Manning & Napier, Inc. Reports Second Quarter 2012 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 512 employees as of June 30, 2012.

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												Six Months Ended
		June 30,				March 31,			June 30,					June 30,				June 30,
			2012				2012			2011					2012				2011
Revenues
Investment management services revenue		$	81,529			$	85,014		$	85,805				$	166,543			$	163,845
Expenses
Compensation and related costs			46,570				27,732			27,061					74,302				49,955
Sub-transfer agent and shareholder service costs			12,471				12,674			12,668					25,145				24,363
Other operating costs			9,259				8,589			9,700					17,848				15,925
Total operating expenses			68,300				48,995			49,429					117,295				90,243
Operating income			13,229				36,019			36,376					49,248				73,602
Non-operating (loss) income
Interest expense on shares subject to mandatory redemption			-				-			(16,095	)				-				(29,383	)
Other non-operating (loss) income			(574	)			395			(155	)				(179	)			(147	)
Total non-operating (loss) income			(574	)			395			(16,250	)				(179	)			(29,530	)
Income before provision for income taxes			12,655				36,414			20,126					49,069				44,072
Provision for income taxes			3,199				1,990			253					5,189				539
Net income attributable to the controlling and the noncontrolling interests			9,456				34,424			19,873					43,880				43,533
Less: net income attributable to the noncontrolling interests			11,292				31,521			19,873					42,813				43,533
Net (loss) income attributable to Manning & Napier, Inc.		$	(1,836	)		$	2,903		$	-				$	1,067			$	-
Net (loss) income per share available to Class A common stock
Basic		$	(0.14	)		$	0.21							$	0.08
Diluted		$	(0.14	)		$	0.21							$	0.08
Weighted average shares of Class A common stock outstanding
Basic			13,583,873				13,583,873								13,583,873
Diluted			13,583,873				13,583,873								13,583,873

Manning & Napier, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
			2012				2012				2011				2012				2011
Reconciliation of non-GAAP financial measures:
Net (loss) income attributable to Manning & Napier, Inc.		$	(1,836	)		$	2,903			$	-			$	1,067			$	-
Plus: net income attributable to the noncontrolling interests			11,292				31,521				19,873				42,813				43,533
Net income attributable to the controlling and the noncontrolling interests			9,456				34,424				19,873				43,880				43,533
Provision for income taxes			3,199				1,990				253				5,189				539
Income before provision for income taxes			12,655				36,414				20,126				49,069				44,072
Interest expense on shares subject to mandatory redemption			-				-				16,095				-				29,383
Reorganization-related share-based compensation			24,037				3,709				-				27,746				-
Economic income			36,692				40,123				36,221				76,815				73,455
Adjusted income taxes			14,035				15,347				13,855				29,382				28,097
Economic net income		$	22,657			$	24,776			$	22,366			$	47,433			$	45,358
Reconciliation of non-GAAP per share financial measures:
Net (loss) income available to Class A common stock per basic share		$	(0.14	)		$	0.21							$	0.08
Plus: net income attributable to the noncontrolling interests per basic share			0.83				2.32								3.15
Net income attributable to the controlling and the noncontrolling interests per basic share			0.69				2.53								3.23
Provision for income taxes per basic share			0.24				0.15								0.38
Income before provision for income taxes per basic share			0.93				2.68								3.61
Interest expense on shares subject to mandatory redemption per basic share			-				-								-
Reorganization-related share-based compensation per basic share			1.77				0.27								2.04
Economic income per basic share			2.70				2.95								5.65
Adjusted income taxes per basic share			1.03				1.13								2.16
Economic net income per basic share			1.67				1.82								3.49
Less: Impact of Manning & Napier Group, LLC units converted to publicly traded shares			(1.42	)			(1.54	)							(2.96	)
Economic net income per adjusted share		$	0.25			$	0.28							$	0.53
Total basic shares of Class A common stock outstanding			13,583,873				13,583,873								13,583,873
Total exchangeable units of Manning & Napier Group, LLC			76,400,000				76,400,000								76,400,000
Total adjusted Class A common stock outstanding			89,983,873				89,983,873								89,983,873

