Affiliated Managers Group, Inc. (NYSE: AMG) today reported its
financial and operating results for the third quarter and nine
months ended September 30, 2022.
Jay C. Horgen, President and Chief
Executive Officer of AMG, said:“Economic Earnings per
share grew 5% in the quarter and in the nine months ended September
30, 2022, relative to the respective year-ago periods, reflecting
the disciplined execution of our strategy. While impacted by
ongoing client de-risking, particularly within global equities, net
client cash flows improved in the quarter and included strong
inflows in our alternative strategies.
“AMG's partnership approach continues to resonate with the
highest-quality partner-owned investment firms. In October, we made
an investment in a leading communications infrastructure firm with
excellent forward prospects, given the strong secular demand for
mobile data. This new partnership enhances our participation in the
highly-attractive real asset space, and further diversifies our
business profile.
“Looking ahead, the current environment presents unique
opportunities for AMG given the diversity and quality of our
Affiliates, and our strong and flexible capital position. In
addition, the proceeds from the October sale of our minority
interest in Baring Private Equity Asia significantly enhance our
financial flexibility to allocate capital across AMG’s unique
opportunity set to the areas of highest growth and return. We
remain focused on executing our strategy and confident in our
ability to create meaningful shareholder value over time."
FINANCIAL
HIGHLIGHTS |
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
(in millions, except as noted
and per share data) |
|
|
9/30/2021 |
|
9/30/2022 |
|
|
|
9/30/2021 |
|
9/30/2022 |
|
Operating Performance
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
AUM (at period end, in billions) |
|
|
$ |
747.8 |
|
$ |
644.6 |
|
|
|
|
$ |
747.8 |
|
|
$ |
644.6 |
|
|
Average AUM (in billions) |
|
|
|
751.8 |
|
|
680.1 |
|
|
|
|
|
745.8 |
|
|
|
731.8 |
|
|
Net client cash flows (in billions) |
|
|
|
3.3 |
|
|
(8.8 |
) |
|
|
|
|
(12.3 |
) |
|
|
(22.5 |
) |
|
Aggregate fees |
|
|
|
1,076.2 |
|
|
1,165.5 |
|
|
|
|
|
3,676.2 |
|
|
|
3,675.6 |
|
|
Financial Performance
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
|
$ |
128.4 |
|
$ |
112.6 |
|
|
|
|
$ |
387.3 |
|
|
$ |
368.0 |
|
|
Earnings per share (diluted) (1) |
|
|
|
3.00 |
|
|
2.80 |
|
|
|
|
|
8.95 |
|
|
|
8.83 |
|
|
Supplemental
Performance Measures (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (controlling interest) |
|
|
$ |
227.7 |
|
$ |
220.4 |
|
|
|
|
$ |
701.8 |
|
|
$ |
689.1 |
|
|
Economic net income (controlling interest) |
|
|
|
168.5 |
|
|
166.4 |
|
|
|
|
|
524.5 |
|
|
|
516.9 |
|
|
Economic earnings per share |
|
|
|
4.00 |
|
|
4.21 |
|
|
|
|
|
12.28 |
|
|
|
12.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information on our Supplemental Performance
Measures, including reconciliations to GAAP, see the Financial
Tables and Notes.
__________________________* AMG sold its minority interest in
BPEA and invested in a new Affiliate in October 2022; accordingly,
the financial impact of these transactions is not included in the
presentation of third quarter financial results.
Capital Management During the third quarter of
2022, the Company repurchased approximately $80 million in common
stock, bringing total year-to-date share repurchases to
approximately $345 million, and announced a third-quarter cash
dividend of $0.01 per share of common stock, payable December 1,
2022 to stockholders of record as of the close of business on
November 17, 2022. In addition, AMG’s Board of
Directors increased the Company’s share repurchase
authorization to a total of 5.8 million shares.
