Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2011 Earnings Presentation
48 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 27, 2011
Slide 1: Third Quarter 2011 Review
October 26, 2011 Third Quarter 2011 Review Peter S. Kraus Chairman & Chief Executive Officer David A. Steyn Chief Operating Officer Edward J. Farrell Interim Chief Financial Officer & Controller ALLIANCEBERNSTEIN
Slide 2: Cautions Regarding Forward-Looking Statements
Cautions Regarding Forward-Looking Statements Certain statements provided by management in this presentation 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 fac
Slide 3: Peter S. Kraus
Peter S. Kraus Chairman & Chief Executive Officer
Slide 4: Declining Markets Amid Global Economic Uncertainty
Declining Markets Amid Global Economic Uncertainty 4Q08 — Lehman Failure 1Q09 — Height of Financial Crisis sap 500 ——MSCI EAFE —saP 500 ——MSCI EAFE * on al oF (16)% (30)% (23)% | - 2Q10 — Europe Debt Crisis | 3Q11 — Euro Crisis Il and US Debt/Economy ——S&P 500 ——MSCI EAFE ——S&P 500 ——-MSCI EAFE * ca
Slide 5: Equities: Fundamentals Out Of Favor
Equities: Fundamentals Out Of Favor Core Investing Fundamentals: Earnings Growth Potential and Cheapness* Low Price to Book Low Price to Forward Earnings 0.9% 6.3% — a 9.7% (9.0)% (10.5)% (12.39% What's Working Now: Safety, Proven Earnings and Dividends** Low Beta Current Profitability Dividends 27.
Slide 6: Equities: A Market That Rewards Short Duration
Equities: A Market That Rewards Short Duration Year-to-Date Relative Returns Short High Dividends / Current Earnings / Ciiréiit Duration Momentum / Earnings Revision / Long —— Lower Beta —_—_ ———~ Five-Year CashFlow = SS 67% 65% 5.3% Large Global Small us Cap Research Cap Strategic Int! ~—_ Global G
Slide 7: Evolution of Our Business
Evolution of Our Business Dec-08: $221 Billion 49% of Firm Total Fixed Equities ex- Income Large Cap" Asset Allocation [Large Cap | $5 Alternatives Equities: $2288 Dec-08: $703 Million 36% of Firm Total Fixed Equities ex- Income Large Cap* Asset ™ Allocation $. Large Cap | 32 Alternatives AUM (Sin B
Slide 8: Positioning AB for Long-Term Success — 3Q Accomplishments
Positioning AB for Term Success — 3Q Accomplishments Firmwide Initiative Evidence of Progress in 3Q Improve investment performance and restore client confidence Diversify our business across channels, investment services and geographies = Ongoing outperformance in Global Fixed Income, US Small and S
Slide 9: David A. Steyn
David A. Steyn Chief Operating Officer
Slide 10: Assets Under Management: Third Quarter 2011
Assets Under Management: Third Quarter 2011 In US $ Billions End of Period AUM 30:11 20:11 30:11 30:10 $474 $464 $438 $438 3011 20:11 3011 30:10 $14 $13 st si 30:11 20:11 30:11 30:10 30:11 20:11 30:11 30:10 $(15) $(15) $(16) $(20)
Slide 11: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution C nnel: Quarterly Trend In US $ Billions 73 42 Inst Ret PC. 3Q10 Net Totals: $(15.6) Gross Sales m Gross Redemptions ¢ Net Flows (10.5) (18.1) (18.6) Inst Ret PC. Inst. Ret 1011 2Q11 $(14.4) $(19.5) (143) (1.7) Inst Ret PC. 3Q11 $(15.4)
Slide 12: Institutional Flows
Institutional Flows In US $ Billions ME Gross Sales mE Gross Redemptions —¢—NetFlows 42 23 a2 35 Ey d | it a 6 (259) 3Q 10 4Q 10 1Q11 2Q11 3Q11
Slide 13: Institutional Highlights
