NEW YORK, July 25, 2019 /PRNewswire/
-- AllianceBernstein L.P. ("AB") and AllianceBernstein Holding
L.P. ("AB Holding") (NYSE: AB) today reported financial and
operating results for the quarter ended June
30, 2019.
"Our second quarter results continue to reflect momentum in
several areas of our business," said Seth
P. Bernstein, President and CEO of AllianceBernstein. "Total
firmwide net inflows of $9.5 billion
were positive for a fourth straight quarter and were driven by
$10.2 billion of active net inflows.
Year-to-date active net inflows of $12.3
billion translates to a 5.4% annualized organic growth rate
and is our best first half in more than a decade."
(US $ Thousands
except per Unit amounts)
|
2Q
2019
|
|
2Q
2018
|
|
2Q 2019 vs 2Q 2018
% Change
|
|
1Q
2019
|
|
2Q 2019 vs. 1Q
2019 % Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
857,799
|
|
|
$
|
844,738
|
|
|
1.5
|
%
|
|
$
|
795,462
|
|
|
7.8
|
%
|
Operating
income
|
$
|
184,220
|
|
|
$
|
189,464
|
|
|
(2.8)
|
%
|
|
$
|
168,151
|
|
|
9.6
|
%
|
Operating
margin
|
20.6
|
%
|
|
22.4
|
%
|
|
(180 bps)
|
|
19.9
|
%
|
|
70 bps
|
AB Holding Diluted
EPU
|
$
|
0.54
|
|
|
$
|
0.59
|
|
|
(8.5)
|
%
|
|
$
|
0.49
|
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
714,566
|
|
|
$
|
719,692
|
|
|
(0.7)
|
%
|
|
$
|
657,884
|
|
|
8.6
|
%
|
Operating
income
|
$
|
179,685
|
|
|
$
|
196,744
|
|
|
(8.7)
|
%
|
|
$
|
158,857
|
|
|
13.1
|
%
|
Operating
margin
|
25.1
|
%
|
|
27.3
|
%
|
|
(220 bps)
|
|
24.1
|
%
|
|
100 bps
|
AB Holding Diluted
EPU
|
$
|
0.56
|
|
|
$
|
0.62
|
|
|
(9.7)
|
%
|
|
$
|
0.49
|
|
|
14.3
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.56
|
|
|
$
|
0.62
|
|
|
(9.7)
|
%
|
|
$
|
0.49
|
|
|
14.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
580.8
|
|
|
$
|
539.8
|
|
|
7.6
|
%
|
|
$
|
554.7
|
|
|
4.7
|
%
|
Average
AUM
|
$
|
565.9
|
|
|
$
|
542.2
|
|
|
4.4
|
%
|
|
$
|
539.2
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The adjusted
financial measures are all non-GAAP financial measures. See page 11
for reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 12-13 for notes describing the
adjustments.
|
Bernstein continued, "In Retail, gross sales reached a record
$18.8 billion and represents a
continued rebound in fixed income and ongoing success with active
equities. Net inflows of $5.9 billion
were positive for a fourth straight quarter and were the highest
level in 19 years. The breadth of our offering means a diverse
array of AB funds attracted more than $100
million of net flows during the quarter - 12 fixed income, 8
equity and 1 multi-asset - and an impressive 52 retail products
have assets over $1 billion at
quarter-end. In Institutional, our active equity business has grown
23% since January 2018, with 86% of
that growth occurring organically. Second quarter active equity
gross sales of $2.4 billion is our
eighth straight quarter of at least $1
billion in sales and net inflows of $1.1 billion is our sixth consecutive quarter of
organic growth. Our $7.1 billion
institutional pipeline at quarter-end is fairly evenly split
between active equity, fixed income and alternatives. Our
pipeline's annualized fee base exceeded $30
million for a seventh straight quarter and new additions in
the second quarter were at an average fee rate more than double the
fee rate on the overall channel. In Private Wealth, gross sales
were flat year-on-year excluding Option Advantage, and while flows
were negative in a seasonally weaker quarter, annualized outflows
remain below our historical average. On the sell-side, Bernstein
Research continues to feel the effects of a difficult environment
as global trading volumes continued to decline. As a firm, we
expanded our adjusted operating margin of 25.1% by 100 basis points
versus the prior quarter."
The firm's cash distribution per unit of $0.56 is payable on August
22, 2019, to holders of record of AB Holding Units at the
close of business on August 5,
2019.
Market Performance
US and global equity and fixed income markets were higher in the
second quarter. The S&P 500's total return was 4.3% and the
MSCI EAFE Index's total return was 4.0%. The Bloomberg Barclays US
Aggregate Index returned 3.1% during the second quarter and the
Bloomberg Barclays Global Aggregate ex US Index's total return was
3.4%.
