Q2 2024 Virtus Investment Partners Inc Earnings Call

July 26, 2024

Good morning. My name is Deedee and I will be your conference operator today.

Sean Rourke: to welcome everyone to the Virtus Investment Partners Quarterly conference call. The slide presentation for this call is available in the Investor Relations section of the Virtus website www.virtus.com. This call is being recorded and will be available for replay on the Virtus website.

Operator: I welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com. This call is being recorded and will be available for replay on the Virtus website. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer period, and instructions will follow at that time. I will now turn the conference to your host, Sean Rourke.

Speaker Change: I would like to welcome everyone to the Virtus Investment Partners Quarterly Conference Call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com.

Operator: At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer period, and instructions will follow at that time.

Speaker Change: This call is being recorded and will be available for replay on the Virtus website.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's remarks, there will be a question and answer period, and instructions will follow at that time. I will now turn the conference to your host, Sean Rourke.

Sean Rourke: I will now turn the conference to your host, Sean Rourke. Thank you and good morning, everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the second quarter of 2024. Our speakers today are George Aylward, President and CEO, and Mike Angerthal, Chief Financial Officer. Following their prepared remarks, we will have a Q&A period.

Sean Rourke: Thank you and good morning everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the second quarter of 2024. Our speakers today are George Aylward, President and CEO, and Mike Angerthal, Chief Financial Officer. Following their prepared remarks, we'll have a Q&A period.

Speaker Change: Our speakers today are George Aylward, President and CEO , and Mike Angerthal, Chief Financial Officer.

Sean Rourke: Before we begin, please note the disclosures on page two of the slide presentation. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. And as such, a subject to known and unknown risks and uncertainties, including, but not limited to those factors that are forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to defer materially, and most discussed in the statements.

Sean Rourke: Before we begin, please note the disclosures on page 2 of the slide presentation; certain matters discussed in this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and, as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in this statement.

Speaker Change: Following their prepared remarks, we'll have a Q&A period.

Speaker Change: Before we begin, please note the disclosures on page 2 of the slide presentation. Certain matters discussed on this call

Speaker Change: may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker Change: and as such are subject to known and unknown risks and uncertainties including but not limited to those factors set forth in today's news release and discussed in our SEC filings.

Speaker Change: These risks and uncertainties may cause actual results to differ materially from those discussed in the statements.

Sean Rourke: In addition to results presented on a gap basis, we use certain non-gap measures to evaluate our financial results. Our non-gab financial measures are not substitutes for gap financial results and should be read in conjunction with the gap results. Reconciliation of these non-GAAP financial measures to the applicable GAAP measures, including in today's news release and financial supplement, which are available on our website.

Sean Rourke: In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with GAAP. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement, which are available on our website. Now, I'd like to turn the call over to George. George?

Speaker Change: In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results.

Speaker Change: Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with the GAAP results.

Speaker Change: Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement, which are available on our website.

George Aylward: Now, I'd like to turn the call over to George. Thank you, Sean, and good morning, everyone. I'll start with an overview of the results where we reported this morning, and then I'll turn it over to Mike, who provides some more detail. For the second quarter, while we had net outflows, which were largely consistent with broader trends for active U.S. retail funds; we also had growth in strategic areas, including retail separate accounts, ETFs, and global funds. Higher earnings and operating margin, both sequentially and over the prior year period, a track from investment forms across strategies, continued return of capital through share repurchases in our dividend, and we ended the quarter with a modest level of leverage and meaningful capital flexibility.

George Robert Aylward: Thank you, Sean, and good morning, everyone. I'll start with an overview of the results reported this morning, and then I'll turn it over to Mike, who will provide some more detail. For the second quarter, while we had net outflows, which were largely consistent with broader trends for active U.S. retail funds, we also had growth in strategic areas, including retail separate accounts, ETFs, and global funds. Higher earnings and operating margin both sequentially and over the prior year period. The track of investment performance across strategies.

Speaker Change: Now I'd like to turn the call over to George. George? Thank you, Sean, and good morning everyone. I'll start with an overview of the results reported this morning and then I'll turn it over to Mike who'll provide some more detail.

Michael Aaron Angerthal: But the second quarter, while we had net outflows, which were largely consistent with broader trends for active U.S. retail funds,

Michael Aaron Angerthal: We also had growth in strategic areas including retail separate accounts, ETFs, and global funds.

Michael Aaron Angerthal: Higher earnings and operating margin both sequentially and over the prior year period.

George Robert Aylward: Continued return of capital through share repurchases in our dividend, and we ended the quarter with a modest level of leverage and meaningful capital flexibility. One area of emerging growth to note in the quarter was our ETF platform, which surpassed $2 billion in assets under management, due in large part to 45% organic growth over the past year and positive net flows each quarter. We currently have 18 ETFs across a variety of strategies and managers, which have demonstrated strong performance, and we have a number of new funds and solution-oriented products under development.

Speaker Change: Attractive investment performance across strategies

Speaker Change: Continued return of capital through share repurchases in our dividend and we ended the quarter with a modest level of leverage and meaningful capital flexibility.

George Aylward: One area of emerging growth to note in the quarter was our ETF platform, which surpassed two billion assets owned in management, due in large part to 45% organic growth over the past year and positive net flows each quarter. We currently have 18 ETFs across a variety of strategies and managers, which have demonstrated strong performance, and we have a number of new funds and solution-oriented products under development. While ETFs are still a small part of our business and some are not yet available at all of our intermediaries, we are focused on expanding our offerings. We've had several recent introductions, including an ETF from Alpha Simplex that we launched during the quarter, and we have several other funds under development.

Speaker Change: One area of emerging growth to note in the quarter was our ETF platform, which surpassed $2 billion in assets under management, due in large part to 45% organic growth over the past year, and positive net flows each quarter.

Speaker Change: We currently have 18 ETFs across a variety of strategies and managers, which have demonstrated strong performance. And we have a number of new funds and solution-oriented products under development.

George Robert Aylward: While ETFs are still a small part of our business, and some are not yet available at all of our intermediaries, we are focused on expanding our offer. We've had several recent introductions, including an ETF from Alpha Simplex that we launched during the quarter, and we have several other funds under development. Similarly, retail separate accounts and global funds have been meaningful growth areas for us, and we expect them to continue to be drivers of growth as we focus on and invest in their development and bring new strategies to market.

Speaker Change: While ETFs are still a small part of our business, and some are not yet available at all of our intermediaries, we are focused on expanding our offerings.

Speaker Change: We've had several recent introductions, including an ETF from Alpha Simplex that we launched during the quarter, and we have several other funds under development.

George Aylward: Similarly, retail separate accounts and global funds have been meaningful growth areas for us, and we expect them to continue to be drivers of growth as we focus on and invest in their development and bring new strategies to March. Turning now to a review of the results, total assets and management decreased 3% to 174 billion due to market performance and net outflows in U.S. retail funds and institutional, which were partially offset by positive net flows in retail, separate accounts, ETFs, and global funds. Tales of 6.1 billion declined from the strong first quarter, primarily due to open-end funds and institutional, which benefited from a large mandate in the prior quarter.

Speaker Change: Similarly, retail separate accounts and global funds have been meaningful growth areas for us and we expect them to continue to be drivers of growth as we focus on and invest in their development and bring new strategies to market.

George Robert Aylward: Total assets under management decreased 3% to $174 billion due to market performance and net outflows in U.S. retail funds and institutional, which were partially offset by positive net flows in retail separate accounts, ETFs, and global funds. Sales of $6.1 billion declined from the strong first quarter, primarily due to open-end funds and institutional, which benefited from a large mandate in the prior quarter. For retail separate account, sales of $2.2 billion were modestly lower than the prior quarter, but they were up more than 60% over the prior year period on continuous strong demand.

Speaker Change: Turning now to a review of the results.

Speaker Change: Total assets under management decreased 3% to $174 billion due to market performance and net outflows in U.S. retail funds and institutional, which were partially offset by positive net flows in retail separate accounts, ETFs, and global funds.

Speaker Change: Sales of $6.1 billion declined from the strong first quarter, primarily due to open-end funds and institutional, which benefited from a large mandate in the prior quarter.

George Aylward: For retail, separate accounts, sales of 2.2 billion were mostly lower than the prior quarter, but they were up more than 60% over the prior year period on continued strong demand. Net outflows of 2.6 billion, compared with 1.2 billion in the prior quarter, with the significant majority of the net flows early in the quarter in the month of April. For the quarter, institutional had net outflows of 1.7 billion, as redemptions included a partial client rebalancing of a large cap growth strategy related to strong performance. We continue to see a high level of interest in our institutional offerings from investors across regions and managers, as investors seek quality active managers with strong performance.

Speaker Change: For retail separate account, sales of $2.2 billion were modestly lower than the prior quarter, but they were up more than 60% over the prior year period on continuous strong demand.

George Robert Aylward: Net outflows of $2.6 billion compared with $1.2 billion in the prior quarter, with a significant majority of the net flows early in the quarter, in the month of April. For the quarter, Institutional had net outflows of $1.7 billion as redemptions included a partial client rebalancing of a large cap growth strategy related to strong performance. We continue to see a high level of interest in our institutional offerings from investors across regions and managers as investors seek quality, active managers with strong performance.

Speaker Change: Net outflows of $2.6 billion compared with $1.2 billion in the prior quarter, with a significant majority of the net flows early in the quarter, in the month of April .

Speaker Change: For the quarter, Institutional had net outflows of $1.7 billion as Redemptions included a partial client rebalancing of a large-cap growth strategy related to strong performance.

Speaker Change: We continue to see a high level of interest in our institutional offerings from investors across regions and managers as investors seek quality active managers with strong performance.

George Aylward: Retail separate accounts generated positive net flows of 0.5 billion and have delivered 5% organic growth over the past year due to strong investment performance and growing demand. We are focused on expanding the strategies available in retail separate accounts, particularly in fixed income and non-US equities to complement our current offerings. Open-end fund net outflows of 1.3 billion, compared with 0.6 billion in the first quarter, with a higher level of net outflows in US retail funds. Global funds in ETFs again generate a positive net flows, and we saw improved net flows in alternatives, leverage finance, and international equity.

