NEW YORK, Oct. 22, 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 September 30,
2020.
"The firm delivered strong financial results in an improving,
though still uncertain economic and market environment," said
Seth P. Bernstein, President and CEO
of AllianceBernstein. "Earnings and cash distributions to
Unitholders grew year-over-year and sequentially, and we generated
net inflows in all three client channels. Active net inflows
of $7.3 billion represented a 5%
annualized organic growth rate, excluding low-fee AXA redemptions
of $2.2 billion. Sales and net
inflows of active equities remained robust in both Retail and
Institutional, and our Private Client channel generated sales
growth and net inflows. Our fixed income strategies outperformed
peers in the quarter, as credit sectors strengthened. We expanded
operating margins and drove double-digit earnings growth both
year-over-year and sequentially."
(US $ Thousands
except per Unit amounts)
|
3Q
2020
|
|
3Q
2019
|
|
%
Change
|
|
2Q
2020
|
|
%
Change
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
900,038
|
|
|
$
|
877,867
|
|
|
2.5
|
%
|
|
$
|
871,449
|
|
|
3.3
|
%
|
Operating
income
|
$
|
217,146
|
|
|
$
|
202,783
|
|
|
7.1
|
%
|
|
$
|
209,647
|
|
|
3.6
|
%
|
Operating
margin
|
24.1
|
%
|
|
22.6
|
%
|
|
150 bps
|
|
21.7
|
%
|
|
240 bps
|
AB Holding Diluted
EPU
|
$
|
0.70
|
|
|
$
|
0.62
|
|
|
12.9
|
%
|
|
$
|
0.59
|
|
|
18.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
726,997
|
|
|
$
|
726,709
|
|
|
—
|
%
|
|
$
|
698,725
|
|
|
4.0
|
%
|
Operating
income
|
$
|
216,225
|
|
|
$
|
199,928
|
|
|
8.2
|
%
|
|
$
|
195,013
|
|
|
10.9
|
%
|
Operating
margin
|
29.7
|
%
|
|
27.5
|
%
|
|
220 bps
|
|
27.9
|
%
|
|
180 bps
|
AB Holding Diluted
EPU
|
$
|
0.69
|
|
|
$
|
0.63
|
|
|
9.5
|
%
|
|
$
|
0.61
|
|
|
13.1
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.69
|
|
|
$
|
0.63
|
|
|
9.5
|
%
|
|
$
|
0.61
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management ("AUM")
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
630.8
|
|
|
$
|
592.4
|
|
|
6.5
|
%
|
|
$
|
600.0
|
|
|
5.1
|
%
|
Average
AUM
|
$
|
624.3
|
|
|
$
|
586.3
|
|
|
6.5
|
%
|
|
$
|
578.5
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
Bernstein continued, "In Retail, we generated net inflows
despite gross sales normalizing following record prior periods.
Active equities grew 8% organically, with inflows of $1.7 billion, positive for the 14th straight
quarter. In Institutional, net flows were positive led by a 14%
active equity organic growth rate. Our institutional pipeline of
$16.9 billion continued to reflect
strong alternatives and active equity participation, in addition to
growth in multi-asset (CRS) strategies. In Private Wealth, improved
sales and net inflows reflected fundings from a diverse client
pipeline. Bernstein Research revenues declined versus both prior
periods, as higher retail participation led to lower institutional
trading volumes and market volatility declined from this year's
second quarter. Our adjusted operating margin of 29.7% was up
220 basis points year-over-year and 180 basis points
sequentially."
Bernstein concluded, "Our firm saw solid AUM growth in the third
quarter, with global equity and fixed income markets both providing
returns in the mid-to-high single digits. Looking forward, we
remain ever-focused on client needs, aware that volatility could
return given the continued global effects of the COVID-19
pandemic. Our colleagues around the world have proven their
resiliency in the face of recent circumstances, strengthening the
foundation of our firm. We move forward with confidence in
our ability to continue to deliver for our clients."
The firm's cash distribution per Unit of $0.69 is payable on November 12, 2020, to
holders of record of AB Holding Units at the close of business on
November 2, 2020.
