GAAP Diluted Net Income of $0.50 per Unit
Adjusted Diluted Net Income of $0.65 per Unit
Cash Distribution of $0.65 per Unit
NASHVILLE, Tenn., Oct. 26,
2023 /PRNewswire/ -- AllianceBernstein L.P. ("AB")
and AllianceBernstein Holding L.P. ("AB Holding") (NYSE: AB) today
reported financial and operating results for the quarter ended
September 30, 2023.
"AB delivered organic growth in several key services, while
markets and flows reflected investor risk aversion as yields moved
higher throughout the quarter," said Seth
P. Bernstein, President and CEO of AllianceBernstein. "AB
saw modest net outflows of $1.9
billion, with active net flows nearly flat. Retail gained
market share, with organic growth driven by taxable fixed income
and municipals. Our municipal SMA business reached $20 billion in AUM, more than doubling
organically over the last five years. In Institutional, fixed
income and passive equity outflows more than offset active equities
organic growth. Investment performance remained strong in fixed
income, with modest improvement in equities. Reflecting higher
year-over-year average AUM, on an adjusted basis revenues rose 4%,
operating income increased by 13% and earnings per Unit and
distributions to unitholders rose by 2%."
(US $ Thousands except
per Unit amounts)
|
3Q
2023
|
|
3Q
2022
|
|
%
Change
|
|
2Q
2023
|
|
%
Change
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
1,032,056
|
|
$
986,984
|
|
4.6 %
|
|
$
1,008,456
|
|
2.3 %
|
Operating
income
|
$
175,250
|
|
$
170,305
|
|
2.9 %
|
|
$
188,661
|
|
(7.1 %)
|
Operating
margin
|
17.2 %
|
|
18.3 %
|
|
(110 bps)
|
|
18.4 %
|
|
(120 bps)
|
AB Holding Diluted
EPU
|
$
0.50
|
|
$
0.56
|
|
(10.7) %
|
|
$
0.53
|
|
(5.7 %)
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
845,792
|
|
$
814,031
|
|
3.9 %
|
|
$
822,631
|
|
2.8 %
|
Operating income
(2)
|
$
236,854
|
|
$
209,689
|
|
13.0 %
|
|
$
221,947
|
|
6.7 %
|
Operating margin
(2)
|
28.0 %
|
|
25.8 %
|
|
220 bps
|
|
27.0 %
|
|
100 bps
|
AB Holding Diluted
EPU
|
$
0.65
|
|
$
0.64
|
|
1.6 %
|
|
$
0.61
|
|
6.6 %
|
AB Holding cash
distribution per Unit
|
$
0.65
|
|
$
0.64
|
|
1.6 %
|
|
$
0.61
|
|
6.6 %
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under Management
("AUM")
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
669.0
|
|
$
612.7
|
|
9.2 %
|
|
$
691.5
|
|
(3.3 %)
|
Average AUM
|
$
689.6
|
|
$
653.9
|
|
5.5 %
|
|
$
678.4
|
|
1.7 %
|
|
(1) The
adjusted financial measures represent non-GAAP financial measures.
See page 12 for reconciliations of GAAP Financial Results to
Adjusted Financial Results and pages 13-14 for notes describing the
adjustments.
|
(2) During the second quarter of
2023, we revised adjusted operating income for the impact of
interest on borrowings to align with our industry peers. We have
recast prior periods to align with current periods
presentation.
|
Bernstein continued, "Retail sales continued to reflect strong
demand for taxable and municipal fixed income, contributing to net
inflows growing organically by 7% and 14% annualized, respectively.
US Retail net inflows grew 9% annualized, positive 12 of the last
13 quarters. Retail channel net inflows were $1.6 billion. Our Institutional channel saw net
outflows of $3.5 billion driven by
taxable fixed income and passive equities, partially offset by
active equities annualized organic growth of 7%. The pipeline of
awarded but unfunded Institutional mandates was $12.5 billion at quarter-end, with private
alternatives comprising more than 80% of the fee base. Private
Wealth maintained healthy sales with net flows flat in the quarter,
and up 1.6% year-to-date. Bernstein Research revenues increased 3%
reflecting growth in research payments."
Bernstein concluded, "Markets continue to exhibit volatility as
yields have risen to generational highs. Retail investors are
currently earning returns with little or no risk, leading to
significant growth in cash assets industry wide. Our view remains
constructive as we believe that cash assets will eventually be
re-allocated into riskier assets, supporting higher investment
returns over time. Our global investment teams are mindful of
heightened volatility and continue to actively manage our clients'
assets through ever-changing conditions."
