Operator: Good morning. My name is Didi, and I will be your conference operator today. 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. 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 #1: 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 website.
Speaker #1: for replay on the VIRTUS At this time, all mode. After the speakers' remarks, there will be a question-and-answer period time. I will now turn the conference to and instructions will follow at that participants are in a listen-only your host, Sean
Speaker #1: Rourke: Thanks, DeeDee, and good morning,
Sean Rourke: Thanks, Didi, and good morning, everyone. Welcome to Virtus Investment Partners' discussion of our Q4 2025 financial and operating results. Joining me today are George Aylward, our President and CEO, and Mike Angerthal, our Chief Financial Officer. After their prepared remarks, we will open the call for questions. Before we begin, I'll refer you to the disclosures on slide two. Today's comments may include forward-looking statements, which involve risks and uncertainties described in our news release and SEC filings. Actual results may differ materially. We also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in today's news release and financial supplement on our website. Now I'd like to turn the call over to George. George?
Sean Rourke: Thanks, Didi, and good morning, everyone. Welcome to Virtus Investment Partners' discussion of our Q4 2025 financial and operating results. Joining me today are George Aylward, our President and CEO, and Mike Angerthal, our Chief Financial Officer. After their prepared remarks, we will open the call for questions. Before we begin, I'll refer you to the disclosures on slide two. Today's comments may include forward-looking statements, which involve risks and uncertainties described in our news release and SEC filings. Actual results may differ materially. We also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in today's news release and financial supplement on our website. Now I'd like to turn the call over to George. George?
Speaker #2: Everyone, welcome to Virtus Investment Partners' discussion of our fourth quarter 2025 financial and operating results. Joining me today are George Aylward, our President and CEO; and Mike Angerthal, our Chief Financial Officer.
Speaker #2: After their prepared remarks, we will open the call for questions. Before we begin, I'll refer you to the disclosures on slide two. Today's comments may include forward-looking statements, which involve risks and uncertainties described in our news release and SEC filings.
Speaker #2: Actual results may defer materially. We will also refer—we also reference certain non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures are available in today's news release, and website.
Speaker #2: Now, I'd like to turn the call over to George. George.
Speaker #3: Thank you, Sean, and good morning,
George Aylward: Thank you, Sean, and good morning, everyone. I'll start with an overview of the results we reported this morning, and then Mike will provide more detail. Q4 reflected a challenging environment for us, given that quality-oriented equity strategies, which represent half of our AUM, remained out of favor, resulting in increased level of net outflows. As we have previously noted, our quality-oriented equity strategies have delivered strong long-term performance across cycles and have previously been our largest drivers of growth when in favor. However, the market backdrop continued to favor more momentum-driven stocks, resulting in near-term underperformance. Importantly, the impact from our quality equity strategies has overshadowed areas of strength across the business, which in the quarter include positive net flows and strategies from several managers, including in growth equity, emerging markets debt, listed real assets, and event-driven.
George Aylward: Thank you, Sean, and good morning, everyone. I'll start with an overview of the results we reported this morning, and then Mike will provide more detail. Q4 reflected a challenging environment for us, given that quality-oriented equity strategies, which represent half of our AUM, remained out of favor, resulting in increased level of net outflows. As we have previously noted, our quality-oriented equity strategies have delivered strong long-term performance across cycles and have previously been our largest drivers of growth when in favor. However, the market backdrop continued to favor more momentum-driven stocks, resulting in near-term underperformance. Importantly, the impact from our quality equity strategies has overshadowed areas of strength across the business, which in the quarter include positive net flows and strategies from several managers, including in growth equity, emerging markets debt, listed real assets, and event-driven.
Speaker #3: Results reported this morning, and then Mike will provide more detail. The fourth quarter reflected a challenging environment for us, given that quality-oriented equity strategies, which represent half of our AUM, remained financial supplement on our of net outflows.
Speaker #3: As we have previously noted, our quality-oriented equity strategies have delivered strong long-term performance across cycles and have previously been our largest drivers of growth. However, the backdrop continued to favor more momentum-driven stocks, resulting in near-term underperformance.
Speaker #3: Importantly, the impact from our quality equity strategies has overshadowed areas of strength when in favor. across the business, which in the quarter include positive net flows and strategies from several managers, including in growth equity, However, the market emerging markets debt, listed real assets, and event-driven.
Speaker #3: Continued strong positive net flows in ETFs, product introductions of differentiated actively managed ETFs, expansion into private markets with two strategic investments, solid long-term investment performance with fixed income and alternatives also having strong near-term performance, continued return of capital with $10 million of share buybacks in the quarter, and a solid balance sheet, meaningful liquidity, and a minimus net We continue to execute our strategic leverage a year-end.
