ALLIANCEBERNSTEIN HOLDING L.P. ANNOUNCES FOURTH QUARTER RESULTS
GAAP Diluted Net Income of
Adjusted Diluted Net Income of
Cash Distribution of
"Equity and fixed income markets registered strong gains in 2023, aided by a robust fourth quarter rally as investors anticipated a shift in Fed policy to lower interest rates in 2024," said
(US $ Thousands except per Unit amounts) |
Q4 2023 |
|
Q4 2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ 1,090,720 |
|
$ 990,176 |
|
10.2 % |
|
$ 4,155,323 |
|
$ 4,054,290 |
|
2.5 % |
Operating income |
$ 238,500 |
|
$ 203,741 |
|
17.1 % |
|
$ 817,670 |
|
$ 815,096 |
|
0.3 % |
Operating margin |
20.6 % |
|
20.0 % |
|
60 bps |
|
19.1 % |
|
21.5 % |
|
(240 bps) |
AB Holding Diluted EPU |
$ 0.71 |
|
$ 0.59 |
|
20.3 % |
|
$ 2.34 |
|
$ 2.69 |
|
(13.0) % |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial Measures 1 |
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ 870,927 |
|
$ 802,114 |
|
8.6 % |
|
$ 3,371,949 |
|
$ 3,336,234 |
|
1.1 % |
Operating income2 |
$ 253,894 |
|
$ 240,452 |
|
5.6 % |
|
$ 951,219 |
|
$ 965,103 |
|
(1.4 %) |
Operating margin2 |
29.2 % |
|
30.0 % |
|
(80 bps) |
|
28.2 % |
|
28.9 % |
|
(70 bps) |
AB Holding Diluted EPU |
$ 0.77 |
|
$ 0.70 |
|
10.0 % |
|
$ 2.69 |
|
$ 2.94 |
|
(8.5 %) |
|
$ 0.77 |
|
$ 0.70 |
|
10.0 % |
|
$ 2.69 |
|
$ 2.95 |
|
(8.8 %) |
|
|
|
|
|
|
|
|
|
|
|
|
(US $ Billions) |
|
|
|
|
|
|
|
|
|
|
|
Assets Under Management ("AUM") |
|
|
|
|
|
|
|
|
|
|
|
Ending AUM |
$ 725.2 |
|
$ 646.4 |
|
12.2 % |
|
$ 725.2 |
|
$ 646.4 |
|
12.2 % |
Average AUM |
$ 685.4 |
|
$ 636.0 |
|
7.8 % |
|
$ 680.3 |
|
$ 686.5 |
|
(0.9 %) |
|
|
|
|
|
|
|
|
|
|
|
|
1 The adjusted financial measures represent non-GAAP financial measures. See page 15 for reconciliations of GAAP Financial Results to Adjusted Financial Results and pages 16-17 for notes describing the adjustments. |
2 During the second quarter of 2023, we revised adjusted operating income for the impact of interest on borrowings to align with our industry peers. We have recast prior periods to align with current periods presentation. |
Bernstein continued: "Our fixed income investment performance was strong, with 75% of assets outperforming in 2023. Equity assets lagged with 26% of assets outperforming, reflecting stock selection and concentrated index returns driven by a small number of mega-cap technology stocks. Firmwide gross sales decreased 12% in FY23, primarily attributed to slower Institutional sales as compared with a strong FY22, offsetting 8% sales growth in Retail and 6% in Private Wealth. Our US Retail business grew organically for the fifth consecutive year and Private Wealth grew for the third straight year. Our year-end institutional pipeline of
Bernstein concluded, "Entering 2024, we maintain a balanced perspective in managing our business. While we enter 2024 with an AUM base 12% above the prior year period, we anticipate markets will continue to reflect a volatile macroeconomic and geopolitical environment. We are committed to investing in select profitable growth opportunities to serve our clients' changing needs. Our investment teams are focused on delivering outstanding investment performance, through pursuing insight that unlocks opportunity, for our clients, unitholders and stakeholders."
