NEW YORK, Feb. 12, 2020 /PRNewswire/
-- AllianceBernstein L.P. ("AB") and AllianceBernstein Holding
L.P. ("AB Holding") (NYSE: AB) today reported financial and
operating results for the quarter and year ended December 31, 2019.
"Our global platform experienced broad-based growth during 2019,
demonstrating strong progress in executing on our growth strategy,"
said Seth P. Bernstein, President
and CEO of AllianceBernstein. "Active organic growth of 6.5%
reflected strength across our global fixed income, equity and
alternative platforms. Combined with strong markets, AUM of
$623 billion grew 21% from the prior
year, while our fee rate remained essentially flat. Investments to
revitalize our active equities platform and diversify our global
business have produced distinguished results and position the firm
to sustain our momentum."
(US $ Thousands
except per Unit amounts)
|
4Q
2019
|
|
4Q
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
987,304
|
|
|
$
|
804,660
|
|
|
22.7
|
%
|
|
$
|
3,518,432
|
|
|
$
|
3,367,361
|
|
|
4.5
|
%
|
Operating
income
|
$
|
268,283
|
|
|
$
|
199,359
|
|
|
34.6
|
%
|
|
$
|
823,437
|
|
|
$
|
825,314
|
|
|
(0.2)
|
%
|
Operating
margin
|
26.4
|
%
|
|
25.0
|
%
|
|
140 bps
|
|
22.6
|
%
|
|
23.9
|
%
|
|
(130 bps)
|
AB Holding Diluted
EPU
|
$
|
0.84
|
|
|
$
|
0.63
|
|
|
33.3
|
%
|
|
$
|
2.49
|
|
|
$
|
2.50
|
|
|
(0.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
817,457
|
|
|
$
|
696,418
|
|
|
17.4
|
%
|
|
$
|
2,916,615
|
|
|
$
|
2,925,604
|
|
|
(0.3)
|
%
|
Operating
income
|
$
|
263,974
|
|
|
$
|
204,227
|
|
|
29.3
|
%
|
|
$
|
802,444
|
|
|
$
|
852,059
|
|
|
(5.8)
|
%
|
Operating
margin
|
32.3
|
%
|
|
29.3
|
%
|
|
300 bps
|
|
27.5
|
%
|
|
29.1
|
%
|
|
(160 bps)
|
AB Holding Diluted
EPU
|
$
|
0.85
|
|
|
$
|
0.64
|
|
|
32.8
|
%
|
|
$
|
2.52
|
|
|
$
|
2.67
|
|
|
(5.6)
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.85
|
|
|
$
|
0.64
|
|
|
32.8
|
%
|
|
$
|
2.53
|
|
|
$
|
2.68
|
|
|
(5.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management ("AUM")
|
|
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
622.9
|
|
|
$
|
516.4
|
|
|
20.6
|
%
|
|
$
|
622.9
|
|
|
$
|
516.4
|
|
|
20.6
|
%
|
Average
AUM
|
$
|
606.8
|
|
|
$
|
532.5
|
|
|
14.0
|
%
|
|
$
|
574.2
|
|
|
$
|
544.2
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
adjusted financial measures represent non-GAAP financial measures.
See page 15 for reconciliations of GAAP Financial Results to
Adjusted Financial Results and pages 16-17 for notes describing the
adjustments.
|
Bernstein continued: "Our commitment to delivering
differentiated return streams to our clients has led to consistent
results in both investment performance and flows. In Retail, we
drove record full-year gross sales of $75
billion, which was $19 billion
or 34% above our historic high, resulting in active net inflows of
$27 billion, or 20% organic growth.
During 2019, 33 AB funds across asset classes each had more than
$100 million in net inflows. In
Institutional, active equity gross sales of $9.2 billion were our highest since 2008 with net
inflows of $2.9 billion, or 9%
organic growth. Our $15.1 billion
institutional pipeline at year-end grew 56% from the prior year,
reflecting strength across asset classes.
Bernstein concluded: "2019 was in many ways an exemplary year
for our firm, furthered by the simultaneous transition of our core
operations to our new Nashville,
TN headquarters. While to-date markets have remained
constructive, we remain committed to optimizing our platform for
all environments. Through investing in select growth opportunities,
attracting and retaining top talent, and focusing on our clients'
evolving needs, we are confident that our strategy will deliver
continued success."
The firm's cash distribution per Unit of $0.85 is payable on March
5, 2020, to holders of record of AB Holding Units at the
close of business on February 24,
2020.
Market Performance
US and global equity and fixed income markets generated positive
total returns for the fourth quarter and for the full year of 2019.
