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AMG Reports Financial and Operating Results for the Fourth Quarter and Full Year 2019

Company reports EPS of $0.46, Economic EPS of $4.52 in fourth quarter
EPS of $0.31, Economic EPS of $14.22 for the full year 2019

  • Net Income (controlling interest) of $23 million, Economic Net Income of $222 million
  • Adjusted EBITDA of $200 million, a 5% increase year-over-year  
  • Returned $426 million in capital to shareholders in 2019, including $110 million in share repurchases in Q4  
  • Announced $0.32 cash dividend per common share  

WEST PALM BEACH, Fla., Feb. 03, 2020 (GLOBE NEWSWIRE) -- Affiliated Managers Group, Inc. (AMG) today reported its financial and operating results for the fourth quarter and full year 2019.

Jay C. Horgen, President and Chief Executive Officer of AMG, said:
“AMG reported Economic earnings per share of $4.52 and year-over-year EBITDA growth of 5%, reflecting strong Affiliate investment performance and related performance fees. Net client cash flows of ($11.3) billion were driven primarily by certain quantitative strategies and seasonal client redemptions. During the quarter, AMG and certain Affiliates implemented a number of strategic repositioning initiatives to reallocate resources to areas of higher growth and return.

"Looking ahead, we are well-positioned to generate growth over time, given our Affiliates’ strong long-term performance records — particularly in fundamental and relative value strategies — along with their business momentum in growing areas such as private markets, wealth management, and fixed income. In addition, we continue to invest in growth opportunities and are advancing discussions with prospective Affiliates operating in areas of strong client demand. Through the disciplined execution of our growth strategy, along with our commitment to returning excess capital to shareholders, we are confident in our ability to create long-term shareholder value.”

FINANCIAL HIGHLIGHTS     Three Months Ended   Year Ended
(in millions, except as noted and per share data)     12/31/2018 12/31/2019   12/31/2018 12/31/2019
Operating Performance Measures              
AUM (at period end, in billions)     $ 736.0   $ 722.5     $ 736.0   $ 722.5  
Average AUM (in billions)     776.0   720.2     819.9   758.1  
Net client cash flows (in billions)     (15.8 ) (11.3 )   (12.5 ) (53.5 )
Aggregate fees     1,231.6   1,417.2     5,442.4   4,962.7  
Financial Performance Measures              
Net income (loss) (controlling interest)     $ (151.3 ) $ 22.5     $ 243.6   $ 15.7  
Earnings (loss) per share (diluted)     (2.88 ) 0.46     4.52   0.31  
Supplemental Performance Measures (1)              
Adjusted EBITDA (controlling interest)     $ 191.3   $ 200.3     $ 961.8   $ 841.6  
Economic net income (controlling interest)     185.8   221.8     780.7   720.2  
Economic earnings per share     3.53   4.52     14.50   14.22  

For additional information on our Supplemental Performance Measures, including reconciliations to GAAP, see the Financial Tables and Notes.

Capital Management
The Company announced a first-quarter cash dividend of $0.32 per common share, payable February 27, 2020 to common stockholders of record as of the close of business on February 13, 2020. During the fourth quarter of 2019, the Company repurchased $110 million in common stock.

About AMG
AMG is a global asset management company with equity investments in leading boutique investment management firms. AMG’s strategy is to generate long‐term value by investing in leading independent active investment managers, through a proven partnership approach, and allocating resources across the Company's unique opportunity set to the areas of highest growth and return. AMG’s innovative partnership approach allows each Affiliate’s management team to own significant equity in their firm while maintaining operational autonomy. In addition, AMG provides centralized assistance to its Affiliates on strategy, marketing, distribution, and product development. As of December 31, 2019, AMG’s aggregate assets under management were approximately $723 billion, across a broad range of active, return-oriented strategies. For more information, please visit the Company’s website at www.amg.com.

