GAAP Diluted Net Income of $0.53 per Unit
Adjusted Diluted Net Income of $0.61 per Unit
Cash Distribution of $0.61 per Unit
NASHVILLE, Tenn., July 27,
2023 /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, 2023.
"AB's results reflected generally risk-averse activity as
markets transitioned into a higher-rate environment," said
Seth P. Bernstein, President and CEO
of AllianceBernstein. "That said, global equity markets continued
their year-to-date rally, rising throughout the quarter. Net
outflows were $4.0 billion, turning
positive in May and June following April's expected $6.2 billion in low-fee institutional
redemptions. Investors continued to embrace fixed income, which
grew 9% annualized organically, mostly offsetting active equity
outflows. Our institutional pipeline grew 10% sequentially to
$14.4 billion, driven by active
equity wins. Importantly, Equitable Holdings committed an
additional $10 billion of permanent
capital to grow our Private Markets business, increasing the value
derived from our mutually beneficial partnership. Investment
performance improved in fixed income, while near-term equity
performance lagged. Reflecting lower year-over-year average AUM,
adjusted operating income declined by 3% and adjusted earnings per
unit and distributions to unitholders declined by 14%."
|
(US $ Thousands except
per Unit amounts)
|
2Q
2023
|
|
2Q
2022
|
|
%
Change
|
|
1Q
2023
|
|
%
Change
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
1,008,456
|
|
$
971,444
|
|
3.8 %
|
|
$
1,024,091
|
|
(1.5 %)
|
|
Operating
income
|
$
188,661
|
|
$
192,648
|
|
(2.1) %
|
|
$
215,260
|
|
(12.4 %)
|
|
Operating
margin
|
18.4 %
|
|
22.6 %
|
|
(420 bps)
|
|
20.1 %
|
|
(170 bps)
|
|
AB Holding Diluted
EPU
|
$
0.53
|
|
$
0.69
|
|
(23.2) %
|
|
$
0.59
|
|
(10.2 %)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
822,631
|
|
$
816,346
|
|
0.8 %
|
|
$
832,599
|
|
(1.2 %)
|
|
Operating income
(2)
|
$
221,947
|
|
$
228,450
|
|
(2.8) %
|
|
$
238,524
|
|
(6.9 %)
|
|
Operating margin
(2)
|
27.0 %
|
|
28.0 %
|
|
(100 bps)
|
|
28.7 %
|
|
(170 bps)
|
|
AB Holding Diluted
EPU
|
$
0.61
|
|
$
0.71
|
|
(14.1) %
|
|
$
0.66
|
|
(7.6 %)
|
|
AB Holding cash
distribution per Unit
|
$
0.61
|
|
$
0.71
|
|
(14.1) %
|
|
$
0.66
|
|
(7.6 %)
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
|
Assets Under Management
("AUM")
|
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
691.5
|
|
$
646.8
|
|
6.9 %
|
|
$
675.9
|
|
2.3 %
|
|
Average AUM
|
$
678.4
|
|
$
688.6
|
|
(1.5) %
|
|
$
666.8
|
|
1.7 %
|
|
|
(1) The
adjusted financial measures represent non-GAAP financial measures.
See page 12 for reconciliations of GAAP Financial Results to
Adjusted Financial Results and pages 13-14 for notes describing the
adjustments.
|
|
(2) During the second quarter of
2023, we revised adjusted operating income for the impact of
interest on borrowings to align with our industry peers. We have
recast prior periods to align with current periods
presentation.
|
Bernstein continued, "In Retail, sales reflected strong demand
for taxable and municipal fixed income, which grew organically by
9% and 13% annualized, respectively. US Retail grew 9% annualized,
positive 11 of the last 13 quarters. Channel outflows were
$0.7 billion. Our Institutional
channel saw fixed income annualized organic growth of 11%, with net
outflows of $3.2 billion driven by
April's previously announced low-fee redemptions. Private Wealth
maintained strong sales in a seasonally lighter quarter; net flows
were essentially flat in the second quarter and grew 3.4%
annualized year-to-date. Bernstein Research revenues decreased 14%
versus the prior year as global institutional trading volumes
remained significantly constrained."
