Affiliated Managers (MGR) 27 Apr 202020 Q1 Earnings call transcript

Greetings, and welcome to the AMG First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

to Vice conference AMG. President, like host, to now Aggarwal, Anjali Investor would turn over the your I Relations for you. Thank

You may begin.

the Thank our AMG joining first for you XXXX. quarter to of for results discuss

call, this statements. certain constitute will During forward-looking discussed matters

materially could any this referenced a assume those those projected our no filings. forward-looking We Form during XX-K obligation Our number differ due factors, update of statements actual made call. from results SEC to including in to and other

Investor the replay including on of AMG section a of of this a provide will financial release, any reconciliation site, Web Relations announced on as call. of copy measures, its guidance any non-GAAP a call, this earnings as our earnings well

Web site morning consult As investors to for site regularly encourage a we on this an reminder, and our posted information. updated updated investor our presentation

With for results Chief Chief the us the President to Officer; quarter Financial and the on and discuss Horgen, Wojcik, Tom Executive Jay company’s line Officer. are

to turn the With Jay. call that, I’ll over

Anjali, everyone. Thanks, and morning, good

I I your Before say safe. note that is and on personal and forward healthy and are everyone a on like results that I well our would hope the prospects, call to that you on today our and families sincerely begin discussion

and by community Our being the affiliates we health at at are of families the and large. the those thoughts the most remain with our affected AMG, well and virus focused on individuals and

The impacting markets. on COVID-XX This effect it is elements is and a and us. live the challenging economy financial crisis which had all extremely the we world work, and an for time of all in profound

affiliates to and experienced our key clients. Given most serve operations importantly minimal entrepreneurial disruption the remain nature and and decentralized continuing our have our our our stakeholders, in culture, operational fully of we

may the We’re operating behavior tremendous to what recover, knows of or time and and changes when uncertainty in that in shape recovery. are one markets economy going no a

through to the in stronger an find to even challenges am dislocation remain unique some organization While time, amid we growth as navigate likely ability the this uncertainty emerge our I opportunities face in confident for will to and future.

have and through Our the bubble. crisis, affiliates the extremely and dot.com like as X/XX our global has business management tested financial been volatile team, our periods before,

be AMG's with will our volatility, clients of worldwide quality partner-owned and affiliates, partnership of approach crisis strength to to has value as diversity in an to of again dislocation benefits this opportunity of shareholders. through differentiated and active business different, prove to the independent well periods of deliver the While AMG our management an opportunity together once the as our the

asset volatility potential near-term has our and our strategy. on its in levels impact focus the impact results, depth on While and markets execution the economic been downturn a long-term and of may on the duration primary of have quarterly

business plan have a maximizing ability potential for would on a range expect, As aspects downturn. to of focused we on And outcomes. of you our across our our through all extended strategy we execute are

number be we of enhanced over asset XXXX elaborate I’ll the of last in levels, positioned. flexibility coming a this period our and our balance into financial with strategic well to lower continue sheet Even We through our business aligned in team repositioning moment. and couple on management the a further all which our of initiatives our years, shareholders, with including implemented we decisions

in times. challenging the the affiliates our crisis, have current leading back, of through clients unique Stepping in context our think me as about advantages we the discuss let business first

growth to invest of addition, us for the the In in advantages attributes I’ll and structural on model these environments. all ability how touch afford our

including Boutique competitive advantages and returns in as in built of independent Independent demonstrated Volatile study, our AMG to over times have business has past during that published market-leading recently Environments. quarter-century clients, The the boutique especially active volatility, on its the principle delivering Advantage unique in

superior cultures and investment reputation as investment-centric to outstanding being operating records, are performance accountability It in focused equity affiliate their among disciplines. in our client respective highly globally long-term indexing. affiliates contrast and firms, passive stark the has engagement, have ultimate excellent as owners leaders recognized With their partners our in

their very are Such experience the and entrepreneurial quickly and best risk to cultures talent, of reward their and opportunity. attract to significant principle typically alongside areas to positioned protect of volatility, money own the in pivot Therefore, decision. in independent investment invest the greatest both capital clients truly boutiques times better

economy of strong still are impact affiliates its the generating in strategies. And days, crisis this while our across number early of is the full performance on a

are development. strong products in including considering and are managers, Loevner, GW&K generating Our their opportunistically relative and performance Harding Veritas, product global new

their most positioned benefiting to managers, delivered uncorrelated quarter alternative including well And and top given Browne, outperformed are Garda significantly finally, value notably the capture and are from Tweedy, our and managers, Yacktman stream. appreciation have performance. during and renewed for strong Our inflows and Capula, return client quartile a Systematica, allocations returns future peers increased

