Hamilton Lane Incorporated

Ladies and gentlemen, thank you for standing by and welcome to the Hamilton Lane Incorporated second quarter fiscal year 2021 earnings conference call. At this time, all participants are in the lesson only mode. After this presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please text R0. I would now like to send the conference over to your speaker today, John Cole, Vice President, Investor Relations. Please go ahead.

Thank you, Julie. Good morning and welcome to the Hamilton Lane Q2 Fiscal 2021 Earnings Call. Today, I will be joined virtually by Mario Giannini, CEO, Eric Hirsch, Vice Chairman, and Atul Varma, CFO. Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For discussion of these risks, please review the risk factors included in the Hamilton Lane Fiscal 2020 10-K and subsequent reports we file with the SEC. We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the public investor relations section of the Hamilton Lane website. Our detailed financial results will be made available when our 10-Q is filed. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane's products. Beginning on slide three. Year-to-date, our management and advisory fee revenue grew by nearly 12%, while our fee-related earnings grew by over 14% versus the prior year period. This translated into year-to-date GAAP EPS of $0.79 based on $25.1 million of GAAP net income and non-GAAP EPS of $0.91 based on $48.8 million of adjusted net income. We have also declared a dividend of $31.25 per share this quarter, which keeps us on track for the 13.6% increase over last fiscal year, equating to the targeted $1.25 per share for fiscal year 2021. With that, I'll turn the call over to Mario.

Thanks, John, and good morning. We've had another strong quarter of growth, and I continue to be impressed by and proud of our team for their tremendous efforts in meeting and exceeding the needs of our clients, all while juggling their own daily lives. While we continue to operate virtually across many of our global locations, We are starting to see some return to normal in several of our offices outside the U.S., with employees in the office and in-person meetings with clients and prospects. Across the firm, productivity and output remain strong, employee engagement is high, and we continue to lean heavily on our strong technology backbone, both to keep us connected and to service our clients. This is all a result of the continued growth and support from both new and existing clients. I'll shift gears now and turn to an update on our new headquarters build and highlight a new office who's open in Asia. Quick reminder regarding our new headquarters. We assigned a 17-year lease to occupy approximately 130,000 square feet in a newly constructed building located in a suburb of Philadelphia. The square footage nearly doubles our current footprint, and while we envision growing into the space over time, in the near term, the additional footprint allows us to provide a safe and socially distanced work environment for our employees. And, to the extent we find ourselves in an excite space, we will suit the sublux portions of the building. Construction continues to progress well, and we anticipate relocating the new space in the first half of 2021. In Asia, we've opened a new office in Singapore. This further expands our Asian presence and puts us closer to investors and investment opportunities in that region. I'd also like to speak about a few recognitions the firm recently received. I highlight these not only because it speaks to the first-class organization we built, but also to demonstrate what is truly important to us and our culture. I'm proud to say that for the ninth consecutive year, Hamilton Lane has been selected as the best place to work in Pennsylvania by the Central Penn Business Journal. It's a statewide program dedicated to identifying and recognizing Pennsylvania's best employers. In addition, the firm was recently designated by the Private Equity Women Investor Network as the International Limited Partner of the Year for 2020. This award is given annually to an outstanding institutional limited partner, who has demonstrated a commitment to encouraging and supporting female investors in the private equity industry. It's a tremendous honor to be selected for this award and reflects the deep commitment that Hamilton Lane has for creating a diverse work environment. Past few months have caused us, like many firms, to again re-examine our principles and to ask whether we can do more. Our answer to that question is yes. We are extremely proud of the caliber of organization we have built with women and minorities representing 50% of our workforce globally and 46% of our senior leadership team. And while those figures alone position us as a leader in our industry, we are focused on further improving and enhancing our efforts to build a truly diverse and inclusive organization. There has not been a time in recent memory when people in organizations cared more about who they are partnering with and we are working hard to ensure we continue to be an organization that brings pride to our clients, partners, and shareholders. Finally, before I move to cover some of the quarter's results in detail, let me take a minute to talk about what's going on in the private markets. It's a similar story to the public markets. Valuations, fundraising, and deal activity across all sectors have rebounded, in some cases to levels higher than what we saw pre-pandemic. The rebound has not been uniform, with some industries and sectors, such as growth and technology, doing very well, while other sectors, such as energy and some parts of the leisure market, struggle. How limited partners and investors reacted? At no point did we see any of the panic reactions we saw in the global financial crisis. By and large, investors have maintained and more often increased their allocations and have continued investing across all parts of the private markets. There has been a small shift favoring growth-oriented investments in some areas of the credit markets, but we haven't seen any significant changes in how investors are approaching the private markets. Let me now turn to some results for the quarter. Beginning on slide four, Here we highlight our total asset footprint, which we define as the sum of our AUM, assets under management, and AUA, assets under advisement. Total asset footprint for the quarter stood at approximately $547 billion, and represents a 14% increase to our footprint year-over-year, continuing our long-term growth trend. Consistent with prior quarters, AUM growth year-over-year, which was approximately $7 billion, or nearly 11%, came from both our specialized funds and customized separate accounts, and continues to be diversified across client type, size of client, and geographic region. Our focus remains simply growing and winning across both lines of business, and we are pleased with the continued success. As for our AUA, similar to what we've seen with our AUM, growth year-over-year, which came in at over $58 billion for approximately 14%, it's been across client type and geographic region. As we have mentioned on prior earnings calls, AUA can fluctuate quarter to quarter for a variety of reasons, but the revenue associated with AUA does not necessarily move in lockstep with those changes. And while this quarter saw an increase in AUA dollars relative to the previous quarter, we will continue to emphasize that no direct correlation exists between the scale of AUA dollars and revenue generation. Let me now turn it over to Eric.