Manning & Napier Earnings Release Supplement. For the period ended September 30, 2015

Transcription

1 Manning & Napier Earnings Release Supplement For the period ended September 30, 2015

2 Forward Looking Statements This presentation contains forward-looking statements. Such statements can be identified by the use of forwardlooking terminology such as believes, expects, may, estimates, will, should, intends, plans or anticipates or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. You are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forwardlooking statements as a result of various factors. Prospective investors are cautioned not to place undue reliance on forward-looking statements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by those cautionary statements. Any forward-looking statements which we make in this presentation speak only as of the dates of such statements, and we undertake no obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained in this presentation to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. 2

3 Business Update and Quarterly Discussion Patrick Cunningham Chief Executive Officer 33 Years of Experience, 23 Years with Manning & Napier With his extensive business development experience in the asset management industry, Patrick has served on Manning & Napier s Executive Group since 2000, co-chairing it from 2003 through Patrick is a frequent presenter at industry conferences and his broad philanthropic efforts include his current role as Vice Chairman of the Board for the Rochester Museum and Science Center. Patrick earned his BS from the Massachusetts Institute of Technology. James Mikolaichik Chief Financial Officer 22 Years of Experience, 4 Years with Manning & Napier Prior to joining Manning & Napier in 2011, James served as Executive Vice President and Head of Strategy at Old Mutual Asset Management from 2008 through 2011 and as its Chief Risk Officer from 2004 through James also served, in various capacities, at Deloitte & Touche LLP providing consulting, financial advisory, auditing, and accounting services from 1993 through James earned his BS from Susquehanna University and his MBA from Columbia University. 3

4 This is a challenging market environment Unprecedented monetary & fiscal policies have characterized the environment the past few years. The inevitable unwinding of these policies creates both risks & opportunities. Investors must be diligent, disciplined, and selective. These qualities are deeply rooted in Manning & Napier s active management process. 4

5 Investment Process at a Glance Our bottom-up investment strategies utilize an active approach that adjusts asset allocation and individual holdings based on current market risks and opportunities. Overall asset allocation is determined by bottom-up stock allocation and valuation. What We Do Build a diversified portfolio of individual securities using bottom-up, fundamental research Invest in all capitalizations, countries, styles, and sectors using an opportunistic core approach Complement our bottom-up research with top-down, macroeconomic viewpoints Establish buy/sell targets focused on absolute returns What We Don t Do Limit our investment universe by capitalization, style, or country Focus on relative valuations Maintain a set asset allocation through all market and economic environments Allow this bottom-up driven research and valuation work to drive asset allocation adjustments Monitor current allocations continually 5

6 Growth of $100,000 Over the Current U.S. Stock Market Cycle (04/01/ /30/2015) $300,000 $257,092 $250,000 $213,207 $200,000 $150,000 $100,000 $50,000 $0 04/00 08/01 01/03 06/04 11/05 04/07 09/08 02/10 07/11 12/12 05/14 10/15 Long-Term Growth 40/15/45 Blended Index 2 4 Short-term periods of underperformance are a natural part of our benchmark-agnostic style, which has proven to add value over the long-term, across multiple market cycles. See last page for disclosures. 6

7 2015 Strategic Plan Distribution Adhere to Core Beliefs & Monitor and Enhance Investment Process Product Development Service Strategy U.S. Equity Non-U.S. Equity Upcoming Three-Year Track Records Global Fixed Income Strategic Income (Conservative & Moderate) New Business Strategy Defined Contribution Focus Product Emphasis Across Channels: Multi-Asset Class Global Quality Fixed Income High Yield Real Estate M&A Activity Ongoing efforts to diversify business Partnership possibilities Product Seeding Ongoing efforts based on market needs International Fixed Income Emerging Markets Fixed Income 7

8 Assets Under Management by Portfolio ($B) Our Balanced products, including our Life Cycle and Retirement Target mutual funds and collective trusts, remain our flagship products and represent a valuable franchise. $1.1 $1.2 $26.0 $21.3 $1.2 $20.3 $20.8 $23.5 $13.2 $1.0 $2.9 $10.7 $1.1 $4.7 $13.0 $4.8 $10.1 $13.0 $13.9 $17.3 $18.1 $20.5 $23.7 $25.3 $ Q15 Total AUM: $14.7 $18.8 $16.2 $28.3 $38.8 $40.2 $45.2 $50.8 $47.8 $37.2 Multi-Asset Balanced Class Equity Fixed Income 8

