NEW YORK, April 25, 2019 /PRNewswire/ -- AllianceBernstein
L.P. ("AB") and AllianceBernstein Holding L.P. ("AB Holding")
(NYSE: AB) today reported financial and operating results for the
quarter ended March 31, 2019.
"Our first quarter results reflect continued underlying momentum
in many areas of our business," said Seth
P. Bernstein, President and CEO of AllianceBernstein. "Total
firmwide net inflows of $1.1 billion
were positive for a third straight quarter and were driven by
$2.2 billion of active net inflows,
translating to a 2% active annualized organic growth rate."
(US $ Thousands
except per Unit amounts)
|
1Q
2019
|
|
1Q
2018
|
|
1Q 2019
vs 1Q
2018 %
Change
|
|
4Q
2018
|
|
1Q 2019
vs. 4Q
2018 %
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
795,462
|
|
|
$
|
867,787
|
|
|
(8.3)
|
%
|
|
$
|
804,660
|
|
|
(1.1)
|
%
|
Operating
income
|
$
|
168,151
|
|
|
$
|
222,671
|
|
|
(24.5)
|
%
|
|
$
|
199,359
|
|
|
(15.7)
|
%
|
Operating
margin
|
19.9
|
%
|
|
23.0
|
%
|
|
(310 bps)
|
|
25.0
|
%
|
|
(510 bps)
|
AB Holding Diluted
EPU
|
$
|
0.49
|
|
|
$
|
0.60
|
|
|
(18.3)
|
%
|
|
$
|
0.63
|
|
|
(22.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
657,884
|
|
|
$
|
782,349
|
|
|
(15.9)
|
%
|
|
$
|
696,418
|
|
|
(5.5)
|
%
|
Operating
income
|
$
|
158,857
|
|
|
$
|
235,330
|
|
|
(32.5)
|
%
|
|
$
|
204,227
|
|
|
(22.2)
|
%
|
Operating
margin
|
24.1
|
%
|
|
30.1
|
%
|
|
(600 bps)
|
|
29.3
|
%
|
|
(520 bps)
|
AB Holding Diluted
EPU
|
$
|
0.49
|
|
|
$
|
0.73
|
|
|
(32.9)
|
%
|
|
$
|
0.64
|
|
|
(23.4)
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.49
|
|
|
$
|
0.73
|
|
|
(32.9)
|
%
|
|
$
|
0.64
|
|
|
(23.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
554.7
|
|
|
$
|
549.5
|
|
|
0.9
|
%
|
|
$
|
516.4
|
|
|
7.4
|
%
|
Average
AUM
|
$
|
539.2
|
|
|
$
|
557.1
|
|
|
(3.2)
|
%
|
|
$
|
532.5
|
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The adjusted
financial measures are all non-GAAP financial measures. See page 11
for reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 12-13 for notes describing the
adjustments.
|
Bernstein continued, "In Retail, 85% of our rated-assets were
rated 4- or 5-stars by Morningstar at quarter-end. Gross sales of
$16.4 billion were our best in six
years and represent continued success with active equities and a
rebound in fixed income in Asia ex
Japan. We continue to see a
diverse array of AB funds attracting assets: seven fixed income and
six equity funds attracted more than $100
million of net inflows during the quarter. In Institutional,
active equity gross sales of $2.2
billion marks our seventh straight quarter of at least
$1 billion in sales and contributed
to a fifth straight quarter of active equity organic growth. Our
$11.4 billion institutional pipeline
at quarter-end reflects demand for our services across the asset
class spectrum and translates to our highest annualized fee base
since we began tracking it more than seven year ago. In Private
Wealth, we saw a return to positive net flows as both sales and
redemptions improved sequentially. In our sell side business,
revenues were down sharply as global trading volumes were under
pressure and volatility eased. As a firm, we produced an adjusted
operating margin of 24.1% in the quarter."
