GAAP Diluted Net Income of $0.59 per Unit
Adjusted Diluted Net Income of $0.66 per Unit
Cash Distribution of $0.66 per Unit
NASHVILLE, Tenn., April 26,
2023 /PRNewswire/ -- AllianceBernstein L.P. ("AB")
and AllianceBernstein Holding L.P. ("AB Holding") (NYSE: AB) today
reported financial and operating results for the quarter ended
March 31, 2023.
"AB grew organically in the first quarter, despite a tumultuous
March in the banking sector," said Seth P.
Bernstein, President and CEO of AllianceBernstein. "Net
inflows were $0.8 billion, as
investors embraced fixed income across our private wealth and
retail channels. Taxable bonds, municipals and money markets drove
our growth. Our institutional pipeline remained healthy at
$13.1 billion, comprised of
two-thirds private alternatives. Investment performance improved in
fixed income and remained strong versus peers in equities.
Reflecting lower year-over-year asset prices, adjusted operating
income declined by 21% and adjusted earnings per unit and
distributions to unitholders declined by 27%."
(US $ Thousands except
per Unit amounts)
|
1Q
2023
|
|
1Q
2022
|
|
%
Change
|
|
4Q
2022
|
|
%
Change
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
1,024,091
|
|
$
1,105,687
|
|
(7.4) %
|
|
$
990,176
|
|
3.4 %
|
Operating
income
|
$
215,260
|
|
$
248,403
|
|
(13.3) %
|
|
$
203,741
|
|
5.7 %
|
Operating
margin
|
20.1 %
|
|
24.7 %
|
|
(460 bps)
|
|
20.0 %
|
|
10 bps
|
AB Holding Diluted
EPU
|
$
0.59
|
|
$
0.87
|
|
(32.2) %
|
|
$
0.59
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
832,599
|
|
$
903,744
|
|
(7.9) %
|
|
$
802,114
|
|
3.8 %
|
Operating
income
|
$
224,811
|
|
$
285,049
|
|
(21.1) %
|
|
$
231,947
|
|
(3.1 %)
|
Operating
margin
|
27.0 %
|
|
31.5 %
|
|
(450 bps)
|
|
28.9 %
|
|
(190 bps)
|
AB Holding Diluted
EPU
|
$
0.66
|
|
$
0.90
|
|
(26.7) %
|
|
$
0.70
|
|
(5.7 %)
|
AB Holding cash
distribution per Unit
|
$
0.66
|
|
$
0.90
|
|
(26.7) %
|
|
$
0.70
|
|
(5.7 %)
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under Management
("AUM")
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
675.9
|
|
$
735.4
|
|
(8.1) %
|
|
$
646.4
|
|
4.6 %
|
Average AUM
|
$
666.8
|
|
$
751.2
|
|
(11.2) %
|
|
$
636.0
|
|
4.8 %
|
(1)
|
The adjusted financial
measures represent non-GAAP financial measures. See page 12 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 13-14 for notes describing the
adjustments.
|
Bernstein continued, "In Retail, sales improved sequentially,
reflecting strengthening demand for taxable and municipal fixed
income, which grew organically by 15% and 21% annualized,
respectively. Municipals posted their 10th consecutive
quarter of organic growth, and overall Retail net inflows were
$1.6 billion. Our Institutional
channel saw net outflows of $2.7
billion. Private Wealth grew organically for the 8th of the
last 11 quarters, with net inflows of $1.9
billion. Bernstein Research revenues decreased 15% versus
the prior year as global institutional trading volumes remained
constrained."
Bernstein concluded, "AB's globally diversified investment
capabilities enable us to deliver for our clients as their
liquidity, risk, and return objectives change. This was evidenced
this quarter as client demand shifted to fixed income and money
market solutions. AB continues to maintain a healthy financial
profile during periods of market dislocation, balancing near-term
expense discipline with strategic long-term investment. Our
teams remain focused on delivering outstanding investment
performance to our clients."
The firm's cash distribution per Unit of $0.66 is payable on May 25, 2023, to holders
of record of AB Holding Units at the close of business on
May 8, 2023.
