AllianceBernstein Holding LP

10/23/2025 | Press release | Distributed by Public on 10/23/2025 04:41

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
AB Holding's principal source of income and cash flow is attributable to its investment in AB Units. AB Holding's interim condensed financial statements and notes and management's discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with those of AB included as an exhibit to this Form 10-Q. They also should be read in conjunction with AB's audited financial statements and notes and MD&A included in AB Holding's Form 10-K for the year ended December 31, 2024.
Results of Operations
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(in thousands, except per unit amounts)
Net income attributable to AB Unitholders $ 259,263 $ 345,972 (25.1) % $ 690,529 $ 873,471 (20.9) %
Weighted average equity ownership interest 31.4 % 39.4 % 35.2 % 39.5 %
Equity in net income attributable to AB Unitholders 81,412 136,374 (40.3) 242,995 345,360 (29.6)
Income taxes 7,661 9,179 (16.5) 24,962 27,420 (9.0)
Net income of AB Holding $ 73,751 $ 127,195 (42.0) $ 218,033 $ 317,940 (31.4)
Net income per AB Holding Unit $ 0.79 $ 1.12 (29.5) $ 2.08 $ 2.77 (24.9)
Distribution declared per AB Holding Unit (1)
$ 0.86 $ 0.77 11.7 $ 2.42 $ 2.21 9.5
________________________
(1)Distributions reflect the impact of AB's non-GAAP adjustments.
AB Holding's net income for the three and nine months ended September 30, 2025 decreased $53.4 million and $99.9 million, respectively, compared to the corresponding periods in 2024, primarily due to lower weighted average equity ownership interest in AB (as discussed in Note 1 to the condensed financial statements in Item 1) and lower net income attributable to AB Unitholders primarily due to the recognition of a prior period gain of $128.5 million related to a fair value remeasurement of the contingent payment liability associated with AB's acquisition of AB CarVal in 2022 (as discussed in Note 11 to AB's condensed financial statements in Exhibit 99.1).
AB Holding's partnership gross income is derived from its interest in AB. AB Holding's income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are computed by multiplying AB qualifying revenues by AB Holding's ownership interest in AB, multiplied by the 3.5% tax rate. AB qualifying revenues are primarily U.S. investment advisory fees. AB Holding's effective tax rate was 9.4% during the three months ended September 30, 2025, compared to 6.7% during the three months ended September 30, 2024. AB Holding's effective tax rate was 10.3% during the nine months ended September 30, 2025, compared to 7.9% during the nine months ended September 30, 2024. See Note 7 to the condensed financial statements in Item 1for the calculation of income tax expense.
Management Operating Metrics
As supplemental information, AB provides the performance measures "adjusted net revenues," "adjusted operating income" and "adjusted operating margin," which are additional metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management uses these additional metrics in evaluating performance because they present a clearer picture of AB's operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, acquisition-related expenses, interest expense and other adjustment items. Similarly, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles ("non-GAAP measures").
We provide the non-GAAP measures "adjusted net income" and "adjusted net income per unit" because our quarterly distribution per unit is typically our adjusted net income per unit (which is derived from adjusted net income).
Index
These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both GAAP and non-GAAP measures in evaluating the company's financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB's revenues and expenses. Further, adjusted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See AB's MD&A contained in Exhibit 99.1.
The impact of these adjustments on AB Holding's net income and net income per AB Holding Unit is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
(in thousands, except per Unit amounts)
AB non-GAAP adjustments (1)
$ 18,852 $ (104,529) $ 98,216 $ (175,233)
AB income tax (expense) benefit on non-GAAP adjustments (714) 4,282 (5,891) 10,337
AB non-GAAP adjustments, after taxes 18,138 (100,247) 92,325 (164,896)
AB Holding's weighted average equity ownership interest in AB 31.4 % 39.4 % 35.2 % 39.5 %
Impact on AB Holding's net income of AB non-GAAP adjustments $ 5,695 $ (39,515) $ 32,488 $ (65,198)
Net income, GAAP basis $ 73,751 $ 127,195 $ 218,033 $ 317,940
Impact on AB Holding's net income of AB non-GAAP adjustments 5,695 (39,515) 32,488 (65,198)
Adjusted net income $ 79,446 $ 87,680 $ 250,521 $ 252,742
Net income per AB Holding Unit, GAAP basis $ 0.79 $ 1.12 $ 2.08 $ 2.77
Impact of AB non-GAAP adjustments 0.07 (0.35) 0.32 (0.56)
Adjusted net income per AB Holding Unit $ 0.86 $ 0.77 $ 2.40 $ 2.21
(1)Includes all AB non-GAAP adjustments to pre-tax income.
The degree to which AB's non-GAAP adjustments impact AB Holding's net income fluctuates based on AB Holding's ownership percentage in AB.
Cash Distributions
AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted net income per Unit for the quarter multiplied by the number of Units outstanding at the end of the quarter. Management anticipates that Available Cash Flow will continue to be based on adjusted net income per Unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments made to adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to the condensed financial statements in Item 1for a description of Available Cash Flow.
Capital Resources and Liquidity
During the nine months ended September 30, 2025, net cash provided by operating activities was $275.1 million, compared to $253.0 million during the corresponding 2024 period. The increase primarily resulted from higher cash distributions received from AB of $19.8 million.
During the nine months ended September 30, 2025, net cash used in financing activities was $275.1 million, compared to $253.0 million during the corresponding 2024 period. The increase was primarily due to higher cash distributions to Unitholders of $20.4 million.
Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB. AB Holding's cash inflow is comprised entirely of distributions from AB. These distributions are subsequently distributed (net of taxes paid) in their entirety to AB Holding's Unitholders. As a result, AB Holding has no liquidity risk as it only pays distributions to AB Holding's Unitholders to the extent of distributions received from AB (net of taxes paid).
Index
Commitments and Contingencies
See Note 8 to the condensed financial statements in Item 1.
CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements provided by management in this report and in the portion of AB's Form 10-Q attached hereto as Exhibit 99.1are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately managed accounts, general economic conditions, the impact of tariffs and potential disruptions in international trade on financial markets, product and account performance, asset levels and economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see "Risk Factors" in Part I, Item 1Aof our Form 10-K for the year ended December 31, 2024 and Part II, Item 1A in this Form 10-Q. Any or all of the forward-looking statements that we make in our Form 10-K, this Form 10-Q, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in "Risk Factors" and those listed belowcould also adversely impact our revenues, financial condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding's principal source of income and cash flow is attributable to its investment in AB, include statements regarding:
•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations:AB Holding's cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding's ability to meet its financial obligations is dependent on AB's cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.
•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs:Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm's credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.
•The outcome of litigation:Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant and could have such an effect.
•The possibility that we will engage in open market purchases of AB Holding Units for anticipated obligations under our incentive compensation award program:The number of AB Holding Units AB may decide to buy in future periods, if any, for incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.
•Our determination that adjusted employee compensation expense, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues on an annual basis:Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.
Index
AllianceBernstein Holding LP published this content on October 23, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 23, 2025 at 10:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]