Company Reports Economic EPS of $2.91; EPS of $2.28
BOSTON -- (Business Wire)
Affiliated Managers Group, Inc. (NYSE: AMG) today reported its financial
and operating results for the quarter ended March 31, 2015.
For the first quarter of 2015, Economic earnings per share (“Economic
EPS”) were $2.91, compared to $2.48 for the same period of 2014, while
diluted earnings per share for the first quarter of 2015 were $2.28,
compared to $1.40 for the same period of 2014. For the first quarter of
2015, Economic net income was $162.1 million, compared to $137.9 million
for the same period of 2014. For the first quarter of 2015, Net income
was $128.0 million, compared to $77.2 million for the same period of
2014. For the first quarter of 2015, EBITDA was $221.0 million, compared
to $191.9 million for the same period of 2014. (Economic EPS, Economic
net income, and EBITDA are defined in the attached tables, along with
reconciliations to the most directly comparable GAAP measures.)
Net client cash flows for the first quarter of 2015 were $5.3 billion.
Aggregate assets under management of AMG’s affiliated investment
management firms were approximately $638 billion at March 31, 2015, pro
forma for the investment in Baker Street Advisors, which closed on April
1, 2015.
“AMG’s first quarter results marked a strong start to 2015, including
Economic earnings per share of $2.91, a 17% increase over the first
quarter of 2014, and record assets under management of $638 billion,”
stated Sean M. Healey, Chairman and Chief Executive Officer of AMG. “Our
results reflect continued outstanding execution across AMG’s business,
including strong organic growth, the long-term investment outperformance
of our Affiliates, and the ongoing success of our strategy to partner
with the highest-quality boutiques worldwide.”
“With $5.3 billion in net client cash flows in the quarter, AMG has now
generated strong organic growth from net client flows for 20 consecutive
quarters – over $130 billion in total net flows over this period,” Mr.
Healey continued. “Through our boutique Affiliates, AMG is one of the
largest and fastest-growing providers of performance-oriented products
globally. Sophisticated clients around the world increasingly recognize
the advantages of boutiques in creating value in the alpha portion of
their portfolios, and with our Affiliates’ outstanding long-term
performance, especially in global and emerging markets equities and
alternatives, we see ongoing opportunities for strong organic growth
ahead.”
“Finally, the transaction environment remains highly favorable for us,
and we have a growing pipeline of prospective new Affiliates, including
a broad array of leading traditional and alternative firms around the
world,” Mr. Healey concluded. “Given our long-term track record of
successful partnerships and proven global distribution capability, AMG
is positioned as the partner of choice for the best boutique firms in
the industry. Looking ahead, we remain confident in our ability to
generate meaningful earnings growth through additional accretive
investments in outstanding new Affiliates.”
About AMG
AMG is a global asset management company with equity investments in
leading boutique investment management firms. AMG’s innovative
partnership approach allows each Affiliate’s management team to own
significant equity in their firm while maintaining operational autonomy.
AMG’s strategy is to generate growth through the internal growth of
existing Affiliates, as well as through investments in new Affiliates.
In addition, AMG provides centralized assistance to its Affiliates in
strategic matters, marketing, distribution, product development and
operations. As of March 31, 2015, the aggregate assets under management
of AMG’s Affiliates were approximately $638 billion, pro forma for the
investment in Baker Street Advisors, which closed on April 1, 2015, in
more than 400 investment products across a broad range of investment
styles, asset classes and distribution channels. For more information,
please visit the Company’s website at www.amg.com.
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,” “continues,” “may,”
“will,” “should,” “seeks,” “approximately,” “predicts,” “intends,”
“plans,” “estimates,” “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, 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 Annual Report on Form 10-K for the year ended
December 31, 2014, as such factors may be updated from time to time in
our periodic filings with the SEC, which are accessible on the SEC’s
website at www.sec.gov.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.
Financial Tables Follow
A teleconference will be held with AMG’s management at 11:00 a.m.
Eastern time today.Parties interested in listening to the
teleconference should dial 1-877-407-9210 (domestic calls) or
1-201-689-8049 (international calls) starting at 10:45 a.m. Eastern time.Those wishing to listen to the teleconference should dial the
appropriate number at least ten minutes before the call begins.
