Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2014 Earnings Presentation
41 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 24, 2014
Slide 1: Third Quarter 2014 Review
October 23, 2014 Third Quarter 2014 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: Third Quarter 2014
Firmwide Overview: Third Quarter 2014 In US §$ Billions $18.8 3014 $479.0 3014 $23.6 2014 $8.3 2014 $480.2 2014 $464.2 2014 3014 $479.0 3a14 $18.7 3013 3013 $439.9 3013
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions = Gross Sales = Gross Redemptions @Net Flows: 12.4 14 11.6 99 10.5 78 45 55 5.8 18 15 22 17 14 ial vs 125) en Oy (1.7) (1.3) (2.5) (2.2) eo co a G7) 22) Go) (5.6) 66) “” (itt) = (11.0) 14.7 co (14.7) (14.7) Inst. Ret. P.C. Inst. R
Slide 6: Institutional Highlights
Institutional Highlights ‘Second Straight Quarter of Net Inflows Redemptions and Redemption Rate Continue to Decline SB 10.5 7 2 20 8 Lowestredemption '® rate since 4005 ‘0 4 5 (11.1) " A 3Q13 4Q13* 1014 2014 3Q14 4Q13 1014 2Q14 3Q14 =m Gross Sales =m Gross Redemptions Net Flows ‘=m Redemptions ($B,
Slide 7: Fixed Income Investment Performance
Fixed Income Investment Performance Relative Performance Through 9/30/14 (%) US: 3Q14 4 Year 3 Year 5 Year Strategic Core Plus 02 1.6 11 15 Core Fixed Income 0.0 04 0.6 0.9 High Yield 07 16 1.3 14 Diversified Yield Plus 0.2 3.5 42 43 Insurance — US Bond 0.0 1.3 4A 09 TIPS — Plus 0.2 19 16 2.2 Uncons
Slide 8: Fixed Income: Diversify Risk with Varied, Global Exposure
Fixed Income: Diversify Risk with Varied, Global Exposure Country Bond Returns” Rotate Leadership Across Cycles... ...As Do Sector Bond Returns?) % 2009 = 20102011 20122013 % 2009 2010S 201120122013 Best Best Y Performer Performer 98 A5 FX Camry 220 IGCorp. IGComp. 1G Corp 187 90 82 Worst Worst Gap
Slide 9: Equities Investment Performance
Equities Investment Performance Relative Performance Through 9/30/14 (%) US: 3Q14 4 Year 3 Year 5 Year US Small Cap Value 01 44 58 49 US Strategic Value 03 19 07 (1.4) US Small Cap Growth 01 1.0 2.2 48 US Large Cap Growth Pd 2.0 26 (1.3) Select US Equity 12 (0.1) 05 25 Concentrated US Growth 08 (0.9
Slide 10: Equities: Delivering for Our Clients Through a Range of Strategies
Equities: Delivering for Our Clients Through a Range of Strategies Evolving our Equities Platform to Meet Clients’ Changing Needs = European Flexible Equity = Low Volatility ® Select US Long/Short limited downside risk = Global Core Equity = Select US Equity = Emerging Markets Multi-Asset Equity Inc
Slide 11: Retail Highlights
Retail Highlights Continued Gross Sales Momentum Improved YTD Redemptions and Net Flow Trends 8B 12.4 14 16 (0.1) : = (84) L (13.0) (11.7) (11.0) 4) (11.7) 3013 4a13 1014 2014 3014 mmmGross Sales mmm Gross Redemptions —+-Net Flows SB _ Redemptions Net Flows $138 or 28% Improvement $4B+ Improvement 0
Slide 12: Private Client Highlights
Private Client Highlights Significant Year-Over-Year Flow Improvement YTD Gross Sales, Redemptions and Net Flow Trends SB 22 18 15 17 14 (1.3) (1.7) (25) (23) (22) 3013 4a13 1014 2a14 3a14 Gross Sales mmmGross Redemptions © —»-Net Flows $B 49 5.3 = : = = (6.1) (7.8) Gross Sales. Gross Redemptions Ne
Slide 13: Bernstein Research Services Highlights
Bernstein Research Services Highlights BRS Quarterly Revenues Up Year-Over-Year... ...Despite Flat to Down Global Trading Volumes sM Global Industry Trading Volumes" (% Change) % Change 3014 /3Q13: +5% 3014/2014: (6)% 1 12 = a 107 ©) LJ ” us Europe Asia 3a13 2014 3a14 =3Q14/3Q13 3014/2014 Lower Than
Slide 14: Progress on Our Strategy in 3Q14
Progress on Our Strategy in 3Q14 Firmwide Initiative Progress 80% of Fixed Income assets in outperforming services for 3-yr period Diversified Yield Plus and Unconstrained Bond outperformed by 4+ ppts for 3-yr 70% of Active Equity assets in outperforming services for 3-yr period EM Growth outperform
Slide 15: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 16: Financial Highlights: Third Quarter 2014
