10-QPeriod: Q3 FY2022

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 7, 2022For Securities:AMGMGRBMGRMGRDMGRE

Summary

For the third quarter of 2022, Affiliated Managers Group, Inc. (AMG) reported consolidated revenue of $578.6 million, a slight increase from $575.2 million in the prior year period. Net income attributable to controlling interest decreased to $112.6 million from $128.4 million year-over-year. Diluted earnings per share also saw a decline to $2.80 from $3.00 in the comparable period. Despite a challenging market environment leading to a decrease in assets under management to $644.6 billion from $747.8 billion a year ago, AMG demonstrated resilience in performance-based fees, which saw an increase. The company's strategy remains focused on investing in high-quality independent active investment management firms and providing them with growth capital and global distribution. Management highlighted continued demand for return-oriented strategies in areas like private markets and alternatives.

Financial Highlights

39 data points
Beta

Revenue

$578.60M

Net Income

$112.60M

19.5% Net Margin

EPS (Diluted)

$2.80

Total Assets

$8.43B

Cash & Equivalents

$622.90M

Free Cash Flow

$287.90M

Financial Statements
Beta
Revenue$578.60M
SG&A Expenses$93.20M
Operating Expenses$425.40M
Interest Expense$28.30M
Net Income$112.60M
EPS (Basic)$2.95
EPS (Diluted)$2.80
Shares Outstanding (Basic)38.20M
Shares Outstanding (Diluted)43.50M

Key Highlights

  • 1Consolidated revenue for Q3 2022 was $578.6 million, a modest increase year-over-year.
  • 2Net income attributable to controlling interest decreased to $112.6 million in Q3 2022 from $128.4 million in Q3 2021.
  • 3Diluted EPS fell to $2.80 in Q3 2022 from $3.00 in Q3 2021.
  • 4Assets under management decreased to $644.6 billion as of September 30, 2022, compared to $747.8 billion as of September 30, 2021.
  • 5Performance-based fees increased, particularly in alternative strategies, demonstrating continued client demand for specific investment approaches.
  • 6The company maintained strong liquidity with $622.9 million in cash and cash equivalents as of September 30, 2022.
  • 7AMG repurchased approximately 0.6 million shares of common stock during the third quarter of 2022.

Frequently Asked Questions

The decrease in net income and EPS was primarily driven by a decline in 'Investment and other income (expense)' and a decrease in overall assets under management due to market conditions. While performance-based fees saw an increase, this was not enough to offset the decline in other income sources and the impact of lower average assets under management on asset-based fees.

Market conditions led to a significant decrease in AUM, which fell from $747.8 billion to $644.6 billion year-over-year. This was attributed to a combination of market declines and net client cash outflows in certain strategies, particularly in global equities.

AMG sees continued demand for return-oriented strategies in secular growth areas such as private markets, liquid alternatives, Asia, wealth management, and ESG. While acknowledging the industry-wide trend towards passive products, the company believes well-performing active equity managers will continue to thrive.

The company maintained a healthy cash position with $622.9 million in cash and cash equivalents as of September 30, 2022. Total debt remained substantial but manageable, with senior bank debt, senior notes, junior subordinated notes, and junior convertible securities totaling $2.53 billion. The company expects its current cash balance, operating cash flows, and revolving credit facility to be sufficient to meet its future cash requirements.