Affiliated Managers Group’s Earnings Call Highlights Strategic Gains

Affiliated Managers Group ((AMG)) has held its Q1 earnings call. Read on for the main highlights of the call.

Affiliated Managers Group’s recent earnings call conveyed a largely positive sentiment, highlighting significant achievements in alternative strategies and strategic partnerships. Despite facing challenges in the equities segment and a decline in adjusted EBITDA, the company showcased its resilience and strategic foresight.

Record $14 Billion Net Client Cash Inflows

Affiliated Managers Group, Inc. reported a record-breaking $14 billion in net client cash inflows into alternative strategies. This impressive figure successfully offset the outflows from the long-only business, underscoring the company’s strong performance in alternative investments.

Strategic Partnerships and Investments

The company announced three new strategic partnerships with Northbridge Partners, Verition, and Qualitas Energy. These partnerships involve a commitment of approximately $700 million, set to enhance the company’s growth prospects in 2025.

Strong Liquid Alternatives Performance

Liquid alternatives experienced a remarkable $10 billion in net inflows, primarily driven by tax-aware solutions. This marks the strongest quarterly flow number in liquid alternatives in the company’s history, highlighting the growing demand for these products.

Capital Allocation and Share Repurchases

Affiliated Managers Group repurchased $173 million in shares during the first quarter, with plans to repurchase approximately $400 million for the full year 2025. This strategic capital allocation reflects the company’s commitment to enhancing shareholder value.

Significant Gain from Peppertree Sale

The company reported a significant gain from the sale of its minority stake in Peppertree, effectively doubling the initial investment. This transaction underscores the company’s ability to generate substantial returns from strategic divestments.

8% Accretion Expected from New Investments

New investments in Northbridge Partners, Verition, and Qualitas Energy, along with the Peppertree sale, are anticipated to result in approximately 8% accretion in economic earnings per share, highlighting the potential for enhanced profitability.

Equities Net Outflows

Affiliated Managers Group faced net outflows of approximately $14 billion in equities, reflecting broader industry challenges and performance headwinds. Despite this, the company’s focus on alternative strategies provides a counterbalance to these challenges.

Decline in Adjusted EBITDA

The company reported an adjusted EBITDA of $228 million, marking a 12% decline year over year. This decrease was driven by lower performance fees and one-time catch-up fees from the previous year, presenting a challenge the company aims to address.

Forward-Looking Guidance

Looking ahead, Affiliated Managers Group anticipates second-quarter adjusted EBITDA to range between $210 million and $225 million. The strategic shift towards alternatives is expected to continue improving the business mix, driving sustained organic growth and incremental shareholder value over time. The company remains committed to executing its share repurchase plan, subject to market conditions.

In summary, Affiliated Managers Group’s earnings call highlighted a positive outlook, driven by strong performance in alternative strategies and strategic partnerships. Despite challenges in the equities segment and a decline in adjusted EBITDA, the company’s strategic initiatives and forward-looking guidance suggest a promising path for sustained growth and shareholder value.