NEW YORK, Oct. 24, 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 September 30, 2019.
"Our third quarter results continue to reflect momentum in
several areas of our business," said Seth
P. Bernstein, President and CEO of AllianceBernstein. "Total
firmwide net inflows of $8.1 billion
were positive for a fifth straight quarter and were driven by
$9.3 billion of active net inflows.
Year-to-date active net inflows of $21.6
billion translates to a 6.3% annualized organic growth
rate, continuing our best year-to-date in more than a decade."
(US $ Thousands
except per Unit amounts)
|
3Q
2019
|
|
3Q
2018
|
|
3Q 2019
vs 3Q
2018 %
Change
|
|
2Q
2019
|
|
3Q 2019
vs. 2Q
2019 %
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
877,867
|
|
|
$
|
850,176
|
|
|
3.3
|
%
|
|
$
|
857,799
|
|
|
2.3
|
%
|
Operating
income
|
$
|
202,783
|
|
|
$
|
213,819
|
|
|
(5.2)
|
%
|
|
$
|
184,220
|
|
|
10.1
|
%
|
Operating
margin
|
22.6
|
%
|
|
25.1
|
%
|
|
(250 bps)
|
|
20.6
|
%
|
|
200 bps
|
AB Holding Diluted
EPU
|
$
|
0.62
|
|
|
$
|
0.68
|
|
|
(8.8)
|
%
|
|
$
|
0.54
|
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
726,709
|
|
|
$
|
727,143
|
|
|
(0.1)
|
%
|
|
$
|
714,566
|
|
|
1.7
|
%
|
Operating
income
|
$
|
199,928
|
|
|
$
|
215,758
|
|
|
(7.3)
|
%
|
|
$
|
179,685
|
|
|
11.3
|
%
|
Operating
margin
|
27.5
|
%
|
|
29.7
|
%
|
|
(220 bps)
|
|
25.1
|
%
|
|
240 bps
|
AB Holding Diluted
EPU
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
(8.7)
|
%
|
|
$
|
0.56
|
|
|
12.5
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
(8.7)
|
%
|
|
$
|
0.56
|
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
592.4
|
|
|
$
|
550.4
|
|
|
7.6
|
%
|
|
$
|
580.8
|
|
|
2.0
|
%
|
Average
AUM
|
$
|
586.3
|
|
|
$
|
546.9
|
|
|
7.2
|
%
|
|
$
|
565.9
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
(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 reached a record
$21.1 billion - the highest in Retail
history - and represents a continued rebound in fixed income and
ongoing success with active equities. Net inflows of $7.4 billion were the highest in 19 years,
positive for a fifth straight quarter and represent our third
consecutive quarter exceeding $5
billion. In Institutional, we have seen substantial pipeline
growth as net flows turn positive for the year at $1 billion. Our $11.6
billion institutional pipeline - up 63% sequentially at
quarter-end - is more heavily weighted toward active equity and
alternative investment strategies. Our pipeline's annualized fee
base reached a new high of over $40
million, representing the eighth straight quarter in which
it exceeded $30 million. New
additions in the third quarter are the highest in two years at an
average fee rate of more than 2x the channel average. In Private
Wealth, gross sales were down year-on-year, and while flows were
negative in a weaker quarter, annualized outflows remain below our
historical average. On the sell-side, Bernstein Research continues
to feel the effects of a difficult environment as global customer
activity continued to decline. As a firm, we expanded our adjusted
operating margin of 27.5% by 240 basis points versus this year's
second quarter."
The firm's cash distribution per Unit of $0.63 is payable on November 14, 2019, to holders of record of AB
Holding Units at the close of business on November 4, 2019.
Market Performance
US and global equity and fixed income markets were mixed in the
third quarter. The S&P 500's total return was 1.7% and the MSCI
EAFE Index's total return was (1.0)%. The Bloomberg Barclays US
Aggregate Index returned 2.3% during the third quarter and the
Bloomberg Barclays Global Aggregate ex US Index's total return was
(0.6)%.
Assets Under Management ($ Billions)
Total assets under management as of September 30, 2019 were $592.4 billion, up $11.6
billion, or 2.0%, from June 30,
2019, and up $42.0 billion, or
7.6%, from September 30, 2018.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 9/30/2019
|
$272.9
|
|
$222.5
|
|
$97.0
|
|
$592.4
|
Net Flows for Three
Months Ended 9/30/19:
|
|
|
|
|
|
|
|
Active
|
$2.0
|
|
$8.2
|
|
$(0.9)
|
|
$9.3
|
Passive
|
(0.5)
|
|
(0.8)
|
|
0.1
|
|
(1.2)
|
Total
|
$1.5
|
|
$7.4
|
|
$(0.8)
|
|
$8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net inflows were $8.1
billion in the third quarter, compared to net inflows of
$9.5 billion in the second quarter,
and net inflows of $1.3 billion in
the prior year period.
