10-QPeriod: Q1 FY2022

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 6, 2022For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported its first-quarter 2022 financial results, showing resilience and strategic adjustments. Consolidated revenue increased by 9% year-over-year to $607.3 million, driven by a 9% rise in asset-based fees due to higher average assets under management in U.S. equity strategies, reflecting recent affiliate investments. While net income attributable to controlling interest saw a slight decrease of 3% to $146.0 million, the company's core operating performance remained strong. Adjusted EBITDA and Economic Net Income, key non-GAAP measures, both increased by 3%, signaling underlying operational strength and effective management of strategic investments. The company also announced a significant development: the agreement to sell its equity interest in Baring Private Equity Asia (BPEA) to EQT AB, expected to close in Q4 2022, which will result in cash proceeds and EQT ordinary shares, with a substantial portion allocated for taxes, debt repayment, growth investments, and share repurchases.

Financial Highlights

39 data points
Beta

Revenue

$607.30M

Net Income

$146.00M

24.0% Net Margin

EPS (Diluted)

$3.44

Total Assets

$8.57B

Cash & Equivalents

$501.00M

Free Cash Flow

$141.30M

Financial Statements
Beta
Revenue$607.30M
SG&A Expenses$89.40M
Operating Expenses$395.10M
Interest Expense$29.10M
Net Income$146.00M
EPS (Basic)$3.68
EPS (Diluted)$3.44
Shares Outstanding (Basic)39.70M
Shares Outstanding (Diluted)46.90M

Key Highlights

  • 1Consolidated revenue grew 9% to $607.3 million, driven by increased asset-based fees.
  • 2Net income attributable to controlling interest decreased slightly by 3% to $146.0 million, compared to $149.9 million in the prior year period.
  • 3Adjusted EBITDA (controlling interest) increased by 3% to $255.3 million, indicating operational strength.
  • 4Economic Net Income (controlling interest) increased by 3% to $190.0 million, highlighting effective long-term performance measures.
  • 5The company agreed to sell its stake in Baring Private Equity Asia (BPEA) to EQT AB for $240.0 million in cash and EQT ordinary shares, expected to close in Q4 2022.
  • 6Total assets decreased to $8.57 billion as of March 31, 2022, from $8.88 billion as of December 31, 2021.
  • 7Cash flow from operating activities decreased to $145.0 million from $188.9 million in the prior year period.

Frequently Asked Questions

AMG reported a 9% increase in consolidated revenue to $607.3 million, primarily driven by higher asset-based fees due to an increase in average assets under management. However, net income attributable to controlling interest saw a slight decrease of 3% to $146.0 million. Key non-GAAP metrics like Adjusted EBITDA and Economic Net Income showed modest growth of 3%, indicating underlying operational resilience.

The most significant development is the agreement to sell AMG's equity interest in Baring Private Equity Asia (BPEA) to EQT AB. This transaction is expected to close in the fourth quarter of 2022 and will result in cash and EQT ordinary shares. The proceeds will be used for taxes, debt repayment, growth investments, and share repurchases. Additionally, AMG completed an investment in Systematica Investments.

Total AUM increased by 5% to $776.7 billion as of March 31, 2022, compared to $738.0 billion in the prior year. The increase was supported by net client inflows in secular growth areas like private markets, liquid alternatives, Asia, wealth management, and ESG. However, the company also experienced outflows in certain equity strategies, consistent with industry trends towards passive products.

Upon closing the BPEA sale, AMG expects to receive $240.0 million in cash and EQT ordinary shares. Approximately 40% of these proceeds are earmarked for taxes, transaction expenses, and debt repayment. The remaining 60% will be deployed according to AMG's capital allocation strategy, which includes growth investments and share repurchases over time.