10-QPeriod: Q3 FY2023

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 6, 2023For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported a strong third quarter for 2023, with Net Income attributable to controlling interest increasing by 93% to $217.0 million, or $5.48 per diluted share, compared to the prior year period. This substantial growth was significantly driven by a $133.1 million pre-tax gain from the sale of Veritable, LP, and an increase in investment and other income. For the first nine months of 2023, Net Income attributable to controlling interest rose 30% to $476.8 million, or $12.28 per diluted share, also bolstered by the Veritable transaction gain and growth in equity method income. Despite an overall decrease in consolidated revenue, which declined 9% for the quarter and 13% year-to-date due to lower asset-based and performance-based fees, the company demonstrated operational resilience. Expenses were managed effectively, with total consolidated expenses decreasing by 16% for the quarter. The company also saw a notable increase in its cash position, with cash and cash equivalents rising to $999.2 million. AMG continues to focus on its strategy of investing in independent investment management firms and supporting their long-term growth, with recent minority investments in Forbion Group Holding B.V. and Ara Partners Group, LLC.

Financial Highlights

39 data points
Beta

Revenue

$525.20M

Net Income

$217.00M

41.3% Net Margin

EPS (Diluted)

$5.48

Total Assets

$9.00B

Cash & Equivalents

$999.20M

Free Cash Flow

$291.30M

Financial Statements
Beta
Revenue$525.20M
SG&A Expenses$91.10M
Operating Expenses$357.40M
Interest Expense$31.10M
Net Income$217.00M
EPS (Basic)$6.22
EPS (Diluted)$5.48
Shares Outstanding (Basic)34.90M
Shares Outstanding (Diluted)43.40M

Key Highlights

  • 1Net income attributable to controlling interest surged 93% year-over-year to $217.0 million in Q3 2023.
  • 2Diluted Earnings Per Share (EPS) reached $5.48 for Q3 2023, a significant increase from $2.80 in the prior year.
  • 3A substantial $133.1 million pre-tax gain was recognized from the sale of Veritable, LP.
  • 4Total consolidated expenses decreased by 16% in the third quarter of 2023.
  • 5Cash and cash equivalents increased to $999.2 million as of September 30, 2023.
  • 6The company completed strategic minority investments in Forbion Group Holding B.V. and Ara Partners Group, LLC during the period.
  • 7Consolidated revenue decreased by 9% in Q3 2023, primarily due to lower asset-based and performance-based fees.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the $133.1 million pre-tax gain recognized from the sale of Veritable, LP. Additionally, an increase in investment and other income also contributed to the improved profitability.

Consolidated revenue decreased by 9% to $525.2 million in the third quarter of 2023 compared to the prior year. This decline was mainly due to a decrease in both asset-based and performance-based fees, reflecting industry-wide trends and specific portfolio performance.

AMG's cash and cash equivalents significantly increased to $999.2 million as of September 30, 2023, up from $429.2 million at the end of 2022. This increase reflects strong operational cash flow and proceeds from certain transactions.

During the period, AMG completed minority investments in two notable firms: Forbion Group Holding B.V., a European private markets firm focused on life sciences, and Ara Partners Group, LLC, a firm specializing in industrial decarbonization.