Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the BrightSphere Investment Group earnings conference call and webcast for the third quarter 2022. [Operator Instructions] Please note, this call is being recorded today, November 3, 2022, at 11 Eastern Time.

I would now like to turn the meeting over to Elie Sugarman, Head of Strategy and Corporate Development. Please go ahead, Elie.

Elie Sugarman

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

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

forward-looking that XXXX the the and to future and regarding appears Any in we XXXX. and of them our on including of today, these earnings filings, on events. obligation containing no result statements today risks or first update uncertainties this XX-K based Form Form information our call information filed are undertake Additional SEC X-K of as the and XX-Qs make Form release, as assumptions our for quarters second a we new

also We our today's that measures reconciliation use of including discussion. a reference financial any can as we about found non-GAAP measures measures, non-GAAP may the measures. part slides referenced, along GAAP with be those certain of will Information to website on

nothing shall Finally, be buy any deemed an investment herein products. to solicitation or offer be to

pleased will over Suren and President Chief now Executive the to turn the Rana, call. And Officer, I'm Suren. Suren? our to call lead

Suren Rana

Thanks, Elie. for you Good today. morning, everyone, joining us and thank

of this a than significant AUM the impact this buyback equity quarter We me that caused on third quarter year, off this the in share in deck. share for our more stronger let ENI decline the sizable reported market by on to of offset the of earnings the QX and with our compared decline start of dollar. and per third usual, as $X.XX Slide QX the reported As the financial of X% X 'XX highlights we U.S. $X.XX year of XXXX higher in from for our year

be pleased, this investment performance however, to our volatile through environment, continues strong. We're that market

by strategies XX-year benchmarks the XX% XX%, XX% over X- XX, XX%, September revenue of prior beat X-, and of As and respectively. X-, their periods,

the of we turned pretty flows pipeline healthy. modestly strategies. Next, our of billion positive in client encouraged inflows, our cash as positive are all across sales we that with major quarter, remains $X.X our much net And saw flat growth to net

continue a efforts out longer-term equity From perspective, last and call. announced build systematic that credit on our we we to earnings in alternative our

quarter, added we During people data and these the teams to the are to more and technology adding infrastructure.

the of kick-starting We be equity this $XX capital month. will with seed platform million alternatives

initiatives demand like business. the to We Together, also returns, for these to efforts, tap expect and long-term our them macro. organic growth growth help continue will secular into generate our make ongoing systematic progress growing on for uncorrelated we

balance Turning to management. $XXX million as a of We capital 'XX. XX, had September of cash

expect our generate cash come deploying support to to growth we our capital back free and business flow, organic continues As to whenever opportunities up. buy to strong continue shares

AUM of 'XX dollar, U.S. XX a over a decline approximately by due portion was months given AUM XX% substantial equity in and EBITDA some million operating highlights compared XQ $XX.X XXXX. third The Slide million compared in adjusted X. to year to in the quarter stronger decline mainly the the of in Acadian drop driven Turning globally invested market EBITDA the third to this to on the of quarter of $XX.X our for of outside Acadian U.S. generated last is

was in was driven $X even million also $X continued this second was in year, mainly EBITDA at drop million. third the of the compared declines. in And 'XX second lower to sequential The quarter. third for the prior quarter also, The by the million versus quarter of $XX.X in the market quarter, performance EBITDA quarter second fee quarter

quarter. our reminder, of through comes majority performance in fourth generally the a fee As

rows: a good the the platform. AUM provides Slide to resides turn franchise expansive the me potential of Acadian's capabilities let in to where our alpha reduced Now alpha snapshot for strategies; produce Equity, seek today of volatility. and in seek equity the to we of top as of equity strategies where it managed consistently Most XX minute future clients we X and a produce volatility, across for various with our

call are our very to positive is We that we prove on equally platform good the a generating equities. discussed alpha market. large However, will in be outside credit last how

with our high-yield We credit with areas. team, will we building effort quant in have and systematic started the and investment-grade start

our to along I million equity previously AUM. touched integrated $XX of to are strategies. our XX-plus strategies, which in move macro alternatives our And like back continue launched seeding platform this throughout process multi-asset with our absolute on to date $X now systematic of We capabilities and billion ESG return, capital our than month years investment and returns. seed provide uncorrelated investors more have

see investors mitigate ESG We portfolios to factors and ESG ESG customize continue alpha from to for their demand from for to values. risk

grow, these large to will quant this our of each serve continue us are effectively very demand of So capabilities pockets and and to unique allow in demand. summary,