The teleconference 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 (domestic calls) or
1-201-612-7415 (international calls) and provide conference ID 13607385.The live call and replay of the session, and additional financial
information referenced during the teleconference, can also be accessed
via the Web at http://www.amg.com/InvestorRelations/.
|
AMG |
Financial Highlights |
(in millions, except per share data)
|
|
| |
| |
| | Three Months | | Three Months |
| | Ended | | Ended |
| |
| 3/31/14 | |
| 3/31/15 |
| | | |
|
Revenue
| |
$
|
593.1
| |
$
|
635.0
|
| | | |
|
Net income (controlling interest)
| |
$
|
77.2
| |
$
|
128.0
|
| | | |
|
Economic net income (controlling interest) (A)
| |
$
|
137.9
| |
$
|
162.1
|
| | | |
|
EBITDA (controlling interest) (B)
| |
$
|
191.9
| |
$
|
221.0
|
| | | |
|
| | | |
|
Average shares outstanding - diluted
| | |
55.2
| | |
57.8
|
| | | |
|
Earnings per share - diluted
| |
$
|
1.40
| |
$
|
2.28
|
| | | |
|
Average shares outstanding - adjusted diluted (C)
| | |
55.6
| | |
55.7
|
| | | |
|
Economic earnings per share (C)
| |
$
|
2.48
| |
$
|
2.91
|
| | | |
|
| | | |
|
| | | |
|
| | December 31, 2014 | | March 31, 2015 |
| | | |
|
Cash and cash equivalents
| |
$
|
550.6
| |
$
|
438.2
|
| | | |
|
Senior bank debt
| |
$
|
855.0
| |
$
|
535.0
|
| | | |
|
Senior notes
| |
$
|
736.8
| |
$
|
1,084.2
|
| | | |
|
Convertible securities
| |
$
|
303.1
| |
$
|
303.6
|
| | | |
|
Stockholders’ equity
| |
$
|
2,627.0
| |
$
|
2,557.8
|
| | | | | |
|
|
AMG |
Reconciliations of Earnings Per Share Calculation |
(in millions, except per share data)
|
|
| |
| |
| | Three Months | | Three Months |
| | Ended | | Ended |
| |
| 3/31/14 | |
| 3/31/15 |
|
| | | |
|
Net income (controlling interest)
| |
$
|
77.2
| |
$
|
128.0
| |
Convertible securities interest expense, net
| |
|
-
| |
|
3.8
|
|
Net income (controlling interest), as adjusted
| |
$
|
77.2
| |
$
|
131.8
| |
| | | |
|
Average shares outstanding - diluted
| | |
55.2
| | |
57.8
| |
| | | |
|
Earnings per share - diluted
| |
$
|
1.40
| |
$
|
2.28
| |
| | | |
|
| | | |
|
Reconciliations of Average Shares Outstanding |
(in millions)
|
| | | |
|
| | Three Months | | Three Months |
| | Ended | | Ended |
| |
| 3/31/14 | |
| 3/31/15 |
|
| | | |
|
Average shares outstanding - diluted
| | |
55.2
| | |
57.8
| |
Assumed issuance of junior convertible securities shares
| | |
-
| | |
(2.2
|
)
|
Dilutive impact of junior convertible securities shares
| |
|
0.4
| |
|
0.1
|
|
Average shares outstanding - adjusted diluted (C)
| |
|
55.6
| |
|
55.7
|
|
| | | | | | |
|
|
AMG |
Operating Results |
|
Assets Under Management |
(in millions)
|
|
Statement of Changes
|
|
| |
| |
| |
| |
| | Institutional | | Mutual Fund | | High Net Worth | | Total |
| | | | | | | |
|
Assets under management, December 31, 2014
| |
|
$355,600
| | |
$
|
188,428
| | |
$
|
76,158
| | |
$
|
620,186
| |
Client cash inflows
| | |
13,022
| | | |
13,737
| | | |
3,456
| | | |
30,215
| |
Client cash outflows
| |
|
(10,093
|
)
| |
|
(12,375
|
)
| |
|
(2,415
|
)
| |
|
(24,883
|
)
|
Net client cash flows
| |
|
2,929
|
| |
|
1,362
|
| |
|
1,041
|
| |
|
5,332
|
|
Market changes
| | |
1,528
| | | |
3,932
