10-QPeriod: Q3 FY2017

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 2, 2017For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported solid financial performance for the nine months ended September 30, 2017, with continued growth in revenue and net income. The company saw an increase in both consolidated and equity method assets under management, reflecting strong client demand for its active, return-oriented strategies, particularly in alternatives and multi-asset classes. Revenue grew by 3% for the nine-month period to $1,700.9 million, driven by an increase in asset-based fees, despite a slight decline in performance fees from consolidated affiliates. Net income attributable to controlling interest rose by 16% to $374.2 million, demonstrating effective management and operational efficiency. AMG continues to execute its growth strategy through investments in new and existing affiliates, which is reflected in the significant 60% increase in equity method revenue. The company also maintained a strong liquidity position, with $374.7 million in cash and cash equivalents at the end of the period, and actively managed its capital through share repurchases and debt management, including the redemption of $200 million in senior notes. While intangible amortization and impairments decreased, indicating improved asset performance, investors should monitor the ongoing integration of new affiliates and potential impacts of regulatory changes on fee structures.

Financial Highlights

43 data points
Beta

Revenue

$585.70M

Net Income

$125.40M

21.4% Net Margin

EPS (Diluted)

$2.22

Total Assets

$8.70B

Cash & Equivalents

$374.70M

Free Cash Flow

$349.80M

Financial Statements
Beta
Revenue$585.70M
SG&A Expenses$91.90M
Operating Expenses$389.60M
Operating Income$289.50M
Interest Expense$22.10M
Net Income$125.40M
EPS (Basic)$2.25
EPS (Diluted)$2.22
Shares Outstanding (Basic)55.80M
Shares Outstanding (Diluted)58.30M

Key Highlights

  • 1Total assets under management (AUM) grew to $803.7 billion as of September 30, 2017, a 20% increase year-over-year, driven by both consolidated and equity method affiliates.
  • 2Revenue for the nine months ended September 30, 2017, increased by 3% to $1,700.9 million, with a notable 50% increase in equity method revenue.
  • 3Net income attributable to controlling interest increased by 16% to $374.2 million for the nine-month period.
  • 4Operating expenses decreased by 1% year-over-year for the nine-month period, primarily due to lower intangible amortization and impairments.
  • 5The company redeemed $200 million of its 6.375% senior unsecured notes due 2042.
  • 6Cash flow from operating activities increased by $116.0 million to $800.5 million for the nine months ended September 30, 2017.
  • 7The company maintained a strong liquidity position with $374.7 million in cash and cash equivalents as of September 30, 2017.

Frequently Asked Questions

AMG's total revenue increased by 3% to $1,700.9 million for the nine months ended September 30, 2017, compared to $1,644.2 million in the prior year. This growth was primarily driven by a significant 60% increase in equity method revenue, while revenue from consolidated affiliates saw a modest 3% increase.

AMG's total operating expenses for the nine months ended September 30, 2017, decreased by 1% to $1,104.6 million from $1,112.7 million in the prior year. This decrease was largely due to a 21% reduction in intangible amortization and impairments, along with a 6% decrease in selling, general, and administrative expenses.

During the third quarter of 2017, AMG redeemed all $200 million of its outstanding 6.375% senior unsecured notes due 2042. The company also maintained flexibility under its credit facilities, with approximately $1 billion in remaining capacity under its revolving credit facility as of September 30, 2017.

'Revenue' typically refers to the income generated by AMG's consolidated affiliates, where their financial results are fully included in AMG's statements. 'Equity method revenue' refers to AMG's share of revenue from its affiliates accounted for under the equity method, where only AMG's proportional share of the affiliate's net income is reported. The significant growth in equity method revenue indicates strong performance from these proportionally-owned affiliates, contributing substantially to AMG's overall financial picture.