NEW YORK, July 23, 2020
/PRNewswire/ -- AllianceBernstein L.P. ("AB") and
AllianceBernstein Holding L.P. ("AB Holding") (NYSE: AB) today
reported financial and operating results for the quarter ended
June 30, 2020.
"The firm delivered strong second quarter results in a dynamic
operating environment, as financial markets rebounded from March
crisis lows," said Seth P.
Bernstein, President and CEO of AllianceBernstein. "We
focused on servicing our clients' distinct needs through delivering
differentiated investment performance. Our platform generated net
inflows of $4.6 billion or 3%
annualized organic growth, excluding expected low-fee AXA
redemptions of $7.9 billion. Both
Retail and Institutional had very strong sales quarters, and our
pipeline of institutional mandates reached a new record, reflecting
continued active equities and alternatives strength. Investment
performance improved in our fixed income strategies as credit
sectors recovered. We expanded operating margins both
year-over-year and sequentially."
(US $ Thousands
except per Unit amounts)
|
2Q
2020
|
|
2Q
2019
|
|
%
Change
|
|
1Q
2020
|
|
%
Change
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
871,449
|
|
|
$
|
857,799
|
|
|
1.6
|
%
|
|
$
|
874,156
|
|
|
(0.3)
|
%
|
Operating
income
|
$
|
209,647
|
|
|
$
|
184,220
|
|
|
13.8
|
%
|
|
$
|
178,223
|
|
|
17.6
|
%
|
Operating
margin
|
21.7
|
%
|
|
20.6
|
%
|
|
110 bps
|
|
23.3
|
%
|
|
(160 bps)
|
AB Holding Diluted
EPU
|
$
|
0.59
|
|
|
$
|
0.54
|
|
|
9.3
|
%
|
|
$
|
0.63
|
|
|
(6.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
698,725
|
|
|
$
|
714,566
|
|
|
(2.2)
|
%
|
|
$
|
743,803
|
|
|
(6.1)
|
%
|
Operating
income
|
$
|
195,013
|
|
|
$
|
179,685
|
|
|
8.5
|
%
|
|
$
|
205,590
|
|
|
(5.1)
|
%
|
Operating
margin
|
27.9
|
%
|
|
25.1
|
%
|
|
280 bps
|
|
27.6
|
%
|
|
30 bps
|
AB Holding Diluted
EPU
|
$
|
0.61
|
|
|
$
|
0.56
|
|
|
8.9
|
%
|
|
$
|
0.64
|
|
|
(4.7)
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.61
|
|
|
$
|
0.56
|
|
|
8.9
|
%
|
|
$
|
0.64
|
|
|
(4.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management ("AUM")
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
600.0
|
|
|
$
|
580.8
|
|
|
3.3
|
%
|
|
$
|
541.8
|
|
|
10.7
|
%
|
Average
AUM
|
$
|
578.5
|
|
|
$
|
565.9
|
|
|
2.2
|
%
|
|
$
|
602.0
|
|
|
(3.9)
|
%
|
|
(1) The adjusted financial measures
represent 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, gross sales of $19.6 billion were the third highest in Retail
history. Active Fixed Income inflows were $2.0 billion as redemptions normalized following
the industrywide March selloff, and active equity inflows of
$1.9 billion were positive for the
13th straight quarter. In Institutional, net flows were positive
excluding the low-fee AXA redemptions and led by a 33% active
equity organic growth rate, reflecting our highest active equity
sales quarter in 12 years. Our institutional pipeline grew to a
record $17.5 billion, with
alternatives and active equity comprising over 80% of the
annualized pipeline fee base. In Private Wealth, moderating sales
and net outflows reflected client risk aversion in a volatile
market. Bernstein Research grew 7% year over year, as global
trading volumes remained elevated versus the prior year, while
moderating sequentially. As a firm, we expanded our adjusted
operating margin of 27.9% by 280 basis points year over year and 30
basis points sequentially."
Bernstein concluded, "While pleased with our second quarter
financial results, looking forward, we may experience further
market volatility in the face of continued uncertainty stemming
from the global effects of the COVID-19 pandemic. I'm grateful to
our talented and focused team members, operating almost entirely
remotely, who continue to effectively service our clients' needs.
Markets continue to weigh many uncertainties, and our investment
teams and operations remain positioned to flexibly respond to best
serve our clients."
