Artisan Partners (APAM) Q4 Earnings Meet Estimates, AUM Rises
Artisan Partners Asset Management Inc. APAM reported fourth-quarter 2023 adjusted net income per adjusted share of 78 cents, meeting the Zacks Consensus Estimate. The bottom line increased 20% 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 and assets under management (AUM) balance improved in the reported quarter. However, elevated operating expenses were the undermining factors.
Net income attributable to Artisan Partners (GAAP basis) was $64.8 million, up from $52.9 million in the prior-year quarter.
In 2023, adjusted net income per adjusted share was $2.89, beating the Zacks Consensus Estimate of $2.88 but declining 7.1% year over year. Net income attributable to Artisan Partners (GAAP basis) was $222.3 million, up from $206.8 million in 2022.
Revenues & Expenses Rise
Fourth-quarter revenues were $249 million, which rose 10.2% year over year. The top line also outpaced the Zacks Consensus Estimate of $243.8 million.
In 2023, revenues fell 1.8% to $975.1 billion. The top line, nonetheless, surpassed the consensus estimate of $969.9 million.
Management fees earned from Artisan Funds & Artisan Global Funds increased 11% year over year to $153.7 million. Management fees earned from Separate accounts grew 4.5% to $91.2 million. We anticipated management fees earned from Artisan Funds & Artisan Global Funds and Separate accounts to be $151.3 million and $92.4 million, respectively.
Total operating expenses was $172.6 million, up 10.6% year over year. The rise was due to an increase in all components of operating expenses except operating costs. We projected operating expenses to be $171.1 million.
Operating income was $76.4 million, up 9.1% year over year. We expected the metric to be $72.7 million.
AUM Balance Rises
As of Dec 31, 2023, the ending AUM was $150.2 billion, up 10% from the previous quarter primarily due to investment returns partially offset by net client cash outflows. We estimated the metric to be $149.6 billion.
Average AUM totaled $140.3 billion, down 1% from the prior quarter. We suggested the metric to be $143 billion.
Balance Sheet Position Improves
Cash and cash equivalents were $141 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 Dec 31, 2023.
Dividend Update
The company’s board of directors declared a variable fourth-quarter dividend of 68 cents per share of Class A common stock and a special dividend of 34 cents per share. The total amount will be paid out on Feb 29 to shareholders of record as of Feb 15.
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.
Nonetheless, 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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s BLK fourth-quarter 2023 adjusted earnings of $9.66 per share handily surpassed the Zacks Consensus Estimate of $8.84. The figure reflects an increase of 8.2% year over year.
BLK’s quarterly results benefited from a rise in revenues and higher non-operating income. Further, AUM balance witnessed an improvement owing to net inflows. However, higher expenses acted as dampeners.
Invesco’s IVZ fourth-quarter 2023 adjusted earnings of 47 cents per share handily surpassed the Zacks Consensus Estimate of 38 cents. The bottom line grew 20.5% year over year.
Results benefited from an increase in AUM balance on decent inflows. However, a rise in operating expenses and lower revenues were the undermining factors.
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