Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Q3 2021 Earnings Presentation
45 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 28, 2021
Slide 1: Third Quarter 2021 Review
Third Quarter 2021 Review October 28, 2021 Seth P. Bernstein, President & Chief Executive Officer Ajai Kaul, SVP, Chief Executive Officer, Asia Pacific Ali Dibadj, Chief Financial Officer & Head of Strategy
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 Third Quarter 2021 Review 3
Slide 4: Firmwide Overview: Third Quarter 2021
Firmwide Overview: Third Quarter 2021 3Q:21 vs. 3Q:20 3Q:21 vs. 2Q:21 $45.0 $32.3 $29.3 32.3 $36.3 Ex - Gross Sales* Venerable 3Q:21 3Q:20 3Q:21 2Q:21 $7.3 (Ex-AXA) $9.3 (Ex-AXA + Venerable) $6.7 $6.7 Active Net Flows† $5.1 $6.7 3Q:21 3Q:20 3Q:21 2Q:21 $742.2 $742.2 $738.4 $630.8 End of Period AUM 3
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend Firmwide Retail 45.0 25.6 23.0 23.8 29.3 31.3 33.3 36.3 ex- 32.3 17.5 17.7 Venerable 5.2 6.6 5.3 7.5 7.2 2.7 3.9 5.2 0.7 3.1 3.2 6.2 (0.7) (2.2) (0.7) (25.1) (26.2) (28.1) (28.1) (10.0) (1.3) (16.8) (18.4) (20.3) (18.6) (19.0) (38.8) 3Q:20* 4Q:20*
Slide 6: Percentage of Assets Outperforming at Quarter-End
Percentage of Assets Outperforming at Quarter-End Fixed Income One-Year Three-Year Five-Year 91 91 92 79 69 70 63 65 68 70 62 55 43 49 24 3Q:20 4Q:20 1Q:21 2Q:21 3Q:21 3Q:20 4Q:20 1Q:21 2Q:21 3Q:21 3Q:20 4Q:20 1Q:21 2Q:21 3Q:21 Equities One-Year Three-Year Five-Year 76 78 71 67 66 67 67 70 61 57 53
Slide 7: Retail Highlights
Retail Highlights Broad Offering Drives Consistent Organic Growth Third Quarter 2021 Highlights 9% AOG in 3Q; 11th positive quarter out of last 13 (USD billions) Record Sales and Flows 30 • Record gross sales of $25.6B; up $8B or 46% Y/Y, and up $2B or 7% Q/Q 20 • Improved redemption rate of 26%, do
Slide 8: Institutional Highlights
Institutional Highlights Organic Growth in 9/10 Trailing Quarters Third Quarter 2021 Highlights (USD billions) Sales and Flows 20 • Gross sales of $2.6B, down -85% vs. an extraordinary 2Q21 impacted by the EQH-Venerable transaction, and -68% Y/Y 10 4.2 5.0 1.5 1.4 • Moderate outflows of $2.4B; low 2
Slide 9: Private Wealth Management Highlights
Private Wealth Management Highlights Positive Net Flows in 3Q, and in 4 of last 5 quarters Third Quarter 2021 Highlights (USD billions) Double-Digit Sales Growth Rate vs. Prior Periods 5 • Gross sales of $4.1B, up 15% both Y/Y and Q/Q • FA Productivity up 17% Y/Y and 13% Q/Q 0.3 0.1 0.5 • Net inflow
Slide 10: Bernstein Research Highlights
Bernstein Research Highlights Bernstein Research Quarterly Revenues Third Quarter 2021 Highlights (USD millions) Growth in Institutional Trading Volumes 106 113 99 • Revenues of $113M, +15% Y/Y, +7% Q/Q • Solid Y/Y revenue growth in all regions; Europe up strongly with Asia Percent Change continuing
Slide 11: Progress on Our Strategy in 3Q21
Progress on Our Strategy in 3Q21 Firmwide Initiative Progress Deliver superior • Active Equity: 78% of assets in outperforming services for 3-yr period; 76% for 1-yr and 70% for 5-yr investment • Fixed Income: 70% of assets in outperforming services for 3-yr period; 92% for 1-yr and 70% for 5-yr sol
Slide 12: Ajai Kaul, SVP, Chief Executive Officer, Asia Pacific
Ajai Kaul SVP, Chief Executive Officer, Asia Pacific Third Quarter 2021 Review 12
Slide 13: AB is Well-Positioned to Capitalize on Asia's Growth Potential
AB is Well-Positioned to Capitalize on Asia’s Growth Potential Market Dynamism Growth Avenues Early Mover Advantage Product Base Key Attributes of AB’s Diversification Advantaged APAC Position Strong Brand Recognition Third Quarter 2021 Review 13
Slide 14: APAC is a Large and Fast-Growing Region
Market Dynamism APAC is a Large and Fast-Growing Region with Significant Growth Potential APAC has contributed most of any region to Global GDP …and the Region's National Savings Rates Demonstrate Growth for the last 15 years Structural Resilience 1.2 WB/IMF 50 (% Point Differential - APAC vs. NA) E
Slide 15: Regional Footprint in APAC
Early-Mover We Have Invested Time and Capital Consistently to Build a Strong Regional Footprint in APAC… APAC Milestones Expansion 2008 - Formed local asset 2006 management company 1986 - Acquired full ownership in Korea 2010 2015 1997 in Hong Kong - Sold off the Taiwan JV - Started Asia FI 2012 - S
