Affiliated Managers Group, Inc. (NYSE: AMG) today reported its
financial and operating results for the first quarter of 2021.
Jay C. Horgen, President and Chief
Executive Officer of AMG, said:“AMG reported growth of 23%
in Adjusted EBITDA and 35% in Economic earnings per share relative
to the year-ago quarter, our third consecutive quarter of
year-over-year growth, further demonstrating positive momentum
across the business. Our results reflect strong Affiliate
investment performance, improving organic growth trends, and the
consistent execution of our growth strategy. Net client cash flows
were positive excluding certain quantitative strategies, driven by
strength in private markets, specialty fixed income, wealth
management, and ESG strategies. With continued momentum in these
secular growth areas, including through our strategic focus on new
investments, along with increasing demand for active equities,
particularly value-and impact-oriented strategies, AMG is
well-positioned for future organic growth.
“As economic activity accelerates and the macro
environment presents additional favorable opportunities for active
managers, we continue to focus on our core competitive advantages
and invest for growth across new Affiliates, existing Affiliates,
and our value-added central capabilities. During the quarter, we
evolved our U.S. wealth distribution platform for the benefit of
clients, by enhancing the quality of our product offering, lowering
fees, and clarifying our presence in the market as the premier
partner to world-class independent investment firms, all while
aligning our capital and resources more fully with our Affiliate
partners and their greatest opportunities for growth.
“Given the evolving competitive landscape and the
strategic investments we have made over the last two years, AMG’s
partnership approach is resonating with a broader and more diverse
array of high-quality independent firms operating in areas of
strong client demand. Our partnership solutions and strategic
capabilities are increasingly differentiated components of our
approach, as evidenced by the series of new partnerships we have
established over the last year. Most recently, we are pleased to
welcome our newest Affiliate, OCP Asia, a leading alternative
manager providing customized lending solutions with deep expertise
in investing across private credit markets in Asia. Looking ahead,
with our strong balance sheet and significant cash generation, we
are well-positioned to capitalize on the considerable and growing
opportunity set ahead, further enabling us to compound earnings
growth and create significant shareholder value over time.”
FINANCIAL HIGHLIGHTS |
|
|
Three Months Ended |
(in millions, except as noted and per share data) |
|
|
3/31/2020 |
|
3/31/2021 |
Operating Performance Measures |
|
|
|
|
|
AUM (at period end, in billions) |
|
|
$ |
599.9 |
|
|
$ |
738.0 |
|
Average AUM (in billions) |
|
|
663.0 |
|
|
733.6 |
|
Net client cash flows (in billions) |
|
|
(13.8 |
) |
|
(7.5 |
) |
Aggregate fees |
|
|
1,253.1 |
|
|
1,414.4 |
|
Financial Performance Measures |
|
|
|
|
|
Net income (loss) (controlling interest) |
|
|
$ |
(15.6 |
) |
|
$ |
149.9 |
|
Earnings (loss) per share (diluted)(1) |
|
|
(0.33 |
) |
|
3.41 |
|
Supplemental Performance Measures
(2) |
|
|
|
|
|
Adjusted EBITDA (controlling interest) |
|
|
$ |
200.4 |
|
|
$ |
246.8 |
|
Economic net income (controlling interest) |
|
|
151.3 |
|
|
184.8 |
|
Economic earnings per share |
|
|
3.16 |
|
|
4.28 |
|
For additional information on our Supplemental
Performance Measures, including reconciliations to GAAP, see the
Financial Tables and Notes.
Capital Management During the
first quarter of 2021, the Company repurchased approximately $210
million in common stock and announced a first-quarter cash dividend
of $0.01 per share of common stock, payable May 27, 2021 to
stockholders of record as of the close of business on May 13,
2021.
About AMGAMG is a leading partner
to independent active investment management firms globally. AMG’s
strategy is to generate long‐term value by investing in a diverse
array of excellent partner-owned investment firms, referred to as
"Affiliates," through a proven partnership approach, and allocating
resources across the Company's unique opportunity set to the areas
of highest growth and return. AMG’s innovative partnership approach
enables each Affiliate’s management team to own significant equity
in their firm while maintaining operational and investment
autonomy. In addition, AMG offers its Affiliates growth capital,
global distribution, and other strategic value-added capabilities,
which enhance the long-term growth of these independent businesses
and enable them to align equity incentives across generations of
principals to build enduring franchises. As of March 31, 2021,
AMG’s aggregate assets under management were approximately $738
billion, across a broad range of active, return-oriented
strategies. For more information, please visit the Company’s
website at www.amg.com.