Manning & Napier, Inc.
Assets Under Management (in millions)
				Investment Vehicle												Portfolio
Assets Under Management Three-months ended				Separate accounts				Mutual funds and collective investment trusts				Total				Blended				Equity				Fixed Income				Total
As of March 31, 2012				$	24,827.7			$	19,904.3			$	44,732.0			$	19,658.1			$	23,819.0			$	1,254.9			$	44,732.0
Gross client inflows					979.2				1,443.5				2,422.7				1,015.6				1,365.7				41.4				2,422.7
Gross client outflows					(1,193.8	)			(1,422.4	)			(2,616.2	)			(894.0	)			(1,626.5	)			(95.7	)			(2,616.2	)
Market appreciation (depreciation)					(1,062.6	)			(1,104.4	)			(2,167.0	)			(329.0	)			(1,862.3	)			24.3				(2,167.0	)
As of June 30, 2012				$	23,550.5			$	18,821.0			$	42,371.5			$	19,450.7			$	21,695.9			$	1,224.9			$	42,371.5
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
Gross client inflows					879.2				1,853.1				2,732.3				1,031.3				1,613.6				87.4				2,732.3
Gross client outflows					(939.3	)			(1,472.2	)			(2,411.5	)			(820.2	)			(1,494.5	)			(96.8	)			(2,411.5	)
Market appreciation (depreciation)					2,229.7				1,981.4				4,211.1				1,324.5				2,887.9				(1.3	)			4,211.1
As of March 31, 2012				$	24,827.7			$	19,904.3			$	44,732.0			$	19,658.1			$	23,819.0			$	1,254.9			$	44,732.0
As of March 31, 2011				$	24,384.1			$	18,180.0			$	42,564.1			$	18,420.4			$	22,871.3			$	1,272.4			$	42,564.1
Gross client inflows					1,262.8				2,385.4				3,648.2				1,055.3				2,546.1				46.8				3,648.2
Gross client outflows					(961.9	)			(958.6	)			(1,920.5	)			(799.4	)			(1,038.0	)			(83.1	)			(1,920.5	)
Market appreciation					225.8				105.5				331.3				115.0				194.2				22.1				331.3
As of June 30, 2011				$	24,910.8			$	19,712.3			$	44,623.1			$	18,791.3			$	24,573.6			$	1,258.2			$	44,623.1
				Investment Vehicle												Portfolio
Assets Under Management Six-months ended				Separate accounts				Mutual funds and collective investment trusts				Total				Blended				Equity				Fixed Income				Total
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
Gross client inflows					1,858.4				3,296.6				5,155.0				2,046.9				2,979.3				128.8				5,155.0
Gross client outflows					(2,133.1	)			(2,894.6	)			(5,027.7	)			(1,714.2	)			(3,121.0	)			(192.5	)			(5,027.7	)
Market appreciation					1,167.1				877.0				2,044.1				995.5				1,025.6				23.0				2,044.1
As of June 30, 2012				$	23,550.5			$	18,821.0			$	42,371.5			$	19,450.7			$	21,695.9			$	1,224.9			$	42,371.5
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					2,224.1				4,799.2				7,023.3				2,201.5				4,748.3				73.5				7,023.3
Gross client outflows					(1,459.6	)			(1,800.0	)			(3,259.6	)			(1,473.5	)			(1,632.9	)			(153.2	)			(3,259.6	)
Market appreciation					1,211.2				806.5				2,017.7				782.8				1,201.3				33.6				2,017.7
As of June 30, 2011				$	24,910.8			$	19,712.3			$	44,623.1			$	18,791.3			$	24,573.6			$	1,258.2			$	44,623.1

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