Bernstein concluded, "The diversity and global composition of
our business allows us to compete in a variety of market
environments and I'm proud of the accomplishments we achieved in
the first quarter. Our talented people at AB continue to work
relentlessly to make progress on our long-term strategy and
consistently deliver for our clients."
The firm's cash distribution per unit of $0.49 is payable on May
16, 2019, to holders of record of AB Holding Units at the
close of business on May 6, 2019.
Market Performance
US and global equity and fixed income markets were higher in the
first quarter. The S&P 500's total return was 13.7% and the
MSCI EAFE Index's total return was 10.1%. The Bloomberg Barclays US
Aggregate Index returned 2.9% during the first quarter and the
Bloomberg Barclays Global Aggregate ex US Index's total return was
1.5%.
Assets Under Management ($ Billions)
Total assets under management as of March
31, 2019 were $554.7 billion,
up $38.3 billion, or 7.4%, from
December 31, 2018, and up
$5.2 billion, or 0.9%, from
March 31, 2018.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 3/31/2019
|
$256.6
|
|
$201.9
|
|
$96.2
|
|
$554.7
|
Net Flows for Three
Months Ended 3/31/19:
|
|
|
|
|
|
|
|
Active
|
$(4.6)
|
|
$6.3
|
|
$0.5
|
|
$2.2
|
Passive
|
(0.1)
|
|
(1.0)
|
|
—
|
|
(1.1)
|
Total
|
$(4.7)
|
|
$5.3
|
|
$0.5
|
|
$1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net inflows were $1.1
billion in the first quarter, versus net inflows of
$0.8 billion in the fourth quarter of
2018, and net outflows of $2.4
billion in the prior year period.
Institutional channel first quarter net outflows of $4.7 billion compared to net inflows of
$1.0 billion in the fourth quarter of
2018. Institutional gross sales of $3.4
billion decreased 6% sequentially from $3.6 billion. The pipeline of awarded but
unfunded Institutional mandates increased sequentially to
$11.4 billion at March 31, 2019 from $9.7
billion at December 31,
2018.
Retail channel first quarter net inflows of $5.3 billion compared to net inflows of
$0.7 billion in the fourth quarter of
2018. Retail gross sales of $16.4
billion increased 9% sequentially from $15.0 billion.
Private Wealth channel first quarter net inflows of $0.5 billion compared to net outflows of
$0.9 billion in the fourth quarter of
2018. Private Wealth gross sales of $3.3
billion increased 27% sequentially from $2.6 billion.
First Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because we believe they present a clearer
picture of our operating performance, and allow management to see
long-term trends without the distortion caused by long-term
incentive compensation-related mark-to-market adjustments, real
estate consolidation charges/credits and other adjustment items.
Similarly, we believe that this non-GAAP earnings information helps
investors better understand the underlying trends in our results
and, accordingly, provides a valuable perspective for investors.
Please note, however, that these non-GAAP measures are provided in
addition to, and not as substitutes for, any measures derived in
accordance with US GAAP and they may not be comparable to non-GAAP
measures presented by other companies. Management uses both US GAAP
and non-GAAP measures in evaluating our financial performance. The
non-GAAP measures alone may pose limitations because they do not
include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Available Cash Flow
typically is the adjusted diluted net income per unit for the
quarter multiplied by the number of units outstanding at the end of
the quarter. Management anticipates that Available Cash Flow will
continue to be based on adjusted diluted net income per unit,
unless management determines, with concurrence of the Board of
Directors, that one or more adjustments that are made for adjusted
net income should not be made with respect to the Available Cash
Flow calculation.
US GAAP Earnings
Revenues
First quarter net revenues of $795
million decreased 8% from the first quarter of 2018. Lower
Bernstein Research revenues, investment advisory base fees,
investment gains, distribution revenues, performance-based fees and
other revenues drove the decrease.
Sequentially, net revenues decreased 1% from $804 million. Lower performance-based fees and
Bernstein research revenues were partially offset by investment
gains versus investment losses in the prior period and higher
investment advisory base fees.
