42 slides from Alliancebernstein Holding L.p's earnings presentation, Aug 1, 2013
Slide 1: Second Quarter 2013 Review
July 31, 2013 Second 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: Second Quarter
Firmwide Overview: Second Quarter In US $ Billions Average AUM ‘AllianceBernstein.com $23.3 $23.7 $23.3 $18.3 2013 1013 2Q13 2Q12 $0.2 a 7” || $0.2 et a $(2.8) 2013 1013 2Q13 2Q12 $4346 $443.2 $434.6 $407.3 2013 1013 2Q13 2Q12 $445.9 $436.7 $445.9 $411.4 2013 1013 2013 2012
Slide 5: Asset Flows by Distribution Channel
Asset Flows by Distribution C In US $ Billions = Gross Sales ™Gross Redemptions ‘Net Flows: 16.4 152 148 144 11.9 77 73 56 52 ST, 33, 47 os 1.0 1.0 1.8 4.2 : Ga) anf feo) fea] ial iG G4) 77) en (3.8) (4.2) (4.0) 27 (3.0) (25) (8.4) (93) (10.2) (1.4) (12.9) (14.4) (17.6) Inst. Ret. P.C. Inst. Ret. P.
Slide 6: Institutional Highlights
Institutional Highlights Third Consecutive Net Flow Positive Quarter Diverse Pipeline* by Service and Region $B 56 52 (9.3) (12.9) 2012 3012 4a12 1013 2013 Gross Sales = Gross Redemptions = PPIP) # Net Flows Pipeline* Fundings and Pass Through Exceeded Additions By Service Index cx : PN as Alts / Ot
Slide 7: Fixed Income: Recent Interest Rate Volatility Took Many by Surprise
Fixed Income: Recent Interest Rate Volatility Took Many by Surprise US Treasury 10-Year Yields Spiked in June... Change in Yields — Global Bond Markets % %, Change in pts 16 12 55 67 79 91 03 13 ..And Investors Fled Fixed Income $B Total US Retail Monthly Bond Fund Flows 60 30 0 A 1 L | (30) (60) 07
Slide 8: Fixed Income Investment Performance
Fixed Income Investment Performance Relative Performance Through 6/30/13 (%) US: 2Q13 4H13 4 Year 3 Year 5 Year Strategic Core Plus (0.4) (0.1) 12 414 1.3 Core Fixed Income (0.2) (0.0) 1.0 07 0.9 High Yield 0.9 a4 24 0.6 1.3 Diversified Yield Plus (1.5) (0.3) 46 3.8 3.0 US Income (1.0) 0.1 42 3.8 3.
Slide 9: Fixed Income: Well-Positioned for the Long-Term
Fixed Income: Well-Positioned for the Long-Term Bond Index Betas vs. US Treasuries* A Diverse, Global and Credit-Focused Platform January 1994 - March 2013 0.80 0.74 087 0.47 0.44 (0.25) Barclays US Barclays Barclays JPMEMBI Barclays. Barclays HY Credit Agr. Bond Global Aggr. Global Muni Year Credit
Slide 10: Equities Investment Performance
Equities Investment Performance Relative Performance Through 6/30/13 (%) us: 2Q13 4H13 1Year 3 Year 5 Year US Small Cap Value 1.5 47 7.4 4.4 5.1 US SMID Cap Value 1.5 28 47 0.3 1.3 US Strategic Value 2.8 45 5.1 (2.5) (3.0) US Small Cap Growth 18 (0.2) (2.2) 5.9 3.7 US SMID Cap Growth 0.0 (0.5) (1.6)
Slide 11: Equities: Better Environment for Stock-Picking and Deep Value
Equities: Better Environment for Stock-Picking and Deep Value The Crowded Trade in “Safe” Stocks Began to Reverse as Investors Look Beyond the Near-Term Correlation of High Dividend Yield Stocks" to Treasuries Leading Sectors® Became Laggards 7 288 50 eae. 21.3 214 & 25 5 —_— = 8 25) = (25) (66) (8.
