Affiliated Managers Group, Inc.

Greetings and welcome to the AMG fourth quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Anjali Agarwal, head of investor relations for AMG. Thank you. You may begin.

Good morning. And thank you for joining us today to discuss AMG's results for the fourth quarter and full year 2021. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially, and AMG assumes no obligation to update these statements. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and a reconciliation of any non-GAAP financial measures including any earnings guidance announced on this call. In addition, we posted an updated investor presentation to our website this morning and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgan, President and Chief Executive Officer, and Tom Wojcik, Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Anjali. And good morning, everyone. AMG achieved outstanding results in 2021 through the strong execution of our growth strategy, the excellent performance of our affiliates, and increasing momentum across our business. AMG generated over $1 billion of EBITDA, up 33% year-over-year, and record economic earnings per share of 1828, representing annual growth of 37%. Our demonstrated commitment to investing for growth across both existing and new affiliates while simultaneously returning capital to shareholders has resulted in significant business momentum and compounded earnings growth, which continues in 2022. Stepping back, over the last few years, we have renewed our focus on AMG's foundational values of entrepreneurial spirit, ownership mindset, and discipline execution, which has resulted in reinvigorating our new investment strategy, enhancing our strategic engagement with affiliates, and realigning our resources with our most significant growth opportunities. Through these initiatives, we have meaningfully increased our long-term earnings power, and more importantly, are reshaping our business in favor of fast-growing areas, including private markets, liquid alternatives, Asia, wealth management, and ESG, all of which are well positioned to deliver strong growth over time. More broadly, we believe that the investment environment has fundamentally changed. Following a decade of globally coordinated monetary policy, ultra-low rates, and highly correlated returns across asset classes, a new paradigm is forming. Looking ahead, Given the combination of elevated inflation, rising interest rates, and an increasing focus on climate change and sustainability, taking an active approach to investing is critical to achieving clients' goals and objectives. AMG's affiliates are industry-leading active managers with proven track records of delivering excellent risk-adjusted returns for clients across market cycles and are well-positioned for this evolving environment. In parallel with the fundamental shift in the investment environment, clients are changing the way they manage their exposures as well. And all of these developing trends will continue to shape our strategy and the way that we and our affiliates engage with clients. Among the trends that are influencing both our capital allocation decisions and our financial results are the ongoing demand for private markets, the diversifying power of uncorrelated liquid alternatives, and an increasing appetite for sustainable investing. Today, AMG is structurally well positioned in these areas. Within private markets, our affiliates manage $120 billion in asset center management across roughly 30 global and regional private equity, credit, direct lending, real estate, infrastructure, and private market solution strategies, offering investors diversification, income, and inflation protection across market cycles. We have established three new partnerships in this segment over the last 24 months in Comvest, OCP Asia, and Abacus, and have invested in distribution and product development at Pantheon, PFM, and Bering Asia to continue to address growing demand for both institutional and wealth investors globally. And now that we have completed the repositioning of our U.S. wealth platform, we are investing in private markets, resources, and product development to accelerate our affiliates' growth in this attractive client segment. Collectively, our affiliates have raised nearly $25 billion in the private markets over the course of 2021, generating organic growth north of 20%, and each have significant dry powder to capitalize on market opportunities ahead. The changing environment is also creating greater opportunities for liquid alternatives. As correlations fall across markets and the demand for these unique return streams has rapidly improved. Our liquid alternative affiliates had an excellent year in 2021, generating significant returns and performance fees while navigating volatility and protecting capital. Strong flow trends continue for Capula and Garda and each is focused on product innovation. And we begin 2022 with an incremental investment in Systematica, one of the industry's leading technology-driven alternative managers. Through Leda Braga's outstanding leadership, Systematica has grown and diversified substantially since AMG's initial investment in 2016 and is well-positioned to benefit from increasing client demand for absolute return streams, and portfolio diversification. A consistent theme across our client conversations today is the desire for an increasing focus on sustainable investing and active stewardship. As I've said before, sustainable investing requires an active approach, and our affiliates are benefiting as clients increasingly engage high-quality active managers to generate positive impact in communities worldwide. Dedicated ESG strategies across our affiliates now account for over $90 billion of our asset center management, a segment that is growing organically at a double-digit rate. Two ESG pioneers, Parnassus and Boston Common, joined as new affiliates in 2021, each with a multi-decade and differentiated track record of sustainable investing. In addition, we are collaborating with a number of our affiliates to broaden their capabilities in this area. Recently, we assisted Artemis in launching a new ESG strategy, while also adding new ESG products to our U.S. wealth platform. As client demand for ESG investing continues to accelerate, our affiliates' authentic approach will be an ongoing area of differentiation for AMG. Our strategic focus on the fast-growing areas of private markets, liquid alternatives, and ESG strategies, along with our Asia focus in wealth management businesses, have collectively become a more significant contributor to our overall growth profile. Our affiliates in these areas generate approximately $35 billion in net client flows, which accelerate in the second half of the year, and we will continue to invest in these attractive areas. As I said earlier, we are focused on long-term sustainable growth, and the strategic decisions we are making today with our capital and resources are aligned with the growth opportunities we see over the next decade. AMG's business model is uniquely advantaged in this respect. We have the ability to shape and scale our earnings power through new investments, the magnitude of which is evident across our recent transactions. In 2021, we partnered with four new affiliates operating in fast-growing areas. And so far in 2022, we've made a significant incremental investment in Systematica, which together will contribute approximately $120 million in annual EBITDA going forward. AMG has been one of the most active investors and independent asset managers over the past 24 months. Our partnership approach is resonating with the highest quality partner-owned investment firms. And looking ahead, we are confident in our ability to execute on our new investment opportunity set given the favorable transaction environment, AMG's strong competitive position, and increasing demand for our unique partnership solutions. As we continue to invest in high-quality new affiliates and in growth opportunities at existing affiliates, using a disciplined capital allocation framework, we are able to meaningfully enhance our growth profile over time. Given our ability to invest for growth and evolve the shape of our business together with share repurchases, the long-term opportunity to compound earnings growth is clear, and we are uniquely positioned to deliver significant shareholder value over time. And with that, I'll turn it over to Tom to review the details of the quarter.