The S&P 500's total return was 9.1% in the fourth quarter and
the MSCI EAFE Index's total return was 8.2%. For the full year, the
S&P 500 returned 31.5% and the MSCI EAFE returned 22.7%. The
Bloomberg Barclays US Aggregate Index returned 0.2% during the
fourth quarter and the Bloomberg Barclays Global Aggregate ex US
Index's total return was 0.7%. For the full year, the Bloomberg
Barclays US Aggregate Index's total return was 8.7% and the
Bloomberg Barclays US Aggregate ex US Index returned 5.1%.
Assets Under Management ($ Billions)
Total assets under management as of December 31, 2019 were $622.9 billion, up $30.5
billion, or 5%, from September 30,
2019, and up $106.5 billion,
or 21%, from December 31, 2018.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 12/31/19
|
$282.7
|
|
$239.2
|
|
$101.0
|
|
$622.9
|
Net Flows for Three
Months Ended 12/31/19:
|
|
|
|
|
|
|
|
Active
|
$2.1
|
|
$6.2
|
|
$(0.2)
|
|
$8.1
|
Passive
|
(0.7)
|
|
(1.0)
|
|
0.1
|
|
(1.6)
|
Total
|
$1.4
|
|
$5.2
|
|
$(0.1)
|
|
$6.5
|
|
|
|
|
|
|
|
|
Net Flows for Twelve
Months Ended 12/31/19:
|
|
|
|
|
|
|
|
Active
|
$3.8
|
|
$27.2
|
|
$(1.3)
|
|
$29.7
|
Passive
|
(1.4)
|
|
(3.4)
|
|
0.3
|
|
(4.5)
|
Total
|
$2.4
|
|
$23.8
|
|
$(1.0)
|
|
$25.2
|
Total net inflows were $6.5
billion in the fourth quarter, versus net inflows of
$8.1 billion in the third quarter,
and net inflows of $0.8 billion in
the prior year period. Total net inflows were $25.2 billion for the full year of 2019, versus
net outflows of $8.1 billion in the
prior year.
Institutional channel fourth quarter net inflows of $1.4 billion compared to net inflows of
$1.5 billion in the third quarter.
Institutional gross sales of $5.4
billion increased 86% sequentially from $2.9 billion. Full year 2019 net inflows of
$2.4 billion compared to net outflows
of $10.0 billion in the prior year.
Full year 2019 gross sales of $17.1
billion decreased 34% from $26.1
billion in the prior year, which included $10.1 billion of low-fee Customized Retirement
Strategies fundings. The pipeline of awarded but unfunded
Institutional mandates increased sequentially to $15.1 billion at December
31, 2019 from $11.6 billion at
September 30, 2019.
Retail channel fourth quarter net inflows of $5.2 billion compared to net inflows of
$7.4 billion in the third quarter.
Retail gross sales of $18.9 billion
decreased 10% sequentially from $21.1
billion. Full year 2019 net inflows of $23.8 billion compared to zero net flows in the
prior year. Full year 2019 gross sales of $75.3 billion increased 39% from $54.2 billion in the prior year.
Private Wealth channel fourth quarter net outflows of
$0.1 billion compared to net outflows
of $0.8 billion in the third quarter.
Private Wealth gross sales of $2.7
billion increased 17% sequentially from $2.3 billion. Full year 2019 net outflows of
$1.0 billion compared to net inflows
of $1.9 billion in the prior year.
Full year 2019 gross sales of $11.3
billion decreased 16% from $13.5
billion in the prior year.
AXA has notified us of their intent to terminate approximately
$14 billion of fixed income
investment mandates during the first half of 2020. The revenue we
earn from the management of these assets is not significant.
Fourth Quarter and Full Year 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 charges/credits and other adjustment items. Similarly, we
believe that 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 a substitute 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 concurrence of the Board of
Directors, that one or more adjustments made to adjusted net income
should not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Revenues
Fourth quarter 2019 net revenues of $987
million increased 23% from the fourth quarter of 2018.
Higher investment advisory base fees, performance-based fees,
investment gains compared to investment losses in the prior year
period and higher distribution revenues drove the increase.
Full year 2019 net revenues of $3.5
billion increased 4% from $3.4
billion in 2018. Higher investment advisory base fees,
distribution revenues and investment gains were partially offset by
lower Bernstein Research revenues and performance-based fees.
Fourth quarter 2019 Bernstein Research revenues decreased 5%
from the prior year period and full year Bernstein Research
revenues decreased 7% due to lower global client activity and
trading commissions, partially offset by the inclusion of revenues
from the Autonomous acquisition.
