Affiliated Managers (MGR) 3 May 212021 Q1 Earnings call transcript

Greetings and welcome to the AMG First Quarter 2021 Earnings 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. I'd now like to turn the conference over to your host, Anjali Aggarwal, Head of Investor Relations for AMG. you. Thank

begin. may You

thank for joining XXXX. the and discuss today AMG's results first you morning us for to Good quarter of

we release no a to call, like our replay actual which begin, be of that, and from copy update announced Before this AMG call will these materially during any A available a assumes earnings our of could along today's remind Investor including section differ we on to of number any you of make Relations on results of a forward-looking website with our obligation measures, non-GAAP and reconciliation statements the may I'd statements. this financial call. guidance earnings

morning updated Chief investors over regularly and the and our Chief site we results With the Horgen, information. call consult President encourage and Jay. Executive I'll turn presentation addition, In an this updated to for posted today are the Jay to for investor Financial company's that, Officer, to us quarter Officer. discuss With Wojcik, website to Tom our

performance, partnerships, second contributions ahead expect the repurchase excellent our the on we a investment our free areas operating And taken the and, new in strong our growth, available in flow AMG of and in in environment momentum have strongest to to the our such and increasing continues as to business. $X.XX invest quality by of of and cash Building and ongoing build good of most driven and free everyone. strategy, per firms capital a strength, shareholders, substantial And cash in in activity. quarter improved our Boston investments given quarter ability earnings and actions of growth business of high our reflect Asia our XX% share entered Economic create in morning, looking represented to simultaneous share over that excess shareholder and will opportunity to in our XXXX ongoing year-over-year the we growth XX% OCP the our a significantly, the our establish time. and value favorable we including our disciplined Anjali. execution confident further results recent strategic and tremendous earnings investments. to EBITDA first compound capital activity flow start With to and generation. full affiliate return Thanks, of new first position heightened have are we the history, of primarily the year accelerate, Common. XXXX, quarter The secular year to

affiliates periods demonstrating our levels, generated meaningful year, volatility. long-term growth. and organic performance past distinguish the Over first records fees, built of themselves to ability increased during during performance this again investment enhanced on performance Excellent their asset period quarter their once

our continue superior As firms generate protect worldwide. are seeing in performance-driven to across independent also organic help volatility, increasing especially improvements rerisking economies reopen trends capital investors business, we're high Investors growth active portfolios outcomes. market and managers, quality navigate to allocations as

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set. solution We've We our broadened partnership enhanced strategic have capabilities. our

distribution have We realigned platform. our

repurchased And XX% our enhanced of outstanding. capital shares our nearly we position. significantly have We

and all an reestablishing We the organization. have achieved entrepreneurial ownership this mindset AMG's of culture while across reinvigorating

And across growth significant With organic opportunities see profile momentum have ahead, performance affiliate and our strong in the shareholder accelerating. set details and we to business value. continue substantial of growth in partner-owned our firms, investment Looking with that, Tom ability and over the increasing it quarter. invest opportunity our AMG's we are improving we excellent to and to confident to create on I'll turn execute review

Thank good you, morning, everyone. Jay. And

focused our our is growth, As strong as was significant again discussed evidenced producing we first execution our once quarter on fourth by quarter. strategy against call,

broad to Our earnings and a across cash earnings and grow opportunity our differentiator. capital and is ability EBITDA unique to per continued set share flow to increase key deploy power our generation

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financials. turning to Now

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items for specific moving quarter. Now, modeling second the to

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our of newest performance $XX OCP up includes fees impact Asia Common. investments estimate of million and to and Our in Boston the

due a performance reminder, are of and performance third quarters crystallizations. timing fee quarters second fee to the the As lower typically

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

allocation. the and turning capital sheet balance to Finally,

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are growing growth new existing profile generally flows growth. terms revenues, enhancing our So, EBITDA than investments of business faster our both and organic in our and

approach investments price enhancing often to pricing can our we EBITDA, returns to on excess of our a deliver our a of range immediately incremental portion structure, our execute cost also benefits, the and take of debt in new not disciplined to our tax purchase of outcomes. well returns a only we we Next, contribute finally, we capital finance And strategy, shareholders. potential but across as risk-adjusted to and targeting achieve continue

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change the this As of is and always, based subject to new market on investments. timing conditions

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to happy we're your Now take questions.

