Virtus Investment Partners, Inc.

Good morning. My name is Michelle, and I will be your conference operator today. I would like to welcome everyone to the VRTAS Investment Partners quarterly conference call. The slide presentation for this call is available on the investor relations section of the VRTAS website, www.vrtas.com. The call is being recorded and will be available for replay on the VRTAS website. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer period, and instructions will follow at that time. I will now turn the conference to your host, Sean Bork.

Thank you, and good morning, everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the third quarter of 2022. Our speakers today are George Elward, President and CEO, and Mike Angerthal, Chief Financial Officer. Following the prepared remarks, we will have a Q&A period. Before we begin, please note the disclosures on page two of the slide presentation. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in the statements. In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with the GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement, which are available on our website. Now I'd like to turn the call over to George. George?

Thank you, Sean. Good morning, everyone. I'll start with an overview of the results we reported earlier today before turning it over to Mike to provide some more detail. And then I'll provide some additional background on our announcement last week of the Alpha Simplex Agreement. The equity and credit markets remained exceptionally challenging in the third quarter. Concerns over rising interest rates, inflation, geopolitical tension, and heightened volatility have negatively affected investor sentiment across products and asset classes. Our third quarter results reflected this difficult environment with year-to-date market declines meaningfully impacting asset center management and operating earnings. For the quarter, we had net outflows, primarily due to mutual funds, though we did have a significant improvement on a sequential basis. While retail separate accounts and institutional also had modest net outflows, we did have positive net flows in closed-end funds, private client, and ETFs. Though the environment remains challenging in the fourth quarter, we believe these types of markets highlight the importance of active management We are pleased with how our managers are navigating these markets, and we believe we are well-positioned to provide clients compelling solutions now and as investor sentiment improves. Turning now to review the results, total assets under management decreased 7% to $145 billion, primarily due to negative market performance in addition to the net outflows. Sales of $5.7 billion declined from $7.9 billion in the second quarter, due primarily to two large institutional client fundings in the prior quarter, as well as a generally unfavorable retail investor sentiment. In certain asset classes, however, including international equity, fixed income, and multi-asset, we had increased sales in the quarter. Net outflows were $3.3 billion, a meaningful improvement from $4.8 billion in the prior quarter. Net outflows were driven primarily by mutual funds, but did include the net outflows in institutional and intermediary distributed retail separate accounts, while ETFs and private client again generated positive net flows. Closed-end funds also generated positive flows, which were related to a rights offering during the quarter. Byproduct, fund net outflows of $2.8 billion improved from $4.5 billion due to a lower level of redemptions across strategies. Retail separate account net flows, which were modestly negative, also improved as a result of lower redemptions. Institutional turned negative, generating net outflows of 0.4 billion after many consecutive quarters of organic growth. The business is inherently lumpy based on the timing of client fundings. We still see a strong level of activity in the pipeline, including mandates that funded immediately after the end of the quarter. In terms of what we're seeing in October, The trend for retail open-end funds remains similar to the third quarter, which varied with the market. For institutional, we remain pleased with the pipeline and have seen several significant mandates begin to fund, including a global growth mandate. We also priced a $300 million CLO earlier this month. Our third quarter financial results reflected the impact of the market declines that began early in the year and continued in the third quarter. Operating income is adjusted with $65 million down from 78 million sequentially, and the related margin of 35 declined from 39.2. Earnings per share has adjusted decreased 16% to $5.76, in large part reflecting the decline in average assets under management. Turning now to capital, given our solid cash flow generation and balance sheet, we continue to return capital to shareholders while maintaining appropriate levels of working capital and leverage. During the quarter, we repurchased 10 million of our common shares, totaling 105 million over the past year, and have reduced shares outstanding by 4.7% since September 30th of 2021. We also raised our quarterly common dividend, representing the fifth consecutive annual increase. We ended the quarter in a net cash position of 47 million and continue to have significant flexibility in managing our capital needs, with total cash on hand as September 30th of 309 million a significant undrawn revolver, and $120 million in investments. While we are disappointed with the results for the quarter, they are primarily related to market and investor sentiment factors, from which we are not immune. In spite of the markets, we continue to be focused on the execution of our strategy, focusing on building out capabilities to position us for future growth as markets stabilize. Our positioning is underpinned, by our increasingly broad range of strategies and product offerings to appeal to clients across changing environments and preferences, our extensive distribution reach, including expanded non-US capabilities, which make us an attractive partner for boutique managers, solid investment performance across products and strategies, and a flexible balance sheet and strong free cash flow, enabling us to return capital to shareholders while continuing to invest in growth opportunities both organically and inorganically, including our recent agreement to add AlphaSimplex as an affiliated manager, which I will discuss later in the call. With that, I'll turn the call over to Mike.