Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q3 2018 Earnings Presentation
20 slides from Acadian Asset Management's earnings presentation, Nov 1, 2018
Slide 1: Q3 2018 Earnings Presentation
Q3 2018 EARNINGS PRESENTATION November 1, 2018 1
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 • Q3'18 U.S. GAAP EPS of $0.51, up from $0.17 in Q3'17 • Q3'18 ENI per share of $0.46, up 7.0% from Q3'17 ENI per share of $0.43, driven by increases in average AUM and weighted average fee rate • Net Client Cash Flows of $(2.6) billion for Q3'18 (including $(1.6) billion of
Slide 4: Growth Strategy
Growth Strategy BrightSphere’s multi-boutique model is well positioned for growth, with four key areas of focus... ___________________________________________________________ Please see definitions and additional notes 3
Slide 5: AUM Progression and Mix
AUM Progression and Mix AUM Progression(1) (Last 12 Months) AUM Mix (9/30/2018) $B AUM $260 % Change: 0.8% AUM by Affiliate $B %Total $10.3 $240 $ 99.7 42% $220 84.8 36% $(8.5) 4.4% 4.6 2% $200 $235.9 $237.7 (3.6)% $180 4.9 2% $160 2.2 1% Net flows Market and Q3'17 other Q3'18 17.7 7% 23.8 10% Total
Slide 6: Strong Long-Term Investment Performance
Strong Long-Term Investment Performance Products representing ≥ 64% of revenue outperforming on a 3- and 5-year basis Commentary • BrightSphere uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance ◦ Reflects percent of management fe
Slide 7: 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 $19.0 $4 $20 $14.6 $2.4 $15 $13.5 $13.1 $12.2 $1.9 $11.3 $2 $1.5 $10 $0.8 $7.3 $6.8 $0.5 $4.7 $5 $0 $0.7 $0.8 $(0.2) $(0.3) $0 -$2 -$5 $(3.4) $(2.5) $(2.5) $(6.6) $(2.6) $(2.6) -$10 $(7.5) $(2
Slide 8: 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 $4 $24 $3 $20 $1.9 $2.8 $2 (1) $16 $1.9 94 $0.1 $13.1 $1 $12 $22.1 $1.3 $1.6 $0.7 39 $13.8 $0.3 $0.7 $0 $0.1 $0.1 $8 $14.9 $(1.6) $4 -$1 $6.7 $(2.4) $(2.9) 24 $2.9 $(3.4)
Slide 9: Financial Highlights – Q3 2018 v. Q3 2017
Financial Highlights – Q3 2018 v. Q3 2017 • Q3'18 economic net income up 4.5% to $48.8 million ($0.46 per share) from $46.7 million ($0.43 per share) in Q3'17 • ENI revenue increase of $0.4 million, or 0.2%, to $228.6 million in Q3'18 ◦ Lower performance fees and removal of Heitman’s earnings in Q3'
Slide 10: Q3'18 Results Remained Solid Despite Ongoing Industry Headwinds
Q3'18 Results Remained Solid Despite Ongoing Industry Headwinds Average AUM(1) ENI Revenue(2) $229 Pre-tax ENI Equity-accounted Performance Performance $b % Change Q3'17 to Q3'18: 2.7% Affiliates $m % Change Q3'17 to Q3'18: 0.2% $m % Change Q3'17 to Q3'18: 0.0% Fees Fees % Change, consolidated Affil
Slide 11: Management Fee Growth Driven By Increase in Average Assets at Consolidated Affiliates
Management Fee Growth Driven By Increase in Average Assets at Consolidated Affiliates With Higher Fee Products Average AUM and Fee Rate by Asset Class(1)(2) ENI Management Fee Revenue by Asset Class(1)(2) $B Avg. AUM $M % Change: 2.6% % Change % Change (3) e: 3.6% 38.8 % Chang $250 $250 (3) $235.0 $
Slide 12: Continuing to Invest for Future Growth
Continuing to Invest for Future Growth Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q3'18 operating expense ratio(1) increased to 36.4% for the period, reflecting
Slide 13: Profit-share Model and Center Cost Structure Reduce Variable Compensation
Profit-share Model and Center Cost Structure Reduce 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 cert
Slide 14: Distribution Ratio Increased Due to Continued Growth at Affiliates
Distribution Ratio Increased Due to Continued Growth at Affiliates with Higher Employee Ownership and Leveraged Employee Equity Structures Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG and other equity holde
Slide 15: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital ($M) September 30, December 31, • September 30 leverage ratio (Debt / Adj. EBITDA) of 1.3x 2018 2017 Assets • Cash of $314.1 million includes $110.7 million at the Cash and cash equivalents $
Slide 16: Appendix
Appendix BRIGHTSPHERE investment Group
Slide 17: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA(1) ($M) Three Months Ended Nine Months Ended ENI Adjustments September 30, September 30, 2018 2017 2018 2017 i. 1 Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income attributable to controlling inter
Slide 18: Definitions and Additional Notes
Definitions and Additional Notes References to “BrightSphere,” “BSIG” or the “Company” refer to BrightSphere Investment Group plc; 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 19: Definitions and Additional Notes
Definitions and Additional Notes The Company adjusts its income tax expense to reflect any tax impact of its ENI adjustments. Please see Slide 16 for a reconciliation of U.S. GAAP net income attributable to controlling interests to economic net income. Adjusted EBITDA Adjusted EBITDA is defined as e
Slide 20: 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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