Waddell & Reed Financial, Inc. (NYSE: WDR) today reported
second quarter 2020 net income1 of $24.8 million, or $0.38 per
diluted share, compared to net income of $22.0 million, or $0.32
per diluted share, during the prior quarter and net income of $33.9
million, or $0.45 per diluted share, during the second quarter of
2019.
Philip J. Sanders, Chief Executive Officer of Waddell & Reed
Financial, Inc. shared, “Despite the continued challenging
circumstances as we navigate the global pandemic, our teams have
remained focused on delivering quality service to our clients and
affiliated advisors every day while executing on the key components
of our long-term vision and growth strategy. We continue to make
measurable progress in a number of key areas of our strategy, while
maintaining a strong financial profile.”
Highlights
- Significant progress in wealth management transformation
continued, with enhanced focus on recruiting, improving operating
metrics and additional growth opportunities
- Since January 1, 2020, 21 advisors have affiliated with Waddell
& Reed with combined prior firm assets under administration
(AUA) totaling $1.4 billion. Advisor count inflected modestly,
stabilizing at 1,317 affiliated advisors and advisor associates at
June 30, 2020.
- Advisory AUA net flows were positive for the 6th straight
quarter despite a challenging market backdrop, illustrating the
wealth manager’s ability to capture assets through market
cycles.
- Launched the second phase of our wealth management technology
transformation, ONESource, which seamlessly connects data across
platforms for advisors, and ONEService, a digital repository of
processes, procedures and other information available to all
advisors.
- Introduced a High Net Worth suite of products and services as
well as a new Separately Managed Account Strategies product
offering.
- For Ivy Investments, assets under management (AUM) rebounded
along with the broader markets in addition to meaningful
improvement in net outflows resulting from lower redemptions
- Introduced two additional strategies in a model-delivery
format, bringing the total offering to nine strategies.
- As a result of changes stemming from ongoing strategic
evaluation of Ivy fund fees, 76% of AUM is now priced at or below
its respective peer median.
- Balance sheet a continued source of strength – maintained
significant liquidity while continuing active capital return
program and flexibility for organic and inorganic growth
opportunities.
- Hired two executives focused on strategic growth – one to
support the buildout of enterprise-wide data analytics and related
capabilities, and one to support M&A origination, evaluation,
and integration.
Financial Summary
The second quarter of 2020 included $12.7 million, or $0.15 per
share, of unrealized gains on our investment portfolio within the
investment and other (loss) income line compared to $11.0 million,
or $0.12 per share, of unrealized losses during the prior quarter
and $5.1 million, or $0.05 per share, of unrealized gains during
the second quarter of 2019.
Revenues totaled $240.0 million for the quarter, a decrease of
$23.7 million and $30.1 million, compared to the prior quarter and
the second quarter of 2019, respectively. Operating expenses of
$216.4 million decreased $7.9 million and $12.5 million, compared
to the first quarter of 2020 and the second quarter of 2019,
respectively. The operating margin was 9.8% during the current
quarter, compared to 14.9% and 15.3% during the prior quarter and
the second quarter of 2019, respectively.
AUM ended the quarter at $65.0 billion, an increase of 16%
compared to the prior quarter primarily due to market appreciation
and a decrease of 10% compared to the second quarter of 2019.
Average AUM were $61.7 billion during the current quarter, compared
to $66.1 billion during the prior quarter and $71.4 billion during
the second quarter of 2019. Net outflows of $1.4 billion during the
current quarter were lower compared to net outflows of $2.3 billion
and $2.4 billion in the prior quarter and second quarter of 2019,
respectively. Sales of $2.2 billion during the current quarter
decreased 13% compared to the prior quarter as second quarter is
generally seasonally lower. Sales increased 3% compared to the
second quarter of 2019. Redemptions were 24% and 19% lower compared
to the prior quarter and second quarter of 2019, respectively.
Wealth management AUA ended the quarter at $59.0 billion, an
increase of 14% and 3%, compared to the first quarter of 2020 and
the second quarter of 2019, respectively. Average AUA were $56.4
billion during the current quarter, compared to $57.8 billion
during the prior quarter and $56.4 billion during the second
quarter of 2019. Net new advisory assets were $189.2 million and
advisory products continue to drive the majority of new sales.
