Q3 2024 BrightSphere Investment Group Inc Earnings Call

I'm a little bit tired of my life, but I'm not tired of my life.

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to the Bright Fear Investment Group, earnings conference call and webcast for the third quarter, 2,024. During the call, all participants will be in the list in only mode.

After the presentation, we will conduct a question and answer session. To be added to the Q, please press the star, followed by one at any time during the call. If you need to reach an operator, please press the star, followed by zero.

Speaker Change: Please note that this call is being recorded today, Thursday, October 31, 2024 at 11am, Eastern Time. I would now like to turn the meeting over to Melody Huang. SVP, Director of Finance and Investor Relations. Please go ahead, Melody.

The End

Good morning and welcome to Bryce Pierce Conference call to discuss our results for the third quarter in this September 30, 2024.

Speaker Change: Before we get started, please know that we may form a looking statement about our business and financial performance.

Each forward looking statement is subject to risk and uncertainties that could cause actual results to differ materialies from those projected.

A disknowing formation regarding the risk and uncertainties appears in our SEC fouling.

Including the form AK filed today containing the earnings release.

Our 2023 Form K&K and now Form K&Q for the first and second quarter of 2024.

In former looking statements that we made on this call are based on assumptions as of today. And we undertake no obligation to update them as a result of new information of future events.

We may also reference certain non-gap financial measures. Information about any non-gap measures referenced.

including a reconciliation of those measures to cap measures can be found on a website.

Along with the fly set, we will use as part of today's discussion.

Finally, nothing here in Shelby Dean to be an offer of solicitation to buy any investment products.

A president and chief executive officer will leave the car. And now I'm pleased to turn the car over to Sirin.

Sirin: Thank you Melody, good morning everyone and thanks for joining us today.

I'll cover the highlight and fly five of the deck in my initial remarks.

and Van Bicken move to Q&A.

The further third quarter of 2024, we reported the E&I first share of 59 cents.

I'm paired up 45th then in the third quarter of 2022.

and also 45th in the second quarter of 2024.

The NI in the third quarter of 2024 increased by 15%.

2 million dollars. I'm 13.3 million. I year ago in the third quarter of 2022.

The increase was primarily driven by the growth in management's fear of a new.

Sirin: Due to higher AUM from the market appreciation, we've seen over the last 12 months. And additionally, we continued our expense discipline during this period.

The ENI per share increased by 31% in the third quarter of 2024 compared to the year ago quarter, which is higher than the 15% increase in ENI over the same period.

Sirin: and that's because the E&I for Share was additionally driven by the $100 million of Share purchases, but we started in December, 23 and continued in the first half of the report.

Acadience Investment Performance remains very strong in the quarter.

As of September 30, 2024, 85% 93% and 94% of a Canadian strategy by revenue, outperform the respective benchmarks across three five and ten year periods.

Sirin: Turning to flowers.

We reported positive, net-clined cash flows of half a billion this quarter. Compared to the break-even-and-dissiet, we had in the second quarter of 2024.

Sirin: and negative half of WNVNGCF that we had in the third quarter of 2023.

Our organic growth initiative continued to progress well and in line with our expectations.

on our systematic credit initiative.

All three studies strategies did it so far are building nice truck records.

As a reminder, these three strategies comprise US-Hio strategy, which we see that in November 2023, global high-yield strategy, heated in April 2024, and US-invacment-grade strategy heated in Q3, up 2024.

Sirin: Honour Aquari Alternatives Initiative, our multi-strategy fund, stated about two years ago in Q4, up 22.

Continues to build a strong track record of out performance.

and in September 24th, we also seated a new global equity extension strategy.

which is a variant of our global equity strategy with some mobility to go short.

Turning to Capitol Management.

As the end of the third quarter, we had a cash balance of approximately $53-$6 million.

Anacadian had fully paid down its revolving facility compared to the outstanding balance of 36 million as the end of the second quarter.

