GlobeNewswire Inc | Oct 26, 2020 07:01AM EDT

October 26, 2020

Company reports EPS of $1.53, Economic EPS of $3.27 in third quarter of 2020

-- Net Income (controlling interest) of $71 million, Economic Net Income of $152 million -- Adjusted EBITDA of $181 million, representing 12% growth versus prior quarter -- Repurchased approximately $85 million in common stock -- Issued $275 million 40-year hybrid bond, further extending balance sheet duration and enhancing liquidity

WEST PALM BEACH, Fla., Oct. 26, 2020 (GLOBE NEWSWIRE) -- Affiliated Managers Group, Inc. (NYSE: AMG) today reported its financial and operating results for the third quarter and nine months ended September 30, 2020.

Jay C. Horgen, President and Chief Executive Officer of AMG, said: AMG reported third quarter Adjusted EBITDA of $181 million, representing 12% quarter-over-quarter growth, as strong Affiliate investment returns more than offset challenges in certain quantitative strategies. AMGs Affiliates continue to generate alpha across a broad array of distinctive equity and alternative strategies, and are well-positioned to benefit as clients recognize increasing asset dispersion and engage high-performing, active managers to navigate rapidly changing markets. Independent partner-owned boutiques have historically outperformed in periods of heightened volatility, and clients view the most skilled active managers as key contributors to achieving their long-term objectives, particularly in a low-yield environment.

"As business activity levels continue to normalize, we have increased our focus on investing for growth and are executing on our opportunity set across both existing Affiliates and new Affiliate prospects operating in areas of strong client demand. AMGs unique investment model enables us to scale our business without the risk or cost of integration. With our three-decade track record as the partner of choice to leading independent firms, our Affiliates long-term organic growth opportunities, and our commitment to returning excess capital to shareholders, we are confident in our ability to generate strong earnings growth and create long-term shareholder value."

FINANCIAL HIGHLIGHTS Three Months Ended Nine Months Ended(in millions, except as 9/30/2019 9/30/2020 9/30/2019 9/30/2020noted and per share data)Operating Performance MeasuresAUM (at period end, in $ 750.7 $ 653.5 $ 750.7 $ 653.5 billions)Average AUM (in billions) 765.4 657.9 770.7 652.2 Net client cash flows (in (19.7 ) (14.0 ) (42.2 ) (46.0 )billions)Aggregate fees 1,130.5 961.7 3,545.6 3,175.7 Financial Performance MeasuresNet income (loss) $ 86.3 $ 71.3 $ (6.8 ) $ 86.3 (controlling interest)Earnings (loss) per share 1.71 1.53 (0.13 ) 1.83 (diluted)Supplemental Performance Measures^ (1)Adjusted EBITDA $ 206.5 $ 181.2 $ 641.3 $ 543.6 (controlling interest)Economic net income 159.4 152.1 498.5 433.0 (controlling interest)Economic earnings per 3.16 3.27 9.75 9.17 share

For additional information on our Supplemental Performance Measures, including reconciliations to GAAP, see the Financial Tables and Notes.

Capital Management During the third quarter of 2020, the Company repurchased approximately $85 million in common stock and announced a third-quarter cash dividend of $0.01 per common share, payable November 20, 2020 to common stockholders of record as of the close of business on November 5, 2020.

About AMG AMG is a global asset management company with equity investments in leading boutique investment management firms. AMGs strategy is to generate longterm value by investing in leading independent active investment managers, through a proven partnership approach, and allocating resources across the Company's unique opportunity set to the areas of highest growth and return. AMGs innovative partnership approach allows each Affiliates management team to own significant equity in their firm while maintaining operational autonomy. In addition, AMG provides centralized assistance to its Affiliates on strategy, marketing, distribution, and product development. As of September30, 2020, AMGs aggregate assets under management were approximately $654 billion, across a broad range of active, return-oriented strategies. For more information, please visit the Companys website at www.amg.com.



Conference Call, Replay and Presentation Information A conference call will be held with AMGs management at 8:30 a.m. Eastern time today. Parties interested in listening to the conference call should dial 1-877-407-8291 (U.S. calls) or 1-201-689-8345 (non-U.S. calls) shortly before the call begins.

The conference call will also be available for replay beginning approximately one hour after the conclusion of the call. To hear a replay of the call, please dial 1-877-660-6853 (U.S. calls) or 1-201-612-7415 (non-U.S. calls) and provide conference ID 13710888. The live call and replay of the session, and a presentation highlighting the Company's performance can also be accessed via AMGs website at https://ir.amg.com/.

