April 25, 2024

Federated Hermes, Inc. reports first quarter 2024 earnings of $0.89; Board declares cash dividend of $1.31 ($0.31 quarterly and $1.00 special)

Total assets under management reach a record $778.7 billionMoney market assets reach a record $578.8 billion Q1 2024 earnings per diluted share of $0.89Quarterly dividend increased by 10.7% to $0.31Special dividend of $1.00 is the sixth declared since 2008

PITTSBURGH, April 25, 2024 /PRNewswire/ — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.89 for Q1 2024, compared to $0.78 for the same quarter last year, on net income of $75.0 million for Q1 2024, compared to $69.6 million for Q1 2023.

Federated Hermes’ total managed assets were a record $778.7 billion at March 31, 2024, up $77.7 billion or 11% from $701.0 billion at March 31, 2023 and up $21.1 billion or 3% from $757.6 billion at Dec. 31, 2023. Total average managed assets for Q1 2024 were $776.5 billion, up $97.1 billion or 14% from $679.4 billion reported for Q1 2023 and up $48.5 billion or 7% from $728.0 billion for Q4 2023.

“Investors continued to turn to the attractive yields available in our liquidity products. Our money market asset increases drove Federated Hermes to record assets under management for the sixth consecutive quarter,” said J. Christopher Donahue, president and chief executive officer. “Investors also sought to add duration to portfolios, and net sales of fixed-income products were led by our flagship core-plus offering, Federated Hermes Total Return Bond Fund, the Federated Hermes Total Return Bond ETF and ultrashort products. In equities, we saw demand for a range of our Federated Hermes MDT strategies utilizing our proprietary alpha-seeking model.”

Federated Hermes’ board of directors declared a dividend of $1.31 per share. The dividend, which will be paid from Federated Hermes’ existing cash balance, is considered an ordinary dividend for tax purposes and consists of a $0.31 quarterly dividend and a $1.00 special dividend. The quarterly dividend increased by $0.03 or 10.7%. The dividend is payable on May 15, 2024 to Federated Hermes Class A and Class B common stock shareholders of record as of May 8, 2024. During Q1 2024, Federated Hermes purchased 1,082,120 shares of Federated Hermes class B common stock for $37.0 million.

At Federated Hermes’ annual shareholder meeting held on April 25, 2024, new independent director Karen L. Hanlon, whose nomination was announced on February 23, 2024, was elected to Federated Hermes’ board of directors. Her election increases the board of directors from six to seven members.

Equity assets were $80.2 billion at March 31, 2024, down $3.4 billion or 4% from $83.6 billion at March 31, 2023 and up $0.9 billion or 1% from $79.3 billion at Dec. 31, 2023. Top-selling equity funds during Q1 2024 on a net basis were Federated Hermes MDT Mid Cap Growth Fund, Federated Hermes MDT Large Cap Growth Fund, Federated Hermes U.S. SMID Equity Fund, Federated Hermes MDT All Cap Core Fund and Federated Hermes MDT Small Cap Core Fund.

Fixed-income assets were $96.3 billion at March 31, 2024, up $8.8 billion or 10% from $87.5 billion at March 31, 2023 and up $1.4 billion or 1% from $94.9 billion at Dec. 31, 2023. Top-selling fixed-income funds during Q1 2024 on a net basis were Federated Hermes Total Return Bond Fund, Federated Hermes Ultrashort Bond Fund, Federated Hermes Government Ultrashort Bond Fund, Federated Hermes Total Return Bond ETF and Federated Hermes Institutional High Yield Bond Fund.

Alternative/private markets assets were $20.5 billion at March 31, 2024, down $0.7 billion or 3% from $21.2 billion at March 31, 2023 and down $0.1 billion or less than 1% from $20.6 billion at Dec. 31, 2023.

Money market assets were a record $578.8 billion at March 31, 2024, up $73.0 billion or 14% from $505.8 billion at March 31, 2023 and up $18.8 billion or 3% from $560.0 billion at Dec. 31, 2023. Money market fund assets were a record $417.1 billion at March 31, 2024, up $59.8 billion or 17% from $357.3 billion at March 31, 2023 and up $10.9 billion or 3% from $406.2 billion at Dec. 31, 2023.

