AMG, a leading partner to independent investment management firms
globally, today reported its financial and operating results for
the third quarter and nine months ended September 30, 2023.
Jay C. Horgen, President and Chief
Executive Officer of AMG, said:“AMG reported Economic
Earnings per share of $4.08 for the third quarter, reflecting the
disciplined execution of our capital allocation strategy across
both growth investments and share repurchases. AMG’s focus on
investing in secular growth areas continues to diversify our
business, and has enhanced our ability to deliver stable earnings
during periods of macroeconomic uncertainty.
“With our recent investments in Ara Partners and Forbion, AMG’s
eight dedicated private markets Affiliates manage more than $100
billion in aggregate client assets across a range of specialized
in-demand strategies, and their fundraising momentum has remained
strong with approximately $7 billion raised in 2023 to date, and
approximately $10 billion pro forma for our recent new investments.
More broadly, our Affiliates manage approximately $230 billion in
alternatives, across diversifying return streams that investors
increasingly view as critical for achieving long-term investment
objectives. Clients recognize that the highest-quality independent
partner-owned firms have fundamental competitive advantages in
offering differentiated return streams. As owners of their
businesses, our Affiliates are directly aligned with their clients
and have distinct entrepreneurial cultures and track records
navigating challenging market environments to deliver superior
outcomes to clients.
“AMG’s unique approach continues to attract outstanding firms
seeking a strategic partner that can magnify their long-term
success. Looking ahead, we remain focused on executing our growth
strategy, and, given the quality and diversity of our Affiliates,
our excellent capital position, and distinctive competitive
advantages, AMG is well-positioned to create meaningful incremental
shareholder value over time.”
FINANCIAL
HIGHLIGHTS |
|
Three Months Ended |
|
Nine Months Ended |
(in millions, except as noted
and per share data) |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
Operating Performance
Measures |
|
|
|
|
|
|
|
|
AUM (at period end, in billions) |
|
$ |
644.6 |
|
|
$ |
635.8 |
|
|
$ |
644.6 |
|
|
$ |
635.8 |
|
Average AUM (in billions) |
|
|
680.1 |
|
|
|
663.8 |
|
|
|
731.8 |
|
|
|
664.4 |
|
Net client cash flows (in billions) |
|
|
(8.8 |
) |
|
|
(9.4 |
) |
|
|
(22.5 |
) |
|
|
(23.1 |
) |
Aggregate fees |
|
|
1,165.5 |
|
|
|
997.5 |
|
|
|
3,675.6 |
|
|
|
3,505.7 |
|
Financial Performance
Measures |
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
$ |
112.6 |
|
|
$ |
217.0 |
|
|
$ |
368.0 |
|
|
$ |
476.8 |
|
Earnings per share (diluted)(1) |
|
|
2.80 |
|
|
|
5.48 |
|
|
|
8.83 |
|
|
|
12.28 |
|
Supplemental
Performance Measures(2) |
|
|
|
|
|
|
|
|
Adjusted EBITDA (controlling interest) |
|
$ |
221.2 |
|
|
$ |
208.4 |
|
|
$ |
676.1 |
|
|
$ |
639.6 |
|
Economic net income (controlling interest) |
|
|
167.0 |
|
|
|
149.5 |
|
|
|
507.1 |
|
|
|
474.9 |
|
Economic earnings per share |
|
|
4.23 |
|
|
|
4.08 |
|
|
|
12.61 |
|
|
|
12.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information on our Supplemental Performance
Measures, including the impact of a definition change on Adjusted
EBITDA (controlling interest), Economic net income (controlling
interest), and Economic earnings per share and reconciliations to
GAAP, see the Financial Tables and Notes.
(i) Investment in Ara Partners closed in October 2023, and
investment in Forbion closed in August 2023; accordingly, the
financial impact of these transactions is not included in the
presentation of third quarter financial results.(ii) AMG completed
the previously announced sale of its outstanding equity interests
in Veritable in September 2023; the gain from that transaction is
excluded from applicable non-GAAP financial metrics, including
Economic net income (controlling interest).(iii) Total year-to-date
share repurchases is inclusive of the $225 million accelerated
share repurchase program entered into at year-end 2022 and
completed in the second quarter of 2023.
