Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q4 2023 Earnings Presentation
48 slides from Alliancebernstein Holding L.p's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter 2023 Review
Fourth Quarter 2023 Review February 7, 2024 Seth P. Bernstein, President & Chief Executive Officer Matthew Bass, Head of Private Alternatives Bill Siemers, Interim Chief Financial Officer
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 Fourth Quarter 2023 Review 3
Slide 4: Firmwide Overview: Fourth Quarter and Full Year 2023
Firmwide Overview: Fourth Quarter and Full Year 2023 4Q:23 vs. 4Q:22 2023 vs. 2022 $115.6 $28.3 $30.9 $101.5 Gross Sales 4Q:23 4Q:22 2023 2022 $0.9 ($0.1) Active Net Flows ($2.8) ($5.2) 4Q:23 4Q:22 2023 2022 $725.2 $725.2 $646.4 $646.4 End of Period AUM 4Q:23 4Q:22 2023 2022 $685.4 $680.3 $686.5 $63
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail $30.9 $21.0 $28.3 $16.8 $16.5 $16.9 $25.6 $22.4 $25.2 $14.2 $1.6 $1.6 $1.3 $0.8 ($1.9) ($1.9) ($1.8) ($0.7) ($4.0) ($3.4) ($24.8) ($15.2) ($15.3) ($26.4) ($27.1) ($17.6) ($17.2) ($19.7) ($32.8) ($30.1) 4Q:22 1Q:23 2Q:23 3Q:23 4Q:23
Slide 6: Asset Flows by Distribution Channel: Annual Trend
Asset Flows by Distribution Channel: Annual Trend Firmwide 5-year average annual organic growth (“AOG”) of 2% 2 of 3 channels positive in 2023 Firmwide Annual Organic Growth Rate (“AOG”) Retail 4.9% 1.5%* 4.0%* 0.1%* -1.1% $100.0 $150.0 $75.3 $78.9 $124.1 $115.6 $65.9 $71.1 $103.7 $101.5 $23.8 $20.8
Slide 7: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End Fixed Income One-Year Three-Year Five-Year 83 76 77 73 73 75 74 73 70 75 75 62 53 20 27 4Q:22 1Q:23 2Q:23 3Q:23 4Q:23 4Q:22 1Q:23 2Q:23 3Q:23 4Q:23 4Q:22 1Q:23 2Q:23 3Q:23 4Q:23 Equities One-Year Three-Year Five-Year 74 77 73 59 59 52 48 49 45 50 38
Slide 8: Retail Highlights
Retail Highlights Organic Growth Led by Fixed Income and US Retail Fourth Quarter and Full Year 2023 Highlights Taxable FI AOG +5% in 4Q23 and +9% FY23 Continued Strength in Cross-Border FI and US Retail Offsets Active Equity Quarterly Annually • 4Q23 gross sales of $21.0B; +$6.8B or +47% Y/Y, and +
Slide 9: Institutional Highlights
Institutional Highlights FY23 Slower Following 4 Straight Years of Organic Growth Fourth Quarter and Full Year 2023 Highlights Sales and Flows (USD Billions) (AOG %) 40 2.6% 10% • 4Q23 gross sales of $3.0B, Net outflows ($2.5B) 4.5% 1.1% 5 Year Avg: • 2023 gross sales of $11.8B reflects industrywide
Slide 10: Private Wealth Highlights
Private Wealth Highlights Third Consecutive Year of Organic Growth Fourth Quarter and Full Year 2023 Highlights 2023 net inflows of $1.1 billion Sales Growth Driven by Differentiated Offerings, Record FA Productivity (% of AUM) • 4Q23 gross sales of $4.3B, +6% Y/Y, +7% Q/Q 20% 17.4% 17.5% • 2023 gro
Slide 11: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Revenues Fourth Quarter and Full Year 2023 Highlights (USD millions) Institutional Trading Volumes Improved Q/Q, though Remain Constrained • 4Q revenues of $100M, Flat Y/Y, +7% Q/Q 416 386 • Key global markets remain soft; signs of modest improvement
Slide 12: Progress on Our Initiatives in 2023
Progress on Our Initiatives in 2023 Firmwide Initiative Progress Deliver • Fixed Income: 73% of assets in outperforming services for 3-yr period; 75% for 1-yr and 77% for 5-yr differentiated • Active Equity: 45% of assets in outperforming services for 3-yr period; 26% for 1-yr and 42% for 5-yr inves