The firm's cash distribution per Unit of $0.61 is payable on August 20, 2020, to
holders of record of AB Holding Units at the close of business on
August 3, 2020.
Market Performance
U.S. and global equity and fixed income markets were up in the
second quarter. The S&P 500's total return was 20.5% and the
MSCI EAFE Index's total return was 15.1%. The Bloomberg Barclays
Global High Yield Index returned 11.8% in the second quarter and
the Bloomberg Barclays U.S. Corporate High Yield Index's return was
10.2%.The Bloomberg Barclays US Aggregate Index returned 2.9%
during the second quarter and the Bloomberg Barclays Global
Aggregate ex US Index's total return was 3.4%.
Assets Under Management
($ Billions)
Total assets under management as of June 30, 2020 were
$600.0 billion, up $58.2 billion, or 11%, from March 31, 2020
and up $19.2 billion, or 3%, from
June 30, 2019.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 6/30/2020
|
$276.2
|
|
$229.5
|
|
$94.3
|
|
$600.0
|
Net Flows for Three
Months Ended 6/30/2020:
|
|
|
|
|
|
|
|
Active
|
$(5.2)
|
|
$4.7
|
|
$(0.8)
|
|
$(1.3)
|
Passive
|
(1.2)
|
|
(0.9)
|
|
0.1
|
|
(2.0)
|
Total
|
$(6.4)
|
|
$3.8
|
|
$(0.7)
|
|
$(3.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net outflows were $3.3
billion in the second quarter, compared to net outflows of
$5.6 billion in the first quarter of
2020, and net inflows of $9.5 billion
in the prior year second quarter. Excluding AXA redemptions of
low-fee fixed income mandates of $7.9
billion in the second quarter and $1.0 billion in the first quarter, the firm
generated net inflows of $4.6 billion
in the second quarter and net outflows of $4.6 billion in the first quarter of 2020.
Institutional channel second quarter net outflows of
$6.4 billion compared to net inflows
of $0.4 billion in the first quarter
of 2020. Institutional gross sales of $8.8
billion increased sequentially from $3.9 billion. The pipeline of awarded but
unfunded Institutional mandates increased sequentially to
$17.5 billion at June 30, 2020
from $15.4 billion at March 31,
2020.
Retail channel second quarter net inflows of $3.8 billion compared to net outflows of
$5.4 billion in the first quarter of
2020. Retail gross sales of $19.6
billion decreased sequentially from $24.2 billion.
Private Wealth channel second quarter net outflows of
$0.7 billion compared to net outflows
of $0.6 billion in the first quarter
of 2020. Private Wealth gross sales of $3.4
billion decreased sequentially from $3.5 billion.
Our ending AUM at June 30, 2020 reflects $8.9 billion in outflows resulting from AXA
S.A.'s redemption of certain low-fee fixed income mandates, of
which $7.9 billion was redeemed
during the second quarter. We expect these redemptions to total
approximately $14 billion, with the
majority of the remaining redemptions to be completed during the
second half of 2020. The revenue we earn from the management of
these assets is not significant.
Second 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 charges/credits and other adjustment items. Similarly, we
believe that 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 a substitute 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 made to adjusted net income
should not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Revenues
Second quarter net revenues of $871
million increased 2% from $858
million in the second quarter of 2019. Higher investment
gains, distribution revenues and Bernstein Research revenues were
partially offset by lower investment advisory fees and
performance-based fees.
Sequentially, net revenues of $871
million decreased from $874
million. Lower investment advisory fees , Bernstein Research
revenues and distribution revenues were partially offset by
investment gains compared to investment losses in the prior
period.
Second quarter Bernstein Research revenues of $114 million increased 7% compared to the prior
year second quarter and decreased 12% sequentially. The increase
from prior year was due to higher relative market volatility, which
led to greater customer activity and more robust trading volumes
across the business. The sequential decrease was due to lower
trading volumes, as we came off the first quarter surge in global
volatility.
Expenses
Second quarter operating expenses of $662
million decreased 2% from $674
million in the second quarter of 2019. Lower total employee
compensation and benefits expense and interest on borrowings were
offset by higher real estate charges. Employee compensation and
benefits expense decreased due to lower commissions, severance,
fringes and recruitment costs.