Capital Management During the third quarter of
2023, the Company repurchased approximately $172 million in common
stock, bringing total year-to-date share repurchases, inclusive of
the $225 million accelerated share repurchase program entered into
at year-end 2022 and completed in the second quarter of 2023, to
approximately $441 million. The Company also announced a
third-quarter cash dividend of $0.01 per share of common stock,
payable November 30, 2023 to stockholders of record as of the close
of business on November 16, 2023. AMG’s Board of Directors
increased the Company’s share repurchase authorization, providing
for a total of approximately 5 million shares available for
repurchase under the Company’s share repurchase programs, as of
October 16, 2023.
About AMGAMG (NYSE: AMG) is a
leading partner to independent investment management firms
globally. AMG’s strategy is to generate long‐term value by
investing in a diverse array of high-quality independent
partner-owned firms, through a proven partnership approach, and
allocating resources across AMG’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, 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 September 30, 2023, AMG’s aggregate assets under management
were approximately $636 billion across a broad range of
differentiated investment 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 13741302.
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/.
Financial Tables Follow
ASSETS UNDER MANAGEMENT - STATEMENTS OF
CHANGES (in billions)
BY STRATEGY - QUARTER
TO DATE |
|
Alternatives |
Global Equities |
U.S. Equities |
Multi-Asset &Fixed
Income |
Total |
AUM, June 30, 2023 |
|
$ |
225.7 |
|
$ |
190.5 |
|
$ |
140.7 |
|
$ |
117.0 |
|
$ |
673.9 |
|
Client cash inflows and commitments |
|
|
6.8 |
|
|
3.8 |
|
|
3.9 |
|
|
4.9 |
|
|
19.4 |
|
Client cash outflows |
|
|
(3.9 |
) |
|
(13.2 |
) |
|
(7.2 |
) |
|
(4.5 |
) |
|
(28.8 |
) |
Net client cash
flows |
|
|
2.9 |
|
|
(9.4 |
) |
|
(3.3 |
) |
|
0.4 |
|
|
(9.4 |
) |
New investments |
|
|
3.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
Veritable* |
|
|
(0.2 |
) |
|
— |
|
|
— |
|
|
(17.6 |
) |
|
(17.8 |
) |
Market changes |
|
|
3.9 |
|
|
(5.3 |
) |
|
(3.6 |
) |
|
(1.5 |
) |
|
(6.5 |
) |
Foreign exchange |
|
|
(1.7 |
) |
|
(2.4 |
) |
|
(0.5 |
) |
|
(0.4 |
) |
|
(5.0 |
) |
Realizations and distributions (net) |
|
|
(2.2 |
) |
|
(0.0 |
) |
|
(0.0 |
) |
|
(0.1 |
) |
|
(2.3 |
) |
Other |
|
|
(0.2 |
) |
|
— |
|
|
0.1 |
|
|
0.0 |
|
|
(0.1 |
) |
AUM, September 30,
2023 |
|
$ |
231.2 |
|
$ |
173.4 |
|
$ |
133.4 |
|
$ |
97.8 |
|
$ |
635.8 |
|
BY STRATEGY - YEAR TO
DATE |
|
Alternatives |
Global Equities |
U.S. Equities |
Multi-Asset &Fixed
Income |
Total |
AUM, December 31, 2022 |
|
$ |
220.9 |
|
$ |
186.1 |
|
$ |
133.3 |
|
$ |
110.5 |
|
$ |