George Robert Aylward: Retail separate accounts generated positive net flows of $0.5 billion and have delivered 5% organic growth over the past year due to strong investment performance and growing demand. We are focused on expanding the strategies available in retail separate accounts, particularly in fixed income and non-U.S. equities, to complement our current offer. Open-end fund net outflows of $1.3 billion compared with $0.6 billion in the first quarter, with a higher level of net outflows in U.S. retail funds.

Speaker Change: Retail Separate Accounts generated positive net flows of $0.5 billion and have delivered 5% organic growth over the past year due to strong investment performance and growing demand.

Speaker Change: We are focused on expanding the strategies available in retail separate accounts, particularly in fixed income and non-U.S. equities, to complement our current offerings.

Speaker Change: Open-end fund net outflows of 1.3 billion compared with 0.6 billion in the first quarter with a higher level of net outflows in U.S. retail funds.

George Robert Aylward: Global funds and ETFs again generated positive net flows, and we saw improved net flows in alternatives, leveraged finance, and international equity. In terms of the flows we're seeing so far in July, retail separate accounts, ETFs, and global funds continue with their positive trends, and U.S. retail funds are tracking better than the monthly average of the second quarter, with notably stronger fixed income inflows. For Institutional, activity remains board-based across strategies and managers, and known wins, which we expect to fund over the next few quarters, exceed known redemptions.

Speaker Change: Global funds and ETFs again generated positive net flows and we saw improved net flows in alternatives, leveraged finance, and international equity.

George Aylward: In terms of the flows we're seeing so far in July, retail separate accounts, ETFs, and global funds continue with their positive trends, and US retail funds are tracking better than the monthly average of the second quarter, with notably stronger fixed income in flows. For institutional, activity remains board-based across strategies and managers, and known wins, which we expect to fund over the next few quarters, exceed no redemptions. The sequential improvement in our financial results reflected the impacts of the higher average AUM levels, as well as the prior quarter seasonal expenses. The operating margin was 32.5 percent, up sequentially from 28.2, which included the impact of the seasonal expenses.

Speaker Change: In terms of the flows we're seeing so far in July , retail separate accounts, ETFs, and global funds continue with their positive trends, and U.S. retail funds are tracking better than the monthly average of the second quarter, with notably stronger fixed income inflows.

Speaker Change: For institutional, activity remains board-based across strategies and managers, and known wins, which we expect to fund over the next few quarters, exceed known redemptions.

George Robert Aylward: The sequential improvement in our financial results reflected the impact of the higher average AUM levels as well as the prior quarter seasonal expenses. The operating margin was 32.5%, up sequentially from 28.2%, which included the impact of seasonal expenses. Earnings per share, as adjusted, of $6.53, increased from $5.41 in the first quarter, which included the seasonal. Relative to the more comparable prior year period, earnings per share, as adjusted, increased 20% on higher average assets and lower expenses.

Speaker Change: The sequential improvement in our financial results reflected the impact of the higher average AUM levels as well as the prior quarter seasonal expenses.

Speaker Change: The operating margin was 32.5%, up sequentially from 28.2%, which included the impact of the seasonal expenses.

George Aylward: Earnings for shares adjusted of $6.53 increased from $5.41 in the first quarter, which included the seasonal expenses. Will it's more comfortable prior year period earnings per share as adjusted increased 20 percent on higher average assets and lower expenses? Turning now to capital, we maintain a strong balance sheet and generate significant cash flow that provides flexibility to take a balanced approach and to prioritize capital allocation as circumstances warrant, including returning capital to shareholders and thoughtfully investing in the growth of the business. During the quarter, we repurchased approximately 55,000 shares for 12.5 million and paid quarterly dividends that were 15 percent above the prior year level.

Speaker Change: Earnings per share is adjusted of $6.53, increased from $5.41 in the first quarter, which included the seasonal expenses.

Speaker Change: Relatives to more comparable prior year period, earnings per share, as adjusted, increased 20% on higher average assets and lower expenses.

George Robert Aylward: Turning now to capital, we maintain a strong balance sheet and generate significant cash flow that provides flexibility to take a balanced approach and to prioritize capital allocation as circumstances warrant, including returning capital to shareholders and thoughtfully investing in the growth of the business. During the quarter, we repurchased approximately 55,000 shares for $12.5 million and paid quarterly dividends that were 15% above the prior year level. We also made a principal payment on our term loan and ended the quarter in a modest debt position at 0.2 times EBIT. So with that, I'm going to turn the call over to Mike. Mike.

Speaker Change: Turning now to capital, we maintain a strong balance sheet and generate significant cash flow that provides flexibility to take a balanced approach and to prioritize capital allocation as circumstances warrant, including returning capital to shareholders and thoughtfully investing in the growth of the business.

Speaker Change: During the quarter, we repurchased approximately 55,000 shares for $12.5 million and paid quarterly dividends that were 15% above the prior year level.

George Aylward: We also made a principal payment on our term loan and then into the quarter in a modest net position at 0.2 times EBITDA.

Speaker Change: We also made a principal payment on our term loan and ended the quarter in a modest net debt position at 0.2 times EBITDA.

Mike Angerthal: So, with that, I'm going to turn the call over to Mike. Thank you, George. Good to be with you all this morning. Starting with our results on slide seven, assets under management. At June 30th, assets under management were $173.6 billion, down 3% from $179.3 billion at March 31st due to $2.6 billion of unfavorable market performance and $2.6 billion of net outflows. Compared with the prior year period, AUM increased 3%, driven by consistent growth in the strategic growth areas of retail separate accounts, global funds, and ETFs, which have collectively increased 18% over the period. Average assets under management in the quarter increased 1% sequentially to $175.2 billion, with ending assets 1% below the quarter's average.

Michael Aaron Angerthal: Thank you, George. Good to be with you all this morning, starting with our results on slide 7, Assets Under Management. At June 30th, assets under management were $173.6 billion, down 3% from $179.3 billion at March 31st due to $2.6 billion of unfavorable market performance and $2.6 billion of net out. Compared with the prior year period, AUM increased 3% driven by consistent growth in the strategic growth areas of retail separate accounts. Global Funds, and ETF, which have collectively increased 18% over the period. Average assets under management in the quarter increased 1% sequentially to $175.2 billion, with ending assets 1% below the quarter's average. Our assets under management continue to represent a broad range of asset classes and products.

Speaker Change: So with that, I'm going to turn the call over to Mike. Mike?

Michael Aaron Angerthal: Thank you, George. Good to be with you all this morning.

Michael Aaron Angerthal: Starting with our results on slide 7, Assets Under Management.

Michael Aaron Angerthal: At June 30th, assets under management were $173.6 billion.

Michael Aaron Angerthal: down 3% from $179.3 billion at March 31st.

Michael Aaron Angerthal: due to $2.6 billion of unfavorable market performance.

Michael Aaron Angerthal: and $2.6 billion of net outflows.

Michael Aaron Angerthal: Compared with the prior year period, AUM increased 3%, driven by consistent growth in the strategic growth areas of retail separate accounts, global funds, and ETFs.

Michael Aaron Angerthal: which have collectively increased 18% over the period.

Michael Aaron Angerthal: Average assets under management in the quarter increased 1% sequentially to $175.2 billion, with ending assets 1% below the quarter's average.

Mike Angerthal: Our assets under management continue to represent a broad range of asset classes and products. Byproduct, institutional is our largest category at 36% of AUM, followed by $2.6 billion. On an asset class basis, strong equity markets over the past year led to equities increasing to 57% of AUM from 54% a year earlier. Within equities, we are well diversified across international and domestic strategies, and domestic equities are nearly evenly split among small, mid, and large cap strategies. We also continue to have compelling long-term relative investment performance across products and strategies. As of June 30th, 61% of rated retail fund assets and 31 funds had 4 of 5 stars, and 90% were in 3, 4 of 5 star funds.

Michael Aaron Angerthal: Our assets under management continue to represent a broad range of asset classes and products.

Michael Aaron Angerthal: By product, institutional is our largest category at 36% of AUM, followed by U.S. retail funds at 28%, and Retail Separate Accounts at 26. On an asset class basis, strong equity markets over the past year led to equities increasing to 57% of AUM from 54% a year earlier. Within equities, we are well diversified across international and domestic strategies, and domestic equities are nearly evenly split among small, mid, and large cap strategies.

Michael Aaron Angerthal: By product, institutional is our largest category at 36% of AUM.

Michael Aaron Angerthal: followed by U.S. retail funds at 28 percent.

Michael Aaron Angerthal: and Retail Separate Accounts at 26%.

Michael Aaron Angerthal: On an asset class basis, strong equity markets over the past year led to equities increasing to 57% of AUM from 54% a year earlier.

Michael Aaron Angerthal: Within equities, we are well diversified across international and domestic strategies.

Michael Aaron Angerthal: And domestic equities are nearly evenly split among small, mid, and large cap strategies.

Michael Aaron Angerthal: We also continue to have compelling long-term relative investment performance across products and strategies. As of June 30th, 61% of rated retail fund assets and 31 Funds had four or five stars, and 90% were in 3, 4, or 5 stars. In addition, 60% of FundAUM outperformed the median of their peer groups over the five-year period, ETFs have also had strong performance, with 90% of ETF assets under management outperforming the median of the peer group over the three-year period, and five of our ETFs rated four or five stars across all products. 55% of AUM at June 30th was beating their benchmarks over the five-year period.

Michael Aaron Angerthal: We also continue to have compelling long-term relative investment performance across products and strategies.

Michael Aaron Angerthal: As of June 30th, 61% of rated retail fund assets

Michael Aaron Angerthal: and 31 funds had four or five stars.

