"The year got off to a strong start, as global equity markets rallied in the first quarter and fixed income momentum continued around the world," said
(US $ Thousands except per Unit amounts) |
1Q 2017 |
1Q 2016 |
1Q 2017 vs 1Q 2016 % Change |
4Q 2016 |
1Q 2017 vs 4Q 2016 % Change |
||||||||||||
U.S. GAAP Financial Measures |
|||||||||||||||||
Net revenues |
$ |
764,917 |
$ |
769,126 |
(0.5)% |
$ |
786,256 |
(2.7%) |
|||||||||
Operating income |
$ |
166,312 |
$ |
173,042 |
(3.9)% |
$ |
222,239 |
(25.2%) |
|||||||||
Operating margin |
19.6 |
% |
23.2 |
% |
(360 bps) |
27.4 |
% |
(780 bps) |
|||||||||
AB Holding Diluted EPU (1) |
$ |
0.46 |
$ |
0.55 |
(16.4)% |
$ |
0.77 |
(40.3%) |
|||||||||
Adjusted Financial Measures (2) |
|||||||||||||||||
Net revenues |
$ |
623,772 |
$ |
590,066 |
5.7 |
% |
$ |
661,969 |
(5.8%) |
||||||||
Operating income |
$ |
150,584 |
$ |
132,066 |
14.0 |
% |
$ |
208,863 |
(27.9%) |
||||||||
Operating margin |
24.1 |
% |
22.4 |
% |
170 bps |
31.6 |
% |
(750 bps) |
|||||||||
AB Holding Diluted EPU (3) |
$ |
0.46 |
$ |
0.39 |
17.9 |
% |
$ |
0.67 |
(31.3%) |
||||||||
AB Holding cash distribution per Unit |
$ |
0.46 |
$ |
0.40 |
15.0 |
% |
$ |
0.67 |
(31.3%) |
||||||||
(US $ Billions) |
|||||||||||||||||
Assets Under Management |
|||||||||||||||||
Ending AUM |
$ |
497.9 |
$ |
479.0 |
4.0 |
% |
$ |
480.2 |
3.7 |
% |
|||||||
Average AUM |
$ |
491.2 |
$ |
465.4 |
5.5 |
% |
$ |
482.9 |
1.7 |
% |
|||||||
(1) |
The GAAP AB Holding Diluted EPU has been revised for 1Q16. |
(2) |
The adjusted financial measures are all non-GAAP financial measures. See page 13 for reconciliations of GAAP Financial Results to Adjusted Financial Results and pages 14-15 for notes describing the adjustments. |
(3) |
The Adjusted AB Holding Diluted EPU has been revised for 1Q16. |
Kraus continued: "The work we've done over the past several years to bolster our investment performance; broaden and diversify our business through innovation in product development and distribution; and strengthen our financial position are increasingly paying off today. Our long-term track records in both fixed income and equities are exceptional, and we feel well positioned in the current environment. In our Institutions channel, while overall client activity remains low, we're seeing more traction with our newer, relevant offerings. One major consultant recently upgraded our Global Concentrated and Global Core equities services to their highest rating. And two of our largest pipeline additions during the quarter were Commercial Real Estate Debt and Customized Multi-Asset, with combined commitments of
Kraus concluded: "Finally, I'm very pleased that, in such a difficult growth environment, we were able to achieve year-over-year quarterly increases in every key adjusted operating metric: revenues, operating income, margin and earnings and distribution per unit. We're as committed as ever to growing our business while keeping expenses in check, and I'm proud of the job we're doing so far in 2017."
