BOSTON, May 20, 2020 /PRNewswire/ -- Eaton Vance Corp. EV today reported earnings per diluted share of $0.65 for the second quarter of fiscal 2020, a decrease of 27 percent from $0.89 of earnings per diluted share in the second quarter of fiscal 2019 and a decrease of 29 percent from $0.91 of earnings per diluted share in the first quarter of fiscal 2020.
The Company reported adjusted earnings per diluted share([1])([2]) of $0.80 for the second quarter of fiscal 2020, unchanged from the second quarter of fiscal 2019 and a decrease of 6 percent from $0.85 of adjusted earnings per diluted share in the first quarter of fiscal 2020. In the second quarter of fiscal 2020, adjusted earnings exceeded earnings under U.S. generally accepted accounting principles (U.S. GAAP) by $0.15 per diluted share, reflecting the reversal of $16.8 million of net losses of consolidated investment entities and the Company's other seed capital investments, the add-back of $1.8 million of management fees and expenses of consolidated investment entities, and the reversal of $1.1 million of net excess tax benefits related to stock‐based compensation awards. Earnings under U.S. GAAP exceeded adjusted earnings per diluted share by $0.09 in the second quarter of fiscal 2019, reflecting the reversal of $11.4 million of net gains of consolidated investment entities and other seed capital investments, the add-back of $1.8 million of management fees and expenses of consolidated investment entities, and the reversal of $0.3 million of net excess tax benefits related to stock-based compensation awards. In the first quarter of fiscal 2020, earnings under U.S. GAAP exceeded adjusted earnings by $0.06 per diluted share, reflecting the reversal of $3.6 million of net gains of consolidated investment entities and other seed capital investments, the add-back of $2.4 million of management fees and expenses of consolidated investment entities, and the reversal of $4.9 million of net excess tax benefits related to stock‐based compensation awards.
Consolidated net outflows of $9.3 billion in the second quarter of fiscal 2020 represent -7 percent annualized internal growth in managed assets (consolidated net flows divided by beginning of period consolidated assets under management). This compares to net inflows of $4.6 billion and 4 percent annualized internal growth in managed assets in the second quarter of fiscal 2019 and net inflows of $6.1 billion and 5 percent annualized internal growth in managed assets in the first quarter of fiscal 2020. Excluding Parametric overlay services, the Company had net outflows of $2.8 billion and -3 percent annualized internal growth in managed assets in the second quarter of fiscal 2020, net inflows of $2.6 billion and 3 percent annualized internal growth in managed assets in the second quarter of fiscal 2019 and net inflows of $5.0 billion and 5 percent annualized internal growth in managed assets in the first quarter of fiscal 2020.
The Company's annualized internal management fee revenue growth (management fees attributable to consolidated inflows less management fees attributable to consolidated outflows, divided by beginning of period consolidated management fee revenue) was -6 percent in the second quarter of fiscal 2020, 1 percent in the second quarter of fiscal 2019 and 5 percent in the first quarter of fiscal 2020.
During the second quarter of fiscal 2020, consolidated net flows varied considerably from month to month. The Company had net inflows of $2.9 billion in February, net outflows of $11.8 billion in March and net outflows of $0.4 billion in April. Excluding Parametric overlay services, the Company had net inflows of $2.4 billion in February, net outflows of $5.4 billion in March and net inflows of $0.2 billion in April. The Company's annualized internal management fee revenue growth was 5 percent in February, -23 percent in March and -2 percent in April.
Consolidated assets under management were $465.3 billion on April 30, 2020, down 1 percent from $469.9 billion of consolidated managed assets on April 30, 2019 and down 10 percent from $518.2 billion of consolidated managed assets on January 31, 2020. The year-over-year decrease in consolidated assets under management reflects net inflows of $14.6 billion and market price declines of $19.3 billion. The sequential quarterly decrease in consolidated assets under management reflects net outflows of $9.3 billion and market price declines of $43.6 billion in the second quarter of fiscal 2020.
"Like all companies, Eaton Vance has been significantly affected by the COVID-19 pandemic," said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "Nearly all of our staff has been working from home since mid-March, and will remain doing so for the foreseeable future. We continue to engage actively with clients and business partners, seeking to help them address their investment needs during this difficult period. Our financial results for the three months ended April 30, 2020 speak to both the challenges of operating in this time of extreme disruption and the great strengths and resilience of our business and culture."
Average consolidated assets under management were $479.5 billion in the second quarter of fiscal 2020, up 5 percent from $456.2 billion in the second quarter of fiscal 2019 and down 6 percent from $509.9 billion in the first quarter of fiscal 2020.
As shown in Attachment 11, excluding performance-based fees, annualized management fee rates on consolidated assets under management averaged 29.7 basis points in the second quarter of fiscal 2020, down 7 percent from 31.8 basis points in the second quarter of fiscal 2019 and down 4 percent from 30.8 basis points in the first quarter of fiscal 2020. Changes in average annualized management fee rates for the compared periods primarily reflect shifts in the Company's mix of business.
Attachments 6 and 7 summarize the Company's consolidated assets under management and net flows by investment mandate and investment vehicle reporting categories. Attachments 8, 9 and 10 summarize the Company's ending consolidated assets under management by investment mandate, investment vehicle and investment affiliate. Attachment 11 shows the Company's average annualized management fee rates by investment mandate.
As shown in Attachments 6 and 7, consolidated sales and other inflows were $61.6 billion in the second quarter of fiscal 2020, up 67 percent from $36.8 billion in the second quarter of fiscal 2019 and up 33 percent from $46.3 billion in the first quarter of fiscal 2020.
Consolidated redemptions and other outflows were $70.9 billion in the second quarter of fiscal 2020, up 120 percent from $32.2 billion in the second quarter of fiscal 2019 and up 76 percent from $40.2 billion in the first quarter of fiscal 2020.
As of April 30, 2020, the Company's 49 percent-owned affiliate Hexavest Inc. (Hexavest) managed $8.6 billion of client assets, down 38 percent from $13.9 billion of managed assets on April 30, 2019 and down 34 percent from $13.0 billion of managed assets on January 31, 2020. Hexavest had net outflows of $2.2 billion in the second quarter of fiscal 2020, versus net inflows of $0.2 billion in the second quarter of fiscal 2019 and net outflows of $0.5 billion in the first quarter of fiscal 2020. Attachment 12 summarizes the assets under management and net flows of Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is the adviser or sub-adviser, the managed assets and flows of Hexavest are not included in our consolidated totals.
Financial Highlights | ||||||
(in thousands, except per share figures) | ||||||
Three Months Ended | ||||||
April 30, | January 31, | April 30, | ||||
2020 | 2020 | 2019 | ||||
Revenue | $ | 405,911 | $ | 452,554 | $ | 411,861 |
Expenses | 283,955 | 317,835 | 284,688 | |||
Operating income | 121,956 | 134,719 | 127,173 | |||
Operating margin | 30.0% | 29.8% | 30.9% | |||
Adjusted operating margin | 30.5% | 30.3% | 31.4% | |||
Non-operating income (expense) | (73,364) | 8,369 | 20,291 | |||
Income taxes | (22,017) | (32,578) | (37,069) | |||
Equity in net income of affiliates, net of tax | 1,481 | 2,325 | 2,735 | |||
Net income | 28,056 | 112,835 | 113,130 | |||
Net (income) loss attributable to non-controlling | ||||||
and other beneficial interests | 44,002 | (8,850) | (11,323) | |||
Net income attributable to | ||||||
Eaton Vance Corp. shareholders | $ | 72,058 | $ | 103,985 | $ | 101,807 |
Adjusted net income attributable to | ||||||
Eaton Vance Corp. shareholders | $ | 89,627 | $ | 97,947 | $ | 91,955 |
Earnings per diluted share | $ | 0.65 | $ | 0.91 | $ | 0.89 |
Adjusted earnings per diluted share | $ | 0.80 | $ | 0.85 | $ | 0.80 |
Second Quarter Fiscal 2020 vs. Second Quarter Fiscal 2019
In the second quarter of fiscal 2020, revenue decreased 1 percent to $405.9 million from $411.9 million in the second quarter of fiscal 2019. Management fees were down 1 percent, as a 7 percent decrease in consolidated average annualized management fee rates more than offset higher average consolidated assets under management and the impact of one additional fee day in the second quarter of fiscal 2020. Performance fees were $2.5 million in the second quarter of fiscal 2020 and $1.8 million in the second quarter of fiscal 2019. Collectively, distribution and service fee revenues were substantially unchanged from the second quarter of fiscal 2019.
