Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q1 2023 Earnings Presentation
43 slides from Alliancebernstein Holding L.p's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Review
First Quarter 2023 Review April 27, 2023 Seth P. Bernstein, President & Chief Executive Officer Kate Burke, Chief Operating Officer & Chief Financial Officer Scott DiMaggio, Co-Head of Fixed Income & Director of Global Fixed Income Gershon Distenfeld, Co-Head of Fixed Income & Director of Credit
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 First Quarter 2023 Review 3
Slide 4: Firmwide Overview: First Quarter 2023
Firmwide Overview: First Quarter 2023 1Q:23 vs. 1Q:22 1Q:23 vs. 4Q:22 $40.9 $25.6 $30.9 $25.6 Gross Sales $31.3 ex- $24.5 ex- CRS CRS 1Q:23 1Q:22* 1Q:23 4Q:22* $12.2 Active Net Flows $1.8 $1.8 ($0.1) 1Q:23 1Q:22* 1Q:23 4Q:22* $675.9 $735.4 $675.9 $646.4 End of Period AUM 1Q:23 1Q:22 1Q:23 4Q:22 $751
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail $40.9 $30.9 $20.6 $16.8 $25.6 $17.3 $14.2 $11.4 $23.9 $19.8 $13.8 $1.6 $0.8 ($2.7) ($1.9) ($1.0) ($2.2) ($5.0) ($3.4) ($10.5) ($15.2) ($26.6) ($24.8) ($18.8) ($17.6) ($29.5) ($30.3) ($32.8) ($21.6) ($19.5) 1Q:22 2Q:22* 3Q:22* 4Q:22
Slide 6: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End Fixed Income One-Year Three-Year Five-Year 83 72 71 70 75 64 63 50 53 53 53 21 20 27 19 1Q:22 2Q:22 3Q:22 4Q:22 1Q:23 1Q:22 2Q:22 3Q:22 4Q:22 1Q:23 1Q:22 2Q:22 3Q:22 4Q:22 1Q:23 Equities One-Year Three-Year Five-Year 82 80 77 74 73 59 59 58 45 49 45
Slide 7: Retail Highlights
Retail Highlights Strong FI Demand Drives Net Inflows First Quarter 2023 Highlights 2.6% annualized organic growth in 1Q 2023 Improved Fixed Income Demand Drives Sales, Net Inflows 25 • Gross sales of $16.8B; -$3.8B or -18% Y/Y, and +$2.6B or +18% Q/Q 15 • Redemption rate improved to 25%, versus 30%
Slide 8: Institutional Highlights
Institutional Highlights Organic Gains in 12 out of 15 Trailing Quarters First Quarter 2023 Highlights (USD Billions) Sales and Flows 20 15 10.2 • 1Q23 gross sales of $3.0B, down 79% Y/Y and 76% Q/Q; both prior 10 5.0 periods saw large custom target-date mandates 2.1 0.8 0.9 0.2 0.4 0.7 1.7 5 1.5 1.
Slide 9: Private Wealth Highlights
Private Wealth Highlights Strong Organic Growth in 1Q First Quarter 2023 Highlights Positive 8 of last 11 quarters Strong Q/Q Sales and Advisor Productivity Growth Drive Net Inflows (USD billions) • 1Q23 gross sales of $5.8B, -3% Y/Y, +40% Q/Q 5 • Advisor productivity: -8% Y/Y, +38% Q/Q 2.2 1.9 1.7
Slide 10: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues First Quarter 2023 Highlights (USD millions) Institutional Trading Volumes Remain Constrained 117.8 • 1Q revenues of $100M, -15% Y/Y, flat Q/Q 100.5 100.0 • Recovery in US and Europe trading activity following slow 4Q, though Percen
Slide 11: Progress on Our Initiatives in 1Q23
Progress on Our Initiatives in 1Q23 Firmwide Initiative Progress Deliver superior • Fixed Income: 83% of assets in outperforming services for 3-yr period; 27% for 1-yr and 75% for 5-yr investment • Active Equity: 38% of assets in outperforming services for 3-yr period; 74% for 1-yr and 73% for 5-yr
Slide 12: Scott DiMaggio and Gershon Distenfeld, Fixed Income
Scott DiMaggio Co-Head of Fixed Income, Director of Global Fixed Income Gershon Distenfeld Co-Head of Fixed Income, Director of Credit First Quarter 2023 Review 12
Slide 13: AB Fixed Income: Global Resources
AB Fixed Income: Global Resources Team structured to deliver a 360° view Global Resources 6 Quantitative Analysts Montréal Seoul Portfolio Management Portfolio Management Tokyo Portfolio Management 24 Global Corporate Credit Taipei Analysts Portfolio Management Nashville Credit Research London Credi
Slide 14: Fixed Income Demand is Improving with Higher Rates
Fixed Income Demand is Improving with Higher Rates AB Net Flows (2022 – March 2023) Market Volatility Led To Outflows Throughout Much of 2022 Though A Broad Platform Helped to Diversify Flows AB Active Fixed Income Flows AB Active Fixed Income Flows 4.0 4.0 2.0 Billions ($) 2.0 Billions ($) - - (2.0
Slide 15: Our Global FI Offering is Differentiated Among our Peers
Our Global FI Offering is Differentiated Among our Peers With highly regarded, innovative capabilities across Income, Municipal and Tailored FI strategies Product Scaling and Our Heritage Tailored Mandates Development • 50+ years experience serving Market leading position in the provision • Deep kno
