AllianceBernstein Holding L.P. Units

Thank you for standing by and welcome to the Alliance Bernstein fourth 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 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. Yanis Jorgali. Please go ahead.

Good morning, everyone, and welcome to our fourth quarter 2025 earnings review. Today's conference call is being webcast and is accompanied by a slide presentation available in the investor relations section of our website at www.alliancebernstein.com. Joining us today to discuss the company's quarterly results are Seth Bernstein, our Chief Executive Officer, and Tom Simeone, our Chief Financial Officer. Onur Erzan, our president, will join us for the question and answer session following 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 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-K, which will be filed next week. 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 reconciliation of GAP to adjusted results are in our presentation, appendix, press release, and our 10-K. 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. 2025 was a year of disciplined execution and strategic progress for Alliance Bernstein. I'm very proud of the strides we've made as a firm, and I'm deeply grateful to my colleagues for their dedication and impact. One individual who has played a pivotal role in our transformation is our newly appointed president, Onur Erzan. With a proven leadership track record spanning our client group, private wealth, and more recently, our private markets businesses, Owner has consistently demonstrated strategic vision, a tireless work ethic, and a deep commitment to our clients, our people, and our unit holders. As CEO, I will continue to set the firm's strategic direction and guide our leadership team. I look forward to partnering with Owner, who will lead the transformation of our business, execute our strategic priorities, and drive profitable growth, working closely with Equitable to deliver innovative client-focused solutions. Now, let's dive into our key business highlights in the quarter and the year on slide three. First, our assets under management reached a record $867 billion at year-end 2025. reflecting market appreciation, strong sales, and organic growth across ultra-high net worth, insurance general accounts, tax-exempt SMAs, and private markets. A notable positive is our Bernstein Private Wealth business, which has $156 billion in assets under management and contributed roughly 37% of our firm-wide revenues in 2025. In addition, our private markets platform closed the year with $82 billion in AUM, up 18% year-over-year, driven by approximately $9 billion of deployments across all channels in 2025. Finally, our SMA franchise reached $62 billion of AUM and grew 12% organically in 2025, led by our market-leading muni capabilities. Our active ETF suite expanded to $14 billion across 24 strategies, delivering 65% organic growth in 2025, excluding conversions. While we've seen strong inflows into targeted growth areas, firm-wide active net flows were negative for both the quarter and the full year. We had $9.4 billion of total net active outflows in 2025, including $3.8 billion outflows in the fourth quarter. Firm-wide active equity redemptions persisted as performance headwinds lingered, with $7.6 billion outflows in the fourth quarter and $22.5 billion throughout the year. Roughly half of these were driven by retail redemptions. Taxable fixed income saw $2 billion in outflows in the fourth quarter and $9.1 billion for the years as overseas retail demand declined amid geopolitical uncertainty and a weaker dollar. Institutionally, we had roughly $4 billion of taxable outflows related to Equitables reinsurance transaction with RGA. On the other hand, our tax-exempt franchise continues to deliver durable organic growth. with $3.9 billion in inflows in the fourth quarter and $11.6 billion for the year. The platform has generated organic growth for 13 consecutive years and long-term alpha for our clients. Alternatives and multi-asset strategies also remain the bright spot, posting $1.9 billion active net inflows in the fourth quarter and $10.6 billion for the full year, supported by strong private markets deployments. Third, our scalable model and disciplined expense management continue to drive profitable growth. Our adjusted operating margin expanded to 33.7% for the year at the upper end of our 30 to 35% investor day target range. With a streamlined expense base and robust operating leverage, we are delivering strong flow through to earnings. Fourth, we've accelerated our collaboration with Equitable as we continue to expand our private markets capabilities and amplify the flywheel effect of this partnership. I'm pleased to share that we're making investments to enhance our commercial real estate lending capabilities and expand the scale of our platform. As a result, we'll onboard more than $10 billion of new long-duration assets from Equitable by year-end 2026. This represents a meaningful expansion of our origination and services and capabilities in commercial mortgages. Beyond the financially accretive nature of this commitment, it underscores the broader strategic value of our partnership with Equipol. It's a clear example of how our alignment continues to unlock incremental