On July 29, 2024, Affiliated Managers Group Inc (AMG, Financial) released its 8-K filing detailing the financial and operating results for the second quarter and first half of 2024. Affiliated Managers Group offers investment strategies to investors through its network of affiliates. The firm typically buys a majority interest in small to midsize boutique asset managers, receiving a fixed percentage of revenue from these firms in return. Affiliates operate independently, with AMG providing strategic, operational, and technology support, as well as global distribution. At the end of December 2023, AMG's affiliate network had $672.2 billion in managed assets.
Performance and Challenges
Affiliated Managers Group Inc (AMG, Financial) reported earnings per share (EPS) of $2.26 for the second quarter of 2024, falling short of the analyst estimate of $3.00. However, the company met revenue expectations, reporting $518.03 million against the estimated $518.03 million. The company’s net income (controlling interest) for the first half of the year was $226 million, with Economic Net Income (controlling interest) of $343 million.
Despite the miss on EPS, AMG's performance was bolstered by positive net client cash flows in the second quarter, driven by continued strength in private markets fundraising. The company also repurchased $327 million in common stock during the quarter, bringing total share repurchases to $477 million in the first half of the year.
Financial Achievements
AMG's Economic Earnings per share for the second quarter stood at $4.67, and $10.06 for the first half of the year, reflecting a 17% year-over-year increase. This performance underscores the company's ongoing business momentum and strategic focus on areas of secular demand, particularly in private markets and liquid alternatives.
Jay C. Horgen, President and Chief Executive Officer of AMG, stated, "AMG reported Economic Earnings per share of $4.67 and $10.06 in the second quarter and the first half, respectively, reflecting our ongoing business momentum. Our results continue to be driven by strength in private markets fundraising, our Affiliates’ long-term track records of investment performance, and the positive impact of our capital allocation strategy."
Key Financial Metrics
| Metric | Q2 2023 | Q2 2024 | H1 2023 | H1 2024 |
|---|---|---|---|---|
| AUM (in billions) | $673.9 | $701.0 | $673.9 | $701.0 |
| Net client cash flows (in billions) | $(10.5) | $0.9 | $(13.7) | $(2.9) |
| Aggregate fees | $1,003.1 | $1,098.1 | $2,508.2 | $2,569.7 |
| Net income (controlling interest) | $125.3 | $76.0 | $259.8 | $225.8 |
| Earnings per share (diluted) | $3.25 | $2.26 | $6.74 | $6.49 |
| Adjusted EBITDA (controlling interest) | $214.3 | $217.5 | $431.1 | $477.3 |
| Economic net income (controlling interest) | $167.3 | $155.9 | $325.4 | $342.6 |
| Economic earnings per share | $4.45 | $4.67 | $8.63 | $10.06 |
Analysis
Affiliated Managers Group Inc (AMG, Financial) demonstrated resilience in the face of challenging market conditions, as evidenced by its strong revenue performance and positive net client cash flows. The company's strategic focus on private markets and liquid alternatives has positioned it well for long-term growth. However, the miss on EPS highlights the need for continued vigilance in managing costs and optimizing operational efficiencies.
Overall, AMG's financial achievements and strategic initiatives underscore its potential for sustained growth and value creation in the asset management industry. Investors will be keen to monitor the company's progress in capital allocation and its ability to capitalize on emerging opportunities in the market.
Explore the complete 8-K earnings release (here) from Affiliated Managers Group Inc for further details.
