Acadian Asset Management Inc. · NYSE:AAMI
Acadian Asset Management — BrightSphere Investment Group — Q2 2018 Earnings Presentation
21 slides from Acadian Asset Management's earnings presentation, Aug 2, 2018
Slide 1: Q2 2018 Earnings Presentation
Q2 2018 EARNINGS PRESENTATION August 2, 2018 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: Key Themes
Key Themes • Profit share model aligns interests and provides cushion in volatile markets • Net outflows reflect normal product cycles and evolution of our product mix • We are investing for the future – the seeds of growth are planted and are coming online • Long-term investment performance remains
Slide 4: Overview and Highlights
Overview and Highlights • Q2'18 U.S. GAAP EPS of $0.02 down from $0.11 in Q2'17 • Q2'18 ENI per share of $0.47 up 11.9% from Q2'17 ENI per share of $0.42, primarily driven by increases in average AUM and weighted average fee rate • Net Client Cash Flows of $(4.1) billion for Q2'18 resulting in an an
Slide 5: Growth Strategy
Growth Strategy BrightSphere’s multi-boutique model is well positioned for growth, with four key areas of focus... ___________________________________________________________ Please see definitions and additional notes 4
Slide 6: AUM Progression and Mix
AUM Progression and Mix AUM Progression (Last 12 Months) AUM Mix (6/30/18) $B % Change: (9.5)% AUM AUM by Affiliate $B %Total $260 $ 96.9 42% $240 $(32.4) $13.3 84.9 36% $220 $258.8 $(5.4) 5.2 2% $200 $234.3 5.2 2% (12.5)% (2.1)% 5.1% $180 2.2 1% $160 16.6 7% Removal of Net flows Market and Q2'17 He
Slide 7: Strong Long-Term Investment Performance
Strong Long-Term Investment Performance Products representing ≥ 70% of revenue outperforming on a 3- and 5-year basis Commentary • BrightSphere uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance ◦ Reflects percent of management fe
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 $13.5 $13.1 $12.2 $1.9 $11.3 $2 $1.5 $10 $0.8 $7.3 $6.8 $0.5 $5 $0 $0.7 $0.8 $(0.2) $(0.3) $0 -$2 -$5 $(3.4) $(2.5) $(2.5) $(6.6) $(2.6) -$10 $(7.5) $(2.9) $(3.2) -
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 - by Asset Class $B $M $4 $24 $3 $20 $1.9 $2.8 $2 $2.1 $16 $15.6 $13.1 $0.1 $1 $12 $22.1 $1.3 $1.6 $1.0 $0.7 82 (1) $0.3 $8 $0 $0.1 $0.1 $14.9 20 $(1.6) $4 -$1 $5.9 $6.7 $(2.4) $(2.8) $(3.4) $(
Slide 10: Financial Highlights – Q2 2018 v. Q2 2017
Financial Highlights – Q2 2018 v. Q2 2017 • Q2'18 economic net income up 8.4% to $50.5 million ($0.47 per share) from $46.6 million ($0.42 per share) in Q2'17 • ENI revenue increase of $9.3 million, or 4.2%, to $230.7 million in Q2'18 ◦ Management fees increased 9.5% to $226.4 million, including net
Slide 11: Q2'18 Results Remained Solid Despite Recent Volatile Markets
Q2'18 Results Remained Solid Despite Recent Volatile Markets $231 Average AUM(1) ENI Revenue(2) Pre-tax ENI Equity-accounted Performance Performance $b % Change Q2'17 to Q2'18: (6.4)% Affiliates $m % Change Q2'17 to Q2'18: 4.2% $m % Change Q2'17 to Q2'18: 4.4% Fees Fees % Change, consolidated Affili
Slide 12: Management Fee Growth Driven By Increase in Average Assets
Management Fee Growth Driven By Increase in Average Assets at Consolidated Affiliates With Higher Fee Products Average AUM and Fee Rate by Asset Class(1)(2) ENI Management Fee Revenue by Asset Class(1)(2) $B Avg. AUM $M % Change: 7.0% (3) % Change % Change .5% nge: 9 38.4 % Cha $250 $250 (3) $236.3
Slide 13: BrightSphere Benefited From Scale Efficiencies
BrightSphere Benefited From Scale Efficiencies Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q2'18 operating expense ratio(1) decreased to 36.0% for the period, re
Slide 14: Cash Variable Compensation In Line With Business Profitability
Cash Variable Compensation In Line With Business Profitability Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses; also includes contractual split of certain perform
Slide 15: Distribution Ratio Increased Due to Continued Growth at Affiliates
Distribution Ratio Increased Due to Continued Growth at Affiliates with Higher Employee Ownership and Leveraged Employee Equity Structures Commentary • Represents employees’ share of profit from their respective Affiliates, in some cases following an initial preference to BSIG and other equity holde
Slide 16: Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value
Balance Sheet Management Provides Ongoing Opportunities to Increase Shareholder Value Balance Sheet Capital ($M) December 31, • June 30 leverage ratio (Debt / Adj. EBITDA) of 1.3x June 30, 2018 2017 Assets • Cash of $234.7 million includes $75.8 million at the Cash and cash equivalents $ 234.7 $ 186
Slide 17: Appendix
Appendix BRIGHTSPHERE investment Group
Slide 18: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA(1) ($M) Three Months Ended Six Months Ended ENI Adjustments June 30, June 30, 2018 2017 2018 2017 i. 1 Exclude non-cash expenses representing changes in the value of Affiliate equity and U.S. GAAP net income attributable to controlling interests $ 2.1
Slide 19: Definitions and Additional Notes
Definitions and Additional Notes References to “BrightSphere” “BSIG” or the “Company” refer to BrightSphere Investment Group plc; 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; r
Slide 20: 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 17 for a reconciliation of U.S. GAAP net income attributable to controlling interests to economic net income. Adjusted EBITDA Adjusted EBITDA is defined as e
Slide 21: 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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