NEW YORK, April 28, 2020 /PRNewswire/
-- AllianceBernstein L.P. ("AB") and AllianceBernstein Holding
L.P. ("AB Holding") (NYSE: AB) today reported financial and
operating results for the quarter ended March 31, 2020.
"AB's thoughts are with those most impacted by the COVID-19
crisis, including the communities and individuals, first responders
and healthcare workers whose sacrifices are for the greater good,"
said Seth P. Bernstein, President
and CEO of AllianceBernstein. "I am proud of AB's employees, who
have remained resilient and focused, and have responded with
solutions for both our clients and our communities as we
collectively address the challenges of this unprecedented
time. AB's financial condition has remained strong throughout
this period, enabling us to focus on our clients' needs."
(US $ Thousands
except per Unit amounts)
|
1Q
2020
|
|
1Q
2019
|
|
%
Change
|
|
4Q
2019
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
874,156
|
|
|
$
|
795,462
|
|
|
9.9
|
%
|
|
$
|
987,304
|
|
|
(11.5)
|
%
|
Operating
income
|
$
|
178,223
|
|
|
$
|
168,151
|
|
|
6.0
|
%
|
|
$
|
268,283
|
|
|
(33.6)
|
%
|
Operating
margin
|
23.3
|
%
|
|
19.9
|
%
|
|
340 bps
|
|
26.4
|
%
|
|
(310 bps)
|
AB Holding Diluted
EPU
|
$
|
0.63
|
|
|
$
|
0.49
|
|
|
28.6
|
%
|
|
$
|
0.84
|
|
|
(25.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
743,803
|
|
|
$
|
657,884
|
|
|
13.1
|
%
|
|
$
|
817,457
|
|
|
(9.0)
|
%
|
Operating
income
|
$
|
205,590
|
|
|
$
|
158,857
|
|
|
29.4
|
%
|
|
$
|
263,974
|
|
|
(22.1)
|
%
|
Operating
margin
|
27.6
|
%
|
|
24.1
|
%
|
|
350 bps
|
|
32.3
|
%
|
|
(470 bps)
|
AB Holding Diluted
EPU
|
$
|
0.64
|
|
|
$
|
0.49
|
|
|
30.6
|
%
|
|
$
|
0.85
|
|
|
(24.7)
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.64
|
|
|
$
|
0.49
|
|
|
30.6
|
%
|
|
$
|
0.85
|
|
|
(24.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management ("AUM")
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
541.8
|
|
|
$
|
554.7
|
|
|
(2.3)
|
%
|
|
$
|
622.9
|
|
|
(13.0)
|
%
|
Average
AUM
|
$
|
602.0
|
|
|
$
|
539.2
|
|
|
11.6
|
%
|
|
$
|
606.8
|
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) The adjusted financial measures
represent non-GAAP financial measures. See page 11 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 12-13 for notes describing the
adjustments.
|
"First quarter results reflected the strength of AB's
diversified, global platform and the committed efforts of our
talented team members during a turbulent period," Bernstein
said. "Despite sharp declines in markets in March, driven by
the uncertain economic impact of the novel coronavirus, we
generated solid year-over-year revenue growth and expanded
operating margins. Both our institutional channel and active
equity platform grew organically in the quarter, with our pipeline
of institutional mandates reaching record levels. Investment
performance was mixed; while active equities improved, fixed income
lagged notably behind expectations, as most strategies maintained a
strategic overweight to credit sectors. Bernstein Research had a
very strong quarter as higher market volatility drove robust global
trading volumes."
Bernstein continued, "In Retail, gross sales reached a record
$24.2 billion - the highest in Retail
history - and March was notably our fourth highest month ever. Our
active equity platform generated net inflows while our Fixed Income
business experienced net outflows in March, as investors retreated
from volatile and illiquid markets, which are now showing signs of
stabilization. In Institutional, net flows were positive, driven by
a 13% active equity organic growth rate. Our institutional pipeline
grew to a record $15.4B, with a 46%
equity mix, the highest proportion ever. Our pipeline's annualized
fee base reached a new high of over $40
million for the third consecutive quarter. In Private
Wealth, advisor sales and productivity grew year-over-year, but
most importantly, we were present when our clients needed us most,
with proactive communications throughout the crisis.
Bernstein Research grew by over 30% organically, benefitting from
strong global trading volumes and a mix shift to higher-touch
trades. As a firm, we expanded our adjusted operating margin of
27.6% by 350 basis points versus the same period a year ago."