The firm's cash distribution per Unit of
Market Performance
Global equity and fixed income markets were up in both the fourth quarter and for the full year of 2023.
|
4Q 2023 |
2023 |
S&P 500 Total Return |
11.7 % |
26.3 % |
MSCI EAFE Total Return |
10.5 |
18.9 |
Bloomberg Barclays US Aggregate Return |
6.8 |
5.5 |
Bloomberg Barclays Global High Yield Index |
7.8 |
13.7 |
Assets Under Management ($ Billions)
Total assets under management as of
|
Institutional |
|
Retail |
|
Private |
|
Total |
Assets Under Management |
|
|
|
|
|
|
|
Net Flows for Three Months Ended 12/31/23: |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Passive |
— |
|
0.5 |
|
0.5 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Flows for Twelve Months Ended 12/31/23: |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Passive |
(2.3) |
|
(1.0) |
|
1.5 |
|
|
Total |
|
|
|
|
|
|
|
Total net outflows were
Institutional channel fourth quarter net outflows of
Retail channel fourth quarter net inflows of
Private Wealth channel fourth quarter net outflows of
Fourth Quarter and Full Year Financial Results
We are presenting both earnings information derived in accordance with accounting principles generally accepted in
US GAAP Earnings
Revenues
Fourth quarter 2023 net revenues of
Full year 2023 net revenues of
Fourth quarter 2023 Bernstein Research Services ("Bernstein") revenues were flat to the prior year period. Full year 2023 Bernstein revenues decreased 7% compared to the prior year. The decrease was driven by significantly lower global customer trading activity due to the prevailing macro-economic environment.
Expenses
Fourth quarter 2023 operating expenses of
Full year 2023 operating expenses of
Operating Income and Net Income Per Unit
Fourth quarter 2023 operating income of
Full year 2023 operating income of
Fourth quarter 2023 diluted net income per Unit was
Full year 2023 diluted net income per Unit was
Non-GAAP Earnings
This section discusses our fourth quarter and full year 2023 non-GAAP financial results, compared to the fourth quarter and full year 2022 financial results. 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.
Adjusted Revenues
Fourth quarter 2023 adjusted net revenues of
Full year 2023 adjusted net revenues of
Adjusted Expenses
Fourth quarter 2023 adjusted operating expenses of
Full year 2023 adjusted operating expenses of
Adjusted Operating Income, Margin and Net Income Per Uni t3
Fourth quarter 2023 adjusted operating income of
Full year 2023 adjusted operating income of
Fourth quarter 2023 adjusted diluted net income per Unit was
Full year adjusted diluted net income per Unit was
3 During the second quarter of 2023, we revised adjusted operating income to exclude interest on borrowings in order to align with our industry peer group. We have recast prior periods presentation to align with the current period presentation. |
Headcount
As of
Unit Repurchases
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
||||||
Total amount of AB Holding Units Purchased/Retained(1) |
2.4 |
|
2.6 |
|
4.7 |
|
5.2 |
Total Cash Paid for AB Holding Units Purchased/Retained(1) |
$ 68.7 |
|
$ 104.1 |
|
$ 144.4 |
|
$ 211.8 |
Open Market Purchases of AB Holding Units Purchased(1) |
0.2 |
|
— |
|
2.0 |
|
2.3 |
Total Cash Paid for Open Market Purchases of AB Holding Units(1) |
$ 5.7 |
|
$ — |
|
$ 62.6 |
|
$ 92.7 |
(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. |
Fourth Quarter 2023 Earnings Conference Call Information
Management will review Fourth Quarter 2023 financial and operating results during a conference call beginning at
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 theU.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 fourth quarter 2023 financial and operating results on February 6, 2023.
A replay of the webcast will be made available beginning approximately one hour after the conclusion of the conference call.
Availability of 2023 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the year ended
- Download Electronic Copy: Unitholders can download an electronic version of the report by visiting the "Investor & Media Relations" page of our website at www.alliancebernstein.com/investorrelations and clicking on the "Reports & SEC Filings" section.
- Order Hard Copy Electronically or by Phone: Unitholders may also order a hard copy of the report, which is expected to be available for mailing in approximately eight weeks, free of charge. Unitholders with internet access can follow the above instructions to order a hard copy electronically. Unitholders without internet access, or who would prefer to order by phone, can call 615-622-0000.
