10-QPeriod: Q2 FY2023

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 7, 2023For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported mixed financial results for the six months ended June 30, 2023. While net income attributable to controlling interest saw a slight increase of 2% to $259.8 million compared to the prior year, consolidated revenue declined by 15% to $1,029.9 million. This revenue decrease was primarily driven by lower asset-based fees due to a reduction in average assets under management, particularly in global equity strategies. Despite the revenue challenges, the company demonstrated resilience through strong performance in equity method income, which increased by 45% to $114.5 million, largely driven by performance-based fees in liquid alternative strategies. Additionally, investment and other income significantly increased, contributing positively to net income. The company maintained a robust balance sheet with total assets of $8,966.1 million as of June 30, 2023, and managed its capital effectively through share repurchases and debt management.

Financial Highlights

39 data points
Beta

Revenue

$512.50M

Net Income

$125.30M

24.4% Net Margin

EPS (Diluted)

$3.25

Total Assets

$8.97B

Cash & Equivalents

$785.50M

Free Cash Flow

$88.60M

Financial Statements
Beta
Revenue$512.50M
SG&A Expenses$85.20M
Operating Expenses$374.60M
Interest Expense$30.90M
Net Income$125.30M
EPS (Basic)$3.49
EPS (Diluted)$3.25
Shares Outstanding (Basic)35.90M
Shares Outstanding (Diluted)42.10M

Key Highlights

  • 1Net income attributable to controlling interest increased by 2% to $259.8 million for the six months ended June 30, 2023.
  • 2Consolidated revenue decreased by 15% to $1,029.9 million for the six months ended June 30, 2023, driven by lower asset-based fees.
  • 3Equity method income (net) significantly increased by 45% to $114.5 million for the six months ended June 30, 2023, primarily due to performance-based fees.
  • 4Investment and other income (expense) improved significantly, turning from a net expense of $(8.4) million to income of $64.3 million for the six months ended June 30, 2023.
  • 5Total assets stood at $8,966.1 million as of June 30, 2023, with cash and cash equivalents increasing to $785.5 million.
  • 6The company repurchased 0.7 million shares of common stock during the three months ended June 30, 2023.
  • 7The company expects to receive approximately $294 million in cash proceeds from the sale of a consolidated Affiliate in the second half of 2023.

Frequently Asked Questions

The primary drivers for the 15% decrease in consolidated revenue for the six months ended June 30, 2023, were a decrease in asset-based fees (11%) and performance-based fees (4%). This was mainly attributed to a decline in consolidated Affiliate average assets under management, particularly in global equity strategies, and the impact of the BPEA Transaction.

Investments accounted for under the equity method showed strong performance, with equity method income (net) increasing by 45% to $114.5 million for the six months ended June 30, 2023. This growth was driven by an increase in equity method revenue, particularly from performance-based fees in liquid alternative strategies, and a significant decrease in equity method intangible amortization.

As of June 30, 2023, AMG had $785.5 million in cash and cash equivalents. The company generated positive cash flow from operations of $325.5 million for the six months ended June 30, 2023, and expects its current cash balance, operating cash flows, and access to its revolving credit facility to be sufficient to meet its foreseeable cash requirements.

Yes, in July 2023, AMG entered into an agreement to sell a consolidated Affiliate for approximately $294 million in gross cash proceeds, expected to close in the second half of 2023. The proceeds are anticipated to be used for debt repayment, taxes, future growth initiatives, and share repurchases.