growth, well beyond the $10 billion plus of additional committed assets. Leveraging our expertise in commercial real estate lending, the adjacent capabilities will build upon our existing footprint in core and core plus real estate credit and bring insurance-tailored assets to over $20 billion. This enhances our scale and enables us to compete more effectively in the strategically important insurance channel. As of year end, we managed over $59 billion on behalf of more than 90 third-party insurance clients, with general account assets growing 36% year over year. We see strong momentum in this business and expect to add $3 billion of new private asset mandates from strategic insurance partnerships in the first half of 2026. Slide four provides a summary page with our key financial metrics. Tom will follow up with more commentary on our results. Turning to slide five, I'll review our investment performance starting with fixed income. Fixed income markets delivered broad-based gains in the fourth quarter of 2025, despite softer labor market trends and limited macroeconomic data due to the government shutdown. Short-term rates declined following the Fed's rates cuts, while long-end yields remained elevated, steepening the yield curve. The U.S. 10-year Treasury ended the year near 4.2%, reflecting persistent long-term inflation and fiscal concerns. The Bloomberg U.S. Aggregate Index returned 1.1% in the fourth quarter and 7.3% in 2025, while Bloomberg's Global High Yield Index returned 2.4% in the fourth quarter and 10% in 2025. Overall, our one-year relative performance improved versus the prior quarter, supported by our higher quality exposure and global high yield, our longer-duration positioning in American income, and continued outperformance across our municipal strategies. where nearly all our funds are rated four or five stars by Morningstar. 86% of our AUM outperformed over the one- and three-year periods, while 67% of our AUM outperformed over the five-year periods. Demand for intermediate duration has strengthened, and fixed-income volatility has declined meaningfully, reducing two key headwinds to performance and enhancing the diversification value of the asset class. As the curve steepens, investors are rotating out of cash floating rate, and short-duration instruments into intermediate-duration products to capture higher yields. U.S. retail taxable flows continue to show encouraging momentum, with two consecutive years of organic growth and increasing adoption of our active ETF suite. In 2025, we ranked among the top 15 fund managers in taxable flows in the United States, a meaningful step forward in the market where we've historically been underpenetrated. Municipals remain well positioned for continued inflows, supported by attractive tax-efficient returns and continued share gains of our market-leading SMA platform. Our systematic strategies are gaining traction in the investment-grade bond market, with strong institutional demand and consultant support in 2025, underpinned by our consistent track record of outperformance. Turning to equities, the S&P 500 returned 2.7% in the fourth quarter, closing year record highs and delivering a roughly 18% total return for 2025. This marks the index's third consecutive year of double-digit gains. For the first time in several years, international equities outperformed the U.S., supported by a weaker U.S. dollar, more compelling relative valuations, and a rotation away from U.S. mega-cap technology leadership. Our equity performance softened in 2025 with relative returns declining across the one, three, and five-year periods. This was primarily driven by sustained underperformance in our largest U.S. equity franchises, particularly growth, defensive, and sustainable strategies amid a market environment dominated by speculative momentum-driven names and narrow leadership. Twenty-one percent of our AUM outperformed over one year, 37% over three years, and 51% over five years, with the most pronounced performance pressure in U.S. large-cap growth-oriented services where benchmark concentrations remain acute. Outside of these areas, many value core and thematic strategies delivered strong absolute and relative results. Portfolios with exposure to cyclical sectors such as industrials and financials benefited from improving earnings breadth, especially in non-U.S. markets. Emerging markets, China, and international value and core strategies were notable standouts. The highly concentrated nature of U.S. equity market leadership and stretched valuations created a challenging backdrop for active managers. In response, we're sharpening execution against our investment philosophies, leveraging decision analytics to identify areas for improvement, implement targeted changes, and measure outcomes with greater discipline. Our equity platform is intentionally diversified across styles and regions, avoiding overexposure to any single market regime. Thematic and cyclically-oriented value strategies provide balance and upside participation in risk-on environments, complementing more defensively positioned portfolios. As market breadth began to improve entering 2026, platform performance has started to rebound. A growing share of growth, value, core, and thematic strategies are now delivering stronger relative