10-QPeriod: Q3 FY2009

Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:BX

Summary

Blackstone Inc. (BX) reported its third-quarter and nine-month results ending September 30, 2009. The company experienced a notable shift in performance, moving from significant losses in the prior year's comparable periods to a reduction in net loss attributable to The Blackstone Group L.P. For the three months ended September 30, 2009, the net loss attributable to common unitholders was $176.2 million, an improvement from $340.3 million in the same period of 2008. This improvement was driven by a substantial increase in performance fees and allocations, largely due to positive fund performance, and a significant increase in investment income, contrasting with substantial investment losses in the previous year. Despite these improvements, total revenues declined year-over-year due to lower management and advisory fees, reflecting a challenging economic environment impacting fee-earning assets under management. The company's financial position showed total assets of $8.73 billion at September 30, 2009, down from $9.26 billion at December 31, 2008. Liabilities also decreased to $2.85 billion from $3.37 billion. Blackstone successfully managed its liquidity, issuing $600 million in senior notes and maintaining access to its revolving credit facility, with no outstanding borrowings. The company continues to actively manage its capital structure and has approximately $339.5 million remaining under its unit repurchase program. While revenue generation remains sensitive to market conditions, the reported results indicate a positive operational trend with reduced losses and improved performance fee generation.

Financial Highlights

17 data points
Beta

Revenue

$597.02M

Net Income

-$479.51M

-80.3% Net Margin

Cash & Equivalents

$486.47M

Free Cash Flow

-$792.49M

Financial Statements
Beta
Revenue$597.02M
Operating Expenses$1.10B
Interest Expense$5.26M
Net Income-$479.51M

Key Highlights

  • 1Blackstone reported a reduced net loss attributable to The Blackstone Group L.P. of $176.2 million for Q3 2009, compared to a loss of $340.3 million in Q3 2008.
  • 2Performance Fees and Allocations significantly increased to $154.0 million in Q3 2009 from $(416.1) million in Q3 2008, indicating a recovery in fund performance.
  • 3Investment Income (Loss) improved to $64.8 million in Q3 2009 from $(199.5) million in Q3 2008, driven by improved returns and elimination of prior year hedge fund losses.
  • 4Total Revenues decreased by 18% year-over-year for the third quarter, primarily due to lower management and advisory fees.
  • 5Assets Under Management decreased to $97.6 billion at September 30, 2009, from $116.3 billion at September 30, 2008, reflecting market depreciation and fund liquidations.
  • 6The company issued $600 million in senior notes and had $486.5 million in cash and $1 billion in high-grade liquid debt strategies at quarter-end, with $673.4 million in outstanding borrowings.
  • 7Fee-Earning Assets Under Management decreased slightly to $96.3 billion from $99.7 billion, impacted by market conditions and fund spin-offs.

Frequently Asked Questions

Blackstone showed improved financial performance compared to the prior year's third quarter. The net loss attributable to The Blackstone Group L.P. was reduced significantly, driven by a strong rebound in performance fees and allocations, and a positive swing in investment income. However, total revenues were down year-over-year due to lower management and advisory fees, reflecting prevailing economic conditions.

The Corporate Private Equity segment saw increased revenues driven by performance fees and investment income. The Real Estate segment's revenues improved, though investment income declined year-over-year. The Credit and Marketable Alternatives segment experienced a significant revenue increase due to improved investment income and performance fees. The Financial Advisory segment saw a revenue decrease, primarily due to lower fees from fund placement activities and fewer large transaction fees in advisory services.

Blackstone maintained a solid liquidity position, with $486.5 million in cash and $1 billion in highly liquid debt strategies at the end of the quarter. The company successfully issued $600 million in senior notes and had $673.4 million in outstanding borrowings. They also had $339.5 million available under their unit repurchase program, indicating prudent capital management.