George Aylward: Continued strong positive net flows in ETFs, product introductions of differentiated, actively managed ETFs, expansion into private markets with two strategic investments, solid long-term investment performance, with fixed income and alternatives also having strong near-term performance, continued return of capital with $10 million of share buybacks in the quarter, and a solid balance sheet, meaningful liquidity, and de minimis net leverage at year-end. We continued to execute our strategic priorities in the quarter, including broadening our product offerings with several ETF introductions and expansion into the private markets. For ETFs, we launched three new actively managed funds in the quarter, including a growth opportunities ETF from Silvant and US and international dividend strategies from our systematic team. We expect several additional active ETF launches over the next two quarters across managers, including Stone Harbor, Duff & Phelps, and Silvant.
George Aylward: Continued strong positive net flows in ETFs, product introductions of differentiated, actively managed ETFs, expansion into private markets with two strategic investments, solid long-term investment performance, with fixed income and alternatives also having strong near-term performance, continued return of capital with $10 million of share buybacks in the quarter, and a solid balance sheet, meaningful liquidity, and de minimis net leverage at year-end. We continued to execute our strategic priorities in the quarter, including broadening our product offerings with several ETF introductions and expansion into the private markets. For ETFs, we launched three new actively managed funds in the quarter, including a growth opportunities ETF from Silvant and US and international dividend strategies from our systematic team. We expect several additional active ETF launches over the next two quarters across managers, including Stone Harbor, Duff & Phelps, and Silvant.
Speaker #3: our product offerings, with several priorities in the quarter, including broadening ETF introductions and expansion into the private markets. For ETFs, we launched three new actively managed funds in the quarter, including a growth opportunities ETF from Sylvant, and U.S.
Speaker #3: and international dividend strategies from our systematic team. We expect several additional active ETF launches over the next two quarters, across managers including Stone Harbor, Duff & Phelps, and Sylvant.
Speaker #3: We now have 25 ETFs spanning a range of strategies and continue to focus on broadening access to them in distribution channels. In addition, we have several other new offerings in process or filing, including interval funds and additional retail separate account strategies.
George Aylward: We now have 25 ETFs spanning a range of strategies and continue to focus on broadening access to them in distribution channels. In addition, we have several other new offerings in process or filing, including interval funds and additional retail separate account strategies. As mentioned, we also have expanded into private markets with the previously announced pending acquisition of a majority interest in Keystone National Group, an asset-centric private credit manager, and a minority investment in Crescent Cove, a venture growth manager. I will discuss both in more detail shortly. Looking at our Q4 results, assets under management were $159 billion at 31 December, down from $169 billion, due to net outflows and the impact of market performance.
George Aylward: We now have 25 ETFs spanning a range of strategies and continue to focus on broadening access to them in distribution channels. In addition, we have several other new offerings in process or filing, including interval funds and additional retail separate account strategies. As mentioned, we also have expanded into private markets with the previously announced pending acquisition of a majority interest in Keystone National Group, an asset-centric private credit manager, and a minority investment in Crescent Cove, a venture growth manager. I will discuss both in more detail shortly. Looking at our Q4 results, assets under management were $159 billion at 31 December, down from $169 billion, due to net outflows and the impact of market performance.
Speaker #3: And as mentioned, we also have expanded into private markets with the previously announced pending acquisition of a majority interest in Keystone National Group, an asset-centric private credit manager, and a minority investment in Crescent Cove, a venture growth manager.
Speaker #3: I will discuss both in more detail shortly. Looking at our fourth quarter results, assets under management were $159 billion at 12:31, down from $169 billion due to net outflows and the impact of market performance.
Speaker #3: Total sales of $5.3 billion compared with $6.3 billion in the third quarter which included a $4 billion CLO issuance. Total net outflows were $8.1 billion, and across products, the outflows were almost entirely driven by equities.
George Aylward: Total sales of $5.3 billion, compared with $6.3 billion in Q3, which included a $0.4 billion CLO issuance. Total net outflows were $8.1 billion, and across products, the outflows were almost entirely driven by equities. Looking at flows across asset classes, the equity net outflows largely reflected the continued style headwind for quality-oriented strategies. We had several meaningful institutional partial redemptions in such strategies, as well as some seasonal tax loss harvesting open-end funds. Fixed income net flows were modestly negative at $0.1 billion for the quarter, and we saw positive net flows in certain fixed income strategies, including multi-sector and emerging market debt. Alternative strategies were essentially break even for the quarter and positive for the trailing twelve months.
George Aylward: Total sales of $5.3 billion, compared with $6.3 billion in Q3, which included a $0.4 billion CLO issuance. Total net outflows were $8.1 billion, and across products, the outflows were almost entirely driven by equities. Looking at flows across asset classes, the equity net outflows largely reflected the continued style headwind for quality-oriented strategies. We had several meaningful institutional partial redemptions in such strategies, as well as some seasonal tax loss harvesting open-end funds. Fixed income net flows were modestly negative at $0.1 billion for the quarter, and we saw positive net flows in certain fixed income strategies, including multi-sector and emerging market debt. Alternative strategies were essentially break even for the quarter and positive for the trailing twelve months.