Sequentially, operating expenses decreased 5% from $695 million. Lower total employee compensation
and benefits expense and promotion and servicing expenses were
partially offset by higher real estate charges. Within employee
compensation and benefits expense, lower commissions, severance and
fringes were partially offset by higher incentive compensation.
Promotion and servicing expenses decreased due to lower
distribution related payments, travel and entertainment and
marketing expenses.
Operating Income and Net Income Per Unit
Second quarter operating income of $210
million increased 14% from $184
million in the second quarter of 2019 and the operating
margin of 21.7% in the second quarter of 2020 increased 110 basis
points from 20.6% in the second quarter of 2019.
Sequentially, operating income increased 18% from $178 million in the first quarter of 2020 and the
operating margin of 21.7% decreased 160 basis points from 23.3% in
the first quarter of 2020.
Second quarter diluted net income per Unit was $0.59 compared to $0.54 in the second quarter of 2019 and
$0.63 in the first quarter of
2020.
Non-GAAP Earnings
This section discusses our second quarter 2020 non-GAAP
financial results, compared to the second quarter of 2019 and the
first quarter of 2020. 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
Second quarter adjusted net revenues of $699 million decreased 2% from the second quarter
of 2019. Lower investment advisory fees, investment gains and
performance-based fees were partially offset by higher Bernstein
Research revenues.
Sequentially, adjusted net revenues decreased 6% from
$744 million. Lower investment
advisory base fees and Bernstein Research revenues were partially
offset by investment gains compared to investment losses in the
prior period and higher performance-based fees.
Expenses
Second quarter adjusted operating expenses of $504 million decreased 6% from $535 million in the second quarter of 2019,
driven by lower total employee compensation and benefits, promotion
and servicing expenses and interest on borrowings, partially offset
by higher general and administrative ("G&A") expenses. Employee
compensation and benefits expense decreased due to lower
commissions, fringes, incentive compensation and recruitment costs.
Within promotion and servicing expenses, lower travel and
entertainment expense and marketing expense were partially offset
by higher trade execution costs. Within G&A, the increase was
driven by higher technology, market data and occupancy expenses
attributed to our headquarters relocation.
Sequentially, adjusted operating expenses decreased 6% from
$538 million. Lower total employee
compensation and benefits and promotion and servicing expenses were
partially offset by higher G&A. Employee compensation and
benefits expense decreased due to lower commissions, incentive
compensation, severance and fringes. Within promotion and servicing
expenses, the decrease was driven by lower travel and entertainment
and marketing expenses. Within G&A, the increase is
attributable to higher technology expenses and professional
fees.
Operating Income, Margin and Net Income Per Unit
Second quarter adjusted operating income of $195 million increased 9% from $180 million in the second quarter of 2019, and
the adjusted operating margin of 27.9% increased 280 basis points
from 25.1%.
Sequentially, adjusted operating income of $195 million decreased 5% from $206 million and the adjusted operating margin of
27.9% in the second quarter of 2020 increased 30 basis points from
27.6%.
Second quarter adjusted diluted net income per Unit of
$0.61 was up from $0.56 in the second quarter of 2019 and down from
$0.64 in the first quarter of
2020.
Headcount
As of June 30, 2020, we had 3,825 employees, compared to
3,762 employees as of June 30, 2019 and 3,846 as of
March 31, 2020.
Unit Repurchases
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(US $
Millions)
|
Total amount of AB
Holding Units Purchased (1)
|
|
1.3
|
|
|
—
|
|
|
2.2
|
|
|
2.0
|
|
Total Cash Paid for
AB Holding Units Purchased (1)
|
|
$
|
27.8
|
|
|
$
|
—
|
|
|
$
|
47.6
|
|
|
$
|
58.6
|
|
Open Market Purchases
of AB Holding Units Purchased (2)
|
|
1.3
|
|
|
—
|
|
|
2.2
|
|
|
1.9
|
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (2)
|
|
$
|
27.8
|
|
|
$
|
—
|
|
|
$
|
45.1
|
|
|
$
|
55.2
|
|
|
(1)
Purchased on a trade date basis.
|
(2)
The remainder related to purchases of AB Holding Units from
employees to fulfill statutory tax withholding requirements at the
time of delivery of long-term incentive compensation
awards.
|
Second Quarter 2020 Earnings Conference Call
Information
Management will review Second Quarter 2020 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Thursday,
July 23, 2020. The conference call will be hosted by
Seth P. Bernstein, President and
Chief Executive Officer, John C.