As it's previously, this revolving facility supports the Cadients first quarter season only.

and is generally paid down fully by urine from the cash generated from the Canadian operations.

Speaker Change: Now, as we announced earlier this month, this will be my last earnings call as bright for your CEO.

Speaker Change: Effective 1225, we will rebrand right-spir as a Cadianathic Management.

Sirin: and the Percadian is our own lead remaining business.

Our current ticker, VSIG, will change to AAMI and Kelly Young, who is currently the CEO of Acadian, our solar operating business, will assume the role of the public company's CEO too.

These chefs basically complete our transition from a multi-bootie conglomerate.

You'll streamline and singularly focused asset managers.

We call the success release of the company 7 of Celia, the strategic acquired.

and retain a tadian, our largest, as a most differentiated person.

Sirin: Thanks for the Investiture's Guiter Turn $1.3 billion of capital to the shareholders of the S.R.R. by-bought.

and the also paid down $125 million of debt.

Sirin: We expanded a cadence business into new areas including credit and equity alternatives that I touched on earlier. And we expect these new asset classes to generate sustain or gain in growth by the company over time.

Sirin: And we also reduced our corporate overhead by approximately 70%.

Over the last few years.

Sirin: Electively, these efforts have produced very strong returns for our shareholders.

Now, Acadian is one of the top performance systematic investment managers in the world.

and the completion of the transition to a singularly focused asset management company.

Present and Exciting Opportunity, the focus exclusively on this exceptional business.

I'd like to close my initial remarks by reiterating as I've gone for about 24 quarters now.

The company will remain focused on maximizing shareholder value and will continue using its free cash flow to support organic growth and to buy back of shares. I'm now turn the call back to the operator and I'm happy to answer questions at this point.

At this time, those with questions should lift their phone receiver and press star, followed by the number one on their telephone keypad. To cancel a question, please press star 1 again. Please hold for a brief moment while we compile the Q&A roster.

And the first question comes from the line of Kenneth Lee of RBC Capital Markets. Please go ahead.

Kenneth Lee: Hey good morning and thanks for taking my question and uh, sirn it's uh, it's been great working with you for the past several years.

Kenneth Lee: In terms of the transition and I think you also mentioned the streamlining of the company structure. Once again I appreciate that Bryce Fier had already gone some major cost reductions in the past.

Sirin: Do you think there's any potential opportunities for any further expense reductions going forward as the structure gets streamlined? Thanks.

Speaker Change: I can, yeah, we always, we always, we maintain, experience discipline and we continue to find opportunities and we continue to be really laser focused on being as efficient as we can be.

So going forward, you know, we'll continue the same approach, but it's hard to say at this point whether there are any obvious opportunities as we've talked about last two years we've actually been.

Sirin: In the infrastructure, we've upgraded our reporting capabilities, we've invested in our trading capabilities. And so what that will do is that it makes our...

Sirin: Patorn, much more scalable.

and we also faced the inflation pressures that we've touched on.

Sirin: So what I would say is that at this point...

We've built up a lot over the last couple of years

So we may not see.

Experts growth necessarily has our revenue growth. So we would see the benefit of operating leverage going forward. But that's hard to say whether there would be reduction in absolute dollar terms of the expense levels.

Gotcha, very helpful there. And just one follow-up if I may. Just want to see if you could just give an updated outlook in terms of...

Sirin: and your cash is used.

is a great stage for the remainder of this year and as well related to that, what's really like the outlook for a sheer repurchases over the near-term death.

Speaker Change: Yeah, thank you. But what high level is it just that earlier?

Speaker Change: The two primary uses for our cash, not haven't changed and as I understand Doug.

Doug: Even as the after the end of my tenure, they won't change, they remain.

Investment in our organic growth on seeding new strategies and then share repurchases.

is a very interesting story.

and see what opportunities present themselves whether in terms of opportunity to see something.

is the client that's looking for a new product from us and also being vigilant about market conditions and with the car to wash your purchases. So it's hard to put no.