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 September 30, 2022, AMG’s
aggregate assets under management were approximately $645 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 13733437.
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/.
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, June 30, 2022 |
|
$ |
243.8 |
|
$ |
201.1 |
|
$ |
134.3 |
|
$ |
111.7 |
|
$ |
690.9 |
|
Client cash inflows and commitments |
|
|
7.7 |
|
|
4.5 |
|
|
5.0 |
|
|
5.7 |
|
|
22.9 |
|
Client cash outflows |
|
|
(5.5 |
) |
|
(12.2 |
) |
|
(6.4 |
) |
|
(7.6 |
) |
|
(31.7 |
) |
Net client cash
flows |
|
|
2.2 |
|
|
(7.7 |
) |
|
(1.4 |
) |
|
(1.9 |
) |
|
(8.8 |
) |
Market changes |
|
|
(0.7 |
) |
|
(11.5 |
) |
|
(5.9 |
) |
|
(3.1 |
) |
|
(21.2 |
) |
Foreign exchange |
|
|
(3.3 |
) |
|
(5.8 |
) |
|
(1.2 |
) |
|
(1.3 |
) |
|
(11.6 |
) |
Realizations and distributions (net) |
|
|
(4.6 |
) |
|
(0.0 |
) |
|
(0.0 |
) |
|
(0.1 |
) |
|
(4.7 |
) |
Other |
|
|
(0.0 |
) |
|
0.1 |
|
|
(0.1 |
) |
|
(0.0 |
) |
|
(0.0 |
) |
AUM, September 30,
2022 |
|
$ |
237.4 |
|
$ |
176.2 |
|
$ |
125.7 |
|
$ |
105.3 |
|
$ |
644.6 |
|
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 |
|
|
30.0 |
|
|
16.0 |
|
|
19.1 |
|
|
17.3 |
|
|
82.4 |
|
Client cash outflows |
|
|
(15.1 |
) |
|
(45.2 |
) |
|
(24.8 |
) |
|
(19.8 |
) |
|
(104.9 |
) |
Net client cash
flows |
|
|
14.9 |
|
|
(29.2 |
) |
|
(5.7 |
) |
|
(2.5 |
) |
|
(22.5 |
) |
Market changes |
|
|
0.5 |
|
|
(60.2 |
) |
|
(37.2 |
) |
|
(17.1 |
) |
|
(114.0 |
) |
Foreign exchange |
|
|
(7.3 |
) |
|
(11.8 |
) |
|
(2.1 |
) |
|
(2.0 |
) |
|
(23.2 |
) |
Realizations and distributions (net) |
|
|
(8.9 |
) |
|
(0.1 |
) |
|
(0.0 |
) |
|
(0.2 |
) |
|
(9.2 |
) |
Other |
|
|
0.0 |
|
|
(0.0 |
) |
|
(0.0 |
) |
|
(0.3 |
) |
|
(0.3 |
) |
AUM, September 30,
2022 |
|
$ |
237.4 |
|
$ |
176.2 |
|
$ |
125.7 |
|
$ |
105.3 |
|
$ |
644.6 |
|
BY CLIENT TYPE -
QUARTER TO DATE |
|
Institutional |
|
Retail |
|
High NetWorth |
|
Total |
|
AUM, June 30, 2022 |
|
$ |
368.0 |
|
$ |
194.6 |
|
$ |
128.3 |
|
$ |
690.9 |
|
Client cash inflows and commitments |
|
|
8.9 |
|
|
8.0 |
|
|
6.0 |
|
|
22.9 |
|
Client cash outflows |
|
|
(13.2 |
) |
|
(11.5 |
) |
|
(7.0 |
) |
|
(31.7 |
) |
Net client cash
flows |
|
|
(4.3 |
) |
|
(3.5 |
) |
|
(1.0 |
) |
|
(8.8 |
) |
Market changes |
|
|
(7.7 |
) |
|
(9.0 |
) |
|
(4.5 |
) |
|
(21.2 |
) |
Foreign exchange |
|
|
(6.2 |
) |
|
(4.5 |
) |
|
(0.9 |
) |
|
(11.6 |
) |
Realizations and distributions (net) |
|
|
(4.6 |
) |
|
(0.0 |
) |
|
(0.1 |
) |
|
(4.7 |
) |
Other |
