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Manning & Napier, Inc. Reports Fourth Quarter And Year-End 2011 Earnings Results

Investors should consider the non-GAAP measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, the Company’s non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures.

About Manning & Napier, Inc.

Manning & Napier (NYSE: MN) provides a broad range of investment solutions through separately managed accounts, mutual funds, and collective investment trust funds, as well as a variety of consultative services that complement our investment process. Founded in 1970, we offer equity and fixed income portfolios as well as a range of blended asset portfolios, such as life cycle funds, that use a mix of stocks and bonds. We serve a diversified client base of high-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans, endowments and foundations. For many of these clients, our relationship goes beyond investment management and includes customized solutions that address key issues and solve client-specific problems. We are headquartered in Fairport, NY and had 471 employees as of December 31, 2011.

Safe Harbor Statement

This press release and other statements that the Company may make may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the Company’s current views with respect to, among other things, its operations and financial performance. Words like “believes,” “expects,” “may,” “estimates,” “will,” “should,” “intends,” “plans,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, are used to identify forward-looking statements, although not all forward-looking statements contain these words. Although the Company believes that it is basing its expectations and beliefs on reasonable assumptions within the bounds of what it currently knows about its business and operations, there can be no assurance that its actual results will not differ materially from what the Company expects or believes. Some of the factors that could cause the Company’s actual results to differ from its expectations or beliefs include, without limitation: changes in securities or financial markets or general economic conditions; a decline in the performance of the Company’s products; client sales and redemption activity; changes of government policy or regulations; and other risks discussed from time to time in the Company’s filings with the Securities and Exchange Commission.

Manning & Napier, Inc.

Combined Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)
 
  Three Months Ended     Twelve Months Ended
December 31,   September 30,   December 31, December 31,   December 31,
2011 2011 2010 2011 2010
 
Revenues
Investment management services revenue $ 80,358 $ 85,789 $ 73,463 $ 329,992 $ 255,472
 
Expenses
Compensation and related costs 235,113 20,890 23,298 305,957 78,416
Sub-transfer agent and shareholder service costs 12,255 12,496 10,537 49,115 36,830
Other operating costs   8,479     9,300     7,078     33,704     25,284  
Total operating expenses   255,847     42,686     40,913     388,776     140,530  
Operating (loss) income (175,489 ) 43,103 32,550 (58,784 ) 114,942
 
Non-operating loss
Interest expense on shares subject to mandatory redemption (3,111 ) (13,339 ) (13,590 ) (45,833 ) (61,243 )
Other non-operating gain   138     192     89     183     111  
 
Total non-operating loss   (2,973 )   (13,147 )   (13,501 )   (45,650 )   (61,132 )
(Loss) income before provision for income taxes (178,462 ) 29,956 19,049 (104,434 ) 53,810

Provision for income taxes
  1,191     253     64     1,982     712  

Net (loss) income attributable to the controlling and the noncontrolling interests
(179,653 ) 29,703 18,985 (106,416 ) 53,098

Less: net (loss) income attributable to the noncontrolling interests
  (152,486 )   29,703     18,985     (79,249 )   53,098  
Net loss attributable to Manning & Napier, Inc. $ (27,167 ) $ -   $ -   $ (27,167 ) $ -  
 
 
November 18, 2011 November 18, 2011
through through
December 31, 2011 December 31, 2011

Net loss attributable to the controlling and the noncontrolling interests
$ (197,874 ) $ (197,874 )
Less: net loss attributable to the noncontrolling interests   (170,707 )   (170,707 )
Net loss attributable to Manning & Napier, Inc. $ (27,167 ) $ (27,167 )
 
 

Net loss available to Class A common stock per basic and diluted share (1)
$ (2.11 ) $ (2.11 )
 

Weighted average basic and diluted shares of Class A common stock outstanding (2)
  12,894,136     12,894,136  

(1) The Company consummated its initial public offering on November 18, 2011. Since that date, the Company has consolidated the results of Manning & Napier Group, LLC due to the Company's role as its managing member. Therefore, all income for the period prior to November 18, 2011 is entirely attributable to the noncontrolling interest which existed prior to the initial public offering. As a result, in the computation of GAAP earnings per share, only the net income attributable to the Company's controlling interest from the period subsequent to the initial public offering is considered.
 

(2) The computation of weighted average basic and diluted shares of Class A common stock outstanding considers the outstanding shares from the date of the initial public offering, November 18, 2011, through December 31, 2011.

