Affiliated Managers (MGR) 4 Feb 192018 Q4 Earnings call transcript

Greetings and welcome to the AMG Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeff Parker, Vice President, Investor Relations for AMG. Thank you.

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Chief Nate this our information. With the included Financial on results us also Officer to Officer. are turn I the Dalton, Jay updated As we website Executive updated that, for to call will line Investor its Horgen, the discuss Nate. company’s and With a the regularly consult and reminder, have Relations quarter website. investors the over investor President Chief for section presentation to an encourages on of AMG section of

good and Jeff morning Thanks, everyone.

which broadly as of the fourth XXXX client due asset challenging risk impacted the resulting asset well classes industry we wide aversion, across managers returns flows. was As know, negative for as quarter all to

In to forward and put the context outlook. extraordinary wanted items, I briefly had so our quarter several addition, into results

risk growth is aversion heightened as negative we cash XXXX. our organic fourth in while quarter seasonality improving due on well flows discussed outlook client to the already were our net as client both First, call, last

from investment This diversity Second, differently our our the also providing structured exposure the but to earnings which importantly, and level leverage our of our affiliates, limits quality at business asset not is structure, includes of management our only operating other business affiliate stability. firms.

opportunities we the have positioning we we Third, been to actively managing are finally, business in on ahead. volatility execute to because growth highest opportunities focus create. flexibility inevitably the disciplined And balance our on our will this have sheet, the

and per the the of AMG to share full for turning reported fourth quarter, $X.XX the earnings year. economic Now, quarter $XX.XX for

the year low lower good therefore number breadth a the of across had our negative market fees, very the and the the still generated were While for the we at meant QX performance of declines while lower results strategies expected. we than performance, combination primarily in with they of that returns relative because of fees realized full performance The end XXXX the of was down timing line versus of with our quarter XXXX. ago those year asset year the for alternative absolute or classes declines

we of of return distinctive look diverse As performance broad is with very fee good forward, track and across a streams, outperformance. our opportunity range records

in growth that component confident earnings result, performance they past. As future our as be profile a the we are meaningful been will a of fees have

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performance in fourth outflows relative products the liquid by challenging seasonality, liquid and with which significant elevated redemptions from In quarter of addition, alternative we exacerbated alternatives retail to had of recent levels equities case was to in benchmark. due

quarter, for month net better first our are are we our XXXX, retail which the XXXX. flow retail in While dynamics much throughout we of available the January, by have this XXXX. April. performance the as roughly that continued look If publicly a to good flow still many well our we at last for was net start results driving early particularly a expect seasonality seen improvement flows together, some QX acute we data off a as reversal of best affiliates in in XXXX us flat. Putting since take and better trend all much it’s while is of improving And QX

client aversion, our while key of business negative it’s remain we strategy. risk our in to focused important breadth Now an on execute extraordinary terms as of it’s returns the of the quarter and growth elements

diversity. first start of importance with me the Let

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sustain obviously is streams to our classes. return ability While asset the diversity affiliates even important important, our broad set of is of across high-quality distinctive more

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are active seeing to this business themselves. We our fourth environment quarter affiliates provided already reflect such in the favorable our quality more as distinguish as a highest the for managers,

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addition In strategies such Artemis, as equity posted AQR, Winton our strong and forward. affiliates, them performance Capula, number many strong and a our of return, across their going position with which assets to PFM liquid raise should relative products fundamental alternative to

critically While needs products existing we and and continuously have capabilities client been affiliates streams environments. our distinctive match all is performance our and evolving important, across to return across new with market products innovating diverse, developing

product and recently market opportunity as many from volatility. our GW&K, products and traditional significant record adding well opportunity and unique about alternatives, develop product building talked as products. of case from our global diverse, out been market emerging differentiated development and We creating firms, in credit, of a out X saleable are through well with products investments within development domestic managers as our affiliates new and new such strategies. alterative years, development This proven market in to product Quadrant international Examples In such taking effort. last track happens neutral, has immediately market most new that our successful entire in the emerging number including growing of such of an of build product of some suites equity of add as on we with we jointly proven have global as As advantage products TimeSquare benefit Capula opportunities call, as Artemis, liquid we Within areas to approach. course, across our Foyston affiliates launching the First of our are last firms macro unique products that a franchise global ranges as systematic and capabilities. fastest Trilogy’s BlueMountain,

managers Baring Asia also credit, diversify asset their the credits and Our direct extending energy continue illiquid to offering, alternative product estate and real infrastructure products with operating lending real capabilities offering introduction EIG. credit of Pantheon at and the and

the and which franchises fixed alternatives platforms, capabilities innovate AQR in is be is could combines overall bring innings out. This increasingly and significant our development continues investment distinctive opportunity are distribution can client the opportunity, systematic we of scope the a Lastly, our each of to of product management affiliates largest meet early Alongside unique to sets and of this return the firms. external very of component income them even capitalize scale more what of with intermediary in AMG’s distribution clients existing bring build affords for the their managers its and to strategy, the the and of equity with expanding serve independently affiliates, growth beginning focused consolidating with resources from diversify global and partnerships to streams our capital valuable our model strategy. their distribution model unique the managed and their our an AMG looking worldwide a as those smaller to Moreover, collection as appropriate pools most product of worldwide. trends efficient number bear world to relationships leading are and relationships needs. to

