Legg Mason profit up 50% Second-quarter revenue, income at all-time highs

Securities industry

July 17, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc.'s net income soared 50 percent and revenue jumped 33 percent in the first quarter of its fiscal year, as retail and institutional investors poured money into the company's mutual funds and fixed-income services.

Revenue, income and income per share reached all-time highs for the quarter that ended June 30, the company said yesterday.

Revenue rose to $248.7 million in the first quarter, up from $186.6 million in the corresponding period a year earlier. Net income surged to $24.4 million in the quarter, up from $16.3 million in the year-earlier period.

The Baltimore-based brokerage and money management company hit Wall Street's estimates on the nose, making 83 cents per diluted share, up 46 percent from 57 cents per diluted share a year earlier.

"We are very pleased with the results, especially in light of some of the volatility" in the stock market, said F. Barry Bilson, Legg's chief financial officer. "All of the areas of the business had solid increases."

Bilson said Legg's second quarter is already "looking quite promising."

Legg shares closed yesterday at $59.875, up 50 cents.

Legg's profit was driven by big gains in its investment advisory business, which had revenue of $90.4 million in the quarter, up 44 percent from the 1997 quarter.

Bilson said the increase in investment advisory revenue came largely from retail and institutional investors, who pumped money into Legg's mutual funds and into its fixed-income services.

At quarter's end, Legg had $74 billion in assets under management, 54 percent more than it had a year earlier.

Assets managed by Legg's most popular fund, the Legg Mason Value Trust, more than doubled to $6.2 billion in the first quarter, up from $2.9 billion for the same period a year earlier, Bilson said.

Legg generated $65 million in revenue from commissions in the quarter, 26 percent more than in the same period last year, and investment banking revenue was $20.9 million in the quarter, 40.2 percent more than in the corresponding period in 1997.

"To refer to these earnings as a record seems to be an understatement," said Michael Flanagan, an independent brokerage analyst at Philadelphia-based Financial Service Analytics. "Legg Mason did exceptionally well in the quarter."

Flanagan said the outlook for the brokerage industry is uncertain but that he sees Legg being able to handle a serious drop in the stock market better than most of its counterparts because of its growing asset-management business.

Pub Date: 7/17/98

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