Speaker #3: Looking at flows across asset classes, the equity net outflows largely reflected the continued style headwind for quality-oriented strategies. We had several meaningful institutional partial redemptions in such strategies, as well as some seasonal tax loss harvesting in independent funds.
Speaker #3: Fixed income net flows were modestly negative at $0.1 billion for the quarter, and we saw positive net flows in certain fixed income strategies, including multi-sector and emerging market debt.
Speaker #3: Alternative strategies were essentially break-even for the quarter and positive for the trailing 12 we're seeing early in the first months. quarter, our U.S. retail funds continue to face headwinds, though there have been In terms of what encouraging signs in the market of broadening investor sentiment, and January sales were at the highest level since June, and net flows at the best fixed income net flows were level since September, and positive.
George Aylward: In terms of what we're seeing early in the first quarter, our US retail funds continue to face headwinds, though there have been encouraging signs in the market of broadening investor sentiment, and January sales were at the highest level since June, and net flows at the best level since September, and fixed income net flows were positive. For ETF, sales and net flows continue to be strong. Within retail separate accounts, while for the month we have seen an increase in sales, there was a large redemption from a client that rebalanced a lower fee, model-only mandate to a passive strategy. On the institutional side, trends are similar to the fourth quarter, with known redemptions exceeding known wins. Turning now to our financial results. Earnings in the operating margin declined modestly, reflecting lower average AUM, partially offset by lower operating expenses.
George Aylward: In terms of what we're seeing early in the first quarter, our US retail funds continue to face headwinds, though there have been encouraging signs in the market of broadening investor sentiment, and January sales were at the highest level since June, and net flows at the best level since September, and fixed income net flows were positive. For ETF, sales and net flows continue to be strong. Within retail separate accounts, while for the month we have seen an increase in sales, there was a large redemption from a client that rebalanced a lower fee, model-only mandate to a passive strategy. On the institutional side, trends are similar to the fourth quarter, with known redemptions exceeding known wins. Turning now to our financial results. Earnings in the operating margin declined modestly, reflecting lower average AUM, partially offset by lower operating expenses.
Speaker #3: For ETFs, sales and net flows continue to be strong. Within retail separate accounts, while for the month we have seen an increase in sales, there was a large redemption from a client that rebalanced a lower-fee, model-only mandate to a passive strategy.
Speaker #3: On the institutional side, trends are similar to the fourth quarter, with no redemptions exceeding known wins. Turning now to our financial results, earnings and the operating margin declined modestly, reflecting lower average AUM, partially offset by lower operating expenses.
Speaker #3: The operating margin was 32.4%, which compared with 33% last quarter. Earnings per share suggested of $6.50 compared with $6.69 in the third quarter. recent performance reflects our overweight to Turning to investment performance, quality equity, while long-term performance demonstrates we have generated solid performance over market cycles.
George Aylward: The operating margin was 32.4%, which compared with 33% last quarter. Diluted earnings per share of $6.50, compared with $6.69 in Q3. Turning to investment performance, recent performance reflects our overweight to quality equity, while long-term performance demonstrates we've generated solid performance over market cycles. For the 3-year period, while 39% of AUM outperformed benchmark due to challenging equity performance, fixed income and alternative strategies performed very well, with 76% and 60% of AUM, respectively, outperforming benchmarks. Over the 10-year period, 62% of our equity assets, 77% of our fixed income assets, and 71% of alternative assets beat their benchmarks. For just mutual funds, 65% of equity funds and 87% of fixed income funds outperformed their peer median for the 10-year period.
George Aylward: The operating margin was 32.4%, which compared with 33% last quarter. Diluted earnings per share of $6.50, compared with $6.69 in Q3. Turning to investment performance, recent performance reflects our overweight to quality equity, while long-term performance demonstrates we've generated solid performance over market cycles. For the 3-year period, while 39% of AUM outperformed benchmark due to challenging equity performance, fixed income and alternative strategies performed very well, with 76% and 60% of AUM, respectively, outperforming benchmarks. Over the 10-year period, 62% of our equity assets, 77% of our fixed income assets, and 71% of alternative assets beat their benchmarks. For just mutual funds, 65% of equity funds and 87% of fixed income funds outperformed their peer median for the 10-year period.
Speaker #3: For the three-year period, while 39% of AUM outperformed the benchmark, due to challenging equity performance, fixed income and alternative strategies performed very well, with 76% and 60% of AUM, respectively, outperforming benchmarks.
Speaker #3: Over the 10-year period, 62% of our equity assets and 77% and 71% of alternative assets beat their benchmarks. For just mutual funds, 65% of equity funds and 87% of fixed income funds outperformed their peer median for the 10-year period.
Speaker #3: I would also note that 84% of our rated retail fund assets were in three-, four-, and five-star funds, and 23% of our retail funds are rated four and five stars.
