Fiera Capital Corporation

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to FIERA Capital's earnings call to discuss financial results for the first quarter of 2024. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. As a reminder, this conference call is being recorded. If you would like to ask a question during this time, simply press star 1. On your telephone keypad. If you would like to withdraw your question, please press star 2. Thank you. I will now turn the conference over to Ms. Marie-France Gay, Senior Vice President, Treasury and Investor Relations. Ms. Gay, you may begin your conference.

Thank you. Good morning, everyone. Bonjour à tous. Bienvenue à l'appel de conférence de FIERA Capital pour discuter des résultats financiers du premier trimestre de 2024. Welcome to the FIERA Capital Conference Call to discuss our financial results for the first quarter of 2024. Note that today's call will be held in English. Before we begin, I invite you to download a copy of today's presentation, which can be found in the Investor Relations section of our website at ir.fieracapital.com. Also note that comments made on today's call, including replies to certain questions, may deal with forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ from expectations. I would ask you to take a moment to read the forward-looking statements on page two of the presentation. On today's call, we will discuss our Q1 2024 results, starting with an update on our AUM flows, followed by highlights of our public and private markets platform, as well as our private wealth business. We will then review our financial performance. Our speakers today are Mr. Jean-Yves Desjardins, Chairman of the Board and Global CEO, and Mr. Lucas Pontillo, Executive Director and Global CFO. Also available to answer questions following the prepared remarks will be Jean-Michel, President and CIO, Public Markets, John Valenti, President and CEO, Private Markets, and Maxime Minard, President and CEO of FIERA Canada and Global Private Wealth. With that, I will now turn the call over to Jean-Michel.

