BSIG - Earnings call transcript Q2 2020 | Acadian Asset Management Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the BrightSphere Investment Group Earnings Conference Call and Webcast for the Second Quarter 2020. [Operator Instructions]. After the presentation, we will conduct a question-and-answer session. [Operator Instructions]. is a.m. today, call XXXX, August this XX at note, being Thursday, recorded X, Please time. Eastern would I to Managing like now Director, Elie over Strategic Sugarman, to Development. turn the meeting Elie. Please go ahead,

Elie Sugarman

call and to second to ended XXXX. XX, June morning, Good BrightSphere's quarter discuss results for welcome our the conference

those Before we could to subject from we differ risks uncertainties that note please actual may about results statements materially is forward-looking get forward-looking and business statement started, cause to our financial that make projected. performance. Each and

result Additional containing regarding uncertainties our are today, based in release make information of in measures update events. any financial website risks to these appears non-GAAP as as quarter Any and on We assumptions them Form GAAP use we measures our on in a undertake first and slides we as discussion. measures, can also XXXX. our along to and we our will obligation measures. reference may on of including forward-looking our this future be part X-K that no SEC new non-GAAP found the that referenced, of reconciliation of XX-Q XXXX and the call certain today's a filings, the Form information XX-K those with filed or for today earnings about including Information of statements

Officer, buy Finally, Suren? to nothing Executive Suren. herein the now investment lead products. any offer to it Rana, shall be Suren President turn solicitation to to I'm be Chief will deemed call. or over our and an pleased And

Suren Rana

are everyone thank I healthy and ones you loved Good for and joining hope Thanks, Elie. and well. today. morning, their everyone, us

second second of deck $X.XX in year. of Slide to of XXXX to quarter with first usual updates some in in We for share ENI $X.XX this last compared X Let per the reported year on the provide second the $X.XX as of quarter our me the the quarter key of presentation business quarter. start and

pro on Hanley a $X.X We flows on total basis, Rock, share in that Copper the from of point which a of ENI of encouraging ago Also, other much ENI net year which mix quarter, on that QX our second impact that and cash quarter flows segments distributions. discussed divestitures client data has generated decline the compensation consistently net with positive announced results the have more three was average on to our of this to the the we to market decline and compared our that more built-in billion, declined on and basis. forma pro previously was impact a of attractive the lower, per time-to-time and our on due discipline OpEx, impact excluding revenue In Copper variable and total too, our our like share the business did another costs While further continuing Rock due forma Barrow across is to the Barrow the and repurchases employee helped variability the the historically. QX for reduce the were pro we revenue forma is a in on positive Hanley AUM, business.

organic to double-digit additional performance We In investment growth & XX% the positive our us Alternative of with expect XX-year flows target, Hanley Solutions our share strategies pro and have and quarters. In use XX% allows repurchase two second forma that and pace, our about excluding in continued the would our a shares, with new basis and which expected of a segment, continue Quant delay segment, affiliates. beating $XXX strategies prior on down pay Liquid per Rock. to XX%, to by after-tax of quarter Barrow strong, to the over debt periods. expect but XXXX. The causing will we be a also proceeds capital now in primarily million to the we slower produce we to of AUM benchmarks Copper accretion timing revenue the see enhance ENI to the their segment, reach X is to X, Alpha In growth

We shares are In which and previously early over that's of will the pre-tax center, repurchased in deliver savings of our earnings a the call. to our of on amount, second $XX on QX quarter, by annualized announced $XX income part million. of the an were of similar we quarter X% repositioning our executed the previously outstanding corporate last annual of cost XXXX from impact track which million announced have

fully we we resume then, first As will revolver our then announced paying intend on repurchases. to and down we focus

strategy discount Acadian and Landmark. mix value; debt seeing briefly these in our the amount a free areas. flow, both we We compared end last outstanding new that strategy reduced strategies organic $XXX balance reduce on. primarily X.Xx drive growth Landmark X, focus quarter comes our and of forma can the million $XXX first to leverage. Slide our divestitures, deploying the & attractive I'll quarter. three mix. our centerpiece leverage to to their our at Each which trades section, Quant and the to: XX% growth. cash pro our our leading three, strong on million executing one, The two, second quarter. top attractive Alternative strong flow primarily recently affiliates segment, secular it players This net generates of that are is to the and from highlight maintain a in sheet; revolver On Acadian, the will are long-term reduced future that repurchase to tailwinds the cash segment, on business, announced we we're and Moving of free at and respective recap for given which ratio stock, This In is fields, Xx our is our from business for at intrinsic scale Solutions of business still accretively meaningful stock

what it's are recap a to affiliates, lay forma businesses on of out X. also our which Slide worthwhile divestiture basis on pro key we the Given two

