Affiliated Managers Group, Inc. (NYSE: AMG) today reported its
financial and operating results for the second quarter and six
months ended June 30, 2022.
Jay C. Horgen, President and Chief
Executive Officer of AMG, said:“AMG reported Economic
Earnings per share of $4.03 for the second quarter, in line with
the year-ago quarter, demonstrating the earnings resiliency of our
business amid heightened market volatility. Net client cash flows
were driven by client de-risking, particularly within global
equities, which offset continued strength in our liquid and
illiquid alternatives and ESG strategies.
“The market environment has fundamentally changed, and as prior
cycles have demonstrated, periods of market dislocation present
meaningful opportunities for AMG and our diverse array of
independent Affiliates. As owners of their businesses, our
Affiliates are directly aligned with their clients and intensely
focused on delivering excellent long-term returns. Challenging
markets provide opportunities for the highest-quality independent
firms to outperform, and our Affiliates have long-term track
records of doing so. AMG's ability to deliver stable earnings
during periods of macroeconomic uncertainty is enhanced by the
broad range of differentiated liquid alternative, private markets,
and value-oriented strategies offered by our Affiliates; their
strong performance records, along with AMG's business momentum,
support our positive outlook for 2022.
“More broadly, we remain focused on the ongoing execution of our
growth strategy supported by our strong and flexible capital
position. With AMG's proven ability to invest in attractive growth
opportunities and consistently return capital to shareholders
across market cycles, we are well-positioned to generate
differentiated performance in the forward environment and create
long-term shareholder value."
FINANCIAL
HIGHLIGHTS |
|
Three Months Ended |
|
Six Months Ended |
(in millions, except as noted
and per share data) |
|
6/30/2021 |
|
6/30/2022 |
|
6/30/2021 |
|
6/30/2022 |
Operating Performance
Measures |
|
|
|
|
|
|
|
|
AUM (at period end, in billions) |
|
$ |
755.7 |
|
|
$ |
690.9 |
|
|
$ |
755.7 |
|
|
$ |
690.9 |
|
Average AUM (in billions) |
|
|
752.1 |
|
|
|
728.1 |
|
|
|
742.8 |
|
|
|
757.7 |
|
Net client cash flows (in billions) |
|
|
(8.1 |
) |
|
|
(11.4 |
) |
|
|
(15.6 |
) |
|
|
(13.6 |
) |
Aggregate fees |
|
|
1,185.6 |
|
|
|
1,179.6 |
|
|
|
2,600.0 |
|
|
|
2,510.0 |
|
Financial Performance
Measures |
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
$ |
109.0 |
|
|
$ |
109.4 |
|
|
$ |
258.9 |
|
|
$ |
255.4 |
|
Earnings per share (diluted) (1) |
|
|
2.55 |
|
|
|
2.68 |
|
|
|
5.96 |
|
|
|
6.10 |
|
Supplemental
Performance Measures (2) |
|
|
|
|
|
|
|
|
Adjusted EBITDA (controlling interest) |
|
$ |
227.3 |
|
|
$ |
213.4 |
|
|
$ |
474.1 |
|
|
$ |
468.7 |
|
Economic net income (controlling interest) |
|
|
171.2 |
|
|
|
160.5 |
|
|
|
356.0 |
|
|
|
350.5 |
|
Economic earnings per share |
|
|
4.03 |
|
|
|
4.03 |
|
|
|
8.30 |
|
|
|
8.67 |
|
For additional information on our Supplemental
Performance Measures, including reconciliations to GAAP, see the
Financial Tables and Notes.
Capital Management During the
second quarter of 2022, the Company repurchased approximately $80
million in common stock as well as $45 million of junior
convertible debt securities, bringing total year-to-date equity and
convertible debt repurchases to approximately $265 million and $60
million, respectively, and announced a second-quarter cash dividend
of $0.01 per share of common stock, payable August 25, 2022 to
stockholders of record as of the close of business on August 11,
2022.
About AMGAMG is a leading partner to
independent active investment management firms globally. AMG’s
strategy is to generate long‐term value by investing in a diverse
array of high-quality independent partner-owned firms, through a
proven partnership approach, and allocating resources across AMG's
unique opportunity set to the areas of highest growth and return.
