Record quarter at Legg Mason Net income up 60%, fiscal-year results at all-time high, too

May 05, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc.'s net income shot up 60 percent and revenue rose 35 percent in its fiscal fourth quarter, as the brokerage and money management firm reaped the rewards of the booming stock market, the company said yesterday.

Revenue, income and income per share reached all-time highs for the quarter and fiscal year, which ended March 31.

"Legg Mason is on a roll," said Michael Flanagan, analyst and owner of Philadelphia-based Financial Service Analytics. "Its earnings were much stronger than expected."

The Baltimore-based company reported net income of $23.5 million in the fourth fiscal quarter, and revenue was $246.3 million, up 35 percent from a year earlier.

Legg beat Wall Street estimates, earning 86 cents a share in the quarter, up 56 percent from the same time in 1997.

"Obviously, I feel good about our results because they are the best we have ever had," said Legg Chairman and Chief Executive Officer Raymond A. "Chip" Mason. "It was across the board."

Legg isn't the only local money manager operating at record levels. T. Rowe Price Associates Inc.'s net income jumped 45 percent to a high of $41.3 million in the first quarter of 1998, and revenue hit $210 million, up 25 percent from a year earlier.

Shares of Legg closed at $59.50 yesterday, down 87.5 cents.

For the year, Legg's net income was up 33 percent to $76 million, and revenue rose 34 percent to $889 million. Net income per share increased by 25 percent to $2.80.

The results include the acquisition of Brandywine Asset Management, an investment management company acquired in January. Brandywine added about $7 billion in assets to what Legg already manages.

As investors have continued to pour money into mutual funds, Legg's assets under management soared during the year to $71 billion, up 61 percent from a year earlier. Five years ago, Legg had $13 billion in assets under management.

"That is an impressive growth rate," Flanagan said. "Its assets under management are growing very strongly. Those are the key to stable earnings in the future."

Legg's money management business led the way with revenue of $295.6 million for the year, up 42 percent from a year earlier. Commissions generated by brokers rose 27 percent to $241.3 million.

Expenses, however, jumped to $760.7 million, up 33.8 percent with the vast majority in compensation and benefits.

Mason said the company has continued to hire people as the market has risen. Legg employs about 4,000 people across the country and overseas.

Mason said there is no way to predict how the rest of the year will turn out.

"It is too soon to tell," he said. "There is just no way of knowing where this market is going. We are almost in a state within the country where everything is going in the right direction."

Pub Date: 5/05/98

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