ALLIANCEBERNSTEIN HOLDING L.P. ANNOUNCES THIRD QUARTER RESULTS
AllianceBernstein (AB) reported strong Q3 2024 results with GAAP diluted net income of $1.12 per unit and adjusted diluted net income of $0.77 per unit. The firm's assets under management reached $805.9 billion, up 21% year-over-year. Active net inflows totaled $2.2 billion, led by Fixed Income gains. The company recorded its third consecutive quarter of organic growth, with Retail channel generating $5.4 billion inflows. Operating margin expanded to 31.3%, up 330 basis points year-over-year. Investment advisory base fees grew 14%, while adjusted operating income increased 12%. The firm declared a cash distribution of $0.77 per unit.
AllianceBernstein (AB) ha riportato risultati solidi per il terzo trimestre del 2024, con un utile netto diluito GAAP di $1,12 per unità e un utile netto diluito rettificato di $0,77 per unità. Gli attivi gestiti dalla società hanno raggiunto $805,9 miliardi, con un incremento del 21% rispetto all'anno precedente. I flussi netti attivi sono ammontati a $2,2 miliardi, guidati dai guadagni del reddito fisso. L'azienda ha registrato il suo terzo trimestre consecutivo di crescita organica, con il canale Retail che ha generato flussi di cassa per $5,4 miliardi. Il margine operativo è aumentato al 31,3%, con un incremento di 330 punti base rispetto all'anno precedente. Le commissioni base per la consulenza sugli investimenti sono cresciute del 14%, mentre il reddito operativo rettificato è aumentato del 12%. La società ha dichiarato una distribuzione in contante di $0,77 per unità.
AllianceBernstein (AB) reportó resultados sólidos para el tercer trimestre de 2024, con un ingreso neto diluido GAAP de $1.12 por unidad y un ingreso neto diluido ajustado de $0.77 por unidad. Los activos bajo gestión de la firma alcanzaron $805.9 mil millones, un aumento del 21% interanual. Los flujos netos activos totalizaron $2.2 mil millones, liderados por ganancias en Renta Fija. La compañía registró su tercer trimestre consecutivo de crecimiento orgánico, con el canal Retail generando flujos de $5.4 mil millones. El margen operativo se expandió al 31.3%, un aumento de 330 puntos básicos en comparación con el año anterior. Las comisiones base por asesoría de inversiones crecieron un 14%, mientras que el ingreso operativo ajustado aumentó un 12%. La firma declaró una distribución en efectivo de $0.77 por unidad.
AllianceBernstein (AB)는 2024년 3분기 강력한 실적을 보고했으며, GAAP 희석 순이익은 주당 $1.12, 조정 희석 순이익은 주당 $0.77에 달했습니다. 회사의 관리 자산은 $805.9 billion에 도달했으며, 전년 대비 21% 증가했습니다. 고용량 순 유입액은 $2.2 billion으로, 고정 수익 자산의 성장이 선도했습니다. 회사는 유기적 성장의 세 번째 연속 분기를 기록했으며, 소매 채널이 $5.4 billion의 유입액을 발생시켰습니다. 운영 마진은 31.3%로 확대되었으며, 전년 대비 330bp 증가했습니다. 투자 자문 기본 수수료는 14% 성장하였고, 조정된 운영 수익은 12% 증가했습니다. 회사는 주당 $0.77의 현금 배당금을 선언했습니다.
AllianceBernstein (AB) a annoncé de solides résultats pour le troisième trimestre 2024, avec un bénéfice net dilué GAAP de 1,12 $ par unité et un bénéfice net dilué ajusté de 0,77 $ par unité. Les actifs sous gestion de la société ont atteint 805,9 milliards de dollars, soit une augmentation de 21 % par rapport à l'année précédente. Les flux nets actifs se chiffrent à 2,2 milliards de dollars, propulsés par des gains en revenu fixe. L'entreprise a enregistré son troisième trimestre consécutif de croissance organique, avec le canal de vente au détail générant des entrées de 5,4 milliards de dollars. La marge opérationnelle s'est élargie à 31,3 %, soit une augmentation de 330 points de base par rapport à l'année précédente. Les frais de base de conseil en investissement ont augmenté de 14 %, tandis que le revenu opérationnel ajusté a augmenté de 12 %. La société a déclaré une distribution en espèces de 0,77 $ par unité.