Market Performance
U.S. and global equity and fixed income markets were up in the
third quarter extending a broad-based recovery from steep declines
experienced during the first quarter.
|
|
S&P 500 Total
Return
|
8.9
|
%
|
MSCI EAFE Total
Return
|
4.9
|
%
|
Bloomberg Barclays US
Aggregate Return
|
0.6
|
%
|
Bloomberg Barclays
Global Aggregate ex US Index Return
|
4.1
|
%
|
Bloomberg Barclays
Global High Yield Index
|
4.3
|
%
|
Bloomberg Barclays
U.S. Corporate High Yield Index
|
4.6
|
%
|
Assets Under Management
($ Billions)
Total assets under management as of September 30, 2020 were
$630.8 billion, up $30.8 billion, or 5%, from June 30, 2020 and
up $38.4 billion, or 7%, from
September 30, 2019.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 9/30/2020
|
$289.5
|
|
$242.9
|
|
$98.4
|
|
$630.8
|
Net Flows for Three
Months Ended 9/30/2020:
|
|
|
|
|
|
|
|
Active
|
$3.2
|
|
$1.7
|
|
$0.2
|
|
$5.1
|
Passive
|
(1.1)
|
|
(1.0)
|
|
0.1
|
|
(2.0)
|
Total
|
$2.1
|
|
$0.7
|
|
$0.3
|
|
$3.1
|
Total net inflows were $3.1
billion in the third quarter, compared to net outflows of
$3.3 billion in the second quarter of
2020, and net inflows of $8.1 billion
in the prior year third quarter. Excluding AXA redemptions of
low-fee fixed income mandates of $2.2
billion in the third quarter and $7.9
billion in the second quarter, the firm generated net
inflows of $5.3 billion in the third
quarter and net inflows of $4.6
billion in the second quarter of 2020.
Institutional channel third quarter net inflows of $2.1 billion compared to net outflows of
$6.4 billion in the second quarter of
2020. Institutional gross sales of $8.3
billion decreased sequentially from $8.8 billion. The pipeline of awarded but
unfunded Institutional mandates remained strong at $16.9 billion at September 30, 2020, as
compared with $17.5 billion at
June 30, 2020.
Retail channel third quarter net inflows of $0.7 billion compared to net inflows of
$3.8 billion in the second quarter of
2020. Retail gross sales of $17.5
billion decreased sequentially from $19.6 billion.
Private Wealth channel third quarter net inflows of $0.3 billion compared to net outflows of
$0.7 billion in the second quarter of
2020. Private Wealth gross sales of $3.5
billion increased sequentially from $3.4 billion.
Our ending AUM at September 30, 2020 reflects $11.1 billion in outflows resulting from AXA
S.A.'s redemption of certain low-fee fixed income mandates, of
which $2.2 billion was redeemed
during the third quarter. We expect these redemptions to total
approximately $14 billion, with the
remaining redemptions expected to be completed by the end of the
first quarter of 2021. The revenue we earn from the management of
these assets is not significant.
Third 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
Third quarter net revenues of $900
million increased 3% from $878
million in the third quarter of 2019. Higher distribution
revenues and investment advisory fees were partially offset by
lower net dividend and interest income, Bernstein Research revenues
and investment gains.
Sequentially, net revenues of $900
million increased from $871
million. Higher investment advisory fees and distribution
revenues were partially offset by lower investment gains, Bernstein
Research revenues and performance-based fees.
Third quarter Bernstein Research revenues of $99 million decreased 3% compared to the prior
year third quarter and decreased 13% sequentially. The decrease
from prior year was due to reduced customer trading volumes in the
U.S. and Europe, partially offset
by growth in Asia. The sequential
decrease was due to lower customer trading activity in the U.S. and
Europe.
Expenses
Third quarter operating expenses of $683
million increased 1% from $675
million in the third quarter of 2019. Higher promotion and
servicing expenses were partially offset by lower total employee
compensation and benefits expense. Promotion and servicing expenses
increased due to higher distribution related payments and
amortization of deferred sales commissions, partially offset by
lower travel and entertainment and marketing expenses. Employee
compensation and benefits expense decreased due to lower fringes,
commissions and recruitment costs, partially offset by higher
incentive compensation.
