AllianceBernstein L.P.(AB) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter adjusted earnings per unit were $1.05, up 36% year-over-year, while full-year adjusted earnings were$ 3.25, up 21% compared to the previous year [42] - Fourth quarter net revenues reached $973 million, a 12% increase year-over-year, and full-year revenues totaled$ 3.5 billion, up 5% from the prior year [44] - Fourth quarter performance fees surged to $133 million, reflecting strong alpha generation, while full-year performance fees increased 80% to$ 227 million [45][59] Business Line Data and Key Metrics Changes - The active platform delivered over $4 billion of net inflows in 2024, with the active fixed income platform growing at a 9% annual organic growth rate, totaling over$ 24 billion in inflows [13] - Active equity outflows totaled $7 billion in the fourth quarter and$ 24 billion for the full year, primarily driven by institutional redemptions [14][15] - The private markets AUM stood at $70 billion at year-end, up 14% in 2024, with significant commitments from Equitable [17][38] Market Data and Key Metrics Changes - The retail channel experienced six consecutive quarters of organic growth, with annual flows reaching the highest level in three years [27] - Institutional demand for taxable fixed income grew 3% annually, while net deployments into alternatives exceeded$ 2 billion [32] - The firm-wide fee rate was 39.8 basis points, slightly lower than the previous quarter, influenced by market conditions and client demand [55] Company Strategy and Development Direction - The company aims to reach $90 billion to$ 100 billion in private markets AUM by 2027, with these products expected to generate over 20% of asset management revenues [38] - The strategic partnership with Equitable is seen as a critical component for growth, particularly in insurance asset management [40][108] - The company is focused on investing in new products and teams, particularly in alternative assets and wealth management [125] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about fixed income demand into 2025, citing strong interest in short and intermediate duration funds [23][81] - The company is experiencing positive trends in various markets, including strong performance in the U.S. retail and Japan [112][113] - The outlook for equity performance is improving, with growth portfolios gaining traction [119] Other Important Information - The relocation of the New York City office is expected to generate approximately $50 million in annual occupancy-related savings [12][51] - The effective tax rate for 2024 was 5.2%, with guidance for 2025 set at 6% to 7% [54] Q&A Session Summary Question: Thoughts on corporate structure and potential conversion to C Corp - Management discussed the tax implications and the impact on index inclusion, indicating that conversion is not currently being pursued due to the risks involved [72][76] Question: Bond reallocation and fixed income demand - Management noted strong interest in fixed income, particularly in municipal bonds, and highlighted the potential for duration extensions [81][84] Question: Organic base fee growth and its durability - Management expressed confidence in the resilience of the fee rate due to a diverse business mix and strong distribution capabilities [92][93] Question: Investment spending and M&A considerations - Management is focused on strategic growth investments in alternative assets and wealth management, while remaining disciplined about costs [125][126] Question: Active ETFs scaling and investor profile - The company has launched 17 active ETFs, with strong performance in the RIA channel and plans for further expansion in Asia and emerging markets [131][135]