Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-14818 | |
Entity Registrant Name | Federated Hermes, Inc. | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 25-1111467 | |
Entity Address, Address Line One | 1001 Liberty Avenue | |
Entity Address, City or Town | Pittsburgh, | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15222-3779 | |
City Area Code | 412 | |
Local Phone Number | 288-1900 | |
Title of 12(b) Security | Class B common stock, no par value | |
Trading Symbol | FHI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001056288 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 9,000 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 100,187,143 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and Cash Equivalents | $ 277,840 | $ 249,174 |
Investments—Consolidated Investment Companies | 55,007 | 64,526 |
Investments—Affiliates and Other | 39,756 | 26,935 |
Receivables, net of reserve of $14 and $14, respectively | 88,008 | 64,492 |
Receivables—Affiliates | 32,513 | 37,589 |
Prepaid Expenses | 20,443 | 16,748 |
Other Current Assets | 7,833 | 1,820 |
Total Current Assets | 521,400 | 461,284 |
Long-Term Assets | ||
Goodwill | 786,999 | 774,534 |
Intangible Assets, net of accumulated amortization of $17,794 and $12,856, respectively | 454,809 | 446,228 |
Property and Equipment, net of accumulated depreciation of $101,403 and $94,766, respectively | 50,722 | 51,725 |
Right-of-Use Assets, net | 98,246 | 100,514 |
Other Long-Term Assets | 21,719 | 45,846 |
Total Long-Term Assets | 1,412,495 | 1,418,847 |
Total Assets | 1,933,895 | 1,880,131 |
Current Liabilities | ||
Accounts Payable and Accrued Expenses | 89,136 | 69,014 |
Accrued Compensation and Benefits | 86,475 | 137,445 |
Lease Liabilities | 13,800 | 13,575 |
Income Taxes Payable | 41,833 | 5,834 |
Other Current Liabilities | 17,752 | 4,845 |
Total Current Liabilities | 248,996 | 230,713 |
Long-Term Liabilities | ||
Long-Term Debt | 90,000 | 100,000 |
Long-Term Deferred Tax Liability, net | 173,097 | 165,382 |
Long-Term Lease Liabilities | 103,856 | 107,543 |
Other Long-Term Liabilities | 26,607 | 23,127 |
Total Long-Term Liabilities | 393,560 | 396,052 |
Total Liabilities | 642,556 | 626,765 |
Commitments and Contingencies (Note (16)) | ||
TEMPORARY EQUITY | ||
Redeemable Noncontrolling Interest in Subsidiaries | 204,672 | 212,086 |
Federated Hermes, Inc. Shareholders' Equity | ||
Retained Earnings | 1,004,497 | 930,351 |
Treasury Stock, at Cost, 9,226,413 and 8,375,077 Shares Class B Common Stock, respectively | (298,142) | (281,032) |
Accumulated Other Comprehensive Income (Loss), net of tax | (25,821) | (249) |
Total Permanent Equity | 1,086,667 | 1,041,280 |
Total Liabilities, Temporary Equity and Permanent Equity | 1,933,895 | 1,880,131 |
Class A | ||
Federated Hermes, Inc. Shareholders' Equity | ||
Common Stock | 189 | 189 |
Class B | ||
Federated Hermes, Inc. Shareholders' Equity | ||
Common Stock | $ 405,944 | $ 392,021 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Receivables, reserve | $ 14 | $ 14 |
Intangible Assets, accumulated amortization | 17,794 | 12,856 |
Property and Equipment, accumulated depreciation | $ 101,403 | $ 94,766 |
Treasury stock, shares (in shares) | 9,226,413 | 8,375,077 |
Class A | ||
Common stock, no par value (usd per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 20,000 | 20,000 |
Common stock, shares issued (in shares) | 9,000 | 9,000 |
Common stock, shares outstanding (in shares) | 9,000 | 9,000 |
Class B | ||
Common stock, no par value (usd per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 900,000,000 | 900,000,000 |
Common stock, shares issued (in shares) | 109,505,456 | 109,505,456 |
Common stock, shares outstanding (in shares) | 100,279,043 | 101,130,379 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||||
Total Revenue | $ 360,712 | $ 321,479 | $ 719,895 | $ 628,529 |
Operating Expenses | ||||
Compensation and Related | 123,583 | 107,248 | 238,918 | 218,464 |
Distribution | 89,038 | 82,000 | 185,198 | 159,632 |
Systems and Communications | 15,091 | 12,111 | 29,987 | 24,905 |
Professional Service Fees | 13,888 | 10,281 | 27,156 | 20,767 |
Office and Occupancy | 10,190 | 11,066 | 21,961 | 22,428 |
Advertising and Promotional | 3,065 | 4,697 | 8,061 | 8,886 |
Travel and Related | 325 | 4,459 | 3,484 | 8,307 |
Other | 8,281 | 4,677 | 15,135 | 9,311 |
Total Operating Expenses | 263,461 | 236,539 | 529,900 | 472,700 |
Operating Income | 97,251 | 84,940 | 189,995 | 155,829 |
Nonoperating Income (Expenses) | ||||
Investment Income, net | 1,013 | 949 | 2,402 | 1,979 |
Gain (Loss) on Securities, net | 13,828 | 577 | (2,012) | 2,256 |
Debt Expense | (785) | (1,332) | (1,717) | (2,732) |
Other, net | (24) | (832) | 8,322 | (508) |
Total Nonoperating Income (Expenses), net | 14,032 | (638) | 6,995 | 995 |
Income Before Income Taxes | 111,283 | 84,302 | 196,990 | 156,824 |
Income Tax Provision | 26,482 | 20,462 | 48,924 | 38,373 |
Net Income Including the Noncontrolling Interests in Subsidiaries | 84,801 | 63,840 | 148,066 | 118,451 |
Less: Net Income (Loss) Attributable to the Noncontrolling Interests in Subsidiaries | 3,605 | 1,116 | 2,692 | 1,181 |
Net Income | $ 81,196 | $ 62,724 | $ 145,374 | $ 117,270 |
Amounts Attributable to Federated Hermes, Inc. | ||||
Earnings Per Common Share—Basic (usd per share) | $ 0.81 | $ 0.62 | $ 1.44 | $ 1.16 |
Earnings Per Common Share—Diluted (usd per share) | 0.80 | 0.62 | 1.44 | 1.16 |
Cash Dividends Per Share (usd per share) | $ 0.27 | $ 0.27 | $ 0.54 | $ 0.54 |
Investment Advisory Fees, net—Affiliates | ||||
Revenue | ||||
Total Revenue | $ 187,026 | $ 166,301 | $ 370,265 | $ 321,908 |
Investment Advisory Fees, net—Other | ||||
Revenue | ||||
Total Revenue | 58,100 | 54,368 | 115,522 | 109,960 |
Administrative Service Fees, net—Affiliates | ||||
Revenue | ||||
Total Revenue | 83,733 | 57,968 | 155,932 | 112,103 |
Other Service Fees, net—Affiliates | ||||
Revenue | ||||
Total Revenue | 28,366 | 39,905 | 69,812 | 78,515 |
Other Service Fees, net—Other | ||||
Revenue | ||||
Total Revenue | $ 3,487 | $ 2,937 | $ 8,364 | $ 6,043 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income Including the Noncontrolling Interests in Subsidiaries | $ 84,801 | $ 63,840 | $ 148,066 | $ 118,451 |
Permanent Equity | ||||
Foreign Currency Translation Gain (Loss) | (713) | (9,539) | (25,572) | (1,875) |
Temporary Equity | ||||
Foreign Currency Translation Gain (Loss) | (435) | (4,600) | (11,889) | (886) |
Other Comprehensive Income (Loss), net of tax | (1,148) | (14,139) | (37,461) | (2,761) |
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries | 83,653 | 49,701 | 110,605 | 115,690 |
Less: Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interest in Subsidiaries | 3,170 | (3,484) | (9,197) | 295 |
Comprehensive Income Attributable to Federated Hermes, Inc. | $ 80,483 | $ 53,185 | $ 119,802 | $ 115,395 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital from Treasury Stock Transactions | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss), net of tax |
Balance, beginning of period at Dec. 31, 2018 | $ 857,121 | $ 367,252 | $ 0 | $ 791,823 | $ (287,337) | $ (14,617) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income (Loss) | 54,546 | 54,546 | ||||
Other Comprehensive Income (Loss), net of tax | 7,664 | 7,664 | ||||
Stock Award Activity | 7,110 | 7,110 | (11,830) | 11,830 | ||
Dividends Declared | (27,217) | (27,217) | ||||
Purchase of Treasury Stock | (1,485) | (1,485) | ||||
Balance, end of period at Mar. 31, 2019 | 897,739 | 374,362 | 0 | 807,322 | (276,992) | (6,953) |
Temporary equity, beginning balance at Dec. 31, 2018 | 182,513 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||
Net Income (Loss) | 65 | |||||
Other Comprehensive Income (Loss), net of tax | 3,714 | |||||
Subscriptions—Redeemable Noncontrolling Interest Holders | 42 | |||||
Stock Award Activity | 2,126 | |||||
Distributions to Noncontrolling Interest in Subsidiaries | (2,260) | |||||
Temporary equity, ending balance at Mar. 31, 2019 | 186,200 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income (Loss) | 62,724 | 62,724 | ||||
Other Comprehensive Income (Loss), net of tax | (9,539) | (9,539) | ||||
Stock Award Activity | 6,240 | 6,069 | 103 | 68 | ||
Dividends Declared | (27,323) | (27,323) | ||||
Purchase of Treasury Stock | (709) | (709) | ||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (16,604) | (16,604) | ||||
Balance, end of period at Jun. 30, 2019 | 912,528 | 380,431 | $ 103 | 826,119 | (277,633) | (16,492) |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||
Net Income (Loss) | 1,116 | |||||
Other Comprehensive Income (Loss), net of tax | (4,600) | |||||
Subscriptions—Redeemable Noncontrolling Interest Holders | 1,822 | |||||
Stock Award Activity | 1,773 | |||||
Distributions to Noncontrolling Interest in Subsidiaries | (541) | |||||
Business Acquisition | (386) | |||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 16,604 | |||||
Temporary equity, ending balance at Jun. 30, 2019 | 201,988 | |||||
Balance, beginning of period at Dec. 31, 2019 | 1,041,280 | 392,210 | 930,351 | (281,032) | (249) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income (Loss) | 64,178 | 64,178 | ||||
Other Comprehensive Income (Loss), net of tax | (24,859) | (24,859) | ||||
Stock Award Activity | 7,467 | 7,467 | (16,146) | 16,146 | ||
Dividends Declared | (27,304) | (27,304) | ||||
Purchase of Treasury Stock | (15,959) | (15,959) | ||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (1,870) | (1,870) | ||||
Balance, end of period at Mar. 31, 2020 | 1,042,933 | 399,677 | 949,209 | (280,845) | (25,108) | |
Temporary equity, beginning balance at Dec. 31, 2019 | 212,086 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||
Net Income (Loss) | (913) | |||||
Other Comprehensive Income (Loss), net of tax | (11,454) | |||||
Subscriptions—Redeemable Noncontrolling Interest Holders | 5,577 | |||||
Consolidation (Deconsolidation) | (4,019) | |||||
Stock Award Activity | 2,153 | |||||
Distributions to Noncontrolling Interest in Subsidiaries | (6,039) | |||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 1,870 | |||||
Temporary equity, ending balance at Mar. 31, 2020 | 199,261 | |||||
Balance, beginning of period at Dec. 31, 2019 | 1,041,280 | 392,210 | 930,351 | (281,032) | (249) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of Treasury Stock | (34,100) | |||||
Balance, end of period at Jun. 30, 2020 | 1,086,667 | 406,133 | 1,004,497 | (298,142) | (25,821) | |
Temporary equity, beginning balance at Dec. 31, 2019 | 212,086 | |||||
Temporary equity, ending balance at Jun. 30, 2020 | 204,672 | |||||
Balance, beginning of period at Mar. 31, 2020 | 1,042,933 | 399,677 | 949,209 | (280,845) | (25,108) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income (Loss) | 81,196 | 81,196 | ||||
Other Comprehensive Income (Loss), net of tax | (713) | (713) | ||||
Stock Award Activity | 6,607 | 6,456 | (678) | 829 | ||
Dividends Declared | (27,243) | (27,243) | ||||
Purchase of Treasury Stock | (18,126) | (18,126) | ||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 2,013 | 2,013 | ||||
Balance, end of period at Jun. 30, 2020 | 1,086,667 | $ 406,133 | $ 1,004,497 | $ (298,142) | $ (25,821) | |
Temporary equity, beginning balance at Mar. 31, 2020 | 199,261 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||
Net Income (Loss) | 3,605 | |||||
Other Comprehensive Income (Loss), net of tax | (435) | |||||
Subscriptions—Redeemable Noncontrolling Interest Holders | 6,225 | |||||
Stock Award Activity | 2,087 | |||||
Distributions to Noncontrolling Interest in Subsidiaries | (4,058) | |||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (2,013) | |||||
