Legg Mason Outshines Estimate – Analyst Blog

Filed in Debt, dividend, earnings, recession, silver, ubs by on May 11, 2010 0 Comments

Legg Mason Inc. ’s ( LM ) fourth-quarter earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 35 cents as well as prior-quarter earnings of 28 cents. Earnings came in substantially ahead of a loss of $2.33 per share reported in the fourth quarter of 2009 due to extensive expense control that led to higher-than-expected operating income. This was coupled with augmented growth in Assets Under Management (AUM).  Net income stood at $63.6 million, compared to $44.9 million in the third quarter and a net loss of $330.2 million in the year-ago quarter.   During the reported quarter, total revenue was $671.4 million, up 8.8% year over year due to increase in performance fees, particularly from Permal and Western Asset Management, and higher average AUM. However, on a sequential basis, revenues were down 2.8% due to a decline in fees earned, fee waivers in liquidity products and lower days count.   Revenue from Investment Advisory fees increased 8.3% on year-over-year basis to $573.9 million but declined 2.9% sequentially. Revenue from Distribution and Service fees increased 12.1% year over year to $97.9 million but declined 1.8% sequentially. Other revenues were flat sequentially but decreased 17.6% on year-over-year basis to $1.4 million.   GAAP operating margins grew to 15.8% from 11.5% in the prior quarter and from a negative of 7.3% year-over-year, driven by the impact of pre-tax money market fund support charges of $606.4 million. Growth was also augmented by operating expenses that declined 7.5% sequentially and 14.6% on a year-over-year basis.   As of Mar 31, 2010, Legg Mason’s AUM was $684.5 billion, up 0.4% sequentially from $681.6 billion, driven by market appreciation that was partially offset by reduced client outflows. On a year-over-year basis, AUM was down 8% from $632.4 billion. Fixed income represented 53% of the consolidated AUM as of Mar 31, 2010, liquidity represented 22% and equity comprised 25%.  During the quarter, fixed income outflows were approximately $8 billion, equity outflows were $2.4 billion and liquidity inflows were $0.5 billion. Total client outflows reduced to $10.9 billion against $33 billion in the third quarter of 2010. Besides, average AUM was $681.2 billion, down from $693.3 billion in the prior quarter but up from $657.4 billion in the year-ago quarter.   For full-year of fiscal 2010, net income was $204.4 million or $1.32 per share, compared with a net loss of $2.0 billion or $13.99 per share in fiscal 2009. Total revenue declined 22% year over year to $2.6 billion, primarily driven by lower average AUM. Operating expense decreased 43% year over year to $2.3 billion, while GAAP operating margins rose to 12.2% from an operating loss of 19.9% in the year-ago period. At the end of fiscal 2010, average AUM declined to $675.5 billion compared with $810.4 billion for fiscal 2009. Total client outflows reduced to $82 billion against $158.9 billion in fiscal 2009.   At the end of Mar 31, 2010, Legg Mason had approximately $1.5 billion in cash compared to $1.4 billion at the end of third quarter, while total debt…

Read the original here:
Legg Mason Outshines Estimate – Analyst Blog

Tags: , , , , , , , , , , , ,

About the Author ()

Leave a Reply

Your email address will not be published. Required fields are marked *