Slide 12: Retail Highlights
Retail Highlights 2Q13 Sales Still Strong, But Net Flows Turned Negative Sharp June Pullback Drove 2Q13 Decline 152 164 148 144 a a 02 (64) (102) ayy (14.4) (176) 2a12 3012 4ai2 1013 2013 s=msGross Sales mmm Gross Redemptions —*~Net Flows Gross Sales and Redemptions - Sequential % Change 57 22 20 44
Slide 13: Private Client Highlights
Private Client Highlights Greater Stability in Our Private Client Business 18 = Lowest 2Q net outflows (includes April tax effect) since 2010 1.0 1.2 = New business pipeline the most robust in years z= m= Remarkable stability in FA base RB. | os —> = No principal departures YTD L(i3) First client su
Slide 14: Bernstein Research Services Highlights
Bernstein Research Services Highlights Bernstein Revenues Improved... Growing Global Profile and Presence % Change = us 2013 / 2012: +12% , 3018) 1016 46% = Successful 29 Annual Strategic Decisions Conference = ~1,700 clients attended, up 5% yiy sm = Double-digit increases in companies hosted, compa
Slide 15: Progress on Our Strategy in 2Q13
Progress on Our Strategy in 2Q13 Firmwide Initiative Progress Improve investment performance and deliver for clients Diversify our business across channels, investment services and geographies ‘AllianceBernstein.com Continued Fixed Income outperformance: 87% of AUM in services outperforming for 1-ye
Slide 16: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 17: Financial Highlights: Second Quarter 2013
Financial Highlights: Second Quarter 2013 In US $ Millions $598 $577 $598 $546 2013 1013 2013 2012 $465 $451 $465 $458 Adjusted Expenses 2013 1013 2013 2012 22.2% 21.9% 22.2% 16.1% 2013 1013 2013 2012 4t¢ 38¢ aie Adjusted 24¢ 2013 1013 2013 2012 Please refer to pages 38-40 for additonal information
Slide 18: Second Quarter 2013 GAAP to Adjusted Reconciliation
Second Quarter 2013 GAAP to Adjusted Reconciliation In US dolar millions ‘Adjustments Distribution- Pass —__Long-Terminc. Venture Real Related Through Compensation _ Capital Estate Adjusted GAAP Payments _ Expenses MT™ Fund Charges (Non-GAAP) Net Revenues $ 734 $ (122) $ 7) $ a) $ ® S$ - $ 598 Opera
Slide 19: Second Quarter 2013 Adjusted Income Statement
Second Quarter 2013 Adjusted Income Statement ® Adjusted Operating Income increased 6% sequentially and 51% versus the prior year quarter ® Margin improvement versus both prior periods resulted from revenue growth outpacing expense growth ® Adjusted EPU and distribution of 41 cents for 2Q13 2Q 1a 2Q
Slide 20: Second Quarter 2013 Adjusted Revenues
Second Quarter 2013 Adjusted Revenues ™ Base Fees sequential increase is due primarily to increases in Retail & Private Client; the 9% increase versus the prior year quarter is due primarily to increased Retail average AUM = Bernstein Research Services revenues improved 5% sequentially due to an inc
Slide 21: Second Quarter 2013 Adjusted Operating Expenses
Second Quarter 2013 Adjusted Operating Expenses = Compensation Ratio was 50.0% for all periods ® Total Compensation & Benefits increased 3% sequentially and 9% versus the prior year quarter in line with increased adjusted revenues = Promotion & Servicing expenses increased 11% sequentially due prima
Slide 22: Second Quarter 2013 Adjusted Operating Results
Second Quarter 2013 Adjusted Operating Results = Adjusted Operating Income improved by 6% sequentially and 51% versus 2Q12 on improved revenues = Adjusted Margin increased to 22.2%, from 21.9% in 1Q13 and 16.1% in 2Q12 2Q 1a 2Q In US dolar millions (except EPU) 2013 2013 %A 2012 %A Adjusted Operatin
Slide 23: AllianceBernstein.com
AllianceBernstein.com
Slide 24: AllianceBernstein.com
AllianceBernstein.com
Slide 25: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended June 30, 2013 2Q One Three Five Ten Service 2013 Year __Years ‘Years _Years Benchmark Value Emerging Markets Value (3.6) (7.1) (4.9) (3.7) (1.1) MSCI EM Global Value 2.0 48 (4.0) (5.3) (2.2) MSC!