AMG’s innovative partnership approach enables each Affiliate’s
management team to own significant equity in their firm while
maintaining operational and investment autonomy. In addition, AMG
offers its Affiliates growth capital, global distribution, and
other strategic value-added capabilities, which enhance the
long-term growth of these independent businesses, and enable them
to align equity incentives across generations of principals to
build enduring franchises. As of June 30, 2022, AMG’s
aggregate assets under management were approximately $691 billion
across a broad range of return-oriented strategies. For more
information, please visit the Company’s website at
www.amg.com.
Conference Call, Replay and Presentation
InformationA conference call will be held with AMG’s
management at 8:30 a.m. Eastern time today. Parties interested in
listening to the conference call should dial 1-877-407-8291 (U.S.
calls) or 1-201-689-8345 (non-U.S. calls) shortly before the call
begins.
The conference call will also be available for replay beginning
approximately one hour after the conclusion of the call. To hear a
replay of the call, please dial 1-877-660-6853 (U.S. calls) or
1-201-612-7415 (non-U.S. calls) and provide conference ID 13731425.
The live call and replay of the session and a presentation
highlighting the Company's performance can also be accessed via
AMG’s website at https://ir.amg.com/.
Investor Relations:Anjali Aggarwal
Media Relations:Ann Imes+1 (617)
747-3300ir@amg.com pr@amg.com
Financial Tables Follow
ASSETS UNDER MANAGEMENT - STATEMENT OF CHANGES
(in billions)
BY STRATEGY - QUARTER
TO DATE |
Alternatives |
|
Global Equities |
|
U.S. Equities |
|
Multi-Asset & Fixed
Income |
|
Total |
|
AUM, March 31, 2022 |
$ |
246.1 |
|
$ |
250.2 |
|
$ |
159.0 |
|
$ |
121.4 |
|
$ |
776.7 |
|
Client cash inflows and commitments |
|
11.6 |
|
|
4.8 |
|
|
5.8 |
|
|
6.3 |
|
|
28.5 |
|
Client cash outflows |
|
(5.1 |
) |
|
(20.0 |
) |
|
(8.0 |
) |
|
(6.8 |
) |
|
(39.9 |
) |
Net client cash
flows |
|
6.5 |
|
|
(15.2 |
) |
|
(2.2 |
) |
|
(0.5 |
) |
|
(11.4 |
) |
Market changes |
|
(2.8 |
) |
|
(29.0 |
) |
|
(21.6 |
) |
|
(8.2 |
) |
|
(61.6 |
) |
Foreign exchange |
|
(3.0 |
) |
|
(4.9 |
) |
|
(0.8 |
) |
|
(0.9 |
) |
|
(9.6 |
) |
Realizations and distributions (net) |
|
(3.0 |
) |
|
(0.0 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
(3.2 |
) |
Other |
|
(0.0 |
) |
|
0.0 |
|
|
(0.0 |
) |
|
0.0 |
|
|
(0.0 |
) |
AUM, June 30,
2022 |
$ |
243.8 |
|
$ |
201.1 |
|
$ |
134.3 |
|
$ |
111.7 |
|
$ |
690.9 |
|
BY STRATEGY - YEAR TO
DATE |
Alternatives |
|
Global Equities |
|
U.S. Equities |
|
Multi-Asset &Fixed
Income |
|
Total |
|
AUM, December 31, 2021 |
$ |
238.2 |
|
$ |
277.5 |
|
$ |
170.7 |
|
$ |
127.4 |
|
$ |
813.8 |
|
Client cash inflows and commitments |
|
22.3 |
|
|
11.5 |
|
|
14.2 |
|
|
11.5 |
|
|
59.5 |
|
Client cash outflows |
|
(9.6 |
) |
|
(33.0 |
) |
|
(18.3 |
) |
|
(12.2 |
) |
|
(73.1 |
) |
Net client cash
flows |
|
12.7 |
|
|
(21.5 |
) |
|
(4.1 |
) |
|
(0.7 |
) |
|
(13.6 |
) |
Market changes |
|
1.1 |
|
|
(48.7 |
) |
|
(31.3 |
) |
|
(13.9 |
) |
|
(92.8 |
) |
Foreign exchange |
|
(3.9 |
) |
|
(6.0 |
) |
|
(1.0 |
) |
|
(0.7 |
) |
|
(11.6 |
) |