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
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
About
As of
Additional information about
AB ( |
|
|
|
|
|
|
US GAAP Consolidated Statement of Income (Unaudited) |
|
|
|
|
|
|
(US $ Thousands) |
Q4 2023 |
|
Q4 2022 |
|
% Change |
|
|
|
|
|
|
|
|
GAAP revenues: |
|
|
|
|
|
|
Base fees |
$ 713,889 |
|
$ 680,484 |
|
4.9 % |
|
Performance fees |
62,042 |
|
32,732 |
|
89.5 % |
|
Bernstein research services |
100,382 |
|
100,467 |
|
(0.1 %) |
|
Distribution revenues |
151,339 |
|
137,764 |
|
9.9 % |
|
Dividends and interest |
48,682 |
|
58,667 |
|
(17.0 %) |
|
Investments gains (losses) |
14,966 |
|
(11,308) |
|
n/m |
|
Other revenues |
25,993 |
|
25,344 |
|
2.6 % |
|
Total revenues |
1,117,293 |
|
1,024,150 |
|
9.1 % |
|
Less: broker-dealer related interest expense |
26,573 |
|
33,974 |
|
(21.8 %) |
|
Total net revenues |
1,090,720 |
|
990,176 |
|
10.2 % |
|
|
|
|
|
|
|
|
GAAP operating expenses: |
|
|
|
|
|
|
Employee compensation and benefits |
453,291 |
|
399,101 |
|
13.6 % |
|
Promotion and servicing |
|
|
|
|
|
|
Distribution-related payments |
156,329 |
|
142,791 |
|
9.5 % |
|
Amortization of deferred sales commissions |
10,312 |
|
8,085 |
|
27.5 % |
|
Trade execution, marketing, T&E and other |
58,585 |
|
52,331 |
|
12.0 % |
|
General and administrative |
146,595 |
|
161,194 |
|
(9.1 %) |
|
Contingent payment arrangements |
2,603 |
|
2,516 |
|
3.5 % |
|
Interest on borrowings |
12,799 |
|
8,505 |
|
50.5 % |
|
Amortization of intangible assets |
11,706 |
|
11,912 |
|
(1.7 %) |
|
Total operating expenses |
852,220 |
|
786,435 |
|
8.4 % |
|
Operating income |
238,500 |
|
203,741 |
|
17.1 % |
|
Income taxes |
(2,202) |
|
11,030 |
|
n/m |
|
Net income |
240,702 |
|
192,711 |
|
24.9 % |
|
Net income of consolidated entities attributable to non-controlling interests |
13,384 |
|
5,574 |
|
140.1 % |
|
Net income attributable to AB Unitholders |
$ 227,318 |
|
$ 187,137 |
|
21.5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ Thousands) |
Q4 2023 |
|
Q4 2022 |
|
% Change |
|
|
|
|
|
|
|
|
Equity in Net Income Attributable to AB Unitholders |
$ 88,517 |
|
$ 71,888 |
|
23.1 % |
|
Income Taxes |
9,319 |
|
8,108 |
|
14.9 % |
|
Net Income |
79,198 |
|
63,780 |
|
24.2 % |
|
Diluted Net Income per Unit |
$ 0.71 |
|
$ 0.59 |
|
20.3 % |
|
Distribution per Unit |
$ 0.77 |
|
$ 0.70 |
|
10.0 % |
|
|
|
|
|
|
|
|
(1) To reflect higher ownership in the |
||||||
|
||||||
Units Outstanding |
Q4 2023 |
|
Q4 2022 |
|
% Change |
|
|
|
|
|
|
|
|
Period-end |
286,609,212 |
|
285,979,913 |
|
0.2 % |
|
Weighted average - basic |
283,761,105 |
|
280,672,157 |
|
1.1 % |
|
Weighted average - diluted |
283,761,105 |
|
280,672,157 |
|
1.1 % |
|
|
|
|
|
|
|
|
Period-end |
114,436,091 |
|
113,801,097 |
|
0.6 % |
|
Weighted average - basic |
111,586,555 |
|
108,493,341 |
|
2.9 % |
|
Weighted average - diluted |
