Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q2 2020 Earnings Presentation
32 slides from Acadian Asset Management's earnings presentation, Aug 6, 2020
Slide 1: BrightSphere Reports Financial and Operating Results for the Second Quarter Ended June 30, 2020
Contact: Elie Sugarman ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Second Quarter Ended June 30, 2020 and Other Business Updates • U.S. GAAP earnings per share of $0.23 for the quarter, compared to $0.31 for Q2'19 • ENI earnings per share of $0.41 for the
Slide 2: Dividend Declaration
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.01 per share payable on September 25, 2020 to shareholders of record as of the close of business on September 11, 2020. Conference Call Dial-in The Company will hold a conference call and simultaneous w
Slide 3: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements which may include, from time to time, information relating to after-tax proceeds from our dispositions of Barrow Hanley and Copper Rock, anticipated revenues, margins, operating expense and variable compensation ratios
Slide 4: Q2 2020 Earnings Presentation
Q2 2020 EARNINGS PRESENTATION August 6, 2020 4
Slide 5: Q2'20 and Other Recent Highlights
Q2’20 and Other Recent Highlights BrightSphere Highlights • U.S. GAAP EPS of $0.23 for Q2'20 compared to $0.31 for Q2'19 • ENI earnings per share of $0.41 for the quarter compared to $0.45 for Q2'19 • Announced divestiture of Barrow Hanley and Copper Rock for $335 million in expected after-tax proce
Slide 6: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended Q2'20 vs. Q2'19 June 30, June 30, March 31, Increase 2020 2019 (Decrease) 2020 • Total revenue decreased (15.6)% Management fees $ 170.7 $ 205.9 (17.1)% $ 178.5 from Q2'19 primarily due to lower Performance
Slide 7: Disciplined Execution of Long-Term Growth Strategy
Disciplined Execution of Long-Term Growth Strategy Focus on High- • Quant & Solutions Demand Quant & ◦ Leveraging broad quant capabilities to provide exposures and solutions sought by clients Solutions and • Alternatives Alternatives ◦ Diverse secondaries private market strategies attracting growing
Slide 8: Pro Forma Business Mix Positioned to Generate Organic Growth
Pro Forma Business Mix Positioned to Generate Organic Growth • 88%(1) of ENI revenue in high-demand Quant & Solutions and Alternatives Segments Quant & Solutions(2) Alternatives(2) Liquid Alpha(2) • Highly scalable offerings with • Diverse secondaries private • Demonstrated long-term alpha substanti
Slide 9: More Attractive Pro Forma Business Mix - by Earnings Metrics
More Attractive Pro Forma Business Mix - by Earnings Metrics(1) ENI Revenue Economic Net Income(2) Adjusted EBITDA(2) Alternatives Alternatives Alternatives 18% 19% 25% BrightSphere Quant & Liquid Solutions Liquid Quant & Alpha Quant & 48% Alpha Solutions 26% Solutions Liquid 29% 53% 56% Alpha 27% L
Slide 10: More Attractive Pro Forma Business Mix - by AUM
More Attractive Pro Forma Business Mix - by AUM(1) By Segment By Asset Class By Client Location Other Alternatives 7% 13% BrightSphere Alternatives Australia 13% 4% Asia Fixed 6% U.S.A. Liquid Quant & Income Europe 73% Alpha Solutions 7% Equity 10% 36% 51% 80% Alternatives Other 18% 7% Pro Forma Alt
Slide 11: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • Segment NCCF of $0.3 billion for Q2'20 compared to $1.0 billion for Q2'19; AUM decreased 5.7% from Q2'19 primarily due to Q1’20 market decline • Continued strong investment performance; decline in 5- and 10- year record driven by managed volatility strategies t
Slide 12: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Segment AUM increased to $24.1 billion at June 30, 2020 compared to $23.5 billion at June 30, 2019 • Alternatives revenue decreased 4.1%, and segment ENI decreased 14.3% in Q2'20 compared to Q2'19, mainly due to change in asset and Affiliate distribution mix Key Per
Slide 13: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • Segment NCCF of $(2.0) billion for Q2'20 compared to $(2.0) billion for Q2'19; excluding Barrow Hanley and Copper Rock, NCCF of $0.1 billion for Q2'20 • Segment AUM decreased 37.5% to $64.9 billion at June 30, 2020 compared to June 30, 2019 due to Vanguard reallocat
