Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q4 2019 Earnings Presentation
32 slides from Acadian Asset Management's earnings presentation, Feb 6, 2020
Slide 1: BrightSphere Reports Financial and Operating Results for Q4 2019
Contact: Brett Perryman ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Fourth Quarter Ended December 31, 2019 • U.S. GAAP earnings per share of $0.79 for the quarter, compared to $0.84 for Q3'19 • ENI earnings per share of $0.50 for the quarter, compared to $
Slide 2: Dividend Declaration and Conference Call Dial-in
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.10 per share payable on March 27, 2020 to shareholders of record as of the close of business on March 13, 2020. Conference Call Dial-in The Company will hold a conference call and simultaneous webcast t
Slide 3: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements which may include, from time to time, information relating to anticipated revenues, margins or earnings, anticipated performance of the Company’s business, expected future net cash flows, anticipated expense levels and
Slide 4: Q4 2019 Earnings Presentation
Exhibit 99.2 Q4 2019 EARNINGS PRESENTATION February 6, 2020
Slide 5: Q4'19 Results
Q4'19 Results • BrightSphere Highlights Diversified Asset and Client Base • U.S. GAAP EPS of $0.79 for Q4'19 compared to $0.84 Quarterly ENI Mgmt. Fee Revenue by Segment (1) for Q3'19 • ENI EPS of $0.50 for Q4'19, compared to $0.42 for Q3'19 Quant & Solutions Alternatives | 20.5% | 47.7% • ENI and E
Slide 6: Disciplined Execution of Long-Term Growth Strategy
Disciplined Execution of Long-Term Growth Strategy Leverage High • Quant & Solutions ◦ Broad capabilities to develop in-demand, outcome-oriented investment solutions Growth • Alternatives Business Mix ◦ Sophisticated illiquid and uncorrelated strategies attracting growing investor allocations • Liqu
Slide 7: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended Q4'19 vs. Q3'19 December 31, September 30, Increase June 30, March 31, December 31, 2019 2019 (Decrease) 2019 2019 2018 • Total revenue increased 4.9% from Management fees $ 197.2 $ 196.4 0.4 % $ 205.9 $ 207
Slide 8: Strong Growth Potential in High-Demand Segments
Strong Growth Potential in High-Demand Segments • Diversified segments align to high-growth and higher fee strategies Quarterly Segment ENI (1) Quant & Solutions Alternatives Liquid Alpha $101.9 billion AUM $23.8 billion AUM $78.7 billion AUM • Versatile, highly- • Predominately illiquid, • Demonstr
Slide 9: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • AUM increased to $101.9 billion in Q4'19, a 6.7% increase from Q3'19, primarily due to market appreciation • Segment ENI increased 33.8% in Q4'19 compared to Q3'19 mainly due to year-end performance fees and non-U.S. equity market increase. Operating margin inc
Slide 10: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Alternatives AUM increased from prior quarter to $23.8 billion as of Q4'19 due to co-investment funding and ongoing Alternatives fundraising • Alternatives revenue improved in Q4'19 by 9.1% from Q3'19 due to lower placement agent fees in Q4'19. ENI decreased (38.7)%
Slide 11: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • AUM decreased to $78.7 billion as of Q4'19, primarily due to Vanguard reallocation. Total NCCF of $(24.9) billion, of which $(22.8) billion was related to Vanguard. Average fee rate increased by 2 bps bps as the result of the reallocation of lower fee sub-advisory a
Slide 12: Key Metrics - Last Five Quarters
Key Metrics - Last Five Quarters • ENI EPS improved both sequentially and compared to prior year AUM ENI Revenue(1) Pre-tax ENI ($b) % Change Q4'18 to Q4'19: (5.2)% ($m) % Change Q4'18 to Q4'19: (3.2)% ($m) % Change Q4'18 to Q4'19: (7.9)% Average AUM $300 $280 $80 End of period AUM $240 $212 $206 $2
Slide 13: Net Client Cash Flows Breakdown by Segment
Net Client Cash Flows Breakdown by Segment • Excluding Vanguard, Liquid Alpha outflows moderated AUM Net Client Cash Flows (“NCCF”)(1) Revenue Impact of NCCF(1)(2) $b $m $5 $10 $0.2 68 $2.5 $1.0 $0.5 $5 $0.2 $0.6 $6.6 $0 $(0.9) $(0.1) $0.1 $(0.8) 38 $0 $1.4 $2.1 $1.4 $2.9 $(3.0) $(2.0) $(1.5) $(1.9)
Slide 14: Management Fee Revenue Trend
Management Fee Revenue Trend • Average fee rate increase was driven by reallocation of low fee sub-advisory assets in Liquid Alpha, and timing of placement agent fees Average AUM and Fee Rate by Segment(1)(2) ENI Management Fee Revenue by Segment(1)(2) $b Avg. AUM $m % Change % Change % Change : (4.
