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Waddell & Reed Financial, Inc. Reports First Quarter Results
Overland Park, KS, May 1, 2018 Waddell & Reed Financial, Inc. (NYSE: WDR) today reported first quarter 2018 net income1 of $46.3 million, or $0.56 per diluted share, compared to net income of $29.8 million, or $0.36 per diluted share, during the prior quarter and net income of $33.9 million, or $0.40 per diluted share, during the first quarter of 2017.
Revenues of $297.6 million during the quarter increased 1% sequentially and 4% compared to the first quarter of 2017. Operating expenses of $237.7 million during the quarter increased 2% sequentially and 2% compared to the same quarter in 2017. The operating margin was 20.1% during the current quarter, compared to 21.0% and 18.5% during the fourth and first quarters of 2017, respectively.
Assets under management ended the quarter at $80.2 billion, declining 1% compared to the prior quarter and 1% compared to the first quarter of 2017. Gross sales increased 40% compared to the fourth quarter of 2017 and 30% compared to the first quarter of 2017, while redemptions improved. Net outflows were $1.5 billion during the current quarter, compared to net outflows of $2.7 billion during the prior quarter and net outflows of $3.4 billion during the comparable quarter in 2017.
Broker-dealer assets under administration ended the quarter at $56.3 billion, declining less than 1% compared to the fourth quarter of 2017 and increasing 5% compared to the same quarter in 2017. Average trailing twelve-month productivity increased to $285 thousand per advisor during the first quarter of 2018 compared to $256 thousand and $230 thousand during the fourth and first quarters of 2017, respectively.
Over the last 18 months, we have made solid progress in transitioning our business model to one that better positions us for the future, said Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. We have made headway on a number of corporate initiatives, including improving investment performance, which we know is key to our long-term success.
Effective January 1, 2018, we elected to change our accounting policy on how we report indirect underwriting and distribution expenses in the underwriting and distribution caption and certain expenses historically reported as general and administrative. The change in presentation of certain line items in our consolidated statements of income is intended to improve the transparency of our financial statements. Separately, we adopted Accounting Standards Update (ASU) 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which reclassifies net periodic pension costs, other than historical service costs, from compensation and benefits to investment and other income (loss). All reclassifications were applied retrospectively and did not affect net income.
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, May 1, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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