Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2020 Earnings Presentation
38 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 22, 2020
Slide 1: Third Quarter 2020 Review
October 22, 2020 THIRD QUARTER 2020 REVIEW Seth P. Bernstein President & Chief Executive Officer Ali Dibadj Head of Finance & 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 Third Quarter 2020 Review | 3
Slide 4: Firmwide Overview: Third Quarter 2020
Firmwide Overview: Third Quarter 2020 3Q20 vs. 3Q19 3Q20 vs. 2Q20 $29.3 $26.3 $29.3 $31.8 Gross Sales 3Q20 3Q19 3Q20 2Q20 $8.1 Net Flows(1) $5.3 ex-AXA $5.3 ex-AXA $4.6 ex-AXA $3.1 $3.1 3Q20 3Q19 ($3.3) 3Q20 2Q20 $630.8 $592.4 $630.8 $600.0 End of Period AUM 3Q20 3Q19 3Q20 2Q20 $624.3 $624.3 $586.3
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail 31.6 31.8 29.3 21.1 24.2 26.3 27.0 18.9 19.6 17.5 7.4 8.1 5.2 3.8 6.5 4.6 5.3 0.7 (4.6) 3.1 (5.6) (3.3) (5.4) (2.2) (13.7) (13.7) (18.2) (15.8) (16.8) (20.5) (1.0) (7.9) (26.2) (37.2) (35.1) (29.6) 3Q19 4Q19 1Q20* 2Q20* 3Q20* 3Q19
Slide 6: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End One-Year Three-Year Five-Year 90 92 86 82 81 64 63 56 45 49 45 Fixed Income 41 38 32 24 3Q19 4Q19 1Q20 2Q20* 3Q20* 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 * Retail fixed income funds ranked in the 39th percentile of Morningstar peer group f
Slide 7: Fixed Income Investment Performance
Fixed Income Investment Performance Performance vs. Morningstar Category Average Through 9/30/20 Top quartile 2nd quartile 1 Year 3 Year 5 Year Retail Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Offshore American Income Portfolio -0.7 59 1.6 22 1.0 20 Emerging Mar
Slide 8: Equities Investment Performance
Equities Investment Performance Performance vs. Morningstar Category Average Through 9/30/20 Top quartile 2nd quartile 1 Year 3 Year 5 Year Retail Service Relative (%) Percentile Relative (%) Percentile Relative (%) Percentile Offshore Select US -0.6 62 0.8 47 0.4 53 Sustainable US Thematic -1.5 52
Slide 9: Retail Highlights
Retail Highlights 14th Straight Quarter of Active Equity Inflows Third Quarter 2020 Highlights 8% Organic growth in 3Q Sales and Flows $B • Gross sales of $17.5B normalized vs. prior record periods; down $4B or 17% 3.0 Y/Y, and $2B or 11% Q/Q 2.0 1.8 1.5 1.9 1.7 1.2 1.0 1.2 1.1 0.7 • Redemptions inc
Slide 10: Institutional Highlights
Institutional Highlights Active Equity Organic Growth in 10/11 Trailing Quarters Third Quarter 2020 Highlights 14% Organic growth in 3Q; 13% Avg. since 2018 Sales and Flows $B 2.9 • Gross sales of $8.3B up 190% Y/Y and down 6% Q/Q 2.7 2.2 1.5 1.6 • Net inflows of $2.1B including $2.2B of AXA redempt
Slide 11: Private Wealth Management Highlights
Private Wealth Management Highlights Net Flows Positive in 3Q Third Quarter 2020 Highlights $B Sales and Flows Up, Despite Continued Client Risk Aversion • Strong gross sales of $3.5B, up 52% Y/Y and 3% Q/Q 3.4 3.5 • Redemptions of $3.2B, or 14%, improved as outflows stabilized 2.3 0.3 • Net inflows
Slide 12: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues Third Quarter 2020 Highlights $M Slowing Institutional Trading Volumes % Change • Revenues of $99M, -3% Y/Y, -13% Q/Q 3Q20/3Q19: (3)% 3Q20/2Q20: (13)% 102 114 • Significant share of YoY US market volume growth in Q3 driven by retail
