Virtus Investment Partners, Inc.

Good morning. My name is DeeDee, and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the investor relations section of the Virtus website, www.Virtus.com. This call is being recorded and will be available for replay on the Virtus 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 Rourke.

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 second quarter of 2024. Our speakers today are George Elward, President and CEO, and Mike Angerthal, Chief Financial Officer. Following their prepared remarks, we'll 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, and good morning, everyone. I'll start with an overview of the results we reported this morning, and then I'll turn it over to Mike, who will provide some more detail. For the second quarter, while we had net outflows, which were largely consistent with broader trends for active U.S. retail funds, we also had growth in strategic areas, including retail separate accounts, ETFs, and global funds, higher earnings and operating margin, both sequentially and over the prior year period, attractive investment performance across strategies, continued return of capital through share repurchases and our dividend, and we ended the quarter with a modest level of leverage and meaningful capital flexibility. One area of emerging growth to note in the quarter was our ETF platform, which surpassed $2 billion in assets under management, due in large part to 45% organic growth over the past year and positive net flows each quarter. We currently have 18 ETFs across a variety of strategies and managers, which have demonstrated strong performance, and we have a number of new funds and solution-oriented products under development. While ETFs are still a smaller part of our business, and some are not yet available at all of our intermediaries, we are focused on expanding our offerings. We've had several recent introductions, including an ETF from Alpha Simplex that we launched during the quarter, and we have several other funds under development. Similarly, retail separate accounts and global funds have been meaningful growth areas for us, and we expect them to continue to be drivers of growth as we focus on and invest in their development and bring new strategies to market. Turning now to a review of the results, total assets under management decreased 3% to $174 billion due to market performance and net outflows in U.S. retail funds and institutional, which were partially offset by positive net flows in retail separate accounts, ETFs, and global funds. Sales of $6.1 billion declined from the strong first quarter to primarily due to open-end funds and institutional, which benefited from a large mandate in the prior quarter. For retail separate account, sales of $2.2 billion were modestly lower than the prior quarter, but they were up more than 60% over the prior year period on continuous strong demand. Net outflows of $2.6 billion compared with $1.2 billion in the prior quarter, with a significant majority of the net flows early in the quarter, in the month of April. For the quarter, institutional had net outflows of $1.7 billion as redemptions included a partial client rebalancing of a large cap growth strategy related to strong performance. We continue to see a high level of interest in our institutional offerings from investors across regions and managers as investors seek quality active managers with strong performance. Retail separate accounts generated positive net flows of $0.5 billion and have delivered 5% organic growth over the past year due to strong investment performance and growing demand. We are focused on expanding the strategies available in retail separate accounts, particularly in fixed income and non-U.S. equities, to complement our current offerings. Open-end fund net outflows of $1.3 billion compared with $0.6 billion in the first quarter, with a higher level of net outflows in U.S. retail funds. Global funds and ETFs again generated positive net flows, and we saw improved net flows in alternatives, leveraged finance, and international equity. In terms of the flows we're seeing so far in July, retail separate accounts, ETFs, and global funds continue with their positive trends, and U.S. retail funds are tracking better than the monthly average of the second quarter, with notably stronger fixed income inflows. For institutional, activity remains broad-based across strategies and managers. and known wins, which we expect to fund over the next few quarters, exceed known redemptions. The sequential improvement in our financial results reflected the impact of the higher average AUM levels as well as the prior quarter seasonal expenses. The operating margin was 32.5%, up sequentially from 28.2%, which included the impact of the seasonal expenses. Earnings per share as adjusted of $6.53 increased from $5.41 in the first quarter, which included the seasonal expenses. Related to this more comparable prior year period, earnings per share as adjusted increased 20% on higher average assets and lower expenses. Turning now to capital, we maintain a strong balance sheet and generate significant cash flow that provides flexibility to take a balanced approach and to prioritize capital allocation as circumstances warrant, including returning capital to shareholders and thoughtfully investing in the growth of the business. During the quarter, we repurchased approximately 55,000 shares for $12.5 million and paid quarterly dividends that were 15% above the prior year level. We also made a principal payment on our term loan and ended the quarter in a modest net debt position at 0.2 times EBITDA. So with that, I'm going to turn the call over to Mike. Mike?