direct active through affiliates successful of the decades of across result partnership leading strength boutiques approach. execution to partner-owned collective is of independent proven strategy three deliberate in This our invest a and our nearly

and a and investment products, channels. have styles diversified We built distribution business that broadly has scaled across

in stress. Given stability benefit our growth diversity, and quality the structure, of our cycles AMG is from long-term to affiliates also across market able of capitalize times partnership unique our on and

earnings a quarter per our first reported almost entirely the economic driven quarter. down $X.XX XXXX, EBITDA. share Consistent that to run quantitative of for by single-digit of of percentage certain strategies results quarters, Turning recent with AMG only were contributed low rate outflows X% for our the year-over-year.

XXXX only our business resources and the crisis also actions The certain the stability but we of took our strategic growth affiliates in with our strength to and to our opportunities. financial of backdrop the reposition in results align not against capital the of position, business reflects

these we clients. few to outcomes affiliates their businesses While for success a future efforts for and complete, select position partners are continue collaborate to largely their with optimize and

value of to potential focused are position continuing across economic business as we Looking and severity to create ahead range we on downturn, our potential duration a and scenarios. effectively evaluate the of operate

a and critical strength. is Our it flexibility, sheet planning years result process balance creating focus and of is a that as of a significant source capacity on of also many of component

capital flexibility cash in business together by current advantage the a our Our environment. generated the flow competitive distinct with creates

challenging markets execution, careful While present opportunities. often unique require they

we in financial well attractive years following disciplined As will and will remember strategic on their financial the partnering and require many the crisis, strategy. remain focused play and reassess to and the and individual global with we owners it our some over capital This successful you take time execute out, as investments partners needs. period most similarly resources new will of and to we quarters businesses our coming aligned anticipate made seeing with of businesses, and and will corporate opportunities

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range higher a to will As structure set. capital continue across to in this our we allocation returns align future opportunity disciplined of result pricing to outcomes, entire approach

in to and time as reassess, events, as for broadly this recent is anticipate result. environment a seeing a our More take on on natural market given a us set and impact back rapidly volatility changing new the and particular, pricing structure because step investments, and we favorable is opportunity

our capital patient with will disciplined this be in opportunities partnership deployment and focused We we explore as environment.

to growth opportunities meet in to In our evolving needs evaluate centralized ability addition, to we affiliates’ our enhancing capabilities continue enhance their existing further potential. and affiliates invest selectively in client to

been opportunistic affiliate distribution, lift partners our launching and with have in outs succession products, dialogue plans. regarding active We ongoing new

that collective behalf our AMG's alternative to partnerships We that distribution the in of affiliates. quarter, relationship across momentum on technology the a iCapital, established of on during strategic leverage our building also continue To our strategic fundraisings products. a we strength see platform, with end, affiliates’ relationships

returning to that capital have in aside favor which remain shareholders. in Tom share And we the XXXX repurchases, describe equity moment. have will the the capital past, to for in reallocate of we to we in Against a backdrop efficiently markets, set have of made excess in as said dividends decision dislocation remaining we committed the

As will business I our stated weather earlier, successfully that confident while tremendous challenging uncertainty, there we are this period. is

and Given track with the now record believe in that particular, approach partner-owned partnering executed and before. our we relevant independent by environment, active when in more firms, remains management, AMG's industry. And ever unmatched businesses these than in important is

our year, changes our approach And further through has to deeply in executives are we Our management and enhance across finally, directors aligned new anticipate completely our and equity set shareholders, alignment affiliates opportunity who their of and significantly. teams actions taken grow ownership with building the with the resonates our over entrepreneurial past existing programs. partnership clients to with Board

Further business, of quarter buyers purchase last our I my to months. view prospects. of in management personally collective in AMG been our three the evidencing Board quarters and shares in competence active and in to of recent forward of have open members our each the have given team market continue this the stock plan purchased the growth

stronger this his confident an I is mindset challenging that we will as with as that on execute Looking ever ahead, organization. as ownership from am emerge strategy. even our it we will time

the review of I’ll With quarter. details it Tom the to to turn that, over

you Thank and morning, everyone. good

like Before time the I’d this recognizing who an thoughts Jay’s in extremely impacted of have is with echo those challenging been and begin, crisis. our by I to COVID-XX all sentiments that are

current and and of of sheet. positioned balance to As strength our well our and flexibility navigate our affiliates, environment Jay the structure quality partnership unique is discussed, given AMG the the diversity

distinct of competitive create strategy shareholders. create as Taken our our long-term execute business together, our value these to for on a we elements advantage