Operating expenses were $284.0 million in the second quarter of fiscal 2020, substantially unchanged from $284.7 million in the second quarter of fiscal 2019, reflecting decreases in compensation and distribution expenses, partially offset by increases in service fee expense, amortization of deferred sales commissions, fund-related expenses and other expenses. The decrease in compensation reflects lower operating income-based and investment performance-based bonus accruals, lower stock-based compensation expense and lower severance expenses, partially offset by higher sales-based incentive compensation and higher salaries associated with increases in headcount, year-end compensation increases for continuing employees and one additional payroll day in the second quarter of fiscal 2020. The decrease in distribution expense reflects lower Class C distribution fee payments and lower marketing and promotion costs, partially offset by an increase in up-front sales commission expense. The increase in service fee expense reflects higher private fund service fee payments, partially offset by lower Class C service fee payments. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization, partially offset by lower Class C commission amortization. The increase in fund-related expenses reflects higher sub-advisory fees paid. Other operating expenses increased 7 percent, primarily reflecting increases in information technology spending and higher facilities expenses, partially offset by lower travel expenses, lower professional services expenses and a decrease in other corporate expenses.
Operating income decreased 4 percent to $122.0 million in the second quarter of fiscal 2020 from $127.2 million in the second quarter of fiscal 2019. The Company's operating margin decreased to 30.0 percent in the second quarter of fiscal 2020 from 30.9 percent in the second quarter of fiscal 2019. As shown in Attachment 3, on an adjusted basis including the management fee revenue and excluding the operating expenses of consolidated investment entities, operating income was down 4 percent year-over-year. Our adjusted operating margin decreased to 30.5 percent in the second quarter of fiscal 2020 from 31.4 percent in the second quarter of fiscal 2019.
Non-operating expense totaled $73.4 million in the second quarter of fiscal 2020 versus $20.3 million of non-operating income in the second quarter of fiscal 2019. The year-over-year change primarily reflects a $65.7 million increase in net losses and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies, a $27.5 million increase in the net expenses of consolidated CLO entities and a $0.5 million increase in interest expense. The increase in interest expense is attributable to borrowings under the Company's line of credit during the second quarter of fiscal 2020. Such borrowings were fully repaid prior to quarter-end.
The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 45.3 percent in the second quarter of fiscal 2020 and 25.1 percent in the second quarter of fiscal 2019. Excluding the impact of consolidated investment entities and other seed capital investments and the net excess tax benefits associated with the Company's stock-based compensation plans, the Company's adjusted effective tax rate, calculated on the same basis, was 24.9 percent in the second quarter of fiscal 2020 and 26.9 percent in the second quarter of fiscal 2019. The Company's effective tax rate is discussed in greater detail under "Taxation" below.
Equity in net income of affiliates was $1.5 million and $2.7 million in the second quarters of fiscal 2020 and 2019, respectively, substantially all relating to the Company's investment in Hexavest.
As detailed in Attachment 4, net income (loss) attributable to non-controlling and other beneficial interests was $(44.0) million in the second quarter of fiscal 2020 and $11.3 million in the second quarter of fiscal 2019. The year-over-year change reflects a decline in income and gains (losses) of consolidated investment entities and other seed capital investments driven primarily by markdowns in position values to reflect securities price declines in the second quarter of fiscal 2020 and the Company's accelerated repurchase of certain profit and capital interests in Parametric entities held by current and former employees, which settled at the end of the fourth quarter of fiscal 2019.
The Company's weighted average basic shares outstanding were 109.2 million in the second quarter of fiscal 2020 and 110.4 million in the second quarter of fiscal 2019, a decrease of 1 percent. The year-over-year reduction reflects share repurchases in excess of new shares issued upon the vesting of restricted stock awards and the exercise of employee stock options. On a diluted basis, the Company's weighted average shares outstanding were 111.6 million in the second quarter of fiscal 2020 and 114.2 million in the second quarter of fiscal 2019, a decrease of 2 percent. The decline in weighted average diluted shares outstanding further reflects a decrease in the dilutive effect of in-the-money options and unvested restricted stock awards due to lower market prices of the Company's shares.
Second Quarter Fiscal 2020 vs. First Quarter Fiscal 2020
In the second quarter of fiscal 2020, revenue decreased 10 percent to $405.9 million from $452.6 million in the first quarter of fiscal 2020. Management fees were down 10 percent, primarily reflecting a 6 percent decrease in average consolidated assets under management, a 4 percent decline in consolidated average annualized management fee rates and the impact of two fewer fee days in the second quarter of fiscal 2020. Performance fees were $2.5 million in the second quarter of fiscal 2020 and $0.2 million in the first quarter of fiscal 2020. Distribution and service fee revenues were collectively down 11 percent, reflecting lower managed assets in fund share classes that are subject to these fees.
Operating expenses decreased 11 percent to $284.0 million in the second quarter of fiscal 2020 from $317.8 million in the first quarter of fiscal 2020, reflecting decreases in compensation, distribution expense, service fee expense, fund-related expenses and other operating expenses, partially offset by an increase in amortization of deferred sales commissions. The decrease in compensation reflects lower operating income-based and investment performance-based bonus accruals, decreases related to seasonal benefit costs and payroll taxes that are recognized primarily in the first fiscal quarter, lower salary and benefit expenses driven by two fewer payroll days in the second fiscal quarter and a decrease in severance expenses, partially offset by higher sales-based incentive compensation. The decrease in compensation also reflects lower stock-based compensation expense driven by accelerated vesting of restricted stock awards and accelerated recognition of employee stock option expense in connection with employee retirements in the first quarter of fiscal 2020. The decrease in distribution expense reflects lower Class C distribution fee payments, lower marketing and promotion costs, lower intermediary marketing support payments and a decrease in up-front sales commission expense. The decrease in service fee expense reflects lower Class A and private fund service fee payments. The decrease in fund-related expenses reflects lower sub-advisory fees paid, offset in part by increases in fund expenses borne by the Company. Other operating expenses decreased 3 percent, primarily reflecting lower travel expenses and lower professional services expenses, partially offset by increases in information technology spending and higher facilities expenses. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization.
Operating income decreased 9 percent to $122.0 million in the second quarter of fiscal 2020 from $134.7 million in the first quarter of fiscal 2020. The Company's operating margin increased to 30.0 percent in the second quarter of fiscal 2020 from 29.8 percent in the first quarter of fiscal 2020. As shown in Attachment 3, on an adjusted basis including the management fee revenue and excluding the operating expenses of consolidated investment entities, operating income was down 10 percent sequentially. Our adjusted operating margin increased to 30.5 percent in the second quarter of fiscal 2020 from 30.3 percent in the first quarter of fiscal 2020.
Non-operating expense totaled $73.4 million in the second quarter of fiscal 2020 versus $8.4 million of non-operating income in the first quarter of fiscal 2020. The sequential change reflects a $66.6 million increase in net losses and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies, a $14.7 million increase in the net expenses of consolidated CLO entities and a $0.5 million increase in interest expense. The increase in interest expense is attributable to borrowings under the Company's line of credit during the second quarter of fiscal 2020. Such borrowings were fully repaid prior to quarter-end.
The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 45.3 percent in the second quarter of fiscal 2020 and 22.8 percent in the first quarter of fiscal 2020. Excluding the impact of consolidated investment entities and other seed capital investments and the net excess tax benefits associated with the Company's stock-based compensation plans, the Company's adjusted effective tax rate, calculated on the same basis, was 24.9 percent in the second quarter of fiscal 2020 and 27.6 percent in the first quarter of fiscal 2020. The Company's effective tax rate is discussed in greater detail under "Taxation" below.
