Slide 1: Q1 2016 Earnings Presentation
Q1 2016 EARNINGS PRESENTATION May 5, 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 • Q1'16 ENI per share of $0.27 down (12.9)% from Q1'15 ENI per share of $0.31, primarily driven by a decrease in average AUM and related revenue, and higher investment-driven expenses ◦ Revenue declines resulted primarily from extreme market volatility, reflected in average Q
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: AUM Progression and Mix
AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (3/31/16) $B % Change: (2.7)% AUM AUM by Affiliate $B %Total $220 $ 69.6 32% $(2.5) $(3.5) $200 90.3 42% $180 (1.1)% (1.6)% $224.0 4.9 2% $218.0 $160 4.9 2% $140 30.6 14% $120 Market and 1.8 1% Q1'15 Net flows other Q1'16 15.9 7% AUM P
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 $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) $(3.2) -$4 -$8 $(6.
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 $3 $20 $0.3 42 $2 $0.7 $15 $0.7 $1.8 42 $5.2 $4.2 $1 $0.1 $1.8 $10 $0.2 $1.3 $0.9 $0.7 25 $0 $2.0 $(0.4) 21 $5 $10.7 $9.8 $6.2 $(0.9) -$1 $(1.9) $5.6 $(2.5) $2.1 $0 $(0.7
Slide 8: Competitive Investment Performance
Competitive Investment Performance Products representing > 65% 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 2016 v. Q1 2015
Financial Highlights – Q1 2016 v. Q1 2015 • Q1’16 economic net income down (14.2)% to $32.0 million ($0.27 per share) from $37.3 million ($0.31 per share) in Q1’15 ◦ Lower management and performance fees and higher investment-driven expenses drive decline • ENI revenue decrease of $(10.4) million, o
Slide 10: Volatile Markets Impacted Profitability
Volatile Markets Impacted Profitability Average AUM ENI Revenue(1)(2) Pre-tax ENI(2) Performance Performance $b % Change Q1'15 to Q1'16: (5.3)% $m % Change Q1'15 to Q1'16:(6.4)% Fees $m % Change Q1'15 to Q1'16:(15.9)% Fees $250 $200 % Change ex. perf. fees: (4.3)% $70 % Change ex. perf. fees: (12.4)
Slide 11: 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) % Change: (5.3 Avg. AUM $B )% % Change $M % Change % Change: (2 .6)% $222.3 34.0 34.7 $200 $220 $210.5 $186.4 $181.5 $34.8 (
Slide 12: Expense Growth Increases Reflect Continued Investment in the Business
Expense Growth Increases Reflect Continued Investment in the Business Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q1’16 ENI operating expense ratio(2) increased
Slide 13: 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 14: 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) • Q1'16 increase in Key Employee Distribu
Slide 15: Balance Sheet Management Provides Multiple Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Multiple Opportunities to Increase Shareholder Value Balance Sheet Capital $M March 31, 2016 December 31, 2015 • In Q1'16, repaid $5.0 million net on revolving credit Assets facility Cash and cash equivalents $ 70.4 $ 135.9 Investment advisory fees receivable 137.0
Slide 16: Appendix
Appendix gQ OMAM 16
Slide 17: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended ENI Adjustments March 31, $m 2016 2015 1 Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income $ 30.8 $ 34.2 profit interests held by Affiliate key Adjustments to reflect the economi
Slide 18: Reconciliation: GAAP to ENI and Components of ENI
Reconciliation: GAAP to ENI and Components of ENI Components of ENI revenue Three Months Ended March 31, ($ in millions) 2016 2015 Management fees(1) $ 149.6 $ 156.9 Performance fees(2) — 3.6 Other income, including equity-accounted Affiliates(3) 3.3 2.8 ENI revenue $ 152.9 $ 163.3 U.S. GAAP revenue
Slide 19: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended March 31, 2016 2015 U.S. GAAP operating expense $ 108.6 $ 116.2 Less: items excluded from economic net income Affiliate key employee equity revaluations 1.3 (4.8) Amortization of acqui
Slide 20: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating income to ENI operating earnings and ENI earnings after Affiliate key employee distributions ($ in millions) Three Months Ended March 31, 2016 2015 U.S. GAAP operating income $ 41.0 $ 44.4 Include investment return on equity-accounted Affiliates 3.3 2.
Slide 21: 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 22: 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 23: 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