Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q3 2020 Earnings Presentation
32 slides from Acadian Asset Management's earnings presentation, Oct 29, 2020
Slide 1: BrightSphere Reports Financial and Operating Results for the Third Quarter Ended September 30, 2020
Contact: Elie Sugarman ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Third Quarter Ended September 30, 2020 • U.S. GAAP earnings per share of $0.46 for the quarter, compared to $0.84 for Q3'19 • ENI earnings per share of $0.47 for the quarter, compared to $0
Slide 2: Dividend Declaration
Dividend Declaration The Company’s Board of Directors approved a quarterly interim dividend of $0.01 per share payable on December 29, 2020 to shareholders of record as of the close of business on December 11, 2020. Conference Call Dial-in The Company will hold a conference call and simultaneous web
Slide 3: Forward Looking Statements
Forward Looking Statements This communication includes forward-looking statements which may include, from time to time, information relating to after-tax proceeds from our dispositions of Barrow Hanley and Copper Rock, the expected closing of the Barrow Hanley disposition, anticipated revenues, marg
Slide 4: Q3 2020 Earnings Presentation
Q3 2020 EARNINGS PRESENTATION October 29, 2020 4
Slide 5: Q3'20 Highlights
Q3’20 Highlights BrightSphere Highlights • U.S. GAAP EPS of $0.46 for Q3'20 compared to $0.84 for Q3'19 • ENI earnings per share of $0.47 for the quarter compared to $0.42 for Q3'19 • Announced divestiture of Barrow Hanley and Copper Rock for $335 million in expected after-tax proceeds including see
Slide 6: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations ($ in millions, unless otherwise noted) Three Months Ended Q3'20 vs. Q3'19 September 30, September 30, June 30, Increase 2020 2019 (Decrease) 2020 • Total revenue decreased (7.8)% from Management fees $ 178.2 $ 196.4 (9.3)% $ 170.7 Q3'19 primarily due to lower Perfo
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 ◦ Diverse secondaries private market strategies attracting growing
Slide 8: Pro Forma Business Mix Positioned to Generate Organic Growth
Pro Forma Business Mix Positioned to Generate Organic Growth • 87%(1) of Segment ENI in high-demand Quant & Solutions and Alternatives Segments Quant & Solutions(2) Alternatives(2) Liquid Alpha(2) • Highly scalable offerings with • Diverse secondaries private • Demonstrated long-term alpha substanti
Slide 9: More Attractive Pro Forma Business Mix - by Earnings Metrics
More Attractive Pro Forma Business Mix - by Earnings Metrics(1) ENI Revenue Economic Net Income(2) Adjusted EBITDA(2) Alternatives Alternatives Alternatives 18% 17% 24% BrightSphere Quant & Liquid Solutions Liquid Quant & Alpha Quant & 49% Alpha Solutions 26% Liquid 28% Solutions 54% Alpha 56% 27% A
Slide 10: More Attractive Pro Forma Business Mix - by AUM
More Attractive Pro Forma Business Mix - by AUM(1) By Segment By Asset Class By Client Location Other Alternatives 7% 13% BrightSphere Alternatives Australia 13% 4% Asia Fixed 5% Liquid Income U.S.A. Quant & 7% Europe Alpha 74% Solutions Equity 9% 35% 52% 80% Alternatives Other 17% 7% Pro Forma Alte
Slide 11: Segment Highlight: Quant & Solutions
Segment Highlight: Quant & Solutions • Segment NCCF of $(2.3) billion for Q3'20 compared to $0.1 billion for Q3'19 driven by re-balancing of select clients; AUM decreased 0.1% from Q3'19 • Investment performance continues to be stable • Segment ENI increased 3.1% in Q3'20 compared to Q3'19 and opera
Slide 12: Segment Highlight: Alternatives
Segment Highlight: Alternatives • Segment NCCF of $0.7 billion for Q3'20 compared to $0.5 billion for Q3'19; AUM increased to $23.9 billion at September 30, 2020 compared to $23.2 billion at September 30, 2019 • Alternatives revenue increased 17.1%, and segment ENI increased 30.6% in Q3'20 compared
Slide 13: Segment Highlight: Liquid Alpha
Segment Highlight: Liquid Alpha • Segment NCCF of $0.1 billion for Q3'20 compared to $(6.8) billion for Q3'19; Pro Forma NCCF (excl. Barrow Hanley and Copper Rock) of $1.1 billion for Q3'20 • Decline in segment AUM to $65.5 billion at September 30, 2020 compared to $98.1 billion at September 30, 201