Bernstein concluded, "AB's financial results reflect the capital
markets, and assets under management have declined by 13% from
year-end 2019. Looking forward, we expect to experience further
market volatility in the face of continued uncertainty stemming
from the global effects of COVID-19. Despite operating almost
entirely remotely, AB's talented and dedicated staff continues to
work diligently to help our clients navigate through tumultuous
markets. While there will be enormous challenges to overcome, I
believe AB is well positioned to capitalize on the opportunities
that will undoubtedly arise as the severity of this health crisis
abates and the unprecedented level of fiscal and monetary support
begin to impact the global economy."
The firm's cash distribution per Unit of $0.64 is payable on May
28, 2020, to holders of record of AB Holding Units at the
close of business on May 11,
2020.
Market Performance
US and global equity and fixed income markets were mostly lower
in the first quarter. The S&P 500's total return was (19.6)%
and the MSCI EAFE Index's total return was (22.7)%. The Bloomberg
Barclays US Aggregate Index returned 3.2% during the first quarter
and the Bloomberg Barclays Global Aggregate ex US Index's total
return was (2.7)%.
Assets Under Management ($ Billions)
Total assets under management as of March 31, 2020 were
$541.8 billion, down $81.1 billion, or 13.0%, from December 31,
2019, and down $12.9 billion, or
2.3%, from March 31, 2019.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 3/31/2020
|
$256.7
|
|
$198.6
|
|
$86.5
|
|
$541.8
|
Net Flows for Three
Months Ended 3/31/2020:
|
|
|
|
|
|
|
|
Active
|
$(0.7)
|
|
$(3.7)
|
|
$(0.8)
|
|
$(5.2)
|
Passive
|
1.1
|
|
(1.7)
|
|
0.2
|
|
(0.4)
|
Total
|
$0.4
|
|
$(5.4)
|
|
$(0.6)
|
|
$(5.6)
|
Total net outflows were $5.6
billion in the first quarter, compared to net inflows of
$6.5 billion in the fourth quarter of
2019, and net inflows of $1.1 billion
in the prior year first quarter.
Institutional channel first quarter net inflows of $0.4 billion compared to net inflows of
$1.4 billion in the fourth quarter of
2019. Institutional gross sales of $3.9
billion decreased sequentially from $5.4 billion. The pipeline of awarded but
unfunded Institutional mandates increased sequentially to
$15.4 billion at March 31,
2020 from $15.1 billion at
December 31, 2019.
Retail channel first quarter net outflows of $5.4 billion compared to net inflows of
$5.2 billion in the fourth quarter of
2019. Retail gross sales of $24.2
billion increased 28% sequentially from $18.9 billion.
Private Wealth channel first quarter net outflows of
$0.6 billion compared to net outflows
of $0.1 billion in the fourth quarter
of 2019. Private Wealth gross sales of $3.5
billion increased sequentially from $2.7 billion.
Our ending AUM at March 31, 2020
reflects $1 billion in outflows
resulting from AXA S.A.'s redemption of certain low-fee fixed
income mandates. We expect these redemptions to total approximately
$14 billion and to be completed in
the first half of 2020. The revenue we earn from the
management of these assets is not significant.
First Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because we believe they present a clearer
picture of our operating performance and allow management to see
long-term trends without the distortion caused by long-term
incentive compensation-related mark-to-market adjustments, real
estate charges/credits and other adjustment items. Similarly, we
believe that non-GAAP earnings information helps investors better
understand the underlying trends in our results and, accordingly,
provides a valuable perspective for investors. Please note,
however, that these non-GAAP measures are provided in addition to,
and not as a substitute for, any measures derived in accordance
with US GAAP and they may not be comparable to non-GAAP measures
presented by other companies. Management uses both US GAAP and
non-GAAP measures in evaluating our financial performance. The
non-GAAP measures alone may pose limitations because they do not
include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Available Cash Flow
typically is the adjusted diluted net income per unit for the
quarter multiplied by the number of units outstanding at the end of
the quarter. Management anticipates that Available Cash Flow will
continue to be based on adjusted diluted net income per unit,
unless management determines, with concurrence of the Board of
Directors, that one or more adjustments made to adjusted net income
should not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Revenues
First quarter net revenues of $874
million increased 10% from $795
million in the first quarter of 2019. Higher investment
advisory fees, Bernstein Research revenues, distribution revenues
and performance-based fees were partially offset by investment
losses compared to investment gains in the prior year first
quarter.
Sequentially, net revenues decreased 12% from $987 million. Lower performance-based fees,
investment losses compared to investment gains in the prior period
and lower investment advisory fees were partially offset by higher
Bernstein Research revenues and distribution revenues.
