Federated Hermes, Inc.‘s FHI second-quarter 2026 earnings per share of $1.38 topped the Zacks Consensus Estimate of $1.19. The bottom line grew 19% from the year-ago quarter.
Higher net investment advisory fees, net administrative service fees, and net other service fees, along with record assets under management (AUM), drove the quarterly performance. The acquisition of a majority stake in U.S. real estate manager FCP Fund Manager, L.P. during the quarter enhanced revenues, strengthened FHI’s private markets capabilities, and increased alternative assets under management. However, the rise in operating expenses remained a headwind.
Net income was $104.3 million in the second quarter, up 14.6% from the year-ago quarter.
FHI’s Revenues Increase, Expenses Rise
Total revenues increased 18% year over year to $502.8 million. The top line surpassed the Zacks Consensus Estimate by 1.7%. The acquisition of FCP Fund Manager contributed $13.9 million to the company’s revenues during the quarter.
Quarterly net investment advisory fees rose 17% year over year to $337.7 million.
Net other service fees grew 54% year over year to $54.9 million. Net administrative service fees rose 8% to $110.1 million.
In the second quarter, Federated Hermes derived 50% of its revenues from money-market assets, 48% from long-term assets (30% from equity, 10% from fixed income, and 8% from alternative/private markets and multi-asset), and 2% from sources other than managed assets.
Total operating expenses increased 20% year over year to $369.9 million. The rise was primarily due to higher distribution, compensation, professional service, and other expenses, including acquisition-related costs associated with the FCP Fund Manager, L.P. transaction.
FHI recorded a net non-operating income of $11.1 million, down 19% year over year, mainly due to lower interest and dividend income.
Federated Hermes’ Balance Sheet Position
As of June 30, 2026, cash and other investments and total long-term debt were $480.7 million and $348.5 million, respectively. Cash and other investments and total long-term debt were $645.4 million and $348.4 million, respectively, as of March 31, 2026.
FHI’s Asset Position Improves
As of June 30, 2026, total managed assets were at a record level of $911.6 billion, up 7.8% year over year.
Money-market assets totaled $676.9 billion, rising 6.7% year over year, while fixed-income assets increased 1.8% to $100.5 billion.
Equity assets of $109.6 billion increased 23.1% from the prior-year quarter, while alternative/private market assets increased 4.4% to $21.6 billion, primarily reflecting $3.2 billion of assets acquired through the FCP transaction.
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