650.8 |
|
Client cash inflows and commitments |
|
|
22.5 |
|
|
13.1 |
|
|
13.7 |
|
|
14.6 |
|
|
63.9 |
|
Client cash outflows |
|
|
(15.5 |
) |
|
(35.3 |
) |
|
(22.4 |
) |
|
(13.8 |
) |
|
(87.0 |
) |
Net client cash
flows |
|
|
7.0 |
|
|
(22.2 |
) |
|
(8.7 |
) |
|
0.8 |
|
|
(23.1 |
) |
New investments |
|
|
3.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
Veritable* |
|
|
(0.2 |
) |
|
— |
|
|
— |
|
|
(17.6 |
) |
|
(17.8 |
) |
Market changes |
|
|
5.5 |
|
|
9.9 |
|
|
8.8 |
|
|
4.3 |
|
|
28.5 |
|
Foreign exchange |
|
|
0.2 |
|
|
0.0 |
|
|
0.0 |
|
|
(0.2 |
) |
|
(0.0 |
) |
Realizations and distributions (net) |
|
|
(4.8 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.2 |
) |
|
(5.2 |
) |
Other |
|
|
(0.4 |
) |
|
(0.3 |
) |
|
0.1 |
|
|
0.2 |
|
|
(0.4 |
) |
AUM, September 30,
2023 |
|
$ |
231.2 |
|
$ |
173.4 |
|
$ |
133.4 |
|
$ |
97.8 |
|
$ |
635.8 |
|
BY CLIENT TYPE -
QUARTER TO DATE |
|
Institutional |
Retail |
High NetWorth |
Total |
AUM, June 30, 2023 |
|
$ |
339.2 |
|
$ |
199.2 |
|
$ |
135.5 |
|
$ |
673.9 |
|
Client cash inflows and commitments |
|
|
8.2 |
|
|
6.6 |
|
|
4.6 |
|
|
19.4 |
|
Client cash outflows |
|
|
(11.0 |
) |
|
(13.0 |
) |
|
(4.8 |
) |
|
(28.8 |
) |
Net client cash
flows |
|
|
(2.8 |
) |
|
(6.4 |
) |
|
(0.2 |
) |
|
(9.4 |
) |
New investments |
|
|
2.8 |
|
|
— |
|
|
0.2 |
|
|
3.0 |
|
Veritable* |
|
|
(0.2 |
) |
|
— |
|
|
(17.6 |
) |
|
(17.8 |
) |
Market changes |
|
|
(0.4 |
) |
|
(3.9 |
) |
|
(2.2 |
) |
|
(6.5 |
) |
Foreign exchange |
|
|
(2.8 |
) |
|
(1.9 |
) |
|
(0.3 |
) |
|
(5.0 |
) |
Realizations and distributions (net) |
|
|
(2.0 |
) |
|
(0.1 |
) |
|
(0.2 |
) |
|
(2.3 |
) |
Other |
|
|
0.1 |
|
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
AUM, September 30,
2023 |
|
$ |
333.9 |
|
$ |
186.8 |
|
$ |
115.1 |
|
$ |
635.8 |
|
BY CLIENT TYPE - YEAR
TO DATE |
|
Institutional |
Retail |
High NetWorth |
Total |
AUM, December 31, 2022 |
|
$ |
333.5 |
|
$ |
188.9 |
|
$ |
128.4 |
|
$ |
650.8 |
|
Client cash inflows and commitments |
|
|
25.1 |
|
|
24.1 |
|
|
14.7 |
|
|
63.9 |
|
Client cash outflows |
|
|
(36.1 |
) |
|
(35.5 |
) |
|
(15.4 |
) |
|
(87.0 |
) |
Net client cash
flows |
|
|
(11.0 |
) |
|
(11.4 |
) |
|
(0.7 |
) |
|
(23.1 |
) |
New investments |
|
|
2.8 |
|
|
— |
|
|
0.2 |
|
|
3.0 |
|
Veritable* |
|
|
(0.2 |
) |
|
— |
|
|
(17.6 |
) |
|
(17.8 |
) |
Market changes |
|
|
13.1 |
|
|
10.1 |
|
|
5.3 |
|
|
28.5 |
|
Foreign exchange |
|
|
0.0 |
|
|
0.0 |
|
|
(0.0 |
) |
|
(0.0 |
) |
Realizations and distributions (net) |
|
|
(4.2 |
) |
|
(0.8 |
) |
|
(0.2 |
) |
|
(5.2 |
) |
Other |
|
|
(0.1 |
) |
|
(0.0 |
) |
|
(0.3 |
) |
|
(0.4 |
) |
AUM, September 30,
2023 |
|
$ |
333.9 |
|
$ |
186.8 |
|
$ |
115.1 |
|
$ |
635.8 |
|
__________________________* Assets under management attributable
to Veritable as of the closing date.
