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Waddell & Reed Financial, Inc. Reports Third Quarter Results
Overland Park, KS, Oct. 30, 2018 Waddell & Reed Financial, Inc. (NYSE: WDR) today reported third quarter 2018 net income1 of $46.3 million, or $0.58 per diluted share, compared to net income of $44.5 million, or $0.55 per diluted share, during the prior quarter and net income of $53.6 million, or $0.64 per diluted share, during the third quarter of 2017. The third quarter of 2017 included net gains of $25.1 million ($15.8 net of taxes, or $0.20 per diluted share) due to the freeze of our pension plan on September 30, 2017.
Revenues of $295.1 million during the quarter remained largely unchanged compared to the second quarter of 2018 and increased $5.7 million compared to the third quarter of 2017. Operating expenses of $235.6 million during the quarter declined $1.4 million sequentially and were unchanged compared to the same quarter in 2017. The operating margin was 20.2% during the current quarter, compared to 19.7% and 18.6% during the second quarter of 2018 and the third quarter of 2017, respectively.
Assets under management ended the quarter at $79.5 billion, increasing 1% compared to the prior quarter and declining 2% compared to the third quarter of 2017. Sales of $2.5 billion during the current quarter declined 13% compared to the second quarter of 2018 and 12% compared to the third quarter of 2017. Net outflows of $2.0 billion during the current quarter improved compared to net outflows of $3.1 billion during the second quarter of 2018 and net outflows of $2.8 billion during the third quarter of 2017. The improvement in net outflows was due to lower redemptions in our institutional channel.
Broker-dealer assets under administration ended the quarter at $58.1 billion, increasing 2% compared to the second quarter of 2018 and 5% compared to the same quarter in 2017. Average productivity per advisor, as measured by average trailing twelve-month revenue per advisor, was $350 thousand for the twelve-month period ended September 30, 2018, rising 46% compared September of 2017.
Our focus remains on making the necessary strategic investments and operational improvements that will enhance the long-term competitive positioning of both our asset management business and our broker-dealer, said Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. Strong investment performance is essential to support this effort and we continue to make solid progress in strengthening both our short- and long-term track records across much of the complex.
Investment management fees declined $1.1 million, or 1% sequentially, due to fee reductions in selected mutual funds and lower average assets under management, which were partly offset by an additional day during the current quarter. Compared with the same quarter in 2017, revenues declined $4.8 million, or 4%, due to fee reductions in selected mutual funds and lower average assets under management. During the current quarter, the effective management fee rate was 64.6 basis points compared to 65.4 basis points during the second quarter of 2018 and 66.1 basis points during the third quarter of 2017. Average assets under management were $79.5 billion during the current quarter, compared to $80.0 billion during the prior quarter and $80.5 billion during the third quarter of 2017.
Underwriting and distribution fees increased $2.4 million, or 2% sequentially, primarily due to higher asset-based advisory fees in the broker-dealer. Compared to the same quarter in 2017, fees increased $11.4 million, or 9%, due to
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, October 30, 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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