Avantax, Inc.

Thank you for standing by. Welcome to the Advantax first quarter 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Dee Luttrell. Please go ahead.

Thank you and welcome everyone to the Avantax first quarter 2023 earnings conference call. On Monday afternoon, following the market close, we posted our earnings release and supplemental information on the investor relations section of our website at avantax.com. I am joined today by Chris Walters, Chief Executive Officer, and Mark Melman, Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that speak only as of the current date. As such, they include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and our SEC filings included in our most recent 10-K informed 10-Q. For more information on some of these specific risks and uncertainties, we assume no obligation to update our forward-looking statements except as required by law. We will discuss both GAAP and non-GAAP financial measures today. Our earnings release and supplemental financial information are available on the investor relations section of our website at avantax.com and include full reconciliations of each non-GAAP financial measure discussed to the nearest applicable gap measure. With that, let me hand the call over to Chris.

Thank you, Dee. Good morning. I'm pleased to share our first quarter 2023 earnings results. After announcing our corporate name change to Avantax earlier this year, we're off to a great start in our first quarter, reporting as a pure play wealth management business with a continuation of our strong operational performance that we reported last night. We delivered record-setting net asset flows with strong inflows of assets and minimal attrition and continued positive momentum in newly recruited assets. Our production retention rates continued to exceed 99% based on the effective support that we provide to our financial professionals, including growth consulting, marketing, and service. Lastly, average production per advisor continues to see steady increase and is now 15% higher than it was just two years ago. Last quarter, we focused our remarks on the significant progress we made on focusing and streamlining operations and capital structure. Since then, we have made additional progress in both areas, beginning with operations for the first quarter. With regards to sales, We drove positive net new asset flows for the fifth straight quarter, largely due to the strong same-store sales flows and limited attrition. Net new assets were at the highest level in years for the organization. Same-store sales across both advisory and brokerage assets outperformed, building on a strong quarter-over-quarter result. From a new store sales perspective, we recruited 54 new financial professionals, including nine new affiliates to Avantax planning partners across five new CPA firms. We've also added 13 financial professionals to our strategic partner program that helps pair up tax and wealth professionals to drive incremental value. Overall, this quarter was a strong indicator of the strength of our tax-focused wealth management model. Coming off a year when both equity and bond markets were down considerably, more existing and prospective clients turned to Avantax Financial Professionals, looking for a more comprehensive and tax-inclusive approach to their financial plans. In addition, our initiatives focused on growth strategies and practice management from our financial professionals and accounting firms, such as our Connect for Growth Conference and our Rise to Elite coaching program. have proven successful as financial professionals participating in these programs are outperforming both their Avantax peers as well as industry benchmarks. Financial professional retention. In Q1, we contained our trend of exceeding 99% production retention, which we believe continues to be best in class. This performance on retention was driven by multiple parts of the business. Our client services and operations team, which continues to achieve superior service and processing metrics. Our elite business strategy team that partners closely with our top performing financial professionals to help them maximize their performance. Our growth consulting team, which provides data-driven critical insights and solutions to our financial professionals to support their growth. Our product and technology teams that continue to prioritize the financial professional's experience and build out digital experiences that are easier to use, more intuitive, and can provide unique value for our financial professionals and their end clients. As we move past tax season, our revamped chapter program, Growth Through Community, is launching to drive more connectivity, education, and accountability. Now onto our mix shift. Our assets under management now are more than 50% of total client assets. This shift was partially enabled by both strong same-store sales, new advisory assets, as well as attrition being concentrated towards commission-based assets. Additionally, we have continued to look to acquire firms that are a good fit for Vantax Planning Partners, our employee-based RIA business. In the past, we have focused our efforts on acquiring independent financial professionals affiliated with Avantax Wealth Management, but we are excited to note that we are now expanding our acquisitions to other wealth management firms not currently affiliated with Avantax Wealth Management and expect to close at least two external deals this year. On capital structure. During Q1, we closed a modified Dutch auction pursuant to which we purchased approximately 8.3 million shares or approximately 17.4% of our outstanding shares for a total amount of approximately $250 million. The tender was funded by cash on hand and $170 million draw from our term loan facility. Additionally, in March, We recommenced our stock buyback program, which Mark will detail in a few minutes. On the Tax Act separation. Finally, I would like to share an update on the Tax Act separation. As part of the sale, we agreed to execute transition services agreements, or TSAs, in several key operational areas to ensure a smooth transition. We expect to complete the services provided by the end of Q3. At that time, we expect to be positioned to deliver stable run rate financial performance for the business beginning in Q4. Now, I'll turn it over to Mark. We'll be happy to answer questions after the prepared remarks. Thank you, Christian.