Market Overview

OMAM Reports Financial and Operating Results for the Fourth Quarter and Year Ended December 31, 2017

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Company Appoints Stephen H. Belgrad as President and Chief Executive
Officer

  • U.S. GAAP net loss of $(48.8) million ($(0.45) per share) for the
    quarter, compared to net income of $25.3 million ($0.21 per share) for
    the 2016 period, and net income of $4.2 million ($0.04 per share) for
    the year compared to $126.4 million ($1.05 per share) for full-year
    2016
  • Economic net income of $48.7 million ($0.44 per share) for the
    quarter, up 25.2% compared to the 2016 period, and $180.9 million
    ($1.62 per share) for the year, up 24.7% compared to the 2016 period
  • AUM of $243.0 billion at December 31, 2017 (reflecting the removal
    of $32.4 billion of Heitman assets in Q3'17) up 1.1% from December 31,
    2016
  • Net client cash flows ("NCCF") for the quarter of $(3.7) billion
    with an annualized revenue impact of $6.8 million; full year NCCF of
    $(6.0) billion with an annualized revenue impact of $32.9 million

OM Asset Management plc (NYSE:OMAM) today reports its results for the
quarter and full year ended December 31, 2017.

This press release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20180201005650/en/

"OMAM had a strong finish to the year, posting year-over-year growth in
ENI per share of 33% for the quarter and 34% for the year, while our
U.S. GAAP earnings were impacted by tax reform in the U.S." said James
J. Ritchie, OMAM's chairman and interim CEO. "Our Affiliates continue to
build on their long-term track records of outperformance, with assets
representing 65%, 72% and 83% of revenue finishing the year ahead of
benchmarks on a one-, three- and five-year basis, respectively. Although
the fourth quarter was challenging from an AUM flow perspective, with
net flows of $(3.7) billion, an average fee rate of 57 basis points on
gross sales compared to 32 basis points on redemptions drove a positive
annualized revenue impact of $6.8 million, continuing a trend which led
to an annualized revenue impact of $32.9 million on net flows of $(6.0)
billion for the year. While we remained committed to investment spending
through collaborative organic growth initiatives, prudent expense
management and scale have generated meaningful operating leverage, as
our ENI operating margin increased 261 bps, to 38%, in 2017.

"We are also pleased with our progress executing on our growth strategy
in 2017. We saw meaningful inflows in multiple Affiliate products that
were seeded as part of OMAM's growth initiatives, including a large ACWI
ex-US mandate sourced by our Global Distribution team. In addition, we
benefited from our late-2016 acquisition of Landmark Partners, which
diversified our business and meaningfully contributed to our earnings
growth and margin expansion. We are committed to making additional,
accretive investments in high quality boutique asset management firms,
and are actively cultivating relationships with a wide range of
entrepreneurial firms.

"Finally, we are very pleased to announce the appointment of Steve
Belgrad as our President and Chief Executive Officer, effective March 2,
2018. OMAM's Board of Directors considered a number of highly qualified
candidates, and there was unanimous support for Steve. With Steve's
appointment, following the completion of Old Mutual's sell-down in the
fourth quarter, the Company has stability of ownership, governance, and
management, and moves forward into 2018 focused on the continued
execution of our growth strategy. In addition, I want to give my sincere
thanks to John Rogers, who will be stepping down from the Board after
successfully completing the CEO selection process as chair of the
Nominating and Governance Committee. John will be replaced on the Board
by Barbara Trebbi, a former portfolio manager and co-managing partner at
Mercator Asset Management."

     
Table 1: Key Performance Metrics (unaudited)
 
($ in millions, unless otherwise noted) Three Months Ended December 31,       Twelve Months Ended December 31,

U.S. GAAP Basis

2017       2016      

Increase

(Decrease)

2017       2016      

Increase

(Decrease)

Revenue $ 249.2 $ 186.6 33.5 % $ 887.4 $ 663.5 33.7 %
Pre-tax income from continuing operations attributable to
controlling interests
82.5 27.3 202.2 % 137.1 161.0 (14.8 )%
Net income (loss) attributable to controlling interests (48.8 ) 25.3 n/m 4.2 126.4 (96.7 )%
Diluted earnings per share $ $ (0.45 ) $ 0.21 n/m $ 0.04 $ 1.05 (96.2 )%
U.S. GAAP operating margin 11 % 16 % (574) bps 8 % 23 % (1545) bps
 

Economic Net Income Basis
(Non-GAAP measure used by management)
(1)

ENI revenue $ 252.3 $ 189.8 32.9 % $ 900.7 $ 678.5
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