Weisenseel, Chief Financial Officer, Kate Burke, Chief Operating Officer, and
Ali Dibadj, Head of Finance and
Strategy.
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 (833) 495-0952 in the U.S.
or (409) 216-0498 outside the U.S. 10 minutes before the scheduled
start time. The conference ID# is 2094118.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Second Quarter 2020 financial and
operating results on July 23, 2020.
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 #: 2094118.
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, integration of acquired companies,
competitive conditions, and 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, 2019 and subsequent Forms 10-Q. Any or
all of the forward-looking statements made in this news release,
Form 10-K, Forms 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 revenues, 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, or that mandates
ultimately will not be funded.
- 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 depends on various
factors, some of which are beyond our control, including the
fluctuation in the price of an AB Holding Unit (NYSE: AB) 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)(4). 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 June 30, 2020, including both the general partnership
and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 35.5% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 65.2% 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)
|
2Q
2020
|
|
2Q
2019
|
|
%
Change
|
|
1Q
2020
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
569,296
|
|
|
$
|
585,077
|
|
|
(2.7)
|
%
|
|
$
|
613,587
|
|
|
(7.2)
|
%
|
Performance
fees
|
8,907
|
|
|
11,287
|
|
|
(21.1)
|
|
|
8,138
|
|
|
9.4
|
|
Bernstein research
services
|
113,609
|
|
|
105,991
|
|
|
7.2
|
|
|
129,223
|
|
|
(12.1)
|
|
Distribution
revenues
|
120,099
|
|
|
108,347
|
|
|
10.8
|
|
|
130,857
|
|
|
(8.2)
|
|
Dividends and
interest
|
12,692
|
|
|
27,654
|
|
|
(54.1)
|
|
|
20,465
|
|
|
(38.0)
|
|
Investments gains
(losses)
|
24,189
|
|
|
10,949
|
|
|
120.9
|
|
|
(44,306)
|
|
|
n/m
|
|
Other
revenues
|
26,092
|
|
|
24,796
|
|
|
5.2
|
|
|
25,511
|
|
|
2.3
|
|
Total
revenues
|
874,884
|
|
|
874,101
|
|
|
0.1
|
|
|
883,475
|
|
|
(1.0)
|
|
Less: interest
expense
|
3,435
|
|
|
16,302
|
|
|
(78.9)
|
|
|
9,319
|
|
|
(63.1)
|
|
Total net
revenues
|
871,449
|
|
|
857,799
|
|
|
1.6
|
|
|
874,156
|
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
349,638
|
|
|
363,702
|
|
|
(3.9)
|
|
|
362,272
|
|
|
(3.5)
|
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
125,678
|
|
|
116,254
|
|
|
8.1
|
|
|
140,145
|
|
|
(10.3)
|
|
Amortization of
deferred sales commissions
|
6,622
|
|
|
3,241
|
|
|
104.3
|
|
|
5,526
|
|
|
19.8
|
|
Trade execution,
marketing, T&E and other
|
44,288
|
|
|
57,550
|
|
|
(23.0)
|
|
|
55,610
|
|
|
(20.4)
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
121,424
|
|
|
120,180
|
|
|
1.0
|
|
|
122,267
|
|
|
(0.7)
|
|
Real
estate charges (credits)
|
5,526
|
|
|
548
|
|
|
n/m
|
|
|
—
|
|
|
n/m
|
|
Contingent payment
arrangements
|
807
|
|
|
829
|
|
|
(2.7)
|
|
|
793
|
|
|
1.8
|
|
Interest on
borrowings
|
1,096
|
|
|
3,990
|
|
|
(72.5)
|
|
|
2,834
|
|
|
(61.3)
|
|
Amortization of
intangible assets
|
6,723
|
|
|
7,285
|
|
|
(7.7)
|
|
|
6,486
|
|
|
3.7
|
|
Total operating
expenses
|
661,802
|
|
|
673,579
|
|
|
(1.7)
|
|
|
695,933
|
|
|
(4.9)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
209,647
|
|
|
184,220
|
|
|
13.8
|
|
|
178,223
|
|
|
17.6