 

Manning & Napier, Inc.

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

(in thousands, except per share data)

(unaudited)
 
  Three Months Ended     Twelve Months Ended
December 31,   September 30,   December 31, December 31,   December 31,
2011 2011 2010 2011 2010

Reconciliation of non-GAAP financial measures:

 
Net loss attributable to Manning & Napier, Inc. $ (27,167 ) $ - $ - $ (27,167 ) $ -
Plus: net (loss) income attributable to the noncontrolling interests   (152,486 )   29,703   18,985   (79,249 )   53,098

Net (loss) income attributable to the controlling and the noncontrolling interests
(179,653 ) 29,703 18,985 (106,416 ) 53,098
Provision for income taxes   1,191     253   64   1,982     712
(Loss) income before provision for income taxes (178,462 ) 29,956 19,049 (104,434 ) 53,810
Interest expense on shares subject to mandatory redemption 3,111 13,339 13,590 45,833 61,243
Reorganization-related share-based compensation   215,324     -   -   215,324     -
Economic income 39,973 43,295 32,639 156,723 115,053
Adjusted income taxes   15,289     16,560   12,484   59,947     44,008
Economic net income $ 24,684   $ 26,735 $ 20,155 $ 96,776   $ 71,045
 
Reconciliation of non-GAAP per share financial measures:
 
Net loss available to Class A common stock per basic and diluted share $ (2.11 ) $ (2.11 )

Plus: net (loss) income attributable to the noncontrolling interests per basic and diluted share
  (11.82 )   (6.14 )

Net (loss) income attributable to the controlling and the noncontrolling interests per basic and diluted share
(13.93 ) (8.25 )
Provision for income taxes per basic and diluted share   0.09     0.15  

Loss (income) before provision for income taxes per basic and diluted share
(13.84 ) (8.10 )

Interest expense on shares subject to mandatory redemption per basic and diluted share
0.24 3.55

Reorganization-related share-based compensation per basic and diluted share
  16.70     16.70  
Economic income per basic and diluted share 3.10 12.15
Adjusted income taxes per basic and diluted share   1.19     4.65  
Economic net income per basic and diluted share 1.91 7.50

Less: Impact of Manning & Napier Group, LLC units converted to publicly traded shares
  (1.64 )   (6.42 )
Economic net income per adjusted share $ 0.27   $ 1.08  
 
Total basic and diluted shares of Class A common stock outstanding 13,583,873 13,583,873
Total units of Manning & Napier Group, LLC   76,400,000     76,400,000  
Total adjusted Class A common stock outstanding   89,983,873     89,983,873  
 

Manning & Napier, Inc.

Assets Under Management

(in millions)
         
Investment Vehicle Portfolio
 

Separate accounts
 

Mutual funds and collective investment trusts
  Total Blended   Equity   Fixed Income   Total
Year-to-date Assets Under Management
 
As of December 31, 2010 $ 22,935.1 $ 15,906.6 $ 38,841.7 $ 17,280.5 $ 20,256.9 $ 1,304.3 $ 38,841.7
Gross client inflows 4,456.3 9,328.4 13,784.7 4,263.4 9,361.6 159.7 13,784.7
Gross client outflows (3,496.2 ) (5,578.3 ) (9,074.5 ) (3,231.0 ) (5,608.0 ) (235.5 ) (9,074.5 )
Market appreciation (depreciation)   (1,237.1 )   (2,114.7 )   (3,351.8 )   (190.4 )   (3,198.5 )   37.1     (3,351.8 )
As of December 31, 2011 $ 22,658.1 $ 17,542.0 $ 40,200.1 $ 18,122.5 $ 20,812.0 $ 1,265.6 $ 40,200.1
 
Quarter-to-date Assets Under Management
As of September 30, 2011 $ 21,551.7 $ 17,217.1 $ 38,768.8 $ 17,183.1 $ 20,356.4 $ 1,229.3 $ 38,768.8
Gross client inflows 777.9 1,902.3 2,680.2 839.8 1,781.1 59.3 2,680.2
Gross client outflows (897.6 ) (2,283.4 ) (3,181.0 ) (830.9 ) (2,297.9 ) (52.2 ) (3,181.0 )
Market appreciation   1,226.1     706.0     1,932.1     930.5     972.4     29.2     1,932.1  
As of December 31, 2011 $ 22,658.1 $ 17,542.0 $ 40,200.1 $ 18,122.5 $ 20,812.0 $ 1,265.6 $ 40,200.1

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