Conference Call, Replay and Presentation Information
A 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 13697921. 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 (2) (in billions)
BY STRATEGY - QUARTER TO DATE Alternatives Global Equities U.S. Equities Multi-Asset &
Fixed Income
Total
AUM, September 30, 2019 $ 280.9   $ 258.2   $ 104.3   $ 107.3   $ 750.7  
Client cash inflows and commitments 6.8   9.9   3.9   5.9   26.5  
Client cash outflows (14.3 ) (13.7 ) (5.3 ) (4.5 ) (37.8 )
Net client cash flows (7.5 ) (3.8 ) (1.4 ) 1.4   (11.3 )
Market changes 0.4   19.1   6.7   2.9   29.1  
Foreign exchange 3.5   4.4   0.3   0.8   9.0  
Realizations and distributions (net) (0.5 ) (0.2 ) (0.2 )   (0.9 )
Strategic repositioning (33.5 ) (2.3 ) (4.8 ) (3.8 ) (44.4 )
Other (2.1 ) (0.5 ) (4.9 ) (2.2 ) (9.7 )
AUM, December 31, 2019 $ 241.2   $ 274.9   $ 100.0   $ 106.4   $ 722.5  
                               


BY STRATEGY - YEAR TO DATE Alternatives Global Equities U.S. Equities Multi-Asset &
Fixed Income
Total
AUM, December 31, 2018 $ 293.5   $ 243.8   $ 97.6   $ 101.1   $ 736.0  
Client cash inflows and commitments 35.0   37.6   16.4   20.8   109.8  
Client cash outflows (62.0 ) (57.2 ) (26.3 ) (17.8 ) (163.3 )
Net client cash flows (27.0 ) (19.6 ) (9.9 ) 3.0   (53.5 )
New investments 4.0         4.0  
Market changes 11.6   51.7   23.3   12.2   98.8  
Foreign exchange 1.7   3.1   0.3   0.8   5.9  
Realizations and distributions (net) (3.1 ) (0.4 ) (0.2 ) (0.2 ) (3.9 )
Strategic repositioning (33.5 ) (2.3 ) (4.8 ) (8.4 ) (49.0 )
Other (6.0 ) (1.4 ) (6.3 ) (2.1 ) (15.8 )
AUM, December 31, 2019 $ 241.2   $ 274.9   $ 100.0   $ 106.4   $ 722.5  
                               


BY CLIENT TYPE - QUARTER TO DATE Institutional Retail High Net
Worth
Total
AUM, September 30, 2019 $ 435.1   $ 199.8   $ 115.8   $ 750.7  
Client cash inflows and commitments 12.4   8.7   5.4   26.5  
Client cash outflows (20.0 ) (13.6 ) (4.2 ) (37.8 )
Net client cash flows (7.6 ) (4.9 ) 1.2   (11.3 )
Market changes 14.3   10.2   4.6   29.1  
Foreign exchange 4.7   4.0   0.3   9.0  
Realizations and distributions (net) (0.4 ) (0.5 )   (0.9 )
Strategic repositioning (36.9 ) (3.0 ) (4.5 ) (44.4 )
Other (2.0 ) (7.5 ) (0.2 ) (9.7 )
AUM, December 31, 2019 $ 407.2   $ 198.1   $ 117.2   $ 722.5  
                         


BY CLIENT TYPE - YEAR TO DATE Institutional Retail High Net
 Worth
Total
AUM, December 31, 2018 $ 432.9   $ 195.4   $ 107.7   $ 736.0  
Client cash inflows and commitments 46.0   44.3   19.5   109.8  
Client cash outflows (81.4 ) (65.0 ) (16.9 ) (163.3 )
Net client cash flows (35.4 ) (20.7 ) 2.6   (53.5 )
New investments 4.0       4.0  
Market changes 50.3   32.9   15.6   98.8  
Foreign exchange 3.3   2.1   0.5   5.9  
Realizations and distributions (net) (3.1 ) (0.7 ) (0.1 ) (3.9 )
Strategic repositioning (36.9 ) (3.0 ) (9.1 ) (49.0 )
Other (7.9 ) (7.9 )   (15.8 )
AUM, December 31, 2019 $ 407.2   $ 198.1   $ 117.2   $ 722.5  
                         