Temporary equity, ending balance at Jun. 30, 2020 | $ 204,672 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Activities | ||
Net Income Including the Noncontrolling Interests in Subsidiaries | $ 148,066 | $ 118,451 |
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities | ||
Amortization of Deferred Sales Commissions | 770 | 1,130 |
Depreciation and Other Amortization | 14,088 | 12,451 |
Share-Based Compensation Expense | 13,935 | 13,188 |
Subsidiary Share-Based Compensation Expense | 4,240 | 3,899 |
(Gain) Loss on Disposal of Assets | 1,172 | 691 |
Provision (Benefit) for Deferred Income Taxes | 6,637 | 5,338 |
Consolidation/Deconsolidation of Investment Companies | (3,051) | 0 |
Net Unrealized (Gain) Loss on Investments | 870 | (2,926) |
Net Sales (Purchases) of Investments—Consolidated Investment Companies | 4,275 | 1,901 |
Other Changes in Assets and Liabilities: | ||
(Increase) Decrease in Receivables, net | (10,904) | 5,929 |
(Increase) Decrease in Prepaid Expenses and Other Assets | (10,135) | (2,116) |
Increase (Decrease) in Accounts Payable and Accrued Expenses | (47,938) | (42,998) |
Increase (Decrease) in Other Liabilities | 31,372 | (2,515) |
Net Cash Provided (Used) by Operating Activities | 153,397 | 112,423 |
Investing Activities | ||
Purchases of Investments—Affiliates and Other | (15,508) | (15,362) |
Cash Paid for Business Acquisitions, Net of Cash Acquired | 2,697 | 785 |
Proceeds from Redemptions of Investments—Affiliates and Other | 3,905 | 1,911 |
Cash Paid for Property and Equipment | (4,979) | (8,864) |
Net Cash Provided (Used) by Investing Activities | (13,885) | (21,530) |
Financing Activities | ||
Dividends Paid | (54,559) | (54,549) |
Purchases of Treasury Stock | (32,911) | (2,194) |
Distributions to Noncontrolling Interest in Subsidiaries | (10,097) | (2,801) |
Contributions from Noncontrolling Interest in Subsidiaries | 11,802 | 1,864 |
Proceeds from New Borrowings | 100,000 | 8,800 |
Payments on Debt | (110,000) | (18,800) |
Other Financing Activities | (1,683) | 171 |
Net Cash Provided (Used) by Financing Activities | (97,448) | (67,509) |
Effect of Exchange Rates on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | (7,576) | (246) |
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 34,488 | 23,138 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period | 249,511 | 157,426 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period | 283,999 | 180,564 |
Less: Restricted Cash Recorded in Other Current Assets | 5,849 | 0 |
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets | 310 | 603 |
Cash and Cash Equivalents | $ 277,840 | $ 179,961 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Federated Hermes, Inc. and its consolidated subsidiaries (collectively, Federated Hermes ) provides investment advisory, administrative, distribution and other services to various investment products, including sponsored investment companies and other funds ( Federated Hermes Funds ) and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets, as well as stewardship services to various companies and real estate development services . The interim Consolidated Financial Statements of Federated Hermes included herein have been prepared in accordance with U.S. generally accepted accounting principles ( GAAP ). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented. In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements. These financial statements should be read in conjunction with Federated Hermes ' Annual Report on Form 10-K for the year ended December 31, 2019 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Guidance Credit Losses On June 16, 2016, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology with a current expected credit loss (CECL) model. CECL requires an entity to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. Federated Hermes adopted Topic 326 on January 1, 2020 using the modified retrospective adoption method. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. Fair Value Measurement On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update remove, modify or add disclosure requirements for fair value measurements to improve the effectiveness of disclosures. Federated Hermes adopted Topic 820 on January 1, 2020 using either the prospective or retrospective adoption method, depending on the amendment. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Federated Hermes adopted this guidance on January 1, 2020 using the prospective adoption method, which did not require the restatement of prior years. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies For a listing of Federated Hermes ' significant accounting policies, please refer to Federated Hermes ' Annual Report on Form 10-K for the year ended December 31, 2019 |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations HCL acquisition On March 5, 2020, Federated Hermes acquired, effective as of March 1, 2020 , 100 percent ownership of HGPE Capital Limited for £15.9 million ( $20.4 million ). The principal activity of HGPE Capital Limited is that of a holding company for an infrastructure and private equity investment management business. As a result of the acquisition of HGPE Capital Limited, Federated Hermes gained control of Hermes GPE LLP (HGPE) (collectively with HGPE Capital Limited, HCL). The addition of London-based HCL provides the opportunity to further accelerate Federated Hermes ' global growth. The HCL acquisition included upfront cash payments that totaled £11.2 million ( $14.3 million ). The transaction also includes contingent purchase price payments payable through December 2024 that were deposited into escrow. The maximum contingent purchase price payments total £3.5 million ( $4.5 million as of March 1, 2020 ), which represents the payment of certain future carried interest, recorded in Other Long-Term Liabilities . Prior to March 1, 2020 , Federated Hermes accounted for its partial ownership interest in HGPE as an equity-method investment recorded in Other Long-Term Assets on the Consolidated Balance Sheets. Management used an independent valuation expert to assist in estimating the fair value of the equity interest in HGPE using primarily the discounted cash flow methodology under the income approach. The acquisition-date fair value of the previous equity interest was $34.5 million . Federated Hermes recognized a gain of $7.5 million as a result of remeasuring the prior equity interest in HGPE held before the business combination and the consolidation of HGPE. This gain is included in Other, net - Nonoperating Income (Expenses) on the Consolidated Statements of Income. Federated Hermes performed a valuation of the fair market value of the HCL acquisition. Due to the timing of the acquisition and the status of the valuation work, the accounting for the business combination is preliminary. The preliminary results of the initial accounting for the business combination are reflected in the Consolidated Financial Statements as of June 30, 2020 and for the six months then ended and represents management's best estimate of fair value of the acquired assets and assumed liabilities. Provisional amounts will be finalized as new information is obtained about facts and circumstances that existed on March 1, 2020 . The final accounting for the business combination may reflect adjustments to the preliminary accounting and such adjustments may be material. The following table summarizes the preliminary purchase price allocation determined as of the purchase date: (in millions) Cash and Cash Equivalents $ 14.0 Other Current Assets 1 11.3 Goodwill 2 19.1 Intangible Assets 3 27.6 Other Long-Term Assets 9.8 Less: Liabilities Acquired (26.9 ) Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary 4 (34.5 ) Total Purchase Price Consideration $ 20.4 1 Includes $4.6 million of accounts receivable. 2 The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of HGPE. In this instance, goodwill is not deductible for tax purposes. 3 Includes $20.3 million for rights to manage fund assets for private equity funds with a weighted-average useful life of 9.0 years and $6.9 million for rights to manage fund assets for infrastructure funds with a weighted-average useful life of 11.0 years , all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets . 4 The fair value of the noncontrolling interest was determined utilizing primarily the discounted cash flow methodology under the income approach. The financial results of HCL have been included in Federated Hermes ' Consolidated Financial Statements from the March 1, 2020 effective date of the HCL acquisition. For the three and four months ended June 30, 2020 , HCL earned revenue of $8.7 million and $11.3 million , respectively, and net income of $1.8 million and $2.1 million , respectively (which excludes acquisition-related intangible amortization and does not take into consideration the amounts attributable to the noncontrolling interests). MEPC acquisition Effective January 1, 2020, Federated Hermes acquired MEPC Limited ( MEPC ) for £9.9 million ( $13.1 million ). MEPC provides real estate development services in the UK. The MEPC acquisition included upfront cash payments of £4.4 million ( $5.9 million ) and deferred consideration and contingent purchase price payments totaling £5.5 million ( $7.2 million ), which were recorded in Other Current Liabilities . As of the date of the MEPC acquisition, Hermes primarily recorded intangible assets of $7.3 million and goodwill of $1.6 million |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table presents Federated Hermes ' revenue disaggregated by asset class: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Money Market 157,430 123,136 308,850 240,443 Equity $ 123,328 $ 134,035 $ 260,618 $ 257,669 Fixed-Income 43,691 44,782 90,297 88,459 Other 1 36,263 19,526 60,130 41,958 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 Primarily includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and stewardship services revenue. The following table presents Federated Hermes ' revenue disaggregated by performance obligation: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Asset Management 1 $ 245,126 $ 220,669 $ 485,787 $ 431,868 Administrative Services 83,733 57,968 155,932 112,103 Distribution 2 25,579 37,196 64,513 73,442 Other 3 6,274 5,646 13,663 11,116 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under Topic 606 , as it is part of a unitary fee arrangement with a single performance obligation. 2 The performance obligation is satisfied at a point in time. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period. 3 Primarily includes shareholder service fees and stewardship services revenue. The following table presents Federated Hermes ' revenue disaggregated by geographical market: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Domestic $ 292,784 $ 265,893 $ 589,147 $ 518,283 Foreign 1 67,928 55,586 130,748 110,246 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 This represents revenue earned by non-U.S. domiciled subsidiaries. The following table presents Federated Hermes ' revenue disaggregated by product type: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Federated Hermes Funds $ 299,125 $ 264,174 $ 596,009 $ 512,527 Separate Accounts 58,100 54,368 115,522 109,959 Other 1 3,487 2,937 8,364 6,043 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 Primarily includes stewardship services revenue. For nearly all revenue, Federated Hermes is not required to disclose certain estimates of revenue expected to be recorded in future periods as a result of applying the following exemptions: (1) contract terms are short-term in nature (i.e., expected duration of one year or less due to termination provisions) and (2) the expected variable consideration would be allocated entirely to future service periods. Federated Hermes expects to recognize revenue in the future related to the unsatisfied portion of the stewardship services and real estate development performance obligations at June 30, 2020 . Generally, contracts are billed in arrears on a quarterly basis and have a three year duration, after which the customer can terminate the agreement with notice, generally from three to twelve months. Based on existing contracts and the exchange rates as of June 30, 2020 , Federated Hermes may recognize future fixed revenue from these services as presented in the following table: (in thousands) Remainder of 2020 $ 5,657 2021 4,644 2022 2,120 2023 and Thereafter 1,850 Total Remaining Unsatisfied Performance Obligations $ 14,271 |