The firm's cash distribution per Unit of $0.65 is payable on November 22, 2023, to
holders of record of AB Holding Units at the close of business on
November 6, 2023.
Market Performance
Global equity and fixed income markets declined in the third
quarter of 2023.
|
3Q
2023
|
S&P 500 Total
Return
|
(3.3) %
|
MSCI EAFE Total
Return
|
(4.1)
|
Bloomberg Barclays US
Aggregate Return
|
(3.2)
|
Bloomberg Barclays
Global High Yield Index - Hedged
|
0.5
|
Assets Under Management
($ Billions)
Total assets under management as of September 30, 2023 were
$669.0 billion, down $22.5 billion, or 3%, from June 30, 2023 and
up $56.3 billion, or 9%, from
September 30, 2022.
|
|
Institutional
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
Assets Under Management
9/30/2023
|
|
$296.9
|
|
$259.2
|
|
$112.9
|
|
$669.0
|
Net Flows for Three
Months Ended 9/30/2023:
|
|
|
|
|
|
|
|
|
Active
|
|
($1.4)
|
|
$1.7
|
|
($0.4)
|
|
($0.1)
|
Passive
|
|
(2.1)
|
|
(0.1)
|
|
0.4
|
|
(1.8)
|
Total
|
|
($3.5)
|
|
$1.6
|
|
$—
|
|
($1.9)
|
Total net outflows were $1.9
billion in the third quarter, compared to net outflows of
$4.0 billion in the second quarter of
2023, and net outflows of $10.5
billion in the prior year third quarter.
Institutional channel third quarter net outflows of $3.5 billion compared to net outflows of
$3.2 billion in the second quarter of
2023. Institutional gross sales of $4.3
billion increased sequentially from $1.5 billion. The pipeline of awarded but
unfunded Institutional mandates decreased sequentially to
$12.5 billion at September 30,
2023 compared to $14.4 billion at
June 30, 2023.
Retail channel third quarter net inflows of $1.6 billion compared to net outflows of
$0.7 billion in the second quarter of
2023. Retail gross sales of $16.9
billion increased sequentially from $16.5 billion.
Private Wealth channel third quarter net flows were flat
compared to the second quarter of 2023. Private Wealth gross sales
of $4.0 billion decreased
sequentially from $4.4 billion.
Third Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because we believe they present a clearer
picture of our operating performance and allow management to see
long-term trends without the distortion caused by incentive
compensation-related mark-to-market adjustments,
acquisition-related expenses, interest expense and other adjustment
items. Similarly, we believe that non-GAAP earnings information
helps investors better understand the underlying trends in our
results and, accordingly, provides a valuable perspective for
investors. Please note, however, that these non-GAAP measures are
provided in addition to, and not as a substitute for, any measures
derived in accordance with US GAAP and they may not be comparable
to non-GAAP measures presented by other companies. Management uses
both US GAAP and non-GAAP measures in evaluating our financial
performance. The non-GAAP measures alone may pose limitations
because they do not include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Available Cash Flow
typically is the adjusted diluted net income per unit for the
quarter multiplied by the number of units outstanding at the end of
the quarter. Management anticipates that Available Cash Flow will
continue to be based on adjusted diluted net income per unit,
unless management determines, with concurrence of the Board of
Directors, that one or more adjustments made to adjusted net income
should not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Revenues
Third quarter net revenues of $1.0
billion increased 5% from the third quarter of 2022. The
increase was due to higher investment advisory base fees,
performance-based fees, net dividend and interest income and
Bernstein Research revenues.
Sequentially, net revenues of $1.0
billion increased 2%. The increase was partially due to
higher investment advisory base fees, performance-based fees,
distribution revenues and Bernstein Research revenues, partially
offset by higher investment losses and lower net dividend and
interest income.
Third quarter Bernstein Research revenues of $93.9 million increased 3% compared to the prior
year third quarter and increased sequentially 2%. The increase from
the third quarter of 2022 and sequentially was driven by a modest
growth in research payments, as customer trading remained at
subdued levels.
Expenses
Third quarter operating expenses of $857 million increased 5% from $817 million in the third quarter of 2022. The
increase is primarily due to higher employee compensation and
benefits expense, contingent payment arrangement expense, interest
on borrowings, and promotion and servicing expenses, partially
offset by lower general and administrative ("G&A") expenses.