First quarter Bernstein Research revenues decreased 21% from the
prior year period due to lower volatility and trading volumes
across all regions and the timing and size of research payments.
The 22% sequential decline was due to the timing of research
payments and lower volatility and trading volumes in the US.
Expenses
First quarter operating expenses of $627
million decreased 3% from the first quarter of 2018.
Promotion and servicing, total employee compensation and benefits
and general and administrative ("G&A") expenses were all lower.
Promotion and servicing expense declined due to lower distribution
related payments, amortization of deferred sales commissions, trade
execution costs and transfer fees. Employee compensation and
benefit expense decreased due to lower incentive compensation,
partially offset by higher base compensation, fringes and other
employment costs. Within G&A, lower expenses related to our
consolidated company-sponsored investment funds were partially
offset by higher professional fees, errors, technology costs and
occupancy expense.
Sequentially, operating expenses increased 4% due to higher
total employee compensation and benefits and G&A expenses,
partly offset by lower promotion and servicing expense. Employee
compensation and benefits expense increased due to higher incentive
compensation, fringes and commissions, partly offset by lower base
compensation and other employment costs. Within promotion and
servicing, lower marketing and travel and entertainment expenses,
transfer fees and trade execution costs were partly offset by
higher distribution related payments. Within G&A, portfolio
servicing fees, errors and professional fees were all higher.
Operating Income and Net Income Per Unit
First quarter operating income of $168
million decreased 25% from $223
million in the first quarter of 2018 and the operating
margin of 19.9% decreased 310 basis points from 23.0% in the first
quarter of 2018.
Sequentially, operating income decreased 16% from $199 million and the operating margin of 19.9%
decreased 510 basis points from 25.0% in the fourth quarter of
2018.
First quarter diluted net income per Unit of $0.49 compared to $0.60 in the first quarter of 2018 and
$0.63 in the fourth quarter of
2018.
Non-GAAP Earnings
This section discusses our first quarter 2019 compared to the
first quarter and the fourth quarter of 2018. 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.
Revenues
First quarter adjusted net revenues of $658 million decreased 16% from the first quarter
of 2018. The decline was driven by lower performance-based fees,
Bernstein Research revenues and investment advisory base fees.
Sequentially, adjusted net revenues decreased 5%. Lower
performance-based fees and Bernstein Research revenues were
partially offset by investment gains versus investment losses in
the prior year period and higher investment advisory base fees.
Expenses
First quarter adjusted operating expenses of $499 million were down 9% from the first quarter
of 2018, driven by lower total employee compensation and benefits
and promotion and servicing expenses, partially offset by higher
G&A expense. Employee compensation and benefits expense
decreased due to lower incentive compensation, partially offset by
higher base compensation, fringes and other employment costs.
Promotion and servicing expense decreased due to lower trade
execution costs and transfer fees. Within G&A, higher
professional fees, errors and technology costs were partially
offset by lower portfolio servicing fees and more favorable foreign
exchange translation.
Sequentially, adjusted operating expenses increased 1%. Higher
employee compensation and benefits and G&A expenses were
partially offset by lower promotion and servicing expense. Employee
compensation and benefits expense increased due to higher incentive
compensation, commissions and fringes, partially offset by lower
base compensation and other employment costs. Within G&A, the
increase was due to higher professional fees and errors. Promotion
and servicing expense decreased due to lower marketing and travel
and entertainment expenses, trade execution costs and transfer
fees.
Operating Income, Margin and Net Income Per Unit
First quarter adjusted operating income of $159 million decreased 32% from $235 million in the first quarter of 2018, and
the adjusted operating margin of 24.1% decreased 600 basis points
from 30.1%.
Sequentially, adjusted operating income decreased 22% from
$204 million and the adjusted
operating margin of 24.1% decreased 520 basis points from
29.3%.
First quarter adjusted diluted net income per Unit of
$0.49 was down from $0.73 in the first quarter of 2018 and down from
$0.64 in the fourth quarter of
2018.