Slide 14: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”)(1) Revenue Impact of NCCF(1)(2) $b 42.9 $m $2 $14 $12 38.8 $6.0 $1.1 38 $10 $1 $8 $6.0 30 $0.1 $6 $0.7 $0.7 72 72 $4 $0 $6.5 $2 $4.5 $0 $-1 $-2 37 37 $(2.3) $(2.3) $-4 $-6 $(11.0) $(11.0) $-2 $-8 $-10 $-12 $-3 Q3 2020 Pro forma exclu
Slide 15: Key Performance Metrics
Key Performance Metrics Key Performance Metrics(1) ($ in millions, unless otherwise noted) Three Months Ended September 30, Three Months Ended June 30, Increase Increase U.S. GAAP Basis 2020 2019 (Decrease) 2020 (Decrease) Revenue $ 182.4 $ 197.8 (7.8)% $ 174.7 4.4 % Pre-tax income from cont. ops. a
Slide 16: ENI Revenue
ENI Revenue Commentary • ENI Revenue includes management fees, performance fees, and our share of earnings from equity-accounted Affiliates • Q3'20 ENI revenue of $180.8 million decreased from Q3'19 by (7.7)% primarily due to a decrease in management fees • Management fees decreased (9.3)% from Q3'1
Slide 17: 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 $73.8 million in Q3'20 from $83.7 million in Q3’19 reflecting expense discipline and Center restructuring, w
Slide 18: ENI Variable Compensation
ENI Variable Compensation Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation plus Center bonuses and also includes a contractual split of certain performance fees ◦ Affiliate variable co
Slide 19: Affiliate Key Employee Distributions
Affiliate Key Employee Distributions Commentary • Represents employees’ share of profit from their respective Affiliate, in some cases following an initial preference to BSIG(1) • Q3'20 Distribution Ratio of 16.7% lower than Q3'19 mainly due to the change in mix of earnings • Full-year Distribution
Slide 20: Balance Sheet Management
Balance Sheet Management Balance Sheet Capital ($M) September 30, 2020 December 31, 2019 Assets Cash and cash equivalents $ 129.8 $ 111.3 Investment advisory fees receivable 101.1 151.9 • September 30 net leverage ratio (Debt, net of total cash Right of use assets 93.7 37.7 and cash equivalents / Ad
Slide 21: Supplemental Information
Supplemental Information 21
Slide 22: Segment Information for Q3'20 and Q3'19
Segment Information for Q3'20 and Q3'19 Three Months Ended September 30, 2020 Three Months Ended September 30, 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
Slide 23: Segment Information for Q2'20
Segment Information for Q2'20 Three Months Ended June 30, 2020 Reconciling ($ in millions, unless otherwise noted) Quant & Solutions Alternatives Liquid Alpha Other Items(1) Total U.S. GAAP (3) ENI Revenue $ 82.8 $ 42.5 $ 47.1 $ 0.1 $ 2.2 $ 174.7 ENI Operating Expenses 35.0 15.7 17.4 5.9 16.4 90.4 E
Slide 24: Assets Under Management Rollforward by Segment
Assets Under Management Rollforward by Segment ($ in billions, unless otherwise noted) Three Months Ended September 30, 2020 September 30, 2019 June 30, 2020 Quant and Solutions Beginning balance $ 92.0 $ 97.6 $ 79.0 Gross inflows 2.8 3.0 3.3 Gross outflows (5.7) (3.6) (3.7) Reinvested income and di
Slide 25: Reconciliations and Disclosures
Reconciliations and Disclosures 25
Slide 26: Reconciliations from U.S. GAAP to Non-GAAP Measures
Reconciliations from U.S. GAAP to Non-GAAP Measures(1) Three Months Ended ENI Adjustments ($ in millions) September 30, September 30, June 30, 2020 2019 2020 1i. Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income attributable to controlling inter
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 per-share U.S. GAAP Net Income to Economic Net Income ($) Three Months Ended September 30, September 30, June 30, 2020 2019 2020 U.S. GAAP net income per share $ 0.46 $ 0.84 $ 0.23 Adjustments to reflect the economic ea
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 Operating Expense to ENI Operating Expense ($ in millions) Three Months Ended September 30, September 30, June 30, 2020 2019 2020 U.S. GAAP operating expense $ 141.9 $ 145.9 $ 148.5 Less: items excluded from E
Slide 29: 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 September 30, September 30, June 30, 2020 2019 2020 U.S. GAAP pre-tax income from continuing operations $ 46.8 $ 51.0
Slide 30: 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 31: 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 32: 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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