Employee compensation and benefits expense increased due to higher
incentive compensation and base compensation, partially offset by
lower commissions and other employment costs. The increase in
interest expense is driven by higher average borrowing and higher
interest rates. Promotion and servicing expenses increased due to
higher distribution-related payments, travel and entertainment
expense ("T&E") and amortization of deferred sales commissions,
partially offset by lower trade execution costs. Within G&A,
the decrease was driven by lower professional fees, portfolio
servicing fees and technology and related expenses, partially
offset by higher valuation adjustments related to the
classification of Bernstein Research Services as held for sale and
office-related expenses.
Sequentially, operating expenses increased 5% from $819 million, primarily driven by higher employee
compensation and benefits expense, contingent payment arrangement
expense and promotion and servicing expense, partially offset by
lower G&A and interest expense on borrowings. Within employee
compensation and benefits, the increase was driven primarily by
higher incentive compensation, base compensation and commissions,
partially offset by lower fringes. Promotion and servicing expenses
increased due to higher distribution-related payments and transfer
fees, partially offset by lower T&E and meetings expenses.
G&A expenses decreased due to lower portfolio services and
valuation adjustments related to the classification of Bernstein
Research Services as held for sale, partially offset by higher
technology expenses.
Operating Income, Margin and Net Income Per Unit
Third quarter operating income of $175 million increased 3% from $170 million in the third quarter of 2022 and the
operating margin of 17.2% in the third quarter of 2023 decreased
110 basis points from 18.3% in the third quarter of 2022.
Sequentially, operating income decreased 7% from $189 million in the second quarter of 2023 and
the operating margin of 17.2% decreased 120 basis points from 18.4%
in the second quarter of 2023.
Third quarter diluted net income per Unit was $0.50 compared to $0.56 in the third quarter of 2022 and
$0.53 in the second quarter of
2023.
Non-GAAP Earnings
This section discusses our third
quarter 2023 non-GAAP financial results, compared to the third
quarter of 2022 and the second quarter of 2023. The phrases
"adjusted net revenues", "adjusted operating expenses", "adjusted
operating income", "adjusted operating margin" and "adjusted
diluted net income per Unit" are used in the following earnings
discussion to identify non-GAAP information.
Revenues
Third quarter adjusted net revenues of $846 million increased 4% from $814 million in the third quarter of 2022. The
increase was due to higher performance-based fees, investment
advisory fees, net dividend and interest income and Bernstein
Research revenues, partially offset by investment losses as
compared with investment gains in the prior year period.
Sequentially, adjusted net revenues increased 3% from
$823 million. The increase was
primarily due to higher performance-based fees, investment advisory
base fees and Bernstein Research revenues, partially offset by
investment losses in the current quarter compared to investment
gains in the prior period and lower net dividend and interest
income.
Expenses
Third quarter adjusted operating expenses of $609 million increased 1% from $604 million in the third quarter of 2022
primarily due to higher promotion and servicing expense and
employee compensation and benefits expense. Promotion and servicing
expense increased due to higher T&E expense. Employee
compensation and benefits expense increased due to higher incentive
and base compensation, partially offset by lower commissions and
other employment costs. G&A expenses were essentially flat.
Sequentially, adjusted operating expenses increased 1% from
$601 million. Higher employee
compensation and benefits expense was partially offset by lower
promotion and servicing expense and G&A expense. Within
employee compensation and benefits, the increase was driven by
higher incentive compensation, commissions and base compensation,
partially offset by lower fringes. Promotion and servicing expenses
decreased primarily due to lower meetings and T&E expenses,
partially offset by higher transfer fees. G&A expenses
decreased due to lower portfolio services fees, partially offset by
higher technology-related expenses.
Operating Income, Margin and Net Income Per
Unit 1
Third quarter adjusted operating income of $237 million increased 13% from $210 million in the third quarter of 2022, and
the adjusted operating margin of 28.0% increased 220 basis points
from 25.8%.
Sequentially, adjusted operating income of $237 million increased 7% from $222 million and the adjusted operating margin of
28.0% increased 100 basis points from 27.0%.
Third quarter adjusted diluted net income per Unit was
$0.65 compared to $0.64 in the third quarter of 2022 and
$0.61 in the second quarter of
2023.