The firm's cash distribution per unit of
Market Performance
US and global equity and fixed income markets were higher in the first quarter. The
Assets Under Management ($ Billions)
Total assets under management as of
Institutions |
Retail |
Private Wealth |
Total |
||||
Assets Under Management 3/31/17 |
$244.9 |
$168.9 |
$84.1 |
$497.9 |
|||
Net Flows for Three Months Ended 3/31/17 |
$(1.9) |
$1.6 |
$0.1 |
$(0.2) |
Total net outflows were
Net outflows from the Institutions channel were
The Retail channel experienced first quarter 2017 net inflows of
In the Private Wealth channel, net inflows of
First Quarter Financial Results
We are presenting both earnings information derived in accordance with accounting principles generally accepted in
Revision
During the third quarter of 2016, management determined that the frequency with which we settle our U.S. inter-company payable balances with foreign subsidiaries over the past several years created deemed dividends under Section 956 of the U.S. Internal Revenue Code of 1986, as amended ("Section 956"). In the past, we funded our foreign subsidiaries as they required cash for their operations rather than pre-fund them each quarter, thereby reducing the inter-company balance to zero on a quarterly basis, as required by Section 956. As a result, we have been understating our income tax provision and income tax liability since 2010. We evaluated the aggregate effects of this error in our income tax provision and income tax liability to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, have determined that the error was not material to our previously issued financial statements. However, the cumulative effect of this error would be material to our third quarter 2016 financial results if recorded as an out-of-period adjustment in the third quarter of 2016. Accordingly, we have revised our previously issued financial statements that are included in our First Quarter 2017 Form 10-Q and this Earnings Release. See page 11 for a summary of the impact of the revisions to net income attributable to AB Unitholders, diluted net income per Holding Unit (GAAP basis) and adjusted diluted net income per Holding Unit.
US GAAP Earnings
Net revenues of
Operating expenses were
On a sequential basis, operating expenses were up 6% due to higher total employee compensation and benefits and G&A expenses partially offset by lower promotion and servicing expense. The increase in total employee compensation and benefits expenses was due to higher incentive compensation, commissions and fringes, partially offset by lower base compensation. Within G&A, the increase was driven by higher professional fees and expenses related to our consolidated company-sponsored investment funds. Additionally, in the first quarter of 2017 there was a de minimus non-cash real estate credit compared to a
Operating income of
Diluted net income per Unit for the first quarter of 2017 was
Non-GAAP Earnings
This section discusses our first quarter 2017 non-GAAP financial results, as compared to the first quarter of 2016 and the fourth quarter of 2016. 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.
Adjusted net revenues of
Adjusted operating expenses were
Sequentially, adjusted operating expenses were up 4%, driven by higher total employee compensation and benefits and G&A expenses, partially offset by lower promotion and servicing expense. The sequential increase in total employee compensation and benefits expenses was driven by higher incentive compensation, commissions and fringes, partially offset by lower base compensation. Within G&A, the increase was driven by higher professional fees and other miscellaneous expenses. The sequential decrease in promotion and servicing was driven by lower marketing and travel and entertainment expenses.
Adjusted operating income of
Adjusted diluted net income per Unit was
Headcount
As of
Unit Repurchases
During the three months ended
First Quarter 2017 Earnings Conference Call Information
Management will review first quarter 2017 financial and operating results during a conference call beginning at
Parties may access the conference call by either webcast or telephone:
- To listen by webcast, please visit AB's Investor Relations website at http://abglobal.com/corporate/investor-relations/home.htm 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 4071366.
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 2017 financial and operating results on April 27, 2017.
AB will be providing live updates via Twitter during the conference call. To access the tweets, follow AB on Twitter: @AB_insights. Also, in the future, AB may provide public disclosures to investors via Twitter and other appropriate internet-based social media.
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 #: 4071366.
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, competitive conditions, and current and proposed 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
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.
- The possibility that AB will engage in open market purchases of Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of
Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards is dependent upon various factors, some of which are beyond our control, including the fluctuation in the price of a Holding Unit and the availability of cash to make these purchases. - The fluctuation of our effective tax rate: Our effective tax rate fluctuates based on the mix of our earnings across our tax filing group, which includes our U.S. partnership, our U.S. corporate subsidiaries and our corporate subsidiaries operating in various non-U.S. jurisdictions, and the differences between the tax rates in the U.S and the other jurisdictions where we conduct business.