First quarter Bernstein Research revenues of $129 million increased 43% compared to the prior
year first quarter and increased 18% sequentially. Excluding
revenues from the Autonomous acquisition, which closed on
April 1, 2019, Bernstein Research
revenues increased 31% from the prior year first quarter due to
higher revenues in U.S., Europe and Asia, resulting from increased customer
trading activity attributed to greater global market volatility,
which also drove the sequential increase.
Expenses
First quarter operating expenses of $696
million increased 11% from $627
million in the first quarter of 2019. Total promotion and
servicing, employee compensation and benefits and general and
administrative ("G&A") expenses were all higher. Promotion and
servicing expense increased due to higher distribution related
payments, trade execution costs and transfer fees, partially offset
by lower travel and entertainment expenses. Employee compensation
and benefits expense increased due to higher base compensation,
incentive compensation and commissions, partially offset by lower
fringes. The increase in G&A was primarily due to higher
portfolio servicing fees, technology costs and occupancy expense,
partially offset by lower professional fees.
Sequentially, operating expenses decreased 3%. Total employee
compensation and benefits expense and G&A expenses were both
lower. Employee compensation and benefits expense decreased due to
lower incentive compensation, partially offset by higher
commissions and base compensation. Within G&A, lower occupancy
expense, other taxes, charitable contributions and a favorable
foreign exchange translation impact were partially offset by higher
portfolio servicing fees. In addition, during the fourth quarter of
2019, we recorded an intangible asset impairment charge of
$3.1 million and a change in our
contingent payment liability of $3.1
million, both relating to our 2016 acquisition.
Operating Income and Net Income Per Unit
First quarter operating income of $178
million increased 6% from $168
million in the first quarter of 2019 and the operating
margin of 23.3% in the first quarter of 2020 increased 340 basis
points from 19.9% in the first quarter of 2019.
Sequentially, operating income decreased 34% from $268 million in the fourth quarter of 2019 and
the operating margin of 23.3% decreased 310 basis points from 26.4%
in the fourth quarter of 2019.
First quarter diluted net income per Unit was $0.63 compared to $0.49 in the first quarter of 2019 and
$0.84 in the fourth quarter of
2019.
Non-GAAP Earnings
This section discusses our first quarter 2020 non-GAAP financial
results, compared to the first quarter of 2019 and the fourth
quarter of 2019. The phrases "adjusted net revenues", "adjusted
operating expenses", "adjusted operating income", "adjusted
operating margin" and "adjusted diluted net income per Unit" are
used in the following earnings discussion to identify non-GAAP
information.
Revenues
First quarter adjusted net revenues of $744 million increased 13% from the first quarter
of 2019. Higher investment advisory fees and Bernstein Research
revenues were partially offset by investment losses compared to
investment gains in the prior year first quarter.
Sequentially, adjusted net revenues decreased 9% from
$817 million. Lower performance-based
fees, investment advisory base fees, investment losses compared to
investment gains in the prior period and lower net dividend and
interest income were partially offset by higher Bernstein Research
revenues.
Expenses
First quarter adjusted operating expenses of $538 million increased 8% from $499 million in the first quarter of 2019, driven
by higher total employee compensation and benefits and promotion
and servicing expenses. Employee compensation and benefits expense
increased due to higher incentive compensation, base compensation
and commissions, partially offset by lower fringes. Within
promotion and servicing expenses, higher trade execution costs,
transfer fees and marketing expenses were partially offset by lower
travel and entertainment expense.
Sequentially, adjusted operating expenses decreased 3% from
$553 million. Total employee
compensation and benefits, G&A and promotion and servicing
expenses were all lower. Employee compensation and benefits expense
decreased due to lower incentive compensation, partially offset by
higher commissions and base compensation. Within G&A, the
decrease was driven by lower professional fees, other taxes,
charitable contributions and a favorable foreign exchange
translation impact, partially offset by higher portfolio servicing
fees. Promotion and servicing expense decreased due to lower travel
and entertainment, partially offset by higher trade execution
costs.
Operating Income, Margin and Net Income Per Unit
First quarter adjusted operating income of $206 million increased 29% from $159 million in the first quarter of 2019, and
the adjusted operating margin of 27.6% increased 350 basis points
from 24.1%.
Sequentially, adjusted operating income decreased 22% from
$264 million and the adjusted
operating margin of 27.6% in the first quarter of 2020 decreased
470 basis points from 32.3%.
First quarter adjusted diluted net income per Unit of
$0.64 was up from $0.49 in the first quarter of 2019 and down from
$0.85 in the fourth quarter of
2019.
Headcount
As of March 31, 2020, we had 3,846 employees, compared to
3,657 employees as of March 31, 2019 and 3,811 as of
December 31, 2019.
