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 Work.

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 fourth quarter of 2024. Our speakers today are George Elward, President and CEO, and Mike Engerthal, Chief Financial Officer. Following their 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 the 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 with the results we reported this morning, and then I'll turn it over to Mike for more detail. We continued to deliver strong financial and operating performance in the fourth quarter, though our results did include net outflows, largely due to a partial institutional redemption. Key highlights of the quarter included positive net flows in focus areas, including ETFs, global funds, and retail separate accounts, attractive investment performance across strategies, an operating margin at the highest level in two and a half years, ongoing introduction of new products, and we ended the year in an in-net cash position with significant financial flexibility while continuing to return capital through share repurchases and our dividend. As it relates to new product introductions, we remained active during the quarter in our focus areas. In ETFs, following the launches earlier in the year of newly actively managed ETFs from Kane, Anderson, Rudnick, and Alpha Simplex, In December, we introduced a new ETF from Sykes and have several others in development. The newest ETF invests in private credit collateralized loan obligations, which Sykes is well positioned for as it currently manages nine CLOs with over $3 billion in assets and has over two decades of CLO experience. We now offer 20 ETFs across strategies and managers and have seen significant growth. While ETFs are currently a smaller part of our business at $3.1 billion, we They have doubled in size over the past year with consistent organic growth and have generated over a half a billion dollars of sales in the fourth quarter alone. In addition to ETF introductions, during the year we launched four global funds, adding to our lineup that continues to generate positive flows. And for SMAs, we've developed a number of offerings across a variety of asset classes, including more solution-oriented multi-strategy products. We continue to prioritize increasing the availability of our ETFs, global funds, and SMAs through intermediaries. Turning now to the results, total assets under management of $175 billion at December 31st decreased sequentially from $183.7 due to net outflows in institutional accounts and U.S. retail funds, partially offset by the positive net flows in ETFs, global funds, and retail separate accounts. Sales of $6.4 billion compared with $6.6 billion in the third quarter as higher institutional sales led by global equity and alternative strategies were offset by lower sales of U.S. retail products. For the full year, total sales increased 3% to $26.8 billion. Total net outflows of $4.8 billion included the partial institutional redemption, excluding which net outflows were $1.5 billion and compared with $1.7 billion in the prior quarter. Reviewing by product and institutional, the net outflows of $3.8 billion were largely due to a $3.3 billion lower fee partial redemption of a multi-manager mandate, which the client added an additional sub-advisor, resulting in reallocation from current sub-advisors. Excluding the partial redemption, which was implemented and completed in the fourth quarter, institutional net outflows were $0.5 billion. Retail separate accounts generated positive net flows of $0.1 billion and delivered 4% organic growth over the past year with consistent positive net flows in the intermediary sole channel and in our $9 billion wealth management business. Open-end fund net outflows of $1.1 billion were essentially unchanged sequentially. Consistent with market trends, U.S. retail fund net outflows were driven by equity strategies partially offset by positive net flows in fixed income. while ETFs and global funds generated $0.4 billion and $0.1 billion in positive net flows, respectively. In terms of what we're seeing in January, U.S. retail fund flows are tracking similarly to the fourth quarter, including continued positive net flows and fixed income, and ETFs are actually running ahead of the average monthly flows of the fourth quarter. For institutional, known redemptions for the first quarter modestly exceed known wins, with the wins representing several different managers and strategies. In terms of our financial results, we delivered strong earnings and margin growth for the quarter and for the full year on higher average AUM levels and ongoing expense management. With higher revenues and discipline around discretionary spending, which resulted in a reduction in other operating expenses for the full year, the operating margin of 35.1% reached its highest level since the second quarter of 2022 and was up sequentially from 34.4. Earnings per share, as adjusted of $7.50, increased 8% from the third quarter to the highest level since the first quarter of 2022, and for the full year, earnings per share grew 20%. Turning it out of capital, we ended the year with a solid balance sheet, including a net cash position of $30 million, while having consistently returned capital to shareholders and invested in the growth of the business. During the year, we repurchased or net settled over 250,000 shares for $57 million and raised the quarterly dividend by 18%, representing the seventh consecutive annual dividend increase. And with that, I'll turn the call over to Mike. Mike?