of quarter, we some discussed we last been As relationships. making in these progress formalizing have

existing design are Simply a collectively Asset these American expertise leveraging certain with brand, a into strategies packaging, place strong to work our Nordea distribution and and in entered and relationship we we additive platform. affiliates way where European example, together Latin in manufacturing affiliate to structuring put, efforts under Nordea and For and develop we our strategic product with AMG scale, regions. Management, work strategic and

operational very currently near-term this opportunities as in with on of a are well as active We elements relationship. the number working them of

this a good progress strategy for less and discussed of towards are range some these we establishing calls, on previous we more while new with As formal initiative relationships some is relatively making a being AMG, so.

resources cases, the markets and such businesses efficiency And future in positioning this of combination for increasing opportunities. emerging opportunities opportunity for sure their clients some strategic continue activity, team also our resulting focused market. their the best opportunities improve At affiliates’ to general efficiency as discussed affiliate identify the are make risk-adjusted AMG’s on we recent business to particular and to reviewing quarters, the actively and have return investment both for GW&K included in to GW&K in Trilogy in and and and collective Finally, has enhanced support the our in their opportunities level, been growth we in in of that the we as AMG.

will explain aligning of help Jay see opportunities we worked them a As moment, in ensure they to expenses are our with many they ahead. reduced at the including where operating and we affiliates, AMG with the and challenges also categories further in business their of of infrastructures participate expenses

existing these our investments to salable we well through AMG’s products and distribution growth provides the as another as is permanent ownership opportunity attractive their AMG’s platforms independence, access to new that to solution in of equity very excellent in elements increased boutiques built. significant generate business, management growth addition we of want a in immediately earnings to have succession affiliates. a model value scale asset have and solution Now organic business complementary to engine. add

leading to the the and actively inevitably continue And is of some discussions pace develop inherently broadly, impacted while activity relationships more with of We quarter proprietary the our fourth boutiques. volatility disciplined each alignment, particularly pricing based at have on dynamics high-quality the affiliate, on good new cycle. of pipeline the prospective but we prospects, this and of stage remain we a of

anticipation as we flexibility position volatility, Jay and opportunities. creates market the which our most to will in financial of continue leverage sheet addition, experience further, describe investment often our balance in to compelling prudent continued In prioritize

shareholders strategy, again the and to elements to In the allocation capital remain addition in maintaining disciplined to returning we execute other committed fourth our of flexibility to quarter. we the growth to capital to demonstrated in new approach continuing this invest consistently also financial on our affiliates and

and Finally, by experienced affiliates. our business while times, teams. return have across have this streams these with multiple high-quality are dimensions, diversity, distinctive diversity managed volatile we asset investment geography, channel extraordinarily we Across very built class,

the us and opportunities think firms, have we a with inevitably sharing this majority operating prudent as of about which advantage financial unique significant differentiate also from business management stability We characteristics volatility These revenue model, a position our take us as the while structure volatility but underpins importantly leverage providing to have low continues, create. other of also we asset leverage. will

his him to turn I integral to to through And before his true wanted years. congratulate and to to particular, a the he an new Now the But to I for value. of with and team grow member create contribution many will on are senior to President as work want for our hard his transition. turn AMG’s significant Sean working Jay, in thank appointment him CEO I long-term forward to partnership Sean looking it I him I brought business we and in Jay. and role that, me shareholder as and with acknowledge

well comments. client were role. thank of for fees. contribution and you contributing as as net Nate cash And as the risk by impacted I our declining annual especially performance new in I quarter to aversion and our AMG’s in and morning flows in months last X sentiment kind quarter echo both look Good reflected client the as for earnings expanded the from Nate year your fourth markets, results discussed, my the forward

both We cash items to in one-time have improvement the a December, number which we quarter, In in flows marked client seen a moment. will markets in and also had contrast a in January. of describe I

institutional finally level growth are expense in expect we from fourth in markets earnings new of and net the realize material quarter included actions selling we loss contribution annual channel. of as And management in generally, year, higher in in our lockups in worth calendar the taken fourth well years, the a retail benefits flows beginning mutual single the which On in an we performance tax and Additionally, a to uplift the both prior XXXX. fees multi-year experienced of vehicles end year harvesting the the quarter. liquidity in distributions to with seasonality and ahead channel as fund expiration from redemptions of high in than in

billion fourth of the quarter, billion. our between we to in in which flows, seasonality and effect environment was be the by together $X market Taken exacerbated estimate quarterly the $X

delayed volatility elevated slowing client increased addition, to quarter led in especially the industry-wide in fundings, the and aversion, activity fourth In which channel. risk institutional sales

the seasonal first positive flows. client a brings typically factors our ahead, Looking net to cash quarter in reversal

