Eaton Vance Corp. Third Quarter Fiscal 2019 Earnings Conference Call and Webcast August 27, 2019
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Eaton Vance Corp. Third Quarter Fiscal 2019 Earnings Conference Call and Webcast August 27, 2019
2 Third Quarter Fiscal 2019 Financial Highlights
$0.90 of adjusted earnings per diluted share, up 10% year-over-year and 1% sequentially
Financial Seed capital and consolidated CLO entity investments contributed a combined $0.04 per diluted
Results share in the third quarter
31.8% adjusted operating margin versus 30.9% in the second quarter of fiscal 2019
$482.8 billion ending consolidated AUM, up 7% versus a year ago and 3% sequentially
Managed Assets
Third quarter consolidated net inflows of $8.0 billion, or $5.3 billion excluding exposure management
and Flows
Annualized internal AUM growth of 7% and annualized internal management fee growth of 2%
73 U.S. mutual funds currently rated 4 or 5 stars by Morningstar for at least one class of shares
Investment 29 U.S. mutual funds currently rated 5 stars by Morningstar for one or more share classes
Performance 41% of U.S. mutual fund AUM in funds ranking in top quartile of their Morningstar peer group over
three years, 64% over five years and 66% over ten years
$0.35 per share regular quarterly dividend, up 12.9% year-over-year
Capital 1.5 million shares repurchased during the third quarter for $61.3 million
Management $777.8 million of cash and cash equivalents and short-term debt securities held
$368.6 million of seed capital investments in managed funds and accounts
Although the Company reports its financial results in accordance with U.S. GAAP, management believes that certain non-U.S. GAAP financial measures, specifically, adjusted net income attributable to Eaton Vance Corp.
shareholders and adjusted earnings per diluted share, while not a substitute for U.S. GAAP financial measures, may be effective indicators of the Company’s performance over time. Non-U.S. GAAP financial measures
should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share are
adjusted to exclude items management deems non-operating or non-recurring in nature, or otherwise outside the ordinary course of business. These adjustments may include, when applicable, the add back of closed-end
fund structuring fees, costs associated with special dividends, debt repayments and tax settlements, the tax impact of stock-based compensation shortfalls or windfalls, and non-recurring charges for the effect of the tax
law changes. Management and our Board of Directors, as well as certain of our outside investors, consider these adjusted numbers a measure of the Company’s underlying operating performance.3 Consolidated Assets under Management and Management Fees
by Investment Mandate
Ending Assets under Management Management Fees
(As of July 31, 2019) (For the three months ended July 31, 2019)
3%
Equity
18% 12%
27% Fixed Income
4%
Floating-Rate Income
48%
13%
Alternative
26%
19% Portfolio Implementation
20%
8% Exposure Management
2%
$482.8 billion $375.7 million
Eaton Vance Corp. consolidated totals as of and for the period ended July 31, 2019. Does not include the directly managed assets and associated revenue of 49%-owned Hexavest Inc.4 Consolidated Assets under Management and Management Fees
by Investment Vehicle
Ending Assets under Management Management Fees
(As of July 31, 2019) (For the three months ended July 31, 2019)
Open-End Funds
22% 20%
Closed-End Funds
30%
41%
Private Funds
5%
12%
9% Institutional Separate
Accounts
14%
34% Individual Separate 13%
Accounts
$482.8 billion $375.7 million
Eaton Vance Corp. consolidated totals as of and for the period ended July 31, 2019. Does not include the directly managed assets and associated revenue of 49%-owned Hexavest Inc.5 Consolidated Assets under Management and Management Fees
by Investment Affiliate
Ending Assets under Management Management Fees
(As of July 31, 2019) (For the three months ended July 31, 2019)
3%
4%
6%
11%
Eaton Vance Management
39%
Parametric
26% 59%
Atlanta Capital
52%
Calvert
$482.8 billion $375.7 million
Eaton Vance Corp. consolidated totals as of and for the period ended July 31, 2019. Does not include the directly managed assets and associated revenue of 49%-owned Hexavest Inc.