| | | |
1,229
| | | |
6,689
| |
Other (D)
| |
|
(44
|
)
| |
|
-
|
| |
|
-
|
| |
|
(44
|
)
|
Assets under management, March 31, 2015
| |
|
$360,013
|
| |
$
|
193,722
|
| |
$
|
78,428
|
| |
$
|
632,163
|
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
Financial Results |
(in millions)
|
| | | | | | | |
|
| | Three | | | | Three | | |
| | Months | | | | Months | | |
| | Ended | | Percent | | Ended | | Percent |
| |
| 3/31/14 |
| | of Total | |
| 3/31/15 |
| | of Total |
Revenue
| | | | | | | | |
Institutional
| |
|
$244.9
| | | |
41
|
%
| |
|
$252.9
| | | |
40
|
%
|
Mutual Fund
| | |
291.9
| | | |
49
|
%
| | |
318.3
| | | |
50
|
%
|
High Net Worth
| |
|
56.3
|
| |
|
10
|
%
| |
|
63.8
|
| |
|
10
|
%
|
| |
|
$593.1
|
| |
|
100
|
%
| |
|
$635.0
|
| |
|
100
|
%
|
| | | | | | | |
|
EBITDA (controlling interest) (B)
| | | | | | | | |
Institutional
| |
|
$98.6
| | | |
51
|
%
| |
|
$109.0
| | | |
49
|
%
|
Mutual Fund
| | |
74.6
| | | |
39
|
%
| | |
90.0
| | | |
41
|
%
|
High Net Worth
| |
|
18.7
|
| |
|
10
|
%
| |
|
22.0
|
| |
|
10
|
%
|
| |
|
$191.9
|
| |
|
100
|
%
| |
|
$221.0
|
| |
|
100
|
%
|
| | | | | | | | | | | | | | | |
|
|
AMG |
Reconciliations of Performance Measures |
(in millions)
|
|
| |
| |
| | Three Months | | Three Months |
| | Ended | | Ended |
| |
| 3/31/14 | |
| 3/31/15 |
|
| | | |
|
Net income (controlling interest)
| |
$
|
77.2
| |
$
|
128.0
| |
Intangible amortization and impairments
| | |
27.3
| | |
29.8
| |
Intangible-related deferred taxes
| | |
16.9
| | |
20.4
| |
Other economic items (E)
| |
|
16.5
| |
|
(16.1
|
)
|
Economic net income (controlling interest) (A)
| |
$
|
137.9
| |
$
|
162.1
|
|
| | | |
|
| | | |
|
Net income (controlling interest)
| |
$
|
77.2
| |
$
|
128.0
| |
Interest expense
| | |
17.6
| | |
22.2
| |
Imputed interest and contingent payment arrangements (E)
| | |
22.5
| | |
(27.2
|
)
|
Income taxes
| | |
45.6
| | |
66.3
| |
Depreciation and other amortization
| | |
1.7
| | |
1.9
| |
Intangible amortization and impairments
| |
|
27.3
| |
|
29.8
|
|
EBITDA (controlling interest) (B)
| |
$
|
191.9
| |
$
|
221.0
|
|
| | | | | | |
|
|
AMG |
Consolidated Statements of Income |
(in millions, except per share data)
|
|
| |
| |
| | Three Months Ended |
| | March 31, |
| |
| 2014 |
| |
| 2015 |
|
| | | |
|
Revenue
| |
$
|
593.1
| | |
$
|
635.0
| |
Operating expenses:
| | | | |
Compensation and related expenses
| | |
235.7
| | | |
252.8
| |
Selling, general and administrative
| | |
122.3
| | | |
108.7
| |
Intangible amortization and impairments
| | |
27.4
| | | |
27.8
| |
Depreciation and other amortization
| | |
3.8
| | | |
4.4
| |
Other operating expenses
| |
|
9.9
|
| |
|
9.9
|
|
| |
|
399.1
|
| |
|
403.6
|
|
Operating income
| |
|
194.0
|
| |
|
231.4
|
|
| | | |
|
Income from equity method investments
| |
|
46.2
|
| |
|
53.1
|
|
| | | |
|
Other non-operating (income) and expenses:
| | | | |
Investment and other income
| | |
(8.2
|
)
| | |
(0.8
|
)
|
Interest expense
| | |
17.6
| | | |
22.2
| |
Imputed interest expense and contingent payment arrangements (E)
| |
|
22.5
|
| |
|
(27.2
|
)
|
| |
|
31.9
|
| |
|
(5.8
|
)
|
| | | |
|
Income before income taxes
| | |
208.3
| | | |
290.3
| |
| | | |
|
