SCU - Earnings call transcript Q1 2022 | Sculptor Capital Management, Inc.

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Operator

Good morning, everyone, and welcome to Sculpture's First Quarter of 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ellen Conti, Head of Corporate Strategy at Sculptor Capital. Please go ahead, ma'am.

Ellen Conti

Thanks, Judith. welcome call. and everyone, morning, to our Good

Financial Joining and our Chief Jimmy of Levin, which our President statements, uncertain contains Investment our Officer our Chief control. Chief Ritchea, Executive Dava outside Chief are Officer; me Today's many Operating call forward-looking are and and Officer. and Officer; of inherently Wayne Cohen,

our a those Before most Please financial may description differ, results Sculpture forward-looking any Capital's we get actual for statements. filings started, The SEC obligation forward-looking I other to the affect of any risk materially, factors update recent need statements. results, matters indicated from statements. to could that these refer these company our to undertake publicly and remind you does not our that in business to related possibly

share. a interest this we of or any GAAP the directly will be website. call in an not are referring release, and an reconciliations No as to of loss non-GAAP be financials diluted our shares on in income, of of GAAP. $XX.X about statements which to measures first prepared income other A and during net per earnings of Today, is or distributable our Information and most company today's posted these During $X.XX our $X.XX construed purchase comparable funds to we entities. basic any call, GAAP the XXXX other offer earnings reported are should in quarter Class that available accordance made U.S. or with economic measures million per

share. million fully $XX were per distributable diluted First quarter $X.XX earnings or

and non-GAAP per on the call discussed earnings and both Additionally, hand Dava Jimmy. metrics. to will now income we will by $X.XX our Class share. A All a distributable I metrics declared dividend over cash Jimmy be economic earnings of

James Levin

more what backdrop. detail. to investment to historically massive cover as in over our equity, state major are both first world it macroeconomic significant We're were quarter, all a difficult Good to fund we the everybody. pretty in Thanks results broad business, pretty for the credit Dava the an stress even has or the over in pretty We highlights to almost fixed to well in going leading of in what much disruptions market against declines some markets, certain joining I'm and our been handing that swath income leaving call. for cases. especially a business financials for able of either incredibly of distress go in as morning, the before deliver proud investors every saw

look you been to generate and after like our outperformance. for historically, this able weather them, been If times like been able investment both have before, storms generally style. typically We've to during this we've good

widening we capture maybe outperformance use rise enter general investments, board. credit, the where welcome spreads, the we funds, capabilities, dramatic truly like been real as then our focus has funds, multi-strategy of estate as stress which this at across oftentimes we detect a world a to historically our harder things rates to longer-term business, rates catalysts our specifically Say be environments an is both as material a estate spreads, owners capital from the certain some assets like in almost and to repricing widening been difficulties. an from significant opportunity investment like a the this So tend rates, from distress as corporates, the be general dynamic have can a risk capability our in for as has to complexity quite in for at a remain a pretty and where distress premium over acute, like ours, us in like who of really within and driven Periods capital which what that safe across opportunity information, create. need extent the thrive. there from and to credit that's from or of our these real core recession, to the is inflation, that's been our by in material them for for looking historically illiquidity And also challenges to in flexible tends great funds, board. of haven to well a market And face providers rising continue seek clients of those forefront both and been market and

first is quite meaningfully initiatives. against future, the overall discussing out and near what line pretty challenging to We've and point for flows. is able to future front pretty to but material absolute side went that the are and into really difficulties the of what turning business. environment zooming us and thing are from We lot, XXXX a different feels side, net And intermediate some that We inflows long was for for X what that business of a for the the flow stretch an the basis, on talked about we're inflows trend on flows this quarter, the had inflows importantly turning say momentum. well. that for been over gross We've funds continued trajectory and powerful On doing gaining net the to continue doing into before the our as material in into first we years long-term are it plant that business. it fact quarter that again, near-term also of sure, growth We look of pretty We've said to working XXXX, strategic $XXX multi-strategy over predict macro was and in traction. like, like a we million first we the but it's just can't and funds. In we've means seeds important million. positive all again, Gross a on I'm almost new $XXX we'll the what it inflows multi-strategy a been quarter Q&A. closes

which close credit seventh a recent in first real second close estate in is the had our Stacks, called credit I most believe we We our in credit a fund. fund had first history. So fund closed-end closed-end our

