AllianceBernstein Holding L.P. Units

The remarks will be a question and answer session, and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay on our website shortly after the conclusion of this call. And I would now like to turn the conference over to the host for this call, Head of Investor Relations for AB, Mr. Mark Griffin. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our first quarter 2024 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the investor relations section of our website, www.alliancebernstein.com. With us today to discuss the company's results for the quarter are Seth Bernstein, President and CEO, Jackie Marks, CFO, and Mark Gessner, Head of U.S. Retail. Owner Erzon, Head of Global Client Group and Private Wealth, will join us for questions after our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I'd like to point out the Safe Harbor language on slide two of our presentation. You can also find our Safe Harbor language in the MD&A of our 10-Q, which we filed yesterday. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. So please ask all such questions during this call. Now I'll turn the call over to Seth.

Good morning, and thank you for joining us today. In the first quarter, AB benefited from strong global equity market returns, complemented by robots, double-digit organic fixed income flows, and 8% annualized growth in alternatives to multi-assets, more than offsetting equity outflows. AB's balance and diversification across asset classes and geographies, coupled with broad global distribution capabilities, enabled us to continue to drive market share gains in key areas. Retail led the way, driven by municipal SMA and strong cross-border fixed income flows. On April 1st, we closed the Bernstein Research Joint Venture with Societe Generale, improving our future profit margin profile while using the proceeds of $304 million to pay down debt before quarter end, providing flexibility to invest in the future. Now, let's get into the specifics, starting with a firm-wide overview on slide four. First quarter gross sales were $32.6 billion, up $7 billion or 27% from the year-ago period. Firm-wide active net inflows were $3.7 billion or 2.3% organic growth. Quarter-end assets under management of $759 billion increased by 12% year-over-year and 5% from the end of the fourth quarter. And first quarter average assets under management were up 11% year-over-year and 8% sequentially. Slide 5 shows our quarterly flow trend by channel. Firm-wide, first quarter net inflows were $500 million. Strong retail gross sales of $23.8 billion increased 42% year-over-year and 13% sequentially, driven by both fixed income and equities. Net inflows were $4.2 billion, or 6% annualized organic, as we continued to gain share in fixed income, up 23% annualized organically. Our institutional channel had gross sales of $3.3 billion, up 12% from both prior periods. Net outflows of $4.2 billion included a $3 billion low-fee passive partial redemption. In private wealth, gross sales were strong at $5.5 billion, with net inflows of $500 million led by munis, our proprietary direct indexing fund, and ETFs. Investment performance is shown on slide six. starting with fixed income. Government bond returns ended the first quarter flat, while most credit risk assets outperformed in the quarter. Government bond returns reflected volatility associated with the magnitude and timing for when central banks would begin to cut rates, falling early in the quarter and subsequently rallying in mid-March when those views began to change. Meanwhile, corporate came to market with record new issuance and investors locked in higher yields. AB's fixed income performance remained strong, with 91% of assets outperforming over the one-year period and 71% over both three- and five-year periods. This performance translated to double-digit annualized organic growth across our fixed income asset base this quarter, including some standout performances in retail. Turning to equities. Global equity markets posted strong quarterly returns with the S&P 500 up 10.6%, reflecting a resilient U.S. economy, ongoing enthusiasm around artificial intelligence, and a widely held outlook for monetary easing, albeit at a slower pace than initially expected. We were encouraged by evidence of a more fundamentally driven environment, as exemplified by some dispersion in performance amidst the Magnificent Seven. Our investment performance showed steady improvement as several large AUM strategies outperformed benchmarks in the first quarter. Forty percent of equity assets outperformed over the one-year period, while 50 percent outperformed over both the three- and five-year periods. We continue to experience outflows in equities. Client rebalancing within their allocations, a shift to fixed income products given the higher rate environment, and specific strategies in which underperformance led to redemptions contributed to the negative flows in the quarter. That said, we received an upgrade from a global consultancy for U.S. sustainable thematic, an example that strong long-term performance is being recognized. We're