Institutional channel third quarter net inflows of $1.5 billion compared to net inflows of
$4.2 billion in the second quarter.
Institutional gross sales of $2.9
billion decreased sequentially from $5.5 billion. The pipeline of awarded but
unfunded Institutional mandates increased sequentially to
$11.6 billion at September 30, 2019 from $7.1 billion at June 30,
2019.
Retail channel third quarter net inflows of $7.4 billion compared to net inflows of
$5.9 billion in the second quarter.
Retail gross sales of $21.1 billion
increased 12% sequentially from $18.8
billion.
Private Wealth channel third quarter net outflows of
$0.8 billion compared to net outflows
of $0.6 billion in the second
quarter. Private Wealth gross sales of $2.3
billion decreased sequentially from $3.0 billion.
Third 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 the 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
Third quarter net revenues of $878
million increased 3% from $850
million in the third quarter of 2018. Higher investment
advisory base fees, distribution revenues, investment gains and net
dividend and interest income were partially offset by lower
performance-based fees and Bernstein Research revenues. The prior
year's quarter included $35 million
of performance-based fees related to two funds, Financial Services
Opportunity Fund I and Real Estate Equity Fund I, which have either
been liquidated or mostly liquidated.
Sequentially, net revenues increased 2% from $858 million. Higher investment advisory base
fees and distribution revenues were partially offset by lower
investment gains, Bernstein Research Revenues and performance-based
fees.
Third quarter Bernstein Research revenues of $102 million decreased slightly compared to the
prior year quarter and decreased 4% sequentially. Excluding
revenues from the Autonomous acquisition, which closed on
April 1, 2019, Bernstein Research
revenues declined 10% from the prior year period due to lower
global client activity and trading commissions which also drove the
sequential decrease.
Expenses
Third quarter operating expenses of $675
million increased 6% from $636
million in the third quarter of 2018. Total employee
compensation and benefits, promotion and servicing and general and
administrative ("G&A") expenses were all higher. Employee
compensation and benefits expense increased due to higher base
compensation, severance and fringes, partially offset by lower
incentive compensation and commissions. Promotion and servicing
expense increased due to higher distribution related payments,
marketing and travel and entertainment expenses, partially offset
by lower amortization of deferred sales commissions. The increase
in G&A was primarily due to higher portfolio servicing fees,
technology costs and occupancy expense.
Sequentially, operating expenses were flat. Higher promotion and
servicing expense was partially offset by lower G&A and
employee compensation and benefits expense. Promotion and servicing
expense increased due to higher distribution related payments,
partially offset by lower travel and entertainment and marketing
expenses. Within G&A, lower professional fees and miscellaneous
G&A expenses were partially offset by higher portfolio
servicing fees. Employee compensation and benefits expense
decreased due to lower incentive compensation, partially offset by
higher commissions.
Operating Income and Net Income Per Unit
Third quarter operating income of $203
million decreased 5% from $214
million in the third quarter of 2018 and the operating
margin of 22.6% in the third quarter of 2019 decreased 250 basis
points from 25.1% in the third quarter of 2018.
Sequentially, operating income increased 10% from $184 million in the second quarter of 2019 and
the operating margin of 22.6% increased 200 basis points from 20.6%
in the second quarter of 2019.
Third quarter diluted net income per Unit was $0.62 compared to $0.68 in the third quarter of 2018 and
$0.54 in the second quarter of
2019.
Non-GAAP Earnings
This section discusses our third quarter 2019 non-GAAP financial
results, compared to the third quarter of 2018 and the second
quarter of 2019. 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
Third quarter adjusted net revenues of $727 million were flat from the third quarter of
2018. Higher investment advisory base fees, investment gains and
net dividend and interest income were partially offset by lower
performance-based fees and higher net distribution expense.
Sequentially, adjusted net revenues increased 2% from
$715 million. Higher investment
advisory base fees were partially offset by lower Bernstein
Research revenues and performance-based fees.
Expenses
Third quarter adjusted operating expenses of $527 million increased 3% from $511 million in the third quarter of 2018, driven
by higher total employee compensation and benefits, G&A and
promotion and servicing expenses. Employee compensation and
benefits expense increased due to higher base compensation and
fringes, partially offset by lower incentive compensation. Within
G&A, technology costs and occupancy expenses were higher.
