10-QPeriod: Q3 FY2021

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported a strong third quarter and first nine months of 2021, demonstrating significant growth in key financial and operational metrics. Consolidated revenue rose by 16% year-over-year for the quarter and 17% for the nine-month period, driven primarily by an increase in asset-based fees resulting from higher average assets under management. Net income attributable to controlling interest surged by 80% in the third quarter and showed substantial growth for the nine-month period, reflecting increased revenue and a significant decrease in intangible amortization and impairments. The company also highlighted strategic acquisitions, including Parnassus Investments and Abacus Capital Group, which are expected to further enhance its diversified investment management platform. AMG's strong performance is underpinned by a robust increase in assets under management, which grew to $747.8 billion by September 30, 2021, indicating continued investor confidence in its active management strategies.

Financial Highlights

40 data points
Beta

Revenue

$575.20M

Net Income

$128.40M

22.3% Net Margin

EPS (Diluted)

$3.00

Total Assets

$8.11B

Cash & Equivalents

$1.13B

Free Cash Flow

$343.60M

Financial Statements
Beta
Revenue$575.20M
SG&A Expenses$82.90M
Operating Expenses$395.30M
Interest Expense$28.50M
Net Income$128.40M
EPS (Basic)$3.12
EPS (Diluted)$3.00
Shares Outstanding (Basic)41.10M
Shares Outstanding (Diluted)44.30M

Key Highlights

  • 1Consolidated revenue increased by 16% to $575.2 million for the three months ended September 30, 2021, and by 17% to $1,720.6 million for the nine months ended September 30, 2021.
  • 2Net income attributable to controlling interest saw a significant jump of 80% to $128.4 million for the three months ended September 30, 2021, and substantial growth for the nine-month period ($387.3 million).
  • 3Assets under management (AUM) grew by 14% to $747.8 billion as of September 30, 2021, indicating positive market conditions and strong investor demand for AMG's strategies.
  • 4Intangible amortization and impairments decreased significantly by 72% ($23.0 million) for the three months and 81% ($108.1 million) for the nine months ended September 30, 2021, contributing positively to profitability.
  • 5The company completed strategic acquisitions during the period, including Parnassus Investments and agreements for Abacus Capital Group, strengthening its market position and diversifying its offerings.
  • 6Operating cash flow increased substantially by $270.5 million to $897.3 million for the nine months ended September 30, 2021, reflecting strong operational performance.
  • 7Adjusted EBITDA (controlling interest) increased by 26% to $227.7 million for the three months and 29% to $701.8 million for the nine months ended September 30, 2021, demonstrating improved profitability before non-cash items.

Frequently Asked Questions

AMG reported a strong increase in revenue. For the three months ended September 30, 2021, consolidated revenue grew by 16% to $575.2 million compared to $494.8 million in the prior year. For the nine months ended September 30, 2021, consolidated revenue increased by 17% to $1,720.6 million compared to $1,473.2 million in the same period of 2020. This growth was primarily driven by higher asset-based fees due to an increase in average assets under management.

Profitability significantly improved. Net income attributable to controlling interest rose by 80% to $128.4 million for the third quarter of 2021, and showed substantial growth for the nine-month period, reaching $387.3 million. Key drivers included increased consolidated revenue, a notable decrease in intangible amortization and impairments, and higher equity method income. Adjusted EBITDA also saw robust growth, up 26% for the quarter and 29% year-to-date.

AMG's assets under management (AUM) grew by 14% to $747.8 billion as of September 30, 2021. The company also announced significant strategic moves, including the completion of its investment in Parnassus Investments, an ESG-dedicated fund manager, and a definitive agreement to acquire a majority equity interest in Abacus Capital Group LLC, a real estate investment manager. These acquisitions are expected to further diversify and strengthen AMG's business.

AMG demonstrated strong cash flow generation. Operating cash flow increased significantly by $270.5 million to $897.3 million for the nine months ended September 30, 2021, driven by higher net income and distributions from equity method investments. However, cash used in investing activities was $177.8 million, mainly due to investments in new Affiliates. Financing activities used $625.5 million, primarily for share repurchases, distributions to non-controlling interests, and debt-related activities.