Q2 2021 Manning & Napier Inc Earnings Call
[music].
Good evening My name is Catherine and I will be your conference operator today at this time I would like to welcome everyone to the Manning and Napier second quarter 2021earnings conference call. Our hosts for today's call are Nicole Kingsley Brunner, Chief Marketing Officer, Marc Mayer, Chairman and Chief Executive.
And if officer, and Paul Battaglia, Chief Financial Officer.
Today's call is being recorded and will be available for replay, peaking at 8 P. M. Eastern standard time today.
The dial in number is 808, 3 and 95103 no pass code is required.
At this time all participants.
Executives have been placed in a listen only mode. If you should require operator assistance. Please press star zero and it is now my pleasure to turn the floor over to MS. Nicole Kingsley Brunner.
Thank you Catherine and thank you everyone for joining us today to discuss Manning and Napier second quarter 2021 results.
Before we begin and I would like to remind everyone that certain statements made during this call not based on historical facts, including any statements.
Relating to financial guidance may be deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
[laughter].
Because these forward looking statements involve known and unknown risks and uncertainties. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward looking statements.
Manning and Napier assumes no obligation or responsibility to update any forward looking statements.
During this call.
Call. Some comments may include reference to non-GAAP financial measures for all.
GAAP reconciliations can be found in our earnings release and related SEC filings with that I will turn the call over to our Chief Executive Officer, Marc Mayer Marc.
Thank you Nicole.
Last quarter, we made progress on our key initiatives.
Improving our positioning for the future.
We will get to those updates and a moment, but first we should begin as we always do with an update on how we performed for our clients.
Our investment teams delivered another fine quarter of results to our clients further bolstering our strong first.
Quarter performance and delivering what has become excellent short to intermediate term performance across nearly all strategies and standard time periods.
Pages, 6 and 7 of the earnings supplement contain the relevant metrics.
All of our bottom up multi asset strategies, which represents.
<unk>, 67% of our assets under management delivered strong absolute returns during the second quarter and for the year to date.
Each outperforming their respective blended benchmarks over both time periods as well as they have consistently over the past few years.
We believe these excellent results.
Or a product of our distinctive disciplined and flexible research processes, which have been time tested over many cycles over the past half century.
Using our flagship long term growth strategy as a proxy for the entire suite.
And our investment research teams added.
Significantly positive relative value through asset allocation sector positioning and security selection decision, making throughout the quarter.
And our more benchmark relative accounts performance was strong and above benchmark across most of our investments we for the quarter.
Results for our bottom up strategies U S equity core non U S equity global equity and core equity unconstrained strategy, all deliver material outperformance for the quarter and each are well ahead of their respective benchmarks on the year.
Moreover, each are meaningfully ahead of benchmark.
Our parks over the intermediate term as well with all 4 strategies materially outperforming over their trailing 3 and 5 year time periods and global equity is well into the top decile for both 3 and 5 years.
Core equity tier definitely captured the historically strong rotation.
Benchmarking to value that prevailed during the first half of this year.
Demonstrating again that we have disciplined processes for identifying both growth and value stocks and capturing the upside in both strong growth and value markets.
Additionally, our sector specific.
<unk> and real estate fund delivered above benchmark performance for the quarter reversing some of the first quarter's underperformance a REIT fund has excellent 3.5 and 10 year numbers and as a top quartile fund over the past decade.
Within fixed income our team.
Perfect can use to perform more than admirably and executing well and.
A truly challenging bond market environment.
Our core bond series high yield Bond series Unconstrained Bond series and diversified tax exempt series each outperformed for the quarter.
And continue and high yield specifically the outperformance is further building an already excellent short and medium term results. The fund is outperforming across all standard time periods and it presently presently ranks and the top decile for all standard time periods as well.
Our fixed income team continue.
To position, our credit debt as well and it navigated the very tricky developments and the yield curve during the quarter.
<unk> duration and capturing the sharp drop and yields that began in June.
These results reflect the clear philosophy disciplined processes and outstanding talent, we have developed within our fixed income.