Equity in net income of affiliates was $1.5 million in the second quarter of fiscal 2020 and $2.3 million in the first quarter of fiscal 2020, substantially all relating to the Company's investment in Hexavest.
As detailed in Attachment 4, net income (loss) attributable to non-controlling and other beneficial interests was $(44.0) million in the second quarter of fiscal 2020 and $8.9 million in the first quarter of fiscal 2020. The sequential change reflects a decline in income and gains (losses) of consolidated investment entities and other seed capital investments driven primarily by markdowns in position values to reflect securities price declines in the second quarter of fiscal 2020.
The Company's weighted average basic shares outstanding decreased to 109.2 million in the second quarter of fiscal 2020 from the 109.4 million in the first quarter of fiscal 2020. The sequential reduction reflects share repurchases in excess of new shares issued upon the vesting of restricted stock awards and the exercise of employee stock options. On a diluted basis, the Company's weighted average shares outstanding were 111.6 million in the second quarter of fiscal 2020 and 114.7 million in the first quarter of fiscal 2020, a decrease of 3 percent. The decline in weighted average diluted shares outstanding further reflects a decrease in the dilutive effect of in-the-money options and unvested restricted stock awards due to lower market prices of the Company's shares.
Taxation | ||||||
The following table reconciles the U.S. statutory federal income tax rate to the Company's effective income tax rate: | ||||||
Three Months Ended | ||||||
April 30, | January 31, | April 30, | ||||
2020 | 2020 | 2019 | ||||
Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % |
State income tax, net of federal income tax benefits | 8.8 | 4.9 | 4.5 | |||
Net income attributable to non-controlling and other beneficial interests | 16.7 | (0.5) | (0.9) | |||
Other items | 1.0 | 0.8 | 0.7 | |||
Net excess tax benefits from stock-based compensation plans | (2.2) | (3.4) | (0.2) | |||
Effective income tax rate | 45.3 | % | 22.8 | % | 25.1 | % |
The Company's income tax provision for the second quarter of fiscal 2020, second quarter of fiscal 2019 and first quarter of fiscal 2020 includes $0.9 million, $0.7 million and $1.3 million, respectively, of charges associated with certain provisions of the Tax Cuts and Jobs Act that took effect for the Company in fiscal 2019, relating principally to limitations on the deductibility of executive compensation.
The Company's income tax provision was reduced by net excess tax benefits related to stock-based compensation awards totaling $1.1 million in the second quarter of fiscal 2020, $0.3 million in the second quarter of fiscal 2019 and $4.9 million in the first quarter of fiscal 2020.
The Company's calculations of adjusted net income and adjusted earnings per diluted share remove the impact of gains (losses) and other investment income (expense) of consolidated investment entities and other seed capital investments, add back the management fees and expenses of consolidated investment entities, and exclude the tax impact of stock-based compensation shortfalls or windfalls. On this basis, the Company's adjusted effective tax rate was 24.9 percent in the second quarter of fiscal 2020, 26.9 percent in the second quarter of fiscal 2019 and 27.6 percent in the first quarter of fiscal 2020. On the same adjusted basis, the Company estimates that its effective tax rate will be approximately 26.5 to 27.0 percent for the balance of fiscal 2020 and for the fiscal year as a whole. The Company's actual adjusted effective tax rate for fiscal 2020 may vary from this estimate due to changes in the Company's tax policy interpretations and assumptions, additional regulatory guidance that may be issued and other factors.
The Company's adjusted effective tax rate is calculated by dividing our adjusted income tax expense by adjusted income before income taxes and equity in net income of affiliates, which was $119.0 million in the second quarter of fiscal 2020, $126.5 million in the second quarter of fiscal 2019 and $134.3 million in the first quarter of fiscal 2020. Adjusted income before income taxes and equity in net income of affiliates does not include the allocation to non-controlling interests and removes the impact of gains (losses) and other investment income (expense) of the Company's consolidated investment entities and other seed capital investments and adds back the management fees and expenses of consolidated investment entities.
The following table reconciles income tax expense (benefit) to adjusted income tax expense (benefit):
(in thousands) | Three Months Ended | |||||
April 30, | January 31, | April 30, | ||||
2020 | 2020 | 2019 | ||||
Income tax expense | $ | 22,017 | $ | 32,578 | $ | 37,069 |
Income tax expense attributable to: | ||||||
Management fees of consolidated sponsored | ||||||
funds and consolidated CLO entities | 330 | 498 | 274 | |||
Non-management expenses of consolidated | ||||||
sponsored funds | 296 | 332 | 335 | |||
Net (gains) losses and other investment income | ||||||
related to consolidated sponsored funds and | ||||||
other seed capital investments | 1,606 | (1,715) | (1,086) | |||
Other (income) expense of consolidated CLO entities | 4,262 | 474 | (2,794) | |||
Net excess tax benefits from stock-based | ||||||
compensation plans | 1,059 | 4,860 | 277 | |||
Adjusted income tax expense | $ | 29,570 | $ | 37,027 | $ | 34,075 |
Balance Sheet Information
As of April 30, 2020, the Company held cash and cash equivalents of $914.9 million and its investments included $36.4 million of short-term debt securities with maturities between 90 days and one year. There were no outstanding borrowings under the Company's $300 million credit facility at such date. During the first six months of fiscal 2020, the Company used $97.6 million to repurchase and retire approximately 2.4 million shares of its Non-Voting Common Stock under its repurchase authorizations. Of the current 8.0 million share repurchase authorization, approximately 4.0 million shares remain available.
Conference Call Information
Eaton Vance Corp. will host a conference call and webcast at 11:00 AM eastern time today to discuss the financial results for the three and six months ended April 30, 2020. To participate in the conference call, please dial 866-521-4909 (domestic) or 647-427-2311 (international) and refer to "Eaton Vance Corp. Second Fiscal Quarter Earnings." A webcast of the conference call can also be accessed via Eaton Vance's website, eatonvance.com.
A replay of the call will be available for one week by calling 800-585-8367 (domestic) or 416-621-4642 (international) or by accessing Eaton Vance's website, eatonvance.com. To listen to the replay, enter the conference ID number 7456187 when instructed.
About Eaton Vance Corp.
Eaton Vance Corp. EV provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Through principal investment affiliates Eaton Vance Management, Parametric, Atlanta Capital, Calvert and Hexavest, the Company offers a diversity of investment approaches, encompassing bottom-up and top-down fundamental active management, responsible investing, systematic investing and customized implementation of client-specified portfolio exposures. As of April 30, 2020, Eaton Vance had consolidated assets under management of $465.3 billion. Exemplary service, timely innovation and attractive returns across market cycles have been hallmarks of Eaton Vance since 1924. For more information, visit eatonvance.com.
Forward-Looking Statements
This news release may contain statements that are not historical facts, referred to as "forward-looking statements." The Company's actual future results may differ significantly from those stated in any forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, the scope and duration of the COVID-19 pandemic and its impact on the global economy or capital markets, client sales and redemption activity, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed in the Company's filings with the Securities and Exchange Commission.