Brokerage asset flows continue to be negative, however, to a lesser
extent compared to the prior quarter and the same quarter in 2019.
In addition, market appreciation was stronger compared to both the
first quarter of 2020 and second quarter of 2019. Starting in the
second quarter of 2020, we updated our definition of net new AUA to
include dividends and interest for consistency with peers and have
reflected this new definition for all periods presented.
Revenues Analysis
Investment management fees decreased $9.4 million, or 9%,
compared to the first quarter of 2020 due to a 7% decrease in
average AUM and a lower effective management fee rate, partially
offset by one more day in the quarter. The effective management fee
rate for the current quarter was 64.5 basis points and decreased
compared to the prior quarter’s rate due to a shift in product mix
as well as targeted fee reductions implemented in the quarter on
our large cap growth and core bond products. Compared to the second
quarter of 2019, investment management fees declined $17.0 million,
or 15%, primarily due to lower average AUM and a lower effective
management fee rate due to the previously mentioned fee
reductions.
Underwriting and distribution fees decreased $13.3 million, or
10%, compared to the prior quarter due to lower advisory fees and
lower service and distribution fees due to lower asset levels. In
addition, sales commissions were $5.7 million lower compared to the
prior quarter as a result of slower sales activity across insurance
product lines. Compared to the same quarter in 2019, underwriting
and distribution fees decreased $9.9 million, or 7%, due to lower
sales commissions and lower service and distribution fees from
lower asset levels, partially offset by an increase in advisory
fees as a result of the ongoing shift in sales towards advisory
products.
Shareholder service fees decreased $1.0 million, or 5%, compared
to the first quarter of 2020 primarily due to a decrease in average
assets. Compared to the second quarter of 2019, shareholder service
fees declined $3.2 million, or 14%, due to a decrease in average
assets and fewer accounts. There was also a reduction in fund
reimbursements related to the outsourcing of our transfer agency
transactional processing operations and a corresponding reduction
in costs.
Operating Expenses Analysis
Distribution expenses decreased $12.2 million, or 10%, compared
to the prior quarter and decreased $8.6 million, or 7%, compared to
the second quarter of 2019. The decrease compared to both periods
is a result of the decrease in underwriting and distribution
revenue from lower asset levels and insurance product sales.
Compensation and benefits expense increased $3.4 million, or 6%,
compared to the prior quarter primarily due to mark-to-market
adjustments on equity compensation and deferred compensation plans.
Compensation and benefits was consistent with the second quarter of
2019, as lower headcount was offset by higher equity compensation
due to mark-to-market adjustments.
General and administrative expenses increased $1.9 million, or
10%, compared to the first quarter of 2020 due to increased
strategic project spending. Compared to the same quarter in 2019,
general and administrative expenses increased $4.5 million, or 28%,
due to a shift of our transfer agency transactional processing
operations costs from technology expenses to general and
administrative expenses as a result of outsourcing and increased
strategic project spending, partially offset by lower travel and
meetings costs.
Technology costs increased $0.7 million, or 5%, compared to the
prior quarter primarily due to increased software costs for new
technologies. Technology costs decreased $2.2 million, or 13%,
compared to the second quarter of 2019 as costs related to the
transfer agency transactional processing operations outsourcing
were shifted to general and administrative expenses. This decrease
was partially offset by increased consulting and software costs for
new technologies.
Occupancy expenses decreased $0.4 million, or 9%, compared to
the prior quarter and decreased $2.4 million, or 36%, compared to
the second quarter of 2019. For both comparative periods, occupancy
costs decreased as a result of the planned transition of corporate
field offices to independent financial advisors associated with our
wealth manager.
Marketing and advertising expenses decreased $0.8 million, or
41%, compared to the prior quarter and decreased $1.3 million, or
53%, compared to the second quarter of 2019. For both comparative
periods, marketing and advertising expenses decreased due to lower
sponsorship fees in connection with the ongoing shift to virtual
industry conferences.
Depreciation expense declined slightly compared to the prior
quarter and declined $2.0 million, or 39%, compared to the second
quarter of 2019 due to capitalized software development assets
becoming fully depreciated.
