Legg Mason Inc. reported Tuesday that it earned $29.2 million in its fourth quarter, down about 62 percent from a year earlier due to added real estate expenses.
The Baltimore-based money manager's results still beat analysts' expectations, and its stock ended the day up 48 cents at $31.86 per share.
On a per-share basis, Legg earned 23 cents, exceeding analysts' expectations by 3 cents per share for the three months ended March 31. A year earlier, Legg earned $76.1 million, or 54 cents per share.
"It's a work in progress," said Macrae Sykes, an analyst with Gabelli & Co. in Rye, N.Y. "They did make some good gains this quarter. Persistence will be important going forward."
Sykes added that the company indicated in a conference call with analysts that it might have more charges in the future, raising uncertainty.
For the year, in which the company had a significant write-down of certain assets, Legg lost $353.3 million, or $2.65 per share. The year before, Legg posted a $220.8 million profit.
Legg has battled for years against an outflow of money from its funds. For the quarter, investors pulled a net $1.8 billion out of Legg funds. Much of that comes from $3.3 billion in redemptions by Japanese investors, leading to the first quarterly outflow by international investors in four years, CEO Joseph A. Sullivan said. He speculated that the Japanese investors might have been taking profits before the end of their tax year in March.
Sullivan noted that the pace of outflows, though, has slowed substantially and flows are the best since September 2007.
Overall, the money manager had $664.6 billion in assets under management as of March 31, a 3 percent increase from a year ago. The asset growth was largely due to $12.1 billion in market gains and $5.4 billion brought in with its $63 million March acquisition of European money manager Fauchier Partners.
Sullivan said Legg is accelerating its efforts to make similar acquisitions, particularly in the area of equity management outside the United States.
"We are more active in talking to potential partners and working with investment bankers than we have been in years," he said.
Legg said its fourth-quarter results reflected $52.8 million in real estate losses from the company's consolidation of office space. This includes the previously announced merger of Baltimore-based Legg Mason Capital Management into one of Legg's New York affiliates — a move that will lead to 10 layoffs at Capital Management in June. Legg also evacuated some offices in New York following superstorm Sandy, moving staffers into other Legg offices nearby.
The company is still seeking to sublease office space at its Baltimore headquarters in Harbor East made available with the Capital Management merger and expects to sublease its former offices in New York soon, Sullivan said.
The consolidation of space is expected to save $10 million a year in occupancy costs.
Sullivan shuffled senior management in the quarter, leading to $8.5 million in severance and deferred-compensation costs that also dampened earnings.
Operating revenues in the fourth quarter reached $667.8 million, up 3 percent from a year earlier.
Legg recently hired an outside consultant to review the company's operations from the bottom up to identify ways to be more effective and efficient, Sullivan said.
Sullivan, appointed CEO in February after his predecessor resigned in October, said Legg has been improving and the mood inside the company is better.
"There is an energy, an intensity and optimism and a focus right now, and a sense of confidence that we can get this thing turned," he said.