XX% backdrop, strategies which Turning against EBITDA outflows, with low of cash our net contribute billion and XX.X AMG equities digit to a today client quarter a driven basis. percentage on volatile by more across quantitative long-only reported liquid single certain that rate run than industry the beginning were of historically and a of alternatives flows,

quantitative While near-term flow affiliates record improve relative strategies volatile especially aggregate, indexing. in track to persist, period, our this may to headwinds their in performance in continue certain passive

income believe and to earnings opportunity and strong relative of long-term creates across value performance the We clients, independent structures net to for alignment form their outperformance equities fixed from significant are ownership the both we directly future our alternatives, growth. inflows managers; in liquid fundamental with this is to seeing and growth attributable

net asset alternatives, flows to outflows class X billion quantitative outflows in Turning reported certain was products. of in by we which billion X.X and by net impacted

our with continue during EIG private and markets at benefit the to X net to with Comvest, in illiquid momentum than most inflows alternatives along ongoing Baring fundraising quarter in billion We increasing Asia affiliates. Pantheon, demand recent strong more from client the at addition with

powder The opportunistic from each to raises dry significant raise managers work money these at attractive will return enable them levels at illiquid put of additional recent capital to and funds.

relative are to fixed in in capacity at Garda, set light see selectively inflows new also and value net strong dislocation. continue We in capitalize strategies up Capula of performance income and on and the opportunity market current our in opening strategies they to existing

believe affiliates. affiliate we benefits our will access delivering finally, to net demonstrating distribution to relationship to technology-enabled the further recently clients, retail enhance iCapital our to And again announced scale commitment to and products alternatives worth of strategic fundraising with momentum and and alternative adding high our of

of period. continue benchmark totaled Moving five-year than performance, long-term fundamental to billion driven affiliates strategies. more equities, strategies generate XX% ahead with overall, equities, quantitative especially strong outflows X.X primarily in by global our of over In a to AUM our

clients. affiliates, strategies, strong In Loevner, as backdrop the Tweedy, distinguishing Harding to against of once in period this Browne including performance. Veritas Several derisking industry excellent continue saw deliver outflows we risk returns and are for relative of only our and affiliates delivering largest our modest management again themselves fundamental and significant

X.X In driven of billion, half products. were which quantitative U.S. equities, we of reported nearly net by outflows

the five-year over value managers, and peers period. Our significantly quarter funds quartile the notably in now Goodman top Beutel, most and several and outperformed Yacktman three the during have

by given our quarter, the U.S. you and significantly fixed performance were aggregate, performance generated despite our can categories. in Multi-asset our income see strategies. strong and affiliates presentation, equity in outflows in value in stable significant In investor industry flows improved these the

income fixed remain in Artemis momentum and trends specialty AQR fixed management. and client positioned in income long-term against and wealth positive see to GW&K, continue at products well We

Turning to financials.

and losses our you net calculations the of and focus enhance As updated income part seed of to we EBITDA release, to in impact our and on our the gains GP continued saw incorporating as disclosure. investments exclude shareholder economic financial non-cash feedback press on capital

offset EBITDA performance of EBITDA measurement Adjusted million FX adjusted in well contributions XX average With quarter, the strategic X% with XXX from million levels, to the versus year-over-year resources market reallocate year lower respect strategies actions to a million performance and our included primarily related gains. took for certain year-end footprint. fees our as funds as rationalize of and quantitative XXXX by in and declined AUM driven by results partially periods X ago, lower to we

Economic interest share $X.XX due quarter net XX% X% cash declined year-over-year reflecting income the repurchases. down share economic higher impact earnings and to to was first while of expense, taxes per

we exposed is variable As our affiliates well compensation majority partnerships discretion managing structured further the operating revenue discretionary with expenses. where remainder continue cost as down to not disciplined naturally as AMG operating a approach More of as over are to we environment look vast expense. reductions the virtual to broadly, with the shares year, year-over-year given of to expect coming expenses our forward and take

moving items. specific Now modeling to

volatile, While reflect expect in AUM seasonally the performance approximately market in X% adjusted current our been X which EBITDA of quarter fees on million. levels markets second blend have, thus of million lower quarter, including incredibly to approximately of based be XXX far the course, we

the fees in AUM. markets second seasonal on expected in noted, reflects and quarter EBITDA of quarter item impact first decline of performance Excluding XX% I impact FX previously the approximately the average our change of the the primarily

our and reflect this our inherent structural guidance earnings our The partnership and resilience unique in of and our strength stability the quarter forward in model. diversity the affiliates

million expense for be expect and first approximately million. interest expense to quarter we interest XX Our share quarter of second XX was the

including affiliates. in value Our share a reduction quarter, method of was amortization million the and alternative to XXX XXX non-U.S. equity of the a million first reported XXX non-cash million includes impairments related carrying affiliate. reflecting for This the expense

