Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q3 2019 Earnings Presentation
33 slides from Acadian Asset Management's earnings presentation, Nov 5, 2019
Slide 1: BrightSphere Reports Financial and Operating Results for Q3 2019
Contact: Brett Perryman Exhibit 99.1 ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Third Quarter Ended September 30, 2019 • U.S. GAAP earnings per share of $0.84 for the quarter, compared to $0.31 for Q2'19, includes income tax benefits arising from the redu
Slide 2: Dividend Declaration
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.10 per share payable on December 27, 2019 to shareholders of record as of the close of business on December 13, 2019. Conference Call Dial-in The Company will hold a conference call and simultaneous web
Slide 3: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements, including, without limitation, information relating to anticipated growth in revenues, margins or earnings, anticipated changes in the Company’s business and strategy, anticipated future performance of the Company’s b
Slide 4: Q3 2019 Earnings Presentation
Q3 2019 EARNINGS PRESENTATION November 5, 2019 4
Slide 5: Solid Q3'19 Results
Solid Q3’19 Results BrightSphere Highlights Diversified Asset and Client Base AUM by Client Location • U.S. GAAP EPS of $0.84 for Q3'19 compared to $0.31 Asia | 5.4% for Q2'19 Europe | 8.7% Australia | 4.2% • ENI earnings per share of $0.42 for Q3'19, compared Other | to $0.45 for Q2'19 6.2% • ENI r
Slide 6: Demonstrated Ability to Deliver Value While Repositioning for Growth
Demonstrated Ability to Deliver Value While Repositioning for Growth • Optimized Center resources and streamlined Center functions ◦ Repositioning of Center generates $8-10 million of annual expense savings ◦ Refocused organization with nimble, efficient structure and entrepreneurial, performance- S
Slide 7: Disciplined Execution of Long-Term Growth Strategy
Disciplined Execution of Long-Term Growth Strategy • Strong position across segments, with secular tailwinds bolstering growth potential in Quant & Solutions and Alternatives segments, which together represent 66% of management fee revenue Leverage High • Quant & Solutions - Accelerating demand for
Slide 8: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended Q3'19 vs. Q2'19 September 30, June 30, Increase March 31, December 31, September 30, 2019 2019 (Decrease) 2019 2018 2018 • Diluted earnings per share Management fees $ 196.4 $ 205.9 (4.6)% $ 207.5 $ 204.0 $
Slide 9: Strong Growth Potential In High-Demand Segments
Strong Growth Potential In High-Demand Segments • Diversified segments align to high-growth and higher fee strategies Quant & Solutions Alternatives Liquid Alpha (1) Quarterly ENI Mgmt. Fee Revenue by Segment $95.5 billion AUM $23.2 billion AUM $98.1 billion AUM • Versatile, highly- • Predominately
Slide 10: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • Quant & Solutions segment generating positive flows with continued strong long-term performance • AUM decreased to $95.5 billion as of Q3'19 from Q2'19, primarily due to non-U.S. equity market depreciation, while segment ENI generally remained stable Key Perfor
Slide 11: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Alternatives segment has experienced consistent flows and is nearing the next fundraising cycle; continued strong, long-term track record • Alternatives revenue consists entirely of recurring management fees in Q3’19. Segment ENI Revenue decreased (15.6)% from Q2'19
Slide 12: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • Liquid Alpha segment has maintained strong long-term performance • AUM decreased to $98.1 billion as of Q3'19 from Q2'19, primarily due to outflows from low fee M&A-related reallocations and continued reallocations from a specific subadvisory client • Segment operat
Slide 13: Key Metrics - Last Five Quarters
Key Metrics - Last Five Quarters • Non-US equity market decline, outflows, and timing of outsized placement agent fees reduced consolidated AUM and revenues AUM ENI Revenue(1) Pre-tax ENI $b % Change E.O.P. AUM Q2'19 to Average AUM $m $m Q3'19: (3.6)% % Change Q2'19 to Q3'19: (4.3)% % Change Q2'19 t