Expenses
Fourth quarter 2019 operating expenses of $719 million increased 19% from the fourth
quarter of 2018. Total employee compensation and benefits,
promotion and servicing and general and administrative ("G&A")
expenses were all higher. Employee compensation and benefit expense
increased due primarily to higher incentive compensation and base
compensation. Promotion and servicing expense increased due to
higher distribution related payments, partially offset by lower
marketing expense. Within G&A, higher portfolio servicing fees,
increased technology costs, occupancy expense, an intangible asset
impairment charge and an unfavorable foreign exchange impact, were
partially offset by lower professional fees. In addition, during
the fourth quarter of 2019, we recorded an intangible asset
impairment charge of $3.1 million and
a change in our contingent payment liability of $3.1 million, both relating to our 2016
acquisition.
Full year 2019 operating expenses of $2.7
billion increased 6% from $2.5
billion in 2018. Total employee compensation and benefits,
promotion and servicing expenses and G&A expense were all
higher. Employee compensation and benefits expense increased due to
higher base compensation, incentive compensation and fringes,
partially offset by lower commissions. Promotion and servicing
expense increased due to higher distribution related payments and
travel and entertainment, partially offset by lower amortization of
deferred sales commissions, trade execution costs and marketing
expense. Within G&A, the increase is due primarily to higher
portfolio servicing fees, increased technology costs, professional
fees and occupancy expense. In addition, during the fourth
quarter of 2019, we recorded an intangible asset impairment charge
of $3.1 million and a change in our
contingent payment liability of $3.1
million, both relating to our 2016 acquisition.
Operating Income and Net Income Per Unit
Fourth quarter 2019 operating income of $268 million increased 35% from $199 million in the fourth quarter of 2018 and
operating margin of 26.4% increased 140 basis points from 25.0% in
the fourth quarter of 2018. Full year 2019 operating income of
$823 million decreased from
$825 million in 2018, and operating
margin of 22.6% decreased 130 basis points from 23.9% in 2018.
Fourth quarter 2019 diluted net income per Unit was $0.84 as compared to $0.63 in the fourth quarter of 2018. Full year
2019 diluted net income per Unit was $2.49 as compared to $2.50 in 2018.
Non-GAAP Earnings
This section discusses our fourth quarter and full year 2019
non-GAAP financial results, compared to the fourth quarter and full
year 2018 financial results. 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
Fourth quarter 2019 adjusted net revenues of $817 million increased 17% from the fourth
quarter of 2018. Higher investment advisory base fees,
performance-based fees and investment gains versus investment
losses in the prior year period, were partially offset by higher
net distribution expense and lower Bernstein Research revenues.
Full year 2019 adjusted net revenues of $2.9 billion were essentially flat from 2018.
Lower performance-based fees, Bernstein Research revenues and
higher net distribution expense were partially offset by higher
investment advisory base fees, investment gains versus investment
losses in the prior year and higher net dividend and interest
income.
Expenses
Fourth quarter 2019 adjusted operating expenses of $553 million were up 12% from the fourth quarter
of 2018. Higher total employee compensation and benefits and
G&A expenses were partially offset by lower promotion and
servicing expense. Employee compensation and benefits expense
increased due to higher incentive compensation and base
compensation. Within G&A, the increase was driven by higher
technology costs, higher occupancy expense and an unfavorable
foreign exchange impact. Promotion and servicing expense decreased
due to lower marketing expense.
Full year 2019 adjusted operating expenses of $2.1 billion increased 2% from 2018. Higher
G&A expense and employee compensation and benefits were
partially offset by lower promotion and servicing expenses. Within
G&A, the increase was driven by higher technology costs,
occupancy expense and professional fees. Employee compensation and
benefits expense increased due to higher base compensation and
fringes, partially offset by lower incentive compensation and
commissions. Promotion and servicing expense decreased due to lower
trade execution costs, marketing expense and transfer fees,
partially offset by higher travel and entertainment expense.
Operating Income, Margin and Net Income Per Unit
Fourth quarter 2019 adjusted operating income of $264 million increased 29% from $204 million in the fourth quarter of 2018.
Adjusted operating margin of 32.3% increased 300 basis points from
29.3%.
Full year 2019 adjusted operating income of $802 million decreased 6% from $852 million in 2018. Adjusted operating margin
of 27.5% decreased 160 basis points from 29.1%.
Fourth quarter 2019 adjusted diluted net income per Unit of
$0.85 was up from $0.64 in the fourth quarter of 2018. Full year
adjusted diluted net income per Unit of $2.52 was down from $2.67 in 2018.
Headcount
As of December 31, 2019, we had
3,811 employees, compared to 3,641 employees as of December 31, 2018 and 3,778 as of September 30, 2019.
Unit Repurchases
During the fourth quarter and full year of 2019, we purchased
3.1 million and 6.0 million AB Holding Units for $90.5 million and $172.6
million, respectively (on a trade date basis). These amounts
reflect open-market purchases of 0.5 million and 2.9 million AB
Holding Units for $13.8 million and
$82.7 million, respectively, 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.