Assets Under Management ($ Billions)
Total assets under management as of June
30, 2019 were $580.8 billion,
up $26.1 billion, or 4.7%, from
March 31, 2019, and up $41.0 billion, or 7.6%, from June 30, 2018.
|
Institutional
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
Assets Under
Management 6/30/2019
|
$269.1
|
|
$214.5
|
|
$97.2
|
|
$580.8
|
Net Flows for Three
Months Ended 6/30/19:
|
|
|
|
|
|
|
|
Active
|
$4.3
|
|
$6.6
|
|
$(0.7)
|
|
$10.2
|
Passive
|
(0.1)
|
|
(0.7)
|
|
0.1
|
|
(0.7)
|
Total
|
$4.2
|
|
$5.9
|
|
$(0.6)
|
|
$9.5
|
|
|
|
|
|
|
|
|
Total net inflows were $9.5
billion in the second quarter, versus net inflows of
$1.1 billion in the previous quarter,
and net outflows of $7.7 billion in
the prior year period.
Institutional channel second quarter net inflows of $4.2 billion compared to net outflows of
$4.7 billion in the first quarter.
Institutional gross sales of $5.5
billion increased 62% sequentially from $3.4 billion. The pipeline of awarded but
unfunded Institutional mandates decreased sequentially to
$7.1 billion at June 30, 2019 from $11.4
billion at March 31, 2019.
Retail channel second quarter net inflows of $5.9 billion compared to net inflows of
$5.3 billion in the first quarter.
Retail gross sales of $18.8 billion
increased 15% sequentially from $16.4
billion.
Private Wealth channel second quarter net outflows of
$0.6 billion compared to net inflows
of $0.5 billion in the first quarter.
Private Wealth gross sales of $3.0
billion decreased 9% sequentially from $3.3 billion.
Second Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because we believe they present a clearer
picture of our operating performance, and allow management to see
long-term trends without the distortion caused by long-term
incentive compensation-related mark-to-market adjustments, real
estate consolidation charges/credits and other adjustment items.
Similarly, we believe that this non-GAAP earnings information helps
investors better understand the underlying trends in our results
and, accordingly, provides a valuable perspective for investors.
Please note, however, that these non-GAAP measures are provided in
addition to, and not as substitutes for, any measures derived in
accordance with US GAAP and they may not be comparable to non-GAAP
measures presented by other companies. Management uses both US GAAP
and non-GAAP measures in evaluating our financial performance. The
non-GAAP measures alone may pose limitations because they do not
include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Available Cash Flow
typically is the adjusted diluted net income per unit for the
quarter multiplied by the number of units outstanding at the end of
the quarter. Management anticipates that Available Cash Flow will
continue to be based on adjusted diluted net income per unit,
unless management determines, with the concurrence of the Board of
Directors, that one or more adjustments that are made for adjusted
net income should not be made with respect to the Available Cash
Flow calculation.
US GAAP Earnings
Revenues
Second quarter net revenues of $858
million increased 2% from $845
million in the second quarter of 2018. Higher investment
advisory base fees, investment gains, distribution revenues and net
dividend and interest income were partially offset by lower
performance-based fees and other revenues. The prior year's quarter
included $14 million of
performance-based fees related to the liquidation of the Financial
Services Opportunity Fund I.
Sequentially, net revenues increased 8% from $795 million. Higher investment advisory base
fees, Bernstein Research revenues, distribution revenues,
performance-based fees and other revenues were partially offset by
lower investment gains.
Second quarter Bernstein Research revenues of $106 million were flat compared to the prior year
quarter and increased 18% sequentially. Excluding revenues from the
Autonomous acquisition, which closed on April 1, 2019, Bernstein Research revenues
declined 9% from the prior year period due to lower client activity
in the US and Asia and increased
7% sequentially due to higher client activity in the US,
Europe and Asia.
Expenses
Second quarter operating expenses of $674
million increased 3% from $655
million in the second quarter of 2018. Total employee
compensation and benefits, promotion and servicing and general and
administrative ("G&A") expenses were all higher. Employee
compensation and benefits expense increased due to higher base
compensation, severance and fringes, partially offset by lower
incentive compensation and commissions. Promotion and servicing
expense increased due to higher distribution related payments and
travel and entertainment expense, partially offset by lower
amortization of deferred sales commissions, marketing and
communications expense and trade execution costs. Within G&A,
higher technology costs, professional fees and portfolio servicing
fees were partially offset by lower occupancy expense. The prior
year's second quarter G&A expense included a $7 million non-cash real estate charge.