Mike Angerthal: In addition, 60% of fund AUM outperformed the median of their peer groups over the 5-year period. ETFs have also had strong performance, with 90% of ETF assets under management outperforming the median of the peer group over the 3-year period, and 5 of our ETFs rated 4 or 5 stars. Across all products, 55% of AUM at June 30th were beating their benchmarks over the 5-year period.

Michael Aaron Angerthal: and 90% were in 3, 4, or 5 star funds.

Michael Aaron Angerthal: In addition, 60% of FundAUM outperformed the median of their peer groups over the five-year period.

Michael Aaron Angerthal: ETFs have also had strong performance.

Michael Aaron Angerthal: with 90% of ETF assets under management outperforming the median of the peer group over the three-year period.

Michael Aaron Angerthal: and five of our ETFs rated four or five stars.

Michael Aaron Angerthal: across all products.

Michael Aaron Angerthal: 55% of AUM at June 30th were beating their benchmarks over the five-year period.

Mike Angerthal: Turning to slide 8, asset flows. Total sales of 6.1 billion decreased 19% from 7.6 billion, largely due to lower flat compared with the prior year. Institutional sales of 1.2 billion declined sequentially from 1.7 billion, due to the prior quarter, including a meaningful new client funding in a mid-cap equity strategy. Retail separate account sales continued to be strong at 2.2 billion. $2.2 billion, although they were down modestly from the prior quarter, as higher private client sales were offset by lower intermediary sold. On a year-to-date basis, retail separate account sales are up 68% over the prior year period, reflecting strong demand.

Michael Aaron Angerthal: Turning to slide 8, Asset Flows. Total sales of $6.1 billion decreased 19% from $7.6 billion, largely due to lower U.S. retail fund and institutional On a year-to-date basis, sales were essentially flat compared with the prior year. Institutional sales of $1.2 billion declined sequentially from $1.7 billion due to the prior quarter, including meaningful new client funding in a mid-cap equity strategy. Retail separate account sales continue to be strong at $2.2 billion.

Michael Aaron Angerthal: Turning to slide 8, Asset Flows

Michael Aaron Angerthal: Total sales of $6.1 billion decreased 19% from $7.6 billion, largely due to lower U.S. retail fund and institutional sales.

Michael Aaron Angerthal: On a year-to-date basis, sales were essentially flat compared with the prior year.

Michael Aaron Angerthal: Institutional sales of $1.2 billion declined sequentially from $1.7 billion due to the prior quarter, including a meaningful new client funding in a mid-cap equity strategy.

Michael Aaron Angerthal: Although they were down modestly from the prior quarter, as higher private client sales were offset by lower intermediary sales, on a year-to-date basis, retail separate account sales are up 68% over the prior year period, reflecting strong demand. Open-end fund sales of $2.8 billion declined sequentially from $3.5 billion, as higher sales of large-cap and global equity were more than offset by lower small- and mid-cap equity, fixed income, and alternatives. On a year-to-date basis, open-end fund sales increased 12% from the prior year.

Michael Aaron Angerthal: Retail separate account sales continue to be strong at $2.2 billion.

Michael Aaron Angerthal: Although they were down modestly from the prior quarter, as higher private client sales were offset by lower intermediaries sold.

Michael Aaron Angerthal: On a year-to-date basis, retail separate account sales are up 68% over the prior year period, reflecting strong demand.

Mike Angerthal: Open-end fund sales of $2.8 billion declined sequentially from $3.5 billion, as higher sales of large cap and global equity were more than offset by lower small and mid cap equity, fixed income, and alternatives. On a year-to-date basis, open-end fund sales increased 12% from the prior year period. Total net outflows were $2.6 billion, as positive net flows and retail separate accounts, ETFs, and global funds were more than offset by net outflows and institutional and US retail funds. Reviewing by product, institutional net outflows of $1.7 billion, compared with $1.3 billion sequentially, included a $0.7 billion partial rebalancing in April by a meaningful client in a large cap growth strategy.

Michael Aaron Angerthal: Open-end fund sales of $2.8 billion declined sequentially from $3.5 billion

Michael Aaron Angerthal: as higher sales of large-cap and global equity were more than offset by lower small and mid-cap equity fixed income and alternatives.

Michael Aaron Angerthal: On a year-to-date basis, open-end fund sales increased 12% from the prior year period.

Michael Aaron Angerthal: Total net outflows were $2.6 billion, as positive net flows in retail separate accounts, ETFs, and global funds were more than offset by net outflows in institutional and U.S. retail funds. Looking by product, institutional net outflows of $1.7 billion, compared with $1.3 billion sequentially, and included a $0.7 billion partial rebalancing in April by a meaningful client in a large-cap growth strategy. As always, institutional flows will fluctuate depending on the timing of client action. However, retail separate accounts continue to generate positive net flows in both the intermediary sold and the Private Client Chain.

Michael Aaron Angerthal: institutional net outflows of 1.7 billion compared with 1.3 billion sequentially and included a 0.7 billion partial rebalancing in April by a meaningful client in a large-cap growth strategy

Mike Angerthal: As always, institutional flows will fluctuate depending on the timing of client actions. Retail separate accounts continued to generate positive net flows in both the intermediary sold and private client channels. Net flows were $0.5 billion in the quarter with 5% organic growth over the past year. For open-end funds, net outflows were $1.3 billion, compared with $0.6 billion in the first quarter due to lower sales, as redemptions were essentially unchanged. Within open-end funds, both ETFs and global funds were again positive, each with strong organic growth rates over the past year.

Michael Aaron Angerthal: As always, institutional flows will fluctuate depending on the timing of client actions.

Michael Aaron Angerthal: Retail separate accounts continue to generate positive net flows in both the intermediary sold and private client channels.

Michael Aaron Angerthal: Net flows were $0.5 billion in the quarter, with 5% organic growth over the past year. For open-end funds, net outflows were $1.3 billion, compared with $0.6 billion in the first quarter due to lower sales, as redemptions were essentially unchanged. Within open-end funds, both ETFs and global funds were again positive, each with strong organic growth rates over the past year.

Michael Aaron Angerthal: Net flows were $0.5 billion in the quarter, with 5% organic growth over the past year.

Michael Aaron Angerthal: For open-end funds, net outflows were $1.3 billion, compared with $0.6 billion in the first quarter due to lower sales.

Michael Aaron Angerthal: as redemptions were essentially unchanged.

Michael Aaron Angerthal: Within open-end funds, both ETFs and global funds were again positive.

Michael Aaron Angerthal: each with strong organic growth rates over the past year.

Mike Angerthal: Turning to slide 9, investment management fees as adjusted of $183.7 million increased $3.1 million, or 2%, reflecting the 1% increase in average assets under management at a slightly higher average fee rate. The average fee rate of 42.2 basis points increased from 41.9 basis points in the prior quarter. Excluding performance fees, the average fee rate in the second quarter was 42 basis points, unchanged from the normalized first quarter fee rate. Looking ahead, we believe the normalized average fee rate for the first and second quarter is reasonable for modeling purposes. As always, the fee rate will be impacted by markets and the mix of assets.

Michael Aaron Angerthal: Turning to slide 9, investment management fees, as adjusted for $183.7 million, increased $3.1 million, or 2%, reflecting the 1% increase in average assets under management and a mildly higher average. The average fee rate of 42.2 basis points increased from 41.9 basis points in the prior year, excluding performance fees. The average fee rate in the second quarter was 42 basis points, unchanged from the normalized first quarter. Looking ahead, we believe the normalized average fee rate for the first and second quarters is reasonable for modeling purposes. As always, the fee rate will be impacted by the market and the mix of that.

Michael Aaron Angerthal: Turning to slide 9, investment management fees as adjusted of $183.7 million.

Michael Aaron Angerthal: increased 3.1 million or 2% reflecting the 1% increase in average assets under management and a modestly higher average fee rate.

Michael Aaron Angerthal: The average fee rate of 42.2 basis points increased from 41.9 basis points in the prior quarter.

Michael Aaron Angerthal: Excluding performance fees, the average fee rate in the second quarter was 42 basis points.

Michael Aaron Angerthal: unchanged from the normalized first quarter fee rate.

Michael Aaron Angerthal: Looking ahead, we believe the normalized average fee rate for the first and second quarter is reasonable for modeling purposes.

Michael Aaron Angerthal: As always, the fee rate will be impacted by markets,

Michael Aaron Angerthal: and The Mix of Assets.

Mike Angerthal: Slide 10 shows the 5-quarter trend in employment expenses. Total employment expenses as adjusted of $103.5 million decreased 7% sequentially, reflecting $10.9 million of seasonal expenses, partially offset by higher variable incentives including performance-based stock compensation. As a percentage of revenues, employment expenses were 51%, up from a seasonally adjusted 50.3% in the first quarter, primarily due to higher performance-based stock compensation. Looking ahead, we believe employment expenses as a percentage of revenues in a range of 49% to 51% remains reasonable. So, as always, it will be variable based on market performance in particular, as well as profits and sales.

Michael Aaron Angerthal: Slide 10 shows the five-quarter trend in employment. Total employment expenses, as adjusted for $103.5 million, decreased 7% sequentially, reflecting $10.9 million of seasonal expenses in the prior, partially offset by higher variable incentives, including performance-based stock compensation. As a percentage of revenues, employment expenses were 51%, up from a seasonally adjusted 50.3% in the first quarter, primarily due to higher performance-based stock compensation. Looking ahead, we believe employment expenses as a percentage of revenues will remain in a range of 49% to 51%.

Michael Aaron Angerthal: Slide 10 shows the five-quarter trend in employment expenses.

Michael Aaron Angerthal: Total employment expenses as adjusted of $103.5 million decreased 7% sequentially, reflecting $10.9 million of seasonal expenses in the prior quarter.

Michael Aaron Angerthal: partially offset by higher variable incentives including performance-based stock compensation.

Michael Aaron Angerthal: As a percentage of revenues, employment expenses were 51%, up from a seasonally adjusted 50.3% in the first quarter, primarily due to higher performance-based stock compensation.