Financial Summary

Q1 2024 vs. Q1 2023

Revenue increased $14.2 million or 4% primarily due to an increase in revenue due to higher average money market assets. This increase was partially offset by a decrease in revenue due to lower average equity assets.

During Q1 2024, Federated Hermes derived 48% of its revenue from long-term assets (30% from equity, 12% from fixed-income, and 6% from alternative/private markets and multi-asset), 51% from money market assets, and 1% from sources other than managed assets.

Operating expenses increased $0.8 million.

Nonoperating income (expenses), net decreased $1.9 million or 26% due primarily to a smaller increase in the market value of investments in Q1 2024 compared to the increase in the market value of investments in Q1 2023. This decrease was partially offset by an increase in investment yields due to higher interest rates.

Q1 2024 vs. Q4 2023

Revenue increased $4.9 million or 1% primarily due to an increase in revenue from higher average money market, equity and fixed-income assets. These increases were partially offset by a decrease in carried interest and performance fees of $9.3 million, including a decrease of $4.9 million of carried interest from consolidated carried interest vehicles, which is offset in compensation expense, and a decrease in revenue due to one less day in Q1 2024.

Operating expenses increased $8.9 million or 3% due to increased compensation expense primarily due to higher incentive compensation, higher payroll taxes and an increase in distribution expense resulting primarily from higher average managed fund assets offset by a decrease in advertising and promotional expenses.

Nonoperating income (expenses), net decreased $9.3 million or 63% due primarily to a smaller increase in the market value of investments in Q1 2024 as compared to the increase in the market value of investments in Q4 2023.

Earnings call information

Federated Hermes will host an earnings conference call at 9 a.m. Eastern on Friday, April 26, 2024. Investors are invited to listen to the earnings teleconference by calling 888-506-0062 (domestic) or 973-528-0011 (international) prior to the 9 a.m. start time. To listen online, go to the About section of FederatedHermes.com/us at least 15 minutes prior to register and join the call. A replay will be available at approximately 12:30 p.m. Eastern on April 26, 2024. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 50336. The online replay will be available via FederatedHermes.com/us for one year.

About Federated Hermes

Federated Hermes, Inc. is a global leader in active, responsible investment management, with $778.7 billion in assets under management1. We deliver investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 10,000 institutions and intermediaries worldwide. Our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated Hermes has more than 2,000 employees in London, New York, Boston and offices worldwide.

Federated Hermes ranks in the top 7% of equity fund managers in the industry, the top 8% of money market fund managers and the top 11% of fixed-income fund managers2. Federated Hermes also ranks as the 8th-largest manager of model-delivered separately managed accounts3. For more information, including an analyst presentation, which is updated periodically, visit FederatedHermes.com/us.

###

1) As of March 31, 2024.
2) Morningstar, March 31, 2024. Based on U.S. fund flows rankings.
3) Money Management Institute/Cerulli,Q4 2023.

Federated Securities Corp. is distributor of the Federated Hermes funds.

Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Fund Managers Ireland Limited, Hermes Investment Management Limited, and Hermes GPE LLP, each a registered investment advisor in one or more of the U.S., U.K. or Ireland.

Cautionary statements

Certain statements in this press release, such as those related to performance, investor preferences and demand, asset flows, asset mix, interest rates and fee waivers constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements can include statements that do not relate strictly to historical or current facts and are typically identified by words or phrases such as “trend,” “forecast,” “project,” “predict,” “potential,” “approximate,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “projection,” “plan,” “assume,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “can,” “may” and similar expressions. Any forward-looking statement, and Federated Hermes’ level of business activity and financial results, are inherently subject to significant business, market, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond Federated Hermes’ control. Other risks and uncertainties include the ability of the company to predict the level of fee waivers and expenses in future quarters, predict whether performance fees or carried interest will be earned and retained, the ability of the company to sustain product demand, the timing and level of product sales and redemptions, market appreciation or depreciation, revenues, and asset levels, flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness, or updating, of such statements in the future.