Investment and Other Income (Loss)
Investment and other income for the second quarter was $15.1
million compared to investment and other losses of $7.7 million in
the prior quarter. The $22.9 million increase is primarily due to
unrealized gains, net of hedging activity, on the seed and
corporate investment portfolios. Compared to the second quarter of
2019, investment and other income increased $6.1 million due to
unrealized gains, net of hedging activity, on the seed and
corporate investment portfolios, partially offset by a decline in
interest income for the corporate investment portfolio due to lower
interest rates.
The effective tax rate was 25.3% for the quarter compared to
32.0% in the prior quarter and 29.1% in the second quarter of 2019.
The primary driver of the lower tax rate is the impact of market
volatility on our estimated pre-tax income for the remainder of
2020 which resulted in a decrease in our annualized effective tax
rate during the second quarter of 2020.
__________________
1 Net income represents net income attributable to Waddell &
Reed Financial, Inc.
AUM
(in millions)
Three Months Ended
Jun. 30,
Mar. 31,
Jun. 30,
Prior Qtr.
Year-over-Year Qtr.
2020
2020
2019
Change
%
Change
%
Unaffiliated 1
Beginning assets
$
20,244
$
26,264
$
27,506
$
(6,020
)
(23
)
%
$
(7,262
)
(26
)
%
Sales 2
1,490
1,581
1,291
(91
)
(6
)
%
199
15
%
Redemptions
(2,179
)
(3,019
)
(2,441
)
840
28
%
262
11
%
Net exchanges
205
326
303
(121
)
(37
)
%
(98
)
(32
)
%
Net Flows
(484
)
(1,112
)
(847
)
628
56
%
363
43
%
Market action
3,964
(4,908
)
886
8,872
181
%
3,078
347
%
Ending assets
$
23,724
$
20,244
$
27,545
$
3,480
17
%
$
(3,821
)
(14
)
%
Annualized organic growth rate
(9.6
)
%
(16.9
)
%
(12.3
)
%
Annualized redemption rate 3
39.9
%
50.9
%
36.7
%
Institutional
Beginning assets
$
2,427
$
3,096
$
4,053
$
(669
)
(22
)
%
$
(1,626
)
(40
)
%
Sales 2
52
43
54
9
21
%
(2
)
(4
)
%
Redemptions
(202
)
(179
)
(440
)
(23
)
(13
)
%
238
54
%
Net exchanges
22
—
25
22
NM
(3
)
(12
)
%
Net Flows
(128
)
(136
)
(361
)
8
6
%
233
65
%
Market action
698
(533
)
195
1,231
231
%
503
258
%
Ending assets
$
2,997
$
2,427
$
3,887
$
570
23
%
$
(890
)
(23
)
%
Annualized organic growth rate
(21.1
)
%
(17.6
)
%
(35.6
)
%
Annualized redemption rate 3
28.6
%
24.9
%
46.1
%
Wealth Management
Beginning assets
$
33,339
$
40,598
$
40,095
$
(7,259
)
(18
)
%
$
(6,756
)
(17
)
%
Sales 2
649
895
789
(246
)
(27
)
%
(140
)
(18
)
%
Redemptions
(1,259
)
(1,588
)
(1,609
)
329
21
%
350
22
%
Net exchanges
(227
)
(326
)
(328
)
99
30
%
101
31
%
Net Flows
(837
)
(1,019
)
(1,148
)
182
18
%
311
27
%
Market action
5,743
(6,240
)
1,497
11,983
192
%
4,246
284
%
Ending assets
$
38,245
$
33,339
$
40,444
$
4,906
15
%
$
(2,199
)
(5
)
%
Annualized organic growth rate
(10.0
)
%
(10.0
)
%
(11.5
)
%
Annualized redemption rate 3
11.6
%
14.6
%
13.8
%
Consolidated Total
Beginning assets
$
56,010
$
69,958
$
71,654
$
(13,948
)
(20
)
%
$
(15,644
)
(22
)
%
Sales 2
2,191
2,519
2,134
(328
)
(13
)
%
57
3
%
Redemptions
(3,640
)
(4,786
)
(4,490
)
1,146
24
%
850
19
%
Net exchanges
—
—
—
—
—
—
—
Net Flows
(1,449
)
(2,267
)
(2,356
)
818
36
%
907
38
%
Market action
10,405
(11,681
)
2,578
22,086
189
%
7,827
304
%
Ending assets
$
64,966
$
56,010
$
71,876
$
8,956
16
%
$
(6,910
)
(10
)
%
Annualized organic growth rate
(10.3
)
%
(13.0
)
%
(13.2
)
%
Annualized redemption rate 3
22.6
%
28.5
%
24.3
%
__________________________
1
Unaffiliated includes National channel
(home office and wholesale), Defined Contribution Investment Only,
Registered Investment Advisor and Variable Annuity.