AllianceBernstein (AB) meldete starke Ergebnisse für das dritte Quartal 2024 mit einem GAAP-diluted Nettoergebnis von $1,12 pro Einheit und einem angepassten diluted Nettoergebnis von $0,77 pro Einheit. Das verwaltete Vermögen der Firma erreichte $805,9 Milliarden, was einem Anstieg von 21 % im Jahresvergleich entspricht. Die aktiven Nettoneu-Zuflüsse betrugen insgesamt $2,2 Milliarden, angeführt von den Gewinnen im festverzinslichen Bereich. Das Unternehmen verzeichnete das dritte aufeinanderfolgende Quartal organischen Wachstums, wobei der Retail-Kanal Zuflüsse von $5,4 Milliarden generierte. Die operative Marge erweiterte sich auf 31,3 %, ein Anstieg um 330 Basispunkte im Jahresvergleich. Die Basisgebühren für Anlageberatung wuchsen um 14 %, während das angepasste Betriebsergebnis um 12 % anstieg. Die Firma erklärte eine Barausschüttung von $0,77 pro Einheit.
- Assets under management increased 21% YoY to $805.9 billion
- Active net inflows of $2.2 billion in Q3
- Operating margin expanded 330 basis points to 31.3%
- Investment advisory base fees grew 14%
- Adjusted operating income increased 12%
- Retail channel recorded highest quarterly inflows since 2021 at $5.4 billion
- Institutional channel experienced net outflows of $4.4 billion
- Active Equity outflows persisted at Institutional level
- Headcount decreased from 4,657 to 4,292 YoY due to Bernstein Research Services deconsolidation
Insights
AllianceBernstein's Q3 2024 results demonstrate robust financial performance with several positive indicators. GAAP operating income surged 108.4% to
Key highlights include:
- Assets under management reached
$805.9 billion , up20.5% year-over-year - Active net inflows of
$2.2 billion , marking the third consecutive quarter of organic growth - Strong fixed income performance with nearly
$20 billion in active fixed income inflows year-to-date - Retail channel showed impressive momentum with
$5.4 billion in net inflows
The firm's strategic positioning in fixed income markets and robust retail performance offset institutional outflows, while maintaining a healthy
GAAP Diluted Net Income of
Adjusted Diluted Net Income of
Cash Distribution of
"AB's relentless commitment to delivering better investment outcomes continues to resonate with our clients globally," said Seth Bernstein, President and CEO of AllianceBernstein. "We registered our third consecutive quarter of organic gains while reaching approximately
(US $ Thousands except per Unit amounts) | 3Q 2024 | 3Q 2023 | % Change | 2Q 2024 | % Change | ||||
Net revenues | $ 1,085,489 | $ 1,032,056 | 5.2 % | $ 1,027,943 | 5.6 % | ||||
Operating income | $ 365,281 | $ 175,250 | 108.4 % | $ 199,289 | 83.3 % | ||||
Operating margin | 33.2 % | 17.2 % | 1600 bps | 19.0 % | 1420 bps | ||||
AB Holding Diluted EPU | $ 1.12 | $ 0.50 | 124.0 % | $ 0.99 | 13.1 % | ||||
Adjusted Financial Measures (1) | |||||||||
Net revenues | $ 845,095 | $ 845,792 | (0.1) % | $ 825,833 | 2.3 % | ||||
Operating income | $ 264,154 | $ 236,854 | 11.5 % | $ 254,186 | 3.9 % | ||||
Operating margin | 31.3 % | 28.0 % | 330 bps | 30.8 % | 50 bps | ||||
AB Holding Diluted EPU | $ 0.77 | $ 0.65 | 18.5 % | $ 0.71 | 8.5 % | ||||
AB Holding cash distribution per Unit | $ 0.77 | $ 0.65 | 18.5 % | $ 0.71 | 8.5 % | ||||
(US $ Billions) | |||||||||
Assets Under Management ("AUM") | |||||||||
Ending AUM | $ 805.9 | $ 669.0 | 20.5 % | $ 769.5 | 4.7 % | ||||
Average AUM | $ 785.9 | $ 689.6 | 14.0 % | $ 755.5 | 4.0 % |
(1) | The adjusted financial measures represent non-GAAP financial measures. See page 13 for reconciliations of GAAP Financial Results to Adjusted Financial Results and pages 14-15 for notes describing the adjustments. |
Bernstein continued, "Our Retail channel extended organic gains for the fifth consecutive quarter, generating
Bernstein concluded, "The third quarter of 2024 was a turning point for monetary and fiscal policy around the world, initiating a rate cutting cycle in many developed economies and stimulus measures in
The firm's cash distribution per Unit of
Market Performance
Global equity and fixed income markets were up in the third quarter of 2024.