XX We the more approximately return expect of to second in normalized this line levels quarter to item million.

primarily first of effective were quarter, the tax not item and GAAP the given rates cash non-cash Our meaningful mentioned. impact the in just I

tax we approximately forward. rates going GAAP our and XX%, cash XX% purposes, expect modeling respectively, For and to be

deferred X Intangible-related item of in to the the deferred million. quarter, the of the first intangible-related second normalized return to previously taxes expect more in quarter impact negative were we million XX approximately given primarily noted and taxes levels non-cash

X Other were included and million economic items X capital GP of million gains. and investment seed

non-cash Going forward, be of anticipate will or losses. other we items volatile that inclusion gains more these economic given the

modeling for million. expect other In economic to items X the second quarter, we purposes, be

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

the to turning Finally, balance sheet and capital allocation.

many position capital of cost strong a and capacity and our lowering our discussed, Jay remains capital. on As stable as simplifying of focus sheet, increasing of years balance our duration, result extending

crisis associated business be flexibility growth taken actively COVID-XX prepared invest to future stress as and in weather our have to with the sheet tested attractive further to opportunities. steps balance financial We our maintain enhance market pressures liquidity as potential to well and to

the full continue X.XX ability manage operating We we without we have currently to substantial and rating impacting have ratio an covenants. capacity, our EBITDA. grade with of the leverage consistent draw investment in to billion most and we approximately to access at revolver, this and are prominently Xx Notwithstanding to our debt form prudently liquidity, the

During the share quarter, XX to of XX returned capital shareholders million million we in including repurchases.

$X.XX as to resetting possible, opportunities invest efficiently to business as excess we capital the we along share. to in with desire to shareholders per dividend see return our to our continue quarterly Given our are

capital subject market shares new the expect conditions. payments, we over share to the that XX repurchase In balance prospects forward for lieu the would XX we coming repurchases quarters, also of million to beyond investments of million and In reallocate the additional dividend year. remaining will of towards

strategy with core managers. is excellent boutique independent Our partnering

successfully capital, this the return both approach Our strategy to execute our ability in to us. disciplined experience especially a we in and times like take requires highest and available to opportunities will capital risk-adjusted allocating

focused and on to experience the these of time. has over past balance we flexibility maximize and As strength necessarily do business of are our not every us, quarter consistently themselves our to thought shareholders returns present leveraging our sheet the opportunities

questions. to Now, happy your we are take

conducting time, session. Instructions]. question-and-answer this be a At we’ll [Operator Thank you. you. Thank

Our comes Siegenthaler line Credit question. Please the first with Suisse. proceed question of Craig with your from

Good morning, Thanks. everyone.

Hi, Craig.

Good morning, Craig.

of this interest in XX% AMG about you non-controlling obligations? could repurchase experience decline maximum drove in drop the redeemable balance was And for There can talk what equity when on just sheet. put-backs wondering, estimated what’s on about affiliate then also a basis the I’m annual year? value level the you think that an really XXXX,

Thanks, Nice take generally. to item our I’ll then more about talk sheet your maybe to let Craig. the I’m hear model and voice. back going come balance and Tom

Thanks for Craig. Sure. the question,

reminder, our equity just of XXX partners XXX bit value years into market level. equity you to than sell affiliate that a a runs as past, in to generally That as reflects year, some be the this the in we’ve context. expecting So little came to fair in to the can repurchases number We really mentioned NCI affiliate give AMG. higher past

kind given be that of and to of it year, indicated disclosure. few expected some we the in level more our transactions in this We XXX-ish historical a

more. quarter, Given around of NCI in the balance of equity purchases pretty in that well market that some a we first decline as first the XXX saw we made right the as significant million, declines we saw quarter the in a little affiliate bit

and repurchases you of earnings that quite down because forward as partially think markets partially amount given well. overall the and impact because should fair businesses, bit, So of paid those a our it down we about obligation the value a comes the those as come going has of on

core and succession transition at then, as Tom. what planning know, up is take to And it Craig, level, do very the we equity of you Thanks, AMG. one

We XX on a this program well-designed have for have good occurs that quarter. visibility they've over good transactions done and protections these recycling adjust We conditions generation, XX of years. as they have we do market as a to

out So our model once proven of alignment is again. being

sheet to we see into think as a this weren’t very put, this we partners works got future and that about is markets crisis, important that. they’re where our retiring, that period that's we model. other and and reflects thing is had The structure note alignment where positive they discretion statement balance did to decide to of as evolve, the The the regards not with item

Thank you.

