Franklin Resources (BEN) 1 Feb 222022 Q1 Earnings call transcript

Welcome to Franklin Resources Earnings Conference Call for the Quarter Ended December 31, 2021. Hello, my name is April and I will be your operator today.

As a reminder, this conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations for Franklin Resources.

You may begin.

you us thank our to and results. quarterly morning for today joining discuss Good this regarding within conference which on Reform made Statements call XXXX. historical the Securities or Act of of are Franklin facts forward-looking meaning statements the Private Litigation not Inc., Resources, involve of or from materially forward-looking statements. other results unknown expressed and by known any risks, such differ statements These factors results that to and uncertainties implied forward-looking important could a number cause actual future other Exchange important of detail Factors and are in and just filings and more uncertainties These MD&A Franklin’s other Risk in factors in XX-K Form with XX-Q described risks, sections the recent the and the Commission, filings. recent most Franklin’s Securities and including

Johnson, and Now, Officer. Executive our President I’d turn to like to Chief the call Jenny over

Selene. have types, investment vehicles. a reminds offer recent in Throughout be regions importance a a start full our Adam year. you well-positioned the clients XXXX lows, quarter. of environment build diversified first company, After resilient strong clients organization. be to our pandemic a our run us investment everyone for years, results of management this had the of time us our for Franklin to and shareholders, anniversary you, fiscal Global discuss me are a volatile Hello, benefits our the has range XXXX firm has much value thank across CFO employees joining Spector, commitment Templeton’s the In proud our and of diversified in a span, equity call business changed to classes, the markets the today marks worked with on today. global of the have Navigating client for of Distribution, Head to Matthew asset solutions. of Nicholls, we And although to to sure. we and our milestone enjoying progress XXth our and history, since not. Franklin Templeton’s to active further Thank that and

continued course to industry the Over and have resources add and sustainable growth we key ESG wealth driving alternatives, management as acquisitions in make as investing. SMAs such quarter, of the as well and past areas

to flexibility provides positions our balance us sheet As well and strong we cycles. financial with across us future, the market look

market on Importantly, despite current remain have resources conditions, priorities. the we on long-term to focused strategic our executing

in marked fiscal asset now were higher long-term quarter flows results, XXXX. billion since for in net highest All the classes $XX.X billion to positive first December XXXX. quarter $X.X of long-term saw third typically alternatives consecutive Reinvested of in the posted of in outflows compares the quarter distributions, net first billion This prior billion. quarter and the to elevated quarter our outflows which first and a prior inflows are long-term billion net net the long-term Turning $XX.X in at billion inflows company quarter. tenth year $X with $X.X of improved were and first quarter, compared history to quarter the $XX.X the of

won newly distribution made mandates a improvements the and all we We efforts made on in or have from have progress focused reinvested driving the global classes. our excluding investment including remain and are evolving we new growth. However, dividends team, asset

our focus our flows net prioritized have positive the markets led in We which long-term EMEA on to region. largest and and clients, our has U.S.

and XX% XX% focus for composites XX-year X, a all as with across are strong sales cross-selling continued X, outperforming are their of was benchmarks we Investment XX%, on regions. and momentum all XX%, positioned respective strategy our and We on relationships deepening periods, across X basis. performance

rated fund ago. mutual XX% by in a were our X AUM X-star funds of year to XX% or Morningstar quarter, the For compared

the than that’s Adjusted higher last year from by was time. same and to management financial to upon year quarter improve. compared to ago business The to income our X% X% the or an of results during quarter and under million increased at trillion a XX% quarter-over-quarter operating this $X.XX increased continued X% average X% Assets based increase AUM. $XXX

we positioned to trends of industry. mentioned well capitalize that important we As on believe are number earlier, our a influencing

Let’s represent alternative industry Templeton. an asset start for a asset and increasing the management. key share with Alternatives of management Franklin priority strategic

our When alternative most For $XXX.X XX% the the and grew our managers year by billion investment prior period. X% acquire from pro the management Partners, closes, our leading quarter specialist Lexington we transaction recent in alternative forma now asset are quarter, With alternative Capital, assets to categories. our prior announcement under strategic to from in alternative have North investments. the an billion. alternative securities private approximately [ph], expected management assets and providing a stage be leader $XXX asset and quarter, to efforts, we this investments in platform early develop to market access under made market investors To Case key their advisors further retail also

their relative versus rates other higher retail given products. Another important SMAs, growth area is