Fourth Quarter 2019 Earnings Conference Call
Information
Management will review Fourth Quarter 2019 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Wednesday,
February 12, 2020. 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:
- 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.
- 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 4325968.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Fourth Quarter 2019 financial and
operating results on February 12, 2020.
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 #: 4325968.
Availability of 2019 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the year
ended December 31, 2019 in either
electronic format or hard copy on www.alliancebernstein.com:
- Download Electronic Copy: Unitholders can download an
electronic version of the report by visiting the "Investor &
Media Relations" page of our website at
www.alliancebernstein.com/investorrelations and clicking on
the "Reports & SEC Filings" section.
- Order Hard Copy Electronically or by Phone: Unitholders may
also order a hard copy of the report, which is expected to be
available for mailing in approximately eight weeks, free of charge.
Unitholders with internet access can follow the above instructions
to order a hard copy electronically. Unitholders without internet
access, or who would prefer to order by phone, can call
212-969-2416.
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, such
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, 2019. Any or
all of the forward-looking statements made in this news release,
Form 10-K, 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, or that mandates
ultimately will not be funded.
- 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)(4). 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, 2019.
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 December 31, 2019, including
both the general partnership and limited partnership interests in
AllianceBernstein, AllianceBernstein Holding owned approximately
36.0% of AllianceBernstein and Equitable Holdings ("EQH"), directly
and through various subsidiaries, owned an approximate 64.8%
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)
|
4Q
2019
|
|
4Q
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
Base fees
|
$
|
626,357
|
|
|
$
|
544,484
|
|
|
15.0
|
%
|
|
Performance
fees
|
76,344
|
|
|
35,440
|
|
|
115.4
|
%
|
|
Bernstein research
services
|
109,671
|
|
|
115,240
|
|
|
(4.8)
|
%
|
|
Distribution
revenues
|
127,553
|
|
|
100,952
|
|
|
26.4
|
%
|
|
Dividends and
interest
|
24,539
|
|
|
26,875
|
|
|
(8.7)
|
%
|
|
Investments gains
(losses)
|
7,541
|
|
|
(24,207)
|
|
|
n/m
|
|
|
Other
revenues
|
26,061
|
|
|
22,128
|
|
|
17.8
|
%
|
|
Total
revenues
|
998,066
|
|
|
820,912
|
|
|
21.6
|
%
|
|
Less: interest
expense
|
10,762
|
|
|
16,252
|
|
|
(33.8)
|
%
|
|
Total net
revenues
|
987,304
|
|
|
804,660
|
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
377,951
|
|
|
319,297
|
|
|
18.4
|
%
|
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
137,992
|
|
|
104,359
|
|
|
32.2
|
%
|
|
Amortization of
deferred sales commissions
|
4,681
|
|
|
3,981
|
|
|
17.6
|
%
|
|
Trade execution,
marketing, T&E and other
|
58,848
|
|
|
58,535
|
|
|
0.5
|
%
|
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
129,666
|
|
|
111,401
|
|
|
16.4
|
%
|
|
Real
estate charges
|
2,623
|
|
|
670
|
|
|
n/m
|
|
|
Contingent payment
arrangements
|
(2,222)
|
|
|
(2,376)
|
|
|
(6.5)
|
%
|
|
Interest on
borrowings
|
2,259
|
|
|
2,407
|
|
|
(6.1)
|
%
|
|
Amortization of
intangible assets
|
7,223
|
|
|
7,027
|
|
|
2.8
|
%
|
|
Total operating
expenses
|
719,021
|
|
|
605,301
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
Operating
income
|
268,283
|
|
|
199,359
|
|
|
34.6
|
%
|
|
|
|
|
|
|
|
|
Income
taxes
|
11,795
|
|
|
13,033
|
|
|
(9.5)
|
%
|
|
|
|
|
|
|
|
|
Net income
|
256,488
|
|
|
186,326
|
|
|
37.7
|
%
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities
attributable to non-controlling interests
|
7,623
|
|
|
(1,727)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
248,865
|
|
|
$
|
188,053
|
|
|
