Legg Mason's profit up 16% in 3rd quarter

70 cents per share beats the estimates

January 22, 2003|By William Patalon III | William Patalon III,SUN STAFF

Legg Mason Inc. reported a 16 percent jump in net earnings for its fiscal third quarter yesterday, results that were just ahead of analysts' estimates.

For the three months that ended Dec. 31, the Baltimore brokerage and asset manager recorded net earnings of $47.9 million, up from the $41.1 million it reported for the third quarter a year earlier. On a per-share basis, earnings were 70 cents -- 10 cents higher than a year earlier and a penny more than analysts' consensus estimate of 69 cents, according to Thomson First Call, the financial-information service that most Wall Streeters follow.

The earnings came largely as a result of cost cutting, the company noted. Revenue gained just 2 percent, to $379.8 million from $374.8 million in the year-earlier quarter.

"Overall, I think they looked pretty good," said Bjorn Turnquist, an analyst who follows Legg for SNL Financial in Charlottesville, Va. "They were really able to control their expenses. They didn't grow revenue all that much, but they did keep expenses down, which is great. It looks like they had a pretty good quarter, and did beat estimates."

Noninterest expenses declined during the quarter to $302.93 million, down 2 percent.

Assets under management rose to $184.7 billion as of Dec. 31, an increase of 9 percent from $170.1 billion at the end of 2001 and up 5 percent from the previous quarter.

"Our assets under management and asset management revenues were at record levels during the December quarter," Raymond A. "Chip" Mason, Legg's chairman and chief executive officer, said in a company statement.

Mason said the company continues to perform well, despite a bear market that has resulted in three straight losing years for the major market indices.

"Despite the difficult markets that have characterized our industry over the last few years, and the resulting weakness in our private client business, our earnings this quarter -- both net earnings and diluted earnings per share -- were the third-highest in Legg Mason's history, and for the [first three quarters of the current fiscal year] set new records," Mason said.

For the nine months that ended Dec. 31, Legg said net earnings totaled $142.2 million, an increase of 33 percent over the corresponding period of the previous fiscal year. Fully diluted earnings per share were $2.07, up 32 percent, the company said. Net revenue was $1.144 billion, an 8 percent increase.

Legg also said yesterday that its board of directors declared a regular quarterly dividend of 11 cents per share on its common stock, payable April 7 to shareholders of record March 6.

The results were released after stock markets closed yesterday. Shares of Legg Mason closed at $49.18, down 83 cents.

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