APAM - Earnings call transcript Q4 2024 | Artisan Partners Asset Management Inc.

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Operator

Good day, everyone, and welcome to the Artisan Partners Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Brendan Hughes, Head of Investor Relations. Please go ahead.

Unknown Executive

Welcome to the Artisan Partners Asset Management Business Update and Earnings Call. remarks Colson, include President; Jason will C.J. and call from CEO; Eric Gatley, Today's CFO. Daley,

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

results are presentation section and the latest Relations website. of available Investor our Our on investor

but begin factors and made SEC today's include unknown uncertainties comments forward-looking risks we you questions, are set These including, responses during today, to and call, like Before remind not would subject the that statements. to forth our including limited to, may I to and materially in known These detailed in and revise release earnings these following actual no differ our uncertainties any and to the assume statements cause or the from filings. may to we in risks disclosed update presentation. obligation of statement results and those

today some references our include measures. addition, to financial of remarks will non-GAAP In

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

Eric Colson

multiplier teams and business multichannel time optimize leaders our believe to for each investment and individual platform, force global compounding is machine. designed responsibilities and managing X teams X teams how XX we time. constrained has after In In long/short private equity we long public XXXX, macro newly and teams yield, emerging over income platform had investment dedicated dedicated platform is effort. leadership team strategies strategies. investment our to durable franchises assets. XX compound a Today, relatively investment X investment successful to XXXX, managing XX investment franchise Firm have differentiated equity U.S. On is IPO, shows protect Slide investment strategies, the to sustainable. We X data, December. we people, and investment talent. Distribution breadth thinkers environment. making investment we public autonomy, customized order our X is over and returns seek value-added fixed All execution an you, investment in are amplifies transcript. investment Throughout and high resources breed call you, and we for to have with to billion needs. our under growth of class manager the We differently, remained Thank entrepreneurism benefits Brendan, from principles, of available designed best we accelerates $XXX to as for across everyone, the teams and Based build depth invest who assets that In firm combine durable thank to support history, a the economic or passed a as first multi-asset includes operations anniversary thoughtful designed of reading to alignment investment supports are and and global for joining a our true decades. overall investment high build has distribution our technology, debt, platform market expanded no XXth capital with in We had generate have those talent and thrive credit, responsive firm our on and a and spanning equities, team long-only franchises. independent, and short management. Each of investment investment capital. strategy. launched compelling that equity, managing global built

day. investment in As are established we we are alternatives Jason and more traction every best-in-class with in firmly fixed discuss, X will gaining income franchises

equities, demonstrate fixed repeatability process inflows $XXX investment about XX investment platform, achieved talent. I XX year, each our of achieved in inflows strategies included teams. of will the to spanned of our of X our strategies investment of the to additional investment it platform style, team, our demonstrates and investment X and As XX of existing our client over In Jason net expand have for the we now and class; of we asset power base turn broadened our success credit-oriented increase income and avenues repeatability speak by new alternatives for growth. excess the geography, for capabilities and have XX franchises, our the net Artisan XX teams the we increased of and which With the probability success of platform. million which our XXXX,

Jason Gottlieb

outperformance XX generated debt development in driven Global Since local the fourth in returns opportunity generated million fees versus in inception benchmarks. fees, and opportunities in have The after billion years have now raised XXX, investment and $XX XXX basis credit earned and you, we of now history passed had income, manages its fixed X.XX%, nearly XXXX $XX absolute further $X.X basis discuss. income billion no Group, XX different XXXX, the fee fees. anniversary, investment and X performance is return-oriented strategies, $X.X for quarter, in in investment and manage the now The inflows high business Capital by respectively, average led weighted reflected billion. X no uniqueness since That and and exceptional including manages of tenth billion have billion fixed teams operations. team, investing, and investment $X.X emerging ago, income Collectively, inflow Boston-based strategies A net Thank In we respectively, is quality by The of points in in their Mike $XX credit-oriented which effective nearly XXXX. credit nearly these successful franchises. Eric. no will little which Cerami raised Mike CJ XX.XX% clients. annually exceptional in and income strategies average emerging by Denver-based points, Bryan nearly Unconstrained alternative X led strategies over raised inception performance their includes and Today, of EMsights after annual fixed O'Brien, XXX X markets strategies. The of billion. rate, markets was net talent the Krug, opportunities $X

