Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q2 2021 Earnings Presentation
42 slides from Alliancebernstein Holding L.p's earnings presentation, Jul 29, 2021
Slide 1: Second Quarter 2021 Review
July 29, 2021 SECOND QUARTER 2021 REVIEW Seth P. Bernstein President & Chief Executive Officer Ali Dibadj Chief Financial Officer & Head of Strategy
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 fact
Slide 3: Seth P. Bernstein
Seth P. Bernstein President & Chief Executive Officer Second Quarter 2021 Review | 3
Slide 4: Firmwide Overview: Second Quarter 2021
Firmwide Overview: Second Quarter 2021 2Q21 vs. 2Q20 2Q21 vs. 1Q21 $45.0 $45.0 Gross Sales $31.8 $33.3 $36.3 Ex - $36.3 Ex - Venerable Venerable 2Q21 2Q20 2Q21 1Q21 $9.3 (Ex-AXA + Venerable) $9.3 (Ex-AXA + Venerable) $6.7 $6.6 (Ex-AXA) $6.7 $6.5 Active Net Flows(1) ($1.3) 2Q21 2Q20 2Q21 1Q21 $738.4
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail 45.0 19.6 23.0 23.8 17.5 17.7 31.8 33.3 36.3 ex - 29.3 31.3 Venerable 5.2 0.7 (0.7) 4.6 5.3 3.9 7.5 3.8 2.7 3.1 3.2 5.2 6.2 (3.3) (15.8) (16.8) (0.7) (28.8) (18.4) (18.6) (7.9) (2.2) (20.3) (28.1) (10.0) (26.2) (28.1) (35.1) (1.3)
Slide 6: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End One-Year Three-Year Five-Year Fixed Income One-Year Three-Year Five-Year Equities Percentage of active fixed income and equity assets in institutional services that outperformed their benchmark gross of fees and percentage of active fixed income and
Slide 7: Retail Highlights
Retail Highlights Balanced Offering Drives Consistent Organic Growth Second Quarter 2021 Highlights 8% AOG in 2Q; 10th Positive Quarter out of last 12 Sales and Flows $B • Gross sales of $23.8B, second highest ever to Q1 20; up $4B or 22% Y/Y, and up $1B or 4% Q/Q • Redemption rate of 27% down from
Slide 8: Institutional Highlights
Institutional Highlights Organic Growth in 8/9 Trailing Quarters Second Quarter 2021 Highlights 1% AOG in 2Q Sales and Flows $B • Gross sales of $17.6B include $8.7B from EQH's Venerable transaction; excluding this, gross sales +82% Q/Q and +1% Y/Y • Outflows of $16.7B include $10B due to Venerable
Slide 9: Private Wealth Management Highlights
Private Wealth Management Highlights Net Flows Remain Positive in 2Q Second Quarter 2021 Highlights $B Sales Moderate While Flows Remain Positive • Gross sales of $3.6B, up 4% Y/Y and down 33% Q/Q • Redemptions of $3.4B, improvement of 17% Y/Y and 6% Q/Q • Net inflows of $0.1B, 1% AOG; net inflows 3
Slide 10: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues Second Quarter 2021 Highlights $M Institutional Trading Volumes Normalize vs. Robust Prior Year Period % Change • Revenues of $106M, -7% Y/Y, -11% Q/Q 2Q21/2Q20: (7)% 2Q21/1Q21: (11)% • Normalized institutional markets lead to reduc
Slide 11: Progress on Our Strategy in 2Q21
Progress on Our Strategy in 2Q21 Firmwide Initiative Progress Deliver superior • Active Equity: 66% of assets in outperforming services for 3-yr period; 44% for 1-yr and 71% for 5-yr investment solutions • Fixed Income: 69% of assets in outperforming services for 3-yr period; 91% for 1-yr and 68% fo
Slide 12: Ali Dibadj
Ali Dibadj Chief Financial Officer & Head of Strategy Second Quarter 2021 Review | 12
Slide 13: Second Quarter 2021 GAAP Income Statement
Second Quarter 2021 GAAP Income Statement Income Statement (in US $ Millions) 2Q21 2Q20 %∆ 1Q21 %∆ Base Fees $ 724 $ 569 27 % $ 687 5% Performance Fees 54 9 n/m 16 n/m Bernstein Research Services 106 114 (7)% 119 (11)% Distribution Revenues 155 120 30 % 147 5% Dividends & Interest 9 13 (32)% 9 —% In
Slide 14: Adjusted Financial Highlights: Second Quarter 2021
Adjusted Financial Highlights: Second Quarter 2021 In US $ Millions; scales may differ 2Q21 vs. 2Q20 2Q21 vs. 1Q21 Adjusted Revenues Adjusted Operating Income Adjusted Operating Margin Adjusted EPU Please refer to pages 38-41 for additional information on the reconciliation of GAAP financial results
Slide 15: Second Quarter 2021 Adjusted Income Statement