Conference Call, Replay and Presentation
InformationA conference call will be held with AMG’s
management at 8:30 a.m. Eastern time today. Parties interested in
listening to the conference call should dial 1-877-407-8291 (U.S.
calls) or 1-201-689-8345 (non-U.S. calls) shortly before the call
begins.
The conference call will also be available for
replay beginning approximately one hour after the conclusion of the
call. To hear a replay of the call, please dial 1-877-660-6853
(U.S. calls) or 1-201-612-7415 (non-U.S. calls) and provide
conference ID 13718538. The live call and replay of the session and
a presentation highlighting the Company's performance can also be
accessed via AMG’s website at https://ir.amg.com/.
Investor Relations:Anjali Aggarwal
Media Relations:Jonathan Freedman
+1 (617) 747-3300ir@amg.compr@amg.com
Financial Tables Follow
ASSETS
UNDER MANAGEMENT - STATEMENT OF CHANGES (in billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
BY STRATEGY - QUARTER
TO DATE |
Alternatives |
|
Global Equities |
|
|
U.S. Equities |
|
Multi-Asset & Fixed
Income |
|
|
Total |
|
AUM, December 31, 2020 |
$ |
216.5 |
|
|
$ |
278.5 |
|
|
$ |
103.5 |
|
|
$ |
117.7 |
|
|
$ |
716.2 |
|
Client cash inflows and commitments |
8.3 |
|
|
9.1 |
|
|
6.7 |
|
|
6.7 |
|
|
30.8 |
|
Client cash outflows |
(6.1 |
) |
|
(17.1 |
) |
|
(7.8 |
) |
|
(7.3 |
) |
|
(38.3 |
) |
Net client cash flows |
2.2 |
|
|
(8.0 |
) |
|
(1.1 |
) |
|
(0.6 |
) |
|
(7.5 |
) |
New investments |
— |
|
|
2.9 |
|
|
1.1 |
|
|
— |
|
|
4.0 |
|
Market changes |
4.4 |
|
|
10.5 |
|
|
7.0 |
|
|
2.5 |
|
|
24.4 |
|
Foreign exchange |
0.3 |
|
|
0.8 |
|
|
0.1 |
|
|
0.2 |
|
|
1.4 |
|
Realizations and distributions (net) |
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Other |
(0.2 |
) |
|
— |
|
|
0.1 |
|
|
— |
|
|
(0.1 |
) |
AUM, March 31, 2021 |
$ |
222.8 |
|
|
$ |
284.7 |
|
|
$ |
110.7 |
|
|
$ |
119.8 |
|
|
$ |
738.0 |
|
BY CLIENT TYPE -
QUARTER TO DATE |
Institutional |
|
|
Retail |
|
|
High Net Worth |
|
|
Total |
|
AUM, December 31, 2020 |
$ |
401.0 |
|
|
$ |
189.3 |
|
|
$ |
125.9 |
|
|
$ |
716.2 |
|
Client cash inflows and commitments |
9.2 |
|
|
14.5 |
|
|
7.1 |
|
|
30.8 |
|
Client cash outflows |
(15.5 |
) |
|
(17.3 |
) |
|
(5.5 |
) |
|
(38.3 |
) |
Net client cash
flows |
(6.3 |
) |
|
(2.8 |
) |
|
1.6 |
|
|
(7.5 |
) |
New investments |
2.2 |
|
|
0.9 |
|
|
0.9 |
|
|
4.0 |
|
Market changes |
12.1 |
|
|
8.4 |
|
|
3.9 |
|
|
24.4 |
|
Foreign exchange |
0.8 |
|
|
0.5 |
|
|
0.1 |
|
|
1.4 |
|
Realizations and distributions (net) |
(0.4 |
) |
|
— |
|
|
— |
|
|
(0.4 |
) |
Other |
(0.5 |
) |
|
0.5 |
|
|
(0.1 |
) |
|
(0.1 |
) |
AUM, March 31,
2021 |
$ |
408.9 |
|
|
$ |
196.8 |
|
|
$ |
132.3 |
|
|
$ |
738.0 |
|
CONSOLIDATED STATEMENTS OF INCOME |
|
|
Three Months Ended |
(in millions, except per share
data) |
3/31/2020 |
