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Artisan Partners (APAM) Q2 Earnings Lag Estimates, AUM Falls

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Artisan Partners Asset Management Inc.’s (APAM - Free Report) second-quarter 2022 adjusted net income per adjusted share was 79 cents, missing the Zacks Consensus Estimate of 84 cents. The bottom line declined from $1.28 in the year-ago quarter. Our estimate for second-quarter adjusted net income per adjusted share was 92 cents.

Lower management fees earned from Separate accounts and the Artisan Funds & Artisan Global Funds weighed on the overall top line. Lower assets under management (AUM) on global market declines was another undermining factor.

Net income attributable to Artisan Partners (GAAP basis) was $44.3 million, down from $88.2 million in the prior year.

Revenues Fall, Expenses Reduce

Second-quarter revenues were $251.4 million, down 18% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $264.5 million. Our estimate for total revenues was $279.9 million.

Management fees earned from the Artisan Funds & Artisan Global Funds fell 17% year over year to $156.6 million. Management fees earned from Separate accounts declined 15.5% to $94.7 million.

Total operating expenses amounted to $163 million, down 2.5% year over year. The fall was primarily due to lower compensation and benefits, partially offset by higher occupancy, and general and administrative expenses.

The operating income was $88.4 million, down 35.9% year over year.

AUM Falls

As of Jun 30, 2022, the ending AUM was $130.5 billion, down 18% from the earlier quarter due to global market declines.

The average AUM totaled $143.9 billion, down 11% from the prior quarter.

Balance Sheet Position Deteriorates

Cash and cash equivalents were $150.7 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 0.4 as of Jun 30, 2022.

Capital Deployment Update

The company’s board of directors declared a variable second-quarter dividend of 60 cents per share of Class A common stock. The amount will be paid out on Aug 31, 2022, to shareholders of record as of the close of business on Aug 17.

Our View

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. Any increase in incentive compensation and third-party distribution expenses to support growth prospects will inflate costs and limit the bottom line.

Currently, Artisan Partners carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Performance of Other Asset Managers

BlackRock, Inc.’s (BLK - Free Report) second-quarter 2022 adjusted earnings of $7.36 per share missed the Zacks Consensus Estimate of $8.33. The figure reflects a decrease of 30% from the year-ago quarter.

BLK’s results were adversely impacted by an unfavorable operating backdrop, leading to lower revenues and AUM balance. A modest decline in expenses was a tailwind.

SEI Investments Co.’s (SEIC - Free Report) second-quarter 2022 earnings of 81 cents per share lagged the Zacks Consensus Estimate by a penny. The bottom line reflects a decline of 12.9% from the prior-year quarter.

SEIC’s results were hurt by a rise in expenses. However, growth in revenues and an increase in AUM balance were tailwinds.

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