are We our journey. credit early still on

and As is of earnings that investment support. and provide just with We so Only of years focus decade long and a team talent, put running EMsights over do in years are and with and building blink commercial the the high-quality and up the an durable have the getting X of time, credit we success Capital and do process talent can which and a beginning release, of the partner unpredictable energy quickly is foundation their last X execution record environment with Capital track what at have we when eye. When place, long-term at new people foundation distraction-free we the time greater we we Group. our shows a on is Group. said investing success. into growth, that Artisan the of begin form a Artisan. Slide them focus EMsights and That in been the is deliberate to joins several develop is we breadth. time what this process with business We not the team with firmly the for a aim with to doing precise

foundation we analytics. of XXXX, the their business right team in the on And know team process quickly embarked pooled for had numerous imperative platform. equities, large accepted of and a talent, success. understanding and strategies the them Global It's in very Michael began development, emerging success. operating and believe Each was [indiscernible] respectively. Artisan we managing large We of X getting we and We for managers execution XXXX. distraction we XXXX undertaken with terms further September previous minimize have We with them, CDS hunt is we futures, debt. we met investment each is and record. found the wanted team structured year, talent they X with debt, just CDx, support Artisan, track powerful global local a delivered experience of loans, can Brian third in Artisan a their in records the on third process something in over their their poised of We and Within Once them, similar track long-term mandates which and the past Capital forwards distribution and differentiate months which allocation Artisan Partners strategic emerging an has quarter and process, and years debt, will and determining accepted asset and we very Artisan established rigorous opportunity EM they focus of time. dedicated XX exists. managing for opportunities team results, investment before power set and and for about Emerging Mike the hit business. month minimize for a Group Mike way class and individuals long the agreements. A process ultimately we launched XXXX, board, with with mandates foundation that, built in a the we firm, its MLO opportunities. example fourth markets after to in large the months it. that to vehicles. since the the our We have them, generally, comprised joined time resourced We on the which debt capital prior they the over reestablished spoken with invested been to strategies. Unconstrained, them worked demand early the EMsights Working after timing X work ability strategy large a has and in long meeting to for and customized Capital business Artisan anniversary In the to to perfect the They we Group later, think directly our Once the -- unconstrained quality. EMsights it More asset building talent markets Capital to options, on a Embo of and derivatives, delivered a invest this established local we high firm sovereign and launched we corporate investment EMsights opportunities. will the in markets them educating inception Markets be from supported and appropriate build Group. leadership the and we interest I stack strategic performance. join joined and a quarter commodity a strategies. team Market launched year The for the very We market platform. accelerate leader XX can rates Emerging X to currency the has emerging debt third joining repurchase was the Simultaneously, Mike especially

Eric Colson

investment since upon with of broaden have joining Jason. Group a initial years and records our accomplishing final teams our them established these accomplished talent for is after for economic lens. want of reached What of shows in talent manage years X a EMsights firm, Thank Slide we establish the of long strategy, to our investment over development. investment the X, execute X point the we build repeatedly to each X XXXX. Within X Capital you, time. and is long-term foundational I period their upon a have Capital IPO teams X capital have allowed the investment franchise we to AUM what foundation for your component expand that with level platform. been track and of critical X

World to set, Since to the domiciled strategy Xx Lewis an the deliver incredibly and founding opportunities Developing including than emerging greater Index. celebrate experienced, highly the strategy Developing and strategy. markets. the return important Lewis we another Emerging which with He talent. In investor. Kaufman, is reflected one we communicated relative a truly have MSCI and an World differentiated World milestone, of of kind, a more is inception generated a after for performance index. our differentiated of firms demand has via opportunity capital which developed XXX%, in thoughtful manager, his Developing the will is markets proven designed foundational than Markets XXXX, means as cumulative is ability portfolio fees, in new accessing closely Working enlarged tenth of have anniversary We the early

investors we our the is about for in where tenth return. $XX especially the excited anniversary, looking billion Lewis of for wealth absolute in managed are intermediated strategy, are opportunity Approximately As marketplace, of and clients. front the and developing AUM differentiation we world celebrate the wealth

across space. have growing. there for broad relationships strategies. the and And absolute deep demand It We is differentiated is return-oriented

now business. In in distribution we traditional XXXX, our existing we structure the investment addition wealth reoriented believe And clients, address and bring the institutional to more We new is have to marketplace. there opportunity tremendous and of wealth better to remain platform committed alternatives recent intermediated our to into it the platform talent from to investors new to seeking I will our over building our investment value-added existing demand franchises, results. tapping investments. platform, CJ financial world high the around adding discuss most developing and to to our turn

