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spk02: Good evening, my name is Catherine and I will be your conference operator today. At this time, I would like to welcome everyone to the Manning and Napier second quarter 2021 earnings conference call. Our hosts for today's call are Nicole Kingsley Brunner, Chief Marketing Officer, Mark Mayer, Chairman and Chief Executive Officer, and Paul Battaglia, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 8 p.m. Eastern Standard Time today. The dial-in number is 800-839-5103. No passcode is required. At this time, all participants have been placed in a listen-only mode. If you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Ms. Nicole Kingsley-Brunner.
spk03: Thank you, Catherine, and thank you, everyone, for joining us today to discuss Manning and Appear's second quarter 2021 results. Before we begin, I would like to remind everyone that certain statements made during this call, not based on historical facts, including any statements relating to financial guidance, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Manning and Appear assumed no obligation or responsibility to update any forward-looking statements. During this call, some comments may include reference to non-GAAP financial measures. Full GAAP reconciliations can be found in our earnings release and related SEC filings. With that, I will turn the call over to our Chief Executive Officer, Mark Mayer. Mark.
spk01: Thank you, Nicole. Last quarter, we made progress on our key initiatives, improving our positioning for the future. We will get to those updates in a moment. But first, we should begin, as we always do, with an update on how we performed for our clients. Our investment teams delivered another fine quarter of results to our clients. further bolstering our strong first quarter performance and delivering what has become excellent short to intermediate term performance across nearly all strategies and standard time periods. Pages six and seven of the earnings supplement contain the relevant metrics. All of our bottom-up multi-asset strategies, which represent 67% of our assets under management, delivered strong absolute returns during the second quarter and for the year to date, each outperforming their respective blended benchmarks over both time periods as well, as they have consistently over the past few years. We believe these excellent results are a product of our distinctive, disciplined, and flexible research processes, which have been time tested over many cycles over the past half century. Using our flagship long-term growth strategy as a proxy for the entire suite, our investment research teams added significantly positive relative value through asset allocation, sector positioning, and security selection decision-making throughout the quarter. In our more benchmark relative accounts, performance was strong and above benchmark across most of our investment suite for the quarter. Our core bottom-up strategies, U.S. equity, core non-U.S. equity, global equity, and core equity unconstrained strategy, all deliver material outperformance for the quarter, and each are well ahead of their respective benchmarks on the year. Moreover, each are meaningfully ahead of benchmarks over the intermediate term as well, with all four strategies materially outperforming over their trailing three- and five-year time periods. global equity is well into the top decile for both three and five years. Our core equity team definitely captured the historically strong rotation into value that prevailed during the first half of this year, demonstrating again that we have disciplined processes for identifying both growth and value stocks and capturing the upside in both strong growth and value markets. Additionally, our sector-specific real estate fund delivered above benchmark performance for the quarter, reversing some of the first quarter's underperformance. Our REIT fund has excellent 3-, 5-, and 10-year numbers and is a top quartile fund over the past decade. Within fixed income, our team continues to perform more than admirably, executing well in a truly challenging bond market environment. Our core bond series, high-yield bond series, unconstrained bond series, and diversified tax-exempt series each outperformed for the quarter. In high-yield specifically, the outperformance is further building on already excellent short and medium-term results. The fund is outperforming across all standard time periods, and it presently ranks in the top decile for all standard time periods as well. Our fixed income team continued to position our credit bets well, and it navigated the very tricky developments in the yield curve during the quarter, lengthening the duration and capturing the sharp drop in yields that began in June. These results reflect the clear philosophy, discipline processes, and outstanding talent we have developed within our fixed income team. And we believe the positive flow momentum we are experiencing in fixed income is only the beginning. Our Rainier team performs well in the quarter with our Rainier International Discovery Fund outperforming by approximately 250 basis points, cutting in half its underperformance from the start of the year. Although the strategy is still trailing its benchmark year to date, this fund is coming off a stunning year last year, having delivered relative outperformance of over 25 percentage points in the year 2020. The strategies intermediate term track record remains outstanding and the fund is ahead of benchmark on the trailing three and five year time periods by 552 and 416 basis points annualized respectively. Our quantitative discipline value suite of strategies has been one of the very few challenged areas this year and in the second quarter specifically. Although the performance pattern is not altogether surprising given the environment and our