AllianceBernstein Holding (AB) Q1 2012 Earnings Call May 2, 2012 8:00 am ET Executives Andrea Prochniak - Director, IR Peter Kraus - Chairman and CEO Ed Farrell - Controller and Interim CFO Jim Gingrich - Chief Operating Officer Analyst Michael Kim - Sandler O'Neill Steve Fullerton - Citigroup Chris Spahr - CLSA Cynthia Mayer - Bank of America Merrill Lynch Marc Irizarry - Goldman Sachs Michael Kim - Sandler O'Neill Presentation Operator Welcome to the AllianceBernstein first quarter 2012 earnings review. (Operator Instructions)
Previous Statements by AB
» AllianceBernstein's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» AllianceBernstein's CEO Discusses at Bank of America Merrill Lynch - Conference Call Transcript
» AllianceBernstein's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» AllianceBernstein CEO Discusses Q2 2011 Results - Earnings Call Transcript
I'd also like to remind you that under Regulation FD, management may only address questions of a material nature from the investment community in a public forum. So please ask all such questions during this call.Now, I'll turn the call over to Peter. Peter Kraus Thanks, Andrea, and thanks everybody for joining for our first quarter earnings call. As Andrea noted, I will go business highlights, Ed will then go with the financials and our COO, Jim Gingrich who is here as well will join Ed and I for questions at the end. Let's start the morning with Slide 3. In a more constructive operating environment, we were able to deliver better investment preference for our clients and much stronger financial results this quarter than last. Gross sales were $18.1 billion and were up 21% from the fourth quarter of 2011 and 15% from the same period last year. That is our highest since the second quarter of 2010 when sales were $18.8 billion, very close to this quarter's number. Net outflows were down versus prior periods and that includes the impact of last years AXA asset sales which I will discuss in a moment. AUM increased 3% from yearend 2011 due to both, market appreciation and net new flows to retail, a business that performed extremely well in the first quarter. Our retail strength is clear from the distribution channel view on Slide 4, should we take a look. Retail gross sales of $12.9 billion were 81% higher than the fourth quarter and 66% higher than 2011s quarterly average. This is our best retail sales quarter since the second quarter of '07 when sales were $13.6 billion, again pretty close to this years' level. While Asia remains our strongest market, we had growth across regions, asset classes and both new and long standing products. As a result, retail had net inflows of $2.3 billion, our first positive flow quarter since early 2010 when inflows were $2.5 billion.
Inflows would have been stronger were not for about $600 million in redemptions related to prior year AXA assets sales in Canada and Australia that hit during the quarter.Private client gross sales of $1.4 billion were down from the prior quarter. The retention is moderated and net cap net outflows flat. In institutional, gross sales of $3.8 billion were down sequentially and year-over-year. CRS sales were much later this quarter compared with the large funding we saw in a two comparable prior quarters. As expected we had about $5.2 billion institutional redemptions related to AXA assets sales last year. This pushed outflows higher for the second consecutive quarter. Slide 5 breaks out the impact of this dynamics when institutional flows more clearly. As you can see from the chart, top right, absent the AXA impact, outflows have been stable since the third quarter of 2011 and were substantially better than the first and the second quarter of last year. As you have surely noted, we also added to our pipeline during the quarter, 40% of our $6.6 billion pipeline at the quarter end represented new additions including in diverse services like emerging market debt, global credit and small cap growth. In fact, we're seeing increased our fee activity in both Fixed Income and Equities. In Fixed Income, we had first quarter wins in U.S. High Yield and Global Plus put a fine contribution and pitch for new business in global credit, global investment grade, high income and muni's. In Equities, we had wins in market neutral, U.S. small cap growth and we're getting into more searches for emerging market value against strategic value and select U.S. equity. Maintaining our recent improvement in investment performance will be a key factor in wining more business going forward. As you can see on Slide 6, many of our services beat their benchmarks in the first quarter. Most of our Fixed Income strategies continue to outperform. Global high income, global fixed income and diversified yield have all beaten their benchmarks for the quarter, one, three and five year periods. Read the rest of this transcript for free on seekingalpha.com