Qualified Tax Notice
This announcement is intended to be a qualified notice under Treasury Regulation §1.1446-4(b). Please note that 100% of
About AB
AB 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
Additional information about AB may be found on our website, www.abglobal.com.
AB (The Operating Partnership) |
|||||||||||||||||
US GAAP Consolidated Statement of Income (Unaudited) |
|||||||||||||||||
(US $ Thousands) |
1Q 2017 |
1Q 2016 |
1Q 2017 vs. |
4Q 2016 |
1Q 2017 vs. |
||||||||||||
GAAP revenues: |
|||||||||||||||||
Base fees |
$ |
492,176 |
$ |
450,791 |
9.2 |
% |
$ |
486,469 |
1.2 |
% |
|||||||
Performance fees |
6,114 |
622 |
883.0 |
% |
29,147 |
(79.0%) |
|||||||||||
Bernstein research services |
112,741 |
126,465 |
(10.9%) |
127,472 |
(11.6%) |
||||||||||||
Distribution revenues |
96,554 |
92,692 |
4.2 |
% |
96,766 |
(0.2%) |
|||||||||||
Dividends and interest |
14,056 |
10,073 |
39.5 |
% |
16,812 |
(16.4%) |
|||||||||||
Investments gains (losses) |
25,201 |
65,587 |
(61.6%) |
7,883 |
219.7 |
% |
|||||||||||
Other revenues |
22,365 |
24,971 |
(10.4%) |
24,815 |
(9.9%) |
||||||||||||
Total revenues |
769,207 |
771,201 |
(0.3%) |
789,364 |
(2.6%) |
||||||||||||
Less: interest expense |
4,290 |
2,075 |
106.7 |
% |
3,108 |
38.0 |
% |
||||||||||
Total net revenues |
764,917 |
769,126 |
(0.5%) |
786,256 |
(2.7%) |
||||||||||||
GAAP operating expenses: |
|||||||||||||||||
Employee compensation and benefits |
321,748 |
302,011 |
6.5 |
% |
301,723 |
6.6 |
% |
||||||||||
Promotion and servicing |
|||||||||||||||||
Distribution-related payments |
96,367 |
87,127 |
10.6 |
% |
95,419 |
1.0 |
% |
||||||||||
Amortization of deferred sales commissions |
9,079 |
11,242 |
(19.2%) |
9,460 |
(4.0%) |
||||||||||||
Trade execution, marketing, T&E and other |
48,214 |
54,201 |
(11.0%) |
51,776 |
(6.9%) |
||||||||||||
General and administrative |
|||||||||||||||||
General & administrative |
114,221 |
105,923 |
7.8 |
% |
103,964 |
9.9 |
% |
||||||||||
Real estate (credits) charges |
(2) |
27,586 |
n/m |
(6,942) |
(100.0%) |
||||||||||||
Contingent payment arrangements |
177 |
353 |
(49.9%) |
178 |
(0.6%) |
||||||||||||
Interest on borrowings |
1,868 |
1,232 |
51.6 |
% |
1,472 |
26.9 |
% |
||||||||||
Amortization of intangible assets |
6,933 |
6,409 |
8.2 |
% |
6,967 |
(0.5%) |
|||||||||||
Total operating expenses |
598,605 |
596,084 |
0.4 |
% |
564,017 |
6.1 |
% |
||||||||||
Operating income |
166,312 |
173,042 |
(3.9%) |
222,239 |
(25.2%) |
||||||||||||
Income taxes (1) |
10,057 |
12,506 |
(19.6%) |
(8,996) |
n/m |
||||||||||||
Net income (1) |
156,255 |
160,536 |
(2.7%) |
231,235 |
(32.4%) |
||||||||||||
Net income (loss) of consolidated entities attributable to non-controlling interests |
16,318 |
(5,748) |
n/m |
6,697 |
143.7 |
% |
|||||||||||
Net income attributable to AB Unitholders (1) |
$ |
139,937 |
$ |
166,284 |
(15.8%) |
$ |
224,538 |