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)

Quarter Ended

% Change
Q1 2023 to
Q1 2024

Quarter Ended

% Change
Q4 2023 to
Q1 2024

March 31, 2024

March 31, 2023

Dec. 31, 2023

Revenue

Investment advisory fees, net

$ 264,294

$ 263,982

0 %

$ 264,693

0 %

Administrative service fees, net—affiliates

94,786

79,180

90,930

Other service fees, net

37,291

39,027

(4)

35,874

Total Revenue

396,371

382,189

391,497

Operating Expenses

Compensation and related

136,546

136,878

127,504

Distribution

94,894

93,333

90,940

Systems and communications

21,823

19,972

20,944

Professional service fees

18,352

16,220

16,632

Office and occupancy

9,969

12,874

(23)

10,159

(2)

Advertising and promotional

4,306

4,342

(1)

9,684

(56)

Travel and related

3,273

3,231

4,308

(24)

Intangible asset related

3,235

3,326

(3)

3,676

(12)

Other

5,392

6,847

(21)

5,080

Total Operating Expenses

297,790

297,023

288,927

Operating Income

98,581

85,166

102,570

(4)

Nonoperating Income (Expenses)

Investment income (loss), net

8,483

10,312

(18)

17,418

(51)

Debt expense

(3,149)

(3,125)

(3,142)

Other, net

103

122

(16)

461

(78)

Total Nonoperating Income (Expenses), net

5,437

7,309

(26)

14,737

(63)

Income before income taxes

104,018

92,475

117,307

(11)

Income tax provision

29,008

21,009

31,260

(7)

Net income including the noncontrolling interests in subsidiaries

75,010

71,466

86,047

(13)

Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries

(23)

1,865

(101)

3,869

(101)

Net Income

$ 75,033

$ 69,601

8 %

$ 82,178

(9) %

Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share1

Basic and diluted

$ 0.89

$ 0.78

14 %

$ 0.96

(7) %

Weighted-Average Shares Outstanding

Basic

80,709

84,875

81,961

Diluted

80,710

84,875

81,973

Dividends Declared Per Share

$ 0.28

$ 0.27

$ 0.28

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of earnings per share under the “two-class method.” As such, total net income of $3.4 million, $3.5 million and $3.6 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended March 31, 2024, March 31, 2023 and Dec. 31, 2023, respectively, was excluded from the computation of earnings per share.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

March 31, 2024

Dec. 31, 2023

Assets

Cash and other investments

$ 558,532

$ 560,675

Other current assets

161,124

160,054

Intangible assets, net, including goodwill

1,210,073

1,216,605

Other long-term assets

157,243

164,510

Total Assets

$ 2,086,972

$ 2,101,844

Liabilities, Redeemable Noncontrolling Interests and Equity

Current liabilities

$ 212,499

$ 287,343

Long-term debt

347,909

347,843

Other long-term liabilities

306,007

312,561

Redeemable noncontrolling interests

73,130

25,845

Equity excluding treasury stock

1,695,050

1,649,655

Treasury stock

(547,623)

(521,403)

Total Liabilities, Redeemable Noncontrolling Interests and Equity

$ 2,086,972

$ 2,101,844

Unaudited Changes in Long-Term Assets – By Asset Class

(in millions)

Quarter Ended

March 31, 2024

Dec. 31, 2023

March 31, 2023

Equity

Beginning assets

$ 79,291

$ 77,315

$ 81,523

Sales1

3,915

3,335

5,631

Redemptions1

(7,351)

(8,005)

(4,736)

Net sales (redemptions)1

(3,436)

(4,670)

895

Net exchanges

(6)

103

Impact of foreign exchange2

(567)

891

108

Market gains and (losses)3

4,864

5,761

1,000

Ending assets

$ 80,157

$ 79,291

$ 83,629

Fixed Income

Beginning assets

$ 94,920

$ 89,765

$ 86,743

Sales1

6,583

7,594

6,047

Redemptions1

(5,395)

(6,669)

(7,127)

Net sales (redemptions)1

1,188

925

(1,080)

Net exchanges

(7)

(101)

Impact of foreign exchange2

(71)

143

Market gains and (losses)3

295

4,080

1,861

Ending assets

$ 96,325

$ 94,920

$ 87,461

Alternative/Private Markets

Beginning assets

$ 20,551

$ 20,337

$ 20,802

Sales1

761

700

1,265

Redemptions1

(740)

(755)

(792)

Net sales (redemptions)1

(55)