|
|
0.1 |
|
|
(0.1 |
) |
|
0.0 |
|
|
(0.0 |
) |
AUM, September 30,
2022 |
|
$ |
345.3 |
|
$ |
177.5 |
|
$ |
121.8 |
|
$ |
644.6 |
|
BY CLIENT TYPE - YEAR
TO DATE |
|
Institutional |
|
Retail |
|
High NetWorth |
|
Total |
|
AUM, December 31, 2021 |
|
$ |
413.8 |
|
$ |
252.5 |
|
$ |
147.5 |
|
$ |
813.8 |
|
Client cash inflows and commitments |
|
|
32.9 |
|
|
30.8 |
|
|
18.7 |
|
|
82.4 |
|
Client cash outflows |
|
|
(42.0 |
) |
|
(43.0 |
) |
|
(19.9 |
) |
|
(104.9 |
) |
Net client cash
flows |
|
|
(9.1 |
) |
|
(12.2 |
) |
|
(1.2 |
) |
|
(22.5 |
) |
Market changes |
|
|
(40.5 |
) |
|
(49.7 |
) |
|
(23.8 |
) |
|
(114.0 |
) |
Foreign exchange |
|
|
(11.9 |
) |
|
(10.1 |
) |
|
(1.2 |
) |
|
(23.2 |
) |
Realizations and distributions (net) |
|
|
(8.5 |
) |
|
(0.3 |
) |
|
(0.4 |
) |
|
(9.2 |
) |
Other |
|
|
1.5 |
|
|
(2.7 |
) |
|
0.9 |
|
|
(0.3 |
) |
AUM, September 30,
2022 |
|
$ |
345.3 |
|
$ |
177.5 |
|
$ |
121.8 |
|
$ |
644.6 |
|
|
CONSOLIDATED
STATEMENTS OF INCOME |
|
|
Three Months Ended |
(in millions, except per share
data) |
|
9/30/2021 |
|
9/30/2022 |
|
|
|
|
|
Consolidated revenue |
|
$ |
575.2 |
|
|
$ |
578.6 |
|
|
|
|
|
|
Consolidated
expenses: |
|
|
|
|
Compensation and related expenses |
|
|
256.4 |
|
|
|
273.8 |
|
Selling, general and administrative |
|
|
82.9 |
|
|
|
93.2 |
|
Intangible amortization and impairments |
|
|
8.9 |
|
|
|
14.4 |
|
Interest expense |
|
|
28.5 |
|
|
|
28.3 |
|
Depreciation and other amortization |
|
|
4.0 |
|
|
|
3.8 |
|
Other expenses (net) |
|
|
14.6 |
|
|
|
11.9 |
|
Total consolidated
expenses |
|
|
395.3 |
|
|
|
425.4 |
|
|
|
|
|
|
Equity method income
(net)(3) |
|
|
35.9 |
|
|
|
44.8 |
|
|
|
|
|
|
Investment and other
income |
|
|
37.5 |
|
|
|
3.1 |
|
Income before income
taxes |
|
|
253.3 |
|
|
|
201.1 |
|
|
|
|
|
|
Income tax expense |
|
|
44.9 |
|
|
|
36.8 |
|
Net
income |
|
|
208.4 |
|
|
|
164.3 |
|
|
|
|
|
|
Net income (non-controlling
interests) |
|
|
(80.0 |
) |
|
|
(51.7 |
) |
Net income
(controlling interest) |
|
$ |
128.4 |
|
|
$ |
112.6 |
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
41.1 |
|
|
|
38.2 |
|
Average shares outstanding
(diluted) |
|
|
44.3 |
|
|
|
43.5 |
|
|
|
|
|
|
Earnings per share
(basic) |
|
$ |
3.12 |
|
|
$ |
2.95 |
|
Earnings per share
(diluted)(1) |
|
$ |
3.00 |
|
|
$ |
2.80 |
|
|
RECONCILIATIONS OF
SUPPLEMENTAL PERFORMANCE MEASURES(2) |
|
|
Three Months Ended |
(in millions, except per share
data) |
|
9/30/2021 |
|
9/30/2022 |
|
|
|
|
|
Net income (controlling interest) |
|
$ |
128.4 |
|
|
$ |
112.6 |
|