Institutional Highlights Pipeline is Growing... And Diverse... 3Q Wins* $6.28 $7.08 = $450MM ABRA (AB Recovery Asset) = $400MM US Fixed Income = $350MM European Fixed Income = $330MM Emerging Markets Fixed Income Eng 2011 Eng 9att = $140MM Japan Strategic Value Across Investment Services... ..And Re
Slide 14: Top Performing Services in Large Asset Categories
Top Performing Services in Large Asset Categories Quartile Ranks Relative Returns Relative Return 1Yr 3Yr 5Yr_ _1Yr_3Yr SYr Benchmark Fixed Income Global Plus Fixed Income 1 2 2 07 #19 O03 Barclays Capital Global Aggregate US Core Fixed Income 2 1 3 00 20 03 Barclays Capital US Aggregate Emerging Ma
Slide 15: Retail Flows
Retail Flows In US $ Billions mmm Gross Sales mmm Gross Redemptions NetFlows 7 | - | : = @.0) 5 J 10.5) 10.5) (10.5) aE (10.5) (11.7) 3Q10 4Q10 1Q11 2011 3Q11
Slide 16: Retail Sales Trends
Retail Sales Trends 3Q Retail Gross Sales 3Q US Mutual Fund Flows $10 = 3 2010 mQ2 2011 $8 (13)% 3 2011 6 : (21) % $4 $2 (36)% (22)% fa % ene oe Total Fixed Value Growth Index Income $B (60) (Oy Q110 210 Q310 Q410 Qttt 211 Q3tt mmm Total US Equity/Fixed Income Flows (left) —AB Flows (right) Products
Slide 17: Private Client Flows
Private Client Flows In US $ Billions fmm Gross Sales mms Gross Redemptions © Net Flows 23 19 16 0) (2.1) (3.0) 3Q10 4Q10 1011 2Q11 3Q11
Slide 18: DAA: Smoothing the Ride for Private Clients
DAA: Smoothing the Ride for Private Clients With DAA We Continuously Adapt to Ra & 2 EuroArea Crisis 1 Japanese Earthquake Euro Area Crisis I! 120 = ™ auichly reduced equity weight Risk remained localized Underweight and partial Euro hedge —E 10 110 | = s foo 100 * 5 Se 3 3 2 (10) 90 = 2 lm Adjustme
Slide 19: Bernstein Research Services
Bernstein Research Services Increase in Revenues... 3Q Accomplishments $MM % Change 3Q11/3Q10: 23% 3011/2011: 10% 118 96 108 3010 2011 3a1t ...Driven by Spike in Volume and Volatility 20 50 1s 40 30 10 20 § 10 ° 0 > s ‘ > SPF FSF CEH FE SI Mest mmm NYSE & Nasdaq Shares Traded (B)* (left) — VIX Volat
Slide 20: Edward J. Farrell
Edward J. Farrell Interim Chief Financial Officer & Controller
Slide 21: Financial Highlights: Third Quarter 2011
Financial Highlights: Third Quarter 2011 36 ay 36¢ 204 ¢ Adjusted EPU 30:11 20:11 30:11 30:10 im (1.5)% Adjusted (3.0)% Adjusted Revenues Expenses (6.4)% 3.7)% % Change 3 vs. a2 % Change Q311 vs. 310 19.7% 19.5% 17.7% 177% Adjusted Operating Margins 30:11 20:11 30:11 30:10 51.0 448 et 514 30:11 20:1
Slide 22: Third Quarter 2011 Income Statement
Third Quarter 2011 Income Statement = Prior year quarter included $90 million real estate charge in GAAP earnings = Current quarter includes $7 million real estate charge in GAAP earnings, related to the consolidation of London office space @ Adjusted EPU of 30 cents, as lower advisory fees and larg
Slide 23: Third Quarter 2011 Revenues
Third Quarter 2011 Revenues = Bernstein Research improved versus both prior periods, due to increased market volumes = Greater current quarter deferred compensation and seed investment losses versus prior quarter losses and prior year quarter gains 3a 20 3a Revenues (in US dollar millions) 2011 2011
Slide 24: Third Quarter 2011 Operating Expenses
Third Quarter 2011 Operating Expenses |= Incentive compensation declined versus both prior periods, due primarily to lower MTM vesting on prior years’ deferred compensation awards and lower revenues for compensation calculation = Promotion & Servicing sequential decrease due to lower T&E costs; incr
Slide 25: Third Quarter 2011 GAAP to Adjusted Reconciliation