9 Financial Update 9

10 Historical AUM by Portfolio ($ in billions) Growth in assets under management has historically been driven by client cash flows and high separate account client retention (over 90%). Despite recent outflows from our single-asset class strategies, our multi-asset class strategies have steadily increased by over $4 billion since For the year ended December 31, For the quarter ended $1.1 $1.2 $1.2 $1.2 $20.8 $23.5 $26.0 $21.3 $24.5 $21.3 $19.0 $17.0 $1.2 $13.2 $18.1 $20.5 $23.7 $25.3 $25.3 $25.3 $25.4 $24.9 $ Total AUM $40.2 $45.2 $50.8 $47.8 Organic Growth $4.7 $(0.8) $(2.5) $(3.3) 9/30/14 12/31/14 3/31/15 6/30/2015 9/30/2015 Total AUM $51.1 $47.8 $45.6 $43.1 $37.2 Organic Growth ($0.4) $(2.7) $(2.6) $(2.8) ($2.6) 10

11 Historical Revenue & Revenue Rates ($ in millions) Although AUM levels and business mix have varied since 2011, revenue margins have remained consistent. For the year ended December 31, For the quarter ended $330 $339 $376 $405 $105 $98 $90 $87 $ % 0.78% 0.78% 0.79% 0.78% 0.79% 0.78% 0.77% 0.77% Average AUM (in billions) $42.2 $43.6 $48.3 $51.6 9/30/14 12/31/14 3/31/15 6/30/2015 9/30/2015 Average AUM (in billions) $53.0 $49.5 $47.1 $45.3 $

12 Operating Expense, as adjusted, as a Percentage of Total Revenue Key considerations of our compensation structure: Since 2010, annual compensation as a percentage of revenue has ranged between 27 and 31%. However, quarterly ranges can be more variable based on recent market trends, with compensation as a percentage of revenue ranging between 24-33% historically. The Investment Team compensation is based on both absolute & relative returns for trailing 1-, 2- and 3-year periods, and measured and paid semi-annually as of June 30 and December 31. The Sales, Service and Product Team compensation includes incentives for both new business generation as well as service incentives. Starting in the second quarter of 2013, compensation and related costs includes expenses associated with equity grants awarded under the Company s Long-Term Incentive Plan, with additional equity awards expected in future years. For the year ended December 31, 53% 54% 56% 57% For the quarter ended 57% 56% 58% 61% 61% 27% 28% 29% 29% 28% 26% 29% 30% 30% 16% 17% 18% 19% 19% 19% 19% 18% 17% 9% 9% 8% 9% 0% 0% 0% 1% % 10% 10% 10% 12% 1% 1% 1% 2% 2% 9/30/14 12/31/14 3/31/15 6/30/2015 9/30/2015 (1) Operating expense and compensation and related costs as a percentage of revenue excludes non-cash reorganization-related share-based compensation for periods prior to March 31, For further information and reconciliation between GAAP and our Non-GAAP financial measures, see the appendix as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. 12

13 Pre-Tax Income, Economic Net Income & Economic Income Margins (1) ($ in millions) Our focused business model results in a flexible expense structure and has produced strong margins over time while allowing for investment in growth alongside of high dividend payouts. For the year ended December 31, $167 $175 $157 $157 47% 46% 45% 43% 80% 70% 60% 50% 40% For the quarter ended $44 $43 $39 42% 44% 43% $32 37% $25 32% 80% 70% 60% 50% 40% 30% 30% $97 $97 $103 $108 20% 10% $27 $27 $24 $20 $17 20% 10% Economic Net Income per Adjusted Share (2) $1.08 $1.08 $1.15 $1.22 0% 9/30/14 12/31/14 3/31/15 6/30/2015 9/30/2015 Economic Net Income per Adjusted Share (2) $0.31 $0.30 $0.28 $0.24 $0.21 0% (1) Economic Income excludes non-cash reorganization-related share-based compensation. Beginning with the period ending March 31, 2015, economic income is equivalent to income before provision for taxes. For further information and reconciliation between GAAP and our Non-GAAP financial measures, see the appendix as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. (2) Assumes the weighted average exchangeable units of Manning & Napier Group, LLC and unvested equity awards are converted into the Company s Class A common stock as of the respective reporting date, on a one-to-one basis 13