discipline. Our discipline value strategies seek attractive valuation coupled with high quality, measured by free cash flow generation, sustainable dividend growth, and a healthy balance sheet. Distinct from the majority of quantitative managers, momentum does not play a significant role in our models. Rather predictably, the value rotation was led by lower quality companies. In early cycles, heavily indebted companies whose future is controversial generally rally the strongest as they are perceived to be able to live to fight another day as a rising tide lifts all boats. Inexpensive but higher quality businesses that were already afloat benefit less from the revaluation than their lower quality peers in an early cycle value rotation. We believe the philosophy and process underpinning our discipline value strategies are as robust as ever. While there may be periods, sometimes extended, when the value style is out of favor, and there are those rarer times when our higher quality version of value underperforms, we believe the strategy will continue to deliver long-term investment success for our clients, as it has already done since inception. The Discipline Value Fund remains in the top 30 percent of its peers over five and ten years. Our Quantitative Strategies Group, headed by Chris Petrosino, which runs our Discipline Value Strategies, also manages our multi-asset ETF portfolios, which come in five risk flavors akin to our fundamentally managed multi-asset portfolios. These strategies performed in line with their respective benchmarks for the quarter. The value orientation of the quantitative strategies group has made them more cautious with respect to equity valuations and their higher allocations to bonds across the suite over the past year have dampened performance. These are important strategies for us as they offer a compelling low-cost offering in the multi-asset space. Our long-term records compare favorably to so-called ETF strategists and differentiate us in wealth management from advisors using ETFs who do not have audited track records like we do. Risk management remains central to our investment strategy. Our clients' goals and objectives are measured in decades, not months and quarters. While risk measures like volatility and CVAR are useful, we believe the most significant risk is the permanent impairment of capital which can occur if clients panic during large drawdowns. Skillful downside risk management has been a hallmark of our processes for half a century and is visible in our results for clients. By way of example, our multi-asset long-term growth strategy has substantially outperformed global equities over the past three and five years with approximately half the volatility. The strategy has experienced a downside capture of about 30% versus global equities in those time periods, meaning that has realized less than a third of the declines in global equities over the past five years. Within our benchmark-aware equity portfolios, the results of our risk management disciplines are equally palpable. While sharp and information ratios are the most common measures of risk-adjusted returns, We would argue that a more useful measure is the Sortino ratio, which looks at returns per unit of downside risk, the risk we all care about. Our fundamentally managed global equity, international equity, U.S. equity, Rainier International small cap equity, and our REIT portfolio all have three- and five-year Sortino ratios that are well above one, a high excess return per unit of downside risk. More notably, over the past three and five years, each of the portfolios in each time period has a Sortino ratio that is between 25 percent and 65 percent higher than its benchmark. These are significantly more efficient portfolios than their benchmarks. Validating our approach to active management, not only in terms of excess returns over time, but with far less risk than the passive alternatives. Our shareholders might think that this has been a bit of a detailed discussion of risk management and its impact for an earnings call. In fact, it may be the first time Sortino ratios have ever been discussed on any earnings call. But we believe risk management is quite relevant for our shareholders as it is for our clients. strong as well as more stable results for clients are clearly valuable and genuinely differentiable from other active managers as well as passive alternatives in all of our channels. We believe that increasingly effective prosecution of this differentiation will benefit the clients who invest with us while enabling us to add new relationships at an accelerating rate and that this will be down to the benefit of our shareholders through solid, stable growth. The tremendous rally in equities, particularly in the United States, that began after last March's precipitous sell-off, has continued thus far in 2021, as we have witnessed a near-steady progression of new highs in stocks. Economic fundamentals are strong, and they are filtering into robust earnings results, in just about every sector, both against depressed levels in 2020, but honestly also relative to the trend line in 2019. These fundamentals are compelling, there is no denying that, but fundamentals must always be viewed against valuations. Equities are expensive, measured in a host of ways versus their history, particularly in the US. However, It should be noted the relationship between the earnings yield on the S&P, the inverse of the 12-month forward P.E., and the 10-year Treasury yield is about the same as it was in 2016, and it has actually remained about the same over that timeframe. Importantly, this is the measure that the Fed prefers in thinking about the valuation of the stock market. Nevertheless, we do believe that valuation-sensitive investors like us must be thoughtful as valuation risk is elevated. So, all of this is to