Realizations and distributions (net) |
|
(4.3 |
) |
|
(0.1 |
) |
|
(0.0 |
) |
|
(0.1 |
) |
|
(4.5 |
) |
Other |
|
0.0 |
|
|
(0.1 |
) |
|
0.0 |
|
|
(0.3 |
) |
|
(0.4 |
) |
AUM, June 30,
2022 |
$ |
243.8 |
|
$ |
201.1 |
|
$ |
134.3 |
|
$ |
111.7 |
|
$ |
690.9 |
|
BY CLIENT TYPE -
QUARTER TO DATE |
Institutional |
|
Retail |
|
High Net Worth |
|
Total |
|
AUM, March 31, 2022 |
$ |
404.9 |
|
$ |
230.6 |
|
$ |
141.2 |
|
$ |
776.7 |
|
Client cash inflows and commitments |
|
11.9 |
|
|
9.9 |
|
|
6.7 |
|
|
28.5 |
|
Client cash outflows |
|
(16.7 |
) |
|
(15.9 |
) |
|
(7.3 |
) |
|
(39.9 |
) |
Net client cash
flows |
|
(4.8 |
) |
|
(6.0 |
) |
|
(0.6 |
) |
|
(11.4 |
) |
Market changes |
|
(24.4 |
) |
|
(25.4 |
) |
|
(11.8 |
) |
|
(61.6 |
) |
Foreign exchange |
|
(4.7 |
) |
|
(4.4 |
) |
|
(0.5 |
) |
|
(9.6 |
) |
Realizations and distributions (net) |
|
(3.0 |
) |
|
(0.2 |
) |
|
(0.0 |
) |
|
(3.2 |
) |
Other |
|
(0.0 |
) |
|
— |
|
|
0.0 |
|
|
(0.0 |
) |
AUM, June 30,
2022 |
$ |
368.0 |
|
$ |
194.6 |
|
$ |
128.3 |
|
$ |
690.9 |
|
BY CLIENT TYPE - YEAR
TO DATE |
Institutional |
|
Retail |
|
High Net Worth |
|
Total |
|
AUM, December 31, 2021 |
$ |
413.8 |
|
$ |
252.5 |
|
$ |
147.5 |
|
$ |
813.8 |
|
Client cash inflows and commitments |
|
24.1 |
|
|
22.7 |
|
|
12.7 |
|
|
59.5 |
|
Client cash outflows |
|
(28.8 |
) |
|
(31.5 |
) |
|
(12.8 |
) |
|
(73.1 |
) |
Net client cash
flows |
|
(4.7 |
) |
|
(8.8 |
) |
|
(0.1 |
) |
|
(13.6 |
) |
Market changes |
|
(32.8 |
) |
|
(40.7 |
) |
|
(19.3 |
) |
|
(92.8 |
) |
Foreign exchange |
|
(5.6 |
) |
|
(5.6 |
) |
|
(0.4 |
) |
|
(11.6 |
) |
Realizations and distributions (net) |
|
(3.9 |
) |
|
(0.2 |
) |
|
(0.4 |
) |
|
(4.5 |
) |
Other |
|
1.2 |
|
|
(2.6 |
) |
|
1.0 |
|
|
(0.4 |
) |
AUM, June 30,
2022 |
$ |
368.0 |
|
$ |
194.6 |
|
$ |
128.3 |
|
$ |
690.9 |
|
CONSOLIDATED STATEMENTS OF INCOME
|
Three Months Ended |
(in millions, except per share
data) |
6/30/2021 |
|
6/30/2022 |
|
|
|
|
Consolidated revenue |
$ |
586.3 |
|
|
$ |
604.1 |
|
|
|
|
|
Consolidated
expenses: |
|
|
|
Compensation and related expenses |
|
248.9 |
|
|
|
268.2 |
|
Selling, general and administrative |
|
88.6 |
|
|
|
93.1 |
|
Intangible amortization and impairments |
|
8.9 |
|
|
|
12.5 |
|
Interest expense |
|
26.8 |
|
|
|
27.3 |
|
Depreciation and other amortization |
|
4.1 |
|
|
|
4.7 |
|
Other expenses (net) |
|
12.6 |
|
|
|
(5.2 |
) |
Total consolidated
expenses |
|
389.9 |
|
|
|
400.6 |
|
|
|
|
|
Equity method income
(net)(3) |
|
37.6 |
|
|
|
30.5 |
|
|
|
|
|
Investment and other income
(expense) |
|
21.1 |
|
|
|
(22.0 |
) |
Income before income
taxes |
|
255.1 |
|
|
|
212.0 |
|
|
|
|
|
Income tax expense |
|
70.9 |
|
|
|
38.0 |
|
Net
income |
|
184.2 |
|
|
|
174.0 |
|
|
|
|
|
Net income (non-controlling
interests) |
|
(75.2 |
) |
|
|
(64.6 |
) |
Net income
(controlling interest) |
$ |
109.0 |
|
|
$ |
109.4 |
|
|
|
|
|
Average shares outstanding
(basic) |
|
41.6 |
|
|
|
38.7 |
|
Average shares outstanding
(diluted) |
|
44.6 |
|
|
|
44.5 |
|
|
|
|
|
Earnings per share
(basic) |
$ |
2.62 |
|
|
$ |
2.83 |
|
Earnings per share
(diluted)(1) |
$ |
2.55 |
|
|
$ |
2.68 |
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE
MEASURES(2)
|
Three Months Ended |