George Aylward: I would also note that 84% of our rated retail fund assets were in three, four, and five-star funds, and 23 of our retail funds are rated four and five stars. As it relates to equities, despite the style headwind, our quality-focused managers continue to invest with high conviction businesses with durable fundamentals and long-term potential. Their disciplined approach has delivered excellent returns over cycles, and we remain confident that as companies with quality characteristics come back in favor, these strategies are well positioned. With the environment year to date, we are pleased that although it's a short period, several of these strategies have generated very compelling performance. In terms of our balance sheet and capital, we continue to have financial flexibility to balance our capital priorities of investing in the business, returning capital to shareholders, and appropriate leverage.
George Aylward: I would also note that 84% of our rated retail fund assets were in three, four, and five-star funds, and 23 of our retail funds are rated four and five stars. As it relates to equities, despite the style headwind, our quality-focused managers continue to invest with high conviction businesses with durable fundamentals and long-term potential. Their disciplined approach has delivered excellent returns over cycles, and we remain confident that as companies with quality characteristics come back in favor, these strategies are well positioned. With the environment year to date, we are pleased that although it's a short period, several of these strategies have generated very compelling performance. In terms of our balance sheet and capital, we continue to have financial flexibility to balance our capital priorities of investing in the business, returning capital to shareholders, and appropriate leverage.
Speaker #3: As it relates to equities, despite the style headwind, our quality-focused managers continue to invest with high conviction businesses, with durable fundamentals and long-term potential.
Speaker #3: Their disciplined approach has delivered excellent returns over cycles, and we remain confident that as companies with quality characteristics come back in favor, these strategies are well positioned.
Speaker #3: With the environment year-to-date, we are pleased that, although it is a short period, several of these strategies have generated very compelling performance. In terms of our balance sheet and capital, we continue to have financial flexibility to balance our capital priorities of investing in the business, returning capital to shareholders, and appropriate leverage.
Speaker #3: During the quarter, we repurchased approximately 60,000 shares for $10 million, and for the full year we used $60 million to repurchase over 347,000 shares, representing 5% of beginning shares.
George Aylward: During the quarter, we repurchased approximately 60,000 shares for $10 million. The full year, we used $60 million to repurchase over 347,000 shares, representing 5% of beginning shares. We ended the quarter with significant liquidity, including $386 million of cash and equivalents and an undrawn $250 million revolver, positioning us for the upcoming first quarter obligations, including the closing payment for Keystone National. Before turning the call over to Mike to review our financial results in more detail, I would like to provide some highlights on the Keystone National and Crescent Cove transactions, which will allow us to provide private market offerings in differentiated strategies with strong track records.
George Aylward: During the quarter, we repurchased approximately 60,000 shares for $10 million. The full year, we used $60 million to repurchase over 347,000 shares, representing 5% of beginning shares. We ended the quarter with significant liquidity, including $386 million of cash and equivalents and an undrawn $250 million revolver, positioning us for the upcoming first quarter obligations, including the closing payment for Keystone National. Before turning the call over to Mike to review our financial results in more detail, I would like to provide some highlights on the Keystone National and Crescent Cove transactions, which will allow us to provide private market offerings in differentiated strategies with strong track records.
Speaker #3: We ended the quarter with significant an undrawn $250 liquidity, including $386 the upcoming first quarter obligations, including the closing payment for Keystone National. Before turning the call over detail, I would like to provide some to Mike to review our financial results in more highlights on the Keystone National and Crescent Cove transactions, which will allow us to provide private market offerings in differentiated strategies with strong track records.
Speaker #3: We will acquire a 56% majority interest in Keystone, a boutique private credit manager specializing in asset-based lending, with approximately $2.5 billion in assets across a tender offer fund and two private REITs.
George Aylward: We will acquire a 56% majority interest in Keystone, a boutique private credit manager specializing in asset-based lending with approximately $2.5 billion in assets across a tender offer fund, two and two private REITs. Keystone's approach differs from traditional direct lending. Its financings are secured by specific collateral, are self-amortizing with regular payments of principal and interest, have shorter durations, and are structured with robust covenants and triggers. This collateral-backed, covenant-rich design provides meaningful downside protection for investors who are underexposed to private markets and serves as a differentiated complement for those already invested in traditional private credit. We see significant growth opportunities for Keystone across both retail and institutional channels. Their strategies are already available in an at-scale tender offer fund used by an established base of wealth management firms, and we believe we can expand that meaningfully.
George Aylward: We will acquire a 56% majority interest in Keystone, a boutique private credit manager specializing in asset-based lending with approximately $2.5 billion in assets across a tender offer fund, two and two private REITs. Keystone's approach differs from traditional direct lending. Its financings are secured by specific collateral, are self-amortizing with regular payments of principal and interest, have shorter durations, and are structured with robust covenants and triggers. This collateral-backed, covenant-rich design provides meaningful downside protection for investors who are underexposed to private markets and serves as a differentiated complement for those already invested in traditional private credit. We see significant growth opportunities for Keystone across both retail and institutional channels. Their strategies are already available in an at-scale tender offer fund used by an established base of wealth management firms, and we believe we can expand that meaningfully.
