Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q1 2020 Earnings Presentation
31 slides from Acadian Asset Management's earnings presentation, May 7, 2020
Slide 1: BrightSphere Reports Financial and Operating Results for the First Quarter Ended March 31, 2020
Contact: Investor Relations ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the First Quarter Ended March 31, 2020 • U.S. GAAP earnings per share of $0.38 for the quarter, compared to $0.54 for Q1'19 • ENI earnings per share of $0.40 for the quarter, compared to $
Slide 2: Dividend Declaration
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.01 per share payable on June 26, 2020 to shareholders of record as of the close of business on June 12, 2020. Conference Call Dial-in The Company will hold a conference call and simultaneous webcast to
Slide 3: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements which may include, from time to time, information relating to anticipated revenues, margins, cash flows or earnings, anticipated performance of the Company’s business or particular segments, expected future net cash fl
Slide 4: Q1 2020 Earnings Presentation
Q1 2020 EARNINGS PRESENTATION May 7, 2020 4
Slide 5: Q1'20 Highlights
Q1’20 Highlights BrightSphere Highlights • U.S. GAAP EPS of $0.38 for Q1'20 compared to $0.54 for Q1'19 • ENI earnings per share of $0.40 for the quarter, stable compared to $0.40 for Q1'19 • NCCF(1) of $1.0 billion ◦ Turned positive for the first time since Q1’18 ◦ Driven by strong increase in gros
Slide 6: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended Q1'20 vs. Q1'19 March 31, March 31, December 31, Increase 2020 2019 (Decrease) 2019 • Total revenue decreased (11.9)% Management fees $ 178.5 $ 207.5 (14.0)% $ 197.2 from Q1’19 primarily due to lower Perform
Slide 7: Disciplined Execution of Long-Term Growth Strategy
Disciplined Execution of Long-Term Growth Strategy Focus on High- • Quant & Solutions Demand Quant ◦ Leveraging broad quant capabilities to provide exposures and solutions sought by clients & Solutions and • Alternatives Alternatives ◦ Sophisticated private market and uncorrelated strategies attract
Slide 8: Business Mix Positioned to Generate Organic Growth
Business Mix Positioned to Generate Organic Growth • Two-thirds of business in high-demand Quant & Solutions and Alternatives Segments Quant & Solutions(1) Alternatives(1) Liquid Alpha(1) $79.0 billion AUM, 53% of Segment ENI $24.3 billion AUM, 18% of Segment ENI $58.5 billion AUM, 29% of Segment EN
Slide 9: Diversified Business With Two-Thirds in High-Demand Quant & Solutions and Alternatives Segments
Diversified Business With Two-Thirds in High-Demand Quant & Solutions and Alternatives Segments Diversified Revenue Streams (1) Quarterly ENI Mgmt. Fee Revenue by Segment Quarterly Segment ENI (2) Alternatives | Alternatives | $41.4 | 23.2% $10.3 Liquid Alpha | $17.0 Liquid Alpha | $51.9 | 29.1% Qua
Slide 10: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • Segment NCCF of $1.5 billion in Q1'20 compared to $2.5 billion in Q1’19; investment performance improved compared to prior 3-, 5- and 10- year periods with continued strong long-term outperformance • AUM decreased 16.9% in Q1'20 compared to Q1’19 primarily due
Slide 11: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Segment NCCF of $0.6 billion driven by co-investment funding and ongoing Alternatives fundraising compared to $0.2 billion in Q1'19; segment AUM increased to $24.3 billion for Q1'20 compared to $24.0 billion for Q1'19 • Alternatives revenue decreased 4.8% and segmen
Slide 12: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • Segment NCCF of $(1.1) billion compared to $(3.0) billion in Q1'19 • Segment AUM decreased 43.3% to $58.5 billion as of Q1'20 compared to Q1'19 due to Vanguard reallocation of $22.8 billion in Q4’19 and the impact of Q1’20 market decline • Segment investment perform