Market Performance
Global equity and fixed income markets were up in the first
quarter of 2023.
|
1Q
2023
|
S&P 500 Total
Return
|
7.5 %
|
MSCI EAFE Total
Return
|
8.6
|
Bloomberg Barclays US
Aggregate Return
|
3.0
|
Bloomberg Barclays
Global High Yield Index
|
3.2
|
Assets Under
Management ($ Billions)
|
|
Total assets under
management as of March 31, 2023 were $675.9 billion, up $29.5
billion, or 5%, from December 31, 2022 and down $59.5 billion,
or 8%, from March 31, 2022.
|
|
|
|
Institutional
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
Assets Under Management
3/31/2023
|
|
$306.6
|
|
$256.7
|
|
$112.6
|
|
$675.9
|
Net Flows for Three
Months Ended 3/31/2023:
|
|
|
|
|
|
|
|
|
Active
|
|
($2.5)
|
|
$2.6
|
|
$1.7
|
|
$1.8
|
Passive
|
|
(0.2)
|
|
(1.0)
|
|
0.2
|
|
(1.0)
|
Total
|
|
($2.7)
|
|
$1.6
|
|
$1.9
|
|
$0.8
|
Total net inflows were $0.8
billion in the first quarter, compared to net outflows of
$1.9 billion in the fourth quarter of
2022, and net inflows of $11.4
billion in the prior year first quarter.
Institutional channel first quarter net outflows of $2.7 billion compared to net inflows of
$1.7 billion in the fourth quarter of
2022. Institutional gross sales of $3.0
billion decreased sequentially from $12.6 billion reflecting a $6.4 billion custom target date sale in the
fourth quarter of 2022. The pipeline of awarded but unfunded
Institutional mandates remained relatively flat at $13.1 billion at March 31, 2023 compared to
$13.2 billion at December 31,
2022.
Retail channel first quarter net inflows of $1.6 billion compared to net outflows of
$3.4 billion in the fourth quarter of
2022. Retail gross sales of $16.8
billion increased sequentially from $14.2 billion.
Private Wealth channel first quarter net inflows of $1.9 billion compared to net outflows of
$0.2 billion in the fourth quarter of
2022. Private Wealth gross sales of $5.8
billion increased sequentially from $4.1 billion.
First Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because we believe they present a clearer
picture of our operating performance and allow management to see
long-term trends without the distortion caused by incentive
compensation-related mark-to-market adjustments, real estate
charges/credits and other adjustment items. Similarly, we believe
that non-GAAP earnings information helps investors better
understand the underlying trends in our results and, accordingly,
provides a valuable perspective for investors. Please note,
however, that these non-GAAP measures are provided in addition to,
and not as a substitute for, any measures derived in accordance
with US GAAP and they may not be comparable to non-GAAP measures
presented by other companies. Management uses both US GAAP and
non-GAAP measures in evaluating our financial performance. The
non-GAAP measures alone may pose limitations because they do not
include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Available Cash Flow
typically is the adjusted diluted net income per unit for the
quarter multiplied by the number of units outstanding at the end of
the quarter. Management anticipates that Available Cash Flow will
continue to be based on adjusted diluted net income per unit,
unless management determines, with concurrence of the Board of
Directors, that one or more adjustments made to adjusted net income
should not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Revenues
First quarter net revenues of $1.0
billion decreased 7% from $1.1
billion in the first quarter of 2022. The decrease was
primarily due to lower investment advisory base fees,
performance-based fees, distribution revenues and Bernstein
Research revenues, partially offset by investment gains in the
current year compared to investment losses in the prior year and
higher net dividend and interest income.
Sequentially, net revenues of $1.0
billion increased 3% from $990
million. The increase was due to investment gains in the
current year compared to investment losses in the prior year,
higher investment advisory base fees, performance-based fees and
distribution revenues, partially offset by lower net dividend and
interest income.
First quarter Bernstein Research revenues of $100 million decreased 15% compared to the prior
year first quarter and flat sequentially. The decrease in the first
quarter was driven by a significant decline in customer trading
activity across all regions as a result of market conditions.
Sequentially, there was an increase in customer trading activity
offset by the timing of research check payments.
