10-QPeriod: Q2 FY2015

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 4, 2015For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported a strong second quarter for 2015, with Net Income attributable to controlling interest increasing by 30% year-over-year to $128.7 million, and diluted Earnings Per Share (EPS) rising to $2.31 from $1.75 in the prior year's quarter. For the first six months of 2015, Net Income grew by 46% to $256.7 million, and diluted EPS increased to $4.58 from $3.15. This growth was driven by a 6% increase in Assets Under Management (AUM) to $642.7 billion, fueled by new investments in Affiliates and organic growth from net client cash flows. The company's operational performance was robust, with revenue increasing by 2% in the quarter and 4% year-to-date, primarily due to higher asset-based fees resulting from increased AUM. While performance fees saw a decline, this was offset by growth in asset-based fees and strategic investments in new Affiliates. AMG continues to focus on its growth strategy through existing Affiliate expansion and new boutique firm investments, aiming to generate shareholder value. The company's financial condition remains solid, with sufficient liquidity and cash generated from operations to meet its foreseeable cash requirements.

Financial Highlights

38 data points
Beta

Net Income

$127.60M

EPS (Diluted)

$2.29

Total Assets

$7.68B

Cash & Equivalents

$488.50M

Free Cash Flow

$344.40M

Financial Statements
Beta
SG&A Expenses$114.30M
Operating Expenses$451.40M
Operating Income$195.20M
Interest Expense$22.50M
Net Income$127.60M
EPS (Basic)$2.36
EPS (Diluted)$2.29
Shares Outstanding (Basic)54.60M
Shares Outstanding (Diluted)57.50M

Key Highlights

  • 1Net Income attributable to controlling interest increased by 30% to $128.7 million for Q2 2015.
  • 2Diluted Earnings Per Share (EPS) grew by 32% to $2.31 for Q2 2015.
  • 3Total Assets Under Management (AUM) reached $642.7 billion as of June 30, 2015, a 6% increase.
  • 4Revenue increased by 2% to $646.6 million for Q2 2015, driven by higher asset-based fees.
  • 5Significant year-over-year growth in both Net Income (46%) and Diluted EPS (45%) for the six months ended June 30, 2015.
  • 6The company repurchased 577,697 shares of common stock during the second quarter of 2015.
  • 7Positive trends in the High Net Worth and Mutual Fund distribution channels, with revenue increases of 12% and 4% respectively in Q2 2015.

Frequently Asked Questions

Revenue growth was primarily driven by a 7% increase in asset-based fees, largely due to a 6% rise in total Assets Under Management (AUM) to $642.7 billion. This AUM growth was a result of new investments in Affiliates and organic growth from net client cash flows.

Profitability showed significant improvement. Net Income attributable to controlling interest increased by 30% to $128.7 million in Q2 2015 and by 46% to $256.7 million for the first six months of 2015. Correspondingly, diluted EPS rose by 32% to $2.31 in Q2 and by 45% to $4.58 for the first half of 2015.

AMG's strategy focuses on generating shareholder value through the growth of its existing Affiliates and making additional investments in boutique investment management firms. They also provide centralized support to their Affiliates in strategic matters, marketing, distribution, product development, and operations.

As of June 30, 2015, AMG had $488.5 million in cash and cash equivalents. The company expects that cash flows from operations, along with borrowings under its credit facility, will be sufficient to meet its cash requirements for investments, distributions, share repurchases, debt payments, and general working capital.