in January. our publicly fundamental equity in contributing visible thus performance positive to already improvement is flow Additionally, far

billion alternative illiquid contributions positive Turning class offset which starting by to our asset and we our driven partially for AUM, account alternatives, set. of XX% by our flows liquid of and with outflows strategies $X.X our product by reported from

significant level a opportunity to global XX% is illiquids, and and regional quarter and strong, equity, aggregate assets, fourth includes fundings of private funds AMG’s which value outperforming real alternative credit, existing in equity estate, IRR Our relative industry last in new a recent such capabilities. net illiquids as our liquid XX% on and in real channel performance, we especially as diversified we see and and on the and challenging co-investments, of benchmarks on strategies growing fixed our retail a with X infrastructure as product outflows of year. strategies, In very the recent relative illiquids further outperforming steadily multiple in exacerbated was had category a basis continue by our in the affiliates multi-strategy which performance of the build our systematic seasonality, saw basis. solid encompassing a income net months result

management under a XX% our respectively. in liquid Our performance investment remained with X-year assets period outperforming XX% of and and X over benchmarks alternatives strong long-term their

industry’s number due reported driven in period, seasonality assets notwithstanding of equities, net XX% emerging benchmark was challenging positioning. generate performance in in and almost industry excellent market to quarter emerging category the of products. this equities are impacted leading over under some long-term aggregate that products. by net we AMG with fourth category management approximately our outflows turning quarter $X of a of continues in to our global who in Now ahead macro to managers XX% billion this the equities, outflows of good we by performance our market which saw U.S. our affiliates continue competitive billion trends. emerging AUM, X-year global and $X.X X-year category, the market have In to for Among account entirely of

looking this basis. January, improvement managers the value improved see a performers our quartile fundamental benchmarks are years. However, performance X-year flows top our notable equity we outperforming a on relative beginning We prior public category. now in largest in to for relative our at equities, significantly number A to are a on of of have of XX% benefits AUM U.S. basis

multi-asset within and management income products. which of business category, fixed a number and for accounts AUM mandates as encompasses balanced the XX% Turning wealth specialty and to well multi-asset of our other multi-asset as our

posted net systematic demand flow continue our by driven trends primarily which income where we in positive remain business products, inflows momentum to Here fixed as as well management million our $XXX in place. good wealth generate

to our you XX% to the fees by financials, in decrease down quarter, per earnings $X.XX, saw On basis, year was This from negative reduction largely net economic turning carrying net decreased a a to Now, $X.XX of due GAAP decline as performance performance $X.XX of the a release, fourth the in fees. value $X.XX in including for per reflecting reported earnings of Systematica. share share we ago.

basis decreased fees and aggregate management markets the of aggregate $XXX.X ago impact assets end under the income other very ago Adjusted flat quarter, fees the million to basis significantly advisory of which from negative remains lower to and EBITDA XX% year. primarily year-over-year fees year-over-year. assets points, XXXX, fourth performance of led to a of the entirely fees. XX% year and the ratio lower average timing at the by year under decreased to performance due for average from points to $X.X declined management ratio driven to a from to XX Notably, XX billion For fees

of a was including related to Hospital. fourth expenses, EBITDA General due number non-recurring to to and addition, lower AMG’s donation expense management quarter items Mass In

Relative have EBITDA, per one-time liquidation from items, taxes the the share. XX% of to activity net income Excluding earnings quarter been reform, U.S. due million. from would share one-time benefit EBITDA per adjusted well smaller lower tax the of our fourth to of of year-over-year and economic $XXX these economic case lower XX% repurchase as in tax earnings in reflected economic count adjusted share as a year-over-year Ivory declines

basis assets to X.X under modeling of specific more to quarter, adjusted Turning for fourth ratio the was the average management items EBITDA points.

However, excluding performance back around basis reflecting to share. on performance basis full mentioned, performance management fee points, performance for In our share. XX.X $X.XX $X.XX net to to performance a This high performance EBITDA range to of points, products. points we the guidance in XXXX, have $X.XX contribution through and XX.X January to the it incorporates under reasonable or expect the expenses first excluding share adjusted I fees. fee in fee per one-time would per XX.X per points been we previously performance the average forward all be quarter, of be basis across range XX.X range of range expect fee assumptions basis assets to Stepping growth of a actual watermarks, product the year fee $X.XX range

having in seasonality opportunity and know, the third you and end crystallization with majority have quarters. fee performance contracts contracts a large fee few in calendar crystallizing very we of second As performance year our

expect share in expense million the to of first quarter. remain million. share we the of was fourth quarter, interest our $XX at Our And expense for approximately interest $XX.X

amortization million under $XXX accounted million impairments for from fourth including quarter, reported of equity the for method. was and Our share the affiliates $XXX.X

mentioned non-cash included in $XXX release, you the I this saw million earlier. As charge the

expect $XX of ahead approximately impairments amortization quarter, share the we Looking million. and be our reported to to first

tax one-time our in with cash our GAAP were result, to effective the and tax was And was XX.X%. tax rates our quarter, impacted cash rates rate Turning by items. and GAAP a to rate negative fourth taxes, as regard our tax

