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AM

AFFILIATED MANAGERS GROUP, INC. (AMG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered consolidated revenue of $524.2M and diluted EPS of $4.92; Economic EPS was $6.53 as repurchases and alternative strategy exposure supported results .
  • Full-year 2024 Economic EPS grew 10% YoY to $21.36, with adjusted EBITDA up 4% to $973.1M, while net client cash outflows improved to $(13.9)B from $(29.2)B in 2023 .
  • Management guided Q1 2025 adjusted EBITDA to $220–$230M and Economic EPS to $5.02–$5.26; performance fees expected at $10–$20M, with annual performance fees still targeted at ~$150M over time .
  • Strategic catalyst: minority investment in NorthBridge Partners expanding AMG’s private markets footprint into last‑mile logistics real estate; combined with at least $400M share repurchase plan for 2025, this underpins capital deployment and mix shift toward alternatives .

What Went Well and What Went Wrong

What Went Well

  • Record full-year Economic EPS (+10% YoY to $21.36) and growing fee-related earnings, supported by higher average AUM and recent new investments .
  • Alternatives momentum: private markets raised $24B in 2024 (Q4: $6B), and liquid alternatives posted a second consecutive quarter of positive net inflows ($2B) driven by AQR, Winton, Systematica, and Garda .
  • Strategic expansion: partnership with NorthBridge broadens exposure to secular growth in industrial logistics; management emphasized pipeline strength and late-stage opportunities in alternatives .

What Went Wrong

  • Equity strategies faced notable industry/performance headwinds with ~$(16)B net outflows in Q4, offsetting strong alternatives and pressuring aggregate net flows .
  • Q4 adjusted EBITDA declined 5% YoY to $281.7M due to lower net performance fees compared to Q4 2023, despite ~10% growth in fee-related earnings .
  • Performance-fee outlook: Q1 2025 performance fees expected $20–$30M below the prior-year quarter, implying a slower start to the year despite confidence in the longer-term ~$150M annual run-rate .

Financial Results

Sequential performance (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Consolidated Revenue ($USD Millions)$500.3 $516.4 $524.2
Diluted EPS ($USD)$2.26 $3.78 $4.92
Adjusted EBITDA ($USD Millions)$217.5 $214.1 $281.7
Economic EPS ($USD)$4.67 $4.82 $6.53
Net Client Cash Flows ($USD Billions)$0.9 $(2.8) $(8.3)
Average AUM ($USD Billions)693.1 711.7 717.3

Year-over-year Q4 comparison

MetricQ4 2023Q4 2024
Consolidated Revenue ($USD Millions)$502.7 $524.2
Diluted EPS ($USD)$5.15 $4.92
Adjusted EBITDA ($USD Millions)$296.2 $281.7
Net Income (Controlling Interest) ($USD Millions)$196.2 $162.1
Economic Net Income (Controlling Interest) ($USD Millions)$242.9 $205.8
Economic EPS ($USD)$6.86 $6.53

Segment/AUM breakdown (Q4 2024, quarter-to-date)

StrategyAUM 12/31/24 ($USD Billions)Net Client Cash Flows ($USD Billions)
Alternatives – Private Markets$135.4 +$5.5
Alternatives – Liquid Alternatives$140.7 +$1.6
Differentiated Long-Only – Equities$316.2 $(15.6)
Differentiated Long-Only – Multi-Asset & Fixed Income$115.6 +$0.2
Total$707.9 $(8.3)

KPIs

  • AUM at period end: $707.9B; Average AUM: $717.3B; Aggregate fees Q4: $1,509.2M .
  • Share repurchases: ~$$120M in Q4; ~$700M full-year (~13% of shares outstanding) .
  • Dividend: $0.01 per share, payable March 4, 2025 (record date February 18, 2025) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)Q1 2025Not previously provided$220–$230 New
Performance Fees ($USD Millions)Q1 2025Not previously provided$10–$20; $20–$30 below prior year quarter New / Lower vs PYQ
Economic EPS ($USD)Q1 2025Not previously provided$5.02–$5.26 (30.7M adjusted diluted shares) New
Annual Performance Fees ($USD Millions)Long-term~$150 (framework) [prior commentary]Reiterated ~$150 target Maintained
NorthBridge Earnings ContributionQ1 2025N/ANone in Q1; modestly positive starting Q2 Clarified timing
Share Repurchases ($USD Millions)FY 2025N/AAt least $400, subject to market/new investments New
Dividend ($USD)Q4 2024$0.01 typical quarterly$0.01 declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Private Markets FundraisingQ2: Alternatives meaningfully contributing; positive net client flows; disciplined capital allocation . Q3: ~$7B raised; strong demand for specialized strategies .~$24B full-year; $6B in Q4; broad base (Comvest, EIG, Forbion, Pantheon, Peppertree) .Strengthening; sustained growth
Liquid Alternatives FlowsQ2: Emphasis on liquid alts contribution . Q3: Ongoing evolution toward alternatives .Second consecutive quarter of positive net inflows (~$2B), led by AQR, Winton, Systematica, Garda .Improving momentum
Equities FlowsQ2: Mixed, overall positive net flows . Q3: Net outflows $(2.8)B .Net outflows ~$(16)B) in Q4 amid industry/performance headwinds .Deteriorating
U.S. Wealth Platform (Alts)Q2: Capital formation capabilities highlighted . Q3: Continued investment to develop wealth products .>$6B AUM; +$2.5B alts net inflows in 2024; six evergreen products; AMG Pantheon Fund >$4.5B .Expanding rapidly
Product Innovation (Active ETFs)Q2: Focus on product wrappers . Q3: Evolving delivery of strategies .Active ETF development with Affiliates; “exciting opportunity” for long-only in ETFs .Building pipeline
Balance Sheet & LeverageQ2: Authorization increased; repurchases $327M; duration >20 years . Q3: Issued $400M notes; duration >20 years .Issued $850M long-duration, paid down $750M short-term; revolver extended; cash $625M, investments $475M .Strengthening flexibility
M&A Pipeline (Alternatives)Q3: “Increasing opportunities” to invest for growth .NorthBridge partnership; late-stage opportunities; mix of mid-sized and larger franchises .Robust pipeline

