Artisan Partners Asset Management Inc. Class A

Hello, and thank you for standing by. My name is Rocco, and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, management will conduct a question-and-answer session, and conference participants will be given instructions at that time. As a reminder, this conference call is being recorded. At this time, I would like to turn the call over to Michaela Tophorn. Director, Investor Relations for Artisan Partners Asset Management. Please go ahead.

Thank you. Welcome to the Artisan Partners Asset Management business update and earnings call. Today's call will include remarks from Eric Holton, CEO, and CJ Daly, CFO. Our latest results and investor presentation are available on the Investor Relations section of our website. And following these remarks, we will open up the line for questions. Before we begin, I'd like to remind you that comments made on today's call, including responses to questions, may deal with forward-looking statements. These are subject to risks and uncertainties and are presented in the earnings release and detailed in our filings with the FCC. We are not required to update or revise any of these statements following the call. In addition, some of our remarks made today will reference non-GAAP financial measures. You can find reconciliations of those measures to the most comparable gap measures in our earnings release. With that, I'll now turn the call over to Eric Olson.

Thank you, Michaela, and thank you everyone for joining the call or reading the transcript. We appreciate you taking the time. Artisan Partners is a high-value-added investment firm designed for investment talent to thrive in a thoughtful growth environment. We know who we are and constantly remind ourselves and others. We have remained disciplined in our philosophy and business model, while also expanding our investment platform and capabilities. Today, we offer investment talent the same entrepreneurial opportunity and investment autonomy that we have offered since 1995. But we have significantly expanded investment degrees of freedom, operational support, and multi-channel global distribution. The consistency and repeatability of who we are and what we do has steadily grown our business value over time. Our ability to generate alpha for clients, our ability to generate successful careers for people, and our ability to generate long-term return for shareholders. We recently launched the Artisan Global Unconstrained and Artisan Emerging Markets Debt Opportunities Strategies. These launches and all of the work behind them exemplify how we execute and build business value. On slide two, you can see the team we have built with Mike Cerami, Mike O'Brien, and Sarah Orban. Since they joined last September, we have built a diverse team of 11 investment professionals. We located the team inside their own four walls in Boston, where they wanted to be. We have built customized research management tools set up new order management and trade execution technology, and established local market access in over 100 developed, emerging, and frontier countries at initial launch. We seeded the team's first two strategies, and we recruited and hired a proven distribution leader with deep experience building an EM debt business. Today, after a little more than six months at Artisan Partners, The team is running money and open for business. Emerging Markets Debt brings together a number of attractive investment and business characteristics. A large and growing investment opportunity set to differentiate from the index and peers. A large addressable market of sophisticated investors and allocators to build a long duration client base with attractive fees. And a limited supply of investment talent with the experience, resources, and degrees of freedom possessed by the Artisan M-Cites Capital Group. On slide three is our repeatable process for franchise development. This is how we drive business value. We take the time to find and recruit the right investment leadership, unique investment leaders who are passionate about what they do, want to own the outcome, and are willing to take risks and bet on themselves. Around that leadership, we bring together additional talent and resources, including proven distribution leadership. We provide infrastructure and customized technology. We provide autonomy and space to execute a process and develop a culture. And we are patient, focusing on establishing a strong foundation and a compelling investment track record. We have successfully executed this process across time and asset classes and through market cycles. While each franchise takes its own path, we have a stated set of franchise characteristics we seek to achieve. And we have a disciplined process for achieving and maintaining those characteristics through time. This is what our management team does. We maintain an investment first culture. We bring to bear the entire resources of our firm to support our investment teams. We minimize investment team distractions. We maintain economic and risk alignment. We insulate our firm from short-term pressures and noise. We focus on building long-term business value. Today, we see opportunity all around us. Industry consolidation is focused on scale, solutions, and distribution. not on creating great homes for investment talent. Creative investors are increasingly risk-managed, diluted, and disintermediated from end clients. At Artisan Partners, we are staying true to who we are, emphasizing creative talent, autonomous investing, broad opportunity sets, and a patient, long-term mindset. The milestones we've passed with the MSITES Capital Group are milestones we've passed many times before, We know we have a lot more to do. We also know the potential outcome if we execute as we have in the past. Business value that compounds and diversifies and ultimately yields economic value. On slide four, you can see the AUM outcome of recent launches. Underlining the AUM outcome is tremendous business value creation. Investment leadership surrounded by additional talent and resource well. Established investment processes and emerging investment team cultures, compelling early investment track records, and foundational business development on which to build broader investment platforms. It takes time, but if we remain patient and focused on the things we can control, we expect successful outcomes will follow. On slide five, we have expanded the view across time and across the firm. On the top part of the page, we have summarized investments we have made in our business over the last 10 years. By following the repeatable process I described earlier, we have doubled investment teams from 5 to 10 and doubled investment strategies from 12 to 24. Expanding investment degrees of freedom, we have added multiple new asset classes and significantly increased the markets and instruments available to our investment teams. And we have built out our distribution capabilities across geographies and channels, nearly tripling relationships greater than 200 million and increasing our number of non-US investors and client relationships more than six-fold. Our disciplined approach, repeatable process, and proven success strengthens our brand and reputation and increases our probability of successful outcomes going forward. Similar to the power of compounding revenue growth, successful franchise development has a compounding effect on future business value. For example, in 2013, when Brian Krug joined Artisan to launch our credit team, we were unproven in fixed income. What we have built with Brian was an important data point when Mike Cerami, Sarah Orban, and Mike O'Brien decided to join Artisan last year. They saw a firm that could support fixed incomes. build new operations to support emerging markets debt, and be a successful home for a differentiated fixed income team. We lean into franchise development by identifying the right talent for us and stacking resources to put the odds in our favor. Our approach differs from firms that refer to investments as manufacturing or engineering products for mass distribution. They play the odds and time horizon differently. In the long run, we believe that we produce sustainable growth outcomes with lower risk for all stakeholders. On these calls and in other forums, I spend almost all of my time on investments and how we are driving business value, as opposed to reading off recent numbers. We focus on what we can control and seek to build business value over the long term. So quarterly or even annually, economic outcomes are not terribly relevant to what we are trying to do in managing the business. But over longer periods, we do expect economic outcomes to reflect the growth of our business value. Over the last 10 years, since approximately the time we launched the credit team and began focusing in earnest on degrees of freedom, we have more than doubled our AUM from $74 billion to $160 billion, more than doubled our annual revenue from $506 million to $1.2 billion, maintained an adjusted operating margin in the 40% range, and inclusive of our upcoming dividend, distributed $30.31 per share to our shareholders, more than our IPO price of $30 per share in 2013. Looking forward, we will continue to focus on building business value, investing in our existing franchises, recruiting new talent and launching new franchises, launching new strategies with broad opportunity sets and large addressable markets, expanding our operating platform in fixed income, private investing, and greater China, and further investing in digital marketing, accessing the wealth channel, and other global distribution capabilities. We are confident we can grow business value, as we have in the past. and eventually we expect economic value to reflect business value creation. I will now turn it over to CJ to discuss our more recent results.