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
11,386
|
|
|
10,211
|
|
|
11.5
|
|
|
9,474
|
|
|
20.2
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
198,261
|
|
|
174,009
|
|
|
13.9
|
|
|
168,749
|
|
|
17.5
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income of
consolidated entities
attributable to non-controlling interests
|
20,940
|
|
|
7,757
|
|
|
169.9
|
|
|
(25,571)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
177,321
|
|
|
$
|
166,252
|
|
|
6.7
|
|
|
$
|
194,320
|
|
|
(8.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2020
|
|
2Q
2019
|
|
%
Change
|
|
1Q
2020
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
63,201
|
|
|
$
|
59,023
|
|
|
7.1
|
%
|
|
$
|
69,914
|
|
|
(9.6)
|
%
|
Income
Taxes
|
6,275
|
|
|
6,749
|
|
|
(7.0)
|
|
|
7,655
|
|
|
(18.0)
|
|
Net
Income
|
56,926
|
|
|
52,274
|
|
|
8.9
|
|
|
62,259
|
|
|
(8.6)
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
3
|
|
|
19
|
|
|
(84.2)
|
%
|
|
15
|
|
|
(80.0)
|
%
|
Net Income -
Diluted
|
$
|
56,929
|
|
|
$
|
52,293
|
|
|
8.9
|
|
|
$
|
62,274
|
|
|
(8.6)
|
|
Diluted Net Income
per Unit
|
$
|
0.59
|
|
|
$
|
0.54
|
|
|
9.3
|
|
|
$
|
0.63
|
|
|
(6.3)
|
|
Distribution per
Unit
|
$
|
0.61
|
|
|
$
|
0.56
|
|
|
8.9
|
|
|
$
|
0.64
|
|
|
(4.7)
|
|
|
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
Units
Outstanding
|
2Q
2020
|
|
2Q
2019
|
|
%
Change
|
|
1Q
2020
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
268,620,187
|
|
|
268,815,565
|
|
|
(0.1)
|
%
|
|
269,981,431
|
|
|
(0.5)
|
%
|
Weighted average -
basic
|
269,080,676
|
|
|
268,475,021
|
|
|
0.2
|
%
|
|
270,497,710
|
|
|
(0.5)
|
|
Weighted average -
diluted
|
269,090,125
|
|
|
268,522,779
|
|
|
0.2
|
%
|
|
270,529,887
|
|
|
(0.5)
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
96,431,971
|
|
|
96,624,449
|
|
|
(0.2)
|
%
|
|
97,793,215
|
|
|
(1.4)
|
%
|
Weighted average -
basic
|
96,892,460
|
|
|
96,283,355
|
|
|
0.6
|
%
|
|
98,309,494
|
|
|
(1.4)
|
|
Weighted average -
diluted
|
96,901,909
|
|
|
96,331,113
|
|
|
0.6
|
%
|
|
98,341,671
|
|
|
(1.5)
|
|
AllianceBernstein
L.P.
|
|
|
|
ASSETS UNDER
MANAGEMENT | June 30, 2020
|
|
|
|
($
Billions)
|
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
6/30/20
|
|
6/30/19
|
|
Ending Assets Under
Management
|
$600.0
|
|
$580.8
|
|
Average Assets Under
Management
|
$578.5
|
|
$565.9
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
256.7
|
|
|
$
|
198.6
|
|
|
$
|
86.5
|
|
|
$
|
541.8
|
|
|
Sales/New
accounts
|
8.8
|
|
|
19.6
|
|
|
3.4
|
|
|
31.8
|
|
|
Redemption/Terminations
|
(12.7)
|
|
|
(14.5)
|
|
|
(4.2)
|
|
|
(31.4)
|
|
|
Net Cash
Flows
|
(2.5)
|
|
|
(1.3)
|
|
|
0.1
|
|
|
(3.7)
|
|
|
Net
Flows
|
(6.4)
|
|
|
3.8
|
|
|
(0.7)
|
|
|
(3.3)
|
|
|
Transfers
|
—
|
|
|
0.2
|
|
|
(0.2)
|
|
|
—
|
|
|
Investment
Performance
|
25.9
|
|
|
26.9
|
|
|
8.7
|
|
|
61.5
|
|
|
End of
Period
|
$
|
276.2
|
|
|
$
|
229.5
|
|
|
$
|
94.3
|
|
|
$
|
600.0
|
|
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
|
$
|
141.5
|
|
|
$
|
47.2
|
|
|
$
|
236.1
|
|
|
$
|
45.9
|
|
|
$
|
10.3
|
|
|
$
|
60.8
|
|
|
$
|
541.8
|
|
|
Sales/New
accounts
|
13.8
|
|
|
—
|
|
|
15.0
|
|
|
2.3
|
|
|
—
|
|
|
0.7
|
|
|
31.8
|
|
|
Redemption/Terminations
|
(9.3)
|
|
|
—
|
|
|
(18.8)
|
|
|
(2.6)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(31.4)
|
|
|
Net Cash
Flows
|
(1.7)
|
|
|
(1.5)
|
|
|
(1.3)
|
|
|
—
|
|
|
(0.5)
|
|
|
1.3
|
|
|
(3.7)
|
|
|
Net
Flows
|
2.8
|
|
|
(1.5)
|
|
|
(5.1)
|
|
|
(0.3)
|
|
|
(0.6)
|
|
|
1.4
|
|
|
(3.3)
|
|
|
Investment
Performance
|
28.8
|
|
|
8.6
|
|
|
16.9
|
|
|
1.5
|
|
|
0.2
|
|
|
5.5