<unk>.
And we believe the positive flow momentum we are experiencing in fixed income is only the beginning.
Our Rainier team performed well and the quarter with our Rainier International Discovery fund outperforming by approximately 250 basis points cutting and half its underperformance from.
<unk> of the year.
Although this strategy is still trailing its benchmark year to date. This fund is coming off a stunning year last year, having delivered relative outperformance of over 25 percentage points in the year 2020.
The strategies intermediate term track record remains outstanding.
And the fund is ahead of benchmark on the trailing 3 and 5 year time periods by 552% and 416 basis points annualized respectively.
And our quantitative disciplined value suite of strategies has been 1 of the very few challenged areas this year and and the second quarter specifics.
Specifically.
Although the performance pattern is not altogether surprising given the environment and our discipline.
Our disciplined value strategy seek attractive valuation coupled with high quality measured by free cash flow generation sustainable dividend growth and a healthy balance sheet.
Distinct from the majority of quantitative managers momentum does not play a significant role and our models.
Rather predictably the value rotation was led by lower quality companies.
And early cycles heavily indebted companies, whose future is controversial.
Generally rallied the strongest as they are perceived to be able to live to fight another day as a rising tide lifts all boats.
Inexpensive, but higher quality businesses that we're already a float benefit less from the revaluation and theyre lower quality peers.
And the early cycle value rotation.
We believe the philosophy and process underpinning our disciplined value strategies are as robust as ever and while there maybe periods, sometimes extended when the value styles out of favor.
And there are those rare times, when our higher quality version of value underperform.
Warms and we believe this strategy will continue to deliver long term investment success for our clients.
And as it has already done since inception, the disciplined value fund remains and the top 30% of its peers over 5 and 10 years.
Our quantitative strategies group headed by Chris Petros.
We know.
Which runs our disciplined value strategies also manages are multi asset ETF portfolios, which come and 5 risk flavors akin to our fundamentally manage multi asset portfolios. These strategies performed in line with their respective benchmarks for the quarter.
The value orientation.
Petros simple quantitative strategies group has made them more cautious with respect to equity valuations and theyre higher allocations to bonds across the suite over the past year have damped and performance.
These are important strategies for us as they offer a compelling low cost.
Cost offering and the multi asset space, our long term records compare favorably to so called ETF strategists, and differentiate us and wealth management from advisers, using Etfs, who do not have audits audited track records like we do.
Risk management.
<unk> remains central to our investment strategy.
Our clients' goals and objectives are measured in decades, not months and quarters.
While risk measures like volatility and <unk> are useful we believe the most significant risk as the permanent impairment of capital, which can occur if clients panic during.
During large drawdowns skillful downside risk management has been a hallmark of our processes for half a century and is visible and our results for clients.
My way of example, our multi asset long term growth growth strategy has substantially outperformed global equities.
Over the past 3 and 5 years with approximately half the volatility.
This strategy has experienced a downside capture of about 30% versus global equities and those time periods.
Meaning that has realized less than a third of the declines in global equities over the past.
5 years.
Within our benchmark aware equity portfolios. The result of our risk management disciplines are equally palpable.
While sharp and information ratios are the most common measures of risk adjusted returns we would argue that a more useful measure is the sortino ratio.
Which looks at.
And as per unit of downside risk the risk we all care about.
Our fundamentally manage global equity International equity U S equity Rainier International small cap equity and our REIT portfolio, all have 3 and 5 year sortino ratios that are well above 1.
Hi, excess return per unit of downside risk.
More notably over the past 3 and 5 years each of the portfolios in each time period has a sortino ratio that is between 25% and 65% higher than its benchmark.
And these are.
Significantly more efficient portfolios and their benchmarks validating our approach to active management not only in terms of excess returns over time, but with far less risk than the passive alternatives.
Our shareholders might think that this has been a bit of a detailed discussion.
And of risk management, and its impact for an earnings call and.
In fact, it may be the first time sortino ratios have ever been discussed on any earnings call.
