10-QPeriod: Q1 FY2012

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 8, 2012For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported its first-quarter 2012 financial results, showing a slight decrease in revenue and net income compared to the prior year. Revenue for the quarter ended March 31, 2012, was $417.7 million, down from $426.3 million in the same period of 2011. Net income attributable to controlling interest also saw a modest decline, falling to $37.4 million from $39.1 million, resulting in diluted earnings per share of $0.71, down from $0.74 in the prior year. Despite the slight top-line and bottom-line dip, the company's assets under management grew to $363.9 billion, a 7% increase year-over-year, driven by positive investment performance and net client cash flows. The company highlighted a gain on the revaluation of contingent payment arrangements, which offset some of the revenue decline. Operating expenses saw an increase, primarily due to higher amortization of intangible assets, including an $8.7 million impairment charge related to indefinite-lived intangible assets at one of its affiliates. Looking ahead, AMG announced two significant pending acquisitions: Veritable, LP, expected to close in the second quarter of 2012, and Yacktman Asset Management Co., slated for the third quarter of 2012, which are expected to be financed through existing cash and credit facilities.

Financial Highlights

45 data points
Beta

Net Income

$37.50M

EPS (Diluted)

$0.71

Total Assets

$5.21B

Cash & Equivalents

$393.70M

Free Cash Flow

$51.20M

Financial Statements
Beta
SG&A Expenses$85.00M
Operating Expenses$308.90M
Operating Income$108.80M
Interest Expense$18.60M
Net Income$37.50M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)51.60M
Shares Outstanding (Diluted)52.90M

Key Highlights

  • 1Revenue decreased by 2% to $417.7 million for the three months ended March 31, 2012, compared to $426.3 million for the same period in 2011.
  • 2Net income attributable to controlling interest decreased by 4% to $37.4 million, with diluted EPS falling to $0.71 from $0.74.
  • 3Total assets under management increased by 7% year-over-year to $363.9 billion, driven by positive investment performance and net client cash flows.
  • 4A gain of $9.9 million on the revaluation of contingent payment arrangements positively impacted results.
  • 5Amortization of intangible assets increased by 38% to $30.4 million, including an $8.7 million impairment of indefinite-lived intangible assets.
  • 6The company announced two significant pending acquisitions: Veritable, LP, and Yacktman Asset Management Co., expected to close in Q2 and Q3 2012, respectively.

Frequently Asked Questions

In the first quarter of 2012, AMG experienced a slight decrease in revenue to $417.7 million from $426.3 million in Q1 2011. Net income attributable to controlling interest also decreased to $37.4 million from $39.1 million, resulting in a drop in diluted EPS to $0.71 from $0.74. Despite these declines, assets under management grew to $363.9 billion.

The decrease in revenue was primarily attributed to a modest decline in average fee rates and a reduction in performance fees, partially offset by a slight increase in average assets under management from consolidated affiliates. The Mutual Fund distribution channel saw a revenue decrease largely due to a 4% drop in average assets under management from consolidated affiliates.

A significant factor was the increase in amortization of intangible assets, which rose by 38% to $30.4 million. This was largely due to an $8.7 million impairment charge on indefinite-lived intangible assets at one of its affiliates. However, the company also benefited from a $9.9 million gain on the revaluation of contingent payment arrangements.

AMG is actively pursuing growth through acquisitions, having announced agreements to purchase equity interests in Veritable, LP, in March 2012 (expected to close in Q2 2012) and Yacktman Asset Management Co. in April 2012 (expected to close in Q3 2012). These transactions are intended to be financed with existing cash and borrowings under their credit facility.