Affiliated Managers Group, Inc.

Greetings and welcome to the AMG first quarter 2022 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, Anjali Agrawal, 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 first quarter of 2022. 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. Good morning, everyone. AMG achieved strong results in the first quarter of 2022, with economic earnings per share of $4.65, up 9% year-over-year, driven by growth in management fee earnings and continued capital deployment. During the quarter, we announced two meaningful strategic transactions involving Systematica and Bering Asia that further demonstrate the successful execution of our strategy and our ability to create shareholder value. The full impact of these transactions will be reflected in our results later this year and into 2023 as we generate earnings growth from Systematica and redeploy capital from Bearing. AMG's business is enhanced by these two transactions, and the consistent and disciplined execution of our strategy over time has resulted in our strong position today. Our business is diversified. and we have structural advantages inherent in our partnership model. Our high-quality affiliates are generating strong performance across a wide array of in-demand areas, and we have a strong balance sheet enhanced by a recurring cash flow and significant incremental capital to invest. Towards the end of last year, we saw a fundamental shift in the market environment for asset management. And over the past four months, that shift has become even more evident. Looking forward, we expect the ongoing rotation within our industry to continue, presenting new opportunities for the highest quality, active managers to deliver value for clients. Given the combination of geopolitical tensions, elevated inflation, rising rates, and an increasing focus on ESG, taking an active approach to investing is critical. to achieving clients' goals and objectives. Certain managers whose strategies resonated in recent years will need to adapt, while others that have adhered to their long-held investment beliefs, like many of our affiliates managing value, relative value, macro, and trend-falling strategies, are seeing a pronounced resurgence in performance, and these strategies are demonstrating their importance in client portfolios. While it's still early in this transition to the new environment, we have seen several themes emerge at our affiliates. First, after a decade of underperformance, the comeback in value is benefiting numerous affiliates, including Yachman, EIG, River Road, AQR, and Tweedy Brown, given their excellent long-term track records and reputation as well-known value investors. Similarly, affiliates with relative value alternative strategies have generated strong positive returns this year, as they have over the past several years, in particular at affiliates such as Capula and Garda. In addition, macro and trend-following strategies have generated exceptional performance since the beginning of 2021, resulting in improving performance, fees, and flows for AQR and Winton, And we continue to see inflows at Systematica given industry leading performance over the past three years. Finally, while ESG strategies are being tested in the current environment, we view this as an opportunity for the longest tenured, most authentic managers to separate from the pack and gain share, including Boston Common and Parnassus, where client demand remains strong. In addition, Over the past three years, we have meaningfully increased our exposure to areas of secular growth. In 2021, we added four new affiliates operating in real estate, private credit, ESG, and Asia. In 2022, we have further enhanced our business position with our increased ownership in Systematica, an innovative technology-driven firm focused on systematic investing. The firm is led by Leda Braga, one of the best-known thought leaders in quantitative investing, and she has built a franchise that continues to deliver outstanding performance. Also in the first quarter, we announced a significant event for AMG shareholders in the merger of Bearing with EQT. Given our alignment with the management partners of Bearing and the strategic position of the combined entity, we believe the merger will be a win-win for all stakeholders. AMG shareholders will benefit from the considerable capital from this transaction, as we will re-deploy approximately $1 billion for the benefit of our shareholders. We are very pleased that AMG's alignment and engagement with Behring enhanced the team's ability to achieve their long-term strategic goals and that our partnership will culminate in an excellent outcome. While this transaction may seem unique in the context of our history, it is very much in line with our strategy. When an affiliate chooses to partner with AMG, the management principles select the partnership model that aligns with their long-term strategic direction of their business, and we are aligned with the future choices they make. Through bespoke partnerships, we are able to address a broad set of objectives for independent firms and enhance affiliates' long-term success. In the case of Behring, A strategic transaction was one potential outcome, and given our strong alignment, this transaction provided an opportunity for AMG shareholders to realize significant value. AMG's alignment with our affiliate partners is differentiated in our industry. Our affiliates' goals are our goals, and our purpose is to act as a catalyst for affiliates to enhance their long-term business success and as a magnifier of their growth ambitions. We enter into every affiliate partnership with a permanent approach and ready to invest alongside affiliates as they execute on their opportunity sets and strategic growth objectives. High quality independent businesses are attracted to AMG's uniquely broad array of partnership solutions to address various stages of their development over time. from growth capital to distribution to succession planning. AMG's strategic expertise in collaborating with partner-owned firms has been honed over the course of three decades of successful partnerships, and our solutions are a direct reflection of the needs of independent firms. AMG has been one of the most active investors in independent asset managers over the past three years. Since 2019, we have made nine investments in new or existing affiliates deploying over a billion dollars, and those investments generate nearly $175 million in annual EBITDA today. Moreover, these firms are operating in areas of secular demand, including private markets, liquid alternatives, ESG, and Asia, and have improved our overall growth profile. Over time, we expect a larger proportion of our EBITDA and flows to come from these fast-growing areas as we continue to invest in high-quality new affiliates and in growth opportunities at existing affiliates using a disciplined allocation framework. AMG's business was built affiliate by affiliate throughout market cycles, and this deliberate approach over three decades has resulted in a diversified, and resilient business. Today, AMG is not only diversified by asset class, strategy, geography, and client, but also across roughly 40 partner-owned businesses run by successful entrepreneurs. Our affiliates are industry-leading independent active managers with proven track records of delivering excellent risk-adjusted returns for clients throughout a cycle. These best-in-class specialist firms have a history of being nimble and innovative during periods of transition, and that entrepreneurial spirit and ownership culture enable them to protect and grow client assets, as well as introduce new products as market conditions evolve. The combination of our affiliates' entrepreneurial vision and our commitment to support their growth initiatives has resulted in the launch of more than 50 new products over the past three years, which today total approximately $30 billion in assets. Finally, we see our industry as being in the midst of significant change. For AMG, given our partnership structure, diversification, and significant capital position, We not only have the structural resiliency to navigate this environment, but we also expect to outperform by capitalizing on opportunities to create substantial future growth. And many of our most successful investments have come after periods of industry transition and uncertainty. We remain confident in our ability to shape our business as well as scale and compound our earnings. through the deployment of capital into our growth strategy, while also returning significant excess capital to shareholders. And with that, I'll turn it over to Tom to review the details of the quarter.