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 VRTIS Investment Partners quarterly conference call. The slide presentation for this call is available in the investor relations section of the VRTIS website, www.VRTIS.com. This call is being recorded and will be available for replay on the VRTIS 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.

Thanks, DeeDee, 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 2025. 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 2 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 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 these 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 them. 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 to give a little more detail. We delivered solid financial results in the third quarter, supported by higher average assets under management and favorable market momentum. We did, however, have net outflows as our quality-oriented strategies continue to face headwinds in a market environment that has largely favored momentum. Our focus remains on our initiatives to increase our retail separate account offerings, expand the availability of ETFs and key channels, and grow the wealth management business. Key highlights of the quarter included higher earnings per share and operating margin, strong growth in ETF assets with our highest level of quarterly sales and net flows, positive net flows in both fixed income and alternative strategies, an increase in our quarterly dividend for the eighth consecutive year, and we completed a debt refinancing, providing significant liquidity and flexibility to invest in the business and return capital to shareholders. Our exchange-traded fund business was a particular highlight this quarter. ETF assets reached $4.7 billion, up 79% over the prior year, with a strong organic growth rate over the period. In the third quarter, ETF sales and flows reached their highest quarterly level at $0.9 billion each, benefiting from strong investment performance and demand for some of our strategies. As of September 30th, 77% of ETF AUM were beating benchmarks over the three-year period and 85 were outperforming peers over the same period. We continue to focus on broadening access to our ETFs and key distribution channels and introducing compelling new offerings. We currently have 21 ETFs across a variety of strategies, and we have several actively managed funds in filing that we anticipate will launch over the next few quarters, including several growth equity-oriented ETFs from Sylvan, a real estate income ETF managed by Duff & Phelps, a multi-managed fixed income ETF collaboration between New Fleet and Sikes, and a set of building block ETFs from Vertis Systematic. And these follow the introduction of a global macro ETF from Alpha Simplex during the third quarter. On the inorganic side, I would reiterate my comments from our last call that the environment remains very favorable with attractive opportunities to add compelling new capabilities or increase scale. As always, however, we take a highly disciplined approach to inorganic growth and will act only when an opportunity is both financially and strategically compelling. I would note that in the quarter, we did have $1 million of discrete business initiative expenses that were related to inorganic activity. Turning to investment performance, while recent equity performance reflects our quality orientation in a market that has favored momentum, we are pleased with the performance we have generated over market cycles. Over the 10-year period, 70% of our equity assets and 77% of our fixed income assets beat their benchmark. For just mutual funds, 70% of equity funds and 80% of fixed income funds outperformed the peer median. I would also note that 25% of our retail funds are rated four and five-star funds, and 84% of our rated retail fund assets were in three, four, or five-star funds. Turning now to review the results, Total assets earned in management were $169 billion at September 30th, modestly below the prior quarter level, as favorable market performance was offset by net outflows. Total sales of $6.3 billion increased 12% from $5.6 billion in the second quarter, with higher sales of fixed income and alternative strategies. On a product basis, we saw higher sales in institutional and ETFs. Total net outflows for the quarter of $3.9 billion were unchanged sequentially in spite of our highest level of ETF flows and positive flows in fixed income and alternative strategies, which are more than offset by outflows in quality equity strategies. Looking at flows across asset classes, the equity net outflows largely reflect our weighting towards quality-oriented strategies. And while quality has historically outperformed over longer market cycles, it tends to underperform momentum and risk-on environments, which has been particularly stark over the past two years. Fixed income net flows were positive for the quarter and the trailing 12 months, supported by very strong investment performance both for the shorter and longer-term periods. For the quarter, we saw positive net flows in our fixed income strategies across several products, including ETFs, institutional, and retail separate accounts. Net flows of alternative strategies were also positive, primarily in ETFs. In terms of what we're seeing in October, flows across products and asset classes are trending similarly. ETF sales and net flows remain strong, though U.S. retail mutual fund headwinds continue. And institutional trends are also similar to the third quarter, with known redemptions exceeding known wins, and with the wins across a range of strategies, including such things as emerging market debt and global and domestic REIT. Turning now to our financial results, the sequential improvement reflected growth in average assets under management and stable operating expenses. The operating margin was up 170 basis points to 33%, or 33.4% without discrete items, with an incremental margin that continues to be above 50%. Earnings per share, as adjusted of $6.69, increased from $6.25 in the second quarter Relative to the prior year period, earnings per share as suggested decreased 3% on lower average assets. In terms of our balance sheet and capital, given the nearing maturity of our previous credit agreement, we refinanced with a new $400 million term loan and $250 million revolving credit facility, increasing our financial flexibility and extending our debt maturity profile with attractive terms. On a net basis, this added $158 million of cash to our balance sheet at the end of September. We also raised our quarterly dividend, representing the eighth consecutive annual increase. Regarding share repurchases, we were not in the market in the third quarter given other considerations and priorities. As a reminder, we bought back $50 million of our shares in the first half of the year, which was higher than our full year of repurchases in each of the prior two years. Buybacks remain an important component of our capital management strategy, and given our strong liquidity position, we intend to continue to balance return of capital to shareholders with investments in the business, including inorganic opportunities. With that, I'll turn the call over to Mike. Mike?