Bernstein concluded, "Rebounding equity markets resulted in
quarter-end assets under management of $692
billion, above both prior periods, positioning AB for an
improved start to the second half of 2023. Still, we maintain a
balanced outlook, recognizing that risks remain in today's economic
environment. Our globally diversified investment capabilities
position us well to serve client demand as conditions change. We
continue to focus intently on providing outstanding investment
performance to our clients."
The firm's cash distribution per Unit of $0.61 is payable on August 17, 2023, to
holders of record of AB Holding Units at the close of business on
August 7, 2023.
Market Performance
Global equity and fixed income market returns were predominantly
positive in the second quarter of 2023.
|
2Q
2023
|
|
S&P 500 Total
Return
|
8.7 %
|
|
MSCI EAFE Total
Return
|
3.2
|
|
Bloomberg Barclays US
Aggregate Return
|
(0.8)
|
|
Bloomberg Barclays
Global High Yield Index
|
2.0
|
Assets Under Management
($ Billions)
Total assets under management as of June 30, 2023 were
$691.5 billion, up $15.6 billion, or 2%, from March 31, 2023
and up $44.7 billion, or 7%, from
June 30, 2022.
|
|
Institutional
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
Assets Under Management
6/30/2023
|
|
$309.2
|
|
$266.6
|
|
$115.7
|
|
$691.5
|
|
Net Flows for Three
Months Ended 6/30/2023:
|
|
|
|
|
|
|
|
|
|
Active
|
|
($3.1)
|
|
($0.4)
|
|
($0.5)
|
|
($4.0)
|
|
Passive
|
|
(0.1)
|
|
(0.3)
|
|
0.4
|
|
—
|
|
Total
|
|
($3.2)
|
|
($0.7)
|
|
($0.1)
|
|
($4.0)
|
Total net outflows were $4.0
billion in the second quarter, compared to net inflows of
$0.8 billion in the first quarter of
2023, and net outflows of $2.7
billion in the prior year second quarter.
Institutional channel second quarter net outflows of
$3.2 billion compared to net outflows
of $2.7 billion in the first quarter
of 2023. Institutional gross sales of $1.5
billion decreased sequentially from $3.0 billion. The pipeline of awarded but
unfunded Institutional mandates increased sequentially to
$14.4 billion at June 30, 2023
compared to $13.1 billion at
March 31, 2023.
Retail channel second quarter net outflows of $0.7 billion compared to net inflows of
$1.6 billion in the first quarter of
2023. Retail gross sales of $16.5
billion decreased sequentially from $16.8 billion.
Private Wealth channel second quarter net outflows of
$0.1 billion compared to net inflows
of $1.9 billion in the first quarter
of 2023. Private Wealth gross sales of $4.4
billion decreased sequentially from $5.8 billion.
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 incentive
compensation-related mark-to-market adjustments,
acquisition-related expenses, interest expense 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 $1.0
billion increased 4% in the second quarter of 2022. The
increase was primarily due to investment gains in the current
quarter compared to investment losses in the prior year quarter,
higher net dividend and interest income and investment advisory
base fees, offset by lower Bernstein Research revenues,
distribution revenues and performance-based fees.
Sequentially, net revenues of $1.0
billion decreased 2%. The decrease was due to lower
performance-based fees, Bernstein Research revenues and investment
gains, partially offset by higher investment advisory base fees,
distribution revenues and net dividend and interest income.
Second quarter Bernstein Research revenues of $91.8 million decreased 14% compared to the prior
year second quarter and decreased 8% sequentially. The decrease in
the second quarter was driven by a significant decline in customer
trading activity due to prevailing macroeconomic conditions.
Sequentially, there was a decrease driven by a significant decline
in customer trading activity, partially offset by the timing of
research payments.
Expenses
Second quarter operating expenses of $819
million increased 5% from $778
million in the second quarter of 2022. The increase is
primarily due to higher employee compensation and benefit expense,
interest on borrowings, amortization of intangibles and general and
administrative ("G&A") expenses, offset by lower promotion and
servicing expenses. Employee compensation and benefits expense
increased due to higher incentive compensation, base compensation
and fringes, partially offset by lower commissions.The increase in
interest expense is driven by higher average borrowings and higher
interest rates. Within G&A, the increase was driven by higher
office-related expenses and valuation adjustments related to the
classification of Bernstein as held for sale, partially offset by
lower portfolio servicing fees and a favorable foreign
exchange impact. Promotion and servicing expenses decreased
due to lower distribution-related payments, trade execution costs
and transfer fees.