Third Quarter 2011 GAAP to Adjusted Reconciliation = GAAP Operating Income declined 33% sequentially but increased 35% versus the prior year = Adjusted Operating Margin declined versus both prior periods m= GAAP Operating Margin improved versus the prior year period and declined versus the prior qua
Slide 26: AllianceBernstein.com
AllianceBernstein.com 25
Slide 27: AllianceBernstein.com
AllianceBernstein.com 26
Slide 28: Institutional Value Equity: Relative Performance
Institutional Value Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended Sept 30, 2011 3Q One Three — Five. Ten Service 2011 ‘Year __—‘Years _—‘Years _Years Benchmark US Diversified Value (1.6) (2.1) (1.1) (2.7) (1.2) Russell 1000 Value US Strategic Value (6.1) (
Slide 29: Institutional Growth Equity: Relative Performance
Institutional Growth Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended Sept 30, 2011 3Q One Three _—Five Ten Service 2011 Year _—Years —_—sYears_—‘Years Benchmark Global Research Growth (23) (6) (48) (49) (2.0) MSCI World (Cap, UH, net) US Large Cap Growth (25
Slide 30: Institutional Blend Strategies: Relative Performance
Institutional Blend Strategies: Relative Performance Institutional Blend Strategies Equity Composites vs. Benchmarks Periods Ended Sept 30, 2011 3Q One Three Five Ten Service 2011 Year Years Years Years Benchmark Global Blend Strategies (36) (7.0) (6.0) (5) NA MSCIWorld (Cap, UH, net) Intemational B
Slide 31: Institutional Fixed Income: Relative Performance
nal Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended Sept 30, 2011 3Q One Three Five —‘Ten Service 2011 Year _—‘Years ‘Years _Years Benchmark Corporate Bonds 02 05 13 05 03 Barclays Capital US Credit index Strategic Core Plus @s) oA 28 05 0.8 Bar
Slide 32: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended Sept 30, 2011 3Q One Three Five Ten Service 2011 Year Years Years Years Fully Diversified Simulation* (9.8) (2.0) 15 (1.1) 3.9 S&P 500 (13.9) aH 12 (1.2) 28 MSCI World index - Net (16.6) (4.3) (0.1) (2.2) 37 Lipper Short/int Blended Muni Fund Avg 1.
Slide 33: Retail Value Equity: Relative Performance
Retail Value Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2011 3a One Three Five ‘Ten Service 2011 Year _‘Years Years _Years Lipper Average Intemational Value (29) (64) (45) (49) 1) Intemational Large Cap Value Growth & Income 04 36 06 (13) 8) Larg
Slide 34: Retail Growth Equity: Relative Performance
Retail Growth Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2011 3Q One Three Five ‘Ten Service 2011 ‘Year _Years Years __Years Lipper Average Global Growth 14 (21) (39) (48) N/A Global Large-Cap Growth Global Thematic Growth 1) (74) 7) (1.1) Global
Slide 35: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended September 30, 2011 3Q One Three Five Ten Service 2011 Year Years Years Years Lipper Average Global High Yield Portfolio 3.8 1A 36 18 18 Bond Global High Yield American income Portfolio (23) (07) 40
Slide 36: Wealth Strategies: Relative Performance
Wealth Strategies: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2011 3Q One Three Five ~— Ten Service 2011 Year __ Years _Years__Years Lipper Average Conservative Wealth (0.4) (14) (1.4) (08) NA Mixed-Asset Target Alloc Consv Balanced Wealth (29) (3.0) (06
Slide 37: AUM Roll-Forward by Distribution Channel
