Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — OM Asset Management — Q3 2016 Earnings Presentation
25 slides from Acadian Asset Management's earnings presentation, Nov 2, 2016
Slide 1: Q3 2016 Earnings Presentation
Q3 2016 EARNINGS PRESENTATION November 2, 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 • Q3’16 U.S. GAAP EPS of $0.28 down (3.4)% from Q3’15 • Q3’16 ENI per share of $0.32 up 3.2% from Q3’15 ENI per share of $0.31, primarily driven by an increase in market driven management fee revenue ◦ ENI per share increased 6.7% from $0.30 in Q2’16 and U.S. GAAP EPS decreas
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: OMAM AUM Progression and Mix
OMAM AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (9/30/16) $B AUM .2% % Change: 12 AUM by Affiliate $B %Total $8.8 $240 $ 74.5 32% $220 $23.0 90.8 39% $200 4.2% $(6.3) 4.9 2% $180 11.0% $234.2 $160 $208.7 (3.0)% 5.3 2% $140 30.2 13% $120 Net flows Market and Acquisition 1.7 1% Q
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) $(2.6) -$4 $(3.0) $(3.4) $(2.9
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 $5 $15 $4 $6.1 $1.6 $10 $3 $4.9 $2 $0.9 $1.8 $0.7 49 $5 $6.2 $1 $0.2 $1.2 $1.3 $0.8 $0.7 $0.7 $0.8 42 $5.6 $3.2 $0 $(0.4) $3.0 $3.9 $2.1 $0 $(0.7) -$1 $(1.9) $(1.3) $(2.5
Slide 8: Competitive Long-term Investment Performance
Competitive Long-term Investment Performance Products representing ≥ 69% 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 r
Slide 9: Macro Factors Have Led Benchmarks to Outpace Active Managers
Macro Factors Have Led Benchmarks to Outpace Active Managers Investment disciplines rooted in fundamental valuation challenged by the yield trade in H1 2016 Benchmark Ranks in Peer Universes as of 9/30/16 (1-year)(1) • Many domestic benchmarks were at or Value Core Growth near top quartile in their
Slide 10: Financial Highlights – Q3 2016 v. Q3 2015
Financial Highlights – Q3 2016 v. Q3 2015 • Q3’16 economic net income up 0.3% to $38.0 million ($0.32 per share) from $37.9 million ($0.31 per share) in Q3’15 ◦ Higher market driven management fees and lower effective tax rate enhance results • ENI revenue increase of $9.9 million, or 6.0%, to $175.
Slide 11: Improving Markets and Fee Mix Benefit Q3'16 Results
Improving Markets and Fee Mix Benefit Q3'16 Results $176 Average AUM $167Revenue(1) ENI Pre-tax ENI Performance Performance $b $m % Change Q3'15 to Q3'16: 6.0% % Change Q3'15 to Q3'16:(3.1)% % Change Q3'15 to Q3'16: 4.3% Fees $m Fees $250 $210 % Change ex. perf. fees: 8.8% $70 $176 % Change ex. perf
Slide 12: Management Fee Growth Driven by Higher Average Assets and Landmark
Management Fee Growth Driven by Higher Average Assets and Landmark Average AUM and Fee Rate by Asset Class(1) Gross Management Fee Revenue by Asset Class(1) Avg. AUM $B % Change $M % Change % Change: 4.3% 9% % Change: 7. $240 $228.1 35.7 $218.6 34.5 $205.0 $200 $190.0 44 $41.5 (18%) 49 15% $200 $36.
Slide 13: Expenses Impacted by Landmark Acquisition in Q3'16
Expenses Impacted by Landmark Acquisition in Q3'16 Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q3’16 ENI Operating Expense Ratio(2) remained relatively stable at
Slide 14: Variable Compensation In Line with Business Profitability
Variable Compensation In Line with Business Profitability 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 ◦ Affiliate variable compensation includes cash and equi
Slide 15: Affiliate Key Employee Distributions Move 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 - 40%, in some cases following an initial preference to OMAM(1) • Q3'16 Key Employee Distributions increa
Slide 16: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital $M September 30, December 31, 2016 2015 Assets • Issued $400 million of bonds in July 2016 Cash and cash equivalents $ 151.3 $ 135.9 ◦ Use of proceeds: Investment advisory fees receivable 159.
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 Nine Months Ended ENI Adjustments September 30, September 30, $m 2016 2015 2016 2015 i. 1 Exclude non-cash expenses representing U.S. GAAP net income attributable to controlling interests $ 34.0 $ 35.0 $ 101.1 $ 118.6 changes in the
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 September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Management fees(1) $ 171.8 $ 158.4 $ 478.5 $ 480.2 (2) Performance fees (1.1) 3.3 (1.9) 7.4 Other income, including equity-
Slide 20: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 U.S. GAAP operating expense $ 130.6 $ 118.8 $ 351.7 $ 385.6 Less: items excluded from economic net income Acquisition-
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 September 30, Nine Months Ended September 30, 2016 2015 2016 2015 U.S. GAAP general and administrative expense $ 27.2 $ 23.3 $ 71.7 $ 66.0 Sales-based
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 September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Pre-tax economic net income(1) $ 49.4 $ 51.0 $ 140.2 $ 154.2 Intercompany interest expense deductible for U.S. tax purposes
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 eight boutique asset management firms (the "Affiliates"). OMAM's distribution activities are
Slide 24: Definitions and Additional Notes
Definitions and Additional Notes The Company adjusts its income tax expense to reflect any tax impact of its ENI adjustments. Please see Slide 18 for a reconciliation of U.S. GAAP net income to economic net income. Adjusted EBITDA Adjusted EBITDA is defined as economic net income before interest, in
Slide 25: 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