First Quarter 2012 Financial Review
Manning & Napier reported first quarter 2012 revenue of $85.0 million, an increase of 9% over revenue of $78.0 million reported in the first quarter of 2011, and an increase of 6% from revenue of $80.4 million reported in the fourth quarter of 2011. The changes in revenue were generally consistent with changes in average assets under management, which increased by 5% over the first quarter of 2011 and 6% over the fourth quarter of 2011. Revenue as a percentage of average AUM was 0.79% for first quarter 2012, consistent with the previous quarter and slightly higher from 0.76% for the first quarter 2011.
Operating expenses were $49.0 million, or $45.3 million excluding non-cash reorganization-related share-based compensation of $3.7 million. The $45.3 million represents a $4.5 million increase in expenses, compared with the first quarter of 2011, and a $4.8 million increase in expenses compared with the fourth quarter of 2011, excluding reorganization-related share-based compensation. Expenses increased in the first quarter compared with the 2011 first and fourth quarters due to higher compensation and sub-transfer agent and shareholder service costs as a result of increases in revenue and average AUM. The increased compensation as compared to the first quarter of 2011 was primarily attributable to an 18% increase in headcount, whereas the increased compensation as compared to the fourth quarter 2011 was attributable to both higher incentive compensation and increases in headcount.
Generally Accepted Accounting Principles (“GAAP”) based operating income was $36.0 million. Operating income, excluding non-cash reorganization-related share-based compensation, was $39.7 million for the quarter, a $2.5 million increase over the first quarter of 2011 and a $0.1 million decrease from the fourth quarter of 2011. Operating margin, excluding non-cash reorganization-related share-based compensation expense, was 46.7% for the first quarter of 2012, compared with 47.7% for the first quarter of 2011 and 49.6% for the fourth quarter of 2011.
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