111,586,555 |
|
108,493,341 |
|
2.9 % |
|
AB ( |
|
|
|
|
|
|
US GAAP Consolidated Statement of Income (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ Thousands) |
|
2023 |
|
2022 |
|
% Change |
GAAP revenues: |
|
|
|
|
|
|
Base fees |
|
$ 2,830,557 |
|
2,825,791 |
|
0.2 % |
Performance fees |
|
144,911 |
|
145,247 |
|
(0.2) % |
Bernstein research services |
|
386,142 |
|
416,273 |
|
(7.2) % |
Distribution revenues |
|
586,263 |
|
607,195 |
|
(3.4) % |
Dividends and interest |
|
199,443 |
|
123,091 |
|
62.0 % |
Investments gains (losses) |
|
14,206 |
|
(102,413) |
|
n/m |
Other revenues |
|
101,342 |
|
105,544 |
|
(4.0) % |
Total revenues |
|
4,262,864 |
|
4,120,728 |
|
3.4 % |
Less: broker-dealer related interest expense |
|
107,541 |
|
66,438 |
|
61.9 % |
Total net revenues |
|
4,155,323 |
|
4,054,290 |
|
2.5 % |
|
|
|
|
|
|
|
GAAP operating expenses: |
|
|
|
|
|
|
Employee compensation and benefits |
|
1,769,153 |
|
1,666,636 |
|
6.2 % |
Promotion and servicing |
|
|
|
|
|
|
Distribution-related payments |
|
610,368 |
|
629,572 |
|
(3.1) % |
Amortization of deferred sales commissions |
|
36,817 |
|
34,762 |
|
5.9 % |
Trade execution, marketing, T&E and other |
|
215,643 |
|
215,556 |
|
— % |
General & administrative |
|
581,571 |
|
641,635 |
|
(9.4) % |
Contingent payment arrangements |
|
22,853 |
|
6,563 |
|
n/m |
Interest on borrowings |
|
54,394 |
|
17,906 |
|
n/m |
Amortization of intangible assets |
|
46,854 |
|
26,564 |
|
76.4 % |
Total operating expenses |
|
3,337,653 |
|
3,239,194 |
|
3.0 % |
|
|
|
|
|
|
|
Operating income |
|
817,670 |
|
815,096 |
|
0.3 % |
|
|
|
|
|
|
|
Income taxes |
|
29,051 |
|
39,639 |
|
(26.7) % |
|
|
|
|
|
|
|
Net income |
|
788,619 |
|
775,457 |
|
1.7 % |
|
|
|
|
|
|
|
Net income (loss) of consolidated entities attributable to non-controlling interests |
|
24,009 |
|
(56,356) |
|
n/m |
|
|
|
|
|
|
|
Net income attributable to AB Unitholders |
|
$ 764,610 |
|
$ 831,813 |
|
(8.1) % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $ Thousands) |
|
2023 |
|
2022 |
|
% Change |
Equity in Net Income Attributable to AB Unitholders |
|
$ 299,781 |
|
$ 305,504 |
|
(1.9) % |
Income Taxes |
|
35,597 |
|
31,339 |
|
13.6 % |
Net Income |
|
264,184 |
|
274,165 |
|
(3.6) % |
Additional Equity in Earnings of |
|
— |
|
2 |
|
(100.0) % |
Net Income - Diluted |
|
$ 264,184 |
|
$ 274,167 |
|
(3.6) % |
Diluted Net Income per Unit |
|
|
|
|
|
(13.0) % |
Distribution per Unit |
|
|
|
|
|
(8.8) % |
|
|
|
|
|
|
|
(1) To reflect higher ownership in the |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Outstanding |
|
2023 |
|
2022 |
|
% Change |
|
|
|
|
|
|
|
Period-end |
|
286,609,212 |
|
285,979,913 |
|
0.2 % |
Weighted average - basic |
|
285,124,535 |
|
273,942,916 |
|
4.1 % |
Weighted average - diluted |
|
285,124,535 |
|
273,943,976 |
|
4.1 % |
|
|
|
|
|
|
|
Period-end |
|
114,436,091 |
