AssetMark(US:AMK)2021-02-12 04:53Financial Data and Key Metrics Changes - In 2020, net revenue increased by 3.4% year-over-year, driven by an 11% increase in asset-based revenue [9] - Adjusted EBITDA grew by 4.7% to $115 million, with an adjusted EBITDA margin improvement of 30 basis points [9][29] - Adjusted net income rose by 10.7% to $73.2 million, resulting in an adjusted EPS of $2, the highest in the company's history [9][30] Business Line Data and Key Metrics Changes - Fourth quarter net flows were $1.5 billion, up 27% quarter-over-quarter, contributing to a record platform asset total of $74.5 billion [7][21] - For the full year, net flows totaled $5.5 billion, representing 8.9% of beginning year platform assets, aligning with the target of 8% to 10% [21][22] - Engaged advisors increased by 13.7% year-over-year, now accounting for 90% of total assets on the platform [24] Market Data and Key Metrics Changes - The company added $12.9 billion in assets and 306 engaged advisors in 2020, with 743 new producing advisors joining the platform [8] - The RIA and hybrid RIA segments accounted for 15.8% of production on the platform, up from 10.9% in 2018, with RIAs growing their production by 50% since last year [18] Company Strategy and Development Direction - The company is focused on attracting adjacent advisors in the RIA and hybrid RIA channels to augment its growth strategy [6][18] - Investment in technology development totaled $50 million in 2020, aimed at enhancing tools and services for advisors [11] - The launch of AssetMark Institutional aims to provide a holistic solution for RIAs, including new products and operational support [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2021, citing strong sales activity and a robust pipeline of projects [16][34] - The company anticipates organic growth of 8% to 10% for 2021, with total asset growth expected between 11.5% and 13.5% [34] - Management acknowledged potential challenges from the pandemic and market conditions but remains focused on leveraging technology and advisor engagement [34][56] Other Important Information - The company secured a new $250 million revolving credit facility, enhancing its financial flexibility [32] - Total adjusted expenses decreased by 2.5% year-over-year, reflecting effective cost management [27] Q&A Session Summary Question: Can you discuss the adoption trends for AMP and competition in the space? - Management highlighted that AMP (Advisor-Managed Portfolios) is designed for RIAs and hybrid RIAs, allowing them to manage parts of portfolios while outsourcing other functions, which is expected to drive growth [40][41] Question: How is the growth outlook for 2021 disaggregated between RIA and core legacy business? - Management indicated that a growing percentage of organic growth is coming from the RIA segment, while the majority still comes from the core IBD segment [49][50] Question: What lessons learned from the pandemic are supporting EBITDA outlook? - Management noted increased productivity from remote operations and the ability to deliver content more efficiently, which will continue to enhance business operations [55][56] Question: What are the main technology investment areas as the company moves into the RIA world? - Management emphasized investments in financial wellness tools, including planning visualization and risk assessment, as key areas for technology development [60][62] Question: How is the company approaching M&A opportunities? - Management remains focused on both consolidation and capability-enhancing deals, with a disciplined approach to evaluating potential acquisitions [66][68] Question: How does consolidation in the independent broker-dealer and RIA space affect the company? - Management views consolidation as both an opportunity and a threat, noting that while larger firms may invest in capabilities, there are still many sub-scale RIAs that present growth opportunities [70][74]