2
Sales consist of gross sales and includes
net reinvested dividends, capital gains and investment income.
3
Excludes Money Market.
MorningStar Fund Rankings 1
1 Year
3 Years
5 Years
Funds ranked in top half
48
%
49
%
37
%
Assets ranked in top half
45
%
48
%
38
%
MorningStar Ratings 1
Overall
3 Years
5 Years
Funds with 4/5 stars
28
%
28
%
26
%
Assets with 4/5 stars
41
%
39
%
41
%
____________________________
1
Based on class I share, which reflects the
largest concentration of sales and assets.
Three Months Ended
Wealth Management
Jun. 30,
Mar. 31,
Jun. 30,
Prior Qtr.
Year-over-Year Qtr.
(in millions)
2020
2020
2019
Change
%
Change
%
AUA
Ending advisory AUA
$
27,155
$
23,192
$
24,789
$
3,963
17
%
$
2,366
10
%
Ending non-advisory AUA
31,836
28,644
32,641
3,192
11
%
(805
)
(2
)
%
Ending total AUA
58,991
51,836
57,430
7,155
14
%
1,561
3
%
Average advisory AUA 1
$
25,030
$
26,680
$
23,917
$
(1,650
)
(6
)
%
$
1,113
5
%
Average non-advisory AUA 1
30,151
32,488
32,272
(2,337
)
(7
)
%
(2,121
)
(7
)
%
Average AUA 1
55,181
59,168
56,189
(3,987
)
(7
)
%
(1,008
)
(2
)
%
Net new advisory AUA 2
$
189
$
442
$
349
$
(253
)
(57
)
%
$
(160
)
(46
)
%
Net new non-advisory AUA 2, 3
(346
)
(658
)
(747
)
312
47
%
401
54
%
Total net new AUA 2, 3
(157
)
(216
)
(398
)
59
27
%
241
61
%
Annualized advisory AUA growth 4
3.3
%
6.6
%
5.9
%
Annualized AUA growth 4
(1.2
)
%
(1.4
)
%
(2.8
)
%
Advisors and advisor associates
1,317
1,316
1,347
1
—
(30
)
(2
)
%
Avg. trailing 12-month revenue per advisor
5 (in thousands)
$
464
$
462
$
408
$
2
—
$
56
14
%
_________________________
1
Average AUA are calculated as the average
of the beginning of month AUA during each reporting period.
2
Net new AUA are calculated as total client
deposits and net transfers less client withdrawals. Client
deposits
include dividends and interest.
3
Excludes activity related to products held
outside of our wealth management platform. These assets
represent
less than 10% of total AUA.
4
Annualized growth is calculated as
annualized quarterly net new AUA divided by beginning AUA.
5
Production per Advisor is calculated as
trailing 12- month Total underwriting and distribution fees less
“other”
underwriting and distribution fees divided
by the average number of advisors. “Other” underwriting and
distribution fees predominantly includes
fees paid by advisors for programs and services.
Unaudited Consolidated Statements of
Income
(in thousands, except per share data and
margin)
Three Months Ended
Jun. 30,
Mar. 31,
Jun. 30,
Prior Qtr.
Year-over-Year Qtr.