Unit Repurchases
|
|
1Q20
|
|
1Q19
|
|
|
(US $
Millions)
|
Total amount of AB
Holding Units Purchased (1)
|
|
0.9
|
|
|
2.0
|
|
Total Cash Paid for
AB Holding Units Purchased (1)
|
|
$
|
19.8
|
|
|
$
|
58.6
|
|
Open Market Purchases
of AB Holding Units Purchased (2)
|
|
0.8
|
|
|
1.9
|
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (2)
|
|
$
|
17.3
|
|
|
$
|
55.2
|
|
|
(1)
Purchased on a trade date basis.
|
(2)
The remainder related to purchases of AB Holding Units from
employees to all them to fulfill statutory tax withholding
requirements at the time of delivery of long-term incentive
compensation awards.
|
First Quarter 2020 Earnings Conference Call
Information
Management will review First Quarter 2020 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Tuesday,
April 28, 2020. The conference call will be hosted by Seth P. Bernstein, President and Chief Executive
Officer, and John C. Weisenseel,
Chief Financial Officer.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at http://alliancebernstein.com/investorrelations at
least 15 minutes prior to the call to download and install any
necessary audio software.
- To listen by telephone, please dial (866) 556-2265 in the U.S.
or (973) 935-8521 outside the U.S. 10 minutes before the scheduled
start time. The conference ID# is 9592750.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of First Quarter 2020 financial and
operating results on April 28, 2020.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference call
and will be available on AB's website for one week. An audio replay
of the conference call will also be available for one week. To
access the audio replay, please call (855) 859-2056 in the US,
or (404) 537-3406 outside the US, and provide the
conference ID #: 9592750.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of these factors include, but are not limited
to, the following: the performance of financial markets, the
investment performance of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, integration of acquired companies,
competitive conditions, and government regulations, including
changes in tax regulations and rates and the manner in which the
earnings of publicly-traded partnerships are taxed. AB cautions
readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such
statements are made; AB undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. For further information regarding
these forward-looking statements and the factors that could cause
actual results to differ, see "Risk Factors" and "Cautions
Regarding Forward-Looking Statements" in AB's Form 10-K for the
year ended December 31, 2019 and subsequent Forms 10-Q. Any or
all of the forward-looking statements made in this news release,
Form 10-K, Forms 10-Q, other documents AB files with or furnishes
to the SEC, and any other public statements issued by AB, may turn
out to be wrong. It is important to remember that other factors
besides those listed in "Risk Factors" and "Cautions Regarding
Forward-Looking Statements", and those listed below, could also
adversely affect AB's revenues, financial condition, results of
operations and business prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional mandates do
not represent legally binding commitments to fund and, accordingly,
the possibility exists that not all mandates will be funded in the
amounts and at the times currently anticipated, or that mandates
ultimately will not be funded.
- The possibility that AB will engage in open market
purchases of AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB Holding Units AB may decide to buy in future periods, if any,
to help fund incentive compensation awards depends on various
factors, some of which are beyond our control, including the
fluctuation in the price of an AB Holding Unit (NYSE: AB) and the
availability of cash to make these purchases.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b)(4). Please note that 100% of
AB Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
37% effective January 1, 2018.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional investors, individuals and private wealth
clients in major world markets.