Promotion and servicing expense increased due to higher marketing
and travel and entertainment expenses.
Sequentially, adjusted operating expenses decreased 2% from
$535 million. Promotion and servicing
and G&A expenses were lower. Promotion and servicing expense
decreased due to lower travel and entertainment and marketing
expenses.
Operating Income, Margin and Net Income Per Unit
Third quarter adjusted operating income of $200 million decreased 7% from $216 million in the third quarter of 2018, and
the adjusted operating margin of 27.5% decreased 220 basis points
from 29.7%.
Sequentially, adjusted operating income increased 11% from
$180 million and the adjusted
operating margin of 27.5% in the third quarter of 2019 increased
240 basis points from 25.1%.
Third quarter adjusted diluted net income per Unit of
$0.63 was down from $0.69 in the third quarter of 2018 and up from
$0.56 in the second quarter of
2019.
Headcount
As of September 30, 2019, we had
3,778 employees, compared to 3,583 employees as of September 30, 2018 and 3,762 as of June 30, 2019.
Unit Repurchases
During the three and nine months ended September 30, 2019,
we purchased 0.9 million and 2.9 million AB Holding Units for
$25.1 million and $83.7 million (on a trade date basis),
respectively. These amounts reflect open-market purchases of 0.6
million and 2.5 million AB Holding Units for $15.3 million and $70.6
million, respectively, 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. During the
three and nine months ended September 30, 2018, AB purchased
1.6 million and 2.9 million AB Holding Units for $48.0 million and $83.2
million, respectively (on a trade date basis). These amounts
reflect open-market purchases of 1.6 million and 2.8 million AB
Holding Units for $48.0 million and
$80.9 million, respectively, 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.
Third Quarter 2019 Earnings Conference Call
Information
Management will review Third Quarter 2019 financial and
operating results during a conference call beginning at
8:00 a.m. (EDT) on Thursday,
October 24, 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 6385796.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Third Quarter 2019 financial and
operating results on October 24, 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 #: 6385796.
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, these
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
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). 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 September 30, 2019,
including both the general partnership and limited partnership
interests in AllianceBernstein, AllianceBernstein Holding owned
approximately 35.4% of AllianceBernstein and AXA Equitable Holdings
("EQH"), directly and through various subsidiaries, owned an
approximate 65.3% 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)
|
3Q
2019
|
|
3Q
2018
|
|
3Q 2019
vs. 3Q
2018 %
Change
|
|
2Q
2019
|
|
3Q 2019
vs. 2Q
2019 %
