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Waddell & Reed Financial, Inc. Reports Fourth Quarter Results
Overland Park, KS, February 4, 2020 — Waddell & Reed Financial, Inc. (NYSE: WDR) today reported fourth quarter 2019 net income1 of $15.9 million, or $0.23 per diluted share, compared to net income of $33.1 million, or $0.46 per diluted share, during the prior quarter and net income of $46.5 million, or $0.60 per diluted share, during the fourth quarter of 2018. The fourth quarter of 2019 included non-cash asset impairment charges of $12.8 million in connection with certain assets held for sale, including real property related to our corporate headquarters move and the elimination of our internal aviation operations, an $11.2 million non-cash charge related to the annual revaluation of the pension plan liability and $2.3 million in severance expense related to the outsourcing of our transfer agency transactional processing operations. Excluding the non-cash charges and severance expense, adjusted net income2 for the fourth quarter of 2019 was $36.0 million and adjusted net income per diluted share2 was $0.51.
Revenues of $270.1 million decreased slightly compared to the prior quarter and decreased $2.2 million compared to the fourth quarter of 2018. Operating expenses as reported of $241.2 million increased $10.6 million compared to the prior quarter and increased $13.4 million compared to the same quarter of 2018. Adjusted operating expenses2 decreased $1.5 million, or less than 1%, compared to the third quarter of 2019 and increased $1.4 million, or less than 1%, compared to fourth quarter of 2018. The reported operating margin was 10.7% and the adjusted operating margin2 was 16.3% during the current quarter, compared to 15.9% during the prior quarter and 17.5% during the fourth quarter of 2018.
Assets under management ended the quarter at $70.0 billion, an increase of 2% compared to the prior quarter and an increase of 6% compared to the fourth quarter of 2018. Average assets under management were $69.1 billion during the current quarter, compared to $70.5 billion during the prior quarter and $71.6 billion during the fourth quarter of 2018. Net outflows of $3.4 billion during the current quarter were higher compared to net outflows of $2.7 billion in the third quarter of 2019 and were lower compared to net outflows of $3.8 billion in the fourth quarter of 2018. Sales of $1.5 billion during the current quarter declined 14% and 43% compared to the prior quarter and the fourth quarter of 2018, respectively. Industry-wide flows continued toward fixed income and money market strategies while equity flows remained challenged. Redemptions increased 10% compared to the prior quarter and improved 24% compared to the fourth quarter of 2018.
Wealth management assets under administration ended the quarter at $60.1 billion, an increase of 5% compared to the third quarter of 2019, and a 17% increase compared to prior year-end. For both comparative periods, assets under administration increased primarily due to strong market gains and growth in net new advisory assets, partially offset by brokerage redemptions.
Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. shared, “While both the quarter and year remained challenging from a flow perspective within our asset management business, we continued to make steady progress in the transformation of our wealth management business.” Mr. Sanders continued, “On balance, the repositioning of our overall business model, combined with operational improvements across the enterprise and our strong balance sheet, has us well positioned to focus on renewed growth opportunities as we look ahead to 2020 and beyond.”
1 Net income represents net income attributable to Waddell & Reed Financial, Inc.
2 See Non-GAAP Financial Measures section and Reconciliation of GAAP to Non-GAAP Financial Measures table
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, February 4, 2020 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-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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