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Artisan Partners (APAM) Up on Q4 Earnings Beat, AUM Falls
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Shares of Artisan Partners Asset Management Inc. (APAM - Free Report) gained 1.7% in after-hours trading following the release of its fourth-quarter and full-year 2022 results. Quarterly adjusted net income per adjusted share was 65 cents, beating the Zacks Consensus Estimate of 62 cents. The bottom line, however, plunged 50% year over year. Our estimate for adjusted net income per adjusted share was 60 cents.
Results benefited from lower expenses. However, a decline in management fees weighed on revenue growth. Also, lower assets under management (AUM) on a challenging operating backdrop was an undermining factor.
Net income attributable to Artisan Partners (GAAP basis) was $52.9 million, down from $84.6 million in the prior-year quarter.
In 2022, adjusted net income per adjusted share was $3.11, beating the Zacks Consensus Estimate of $3.08 but declining 38% year over year. We had projected this metric to be $3.07 for 2022. Net income attributable to Artisan Partners (GAAP basis) was $206.8 million, down from $336.5 million in 2021.
Revenues & Expenses Down
Fourth-quarter revenues were $226 million, down 28% from the year-ago quarter. The top line, however, marginally beat the Zacks Consensus Estimate of $225.9 million. Our estimate for total revenues was $226.9 million.
In 2022, revenues fell 19% to $1 billion. The top line, nonetheless, surpassed the consensus estimate of $993.2 million. Our estimate for total revenues was $994.2 million.
Management fees earned from the Artisan Funds & Artisan Global Funds fell 30% year over year to $138.5 million. Management fees earned from Separate accounts declined 25% to $87.3 million.
Total operating expenses amounted to $156 million, down 12%. The fall was primarily due to lower compensation and benefits and distribution, servicing and marketing costs. We had projected operating expenses of $159.9 million.
The operating income was $70 million, down 49% year over year.
Cash and cash equivalents were $114.8 million compared with $189.2 million as of Dec 31, 2021. The company’s debt leverage ratio, calculated in accordance with its loan agreements, was 0.5 as of Dec 31, 2022.
AUM Balance Dips
As of Dec 31, 2022, the ending AUM was $127.9 billion, down 27% from the previous quarter, mainly due to global market declines and net client cash outflows.
The average AUM totaled $127.4 billion, down 28% from the prior quarter.
Dividend Update
The company’s board of directors declared a variable fourth-quarter dividend of 55 cents per share of Class A common stock and a special dividend of 35 cents per share. The total amount will be paid out on Feb 28 to shareholders of record as on Feb 14.
Our Take
A challenging operating backdrop and several geopolitical concerns might reduce the company’s AUM in the upcoming period. A volatile trend in net outflows over the past years keeps us apprehensive.
However, a manageable expense level and decent liquidity position will support financials. Also, diverse investment strategies across multiple asset classes and investments in new teams and operational capabilities are likely to drive revenues in the upcoming period.
Artisan Partners Asset Management Inc. Price, Consensus and EPS Surprise
Invesco’s (IVZ - Free Report) fourth-quarter 2022 adjusted earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 54.7% from the prior-year quarter. Our estimate for earnings was 33 cents.
IVZ’s results benefited from a decline in operating expenses. However, lower AUM balance and long-term outflows hurt revenues.
Franklin Resources Inc.’s (BEN - Free Report) first-quarter fiscal 2023 (ended Dec 31) adjusted earnings of 51 cents per share lagged the Zacks Consensus Estimate of 54 cents. The bottom line declined 53% from the prior-year quarter. Our estimate for earnings was 52 cents.
BEN’s results have been hurt by a decline in revenues and higher expenses. A fall in AUM was another major drag. Nevertheless, the company’s balance sheet remained robust in the quarter under review.
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Artisan Partners (APAM) Up on Q4 Earnings Beat, AUM Falls
Shares of Artisan Partners Asset Management Inc. (APAM - Free Report) gained 1.7% in after-hours trading following the release of its fourth-quarter and full-year 2022 results. Quarterly adjusted net income per adjusted share was 65 cents, beating the Zacks Consensus Estimate of 62 cents. The bottom line, however, plunged 50% year over year. Our estimate for adjusted net income per adjusted share was 60 cents.
Results benefited from lower expenses. However, a decline in management fees weighed on revenue growth. Also, lower assets under management (AUM) on a challenging operating backdrop was an undermining factor.
Net income attributable to Artisan Partners (GAAP basis) was $52.9 million, down from $84.6 million in the prior-year quarter.
In 2022, adjusted net income per adjusted share was $3.11, beating the Zacks Consensus Estimate of $3.08 but declining 38% year over year. We had projected this metric to be $3.07 for 2022. Net income attributable to Artisan Partners (GAAP basis) was $206.8 million, down from $336.5 million in 2021.
Revenues & Expenses Down
Fourth-quarter revenues were $226 million, down 28% from the year-ago quarter. The top line, however, marginally beat the Zacks Consensus Estimate of $225.9 million. Our estimate for total revenues was $226.9 million.
In 2022, revenues fell 19% to $1 billion. The top line, nonetheless, surpassed the consensus estimate of $993.2 million. Our estimate for total revenues was $994.2 million.
Management fees earned from the Artisan Funds & Artisan Global Funds fell 30% year over year to $138.5 million. Management fees earned from Separate accounts declined 25% to $87.3 million.
Total operating expenses amounted to $156 million, down 12%. The fall was primarily due to lower compensation and benefits and distribution, servicing and marketing costs. We had projected operating expenses of $159.9 million.
The operating income was $70 million, down 49% year over year.
Cash and cash equivalents were $114.8 million compared with $189.2 million as of Dec 31, 2021. The company’s debt leverage ratio, calculated in accordance with its loan agreements, was 0.5 as of Dec 31, 2022.
AUM Balance Dips
As of Dec 31, 2022, the ending AUM was $127.9 billion, down 27% from the previous quarter, mainly due to global market declines and net client cash outflows.
The average AUM totaled $127.4 billion, down 28% from the prior quarter.
Dividend Update
The company’s board of directors declared a variable fourth-quarter dividend of 55 cents per share of Class A common stock and a special dividend of 35 cents per share. The total amount will be paid out on Feb 28 to shareholders of record as on Feb 14.
Our Take
A challenging operating backdrop and several geopolitical concerns might reduce the company’s AUM in the upcoming period. A volatile trend in net outflows over the past years keeps us apprehensive.
However, a manageable expense level and decent liquidity position will support financials. Also, diverse investment strategies across multiple asset classes and investments in new teams and operational capabilities are likely to drive revenues in the upcoming period.
Artisan Partners Asset Management Inc. Price, Consensus and EPS Surprise
Artisan Partners Asset Management Inc. price-consensus-eps-surprise-chart | Artisan Partners Asset Management Inc. Quote
Currently, Artisan Partners sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Asset Managers
Invesco’s (IVZ - Free Report) fourth-quarter 2022 adjusted earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 54.7% from the prior-year quarter. Our estimate for earnings was 33 cents.
IVZ’s results benefited from a decline in operating expenses. However, lower AUM balance and long-term outflows hurt revenues.
Franklin Resources Inc.’s (BEN - Free Report) first-quarter fiscal 2023 (ended Dec 31) adjusted earnings of 51 cents per share lagged the Zacks Consensus Estimate of 54 cents. The bottom line declined 53% from the prior-year quarter. Our estimate for earnings was 52 cents.
BEN’s results have been hurt by a decline in revenues and higher expenses. A fall in AUM was another major drag. Nevertheless, the company’s balance sheet remained robust in the quarter under review.