X% $XXX.X prior from to business billion a grew quarter. prior Our in from record the XX% by and AUM SMA year quarter the

bring managed of year accounts. SMA deliver custom in assets Management, billion. strategic which on solution to December its closed sophisticated our segment the past O'Shaughnessy over has a of the we XX, individualized $X evolution continue as enhances the Canvas, to As solutions larger customization investors, doubled ability Asset broader initiative to advance to of our part our to indexing of our acquisition

personalized we Investors more investing number partner ESG increased objectives. since sustainable to on announcement. a are solutions and firms, and and the range focused ever their of of investment Additionally, to provide have than the aim threefold highly goals meet

arena. driving created background policy sustainability in and investing role We In in Anne Global to Simpson and globally. our overall charged area. we context, are recently announce Anne extensive Templeton’s pension our Sustainability, critical of stewardship, [indiscernible] investment newly to experience strategic brings at the an as this this develop a and with in are international of the regulatory plans leadership to position direction ESG with excited strategy tools Head and public expertise, resources Franklin committed

strides next years important leadership area efforts help in recent expertise and made will have to in take level. Anne’s this firm-wide our and We the

with during a a that quarter combination by was experience. service assume the transition occurred global technology development of Another our unique deliver FIS agent of both operation The companies will phased year. TA global our form meeting agreement enhanced coming an strategic over that built for the transfer to offering will

Stepping reflecting with Importantly, purchase our leading past including our and years allow ability overall the This natural functions, efforts with our investment world move industry will transfer for application ease. business all in as is different Templeton professionals our the a financial fund greater today. of to and specialist evolution agent successful efforts platform shareholders the a single to of fund funds follows to change strategically and and Franklin partner firms is technology. business brought several a managers, together administration we and back class exchange

the many client campaign, which have And our launch I focus in have brand meet creates Franklin belief We advertising just on we and said better previous significant on announced so change why opportunity Templeton Progress, global innovation calls the relentless as embodies yet, reintroduced the an to getting we are started. our That’s Hello ways, the needs. of that progress. made and every in January,

tell. vibrant more now to global story company. We on a offer specialization and boutique built We new scale. a have a We stronger more

a while access the enjoying clients firm with working have size. with our Our they confidence the that expertise of to need, specialist comes and

our them none which by possible our be me the I’d us for thank on like and for saying business Let it has that dedicated client, up would last thrive to their ongoing we positions weren’t up call wrap questions. now, of focus accomplishments employees. And if to for XX. years to your the helped open Operator? well like XX to the next our for would the

Bank America. And Craig Siegenthaler our is with [Operator you. of question Thank Instructions] from first

Jenny, morning, congrats and net are well you positive Matt. Hope Good the on flow doing inflection. both

morning. Good

you. Thank

the So, my your initiative in strategic question business. on SMA is

And net biggest SMA also, a RIA leading you are trajectory indexing verticals products platform from going you you then strategy. am which overall opportunities? specifically, I which got best Now flow the Canvas, update to think on do client Franklin I business what specifically do an the that SMA the get direct And see is your probably big you have wanted side. really Because Mason SMA assuming here? to Legg on complements have one. O'Shaughnessy’s the

out much greater just Adam we jump think have feel I I enabling then is will all and mean, is in. technology customization. I like start with what

and so And capabilities direct its Canvas is like tax make fantastic with merge you strategies indexing, will for while platform, think do to something more efficient. them active we take that SMA be able our really

it’s handling really it. the it with outstanding As in a almost small base lot a platforms many an that even growing manually, announced the grown and actually a matter side, platform technology been it – has platform able industry indexing while have of of driven, just been since them we they has on on enables they really twice of direct program Canvas that to take to are have the have what because fact,

with think do channels. talk we are all about to But think, more SMAs some board, it’s little continue that others. a future more So, than that? And honestly Adam, bit I in to grow. just And it the across the already you that comfortable want

Legg on we our not traditional I the had its Mason the business. business because Sure. really depending traditional traditional talking or if differentiated that’s here. growth really at SMA say about is more sure mute Making where Canvas would I wires, SMA am The that are strength. was strongest on

really need have real We there products, such significant well we of SMA last year you the legacy partners now some as our that the the as with growth see over fixed well. equity income, FT in products pleased been FT as regional at cross-selling and

are So of product breadth out we wires. are and we more spreading there the getting also

using for products we newer that of already of the we time, like an on broker-dealer entire platform more the At to to to serving we continue world. that we that Canvas, it platform. for terms areas into tripled the expand are to platform as opposed where Canvas, market investment RIAs are traditional can Canvas, platform. think grow working focused in number in it And think essentially really we we They create use need broker-dealer In are have the as the same to area. that

class What really last So, We There in. strategy the see is is is you we that growth year. really what’s we to product asset we achieve are most are directions would growth over I will one or cross-selling about and that. seeing able in both for the SMA us. to breadth say want pleased have in key one that not actually been the the move

why the of Thank or point know your not bigger realization you, markets Matt, realizations you the forward At because include you and things? our accounting and are more would question. just much an us appreciation guys it future roll this the bigger just I Adam. in acquisition, beta. breakout type in think much private for I have one in Jenny help follow-up in of all, AUM But Lexington and because you side did separately, I market from modeling it’s

