Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q2 2016 Earnings Presentation
25 slides from Acadian Asset Management's earnings presentation, Aug 4, 2016
Slide 1: Q2 2016 Earnings Presentation
Q2 2016 EARNINGS PRESENTATION August 4, 2016 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 • Q2’16 ENI per share of $0.30 down (6.3)% from Q2’15 ENI per share of $0.32(1), primarily driven by a decrease in management fee revenue, while Q2’16 U.S. GAAP EPS of $0.30 decreased (26.8)% from Q2’15(1) ◦ ENI revenue declines resulted from market volatility and negative ne
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
Slide 5: Overview of Landmark Partnership
Overview of Landmark Partnership Landmark Overview Summary of Partnership • Leading global secondary private equity, real estate, • OMAM will acquire 60% of Landmark's equity; and real asset investment manager remaining 40% retained by management • $15.5 billion of committed capital since inception
Slide 6: OMAM AUM Progression and Mix
OMAM AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (6/30/16) $B % Change: (3.4)% AUM AUM by Affiliate $B %Total $220 $ 70.5 32% $(6.2) $(1.6) $200 90.2 41% $180 (2.7)% (0.7)% $226.6 4.9 2% $218.8 $160 4.9 2% $140 30.3 14% $120 Market and 1.9 1% Q2'15 Net flows other Q2'16 16.1 8%
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 $20.0 $3.8 $20 $19.1 $4 $3.6 $18.4 $3.2 $3.3 $3.0 $3.1 $16.5 $16 $2.4 $13.5 $2 $11.6 $11.3 $12 $1.0 $0.8 $8.6 $7.3 $8 $5.8 $0 $(0.2) $4 $0.7 $(1.0) $0 -$2 $(2.5) -$4 $(3.0) $(3.4) $(2.9) $(3.2
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 $5 $15 $6.0 $4 $6.1 $1.6 $10 $0.2 $3 $4.9 $2 $0.9 $0.9 $1.8 $5 $9.8 $6.2 $1 $0.1 44 $1.2 $1.3 $0.2 $0.9 $0.8 $0.7 $0.7 42 $5.6 $0 $2.1 $3.9 $(0.4) $3.0 $(0.9) $(0.2) $0 $
Slide 9: Competitive Investment Performance
Competitive Investment Performance Products representing > 60% 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 10: Financial Highlights – Q2 2016 v. Q2 2015
(1) Financial Highlights – Q2 2016 v. Q2 2015 • Q2’16 economic net income down (4.7)% to $36.2 million ($0.30 per share) from $38.0 million ($0.32 per share) in Q2’15 ◦ Lower management and performance fees drive decline • ENI revenue decrease of $(7.8) million, or (4.6)%, to $160.0 million in Q2’16
Slide 11: Improving Markets and Fee Mix Benefit Q2'16 Results
Improving Markets and Fee Mix Benefit Q2'16 Results Average AUM ENI Revenue(1)(2) $166 $160 Pre-tax ENI(2) Performance Performance $b $m % Change Q2'15 to Q2'16:(4.6)% % Change Q2'15 to Q2'16:(8.2)% % Change Q2'15 to Q2'16: (3.5)% Fees $m Fees $250 $210 % Change ex. perf. fees: (3.9)% $70 % Change e
Slide 12: Revenue Impact of Decline in Average Assets Partially Offset by Increase in Fee Rates
Revenue Impact of Decline in Average Assets Partially Offset by Increase in Fee Rates Average AUM and Fee Rate by Asset Class(1) Gross Management Fee Revenue by Asset Class(1) Avg. AUM $B % Change: (3.5)% % Change $M % Change % Change: (2 .1)% $227.2 34.3 $219.2 35.0 $220 $35.2 (15%) 43 $200 $194.5
Slide 13: Expenses Were Stable During Q2 '16 vs. Q2 '15
Expenses Were Stable During Q2 '16 vs. Q2 '15 Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q2’16 ENI Operating Expense Ratio(2) increased to 39.3% for the period
Slide 14: Variable Compensation Reduced In Line with Business Profitability
Variable Compensation Reduced In Line with Business Profitability 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
Slide 15: Affiliate Key Employee Distributions Typically Will Move In Line With Affiliate Profitability
Affiliate Key Employee Distributions Typically Will Move In Line With Affiliate Profitability Commentary • Represents employees’ share of profit from their respective Affiliates, ranging from 15 - 35%, in some cases following an initial preference to OMAM(1) • Q2'16 Key Employee Distributions decrea
Slide 16: Balance Sheet Management Provides Multiple Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Multiple Opportunities to Increase Shareholder Value Balance Sheet Capital $M December 31, June 30, 2016 2015 Assets • In Q2'16, repaid $35.0 million net on revolving credit facility Cash and cash equivalents $ 65.1 $ 135.9 ◦ $50 million currently drawn on OMAM’s $3
Slide 17: Appendix
Appendix gQ OMAM 17
Slide 18: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended Six Months Ended ENI Adjustments June 30, June 30, $m 2016 2015 2016 2015 1 Exclude non-cash expenses representing U.S. GAAP net income $ 36.3 $ 49.4 $ 67.1 $ 83.6 changes in the value of Affiliate equity and Adjustments to reflect t
Slide 19: Reconciliation: GAAP to ENI and Components of ENI
Reconciliation: GAAP to ENI and Components of ENI Components of ENI revenue ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (1) Management fees $ 157.1 $ 164.9 $ 306.7 $ 321.8 Performance fees(2) (0.8) 0.5 (0.8) 4.1 Other income, including equity-accounted A
Slide 20: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 U.S. GAAP operating expense $ 112.5 $ 150.6 $ 221.1 $ 266.8 Less: items excluded from economic net income Affiliate key employee
Slide 21: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP general and administrative expense to ENI general and administrative expense ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 U.S. GAAP general and administrative expense $ 22.7 $ 22.9 $ 44.5 $ 42.7 Sales-based compensati
Slide 22: Calculation of ENI Effective Tax Rate
Calculation of ENI Effective Tax Rate Calculation of ENI Effective Tax Rate ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Pre-tax economic net income(1) $ 47.9 $ 52.2 $ 90.8 $ 103.2 Intercompany interest expense deductible for U.S. tax purposes (17.7) (17.
Slide 23: 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. OMAM operates its business through seven boutique asset management firms (the "Affiliates"). OMAM's distribution activities are
Slide 24: Definitions and Additional Notes
Definitions and Additional Notes Methodologies for calculating investment performance(1): 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 takin
Slide 25: Definitions and Additional Notes
Definitions and Additional Notes ENI variable compensation ratio The ENI variable compensation ratio is calculated as variable compensation divided by ENI earnings before variable compensation. It is used by management and is useful to investors to evaluate consolidated variable compensation as meas