AllianceBernstein Holding L.P. Units

Thank you for standing by, and welcome to the Alliance Bernstein Third Quarter 2025 Earnings Review. At this time, all participants are in a listen-only mode. After the remarks, there 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 call is being recorded and will be available for replay on our website shortly after the conclusion of this call. I would now like to turn the conference over to the host for this call, Head of Investor Relations for AB, Mr. Yadis Yirgali. Please go ahead.

Good morning, everyone, and welcome to our third quarter 2025 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, and Tom Simeone, CFO. Honor Erzon, head of Global Client Group and Private Wealth, will join us for questions after our prepared remarks. Some of the information we will present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure, so I would 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 this morning. We base our distribution to unit holders on our adjusted results, which we provide in addition to and not as a substitute for our GAP results. Our standard GAP reporting and a reconciliation of GAP to adjusted results are in our presentation appendix, press release, and our 10-Q. 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 it over to Seth.

Good morning, and thank you for joining us today. I am delighted to update you on our progress against our goals for Alliance Bernstein. Harnessing our diversified investment expertise and deep distribution capabilities, we remain steadfast in our commitment to providing better outcomes for our clients. On slide three, I will review the key business highlights of the third quarter. First, firm-wide assets under management have reached a new milestone, sitting at $860 billion as of quarter end. Bernstein Private Wealth has reached a record high of $153 billion, bolstering relationships within the ultra-high net worth client segment, including wealth creators, family offices, global families, and business owners. Our institutional asset management business, with $351 billion in AUM, caters to long-duration capital pools encompassing private markets, insurance general account assets, and customized retirement plans. Our $356 billion retail platform serves robust markets like Asia Pacific and U.S. high net worth, offering secularly growing solutions such as SMAs, active ETFs, and model portfolios spanning a diverse asset allocation. Through scale, improved operating leverage, and a sustainable fee structure, we are driving consistent growth in revenues, earnings, and margins, capturing profitable growth aligned with market dynamics. Second, flow dynamics improved in the third quarter, excluding $4 billion of outflows related to the previously announced equitable RGA reinsurance deal. Our firm-wide net flows were $1.7 billion positive. Demand was led by two secularly growing asset classes and consistent organic growth engines for AB, tax-exempt fixed income and private alternatives. In the third quarter, we had over 4 billion tax-exempt inflows, extending our streak of positive organic growth to 11 consecutive quarters. This quarter saw accelerated inflows from both retail and private wealth. AB is the number one retail muni SMA manager. We grew our tax-exempt platform to more than $50 billion of AUM despite a very turbulent macro backdrop from unique bonds. Private markets generated nearly $3 billion of net inflows, reflecting an improved backdrop for commercial real estate coupled with strong origination for investment-grade corporate and ABS private placements. While active equities shed over $6 billion, driven by growth-oriented redemptions, we're seeing inflows in structured and defensive strategies such as our global structured equities, strategic core, and U.S. select. Additionally, thematic investments such as security of the future and our disruptors ETF, ticker FWD, continue to attract strong inflows and deliver relative outperformance. Net taxable outflows of approximately $4 billion were largely episodic. Excluding the impact from the reinsurance transaction, firm-wide taxable flows were flat, reflecting improved retail and private wealth dynamics where we observed modest inflows. Thirdly, we continue to enhance our third-party insurance asset management business, drawing on our extensive 40-plus years of experience in managing insurance assets. We're excited to announce our new partnership with Fortitude in strategic investment in FCA RE. This represents another major milestone in our ongoing efforts to expand our leadership in global insurance asset management. Leveraging our prominent competitive position in the Asia Pacific market, we're gaining further traction as a partner of choice for insurers in the region. Looking ahead, we're eager to expand our collaboration with Fortitude through this partnership. Year-to-date, we've successfully onboarded seven new insurance GA relationships spanning across eight strategies. These partnerships necessitate a high-touch client service approach that goes beyond traditional asset management. We've dedicated substantial operational resources and institutional expertise to provide a comprehensive client experience that is scalable, unlocking additional revenue streams beyond management fees. Our strategic alliance with Equitable gives us a competitive advantage, reinforcing our client-centric asset-light approach. By leveraging the permanent capital commitment from Equitable, we can seed and scale our higher-fee, longer-dated private alternative strategies. To date, we've deployed approximately $17 billion of the $20 billion capital commitment made by Equitable to our AB private market strategies. We see further opportunity to increase this allocation over time as Equitable continues to grow its general account assets. Skipping to slide five, I'll review our investment performance, starting with fixed income. In the U.S., a weakening labor market and better than feared inflation readings raised the possibility of rate cuts, pushing yields lower. Conversely, European and Japanese sovereign yields increased due to concerns over government stability increased fiscal spending, and the conclusion of the European Central Bank's rate-cutting cycle. Credit markets performed well, with investment-grade corporate spreads tightening and risk-on sentiment for high-yield bonds. The Bloomberg