Thank you, Marie-France. Good morning, everyone. Thank you for joining us today. The year began with optimism of a soft landing where a recession would be avoided and inflation would continue to improve, thus setting the scene for the dawn of a cycle of central bank rate cuts. This backdrop led to impressive equity market returns, which sustained gains in the first quarter, maintaining the momentum seen over a period of 12 months. Better than expected economic performance, particularly in the U.S., has impacted the trajectory of inflation metrics and pushed out expectations on the timing and magnitude of rate cuts. While this situation is not consistent in all economies, With Canada and Europe experiencing a clear downtrend in inflation, the U.S. economy continues to defy expectations, keeping inflation uncomfortably high. The resultant interest rate volatility and reduced rate cut expectations lifted government yields higher and dented bond market performance. Against this backdrop, We are pleased with the performance of our investment asset classes, which contributed to assets under management of $165.2 billion as of March 31, 2024, versus $161.7 billion at December 31, 2023, representing a growth of $3.5 billion in the first quarter of the year. Assets under management in our private markets division grew 400 million, or 2% to 18.9 billion, driven by new contributions of 600 million in the quarter. The sustained strength in equity markets in the first three months of the year drove a rise in assets under management in our public markets division, which saw an increase of 3.1 billion or more than 2% from $143.2 billion to $146.3 billion in the quarter. Favorable market impact of $6.4 billion was partly offset by negative organic growth of $3.3 billion in the quarter. The public markets asset class, excluding pine stones, saw an increase of $1 billion in assets under management. While the division benefited from $1.5 billion in positive market performance, it also generated $700 million in new mandates across equity and fixed income strategies. This was partially offset by $1.2 billion of outflows entirely attributable to rebalancing in lower-fee fixed-income strategies. Of note, when looking at year-over-year assets under management, public markets, excluding pine stones, grew by $3.6 billion, whereas assets under management, subadvised by pine stone, fell by $3.3 billion. Hence, despite a total of $7.2 billion in AUM, Having transferred directly to Pinestone in the last 12 months, the public markets overall AUM has increased over the period. Of the negative organic growth in the quarter, 2.8 billion or 85% of outflows were connected to assets under management subadvised by Pinestone, of which 2.7 billion related to assets under management that transferred directly to Pintstone and represented two US-based institutional clients. With respect to the balance of $3.1 billion of a large financial intermediary that we mentioned in the last earnings call, there were no transfers to Pintstone in the current quarter. We continue to expect this amount to be redirected to Pintstone by the end of the second quarter. Excluding this, management expects that assets under management from last mandate transferring directly to Pinestone to be in the range of 3 to 4 billion this year. The favorable market impact in the quarter on assets under management, subadvised by Pinestone, was 4.9 billion. which more than offset the pure leakage of $2.7 billion seen in the quarter. So I will now turn to our commercial and investment performance across our asset classes in the first quarter. So starting with our public market asset class. The public markets asset class, excluding assets under management subadvised by Pinestone, saw positive net organic growth, of over $650 million into our equity strategies, with new mandates in Atlas Global Equity combined with new flows and positive net contributions in U.S. growth equity leading the rise. This was largely offset by approximately $1 billion in negative net contributions, where the outflows for the quarter were essentially all in fixed income strategies and overwhelmingly related to negative net contributions from rebalancing out of these strategies as clients adjusted their allocations in the quarter. Turning to investment performance in public markets for the quarter. Performance in equities was mixed in the first quarter. Large-cap U.S. equity core outperformed its benchmark as did large-cap Canadian equity strategies posting positive relative returns and ranking in the first quartile for the period. Global equity strategies underperform their benchmarks in the short term. This is largely due to sector allocation, underexposure to technology in particular, as well as transitory factors affecting certain holdings. Dislocations from the indices are normal on a long-term basis. The strategies continue to rank in the top quartile and outperform their respective benchmarks. The frontier market strategy maintained its excellent track record in the quarter, with an additional 640 basis points of outperformance, adding up to close to 23% of value-added on a one-year basis. Our emerging markets select strategy also maintained its strong performance, outperforming its benchmark by 950 basis points in the quarter. The strategy was, excuse me, the strategy has outperformed its benchmark by 14% since its inception in 2021. Despite the loss in momentum seen in bond markets in the first quarter of 2024 from reduced rate cut expectations, almost all of FIERA's flagship Canadian and foreign fixed income strategies generated positive relative returns. The active, strategic, and integrated core strategies all generated positive results relative to their benchmarks, largely due to the spread benefit from their corporate and municipal overweight positioning. Turning to our private markets platform. Our private markets platform offers stability and enhanced yield through all market scenarios and remains particularly attractive in the current uncertain economic environment. However, Higher interest rates have made it a more challenging environment for fundraising in private markets, with certain sectors being impacted more than others. Despite this, the benefits of FIERA's diversified platform can be seen in the first quarter of 2024 with positive net organic growth, of more than $500 million after returning capital of $55 million to investors. New contributions represented several new Canadian clients in private debt as well as a new U.S. client to agriculture. Of the $600 million in new contributions in the quarter, $200 million was deployed, and we maintained a pipeline with 1.4 billion available for deployment into future opportunities. Now with respect to investment performance for private markets. In real estate, the performance of the Canadian and the UK real estate strategies have begun to reflect the first stages of a more favorable macroeconomic landscape and recovery for the industry. The persistent headwinds experienced since early 22 are beginning to subside and valuations are stabilizing. Throughout the higher interest rate cycle, underground operating and rental fundamentals, with the exception of the challenge office sector, have been solid and are set to gather steam as their recovery begins. Portfolios more heavily allocated to the industrial and multi-residential sectors, such as strategies managed by Fiera Real Estate, are best positioned to outperform going forward as their recovery takes hold. Our private credit strategies. continued to perform well as they benefited from strong yields. Our real estate debt strategies in both Canada and Australia and New Zealand returned over 3% each in the quarter. Infrastructure private debt joined the financing solution for Grinalia, a leading Spanish developer of renewable power projects. Also, Fiera Private Debt achieved the first close for the seventh vintage of its flagship Canadian corporate credit strategy in the quarter. In private equity, the strategy continues to generate strong positive performance supported by continued growth in the portfolio. This included the closing of a new investment in an independent retirement plan record-keeper, with the benefit of a highly recurring revenue model and low customer concentration in the US. Now, lastly, the Global Agricultural Fund, which saw a near doubling of its assets under management in the last two years, closed another new partnership in the quarter. This represents the fifth partnership in the US and will provide exposure to two new commodities, nursery trees and walnuts. In addition, Agri investor named Fiera Comox as the 2023 winner of the Agri Business Deal of the Year in Europe for the acquisition of the Iberian olive oil business in Noleva Group. And finally, we confirm that the newly established sustainable timberland achieved its first close in the quarter. Moving on to private wealth. Private wealth saw growth of $300 million to reach $14.3 billion in assets under management in the first quarter. This was largely driven by market performance. Under the new leadership of Maxime Minard, The Global Private Wealth Division underwent a reorganization during the quarter. This included the establishment of regionalized teams aiming to boost community engagement, deepen client relationships, and drive client retention and growth. Each regional head will focus on their region's unique needs, ensuring tailored services for our clients. A good example of the focused strategy is the success we are seeing in Canada in building relationships with First Nations. Under this focused leadership, the Private World Group is well positioned for growth with significant opportunities in the pipeline. Now with that, I will turn it over to Lucas for a review of our financial performance.