PITTSBURGH, Jan. 30, 2025 /PRNewswire/ — Federated Hermes, Inc. (NYSE: FHI), a global leader in active investing, today reported earnings per diluted share (EPS) for Q4 2024 of $1.04, compared to $0.96 for the same quarter last year, on net income of $84.7 million for Q4 2024, compared to $82.2 million for Q4 2023. Full-year 2024 EPS was $3.23, compared to $3.40 for 2023 on net income of $268.3 million for 2024, compared to $299.0 million for 2023. Federated Hermes’ full-year 2024 results include a $66.3 million non-cash expense, or ($0.73) per diluted share, related to the Q2 2024 impairment of an indefinite-lived intangible asset.
Federated Hermes’ total managed assets were a record $829.6 billion at Dec. 31, 2024, up $72.0 billion or 10% from $757.6 billion at Dec. 31, 2023 and up $29.1 billion or 4% from $800.5 billion at Sept. 30, 2024. Average managed assets for Q4 2024 were $804.4 billion, up $76.4 billion or 10% from $728.0 billion reported for Q4 2023 and up $10.9 billion or 1% from $793.5 billion reported for Q3 2024.
“Federated Hermes’ record assets at year-end were driven by another quarter of money market asset increases, as all segments of our liquidity products offered exceptional cash management resources, as well as opportunities for attractive returns in balanced client portfolios,” said J. Christopher Donahue, president and chief executive officer. “We also continued to see investor interest in a range of fixed-income strategies, from multisector to ultrashorts to emerging market debt. In equities, we saw net positive flows into the full range of our quantitative MDT equity products—in large-, mid- and small-cap funds and ETFs.”
Federated Hermes’ board of directors declared a quarterly dividend of $0.31 per share. The dividend is payable on Feb. 14, 2025 to shareholders of record as of Feb. 7, 2025. During Q4 2024, Federated Hermes purchased 552,533 shares of Federated Hermes class B common stock for $22.1 million, bringing the total shares of Class B common stock purchased in 2024 to 4,012,017 shares for $133.6 million.
Federated Hermes’ equity assets were $79.4 billion at Dec. 31, 2024, up $0.1 billion from $79.3 billion at Dec. 31, 2023 and down $4.2 billion or 5% from $83.6 billion at Sept. 30, 2024. Top-selling equity funds on a net basis during Q4 2024 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 U.S. Strategic Dividend ETF.
Federated Hermes’ fixed-income assets were $98.1 billion at Dec. 31, 2024, up $3.2 billion or 3% from $94.9 billion at Dec. 31, 2023 and down $2.1 billion or 2% from $100.2 billion at Sept. 30, 2024. Top-selling fixed-income funds on a net basis during Q4 2024 were Federated Hermes Total Return Bond Fund, Federated Hermes Government Ultrashort Fund, Federated Hermes Emerging Markets Debt Fund, Federated Hermes Short-Term Income Fund and Federated Hermes Conservative Municipal Microshort Fund.
Federated Hermes’ alternative/private markets assets were $18.9 billion at Dec. 31, 2024, down $1.7 billion or 8% from $20.6 billion at Dec. 31, 2023 and down $1.8 billion or 9% from $20.7 billion at Sept. 30, 2024.
Federated Hermes’ money market assets were a record $630.3 billion at Dec. 31, 2024, up $70.3 billion or 13% from $560.0 billion at Dec. 31, 2023 and up $37.3 billion or 6% from $593.0 billion at Sept. 30, 2024. Money market mutual fund assets were a record $461.7 billion at Dec. 31, 2024, up $55.5 billion or 14% from $406.2 billion at Dec. 31, 2023 and up $21.3 billion or 5% from $440.4 billion at Sept. 30, 2024. Federated Hermes’ money market separate account assets were a record $168.6 billion at Dec. 31, 2024, up $14.8 billion or 10% from $153.8 billion at Dec. 31, 2023 and up $16.0 billion or 10% from $152.6 billion at Sept. 30, 2024.
Financial Summary
Q4 2024 vs. Q4 2023
Revenue increased $33.2 million or 8% primarily due to an increase in revenue from higher average money market and equity assets.
During Q4 2024, Federated Hermes derived 51% of its revenue from money market assets, 48% from long-term assets (29% from equity assets, 12% from fixed-income assets and 7% from alternative/private markets and multi-asset) and 1% from sources other than managed assets.
Operating expenses increased $25.3 million or 9% primarily due to an increase in compensation expense primarily from higher incentive compensation, an increase in distribution expenses resulting primarily from higher average managed money market and equity fund assets and an increase in other expense resulting primarily from fluctuations in foreign currency exchange rates.
Nonoperating income (expenses), net decreased $12.8 million primarily due to a decrease in the market value of investments in Q4 2024 compared to an increase in the market value of investments in Q4 2023.
Q4 2024 vs. Q3 2024
Revenue increased $16.2 million or 4% primarily due to an increase in revenue from higher average equity and money market assets.
Operating expenses increased $17.5 million or 6% primarily due to an increase in other expense resulting primarily from fluctuations in foreign currency exchange rates, an increase in advertising and promotional expenses and an increase in distribution expenses resulting primarily from higher average managed money market fund assets.
Nonoperating income (expenses), net decreased $9.0 million primarily due to a decrease in the market value of investments in Q4 2024 compared to an increase in the market value of investments in Q3 2024.