As of March 31, 2020, including both the general
partnership and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 35.9% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 64.9% economic
interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our website, www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2020
|
|
1Q
2019
|
|
%
Change
|
|
4Q
2019
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
613,587
|
|
|
$
|
552,230
|
|
|
11.1
|
%
|
|
$
|
626,357
|
|
|
(2.0)
|
%
|
Performance
fees
|
8,138
|
|
|
4,364
|
|
|
86.5
|
|
|
76,344
|
|
|
(89.3)
|
|
Bernstein research
services
|
129,223
|
|
|
90,235
|
|
|
43.2
|
|
|
109,671
|
|
|
17.8
|
|
Distribution
revenues
|
130,857
|
|
|
100,509
|
|
|
30.2
|
|
|
127,553
|
|
|
2.6
|
|
Dividends and
interest
|
20,465
|
|
|
27,346
|
|
|
(25.2)
|
|
|
24,539
|
|
|
(16.6)
|
|
Investments gains
(losses)
|
(44,306)
|
|
|
15,735
|
|
|
n/m
|
|
7,541
|
|
|
n/m
|
Other
revenues
|
25,511
|
|
|
22,206
|
|
|
14.9
|
|
|
26,061
|
|
|
(2.1)
|
|
Total
revenues
|
883,475
|
|
|
812,625
|
|
|
8.7
|
|
|
998,066
|
|
|
(11.5)
|
|
Less: interest
expense
|
9,319
|
|
|
17,163
|
|
|
(45.7)
|
|
|
10,762
|
|
|
(13.4)
|
|
Total net
revenues
|
874,156
|
|
|
795,462
|
|
|
9.9
|
|
|
987,304
|
|
|
(11.5)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
362,272
|
|
|
339,309
|
|
|
6.8
|
|
|
377,951
|
|
|
(4.1)
|
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
140,145
|
|
|
105,993
|
|
|
32.2
|
|
|
137,992
|
|
|
1.6
|
|
Amortization of
deferred sales commissions
|
5,526
|
|
|
3,502
|
|
|
57.8
|
|
|
4,681
|
|
|
18.1
|
|
Trade execution,
marketing, T&E and other
|
55,610
|
|
|
49,648
|
|
|
12.0
|
|
|
58,848
|
|
|
(5.5)
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
122,267
|
|
|
117,848
|
|
|
3.7
|
|
|
129,666
|
|
|
(5.7)
|
|
Real
estate charges (credits)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,623
|
|
|
(100.0)
|
|
Contingent payment
arrangements
|
793
|
|
|
54
|
|
|
n/m
|
|
(2,222)
|
|
|
n/m
|
Interest on
borrowings
|
2,834
|
|
|
3,983
|
|
|
(28.8)
|
|
|
2,259
|
|
|
25.5
|
|
Amortization of
intangible assets
|
6,486
|
|
|
6,974
|
|
|
(7.0)
|
|
|
7,223
|
|
|
(10.2)
|
|
Total operating
expenses
|
695,933
|
|
|
627,311
|
|
|
10.9
|
|
|
719,021
|
|
|
(3.2)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
178,223
|
|
|
168,151
|
|
|
6.0
|
|
|
268,283
|
|
|
(33.6)
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
9,474
|
|
|
8,921
|
|
|
6.2
|
|
|
11,795
|
|
|
(19.7)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
168,749
|
|
|
159,230
|
|
|
6.0
|
|
|
256,488
|
|
|
(34.2)
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income of
consolidated entities
attributable to non-controlling interests
|
(25,571)
|
|
|
10,116
|
|
|
n/m
|
|
7,623
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
194,320
|
|
|
$
|
149,114
|
|
|
30.3
|
|
|
$
|
248,865
|
|
|
(21.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded
Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2020
|
|
1Q
2019
|
|
%
Change
|
|
4Q
2019
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
69,914
|
|
|
$
|
52,638
|
|
|
32.8
|
%
|
|
$
|
87,909
|
|
|
(20.5)
|
%
|
Income
Taxes
|
7,655
|
|
|
6,199
|
|
|
23.5
|
|
|
7,887
|
|
|
(2.9)
|
|
Net
Income
|
62,259
|
|
|
46,439
|
|
|
34.1
|
|
|
80,022
|
|
|
(22.2)
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating
Partnership (1)
|
15
|
|
|
26
|
|
|
(42.3)
|
%
|
|
19
|
|
|
(21.1)
|
%
|
Net Income -
Diluted
|
$
|
62,274
|
|
|
$
|
46,465
