Eaton Vance Corp. (NYSE:EV) Q4 2018 Earnings Conference Call Transcript

Nov 27, 2018 • 09:00 am ET

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Eaton Vance Corp. (NYSE:EV) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Stephanie and I'll be your conference operator today. At this time, I would like to welcome everyone to the Eaton Vance Corp. Fourth Fiscal Quarter Earnings Conference Call and Webcast.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Eric Senay, you may begin your conference.

Executive
Eric Senay

Thank you and good morning and welcome to our fiscal 2018 fourth quarter earnings call and webcast. With me this morning are Tom Faust, Chairman and CEO of Eaton Vance and Laurie Hylton, our CFO.

In today's call, we will first comment on the quarter and fiscal year and then take your questions. The full earnings release and charts, we will refer to during the call are available on Website, eatonvance.com, under the heading, Press Releases.

(Forward-Looking Cautionary Statements)

I'll now turn the call over to Tom.

Executive
Thomas E. Faust Jr.

Earlier today, Eaton Vance reported adjusted earnings per diluted share of $3.21 for the fiscal year ended October 31, which is an increase of 29% from the $2.48 of adjusted earnings per diluted share we reported for fiscal 2017.

For the fourth quarter of fiscal 2018, we reported adjusted earnings per diluted share of $0.85, which is up 21% from the $0.70 per diluted share of earnings we reported for the fourth quarter of fiscal 2017 and up 4% from $0.82 per diluted share in this fiscal year's third quarter. Both the annual and quarterly results we reported today are new record highs for the company.

While lower income taxes have contributed significantly to this year's earnings growth, pretax adjusted operating income increased 14% for fiscal 2018 as a whole and was up 4% in the fourth quarter versus the fourth quarter of last year.

We ended fiscal 2018 with consolidated assets under management of $439.3 billion, up 4% from 12 months earlier. With a volatile October raising the fiscal year's previous market gains, our AUM growth in fiscal 2018 was attributable to net inflows.

We generated $17.3 billion of consolidated net inflows in fiscal 2018, representing 4% internal growth in managed assets. Excluding exposure management, which has lower fees and more volatile flows in the rest of our business, net inflows for the year were $25.6 billion in fiscal 2018. This equates to 8% internal growth in managed assets and nearly matches the $26.4 billion of net inflows we delivered in the -- in fiscal 2017.

Fourth quarter fiscal 2018 consolidated and net inflows of $2.1 billion represent 2% annualized internal growth in managed assets or 5% annualized internal AUM growth excluding the $2.5 billion of exposure management net outflows we had in the fourth quarter.

While net outflows -- while net flows in internal growth and managed assets are customary measures of an asset manager's organic growth, we also focus on internal growth in management fee revenue. Organic revenue growth as we define it, measures the change in consolidated management fee revenue resulting from