Affiliated Managers Group ((AMG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Affiliated Managers Group (AMG) recently held an earnings call that painted a mixed picture of their financial performance. The company reported record earnings and notable growth in private markets and liquid alternatives, fueled by strategic investments and share buybacks. However, challenges were noted with net outflows and a decline in equities performance and adjusted EBITDA, presenting a nuanced sentiment.
Record Economic Earnings Per Share in 2024
AMG achieved a milestone by delivering record economic earnings per share in 2024, with a 10% increase in full-year earnings compared to the previous year. This achievement underscores the effectiveness of AMG’s disciplined capital allocation strategy, which has evidently paid off in financial performance.
Successful Fundraising in Private Markets
The company’s private market affiliates successfully raised $24 billion throughout the year, reflecting an impressive annualized organic growth of approximately 20%. This success indicates strong demand for specialized strategies, positioning AMG well within the private markets sector.
Expansion in Liquid Alternatives
AMG saw continued momentum in liquid alternatives, with net inflows of $2 billion for the second consecutive quarter. Affiliates such as AQR, Winton, Systematica, and Garda have been pivotal in driving these inflows, evidencing AMG’s strategic positioning in the alternatives space.
Strategic Investment in NorthBridge Partners
AMG announced a strategic minority investment in NorthBridge Partners, a private markets manager specializing in industrial logistics real estate. This move aligns with AMG’s strategy to invest in high-growth areas and further diversify its investment portfolio.
Strong Balance Sheet and Share Buybacks
The company fortified its balance sheet by issuing $850 million in long-duration debt and repurchasing $700 million in shares, equivalent to 13% of shares outstanding. This highlights AMG’s financial flexibility and commitment to enhancing shareholder value.
Net Client Cash Outflows
Despite strengths in alternatives, AMG experienced significant net client cash outflows of $8 billion in the quarter, largely attributed to industry headwinds in equities. This remains a concern as the company navigates market challenges.
Decline in Adjusted EBITDA
The fourth quarter saw a decline in adjusted EBITDA to $282 million, down 5% year-over-year. This decline was primarily influenced by lower net performance fees compared to the previous year, indicating areas needing attention.
Equities Outflows
AMG faced equities outflows of approximately $16 billion during the quarter, reflecting ongoing industry challenges and near-term performance headwinds. This trend underscores the volatility and competitive pressures within the equities sector.
Forward-Looking Guidance
Looking forward, AMG has set ambitious targets for the first quarter of 2025, anticipating adjusted EBITDA between $220 million and $230 million and economic earnings per share ranging from $5.02 to $5.26. With a robust balance sheet, AMG plans to repurchase at least $400 million in shares in 2025, while continuing to explore new investment opportunities to enhance shareholder value.
In summary, AMG’s recent earnings call revealed a company that is both thriving and facing challenges. While record earnings and strategic expansions in private markets and alternatives are promising, the net outflows and equities challenges present areas for strategic focus. AMG remains committed to leveraging its strong financial position to drive growth and shareholder value in the coming quarters.
