41 slides from Alliancebernstein Holding L.p's earnings presentation, Jul 31, 2014
Slide 1: Second Quarter 2014 Review
July 30, 2014 Second Quarter 2014 Review Peter S. Kraus Chairman & Chief Executive Officer John C. Weisenseel Chief Financial Officer ALLIANCEBERNSTEIN
Slide 2: Cautions Regarding Forward-Looking Statements
Cautions Regarding Forward-Looking Statements Certain statements provided by management in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other fac
Slide 3: Peter S. Kraus
Peter S. Kraus Chairman & Chief Executive Officer
Slide 4: Firmwide Overview: Second Quarter
Firmwide Overview: Second Qu In US $ Billions $23.6 $23.6 $23.3 $149 2014 1014 2014 2013 $83 $83 4 = $(4.4) 2014 1014 2014 2013 $480.2 $480.2 $454.41 $434.6 2014 1014 2a14 2013 $464.2 $452.0 $464.2 a 2014 1014 2014 2013
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US §$ Billions =Gross Sales "Gross Redemptions Net Flows 144 12.4 99 77 47 (14.1) (11.0) (13.0) “ (178) Inst. Ret. P.C. Inst. Ret. P.C. Inst. Ret. P.C. Inst. Ret. P.C. 2013 3013 4Q13 1014 Total Gross Sales $23.3 $18.7 $148 $149 Gross Redemption
Slide 6: Institutional Highlights
Institutional Highlights 2Q14 Gross Sales Highest in Six Years Continued Momentum with RFP Activity $B 10.5 0) 66) (4.4) 2013 3013 4Q13* 1014 2014 s=Gross Sales Gross Redemptions. —e-Net Flows % Change 1H14 / 1H13 120 Be . 13 14 — Fixed Income Alternatives Multi-Asset Equity Total Pipeline‘ Down but
Slide 7: Fixed Income Investment Performance
Fixed Income Investment Performance Relative Performance Through 6/30/14 (%) us: 2Q14 1 Year 3 Year 5 Year Strategic Core Plus 0.5 1.5 07 2.3 Core Fixed Income 0.2 0.5 04 14 High Yield 0.1 1.0 07 21 Diversified Yield Plus 1.0 3.5 3.5 5.8 US Income 14 45 3.4 5.0 Insurance — US Bond 0.3 14 06 1.3 TIPS
Slide 8: Building a Broad and Balanced Fixed Income Platform
ng a Broad and Balanced Fixed Income Platform Offerings introduced since 1Q09 = Global High Yield / High Income, American Income, European Income, Return Return seeking Emerging-Market Debt Hard Currency, Seeking/ Emerging-Market Debt Local Currency, Income _ Strategies with less Emerging-Market Cor
Slide 9: Equities Investment Performance
quities Investment Performance Relative Performance Through 6/30/14 (%) us: 2Q14 1 Year 3 Year 5 Year US SMID Cap Value 16 3.4 1.2 1.6 US Strategic Value (0.1) 3.2 (1.1) (1.3) US SMID Cap Growth (1.4) (1.6) 0.2 34 US Large Cap Growth 0.4 3.9 07 (1.1) Select US Equity 0.0 (2.8) 1.6 26 Concentrated US
Slide 10: Evolving our Equities Platform to Meet Clients' Changing Needs
Evolving our Equities Platform to Meet Clients’ Changing Needs Bring Better Balance Streamlined Growth Further aligned PM talent Combined Global Growth research structure with key strategies and Thematic teams to leverage complementary insights = Low Vol = Frontier (Intl, Global, US) Markets = EM =
Slide 11: Retail Highlights
Retail Highlights A Return to Positive Net Flows in 2Q14 With More Regionally Diverse Sales Mix $B 14.4 124 78 (11.9) (04) (13.0) 47) (17.6) 2013 3Q13 4013 1014 2014 Gross Sales mmmGross Redemptions —r~Net Flows Redemption Rates Improving in Retail and GHY / AIP Regional Sales as % of Total Retail G
Slide 12: Private Client Highlights
Private Client Highlights Significant Year-Over-Year Flow Improvement Best Second Quarter Gross Sales in Four Years $B 22 18 15 47 12 (1.7) (25) (25) (23) (2.2) 2013 3013 4013 1014 2014 Gross Sales mmm Gross Redemptions © —e—Net Flows Success with New Core and Targeted Services $B 24 17 18 12 os 2Q1
Slide 13: Bernstein Research Services Highlights
Bernstein Research Services Highlights BRS Quarterly Revenues Up Year-Over-Year... ..-Despite Declines in Trading Volumes in US and Asia SM % Change 2014/2013: +3% 2014/1014: (3)% Global Industry Trading Volumes* (% Change) 2 123 119 a © ° (16) (37), us Europe Asia 2013 1a14 2014 2014/2013 m2Q14/ 10
Slide 14: Progress on Our Strategy in 2Q14