Second Quarter 2021 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 2Q21 2Q20 %∆ 1Q21 %∆ Base Fees(1) $ 698 $ 554 26 % $ 661 6% Performance Fees 54 9 n/m 16 n/m Bernstein Research Services 106 114 (7)% 119 (11)% Investment Gains (Losses) — 1 (79)% 2 (87)% Other Revenues 24 24
Slide 16: Second Quarter 2021 Adjusted Income Statement Highlights
Second Quarter 2021 Adjusted Income Statement Highlights Revenues • Base Fees increased 26% versus 2Q20 driven by a 25% increase in average AUM, higher across all channels, while the fee rate increased 1%. Base Fees increased 6% versus 1Q21 due primarily to a 5% increase in average AUM, higher acros
Slide 17: Equitable / AB Strategic Relationship Update
Equitable / AB Strategic Relationship Update Second Quarter 2021 Review | 17
Slide 18: AB has Accelerated its Strategic Relationship with Equitable Towards Growth
AB has Accelerated its Strategic Relationship with Equitable Towards Growth AB delivers stable and unregulated cash distributions; diversifying, low-capital business New $2.5B Commitment added by EQH; $6B in total Private Alts w/AXA AB C-Suite joins EQH ~$10B “Permanent EQH/AXA Seeds Management Capi
Slide 19: Equitable's New Commitment Enhances AB's Growth Prospects
Equitable’s New Commitment Enhances AB’s Growth Prospects AB Manages $121B in AUM for Equitable 1 ~ $10B in capital Separate Accounts commitments to AB’s & Other 36% illiquids build out: General Account (GA) 64% Private Alternatives Private Placements Notes: Capital Commitment: Although EQH has in
Slide 20: Aligns with Growth of Alternatives, to Meet Diversified Client Objectives
Aligns with Growth of Alternatives, to Meet Diversified Client Objectives Access to Strategic Capital Sources: • Permanent capital from Equitable Holdings, a “virtuous cycle” • Bernstein Private Wealth Management, overseeing >$100B in AUM • Global institutional and retail client base, with >$600B in
Slide 21: Private Alternatives Managers Trade at Premium Multiples to Traditionals
Private Alternatives Managers Trade at Premium Multiples to Traditionals Reflecting longer-dated/permanent capital, higher fee rates, and secular growth of private alternatives Comparative Valuation Multiples 35 30 29.1 25 21.0 19.6 20 14.7 15 12.6 10.1 10 3.8 4.5 5 0 P/E 2021 EV/EBITDA EV/Sales EV/
Slide 22: EQH and AB are Looking to Amplify a Win-Win
EQH and AB are Looking to Amplify a Win-Win Building a client-centric, faster-growth, higher-multiple, differentiated business together For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public. Second Quarter AB Corporate 2021 Review Upfronts | 22
Slide 23: The AB Investment Opportunity
The AB Investment Opportunity Differentiated investment performance and distribution capabilities driving sustained best-in-class Sustained Growth organic growth and accelerating inorganic growth opportunities Demonstrated expansion in higher-fee, persistent-AUM alternatives platforms Expanding Alte
Slide 24: Appendix
APPENDIX Second Quarter 2021 Review | 24
Slide 25: Retail Mutual Funds Relative Performance vs. Morningstar Average
Retail Mutual Funds Relative Performance vs. Morningstar Average Top quartile 2nd quartile 1 Year 3 Year 5 Year 10 Year Retail Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Equity Large Cap Growth (2.6) 64 2.4 25 2.0 24 2.6 12 Concentrated Gr
Slide 26: Retail Mutual Funds Relative Performance vs. Morningstar Average
Top quartile Retail Mutual Funds Relative Performance vs. Morningstar Average 2nd quartile 1 Year 3 Year 5 Year 10 Year Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Fixed Income American Income — 46 1.5 28 0.7 36 1.5 8 European Income 1.6 32
Slide 27: Institutional Composite Relative Performance vs. Benchmarks
Institutional Composite Relative Performance vs. Benchmarks Service 1 Year 3 Year 5 Year 10 Year Equity US Small Cap Growth 0.1 9.5 9.7 4.7 Concentrated Global Growth 0.8 4.9 6.0 3.8 Global Core 0.5 1.4 1.9 2.3 International Strategic Core (7.8) (1.4) (0.9) N/A Sustainable Global Thematic 5.7 8.2 6.