Good of asset business. we We XX next to Yes. do morning, just I’d our assess was Craig. million that of the alternative of $XXX that, say, as realizations. breadth performance continue $XX we in fees may the months Out million reported, the

$XXX potential I highest have, size to about quantify which going $XX out both our and quarter performance million fees accurately, we on guidance is perspective. guidance performance we is hard also annual at on where Obviously, actually in quarterly to realizations million quarter were this $XX the a performance stage. was the because the the from have quarter performance The performance pretty where that the we million the larger probably annual related. fees. note of guidance our alternatives second increase for this will view, think is of I’d $XX to quarter. the Lexington fees, excludes But are from our to The of to it’s $XX December business. our million, the fees that million that rest of front million, $XX we reflects specifically

provide be It’s we categories, Craig, this more very So, very useful see where further going they to are to we to performance granular I guides in The can. if know better broad but to we study fees to question, we provide modeling. your do our longer are but will to that’s can are answer a difficult. and best information different

guys revenue AUM on are you, things, of just your So, my realization response little Thank it? a you to Matt. questions. heard question my fee side was performance but the and the for And more you of I into things taking thank side highlight, looking that

Okay, got very it. Thank you much.

question is Your from with next Goldman Alex Blostein Sachs.

business alts with morning wanted minutes. for good question. couple Hey, Thanks of the everybody. I for to the a start

last management pro generate, fees that flex. forma call, business the forma total the on guess I you talked maybe billion in I about, think $X pro would about I revenues think, or

number. you What’s growth on the the guys that was base How time? these billion so organic expect could or the in revenues? you think Franklin that the over thinking I for are about growth businesses collection of of $X organic sort produce

Thank Jenny. Yes. Alex. you, Good morning,

billion be to post I would probably billion months close $X think, fairly the fees. would conservative. is pro performance Lexington XX forma billion, candidly, We plus that $X.X thereafter hope closing, that, $X.X already the to for

we that of about have at couple been growing XX%. last the So over years the a rate business growth of

I the of half past in think mentioned have that about I organic. that is

market half growth. through The other is

our for be alternatives say XX% minimum but and I between respect XX% we’d So think business. XX%, the it view, our rate should with to of combined growth in

related flesh be to of pre-Lexington rest standalone maybe you you any thinking helpful would second expense if guidance, then about for as just there you the things of out guidance that fees of expenses, the about other maybe performance in That’s just year? terms Franklin talk for Thank fiscal Great. the you. kind heard want to is helpful. how base are I well, And the quarter

Yes, okay.

parts from a about current time Obviously, be right, this the spend most to I few try and So not in my and we talking go possible. but as easy then exactly can of to market number as annual this there get to of is going the am there. volatile useful it’s

today is we includes just million make quarter benefit that the are I’d first one-time of reporting point G&A. first $XX to the So that

most think of out have you pointed I already. that

the calendar year annual etcetera. And as restart quarter So, costs comp increases, payroll good. includes that’s second XXX(k) a of such merit match, taxes,

market of comp XX% to the are And is our operational And terms expect efficiencies. area, XX% to ratio in base expense of have variable then our as other XX% the XX% to consistently that we of total performance. compensation. XX% in potential to reviewing mentioned and note with remain I’d performance inclusive we XX% we long-term However, beforehand, fee

point, to So our we what weeks to ‘XX of performance this the operating that billion, at and few market last excluding still the excluding be inclusive this range that means expect all the fees in full expenses of over billion $X.XX experienced year Lexington. we’ve is $X.X

Thanks so helpful. Very much.

you. Thank

with Your next question is from Katz Bill Citigroup.

well. a sort talk disintermediated WAMCO one out in U.S., pretty the Jenny, very management could bit for opportunity, is in taking my alternative more much to income you commentary for same democratization retail fixed converse you then the supplemental space. you questions Okay. Thank as sort just press the release, how time portfolio? came non-U.S.? at the And if good a the strategically of take more the advantage of you spoke I wondering traditional maybe also your that see was some little of breadth given you for maybe like franchise its in opportunity

within markets. excess returns Franklin you’re is the in tell passion private the seeing Yes. all, can of this because that Thanks, I Bill, first of so you, the

between disparity to And Xx excess differential markets. of and of bad backed private number company two, so half today. think markets. consolidate came access the because in And managers from in And active is Well, there same are all, idea, managers with out thing there in dramatic. firms, the first XXXX. that person number returns couldn’t get about equity access than the and firms let’s were an equity people the the good Franklin’s to returns management, history XXXX, public There a in types to the the that equities can – significant, there calling how were these of a equity If out masses the a so number as started bring with are the the are products that to society, over returns to we’ve feel that right? public figure up exists the responsibly market. figure we out mass the of you average the So markets