3Q 2024 | |
S&P 500 Total Return | 5.9 % |
MSCI EAFE Total Return | 7.3 |
Bloomberg Barclays US Aggregate Return | 5.2 |
Bloomberg Barclays Global High Yield Index - Hedged | 5.5 |
Assets Under Management
($ Billions)
Total assets under management as of September 30, 2024 were
Institutional | Retail | Private Wealth | Total | |||||
Assets Under Management 9/30/2024 | ||||||||
Net Flows for Three Months Ended 9/30/2024: | ||||||||
Active | ( | ( | ||||||
Passive | (0.4) | (1.2) | 0.5 | (1.1) | ||||
Total | ( |
Total net inflows were
Institutional channel third quarter net outflows of
Retail channel third quarter net inflows of
Private Wealth channel third quarter net inflows of
Third Quarter Financial Results
We are presenting both earnings information derived in accordance with accounting principles generally accepted in
AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. Management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments made to adjusted net income should not be made with respect to the Available Cash Flow calculation.
US GAAP Earnings
Effective April 1, 2024, AB and Societe Generale completed their previously announced transaction to form a global joint venture with two joint venture holding companies, one outside of
Revenues
Third quarter net revenues of
Sequentially, net revenues of
Third quarter Bernstein Research Services revenues decreased
Expenses
Third quarter operating expenses of
Sequentially, operating expenses of
Operating Income, Margin and Net Income Per Unit
Third quarter operating income of
Sequentially, operating income increased
Third quarter diluted net income per Unit was
Non-GAAP Earnings
This section discusses our third quarter 2024 non-GAAP financial results, compared to the third quarter of 2023 and the second quarter of 2024. 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
Third quarter adjusted net revenues of
Sequentially, adjusted net revenues of
Adjusted Expenses
Third quarter adjusted operating expenses of
Sequentially, adjusted operating expenses of
Adjusted operating Income, Margin and Net Income Per Unit
Third quarter adjusted operating income of
Sequentially, adjusted operating income of
Third quarter adjusted diluted net income per Unit was
Headcount
As of September 30, 2024, we had 4,292 employees, compared to 4,657 employees as of September 30, 2023 and 4,264 employees as of June 30, 2024. The decrease in headcount as of September 30, 2023 is due the Bernstein Research Services deconsolidation and transferring 546 employees to the newly formed joint ventures. Excluding Bernstein, the increase in headcount as compared to September 30, 2023 was predominantly driven by hiring of offshore personnel.
Unit Repurchases
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
(in millions) | ||||||||
Total amount of AB Holding Units Purchased (1) | 1.1 | 1.8 | 2.1 | 2.3 | ||||
Total Cash Paid for AB Holding Units Purchased (1) | $ 38.6 | $ 56.9 | $ 71.7 | $ 75.7 | ||||
Open Market Purchases of AB Holding Units Purchased (1) | 1.1 | 1.8 | 1.8 | 1.8 | ||||
Total Cash Paid for Open Market Purchases of AB Holding Units (1) | $ 38.6 | $ 56.9 | $ 60.1 | $ 56.9 | ||||
(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. |
Third Quarter 2024 Earnings Conference Call Information
Management will review third quarter 2024 financial and operating results during a conference call beginning at 9:00 a.m. (CST) on Thursday, October 24, 2024. The conference call will be hosted by Seth Bernstein, President & Chief Executive Officer; Jackie Marks, Chief Financial Officer; Onur Erzan, Head of Global Client Group & Head of Private Wealth; and Matthew Bass, Head of Private Alternatives.