|
|
|
34.0
|
|
|
$
|
80,041
|
|
|
(22.2)
|
|
Diluted Net Income
per Unit
|
$
|
0.63
|
|
|
$
|
0.49
|
|
|
28.6
|
|
|
$
|
0.84
|
|
|
(25.0)
|
|
Distribution per
Unit
|
$
|
0.64
|
|
|
$
|
0.49
|
|
|
30.6
|
|
|
$
|
0.85
|
|
|
(24.7)
|
|
|
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
|
|
Units
Outstanding
|
1Q
2020
|
|
1Q
2019
|
|
%
Change
|
|
4Q
2019
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
269,981,431
|
|
|
267,186,102
|
|
|
1.0
|
%
|
|
270,380,314
|
|
|
(0.1)
|
%
|
Weighted average -
basic
|
270,497,710
|
|
|
267,336,134
|
|
|
1.2
|
%
|
|
267,909,846
|
|
|
1.0
|
|
Weighted average -
diluted
|
270,529,887
|
|
|
267,408,249
|
|
|
1.2
|
%
|
|
267,943,122
|
|
|
1.0
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
97,793,215
|
|
|
94,994,404
|
|
|
2.9
|
%
|
|
98,192,098
|
|
|
(0.4)
|
%
|
Weighted average -
basic
|
98,309,494
|
|
|
95,144,146
|
|
|
3.3
|
%
|
|
95,719,226
|
|
|
2.7
|
|
Weighted average -
diluted
|
98,341,671
|
|
|
95,216,261
|
|
|
3.3
|
%
|
|
95,752,502
|
|
|
2.7
|
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | March 31, 2020
|
|
|
($
Billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
3/31/20
|
3/31/19
|
|
Ending Assets Under
Management
|
$541.8
|
$554.7
|
|
Average Assets Under
Management
|
$602.0
|
$539.2
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
282.7
|
|
|
$
|
239.2
|
|
|
$
|
101.0
|
|
|
$
|
622.9
|
|
|
Sales/New
accounts
|
3.9
|
|
|
24.2
|
|
|
3.5
|
|
|
31.6
|
|
|
Redemption/Terminations
|
(2.9)
|
|
|
(25.6)
|
|
|
(4.2)
|
|
|
(32.7)
|
|
|
Net Cash
Flows
|
(0.6)
|
|
|
(4.0)
|
|
|
0.1
|
|
|
(4.5)
|
|
|
Net
Flows
|
0.4
|
|
|
(5.4)
|
|
|
(0.6)
|
|
|
(5.6)
|
|
|
Transfers
|
0.1
|
|
|
(0.1)
|
|
|
—
|
|
|
—
|
|
|
Acquisition
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Investment
Performance
|
(26.5)
|
|
|
(35.3)
|
|
|
(13.9)
|
|
|
(75.7)
|
|
|
End of
Period
|
$
|
256.7
|
|
|
$
|
198.6
|
|
|
$
|
86.5
|
|
|
$
|
541.8
|
|
Three-Month
Changes By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive (1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-
Exempt
|
|
Fixed
Income
Passive (1)
|
|
Other
(2)
|
|
Total
|
|
Beginning of
Period
|
$
|
177.2
|
|
|
$
|
60.1
|
|
|
$
|
258.3
|
|
|
$
|
47.1
|
|
|
$
|
9.3
|
|
|
$
|
70.9
|
|
|
$
|
622.9
|
|
|
Sales/New
accounts
|
12.1
|
|
|
0.4
|
|
|
14.7
|
|
|
2.9
|
|
|
—
|
|
|
1.5
|
|
|
31.6
|
|
|
Redemption/Terminations
|
(9.1)
|
|
|
—
|
|
|
(19.8)
|
|
|
(2.9)
|
|
|
(0.1)
|
|
|
(0.8)
|
|
|
(32.7)
|
|
|
Net Cash
Flows
|
(1.6)
|
|
|
(1.7)
|
|
|
(1.3)
|
|
|
—
|
|
|
0.8
|
|
|
(0.7)
|
|
|
(4.5)
|
|
|
Net
Flows
|
1.4
|
|
|
(1.3)
|
|
|
(6.4)
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
(5.6)
|
|
|
Acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
Investment
Performance
|
(37.1)
|
|
|
(11.6)
|
|
|
(15.8)
|
|
|
(1.2)
|
|
|
0.3
|
|
|
(10.3)
|
|
|
(75.7)
|
|
|
End of
Period
|
$
|
141.5
|
|
|
$
|
47.2
|
|
|
$
|
236.1
|
|
|
$
|
45.9
|
|
|
$
|
10.3
|
|
|
$
|
60.8
|
|
|
$
|
541.8
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
1.4
|
|
|
(1.3)
|
|
|
$
|
0.1
|
|
|
|
Fixed
Income
|
(6.4)
|
|
|
0.7
|
|
|
(5.7)
|
|
|
|
Other (2)
|
(0.2)
|
|
|
0.2
|
|
|
—
|
|
|
|
Total
|
$
|
(5.2)
|
|
|
$
|
(0.4)
|
|
|
$
|
(5.6)
|
|
|
|
(1) Includes index and enhanced index
services.
|
(2) Includes certain multi-asset
solutions and services and certain alternative
investments.
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S.
Clients
|
$
|
165.6
|
|
|
$
|
108.7
|
|
|
$
|
84.7
|
|
|
$
|
359.0
|
|
|
Non-U.S.
