Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q4 2018 Earnings Presentation
21 slides from Acadian Asset Management's earnings presentation, Feb 7, 2019
Slide 1: Q4 2018 Earnings Presentation
Exhibit 99.2 Q4 2018 EARNINGS PRESENTATION February 7, 2019
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: Leading Company Positioned for Growth
Leading Company Positioned for Growth BrightSphere Highlights(1) Diversified Asset and Client Base(1) • Diversified multi-Affiliate business with $206.3 AUM by Client Location Management Fee Revenue Australia | 4.5% billion in AUM Asia | 5.0% Middle East | 0.1% Fixed Income | 3.0% Other | 6.0% Alter
Slide 4: BrightSphere's Global Reach Creates Expansion Opportunities
BrightSphere’s Global Reach Creates Expansion Opportunities ___________________________________________________________ 1. Certain coverage in Middle East, South America, Asia, and Australia is facilitated by fly in/fly out marketing and certain third party marketing agreements. 2. Offices include b
Slide 5: BrightSphere Repositioning
BrightSphere Repositioning Focus on Organic • Expand Global Distribution with emphasis on high-growth markets in Asia-Pacific region Growth • Continue to invest in new product development and capacity expansion • Optimize and refocus Center resources ◦ Reduction of $20 million in Center total compen
Slide 6: Solid Earnings Results in a Challenging Period
Solid Earnings Results in a Challenging Period • GAAP EPS of $0.22 for Q4'18 and $1.26 for 2018, up from $(0.45) for Q4'17 and $0.04 for 2017 Financial Results • ENI per share of $0.43 for Q4'18 and $1.86 for 2018, down (2.3)% from Q4'17 and up 14.8% from 2017 • Significant reduction in cost structu
Slide 7: Q4'18 Results Remained Solid Despite Market Decline and Industry Headwinds
Q4'18 Results Remained Solid Despite Market Decline and Industry Headwinds $248 (1) Average AUM ENI Revenue(2) Pre-tax ENI Equity-accounted % Change Q4'17 to Q4'18: (7.3)% % Change Q4'17 to Q4'18: (16.0)% Performance % Change Q4'17 to Q4'18: (14.8)% Performance Affiliates Fees Fees % Change, consoli
Slide 8: A Solid Record of Growth
A Solid Record of Growth Average AUM(1) ENI Revenue(2)(6) Pre-tax ENI(6) Equity-accounted Performance Performance CAGR ('14-'18): 2.8% Affiliates CAGR ('14-'18): 9.7% CAGR ('14-'18): 6.5% Fees Fees CAGR, consolidated Affiliates: 6.2% CAGR, ex. perf. fees: 10.9% $901 $919 $275 CAGR, ex. perf. fees: 8
Slide 9: Strong Long-Term Investment Performance
Strong Long-Term Investment Performance Products representing ≥ 68% of revenue outperforming on a 3- and 5-year basis Commentary • Brightsphere uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance ◦ Reflects percent of management fe
Slide 10: Revenue Flows Flat for 2018 Notwithstanding Negative AUM Flows
Revenue Flows Flat for 2018 Notwithstanding Negative AUM Flows AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $B $M $19.0 $20 $4 $14.6 $15 $13.1 $2.4 $12.2 $1.9 $2 $1.5 $10 $7.3 $6.8 $0.5 $4.7 $5 $0 $0.8 $0 $(0.3) -$5 $(3.4) -$2 -$10 $(7.5) $(2.6) $(2.5) $(2.6) $(2.9) $(12.3) -$4 $(3.7
Slide 11: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) - by Asset Class Revenue Impact of NCCF(3) - by Asset Class $B $M $4 $24 $3 $20 $2.8 $2 $16 $1.9 $1 $1.6 (1) $12 $22.1 $0.7 $0.7 73 $0.3 $0.2 $13.8 $0 $0.1 $0.1 $8 $14.9 $(1.6) -$1 $(3.4) $(2.9) $(3.3) 24 $4 -$2 $(0.1) $(3.9) $2.9 $1
Slide 12: Management Fee Decline Driven By Negative Equity Market in 2018
Management Fee Decline Driven By Negative Equity Market in 2018 Average AUM and Fee Rate by Asset Class(1)(2) Gross Management Fee Revenue by Asset Class(1)(2) $B Avg. AUM $M % Change % Change : (7.3)% % Chang % Change (3) e: (12.8)% $250 39.2 $250 $236.8 (3) $233.9 98 (4) 36.9 $21.3 (9%) $219.4 (4)
Slide 13: Expense Growth Moderated as Management Fee Revenues Declined
Expense Growth Moderated as Management Fee Revenues Declined Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q4'18 operating expense ratio(1) increased to 42.2% for
Slide 14: Profit-share Model and Center Cost Structure Reduce Variable Compensation
Profit-share Model and Center Cost Structure Reduce Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of cert
Slide 15: Affiliate Key Employee Distributions Typically Will Move In Line with Affiliate Profitability
Affiliate Key Employee Distributions Typically Will Move In Line with Affiliate Profitability Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG and other equity holders(1) • Q4'18 Distribution Ratio of 17.7% low
Slide 16: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital ($M) December 31, December 31, 2018 2017 • December 31 leverage ratio (Debt / Adj. EBITDA) of Assets 2.1x within target range of 1.75x - 2.25x Cash and cash equivalents $ 340.6 $ 186.3 Investm
Slide 17: Appendix
Appendix BRIGHTSPHERE investment Group
Slide 18: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA(1) Three Months Ended Years Ended ENI Adjustments December 31, December 31, $m 2018 2017 2018 2017 i.1 Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income (loss) attributable to controlling interests
Slide 19: Definitions and Additional Notes
Definitions and Additional Notes References to “BrightSphere,” “BSIG” or the “Company” refer to BrightSphere Investment Group plc; 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 20: Definitions and Additional 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 21: 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
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