But we believe risk management is quite relevant for our shareholders as it is for our clients.
Strong.
Total is more stable results for clients are clearly valuable and genuinely differentiable from other active managers as well as possible alternatives and all of our channels.
We believe that increasingly effective prosecution of this differentiation will.
Benefit for clients, who invest with us, while enabling us to add new relationship set and an accelerating rate and.
This will be down to the benefit of our shareholders through solid stable growth.
Other tremendous rally and equities, particularly in the United States that began.
And after last March's precipitous Selloff has continued thus far and 2021 as we have witnessed a near steady progression of new highs and stocks.
Economic fundamentals are strong and they are filtering into robust earnings results and just about every sector both against.
Cost levels in 'twenty, and 'twenty, but honestly also relative to the trend line in 2019.
These fundamentals are compelling there is no denying that but fundamentals must always be viewed against valuations.
And equities are expensive measured and a host of ways versus.
The prior history, particularly in the U S.
However, it should be noted the relationship between the earnings yield on the S&P the inverse of the 12 months forward P/e.
And the 10 year Treasury yield is about the same as it was in 2016.
Vs that has actually remained about the same over that timeframe and.
Importantly, this is the measure that the debt and.
Prefers and thinking about the valuation of the stock market.
Nevertheless, we do believe that valuation sensitive investors like us must be thoughtful as valuation.
And is elevated.
So all of this is to say that and a rally as remarkable as the 1 we have seen over the past 15 months, we believe our research teams ability to deliver more than full market participation, while simultaneously sticking to its risk management disciplines enabled.
Table by decision, making excellence across all the vectors available to us as active managers.
Simply a tremendous accomplishment and we are deeply proud of our team.
I'd like to now turn to our business operations and progress on strategic initiatives.
And risk first our strong investment results investment and our sales teams marketing and public relations efforts as well as recent award recognitions are all beginning to generate and increase inflows.
Net flows were very slightly negative and the quarter as our intermediary business is now and net.
Positive flows offset by moderating outflows in wealth management and institutional channels.
<unk> will discuss our AUM and flows and more detail.
As mentioned on prior calls we expected our recent investment performance to draw increasing interest from intermediary.
Free buyers. These buyers are the most performance sensitive and our business and they are responding to our strong results for clients.
Our goal however is not to chase easy high performance sensitive dollars, but instead to rebuild the foundation of our firm across all of our distribution channels.
We begin with and articulation of our most differentiated strengths and move forward through the creation of processes and partnerships that position us for sustainable success.
We believe the consistent improvements and our net flows that has been visible over the past 18 months is evidence of progress and.
Strong sustainable distribution effort across all segments of our market.
To further strengthen our client facing teams. We've recently undertaken a series of meaningful changes to our distribution structure that will securely position our organization for the future.
We have been successful over.
Building and 2 years and Staunching the rate of outflows, our organizational changes represent the next step and our efforts to increase sales productivity and accelerate inflows.
Aaron Mcgreevy has been promoted to chief distribution officer.
With responsibility for all distribution channels previously.
<unk> Aaron had overseen our asset management efforts with specific responsibility for our intermediary and institutional teams.
For those who will add responsibility for our wealth management effort.
Consolidating all our distribution efforts under his insightful and strategic leadership, we believe we will realize more consistent.
Past, the greater focus and further success.
Kingsley Brunner and become chief marketing and strategy Officer, Nicole, we'll add oversight of advisory services and strategy toward current responsibility for marketing.
And this expanded role Nicole will help our executive Committee.
And strategically across distribution and marketing as we seek to strengthen our differentiated positioning for clients across all our sales channels.
<unk> is a highly effective leader, whose creativity inspiration and tireless work ethic are and valuable to our team.
In addition to these changes to our executive team.
<unk>. We also made a series of key leadership appointments within our distribution organization Nicky.
Nicky Hamblin, who has experience and insight and has helped drive forward. Our renewed intermediary efforts has been promoted to managing director of intermediary sales Greg.