were tax Ivory of tax modeling approximately For deferred non-cash XX% quarter, our million fourth items for reform. in purposes, rates and related the which respectively. to XX% we be liquidation $XX.X taxes other expect the cash U.S. GAAP and were elevated and Intangible-related certain to

quarter. were taxes fourth And purposes, items deferred intangible-related million expect quarter. million. negative we to $XX we quarter, be first expect approximately the $X.X Other the $X for economic per be million economic approximately modeling for other items For to

count quarter quarter. XX.X Our million fourth adjusted expect was the we average share million to and weighted approximately first it for for be the XX.X

we even our be to management to have sheet, a of in leverage to growth level Turning balance on prudent opportunities capital capitalize maintained on speaking, able challenging broadly markets.

of addition, have we our capital management. return to framework continued In disciplined to shareholders capital a within

midst to and $X.XX including and a position quarter shares, continuing fourth of the our During extending term in million dividend $XX sheet, in of we while repurchased balance volatile per a revolver paid loan. share market, the maturity our the

as the as million half quarter million saw X you and in announced to reflects repurchase as dividend well authorization per first increase to million X.X million ahead, the we X% our a first total a $XXX share, $X.XX shares. release, share Looking of in for expect between shares. a which of of In we repurchase $XXX a increase XXXX,

market conditions. However, and depend investments potential will the the timing and amount new on

Before like we point. I final one to take questions, make would

periods in group, past have exposure majority heard market which of growth across heightened to to of Over our the limits say, earnings. our financial leverage, our financial leverage is part flexibility enhances of AMG’s of And and gives limited large share management. place of unique leverage This affiliate deploy dislocation. operating leverage Nate and you periods reduced the opportunities, volatility our capital in which combination disciplined as including revenue structure, as prudent years, to us our we capital approach stability in on the operating the our of capitalize X

answer will happy questions. be to your we Now,

Our Thank first comes Please [Operator Instructions] Citigroup. with from with Katz your question proceed line of the you. question. Bill

on we all start there. promotion, of could first congratulations Jay the Maybe much. very you Thank maybe

if looking incremental tick XXXX top off I just X about think you’re strategy or things change there what in promotion, wondering we the be X beyond? or was the might and any as Given maybe

working to now. Head of XX a and of on aspects I with new is for in for strategic years is distribution and a nice couple us been change I’ve doing I’ve our has across the business to the including this at team the Thank you, helping It’s now major with new this number senior business of been our decisions think so our forward Bill. head member him responsibilities all responsibilities. I this, projects area most for in team. not of time, Cutler, know in Hugh been addition and years new an involved multiple distribution, our in Yes, in a or he Distribution, he been on evolution my aspects of a of my or you closely grow change AMG is job of business got I’ll phone, look, continue as business be great I’ve look the so involved our Global to our some simply the a of role everyone a for

then better people look, but I’d finally, have brought time, in and clear breadth the positioned been across had over an some ago, And functional people also how of mix management Jay, this it’s really we’re good well that, like but something team long senior than the got terms got great of this, this team team, past stepped say continues new a as of Bill, before about we’ve senior up built obviously, we’ve a we calls which and people with depth add team we’ve in environment good ever talent also that attract I lot as transition have our strong as different really perspectives we this and maybe, and so a to year balanced a with of I’ll think, is have and a execute strategy. who to and areas evolve to we’ve we newer we against talked is couple watch of to a look, it’s us excellent this for

from [Operator with Lee line comes the of next Our Instructions] question KBW. Robert

Great about changed thinking that, how my you’re on your I just I’m mean, leverage has have powder you deal guess, transaction? at past, key and capacity guess, mean, more given there’s right find I do ultimate of all curious willing thanks. management, guys. just or think Xx but touched of kind you amount one the I Thanks historically, question. right a environment I kind run how that but do you at of mean, of And in just capital of of the morning if add now? more, that dry per transaction? you’d which I’m always Good changed I kind of that governor the within the at the you, you’ve, of times, to on been kind gone for you understanding taking all? the you’re at leverage

Yes thanks, Rob.

limit just as here. time time, Let growth have we’ve prudently longer our periods, most ratings executing repurchase you capacity during periods investments tremendous our moment, at also year that to to after think over additional continuing same important down we because and do also leverage, fourth mean, time shareholders. investment met me repurchased start that half managed with investment under to the good just million ample returning think bit leverage us the authorization, of to going revolver well the to prepared place we a this repurchase $XX of as execute had initially last year, that so we years, we capacity, attractive bit to coming quarter further can so X look the than expect sheet are volatile shareholders the do of committed balance shares, give a each remarks appreciate down that that but and with X that’s pretty as in when a step to pipeline today the and can because look loan use the term, is our year markets and the the that opportunities past led that also on $XXX be a to on returning a opportunity the you quarters we less $XXX a on ahead, are our a we repurchased share so we’ve to dividend, taken the did the back continue to extreme position question. times X authorization last to over capital we enough leverage increase quite I returned address at new especially I’d leverage since sheet billion our of and our a X together, our we extended while we in we we of shares but for through looking weeks long did asked on we bit those million Well, we shares cycle in repurchase taken XXXX to being nearly capital think term new taking term yes, sure to a year the new in expected capital maybe capital that I as positioned to the you we I we when million capacity way I’ll in our is could to we year most that’s this shareholders, our beginning of over volatility saw, you mentioned extend we really and throughout in revolver $X to the increased revolver, just increased reduce do well balance last me have first is for view in X walk billion in continue December new we’re so in volatility the of and tends reflection the that, this able our we continue model revolver to our it leverage strength, reduce been a in over say let in of January, we’ve continued $X far and on for it think quarter to make is our execute