Sequentially, operating expenses increased 1% from $809 million, primarily driven by higher G&A
expenses and promotion and servicing expenses, partially offset by
lower employee compensation and benefits expense. Within G&A,
the increase was driven primarily by higher portfolio servicing
fees, an unfavorable foreign exchange impact, higher
office-related expenses, a write off of acquisition related
leasehold improvements, higher professional fees and technology
fees. Promotion and servicing expenses increased due to higher
marketing and meetings expenses, distribution-related payments and
travel and entertainment costs, partially offset by lower trade
execution costs. Employee compensation and benefits expense
decreased due to lower base compensation, commissions and fringes,
partially offset by higher incentive compensation.
Operating Income, Margin and Net Income Per Unit
Second quarter operating income of $189 million decreased 2% from $193 million in the second quarter of 2022 and
the operating margin of 18.4% in the second quarter of 2023
decreased 420 basis points from 22.6% in the second quarter of
2022.
Sequentially, operating income decreased 12% from $215 million in the first quarter of 2023 and the
operating margin of 18.4% decreased 170 basis points from 20.1% in
the first quarter of 2023.
Second quarter diluted net income per Unit was $0.53 compared to $0.69 in the second quarter of 2022 and
$0.59 in the first quarter of
2023.
Non-GAAP Earnings
This section discusses our second
quarter 2023 non-GAAP financial results, compared to the second
quarter of 2022 and the first quarter of 2023. 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 $823 million increased 1% from $816 million in the second quarter of 2022. The
increase was due to higher net dividend and interest income,
investment gains in the current quarter compared to investment
losses in the prior year quarter and higher investment advisory
base fees, partially offset by lower Bernstein Research revenues
and performance-based fees.
Sequentially, adjusted net revenues decreased 1% from
$833 million. The decrease was
primarily due to lower performance-based fees and Bernstein
Research revenues, partially offset by higher investment advisory
base fees, investment gains in the current quarter compared to
investment losses in the prior year quarter and higher net dividend
and interest income.
Expenses
Second quarter adjusted operating expenses of $601 million increased 2% from $588 million in the second quarter of 2022.
Higher employee compensation and benefits and G&A expenses were
partially offset by lower promotion and servicing expenses.
Employee compensation and benefits expense increased due to higher
base compensation, incentive compensation and fringes, partially
offset by lower commissions. Within G&A, the increase was
driven by higher office-related expenses and professional fees,
partially offset by a favorable foreign exchange impact. Promotion
and servicing expenses decreased due to lower trade execution costs
and transfer fees.
Sequentially, adjusted operating expenses increased 1% from
$594 million. Higher G&A expense
and promotion and servicing expenses were partially offset by lower
total employee compensation and benefits expense. Within G&A,
the increase was driven by an unfavorable foreign exchange
impact, higher portfolio servicing fees, office-related expenses,
professional fees and technology fees. Promotion and servicing
expenses increased primarily due to higher marketing and meetings
expenses and travel and entertainment expenses. Employee
compensation and benefits expense decreased due to lower base
compensation, commissions and fringes, partially offset by higher
incentive compensation.
Operating Income, Margin and Net Income Per
Unit 1
Second quarter adjusted operating income of $222 million decreased 3% from $228 million in the second quarter of 2022, and
the adjusted operating margin of 27.0% decreased 100 basis points
from 28.0%.
Sequentially, adjusted operating income of $222 million decreased 7% from $239 million and the adjusted operating margin of
27.0% decreased 170 basis points from 28.7%.
Second quarter adjusted diluted net income per Unit was
$0.61 compared to $0.71 in the second quarter of 2022 and
$0.66 in the first quarter of
2023.