Expenses
First quarter operating expenses of $809 million decreased 6% from $857 million in the first quarter of 2022. The
decrease is primarily due to lower general and administrative
("G&A") expenses, promotion and servicing expenses and employee
compensation and benefit expense, offset by higher interest expense
and amortization of intangibles. Within G&A, the decrease was
driven by lower portfolio servicing fees, professional fees and a
favorable foreign exchange translation impact, partially offset by
higher valuation adjustments related to the classification of
Bernstein as held for sale and technology expenses. Promotion and
servicing expenses decreased due to lower distribution-related
payments, transfer fees, trade execution costs and amortization of
deferred sales commissions, offset by higher travel and
entertainment and marketing expenses. Employee compensation and
benefits expense decreased due to lower incentive compensation and
commissions, partially offset by higher base compensation and
fringes.
Sequentially, operating expenses increased 3% from $786 million, primarily driven by higher employee
compensation and benefits expense, interest expense and promotion
and servicing expenses, partially offset by lower G&A expenses.
Employee compensation and benefits expense increased due to higher
base compensation, incentive compensation and fringes. Promotion
and servicing expenses increased due to higher distribution-related
payments, partially offset by lower transfer fees. Within G&A,
the decrease was driven by lower valuation adjustments related to
the classification of Bernstein as held for sale, professional
fees, impairment of acquisition related intangible assets and
portfolio servicing fees.
Operating Income, Margin and Net Income Per Unit
First quarter operating income of $215 million decreased 13% from $248 million in the first quarter of 2022 and the
operating margin of 20.1% in the first quarter of 2023 decreased
460 basis points from 24.7% in the first quarter of 2022.
Sequentially, operating income increased 6% from $204 million in the fourth quarter of 2022 and
the operating margin of 20.1% increased 10 basis points from 20.0%
in the fourth quarter of 2022.
First quarter diluted net income per Unit was $0.59 compared to $0.87 in the first quarter of 2022 and
$0.59 in the fourth quarter of
2022.
Non-GAAP Earnings
This section discusses our first quarter 2023 non-GAAP financial
results, compared to the first quarter of 2022 and the fourth
quarter of 2022. The phrases "adjusted net revenues", "adjusted
operating expenses", "adjusted operating income", "adjusted
operating margin" and "adjusted diluted net income per Unit" are
used in the following earnings discussion to identify non-GAAP
information.
Revenues
First quarter adjusted net revenues of $833 million decreased 8% from $904 million in the first quarter of 2022. The
decrease was due to lower investment advisory base fees, Bernstein
Research revenues and performance-based fees, partially offset by
higher net dividend and interest income and lower investment
losses.
Sequentially, adjusted net revenues increased 4% from
$802 million. The increase was
primarily due to higher performance-based fees, net dividend and
interest income and investment advisory base fees.
Expenses
First quarter adjusted operating expenses of $608 million decreased 2% from $619 million in the first quarter of 2022. Lower
employee compensation and benefits were partially offset by higher
interest expense on borrowings. Employee compensation and benefits
expense decreased due to lower incentive compensation and
commissions, partially offset by higher base compensation and
fringes.
Sequentially, adjusted operating expenses increased 7% from
$570 million. Higher total employee
compensation and benefits and interest on borrowings were partially
offset by lower G&A expense. Employee compensation and benefits
expense increased due to higher base compensation, incentive
compensation and fringes. Within G&A, the decrease was driven
by lower portfolio servicing fees, technology expenses and
professional fees.
Operating Income, Margin and Net Income Per Unit
First quarter adjusted operating income of $225 million decreased 21% from $285 million in the first quarter of 2022, and
the adjusted operating margin of 27.0% decreased 450 basis points
from 31.5%.
Sequentially, adjusted operating income of $225 million decreased 3% from $232 million and the adjusted operating margin of
27.0% decreased 190 basis points from 28.9%.
First quarter adjusted diluted net income per Unit was
$0.66 compared to $0.90 in the first quarter of 2022 and
$0.70 in the fourth quarter of
2022.
Headcount
As of March 31, 2023, we had 4,566 employees, including 284
new hires which were previously outsourced consultants in
Pune, India, compared to 4,161
employees as of March 31, 2022 and 4,436 as of
December 31, 2022, including 203 AB CarVal Employees.
