Affiliated Managers Group, Inc.

Greetings and welcome to the AMG first quarter 2023 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, Patricia Figueroa, 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 2023. 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, Patricia, and good morning, everyone. AMG delivered solid results to start 2023, reporting economic earnings per share of $4.18 in the first quarter, driven by excellent affiliate investment performance, and the positive impact of our capital allocation strategy. During the quarter, we advanced several attractive new investment opportunities, we invested in our distribution resources and product development capabilities, and we enhanced our liquidity position to capitalize on the forward opportunity set. Also during the quarter, we continued to see the impact of the changing market environment as evidenced by the disruption in the banking sector and the historic volatility in Treasury rates. High-quality, alpha-oriented managers across both alternative and active equity strategies have distinguished themselves in this environment, as elevated volatility, asset dispersion, and macroeconomic uncertainty have created opportunities to generate differentiated returns. Over the past three years, we have seen a resurgence of alpha generation in nearly every liquid alternatives category. And in 2022, active equity outperformance reached levels less seen more than a decade ago. Consistent with those trends, our affiliates' performance continues to be excellent, with approximately 90% of assets under management in both liquid alternatives and private markets delivering excess returns, and more than 80% of our U.S. equity strategies above three-year benchmarks. We expect the existing market dynamics to persist, and high-quality, alpha-oriented managers are well-positioned to outperform. Differentiated return streams are critical for clients to achieve their long-term objectives We believe that independent partner-owned firms have competitive advantages in generating those differentiated returns across all stages of a market cycle. With strong long-term investment track records, entrepreneurial cultures, and alignment with their clients, our affiliates represent the best of independent firms focused on alpha-oriented strategies. Their entrepreneurial spirit and ownership cultures enable them to protect, and grow client assets in rapidly changing markets. AMG offers a unique opportunity to invest in a diversified array of independent alpha-oriented managers at scale. We have built our business one partnership at a time with a proven approach that is attractive to the highest quality firms, and we have decades of experience in identifying and partnering with them. AMG's model enables each independent firm to preserve their entrepreneurial culture and maintain their investment focus, as well as their alignment with clients. Today, with nearly 40 partner-owned firms across asset classes, strategies, and geographies, along with our ability to make investments in new and existing affiliates, AMG offers shareholders an attractive, diversified business profile that is well positioned for long-term growth. And we see an opportunity to partner with additional alpha-oriented independent firms at a time when we expect client demand for these differentiated return streams to accelerate. Our approach continues to resonate with those firms seeking to preserve their independence while simultaneously benefiting from collaboration with a strategic partner. Our steadfast commitment to offering solutions to independent partner-owned firms and our ability to invest across all stages of a market cycle have distinguished AMG over time, and we formed a number of our most successful partnerships during challenging market periods. Given our 30-year track record, enhanced financial flexibility, and proprietary relationships with prospective affiliates, we are well positioned to increase our level of new investment activity. Challenging periods can present opportunities and also highlight the value of an engaged strategic partner. Choosing a partner is one of the most important decisions the principals of an independent firm make for their business. And in that process, the value of AMG's expertise and orientation is paramount. We work with our partners to magnify their efforts and strengthen their competitive positioning, ultimately creating value for all stakeholders. As part of that strategic engagement, we continue to invest alongside our affiliates using our capital and resources to advance our affiliates' long-term objectives, including through succession planning, capital formation, and other business development initiatives. Given our confidence in AMGs and our affiliates' ability to capitalize on the increasingly attractive opportunities for growth, We recently invested in key hires to further enhance AMG's product development and distribution capabilities, including a new head of client solutions. More broadly, given our focus on high-performing independent firms and our ongoing strategic evolution towards areas of secular growth, AMG's long-term organic growth profile is improving, enhancing our cash flow and earnings growth over time. And as you know, over the last few years, we have strategically evolved AMG by aligning our capital and resources with long-term demand trends and investing in high quality partner owned firms that can benefit from these trends. Since 2019, we have made 1.4 billion in growth investments in new and existing affiliates. Alternatives across both liquid alternatives and private markets accounted for approximately two thirds of these investments. with the remaining one-third primarily in sustainable strategies. Today, more than half of our earnings are generated by affiliates in areas of secular growth, nearly doubling our exposure since 2019. And as we continue to add new affiliates in high-growth areas, we will further evolve our composition towards in-demand strategies, driving our long-term organic growth and further differentiating AMG. Finally, capital allocation decisions are fundamental to our strategy, and we evaluate every opportunity on a risk-adjusted basis, factoring in the impact of the investment to our business mix, cash flow, and franchise. These decisions require judgment, and our allocation discipline is embedded across all elements of our process and culture. In executing growth investments in new and existing affiliates, we ensure proper alignment with our affiliate partners and structure investments that benefit all stakeholders. Looking ahead, our opportunities to invest for growth have been steadily building as a result of our broadened capabilities and the changing market environment, which, as we have seen historically, can present unique opportunities to invest and create value. Given the combination of our enhanced opportunity set and our disciplined approach to capital allocation, we are confident in our growth strategy and our ability to create shareholder value going forward. And with that, I'll turn it over to Tom to review the details of the quarter.