Attachment 1 | ||||||||||||||||||
Eaton Vance Corp. | ||||||||||||||||||
Summary of Results of Operations | ||||||||||||||||||
(in thousands, except per share figures) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
% | % | |||||||||||||||||
Change | Change | |||||||||||||||||
Q2 2020 | Q2 2020 | |||||||||||||||||
April 30, | January 31, | April 30, | vs. | vs. | April 30, | April 30, | % | |||||||||||
2020 | 2020 | 2019 | Q1 2020 | Q2 2019 | 2020 | 2019 | Change | |||||||||||
Revenue: | ||||||||||||||||||
Management fees | $ | 354,121 | $ | 394,801 | $ | 359,384 | (10) | % | (1) | % | $ | 748,922 | $ | 710,134 | 5 | % | ||
Distribution and underwriter fees | 19,122 | 21,578 | 20,054 | (11) | (5) | 40,700 | 43,144 | (6) | ||||||||||
Service fees | 30,557 | 33,939 | 29,586 | (10) | 3 | 64,496 | 58,946 | 9 | ||||||||||
Other revenue | 2,111 | 2,236 | 2,837 | (6) | (26) | 4,347 | 6,053 | (28) | ||||||||||
Total revenue | 405,911 | 452,554 | 411,861 | (10) | (1) | 858,465 | 818,277 | 5 | ||||||||||
Expenses: | ||||||||||||||||||
Compensation and related costs | 149,072 | 171,982 | 153,542 | (13) | (3) | 321,054 | 307,430 | 4 | ||||||||||
Distribution expense | 33,533 | 40,003 | 35,930 | (16) | (7) | 73,536 | 73,438 | - | ||||||||||
Service fee expense | 26,648 | 29,755 | 25,921 | (10) | 3 | 56,403 | 51,438 | 10 | ||||||||||
Amortization of deferred sales commissions | 6,289 | 5,968 | 5,571 | 5 | 13 | 12,257 | 11,118 | 10 | ||||||||||
Fund-related expenses | 10,897 | 11,067 | 9,960 | (2) | 9 | 21,964 | 19,605 | 12 | ||||||||||
Other expenses | 57,516 | 59,060 | 53,764 | (3) | 7 | 116,576 | 106,945 | 9 | ||||||||||
Total expenses | 283,955 | 317,835 | 284,688 | (11) | - | 601,790 | 569,974 | 6 | ||||||||||
Operating income | 121,956 | 134,719 | 127,173 | (9) | (4) | 256,675 | 248,303 | 3 | ||||||||||
Non-operating income (expense): | ||||||||||||||||||
Gains (losses) and other investment income, net | (50,512) | 16,090 | 15,206 | NM | NM | (34,422) | 21,039 | NM | ||||||||||
Interest expense | (6,364) | (5,888) | (5,888) | 8 | 8 | (12,252) | (12,019) | 2 | ||||||||||
Other income (expense) of consolidated | ||||||||||||||||||
collateralized loan obligation (CLO) entities: | ||||||||||||||||||
Gains (losses) and other investment income, net | (4,841) | 15,563 | 21,794 | NM | NM | 10,722 | 27,235 | (61) | ||||||||||
Interest and other expense | (11,647) | (17,396) | (10,821) | (33) | 8 | (29,043) | (19,157) | 52 | ||||||||||
Total non-operating income (expense) | (73,364) | 8,369 | 20,291 | NM | NM | (64,995) | 17,098 | NM | ||||||||||
Income before income taxes and equity | ||||||||||||||||||
in net income of affiliates | 48,592 | 143,088 | 147,464 | (66) | (67) | 191,680 | 265,401 | (28) | ||||||||||
Income taxes | (22,017) | (32,578) | (37,069) | (32) | (41) | (54,595) | (64,694) | (16) | ||||||||||
Equity in net income of affiliates, net of tax | 1,481 | 2,325 | 2,735 | (36) | (46) | 3,806 | 4,683 | (19) | ||||||||||
Net income | 28,056 | 112,835 | 113,130 | (75) | (75) | 140,891 | 205,390 | (31) | ||||||||||
Net (income) loss attributable to non-controlling | ||||||||||||||||||
and other beneficial interests | 44,002 | (8,850) | (11,323) | NM | NM | 35,152 | (16,782) | NM | ||||||||||
Net income attributable to | ||||||||||||||||||
Eaton Vance Corp. shareholders | $ | 72,058 | $ | 103,985 | $ | 101,807 | (31) | (29) | $ | 176,043 | $ | 188,608 | (7) | |||||
Earnings per share: | ||||||||||||||||||
Basic | $ | 0.66 | $ | 0.95 | $ | 0.92 | (31) | (28) | $ | 1.61 | $ | 1.69 | (5) | |||||
Diluted | $ | 0.65 | $ | 0.91 | $ | 0.89 | (29) | (27) | $ | 1.55 | $ | 1.64 | (5) | |||||
Weighted average shares outstanding: | ||||||||||||||||||
Basic | 109,224 | 109,380 | 110,379 | - | (1) | 109,297 | 111,315 | (2) | ||||||||||
Diluted | 111,610 | 114,688 | 114,249 | (3) | (2) | 113,292 | 114,795 | (1) | ||||||||||
Dividends declared per share | $ | 0.375 | $ | 0.375 | $ | 0.350 | - | 7 | $ | 0.750 | $ | 0.700 | 7 | |||||
Attachment 2 | ||||||||||||||||||||
Eaton Vance Corp. | ||||||||||||||||||||
Reconciliation of net income attributable to Eaton Vance Corp. | ||||||||||||||||||||
shareholders to adjusted net income attributable to Eaton Vance Corp. | ||||||||||||||||||||
shareholders and earnings per diluted share to adjusted earnings per diluted share | ||||||||||||||||||||
(in thousands, except per share figures) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
% | % | |||||||||||||||||||
Change | Change | |||||||||||||||||||
Q2 2020 | Q2 2020 | |||||||||||||||||||
April 30, | January 31, | April 30, | vs. | vs. | April 30, | April 30, | % | |||||||||||||
2020 | 2020 | 2019 | Q1 2020 | Q2 2019 | 2020 | 2019 | Change | |||||||||||||
Net income attributable to Eaton Vance | ||||||||||||||||||||
Corp. shareholders | $ | 72,058 | $ | 103,985 | $ | 101,807 | (31) | % | (29) | % | $ | 176,043 | $ | 188,608 | (7) | % | ||||
Management fees of consolidated sponsored | ||||||||||||||||||||
funds and consolidated CLO entities, net of tax(1) | 947 | 1,428 | 802 | (34) | 18 | 2,375 | 1,342 | 77 | ||||||||||||
Non-management expenses of consolidated | ||||||||||||||||||||
sponsored funds, net of tax(2) | 848 | 955 | 980 | (11) | (13) | 1,803 | 2,073 | (13) | ||||||||||||
Net (gains) losses and other investment income | ||||||||||||||||||||
related to consolidated sponsored funds and | ||||||||||||||||||||
other seed capital investments, net of tax(3) | 4,607 | (4,920) | (3,178) | NM | NM | (313) | (3,582) | (91) | ||||||||||||
Other (income) expense of consolidated CLO | ||||||||||||||||||||
entities, net of tax(4) | 12,226 | 1,359 | (8,179) | 800 | NM | 13,585 | (6,022) | NM | ||||||||||||
Net excess tax benefit from stock-based | ||||||||||||||||||||
compensation plans | (1,059) | (4,860) | (277) | (78) | 282 | (5,919) | (3,226) | 83 | ||||||||||||
Adjusted net income attributable to Eaton | ||||||||||||||||||||
Vance Corp. shareholders | $ | 89,627 | $ | 97,947 | $ | 91,955 | (8) | (3) | $ | 187,574 | $ | 179,193 | 5 | |||||||
Earnings per diluted share | $ | 0.65 | $ | 0.91 | $ | 0.89 | (29) | (27) | $ | 1.55 | $ | 1.64 | (5) | |||||||
Management fees of consolidated sponsored | ||||||||||||||||||||
funds and consolidated CLO entities, net of tax | 0.01 | 0.01 | - | - | NM | 0.02 | 0.01 | 100 | ||||||||||||
Non-management expenses of consolidated | ||||||||||||||||||||
sponsored funds, net of tax | 0.01 | 0.01 | 0.01 | - | - | 0.02 | 0.02 | - | ||||||||||||
Net (gains) losses and other investment income | ||||||||||||||||||||
related to consolidated sponsored funds and | ||||||||||||||||||||
other seed capital investments, net of tax | 0.04 | (0.04) | (0.03) | NM | NM | - | (0.03) | (100) | ||||||||||||
Other (income) expense of consolidated CLO | ||||||||||||||||||||
entities, net of tax | 0.11 | 0.01 | (0.07) | NM | NM | 0.12 | (0.05) | NM | ||||||||||||
Net excess tax benefit from stock-based | ||||||||||||||||||||
compensation plans | (0.02) | (0.05) | - | (60) | NM | (0.05) | (0.03) | 67 | ||||||||||||
Adjusted earnings per diluted share | $ | 0.80 | $ | 0.85 | $ | 0.80 | (6) | - | $ | 1.66 | $ | 1.56 | 6 | |||||||
