Affiliated Managers (AMG) Q3 Earnings Beat On Lower Costs
Zacks Investment Research | Oct 30, 2016 09:35PM ET
Affiliated Managers Group Inc. (NYSE:AMG) reported third-quarter 2016 economic earnings of $3.02 per share, outpacing the Zacks Consensus Estimate of $3.00. Also, earnings were up 3% year over year.
Better-than-expected results were driven by a decrease in operating expenses. Further, growth in assets under management ("AUM"), led by net inflows acted as a tailwind. However, lower revenue was an undermining factor.
Affiliated Managers’ economic net income was $164.5 million, an increase of 3% from the prior-year quarter.
Revenue Slump Offset by Fall in Expenses
Total revenue fell 11% year over year to $544.7 million. Also, the top line missed the Zacks Consensus Estimate of $570.6 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $219.8 million, marginally up from $218.9 million in the year-ago quarter.
Total operating expenses declined 6% year over year to $373.7 million. The fall was mainly due to a reduction in selling, general and administrative costs.
As of Sep 30, 2016, total AUM grew 13% from the prior-year quarter to $672.4 billion. This reflected a net client cash inflow of $5.8 billion.
Strong Capital & Liquidity Position
As of Sep 30, 2016, Affiliated Managers had $422 million in cash and cash equivalents compared with $563.8 million as of Dec 31, 2015. Moreover, the company had $873.5 million of senior bank debt at quarter end compared with $643.3 million as of Dec 31, 2015.
Shareholders’ equity as of Sep 30, 2016, totaled $3.19 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.
AFFIL MANAGERS Price, Consensus and EPS Surprise
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