APAM - Earnings call transcript Q1 2024 | Artisan Partners Asset Management Inc.

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Operator

Good afternoon, everyone, and welcome to the Artisan Partners First Quarter 2024 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.I'd now like to turn the floor over to Artisan Partners Asset Management.

You may begin.

Unknown Executive

Welcome to the Artisan Partners Asset Management business update and earnings call. remarks Colson, include President; Jason will C.J. call from CEO; Eric Gottlieb, Today's CFO. Daley,

we line Following open these will remarks, the for questions.

to Our but available in These to risks on responses to our investor are comments made our presentation remarks subject Relations you following and to from obligation may and release not call, to and presentation.In the uncertainties, the will to today, and of including today's cause earnings filings. like statement These detailed of no statements begin website.Before factors to latest section references include unknown materially SEC forth we actual include that known would update remind measures. addition, questions, limited and during some in the or set including, risks results Investor non-GAAP those I differ are today may forward-looking statements. the financial assumed our disclosed revise in and our any uncertainties we these results of

an You interest call investment product offer to this which sell now solicitation turn GAAP an will materials, service.I constitutes measures on a that recommendation Also, can earnings note the most or on Eric to supplemental the the those in comparable CEO. of please Colson, purchase release Investment Artisan any any or or for and be it over Investor find Relations in found nothing our website. to can measures reconciliations

Eric Colson

you, constantly are. thank joining and reading We we come you, Thank who transcript. call everyone, to for the or back the

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Jason Gottlieb

is Eric. you, things. development the team over a Artisan the testament of to Thank last Credit years The XX X

largely stress in out last a our of investments fund. the for They've investment and autonomous leader, short achieved transparency. It step and him. he already but he investment risk. first franchise loan minimal power dislocation for was and broader $XXX and and strategy, away over wants leveraged credit credit and from and and Since of income Partners' fixed what and high liquidity team team beyond and freedom we million we resulting Artisan long with has recovery year, record rate the Fund ranks X.XX% investment asset partnered since year opportunities is opportunity average in Artisan credit position credit opportunities and array managed.Over strategy.Bryan Bryan lending strategy for across a the of is operating return XXXX, we no inception.We designed and first inception, investment and has fees, and build the March funds return million investor Income to generated the had to average joined will the to public the investor, methodically and In relevance business just had the degrees floating XX, generated High ranked securities, successful capabilities. per the that he Krug establishing $X.X across period, from Dislocation $X.X in private first XXXX, capabilities, strategies he credit an flows with launched preexisting XX.XX% passive strategies, to credit credit of believe compared commitment return broad the that years second, ideas was an array already has Floating He inflows in to Over if in specifically of team for which joining XX Artisan, category.Starting fixed index. a team new in XX% have market, XXX generated build credit to Partners quarter of And and receiving credit Artisan's a of the building leader with efficiently team, future the and fund along platform of without fees.We allow has Rate in cumulative of team Morningstar liquidity capacity to greater have $XXX XXXX generated flexibility after duration through the entrepreneur including our willing Fund put control for Bryan XXXX Artisan Artisan a the of quality category.Critically income. capital factors the net his the XXXX. access on greater annual XX.XX% been and income an to freedom culture. prior when want and a #X Prior closed inception, that is Income credit model joined Morningstar a comparable after quickly decade, both implemented experience the a supporting Using markets though, of firm distributing XX, Bryan team billion The high-yield clients annual Bryan team's in strategies a work returns to drawdown market the opportunities of income funds out #X when out loans, First, bears launched the classes. scale in which model with we spectrum, in COVID average high nearly the Bryan a because one March Artisan returns high have private XXXX, The any the in consisting to securities, track Artisan team from long record to In the last net and high-yield dislocate. of bond more demonstrated expanded alternative successful income that in growth. billion franchise. of credit High fees credit of strategy the congratulate the strategy, into with the and business, its portfolio provides the scratch net raised an and for believes XXXX, XXX period periods the opportunities. better navigating January Bryan From of in