Slide 14: Net Client Cash Flows Breakdown by Segment
Net Client Cash Flows Breakdown by Segment • Net outflows in Liquid Alpha driven by lumpy low fee transactions/sub-advisory related redemptions AUM Net Client Cash Flows (“NCCF”)(1) Revenue Impact of NCCF(1)(2) $b $m $4 $20 $16 $0.2 $10.6 $0.5 $2 $12 $2.1 $2.5 64 $8 $1.0 $0.5 $0 $0.2 $(0.1) $0.1 38
Slide 15: Management Fee Revenue Trend
Management Fee Revenue Trend • Lower average fee rates and management fees were driven by non-U.S. equity market depreciation and timing of outsized placement agent fees Average AUM and Fee Rate by Segment(1)(2) ENI Management Fee Revenue by Segment(1)(2) $b Avg. AUM $m % Change % Change % Change: (
Slide 16: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliates • Q3'19 ENI revenue of $195.8 million decreased from Q2'19 by (4.3)% primarily due to a decrease in management fees • Management fees decreased (4.6)% from Q2'1
Slide 17: ENI Operating Expenses
ENI Operating Expenses Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q3'19 Operating Expense Ratio(1) increased to 42.6% for the period, mainly attributable to the
Slide 18: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation plus Center bonuses and also includes a contractual split of certain performance fees ◦ Affiliate variable co
Slide 19: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliate, in some cases following an initial preference to BSIG and other equity holders(1) • Q3'19 Distribution Ratio of 18.5% lower than Q2'19 mainly due to a decrease in ENI operating ea
Slide 20: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($M) September 30, December 31, • September 30 leverage ratio (Debt / Adj. EBITDA) of 2019 2018 2.3x ; September 30 net leverage ratio (Debt, net of total Assets cash and cash equivalents / Adj. EBITDA) of 1.8x Cash and cash equivalents $ 116.5 $ 340.6
Slide 21: Supplemental Information
Supplemental Information 21
Slide 22: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(2) ($ in millions, unless otherwise noted) Three Months Ended September 30, Three Months Ended June 30, Increase Increase U.S. GAAP Basis 2019 2018 (Decrease) 2019 (Decrease) Revenue $ 197.8 $ 230.1 (14.0)% $ 207.1 (4.5)% Pre-tax income from cont. ops.
Slide 23: Segment Information for Q3'19 and Q2'19
Segment Information for Q3'19 and Q2'19 Three Months Ended September 30, 2019 Three Months Ended June 30, 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 Liqu
Slide 24: Segment Information for Q3'18
Segment Information for Q3'18 Three Months Ended September 30, 2018 Reconciling Items (1) ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Total U.S. GAAP (3) ENI Revenue 97.0 54.6 76.9 0.1 1.5 230.1 ENI Operating Expenses 37.5 15.5 21.0 9.6 55.5 139.1 Earnin
Slide 25: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 Quantitative and Solutions Beginning balance $ 97.6 $ 95.1 $ 85.2 $ 98.5 $ 95.5 Gross inflows 3.0 2.5 5.1 2.7
Slide 26: Reconciliations and Disclosures
Reconciliations and Disclosures 26
Slide 27: 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) September 30, June 30, March 31, December 31, September 30, i.1 Exclude non-cash expenses representing 2019 2019 2019 2018 2018 changes in the value of Affiliate equity U.S. GAAP net income attr
Slide 28: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures Reconciliation of per-share U.S. GAAP Net Income to Economic Net Income ($) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 U.S. GAAP net income per share $ 0.84 $ 0.31 $ 0.54 $ 0.22 $ 0.51 Ad
Slide 29: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures Reconciliation of U.S. GAAP Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 U.S. GAAP operating expense $ 145.9 $ 160.5 $ 139.2 $ 184
Slide 30: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures Reconciliation of U.S. GAAP pre-tax income from continuing operations to Pre-tax ENI ($ in millions) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 U.S. GAAP pre-tax income from continuing op
Slide 31: 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 32: 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 33: 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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