|
3/31/2021 |
|
|
|
|
|
|
Consolidated revenue |
$ |
507.3 |
|
|
$ |
559.1 |
|
|
|
|
|
|
|
|
|
Consolidated
expenses: |
|
|
|
|
|
|
|
Compensation and related expenses |
207.8 |
|
|
246.9 |
|
Selling, general and administrative |
90.3 |
|
|
78.8 |
|
Intangible amortization and impairments |
20.6 |
|
|
7.5 |
|
Interest expense |
19.5 |
|
|
27.5 |
|
Depreciation and other amortization |
5.1 |
|
|
4.3 |
|
Other expenses (net) |
11.0 |
|
|
13.5 |
|
Total consolidated
expenses |
354.3 |
|
|
378.5 |
|
|
|
|
|
Equity method income
(loss) (net)(3) |
(113.2 |
) |
|
51.7 |
|
|
|
|
|
Investment and other
income |
2.4 |
|
|
32.3 |
|
Income before income
taxes |
42.2 |
|
|
264.6 |
|
|
|
|
|
Income tax expense |
2.2 |
|
|
50.5 |
|
Net
income |
40.0 |
|
|
214.1 |
|
|
|
|
|
Net income (non-controlling
interests) |
(55.6 |
) |
|
(64.2 |
) |
Net income (loss)
(controlling interest) |
$ |
(15.6 |
) |
|
$ |
149.9 |
|
|
|
|
|
Average shares outstanding
(basic) |
47.8 |
|
|
42.6 |
|
Average shares outstanding
(diluted) |
47.8 |
|
|
45.4 |
|
|
|
|
|
Earnings (loss) per
share (basic) |
$ |
(0.33 |
) |
|
$ |
3.52 |
|
Earnings (loss) per
share (diluted)(1) |
$ |
(0.33 |
) |
|
$ |
3.41 |
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE
MEASURES(2) |
|
|
Three Months Ended |
(in millions, except per share
data) |
3/31/2020 |
|
3/31/2021 |
|
|
|
|
Net income (loss) (controlling interest) |
$ |
(15.6 |
) |
|
$ |
149.9 |
|
Intangible amortization and impairments |
195.7 |
|
|
40.6 |
|
Intangible-related deferred taxes |
(31.0 |
) |
|
8.9 |
|
Other economic items |
2.2 |
|
|
(14.6 |
) |
Economic net income
(controlling interest) |
$ |
151.3 |
|
|
$ |
184.8 |
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
47.8 |
|
|
43.2 |
|
Economic earnings per
share |
$ |
3.16 |
|
|
$ |
4.28 |
|
|
|
|
|
Net income (loss)
(controlling interest) |
$ |
(15.6 |
) |
|
$ |
149.9 |
|
Interest expense |
19.5 |
|
|
27.5 |
|
Income taxes |
0.2 |
|
|
48.4 |
|
Intangible amortization and impairments |
195.7 |
|
|
40.6 |
|
Other items |
0.6 |
|
|
(19.6 |
) |
Adjusted EBITDA
(controlling interest) |
$ |
200.4 |
|
|
$ |
246.8 |
|
|
|
|
|
|
|
|
|
See Notes for additional information. |
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET |
|
|
Period Ended |
(in millions) |
12/31/2020 |
|
3/31/2021 |
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,039.7 |
|
|
$ |
766.2 |
|
Receivables |
421.6 |
|
|
509.3 |
|
Investments in marketable securities |
74.9 |
|
|
108.8 |
|
Goodwill |
2,661.4 |
|
|
2,666.2 |
|
Acquired client relationships (net) |
1,048.8 |
|
|
1,044.3 |
|
Equity method investments in Affiliates (net) |
2,074.8 |
|
|
1,999.5 |
|
Fixed assets (net) |
79.6 |
|
|
76.1 |
|
Other investments |
257.2 |
|
|
292.7 |
|
Other assets |
230.9 |
|
|
217.5 |
|
Total assets |
$ |
7,888.9 |
|
|
$ |
7,680.6 |
|