2020
2020
2019
Change
%
Change
%
Revenues:
Investment management fees
$
95,824
$
105,219
$
112,870
$
(9,395
)
(9
)
%
$
(17,046
)
(15
)
%
Underwriting and distribution fees
123,633
136,943
133,495
(13,310
)
(10
)
%
(9,862
)
(7
)
%
Shareholder service fees
20,577
21,571
23,789
(994
)
(5
)
%
(3,212
)
(14
)
%
Total
240,034
263,733
270,154
(23,699
)
(9
)
%
(30,120
)
(11
)
%
Operating expenses:
Distribution1
107,876
120,033
116,477
(12,157
)
(10
)
%
(8,601
)
(7
)
%
Compensation and benefits (including
share-based compensation of $12,532, $9,983 and $11,119,
respectively)
61,863
58,425
61,876
3,438
6
%
(13
)
—
General and administrative
20,524
18,598
16,037
1,926
10
%
4,487
28
%
Technology
14,237
13,502
16,442
735
5
%
(2,205
)
(13
)
%
Occupancy
4,291
4,709
6,701
(418
)
(9
)
%
(2,410
)
(36
)
%
Marketing and advertising
1,119
1,896
2,399
(777
)
(41
)
%
(1,280
)
(53
)
%
Depreciation
3,209
3,513
5,228
(304
)
(9
)
%
(2,019
)
(39
)
%
Subadvisory fees
3,288
3,666
3,715
(378
)
(10
)
%
(427
)
(11
)
%
Total
216,407
224,342
228,875
(7,935
)
(4
)
%
(12,468
)
(5
)
%
Operating income
23,627
39,391
41,279
(15,764
)
(40
)
%
(17,652
)
(43
)
%
Investment and other income (loss)
15,148
(7,745
)
9,025
22,893
296
%
6,123
68
%
Interest expense
(1,539
)
(1,549
)
(1,552
)
10
1
%
13
1
%
Income before provision for income
taxes
37,236
30,097
48,752
7,139
24
%
(11,516
)
(24
)
%
Provision for income taxes
9,412
9,633
14,190
(221
)
(2
)
%
(4,778
)
(34
)
%
Net income
27,824
20,464
34,562
7,360
36
%
(6,738
)
(19
)
%
Net income (loss) attributable to
redeemable noncontrolling interests
3,000
(1,522
)
614
4,522
297
%
2,386
389
%
Net income attributable to Waddell
& Reed Financial, Inc.
$
24,824
$
21,986
$
33,948
$
2,838
13
%
$
(9,124
)
(27
)
%
Net income per share, basic and
diluted:
$
0.38
$
0.32
$
0.45
Weighted average shares outstanding -
basic and diluted
65,488
67,675
74,694
Operating margin
9.8
%
14.9
%
15.3
%
1Distribution expense
Unaffiliated
20,587
23,624
25,242
Wealth Management
87,289
96,409
91,235
$
107,876
$
120,033
$
116,477
Unaudited Consolidated Statements of
Income
(in thousands, except per share data and
margin)
Six Months Ended
Jun. 30,
Jun. 30,
2020
2019
Change
%
Revenues:
Investment management fees
$
201,043
$
222,632
$
(21,589
)
(10
)
%
Underwriting and distribution fees
260,576
259,740
836
—
Shareholder service fees
42,148
47,192
(5,044
)
(11
)
%
Total
503,767
529,564
(25,797
)
(5
)
%
Operating expenses:
Distribution1
227,909
226,271
1,638
1
%
Compensation and benefits (including
share-based compensation of $22,515 and $23,892, respectively)
120,288
126,719
(6,431
)
(5
)
%
General and administrative
39,122
30,741
8,381
27
%
Technology
27,739
32,750
(5,011
)
(15
)
%
Occupancy
9,000
13,416
(4,416
)
(33
)
%
Marketing and advertising
3,015
4,363
(1,348
)
(31
)
%
Depreciation
6,722
11,229
(4,507
)
(40
)
%
Subadvisory fees
6,954
7,272
(318
)
(4
)
%
Total
440,749
452,761
(12,012
)
(3
)
%
Operating income
63,018
76,803
(13,785
)
(18
)
%
Investment and other income
7,403
18,478
(11,075
)
(60
)
%
Interest expense
(3,088
)
(3,100
)
12
—
Income before provision for income
taxes
67,333
92,181
(24,848
)
(27
)
%
Provision for income taxes
19,045
24,861
(5,816
)
(23
)
%
Net income
48,288
67,320
(19,032
)
(28
)
%
Net income attributable to redeemable
noncontrolling interests
1,478
1,318
160
12
%
Net income attributable to Waddell
& Reed Financial, Inc.