(in millions, except per share
data) |
6/30/2021 |
|
6/30/2022 |
|
|
|
|
Net income (controlling interest) |
$ |
109.0 |
|
|
$ |
109.4 |
|
Intangible amortization and impairments |
|
35.6 |
|
|
|
43.1 |
|
Intangible-related deferred taxes |
|
31.0 |
|
|
|
12.8 |
|
Other economic items |
|
(4.4 |
) |
|
|
(4.8 |
) |
Economic net income
(controlling interest) |
$ |
171.2 |
|
|
$ |
160.5 |
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
42.5 |
|
|
|
39.9 |
|
Economic earnings per
share |
$ |
4.03 |
|
|
$ |
4.03 |
|
|
|
|
|
Net income
(controlling interest) |
$ |
109.0 |
|
|
$ |
109.4 |
|
Interest expense |
|
26.8 |
|
|
|
27.3 |
|
Income taxes |
|
62.2 |
|
|
|
35.9 |
|
Intangible amortization and impairments |
|
35.6 |
|
|
|
43.1 |
|
Other items |
|
(6.3 |
) |
|
|
(2.3 |
) |
Adjusted EBITDA
(controlling interest) |
$ |
227.3 |
|
|
$ |
213.4 |
|
See Notes for additional information.
CONSOLIDATED STATEMENTS OF INCOME
|
Six Months Ended |
(in millions, except per share
data) |
6/30/2021 |
|
6/30/2022 |
|
|
|
|
Consolidated revenue |
$ |
1,145.4 |
|
|
$ |
1,211.4 |
|
|
|
|
|
Consolidated
expenses: |
|
|
|
Compensation and related expenses |
|
495.8 |
|
|
|
523.2 |
|
Selling, general and administrative |
|
167.4 |
|
|
|
182.6 |
|
Intangible amortization and impairments |
|
16.4 |
|
|
|
25.0 |
|
Interest expense |
|
54.3 |
|
|
|
56.4 |
|
Depreciation and other amortization |
|
8.4 |
|
|
|
8.1 |
|
Other expenses (net) |
|
26.1 |
|
|
|
0.4 |
|
Total consolidated
expenses |
|
768.4 |
|
|
|
795.7 |
|
|
|
|
|
Equity method income
(net)(3) |
|
89.2 |
|
|
|
79.1 |
|
|
|
|
|
Investment and other income
(expense) |
|
53.5 |
|
|
|
(8.4 |
) |
Income before income
taxes |
|
519.7 |
|
|
|
486.4 |
|
|
|
|
|
Income tax expense |
|
121.5 |
|
|
|
93.8 |
|
Net
income |
|
398.2 |
|
|
|
392.6 |
|
|
|
|
|
Net income (non-controlling
interests) |
|
(139.3 |
) |
|
|
(137.2 |
) |
Net income
(controlling interest) |
$ |
258.9 |
|
|
$ |
255.4 |
|
|
|
|
|
Average shares outstanding
(basic) |
|
42.1 |
|
|
|
39.2 |
|
Average shares outstanding
(diluted) |
|
45.0 |
|
|
|
48.1 |
|
|
|
|
|
Earnings per share
(basic) |
$ |
6.15 |
|
|
$ |
6.52 |
|
Earnings per share
(diluted)(1) |
$ |
5.96 |
|
|
$ |
6.10 |
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE
MEASURES(2)
|
Six Months Ended |
(in millions, except per share
data) |
6/30/2021 |
|
6/30/2022 |
|
|
|
|
Net income (controlling interest) |
$ |
258.9 |
|
|
$ |
255.4 |
|
Intangible amortization and impairments |
|
76.1 |
|
|
|
75.0 |
|
Intangible-related deferred taxes |
|
39.9 |
|
|
|
28.5 |
|
Other economic items |
|
(18.9 |
) |
|
|
(8.4 |
) |
Economic net income
(controlling interest) |
$ |
356.0 |
|
|
$ |
350.5 |
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
42.9 |
|
|
|
40.5 |
|
Economic earnings per
share |
$ |
8.30 |
|
|
$ |
8.67 |
|
|
|
|
|
Net income
(controlling interest) |
$ |
258.9 |
|
|
$ |
255.4 |
|
Interest expense |
|
54.3 |
|
|
|
56.4 |
|
Income taxes |
|
110.6 |
|
|
|
86.4 |
|
Intangible amortization and impairments |
|
76.1 |
|
|
|
75.0 |
|
Other items |
|
(25.8 |
) |
|
|
(4.5 |
) |
Adjusted EBITDA
(controlling interest) |
$ |
474.1 |
|
|
$ |
468.7 |
|
See Notes for additional information.
