10-QPeriod: Q3 FY2016

Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 8, 2016For Securities:BX

Summary

Blackstone Inc. (BX) reported its quarterly results for the period ending September 29, 2016. Total Revenues increased significantly year-over-year, primarily driven by a substantial recovery in Performance Fees, which swung from a net loss in the prior year's period to a significant gain, largely due to improved performance in Private Equity and Real Estate segments. Investment Income also saw a notable increase, contributing to the overall revenue growth. However, Management and Advisory Fees, Net, experienced a decline, partly due to the spin-off of the Financial Advisory segment. Expenses increased year-over-year, primarily driven by higher Performance Fee Compensation related to the surge in Performance Fees. Despite the increase in expenses, Net Income Attributable to The Blackstone Group L.P. showed a substantial positive swing, reflecting the strong revenue recovery. Total Assets grew to $24.41 billion from $22.53 billion at the end of the previous year, with a notable increase in Investments. Total Liabilities also increased, largely due to higher Loans Payable, reflecting expanded borrowing or fund-level financing. The company's Fee-Earning Assets Under Management and Total Assets Under Management showed positive growth across segments, indicating continued asset gathering. The company also refinanced and increased its credit facility, demonstrating ongoing financial flexibility.

Financial Highlights

33 data points
Beta

Revenue

$1.43B

Net Income

$312.90M

21.9% Net Margin

EPS (Diluted)

$0.47

Total Assets

$24.41B

Cash & Equivalents

$1.78B

Free Cash Flow

$413.06M

Financial Statements
Beta
Revenue$1.43B
Operating Expenses-$773.78M
Interest Expense$37.28M
Net Income$312.90M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)650.92M
Shares Outstanding (Diluted)1.20B

Key Highlights

  • 1Total Revenues surged to $1.43 billion for the three months ended September 30, 2016, a significant increase from $11.6 million in the prior year's period, driven by strong Performance Fees and Investment Income.
  • 2Performance Fees turned positive, reaching $671 million, a substantial swing from a $(638.1) million loss in the prior year's period, reflecting improved investment performance.
  • 3Net Income Attributable to The Blackstone Group L.P. was $312.9 million, a significant turnaround from a net loss of $(254.7) million in the prior year's period.
  • 4Total Assets increased to $24.41 billion as of September 30, 2016, up from $22.53 billion as of December 31, 2015.
  • 5Fee-Earning Assets Under Management grew to $267.8 billion as of September 30, 2016, up from $240.9 billion at the end of 2015.
  • 6Blackstone amended and extended its revolving credit facility, increasing its capacity to $1.5 billion.
  • 7On October 5, 2016, post-quarter, Blackstone issued €600 million in senior notes maturing in 2026.

Frequently Asked Questions

Blackstone experienced a substantial increase in Total Revenues to $1.43 billion for the three months ended September 30, 2016, a significant improvement from $11.6 million in the same period last year. This growth was primarily driven by a strong recovery in Performance Fees, which moved from a significant loss to a substantial gain, and a notable increase in Investment Income. Management and Advisory Fees, Net, however, saw a decrease, partly due to the spin-off of the Financial Advisory segment.

The significant improvement in Performance Fees was largely due to better investment performance across Blackstone's segments, particularly in Private Equity and Real Estate. For instance, the Real Estate segment saw a positive appreciation of 3.7% in its opportunistic funds during the quarter, contrasting with a depreciation in the prior year's period. Improved energy investments and distressed debt positions also contributed to stronger performance in the Credit segment.

Blackstone's Total Assets grew to $24.41 billion as of September 30, 2016, up from $22.53 billion at the end of 2015. This increase was primarily driven by growth in Investments. Total Liabilities also increased to $12.06 billion from $10.30 billion, largely due to higher Loans Payable, reflecting the company's operational activities and fund-level financing. The company also demonstrated financial flexibility by amending and increasing its revolving credit facility to $1.5 billion.

Blackstone's Fee-Earning Assets Under Management showed positive growth, reaching $267.8 billion as of September 30, 2016, an increase from $240.9 billion at the end of 2015. This growth was fueled by strong inflows across its segments, including Private Equity, Credit, Hedge Fund Solutions, and Real Estate, as well as market appreciation. The company continues to attract capital across its diverse strategies.