Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q1 2021 Earnings Presentation
42 slides from Alliancebernstein Holding L.p's earnings presentation, Apr 29, 2021
Slide 1: First Quarter 2021 Review
April 29, 2021 FIRST QUARTER 2021 REVIEW Seth P. Bernstein President & Chief Executive Officer Matt Bass SVP, Head of Private Alternatives 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 First Quarter 2021 Review | 3
Slide 4: Firmwide Overview: First Quarter 2021
Firmwide Overview: First Quarter 2021 1Q21 vs. 1Q20 1Q21 vs. 4Q20 $33.3 $31.6 $33.3 $31.3 Gross Sales 1Q21 1Q20 1Q21 4Q20 $6.5 $5.2 ex-AXA $6.5 Active Net Flows(1) ($4.2) ex-AXA $4.5 ($5.2) 1Q21 1Q20 1Q21 4Q20 $697.2 $697.2 $685.9 $541.8 End of Period AUM 1Q21 1Q20 1Q21 4Q20 $688.5 $688.5 $651.7 Ave
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail 31.6 31.8 29.3 31.3 33.3 24.2 23.0 19.6 17.7 17.5 3.8 2.7 4.6 5.3 3.9 5.2 0.7 (4.6) 3.1 3.2 (0.7) (3.3) (5.4) (5.6) (2.2) (0.7) (15.8) (16.8) (18.4) (20.3) (1.0) (7.9) (26.2) (28.1) (28.1) (35.1) (29.6) (37.2) 1Q20* 2Q20* 3Q20* 4Q2
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 First Quarter 2021 Highlights 4% AOG in 1Q; 9th Positive Quarter out of last 11 Sales and Flows $B • Gross sales of $23.0B, second highest ever to Q1 20; down $1B or 5% Y/Y, and up $5B or 30% Q/Q • Redemption rate of 31% stable wit
Slide 8: Institutional Highlights
Institutional Highlights Organic Growth in 7/8 Trailing Quarters First Quarter 2021 Highlights 1% AOG in 1Q Sales and Flows $B • Gross sales of $4.9B up 26% Y/Y and down 51% Q/Q • Net inflows of $0.8B and positive for 7 of the last 8 quarters • 3rd consecutive quarter of organic growth • Sales diver
Slide 9: Private Wealth Management Highlights
Private Wealth Management Highlights Strong Rebound in Net Flows in 1Q First Quarter 2021 Highlights $B Sales and Flows Reflect Sentiment Shift to Re-Risk • Strong gross sales of $5.4B, up 54% Y/Y and 46% Q/Q • Productivity continues to improve, +31% Q/Q • Redemptions of $3.7B, or 23% sequential imp
Slide 10: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues First Quarter 2021 Highlights $M Healthy Institutional Trading Volumes % Change • Revenues of $119M, -8% Y/Y, +1% Q/Q 1Q21/1Q20: (8)% 1Q21/4Q20: +1% • Continued strong growth in Asia, including India, supported by Asian investments
Slide 11: Progress on Our Strategy in 1Q21
Progress on Our Strategy in 1Q21 Firmwide Initiative Progress Deliver superior • Active Equity: 57% of assets in outperforming services for 3-yr period; 38% for 1-yr and 67% for 5-yr investment solutions • Fixed Income: 55% of assets in outperforming services for 3-yr period; 91% for 1-yr and 65% fo
Slide 12: Matt Bass
Matt Bass SVP, Head of Private Alternatives First Quarter 2021 Review | 12
Slide 13: Long-Term Strategy to Extend Investment Capabilities into Alternatives
Long-Term Strategy to Extend Investment Capabilities into Alternatives Private Alternatives US Commercial US Direct Current RE Debt Lending AUM European Commercial RE Debt Opportunistic Managed Energy CLOs 2010 2011 2012 2014 2016 2018 2019 2020 Arya Global Multi-Strategy Public Alternatives Fund of
Slide 14: Growth in Private Alternatives Driven by Credit Strategies
Growth in Private Alternatives Driven by Credit Strategies A Natural Extension of our Liquid Credit Business Q1 2021 Total Credit AUM* $127 Billion 2010 Total Credit AUM* $54 Billion $1 ($ Billions) $20 $8 $12 $45 $94 Liquid Credit Private Placements Private Alternatives Managed CLO Notes: Liquid Cr
Slide 15: Private Alternatives Platform Provides Strong Foundation for Growth
Private Alternatives Platform Provides Strong Foundation for Growth Private Alternatives: $20 Billion in Committed Capital * Private Credit Commercial Real Estate US Direct Lending US Commercial Real Estate Debt • Launched in 2014 • Launched in 2012 • Deployed $13.0B since inception, invested in 206
Slide 16: Growth Strategy Supported by Access to Strategic Capital Sources
Growth Strategy Supported by Access to Strategic Capital Sources Organic Growth: Scale Existing Inorganic Growth: Fill Gaps Investment Platforms Growing the core Fill gaps through targeted acquisitions and Scaling existing funds team lift-outs Follow-on funds Geographic New funds targeting new
Slide 17: Why AB?