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

morning. Good guys. Hi,

morning. Good

you Could the much same should forward? deal you again? we that elaborate to structure expect the going And on use structure of more Comvest

Yes, the thanks, Chris. Really appreciate question.

I As we XX I prepared structure is over this investments case in we we do something I outcomes structure have my and that experienced noted approach and carefully for over but Garda. with ourselves last said have years. And remarks, both in time applied we think our the multiple of over to evolved both the also continue new have evolve different and as Comvest of pricing scenarios we

As invest see protect on in kind original they That terms business. days are of these in a capital on strong also XXXX you you will again in very its and growing And early Garda. our more their growing firms, growth. of led particular, that estimate upside significant experiencing over It’s above of in with continued with actively but strong has only very XXXX, performed. but case cases of period look it Comvest, in to was has lower how us I given forward, to business allows effort structuring the our Garda, not and us think multiyear case the

look helping to and global we the distribution them to favorable, putting capital work very it been and We’re as in grows. feedback has more forward already

Thank you.

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

and in guys. their Good are I families Great. And well this. doing everyone morning, hope

well. as You

Thank you.

you you maybe there trying or just having revenue run of certainly I where is share question have instances affiliates revenue terms share, maybe it rid a are some any place that sharp where share Obviously into but some that stock a guess an I running at cut share, their that’s hoped the and in given that any the where got where So of not is any guys, but obviously been helped functioning downdraft minority to as a place issue? – be to Hartwell you would you feel owner problem, cuts place into needs have where others restructured? into but the the

a vast over The in particular, back Rob. tenable thanks, affiliates majority market. and grown [ph] time, off our have know, as of Yes, you the of

revenue our share since grown share. affiliates significantly affiliates revenue they agreement, which created means largest most of smaller our have even margin significant Our or that the have original under

I of is and And works. think these market substantial declines creates you in cushion where how for of times us. a that even know that amount it volatility in

period, expect. in So model, and nimble would our at very point, it stability our the dislocation. cycle and And the of our business through a of to frankly think handling even during opportunistic to you speaks was this lowest ability periods I as be invest flexible, business

call that a very on businesses to or an You with our worked last we and mentioned partners as and actions affiliates did also opportunity success. took to we to that their mention this one find best affiliate XXXX outcome we business align reposition I affiliates their number to of for with say our them took certain in with would the work clients,

in optimal with outcomes. few mentioned largely affiliates achieve my to we also but are I working additional a remarks, this complete select prepared is As

outcome and work the to and autonomy our you model those with partners collaborative who for and approach, partners their own given business businesses to As make solutions determine our partnership find clients. decisions operating their the way the in know, best support a ultimately affiliate them we and

current I It in As started the started way good of we that that that through feel crisis. said, largely we're We process. ahead XXXX.

And is think their we if a opportunity this other facing with as Trilogy, now are for for with solutions which really scale Partners are another opportunities I will affiliates. opportunity position partners us good Hartwell, Group, these well found we an and with Capital in, has that So really affiliates see partnered with is strategically. strategically a outcomes. like in that that What a business Wealth have you number good and you position mentioned our we our find an headwinds of GW&K. given as affiliates those and very in I are think other remember, best the clients do an to as businesses investment

Thank you.

Our with proceed question. Katz from Bill the with Citigroup. comes question line your next Please of

like Thank I healthy safe for this And my very everyone’s Okay. hope morning. others, and in you much taking timeframe. question this

Just back management, transactions maybe go-forward you the be of coming to the kind capital and of use leverage fund sort as a ratio can basis, on of talk what leverage business just to about might willing you about to think you think you sustain?