You know, sort of a relative prior to theization of the two, but those two remained the primary and I was the almost exclusive use this for the cash.

Speaker Change: Thank you again.

Doug: The End

Your next question comes from John Dunn of Evercore ISI. Please go ahead.

Hi, could you maybe give us a little update on the Institutional Pipeline, like Composition, Magnitude, Time to Funding, maybe Geography.

Doug: Hey John!

Speaker Change: Yeah, I guess we are pleased with the pipeline. Of course, that we saw in the numbers in the third quarter the pipeline has been good and then we are working through it and as it sort of progresses some of it has been converting into the pipeline.

and it's pretty healthy, it's pretty robust and it does a crop.

Just that Johnny, it goes across geography, it goes across strategies, so it's not concentrated in any particular areas.

and we are also seeing good response from some of the newer.

Speaker Change: Area is like we have enhanced.

Speaker Change: Strategy that has a lowest.

So it should there offer a low tracking error doing disease but also with low risk.

Doug: So I think we're happy with how things are going in the pipeline.

Also, we saw the Microsoft's from management volatility in this quarter as well. So we have pockets of risk as well. So I would say on balance, we are satisfied with where things are.

Doug: That we expect to essentially ideally be positive flows or maybe at bright given as we look forward to next few quarters.

Speaker Change: I'm a little bit nervous.

You know, you've done some new product launches, but maybe thinking about the next phase. Is there kind of like another crop of areas where you would consider maybe, you know,

Doug: going into as like the next phase of growth.

Speaker Change: Yeah, we're always remain opportunistic and see if there are opportunities to see any new effort classes. But I would say we do have our hands full at the moment where definitely the areas that we're looking to expand into credit and equity alternatives.

Speaker Change: and we've got some other product variants in the mix. These are large markets and we are really keeping our eye on the ball and actually good in quarter to quarter in terms of building out the necessary capabilities and starting to talk to clients.

So we'll definitely focus on what we have already in the hopper. Hopper, genetically something great comes along, we'll look at it. But we want to stay disciplined and execution too.

Doug: Thanks for watching.

John: Thank you John.

Speaker Change: Please go ahead.

Speaker Change: Hi, I'm Rana and congratulations on your tenure with Bright Sear and the strong execution on a locking value for shareholders over the past. Number of beers it's been great working with you. We'll show you all the best in the next video.

You're new endeavors. Just a couple of questions here. Just curious in your dialogue with the board among others. Maybe you could just find out on the new strategy what prompted it. And what is this scope for strategic alternatives from here? And the past you guys have looked at.

and the first thing to do is to pursue maybe potential wires just curious what the reception key back is then. Seems like the change in strategy is moving on from this trip.

Speaker Change: and the World Heritage Heritage Chapter to the Organic Growth Chapter next.

Thank you for the kind word Mike appreciate it

and I would say there's really nothing new I would say there isn't necessarily a change of strategy. So that's as we've said for a while right did we that we remain focused on maximizing shareholder value and looking at all possible.

We can do that. So that's proud of your remains the same where the company remains open to strategic alternatives.

That's no longer an option or that's off the table.

What we've done over the last few years has really sort of moved from...

Speaker Change: The conglomerate approach.

Speaker Change: You really are singular integrated asset management approach, right? And then this is the sort of the...

But most unique and well positioned.

Business to do that with.

So we accomplish this almost year and a half ago and then we've remained open strategic alternatives.

But of course the partner has to be right. And at the same time, we continue to optimize our position as an independent.

Speaker Change: Public Company.

and continue to be disciplined and expensive and we've had leadership, succession, out of KD and in the interim.

We updated and so we've been

Speaker Change: You know, really continuing to be optimized on all fronts as an independent public company, as well as we're

Continued execution of the strategy we've had for a while. And this is sort of, you know, in a way culmination of...

Speaker Change: of that effort, going forward the company's 31 position.

has an independent company but also open to if something synergistic came along that creates shareholder value the company remains open to that.

