10-QPeriod: Q1 FY2016

Blackstone Inc. Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:BX

Summary

Blackstone Inc. (BX) reported its first quarter 2016 results, showing a significant decrease in total revenues to $932.4 million from $2.5 billion in the prior year's quarter. This decline was primarily driven by a substantial drop in Performance Fees, down 81% to $314.5 million, largely due to lower unrealized carried interest across its Private Equity and Real Estate segments. Consequently, Net Income Attributable to The Blackstone Group L.P. fell sharply by 76% to $150.0 million, or $0.23 per diluted common unit. Despite the lower revenue and net income, Blackstone's Fee Related Earnings (FRE) remained robust, indicating the stability of its management fee-based business. Fee-earning assets under management saw a slight decrease to $244.5 billion from $246.1 billion, impacted by realizations and outflows, though partially offset by inflows and market appreciation in certain segments like Real Estate. The company maintained a strong liquidity position with $1.4 billion in cash and cash equivalents, underscoring its financial resilience amidst market volatility.

Financial Highlights

33 data points
Beta

Revenue

$932.35M

Net Income

$159.75M

17.1% Net Margin

EPS (Diluted)

$0.23

Total Assets

$22.05B

Cash & Equivalents

$1.37B

Free Cash Flow

$210.29M

Financial Statements
Beta
Revenue$932.35M
Operating Expenses-$617.71M
Interest Expense$37.36M
Net Income$159.75M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)644.90M
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Total Revenues decreased by 63% year-over-year to $932.4 million, primarily due to a significant reduction in Performance Fees.
  • 2Performance Fees declined by 81% to $314.5 million, reflecting lower appreciation in investment holdings across Private Equity and Real Estate segments.
  • 3Net Income Attributable to The Blackstone Group L.P. decreased by 76% to $150.0 million, or $0.23 per diluted common unit.
  • 4Fee-Earning Assets Under Management decreased slightly to $244.5 billion from $246.1 billion, impacted by realizations and outflows.
  • 5Total Assets Under Management increased by 11% to $343.7 billion, driven by inflows and market appreciation, particularly in Real Estate.
  • 6The company maintained a strong liquidity position with $1.4 billion in cash and cash equivalents and $2.0 billion in Treasury Cash Management Strategies.
  • 7Operating expenses decreased by 46% to $617.7 million, largely due to lower Performance Fee Compensation, reflecting the lower Performance Fees.

Frequently Asked Questions

The primary driver of the revenue decline was a sharp decrease in Performance Fees, which fell by 81% year-over-year. This was mainly due to lower unrealized carried interest across Blackstone's Private Equity and Real Estate segments, reflecting a lower rate of investment appreciation compared to the prior year's quarter.

Blackstone's Fee Related Earnings (FRE) remained strong at $219.5 million for the quarter. This highlights the stability of its management fee-based business, which is less sensitive to short-term market fluctuations compared to performance fees.

Total Assets Under Management (AUM) increased to $343.7 billion, up from $336.4 billion at the end of the previous year. This growth was primarily driven by inflows across various segments, particularly Real Estate, and market appreciation. Fee-earning AUM saw a slight decrease to $244.5 billion, mainly due to realizations and outflows, but remains a substantial base for management fees.

Blackstone maintains a strong liquidity position, with $1.4 billion in cash and cash equivalents and significant investments in Treasury Cash Management Strategies. The company has multiple sources of liquidity, including operating cash flows, realizations from investments, and access to its revolving credit facility and debt issuances, which are deemed sufficient to meet its capital needs, including funding commitments to its funds, operating expenses, and debt service.