|
|
|
|
Liabilities and Equity |
|
|
|
Payables and accrued liabilities |
$ |
712.4 |
|
|
$ |
543.5 |
|
Debt |
2,312.1 |
|
|
2,303.1 |
|
Deferred income tax liability (net) |
423.4 |
|
|
432.9 |
|
Other liabilities |
452.2 |
|
|
483.2 |
|
Total liabilities |
3,900.1 |
|
|
3,762.7 |
|
|
|
|
|
Redeemable non-controlling
interests |
671.5 |
|
|
730.6 |
|
Equity: |
|
|
|
Common stock |
0.6 |
|
|
0.6 |
|
Additional paid-in capital |
728.9 |
|
|
619.7 |
|
Accumulated other comprehensive loss |
(98.3 |
) |
|
(73.8 |
) |
Retained earnings |
4,005.5 |
|
|
4,154.9 |
|
|
4,636.7 |
|
|
4,701.4 |
|
Less:
treasury stock, at cost |
(1,857.0 |
) |
|
(2,050.2 |
) |
Total stockholders’ equity |
2,779.7 |
|
|
2,651.2 |
|
Non-controlling interests |
537.6 |
|
|
536.1 |
|
Total equity |
3,317.3 |
|
|
3,187.3 |
|
Total liabilities and equity |
$ |
7,888.9 |
|
|
$ |
7,680.6 |
|
Notes |
|
(1) |
Earnings
(loss) per share (diluted) adjusts for the dilutive effect of the
potential issuance of incremental shares of our common stock. We
had junior convertible securities outstanding during the periods
presented and are required to apply the if-converted method to
these securities in our calculation of Earnings (loss) per share
(diluted). Under the if-converted method, shares that are issuable
upon conversion are deemed outstanding, regardless of whether the
securities are contractually convertible into our common stock at
that time. For this calculation, the interest expense (net of tax)
attributable to these dilutive securities is added back to Net
income (loss) (controlling interest), reflecting the assumption
that the securities have been converted. Issuable shares for these
securities and related interest expense are excluded from the
calculation if an assumed conversion would be anti-dilutive to
diluted earnings per share. |
|
|
|
The following table provides a reconciliation of the numerator and
denominator used in the calculation of basic and diluted earnings
per share: |
|
|
Three Months Ended |
|
(in millions) |
3/31/2020 |
|
3/31/2021 |
|
Numerator |
|
|
|
|
Net income (loss) (controlling interest) |
$ |
(15.6 |
) |
|
$ |
149.9 |
|
|
Interest
expense on junior convertible securities, net of taxes |
— |
|
|
4.7 |
|
|
Net
income (loss) (controlling interest), as adjusted |
$ |
(15.6 |
) |
|
$ |
154.6 |
|
|
Denominator |
|
|
|
|
Average
shares outstanding (basic) |
47.8 |
|
|
42.6 |
|
|
Effect
of dilutive instruments: |
|
|
|
|
Stock options and restricted stock units |
— |
|
|
0.6 |
|
|
Junior convertible securities |
— |
|
|
2.2 |
|
|
Average
shares outstanding (diluted) |
47.8 |
|
|
45.4 |
|
(2) |
As supplemental information, we provide non-GAAP performance
measures of Adjusted EBITDA (controlling interest), Economic net
income (controlling interest) and Economic earnings per share.
