• Economic Earnings Per Share (EPS): $6.53 for Q4 2024; $21.36 for full year 2024, up 10% year over year.
• Adjusted EBITDA: $282 million for Q4 2024, down 5% year over year; $973 million for full year 2024, up 4% versus 2023.
• Net Client Cash Outflows: $8 billion in Q4 2024.
• Private Markets Fundraising: $6 billion in Q4 2024; $24 billion for full year 2024, representing annualized organic growth of approximately 20%.
• Liquid Alternatives Net Inflows: $2 billion in Q4 2024.
• Equities Net Outflows: Approximately $16 billion in Q4 2024.
• Multi-Asset and Fixed Income Inflows: Modest inflows in Q4 2024; approximately $3 billion for full year 2024.
• Share Repurchases: $120 million in Q4 2024; approximately $700 million for full year 2024, or 13% of shares outstanding.
• Cash and Investments: $625 million in cash and $475 million in investments.
• First Quarter 2025 Guidance: Adjusted EBITDA expected between $220 million and $230 million; Economic EPS expected between $5.02 and $5.26.

• Warning! GuruFocus has detected 6 Warning Sign with AMG.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Affiliated Managers Group Inc (NYSE:AMG) delivered record economic earnings per share in 2024, with full-year earnings up 10% year over year.
• AMG's private market Affiliates raised approximately $24 billion during the year, reflecting strong demand for specialized strategies.
• The company announced a minority investment in NorthBridge Partners, a private markets manager specializing in industrial logistics real estate, aligning with AMG's strategy of investing in high-quality independent firms.
• AMG's liquid alternatives Affiliates experienced positive flows for the second consecutive quarter, driven by strong client demand.
• The company has a strong capital position, allowing for flexibility in executing growth opportunities and returning capital through share repurchases.

Negative Points

• AMG experienced net client cash outflows of $8 billion in the quarter, primarily due to industry headwinds in equities.
• Equities saw net outflows of approximately $16 billion in the quarter, reflecting performance challenges and seasonality.
• Adjusted EBITDA for the fourth quarter was down 5% year over year, impacted by lower net performance fees.
• First quarter guidance indicates a decrease in adjusted EBITDA compared to the previous year, with expected performance fee earnings lower than the year-ago period.
• Despite strong fundraising in private markets, AMG faces ongoing challenges in improving flow trends in the equities sector.

Q & A Highlights

Q: Can you discuss in more detail the pipelines for new investments and how that compares to this time a year ago? Also, did the change in administration have any impact on conversations or dialogue with prospective Affiliates? A: Our pipeline remains strong, with several opportunities in late stages. The change in administration is likely favorable for new investments due to potential lower regulation and pro-business policies, which could accelerate our investment pipeline.

Q: Is the go-forward strategy similar to the NorthBridge model, focusing on minority stakes in smaller franchises, or are there plans for larger deals? A: We are pursuing both strategies. We have mid-sized firms that can grow significantly with our resources, and we also have larger new investments in our pipeline. Our approach includes both minority and bare majority stakes, with the potential for larger transactions if they meet our high standards.

Q: Can you provide an update on the trends in your retail alternative product pipeline, client demand, and distribution fee arrangements? How active are you in developing active ETFs for your Affiliates? A: We have aggressively ramped up product launches, with six continuously offered products now available. We see active ETFs as an exciting opportunity and are working with Affiliates to enter these markets, combining investment expertise with client demand trends.

Q: How does AMG's unique model attract firms like NorthBridge, and what strategic advantages do you offer? A: AMG offers strategic resources while preserving the independence of firms. NorthBridge chose us for our growth capital, seed capital, and strategic business development capabilities. Our model is attractive to independent firms seeking both strategic support and operational autonomy.

Q: What are the expectations for performance fee earnings, and how do they contribute to AMG's overall earnings? A: We expect performance fees to contribute meaningfully over the long term, with a reasonable annual expectation of $150 million. Despite starting the year lower, we remain confident in the growing contribution from private markets carried interest.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.