APOLLO GLOBAL MANAGEMENT, INC. FILES (8-K) Disclosing Results of Operations and Financial Condition, Regulation FD Disclosure
Item 2.02 Results of Operations and Financial Condition.
The information that pertains to the fiscal quarter and fiscal year ended
herein.
Item 7.01 Regulation FD Disclosure.
Update on Merger-Related and Other Financial Items
As previously announced,
to release financial results for the fourth quarter and full year 2021 on
Holding Ltd. ("Athene") on
are providing select financial updates based on information available as of
As a high-growth, global alternative asset manager, Apollo presented its
five-year growth strategy (the "plan") at our Investor Day. Embedded within our
plan are three key goals: scaling our origination capabilities, building out
global wealth distribution, and growing our capital solutions business. Recent
progress with each of these goals is consistent with progress against our
financial targets. We provided business and financial performance targets we
seek to achieve by the end of 2026 and per share Fee Related Earnings ("FRE")
and Spread Related Earnings ("SRE") estimates for 2022. We remain comfortable
with these targets in view of our progress to date with the plan.
We have recently made several announcements regarding transformative forward
progress, including the completion of the Athene merger, our pending acquisition
of the US wealth distribution and asset management businesses of
("Griffin"), our compensation reset to better align employees with shareholders,
and a share repurchase program. Additionally, with our share class restructure
completed alongside the Athene merger close, we believe we have fully met all
criteria for inclusion in the S&P 500 index. We also announced the recasting of
our non-GAAP financial results and performance measures to reflect new operating
segments, categorization of investment strategies, and certain segment
allocations commencing with the first quarter of 2022.
This report notes the financial impact of certain items relevant to the fourth
quarter and/or full year 2021, the impacts of which we believe are largely
transitory on GAAP and/or non-GAAP measures.
Athene Merger
On
transaction. We believe the combination will accelerate growth through fully
aligning both companies' respective strategies and employee incentives, while
strengthening our combined capabilities as a capital solutions provider.
As previously announced, Apollo will report standalone financial results on
will be filed on or around
While the common shares of Athene have been de-listed following the closing of
the merger, Athene's preferred shares remain listed, and the company will
continue to report standalone financial results for the year ended
2021
file its Form 10-K on or around
financial reports with the
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Compensation Reset
On
create better alignment between shareholders and employees and incentives to
achieve the business and financial performance targets presented at Investor
Day. We want to attract the most qualified and energized talent in the industry
and want motivated, productive talent to spend the entirety of their career at
Apollo. These changes, which include the one-time issuance of additional vested
equity awards, are expected to lower our fee related compensation expense ratio
from approximately 30% to 25% over the next five years.
As previously announced, we consequently expect to incur a one-time, non-cash
GAAP charge of approximately
related to the issuance of vested equity awards. This vesting paradigm is a
purposeful step in empowering our employees. We want highly energized and
productive employees who want to be at Apollo, rather than people who are
incentivized to stay at Apollo because they need to vest. The share count impact
is described below.
The compensation reset will lower our Distributable Earnings ("DE") tax rate for
fiscal year 2021 to be approximately 8%, and we expect our DE effective tax rate
for full year 2022 to be approximately 18%.
Griffin Acquisition
On
wealth distribution and asset management businesses in an all-stock transaction.
The acquisition is a significant step in building Apollo's Global Wealth
Management Solutions business, which is focused on the development and
distribution of alternatives to individual investors and their wealth advisors.
We believe this acquisition will expand our retail investor presence, accelerate
our global wealth build, and will be strategically accretive. More specifically,
Griffin will expand our presence in the independent broker dealer and wirehouse
distribution channels and includes two retail interval funds totaling
approximately
generate higher fee related revenues and costs and to become a meaningful driver
of earnings growth from Apollo's Global Wealth Management Solutions business in
the years ahead.
The Griffin transaction is expected to close in two phases. We expect to
complete the acquisition of the US wealth distribution in the first quarter of
2022, followed by the anticipated close of the acquisition of the investment
advisers to the two retail interval funds in the second quarter of 2022. The
Griffin acquisition is subject to customary closing conditions, including
approval by stockholders of
the
The Griffin transaction is expected to be approximately breakeven to Apollo's
after-tax DE per share in 2022.
Shares Outstanding
As of
issued and outstanding. As of
approximately 461 million shares, which includes vested and unvested equity
awards issued in conjunction with the compensation reset and 1.7 million of
newly issued shares committed to establishing a non-profit foundation.
As of
issued and outstanding. Our DE shares outstanding is currently approximately 600
million shares. Pro forma for the expected closing of the Griffin transaction in
the second quarter of 2022, our DE shares outstanding is approximately 604
million shares.
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DE shares outstanding consist of total shares of common stock outstanding,
Apollo Operating Group Units that participate in dividends and restricted share
units ("RSUs") that participate in dividends. See "Non-GAAP Disclosures and
Reconciliation" below for the share reconciliation.
Share Repurchase Authorization
On
repurchase authorization that allows Apollo to repurchase up to an aggregate of
its share count and up to an aggregate of
stock in order to offset the dilutive impact of share issuances under Apollo's
equity incentive plans.
The authorization does not obligate us to make any repurchases at any specific
time and does not expire. The program is effective currently and until the
aggregate repurchase amount that has been approved by Apollo's board of
directors has been expended. The program may be suspended, extended, modified or
discontinued at any time.
