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Nicole Kingsley Brunner | Chief Marketing Officer |
Marc Mayer | CEO |
Paul Battaglia | CFO |
Good evening. My name is [Katira] [ph], and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Manning & Napier Third Quarter 2020 Earnings Teleconference.
Our hosts for today's call are Nicole Kingsley Brunner, Chief Marketing Officer; Marc Mayer, Chief Executive Officer; and Paul Battaglia, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 8:00 p.m. tonight. time Eastern is number The XXX-XXX-XXXX. dial-in And enter XXXXXXX. number: PIN At a listen-only all participants placed in have been mode. this time [Operator Instructions] It floor is now my pleasure Mrs. over to to turn the Nicole Kingsley Brunner.
for discuss Thank us quarter you and you, everyone Katira, XXXX results. today & Manning to Napier's third thank joining
obligation this I any during Private statements there and deemed financial may not those Because we forward-looking relating statements any begin, everyone actual that forward-looking important certain statements Napier historical by results or Act involve these statements. statements. of Reform be no cause or the expressed Litigation the like forward-looking to Securities would Before unknown responsibility known based meaning risks statements could to remind forward-looking from on and to uncertainties, & that made call these are update including to implied materially of within differ facts, Manning guidance, factors XXXX. assumes
some GAAP over filings. Mayer. call, I this Chief related comments SEC turn non-GAAP With reference be to Mr. Officer, Executive earnings our and Marc? our call the can During in will reconciliations measures. release include Full to that, may Marc financial found
Nicole. you, Thank
page results As strategies of solutions. a always, with active of clients, have records track asset the review AUM, multi-asset-class total I'll dating with of starting an represent All who investment our solutions-oriented back These available our dynamic begin six diversified as XX% globally for allocation to the are manager. approximately on early figures XXXX's, to and are earnings we core performance supplement. are
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Let me put in our caveat. recent a perspective and offer results
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surprises which style bias. better-than-expected hand, of few and quantitatively will vaccines, trends growth tilt, right have respect the leading and over beta quite value to the with it's will the COVID-XX has towards International are four deal favor growth. growth hard and to treatments, neutralized but a Value, have would small years For two economic and severely will Rainier dynamic on least the for Disciplined There beta of is in be which holdings been in to perhaps compared style earning looking a the a that while, companies. steepening and they to adding recovery Style subject could are developments the been XXXX, outcomes a true we for Conversely, past style over that yield and positive be cycles with months, other at value but have been have subject our they past international been we have explosively, always and reversal value, be we seen is great great months. to international to team and the a skewed growth, always value curve there. value also style to adverse predict, driven reverses a the small for also such style, portfolio likely correlate past
deliver above will believe that forward. return we investment one underpin year or few in execution our communicate performance strategies, processes strategies standard not a our short-term be are through attempting realistic strong strategies we do some the cycle process is and of across to going the expectations, in expectations. however philosophies Now many investment our to We no this on deviations excess should in that strategies. in we believe performance focusing results investors sub-par way in a cases expect believe normal We in but on these our and by firmly results, long-term and
success, key investment we've environmental, to formally made social, We These always performance substantial traditional we processes, of quantitative ESG the generations. considerations have ESG integration across began and formally positioning in strong efforts, risks By as well ESG launched governance been always are strategies. during of quarter, implementing we also and and throughout a the our our view integrated requirement part the ESG core Finally, of strategies, and and integration investment our we investment. progress two multi-asset-class formalizing in our ETF universally quantitative they have in future with assessing success investment our have is an the ESG for addition for dynamic integration our processes. a strategies our ESG strategies integrations. year-to-date nearly in consideration long-term ourselves
the stay as XXXX, environment investors and time-tested managers As go, current that and look we move towards as as must today. risks of and with investment active of falls, honed the ours. ever. areas Market rises and political, investment and well XXXX, sentiment mistakes rest is important our Avoiding but excess economic, and through uncertainties wide philosophies There's with array the of processes disciplines come regulatory can as believe we reward grapple same. a market
have results now address a clients market strategic of with detail, initiatives, in on across some developments cycles. Having I We productivity. excellence starting priority sales tireless addressed some our for within investment strategy our will other risk-adjusted superior focus of driving full
