Equitable Holdings, Inc. ((EQH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Equitable Holdings’ recent earnings call conveyed an optimistic sentiment, indicating substantial growth across several financial metrics. The company highlighted remarkable increases in non-GAAP operating earnings and assets under management, alongside impressive cash flow generation. While strategic initiatives and organic growth in business segments are progressing well, challenges were noted in Protection Solutions and alternative investment income. However, the overall positive developments significantly outshone the reported difficulties.
Significant Increase in Non-GAAP Operating Earnings
The company reported a notable rise in non-GAAP operating earnings, reaching $2 billion or $5.93 per share, marking a 29% year-over-year increase on a per-share basis. Adjusted for notable items, non-GAAP operating EPS was $6.18, showing a 20% increase from the previous year.
Strong Asset Growth
Equitable Holdings witnessed a robust 10% year-over-year growth in assets under management and administration, which now surpasses the $1 trillion mark. This achievement underscores the company’s successful asset management strategies.
Record Cash Flow Generation
The company generated $1.5 billion in cash flow for the Holding company, at the high end of its guidance range. Notably, over 50% of this cash flow originated from its asset and wealth management businesses.
Progress on Strategic Initiatives
Equitable Holdings achieved $100 million in run-rate expense savings, on track to meet or exceed its $150 million target by 2027. The company also generated $80 million in incremental net investment income, ahead of its plan to achieve $110 million by 2027.
Strong Organic Growth in Business Segments
The firm reported full-year net inflows of $7.1 billion in retirement and $4 billion in wealth management. AB reported full-year active net inflows of $4.3 billion, demonstrating strong organic growth across its business segments.
AB’s Successful Business Execution
AB successfully executed the separation of its Bernstein Research Services business and completed the relocation of its New York City office. The firm anticipates achieving a 33%+ adjusted operating margin by 2025.
Positive Developments in In-Plan Guarantee Market
Equitable Holdings saw over $600 million in net inflows from BlackRock’s LifePath Paycheck offering and established a new partnership with JPMorgan Asset Management, highlighting positive developments in the in-plan guarantee market.
Challenges in Protection Solutions
Despite the overall positive outlook, the company faced challenges in its Protection Solutions segment, with full-year earnings at the lower end of the $200 million to $300 million guidance range, primarily due to elevated net mortality and large claims with minimal reinsurance coverage.
Below Plan Alternative Investment Income
In the fourth quarter, alternative investment income fell below expectations, resulting in a $27 million after-tax reduction in earnings.
Volatility in Corporate and Other Segment
The corporate and other segment is expected to report a full-year loss of approximately $400 million, indicating volatility that the company aims to address moving forward.
Forward-Looking Guidance
Equitable Holdings provided robust guidance for 2025, outlining a path to continued growth. The company anticipates cash generation of $1.6 billion to $1.7 billion in 2025, with prospects of reaching $2 billion by 2027. AB aims for a 33%+ adjusted operating margin by 2025, enhancing its financial outlook by over 400 basis points from 2022. The company plans to maintain a 60% to 70% payout ratio, having already returned $1.3 billion to shareholders in 2024, aligning with its strategic goals for 2027.
In summary, Equitable Holdings’ earnings call reflected a generally positive sentiment, underscoring substantial growth and successful strategic initiatives. While challenges remain in certain segments, the company’s forward-looking guidance and robust performance metrics suggest a promising outlook for future growth and shareholder returns.