Greg Holden has been promoted to managing director of wealth management.
With responsibility for leveraging his vision and courage to manage our growing team of financial consultants and Greg Woodard has become managing director of institutional distribution with responsibility for our Taft Hartley and institutional businesses.
Beyond the senior level changes, we have continued to invest and building.
Our client facing teams during the quarter, we completed the higher of 2 new senior Pi financial consultants within our local Rochester client facing teams and added 2 more financial consultants and Rochester for and internal transfers. We also added a new advisor consultant to our intermediary distribution group our distributions.
Tribunal efforts are seeing clear signs of traction and we believe we are and the right track to building a distribution organization that positions us for sustainable growth.
During the quarter, we submitted our application for a U and <unk> designation. This is a further step towards implementing ESG investing strategies across.
Cross our portfolios, we maintain ESG ratings at every stock and credit and our portfolios and we will continue to evolve our ESG capabilities going forward.
To state the obvious ESG integration is now expected of asset managers, we believe the integration with our distinctive research meth.
Apologies for identifying investment opportunities and risks will give us a differentiated approach to this essential capability.
Regarding our digital transformation, we made important strides last quarter across each of our 3 major applications. Charles River has been deployed for several of our strategies across many occur.
Accounts and we are continuing to work towards full implementation across the rest of our investment suite, which is anticipated to be completed during the first quarter of 2022.
Workday for human capital management was delivered on schedule and on budget. This marks the final work day implementation for financial planning.
Turning and budgeting will be completed this quarter.
And we're continuing to make headway on our highly complex and best cloud implementation. We've just rolled out the financial planning modules for all our wealth management and advisory services teams parallel efforts are migrating our CRM adviser portal portfolio counting.
Performance reporting and attribution functionality.
<unk> completion of all and best crowd and implementation is also the first quarter of 2022.
Thus and early 2022.
We anticipate that we will have replaced the entirety of our technology stack a herculean effort.
Involving high cost and significant organizational stress on.
And on the other side of the soon to be completed effort, we expect to have far superior client experiences and a substantially streamlined set of business processes.
Upon completion next year, we will have accomplished the following.
And exceptional client portal vastly superior client reported state of the art financial planning dramatically simplified client service processes, much smoother and more efficient implementation of our portfolios and fully integrated CRM and sales portals and tightly integrated financial.
And HR systems we.
We will be capable of sophisticated business intelligence that is simply not possible with our existing technology.
And next year, we anticipate realizing some cost efficiencies from improved business processes as well as accelerated cash flow as heavy cash spending.
And I'll, let you rolls off of depreciation charges will rise cash flows will improve as Paul will detail later on.
In addition, during the quarter, we took steps towards simplifying our corporate structure with the exchange transaction with most of our remaining private unitholders and Paul.
Paul will discuss this in more detail.
Further we recently strengthened our governance profile through the appointment of loft and holder to the board of directors.
Mr Holder served as the co founder and managing partner for Pine Street alternative asset management and his extensive industry expertise and experience have already proven.
And a valuable addition to our board.
We are committed to returning excess capital that we cannot more productively deploy to our shareholders.
Our share repurchase continue to pace during the quarter as Paul will detail and last week, our board authorized the resumption of the dividend set at <unk>.
Moving to bill quarter.
Lastly, I'd like to discuss the firm's perspective on workplace flexibility as firms begin to reassess what return to office means for their businesses and employees. Our strategic priority is to maintain a culture and environment that fosters the high talent density.
That lies at the heart of being a very successful firm.
And we hold 2 principles before us and thinking about the future of work at Manning and Napier.
Number 1 a powerful consistent culture is a prerequisite for great success culture.
Culture requires dialogue collab.
Duration constant learning and continue a reinforcement of our core values and purpose.
Ours is almost entirely a homegrown organization.
It can be a differentiated strengths when coupled with clear purpose and common values. This means ours is very much.
Collab and to ship model.
And which does call for co location to a high degree.
As it is indisputably help and learning and acculturation and.