Intangible amortization and impairments |
|
|
35.6 |
|
|
|
41.9 |
|
Intangible-related deferred taxes |
|
|
12.0 |
|
|
|
12.7 |
|
Other economic items |
|
|
(7.5 |
) |
|
|
(0.8 |
) |
Economic net income
(controlling interest) |
|
$ |
168.5 |
|
|
$ |
166.4 |
|
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
|
42.2 |
|
|
|
39.5 |
|
Economic earnings per
share |
|
$ |
4.00 |
|
|
$ |
4.21 |
|
|
|
|
|
|
Net income
(controlling interest) |
|
$ |
128.4 |
|
|
$ |
112.6 |
|
Interest expense |
|
|
28.5 |
|
|
|
28.3 |
|
Income taxes |
|
|
42.6 |
|
|
|
34.8 |
|
Intangible amortization and impairments |
|
|
35.6 |
|
|
|
41.9 |
|
Other items |
|
|
(7.4 |
) |
|
|
2.8 |
|
Adjusted EBITDA
(controlling interest) |
|
$ |
227.7 |
|
|
$ |
220.4 |
|
See Notes for additional information.
|
CONSOLIDATED
STATEMENTS OF INCOME |
|
|
Nine Months Ended |
(in millions, except per share
data) |
|
9/30/2021 |
|
9/30/2022 |
|
|
|
|
|
Consolidated revenue |
|
$ |
1,720.6 |
|
|
$ |
1,789.9 |
|
|
|
|
|
|
Consolidated
expenses: |
|
|
|
|
Compensation and related expenses |
|
|
752.2 |
|
|
|
797.0 |
|
Selling, general and administrative |
|
|
250.3 |
|
|
|
275.7 |
|
Intangible amortization and impairments |
|
|
25.3 |
|
|
|
39.4 |
|
Interest expense |
|
|
82.8 |
|
|
|
84.7 |
|
Depreciation and other amortization |
|
|
12.5 |
|
|
|
11.9 |
|
Other expenses (net) |
|
|
40.6 |
|
|
|
12.3 |
|
Total consolidated
expenses |
|
|
1,163.7 |
|
|
|
1,221.0 |
|
|
|
|
|
|
Equity method income
(net)(3) |
|
|
125.1 |
|
|
|
123.9 |
|
|
|
|
|
|
Investment and other income
(expense) |
|
|
91.1 |
|
|
|
(5.3 |
) |
Income before income
taxes |
|
|
773.1 |
|
|
|
687.5 |
|
|
|
|
|
|
Income tax expense |
|
|
166.4 |
|
|
|
130.5 |
|
Net
income |
|
|
606.7 |
|
|
|
557.0 |
|
|
|
|
|
|
Net income (non-controlling
interests) |
|
|
(219.4 |
) |
|
|
(189.0 |
) |
Net income
(controlling interest) |
|
$ |
387.3 |
|
|
$ |
368.0 |
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
41.8 |
|
|
|
38.8 |
|
Average shares outstanding
(diluted) |
|
|
44.8 |
|
|
|
47.8 |
|
|
|
|
|
|
Earnings per share
(basic) |
|
$ |
9.28 |
|
|
$ |
9.48 |
|
Earnings per share
(diluted)(1) |
|
$ |
8.95 |
|
|
$ |
8.83 |
|
|
RECONCILIATIONS OF
SUPPLEMENTAL PERFORMANCE MEASURES(2) |
|
|
Nine Months Ended |
(in millions, except per share
data) |
|
9/30/2021 |
|
9/30/2022 |
|
|
|
|
|
Net income (controlling interest) |
|
$ |
387.3 |
|
|
$ |
368.0 |
|
Intangible amortization and impairments |
|
|
111.7 |
|
|
|
116.9 |
|
Intangible-related deferred taxes |
|
|
51.9 |
|
|
|
41.2 |
|