CONSOLIDATED BALANCE SHEET
|
Period Ended |
(in millions) |
12/31/2021 |
|
6/30/2022 |
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
908.5 |
|
|
$ |
606.8 |
|
Receivables |
|
419.2 |
|
|
|
399.2 |
|
Investments in marketable securities |
|
78.5 |
|
|
|
66.6 |
|
Goodwill |
|
2,689.2 |
|
|
|
2,660.0 |
|
Acquired client relationships (net) |
|
1,966.4 |
|
|
|
1,905.2 |
|
Equity method investments in Affiliates (net) |
|
2,134.4 |
|
|
|
2,104.1 |
|
Fixed assets (net) |
|
73.9 |
|
|
|
71.3 |
|
Other investments |
|
375.2 |
|
|
|
384.7 |
|
Other assets |
|
231.1 |
|
|
|
270.8 |
|
Total
assets |
$ |
8,876.4 |
|
|
$ |
8,468.7 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Payables and accrued liabilities |
$ |
789.1 |
|
|
$ |
548.3 |
|
Debt(4) |
|
2,490.4 |
|
|
|
2,534.3 |
|
Deferred income tax liability (net) |
|
503.2 |
|
|
|
493.6 |
|
Other liabilities |
|
709.2 |
|
|
|
700.9 |
|
Total
liabilities |
|
4,491.9 |
|
|
|
4,277.1 |
|
|
|
|
|
Redeemable non-controlling
interests |
|
673.9 |
|
|
|
547.8 |
|
Equity: |
|
|
|
Common stock |
|
0.6 |
|
|
|
0.6 |
|
Additional paid-in capital |
|
651.6 |
|
|
|
651.8 |
|
Accumulated other comprehensive loss |
|
(87.9 |
) |
|
|
(145.7 |
) |
Retained earnings |
|
4,569.5 |
|
|
|
4,828.5 |
|
|
|
5,133.8 |
|
|
|
5,335.2 |
|
Less: treasury stock, at
cost |
|
(2,347.4 |
) |
|
|
(2,594.2 |
) |
Total stockholders’
equity |
|
2,786.4 |
|
|
|
2,741.0 |
|
Non-controlling interests |
|
924.2 |
|
|
|
902.8 |
|
Total
equity |
|
3,710.6 |
|
|
|
3,643.8 |
|
Total liabilities and
equity |
$ |
8,876.4 |
|
|
$ |
8,468.7 |
|
See Notes for additional information.