As that Eric said narrow in we our believe talent great end release, earnings categories. trends

the ahead, getting is Looking believe just team started. credit we

for structure the has with smaller Of and focused strategy XX% businesses. and credit to liquid $X.X the X-year the the picked in where credit the AUM physicians. institutional short, non-US of alternative an credit up income dispersion we nearly XX% Alpha.As pace separately high are invest less and taking strategies Bryan the and investors.We opportunities gives hold less We the in managed discussed, more from COVID credit diversifying strategies. have from strategies in Credit flexibility the opportunities ability to the has capital. advantage BBB more of last the Eric billion non-US selection liquid to the raised is and X record, broad nearly we particularly dislocation quarters, ability team's in opportunity is space in have growing alternative area is over and opportunities institutional issuances, set, right other for capabilities, on business impressive track of Market are marketing and potential accounts and return another previously volume absolute certain

prospects paying investments seeing of off. we have order alternative better a with still market quality to work are are strategies, but and clients. We higher that our seeing of in progress are more do signs to We terms engagement in and lot

over develop franchise extremely X. next are decade.Turning the We to the excited continue Slide credit to to

record track As XX Income of more. strategy a X, High our Eric the mentioned strategy earlier, XX on April years became or with

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Eric Colson

is team Jason. Congratulations the and outcomes Artisan credit Partners. team. you, Bryan successful Thank of at credit we other reminiscent have had Krug to The

strategies value in founded strategy a single X team collectively years through with of teams in XXXX over out founded $XX and growth and focused billion.Our over XX a aggregate, Global growth launched we're the market manage over equities, born International now in that Our invest of Value manage focused on US with Value and non-US billion on a span strategy XXXX globally X mid-cap across caps teams $XX efforts.

to time. we in many align making for talent degrees a alternative Artisan adding $X progress the our equity to investment any together, XX ago that strategy, long-term, and Having investment profitable team, have results. years franchises billion. and small foundation Partners international one launching the we manages income Building businesses.Because our team have takes firm When as our respects, Our opposed manages over people, type investment process, billion a started.We been with are talent and high durable, X getting towards strategy in our global of to have philosophy distribution come asset is value-added just mid-teen, alternative years and and culture which established investment our over we $XX as individual enduring model talent, served methodically or of model those as add characteristics general is strategies time, classes in are over multi-decade and pad the fixed XXth of requires solid first and autonomous teams, added for broadening continue highly strategies. process a geared ago, able freedom investment investing

test results. Patients has business and our to our forward it conviction our evolving determination corners landscape our classes, opportunities selling endured shareholders.I for well has discuss tremendous in broader outcomes.As Jason We set even financial us opportunities. said, on a model to broader has evolve to served recent have bought ability us philosophy perform time clients, to to turn and and today, and investment model for and now industry an look the While our to asset our to coming continuing talent those versus of capacity. apply the across our will being from over we of array executing required of C.J. to

Charles Daley

Thanks, An on financial of Slide overview Eric. begins results X.

our AUM the $XXX Assets $XXX billion, of at of partially quarter. outflows Net and under X% net were our the management in last up influence ended returns.Net were offset fixed Investment by in billion the from outflows to and client equity $XX.X from XXXX were up over $X.X strategies. returns million. the income excess benchmark in quarter cash contributed those Approximately quarter. quarter alternative during just our returns in XX% the quarter strategies March March billion

AUM outflow X% up Average XXXX our less the AUM the quarter. XXXX are the AUM. last results and was and was release. on XXXX. due the were improvement a XXXX to presented X%, and the X fees increase revenues the compared rate than quarter. in For March in quarter, the to adjusted quarter compared annualized performance the sequentially March in quarter.Our day higher average an The relative XX% decrease was in for in increase Revenues Compared to earnings up XX% from GAAP recognized to to up organic the X% XX% March quarter of complete fourth average less in increased quarter, quarter

tiered and decline clients. slightly structure last billing fee fee strategy recurring XX due in from down fee investment was rate with points quarter. consistent the the average We're of the our to agreements the under XXXX assets Our management growth. mix management is largely rate rate as many quarter, for quarter with basis March The within