Slide 16: Brand Recognition: 4th Ranked Brand in APAC in 2021
Brand Recognition ….and Have Developed Strong Brand Presence Across APAC… 4th Ranked Brand in APAC in 2021 Taiwan Korea 3rd 4th Brand Rank Brand Rank Hong Kong Singapore 6th 11th Brand Rank Brand Rank Source: Broadridge Fund Brand 50 2021 What our clients say about us … AB’s Online content has over
Slide 17: Competitively-Advantaged Position in Asia
Competitive Advantage ...Resulting in AB's Competitively-Advantaged Position in Asia... APAC's annualized fee base grew at a 13% CAGR since APAC contributes 18% of AB’s AUM - 2x that of U.S. & 2015 and represents 25% of the Firm’s annualized fee base European peers(1) Asia as % of AUM 26% 18% Fee Ba
Slide 18: Scale Driving Strong Operating Leverage versus Peers
Competitive Advantage ….With Scale Driving Strong Operating Leverage versus Peers AB’s Asian business has strong operating leverage relative Leveraging our global platform, we are scaling our business to Asia average effectively, judiciously managing costs while improving Bps of Average AUM 2020 pro
Slide 19: Broad and Diverse Platform Positioned For Growth
Product Diversification Our Broad and Diverse Platform is Strategically Positioned For Growth…. We have leveraged our FI Leadership in Our US equity market share in Japan Our strong YoY growth in equity AUM Taiwan to grow our Equity & MAS AUM(1) has tripled since 2015(1) is replicating our FI journe
Slide 20: Opportunities Abound in APAC For Continued Growth
Growth Strategies Opportunities Abound in APAC For Continued and Significant Growth Lift & Shift • Traditional strength in fixed income has been successfully extended into equity • Potential to extend beyond equity in MAS and alternatives • Private banking channel growing at ~8%/yr, represents a s
Slide 21: Ali Dibadj, Chief Financial Officer & Head of Strategy
Ali Dibadj Chief Financial Officer & Head of Strategy Third Quarter 2021 Review 21
Slide 22: Third Quarter 2021 GAAP Income Statement
Third Quarter 2021 GAAP Income Statement Income Statement (in US $ Millions) 3Q21 3Q20 %∆ 2Q21 %∆ Base Fees $759 $623 22 % $724 5% Performance Fees 18 7 163 % 54 (66)% Bernstein Research Services 113 99 15 % 106 7% Distribution Revenues 170 136 26 % 155 10 % Dividends & Interest 9 9 (3)% 9 2% Invest
Slide 23: Adjusted Financial Highlights: Third Quarter 2021
Adjusted Financial Highlights: Third Quarter 2021 3Q:21 vs. 3Q:20 3Q:21 vs. 2Q:21 $884 $884 $881 $727 Adjusted Revenues 3Q:21 3Q:20 3Q:21 2Q:21 $281 $281 $279 $216 Adjusted Operating Income 3Q:21 3Q:20 3Q:21 2Q:21 31.8% 29.7% 31.8% 31.7% Adjusted Operating Margin 3Q:21 3Q:20 3Q:21 2Q:21 $0.89 $0.89
Slide 24: Third Quarter 2021 Adjusted Income Statement
Third Quarter 2021 Adjusted Income Statement Adjusted Income Statement (in US $ Millions) 3Q21 3Q20 %∆ 2Q21 %∆ Base Fees(1) $729 $599 22 % $698 4% Performance Fees 18 7 163 % 54 (66)% Bernstein Research Services 113 99 15 % 106 7% Investment Gains (Losses) 0 (1) (79)% 0 n/m Other Revenues 25 24 —% 2
Slide 25: Third Quarter 2021 Adjusted Income Statement Highlights
Third Quarter 2021 Adjusted Income Statement Highlights Revenues • Base Fees increased 22% versus 3Q20 driven by a 20% increase in average AUM, higher across all channels, while the fee rate increased 1%. Base Fees increased 4% versus 2Q21 due primarily to a 3% increase in average AUM, higher across
Slide 26: The AB Investment Opportunity
The AB Investment Opportunity • Differentiated investment performance and distribution capabilities driving sustained best- Sustained Growth in-class organic growth and accelerating inorganic growth opportunities Expanding Alternatives • Demonstrated expansion in higher-fee, persistent-AUM alternati
Slide 27: Appendix
Appendix Third Quarter 2021 Review 27
Slide 28: 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 1.4 36 2.6 22 1.9 26 2.7 10 Concentrated Growth 4.7 15 0.3 46 (0.5) 53
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 Service (%) Percentile (%) Percentile (%) Percentile (%) Percentile Fixed Income American Income 0.3 44 1.6 25 0.8 32 1.5 7 European Income 0.6 38 1.8 12 1.5 17 2.7 12 A
Slide 30: 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 4.3 10.0 11.1 5.2 Concentrated Global Growth (2.9) 4.7 4.8 3.3 Global Core 0.7 0.6 1.1 2.4 International Strategic Core (8.1) (1.3) (0.3) 1.7 Sustainable Global Thematic 2.0 9.