Update of Non-GAAP Measures
On
to show financial information for historical periods in a new reporting format
that Apollo will utilize for its non-GAAP financial results commencing with the
first quarter of 2022. These reporting changes have no impact on Apollo's
historical consolidated
our Investor Day, we will report our results for three operating and reportable
segments, which will be Asset Management, Retirement Services, and Principal
Investing. We believe this reporting format better reflects how we manage the
business after announcing and completing several strategic transactions,
including Athene,
origination platforms, including
Finance.
The recast presentation also addresses Apollo's allocation of certain
compensation and non-compensation expenses from the Asset Management segment to
the Principal Investing segment. The allocation of expenses represents costs
associated with corporate activities that support the consolidated business of
Apollo, inclusive of Athene.
Athora Revised Fee Agreement
On
insurance business in the European retirement services market. The new fee
agreement revises the base fee that we charge for managing certain assets on
behalf of
incurred by Apollo. The effective date for these changes is
For our GAAP and non-GAAP financial results for 2021, the impact of these fee
agreement changes will be accounted for as an increase in revenue and expenses.
The annual increase in revenue and expenses is approximately
fee agreement changes were reflected in the recent presentation updating
non-GAAP financial measures and will also be reflected in our financial results
to be issued on
Fee Related Earnings Margin
Pro forma for the segment allocations and the revised fee agreement with
described above, our full year 2021 FRE margin is expected to be approximately
57%. However, pro forma for our acquisition of Griffin, we expect this margin to
be approximately 100 basis points lower, as Griffin operates at a lower profit
margin than Apollo's Asset Management segment. FRE margin is calculated as FRE
divided by fee
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related revenues (which includes management fees, transaction and advisory fees
and certain performance fees).
The information included in this Current Report on Form 8-K is being furnished
and shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that Section, nor shall it be incorporated by
reference into a filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing.
* * *
In this Current Report on Form 8-K, references to "Apollo" and "we" refer
collectively to
context otherwise indicates. The information in this Current Report on Form 8-K
contains forward-looking statements that are within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act.
These statements include, but are not limited to, discussions related to
Apollo's expectations regarding the performance of its business, its liquidity
and capital resources and the other non-historical statements in the discussion
and analysis and expectations regarding benefits anticipated to be derived from
the merger with Athene. These forward-looking statements are based on
management's beliefs, as well as assumptions made by, and information currently
available to, management. When used in this Current Report on Form 8-K, the
words "believe," "anticipate," "estimate," "expect," "intend", "may," "will,"
"could," "should," "might," "target," "plan," "seek," "continue" and similar
expressions are intended to identify forward-looking statements. Although
management believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations will
prove to have been correct. It is possible that actual results will differ,
possibly materially, from the anticipated results indicated in these statements.
These statements are subject to certain risks, uncertainties and assumptions,
including risks relating to Apollo's dependence on certain key personnel,
Apollo's ability to raise new Apollo funds, the impact of COVID-19, the impact
of energy market dislocation, market conditions, and interest rate fluctuations,
generally, Apollo's ability to manage its growth, fund performance, the
variability of Apollo's revenues, net income and cash flow, Apollo's use of
leverage to finance its businesses and investments by Apollo funds, Athene's
ability to maintain or improve financial strength ratings, the impact of
Athene's reinsurers failing to meet their assumed obligations, Athene's ability
to manage its business in a highly regulated industry, changes in Apollo's
regulatory environment and tax status, litigation risks and Apollo's ability to
recognize the benefits expected to be derived from the Merger. Apollo believes
these factors include but are not limited to those described under the section
entitled "Risk Factors" in the joint proxy statement/prospectus filed by
Global Management, Inc.
Management Inc.'s
Annual Report on Form 10- K filed with the
Quarterly Report on Form 10-Q filed with the
Annual Report on Form 10-K filed with the
its Annual Report on Form 10-K/A filed with the
Quarterly Report on Form 10-Q filed with the
factors may be updated from time to time in Apollo's, AAM's or Athene's periodic
filings with the
http://www.sec.gov. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements that are
included in this Current Report on Form 8-K and in other filings. Apollo
undertakes no obligation to publicly update or review any forward-looking
statements, whether as a result of new information, future developments or
otherwise, except as required by applicable law. This Current Report on Form 8-K
does not constitute an offer of any Apollo fund.
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No Offer or Solicitation
This Current Report on Form 8-K is for informational purposes only and not
intended to and does not constitute an offer to subscribe for, buy or sell, the
solicitation of an offer to subscribe for, buy or sell or an invitation to
subscribe for, buy or sell any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to or in connection with the proposed
transaction or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
Non-GAAP Disclosures and Reconciliation
This report contains financial information that is calculated and presented on
the basis of methodologies other than in accordance with accounting principles
generally accepted in
limitations inherent in non-GAAP measures because they exclude certain charges
and credits that are required to be included in a GAAP presentation. Non-GAAP
measures should not be considered in isolation from, or as a substitute for,
financial information presented in compliance with GAAP, and non-GAAP measures
as used by Apollo may not be comparable to similarly titled measures used by
other companies.
The table below sets forth a reconciliation of common stock outstanding to our
DE shares outstanding:
December 31, January 6,
Share Reconciliation (in millions) 2021 2022
Total GAAP Class A Common Stock Outstanding 249 571
Non-GAAP Adjustments:
Participating Apollo Operating Group Units 185 -
Vested RSUs 18 18
Unvested RSUs Eligible for Dividend Equivalents 10 11
Distributable Earnings Shares Outstanding1 461 600
1.Numbers are approximate and may not sum to totals due to rounding. Shares
outstanding as of
known as
outstanding as of
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