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AFFILIATED MANAGERS GROUP, INC. 8-K Report, Financial Results (Feb 5, 2024)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed February 5, 2024
Period End
February 5, 2024
In the record · 2016–202610-K1510-Q328-K101

AMG filed 15 annual reports (10-K), 32 quarterly reports (10-Q) and 101 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Oct ’16Oct ’16
  2. Leadership change8-K · May ’19May ’19
  3. Material agreement8-K · Oct ’21Oct ’21
  4. Material agreement8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed February 5, 2024. Cited figures are marked; the original filing is the authoritative source.

AMG reported fourth-quarter and full-year 2023 results on February 5, 2024, with diluted EPS of $5.15a for Q4 (down from $17.40 a year earlier, which included large Affiliate Transaction gains) and $17.42 for the full year (down from $25.35).

The more relevant comparison for ongoing performance is non-GAAP Economic EPS, which was $6.86b in Q4 (down from $7.40) and $19.48 for 2023 (down from $20.02). Full-year Economic Net Income was $718 million and Net Income (controlling interest) was $673 million, versus $797 million and $1,146 million in 2022, with the decline largely reflecting the absence of the 2022 BPEA/EQT-related gains and lower revenue. Consolidated revenue fell about 12% to $2.06 billion, and AUM ended the year at $672.7 billion, up from $650.8 billion, though net client outflows were $29.2 billion for the year.

Capital allocation was a major focus. AMG repurchased $574 millionc of common stock in 2023, roughly 10% of shares outstanding, including a $225 million accelerated share repurchase completed in Q2 2023. Year-end cash rose to $813.6 million, and the company completed an investment in Ara Partners and welcomed Forbion as new private markets Affiliates.

Management says its dedicated private markets Affiliates manage roughly $115 billiond and raised about $16 billion on a pro forma basis in 2023. The Board also declared a quarterly dividend of $0.01 per share, payable February 29, 2024 to holders of record on February 15, 2024.

For investors, the headline GAAP declines are largely distorted by one-time gains in 2022 and 2023 Veritable sale activity, so the Economic EPS and Adjusted EBITDA trends (Adjusted EBITDA of $935.7 million versus $1,053.8 million) are the more useful gauges of underlying performance. The share count reduction from buybacks supports per-share metrics, while net client outflows and lower fee revenue remain the key watch items.

02—Key points

Key Highlights

  1. Q4 2023 diluted EPS was $5.15 versus $17.40 in Q4 2022, while Economic EPS was $6.86 versus $7.40; the prior-year quarter was inflated by Affiliate Transaction gains.
  2. Full-year 2023 diluted EPS was $17.42 (vs. $25.35) and Economic EPS was $19.48 (vs. $20.02).
  3. Full-year Economic Net Income of $717.8 million and GAAP Net Income (controlling interest) of $672.9 million, both lower than 2022.
  4. Consolidated revenue fell to $2,057.8 million in 2023 from $2,329.6 million in 2022, and Adjusted EBITDA declined to $935.7 million from $1,053.8 million.
  5. AUM grew to $672.7 billion at year-end 2023 from $650.8 billion, but net client cash flows were negative at $(29.2) billion for the year.
  6. Repurchased $574 million of stock in 2023 (about 10% of shares outstanding), including the $225 million accelerated share repurchase; year-end cash was $813.6 million.
  7. Declared a $0.01 per share quarterly dividend payable February 29, 2024 to holders of record as of February 15, 2024.

03—Questions

Frequently Asked Questions

  1. Why did GAAP EPS fall so sharply in 2023 compared with 2022?

    The 2022 results included large Affiliate Transaction gains from the BPEA sale to EQT (about $641.9 million pre-tax in Q4 2022 alone). In 2023, the largest gain-related item was smaller, with Affiliate Transaction gains of $133.1 million for the full year. Excluding these items, the decline is smaller, and Economic EPS fell only from $20.02 to $19.48.

  2. What is Economic EPS and why does AMG emphasize it?

    Economic EPS is a non-GAAP measure that adjusts GAAP earnings for items such as intangible amortization and impairments, deferred taxes on intangibles, Affiliate transaction gains, and certain other economic items. Management uses Economic Net Income as its principal performance benchmark, including for executive compensation. The company's definition of Adjusted EBITDA and Economic Net Income was updated in Q1 2023, with prior periods restated.

  3. How much capital did AMG return to shareholders in 2023?

    AMG repurchased approximately $574 million of common stock in 2023, roughly 10% of shares outstanding, including the $225 million accelerated share repurchase entered into at year-end 2022 and completed in Q2 2023. Q4 repurchases were about $133 million. The quarterly dividend is only $0.01 per share, so buybacks are the primary means of capital return.

  4. What drove AUM growth and what are the main concerns?

    AUM increased to $672.7 billion from $650.8 billion, driven mainly by market gains of $67.0 billion and new investments of $8.1 billion, partially offset by $29.2 billion in net client outflows and the $17.8 billion Veritable deconsolidation. Continued net outflows, especially in Global Equities (down $26.3 billion for the year), are a key watch item for investors.

  5. What growth initiatives did management highlight for 2024?

    Management pointed to private markets growth, including the Ara Partners and Forbion Affiliate additions, which together with existing private markets Affiliates manage about $115 billion and raised roughly $16 billion on a pro forma basis in 2023. Management also cited an excellent capital position and increasing opportunities to invest for growth, though the release did not provide specific 2024 financial guidance.

04—Continue

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