Headcount
As of June 30, 2023, we had 4,606 employees, including 284
new hires onboarded during the first quarter of 2023, which were
previously outsourced consultants in Pune, India. Net of these hires, headcount was
essentially flat year-over-year, with 4,313 employees as of
June 30, 2022. Headcount was 4,566 as of March 31,
2023.
|
|
|
|
|
|
|
|
1 During the
second quarter of 2023, we revised adjusted operating income to
exclude interest on borrowings in order to align with our industry
peer group. We have recast prior periods presentation to align with
the current period presentation.
|
Unit Repurchases
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(in
millions)
|
|
Total amount of AB
Holding Units Purchased/Retained (1)
|
|
—
|
|
2.3
|
|
0.5
|
|
2.6
|
|
Total Cash Paid for AB
Holding Units Purchased/Retained (1)
|
|
$
—
|
|
$
92.7
|
|
$
18.8
|
|
$
106.7
|
|
Open Market Purchases
of AB Holding Units Purchased (1)
|
|
—
|
|
2.3
|
|
—
|
|
2.3
|
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (1)
|
|
$
—
|
|
$
92.7
|
|
$
—
|
|
$
92.7
|
|
|
(1) Purchased on a trade date basis.
The difference between open-market purchases and units retained
reflects the retention 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 2023 Earnings Conference Call
Information
Management will review second quarter 2023 financial and
operating results during a conference call beginning at
9:00 a.m. (CT) on Friday, July 28,
2023. The conference call will be hosted by Seth Bernstein, President & Chief Executive
Officer; Karl Sprules, Chief
Operating Officer; Bill Siemers,
Interim Chief Financial Officer; Controller and Chief Accounting
Officer; and Onur Erzan, Head of Global Client Group & Head of
Private Wealth.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at
https://www.alliancebernstein.com/corporate/en/investor-relations.html at
least 15 minutes prior to the call to download and install any
necessary audio software.
- To listen by telephone, please dial (888) 440-3310 in the U.S.
or +1 (646) 960-0513 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 6072615.
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 2023 financial and
operating results on July 27, 2023.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference
call.
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, 2022 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, 2023, including both the general partnership
and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 39.3% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 61.4% 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
2023
|
|
2Q
2022
|
|
%
Change
|
|
1Q
2023
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
|
Base fees
|
$ 703,371
|
|
$ 696,685
|
|
1.0 %
|
|
$ 692,327
|
|
1.6 %
|
|
Performance
fees
|
18,307
|
|
22,791
|
|
(19.7)
|
|
36,580
|
|
(50.0)
|
|
Bernstein research
services
|
91,847
|
|
106,442
|
|
(13.7)
|
|
100,038
|
|
(8.2)
|
|
Distribution
revenues
|
144,798
|
|
153,130
|
|
(5.4)
|
|
141,078
|
|
2.6
|
|
Dividends and
interest
|
50,193
|
|
22,512
|
|
123.0
|
|
50,679
|
|
(1.0)
|
|
Investments gains