32.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
4Q
2019
|
|
4Q
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
87,909
|
|
|
$
|
66,759
|
|
|
31.7
|
%
|
|
Income
Taxes
|
7,887
|
|
|
6,879
|
|
|
14.7
|
%
|
|
Net
Income
|
80,022
|
|
|
59,880
|
|
|
33.6
|
%
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
19
|
|
|
71
|
|
|
(73.2)
|
%
|
|
Net Income -
Diluted
|
$
|
80,041
|
|
|
$
|
59,951
|
|
|
33.5
|
%
|
|
Diluted Net Income
per Unit
|
$
|
0.84
|
|
|
$
|
0.63
|
|
|
33.3
|
%
|
|
Distribution per
Unit
|
$
|
0.85
|
|
|
$
|
0.64
|
|
|
32.8
|
%
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
Units
Outstanding
|
4Q
2019
|
|
4Q
2018
|
|
%
Change
|
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
270,380,314
|
|
|
268,850,276
|
|
|
0.6
|
%
|
|
Weighted average -
basic
|
267,909,846
|
|
|
267,611,568
|
|
|
0.1
|
%
|
|
Weighted average -
diluted
|
267,943,122
|
|
|
267,771,111
|
|
|
0.1
|
%
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
Period-end
|
98,192,098
|
|
|
96,658,278
|
|
|
1.6
|
%
|
|
Weighted average -
basic
|
95,719,226
|
|
|
95,418,778
|
|
|
0.3
|
%
|
|
Weighted average -
diluted
|
95,752,502
|
|
|
95,578,321
|
|
|
0.2
|
%
|
|
AB (The Operating
Partnership)
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
|
2019
|
|
2018
|
|
%
Change
|
GAAP
revenues:
|
|
|
|
|
|
|
Base fees
|
|
$
|
2,372,429
|
|
|
$
|
2,244,068
|
|
|
5.7
|
%
|
Performance
fees
|
|
99,615
|
|
|
118,143
|
|
|
(15.7)
|
%
|
Bernstein research
services
|
|
407,911
|
|
|
439,432
|
|
|
(7.2)
|
%
|
Distribution
revenues
|
|
455,043
|
|
|
418,562
|
|
|
8.7
|
%
|
Dividends and
interest
|
|
104,421
|
|
|
98,226
|
|
|
6.3
|
%
|
Investments gains
(losses)
|
|
38,659
|
|
|
2,653
|
|
|
n/m
|
|
Other
revenues
|
|
97,559
|
|
|
98,676
|
|
|
(1.1)
|
%
|
Total
revenues
|
|
3,575,637
|
|
|
3,419,760
|
|
|
4.6
|
%
|
Less: interest
expense
|
|
57,205
|
|
|
52,399
|
|
|
9.2
|
%
|
Total net
revenues
|
|
3,518,432
|
|
|
3,367,361
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
1,442,783
|
|
|
1,378,811
|
|
|
4.6
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
|
487,965
|
|
|
427,186
|
|
|
14.2
|
%
|
Amortization of deferred sales commissions
|
|
15,029
|
|
|
21,343
|
|
|
(29.6)
|
%
|
Trade
execution, marketing, T&E and other
|
|
219,860
|
|
|
222,630
|
|
|
(1.2)
|
%
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
|
484,750
|
|
|
448,996
|
|
|
8.0
|
%
|
Real
estate charges
|
|
3,324
|
|
|
7,160
|
|
|
(53.6)
|
%
|
Contingent payment
arrangements
|
|
(510)
|
|
|
(2,219)
|
|
|
(77.0)
|
%
|
Interest on
borrowings
|
|
13,035
|
|
|
10,359
|
|
|
25.8
|
%
|
Amortization of
intangible assets
|
|
28,759
|
|
|
27,781
|
|
|
3.5
|
%
|
Total operating
expenses
|
|
2,694,995
|
|
|
2,542,047
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
Operating
income
|
|
823,437
|
|
|
825,314
|
|
|
(0.2)
|
%
|
|
|
|
|
|
|
|
Income
taxes
|
|
41,754
|
|
|
45,816
|
|
|
(8.9)
|
%
|
|
|
|
|
|
|
|
Net income
|
|
781,683
|
|
|
779,498
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
Net income of
consolidated entities attributable to
non-controlling interests
|
|
29,641
|
|
|
21,910
|
|
|
35.3
|
%
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
|
$
|
752,042
|
|
|
$
|
757,588
|
|
|
(0.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
%
Change
|
Equity in Net Income
Attributable to AB Unitholders
|
|
$
|
266,292
|
|
|
$
|
270,647
|
|
|
(1.6)
|
%
|
Income
Taxes
|
|
27,729
|
|
|
28,250
|
|
|
(1.8)
|
%
|
Net
Income
|
|
238,563
|
|
|
242,397
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
|
79
|
|
|
447
|
|
|
(82.3)
|
%
|
Net Income -
Diluted
|
|
$
|
238,642
|
|
|
$
|
242,844
|
|
|
(1.7)
|
%
|
Diluted Net Income
per Unit
|
|
$2.49
|
|
|
$2.50
|
|
|
(0.4)
|
%
|
Distribution per
Unit
|
|
$2.53
|
|
|
$2.68
|
|
|
(5.6)
|
%
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
Outstanding
|
|
2019
|
|
2018
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
|
270,380,314
|
|
|
268,850,276
|
|
|
0.6
|
%
|
Weighted average -
basic
|
|
268,074,947
|
|
|
269,235,699
|
|
|
(0.4)
|
%
|
Weighted average -
diluted
|
|
268,119,213
|
|
|
269,486,879
|
|
|
(0.5)
|
%
|
AB Holding
L.P.