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
608,765
|
|
|
$
|
568,918
|
|
|
7.0
|
%
|
|
$
|
585,077
|
|
|
4.0
|
%
|
Performance
fees
|
7,619
|
|
|
41,145
|
|
|
(81.5)
|
%
|
|
11,287
|
|
|
(32.5)
|
%
|
Bernstein research
services
|
102,014
|
|
|
103,581
|
|
|
(1.5)
|
%
|
|
105,991
|
|
|
(3.8)
|
%
|
Distribution
revenues
|
118,635
|
|
|
104,488
|
|
|
13.5
|
%
|
|
108,347
|
|
|
9.5
|
%
|
Dividends and
interest
|
24,882
|
|
|
21,942
|
|
|
13.4
|
%
|
|
27,654
|
|
|
(10.0)
|
%
|
Investments gains
(losses)
|
4,433
|
|
|
565
|
|
|
n/m
|
|
10,949
|
|
|
(59.5)
|
%
|
Other
revenues
|
24,497
|
|
|
24,012
|
|
|
2.0
|
%
|
|
24,796
|
|
|
(1.2)
|
%
|
Total
revenues
|
890,845
|
|
|
864,651
|
|
|
3.0
|
%
|
|
874,101
|
|
|
1.9
|
%
|
Less: interest
expense
|
12,978
|
|
|
14,475
|
|
|
(10.3)
|
%
|
|
16,302
|
|
|
(20.4)
|
%
|
Total net
revenues
|
877,867
|
|
|
850,176
|
|
|
3.3
|
%
|
|
857,799
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
361,822
|
|
|
357,442
|
|
|
1.2
|
%
|
|
363,702
|
|
|
(0.5)
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
127,726
|
|
|
106,372
|
|
|
20.1
|
%
|
|
116,254
|
|
|
9.9
|
%
|
Amortization of
deferred sales
commissions
|
3,605
|
|
|
4,651
|
|
|
(22.5)
|
%
|
|
3,241
|
|
|
11.2
|
%
|
Trade execution,
marketing, T&E and
other
|
53,814
|
|
|
50,793
|
|
|
5.9
|
%
|
|
57,550
|
|
|
(6.5)
|
%
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
117,056
|
|
|
107,526
|
|
|
8.9
|
%
|
|
120,180
|
|
|
(2.6)
|
%
|
Real
estate charges (credits)
|
153
|
|
|
(155)
|
|
|
n/m
|
|
548
|
|
|
(72.1)
|
%
|
Contingent payment
arrangements
|
829
|
|
|
52
|
|
|
n/m
|
|
829
|
|
|
—
|
%
|
Interest on
borrowings
|
2,802
|
|
|
2,711
|
|
|
3.4
|
%
|
|
3,990
|
|
|
(29.8)
|
%
|
Amortization of
intangible assets
|
7,277
|
|
|
6,965
|
|
|
4.5
|
%
|
|
7,285
|
|
|
(0.1)
|
%
|
Total operating
expenses
|
675,084
|
|
|
636,357
|
|
|
6.1
|
%
|
|
673,579
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
202,783
|
|
|
213,819
|
|
|
(5.2)
|
%
|
|
184,220
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
10,827
|
|
|
9,419
|
|
|
14.9
|
%
|
|
10,211
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
191,956
|
|
|
204,400
|
|
|
(6.1)
|
%
|
|
174,009
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities
attributable to non-controlling interests
|
4,145
|
|
|
726
|
|
|
n/m
|
|
7,757
|
|
|
(46.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
187,811
|
|
|
$
|
203,674
|
|
|
(7.8)
|
%
|
|
$
|
166,252
|
|
|
13.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
3Q
2019
|
|
3Q
2018
|
|
3Q 2019
vs. 3Q
2018 %
Change
|
|
2Q
2019
|
|
3Q 2019
vs. 2Q
2019 %
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
66,722
|
|
|
$
|
72,802
|
|
|
(8.4)
|
%
|
|
$
|
59,023
|
|
|
13.0
|
%
|
Income
Taxes
|
6,894
|
|
|
6,902
|
|
|
(0.1)
|
%
|
|
6,749
|
|
|
2.1
|
%
|
Net
Income
|
59,828
|
|
|
65,900
|
|
|
(9.2)
|
%
|
|
52,274
|
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating
Partnership (1)
|
17
|
|
|
117
|
|
|
(85.5)
|
%
|
|
19
|
|
|
(10.5)
|
%
|
Net Income -
Diluted
|
$
|