Speaker #3: Keystone's approach differs from traditional direct lending. Its financing is secured by specific collateral, our self-amortizing with regular payments of principal and interest, million revolver, positioning us for structured with robust covenants and triggers.
Speaker #3: This collateral-backed covenant-rich design provides meaningful downside protection for investors who are underexposed to private markets and serves as a differentiated complement for those already invested in traditional private credit.
Speaker #3: We see significant growth opportunities for Keystone across both retail and institutional channels. Their strategies are already available in an at-scale tender offer fund used by an established base of wealth management firms, and we believe we can expand that meaningfully.
Speaker #3: In addition, over time, we also expect to introduce their capabilities to U.S. and non-U.S. institutional clients. We're excited to welcome Keystone's Salt Lake City-based team to VIRTUS and expect to close the transaction during the quarter.
George Aylward: In addition, over time, we also expect to introduce their capabilities to US and non-US institutional clients. We're excited to welcome Keystone's Salt Lake City-based team to Virtus and expect to close the transaction during Q1. With regard to Crescent Cove, a private investment firm that focuses on providing flexible capital solutions to high-growth, middle-market technology companies, we completed a 35% minority investment. Crescent Cove has built a strong track record, growing to over $1 billion in AUM across multiple private funds with a diversified client base. Their venture debt strategy offers a compelling risk-managed way for investors to gain exposure to private technology companies. We see long-term growth potential for Crescent Cove, including extensions into other products for broader client usage, and we're excited to be partnering with their team.
George Aylward: In addition, over time, we also expect to introduce their capabilities to US and non-US institutional clients. We're excited to welcome Keystone's Salt Lake City-based team to Virtus and expect to close the transaction during Q1. With regard to Crescent Cove, a private investment firm that focuses on providing flexible capital solutions to high-growth, middle-market technology companies, we completed a 35% minority investment. Crescent Cove has built a strong track record, growing to over $1 billion in AUM across multiple private funds with a diversified client base. Their venture debt strategy offers a compelling risk-managed way for investors to gain exposure to private technology companies. We see long-term growth potential for Crescent Cove, including extensions into other products for broader client usage, and we're excited to be partnering with their team.
Speaker #3: With regard to Crescent Cove, a private investment firm that focuses on providing flexible capital solutions to first high-growth middle-market technology companies, we completed a 35% minority record, growing to over $1 billion in AUM across multiple private funds with a investment.
Speaker #3: base. Their venture debt strategy offers a compelling, risk-managed way for investors to gain exposure to private technology companies. We see long-term growth potential for Crescent Cove, including extensions into other products for broader client usage and we're excited to be partnering with their team.
Speaker #3: With that, I'll turn the call over to Mike to provide some more details on the financials. Crescent Cove has built a strong track Mike?
George Aylward: With that, I'll turn the call over to Mike to provide some more details on the financials. Mike?
George Aylward: With that, I'll turn the call over to Mike to provide some more details on the financials. Mike?
Speaker #2: Thank you, George. Good to be with you all this morning. Starting with our results on slide 10, assets under management. Our total assets under management at December 31st were $159.5 billion.
Michael Angerthal: Thank you, George. Good to be with you all this morning. Starting with our results on slide 10, Assets Under Management. Our total assets under management at December 31 were $159.5 billion, and average assets declined 3% to $165.2 billion. Our AUM continues to be well-diversified across products and asset classes. By product, institutional accounts were 33% of AUM, retail separate accounts, including wealth management, represented 27%, and US retail funds represented 26%. The remaining 14% consisted of closed-end funds, global funds, and ETFs. Within open-end funds, ETF AUM increased to $5.2 billion, up $0.5 billion sequentially on continued strong net flows and up 72% year-over-year.
Mike Angerthal: Thank you, George. Good to be with you all this morning. Starting with our results on slide 10, Assets Under Management. Our total assets under management at December 31 were $159.5 billion, and average assets declined 3% to $165.2 billion. Our AUM continues to be well-diversified across products and asset classes. By product, institutional accounts were 33% of AUM, retail separate accounts, including wealth management, represented 27%, and US retail funds represented 26%. The remaining 14% consisted of closed-end funds, global funds, and ETFs. Within open-end funds, ETF AUM increased to $5.2 billion, up $0.5 billion sequentially on continued strong net flows and up 72% year-over-year.
Speaker #2: And average assets declined 3% to $165.2 billion. Our AUM continues to be well-diversified across products and asset classes. By product, institutional accounts were 33% of AUM, retail separate accounts including wealth management represented 27%, and U.S.