seeing some signs of renewed in U.S. value. for which we have several competitive strategies, as exemplified by fundings of the $330 million SMIT cap value mandate during the quarter. Relative to peers, 54%, 71%, and 68% of our equity assets outperform the Morningstar peer group over the one, three, and five-year periods respectively. Now I'll review our client channels, beginning with retail on slide seven. Growth sales and net inflows Both reached the highest level in nine quarters, approaching record 2021 levels. The redemption rate improved sequentially to 27% from 30%, while ticking up slightly versus prior year. Net inflows of $4.2 billion reflected strong geographic breadth and demand for income from Asian investors, despite resurgent rates volatility in the quarter. In taxable fixed income, we grew organically at a 25% annualized rate with net inflows of $4 billion, marking the highest quarterly gains since 2019. Sustained inflows into American income and money markets were supplemented by client engagement in global high yield. Unis posted record net inflows of 2.3 billion, 28% annualized organic growth rate. Active equity outflows reflected improvement as redemption subsided while performance rebounded. U.S. large-cap growth posted net inflows in both Japan and the United States. You'll hear today from Mark Gessner, our head of U.S. retail, who will walk you through our remarkable progress and growth outlook in the U.S. retail channel. Turning to institutional on slide 8, first quarter gross sales were $3.3 billion, up 12% versus prior periods. Outflows of $4.2 billion were concentrated in equities, including a $3 billion low-fee passive equity partial redemption. Flows were bolstered by A.B. Carvalho, which saw a $780 million CLO and $315 million in residential mortgages, the latter funded by Equitable. Alternative multi-asset flows are now positive for 13 of the last 16 quarters. Representing 35% of our channel AUM, up from 21% three years ago, AltimultiAsset has grown at a 20% CAGR, lifting our channel fee rate by 13% over this period. The AV CarVal acquisition is reflected during this period. Our pipeline was $11.5 billion at quarter end, down $500 million sequentially. First quarter fundings included $330 million in U.S. SMID value and $135 million in U.S. low vol. Notable pipeline additions include $500 million for AB Private Credit Investors' new NAV lending strategy funded by Equitable, and $500 million for Systematic U.S. Investment Grade. Equitable's initial $10 billion private markets program is now over 95% deployed, and we expect it will be completed in the first half of this year. The second $10 billion is expected to commence thereafter and extend over the next few years. Moving to private wealth on slide 9. First quarter gross sales of $5.5 billion resulted in net inflows of $500 million. We posted strong sales in our proprietary direct indexing strategy, now $4.6 billion in AUM, municipals, and ETFs. Advisor productivity remains solid, and we continue to invest with FA headcount on track for mid-single-digit growth in 2024, including internal promotions. key part of our strategy. We have a diverse slate of private alternatives launches slated to ramp beginning in the second quarter, including our Evergreen strategies, two AB Carvel strategies, and select external partners. I'll finish with our business overview with the sell side on slide 10. With the close of the joint venture on April 1, this is the last time we'll be reporting separately on Bernstein Research. First quarter Bernstein research revenues of 96 million were down 4% over both prior periods. We saw modest improvement in Asia, though global trading activity remained subdued. The close of the joint venture was bittersweet, the culmination of a great deal of time and effort extended by our many talented colleagues. We're proud of Bernstein's high-quality global research effort built over the years, and we are excited for Bernstein's future under Societe Generale's majority ownership with the opportunity to leverage StockGen's experience in equity capital markets, derivatives, and prime brokerage. Jackie will walk through the specifics on modeling for the financial impact shortly, which is summarized on the accompanying slide. I'll conclude by reviewing the status of our strategic initiatives on slide 11. Performance of fixed income was strong for all periods while equities improved steadily, though much progress remains. We grew organically, driven by 2% active organic growth, led by retail, which posted outstanding 25% plus annualized growth in both taxable and municipal fixed income. We continue to grow through differentiated product, including our ETFs, now up to $2.6 billion in AUM, private markets at $63 billion, up 9% year-over-year, and tax-efficient offerings, including municipals. First quarter adjusted operating income rose 12% year over year. Operating margin exceeded 30%, up 160 basis points. And earnings and unit holder distributions of 73 cents per unit were up 11%. Now I'm pleased to turn the call over to Mark Gessner to discuss the growth in our U.S. retail platform. Mark?