Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2022 Earnings Presentation
46 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 28, 2022
Slide 1: Third Quarter 2022 Review
Third Quarter 2022 Review October 28, 2022 Seth P. Bernstein, President & Chief Executive Officer Kate Burke, Chief Operating Officer & Chief Financial Officer Onur Erzan, Head of Global Client Group & Private Wealth
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, President & Chief Executive Officer
Seth P. Bernstein President & Chief Executive Officer Third Quarter 2022 Review 3
Slide 4: Firmwide Overview: Third Quarter 2022
Firmwide Overview: Third Quarter 2022 3Q:22 vs. 3Q:21 3Q:22 vs. 2Q:22 $32.3 $19.8 $23.9 $19.8 Gross Sales 3Q:22 3Q:21 3Q:22 2Q:22 $6.7 ($6.1) (ex-AXA) ($6.1) (ex-AXA) ($2.8) (ex-AXA) Active Net Flows ($3.4) ($7.8) ($7.8) 3Q:22 3Q:21 3Q:22 2Q:22 $742.2 $612.7 $612.7 $646.8 End of Period AUM 3Q:22 3Q:
Slide 5: Asset Flows by Distribution Channel: Quarterly & YTD Trend
Asset Flows by Distribution Channel: Quarterly & YTD Trend Firmwide Retail $39.4 $40.9 $84.6 $27.6 $51.7 $25.6 $32.3 $23.9 $20.6 $17.3 $11.4 $19.8 $13.8 $7.4 $6.6 $6.3 $7.2 $2.7 ($6.0) ($2.1) ($2.8) ($6.6) -… ($2.7) ($1.8) ($1.0) ($2.2) ($5.0) ($10.5) ($8.2) ($0.6) ($2.2) ($25.1) ($26.6) ($19.0) ($2
Slide 6: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End Fixed Income One-Year Three-Year Five-Year 92 89 70 72 72 70 70 71 64 63 50 53 53 21 19 3Q:21 4Q:21 1Q:22 2Q:22 3Q:22 3Q:21 4Q:21 1Q:22 2Q:22 3Q:22 3Q:21 4Q:21 1Q:22 2Q:22 3Q:22 Equities One-Year Three-Year Five-Year 76 78 75 82 80 73 70 58 45 49 45
Slide 7: Retail Highlights
Retail Highlights Negative Market Sentiment + AXA Redemptions Drive 3Q Third Quarter 2022 Highlights Outflows (USD Billions) Sales Continue to Moderate Reflecting Challenging Markets 30 20 • Gross sales of $13.8B; -$11.8B or -46% Y/Y, and -$3.5B or -20% Q/Q 10 5.2 6.6 6.3 • Redemption rate (ex-AXA)
Slide 8: Institutional Highlights
Institutional Highlights Slower Industrywide Sales Drive Net Outflows in 3Q Third Quarter 2022 Highlights (USD billions) Sales and Flows 20 15 10.2 • Gross sales of $1.9B, down 42% Q/Q and 26% Y/Y, reflective of 10 5.0 4.6 industrywide slowdown in institutional activity 5 1.5 1.4 2.1 0.8 0.9 0.2 0.4
Slide 9: Private Wealth Highlights
Private Wealth Highlights Gross Sales, Redemptions and Net Flows Third Quarter 2022 Highlights Net Flows Positive 7 of last 9 quarters 3Q Net Inflows with Improved Advisor Productivity (USD billions) • 3Q gross sales of $4.1B, flat Y/Y, +25% Q/Q 5 • Advisor Productivity +4% Y/Y, +23% Q/Q 2.2 1.7 0.7
Slide 10: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues Third Quarter 2022 Highlights (USD millions) Institutional Trading Volumes Constrained Despite Volatility $113 $106 • 3Q Revenues of $92M, -19% Y/Y, -14% Q/Q $92 • Institutional trading significantly constrained amidst global uncert
Slide 11: Status on Our Initiatives in 3Q22
Status on Our Initiatives in 3Q22 Firmwide Initiative Status Deliver superior • Fixed Income: 53% of assets in outperforming services for 3-yr period; 19% for 1-yr and 53% for 5-yr investment • Active Equity: 37% of assets in outperforming services for 3-yr period; 45% for 1-yr and 80% for 5-yr solu
Slide 12: Onur Erzan, Head of Global Client Group & Private Wealth