CONSOLIDATED STATEMENTS OF INCOME (QUARTERLY)    
    Three Months Ended
(in millions, except per share data)   12/31/2018 12/31/2019
       
Consolidated revenue   $ 564.4   $ 555.5  
       
Consolidated expenses:      
Compensation and related expenses   225.8   234.8  
Selling, general and administrative   103.3   93.5  
Intangible amortization and impairments   38.3   72.5  
Interest expense   18.1   18.8  
Depreciation and other amortization   5.5   4.6  
Other expenses (net)   36.3   20.8  
Total consolidated expenses   427.3   445.0  
       
Equity method loss (net) (3)   (191.4 ) (19.5 )
       
Investment and other income (loss)   (9.3 ) 3.3  
Income (loss) before income taxes   (63.6 ) 94.3  
       
Income tax expense (benefit)   35.2   (1.6 )
Net income (loss)   (98.8 ) 95.9  
       
Net income (non-controlling interests)   (52.5 ) (73.4 )
Net income (loss) (controlling interest)   $ (151.3 ) $ 22.5  
       
Average shares outstanding (basic)   52.5   48.9  
Average shares outstanding (diluted)   52.5   49.1  
       
Earnings (loss) per share (basic)   $ (2.88 ) $ 0.46  
Earnings (loss) per share (diluted)   $ (2.88 ) $ 0.46  


RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES (QUARTERLY)(1)    
    Three Months Ended
(in millions, except per share data)   12/31/2018 12/31/2019
       
Net income (loss) (controlling interest)   $ (151.3 ) $ 22.5  
Intangible amortization and impairments   288.0   162.3  
Intangible-related deferred taxes   49.6   32.3  
Other economic items   (0.5 ) 4.7  
Economic net income (controlling interest)   $ 185.8   $ 221.8  
       
Average shares outstanding (adjusted diluted)   52.7   49.1  
Economic earnings per share   $ 3.53   $ 4.52  
       
Net income (loss) (controlling interest)   $ (151.3 ) $ 22.5  
Interest expense   18.1   18.8  
Income taxes   30.7   (6.0 )
Intangible amortization and impairments   288.0   162.3  
Other items   5.8   2.7  
Adjusted EBITDA (controlling interest)   $ 191.3   $ 200.3  
               

See Notes for additional information.

CONSOLIDATED STATEMENTS OF INCOME (YEARLY)    
    Year Ended
(in millions, except per share data)   12/31/2018 12/31/2019
       
Consolidated revenue   $ 2,378.4   $ 2,239.6  
       
Consolidated expenses:      
Compensation and related expenses   987.2   943.0  
Selling, general and administrative   417.7   376.8  
Intangible amortization and impairments   114.8   144.5  
Interest expense   80.6   76.2  
Depreciation and other amortization   22.0   21.3  
Other expenses (net)   69.7   57.0  
Total consolidated expenses   1,692.0   1,618.8  
       
Equity method loss (net) (3)   (0.2 ) (338.0 )
       
Investment and other income   27.4   25.2  
Income before income taxes   713.6   308.0  
       
Income tax expense   181.3   2.9  
Net income   532.3   305.1  
       
Net income (non-controlling interests)   (288.7 ) (289.4 )
Net income (controlling interest)   $ 243.6   $ 15.7  
       
Average shares outstanding (basic)   53.6   50.5  
Average shares outstanding (diluted)   53.8   50.6  
       
Earnings per share (basic)   $ 4.55   $ 0.31  
Earnings per share (diluted)   $ 4.52   $ 0.31  


RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES (YEARLY) (1)   Year Ended
(in millions, except per share data)   12/31/2018 12/31/2019
       
