Why did GAAP earnings fall so sharply compared with the prior year?

The third quarter of 2023 included a one-time $133.1 million Affiliate Transaction gain tied to the sale of Veritable, LP, which did not recur in 2024. Income tax expense also fell, from $77.7 million to $31.3 million, but this only partly offset the gain's absence. Management's Economic earnings measures exclude these transaction effects, and on that basis earnings per share grew 18%.

What is the difference between GAAP EPS and Economic EPS?

GAAP diluted EPS of $3.78 reflects reported net income, including intangible amortization, deferred taxes, and other items. Economic EPS of $4.82 adds back after-tax intangible amortization and impairments, related deferred taxes, Affiliate Transaction gains and losses, and other economic items, and uses a lower adjusted share count. Management and the Board treat Economic EPS as the principal performance benchmark, including for executive compensation, so investors should review the reconciliation in the financial tables.

Is AMG's client base still shrinking?

Net client cash flows were negative $2.8 billion in Q3 2024, an improvement from negative $9.4 billion in Q3 2023. Year-to-date outflows are negative $5.6 billion, compared with negative $23.1 billion in the first nine months of 2023. Alternatives strategies had net inflows of $7.4 billion in the quarter, offsetting outflows in equities, so the trend is improving but not yet consistently positive.

How is AMG returning capital to shareholders, and is the dividend meaningful?

AMG repurchased about $103 million of common stock in Q3 2024 and about $580 million year-to-date. The quarterly dividend is only $0.01 per share, so the company's capital return comes mainly from buybacks rather than the dividend. The lower share count from repurchases supports per-share metrics, although buybacks are funded partly by debt and cash, and the company also issued $400 million of senior notes during the quarter.

What does the growth in alternatives mean for AMG's business?

Management said alternative strategies are an increasing share of earnings and that dedicated private markets Affiliates raised about $7 billion in the quarter. Alternatives AUM reached $266.5 billion, up from $238.8 billion at year-end 2023. Shifting toward alternatives could support higher-margin, longer-duration fee revenue, but results remain exposed to market conditions, Affiliate investment performance, and fundraising pace, as the forward-looking statements caution.

AFFILIATED MANAGERS GROUP, INC. 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 4, 2024. Cited figures are marked; the original filing is the authoritative source.

AMG reported third-quarter 2024 results (quarter ended September 30, 2024) that were mixed on a GAAP basis but strong on the company's preferred metrics.

GAAP diluted EPS fell to $3.78^a from $5.48 a year earlier, and net income attributable to controlling interest dropped to $123.6 million from $217.0 million. The decline is largely explained by the absence of the $133.1 million Affiliate Transaction gain recorded in Q3 2023, which was not repeated this year. Excluding that item and other adjustments, Economic EPS rose 18% year-over-year to $4.82 from $4.08, and Economic Net Income increased to $153.2 million from $149.5 million.

Aggregate fees grew to $1,157.1 million^b from $997.5 million, and Adjusted EBITDA (controlling interest) rose to $214.1 million from $208.4 million. Assets under management reached $728.4 billion at September 30, 2024, up from $635.8 billion a year earlier, though net client outflows were $2.8 billion in the quarter, improving from $9.4 billion a year ago. Management highlighted about $7 billion raised by its private markets Affiliates during the quarter and a shift in business mix toward alternatives.

AMG repurchased roughly $103 million^c of stock in the quarter, bringing year-to-date buybacks to about $580 million, and issued $400 million of senior notes that extended the average debt duration beyond 20 years. Share count fell sharply, with diluted average shares of 35.0 million versus 43.4 million a year earlier, which supports per-share metrics. The Board also declared a $0.01 per share quarterly dividend, payable November 29, 2024 to holders of record on November 14, 2024.

Investors should weigh the strong per-share growth and buyback-driven accretion against the lower GAAP earnings base and the still-negative net flows. Continued alternatives momentum and capital deployment will be key indicators going forward.

02—Key points

Key Highlights

Economic EPS of $4.82 rose 18% year-over-year from $4.08, while GAAP diluted EPS fell to $3.78 from $5.48.
GAAP net income (controlling interest) declined to $123.6 million from $217.0 million, mainly because the prior-year period included a $133.1 million Affiliate Transaction gain that did not recur.
Aggregate fees increased about 16% to $1,157.1 million, and Adjusted EBITDA (controlling interest) rose to $214.1 million from $208.4 million.
AUM grew to $728.4 billion from $635.8 billion year-over-year, though Q3 net client cash outflows of $2.8 billion were much smaller than the $9.4 billion outflow a year earlier.
Capital returns remained significant: about $103 million of share repurchases in the quarter and about $580 million year-to-date, with diluted shares down to 35.0 million from 43.4 million.
AMG issued $400 million of senior notes, extending the average debt duration to more than 20 years, and debt rose to $2.62 billion at September 30, 2024 from $2.54 billion at year-end 2023.
The Board declared a $0.01 per share quarterly dividend, payable November 29, 2024 to holders of record as of November 14, 2024.

03—Questions

Frequently Asked Questions

Why did GAAP earnings fall so sharply compared with the prior year?
The third quarter of 2023 included a one-time $133.1 million Affiliate Transaction gain tied to the sale of Veritable, LP, which did not recur in 2024. Income tax expense also fell, from $77.7 million to $31.3 million, but this only partly offset the gain's absence. Management's Economic earnings measures exclude these transaction effects, and on that basis earnings per share grew 18%.
What is the difference between GAAP EPS and Economic EPS?
GAAP diluted EPS of $3.78 reflects reported net income, including intangible amortization, deferred taxes, and other items. Economic EPS of $4.82 adds back after-tax intangible amortization and impairments, related deferred taxes, Affiliate Transaction gains and losses, and other economic items, and uses a lower adjusted share count. Management and the Board treat Economic EPS as the principal performance benchmark, including for executive compensation, so investors should review the reconciliation in the financial tables.
Is AMG's client base still shrinking?
Net client cash flows were negative $2.8 billion in Q3 2024, an improvement from negative $9.4 billion in Q3 2023. Year-to-date outflows are negative $5.6 billion, compared with negative $23.1 billion in the first nine months of 2023. Alternatives strategies had net inflows of $7.4 billion in the quarter, offsetting outflows in equities, so the trend is improving but not yet consistently positive.
How is AMG returning capital to shareholders, and is the dividend meaningful?
AMG repurchased about $103 million of common stock in Q3 2024 and about $580 million year-to-date. The quarterly dividend is only $0.01 per share, so the company's capital return comes mainly from buybacks rather than the dividend. The lower share count from repurchases supports per-share metrics, although buybacks are funded partly by debt and cash, and the company also issued $400 million of senior notes during the quarter.
What does the growth in alternatives mean for AMG's business?
Management said alternative strategies are an increasing share of earnings and that dedicated private markets Affiliates raised about $7 billion in the quarter. Alternatives AUM reached $266.5 billion, up from $238.8 billion at year-end 2023. Shifting toward alternatives could support higher-margin, longer-duration fee revenue, but results remain exposed to market conditions, Affiliate investment performance, and fundraising pace, as the forward-looking statements caution.

04—Continue

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