Michael Aaron Angerthal: Looking ahead, we believe employment expenses as a percentage of revenues in a range of 49% to 51% remains reasonable.

Michael Aaron Angerthal: So, as always, it will be variable based on market performance in particular, as well as profits and sales. Turning to slide 11, other operating expenses as adjusted were $31.3 million, with a 4% sequential increase primarily due to $0.7 million of annual grants to the Board of Governors. Compared with the prior year period, other operating expenses were modestly lower in spite of continued increases in data and service provider costs as we continue to closely manage expenses.

Michael Aaron Angerthal: So, as always, it will be variable based on market performance in particular.

Michael Aaron Angerthal: as well as profits and sales.

Mike Angerthal: Turning to slide 11, other operating expenses as adjusted were 31.3 million, with the 4% sequential increase primarily due to 0.7 million of annual grants to the Board of Directors. Compared with the prior year period, other operating expenses were modestly lower, in spite of continued increases in data and service provider costs as we continue to closely manage expenses. As a percentage of revenues, other operating expenses declined 120 basis points compared with the second quarter of 2023. Looking ahead, the quarterly range of 30 to 32 million for other operating expenses as adjusted remains reasonable.

Michael Aaron Angerthal: Turning to slide 11, other operating expenses as adjusted were $31.3 million.

Michael Aaron Angerthal: with a 4% sequential increase primarily due to $0.7 million of annual grants to the Board of Directors.

Michael Aaron Angerthal: Compared with the prior year period, other operating expenses were modestly lower in spite of continued increases in data and service provider costs as we continue to closely manage expenses.

Michael Aaron Angerthal: As a percentage of revenues, other operating expenses declined 120 basis points compared with the second quarter of 2023. Looking ahead, the quarterly range of $30 to $32 million for other operating expenses has been adjusted and remains reasonable. Slide 12 illustrates the trend in earnings. Operating income as adjusted of $66 million increased $9.6 million or 17% sequentially, primarily due to the prior quarter seasonal employment expenses and higher average assets. Over the more comparable prior year period, operating income increased 7%. The operating margin adjusted was 32.5% compared with 28.2% in the first quarter. On a year-over-year basis, the operating margin increased by 20% with respect to below-the-line items.

Michael Aaron Angerthal: As a percentage of revenues, other operating expenses declined 120 basis points compared with the second quarter of 2023.

Michael Aaron Angerthal: Looking ahead, the quarterly range of $30 to $32 million for other operating expenses has adjusted.

Michael Aaron Angerthal: remains reasonable.

Mike Angerthal: Slide 12 illustrates the trend in earnings. Operating income as adjusted of 66 million increased 9.6 million or 17% sequentially, primarily due to the prior quarter seasonal employment expenses and higher average assets. Over the more comparable prior year period, operating income increased 7%. The operating margin as adjusted of 32.5%, compared with 28.2% in the first quarter. On a year-over-year basis, the operating margin increased by 20 basis points. With respect to below-the-line items, interested dividend incomes increased by 1.2 million, primarily reflecting interest income on our CLO investment from last year's issuance. Net income as adjusted of $6.53 per diluted share increased from $5.41 in the first quarter and increased 20% over the prior year period.

Michael Aaron Angerthal: Slide 12 illustrates the trend in earnings.

Michael Aaron Angerthal: Operating income as adjusted of $66 million, increased $9.6 million, or 17% sequentially.

Michael Aaron Angerthal: primarily due to the prior quarter seasonal employment expenses and higher average assets.

Michael Aaron Angerthal: Over the more comparable prior year period, operating income increased 7%.

Michael Aaron Angerthal: The operating margin has adjusted of 32.5% compared with 28.2% in the first quarter.

Michael Aaron Angerthal: On a year-over-year basis, the operating margin increased by 20 basis points.

Michael Aaron Angerthal: Interest and dividend income increased by $1.2 million, primarily reflecting interest income on our CLO investment from last year's issue. Net income as adjusted of $6.53 per diluted share increased from $5.41 in the first quarter and increased 20% over the prior year period. In terms of GAAP results, net income per share of $2.43 compared with $4.10 per share in the first quarter and included $1.71 of realized and unrealized losses on investment, $1.04 of expense related to the increase in fair value of minority interest, and $0.36 of expenses related to an early lease termination. Acquisition and Integration, and Restructure.

Michael Aaron Angerthal: With respect to below the line items, interest and dividend income increased by $1.2 million, primarily reflecting interest income on our CLO investment from last year's issuance.

Michael Aaron Angerthal: Net income as adjusted of $6.53 per diluted share increased from $5.41 in the first quarter and increased 20% over the prior year period.

Mike Angerthal: In terms of gap results, net income per share of $2.43 compared with $4.10 per share in the first quarter and included $1.71 of realized and unrealized losses on investments. $1.04 of expense related to the increase in fair value of minority interests, and 36 cents of expenses related to an early lease termination, acquisition and integration, and restructuring.

Michael Aaron Angerthal: In terms of GAAP results, net income per share of $2.43.

Michael Aaron Angerthal: compared with $4.10 per share in the first quarter and included $1.71 of realized and unrealized losses on investments.

Michael Aaron Angerthal: $1.04 of expense related to the increase in fair value of minority interests and $0.36 of expenses related to an early lease termination, acquisition and integration, and restructuring.

Mike Angerthal: in terms of manufacturing. Slide 13 shows the trend of our capital, liquidity, and select allot sheet items. Working capital was 143 million at June 30th, up sequentially from 123.4 million, as cash generated more than offset return of capital to shareholders and debt repayment. Cash and equivalents increased sequentially to 183 million, from 123.9 million at March 31st. During the second quarter, we repurchased 55,099 shares of common stock for 12.5 million. We also made a $5 million payment on our term loan, our first discretionary payment since mid-2022. As a reminder, we paid off the balance of our revolving credit facility in the fourth quarter of 2023.

Michael Aaron Angerthal: Slide 13 shows the trend of our capital, liquidity, and select balance sheet items. Working capital was $143 million at June 30th, up sequentially from $123.4 million, as a cash-generated, more-than-offset return of capital to shareholders and debt repayment. Cash and equivalents increased sequentially to $183 million from $123.9 million at March 31. During the second quarter, we repurchased 55,099 shares of Common Stock for $12.5 million. We also made a $5 million payment on our term loan, our first discretionary payment since mid 2020.

Michael Aaron Angerthal: Slide 13 shows the trend of our capital, liquidity, and select balance sheet items.

Michael Aaron Angerthal: Working capital was $143 million at June 30th, up sequentially from $123.4 million as cash generated more than offset return of capital to shareholders and debt repayment.

Michael Aaron Angerthal: Cash and equivalents increased sequentially to $183 million from $123.9 million on March 31st.

Michael Aaron Angerthal: During the second quarter, we repurchased 55,099 shares of common stock for $12.5 million.

Michael Aaron Angerthal: We also made a $5 million payment on our term loan, our first discretionary payment since mid-2022.

Michael Aaron Angerthal: As a reminder, we paid off the balance of our revolving credit facility in the fourth quarter of 2020. As of June 30th, gross debt to EBITDA was 0.8 times, down from 0.9 times at March 31st. Net debt at June 30th was $69 million, or 0.2 times EBITDA. We generated $82 million of EBITDA in the second quarter, up sequentially due to prior quarter seasonal employment expenses and Higher Average AUM, and up 11% from the prior year level.

Michael Aaron Angerthal: As a reminder, we paid off the balance of our revolving credit facility in the fourth quarter of 2023.

Mike Angerthal: At June 30th, gross debt to EBITDA was 0.8 times, down from 0.9 times at March 31st. Net debt at June 30th was 69 million, or 0.2 times EBITDA. We generated 82 million of EBITDA in the second quarter, up sequentially due to prior quarter seasonal employment expenses and higher average AUM. And up 11% from the prior year level. Looking ahead, anticipated capital uses include scheduled minority interest purchases and a potential new CLO, as well as other product introductions to support the future growth of the business.

Speaker Change: Thank you for joining us. Have a great day. Thank you.

Speaker Change: At June 30th, Gross Debt to EBITDA was 0.8 times.

Speaker Change: down from .9 times at March 31st.

Speaker Change: Net debt at June 30th was $69 million, or 0.2 times EBITDA.

Speaker Change: We generated $82 million of EBITDA in the second quarter, up sequentially due to prior quarter seasonal employment expenses and higher average AUM.

Michael Aaron Angerthal: Looking ahead, anticipated capital use includes scheduled minority interest purchases and a potential new CLO, as well as other product introductions, to support the future growth of the business. With that, let me turn the call back over to George.

Speaker Change: and up 11% from the prior year level.

Speaker Change: Looking ahead, anticipated capital uses include scheduled minority interest purchases and a potential new CLO, as well as other product introductions to support the future growth of the business.

George Aylward: With that, let me turn the call back over to George. George? Thanks, Mike. We'll now take all your questions.

George Robert Aylward: Thanks, Mike. We'll now take all your questions. DeeDee, would you open up the lines, please? Thank you.

Speaker Change: With that, let me turn the call back over to George. George?

Operator: Dee Dee, would you open up the lines, please? Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Crispin Love on Piper Sandler. Your line is open.

George Robert Aylward: Thanks, Mike. We'll now take all your questions. DeeDee, would you open up the lines, please?

DeeDee: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Crispin Love: And our first question comes from Crispin Love of Piper Sandler. Your line is open. Thank you.

Speaker Change: And our first question comes from Crispin Love of Piper Sandler. Your line is open.

Crispin Elliot Love: Thank you. Good morning, everyone.

George Aylward: Good morning, everyone. Just for a topic, broader markets for several quarters here. I've been driven by the largest U.S. stock, especially in the tech space, as shown by just the SMT meaningfully outperforming the equal weight, SMT, year-to-date, in the last year, etc. But we've seen some of that shift recently with the equal weight, as they are actually outperforming. I know there's a recent shift here, but does this dynamic change anything for you? What flows might look like or new sales in July relative to prior quarters? Or do you expect it to make any differences over the near term?

