Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q4 2020 Earnings Presentation
31 slides from Acadian Asset Management's earnings presentation, Feb 4, 2021
Slide 1: Q4 2020 Earnings Presentation
Exhibit 99.2 Q4 2020 EARNINGS PRESENTATION February 4, 2021
Slide 2: BrightSphere Reports Financial and Operating Results for Q4 2020
Contact: Elie Sugarman ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Fourth Quarter Ended December 31, 2020 • U.S. GAAP earnings per share of $2.42 for the quarter, compared to $0.79 for Q4'19, driven by the gain on sale of Barrow Hanley • ENI earnings per s
Slide 3: Dividend Declaration
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.01 per share payable on March 26, 2021 to shareholders of record as of the close of business on March 12, 2021. Conference Call Dial-in The Company will hold a conference call and simultaneous webcast t
Slide 4: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements which may include, from time to time, expected use of proceeds from the sale of Barrow Hanley, anticipated revenues, margins, operating expense, variable compensation and distribution ratios, cash flows or earnings gro
Slide 5: Q4'20 Highlights
Q4'20 Highlights • BrightSphere Highlights • U.S. GAAP EPS of $2.42 for Q4'20 compared to $0.79 for Q4'19, increase driven by the gain on sale of Barrow Hanley • ENI EPS of $0.47 for Q4'20, compared to $0.50 for Q4'19 • NCCF of $(1.1) billion for Q4'20, and $(0.3) billion(1) excluding Barrow Hanley
Slide 6: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended December 31, December 31, September 30, Q4'20 vs. Q4'19 Increase 2020 2019 (Decrease) 2020 Management fees $ 170.5 $ 197.2 (13.5)% $ 178.2 • Total revenue decreased (13.8)% from Performance fees 5.3 6.8 (22.
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: Business Mix Positioned to Generate Organic Growth
Business Mix Positioned to Generate Organic Growth • 85%(1) of Segment ENI in high-demand Quant & Solutions and Alternatives Segments Quant & Solutions(1) Alternatives(1) Liquid Alpha(1) • Highly scalable offerings with • Diverse secondaries private • Demonstrated long-term alpha substantial capacit
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 20% 19% 25% BrightSphere Liquid Liquid Alpha Quant & Alpha Liquid Quant & 21% Solutions 22% Quant & Alpha Solutions Solutions 55% 20% 58% 60% A
Slide 10: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • Segment NCCF of $(1.3) billion for Q4'20 compared to $(0.8) billion for Q4'19, AUM increased 5.4% from December 31, 2019 • Investment performance continued to be stable, with 90% revenue-weighted outperformance over the 10 year period • Segment ENI decreased 16
Slide 11: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Segment NCCF of $0.6 billion for Q4'20 compared to $0.6 billion for Q4'19; AUM increased 1.7% to $24.2 billion at December 31, 2020 compared to $23.8 billion at December 31, 2019 • Alternatives revenue increased 9.3%, and segment ENI increased 41.4% in Q4'20 compare
Slide 12: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • Segment NCCF of $(0.4) billion for Q4'20 compared to $(24.9) billion for Q4'19, which had been driven by Vanguard reallocation; Pro Forma NCCF (excl. Barrow Hanley) of $0.4 billion for Q4'20 • Decline in segment AUM to $25.1 billion at December 31, 2020 compared to
Slide 13: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $b $m $2 $14 $12 43.1 $6.0 $10 41.0 $1 $8 $6.0 40 $0.4 $6 73 $0.6 73 $0.6 $4 $0 $2 $3.8 $3.8 37 $0 $(1.3) $(1.3) 37 $-1 $-2 $-4 $(8.0) $(8.0) $(0.4) 33 $-6 $-2 $-8 $(0.8) $-10 $(3.7) $-12 $-3 Q4 2020 Pro for
Slide 14: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(1) ($ in millions, unless otherwise noted) Three Months Ended December 31, Three Months Ended September 30, Increase U.S. GAAP Basis 2020 2019 (Decrease) 2020 Increase (Decrease) Revenue $ 178.8 $ 207.4 (13.8)% $ 182.4 (2.0)% Pre-tax income from cont.
Slide 15: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliate • Q4'20 ENI revenue of $177.4 million decreased from Q4'19 by (14)% primarily due to the sale of Barrow Hanley • Management fees decreased (13.5)% overall from Q
Slide 16: ENI Operating Expenses
ENI Operating Expenses Commentary • Total ENI operating expenses reflect Affiliate and Center operating expenses (excluding variable compensation) • ENI Operating expenses reduced to $72.5 million in Q4'20 from $86.5 million in Q4'19 reflecting expense discipline and Center restructuring, as well as
Slide 17: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25% - 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of certain performance fees ◦ Affiliate variable compe
Slide 18: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG(1) • Q4'20 Distribution Ratio of 14.8% lower than Q4'19 mainly due to the change in mix of earnings • 2021 full year Distrib
Slide 19: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($m) December 31, December 31, 2020 2019 Assets • December 31 net leverage ratio (Debt, net of total Cash and cash equivalents $ 401.9 $ 111.3 cash and cash equivalents / Adj. EBITDA) of 0.0x Restricted cash 1.6 — Investment advisory fees receivable 112
Slide 20: Supplemental Information
Supplemental Information 20
Slide 21: Segment Information for Q4'20 and Q4'19
Segment Information for Q4'20 and Q4'19 Three Months Ended December 31, 2020 Three Months Ended December 31, 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 L
Slide 22: Segment Information for Q3'20
Segment Information for Q3'20 Three Months Ended September 30, 2020 Reconciling ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Items(1) Total U.S. GAAP (3) ENI Revenue $ 89.0 $ 43.8 $ 47.9 $ 0.1 $ 1.6 $ 182.4 ENI Operating Expenses 37.2 15.3 15.5 5.8 12.6 8
Slide 23: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended December 31, 2020 December 31, 2019 September 30, 2020 Quantitative and Solutions Beginning balance $ 95.4 $ 95.5 $ 92.0 Gross inflows 3.1 2.3 2.8 Gross outflows (5.0) (3.9) (5.7) Reinvested inc
Slide 24: Reconciliations and Disclosures
Reconciliations and Disclosures 24
Slide 25: 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) December 31, December 31, September 30, i. 1 Exclude non-cash expenses representing 2020 2019 2020 changes in the value of Affiliate equity and U.S. GAAP net income (loss) attributable to contro
Slide 26: 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 December 31, December 31, September 30, 2020 2019 2020 U.S. GAAP net income per share $ 2.42 $ 0.79 $ 0.46 Adjustments to reflect the economic
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 U.S. GAAP Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended December 31, December 31, September 30, 2020 2019 2020 U.S. GAAP operating expense $ 140.2 $ 123.6 $ 141.9 Less: items excluded fro
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 pre-tax income from continuing operations to Pre-tax ENI ($ in millions) Three Months Ended December 31, December 31, September 30, 2020 2019 2020 U.S. GAAP pre-tax income from continuing operations $ 283.9 $
Slide 29: 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 30: 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 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
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