Waddell & Reed Financial Inc. (WDR) Tuesday said its first quarter profit plunged from the prior year on lower revenues and on non-cash charges related to impairment of investments in affiliated mutual funds.
First quarter net income of Overland Park, Kansas-based Waddell & Reed dropped to $15.47 million or $0.18 per share from $28.34 million or $0.33 per share in the same quarter a year ago.
Quarterly results include a non-cash charge of $3.7 million, or $2.3 million net of taxes or $0.03 per share, for other-than-temporary impairment of certain of the company's investments in affiliated mutual funds. New accounting standard adopted also resulted in a $0.01 per share decline in first quarter earnings.
Excluding items, net income would have been $17.8 million or $0.22 per share, compared to $28.3 million or $0.33 per share in the prior-year quarter.
On average, eleven analysts polled by Thomson Reuters expected earnings of $0.20per share for the quarter. Analysts' estimates typically exclude one-time items.
Total operating revenues for the quarter plunged to $176.67 million from $234.07 million in the comparable quarter a year ago, below Street estimates of $185.47 million.
In the sequentially preceding fourth quarter, Waddell & Reed Financial slipped to a loss of $0.73 million or $0.01 per share on revenues that dropped to $191.04 million from $236.12 million in the same quarter a year ago.
Investment and management fees of the quarter under review declined 31.07% to $70.98 million, and underwriting and distribution fees decreased 23.9% to $80.72 million, while shareholder service fees remained almost constant at $24.98 million, compared to the corresponding quarter a year ago.
Total operating expenses decreased to $145.85 million from $187.93 million in the comparable quarter a year ago. Operating income was $30.83 million, compared to $46.14 million in the year-earlier quarter. Operating margin was 17.4%, compared to 19.7% in the same quarter of the last year.
Investment and other losses included a non-cash charge of $3.7 million to reflect the "other than temporary" impairment of certain investments in affiliated mutual funds, offset by gains on mutual fund trading portfolio and interest on invested cash.
WDR is currently trading at $22.19, up $0.05 or 0.23%, on a volume of 1.34 million shares.
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