(1) | Represents management fees eliminated upon the consolidation of sponsored funds and CLO entities. On a pre-tax basis, these totaled $1.3 million in the three months ended April 30, 2020, $1.9 million in the three months ended January 31, 2020, $1.1 million in the three months ended April 30, 2019, $3.2 million in the six months ended April 30, 2020 and $1.8 million in the six months ended April 30, 2019. | |||||||||||||||||||
(2) | Represents expenses of consolidated sponsored funds. On a pre-tax basis, these totaled $1.1 million in the three months ended April 30, 2020, $1.3 million in the three months ended January 31, 2020, $1.3 million in the three months ended April 30, 2019, $2.4 million in the six months ended April 30, 2020 and $2.8 million in the six months ended April 30, 2019. | |||||||||||||||||||
(3) | Represents gains, losses and other investment income earned on investments in sponsored strategies, whether accounted for as consolidated funds, separate accounts or equity investments, as well as the gains and losses recognized on derivatives used to hedge these investments. Stated amounts are net of non-controlling interests. On a pre-tax basis, these totaled $(6.2) million in the three months ended April 30, 2020, $6.6 million in the three months ended January 31, 2020, $4.3 million in the three months ended April 30, 2019, $0.4 million in the six months ended April 30, 2020 and $4.8 million in the six months ended April 30, 2019. | |||||||||||||||||||
(4) | Represents other income and expenses of consolidated CLO entities. On a pre-tax basis, these totaled $(16.5) million in the three months ended April 30, 2020, $(1.8) million in the three months ended January 31, 2020, $11.0 million in the three months ended April 30, 2019, $(18.3) million in the six months ended April 30, 2020 and $8.1 million in the six months ended April 30, 2019. | |||||||||||||||||||
Attachment 3 | ||||||||||||||||||||
Eaton Vance Corp. | ||||||||||||||||||||
Reconciliation of operating income and operating margin | ||||||||||||||||||||
to adjusted operating income and adjusted operating margin | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | |||||||||||||||||||
% | % | |||||||||||||||||||
Change | Change | |||||||||||||||||||
Q2 2020 | Q2 2020 | |||||||||||||||||||
April 30, | January 31, | April 30, | vs. | vs. | April 30, | April 30, | % | |||||||||||||
2020 | 2020 | 2019 | Q1 2020 | Q2 2019 | 2020 | 2019 | Change | |||||||||||||
Total revenue | $ | 405,911 | $ | 452,554 | $ | 411,861 | (10) | (1) | $ | 858,465 | $ | 818,277 | 5 | |||||||
Management fees of consolidated sponsored | ||||||||||||||||||||
funds and consolidated CLO entities(1) | 1,277 | 1,925 | 1,076 | (34) | 19 | 3,202 | 1,801 | 78 | ||||||||||||
Adjusted total revenue | $ | 407,188 | $ | 454,479 | $ | 412,937 | (10) | (1) | $ | 861,667 | $ | 820,078 | 5 | |||||||
Total expenses | $ | 283,955 | $ | 317,835 | $ | 284,688 | (11) | - | $ | 601,790 | $ | 569,974 | 6 | |||||||
Non-management expenses of consolidated | ||||||||||||||||||||
sponsored funds(2) | (1,144) | (1,287) | (1,314) | (11) | (13) | (2,432) | (2,781) | (13) | ||||||||||||
Adjusted total expenses | $ | 282,811 | $ | 316,548 | $ | 283,374 | (11) | - | $ | 599,358 | $ | 567,193 | 6 | |||||||
Operating income | $ | 121,956 | $ | 134,719 | $ | 127,173 | (9) | % | (4) | % | $ | 256,675 | $ | 248,303 | 3 | % | ||||
Management fees of consolidated sponsored | ||||||||||||||||||||
funds and consolidated CLO entities(1) | 1,277 | 1,925 | 1,076 | (34) | 19 | 3,202 | 1,801 | 78 | ||||||||||||
Non-management expenses of consolidated | ||||||||||||||||||||
sponsored funds(2) | 1,144 | 1,287 | 1,314 | (11) | (13) | 2,432 | 2,781 | (13) | ||||||||||||
Adjusted operating income | $ | 124,377 | $ | 137,931 | $ | 129,563 | (10) | (4) | $ | 262,309 | $ | 252,885 | 4 | |||||||
Operating margin | 30.0 | % | 29.8 | % | 30.9 | % | 1 | (3) | 29.9 | % | 30.3 | % | (1) | |||||||
Adjusted operating margin | 30.5 | % | 30.3 | % | 31.4 | % | 1 | (3) | 30.4 | % | 30.8 | % | (1) | |||||||
(1) Reflects the add-back of management fees eliminated upon consolidation of sponsored funds and CLO entities. | ||||||||||||||||||||
(2) Reflects the exclusion from expenses of the operating expenses of consolidated sponsored funds. | ||||||||||||||||||||
Attachment 4 | |||||||||||||||||||
Eaton Vance Corp. | |||||||||||||||||||
Components of net income attributable | |||||||||||||||||||
to non-controlling and other beneficial interests | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
% | % | ||||||||||||||||||
Change | Change | ||||||||||||||||||
Q2 2020 | Q2 2020 | ||||||||||||||||||
April 30, | January 31, | April 30, | vs. | vs. | April 30, | April 30, | % | ||||||||||||
2020 | 2020 | 2019 | Q1 2020 | Q2 2019 | 2020 | 2019 | Change | ||||||||||||
Consolidated sponsored funds | $ | (45,276) | $ | 7,177 | $ | 8,141 | NM | % | NM | % | $ | (38,099) | $ | 10,563 | NM | % | |||
Majority-owned subsidiaries | 1,274 | 1,673 | 3,182 | (24) | (60) | 2,947 | 6,219 | (53) | |||||||||||
Net income (loss) attributable to non-controlling | |||||||||||||||||||
and other beneficial interests | $ | (44,002) | $ | 8,850 | $ | 11,323 | NM | NM | $ | (35,152) | $ | 16,782 | NM | ||||||
Attachment 5 | ||||||
Eaton Vance Corp. | ||||||
Balance Sheet | ||||||
(in thousands, except per share figures) | ||||||
April 30, | October 31,(1) | |||||
2020 | 2019 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 914,857 | $ | 557,668 | ||
Management fees and other receivables | 219,944 | 237,864 | ||||
Investments | 635,079 | 1,060,739 | ||||
Assets of consolidated CLO entities: | ||||||
Cash | 42,081 | 48,704 | ||||
Bank loans and other investments | 1,135,609 | 1,704,270 | ||||
Other assets | 5,555 | 28,039 | ||||
Deferred sales commissions | 59,813 | 55,211 | ||||
Deferred income taxes | 60,914 | 62,661 | ||||
Equipment and leasehold improvements, net | 71,797 | 72,798 | ||||
Operating lease right-of-use assets | 261,660 | - | ||||
Intangible assets, net | 73,921 | 75,907 | ||||
Goodwill | 259,681 | 259,681 | ||||
Loan to affiliate | 5,000 | 5,000 | ||||
Other assets | 100,803 | 85,087 | ||||
Total assets | $ | 3,846,714 | $ | 4,253,629 | ||
Liabilities, Temporary Equity and Permanent Equity | ||||||
Liabilities: | ||||||
Accrued compensation | $ | 122,051 | $ | 240,722 | ||
Accounts payable and accrued expenses | 72,411 | 89,984 | ||||
Dividend payable | 53,803 | 55,177 | ||||
Debt | 620,930 | 620,513 | ||||
Operating lease liabilities | 310,860 | - | ||||
Liabilities of consolidated CLO entities: | ||||||
Senior and subordinated note obligations | 1,088,574 | 1,617,095 | ||||
Other liabilities | 39,454 | 51,122 | ||||
Other liabilities | 50,391 | 108,982 | ||||
Total liabilities | 2,358,474 | 2,783,595 | ||||
Commitments and contingencies | ||||||
Temporary Equity: | ||||||
Redeemable non-controlling interests | 211,135 | 285,915 | ||||
Total temporary equity | 211,135 | 285,915 | ||||
Permanent Equity: | ||||||
Voting Common Stock, par value $0.00390625 per share: | ||||||
Authorized, 1,280,000 shares | ||||||