Landmark, which Alternative EBITDA markets and technology, our strategies client In the basis. Solutions Quant I which pro in capability generate the Acadian, our comprises differentiated basis. specialized which the as & ongoing and and highly Slide and Quant comprises allows research, is to us middle XX% investment data business on forma a is Alpha specific of primarily in desire evolve. said, pro on left a of exposures to segment, So on that broad-based with Acadian is the XX% a forma EBITDA cutting-edge is primarily X, our is on our and and as segment, continue

the term growing discussed to as can efficiently growing because funds. demand. business This demand we've this meet for also we strategies continues well-positioned very long vintage our before, market expect next As very is secondary well continue we for private the to that raised grow strategies business and

one a is the names Landmark in the and pioneer Importantly, of few business. secondaries top

returns this income various on On we is and EBITDA X as we cap is right a segment the long business mix value business, business GSW, and to across And highlights is basis. ranges benefit favor. lease and on pro our when our more in well. fundamental primarily comprises strategy Liquid attractive is provide mix metrics. Slide our This of which segment, our pro XX believe now by In diversifies how forma fixed and well-positioned to XX% business overall equities forma of this a complements regions. Alpha and

Quant comes if of a from EBITDA our at pro example, Alternative half will you basis on you For bottom that forma look the segments. and & see X, Slide XX% of Solutions

can you show detail Alpha few out I Next on point our of regarding slides things segment in that couple XX review. our Liquid results a Slide will greater segment.

QX. bps segment was management Our in rate fee the XX for

pro would As fee be margin for divestitures, the rate at QX. for XX.X% forma footnote higher bps. QX one, Similarly, management was ENI in disclosed XX operating for

QX for forma at footnote the be higher in disclosed would for As two, operating margin ENI XX.X%. divestitures, pro

Finally, our flows XX. Slide turning to on

the the saw our and Rock pro earlier, as flows divestitures, at Copper segments. mentioned chart positive for Looking we Hanley on three left, across Barrow forma I

will in the up further next Alternative trends overall segment that Looking we're and hopeful are pleased improving by pace the ahead, these pick slots. fundraising our year,

back point. at answer Now to I'd the questions to operator. you. this turn the call like Thank Happy to

Operator

Instructions]. [Operator

comes Credit question Suisse. Craig with first Our Siegenthaler from

open. is line Your

Craig Siegenthaler

Good your growth mix, two with successful I Barrow your of disposition and matter wanted Copper is similar Hanley traditional for and all Hope organic just Rock, which a exits Suren. your potential other importantly, well. could business After rate further? your perspective morning, improve affiliates, on the actually more

Suren Rana

but our regards we too, up out, opportunity to we that those with as this announced diversification as Craig, forma the be very pro a had divestitures, Having on any to duty record not our divestitures, business. every compelling or consider value. to mix flows. happen from thanks. quarter, pointed Alpha time-to-time like And flows in now strong Hi, the shareholder we may positive to value of do Liquid is producing business you a have compellingly come may mentioned, quarter, strong that, attractive may we've overall things shareholder segment, positive that when we large have Yes, said it that

consider as those will come things we So they up.

Craig Siegenthaler

what us after the two-quarter is two-quarter seeing when my Thanks, should running many first Or start last fundraising you equate saying with think delay the this were delay XXXX closes? cycle Suren. on call. as already actually XQ Landmark, were May to earnings earnings to incremental just the And a of I on follow-up this Landmark Does we XQ on call? the

Suren Rana

pick moved expect and last is same that. of we that which been XXXX, would means of Thanks we've prior want had of XXXX of delays. just fund the that definitely what we reiterating XXXX. to most XXXX, two-quarter is half earnings the the was discussions is when Initially, for pace. earlier up half second second clarify fundraising confusion, that XXXX all the to there that of we And that and first call rating is to half the had asking were saying To extent that we