$
46,810
$
66,002
$
(19,192
)
(29
)
%
Net income per share, basic and
diluted:
$
0.70
$
0.87
Weighted average shares outstanding -
basic and diluted
66,581
75,492
Operating margin
12.5
%
14.5
%
1Distribution expense
Unaffiliated
44,211
49,258
Wealth Management
183,698
177,013
$
227,909
$
226,271
Underwriting and distribution
fees
(in thousands)
For the three months ended
Jun. 30, 2020
Unaffiliated
Wealth Management
Total
Advisory fees
$
—
$
72,534
$
72,534
Service and distribution fees
13,670
13,600
27,270
Sales commissions
373
15,034
15,407
Other revenues
91
8,331
8,422
Total underwriting and distribution
fees
$
14,134
$
109,499
$
123,633
For the three months ended
Mar. 31, 2020
Unaffiliated
Wealth Management
Total
Advisory fees
$
—
$
77,118
$
77,118
Service and distribution fees
15,276
14,589
29,865
Sales commissions
451
20,657
21,108
Other revenues
135
8,717
8,852
Total underwriting and distribution
fees
$
15,862
$
121,081
$
136,943
For the three months ended
Jun. 30, 2019
Unaffiliated
Wealth Management
Total
Advisory fees
$
—
$
70,220
$
70,220
Service and distribution fees
16,615
16,041
32,656
Sales commissions
493
20,794
21,287
Other revenues
83
9,249
9,332
Total underwriting and distribution
fees
$
17,191
$
116,304
$
133,495
For the six months ended Jun.
30, 2020
Unaffiliated
Wealth Management
Total
Advisory fees
$
—
$
149,652
$
149,652
Service and distribution fees
28,946
28,189
57,135
Sales commissions
824
35,691
36,515
Other revenues
226
17,048
17,274
Total underwriting and distribution
fees
$
29,996
$
230,580
$
260,576
For the six months ended Jun.
30, 2019
Unaffiliated
Wealth Management
Total
Advisory fees
$
—
$
135,450
$
135,450
Service and distribution fees
33,081
31,445
64,526
Sales commissions
935
40,416
41,351
Other revenues
175
18,238
18,413
Total underwriting and distribution
fees
$
34,191
$
225,549
$
259,740
Unaudited Condensed Balance
Sheet
(in thousands)
Jun. 30,
Dec. 31,
2020
2019
Assets
Cash & cash equivalents
(unrestricted)
$
156,710
$
151,815
Investment securities
619,052
688,346
Other assets
212,443
245,572
Property and equipment, net
31,928
34,726
Goodwill and intangible assets
145,869
145,869
Total assets
$
1,166,002
$
1,266,328
Liabilities, redeemable noncontrolling
interests and equity
Short-term notes payable
$
94,962
$
—
Long-term debt
—
94,926
Other liabilities
278,480
343,300
Redeemable noncontrolling interests
25,857
19,205
Total stockholders’ equity
766,703
808,897
Liabilities, redeemable noncontrolling
interests and equity
$
1,166,002
$
1,266,328
Shares outstanding
65,174
68,847
Unaudited Condensed Cash Flow
(in thousands)
Three Months Ended
Six Months Ended
Jun. 30,
Mar. 31,
Jun. 30,
Jun. 30,
Jun. 30,
2020
2020
2019
2020
2019
Cash provided by (used in):
Operating activities
$
(526
)
$
29,276
$
40,644
$
28,750
$
23,147
Investing activities
20,430
27,694
9,946
48,124
(3,987
)
Financing activities
(32,123
)
(69,371
)
(53,605
)
(101,494
)
(113,118
)
Net change during period
$
(12,219
)
$
(12,401
)
$
(3,015
)
$
(24,620
)
$
(93,958
)
Three Months Ended
Six Months Ended
Jun. 30,
Mar. 31,
Jun. 30,
Jun. 30,
Jun. 30,
(in thousands, except number of
shares)
2020
2020
2019
2020
2019
Shares repurchased
Number of shares
1,468,367
3,807,438
2,142,894
5,275,805
4,369,219
Total cost
$
18,061
$
53,939
$
36,824
$
72,000
$
75,963
Dividend paid
Rate per share
$
0.25
$
0.25
$
0.25
$
0.50
$
0.50
Total paid
$
16,528
$
17,119
$
18,840
$
33,647
$
38,188
Capital returned to
stockholders
$
34,589
$
71,058
$
55,664
$
105,647
$
114,151
Earnings Conference Call
Stockholders, members of the investment community and the
general public are invited to listen to a live Web cast of our
earnings release conference call today at 10:00 a.m. Eastern.
During this call, Philip J. Sanders, CEO, will review our quarterly
results. Live access to the teleconference will be available on the
“Investor Relations” section of our Web site at ir.waddell.com. A
Web cast replay will be made available shortly after the conclusion
of the call and accessible for seven days.