Onur Erzan Head of Global Client Group & Private Wealth Third Quarter 2022 Review 12
Slide 13: Serving Our Clients from an Expansive Global Distribution Platform
Serving Our Clients from an Expansive Global Distribution Platform A combination of regional expertise and local coverage drives holistic engagement Institutional AUM: $279B Other Zurich APAC Japan 5% ex 5% Stockholm Japan London Toronto Amsterdam 7% Frankfurt Minneapolis Chicago Seoul Paris EMEA Lo
Slide 14: Generating Sustained Organic Growth over the Long Run
Generating Sustained Organic Growth over the Long Run Active equity and alts/multi-asset organic growth has accelerated and is well above peer group Average Annualized Organic Growth Rates for Active Net Inflows 2017 through 3Q:22 and 2019 through 3Q:22 (percent) 9.9 6.5 4.5 4.6 3.8 3.0 2.4 1.7 1.8
Slide 15: Driving Our Distribution Platform with Differentiated Capabilities
Driving Our Distribution Platform with Differentiated Capabilities In-market coverage: Comprehensive local Value-add services: Differentiated client- coverage for leading global/regional capability building and thought leadership intermediaries and consultants AB Advisor Institute 250+ sales profess
Slide 16: Optimizing US Large Cap Growth for Diverse Markets
Optimizing US Large Cap Growth for Diverse Markets Global, vehicle-agnostic product for distribution in local markets AUM (USD Billions) 80 60 • 10-yr CAGR: 34% 40 • Nine straight years 20 of organic growth 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sept 22* Annual (11.6)% 2.7% 68.3% 5.5% 2
Slide 17: Strong Growth in Muni SMA Across US Retail Platform
Strong Growth in Muni SMA Across US Retail Platform Consistent growth across accounts, advisors and distributors AUM and Net Flow Results (USD Billions) 20 • 50% CAGR over 15 last 10 years 10 • SMAs have grown to 37% of US Retail 5 AUM—more than 4 times 2012 0 2011 2012 2013 2014 2015 2016 2017 2018
Slide 18: Innovation in DC Retirement Income Solutions
Innovation in DC Retirement Income Solutions Leveraging 15+ years of experience in glide-path design for large Defined Contribution plans Custom Target-Date AUM (USD Billions) Lifetime Income Strategy: Designed for Retirement-Income Certainty without Sacrificing Liquidity or Growth Potential 64 48 $
Slide 19: Investing in Markets that will Drive Future Growth
Investing in Markets that will Drive Future Growth AB is focusing on solutions, vehicles and geographies with above-market growth potential Private Debt Insurance AUM (USD Tril.) 5-year projected growth AUM (USD Tril.) 5-year projected growth 1.2 10%-12% 36 5%–8% Products / Segments Active ETFs US R
Slide 20: Focusing on Attractive Insurance Asset-Management Segment
Focusing on Attractive Insurance Asset-Management Segment Leveraging our heritage to serve third-party insurers Strong Foundation of Insurance AB Executing Targeted Investments to Track Record of Recent Success to Heritage and Partnership Better Serve Insurers’ Unique Needs Grow AB’s $25Bn in 3rd Pa
Slide 21: Scaling Asset Growth through Client-Centered Solutions
Scaling Asset Growth through Client-Centered Solutions Our differentiated capabilities create a multiplier effect for inorganic growth Acquired capabilities integrate On-the-ground global distribution with product development In-market resources; access to retail process to expand client reach Vehic