Clients
|
91.1
|
|
|
89.9
|
|
|
1.8
|
|
|
182.8
|
|
|
Total
|
$
|
256.7
|
|
|
$
|
198.6
|
|
|
$
|
86.5
|
|
|
$
|
541.8
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
874,156
|
|
|
$
|
987,304
|
|
|
$
|
877,867
|
|
|
$
|
857,799
|
|
|
$
|
795,462
|
|
|
$
|
804,660
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(130,857)
|
|
|
(127,553)
|
|
|
(118,635)
|
|
|
(108,347)
|
|
|
(100,509)
|
|
|
(100,952)
|
|
|
|
Investment advisory
services fees
|
(14,814)
|
|
|
(15,120)
|
|
|
(12,696)
|
|
|
(11,148)
|
|
|
(8,986)
|
|
|
(7,388)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(7,062)
|
|
|
(6,717)
|
|
|
(5,119)
|
|
|
(4,356)
|
|
|
(4,722)
|
|
|
(1,099)
|
|
|
|
Other
revenues
|
(9,607)
|
|
|
(9,436)
|
|
|
(9,571)
|
|
|
(9,160)
|
|
|
(7,759)
|
|
|
(7,940)
|
|
|
|
Impact of
consolidated company-sponsored
investment funds
|
24,135
|
|
|
(8,567)
|
|
|
(4,820)
|
|
|
(8,697)
|
|
|
(10,959)
|
|
|
931
|
|
|
|
Long-term incentive
compensation-related
investment losses (gains)
|
7,099
|
|
|
(1,457)
|
|
|
(189)
|
|
|
(1,389)
|
|
|
(4,496)
|
|
|
7,104
|
|
|
|
Long-term incentive
compensation-related
dividends and interest
|
(106)
|
|
|
(997)
|
|
|
(128)
|
|
|
(136)
|
|
|
(147)
|
|
|
(1,631)
|
|
|
|
Write-down of
investment
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
Adjusted Net
Revenues
|
|
$
|
743,803
|
|
|
$
|
817,457
|
|
|
$
|
726,709
|
|
|
$
|
714,566
|
|
|
$
|
657,884
|
|
|
$
|
696,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP
basis
|
|
$
|
178,223
|
|
|
$
|
268,283
|
|
|
$
|
202,783
|
|
|
$
|
184,220
|
|
|
$
|
168,151
|
|
|
$
|
199,359
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate (credits)
charges
|
(339)
|
|
|
2,623
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|
|
Long-term incentive
compensation-related
items
|
566
|
|
|
66
|
|
|
517
|
|
|
277
|
|
|
357
|
|
|
243
|
|
|
|
CEO's EQH award
compensation
|
184
|
|
|
217
|
|
|
217
|
|
|
227
|
|
|
465
|
|
|
—
|
|
|
|
Write-down of
investment
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
|
Acquisition-related
expenses
|
526
|
|
|
3,459
|
|
|
556
|
|
|
2,718
|
|
|
—
|
|
|
1,924
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
(3,051)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,429)
|
|
|
|
Sub-total of non-GAAP
adjustments
|
1,796
|
|
|
3,314
|
|
|
1,290
|
|
|
3,222
|
|
|
822
|
|
|
3,141
|
|
|
|
Less: Net (loss)
income of consolidated entities
attributable to non-controlling interests
|
(25,571)
|
|
|
7,623
|
|
|
4,145
|
|
|
7,757
|
|
|
10,116
|
|
|
(1,727)
|
|
|
Adjusted Operating
Income
|
|
$
|
205,590
|
|
|
$
|
263,974
|
|
|
$
|
199,928
|
|
|
$
|
179,685
|
|
|
$
|
158,857
|
|
|
$
|
204,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-
controlling interests
|
23.3
|
%
|
|
26.4
|
%
|
|
22.6
|
%
|
|
20.6
|
%
|
|
19.9
|
%
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
27.6
|
%
|
|
32.3
|
%
|
|
27.5
|
%
|
|
25.1
|
%
|
|
24.1
|
%
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except
per Unit amounts,
unaudited)
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
Net Income -
Diluted, GAAP basis
|
$
|
62,274
|
|
|
$
|
80,041
|
|
|
$
|
59,845
|
|
|
$
|
52,293
|
|
|
$
|
46,465
|
|
|
$
|
59,951
|
|
|
Impact on net income
of AB non-GAAP
adjustments
|
326
|
|
|
1,234
|
|
|
512
|
|
|
1,234
|
|
|
462
|
|
|
1,000
|
|
|
Adjusted Net
Income - Diluted
|
$
|
62,600
|
|
|
$
|
81,275
|
|
|
$
|
60,357
|
|
|
$
|
53,527
|
|
|
$
|
46,927
|
|
|
$
|
60,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP
basis
|
$
|
0.63
|
|
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
|
$
|
0.63
|
|
|
Impact of AB non-GAAP
adjustments
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
Adjusted Diluted
Net Income per Holding
Unit
|
$
|
0.64
|
|
|
$
|
0.85
|
|
|
$
|
0.63
|
|
|
$
|
0.56
|
|
|
$
|
0.49
|
|
|
$
|
0.64
|
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Net Revenue, as adjusted, is reduced to exclude all of the
company's distribution revenues, which are recorded as a separate
line item on the consolidated statement of income, as well as a
portion of investment advisory services fees received that is used
to pay distribution and servicing costs. For certain products,
based on the distinct arrangements, certain distribution fees are
collected by us and passed-through to third-party client
intermediaries, while for certain other products, we collect
investment advisory services fees and a portion is passed-through
to third-party client intermediaries. In both arrangements, the
third-party client intermediary owns the relationship with the
client and is responsible for performing services and distributing
the product to the client on our behalf. We believe offsetting
distribution revenues and certain investment advisory services fees
is useful for our investors and other users of our financial
statements because such presentation appropriately reflects the
nature of these costs as pass-through payments to third parties
that perform functions on behalf of our sponsored mutual funds
and/or shareholders of these funds. Distribution-related
adjustments fluctuate each period based on the type of investment
products sold, as well as the average AUM over the period. Also, we
adjust distribution revenues for the amortization of deferred sales
commissions as these costs, over time, will offset such
revenues.
