Equitable Holdings, Inc.

one to the equitable holdings full year and fourth quarter earnings call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press star one again and please limit to one question and one follow-up thank you i would now like to turn the call over to eric bass head of investor relations please go ahead

Good morning and welcome to Equitable Holdings' full year and fourth quarter 2024 earnings call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. please refer to the Safe Harbor language on slide two of our presentation for additional information. Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings, Robin Raju, our Chief Financial Officer, Nick Lane, President of Equitable Financial, Jackie Marks, Alliance Bernstein's Chief Financial Officer, and Onur Ercan, head of Alliance Bernstein's Global Client Group and Private Wealth Business. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the investor relations portion of our website and in our earnings release slide presentation and financial supplement. I will now turn the call over to Mark.

Good morning and thank you for joining today's call. 2024 showcased the power of Equitable Holdings integrated business model and the strong growth momentum across our retirement, asset management and wealth management segments. This is a fantastic time to be focused on the US retirement market and Equitable is uniquely positioned to grow and deliver value to all our stakeholders. I'll briefly highlight our 2024 results and the progress we're making against each of our 2027 financial targets before turning over to Nick and Onar to discuss initiatives to help sustain growth momentum for equitable and AB. Robin will then discuss our financial results and provide some guidance for 2025. Turning to slide three, Full-year non-GAAP operating earnings were $2 billion, or $5.93 per share, which is up 29% year-over-year on a per-share basis. Adjusting for notable items, non-GAAP operating EPS was $6.18, which is up 20% compared to the prior year, and above a 12% to 15% annualized growth guidance. Assets under management and administration increased 10% year over year and now exceed $1 trillion, which bodes well for growth in fee and spread-based earnings as we move into 2025. We generated $1.5 billion of cash flow to the holding company at the high end of our guidance range, with over 50% coming from our asset and wealth management businesses. For 2025, we forecast cash generation of $1.6 to $1.7 billion, continuing the ramp to $2 billion by 2027. This strong cash flow enables Equitable to consistently return capital to shareholders, and we deployed $1.3 billion in 2024, equating to a 66% payout ratio consistent with our 60% to 70% target range. We also continue to make progress against key strategic initiatives. Through year end, we have achieved $100 million of run rate expense saves and have clear plans to meet or exceed our $150 million target by 2027. Repositioning our investment portfolio has enabled Equitable to generate $80 million of incremental net investment income to date, putting us ahead of plan to achieve $110 million by 2027. Finally, AB successfully executed the separation of its Bernstein Research Services business and completed its New York City office relocation. AB expects to produce a 33% plus adjusted operating margin in 2025, which represents over 400 basis points of improvement from 2022. Shifting to our business segments, we continue to deliver strong organic growth with full year net inflows of $7.1 billion in retirement and $4 billion in wealth management. AB reported full-year active net inflows of $4.3 billion and had its second highest year ever for firm-wide sales. Importantly, this was achieved while maintaining a stable fee rate. AB also increased private markets AUM by 14% to $70 billion, helped by investments from Equitable's general account. Equitable also established itself as a clear leader in the emerging in-plan guarantee market, highlighted by over $600 million net inflows in the year from BlackRock's LifePath paycheck offering and the announcement of a new partnership with JPMorgan Asset Management. We expect additional inflows in the first half of 2025 and see significant growth potential in this market over the next few years. On slide four, we highlight some of the key performance indicators for our business segments and the progress we have made against our yesterday targets. As a reminder, there are three key tenants to our strategy. First, we're focused on defending and growing our core retirement and asset management businesses where we have scale and well-established market positions. Secondly, We're looking to scale adjacent high growth businesses where we have a clear right to win. These include our wealth management segment and AB's private markets platform. Finally, we want to seed future growth by finding new emerging market opportunities. These include in-plan guarantees and AB's entrance into the China market and expansion in insurance asset management. We have made significant progress against each of these objectives and are on track to meet or exceed all our key 2027 targets. I've already mentioned many of these accomplishments as part of our 2024 highlights, so I won't repeat them, but the results demonstrate that we have chosen to play in attractive markets and have the right strategy to be successful in each of them. there are meaningful synergies between our retirement, asset management, and wealth management businesses, enabling us to generate better economics by participating in the full value chain. Turning to slide five, we provide a scorecard against our three primary financial targets, which are to grow annual cash generation to $2 billion by 2027, deliver a 60 to 70% payout ratio, and grow non-GAAP operating earnings per share 12 to 15% annually. As I mentioned, we generated $1.5 billion of cash in 2024 and expect this to grow to $1.6 to $1.7 billion in 2025, a 7 to 13% year-over-year increase. This puts us well on track to achieve our $2 billion target by 2027. And Robin will talk later about actions we've taken to further improve visibility into future cash flows. Our predictable cash flow and strong balance sheet enables us to consistently return capital to shareholders regardless of the market environment. Over the past two years, we've had a payout ratio of 67% above the midpoint of our 60 to 70% target range. During this period, we have reduced shares outstanding by 15%. Turning to earnings growth, we had a slow start in 2023 due to headwinds from elevated mortality and the lagged impact of the equity market decline in 2022. But 2024 marked an inflection point for the business. Non-GAAP operating EPS, excluding notable items, increased 20%, bringing the two-year growth rate to 12%, which is the low end of our target range. We expect this growth momentum to continue in 2025 and remain confident in delivering 12% to 15% annualized growth through 2027. Now I'd like to turn the call over to Nick and Onar to discuss some of the things we're doing to sustain organic growth in our core businesses and scale in adjacent markets.