Slide 22: Kate Burke, Chief Operating Officer & Chief Financial Officer
Kate Burke Chief Operating Officer & Chief Financial Officer Third Quarter 2022 Review 22
Slide 23: Third Quarter 2022 GAAP Income Statement
Third Quarter 2022 GAAP Income Statement Income Statement (in US $ Millions) 3Q22 3Q21 %∆ 2Q22 %∆ Base Fees $701 $759 (8)% $697 1% Performance Fees 14 18 (25)% 23 (40)% Bernstein Research Services 92 113 (19)% 106 (14)% Distribution Revenues 148 170 (13)% 153 (3)% Dividends & Interest 30 9 n/m 22 35
Slide 24: Adjusted Financial Highlights: Third Quarter 2022
Adjusted Financial Highlights: Third Quarter 2022 3Q:22 vs. 3Q:21 3Q:22 vs. 2Q:22 $814 $884 $814 $816 Adjusted Revenues 3Q:22 3Q:21 3Q:22 2Q:22 $281 $204 $204 $226 Adjusted Operating Income 3Q:22 3Q:21 3Q:22 2Q:22 25.1% 31.8% 25.1% 27.7% Adjusted Operating Margin 3Q:22 3Q:21 3Q:22 2Q:22 $0.89 $0.64
Slide 25: Third Quarter 2022 Adjusted Income Statement
Third Quarter 2022 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 3Q22 3Q21 %∆ 2Q22 %∆ Base Fees(1) $680 $729 (7)% $677 —% Performance Fees 10 18 (45)% 18 (43)% Bernstein Research Services 92 113 (19)% 106 (14)% Investment (Losses) 10 — n/m (6) n/m Other Revenues 43 25 80 % 3
Slide 26: Third Quarter 2022 Adjusted Income Statement Highlights
Third Quarter 2022 Adjusted Income Statement Highlights Revenues • Base Fees decreased by approximately 7% versus 3Q21 driven by a 13% decrease in Average AUM, lower across all channels, partially offset by fee rate improvement of 7% driven by asset mix and the impact of higher fee rate CarVal Base
Slide 27: 3Q22 in Review: AB's 5-part Strategy Statement
3Q22 in Review: AB’s 5-part Strategy Statement • 80% of Equities and 53% of Fixed Income assets outperforming over long-term (5 years) Deliver • +3% AOG in Private Wealth (positive 7 of last 9 quarters); overall, +1% TTM organic growth • Alts/MAS +4% AOG, Munis positive Key Inflows by Asset Class: •
Slide 28: Appendix
Appendix Third Quarter 2022 Review 28
Slide 29: Retail Mutual Funds Relative Performance vs. Morningstar Averages
Retail Mutual Funds Relative Performance vs. Morningstar Averages 1 Year 3 Year 5 Year 10 Year Relative Relative Relative Relative Retail Service (%) Percentile (%) Percentile (%) Percentile (%) Percentile Equity Large Cap Growth 3.0 41 2.2 26 2.6 15 2.7 6 Concentrated Growth 4.7 33 (0.6) 61 1.1 32
Slide 30: Retail Mutual Funds Relative Performance vs. Morningstar Averages
Retail Mutual Funds Relative Performance vs. Morningstar Averages 1 Year 3 Year 5 Year 10 Year Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Fixed Income American Income (3.6) 77 (2.4) 91 (0.7) 79 (0.2) 55 European Income (6.2) 88 (2.2) 87 (0
Slide 31: 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 (9.9) 2.1 5.1 2.7 Concentrated Global Growth (7.8) (1.6) 1.4 1.8 Global Core (3.2) (2.5) 0.1 0.8 International Strategic Core 3.9 0.1 1.5 2.0 Sustainable Global Thematic (6.8)
Slide 32: Assets Under Management: 3Q22
Assets Under Management: 3Q22 (US $ Billions) September 30, 2022 June 30, 2022 Institutions Private Wealth Retail Total Total Equity Actively Managed $ 51 $ 43 $ 109 $ 203 $ 223 Passive (1) 21 2 29 52 56 Total Equity 72 45 138 255 279 Fixed Income Taxable 121 13 53 187 201 Tax-Exempt 1 25 26 52 54 P
Slide 33: Three Months Ended 9/30/22: AUM Roll-Forward by Distribution Channel
