Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q1 2017 Earnings Presentation
24 slides from Acadian Asset Management's earnings presentation, May 4, 2017
Slide 1: Q1 2017 Earnings Presentation
Q1 2017 EARNINGS PRESENTATION May 4, 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
Overview and Highlights • Q1'17 U.S. GAAP EPS of $0.19 down (26.9)% from Q1'16 • Q1'17 ENI per share of $0.34 up 25.9% from Q1'16 ENI per share of $0.27, primarily driven by a market- driven increase in management fee revenue, strong expense control, stock buybacks and the acquisition of Landmark •
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 (3/31/17) $B AUM .5% % Change: 14 AUM by Affiliate $B %Total $260 $8.8 $ 82.1 33% $240 $29.4 91.2 36% $220 4.0% $200 5.2 2% $(6.5) 13.5% $249.7 $180 $218.0 (3.0)% 5.5 2% $160 31.4 13% $140 Net flows Market and Acquisition 2.0 1% Q
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 $0.8 $11.3 $12 $7.3 $0 $8 $(0.2) $4 $(1.0) $0.7 $0.8 -$2 $0 $(2.5) $(2.6) $(2.5) -$4 $(3.0) $(3.4) $(2.9) $(3.2) -$4 -$
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 $5 $20 $4 $1.6 $16 $3 $12.7 $2.6 $12 $6.1 $2 $1.8 $0.7 54 $8 $0.2 $1 $0.2 $1.0 $1.2 42 $0.7 $0.7 $0.8 $6.2 $0.4 $1.2 $9.4 $0 $(0.4) $4 $8.1 $3.9 $3.2 -$1 $(1.7) $2.1 $(1.
Slide 8: Competitive Long-term Investment Performance
Competitive Long-term Investment Performance Products representing ≥ 59% of revenue outperforming on a 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 r
Slide 9: Financial Highlights – Q1 2017 v. Q1 2016
Financial Highlights – Q1 2017 v. Q1 2016 • Q1'17 economic net income up 21.6% to $38.9 million ($0.34 per share) from $32.0 million ($0.27 per share) in Q1'16 ◦ EPS growth of 25.9% benefited from 6.0 million share stock buyback in December 2016 • ENI revenue increase of $45.9 million, or 30.0%, to
Slide 10: Improving Markets and Fee Mix Benefit Q1'17 Results
Improving Markets and Fee Mix Benefit Q1’17 Results $199 (1) Average AUM ENI Revenue Pre-tax ENI Performance $b % Change Q1’16 to Q1’17: 16.7% $m % Change Q1’16 to Q1’17: 30.0% Fees $m % Change Q1’16 to Q1’17: 22.1% Performance $70 Fees $246 % Change ex. perf. fees: 29.9% $250 % Change ex. perf. fee
Slide 11: Management Fee Growth Driven by Higher Average Assets
Management Fee Growth Driven by Higher Average Assets at Higher Fee Rates and Landmark Average AUM and Fee Rate by Asset Class(1) Gross Management Fee Revenue by Asset Class(1) Avg. AUM $B % Change $M % Change % Change: 16.7% .7% 37.7 % Change: 25 $245.7 $240 $228.2 $240 34.7 $48.6 (20%) 54 30% $210
Slide 12: Expenses Increased Primarily Due to Landmark Acquisition
Expenses Increased Primarily Due to Landmark Acquisition Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q1'17 ENI Operating Expense Ratio(2) decreased to 38.5% for
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 ◦ Affiliate variable compensation includes cash and equi
Slide 14: Affiliate Key Employee Distributions Move With Profitability
Affiliate Key Employee Distributions Typically Will Move In Line With Affiliate Profitability Commentary • Represents employees’ share of profit from their respective Affiliates, ranging from 15 - 40%, in some cases following an initial preference to OMAM(1) • Q1'17 Key Employee Distributions increa
Slide 15: Balance Sheet Management Provides Ongoing Opportunities
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital $M December 31, • March 31 leverage ratio (Debt / LTM Adjusted EBITDA) of March 31, 2017 2016 1.76x, within target range of 1.75x - 2.25x Assets Cash and cash equivalents $ 117.7 $ 101.9 • Cas
Slide 16: Appendix
Appendix gQ OMAM 16
Slide 17: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended March 31, ENI Adjustments $m 2017 2016 U.S. GAAP net income attributable to controlling interests $ 21.4 $ 30.8 i. 1 Exclude non-cash expenses representing changes in the value of Affiliate equity and Adjustments to reflect the econo
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 March 31, 2017 2016 Management fees(1) $ 195.7 $ 149.6 Performance fees 0.2 — Other income, including equity-accounted Affiliates(2) 2.9 3.3 ENI revenue $ 198.8 $ 152.9 U.S. GAAP revenue to
Slide 19: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended March 31, 2017 2016 U.S. GAAP operating expense $ 172.7 $ 108.6 Less: items excluded from economic net income Acquisition-related consideration and pre-acquisition employee equity(1) (
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 March 31, 2017 2016 U.S. GAAP general and administrative expense $ 25.6 $ 21.8 Sales-based compensation 4.4 4.8 Capital transaction costs — (0.1) ENI
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 March 31, 2017 2016 Pre-tax economic net income(1) $ 52.4 $ 42.9 Intercompany interest expense deductible for U.S. tax purposes (19.3) (17.7) Taxable economic net income 33.1 25.2 Taxes at
Slide 22: Definitions and Additional Notes
Definitions and Additional Notes References to “OMAM” or the “Company” refer to OM Asset Management plc; references to the “Parent” or “Old Mutual” refer to Old Mutual plc; references to the “Center” refer to the holding company excluding the Affiliates; references to "Landmark" refer to Landmark Pa
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