Our adjusted financial results for the first quarter of 2018
included $78 million of performance
fee revenues, $35 million of
operating income and $0.13 of EPU
related to the Real Estate Equity Fund 1 which is in the process of
liquidation. Therefore, this accounted for more than one-half or
$0.13 of the total $0.24 decline in adjusted EPU to $0.49 in the first quarter of 2019.
Headcount
As of March 31, 2019, we had 3,657
employees, compared to 3,446 employees as of March 31, 2018 and 3,641 as of December 31, 2018.
Unit Repurchases
During the three months ended March 31,
2019 and 2018, AB purchased 2.0 million and 0.1 million AB
Holding Units for $58.6 million and
$2.3 million, respectively (on a
trade date basis). The 2019 amount reflects open-market purchases
of 1.9 million AB Holding Units for $55.2
million, with the remainder relating to purchases of AB
Holding units from employees to allow them to fulfill statutory tax
withholding requirements at the time of delivery of long-term
incentive compensation awards. There were no open-market purchases
during the first quarter of 2018. Purchases of AB Holding Units
reflected on the consolidated statements of cash flows are net of
AB Holding Units purchased by employees as part of a distribution
reinvestment election.
First Quarter 2019 Earnings Conference Call
Information
Management will review First Quarter 2019 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Thursday,
April 25, 2019. The conference call will be hosted by Seth P. Bernstein, President and Chief Executive
Officer, and John C. Weisenseel,
Chief Financial Officer.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at http://alliancebernstein.com/investorrelations 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 5153458.
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 2019 financial and
operating results on April 25, 2019.
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 #: 5153458.
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
December 31, 2018 and Form 10-Q for
the quarter ended March 31, 2019. Any
or all of the forward-looking statements made in this news release,
Form 10-K, Form 10-Q, other documents AB files with or furnishes to
the SEC, and any other public statements issued by AB, may turn out
to be wrong. It is important to remember that other factors besides
those listed in "Risk Factors" and "Cautions Regarding
Forward-Looking Statements", and those listed below, could also
adversely affect AB's financial condition, results of operations
and business prospects.
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 AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB 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.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
37% effective January 1, 2018.
About AllianceBernstein
AllianceBernstein 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 March 31, 2019, including
both the general partnership and limited partnership interests in
AllianceBernstein, AllianceBernstein Holding owned approximately
35.2% of AllianceBernstein and AXA Equitable Holdings ("EQH"),
directly and through various subsidiaries, owned an approximate