Financial Tables Follow

ASSETS UNDER MANAGEMENT - STATEMENT OF CHANGES (in billions)

Multi-AssetBY STRATEGY - Alternatives Global U.S. & TotalQUARTER TO DATE Equities Equities Fixed IncomeAUM, June 30, $ 220.5 $ 229.2 $ 84.0 $ 104.7 $ 638.4 2020Client cashinflows and 6.3 7.7 3.1 5.8 22.9 commitmentsClient cash (9.9 ) (13.5 ) (8.5 ) (5.0 ) (36.9 )outflowsNet client cash (3.6 ) (5.8 ) (5.4 ) 0.8 (14.0 )flowsMarket changes 1.3 15.1 5.5 3.5 25.4 Foreign exchange 1.7 2.3 0.2 0.5 4.7 Realizations anddistributions (0.7 ) (0.1 ) ? ? (0.8 )(net)Other (0.1 ) ? ? (0.1 ) (0.2 )AUM, September $ 219.1 $ 240.7 $ 84.3 $ 109.4 $ 653.5 30, 2020

Multi-AssetBY STRATEGY - Alternatives Global U.S. & TotalYEAR TO DATE Equities Equities Fixed IncomeAUM, December $ 241.2 $ 274.9 $ 100.0 $ 106.4 $ 722.5 31, 2019Client cashinflows and 22.6 24.9 10.8 16.7 75.0 commitmentsClient cash (35.9 ) (46.4 ) (23.0 ) (15.7 ) (121.0 )outflowsNet client cash (13.3 ) (21.5 ) (12.2 ) 1.0 (46.0 )flowsNew investments 3.7 ? ? ? 3.7 Market changes (9.5 ) (9.5 ) (2.4 ) 2.9 (18.5 )Foreign exchange (1.3 ) (2.8 ) (0.2 ) (0.9 ) (5.2 )Realizations anddistributions (1.4 ) (0.1 ) ? (0.2 ) (1.7 )(net)Other (0.3 ) (0.3 ) (0.9 ) 0.2 (1.3 )AUM, September $ 219.1 $ 240.7 $ 84.3 $ 109.4 $ 653.5 30, 2020

BY CLIENT TYPE - QUARTER TO Institutional Retail High Net TotalDATE WorthAUM, June 30, 2020 $ 364.9 $ 161.8 $ 111.7 $ 638.4 Client cash inflows and 9.1 8.9 4.9 22.9 commitmentsClient cash outflows (19.4 ) (12.9 ) (4.6 ) (36.9 )Net client cash flows (10.3 ) (4.0 ) 0.3 (14.0 )Market changes 14.0 7.7 3.7 25.4 Foreign exchange 2.5 2.0 0.2 4.7 Realizations and distributions (0.7 ) (0.1 ) ? (0.8 )(net)Other ? (0.2 ) ? (0.2 )AUM, September 30, 2020 $ 370.4 $ 167.2 $ 115.9 $ 653.5

BY CLIENT TYPE - YEAR TO DATE Institutional Retail High Net Total WorthAUM, December 31, 2019 $ 407.2 $ 198.1 $ 117.2 $ 722.5 Client cash inflows and 30.4 30.4 14.2 75.0 commitmentsClient cash outflows (57.2 ) (48.9 ) (14.9 ) (121.0 )Net client cash flows (26.8 ) (18.5 ) (0.7 ) (46.0 )New investments 3.7 ? ? 3.7 Market changes (9.2 ) (9.2 ) (0.1 ) (18.5 )Foreign exchange (2.6 ) (2.3 ) (0.3 ) (5.2 )Realizations and distributions (1.4 ) (0.2 ) (0.1 ) (1.7 )(net)Other (0.5 ) (0.7 ) (0.1 ) (1.3 )AUM, September 30, 2020 $ 370.4 $ 167.2 $ 115.9 $ 653.5

