Investment management company Eaton Vance Corp. (EV) on Wednesday reported a 20 percent increase in profit for the second quarter, reflecting strong increase in net inflows and higher fee revenue. However, revenue missed analysts' expectations, while adjusted earnings per share matched their estimates.
Thomas Faust, Chairman and CEO of Eaton Vance said, "Strong net flows and favorable market action propelled Eaton Vance to solid growth in our second fiscal quarter. Higher managed assets across a range of investment categories position the Company for continued progress."
Net inflows into long-term funds and separate accounts during the the latest quarter were $6.6 billion, compared to net inflows of $0.6 billion in the year-ago quarter. The sharp improvement year-over-year reflects strong net inflows into floating-rate income and alternative mandates as well as improved equity net flows.
The Boston, Massachusetts-based asset manager's net income for the second quarter was $63.68 million or $0.50 per share, up from $52.87 million or $0.44 per share in the prior-year quarter.
The latest quarter's results include adjustments in connection with increases in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value. The results also include closed-end fund structuring fees recognized in connection with the $205 million initial public offering of Eaton Vance Municipal Income Term Trust during the quarter.
Adjusted net income for the quarter was $66.02 million or $0.52 per share, compared to $53.97 million or $0.45 per share in the year-ago period. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts estimate typically excludes one-time special items.
Revenue for the quarter rose 9 percent to $331.69 million from $304.77 million in the same quarter last year, but missed analysts' consensus estimate of $335.51 million.
Eaton's investment advisory and administration fees rose 11 percent from the prior-year period, reflecting a 30 percent increase in average consolidated assets under management and lower average effective fee rates, primarily as a result of the full quarter impact of the Clifton acquisition.
Distribution and service fees declined 2 percent on a combined basis, reflecting lower managed assets in fund share classes that are subject to distribution and service fees.
Operating margin for the quarter increased to 33 percent from 32 percent in the year-ago period.
Eaton's assets under management as at the end of the quarter was $260.3 billion, up 32 percent from $197.5 billion of managed assets as at the end of the prior-year quarter.
The year-over-year increase in ending assets under management reflects the $34.8 billion of managed assets gained in the December 2012 acquisition of the former Clifton Investment Management Co. by subsidiary Parametric Portfolio Associates LLC, twelve-month net inflows of $12.7 billion and market price appreciation of $15.4 billion.
In Wednesday's regular session, EV is trading at $43.78, up $0.03 or 0.08 percent on a volume of 22,806 shares.
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