65.6% economic interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our website, www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2019
|
|
1Q
2018
|
|
1Q 2019
vs. 1Q
2018 %
Change
|
|
4Q
2018
|
|
1Q 2019
vs. 4Q
2018 %
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
552,230
|
|
|
$
|
567,856
|
|
|
(2.8)
|
%
|
|
$
|
544,484
|
|
|
1.4
|
%
|
Performance
fees
|
4,364
|
|
|
6,260
|
|
|
(30.3)
|
%
|
|
35,440
|
|
|
(87.7)
|
%
|
Bernstein research
services
|
90,235
|
|
|
114,400
|
|
|
(21.1)
|
%
|
|
115,240
|
|
|
(21.7)
|
%
|
Distribution
revenues
|
100,509
|
|
|
108,004
|
|
|
(6.9)
|
%
|
|
100,952
|
|
|
(0.4)
|
%
|
Dividends and
interest
|
27,346
|
|
|
28,215
|
|
|
(3.1)
|
%
|
|
26,875
|
|
|
1.8
|
%
|
Investments gains
(losses)
|
15,735
|
|
|
26,082
|
|
|
(39.7)
|
%
|
|
(24,207)
|
|
|
n/m
|
|
Other
revenues
|
22,206
|
|
|
26,510
|
|
|
(16.2)
|
%
|
|
22,128
|
|
|
0.4
|
%
|
Total
revenues
|
812,625
|
|
|
877,327
|
|
|
(7.4)
|
%
|
|
820,912
|
|
|
(1.0)
|
%
|
Less: interest
expense
|
17,163
|
|
|
9,540
|
|
|
79.9
|
%
|
|
16,252
|
|
|
5.6
|
%
|
Total net
revenues
|
795,462
|
|
|
867,787
|
|
|
(8.3)
|
%
|
|
804,660
|
|
|
(1.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
339,309
|
|
|
343,825
|
|
|
(1.3)
|
%
|
|
319,297
|
|
|
6.3
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
105,993
|
|
|
110,154
|
|
|
(3.8)
|
%
|
|
104,359
|
|
|
1.6
|
%
|
Amortization of
deferred sales commissions
|
3,502
|
|
|
6,598
|
|
|
(46.9)
|
%
|
|
3,981
|
|
|
(12.0)
|
%
|
Trade execution,
marketing, T&E and other
|
49,648
|
|
|
54,043
|
|
|
(8.1)
|
%
|
|
58,535
|
|
|
(15.2)
|
%
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
117,848
|
|
|
121,234
|
|
|
(2.8)
|
%
|
|
111,401
|
|
|
5.8
|
%
|
Real
estate charges (credits)
|
—
|
|
|
(264)
|
|
|
n/m
|
|
|
670
|
|
|
n/m
|
|
Contingent payment
arrangements
|
54
|
|
|
53
|
|
|
1.9
|
%
|
|
(2,376)
|
|
|
n/m
|
|
Interest on
borrowings
|
3,983
|
|
|
2,612
|
|
|
52.5
|
%
|
|
2,407
|
|
|
65.5
|
%
|
Amortization of
intangible assets
|
6,974
|
|
|
6,861
|
|
|
1.6
|
%
|
|
7,027
|
|
|
(0.8)
|
%
|
Total operating
expenses
|
627,311
|
|
|
645,116
|
|
|
(2.8)
|
%
|
|
605,301
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
168,151
|
|
|
222,671
|
|
|
(24.5)
|
%
|
|
199,359
|
|
|
(15.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
8,921
|
|
|
15,825
|
|
|
(43.6)
|
%
|
|
13,033
|
|
|
(31.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
159,230
|
|
|
206,846
|
|
|
(23.0)
|
%
|
|
186,326
|
|
|
(14.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
10,116
|
|
|
22,650
|
|
|
(55.3)
|
%
|
|
(1,727)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
149,114
|
|
|
$
|
184,196
|
|
|
(19.0)
|
%
|
|
$
|
188,053
|
|
|
(20.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
1Q
2019
|
|
1Q
2018
|
|
1Q 2019
vs. 1Q
2018 %
Change
|
|
4Q
2018
|
|
1Q 2019
vs. 4Q
2018 %
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
52,638
|
|
|
$
|
65,698
|
|
|
(19.9)
|
%
|
|
$
|
66,759
|
|
|
(21.2)
|
%
|
Income
Taxes
|
6,199
|
|
|
7,538
|
|
|
(17.8)
|
%
|
|
6,879
|
|
|
(9.9)
|
%
|
Net
Income
|
46,439
|
|
|
58,160
|
|
|
(20.2)
|
%
|
|
59,880
|
|
|
(22.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
26
|
|
|
145
|
|
|
(82.1)
|
%
|
|
71
|
|
|
(63.4)
|
%
|
Net Income -
