Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q2 2019 Earnings Presentation
19 slides from Acadian Asset Management's earnings presentation, Aug 1, 2019
Slide 1: Q2 2019 Earnings Presentation
Q2 2019 EARNINGS PRESENTATION August 1, 2019 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: Leading Company Positioned For Growth
Leading Company Positioned For Growth BrightSphere Highlights(1) Diversified Asset and Client Base(1) • Diversified multi-Affiliate business with $225.0 AUM by Client Location Quarterly Mgmt. Fee Revenue by Asset Class billion in AUM Asia | 5.1% Australia | 4.6% Fixed Income | 3.2% Other | 6.0% • 7
Slide 4: BrightSphere Long-Term Strategic Update
BrightSphere Long-Term Strategic Update • Optimized Center resources and streamlined Center functions • Completed corporate redomicile to U.S. in July; further enhancing regulatory, Successful operational and governance simplicity Repositioning • Continued focus on efficient capital management, incl
Slide 5: Solid Earnings Results
Solid Earnings Results • GAAP EPS of $0.31 for Q2'19 down (42.6)% from $0.54 for Q1'19 • ENI per share of $0.45 for Q2'19, up 12.5% from Q1'19 Financial Results • ENI results benefited from a strong market environment, positive impact from share repurchases, and continued realization of Center cost
Slide 6: Q2'19 Results Improved From Q1'19
Q2'19 Results Improved From Q1’19 AUM ENI Revenue(1) Pre-tax ENI $205 Performance Average AUM % Change Q1'19 to Q2'19: (0.5)% Performance $m $b % Change E.O.P. AUM Q1'19 to $m % Change Q1'19 to Q2'19: 3.1% Fees Fees Q2'19: 1.2% End of period % Change ex. perf. fees: (0.8)% % Change ex. perf. fees: 1
Slide 7: Strong Long-Term Investment Performance In Liquid Strategies
Strong Long-Term Investment Performance In Liquid Strategies Liquid strategies representing ≥ 65% of revenue outperforming on a 3-, 5- and 10- year basis Commentary • BrightSphere uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance
Slide 8: 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 $19.0 $4 $20 $14.6 $2.4 $15 $13.1 $12.2 $1.9 $2 $1.5 $10 $7.3 $6.8 $0.5 $4.7 $5 $0 $0.8 $(0.3) $0 -$2 -$5 $(3.4) $(1.8) $(5.9) $(2.6) $(2.5) $(2.6) $(7.5) $(2.9) $(2.9) -$10 -$4 $(3.7) $(12.3)
Slide 9: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) - by Asset Class Revenue Impact of NCCF(1) - by Asset Class $B $M $4 $24 $3 $20 $2 $16 $1.9 $1 $12 $0.2 $13.8 $0.8 19 $0.3 $0.7 $0.6 $0 $0.1 $0.2 $8 -$1 $(1.7) $4 $(2.9) $(2.6) 25 $2.9 $(3.3) $1.4 $0.8 $(3.9) $0 -$2 $(2.0) $(0.8) $(1
Slide 10: Management Fees Remained Stable
Management Fees Remained Stable Average AUM and Fee Rate by Asset Class(1)(2) ENI Management Fee Revenue by Asset Class(1)(2) $B Avg. AUM $M % Change % Change % Change: 1.9% $250 $250 % Change: (0.8)% 39.0 37.5 $219.9 $215.9 $207.5 $205.9 74 $23.8 (11%) 73 0% $23.9 (11%) $200 $200 20 $13.5 (6%) 19 4
Slide 11: Expense Decrease In Q2 Reflects Efficiencies
Expense Decrease In Q2 Reflects Efficiencies Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q2'19 Operating Expense Ratio(1) decreased to 40.3% for the period, main
Slide 12: Variable Compensation Normalized In Q2'19
Variable Compensation Normalized In Q2’19 Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of certain performance fees ◦ Affiliate
Slide 13: Affiliate Key Employee Distributions Typically Will Move In Line With Affiliate Profitability
Affiliate Key Employee Distributions Typically Will Move In Line With Affiliate Profitability Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG and other equity holders(1) • Q2'19 Distribution Ratio of 18.9% low
Slide 14: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital ($M) December 31, • June 30 leverage ratio (Debt / Adj. EBITDA) of 2.3x ; June June 30, 2019 2018 30 net leverage ratio (Debt, net of total cash and cash Assets equivalents / Adj. EBITDA) of 1
Slide 15: Appendix
Appendix BRIGHTSPHERE investment Group 14
Slide 16: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA(1) ($M) Three Months Ended ENI Adjustments Three Months Ended June 30, March 31, 2019 2018 2019 i. 1 Exclude non-cash expenses representing U.S. GAAP net income attributable to controlling changes in the value of Affiliate equity and interests $ 28.0 $
Slide 17: 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 18: 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 19: 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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