BrightSphere Investment Group Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Bright Sphere Investment Group earnings conference call and webcast for the third quarter 2024. 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 star followed by one at any time during the call. If you need to reach an operator, please press the star followed by zero. Please note that this call is being recorded today, Thursday, October 31st, 2024, at 11 a.m. Eastern Time. I would now like to turn the meeting over to Melody Wong, SVP, 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 know that we may make 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 filings. including the Form 8-K filed today containing the earnings release, our 2023 Form 10-K, and our Form 10-Q for the first and second quarter of 2024. 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 of future events. We may also reference certain non-GAAP financial measures. Information about any non-GAAP measures referenced, including a 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. Finally, nothing herein shall be deemed to be an offer or solicitation to buy any investment products. Surin Renna, a President and Chief Executive Officer, will lead the call. And now, I'm pleased to turn the call over to Surin.

Thank you, Melody. Good morning, everyone, and thanks for joining us today. I'll cover the highlights on slide five of the deck in my initial remarks, and then we can move to Q&A. So, for the third quarter of 2024, we reported ENI per share of 59 cents. compared to 45 cents in the third quarter of 2023, and also 45 cents in the second quarter of 2024. The E&I in the third quarter of 2024 increased by 15%, 2 million dollars, compared to 19.3 million a year ago in the third quarter of 2023. The increase was primarily driven by the growth in management fee revenue. due to higher AUM from the market appreciation that we've seen over the last 12 months. And additionally, we continued our expense discipline during this period. The E&I per share increased by 31% in the third quarter of 2024 compared to the year-ago quarter, which is higher than the 15% increase in E&I over that same period. And that's because the E&I per share was additionally driven by the $100 million of share repurchases that we started in December 23 and continued in the first half of the year before. Acadian investment performance remained very strong in the quarter. As of September 30, 2024, 85%, 93%, and 94% of Acadian strategies by revenue outperformed their respective benchmarks across three, five, and 10-year periods. Turning to flows, we reported positive net client cash flows of half a billion this quarter compared to the break-even NCCF we had in the second quarter of 2024 and negative half a billion of NCCF that we had in the third quarter of 2023. Our organic growth initiatives continue to progress well. and in line with our expectations. On our systematic credit initiative, all three credit strategies stated so far are building nice track records. As a reminder, these three strategies comprise U.S. high-yield strategy, which we seeded in November 2023, global high-yield strategy, seeded in April 2024, and U.S. investment-grade strategy, seeded in Q3 of 2024. On our equity alternatives initiative, our multi-strategy fund, seeded about two years ago in Q4 of 22, continues to build a strong track record of our performance. And in September 24, we also seeded a new global equity extension strategy, which is a variant of our global equity strategy with some ability to go short. Turning to capital management. At the end of the third quarter, we had a cash balance of approximately $53.6 million, and Acadian had fully paid down its revolving facility compared to the outstanding balance of $36 million at the end of the second quarter. As discussed previously, this revolving facility supports Acadian's first quarter seasonal needs and is generally paid down fully by year end from the cash generated from Acadian's operations. Now, as we announced earlier this month, this will be my last earnings call as BrightFear CEO. Effective 1Q25, we will rebrand BrightFear as Acadian Asset Management, since Acadian is our only remaining business. Our current ticker, BSIG, will change to AAMI. And Kelly Young, who is currently the CEO of Acadian, our sole operating business, will assume the role of the public company's CEO, too. These steps basically complete our transition from a multi-boutique conglomerate to a streamlined and singularly focused asset manager. We successfully sold six of the company's seven affiliates to strategic acquirers and retain Acadian, our largest and the most differentiated business. Thanks to the divestitures, we returned $1.3 billion of capital to the shareholders via shared buybacks, and we also paid down $125 million of debt. We expanded Acadian's business into new areas, including credit and equity alternatives that I touched on earlier, and we expect these new asset classes to generate sustained organic growth for the company over time. And we also reduced our corporate overhead by approximately 70% over the last few years. Collectively, these efforts have produced very strong returns for our shareholders. Now, Acadian is one of the top performing systematic investment managers in the world. And the completion of the transition to a singularly focused asset management company presents an exciting opportunity to focus exclusively on this exceptional business. I'd like to close my initial remarks by reiterating, as I've done for about 24 quarters now, that the company will remain focused on maximizing shareholder value and will continue using its free cash flow to support organic growth and to buy back its shares. I'll now turn the call back to the operator, and I'm happy to answer questions at this point.