Our fund obviously million. several to first that on closed-end I estate should fund estate credit $XXX we on $XXX around Estate most credit our Real million. recent was Fund And fund ago fund additional Credit say. closes years credit and I have real hope Stacks believe II, was the both real --

closing other And in insurance of the that The to structured specifically the of solution needs investment vehicle earnings a largely mentioned that quarter meet release. the our tailored in our we development was clients. is

base the real what the universe, optimize for that perfect multi-strategy client the for on solution do certainly as we that do at their and the tailored their first looks our liquidity and on industry capital a we well credit investment to side, rating insurance this. estate on of side And so when balance the look their sheet. is we looked side, a we're lot as the as capabilities But needs, return to is across needs, what And requires their needs. it needs not

X- life. we The the wide fundraising so is channel. time investment markets note executed of X-year for with solution this do to We've CLO think talked this is to have channel, a as solutions were capital allows a it'll institutional help us It's create that it's those that, over skills a through breadth for to to in in solution develops more first to and pretty our allocators sheet, in is to balance of both akin to really large That sheet also to a do long-term horizon. industry for that those but look compete, sheet. Also as started balance growth. over hopefully that moving And that create about is from think having that at strong product items. this a continue which it style help alternatives broader need for be of to where deploy more market, can were And investors capital a and how funds not our able a sheet. view X The to return when many Away traditional use compete the allows support for a sheets. as our through type we time. capital-efficient the balance franchise to on because have We across balance great players provide format to our quarter executed and utilize we our we investors scale trend are first we strong we to we that structure, investment of marry They that well. who a times, we requirement. balance great the

the what or for return addition always that optimal in In and parallel, to this in is we will structure a form. capital but what that, said not to time shareholders also evaluate we and we've and capital to additional long whether did

areas knows, stock, we capital. we about power buyback is. we we the presented we a buying stock, type And have when And our we of It's is we we see quarter. of our and our to math that in future a started to management our think And today want all our in to that a earnings so with We a is quite do When own we compensation look incentive authorized in of any excess as -- at that what we to list asset But think are look lot math, our first back that always of and parallel. wanted represents on use in against of buyback, own that our grow in through on then with long which last because our think really what earnings fee-related we net think execute when the that we call a start that went going opportunity stock we everyone that we position. ABURI. evaluate which tough require fee-related power call, capital. of attractive ABURI adjusted at we we we know the our do

balance to So we sheet. to our try continue will build

take our and we to We a great try think try sheet balance opportunity to will is will of for growth, stock. back what to we to our buy continue continue deploy own and advantage

So will it to hand over with I that, Dava.

Dava Ritchea

initiatives the and reducing the everyone. of our rebuilding Thanks, holiday, discussed, balance Since just our few a key by on growth debt distribution Jimmy, then deficit start our first defense we on was strategy ensure during net was million materially asset the that play increasing topics investing challenging our and focusing expanded the management a shareholder position. capital of end and sheet million our to in balance of position build sheet $XXX.X net to up that Jimmy $XX.X times have from play goal good offense like start sheet, second, balance morning, by by of transparency. and, XXXX. on focused for business. first in to can on the of The March, Adjusted finally, assets we as of to I'd

was product. of our One structured in launched made newly alternative we investment the investments

We the that this a long-duration funds investments date. to to solution middle platform. to for money capital including we the excited future. this fund X, insurance funds for are ahead launch on business real product The credit deployed the in of and commitment investment structured management market is ICS April our the quarter provide continue reported and estate our capital underlying hope alternative the deploy these in into across capital on to solutions assets the on our funds. third and various platform, started was as We clients on our across multi-strategy the structure deploys closed initially our March of Beginning under into

was the distribution from business. and various capital funds ICS we reported underlying the into this deployed, As corresponding inflows

based in this reporting financial forward, starting underlying this full structure solution located for Because quarter. in will invested this Going our our product, have you fund consolidated GAAP on our onto the clients we we investments. see alongside AUM the statements the

While consolidation. will statements, GAAP economic our income be to in impact from appear will items new there financial this no

Next, to strategy. I expand wanted on management our capital

of amount million outstanding. program current share $XXX of this stock. public the a price, quarter, authorized the a up repurchase At to of During our our represents common stock share significant Board

price the prices, was of which the million average $XX.XX, million million X At we these attractive During for uses shares X. believe total average our the for capital. of through of $XX.X XXX,XXX approximately at price an quarter, a one this stock repurchased $XX.XX most the an in we May is of shares aggregate quarter, of $X.X and at

Class per represents a quarter, announced the of also distributable for XX% We cash $X.XX of first dividend earnings. A share which

to expect then We to XXXX. expect true quarter, And A a dividend timing full year second to income XX% This dividend in our dividends earnings. sensible the distributable to as payments is earnings aligns distributable of policy with quarters expenses. for approach dividend a target pacing bonus better to to of of dividend and to more third of fourth it prudent earnings Class up incentive the we the bring during the XX% XX% given shareholders year of our and

change a not just to the those the is this year. our to payments dividend Importantly, annual timing throughout of policy,