473

Net exchanges

(3)

Impact of foreign exchange2

(226)

836

368

Market gains and (losses)3

117

(564)

(470)

Ending assets

$ 20,465

$ 20,551

$ 21,174

Multi-asset

Beginning assets

$ 2,867

$ 2,728

$ 2,989

Sales1

Redemptions1

(112)

(142)

(144)

Net sales (redemptions)1

(68)

(108)

(97)

Net exchanges

Market gains and (losses)3

129

239

Ending assets

$ 2,928

$ 2,867

$ 2,973

Total Long-term Assets

Beginning assets

$ 197,629

$ 190,145

$ 192,057

Sales1

11,303

11,663

12,990

Redemptions1

(13,598)

(15,571)

(12,799)

Net sales (redemptions)1

(2,295)

(3,908)

191

Net exchanges

Impact of foreign exchange2

(864)

1,870

514

Market gains and (losses)3

5,405

9,516

2,470

Ending assets

$ 199,875

$ 197,629

$ 195,237

For certain accounts, including separately managed accounts, institutional accounts, certain sub-advised funds and other managed products, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

Reflects the impact of translating non-U.S. dollar denominated assets under management (AUM) into U.S. dollars for reporting purposes.

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

Unaudited Changes in Long-Term Assets – By Asset Class and Product Type

(in millions)

Quarter Ended

March 31, 2024

Equity

Fixed Income

Alternative / Private
Markets

Multi-asset

Total

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds.

Separate
Accounts1

Beginning assets

$ 42,513

$ 36,778

$ 43,908

$ 51,012

$ 12,379

$ 8,172

$ 2,730

$ 137

$ 101,530

$ 96,099

Sales

2,419

1,496

4,049

2,534

654

107

7,166

4,137

Redemptions

(4,069)

(3,282)

(3,484)

(1,911)

(569)

(171)

(108)

(4)

(8,230)

(5,368)

Net sales (redemptions)

(1,650)

(1,786)

565

623

(64)

(4)

(1,064)

(1,231)

Net exchanges

(5)

(2)

Impact of foreign exchange2

(235)

(332)

(46)

(25)

(139)

(87)

(420)

(444)

Market gains and (losses)3

2,782

2,082

236

131

(14)

123

3,095

2,310

Ending assets

$ 43,415

$ 36,742

$ 44,481

$ 51,844

$ 12,458

$ 8,007

$ 2,789

$ 139

$ 103,143

$ 96,732

Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

Unaudited Changes in Long-Term Assets – By Product Type

(in millions)

Quarter Ended

March 31, 2024

Dec. 31, 2023

March 31, 2023

Total Fund Assets

Beginning assets

$ 101,530

$ 98,378

$ 102,423

Sales

7,166

5,999

8,317

Redemptions

(8,230)

(9,578)

(8,491)

Net sales (redemptions)

(1,064)

(3,579)

(174)

Net exchanges

(7)

Impact of foreign exchange1

(420)

1,002

334

Market gains and (losses)2

3,095

5,736

1,622

Ending assets

$ 103,143

$ 101,530

$ 104,220

Total Separate Account Assets3

Beginning assets

$ 96,099

$ 91,767

$ 89,634

Sales4

4,137

5,664

4,673

Redemptions4

(5,368)

(5,993)

(4,308)

Net sales (redemptions)4

(1,231)

(329)

365

Net exchanges

(2)

(10)

Impact of foreign exchange1

(444)

868

180

Market gains and (losses)2

2,310

3,780

848

Ending assets

$ 96,732

$ 96,099

$ 91,017

Total Long-term Assets3

Beginning assets

$ 197,629

$ 190,145

$ 192,057

Sales4

11,303

11,663

12,990

Redemptions4

(13,598)

(15,571)

(12,799)

Net sales (redemptions)4

(2,295)

(3,908)

191

Net exchanges

Impact of foreign exchange1

(864)

1,870

514

Market gains and (losses)2

5,405

9,516

2,470

Ending assets

$ 199,875

$ 197,629

$ 195,237

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products.