And their the happens scenario to because of event needs it’s with where single their say the so average responsibly, in life. access investor their when and a that of kind money running scissors I savings

tied a a so And are can assets, they long-term that be problem. private up in

is So do we there way interesting to that. think

$XXX when depending four you trillion There the They just the about opportunity, ask, firm, an take assets. are allocations in the in so largest And have them, market on the wire X% X% those is to four and somewhere the U.S. $XX well, we’ve in XX% houses by to billion what’s somewhere average houses, off space. just added X% increase to increase XX% and their the to wire private markets. like they’d talked between

to firms to think those recognize appropriate U.S. recognize with need the to that the in phenomenon So do that in bring to to to And talked disparity be returns. feels with the it, same it’s come – the able that we’ve we other everybody channel. it that the be products exists need to of able up exist markets

the that think answer – very, think it’s we your we big. So very question, to

add Western that would of being just I terms one is disintermediated. thing in And

that remember strong their Just there. alternative got concern That’s thing not space, opportunities fund a in product add. strong they macro have own, CLO would is very really the their strong, I very the global on only so

follow-up. that Okay, Adam, thank you, for

I’m could be just thing. interesting. is think going where This we add one it to actually other

has We’re some Western. fund you allocation looking product private provide within private credit a as where development private BSP with although closed-end at credit say, credit, WAMCO a an combined book,

retail this breadth of interesting mean we really think is to I some products the bring having market. the where capabilities So can that

there. you Okay. Thank you. up twice both I’m sorry, cut I

question Just Matt. for follow-up maybe a

as And quarterly now a those calendar the Can sort rate? fees, Thank think sort you annual on a of first for that normal run elaborate quarter of you. you are? just assumptions on your is expenses. you thank performance market guidance guidance Just what updated about

through just as Bill. year increase. there really performance fee we continues Yes. asset alternative provide continue going expect business potential to as to guidance performance we’re was do to the second fee our guidance for But The our roll additional our again, try to quarter, we best expand, to the

that that’s piece. So

decline, the on the the account market the in digits S&P becomes I business our institutional than one when of close the ago ops the parts got took for there now aware other market. business when significantly XXX for terms to pretty sticky and over we fixed we’ve And for few and several and a the much the that bit businesses days and less. indices the think the the franchise In less down revenue assumption, and double but prone guidance was declines to obviously markets very the that business of guidance I’ll on market the business provide into And things it’s some to I for like because note past you’re that larger, the wealth we’ve NASDAQ for as and of XXXX, less year, a and don’t in down particular. front. when of of market that’s revenue sharp this, more sticky just the SMA a of top as example, our certainly the revenue little markets line, lot Russell income But diversified years, the while so market decline, the declines

without address So on giving any guidance more the revenue side, that Bill. question how that’s I’d

the color questions. for thank Okay, for you thank all you and that

you. Thank

with next Your UBS. Hawken Brennan from is question

Thanks morning. question. taking Hi, for good my

please $X.X through I’m – is the here, line. there billion about normally, we about of lift-out, flowing a could sure when think that the curious is think lift-outs, was definitional a acquisition inflows reason sort you that but of Just we from

rather was it line? line acquisition that So the around Thanks. through nuance where flow the than flowed the what on

good really a you. question, this thank feel circumstance. that very is Yes. do That’s Because we specific a

Franklin more firm, were the the it. essentially an at quite investment That If had number firm new platforms those team O’Shaughnessy, were a to that contractual of clients. to with would Franklin of They when We client. and did team the the Franklin employees a start move clients best absolutely business that Templeton. relationships really including assets the new form zero under that that and chose assets zero they with at, where with platform out much going the we looking with new something was They relationship in they typical you contract actual the it Visa assets look any with reach they of as is to purchase was to was home. a pleased they thought different. to were for able their really be to of moved come like management because them with What then of essentially a over

the not those that actually at simply We the hired was AUM purchased. the brought had thrilled such clients consultants the in announcement. than they were the more the back that their platform people. So strength that clients saw that time over of We and AUM we

that’s think any to that line. that’s through the assets, didn’t purchase the we I flow Franklin So testament see strength the But others platform. a came in because it why

the Got think And business visibility to we industry, challenging think that color you how rate any do about think fee fees to all it’s then some think the and that about have ex-performance overall the path? downward Should thanks view Do clarification. in from along ex-Lexington trying ex-performance with when it. just any I ex-Lexington. from fee for or the you and on for pressure we in divergence here about, have and about Thanks Matt, know continued here? core

and think at Lexington rate Brendan, fees feel good excluding I excluding point. Yes. effective firstly, so is pretty fee performance our we this about where