Speaker Change: I think you could just elaborate a bit on the traction that you're seeing with some of the new strategies.

You've been sitting over the past couple of years, just where you are.

I'm from the third party client assets, tracks, and interest from clients and how you're thinking about this go for maybe bringing some newer strategies to the marketplace over the next year or so.

Speaker Change: I'm going to start the new strategy that's been...

Moving along completely unexpected lines. And I appreciate that looking from outside and I sort of really hard to tell.

Speaker Change: What's been going on because with anything new, as you can see, necessarily a lot of flows is hard to tell. But with new strategies in our institutional, long-only app advertisement business.

It is the length of the truck record. It's quite important to, you know, before we start the meeting, meaningful failed numbers.

But the execution has been going along well and kind of on more or less on the lines we expected that we built the teams, we built the models, we built the necessary.

and the technological changes we have to do and we've been having great conversations with clients who have taken a lot of interest, but just the incredible idea of reason they're internaled.

and the thresholds that there are people who have requirements to see a certain duration that's in the length of track record.

Speaker Change: So I would say that these are...

Speaker Change: There is nothing to be concerned about on the new strategies. It's just moving along, things take awfully long in terms of coming up with new strategies that over time build scales.

So that's what I would say that we continue to stay focused on all these new strategies.

and we are happy with how the execution is going. So it's not that we would...

and one of the start new strategies.

Speaker Change: because we're unhappy with what we're doing right now. But we remain opportunistic as I said that if something compelling were to come from either from client feedback or market opportunities present themselves, the company remains open to exceeding new strategies as well.

But we do have enough in the pipeline right now.

Speaker Change: Great. And just one one for one question is just on capital allocation. I know you mentioned that you're looked to be opportunistic on the budget of the hospital looking to seed as we think about into 25 just curious how we should think about.

Speaker Change: [inaudible]

vs. seeing strategies or other ways just catch building or other uses. Maybe could help flush that out.

Yeah, I mean those two are the uses and it's really, yeah, we haven't made any sort of pre-determined allocation between the two. We do remain opportunistic.

and it will be a function of the market conditions with regard to the buyback opportunity and just sort of...

and how we see it's a recline feedback with the gardening news.

Speaker Change: and how big those markets are. We have enough to digest on the organic side right now that maybe some one or two things that may come up but it may not be very sizable. Nothing that we know of.

That would be very large. And so I would say that you may probably see both of them, you know, with the car too, the relative allocation between the two that it's hard to tell.

Thank you so much for having me. I'm going to be working with you which we all the best.

Speaker Change: Thank you, my.

Here next question comes from Kennously from RBC Capital Market. Please go ahead.

Thanks for taking my follow up. Just want to get a better sense of what specific strategies drove net flows in the corridor. Thanks.

Speaker Change: Yeah, they really came from, I mean, it's a good cross-section of the strategies that did that, but one of them, for them, just to touch on is the mention.

We have some new variants as well. So one of them is enhanced, whereby we offer low tracking error with low risk and that's a resonative of lines that we're otherwise going past them.

So that was one area for example. We've seen good interest in small cap equity, non-US as well as US and those are high fee as well so that's a nice.

and we also saw interesting emerging markets, mall cap opportunity. It's been across our idea of strategy.

Gotcha, thanks again for taking my fall-up.

Speaker Change: Thank you, Ken.

This concludes our question and answer session and like to turn the conference call back over to Sirin Rana.

Thank you, operator, and thanks everyone for joining us and thank you also for the kind words. It's a bit of a sweet moment for me as I mentioned in the one hand it's really been...

A culmination of the strategy that we had been executing for the last few years, but but also the same time, it is an exciting new phase as a more streamlined and dependent.

Public Company, and I leave with a knowledge that the company is very well positioned without me.

Thank you, I'm Edmund for joining us.

Speaker Change: Music Music

Melody Huang: Hello, I'm Melody Huang.