Concentration Risk
Concentration Risk | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk | Concentration Risk (a) Revenue Concentration by Asset Class The following table presents Federated Hermes ' revenue concentration by asset class: Six Months Ended June 30, 2020 2019 Money Market Assets 43 % 38 % Equity Assets 36 % 41 % Fixed-Income Assets 13 % 14 % The change in the relative proportion of Federated Hermes ' revenue attributable to money market assets for the six months ended June 30, 2020 , as compared to the same period in 2019 , was primarily the result of a higher proportion of average money market assets to total average assets in 2020 as compared to 2019. (b) Revenue Concentration by Investment Strategy/Fund The following table presents Federated Hermes ' revenue concentration by investment strategy/fund: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Federated Hermes Government Obligations Fund 14 % 9 % 13 % 9 % Federated Hermes Strategic Value Dividend strategy 1 8 % 11 % 9 % 11 % 1 Strategy includes Federated Hermes Funds and Separate Accounts . A significant and prolonged decline in the AUM in this fund or strategy could have a material adverse effect on Federated Hermes ' future revenues and, to a lesser extent, net income, due to a related reduction in distribution expenses associated with the Federated Hermes Funds managed in accordance with this fund or strategy. (c) Revenue Concentration by Intermediary Approximately 8% and 10% of Federated Hermes ' total revenue for the three- and six-month period s ended June 30, 2020 , respectively, and 11% for both the three- and six-month periods ended June 30, 2019 was derived from services provided to one intermediary, The Bank of New York Mellon Corporation, including its Pershing subsidiary. Significant negative changes in Federated Hermes ' relationship with this intermediary could have a material adverse effect on Federated Hermes ' future revenues and, to a lesser extent, net income due to a related reduction in distribution expenses associated with this intermediary. |
Consolidation
Consolidation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Consolidation The Consolidated Financial Statements include the accounts of Federated Hermes , certain Federated Hermes Funds and other entities in which Federated Hermes holds a controlling financial interest. Federated Hermes is involved with various entities in the normal course of business that may be deemed to be voting rights entities ( VRE s) or variable interest entities ( VIE s). From time to time, Federated Hermes invests in Federated Hermes Funds for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Federated Hermes ' investment in, and/or receivables from, these Federated Hermes Funds represents its maximum exposure to loss. The assets of each consolidated Federated Hermes Fund are restricted for use by the respective Federated Hermes Fund . Generally, neither creditors of, nor equity investors in, the Federated Hermes Funds have any recourse to Federated Hermes ' general credit. Given that the entities consolidated by Federated Hermes follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses. In the ordinary course of business, Federated Hermes may implement Fee Waivers for various Federated Hermes Funds for competitive, regulatory or contractual reasons. For the three and six months ended June 30, 2020 , Fee Waivers totaled $184.9 million and $315.4 million , respectively, of which $141.6 million and $241.7 million , respectively, related to money market funds which meet the scope exception of the consolidation guidance. For the three and six months ended June 30, 2019 , Fee Waivers totaled $101.7 million and $200.5 million , respectively, of which $73.7 million and $141.8 million , respectively, related to money market funds which meet the scope exception of the consolidation guidance. Like other sponsors of investment companies, Federated Hermes in the ordinary course of business may make capital contributions to certain affiliated money market Federated Hermes Funds in connection with the reorganization of such funds into certain other affiliated money market Federated Hermes Funds or in connection with the liquidation of a money market Federated Hermes Fund . In these instances, such capital contributions typically are intended to either offset realized losses or other permanent impairments to a fund's net asset value ( NAV ), increase the market-based NAV per share of the fund's portfolio that is being reorganized to equal the market-based NAV per share of the acquiring fund or to bear a portion of expenses relating to a fund liquidation. Under current money fund regulations and Securities and Exchange Commission ( SEC ) guidance, Federated Hermes is required to report these types of capital contributions to U.S. money market mutual funds to the SEC as financial support to the investment company that is being reorganized or liquidated. There were no contributions for the three and six months ended June 30, 2020 or 2019 . In accordance with Federated Hermes ' consolidation accounting policy, Federated Hermes first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated Hermes proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations as of June 30, 2020 and December 31, 2019 . (a) Consolidated Voting Rights Entities Most of the Federated Hermes Funds meet the definition of a VRE, which Federated Hermes will consolidate only when it is deemed to have control. Consolidated VREs are reported on Federated Hermes ' Consolidated Balance Sheets primarily in Investments—Consolidated Investment Companies and Redeemable Noncontrolling Interest in Subsidiaries . (b) Consolidated Variable Interest Entities As of December 31, 2019 , Federated Hermes was deemed to be the primary beneficiary of, and therefore consolidated, a Federated Hermes Fund as a result of its controlling financial interest. No Federated Hermes Fund VIE was consolidated as of June 30, 2020 . The following table presents the balance related to the consolidated Federated Hermes Fund VIE that was included on the Consolidated Balance Sheets as well as Federated Hermes ' net interest in the consolidated Federated Hermes Fund VIE as of December 31, 2019. (in millions) Investments—Consolidated Investment Companies $ 13.3 Other Assets 0.3 Less: Liabilities 0.1 Less: Redeemable Noncontrolling Interest in Subsidiaries 9.3 Federated Hermes' Net Interest in Federated Hermes Fund VIEs $ 4.2 Federated Hermes ' net interest in the consolidated Federated Hermes Fund VIE represents the value of Federated Hermes ' economic ownership interest in this Federated Hermes Fund . During the second quarter of 2020, Federated liquidated its investment in the one consolidated VIE in which it was the only remaining shareholder. Accordingly, Federated redeemed $6.0 million from Investments—Consolidated Investment Companies on the Consolidated Balance Sheets as of the date of the liquidation. There was no impact to the Consolidated Statements of Income as a result of this liquidation. There were no other consolidations or deconsolidations of VIEs during the six months ended June 30, 2020 . (c) Non-Consolidated Variable Interest Entities Federated Hermes ' involvement with certain Federated Hermes Funds that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated Hermes ' variable interest is not deemed to absorb losses or receive benefits that could potentially be significant to the VIE. Therefore, Federated Hermes is not the primary beneficiary of these VIEs and has not consolidated these entities. At June 30, 2020 and December 31, 2019 , Federated Hermes ' variable interest in non-consolidated VIEs was $5.0 million and $111.9 million , respectively, (primarily recorded in Other Long-Term Assets and Cash and Cash Equivalents , respectively, on the Consolidated Balance Sheets) and was entirely related to Federated Hermes Fund s. AUM for these non-consolidated Federated Hermes Fund s totaled $272.7 million and $9.6 billion at June 30, 2020 and December 31, 2019 , respectively. Of the Receivables—Affiliates at June 30, 2020 and December 31, 2019 , $0.3 million and $15.4 million , respectively, related to non-consolidated VIEs and represented Federated Hermes ' maximum risk of loss from non-consolidated VIE receivables. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments At June 30, 2020 and December 31, 2019 , Federated Hermes held investments in fluctuating-value Federated Hermes Funds of $30.8 million and $20.1 million , respectively, primarily in mutual funds which invest in equity securities. Federated Hermes held investments in Separate Accounts of $9.0 million and $6.8 million at June 30, 2020 and December 31, 2019 , respectively, that were included in Investments—Affiliates and Other on the Consolidated Balance Sheets . Federated Hermes ' investments held in Separate Accounts as of June 30, 2020 and December 31, 2019 , were primarily composed of domestic debt securities ( $5.3 million and $2.6 million , respectively) and stocks of large U.S. and international companies ( $2.8 million and $3.0 million , respectively). Federated Hermes consolidates certain Federated Hermes Funds into its Consolidated Financial Statements as a result of Federated Hermes ' controlling financial interest in these Federated Hermes Funds (see Note (7) ). All investments held by these consolidated Federated Hermes Funds were included in Investments—Consolidated Investment Companies on Federated Hermes ' Consolidated Balance Sheets . Federated Hermes ' investments held by consolidated Federated Hermes Funds as of June 30, 2020 and December 31, 2019 , were primarily composed of domestic and foreign debt securities ( $29.1 million and $38.9 million , respectively) and stocks of large international and U.S. companies ( $22.1 million and $22.6 million , respectively). The following table presents gains and losses recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income in connection with Federated Hermes ' investments: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Investments—Consolidated Investment Companies Unrealized Gains (Losses) $ 9,889 $ 424 $ (464 ) $ 1,709 Net Realized Gains (Losses) 1 (1,108 ) (206 ) (1,104 ) (667 ) Net Gains (Losses) on Investments—Consolidated Investment Companies 8,781 218 (1,568 ) 1,042 Investments—Affiliates and Other Unrealized Gains (Losses) 4,991 340 (406 ) 1,217 Net Realized Gains (Losses) 1 56 19 (38 ) (3 ) Net Gains (Losses) on Investments—Affiliates and Other 5,047 359 (444 ) 1,214 Gain (Loss) on Securities, net $ 13,828 $ 577 $ (2,012 ) $ 2,256 1 Realized gains and losses are computed on a specific-identification basis. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or the price that would be paid to transfer a liability as of the measurement date. A fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The levels are: Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs. Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active markets. NAV Practical Expedient – Investments that calculate NAV per share (or its equivalent) as a practical expedient. These investments have been excluded from the fair value hierarchy. (a) Fair Value Measurements on a Recurring Basis The following table presents fair value measurements for Federated Hermes ' financial assets and liabilities measured at fair value on a recurring basis: (in thousands) Level 1 Level 2 Level 3 Total June 30, 2020 Financial Assets Cash and Cash Equivalents $ 277,840 $ 0 $ 0 $ 277,840 Investments—Consolidated Investment Companies 9,197 45,810 0 55,007 Investments—Affiliates and Other 34,062 5,364 330 39,756 Other 1 8,537 54 0 8,591 Total Financial Assets $ 329,636 $ 51,228 $ 330 $ 381,194 Total Financial Liabilities 2 $ 45 $ 1,261 $ 9,785 $ 11,091 December 31, 2019 Financial Assets Cash and Cash Equivalents $ 249,174 $ 0 $ 0 $ 249,174 Investments—Consolidated Investment Companies 7,245 57,281 0 64,526 Investments—Affiliates and Other 23,667 2,945 323 26,935 Other 1 2,901 3,177 0 6,078 Total Financial Assets $ 282,987 $ 63,403 $ 323 $ 346,713 Total Financial Liabilities 2 $ 6 $ 0 $ 2,081 $ 2,087 1 Amounts primarily consist of restricted cash and security deposits as of June 30, 2020 and a derivative asset and security deposits as of December 31, 2019. 2 Amounts primarily consist of acquisition-related future contingent consideration liabilities. The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated Hermes did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at June 30, 2020 or December 31, 2019 . Cash and Cash Equivalents Cash and Cash Equivalents include deposits with banks and investments in money market funds. Investments in money market funds totaled $246.2 million and $222.1 million at June 30, 2020 and December 31, 2019 , respectively. Cash investments in publicly available money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. Investments—Consolidated Investment Companies Investments—Consolidated Investment Companies represent securities held by consolidated Federated Hermes Funds . For publicly traded securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. The fair value of certain securities held by consolidated Federated Hermes Funds are determined by a third-party pricing service and may include observable market inputs of comparable investments (Level 2). Investments—Affiliates and Other Investments—Affiliates and Other primarily represent investments in fluctuating-value Federated Hermes Funds , as well as investments held in Separate Accounts . For investments in fluctuating-value Federated Hermes Funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. For publicly traded securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. The fair value of certain securities are determined by third-party pricing services and may include observable market inputs of comparable investments (Level 2). Acquisition-related future contingent consideration liabilities From time to time, pursuant to agreements entered into in connection with certain business combinations and asset acquisitions, Federated Hermes may be required to make future consideration payments if certain contingencies are met. In connection with certain business combinations, Federated Hermes records a liability representing the estimated fair value of future consideration payments as of the acquisition date. The liability is subsequently re-measured at fair value on a recurring basis with changes in fair value recorded in earnings. As of June 30, 2020 , acquisition-related future consideration liabilities of $9.8 million were primarily related to business combinations made in the first quarter of 2020 and were recorded in Other Current Liabilities ( $5.6 million ) and Other Long-Term Liabilities ( $4.2 million ) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3). The following table presents a reconciliation of the beginning and ending balances for Federated Hermes ' liability for future consideration payments related to these acquisitions: (in thousands) Balance at December 31, 2019 $ 2,081 New Acquisition 1 8,201 Changes in Fair Value 1,337 Contingent Consideration Payments (1,834 ) Balance at June 30, 2020 $ 9,785 1 Amounts include the preliminary fair value of the contingent payment liability recorded in connection with new acquisitions. Investments using Practical Expedients For investments in mutual funds that are not publicly available but for which the NAV is calculated monthly and for which there are redemption restrictions, the securities are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. As of June 30, 2020 and December 31, 2019 , these investments totaled $5.1 million and $3.7 million , respectively, and were recorded in Other Long-Term Assets . (b) Fair Value Measurements on a Nonrecurring Basis Federated Hermes did not hold any assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2020 . (c) Fair Value Measurements of Other Financial Instruments The fair value of Federated Hermes ' debt is estimated by management using observable market data (Level 2). Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Hermes Fund Managers Limited ( Hermes ), a British Pound Sterling-denominated majority-owned subsidiary of Federated Hermes , enters into foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations in the U.S. Dollar . None of the forwards have been designated as hedging instruments for accounting purposes. As of June 30, 2020 , this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £50.3 million and expiration dates ranging from September 2020 through March 2021. Federated Hermes recorded $1.2 million in Other Current Liabilities on the Consolidated Balance Sheets, which represented the fair value of these derivative instruments as of June 30, 2020 . As of December 31, 2019 , Hermes held foreign currency forward derivative instruments with a combined notional amount of £53.0 million and expiration dates ranging from March 2020 through September 2020. Federated Hermes recorded $3.1 million in Receivables on the Consolidated Balance Sheets, which represented the fair value of these derivative instruments as of December 31, 2019 . |
Intangible Assets, including Go
Intangible Assets, including Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, including Goodwill | Intangible Assets, including Goodwill Intangible Assets, net at June 30, 2020 increased $8.6 million from December 31, 2019 primarily due to $27.6 million of intangible assets recorded in connection with the HCL acquisition and $7.3 million in connection with the MEPC acquisition (see Note (4) for additional information). These increases were partially offset by a $21.5 million decrease in the value of intangible assets denominated in a foreign currency as a result of foreign exchange rate fluctuations and $5.8 million of amortization expense. Goodwill at June 30, 2020 increased $12.5 million from December 31, 2019 primarily due to $19.1 million of goodwill recorded in connection with the HCL acquisition and $1.6 million related to the MEPC acquisition. These increases were partially offset by an $8.2 million decrease in the value of goodwill denominated in a foreign currency as a result of foreign exchange rate fluctuations. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt On June 5, 2017 , Federated Hermes entered into an unsecured Third Amended and Restated Credit Agreement by and among Federated Hermes , certain of its subsidiaries as guarantors party thereto, a syndicate of ten banks as Lenders party thereto, PNC Bank, National Association as administrative agent, PNC Capital Markets LLC, as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc., as joint lead arranger, Citibank, N.A. as syndication agent, and TD Bank, N.A. as documentation agent ( Credit Agreement ). The Credit Agreement consists of a $375 million revolving credit facility with an additional $200 million available via an optional increase (or accordion) feature. The interest on the revolving credit facility is calculated at the monthly London Interbank Offering Rate ( LIBOR ) plus a spread. The borrowings under the revolving credit facility may include up to $25 million for which interest is calculated at the daily LIBOR plus a spread ( Swing Line ). On July 1, 2018, Federated Hermes entered into an amendment to the Credit Agreement to add certain definitions and to amend certain negative covenants relating to indebtedness, guarantees, and restrictions on dividends, related to the 2018 acquisition of a controlling interest in Hermes ( Hermes Acquisition ). This amendment contains other customary conditions, representations, warranties and covenants. The Credit Agreement , which expires on June 5, 2022, has no principal payment schedule, but instead requires that any outstanding principal be repaid by the expiration date. Federated Hermes , however, may elect to make discretionary principal payments. During the first six months of 2020, Federated Hermes borrowed $100 million from the revolving credit facility for general corporate purposes and repaid $110 million . As of June 30, 2020 and December 31, 2019 , the amounts outstanding under the revolving credit facility were $90 million and $100 million , respectively, and were recorded as Long-Term Debt on the Consolidated Balance Sheets. The interest rate was 1.302% and 2.816% as of June 30, 2020 and December 31, 2019 , respectively, which was calculated at LIBOR plus a spread. The commitment fee under the Credit Agreement currently is 0.125% per annum on the daily unused portion of each Lender's commitment. As of June 30, 2020 , Federated Hermes has $285 million available for borrowings. The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated Hermes was in compliance with all covenants at and during the six months ended June 30, 2020 (see the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information). The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of debt outstanding if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed. The Credit Agreement also requires certain subsidiaries to enter into a Second Amended and Restated Continuing Agreement of Guaranty and Suretyship to guarantee payment of all obligations incurred through the Credit Agreement . |
Share-Based Compensation Plans
Share-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans During the six months ended June 30, 2020 , Federated Hermes awarded 699,581 shares of restricted Federated Hermes Class B common stock, nearly all of which was granted in connection with a bonus program in which certain key employees receive a portion of their bonus in the form of restricted stock under Federated Hermes ' Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over three years . During 2019 , Federated Hermes awarded 928,324 shares of restricted Federated Hermes Class B common stock under its Stock Incentive Plan. Of this amount, 498,324 shares were awarded in connection with the aforementioned bonus program in 2019 . The remaining shares were awarded to certain key employees and generally vest over ten years . |
Equity
Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Equity | Equity In October 2016 , the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 4 million shares of Class B common stock. This program was fulfilled in March 2020. In March 2020, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 500 thousand shares of Class B common stock. This program was fulfilled in May 2020. In April 2020, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 3.5 million shares of Class B common stock. No other programs existed as of June 30, 2020 . The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is to be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities, unless Federated Hermes ' board of directors subsequently determines to retire the repurchased stock and restore the shares to authorized but unissued status (rather than holding the shares in treasury). During the first six months of 2020 , Federated Hermes repurchased approximately 1.6 million shares of its Class B common stock for $34.1 million ( $1.2 million of which was accrued in Other Current Liabilities as of June 30, 2020 ), most of which were repurchased in the open market. At June 30, 2020 , approximately 3.0 million shares remain available to be purchased under Federated Hermes ' remaining buyback program. The following table presents the activity for the Class B common stock and Treasury stock for the three and six months ended June 30, 2020 and 2019 . Class A shares have been excluded as there was no activity during these same periods. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Class B Shares Beginning Balance 101,065,709 101,240,873 101,130,379 100,803,382 Stock Award Activity 56,750 22,750 706,331 521,074 Purchase of Treasury Stock (843,416 ) (52,600 ) (1,557,667 ) (113,433 ) Ending Balance 100,279,043 101,211,023 100,279,043 101,211,023 Treasury Shares Beginning Balance 8,439,747 8,264,583 8,375,077 8,702,074 Stock Award Activity (56,750 ) (22,750 ) (706,331 ) (521,074 ) Purchase of Treasury Stock 843,416 52,600 1,557,667 113,433 Ending Balance 9,226,413 8,294,433 9,226,413 8,294,433 Redeemable Noncontrolling Interest in Subsidiaries The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries: (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 Net Income (Loss) (2,802 ) 1,889 (913 ) Other Comprehensive Income (Loss), net of tax 0 (11,454 ) (11,454 ) Subscriptions—Redeemable Noncontrolling Interest Holders 5,577 0 5,577 Consolidation/(Deconsolidation) (4,019 ) 0 (4,019 ) Stock Award Activity 0 2,153 2,153 Distributions to Noncontrolling Interest in Subsidiaries (6,039 ) 0 (6,039 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 1,870 1,870 Balance at March 31, 2020 $ 12,589 $ 186,672 $ 199,261 Net Income (Loss) 2,560 1,045 3,605 Other Comprehensive Income (Loss), net of tax 0 (435 ) (435 ) Subscriptions—Redeemable Noncontrolling Interest Holders 6,225 0 6,225 Stock Award Activity 0 2,087 2,087 Distributions to Noncontrolling Interest in Subsidiaries (4,058 ) 0 (4,058 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 (2,013 ) (2,013 ) Balance at June 30, 2020 $ 17,316 $ 187,356 $ 204,672 (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 678 (613 ) 65 Other Comprehensive Income (Loss), net of tax 0 3,714 3,714 Subscriptions—Redeemable Noncontrolling Interest Holders 42 0 42 Stock Award Activity 0 2,126 2,126 Distributions to Noncontrolling Interest in Subsidiaries (2,260 ) 0 (2,260 ) Balance at March 31, 2019 $ 10,086 $ 176,114 $ 186,200 Net Income (Loss) 340 776 1,116 Other Comprehensive Income (Loss), net of tax 0 (4,600 ) (4,600 ) Subscriptions—Redeemable Noncontrolling Interest Holders 1,822 0 1,822 Stock Award Activity 0 1,773 1,773 Distributions to Noncontrolling Interest in Subsidiaries (541 ) 0 (541 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 16,604 16,604 Balance at June 30, 2019 $ 11,707 $ 190,281 $ 201,988 |
Earnings Per Share Attributable
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders | Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Hermes : Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2020 2019 2020 2019 Numerator Net Income Attributable to Federated Hermes, Inc. $ 81,196 $ 62,724 $ 145,374 $ 117,270 Less: Total Net Income Available to Participating Unvested Restricted Shareholders 1 (3,171 ) (2,404 ) (5,568 ) (4,542 ) Total Net Income Attributable to Federated Hermes Common Stock - Basic $ 78,025 $ 60,320 $ 139,806 $ 112,728 Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary (307 ) (166 ) (395 ) (199 ) Total Net Income Attributable to Federated Hermes Common Stock - Diluted $ 77,718 $ 60,154 $ 139,411 $ 112,529 Denominator Basic and Diluted Weighted-Average Federated Hermes Common Stock 2 96,800 97,330 97,073 97,163 Earnings Per Share Net Income Attributable to Federated Hermes Common Stock – Basic 2 $ 0.81 $ 0.62 $ 1.44 $ 1.16 Net Income Attributable to Federated Hermes Common Stock – Diluted 2 $ 0.80 $ 0.62 $ 1.44 $ 1.16 1 Includes dividends paid on unvested restricted Federated Hermes Class B Common Stock and their proportionate share of undistributed earnings attributable to Federated Hermes shareholders. 2 Federated Hermes |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Contractual From time to time, pursuant to agreements entered into in connection with certain business combinations and asset acquisitions, Federated Hermes may be required to make future consideration payments if certain contingencies are met. See Note (9) for additional information regarding these payments. (b) Contingencies Certain revenue earned by Federated Hermes related to carried interest received from certain funds is subject to clawback provisions (Carried Interest). As a result of the significant impact of the coronavirus pandemic (COVID-19) on certain markets, it is probable that the market value of the assets held by these funds will be reduced at the December 31, 2020 valuation date, resulting in a portion or all of this Carried Interest being repaid in 2021. As of June 30, 2020 , approximately $10 million of Carried Interest is subject to clawback. Management has recorded an estimated liability for an immaterial amount related to the clawback of Carried Interest during the second quarter of 2020. However due to the uncertainty of the impact that COVID-19 will have on the value of the assets held by these funds as of the December 31, 2020 valuation date, this estimate of the clawback of Carried Interest may change and such change may be material. (c) Guarantees and Indemnifications On an intercompany basis, various subsidiaries of Federated Hermes guarantee certain financial obligations of Federated Hermes, Inc., and Federated Hermes, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated Hermes has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated Hermes , under which Federated Hermes agrees to hold the other party harmless against losses arising out of the contract, provided the other party's actions are not deemed to have breached an agreed-upon standard of care. In each of these circumstances, payment by Federated Hermes is contingent on the other party making a claim for indemnity, subject to Federated Hermes ' right to challenge the claim. Further, Federated Hermes ' obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated Hermes ' obligations and the unique facts and circumstances involved in each particular agreement. As of June 30, 2020 , management does not believe that a material loss related to any of these matters is reasonably possible. (d) Legal Proceedings Like other companies, Federated Hermes has claims asserted and threatened against it in the ordinary course of business. As of June 30, 2020 , Federated Hermes does not believe that a material loss related to these claims is reasonably possible. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders | Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders Accumulated Other Comprehensive Income (Loss), net of tax attributable to Federated Hermes shareholders resulted from foreign currency translation gain (loss): (in thousands) Balance at December 31, 2019 $ (249 ) Other Comprehensive Income (Loss) (25,572 ) Balance at June 30, 2020 $ (25,821 ) Balance at December 31, 2018 $ (14,617 ) Other Comprehensive Income (Loss) (1,875 ) Balance at June 30, 2019 $ (16,492 ) |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest in Subsidiaries | 6 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest in Subsidiaries | Equity In October 2016 , the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 4 million shares of Class B common stock. This program was fulfilled in March 2020. In March 2020, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 500 thousand shares of Class B common stock. This program was fulfilled in May 2020. In April 2020, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 3.5 million shares of Class B common stock. No other programs existed as of June 30, 2020 . The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is to be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities, unless Federated Hermes ' board of directors subsequently determines to retire the repurchased stock and restore the shares to authorized but unissued status (rather than holding the shares in treasury). During the first six months of 2020 , Federated Hermes repurchased approximately 1.6 million shares of its Class B common stock for $34.1 million ( $1.2 million of which was accrued in Other Current Liabilities as of June 30, 2020 ), most of which were repurchased in the open market. At June 30, 2020 , approximately 3.0 million shares remain available to be purchased under Federated Hermes ' remaining buyback program. The following table presents the activity for the Class B common stock and Treasury stock for the three and six months ended June 30, 2020 and 2019 . Class A shares have been excluded as there was no activity during these same periods. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Class B Shares Beginning Balance 101,065,709 101,240,873 101,130,379 100,803,382 Stock Award Activity 56,750 22,750 706,331 521,074 Purchase of Treasury Stock (843,416 ) (52,600 ) (1,557,667 ) (113,433 ) Ending Balance 100,279,043 101,211,023 100,279,043 101,211,023 Treasury Shares Beginning Balance 8,439,747 8,264,583 8,375,077 8,702,074 Stock Award Activity (56,750 ) (22,750 ) (706,331 ) (521,074 ) Purchase of Treasury Stock 843,416 52,600 1,557,667 113,433 Ending Balance 9,226,413 8,294,433 9,226,413 8,294,433 Redeemable Noncontrolling Interest in Subsidiaries The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries: (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 Net Income (Loss) (2,802 ) 1,889 (913 ) Other Comprehensive Income (Loss), net of tax 0 (11,454 ) (11,454 ) Subscriptions—Redeemable Noncontrolling Interest Holders 5,577 0 5,577 Consolidation/(Deconsolidation) (4,019 ) 0 (4,019 ) Stock Award Activity 0 2,153 2,153 Distributions to Noncontrolling Interest in Subsidiaries (6,039 ) 0 (6,039 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 1,870 1,870 Balance at March 31, 2020 $ 12,589 $ 186,672 $ 199,261 Net Income (Loss) 2,560 1,045 3,605 Other Comprehensive Income (Loss), net of tax 0 (435 ) (435 ) Subscriptions—Redeemable Noncontrolling Interest Holders 6,225 0 6,225 Stock Award Activity 0 2,087 2,087 Distributions to Noncontrolling Interest in Subsidiaries (4,058 ) 0 (4,058 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 (2,013 ) (2,013 ) Balance at June 30, 2020 $ 17,316 $ 187,356 $ 204,672 (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 678 (613 ) 65 Other Comprehensive Income (Loss), net of tax 0 3,714 3,714 Subscriptions—Redeemable Noncontrolling Interest Holders 42 0 42 Stock Award Activity 0 2,126 2,126 Distributions to Noncontrolling Interest in Subsidiaries (2,260 ) 0 (2,260 ) Balance at March 31, 2019 $ 10,086 $ 176,114 $ 186,200 Net Income (Loss) 340 776 1,116 Other Comprehensive Income (Loss), net of tax 0 (4,600 ) (4,600 ) Subscriptions—Redeemable Noncontrolling Interest Holders 1,822 0 1,822 Stock Award Activity 0 1,773 1,773 Distributions to Noncontrolling Interest in Subsidiaries (541 ) 0 (541 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 16,604 16,604 Balance at June 30, 2019 $ 11,707 $ 190,281 $ 201,988 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 30, 2020 , the board of directors declared a $0.27 per share dividend to shareholders of record as of August 7, 2020 to be paid on August 14, 2020 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Federated Hermes, Inc. and its consolidated subsidiaries (collectively, Federated Hermes ) provides investment advisory, administrative, distribution and other services to various investment products, including sponsored investment companies and other funds ( Federated Hermes Funds ) and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets, as well as stewardship services to various companies and real estate development services . The interim Consolidated Financial Statements of Federated Hermes included herein have been prepared in accordance with U.S. generally accepted accounting principles ( GAAP ). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented. |
