10-KPeriod: FY2021

AFFILIATED MANAGERS GROUP, INC. Annual Report, Year Ended Dec 31, 2021

Filed February 18, 2022For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported strong growth in its 2021 fiscal year, with assets under management (AUM) increasing to $814 billion, up from $716 billion in 2020. This growth was driven by both market appreciation and net client inflows, particularly in secular growth areas like private markets, liquid alternatives, and ESG strategies. Aggregate fees rose by 21% to $5.6 billion, reflecting the increase in AUM and a positive shift in fee mix. The company's strategy of partnering with independent active investment management firms continues to yield positive results, with recent acquisitions in ESG and real estate sectors. Adjusted EBITDA (controlling interest) saw a significant increase of 33% to $1.06 billion, indicating robust operational performance. Financially, AMG demonstrated solid operational efficiency, with net income (controlling interest) jumping to $565.7 million from $202.2 million in the prior year. This improvement was supported by a decrease in intangible amortization and impairments, and a significant increase in equity method income. The company also continued its commitment to returning capital to shareholders through share repurchases, buying back 3.5 million shares in 2021. Despite a substantial debt load of $2.5 billion, AMG's credit metrics remained strong, with leverage ratios well within covenants, suggesting a stable financial position.

Financial Highlights

40 data points
Beta

Revenue

$2.41B

Net Income

$565.70M

23.4% Net Margin

EPS (Diluted)

$13.05

Total Assets

$8.88B

Cash & Equivalents

$908.50M

Free Cash Flow

$1.25B

Financial Statements
Beta
Revenue$2.41B
SG&A Expenses$347.10M
Operating Expenses$1.63B
Interest Expense$111.40M
Net Income$565.70M
EPS (Basic)$13.65
EPS (Diluted)$13.05
Shares Outstanding (Basic)41.50M
Shares Outstanding (Diluted)44.80M

Key Highlights

  • 1Assets Under Management (AUM) grew to $814 billion by year-end 2021, a 14% increase from $716 billion in 2020, driven by market appreciation and net client inflows.
  • 2Aggregate fees increased by 21% to $5.61 billion in 2021, reflecting growth in AUM and a favorable shift towards higher-margin strategies.
  • 3Net income attributable to controlling interest surged to $565.7 million in 2021, a significant increase from $202.2 million in 2020.
  • 4Adjusted EBITDA (controlling interest) grew by 33% to $1.06 billion in 2021, demonstrating strong operational profitability.
  • 5The company completed majority investments in Parnassus Investments (ESG-focused) and Abacus Capital Group LLC (real estate), aligning with its strategy of investing in high-growth areas.
  • 6Share repurchases remained a focus, with 3.5 million shares bought back in 2021, indicating a commitment to returning capital to shareholders.
  • 7The company maintained its credit ratings (A3 by Moody's, BBB+ by S&P) and remained in compliance with its debt covenants, with a leverage ratio of 1.1x at year-end 2021.

Frequently Asked Questions

AMG's strong financial performance in 2021 was primarily driven by a significant increase in assets under management (AUM) to $814 billion, leading to a 21% rise in aggregate fees to $5.61 billion. This growth was fueled by positive market performance and net client inflows into secular growth areas like private markets and ESG. The company also benefited from a decrease in intangible amortization and impairments, contributing to a substantial increase in net income.

AMG's strategy remains focused on partnering with high-quality independent active investment management firms. In 2021, they strategically expanded into key growth areas by completing majority investments in Parnassus Investments, a leader in ESG-focused fund management, and Abacus Capital Group LLC, a real estate investment firm. These acquisitions align with AMG's objective to invest in areas of secular growth and client demand.

AMG aims to generate long-term value by investing in its Affiliates and by returning excess capital to shareholders. In 2021, the company actively repurchased 3.5 million shares of its common stock, demonstrating a commitment to shareholder returns. AMG also manages its capital structure with a focus on maintaining an investment-grade profile, supported by its credit ratings and compliance with debt covenants.

Key risks for AMG include dependence on asset- and performance-based fees which can fluctuate with market performance and fee levels, potential harm to reputation from various factors (e.g., compliance failures, cyber incidents), intense competition in the asset management industry, and the short-notice termination of investment management contracts. Additionally, risks related to capital raising, intangible asset impairments, regulatory changes, and operational effectiveness are also highlighted.