The second principle that we hold before us with equal importance is the value we place on being a caring organization.
And our prep understands that employees are a heterogeneous bunch.
We price that heterogeneity.
And we celebrate the diversity of our people and are committed to increasing it.
We also respect the desire for flexibility and work, it's not everyone is productive and the same.
Ways nor.
Nor are each person's life circumstances equally amenable to being in the office every hour of every day.
The pandemic accelerated not only our own digital transformation, but the entire way our society work views work life balance so we support.
Same ability for.
Lending important face time in the office with a unique productivity aspects can come with remote work.
And doing so we seek to foster a great firm with a powerful culture that remains a destination of choice for talented people.
And with that I'll turn the call over to Paul for more details on our financials Paul.
Thanks, Mark and good after.
And everyone and thanks for joining us today.
Highlights for the second quarter included continued improvement and assets under management and revenue resulting from the.
Flex and performance metrics that mark alluded to earlier and further reduction in net client outflows.
Our progress on our share repurchase program with more than $5 million of stock repurchased through June 30.
And another step and the simplification of our complex corporate structure with the completion of the 2021 annual exchange.
And <unk> in June.
Starting with net client flows and assets under management.
AUM at the end of June was $22.3 billion.
Up from $21.1 billion as of March 31.
For 5% increase was the result of $1.2 billion and market appreciation partially offset.
Transit and $62 million of net client outflows.
When compared to June 30 of 2020 and AUM.
<unk> has improved by $3.6 billion or 19%.
Though net client flows remain negative $62 million of net client outflows for the quarter represents approximately half of net outflows from Q.
1.
Year to date net client outflows of $194 million and represented 83% improvement from net outflows of $1.1 billion reported this time last year.
Second quarter gross client inflows of $787 million improved by more than $150 million or 25%.
Over last quarter.
Year to date gross client inflows have increased by 16% since last year to $1.4 billion.
And the wealth management side, we reported gross inflows of approximately $215 million and Q2 and $440 million through June 30th and we've reported gross client inflows of.
And and $70 million for the quarter and $970 million through June 30th from the intermediary and institutional channel.
Gross client outflows for the quarter were $850 million slightly up when compared to last quarter, but improved from $1.2 billion and Q2.2020.
Our turnover rate, which we.
Measure as annualized gross client outflows for the quarter divided by beginning of the period AUM was approximately 16% for the second consecutive quarter, which is an improvement from last year when our turnover rate was and the mid 20% range for the 6 months ended June 30th client outflows were $1.6 billion well.
Well below.
Although the $2.3 billion and the first half of 2020.
Our separate account retention rate during the quarter was approximately 98%.
When looking at net client flows we think it is notable and net flows for the intermediary and institutional channel turned positive for the quarter was $17 million of net inflows.
The wealth management team remained in a net outflow position was $79 million out during the quarter.
Also noteworthy net flows for our mutual funds and collective trusts turned positive in the quarter with approximately $64 million of net inflows compared to 126 million of net outflows from our separate accounts the.
The improvement and our net flows has been driven.
Given by the intermediary channel, which has historically been the most responsive responsive to performance and where our mutual funds have good traction. So these trends do lineup as Mark noted the majority of our track records look very competitive against benchmarks across 1.3 and 5 year periods and therefore, we expect that gross inflows should continue to improve across.
All of our channels.
Turning to our second quarter P&L, we reported revenue of $36.1 million for the quarter with revenue margin of 66 basis points compared to revenue of $34.2 million reported last quarter with revenue margin of 68 basis points.
Operating expense.
Fences were $28.3 million and the quarter, an increase of $365000 compared to last quarter, and a $1 million increase compared to the second quarter of 2020.
When comparing operating expenses against the last quarter, we see the compensation is down 3% for debt decreases offset by an increase and other operating expenses.
Crosses.
The sequential decrease and compensation and related costs is mainly the result of seasonality of payroll benefits driven by the timing of incentive compensation payments.