Yes, thanks, Bill.

me start capital I start will the and about take then Let as history generally. well sheet. you talk be But our specifically strategy back balance Tom that have and through with may allocation Tom

capacity, for thanks weather even for in have turn capital And of Yes. that’s and start balance duration on a cost sheet terms and color with market worse. we in as Jay. Bill. on or it this ensuring capital, and been back the make best to like we specific if years. return increasing or just question, an in the significant tremendous balance things environment feel to gets flexibility bit period remarks, new into of we’ve just terms to like We've sheet, to coming our Thanks, said little in we lowering Maybe the dividend the investments debt. whether really of our proactive terms But of of result, terms also the the a have to been as this give then I’ll and Jay, the planning environment very for in really we enhancing our prepared

covenant the business. solid remarks, our issues. we’ve us our a effectively any your my bank have prepared $X.XX have on Over we to in our the of access billion we further more even primarily cash. we With without taken draw said, last That cushion leverage steps really grade rating couple whether respect a sure to we consider important for think operate a we of financial constraints, time. revolver to strategic just entire a comfortable more said discrete and right debt But question, I as very at and do. we good dividend. we we’re we perspective, to opportunities, level a a operating engineering capital think going be Maybe the not higher just for higher was at I decision. This It’s purely clear strategic that’s sheet I for decision. I back very a leverage make have level, on do a period it really months, is not affords of deployment on something want the do capital is to Jay, This before balance through only flexibility, single as I feel dividend a would decision. and to which which to quickly there substantial And can turn have was holding

amount Our It’s cash a tremendous liquid balance generate and our flow sheet is strong. we of in business.

we is in cash that’s big very a So year number the whole actually put strategic context of all number not an have our the our million meaningful a not very with amount XX a it repurchase from dividend dividends at cash thing and of the sheet. impact and around a flow. But our stock flow that generation, was can in context perspective, big a about deploy it’s in really paid a that decision we to how share, certainly the To in $XX balance optimize last perspective.

So, better our are our thinking repurchases And as environment, long-term much today. core of business use a for level dividend the the owners we and that the not shareholders income really shareholders. the as current really capital believe in ourselves, about a of given of our yield, holding we’re the frankly

we’re course year the do of expect prospects make XX for So capital over that new in toward million incremental on prepared market the to the additional reallocating repurchases. remarks, repurchases going forward. of also And and we beyond conditions as my investments I said that depending

phrase of to relative lieu Tom’s Tom’s like simply Tom. was and choice there. This Thanks, in want I statement. dividends to repurchase echo a I

We from taking ownership did we our the benefit action shareholders. positive feedback an think mindset all receive are We and of shareholders. is for a this

long take capital do idea capital leverage and long-term let with our slightly step capital As more a new as and a a not we of structure promised, opportunity. have bring strategic take kind benefit a ultimately that agree of problem me a new talk that back truly from we I also down cash about of concept. as We around flow broadly. high the Tom it’s allocation the investment engineering concept; financial But allocation. to I approach more is And that it’s not we investment as would ratio conviction back opportunity. that leverage

decade the can for down that operated moment even Xx like Again, and Xx, We leverage a in it. to the grade. have above go maybe under to between years, brought We investment staying leverage, most a ratio recent We half historically Xx ratio. Xx time. and seven we like we’ve Xx

I for all operate, as well growth markets invest In after continued in capital we investments as our that important have course to are first capital return to think those line we’ve new which is which we priority existing with to communicate, affiliates efficiency. our how then and done. of strategy, excess primarily access shareholders, to aspects through

that dislocation. had more And us opportunities commented in we see we We through a of that. the a growing into of from been all happen see opportunities we’ve still see of hoped percentage as time that I period, growth dislocation Moving dislocation. experience we And in experience. our don’t as mentioned, before this tells than deployment. times unique probably we immediately. that call, capital we’re They last Clearly, we’d

having calling that going creating prepared. social You period. because distancing difficult advantageous, and to be longer-term have capital existing also be our us world of our patient, multi-decade proprietary do us. I differentiated of in the new think a more and relationship help will pipeline I relationships ready, is capital to and prove our for to in think view relationship structure is deployment very be will this valuable existing also

substantial have from earlier our those Chris’ we flow said, of to Tom we from arena, as the as see come the like up As structuring well discipline in in course along new capacity we that described the both and investment would opportunities as business. question. revolver make cash And our I

Artemis made and largest of crisis, Pantheon. Harding on in the of had A financial global productive of are our many GW&K, today. of our number you As remember, those periods. AMG We the most Loevner, affiliates investment heels one

over anticipate said, the years that balance type and sheet see take we’ll And positioned, of we to advantage and years, this our similarly Tom so of as quarters therefore environment. coming opportunities attractive we for

you. Thank

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

Good the taking morning. Thanks question. for

maybe the with that guys $XXX another quarter? about sheet. the the about bit balance on answered you million we guys put-back around one little Can does And you in this Just debt increased talk just the markets, it out assuming a which year, respect year earlier in peak into look answer background steady likely to the on just would sort among schedule given flavor guys to grow Thanks. affiliates this, us give this be And amount next your kind active affiliates, continue you are more of that can of a does year? if helpful? vesting be or to as into