Unit
Repurchases
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
|
(in
millions)
|
Total amount of AB
Holding Units Purchased/Retained (1)
|
|
0.5
|
|
0.3
|
Total Cash Paid for AB
Holding Units Purchased/Retained (1)
|
|
$
18.8
|
|
$
14.0
|
Open Market Purchases
of AB Holding Units Purchased (1)
|
|
—
|
|
—
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (1)
|
|
$
—
|
|
$
—
|
(1)
|
Purchased on a trade
date basis. The difference between open-market purchases and units
retained reflects the retention of AB Holding Units from employees
to fulfill statutory tax withholding requirements at the time of
delivery of long-term incentive compensation awards.
|
First Quarter 2023 Earnings Conference Call
Information
Management will review first quarter 2023 financial and
operating results during a conference call beginning at
8:00 a.m. (CST) on Thursday,
April 27, 2023. The conference call will be hosted by Seth Bernstein, President & Chief Executive
Officer; Kate Burke, Chief
Operating Officer & Chief Financial Officer; Onur Erzan, Head of Global Client Group &
Head of Private Wealth; Scott
DiMaggio, Co-Head of Fixed Income; and Gershon Distenfeld, Co-Head of Fixed Income.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at
https://www.alliancebernstein.com/corporate/en/investor-relations.html at
least 15 minutes prior to the call to download and install any
necessary audio software.
- To listen by telephone, please dial (888) 440-3310 in the U.S.
or +1 (646) 960-0513 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 6072615.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of first quarter 2023 financial and
operating results on April 26, 2023.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference
call.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of these factors include, but are not limited
to, the following: the performance of financial markets, the
investment performance of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, integration of acquired companies,
competitive conditions, and government regulations, including
changes in tax regulations and rates and the manner in which the
earnings of publicly-traded partnerships are taxed. AB cautions
readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such
statements are made; AB undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. For further information regarding
these forward-looking statements and the factors that could cause
actual results to differ, see "Risk Factors" and "Cautions
Regarding Forward-Looking Statements" in AB's Form 10-K for the
year ended December 31, 2022 and subsequent Forms 10-Q. Any or
all of the forward-looking statements made in this news release,
Form 10-K, Forms 10-Q, other documents AB files with or furnishes
to the SEC, and any other public statements issued by AB, may turn
out to be wrong. It is important to remember that other factors
besides those listed in "Risk Factors" and "Cautions Regarding
Forward-Looking Statements", and those listed below, could also
adversely affect AB's revenues, financial condition, results of
operations and business prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional mandates do
not represent legally binding commitments to fund and, accordingly,
the possibility exists that not all mandates will be funded in the
amounts and at the times currently anticipated, or that mandates
ultimately will not be funded.
- The possibility that AB will engage in open market
purchases of AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB Holding Units AB may decide to buy in future periods, if any,
to help fund incentive compensation awards depends on various
factors, some of which are beyond our control, including the
fluctuation in the price of an AB Holding Unit (NYSE: AB) and the
availability of cash to make these purchases.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b)(4). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
37% effective January 1, 2018.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional investors, individuals and private wealth
clients in major world markets.