U.S. Aggregate Bond Index returned 2 percent, while the Hedge Global High Yield Index returned 2.7 percent in the third quarter. Our one-year performance faced challenges due to selection in emerging markets' high-yield corporates and yield curve positioning, which detracted from our returns as longer yields fluctuated, ultimately ending lower. Thirty percent of our fixed-income assets outperformed over the one-year period. Despite rates volatility, active management of duration and credit exposure has generated strong long-term returns, with 86 percent and 70 percent of AUM outperforming over the three- and five-year periods, respectively. Our flagship income strategies, American income and global high yield, delivered high single-digit and low double-digit returns over the three-year period, both outperforming the morning strike categories for that period. Notably, we observed a rebound in client flows into American income, reflecting resurgent interest in duration extension and U.S. dollar-denominated assets. highlighting the enduring appeal of U.S. assets supported by attractive rate differentials and deep capital markets. Looking ahead, we maintain a positive outlook on fixed income, and we stand ready to capture the next reallocation wave. As bonds regain their diversification value, credit fundamentals remain robust and monetary policy clarity increases. Turning to equities, U.S. equity markets delivered strong returns in the third quarter of 2025, benefiting from the resilient consumer spending, benign inflation readings, and strong GDP and corporate earnings growth. The S&P 500 returned 8.1% during the quarter, reaching record highs. Small cap stocks outperformed large caps, driving a 12.4% return for the Russell 2000 in Q3. Global developed equities posted positive returns, although they underperformed the U.S., while emerging markets outperformed. Signs of improving market breadth are encouraging, but it's important to note that the recent rally was primarily driven by lower quality, unprofitable, high momentum, and heavily shorted names. Given our limited exposure to these equity baskets, our relative performance was affected, with 22 percent of assets outperforming over the one year, 41 percent over the three year, and 53 percent of our equity AUM outperforming over the five year. Despite these dynamics weighing on the relative performance across the active industry, our client discussions regarding our decisions to underweight in these riskier names have been positive. Our investment philosophy centered around an active approach to quality investing continues to resonate with those seeking such strategies. Finally, I want to highlight the growing interest in international equities, where we have a diverse selection of active equity strategies with strong breadth and high-quality product offerings. balanced across geographies. These include our international strategic equities, international small cap, international value, emerging markets strategic core, China, and emerging markets value. Next, I'll briefly cover channel highlights before doing a deeper dive into our retirement and private alternatives capabilities. Turning to slide six with our retail highlights. Despite facing channel outflows for the second consecutive quarter, we observed a notable uptick in momentum, driven primarily by active fixed income. Sentiment around taxable fixed income has improved as rates volatility stabilized. Taxable net flows rebounded slightly in the third quarter, driven by our fixed income ETF platform in the U.S. and improving demand for our American income product in Asia. Furthermore, our tax exempt retail inflows re-accelerated, growing organically at an impressive 26% annualized rate. We think the bond reallocation theme has more runway, and we stand ready to assist our clients in capturing the enduring value proposition of fixed income as we effectively demonstrated in 2024. Moving on to slide seven to cover our institutional channel. Our private alternative services are experiencing significant inflows with a range of existing, adjacent, and new strategies in illiquid credit, attracting substantial investments from equitable and third-party institutions. Our pipeline AUM currently sits at around $12 billion, showcasing notable fundings in both liquid and illiquid credit, as well as active and passive equities. We anticipate an additional $1.5 billion in private markets AUM in the upcoming quarters a figure not yet accounted for in our pipeline. Next, I'll move to slide eight to cover private wealth. Through a blend of flexibility, insight, and personal attention, Bernstein Private Wealth continues to gain market share in the ultra-high net worth channel. Our private wealth channel delivered strong sales and the highest inflows in 10 quarters, reflecting strong advisor productivity and cross-asset client allocations. Bernstein Private Wealth represents 18 percent of our firm-wide assets, with average client tenures more than 10 years, generating approximately 36 percent of our firm-wide revenues. Moving to slide nine, I'd like to talk about how AB is helping clients navigate one of their most important financial objectives, retiring with confidence. The retirement landscape has evolved a lot over the years. There are fewer younger workers to care for our aging populations, And with longer lifespans, the savings challenge is even greater. The shift from defined benefit to defined contribution plans is reshaping the way people prepare for their golden years. More than ever, the burden is on individuals to save on their own and choose their own investments. Getting it wrong could leave them without the reliable income stream and retirement less that EB plans once provided. Innovation has played a pivotal role in addressing the evolving trends and challenges in retirement planning. Target date funds became very popular after the passage of the Pension Protection Act of 2006. It was a meaningful step in improving retirement outcomes, and it relieved individuals from the burden of having to make complex asset allocation decisions that they weren't trained to do. But markets have become increasingly complex, and we need to continue to innovate by customizing target date funds at the plan and participant level and incorporating a broader set of asset classes, including private assets and insurance solutions that