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Affiliated Managers' (AMG) Q1 Earnings Beat, Revenues Fall
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Affiliated Managers Group Inc.’s (AMG - Free Report) first-quarter 2020 economic earnings of $3.16 per share surpassed the Zacks Consensus Estimate of $3.14. However, the bottom line declined 3.1% year over year.
The results reflect lower operating expenses and a robust liquidity position. However, lower revenues, fall in assets under management (AUM) balance and decline in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were the undermining factors.
Economic net income was $151.3 million, down 10.5% from the prior-year quarter.
Revenues & AUM Down, Expenses Fall
Total revenues fell 6.6% year over year to $507.3 million. However, the top line beat the Zacks Consensus Estimate of $483.7 million.
Adjusted EBITDA was $200.4 million, down 7.1% from the year-ago quarter.
Total expenses decreased 8.6% from the prior-year quarter to $354.3 million. Decline in compensation and related expenses, selling, general and administrative costs, and intangible amortization and impairments primarily led to the fall.
As of Mar 31, 2020, total AUM was $599.9 billion, down 22.5% year over year. Net client cash outflows of $13.8 billion hurt AUM.
Capital & Liquidity Position Decent
As of Mar 31, 2020, Affiliated Managers had $592.2 million in cash and cash equivalents compared with $539.6 million as of Dec 31, 2019. The company had $2 billion of debt, up 14% from the Dec 31, 2019 level.
Shareholders’ equity as of Dec 31, 2019 was $3 billion, up from $2.9 billion on Dec 31, 2019.
Capital Deployment Updates
During the first quarter, the company repurchased shares worth $70 million. Moreover, through 2020, it intends to reallocate $50 million capital toward buybacks in place of dividend payments.
In sync with this, Affiliated Managers announced second-quarter cash dividend payment of 1 cent per share. The company had paid out a dividend of 32 cents per share in the prior quarter. The new dividend will be paid on May 21 to shareholders of record as of May 7.
Our Take
Affiliated Managers is well positioned for growth, based on successful partnerships and global distribution capability, along with a diverse product mix. However, muted revenue growth and decline in AUM balance remain major concerns.
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise
Invesco (IVZ - Free Report) reported first-quarter 2020 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 56 cents. Also, the bottom line declined 39.3% from the prior-year quarter.
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago reported number.
Cohen & Steers’ (CNS - Free Report) first-quarter 2020 adjusted earnings of 61 cents per share missed the Zacks Consensus Estimate of 66 cents. However, the bottom line was 5.2% higher than the year-ago reported figure.
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Affiliated Managers' (AMG) Q1 Earnings Beat, Revenues Fall
Affiliated Managers Group Inc.’s (AMG - Free Report) first-quarter 2020 economic earnings of $3.16 per share surpassed the Zacks Consensus Estimate of $3.14. However, the bottom line declined 3.1% year over year.
The results reflect lower operating expenses and a robust liquidity position. However, lower revenues, fall in assets under management (AUM) balance and decline in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were the undermining factors.
Economic net income was $151.3 million, down 10.5% from the prior-year quarter.
Revenues & AUM Down, Expenses Fall
Total revenues fell 6.6% year over year to $507.3 million. However, the top line beat the Zacks Consensus Estimate of $483.7 million.
Adjusted EBITDA was $200.4 million, down 7.1% from the year-ago quarter.
Total expenses decreased 8.6% from the prior-year quarter to $354.3 million. Decline in compensation and related expenses, selling, general and administrative costs, and intangible amortization and impairments primarily led to the fall.
As of Mar 31, 2020, total AUM was $599.9 billion, down 22.5% year over year. Net client cash outflows of $13.8 billion hurt AUM.
Capital & Liquidity Position Decent
As of Mar 31, 2020, Affiliated Managers had $592.2 million in cash and cash equivalents compared with $539.6 million as of Dec 31, 2019. The company had $2 billion of debt, up 14% from the Dec 31, 2019 level.
Shareholders’ equity as of Dec 31, 2019 was $3 billion, up from $2.9 billion on Dec 31, 2019.
Capital Deployment Updates
During the first quarter, the company repurchased shares worth $70 million. Moreover, through 2020, it intends to reallocate $50 million capital toward buybacks in place of dividend payments.
In sync with this, Affiliated Managers announced second-quarter cash dividend payment of 1 cent per share. The company had paid out a dividend of 32 cents per share in the prior quarter. The new dividend will be paid on May 21 to shareholders of record as of May 7.
Our Take
Affiliated Managers is well positioned for growth, based on successful partnerships and global distribution capability, along with a diverse product mix. However, muted revenue growth and decline in AUM balance remain major concerns.
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise
Affiliated Managers Group, Inc. price-consensus-eps-surprise-chart | Affiliated Managers Group, Inc. Quote
Affiliated Managers currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Invesco (IVZ - Free Report) reported first-quarter 2020 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 56 cents. Also, the bottom line declined 39.3% from the prior-year quarter.
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago reported number.
Cohen & Steers’ (CNS - Free Report) first-quarter 2020 adjusted earnings of 61 cents per share missed the Zacks Consensus Estimate of 66 cents. However, the bottom line was 5.2% higher than the year-ago reported figure.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>