Slide 26: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended June 30, 2013 2Q One Three Five Ten Service 2013 Year _Years ‘Years _Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income at 6.4 2.6 2.6 15 Global and 33% JPM GBI-
Slide 27: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended June 30, 2013 2a One Three Five —‘ Ten Service 2013 Year ‘Years Years _Years Lipper Average Value International Value 04 0.9 (24) (46) (2.4) International Large Cap Value Growth & Income 26 3.2 46 1.3 (0.6) Mul
Slide 28: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended June 30, 2013 2a One Three Five —‘ Ten Service 2013 Year Years Years Years Lipper Average Global High Yield Portfolio (4) (07) 7) 3.0 17 Bond Global High Yield American Income Portfolio (1.2) 1.9 27
Slide 29: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended June 30, 2013 2a One Three Five Ten Service 2013 Year Years Years Years Fully Diversified Simulation* 03 10.7 78 2.0 49 S&P 500 2.9 20.6 18.5 7.0 73 MSCI World Index - Net 06 18.6 13.7 27 72 Lipper Short/Int Blended Muni Fund Avg (2.1) (0.0) 27 34 2
Slide 30: Assets Under Management — 2Q13
Assets Under Management — 2Q13 (8 billions) At June 30, 2013 At Mar 31, 2013 Private Institutions Retail Client Total Total Equity Actively Managed $ 30 $ 3S 31 9% S$ 99 Passive 20 24 1 45 44 Total Equity 50 59 32 141 143 Fixed Income Taxable 144 65 10 219 226 Tax-Exempt 2 9 19 30 34 Passive” = 8 -
Slide 31: Three Months Ended 6/30/13: AUM Roll-Forward by Distribution Channel
Three Months Ended 6/30/13: 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 Performance Change _of Period Institutions us 112.4 By (0.9) 0.4 22 (2.9) (0.7) 111.
Slide 32: Three Months Ended 6/30/13: AUM Roll-Forward by Investment Service
Three Months Ended 6/30/13: AUM Roll-Forward by Investment Service InUS $ 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 456 27 (1.8) 07) 02 17 19 475 Global and N
Slide 33: As of June 30, 2013
As of June 30, 2013 Institutions Retail NAexUS 3% Other 1% Other 3% United Kingdom 5% Japan 6% Asia ex Japan 6% EMEA 10% Japan 12% US 59% US 58% EMEA 14% Asia ex Japan 23% $223.9B $144.4B By client domicile ‘AllianceBernstein.com 32
Slide 34: Second Quarter 2013 Adjusted Advisory Fees
Second Quarter 2013 Adjusted Advisory Fees In US Dollars 2a 1a 2a 2013 2013 %A 2012 %A Ending AUM ($ Billions) $435 $443 (2%) $407 T% Average AUM ($ Billions) $446 $437 2% $414 9% By Fee Type ($ Millions): Adjusted Base Fees $454 $440 3% $418 9% Adjusted Performance Fees 5 4 25% 4 25% Total $459 $44
Slide 35: Second Quarter 2013 GAAP Income Statement
Second Quarter 2013 GAAP Income Statement 2a 10 2a In US dolar millions (except EPU) 2013 2013 %A 2012 HA Net Revenues $ 734 $ 709 4% $ 642 14% Operating Expenses 597 585 2% 563 6% Operating Income 137 124 10% 79 73% Net Income Attributable to AB Unitholders 121 115 5% 74 64% 'AB Holding GAAP Dilute
Slide 36: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets June 30, 2013 December 31, 2012 Cash and cash equivalents $ a7 $ 627 Cash and securities, segregated 835 1,551 Receivables, net 4,650 1,616 Investments: Long-term incentive compensation-related 108 123 Other 578 610 Goodwill 2,954 2,954 Intangible a
Slide 37: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions ‘Six Months Ended ‘June 30, 2013 June 30, 2012 Net Income $ 20S 167 Non-cash items: Amortization of deferred sales commissions 2 19 ‘Amortization of non-cash long-term incentive compensation 9 8 Depreciation and other amortization 3t a Unrealized
Slide 38: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 2a 1a 2a 2013 2013 %A 2012 %A AllianceBernstein Net Income Attributable to AllianceBernstein $121 $115 5% $74 64% Weighted Average Equity Ownership Interest 37.6% 37.5% 37.5% AllianceBernstein Holding ash a Inc
Slide 39: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation Three Months Ended $ thousands, unaudited ears sans aH gs0n2 eo saz Net Revenues, GAAP basis $ 734,275 $ 709,122 § 704,607 $ 708,158 § 642,163 $ 681,809 Exclude: Long-term incentive compensation-related investment (gains) losses (818) (6,029) (2,385
Slide 40: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands except per Unit amounts, unaudited 6/30/13, 3313 12812 __—sor'2_——ego'2 BIZ Net income (Loss) - Diluted, GAAP basis 40,617 38,474 $ 26,192 $ (23,142) $ 21,339 § 26,699 Impact on net income of AlianceBemstein n
Slide 41: 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 42: AllianceBernstein.com 212-756-4542
AllianceBernstein.com 212-756-4542