Operator

Thank you.

with Carrier Our next of Mike from question Merrill America Bank comes Lynch.

line Your open. is

Mike Carrier

Thanks morning. the taking Good for question.

buyback and want appreciation back the but accretion with you kind just on the pay I to economic what the the one, loss income. you that like the First like know want just I sure given just down and net I and tougher sort to income impact, And buybacks. mentioned if you debt of to to of you losing. down, the the obviously, to then be slightly don't can transaction, certain pay get think you into going guys, earnings know know when that and the that divestitures correlate announced the net to I that, levels earnings I is. of maybe you're make

Suren Rana

proceeds those guidance EBITDA the we and we lose paying Hi, last debt the Mike, was shares, week divesting. expect share. correctly, would But from accretion by are understood question deploying yes, we to affiliates we that double-digit gave the earnings per if the in that the I yes, yes, the down repurchasing and that, ENI

in referring were ENI accretion. the ENI terms per we to share terms in So of of

if a variety essentially, answer paying comfortable our Does are we divestitures and that the your And the pay we ENI and repurchase would using down had Mike? as million that announced But debt but debt scenarios $XX and use repurchasing effect do scenarios. mean. price and accretion pay the as I a annualized double-digit down proceeds scenarios, our you that get of EPS those shares, about we EBITDA tax you well by can from question, most math, and that lose EPS, that. in So debt we down we

Mike Carrier

the And sense. makes like be timing given of guidance transactions, forma gave, that the for for good That you like that thinking a base of yes. expense just then is just us on some to XXXX? ratio these Yes, pro pretty

Suren Rana

on the in Yes, ratios given that's XXXX pretty my perspective. Yes. deck, good investor that the the from guidance we've

vary on the based particularly generally far. ratios, does. But the what know they're of with does what obviously ratio Some that depending the so we that revenue and the qualifier, OpEx market on good

Operator

Our Cyprys from is Michael next question Stanley. from Morgan

Your line is open.

Michael Cyprys

those & just can was Solutions Thanks the able is morning. top of business in you are us open to you strategies? and maybe were could specifically, that the understand say, and more give a what around good question. color for dedicating. curtain the Quant the those the in they & help on just just if And have three I the you if us taking bit three much strategies some maybe the business. more to come strategies, the I flowing want Hey, Quant mix those how would have. top And frame And there of diversity quantify, top us three hoping top recently? And Solutions back to different each maybe much coming line across help strategies? then just indicating strategies, how

Suren Rana

That's it's yes, our a pro diversified businesses continuing variety revenue to and basis; one have, of more we're with half Hi, largest on very a especially or forma it's EBITDA. Mike, strategies. new of than the strategies, of we a business see

So regional strategy, larger for the example, as strategies, there. some one emerging of the larger of strategies, a market strategies

non-U.S. cap of strategies We regional different ranges like Japan. and in with markets variety of a have terms flavors

also always with factor are much two for of factors on. smaller experimenting have a we part or three our a volatility low have combination looking are are things. the strategies a more regions. strategies exposure getting -- by new smaller but specific where managed dissected multi-asset managed are where specific wall, We And clients are that factor a which, There new strategies plant ball again, of number clients and we good or traction from of we've touched like further businesses that are of to or

business. a it's but to diversified lot other. things different inflowing market of or different tend So balance, And do depending on strategies, environments, on it's become offset very a outflowing, each

data with the we're capability. it team, So research region, research and diversifies academic pleased and lot The in we're specific the and the the clients and that by but Alpha a capabilities, objectives the the the model by ultimately, core investment have. doing the the

Michael Cyprys

redemptions inflows the at & just $XXX Acadian. negative or with looked the out revenue about million guess at door looks like those sales. all in inflows impact negative rate than the I higher a just was into associated a million And that's Quant quarter, fee the Okay. Solutions. revenue on Page there. There like going XX; gross the it impact Imagine annualized that's it $X.X so

quarter? a help more and So color just bit hoping from? the were give us saw strategies a just us Maybe in you strategies on there you could which elaborate advocating inflowing which around that. sense little And outflows maybe