Sequentially, operating expenses increased 3% from $662 million. Higher promotion and servicing
expenses and total employee compensation and benefits expense were
partially offset by lower real estate charges and general and
administrative ("G&A") expenses. Promotion and servicing
expenses increased due to higher distribution related payments,
partially offset by lower trade execution costs. Within employee
compensation and benefits expense, higher commissions and base
compensation were partially offset by lower incentive compensation.
Within G&A, the decrease was driven by lower technology costs
and office-related expense, partially offset by higher professional
fees.
Operating Income and Net Income Per Unit
Third quarter operating income of $217
million increased 7% from $203
million in the third quarter of 2019 and the operating
margin of 24.1% in the third quarter of 2020 increased 150 basis
points from 22.6% in the third quarter of 2019.
Sequentially, operating income increased 4% from $210 million in the second quarter of 2020 and
the operating margin of 24.1% increased 240 basis points from 21.7%
in the second quarter of 2020.
Third quarter diluted net income per Unit was $0.70 compared to $0.62 in the third quarter of 2019 and
$0.59 in the second quarter of
2020.
Non-GAAP Earnings
This section discusses our third quarter 2020 non-GAAP financial
results, compared to the third quarter of 2019 and the second
quarter of 2020. 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
Third quarter adjusted net revenues of $727 million were flat from the third quarter of
2019. Higher investment advisory fees were partially offset by
investment losses compared to investment gains in the prior year
and lower Bernstein Research revenues.
Sequentially, adjusted net revenues increased 4% from
$699 million. Higher investment
advisory base fees were partially offset by lower Bernstein
Research revenues, investment losses compared to investment gains
in the prior period and lower performance-based fees.
Expenses
Third quarter adjusted operating expenses of $511 million decreased 3% from $527 million in the third quarter of 2019, driven
by lower promotion and servicing expenses, total employee
compensation and benefits and interest on borrowings, partially
offset by higher G&A expenses. Promotion and servicing expenses
decreased due to lower travel and entertainment expense and
marketing expense. Within employee compensation and benefits
expense, lower fringes, commissions and recruitment costs were
partially offset by higher base compensation and incentive
compensation. Within G&A, the increase was driven by higher
other taxes, an unfavorable foreign exchange translation impact and
higher technology expense. G&A included the write-off of
one-time legal fees incurred for products which will not be
launched. Excluding these legal fees, G&A would have
increased by less than 2%.
Sequentially, adjusted operating expenses increased 1% from
$504 million. Higher total employee
compensation and benefits expense was partially offset by lower
promotion and servicing and G&A expenses. Employee compensation
and benefits expense increased due to higher commissions, base
compensation and incentive compensation, partially offset by lower
fringes. Within promotion and servicing expenses, the decrease was
driven by lower trade execution costs. Within G&A, the decrease
is attributable to lower technology and office-related expenses,
partially offset by higher professional fees.
Operating Income, Margin and Net Income Per Unit
Third quarter adjusted operating income of $216 million increased 8% from $200 million in the third quarter of 2019, and
the adjusted operating margin of 29.7% increased 220 basis points
from 27.5%.
Sequentially, adjusted operating income of $216 increased 11% from $195 million and the adjusted operating margin of
29.7% in the third quarter of 2020 increased 180 basis points from
27.9%.
Third quarter adjusted diluted net income per Unit of
$0.69 was up from $0.63 in the third quarter of 2019 and up from
$0.61 in the second quarter of
2020.
Headcount
As of September 30, 2020, we had 3,869 employees, compared
to 3,778 employees as of September 30, 2019 and 3,825 as of
June 30, 2020.
Unit Repurchases
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(in
millions)
|
Total amount of AB
Holding Units Purchased (1)
|
|
0.3
|
|
|
0.9
|
|
|
2.5
|
|
|
2.9
|
|
Total Cash Paid for
AB Holding Units Purchased (1)
|
|
$
|
6.8
|
|
|
$
|
25.1
|
|
|
$
|
54.4
|
|
|
$
|
83.7
|
|
Open Market Purchases
of AB Holding Units Purchased (2)
|
|
0.2
|
|
|
0.6
|
|
|
2.4
|
|
|
2.5
|
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (2)
|
|
$
|
6.7
|
|
|
$
|
15.3
|
|
|
$
|
51.8
|
|
|
$
|
70.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Purchased on a trade date basis.