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended(in millions, except per share data) 9/30/2019 9/30/2020 Consolidated revenue $ 549.0 $ 494.8 Consolidated expenses: Compensation and related expenses 222.0 212.5 Selling, general and administrative 91.5 74.1 Intangible amortization and impairments 21.1 31.9 Interest expense 19.5 23.8 Depreciation and other amortization 6.2 4.6 Other expenses (net) 13.1 12.3 Total consolidated expenses 373.4 359.2 Equity method income (net)^(2) 10.3 17.0 Investment and other income 6.7 12.7 Income before income taxes 192.6 165.3 Income tax expense 30.5 37.5 Net income 162.1 127.8 Net income (non-controlling interests) (75.8 ) (56.5 )Net income (controlling interest) $ 86.3 $ 71.3 Average shares outstanding (basic) 50.4 46.3 Average shares outstanding (diluted) 50.4 46.5 Earnings per share (basic) $ 1.71 $ 1.54 Earnings per share (diluted) $ 1.71 $ 1.53

RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES(1)

Three Months Ended(in millions, except per share data) 9/30/2019 9/30/2020 Net income (controlling interest) $ 86.3 $ 71.3 Intangible amortization and impairments 68.4 59.1 Intangible-related deferred taxes 3.5 27.0 Other economic items 1.2 (5.3 )Economic net income (controlling interest) $ 159.4 $ 152.1 Average shares outstanding (adjusted diluted) 50.4 46.5 Economic earnings per share $ 3.16 $ 3.27 Net income (controlling interest) $ 86.3 $ 71.3 Interest expense 19.5 23.8 Income taxes 28.3 32.5 Intangible amortization and impairments 68.4 59.1 Other items 4.0 (5.5 )Adjusted EBITDA (controlling interest) $ 206.5 $ 181.2

See Notes for additional information.

CONSOLIDATED STATEMENTS OF INCOME

Nine Months Ended(in millions, except per share data) 9/30/2019 9/30/2020 Consolidated revenue $ 1,684.0 $ 1,473.2 Consolidated expenses: Compensation and related expenses 708.2 636.9 Selling, general and administrative 283.3 237.9 Intangible amortization and impairments 72.0 133.4 Interest expense 57.4 65.6 Depreciation and other amortization 16.7 14.7 Other expenses (net) 36.2 34.6 Total consolidated expenses 1,173.8 1,123.1 Equity method loss (net)^(2) (318.5 ) (78.8 ) Investment and other income 22.0 2.9 Income before income taxes 213.7 274.2 Income tax expense 4.4 43.0 Net income 209.3 231.2 Net income (non-controlling interests) (216.1 ) (144.9 )Net income (loss) (controlling interest) $ (6.8 ) $ 86.3 Average shares outstanding (basic) 51.1 47.1 Average shares outstanding (diluted) 51.1 47.2 Earnings (loss) per share (basic) $ (0.13 ) $ 1.83 Earnings (loss) per share (diluted) $ (0.13 ) $ 1.83

RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES(1)

Nine Months Ended(in millions, except per share data) 9/30/2019 9/30/2020 Net income (loss) (controlling interest) $ (6.8 ) $ 86.3 Intangible amortization and impairments 583.5 341.1 Intangible-related deferred taxes (83.6 ) (7.1 )Other economic items 5.4 12.7 Economic net income (controlling interest) $ 498.5 $ 433.0 Average shares outstanding (adjusted diluted) 51.1 47.2 Economic earnings per share $ 9.75 $ 9.17 Net income (loss) (controlling interest) $ (6.8 ) $ 86.3 Interest expense 57.4 65.6 Income taxes (3.1 ) 33.7 Intangible amortization and impairments 583.5 341.1 Other items 10.3 16.9 Adjusted EBITDA (controlling interest) $ 641.3 $ 543.6

See Notes for additional information

CONSOLIDATED BALANCE SHEET

Period Ended(in millions) 12/31/2019 9/30/2020 Assets Cash and cash equivalents $ 539.6 $ 929.4 Receivables 417.1 404.8 Investments in marketable securities 59.4 68.2 Goodwill 2,651.7 2,638.8 Acquired client relationships (net) 1,182.0 1,035.2 Equity method investments in Affiliates (net) 2,195.6 1,974.7 Fixed assets (net) 92.3 81.6 Other investments 211.8 223.5 Other assets 304.0 313.3 Total assets $ 7,653.5 $ 7,669.5 Liabilities and Equity Payables and accrued liabilities $ 634.6 $ 514.8 Debt 1,793.8 2,310.8 Deferred income tax liability (net) 450.2 400.4 Other liabilities 359.1 463.1 Total liabilities 3,237.7 3,689.1 Redeemable non-controlling interests 916.7 652.0 Equity: Common stock 0.6 0.6 Additional paid-in capital 707.2 764.1 Accumulated other comprehensive loss (108.8 ) (154.9 )Retained earnings 3,819.8 3,890.1 4,418.8 4,499.9 Less: treasury stock, at cost (1,481.3 ) (1,651.0 )Total stockholders? equity 2,937.5 2,848.9 Non-controlling interests 561.6 479.5 Total equity 3,499.1 3,328.4 Total liabilities and equity $ 7,653.5 $ 7,669.5

