Affiliated Managers (US:AMG)2019-05-09 20:39Assets Under Management - As of March 31, 2019, the company's aggregate assets under management were $774.2 billion, a decrease of 7% from $830.9 billion in 2018[112][115]. - Average assets under management for the three months ended March 31, 2019, were $772.6 billion, reflecting a decline of $67.1 billion or 8% compared to the same period in 2018[122]. - Average assets under management for equity method Affiliates decreased to $373.6 billion, an 8% decline compared to $406.4 billion for the same period in 2018[140]. Financial Performance - Aggregate fees for the three months ended March 31, 2019, were $1,252.0 million, a decrease of $396.7 million or 24% compared to $1,648.7 million in the same period of 2018[125]. - The decrease in aggregate fees was attributed to a $254.1 million or 15% decline in performance-based fees and a $142.6 million or 9% decline in asset-based fees[125]. - Net income (loss) attributable to controlling interest for the three months ended March 31, 2019, was $(200.8) million, compared to $153.0 million for the same period in 2018[126]. - Adjusted EBITDA (controlling interest) decreased by $70.9 million or 25% to $215.6 million for the three months ended March 31, 2019[127]. - Economic net income (controlling interest) also decreased by $46.2 million or 21% to $169.0 million for the same period[126]. - Consolidated revenue decreased by $69.3 million or 11% for the three months ended March 31, 2019, primarily due to a $62.2 million or 10% decrease from asset-based fees[133]. - Economic net income (controlling interest) for the three months ended March 31, 2019, was $169.0 million, compared to $215.2 million for the same period in 2018, reflecting a decrease of approximately 21.5%[155]. - Economic earnings per share for the three months ended March 31, 2019, was $3.26, down from $3.92 in the same period of 2018, indicating a decline of about 16.8%[155]. Cash Flows and Liquidity - Net client cash flows for the three months ended March 31, 2019, were $(7.4) billion, with client cash inflows of $30.9 billion and outflows of $38.3 billion[120]. - Operating cash flow decreased by $222.9 million for the three months ended March 31, 2019, primarily due to a $129.2 million decrease in distributions received from equity method investments[157]. - Cash and cash equivalents decreased from $565.5 million as of December 31, 2018, to $305.2 million as of March 31, 2019[157]. - Financing cash flows decreased by $69.4 million for the three months ended March 31, 2019, primarily due to a $101.9 million decrease in net repurchases of common stock[160]. - The company issued $280.0 million of junior subordinated notes on March 27, 2019, with a fixed interest rate of 5.875% per annum[164]. - As of March 31, 2019, the company had a remaining capacity of approximately $1.2 billion under its revolving credit facility[163]. - The company anticipates repurchasing approximately $150 million of Affiliate equity in 2019[170]. Expenses and Impairments - Compensation and related expenses decreased by $38.5 million or 14% for the three months ended March 31, 2019, primarily due to a decrease in compensation expenses at Affiliates[135]. - Intangible amortization and impairments increased by $408.2 million for the three months ended March 31, 2019, primarily due to a $415.0 million expense to reduce the carrying value of a U.S. credit alternative Affiliate[142]. - Investment and other income decreased by $6.2 million or 44% for the three months ended March 31, 2019, primarily due to an 85% decrease from the valuation of other investments[143]. - Income tax expense decreased by $125.3 million for the three months ended March 31, 2019, primarily due to a decrease in income before taxes[145]. Market and Strategy - The company continues to see demand for active, return-oriented strategies, particularly in illiquid alternatives and multi-asset strategies, despite outflows in U.S. equity strategies[118]. - The company recognized a $415.0 million expense to reduce the carrying value of a U.S. credit alternative Affiliate to fair value[179]. - A 5% ownership interest in a non-U.S. credit alternative Affiliate will be acquired for $25.7 million, expected to complete in Q2 2019[174]. Currency Impact - A 1% change in the pound sterling to U.S. dollar exchange rate would result in a $3.7 million change in stockholders' equity[182]. - A 1% change in the Canadian dollar to U.S. dollar exchange rate would result in a $2.0 million change in stockholders' equity[182]. - For the three months ended March 31, 2019, a 1% change in the pound sterling would affect income before income taxes by $1.1 million[182]. - For the same period, a 1% change in the Canadian dollar would affect income before income taxes by $0.3 million[182]. Investment Impairment Testing - The company performs equity method investment impairment tests annually, or more frequently if necessary[178]. - No triggering events were identified for increased risk of impairment for remaining equity method investments in Affiliates during the three months ended March 31, 2019[180]. - The company uses discounted cash flow analyses for fair value assessments of equity method investments, considering various financial assumptions[177].