Waddell & Reed Financial, Inc. (NYSE: WDR) today reported second quarter net income of $52.0 million, or $0.61 per diluted share, compared to net income of $53.9 million, or $0.63 per diluted share during the previous quarter, and net income from continuing operations of $41.2 million, or $0.48 per diluted share during the second quarter of 2012.
The current quarter included a charge of $8.6 million ($5.4 million net of taxes), or $0.06 per diluted share, for costs incurred during the launch of the Ivy High Income Opportunities Fund (NYSE: IVH), our first closed-end fund. Excluding these costs, second quarter adjusted net income would have been $57.3 million, or $0.67 per diluted share. The use of non-GAAP adjusted figures is presented for the purpose of providing comparative results to other periods. The table on page 2 provides a breakdown of expenses associated with the launch of the Ivy High Income Opportunities Fund and a reconciliation to GAAP .
Operating revenues were $332 million, an improvement of 5% compared to the previous quarter and 15% compared to the same period last year. The operating margin was 25.6%; however, excluding the above referenced costs associated with the launch of our closed-end fund, the operating margin was 28.2%, a multi-year high.
On July 2, we internalized the management of the Global Natural Resources funds after the portfolio manager’s retirement from Mackenzie Financial Corporation, the subadvisor. By managing the Global Natural Resources funds in-house, the company will realize a decline in future subadvisory costs.Assets under management were $104 billion at quarter-end, a sequential increase of 1% and a year-over-year increase of 17%. Net inflows were $935 million, compared to $2.1 billion during the previous quarter and $376 million during the second quarter of 2012.
Reconciliation to GAAP
Summary Income Statement
|(Amounts in thousands, except for per share data)||(GAAP)||Expenses||(Non-GAAP)|
|Total Operating Revenues||$||331,706||$||-||$||331,706|
|Underwriting and distribution (total)||164,844||(1,824||)||163,020|
|General and administrative||26,938||(6,728||)||20,210|
|All other operating expenses||54,889||-||54,889|
|Total Operating Expenses||246,671||(8,552||)||238,119|
|Income before provision for income taxes||83,179||8,552||91,731|
|Provision for income taxes||31,222||3,177||34,399|
|Net income per share||0.61||0.06||0.67|
|Weighted average shares outstanding - diluted||85,869||85,869||85,869|