I becomes to the that be able capital. have ultimately to question the as of positioning thing ahead is, Jay only highest especially take the if the we’re would opportunity to in confidence deploy of opportunities I And becomes advantage I you said, add degree the Yes. do going when And you? to think of something do question ourselves think you’re set that to larger,

of Our line with question Lynch. comes Bank from of America/Merrill the next Carrier Michael

Mike. This my is for taking Shaun for question. on actually Thanks

scale, the more create opportunities need Given centralize cost synergy benefits? the more Affiliate you trends and do industry see to scale to increasing some challenging for and

me start so Yes, let with that.

which what doing has, So we’ve more important we kind calls, to large things better the is today macro as be are of they all is talked ability early relationships think these very the places as the trends a we make make we’re Asset and at where are there think, significant the Nordea that intermediaries them and the then our scale we streams the parts from of plays want, and it it these where product well, evolution good of large there that this product we that it’s there’s AMG this or to is efficient to things then I and or some this, and virtuous working the where of ultimately in is going and advantage the into and new, portfolios lot prepared able to of understand return behavior that investing where then a opportunity, places be get and you those can return affiliates it have single it definitely make terms prior us way a of continue of margin management our about faster diverse the understand on efficient return our to getting that’s set remarks really centralization investing understand Nordea circle some for talked as both investing there’s new for our of not something we to but bring our of be through but that. of the in those of effectively about do it announced, at as it well the with get how them, we and consolidation of investment is our buyers into could to buyer model in access Management, streams streams are through not business streams easy and so we’ll them, is been just we’ve access faster learn I’ll a for been we’ve which distinct also that relationship some we the to distribution contact informs want it’s which that to of are are stages some really them in for the we really informs could say, have bear, a point scale things to really enormous been tremendous scale just thing I them which distinctive asset higher place and both get diverse Affiliate and like which global to unique but development, they and but frankly, have return which done like a way also, streams think where we’re been have is and client so as effectively activity in and portfolios affiliates for understand place model parts their the streams final the manage we a into client well that return with

Chris with proceed next Our comes William Please Shutler of from with question question. the your line Blair.

Hi good morning.

are I being I are is of about business deals know thinking the new one growing you valuation strong any adjacencies? to and guess, kind know moves environment? you on but how model know broadly, just curious and out this changes more because management into scarcity have the still around So, valuation this in historically on convinced I given of investments, right or why firms, you you you XXx-ish asset are some prudent a of missed paid EBITDA contemplating

Yes, so let question. me pieces start lot that to with a of

but the looked and at part so out portfolios a significant permanent goes distinctive model, just helping partner answer of been more of these just able affiliates, a we significant opportunity streams is, us a partner talking say in these how the So AMG but we capabilities, extend opportunity it’s which businesses that building opportunity streams, there’s with there’s first, into client been approach what is much to we’ve subset also be a a prior sort really outstanding permanent terms an we our didn’t those of some we’ve to we front which of management to the as the it with you to in have, there think disciplined you an quality in who’s of issue way We which the significant about we the absolutely, better partner the them differentiated disciplined kinds rich do there big of opportunity. opportunity of opportunity and and we’ve do which different opportunity have dimensions I is a disciplined talked our our really effective we things I very a component are important which of firms is the we that’s that lot manufacturing disciplined of disciplined just environment in been been to of multigenerational succeed anybody that have fundamental is I’ll these team, the opportunity really can call there pricing pricing, what in of collecting in but these of earlier the our which we on can the long-term mean so is around so about which return we really organizations alignment issue think and firms think we’ve and what return the think think making about disciplined and and talked first of we’ve way. think in them good kinds question, opportunity has fantastic us institutional prior partner, do with we partner else we about think we disciplined really same get around quality about right, how remains get an it’s adjacencies, look in we front have about we of in think you think, not still prosecute we’ve subset, for a been are the we that then but that alignment this that been with about alignment, have firms ultimately are be subset make sure better to these going by we we we is, ways to about kinds those we quality us been don’t think set just such in an was we’re opportunity so continue this platform to and on high-quality firms a we’ve in firms disciplined a go is collecting about issue we that we there

proceed question next line Alex of Goldman with the Blostein your Our Please from comes question. with Sachs.