say that in a rally as remarkable as the one we have seen over the past 15 months, we believe our research team's ability to deliver more than full market participation while simultaneously sticking to its risk management disciplines enabled by decision-making excellence across all the vectors available to us as active managers is simply a tremendous accomplishment, and we are deeply proud of our team. I'd like to now turn to our business operations and progress on strategic initiatives. First, our strong investment results, investment in our sales teams, marketing and public relations efforts, as well as recent award recognitions are all beginning to generate an increase in flows. Net flows were very slightly negative in the quarter, as our intermediary business is now in net positive flows, offset by moderating outflows in wealth management and institutional channels. Paul will discuss our AUM and flows in more detail. As mentioned on prior calls, We expected our recent investment performance to draw increasing interest from intermediary buyers. These buyers are the most performance sensitive in our business, and they are responding to our strong results for clients. Our goal, however, is not to chase easy, high performance sensitive dollars, but instead to rebuild the foundation of our firm across all of our distribution channels. We begin with an articulation of our most differentiated strengths and move forward through the creation of processes and partnerships that position us for sustainable success. We believe the consistent improvement in our net flows that has been visible over the past 18 months is evidence of progress in building a strong, sustainable distribution effort across all segments of our market. To further strengthen our client-facing teams, we have recently undertaken a series of meaningful changes to our distribution structure that will securely position our organization for the future. We have been successful over the past two years in staunching the rate of outflows. Our organizational changes represent the next step in our efforts to increase sales productivity and accelerate inflows. Aaron McGreevey has been promoted to Chief Distribution Officer with responsibility for all distribution channels. Previously, Aaron had overseen our asset management efforts with specific responsibility for our intermediary and institutional teams. To those, he will add responsibility for our wealth management effort. By consolidating all our distribution efforts under his insightful and strategic leadership, we believe we will realize more consistency, greater focus, and further success. Nicole Kingsley Brunner, become chief marketing and strategy officer. Nicole will add oversight of advisory services and strategy to her current responsibility for marketing. In this expanded role, Nicole will help our executive committee think strategically across distribution and marketing as we seek to strengthen our differentiated positioning for clients across all our sales channels. Nicole is a highly effective leader whose creativity, inspiration, and tireless work ethic are invaluable to our team. In addition to these changes to our executive team, we also made a series of key leadership appointments within our distribution organization. Nikki Hamblin, whose experience and insight has helped drive forward our renewed intermediary efforts, has been promoted to managing director of intermediary sales. Greg Holden has been promoted to managing director of wealth management. with responsibility for leveraging his vision and courage to manage our growing team of financial consultants. And Greg Woodard has become managing director of institutional distribution with responsibility for our Taft-Hartley and institutional businesses. Beyond the senior level changes, we have continued to invest in building out our client-facing teams. During the quarter, we completed the hire of two new senior financial consultants within our local Rochester client-facing teams, and added two more financial consultants in Rochester from internal transfers. We also added a new advisor consultant to our intermediary distribution group. Our distribution efforts are seeing clear signs of traction, and we believe we are on the right track to building a distribution organization that positions us for sustainable growth. During the quarter, we submitted our application for a UN PRI designation. This is a further step towards implementing ESG investing strategies across our portfolios. We maintain ESG ratings on every stock and credit in our portfolios and will continue to evolve our ESG capabilities going forward. To state the obvious, ESG integration is now expected of asset managers. We believe the integration with our distinctive research methodologies for identifying investment opportunities and risks will give us a differentiated approach to this essential capability. Regarding our digital transformation, we made important strides last quarter across each of our three major applications. Charles River has been deployed for several of our strategies across many accounts, and we are continuing to work towards full implementation across the rest of our investment suite, which is anticipated to be completed during the first quarter of 2022. Workday for human capital management was delivered on schedule and on budget this month. The final Workday implementation for financial planning and budgeting will be completed this quarter. We are continuing to make headway on our highly complex InvestCloud implementation. We have just rolled out the financial planning modules to all our wealth management and advisory services teams. Parallel efforts are migrating our CRM, advisor portal, portfolio counting, performance reporting, and attribution functionality. Targeted completion of all InvesCloud implementation is also the first quarter of 2022. Thus, in