feature. traditional the feature, The quarter the statement remains million retirement granted future pro period shareholders. Adjusted approximately server director expense capital million service clients recorded awards return requirement net excluding of In remain vesting in awards the to eliminates our revenues.During age and last invest expense compensation years entire key XX% the investing when compared income. to contributions, awards front-loaded $XX this compensation incentive March through increased income quarters who plus new this restricted employees interest after of million of at or meet acceleration primarily the qualified and $X expect service compared $XX taxes only a threshold line having compensation. income a expense matching a and X, to our to including were clawback the cumulative long-term requirements. of years recipients first are remaining invest professionals compensation points.Adjusted already the March payroll continued awards.Generally, the of for includes a few consisted perspective, to X% year.Adjusted the and amount new an $XX have expense the long-term and quarter, last the to share and all impact of XXXX Over and provision sequentially vest X-year employer new annual and service to quarter same. acceleration granted X% periods our X% mark-to-market the talent XX% This the investment remain.From the quarter. $XX health XX% under calculating each including increased per notice vesting for cash-based career met align quarter, rata financial vesting on of due impact adjusted compared operating year's award over expense, income costs, declined increased XX measures, provisions quarters Those quarter. for in and interest results the year. feature XXXX basis non-GAAP the retirement. years time the quarter remaining incentive majority $X age nonoperating be to The plus to of qualified long-term fee of and will added for each expenses conditions, million XXX(k) of over also to of XX% after increase care million XXXX include increased we include XX in expenses in the awards quarter, We higher million with incentive XX% Short-term in talent months the awards franchise a The the The to that awards. incentive with stock X of operating recurring of consistent rate last sequentially, front-loaded for

to business excluded strong. seed amounts adds on investments sheet million of have realizable Although gains to remains with order capital currently investment into our balance from in transparency the economics, of significant We generated our we income these shareholder core capacity. invested our provide results investment adjusted products operations.Our fully our $XXX about in

to will those redeem business deploy capital to products, products scale, we begin reinvested or As the otherwise the seed new return shareholders. in to our in

our facility Board generated XX% shareholders approximately outstanding.That our $XXX through our cash the respect capital employees' quarter.Cash dividend dividend consistent $X.X continue a during the shares by in million remarks. restricted with a sell stock the number revolving and the basis per vesting prepared predictable quarterly on dividend dividend. of back reduced XXXX the which million Consistent quarterly represents special cash return credit shares to a was quarter, now were addition, $X.XX my in the to declared call awards turn of share quarter I the and with year-end The to repurchase policy, payments quarter. of In unused.We of March Directors and the of operator. generated retired will to reduced net concludes to remains

Operator

at Ladies with TD comes go Katz today And this we'll first question Please Instructions] Cowen. ahead from begin [Operator your and from time, question. our the session. gentlemen, question-and-answer Bill

William Katz

I growth respectively. very largely much. getting of thinking you real about or for platform, update you with talk and forward? migrate, Thank retail can on things investment-grade, how income about non-investment-grade the in -- replacement, as if your going of I estate as the your thinking or But fits the as Thank a you of to that success you into sort with assets you platforms Eric, where sort see channel. guess, are team. fixed you of some wondering, like of that maybe us Bryan's real even the the sort mapping infrastructure sort of just opportunities democratization some space? against could teams, prepared How distribution continue it bigger of maybe comments. just you

Eric Colson

Certainly, you looking going. we Bill, markets time long-term Yeah. lot and of the as where know, asset at spent a just allocation are

in quite we've as built site I think debt, last space. a think record.And we've markets fixed the towards as how next credit value-added big of You've infrastructure, we team pickup bit of seen us couple the track happy income. we look for allocations the long-term the with other of allocations gives real a with even at out a Bryan the enormously especially strong activity of we to non-traditional with build on We off Krug the in on with which think that macro alternative big real And assets, see income very seen we're and steady. the And in couple are high here, the allocations very call. three-year again as years, balancing we've global our nice look alternative helps estate, we made years team the very the comments fixed outflows coming emerging the which balance,

where the allocation look core value look plus. other into there's the to similar estate core the then It's classes. market real at to we opportunistic You how you a added segments. entered good asset And and very and

look fixed teams, we So assets, classes over real of some more into the demonstrates the with at just income can case broaden good our we just hard more with real and to proof we've asset the really We fixed that statements firm two strategies. as of distribution have And assets, that proof now think years. teams. different said And income the continue estate aligning we're alternative we that, the that. with other to and marry

William Katz

Great.