Net income (controlling interest)   $ 243.6   $ 15.7  
Intangible amortization and impairments   454.9   745.8  
Intangible-related deferred taxes   79.7   (51.3 )
Other economic items   2.5   10.0  
Economic net income (controlling interest)   $ 780.7   $ 720.2  
       
Average shares outstanding (adjusted diluted)   53.8   50.6  
Economic earnings per share   $ 14.50   $ 14.22  
       
Net income (controlling interest)   $ 243.6   $ 15.7  
Interest expense   80.6   76.2  
Income taxes   169.4   (9.1 )
Intangible amortization and impairments   454.9   745.8  
Other items   13.3   13.0  
Adjusted EBITDA (controlling interest)   $ 961.8   $ 841.6  
               

See Notes for additional information.

CONSOLIDATED BALANCE SHEET    
    Year Ended
(in millions)   12/31/2018 12/31/2019
       
Assets      
Cash and cash equivalents   $ 565.5   $ 539.6  
Receivables   400.6   417.1  
Investments in marketable securities   119.3   59.4  
Goodwill   2,633.4   2,651.7  
Acquired client relationships (net)   1,309.9   1,182.0  
Equity method investments in Affiliates (net)   2,791.0   2,195.6  
Fixed assets (net)   104.3   92.3  
Other investments   201.1   211.8  
Other assets   94.0   304.0  
Total assets   $ 8,219.1   $ 7,653.5  
       
Liabilities and Equity      
Payables and accrued liabilities   $ 746.6   $ 634.6  
Debt   1,829.6   1,793.8  
Deferred income tax liability (net)   511.6   450.2  
Other liabilities   162.7   359.1  
Total liabilities   3,250.5   3,237.7  
       
Redeemable non-controlling interests   833.7   916.7  
Equity:      
Common stock   0.6   0.6  
Additional paid-in capital   835.6   707.2  
Accumulated other comprehensive loss   (109.0 ) (108.8 )
Retained earnings   3,876.8   3,819.8  
    4,604.0   4,418.8  
Less: treasury stock, at cost   (1,146.6 ) (1,481.3 )
Total stockholders’ equity   3,457.4   2,937.5  
Non-controlling interests   677.5   561.6  
Total equity   4,134.9   3,499.1  
Total liabilities and equity   $ 8,219.1   $ 7,653.5  
               

Notes

(1) 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, and adjustments to our contingent payment arrangements. 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 arrangements) and certain Affiliate equity expenses. Economic net income (controlling interest) is used by management and our Board of Directors as our principal performance benchmark, including as a measure 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, 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   Year Ended
  (in millions)   12/31/2018   12/31/2019   12/31/2018   12/31/2019
  Average shares outstanding (diluted)   52.5     49.1     53.8     50.6  
  Stock options and restricted stock units   0.2              
  Average shares outstanding (adjusted diluted)   52.7     49.1     53.8     50.6  
                           


  These non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income (controlling interest),  Earnings per share (controlling interest) 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.
   
(2)  Strategic repositioning includes assets under management attributable to Affiliates that are not significant to our results, or those in which AMG has divested of its interest. Other includes assets under management attributable to product transitions and reclassifications.
   
(3) The following table presents equity method earnings and equity method intangible amortization and impairments, which in aggregate form Equity method loss (net):


      Three Months Ended   Year Ended
  (in millions)   12/31/2018   12/31/2019   12/31/2018   12/31/2019
  Equity method earnings   $ 70.5     $ 78.8     $ 370.6     $ 289.4  
  Equity method intangible amortization and impairments   (261.9 )   (98.3 )   (370.8 )   (627.4 )
  Equity method loss (net)   $ (191.4 )   $ (19.5 )   $ (0.2 )   $ (338.0 )
                                   

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, the availability of equity and debt financing, competition for acquisitions of interests in investment management firms, the ability to close pending investments, 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. 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:
Media Relations:
Anjali Aggarwal
Jonathan Freedman
+1 (617) 747-3300
ir@amg.com
pr@amg.com