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 our third quarter 2024 financial and operating results on October 24, 2024.
A replay of the webcast will be made available beginning approximately one hour after the conclusion of the conference call.
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 December 31, 2023 and subsequent Forms 10-Q. Any or all of the forward-looking statements made in this news release, Form 10-K, Forms 10-Q, other documents AB files with or furnishes to the SEC, and any other public statements issued by AB, may turn out to be wrong. It is important to remember that other factors besides those listed in "Risk Factors" and "Cautions Regarding Forward-Looking Statements", and those listed below, could also adversely affect AB's revenues, financial condition, results of operations and business prospects.
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
About AllianceBernstein
AllianceBernstein is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals and private wealth clients in major world markets.
As of September 30, 2024, including both the general partnership and limited partnership interests in AllianceBernstein, AllianceBernstein Holding owned approximately
Additional information about AllianceBernstein may be found on our website, www.alliancebernstein.com.
AB (The Operating Partnership) | |||||||||
US GAAP Consolidated Statement of Income (Unaudited) | |||||||||
(US $ Thousands) | 3Q 2024 | 3Q 2023 | % Change | 2Q 2024 | % Change | ||||
GAAP revenues: | |||||||||
Base fees | $ 813,623 | $ 720,969 | 12.9 % | $ 774,017 | 5.1 % | ||||
Performance fees | 28,763 | 27,982 | 2.8 | 43,310 | (33.6) | ||||
Bernstein research services1 | — | 93,875 | (100.0) | — | n/m | ||||
Distribution revenues | 189,216 | 149,049 | 26.9 | 172,905 | 9.4 | ||||
Dividends and interest | 38,940 | 49,889 | (21.9) | 43,986 | (11.5) | ||||
Investments (losses) gains | (3,512) | (6,694) | (47.5) | (23,629) | (85.1) | ||||
Other revenues | 39,673 | 24,484 | 62.0 | 39,167 | 1.3 | ||||
Total revenues | 1,106,703 | 1,059,554 | 4.4 | 1,049,756 | 5.4 | ||||
Less: Broker-dealer related interest expense | 21,214 | 27,498 | (22.9) | 21,813 | (2.7) | ||||
Total net revenues | 1,085,489 | 1,032,056 | 5.2 | 1,027,943 | 5.6 | ||||
GAAP operating expenses: | |||||||||
Employee compensation and benefits | 424,893 | 453,619 | (6.3) | 423,324 | 0.4 | ||||
Promotion and servicing | |||||||||
Distribution-related payments | 192,230 | 155,620 | 23.5 | 179,908 | 6.8 | ||||
Amortization of deferred sales commissions | 15,005 | 9,585 | 56.5 | 13,348 | 12.4 | ||||
Trade execution, marketing, T&E and other | 38,312 | 52,289 | (26.7) | 40,940 | (6.4) | ||||
General and administrative | 155,808 | 145,388 | 7.2 | 145,732 | 6.9 | ||||
Contingent payment arrangements | (125,947) | 15,364 | n/m | 2,558 | n/m | ||||
Interest on borrowings | 8,456 | 13,209 | (36.0) | 11,313 | (25.3) | ||||
Amortization of intangible assets | 11,451 | 11,732 | (2.4) | 11,531 | (0.7) | ||||
Total operating expenses | 720,208 | 856,806 | (15.9) | 828,654 | (13.1) | ||||
Operating income | 365,281 | 175,250 | 108.4 | 199,289 | 83.3 | ||||
Gain on divestiture | — | — | n/m | 134,555 | n/m | ||||
Non-Operating income | — | — | n/m | 134,555 | n/m | ||||
Pre-tax income | 365,281 | 175,250 | 108.4 | 333,844 | 9.4 | ||||