As of March 31, 2023, including both the general
partnership and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 39.3% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 61.4% economic
interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our website, www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
US GAAP Consolidated
Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2023
|
|
1Q
2022
|
|
%
Change
|
|
4Q
2022
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$ 692,327
|
|
$ 747,813
|
|
(7.4 %)
|
|
$ 680,484
|
|
1.7 %
|
Performance
fees
|
36,580
|
|
75,969
|
|
(51.8)
|
|
32,732
|
|
11.8
|
Bernstein research
services
|
100,038
|
|
117,807
|
|
(15.1)
|
|
100,467
|
|
(0.4)
|
Distribution
revenues
|
141,078
|
|
168,341
|
|
(16.2)
|
|
137,764
|
|
2.4
|
Dividends and
interest
|
50,679
|
|
11,475
|
|
n/m
|
|
58,667
|
|
(13.6)
|
Investments gains
(losses)
|
5,264
|
|
(39,024)
|
|
n/m
|
|
(11,308)
|
|
n/m
|
Other
revenues
|
26,146
|
|
26,155
|
|
—
|
|
25,344
|
|
3.2
|
Total
revenues
|
1,052,112
|
|
1,108,536
|
|
(5.1)
|
|
1,024,150
|
|
2.7
|
Less: interest
expense
|
28,021
|
|
2,849
|
|
n/m
|
|
33,974
|
|
(17.5)
|
Total net
revenues
|
1,024,091
|
|
1,105,687
|
|
(7.4)
|
|
990,176
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
434,163
|
|
439,420
|
|
(1.2)
|
|
399,101
|
|
8.8
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
148,381
|
|
176,244
|
|
(15.8)
|
|
142,791
|
|
3.9
|
Amortization of
deferred sales commissions
|
8,154
|
|
9,383
|
|
(13.1)
|
|
8,085
|
|
0.9
|
Trade execution,
marketing, T&E and other
|
50,630
|
|
51,227
|
|
(1.2)
|
|
52,331
|
|
(3.3)
|
General and
administrative
|
139,653
|
|
177,625
|
|
(21.4)
|
|
161,194
|
|
(13.4)
|
Contingent payment
arrangements
|
2,444
|
|
838
|
|
191.6
|
|
2,516
|
|
(2.9)
|
Interest on
borrowings
|
13,713
|
|
1,411
|
|
n/m
|
|
8,505
|
|
61.2
|
Amortization of
intangible assets
|
11,693
|
|
1,136
|
|
n/m
|
|
11,912
|
|
(1.8)
|
Total operating
expenses
|
808,831
|
|
857,284
|
|
(5.7)
|
|
786,435
|
|
2.8
|
Operating
income
|
215,260
|
|
248,403
|
|
(13.3)
|
|
203,741
|
|
5.7
|
Income taxes
|
11,342
|
|
12,721
|
|
(10.8)
|
|
11,030
|
|
2.8
|
Net income
|
203,918
|
|
235,682
|
|
(13.5)
|
|
192,711
|
|
5.8
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
9,767
|
|
(25,045)
|
|
n/m
|
|
5,574
|
|
75.2
|
Net income attributable
to AB Unitholders
|
$ 194,151
|
|
$ 260,727
|
|
(25.5)
|
|
$ 187,137
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P. (The
Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2023
|
|
1Q
2022
|
|
%
Change
|
|
4Q
2022
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
76,382
|
|
$
94,353
|
|
(19.0 %)
|
|
$
71,888
|
|
6.3 %
|
Income Taxes
|
8,945
|
|
8,425
|
|
6.2
|
|
8,108
|
|
10.3
|
Net
Income
|
67,437
|
|
85,928
|
|
(21.5)
|
|
63,780
|
|
5.7
|
Additional Equity in
Earnings of Operating Partnership (1)
|
—
|
|
2
|
|
(100.0 %)
|
|
—
|
|
— %
|
Net Income -
Diluted
|
$
67,437
|
|
$
85,930
|
|
(21.5)
|
|
$
63,780
|
|
5.7
|
Diluted Net Income
per Unit
|
$
0.59
|
|
$
0.87
|
|
(32.2)
|
|
$
0.59
|
|
—
|
Distribution per
Unit
|
$
0.66
|
|
$
0.90
|
|
(26.7)
|
|
$
0.70
|
|
(5.7)
|
|
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
Units
Outstanding
|
1Q
2023
|
|
1Q
2022
|
|
%
Change
|
|
4Q
2022
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
285,654,435
|
|
271,775,790
|
|
5.1 %
|
|
285,979,913
|
|
(0.1) %
|
Weighted average -
basic
|
285,725,829
|
|
271,382,946
|
|
5.3 %
|
|
280,672,157
|
|
1.8
|
Weighted average -
diluted
|
285,725,829
|
|
271,386,203
|
|
5.3 %
|
|
280,672,157
|
|
1.8
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
113,476,219
|
|
99,594,474
|
|
13.9 %
|
|
113,801,097
|
|
(0.3) %
|
Weighted average -
basic
|
113,547,020
|
|
99,201,630
|
|
14.5 %
|
|
108,493,341
|
|
4.7
|
Weighted average -
diluted
|
113,547,020
|
|
99,204,887
|
|
14.5 %
|
|
108,493,341
|
|
4.7
|
AllianceBernstein
L.P.