Managed assets and associated revenue of client portfolios overseen by multiple Eaton Vance affiliates are attributed to the affiliate most responsible for day-to-day management.6 Consolidated Assets under Management
$ billion 482.8
439.3
422.3
336.4
311.4
297.7
280.7
199.5
185.2 188.2
154.9
F 2009 F 2010 F 2011 F 2012 F 2013 F 2014 F 2015 F 2016 F 2017 F 2018 F 2019
Q3
Eaton Vance Corp. consolidated totals as of period end. Does not include the directly managed assets of 49%-owned Hexavest Inc., which were $13.2 billion as of July 31, 2019.7 Consolidated Net Inflows
$ billion
First Nine Months of Fiscal Year 37.8
Fiscal Year
24.7
19.3
16.7 17.3
16.3
13.5 29.9
20.8
14.5 15.2 14.1
13.1 12.1
6.6 2.8
7.9
3.9 0.2
(2.0)
(4.0)
F 2009 F 2010 F 2011 F 2012 F 2013 F 2014 F 2015 F 2016 F 2017 F 2018 F 2019
Q3 YTD
Hexavest net flows not included above
($ billion): 0.7 2.2 (1.1) (2.7) (1.0) 0.1 (2.2) (1.2)
Does not reflect assets acquired or, except as noted, flows into directly managed assets of 49%-owned Hexavest Inc.8 Annualized Internal Growth in Consolidated Managed Assets
12%
11% 11% 11%
6% 6%
4% 4%
2%
1%
0.1%
F 2009 F 2010 F 2011 F 2012 F 2013 F 2014 F 2015 F 2016 F 2017 F 2018 F 2019
Q3 YTD
Consolidated net inflows divided by beginning of period consolidated assets under management. Does not reflect assets acquired or directly managed assets and related flows of 49%-owned
Hexavest Inc.9 Consolidated Net Flows by Quarter
$ billion
Excluding exposure management
12.9
9.1
8.0 8.0 8.0
7.8 7.4
7.1
8.1
7.5
4.6 4.6
5.9 5.6 4.4
3.7 5.3
4.9
2.1 2.2
2.6
1.5
F 2017 F 2017 F 2017 F 2017 F 2018 F 2018 F 2018 F 2018 F 2019 F 2019 F 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Hexavest net flows not included above ($ billion):
0.02 (0.6) 0.5 0.3 (0.4) (0.2) (0.7) (0.9) (0.7) 0.2 (0.6)
Consolidated quarterly net inflows. Does not reflect assets acquired or, except as noted, flows for directly managed assets of 49%-owned Hexavest Inc.10 Annualized Internal Growth in Consolidated Managed Assets by Quarter
Excluding exposure management
14%
11%
9% 9%
10% 9%
8% 8%
9%
7% 7%
7% 5%
6%
4% 4%
5%
3%
2% 2%
3%
1%
F 2017 F 2017 F 2017 F 2017 F 2018 F 2018 F 2018 F 2018 F 2019 F 2019 F 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Quarterly consolidated net inflows x 4 divided by beginning of period consolidated assets under management. Does not reflect assets acquired or directly managed assets and related flows of
49%-owned Hexavest Inc.11 Annualized Internal Growth in Consolidated Management Fees by Quarter
7%
6% 6% 6%
5% 5%
4%
2%
1% 1%
(4%)
F 2017 F 2017 F 2017 F 2017 F 2018 F 2018 F 2018 F 2018 F 2019 F 2019 F 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Does not reflect assets acquired or directly managed assets and related flows of 49%-owned Hexavest Inc.12 Custom Beta Managed Assets and Annualized Net Flows
$ billion
110.0
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
Core Equity - Tax-Managed Core Equity - Non-Tax-Mgd Municipal Ladders Corporate Ladders Annualized Net Flows
Custom Core equity and laddered bond portfolios offered as individual separate accounts. Managed assets are shown as of fiscal quarter end (bars) and annualized net flows are for the fiscal
quarter (line).13 Quarterly Earnings and Profitability
Adjusted Net Income Attributable Adjusted Operating Income and
to EVC Shareholders and Adjusted Operating Margin
Adjusted Earnings Per Diluted Share 34.1%
33.5%
33.2%
32.3%
$0.89 $0.90 32.2%
31.6% 31.8%
31.4%
$0.82
$0.85
142.3 144.5 30.9%
138.4 135.8 29.8% 137.1
29.6% 132.7
$0.78 $0.77 $0.73
124.5 127.2
121.1
117.9
$0.70
105.4
100.5 102.4 101.5 101.6
$0.62 $0.62
96.5 94.8
82.7 83.9
$0.53
72.0 72.8
60.6
F17 F17 F17 F17 F18 F18 F18 F18 F19 F19 F19 F17 F17 F17 F17 F18 F18 F18 F18 F19 F19 F19
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
($ million, except per share data) ($ million)
Adjusted net income Adjusted earnings per diluted share Adjusted operating income Adjusted operating margin
See footnote on slide 2. For further information and reconciliation between GAAP and adjusted results, see previously filed Form 10-Ks, 10-Qs and 8-Ks of Eaton Vance Corp.14 Mutual Fund Performance Quartile Rankings