Income taxes | 14,255 | 10,010 | 42.4 | 20,092 | (29.1) | ||||
Net income | 351,026 | 165,240 | 112.4 | 313,752 | 11.9 | ||||
Net income of consolidated entities attributable to non-controlling interests | 5,054 | (2,164) | n/m | 4,180 | 20.9 | ||||
Net income attributable to AB Unitholders | $ 345,972 | $ 167,404 | 106.7 % | $ 309,572 | 11.8 % |
________________________ | |
1 | On April 1, 2024, AB and Societe Generale, a leading European bank, completed their transaction to form a jointly owned equity research provider and cash equity trading partner for institutional investors. AB deconsolidated the Bernstein Research Services business and contributed the business to the joint venture. |
AB Holding L.P. (The Publicly-Traded Partnership) | |||||||||
SUMMARY STATEMENTS OF INCOME | |||||||||
(US $ Thousands) | 3Q 2024 | 3Q 2023 | % Change | 2Q 2024 | % Change | ||||
Equity in Net Income Attributable to AB Unitholders | $ 136,374 | $ 65,761 | 107.4 % | $ 122,705 | 11.1 % | ||||
Income Taxes | 9,179 | 8,770 | 4.7 | 9,182 | — | ||||
Net Income | $ 127,195 | $ 56,991 | 123.2 % | $ 113,523 | 12.0 % | ||||
Net Income - Diluted | $ 127,195 | $ 56,991 | 123.2 % | $ 113,523 | 12.0 % | ||||
Diluted Net Income per Unit | $ 1.12 | $ 0.50 | 124.0 % | $ 0.99 | 13.1 % | ||||
Distribution per Unit | $ 0.77 | $ 0.65 | 18.5 % | $ 0.71 | 8.5 % | ||||
Units Outstanding | 3Q 2024 | 3Q 2023 | % Change | 2Q 2024 | % Change | ||||
AB L.P. | |||||||||
Period-end | 285,586,728 | 283,971,597 | 0.6 % | 286,773,773 | (0.4) % | ||||
Weighted average - basic | 286,195,935 | 285,359,824 | 0.3 | 287,191,726 | (0.3) | ||||
Weighted average - diluted | 286,195,935 | 285,359,824 | 0.3 | 287,191,726 | (0.3) | ||||
AB Holding L.P. | |||||||||
Period-end | 113,435,357 | 111,796,873 | 1.5 % | 114,619,452 | (1.0) % | ||||
Weighted average - basic | 114,042,095 | 113,184,935 | 0.8 | 115,034,220 | (0.9) | ||||
Weighted average - diluted | 114,042,095 | 113,184,935 | 0.8 | 115,034,220 | (0.9) | ||||
AllianceBernstein L.P. | ||||
ASSETS UNDER MANAGEMENT | September 30, 2024 | ||||
($ Billions) | ||||
Ending and Average | Three Months Ended | |||
9/30/24 | 9/30/23 | |||
Ending Assets Under Management | ||||
Average Assets Under Management | ||||
Three-Month Changes By Distribution Channel | ||||||||
Institutions | Retail | Private Wealth | Total | |||||
Beginning of Period | $ 322.7 | $ 316.4 | $ 130.4 | $ 769.5 | ||||
Sales/New accounts | 4.2 | 26.6 | 4.7 | 35.5 | ||||
Redemption/Terminations | (4.1) | (17.7) | (4.6) | (26.4) | ||||
Net Cash Flows | (4.5) | (3.5) | — | (8.0) | ||||
Net Flows | (4.4) | 5.4 | 0.1 | 1.1 | ||||
Transfers | 0.1 | (0.1) | — | — | ||||
Investment Performance | 16.8 | 12.8 | 5.7 | 35.3 | ||||
End of Period | $ 335.2 | $ 334.5 | $ 136.2 | $ 805.9 | ||||
Three-Month Changes By Investment Service | ||||||||||||||
Equity | Equity | Fixed | Fixed | Fixed | Alternatives/ | Total | ||||||||
Beginning of Period | $ 264.4 | $ 65.8 | $ 216.0 | $ 66.2 | $ 11.0 | $ 146.1 | $ 769.5 | |||||||
Sales/New accounts | 13.0 | 0.2 | 11.6 | 5.6 | — | 5.1 | 35.5 | |||||||
Redemption/Terminations | (12.6) | (0.1) | (9.2) | (2.4) | (0.1) | (2.0) | (26.4) | |||||||
Net Cash Flows | (4.9) | (1.2) | 0.3 | 0.1 | (0.2) | (2.1) | (8.0) | |||||||
Net Flows | (4.5) | (1.1) | 2.7 | 3.3 | (0.3) | 1.0 | 1.1 | |||||||
Transfers(1) | — | — | (12.1) | — | — | 12.1 | — | |||||||