A decrease and share based compensation due to the timing of equity award grants and reduced severance costs during the quarter.
<unk> I'm going to pause here and drill down a bit more on compensation and related costs comps.
Compensation as a percentage of revenue was 51% for Q2, an improvement from last quarter, when we reported 55% and from prior periods, where the ratio ranged from the high <unk> to low 60% range.
Part.
This improving trend can be explained by the size of our workforce, which has decreased from 288 employees. At this time last year to 272 as of June 30th.
Net decrease and head count is the result of ongoing reductions and middle and back office staffing that is and partially offset by additions to our sales teams and our existing geographies.
Designed to expand our sales and servicing capacity.
The other driver of the improved compensation ratio has been the implementation of our deferred compensation program and 2021, which we've addressed on prior calls.
Under this plan a fraction of incentive compensation for our highly compensated employees is.
<unk> invested in our mutual funds invested over future periods the.
And the accounting for the vesting of the deferred compensation over multiple periods has resulted in onetime compensation savings during 2021, which is contributing to the improved compensation ratio.
As we look ahead and.
And the near term I expect our compensation ratio for the next few quarters will likely be and the mid 50% range, assuming no significant market volatility or changes to our assets and revenues.
Longer term our goal is to have a compensation ratio of less than 50%, which will be achieved through both revenue growth and efficiencies achieved through our digital.
Digital transformation.
Returning to our second quarter results.
Distribution servicing and custody expenses increased by 6% during the quarter in line with the growth and revenue and other operating expenses increased by 11% to $7.5 million and the quarter with the change stemming from costs.
Associated with our continuing digital transformation efforts cost associated with the closing of our annual exchange transaction, and and overall uptick and travel and client related activities.
Expenses continue to run at approximately 20% of total revenue.
All told second quarter operating income of $7.8 million.
<unk> represents a 25% improvement from last quarter with operating margins of 21, 5%.
Non operating income for the quarter was approximately $250000, resulting in pretax income of approximately $8 million with margins of 22, 2% compared to $6.7 million last quarter.
Looking at our non-GAAP financial metrics with approximately $800000 of strategic restructuring costs, we reported economic income of $8.8 million.
Similar to the first quarter, we reported a reduced effective tax rate in Q2 of approximately 16, 4% caused by the tax benefits.
Dollar weighted by the company, resulting from stock options exercised during the quarter.
After accounting for our adjusted income taxes, we reported economic net income of $7.4 million or <unk> 31 cents of economic net income per adjusted share of <unk> <unk> improvement from 29 per adjusted share last quarter.
Require effective tax rate has been below the normalized 30% tax rate for the last several quarters as a result of both options exercised during the periods as well as other 1 time activity, including the impacts of the cares Act and 2020, however for our planning purposes, we continue to model and estimated 30.
And effective tax rate for future quarters.
Turning to our midyear results.
We reported revenue of $70.2 million up 14% from $61.5 million at this time last year with overall revenue margins of 67 basis points.
Operating expenses of $56.2 million.
Or effectively flat compared to the 6 months ended June 30 of 2020.
Compensation and related costs for the half year of $37.2 million increased by $580000 since last year.
And represented 53% of revenue.
This change was driven by increased variable incentive.
And if compensation accruals based on strong investment performance and improved sales for year to date and 2021 versus 2020, partially offset by the aforementioned reductions and head count and the onetime savings derived from the deferred compensation program.
Yeah.
$580000 increase and compensation was more than offset.
Set by $800000 of decreases and distribution servicing and custody expenses and other operating costs.
Operating income of nearly $14 million for the 6 months ended June 30 of 2021 is a 180% improvement from this time last year. When we reported operating income of approximately 5 million.
Yes.
Our year to date and non-GAAP earnings per adjusted share of <unk> 60.
Is a dramatic increase from 9 per adjusted share reported this time last year and as a function of the improved operating results I outlined above as well as the accretive redemption transaction that was completed during 2020.
Turning to the balance sheet, we reported approximately $80 million of cash and investments as of June 30th and increase of $10 million compared to what we reported on March 31.