Sequentially, operating expenses increased 7% from $627 million due to higher total employee
compensation and benefits, promotion and servicing and G&A
expenses. Employee compensation and benefits expense increased due
to higher incentive compensation, base compensation and severance.
Within promotion and servicing, distribution related payments,
marketing and communications and travel and entertainment expenses,
trade execution costs and transfer fees were all higher. Within
G&A, higher technology costs and occupancy expense were
partially offset by lower errors and favorable foreign exchange
translation.
Operating Income and Net Income Per Unit
Second quarter operating income of $184
million decreased 3% from $190
million in the second quarter of 2018 and the operating
margin of 20.6% in the second quarter of 2019 decreased 180 basis
points from 22.4% in the second quarter of 2018.
Sequentially, operating income increased 10% from $168 million in the first quarter of 2019 and the
operating margin of 20.6% increased 70 basis points from 19.9% in
the first quarter of 2019.
Second quarter diluted net income per Unit of $0.54 compared to $0.59 in the second quarter of 2018 and
$0.49 in the first quarter of
2019.
Non-GAAP Earnings
This section discusses our second quarter 2019 non-GAAP
financial results, compared to the second quarter of 2018 and the
first quarter of 2019. The phrases "adjusted net revenues",
"adjusted operating expenses", "adjusted operating income",
"adjusted operating margin" and "adjusted diluted net income per
Unit" are used in the following earnings discussion to identify
non-GAAP information.
Revenues
Second quarter adjusted net revenues of $715 million decreased 1% from $720 million in the second quarter of 2018. The
decline was due to lower performance-based fees and higher net
distribution expense, partially offset by higher investment
advisory base fees, investment gains and net dividend and interest
income.
Sequentially, adjusted net revenues increased 9% from
$658 million. Higher investment
advisory base fees, Bernstein Research revenues and
performance-based fees were partially offset by higher net
distribution expense.
Expenses
Second quarter adjusted operating expenses of $535 million increased 2% from $523 million in the second quarter of 2018,
driven by higher G&A and total employee compensation and
benefits expenses, partially offset by lower promotion and
servicing expense. Within G&A, higher technology costs,
occupancy expense and other miscellaneous expenses were partially
offset by lower portfolio servicing fees. Employee compensation and
benefits expense increased due to higher base compensation,
severance and fringes, partially offset by lower incentive
compensation and commissions. Promotion and servicing expense
decreased due to lower marketing and communications expense,
partially offset by higher travel and entertainment expense.
Sequentially, adjusted operating expenses increased 7% from
$499 million. Total employee
compensation and benefits, promotion and servicing and G&A
expenses were all higher. Employee compensation and benefits
expense increased due to higher incentive compensation, base
compensation and severance. Promotion and servicing expense
increased due to higher marketing and communications and travel and
entertainment expenses, trade execution costs and transfer fees.
Within G&A, the increase was due to higher technology costs,
occupancy expense and portfolio servicing fees, partially offset by
lower professional fees and errors and more favorable foreign
exchange translation.
Operating Income, Margin and Net Income Per Unit
Second quarter adjusted operating income of $180 million decreased 9% from $197 million in the second quarter of 2018, and
the adjusted operating margin of 25.1% decreased 220 basis points
from 27.3%.
Sequentially, adjusted operating income increased 13% from
$159 million and the adjusted
operating margin of 25.1% increased 100 basis points from
24.1%.
Second quarter adjusted diluted net income per Unit of
$0.56 was down from $0.62 in the second quarter of 2018 and up from
$0.49 in the first quarter of
2019.
Headcount
As of June 30, 2019, we had 3,762
employees, compared to 3,505 employees as of June 30, 2018 and 3,657 as of March 31, 2019.
Unit Repurchases
During the six months ended June 30, 2019, we purchased 2.0
million AB Holding Units for $58.6
million (on a trade date basis). As there were no
open-market purchases during the second quarter of 2019, these
amounts reflect open-market purchases of 1.9 million AB Holding
Units for $55.2 million during the
three months ended March 31, 2019,
with the remainder relating to purchases of AB Holding Units from
employees to allow them to fulfill statutory tax withholding
requirements at the time of delivery of long-term incentive
compensation awards. During the three and six months ended
June 30, 2018, AB purchased approximately 1.2 million and 1.2
million AB Holding Units for $32.9
million and $35.2 million,
respectively (on a trade date basis). These amounts reflect
open-market purchases of 1.2 million AB Holding Units for
$32.9 million during the second
quarter of 2018 with the remainder relating to purchases of AB
Holding Units from employees to allow them to fulfill statutory tax
withholding requirements at the time of delivery of long-term
incentive compensation awards. Purchases of AB Holding Units
reflected on the condensed consolidated statements of cash flows
are net of AB Holding Unit purchases by employees as part of a
distribution reinvestment election.