|
|
|
|
|
|
|
Period-end
|
|
98,192,098
|
|
|
96,658,278
|
|
|
1.6
|
%
|
Weighted average -
basic
|
|
95,883,604
|
|
|
97,040,797
|
|
|
(1.2)
|
%
|
Weighted average -
diluted
|
|
95,927,870
|
|
|
97,291,977
|
|
|
(1.4)
|
%
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | December 31, 2019
|
|
|
($
Billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
12/31/19
|
9/30/19
|
|
Ending Assets Under
Management
|
$622.9
|
$592.4
|
|
Average Assets Under
Management
|
$606.8
|
$586.3
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
272.9
|
|
|
$
|
222.5
|
|
|
$
|
97.0
|
|
|
$
|
592.4
|
|
|
Sales/New
accounts
|
5.4
|
|
|
18.9
|
|
|
2.7
|
|
|
27.0
|
|
|
Redemption/Terminations
|
(1.3)
|
|
|
(11.6)
|
|
|
(2.7)
|
|
|
(15.6)
|
|
|
Net Cash
Flows
|
(2.7)
|
|
|
(2.1)
|
|
|
(0.1)
|
|
|
(4.9)
|
|
|
Net
Flows
|
1.4
|
|
|
5.2
|
|
|
(0.1)
|
|
|
6.5
|
|
|
Investment
Performance
|
8.4
|
|
|
11.5
|
|
|
4.1
|
|
|
24.0
|
|
|
End of
Period
|
$
|
282.7
|
|
|
$
|
239.2
|
|
|
$
|
101.0
|
|
|
$
|
622.9
|
|
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
|
$
|
159.9
|
|
|
$
|
56.8
|
|
|
$
|
252.9
|
|
|
$
|
45.8
|
|
|
$
|
9.4
|
|
|
$
|
67.6
|
|
|
$
|
592.4
|
|
|
Sales/New
accounts
|
10.9
|
|
|
0.3
|
|
|
12.2
|
|
|
2.4
|
|
|
—
|
|
|
1.2
|
|
|
27.0
|
|
|
Redemption/Terminations
|
(6.3)
|
|
|
(0.2)
|
|
|
(7.0)
|
|
|
(1.4)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(15.6)
|
|
|
Net Cash
Flows
|
(1.3)
|
|
|
(1.7)
|
|
|
(2.0)
|
|
|
—
|
|
|
(0.1)
|
|
|
0.2
|
|
|
(4.9)
|
|
|
Net
Flows
|
3.3
|
|
|
(1.6)
|
|
|
3.2
|
|
|
1.0
|
|
|
(0.2)
|
|
|
0.8
|
|
|
6.5
|
|
|
Investment
Performance
|
14.0
|
|
|
4.9
|
|
|
2.2
|
|
|
0.3
|
|
|
0.1
|
|
|
2.5
|
|
|
24.0
|
|
|
End of
Period
|
$
|
177.2
|
|
|
$
|
60.1
|
|
|
$
|
258.3
|
|
|
$
|
47.1
|
|
|
$
|
9.3
|
|
|
$
|
70.9
|
|
|
$
|
622.9
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
3.3
|
|
|
$
|
(1.6)
|
|
|
$
|
1.7
|
|
|
|
Fixed
Income
|
4.2
|
|
|
(0.2)
|
|
|
4.0
|
|
|
|
Other
(2)
|
0.6
|
|
|
0.2
|
|
|
0.8
|
|
|
|
Total
|
$
|
8.1
|
|
|
$
|
(1.6)
|
|
|
$
|
6.5
|
|
|
(1)
Includes index and enhanced index services.
|
(2)
Includes certain multi-asset solutions and services and certain
alternative investments.