Headcount
As of September 30, 2023, we had
4,657 employees, including 284 new hires onboarded during the first
quarter of 2023, which were previously outsourced consultants in
Pune, India. Net of these hires,
headcount declined year-over-year, as compared with 4,490 employees
as of September 30, 2022. Headcount
was 4,606 as of June 30, 2023.
|
|
|
|
|
|
|
|
|
|
1 During the
second quarter of 2023, we revised adjusted operating income to
exclude interest on borrowings in order to align with our industry
peer group. We have recast prior periods presentation to align with
the current period presentation.
|
Unit Repurchases
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(in
millions)
|
Total amount of AB
Holding Units Purchased/Retained (1)
|
|
1.8
|
|
—
|
|
2.3
|
|
2.6
|
Total Cash Paid for AB
Holding Units Purchased/Retained (1)
|
|
$
56.9
|
|
$
1.0
|
|
$
75.7
|
|
$
107.7
|
Open Market Purchases
of AB Holding Units Purchased (1)
|
|
1.8
|
|
—
|
|
1.8
|
|
2.3
|
Total Cash Paid for
Open Market Purchases of AB Holding Units (1)
|
|
$
56.9
|
|
$
—
|
|
$
56.9
|
|
$
92.7
|
|
(1)
Purchased on a trade date basis. The difference between
open-market purchases and units retained reflects the retention of
AB Holding Units from employees to fulfill statutory tax
withholding requirements at the time of delivery of long-term
incentive compensation awards.
|
Third Quarter 2023 Earnings Conference Call
Information
Management will review third quarter 2023 financial and
operating results during a conference call beginning at
9:00 a.m. (CST) on Friday,
October 27, 2023. The conference call will be hosted by
Seth Bernstein, President &
Chief Executive Officer; Karl
Sprules, Chief Operating Officer; Bill Siemers, Interim Chief Financial Officer;
and Onur Erzan, Head of Global Client Group & Head of Private
Wealth.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at
https://www.alliancebernstein.com/corporate/en/investor-relations.html
at least 15 minutes prior to the call to download and install any
necessary audio software.
- To listen by telephone, please dial (888) 440-3310 in the U.S.
or +1 (646) 960-0513 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 6072615.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of third quarter 2023 financial and
operating results on October 26, 2023.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference
call.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of these factors include, but are not limited
to, the following: the performance of financial markets, the
investment performance of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, integration of acquired companies,
competitive conditions, and government regulations, including
changes in tax regulations and rates and the manner in which the
earnings of publicly-traded partnerships are taxed. AB cautions
readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such
statements are made; AB undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. For further information regarding
these forward-looking statements and the factors that could cause
actual results to differ, see "Risk Factors" and "Cautions
Regarding Forward-Looking Statements" in AB's Form 10-K for the
year ended December 31, 2022 and subsequent Forms 10-Q. Any or
all of the forward-looking statements made in this news release,
Form 10-K, Forms 10-Q, other documents AB files with or furnishes
to the SEC, and any other public statements issued by AB, may turn
out to be wrong. It is important to remember that other factors
besides those listed in "Risk Factors" and "Cautions Regarding
Forward-Looking Statements", and those listed below, could also
adversely affect AB's revenues, financial condition, results of
operations and business prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional mandates do
not represent legally binding commitments to fund and, accordingly,
the possibility exists that not all mandates will be funded in the
amounts and at the times currently anticipated, or that mandates
ultimately will not be funded.
- The possibility that AB will engage in open market
purchases of AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB Holding Units AB may decide to buy in future periods, if any,
to help fund incentive compensation awards depends on various
factors, some of which are beyond our control, including the
fluctuation in the price of an AB Holding Unit (NYSE: AB) and the
availability of cash to make these purchases.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b)(4). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
37% effective January 1, 2018.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional investors, individuals and private wealth
clients in major world markets.
