0.56 | |||||||||||||||||||||||||||
| Weighted average shares outstanding – basic and diluted | 76,299 | 77,786 | 83,111 | ||||||||||||||||||||||||||||||
| Operating margin | 13.7 | % | 16.3 | % | 20.1 | % | |||||||||||||||||||||||||||
| (1) Distribution expense | |||||||||||||||||||||||||||||||||
| Unaffiliated | 23,300 | 25,406 | 30,354 | ||||||||||||||||||||||||||||||
| Broker-dealer | 86,494 | 86,050 | 84,116 | ||||||||||||||||||||||||||||||
| $ | 109,794 | $ | 111,456 | $ | 114,470 | ||||||||||||||||||||||||||||
|
Underwriting and distribution fees (in thousands) |
||||||||||||
| For the three months ended Mar. 31, 2019 | ||||||||||||
| Unaffiliated | Broker-Dealer | Total | ||||||||||
| Fee-based asset allocation product revenues | $ | — | $ | 65,230 | $ | 65,230 | ||||||
| Rule 12b-1 service and distribution fees | 16,182 | 15,688 | 31,870 | |||||||||
|
Sales commissions on front-end load mutual funds and variable annuity products |
438 | 12,020 | 12,458 | |||||||||
| Sales commissions on other products | — | 7,606 | 7,606 | |||||||||
| Other revenues | 92 | 8,989 | 9,081 | |||||||||
| Total underwriting and distribution fees | $ | 16,712 | $ | 109,533 | $ | 126,245 | ||||||
| For the three months ended Dec. 31, 2018 | ||||||||||||
| Unaffiliated | Broker-Dealer | Total | ||||||||||
| Fee-based asset allocation product revenues | $ | — | $ | 67,504 | $ | 67,504 | ||||||
| Rule 12b-1 service and distribution fees | 17,307 | 16,347 | 33,654 | |||||||||
|
Sales commissions on front-end load mutual funds and variable annuity products |
468 | 12,994 | 13,462 | |||||||||
| Sales commissions on other products | — | 9,533 | 9,533 | |||||||||
| Other revenues | 109 | 9,526 | 9,635 | |||||||||
| Total underwriting and distribution fees | $ | 17,884 | $ | 115,904 | $ | 133,788 | ||||||
| For the three months ended Mar. 31, 2018 | ||||||||||||
| Unaffiliated | Broker-Dealer | Total | ||||||||||
| Fee-based asset allocation product revenues | $ | — | $ | 65,516 | $ | 65,516 | ||||||
| Rule 12b-1 service and distribution fees | 20,976 | 18,377 | 39,353 | |||||||||
|
Sales commissions on front-end load mutual funds and variable annuity products |
470 | 14,427 | 14,897 | |||||||||
| Sales commissions on other products | — | 8,422 | 8,422 | |||||||||
| Other revenues | 185 | 9,668 | 9,853 | |||||||||
| Total underwriting and distribution fees | $ | 21,631 | $ | 116,410 | $ | 138,041 | ||||||
|
Unaudited Condensed Balance Sheet (in thousands) |
||||||||
| Mar. 31, | Dec. 31, | |||||||
| 2019 | 2018 | |||||||
| Assets | ||||||||
| Cash & cash equivalents (unrestricted) | $ | 177,611 | $ | 231,997 | ||||
| Investment securities | 649,052 | 617,135 | ||||||
| Other assets | 197,158 | 285,649 | ||||||
| Property and equipment, net | 58,773 | 63,429 | ||||||
| Goodwill and intangible assets | 145,869 | 145,869 | ||||||
| Total assets | $ | 1,228,463 | $ | 1,344,079 | ||||
| Liabilities, redeemable noncontrolling interests and equity | ||||||||
| Long-term debt | 94,872 | 94,854 | ||||||
| Other liabilities | 252,051 | 354,312 | ||||||
| Redeemable noncontrolling interests | 12,936 | 11,463 | ||||||
| Total stockholders’ equity | 868,604 | 883,450 | ||||||
| Liabilities, redeemable noncontrolling interests and equity | $ | 1,228,463 | $ | 1,344,079 | ||||
| Shares outstanding | 75,679 | 76,790 | ||||||
|
Unaudited Condensed Cash Flow (in thousands) |
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| Three Months Ended | |||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | |||||||||||||
| 2019 | 2018 | 2018 | |||||||||||||
| Cash (used in) provided by: | |||||||||||||||
| Operating activities | $ | (17,497 | ) | $ | 93,278 | $ | 50,265 | ||||||||
| Investing activities | (13,933 | ) | (32,224 | ) | 56,272 | ||||||||||
| Financing activities | (59,513 | ) | (69,152 | ) | (131,948 | ) | |||||||||
| Net change during period | $ | (90,943 | ) | $ | (8,098 | ) | $ | (25,411 | ) | ||||||
| Three Months Ended | ||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||
| (in thousands, except number of shares) | 2019 | 2018 | 2018 | |||||||||
| Shares repurchased | ||||||||||||
| Number of shares | 2,226,325 | 2,443,723 | 996,309 | |||||||||
| Total cost | $ | 39,139 | $ | 46,873 | $ | 20,507 | ||||||
| Dividend paid | ||||||||||||
| Rate per share | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||
| Total paid | $ | 19,348 | $ | 19,684 | $ | 20,890 | ||||||
|
Capital returned to stockholders |
$ | 58,487 | $ | 66,557 | $ | 41,397 | ||||||
Earnings Conference Call
Stockholders, members of the investment community and the general public
are invited to listen to a live Web cast of our earnings release
conference call today at 10:00 a.m. Eastern. During this call, Philip J.