Speaker #2: Retail funds represented 14% and consisted of closed-end funds, global funds, and ETFs. Within open-end funds, ETF AUM was 26%. The remaining increased to $5.2 billion, up $0.5 billion sequentially, on continued strong net flows.
Speaker #2: And up 72% year over year. We are also well-diversified by asset class, with broad representation across domestic and international equities, including mid, small, and large-cap strategies, and a fixed income platform diversified across duration, credit quality, and geography.
Michael Angerthal: We are also well-diversified by asset class, with broad representation across domestic and international equities, including mid, small, and large cap strategies, and a fixed income platform diversified across duration, credit quality, and geography. Turning to slide 11, Asset Flows, sales were $5.3 billion, compared with $6.3 billion in Q3. Reviewing by product, institutional sales were $1.4 billion, versus $2 billion last quarter, which included the issuance of a $0.4 billion CLO. Retail separate account sales were $1.2 billion, compared with $1.4 billion in Q3. Open-end fund sales were $2.8 billion, consistent with the prior quarter, and included $0.8 billion of ETF sales. Total net outflows were $8.1 billion, compared with $3.9 billion last quarter.
Mike Angerthal: We are also well-diversified by asset class, with broad representation across domestic and international equities, including mid, small, and large cap strategies, and a fixed income platform diversified across duration, credit quality, and geography. Turning to slide 11, Asset Flows, sales were $5.3 billion, compared with $6.3 billion in Q3. Reviewing by product, institutional sales were $1.4 billion, versus $2 billion last quarter, which included the issuance of a $0.4 billion CLO. Retail separate account sales were $1.2 billion, compared with $1.4 billion in Q3. Open-end fund sales were $2.8 billion, consistent with the prior quarter, and included $0.8 billion of ETF sales. Total net outflows were $8.1 billion, compared with $3.9 billion last quarter.
Speaker #2: Turning to slide 11, asset flows. Total sales were $5.3 billion compared with $6.3 billion in the third quarter. Reviewing by product, institutional sales were $1.4 billion, versus $2 billion last quarter, which included the issuance of a $0.4 billion CLO.
Speaker #2: Retail billion, compared with $1.4 billion in the third separate account sales were $1.2 quarter. Open-end fund sales were $2.8 billion, consistent with the prior quarter, and included $0.8 billion of ETF sales.
Speaker #2: Total net outflows were $8.1 billion, compared with $3.9 billion last quarter. Reviewing by product, institutional net outflows of $3 billion were primarily due to redemptions of quality domestic and global large-cap growth strategies.
Michael Angerthal: Reviewing by product, institutional net outflows of $3 billion were primarily due to redemptions of quality, domestic, and global large cap growth strategies. Of the total gross outflows in the quarter, 75% were partial redemptions rather than full terminations. Retail separate accounts had net outflows of $2.5 billion, driven by quality, small, and midcap equity strategies. Open-end fund net outflows of $2.5 billion, compared with $1.1 billion last quarter, also driven by quality-oriented equity strategies, which more than offset positive ETF flows. ETFs continued to deliver strong momentum, generating $0.6 billion of positive net flows and sustaining a strong double-digit organic growth rate. Before turning to the financial results, I would note that outlook commentary that I provide beyond Q1 contemplates a full quarter impact of Keystone National. Turning to slide 12.
Mike Angerthal: Reviewing by product, institutional net outflows of $3 billion were primarily due to redemptions of quality, domestic, and global large cap growth strategies. Of the total gross outflows in the quarter, 75% were partial redemptions rather than full terminations. Retail separate accounts had net outflows of $2.5 billion, driven by quality, small, and midcap equity strategies. Open-end fund net outflows of $2.5 billion, compared with $1.1 billion last quarter, also driven by quality-oriented equity strategies, which more than offset positive ETF flows. ETFs continued to deliver strong momentum, generating $0.6 billion of positive net flows and sustaining a strong double-digit organic growth rate. Before turning to the financial results, I would note that outlook commentary that I provide beyond Q1 contemplates a full quarter impact of Keystone National. Turning to slide 12.
Speaker #2: Of the total gross outflows in the quarter, 75% were partial redemptions rather than full terminations. Retail separate accounts had net outflows of $2.5 billion, driven by quality small- and mid-cap equity strategies.
Speaker #2: Open-end fund net outflows of $2.5 billion, compared with $1.1 billion last quarter, were also driven by quality-oriented equity strategies, which more than offset positive ETF flows.
Speaker #2: ETFs continued to deliver strong momentum, generating $0.6 billion of positive net flows, and sustaining a strong double-digit organic growth rate. Before turning to the financial results, I would note that outlook commentary that I provide beyond the first quarter contemplates a full quarter impact of Keystone National.
Speaker #2: Turning to slide 12, investment management fees, as adjusted, were $168.9 million, down 4% due to lower average AUM and a modestly lower average fee rate.