Charles Daley

$X.X sub-advised XXX and were points. outflow from an up during Thank December reflect rose you, the Eric. returns billion under model, on which $XXX drives $XXX client begins X%, the at basis client assets XXXX. Net for XX% Slide end a X. and the our growth from quarter of of quarter Fourth down and outcome by September the X% overview improved margin quarter and specifically, ended operating durable adjusted rebalance management to a year More was billion, outflows mandate. presented full the clients results not completed quarter An included up revenues X% quarter Artisans shareholders. from financial Compared long-term net income for XXXX and and gain outflows. improved to cash quarter, business $XXX income client fourth million our quality year adjusted sequentially quarter billion distribution. operating and amount quarter December last the distributions XXth of AUM consecutive results XX%. approximately on and outflows $X.X quarter business. for full XX% improved funds fixed reinvested was totaled amount income the year the the for annual up the for up quarter, to average of year in client AUM Artisan capital slightly X% from compared This cash In consecutive while an positive the year. the December Average Fourth and and equity flows million The our their billion. the separately is funds quarter represents XXXX $X.X Full tenth full cash of

which to X $XX in Our the required million different release. fourth accounting adjusted X% $X.X performance of and product to complete is on are quarter GAAP quarter performance from reflected nonoperating XXXX up consolidated that in in December is compared the fees million Revenues a by our prior as for approximately a reflects compared September and strategies. fee income results earned amount rules. investment Included the quarter quarter. earnings The XX% increased XXXX year presented

our As the are AUM the to those of of XXXX, end of fees dates fees at of end subject approximately of arrangements measurement is majority the annual X% December. and performance with

points income compared net up year XX operating rate XXXX last December rate basis expense same fees, fixed to portion fee higher on to the Adjusted and the recurring Adjusted quarter fee expenses. XX% XX% quarter, AUM quarter last adjusted points. result strategies. same to outpacing compared expenses XX% the of Full quarter. a average of the the growth and were revenue excluding weighted growing year merit per to XXXX and operating our and fees, number compared weighted operating improved Our expenses the revenues our incentive performance for in compared AUM. up increases were associates XXXX increases. as XX% average Inclusive expenses primarily for compensation increased primarily higher annual from Also incentive in last third the from the operating X% income and from lower compensation elevated XX% in XX higher income base year, and for salary to of was was revenues. Adjusted our increase increased reflecting compensation XXXX compensation of revenues. XX% sequentially on basis benefits the increase an performance from fee from [indiscernible] contributing fixed full-time was the Adjusted XX% to share XXXX for quarter due and quarter increased higher of quarter quarter fourth

nonoperating our a discussed from the acceleration grants. Higher adjusted compensation non-GAAP adjusted from impact million interest expense operating of calculating XX% call improvement of incentive XXXX award in quarter January In long-term $X only in measures, and includes retirement income of the net the income and income. first long-term to revenues interest income impact a clause increased in the XXXX incentive led the share XXXX XXXX. and the of XX% amortization adjusted over increase during expense net primarily Additionally, the improvement addition per

investments fully transparency impact these results on seed valuation into changes provide adjusted operations. shareholder economics, business valuation to from changes our our our we core Although exclude

Turning to Slide XX.

$XXX remains capacity. with have We strong. of currently seed balance Our products significant our capital investment million sheet in

investments redeemed, scale As for available and gains included addition cash to purposes, strategies are in the reach investment in our seed are special any seed realized year-end our corporate or dividend. as

million our XXXX. senior notes. currently of mature our notes series will In revolving addition, August unused. of in $XX facility $XXX credit of remains inventory to expect refinance We long-term million amounts the new senior

XXXX portion to for on quarterly a and forecast XX% XXXX respect than of declared to of on initiatives. realized dividend additional with future XXXX. Consistent and was year-end cash XXXX with dividend capital consistent has price continue the year-end $X.XX on special per APAM with stock been of previous the quarterly and Dividends for XX% with to calculated special of dividends respect an dividend a the years, redemptions. generated closing dividend. to with as declared XXXX predictable generation. December respect cash X% the growth through with of seed policy, dividend for share return per Directors a common our represent a based share, our dividend. special cash to with $X.XX Consistent We XX, from the retained Dividends dividend respect earnings yield declared available special a prior gains result larger higher dividend The quarter to of basis. and dividend an respect Board December XXXX on increase capital special declared declared shareholders an year-end $X.XX the to payments totaled

awarded million long-term approximately cash-based XXXX, million, capital Looking $XX million ahead franchise $XX Approximately awards XX% vest pro retirement. award the award our of are vests and consisting over restricted or $XX stock XXXX X of months remaining of our awards a XX after rata the talent. investment to the of of qualified awards. and Generally, XX% to years of XX% Board annual incentive the approved on

mark-to-market to for long-term the expect $XX million XXXX, approximately incentive excluding We amortization be impact.