Sanders, CEO and CIO, will review our quarterly results. Live access to
the teleconference will be available on the “Investor Relations” section
of our Web site at ir.waddell.com. A Web cast replay will be made
available shortly after the conclusion of the call and accessible for
seven days.
Web Site Resources
We invite you to visit the Investor Relations section of our Web site at ir.waddell.com.
Under the “Investor Information” tab you will find a link to
presentations as well as to data tables, which include supplemental
information schedules.
Past performance is no guarantee of future results. Please invest
carefully.
About the Company
Through its subsidiaries, Waddell & Reed Financial, Inc. has provided
investment management and financial planning services to clients
throughout the United States since 1937. Today, we distribute our
investment products through the unaffiliated channel (encompassing
broker/dealer, retirement, and registered investment advisors), our
broker-dealer channel (through independent financial advisors), and our
Institutional channel (including defined benefit plans, pension plans,
endowments and subadvisory relationships). For more information,
visit ir.waddell.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which
reflect the current views and assumptions of management with respect to
future events regarding our business and industry in general. These
forward-looking statements include all statements, other than statements
of historical fact, regarding our financial position, business strategy
and other plans and objectives for future operations, including
statements with respect to revenues and earnings, the amount and
composition of assets under management, distribution sources, expense
levels, redemption rates, stock repurchases and the financial markets
and other conditions. These statements are generally identified by the
use of such words as “may,” “could,” “should,” “would,” “believe,”
“anticipate,” “forecast,” “estimate,” “expect,” “intend,” “plan,”
“project,” “outlook,” “will,” “potential” and similar statements of a
future or forward-looking nature. Readers are cautioned that any
forward-looking information provided by us or on our behalf is not a
guarantee of future performance. Actual results may differ materially
from those contained in these forward-looking statements as a result of
various factors, including but not limited to those discussed below. If
one or more events related to these or other risks, contingencies or
uncertainties materialize, or if our underlying assumptions prove to be
incorrect, actual results may differ materially from those forecasted or
expected. Certain important factors that could cause actual results to
differ materially from our expectations are disclosed in the “Risk
Factors” section of our Annual Report on Form 10-K for the year ended
December 31, 2018, which include, without limitation:
-
The loss of existing distribution relationships or inability to access
new distribution relationships; -
A reduction in assets under our management on short notice, through
increased redemptions in our distribution channels or our Funds,
particularly those Funds with a high concentration of assets, or
investors terminating their relationship with us or shifting their
funds to other types of accounts with different rate structures; -
The adverse ruling or resolution of any litigation, regulatory
investigations and proceedings, or securities arbitrations by a
federal or state court or regulatory body; -
Changes in our business model, operations and procedures, including
our methods of distributing our proprietary products, as a result of
evolving fiduciary standards; -
The introduction of legislative or regulatory proposals or judicial
rulings that change the independent contractor classification of our
financial advisors at the federal or state level for employment tax or
other employee benefit purposes; -
A decline in the securities markets or in the relative investment
performance of our Funds and other investment portfolios and products
as compared to competing funds; -
Our inability to reduce expenses rapidly enough to align with declines
in our revenues due to various factors, including fee pressure, the
level of our assets under management or our business environment; -
Non-compliance with applicable laws or regulations and changes in
current legal, regulatory, accounting, tax or compliance requirements
or governmental policies; -
Our inability to attract and retain senior executive management and
other key personnel to conduct our broker-dealer, fund management and
investment advisory business; -
A failure in, or breach of, our operational or security systems or our
technology infrastructure, or those of third parties on which we rely;
and -
Our inability to implement new information technology and systems, or
our inability to complete such implementation in a timely or cost
effective manner.
The foregoing factors should not be construed as exhaustive and
should be read together with other cautionary statements included in
this and other reports and filings we make with the Securities and
Exchange Commission, including the information in Item 1 “Business” and
Item 1A “Risk Factors” of Part I and Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of Part II to
our Annual Report on Form 10- K for the year ended December 31, 2018 and
as updated in our quarterly reports on Form 10-Q for the year ending
December 31, 2019. All forward-looking statements speak only as of the
date on which they are made and we undertake no duty to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent required by law.
Contacts
Investor Contact:
Mike Daley, Vice
President – Corporate Controller & Investor Relations, (913) 236-1795,
[email protected]
Mutual Fund
Investor Contact:
Call (888) WADDELL, or visit www.waddell.com
or www.ivyfunds.com.
