10-QPeriod: Q2 FY2011

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 9, 2011For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported strong financial results for the six months ended June 30, 2011, demonstrating significant growth in revenue and net income compared to the same period in 2010. Total revenue increased by 52% to $888.5 million, driven by a substantial 53% rise in average assets under management to $338.8 billion. This growth was fueled by positive investment performance, net client cash flows, and strategic investments in new Affiliates. Net income attributable to controlling interests surged by 98% to $84.5 million, with diluted earnings per share growing to $1.59. The company's balance sheet shows total assets of $5.325 billion and total equity of $2.460 billion as of June 30, 2011. While senior debt decreased significantly to $295 million, the company maintained substantial convertible securities, totaling $940.1 million. Cash flow from operations was robust, providing ample liquidity. Management highlights its diversified business model across Mutual Fund, Institutional, and High Net Worth distribution channels as a key strength in navigating market conditions.

Financial Highlights

45 data points
Beta

Net Income

$45.40M

EPS (Diluted)

$0.85

Total Assets

$5.33B

Cash & Equivalents

$311.20M

Free Cash Flow

$176.70M

Financial Statements
Beta
SG&A Expenses$90.60M
Operating Expenses$322.30M
Operating Income$140.00M
Interest Expense$18.10M
Net Income$45.40M
EPS (Basic)$0.87
EPS (Diluted)$0.85
Shares Outstanding (Basic)52.10M
Shares Outstanding (Diluted)53.40M

Key Highlights

  • 1Revenue surged by 52% year-over-year to $888.5 million for the first six months of 2011.
  • 2Net income attributable to controlling interest more than doubled, increasing by 98% to $84.5 million.
  • 3Diluted earnings per share rose significantly by 73% to $1.59 for the six-month period.
  • 4Total assets under management grew by 40% to $348.4 billion as of June 30, 2011.
  • 5The company benefited from strong investment performance ($14.6 billion for H1 2011) and net client cash inflows ($14.0 billion for H1 2011).
  • 6Operating expenses increased, notably amortization of intangible assets (up 139%) and selling, general, and administrative expenses (up 52%), largely due to new Affiliate investments.
  • 7Senior bank debt was reduced to $295 million, while convertible securities remained a significant portion of the capital structure.

Frequently Asked Questions

The primary driver of AMG's revenue growth was a substantial increase in average assets under management, which rose by 53% year-over-year. This growth was attributed to positive investment performance across its Affiliates, net client cash flows, and strategic investments in new Affiliates.

Profitability significantly improved. Net income attributable to controlling interest increased by 98% to $84.5 million for the six months ended June 30, 2011, compared to $42.7 million in the same period of 2010. Diluted earnings per share also saw a substantial increase of 73%, reaching $1.59.

As of June 30, 2011, AMG has a capital structure including $295 million in senior bank debt, which was reduced from $460 million at the end of 2010. The company also has substantial convertible securities outstanding, totaling $940.1 million ($428.9 million in senior convertible notes and $511.2 million in junior convertible trust preferred securities). While senior debt decreased, convertible securities remain a significant part of the capital structure.

Investments in new Affiliates contributed to the growth in assets under management and revenue. However, these new investments also led to increased operating expenses, particularly in amortization of intangible assets and selling, general, and administrative expenses, which rose by 139% and 52% respectively for the first six months of 2011.