Apollo Global Management, Inc. (New)

Good morning, and welcome to Apollo Global Management's fourth quarter 2019 earnings conference call. During today's presentation, all callers will be placed in a listen-only mode, and following management's prepared remarks, the conference call will be opened for questions. This conference call is being recorded. This call may include forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this call, which management believe are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also, note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Apollo fund. I would now like to turn the call over to Gary Stein, Head of Investor Relations.

Great. Thanks, operator. Welcome to our fourth quarter 2019 earnings call. Joining me this morning are Leon Black, Chairman and Chief Executive Officer, Josh Harris, Co-Founder and Senior Managing Director, and Martin Kelly, Chief Financial Officer and Co-Chief Operating Officer. Gary Parr, Senior Managing Director, is also here with us and will be available during the Q&A portion of our call. Earlier this morning, we reported distributable earnings of $1.10 per share, which led to a cash dividend of 89 cents per share for the fourth quarter. The quarter's distributable earnings were driven by pre-tax fee-related earnings, or FRE, of 59 cents per share and strong performance fee generation from our private equity and credit businesses. With that, I'll turn the call over to Leon Black.

Thanks, Gary. Good morning, and thank you all for joining us. I'd like to first discuss focus my remarks this morning on the extremely productive year we had in 2019 at Apollo. Following that, I'd like to briefly highlight the continued strong growth trajectory that we see ahead for the firm. From there, Josh will spend a few minutes discussing the firm's recent operating performance, and then Martin will provide greater detail on our strong financial performance for the year and the quarter. As I reflect on the past year, it's quite remarkable to consider the many meaningful changes that have taken place with respect to Apollo and the positive impact these changes have had on our firm and our shareholders. Just to recap a few key events, during the course of the last few quarters, one, we have announced and completed our conversion from a publicly traded partnership to a C corporation, effective last September 5th. Pursuant to our conversion, we have already been included in some major indices, such as the CRISP and S&P total market indices, and have seen an over 50% increase in our long-only and passive ownership. We have also benefited from greater liquidity in our stock, as our average daily volume has doubled since our conversion. Two. In October, we announced an important transaction to strengthen the strategic relationship between Apollo and Athene. Through this transaction, Apollo and certain of its related parties and employees will nearly double their ownership stake in Athene to approximately 35% with an option to purchase an additional 5%. Athene will be eliminating its dual class structure and taking on approximately a 7% stake in Apollo, marking the first time they will have a direct economic interest in our financial success and further increasing the alignment between our two companies. Third, in November, we hosted an investor day. The key points we communicated through the course of the day were, firstly, the fact that Apollo offers shareholders both high growth and an attractive yield. In addition, we offered a robust view of our long-term growth objectives and laid out the path for how we expect to achieve them. Specifically, over the past five years, we've been able to double our AUM and FRE, and we believe that we will be able to do so again over the next five years. We also felt that we were significantly undervalued, and while investors have begun to recognize the value of our franchise, We believe Apollo is still an extremely attractive investment. I'd also mention that our investor day provided us with an excellent opportunity to showcase many leaders from across our organization. We're very proud of the deep bench of talent we have at Apollo, and they're pleased that we were able to feature a handful of the many people that have helped drive Apollo's great success. Finally, During our Investor Day, in response to recommendations from many of you, our shareholders, we unveiled a new minimum cash dividend of $0.40 per quarter or $1.60 per year. We believe this minimum dividend is reflective of the strong and growing cash-generating power of our business and is supported by our stable and recurring fee-related earnings without including any upside from our incentive businesses. We were optimistic that by undertaking these actions throughout the year, we would be able to unlock meaningful shareholder value. And that has certainly come to pass as Apollo stock returned approximately 100% during 2019. In connection with our corporate conversion, we have also seen a significant shift in our shareholder base towards larger, longer-term focused investors, and we believe this transition is still an early inning. When I look at our business today, I see a franchise that has tremendous secular tailwinds at its back, as low interest rates globally have made it increasingly difficult for investors to meet their income and return requirements in the public arena. Today, we have built the largest alternative credit platform in the world, with over $215 billion of AUM and more than 20 different credit strategies to meet these investor needs. As we continue to scale our broad insurance capabilities, we have continued to expand our differentiated yield capabilities in order to drive strong performance across the platform. We have also delivered industry-leading private equity returns a 39% gross and 25% net IRRs since Apollo's founding in 1990, 30 years ago. In addition, investors are increasingly consolidating their relationships with trusted partners like Apollo, driving continued growth of our AUM. Half of our AUM is now permanent capital, which is the most stable and sticky kind of capital there is. and over 80% of our AUM is in permanent capital vehicles or has a contractual life of seven years or more from inception. As a firm, we've been able to deliver exceptional performance over 30 years and develop a world-class brand name driven by our integrated global platform, our deep bench of talent, and our continued commitment to excellence. As we've discussed before, Embedded within our culture of excellence is our commitment towards socially responsible investing, which has been a cornerstone of our investment process for many years. As a reminder, a few months ago, we published our 10th annual ESG report, in which we disclosed in great detail the many ways that we've engaged with portfolio companies of Apollo Managed Funds across environmental, social, and governance factors. We encourage everyone to review that report, and we look forward to engaging further with our investors on this very important topic. With that, I'd like to turn the call over to Josh to provide some color around the firm's recent operating results. Thanks, Leon.