Ended 9/30/11: AUM Roll-Forward by Distribution Channel In US $ Billions Institutions Retail Private Client Total Client Domicile: us Non-US __ Total us Non-US Total us Non-US _ Total us Non-US Total Beginning of Period $141.5 $113.0 $254.5 $82.2 $47.2 $129.4 $75.4 $1.7 $77.4 $299.1 $161.9 $461.0 ‘S
Slide 38: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/11: AUM Roll-Forward by Investment Service In US §$ Billions Value Equity Growth Equity Fixed Income Other” Total Client Domicile: US Non-US Total US Non-US Total US Non US Total US Non-US Total -US_——Non-US Total Beginning of Period s777 $437 szi4 | S474 $158 $626 | $1172 $9
Slide 39: AUM by Region
AUM by Region As of September 30, 2011 Institutions Retail Other 10% Other 2% Europe 7% US 55% Eur. ex-UK 5% Australia 6% Ai UK 5% N.A. ex- US 7% Japan 12% US $ Billions $224.1 $109.8 US 64% Private Client Non-US 2% $68.1 » US 98%
Slide 40: Third Quarter 2011 Advisory Fees
Third Quarter 2011 Advisory Fees In US Dollars 3Q 2a 3a 2014 2014 %A 2010 % A Ending AUM (S Billions) $402 $461 (13%) $478 (16%) Average AUM ($ Billions) $438 $474 (8%) $464 (6%) By Fee Type (§ Millions): Base Fees $469 $505 (7%) $498 (6%) Performance Fees 1 4 (84%) 6 (89%) Total $470 $509 (8%) $504
Slide 41: Six-Quarter Deferred Compensation Net P&L Trend
Six-Quarter Deferred Compensation Net P&L Trend In US $ Millions 2Q 3a 4Q 1a 2Q 3Q 2010 2010 2010 2011 2011 2011 Revenues Investment Gains (Losses) ($37) $36 $17 $10 ($2) ($38) Dividends mt 1 4 * 1 1 Total Revenues ($37) $37 $21 $10 ($1) ($37) Expenses Amortization of Original Awards $31 $27 $31 $19
Slide 42: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets Sept 30, 2011 Dec 31, 2010 Casirand cash equiaients $ 9S 650 Cash and securities, segregated 4,194 4,110 Receivables, net 4,384 4,389 Investments: Deferred compensation - related 216 Other 633, Goodwill 2,945 Intangible assets, net 195 Deferred sale
Slide 43: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Nine Months Ended ‘Sept 30, 2011 ‘Sept 30, 2010 Net income $ 308 23 Non-cash items: Amortization of deferred sales commissions 29 36 ‘Amortization of non-cash deferred compensation 125 86 Depreciation and other amortization 63 62 Unrealized losse
Slide 44: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 3a 2a 3a 2011 2011 %A 2010 % A AllianceBernstein Net Income Attributable to AllianceBemstein $91 $114 (20%) $52 71% Weighted Average Equity Ownership Interest 375% 37.4% 26.7% AllianceBernstein Holding Atbuable
Slide 45: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation Three Months Ended $ thousands 9130/14 6130/14 sist az3stto 93010630710 Net Revenues, GAAP basis $ 641,529 $ 727,994 $ 755,390 $ 777,561 $ 757,567 $ 688,343 Exclude Deferred compensation elated investment losses (gains) 37,840 1,988 (9,740) (16,677)
Slide 46: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands except per unit amounts 9/30/11 6/30/11 33411 1231/10 9/30/10 6/30/10 Diluted Net Income, GAAP basis, $ 27,003 $ 35,653 43,923 $ 43,289 $ 12,384 32,256 Impact on net income of AllianceBemstein L.P. non-GAAP ad
Slide 47: AllianceBernstein Adjusted Financial Results Reconciliation
AllianceBernstein Adjusted Financial Results Reconciliation AllianceBernstein L.P. Notes to Condensed Consolidated Statements of income and Supplemental Information (Unaudited) Adjusted Not Revenues ‘Adjusted net revenues exclude investment gains and losses and dividends and interest on deferred com
Slide 48: ALLIANCEBERNSTEIN
7B ALLIANCEBERNSTEIN
AllianceBernstein Holding — Q3 2011 Earnings Presentation on 6ix