early 2022, we anticipate that we will have replaced the entirety of our technology stack, a Herculean effort involving high cost and significant organizational stress. On the other side of this soon-to-be-completed effort, we expect to have far superior client experiences and a substantially streamlined set of business processes. Upon completion next year, we will have accomplished the following, an exceptional client portal, vastly superior client reporting, state-of-the-art financial planning, dramatically simplified client service processes. much smoother, more efficient implementation of our portfolios, fully integrated CRM and sales portals, and tightly integrated financial and HR systems. We will be capable of sophisticated business intelligence that is simply not possible with our existing technology. And next year, we anticipate realizing some cost efficiencies from improved business processes, as well as accelerated cash flow as heavy cash spending on technology rolls off. While depreciation charges will rise, cash flows will improve, as Paul will detail later on. In addition, during the quarter, we took steps towards simplifying our corporate structure with the exchange transaction with most of our remaining private unit holders, and Paul will discuss this in more detail. Further, we recently strengthened our governance profile through the appointment of Loft and Holder to the Board of Directors. Mr. Holder served as the co-founder and managing partner for Pine Street Alternative Asset Management, and his extensive industry expertise and experience have already proven to be a valuable addition to our board. We are committed to returning excess capital that we cannot more productively deploy to our shareholders. Our share repurchase continued to pace during the quarter, as Paul will detail, and last week our board authorized the resumption of the dividend set at $0.05 per quarter. Lastly, I'd like to discuss a firm's perspective on workplace flexibility as firms begin to reassess what return to office means for their businesses and employees. Our strategic priority is to maintain a culture and environment that fosters the high talent density that lies at the heart of being a very successful firm. we hold two principles before us in thinking about the future of work at Manning and Napier. Number one, a powerful consistent culture is a prerequisite for great success. Culture requires dialogue, collaboration, constant learning, and continual reinforcement of our core values and purpose. Ours is almost entirely a homegrown organization, which can be a differentiated strength when coupled with clear purpose and common values. This means ours is very much an apprenticeship model, which does call for co-location to a high degree as it is indisputably helpful in learning and acculturation. The second principle that we hold before us with equal importance is the value we place on being a caring organization that understands that employees are a heterogeneous bunch. We prize that heterogeneity. We celebrate the diversity of our people and are committed to increasing it. We also respect the desire for flexibility in work, as not everyone is productive in the same ways, nor are each person's life circumstances equally amenable to being in the office every hour of every day. The pandemic accelerated not only our own digital transformation, but the entire way our society views work-life balance. So we support flexibility, blending important face time in the office with the unique productivity aspects that can come with remote work. In doing so, we seek to foster a great firm with a powerful culture that remains a destination of choice for talented people. And with that, I'll turn the call over to Paul for more details on our financials. Paul?
spk00: Thanks, Mark. Good afternoon, everyone, and thanks for joining us today. The highlights for the second quarter included continued improvement in assets under management and revenue, resulting from the investment performance metrics that Mark alluded to earlier and further reduction in net client outflows. more progress on our share repurchase program with more than $5 million of stock repurchased through June 30th, and another step in the simplification of our complex corporate structure with the completion of the 2021 annual exchange transaction in June. Starting with net client flows and assets under management, AUM at the end of June was $22.3 billion, up from $21.1 billion as of March 31st. The 5% increase was the result of $1.2 billion of market appreciation, partially offset by $62 million of net client outflows. When compared to June 30, 2020, AUM has improved by $3.6 billion, or 19%. Though net client flows remain negative, $62 million of net client outflows for the quarter represents approximately half of the net outflows from Q1. Year to date net client outflows of $194 million represent an 83% improvement from net outflows of $1.1 billion reported this time last year. Second quarter gross client inflows of $787 million improved by more than $150 million or 25% over last quarter. Year to date gross client inflows have increased by 16% since last year to $1.4 billion. On the wealth management side, we reported gross inflows of approximately $215 million in Q2 and $440 million through June 30th, and we reported gross client inflows of $570 million for the quarter and $970 million through June 30th from the intermediary and institutional channel. Gross client outflows for the quarter were $850 million, slightly up when compared to last quarter, but improved from $1.2 billion in Q2 2020. Our turnover rate, which we measure as annualized gross client outflows for the quarter divided by beginning of the period AUM, was approximately 16% for the second consecutive quarter, which is an improvement from last year when our turnover rate was in the