47 slides from Alliancebernstein Holding L.p's earnings presentation, Feb 13, 2014
Slide 1: Fourth Quarter 2013 Review
February 12, 2014 Fourth Quarter 2013 Review Peter S. Kraus Chairman & Chief Executive Officer John C. Weisenseel Chief Financial Officer 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: Firmwide Overview: Fourth Quarter and Full Year 2013
Firmwide Overview: Fourth Quarter and Full Year 2013 s 4 $81.9 In US $ Billions 5187 bad $14.8 4013 3013 2013 2012 -— = = ©... $14.8) related to AXA $(10.3) dispositions $(12.3) 144) 4013 3013 2013 2012 $450.4 $445.2 $450.4 $430.0 4013 3013 2013 2012 pani $439.9 $442.7 $416.0 Average AUM. 4013 3013
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions 16.4 67 1.0 (38) (42) (11.1) Inst. Ret. P.C. 4012 Total Gross Sales $24.1 Gross Redemptions $(19.1) Net Flows $5.0 = Gross Sales ™Gross Redemptions ‘@Net Flows 146 14.4 12.4 7.3 77 3.3 47 45 18 12 18 ka ic a0) 27 0) @5) (25) (80)
Slide 6: Institutional Highlights
Institutional Highlights $20B+ Net Flow Improvement in 2013 Double-Digit Sales Growth in Every Region in 2013 % Change FY13 / FY12 4 27 46.9) 7 —< 12 ku se eon B i 2010 2011 2012 2013 mm Gross Sales Gross Redemptions AXA/PPIP* —=Net Flows Americas EMEA Asia Total Strong 2013 Sales Growth Across Asse
Slide 7: Fixed Income Investment Performance
Fixed Income Investment Performance Relative Performance Through 12/31/13 (%) US: 4 Year 3 Year 5 Year Strategic Core Plus 03 0.6 3.4 Core Fixed Income 0.1 0.4 22 High Yield 16 07 14 Diversified Yield Plus 07 3.3 7.3 US Income aly d 3.0 6.4 Insurance — US Bond 1.0 0.5 2.0 TIPS — Plus 05 1.2 43 Uncon
Slide 8: Equities Investment Performance
Equities Investment Performance Relative Performance Through 12/31/13 (%) US: 4 Year 3 Year 5 Year US SMID Cap Value 5.7 0.2 3.4 US Strategic Value 86 (1.5) 0.3 US SMID Cap Growth (0.4) 22 47 US Large Cap Growth 5.2 04 (0.9) Select US Equity (0.2) 16 45 US Growth & Income 3.3 3.8 2.1 Global / Intern
Slide 9: Acquisitions: Client Focused, Complementary, High Growth Potential
Acquisitions: Client Focused, Complementary, High Growth Potential Acquired Assets at acquisition Investment description Investment strategies Vehicles ‘AUM potential Relevant to clients Global appeal Complementary fit Long-term track record Investment discipline Research culture May 2011 December 2
Slide 10: Evolving our Equities Platform to Meet Clients' Changing Needs
Evolving our Equities Platform to Meet Clients’ Changing Needs @ Select US Long/Short, Global & US Absolute Rethinking benchmarks Market Neutral, European Flexible, Return to manage absolute risk Japan Long/Short @ EM Strategic Core, Global, Intl & US Low Volatility, EM Multi-Asset, Asia Stability U
Slide 11: Retail Highlights
Retail Highlights Gross Sales Off Record Levels and Redemptions Rose Asia Retail Rotation from Bonds to Equities $B (41.9) 2010 2011 jmmsGross Sales sm Gross Redemptions Net Flows Asia ex-Japan Cross Border Retail Mutual Fund Flows, $8 31.9 223 142 135 i 56 56 4H13 2H13 Bonds Equities Multi-Asset St
Slide 12: Private Client Highlights
Private Client Highlights Greater Stability in Our Private Client Business 2013 Milestones $B 76 73 (9.8) (10.2) (14.1) (13.3) 2010 2011 2012 2013 jemsGross Sales mmmGross Redemptions —*Net Flows = Annual gross sales up nearly 50% and net outflows down almost 60% = Stable and productive FA base = No
Slide 13: Bernstein Research Services Highlights