Notes
(1) |
|
Earnings per
share (diluted) adjusts for the dilutive effect of the potential
issuance of incremental shares of our common stock. |
|
|
|
|
|
Prior to
2022, we excluded any potential dilutive effect from possible share
settlements of Redeemable non-controlling interests as we intend to
settle in cash. Upon adoption of Accounting Standard Update
2020-06, Debt with Conversion and Other Options and Derivatives and
Hedging - Contracts in Entity’s Own Equity ("ASU 2020-06"), we must
assume the settlement of all of our Redeemable non-controlling
interests using the maximum number of shares permitted under our
arrangements. The issuance of shares and the related income
acquired are excluded from the calculation if an assumed purchase
of Redeemable non-controlling interests would be anti-dilutive to
diluted earnings per share. |
|
|
|
|
|
We had
junior convertible securities outstanding during the periods
presented and are required to apply the if-converted method to
these securities in our calculation of Earnings per share
(diluted). Under the if-converted method, shares that are issuable
upon conversion are deemed outstanding, regardless of whether the
securities are contractually convertible into our common stock at
that time. For this calculation, the interest expense (net of tax)
attributable to these dilutive securities is added back to Net
income (controlling interest), reflecting the assumption that the
securities have been converted. Issuable shares for these
securities and related interest expense are excluded from the
calculation if an assumed conversion would be anti-dilutive to
diluted earnings per share. |
|
|
|
|
|
The following table provides a reconciliation of the numerator
and denominator used in the calculation of basic and diluted
earnings per share: |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
(in millions) |
|
6/30/2021 |
|
6/30/2022 |
|
6/30/2021 |
|
6/30/2022 |
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
$ |
109.0 |
|
$ |
109.4 |
|
$ |
258.9 |
|
$ |
255.4 |
|
|
Income from hypothetical
settlement of Redeemable non-controlling interests, net of
taxes |
|
|
— |
|
|
6.6 |
|
|
— |
|
|
30.8 |
|
|
Interest expense on junior
convertible securities, net of taxes |
|
|
4.6 |
|
|
3.5 |
|
|
9.4 |
|
|
7.3 |
|
|
Net income (controlling
interest), as adjusted |
|
$ |
113.6 |
|
$ |
119.5 |
|
$ |
268.3 |
|
$ |
293.5 |
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
41.6 |
|
|
38.7 |
|
|
42.1 |
|
|
39.2 |
|
|
Effect of dilutive
instruments: |
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units |
|
|
0.9 |
|
|
1.2 |
|
|
0.8 |
|
|
1.3 |
|
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
|
— |
|
|
2.8 |
|
|
— |
|
|
5.7 |
|
|
Junior convertible securities |
|
|
2.1 |
|
|
1.8 |
|
|
2.1 |
|
|
1.9 |
|
|
Average shares outstanding
(diluted) |
|
|
44.6 |
|
|
44.5 |
|
|
45.0 |
|
|
48.1 |
|
(2) |
|
As supplemental information, we provide non-GAAP performance
measures of Adjusted EBITDA (controlling interest), Economic net
income (controlling interest), and Economic earnings per share.
Management utilizes these non-GAAP performance measures to assess
our performance before our share of certain non-cash expenses and
to improve comparability between periods. |
|
|
|
|
|
Adjusted EBITDA (controlling interest) represents our performance
before our share of interest expense, income taxes, depreciation,
amortization, impairments, certain Affiliate equity expenses,
certain gains and losses, including on general partner and seed
capital investments, certain non-income based taxes, and
adjustments to our contingent payment obligations. We believe that
many investors use this non-GAAP measure when assessing the
financial performance of companies in the investment management
industry. |
|
|
|
|
|
Under our Economic net income (controlling interest) definition, we
add to Net income (controlling interest) our share of pre-tax
intangible amortization and impairments (including the portion
attributable to equity method investments in Affiliates), deferred
taxes related to intangible assets, and other economic items which
include non-cash imputed interest (principally related to the
accounting for convertible securities and contingent payment
obligations), certain Affiliate equity expenses, and certain gains
and losses, including on general partner and seed capital
investments. Economic net income (controlling interest) is used by
management and our Board of Directors as our principal performance
benchmark, including as one of the measures for aligning executive
compensation with stockholder value. |
|
|
|
|
|
Economic earnings per share represents Economic net income
(controlling interest) divided by the Average shares outstanding
(adjusted diluted). In this calculation, we exclude the potential
shares issued upon settlement of Redeemable non-controlling
interests from Average shares outstanding (adjusted diluted)
because we intend to settle those obligations without issuing
shares, consistent with all prior Affiliate equity purchase
transactions. The potential share issuance in connection with our
junior convertible securities is measured using a “treasury stock”