|
|
|
|
ASSETS UNDER
MANAGEMENT | March 31, 2023
|
|
|
|
($ Billions)
|
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
3/31/23
|
|
3/31/22
|
|
Ending Assets Under
Management
|
$675.9
|
|
$735.4
|
|
Average Assets Under
Management
|
$666.8
|
|
$751.2
|
Three-Month Changes
By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
Beginning of
Period
|
$
297.3
|
|
$
242.9
|
|
$
106.2
|
|
$
646.4
|
|
Sales/New
accounts
|
3.0
|
|
16.8
|
|
5.8
|
|
25.6
|
|
Redemption/Terminations
|
(3.4)
|
|
(13.3)
|
|
(3.9)
|
|
(20.6)
|
|
Net Cash
Flows
|
(2.3)
|
|
(1.9)
|
|
—
|
|
(4.2)
|
|
Net
Flows
|
(2.7)
|
|
1.6
|
|
1.9
|
|
0.8
|
|
Investment
Performance
|
12.0
|
|
12.2
|
|
4.5
|
|
28.7
|
|
End of
Period
|
$
306.6
|
|
$
256.7
|
|
$
112.6
|
|
$
675.9
|
Three-Month Changes
By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive(1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-
Exempt
|
|
Fixed
Income
Passive(1)
|
|
Alternatives/
Multi-Asset
Solutions(2)
|
|
Total
|
|
Beginning of
Period
|
$
217.9
|
|
$
53.8
|
|
$
190.3
|
|
$
52.5
|
|
$
9.4
|
|
$
122.5
|
|
$
646.4
|
|
Sales/New
accounts
|
8.5
|
|
0.2
|
|
11.1
|
|
3.9
|
|
—
|
|
1.9
|
|
25.6
|
|
Redemption/Terminations
|
(10.6)
|
|
—
|
|
(6.1)
|
|
(2.5)
|
|
(0.1)
|
|
(1.3)
|
|
(20.6)
|
|
Net Cash
Flows
|
(1.3)
|
|
(1.0)
|
|
(1.5)
|
|
0.2
|
|
(0.1)
|
|
(0.5)
|
|
(4.2)
|
|
Net
Flows
|
(3.4)
|
|
(0.8)
|
|
3.5
|
|
1.6
|
|
(0.2)
|
|
0.1
|
|
0.8
|
|
Investment
Performance
|
14.6
|
|
3.6
|
|
4.6
|
|
1.2
|
|
0.3
|
|
4.4
|
|
28.7
|
|
End of
Period
|
$
229.1
|
|
$
56.6
|
|
$
198.4
|
|
$
55.3
|
|
$
9.5
|
|
$
127.0
|
|
$
675.9
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
Equity
|
$
(3.4)
|
|
(0.8)
|
|
$
(4.2)
|
|
Fixed Income
|
5.1
|
|
(0.2)
|
|
4.9
|
|
Alternatives/Multi-Asset Solutions
(2)
|
0.1
|
|
—
|
|
0.1
|
|
Total
|
$
1.8
|
|
$
(1.0)
|
|
$
0.8
|
(1)
|
Includes index and
enhanced index services.
|
(2)
|
Includes certain
multi-asset solutions and services not included in equity or fixed
income services.
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S. Clients
|
$
222.6
|
|
$
150.1
|
|
$
110.3
|
|
$
483.0
|
|
Non-U.S.