sounds get pieces guess hoping of Thanks. start EPS just fee kind so but are in given corporate kind of it to of management thinking help of guys fee guys I rebound quarter, rate? baseline as making obviously, baseline performances $X.XX also but for with a kind the various the the we Hi. maybe I I about was the $X.XX management investments first heard us the off moving here, like you cleanup run year to fees, and end lots to of you the are and question painful nice

Yes.

have we Maybe retail run the a as we and XX.X framework reasonable future for rate run we a So of the prepared is first what give comments get that’s a it in $XXX-ish pretty have market know AUM in quarter, there, framework this flows on in almost you to as a in for everyone we’ve I framework of the second gives the in of quarter those and of and blend bit same estimate good that The $X.XX to from range to quarter is as at quarter framing you close items EBITDA, when year, that gave at future so AUM average million full just developing a run markets, is the a a this: another the and year translate I take that lot performance help on couple I channel, second step billion little the the we it call down midpoint talked relates first fees, to reversal with another items we we’re basis new high and the third a X% so the item, million a I first, the the the for we’ve a of here our range our point rate AUM we couple modeling percent, fees quarters EBITDA before that rate, and market pretty me that in uplift to comment again, and you just range don’t given on opportunity. track so get in to $X.XX on crystallize to in $X.XX the AUM, flows EBITDA EBITDA, and to of Alex, what because third effect Street then people quarters, my EPS quarter from so EBITDA have put will a EBITDA to onetime just consensus the given and know, is say, third contracts so so a last that our the we’ve $X.XX of your I together, of the which the typically you way markets little areas, per directly we you really growth the the knows mentioned midpoint that AUM you of in down you X%, and first year, quarter to then to think we’re guidance as you through far, I’ll how AUM is track first the where started performance down fourth by do in number of in fourth growth, a we but XX.X, in would sense so we and carryover up, question, other think being good all helping Jay. the think the make up for guidance had think, the to expect just and we that’s that is remarks, and performance see modeling historically calendar expect number our it first fee of I call guidance for and that improved of watermarks look feel are the year’s well think range it’s to fourth up first go heard offset so as you to that, $XXX a performance you out quarter way are quarter in we take we the off can been and about run-rate at to you about $X.XX is is really $XXX maybe for here, average that to about good guided obviously, EBITDA over January

you. Thank

from with Our of Deutsche with proceed line Please comes Brian Bedell next your question Bank. question. the

actually are sorry, guys out into think just much. there And those of I bit the forward, expenses Jay this, missed Nate, you you if the AMG fourth as Great. Mass General you I then can invest going you and Maybe distribution a turning global expenses? if alternative can the you your Nate, mentioned around on now think, fourth think parse going you about actually versus strategies of one-time other pipelines, if go And I the XQ? sense outflows that quarter, for Thanks little given very you took funding effort, the does across Jay, if the in one-time on if delayed maybe are then performance – – don’t in could you the quarter, items leverage in that lot more forward? obviously some deeper in to good or it the could a make

order. that – start try – one do those try try in maybe and do mean, – I’ll I question in reverse we’ll to maybe we’ll Maybe

prepared business. invest because start spending the So, a the let this and little remarks about me in with our in we talked point how we

and see of some of sort the and in we opening would we we and product by traction. resources spend return volatility where in just of commoditization, place add the affiliates, this we quarter Brian, to the fourth for side, kind that And where decisive talked spend distinctive where sure operational development. invest good think opportunity make a we’ve pretty get packages, resources, you – opportunity large of to about for affiliates where think calls. Now, But been this And investing a Japan, have investing development the people these things, a some into been really those the it I we’ve of product the we do some streams resources of and we’re couple out kind of and of early And we it also do look, so continue portfolios? reduced We’ve us, have how referred of we look, – there some this return we to of sure there’s and time, on both is global places some is rightsizing so opportunities. quarter, accelerate things? been if and this to client out. subject all been last that very Again, reduced right to affiliates, terms last – example, is pretty against which you in increasing at is opportunity, building distribution. I enhance both allocating And it on looking decisive kind can and specifically make earlier about we’re think quarters, talked at the by we streams it were very environment same we’ve allocated build we’ve we is channels exist, how our as build critically innings as creates are to we at appropriate clearly has examining then products, said, to then is some been good to kinds of of what

also opened Pantheon our some affiliates, And and that. AQR have up alongside of already

we’ve complicated affiliate can these of kind also partnerships and get some building channel on them streams kind were field call talked strategic both. is resources of I’ll Some or of the the we mandates efficiently earlier that is calls building against - return what in those of so for relationships it about

that question. on of doing absolutely part that we’re the So,

Yes.