|
113,801,097 |
|
0.6 % |
Weighted average - basic |
|
112,948,341 |
|
101,762,514 |
|
11.0 % |
Weighted average - diluted |
|
112,948,341 |
|
101,763,574 |
|
11.0 % |
|
|
|
|
ASSETS UNDER MANAGEMENT | |
|
|
|
(US $ Billions) |
|
|
|
Ending and Average |
Three Months Ended |
||
|
|
|
|
|
Ending Assets Under Management |
|
|
|
Average Assets Under Management |
|
|
Three-Month Changes by Distribution Channel |
|
|
|
|
|
|
|
|
|
|
Institutions |
|
Retail |
|
Private Wealth |
|
Total |
|
Beginning of Period |
$ 296.9 |
|
$ 259.2 |
|
$ 112.9 |
|
$ 669.0 |
|
Sales/New accounts |
3.0 |
|
21.0 |
|
4.3 |
|
28.3 |
|
Redemption/Terminations |
(2.5) |
|
(16.7) |
|
(4.9) |
|
(24.1) |
|
Net Cash Flows |
(3.0) |
|
(3.0) |
|
— |
|
(6.0) |
|
Net Flows |
(2.5) |
|
1.3 |
|
(0.6) |
|
(1.8) |
|
Investment Performance |
22.7 |
|
26.3 |
|
9.0 |
|
58.0 |
|
End of Period |
$ 317.1 |
|
$ 286.8 |
|
$ 121.3 |
|
$ 725.2 |
Three-Month Changes by Investment Service |
|
|
|
|
|
|
|
|
|
|
||||
|
|
Equity |
|
Equity |
|
Fixed |
|
Fixed |
|
Fixed |
|
Alternatives/ |
|
Total |
|
Beginning of Period |
$ 226.8 |
|
$ 56.0 |
|
$ 195.0 |
|
$ 55.6 |
|
$ 9.4 |
|
$ 126.2 |
|
$ 669.0 |
|
Sales/New accounts |
9.2 |
|
0.2 |
|
10.2 |
|
5.5 |
|
1.3 |
|
1.9 |
|
28.3 |
|
Redemption/Terminations |
(10.9) |
|
(0.1) |
|
(8.4) |
|
(3.6) |
|
(0.1) |
|
(1.0) |
|
(24.1) |
|
Net Cash Flows |
(3.3) |
|
(0.6) |
|
(1.2) |
|
— |
|
— |
|
(0.9) |
|
(6.0) |
|
Net Flows |
(5.0) |
|
(0.5) |
|
0.6 |
|
1.9 |
|
1.2 |
|
— |
|
(1.8) |
|
Investment Performance |
25.7 |
|
6.6 |
|
13.0 |
|
3.6 |
|
0.8 |
|
8.3 |
|
58.0 |
|
End of Period |
$ 247.5 |
|
$ 62.1 |
|
$ 208.6 |
|
$ 61.1 |
|
$ 11.4 |
|
$ 134.5 |
|
$ 725.2 |
Three-Month Net Flows by Investment Service (Active versus Passive) |
||||||
|
|
Actively |
|
Passively |
|
Total |
|
Equity |
$ (5.0) |
|
$ (0.5) |
|
$ (5.5) |
|
Fixed Income |
2.5 |
|
1.2 |
|
3.7 |
|
Alternatives/Multi-Asset Solutions (2) |
(0.3) |
|
0.3 |
|
— |
|
Total |
$ (2.8) |
|
$ 1.0 |
|
$ (1.8) |
(1) Includes index and enhanced index services. |
(2) Includes certain multi-asset solutions and services not included in equity or fixed income services. |
|
|
|
|
ASSETS UNDER MANAGEMENT | |
|
|
|
(US $ Billions) |
|
|
|
Ending and Average |
Twelve Months Ended |
||
|
|
|
|
|
Ending Assets Under Management |
|
|
|
Average Assets Under Management |
|
|
Twelve-Month Changes by Distribution Channel |
|
|
|
|
|
|
||
|
|
Institutions |
|
Retail |
|
Private Wealth |
|
Total |
|
Beginning of Period |
$ 297.3 |
|
$ 242.9 |
|
$ 106.2 |
|
$ 646.4 |
|
Sales/New accounts |
11.8 |
|
71.1 |
|
18.6 |
|
101.5 |
|
Redemption/Terminations |
(12.6) |
|
(58.1) |
|
(17.5) |
|
(88.2) |
|
Net Cash Flows |
(11.0) |
|
(9.3) |
|
— |
|
(20.3) |
|
Net Flows |
(11.8) |
|
3.7 |
|
1.1 |
|
(7.0) |
|
Transfers |
0.1 |
|
(0.1) |
|
— |
|
— |
|
Investment Performance |
31.5 |
|
40.3 |
|
14.0 |
|
85.8 |
|
End of Period |
