Artisan Partners (APAM) Q3 Earnings Beat Estimates, AUM Falls
Artisan Partners Asset Management Inc. APAM reported third-quarter 2023 adjusted net income per adjusted share of 75 cents, which surpassed the Zacks Consensus Estimate of 47 cents. The bottom line also increased 7.1% year over year.
Results benefited from a rise in management fees earned from Artisan Funds & Artisan Global Funds and Separate accounts, which resulted in top-line growth. Balance sheet position improved in the reported quarter. However, elevated operating expenses and a fall in assets under management (AUM) were the undermining factors.
Net income attributable to Artisan Partners (GAAP basis) was $53.1 million, up from $44.2 million in the prior-year quarter.
Revenues & Expenses Rise
Third-quarter revenues were $248.7 million, which rose 6.1% from the year-ago quarter. The top line also outpaced the Zacks Consensus Estimate of $197.4 million.
Management fees earned from Artisan Funds & Artisan Global Funds increased 6.8% year over year to $156.4 million. Management fees earned from Separate accounts increased 5% to $92.2 million.
Total operating expenses totaled $166.5 million, up 7% year over year. The rise was due to an increase in all the components of operating expenses. We projected operating expenses to be $147.6 million.
Operating income was $82.2 million, up 4.4% year over year.
AUM Balance Falls
As of Sep 30, 2023, the ending AUM was $136.5 billion, down 4.5% from the previous quarter, mainly due to market depreciation and net client cash outflows. We estimated the metric to be $111.5 billion.
Average AUM totaled $142.2 billion, up 2.1% from the prior quarter. We had suggested the metric to be $127.2 billion.
Balance Sheet Position Improves
Cash and cash equivalents were $198.3 million compared with $114.8 million as of Dec 31, 2022. Artisan Partners’ debt leverage ratio, calculated in accordance with its loan agreements, was 0.6x as of Sep 30, 2023.
Dividend Update
The company’s board of directors declared a variable third-quarter dividend of 65 cents per share of Class A common stock. The total amount will be paid out on Nov 30 to shareholders of record as of Nov 16.
Our Take
A challenging operating backdrop and several geopolitical concerns may reduce the company’s AUM in the upcoming period. 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
T. Rowe Price Group, Inc. TROW reported third-quarter 2023 adjusted earnings per share of $2.17, which outpaced the Zacks Consensus Estimate of $1.76. The bottom line increased 16.7% year over year.
TROW's net revenues were supported by a rise in AUM. Further, appreciation in cash and cash equivalents will help the company to continue investing. However, a rise in expenses in the quarter under discussion hinders bottom-line growth.
Franklin Resources Inc. BEN reported fourth-quarter fiscal 2023 (ended Sep 30) adjusted earnings of 84 cents per share, which beat the Zacks Consensus Estimate of 60 cents. The bottom line also increased 7.7% from the prior-year quarter.
BEN’s results display top-line strength from the prior quarter. However, rising expenses affected the bottom line to some extent. A decline in AUM was another major drag.
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