Other economic items |
|
|
(26.4 |
) |
|
|
(9.2 |
) |
Economic net income
(controlling interest) |
|
$ |
524.5 |
|
|
$ |
516.9 |
|
|
|
|
|
|
Average shares outstanding
(adjusted diluted) |
|
|
42.7 |
|
|
|
40.2 |
|
Economic earnings per
share |
|
$ |
12.28 |
|
|
$ |
12.85 |
|
|
|
|
|
|
Net income
(controlling interest) |
|
$ |
387.3 |
|
|
$ |
368.0 |
|
Interest expense |
|
|
82.8 |
|
|
|
84.7 |
|
Income taxes |
|
|
153.2 |
|
|
|
121.1 |
|
Intangible amortization and impairments |
|
|
111.7 |
|
|
|
116.9 |
|
Other items |
|
|
(33.2 |
) |
|
|
(1.6 |
) |
Adjusted EBITDA
(controlling interest) |
|
$ |
701.8 |
|
|
$ |
689.1 |
|
See Notes for additional information.
|
CONSOLIDATED BALANCE
SHEET |
|
|
Period Ended |
(in millions) |
|
12/31/2021 |
|
9/30/2022 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
908.5 |
|
|
$ |
622.9 |
|
Receivables |
|
|
419.2 |
|
|
|
377.7 |
|
Investments in marketable securities |
|
|
78.5 |
|
|
|
183.7 |
|
Goodwill |
|
|
2,689.2 |
|
|
|
2,627.9 |
|
Acquired client relationships (net) |
|
|
1,966.4 |
|
|
|
1,864.1 |
|
Equity method investments in Affiliates (net) |
|
|
2,134.4 |
|
|
|
2,046.8 |
|
Fixed assets (net) |
|
|
73.9 |
|
|
|
70.1 |
|
Other investments |
|
|
375.2 |
|
|
|
353.7 |
|
Other assets |
|
|
231.1 |
|
|
|
283.3 |
|
Total
assets |
|
$ |
8,876.4 |
|
|
$ |
8,430.2 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
Payables and accrued liabilities |
|
$ |
789.1 |
|
|
$ |
569.1 |
|
Debt(4) |
|
|
2,490.4 |
|
|
|
2,534.8 |
|
Deferred income tax liability (net) |
|
|
503.2 |
|
|
|
491.7 |
|
Other liabilities |
|
|
709.2 |
|
|
|
692.6 |
|
Total
liabilities |
|
|
4,491.9 |
|
|
|
4,288.2 |
|
|
|
|
|
|
Redeemable non-controlling
interests |
|
|
673.9 |
|
|
|
486.6 |
|
Equity: |
|
|
|
|
Common stock |
|
|
0.6 |
|
|
|
0.6 |
|
Additional paid-in capital |
|
|
651.6 |
|
|
|
709.6 |
|
Accumulated other comprehensive loss |
|
|
(87.9 |
) |
|
|
(213.9 |
) |
Retained earnings |
|
|
4,569.5 |
|
|
|
4,940.7 |
|
|
|
|
5,133.8 |
|
|
|
5,437.0 |
|
Less: treasury stock, at
cost |
|
|
(2,347.4 |
) |
|
|
(2,670.8 |
) |
Total stockholders’
equity |
|
|
2,786.4 |
|
|
|
2,766.2 |
|
Non-controlling interests |
|
|
924.2 |
|
|
|
889.2 |
|
Total
equity |
|
|
3,710.6 |
|
|
|
3,655.4 |
|
Total liabilities and
equity |
|
$ |
8,876.4 |
|
|
$ |
8,430.2 |
|
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 |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2021 |
|
9/30/2022 |
|
9/30/2021 |
|
9/30/2022 |
|
Numerator |
|
|
|
|
|
|
|
|
|
Net income (controlling interest) |