Michael Angerthal: Investment management fees, as adjusted, were $168.9 million, down 4% due to lower average AUM at a modestly lower average fee rate. The average fee rate was 40.6 basis points, which compared with 41.1 basis points last quarter. For the first quarter, an average fee rate of 41 to 42 basis points is reasonable for modeling purposes. And looking beyond the first quarter, we anticipate the average fee rate will be in the range of 43 to 45 basis points. As always, the fee rate will be impacted by markets and the mix of assets. Slide 13 shows the 5-quarter trend in employment expenses. Total employment expenses, as adjusted, of $95.8 million, decreased 3% due to lower variable incentive compensation.
Mike Angerthal: Investment management fees, as adjusted, were $168.9 million, down 4% due to lower average AUM at a modestly lower average fee rate. The average fee rate was 40.6 basis points, which compared with 41.1 basis points last quarter. For the first quarter, an average fee rate of 41 to 42 basis points is reasonable for modeling purposes. And looking beyond the first quarter, we anticipate the average fee rate will be in the range of 43 to 45 basis points. As always, the fee rate will be impacted by markets and the mix of assets. Slide 13 shows the 5-quarter trend in employment expenses. Total employment expenses, as adjusted, of $95.8 million, decreased 3% due to lower variable incentive compensation.
Speaker #2: The average fee rate was 40.6 basis points, which compared with 41.1 basis points last quarter. For the first quarter, an average fee rate of 41 to 42 basis points is reasonable for modeling purposes.
Speaker #2: And looking beyond the first quarter, we anticipate the average fee rate will be in the range of 43 to 45 basis points. As always, the fee rate will be impacted by markets, and the mix of assets.
Speaker #2: Slide 13 shows the five-quarter trend in employment, adjusted to 95.8 million. Expenses decreased 3% due to lower total employment expenses as variable incentive compensation.
Speaker #2: As a percentage of revenues, employment expenses as adjusted were 50.7%, and within our range of 49% to 51%. As a reminder, the first quarter will include seasonal employment expenses, which are incremental to this range.
Michael Angerthal: As a percentage of revenues, employment expenses as adjusted were 50.7%, and within our range of 49% to 51%. As a reminder, the first quarter will include seasonal employment expenses, which are incremental to this range. Looking beyond the first quarter, we anticipate that employment expenses as a percentage of revenues will be in a range of 50% to 52%, as the benefit from the addition of Keystone is more than offset by the decline in equity AUM. As always, it will be variable based on market performance, in particular, as well as profits and sales. Turning to slide 14. Other operating expenses, as adjusted, were $30.2 million, down from $31.1 million due to discrete M&A-related costs in the prior quarter.
Mike Angerthal: As a percentage of revenues, employment expenses as adjusted were 50.7%, and within our range of 49% to 51%. As a reminder, the first quarter will include seasonal employment expenses, which are incremental to this range. Looking beyond the first quarter, we anticipate that employment expenses as a percentage of revenues will be in a range of 50% to 52%, as the benefit from the addition of Keystone is more than offset by the decline in equity AUM. As always, it will be variable based on market performance, in particular, as well as profits and sales. Turning to slide 14. Other operating expenses, as adjusted, were $30.2 million, down from $31.1 million due to discrete M&A-related costs in the prior quarter.
Speaker #2: Looking beyond the first quarter, we anticipate that employment expenses as a percentage of revenues will be in a range of 50% to 52%, as the benefit from the addition of Keystone is more than offset by the decline in equity AUM.
Speaker #2: As always, it will be variable based on market performance in particular, as well as profits and sales. Turning to slide 14, other operating expenses as adjusted were $30.2 million, down from $31.1 million, due to discrete M&A-related costs in the prior quarter.
Speaker #2: We have maintained other operating expenses within our 30 to 32 million dollar quarterly range for several years, and for modeling purposes, this remains appropriate for the first quarter.
Michael Angerthal: We have maintained other operating expenses within our $30 to 32 million quarterly range for several years, and for modeling purposes, this remains appropriate for Q1. Looking beyond Q1, we believe a quarterly range of $31 to 33 million is reasonable. Slide 15 illustrates the trend in earnings. Operating income, as adjusted, of $61.1 million, compared with $65 million in Q3, with the decline due to lower average assets, partially offset by lower operating expenses. The operating margin, as adjusted, of 32.4%, decreased 60 basis points from Q3. With respect to non-operating items, non-controlling interests of $1.5 million decreased from $2.1 million due to the increase in ownership of our majority-owned manager. For modeling purposes, this level is appropriate for Q1.
Mike Angerthal: We have maintained other operating expenses within our $30 to 32 million quarterly range for several years, and for modeling purposes, this remains appropriate for Q1. Looking beyond Q1, we believe a quarterly range of $31 to 33 million is reasonable. Slide 15 illustrates the trend in earnings. Operating income, as adjusted, of $61.1 million, compared with $65 million in Q3, with the decline due to lower average assets, partially offset by lower operating expenses. The operating margin, as adjusted, of 32.4%, decreased 60 basis points from Q3. With respect to non-operating items, non-controlling interests of $1.5 million decreased from $2.1 million due to the increase in ownership of our majority-owned manager. For modeling purposes, this level is appropriate for Q1.