Crispin Elliot Love: Thank you. Good morning, everyone. Just first off, broader markets for several quarters here have been driven by the largest U.S. stock, especially in the tech space as shown by

Crispin Elliot Love: just the S&P meaningfully outperforming the equal weight S&P year-to-date in the last year, etc. But we've seen some of that shift recently with the equal weight S&P actually outperforming. I know it's a recent shift here, but does this dynamic change anything for you, what flows might look like, or new sales?

Crispin Elliot Love: Just first off, looking at broader markets for several quarters here, I've been driven by the largest U.S. stocks, especially in the tech space, as shown by just the S&P meaningfully outperforming the equal weight S&P year-to-date in the last year, etc. But we've seen some of that shift recently with the equal weight S&P actually outperforming. I know it's a recent shift here, but does this dynamic change anything for you, what flows might look like or new sales in July relative to prior quarters, or do you expect it to make any differences over the near term?

Speaker Change: in July relative to prior quarters, or do you expect it to make any differences over the near term?

George Robert Aylward: It's a really interesting question because those dynamics are not always really fully understood. So, as you're kind of pointing out, one of the experiences in the U.S. markets has been not only the predominance of the S&P 500, so the larger caps, but a certain small number of names within them. [inaudible] So extrapolating your question, as we kind of look at it, our asset base is actually more correlated on the domestic side to the mid-caps and the small caps.

George Aylward: It's a really interesting question because those dynamics are not always really fully understood. So, as you're kind of pointing out, one of the experiences in the U.S. markets has really been not only the predominance of the S&P 500, so the larger caps, but a certain small number of names within them. So extrapolating your question, as we kind of look at it, our asset base is actually more correlated on the domestic side to the mid caps and the small caps. So one of our experiences over the last period where that S&P has had such strong performance is that, on a relative basis, the smaller caps and the mid caps have actually underperformed, right?

Speaker Change: It's a really interesting question because those dynamics are not always really fully understood. So as you're kind of pointing out...

Speaker Change: You know, one of the experiences in the U.S. markets has really been not only the predominance of the S&P 500, so the larger caps, but a certain small number of names within them.

Speaker Change: [inaudible]

Speaker Change: Extrapolating your question, as we kind of look at it, our asset base is actually more correlated on the domestic side to the mid-caps and the small-caps. So one of our experiences over the last...

George Robert Aylward: So one of our experiences over the last period where the S&P has had such strong performance is that, on a relative basis, the smaller caps and the mid-caps have actually underperformed, right? So if you look at the indices for the six-month period or even the year-to-date period, you'll see large cap indices.

Speaker Change: period where that S&P has had such strong performance is that on a relative basis, the smaller caps and the mid-caps have actually underperformed, right? So if you look at the indices, you know, for the six-month period or, you know, even the year-to-day period, you'll see the relative underperformance relative to the...

George Aylward: So if you look at the indices for the six-month period or even the year-to-date period, you'll see the relative underperformance relative to the large-cap indices.

George Robert Aylward: So in some ways, that's been a little bit of a headwind for us, and we're actually as we see the reversion, or hope to see the reversion of that again, with our strength, particularly in mid-cap where we have a very strong position, and as you know, we have a diversity of small caps. For us, that really does create a lot of opportunity. And then related to that, the other factor in the markets that's impacting them, that would impact us, right? I would say quality versus momentum, right?

George Aylward: So, in some ways, that's been a little bit of a headwind for us, and we're actually, as we see, the reversion or hope to see the reversion of that, again, with our strength, particularly in mid cap, where we have a very strong position, and as you know, we have a diversity of small caps. For us, that really does create a lot of opportunity. And then related to that, the other factor in the markets that's impacting, that it would impact us, right, is I would say quality versus momentum, right? So generally, some of our larger equity managers have more of a quality orientation.

Speaker Change: large cap indices. So in some ways, that's been a little bit of a headwind for us. And we're actually as we see the reversion or hope to see the reversion of that, again, with our strength, particularly in mid cap, where we have a very strong position. And as you know, we have a diversity of small caps.

Speaker Change: For us, that really does create a lot of opportunity. And then related to that, the other.

George Robert Aylward: So generally, some of our larger equity managers have more of a quality orientation. So when, you know, quality underperforms relative momentum, which has been the recent experience, that also creates a headwind for us. And as that reverts, then that would create a tailwind, particularly for the two, we have two or three managers that would particularly move in coordination with quality versus momentum. So that's kind of the way we, as we kind of look through that, and we always caution people, looking at the S&P 500 is not going to be very indicative of, you know, how our AUM or revenue is going to trend, given the diversity we have and Does that answer your question?

Speaker Change: And the other factor in the market that's impacting, that would impact us, right, is I would say quality versus momentum. So generally, some of our larger equity managers have more of a quality orientation. So when quality underperforms relative to momentum, which is...

George Aylward: So when quality underperformance relative momentum, which has been the recent experience, that also creates a headwind for us, and as that reverts, then that would create a tailwind particularly for us. We have two or three managers that would particularly move in coordination with quality versus momentum. So that's kind of the way we, as we kind of look through that, in a way always caution people. Looking at the S&P 500 is not going to be very indicative of how our AUM or revenue was going to trend, given the diversity we have and the credit side versus the equity side and then within the equity side between the market caps.

Speaker Change: has been the recent experience that also creates a headwind for us.

Speaker Change: And as that reverts, then that would create a tailwind, particularly for the two, we have two or three managers that would particularly.

Speaker Change: move in in coordination with quality versus momentum. So that that's kind of the way we as we kind of look through that and we always caution people looking at the S&P 500 is not going to be very indicative

Speaker Change: of you know how our AUM or revenue is going to trend given the diversity we have and the credit side versus the equity side and then within the equity side between the market caps.

Crispin Love: Does that answer your question? It does. I appreciate that, George.

Crispin Elliot Love: It does, it does. I appreciate that, George.

Crispin Love: And then just one other for me, and I know institutional flow can be lumpy, but I'm curious. Anything so far in the third quarter that you expect over the course of the quarter that could drive flow trends specifically and institutional, if that's worth calling out. So I think you mentioned some known wins over the next few quarters, but any way to side that or time it how you might expect it and it is looking more positive rather than negative as well. That's the kind of the sense that I got from your comments. I'm curious if I'm thinking about that correctly.

Speaker Change: Does that answer your question?

Speaker Change: It does, it does. I appreciate that, George. And then just one other from me, and I know institutional flows can be lumpy, but

George Robert Aylward: And then just one other from me, and I know institutional flows can be lumpy, but Just I'm curious, anything so far in the third quarter that you expect over the course of the quarter that could drive flow trends specifically and institutional that's worth calling out? I think you mentioned some known wins over the next few quarters, but any way to size that or, or time it, how you might expect it? And is it looking more positive rather than negative as well? That's kind of the sense that I got from your comments, but I'm curious if I'm thinking about that correctly.

Speaker Change: I'm curious, anything so far in the third quarter?

Speaker Change: that you expect over the course of the quarter that could drive flow trends, specifically in institutional, if that's worth calling out. I think you mentioned some known wins over the next few quarters, but any way to size that or time it how you might expect it? And is it looking more positive rather than negative as well? That's kind of the sense that I got from your comments, but I'm curious if I'm thinking about that correctly.

Michael Aaron Angerthal: Yeah, yeah. So, some thoughts, and then Mike can expand upon those. So, as you pointed out, yeah, the lumpiness is always a little frustrating, right? So in Mike's comments, he referred to the fact that in the first quarter, we had a meaningful, you know, inflow, and that was on the mid-cap side. And then, as we referenced in April, in the early part of this quarter, there was a rebalancing, which again, generally relates to areas where, you know, we have mandates that might have, say, a target allocation, and performance can actually pull you above that.

George Aylward: Yeah. So some thoughts, and then Michael can expand upon those. So, as you pointed out, the lumpiness is always a little frustrating, right? So in Mike's comments, he referred to the fact that in the first quarter, we had a meaningful inflow, and that was on the mid cap side. And then we referenced in April, in the early part of this quarter, there was a rebalancing, which again, those generally relate to areas where we have mandates that might have say a target allocation, and performance can actually pull you above that. So there's always going to be that volatility in the business, and the trends of where clients are ultimately interested can vary a bit.

Speaker Change: Yeah, yeah, so some thoughts and then Mike can expand upon those. So as you pointed out, the lumpiness is always a little frustrating, right? So in Mike's comments, he referred to the fact that in the first quarter, we had a meaningful...

Michael Aaron Angerthal: you know inflow and that was on the mid-cap uh side and then we referenced in in April in the early part of this quarter there was a rebalancing which again those generally relate to areas where

Michael Aaron Angerthal: So there's always going to be that volatility in the business, and the trends of where clients are ultimately interested can vary a bit. And in terms of the diversity that we have, so again, we can have in one period a mid-cap opportunity, another period a large cap. And as you know, we've previously spoken to global REITs as well as fixed income mandates. So there will always be that variability. I'll let Mike go into some of the forward-looking comments.

Speaker Change: We have mandates that might have, say, a target allocation, and performance can actually pull you above that. So there's always going to be that volatility in the business, and the trends of where clients are ultimately interested can vary a bit.

Mike Angerthal: And in terms of the diversity that we have, so again, we can have, in one period, a mid cap opportunity, another period, a large cap. And as you know, we've previously spoken to Global Read as well as 16 Come mandates. So there always will be that variability.

Speaker Change: and a

Michael Aaron Angerthal: terms of the diversity that we have. So again, we can have in one period a mid-cap opportunity, another period a large cap, and as you know, we've previously spoken to global REIT as well as fixed income mandates. So there always will be that variability. I'll let Mike go into some of the forward-looking comments.

