10-QPeriod: Q2 FY2011

Blackstone Inc. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:BX

Summary

Blackstone Inc. (BX) reported strong financial performance for the second quarter and first half of 2011, driven by significant growth in its Performance Fees and Management and Advisory Fees. Total Revenues saw a substantial increase year-over-year, fueled by robust performance across its Private Equity and Real Estate segments, with notable contributions from the commencement of the BCP VI fund's investment period and strong performance in the BREP funds. The company also saw a decrease in Compensation and Benefits expenses year-over-year, primarily due to lower equity-based compensation. Despite an increase in interest expense following a debt issuance, Blackstone maintained a healthy financial position with growing Assets Under Management and Fee-Earning Assets Under Management across all segments. The company's overall financial health appears robust, with a significant increase in total revenues and a notable decrease in key expenses, leading to a substantial improvement in net income attributable to The Blackstone Group L.P. The strong growth in Assets Under Management and Fee-Earning Assets Under Management indicates continued investor confidence and successful capital deployment. Investors should monitor the company's ability to sustain this growth, particularly in light of the ongoing economic and market uncertainties highlighted in the report.

Financial Highlights

32 data points
Beta

Revenue

$1.31B

Net Income

$86.24M

6.6% Net Margin

EPS (Diluted)

$0.18

Total Assets

$22.33B

Cash & Equivalents

$434.80M

Free Cash Flow

-$80.27M

Financial Statements
Beta
Revenue$1.31B
Operating Expenses$984.83M
Interest Expense$14.19M
Net Income$86.24M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)476.29M
Shares Outstanding (Diluted)483.64M

Key Highlights

  • 1Total Revenues increased significantly by 138% year-over-year for the three months ended June 30, 2011, reaching $1.31 billion.
  • 2Performance Fees more than doubled, driven by strong performance in Real Estate and Private Equity segments, with unrealized performance fees up significantly.
  • 3Management and Advisory Fees increased by 23% year-over-year, benefiting from increased transaction fees in Real Estate and growing management fees across Private Equity, Credit Businesses, and Hedge Fund Solutions.
  • 4Total Expenses decreased by 13% year-over-year, primarily due to a significant reduction in Compensation and Benefits expenses, largely driven by lower equity-based compensation.
  • 5Net Income (Loss) Attributable to The Blackstone Group L.P. improved substantially from a loss of $193.3 million in Q2 2010 to a gain of $86.2 million in Q2 2011.
  • 6Assets Under Management grew by 6% quarter-over-quarter and 57% year-over-year, reaching $158.7 billion as of June 30, 2011.
  • 7Fee-Earning Assets Under Management also showed strong growth, increasing by 4% quarter-over-quarter and 27% year-over-year, reaching $129.0 billion as of June 30, 2011.

Frequently Asked Questions

Blackstone demonstrated significantly improved financial performance in Q2 2011 compared to Q2 2010. Total Revenues increased by 138% to $1.31 billion, driven by a substantial surge in Performance Fees and a solid increase in Management and Advisory Fees. This top-line growth, combined with a 13% reduction in total expenses, led to a significant swing from a net loss to a net profit attributable to The Blackstone Group L.P.

The significant increase in Performance Fees is primarily attributed to the strong appreciation in the fair value of investments within Blackstone's Real Estate funds (BREP V and BREP VI) and positive performance in its BCP IV Private Equity fund. The commencement of the BCP VI fund's investment period also contributed to increased management fees.

Blackstone experienced robust growth in both AUM and FEAUM. AUM increased by 6% quarter-over-quarter and 57% year-over-year to $158.7 billion as of June 30, 2011. FEAUM also showed strong growth, up 4% quarter-over-quarter and 27% year-over-year, reaching $129.0 billion. This growth reflects successful capital raising and deployment across its various business segments.

Total Expenses decreased by 13% year-over-year in Q2 2011. This reduction was primarily driven by a significant decrease in Compensation and Benefits expenses, largely due to lower equity-based compensation costs compared to the prior year. The company also reported a decrease in performance fee compensation, which was offset by increases in other compensation categories related to business growth and performance.