Income taxes (F)
| |
|
48.9
|
| |
|
69.6
|
|
Net income
| | |
159.4
| | | |
220.7
| |
| | | |
|
Net income (non-controlling interests)
| | |
(82.2
|
)
| | |
(92.7
|
)
|
| |
| |
|
Net income (controlling interest)
| |
$
|
77.2
|
| |
$
|
128.0
|
|
| | | |
|
Average shares outstanding - basic
| | |
53.7
| | | |
54.8
| |
Average shares outstanding - diluted
| | |
55.2
| | | |
57.8
| |
| | | |
|
Earnings per share - basic
| |
$
|
1.44
| | |
$
|
2.34
| |
Earnings per share - diluted
| |
$
|
1.40
| | |
$
|
2.28
| |
| | | | | | | |
|
|
AMG |
Consolidated Balance Sheets |
(in millions)
|
|
| |
| |
| | December 31, | | March 31, |
| |
| 2014 |
| |
| 2015 |
|
Assets | | | | |
Cash and cash equivalents
| |
$
|
550.6
| | |
$
|
438.2
| |
Receivables
| | |
425.9
| | | |
514.0
| |
Investments in marketable securities
| | |
172.6
| | | |
192.9
| |
Other investments
| | |
167.2
| | | |
158.0
| |
Fixed assets, net
| | |
95.4
| | | |
94.9
| |
Goodwill
| | |
2,652.8
| | | |
2,621.2
| |
Acquired client relationships, net
| | |
1,778.4
| | | |
1,724.7
| |
Equity investments in Affiliates
| | |
1,783.5
| | | |
1,678.0
| |
Other assets
| |
|
71.7
|
| |
|
72.0
|
|
Total assets
| |
$
|
7,698.1
|
| |
$
|
7,493.9
|
|
| | | |
|
Liabilities and Equity | | | | |
Payables and accrued liabilities
| |
$
|
808.3
| | |
$
|
577.2
| |
Senior bank debt
| | |
855.0
| | | |
535.0
| |
Senior notes
| | |
736.8
| | | |
1,084.2
| |
Convertible securities
| | |
303.1
| | | |
303.6
| |
Deferred income taxes
| | |
491.7
| | | |
524.6
| |
Other liabilities
| |
|
214.5
|
| |
|
181.3
|
|
Total liabilities
| | |
3,409.4
| | | |
3,205.9
| |
| | | |
|
Redeemable non-controlling interests
| | |
645.5
| | | |
743.2
| |
Equity:
| | | | |
Common stock
| | |
0.6
| | | |
0.6
| |
Additional paid-in capital
| | |
672.2
| | | |
519.2
| |
Accumulated other comprehensive income (loss)
| | |
31.8
| | | |
(2.8
|
)
|
Retained earnings
| |
|
2,163.3
|
| |
|
2,291.3
|
|
| | |
2,867.9
| | | |
2,808.3
| |
Less: treasury stock, at cost
| |
|
(240.9
|
)
| |
|
(250.5
|
)
|
Total stockholders’ equity
| | |
2,627.0
| | | |
2,557.8
| |
Non-controlling interests
| |
|
1,016.2
|
| |
|
987.0
|
|
Total equity
| |
|
3,643.2
|
| |
|
3,544.8
|
|
Total liabilities and equity
| |
$
|
7,698.1
|
| |
$
|
7,493.9
|
|
| | | | | | | |
|
|
AMG |
Notes |
(in millions, except per share data)
|
|
(A)
|
|
Under our Economic net income (controlling interest) definition,
we add to Net income (controlling interest) our share of
intangible amortization (including equity method intangible
amortization) and impairments, 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) and
certain Affiliate equity expenses. We consider Economic net income
(controlling interest) an important measure of our financial
performance, as we believe it best represents operating
performance before non-cash expenses relating to the acquisition
of interests in our affiliated investment management firms, and it
is therefore employed as our principal performance benchmark. This
non-GAAP performance measure is provided in addition to, but not
as a substitute for, Net income (controlling interest) or any
other GAAP measure of financial performance or liquidity.