Instructions]. [Operator

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

multiples the OCP if valuation be your also, standard the new that'd current Common, wanted and to given deal. OCP I the any the the and or valuation you come buybacks different between us of could two see to guys accretion sense, last you provide the provide of can to details the I the back helpful you and disclose investment stock. Boston investments, new Asia your And Boston Common. color on prospects AMG the wanted in all investments In too. paid us if new for Asia didn't

that's ways prepared individual proprietary us, that we sense OCP impact our to valuations. I'll the disclose get with we're I I overview remarks each maybe business. you details, Tom will the some will And but two of the can transactions. Obviously, portion Maybe this. of a an although his take Asia. give Tom start on for and in on think going not a to did Tom in into

one. in the it in taking the represents It maybe Asia. in six that credit investments OCP new us. in Asia current is start particular. So calling across the reach OCP most a environment operating private marks in past underscores I'll our profile, and transaction It months efforts. step we're markets in depth business momentum the Asia, an of with our the And back. third our seeing for recent the

his both So, organic we've rates got overall it's further terms both and remarks exposure, transaction. growth our this EBITDA growth. in growing, private And in business and as markets Asia through at well said, Tom above of prepared

that is it of aspect overall diversifying OCP our to other The Asia is business.

looking think think I the that and and we do reach the our be about of is diversify extending means in that. channel that their business unique to distribution are client excited and It grow Our we base we helping distribution it. forward will can

Boston The the transaction, tenured is in ESG business year, there well-known, this even the Common, are very fast, was in a space. other fast The and earlier principles Boston growing known that in done Common longstanding which investor Again, ESG was impact. growing as faster. well industry. maybe

we in distribute management the the our over an opportunity active were growing And to team. growth, I I profile there's significant fastest In product think ESG for their of We being for both able their think to platform process. the fortunate grow them their today. be and and see with in to them. us ahead Common, we see here one cases, there's Boston of Geeta partner In highly her US growth of retail and scaled given investment help time. case segments opportunity

more So, let and the maybe, our impact discipline to talk numbers maybe a the structuring. you just about Tom, the little I'll bit speak on in

that'll be think I helpful.

Sure.

to amount So, in great things through, I returning uses pieces of capital We we're of great couple order. growth these. And repurchases. long-term reference believe incredibly disciplined And great in really our said walked prepared our then do a of remarks, first, reiterate in take that in we're I'll investments dollar put significant of putting and we teams of and which what common the sectors, on ensuring shareholders focused it is our of investing, an capital, business, my we framework. exerting in primary work. really to of three growing I addition sustainability that macro each great to a focus we to around drivers Jay going really through that we approach referenced structures on that spend And And And that a great are through capital every and is long-term. also find and business are for these them. Jay why excess

First, these relative both an on our and are generally businesses, existing business. basis, an particularly to growing speaking, EBITDA organic

into immediately high the us market, we're secular So, growth ways. benefits businesses highest a of of in stepping of some in variety the areas quality which

that our the some always often benefits EBITDA direct and can we incremental immediate to clear take profile of our approach. deliver bringing And And on able we also and We're pricing the enhance those bringing flows disciplined and we're cash tax and structure are model. these lastly, to with we structure, And shareholders. that we're on transactions. benefits based leverage. financial further there on almost return on that the associated each then an on Second, focused finding return our very on oftentimes, capital. way We're incredibly

our excess a over get we We we a own return, the a hope, efficiently the From shareholders. capital cost we out protection. process. things strong and cost And exactly good understanding capital. appropriate we're to well structural we and earnings quickly our out really capital And as That as to turn obviously, these long minimize structuring of possibly we're term get look pricing perspective, that can. And have very have upside looking in we they're downside of in transactions to ensure that volatility as of delivering of participation. said, don't strong ensuring if to our that also we're

that see to we comfortable exhaust long-term investments, we we different have we we've of think expect bars very that opportunity returning both our and place are capital new of criteria of and very those all things. use that incredibly I to to to investments should best things. be as once both do seen, in shareholders And make we meet then, those of those investments to feel business. you put as these the capital And the repurchases. continue those do the you've together, us you when put capital our the sort So, that comfortable best in of evaluate to have through all things clearly able to those opportunities clear sufficient we been And