Slide 15: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliates • Q4'19 ENI revenue of $205.2 million increased from Q3'19 by 4.8% • Management fees increased 0.4% overall from Q3'19 primarily due to non-U.S. equity market a
Slide 16: ENI Operating Expenses
ENI Operating Expenses Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q4'19 Operating Expense Ratio(1) increased to 43.9% for the period, reflecting seasonality of
Slide 17: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25% - 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of certain performance fees ◦ Affiliate variable compe
Slide 18: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG and other equity holders(1) • Q4'19 Distribution Ratio of 17.7% lower than Q3'19 mainly due to impact of performance fee sha
Slide 19: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($m) December 31, December 31, 2019 2018 • December 31 leverage ratio (Debt / Adj. EBITDA) of Assets 2.1x vs. 2.3x at September 30; December 31 net Cash and cash equivalents $ 111.3 $ 340.6 leverage ratio (Debt, net of total cash and cash Investment adv
Slide 20: Supplemental Information
Supplemental Information 20
Slide 21: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(1) ($ in millions, unless otherwise noted) Three Months Ended December 31, Three Months Ended September 30, Increase U.S. GAAP Basis 2019 2018 (Decrease) 2019 Increase (Decrease) Revenue $ 207.4 $ 214.5 (3.3)% $ 197.8 4.9 % Pre-tax income from cont. op
Slide 22: Segment Information for Q4'19 and Q3'19
Segment Information for Q4'19 and Q3'19 Three Months Ended December 31, 2019 Three Months Ended September 30, 2019 Quant & Reconciling Total U.S. Quant & Reconciling Total U.S. ($ in millions, unless otherwise noted) Solutions Alternatives Liquid Alpha Other Items(1) GAAP (3) Solutions Alternatives
Slide 23: Segment Information for Q4'18
Segment Information for Q4'18 Three Months Ended December 31, 2018 Reconciling Items (1) ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Total U.S. GAAP (3) ENI Revenue $ 93.8 $ 48.1 $ 70.0 $ 0.1 $ 2.5 $ 214.5 ENI Operating Expenses 39.1 15.1 20.4 11.5 31.6
Slide 24: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 Quantitative and Solutions Beginning balance $ 95.5 $ 97.6 $ 95.1 $ 85.2 $ 98.5 Gross inflows 2.3 3.0 2.5 5.1
Slide 25: Reconciliations and Disclosures
Reconciliations and Disclosures 25
Slide 26: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) Three Months Ended ENI Adjustments i.1 Exclude non-cash expenses representing ($ in millions) December 31, September 30, June 30, March 31, December 31, changes in the value of Affiliate equity 2019 2019 2019 2019 2018 and profit interests held
Slide 27: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of per-share U.S. GAAP Net Income to Economic Net Income ($) Three Months Ended December 31, September 30, June 30, March 31, December 31, 2019 2019 2019 2019 2018 U.S. GAAP net income per share $ 0.79 $ 0.84 $ 0.31 $ 0.54
Slide 28: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended December 31, September 30, June 30, March 31, December 31, 2019 2019 2019 2019 2018 U.S. GAAP operating expense $ 123.6 $ 145.9 $ 1
Slide 29: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP pre-tax income from continuing operations to Pre-tax ENI ($ in millions) Three Months Ended December 31, September 30, June 30, March 31, December 31, 2019 2019 2019 2019 2018 U.S. GAAP pre-tax income from con
Slide 30: Notes
Definitions and Additional Notes References to “BrightSphere,” “BSIG” or the “Company” refer to BrightSphere Investment Group Inc.; references to “OM plc” refer to Old Mutual plc, the Company’s former parent; references to “BSUS” or the “Center” refer to the holding company excluding the Affiliates.
Slide 31: Notes
Definitions and Additional Notes The Company adjusts its income tax expense to reflect any tax impact of its ENI adjustments. Adjusted EBITDA Adjusted EBITDA is defined as economic net income before interest, income taxes, depreciation and amortization. The Company notes that its calculation of Adju
Slide 32: 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 ENI variable compensation divided by ENI
BrightSphere Investment Group — Q4 2019 Earnings Presentation on 6ix