Slide 13: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown • Quant & Solutions and Alternatives segments produced positive NCCF offsetting net outflows in Liquid Alpha segment AUM Net Client Cash Flows (“NCCF”)(1) Revenue Impact of NCCF(1)(2) $b $m $3 $8 $6 $2 $0.6 69 $4 $1 $5.4 $1.5 37 $2 $0 $0 $(0.9) $(1.1) 30 -$2 -$1 $(4.7
Slide 14: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(1) ($ in millions, unless otherwise noted) Three Months Ended Three Months Ended March 31, December 31, Increase Increase U.S. GAAP Basis 2020 2019 (Decrease) 2019 (Decrease) Revenue $ 182.6 $ 207.2 (11.9)% $ 207.4 (12.0)% Pre-tax income from cont. ops
Slide 15: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliates • Q1'20 ENI revenue of $180.6 million decreased from Q1'19 by (12.2)% primarily due to a decrease in management fees • Management fees decreased (14.0)% from Q1
Slide 16: ENI Operating Expenses
ENI Operating Expenses Commentary • Total ENI operating expenses reflect Affiliate operating expenses and Center expenses (excluding variable compensation) • ENI Operating expenses reduced to $81.2 million in Q1’20 from $88.5 million in Q1’19 due to expense discipline while Q1'20 Operating Expense R
Slide 17: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation plus Center bonuses and also includes a contractual split of certain performance fees ◦ Affiliate variable co
Slide 18: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliate, in some cases following an initial preference to BSIG(1) • Q1'20 Distribution Ratio of 16.4% lower than Q1'19 mainly due to a decrease in ENI operating earnings, particularly at h
Slide 19: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($M) December 31, • March 31 net leverage ratio (Debt, net of total cash and March 31, 2020 2019 cash equivalents / Adj. EBITDA) of 2.0x; increase driven Assets by first quarter seasonality of timing of payment of Cash and cash equivalents $ 124.4 $ 111
Slide 20: Supplemental Information
Supplemental Information 20
Slide 21: Segment Information for Q1'20 and Q1'19
Segment Information for Q1'20 and Q1'19 Three Months Ended March 31, 2020 Three Months Ended March 31, 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 Liquid
Slide 22: Segment Information for Q4'19
Segment Information for Q4'19 Three Months Ended December 31, 2019 Reconciling Items (1) ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Total U.S. GAAP (3) ENI Revenue $ 103.3 $ 40.8 $ 61.0 $ 0.1 $ 2.2 $ 207.4 ENI Operating Expenses 40.2 17.5 18.8 10.0 (21.
Slide 23: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended March 31, 2020 March 31, 2019 December 31, 2019 Quantitative and Solutions Beginning balance $ 101.9 $ 85.2 $ 95.5 Gross inflows 3.7 5.1 2.3 Gross outflows (3.1) (3.3) (3.9) Reinvested income an
Slide 24: Reconciliations and Disclosures
Reconciliations and Disclosures 24
Slide 25: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) Three Months Ended ($ in millions) March 31, March 31, December 31, ENI Adjustments 2020 2019 2019 i.1 Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income attributable to controlling interests
Slide 26: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of per-share U.S. GAAP Net Income to Economic Net Income ($) Three Months Ended March 31, March 31, December 31, 2020 2019 2019 U.S. GAAP net income per share $ 0.38 $ 0.54 $ 0.79 Adjustments to reflect the economic earnin
Slide 27: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended March 31, March 31, December 31, 2020 2019 2019 U.S. GAAP operating expense $ 108.5 $ 139.2 $ 123.6 Less: items excluded from ENI A
Slide 28: Reconciliations from U.S. GAAP to Non-GAAP Measures (cont.)
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) (cont.) Reconciliation of U.S. GAAP pre-tax income from continuing operations to Pre-tax ENI ($ in millions) Three Months Ended March 31, March 31, December 31, 2020 2019 2019 U.S. GAAP pre-tax income from continuing operations $ 35.7 $ 82.7 $ 8
Slide 29: 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 30: 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
Slide 31: 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
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