results, while defensive strategies have lagged in a more risk-supportive condition. Looking ahead, we believe that continued earnings breadth and stable economic growth could favor international and value strategies. Additionally, portfolios with lower tracking error may offer clients more consistent participation in narrow leadership environments. helping to diversify performance streams and reduce reliance on a concentrated set of products. Turning to slide six, I'll discuss our retail highlights. Retail flows softened in 2025, ending a two-year streak of organic gains. The channel saw $3.5 billion in net outflows in the fourth quarter and $9.1 billion for the full year, driven by active equity redemptions and softness in taxable fixed incomes. partially offset by continuing strength in municipals. Active equities experienced outflows throughout the quarter and the year, primarily led by U.S. growth-oriented services. Fixed income allocations favored tax-exempt strategies, while taxable flows reversed to modest outflows, driven primarily by APAC, as the U.S. dollar weakened. Our retail muni platform delivered 23% organic growth in 2025, surpassing $56 billion in third-party retail AUM across SMAs, ETFs, and mutual funds. Despite overseas headwinds, U.S. retail momentum remained durable. Taxable fixed income posted a second consecutive year of organic growth, supported by expanding adoption of our ETF suite alongside continued market share gains and tax exempt, extending a 13-year history of organic growth. In effect, we believe the bond reallocation trend has significant runway, and we're well positioned to help clients capture fixed incomes enduring value, just as we've consistently demonstrated in the early waves in 2024. Moving to slide seven, I'll cover our institutional channel. Institutional outflows moderated year over year, narrowing to $1.9 billion in the fourth quarter and $4.6 billion in 2025. Private alternatives remain the key growth engine, supported by strong inflows across existing, adjacent, and newly launched strategies. Channel deployments into private markets totaled approximately $2 billion in the fourth quarter and nearly $8 billion for the year. Taxable fixed income outflows were modest in the fourth quarter, while outflows for the year were largely driven by equitable RGA's reinsurance transaction, offsetting inflows into our growing systematic platforms. Active equities experienced roughly $2 billion in outflows in the fourth quarter and $7 billion for the year, primarily from our concentrated growth and global core strategies. Our institutional pipeline expanded to nearly $20 billion, bolstered by the addition of more than the above-mentioned $10 billion in commercial mortgage loans. As previously noted, we expect to add approximately $3 billion of mandates from strategic insurance partnerships over the coming quarters. Next on slide eight, I will cover private wealth. Bernstein Private Wealth delivered its second consecutive quarter of organic growth and fifth straight year of positive net flows supported by record-level advisory productivity. Net new client assets grew 7% in the fourth quarter and 6% for the full year 2025, with annual organic growth of nearly 2% for both periods. Growth was broad-based across asset classes, driven by client reallocations into fixed incomes, rising adoption of alternatives, and sustained demand for tax-efficient index equity solutions. As noted earlier, private wealth represents approximately 18% of firm-wide average AUM but contributes roughly 37% of total revenues, reflecting its attractive fee profile and highly engaged client base. Importantly, these revenues are sourced directly, underscoring the strength of our differentiated farm-to-table model. I'll close with slides 9 and 10, which highlight both the momentum of our private markets platform and the strategic value of our partnership with Equitable. Over the past decade, we've scaled our private markets platform to $82 billion in fee-paying and fee-eligible AUM, delivering 18% year-over-year growth. Anchored in credit-oriented strategies, including direct lending, alternative credit, commercial real estate debt, and private placements, Our platform serves a broad and growing base of retail, institutional, and insurance clients across a wide range of risk return objectives. Equitable's $20 billion permanent capital commitment, now largely deployed, has accelerated our expansion in private markets and strengthened our ability to seed higher fee, longer duration strategies. Our collaboration continues to evolve beyond periodic commitment cycles with the expansion of the commercial mortgage capabilities representing the latest in a series of successful initiatives spanning residential mortgages, structured private placements, and private credit. We view our strategic partnership with Equitable as a meaningful competitive advantage, reinforcing AB's capital-like client-aligned model and enabling efficient and disciplined scaling of new offerings. With our proven track record and focused strategy, we're well-positioned to transform the business, unlock new opportunities for our clients, and exceed our $90 billion to $100 billion target for private markets, AUM, by 2027. With that, I'll hand it over to Tom to review our financial results. Tom?