15% 13% 8%
26% 41%
1 Year 3 Years
33% 39%
1st
2nd 25%
3rd
4th
6% 9%
10%
14%
20% 5 Years 10 Years
11%
64% 66%
Asset-weighted rankings of Calvert, Eaton Vance and Parametric U.S. mutual funds within their respective Morningstar categories as of July 31, 2019 based on total return net of expenses with
distributions reinvested. Source: Morningstar, Inc. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, a fund's current performance may be lower or higher than quoted.15 Eaton Vance Corp. Overview
73
Morningstar
Top-Rated
Funds
Calvert, Eaton Vance and Parametric U.S. mutual funds with one or more share classes (including load-waived A) rated four or five stars as of July 31, 2019. Source: Morningstar, Inc. Past
performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Performance is for the stated time period only; due to market volatility, a fund's current performance may be lower or higher than quoted.16 Morningstar Top-Rated Equity and Multi-Asset Funds Calvert Balanced EV Atlanta Capital SMID-Cap Calvert Conservative Allocation EV Balanced Calvert Emerging Markets Equity EV Emerging and Frontier Countries Equity Calvert Equity EV Global Income Builder Calvert Global Water EV Global Small-Cap Equity Calvert Growth Allocation EV Greater China Growth Calvert International Equity EV Greater India Calvert International Responsible Index EV International Small-Cap Calvert Mid-Cap EV Large-Cap Value Calvert Moderate Allocation EV Richard Bernstein All-Asset Strategy Calvert Small-Cap EV Stock Calvert US Large-Cap Core Responsible Index EV Tax-Managed Equity Asset Allocation Calvert US Large-Cap Value Responsible Index EV Tax-Managed Value Calvert US Mid-Cap Core Responsible Index Parametric Dividend Income EV Atlanta Capital Focused Growth Parametric International Equity EV Atlanta Capital Select Equity Calvert, Eaton Vance and Parametric equity and multi-asset U.S. mutual funds with one or more share classes (including load-waived A) rated four or five stars as of July 31, 2019. Funds with one or more share classes rated five stars are in BOLD. Source: Morningstar, Inc. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, a fund's current performance may be lower or higher than quoted.
17 Morningstar Top-Rated Taxable Income and Alternative Funds Calvert Bond EV Government Opportunities Calvert Green Bond EV High Income Opportunities Calvert Short Duration Income EV Income Fund of Boston Calvert Ultra-Short Duration Income EV Multi-Asset Credit EV Core Plus Bond EV Multisector Income EV Emerging Markets Debt Opportunities EV Short Duration Government Income EV Emerging Markets Local Income EV Short Duration Inflation-Protected EV Floating-Rate EV Short Duration Strategic Income EV Floating-Rate Advantage Parametric Commodity Strategy EV Floating-Rate & High Income Calvert, Eaton Vance and Parametric taxable income and alternative U.S. mutual funds with one or more share classes (including load-waived A) rated four or five stars as of July 31, 2019. Funds with one or more share classes rated five stars are in BOLD. Source: Morningstar, Inc. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, a fund's current performance may be lower or higher than quoted.
18 Morningstar Top-Rated Municipal Income Funds Calvert Responsible Municipal Income EV TABS 1-to-10 Year Laddered Muni Bond EV AMT-Free Municipal Income EV TABS Short-Term Municipal Bond EV High-Yield Municipal Income EV Single-State Municipal Income: EV Municipal Opportunities AZ, CA, CT, GA, MA, MD, MO, EV National Municipal Income NC, NJ, NY, OH, OR, PA, SC, VA EV Short Duration Municipal Opportunities Calvert and Eaton Vance municipal income U.S. mutual funds with one or more share classes (including load-waived A) rated four or five stars as of July 31, 2019. Funds with one or more share classes rated five stars are in BOLD. Source: Morningstar, Inc. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, a fund's current performance may be lower or higher than quoted.
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