(2)
The remainder related to purchases of AB Holding Units from
employees to fulfill statutory tax withholding requirements at the
time of delivery of long-term incentive compensation
awards.
|
Third Quarter 2020 Earnings Conference Call
Information
Management will review Third Quarter 2020 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Thursday,
October 22, 2020. The conference call will be hosted by
Seth P. Bernstein, President and
Chief Executive Officer, Ali Dibadj,
Head of Finance and Strategy, John C.
Weisenseel, Chief Financial Officer, and Kate Burke, Chief Operating 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 (833) 495-0952 in the U.S.
or (409) 216-0498 outside the U.S. 10 minutes before the scheduled
start time. The conference ID# is 5360089.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Third Quarter 2020 financial and
operating results on October 22, 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 #: 5360089.
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 September 30, 2020, including both the general
partnership and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 35.5% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 65.3% 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)
|
3Q
2020
|
|
3Q
2019
|
|
%
Change
|
|
2Q
2020
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
623,593
|
|
|
$
|
608,765
|
|
|
2.4
|
%
|
|
$
|
569,296
|
|
|
9.5
|
%
|
Performance
fees
|
6,946
|
|
|
7,619
|
|
|
(8.8)
|
|
|
8,907
|
|
|
(22.0)
|
|
Bernstein research
services
|
98,514
|
|
|
102,014
|
|
|
(3.4)
|
|
|
113,609
|
|
|
(13.3)
|
|
Distribution
revenues
|
135,693
|
|
|
118,635
|
|
|
14.4
|
|
|
120,099
|
|
|
13.0
|
|
Dividends and
interest
|
9,070
|
|
|
24,882
|
|
|
(63.5)
|
|
|
12,692
|
|
|
(28.5)
|
|
Investments gains
(losses)
|
1,106
|
|
|
4,433
|
|
|
(75.1)
|
|
|
24,189
|
|
|
(95.4)
|
|
Other
revenues
|
26,583
|
|
|
24,497
|
|
|
8.5
|
|
|
26,092
|
|
|
1.9
|
|
Total
revenues
|
901,505
|
|
|
890,845
|
|
|
1.2
|
|
|
874,884
|
|
|
3.0
|
|
Less: interest
expense
|
1,467
|
|
|
12,978
|
|
|
(88.7)
|
|
|
3,435
|
|
|
(57.3)
|
|
Total net
revenues
|
900,038
|
|
|
877,867
|
|
|
2.5
|
|
|
871,449
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
357,821
|
|
|
361,822
|
|
|
(1.1)
|
|
|
349,638
|
|
|
2.3
|
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
148,380
|
|
|
127,726
|
|
|
16.2
|
|
|
125,678
|
|
|
18.1
|
|
Amortization of
deferred sales commissions
|
7,434
|
|
|
3,605
|
|
|
106.2
|
|
|
6,622
|
|
|
12.3
|
|
Trade execution,
marketing, T&E and other
|
41,220
|
|
|
53,814
|
|
|
(23.4)
|
|
|
44,288
|
|
|
(6.9)
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
119,318
|
|
|
117,056
|
|
|
1.9
|
|
|
121,424
|
|
|
(1.7)
|
|
Real
estate charges
|
—
|
|
|
153
|
|
|
(100.0)
|
|
|
5,526
|
|
|
(100.0)
|
|
Contingent payment
arrangements
|
813
|
|
|
829
|
|
|
(1.9)
|
|
|
807
|
|
|
0.7
|
|
Interest on
borrowings
|
1,073
|
|
|
2,802
|
|
|
(61.7)
|
|
|
1,096
|
|
|
(2.1)
|
|
Amortization of
intangible assets
|
6,833
|
|
|
7,277
|
|
|
(6.1)
|
|
|
6,723
|
|
|
1.6
|
|
Total operating
expenses
|
682,892
|
|
|
675,084
|
|
|
1.2
|
|
|
661,802
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