This change and cash position is not unusual for US is we tend to use more cash during the first and third quarters in conjunction with annual and mid year.
Year incentive compensation payments, while accumulating more cash and Q2 and Q4.
We continue to maintain a debt free capital structure.
The cash increase comes after accounting for about $2.3 million of share repurchases during the quarter under the $10 million share repurchase program, we announced in February.
The repurchase shares are being reported as treasury shares on our balance sheet and we will remain there until they are retired or reissued.
Through June 30th we have repurchased $5.3 million of stock or 714000 shares and an average price that has been below our current share price and a manner that has been accretive.
Give to our class a shareholders.
In addition to returning capital to shareholders through our share repurchase program I'm pleased to report that last week. The board of directors reinstated our quarterly dividend by declaring a <unk> <unk> per share dividend to our class a shareholders that will be paid next month.
We've always prioritized returning capital to shareholders.
Earlier this year the strength of our balance sheet led the board to authorize the share repurchase program as a means to return capital and offset dilution stemming from our long term incentive plan awards.
And the continued strength of our balance sheet, along with a renewed stability of our P&L provided the board with addition of with an additional level of confidence to reinstate.
The dividend, while continuing our share repurchase program.
Looking at ownership, our adjusted share count decreased during the quarter from $23.7 million adjusted shares outstanding as of March 31 to $23.2 million as of June 30th the.
For $23.2 million adjusted shares outstanding.
<unk> includes $18.5 million class a shares.
4 million Unvested stock awards issued under our long term incentive plan approximately.
420000 privately held units held by legacy shareholders and 330000 vested stock options.
As of June 30th our.
<unk> and directors own 34% of the adjusted share count, including Unvested Awards.
But only 19% of the Votable class a common stock.
Earlier this month, we disclosed the closing of the 2021 extra annual exchange transaction.
On June 30th $1.6 million privately.
<unk> units held by legacy shareholders were exchanged on a 1 for 1 basis for unregistered class a shares of common stock.
Because the transaction was completed using class a common stock there was no impact to our adjusted share count.
And upon completion of the transaction the public company's ownership of Manning.
Billy how group increased from 89% to 98%.
And as you'll recall since our IPO Manning <unk> Napier group has been owned by member entities. Many Napier Inc. The public company and managing member along with Manning <unk> Napier Group Holdings, and Manning <unk> Napier capital company entities, where ownership was held.
And if legacy private units.
With the completion of this year's exchange transaction the ownership of many Napier capital Company has now been fully redeemed and during the second half of the year, we'll be working towards dissolving that entity.
To summarize following the completion of the exchange transaction.
And appear many Napier.
For your group's ownership is split whereby many Napier Inc. Now owns approximately 98% with the remaining ownership held by the remaining legacy shareholders of Manning <unk> Napier Group Holdings.
We'll have more disclosure that disclosures on this in our form 10-Q, and we'll provide updates on future calls.
In closing.
Through our focus remains on delivering outstanding investment results and exceptional service to our clients, while driving growth and client inflows.
And revenue.
We believe that providing superior outcomes for our clients will drive superior outcomes for our shareholders. We've reported good progress on these items during.
Closings half of 2021, and our operating results in turn have improved however, considerable considerable work remains for us to drive future top line growth, while completing our digital transformation and reengineering our business processes. So that we're positioned for scalable growth and the future.
In the.
The first and our balance sheet remains strong and provides us the flexibility to continue to invest and the business, while increasing our return of capital to shareholders.
That concludes today's call. If you have any questions on the topics address today. Please contact us using the inquiries portal of our Investor Relations website, and we will promptly addressed here.
And your inquiry.
And for listening and for your interest and Manning <unk> Napier and I will turn the call now back over to the operator cash.
Catherine.
Thank you. This does conclude today's conference call. Please disconnect. Your line at this time and have a wonderful day.
And.
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Oh.
Yes.
Okay.
Alright.
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Uh huh.
Okay.
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