Slide 28: Assets Under Management: 2Q21
Assets Under Management: 2Q21 (US $ Billions) June 30, 2021 March 31, 2021 Institutions Private Wealth Retail Total Total Equity Actively Managed $ 68 $ 57 $ 131 $ 256 $ 232 Passive (1) 29 1 40 70 66 Total Equity 97 58 171 326 298 Fixed Income Taxable 157 14 81 252 252 Tax-Exempt 1 27 26 54 52 Passi
Slide 29: Three Months Ended 6/30/21: AUM Roll-Forward by Distribution Channel
Three Months Ended 6/30/21: AUM Roll-Forward by Distribution Channel In US $ Billions Beginning Sales/New Redemptions/ Net Cash Net Investment Net End Investment Service: of Period Accounts Terminations Flows Flows Transfers Performance Change of Period Institutions US 158.3 10.7 (10.1) (2.5) (1.9)
Slide 30: Three Months Ended 6/30/21: AUM Roll-Forward by Investment Service
Three Months Ended 6/30/21: AUM Roll-Forward by Investment Service In US $ Billions Beginning Sales/New Redemptions/ Net Cash Net Investment Net End Investment Service: of Period Accounts Terminations Flows Flows Performance Change of Period Equity Active US 132.9 12.3 (6.0) (2.0) 4.3 12.7 17.0 149.
Slide 31: Active vs. Passive Net Flows
Active vs. Passive Net Flows Three Months Ended 6/30/21 Actively Passively Managed Managed (1) Total Equity $ 5.6 $ (1.7) $ 3.9 Fixed Income (3.8) 0.9 (2.9) Alternatives/MAS (2) 4.9 0.3 5.2 Total $ 6.7 $ (0.5) $ 6.2 (1) Includes index and enhanced index services. (2) Includes certain multi-asset sol
Slide 32: AUM by Region
AUM by Region Institutional Retail $329.1B $293.7B As of June 30, 2021 By client domicile Second Quarter 2021 Review | 32
Slide 33: Second Quarter 2021 Adjusted Advisory Fees
Second Quarter 2021 Adjusted Advisory Fees 2Q21 2Q20 %∆ 1Q21 %∆ Ending AUM ($ Billions) $ 738 $ 600 23 % $ 697 6% Average AUM ($ Billions) $ 723 $ 579 25 % $ 689 5% By Fee Type ($ Millions): Adjusted Base Fees $ 698 $ 554 26 % $ 661 6% Adjusted Performance Fees 54 9 n/m 16 n/m Total $ 752 $ 563 34 %
Slide 34: Second Quarter 2021 GAAP Income Statement
Second Quarter 2021 GAAP Income Statement In US $ Millions (except EPU) 2Q21 2Q20 %∆ 1Q21 %∆ Net Revenues $ 1,077 $ 872 24 % $ 1,007 7% Operating Expenses 793 662 20 % 747 6% Operating Income 284 210 35 % 260 9% Net Income Attributable to AB Unitholders 268 177 51 % 244 10 % AB Holding GAAP Diluted
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 6/30/2021 12/31/2020 Cash and cash equivalents $ 1,093 $ 1,037 Cash and securities, segregated 1,073 1,754 Receivables, net 2,529 2,280 Investments: Long-term incentive compensation-related 62 60 Other 167 193 Assets of consolidated variable interes
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Six Months Ended 6/30/2021 6/30/2020 Net Income $ 515 $ 367 Non-cash items: Amortization of deferred sales commissions 16 12 Non-cash long-term incentive compensation expense 28 15 Depreciation and other amortization 65 72 Unrealized losses on in
Slide 37: Second Quarter 2021 AB Holding Financial Results
Second Quarter 2021 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 2Q21 2Q20 %∆ 1Q21 %∆ AB Net Income Attributable to AllianceBernstein $ 268 $ 177 51 % $ 244 10 % Weighted Average Equity Ownership Interest 36.4 % 35.6 % 36.4 % AB Holding Equity in Net Income Attributable
Slide 38: Second Quarter 2021 GAAP to Non-GAAP Reconciliation
Second Quarter 2021 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servi
Slide 39: Second Quarter 2020 GAAP to Non-GAAP Reconciliation
Second Quarter 2020 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servi
Slide 40: First Quarter 2021 GAAP to Non-GAAP Reconciliation
First Quarter 2021 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servic
Slide 41: AB Adjusted Financial Results Reconciliation
AB Adjusted Financial Results Reconciliation Notes to Consolidated Statements of Income and Supplemental Information (Unaudited) A. We exclude all of the company’s distribution revenues, which are recorded as a separate line item on the consolidated statement of income, as well as a portion of inves
Slide 42: AllianceBernstein
ALLIANCEBERNSTEIN.
AllianceBernstein Holding L.P. Units — Q2 2021 Earnings Presentation on 6ix