Three Months Ended 9/30/22: 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 Acquisition Performance Change of Period Institutions US $ 138.5 $1.1 $(1.2) $(0.5) $
Slide 34: Three Months Ended 9/30/22: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/22: 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 Acquisition Performance Change of Period Equity Active US $ 133.0 $ 5.8 $ (5.1) $ (1.0)
Slide 35: Three Months Ended 9/30/22: Active vs. Passive Net Flows
Three Months Ended 9/30/22: Active vs. Passive Net Flows Actively Passively Managed Managed (1) Total Equity $ (5.0) $ (0.9) $ (5.9) Fixed Income (3.6) (2.1) (5.7) Alternatives/MAS (2) 0.8 0.3 1.1 Total $ (7.8) $ (2.7) $ (10.5) (1) Includes index and enhanced index services. (2) Includes certain mul
Slide 36: Assets Under Management By Region
Assets Under Management By Region Institutional Geographic Breakdown Retail Geographic Breakdown Other Japan 3% 5% APAC ex Other Japan 5% EMEA 7% 10% Japan EMEA 11% 12% APAC ex US Japan US 71% 18% 58% $279.4B $232.3B As of September 30, 2022 By Client Domicile Percentages may not add up to 100% due
Slide 37: Third Quarter 2022 Adjusted Advisory Fees
Third Quarter 2022 Adjusted Advisory Fees 3Q22 3Q21 %∆ 2Q22 %∆ Ending AUM ($ Billions) $ 613 $ 742 (17)% $ 647 (5)% Average AUM ($ Billions) $ 654 $ 747 (13)% $ 689 (5)% By Fee Type ($ Millions): Adjusted Base Fees(1) $ 680 $ 729 (7)% $ 677 —% Adjusted Performance Fees 10 18 (45)% 18 (43)% Total $ 6
Slide 38: Third Quarter 2022 GAAP Income Statement
Third Quarter 2022 GAAP Income Statement In US $ Millions (except EPU) 3Q22 3Q21 %∆ 2Q22 %∆ Net Revenues $ 987 $ 1,093 (10)% $ 971 2% Operating Expenses 817 813 —% 778 5% Operating Income 170 280 (39)% 193 (12)% Net Income Attributable to AB Unitholders 175 265 (34)% 209 (16)% AB Holding GAAP Dilute
Slide 39: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 9/30/2022 12/31/2021 Cash and cash equivalents $ 1,136 $ 1,286 Cash and securities, segregated 1,335 1,504 Receivables, net 2,680 2,651 Investments: Long-term incentive compensation-related 46 64 Other 166 209 Assets of consolidated variable interes
Slide 40: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Nine Months Ended 9/30/2022 9/30/2021 Net Income $ 583 $ 779 Non-cash items: Amortization of deferred sales commissions 27 25 Non-cash long-term incentive compensation expense 36 35 Depreciation and other amortization 45 34 Unrealized losses on i
Slide 41: Third Quarter 2022 AB Holding Financial Results
Third Quarter 2022 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 3Q22 3Q21 %∆ 2Q22 %∆ AB Net Income Attributable to AllianceBernstein $ 175 $ 265 (34)% $ 209 (16)% Weighted Average Equity Ownership Interest 36.5 % 36.2 % 36.1 % AB Holding Equity in Net Income Attributabl
Slide 42: Third Quarter 2022 GAAP to Non-GAAP Reconciliation
Third Quarter 2022 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 43: Third Quarter 2021 GAAP to Non-GAAP Reconciliation
Third 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 44: Second Quarter 2022 GAAP to Non-GAAP Reconciliation
Second Quarter 2022 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 servi
Slide 45: 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 46: AllianceBernstein
ALLIANCEBERNSTEIN—
AllianceBernstein Holding L.P. Units — Q3 2022 Earnings Presentation on 6ix