10-QPeriod: Q1 FY2009

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 11, 2009For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported a significant decline in revenue and net income for the first quarter of 2009 compared to the same period in 2008. Total revenue decreased by 47% to $178.5 million, primarily driven by a 38% drop in average assets under management to $161 billion, a consequence of declining global equity markets and negative net client cash flows. Net income attributable to controlling interest plummeted by 80% to $6.1 million, with diluted EPS falling to $0.15 from $0.81. Despite the challenging market conditions, AMG successfully repaid its outstanding Term Loan, reducing its senior bank debt to zero. The company also continues to manage its capital structure effectively, with a reported internal leverage ratio of 1.4:1 at March 31, 2009, and remains in compliance with its credit facility covenants. While facing headwinds from market volatility, the company is focused on its growth strategy through internal growth and strategic investments in investment management firms.

Key Highlights

  • 1Revenue declined significantly by 47% year-over-year to $178.5 million due to market conditions and net client outflows.
  • 2Net income attributable to controlling interest dropped by 80% to $6.1 million, with diluted EPS falling to $0.15.
  • 3Average assets under management decreased by 38% to $161 billion, reflecting market declines and net client outflows.
  • 4The company fully repaid its $233.5 million Term Loan, eliminating outstanding senior bank debt.
  • 5Internal leverage ratio was 1.4:1, and the company remained compliant with its credit facility covenants.
  • 6Performance fees declined significantly, contributing only 1% of revenue in Q1 2009 compared to 9% in Q1 2008.
  • 7The company received $144.3 million in proceeds from its forward equity sale agreement in Q1 2009.

Frequently Asked Questions

The primary driver of the significant revenue decline was a substantial decrease in average assets under management, which fell by 38% to $161 billion. This was largely due to the challenging global equity markets and negative net client cash flows experienced during the first quarter of 2009.

Affiliated Managers Group, Inc. successfully repaid its outstanding Term Loan of $233.5 million during the first quarter of 2009, resulting in zero outstanding senior bank debt. The company also maintains compliance with its credit facility covenants and reported a healthy internal leverage ratio of 1.4:1.

Performance fees had a considerably smaller impact on revenue in the first quarter of 2009 compared to the prior year. They represented only 1% of total revenue, down from 9% in the first quarter of 2008, reflecting the difficult market conditions and reduced investment performance across many of their strategies.

While the first quarter showed significant declines due to market headwinds, the company remains focused on its long-term growth strategy. This includes pursuing internal growth within its existing Affiliates, making further strategic investments in investment management firms, and managing its capital structure prudently. The company's ability to repay debt and maintain compliance with covenants demonstrates resilience.