Artisan Partners (APAM) Q2 Earnings Beat Estimates, AUM Rises
Artisan Partners Asset Management Inc. APAM reported second-quarter 2023 adjusted net income per adjusted share of 71 cents, which surpassed the Zacks Consensus Estimate of 61 cents. The bottom line, however, plunged 10.1% year over year.
Results benefited from a rise in assets under management (AUM), lower expenses and an improved balance sheet position. However, lower management fees earned from Separate accounts and Artisan Funds & Artisan Global Funds weighed on the overall top line.
Net income attributable to Artisan Partners (GAAP basis) was $53.6 million, down from $44.3 million in the prior-year quarter.
Revenues & Expenses Down
Second-quarter revenues were $242.9 million, down 3.4% from the year-ago quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $236.1 million.
Management fees earned from Artisan Funds & Artisan Global Funds fell 3.2% year over year to $151.6 million. Management fees earned from Separate accounts declined 3.6% to $91.3 million.
Total operating expenses totaled $166.2 million, down 2% year over year. The fall was due to lower distribution, servicing and marketing costs as well as general and administrative expenses. We projected operating expenses to be $168 million.
Operating income was $76.7 million, down 13.2% year over year.
AUM Balance Increase
As of Jun 30, 2023, the ending AUM was $143 billion, up 3.2% from the previous quarter. We estimated the metric to be $131.8 billion. The company reported better-than-expected AUM for the June-end period primarily on positive investment returns.
Average AUM totaled $139.3 billion, up 2.9% from the prior quarter. We had suggested the metric to be $135.1 billion.
Balance Sheet Position Improves
Cash and cash equivalents were $165 million compared with $114.8 million as of Dec 31, 2022. Artisan Partners’ debt leverage ratio, calculated in accordance with its loan agreements, was 0.6 as of Jun 30, 2023.
Dividend Update
The company’s board of directors declared a variable second-quarter dividend of 61 cents per share of Class A common stock. The total amount will be paid out on Aug 31 to shareholders of record as of Aug 17.
Our Take
A decline in management fees earned and a worsening operating backdrop are major near-term concerns. A volatile trend in net outflows over the past years keeps us apprehensive.
However, a manageable expense level and decent liquidity position are expected to support financials. Also, diverse investment strategies across multiple asset classes, and investments in new teams and operational capabilities are likely to drive revenues in the upcoming period.
Artisan Partners Asset Management Inc. Price, Consensus and EPS Surprise
Artisan Partners Asset Management Inc. price-consensus-eps-surprise-chart | Artisan Partners Asset Management Inc. Quote
Currently, Artisan Partners carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Invesco’s IVZ second-quarter 2023 adjusted earnings of 31 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line plunged 20.5% from the prior-year quarter.
Results of IVZ were hurt by a rise in operating expenses and lower revenues. Nevertheless, an increase in the AUM balance aided the results to some extent.
Franklin Resources Inc. BEN reported third-quarter fiscal 2023 (ended Jun 30) adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 60 cents. However, the bottom line declined 23% from the prior-year quarter.
While a rise in AUM was a tailwind, BEN’s results displayed top-line weakness in the quarter. Rising expenses affected the bottom line to some extent.
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