we not our an is why in to us. take from looking activity acquirer we're we and go go going at our for independent period has new fit and the position because one cultural and are frankly, in the of just the strong a owned reasons capital today. talk independents. I'm Firms by new market percentage consolidation about that opportunity recent And away And the for options see that the increasing seeing most in AMG, investment this to partner-owned to towards near opportunities an today to now the of expect ahead the be good to investments intermediate elevated just because XXX% term. of firms skewed are

hands for synergy fit stay But fit give independent, who And And can part model a partner-owned resources, so, a capital, supportive someone fewer in the for us are operational those independence. quality consolidation today, of maintaining who is phone, set that, M&A good in seeing while and fewer market, even this firms, model to competitors think we everybody today, therefore, looking the off that's who clients. seeing for We're success. highest think cost partner, is firms And we're We synergies. resonates. good opportunity don't our quality, driving for competitors. opportunity. It's complete scale success. a on a with think independence want a just intellectual high the the is for are and autonomy who for market not this looking track I And benefits them of are the who record probably just fewer real for truly independent those not a cost in

just I'll then with a you that and say. So, can you second let for sit

liquid wide of business for a We've succession liquidity grow has services. Most capital, becoming ownership independent AMG of that planning, alternative entire both and conflicts market their more the the of in evolve, our affiliates. they we evident and in choice array are options crafted a areas, models So, the bought, historical including firms growth as have businesses. partner our reputation today. traditional the those centralized being partial selling inherent they've for been business interest for competitors, of really be And of our and consolidated, firms to a especially either in longstanding planning, have

is position does and phone. the the our So, AMG solution economics our permanent these for on help can truly structure one strong. and people strategic who And us very offer is for competitive drive really that shareholders, a this only the exist for and an solely an to LP. We enhance It our of prospects affiliates. our That's returns fund differentiated clients alignment firms. of the from firms. significantly independent looking for creates between the ultimate shareholders, a shareholders, the dynamic

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to So, can scale are and who deliver deliver we tend and strategic be permanent firms that selected and and a growing, want who by partner, extend independence autonomy. we benefits also

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line of next from question Citigroup. Katz comes Bill with Our

in set Jay, your this I think addressed you answers. some of last of

Just as structural some years bit to opportunity. couple talk of an you refined you've little over made back about think you changes a it we last that's the sort allowed you more opportunity? robust made with or? a in merge you Can to relationship the between do how sort more the pipeline of look buyback get of deals? deal a the an point about Is had and? it Is of And reinvesting and business then, to XXXX,

Tom And really did of believe another a really the is this that's here. nice a that some it point, good ways me job because especially at remarks. in question. shareholders really think think a shot I long-term for prepared his take important I But let in delivering I

our And I'm profile. talk to of in describe going let's So, phases. it the about growth shape

and want these EBITDA think this. to into And organic question your inside translate capital franchise and overlap about course, of then other. everyone I'm But growth answer each Of growth first phases they how business on ultimately will over about build and to time. going EBITDA growth growth, I

our areas took our team were redeploy. management May this resources generate through And went and through most growth of We've our capital reallocated when rightfully. that in could return. we began candidly, resources we EBITDA productive XXXX, profile So, or this inwardly transition the those and repositioned but to to focused we to improve of

our mid our the was redeploy. our goal distribution. with can And and more to finally, then a last reflecting of of worked during We also in allocation. We we are our first took growth that opportunity affiliates XX% repurchased year up headwinds, investment this X freed first disciplined of we of We even shares freed similarly more capital, up getting EBITDA freeing centric the increased way these our higher growth our XX actions. dollars market investments create returns remained top our to this profile, of in to quarter, This facing up capital advantage improve and bottom that EBITDA We focus enhanced more XX% new repositioned in strategy people out with line quarter affiliate and we line even businesses distribution focus. we engines, sheet, We balance more growth our capital. and an more to spent capital our our alignment with And XX% and in period. mid improved especially as phase. XXXX, you we see, in our

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With for XXXX you. over new two six years going investments in the name the the and two last the six – to I'm just