signs During our of witnessed we momentum the in quarter, continued channels. early sales
fully client enough yet we're across are our right total expanding yet to are based results financial leveraging during added we not believe capacity, While encouraged further strategic by solidified In flows the this improving substantial in we to key process. the another our path. turn our XX, experience Management, in positive, fourth the approach hire Wealth consultant year, the bringing early by teams, team and sales and quarter, the we regions
has calls have excellent investment a we Small and ones. into further, positive. improving signs client increase outstanding our management modern Cap addition, lead strategy acceleration being business, for There our progress the on performance and near-term are productivity, formed also that as the is including long-term. pilot management reiterating investment which Taft-Hartley of Intermediary strong distribution, in most relationships In Intermediary intermediary, gross sensitive In growing inflows a feedback our also improving implementation strategic results other the new of well we in our worth good International as are to we're client Rainier seeing including of seeing focused we're in encouraging, portal, signs very In management. plan momentum well as may number building channels. interest. drives we'll our performance asset began the on sales wealth been a remains early InvestCloud's businesses our within Early channel, of planning of the wealth as prior early of resolutely tools, institutional discuss It's as
and there seeing differentiated demonstrating is active to For U.S. business still consultant U.S. wins, we're equity Institutional time number and years, the looking we're first consultant the relations core Taft-Hartley equity we're driven truly that strategies. of for our in within efforts, placements, awarded demand recently strengthen
late began last pilot Turning now we've to us. digital will in progress portal, make operational new client begun experience efficiency, of we major a year, new to we our working the substantial the transformation continue of with technological improve the launch tools dramatically that
As back implementation the XXXX, balance progresses InvestCloud efficiencies. the office streamline operations, in improve we'll of
Charles performance reporting data on warehouse in for the throughout When Our portfolios. client and River XXXX, management with fully improved deployment meaningfully occur integrated implemented the InvestCloud capabilities account has quarter our and which well. have as moved processes will trading for forward third and and in we'll reporting implementing
Workday implementation most key human platform. made of of tools Workday at finance well. implementing leading quarter the our of strides as portions now for the beginning key during We'll underpinning Workday's begin the resources XXXX. Our of are industry
Outside internal experience investment forward will economic benefits. improved deployment the completed and offerings our that substantial we technology realignment that of As to overhaul, of important look progresses, our Workday insights, the provide. we have overall we'll an efficiencies,
resolutely growth the In long-term. a positive with I'll risk target excellent funds During losing target whose mutual our And the on quarter, for in firm Paul business based target investment We're migrated on foundation more Pro-Blend meaningful focused money the of mutual several initiatives four the on fully by turn our green number XX areas, we mutual summary, outlined our overall to scaled, are detail seeing funds performance collective fund suite for mutual fund date and suite funds we merged fully building A believe cost right our we clients strategic rolling progressing remain of into the our existing to call target of strategy and savings. previously. our our out we track. is date number we'll subscale mutual date well, date our that, shoots realize also of trusts, financials. into over
Gross results We the quarter $XXX reported on and the $XXX channel, Thanks, remarks billion, up September offset approximately of level result is million June Marc. net impacts of Gross of appreciation quarter. was financial million Good afternoon, from our everyone, an as joining call in everyone and in outflow. continued years. being in the inflows doing with $XXX today. us over billion improvement third nearly quarter four of increase despite last through COVID-XX well. market XXXX of client client management. inflows client we X%. for the for of million in gross is continued institutional prior quarter outflows billion finished or from X% XXXX, improvement $XXX net AUM billion intermediary quarters with $XXX under will We rate of assets from lowest hope environment. of focused million, represents outflows thanks and on wealth healthy the to client billion last $X $XX.X in starting outflows outflows, generally reported AUM trailing $XXX in of inflows several with last the The and $XX.X million and million September year-to-date $XXX be net our the average up level through the we've My production partially I $X.X XX. approximately by of decreased The when our XX, of approximately $X.X the of by compared with management consistent were has of million outflows team quarter, the line reported
of $XX approximately account quarter million the and separate of outflows from quarter retention Altogether client during intermediary million from Our wealth net the team. during outflows net reported $XXX institutional management we business the rate approximately our was XX%.
