Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2013 Earnings Presentation
41 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 25, 2013
Slide 1: Third Quarter 2013 Review
October 24, 2013 Third Quarter 2013 Review Peter S. Kraus Chairman & Chief Executive Officer John C. Weisenseel Chief Financial Officer ALLIANCEBERNSTEIN
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 fac
Slide 3: Peter S. Kraus
Peter S. Kraus Chairman & Chief Executive Officer
Slide 4: Firmwide Overview: Third Quarter
Firmwide Overview: Third Qu In US $ Billions : $23.3 S214 $187 $187 3013 2013 3013 3a12 $02 s(4.8) $(4.8) $(4.4) 3013 2013 3013 3012 $448.2 $445.2 S45 $418.9 3013 2013 3013 3012 $439.9 $445.9 $439.9 $411.0 Average 3013 2013 3013 3012
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions Inst. Ret. P.C. 3Q 12 Total Gross Sales $214 Gross Redemptions $(25.8) Net Flows $(4.4) = Gross Sales = Gross Redemptions @Net Flows: 16.4 14.6 14.4 12.4 Pee 67 33 au 45 1.0 18 (38) (42) (40) 27) (0) 25) (8.0) (11.1) (144) (13.0)
Slide 6: Institutional Highlights
Institutional Highlights Net Flows Turned Negative in 3Q13 Diverse Pipeline” by Service and Region $B 67 - a7 By Service By Region 5.2 North 3 45 Index Fea a i ip , (38) (4.0) G9) h (60) (12.9) EMEA Asia 3Q12 4Q12 1013 2Q13 3013 Alts / Gross Sales = Gross Redemptions PPIP() @ Net Flows Multi-Asset P
Slide 7: Fixed Income: Long-Term Opportunity Intact Despite Recent Volatility
Fixed Income: Long-Term Opportunity Intact Despite Recent Volatility After Taper Surprise, Treasury Yields Stabilized in 3Q Fund Redemptions Concentrated in “Core” Bond Funds 3.0 US 10-Year Treasury Yields (%) 25 20 18 10 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Taxable Bond US Mutual
Slide 8: Fixed Income Investment Performance
Fixed Income Investment Performance Relative Performance Through 9/30/13 (%) us: 3Q13 YTD13 1 Year 3 Year 5 Year Strategic Core Plus 0.1 (0.1) 05 06 24 Core Fixed Income 0.0 0.0 0.3 04 1.4 High Yield 0.2 1.3 1.8 05 1.8 Diversified Yield Plus 0.2 (0.1) 1.9 3.2 45 US Income 0.2 0.3 2.0 27 42 Insurance
Slide 9: Equities Investment Performance
Equities Investment Performance Relative Performance Through 9/30/13 (%) us: 3Q13 YTD13 1 Year 3 Year 5 Year US Small Cap Value 0.9 6.2 8.4 44 65 US SMID Cap Value 1.4 47 7.0 0.3 24 US Strategic Value 13 62 94 (1.5) (0.7) US Small Cap Growth 21 23 (0.4) 5.0 5.2 US SMID Cap Growth 24 1.9 0.6 3.5 49 U
Slide 10: Equities: An Early-Stage Deep Value Recovery Points to Many Opportunities
Equities: An Early-Stage Deep Value Recovery Points to Many Opportunities We Are One Year into a Deep Value Cycle... ..And the Potential is Great from Here Duration of Value Cycles: 1974 - 2013!) Global Stocks: Highest vs. Lowest P/B Spreads" 10 May 2012 Global | Peak: 8.9 Tech Bubble Financial (Tru
Slide 11: Retail Highlights
Retail Highlights 3Q13 Sales Slowed, but Redemptions Stabilized Improved GHY & AIP Redemptions Lowered Overall Rate* $B is 164 146 144 Retail Redemption Rate (%); Annualized 124 50 saa a 40 (10.2) (14.1) Sh Change in GHY / AIP Redemption Rate" (14.4) C180) 2Q13/ 1013: +22 ppts EG) 3Q13 / 2Q13: (23)
Slide 12: Private Client Highlights
Private Client Highlights Greater Stability in Our Private Client Business #8. 18 18 10 . 12 : (27) (27) (25) (25) (42) 3012 4Q12 1013 2013 3013 Gross Sales mmm Gross Redemptions —*Net Flows The Bernstein Approach: Smart, Timely and Innovative Nearly 40% sequential increase in gross sales Net outflo