Slide 13: Matthew Bass, Head of Private Alternatives
Matthew Bass Head of Private Alternatives Fourth Quarter 2023 Review 13
Slide 14: AB Private Markets: Established Platform With Differentiated Return Streams
AB Private Markets: Established Platform With Differentiated Return Streams to Meet Client Objectives Private Markets Current AUM: $61B1 2027 Target: $90-$100B $50B Fee-Earning AUM | $11B Fee-Eligible AB Private Credit AB Private Commercial Real Investors (“AB-PCI”) AB CarVal Estate Debt Placements
Slide 15: AB Private Credit Investors (AB-PCI)
AB Private Credit Investors (“AB-PCI”) AB-PCI is AB’s US private corporate credit and sponsor fund finance platform Established in 2014, AB-PCI has grown into a scaled platform facilitated by its differentiating features 1 Scaled Platform and Team with Well-Established Reputation 2 Core Middle Marke
Slide 16: Scaled Platform and Team with Well-Established Reputation
1 Scaled Platform and Team with Well-Established Reputation Strong reputation underpinned by experienced team and robust investment activity Founding Team Current Team Capital Investment Activity 2008 Austin, TX $17.3 billion $24.5 billion Founding Team’s Inception NYC | CHI | HOU | LA AUM Committed
Slide 17: Core Middle Market Focus with Differentiated Sector Expertise
2 Core Middle Market Focus with Differentiated Sector Expertise AB-PCI principally invests in sr. secured loans to sponsor-backed companies in US middle market Investment Strategy • Directly originated, privately negotiated senior secured loans • Focus on the core middle market • Overweight sponsor-
Slide 18: Proven Asset Selection and Track Record of Strong Performance
3 Proven Asset Selection and Track Record of Strong Performance Highly discerning asset selection process with focus on predictable & recurring revenue businesses Strong returns since 2008 for all AB-PCI and predecessor client accounts Asset Selection: Target Investment Characteristics Lead to Core
Slide 19: Perpetual Commingled Funds & Separate Accounts
4 Perpetual Commingled Funds & Separate Accounts Suite of perpetual investment solutions accommodating a variety of institutional & individual clients Perpetual structure facilitates ongoing exposure, investor optionality and asset diversification AB-PCI Product Offerings $17.3B AUM* Private Corpora
Slide 20: AB-PCI Has Experienced Robust Historical Growth
5 AB-PCI Has Experienced Robust Historical Growth Historical growth due to scaling perpetual vehicles, underpinned by strong performance for clients AB-PCI AUM Growth ($billions) Expand Existing +48% $17.3 Solutions CAGR Access New $10.8 Client Segments $5.6 Extend into Adjacencies $0.5 2014 2017 20
Slide 21: Organic Growth Strategy
5 Organic Growth Strategy Leverage existing capabilities to penetrate new client channels and launch product expansions Scalability Path Scale Core Strategy Extend Into Adjacencies Launch New Vehicles and Solutions Leverage Existing Platform Edge to Grow Existing Vehicles and Solutions to Further Pe
Slide 22: Bill Siemers, Interim Chief Financial Officer
Bill Siemers Interim Chief Financial Officer Fourth Quarter 2023 Review 22
Slide 23: Fourth Quarter and Full Year 2023 GAAP Income Statement