Slide 13: Progress on Our Strategy in 3Q20
Progress on Our Strategy in 3Q20 Firmwide Initiative Progress Deliver differentiated • Active Equity: 67% of assets in outperforming services for 3-yr period; 43% for 1-yr and 67% for 5-yr return streams to • Top quartile(1) 3-yr: Sustainable Global Thematic, Small Cap Growth, Select US L/S, Interna
Slide 14: Ali Dibadj
Ali Dibadj Head of Finance & Strategy Third Quarter 2020 Review | 14
Slide 15: Third Quarter 2020 GAAP Income Statement
Third Quarter 2020 GAAP Income Statement Income Statement (in US $ Millions) 3Q20 3Q19 %∆ 2Q20 %∆ Base Fees $ 623 $ 609 2%$ 569 9% Performance Fees 7 8 (13)% 9 (22)% Bernstein Research Services 99 102 (3)% 114 (13)% Distribution Revenues 136 119 14 % 120 13 % Dividends & Interest 9 25 (64)% 13 (31)%
Slide 16: Adjusted Financial Highlights: Third Quarter 2020
Adjusted Financial Highlights: Third Quarter 2020 In US $ Millions; scales may differ 3Q20 vs. 3Q19 3Q20 vs. 2Q20 Adjusted Revenues $727 $727 $727 $699 3Q20 3Q19 3Q20 2Q20 $216 $200 Adjusted Operating $216 $195 Income 3Q20 3Q19 3Q20 2Q20 Adjusted Operating 29.7% 27.5% 29.7% 27.9% Margin 3Q20 3Q19 3Q
Slide 17: Third Quarter 2020 Adjusted Income Statement
Third Quarter 2020 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 3Q20 3Q19 %∆ 2Q20 %∆ Base Fees(1) $ 599 $ 591 1%$ 554 8% Performance Fees 7 8 (13)% 9 (22)% Bernstein Research Services 99 102 (3)% 114 (13)% Investment (Losses) Gains (1) 4 n/m 1 n/m Other Revenues 24 35 (31)%
Slide 18: Third Quarter 2020 Adjusted Income Statement Highlights
Third Quarter 2020 Adjusted Income Statement Highlights Revenues • The 1% increase in Base Fees, net versus 3Q19 was primarily due to higher average retail and institutional AUM partially offset by lower fee rates. Higher average AUM across all channels drove the 8% increase in Base Fees versus 2Q20
Slide 19: 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 20: Q&A
Q&A Third Quarter 2020 Review | 20
Slide 21: Appendix
APPENDIX Third Quarter 2020 Review | 21
Slide 22: Institutional Composite Relative Performance vs. Benchmarks
Institutional Composite Relative Performance vs. Benchmarks Periods Ended September 30, 2020 Service 3Q20 1-Yr 3-Yr 5-Yr 10-Yr Benchmark Equity International Strategic Core 1.2 2.0 3.1 2.1 N/A MSCI EAFE US Small & Mid Cap Value 1.0 (1.2) (1.1) (0.5) 0.4 Russell 2500 Value US Strategic Value (1.4) (3
Slide 23: Retail Mutual Funds Relative Performance vs. Morningstar Average
Retail Mutual Funds Relative Performance vs. Morningstar Average Periods Ended September 30, 2020 Service 3Q20 1-Yr 3-Yr 5-Yr 10-Yr Morningstar Average Equity Global Core (2.2) (5.1) 1.2 1.3 N/A World Large Stock Relative Value (1.1) (2.2) — 0.3 1.5 Large Value Discovery Value (0.1) (4.6) (3.5) (1.7
Slide 24: Assets Under Management: 3Q20
Assets Under Management: 3Q20 (US $ Billions) September 30, 2020 June 30, 2020 Institutions Private Wealth Retail Total Total Equity Actively Managed $ 51 $ 46 $ 92 $ 189 $ 173 Passive (1) 25 — 32 57 54 Total Equity 76 46 124 246 227 Fixed Income Taxable 157 15 82 254 248 Tax-Exempt 1 25 22 48 47 Pa
Slide 25: Three Months Ended 9/30/20: AUM Roll-Forward by Distribution Channel
Three Months Ended 9/30/20: 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 150.8 3.6 (4.5) 0.3 (0.6) 0.2