$ 317.1 |
|
$ 286.8 |
|
$ 121.3 |
|
$ 725.2 |
Twelve-Month Changes by Investment Service |
|
|
|
|
|
|
|
|
||||||
|
|
Equity |
|
Equity |
|
Fixed |
|
Fixed |
|
Fixed |
|
Alternatives/ |
|
Total |
|
Beginning of Period |
$ 217.9 |
|
$ 53.8 |
|
$ 190.3 |
|
$ 52.5 |
|
$ 9.4 |
|
$ 122.5 |
|
$ 646.4 |
|
Sales/New accounts |
37.3 |
|
1.3 |
|
36.4 |
|
16.5 |
|
1.7 |
|
8.3 |
|
101.5 |
|
Redemption/Terminations |
(43.8) |
|
(0.3) |
|
(27.3) |
|
(11.1) |
|
(0.3) |
|
(5.4) |
|
(88.2) |
|
Net Cash Flows |
(9.0) |
|
(5.0) |
|
(2.5) |
|
0.3 |
|
0.1 |
|
(4.2) |
|
(20.3) |
|
Net Flows |
(15.5) |
|
(4.0) |
|
6.6 |
|
5.7 |
|
1.5 |
|
(1.3) |
|
(7.0) |
|
Investment Performance |
45.1 |
|
12.3 |
|
11.7 |
|
2.9 |
|
0.5 |
|
13.3 |
|
85.8 |
|
End of Period |
$ 247.5 |
|
$ 62.1 |
|
$ 208.6 |
|
$ 61.1 |
|
$ 11.4 |
|
$ 134.5 |
|
$ 725.2 |
Twelve-Month Net Flows by Investment Service (Active versus Passive) |
||||||
|
|
Actively |
|
Passively |
|
Total |
|
Equity |
$ (15.5) |
|
$ (4.0) |
|
$ (19.5) |
|
Fixed Income |
12.3 |
|
1.5 |
|
$ 13.8 |
|
Alternatives/Multi-Asset Solutions (2) |
(2.0) |
|
0.7 |
|
$ (1.3) |
|
Total |
$ (5.2) |
|
$ (1.8) |
|
$ (7.0) |
(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 |
|
|
$ 235.8 |
|
$ 172.5 |
|
$ 118.7 |
|
$ 527.0 |
|
Non- |
81.3 |
|
114.3 |
|
2.6 |
|
198.2 |
|
Total |
$ 317.1 |
|
$ 286.8 |
|
$ 121.3 |
|
$ 725.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
RECONCILIATION OF GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS |
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
Three Months Ended |
Twelve Months Ended |
|||||||||||
|
(US $ Thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP basis |
|
$ 1,090,720 |
|
$ 1,032,056 |
|
$ 1,008,456 |
|
$ 1,024,091 |
|
$ 990,176 |
|
$ 4,155,323 |
|
$ 4,054,290 |
||
|
|
Exclude: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Distribution revenues |
(151,339) |
|
(149,049) |
|
(144,798) |
|
(141,078) |
|
(137,764) |
|
(586,263) |
|
(607,195) |
||
|
|
Investment advisory services |
(15,302) |
|
(16,156) |
|
(14,005) |
|
(15,456) |
|
(13,112) |
|
(60,919) |
|
(57,139) |
||
|
|
Pass through adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Investment advisory services |
(27,162) |
|
(14,567) |
|
(11,046) |
|
(9,763) |
|
(7,730) |
|
(62,538) |
|
(65,116) |
||
|
|
Other revenues |
(8,811) |
|
(8,661) |
|
(8,096) |
|
(9,343) |
|
(10,055) |
|
(34,910) |
|
(38,959) |
||
|
|
Impact of consolidated company- |
(13,670) |
|
1,931 |
|
(2,975) |
|
(10,409) |
|
(2,512) |
|
(25,123) |
|
57,436 |
||
|
|
Incentive compensation-related |
(3,509) |
|
238 |
|
(4,905) |
|
(5,443) |
|
(16,889) |
|
(13,621) |
|
(7,083) |
||
|
Adjusted Net Revenues |
|
|
|
$ 845,792 |
|
$ 822,631 |
|
$ 832,599 |
|
|
|
$ 3,371,949 |
|
$ 3,336,234 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, GAAP basis |
|
|
|
$ 175,250 |
|
$ 188,661 |
|
$ 215,260 |
|
|
|
$ 817,670 |
|