Fourth Quarter and Full Year 2023 GAAP Income Statement Income Statement (in US $ Millions) 4Q23 4Q22 %∆ FY 2023 FY 2022 %∆ Base Fees $714 $680 5 % $2,831 $2,826 — % Performance Fees 62 33 90 % 145 145 —% Bernstein Research Services 100 100 —% 386 416 (7)% Distribution Revenues 151 138 10 % 586 607
Slide 24: Adjusted Financial Highlights: Fourth Quarter and Full Year 2023
Adjusted Financial Highlights: Fourth Quarter and Full Year 2023 4Q:23 vs. 4Q:22 2023 vs. 2022 $871 $802 $3,372 $3,336 Adjusted Revenues 4Q:23 4Q:22 2023 2022 $951 $965 $254 $240 Adjusted Operating Income 4Q:23 4Q:22 2023 2022 29.2% 30.0% 28.2% 28.9% Adjusted Operating Margin 4Q:23 4Q:22 2023 2022 $
Slide 25: Fourth Quarter and Full Year 2023 Adjusted Income Statement
Fourth Quarter and Full Year 2023 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 4Q23 4Q22 %∆ FY 2023 FY 2022 %∆ Base Fees(1) $682 $659 3 % $2,717 $2,742 (1) % Performance Fees 51 18 184 % 126 91 39 % Bernstein Research Services 100 100 —% 386 416 (7)% Investment Gains (Losse
Slide 26: Adjusted Income Statement Highlights
Fourth Quarter and Full Year 2023 Adjusted Income Statement Highlights Revenues • Base Fees increased 3% versus 4Q22 driven by an 8% increase in average AUM, higher across all channels, partially offset by fee rate decrease of 4%, lower across all channels, principally driven by asset mix. Base Fees
Slide 27: 2023 in Review: Execution Across our Strategy
2023 in Review: Execution Across our Strategy • 77% of Fixed income and 42% of Equity assets outperforming over long-term (5 years) Deliver • Retail, Private Wealth channels both positive for full year, led by Fixed Income +5.5% AOG • Augmenting solutions through new wrappers: launched 10 new ETF’s,
Slide 28: Appendix
Appendix Fourth Quarter 2023 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 (1.7) 58 2.7 29 1.7 24 2.6 10 Concentrated Growth (17.0) 94 1.2 50 (0.
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 2.3 14 (0.3) 57 0.2 40 0.9 17 European Income 5.7 3 (0.5) 64 0.9 23 1.3
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 0.5 (3.2) 2.4 2.6 Concentrated Global Growth (12.3) (7.2) (1.5) 1.2 Global Core (1.2) (0.6) (1.0) 0.3 International Strategic Core (1.6) (0.4) (0.9) 2.0 Sustainable Global Them
Slide 32: Assets Under Management: 4Q23
Assets Under Management: 4Q23 (US $ Billions) September 30, December 31, 2023 2023 Institutions Private Wealth Retail Total Total Equity Actively Managed $59 $50 $138 247 227 Passive (1) 24 4 34 62 56 Total Equity 83 54 172 309 283 Fixed Income Taxable 127 18 64 209 195 Tax-Exempt 1 27 33 61 56 Pass
Slide 33: Three Months Ended 12/31/23: AUM Roll-Forward by Distribution Channel
Three Months Ended 12/31/23: 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 $141.5 $1.3 $(1.7) $(0.6) $(1.0) $10.0
Slide 34: Twelve Months Ended 12/31/23: AUM Roll-Forward by Distribution Channel
Twelve Months Ended 12/31/23: 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 $137.1 $6.0 $(2.8) $(1.9) $1
Slide 35: Three Months Ended 12/31/23: AUM Roll-Forward by Investment Service
Three Months Ended 12/31/23: 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 $146.3 $6.2 $(7.5) $(2.0) $(3.3) $18.3 $
Slide 36: Twelve Months Ended 12/31/23: AUM Roll-Forward by Investment Service
Twelve Months Ended 12/31/23: 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 $134.8 $27.3 $(28.5) $(5.0) $(6.2) $32.