|
|
|
61.5
|
|
|
End of
Period
|
$
|
173.1
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
47.1
|
|
|
$
|
9.9
|
|
|
$
|
67.7
|
|
|
$
|
600.0
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
2.8
|
|
|
(1.5)
|
|
|
$
|
1.3
|
|
|
|
Fixed
Income
|
(5.4)
|
|
|
(0.6)
|
|
|
(6.0)
|
|
|
|
Other
(2)
|
1.3
|
|
|
0.1
|
|
|
1.4
|
|
|
|
Total
|
$
|
(1.3)
|
|
|
$
|
(2.0)
|
|
|
$
|
(3.3)
|
|
|
|
(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
|
$
|
186.3
|
|
|
$
|
125.1
|
|
|
$
|
92.2
|
|
|
$
|
403.6
|
|
|
Non-U.S.
Clients
|
89.9
|
|
|
104.4
|
|
|
2.1
|
|
|
196.4
|
|
|
Total
|
$
|
276.2
|
|
|
$
|
229.5
|
|
|
$
|
94.3
|
|
|
$
|
600.0
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
6/30/2020
|
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
871,449
|
|
|
$
|
874,156
|
|
|
$
|
987,304
|
|
|
$
|
877,867
|
|
|
$
|
857,799
|
|
|
$
|
795,462
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(120,099)
|
|
|
(130,857)
|
|
|
(127,553)
|
|
|
(118,635)
|
|
|
(108,347)
|
|
|
(100,509)
|
|
|
|
Investment advisory
services fees
|
(12,202)
|
|
|
(14,814)
|
|
|
(15,120)
|
|
|
(12,696)
|
|
|
(11,148)
|
|
|
(8,986)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(3,331)
|
|
|
(7,062)
|
|
|
(6,717)
|
|
|
(5,119)
|
|
|
(4,356)
|
|
|
(4,722)
|
|
|
|
Other
revenues
|
(10,195)
|
|
|
(9,607)
|
|
|
(9,436)
|
|
|
(9,571)
|
|
|
(9,160)
|
|
|
(7,759)
|
|
|
|
Impact of
consolidated company-sponsored investment funds
|
(21,552)
|
|
|
24,135
|
|
|
(8,567)
|
|
|
(4,820)
|
|
|
(8,697)
|
|
|
(10,959)
|
|
|
|
Long-term incentive
compensation-related investment losses (gains)
|
(5,257)
|
|
|
7,099
|
|
|
(1,457)
|
|
|
(189)
|
|
|
(1,389)
|
|
|
(4,496)
|
|
|
|
Long-term incentive
compensation-related dividends and interest
|
(88)
|
|
|
(106)
|
|
|
(997)
|
|
|
(128)
|
|
|
(136)
|
|
|
(147)
|
|
|
|
Write-down of
investment
|
—
|
|
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted Net
Revenues
|
|
$
|
698,725
|
|
|
$
|
743,803
|
|
|
$
|
817,457
|
|
|
$
|
726,709
|
|
|
$
|
714,566
|
|
|
$
|
657,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
209,647
|
|
|
$
|
178,223
|
|
|
$
|
268,283
|
|
|
$
|
202,783
|
|
|
$
|
184,220
|
|
|
$
|
168,151
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate
|
5,188
|
|
|
(339)
|
|
|
2,623
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Long-term incentive
compensation-related items
|
104
|
|
|
566
|
|
|
66
|
|
|
517
|
|
|
277
|
|
|
357
|
|
|
|
CEO's EQH award
compensation
|
209
|
|
|
184
|
|
|
217
|
|
|
217
|
|
|
227
|
|
|
465
|
|
|
|
Write-down of
investment
|
—
|
|
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Acquisition-related
expenses
|
805
|
|
|
526
|
|
|
3,459
|
|
|
556
|
|
|
2,718
|
|
|
—
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
—
|
|
|
(3,051)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Sub-total
of non-GAAP
adjustments
|
6,306
|
|
|
1,796
|
|
|
3,314
|
|
|
1,290
|
|
|
3,222
|
|
|
822
|
|
|
|
Less: Net (loss)
income of consolidated entities attributable to non-controlling
interests
|
20,940
|
|
|
(25,571)
|
|
|
7,623
|
|
|
4,145
|
|
|
7,757
|
|
|
10,116
|
|
|
Adjusted Operating
Income
|
$
|
195,013
|
|
|
$
|
205,590
|
|
|
$
|
263,974
|
|
|
$
|
199,928
|
|
|
$
|
179,685
|
|
|
$
|
158,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
21.7
|
%
|
|
23.3
|
%
|
|
26.4
|
%
|
|
22.6
|
%
|
|
20.6
|
%
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
27.9
|
%
|
|
27.6
|
%
|
|
32.3
|
%
|
|
27.5
|
%
|
|
25.1
|
%
|
|
24.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except
per Unit amounts, unaudited)