Second Quarter 2019 Earnings Conference Call
Information
Management will review Second Quarter 2019 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Thursday,
July 25, 2019. The conference call will be hosted by Seth P. Bernstein, President and Chief Executive
Officer, and John C. Weisenseel,
Chief Financial Officer.
Parties may access the conference call by either webcast or
telephone:
1. To listen by webcast, please visit AB's Investor
Relations website at http://alliancebernstein.com/investorrelations
at least 15 minutes prior to the call to download and install any
necessary audio software.
2. To listen by telephone, please dial (866) 556-2265 in
the U.S. or (973) 935-8521 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 7639948.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Second Quarter 2019 financial and
operating results on July 25, 2019.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference call
and will be available on AB's website for one week. An audio
replay of the conference call will also be available for one week.
To access the audio replay, please call (855) 859-2056 in the
US, or (404) 537-3406 outside the US, and provide the
conference ID #: 7639948.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of these factors include, but are not limited
to, the following: the performance of financial markets, the
investment performance of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, integration of acquired companies,
competitive conditions, and government regulations, including
changes in tax regulations and rates and the manner in which the
earnings of publicly-traded partnerships are taxed. AB cautions
readers to carefully consider such factors. Further, these
forward-looking statements speak only as of the date on which such
statements are made; AB undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. For further information regarding
these forward-looking statements and the factors that could cause
actual results to differ, see "Risk Factors" and "Cautions
Regarding Forward-Looking Statements" in AB's Form 10-K for the
year ended December 31, 2018 and
subsequent Forms 10-Q . Any or all of the forward-looking
statements made in this news release, Form 10-K, Forms 10-Q, other
documents AB files with or furnishes to the SEC, and any other
public statements issued by AB, may turn out to be wrong. It is
important to remember that other factors besides those listed in
"Risk Factors" and "Cautions Regarding Forward-Looking Statements",
and those listed below, could also adversely affect AB's revenues,
financial condition, results of operations and business
prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional mandates do
not represent legally binding commitments to fund and, accordingly,
the possibility exists that not all mandates will be funded in the
amounts and at the times currently anticipated.
- The possibility that AB will engage in open market
purchases of AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB Holding Units AB may decide to buy in future periods, if any,
to help fund incentive compensation awards depends on various
factors, some of which are beyond our control, including the
fluctuation in the price of an AB Holding Unit (NYSE: AB) and the
availability of cash to make these purchases.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
37% effective January 1, 2018.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional investors, individuals and private wealth
clients in major world markets.
As of June 30, 2019, including