217,146
|
|
|
202,783
|
|
|
7.1
|
|
|
209,647
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
9,089
|
|
|
10,827
|
|
|
(16.1)
|
|
|
11,386
|
|
|
(20.2)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
208,057
|
|
|
191,956
|
|
|
8.4
|
|
|
198,261
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) of consolidated entities attributable to non-controlling
interests
|
81
|
|
|
4,145
|
|
|
(98.0)
|
|
|
20,940
|
|
|
(99.6)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
207,976
|
|
|
$
|
187,811
|
|
|
10.7
|
|
|
$
|
177,321
|
|
|
17.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
3Q
2020
|
|
3Q
2019
|
|
%
Change
|
|
2Q
2020
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
73,874
|
|
|
$
|
66,722
|
|
|
10.7
|
%
|
|
$
|
63,201
|
|
|
16.9
|
%
|
Income
Taxes
|
6,875
|
|
|
6,894
|
|
|
(0.3)
|
|
|
6,275
|
|
|
9.6
|
|
Net
Income
|
66,999
|
|
|
59,828
|
|
|
12.0
|
|
|
56,926
|
|
|
17.7
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
14
|
|
|
17
|
|
|
(17.6)
|
%
|
|
3
|
|
|
n/m
|
|
Net Income -
Diluted
|
$
|
67,013
|
|
|
$
|
59,845
|
|
|
12.0
|
|
|
$
|
56,929
|
|
|
17.7
|
|
Diluted Net Income
per Unit
|
$
|
0.70
|
|
|
$
|
0.62
|
|
|
12.9
|
|
|
$
|
0.59
|
|
|
18.6
|
|
Distribution per
Unit
|
$
|
0.69
|
|
|
$
|
0.63
|
|
|
9.5
|
|
|
$
|
0.61
|
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
Units
Outstanding
|
3Q
2020
|
|
3Q
2019
|
|
%
Change
|
|
2Q
2020
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
268,362,084
|
|
|
268,182,957
|
|
|
0.1
|
%
|
|
268,620,187
|
|
|
(0.1)
|
%
|
Weighted average -
basic
|
268,537,856
|
|
|
268,567,071
|
|
|
—
|
%
|
|
269,080,676
|
|
|
(0.2)
|
|
Weighted average -
diluted
|
268,564,862
|
|
|
268,603,472
|
|
|
—
|
%
|
|
269,090,125
|
|
|
(0.2)
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
96,174,568
|
|
|
95,991,941
|
|
|
0.2
|
%
|
|
96,431,971
|
|
|
(0.3)
|
%
|
Weighted average -
basic
|
96,349,686
|
|
|
96,375,961
|
|
|
—
|
%
|
|
96,892,460
|
|
|
(0.6)
|
|
Weighted average -
diluted
|
96,376,692
|
|
|
96,412,362
|
|
|
—
|
%
|
|
96,901,909
|
|
|
(0.5)
|
|
AllianceBernstein
L.P.
|
|
|
|
ASSETS UNDER
MANAGEMENT | September 30, 2020
|
|
|
|
($
Billions)
|
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
9/30/20
|
|
9/30/19
|
|
Ending Assets Under
Management
|
$630.8
|
|
$592.4
|
|
Average Assets Under
Management
|
$624.3
|
|
$586.3
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
276.2
|
|
|
$
|
229.5
|
|
|
$
|
94.3
|
|
|
$
|
600.0
|
|
|
Sales/New
accounts
|
8.3
|
|
|
17.5
|
|
|
3.5
|
|
|
29.3
|
|
|
Redemption/Terminations
|
(5.7)
|
|
|
(14.3)
|
|
|
(3.2)
|
|
|
(23.2)
|
|
|
Net Cash
Flows
|
(0.5)
|
|
|
(2.5)
|
|
|
—
|
|
|
(3.0)
|
|
|
Net
Flows
|
2.1
|
|
|
0.7
|
|
|
0.3
|
|
|
3.1
|
|
|
Transfers
|
0.6
|
|
|
—
|
|
|
(0.6)
|
|
|
—
|
|
|
Investment
Performance
|
10.6
|
|
|
12.7
|
|
|
4.4
|
|
|
27.7
|
|
|
End of
Period
|
$
|
289.5
|
|
|
$
|
242.9
|
|
|
$
|
98.4
|
|
|
$
|
630.8
|
|
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
|
$
|
173.1
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
47.1
|
|
|
$
|
9.9
|
|
|
$
|
67.7
|
|
|
$
|
600.0
|
|
|
Sales/New
accounts
|
12.0
|
|
|
1.2
|
|
|
11.0