(losses)
|
670
|
|
(48,220)
|
|
n/m
|
|
5,264
|
|
(87.3)
|
|
Other
revenues
|
24,719
|
|
26,950
|
|
(8.3)
|
|
26,146
|
|
(5.5)
|
|
Total
revenues
|
1,033,905
|
|
980,290
|
|
5.5
|
|
1,052,112
|
|
(1.7)
|
|
Less: Broker-dealer
related interest expense
|
25,449
|
|
8,846
|
|
187.7
|
|
28,021
|
|
(9.2)
|
|
Total net
revenues
|
1,008,456
|
|
971,444
|
|
3.8
|
|
1,024,091
|
|
(1.5)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
428,079
|
|
398,273
|
|
7.5
|
|
434,163
|
|
(1.4)
|
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
150,038
|
|
158,532
|
|
(5.4)
|
|
148,381
|
|
1.1
|
|
Amortization of
deferred sales commissions
|
8,767
|
|
8,953
|
|
(2.1)
|
|
8,154
|
|
7.5
|
|
Trade execution,
marketing, T&E and other
|
54,138
|
|
60,404
|
|
(10.4)
|
|
50,630
|
|
6.9
|
|
General and
administrative
|
149,935
|
|
147,855
|
|
1.4
|
|
139,653
|
|
7.4
|
|
Contingent payment
arrangements
|
2,443
|
|
838
|
|
191.5
|
|
2,444
|
|
—
|
|
Interest on
borrowings
|
14,672
|
|
2,681
|
|
n/m
|
|
13,713
|
|
7.0
|
|
Amortization of
intangible assets
|
11,723
|
|
1,260
|
|
n/m
|
|
11,693
|
|
0.3
|
|
Total operating
expenses
|
819,795
|
|
778,796
|
|
5.3
|
|
808,831
|
|
1.4
|
|
Operating
income
|
188,661
|
|
192,648
|
|
(2.1)
|
|
215,260
|
|
(12.4)
|
|
Income taxes
|
9,901
|
|
10,650
|
|
(7.0)
|
|
11,342
|
|
(12.7)
|
|
Net income
|
178,760
|
|
181,998
|
|
(1.8)
|
|
203,918
|
|
(12.3)
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
3,023
|
|
(26,771)
|
|
n/m
|
|
9,767
|
|
(69.0)
|
|
Net income attributable
to AB Unitholders
|
$ 175,737
|
|
$ 208,769
|
|
(15.8)
|
|
$ 194,151
|
|
(9.5)
|
|
AB Holding L.P. (The
Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2023
|
|
2Q
2022
|
|
%
Change
|
|
1Q
2023
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
69,121
|
|
$
75,358
|
|
(8.3 %)
|
|
$
76,382
|
|
(9.5) %
|
|
Income Taxes
|
8,563
|
|
7,217
|
|
18.7
|
|
8,945
|
|
(4.3)
|
|
Net
Income
|
60,558
|
|
68,141
|
|
(11.1)
|
|
67,437
|
|
(10.2)
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
—
|
|
—
|
|
— %
|
|
—
|
|
— %
|
|
Net Income -
Diluted
|
$
60,558
|
|
$
68,141
|
|
(11.1)
|
|
$
67,437
|
|
(10.2)
|
|
Diluted Net Income
per Unit
|
$
0.53
|
|
$
0.69
|
|
(23.2)
|
|
$
0.59
|
|
(10.2)
|
|
Distribution per
Unit
|
$
0.61
|
|
$
0.71
|
|
(14.1)
|
|
$
0.66
|
|
(7.6)
|
|
|
|
|
|
|
|
|
|
|
|
(1) To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
|
Units
Outstanding
|
2Q
2023
|
|
2Q
2022
|
|
%
Change
|
|
1Q
2023
|
|
%
Change
|
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
|
Period-end
|
285,730,404
|
|
269,447,055
|
|
6.0 %
|
|
285,654,435
|
|
— %
|
|
Weighted average -
basic
|
285,670,383
|
|
270,982,905
|
|
5.4 %
|
|
285,725,829
|
|
—
|
|
Weighted average -
diluted
|
285,670,383
|
|
270,982,905
|
|
5.4 %
|
|
285,725,829
|
|
—
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
Period-end
|
113,555,480
|
|
97,266,839
|
|
16.7 %
|
|
113,476,219
|
|
0.1 %
|
|
Weighted average -
basic
|
113,493,799
|
|
98,801,601
|
|
14.9 %
|
|
113,547,020
|
|
—
|
|
Weighted average -
diluted
|
113,493,799
|
|
98,801,601
|
|
14.9 %
|
|
113,547,020
|
|
—
|
|
AllianceBernstein
L.P.