both the general partnership and limited partnership interests in
AllianceBernstein, AllianceBernstein Holding owned approximately
35.6% of AllianceBernstein and AXA Equitable Holdings ("EQH"),
directly and through various subsidiaries, owned an approximate
65.2% economic interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our website, www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2019
|
|
2Q
2018
|
|
2Q 2019 vs. 2Q
2018 % Change
|
|
1Q
2019
|
|
2Q 2019 vs. 1Q
2019 % Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
585,077
|
|
|
$
|
562,810
|
|
|
4.0
|
%
|
|
$
|
552,230
|
|
|
5.9
|
%
|
Performance
fees
|
11,287
|
|
|
35,298
|
|
|
(68.0)
|
%
|
|
4,364
|
|
|
158.6
|
%
|
Bernstein research
services
|
105,991
|
|
|
106,211
|
|
|
(0.2)
|
%
|
|
90,235
|
|
|
17.5
|
%
|
Distribution
revenues
|
108,347
|
|
|
105,118
|
|
|
3.1
|
%
|
|
100,509
|
|
|
7.8
|
%
|
Dividends and
interest
|
27,654
|
|
|
21,194
|
|
|
30.5
|
%
|
|
27,346
|
|
|
1.1
|
%
|
Investments gains
(losses)
|
10,949
|
|
|
213
|
|
|
n/m
|
|
|
15,735
|
|
|
(30.4)
|
%
|
Other
revenues
|
24,796
|
|
|
26,026
|
|
|
(4.7)
|
%
|
|
22,206
|
|
|
11.7
|
%
|
Total
revenues
|
874,101
|
|
|
856,870
|
|
|
2.0
|
%
|
|
812,625
|
|
|
7.6
|
%
|
Less: interest
expense
|
16,302
|
|
|
12,132
|
|
|
34.4
|
%
|
|
17,163
|
|
|
(5.0)
|
%
|
Total net
revenues
|
857,799
|
|
|
844,738
|
|
|
1.5
|
%
|
|
795,462
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
363,702
|
|
|
358,248
|
|
|
1.5
|
%
|
|
339,309
|
|
|
7.2
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
116,254
|
|
|
106,301
|
|
|
9.4
|
%
|
|
105,993
|
|
|
9.7
|
%
|
Amortization of
deferred sales commissions
|
3,241
|
|
|
6,113
|
|
|
(47.0)
|
%
|
|
3,502
|
|
|
(7.5)
|
%
|
Trade execution,
marketing, T&E and other
|
57,550
|
|
|
59,259
|
|
|
(2.9)
|
%
|
|
49,648
|
|
|
15.9
|
%
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
120,180
|
|
|
108,836
|
|
|
10.4
|
%
|
|
117,848
|
|
|
2.0
|
%
|
Real
estate charges (credits)
|
548
|
|
|
6,909
|
|
|
(92.1)
|
%
|
|
—
|
|
|
n/m
|
|
Contingent payment
arrangements
|
829
|
|
|
52
|
|
|
n/m
|
|
|
54
|
|
|
n/m
|
|
Interest on
borrowings
|
3,990
|
|
|
2,629
|
|
|
51.8
|
%
|
|
3,983
|
|
|
0.2
|
%
|
Amortization of
intangible assets
|
7,285
|
|
|
6,927
|
|
|
5.2
|
%
|
|
6,974
|
|
|
4.5
|
%
|
Total operating
expenses
|
673,579
|
|
|
655,274
|
|
|
2.8
|
%
|
|
627,311
|
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
184,220
|
|
|
189,464
|
|
|
(2.8)
|
%
|
|
168,151
|
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
10,211
|
|
|
7,538
|
|
|
35.5
|
%
|
|
8,921
|
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
174,009
|
|
|
181,926
|
|
|
(4.4)
|
%
|
|
159,230
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
7,757
|
|
|
261
|
|
|
n/m
|
|
|
10,116
|
|
|
(23.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
166,252
|
|
|
$
|
181,665
|
|
|
(8.5)
|
%
|
|
$
|
149,114
|
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2019
|
|
2Q
2018
|
|
2Q 2019 vs. 2Q
2018 % Change
|
|
1Q
2019
|
|
2Q 2019 vs. 1Q
2019 % Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
59,023
|
|
|
$
|
65,388
|
|
|
(9.7)
|
%
|
|
$
|
52,638
|
|
|
12.1
|
%
|
Income
Taxes
|
6,749
|
|
|
6,931
|
|
|
(2.6)
|
%
|
|
6,199
|
|
|
8.9
|
%
|
Net
Income
|
52,274
|
|
|
58,457
|
|
|
(10.6)
|
%
|
|
46,439
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
19
|
|
|
115
|
|
|
(83.5)
|
%
|
|
26
|
|
|
(26.9)
|
%
|
Net Income -
Diluted
|
$
|
52,293
|
|
|
$
|
58,572
|
|
|
(10.7)
|
%
|
|
$
|
46,465
|
|
|
12.5
|
%
|
Diluted Net Income
per Unit
|
$
|
0.54
|
|
|
$
|
0.59
|
|
|
(8.5)
|
%