|
$ |
128.4 |
|
$ |
112.6 |
|
$ |
387.3 |
|
$ |
368.0 |
|
Income from hypothetical
settlement of Redeemable non-controlling interests, net of
taxes |
|
|
— |
|
|
5.8 |
|
|
— |
|
|
43.4 |
|
Interest expense on junior
convertible securities, net of taxes |
|
|
4.6 |
|
|
3.4 |
|
|
13.9 |
|
|
10.6 |
|
Net income (controlling
interest), as adjusted |
|
$ |
133.0 |
|
$ |
121.8 |
|
$ |
401.2 |
|
$ |
422.0 |
|
Denominator |
|
|
|
|
|
|
|
|
|
Average shares outstanding
(basic) |
|
|
41.1 |
|
|
38.2 |
|
|
41.8 |
|
|
38.8 |
|
Effect of dilutive
instruments: |
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units |
|
|
1.1 |
|
|
1.3 |
|
|
0.9 |
|
|
1.4 |
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
|
— |
|
|
2.3 |
|
|
— |
|
|
5.7 |
|
Junior convertible securities |
|
|
2.1 |
|
|
1.7 |
|
|
2.1 |
|
|
1.9 |
|
Average shares outstanding
(diluted) |
|
|
44.3 |
|
|
43.5 |
|
|
44.8 |
|
|
47.8 |
(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 certain
gains and losses, principally related to the accounting for
contingent payment obligations as well as general partner and seed
capital investments, tax windfalls and shortfalls from share-based
compensation, certain Affiliate equity expenses, and non-cash
imputed interest. 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 |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2021 |
|
9/30/2022 |
|
9/30/2021 |
|
9/30/2022 |
|
Average shares outstanding (diluted) |
|
44.3 |
|
|
43.5 |
|
|
44.8 |
|
|
47.8 |
|
|
Hypothetical issuance of shares to settle Redeemable
non-controlling interests |
|
— |
|
|
(2.3 |
) |
|
— |
|
|
(5.7 |
) |
|
Junior convertible securities |
|
(2.1 |
) |
|
(1.7 |
) |
|
(2.1 |
) |
|
(1.9 |
) |
|
Average shares outstanding
(adjusted diluted) |
|
42.2 |
|
|
39.5 |
|
|
42.7 |
|
|
40.2 |
|
|
|
|
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 |
|
Nine Months Ended |
|
(in millions) |
|
9/30/2021 |
|
9/30/2022 |
|
9/30/2021 |
|
9/30/2022 |
|
Equity method earnings |
|
$ |
65.2 |
|
|
$ |
76.2 |
|
|
$ |
218.9 |
|
|
$ |
213.2 |
|
|
Equity method intangible
amortization |
|
|
(29.3 |
) |
|
|
(31.4 |
) |
|
|
(93.8 |
) |
|
|
(89.3 |
) |
|
Equity method intangible
impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Equity method income (net) |
|
$ |
35.9 |
|
|
$ |
44.8 |
|
|
$ |
125.1 |
|
|
$ |
123.9 |
|
|
|
(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.
Investor Relations:Patricia Figueroa
Media RelationsAnn Imes
+1 (617) 747-3300ir@amg.compr@amg.com
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