Fortress Investment Group LLC :FIG-US: Earnings Analysis: Q1, 2017 By the Numbers : June 5, 2017

Fortress Investment Group LLC reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Fortress Investment Group LLC – Invesco Ltd., Apollo Global Management, LLC Class A, Oaktree Capital Group, LLC Class A, Blackstone Group L.P., KKR & Co. L.P., Och-Ziff Capital Management Group LLC Class A, Carlyle Group L.P. and Ares Management LP (IVZ-US, APO-US, OAK-US, BX-US, KKR-US, OZM-US, CG-US and ARES-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 236.62 million, Net Earnings of USD -3.63 million.
  • Gross margins widened from 97.09% to 98.12% compared to the same period last year, operating (EBITDA) margins now 6.67% from 7.74%.
  • Year-on-year change in operating cash flow of 26.37% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 236.62 484.24 260.57 230.68 215.57
Revenue Growth (%YOY) 9.76 16.3 -1.5 -32.63 -4.94
Earnings (mil) -3.63 85.84 30.35 -15.35 -8.89
Earnings Growth (%YOY) 59.2 58.13 307.02 -635.96 -127.29
Net Margin (%) -1.53 17.73 11.65 -6.65 -4.13
EPS -0.02 0.35 0.07 -0.07 -0.04
Return on Equity (%) -1.67 41.73 16.36 -7.77 -3.96
Return on Assets (%) -0.68 15.81 5.87 -3.01 -1.63

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Market Share Versus Profits

Revenues History
Earnings History

FIG-US‘s change in revenue this period compared to the same period last year of 9.76% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that FIG-US is holding onto its market share. Also, for comparison purposes, revenues changed by -51.14% and earnings by -104.23% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 97.09% to 98.12%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

FIG-US‘s change in operating cash flow of 26.37% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.


The company’s operating (EBIT) margins contracted from 4.83% to 4.78%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -7.04% to -3.62%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Fortress Investment Group LLC is a diversified global investment management company that provides investment management services for investment funds and companies, including related managed accounts. It operates business through following segments: Private Equity Funds, Liquid Hedge Funds, Credit Funds, Credit Private Equity Funds and Logan Circle. The Private Equity Funds segment primarily makes significant, control-oriented investments in debt and equity securities of public or privately held entities in North America and Western Europe, with a focus on acquiring and building asset-based businesses with significant cash flows. The Liquid Hedge Funds segment invests globally in fixed income, currency, equity and commodity markets and related derivatives to capitalize on imbalances in the financial markets. The Credit Funds segment makes diversified investments in assets, opportunistic lending situations and securities, on a global basis and throughout the capital structure with a value orientation. The Credit Private Equity Funds segment focuses on investing in distressed and undervalued assets. The Logan Circle segment manages portfolios for institutional investors across a comprehensive range of strategies that include core, core plus, short, intermediate and long duration, corporate and high yield. Fortress Investment Group was founded by Wesley Robert Edens, Robert I. Kauffman and Randy Alan Nardone in 1998 and is headquartered in New York, NY.

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