Yes. Thank you, Alex. the question. I appreciate

take one let that and you Tom question going to it. I’ll We’re as walk through

Thanks, Alex.

valuable previously model that mentioned of and course. the levels our in times than more tremendous the amount to more there there about just cash. is change a of cash, asset And I when So respect tremendous in no in opportunity, just no And we you ordinary you in put uncertainty, quarter, cash. is on than value if asset in valuable see times with debt think in future the

which themselves. that Also, in we've present the more that sure of make a elevated to draw on and done to relative operate Shifting cost in to to to to this on as something order opportunity that be unique repurchases, manageable us cash bit and be historically, this on did kind at order just nimble in. the capital an is affiliate we all-time opportunities is I’d So in was question us that of note we your just it little nimbleness hand our flexibility to is have revolver, very environment. an knew year. cost for carrying low, gives so coming opportunistic, We

XXX-ish something think fairly about prior to expect substantially. that’s versus of As in we do we the probably number years, the be This number XXX next range, years of in over kind will the year, come XXXs-ish last the couple to year’s that. down

buying grown there’s and we we affiliates tends was of. but of the businesses investment repurchases that because successful it if into have with to time been be certainly of have looking the had have most And had spike so be those to that into on affiliate come our therefore names, who the to I respect go more have a performance, the since a ways there the range, back that tend investment this think bias, will, most are, made the greatest best I to to XXXX, lot historical the you’re inflows, year. a a the won't back into going positive bit you

of So ultimately cash businesses best to of up end we those at of very get more we experience attractive valuations. the and businesses flows some our owning

come with the you call, into we investments Yes. have still pipeline. note significant of from that a and will as I’ll we this that new last just pipeline period, did remember

we were this are we But trying draws, sure and a we that Of want taking to we environment the really I to owned investments. this looks really the partner on make gets of like. what in point sure high-quality, course, was new view to and making we’re step still back to and make want the forward make ready the ready know cash execute we sure heart to that

you. Thank

with line Bank Our with Mike comes your proceed of America. the next of from Carrier question question. Please

the question. Good morning and for thanks taking

strategic relative Just your like, you over how just buybacks your time. Can that importantly, XX you of more stacks the deals to have levels? and with terms that and capital. And amount that in over means XX flow up for say commitments one capital the run what it more or just and like through the next, cash of flexibility months

Mike. Thanks, Yes.

as our I got internal respect the at take to Because, described, necessary forward because recycling that transactions level. kind business. just Tom we in the mentioned, think going Let higher take with going is one resources down me for to the of that through outlay I’m the we known cash it outlook

first opportunities, the investments. our from additional capital to disciplined on opportunity execute be two new choices focused capital main was and new really comes do So given over expect will of I’d to and investments do foremost growth we do that and say of no terms return it pivoting investments. But really we’re And to we on if we and able being repurchases. short deployment, to in to new additional expect will term, medium careful

level, is we one positioned ourselves on able new to Going our execute we longer balance revolver of significant up revolver. a itself handle kind way dated be to more The sheet. investments with the

consider frankly reasons on investments. look two, we those After just substantial I that capital our execute have execute to financial new we level, structure done redoing opportunities. that a were before much able The to when to strategic crisis Xx. activity. the that’s be of the be the the global in Those on long-term investment would had in combination it. today willing past revolver did cash consider think in would share, to point say Tom years we at let I And left touch a ratio X.X obviously earlier going we from the the least bring you smaller below on leverage go then levels and but of of that, even company, us we think new to for that above kind our generated we at new three have would that investment business, made

So do so. we do substantial have substantial to liquidity capacity and

Thank you.