Lastly, we adjust investment advisory and services fees and
other revenues for pass through costs, primarily related to our
transfer agent and shareholder servicing fees. These fees do not
affect operating income, but they do affect our operating margin.
As such, we exclude these fees from adjusted net revenues.
We adjust for the revenue impact of consolidating
company-sponsored investment funds by eliminating the consolidated
company-sponsored investment funds' revenues and including AB's
fees from such consolidated company-sponsored investment funds and
AB's investment gains and losses on its investments in such
consolidated company-sponsored investment funds that were
eliminated in consolidation.
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments.
Lastly, we wrote-down an investment which had been received in
exchange for the sale of software technology; the first quarter
2020 write-down brought the investment balance to zero.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2)
acquisition-related expenses, (3) the impact on net revenues and
compensation expense of the investment gains and losses (as well as
the dividends and interest) associated with employee long-term
incentive compensation-related investments, (4) our CEO's EQH award
compensation, as discussed below, (5) the impact of
consolidated company-sponsored investment funds, (6) the write-down
of an investment, and (7) adjustments to contingent payment
arrangements.
Real estate charges (credits) incurred have been excluded
because they are not considered part of our core operating results
when comparing financial results from period to period and to
industry peers. However, beginning in the fourth quarter of 2019,
real estate charges (credits), while excluded in the period in
which the charges (credits) are recorded, are included ratably over
the remaining applicable lease term.
Acquisition-related expenses have been excluded because they are
not considered part of our core operating results when comparing
financial results from period to period and to industry peers.
Prior to 2009, a significant portion of employee compensation
was in the form of long-term incentive compensation awards that
were notionally invested in AB investment services and generally
vested over a period of four years. AB economically hedged the
exposure to market movements by purchasing and holding these
investments on its balance sheet. All such investments had vested
as of year-end 2012 and the investments have been delivered to the
participants, except for those investments with respect to which
the participant elected a long-term deferral. Fluctuation in the
value of these investments is recorded within investment gains and
losses on the income statement and also impacts compensation
expense. Management believes it is useful to reflect the offset
achieved from economically hedging the market exposure of these
investments in the calculation of adjusted operating income and
adjusted operating margin. The non-GAAP measures exclude gains and
losses and dividends and interest on employee long-term incentive
compensation-related investments included in revenues and
compensation expense.
The board of directors of EQH granted to Seth P. Bernstein ("CEO") equity awards in
connection with EQH's IPO and Mr. Bernstein's membership on the EQH
Management Committee. Mr. Bernstein may receive additional equity
or cash compensation from EQH in the future related to his service
on the Management Committee. Any awards granted to Mr. Bernstein by
EQH are recorded as compensation expense in AB's consolidated
statement of income. The compensation expense associated with these
awards has been excluded from our non-GAAP measures because they
are non-cash and are based upon EQH's, and not AB's, financial
performance.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored funds' revenues and expenses and
including AB's revenues and expenses that were eliminated in
consolidation. We also excluded the limited partner interests we do
not own.
The write-down of the investment has been excluded due to their
non-recurring nature and because they are not part of our core
operating results.
The recording of changes in estimates of contingent
consideration payable with respect to contingent payment
arrangements associated with our acquisitions are not considered
part of our core operating results and, accordingly, have been
excluded.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period without the
volatility noted above in our discussion of adjusted operating
income and to compare our performance to industry peers on a
basis that better reflects our performance in our core business.
Adjusted operating margin is derived by dividing adjusted operating
income by adjusted net revenues.
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SOURCE AllianceBernstein