|
|
$
|
0.49
|
|
|
10.2
|
%
|
Distribution per
Unit
|
$
|
0.56
|
|
|
$
|
0.62
|
|
|
(9.7)
|
%
|
|
$
|
0.49
|
|
|
14.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
Units
Outstanding
|
2Q
2019
|
|
2Q
2018
|
|
2Q 2019 vs. 2Q
2018 % Change
|
|
1Q
2019
|
|
2Q 2019 vs. 1Q
2019 % Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
268,815,565
|
|
|
270,222,414
|
|
|
(0.5)
|
%
|
|
267,186,102
|
|
|
0.6
|
%
|
Weighted average -
basic
|
268,475,021
|
|
|
270,563,705
|
|
|
(0.8)
|
%
|
|
267,336,134
|
|
|
0.4
|
%
|
Weighted average -
diluted
|
268,522,779
|
|
|
270,835,739
|
|
|
(0.9)
|
%
|
|
267,408,249
|
|
|
0.4
|
%
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
96,624,449
|
|
|
98,028,820
|
|
|
(1.4)
|
%
|
|
94,994,404
|
|
|
1.7
|
%
|
Weighted average -
basic
|
96,283,355
|
|
|
98,367,626
|
|
|
(2.1)
|
%
|
|
95,144,146
|
|
|
1.2
|
%
|
Weighted average -
diluted
|
96,331,113
|
|
|
98,639,660
|
|
|
(2.3)
|
%
|
|
95,216,261
|
|
|
1.2
|
%
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | June 30, 2019
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
6/30/19
|
6/30/18
|
|
Ending Assets Under
Management
|
$580.8
|
$539.8
|
|
Average Assets Under
Management
|
$565.9
|
$542.2
|
|
|
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
256.6
|
|
|
$
|
201.9
|
|
|
$
|
96.2
|
|
|
$
|
554.7
|
|
|
Sales/New
accounts
|
5.5
|
|
|
18.8
|
|
|
3.0
|
|
|
27.3
|
|
|
Redemption/Terminations
|
(1.3)
|
|
|
(11.2)
|
|
|
(3.6)
|
|
|
(16.1)
|
|
|
Net Cash
Flows
|
—
|
|
|
(1.7)
|
|
|
—
|
|
|
(1.7)
|
|
|
Net
Flows
|
4.2
|
|
|
5.9
|
|
|
(0.6)
|
|
|
9.5
|
|
|
Adjustments(3)
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
(0.9)
|
|
|
Investment
Performance
|
8.3
|
|
|
6.7
|
|
|
2.5
|
|
|
17.5
|
|
|
End of
Period
|
$
|
269.1
|
|
|
$
|
214.5
|
|
|
$
|
97.2
|
|
|
$
|
580.8
|
|
Three-Month
Changes By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity Passive
(1)
|
|
Fixed Income
Taxable
|
|
Fixed Income
Tax-Exempt
|
|
Fixed Income
Passive (1)
|
|
Other
(2)
|
|
Total
|
|
Beginning of
Period
|
$
|
155.1
|
|
|
$
|
55.8
|
|
|
$
|
227.2
|
|
|
$
|
43.8
|
|
|
$
|
9.3
|
|
|
$
|
63.5
|
|
|
$
|
554.7
|
|
|
Sales/New
accounts
|
8.8
|
|
|
—
|
|
|
13.1
|
|
|
2.6
|
|
|
—
|
|
|
2.8
|
|
|
27.3
|
|
|
Redemption/Terminations
|
(6.7)
|
|
|
—
|
|
|
(6.5)
|
|
|
(2.4)
|
|
|
(0.1)
|
|
|
(0.4)
|
|
|
(16.1)
|
|
|
Net Cash
Flows
|
(1.1)
|
|
|
(0.6)
|
|
|
0.3
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(1.7)
|
|
|
Net
Flows
|
1.0
|
|
|
(0.6)
|
|
|
6.9
|
|
|
0.1
|
|
|
(0.2)
|
|
|
2.3
|
|
|
9.5
|
|
|
Adjustments(3)
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
Investment
Performance
|
5.7
|
|
|
2.2
|
|
|
7.1
|
|
|
0.9
|
|
|
0.4
|
|
|
1.2
|
|
|
17.5
|
|
|
End of
Period
|
$
|
161.8
|
|
|
$
|
57.4
|
|
|
$
|
240.8
|
|
|
$
|
44.3
|
|
|
$
|
9.5
|
|
|
$
|
67.0
|
|
|
$
|
580.8
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively Managed
(1)
|
|
Total
|
|
|
Equity
|
$
|
1.0
|
|
|
$
|
(0.6)
|
|
|
$
|
0.4
|
|
|
|
Fixed
Income
|
7.0
|
|
|
(0.2)
|
|
|
6.8
|
|
|
|
Other
(2)
|
2.2
|
|
|
0.1
|
|
|
2.3
|
|
|
|
Total
|
$
|
10.2
|
|
|
$
|
(0.7)
|
|
|
$
|
9.5
|
|
|
(1)
|
Includes index and
enhanced index services.
|
(2)
|
Includes certain
multi-asset solutions and services and certain alternative
investments.
|
(3)
|
Approximately $900
million of non-investment management fee earning taxable and
tax-exempt money market assets were removed from assets under
management during the second quarter of 2019.
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S.
Clients
|
$
|
165.9
|
|
|
$
|
119.8
|
|
|
$
|
95.1
|
|
|
$
|
380.8
|
|
|
Non-U.S.