Issued and outstanding, 478,643 and 422,935 shares, respectively | 2 | 2 | ||||
Non-Voting Common Stock, par value $0.00390625 per share: | ||||||
Authorized, 190,720,000 shares | ||||||
Issued and outstanding, 113,929,794 and 113,143,567 shares, respectively | 445 | 442 | ||||
Additional paid-in capital | 12,094 | - | ||||
Notes receivable from stock option exercises | (7,070) | (8,447) | ||||
Accumulated other comprehensive loss | (68,925) | (58,317) | ||||
Retained earnings | 1,340,559 | 1,250,439 | ||||
Total permanent equity | 1,277,105 | 1,184,119 | ||||
Total liabilities, temporary equity and permanent equity | $ | 3,846,714 | $ | 4,253,629 | ||
Attachment 6 | ||||||||||||||||
Eaton Vance Corp. | ||||||||||||||||
Consolidated Assets under Management and Net Flows by Investment Mandate(1) | ||||||||||||||||
(in millions) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | January 31, | April 30, | April 30, | April 30, | ||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Equity assets – beginning of period(2) | $ | 138,708 | $ | 131,895 | $ | 116,990 | $ | 131,895 | $ | 115,772 | ||||||
Sales and other inflows | 8,316 | 7,806 | 5,050 | 16,122 | 11,270 | |||||||||||
Redemptions/outflows | (8,793) | (6,182) | (4,570) | (14,975) | (10,031) | |||||||||||
Net flows | (477) | 1,624 | 480 | 1,147 | 1,239 | |||||||||||
Exchanges | (205) | 3 | 150 | (202) | 42 | |||||||||||
Market value change | (15,753) | 5,186 | 8,249 | (10,567) | 8,816 | |||||||||||
Equity assets – end of period | $ | 122,273 | $ | 138,708 | $ | 125,869 | $ | 122,273 | $ | 125,869 | ||||||
Fixed income assets – beginning of period(3) | 64,262 | 62,378 | 56,910 | 62,378 | 54,339 | |||||||||||
Sales and other inflows | 7,898 | 5,086 | 5,237 | 12,984 | 11,782 | |||||||||||
Redemptions/outflows | (7,719) | (3,947) | (4,452) | (11,666) | (9,318) | |||||||||||
Net flows | 179 | 1,139 | 785 | 1,318 | 2,464 | |||||||||||
Exchanges | 154 | 23 | 71 | 177 | 397 | |||||||||||
Market value change | (3,248) | 722 | 765 | (2,526) | 1,331 | |||||||||||
Fixed income assets – end of period | $ | 61,347 | $ | 64,262 | $ | 58,531 | $ | 61,347 | $ | 58,531 | ||||||
Floating-rate income assets – beginning of period | 33,836 | 35,103 | 40,943 | 35,103 | 44,837 | |||||||||||
Sales and other inflows | 1,937 | 1,689 | 2,079 | 3,626 | 5,645 | |||||||||||
Redemptions/outflows | (5,096) | (3,046) | (3,657) | (8,142) | (10,135) | |||||||||||
Net flows | (3,159) | (1,357) | (1,578) | (4,516) | (4,490) | |||||||||||
Exchanges | (119) | (27) | (57) | (146) | (323) | |||||||||||
Market value change | (2,736) | 117 | 442 | (2,619) | (274) | |||||||||||
Floating-rate income assets – end of period | $ | 27,822 | $ | 33,836 | $ | 39,750 | $ | 27,822 | $ | 39,750 | ||||||
Alternative assets – beginning of period(4) | 8,553 | 8,372 | 9,991 | 8,372 | 12,139 | |||||||||||
Sales and other inflows | 498 | 675 | 802 | 1,173 | 1,846 | |||||||||||
Redemptions/outflows | (1,182) | (593) | (1,275) | (1,775) | (4,539) | |||||||||||
Net flows | (684) | 82 | (473) | (602) | (2,693) | |||||||||||
Exchanges | (14) | - | (149) | (14) | (176) | |||||||||||
Market value change | (629) | 99 | 40 | (530) | 139 | |||||||||||
Alternative assets – end of period | $ | 7,226 | $ | 8,553 | $ | 9,409 | $ | 7,226 | $ | 9,409 | ||||||
Parametric custom portfolios assets – beginning of period(5) | 175,318 | 164,895 | 141,050 | 164,895 | 134,345 | |||||||||||
Sales and other inflows | 13,896 | 9,745 | 9,099 | 23,641 | 19,263 | |||||||||||
Redemptions/outflows | (12,596) | (6,221) | (5,696) | (18,817) | (10,996) | |||||||||||
Net flows | 1,300 | 3,524 | 3,403 | 4,824 | 8,267 | |||||||||||
Exchanges | 4 | 1 | (22) | 5 | 53 | |||||||||||
Market value change | (17,926) | 6,898 | 9,173 | (11,028) | 10,939 | |||||||||||
Parametric custom portfolios assets – end of period | $ | 158,696 | $ | 175,318 | $ | 153,604 | $ | 158,696 | $ | 153,604 | ||||||
Parametric overlay services assets – beginning of period | 97,514 | 94,789 | 78,768 | 94,789 | 77,871 | |||||||||||
Sales and other inflows | 29,025 | 21,313 | 14,559 | 50,338 | 31,681 | |||||||||||
Redemptions/outflows | (35,494) | (20,199) | (12,544) | (55,693) | (30,352) | |||||||||||
Net flows | (6,469) | 1,114 | 2,015 | (5,355) | 1,329 | |||||||||||
Exchanges | 178 | - | - | 178 | - | |||||||||||
Market value change | (3,304) | 1,611 | 1,992 | (1,693) | 3,575 | |||||||||||
Parametric overlay services assets – end of period | $ | 87,919 | $ | 97,514 | $ | 82,775 | $ | 87,919 | $ | 82,775 | ||||||
Total assets under management – beginning of period | 518,191 | 497,432 | 444,652 | 497,432 | 439,303 | |||||||||||
Sales and other inflows | 61,570 | 46,314 | 36,826 | 107,884 | 81,487 | |||||||||||
Redemptions/outflows | (70,880) | (40,188) | (32,194) | (111,068) | (75,371) | |||||||||||
Net flows | (9,310) | 6,126 | 4,632 | (3,184) | 6,116 | |||||||||||
Exchanges | (2) | - | (7) | (2) | (7) | |||||||||||
Market value change | (43,596) | 14,633 | 20,661 | (28,963) | 24,526 | |||||||||||
Total assets under management – end of period | $ | 465,283 | $ | 518,191 | $ | 469,938 | $ | 465,283 | $ | 469,938 | ||||||
(1) | Consolidated Eaton Vance Corp. See Attachment 12 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above. | |||||||||||||||
(2) | Includes balanced and other multi‐asset mandates. Excludes equity mandates reported as Parametric custom portfolios. | |||||||||||||||
(3) | Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020. | |||||||||||||||
(4) | Consists of absolute return, commodity and currency mandates. | |||||||||||||||
(5) | Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020. | |||||||||||||||
Attachment 7 | ||||||||||||||||
Eaton Vance Corp. | ||||||||||||||||
Consolidated Assets under Management and Net Flows by Investment Vehicle(1) | ||||||||||||||||
(in millions) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | January 31, | April 30, | April 30, | April 30, | ||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Funds – beginning of period | $ | 180,539 | $ | 174,068 | $ | 162,750 | $ | 174,068 | $ | 164,968 | ||||||
Sales and other inflows | 14,316 | 11,496 | 10,510 | 25,812 | 24,233 | |||||||||||
Redemptions/outflows | (17,297) | (9,161) | (9,399) | (26,458) | (24,824) | |||||||||||
Net flows | (2,981) | 2,335 | 1,111 | (646) | (591) | |||||||||||
Exchanges | (3) | - | (7) | (3) | (105) | |||||||||||
Market value change | (17,151) | 4,136 | 7,108 | (13,015) | 6,690 | |||||||||||
Funds – end of period | $ | 160,404 | $ | 180,539 | $ | 170,962 | $ | 160,404 | $ | 170,962 | ||||||
Institutional separate accounts – beginning of period | 175,258 | 173,331 | 155,224 | 173,331 | 153,996 | |||||||||||
Sales and other inflows | 33,732 | 23,605 | 16,327 | 57,337 | 37,156 | |||||||||||
Redemptions/outflows | (41,869) | (25,449) | (16,499) | (67,318) | (38,828) | |||||||||||
Net flows | (8,137) | (1,844) | (172) | (9,981) | (1,672) | |||||||||||
Exchanges | 6 | - | - | 6 | 98 | |||||||||||
Market value change | (12,372) | 3,771 | 5,408 | (8,601) | 8,038 | |||||||||||
Institutional separate accounts – end of period | $ | 154,755 | $ | 175,258 | $ | 160,460 | $ | 154,755 | $ | 160,460 | ||||||