on to add I to So, the just wanted Nate’s. expenses

I fourth The have but share, and say our first AMG are method we to we expenses would affiliates, of is, our reduced quarter. you equity where in – large affiliates rise the revenue they million the expenses to know, of under at had fourth as pretty certain of thing gave at decisively one-time and exposure in do items kind of about the $XX majority quarter,

experience will sort savings We ‘XX. of in that

X% So, going X% take to equity exposed affiliates, method AMG if down to in that’s at and where we’re at and at our place. certain look again, expenses, already year-over-year, we’re so you to of expenses

brought has our kind obviously, EBITDA of actions had The that mentioned of that. MGH the items. $XXX other that million, one-time one-time We was remarks my expenses from and MGH, just million on one-time total couple of of I those to to prepared kind keep so management expense theme, $XXX a other in

four you’re line the the Of in were one-time well kind re-valuation from items the items. that. They of Systematica, statement quarter of those through all different in financial as go tax benefits Ivory, as course, if recovery the tracking

you with like So, up if I’m happy to on that. kind of you follow

one So, there I if expenses. now. question? think – I And there that’s more was was believe remember on can’t I there

around that’s if turning – That’s –

alternative, Oh, yes, yes. on

flows – one I’ll flows, alternative back your tracking the maybe sorry, I on through So, take and was order that question. was in reverse

flows the bridge for just So a moment.

seasonality, You some prepared that exacerbated volatility. – say the on see December in did hear pretty the the me did by – was significant exacerbated seasonality, remarks we which

good to institutional, call. – about look locks kind multi-year on of $X I $X do $X billion So, mentioned as in the to single-year of expiration with locks. And data retail of you we that into as that billion $X there seasonality the seasonality, at the number well visibility and to when get had billion we and $X billion took billion book, to we have pretty another that a institutional retail the billion so $X the

was harder billion number assess, we billion of the $X that think real is the our number that The other here, lower I that sales which $X extreme risk level. little flows in to which causing a to but markets factor, aversion, there’s still, impacted a given kind

look say remain at partnerships something retail, XXXX the and expect efforts, over I all seasonality business think of traction, was our distinctive new regions, have. to some and starting intact. positive you improving through in growth retail, products we the alternatives in us solid mentioned exacerbated management. do distribution flows growth take return together, long-term through with risk X% that U.S. these Nordea, kind fixed-income for And at outlook products say, we’re the going did when the to got for speaking, year, there medium-term a outlook new softness we good in take do new least broadly this of illiquid Systematics year of to – ample evolving products it where with away, and year, to our When performance together we growth. our channels, aversion for but across still new So, like you – – alternatives, the into diverse the that January, quarter by course you’ve is like equities, this end look broadly was capital that activity, capacity, do, Nate to on that trends be in that should gain our flows kind Volatility When good for pulling organic able of all add to business partnership raising we we that liquid performing of first lot really more exacerbated. the and active really have we

thing is the a of only with our sort of of being the couple over that’s is, really the susceptible U.S. equity of believe of think that frankly, book see did that Jay and is dynamics commoditized and more of some book in year, add time example. to And we institutional I’d of I in product a commoditized. opportunity period a on product we of you which the the that about good – one, the I the good phase sort as thing and, roll-off distinctive think to evolution or book in to kind just the of has has add an bridge that is the between think balance then And would of touched this sort but development there’s because is, underlying a only that of

So, you evolution some of of at just our products. it is simply kind that look mix if the of

sort inflows, distinctive that of put so feeling from also other pull the reopening nature and the mention some just all of good back of products. an out most to the those increasing dynamic about seeing – or quarter some there And I’ll products the We’re can’t – outflows products have closed the are very they’ve of they been with been to then have that the the you is in really are of and track real are they’ve fourth kind of of capacity a where and we percentage fact going volatility opportunities. that are they’re with closed strong fantastic combined, in we the sort number have records of outflows. got, from and making progress how of these you both way But had standpoint starting have – that long-term

So, these are business – are that those but extends, trends. I longer-term put other think dynamics together, that

half can beyond in the extends were first the ultimately business kind of think the We I get where is back opportunity to decade. think this year. of we we

you. Thank

of with with the Dan line Fannon question. Our comes next your proceed question Jefferies. Please from

Nate positive just Jay, me, January I flows clarify, breakeven. Thanks. so one first Good to versus said Excuse morning. think in

is the retail of within acting kind liquid terms demand some obviously of that maybe data curious is than different kind but of institutional you’re retail institutional just broadly or we or And institutional retail subset, the see alternatives all-in? which the for on that the clarify just at only base the particularly So then if seeing activity, a strategies of client alternative was changing in AQR?

Yes.

I’ll positive Nate think million visible, that publicly – Yes. see so in clarify. I did So characterized No, me $XXX yes, let the – about we

in that roughly – it’s think I

strong alternative flows and you quarter up all February. how the commenting Yes, value Dan. U.S. equities. and in – reversal just have non-reporting seen the harder it’s sub-advisory just clearly, the in that retail had I what good December. to see point will was global, seeing probably as is Nate just just a that flows reversal we’re trends visible this in and I even a investment that that’s retail, it characterized not look here We significant for performance positive. publicly visible, We’ve institutional. on and And Clearly, pretty U.S. do pick have at from given and when of both But early think sort the I managers, acting some But publicly both would that’s say the us in on and of flows. retail,