Clients
|
103.2
|
|
|
94.7
|
|
|
2.1
|
|
|
200.0
|
|
|
Total
|
$
|
269.1
|
|
|
$
|
214.5
|
|
|
$
|
97.2
|
|
|
$
|
580.8
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
US $ Thousands,
unaudited
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues,
GAAP
basis
|
|
$
|
857,799
|
|
|
$
|
795,462
|
|
|
$
|
804,660
|
|
|
$
|
850,176
|
|
|
$
|
844,738
|
|
|
$
|
867,787
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,844
|
|
|
|
|
Distribution-related
payments
|
(116,254)
|
|
|
(105,993)
|
|
|
(104,359)
|
|
|
(106,372)
|
|
|
(106,301)
|
|
|
(110,154)
|
|
|
|
|
Amortization of
deferred sales
commissions
|
(3,241)
|
|
|
(3,502)
|
|
|
(3,981)
|
|
|
(4,651)
|
|
|
(6,113)
|
|
|
(6,598)
|
|
|
|
|
Pass-through fees
& expenses
|
(13,516)
|
|
|
(12,481)
|
|
|
(9,039)
|
|
|
(10,084)
|
|
|
(10,487)
|
|
|
(10,609)
|
|
|
|
|
Impact of
consolidated company-
sponsored investment funds
|
(8,697)
|
|
|
(10,959)
|
|
|
931
|
|
|
(1,543)
|
|
|
(1,494)
|
|
|
(36,037)
|
|
|
|
|
Long-term
incentive
compensation-related investment
losses (gains)
|
(1,389)
|
|
|
(4,496)
|
|
|
7,104
|
|
|
(1,253)
|
|
|
(542)
|
|
|
209
|
|
|
|
|
Long-term
incentive
compensation-related dividends
and interest
|
(136)
|
|
|
(147)
|
|
|
(1,631)
|
|
|
(130)
|
|
|
(156)
|
|
|
(93)
|
|
|
|
|
Loss (gain) on sale
of software
technology
|
—
|
|
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
|
Adjusted Net
Revenues
|
|
$
|
714,566
|
|
|
$
|
657,884
|
|
|
$
|
696,418
|
|
|
$
|
727,143
|
|
|
$
|
719,692
|
|
|
$
|
782,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
184,220
|
|
|
$
|
168,151
|
|
|
$
|
199,359
|
|
|
$
|
213,819
|
|
|
$
|
189,464
|
|
|
$
|
222,671
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,156
|
|
|
|
|
Real estate charges
(credits)
|
—
|
|
|
—
|
|
|
670
|
|
|
(155)
|
|
|
6,909
|
|
|
(264)
|
|
|
|
|
Long-term incentive
compensation-
related items
|
277
|
|
|
357
|
|
|
243
|
|
|
1,820
|
|
|
585
|
|
|
417
|
|
|
|
|
CEO's EQH award
compensation
|
227
|
|
|
465
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Loss (gain) on sale
of software
technology
|
—
|
|
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
|
|
Acquisition-related
expenses
|
2,718
|
|
|
—
|
|
|
1,924
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
—
|
|
|
(2,429)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
|
|
Sub-total of
non-GAAP
adjustments
|
3,222
|
|
|
822
|
|
|
3,141
|
|
|
2,665
|
|
|
7,541
|
|
|
35,309
|
|
|
|
|
Less: Net (loss)
income of
consolidated entities attributable to
non-controlling interests
|
7,757
|
|
|
10,116
|
|
|
(1,727)
|
|
|
726
|
|
|
261
|
|
|
22,650
|
|
|
|
Adjusted Operating
Income
|
|
$
|
179,685
|
|
|
$
|
158,857
|
|
|
$
|
204,227
|
|
|
$
|
215,758
|
|
|
$
|
196,744
|
|
|
$
|
235,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis
excl. non-controlling interests
|
20.6
|
%
|
|
19.9
|
%
|
|
25.0
|
%
|
|
25.1
|
%
|
|
22.4
|
%
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
25.1
|
%
|
|
24.1
|
%
|
|
29.3
|
%
|
|
29.7
|
%
|
|
27.3
|
%
|
|
30.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU
TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
$ Thousands except
per Unit
amounts, unaudited
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
|
Net Income -
Diluted, GAAP basis
|
$
|
52,293
|
|
|
$
|
46,465
|
|
|
$
|
59,951
|
|
|
$
|
66,017
|
|
|
$
|
58,572
|
|
|
$
|
58,305
|
|
|
|
Impact on net income
of AB non-
GAAP adjustments
|
1,234
|
|
|
462
|
|
|
1,000
|
|
|
919
|
|
|
2,609
|
|
|
12,271
|
|
|
|
Adjusted Net
Income - Diluted
|
$
|
53,527
|
|
|
$
|
46,927
|
|
|
$
|
60,951
|
|
|
$
|
66,936
|
|
|
$
|
61,181
|
|
|
$
|
70,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding
Unit, GAAP basis
|
$
|
0.54
|
|
|
$
|
0.49
|
|
|
$
|
0.63
|
|
|
$
|
0.68
|
|
|
$
|
0.59
|
|
|
$
|
0.60
|
|
|
|
Impact of AB non-GAAP
adjustments
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.13
|
|
|
|
Adjusted Diluted
Net Income per
Holding Unit
|
$
|
0.56
|
|
|
$
|
0.49
|
|
|
$
|
0.64
|
|
|
$
|
0.69
|
|
|
$
|
0.62
|
|
|
$
|
0.73
|
|
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues offset distribution-related payments to
third parties as well as amortization of deferred sales commissions
against distribution revenues. We believe offsetting net revenues
by distribution-related payments is useful for our investors and
other users of our financial statements because such presentation
appropriately reflects the nature of these costs as pass-through
payments to third parties that perform functions on behalf of our
sponsored mutual funds and/or shareholders of these funds. We
offset amortization of deferred sales commissions against net
revenues because such costs, over time, essentially offset our
distribution revenues. We also exclude additional pass-through
expenses we incur (primarily through our transfer agency) that are
reimbursed and recorded as fees in revenues. These fees do not
affect operating income, but they do affect our operating margin.