|
|
|
|
|
ASSETS UNDER
MANAGEMENT | June 30, 2023
|
|
|
|
|
($ Billions)
|
|
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
6/30/23
|
|
6/30/22
|
|
Ending Assets Under
Management
|
$691.5
|
|
$646.8
|
|
Average Assets Under
Management
|
$678.4
|
|
$688.6
|
|
Three-Month Changes
By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
Beginning of
Period
|
$
306.6
|
|
$
256.7
|
|
$
112.6
|
|
$
675.9
|
|
Sales/New
accounts
|
1.5
|
|
16.5
|
|
4.4
|
|
22.4
|
|
Redemption/Terminations
|
(4.0)
|
|
(14.6)
|
|
(4.5)
|
|
(23.1)
|
|
Net Cash
Flows
|
(0.7)
|
|
(2.6)
|
|
—
|
|
(3.3)
|
|
Net
Flows
|
(3.2)
|
|
(0.7)
|
|
(0.1)
|
|
(4.0)
|
|
Transfers
|
0.1
|
|
(0.1)
|
|
—
|
|
—
|
|
Investment
Performance
|
5.7
|
|
10.7
|
|
3.2
|
|
19.6
|
|
End of
Period
|
$
309.2
|
|
$
266.6
|
|
$
115.7
|
|
$
691.5
|
|
Three-Month Changes
By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive(1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-
Exempt
|
|
Fixed
Income
Passive(1)
|
|
Alternatives/
Multi-Asset
Solutions(2)
|
|
Total
|
|
Beginning of
Period
|
$
229.1
|
|
$
56.6
|
|
$
198.4
|
|
$
55.3
|
|
$
9.5
|
|
$
127.0
|
|
$
675.9
|
|
Sales/New
accounts
|
9.3
|
|
0.4
|
|
7.6
|
|
3.4
|
|
—
|
|
1.7
|
|
22.4
|
|
Redemption/Terminations
|
(12.9)
|
|
—
|
|
(5.5)
|
|
(2.5)
|
|
(0.1)
|
|
(2.1)
|
|
(23.1)
|
|
Net Cash
Flows
|
(3.2)
|
|
(0.7)
|
|
2.8
|
|
—
|
|
0.2
|
|
(2.4)
|
|
(3.3)
|
|
Net
Flows
|
(6.8)
|
|
(0.3)
|
|
4.9
|
|
0.9
|
|
0.1
|
|
(2.8)
|
|
(4.0)
|
|
Transfers
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Investment
Performance
|
13.6
|
|
4.2
|
|
(1.0)
|
|
(0.1)
|
|
(0.2)
|
|
3.1
|
|
19.6
|
|
End of
Period
|
$
235.9
|
|
$
60.5
|
|
$
202.3
|
|
$
56.1
|
|
$
9.4
|
|
$
127.3
|
|
$
691.5
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
Equity
|
$
(6.8)
|
|
(0.3)
|
|
$
(7.1)
|
|
Fixed Income
|
5.8
|
|
0.1
|
|
5.9
|
|
Alternatives/Multi-Asset Solutions
(2)
|
(3.0)
|
|
0.2
|
|
(2.8)
|
|
Total
|
$
(4.0)
|
|
$
—
|
|
$
(4.0)
|
|
|
(1) Includes
index and enhanced index services.
|
|
(2) Includes
certain multi-asset solutions and services not included in equity
or fixed income services.
|
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S. Clients
|
$
227.8
|
|
$
158.1
|
|
$
113.3
|
|
$
499.2
|
|
Non-U.S.
Clients
|
81.4
|
|
108.5
|
|
2.4
|
|
192.3
|
|
Total
|
$
309.2
|
|
$
266.6
|
|
$
115.7
|
|
$
691.5
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(US $ Thousands,
unaudited)
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
1,008,456
|
|
$
1,024,091
|
|
$
990,176
|
|
$
986,984
|
|
$
971,444
|
|
$
1,105,687
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(144,798)
|
|
(141,078)
|
|
(137,764)
|
|
(147,960)
|
|
(153,130)
|
|
(168,341)
|
|
|
|
Investment advisory
services fees
|
(14,005)
|
|
(15,456)
|
|
(13,112)
|
|
(12,385)
|
|
(14,357)
|
|
(17,285)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(11,046)
|
|
(9,763)
|
|
(7,730)
|
|
(11,367)
|
|
(10,043)
|
|
(35,976)
|
|
|
|
Other
revenues
|
(8,096)
|
|
(9,343)
|
|
(10,055)
|
|
(10,505)
|
|
(9,436)
|
|
(8,963)
|
|
|
|
Impact of consolidated
company-sponsored investment funds
|
(2,975)
|
|
(10,409)
|
|
(2,512)
|
|
8,837
|
|
26,573
|
|
24,538
|
|
|
|
Incentive
compensation-related items
|
(4,905)
|
|
(5,443)
|
|
(16,889)
|
|
427
|
|
5,295
|
|
4,084
|
|
|
Adjusted Net
Revenues
|
|
$
822,631
|
|
$
832,599
|
|
$
802,114
|
|
$
814,031
|
|
$
816,346
|
|
$
903,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
188,661
|
|
$
215,260
|
|
$
203,741
|
|
$
170,305
|
|
$
192,648
|
|
$
248,403
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
|
|
Incentive
compensation-related items
|
1,103
|
|
1,608
|
|
378
|
|
622
|
|
1,463
|
|
945
|
|
|
|
EQH award
compensation
|
215
|
|
191
|
|
134
|
|
133
|
|
164
|
|
175
|
|
|
|
Acquisition-related
expenses
|
20,525
|
|
17,725
|
|
33,474
|
|
23,412
|
|
4,929
|
|
10,687
|
|
|
|
Total of non-GAAP
adjustments before interest on borrowings
|
21,637
|
|
19,318
|
|
33,780
|
|
23,961
|
|
6,350