method. Under this method, only the net number of shares of common
stock equal to the value of the junior convertible securities in
excess of par, if any, are deemed to be outstanding. We believe the
inclusion of net shares under a treasury stock method best reflects
the benefit of the increase in available capital resources (which
could be used to repurchase shares of common stock) that occurs
when these securities are converted and we are relieved of our debt
obligation. |
|
|
|
|
|
The following table provides a
reconciliation of Average shares outstanding (adjusted
diluted): |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
(in millions) |
|
6/30/2021 |
|
6/30/2022 |
|
6/30/2021 |
|
6/30/2022 |
|
|
Average shares outstanding (diluted) |
|
|
44.6 |
|
|
|
44.5 |
|
|
|
45.0 |
|
|
|
48.1 |
|
|
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
|
— |
|
|
|
(2.8 |
) |
|
|
— |
|
|
|
(5.7 |
) |
|
|
Junior convertible securities |
|
|
(2.1 |
) |
|
|
(1.8 |
) |
|
|
(2.1 |
) |
|
|
(1.9 |
) |
|
|
Average shares outstanding
(adjusted diluted) |
|
|
42.5 |
|
|
|
39.9 |
|
|
|
42.9 |
|
|
|
40.5 |
|
|
|
|
|
|
These non-GAAP performance measures are provided in addition to,
but not as a substitute for, Net income (controlling interest),
Earnings per share, or other GAAP performance measures. For
additional information on our non-GAAP measures, see our Annual and
Quarterly Reports on Form 10-K and 10-Q, respectively, which are
accessible on the SEC’s website at www.sec.gov. |
|
|
|
(3) |
|
The following table
presents equity method earnings and equity method intangible
amortization and impairments, which in aggregate form Equity method
income (net): |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
(in millions) |
|
6/30/2021 |
|
6/30/2022 |
|
6/30/2021 |
|
6/30/2022 |
|
|
Equity method earnings |
|
$ |
66.9 |
|
|
$ |
65.1 |
|
|
$ |
153.7 |
|
|
$ |
137.0 |
|
|
|
Equity method intangible
amortization |
|
|
(29.3 |
) |
|
|
(34.6 |
) |
|
|
(64.5 |
) |
|
|
(57.9 |
) |
|
|
Equity method intangible
impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Equity method income (net) |
|
$ |
37.6 |
|
|
$ |
30.5 |
|
|
$ |
89.2 |
|
|
$ |
79.1 |
|
|
|
(4) |
|
Effective January 1,
2022, the Company adopted ASU 2020-06, which impacted the treatment
of our junior convertible securities. The adoption resulted in
increases in Debt and beginning Retained earnings of $101.5 million
and $4.5 million, respectively, and decreases in Additional
paid-in-capital and Deferred income tax liability (net) of $80.6
million and $25.4 million, respectively. |
Forward-Looking Statements and Other
Matters
Certain matters discussed in this press release
may constitute forward-looking statements within the meaning of the
federal securities laws. These statements include, but are not
limited to, statements related to our expectations regarding the
performance of our business, our financial results, our liquidity
and capital resources, and other non-historical statements. You can
identify these forward-looking statements by the use of words such
as “outlook,” “guidance,” “believes,” “expects,” “potential,”
"preliminary," “continues,” “may,” “will,” “should,” “seeks,”
“approximately,” “predicts,” “projects,” “positioned,” “prospects,”
“intends,” “plans,” “estimates,” “pending investments,”
“anticipates,” or the negative version of these words or other
comparable words. Actual results and the timing of certain events
could differ materially from those projected in or contemplated by
the forward-looking statements due to a number of factors,
including changes in the securities or financial markets or in
general economic conditions, pandemics and related changes in the
global economy, capital markets and the asset management industry,
the availability of equity and debt financing, competition for
acquisitions of interests in investment management firms,
uncertainties relating to closing of pending investments or
transactions and potential changes in the anticipated benefits
thereof, the investment performance and growth rates of our
Affiliates and their ability to effectively market their investment
strategies, the mix of Affiliate contributions to our earnings, and
other risks, uncertainties, and assumptions, including those
described under the section entitled “Risk Factors” in our most
recent Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. Such factors may be updated from time to time in our periodic
filings with the SEC. These factors should not be construed as
exhaustive and should be read in conjunction with the other
cautionary statements that are included in this release and in our
filings with the SEC. We undertake no obligation to publicly update
or review any forward-looking statements, whether as a result of
new information, future developments, or otherwise, except as
required by applicable law.
From time to time, AMG may use its website as a
distribution channel of material Company information. AMG routinely
posts financial and other important information regarding the
Company in the Investor Relations section of its website at
www.amg.com and encourages investors to consult that section
regularly.
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