10-QPeriod: Q2 FY2000

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2000

Filed August 14, 2000For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported strong financial performance for the quarter ended June 30, 2000, showcasing significant revenue and net income growth compared to the prior year period. Revenues surged by 41% to $110.9 million, driven by robust internal growth from existing affiliates and contributions from recent investments like Frontier Capital Management Company. Net income more than doubled year-over-year, reaching $13.7 million, reflecting the company's ability to leverage its affiliate structure for profitable growth. The company also highlighted an increase in Assets Under Management (AUM) to $89.3 billion, despite some market headwinds, underscoring the continued demand for its diverse investment management services. AMG's balance sheet shows a significant increase in goodwill and acquired client relationships, reflecting its strategy of acquiring and holding stakes in investment management firms. While total assets decreased slightly from year-end 1999, driven by a reduction in cash and investment advisory fees receivable, liabilities also decreased, primarily due to a reduction in accounts payable and accrued liabilities. The company continues to manage its capital effectively, with a revolving credit facility providing flexibility for future investments and operations. Investors should note the company's focus on EBITDA Contribution and Cash Net Income as key performance indicators alongside GAAP net income, emphasizing its commitment to cash generation.

Key Highlights

  • 1Revenues increased by 41% year-over-year to $110.9 million for the second quarter of 2000.
  • 2Net income saw a substantial increase of over 44% year-over-year, reaching $13.7 million for the quarter.
  • 3Assets Under Management (AUM) stood at $89.3 billion as of June 30, 2000.
  • 4Operating income grew significantly, indicating improved profitability from the company's core operations.
  • 5The company repurchased shares of Common Stock, totaling 384,700 shares in the three-month period ended June 30, 2000.
  • 6A subsequent event noted the acquisition of the retail business of Smith Breeden Associates, Inc. on August 1, 2000, funded through its credit facility.

Frequently Asked Questions

AMG's revenue growth was primarily driven by the internal growth of its existing affiliates and, to a lesser extent, the positive performance of its recent investment in Frontier Capital Management Company, LLC, acquired in January 2000. The company's revenue sharing model allows it to participate in the increased revenues generated by its affiliates.

AMG primarily utilizes a combination of bank borrowings, particularly its revolving credit facility, and cash generated from operating activities. The company also has the ability to issue equity or debt securities. The credit facility is collateralized by pledges of its interests in its affiliates and provides flexibility for new investments and share repurchases.

AMG presents EBITDA Contribution and Cash Net Income as supplemental measures to GAAP net income. EBITDA Contribution provides an indicator of funds available from its affiliates' operations before holding company expenses, useful for assessing debt service and investment capacity. Cash Net Income represents earnings plus depreciation and amortization, indicating funds available for investments, debt repayment, and share repurchases, as it excludes non-cash charges like amortization of intangible assets.

AMG faces risks related to the performance of financial and securities markets, which can impact advisory and performance fees. There is also uncertainty regarding the success of acquiring new investment management firms on favorable terms and the availability of capital for future investments. Additionally, the company's performance is influenced by its ability to maintain favorable operating results from its existing and new affiliates.