59,845
|
|
|
$
|
66,017
|
|
|
(9.3)
|
%
|
|
$
|
52,293
|
|
|
14.4
|
%
|
Diluted Net Income
per Unit
|
$
|
0.62
|
|
|
$
|
0.68
|
|
|
(8.8)
|
%
|
|
$
|
0.54
|
|
|
14.8
|
%
|
Distribution per
Unit
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
(8.7)
|
%
|
|
$
|
0.56
|
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
|
Units
Outstanding
|
3Q
2019
|
|
3Q
2018
|
|
3Q 2019
vs. 3Q
2018 %
Change
|
|
2Q
2019
|
|
3Q 2019
vs. 2Q
2019 %
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
268,182,957
|
|
|
268,565,762
|
|
|
(0.1)
|
%
|
|
268,815,565
|
|
|
(0.2)
|
%
|
Weighted average -
basic
|
268,567,071
|
|
|
269,602,398
|
|
|
(0.4)
|
%
|
|
268,475,021
|
|
|
—
|
%
|
Weighted average -
diluted
|
268,603,472
|
|
|
269,847,693
|
|
|
(0.5)
|
%
|
|
268,522,779
|
|
|
—
|
%
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
95,991,941
|
|
|
96,372,964
|
|
|
(0.4)
|
%
|
|
96,624,449
|
|
|
(0.7)
|
%
|
Weighted average -
basic
|
96,375,961
|
|
|
97,408,864
|
|
|
(1.1)
|
%
|
|
96,283,355
|
|
|
0.1
|
%
|
Weighted average -
diluted
|
96,412,362
|
|
|
97,654,159
|
|
|
(1.3)
|
%
|
|
96,331,113
|
|
|
0.1
|
%
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | September 30, 2019
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
9/30/19
|
9/30/18
|
|
Ending Assets Under
Management
|
$592.4
|
$550.4
|
|
Average Assets Under
Management
|
$586.3
|
$546.9
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
269.1
|
|
|
$
|
214.5
|
|
|
$
|
97.2
|
|
|
$
|
580.8
|
|
|
Sales/New
accounts
|
2.9
|
|
|
21.1
|
|
|
2.3
|
|
|
26.3
|
|
|
Redemption/Terminations
|
(4.2)
|
|
|
(11.2)
|
|
|
(3.2)
|
|
|
(18.6)
|
|
|
Net Cash
Flows
|
2.8
|
|
|
(2.5)
|
|
|
0.1
|
|
|
0.4
|
|
|
Net
Flows
|
1.5
|
|
|
7.4
|
|
|
(0.8)
|
|
|
8.1
|
|
|
Investment
Performance
|
2.3
|
|
|
0.6
|
|
|
0.6
|
|
|
3.5
|
|
|
End of
Period
|
$
|
272.9
|
|
|
$
|
222.5
|
|
|
$
|
97.0
|
|
|
$
|
592.4
|
|
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
|
$
|
161.8
|
|
|
$
|
57.4
|
|
|
$
|
240.8
|
|
|
$
|
44.3
|
|
|
$
|
9.5
|
|
|
$
|
67.0
|
|
|
$
|
580.8
|
|
|
Sales/New
accounts
|
6.9
|
|
|
0.3
|
|
|
16.2
|
|
|
2.5
|
|
|
—
|
|
|
0.4
|
|
|
26.3
|
|
|
Redemption/Terminations
|
(7.2)
|
|
|
(0.6)
|
|
|
(8.8)
|
|
|
(1.5)
|
|
|
(0.1)
|
|
|
(0.4)
|
|
|
(18.6)
|
|
|
Net Cash
Flows
|
(1.1)
|
|
|
(0.8)
|
|
|
2.0
|
|
|
—
|
|
|
(0.1)
|
|
|
0.4
|
|
|
0.4
|
|
|
Net
Flows
|
(1.4)
|
|
|
(1.1)
|
|
|
9.4
|
|
|
1.0
|
|
|
(0.2)
|
|
|
0.4
|
|
|
8.1
|
|
|
Investment
Performance
|
(0.5)
|
|
|
0.5
|
|
|
2.7
|
|
|
0.5
|
|
|
0.1
|
|
|
0.2
|
|
|
3.5
|
|
|
End of
Period
|
$
|
159.9
|
|
|
$
|
56.8
|
|
|
$
|
252.9
|
|
|
$
|
45.8
|
|
|
$
|
9.4
|
|
|
$
|
67.6
|
|
|
$
|
592.4
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
(1.4)
|
|
|
$
|
(1.1)
|
|
|
$
|
(2.5)
|
|
|
|
Fixed
Income
|
10.4
|
|
|
(0.2)
|
|
|
10.2
|
|
|
|
Other
(2)
|
0.3
|
|
|
0.1
|
|
|
0.4
|
|
|
|
Total
|
$
|
9.3
|
|
|
$
|
(1.2)
|
|
|
$
|
8.1
|
|
|
|
(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
|
$
|
173.8
|
|
|
$
|
120.9
|
|
|
$
|
94.9
|
|
|
$
|
389.6
|
|
|
Non-U.S.
