10-QPeriod: Q3 FY2014

Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 6, 2014For Securities:BX

Summary

Blackstone Inc. (BX) reported solid financial performance for the nine months ended September 30, 2014, with total revenues increasing by 40% year-over-year to $5.5 billion. This growth was primarily driven by a significant surge in Performance Fees, up 64% to $3.1 billion, largely attributed to strong returns in their Private Equity and Real Estate segments. Management and Advisory Fees also saw a healthy increase of 15%, reaching $1.8 billion, reflecting growth across their key business segments. The company's total assets grew to $30.5 billion, while total liabilities decreased to $14.1 billion, demonstrating improved financial leverage. Blackstone's Fee Related Earnings (FRE) and Distributable Earnings also showed positive trends, underscoring the recurring nature of their fee-based income and effective management of operating expenses. Despite strong revenue growth, expenses also increased by 20% to $3.0 billion, primarily driven by higher compensation and benefits costs, which were largely a consequence of increased performance-based compensation linked to higher revenues and strategic headcount additions. The company maintained robust fee-earning assets under management, reaching $214.8 billion, indicating continued investor confidence. Overall, the report highlights Blackstone's ability to generate substantial performance-based revenue in favorable market conditions while managing its operational costs effectively.

Financial Highlights

33 data points
Beta

Revenue

$1.68B

Net Income

$250.50M

14.9% Net Margin

EPS (Diluted)

$0.41

Total Assets

$30.51B

Cash & Equivalents

$943.52M

Free Cash Flow

$216.44M

Financial Statements
Beta
Revenue$1.68B
Operating Expenses$1.06B
Interest Expense$31.61M
Net Income$250.50M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)611.68M
Shares Outstanding (Diluted)614.98M

Key Highlights

  • 1Total revenues increased by 40% to $5.5 billion for the nine months ended September 30, 2014, compared to the same period in 2013.
  • 2Performance Fees saw a significant 64% increase to $3.1 billion, driven by strong returns in Private Equity and Real Estate segments.
  • 3Management and Advisory Fees, Net, grew by 15% to $1.8 billion, reflecting broad-based growth across business segments.
  • 4Total assets increased to $30.5 billion, while total liabilities decreased to $14.1 billion, improving the company's balance sheet.
  • 5Fee-Earning Assets Under Management grew to $214.8 billion, indicating strong investor demand and effective capital deployment.
  • 6Net Income Attributable to The Blackstone Group L.P. more than doubled to $1.03 billion for the nine months ended September 30, 2014.
  • 7Distributions declared per common unit increased significantly to $1.48 for the nine months ended September 30, 2014, up from $0.95 in the prior year.

Frequently Asked Questions

The primary driver of Blackstone's revenue growth was a substantial increase in Performance Fees, which grew by 64% to $3.1 billion. This surge was mainly attributed to strong returns generated by their Private Equity and Real Estate segments, benefiting from favorable market conditions and successful investment performances.

While revenues grew significantly, expenses also increased by 20% to $3.0 billion. This rise was primarily due to higher compensation and benefits costs, largely driven by performance-based compensation directly linked to the increased revenue and strategic headcount additions to support business growth. Despite the increase in expenses, the company's Fee Related Earnings and Distributable Earnings demonstrated positive trends, indicating effective management of operating costs relative to recurring revenue.

As of September 30, 2014, Blackstone reported total assets of $30.5 billion and total liabilities of $14.1 billion, indicating a strengthening balance sheet with total liabilities decreasing from the previous year. The company had $943.5 million in cash and cash equivalents, substantial investments in Treasury Cash Management Strategies, and access to a $1.1 billion revolving credit facility, demonstrating a strong liquidity position to fund its operations and capital commitments.

Blackstone's Fee-Earning Assets Under Management (FEAUM) grew by 9% year-over-year to $214.8 billion by September 30, 2014. This growth reflects continued investor confidence and successful capital deployment across its various segments. Total Assets Under Management also increased by 8% to $284.4 billion, showcasing the overall expansion of the capital managed by the firm.