As pay first to dividends Class Taking million million share the dividends a via shareholders. quarter, for via holiday, repurchases of during the repurchase we the program we returning dividend. that reminder, and shareholders, are $X.X to million $X.X $X.X our and only distribution the share together, A

mind, areas quarter is a the last growth we balance in ongoing annually holiday. distributable and balance will thoughtful We're proposed holiday of shareholders. on deploying expecting that to XX% there strong to dividend distribution in to distribution the We continue XX% of of gave our to change once capital maintaining no capital be returning and earnings core to sheet, still expires. policy pay post guidance our the that between With

business to are related I'd important we're AUM table an year the Lastly, metric we've believe and proud rates focused calculate AUM, to quarter had our is this fee-paying work directly like to of allowed our update on thoughtful the roll-forward communication. shareholder done the the metric and reporting. our an we fee and disclosure that you in that materials past We transform our To disclosed average on over better aligns end, reporting. remain our this disclosure on we the our providing introduced showing peers. as transparency the we but Previously, paying now and to fee provide

AUM filings. We and are monthly also performance multi-strategy announcing X-K a our change to

will a issue monthly we disclose forward, Going this X-K to not information.

our our This of disclose of on website multi-strategy is accounted and will revenues our our incomplete AUM. the as funds monthly the Previously, more at with multi-strategy versus just part platform appropriate majority our has We our representing earnings. and disclosure majority on this today, recent change quarterly past have our it we as believe now we been provided the today. disclose for of We a of distraction filing an we business vast and meaningful XX% basis, in basis. release. give into window was If state on confusing window diversified our grown quarterly think of complete of the to as earnings fund release, business company. of will our AUM continue We and therefore for our to a successfully therefore our as our monthly a it's is the the AUM business public for better look part standard and performance earnings our

fundamentals to to any ensure I'll the are continue business providing the open we to up time earnings call shareholder you to improve to to it overall our over will over appropriate operator to information questions. that, We the transparency With and meaningful strive is and and drivers. key that hand

Operator

of Citigroup. Bill from comes question first Katz The Instructions] [Operator

Bill Katz

Okay.

that's here? Could is from part going mandates with about bit just fee-paying of you to level? channel you I what the of this think sheet I a sort doing and And questions. just start you're in of sort that insurance migrate Bill can a questions. will balance of into to bit for more a platform. a incremental AUM? think could these But of then little terms the of sort this How little related mentioned unpack cash much ICS just ramp actually couple how Katz. back in the of should move maybe into packing broadly, such Maybe your apologize we of the Jimmy, investments we out be business

James Levin

Sure.

prepared this estate and day question, the I it capital in the closes, her vehicle underlying think, in across It ICS deployed across but just funds comments, money see comes or is then the Dava where clarified then transaction deployed multi-strat capital the the over closed, the the and thereby that reflected you'll time. and so the it largely in capital invests those in being which Once in and has funds platform credit appears ICS. line into market underlying appropriately in So already gets hopefully, capital been the real mid-March, happened that deployed reflected items.

line credit clients this clients for the industry estate that what we historically we form a is, out have market insurance insurance think yet for that particularly until in of is more ours. one great is specifically to about funds. do to that we've future SMAs, be investment what other business do able estate solution, of deliver structured to is as thought real have of market of generally. we a structure is big industry. the for do great how far What forms have, real of to generally and market alternatives of allocators probably et the assets skill what way whether that's more be relationships, by directly type direct a whether or we cetera. future an our And focus insurance to And figure plenty again, forms of meaningful as we really insurance helpful to that industry that and in we our the now of that out the biggest As funds, in figure it's just suits the talked most we the ought in the There's what is alternative investment way how not before, credit this And but to in to of the and insurance funds. way, more continues of all

and Bill, you think more it quite can to numerical but I try follow, have some specific didn't questions, you, again. I back kick you I'll

Bill Katz

a I'll follow-up. leave for those

for picture So big maybe you. another question

makes stock that allocation decisions. capital the certainly to us. where is trading, sense the appreciate Just Particularly

sheet, look balance about migrate your here, as think a from fair I go cash your So as to investments. at amount of you forward you

now we that's what earnings you geared and about versus Or as should here, you balancing to buyback is your real-time cash of So see balance more think think stream liquidity deep function pretty sheet about flow? a value it little how balance free a -- as year-end?

