The Blackstone Group’s (BX) second quarter 2011 economic net income (ENI) of 63 cents per share substantially outpaced the Zacks Consensus Estimate of 34 cents, as well as the prior-year quarter’s ENI of 18 cents.
ENI came in at $703.3 million for the reported quarter compared with $205.2 million in the year-ago quarter. The increase was primarily driven by an improved investment performance in all the segments.
The upbeat performance was aided by a strong revenue growth, improved equity markets and lower operating expenses. Blackstone’s assets under management (AUM) also continued to show a significant growth.
Quarter in Detail
Blackstone’s total revenue in the quarter surged 137.8% to $1.31 billion from $550.1 million in the prior-year quarter. The revenue upside was attributable to significantly higher performance fees, investment Income, as well as interest and dividend revenue. Total revenue also surpassed the Zacks Consensus Estimate of $968.0 million.
Total expenses declined 12.7% year over year to $984.8 million in the reported quarter. The decrease reflects a significant fall in employee compensation and benefit expenses, which was partially offset by a rise in general and administration expenses, as well as interest expenses.
Asset Position
Fee-earnings AUM totaled $129.0 billion as of June 30, 2011, up 27% year over year. As of June 30, 2011, total AUM stood at $158.7 billion, up 42.8% from $111.1 billion as of June 30, 2010. Net inflows and investment appreciation accounted for the improvement in both fee-earnings AUM and total AUM.
Capital
As of June 30, 2011, Blackstone had $1.8 billion in cash, Treasury cash management strategies and liquid Blackstone funds. Furthermore, Blackstone funds had $31.4 billion of committed but uninvested capital at second quarter end.
Dividend Update
Concurrent with the earnings release, Blackstone declared a quarterly distribution of 10 cents per unit to record-holders of common units as of the close of business on August 15, 2011. This distribution will be paid on August 31, 2011.
Our Take
Although concerns over the sluggish economic recovery persist, Blackstone is likely to continue benefiting from the growing need for risk management and alternative investment solutions within the financial industry.
Blackstone’s close competitor – Virtus Investment Partners, Inc. (VRTS) – is scheduled to report its second quarter 2011 earnings on August 2.
Currently, Blackstone retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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