Use of Estimates | In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance Credit Losses On June 16, 2016, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology with a current expected credit loss (CECL) model. CECL requires an entity to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. Federated Hermes adopted Topic 326 on January 1, 2020 using the modified retrospective adoption method. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. Fair Value Measurement On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update remove, modify or add disclosure requirements for fair value measurements to improve the effectiveness of disclosures. Federated Hermes adopted Topic 820 on January 1, 2020 using either the prospective or retrospective adoption method, depending on the amendment. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Federated Hermes adopted this guidance on January 1, 2020 using the prospective adoption method, which did not require the restatement of prior years. The adoption did not have a material impact on Federated Hermes ' Consolidated Financial Statements. |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Summary of Preliminary Purchase Price Allocation | The following table summarizes the preliminary purchase price allocation determined as of the purchase date: (in millions) Cash and Cash Equivalents $ 14.0 Other Current Assets 1 11.3 Goodwill 2 19.1 Intangible Assets 3 27.6 Other Long-Term Assets 9.8 Less: Liabilities Acquired (26.9 ) Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary 4 (34.5 ) Total Purchase Price Consideration $ 20.4 1 Includes $4.6 million of accounts receivable. 2 The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of HGPE. In this instance, goodwill is not deductible for tax purposes. 3 Includes $20.3 million for rights to manage fund assets for private equity funds with a weighted-average useful life of 9.0 years and $6.9 million for rights to manage fund assets for infrastructure funds with a weighted-average useful life of 11.0 years , all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets . 4 The fair value of the noncontrolling interest was determined utilizing primarily the discounted cash flow methodology under the income approach. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents Federated Hermes ' revenue disaggregated by asset class: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Money Market 157,430 123,136 308,850 240,443 Equity $ 123,328 $ 134,035 $ 260,618 $ 257,669 Fixed-Income 43,691 44,782 90,297 88,459 Other 1 36,263 19,526 60,130 41,958 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 Primarily includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and stewardship services revenue. The following table presents Federated Hermes ' revenue disaggregated by performance obligation: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Asset Management 1 $ 245,126 $ 220,669 $ 485,787 $ 431,868 Administrative Services 83,733 57,968 155,932 112,103 Distribution 2 25,579 37,196 64,513 73,442 Other 3 6,274 5,646 13,663 11,116 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under Topic 606 , as it is part of a unitary fee arrangement with a single performance obligation. 2 The performance obligation is satisfied at a point in time. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period. 3 Primarily includes shareholder service fees and stewardship services revenue. The following table presents Federated Hermes ' revenue disaggregated by geographical market: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Domestic $ 292,784 $ 265,893 $ 589,147 $ 518,283 Foreign 1 67,928 55,586 130,748 110,246 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 This represents revenue earned by non-U.S. domiciled subsidiaries. The following table presents Federated Hermes ' revenue disaggregated by product type: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Federated Hermes Funds $ 299,125 $ 264,174 $ 596,009 $ 512,527 Separate Accounts 58,100 54,368 115,522 109,959 Other 1 3,487 2,937 8,364 6,043 Total Revenue $ 360,712 $ 321,479 $ 719,895 $ 628,529 1 Primarily includes stewardship services revenue. |
Future Fixed Revenue from Stewardship and Real Estate Development Services | Based on existing contracts and the exchange rates as of June 30, 2020 , Federated Hermes may recognize future fixed revenue from these services as presented in the following table: (in thousands) Remainder of 2020 $ 5,657 2021 4,644 2022 2,120 2023 and Thereafter 1,850 Total Remaining Unsatisfied Performance Obligations $ 14,271 |
Concentration Risk (Tables)
Concentration Risk (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of Revenue Concentration | The following table presents Federated Hermes ' revenue concentration by investment strategy/fund: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Federated Hermes Government Obligations Fund 14 % 9 % 13 % 9 % Federated Hermes Strategic Value Dividend strategy 1 8 % 11 % 9 % 11 % 1 Strategy includes Federated Hermes Funds and Separate Accounts . The following table presents Federated Hermes ' revenue concentration by asset class: Six Months Ended June 30, 2020 2019 Money Market Assets 43 % 38 % Equity Assets 36 % 41 % Fixed-Income Assets 13 % 14 % |
Consolidation (Tables)
Consolidation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Federated Funds VIEs | The following table presents the balance related to the consolidated Federated Hermes Fund VIE that was included on the Consolidated Balance Sheets as well as Federated Hermes ' net interest in the consolidated Federated Hermes Fund VIE as of December 31, 2019. (in millions) Investments—Consolidated Investment Companies $ 13.3 Other Assets 0.3 Less: Liabilities 0.1 Less: Redeemable Noncontrolling Interest in Subsidiaries 9.3 Federated Hermes' Net Interest in Federated Hermes Fund VIEs $ 4.2 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Gains and Losses Recognized in Gain (Loss) on Securities, Net | The following table presents gains and losses recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income in connection with Federated Hermes ' investments: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2020 2019 2020 2019 Investments—Consolidated Investment Companies Unrealized Gains (Losses) $ 9,889 $ 424 $ (464 ) $ 1,709 Net Realized Gains (Losses) 1 (1,108 ) (206 ) (1,104 ) (667 ) Net Gains (Losses) on Investments—Consolidated Investment Companies 8,781 218 (1,568 ) 1,042 Investments—Affiliates and Other Unrealized Gains (Losses) 4,991 340 (406 ) 1,217 Net Realized Gains (Losses) 1 56 19 (38 ) (3 ) Net Gains (Losses) on Investments—Affiliates and Other 5,047 359 (444 ) 1,214 Gain (Loss) on Securities, net $ 13,828 $ 577 $ (2,012 ) $ 2,256 1 Realized gains and losses are computed on a specific-identification basis. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents fair value measurements for Federated Hermes ' financial assets and liabilities measured at fair value on a recurring basis: (in thousands) Level 1 Level 2 Level 3 Total June 30, 2020 Financial Assets Cash and Cash Equivalents $ 277,840 $ 0 $ 0 $ 277,840 Investments—Consolidated Investment Companies 9,197 45,810 0 55,007 Investments—Affiliates and Other 34,062 5,364 330 39,756 Other 1 8,537 54 0 8,591 Total Financial Assets $ 329,636 $ 51,228 $ 330 $ 381,194 Total Financial Liabilities 2 $ 45 $ 1,261 $ 9,785 $ 11,091 December 31, 2019 Financial Assets Cash and Cash Equivalents $ 249,174 $ 0 $ 0 $ 249,174 Investments—Consolidated Investment Companies 7,245 57,281 0 64,526 Investments—Affiliates and Other 23,667 2,945 323 26,935 Other 1 2,901 3,177 0 6,078 Total Financial Assets $ 282,987 $ 63,403 $ 323 $ 346,713 Total Financial Liabilities 2 $ 6 $ 0 $ 2,081 $ 2,087 1 Amounts primarily consist of restricted cash and security deposits as of June 30, 2020 and a derivative asset and security deposits as of December 31, 2019. 2 Amounts primarily consist of acquisition-related future contingent consideration liabilities. |
Reconciliation of Liability for Future Consideration Payments | The following table presents a reconciliation of the beginning and ending balances for Federated Hermes ' liability for future consideration payments related to these acquisitions: (in thousands) Balance at December 31, 2019 $ 2,081 New Acquisition 1 8,201 Changes in Fair Value 1,337 Contingent Consideration Payments (1,834 ) Balance at June 30, 2020 $ 9,785 1 Amounts include the preliminary fair value of the contingent payment liability recorded in connection with new acquisitions. |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Activity for Class B Common Stock and Treasury Stock | The following table presents the activity for the Class B common stock and Treasury stock for the three and six months ended June 30, 2020 and 2019 . Class A shares have been excluded as there was no activity during these same periods. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Class B Shares Beginning Balance 101,065,709 101,240,873 101,130,379 100,803,382 Stock Award Activity 56,750 22,750 706,331 521,074 Purchase of Treasury Stock (843,416 ) (52,600 ) (1,557,667 ) (113,433 ) Ending Balance 100,279,043 101,211,023 100,279,043 101,211,023 Treasury Shares Beginning Balance 8,439,747 8,264,583 8,375,077 8,702,074 Stock Award Activity (56,750 ) (22,750 ) (706,331 ) (521,074 ) Purchase of Treasury Stock 843,416 52,600 1,557,667 113,433 Ending Balance 9,226,413 8,294,433 9,226,413 8,294,433 |
Earnings Per Share Attributab_2