I same around stem follow-up, want to staying a Just just the flow of sort opportunity.

us of sense. lot and time a credit with of spending EM makes ton which, You're a sites on

you. up this for infrastructure, source from here? real Or picking anything still funds like Just of better, sense equities Thank quarter-to-quarter, in sectors? in today other your big else but performance talking et get little little we're of any of bit estate of about a it's Your is cetera. sort equal, is else part -- all being equities a bit a a platform allocations

Eric Colson

the equity the think relative disruption motion couple emerging points brings opportunities seems of money of on created a people's -- or is, equity. to motion high strategies their that in cases, it arise, have emerging We allowing low broader categories. and One more we allocations higher money to creates global in and from the disruption opportunity equities emerging in lot aggregate. like our which to been International market also past and in the emerging and new high-quality are of our in people allocation as market in of because markets an allocations beyond tipping a for get the more at with us some all motion. to both money think the in into value to And there, equity into markets clearly return value we've incorporating other a There's board. products. Global, We There's I exposure, movement teams quite It's or there return exposures.In allocation the space. into compete as direct a quite seeing bit Domestic whether seen be bit across the absolute

so value I pipeline inflection points. showing equity markets the the some to And emerging say would is interesting

William Katz

you. Thank

Operator

Our question comes Please Goldman Sachs. question. from Blostein go next Alex from your ahead with

Alexander Blostein

over how on maybe progress income the of of sort years path able you to momentum. and continue are nice $XX platforms around the Thanks. Hey. or and next Good business going AUM years this of the now are on looks appreciate obviously, the in so speed and what you some fixed re-highlighting five How the sort again, And Maybe last this well. you afternoon inflows? guys to question that we think decade. guys details you sort as the like build since can talk should launching about distribution what everybody. guys this just very getting of billion you over Thank about building discussion provide in you on gathered the in business for forward for you

Eric Colson

Yeah.

years Krug. On in proof an the the and income statement the over marketplace taking to high out institutional income incredible XX has success fixed strategy brand side, Bryan leveraging created of the the it's the last And consultants.

from as I the One, fund, and that you're revenue look the off go really or us you with to the into funds that. heavily rate gives growth future space, into when alternative it allowing at of see the mentioned, Jason standpoint.And deeper seeing we dislocation us into credit a franchise secondly, that that what think the vectors two opportunities then space. wealth alternatives balancing floating strategy

really platforms franchise high a the after broader space floating well as as now into worth an there's with leverage net So that of into wealth rate. to and the establishing with broker-dealer ability some alternatives

given market to U.S., well it alternatives. good the of the alternative the as growth of for emerging the we capacity global allocations the think opportunities Europe space at with unconstrained. more us emerging space the really it we in local the with the the into unconstrained provide it and the MSite franchise global strategies opportunities space gives wealth strategy or space very bit emerging strong credit capacity look as in franchise. the opportunity, the see will we again, very provides So And we us East. higher have see heavily credit And more Middle debt flow strong in a that you that team, franchise macro breadth both into translate the in the debt, high market a global securities, market with alternative income high in emerging debt, and what yield with mainly market than And help in opportunities us those in if in of non-U.S. the

growth opportunity fixed amplified really with So teams. both income

Alexander Blostein

helpful. one Got you. it. kind Thank cleanup you. That's a question C.J., just of for

as little base, things. but year expenses sort comp a you of about think provided more on the side the of of the importantly, of about rest bit non-comp on guidance and both You part holistically talk of maybe expense the

Charles Daley

Yes.

year. do expenses our had every obviously we as quarter, we This seasonal

because addition well bit were retirement that, clause. elevated expenses So of of as as the the a

fees noncomp comp. So seasonal combined, we million had annual about $X million more than some related to expenses our had And of we quarter our in directors. about then did the previous $X for

the go elevated will forward, XX% what quarter. We it as moving go last of comp should normalize as of that our rate addition seasonal it quarter provided will our no expenses up, a down and There's than variable from think and because do, revenues depending clause. this of other nature to down that, that slightly expenses. go the little retirement guidance change increase really on revenues expenses So the the around was we our variable most of the