As such, we exclude these fees from adjusted net revenues.
We adjust for the revenue impact of consolidating
company-sponsored investment funds by eliminating the consolidated
company-sponsored investment funds' revenues and including AB's
fees from such consolidated company-sponsored investment funds and
AB's investment gains and losses on its investments in such
consolidated company-sponsored investment funds that were
eliminated in consolidation.
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments.
On January 1, 2018, we recorded a
cumulative effect adjustment, net of tax, of $35.0 million to partners' capital in the
consolidated statement of financial condition. This amount
represents carried interest distributions of $77.9 million previously received, net of revenue
sharing payments to investment team members of $42.7 million, with respect to which it is
probable that significant reversal will not occur. These amounts
were included in adjusted net revenues and adjusted operating
income in the first quarter of 2018.
Lastly, during 2017 we excluded a realized gain of $4.6 million on the exchange of software
technology for an ownership stake in a third party provider of
financial market data and trading tools. During 2018, we decreased
our valuation of this investment by $3.7
million.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2)
acquisition-related expenses, (3) the impact on net revenues and
compensation expense of the investment gains and losses (as well as
the dividends and interest) associated with employee long-term
incentive compensation-related investments, (4) our CEO's EQH award
compensation, as discussed below, (5) the impact of
consolidated company-sponsored investment funds, (6) the loss
(gain) on software technology investment, (7) adjustments to
contingent payment arrangements, and (8) the revenues and expenses
associated with the implementation of ASC 606 discussed above.
Real estate charges (credits) incurred outside of our
headquarters relocation strategy have been excluded because they
are not considered part of our core operating results when
comparing financial results from period to period and to industry
peers.
Acquisition-related expenses have been excluded because they are
not considered part of our core operating results when comparing
financial results from period to period and to industry peers.
Prior to 2009, a significant portion of employee compensation
was in the form of long-term incentive compensation awards that
were notionally invested in AB investment services and generally
vested over a period of four years. AB economically hedged the
exposure to market movements by purchasing and holding these
investments on its balance sheet. All such investments had vested
as of year-end 2012 and the investments have been delivered to the
participants, except for those investments with respect to which
the participant elected a long-term deferral. Fluctuation in the
value of these investments is recorded within investment gains and
losses on the income statement and also impacts compensation
expense. Management believes it is useful to reflect the offset
achieved from economically hedging the market exposure of these
investments in the calculation of adjusted operating income and
adjusted operating margin. The non-GAAP measures exclude gains and
losses and dividends and interest on employee longterm incentive
compensation-related investments included in revenues and
compensation expense.
The board of directors of EQH granted to Seth P. Bernstein ("CEO") equity awards in
connection with EQH's IPO and Mr. Bernstein's membership on the EQH
Management Committee. Mr. Bernstein may receive additional equity
or cash compensation from EQH in the future related to his service
on the Management Committee. Any awards granted to Mr. Bernstein by
EQH are recorded as compensation expense in AB's condensed
consolidated statement of income. The compensation expense
associated with these awards has been excluded from our non-GAAP
measures because they are non-cash and are based upon EQH's, and
not AB's, financial performance.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored funds' revenues and expenses and
including AB's revenues and expenses that were eliminated in
consolidation. We also excluded the limited partner interests we do
not own.
Gains and losses on the software technology investment have been
excluded due to its non-recurring nature and because it is not part
of our core operating results.
The recording of changes in estimates of contingent
consideration payable with respect to contingent payment
arrangements associated with our acquisitions are not considered
part of our core operating results and, accordingly, have been
excluded.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period without the
volatility noted above in our discussion of adjusted operating
income and to compare our performance to industry peers on a
basis that better reflects our performance in our core business.
Adjusted operating margin is derived by dividing adjusted operating
income by adjusted net revenues.
View original
content:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-second-quarter-results-300890940.html
SOURCE AllianceBernstein