Clients
|
84.0
|
|
106.6
|
|
2.3
|
|
192.9
|
|
Total
|
$
306.6
|
|
$
256.7
|
|
$
112.6
|
|
$
675.9
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
1,024,091
|
|
$
990,176
|
|
$
986,984
|
|
$
971,444
|
|
$
1,105,687
|
|
$
1,264,682
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(141,078)
|
|
(137,764)
|
|
(147,960)
|
|
(153,130)
|
|
(168,341)
|
|
(178,490)
|
|
|
|
Investment advisory
services fees
|
(15,456)
|
|
(13,112)
|
|
(12,385)
|
|
(14,357)
|
|
(17,285)
|
|
(21,699)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(9,763)
|
|
(7,730)
|
|
(11,367)
|
|
(10,043)
|
|
(35,976)
|
|
(28,012)
|
|
|
|
Other
revenues
|
(9,343)
|
|
(10,055)
|
|
(10,505)
|
|
(9,436)
|
|
(8,963)
|
|
(9,091)
|
|
|
|
Impact of consolidated
company-sponsored investment funds
|
(10,409)
|
|
(2,512)
|
|
8,837
|
|
26,573
|
|
24,538
|
|
(3,304)
|
|
|
|
Incentive
compensation-related items
|
(5,443)
|
|
(16,889)
|
|
427
|
|
5,295
|
|
4,084
|
|
(1,640)
|
|
|
|
Write-down of
investment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,880
|
|
|
Adjusted Net
Revenues
|
|
$
832,599
|
|
$
802,114
|
|
$
814,031
|
|
$
816,346
|
|
$
903,744
|
|
$
1,024,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
215,260
|
|
$
203,741
|
|
$
170,305
|
|
$
192,648
|
|
$
248,403
|
|
$
392,605
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
|
|
Incentive
compensation-related items
|
1,608
|
|
378
|
|
622
|
|
1,463
|
|
945
|
|
552
|
|
|
|
EQH award
compensation
|
191
|
|
134
|
|
133
|
|
164
|
|
175
|
|
241
|
|
|
|
Write-down of
investment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,880
|
|
|
|
Acquisition-related
expenses
|
17,725
|
|
33,474
|
|
23,412
|
|
4,929
|
|
10,687
|
|
2,195
|
|
|
|
|
Sub-total of non-GAAP
adjustments
|
19,318
|
|
33,780
|
|
23,961
|
|
6,350
|
|
11,601
|
|
4,662
|
|
|
|
Less: Net income (loss)
of consolidated entities attributable to non-controlling
interests
|
9,767
|
|
5,574
|
|
(10,114)
|
|
(26,771)
|
|
(25,045)
|
|
2,904
|
|
|
Adjusted Operating
Income
|
$
224,811
|
|
$
231,947
|
|
$
204,380
|
|
$
225,769
|
|
$
285,049
|
|
$
394,363
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
20.1 %
|
|
20.0 %
|
|
18.3 %
|
|
22.6 %
|
|
24.7 %
|
|
30.8 %
|
|
|
Adjusted Operating
Margin
|
27.0 %
|
|
28.9 %
|
|
25.1 %
|
|
27.7 %
|
|
31.5 %
|
|
38.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except per
Unit amounts, unaudited)
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
12/31/2021
|
|
|
Net Income -
Diluted, GAAP basis
|
$
67,437
|
|
$
63,780
|
|
$
56,316
|
|
$
68,141
|
|
$
85,930
|
|
$
125,165
|
|
|
Impact on net income of
AB non-GAAP adjustments
|
7,401
|
|
12,394
|
|
8,373
|
|
1,630
|
|
3,520
|
|
1,653
|
|
|
Adjusted Net Income
- Diluted
|
$
74,838
|
|
$
76,174
|
|
$
64,689
|
|
$
69,771
|
|
$
89,450
|
|
$
126,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
0.59
|
|
$
0.59
|
|
$
0.56
|
|
$
0.69
|
|
$
0.87
|
|
$
1.27
|
|
|
Impact of AB non-GAAP
adjustments
|
0.07
|
|
0.11
|
|
0.08
|
|
0.02
|
|
0.03
|
|
0.02
|
|
|
Adjusted Diluted Net
Income per Holding Unit
|
$
0.66
|
|
$
0.70
|
|
$
0.64
|
|
$
0.71
|
|
$
0.90
|
|
$
1.29
|
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Net Revenue, as adjusted, is reduced to exclude all of the
company's distribution revenues, which are recorded as a separate
line item on the consolidated statement of income, as well as a
portion of investment advisory services fees received that is used
to pay distribution and servicing costs. For certain products,
based on the distinct arrangements, certain distribution fees are
collected by us and passed through to third-party client
intermediaries, while for certain other products, we collect
investment advisory services fees and a portion is passed through
to third-party client intermediaries. In both arrangements, the
third-party client intermediary owns the relationship with the
client and is responsible for performing services and distributing
the product to the client on our behalf. We believe offsetting
distribution revenues and certain investment advisory services fees
is useful for our investors and other users of our financial
statements because such presentation appropriately reflects the
nature of these costs as pass-through payments to third parties
that perform functions on behalf of our sponsored mutual funds
and/or shareholders of these funds. Distribution-related
adjustments fluctuate each period based on the type of investment
products sold, as well as the average AUM over the period. Also, we
adjust distribution revenues for the amortization of deferred sales
commissions as these costs, over time, will offset such
revenues.