CONSOLIDATED STATEMENTS OF INCOME
|
|
Three Months Ended |
(in millions, except per share
data) |
|
9/30/2022 |
|
9/30/2023 |
Consolidated revenue |
|
$ |
578.6 |
|
|
$ |
525.2 |
|
|
|
|
|
|
Consolidated
expenses: |
|
|
|
|
Compensation and related expenses |
|
|
273.8 |
|
|
|
211.8 |
|
Selling, general and administrative |
|
|
93.2 |
|
|
|
91.1 |
|
Intangible amortization and impairments |
|
|
14.4 |
|
|
|
12.5 |
|
Interest expense |
|
|
28.3 |
|
|
|
31.1 |
|
Depreciation and other amortization |
|
|
3.8 |
|
|
|
3.0 |
|
Other expenses (net) |
|
|
11.9 |
|
|
|
7.9 |
|
Total consolidated
expenses |
|
|
425.4 |
|
|
|
357.4 |
|
|
|
|
|
|
Equity method income
(net)(3) |
|
|
44.8 |
|
|
|
39.8 |
|
Affiliate Transaction
gain(4) |
|
|
— |
|
|
|
133.1 |
|
Investment and other
income |
|
|
3.1 |
|
|
|
23.0 |
|
Income before income
taxes |
|
|
201.1 |
|
|
|
363.7 |
|
Income tax expense |
|
|
36.8 |
|
|
|
77.7 |
|
Net
income |
|
|
164.3 |
|
|
|
286.0 |
|
Net income (non-controlling
interests) |
|
|
(51.7 |
) |
|
|
(69.0 |
) |
Net income
(controlling interest) |
|
$ |
112.6 |
|
|
$ |
217.0 |
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
38.2 |
|
|
|
34.9 |
|
Average shares outstanding
(diluted) |
|
|
43.5 |
|
|
|
43.4 |
|
|
|
|
|
|
Earnings per share
(basic) |
|
$ |
2.95 |
|
|
$ |
6.22 |
|
Earnings per share
(diluted)(1) |
|
$ |
2.80 |
|
|
$ |
5.48 |
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE
MEASURES(2)
|
|
Three Months Ended |
(in millions, except per share
data) |
|
9/30/2022 |
|
9/30/2023 |
Net income (controlling interest) |
|
$ |
112.6 |
|
|
$ |
217.0 |
|
Intangible amortization and impairments |
|
|
41.9 |
|
|
|
29.8 |
|
Intangible-related deferred taxes |
|
|
12.7 |
|
|
|
14.7 |
|
Affiliate Transactions(4) |
|
|
— |
|
|
|
(104.7 |
) |
Other economic items |
|
|
(0.2 |
) |
|
|
(7.3 |
) |
Economic net income
(controlling interest) |
|
$ |
167.0 |
|
|
$ |
149.5 |
|
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
|
39.5 |
|
|
|
36.6 |
|
Economic earnings per
share |
|
$ |
4.23 |
|
|
$ |
4.08 |
|
|
|
|
|
|
Net income
(controlling interest) |
|
$ |
112.6 |
|
|
$ |
217.0 |
|
Interest expense |
|
|
28.3 |
|
|
|
31.1 |
|
Income taxes |
|
|
34.8 |
|
|
|
76.6 |
|
Intangible amortization and impairments |
|
|
41.9 |
|
|
|
29.8 |
|
Affiliate Transactions(4) |
|
|
— |
|
|
|
(139.6 |
) |
Other items |
|
|
3.6 |
|
|
|
(6.5 |
) |
Adjusted EBITDA
(controlling interest) |
|
$ |
221.2 |
|
|
$ |
208.4 |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
INCOME
|
|
Nine Months Ended |
(in millions, except per share
data) |
|
9/30/2022 |
|
9/30/2023 |
Consolidated revenue |
|
$ |
1,789.9 |
|
|
$ |
1,555.2 |
|
|
|
|
|
|
Consolidated
expenses: |
|
|
|
|
Compensation and related expenses |
|
|
797.0 |
|
|
|
663.0 |
|
Selling, general and administrative |
|
|
275.7 |
|
|
|
273.4 |
|
Intangible amortization and impairments |
|
|
39.4 |
|
|
|
37.5 |
|
Interest expense |
|
|
84.7 |
|
|
|
92.4 |
|
Depreciation and other amortization |
|
|
11.9 |
|
|
|
10.0 |
|
Other expenses (net) |
|
|
12.3 |
|
|
|
36.2 |
|
Total consolidated
expenses |
|
|
1,221.0 |
|
|
|
1,112.5 |
|
|
|
|
|
|
Equity method income
(net)(3) |
|
|
123.9 |
|
|
|
154.3 |
|
Affiliate Transaction
gain(4) |
|
|
— |
|
|
|
133.1 |
|
Investment and other income
(expense) |
|
|
(5.3 |
) |
|
|
87.2 |
|
Income before income
taxes |
|
|