Progress on Our Strategy in 2Q14 Firmwide Initiative Progress Improve investment performance and deliver for clients Diversify our business across channels, investment services and geographies = 79% of Fixed Income assets in outperforming services for 3-yr period; 84% for 5-yr period = Unconstrained
Slide 15: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 16: Financial Highlights: Second Quarter 2014
Financial Highlights: Second Quarter 2014 In US $ Millions $632 $598 $632 $508 2014 1014 2014 2013 S486 $467 S488 $465 Adjusted Expenses 2014 rar 2ai4 2013 22.9% 21.9% 22.9% 22.2% 2014 1014 2014 2013 4 id 39¢ Ase aig Adjusted EPU 2014 1014 2a14 2013 Please refer to pages 37-39 for additonal informat
Slide 17: Second Quarter 2014 GAAP to Adjusted Reconciliation
Second Quarter 2014 GAAP to Adjusted Reconciliation In US dolar mitions Adjustments Distribution- Pass_—_Long-Terminc. Venture Real ‘Acquisition Related Through Compensation Capital Estate Related Adjusted GAAP Payments _ Expenses MT™M Fund Charges Expenses (Non-GAAP) Net Revenues $ 754 $ (110) $ (8
Slide 18: Second Quarter 2014 Adjusted Income Statement
Second Quarter 2014 Adjusted Income Statement 2a 1Q 2a In US dolar millions (except EPU) 2014 2014 %A 2013 %A Adjusted Net Revenues $ 632 $ 598 6% $F 598 6% Adjusted Operating Expenses 488 467 4% 465 5% Adjusted Operating Income 144 131 10% 133 8% Adjusted Operating Margin 22.9% 21.9% 22.2% 'AB Hold
Slide 19: Second Quarter 2014 Adjusted Revenues
Second Quarter 2014 Adjusted Revenues =m Base Fees increased sequentially in all three distribution channels; the 4% increase versus the prior year quarter is due primarily to an increase in Private Client base fees = Performance Fees are up both sequentially and versus the prior year due to fees ea
Slide 20: Second Quarter 2014 Adjusted Operating Expenses
Second Quarter 2014 Adjusted Operating Expenses = Adjusted Compensation Ratio was 50.0% for all periods = Total Compensation & Benefits increased 6% sequentially, and increased 6% versus the prior year due to higher revenues m= Promotion & Servicing expenses increased 10% sequentially due to higher
Slide 21: Second Quarter 2014 Adjusted Operating Results
Second Quarter 2014 Adjusted Operating Results m= Adjusted Operating Income improved 10% sequentially and 8% versus 2Q13 due to increased revenues outpacing expense growth = Adjusted Margin for 2Q14 was 22.9%, up from 21.9% in 1Q14, and 22.2% in 2Q13 2Q 1a 2Q In US dollar millions (except EPU) 2014
Slide 22: AllianceBernstein.com
AllianceBernstein.com
Slide 23: AllianceBernstein.com
AllianceBernstein.com
Slide 24: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended June 30, 2014 2a One Three Five Ten Service 2014 Year Years ‘Years __Years Benchmark Value Emerging Markets Value 28 44 (3.2) (2.4) (1.4) MSCI EM Global Value 0.1 3.7 (1.7) (2.1) (1.9) MSCI World
Slide 25: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended June 30, 2014 2Q One Three —~Five Ten Service 2014 Year _—Years_~—*Years _—‘Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income (1.7) 2.0 29 45 18 Global and 33%
Slide 26: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended June 30, 2014 20 One Three — Five Ten Service 2014 Year _—Years ‘Years _‘Years Lipper Average Value International Value (05) (1.2) (29) (2.7) (2.4) International Multi-Cap Value Growth & Income (18) (3.4) 1.4 0
Slide 27: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended June 30, 2014 2Q One Three Five Ten Service 2014 Year Years Years Years Lipper Average Global High Yield Portfolio 0.0 (2.1) 1.0 1.9 1.8 Bond Global High Yield American Income Portfolio 1.3 3.0 25 3
Slide 28: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended June 30, 2014 2Q One Three Five Ten Service 2014 Year Years Years Years Fully Diversified Simulation" 3.3 13.2 6.7 9.4 49 S&P 500 5.2 24.6 16.6 18.8 7.8 MSCI World Index - Net 49 24.0 11.8 15.0 7.2 Lipper Short/Int Blended Muni Fund Avg 1.4 3.5 29 3
Slide 29: Assets Under Management — 2Q14
