BrightSphere Investment Group Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the BrightSphere Investment Group Earnings Conference call and webcast for the third quarter 2023. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question and answer session. To be added to the queue, please press the start followed by 1 at any time during the call. If you need to reach an operator, please press the start followed by 0. Please note that this call is being recorded today, Thursday, November 2nd, 2023, at 11 a.m. Eastern Time. I would now like to turn the meeting over to Melody Huang, Senior Vice President, Director of Finance and Investor Relations. Please go ahead, Melody.

Good morning and welcome to Bryce Sears' conference call to discuss our results for the third quarter ended September 30th. Before we get started, please note that we may take forward-looking statements about our business and financial performance. Each forward-looking statement is subject to risk and uncertainties that could cause actual results to differ materially from those projected. Additional information regarding this risk and uncertainties appears in our SEC filing including the form 8K filed today containing the earnings released, our 2022 form 10K, and our form 10Q for the first and second quarters of 2023. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update them as a result of new information or future events. We may also reference certain non-GAAP financial measures. Information about any non-GAAP measures referenced, including the reconciliation of those measures to GAAP measures, can be found on our website, along with the slides that we will use as part of today's discussion. Nothing herein shall be deemed to be an offer or solicitation to buy any investment products. Surin Rana, our President and Chief Executive Officer, will lead the call. And now, I'm pleased to turn the call over to Surin.

Thanks, Mallory. Good morning, everyone, and thank you for joining us today. As usual, I'll start off with the main highlights on slide five of the deck, and then I can answer questions. So for the third quarter of 2023, we reported E&I per share of 45 cents compared to 30 cents in the third quarter of 2022, and 28 cents in the second quarter of 2023. This 50% increase in E&I per share compared to the year-ago quarter was primarily driven by a 24% increase in revenue due to higher AUM from market appreciation and higher performance fees. Acadian's investment performance remained strong and got even stronger in the third quarter. As of September 30, 2023, 83%, 88%, and 91% of strategies by revenue beat their benchmarks over the prior three, five, and 10-year periods, respectively. We reported half a billion of net outflows this quarter as we had some lumpy reallocations from select clients out of our managed volatility strategy. However, we continue to have a robust sales pipeline. The implementation of our growth initiative continues to be on track. Acadian's equity alternatives platform is off to a good start and is showing nice investment outperformance so far. Acadian's systematic credit initiative will be seated this month, starting with a high-yield strategy, and then that effort will also start to build its investment stock record. Turning to capital management, we had a cash balance of $143 million as of September 30, 2023. Acadian has continued to play down its revolving credit facility and ended the quarter with an outstanding balance of $13 million. compared to 38 million at the end of Q2 and 87 million at the end of the first quarter of the year. As in prior years, we expect the facility to be fully paid down by year end. Our long-term strategy remains the same. We'll continue to invest in and leverage our unique quant capabilities to grow and expand into new areas. We'll continue using our free cash flow to support organic growth and to buy back stock whenever opportunities are available, and will remain focused on maximizing shareholder value. Now, let me turn the call back to the operator, and I'm happy to answer any questions at this point.