mid-20% range. For the six months ended June 30th, client outflows were $1.6 billion, well below the $2.3 billion in the first half of 2020. Our separate account retention rate during the quarter was approximately 98%. When looking at net client flows, we think it is notable the net flows for the intermediary and institutional channel turned positive for the quarter with $17 million of net inflows. The wealth management team remained in a net outflow position with $79 million out during the quarter. Also noteworthy, net flows for our mutual funds and collective trust turned positive in the quarter with approximately $64 million of net inflows compared to $126 million of net outflows from our separate accounts. The improvement in our net flows has been driven by the intermediary channel, which has historically been the most responsive to performance and where our mutual funds have good traction. So these trends do line up. As Mark noted, the majority of our track records look very competitive against benchmarks across one, three, and five-year periods, and therefore we expect that gross inflows should continue to improve across all of our channels. Turning to our second quarter P&L, we reported revenue of $36.1 million for the quarter with revenue margins of 66 basis points compared to revenue of $34.2 million reported last quarter with revenue margins of 68 basis points. Operating expenses were $28.3 million in the quarter, an increase of $365,000 compared to last quarter, and a $1 million increase compared to the second quarter of 2020. When comparing operating expenses against last quarter, we see that compensation is down 3%, though that decrease is offset by an increase in other operating expenses. The sequential decrease in compensation and related costs is mainly the result of seasonality of payroll benefits driven by the timing of incentive compensation payments, a decrease in share-based compensation due to the timing of equity award grants, and reduced severance costs during the quarter. I'm going to pause here and drill down a bit more on compensation and related costs. Compensation as a percentage of revenue was 51% for Q2, an improvement from last quarter when we reported 55%, and from prior periods where the ratio ranged from the high 50% to low 60% range. Part of this improving trend can be explained by the size of our workforce, which has decreased from 288 employees at this time last year to 272 as of June 30th. The net decrease in headcount is the result of ongoing reductions in middle and back office staffing that has been partially offset by additions to our sales teams in our existing geographies designed to expand our sales and servicing capacity. The other driver of the improved compensation ratio has been the implementation of our deferred compensation program in 2021, which we've addressed on prior calls. Under this plan, a fraction of incentive compensation for our highly compensated employees is deferred, invested in our mutual funds, invested over future periods. The accounting for the vesting of the deferred compensation over multiple periods has resulted in one-time compensation savings during 2021, which is contributing to the improved compensation ratio. As we look ahead in the near term, I expect our compensation ratio for the next few quarters will likely be in the mid 50% range, assuming no significant market volatility or changes to our assets and revenues. Longer term, our goal is to have a compensation ratio of less than 50%, which will be achieved through both revenue growth and efficiencies achieved through our digital transformation. Returning to our second quarter results, Distribution, servicing, and custody expenses increased by 6% during the quarter in line with the growth in revenue, and other operating expenses increased by 11% to $7.5 million in the quarter, with the change stemming from costs associated with our continuing digital transformation efforts, costs associated with the closing of our annual exchange transaction, and an overall uptick in travel and client-related activities. These expenses continue to run at approximately 20% of total revenue. All told, second quarter operating income of $7.8 million represents a 25% improvement from last quarter with operating margins of 21.5%. Non-operating income for the quarter was approximately $250,000 resulting in pre-tax income of approximately $8 million with margins of 22.2% compared to 6.7 million last quarter. Looking at our non-GAAP financial metrics, With approximately $800,000 of strategic restructuring costs, we reported economic income of $8.8 million. Similar to the first quarter, we reported a reduced effective tax rate in Q2 of approximately 16.4% caused by the tax benefits recorded by the company resulting from stock options exercised during the quarter. After accounting for our adjusted income taxes, we reported economic net income of $7.4 million or $0.31 of economic net income per adjusted share, a $0.02 improvement from $0.29 per adjusted share last quarter. our effective tax rate has been below the normalized 30 tax rate for the last several quarters as a result of both options exercised during the periods as well as other one-time activity including the impacts of the cares act in 2020. however for our planning purposes we continue to model an estimated 30 effective tax rate for future quarters turning to our mid-year results We reported revenue of $70.2 million, up 14% from $61.5 million this time last year, with overall revenue margins of 67 basis points. Operating expenses of $56.2 million are effectively flat compared to the six months ended June 30, 2020. Compensation-related costs for the half year of $37.2 million increased by $580,000 since last year, and represented 53% of revenue. This change was driven by increased variable incentive compensation accruals based on strong investment