As of September 30, 2023, including both the general
partnership and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 39.0% of
AllianceBernstein and Equitable Holdings ("EQH"), directly and
through various subsidiaries, owned an approximate 61.7% economic
interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our website, www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
US GAAP Consolidated
Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
3Q
2023
|
|
3Q
2022
|
|
%
Change
|
|
2Q
2023
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$ 720,969
|
|
$ 700,809
|
|
2.9 %
|
|
$ 703,371
|
|
2.5 %
|
Performance
fees
|
27,982
|
|
13,755
|
|
103.4
|
|
18,307
|
|
52.8
|
Bernstein research
services
|
93,875
|
|
91,557
|
|
2.5
|
|
91,847
|
|
2.2
|
Distribution
revenues
|
149,049
|
|
147,960
|
|
0.7
|
|
144,798
|
|
2.9
|
Dividends and
interest
|
49,889
|
|
30,437
|
|
63.9
|
|
50,193
|
|
(0.6)
|
Investments (losses)
gains
|
(6,694)
|
|
(3,861)
|
|
73.4
|
|
670
|
|
n/m
|
Other
revenues
|
24,484
|
|
27,096
|
|
(9.6)
|
|
24,719
|
|
(1.0)
|
Total
revenues
|
1,059,554
|
|
1,007,753
|
|
5.1
|
|
1,033,905
|
|
2.5
|
Less: Broker-dealer
related interest expense
|
27,498
|
|
20,769
|
|
32.4
|
|
25,449
|
|
8.1
|
Total net
revenues
|
1,032,056
|
|
986,984
|
|
4.6
|
|
1,008,456
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
453,619
|
|
429,842
|
|
5.5
|
|
428,079
|
|
6.0
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
155,620
|
|
152,005
|
|
2.4
|
|
150,038
|
|
3.7
|
Amortization of
deferred sales commissions
|
9,585
|
|
8,341
|
|
14.9
|
|
8,767
|
|
9.3
|
Trade execution,
marketing, T&E and other
|
52,289
|
|
51,594
|
|
1.3
|
|
54,138
|
|
(3.4)
|
General and
administrative
|
145,388
|
|
154,961
|
|
(6.2)
|
|
149,935
|
|
(3.0)
|
Contingent payment
arrangements
|
15,364
|
|
2,371
|
|
n/m
|
|
2,443
|
|
n/m
|
Interest on
borrowings
|
13,209
|
|
5,309
|
|
148.8
|
|
14,672
|
|
(10.0)
|
Amortization of
intangible assets
|
11,732
|
|
12,256
|
|
(4.3)
|
|
11,723
|
|
0.1
|
Total operating
expenses
|
856,806
|
|
816,679
|
|
4.9
|
|
819,795
|
|
4.5
|
Operating
income
|
175,250
|
|
170,305
|
|
2.9
|
|
188,661
|
|
(7.1)
|
Income taxes
|
10,010
|
|
5,239
|
|
91.1
|
|
9,901
|
|
1.1
|
Net income
|
165,240
|
|
165,066
|
|
0.1
|
|
178,760
|
|
(7.6)
|
Net (loss) income of
consolidated entities attributable to non-controlling
interests
|
(2,164)
|
|
(10,114)
|
|
(78.6)
|
|
3,023
|
|
n/m
|
Net income attributable
to AB Unitholders
|
$ 167,404
|
|
$ 175,180
|
|
(4.4)
|
|
$ 175,737
|
|
(4.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P. (The
Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
3Q
2023
|
|
3Q
2022
|
|
%
Change
|
|
2Q
2023
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
65,761
|
|
$
63,905
|
|
2.9 %
|
|
$
69,121
|
|
(4.9) %
|
Income Taxes
|
8,770
|
|
7,589
|
|
15.6
|
|
8,563
|
|
2.4
|
Net
Income
|
$
56,991
|
|
$
56,316
|
|
1.2
|
|
$
60,558
|
|
(5.9)
|
Diluted Net Income
per Unit
|
$
0.50
|
|
$
0.56
|
|
(10.7)
|
|
$
0.53
|
|
(5.7)
|
Distribution per
Unit
|
$
0.65
|
|
$
0.64
|
|
1.6
|
|
$
0.61
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
|
Units
Outstanding
|
3Q
2023
|
|
3Q
2022
|
|
%
Change
|
|
2Q
2023
|
|
%
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
283,971,597
|
|
272,579,860
|
|
4.2 %
|
|
285,730,404
|
|
(0.6) %
|
Weighted average -
basic
|
285,359,824
|
|
272,645,828
|
|
4.7 %
|
|
285,670,383
|
|
(0.1)
|
Weighted average -
diluted
|
285,359,824
|
|
272,645,828
|
|
4.7 %
|
|
285,670,383
|
|
(0.1)
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
111,796,873
|
|
100,401,044
|
|
11.4 %
|
|
113,555,480
|
|
(1.5) %
|
Weighted average -
basic
|
113,184,935
|
|
100,465,627
|
|
12.7 %
|
|
113,493,799
|
|
(0.3)
|
Weighted average -
diluted
|
113,184,935
|
|
100,465,627
|
|
12.7 %
|
|
113,493,799
|
|
(0.3)
|
AllianceBernstein
L.P.