Management utilizes these non-GAAP performance measures to assess
our performance before our share of certain non-cash expenses and
to improve comparability between periods. |
|
|
|
Adjusted EBITDA (controlling
interest) represents our performance before our share of interest
expense, income taxes, depreciation, amortization, impairments,
certain Affiliate equity expenses, gains and losses on general
partner and seed capital investments, and adjustments to our
contingent payment arrangements. We believe that many investors use
this non-GAAP measure when assessing the financial performance of
companies in the investment management industry. |
|
|
|
Under our Economic net income
(controlling interest) definition, we add to Net income (loss)
(controlling interest) our share of pre-tax intangible amortization
and impairments (including the portion attributable to equity
method investments in Affiliates), deferred taxes related to
intangible assets, and other economic items which include non-cash
imputed interest (principally related to the accounting for
convertible securities and contingent payment arrangements),
certain Affiliate equity expenses, and gains and losses on general
partner and seed capital investments. Economic net income
(controlling interest) is used by management and our Board of
Directors as our principal performance benchmark, including as one
of the measures for aligning executive compensation with
stockholder value. |
|
|
|
Economic earnings per share
represents Economic net income (controlling interest) divided by
the Average shares outstanding (adjusted diluted). In this
calculation, the potential share issuance in connection with our
junior convertible securities is measured using a “treasury stock”
method. Under this method, only the net number of shares of common
stock equal to the value of the junior convertible securities in
excess of par, if any, are deemed to be outstanding. We believe the
inclusion of net shares under a treasury stock method best reflects
the benefit of the increase in available capital resources (which
could be used to repurchase shares of common stock) that occurs
when these securities are converted and we are relieved of our debt
obligation. |
|
|
|
The following table provides a
reconciliation of Average shares outstanding (adjusted
diluted): |
|
|
Three Months Ended |
|
(in millions) |
3/31/2020 |
|
3/31/2021 |
|
Average shares outstanding (diluted) |
47.8 |
|
|
45.4 |
|
|
Stock options and restricted stock units |
0.0 |
|
|
— |
|
|
Junior convertible securities |
— |
|
|
(2.2 |
) |
|
Average shares outstanding
(adjusted diluted) |
47.8 |
|
|
43.2 |
|
|
|
|
|
|
|
|
|
These non-GAAP
performance measures are provided in addition to, but not as a
substitute for, Net income (controlling interest), Earnings per
share or other GAAP performance measures. For additional
information on our non-GAAP measures, see our Annual and Quarterly
Reports on Form 10-K and 10-Q, respectively, which are accessible
on the SEC’s website at www.sec.gov. |
(3) |
The following
table presents equity method earnings and equity method intangible
amortization and impairments, which in aggregate form Equity method
income (loss) (net): |
|
|
Three Months Ended |
|
(in millions) |
3/31/2020 |
|
3/31/2021 |
|
Equity method earnings |
$ |
66.1 |
|
|
$ |
86.9 |
|
|
Equity
method intangible amortization and impairments |
(179.3 |
) |
|
(35.2 |
) |
|
Equity method income (loss) (net) |
$ |
(113.2 |
) |
|
$ |
51.7 |
|
|
|
|
|
|
|
|
|
|
Forward Looking Statements and Other
Matters
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal
securities laws. These statements include, but are not limited to,
statements related to our expectations regarding the performance of
our business, our financial results, our liquidity and capital
resources and other non-historical statements. You can identify
these forward-looking statements by the use of words such as
“outlook,” “guidance,” “believes,” “expects,” “potential,”
"preliminary," “continues,” “may,” “will,” “should,” “seeks,”
“approximately,” “predicts,” “projects,” “positioned,” “prospects,”
“intends,” “plans,” “estimates,” “pending investments,”
“anticipates” or the negative version of these words or other
comparable words. Actual results and the timing of certain events
could differ materially from those projected in or contemplated by
the forward-looking statements due to a number of factors,
including changes in the securities or financial markets or in
general economic conditions, pandemics (including COVID-19) and
related changes in the global economy, capital markets and the
asset management industry, the availability of equity and debt
financing, competition for acquisitions of interests in investment
management firms, the ability to close pending investments, the
investment performance and growth rates of our Affiliates and their
ability to effectively market their investment strategies, the mix
of Affiliate contributions to our earnings and other risks,
uncertainties and assumptions, including those described under the
section entitled “Risk Factors” in our most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. Such factors may be
updated from time to time in our periodic filings with the SEC.
These factors should not be construed as exhaustive and should be
read in conjunction with the other cautionary statements that are
included in this release and in our filings with the SEC. We
undertake no obligation to publicly update or review any
forward-looking statements, whether as a result of new information,
future developments or otherwise, except as required by applicable
law.
From time to time, AMG may use its website as a distribution
channel of material Company information. AMG routinely posts
financial and other important information regarding the Company in
the Investor Relations section of its website at www.amg.com and
encourages investors to consult that section regularly.
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