Web Site Resources
We invite you to visit the Investor Relations section of our Web
site at ir.waddell.com. Under the “Investor Information” tab you
will find a link to presentations as well as to data tables, which
include supplemental information schedules.
Past performance is no guarantee of future results. Please
invest carefully.
About the Company
Through its subsidiaries, Waddell & Reed Financial, Inc. has
provided investment management and wealth management services to
clients throughout the United States since 1937. Today, we
distribute our investment products through the unaffiliated channel
under the IVY INVESTMENTS® brand (encompassing broker/dealer,
retirement, and registered investment advisors), our wealth
management channel (through independent financial advisors
associated with WADDELL & REED, INC.), and our institutional
channel (including defined benefit plans, pension plans, endowments
and subadvisory relationships). For more information, visit
ir.waddell.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which reflect the current views and assumptions of
management with respect to future events regarding our business and
industry in general. These forward-looking statements include all
statements, other than statements of historical fact, regarding our
financial position, business strategy and other plans and
objectives for future operations, including statements with respect
to revenues and earnings, the amount and composition of assets
under management and assets under administration, distribution
sources, expense levels, redemption rates, stock repurchases and
the financial markets and other conditions. These statements are
generally identified by the use of such words as “may,” “could,”
“should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,”
“expect,” “intend,” “plan,” “project,” “outlook,” “will,”
“potential” and similar statements of a future or forward-looking
nature. Readers are cautioned that any forward-looking information
provided by us or on our behalf is not a guarantee of future
performance. Actual results may differ materially from those
contained in these forward-looking statements as a result of
various factors, including but not limited to the impact of the
COVID-19 pandemic and related economic conditions, as well as the
factors discussed below. If one or more events related to these or
other risks, contingencies or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may
differ materially from those forecasted or expected. Certain
important factors that could cause actual results to differ
materially from our expectations are disclosed in the “Risk
Factors” section of our Annual Report on Form 10-K for the year
ended December 31, 2019, which include, without limitation:
- The loss of existing distribution relationships or inability to
access new distribution relationships;
- A reduction in assets under our management on short notice,
through increased redemptions in our distribution channels or our
Funds, particularly those Funds with a high concentration of
assets, or investors terminating their relationship with us or
shifting their funds to other types of accounts with different rate
structures;
- The adverse ruling or resolution of any litigation, regulatory
investigations and proceedings, or securities arbitrations by a
federal or state court or regulatory body;
- Changes in our business model, operations and procedures,
including our methods of distributing our proprietary products, as
a result of evolving fiduciary standards;
- The introduction of legislative or regulatory proposals or
judicial rulings that change the independent contractor
classification of our financial advisors at the federal or state
level for employment tax or other employee benefit purposes;
- A decline in the securities markets or in the relative
investment performance of our Funds and other investment portfolios
and products as compared to competing funds;
- Our inability to reduce expenses rapidly enough to align with
declines in our revenues due to various factors, including fee
pressure, the level of our assets under management or our business
environment;
- Non-compliance with applicable laws or regulations and changes
in current legal, regulatory, accounting, tax or compliance
requirements or governmental policies;
- Our inability to attract and retain senior executive management
and other key personnel to conduct our wealth management and
investment management business;
- A failure in, or breach of, our operational or security systems
or our technology infrastructure, or those of third parties on
which we rely; and
- Our inability to implement new information technology and
systems, or our inability to complete such implementation in a
timely or cost effective manner.
The foregoing factors should not be construed as exhaustive and
should be read together with other cautionary statements included
in this and other reports and filings we make with the Securities
and Exchange Commission, including the information in Item 1
“Business” and Item 1A “Risk Factors” of Part I and Item 7
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of Part II to our Annual Report on Form 10‑K
for the year ended December 31, 2019 and as updated in our
quarterly reports on Form 10-Q for the year ending December 31,
2020. All forward-looking statements speak only as of the date on
which they are made and we undertake no duty to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005275/en/
Investor Contact: Mike Daley, Vice
President, Chief Accounting Officer & Investor Relations, (913)
236-1795, mdaley1@waddell.com
Mutual Fund Investor Contact: Call
(888) WADDELL, or visit www.waddell.com or
www.ivyinvestments.com.
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