10-QPeriod: Q2 FY2022

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported its second-quarter 2022 financial results, showing a slight increase in Net income attributable to controlling interest to $109.4 million, up from $109.0 million in the prior year's comparable quarter. For the six months ended June 30, 2022, Net income attributable to controlling interest was $255.4 million, a slight decrease from $258.9 million in the same period last year. Consolidated revenue saw a modest increase of 3% for the quarter, driven by performance-based fees, though this was partially offset by a decrease in asset-based fees. However, total consolidated expenses also rose by 3% due to higher compensation and intangible amortization costs. The company's Assets Under Management (AUM) decreased by 9% year-over-year to $690.9 billion as of June 30, 2022, impacted by market declines and foreign exchange. Despite the overall AUM decrease, AMG noted continued demand for return-oriented strategies and net inflows in areas like private markets and ESG, while experiencing outflows in certain equity strategies consistent with industry trends. The company also announced a significant event: the pending sale of 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 shares, with a portion earmarked for taxes, expenses, and debt repayment, and the remainder for growth investments and share repurchases.

Financial Highlights

39 data points
Beta

Revenue

$604.10M

Net Income

$109.40M

18.1% Net Margin

EPS (Diluted)

$2.68

Total Assets

$8.47B

Cash & Equivalents

$606.80M

Free Cash Flow

$359.10M

Financial Statements
Beta
Revenue$604.10M
SG&A Expenses$93.10M
Operating Expenses$400.60M
Interest Expense$27.30M
Net Income$109.40M
EPS (Basic)$2.83
EPS (Diluted)$2.68
Shares Outstanding (Basic)38.70M
Shares Outstanding (Diluted)44.50M

Key Highlights

  • 1Net income attributable to controlling interest was $109.4 million for Q2 2022, a slight increase from $109.0 million in Q2 2021.
  • 2Consolidated revenue increased by 3% to $604.1 million for Q2 2022, primarily driven by a 7% increase in performance-based fees.
  • 3Total consolidated expenses increased by 3% to $400.6 million for Q2 2022, mainly due to higher compensation and intangible amortization.
  • 4Assets Under Management (AUM) decreased by 9% year-over-year to $690.9 billion as of June 30, 2022, primarily due to market conditions and foreign exchange.
  • 5The company expects to close the sale of its equity interest in Baring Private Equity Asia (BPEA) to EQT AB in Q4 2022, anticipating significant cash and share proceeds.
  • 6Share repurchases continued, with approximately $128.75 million spent on repurchasing 621,810 shares during the second quarter of 2022.
  • 7Effective January 1, 2022, AMG adopted ASU 2020-06, which removes separate liability and equity accounting for junior convertible securities, treating them entirely as debt.

Frequently Asked Questions

Consolidated revenue increased by 3% to $604.1 million for the three months ended June 30, 2022, compared to $586.3 million in the same period of 2021. This growth was primarily driven by a 7% increase in performance-based fees, partially offset by a decrease in asset-based fees.

AMG has entered into an agreement to sell its equity interest in Baring Private Equity Asia (BPEA) to EQT AB. The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions. Upon closing, AMG will receive $240.0 million in cash and 28.68 million EQT ordinary shares.

Assets Under Management (AUM) decreased by 9% year-over-year to $690.9 billion as of June 30, 2022. This decrease was primarily attributed to market declines and foreign exchange movements, although the company noted continued demand for certain strategies like private markets and ESG.

Effective January 1, 2022, AMG adopted ASU 2020-06, which changes the accounting for junior convertible securities by removing separate liability and equity classification. These securities are now accounted for wholly as debt. This adoption resulted in an increase in Debt and beginning Retained Earnings, and decreases in Additional Paid-in Capital and Deferred Income Tax Liability.