14 Cash Utilized to Enhance Shareholder Value MN has returned cash to shareholders while at the same time enhancing shareholder value through accretive share repurchases and by further diversifying the product line up through new product seeding. Adjusted Shares Outstanding (in millions) Product Seeding (in millions) $29.1 $30.2 $30.5 $12.2 $8.6 $13.6 $7.6 $6.2 12/31/12 12/31/13 12/31/2014 9/30/2015 Dividends (per Class A share) YTD 2015 Initial Seeded Amount Total Portfolio MV Distributions (in millions) $0.08 $0.08 $15.0 $15.0 $0.64 $0.64 $0.64 $0.48 $125.4 $125.4 $125.4 $ YTD YTD 2015 Standard Special Standard Special 14

15 Disclosures 1 The Russell 1000 Index is an unmanaged index that consists of 1,000 large-capitalization U.S. stocks. The Index returns are based on a market capitalization-weighted average of relative price changes of the component stocks plus dividends whose reinvestments are compounded daily. 2 The Manning & Napier Long-Term Growth Composite is a weighted average of discretionary separately managed accounts, and may include proprietary mutual fund and collective investment trust fund accounts with a Long-Term Growth objective. Accounts in this composite must have a market value greater than $500,000 and tenure of at least one year under our management. Long-Term Growth is a blended investment objective that invests in equities, primarily U.S. with some non-u.s., and fixed income securities. The primary investment objective of accounts in this composite is long-term growth, and the secondary objective is preservation of capital. Equity exposure for accounts in this composite typically ranges from 30% to 80% with situational adjustments within this range at our discretion. Net-of-fee returns are calculated based off of the effective fees of the accounts in the composite. They are after brokerage commissions, reinvested income, and advisory fees, but if applicable, before custodian costs and the fees of the investor s Personal Financial Advisor. Also, accounts subject to solicitation fees may incur as much as 0.15% in additional expenses. Fees will vary with size and circumstances and these fee differentials would impact returns accordingly. Fees used for calculations are firmwide rates prior to 2001 and specific to this composite for 2001 onward. Past performance does not guarantee future results. Prior to 01/01/2009, proprietary mutual fund and collective investment trust fund accounts with a Long-Term Growth objective were excluded from the composite. This composite includes separately managed accounts that may have a portion of their assets invested in proprietary asset class mutual funds, which may be declined or may not be permitted through the selection of some custodial programs. All data are subject to revision. 3 The Barclays U.S. Aggregate Bond Index is an unmanaged, market-value weighted index of U.S. domestic investment-grade debt issues, including government, corporate, asset-backed, and mortgagebacked securities, with maturities of one year or more. 4 Due to the active allocation process, actual allocations may vary from benchmarks. These are unmanaged mixed-asset class benchmarks. Benchmarks shown are a weighted blend of the respective indices. The 40/15/45 Blended Index is 40% Russell 3000 Index (Russell 3000), 15% MSCI ACWI ex USA Index (ACWIxUS), and 45% Barclays U.S. Aggregate Bond Index (BAB). Russell 3000 is an unmanaged index that consists of 3,000 of the largest U.S. companies based on total market capitalization. Index returns are based on a market capitalization-weighted average of relative price changes of the component stocks plus dividends whose reinvestments are compounded daily. Index returns provided by Bloomberg. ACWIxUS is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets and consists of 45 developed and emerging market country indices outside the U.S. The Index is denominated in U.S. dollars. The Index returns are net of withholding taxes. They assume daily reinvestment of net dividends thus accounting for any applicable dividend taxation. Index returns provided by Bloomberg. BAB is an unmanaged, market value-weighted index of U.S. domestic investment-grade debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of one year or more. Index returns provided by Interactive Data. The returns of the indices do not reflect any fees or expenses. Returns provided are calculated monthly using a blended allocation. 15

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