|
|
|
2.2
|
|
|
—
|
|
|
2.9
|
|
|
29.3
|
|
|
Redemption/Terminations
|
(8.8)
|
|
|
(1.7)
|
|
|
(10.4)
|
|
|
(1.6)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(23.2)
|
|
|
Net Cash
Flows
|
(1.0)
|
|
|
(0.5)
|
|
|
(0.8)
|
|
|
0.2
|
|
|
(1.0)
|
|
|
0.1
|
|
|
(3.0)
|
|
|
Net
Flows
|
2.2
|
|
|
(1.0)
|
|
|
(0.2)
|
|
|
0.8
|
|
|
(1.1)
|
|
|
2.4
|
|
|
3.1
|
|
|
Investment
Performance
|
13.5
|
|
|
4.2
|
|
|
5.6
|
|
|
0.8
|
|
|
0.2
|
|
|
3.4
|
|
|
27.7
|
|
|
End of
Period
|
$
|
188.8
|
|
|
$
|
57.5
|
|
|
$
|
253.3
|
|
|
$
|
48.7
|
|
|
$
|
9.0
|
|
|
$
|
73.5
|
|
|
$
|
630.8
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
2.2
|
|
|
(1.0)
|
|
|
$
|
1.2
|
|
|
|
Fixed
Income
|
0.6
|
|
|
(1.1)
|
|
|
(0.5)
|
|
|
|
Other
(2)
|
2.3
|
|
|
0.1
|
|
|
2.4
|
|
|
|
Total
|
$
|
5.1
|
|
|
$
|
(2.0)
|
|
|
$
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
$
|
198.6
|
|
|
$
|
132.3
|
|
|
$
|
96.3
|
|
|
$
|
427.2
|
|
|
Non-U.S.
Clients
|
90.9
|
|
|
110.6
|
|
|
2.1
|
|
|
203.6
|
|
|
Total
|
$
|
289.5
|
|
|
$
|
242.9
|
|
|
$
|
98.4
|
|
|
$
|
630.8
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
9/30/2020
|
|
6/30/2020
|
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
900,038
|
|
|
$
|
871,449
|
|
|
$
|
874,156
|
|
|
$
|
987,304
|
|
|
$
|
877,867
|
|
|
$
|
857,799
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(135,693)
|
|
|
(120,099)
|
|
|
(130,857)
|
|
|
(127,553)
|
|
|
(118,635)
|
|
|
(108,347)
|
|
|
|
Investment advisory
services fees
|
(20,120)
|
|
|
(12,202)
|
|
|
(14,814)
|
|
|
(15,120)
|
|
|
(12,696)
|
|
|
(11,148)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(3,888)
|
|
|
(3,331)
|
|
|
(7,062)
|
|
|
(6,717)
|
|
|
(5,119)
|
|
|
(4,356)
|
|
|
|
Other
revenues
|
(9,344)
|
|
|
(10,195)
|
|
|
(9,607)
|
|
|
(9,436)
|
|
|
(9,571)
|
|
|
(9,160)
|
|
|
|
Impact of
consolidated company-sponsored investment funds
|
(765)
|
|
|
(21,552)
|
|
|
24,135
|
|
|
(8,567)
|
|
|
(4,820)
|
|
|
(8,697)
|
|
|
|
Long-term incentive
compensation-related investment (gains) losses
|
(3,140)
|
|
|
(5,257)
|
|
|
7,099
|
|
|
(1,457)
|
|
|
(189)
|
|
|
(1,389)
|
|
|
|
Long-term incentive
compensation-related dividends and interest
|
(91)
|
|
|
(88)
|
|
|
(106)
|
|
|
(997)
|
|
|
(128)
|
|
|
(136)
|
|
|
|
Write-down of
investment
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted Net
Revenues
|
|
$
|
726,997
|
|
|
$
|
698,725
|
|
|
$
|
743,803
|
|
|
$
|
817,457
|
|
|
$
|
726,709
|
|
|
$
|
714,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
217,146
|
|
|
$
|
209,647
|
|
|
$
|
178,223
|
|
|
$
|
268,283
|
|
|
$
|
202,783
|
|
|
$
|
184,220
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate
|
(985)
|
|
|
5,188
|
|
|
(339)
|
|
|
2,623
|
|
|
—
|
|
|
—
|
|
|
|
Long-term incentive
compensation-related items
|
(416)
|
|
|
104
|
|
|
566
|
|
|
66
|
|
|
517
|
|
|
277
|
|
|
|
CEO's EQH award
compensation
|
205
|
|
|
209
|
|
|
184
|
|
|
217
|
|
|
217
|
|
|
227
|
|
|
|
Write-down of
investment
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Acquisition-related
expenses
|
356
|
|
|
805
|
|
|
526
|
|
|
3,459
|
|
|
556
|
|
|
2,718
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,051)
|
|
|
—
|
|
|
—
|
|