|
|
|
|
ASSETS UNDER
MANAGEMENT | September 30, 2023
|
|
|
|
($ Billions)
|
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
9/30/23
|
|
9/30/22
|
|
Ending Assets Under
Management
|
$669.0
|
|
$612.7
|
|
Average Assets Under
Management
|
$689.6
|
|
$653.9
|
Three-Month Changes
By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
Beginning of
Period
|
$
309.2
|
|
$
266.6
|
|
$
115.7
|
|
$
691.5
|
|
Sales/New
accounts
|
4.3
|
|
16.9
|
|
4.0
|
|
25.2
|
|
Redemption/Terminations
|
(2.7)
|
|
(13.6)
|
|
(4.0)
|
|
(20.3)
|
|
Net Cash
Flows
|
(5.1)
|
|
(1.7)
|
|
—
|
|
(6.8)
|
|
Net
Flows
|
(3.5)
|
|
1.6
|
|
—
|
|
(1.9)
|
|
Investment
Performance
|
(8.8)
|
|
(9.0)
|
|
(2.8)
|
|
(20.6)
|
|
End of
Period
|
$
296.9
|
|
$
259.2
|
|
$
112.9
|
|
$
669.0
|
Three-Month Changes
By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive(1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-Exempt
|
|
Fixed
Income
Passive(1)
|
|
Alternatives/
Multi-Asset
Solutions(2)
|
|
Total
|
|
Beginning of
Period
|
$
235.9
|
|
$
60.5
|
|
$
202.3
|
|
$
56.1
|
|
$
9.4
|
|
$
127.3
|
|
$
691.5
|
|
Sales/New
accounts
|
10.3
|
|
0.4
|
|
7.6
|
|
3.8
|
|
0.4
|
|
2.7
|
|
25.2
|
|
Redemption/Terminations
|
(9.3)
|
|
—
|
|
(7.4)
|
|
(2.6)
|
|
(0.1)
|
|
(0.9)
|
|
(20.3)
|
|
Net Cash
Flows
|
(1.2)
|
|
(2.8)
|
|
(2.6)
|
|
0.1
|
|
0.1
|
|
(0.4)
|
|
(6.8)
|
|
Net
Flows
|
(0.2)
|
|
(2.4)
|
|
(2.4)
|
|
1.3
|
|
0.4
|
|
1.4
|
|
(1.9)
|
|
Investment
Performance
|
(8.9)
|
|
(2.1)
|
|
(4.9)
|
|
(1.8)
|
|
(0.4)
|
|
(2.5)
|
|
(20.6)
|
|
End of
Period
|
$
226.8
|
|
$
56.0
|
|
$
195.0
|
|
$
55.6
|
|
$
9.4
|
|
$
126.2
|
|
$
669.0
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
Equity
|
$
(0.2)
|
|
(2.4)
|
|
$
(2.6)
|
|
Fixed Income
|
(1.1)
|
|
0.4
|
|
(0.7)
|
|
Alternatives/Multi-Asset Solutions
(2)
|
1.2
|
|
0.2
|
|
1.4
|
|
Total
|
$
(0.1)
|
|
$
(1.8)
|
|
$
(1.9)
|
|
(1) Includes
index and enhanced index services.
|
(2) Includes
certain multi-asset solutions and services not included in equity
or fixed income services.
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S. Clients
|
$
219.8
|
|
$
155.2
|
|
$
110.5
|
|
$
485.5
|
|
Non-U.S.