think because that quarter much the have we were And I very a under business lower pressure institutional, just maybe is in than from industry that’s line, even we’re bit example, been going mix into retail. generally impact quarter which in shift versus in to a lower slightly areas what’s average last really fee there. cuts, our the rate fee think larger necessarily fee versus for most very on we slightly down based certain

going we quarter hopefully So where beginning much fee into – the at. mix, fee will their pretty we we’re to But second I I that’s it third when AUM. be pressure into that the an the obviously, feel well, Obviously, – Lexington it. their guess, because about report upward think have include on we on on higher rate when the rate is good

a a is expected tremendously on – relatively little we to suddenly with that successful a And bit based more So the be Lexington for we’ve in strategy example, the continue the the an bit have creates increase in fees cushion today. with income it where increase we potential markets, a to we’re fee bringing bit feel for business even little we little stable, let’s lower a than alternatives of that to if then from where say, institutional fixed growing into at and regard which assuming grow don’t that or is in. EFR have way, pretty rate business, said the and about stronger beforehand, potentially our alts is continue of flows business, to as equity market we good money

Should still Matthew. And changing. Thanks color, for date we the didn’t that on you X/XX mention count Great. closing expectation generally?

Yes, X, report it all April we accounting a a the having of weeks quarter the directly take it to in probably complicated quarter the when so to something and at to end try that later. end just at for reasons, the of would – it’s few include couple be

think good we around we’re X. than likely more – not progress close April track, made to very we’re on So

Thanks Excellent. very much.

Thank you.

question from with Evercore. next Your is Schorr Glenn

Hi, there.

Hi, Glenn.

there. Hello,

redemptions. lower significantly was distributions extra flows in year-on-year improvement the So

been were year-on-year. you that. all better coming in about I of fixed talked all investments income income, flat could of And gross on other fixed words, to drive for, can what onboard in about selections allocations. let’s for within rest this And the want I year? sales and touch there what think on you specifically say, to if gross in the think you pressure sales is expect there then kind downside talk maybe

you. do to have a rates many What platform to an back Thank are version inflationary going of you think product-wise we year progresses? the rise as according some across to lot that’s going shop people. drive your Now

may And some question. the So growth recognize first, stats thanks, you of those Glenn of retail vault the for channel. on in

– you biggest take obviously, just thank our by U.S. those. The you So for – our channel. far, our

couple sales getting side, year right, place On where of we’re right? So XX%, that the seeing the good – a which portion. accounted greater by – gross of products been outsized it much in growth versus historically and we of grown we’ve you a has obviously, industry XX% for the the last had retail X% is an diversification challenge we’re about in and that to assets one had

much positive it’s in we have And which of the diverse. in and U.S. Europe. of positive some more same the some Now and EMEA. actually down, same but flows see us growth in U.S. markets, had places held had that kind seeing We’ve Asia, like markets, in hiccups then kind positive in we certain

diversify our from standpoint, think we still we do, we industry. is some a what above business seeing growth the we that But overall, have So a product geographic definitely client standpoint well, and intended that to we’re have where places which we’re standpoint from doing had from vulnerability and a some lumpy we’re redemptions.

the so which franchises multiple rates on we honestly, So of things, the and couple have had on alpha inflation of I’ll put things in a of have side, income, fixed that there. fixed actually views, And comes look, like first from. low different correlation and all, where then income their

outperform look, active a assets management income, and you to because that Again, rates spread get, So And rate news, for on good that’s really if up. say, is fixed go think environment tend diversification side, is income you about that’s then fixed important. the when rising actually good right?

You lending, have things direct credit, private loans. leveraged like

things those of tend better All to be get a you where can place returns.

some not for we’re to have, well allocate think And capabilities to we just is become to poised income. we cash mention coke Not that up, you rates fixed income is you’ll fixed that duration. with on the able sidelines when the on go fixed market. portfolios story the that a So there that think have of the where to into sitting bunch back be of

from we it. the large has who there and positive income go is story anybody franchise think real is fixed are just We be is going to don’t rates hurting a going So there. story up think some actually to

Glenn. things down. just add of are Redemptions And kind in that couple that, sales significantly would a up. of are to I modestly

lot the We’re the evident of able both a example wasn’t investment cross-selling great great largest that are to largest four that in platforms for number Leg onboarded as legacy a it of happy platform have banks, now in where the we largest quarter. FT, products, of on this other We now onboard, with thing the those. platform that there. all to Legacy a isn’t And banks, we’ve terms Italy had product access. Italy FT instance, but But is of they in the had the had access is the lot bank platform. significant

exchangeability have coming U.S. at up this the the month of We in end

augur those of for all quite well future better So, sales. things

I all you. Thank that. appreciate

question next KBW. from Robert Your with Lee is

Maybe a leverage. more Thanks about getting I start talking taking on key the Great. my a and kind was of of questions everyone. good Adam, to seeing cross-selling platforms, year kind believe for to morning, this that as follow-up post that, merger