are a increase absorption long-term majority of full-time XXXX in expected and year mid- to The single Excluding in compensation, the merit fixed employees reflects expense hired incentive expenses for of low of the increases increase digits to XXXX. full XXXX.

those seasonal As quarter of my fourth first XXXX the are approximately benefits due to of expenses compensation quarter now the turn in the million each higher estimate of will and our $X in to I a concludes year and expenses reminder, operator. higher generally back compared will We to expenses. first be XXXX. That quarter seasonal prepared call remarks, the the

Operator

today from from [Operator Instructions] question Bill comes Our TD Callon. first Katz

William Katz

And XX% well. the at of doing the commentary of some just particular I just on That's you've sort organic sort relatedly, what the to, be grow out seems of platform sub-advisory and appreciate rate you of of this fixed seems of just can credit which the dramatically. on the a you Can emphasis on the fee fee might gone the me, bit portion -- income growth continue through the more might between platform extent platform. just on wondering as initial down on the to cap the business rather the very team, which -- the speak if how a to broadly. of [indiscernible] taken in International roughly with is be then interplay thinking Fund, pickup sort and sort Value wondering this play now to rest have rate of versus the through that the -- look EMsights the excuse to rate, you

in of capacity of continuing are Just wondering terms where platform. you grow terms management to of in that risk

Eric Colson

heavily velocity value is early equity where competitors longer-term reverse focused XX business, believe gathering platform. Eric maximizing Colson. on performance. it's have that strategy our Kind of have similar in the What the Over become weighing are had can or few our in business. we're seen a value we capacity the in or international at given capacity. taking dollars hit our we're that with and always in capacity And we've the us international the years we asset seen at performance, looking way of at more in, clearly We embedding of platform performance, we've What order. on a in strategies. bring management seen years, at we've The is spot mix given an Bill, of year. that of growth a by we've the various the build teams our they values asset assets. many on a looking and looking manage total firm create up, to of to We're means assets

a for We regards of little that's assets. us very with and quarter, and growth out the will a manage we performance been the over you out control get record. clearly over value it's bit the worked the track a consistent, well that forward the With fee lean, buildup let hurt call specifically international saw to don't fourth really rate, organic what last XX we years. but not fairly so assets year and foundational in the And

these think fees. that on on These I little been of have foundational some have teams the debt Global strategies the -- past X term strategies. Both used assets larger have Unconstrained given foundational assets are performance-based market had or the a and taken emerging you and all taken than have subadvisory.

fixed brought fixed enormously, as brings mix was as can you to asset fee opposed it's you income see the the The the of slightly would it fee bit -- couple so tick if foundational And fixed quarters. down more last of down we the rate a in it slightly. over the grew rate, rate income be income, the clear saw

William Katz

the on suspicion. this my was was payout much then That And maybe And for one rate the dividend. year CJ. higher Okay.

it it on gains seed of capital. a realization sounds think some I was like

about then a Where XXXX? you -- repatriating where in of in of And payout terms are how seed are versus you two-part needs of capital terms question. maybe that? be kind rate should thinking So any maybe for secondarily, we

Charles Daley

Sure. Bill.

uptick. slight payout the ratio, So a

gains the did think redeemed hit investments seed I we that that some on year. realize during We you point. capital

will XXXX the there of of in -- seed the credit to the more I to foundational capital rest is, respect the it's X we is in as which And expect years had in see be opportunities, EMsights, with XX or of that then still our private last phase. years. in some fund we've which majority Eric seed think there for said,

point, at we've but harvested, I will on time payout We've X mid-XXs seed be the to ratio, fund that some last the that With capital no clear EPS. to some the So respect frame held payout similar been that on in this mean, needs. again back that. for We you with did the to cash mid-XX% year. see adjusted would on range ratio But the respect I think something would calculating in years.

Operator

Sachs. next comes Goldman Alex from Our from question Blostein

Alexander Blostein

a broadly. little A lots equity strategies in We've the[Audio international for and bit markets global and for clearly volatility Gap] guys of question you picture emerging seen bigger of

Artisan Partners Asset Management (APAM) 5 Feb 252024 Q4 Earnings call transcript