Apollo Global Management, Inc. (New)

Good morning, and welcome to Apollo Global Management's second quarter 2020 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 open 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, including the 8K Apollo filed this morning for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this file, which management believes 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 any interest in Apollo Funds. I would now like to turn the call over to Gary Stein, Head of Investor Relations.

Welcome to our second quarter 2020 earnings call. We hope you and your families are doing well in these challenging times. Joining me this morning are Leon Black, Founder, Chairman, and Chief Executive Officer, Josh Harris, Co-Founder, and Martin Kelly, Chief Financial Officer and Co-Chief Operating Officer. Gary Parr, Senior Managing Director, is also on the line and will be available during the Q&A session. Earlier this morning, we reported distributable earnings of 46 cents per common share, pre-tax fee-related earnings, or FRE, of 59 cents per share, and a cash dividend of 49 cents per share for the second quarter. With that, I'll turn the call over to Leon Black.

Thanks, Gary, and thank you all for joining us. I'd like to express my wishes to everyone listening that this finds you and your families healthy and safe. And to our employees who have continued to work tirelessly on behalf of our clients and our shareholders, I'd like to convey my appreciation and gratitude. We are not working under typical circumstances, to say the least, and you have all continued to go above and beyond to drive the strong results that we are reporting today. I think this speaks to the tenacity and spirit of our employees, as well as the collaborative and inventive culture we have at Apollo. Globally, companies continue to operate in incredibly challenging circumstances as we face what started as a health crisis, but has progressed into an economic crisis as well. Across the firm, we have responded quickly to this changing landscape with a focus on engagement and operations across our investment professionals, client and product solutions team, and enterprise solutions group, which has helped us transition into a work-from-home environment smoothly. This quarter marks the achievement of a significant milestone as Apollo's AUM grew by approximately $100 billion to surpass $400 billion for the first time in our history. This growth was driven by a theme of thorough and strong inflows during the quarter and represents 33% growth year over year. With $414 billion of AUM as of June 30th, we are well on our way towards the $600 billion goal that we provided at InDesk yesterday, this past November. We continue to see robust demand for Apollo products and a strong pipeline for insurance transactions over the next few years. As a further indication of the breadth of our platform and our activity level through the pandemic, gross purchases were $45 billion across the platform in the second quarter, with some of this related to the repositioning of insurance company balance sheets. We continue to dynamically navigate through this challenging environment on behalf of all our investors. Now I would like to spend some time talking about the remarkable depth of leadership that resides at Apollo and continues to evolve. Since our founding, we have intensely focused on the strategic growth and evolution of Apollo as a leading world-class alternative investment manager. In recent years, we've broadened the firm's executive team, most notably by naming Scott Kleiman and Jim Zelter as co-presidents. Scott and Jim have shown strong corporate leadership, taking on responsibility for Apollo's revenue-generating and investment businesses. Additionally, we continue to elevate and hire exemplary individuals, to run the day-to-day operations across all lines of our business, including credit, private equity, and real assets, and our insurance platforms. Our recent hires and the evolution of our leadership structure demonstrate our commitment towards growth, progression, and the ongoing modernization of our firm. Today, we are announcing that on the back of an almost unprecedented quarter, adding $80 billion of insurance assets and liabilities to the portfolios that we manage. Mark Rowan, co-founder who oversees this area, has decided he will take a step back from his day-to-day oversight of the business and enjoy a semi-sabbatical. Mark will continue to work with Josh and I, driving the strategic direction of the firm, especially for our financial institutions and insurance-related businesses. Mark will remain a member of the Apollo Board and Executive Committee, will continue to serve on the Board and Executive Committee of Athene, and will remain on the Board of Athora. Scott Kleinman will assume the day-to-day operational responsibility of leading our financial institutions and insurance activities. Jim Zelter will continue to focus on asset management and credit investment activities across our insurance clients. Together with Gary Parr, Granat Laura, Matt Michelini, and Joshi Singh, they will lead a broad team of over 100 professionals who are dedicated to our insurance clients. Josh, Mark, and I maintain the utmost confidence in this team to lead us into the next phase of growth and development for these platforms and for the firm more broadly. We are excited for what the future holds. We are also actively engaging on the topics of citizenship, diversity, and inclusion. We recently completed our latest annual social responsibility report, which highlights that since the inception of our ESG program in 2008, the combined efforts have resulted in more than 10 million tons of waste recycled by portfolio companies. over a million volunteer hours by employees of portfolio companies, and approximately $1 billion of charitable donations, just to name a few achievements. We have brought on some exceptional talent to assist with our citizenship efforts, including Lauren Cope-Arnold, who joined late last year as Global Head of Citizenship. This year, we introduced a formal charitable matching program for employees which included special initiatives for COVID with $50 million in relief effort contributions globally from Apollo, its founders, and portfolio companies, and also for racial injustice reform. These initiatives were well supported by our employee base. More recently, as tragic events have further brought the issue of systemic racial injustice in this country to the forefront, We've been spending a great deal of time listening and thinking about how we can engage to a greater degree on this issue. As leaders in our industry, we need to be honest in acknowledging that we can do more to help combat these inequities, and we are committed to enhancing our diversity and inclusion strategy in all aspects of our business. We are very excited to welcome our new head of leadership development and diversity, Jonathan Simon, who joins us next month. In addition, we have expanded our existing partnerships with organizations that work with students of color and communities in need. Finally, before turning this over to Josh who will speak more extensively on the subject, you should know that I am particularly proud of the strong performance delivered by the Apollo team in the second quarter. During challenging times, Apollo has generated dramatic growth in both AUM and FRE in fundraising and in deployment, as well as raising the bar on social consciousness. This has truly been a prime example of grace under pressure or of the whole Apollo enterprise getting going when the going was getting tougher. With that, I'd like to turn this over now to Josh to provide an overview of our business operations for the first quarter. Josh?