|
|
11,601
|
|
|
|
Interest on borrowings
(1)
|
14,672
|
|
13,713
|
|
8,506
|
|
5,309
|
|
2,681
|
|
1,411
|
|
|
|
|
Sub-total of non-GAAP
adjustments
|
36,309
|
|
33,031
|
|
42,286
|
|
29,270
|
|
9,031
|
|
13,012
|
|
|
|
Less: Net income (loss)
of consolidated entities attributable to non-controlling
interests
|
3,023
|
|
9,767
|
|
5,574
|
|
(10,114)
|
|
(26,771)
|
|
(25,045)
|
|
|
Adjusted Operating
Income(1)
|
$
221,947
|
|
$
238,524
|
|
$
240,453
|
|
$
209,689
|
|
$
228,450
|
|
$
286,460
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
18.4 %
|
|
20.1 %
|
|
20.0 %
|
|
18.3 %
|
|
22.6 %
|
|
24.7 %
|
|
|
Adjusted Operating
Margin
|
27.0 %
|
|
28.7 %
|
|
30.0 %
|
|
25.8 %
|
|
28.0 %
|
|
31.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except per
Unit amounts, unaudited)
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
|
|
Net Income -
Diluted, GAAP basis
|
$
60,558
|
|
$
67,437
|
|
$
63,780
|
|
$
56,316
|
|
$
68,141
|
|
$
85,930
|
|
|
Impact on net income of
AB non-GAAP adjustments
|
8,124
|
|
7,401
|
|
12,394
|
|
8,373
|
|
1,630
|
|
3,520
|
|
|
Adjusted Net Income
- Diluted
|
$
68,682
|
|
$
74,838
|
|
$
76,174
|
|
$
64,689
|
|
$
69,771
|
|
$
89,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
0.53
|
|
$
0.59
|
|
$
0.59
|
|
$
0.56
|
|
$
0.69
|
|
$
0.87
|
|
|
Impact of AB non-GAAP
adjustments
|
0.08
|
|
0.07
|
|
0.11
|
|
0.08
|
|
0.02
|
|
0.03
|
|
|
Adjusted Diluted Net
Income per Holding Unit
|
$
0.61
|
|
$
0.66
|
|
$
0.70
|
|
$
0.64
|
|
$
0.71
|
|
$
0.90
|
|
|
|
(1) During the second quarter of
2023, we adjusted operating income to exclude interest on
borrowings in order to align with our industry peer group. We have
recast prior periods presentation to align with the current period
presentation.
|
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.
We adjust investment advisory and services fees and other
revenues for pass through costs, primarily related to our transfer
agent and shareholder servicing fees. Also, we adjust for certain
investment advisory and service fees passed through to our
investment advisors. These fees do not affect operating income, 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. Also, we adjust for certain
acquisition related pass through performance-based fees and
performance related compensation.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2) 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,
(3) the equity compensation paid by EQH to certain AB executives,
as discussed below, (4) the write-down of an investment, (5)
acquisition-related expenses, (6) interest on borrowings and (7)
the impact of consolidated company-sponsored investment funds.
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.
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. 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, our CEO, equity awards in
connection with EQH's IPO. Additionally, equity awards were granted
to Mr. Bernstein and other AB executives for their membership on
the EQH Management Committee. These individuals may receive
additional equity or cash compensation from EQH in the future
related to their service on the Management Committee. Any awards
granted to these individuals 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.
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.
Acquisition-related expenses include professional fees and the
recording of changes in estimates to contingent payment
arrangements associated with our acquisitions. Beginning in the
first quarter of 2022, acquisition-related expenses also include
certain compensation-related expenses, amortization of intangible
assets for contracts acquired and accretion expense with respect to
contingent payment arrangements.
We adjust operating income to exclude interest on borrowings in
order to align with our industry peer group.
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.
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