Slide 26: Three Months Ended 9/30/20: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/20: 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 99.2 7.6 (5.6) (0.8) 1.2 8.4 9.6 108.8 Gl
Slide 27: Active vs. Passive Net Flows
Active vs. Passive Net Flows Three Months Ended 9/30/20 Actively Passively Managed Managed (1) Total Equity $ 2.2 $ (1.0) $ 1.2 (3) Fixed Income 0.6 (1.1) (0.5) (2) Other 2.3 0.1 2.4 Total $ 5.1 $ (2.0) $ 3.1 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions
Slide 28: AUM by Region
AUM by Region Institutional Retail NA ex US 5% Other 4% Japan UK 7% 4% EMEA Asia ex Ja… 12% 5% Japan US 7% 55% EMEA US Asia ex Jap… 10% 69% 22% $289.5B $242.9B As of September 30, 2020 By client domicile Third Quarter 2020 Review | 28
Slide 29: Third Quarter 2020 Adjusted Advisory Fees
Third Quarter 2020 Adjusted Advisory Fees 3Q20 3Q19 %∆ 2Q20 %∆ Ending AUM ($ Billions) $ 631 $ 592 7%$ 600 5% Average AUM ($ Billions) $ 624 $ 586 6%$ 579 8% By Fee Type ($ Millions): Adjusted Base Fees $ 599 $ 591 1%$ 554 8% Adjusted Performance Fees 7 8 (13)% 9 (22)% Total $ 606 $ 599 1%$ 563 8% A
Slide 30: Third Quarter 2020 GAAP Income Statement
Third Quarter 2020 GAAP Income Statement In US $ Millions (except EPU) 3Q20 3Q19 %∆ 2Q20 %∆ Net Revenues $ 900 $ 878 3%$ 872 3% Operating Expenses 683 675 1% 662 3% Operating Income 217 203 7% 210 3% Net Income Attributable to AB Unitholders 208 188 11 % 177 18 % AB Holding GAAP Diluted Net Income p
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 9/30/2020 12/31/2019 Cash and cash equivalents $ 1,014 $ 680 Cash and securities, segregated 1,869 1,095 Receivables, net 1,995 2,045 Investments: Long-term incentive compensation-related 55 51 Other 199 216 Assets of consolidated variable interest
Slide 32: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Nine Months Ended 9/30/2020 9/30/2019 Net Income $ 575 $ 525 Non-cash items: Amortization of deferred sales commissions 20 10 Non-cash long-term incentive compensation expense 24 37 Depreciation and other amortization 108 126 Unrealized losses (g
Slide 33: Third Quarter 2020 AB Holding Financial Results
Third Quarter 2020 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 3Q20 3Q19 %∆ 2Q20 %∆ AB Net Income Attributable to AllianceBernstein $ 208 $ 188 11 % $ 177 18 % Weighted Average Equity Ownership Interest 35.5 % 35.5 % 35.6 % AB Holding Equity in Net Income Attributable
Slide 34: Third Quarter 2020 GAAP to Non-GAAP Reconciliation
Third 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 Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servic
Slide 35: Third Quarter 2019 GAAP to Non-GAAP Reconciliation
Third Quarter 2019 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Acquisition- Related Through Comp. Consol Related GAAP Payments Adjustments Inv. VIE Expenses Non-GAAP (A) (B) (C) (D) (F) Investment advisory and services fees $ 616,384 (12,696) (5,119)
Slide 36: Second Quarter 2020 GAAP to Non-GAAP Reconciliation
Second 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 Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servi
Slide 37: 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 38: AllianceBernstein
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