687.5 |
|
|
|
817.3 |
|
|
|
|
|
|
Income tax expense |
|
|
130.5 |
|
|
|
155.4 |
|
Net
income |
|
|
557.0 |
|
|
|
661.9 |
|
|
|
|
|
|
Net income (non-controlling
interests) |
|
|
(189.0 |
) |
|
|
(185.1 |
) |
Net income
(controlling interest) |
|
$ |
368.0 |
|
|
$ |
476.8 |
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
38.8 |
|
|
|
35.6 |
|
Average shares outstanding
(diluted) |
|
|
47.8 |
|
|
|
42.9 |
|
|
|
|
|
|
Earnings per share
(basic) |
|
$ |
9.48 |
|
|
$ |
13.41 |
|
Earnings per share
(diluted)(1) |
|
$ |
8.83 |
|
|
$ |
12.28 |
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE
MEASURES(2)
|
|
Nine Months Ended |
(in millions, except per share
data) |
|
9/30/2022 |
|
9/30/2023 |
Net income (controlling interest) |
|
$ |
368.0 |
|
|
$ |
476.8 |
|
Intangible amortization and impairments |
|
|
116.9 |
|
|
|
88.6 |
|
Intangible-related deferred taxes |
|
|
41.2 |
|
|
|
44.6 |
|
Affiliate Transactions(4) |
|
|
— |
|
|
|
(122.1 |
) |
Other economic items |
|
|
(19.0 |
) |
|
|
(13.0 |
) |
Economic net income
(controlling interest) |
|
$ |
507.1 |
|
|
$ |
474.9 |
|
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
|
40.2 |
|
|
|
37.3 |
|
Economic earnings per
share |
|
$ |
12.61 |
|
|
$ |
12.72 |
|
|
|
|
|
|
Net income
(controlling interest) |
|
$ |
368.0 |
|
|
$ |
476.8 |
|
Interest expense |
|
|
84.7 |
|
|
|
92.4 |
|
Income taxes |
|
|
121.1 |
|
|
|
150.7 |
|
Intangible amortization and impairments |
|
|
116.9 |
|
|
|
88.6 |
|
Affiliate Transactions(4) |
|
|
— |
|
|
|
(162.7 |
) |
Other items |
|
|
(14.6 |
) |
|
|
(6.2 |
) |
Adjusted EBITDA
(controlling interest) |
|
$ |
676.1 |
|
|
$ |
639.6 |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
|
Period Ended |
(in millions) |
|
12/31/2022 |
|
9/30/2023 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
429.2 |
|
|
$ |
999.2 |
|
Receivables |
|
|
316.0 |
|
|
|
428.9 |
|
Investments in marketable securities |
|
|
716.9 |
|
|
|
462.3 |
|
Goodwill |
|
|
2,648.7 |
|
|
|
2,509.0 |
|
Acquired client relationships (net) |
|
|
1,876.0 |
|
|
|
1,809.5 |
|
Equity method investments in Affiliates (net) |
|
|
2,139.5 |
|
|
|
2,034.9 |
|
Fixed assets (net) |
|
|
68.5 |
|
|
|
63.8 |
|
Other investments |
|
|
421.6 |
|
|
|
457.9 |
|
Other assets |
|
|
264.6 |
|
|
|
238.1 |
|
Total
assets |
|
$ |
8,881.0 |
|
|
$ |
9,003.6 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
Payables and accrued liabilities |
|
$ |
778.3 |
|
|
$ |
636.2 |
|
Debt |
|
|
2,535.3 |
|
|
|
2,536.9 |
|
Deferred income tax liability (net) |
|
|
464.7 |
|
|
|
451.7 |
|
Other liabilities |
|
|
461.7 |
|
|
|
482.3 |
|
Total
liabilities |
|
|
4,240.0 |
|
|
|
4,107.1 |
|
|
|
|
|
|
Redeemable non-controlling
interests |
|
|
465.4 |
|
|
|
432.3 |
|
Equity: |
|
|
|
|
Common stock |
|
|
0.6 |
|
|
|
0.6 |
|
Additional paid-in capital |
|
|
695.5 |
|
|
|
722.3 |
|
Accumulated other comprehensive loss |
|
|
(203.4 |
) |
|
|
(179.9 |
) |
Retained earnings |
|
|
5,718.2 |
|
|
|
6,193.8 |
|
|
|
|
6,210.9 |
|
|
|
6,736.8 |
|
Less: treasury stock, at
cost |
|
|
(2,980.6 |
) |
|
|
(3,241.8 |
) |
Total stockholders’
equity |
|
|
3,230.3 |
|
|
|
3,495.0 |
|
Non-controlling interests |
|
|
945.3 |
|
|
|
969.2 |
|
Total
equity |
|
|
4,175.6 |
|
|
|
4,464.2 |
|
Total liabilities and
equity |
|
$ |
8,881.0 |
|
|
$ |
9,003.6 |
|
|
|
|
|
|
|
|
|
|
See Notes for additional information.