Suren Rana

some if then particular strategies what the function a little combination bit are have not that a seeing Mike. way. just would we of of are see of in to have compression fee outflows they It's range outflows, say some compared that you certainly, And any I so on a we a lower fee the are whether easier of to whether have higher the vary that happenstance, are Yes, because it's implement, higher side, or necessarily lower inflows maybe easier and strategies fee. we in and fee, of to fee, a particular you revenue kind because are any that recurring we and inflows do also because quarter implement, will outflowing by not margin

the depends inflowing and in versa. see choppy. or particular lumpy terms very inflowing just it I So But higher fee It is see fee on a vice and pattern combination. a necessarily can hence, be and institutional wouldn't lower business, of

Michael Cyprys

strategies are And in on which just any inflowing color quarter? outflowing versus the

Suren Rana

changes It from quarter-to-quarter.

quarter. XQ, as strategies had -- you in in we second we saw the we low-vol example, demand So would the more than what for expect,

quarter second a change quarter-to-quarter. quite bit from inflowing, the but strategy in that wasn't does So it

Operator

KBW. Lee question next with comes from Our Robert

open. Your line is

Robert Lee

you. fund shifting Landmark. my to cadence mean Acadian. sense taking similar Maybe to there? for the I size. And Thanks or the Thank raising specifically, assuming pace market multiple of is, by questions. a that ran same Maybe so not Any products, of what Great.

having funds and get the fundraising, as in be to of, it course So it's maybe of what a later strategies close specific closed second trying we of XXXX, different. Just you some part important some Just later, started over of PEs sense of for start raising the get the to are funds some you quarter, obviously, then that, they're a like trying starting small in of strategies strategies cycle? strategy of pattern, to that first just think larger And some will flavor one to say, of it, fundraising should their of larger if the think or sense the that, hit of of year, a first? earlier? larger that to are than more funds what the maybe expect of that getting kind strategy of mix the

Suren Rana

guess, pioneers Landmark diversified. obviously are business, pioneers core because similar also the to very business. one it's the Yes, is a they Yes. one which of somewhat in that business. in Thanks, I The secondary Acadian, strength the also they But diversified aspect, Rob. are of the is

be will strategies estate, the for private primary So we equity, have real example, and which, infrastructure. assets, real

one As being you established earlier more would in classes. private of secondary of the asset equity, expect, strategy the larger one the

obviously we beyond time. expect of to Or five, that a perspective. onwards, grow But ROE wouldn't over and assumption XXXX is any asset that from it six, and expand simplified onwards, quarters. be it back-end in and ideally diversified secondary it's and we for spread So XXXX continue terms target to use evenly seven class sort of we the just would

Robert Lee

maybe as follow-up. And a

heading pending quarter? least that there pretty on So happening quarter. transaction fourth of be Xth XX kind into at is one in fourth quarter? versus of quickly terms had that on any any in kind the information December the they quickly With the quarter so some of more is October closing the buyback for one kind year, in fourth they fourth Are sort sense quarter, later color of

Suren Rana

December. the but I sooner, I assume year-end could would almost assume would Yes. happen toward

Operator

Thank you.

Our Chris question with Fargo. Harris next from is Wells

Your line is open.

Chris Harris

expense operating XX.X% The ratio the second quarter. expenses. on question first So was in

the is for guidance Your XX% year. XX% to

expenses half? a up not I quarter. Or relative mean, if assumption? ratio higher what driving I you're a and expenses second so, the and actual us be second the reasonable we the So in imply do to right? in that second to but half numbers, know could that here giving have seems the that Is

Suren Rana

evolve that, second you'll But compared dollar was it's expenses of is quarter, first The lower. regarding assumptions the Yes, in Chris. to quarter, the certainly. a see again, the revenue. Thanks, range of ratio amount the

for And at by some in vendors, recruitment of that was Landmark. that some third-party had, slowdown we driven T&E, example,

to of in So some up quarter. and expect we pick fourth this would third quarter

-- ratio, of would Just increase. partly operating that, part in it's the to side. some really around terms then the on of market yes, And we the expenses that, happen the expectation what expect would it's really

range that reason. a it's So for

Chris Harris

modeling Is on quarter to it you tends in traditionally, strong pretty fees there the Is possible shed I second for? light unrelated something QX be any rate know can different that. as of where forma this thoughts half? really we still guys then your much the a Is than pro tax on of to what you should be are Okay. And for follow-up, an today? kind that it performance company? relates stands that

Suren Rana

Yes.