To conclude Slide XX. on

Our the remains long-term strategy same.

core our focused maximizing invest shareholder continue available. value. new to unique our whenever opportunities And cash free organic using in platform growth on to leverage We'll continue our capabilities we areas. to flow and will repurchases are and share into quant for remain We support expand

questions back call the let to happy operator, point. we're answer Now this turn at to me and the

Operator

from Kenneth first is [Operator Lee Our with Instructions] Markets. RBC Capital question

Kenneth Lee

any Wondering potential discussions transactions. if you have around value-enhancing you could comment had may recent on

Suren Rana

in up, we suffice shareholder And such whenever and said, on opportunities open we've whether particular, something specifically as maximizing, any do come partnerships remain we possible. transactions. value-enhancing where always value focused say, any shareholder is shareholder such, value, but open. on can't to remain to see engage to maximizing are I or we as Ken, comment anything

Kenneth Lee

I terms Got you. may, follow-up, excess And if one allocation. capital of in just

as you organic support could allow. You or growth stock mentioned that repurchase opportunities

further to expand terms in opportunities wanted that that. means Just clarify, what of allowing

Suren Rana

AUM in And the produces course even repurchases. cash as is the Seeding clear: example, of Yes, Yes. as that business cash flow, the our low. and for of cash twofold, essentially good Thanks, for excess Ken. cyclically new when use been flow strategies is markets, we've said, we've flow, these

regards did with the systematic come equity think seeding, alternatives, that and which to it was we opportunities. credit opportunities compelling with are very up, And

So years million to and the outlined, we use those million $XX a X opportunities, $XX in $XX in million X we'd next probably call over $XX to about as that. million -- let's year, it

time, repurchases. Again, earnings-related we're it's some And restriction, to having come blackout are that. strategic do a an of in window of But or time with kind whether legitimately whenever up, we conversation. opportunities from kind we if

Kenneth Lee

And any are the share do currently? clarify, share given to prices And to in there expect repurchases where Got resume you. was repurchases, you recent most quarter?

Suren Rana

open There any most uses. remain we window, key recent in always of the were opportunity repurchases one that's open. Whenever right clearly not the we quarter, the and have an but

Operator

The next Michael with from question Morgan is Cyprys Stanley.

Michael Cyprys

Maybe just continuing with buybacks theme. the

quarter, you anything So any past? think any in prior that was do repurchases in the to the and were from with I be in I to was. answer? but time, hoping I seen that there potentially weren't to restrictions That of the elaborate alluding you able we've it that might sort that why does have on happen you time hear could And to

Suren Rana

that's right. Yes, Mike.

to also, we course, attractive of buy For we other But and factor most back. the it's monitor the when the open whether have repurchases, is market window. an

things. those of combination a it's So

desired an year. of million window, open reiterate X I and we on, repurchase the attractive $XX a about the already have markets in identified we million have key But that whenever use. to clearly our I'll opportunities seeding, is are touched terms is $XX

can. whenever of we the repurchases is for capital rest So

Michael Cyprys

an have window you third open Did quarter? in the

Suren Rana

the in can't any I specifically quarter. comment But we that. on repurchases third not did do

Michael Cyprys

Okay. softer. which the Fair then maybe quarter. strength had strategies just be contributed to a enough. might flow then of and in organic you was the a on changing topics growth I over outflows hoping elaborate or And which bit flows. maybe any to able strategies bit And to

Suren Rana

flows the course generally, got the were strategies, flat across of positive Yes, to encouraging we which market considering in. all modestly very backdrop is we

of And the are we sales good, aren't strategies we and multi-asset of and good do terms the across buy assets, newer like in. pressure at-risk particular from areas there consultants seeing coming there So class, including strategies. ratings see in traction healthy pipeline any

So that's all encouraging.

most were from to U.K. We -- get impact the strategy not did any it's no. some contributed of So LDI. course say funds, that I particular pension wouldn't it, of --

encouraging numbers would it's the Without that, of been spite have in that, ended So we better. that, good place. up a even at