Slide 13: Bernstein Research Services Highlights
Bernstein Research Services Highlights Revenues: Seasonal Slowdown from 2Q13, but Strong Growth vs. 3Q12 Bernstein Research Services Revenues ($M) Change in Global Industry Trading Volumes (%) % Change 53 3013 / 3012: +6% 3Q13 / 2013: (7)% 115 15 i Si 401 a = © a ©) (29) Sanat us Europe Asia sara 20
Slide 14: Progress on Our Strategy in 3Q13
Progress on Our Strategy in 3Q1 Firmwide Initiative Progress Improve investment performance and deliver for clients Diversify our business across channels, investment services and geographies = Maintained our Fixed Income investment performance premiums for 1-, 3- and 5-yr periods = Notable strength
Slide 15: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 16: Financial Highlights: Third Quarter 2013
Financial Highlights: Third Quarter 2013 In US $ Millions $580 hss $580 $574 3013 2013 3013 3012 $449 ‘$465 $449 $458 Adjusted Expenses 3013 2013 3013 3012 22.6% 22.2% 220% 20.2% 3013 2013 3013 3012 40¢ aig 40¢ 36¢ Adjusted a 3013 2013 3013 3012 Please refer to pages 37-39 for additonal information
Slide 17: Third Quarter 2013 GAAP to Adjusted Reconciliation
Third Quarter 2013 GAAP to Adjusted Reconciliation In US dolar millions Adjustments Distribution. Pass —_Long-Terminc. Venture Real Related Through Compensation Capital Estate Adjusted GAAP Payments _Expenses M™. Fund Charges (Non-GAAP) Net Revenues $ 706 $ (112) $ ”™ § (5) $ Q $$ - $ 580 Operating
Slide 18: Third Quarter 2013 Adjusted Income Statement
Third Quarter 2013 Adjusted Income Statement ® Adjusted Operating Income decreased 2% sequentially and increased 13% versus the prior year quarter = Sequentially, driven by Revenue decrease slightly in excess of Operating Expense decrease ® Versus prior year, Revenues increased while Operating Expen
Slide 19: Third Quarter 2013 Adjusted Revenues
Third Quarter 2013 Adjusted Revenues ™ The sequential decrease in Base Fees is due primarily to a decrease in Retail; the 6% increase versus the prior year quarter is due primarily to increased Retail average AUM = Performance fees are down sequentially due primarily to fees realized on one of our e
Slide 20: Third Quarter 2013 Adjusted Operating Expenses
Third Quarter 2013 Adjusted Operating Expenses m Adjusted Compensation Ratio was 50.0% for 2013; 50.2% in 3Q12 = Total Compensation & Benefits decreased 3% sequentially but increased 1% versus the prior year quarter, in line with adjusted revenues for both time periods = Promotion & Servicing expens
Slide 21: Third Quarter 2013 Adjusted Operating Results
Third Quarter 2013 Adjusted Operating Results = Adjusted Operating Income declined by 2% sequentially due to revenue declines outpacing expense declines; the 13% increase versus 3Q12 is due to higher revenues paired with lower expenses m Adjusted Margin increased to 22.6%, from 22.2% in 2Q13 and 20.
Slide 22: AllianceBernstein.com
AllianceBernstein.com
Slide 23: AllianceBernstein.com
AllianceBernstein.com
Slide 24: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended September 30, 2013 3Q One Three Five Ten Service 2013 Year Years ‘Years _‘Years Benchmark Value Emerging Markets Value 14 (4.4) (4.9) (2.9) (1.1) MSCI EM Global Value 17 94 (3.2) (3.4) (2.0) MSC!