Clients
|
77.1
|
|
104.0
|
|
2.4
|
|
183.5
|
|
Total
|
$
296.9
|
|
$
259.2
|
|
$
112.9
|
|
$
669.0
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS
TO
ADJUSTED FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
(US $ Thousands,
unaudited)
|
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
1,032,056
|
|
$
1,008,456
|
|
$
1,024,091
|
|
$
990,176
|
|
$
986,984
|
|
$
971,444
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution-related
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
(149,049)
|
|
(144,798)
|
|
(141,078)
|
|
(137,764)
|
|
(147,960)
|
|
(153,130)
|
|
|
|
Investment advisory
services fees
|
(16,156)
|
|
(14,005)
|
|
(15,456)
|
|
(13,112)
|
|
(12,385)
|
|
(14,357)
|
|
|
|
Pass through
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
services fees
|
(14,567)
|
|
(11,046)
|
|
(9,763)
|
|
(7,730)
|
|
(11,367)
|
|
(10,043)
|
|
|
|
Other
revenues
|
(8,661)
|
|
(8,096)
|
|
(9,343)
|
|
(10,055)
|
|
(10,505)
|
|
(9,436)
|
|
|
|
Impact of consolidated
company-sponsored investment funds
|
1,931
|
|
(2,975)
|
|
(10,409)
|
|
(2,512)
|
|
8,837
|
|
26,573
|
|
|
|
Incentive
compensation-related items
|
238
|
|
(4,905)
|
|
(5,443)
|
|
(16,889)
|
|
427
|
|
5,295
|
|
|
Adjusted Net
Revenues
|
|
$
845,792
|
|
$
822,631
|
|
$
832,599
|
|
$
802,114
|
|
$
814,031
|
|
$
816,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
175,250
|
|
$
188,661
|
|
$
215,260
|
|
$
203,741
|
|
$
170,305
|
|
$
192,648
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
(206)
|
|
|
|
Incentive
compensation-related items
|
1,354
|
|
1,103
|
|
1,608
|
|
378
|
|
622
|
|
1,463
|
|
|
|
EQH award
compensation
|
142
|
|
215
|
|
191
|
|
134
|
|
133
|
|
164
|
|
|
|
Acquisition-related
expenses
|
44,941
|
|
20,525
|
|
17,725
|
|
33,474
|
|
23,412
|
|
4,929
|
|
|
|
Total of non-GAAP
adjustments before interest on borrowings
|
46,231
|
|
21,637
|
|
19,318
|
|
33,780
|
|
23,961
|
|
6,350
|
|
|
|
Interest on borrowings
(1)
|
13,209
|
|
14,672
|
|
13,713
|
|
8,506
|
|
5,309
|
|
2,681
|
|
|
|
|
Sub-total of non-GAAP
adjustments
|
59,440
|
|
36,309
|
|
33,031
|
|
42,286
|
|
29,270
|
|
9,031
|
|
|
|
Less: Net (loss) income
of consolidated entities attributable to non-controlling
interests
|
(2,164)
|
|
3,023
|
|
9,767
|
|
5,574
|
|
(10,114)
|
|
(26,771)
|
|
|
Adjusted Operating
Income(1)
|
$
236,854
|
|
$
221,947
|
|
$
238,524
|
|
$
240,453
|
|
$
209,689
|
|
$
228,450
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
17.2 %
|
|
18.4 %
|
|
20.1 %
|
|
20.0 %
|
|
18.3 %
|
|
22.6 %
|
|
|
Adjusted Operating
Margin(1)
|
28.0 %
|
|
27.0 %
|
|
28.7 %
|
|
30.0 %
|
|
25.8 %
|
|
28.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO
ADJUSTED
EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
($ Thousands except per
Unit amounts, unaudited)
|
9/30/2023
|
|
6/30/2023
|
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
|
Net Income -
Diluted, GAAP basis
|
$
56,991
|
|
$
60,558
|
|
$
67,437
|
|
$
63,780
|
|
$
56,316
|
|
$
68,141
|
|
|
Impact on net income of
AB non-GAAP adjustments
|
17,077
|
|
8,124
|
|
7,401
|
|
12,394
|
|
8,373
|
|
1,630
|
|
|
Adjusted Net Income
- Diluted
|
$
74,068
|
|
$
68,682
|
|
$
74,838
|
|
$
76,174
|
|
$
64,689
|
|
$
69,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
0.50
|
|
$
0.53
|
|
$
0.59
|
|
$
0.59
|
|
$
0.56
|
|
$
0.69
|
|
|
Impact of AB non-GAAP
adjustments
|
0.15
|
|
0.08
|
|
0.07
|
|
0.11
|
|
0.08
|
|
0.02
|
|
|
Adjusted Diluted Net
Income per Holding Unit
|
$
0.65
|
|
$
0.61
|
|
$
0.66
|
|
$
0.70
|
|
$
0.64
|
|
$
0.71
|
|
|
(1) During the second quarter of
2023, we adjusted operating income to exclude interest on
borrowings in order to align with our industry peer group. We have
recast prior periods presentation to align with the current period
presentation.