Notes
(1) |
Earnings per share (diluted) adjusts for the dilutive effect of the
potential issuance of incremental shares of our common stock. |
|
|
|
We assume the settlement of all
of our Redeemable non-controlling interests using the maximum
number of shares permitted under our arrangements. The issuance of
shares and the related income acquired are excluded from the
calculation if an assumed purchase of Redeemable non-controlling
interests would be anti-dilutive to diluted earnings per
share. |
|
|
|
We are required to apply the
if-converted method to our outstanding junior convertible
securities when calculating Earnings 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 (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 |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
|
Numerator |
|
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
$ |
112.6 |
|
|
$ |
217.0 |
|
|
$ |
368.0 |
|
|
$ |
476.8 |
|
|
Income from hypothetical
settlement of Redeemable non-controlling interests, net of
taxes |
|
|
5.8 |
|
|
|
17.1 |
|
|
|
43.4 |
|
|
|
39.4 |
|
|
Interest expense on junior
convertible securities, net of taxes |
|
|
3.4 |
|
|
|
3.4 |
|
|
|
10.6 |
|
|
|
10.1 |
|
|
Net income (controlling
interest), as adjusted |
|
$ |
121.8 |
|
|
$ |
237.5 |
|
|
$ |
422.0 |
|
|
$ |
526.3 |
|
|
Denominator |
|
|
|
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
38.2 |
|
|
|
34.9 |
|
|
|
38.8 |
|
|
|
35.6 |
|
|
Effect of dilutive
instruments: |
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units |
|
|
1.3 |
|
|
|
1.7 |
|
|
|
1.4 |
|
|
|
1.7 |
|
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
|
2.3 |
|
|
|
5.1 |
|
|
|
5.7 |
|
|
|
3.9 |
|
|
Junior convertible securities |
|
|
1.7 |
|
|
|
1.7 |
|
|
|
1.9 |
|
|
|
1.7 |
|
|
Average shares outstanding
(diluted) |
|
|
43.5 |
|
|
|
43.4 |
|
|
|
47.8 |
|
|
|
42.9 |
|
(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. In the first quarter of
2023, we updated the definitions of Adjusted EBITDA (controlling
interest) and Economic net income (controlling interest) to reflect
AMG’s strategic evolution, including our increased allocation of
capital toward private markets and liquid alternatives. To align
with the economic impact of these capital allocation decisions, the
updated definitions of Adjusted EBITDA (controlling interest) and
Economic net income (controlling interest): (i) include only the
realized economic gains and losses on seed capital, general partner
commitments, and other strategic investments and (ii) exclude any
unrealized gains and losses on strategic investments (consistent
with the existing treatment of seed capital and general partner
commitments). We have retroactively applied this definition change
to prior periods. The following table presents the impact on the
three and nine months ended September 30, 2022: |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
(in millions, except per share
data) |
|
9/30/2022 |
|
9/30/2022 |
|
Adjusted EBITDA (controlling interest) - As reported |
|
$ |
221.2 |
|
|
$ |
676.1 |
|
|
Adjusted EBITDA (controlling
interest) - Prior definition |
|
|
220.4 |
|
|
|
689.1 |
|
|
Change |
|
$ |
0.8 |
|
|
$ |
(13.0 |
) |
|
% Change |
|
|
0.4 |
% |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|
Economic net income
(controlling interest) - As reported |
|
$ |
167.0 |
|
|
$ |
507.1 |
|
|
Economic net income
(controlling interest) - Prior definition |
|
|
166.4 |
|
|
|
516.9 |
|
|
Change |
|
$ |
0.6 |
|
|
$ |
(9.8 |
) |
|
% Change |
|
|
0.4 |
% |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|
Economic earnings per share -
As reported |
|
$ |
4.23 |
|
|
$ |
12.61 |
|
|
Economic earnings per share -
Prior definition |
|
|
4.21 |
|
|
|
12.85 |
|
|
Change |
|
$ |
0.02 |
|
|
$ |
(0.24 |
) |
|
% Change |
|
|
0.5 |
% |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (controlling interest) represents our performance before our
share of interest expense, income and certain non-income based
taxes, depreciation, amortization, impairments, gains and losses