Notes

As supplemental information, we provide non-GAAP performance measures of(1) Adjusted EBITDA (controlling interest), Economic net income (controlling interest) and Economic earnings per share. Management utilizes these non-GAAP performance measures to assess our performance before our share of certain non-cash expenses and to improve comparability between periods. Adjusted EBITDA (controlling interest) represents our performance before our share of interest expense, income taxes, depreciation, amortization, impairments, certain Affiliate equity expenses, gains and losses on general partner and seed capital investments, and adjustments to our contingent payment arrangements. We believe that many investors use this non-GAAP measure when assessing the financial performance of companies in the investment management industry. Under our Economic net income (controlling interest) definition, we add to Net income (loss) (controlling interest) our share of pre-tax intangible amortization and impairments (including the portion attributable to equity method investments in Affiliates), deferred taxes related to intangible assets, and other economic items which include non-cash imputed interest (principally related to the accounting for convertible securities and contingent payment arrangements), certain Affiliate equity expenses, and gains and losses on general partner and seed capital investments. Economic net income (controlling interest) is used by management and our Board of Directors as our principal performance benchmark, including as one of the measures for aligning executive compensation with stockholder value. Economic earnings per share represents Economic net income (controlling interest) divided by the Average shares outstanding (adjusted diluted). In this calculation, the potential share issuance in connection with our junior convertible securities is measured using a ?treasury stock? method. Under this method, only the net number of shares of common stock equal to the value of the junior convertible securities in excess of par, if any, are deemed to be outstanding. We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used to repurchase shares of common stock) that occurs when these securities are converted and we are relieved of our debt obligation. The following table provides a reconciliation of Average shares outstanding (adjusted diluted):

Three Months Nine Months Ended Ended (in millions) 9/30/ 9/30/ 9/30/ 9/30/ 2019 2020 2019 2020 Average shares outstanding (diluted) 50.4 46.5 51.1 47.2 Stock options and restricted stock ? ? 0.0 ? units Average shares outstanding (adjusted 50.4 46.5 51.1 47.2 diluted)

These non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income (loss) (controlling interest), Earnings per share or other GAAP performance measures. For additional information on our non-GAAP measures, see our Annual and Quarterly Reports on Form 10-K and 10-Q, respectively, which are accessible on the SEC?s website at www.sec.gov. The following table presents equity method earnings and equity method(2) intangible amortization and impairments, which in aggregate form Equity method income (loss) (net):

Three Months Ended Nine Months Ended (in millions) 9/30/2019 9/30/2020 9/30/2019 9/30/2020 Equity method $ 62.4 $ 51.3 $ 210.6 $ 171.7 earnings Equity method intangible (52.1 ) (34.3 ) (529.1 ) (250.5 ) amortization and impairments Equity method income $ 10.3 $ 17.0 $ (318.5 ) $ (78.8 ) (loss) (net)

Forward Looking Statements and Other Matters

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements. You can identify these forward-looking statements by the use of words such as outlook, guidance, believes, expects, potential, "preliminary," continues, may, will, should, seeks, approximately, predicts, projects, positioned, prospects, intends, plans, estimates, pending investments, anticipates or the negative version of these words or other comparable words. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including changes in the securities or financial markets or in general economic conditions, pandemics (including COVID-19) and related changes in the global economy, capital markets and the asset management industry, the availability of equity and debt financing, competition for acquisitions of interests in investment management firms, the ability to close pending investments, the investment performance and growth rates of our Affiliates and their ability to effectively market their investment strategies, the mix of Affiliate contributions to our earnings and other risks, uncertainties and assumptions, including those described under the section entitled Risk Factors in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors may be updated from time to time in our periodic filings with the SEC. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

From time to time, AMG may use its website as a distribution channel of material Company information. AMG routinely posts financial and other important information regarding the Company in the Investor Relations section of its website at www.amg.com and encourages investors to consult that section regularly.

Investor Relations:Anjali Aggarwal

Media Relations: Jonathan Freedman

+1 (617) 747-3300ir@amg.compr@amg.com