Investment Performance | 11.4 | 4.2 | 9.6 | 1.7 | 0.7 | 7.7 | 35.3 | |||||||
End of Period | $ 271.3 | $ 68.9 | $ 216.2 | $ 71.2 | $ 11.4 | $ 166.9 | $ 805.9 | |||||||
(1) | Approximately |
Three-Month Net Flows By Investment Service (Active versus Passive) | ||||||
Actively Managed | Passively Managed (1) | Total | ||||
Equity | $ (4.5) | (1.1) | $ (5.6) | |||
Fixed Income | 6.0 | (0.3) | 5.7 | |||
Alternatives/Multi-Asset Solutions (2) | 0.7 | 0.3 | 1.0 | |||
Total | $ 2.2 | $ (1.1) | $ 1.1 | |||
(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 | |||||
U.S. Clients | $ 254.0 | $ 197.8 | $ 133.4 | $ 585.2 | ||||
Non- | 81.2 | 136.7 | 2.8 | 220.7 | ||||
Total | $ 335.2 | $ 334.5 | $ 136.2 | $ 805.9 | ||||
AB L.P. | ||||||||||||||||
RECONCILIATION OF GAAP FINANCIAL RESULTS TO ADJUSTED | ||||||||||||||||
Three Months Ended | ||||||||||||||||
(US $ Thousands, unaudited) | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | ||||||||||
Net Revenues, GAAP basis | $ 1,085,489 | $ 1,027,943 | $ 1,104,151 | $ 1,090,720 | $ 1,032,056 | $ 1,008,456 | ||||||||||
Exclude: | ||||||||||||||||
Distribution-related adjustments: | ||||||||||||||||
Distribution revenues | (189,216) | (172,905) | (165,690) | (151,339) | (149,049) | (144,798) | ||||||||||
Investment advisory services fees | (18,017) | (20,350) | (19,090) | (15,302) | (16,156) | (14,005) | ||||||||||
Pass through adjustments: | ||||||||||||||||
Investment advisory services fees | (12,256) | (11,488) | (15,513) | (27,162) | (14,567) | (11,046) | ||||||||||
Other revenues | (20,987) | (20,447) | (8,761) | (8,811) | (8,661) | (8,096) | ||||||||||
Impact of consolidated company-sponsored investment funds | (5,182) | (3,292) | (8,374) | (13,670) | 1,931 | (2,975) | ||||||||||
Incentive compensation-related items | (2,286) | (1,521) | (2,547) | (3,509) | 238 | (4,905) | ||||||||||
Equity loss on JVs | 7,550 | 27,893 | — | — | — | — | ||||||||||
Adjusted Net Revenues | $ 845,095 | $ 825,833 | $ 884,176 | $ 870,927 | $ 845,792 | $ 822,631 | ||||||||||
Operating Income, GAAP basis | $ 365,281 | $ 199,289 | $ 241,997 | $ 238,500 | $ 175,250 | $ 188,661 | ||||||||||
Exclude: | ||||||||||||||||
Real estate | (206) | (206) | (206) | (206) | (206) | (206) | ||||||||||
Incentive compensation-related items | 742 | 751 | 1,097 | 1,126 | 1,354 | 1,103 | ||||||||||
EQH award compensation | 291 | 291 | 215 | 179 | 142 | 215 | ||||||||||
Acquisition-related expenses | (112,906) | 19,035 | 14,981 | 14,879 | 44,941 | 20,525 | ||||||||||
Equity loss on JVs | 7,550 | 27,893 | — | — | — | — | ||||||||||
Interest on borrowings | 8,456 | 11,313 | 17,370 | 12,800 | 13,209 | 14,672 | ||||||||||
Total non-GAAP adjustments | (96,073) | 59,077 | 33,457 | 28,778 | 59,440 | 36,309 | ||||||||||
Less: Net income (loss) of consolidated entities attributable to non-controlling interests | 5,054 | 4,180 | 8,028 | 13,384 | (2,164) | 3,023 | ||||||||||
Adjusted Operating Income(1) | $ 264,154 | $ 254,186 | $ 267,426 | $ 253,894 | $ 236,854 | $ 221,947 | ||||||||||
Operating Margin, GAAP basis excl. non-controlling interests | 33.2 % | 19.0 % | 21.2 % | 20.6 % | 17.2 % | 18.4 % | ||||||||||
Adjusted Operating Margin(1) | 31.3 % | 30.8 % | 30.3 % | 29.2 % | 28.0 % | 27.0 % | ||||||||||
AB Holding L.P. | ||||||||||||||||