For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

Unaudited Managed Assets

(in millions)

March 31, 2024

Dec. 31, 2023

Sept. 30, 2023

June 30, 2023

March 31, 2023

By Asset Class

Equity

$ 80,157

$ 79,291

$ 77,315

$ 82,992

$ 83,629

Fixed-income

96,325

94,920

89,765

87,425

87,461

Alternative / private markets

20,465

20,551

20,337

21,602

21,174

Multi-asset

2,928

2,867

2,728

2,922

2,973

Total long-term assets

199,875

197,629

190,145

194,941

195,237

Money market

578,811

559,993

525,085

509,017

505,800

Total Managed Assets

$ 778,686

$ 757,622

$ 715,230

$ 703,958

$ 701,037

By Product Type

Funds:

Equity

$ 43,415

$ 42,513

$ 40,801

$ 44,383

$ 44,732

Fixed-income

44,481

43,908

42,569

43,884

43,616

Alternative / private markets

12,458

12,379

12,409

13,338

13,040

Multi-asset

2,789

2,730

2,599

2,782

2,832

Total long-term assets

103,143

101,530

98,378

104,387

104,220

Money market

417,102

406,166

384,896

364,014

357,346

Total Fund Assets

$ 520,245

$ 507,696

$ 483,274

$ 468,401

$ 461,566

Separate Accounts:

Equity

$ 36,742

$ 36,778

$ 36,514

$ 38,609

$ 38,897

Fixed-income

51,844

51,012

47,196

43,541

43,845

Alternative / private markets

8,007

8,172

7,928

8,264

8,134

Multi-asset

139

137

129

140

141

Total long-term assets

96,732

96,099

91,767

90,554

91,017

Money market

161,709

153,827

140,189

145,003

148,454

Total Separate Account Assets

$ 258,441

$ 249,926

$ 231,956

$ 235,557

$ 239,471

Total Managed Assets

$ 778,686

$ 757,622

$ 715,230

$ 703,958

$ 701,037

Unaudited Average Managed Assets

Quarter Ended

(in millions)

March 31, 2024

Dec. 31, 2023

Sept. 30, 2023

June 30, 2023

March 31, 2023

By Asset Class

Equity

$ 78,969

$ 76,009

$ 82,203

$ 83,025

$ 84,155

Fixed-income

95,791

91,927

88,677

87,504

88,209

Alternative / private markets

20,485

20,623

21,413

21,411

20,938

Multi-asset

2,874

2,744

2,861

2,929

3,012

Total long-term assets

198,119

191,303

195,154

194,869

196,314

Money market

578,383

536,727

516,046

510,418

483,083

Total Avg. Managed Assets

$ 776,502

$ 728,030

$ 711,200

$ 705,287

$ 679,397

By Product Type

Funds:

Equity

$ 42,355

$ 40,296

$ 43,687

$ 44,218

$ 45,055

Fixed-income

43,857

42,705

43,437

43,827

43,961

Alternative / private markets

12,377

12,571

13,184

13,181

13,062

Multi-asset

2,739

2,615

2,724

2,787

2,869

Total long-term assets

101,328

98,187

103,032

104,013

104,947

Money market

414,902

392,946

373,088

362,608

333,358

Total Avg. Fund Assets

$ 516,230

$ 491,133

$ 476,120

$ 466,621

$ 438,305

Separate Accounts:

Equity

$ 36,614

$ 35,713

$ 38,516

$ 38,807

$ 39,100

Fixed-income

51,934

49,222

45,240

43,677

44,248

Alternative / private markets

8,108

8,052

8,229

8,230

7,876

Multi-asset

135

129

137

142

143

Total long-term assets

96,791

93,116

92,122

90,856

91,367

Money market

163,481

143,781

142,958

147,810

149,725

Total Avg. Separate Account Assets

$ 260,272

$ 236,897

$ 235,080

$ 238,666

$ 241,092

Total Avg. Managed Assets

$ 776,502

$ 728,030

$ 711,200

$ 705,287

$ 679,397

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SOURCE Federated Hermes, Inc.

Federated Hermes, Inc. reports first quarter 2024 earnings of $0.89; Board declares cash dividend of $1.31 ($0.31 quarterly and $1.00 special)

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Federated Hermes, Inc. reports first quarter 2024 earnings of $0.89; Board declares cash dividend of $1.31 ($0.31 quarterly and $1.00 special)

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