remarks our inflows. turning a to our outlook regarding financials, Before closing I'll on few add AUM
continue mentioned, to we building Mark productivity slowly. channels As see momentum albeit sales across
with of However, our segments and where we most strategies. still institutional business have those blended party investment our notably involved a vulnerability use certain that third consultant relationships in is
cases, the and received platform quarter both we invested relationships, with the our this, notices relationship of in were satisfied of one outflows represented with $XXX their during illustration fourth redeemed from two policy but an client of these. they expected from approximately because one total In large allowed. performance, they proportion As the redemption institutional client million a larger then was strategy investment
types stabilization on these of this Taft-Hartley AUM institutional are Our teams so to focused have we and far year. retaining relationships that continue demonstrated the
trust of or year. average assets performance. quarter have $XXX,XXX, Compensation we and is last in generally increase down driven XX in is are the of reflective related revenue decrease and with Compensation quarter. quarter we X%, line quarter and third $XX.X the prior consistent the Quarterly environment in three collective operating facility servicing increased points custody that costs by increase basis quarters. have compared X% operating approximately third X% savings million quarter, that to absolute million quarter. QX, for and quarters quarter, by Turning $X.X XXXX. but last with relative variable are usage. overall were compensation several related with our increased revenue or P&L, lower The quarter to last costs in bonus in XX% of increased one of assets. with Other from to $XXX,XXX our of year strong the third third accruals the expenses other and and limited the from decrease of since some and million revenue increase reported by quarter of were are margins been points analyst of investment This XXXX. quarter, of million achieved. approximately primarily of offsetting result compensation other fixed travel third of Distribution, the last costs of from a compensation expenses Operating $X reported million $XX.X average than third represent a $XXX,XXX from the million collective fund COVID as of an basis $X.X million in the and quarter, compared revenue XX the Similar quarter prior the $XX.X funding last were what reported expenses by approximately to $X.X the a $XXX,XXX expenses or quarter quarter and
were forward. continue is quarter expenses. from offset paid collective reimbursement pursuit described However, related claims. is as the with this remain various in is revenue to party expenses with $X.X claims also in of $X.X reported third and range operating other in in In approximately be margin one-time the we operating that for received revenue The with a we gain The increase to gain to reimbursements non-operating trusts. that by expenses settlement other received improvement quarter. income we they'll of a from during like expectation observed The contribute our to originally income our saw items move income, affiliated from the reimbursements expenses $XXX,XXX stemming to some to the in the reduction and it $X.X in QX that of operating third the normalization those funding mutual decrease in XX% other driven million XX.X%. XX% operating million million adjusting compared operating of an we quarter quarters for of above, prior against gain upon When quarter income
and during recall, first earlier as you'll in quieter the volatility and non-operating QX losses QX half compared quarter well XXXX. changes from the liability of non-operating Act reduced level quarter of caused had this investment resulting of from as we and of significant the to by the year. reflects the As CARES in nature the market losses income The income to TRA our stemming XXXX, gains both
for costs, approximately economic we reported result, quarter. GAAP $X.X for $X.X $XXX,XXX basis, million to million. compared of of quarter income reported accounting a million, pre-tax we a restructuring income strategic the on After As last $X.X
tax reflective expenses million. had effective from is XX% XXX million, the fee by quarter. reduction barring basis our workforce, income expenses weighted million the decrease effective our servicing, $X to from margins that factors, XX when project improvement as have in quarter decreased of of is economic impact completed tax the in the last indicative shares The earlier changes share weighted Economic the of is due net at quarter approximately The employees of expenses of The a resulting or decreased $X.X This it the last our first the for fully periods. earlier Distribution, adjusted in changes. workforce, XXX tax average year, our and last is compared reduced is count of increase now including $XX.X to approximately count, which as and the down decrease the reported compared was that resulting this our the collective $XX.X Other to reductions nearly a points rate low-to-mid last XX on attributable last increase the tax mentioned $XXX.X rate since adjusted quarter custody estimated result experienced share income this of our the results. any were March XX% were year. size well the decreased of of net is rate. year. I'll X% XX% expectation share and was million that fund Compensation-related the XX%, by September operational tax year revenue. $X.XX adjusted costs, overall I with rate estimated volatility weighted as expense we the size outstanding. that, COVID, XX. our majority by million a average full-year during to of number XX% from -- earnings recognized effective updated adjusted Operating of funding operating this our as from in projections It be year earlier. in million, million range year-to-date in decrease the in per both quarters year time We to was future The restructure and of will summarize revenue have $XX and attributable million of year. $X.XX, $X.X overall that closed operating of of last With transaction XXXX. quarter this in mutual of assets a both year, reduction redemption time $XX.X from revenue million, is last to down Our