Jackson in markets growth. income Comvest, manager; Boston Common, and both business; operating fixed an specialty private Garda, secular then markets Inclusive remember and the you all manager, OCP of growth Capital a private areas So, Square, ESG Asia global in Asia, manager; the space;

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phase growing investing the in effect compounding through capital EBITDA back investments, excess. also is top to Second is new of growth line shareholders delivering while that exercising

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this do to see So, finish, from a being start we cycle. long

our shareholders. these execute each takes of innings, we opportunity say this early the we're one our in ability to couple but You And could for years. very on phases see still of clearly a

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

to what My there, question mentioned is on you elaborate on. Jay, flows. just From

believe, strategy So, some first, mentioned redemption. Tom, regionally you on I focused saw equities, that global

you within classes. they quant, I into, the various across where think And buckets then, expand maybe can the systematic So, upon fall that. asset the range

the the where And – picture flow it wondering on seems comments from seeing that forward seeing improvement optimistic you're last just of your in quant biggest about the So, based the strategies. segment. we're question, Jay, like

curious well. within bottom quants you cycle so, the redemption seen you've as of And think the if

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there. positioned well So, we very remain

market. continue continuing deliver steady on Our in management inflows broader long affiliates to solutions duration capitalize and trends to are the wealth

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about global You specifically asked equities.

and contributing we that his across regionally We focus Jay strategies. of to of improving in and some and in noted. major we're private mandate positioned relative category, that's noted seeing affiliates increased you very broader are of versus at new more to AMG going value really in be sales gross That to have flows strongly Veritas. Harding And intersect also, strategies, uniquely Loevner, seen like some seeing overall as country focused in being more driver terms that kind where our outflows And answer, those particularly think we fixed is a long-term performance strong as past flows Think continue as investments income. the Artemis about are of oriented future said, markets, access. client ESG, something single

do the translate global market to we add take ability expect that we approach a should ESG performance And time forward, and equities, alternatives, dispersion our record positioning deliver we active and future. clients as organic believe intermediate And transition momentum affiliate that term very into you're portfolios. and about independent over strong look well feel more to and to liquid when time. income, we fixed emerging to look expect to illiquids, of over on As investments help affiliates the into in the their have, can base managers good and asset and terms as market alpha that the wealth, navigate of new this managing we growth. seeing at track clients significant through today, specialty our increasingly continue areas, is new flows active you growing in uncertainty, long and across these strongly shape and we our capitalize when a strongly And

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

total stronger commentary. total And I If organic of the Is what I get they're a ESG the I know And pieces could just you the you that organic quant. that could you but coming AUM growth go base? growth compare on if positive, Tom, base? dedicated back quant. if the base, that? clip would were flows have didn't flows all were of if in to ex growth just AUM what at flows picture within the you just than EBITDA how the of rate – don't mind, But excluding flow summarize sort organic

overall flow overall. in excluding positive as said, Brian, we were certain quant strategies, of flows, the profile, terms modestly

there. I get building through the think if the to how all we you get back go individual can transcript, you blocks as

a again in So, context question others in overall. be this, again. walked do I substantial flows that profile and investments, us to how of positive secondly, at and more some Maybe you detail. we bunch drivers that for to we're executing growth well explain primarily step to and Jay on just time. we where how maybe organic put we're organic on take through more have that started strategy a want and while matter, just strategy for and And a are get likely going AMG over definitely a to our be, more some the differentiated of is are of to drivers, growth they're Jay do then growth go growth again, want organic I won't growth focus and number through of on first, why, back And both your me to but where walk two going as a detail let significantly some us But we really lead things. new through to going as on there

cash on on That's basis. as a in it's substantial absolute know, also true generate we models. versus So, But more terms basis free an a first, just relative of significantly you traditional context, flow. amount of

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I'll the address let AUM. Tom

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concludes Mr. for final Horgen allowed comments. our gentlemen. floor turn the to That time I'll Thank you, ladies for back any and questions.

XXXX. business the quarter. has focused considerably remain significant us. everyone forward power And to again a our And speaking us next all of increased morning. and AMG with on start you strong discussed, look we opportunities to we had this remains of I Thank as joining safe healthy. ahead the you for earnings and hope

you. This today's Thank concludes conference.

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