(37.7%) |
|||||||||
(1) The income taxes, net income and net income attributable to AB Unitholders have been revised for 1Q16. |
|||||||||||||||||
AB Holding L.P. (The Publicly-Traded Partnership) |
|||||||||||||||||
SUMMARY STATEMENTS OF INCOME |
|||||||||||||||||
(US $ Thousands) |
1Q 2017 |
Revised |
1Q 2017 vs. |
4Q 2016 |
1Q 2017 vs. |
||||||||||||
Equity in Net Income Attributable to AB Unitholders (2) |
$ |
49,666 |
$ |
60,177 |
(17.5%) |
$ |
78,630 |
(36.8%) |
|||||||||
Income Taxes |
5,756 |
5,585 |
3.1 |
% |
5,966 |
(3.5%) |
|||||||||||
Net Income (2) |
43,910 |
54,592 |
(19.6%) |
72,664 |
(39.6%) |
||||||||||||
Additional Equity in Earnings of Operating Partnership (1) (2) |
176 |
153 |
15.0 |
% |
299 |
(41.1%) |
|||||||||||
Net Income - Diluted (2) |
$ |
44,086 |
$ |
54,745 |
(19.5%) |
$ |
72,963 |
(39.6%) |
|||||||||
Diluted Net Income per Unit (2) |
$ |
0.46 |
$ |
0.55 |
(16.4%) |
$ |
0.77 |
(40.3%) |
|||||||||
Distribution per Unit |
$ |
0.46 |
$ |
0.40 |
15.0 |
% |
$ |
0.67 |
(31.3%) |
||||||||
(1) To reflect higher ownership in the Operating Partnership resulting from application of the treasury stock method to outstanding options. |
|||||||||||||||||
(2) The equity in net income attributable to AB Unitholders, net income, additional equity in earnings of operating partnership, net income-diluted and diluted net income per unit have been revised for 1Q16. |
|||||||||||||||||
Units Outstanding |
1Q 2017 |
1Q 2016 |
1Q 2017 vs. |
4Q 2016 |
1Q 2017 vs. |
||||||||||||
AB L.P. |
|||||||||||||||||
Period-end |
268,714,548 |
270,638,334 |
(0.7%) |
268,893,534 |
(0.1%) |
||||||||||||
Weighted average - basic |
268,479,768 |
271,853,243 |
(1.2%) |
266,665,011 |
0.7 |
% |
|||||||||||
Weighted average - diluted |
269,013,395 |
272,253,490 |
(1.2%) |
267,221,192 |
0.7 |
% |
|||||||||||
AB Holding L.P. |
|||||||||||||||||
Period-end |
96,473,204 |
98,381,192 |
(1.9%) |
96,652,190 |
(0.2%) |
||||||||||||
Weighted average - basic |
96,238,424 |
99,595,925 |
(3.4%) |
94,423,093 |
1.9 |
% |
|||||||||||
Weighted average - diluted |
96,772,051 |
99,996,172 |
(3.2%) |
94,979,274 |
1.9 |
% |
Revisions |
|||||||||||||||||||||||||
2Q16 |
1Q16 |
4Q15 |
3Q15 |
2Q15 |
1Q15 |
||||||||||||||||||||
AB (The Operating Partnership) |
|||||||||||||||||||||||||
Net income attributable to AB Unitholders |
|||||||||||||||||||||||||
Previously reported |
$ |
127,144 |
$ |
168,926 |
$ |
161,063 |
$ |
134,976 |
$ |
149,094 |
$ |
141,469 |
|||||||||||||
Adjustment |
(2,643) |
(2,642) |
(1,669) |
(1,668) |
(1,669) |
(1,669) |
|||||||||||||||||||
Revised |
$ |
124,501 |
$ |
166,284 |
$ |
159,394 |
$ |
133,308 |
$ |
147,425 |
$ |
139,800 |
|||||||||||||
AB Holding L.P. (The Publicly-Traded Partnership) |
|||||||||||||||||||||||||
Diluted net income per Holding Unit, GAAP basis |
|||||||||||||||||||||||||
Previously reported |
$ |
0.41 |
$ |
0.56 |
$ |
0.53 |
$ |
0.43 |
$ |