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Hermes : Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2020 2019 2020 2019 Numerator Net Income Attributable to Federated Hermes, Inc. $ 81,196 $ 62,724 $ 145,374 $ 117,270 Less: Total Net Income Available to Participating Unvested Restricted Shareholders 1 (3,171 ) (2,404 ) (5,568 ) (4,542 ) Total Net Income Attributable to Federated Hermes Common Stock - Basic $ 78,025 $ 60,320 $ 139,806 $ 112,728 Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary (307 ) (166 ) (395 ) (199 ) Total Net Income Attributable to Federated Hermes Common Stock - Diluted $ 77,718 $ 60,154 $ 139,411 $ 112,529 Denominator Basic and Diluted Weighted-Average Federated Hermes Common Stock 2 96,800 97,330 97,073 97,163 Earnings Per Share Net Income Attributable to Federated Hermes Common Stock – Basic 2 $ 0.81 $ 0.62 $ 1.44 $ 1.16 Net Income Attributable to Federated Hermes Common Stock – Diluted 2 $ 0.80 $ 0.62 $ 1.44 $ 1.16 1 Includes dividends paid on unvested restricted Federated Hermes Class B Common Stock and their proportionate share of undistributed earnings attributable to Federated Hermes shareholders. 2 Federated Hermes |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | Accumulated Other Comprehensive Income (Loss), net of tax attributable to Federated Hermes shareholders resulted from foreign currency translation gain (loss): (in thousands) Balance at December 31, 2019 $ (249 ) Other Comprehensive Income (Loss) (25,572 ) Balance at June 30, 2020 $ (25,821 ) Balance at December 31, 2018 $ (14,617 ) Other Comprehensive Income (Loss) (1,875 ) Balance at June 30, 2019 $ (16,492 ) |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interest in Subsidiaries (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Summary of Changes in Redeemable Noncontrolling Interest in Subsidiaries | The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries: (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 Net Income (Loss) (2,802 ) 1,889 (913 ) Other Comprehensive Income (Loss), net of tax 0 (11,454 ) (11,454 ) Subscriptions—Redeemable Noncontrolling Interest Holders 5,577 0 5,577 Consolidation/(Deconsolidation) (4,019 ) 0 (4,019 ) Stock Award Activity 0 2,153 2,153 Distributions to Noncontrolling Interest in Subsidiaries (6,039 ) 0 (6,039 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 1,870 1,870 Balance at March 31, 2020 $ 12,589 $ 186,672 $ 199,261 Net Income (Loss) 2,560 1,045 3,605 Other Comprehensive Income (Loss), net of tax 0 (435 ) (435 ) Subscriptions—Redeemable Noncontrolling Interest Holders 6,225 0 6,225 Stock Award Activity 0 2,087 2,087 Distributions to Noncontrolling Interest in Subsidiaries (4,058 ) 0 (4,058 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 (2,013 ) (2,013 ) Balance at June 30, 2020 $ 17,316 $ 187,356 $ 204,672 (in thousands) Consolidated Investment Companies Hermes Total Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 678 (613 ) 65 Other Comprehensive Income (Loss), net of tax 0 3,714 3,714 Subscriptions—Redeemable Noncontrolling Interest Holders 42 0 42 Stock Award Activity 0 2,126 2,126 Distributions to Noncontrolling Interest in Subsidiaries (2,260 ) 0 (2,260 ) Balance at March 31, 2019 $ 10,086 $ 176,114 $ 186,200 Net Income (Loss) 340 776 1,116 Other Comprehensive Income (Loss), net of tax 0 (4,600 ) (4,600 ) Subscriptions—Redeemable Noncontrolling Interest Holders 1,822 0 1,822 Stock Award Activity 0 1,773 1,773 Distributions to Noncontrolling Interest in Subsidiaries (541 ) 0 (541 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 16,604 16,604 Balance at June 30, 2019 $ 11,707 $ 190,281 $ 201,988 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) $ in Thousands, £ in Millions | Mar. 01, 2020USD ($) | Mar. 01, 2020GBP (£) | Jan. 01, 2020USD ($) | Jan. 01, 2020GBP (£) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 01, 2020GBP (£) | Jan. 01, 2020GBP (£) | Dec. 31, 2019USD ($) |
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 786,999 | $ 786,999 | $ 774,534 | ||||||
HCL | |||||||||
Business Acquisition [Line Items] | |||||||||
Ownership interest acquired | 100.00% | 100.00% | |||||||
Acquisition price | $ 20,400 | £ 15.9 | |||||||
Payments to acquire business | 14,300 | £ 11.2 | |||||||
Maximum contingent purchase price payments | 4,500 | £ 3.5 | |||||||
Revenue | 8,700 | 11,300 | |||||||
Net income | $ 1,800 | $ 2,100 | |||||||
Intangible assets recorded in connection with acquisition | 27,600 | ||||||||
Goodwill | 19,100 | ||||||||
HGPE | |||||||||
Business Acquisition [Line Items] | |||||||||
Acquisition-date fair value of previous equity interest | 34,500 | ||||||||
Gain as a result of remeasuring prior equity interest | $ 7,500 | ||||||||
MEPC | |||||||||
Business Acquisition [Line Items] | |||||||||
Acquisition price | $ 13,100 | £ 9.9 | |||||||
Payments to acquire business | 5,900 | £ 4.4 | |||||||
Maximum contingent purchase price payments | 7,200 | £ 5.5 | |||||||
Intangible assets recorded in connection with acquisition | 7,300 | ||||||||
Goodwill | $ 1,600 |
Business Combinations - Summary
Business Combinations - Summary of Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 01, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 786,999 | $ 774,534 | |
HCL | |||
Business Acquisition [Line Items] | |||
Cash and Cash Equivalents | $ 14,000 | ||
Other Current Assets | 11,300 | ||
Goodwill | 19,100 | ||
Intangible Assets | 27,600 | ||
Other Long-Term Assets | 9,800 | ||
Less: Liabilities Acquired | (26,900) | ||
Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary | (34,500) | ||
Total Purchase Price Consideration | 20,400 | ||
Accounts receivable | $ 4,600 | ||
HCL | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Weighted-average useful life | 9 years | ||
Intangible assets recorded in connection with acquisition | $ 20,300 | ||
HCL | Rights to Manage Fund Assets | |||
Business Acquisition [Line Items] | |||
Weighted-average useful life | 11 years | ||
Intangible assets recorded in connection with acquisition | $ 6,900 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue by Asset Class (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 360,712 | $ 321,479 | $ 719,895 | $ 628,529 |
Money Market | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 157,430 | 123,136 | 308,850 | 240,443 |
Equity | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 123,328 | 134,035 | 260,618 | 257,669 |
Fixed-Income | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 43,691 | 44,782 | 90,297 | 88,459 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 36,263 | $ 19,526 | $ 60,130 | $ 41,958 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of Revenue by Performance Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 360,712 | $ 321,479 | $ 719,895 | $ 628,529 |
Asset Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 245,126 | 220,669 | 485,787 | 431,868 |
Administrative Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 83,733 | 57,968 | 155,932 | 112,103 |
Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 25,579 | 37,196 | 64,513 | 73,442 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 6,274 | $ 5,646 | $ 13,663 | $ 11,116 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Disaggregation of Revenue by Geographic Market (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 360,712 | $ 321,479 | $ 719,895 | $ 628,529 |
Domestic | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 292,784 | 265,893 | 589,147 | 518,283 |
Foreign | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 67,928 | $ 55,586 | $ 130,748 | $ 110,246 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Disaggregation of Revenue by Product Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 360,712 | $ 321,479 | $ 719,895 | $ 628,529 |
Federated Hermes Funds | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 299,125 | 264,174 | 596,009 | 512,527 |
Separate Accounts | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 58,100 | 54,368 | 115,522 | 109,959 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 3,487 | $ 2,937 | $ 8,364 | $ 6,043 |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Narrative (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | |
Contract terms | Generally, contracts are billed in arrears on a quarterly basis and have a three year duration, after which the customer can terminate the agreement with notice, generally from three to twelve months. |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Termination period | 3 months |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Termination period | 12 months |
Revenue from Contracts with C_8
Revenue from Contracts with Customers - Future Fixed Revenue from Stewardship and Real Estate Development Services (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 14,271 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 5,657 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 4,644 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 2,120 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 1,850 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction, period |
Concentration Risk - Schedule o
Concentration Risk - Schedule of Revenue Concentration (Details) - Product Concentration Risk | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Money Market Assets | ||
Concentration Risk [Line Items] | ||
Concentration risk | 43.00% | 38.00% |
Equity Assets | ||
Concentration Risk [Line Items] | ||
Concentration risk | 36.00% | 41.00% |
Fixed-Income Assets | ||
Concentration Risk [Line Items] | ||
Concentration risk | 13.00% | 14.00% |
Concentration Risk - Schedule_2
Concentration Risk - Schedule of Revenue Concentration by Investment Strategy/Fund (Details) - Product Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Federated Hermes Government Obligations Fund | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 14.00% | 9.00% | 13.00% | 9.00% |
Federated Hermes Strategic Value Dividend strategy | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 8.00% | 11.00% | 9.00% | 11.00% |
Concentration Risk - Narrative
Concentration Risk - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Customer Concentration Risk | The Bank of New York Mellon Corporation | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 8.00% | 11.00% | 10.00% | 11.00% |
Consolidation - Narrative (Deta
Consolidation - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Variable Interest Entities [Line Items] | |||||
Fee waivers | $ 184,900,000 | $ 101,700,000 | $ 315,400,000 | $ 200,500,000 | |
VIE | |||||
Variable Interest Entities [Line Items] | |||||
Investment redeemed | 6,000,000 | ||||
AUM | 272,700,000 | 272,700,000 | $ 9,600,000,000 | ||
VIE | Other Long-Term Assets | |||||
Variable Interest Entities [Line Items] | |||||
Maximum risk of loss from non-consolidated VIEs | 5,000,000 | 5,000,000 | |||
VIE | Cash and Cash Equivalents | |||||
Variable Interest Entities [Line Items] | |||||
Maximum risk of loss from non-consolidated VIEs | 111,900,000 | ||||
VIE | Receivables - Affiliates | |||||
Variable Interest Entities [Line Items] | |||||
Maximum risk of loss from non-consolidated VIEs | 300,000 | 300,000 | $ 15,400,000 | ||
Financial Support, Fee Waivers | |||||
Variable Interest Entities [Line Items] | |||||
Money market funds which meet the scope exception of the consolidation guidance | 141,600,000 | 73,700,000 | 241,700,000 | 141,800,000 | |
Financial Support, Capital Contributions | |||||
Variable Interest Entities [Line Items] | |||||
Money market funds which meet the scope exception of the consolidation guidance | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidation - Consolidated Fe
Consolidation - Consolidated Federated Fund VIEs (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entities [Line Items] | ||
Consolidated VIE assets | $ 1,933,895 | $ 1,880,131 |
Less: Liabilities | $ 642,556 | 626,765 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entities [Line Items] | ||
Less: Liabilities | 100 | |
Less: Redeemable Noncontrolling Interest in Subsidiaries | 9,300 | |
Federated Hermes' Net Interest in Federated Hermes Fund VIEs | 4,200 | |
Variable Interest Entity, Primary Beneficiary | Investments—Consolidated Investment Companies | ||
Variable Interest Entities [Line Items] | ||
Consolidated VIE assets | 13,300 | |
Variable Interest Entity, Primary Beneficiary | Other Assets | ||
Variable Interest Entities [Line Items] | ||
Consolidated VIE assets | $ 300 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | $ 39,756 | $ 26,935 |
Investments - Consolidated investment companies | 55,007 | 64,526 |
Debt Securities | ||
Schedule of Investments [Line Items] | ||
Investments - Consolidated investment companies | 29,100 | 38,900 |
Stocks of large U.S. and international companies | ||
Schedule of Investments [Line Items] | ||
Investments - Consolidated investment companies | 22,100 | 22,600 |