Management Commentary

  • CEO on strategy and growth: “AMG delivered record Economic Earnings per share in 2024… increasing our exposure to alternatives… Our private markets Affiliates raised approximately $24 billion during the year” .
  • CEO on NorthBridge: “A minority investment in NorthBridge… industrial logistics real estate… driven by the expanding digital economy and evolving supply chain dynamics” .
  • COO on flows: “Net client cash outflows of $8 billion in the quarter continued to reflect ongoing strength in alternatives, offset by industry headwinds in equities… liquid alternatives resulted in a second consecutive quarter of positive flows with $2 billion of net inflows” .
  • CFO on Q4 performance and outlook: “Adjusted EBITDA of $282 million, down 5% year-over-year, included $70 million in net performance fee earnings… We expect adjusted EBITDA to be $220–$230 million [Q1]… performance fee earnings $10–$20 million” .
  • CFO on capital allocation: “We repurchased $120 million in shares in Q4, ~$700 million for the year… expect to repurchase at least $400 million in 2025” .

Q&A Highlights

  • New investment pipeline and macro backdrop: Pipeline remains strong with several late-stage opportunities; potential tailwind from administration change (lower regulation, pro-investment) .
  • Deal sizing and strategy: Mix of mid-sized firms that can triple with AMG’s resources and some larger franchises; typical enterprise values ~$250–$750 million for minority or bare‑majority stakes, preserving independence .
  • Retail alts and active ETFs: Accelerated product launches; six continuously offered alternative products for U.S. wealth; active ETFs viewed as a compelling long-only wrapper with Affiliates exploring entries .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at the time of query due to API limits; therefore, an explicit actual vs. consensus comparison cannot be provided. Values would normally be sourced from S&P Global.
  • Near-term estimate risk: Q1 2025 performance fees guided $20–$30M below the prior-year quarter and only $10–$20M expected in Q1, which may drive downward revisions to near-term EPS relative to prior models, partly offset by fee-related earnings growth and AUM mix toward alternatives .

Financials vs. Estimates (if available)

MetricQ4 2024 ActualQ4 2024 Consensus
Diluted EPS ($USD)$4.92 — (S&P Global consensus unavailable)
Revenue ($USD Millions)$524.2 — (S&P Global consensus unavailable)

Note: S&P Global consensus data was not accessible at time of drafting due to API limits. Normally, comparisons would be anchored to S&P Global consensus.

Key Takeaways for Investors

  • Mix shift toward alternatives is accelerating and driving resilience: ~$24B private markets fundraising in 2024 and two consecutive quarters of positive liquid alternatives inflows; this supports fee-related earnings despite equity outflows .
  • Q4 2024 showed sequential improvement (revenue, EPS, Economic EPS) and stronger adjusted EBITDA vs. Q3, aided by performance fees; YoY compares were tougher on EBITDA/Economic EPS given lower performance fees vs. Q4 2023 .
  • Near-term caution: Q1 2025 performance fees are set to start below prior-year levels, implying potential pressure on quarterly EPS despite the long-term ~$150M annual target .
  • Capital deployment remains a catalyst: NorthBridge partnership adds secular growth exposure to last-mile logistics; 2025 share repurchases of at least $400M indicate continued return of capital alongside investments .
  • Balance sheet flexibility is high: duration >20 years, revolver extended, cash and investments cover maturities through 2034, enabling opportunistic M&A and buybacks through cycles .
  • Watch flows: Alternatives and multi-asset/fixed income are positive, but equity headwinds persisted; active ETF development and wealth-channel products aim to improve delivery and alignment with client demand .
  • Trading lens: Narrative hinges on alternatives-led growth and capital allocation; near-term results may be sensitive to performance fee cadence, while medium-term thesis benefits from pipeline execution, product launches, and wealth-channel scale .

Appendix – Additional Data Points

  • Q4 2024 AUM by strategy: Private Markets $135.4B; Liquid Alternatives $140.7B; Equities $316.2B; Multi-Asset & FI $115.6B; total $707.9B .
  • Full-year 2024 results: Consolidated revenue $2,040.9M; adjusted EBITDA $973.1M; Economic Net Income $701.6M; diluted EPS $15.13; Economic EPS $21.36 .
  • Dividend: $0.01 per share announced for Q4 2024 .