Slide 14: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”)(1) Revenue Impact of NCCF(1)(2) $b $m $2 $8 $6 $1 39.8 44.2 $4 40 $2 38 $0.1 $0.0 $0.7 $0.3 $0.3 38 $0 $0 $0.0 69 $0.0 69 $-2 $(6.8) $(6.8) $-4 $-1 31 $(2.0) $-6 $-8 $-2 $-10 $(6.6) $-12 $-3 $-14 Q2 2020 Pro forma excluding Revenue Q
Slide 15: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(1) ($ in millions, unless otherwise noted) Three Months Ended June 30, Three Months Ended March 31, Increase Increase U.S. GAAP Basis 2020 2019 (Decrease) 2020 (Decrease) Revenue $ 174.7 $ 207.1 (15.6)% $ 182.6 (4.3)% Pre-tax income from cont. ops. att
Slide 16: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliates • Q2'20 ENI revenue of $172.5 million decreased from Q2'19 by (15.7)% primarily due to a decrease in management fees • Management fees decreased (17.1)% from Q2
Slide 17: ENI Operating Expenses
ENI Operating Expenses Commentary • Total ENI operating expenses reflect Affiliate operating expenses and Center expenses (excluding variable compensation) • ENI Operating expenses reduced to $74.0 million in Q2’20 from $83.0 million in Q2’19 reflecting expense discipline and Center restructuring, w
Slide 18: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation plus Center bonuses and also includes a contractual split of certain performance fees ◦ Affiliate variable co
Slide 19: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliate, in some cases following an initial preference to BSIG(1) • Q2'20 Distribution Ratio of 18.6% lower than Q2'19 mainly due to a decrease in ENI operating earnings, and a change in m
Slide 20: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($M) June 30, 2020 December 31, 2019 • June 30 net leverage ratio (Debt, net of total cash and Assets Cash and cash equivalents $ 115.8 $ 111.3 cash equivalents / Adj. EBITDA) of 1.7x Investment advisory fees receivable 126.2 151.9 • Total seed and co-i
Slide 21: Supplemental Information
Supplemental Information 21
Slide 22: Segment Information for Q2'20 and Q2'19
Segment Information for Q2'20 and Q2'19 Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Quant & Reconciling Total U.S. Quant & Reconciling Total U.S. ($ in millions, unless otherwise noted) Solutions Alternatives Liquid Alpha Other Items(1) GAAP (3) Solutions Alternatives Liquid Al
Slide 23: Segment Information for Q1'20
Segment Information for Q1'20 Three Months Ended March 31, 2020 Reconciling ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Items(1) Total U.S. GAAP (3) ENI Revenue $ 86.1 $ 41.9 $ 52.5 $ 0.1 $ 2.0 $ 182.6 ENI Operating Expenses 37.1 16.6 19.8 7.7 (28.6) 52.
Slide 24: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended June 30, 2020 June 30, 2019 March 31, 2020 Quantitative and Solutions Beginning balance $ 79.0 $ 95.1 $ 101.9 Gross inflows 3.3 2.5 3.7 Gross outflows (3.7) (2.2) (3.1) Reinvested income and dis
Slide 25: Reconciliations and Disclosures
Reconciliations and Disclosures 25
Slide 26: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) Three Months Ended ENI Adjustments ($ in millions) June 30, June 30, March 31, 2020 2019 2020 1i. Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income attributable to controlling interests $ 18
Slide 27: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of per-share U.S. GAAP Net Income to Economic Net Income ($) Three Months Ended June 30, June 30, March 31, 2020 2019 2020 U.S. GAAP net income per share $ 0.23 $ 0.31 $ 0.38 Adjustments to reflect the economic earnings of
Slide 28: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended June 30, June 30, March 31, 2020 2019 2020 U.S. GAAP operating expense $ 148.5 $ 160.5 $ 108.5 Less: items excluded from ENI Amorti
Slide 29: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP pre-tax income from continuing operations to Pre-tax ENI ($ in millions) Three Months Ended June 30, June 30, March 31, 2020 2019 2020 U.S. GAAP pre-tax income from continuing operations $ 61.2 $ 35.7 $ 35.7 A
Slide 30: Definitions and Additional Notes
Definitions and Additional Notes References to “BrightSphere,” “BSIG” or the “Company” refer to BrightSphere Investment Group Inc.; 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 31: 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
Slide 32: 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
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