Mike Angerthal: Let Mike go into some of the forward-looking comments. Yes. Thanks, George. The breadth of the pipeline remains very well positioned for us going forward. The timing is very difficult to forecast, as you indicated, whether it's a third quarter or a fourth quarter. But in addition to the strategies that George alluded to, we've also had some strong interest in office influx, which is our most recent manager that's added to our offering. We see across affiliates and across geographies in the pipeline, and we're pleased that the known winds continue to exceed redemptions that we're aware of. A little bit more difficult again to forecast when you'll see that specifically in the results, but we're pleased with the activity and the breadth of that across our managers.

Michael Aaron Angerthal: Yeah, thanks, George. And I would just add that, you know, the breadth of the pipeline remains very well positioned for us going forward. The timing, you know, is very difficult to forecast, as you indicated, but in addition to the strategies that George alluded to, we've also had strong interest in Alpha Simplex, which is, you know, our most important offering. So, you know, we see, across affiliates and across geography. Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com.au, and The Resolve, pleased with the activity and the breadth of that across our managers. Thank you.

Michael Aaron Angerthal: Yes, thanks George, and I would just add that

Michael Aaron Angerthal: You know the breadth of the the pipeline remains

Michael Aaron Angerthal: very well positioned for us going forward. The timing is very difficult to forecast, as you indicated, whether it's third quarter or fourth quarter.

Michael Aaron Angerthal: but in addition to the...

Speaker Change: The strategies that George alluded to, we've also had some strong interest in Alpha Simplex, which is, you know, our most recent manager that's added to to our to our offering. So.

Speaker Change: We see across affiliates and across geographies in the pipeline, and we're pleased that the known wins continue to exceed redemptions that we're aware of. A little bit more difficult, again, to forecast when you'll see that.

Speaker Change: specifically in the results, but we're pleased with the activity and the breadth of that across our managers.

Crispin Love: Thank you. You get the color George and Mike. Thank you.

Crispin Elliot Love: Thank you. I appreciate the caller, George and Mike, and that's it for me. Thank you.

Speaker Change: Thank you. I appreciate the caller, George and Mike, and that's it for me.

Bradley Hays: Our next question comes from Bradley Hays of TD Cowan. Your line is open. Hi, good morning. It's Bradley Hays on the Fieldcast.

Operator: Our next question comes from Bradley Hayes of TD Cowan. Your line is open.

Speaker Change: Our next question comes from Bradley Hayes of TD Cowan. Your line is open.

Bradley Hayes: Hi, good morning. It's Bradley Hazelon from Bill Katz. Could you give us a bit more on the M&A pipeline and perhaps give us some color on what you're seeing in the market in terms of both deal opportunities and conversations you're having?

George Aylward: Could you dig in a bit more on the M&A pipeline and perhaps give us some color on what you're seeing in the market in terms of both deal opportunities and conversations you're having? Sure. So, you know, in terms of M&A, and again, I think others have said the same that, you know, the activity continues to be ongoing. I think the continued evolution of conversations to be really focused more on the strategic nature of the relationship as opposed to generally just the valuation part of that conversation. The evaluation part is always an interesting thing. So, we continue to be very active in terms of considering opportunities.

Bradley Hazelon: Hi, good morning. It's Bradley Hazelon from Bill Katz. Could you dig in a bit more on the M&A pipeline and perhaps give us some color on what you're seeing in the market in terms of both deal opportunities and conversations you're having?

George Robert Aylward: Sure. So, you know, in terms of M&A, and again, I think others have said the same, that, you know, the activity continues to be ongoing. I think the continued evolution of conversations to be really focused more on the strategic nature of the relationship, as opposed to generally just the valuation part of that conversation. The valuation part is always an interesting thing.

Speaker Change: Sure, so in terms of M&A, and again I think others have said the same, that the activity continues to be ongoing.

Speaker Change: I think the continued evolution of conversations to be really focused more on the strategic nature of the relationship as opposed to generally just the

George Robert Aylward: So we continue to be very active in terms of considering opportunities. We do look at it from a selective point of view in terms of those things which we believe will be generally of strategic value to shareholders as we continue to build out the business. Kind of areas that we've commented on before, and I'll comment again in terms of areas of interest, is that we have very strong representation across the traditional long-only capabilities.

Speaker Change: The valuation part of that conversation, the valuation part is always an interesting thing. So we continue.

George Aylward: We do look at it from a selective point of view in terms of those things which we believe will be generally of strategic value to shareholders as we continue to build out the business. Kind of areas that we've commented before, it'll comment again in terms of areas of interest is we have very strong representation across the traditional, long-only capabilities. Our recent, two most recent acquisitions have been in the liquid alternative space, and we continue to think that there will be opportunities in more of the private markets and those other capabilities. So, you know, we continue to evaluate opportunities, and we've been quite active in terms of doing that. But again, we'll only move forward if there are things that we think are really a value to shareholders.

Speaker Change: to be very active in terms of considering opportunities. We do look at it from a selective point of view in terms of those things which we believe will be generally of strategic value to shareholders as we continue to build out the business.

Speaker Change: Kind of areas that we've commented before and I'll comment again in terms of areas of interest is we have very strong representation across the traditional long only

George Robert Aylward: Our two most recent acquisitions have been in the liquid alternative space, and we continue to think that there will be opportunities in more of the private markets and those other capabilities. So, you know, we continue to evaluate opportunities. And we've been quite active in terms of doing that. But again, we'll only move forward if there are things that we think are really of value to shareholders.

Speaker Change: capabilities. Our two most recent acquisitions have been in the liquid alternative space and we continue to think that there would be opportunities in more of the private markets and those other capabilities. So, you know, we continue to evaluate opportunities.

Speaker Change: And we've been quite active in terms of doing that, but again, we'll only move forward if there are things that we think are really of value to shareholders.

Bradley Hays: Okay, great. Thank you.

George Robert Aylward: Okay, great. Thank you. And then just following up on that, are there any particular verticals within a liquid all that you're looking at?

George Aylward: And then just following up on that, are there any particular verticals within a liquid all that you're looking at? Well, again, they each sort of have the different aspects of them, right? So, they're categorized altogether in terms of the private nature of it and the illiquid nature of it. So, in the broad group, we do think that really for investors to ultimately achieve their long-term financial objectives, they do need to have a portion of their portfolio allocated to those left-liquid investments. Within the verticals of that, you know, again, you've seen a lot of strength on the private credit side and I think that's going to be highly remain in high interest given, you know, people's demand for income and yield, but our view is that really doesn't need to be kind of bounced out with the private equity side and as well as the real asset side, which we think for the diversification of a portfolio really needs to be a part of that conversation. And we always get some concerns when people kind of start over-weighting, you know, one vertical versus another.

Speaker Change: Okay great, thank you. And then just following up on that, are there any particular verticals within a liquid alt that you're looking at?

George Robert Aylward: Well, again, they each sort of have a different aspect to them, right? So they're categorized altogether in terms of the private nature of it and the illiquid nature of it.

Speaker Change: Well, again, they each sort of have a different aspect to them, right? So they're categorized all together in terms of the...

George Robert Aylward: So in the broad group, we do think that for investors to ultimately achieve their long-term financial objectives, they do need to have a portion of their portfolio allocated to those less liquid investors. Within the verticals of that, you know, again, you've seen a lot of strength on the private credit side, and I think that's going to be highly, remain of high interest given, you know, people's demand for income and yield, but our view is that really does need to be kind of balanced out with the private equity side and as well as the real asset side, which we think for the diversification of a portfolio really needs to be part We always get some concerns when people kind of start overweighting one vertical versus another. So we think they all have a place, and those are all areas that we'd be in.

Speaker Change: The private nature of it and the illiquid nature of it. So in the broad group, we do think that really for investors to ultimately achieve their long-term financial objectives, they do need to have a portion of their portfolio allocated to those less liquid investments.

Speaker Change: Within the verticals of that, again, you've seen a lot of strength on the private credit side, and I think that's going to remain in high interest given people's demand for income and yield. But our view is that really does need to be kind of balanced out.

Speaker Change: with the the private equity side and as well as the real asset side, which we think for the diversification of a portfolio really needs to be a part of that conversation and

Speaker Change: We always get some concerns when people kind of start overweighting, you know, one vertical versus another. So we think they all have a place and those are all areas that we'd be interested in.

Bradley Hays: So, we think they all have a place, and those are all areas that we've been. that you're interested in. Okay, thank you.

George Robert Aylward: Okay, thank you. And then on fee rates and flows, you've pretty consistently maintained your fee rate within the provided range. Could you maybe give us some detail on how you're thinking about pricing versus attracting new flows?

George Aylward: And then on fee rate and flows, you've pretty consistently maintained your fee rate within the provided range. Could you maybe give us some detail on how you're thinking about pricing versus attracting new flows? In terms of pricing, yeah, so again, let me expand, but as we kind of look at the, we look at strategies, right? But sometimes the higher fee product isn't always necessarily the higher margin product. So again, we look to be competitive in the market. We generally offer strategies that are either capacity constraint distinctive or somehow differentiated. So our fee rate is higher than a generic look of business that would include a lot of more data like capabilities.

Speaker Change: Okay, thank you. And then on fee rate and flows, you've pretty consistently maintained your fee rate within provided range. Could you maybe give us some detail on how you're thinking about pricing versus attracting new flows?

Michael Aaron Angerthal: In terms of pricing, yeah, so again, and I'll let Mike expand, but as we kind of look at the, we look at both the pricing and then the margin impact as we do pricing for different strategies, right? Because sometimes the higher fee product isn't always necessarily the higher margin product, right? So again, we look to be competitive in the market. You know, we generally offer strategies that are either capacity constrained, distinctive, or somehow differentiated.

Speaker Change: In terms of pricing, yeah, so again, and I'll let Mike expand, but...

Speaker Change: As we kind of look at the, we look at both the pricing and then the...