Financial Highlights: Third Quarter 2014 In US $ Millions $626 $629 $626 $578 3014 2a14 3014 3013 S477 $485 $477 $447 Adjusted Expenses 3014 2a14 3014 3013 23.8% 23.0% 23.8% 22.7% 3014 2014 3014 3013 45¢ 45¢ 45¢ 40¢ Adjusted EPU 3014 2014 3014 3013 Please refer to pages 37-39 for additional informat
Slide 17: Third Quarter 2014 GAAP to Adjusted Reconciliation
Third Quarter 2014 GAAP to Adjusted Reconciliation In US dolar rilions Adjustments Distribution- Pass Long-Term inc. Venture Real ‘Acquisition Related Through Compensation Capital Estate Related Adjusted GAAP Payments _ Expenses MT™ Fund Credits Expenses (Non-GAAP) Net Revenues $ 750 $ (119) $ (10)
Slide 18: Third Quarter 2014 Adjusted Income Statement
Third Quarter 2014 Adjusted Income Statement 3Q 2a 3Q In US dollar rrilfons (except EPU) 2014 2014 %A 2013 %A Adjusted Net Revenues 626 629 (0%) 578 8% ‘Adjusted Operating Expenses 477 485 (2%) 447 7% ‘Adjusted Operating Income 149 144 3% 131 14% Adjusted Operating Margin 23.8% 23.0% 22.7% 'AB Holdi
Slide 19: Third Quarter 2014 Adjusted Revenues
Third Quarter 2014 Adjusted Revenues ™ Base Fees increased both sequentially and versus the prior year quarter due to an increase in average AUM across all three distribution channels m Performance Fees are down sequentially due to the 2Q14 calculation date of two large funds that realized fees in t
Slide 20: Third Quarter 2014 Adjusted Operating Expenses
Third Quarter 2014 Adjusted Operating Expenses = Adjusted Compensation Ratio was 49.5% in 3Q14 vs. approximately 50% in both 2Q14 and 3Q13 = Total Compensation & Benefits decreased 1% sequentially due to the lower comp ratio paired with lower revenues, and increased 7% versus the prior year due to h
Slide 21: Third Quarter 2014 Adjusted Operating Results
Third Quarter 2014 Adjusted Operating Results = Adjusted Operating Income improved 3% sequentially due to lower operating expenses and increased 14% versus 3Q13 due to increased revenues outpacing expense growth = Adjusted Margin for 3Q14 was 23.8%, up from 23.0% in 2Q14, and 22.7% in 3Q13 3Q 2Q 3Q
Slide 22: Q&A
Q&A
Slide 23: APPENDIX
APPENDIX
Slide 24: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended September 30, 2014 3Q One Three Five Ten Service 2014 Year Years —_—Years__—_—‘Years Benchmark Value Emerging Markets Value (0.1) 3.5 (1.5) (2.0) (0.7) MSCI EM Global Value (1.2) 08 14 (2.2) (1.5)
Slide 25: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended September 30, 2014 3Q One Three Five Ten Service 2014 Year Years Years Years Benchmark Global High Income 18 1.8 0.3 08 1.7 Barclays Global High Income Global Fixed Income 0.2 02 1.0
Slide 26: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2014 3Q One Three Five Ten Service 2014 Year _—Years ‘Years __—‘Years Lipper Average Value International Value (04) (4.8) (1.4) (3.2) (2.8) International Mutti-Cap Value Growth & Income (04) (3.4)
Slide 27: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended September 30, 2014 3Q One Three Five Ten Service 2014 Year__—Years_—Years_—_—‘Years. Lipper Average Global High Yield Portfolio 29 3.5 0.9 1.9 23 Bond Global High Yield American Income Portfolio 0.4
Slide 28: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended September 30, 2014 3Q One Five Ten Service 2014 Year Three Years Years Years Fully Diversified Simulation* (0.4) 83 10.3 67 47 S&P 500 11 19.7 23.0 15.7 81 MSCI World Index - Net (2.1) 122 17.9 10.9 71 Lipper Short/Int Blended Muni Fund Avg 07 3.9 2
Slide 29: Assets Under Management — 3Q14
Assets Under Management — 3Q14 (S billions) ‘At September 30, 2014 At June 30, 2014 Private Institutions Retail Client Total Total Equity ‘Actively Managed $ 30 45 S$ 7s 12«$ 116 Passive” 22 27 1 50 50 Total Equity 52 72 38 162 166 Fixed Income Taxable 148 63 10 224 226 Tax-Exempt 2 10 19 En 30 Pass
Slide 30: Three Months Ended 9/30/14: AUM Roll-Forward by Distribution Channel
Three Months Ended 9/30/14: AUM Roll-Forward by Distribution Channel InUS $ Billions Beginning SalesiNew Redemptions) Net Cash Net AUM Investment Net End Investment Service: of Period Accounts Terminations _Flows Flows Transfers _Adjustment‘” Performance Change _of Period Institutions us 1140 15 (0.