Slide 16: Culture of Innovation
Culture of Innovation Pushing research boundaries, pioneering new markets and engineering leading technologies, responsibly Launched next-gen Abbie Investment Integrated Launched Platform for 1987: Pioneered quantitative and Launched Abbie, Municipals “barbell” portfolio fundamental Muni Inflation-
Slide 17: Use a Balanced Approach to Navigate Today's Environment
Use a Balanced Approach to Navigate Today’s Environment Our barbell approach is structured to perform in the vast majority of environments Government and Credit Bonds Rarely Underperform Jointly “Normal times” 27% of the time “Good times” 48% of the time Treasuries Negative; High Yield Positive Trea
Slide 18: Fixed Income Investment Performance
Fixed Income Investment Performance A track record of long-term outperformance Relative Performance* of our Top Retail FI Solutions Product YTW YTD 1-Year Mstar %ile 3-Year Mstar %ile 5-Year Mstar %ile American Income 7.1% +0.8% (1.8%) 74 (0.4%) 63 +0.3% 33 Global High Yield 9.8% (0.0%) (0.3%) 59 +1
Slide 19: Our Fixed Income Growth Strategy has Three Key Pillars
Our Fixed Income Growth Strategy has Three Key Pillars While maintaining an unwavering commitment across the breadth of our FI platform Fixed Income Growth Drivers Municipals Income Insurance Our Muni business has generated strong Capitalize on existing brand recognition Leverage our strong foundati
Slide 20: Kate Burke, Chief Operating Officer & Chief Financial Officer
Kate Burke Chief Operating Officer & Chief Financial Officer First Quarter 2023 Review 20
Slide 21: First Quarter 2023 GAAP Income Statement
First Quarter 2023 GAAP Income Statement Income Statement (in US $ Millions) 1Q23 1Q22 %∆ 4Q22 %∆ Base Fees $692 $748 (7)% $680 2% Performance Fees 37 76 (52)% 33 12 % Bernstein Research Services 100 118 (15)% 100 —% Distribution Revenues 141 168 (16)% 138 2% Dividends & Interest 51 11 n/m 59 (14)%
Slide 22: Adjusted Financial Highlights: First Quarter 2023
Adjusted Financial Highlights: First Quarter 2023 1Q:23 vs. 1Q:22 1Q:23 vs. 4Q:22 $833 $904 $833 $802 Adjusted Revenues 1Q:23 1Q:22 1Q:23 4Q:22 $285 $225 $225 $232 Adjusted Operating Income 1Q:23 1Q:22 1Q:23 4Q:22 27.0% 31.5% 27.0% 28.9% Adjusted Operating Margin 1Q:23 1Q:22 1Q:23 4Q:22 $0.90 $0.66
Slide 23: First Quarter 2023 Adjusted Income Statement
First Quarter 2023 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 1Q23 1Q22 %∆ 4Q22 %∆ Base Fees(1) $667 $725 (8)% $659 1% Performance Fees 33 45 (27)% 18 84 % Bernstein Research Services 100 118 (15)% 100 —% Investment (Losses) (2) (6) (64)% — n/m Other Revenues 63 25 158 %
Slide 24: First Quarter 2023 Adjusted Income Statement Highlights
First Quarter 2023 Adjusted Income Statement Highlights Revenues • Base Fees decreased 8% versus 1Q22 driven by an 11% decrease in average AUM, lower across all channels, while the fee rate increased 4%. Base Fees increased 1% versus 4Q22 driven by a 5% increase in average AUM, higher across all thr
Slide 25: Appendix
Appendix First Quarter 2023 Review 25
Slide 26: 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 3.7 21 1.0 45 2.9 14 3.0 6 Concentrated Growth 2.7 30 1.1 43 1.5 29 0.
Slide 27: 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 (1.8) 74 (0.4) 63 0.3 33 0.6 21 European Income (3.0) 85 0.6 36 0.3 36 1
Slide 28: 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 (3.9) (0.5) 4.5 3.4 Concentrated Global Growth (2.2) (3.3) (0.2) 1.4 Global Core 2.4 (1.8) 0.2 0.9 International Strategic Core (1.9) (2.6) (0.3) 1.6 Sustainable Global Themati
Slide 29: Assets Under Management: 1Q23
Assets Under Management: 1Q23 (US $ Billions) At December 31, At March 31, 2023 2022 Institutions Private Wealth Retail Total Total Equity Actively Managed $57 $48 $124 $229 $218 Passive (1) 23 3 31 57 54 Total Equity 80 51 155 286 272 Fixed Income Taxable 124 17 57 198 190 Tax-Exempt 1 26 28 55 53
Slide 30: AUM Roll-Forward by Distribution Channel
Three Months Ended 3/31/23: 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 $137.1 $1.1 $(0.5) $(0.6) $— $4.5 $4.5 $
Slide 31: AUM Roll-Forward by Investment Service
Three Months Ended 3/31/23: 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 $5.7 $(6.2) $(0.9) $(1.4) $9.4 $8.