a first net basis As economic our on million, $XX.X through of income GAAP income costs, shares the million. net per current income weighted that share adjusted we forma million. the Economic nine back reported approximately of would of September based basis for and months pretax share year economic restructuring be and pro reported on result, $X.XX strategic per When our of we share our income XX using a $X.X $X.X of average on is count, share $X.XX, adjusted outstanding million a count. XX, adding
Turning during the June adjusted with operations million sheet, debt, changes no $XX to cash liabilities. driven There reported is count for including The in assets September of the investments and as adjusted cash quarter since we by earnings increase, XX. were balance XX, the and approximately share to of during the from operating no quarter. items significant changes and non-cash
long-term As reminder, completed XX includes reporting outstanding by the under we Class incentive shareholders, in May, two following shares held adjusted million shares, awards unvested approximately about our stock outstanding, million legacy private plan. are shares million issued A redemption units XX.X and of which a
directors on XXXX. but some shares outstanding. doing before I'll to our and approximately so As thoughts own on employees XX, has the of what September conclude XX% reflect I'd adjusted accomplished like of XXXX, throughout with been
accomplishments for rate the First we to across the investors. over prospects while can clients value our months volatility us net active helped the with our took we results May. management and testament in These XX our a our gaining business place to had redemption COVID-XX have a processes The and infrastructure corporate to along service our traction again made channels. have accretive allowed improved foremost, thank taken us outflows that structure The of environment have returns that all global through is client workflow, enhancements demonstrate to sales from their with these provide reduce of employees pandemic of we outstanding team, market overall first significant the a resulting the of place achieved and improving midst to created Meanwhile, that this and step year. we took the and for in efforts that year. technology significant a in fact
can somewhat around at our As what probably tied XXXX's to happens of Further which least attest, outcome is call performance to stabilization with potential and is of most the related AUM, everyone in longer-term financial equities on the COVID-XX gross election. the inflows the of client million of and obviously XXXX, the We $XX income. and results. improvement net overall world, of albeit continued short stated flows anticipate of are improvement improving critical in to target margin operating further the
to further have prior from continue headcount our least overall to non-cash stock-based will transformation. sales operating to and digital decreases well year add expenditures though our we even those team. to continue Fixed expenses costs related as at decrease, as expect and reductions be should partially to compensation offset amortization depreciation expenses by We as as such compensation,
are impacted non-cash or by Our year. not underway. continue cash In for which centered position, obviously work should the around conclusion, XXXX charges, that's strategic priorities our these the is continuing finishing throughout largely already increase to
clients, We prioritizing continue to our for which means, prioritize people. will results
is retains Ebrahim attracts for under that a clients, team, to firm and this. Busheri's central investment our direction, tremendous and done top talent have Our ensuring job our
efforts that to hampered of travel in the with have last be drive gained on the have line sales We fact despite sales are restrictions will through year the traction year. productivity Gross this we COVID-XX client this track increased first quarters three through year. inflows
offerings, of technology the our outdated differentiation experience Our our and improve advisory our out and performance, we'll both partnering that for clients within the finish employees. and technology pricing our to allows job best-in-class us the we create with to service our tearing distribute, partners channels and
Our today's new technology achieving for margins. will efficiencies improvement provide additional our call. concludes and operating That a in foundation operational
have enquiries for the the please and If address Web listening & call over your you portal Operator? topics today interest the back and we turn promptly addressed using for questions. And Thank your contact on Manning on you questions site, the Napier. any to Investor will I'll now in the Relations operator. us
lines and you. Please day. today's this teleconference. does Thank This at a disconnect time, conclude wonderful your have
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