measure Just outside of So about some try for? an to looking gross sales the simply be of mix or or make of type very you should kind as that there should it the measurable, kind in, Is really just what we be in enhanced looking should platform placement? thinking how success? acceleration from we it leverage is we that

products going And advisers unsatisfied today one seen range. Franklin one Two house within ever platform, the greater most using number now significantly of switch one we breadth product entire I the is is, are still who significant or to the double an larger things. of redemption other on so our is of and more in anyone see that using things. the with That’s couple think significant We’ve are there lower There the ability extent have platform, essentially, they are number and products particular the you’ll to product a forward there. half I is think us. that a investment buying to Templeton a there advisers buying of the the retention. rates growth of the from just

with from you better is you, long-term the larger their of management stickier seen relationship because one relationship. other thing a product just develop products not tend of are you sale holistic we’ve in with historically to adviser that The the them, that assets asset kind number that buys

see think as a you base adviser, AUM I you more as see So products well. per stickier

to first the products that to And to exchanges, just platform. in have on to we’re is do exchanges. the for unable are can’t there conversion we some time, month really significant this the that able those This other if said, you’re add add that. do sense just firms Sorry, TA big

– the doing improvement in or to should we’ve be now while of team be So their and we improvement Mason either just job. who some Adam seen real should cross-selling advisers are that happening Legg Franklin, used

Great. for And road. I guess the it’s more to us down Matt metrics give

next, add I’ll to it the Rob.

Capital you which CAIS, Jenny, for a is Maybe great. follow-up raise. in North made know a I the as did big capital investment so Okay, the you transaction,

Is it table access Within the brings those having alternative fitting or businesses, trying do a to really those Is it I I’m feel what just – mean, for sense give your the you how in you? to it see stakes? you – get other enhanced of like investments more that you does just maybe strategy? technology

Yes.

You just case, right. take

case-to-case private have offers it forms know is with nightmare invested for is to up what and the all what deal things. for to to streamline the to these in signing who a has So, anybody retail, assets

advisor to the clients making And access his for to give so to it case easier tried alternative an that, streamline platform. much

a to are able always again, an of are architecture. very pull that are what doesn’t position investor, is your showcased and the But the have conversation and you be ability they important. be to and products. shelf about where businessing going space to mean If more closed to gives shelf It have showcase you gets you you

about how the think partly investments fintech do. that’s we that we So,

if also, going bit it’s frankly, and larger you to in that this of a Rob, will, a co-opetition, such It’s little it’s just sense larger. giant and space, is the become

specifically servicing internally what with partnering that are It own more So, in focused out on it provides and distribution even is, and a just areas under as different us of significantly think alternative our investments assets with others across further view directly. are ourselves distribution, we Adam our investing opportunities perspective. the Jenny We enhances the technology frankly, mentioned, of business. though from of

learning access. focused then have time we generally we are most enjoyed from them with our really So, that’s and and on, learning and they more hopefully companies, from these what us are getting

in kind it’s for And expect on there just be a one purposes? quick could we going one that of in modeling I the sale Should to noticeable since through squeeze on second Great. if flows Embark technology. is of quarter, gain the

gain approximately is Yes. $XX will – The million.

taking questions. for Great. Thanks Thanks That’s helpful. my guys.

you. Thank

is with next Jefferies. Fannon from Dan Your question

Thanks. Good morning.

in and/or and kind more the been go guys here just last follow-up plenty Lexington with your should highly to X.X the appetite M&A investments active think going in having wanted of months. we of and you kind closing How terms the forward? X over liquidity, years. have years, about I of for forward But still M&A coming of So,

Well, and – there I will I start, you then think Jenny, go.

have After to think into then would annum described, to net as take Dan, the the that hedge it’s firm, the at add important repurchases, at dividend our do least the and share you if I we level to which count. share billion. income look very $X that, after before, grants per enough over that’s the we consideration you roughly employee out always

and things because clients, company, until that So, importantly, in balance add significant look our in to we billion, our management that those now and have shareholders business addition financial every our and And talked at the to revolver obviously, to do $X continue are to demanding. wealth this provides it today strategies further have to assets we to we the distribution that very okay, that we for run say, for have to out our alternative and we diversify got what they is sheet flexibility flexibility that new we and to and year, us have, of about. what our enhance our

We will continue to down that path.