Diluted
|
$
|
46,465
|
|
|
$
|
58,305
|
|
|
(20.3)
|
%
|
|
$
|
59,951
|
|
|
(22.5)
|
%
|
Diluted Net Income
per Unit
|
$
|
0.49
|
|
|
$
|
0.60
|
|
|
(18.3)
|
%
|
|
$
|
0.63
|
|
|
(22.2)
|
%
|
Distribution per
Unit
|
$
|
0.49
|
|
|
$
|
0.73
|
|
|
(32.9)
|
%
|
|
$
|
0.64
|
|
|
(23.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
|
|
Units
Outstanding
|
1Q
2019
|
|
1Q
2018
|
|
1Q 2019
vs. 1Q
2018 %
Change
|
|
4Q
2018
|
|
1Q 2019
vs. 4Q
2018 %
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
267,186,102
|
|
|
269,839,937
|
|
|
(1.0)
|
%
|
|
268,850,276
|
|
|
(0.6)
|
%
|
Weighted average -
basic
|
267,336,134
|
|
|
269,184,109
|
|
|
(0.7)
|
%
|
|
267,611,568
|
|
|
(0.1)
|
%
|
Weighted average -
diluted
|
267,408,249
|
|
|
269,520,000
|
|
|
(0.8)
|
%
|
|
267,771,111
|
|
|
(0.1)
|
%
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
94,994,404
|
|
|
97,643,743
|
|
|
(2.7)
|
%
|
|
96,658,278
|
|
|
(1.7)
|
%
|
Weighted average -
basic
|
95,144,146
|
|
|
96,986,828
|
|
|
(1.9)
|
%
|
|
95,418,778
|
|
|
(0.3)
|
%
|
Weighted average -
diluted
|
95,216,261
|
|
|
97,322,719
|
|
|
(2.2)
|
%
|
|
95,578,321
|
|
|
(0.4)
|
%
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | March 31, 2019
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
3/31/19
|
12/31/18
|
|
Ending Assets Under
Management
|
$554.7
|
$516.4
|
|
Average Assets Under
Management
|
$539.2
|
$532.5
|
|
|
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
|
Sales/New
accounts
|
3.4
|
|
|
16.4
|
|
|
3.3
|
|
|
23.1
|
|
|
Redemption/Terminations
|
(5.2)
|
|
|
(10.1)
|
|
|
(2.9)
|
|
|
(18.2)
|
|
|
Net Cash
Flows
|
(2.9)
|
|
|
(1.0)
|
|
|
0.1
|
|
|
(3.8)
|
|
|
Net
Flows
|
(4.7)
|
|
|
5.3
|
|
|
0.5
|
|
|
1.1
|
|
|
Transfers
|
0.1
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
Investment
Performance
|
14.9
|
|
|
15.8
|
|
|
6.5
|
|
|
37.2
|
|
|
End of
Period
|
$
|
256.6
|
|
|
$
|
201.9
|
|
|
$
|
96.2
|
|
|
$
|
554.7
|
|
Three-Month
Changes By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive (1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-
Exempt
|
|
Fixed
Income
Passive (1)
|
|
Other
(2)
|
|
Total
|
|
Beginning of
Period
|
$
|
136.2
|
|
|
$
|
50.2
|
|
|
$
|
219.7
|
|
|
$
|
41.7
|
|
|
$
|
9.4
|
|
|
$
|
59.2
|
|
|
$
|
516.4
|
|
|
Sales/New
accounts
|
7.9
|
|
|
—
|
|
|
11.5
|
|
|
2.6
|
|
|
—
|
|
|
1.1
|
|
|
23.1
|
|
|
Redemption/Terminations
|
(6.2)
|
|
|
(0.1)
|
|
|
(9.2)
|
|
|
(1.6)
|
|
|
(0.1)
|
|
|
(1.0)
|
|
|
(18.2)
|
|
|
Net Cash
Flows
|
(0.7)
|
|
|
(0.7)
|
|
|
(3.0)
|
|
|
(0.1)
|
|
|
(0.3)
|
|
|
1.0
|
|
|
(3.8)
|
|
|
Net
Flows
|
1.0
|
|
|
(0.8)
|
|
|
(0.7)
|
|
|
0.9
|
|
|
(0.4)
|
|
|
1.1
|
|
|
1.1
|
|
|
Investment
Performance
|
17.9
|
|
|
6.4
|
|
|
8.2
|
|
|
1.2
|
|
|
0.3
|
|
|
3.2
|
|
|
37.2
|
|
|
End of
Period
|
$
|
155.1
|
|
|
$
|
55.8
|
|
|
$
|
227.2
|
|
|
$
|
43.8
|
|
|
$
|
9.3
|
|
|
$
|
63.5
|
|
|
$
|
554.7
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
1.0
|
|
|
$
|
(0.8)
|
|
|
$
|
0.2
|
|
|
|
Fixed
Income
|
0.2
|
|
|
(0.4)
|
|
|
(0.2)
|
|
|
|
Other
(2)
|
1.0
|
|
|
0.1
|
|
|
1.1
|
|
|
|
Total
|
$
|
2.2
|
|
|
$
|
(1.1)
|
|
|
$
|
1.1
|
|
|
(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
|
$
|
157.1
|
|
|
$
|
114.3
|
|
|
$
|
94.1
|
|
|
$
|
365.5
|
|
|
Non-U.S.