Slide 31: Three Months Ended 9/30/14: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/14: AUM Roll-Forward by Investment Service InUSS Bions, Beginning SalesiNew Redemptions’ Net Cash Net AUM Investment Net End Investment Service: of Period Accounts __ Terminations Flows Flows ‘Adystment Performance __Change of Period Equity Active us 608 2a a7 (13) 9) (03) (1
Slide 32: AUM by Region
AUM by Region As of September 30, 2014 Institutions NA ex US 4% United Kingdom 6% Asia ex Japan 6% Japan 12% US 57% EMEA 15% $236.8B By client domicile Japan 5% EMEA 12% Asia ex Japan 19% Retail Other 4% $162.0B US 60% 3s
Slide 33: Third Quarter 2014 Adjusted Advisory Fees
Third Quarter 2014 Adjusted Advisory Fees In US Dollars 3Q 2Q 30 2014 2014 %A 2013 %A Ending AUM (§ Billions) $473 $480 (1%) $445 6% Average AUM (§ Billions) $479 $464 3% $440 9% By Fee Type ($ Millions): Adjusted Base Fees $492 $472 M% $449 10% Adjusted Performance Fees 3 20 (85%) 4 200% Total $495
Slide 34: Third Quarter 2014 GAAP Income Statement
Third Quarter 2014 GAAP Income Statement 3Q 2a 3Q In US dolar rilfons (except EPU) 2014 2014 %A 2013 %A Net Revenues $ 750 754 (1%) 706 6% Operating Expenses 605 611 (1%) 597 1% Operating Income 145 143 1% 109 33% Net Income Attributable to AB Unitholders 140 136 3% 100 40% |AB Holding GAAP Diluted
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets September 30, 2014 December 31, 2013 ‘Cash and cash equivalents $ 5 ~C~«*S 510 Cash and securities, segregated 506 980 Receivables, net 1,952 1,550 Investments: Long-term incentive compensation-related 97 118 Other 728 662 Goodwill 3,045 2,987 Intan
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Wine ie ncaa September 30, 2014 September 30, 2013 Retincome 3 0S 3a ‘Non-cash items: Amortization of deferred sales commissions 20 2 'Non-cash long-term incentive compensation expense 6 13 Depreciation and other amertization 48 46 Unrealized los
Slide 37: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US $ Millions (excluding per unit amounts) 3Q 2Q 3Q 2014 2014 %A 2013 %A AllianceBernstein Net Income Attributable to AllianceBernstein $140 $136 3% $100 40% Weighted Average Equity Ownership Interest 35.7% 35.5% 34.5% AllianceBernstein Holding Aiba to
Slide 38: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Three Months Ended $$ thousands, unaucited a0 e304 sista 12343 SOAS ‘S30AS Net Revenues, GAAP basis $749,748 $ 753,648 $ «714,818 $ 765,572 $ 706078 $ 734,275 Exclude: ‘Long-term incentive compensation-related investment (gains) losses. 1,646 415)
Slide 39: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands except per Unit amounts, unaudited 9130114 130114 3314 1213113973013 6/3013 Net Income - Diluted, GAAP basis, 44,543 «$ 43,230 $ 36,455 57,853 $ 29,706 $ 40,617 Impact on net income of AllianceBemstein non-GAA
Slide 40: 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 in
Slide 41: ALLIANCEBERNSTEIN
45) ALLIANCEBERNSTEIN
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