Investment manager Artio Global Investors Inc. (ART), Tuesday said its first quarter net income nearly doubled, as revenues climbed 23% on higher investment management income following a 24% increase in assets under management.
The New York-based company's fourth-quarter net income increased to $25.7 million or $0.56 per share from $13.2 million or $0.32 per share a year ago. Artio had reported a net loss of $412.4 million or $9.81 per share for the third quarter of 2009.
On a non-GAAP basis, Artio's net income increased to $36.1 million or $0.60 per share from $22.2 million or $0.37 per share in the prior-year quarter. Adjusted net income for the third quarter of 2009 was $28 million or $0.47 per share.
On average, five analysts polled by Thomson Reuters estimated earnings of $0.46 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the fourth quarter increased 23% to $89.6 million from $72.6 million in the fourth quarter of 2008. The increase in fourth-quarter revenue was driven primarily by higher investment management fees, which climbed 21% to $89.3 million, due to higher average assets under management and an increase in the effective fee rate to 64.5 basis points from 62.1 basis points. Three Wall Street analysts expected the company to report revenues of $89.76 million for the quarter. In the sequential third quarter, the company had reported revenues of $84.5 million.
Commenting on the results, Richard Pell, chief executive officer of Artio, said, "For our first full quarter as a public company we are pleased to report strong growth in adjusted net income, both sequentially and compared to the year-ago quarter. Revenues benefited from strong market appreciation over the quarter, while lower compensation costs, resulting mainly from the modification of our deferred compensation plan, were the primary driver of lower operating expenses."
Operating income for the quarter under review increased 127% to $53.2 million from $23.5 million in the similar quarter last year. On an adjusted basis, operating income rose 47% to $57.4 million from $39 million in the year-earlier quarter.
Artio reported significant increase in assets under management during the fourth quarter, mainly on market appreciation of $10.5 billion in 2009. Total assets under management by the company climbed 24% to $56 billion at December 31, 2009 from $10.8 billion at December 31, 2008, due primarily to market appreciation of $10.5 billion in 2009. At the end of the third quarter, the company had assets under management of $55.8 billion.
Net client cash outflows for the fourth quarter declined to $1 billion from $2 billion in the fourth quarter of 2008. This was driven primarily by reduced net client cash outflows from the International Equity I strategy, net client cash inflows to the High Grade Fixed Income strategy compared with net client cash outflows in the fourth quarter of 2008, and higher net client cash inflows to the High Yield strategy, Artio noted.
The overall decrease in net client cash outflows were offset by net client cash outflows from the International Equity II strategy in the fourth quarter, which primarily resulted from a partial redemption of $0.8 billion by a sub-advisory client, compared with net client cash inflows in the fourth quarter of 2008. Artio had net client cash inflows of $0.3 billion for the third quarter of 2009.
The decrease in net client cash flows relates primarily to net client cash outflows from the International Equity II strategy in the fourth quarter of 2009, which primarily resulted from a partial redemption of approximately $0.8 billion by a sub-advisory client, compared with net client cash inflows in the third quarter of 2009.
General and administrative expenses for the fourth quarter declined 37% to $9.5 million, mainly on a lease reserve recorded in the fourth quarter of 2008, lower client-related trading errors and professional fees in the fourth quarter, and the absence of license fees paid to the former parent company, which ceased following the initial public offering of Artio.
For full year 2009, Artio had a net loss of $378.3 million or $8.88 per share, compared to a net income of $61.2 million or $1.46 per share in 2008. Revenue for the period declined 27% to $307.4 million from $422 million. The decrease in revenue was due to lower investment management fees, which fell 28% to $305.3 million, following a decline in average assets under management.
Artio would pay a dividend of $0.06 per share on the Class A and Class C common stock for the fourth quarter on February 24, 2010 to common shareholders of record as of the close of business on February 10, 2010.
ART is gaining $0.95 or 3.95%, and is currently trading at $25.01 on a volume of 73 thousand shares on the New York Stock Exchange.
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