|
AB
Notes to Consolidated Statements of
Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Net Revenue, as adjusted, is reduced to exclude all of the
company's distribution revenues, which are recorded as a separate
line item on the consolidated statement of income, as well as a
portion of investment advisory services fees received that is used
to pay distribution and servicing costs. For certain products,
based on the distinct arrangements, certain distribution fees are
collected by us and passed through to third-party client
intermediaries, while for certain other products, we collect
investment advisory services fees and a portion is passed through
to third-party client intermediaries. In both arrangements, the
third-party client intermediary owns the relationship with the
client and is responsible for performing services and distributing
the product to the client on our behalf. We believe offsetting
distribution revenues and certain investment advisory services fees
is useful for our investors and other users of our financial
statements because such presentation appropriately reflects the
nature of these costs as pass-through payments to third parties
that perform functions on behalf of our sponsored mutual funds
and/or shareholders of these funds. Distribution-related
adjustments fluctuate each period based on the type of investment
products sold, as well as the average AUM over the period. Also, we
adjust distribution revenues for the amortization of deferred sales
commissions as these costs, over time, will offset such
revenues.
We adjust investment advisory and services fees and other
revenues for pass through costs, primarily related to our transfer
agent and shareholder servicing fees. Also, we adjust for certain
investment advisory and service fees passed through to our
investment advisors. These fees do not affect operating income, as
such, we exclude these fees from adjusted net revenues.
We adjust for the revenue impact of consolidating
company-sponsored investment funds by eliminating the consolidated
company-sponsored investment funds' revenues and including AB's
fees from such consolidated company-sponsored investment funds and
AB's investment gains and losses on its investments in such
consolidated company-sponsored investment funds that were
eliminated in consolidation.
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments. Also, we adjust for certain
acquisition related pass through performance-based fees and
performance related compensation.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) real estate charges (credits), (2) the
impact on net revenues and compensation expense of the investment
gains and losses (as well as the dividends and interest) associated
with employee long-term incentive compensation-related investments,
(3) the equity compensation paid by EQH to certain AB executives,
as discussed below, (4) acquisition-related expenses, (5)
interest on borrowings and (6) the impact of consolidated
company-sponsored investment funds.
Real estate charges (credits) incurred have been excluded
because they are not considered part of our core operating results
when comparing financial results from period to period and to
industry peers. However, beginning in the fourth quarter of 2019,
real estate charges (credits), while excluded in the period in
which the charges (credits) are recorded, are included ratably over
the remaining applicable lease term.
Prior to 2009, a significant portion of employee compensation
was in the form of long-term incentive compensation awards that
were notionally invested in AB investment services and generally
vested over a period of four years. AB economically hedged the
exposure to market movements by purchasing and holding these
investments on its balance sheet. All such investments had vested
as of year-end 2012 and the investments have been delivered to the
participants, except for those investments with respect to which
the participant elected a long-term deferral. Fluctuation in the
value of these investments is recorded within investment gains and
losses on the income statement. Management believes it is useful to
reflect the offset achieved from economically hedging the market
exposure of these investments in the calculation of adjusted
operating income and adjusted operating margin. The non-GAAP
measures exclude gains and losses and dividends and interest on
employee long-term incentive compensation-related investments
included in revenues and compensation expense.
The board of directors of EQH granted to Seth P. Bernstein, our CEO, equity awards in
connection with EQH's IPO. Additionally, equity awards were granted
to Mr. Bernstein and other AB executives for their membership on
the EQH Management Committee. These individuals may receive
additional equity or cash compensation from EQH in the future
related to their service on the Management Committee. Any awards
granted to these individuals by EQH are recorded as compensation
expense in AB's consolidated statement of income. The compensation
expense associated with these awards has been excluded from our
non-GAAP measures because they are non-cash and are based upon
EQH's, and not AB's, financial performance.
Acquisition-related expenses have been excluded because they are
not considered part of our core operating results when comparing
financial results from period to period and to industry peers.
Acquisition-related expenses include professional fees and the
recording of changes in estimates to contingent payment
arrangements associated with our acquisitions. Beginning in the
first quarter of 2022, acquisition-related expenses also include
certain compensation-related expenses, amortization of intangible
assets for contracts acquired and accretion expense with respect to
contingent payment arrangements.
We adjust operating income to exclude interest on borrowings in
order to align with our industry peer group.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored funds' revenues and expenses and
including AB's revenues and expenses that were eliminated in
consolidation. We also excluded the limited partner interests we do
not own.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period without the
volatility noted above in our discussion of adjusted operating
income and to compare our performance to industry peers on a
basis that better reflects our performance in our core business.
Adjusted operating margin is derived by dividing adjusted operating
income by adjusted net revenues.
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SOURCE AllianceBernstein