Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q1 2015 Earnings Presentation
21 slides from Acadian Asset Management's earnings presentation, May 14, 2015
Slide 1: Q1 2015 Earnings Presentation
Q1 2015 Earnings Presentation May 14, 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 • Q1’15 ENI of $0.31 per share up 15% over Q1’14 ENI of $0.27 per share • Q1’15 pre-tax ENI of $51 million up 18% over Q1’14 pre-tax ENI of $43 million • AUM of $224 billion up 10% over Q1’14 and 1% over 12/31/14 • Net Client Cash Flows of $(212) million for Q1’15 yield posit
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 (3/31/15) AUM $B AUM by Affiliate $B % Total $230 $10.6 $73 33% $210 $10.3 98 43% 5.2% $190 5.1% 7 3% $224.0 $203.1 4 2% $170 27 12% $150 Q1'14 Q1'15 2 1% AUM Progression (1st Quarter) 13 6% Total $224 100% $B AUM $230 $(0.2) $3.4 AUM
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 $20 $19.1 $20.0 $3.6 $18.4 $3.3 $3.2 $3.1 $16.5 $3.0 $15 $11.6 $11.3 $2 $1.6 $10.0 $10 $8.6 $1.2 $1.0 $5.8 $4.5 $5 $- $1.1 $(0.2) $- $(1.0) $(1.0) $(1.4) $(3.0) $(2) $(5) $(4.4) Q1 Q2
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 $0.2 $0.4 $1.3 $20 $1.4 $0.0 $0.2 $0.7 $3 $2.1 $7.8 $0.3 $0.9 43 $15 $2.6 $0.7 $2 $0.1 $5.2 $3.2 $2.6 $1 $1.8 42 $10 $18.6 $13.9 $0.1 $0.8 $- $0.0 $13.0 ($0.7)
Slide 8: Competitive Investment Performance
Competitive Investment Performance Products representing ≥ 70% 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 revenue in
Slide 9: Financial Highlights – Q1 2015
Financial Highlights – Q1 2015 • Q1’15 Economic Net Income up 15% to $37 million from $32 million in Q1’14 ‒ Positive impact of repurchase of Affiliate equity in Q4’14 offset by public company expense, interest and higher effective tax rate • ENI Revenue increase of 15% to $163 million from $142 mil
Slide 10: Quarterly AUM Growth and Higher Fee Rates Drive Increases in Revenue and Profit
Quarterly AUM Growth and Higher Fee Rates Drive Increases in Revenue and Profit Average AUM ENI Revenue (1) Pre-tax ENI $B $M Performance Fees $M % Change Q1’14 to Q1’15: 12% % Change Q1’14 to Q1’15 : 15% % Change Q1’14 to Q1’15: 18% $250 $200 $184 $70 $216 $218 $222 $63 $225 $208 $159 $163 $199 $15
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 March 31, Q-O-Q $M 2015 2014 Growth 1 Management fees $156.9 $138.6 $ 18.3 13.2% Performance fees 3.6 0.4 3.2 800.0% Attractive reven
Slide 12: Management Fee Growth Driven by Higher Fee Global/Non-U.S. Assets and Alternatives
1 Management Fee Growth Driven by Higher Fee Global/Non-U.S. Assets and Alternatives(1) Average AUM and Fee Rate by Asset Class Gross Management Fee Revenue by Asset Class % Change: 12% Avg. AUM $B % Change $M % Change: 13% % Change $222 34.0 $225 $200 $186 $199 33.7 $35 (16%) 43.2 13% $165 $37.1 (2
Slide 13: Moderate Core Expense Growth Creates Operating Leverage in Business
2 Moderate Core Expense Growth Creates Operating Leverage in Business Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses, and key initiatives, including Global Distribution (excluding variable compensation) • Q1’15 core operating expense ratio at 34.0% of
Slide 14: Variable Compensation Scalable as the Business Grows
3 Variable Compensation Scalable as the Business Grows Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 30%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses ‒ Affiliate variable compensation includes cash and equity
Slide 15: Affiliate Key Employee Distributions Typically Will Grow In-Line With the Business
4 Affiliate Key Employee Distributions Typically Will Grow In-Line With the Business Commentary • Represents employees’ share of profit from their respective Affiliates, ranging from 15 – 35%, in some cases following an initial preference to OMAM(1) • Employee ownership levels projected to remain st
Slide 16: Strong Balance Sheet Provides Financial Flexibility
Strong Balance Sheet Provides Financial Flexibility • New fund consolidation guidance adopted by OMAM in 2015 results in removal of Consolidated Funds from GAAP balance sheet and income statement Balance Sheet Capital ($M ) March 31, 2015 December 31, 2014 • $177 million drawn on OMAM’s $350 million
Slide 17: Appendix
Appendix a OMAM ;
Slide 18: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI Three Months Ended, March 31, ENI Adjustments $m 2015 2014 i.1 Exclude notional non-cash corporate cost allocations U.S. GAAP net income attributable to controlling interests $34.2 $10.3 ii. 2 Exclude interest expense historically paid to OM plc as the related debt was re
Slide 19: Reconciliation: ENI to Adjusted EBITDA
Reconciliation: ENI to Adjusted EBITDA Three Months Ended, Adjusted EBITDA Adjustments March 31, $m 2015 2014 i.1 Exclude net interest (income) expense Economic Net Income $37.3 $32.5 ii.2 Exclude depreciation and amortization 1 Net interest (income) expense 0.9 (0.1) 2 Depreciation and amortization
Slide 20: 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 21: 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