Individual separate accounts – beginning of period | 162,394 | 150,033 | 126,678 | 150,033 | 120,339 | |||||||||||
Sales and other inflows | 13,522 | 11,213 | 9,989 | 24,735 | 20,098 | |||||||||||
Redemptions/outflows | (11,714) | (5,578) | (6,296) | (17,292) | (11,719) | |||||||||||
Net flows | 1,808 | 5,635 | 3,693 | 7,443 | 8,379 | |||||||||||
Exchanges | (5) | - | - | (5) | - | |||||||||||
Market value change | (14,073) | 6,726 | 8,145 | (7,347) | 9,798 | |||||||||||
Individual separate accounts – end of period | $ | 150,124 | $ | 162,394 | $ | 138,516 | $ | 150,124 | $ | 138,516 | ||||||
Total assets under management – beginning of period | 518,191 | 497,432 | 444,652 | 497,432 | 439,303 | |||||||||||
Sales and other inflows | 61,570 | 46,314 | 36,826 | 107,884 | 81,487 | |||||||||||
Redemptions/outflows | (70,880) | (40,188) | (32,194) | (111,068) | (75,371) | |||||||||||
Net flows | (9,310) | 6,126 | 4,632 | (3,184) | 6,116 | |||||||||||
Exchanges | (2) | - | (7) | (2) | (7) | |||||||||||
Market value change | (43,596) | 14,633 | 20,661 | (28,963) | 24,526 | |||||||||||
Total assets under management – end of period | $ | 465,283 | $ | 518,191 | $ | 469,938 | $ | 465,283 | $ | 469,938 | ||||||
(1) | Consolidated Eaton Vance Corp. See Attachment 12 for directly managed assets and flows of 49 percent‐owned Hexavest, which are not included in the table above. | |||||||||||||||
Attachment 8 | ||||||||||||||
Eaton Vance Corp. | ||||||||||||||
Consolidated Assets under Management by Investment Mandate(1) | ||||||||||||||
(in millions) | ||||||||||||||
April 30, | January 31, | % | April 30, | % | ||||||||||
2020 | 2020 | Change | 2019 | Change | ||||||||||
Equity(2) | $ | 122,273 | $ | 138,708 | -12% | $ | 125,869 | -3% | ||||||
Fixed income(3) | 61,347 | 64,262 | -5% | 58,531 | 5% | |||||||||
Floating-rate income | 27,822 | 33,836 | -18% | 39,750 | -30% | |||||||||
Alternative(4) | 7,226 | 8,553 | -16% | 9,409 | -23% | |||||||||
Parametric custom portfolios(5) | 158,696 | 175,318 | -9% | 153,604 | 3% | |||||||||
Parametric overlay services | 87,919 | 97,514 | -10% | 82,775 | 6% | |||||||||
Total | $ | 465,283 | $ | 518,191 | -10% | $ | 469,938 | -1% | ||||||
(1) | Consolidated Eaton Vance Corp. See Attachment 12 for directly managed assets and flows of 49 percent‐owned Hexavest, which are not included in the table above. | |||||||||||||
(2) | Includes balanced and other multi‐asset mandates. Excludes equity mandates reported as Parametric custom portfolios. | |||||||||||||
(3) | Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios. | |||||||||||||
(4) | Consists of absolute return, commodity and currency mandates. | |||||||||||||
(5) | Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized. | |||||||||||||
Attachment 9 | ||||||||||||||
Eaton Vance Corp. | ||||||||||||||
Consolidated Assets under Management by Investment Vehicle(1) | ||||||||||||||
(in millions) | ||||||||||||||
April 30, | January 31, | % | April 30, | % | ||||||||||
2020 | 2020 | Change | 2019 | Change | ||||||||||
Open-end funds | $ | 94,717 | $ | 108,290 | -13% | $ | 104,367 | -9% | ||||||
Closed-end funds | 21,712 | 24,873 | -13% | 24,503 | -11% | |||||||||
Private funds(2) | 43,975 | 47,376 | -7% | 42,092 | 4% | |||||||||
Institutional separate accounts | 154,755 | 175,258 | -12% | 160,460 | -4% | |||||||||
Individual separate accounts | 150,124 | 162,394 | -8% | 138,516 | 8% | |||||||||
Total | $ | 465,283 | $ | 518,191 | -10% | $ | 469,938 | -1% | ||||||
(1) | Consolidated Eaton Vance Corp. See Attachment 12 for directly managed assets and flows of 49 percent‐owned Hexavest, which are not included in the table above. | |||||||||||||
(2) | Includes privately offered equity, fixed and floating-rate income, and alternative funds and CLO entities. | |||||||||||||
Attachment 10 | ||||||||||||||
Eaton Vance Corp. | ||||||||||||||
Consolidated Assets under Management by Investment Affiliate(1)(2) | ||||||||||||||
(in millions) | ||||||||||||||
April 30, | January 31, | % | April 30, | % | ||||||||||
2020 | 2020 | Change | 2019 | Change | ||||||||||
Eaton Vance Management(3) | $ | 133,927 | $ | 149,994 | -11% | $ | 147,602 | -9% | ||||||
Parametric | 287,426 | 320,848 | -10% | 282,169 | 2% | |||||||||
Atlanta Capital | 22,645 | 25,552 | -11% | 23,019 | -2% | |||||||||
Calvert(4) | 21,285 | 21,797 | -2% | 17,148 | 24% | |||||||||
Total | $ | 465,283 | $ | 518,191 | -10% | $ | 469,938 | -1% | ||||||
(1) | Consolidated Eaton Vance Corp. See Attachment 12 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above. | |||||||||||||
(2) | The Company's policy for reporting managed assets of investment portfolios overseen by multiple Eaton Vance affiliates is to base the classification on the strategy's primary identity. | |||||||||||||
(3) | Includes managed assets of Eaton Vance-sponsored funds and separate accounts managed by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision. | |||||||||||||
(4) | Includes managed assets of Calvert Equity Fund, which is sub-advised by Atlanta Capital, and Calvert-sponsored funds managed by unaffiliated third-party advisers under Calvert supervision. | |||||||||||||
Attachment 11 | ||||||||||
Eaton Vance Corp. | ||||||||||
Average Annualized Management Fee Rates by Investment Mandate(1)(2) | ||||||||||
(in basis points on average managed assets) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
% | % | |||||||||
Change | Change | |||||||||
Q2 2020 | Q2 2020 | |||||||||
April 30, | January 31, | April 30, | vs. | vs. | April 30, | April 30, | % | |||
2020 | 2020 | 2019 | Q1 2020 | Q2 2019 | 2020 | 2019 | Change | |||
Equity(3) | 55.1 | 57.0 | 57.1 | -3% | -4% | 56.6 | 56.9 | -1% | ||
Fixed income(4) | 40.1 | 41.4 | 41.7 | -3% | -4% | 40.9 | 41.7 | -2% | ||
Floating-rate income | 49.8 | 49.9 | 50.0 | 0% | 0% | 50.2 | 49.9 | 1% | ||
Alternative(5) | 62.2 | 64.5 | 59.4 | -4% | 5% | 63.8 | 58.6 | 9% | ||
Parametric custom portfolios(6) | 14.5 | 15.2 | 14.6 | -5% | -1% | 14.9 | 14.5 | 3% | ||
Parametric overlay services | 4.9 | 4.9 | 5.3 | 0% | -8% | 4.9 | 5.2 | -6% | ||
Total | 29.7 | 30.8 | 31.8 | -4% | -7% | 30.5 | 31.8 | -4% | ||
(1) | Excludes performance-based fees, which were $2.5 million in the three months ended April 30, 2020, $0.2 million in the three months ended January 31, 2020, $1.8 million in the three months ended April 30, 2019, $2.7 million in the six months ended April 30, 2020 and $1.5 million in the six months ended April 30, 2019. | |||||||||
(2) | Excludes management fees earned on consolidated investment entities that are eliminated in consolidation, which were $1.3 million in the three months ended April 30, 2020, $1.9 million in the three months ended January 31, 2020, $1.1 million in the three months ended April 30, 2019, $3.2 million in the six months ended April 30, 2020 and $1.8 million in the six months ended April 30, 2019. The managed assets and flows of consolidated investment entities are reflected in our consolidated totals. | |||||||||