|
| | |
| |
| |
| |
We add back intangible amortization and impairments attributable
to acquired client relationships because these expenses do not
correspond to the changes in the value of these assets, which do
not diminish predictably over time. The portion of deferred taxes
generally attributable to intangible assets (including goodwill)
is added back because we believe it is unlikely these accruals
will be used to settle material tax obligations. We add back
non-cash imputed interest and reductions or increases in
contingent payment arrangements because it better reflects our
contractual interest obligations. We add back non-cash expenses
relating to certain transfers of equity between Affiliate partners
when these transfers have no dilutive effect to shareholders.
|
| | | | | |
|
(B)
| |
EBITDA (controlling interest) represents our performance before
our share of interest expense, income taxes, depreciation and
amortization. We believe that many investors use this information
when comparing the financial performance of companies in the
investment management industry. EBITDA (controlling interest), as
calculated by us, may not be consistent with computations of
EBITDA by other companies. This non-GAAP performance measure is
provided in addition to, but not as a substitute for, Net income
(controlling interest) or any other GAAP measure of financial
performance or liquidity.
|
| | | | | |
|
(C)
| |
Economic earnings per share represents Economic net income
(controlling interest) divided by the adjusted diluted average
shares outstanding. In this calculation, the potential share
issuance in connection with our 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
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. This method
does not take into account any increase or decrease in our cost of
capital in an assumed conversion. Economic earnings per share is
provided in addition to, but not as a substitute for, Earnings per
share - diluted or any other GAAP measure of financial performance.
|
| | | | | |
|
(D)
| |
Other primarily includes assets under management attributable to
Affiliate product transitions, new investment client transitions
and transfers of our interests in certain Affiliated investment
management firms, the financial effects of which are not material
to our ongoing results.
|
| | | | | |
|
(E)
| |
In the first quarter of 2015, we adjusted our estimate of our
contingent payment obligations and, accordingly, recorded a
pre-tax gain attributable to the controlling interest of $29.8
($18.5 net of tax).
|
| | | | | |
|
(F)
| |
Our consolidated income tax provision includes taxes attributable
to controlling interests, and to a lesser extent, taxes
attributable to non-controlling interests, as follows:
|
| | | | | |
|
| | | |
Three Months Ended
|
| | | |
March 31,
|
| | | |
|
2014
|
| |
|
2015
|
|
| |
Current income taxes
| |
$
|
30.3
| | |
$
|
32.0
| |
| |
Intangible-related deferred taxes
| | |
16.9
| | | |
20.4
| |
| |
Other deferred taxes
| |
|
(1.6
|
)
| |
|
13.9
|
|
| |
Taxes attributable to controlling interests
| | |
45.6
| | | |
66.3
| |
| |
Taxes attributable to non-controlling interests
| |
|
3.3
|
| |
|
3.3
|
|
| |
Total income taxes
| |
$
|
48.9
|
| |
$
|
69.6
|
|
| | | | | |
|
| |
Income before taxes (controlling interests)
| |
$
|
122.8
| | |
$
|
194.3
| |
| | | | | |
|
| |
Effective tax rate*
| | |
37.1
|
%
| | |
34.1
|
%
|
| | | | | |
|
| |
* Taxes attributable to controlling interests divided by controlling
interest share of the consolidated income before taxes.
|
Contacts:
Investor Relations:
Alexandra Lynn
Selene Oh
(617)
747-3300
ir@amg.com
or
Media
Relations:
Laura O’Brien
(617) 747-3300
pr@amg.com
Source: Affiliated Managers Group, Inc.
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