Clients
|
99.5
|
|
|
87.6
|
|
|
2.1
|
|
|
189.2
|
|
|
Total
|
$
|
256.6
|
|
|
$
|
201.9
|
|
|
$
|
96.2
|
|
|
$
|
554.7
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
US $ Thousands,
unaudited
|
|
3/31/2019
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
795,462
|
|
|
$
|
804,660
|
|
|
$
|
850,176
|
|
|
$
|
844,738
|
|
|
$
|
867,787
|
|
|
$
|
919,141
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,844
|
|
|
—
|
|
|
|
|
Distribution-related
payments
|
(105,993)
|
|
|
(104,359)
|
|
|
(106,372)
|
|
|
(106,301)
|
|
|
(110,154)
|
|
|
(110,517)
|
|
|
|
|
Amortization of
deferred sales commissions
|
(3,502)
|
|
|
(3,981)
|
|
|
(4,651)
|
|
|
(6,113)
|
|
|
(6,598)
|
|
|
(6,871)
|
|
|
|
|
Pass-through fees
& expenses
|
(12,481)
|
|
|
(9,039)
|
|
|
(10,084)
|
|
|
(10,487)
|
|
|
(10,609)
|
|
|
(10,664)
|
|
|
|
|
Impact of
consolidated company-sponsored investment funds
|
(10,959)
|
|
|
931
|
|
|
(1,543)
|
|
|
(1,494)
|
|
|
(36,037)
|
|
|
(16,032)
|
|
|
|
|
Long-term incentive
compensation-related investment losses (gains)
|
(4,496)
|
|
|
7,104
|
|
|
(1,253)
|
|
|
(542)
|
|
|
209
|
|
|
(977)
|
|
|
|
|
Long-term incentive
compensation-related dividends and interest
|
(147)
|
|
|
(1,631)
|
|
|
(130)
|
|
|
(156)
|
|
|
(93)
|
|
|
(1,515)
|
|
|
|
|
Loss (gain) on sale
of software technology
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
|
Adjusted Net
Revenues
|
|
$
|
657,884
|
|
|
$
|
696,418
|
|
|
$
|
727,143
|
|
|
$
|
719,692
|
|
|
$
|
782,349
|
|
|
$
|
772,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
168,151
|
|
|
$
|
199,359
|
|
|
$
|
213,819
|
|
|
$
|
189,464
|
|
|
$
|
222,671
|
|
|
$
|
283,035
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue recognition standard ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,156
|
|
|
—
|
|
|
|
|
Real estate charges
(credits)
|
—
|
|
|
670
|
|
|
(155)
|
|
|
6,909
|
|
|
(264)
|
|
|
(2,732)
|
|
|
|
|
Long-term incentive
compensation-related items
|
357
|
|
|
243
|
|
|
1,820
|
|
|
585
|
|
|
417
|
|
|
(103)
|
|
|
|
|
CEO's EQH award
compensation
|
465
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Loss (gain) on sale
of software technology
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Acquisition-related
expenses
|
—
|
|
|
1,924
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
(2,429)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
|
|
Sub-total of non-GAAP
adjustments
|
822
|
|
|
3,141
|
|
|
2,665
|
|
|
7,541
|
|
|
35,309
|
|
|
(2,835)
|
|
|
|
|
Less: Net (loss)
income of consolidated entities attributable to non-controlling
interests
|
10,116
|
|
|
(1,727)
|
|
|
726
|
|
|
261
|
|
|
22,650
|
|
|
8,384
|
|
|
|
Adjusted Operating
Income
|
|
$
|
158,857
|
|
|
$
|
204,227
|
|
|
$
|
215,758
|
|
|
$
|
196,744
|
|
|
$
|
235,330
|
|
|
$
|
271,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
19.9
|
%
|
|
25.0
|
%
|
|
25.1
|
%
|
|
22.4
|
%
|
|
23.0
|
%
|
|
29.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
24.1
|
%
|
|
29.3
|
%
|
|
29.7
|
%
|
|
27.3
|
%
|
|
30.1
|
%
|
|
35.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
$ Thousands except
per Unit amounts, unaudited
|
3/31/2019
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
12/31/2017
|
|
|
Net Income -
Diluted, GAAP basis
|
$
|
46,465
|
|
|
$
|
59,951
|
|
|
$
|
66,017
|
|
|
$
|
58,572
|
|
|
$
|
58,305
|
|
|
$
|
78,802
|
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
462
|
|
|
1,000
|
|
|
919
|
|
|
2,609
|
|
|