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | December 31, 2019
|
|
|
($
Billions)
|
|
|
Ending and
Average
|
Twelve Months
Ended
|
|
|
12/31/19
|
12/31/18
|
|
Ending Assets Under
Management
|
$622.9
|
$516.4
|
|
Average Assets Under
Management
|
$574.2
|
$544.2
|
Twelve-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
|
Sales/New
accounts
|
17.1
|
|
|
75.3
|
|
|
11.3
|
|
|
103.7
|
|
|
Redemption/Terminations
|
(12.0)
|
|
|
(44.0)
|
|
|
(12.4)
|
|
|
(68.4)
|
|
|
Net Cash
Flows
|
(2.7)
|
|
|
(7.5)
|
|
|
0.1
|
|
|
(10.1)
|
|
|
Net
Flows
|
2.4
|
|
|
23.8
|
|
|
(1.0)
|
|
|
25.2
|
|
|
Transfers
|
—
|
|
|
0.1
|
|
|
(0.1)
|
|
|
—
|
|
|
Adjustments(3)
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
(0.9)
|
|
|
Investment
Performance
|
34.0
|
|
|
34.5
|
|
|
13.7
|
|
|
82.2
|
|
|
End of
Period
|
$
|
282.7
|
|
|
$
|
239.2
|
|
|
$
|
101.0
|
|
|
$
|
622.9
|
|
Twelve-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
|
$
|
136.2
|
|
|
$
|
50.2
|
|
|
$
|
219.7
|
|
|
$
|
41.7
|
|
|
$
|
9.4
|
|
|
$
|
59.2
|
|
|
$
|
516.4
|
|
|
Sales/New
accounts
|
34.7
|
|
|
0.5
|
|
|
53.0
|
|
|
10.0
|
|
|
0.1
|
|
|
5.4
|
|
|
103.7
|
|
|
Redemption/Terminations
|
(26.4)
|
|
|
(0.8)
|
|
|
(31.5)
|
|
|
(6.8)
|
|
|
(0.4)
|
|
|
(2.5)
|
|
|
(68.4)
|
|
|
Net Cash
Flows
|
(4.3)
|
|
|
(3.8)
|
|
|
(2.8)
|
|
|
(0.2)
|
|
|
(0.6)
|
|
|
1.6
|
|
|
(10.1)
|
|
|
Net
Flows
|
4.0
|
|
|
(4.1)
|
|
|
18.7
|
|
|
3.0
|
|
|
(0.9)
|
|
|
4.5
|
|
|
25.2
|
|
|
Adjustments(3)
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
Investment
Performance
|
37.0
|
|
|
14.0
|
|
|
20.3
|
|
|
2.9
|
|
|
0.8
|
|
|
7.2
|
|
|
82.2
|
|
|
End of
Period
|
$
|
177.2
|
|
|
$
|
60.1
|
|
|
$
|
258.3
|
|
|
$
|
47.1
|
|
|
$
|
9.3
|
|
|
$
|
70.9
|
|
|
$
|
622.9
|
|
Twelve-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
4.0
|
|
|
$
|
(4.1)
|
|
|
$
|
(0.1)
|
|
|
|
Fixed
Income
|
21.7
|
|
|
(0.9)
|
|
|
$
|
20.8
|
|
|
|
Other
(2)
|
4.0
|
|
|
0.5
|
|
|
$
|
4.5
|
|
|
|
Total
|
$
|
29.7
|
|
|
$
|
(4.5)
|
|
|
$
|
25.2
|
|
|
(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
|
$
|
179.1
|
|
|
$
|
127.9
|
|
|
$
|
98.8
|
|
|
$
|
405.8
|
|
|
Non-U.S.
Clients
|
103.6
|
|
|
111.3
|
|
|
2.2
|
|
|
217.1
|
|
|
Total
|
$
|
282.7
|
|
|
$
|
239.2
|
|
|
$
|
101.0
|
|
|
$
|
622.9
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
987,304
|
|
|
$
|
877,867
|
|
|
$
|
857,799
|
|
|
$
|
795,462
|
|
|
$
|
804,660
|
|
|
$
|
3,518,432
|
|
|
$
|
3,367,361
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,844
|
|
|
|
Distribution-related
payments
|
(137,992)
|
|
|
(127,726)
|
|
|
(116,254)
|
|
|
(105,993)
|
|
|
(104,359)
|
|
|
(487,965)
|
|
|
(427,186)
|
|
|
|
Amortization of
deferred sales
commissions
|
(4,681)
|
|
|
(3,605)
|
|
|
(3,241)
|
|
|
(3,502)
|
|
|
(3,981)
|
|
|
(15,029)
|
|
|
(21,343)
|
|
|
|
Pass-through fees
& expenses
|
(16,153)
|
|
|
(14,690)
|
|
|
(13,516)
|
|
|
(12,481)
|
|
|
(9,039)
|
|
|
(56,840)
|
|
|
(40,219)
|
|
|
|
Impact of
consolidated
company-sponsored funds
|
(8,567)
|
|
|
(4,820)
|
|
|
(8,697)
|
|
|
(10,959)
|
|
|
931
|
|
|
(33,044)
|
|
|
(38,142)
|
|
|
|
Long-term
incentive
compensation-related
investment losses (gains)
|
(1,457)
|
|
|
(189)
|
|
|
(1,389)
|
|
|
(4,496)
|
|
|
7,104
|
|
|
(7,531)
|
|
|
5,520
|
|
|
|
Long-term
incentive
compensation-related
dividends and interest
|
(997)
|
|
|
(128)
|
|
|
(136)
|
|
|
(147)
|
|
|
(1,631)
|
|
|
(1,408)
|
|
|
(2,011)
|
|
|
|
Loss on sale of
software
technology investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
—
|
|
|
3,733
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
Adjusted Net
Revenues
|
|
$
|
817,457
|
|
|
$
|
726,709
|
|
|
$
|
714,566
|
|
|
$
|
657,884
|
|
|
$
|
696,418
|
|
|
$
|
2,916,615
|
|
|
$
|
2,925,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
268,283
|
|
|
$
|
202,783
|
|
|
$
|
184,220
|
|
|
$
|
168,151