performance and improved sales for year-to-date 2021 versus 2020, partially offset by the aforementioned reductions in headcount and the one-time savings derived from the deferred compensation program. The $580,000 increase in compensation was more than offset by $800,000 of decreases in distribution, servicing, and custody expenses and other operating costs. Operating income of nearly $14 million for the six months ended June 30th, 2021 is a 180% improvement from this time last year when we reported operating income of approximately $5 million. Our year-to-date non-GAAP earnings per adjusted share of $0.60 is a dramatic increase from $0.09 per adjusted share reported this time last year and is a function of the improved operating results I outlined above, as well as the accretive redemption transaction that was completed during 2020. Turning to the balance sheet, we reported approximately $80 million of cash and investments as of June 30th, an increase of $10 million compared to what we reported on March 31st. This change in cash position is not unusual for us as we tend to use more cash during the first and third quarters in conjunction with annual and mid-year incentive compensation payments while accumulating more cash in Q2 and Q4. We continue to maintain a debt-free capital structure. The cash increase comes after accounting for about $2.3 million of share repurchases during the quarter under the $10 million share repurchase program we announced in February. The repurchased shares are being reported as Treasury shares on our balance sheet and will remain there until they are retired or reissued. Through June 30th, we have repurchased $5.3 million of stock or 714,000 shares at an average price that has been below our current share price in a manner that has been accretive to our Class A shareholders. In addition to returning capital to shareholders through our share repurchase program, I'm pleased to report that last week the Board of Directors reinstated our quarterly dividend by declaring a $0.05 per share dividend to our Class A shareholders that will be paid next month. We've always prioritized returning capital to shareholders. Earlier this year, the strength of our balance sheet led the Board to authorize the share repurchase program as a means to return capital and offset dilution stemming from our long-term incentive plan awards. The continued strength of our balance sheet, along with the renewed stability of our P&L, provided the board with an additional level of confidence to reinstate the dividend while continuing our share repurchase program. Looking at ownership, our adjusted share count decreased during the quarter from 23.7 million adjusted shares outstanding as of March 31st to 23.2 million as of June 30th. The 23.2 million adjusted shares outstanding includes 18.5 million Class A shares, 4 million unvested stock awards issued under our long-term incentive plan, approximately 420,000 privately held units held by legacy shareholders, and 330,000 vested stock options. As of June 30th, our employees and directors own 34% of the adjusted share count, including unvested awards, but only 19% of the votable Class A common stock. Earlier this month, we disclosed the closing of the 2021 annual exchange transaction. On June 30th, 1.6 million privately held units held by legacy shareholders were exchanged on a one-for-one basis for unregistered Class A shares of common stock. Because the transaction was completed using Class A common stock, there was no impact to our adjusted share count. However, upon completion of the transaction, the public company's ownership of Manning & Appear Group increased from 89% to 98%. As you'll recall, since our IPO, Manning & Appear Group has been owned by member entities, Manning & Appear Inc., the public company and managing member, along with Manning & Appear Group Holdings and Manning & Appear Capital Company, entities where ownership was held through legacy private units. With the completion of this year's exchange transaction, the ownership of Manning & Appear Capital Company has now been fully redeemed, and during the second half of the year, we'll be working towards dissolving that entity. To summarize, following the completion of the exchange transaction, Manning & Appear Group's ownership is split, whereby Manning & Appear Inc. now owns approximately 98% with the remaining ownership held by the remaining legacy shareholders of Manning & Appear Group Holdings. We'll have more disclosures on this in our Form 10-Q, and we'll provide updates on future calls. In closing, our focus remains on delivering outstanding investment results and exceptional service to our clients while driving growth in client inflows, AUM, and revenue. We believe that providing superior outcomes for our clients will drive superior outcomes for our shareholders. We've reported good progress on these items during the first half of 2021 and our operating results in turn have improved. However, considerable work remains for us to drive future top-line growth while completing our digital transformation and re-engineering our business processes so that we are positioned for scalable growth in the future. In the meantime, our balance sheet remains strong and provides us the flexibility to continue to invest in the business while increasing our return of capital to shareholders. That concludes today's call. If you have any questions on the topics addressed today, please contact us using the inquiries portal of our investor relations website, and we'll promptly address your inquiry. Thank you for listening and for your interest in Manning & Appear, and I'll turn the call now back over to the operator. Catherine?
spk02: Thank you. This does conclude today's conference call. Please disconnect your line at this time and have a wonderful day.
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