Speaker Change: Margin impact as we do pricing for different strategies, right? Because sometimes the higher fee product isn't always necessarily the higher margin product. So again, we look to be competitive from the market You know, we generally offer strategies that are either capacity constrained distinctive

Michael Aaron Angerthal: So you know, our fee rate is higher than a generic book of business that would include a lot of more beta-like capabilities, but we're very thoughtful about it. We want to create profitability for the company, but we also need to be competitive with other fees that are offered by others. Yeah, I think I would just add, and I alluded to it in the prepared remarks, I think the markets and

Speaker Change: or somehow differentiated.

Speaker Change: So, you know, our fee rate is...

Speaker Change: is higher than a generic.

Mike Angerthal: But we're very thoughtful about it. We want to create profitability for the company, but we also need to be competitive with other fees that are offered by others. Yeah, I think I would just add, and I alluded to it in the prepared remarks. I think the markets and the mix of our assets will certainly impact the fee rate. And we've been pleased as the institutional businesses grown, as the retail separate account business has grown, that we've been able to maintain our fee rate in that tight range. And we'll please the incremental margins that we experience from the different product areas remain in that 50 to 55 percent level.

Speaker Change: book of business that would include a lot of more beta-like capabilities. But we're very thoughtful about it. We want to create profitability for the company, but we also need to be competitive with other fees that are offered by others.

Michael Aaron Angerthal: Yeah, I think I would just add, and I alluded to it in the prepared remarks, I think the markets and the mix of our assets will certainly impact how much we are able to increase the fee rate, and we have been pleased as the institutional business has grown, as the retail separate account business has grown, that we have been able to maintain our fee rate in that tight range. We're pleased that the incremental margins that we experienced from the different product areas remain at that 50-55% level. So it's something we focus on but will again be impacted by the mix of assets and market.

Speaker Change: I think I would just add, and I alluded to it in the prepared remarks, I think the markets and the mix of our assets will certainly impact.

Speaker Change: We've been pleased as the institutional business has grown, as the retail separate account business has grown, that we've been able to maintain our fee rate in that tight range.

Speaker Change: We're pleased the incremental margins that we experience from the different product areas remain in that 50-55% level. So it's something we focus on, but will again be impacted by the mix of the assets and markets.

Bradley Hays: So it's something we focus on, but we'll again be impacted by the mix of the assets and markets. Okay, thank you. Thank you.

Speaker Change: Okay, thank you.

Michael Cypress: Our next question comes from Michael Cypress of Morgan Stanley. Your line is open. Great, thank you. You're recording. Just wanted to come back to your commentary on capital uses. I was hoping you could elaborate a bit on some of these other product introductions that you were living to. How much would you anticipate allocating there the seed book today? How do you see that expanding, if at all? How do you think about recycling? And then, more broadly, if you could just talk a little bit about some of these opportunities that you see to introduce new products into the marketplace.

Operator: Our next question comes from Michael Cyprys of Morgan Stanley. Your line is open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Michael Cyprys of Morgan Stanley . Your line is open.

Michael J. Cyprys: Great, thank you. Good morning.

Michael J. Cyprys: Great, thank you. Good morning. Just wanted to come back to your commentary on capital uses. I was hoping you could elaborate a bit.

Speaker Change: on some of these other product introductions that you were alluding to. How much would you anticipate allocating there?

Michael J. Cyprys: Just wanted to come back to your commentary on capital uses. I was hoping you could elaborate a bit on some of these other product introductions that you were alluding to. How much would you anticipate allocating there? The seed book today, you know; how do you see that expanding, if at all? How are you thinking about recycling? And then, more broadly, if you could just talk a little bit about some of these opportunities that you see to introduce new products into the marketplace. Where do you see some white space, and where might that make the most sense?

Speaker Change: The Seed Book today, you know, how do you see that expanding, if at all, how are you thinking about recycling, and then more broadly, if you could just talk a little bit about some of these opportunities that you see to introduce new products into the marketplace. Where do you see some white space and where might that make the most sense?

Michael Cypress: Where do you see some white space? And where might it make the most sense?

George Aylward: Sure, yeah. So there's a bit there.

George Robert Aylward: Sure, yeah. So, there's a bit there. So, I'll cover a bunch of that, and then Mike will go a little further. So, in terms of capital, so again, as we've always said, we take a balanced approach, which does include, you know, consistent share repurchases and dividend increases. It does include, you know, the paying down of debt, which Mike has alluded to. And it does include investing in growth, which is into two categories, organic and inorganic.

George Aylward: So I'll cover a bunch of that, and then Mike will go a little further. So, in terms of that capital, so again, as we've always said, as you know, we take a balanced approach, which does include, you know, consistent share repurchases and dividend increases. It does include, you know, the paying down of debt in which Mike is alluded to. And it does include investing in growth, which is two categories: organic and inorganic. And so that ties then into the references to the seed capital. So, in the prepared remarks, we kind of indicated the future, you know, the uses of capital could include, you know, potential CLOs as well as new product introductions, because we do believe, under the right circumstances, those are really good uses of capital.

Speaker Change: Sure, yeah, so there's a bit there, so I'll cover a bunch of that, and then Mike will go a little further. So, in terms of the capital, so again, as we've always said, is, you know, we take a balanced approach, which does include, you know, consistent share repurchases and dividend increases, it does include

Speaker Change: You know, the paying down of debt, in which Mike has alluded to, and it does include investing in growth, which is two categories, organic and inorganic.

George Robert Aylward: And so, that ties then into the references to seed capital. So, in the prepared remarks, we kind of indicated that future uses of capital could include, you know, potential CLOs, as well as new product introduction. We do believe under the right circumstances, those are really good uses of capital, balance sheet allocation to seed capital, including CLO capital. We've maintained that as an area of investment, and many of the growing products and revenue generation we've had have all come from something that was seeded sometime previously.

Michael Aaron Angerthal: and so that ties then into the references to the the seed capital so in the prepared remarks

Michael Aaron Angerthal: We kind of indicated the future uses of capital could include, you know, potential CLOs as well as new product introductions, because we do believe under the right circumstances those are really good uses of capital. We do have a...

George Aylward: We do have a and the balance sheet allocation to seed capital, including CALO capital. We've maintained that as an area of investment, and many of the growing products and revenue generation we've had, they've all come from something that has been seeded sometime previously. So we do think that's important, an important part of investing in the future of the business. We do recycle a lot, so a lot of the capacity that you've seen, we've set aside in the balance sheet or seed capital, has been continuously rebalanced as we seed an investment strategy. Hopefully it grows to a point, it grows third party assets; we then reallocate that.

Michael Aaron Angerthal: balance sheet allocation to seed capital including CLO capital we've maintained that as an area of investment and and many of the

Michael Aaron Angerthal: growing products and revenue generation we've had, they've all come from something that has been seeded sometime previously. So we do think that's an important part of investing in the future of the business.

George Robert Aylward: So we do think that's an important part of investing in the future of the business. We do recycle a lot. So a lot of the capacity that you've seen, we've set aside in the balance sheet for seed capital has been continuously rebalanced as we seed an investment strategy. Hopefully, it grows to a point, it draws in third-party assets, and we then reallocate that. So much of the seed we've

Michael Aaron Angerthal: We do recycle a lot so the a lot of the the

Michael Aaron Angerthal: The capacity that you've seen, we've set aside in the balance sheet for seed capital has been continuously rebalanced as we seed an investment strategy, hopefully it grows to a point, it draws third-party assets, we then reallocate that, so much of the seed we've had periodically

George Aylward: So much of the seed we've had periodically. So there hasn't been probably a lot of major changes in terms of that seed capital level. So we continue to look to recycle that. And then in certain instances there are periods like say we do a CALO that has a good IRR, where we may consider utilizing that if it meets the thresholds that we have. And in terms of the new products, we have been active in terms of a number of actively managed fixed income ETFs. Obviously, particularly if they're fixed income, they require the seed capital. So that's been an area of global funds; it's been another area where we've seeded a lot.

George Robert Aylward: So there probably haven't been a lot of major changes in terms of that seed capital level. So we continue to look to recycle that. And then, but then, in certain instances, there are periods, like say we do a CLO that has a good IRR, where we may consider utilizing that if it meets the thresholds that we have.

Michael Aaron Angerthal: So, there hasn't been probably a lot of major changes in terms of that seed capital level.

Michael Aaron Angerthal: So, we continue to look to recycle that, but then in certain instances there are periods, like say we do a CLO that has a good IRR, where we may consider utilizing that if it meets the thresholds that we have. And in terms of the new products,

George Robert Aylward: And in terms of the new product. You know, we have been active in terms of a number of actively managed fixed-income ETFs. Obviously, particularly if they're fixed-income, they require seed capital. So that's been an area of concern for global funds. It's been another area where we've seeded a lot, so we do believe that there's a big opportunity. And then the third piece is the retail separate accounts, particularly alluding to doing more fixed-income ones. So those are generally at the higher end. We're thoughtful about how we approach that. That is one of the elements. Mike, anything to add?

Michael Aaron Angerthal: You know, we have been active in terms of a number of actively managed fixed income ETFs.

Michael Aaron Angerthal: Obviously, particularly if they're fixed income, they require the seed capital. So that's been an area of global funds. It's been another area where we've seeded a lot. So we do believe that there's a big opportunity. And then the third piece being the retail separate accounts.

George Aylward: So we do believe that there's a big opportunity, and then the third piece being the retail separate accounts, particularly alluding to doing more fixed income ones. So those are generally at the higher end. We're thoughtful about how we approach that, but that is one of the elements.

Michael Aaron Angerthal: particularly alluding to doing more fixed income ones. So, those are generally at the higher end. We're thoughtful about how we approach that, but that is one of the elements. Mike, anything you'd add? I would just add, I think you alluded to it.

Mike Angerthal: Mike, anything you did? I would just say I think you alluded to it. The seed portfolio, we introduced to maybe ten years ago, and we've sort of fluctuated within a relatively narrow range. Sometimes it ticks a little higher when investment opportunities require expanding the seed portfolio. But there's a balance and a discipline around recycling wherever possible, and we actively manage that. So when you see changes in the seed portfolio, they're typically market-based where recycling has been prominent. But we can expand on that as our product needs and requirements call for that as a priority of our capital.