related to the Veritable and BPEA Transactions, and non-cash items
such as certain Affiliate equity activity, gains and losses on our
contingent payment obligations, and unrealized gains and losses on
seed capital, general partner commitments, and other strategic
investments. Adjusted EBITDA (controlling interest) is also
adjusted to include realized economic gains and losses related to
these seed capital, general partner commitments, and other
strategic investments. 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 adjust Net income (controlling interest) for 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, gains and
losses related to the Veritable and BPEA Transactions, net of tax,
and other economic items which include gains and losses related to
contingent payment obligations, tax windfalls and shortfalls from
share-based compensation, certain Affiliate equity activity,
unrealized gains and losses on seed capital, general partner
commitments, and other strategic investments, and realized economic
gains and losses related to these seed capital, general partner
commitments, and other strategic 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, we exclude the potential
shares issued upon settlement of Redeemable non-controlling
interests from Average shares outstanding (adjusted diluted)
because we intend to settle those obligations without issuing
shares, consistent with all prior Affiliate equity purchase
transactions. 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 our 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 |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
|
Average shares outstanding (diluted) |
|
43.5 |
|
|
43.4 |
|
|
47.8 |
|
|
42.9 |
|
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
(2.3 |
) |
|
(5.1 |
) |
|
(5.7 |
) |
|
(3.9 |
) |
|
Junior convertible securities |
|
(1.7 |
) |
|
(1.7 |
) |
|
(1.9 |
) |
|
(1.7 |
) |
|
Average shares outstanding
(adjusted diluted) |
|
39.5 |
|
|
36.6 |
|
|
40.2 |
|
|
37.3 |
|
|
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 most
recent 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
(net): |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
|
Equity method earnings |
|
$ |
76.2 |
|
|
$ |
61.0 |
|
|
$ |
213.2 |
|
|
$ |
217.3 |
|
|
Equity method intangible
amortization and impairments |
|
|
(31.4 |
) |
|
|
(21.2 |
) |
|
|
(89.3 |
) |
|
|
(63.0 |
) |
|
Equity method income (net) |
|
$ |
44.8 |
|
|
$ |
39.8 |
|
|
$ |
123.9 |
|
|
$ |
154.3 |
|
(4) |
The following table presents the impact of the completion of our
previously announced sales of our equity interests in Veritable, LP
(“Veritable”) to a third party (the “Veritable Transaction”), and
Baring Private Equity Asia to EQT AB (“EQT”), a public company
listed on Nasdaq Stockholm (EQT ST), pursuant to which we received
ordinary shares of EQT, (the “BPEA Transaction”): |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
|
Affiliate Transaction gain |
|
$ |
— |
|
|
$ |
133.1 |
|
|
$ |
— |
|
|
$ |
133.1 |
|
|
Investment and other income -
Realized gains on EQT shares |
|
|
— |
|
|
|
6.5 |
|
|
|
— |
|
|
|
29.6 |
|
|
Affiliate Transaction gain, pre-tax |
|
|
— |
|
|
|
139.6 |
|
|
|
— |
|
|
|
162.7 |
|
|
Income taxes |
|
|
— |
|
|
|
(34.9 |
) |
|
|
— |
|
|
|
(40.6 |
) |
|
Affiliate Transaction gain, after-tax |
|
$ |
— |
|
|
$ |
104.7 |
|
|
$ |
— |
|
|
$ |
122.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements and Other
Matters
Certain matters discussed in this press release issued by
Affiliated Managers Group, Inc. (“AMG” or the “Company”) 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 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,
uncertainties relating to closing of pending investments or
transactions and potential changes in the anticipated benefits
thereof, 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.
Investor Relations:Patricia Figueroa
Media Relations:Ann Imes
+1 (617) 747-3300ir@amg.compr@amg.com
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