Bernstein Research Services Highlights BRS Quarterly Revenues Up Vs. Prior Quarter and Year Higher Industry Trading Volumes* Across Regions sm Global Industry Trading Volumes* (% Change) % Change 5g 4Q13 / 4012: +9% 6 4013 / 3Q13: +6% 33 113 20 107 6 10 404 a z 6) 4012 3013 4013 mS Europe Asia 4Q13/
Slide 14: Progress on Our Strategy in 2013
Progress on Our Strategy in 2013 Firmwide Initiative Progress Diversify our business across channels, investment services and geographies Maintained our Fixed Income long-term track records through volatile times 85% of assets in outperforming services for 3- and 5-yr periods Global High Income, US
Slide 15: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 16: Financial Highlights: Fourth Quarter and Full Year 2013
Financial Highlights: Fo rth Quarter and Full Year 2013 In US $ Millions Adjusted Expenses Adjusted $638 $2,902 $2,260 $580 4Q13 3Q13 2013 2012 $1,817 $1,836 $453 $449 413 3013 2013 2012 29.096 24.0% 22.6% 18.8% 4013 3013 2013 2012 204 $1.78 40¢ $1.28 4013 3013 2013 2012 Please refer to pages 41-45
Slide 17: Fourth Quarter GAAP to Adjusted Reconciliation
Fourth Quarter GAAP to Adjusted Reconciliation In US dota ions Adjustments Distribution- Pass _Long-Terminc. Venture Real Contingent Acquisition Non Related Through Compensation Capital Estate Payment Related Controlling Adjusted GAAP___Payments_ _Expenses_ __MTM Fund Charges _Arrangements_ Expenses
Slide 18: Full Year 2013 GAAP to Adjusted Reconciliation
Full Year 2013 GAAP to Adjusted Reconciliation (n US dolar iors Adjustments Distibution- Pass Long-Term nc. Venture Real Contingent Acquisition Non Related Through Compensation Capital stato Payment Related Controling Adjusted aap Payments _Exponsos_ __MTM Fund Charges __ Arrangements _Expenses__Int
Slide 19: Fourth Quarter and Full Year 2013 Adjusted Income Statement
Fourth Quarter and Full Year 2013 Adjusted Income Statement ™ Adjusted Operating Income increased 41% sequentially and 36% versus 2012 = Sequentially, driven by Revenue increase in excess of Operating Expense increase m Versus prior year, Revenues increased while Operating Expenses declined = Adjust
Slide 20: Fourth Quarter and Full Year 2013 Adjusted Revenues
Fourth Quarter and Full Year 2013 Adjusted Revenues ™ The sequential increase in Base Fees is primarily due to an increase in Private Client; the 6% increase versus the prior year is primarily due to increased Retail average AUM m Performance fees are up sequentially due to annual calculation period
Slide 21: Fourth Quarter and Full Year 2013 Adjusted Operating Expenses
Fourth Quarter and Full Year 2013 Adjusted Operating Expenses = Adjusted Compensation Ratio was 45.3% in 4Q13 versus 50.0% in 3Q13, and 48.7% for full year 2013 compared to 49.8% in 2012 = Total Compensation & Benefits decreased 1% sequentially due to the drop in the comp ratio, but increased 4% ver
Slide 22: Fourth Quarter and Full Year 2013 Adjusted Operating Results
Fourth Quarter and Full Year 2013 Adjusted Operating Results ® Adjusted Operating Income rose 41% sequentially due to revenue growth outpacing expense growth; the 36% increase versus 2012 is due to higher revenues paired with lower expenses ® Adjusted Operating Margin was 29.0% in 4Q13, up from 22.6
Slide 23: Global Real Estate Consolidation Update
Global Real Estate Consolidation Update = Over 900K sq. ft. of office space has been vacated and made available for sublease since 2010 m™ Space sublet to date: 92% of Phase #1 and 70% of Phase #2 ® Total write-offs recorded to date of $350M = Currently excluded from adjusted (or non-GAAP) operating
