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Manning & Napier, Inc. Reports Third 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 508 employees as of September 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 share data)
(unaudited)
 
  Three Months Ended     Nine Months Ended
September 30,   June 30,   September 30, September 30,   September 30,
2012 2012 2011 2012 2011
 
Revenues
Investment management services revenue $ 85,382 $ 81,529 $ 85,789 $

251,925

$ 249,634
 
Expenses
Compensation and related costs 40,922 46,570 20,890 115,224 70,845
Sub-transfer agent and shareholder service costs 12,830 12,471 12,496 37,975 36,859
Other operating costs   9,941     9,259     9,300     27,789     25,225  
Total operating expenses   63,693     68,300     42,686     180,988     132,929  
Operating income 21,689 13,229 43,103 70,937 116,705
 
Non-operating income (loss)
Interest expense on shares subject to mandatory redemption - - (13,339 ) - (42,722 )
Other non-operating income (loss)   595     (574 )   192     416     45  
 
Total non-operating income (loss)   595     (574 )   (13,147 )   416     (42,677 )
Income before provision for income taxes 22,284 12,655 29,956 71,353 74,028
Provision for income taxes   1,220     3,199     253     6,409     792  
Net income attributable to the controlling and the noncontrolling interests 21,064 9,456 29,703 64,944 73,236
Less: net income attributable to the noncontrolling interests   19,410     11,292     29,703     62,223     73,236  
Net income (loss) attributable to Manning & Napier, Inc. $ 1,654   $ (1,836 ) $ -   $

2,721

  $ -  
 
 
Net income (loss) per share available to Class A common stock
Basic $ 0.12   $ (0.14 ) $ 0.20  
Diluted $ 0.12   $ (0.14 ) $ 0.20  
 

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 share data)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2012 2012 2011 2012 2011
Reconciliation of non-GAAP financial measures:
 
Net income (loss) attributable to Manning & Napier, Inc. $ 1,654 $ (1,836 ) $ - $ 2,721 $ -
Plus: net income attributable to the noncontrolling interests   19,410     11,292     29,703     62,223     73,236  

Net income attributable to the controlling and the noncontrolling interests

21,064 9,456 29,703 64,944 73,236
Provision for income taxes   1,220     3,199     253     6,409     792  
Income before provision for income taxes 22,284 12,655 29,956 71,353 74,028
Interest expense on shares subject to mandatory redemption - - 13,339 - 42,722
Reorganization-related share-based compensation   17,290     24,037     -     45,036     -  
Economic income 39,574 36,692 43,295 116,389 116,750
Adjusted income taxes   15,137     14,035     16,560     44,519     44,657  
Economic net income $ 24,437   $ 22,657   $ 26,735   $ 71,870   $ 72,093  
 
Reconciliation of non-GAAP per share financial measures:
 
Net income (loss) available to Class A common stock per basic share $ 0.12 $ (0.14 ) $ 0.20

Plus: net income attributable to the noncontrolling interests per basic share

  1.43     0.83     4.58  

Net income attributable to the controlling and the noncontrolling interests per basic share

1.55 0.69 4.78
Provision for income taxes per basic share   0.09     0.24     0.47  
Income before provision for income taxes per basic share 1.64 0.93 5.25
Interest expense on shares subject to mandatory redemption per basic share - - -
Reorganization-related share-based compensation per basic share   1.27     1.77     3.32  
Economic income per basic share 2.91 2.70 8.57
Adjusted income taxes per basic share   1.11     1.03     3.28  
Economic net income per basic share 1.80 1.67 5.29

Less: Impact of Manning & Napier Group, LLC units converted to publicly traded shares

  (1.53 )   (1.42 )   (4.49 )
Economic net income per adjusted share $ 0.27   $ 0.25   $ 0.80  
 
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)
(unaudited)
       
Investment Vehicle Portfolio
         

Assets Under Management

Mutual funds and collective

Three-months ended

Separate accounts

investment trusts

Total Blended Equity Fixed Income Total
 
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
Gross client inflows 507.0 1,306.5 1,813.5 857.7 922.5 33.3 1,813.5
Gross client outflows (1,084.1 ) (1,343.4 ) (2,427.5 ) (816.5 ) (1,551.2 ) (59.8 ) (2,427.5 )
Market appreciation   1,349.9     1,160.6     2,510.5     1,005.9     1,485.7     18.9     2,510.5  
As of September 30, 2012 $ 24,323.3 $ 19,944.7 $ 44,268.0 $ 20,497.8 $ 22,552.9 $ 1,217.3 $ 44,268.0
 
Average assets under management for period $ 23,862.7 $ 19,387.2 $ 43,249.9 $ 19,943.0 $ 22,086.7 $ 1,220.2 $ 43,249.9
 
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
 
Average assets under management for period $ 23,969.5 $ 18,827.0 $ 42,796.5 $ 19,348.3 $ 22,209.2 $ 1,239.0 $ 42,796.5
 
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
Gross client inflows 1,454.3 2,626.9 4,081.2 1,222.1 2,832.2 26.9 4,081.2
Gross client outflows (1,139.0 ) (1,494.9 ) (2,633.9 ) (926.6 ) (1,677.2 ) (30.1 ) (2,633.9 )
Market depreciation   (3,674.4 )   (3,627.2 )   (7,301.6 )   (1,903.7 )   (5,372.2 )   (25.7 )   (7,301.6 )
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
 
Average assets under management for period $ 23,800.0 $ 18,913.5 $ 42,713.5 $ 18,188.4 $ 23,294.5 $ 1,230.6 $ 42,713.5
 
 
   
Investment Vehicle Portfolio
 

Assets Under Management

Mutual funds and collective

Nine-months ended

Separate accounts

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 2,365.4 4,603.1 6,968.5 2,904.6 3,901.8 162.1 6,968.5
Gross client outflows (3,217.2 ) (4,238.0 ) (7,455.2 ) (2,530.7 ) (4,672.2 ) (252.3 ) (7,455.2 )
Market appreciation   2,517.0     2,037.6     4,554.6     2,001.4     2,511.3     41.9     4,554.6  
As of September 30, 2012 $ 24,323.3 $ 19,944.7 $ 44,268.0 $ 20,497.8 $ 22,552.9 $ 1,217.3 $ 44,268.0
 
Average assets under management for period $ 23,884.2 $ 19,106.0 $ 42,990.2 $ 19,467.4 $ 22,283.4 $ 1,239.4 $ 42,990.2
 
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 3,678.4 7,426.1 11,104.5 3,423.6 7,580.5 100.4 11,104.5
Gross client outflows (2,598.6 ) (3,294.9 ) (5,893.5 ) (2,400.1 ) (3,310.1 ) (183.3 ) (5,893.5 )
Market appreciation (depreciation)   (2,463.2 )   (2,820.7 )   (5,283.9 )   (1,120.9 )   (4,170.9 )   7.9     (5,283.9 )
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
 
Average assets under management for period $ 24,111.0 $ 18,326.1 $ 42,437.1 $ 18,261.0 $ 22,915.5 $ 1,260.6 $ 42,437.1




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