So expansive I good, support would say level strategies. across

Michael Cyprys

except Great. bit. largely for on moved like And just the the comp prior this just think question variable guidance I me, expense final expense, looks for little year, kept a It guidance guidance. your you variable

able you hoping was what's I that. So might to driving elaborate on be

thinking into 'XX, good about about is look for it's then But sort any 'XX? 'XX. starting early Or point of of for a guidance different maybe might just your why And a sort that for that as we 'XX? think little

Suren Rana

Yes.

the On fixed. the the think, basically OpEx, it's on dollar I expense guidance, amount relatively, sort is -- of

So level goes as the goes management down, the fee up. ratio

there invest change except that teams initiatives in technology building teams and structured for credit of that We're initiatives we the growing have isn't equity to both need. we So and the in started and those data modules there, much and sources started new those adding alternatives. new

where expenses side. at center more up corporate area year. overhead and down So same bringing next the is build that's time, on expense also to build we're will starting one But the and up

So that will offset some of that.

Michael Cyprys

there. affiliate the And as well, views the on on 'XX. moving variable just distribution then Sorry, the pieces and guidance expenses

Suren Rana

Yes. a skews a that's no, of prior sort it But large little it course, with up of bit. of No, just variable a they But earnings, periods. portion there are pre-variable variable down ratio part is so There's fixed a of amortization comp ratio that. that's is and the what that comp of expenses, from variable. the moves

bringing building move. on with efforts, we're don't guidance And the as that we're comp expectations new and people

we course, new don't new initiatives have these yet. with revenues Of

up a comp down -- something should the generally that, other also Otherwise, little that's it skew would line comp with be earnings. pre-variable bit. the moving ratio So it's in and variable than that

Operator

The next is Dunn with Evercore question from ISI. John

John Dunn

size mix, the for changed little just us? some say. year-to-date, mix. you as You maybe over Maybe talked the composition sales And the bit then has you about the talked pipeline. Several far let's about color And then the multi-asset. several -- it a try months? on more and Could past as

Suren Rana

we've John, had. pipeline. as good haven't terms our as relative on sizing robust pipeline, yes, provided in levels, a it's generally very of sales But we

pipeline In have good medium. So environment, a That's of stage, late that's in encouraging. searches various stages the this early, good. in we

strategies like A various goals. spread regions have some it's And -- some angles like it is the markets, also with international ESG or emerging sustainable good. global strategies, specific specific Australia, pretty of that's equity, across where clients lot

healthy sort -- sales a pipeline. that's pretty So of it's diverse,

are which interest we and leading good community, the good adopter the with also earlier from from indicators. good And are And -- always -- from newer with early seeing the feedback initiatives multi-asset, clients. consultant

So that that's John? see answer to your Does that. encouraged question, -- all we're

John Dunn

Yes. Yes, of it time. the does. And follow-up the fee on then direction over a rate

what's stuff the inflowing those now one rates how newer rolling Just another, are time. over just thinking guys you out, compare the about and different to and fee direction

Suren Rana

Yes.

fair fee rates bit. the do Now vary a

For are rates quoting, structured the return higher. credit we'll fee on are some initially example, focus the the the rates high-yield. strategies, In fee side, of There, absolute higher. for on

how up it and So first depends pick on which items fast.

and strategies are their example, are easier there where factor, with to value And looking simpler simpler some rates increase low fee, clients which do a the current that are a we or fee growth But those our than to -- to offer factor. for would fee. are where be average lower for hence exposure also solutions

have peg. -- irons we're So to it's and good in of about fire, course all to have multiples hard of them. -- it's the multiple We encouraged

getting on fee time, like absolute over bias our which are would uncorrelated So But mandate. is some lower-fee looks have a simpler, I that of there but increase to traction higher rate also a that we are are the number would fee. it we say offerings do return upside good

Operator

[Operator Instructions] no question-and-answer have that And our It will further this appears session. we conclude questions.

turn to Suren like Rana. the conference call I'd to back over

Suren Rana

everyone, us Appreciate for joining today. Great. Thank it. operator. you, Thanks,

Acadian Asset Management (AAMI) 3 Nov 222022 Q3 Earnings call transcript