So, obviously, year with the if have central in from to internally overall repurchases will think But that M&A capacity mix do more have we to will opportunities have in What that. we our after we we get is do business, dividend investment also share and repurchase further expand managers then to to the specialist diversify us. And what every theory. invest our have, importantly something we and is point, At – everything though will that dividend that significantly. to do, we out then some perspective. comfortable our we business of things business a very share increasing run we point, at and about said be we accelerating those – meaningful

and of the Great. Legg around Mason expenses. realize component already just But last appreciate the And then follow-up guidance remaining I synergies. been given the you that’s did a

that planning the you of optimization any contemplate potential year, on what just about this said see AUM you think and business it? your as for of of those businesses, further based, guidance you as so levels it of does is And or kind as kind here

people on today get rest No, before retain that, pull where And we are markets competitive best it. that. pay for it’s to ratio for and on Again, we I I based shows that inflation, need compensation point. of do focused talent, highly to our to we paying this given obviously and at firm are the additional wage the if think competitive. that have we extremely we example, It mostly the levers think and is attract at the need think what said for have to, we for we I environment see some

likely it levers trying saves expenses to as have funds. those the we those lower XX is The focused So, for Jenny to also about as service we mentioned, much outsourcing next that. is the than going on itself, more earlier have to savings the as on can TA we we to we use pull. but manage The have money terrific. said, mostly certainly continue are guidance months to But the TA tremendous, given be at about per ensure do we which in at outsourcing. se, to are funds, mentioned that versus we the is very to Jenny least in unique, that, come levers announced, but our

becomes as at if the will the some internally. in dig we functions places. we point For those lever other that’s us, define and things in more another supporting next all it And to efficient be into what about get TA. can I And see year,

Thank you.

Thank you.

from Your next Autonomous Patrick is question Research. with Davitt

Hi, good morning guys.

morning. Good

you could more reason? your your Matthew, given how frame look a perhaps through M&A, different given potentially ‘XX and your could asset experience than manager standpoint broadly, of experience markets your maybe being thoughts around from any historical of background view any kind more volatile your in views the it pipeline of for

Okay.

price our say would simply point time. sale for are buying lower I that for something no conditions, thing in first there just not markets are really the the in is the think is that thing, because opinion, whatever at I in market They lower. such a good

that point make just So, clear.

and of we support from I significant. across management, pipeline client opportunity happening I changing ever-increasing think don’t and there is as particular, are complex a what really seeing we very needs. ever and think of services And active. demands see pipeline, assets to XXXX. in amount that offer have to the the going wealth consolidation fair into In increased lot is wealth a seen I of alternative in management, it terms don’t

that’s So, history that got It’s to and attract utilize wealth. happening can platform. excellent its a we in And tremendous Fiduciary store, is a businesses. brand business, tremendous Trust

the two since that months mentioned, have or through XX little XX% XX% and the think, Fiduciary Petrus collectively a acquisitions so. acquisition is by, made ago Raytheon we have years over we I grown have which or As X to Trust, announcement

grow the from and an it’s I – the around think good Trust. sectors there for things. out I alternative clients have didn’t we that. to both when we extremely that we leading chose acquire have assets frankly, recently, We of alternative of need companies that’s see we Lexington. think for in company what in But on So, assets. would Fiduciary what things, as be, global were our tent There important already help resonated excited strong. how are will excited, example, excited would a very that were else alternative States, level, where offering of these United involved if wide we we were can here. we within I Europe, to come while say. And important with extremely pipeline company think under nothing being for very do some while because that And and see credible at incredibly is those our most has have think Opportunities even we and a process a did are a in busy benefit the one. – with an meaningful. it parts there, in it and asset that, referred I acquired therefore, our But in and we with about be And are if are we wasn’t And couple we in competition we wealth arena, then to comfortable very we Franklin, the the other really some Lexington, narrative I I have lot it shareholders Franklin. so particular, – And

is if So, update of add know Jenny you front. want or that sort M&A Adam, don’t anything? I the to do the on

No.

You got it.

specific like pro on point? Anything Thanks. point can Lexington Matthew, $X.X be their visibility pipeline That’s that, it really on fundraising forma revenue at just this helpful. I – quick the of said think, is One more one to expect better you kind you or you billion-plus. to driving

meaningful ops. most it’s exposed own really very growth in areas pipeline I really mean really Benefits are exciting experiencing they to Street Partners Clarion the that and the arena, estate all I is are has it meaningful significant have the their real fortunately strong Clarion and of and opportunities. – across performance, growth. think the an has

us. that’s same We area. that Partners, exciting the potential us, tremendous. and another larger Street So for that is in the globalize And with geography think for Benefit alternative to be credit business

closed May to April. have excited fundraising on would are an I Lexington’s gave be as on we is in – it we or much million, on $XXX basis, we say level will comment make to continue we on guide. million it that said or But and we things. revenue, on EBITDA be I then that Lexington think plan really to very be $XXX can’t So, able that just closing an that and for our guide comment two relates like annualized the I we those after Lexington everything we that will for to anything that, both to think going with Lexington. in unfortunately would And which it’s And around stick processes

space thing just mean let the I that. properties we have the alternatives. the for we the to incredibly we me add fortunate they have in retail opportunity have. with Again, And about feel that that on one outstanding talked have performance

Clarion in at performance and that look the competes of and coming some competitors space you problem at just Clarion’s You retail head-to-head, look in no in and assets the space.

