10-QPeriod: Q3 FY2011

Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 9, 2011For Securities:BX

Summary

Blackstone Inc. (BX) reported its third-quarter 2011 results, showcasing continued growth in assets under management (AUM) despite a challenging macroeconomic environment characterized by declining global equity markets and increased volatility. The firm saw a year-over-year increase in total AUM to $157.7 billion by the end of the quarter, driven by strong inflows across its Private Equity, Hedge Fund Solutions, and Credit Businesses segments. Management and advisory fees saw a healthy increase, reflecting higher fee-earning AUM and increased transaction activity. However, the firm's reported net income was negative for the quarter and year-to-date, primarily due to significant unrealized losses in investment income and performance fees, largely driven by the downturn in public markets. Compensation expenses also played a role in the net loss. Despite the reported net loss, the company highlighted its Distributable Earnings and Net Fee Related Earnings from Operations, which exclude the impact of market volatility and are generally positive, indicating the underlying strength of its fee-generating business. Liquidity remains robust, supported by cash reserves and available credit facilities.

Financial Highlights

32 data points
Beta

Revenue

-$124.08M

Net Income

-$274.57M

221.3% Net Margin

EPS (Diluted)

$-0.56

Total Assets

$22.07B

Cash & Equivalents

$592.98M

Free Cash Flow

$376.95M

Financial Statements
Beta
Revenue-$124.08M
Operating Expenses$540.93M
Interest Expense$13.79M
Net Income-$274.57M
EPS (Basic)$-0.56
EPS (Diluted)$-0.56
Shares Outstanding (Basic)487.19M
Shares Outstanding (Diluted)487.19M

Key Highlights

  • 1Total Assets Under Management (AUM) grew to $157.7 billion, up 23% year-over-year, driven by new fund raises and capital deployment.
  • 2Management and Advisory Fees increased by 17% year-over-year for the quarter, reflecting growth in fee-earning AUM and increased transaction activity.
  • 3The firm experienced significant unrealized losses in Performance Fees and Investment Income, leading to a net loss for the quarter, largely attributed to market downturns.
  • 4Despite the net loss, Distributable Earnings and Net Fee Related Earnings from Operations remained positive, indicating the resilience of the core fee-generating business.
  • 5Private Equity segment saw strong increases in Fee-Earning AUM and Assets Under Management due to new fund investments.
  • 6Real Estate segment demonstrated improved operating fundamentals for its portfolio companies, with notable increases in Fee-Earning AUM and Assets Under Management.
  • 7Blackstone's liquidity position remains strong, with $593 million in cash and significant investments in treasury and liquid funds, alongside a $1.02 billion credit facility.
  • 8The company repurchased approximately $2.1 million of units under its $500 million repurchase program during the first nine months of the year.

Frequently Asked Questions

Blackstone reported a net loss of $274.6 million for the three months ended September 30, 2011, compared to a net loss of $44.4 million for the same period in 2010. This net loss was primarily driven by unrealized losses in investment income and performance fees, a result of the challenging market environment.

Blackstone's total AUM increased to $157.7 billion as of September 30, 2011, up from $119.1 billion in the prior year period. Fee-earning AUM also grew to $132.9 billion, up from $104.3 billion in the prior year period. This growth was fueled by significant inflows across its Private Equity, Real Estate, Hedge Fund Solutions, and Credit Businesses segments.

The global macroeconomic environment, marked by declining equity markets and increased volatility, negatively impacted Blackstone's reported net income due to substantial unrealized losses in performance fees and investment income. However, Management and Advisory Fees saw a year-over-year increase, and key operational metrics like Distributable Earnings and Net Fee Related Earnings from Operations remained positive, highlighting the underlying stability of the firm's fee-generating businesses.

Despite market headwinds, Blackstone's Private Equity segment saw growth in AUM driven by new fund investments. The Real Estate segment benefited from stable market fundamentals and increased investment activity. Hedge Fund Solutions and Credit Businesses also reported growth in AUM, though performance fees were impacted by market volatility. The Financial Advisory segment saw relatively flat revenues, with variations across its sub-businesses.