0.48 |
$ |
0.45 |
|||||||||||||
Adjustment |
(0.01) |
(0.01) |
(0.01) |
(0.01) |
(0.01) |
— |
|||||||||||||||||||
Revised |
$ |
0.40 |
$ |
0.55 |
$ |
0.52 |
$ |
0.42 |
$ |
0.47 |
$ |
0.45 |
|||||||||||||
Adjusted diluted net income per Holding Unit |
|||||||||||||||||||||||||
Previously reported |
$ |
0.40 |
$ |
0.40 |
$ |
0.50 |
$ |
0.43 |
$ |
0.48 |
$ |
0.45 |
|||||||||||||
Adjustment |
(0.01) |
(0.01) |
— |
— |
(0.01) |
(0.01) |
|||||||||||||||||||
Revised |
$ |
0.39 |
$ |
0.39 |
$ |
0.50 |
$ |
0.43 |
$ |
0.47 |
$ |
0.44 |
AllianceBernstein L.P. |
|||||||||||||||||||||||||||
ASSETS UNDER MANAGEMENT | March 31, 2017 |
|||||||||||||||||||||||||||
($ billions) |
|||||||||||||||||||||||||||
Ending and Average |
Three Months Ended |
||||||||||||||||||||||||||
3/31/17 |
3/31/16 |
||||||||||||||||||||||||||
Ending Assets Under Management |
$497.9 |
$479.0 |
|||||||||||||||||||||||||
Average Assets Under Management |
$491.2 |
$465.4 |
|||||||||||||||||||||||||
Three-Month Changes By Distribution Channel |
|||||||||||||||||||||||||||
Institutions |
Retail |
Private Wealth |
Total |
||||||||||||||||||||||||
Beginning of Period |
$ |
239.3 |
$ |
160.2 |
$ |
80.7 |
$ |
480.2 |
|||||||||||||||||||
Sales/New accounts |
2.5 |
13.5 |
3.0 |
19.0 |
|||||||||||||||||||||||
Redemption/Terminations |
(5.4) |
(10.2) |
(2.8) |
(18.4) |
|||||||||||||||||||||||
Net Cash Flows |
1.0 |
(1.7) |
(0.1) |
(0.8) |
|||||||||||||||||||||||
Net Flows |
(1.9) |
1.6 |
0.1 |
(0.2) |
|||||||||||||||||||||||
Investment Performance |
7.5 |
7.1 |
3.3 |
17.9 |
|||||||||||||||||||||||
End of Period |
$ |
244.9 |
$ |
168.9 |
$ |
84.1 |
$ |
497.9 |
|||||||||||||||||||
Three-Month Changes By Investment Service |
|||||||||||||||||||||||||||
Equity |
Equity |
Fixed |
Fixed |
Fixed |
Other (2) |
Total |
|||||||||||||||||||||
Beginning of Period |
$ |
111.9 |
$ |
48.1 |
$ |
220.9 |
$ |
36.9 |
$ |
11.1 |
$ |
51.3 |
$ |
480.2 |
|||||||||||||
Sales/New accounts |
4.9 |
0.4 |
11.2 |
2.0 |
— |
0.5 |
19.0 |
||||||||||||||||||||
Redemption/Terminations |
(4.8) |
(1.0) |
(9.9) |
(1.7) |
(0.1) |
(0.9) |
(18.4) |
||||||||||||||||||||
Net Cash Flows |
(0.8) |
(1.4) |
1.4 |
— |
(0.1) |
0.1 |
(0.8) |
||||||||||||||||||||
Net Flows |
(0.7) |
(2.0) |
2.7 |
0.3 |
(0.2) |
(0.3) |
(0.2) |
||||||||||||||||||||
Investment Performance |
7.6 |
2.8 |
4.5 |
0.6 |
0.2 |
2.2 |
17.9 |
||||||||||||||||||||
End of Period |
$ |
118.8 |
$ |
48.9 |
$ |
228.1 |
$ |
37.8 |
$ |
11.1 |
$ |
53.2 |
$ |
497.9 |
|||||||||||||
(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 |
$ |
141.4 |
$ |
99.0 |
$ |
82.1 |
$ |
322.5 |
|||||||||||||||||||
Non-U.S. Clients |
103.5 |
69.9 |
2.0 |
175.4 |
|||||||||||||||||||||||
Total |
$ |
244.9 |
$ |
168.9 |
$ |
84.1 |
$ |
497.9 |
AB L.P. |
|||||||||||||||||||||||||||
RECONCILIATION OF GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS |
|||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||