2024 vs. 2023
Revenue increased $22.5 million or 1% primarily due to an increase in revenue from higher average money market and fixed-income assets. These increases were partially offset by a decrease in carried interest of $50.0 million, including a decrease of $32.3 million of carried interest from consolidated carried interest vehicles, which is offset in compensation expense, and a decrease in revenue due to lower average equity and alternative/private markets assets.
During 2024, Federated Hermes derived 51% of its revenue from money market assets, 48% from long-term assets (29% from equity assets, 12% from fixed-income assets and 7% from alternative/private markets and multi-asset) and 1% from sources other than managed assets.
Operating expenses increased by $48.6 million or 4% primarily due to a $66.3 million increase in intangible asset-expense resulting from the impairment of an intangible asset in Q2 2024 associated with the 2018 acquisition of Federated Hermes Limited, offset by a decrease in compensation expense primarily resulting from the previously mentioned lower carried interest from consolidated carried interest vehicles.
Nonoperating income (expenses), net decreased $3.6 million primarily due to a smaller increase in the market value of investments in 2024 compared to the increase in the market value of investments in 2023. This decrease was partially offset by an increase in investment income from larger investment balances and an increase in yields due to higher interest rates.
Earnings call information
Federated Hermes will host an earnings conference call at 9 a.m. Eastern on Jan. 31, 2025. 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, visit 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 Jan. 31, 2025. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 51862. 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 $829.6 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, the top 9% of money market fund managers and the top 10% of fixed-income fund managers2 in the industry. For more information, including an analyst presentation, visit FederatedHermes.com/us.
###
1) As of Dec. 31, 2024.
2) Morningstar, Dec. 31, 2024. Based on U.S. fund flows rankings.
Federated Securities Corp. is distributor of the Federated Hermes funds.
Certain statements in this press release, such as those related to performance, investment strategies and uses, investor preferences and demand, asset flows and asset mix 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
Q4 2023 to
Q4 2024
Quarter Ended
% Change Q3
2024 to Q4
2024
Dec. 31, 2024
Dec. 31, 2023
Sept. 30, 2024
Revenue
Investment advisory fees, net
$ 288,329
$ 264,693
9 %
$ 274,621
5 %
Administrative service fees, net
99,711
90,930
10
97,687
2
Other service fees, net
36,643
35,874
2
36,148
1
Total Revenue
424,683
391,497
8
408,456
4
Operating Expenses
Compensation and related
137,165
127,504
8
136,027
1
Distribution
98,070
90,940
8
95,859
2
Systems and communications
23,843
20,944
14
23,656
1
Professional service fees
20,307
16,632
22
19,849
2
Office and occupancy
10,328
10,159
2
9,884
4
Advertising and promotional
7,785
9,684
(20)
5,378
45
Travel and related
4,058
4,308
(6)
4,221
(4)
Intangible asset related
3,230
3,676
(12)
3,504
(8)
Other
9,470
5,080
86
(1,664)
NM
Total Operating Expenses
314,256
288,927
9
296,714
6
Operating Income
110,427
102,570
8
111,742
(1)
Nonoperating Income (Expenses)
Investment income (loss), net
5,037
17,418
(71)
14,015
(64)
Debt expense
(3,187)
(3,142)
1
(3,170)
1
Other, net
54
461
(88)
16
238
Total Nonoperating Income (Expenses), net
1,904
14,737
(87)
10,861
(82)
Income before income taxes
112,331
117,307
(4)
122,603
(8)
Income tax provision
28,477
31,260
(9)
32,262
(12)
Net income including the noncontrolling interests in subsidiaries
83,854
86,047
(3)
90,341
(7)
Less: Net (loss) income attributable to the noncontrolling interests in subsidiaries
(862)
3,869
(122)
2,803
(131)
Net Income
$ 84,716
$ 82,178
3 %
$ 87,538
(3) %
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic and diluted
$ 1.04
$ 0.96
8 %
$ 1.06
(2) %
Weighted-Average Shares Outstanding
Basic
78,300
81,961
78,690
Diluted
78,300
81,973
78,706
Dividends Declared Per Share
$ 0.31
$ 0.28
$ 0.31
1)
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 $3.6 million, $3.6 million and $3.7 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended Dec. 31, 2024, Dec. 31, 2023 and Sept. 30, 2024, respectively, was excluded from the computation of earnings per share.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Year Ended
Dec. 31, 2024
Dec. 31, 2023
% Change
Revenue
Investment advisory fees, net
$ 1,097,866
$ 1,115,783
(2) %
Administrative service fees, net—affiliates
387,531
343,332
13
Other service fees, net
146,696
150,459
(3)
Total Revenue
1,632,093
1,609,574
1
Operating Expenses
Compensation and related
540,486
563,388
(4)
Distribution
382,327
371,198
3
Systems and communications
92,515
84,203
10
Intangible asset related
79,361
13,870
472
Professional service fees
78,353
69,514
13
Office and occupancy
39,946
45,069
(11)
Advertising and promotional
24,090
22,992
5
Travel and related
15,399
15,409
0
Other
18,149
36,382
(50)
Total Operating Expenses
1,270,626
1,222,025
4
Operating Income
361,467
387,549
(7)
Nonoperating Income (Expenses)
Investment income (loss), net
32,668
35,740
(9)
Debt expense
(12,665)
(12,519)
1
Other, net
139
562
(75)
Total Nonoperating Income (Expenses), net
20,142
23,783
(15)
Income before income taxes
381,609
411,332
(7)
Income tax provision
113,179
106,551
6
Net income including the noncontrolling interests in subsidiaries
268,430
