AllianceBernstein Holding L.P. (NYSE:AB) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 08:00 am ET

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AllianceBernstein Holding L.P. (NYSE:AB) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Thank you for standing by and welcome to the AllianceBernstein Second Quarter 2020 Earnings Review. [Operator Instructions]

I would now like to turn the conference over to your host for this call, Head of Investor Relations for AB, Mr. Mark Griffin. Please go ahead.

Executive
Mark Griffin

Thank you, Natalia. Good morning, everyone, and welcome to our second quarter 2020 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the Investor Relations section of our website, www.alliancebernstein.com.

Seth Bernstein, our President and CEO; John Weisenseel, our CFO; Kate Burke, our COO and Ali Dibadj, Head of Financial Strategy, will present our results and take questions after our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I'd like to point out the safe harbor language on Slide 2 of our presentation.

You can also find our safe harbor language in the MD&A of our second quarter 2020 10-Q, which we filed earlier this morning. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. So please ask all such questions during this call.

Now I'll turn it over to Seth.

Executive
Seth P. Bernstein

Good morning, and thank you for joining us today. I'm pleased to report strong second quarter results with robust sales across both retail and institutional channels, another strong quarter for active equity flows and organic growth of 3% net of expected AXA redemptions while also expanding our margin. The second quarter was a period of remarkable recovery in the financial markets following the March liquidity crisis and global sell off. In this market, eight of our top 10 retail taxable fixed income funds posted top quartile performance in the quarter as credit sectors recovered as did 10 of our retail municipal funds.

Our equity platform retained good long-term performance. Bernstein Research continued its year-over-year growth, and we've had several large alternative wins that grew our pipeline. So let's get into the specifics. Starting with a firmwide overview on Slide 4.

Gross sales of $31.8 billion represented the second strongest quarter in over a decade, up $4.5 billion or 16% from a year ago and up slightly sequentially. Firmwide net inflows were $4.6 billion, excluding $7.9 billion of previously disclosed low fee AXA redemption as retail flows rebounded following the industry-wide sell-off in March. Quarter end assets under management of $600 billion increased 3% year-over-year and 11% from the prior quarter, reflecting the strong financial market rebound in the second quarter. While average AUM of $579 billion increased 2% year-over-year and decreased 4% sequentially.

Slide 5 shows our quarterly flow trend by channel. Firmwide net inflows of $4.6 billion, excluding the aforementioned AXA redemptions, were driven by continued strength in both retail and institutional. Retail had its third-best sales quarter ever, active equities generated inflows for the 13th straight quarter and active fixed income had $2 billion of net inflows.

In the bottom left chart,