US $ Thousands, unaudited |
3/31/2017 |
12/31/2016 |
9/30/2016 |
6/30/2016 |
3/31/2016 |
12/31/2015 |
|||||||||||||||||||||
Net Revenues, GAAP basis |
$ |
764,917 |
$ |
786,256 |
$ |
747,591 |
$ |
725,806 |
$ |
769,126 |
$ |
726,726 |
|||||||||||||||
Exclude: |
|||||||||||||||||||||||||||
Long-term incentive compensation-related investment (gains) losses |
(2,979) |
846 |
(2,556) |
(791) |
1,326 |
(583) |
|||||||||||||||||||||
Long-term incentive compensation-related dividends and interest |
(158) |
(1,212) |
(142) |
(142) |
(151) |
(1,521) |
|||||||||||||||||||||
Distribution-related payments |
(96,367) |
(95,419) |
(95,844) |
(93,217) |
(87,127) |
(93,379) |
|||||||||||||||||||||
Amortization of deferred sales commissions |
(9,079) |
(9,460) |
(9,787) |
(10,577) |
(11,242) |
(11,673) |
|||||||||||||||||||||
Pass-through fees & expenses |
(10,407) |
(10,682) |
(9,768) |
(11,708) |
(11,651) |
(11,639) |
|||||||||||||||||||||
Gain on sale of investment carried at cost |
— |
— |
— |
— |
(75,273) |
— |
|||||||||||||||||||||
Impact of consolidated company-sponsored investment funds |
(22,155) |
(8,360) |
(16,114) |
(5,472) |
5,058 |
(1,560) |
|||||||||||||||||||||
Adjusted Net Revenues |
$ |
623,772 |
$ |
661,969 |
$ |
613,380 |
$ |
603,899 |
$ |
590,066 |
$ |
606,371 |
|||||||||||||||
Operating Income, GAAP basis |
$ |
166,312 |
$ |
222,239 |
$ |
185,309 |
$ |
142,575 |
$ |
173,042 |
$ |
170,913 |
|||||||||||||||
Exclude: |
|||||||||||||||||||||||||||
Long-term incentive compensation-related items |
68 |
(252) |
363 |
(354) |
963 |
(238) |
|||||||||||||||||||||
Gain on sale of investment carried at cost |
— |
— |
— |
— |
(75,273) |
— |
|||||||||||||||||||||
Real estate (credits) charges |
(2) |
(6,941) |
(140) |
(2,801) |
27,586 |
(221) |
|||||||||||||||||||||
Acquisition-related expenses |
524 |
514 |
303 |
239 |
— |
— |
|||||||||||||||||||||
Contingent payment arrangements |
— |
— |
(21,483) |
— |
— |
(7,212) |
|||||||||||||||||||||
Sub-total of non-GAAP adjustments |
590 |
(6,679) |
(20,957) |
(2,916) |
(46,724) |
(7,671) |
|||||||||||||||||||||
Less: Net (loss) income of consolidated entities attributable to non-controlling interests |
16,318 |
6,697 |
15,696 |
4,843 |
(5,748) |
1,496 |
|||||||||||||||||||||
Adjusted Operating Income |
$ |
150,584 |
$ |
208,863 |
$ |
148,656 |
$ |
134,816 |
$ |
132,066 |
$ |
161,746 |
|||||||||||||||
Operating Margin, GAAP basis excl. non-controlling interests |
19.6 |
% |
27.4 |
% |
22.7 |
% |
19.0 |
% |
23.2 |
% |
23.3 |
% |
|||||||||||||||
Adjusted Operating Margin |
24.1 |
% |
31.6 |
% |
24.2 |
% |
22.3 |
% |
22.4 |
% |
26.7 |
% |
|||||||||||||||
AB Holding L.P. |
|||||||||||||||||||||||||||
RECONCILIATION OF GAAP EPU TO ADJUSTED EPU |
|||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||
$ Thousands except per Unit amounts, unaudited |
3/31/2017 |
12/31/2016 |
9/30/2016 |
6/30/2016 |