12,271
|
|
|
(599)
|
|
|
|
Adjusted Net
Income - Diluted
|
$
|
46,927
|
|
|
$
|
60,951
|
|
|
$
|
66,936
|
|
|
$
|
61,181
|
|
|
$
|
70,576
|
|
|
$
|
78,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.49
|
|
|
$
|
0.63
|
|
|
$
|
0.68
|
|
|
$
|
0.59
|
|
|
$
|
0.60
|
|
|
$
|
0.84
|
|
|
|
Impact of AB non-GAAP
adjustments
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.13
|
|
|
—
|
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.49
|
|
|
$
|
0.64
|
|
|
$
|
0.69
|
|
|
$
|
0.62
|
|
|
$
|
0.73
|
|
|
$
|
0.84
|
|
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
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.
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments.
On January 1, 2018, we recorded a
cumulative effect adjustment, net of tax, of $35.0 million to partners' capital in the
consolidated statement of financial condition. This amount
represents carried interest distributions of $77.9 million previously received, net of revenue
sharing payments to investment team members of $42.7 million, with respect to which it is
probable that significant reversal will not occur. These amounts
were included in adjusted net revenues and adjusted operating
income in the first quarter of 2018.
Lastly, during 2017 we excluded a realized gain of $4.6 million on the exchange of software
technology for an ownership stake in a third party provider of
financial market data and trading tools. During 2018, we decreased
our valuation of this investment by $3.7
million.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2)
acquisition-related expenses, (3) 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, (4) our CEO's EQH award
compensation, as discussed below, (5) the impact of
consolidated company-sponsored investment funds, (6) the loss
(gain) on software technology investment, (7) adjustments to
contingent payment arrangements, and (8) the revenues and expenses
associated with the implementation of ASC 606 discussed above.
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.
Prior to 2009, a significant portion of employee compensation
was in the form of 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 delivered 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 longterm incentive
compensation-related investments included in revenues and
compensation expense.
The board of directors of EQH granted to Seth P. Bernstein ("CEO") equity awards in
connection with EQH's IPO and Mr. Bernstein's membership on the EQH
Management Committee. Mr. Bernstein may receive additional equity
or cash compensation from EQH in the future related to his service
on the Management Committee. Any awards granted to Mr. Bernstein by
EQH are recorded as compensation expense in AB's condensed
consolidated statement of income. The compensation expense
associated with these awards has been excluded because they are
non-cash and are based upon EQH's, and not AB's, financial
performance.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored 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.
Gains and losses on the software technology investment have been
excluded due to its non-recurring nature and because it is not part
of our core operating results.
The recording of changes in estimates of 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.
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.
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SOURCE AllianceBernstein