Why AB? Since 2010, AB has completed 10 team lift-outs/acquisitions within alternatives, significantly scaling these strategies by more than 4x their initial seed investments AB Commitment to Prioritization to diversify investment products by type and region Growing Alternatives Led by client de
Slide 18: Ali Dibadj
Ali Dibadj Chief Financial Officer & Head of Strategy First Quarter 2021 Review | 18
Slide 19: First Quarter 2021 GAAP Income Statement
First Quarter 2021 GAAP Income Statement Income Statement (in US $ Millions) 1Q21 1Q20 %∆ 4Q20 %∆ Base Fees $ 687 $ 614 12 % $ 656 5% Performance Fees 16 8 94 % 109 (86)% Bernstein Research Services 119 129 (8)% 118 1% Distribution Revenues 147 131 13 % 143 3% Dividends & Interest 9 20 (58)% 9 —% In
Slide 20: Adjusted Financial Highlights: First Quarter 2021
Adjusted Financial Highlights: First Quarter 2021 In US $ Millions; scales may differ 1Q21 vs. 1Q20 1Q21 vs. 4Q20 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 21: First Quarter 2021 Adjusted Income Statement
First Quarter 2021 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 1Q21 1Q20 %∆ 4Q20 %∆ Base Fees(1) $ 661 $ 594 11 % $ 632 5% Performance Fees 16 6 189 % 109 (85)% Bernstein Research Services 119 129 (8)% 118 1% Investment Gains (Losses) 2 (7) (135)% (1) n/m Other Revenues 23
Slide 22: First Quarter 2021 Adjusted Income Statement Highlights
First Quarter 2021 Adjusted Income Statement Highlights Revenues • Base Fees increased 11% versus 1Q20 and 5% versus 4Q20 due primarily to higher average AUM across all three distribution channels. • The increase in Performance Fees versus 1Q20 resulted from higher fees earned on our Private Credit
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 First 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 (10.4) 84 1.7 30 1.2 31 2.0 17 Concentrated G
Slide 26: 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 Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Fixed Income American Income 0.1 43 1.4 28 0.8 29 1.2 9 European Income 6.7
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 7.9 10.8 9.9 4.6 Concentrated Global Growth 5.2 4.3 5.4 3.8 Global Core (4.7) 0.9 1.5 N/A International Strategic Core (12.2) (1.2) (0.8) N/A Sustainable Global Thematic 17.8 8
Slide 28: Assets Under Management: 1Q21
Assets Under Management: 1Q21 (US $ Billions) March 31, 2021 December 31, 2020 Institutions Private Wealth Retail Total Total Equity Actively Managed $ 64 $ 53 $ 115 $ 232 $ 218 Passive (1) 28 1 37 66 64 Total Equity 92 54 152 298 282 Fixed Income Taxable 157 14 81 252 263 Tax-Exempt 1 27 24 52 50 P
Slide 29: AUM Roll-Forward by Distribution Channel
Three Months Ended 3/31/21: 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 164.2 1.4 (0.3) (2.8) (1.7) (0
Slide 30: AUM Roll-Forward by Investment Service
Three Months Ended 3/31/21: 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 125.1 9.7 (6.1) (1.6) 2.0 5.8 7.8 132.9 G
Slide 31: Active vs. Passive Net Flows
Active vs. Passive Net Flows Three Months Ended 3/31/21 Actively Passively Managed Managed (1) Total Equity $ 3.7 $ (2.0) $ 1.7 Fixed Income 0.8 0.2 1.0 (2) Alternatives/MAS 2.0 0.5 2.5 Total $ 6.5 $ (1.3) $ 5.2 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutio
Slide 32: AUM by Region
AUM by Region Institutional Retail NA ex US 5% Other 3% Japan UK 8% 4% EMEA Asia ex Japan 12% 6% Japan 7% US 56% EMEA US 10% Asia 68% ex Japan 21% $314.7B $272.3B As of March 31, 2021 By client domicile First Quarter 2021 Review | 32
Slide 33: First Quarter 2021 Adjusted Advisory Fees
First Quarter 2021 Adjusted Advisory Fees 1Q21 1Q20 %∆ 4Q20 %∆ Ending AUM ($ Billions) $ 697 $ 542 29 % $ 686 2% Average AUM ($ Billions) $ 689 $ 602 14 % $ 652 6% By Fee Type ($ Millions): Adjusted Base Fees $ 661 $ 594 11 % $ 632 5% Adjusted Performance Fees 16 6 189 % 109 (85)% Total $ 677 $ 600
Slide 34: First Quarter 2021 GAAP Income Statement
First Quarter 2021 GAAP Income Statement In US $ Millions (except EPU) 1Q21 1Q20 %∆ 4Q20 %∆ Net Revenues $ 1,007 $ 874 15 % $ 1,063 (5)% Operating Expenses 747 696 7% 761 (2)% Operating Income 260 178 46 % 302 (14)% Net Income Attributable to AB Unitholders 244 194 26 % 286 (15)% AB Holding GAAP Dil
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 3/31/2021 12/31/2020 Cash and cash equivalents $ 960 $ 1,037 Cash and securities, segregated 1,413 1,753 Receivables, net 2,416 2,280 Investments: Long-term incentive compensation-related 59 60 Other 141 193 Assets of consolidated variable interest
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Three Months Ended 3/31/2021 3/31/2020 Net Income $ 244 $ 169 Non-cash items: Amortization of deferred sales commissions 8 5 Non-cash long-term incentive compensation expense 18 8 Depreciation and other amortization 32 36 Unrealized losses on inv
Slide 37: First Quarter 2021 AB Holding Financial Results
First Quarter 2021 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 1Q21 1Q20 %∆ 4Q20 %∆ AB Net Income Attributable to AllianceBernstein $ 244 $ 194 26 % $ 286 (15)% Weighted Average Equity Ownership Interest 36.4 % 36.0 % 35.4 % AB Holding Equity in Net Income Attributable
Slide 38: 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 39: First Quarter 2020 GAAP to Non-GAAP Reconciliation
First 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 Other Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investment advisory
Slide 40: Fourth Quarter 2020 GAAP to Non-GAAP Reconciliation
Fourth 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 Other Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investment advisory
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
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