|
6/30/2020
|
|
3/31/2020
|
|
12/31/2019
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
Net Income -
Diluted, GAAP basis
|
$
|
56,929
|
|
|
$
|
62,274
|
|
|
$
|
80,041
|
|
|
$
|
59,845
|
|
|
$
|
52,293
|
|
|
$
|
46,465
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
2,533
|
|
|
326
|
|
|
1,234
|
|
|
512
|
|
|
1,234
|
|
|
462
|
|
|
Adjusted Net
Income - Diluted
|
$
|
59,462
|
|
|
$
|
62,600
|
|
|
$
|
81,275
|
|
|
$
|
60,357
|
|
|
$
|
53,527
|
|
|
$
|
46,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.59
|
|
|
$
|
0.63
|
|
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
|
Impact of AB non-GAAP
adjustments
|
0.02
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
—
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.61
|
|
|
$
|
0.64
|
|
|
$
|
0.85
|
|
|
$
|
0.63
|
|
|
$
|
0.56
|
|
|
$
|
0.49
|
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Net Revenue, as adjusted, is reduced to exclude all of the
company's distribution revenues, which are recorded as a separate
line item on the consolidated statement of income, as well as a
portion of investment advisory services fees received that is used
to pay distribution and servicing costs. For certain products,
based on the distinct arrangements, certain distribution fees are
collected by us and passed-through to third-party client
intermediaries, while for certain other products, we collect
investment advisory services fees and a portion is passed-through
to third-party client intermediaries. In both arrangements, the
third-party client intermediary owns the relationship with the
client and is responsible for performing services and distributing
the product to the client on our behalf. We believe offsetting
distribution revenues and certain investment advisory services fees
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
that perform functions on behalf of our sponsored mutual funds
and/or shareholders of these funds. Distribution-related
adjustments fluctuate each period based on the type of investment
products sold, as well as the average AUM over the period. Also, we
adjust distribution revenues for the amortization of deferred sales
commissions as these costs, over time, will offset such
revenues.
Lastly, we adjust investment advisory and services fees and
other revenues for pass through costs, primarily related to our
transfer agent and shareholder servicing fees. 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.
Lastly, during the first quarter of 2020, we wrote-down an
investment which had been received in exchange for the sale of
software technology; the write-down brought the investment balance
to zero.
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 write-down
of an investment, and (7) adjustments to contingent payment
arrangements.
Real estate charges (credits) incurred 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. However, beginning in the fourth quarter of 2019,
real estate charges (credits), while excluded in the period in
which the charges (credits) are recorded, are included ratably over
the remaining applicable lease term.
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 long-term 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 consolidated
statement of income. The compensation expense associated with these
awards has been excluded from our non-GAAP measures 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.
The write-down of the investment in the first quarter of 2020
has 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