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Waddell & Reed Financial, Inc. Reports Second Quarter Results
Overland Park, KS, July 31, 2018 Waddell & Reed Financial, Inc. (NYSE: WDR) today reported second quarter 2018 net income(1) of $44.5 million, or $0.55 per diluted share, compared to net income of $46.3 million, or $0.56 per diluted share, during the prior quarter and net income of $24.1 million, or $0.29 per diluted share, during the second quarter of 2017.
Revenues of $295.3 million during the quarter declined 1% sequentially and increased 3% compared to the second quarter of 2017. Operating expenses of $237.1 million during the quarter remained largely unchanged compared to the prior quarter and increased less than 1% compared to the same quarter in 2017. The operating margin was 19.7% during the current quarter, compared to 20.1% and 17.8% during the first quarter of 2018 and the second quarter of 2017, respectively.
Assets under management ended the quarter at $78.7 billion, declining 2% compared to the prior quarter and 2% compared to the second quarter of 2017. Sales of $2.9 billion during the current quarter declined 23% compared to the first quarter of 2018 and were 11% lower than the second quarter of 2017. Net outflows were $3.1 billion during the current quarter, compared to net outflows of $1.5 billion during the prior quarter and $2.5 billion during the second quarter of 2017, with the current quarter redemption increase driven primarily by the Institutional channel. A sequential improvement in market return helped offset some of the outflows during the current quarter.
Broker-dealer assets under administration ended the quarter at $57.1 billion, increasing 1% compared to the first quarter of 2018 and 6% compared to the second quarter of 2017. Average productivity per advisor, as measured by average trailing twelve-month revenue per advisor, was $314 thousand for the twelve-month period ended June 30, 2018; improving 10% compared to the twelve-month period ended March 31, 2018. Average productivity per advisor continues to rise as we focus our programs and support on high-performing financial advisors.
We continue to be focused on managing our product line to ensure its competitiveness. Strengthening our investment performance and dynamically managing our products and their distribution are key steps in our progress, said Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. We believe in the value we provide as active managers, and our recent results have borne that out, with performance improvement across a majority of our key strategies.
Investment management fee revenues decreased $3.3 million, or 2%, sequentially, or slightly less than the decrease in average assets under management due to an additional day in the current quarter. Compared to the second quarter of 2017, fees declined less than 1%. During the current quarter, the effective management fee rate was 65.4 basis points, compared to 65.8 basis points during the first quarter of 2018 and 65.1 basis points during the second quarter of 2017. Average assets under management were $80.0 billion during the current quarter, compared to $82.4 billion during the prior quarter and $80.6 billion during the second quarter of 2017.
Underwriting and distribution fees decreased $0.2 million, or less than 1%, sequentially. A decrease in distribution fees due to lower assets in unaffiliated distribution was partially offset by higher asset-based advisory fee revenues in the broker-dealer. Compared to the second quarter of 2017, fees increased $9.1 million, or 7% due to higher asset-based advisory fees in the broker-dealer and new revenues from independent financial advisors for services, which were partially offset by lower distribution fees.
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, July 31, 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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