James Levin

Yes.

think we're what returns the deploy capital sheet our earnings I long-term and our versus doing liquidity profile is take think of economic back our our versus versus balance are the math to it going constantly versus mean buying I what can stock. as we own goes. short- of how that we position the of all that we're returns

whole there's moving we go that and into evaluate host pieces it, reevaluate. of So a continuously and

Bill Katz

Can a on Just sneak more like I seems certainly interplay it's one about to in? just accelerating, for some between with And protection which we that negative is it the versus much backdrop, How see. more think hedge how just the potential mandate the fits certainly, stall of well your the capital should fund, might momentum? of volatile which nice what type return?

James Levin

Sure.

So itself in solve return and necessarily negative of doesn't momentum.

Our the broader objective fraction of markets. downside is experience to of equity a

you the funds returns our significantly is crisis, to market's negative in go how The COVID crisis can the So hedge down the us how can volatility. for versus our are or markets, the and volatility back our is key returns. experience versus financial market,

VIX and equity to asking. right? bonds per as broad IG especially get the XX% we've As So speaking, But markets and those have indices returns you're are of generally it's are when down you a bouts and near-term of you're not difficult. themselves make world do high-yield when volatility, that It's volatility to down corporates, even negative XX%, depending especially problematic hard forecasting like se is hard forecasting X% treasuries, to said, are do at on short-term in way far always that. things extreme in the in at day where XX looking explosions these just flows, that as

Operator

of The next Gerry question O'Hara comes from Jefferies.

Gerry O’Hara

I -- holiday? XX% just And a where on just perhaps you to come could at? to if in but the on suppose on remind XX% think it through as related I arrived distribution Perhaps stand way of us quick prior that, this that you how to relates Great. range quarter, to update was kind that holiday as touched to give you can distribution you a post decision working us the down

James Levin

Sure.

So to compelling what some of be it's is we've XX% if capital, in likely below to XX% to XX%. reasonable XX%. And what But there generally our incredibly earnings. expect business use motivates some be to XX% that distributing to portion be was the to excess of said it not could of as in pretty that, expect. of XX% a range is And we want

we think thing think around investors guidance. have reasonable I to it's bound framework And the do. what it's come XX% expect, and a lower the that's to

to basically as of why do capital want XXX%, long why in we business always There a a of some. that accumulating and is we -- the to pursuit. the such balance continue building far emphasize, things the list we not XX% sheet as is require that As want never-ending of be we to

reasonable widest XX, continue repurchasing to so businesses, to of to want we to new because think stock, available we a because portion the that be great XXX, offense, distributing And to products there's seeding earnings want as the want have we're as creating view we or bound as new capital upper we our be to then be possible range now, some times guidance reasonable so of be ability our whether if of we earnings. retain doing as X able to play XX we well. to have we bound means that want that And to the lower

Dava Ritchea

million. In $XXX earned terms of were of $XXX where we earn requirements are We've the distribution that. to in holiday, million the

we $XXX million go. about So have to left

Gerry O’Hara

the unpack little increased or guess I then commentary suggesting just here Okay. go XX there That's commentary that could platforms, driving some over it next sense months? where to remarks of us and allocators. XX bit what's able new around earnings helpful. gatekeepers, was kind hoping and guess I a release, that a the I give asset in to you of might prepared traction And was be in the potentially

James Levin

Sure.

as difficulties those So solid of of the from performance the we that were what's some investment the as I what the efforts well took time past on driving as as issues well of remediation past. in continued think passage is

to things XXXX us we this then those bigger to generally look X- to It's the that in for has and net we in prior a like, flows belabor try and X-year there of look what was to position And So not steps that and telling take were confidence. quarter, out, to of gross went I once obviously flows think increased or and timing, frankly, needed very but a time which did a or in period at XXXX. how pinpoint needed to why traction. started what difficult highlight, to of fairly obvious we X- us a then capital new were, through point, that pass for what attract hard looked And for the the gives put or reasons. time accomplished attract that. to look we to to managing where years, with, it over just some during our world capital. the continues specific thing at were time, into underlying those they led And chart of the cause X- that people I those is analysis then thankfully do services is great pretty clients' picture all needed shape And we a we of to which to we of believe job to that seeking or look the very is begin is period at that thing specific we multiple need do and a laid able do items had and to like to we think our ourselves various

Operator

call Conti. ahead. further any questions go showing my Ms. will to turn I not in queue. I'm over question Please the now

Ellen Conti

interest joining for in thanks, today and Judith, you, for Capital. Thank your us Sculptor everyone, and

please any hesitate to have you don't questions, out. reach If

Operator

you. Thank today's conference. gentlemen, Ladies that concludes and

disconnect lines. may You your now

Sculptor Capital Management (SCU) 6 May 222022 Q1 Earnings call transcript