And right is the we On It's still model always would you QX there hard yes, generally, right that of would -- course. was predict, always in fees But come it's performance performance the And in, to fee. performance generally, question, if Chris, you're expect, what quarter be fee, QX. second to some to the something.

Chris Harris

you rate, different Pro forma any today? tax it is than are where

Suren Rana

So that with would it. we not run know. will We

Operator

Lee question is Capital Kenneth RBC with from next Our Markets.

open. Your is line

Kenneth Lee

thanks my question. Hi, taking for

capital, Just seed for areas the you you're if capital could invest updated any with specific thoughts one to which Wondering investments. plans us of on seed looking in terms in? any share just

Suren Rana

our a capital, we overall on similar the are yes, on as focusing said, of Again, our industry. that the seed business parts business we as growing it's the to approach

to reflective seed be also would you expect So that. of our portfolio

demand. and Landmark that in new seeding to have be strategies would Acadian expect of primarily client it terms So we

for similarly, vintage. GP in funds that in in portfolio last the strategy of class example, raised in commitment were the And is Landmark few Our the others. some have a at participated Acadian invested, and we multi-asset current

growth So the the it generally, of how that's AUM. with evolve would

Kenneth Lee

if of could unfunded Very I are there? just comment Wondering demand your seeing you. sort may. on And you helpful. you just type what in if products institutional follow-up, of Thanks. Got one

Suren Rana

Would I mind didn't repeating? Ken, you follow the question.

Kenneth Lee

your Just see pipeline. unfunded you on if with want share could any to us comments institutional

Suren Rana

vary. that on won but funded, not pipelines the any we generally some and it. times see. they Yes, in Got expect, always, have the but I eventually not maybe, sense we have as would specifics you funded, share are

very reasonably with pipeline. different have we're satisfied what it's would our the say in I not from normally we So that pipeline.

Operator

Toma question Patrick next Research. is Autonomous Our from with

Your line with Autonomous is Toma Patrick open. Research.

line Your is open.

Patrick Toma

Hey, All good questions have my answered. been morning.

Operator

from is Evercore. Dunn Our with next question John

Your line open. is

John Dunn

puzzle how to given domicile be you the piece? that thinking is strategic how just the Basically, Hi, growth? non-U.S. flows think shift, about talk piece a can the we do be big should about going you of to

Suren Rana

those is Acadian distribution the so there to Yes, important. in less affiliates be because demand, particular, John. important strategies Acadian in is efforts our internationally. and TSW, in to products one be and international, in But have Landmark, regards the with Yes, are non-U.S. overseas. continues the market, for and an as the I both affiliate to the larger in of very which that both because affiliates, with probably say of level would continues U.S. are those larger well as at demand more U.S. in U.S. Landmark, sizable directly the And both those

John Dunn

color And is know give on may at clients existing strategies? adding any new be adding then new can I maybe looking you. clients But COVID. more how due Got us complicated you to

Suren Rana

an that's dynamic. Yes, interesting

John, same that a generally than existing logic, do that seeing little we're those go new touched are But adding to that, before person. too. need any to more You that in is were going logistically And client the clients by their on, seeing we're managers. to able you clients more see challenging a allocate when bit two

somewhat looking advantage. an our whether have something and of client then So that a it's wheelhouse, different, in we have for we already

vintages is So delay that as we are we side. the across we Liquid the Landmark example, more on number we the repeat issues for And prior through. ranging that phenomena. there, both, that the go there just but which a At are have are settle on logistics do mentioned is side, obviously more Illiquid see a TSW, clients expect, and dynamic. that and to more into Acadian travel new of clients do but processes, And would the to the processes related really clients but

Operator

for I'd conference session. the Suren conclude like remarks. Rana now question-and-answer back our closing any over to And to this turn does

Suren Rana

forma you. to offers, this forward value. look business about pro we're shareholder time. and for healthy. net mix and our pleased create we To the taking mix and Stay the Thank low everyone, new unlock and summarize, Thanks, trajectory to safe continuing

Acadian Asset Management (AAMI) 7 Aug 202020 Q2 Earnings call transcript