Slide 32: Active vs. Passive Net Flows
Three Months Ended 3/31/23: Active vs. Passive Net Flows Actively Passively Managed Managed (1) Total Equity $(3.4) $(0.8) $(4.2) Fixed Income 5.1 (0.2) 4.9 Alternatives/MAS (2) 0.1 — 0.1 Total $1.8 $(1.0) $0.8 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solution
Slide 33: Assets Under Management By Region
Assets Under Management By Region Institutional Geographic Breakdown Retail Geographic Breakdown Other Other Japan 4% 3% 5% APAC ex Japan 7% EMEA 10% Japan EMEA 11% 12% APAC ex US Japan US 73% 18% 58% $306.6B $256.7B As of March 31, 2023 By Client Domicile Percentages may not add up to 100% due to r
Slide 34: First Quarter 2023 Adjusted Advisory Fees
First Quarter 2023 Adjusted Advisory Fees 1Q23 1Q22 %∆ 4Q22 %∆ Ending AUM ($ Billions) $676 $735 (8)% $646 5% Average AUM ($ Billions) $667 $751 (11)% $636 5% By Fee Type ($ Millions): Adjusted Base Fees(1) $667 $725 (8)% $659 1% Adjusted Performance Fees 33 45 (27)% 18 84 % Total $700 $770 (9)% $67
Slide 35: First Quarter 2023 GAAP Income Statement
First Quarter 2023 GAAP Income Statement In US $ Millions (except EPU) 1Q23 1Q22 %∆ 4Q22 %∆ Net Revenues $1,024 $1,105 (7)% $990 3% Operating Expenses 809 857 (6)% 786 3% Operating Income 215 248 (13)% 204 6% Net Income Attributable to AB Unitholders 194 261 (26)% 187 4% AB Holding GAAP Diluted Net
Slide 36: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 3/31/2023 12/31/2022 Cash and cash equivalents $886 $1,130 Cash and securities, segregated 1,055 1,522 Receivables, net 2,306 2,435 Investments: Long-term incentive compensation-related 44 48 Other 168 170 Assets of consolidated variable interest en
Slide 37: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Three Months Ended 3/31/2023 3/31/2022 Net Income $204 $236 Non-cash items: Amortization of deferred sales commissions 8 9 Non-cash long-term incentive compensation expense 7 19 Depreciation and other amortization 23 11 Unrealized (gains) losses
Slide 38: First Quarter 2023 AB Holding Financial Results
First Quarter 2023 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 1Q23 1Q22 %∆ 4Q22 %∆ AB Net Income Attributable to AllianceBernstein $194 $261 (26)% $187 4% Weighted Average Equity Ownership Interest 39.3 % 36.2 % 38.4 % AB Holding Equity in Net Income Attributable to A
Slide 39: First Quarter 2023 GAAP to Adjusted Reconciliation
First Quarter 2023 GAAP to Adjusted Reconciliation In US $ Millions Adjustments Distribution- Pass Acquisition Related Through Long-Term Inc. Consol Related Adjusted GAAP Payments Expenses Compensation VIE Expenses (Non-GAAP) Net Revenues $1,024 ($157) ($19) ($5) ($10) $0 $833 Operating Expenses 809
Slide 40: First Quarter 2022 GAAP to Adjusted Reconciliation
First Quarter 2022 GAAP to Adjusted Reconciliation In US $ Millions Adjustments Distribution- Pass Acquisition Related Through Long-Term Inc. Consol Related Adjusted GAAP Payments Expenses Compensation VIE Expenses (Non-GAAP) Net Revenues $1,105 ($185) ($45) $4 $25 $0 $904 Operating Expenses 857 (18
Slide 41: Fourth Quarter 2022 GAAP to Adjusted Reconciliation
Fourth Quarter 2022 GAAP to Adjusted Reconciliation In US $ Millions Adjustments Distribution- Pass Acquisition Related Through Long-Term Inc. Consol Related Adjusted GAAP Payments Expenses Compensation VIE Expenses (Non-GAAP) Net Revenues $990 ($151) ($18) ($17) ($2) $ - $ 802 Operating Expenses 78
Slide 42: AB Adjusted Financial Results Reconciliation
AB Adjusted Financial Results Reconciliation Notes to Consolidated Statements of Income and Supplemental Information (Unaudited) • 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 invest
Slide 43: AllianceBernstein
ALLIANCEBERNSTEIN'
AllianceBernstein Holding L.P. Units — Q1 2023 Earnings Presentation on 6ix