|
|
|
Sub-total of non-GAAP
adjustments
|
(840)
|
|
|
6,306
|
|
|
1,796
|
|
|
3,314
|
|
|
1,290
|
|
|
3,222
|
|
|
|
Less: Net income
(loss) of consolidated entities attributable to non-controlling
interests
|
81
|
|
|
20,940
|
|
|
(25,571)
|
|
|
7,623
|
|
|
4,145
|
|
|
7,757
|
|
|
Adjusted Operating
Income
|
$
|
216,225
|
|
|
$
|
195,013
|
|
|
$
|
205,590
|
|
|
$
|
263,974
|
|
|
$
|
199,928
|
|
|
$
|
179,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
24.1
|
%
|
|
21.7
|
%
|
|
23.3
|
%
|
|
26.4
|
%
|
|
22.6
|
%
|
|
20.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
29.7
|
%
|
|
27.9
|
%
|
|
27.6
|
%
|
|
32.3
|
%
|
|
27.5
|
%
|
|
25.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except
per Unit amounts, unaudited)
|
9/30/2020
|
|
6/30/2020
|
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
Net Income -
Diluted, GAAP basis
|
$
|
67,013
|
|
|
$
|
56,929
|
|
|
$
|
62,274
|
|
|
$
|
80,041
|
|
|
$
|
59,845
|
|
|
$
|
52,293
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
(289)
|
|
|
2,533
|
|
|
326
|
|
|
1,234
|
|
|
512
|
|
|
1,234
|
|
|
Adjusted Net
Income - Diluted
|
$
|
66,724
|
|
|
$
|
59,462
|
|
|
$
|
62,600
|
|
|
$
|
81,275
|
|
|
$
|
60,357
|
|
|
$
|
53,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.70
|
|
|
$
|
0.59
|
|
|
$
|
0.63
|
|
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
0.54
|
|
|
Impact of AB non-GAAP
adjustments
|
(0.01)
|
|
|
0.02
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.69
|
|
|
$
|
0.61
|
|
|
$
|
0.64
|
|
|
$
|
0.85
|
|
|
$
|
0.63
|
|
|
$
|
0.56
|
|
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.
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.
Also, adjusted net revenues exclude investment gains and losses
and dividends and interest on employee long-term incentive
compensation-related investments.
Lastly, during the first quarter of 2020, we wrote-down an
investment that had been received in exchange for the sale of
software technology; the write-down brought the investment balance
to zero. Previously, we had been excluding the value of this
investment from adjusted net revenues.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2) 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,
(3) our CEO's EQH award compensation, as discussed below,
(4) the write-down of an investment, (5) acquisition-related
expenses, (6) adjustments to contingent payment arrangements, and
(7) the impact of consolidated company-sponsored investment
funds.
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.
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. 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.
The write-down of the investment in the first quarter of 2020
has been excluded due to its non-recurring nature and because it is
not part of our core operating results.
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.
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.
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.
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.
View original
content:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-third-quarter-results-301157434.html
SOURCE AllianceBernstein