We adjust investment advisory and services fees and other
revenues for pass through costs, primarily related to our transfer
agent and shareholder servicing fees. Also, we adjust for certain
investment advisory and service fees passed through to our
investment advisors. These fees do not affect operating income, as
such, we exclude these fees from adjusted net revenues.
We adjust for the revenue impact of consolidating
company-sponsored investment funds by eliminating the consolidated
company-sponsored investment funds' revenues and including AB's
fees from such consolidated company-sponsored investment funds and
AB's investment gains and losses on its investments in such
consolidated company-sponsored investment funds that were
eliminated in consolidation.
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments. Also, we adjust for certain
acquisition related pass through performance-based fees and
performance related compensation.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2) the
impact on net revenues and compensation expense of the investment
gains and losses (as well as the dividends and interest) associated
with employee long-term incentive compensation-related investments,
(3) the equity compensation paid by EQH to certain AB executives,
as discussed below, (4) the write-down of an investment, (5)
acquisition-related expenses and (6) the impact of consolidated
company-sponsored investment funds.
Real estate charges (credits) incurred have been excluded
because they are not considered part of our core operating results
when comparing financial results from period to period and to
industry peers. However, beginning in the fourth quarter of 2019,
real estate charges (credits), while excluded in the period in
which the charges (credits) are recorded, are included ratably over
the remaining applicable lease term.
Prior to 2009, a significant portion of employee compensation
was in the form of long-term incentive compensation awards that
were notionally invested in AB investment services and generally
vested over a period of four years. AB economically hedged the
exposure to market movements by purchasing and holding these
investments on its balance sheet. All such investments had vested
as of year-end 2012 and the investments have been delivered to the
participants, except for those investments with respect to which
the participant elected a long-term deferral. Fluctuation in the
value of these investments is recorded within investment gains and
losses on the income statement. Management believes it is useful to
reflect the offset achieved from economically hedging the market
exposure of these investments in the calculation of adjusted
operating income and adjusted operating margin. The non-GAAP
measures exclude gains and losses and dividends and interest on
employee long-term incentive compensation-related investments
included in revenues and compensation expense.
The board of directors of EQH granted to Seth P. Bernstein, our CEO, equity awards in
connection with EQH's IPO. Additionally, equity awards were granted
to Mr. Bernstein and other AB executives for their membership on
the EQH Management Committee. These individuals may receive
additional equity or cash compensation from EQH in the future
related to their service on the Management Committee. Any awards
granted to these individuals by EQH are recorded as compensation
expense in AB's consolidated statement of income. The compensation
expense associated with these awards has been excluded from our
non-GAAP measures because they are non-cash and are based upon
EQH's, and not AB's, financial performance.
Acquisition-related expenses have been excluded because they are
not considered part of our core operating results when comparing
financial results from period to period and to industry peers.
Acquisition-related expenses include professional fees and the
recording of changes in estimates to contingent payment
arrangements associated with our acquisitions. Beginning in the
first quarter of 2022, acquisition-related expenses also include
certain compensation-related expenses, amortization of intangible
assets for contracts acquired and accretion expense with respect to
contingent payment arrangements.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored funds' revenues and expenses and
including AB's revenues and expenses that were eliminated in
consolidation. We also excluded the limited partner interests we do
not own.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period without the
volatility noted above in our discussion of adjusted operating
income and to compare our performance to industry peers on a
basis that better reflects our performance in our core business.
Adjusted operating margin is derived by dividing adjusted operating
income by adjusted net revenues.
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SOURCE AllianceBernstein