$ 815,096 |
||
|
|
Exclude: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
(206) |
|
(206) |
|
(206) |
|
(206) |
|
(206) |
|
(825) |
|
(825) |
||
|
|
Incentive compensation-related |
1,126 |
|
1,354 |
|
1,103 |
|
1,608 |
|
378 |
|
5,192 |
|
3,461 |
||
|
|
EQH award compensation |
179 |
|
142 |
|
215 |
|
191 |
|
134 |
|
727 |
|
606 |
||
|
|
Acquisition-related expenses |
14,879 |
|
44,941 |
|
20,525 |
|
17,725 |
|
33,474 |
|
98,070 |
|
72,503 |
||
|
|
Interest on borrowings4 |
12,800 |
|
13,209 |
|
14,672 |
|
13,713 |
|
8,505 |
|
54,394 |
|
17,906 |
||
|
|
Sub-total of non-GAAP |
28,778 |
|
59,440 |
|
36,309 |
|
33,031 |
|
42,285 |
|
157,558 |
|
93,651 |
||
|
|
Less: Net income (loss) of |
13,384 |
|
(2,164) |
|
3,023 |
|
9,767 |
|
5,574 |
|
24,009 |
|
(56,356) |
||
|
Adjusted Operating Income 4 |
|
|
|
$ 236,854 |
|
$ 221,947 |
|
$ 238,524 |
|
|
|
$ 951,219 |
|
$ 965,103 |
||
|
Operating Margin, GAAP basis excl. |
20.6 % |
|
17.2 % |
|
18.4 % |
|
20.1 % |
|
20.0 % |
|
19.1 % |
|
21.5 % |
|||
|
Adjusted Operating Margin4 |
29.2 % |
|
28.0 % |
|
27.0 % |
|
28.7 % |
|
30.0 % |
|
28.2 % |
|
28.9 % |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
RECONCILIATION OF GAAP EPU TO ADJUSTED EPU |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Three Months Ended |
Twelve Months Ended |
|||||||||||
|
($ Thousands except per Unit amounts, |
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|||
|
Net Income - Diluted, GAAP basis |
$ 79,198 |
|
$ 56,991 |
|
$ 60,558 |
|
$ 67,437 |
|
$ 63,780 |
|
$ 264,184 |
|
$ 274,167 |
|||
|
Impact on net income of AB non-GAAP |
6,228 |
|
17,077 |
|
8,124 |
|
7,401 |
|
12,394 |
|
39,355 |
|
25,468 |
|||
|
Adjusted Net Income - Diluted |
$ 85,426 |
|
$ 74,068 |
|
$ 68,682 |
|
$ 74,838 |
|
$ 76,174 |
|
$ 303,539 |
|
$ 299,635 |
|||
|
Diluted Net Income per Holding Unit, |
$ 0.71 |
|
$ 0.50 |
|
$ 0.53 |
|
$ 0.59 |
|
$ 0.59 |
|
$ 2.34 |
|
$ 2.69 |
|||
|
Impact of AB non-GAAP adjustments |
0.06 |
|
0.15 |
|
0.08 |
|
0.07 |
|
0.11 |
|
0.35 |
|
0.25 |
|||
|
Adjusted Diluted Net Income per |
$ 0.77 |
|
$ 0.65 |
|
$ 0.61 |
|
$ 0.66 |
|
$ 0.70 |
|
$ 2.69 |
|
$ 2.94 |
|
4 During the second quarter of 2023, we adjusted operating income to exclude interest on borrowings in order to align with our industry peer group. We have recast prior periods presentation to align with the current period presentation. |
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 performance-based 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) acquisition-related expenses, (5) interest on borrowings 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
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 adjust operating income to exclude interest on borrowings in order to align with our industry peer group.
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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