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Artisan Partners (APAM) Q3 Earnings Lag Estimates, AUM Falls
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Artisan Partners Asset Management Inc.’s (APAM - Free Report) third-quarter 2022 adjusted net income per adjusted share was 70 cents, missing the Zacks Consensus Estimate of 71 cents. The bottom line declined from $1.33 in the year-ago quarter.Our estimate for third-quarter adjusted net income per adjusted share was 78 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. Lower expenses alleviated the bottom-line pressure.
Net income attributable to Artisan Partners (GAAP basis) was $44.2 million, down from $86.4 million in the prior year.
Revenues Fall, Expenses Reduce
Third-quarter revenues were $234.3 million, down 26% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $239.8 million.Our estimate for total revenues was $250.1 million.
Management fees earned from the Artisan Funds & Artisan Global Funds fell 26.5% year over year to $146.4 million. Management fees earned from Separate accounts declined 25% to $87.8 million.
Total operating expenses amounted to $155.6 million, down 10% 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 $78.7 million, down 45% year over year.
AUM Falls
As of Sep 30, 2022, the ending AUM was $120.6 billion, down 7.6% from the earlier quarter due to global market declines.
The average AUM totaled $132.9 billion, down 8% from the prior quarter.
Balance Sheet Position Deteriorates
Cash and cash equivalents were $168.1 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 Sep 30, 2022.
Capital Deployment Update
The company’s board of directors declared a variable third-quarter dividend of 56 cents per share of Class A common stock. The amount will be paid out on Nov 30, 2022, to shareholders of record as of the close of business on Nov 16.
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.
Artisan Partners Asset Management Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and AUM balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results have been adversely impacted by a lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.
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Artisan Partners (APAM) Q3 Earnings Lag Estimates, AUM Falls
Artisan Partners Asset Management Inc.’s (APAM - Free Report) third-quarter 2022 adjusted net income per adjusted share was 70 cents, missing the Zacks Consensus Estimate of 71 cents. The bottom line declined from $1.33 in the year-ago quarter.Our estimate for third-quarter adjusted net income per adjusted share was 78 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. Lower expenses alleviated the bottom-line pressure.
Net income attributable to Artisan Partners (GAAP basis) was $44.2 million, down from $86.4 million in the prior year.
Revenues Fall, Expenses Reduce
Third-quarter revenues were $234.3 million, down 26% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $239.8 million.Our estimate for total revenues was $250.1 million.
Management fees earned from the Artisan Funds & Artisan Global Funds fell 26.5% year over year to $146.4 million. Management fees earned from Separate accounts declined 25% to $87.8 million.
Total operating expenses amounted to $155.6 million, down 10% 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 $78.7 million, down 45% year over year.
AUM Falls
As of Sep 30, 2022, the ending AUM was $120.6 billion, down 7.6% from the earlier quarter due to global market declines.
The average AUM totaled $132.9 billion, down 8% from the prior quarter.
Balance Sheet Position Deteriorates
Cash and cash equivalents were $168.1 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 Sep 30, 2022.
Capital Deployment Update
The company’s board of directors declared a variable third-quarter dividend of 56 cents per share of Class A common stock. The amount will be paid out on Nov 30, 2022, to shareholders of record as of the close of business on Nov 16.
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.
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 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) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and AUM balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results have been adversely impacted by a lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.