We a have challenge a education whole there it’s space. manager. The is because tremendous process in kind any hard reputation of is the really actually retail that there happens with

to to there. bring if takes of solving to because think a be component focused then say have able the some that of we going So, capability it issue to are And the you in you institutional have do that on would the have I capability, space, bring distribution it. better retail. products alternatives are types we equity way time you to in private secondaries, is the just education J that curve don’t space retail the But the that to we kind an and of that have

think a great And so just opportunity. is Lexington, we

So, you and you products, to the how just reputation it’s have have the now figuring sell it. out

of So, that’s kind final the component.

It’s helpful. Thanks.

Stanley. with from is Michael Cyprys Morgan question next Your

and you meaningful fees. performance Good just morning. to that performance to Clarion arrangement those fees, is follow-up the that for the coming Stephanie And starts when performance just Matt, with could have outlook? the on, a already? be pass-through in This how the filling when us of remind legacy if quick not Mike. on I can

actually happened. Thank you question. That’s for the already

our almost pass-through now. Clarion to performance with with fees, fee zero respect pass-throughs arrangement So, are the

asset on of last that’s on or pipeline, some color or fee billion then give types Thanks. And cost now, us pipeline $XX the evolved can quarter, you wondering lastly trended of if sitting versus rates maybe in quarter? has how Great. just the the some mandates the the this how different mix

largest there change the have a really class but we from asset perspective, in but I is Yes. well. an all as fixed very, overall slight dose a and also would institutional of a very not the the level, income significant the strength is does really equities was of that in not at say, healthy business. change reflect there. alternatives There that, percentage of There

better actually you, but would fact, what in that measuring the The you space. tell really I doing In are better that’s funded business institutional is truth yet. is won, we and have hasn’t

a actually to business the So, bit. the quickly, you number come that will that more extent fund down

is chunk quite the really is business a biggest roughly of income Fixed fixed income but half institutional strong. asset big the So, it. class, is of

change quarters. I In the fees the seen business haven’t we would terms institutional we doing rates, over that that really, last of fee say in are a few

fees a And just back to second. performance

Because rough I we performance XX%. we think at calculate could become in we model fee said a revenue, when because XX%. is we performance fees and now, guide to on better guide one update past, I I comp assuming make just think and helpful mix look XX-XX, be the think fees that the where of think performance compensation, that I think to would just than revenue. maybe the that’s XX% heading we modeling

Great. you. Thank

Thank you.

KBW. question next from with Robert Your Lee is

investment Legg my did the one and the to least transaction, just follow-up. in points kind maybe you was initially, for things affiliates relationships curious weren’t the Thanks of made going going whatnot. touch And expenses. Western that was Great. just back you When taking the with the you to at NAV of that I

I And an to starting of So, but if things this in, a efficiency overall revisit know is maybe cost later opportunity that was XX maybe that the – click. company? may are to for or any left help third don’t months Is rail then a this not, for touching date. there is those or

we as Yes. third of – – that we I think a Rob. mean, rail, we don’t certainly firstly, don’t

open, great executive fact, and investment leadership in of most or largest the committee dialogue company We our specialist management the committee. our have managers on or of with very all of

have in things list things a So, would internally, and as we be long of through. working are of – terms our we in can. have as very together would open I focus all that efficient we discussions and about I these are this just we potential to say that we

talking synergy potential We a investment some from outside cost have enough those got you perspective that are of larger fund of components the management specialist about. of

discussion we expenses those with And the discussion. we will administration, It’s of example, other not talk company company. we be services talk company revenue areas do just a obvious talk in talk and also holding about we FT we the of across about talk years, absolutely where involving all company. It’s for as we about specialist aspects a fund focus a bring down is about investment growth technology But conservative the collectively we the there can all – transformation, sort we Our are expenses about the about And opportunities. company. managers. so will see when and future

to able on has are Legg one more have opportunities specialist at referring to We and enough focus a the frankly, methodical. be outside and what we are therefore, of with specifically got It are you get Mason. And very thing growth we time. revenue legacy to investment on to, managers, with

added for color. it. appreciate Great. Thanks the I

Rob. you, Thank

This to for concludes to now Jenny like final and over today’s Q&A CEO, session. call back I President would the comments. Johnson, Franklin’s hand

everybody, Great. for Well, in today’s thank call. participating you,

I lot many feel we can exciting are getting a And We started. we of have made progress. in so tell just like you, ways,

work for you again, again of all we focused to clients and on And we would remaining to absolutely and quarter. to like So hard next our each on forward other. employees thank their once speaking our look

healthy. So, thank and everybody, you, stay

concludes Thank you. This today’s conference call.

disconnect. now may You