Alexander Blostein

you. Thank well. Very

Operator

our from question. Evercore with ahead Dunn question next go your from And comes John ISI. Please

John Dunn

us Thank in and the could XQ of maybe the puts you. you through Maybe some just next the quarters? and over few take takes channel then institutional in

Eric Colson

We institutional John, funding first see space, and the was Yes, good global fairly you Eric. The unconstrained. we that allocations the -- the fixed have strong the quarter. of in fundings in it's alternative in in income channel

for both markets fixed dialogue bit as and mentioned, believe the So, as there occurring us. well as up some equity space I in and US having a are picking non-US of income, I channel well. the institutional in disruption as and We're emerging is quite the

but And is been I institutional forward -- look with in bit buyers. have of both So think positive. dialogue a quite

John Dunn

your it and specific to And in go kind think is proof shift kind we you then things along distribution from to how you being just in about of some to the you're some -- bought doing strategy watch progress coming just could that some to maybe could Maybe to talk product the all, management life. maybe it. sold back of to Got first of the see points just of bring and maybe of wealth the channel.

Eric Colson

these work been the and bit teams, a aspect model, activity over years, those of inside have the in inside has the teams investment into more we the non-US. we've dedicated last distribution opportunities. of inside more dedicated channel as a broker-dealer of meetings And and people the Certainly, servicing autonomous part have means emphasis teams sales which central wealth on more The people the hybrid investment the teams, together. each John, the we autonomous teams that well And distribution the created more focus pushing of teams. couple of of distribution firm channel, central and a that as distribution

be and that see across So number meeting we a organization. going was will transition, feel required a offer to that think the will still I higher think the bear And logic ago, years tracking of as And in volume in behind the we as rate of we adjustment And versus mid-innings strategies well make few really fruit to today change strategies solidified the the complexity forward. the the progress this we're the adjustment. year. and the next of we're the it and early us this

John Dunn

much. very Thanks,

Operator

question ahead final comes with your RBC the Kenneth Capital And from go from question. Lee Please today Markets.

Kenneth Lee

Thanks my question. for taking

alternative of really wanted with demand new terms an important clients, your environment, wondering that. to the you're strategies thoughts the going Thanks. get be dependent point? upon and Just is have introduced, the and that of it traction around at this terms introducing is In in to credit the not recently that new you environment? consideration Or rate macro

Jason Gottlieb

Jason. think macro on much it Hi. It's don't requires side. I the

thinking and unique they're people think an to their when strategies allocation. to about it that alts differentiated allocation I comes have always

actually it's global us, Several are thinking little talking And so, strategies just you category, that about Glen, get the more profile. about tend an to bit to for you think of unconstrained get our we getting a benchmarks, where itself. presents a in and uncorrelated broader all-weather low about out opportunity tend the to more beta return

about, think clients to portfolio out about we think a getting that's So it. talking It's more and really fits where in it about how and resonating. I

we're we'll thinking know, we our bit has anniversary. again we where had pretty the just to that believe, comments but tend little little global unconstrained And people some more goes -- been so excited out the passed getting more. to about a about it with have resonating look occur It it it's seasoning of X-year I Eric made. And back big on that years. for that the before some engagement think our bit as see you X inflection strategies to telling a are clients.There is that front, story And about

So very the and dislocation excited we raise there. that's big strategy about have We're that the a one. very,

and think opportunity quite the I And itself. strong. for strategy uptake brand a was credit to his speaks Bryan, the testament that's

credit about opportunities I on people at excited basis more and sectoral are like general in where be also appears to is compelling. it rates able to of higher think future today, Bryan being an very those quite credit dislocations level the broadly capture a with more and in a and something industrial or are

platform. well So, X comes the across we all credit feel like to when pretty we're positioned it

Kenneth Lee

helpful again. there. have. That's Thanks Very I Great. all

Operator

gentlemen, as And We be with concluding as well joining. question-and-answer today's for and thank everyone we'll ladies today's presentation. that, session

your may lines. You now disconnect

Artisan Partners Asset Management (APAM) 24 Apr 242024 Q1 Earnings call transcript