Slide 31: Assets Under Management: 3Q21
Assets Under Management: 3Q21 (US $ Billions) September 30, 2021 June 30, 2021 Institutions Private Wealth Retail Total Total Equity Actively Managed $ 67 $ 56 $ 137 $ 260 $ 256 Passive (1) 29 1 39 69 70 Total Equity 96 57 176 329 326 Fixed Income Taxable 156 15 80 251 252 Tax-Exempt 1 27 27 55 54 P
Slide 32: AUM Roll-Forward by Distribution Channel
Three Months Ended 9/30/21: 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 162.1 1.5 (0.2) 0.5 1.8 (0.5) 1.3 163.4
Slide 33: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/21: 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 149.9 12.3 (5.4) (2.2) 4.7 (0.1) 4.6 154.
Slide 34: Active vs. Passive Net Flows
Three Months Ended 9/30/21: Active vs. Passive Net Flows Actively Passively Managed Managed (1) Total Equity $ 4.8 $ (0.3) $ 4.5 Fixed Income 1.6 0.2 1.8 Alternatives/MAS (2) 0.3 0.6 0.9 Total $ 6.7 $ 0.5 $ 7.2 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solution
Slide 35: Assets Under Management By Region
Assets Under Management By Region Institutional Geographic Breakdown Retail Geographic Breakdown NA ex US Other APAC ex 5% 3% Japan 6% UK 4% Japan 10% Japan 7% EMEA 12% EMEA 10% US US 69% 55% APAC ex Japan 20% $327.5B $298.8B As of September 30, 2021 By Client Domicile Percentages may not add up to
Slide 36: Third Quarter 2021 Adjusted Advisory Fees
Third Quarter 2021 Adjusted Advisory Fees 3Q21 3Q20 %∆ 2Q21 %∆ Ending AUM ($ Billions) $ 742 $ 631 18 % $ 738 1% Average AUM ($ Billions) $ 747 $ 624 20 % $ 723 3% By Fee Type ($ Millions): Adjusted Base Fees $ 729 $ 599 22 % $ 698 4% Adjusted Performance Fees 18 7 163 % 54 (66)% Total $ 747 $ 606 2
Slide 37: Third Quarter 2021 GAAP Income Statement
Third Quarter 2021 GAAP Income Statement In US $ Millions (except EPU) 3Q21 3Q20 %∆ 2Q21 %∆ Net Revenues $ 1,093 $ 900 21 % $ 1,077 2% Operating Expenses 813 683 19 % 793 3% Operating Income 280 217 29 % 284 (1)% Net Income Attributable to AB Unitholders 265 208 27 % 268 (1)% AB Holding GAAP Diluted
Slide 38: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets 9/30/2021 12/31/2020 Cash and cash equivalents $ 1,210 $ 1,037 Cash and securities, segregated 909 1,754 Receivables, net 2,697 2,280 Investments: Long-term incentive compensation-related 62 60 Other 161 193 Assets of consolidated variable interest
Slide 39: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Nine Months Ended 9/30/2021 9/30/2020 Net Income $ 779 $ 575 Non-cash items: Amortization of deferred sales commissions 25 20 Non-cash long-term incentive compensation expense 35 24 Depreciation and other amortization 97 108 Unrealized losses on
Slide 40: Third Quarter 2021 AB Holding Financial Results
Third Quarter 2021 AB Holding Financial Results In US $ Millions (excluding per Unit amounts) 3Q21 3Q20 %∆ 2Q21 %∆ AB Net Income Attributable to AllianceBernstein $ 265 $ 208 27 % $ 268 (1)% Weighted Average Equity Ownership Interest 36.2 % 35.5 % 36.4 % AB Holding Equity in Net Income Attributable
Slide 41: Third Quarter 2021 GAAP to Non-GAAP Reconciliation
Third Quarter 2021 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servic
Slide 42: Third Quarter 2020 GAAP to Non-GAAP Reconciliation
Third Quarter 2020 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servic
Slide 43: Second Quarter 2021 GAAP to Non-GAAP Reconciliation
Second Quarter 2021 GAAP to Non-GAAP Reconciliation In US $ Thousands Adjustments Distribution Pass Deferred NCI/ Real Estate Acquisition- Related Through Comp. Consol Credits Related GAAP Payments Adjustments Inv. VIE (Charges) Expenses Non-GAAP (A) (B) (C) (D) (E) (F) Investment advisory and servi
Slide 44: 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 45: AllianceBernstein
ALLIANCEBERNSTEIN'
AllianceBernstein Holding L.P. Units — Q3 2021 Earnings Presentation on 6ix