Federated Hermes Funds | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 30,800 | 20,100 |
Separate Accounts | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 9,000 | 6,800 |
Separate Accounts | Debt Securities | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 5,300 | 2,600 |
Separate Accounts | Equity | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | $ 2,800 | $ 3,000 |
Investments - Gains and Losses
Investments - Gains and Losses Recognized in Gain (Loss) on Securities, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
(Loss) Gain on Securities [Line Items] | ||||
Gain (Loss) on Securities, net | $ 13,828 | $ 577 | $ (2,012) | $ 2,256 |
Investments—Consolidated Investment Companies | ||||
(Loss) Gain on Securities [Line Items] | ||||
Unrealized Gains (Losses) | 9,889 | 424 | (464) | 1,709 |
Net Realized Gains (Losses) | (1,108) | (206) | (1,104) | (667) |
Gain (Loss) on Securities, net | 8,781 | 218 | (1,568) | 1,042 |
Investments—Affiliates and Other | ||||
(Loss) Gain on Securities [Line Items] | ||||
Unrealized Gains (Losses) | 4,991 | 340 | (406) | 1,217 |
Net Realized Gains (Losses) | 56 | 19 | (38) | (3) |
Gain (Loss) on Securities, net | $ 5,047 | $ 359 | $ (444) | $ 1,214 |
Fair Value Measurements - Class
Fair Value Measurements - Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Financial Assets | ||
Investments—Consolidated Investment Companies | $ 55,007 | $ 64,526 |
Investments—Affiliates and Other | 39,756 | 26,935 |
Fair Value, Measurements, Recurring | ||
Financial Assets | ||
Cash and Cash Equivalents | 277,840 | 249,174 |
Investments—Consolidated Investment Companies | 55,007 | 64,526 |
Investments—Affiliates and Other | 39,756 | 26,935 |
Other | 8,591 | 6,078 |
Total Financial Assets | 381,194 | 346,713 |
Financial Liabilities | ||
Total Financial Liabilities | 11,091 | 2,087 |
Fair Value, Measurements, Recurring | Level 1 | ||
Financial Assets | ||
Cash and Cash Equivalents | 277,840 | 249,174 |
Investments—Consolidated Investment Companies | 9,197 | 7,245 |
Investments—Affiliates and Other | 34,062 | 23,667 |
Other | 8,537 | 2,901 |
Total Financial Assets | 329,636 | 282,987 |
Financial Liabilities | ||
Total Financial Liabilities | 45 | 6 |
Fair Value, Measurements, Recurring | Level 2 | ||
Financial Assets | ||
Cash and Cash Equivalents | 0 | 0 |
Investments—Consolidated Investment Companies | 45,810 | 57,281 |
Investments—Affiliates and Other | 5,364 | 2,945 |
Other | 54 | 3,177 |
Total Financial Assets | 51,228 | 63,403 |
Financial Liabilities | ||
Total Financial Liabilities | 1,261 | 0 |
Fair Value, Measurements, Recurring | Level 3 | ||
Financial Assets | ||
Cash and Cash Equivalents | 0 | 0 |
Investments—Consolidated Investment Companies | 0 | 0 |
Investments—Affiliates and Other | 330 | 323 |
Other | 0 | 0 |
Total Financial Assets | 330 | 323 |
Financial Liabilities | ||
Total Financial Liabilities | $ 9,785 | $ 2,081 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Acquisition-related future consideration liabilities | $ 9.8 | |
Acquisition-related future consideration liabilities recorded in Other Current liabilities | 5.6 | |
Acquisition-related future consideration liabilities recorded in Other Long-Term liabilities | 4.2 | |
Money Market | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 246.2 | $ 222.1 |
Mutual Fund | NAV | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other financial assets | $ 5.1 | $ 3.7 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Liability for Future Consideration Payments (Details) - Contingent Consideration $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at December 31, 2019 | $ 2,081 |
New Acquisition | 8,201 |
Changes in Fair Value | 1,337 |
Contingent Consideration Payments | (1,834) |
Balance at June 30, 2020 | $ 9,785 |
Derivatives (Details)
Derivatives (Details) - Foreign Currency Forward £ in Millions, $ in Millions | Jun. 30, 2020USD ($) | Jun. 30, 2020GBP (£) | Dec. 31, 2019USD ($) | Dec. 31, 2019GBP (£) |
Derivative [Line Items] | ||||
Derivative liability, notional amount | £ | £ 50.3 | |||
Derivative asset, notional amount | £ | £ 53 | |||
Other Current Liabilities | ||||
Derivative [Line Items] | ||||
Derivative liability | $ | $ 1.2 | |||
Receivables | ||||
Derivative [Line Items] | ||||
Derivative asset | $ | $ 3.1 |
Intangible Assets, including _2
Intangible Assets, including Goodwill (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Mar. 01, 2020 | Jan. 01, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Increase in intangible assets, net | $ 8.6 | ||
Decrease in value of intangible assets denominated in a foreign currency as a result of foreign exchange rate fluctuations | 21.5 | ||
Amortization expense for intangible assets | 5.8 | ||
Goodwill increase | 12.5 | ||
Decrease in value of goodwill denominated in a foreign currency as a result of foreign exchange rate fluctuations | 8.2 | ||
HCL | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets recorded in connection with acquisition | $ 27.6 | ||
Goodwill recorded in connection with acquisition | 19.1 | ||
MEPC | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets recorded in connection with acquisition | $ 7.3 | ||
Goodwill recorded in connection with acquisition | $ 1.6 |
Debt (Details)
Debt (Details) | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jun. 05, 2017USD ($)bank | |
Debt Instrument [Line Items] | ||||
Number of banks as lenders | bank | 10 | |||
Line of credit facility, maximum borrowing capacity | $ 375,000,000 | |||
Optional increase (or an accordion feature) | 200,000,000 | |||
Proceeds from revolving credit facility | $ 100,000,000 | $ 8,800,000 | ||
Repayments of revolving credit facility | 110,000,000 | $ 18,800,000 | ||
Amounts outstanding under the revolving credit facility | $ 90,000,000 | $ 100,000,000 | ||
Interest rate at period end | 1.302% | 2.816% | ||
Commitment fee | 0.125% | |||
Available for borrowings | $ 285,000,000 | |||
Swing Line | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awarded in period (in shares) | 699,581 | 928,324 |
Class B Common Stock Bonus | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awarded in period (in shares) | 498,324 | |
Restricted stock requisite service period | 3 years | |
Class B Common Stock Key Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock requisite service period | 10 years |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 30, 2020 | Oct. 31, 2016 | |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Purchase of treasury stock (in shares) | 843,416 | 52,600 | 1,557,667 | 113,433 | ||||
Purchase of treasury stock | $ 18,126 | $ 15,959 | $ 709 | $ 1,485 | ||||
Accrued in other current liabilities | (1,200) | $ (1,200) | ||||||
Treasury Stock | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Purchase of treasury stock | $ 18,126 | $ 15,959 | $ 709 | $ 1,485 | $ 34,100 | |||
Class B Shares | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Number of shares authorized under share repurchase program (in shares) | 500,000 | 3,500,000 | 4,000,000 | |||||
Purchase of treasury stock (in shares) | 1,600,000 | |||||||
Remaining number of shares authorized to be repurchased (in shares) | 3,000,000 | 3,000,000 |
Equity - Activity for Class B C
Equity - Activity for Class B Common Stock and Treasury Stock (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning Balance (in shares) | 8,439,747 | 8,264,583 | 8,375,077 | 8,702,074 |
Stock Award Activity (in shares) | (56,750) | (22,750) | (706,331) | (521,074) |
Purchase of Treasury Stock (in shares) | 843,416 | 52,600 | 1,557,667 | 113,433 |
Ending Balance (in shares) | 9,226,413 | 8,294,433 | 9,226,413 | 8,294,433 |
Class B Shares | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning Balance (in shares) | 101,065,709 | 101,240,873 | 101,130,379 | 100,803,382 |
Stock Award Activity (in shares) | 56,750 | 22,750 | 706,331 | 521,074 |
Purchase of Treasury Stock (in shares) | (843,416) | (52,600) | (1,557,667) | (113,433) |
Ending Balance (in shares) | 100,279,043 | 101,211,023 | 100,279,043 | 101,211,023 |
Purchase of Treasury Stock (in shares) | 1,600,000 |
Earnings Per Share Attributab_3
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator | ||||
Net Income Attributable to Federated Hermes, Inc. | $ 81,196 | $ 62,724 | $ 145,374 | $ 117,270 |
Less: Total Net Income Available to Participating Unvested Restricted Shareholders | (3,171) | (2,404) | (5,568) | (4,542) |
Total Net Income Attributable to Federated Hermes Common Stock - Basic | 78,025 | 60,320 | 139,806 | 112,728 |
Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary | (307) | (166) | (395) | (199) |
Total Net Income Attributable to Federated Hermes Common Stock - Diluted | $ 77,718 | $ 60,154 | $ 139,411 | $ 112,529 |
Denominator | ||||
Basic and Diluted Weighted-Average Federated Hermes Common Stock (in shares) | 96,800 | 97,330 | 97,073 | 97,163 |
Earnings Per Share | ||||
Net Income Attributable to Federated Hermes Common Stock – Basic (usd per share) | $ 0.81 | $ 0.62 | $ 1.44 | $ 1.16 |
Net Income Attributable to Federated Hermes Common Share—Diluted (usd per share) | $ 0.80 | $ 0.62 | $ 1.44 | $ 1.16 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Carried interest subject to clawback | $ 10 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), net of tax [Rollforward] | ||
Balance, beginning of period | $ 1,041,280 | $ 857,121 |
Balance, end of period | 1,086,667 | 912,528 |
Foreign Currency Translation Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss), net of tax [Rollforward] | ||
Balance, beginning of period | (249) | (14,617) |
Other Comprehensive Income (Loss) | (25,572) | (1,875) |
Balance, end of period | $ (25,821) | $ (16,492) |
Redeemable Noncontrolling Int_3
Redeemable Noncontrolling Interest in Subsidiaries (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Temporary equity, beginning balance | $ 199,261 | $ 212,086 | $ 186,200 | $ 182,513 |
Net Income (Loss) | 3,605 | (913) | 1,116 | 65 |
Other Comprehensive Income (Loss), net of tax | (435) | (11,454) | (4,600) | 3,714 |
Subscriptions—Redeemable Noncontrolling Interest Holders | 6,225 | 5,577 | 1,822 | 42 |
Consolidation/(Deconsolidation) | (4,019) | |||
Stock Award Activity | 2,087 | 2,153 | 1,773 | 2,126 |
Distributions to Noncontrolling Interest in Subsidiaries | (4,058) | (6,039) | (541) | (2,260) |
Business Acquisition | (386) | |||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (2,013) | 1,870 | 16,604 | |
Temporary equity, ending balance | 204,672 | 199,261 | 201,988 | 186,200 |
Consolidated Investment Companies | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Temporary equity, beginning balance | 12,589 | 19,872 | 10,086 | 11,626 |
Net Income (Loss) | 2,560 | (2,802) | 340 | 678 |
Subscriptions—Redeemable Noncontrolling Interest Holders | 6,225 | 5,577 | 1,822 | 42 |
Consolidation/(Deconsolidation) | (4,019) | |||
Distributions to Noncontrolling Interest in Subsidiaries | (4,058) | (6,039) | (541) | (2,260) |
Temporary equity, ending balance | 17,316 | 12,589 | 11,707 | 10,086 |
Hermes | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Temporary equity, beginning balance | 186,672 | 192,214 | 176,114 | 170,887 |
Net Income (Loss) | 1,045 | 1,889 | 776 | (613) |
Other Comprehensive Income (Loss), net of tax | (435) | (11,454) | (4,600) | 3,714 |
Stock Award Activity | 2,087 | 2,153 | 1,773 | 2,126 |
Business Acquisition | (386) | |||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (2,013) | 1,870 | 16,604 | |
Temporary equity, ending balance | $ 187,356 | $ 186,672 | $ 190,281 | $ 176,114 |
Subsequent Events (Details)
Subsequent Events (Details) | Jul. 30, 2020$ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividend declared (usd per share) | $ 0.27 |