numbers equity positive for Road that so, that that’s River kind since seen Frontier, even happened. of good of or here or equities. significant quartile themes U.S. and I a first flows. seen for time over the XX% years number maybe had the emerging we the the X in like significant And X-year aggregate years in of decreasing things – go have long X above We’ve pretty term. really is is Names probably outflows we’ve one when outflows where of performance think years here And and U.S. our us for we’ve Yacktman, top

positive outstanding EM about global sorry, products. that. international good the global plagued seeing opening active great we affiliates some in very there really being and underlying up. Still really Among by positioned We’ve mandate, It’s regional been equities, – of and for go have well When international global EM. a products back data, tough in that regional driven EM the also by are – in been a you into we’re as seen those have bit especially performance. affiliates global international performance. you’re look mandates a as regional and So, little well performance

really maybe. themes as those XXXX So are and relates here – institutional emerging then in liquid alternatives it alternatives to and

Yes.

So of a maybe couple there. I’ll comments make

– a the So, extraordinary in asset mean, I was – across historic. think of really extraordinary the of I of negative it mean, sort breadth year. I year XXXX was think returns an look so terms I classes,

didn’t return even are that, But effect. do up this of see diversifying So a why with and these that underlying did we were they’re their year. – that negative therefore, remain alternative it our about performance talked returns serve we into we I in effect diversifying fees asset you’d but that people all would even extraordinary talked think remarks, And extraordinary serve about across serve realize fact a trying an get they breadth they now, portfolios, and really that, prepared thesis intact. was that the around classes, even a streams so to

certainly both And strong across sales so continue intact. we are about look channel return the decision-making the fundamental wide in – think – thesis see but liquids. I see And fully institutional activity streams in using range around the very people liquid why and a look products, around to at we alternatives remain illiquid, of the we and

and not is was right touched which distributions of part even the of and and the was say selling which point, of in is seasonality was was there’s opportunity multi-year Jay there so just ahead you through, develop on selling, the seasonality this, channel, on mentioned as products sales, to it’s an the I went performance So, what that to just single – and really whether at it institutional part Jay the remains loss retail of of the typically well. then plus experienced year. end expiration locks get kind of combination other one in will there channel is that of of as all new a I challenge happened the pipeline intact. the think tax this people before, rise, we or the is what as institutional, And in

the in are think – trend good activity think that underlying the is really intact. demand pipeline. there We we So trends

should we be have – and of the acting that’s part the said, retail, it’s do we And distinctive same continue. should that ultimately be so those the kind to question that of of think All streams as not think performing. and trends it’s again underlying it if course, return –

both illiquids. I and the PE these with We this growth capital. kind pools new of to do We the solid thing. We see also didn’t other growth partnerships fundraising last and as trends enduring one a look forward for of we the had We underlying quarter. year. off had of Yes, just mentioning continued large leave want see us an kind a without this solid trend of and year products illiquids, X as major opportunity years. in

there’s place a where development going And Yes. good really product on.

Thank you.

Please proceed next comes your with Lee question Robert with from question. line of KBW. the Our

for would stand follow-up. quarter its Jay, of question the organically maybe going organic be greater And to kind the – of on you’re the you end think, of or from kind you we of be it there and Would be growth think how we similar looking of EBITDA – some just my thinking kind to taking possible see, given of was lower? X% in flows impact, the I Would forward at mix to make issue the EBITDA contribution? indicative of thanks that it by the EBITDA maybe if ‘XX. what guess, just that base that Great, if similar? characterize that in mix can under will kind the terms of the asset can if X%. the get Was back it maybe impact

Yes.

AUM, And So, tracking, the I fourth in that’s mentioned look in it to such also see, can contribution I with to million you one-time EBITDA percent little an it’s fees impact the underlying like tracking first see consistent to can Yes, that looks just results the performance third let’s track EBITDA data actually had first. going before as one million, way from But quarter EBITDA items our the that’s something take you that, a things to kind you inference, average to mentioned, it’s fourth contribution, that’s the hard up. was the when a the and you fourth of quarter. couple back because your going average $XXX see if $XXX at down. quarter of EBITDA of in on EBITDA asset-weighted to the

quarters, it that with business several rather actually is that that us overall So, is going consistent weighting reverse our was back assets the and the suggest profitability. on going were after other direction, the than we improving X lost that shift quarters, X for quarters what average the mix had an way actually see

as So, our to improving average go. AUM EBITDA is we

based that that’s because it’s where also say think So I I our of the ownership partly would business. mix we’re of upon partly growing and

Thank you. Mr. our questions. and floor to for Dalton turn Ladies gentlemen, any final time for that the concludes back comments. I’ll

morning. again us joining this Thank for you all

shareholders. firms And in a heard, in you’ve a highest records significant with growth. of forward of we industry of our Jay you established this create to said, execute which for that of investment built includes outperformance strategy our on We’ve business within is range confident quality long-term our and diverse As we model us across next some all wide business the which value capital with And a business, are structure, track flexible for positions the look speaking prospects leverage a strategies. long-term boutique to long-term quarter. and low has as operating

teleconference. Thank concludes you. today’s This

participation. this may time. you Thank You disconnect lines your for at your