(3) | Includes balanced and other multi‐asset mandates. Excludes equity mandates reported as Parametric custom portfolios. | |||||||||
(4) | Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020. | |||||||||
(5) | Consists of absolute return, commodity and currency mandates. | |||||||||
(6) | Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020. | |||||||||
Attachment 12 | |||||||||||||||||
Eaton Vance Corp. | |||||||||||||||||
Hexavest Inc. Assets under Management and Net Flows | |||||||||||||||||
(in millions) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
April 30, | January 31, | April 30, | April 30, | April 30, | |||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Eaton Vance distributed: | |||||||||||||||||
Eaton Vance sponsored funds – beginning of period(1) | $ | 130 | $ | 152 | $ | 177 | $ | 152 | $ | 159 | |||||||
Sales and other inflows | 4 | 3 | 4 | 7 | 44 | ||||||||||||
Redemptions/outflows | (42) | (26) | (3) | (68) | (28) | ||||||||||||
Net flows | (38) | (23) | 1 | (61) | 16 | ||||||||||||
Market value change | (22) | 1 | 6 | (21) | 9 | ||||||||||||
Eaton Vance sponsored funds – end of period | $ | 70 | $ | 130 | $ | 184 | $ | 70 | $ | 184 | |||||||
Eaton Vance distributed separate accounts – | |||||||||||||||||
beginning of period(2) | $ | 1,566 | $ | 1,563 | $ | 2,065 | $ | 1,563 | $ | 2,169 | |||||||
Sales and other inflows | 24 | 6 | 3 | 30 | 24 | ||||||||||||
Redemptions/outflows | (338) | (22) | (79) | (360) | (219) | ||||||||||||
Net flows | (314) | (16) | (76) | (330) | (195) | ||||||||||||
Market value change | (251) | 19 | 87 | (232) | 102 | ||||||||||||
Eaton Vance distributed separate accounts – end of period | $ | 1,001 | $ | 1,566 | $ | 2,076 | $ | 1,001 | $ | 2,076 | |||||||
Total Eaton Vance distributed – beginning of period | $ | 1,696 | $ | 1,715 | $ | 2,242 | $ | 1,715 | $ | 2,328 | |||||||
Sales and other inflows | 28 | 9 | 7 | 37 | 68 | ||||||||||||
Redemptions/outflows | (380) | (48) | (82) | (428) | (247) | ||||||||||||
Net flows | (352) | (39) | (75) | (391) | (179) | ||||||||||||
Market value change | (273) | 20 | 93 | (253) | 111 | ||||||||||||
Total Eaton Vance distributed – end of period | $ | 1,071 | $ | 1,696 | $ | 2,260 | $ | 1,071 | $ | 2,260 | |||||||
Hexavest directly distributed – beginning of period(3) | $ | 11,296 | $ | 11,640 | $ | 10,988 | $ | 11,640 | $ | 11,467 | |||||||
Sales and other inflows | 304 | 96 | 700 | 400 | 1,219 | ||||||||||||
Redemptions/outflows | (2,120) | (554) | (473) | (2,674) | (1,607) | ||||||||||||
Net flows | (1,816) | (458) | 227 | (2,274) | (388) | ||||||||||||
Market value change | (1,921) | 114 | 419 | (1,807) | 555 | ||||||||||||
Hexavest directly distributed – end of period | $ | 7,559 | $ | 11,296 | $ | 11,634 | $ | 7,559 | $ | 11,634 | |||||||
Total Hexavest managed assets – beginning of period | $ | 12,992 | $ | 13,355 | $ | 13,230 | $ | 13,355 | $ | 13,795 | |||||||
Sales and other inflows | 332 | 105 | 707 | 437 | 1,287 | ||||||||||||
Redemptions/outflows | (2,500) | (602) | (555) | (3,102) | (1,854) | ||||||||||||
Net flows | (2,168) | (497) | 152 | (2,665) | (567) | ||||||||||||
Market value change | (2,194) | 134 | 512 | (2,060) | 666 | ||||||||||||
Total Hexavest managed assets – end of period | $ | 8,630 | $ | 12,992 | $ | 13,894 | $ | 8,630 | $ | 13,894 | |||||||
(1) | Managed assets and flows of Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser. Eaton Vance receives management fees (and in some cases also distribution fees) on these assets, which are included in the consolidated assets under management, flows and average annualized management fee rates reported in Attachments 6 through 11. | ||||||||||||||||
(2) | Managed assets and flows of Eaton Vance-distributed separate accounts managed by Hexavest. Eaton Vance receives distribution fees, but not management fees, on these assets, which are not included in the consolidated assets under management, flows and average annualized management fee rates reported in Attachments 6 through 11. | ||||||||||||||||
(3) | Managed assets and flows of pre-transaction Hexavest clients and post-transaction Hexavest clients in Canada. Eaton Vance receives no management fees or distribution fees on these assets, which are not included in the consolidated assets under management, flows and average annualized management fee rates reported in Attachments 6 through 11. | ||||||||||||||||
([1]) Effective this quarter, the Company's calculation of non-U.S. GAAP financial measures excludes the impact of consolidated sponsored funds and consolidated collateralized loan obligation (CLO) entities (collectively, consolidated investment entities) and other seed capital investments. Adjustments to GAAP operating income include the add-back of management fee revenue received from consolidated investment entities that are eliminated in consolidation and the non-management expenses of consolidated sponsored funds recognized in consolidation. Adjustments to GAAP net income attributable to Eaton Vance Corp. shareholders include the after-tax impact of these adjustments to operating income and the elimination of gains (losses) and other investment income (expense) of consolidated investment entities and other seed capital investments included in non-operating income (expense), as determined net of tax and non-controlling and other beneficial interests. All prior period non-U.S. GAAP financial measures have been updated to reflect this change as shown in Attachments 2 and 3. Please see note 2 below.
([2]) Although the Company reports its financial results in accordance with U.S. GAAP, management believes that certain non-U.S. GAAP financial measures, specifically, adjusted net income attributable to Eaton Vance Corp. shareholders, adjusted earnings per diluted share and adjusted operating income, while not a substitute for U.S. GAAP financial measures, may be effective indicators of the Company's performance over time. Non-U.S. GAAP financial measures should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, net income attributable to Eaton Vance Corp. shareholders, earnings per diluted share and operating income are adjusted to exclude items management deems non-operating or non-recurring in nature, or otherwise outside the ordinary course of business. These adjustments may include, when applicable, the add back of closed-end fund structuring fees, costs associated with special dividends, debt repayments and tax settlements, the tax impact of stock-based compensation shortfalls or windfalls, and non-recurring charges for the effect of tax law changes. The adjusted measures also exclude the impact of consolidated investment entities and other seed capital investments. Management and our Board of Directors, as well as certain of our outside investors, consider the adjusted numbers a measure of the Company's underlying operating performance. Management believes adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and may provide a useful baseline for analyzing trends in our underlying business.
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SOURCE Eaton Vance Corp.
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