Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q3 2017 Earnings Presentation
24 slides from Acadian Asset Management's earnings presentation, Nov 2, 2017
Slide 1: Q3 2017 Earnings Presentation
Q3 2017 EARNINGS PRESENTATION November 2, 2017 1
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This presentation may contain forward looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “expect,” “anticipate,” “may,” “intends,
Slide 3: Overview and Highlights
(1) Overview and Highlights • Q3'17 U.S. GAAP EPS of $0.17 down (39.3)% from Q3'16 • Q3'17 ENI per share of $0.43 up 34.4% from Q3'16 ENI per share of $0.32, primarily driven by increases in management fee revenue and stock buybacks • Net Client Cash Flows of $0.5 billion for Q3'17 with an annualize
Slide 4: Growth Strategy
Growth Strategy OMAM’s multi-boutique model is well positioned for growth, with four key areas of focus... Four Key Multi-Boutique Value Proposition Drives Growth Areas New Incremental Growth Opportunities Partnerships Global Distribution Collaborative Organic Growth (Growth and Seed / Co-Investment
Slide 5: OMAM AUM Progression and Mix
OMAM AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (9/30/17) $B AUM % Change: 0.7% AUM by Affiliate (1) $B %Total $240 $ 92.8 39% $220 $(32.4) $34.9 92.4 39% $(0.8) $200 5.2 2% $234.2 $235.9 $180 (13.8)% (0.4)% 14.9% 6.0 3% $160 2.0 1% $140 Removal of Net flows Market and Heitman
Slide 6: Net Client Cash Flows and Revenue Impact
Net Client Cash Flows and Revenue Impact AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $B $M $3.8 $24 $4 $3.6 $3.1 $20.0 $20 $19.1 $18.4 $2.4 $2 $16 $14.6 $1.5 $13.5 $13.1 $12.2 $0.8 $11.3 $12 $0.5 $7.3 $0 $8 $(0.2) $(0.3) $4 $(1.0) $0.7 $0.8 -$2 $0 $(2.5) $(2.6) $(2.5) -$4 $(3.0) $(3
Slide 7: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) - by Asset Class Revenue Impact of NCCF - by Asset Class $B $M $4 $24 $3 $20 $2.6 $1.9 93 $16 $2 $2.1 $12.7 $15.6 $13.1 $0.1 21 $0.7 $12 $1 $1.0 $1.2 $1.3 41 $0.8 $1.0 $0.4 $8 $0.2 $0 $9.4 $(1.7) $4 $8.1 $6.7 -$1 24 $5.9 $(2.4) $(2.9
Slide 8: Strong Investment Performance
Strong Investment Performance Products representing ≥ 67% of revenue outperforming on a 1-, 3- and 5-year basis Commentary • OMAM uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance ◦ Reflects percent of management fee revenue in p
Slide 9: Financial Highlights – Q3 2017 v. Q3 2016
Financial Highlights – Q3 2017 v. Q3 2016 • Q3'17 economic net income up 22.9% to $46.7 million ($0.43 per share) from $38.0 million ($0.32 per share) in Q3'16 ◦ EPS growth of 34.4% benefited from buyback of 6.0 million shares in December 2016 and 5.0 million shares in May 2017 • ENI revenue increas
Slide 10: Improving Markets and Fee Mix Benefit Q3'17 Results
Improving Markets and Fee Mix Benefit Q3'17 Results $228 (1) (2) Average AUM ENI Revenue Pre-tax ENI Equity-accounted Performance $b % Change Q3'16 to Q3'17: 1.3% Affiliates $m % Change Q3'16 to Q3'17: 29.8% Fees $m % Change Q3'16 to Q3'17: 30.0% Performance Fees % Change, consolidated Affiliates: 1
Slide 11: Management Fee Growth Driven By Increased Average Assets at Consolidated Affiliates and Landmark
Management Fee Growth Driven By Increased Average Assets at Consolidated Affiliates and Landmark Consolidated Affiliates Average AUM and Fee Rate by Asset Class(1)(2) ENI Management Fee Revenue by Asset Class(1)(2) Avg. AUM $B % Change $M % Change 7.0% nge: 1 % Cha 38.4 : 29.0 % $240 ange $229.1 % C
Slide 12: OMAM Benefited From Scale Efficiencies
OMAM Benefited From Scale Efficiencies Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q3'17 ENI Operating Expense Ratio(2) decreased to 35.2% for the period, reflec
Slide 13: Variable Compensation In Line With Business Profitability
Variable Compensation In Line With Business Profitability Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of certain performance
Slide 14: Distribution Ratio Increased Due to Landmark Acquisition and Leveraged Employee Equity Structure
Distribution Ratio Increased Due to Landmark Acquisition and Leveraged Employee Equity Structure Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to OMAM(1) • Q3'17 Key Employee Distributions increased due to higher EN
Slide 15: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital $M September 30, December 31, • September 30 leverage ratio (Debt / LTM Adjusted 2017 2016 EBITDA) of 1.5x, below target range of 1.75x - 2.25x Assets • Cash of $126.4 million includes $108.0
Slide 16: Appendix
Appendix GB omam 16
Slide 17: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended Nine Months Ended ENI Adjustments September 30, September 30, $m 2017 2016 2017 2016 i. 1 Exclude non-cash expenses representing U.S. GAAP net income attributable to controlling interests $ 18.7 $ 34.0 $ 53.0 $ 101.1 changes in the v
Slide 18: Reconciliation: GAAP to ENI and Components of ENI
Reconciliation: GAAP to ENI and Components of ENI Components of ENI revenue ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Management fees(1) $ 221.7 $ 171.8 $ 624.1 $ 478.5 Performance fees 0.7 (1.1) 12.1 (1.9) Other income, including equity-acc
Slide 19: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 U.S. GAAP operating expense $ 214.9 $ 130.6 $ 593.5 $ 351.7 Less: items excluded from economic net income Acquisition-
Slide 20: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP general and administrative expense to ENI general and administrative expense ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 U.S. GAAP general and administrative expense $ 27.6 $ 27.2 $ 80.9 $ 71.7 Sales-based
Slide 21: Calculation of ENI Effective Tax Rate
Calculation of ENI Effective Tax Rate Calculation of ENI Effective Tax Rate ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Pre-tax economic net income(1) $ 64.2 $ 49.4 $ 179.6 $ 140.2 Intercompany interest expense deductible for U.S. tax purposes
Slide 22: Definitions and Additional Notes
Definitions and Additional Notes References to “OMAM” or the “Company” refer to OM Asset Management plc; references to “OM plc” refer to Old Mutual plc, the Company’s former parent; references to the “Center” refer to the holding company excluding the Affiliates; references to "Landmark" refer to La
Slide 23: Definitions and Additional Notes
Definitions and Additional Notes The Company adjusts its income tax expense to reflect any tax impact of its ENI adjustments. Please see Slide 17 for a reconciliation of U.S. GAAP net income attributable to controlling interests to economic net income. Adjusted EBITDA Adjusted EBITDA is defined as e
Slide 24: Definitions and Additional Notes
Definitions and Additional Notes ENI earnings before variable compensation ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense. ENI variable compensation ratio The ENI variable compensation ratio is calculated as variable compensation divided by ENI ear