Acadian Asset Management Inc.

Ladies and gentlemen, thank you for standing by. Welcome to BrightSphere Investment Group Earnings conference call and webcast for the third quarter 2019. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question and answer session. To be added to the queue, please press the star followed by one at any time during the call. If you need to reach an operator, please press the star followed by zero. Please note this call is being recorded today, November 5th, at 11.30 a.m. Eastern Time. I would now like to turn the meeting over to Brett Perryman, Head of Investor Relations. Please go ahead, Brett.

Thank you. Good morning, and welcome to BrightSphere's conference call to discuss our results for the third quarter ended September 30th, 2019. Speaking up on slide three of our new investor deck, before we get started, please note that we may make forward-looking statements about our future business and financial performance. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information regarding these factors appears in our SEC filings, including the Form 8-K filed today containing our earnings release and in our 2018 Form 10-K. Any forward-looking statements that we make on this call are based on assumptions as of and we undertake no obligation to update them as a result of new information or future events. We will also reference certain non-GAAP financial measures. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can be found on our website along with the slides that we are using as part of today's discussion. Guang Yang, our President and Chief Executive Officer, and Sir and Rana, our Chief Financial Officer, will lead the call. and now I'm pleased to turn the call over to Guo.

Thanks, Brett. Good morning, everyone, and thanks for joining us today. Let me begin on slide five of the presentation by walking through some of the highlights for the third quarter. We reported E&I per share of 42 cents for the third quarter compared to 45 for the second quarter. The three cents difference quarter over quarter is attributable to higher placement agent fees and equity market depreciation across some non-U.S. regions. Our outflow of $6.2 billion for the quarter were largely concentrated in lower fees of advisory accounts with about $2 billion related to victories acquisition of USAA and the related reallocations. and another $2 billion related to continued real allocation from a specific client in the U.S. large-cap equity subadvisory space. Looking forward, with a potent business mix concentrated in high-growth segments of the industry, we remain confident in our organic AUM and revenue growth prospects, particularly as investor interest remains high across many of our quantitative strategies and our alternative strategies approach their next vintage fundraising cycle over the next few quarters. Turning to slide six, we have made considerable and measurable progress in refocusing our business since the beginning of 2019 and returned substantial value to shareholders along the way. Streamlining our central resources has generated $8 to $10 million in annual expense savings. As a result, Brightsphere is now a much more nimble and efficient company with an entrepreneurial and performance-driven culture. Our senior management team continues to be aligned with shareholders through a compensation structure focused on out-of-the-money options that keep related costs low and incentivize us to remain focused on creating value for our shareholders. Turning to capital management, our substantial free cash flow, combined with the new 450 million credit facility, provides us with ample financial flexibility. This quarter, we increased both the size and lender participation in our new facility, which includes a broad range of leading U.S. and international financial institutions. We remain prudent with respect to leverage levels and repaid $35 million of indebtedness in the third quarter bring our net debt to adjusted EBITDA level to 1.8 times. Also, we repurchased 16.6 million shares this year through the end of third quarter, with additional 2.7 million shares fall back thus far in the fourth quarter. We have spent approximately $250 million today to share repurchase, generating earnings accretion of 13%. Going forward, we will remain a balanced capital management approach, focused on growth investments, which I will discuss in a moment, as well as opportunistic share repurchases as appropriate. Our growth strategy is online on slide seven and has four main components. The first is to leverage our high-growth business mix, which provides broad participation in attractive in-demand segments of the industry. We have simplified our financial reporting to align with how we think about our firm, our differentiation, and our growth We believe this approach will further increase the transparency of our business model and better illustrate the underlying progress across our quantum solutions, alternatives, and the liquid alpha segments. A key differentiating factor for BrightSphere and our organic growth outlook is that 66% of our management fee revenue is derived from the quant and solutions and alternative segments, nicely aligning with secular demand trends. Second, we're focused on expanding our capabilities in high demand, higher fee areas. Seed and core investments remain key levers to diversify our affiliate business and provide greater stability across the franchise. while also positioning us to participate more broadly in high-growth, higher-faith segments of the industry. Cited products building momentum, including quantum solutions, single-factor, multi-asset class, and China A-shares strategies, as well as liquid alpha, emerging markets, equity, and leveraged loan capabilities. These and other basic seeded products are expected to generate upwards of 3 billion in gross inflow in 2019 and into early 2020. We continue to innovate alongside our affiliates and have several alternative strategies currently in development as well. In addition to working with individual affiliates, I'm excited to share that we're working with Mercer to develop a series of customized investment solutions to address the long-term return investment needs of institutional investors worldwide. Those bespoke strategies would bring together BrightSphere's highly regarded suite of investment capabilities with Mercer's industry-leading OCIO expertise to provide attractively priced open architecture investment framework. Early reaction among select global clients have been very positive and we're optimistic about the potential for this new alliance. Our business model provides a unique advantage in offering this type of product. as we can bring together the independent investment process and philosophy of seven distinct, highly specialized firms into a single point of access for investors. Moving on, we are actively engaged in cultivating relationships with a range of high-quality teams, platforms, and businesses with complementary investment capabilities including liquid alternative, credit, and infrastructure. We have entered into late stage discussions with several attractive businesses and are pleased with our progress today. As with all elements of our business, we will continue to maintain a strict return discipline in evaluating all potential transactions. Third, we remain focused on increasingly penetrating growing markets in key areas of the world. Our global team has established multi-level relationships with many of the world's largest banks, sovereign wealth funds, and family offices in markets such as China, Latin America, Europe, and the Middle East. In addition, this quarter, we expanded our U.S. coverage to include the insurance general account segments. More and more insurance companies are looking to outsource their investment needs to high-performing specialists like our affiliates. Finally, in everything we do, we remain focused on creating value for our shareholders. Our strong, recurring free cash flow from operations supplemented by prudent levels of leverage, provides financial flexibility to fund our growth initiatives and opportunistic share repurchases. And we have infused the organization with a rigorous expense discipline that is focused on real allocating resources to maximize growth. Thank you once again, and now let me turn the call over to Soren to discuss our results in greater detail.