Slide 24: AllianceBernstein.com
AllianceBernstein.com
Slide 25: AllianceBernstein.com
AllianceBernstein.com
Slide 26: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended December 31, 2013 4Q One ‘Three Five Ten Service 2013 Year __ Years ‘Years _Years Benchmark Value Emerging Markets Value (0.1) (6.1) (4.7) (1.5) (1.9) MSCI EM Global Value 04 5.9 (3.1) (2.1) (1.9)
Slide 27: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended December 31, 2013 4Q One Three ——Five Ten Service 2013 Year Years Years __Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income 23 86 3.0 74 1.6 Gb GRISS9e TRA GBLE
Slide 28: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended December 31, 2013 4Q One Three — Five Ten Service 2013 Year _—‘Years ‘Years _‘Years Lipper Average Value International Value (0.1) 04 (3.6) (24) (2.4) International Large Cap Value Growth & Income (0.0) 29 38 1
Slide 29: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended December 31, 2013 4Q One Three Five Ten Service 2013 Year ‘Years Years _‘Years Lipper Aver: Global High Yield Portfolio (0.3) (2.2) (0.5) 29 1.6 Bond Global High Yield American Income Portfolio 0.7
Slide 30: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended December 31, 2013 4Q One Three Five Ten Service 2013 Year Years Years Years Fully Diversified Simulation* 48 15.2 6.3 9.9 47 S&P 500 10.5 32.4 16.2 17.9 7.4 MSCI World Index - Net 8.0 26.7 11.5 15.0 7.0 Lipper Short/int Blended Muni Fund Avg 02 (1.3
Slide 31: Assets Under Management - 4Q13
Assets Under Management - 4Q1 (S billions) At December 31, 2013 At Sept 30, 2013 Private Institutions Retail Client Total Total Equity Actively Managed $ 2 $ 42 $ 37 «$ 108 101 Passive 24 28 : 49 46 Total Equity 50 70 37 157_ 147 Fixed Income Taxable 140 61 40 211 220 Tax-Exempt 2 8 19 29 29 Passive
Slide 32: Three Months Ended 12/31/13: AUM Roll-Forward by Distribution Channel
Three Months Ended 12/31/13: AUM Roll-Forward by Distribution C InUS $ Billions Beginning — Sales/New Redemptions/ Net Cash Net Acquisitions _ Investment Net End Investment Service: of Period __Accounts_ Terminations Flows Flows Performance Change _ of Period Institutions US 111.5 23 (75) (0.1) (6.3
Slide 33: Three Months Ended 12/31/13: AUM Roll-Forward by Investment Service
Three Months Ended 12/31/13: AUM Roll-Forward by Investment Service InUS $ Billions Beginning —_—Sales/New Redemptions! Net Cash Net Acquisition —_Investment Net End Investment Servi of Period ‘Accounts Terminations Flows Flows Performance Change of Period Equity Active us 513 23 (20) (08) (05) 19 4
Slide 34: Twelve Months Ended 12/31/13: AUM Roll-Forward by Distribution Channel
Twelve Months Ended 12/31/13: AUM Roll-Forward by Distribution Channel In US $ Billions Beginning — Sales/New Redemptions/ Net Cash Net Acquisitions _ Investment Net End Investment Service: of Period _Accounts_ Terminations Flows Flows Performance Change __of Period Institutions us 109.9 89 (9.1) (2
Slide 35: Twelve Months Ended 12/31/13: AUM Roll-Forward by Investment Service
Twelve Months Ended 12/31/13: AUM Roll-Forward by Investment Service InUS $ Biltons Beginning _—SalesiNew —_Redemptions/ Net Cash Net Acquisitions —_ Investment Net End Investment Service: of Period ‘Accounts Terminations. Flows Flows Performance Change of Period Equity Active us 40.0 112 73) 28) 14