Michael Aaron Angerthal: I would just add, I think you alluded to it, the seed portfolio. You know, we introduced it maybe... 10 years ago, and we've sort of fluctuated within a relatively narrow range. Sometimes it ticks a little higher when investment opportunities require expanding the seed portfolio. But there's a balance and a discipline around recycling wherever possible, and we actively manage that. So when you see changes in the seed portfolio, they're typically market-based, where recycling has been prominent, but we can expand on that as our product, needs, and requirements call for that as a priority of our capital, as part of our balanced approach to investing in the business. Returning Capitalists, paying down debt. So I think you'll see that as a continued. Strategic Priority.

Michael Aaron Angerthal: The seed portfolio, you know, we introduced to maybe...

Michael Aaron Angerthal: ten years ago, and we've sort of

Michael Aaron Angerthal: fluctuated within a relatively narrow range. Sometimes it ticks a little higher when

Michael Aaron Angerthal: investment opportunities require expanding the seed portfolio but there's a balance and a discipline around recycling wherever possible and

Michael Aaron Angerthal: We actively manage that. So when you see changes in the seed portfolio, they're typically market-based where recycling has been prominent, but we, you know, we can expand on that as our product needs and requirements.

Mike Angerthal: And it's part of our balanced approach of investing in the business, returning capital, and paying down debt. So I think you'll see that as a continued strategic priority for us.

Michael Aaron Angerthal: call for that as a priority of our capital and it's part of our balanced approach of investing in the business and returning capital and paying down debt so I think you'll see that as a continued strategic priority for us.

Michael J. Cyprys: Great, thank you for that. Maybe just to follow up on the capital return. I think it was about $12.5 million of buybacks in the quarter, and debt pay down around just under $6 million or so. Just curious how we should think about the cadence and pace of that over the next couple of quarters. Do you think that this quarter is a good run rate? We do anticipate it accelerating as we look out from here, or decelerating. How should we think about the cadence and pace of buybacks and debt pay-down?

Michael Cypress: Great, thank you for that. Maybe just to follow up on the capital return. I think it was about twelve and a half million buybacks in the quarter, debt paydown around just under six million or so. Just curious how we should think about the cadence and pace of that over the next couple of quarters. Do you think that this quarter is a good run rate? Should we do anticipated accelerating as we look out from here, or decelerating? How should we think about the cadence and pace of buybacks and debt paydown? Thank you. Yeah, and again, we evaluate all of those, and that actually connects, obviously, to your previous question in terms of opportunities for seed.

Speaker Change: Great, thank you for that. Maybe just to follow up on the capital return.

Speaker Change: I think it was about $12.5 million buybacks in the quarter, debt pay down around just under $6 million or so. Just curious how we should think about the cadence and pace of that over the next couple of quarters. Do you think that this quarter is a good run rate? We do anticipate it accelerating as we look out from here or decelerating. How should we think about the cadence and pace?

George Robert Aylward: Thank you.

George Robert Aylward: Yeah, and again, we evaluate all of those, and that actually connects obviously to your previous question in terms of opportunities for seed. So again, we maintain a strong balance sheet and generate a lot of cash flow, which gives us that flexibility to continue to do things that we think are critical. So, you know, our consistency in terms of share buybacks has been pretty consistent in terms of how we look at the number will fluctuate, depending upon the cash utilization for other purposes during that month.

Speaker Change: of Buybacks and Debt Paydown. Thank you.

Speaker Change: Yeah, and again, we evaluate all of those and that actually connects obviously to your previous question in terms of, you know, opportunities for seed. So again, we maintain a strong balance sheet and generating a lot of cash flow which gives us that flexibility.

George Aylward: So again, we maintain a strong balance sheet and generating a lot of cash flow, which gives us that flexibility to continue to do things that we think are critical. And so, you know, our consistency in terms of share buybacks has been pretty consistent in terms of how we've looked at the number. We'll fluctuate depending upon the cash utilization of other purposes during that month. You know, we're beginning to start to have the cash if they're having paid down the outstanding balance on the revolver on the debt. And we have commented on that so, you know, every quarter it will vary depending upon the timing of the quarter, the level of cash, the trading level of our stock in terms of that, but we continue to balance all three of those, you know, within a reasonable range.

Speaker Change: to continue to do things that we think are critical. So, you know, our...

Speaker Change: Consistency in terms of share buybacks has been pretty consistent in terms of how we look that the number will fluctuate depending upon the cash utilization for other purposes during that month.

George Robert Aylward: You know, we're beginning to have cash after having paid down the outstanding balance on the revolver, on the debt. And we have commented on that. So, every quarter, it will vary depending upon the timing of the quarter, the level of cash, and the trading level of our stock in terms of that. But we continue to balance all three of those, you know, within a reasonable range.

Speaker Change: We're beginning to start to have the cash after having paid down the outstanding balance on the revolver, on the debt, and we have commented on that. So every quarter it will vary depending upon the timing of the quarter, the level of cash.

Speaker Change: the trading level of our stock in terms of that. But we continue to balance all three of those, you know, within a reasonable range. The other piece, and again, I alluded to it in the prepared remarks, but it's worth as a reminder is in

Michael Aaron Angerthal: The other piece, and again I alluded to it in the prepared remarks, but it's worth a reminder is in... You know, this coming quarter, we have the scheduled affiliate minority purchases that will be a capital use that, priority and I think last year that was above 20 million, and that number will fluctuate a bit, but that'll be a capital use that's forthcoming, and potential CLO issuances. We're monitoring the market on the CLO side. So, again, we balance investments with the other capital providers we've discussed.

Michael Cypress: The other piece, and again I alluded to it in the prepared remarks, but it's worth as a reminder, is in, you know, this coming quarter we have the scheduled affiliate minority purchases that will be a capital use that is a priority. And I think last year that was above 20 million, and the number will fluctuate a bit, but that'll be a capital use that's forthcoming and potential CLO issuances we're monitoring the market on the CLO side so. Again we balance investments with the other capital powers we've discussed. Great, sorry just one other if I could follow up on that 20 million minority purchase. Just if you could help us with the next couple of years, how much you anticipate in terms of other uses from a strategic angle, like that? Any earnouts to be aware of to have on the radar screen.

Speaker Change: This coming quarter, we have the scheduled affiliate minority purchases. That will be a capital use that...

Speaker Change: is a priority and I think last year that was above 20 million and that number will fluctuate a bit but that'll be a capital use that's forthcoming.

Speaker Change: and potential CLO issuances. We're monitoring the market on the CLO side. So, again, we balance investments with the other capital priorities we've discussed.

Michael J. Cyprys: Great. Sorry, just one other question. If I could follow up on that $20 million minority purchase, just if you could help us over the next couple of years, how much do you anticipate in terms of other uses from a strategic angle like that? Any earnouts to be aware of to have on the radar screen?

Speaker Change: Great. Sorry, just one other if I could follow up on that 20 million minority purchase. Just if you could help us with the next couple of years, how much do you anticipate in terms of other uses from a strategic angle like that? Any earnouts to be aware of to have on the radar screen?

Mike Angerthal: Yeah, I think the cadence on the minority purchases, I think again was part of the original transaction where we acquired a majority interest, and this is part of the stage purchases. So there'll be one more year after 2024 stage purchases, so that you can expect in the middle of 2025. I think the other thing that we talk about frequently is the contingent consideration, and that the meaningful amount of that balance is paid off each first quarter, and there'll be a forthcoming payment in the first quarter of 2025 and then one more significant payment in the first quarter of 2026.

Michael Aaron Angerthal: Yeah, I think The cadence on the minority purchases, I think, again, was part of the original transaction where we acquired a majority interest, and this is part of the stage purchases, so there'll be one more year after 2024 of stage purchases, so you can expect in the middle of 2025. I think the other thing that we talk about frequently is the contingent consideration and that a meaningful amount of that balance is paid off each first quarter, and there'll be a forthcoming payment in the first quarter of 2025 and then one more significant payment in the first quarter of 2026. I think those three additional payments are probably the more meaningful capital priorities in addition to the one in the third quarter of this year that I alluded to.

Speaker Change: Yeah, I think...

Speaker Change: The cadence on the minority purchases, I think, again, was part of the original transaction where we...

Speaker Change: acquired a majority interest and this is part of the stage purchases so there'll be one more year after 2024 of stage purchases so that you can expect in the middle of 2025. I think the other thing that we

Speaker Change: that we talk about frequently is the contingent consideration

Speaker Change: the meaningful amount of that balance.

Speaker Change: is paid off each first quarter and there'll be a forthcoming payment in the first quarter of 2025 and then one more significant payment in the first quarter of 2026. I think those

Michael Cypress: I think those three additional payments are probably the more meaningful capital priorities in addition to the one in the third quarter of this year that I alluded to. Great thanks so much.

Speaker Change: three additional payments are.

Speaker Change: You know, probably the more meaningful capital priorities in addition to the one in the third quarter of this year that I alluded to.

George Aylward: Thank you.

George Robert Aylward: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Alward. I just want to thank everyone for joining us today, and as we always do, we do encourage you to reach out if there's any other further questions. Thank you so much.

Speaker Change: Great. Thanks so much.

Speaker Change: Rourke.

Speaker Change: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.

George Robert Aylward: I just want to thank everyone for joining us today, and, as we always do, we do encourage you to reach out if there's any further questions. Thank you so much.

Operator: That concludes today's call. Thank you for participating. You may now disconnect.

Aylward: I just want to thank everyone for joining us today, and as we always do, we do encourage you to reach out if there's any other further questions. Thank you so much.

That concludes today's call. Thank you for participating. You may now disconnect. Thank you.

Aylward: That concludes today's call. Thank you for participating. You may now disconnect.

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