Assets Under Management — 2Q14 (S billions) At June 30, 2014 ‘At March 34, 2014 Private Institutions Retail Client Total Total Equity Actively Managed $ 31 46 S$ 39 $ 1160 $ 109 Passive” 22 28 - 50 48 Total Equity 53 74 39 166 157 Fixed Income Taxable 154 65 10 226 213 Tax-Exempt 2 9 19 30 30 Passiv
Slide 30: Three Months Ended 6/30/14: AUM Roll-Forward by Distribution Channel
Three Months Ended 6/30/14: AUM Roll-Forward by Distribution C InUS § Billions Beginning —_Sales/New Redemptions/ Net Cash Net Investment Net End Investment Service: of Period Accounts _ Terminations. Flows Flows Acquisitions Transfers Performance __ Change __of Period Institutions us 110.3, 3.0 (07
Slide 31: Three Months Ended 6/30/14: AUM Roll-Forward by Investment Service
Three Months Ended 6/30/14: AUM Roll-Forward by Investment Service InUS$ Bilions Beginning SalesiNew Redemptions) Net Cash Net Acquisiton Investment Net End Investment Service: of Period ‘Accounts Terminations Flows Flows Performance Change __of Period Equiy Active us 586 24 22) 7) (05) - 25 20 606
Slide 32: AUM by Region
AUM by Region As of June 30, 2014 Institutions NA ex US 4% United Kingdom 6% Asia ex Japan 6% Japan 13% US 56% EMEA 15% $240.3B By client domicile Japan 6% EMEA 12% Asia ex Japan 18% Retail Other 4% $165.4B US 60% a
Slide 33: Second Quarter 2014 Adjusted Advisory Fees
Second Quarter 2014 Adjusted Advisory Fees In US Dollars 2a 1a 2a 2014 2014 AN 2013 HA Ending AUM (§$ Billions) $480 $454 6% $435 10% Average AUM (§ Billions) $464 $452 3% $446 4% By Fee Type ($ Millions): Adjusted Base Fees $473 $452 5% $454 4% Adjusted Performance Fees 20 3 567% 5 300% Total $493
Slide 34: Second Quarter 2014 GAAP Income Statement
Second Quarter 2014 GAAP Income Statement 2Q 19 2a In US dollar milions (except EPU) 2014 2014 %A 2013 %A Net Revenues $ 754 $ 715 5% 734 3% Operating Expenses 611 585 4% 597 2% Operating Income 143 130 10% 137 4% Net Income Attributable to AB Unitholders 136 117 16% 121 12% AB Holding GAAP Diluted
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets June 30, 2014 December 31, 2013 Cash and cash equivalents $ b2.~«S 510 Cash and securities, segregated 590 980 Receivables, net 1,722 4,550 Investments: Long-term incentive compensation-related 99 118 Other 684 662 Goodwill 3,072 2,987 Intangible as
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions ‘Six Months Ended June 30, 2014 June 30, 2013 Net Income $ 25 ~S 240 Non-cash items: Amortization of deferred sales commissions 18 24 Non-cash long-term incentive compensation expense 8B 9 Depreciation and other amortization 32 31 Unrealized gain
Slide 37: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 2Q 1Q 2a 2014 2014 % A 2013 %A AllianceBernstein Net Income Attributable to AllianceBernstein $136 $117 16% $121 12% Weighted Average Equity Ownership Interest 35.5% 35.4% 37.6% AllianceBernstein Holding Atrbad
Slide 38: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation Three Months Ended $ thousands, unaudited er0rt4 EE EPEED ‘9130/13 S303 EEE} Not Revenues, GAAP basis S 753.648 $ 714618 $ 765,572 $ 706,078 $ 734,275 $ 709,122 Exclude: Long-term incentive compensation-related investment (gains) losses G18) (1,297)
Slide 39: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended, $ thousands except per Unit amounts, unaudited 6/30/14 3314 128113 9130/13. 6/30/13 3/31/13, Net Income - Diluted, GAAP basis 43,230 $§ 36,455 $§ 57,853 $ 29,706 40.617 $ 38,474 Impact on net income of AlianceBernstein
Slide 40: AllianceBernstein Adjusted Financial Results Reconciliation
AllianceBernstein Adjusted Financial Results Reconciliation AllianceBernstein L.P. Notes to Condensed Consolidated Statements of Income and Supplemental Information (Unaudited) Adjusted Net Revenues ‘Adjusted net revenues exclude investment gains and losses and dividends and interest on long-term in
Slide 41: AllianceBernstein.com 212-756-4542
AllianceBernstein.com 212-756-4542