Slide 36: As of December 31, 2013
As of December 31, 2013 Institutions Retail NAexUS 4% Other 1% Other 4% United Kingdom 5% Japan 5% Asia ex Japan 6% EMEA 11% Japan 12% US 57% US 61% EMEA 15% ° Asia ex Japan 19% $226.0B $153.0B By client domicile
Slide 37: Fourth Quarter and Full Year 2013 Adjusted Advisory Fees
Fourth Quarter and Full Year 2013 Adjusted Advisory Fees In US Dollars 4Q 3a 2013 2013 %A FY 2013 FY 2012 %A Ending AUM ($ Billions) $450 $445 1% $450 $430 5% Average AUM ($ Billions) $447 $440 2% $442 $416 6% By Fee Type ($ Millions): Adjusted Base Fees $453 $449 1% $1,795 $1,694 6% Adjusted Perfor
Slide 38: Fourth Quarter and Full Year 2013 GAAP Income Statement
Fourth Quarter and Full Year 2013 GAAP Income Statement 4Q 3Q In US dolar millions (except EPU) 2013 2013 %A FY 2013 FY 2012 %A Net Revenues $ 766 $ 706 8% $2,915 § 2,737 7% Operating Expenses 571 597 (4%) 2,351 2,535 (7%) Operating Income 195 109 79% 564 202 179% Net Income Attributable to AB Unith
Slide 39: Consolidated Balance Sheet
Consolidated Balance Sheet In US § Millions Assets December 31, 2013 December 31, 2012 Cash and cash equivalents $ 30 ~SCS 627 Cash and securities, segregated 980 1,551 Receivables, net 4,550 1,616 Investments: Long-term incentive compensation-related 118 123 Other 662 610 Goodwill 2,987 2,954 Intan
Slide 40: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US § Millions ‘Twelve Months Ended Dec. 31, 2013, Dec. 34, 2012 Netincone = oS 1 Non-cash items: Amortization of deferred sales commissions 4a 40 ‘Amortization of non-cash long-term incentive compensation 189 2 Depreciation and other amortization 60 78 Unreati
Slide 41: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Fina cial Results In US § Millions (excluding per unit amounts) 4Q 3a 2013 2013 %A FY 2013 FY 2012 %A AllianceBernstein Net Income Attributable to AllianceBernstein $182 $100 82% $518 $189 174% Weighted Average Equity Ownership Interest 34.5% 34.5% 35.9% 37.5% AllianceBerns
Slide 42: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands, unaudited WBNS 9BOTS _6ROAS was 12812 9702 Net Revenues, GAAP basis $ 765572 $ 706,078 $ 734,275 $ 709,122 $ 704,607 $ 708,158 Exclude Long-term incentive compensation-related investment (gains) losses (a7) (6,284) (
Slide 43: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation Twelve Months Ended December 31, $ thousands, unaudited 2013, 2012 Net Revenues, GAAP basis $ 2,915,047 $2,736,737 Exclude: Long-term incentive compensation-related investment (gains) (16,842) (16,711) Long-term incentive compensation-related divide
Slide 44: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands except per Unit amounts, unaudited 1231330 BISONS ISIN AzIBWI2__sra0Nt2 Net Income (Loss) - Diluted, GAAP basis, 3 57,853 § 29,708 § 40617 § 38474 § 26,192 § (23,142) Impact on net income of AlianceBernstein n
Slide 45: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Twelve Months Ended December 31, $ thousands except per Unit amounts, unaudited 2013 2012 Net Income - Diluted, GAAP basis $ 166,668 $ 51,085 Impact on net income of AllianceBernstein non-GAAP adjustments 6,841 78,693 Adjusted Net Income -
Slide 46: 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 Net Revenues ‘Adjusted net revenues exclude investment gains and losses and dividends and interest on long-term i
Slide 47: AllianceBernstein.com 212-756-4542
AllianceBernstein.com 212-756-4542