Slide 25: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended September 30, 2013 3Q One ‘Three —- Five Ten Service 2013 Year _ Years ‘Years _—‘Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income 08 66 34 37 1.4 Global and 33
Slide 26: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2013 3Q One Three — Five Ten Service 2013 Year _—‘Years ‘Years _‘Years Lipper Average Value International Value 05 35 (3.4) (4.4) (2.6) International Large Cap Value Growth & Income (0.2) 3.5 3.5
Slide 27: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended September 30, 2013 3Q One Three Five —‘ Ten Service 2013 Year _—‘Years ‘Years _Years Lipper Average Global High Yield Portfolio (22) (3.2) 0.0 24 1.4 Bond Global High Yield American Income Portfolio
Slide 28: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended September 30, 2013 3Q One Three Five Ten Service 2013 Year Years Years Years Fully Diversified Simulation* 40 11.6 67 53 5.0 S&P 500 52 19.3 16.3 10.0 76 MSCI World Index - Net 8.2 20.2 118 78 76 Lipper Short/Int Blended Muni Fund Avg 0.3 (1.2) 2.0
Slide 29: Assets Under Management — 3Q13
Assets Under Management — 3Q13 ($ billions) ‘At September 30, 2013, At Jun 30, 2013 Private Institutions Retail Client Total Total Equity ‘Actively Managed $ 30 $ 38 $ 33 $ 11 96 Passive 19 26 1 46 45 Total Equity 49 64 34 147 141 Fixed Income Taxable 148 64 10 20 219 Tax-Exempt 1 9 19 29 30 Passive
Slide 30: Three Months Ended 9/30/13: AUM Roll-Forward by Distribution Channel
hs Ended 9/30/13: 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 Performance Change of Period Institutions us 111.4 16 (0.6) (23) (1.3) 14 04 111.5 Global a
Slide 31: Three Months Ended 9/30/13: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/13: AUM Roll-Forward by Investment Service InUS $ Billons Beginning SalesiNew Redemptions! Net Cash Net Investment Net End Investment Service: of Period ‘Accounts Terminations Flows Flows Performance Change of Period Equity Active us 475 34 (a) 0.9) 02 36 38 513 Global and No
Slide 32: AUM by Region
AUM by Region As of September 30, 2013 Institutions Retail NAexUS 4% Other 1% Other 3% United Kingdom 5% Japan 6% Asia ex Japan 6% EMEA 10% Japan 12% US 58% US 59% EMEA 14% Asia ex Japan 22% $227.3B $149.8B By client domicile
Slide 33: Third Quarter 2013 Adjusted Advisory Fees
Third Quarter 2013 Adjusted Advisory Fees In US Dollars 3Q 2a 3a 2013 2013 HA 2012 %A Ending AUM ($ Billions) $445 $435 2% $419 6% Average AUM ($ Billions) $440 $446 (4%) $411 TM% By Fee Type ($ Millions): Adjusted Base Fees $449 $454 (1%) $424 6% Adjusted Performance Fees 1 5 (80%) 22 (95%) _ Total
Slide 34: Third Quarter 2013 GAAP Income Statement
Third Quarter 2013 GAAP Income Statement 3Q 2a 3a In US dollar millions (except EPU) 2013 2013 hv 2012 ha Net Revenues $ 706 $ 734 (4%) = $ +708 (0%) Operating Expenses 597 597 0% 764 (22%) Operating Income (Loss) 109 137 (20%) (66) vm Net Income (Loss) Attributable to AB Unitholders 100 124 (17%) (
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US § Millions Assets September 30, 2013 December 31, 2012 Cash and cash equivalents $ ors 627 Cash and securities, segregated 834 1,551 Receivables, net 4,552 1,616 Investments: Long-term incentive compensation-related 115 123 Other 550 610 Goodwill 2,954 2,954 Intangib
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Nine Months Ended Sept. 30, 2013 Sept. 30, 2042 Net Income 3 us 118 Non-cash items: Amortization of deferred sales commissions 32 29 ‘Amortization of non-cash long-term incentive compensation 13 12 Depreciation and other amortization 46 60 Unreal
Slide 37: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 3a 2a 3 2013 2013 %A 2012 %A AllianceBernstein Net Income (Loss) Attributable to AllianceBernstein $100 $121 (17%) ($44) im Weighted Average Equity Ownership Interest 345% 37.6% 37.5% AllianceBernstein Holding
Slide 38: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation Three Months Ended ‘$ thousands, unaudited S303 6/3013, BRS 12/3142 S302 S302 Net Revenues, GAAP basis $ 706,078 $ 734,275 $ 709,122 $ 704607 $ 708,158 $ 642,163 Exclude: Long-term incentive compensation-related investment (gains) losses (6.284) (18
Slide 39: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation Three Months Ended $ thousands except per Unit amounts, unaudited enone enons _aains —t2atn2 _smsona _esorta Net Income (Loss) - Diluted, GAAP basis: 29,706 40,617 $ 38474 $ 26,192 (23,142) $ 21,339 Impact on net income of AlianoeBemstein no
Slide 40: AllianceBernstein Adjusted Financial Results Reconciliation
AllianceBernstein Adjusted Financial Results Reconciliation AllianceBernstein L.P. Notes to Condensed Consolidated Statements of Income and Supplemental Information (Unaudited) Adjusted Net Revenues Adjusted net revenues exclude investment gains and losses and dividends and interest on long-term inc
Slide 41: AllianceBernstein.com 212-756-4542
AllianceBernstein.com 212-756-4542
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