Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q3 2015 Earnings Presentation
20 slides from Acadian Asset Management's earnings presentation, Nov 4, 2015
Slide 1: Q3 2015 Earnings Presentation
Q3 2015 Earnings Presentation November 4, 2015
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This presentation may contain forward looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “expect,” “anticipate,” “may,” “intends,
Slide 3: Overview and Highlights
Overview and Highlights • Q3’15 ENI per share of $0.31 consistent with Q3’14 ENI per share of $0.31 ‒ Total Q3’15 ENI of $37.9 million up 0.8% over Q3’14 ENI of $37.6 million • Net Client Cash Flows of $(2.5) billion for Q3’15 yielding positive annualized revenue impact of $0.7 million for Q3 and $2
Slide 4: Growth Strategy
Growth Strategy OMAM’s multi-boutique model is well positioned for growth, with four key areas of focus… Four Key Multi-Boutique Value Proposition Drives Growth Areas New Incremental Growth Opportunities Partnerships Global Distribution Collaborative Organic Growth (Growth and Seed / Co-Investment C
Slide 5: AUM Progression and Mix
AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (9/30/15) AUM $B AUM by Affiliate $B % Total $230 $1.9 $66 32% $210 $(7.0) 88 42% 0.9% $190 7 3% $213.8 -3.3% $208.7 $170 4 2% 28 13% $150 Q3'14 Q3'15 2 1% AUM Progression (3rd Quarter) 14 7% Total $209 100% $B AUM $230 AUM by Asset Cl
Slide 6: Net Client Cash Flows and Revenue Impact
Net Client Cash Flows and Revenue Impact AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $B $M $4 $3.8 $19.1 $20.0 $3.6 $20 $18.4 $3.2 $3.3 $3.0 $3.1 $16.5 $3 $15 $13.5 $2 $1.6 $11.6 $11.3 $1.2 $10.0 $1.0 $10 $1 $0.8 $8.6 $5.8 $- $4.5 $5 $(0.2) $(1) $1.1 $0.7 $(1.0) $(1.0) $(1.4) $- $(2
Slide 7: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) - by Asset Class Revenue Impact of NCCF - by Asset Class $B $M $5 $25 $4 $0.4 $20 $1.4 $1.3 $0.7 $0.2 $3 $7.8 $0.3 $0.7 $15 $2 $0.1 $5.2 $3.2 $4.2 $2.6 $0.7 $0.0 44 $10 $0.2 $1 $1.8 $0.1 $18.6 $1.3 41 $0.9 $13.0 $2.0 $- $(0.4) $5 $10
Slide 8: Strong Long-Term Investment Performance
Strong Long-Term Investment Performance Products representing ≥ 80% of revenue outperforming on a 3- and 5-year basis Commentary • OMAM uses revenue-weighted performance as its primary investment metric ‒ Ties investment performance to business performance ‒ Reflects percent of management fee revenu
Slide 9: Financial Highlights – Q3 2015
Financial Highlights – Q3 2015 • Q3’15 Economic Net Income up 0.8% to $37.9 million from $37.6 million in Q3’14 ‒ Positive impact of higher management fees, partially offset by public company expense and increases in core general and administrative expenses • ENI Revenue increase of 4% to $166 milli
Slide 10: Steady Results in a Volatile Market
Steady Results in a Volatile Market Average AUM(4) ENI Revenue(1) (5) Pre-tax ENI(5) $B $M Performance Fees $M % Change Q3’14 to Q3’15: 1% % Change Q3’14 to Q3’15: 4% % Change Q3’14 to Q3’15: 3% $250 $227 $200 $184 $70 $216 $218 $222 $219 $168 $166 $63 $225 $159 $163 $60 $51 $52 $51 $200 $150 $49 $5
Slide 11: Key Drivers of Financial Performance
Key Drivers of Financial Performance Economic Net Income (“ENI”) reflects the underlying economic earnings of the business Financial Highlights (1) Three Months Ended Nine Months Ended September 30, September 30, Q-O-Q P-O-P $M 2015 2014 2015 2014 Growth Growth Moderate revenue growth: 1 Management
Slide 12: Increasing Management Fee Rate in Q3'15 Driven by Mix Shift in U.S. and Alternatives
1 Increasing Management Fee Rate in Q3’15 Driven by Mix Shift in U.S. and Alternatives (1) Average AUM and Fee Rate by Asset Class Gross Management Fee Revenue by Asset Class Avg. AUM % Change: 1% % Change: 5% $B % Change $M % Change $250 $200 $190 34.5 $180 $216 33.1 $219 $39.9 (21%) 17% $200 42 $3
Slide 13: Core Expense Growth Reflects Investment in the Business
2 Core Expense Growth Reflects Investment in the Business Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses including public company expenses, and key initiatives, including Global Distribution (excluding variable compensation) • Q3’15 core operating exp
Slide 14: Variable Compensation Aligned With Business Performance
3 Variable Compensation Aligned With Business Performance Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 30%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses ‒ Affiliate variable compensation includes cash and equi
Slide 15: Affiliate Key Employee Distributions Typically Will Grow In-Line With the Business
4 Affiliate Key Employee Distributions Typically Will Grow In-Line With the Business Commentary • Represents employees’ share of profit from their respective Affiliates, ranging from 15 – 35%, in some cases following an initial preference to OMAM(1) • Employee ownership levels projected to remain st
Slide 16: Balance Sheet Can Be Leveraged To Grow Business
Balance Sheet Can Be Leveraged To Grow Business • New fund consolidation guidance adopted by OMAM in 2015 results in removal of Consolidated Funds from GAAP balance sheet and income statement Balance Sheet Capital ($M ) September 30, • In the nine months ended 2015, repaid $37 million 2015 December
Slide 17: Appendix
Appendix gE OMAM ;
Slide 18: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended Nine Months Ended ENI Adjustments September 30, September 30, $m 2015 2014 2015 2014 i.1 Exclude notional non-cash corporate cost allocations U.S. GAAP net income attributable to controlling interests $35.0 ($1.7) $118.6 $17.4 ii. 2
Slide 19: Definitions and Additional Notes
Definitions and Additional Notes References to “OMAM” or the “Company” refer to OM Asset Management plc; references to the “Parent” or “Old Mutual” refer to Old Mutual plc; references to the “Offering” refer to the Company’s initial public offering dated October 8, 2014 and references to the “Prospe
Slide 20: Definitions and Additional Notes
Definitions and Additional Notes Methodologies for calculating investment performance: Revenue-weighted investment performance measures the percentage of management fee revenue generated by Affiliate strategies which are beating benchmarks. It calculates each strategy’s percentage weight by taking i