|
|
|
$
|
199,359
|
|
|
$
|
823,437
|
|
|
$
|
825,314
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,156
|
|
|
|
Real estate
charges
|
2,623
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|
2,623
|
|
|
7,160
|
|
|
|
Long-term
incentive
compensation-related items
|
66
|
|
|
517
|
|
|
277
|
|
|
357
|
|
|
243
|
|
|
1,217
|
|
|
3,064
|
|
|
|
CEO's EQH award
compensation
|
217
|
|
|
217
|
|
|
227
|
|
|
465
|
|
|
—
|
|
|
1,125
|
|
|
—
|
|
|
|
Loss on sale of
software
technology investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
—
|
|
|
3,733
|
|
|
|
Acquisition-related
expenses
|
3,459
|
|
|
556
|
|
|
2,718
|
|
|
—
|
|
|
1,924
|
|
|
6,734
|
|
|
1,924
|
|
|
|
Contingent
payment
arrangements
|
(3,051)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,429)
|
|
|
(3,051)
|
|
|
(2,429)
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
|
Sub-total of non-GAAP
adjustments
|
3,314
|
|
|
1,290
|
|
|
3,222
|
|
|
822
|
|
|
3,141
|
|
|
8,648
|
|
|
48,655
|
|
|
|
Less: Net income
(loss) of
consolidated entities attributable
to non-controlling interests
|
7,623
|
|
|
4,145
|
|
|
7,757
|
|
|
10,116
|
|
|
(1,727)
|
|
|
29,641
|
|
|
21,910
|
|
|
Adjusted Operating
Income
|
|
$
|
263,974
|
|
|
$
|
199,928
|
|
|
$
|
179,685
|
|
|
$
|
158,857
|
|
|
$
|
204,227
|
|
|
$
|
802,444
|
|
|
$
|
852,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis
excl. non-controlling interests
|
26.4
|
%
|
|
22.6
|
%
|
|
20.6
|
%
|
|
19.9
|
%
|
|
25.0
|
%
|
|
22.6
|
%
|
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
32.3
|
%
|
|
27.5
|
%
|
|
25.1
|
%
|
|
24.1
|
%
|
|
29.3
|
%
|
|
27.5
|
%
|
|
29.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU
TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
($ Thousands except
per Unit
amounts, unaudited)
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
2019
|
|
2018
|
|
Net Income -
Diluted, GAAP
basis
|
$
|
80,041
|
|
|
$
|
59,845
|
|
|
$
|
52,293
|
|
|
$
|
46,465
|
|
|
$
|
59,951
|
|
|
$
|
238,642
|
|
|
$
|
242,844
|
|
|
Impact on net income
of AB non-
GAAP adjustments
|
1,234
|
|
|
512
|
|
|
1,234
|
|
|
462
|
|
|
1,000
|
|
|
3,441
|
|
|
16,856
|
|
|
Adjusted Net
Income - Diluted
|
$
|
81,275
|
|
|
$
|
60,357
|
|
|
$
|
53,527
|
|
|
$
|
46,927
|
|
|
$
|
60,951
|
|
|
$
|
242,083
|
|
|
$
|
259,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding
Unit, GAAP basis
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
|
$
|
0.63
|
|
|
$
|
2.49
|
|
|
$
|
2.50
|
|
|
Impact of AB
non-GAAP
adjustments
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
0.03
|
|
|
0.17
|
|
|
Adjusted Diluted
Net Income per
Holding Unit
|
$
|
0.85
|
|
|
$
|
0.63
|
|
|
$
|
0.56
|
|
|
$
|
0.49
|
|
|
$
|
0.64
|
|
|
$
|
2.52
|
|
|
$
|
2.67
|
|
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 who 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, as a result of
our adoption of ASC 606, 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 on
the sale of a 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) 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. However, beginning in the fourth quarter of 2019, real
estate charges (credits), while excluded in the period in which the
charges (credits) are recorded, are included ratably over the
remaining applicable lease term.
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.
During 2019, these expenses included an intangible asset impairment
charge of $3.1 million relating to
our 2016 acquisition.
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 long-term 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 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.
The loss on the sale of a software technology investment has
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.
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SOURCE AllianceBernstein