provide guaranteed lifetime income. AB's custom target date business was launched in 2006. Today, about two decades later, it stands at approximately $105 billion in assets under management across 27 global clients mostly concentrated in the U.S., but also of a meaningful business in the U.K., where we've been an industry leader for well over 10 years. We've seen more custom target date searches this year, and we're pleased to have been selected recently to design and manage a custom target date solution for a large U.S. insurance company's D.C. plan. It's the second mandate we've won this year. Combined, they total nearly $4 billion, and both will be implemented in the first half of 2026. Additionally, we were selected earlier this year to run a custom and retirement solution for one of the largest DC master trusts in the UK, which is expected to grow to significant scale over time. In collaboration with Equitable, we were first movers in the in-plan lifetime income market. Our industry-leading lifetime income strategy, also known as LIS, manages $13.5 billion of total assets, and $5 billion of that is guaranteed by five insurance companies. LIS gives DC plan participants a personalized target date portfolio with a flexible guaranteed income option, addressing both their accumulation and deaccumulation needs. When we first launched LIS in 2012, we designed it to comply with QDIA regulations so that it could be a true default option for DC plans. Our team's foresight proved invaluable. On September 23rd, an advisory opinion from the U.S. Department of Labor affirmed that DC plan sponsors can benefit from ERISA's fiduciary safe harbor when they select AB's LIS program. This endorsement validates our approach and offers further reassurance to plan sponsors. The guidance significantly reduces regulatory uncertainty and shields our plan sponsor clients from potential litigation risks. That empowers them to focus on what really matters, solving for the best outcome for their participants. In fact, participants in our multi-insurer secured income portfolio have both guaranteed income for life and net-a-fee returns that have exceeded the typical target date fund benchmark since inception. Our design allows us to take on higher equity exposure and has delivered returns that have offset the cost of the insurance. We continue to expand our lifetime income platform to provide choice-to-plan sponsors. This includes the option to add lifetime income without changing their current target date provider and a new fixed annuity version of the SAB secured income portfolio. Combining the recent DOL advisory opinion with our 13-year track record, expanded lifetime income solutions platform, and ongoing integrations of additional record keepers, we are well positioned to benefit as interest in these solutions continues to grow. Expanding access to private assets in DC plans is another area where AV's innovation has already been addressing the need for more diversification and new return sources. We believe that incorporating private assets and target date funds can help deliver long-term results while also minimizing downside risks for participants. We've been doing this for a decade now in both the U.S. and the U.K. We've embedded private assets into glide paths for many of our clients. This includes both corporate and public plans and spans private market segments such as private equity, private credit, and private real estate. Finally, I'd like to close with slide 10, which highlights our private market capabilities and our strong growth in this platform. Over the past decades, we've successfully expanded our private markets platform to nearly $80 billion in fee-paying and fee-eligible assets under management, representing a 17% year-over-year growth. We focus on credit-oriented strategies, offering diverse capabilities tailored to various risk, return, and portfolio objectives. AB Private Credit Investors, or ABPCI, our $22 billion middle market direct lending platform, has a 17-year track record investing in directly originated, privately negotiated loans to core middle market companies, offering a variety of solutions to institutional, insurance, and individual investor clients. AB Carvel, our $20 billion global asset-based credit platform, has a 38-year track record specializing in consumer, real estate, aviation, and energy transition opportunities, investing across drawdown, evergreen, and interval funds, and across the capital structure from investment grade, private credit, through opportunistic investing. U.S. and European commercial real estate lending. Our $12 billion commercial real estate lending platform invests across property type and business plan in the U.S. and Europe, spending multiple risk return profiles with fund, lead, and SMA offerings. Corporate and structured private placements. Our $18 billion platform offers a differentiated relative value orientation to complement investment grade portfolios. In addition to continued organic growth in this business, the private credit markets continue to scale and diversify. We're actively exploring strategic partnerships and lift-outs to further expand our capabilities. For instance, our structured private placement team we onboarded approximately one year ago and already manages more than $2 billion in AUM. More recently, we added a correspondent residential mortgage team to expand the origination capabilities of our existing residential mortgage platform. Our relationship with equitable provides us with significant competitive advantage as we expand our private markets businesses. We continue to scale existing and develop new solutions in partnership with Equitable, leveraging our existing investment teams such as residential mortgages, NAV lending, and private investment-grade asset-backed finance. These solutions are also corridor offering to other insurance and institutional clients, helping drive diversified growth in our private markets franchise. Our ability to provide borrowers with a range of solutions across the cost-to-capital spectrum and match those investment opportunities to the various risk-reward profiles of our diversified client base is a competitive advantage. With strong momentum in the business, we're confident that we'll achieve our target of 90 to 100 billion of assets under management by 2027. Now I'll pass it to Tom to cover our financial results.