The Blackstone Group L.P. BX reported first-quarter 2015 economic net income (ENI) of $1.37 per share, significantly outpacing the Zacks Consensus Estimate of $1.05. Moreover, the figure came in a massive 96% higher than the prior-year quarter figure.
Better-than-expected results were aided by commendable growth in revenues as well as assets under management (AUM). Moreover, a sound balance sheet continued to be a strength. However, elevated costs were a downside.
Blackstone reported ENI of $1.62 billion, up 99% year over year.
Behind the Headlines
Total revenue surged 66% year over year to $2.51 billion. The considerable rise was mainly attributable to an increase in performance fees (up substantially), investment income (up 63%), interest income and dividend revenue (up 36%) and fee revenues (up 4%). Moreover, it came above the Zacks Consensus Estimate of $2.16 billion.
Total expenses climbed 28% year over year to $876.9 million. The surge in expenses was primarily driven by higher compensation and benefits costs as well as other expenses.
Fee-earnings AUM grew 10% year over year to $223.5 billion. Total AUM as of Mar 31, 2015 amounted to $310.5 billion, up 14% year over year. The rise in total AUM was primarily driven by $24.0 billion of strong fund appreciation and $77.2 billion of gross inflows.
As of Mar 31, 2015, Blackstone had $3.2 billion in cash, corporate treasury and liquid investments. Moreover, the company had $2.1 billion as long-term debt at the end of the quarter.
Our Viewpoint
Going forward, the improving economic conditions are expected to assist Blackstone’s fund-raising ability. Also, the changing investor preference for alternative asset classes and other risk management strategies will boost the top line in the forthcoming quarters. Further, we foresee steady improvement in AUM, backed by continued inflows in all the segments.
However, we remain concerned about the adverse effect of the ongoing capital market volatility and stringent regulations. These factors could weigh on the company's financial performance in the near term.
Currently, Blackstone carries a Zacks Rank #3 (Hold).
Among other investment mangers, Waddell & Reed Financial, Inc. WDR and Apollo Global Management, LLC APO are scheduled to announce their first-quarter 2015 earnings results on Apr 28 and May 7, respectively, while Franklin Resources Inc. BEN is slated to release second-quarter fiscal 2015 results on Apr 27.
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