Clients
|
99.1
|
|
|
101.6
|
|
|
2.1
|
|
|
202.8
|
|
|
Total
|
$
|
272.9
|
|
|
$
|
222.5
|
|
|
$
|
97.0
|
|
|
$
|
592.4
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
US $ Thousands,
unaudited
|
|
9/30/2019
|
|
6/30/2019
|
|
3/31/2019
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues,
GAAP
basis
|
|
$
|
877,867
|
|
|
$
|
857,799
|
|
|
$
|
795,462
|
|
|
$
|
804,660
|
|
|
$
|
850,176
|
|
|
$
|
844,738
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
payments
|
(127,726)
|
|
|
(116,254)
|
|
|
(105,993)
|
|
|
(104,359)
|
|
|
(106,372)
|
|
|
(106,301)
|
|
|
|
Amortization of
deferred sales
commissions
|
(3,605)
|
|
|
(3,241)
|
|
|
(3,502)
|
|
|
(3,981)
|
|
|
(4,651)
|
|
|
(6,113)
|
|
|
|
Pass-through fees
& expenses
|
(14,690)
|
|
|
(13,516)
|
|
|
(12,481)
|
|
|
(9,039)
|
|
|
(10,084)
|
|
|
(10,487)
|
|
|
|
Impact of
consolidated company-
sponsored investment funds
|
(4,820)
|
|
|
(8,697)
|
|
|
(10,959)
|
|
|
931
|
|
|
(1,543)
|
|
|
(1,494)
|
|
|
|
Long-term
incentive
compensation-related investment
losses (gains)
|
(189)
|
|
|
(1,389)
|
|
|
(4,496)
|
|
|
7,104
|
|
|
(1,253)
|
|
|
(542)
|
|
|
|
Long-term
incentive
compensation-related dividends
and interest
|
(128)
|
|
|
(136)
|
|
|
(147)
|
|
|
(1,631)
|
|
|
(130)
|
|
|
(156)
|
|
|
|
Loss on sale of
software
technology
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
Adjusted Net
Revenues
|
|
$
|
726,709
|
|
|
$
|
714,566
|
|
|
$
|
657,884
|
|
|
$
|
696,418
|
|
|
$
|
727,143
|
|
|
$
|
719,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
202,783
|
|
|
$
|
184,220
|
|
|
$
|
168,151
|
|
|
$
|
199,359
|
|
|
$
|
213,819
|
|
|
$
|
189,464
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate charges
(credits)
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|
(155)
|
|
|
6,909
|
|
|
|
Long-term incentive
compensation-
related items
|
517
|
|
|
277
|
|
|
357
|
|
|
243
|
|
|
1,820
|
|
|
585
|
|
|
|
CEO's EQH award
compensation
|
217
|
|
|
227
|
|
|
465
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Loss on sale of
software
technology
|
—
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
|
Acquisition-related
expenses
|
556
|
|
|
2,718
|
|
|
—
|
|
|
1,924
|
|
|
—
|
|
|
—
|
|
|
|
Contingent payment
arrangements
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,429)
|
|
|
—
|
|
|
—
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
|
Sub-total of
non-GAAP
adjustments
|
1,290
|
|
|
3,222
|
|
|
822
|
|
|
3,141
|
|
|
2,665
|
|
|
7,541
|
|
|
|
Less: Net income
(loss) of
consolidated entities attributable to
non-controlling interests
|
4,145
|
|
|
7,757
|
|
|
10,116
|
|
|
(1,727)
|
|
|
726
|
|
|
261
|
|
|
Adjusted Operating
Income
|
|
$
|
199,928
|
|
|
$
|
179,685
|
|
|
$
|
158,857
|
|
|
$
|
204,227
|
|
|
$
|
215,758
|
|
|
$
|
196,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis
excl. non-controlling interests
|
22.6
|
%
|
|
20.6
|
%
|
|
19.9
|
%
|
|
25.0
|
%
|
|
25.1
|
%
|
|
22.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
27.5
|
%
|
|
25.1
|
%
|
|
24.1
|
%
|
|
29.3
|
%
|
|
29.7
|
%
|
|
27.3
|
%
|
|
|
|
|
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AB Holding
L.P.
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RECONCILIATION OF
GAAP EPU
TO ADJUSTED EPU
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Three Months
Ended
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$ Thousands except
per Unit
amounts, unaudited
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9/30/2019
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6/30/2019
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3/31/2019
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12/31/2018
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9/30/2018
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6/30/2018
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Net Income -
Diluted, GAAP basis
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$
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59,845
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$
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52,293
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$
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46,465
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$
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59,951
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$
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66,017
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$
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58,572
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Impact on net income
of AB non-
GAAP adjustments
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512
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1,234
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462
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1,000
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919
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2,609
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Adjusted Net
Income - Diluted
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$
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60,357
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$
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53,527
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$
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46,927
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$
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60,951
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$
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66,936
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$
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61,181
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Diluted Net Income
per Holding
Unit, GAAP basis
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$
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0.62
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$
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0.54
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$
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0.49
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$
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0.63
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$
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0.68
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$
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0.59
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Impact of AB non-GAAP
adjustments
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0.01
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0.02
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—
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0.01
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0.01
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0.03
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Adjusted Diluted
Net Income per
Holding Unit
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$
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0.63
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$
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0.56
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$
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0.49
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$
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0.64
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$
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0.69
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$
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0.62
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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 that 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.
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 on
sale of software technology, and (7) adjustments to contingent
payment arrangements.
Real estate charges (credits) incurred outside of our
headquarters relocation strategy 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 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 condensed
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 loss on the sale of software technology 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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content:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-third-quarter-results-300944768.html
SOURCE AllianceBernstein L.P.