RECONCILIATION OF GAAP EPU TO ADJUSTED EPU | ||||||||||||||||
Three Months Ended | ||||||||||||||||
($ Thousands except per Unit amounts, unaudited) | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | ||||||||||
Net Income - Diluted, GAAP basis | $ 127,195 | $ 113,523 | $ 77,222 | $ 79,198 | $ 56,991 | $ 60,558 | ||||||||||
Impact on net income of AB non-GAAP adjustments | (39,515) | (32,232) | 6,176 | 6,228 | 17,077 | 8,124 | ||||||||||
Adjusted Net Income - Diluted | $ 87,680 | $ 81,291 | $ 83,398 | $ 85,426 | $ 74,068 | $ 68,682 | ||||||||||
Diluted Net Income per Holding Unit, GAAP basis | $ 1.12 | $ 0.99 | $ 0.67 | $ 0.71 | $ 0.50 | $ 0.53 | ||||||||||
Impact of AB non-GAAP adjustments | (0.35) | (0.28) | 0.06 | 0.06 | 0.15 | 0.08 | ||||||||||
Adjusted Diluted Net Income per Holding Unit | $ 0.77 | $ 0.71 | $ 0.73 | $ 0.77 | $ 0.65 | $ 0.61 | ||||||||||
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 investment advisory and service fees passed through to our investment advisors. We also adjust for certain pass through costs associated with the transition of services to the JVs entered into with SocGen. These amounts are expensed by us and passed to the JVs for reimbursement. 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.
We also adjust net revenues to exclude our portion of the equity income or loss associated with our investment in the JVs. Effective April 1, 2024, following the close of the transaction with SocGen, we record all income or loss associated with the JVs as an equity method investment income (loss). As we no longer consider this activity part of our core business operations and our intent is to fully divest from both joint ventures, we consider these amounts temporary and as such, we exclude these amounts from our adjusted net revenues.
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) equity income (loss) on JVs (6) interest on borrowings and (7) 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 Seth P. Bernstein, our CEO, equity awards in connection with EQH's IPO. Additionally, equity awards were granted to Mr. Bernstein and other AB executives for their membership on the EQH Management Committee. These individuals may receive additional equity or cash compensation from EQH in the future related to their service on the Management Committee. Any awards granted to these individuals by EQH are recorded as compensation expense in AB's consolidated statement of income. The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.
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. During the three months ended September 30, 2024 we recognized a gain of
We also adjust operating income to exclude our portion of the equity income or loss associated with our investment in the JVs. Effective April 1, 2024, following the close of the transaction with SocGen, we record all income or loss associated with the JVs as an equity method investment income (loss). As we no longer consider this activity part of our core business operations and our intent is to fully divest from both joint ventures, we consider these amounts temporary and as such, we exclude these amounts from our adjusted operating income.
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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SOURCE AllianceBernstein
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