Slide 37: Active vs. Passive Net Flows
Active vs. Passive Net Flows Three Months Ended 12/31/23 Actively Passively Managed Managed (1) Total Equity $ (5.0) $ (0.5) $ (5.5) Fixed Income 2.5 1.2 3.7 Alternatives/MAS (2) (0.3) 0.3 — Total $ (2.8) $ 1.0 $ (1.8) Twelve Months Ended 12/31/23 Actively Passively Managed Managed (1) Total Equity
Slide 38: Assets Under Management By Region
Assets Under Management By Region Institutional Geographic Breakdown Retail Geographic Breakdown Other Other Japan 4% 3% APAC ex 4% Japan 6% EMEA 9% Japan 11% EMEA 12% APAC ex Japan 17% US US 74% 60% $317.1B $286.8B As of December 31, 2023 By Client Domicile Percentages may not add up to 100% due to
Slide 39: Fourth Quarter and Full Year 2023 Adjusted Advisory Fees
Fourth Quarter and Full Year 2023 Adjusted Advisory Fees 4Q23 4Q22 %∆ FY 2023 FY 2022 %∆ Ending AUM ($ Billions) $725 $646 12 % $725 $646 12 % Average AUM ($ Billions) $685 $636 8% $680 $687 (1)% By Fee Type ($ Millions): Adjusted Base Fees(1) $682 $659 3% $2,717 $2,742 (1)% Adjusted Performance Fee
Slide 40: Fourth Quarter and Full Year 2023 GAAP Income Statement
Fourth Quarter and Full Year 2023 GAAP Income Statement In US $ Millions (except EPU) 4Q23 4Q22 %∆ FY 2023 FY 2022 %∆ Net Revenues $1,090 $990 10 % $4,155 $4,054 3% Operating Expenses 852 786 8% 3,337 3,239 3% Operating Income 238 204 17 % 818 815 —% Net Income Attributable to AB Unitholders 227 187
Slide 41: Fourth Quarter and Full Year 2023 AB Holding Financial Results
Fourth Quarter and Full Year 2023 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 4Q23 4Q22 %∆ FY 2023 FY 2022 %∆ AB Net Income Attributable to AllianceBernstein $227 $187 22 % $765 $832 (8)% Weighted Average Equity Ownership Interest 38.9 % 38.4 % 39.2 % 36.7 % AB Holding
Slide 42: Fourth Quarter 2023 GAAP to Non-GAAP Reconciliation
Fourth Quarter 2023 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related Interest GAAP Payments Adjustments Inv. VIE (Charges) Expenses Expense Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investme
Slide 43: Fourth Quarter 2022 GAAP to Non-GAAP Reconciliation
Fourth Quarter 2022 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related Interest GAAP Payments Adjustments Inv. VIE (Charges) Expenses Expense Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investme
Slide 44: Full Year 2023 GAAP to Non-GAAP Reconciliation
Full Year 2023 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related Interest GAAP Payments Adjustments Inv. VIE (Charges) Expenses Expense Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investment ad
Slide 45: Full Year 2022 GAAP to Non-GAAP Reconciliation
Full Year 2022 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related Interest GAAP Payments Adjustments Inv. VIE (Charges) Expenses Expense Non-GAAP (A) (B) (C) (D) (E) (F) (G) Investment ad
Slide 46: 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 47: A Word About Risk
A Word About Risk The value of an investment can go down as well as up and investors may not get back the full amount they invested. Capital is at risk. Past performance does not guarantee future results. There can be no assurance that any alternative investment objectives will be achieved. Investme
Slide 48: AllianceBernstein
ALLIANCEBERNSTEIN'
AllianceBernstein Holding L.P. Units — Q4 2023 Earnings Presentation on 6ix