3/31/2016 |
12/31/2015 |
|||||||||||||||||||||
Net Income - Diluted, GAAP basis |
$ |
44,086 |
$ |
72,963 |
$ |
50,479 |
$ |
39,261 |
$ |
54,745 |
$ |
51,394 |
|||||||||||||||
Impact on net income of AB non-GAAP adjustments |
197 |
(9,761) |
(6,953) |
(949) |
(15,686) |
(2,578) |
|||||||||||||||||||||
Adjusted Net Income - Diluted |
$ |
44,283 |
$ |
63,202 |
$ |
43,526 |
$ |
38,312 |
$ |
39,059 |
$ |
48,816 |
|||||||||||||||
Diluted Net Income per Holding Unit, GAAP basis |
$ |
0.46 |
$ |
0.77 |
$ |
0.52 |
$ |
0.40 |
$ |
0.55 |
$ |
0.52 |
|||||||||||||||
Impact of AB non-GAAP adjustments |
— |
(0.10) |
(0.07) |
(0.01) |
(0.16) |
(0.02) |
|||||||||||||||||||||
Adjusted Diluted Net Income per Holding Unit |
$ |
0.46 |
$ |
0.67 |
$ |
0.45 |
$ |
0.39 |
$ |
0.39 |
$ |
0.50 |
AB
Notes to Consolidated Statements of Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. In addition, adjusted net revenues offset distribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues. We believe offsetting net revenues by distribution-related payments 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 who perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. We offset amortization of deferred sales commissions against net revenues because such costs, over time, essentially offset our distribution revenues. We also exclude additional pass-through expenses we incur (primarily through our transfer agency) that are reimbursed and recorded as fees in revenues. 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. In addition, in the first quarter of 2016 we excluded a realized gain of
Adjusted Operating Income
Adjusted operating income represents operating income on a US GAAP basis excluding (1) 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, (2) the gain on the sale of our investment in Jasper, (3) real estate charges (credits), (4) acquisition-related expenses, (5) adjustments to contingent payment arrangements, and (6) the impact of consolidated company-sponsored investment funds.
Prior to 2009, a significant portion of employee compensation was in the form of employee 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 distributed 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.
A realized gain on the liquidation of our Jasper investment has been excluded due to its non-recurring nature and because it is not part of our core operating results.
Real estate charges (credits) 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.
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 the 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 investment 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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-first-quarter-results-300447086.html
SOURCE AB
Andrea Prochniak, Investors, 212.756.4542, andrea.prochniak@abglobal.com; Jonathan Freedman, Media, 212.823.2687, jonathan.freedman@abglobal.com