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

everyone’s Hope also. morning. Good and well Thanks. safe Great.

question, Brian. you for Thank you. your Thank

well. as You

Yes, thanks.

the topic over I to know that to the ring-fence current future amount, outflows if ebbing. to you sort would that of talk So a but little could your maybe I difficult that’s just maybe may be that is bit it rundown. imagine to that the organic risk about shift growth,

I EBITDA. low think said these of you digit strategies now percentage are single

is EBITDA, of with we strategies’ million just then if those of quarter? more least a And April? here, that we’re improving sort into flavor the on you assumption market second outlook can the the flow into for maybe second quant us come quarter of in So we bit your contribution risk a as quarter little whether in of what at give think outlook a on XXX

that I’ll and level then about – of question all Thanks, clients I’m I Brian. because your take I’m seeing going of maybe make to to Yes. answer the just I’ll and going Tom we’re let talk the sure strategies quantitative it to contribution. what questions, answer around generally with

a through, market. of generally you saw freezing mid-March. probably dislocation, these your is uncertainty clients research, the own you initially go of number there's is say, in in, are a a As have stage we when the first of And and moments asset what and of that hearing stages that bit

work-from-home new We a the operational a environment. a a also work here additional had new of new environment, environment, environment, complexity

retail their So thought. getting physically speaking, people wasn't virtually, communicating some freezing to we some bad did of across would not Frankly, just and you extent, with as and expect. It clients. was it home happened see have readjusted as derisking it Broadly the we institutional and offices would that in retail as market. wasn't

through side, managers. saw the some logistics, work-from-home to we was actually repositioning we of our fundamental assets institutional the On after modest favorable which got

the adjust. picked further seen side on, up. April. clients moved on and As Activity illiquid environment the closings seeing time settled has has are has We’ve down a we bit into

managers, occur some have our during those themselves into reallocation distinguish this fundamental especially period. seen have We who

ability and on affiliates of our of our of I capitalize course through volatility. volatility dislocation the the think opportunities is one to

seen affiliates themselves environment. in We distinguished this have

I think some named prepared we in them of our remarks.

in come published read. and amongst managers our during mentioned, We them managers out of fundraising boutiques It’s Browne, how are April. Tweedy, our of have tremendous who in two existing substantial illiquid quick especially new but even that Systematica; and month It's fundraising performed all out study prove seeing Web Yacktman; close managers just but our independent through volatile alternative partner-owned last we're have on Garda, fundamental amount also over volatile powder. of with play I independent the our in to partner-owned Loevner, as it that Capula, periods. a outperformed periods activities each site, years does gone Veritas, firms recently And continuing Harding a on out the have during periods, a dry

both across quantitative we're strategies we So in said, the this and qualities independent That of area optimistic where outflows see about is alternative in very distinguishing long-only. the partner-owned the active period. firms

the was quarter. of quarter. If second As Tom would said, continue, our plus XX% we this XX% outflows trends say that in the over

I gave Tom very estimate we very that is think it contribution is you, a number, the so expect in lining single-digit the would be only to that silver XXX-ish million low low. to

you. Thank

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

you. Thank

So the my investments for dovetails return. question new kind outlook with capital of of plus kind

as quantified increased currently? you investments in. or guess the in range one And thinking But more this the you year, just just the Thanks. pipeline given of is the you deals about should if XX see the on of of you’ve assume we environment or we investments, would have kind been investments remainder executing scope I so AUM that do repurchases talk on for about today Can the I year? the potential be beyond have of in about the we’re small couple new closing And not through the given terms new we pipeline. last can kind potential new go or about million of makeup size of investment that this curious and new of pipeline of talk difficult

Dan. Thanks, Yes.

to the last the crisis quarter back you pre-COVID take call. on I’ll maybe So

had were in as discussions we had At with point, high-quality we pipeline gaining Our that a of described. advanced prospects. number been momentum

others remind not go of Artemis One XX global on which we they our of number a of Comvest. will Those pipeline And obviously took going businesses of the latest them story had in do that. ultimately but in stage into about you we transacted pipeline. away. financial the I were transacted, was of months, which the then it a and we crisis us

also mentioned. get they and settle things are generation, look. partnerships as as with done to investors these because we comfortable over make comfortable environment with the these a are requires away reflecting partnership partners forward So I that environment, that are sure the And go the as are that really it don’t to

don't together because really help away they partners. go market but so us come of market And stability as does dislocation

We sellers also even as this created corporate think shareholders, their strategic be that reassess in new opportunities needs. will environment,

do be with and mindful to develop It why is opportunity we’ll does to just want time expect Tom That’s So set. clarify take of some be and said capital our will do for what to new whole patient just we dividends aside but evolve. level. the our said That the we on we million of the depend extent over The course above the it it of expect investments, repurchases. repurchases and and of amount additional XX additional even timing set capital.

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

Thank us morning. this for again you all joining

And opportunities. look growth. has healthy for challenging, quarter. and our environment business actively position and markets I you remain future compelling to forward forward been we the next to and we’ll in we speaking While yield difficult confident hope prospects our everyone continue Thank you. remains safe with

conference. today’s concludes This you. Thank

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