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Affiliated Managers (AMG) Q1 Earnings In Line, Costs Fall

Affiliated Managers Group Inc. AMG reported first-quarter 2016 economic earnings of $2.94 per share, which came in line with the Zacks Consensus Estimate. Further, earnings were up 1% year over year.

 


Results exhibited a fall in revenues offset by a decrease in operating expenses. Notably, growth in assets under management ("AUM") led by net inflows acted as a tailwind.

Affiliated Managers’ economic net income was $159.9 million, down 1% year over year.

Performance in Detail

Total revenue fell 14% year over year to $545.4 million. Also, the top line lagged the Zacks Consensus Estimate of $580.8 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $215.7 million, down 2% year over year.

Total operating expenses fell 9% year over year to $366.6 million. The fall was due to a reduction in all expense components except depreciation and other amortization costs as well as other expenses.

As of Mar 31, 2016, total AUM was $642.0 billion, up 5% from Dec 31, 2015 level. This reflected a net client cash inflow of $5.1 billion.

Capital and Liquidity

As of Mar 31, 2016, Affiliated Managers had $297.6 million in cash and cash equivalents compared with $563.8 million as of Dec 31, 2015. Moreover, the company had $1.06 billion of senior bank debt at quarter end compared with $643.3 million as of Dec 31, 2015.

Shareholders’ equity as of Mar 31, 2016, totaled $2.87 billion, up from $2.84 billion as of Dec 31, 2015.

Our Take

Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability along with a diverse product mix. Also, the company’s consistent investments in new affiliates and initiatives undertaken to strengthen retail market operations are expected to work in its favor going forward.

However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.

Currently, Affiliated Managers carries a Zacks Rank #2 (Buy).

Performance of Other Asset Managers

BlackRock, Inc. BLK reported first-quarter 2016 adjusted earnings of $4.25 per share, which lagged the Zacks Consensus Estimate of $4.29. Lower-than-expected quarterly results were due to a decrease in revenues triggered by market volatility. However, an almost stable expense line was a positive.

Janus Capital Group, Inc. JNS recorded a negative earnings surprise of 9.52% in first-quarter 2016. Lower-than-expected results reflected the reduction in revenues partly offset by a decline in operating expenses.

However, driven by lower fee-waivers, Federated Investors, Inc. FII delivered a positive earnings surprise in first quarter 2016, marking the fourth consecutive quarter of an earnings beat. The better-than-expected results were mainly driven by a rise in total revenue and a surge in equity asset balances.

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JANUS CAP GRP (JNS): Free Stock Analysis Report
 
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AFFIL MANAGERS (AMG): Free Stock Analysis Report
 
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