Speaker #2: Looking beyond the first quarter, we believe a quarterly range of 31 to 33 million is reasonable. Slide 15 illustrates the trend in earnings. Operating income, as adjusted, was $61.1 million, compared with $65 million in the third quarter, with the decline due to lower average assets, partially offset by lower operating expenses.
Speaker #2: The operating margin as adjusted of 32.4% decreased 60 basis points from the third quarter. With respect to non-operating items, non-controlling interests of $1.5 million decreased from $2.1 million due to the increase in ownership of our majority-owned manager.
Speaker #2: For modeling purposes, this level is appropriate for the first quarter. Beyond the first quarter, we believe that a reasonable range for non-controlling interests will be 5 to 6 million, which factors in the Keystone minority ownership.
Michael Angerthal: Beyond the first quarter, we believe that a reasonable range for non-controlling interests will be $5 to 6 million, which factors in the Keystone minority ownership. Our effective tax rate of 25.3% was lower by 70 basis points sequentially due to an update to our blended state tax rate, and this rate is appropriate for modeling purposes in the first quarter. Beginning with the second quarter, we anticipate an effective tax rate of 23% to 24% due to the addition of Keystone. Net income, as adjusted, of $6.50 per diluted share, declined 3% from $6.69 in the prior quarter. Slide 16 shows the trend of our capital liquidity and select balance sheet items. Cash and equivalents at 31 December were $386 million.
Mike Angerthal: Beyond the first quarter, we believe that a reasonable range for non-controlling interests will be $5 to 6 million, which factors in the Keystone minority ownership. Our effective tax rate of 25.3% was lower by 70 basis points sequentially due to an update to our blended state tax rate, and this rate is appropriate for modeling purposes in the first quarter. Beginning with the second quarter, we anticipate an effective tax rate of 23% to 24% due to the addition of Keystone. Net income, as adjusted, of $6.50 per diluted share, declined 3% from $6.69 in the prior quarter. Slide 16 shows the trend of our capital liquidity and select balance sheet items. Cash and equivalents at 31 December were $386 million.
Speaker #2: Our effective tax rate of 25.3% was lower by 70 basis points sequentially due to an update to our blended state tax rate, and this rate is for the quarter.
Speaker #2: Beginning appropriately for modeling purposes in the first and the second quarters, we anticipate an effective tax rate of 23% to 24% due to the addition of Keystone.
Speaker #2: Net income, as adjusted, of $6.50 per diluted share declined 3% from $6.69 in the prior quarter. Slide 16 shows the trend of our capital, liquidity, and select balance sheet items.
Speaker #2: Cash and equivalents at December 31st were $386 million. In addition, we had $306 million of other investments, including seed capital, to support growth initiatives.
Michael Angerthal: In addition, we had $306 million of other investments, including seed capital, to support growth initiatives. The $1 million decline in outstanding debt reflected the quarterly required amortization payment on the new term loan. Gross debt to EBITDA was 1.3 times, and we ended the quarter with $13 million of net debt. During the fourth quarter, we repurchased 60,290 shares of common stock for $10 million. Other uses of capital during the quarter included the $40 million closing payment for Crescent Cove. That is included in the $61 million of investments equity method row, which also includes our minority investment in Zevenbergen, as well as $9 million for an increase in equity of our majority-owned manager, which was the last of the scheduled equity purchases.
Mike Angerthal: In addition, we had $306 million of other investments, including seed capital, to support growth initiatives. The $1 million decline in outstanding debt reflected the quarterly required amortization payment on the new term loan. Gross debt to EBITDA was 1.3 times, and we ended the quarter with $13 million of net debt. During the fourth quarter, we repurchased 60,290 shares of common stock for $10 million. Other uses of capital during the quarter included the $40 million closing payment for Crescent Cove. That is included in the $61 million of investments equity method row, which also includes our minority investment in Zevenbergen, as well as $9 million for an increase in equity of our majority-owned manager, which was the last of the scheduled equity purchases.
Speaker #2: The $1 million decline in outstanding debt reflected the quarterly required amortization payment on the new term loan. Gross debt to EBITDA was $1.3 times, and we ended the quarter with $13 million of net debt.
Speaker #2: During the fourth quarter, we repurchased 60,292 shares of common stock for $10 million. Other uses of capital during the quarter included the $40 million closing payment for Crescent Cove that is included in the $61 million of investments, equity method row, which also includes our minority investment in Zevenbergen.
Speaker #2: As well as $9 million for an increase in equity of our majority-owned manager, which was the last of the scheduled equity purchases. In the first quarter, cash usage will include our annual incentive payments—typically our highest operating cash outlay of the year—and the annual revenue participation payment, which we expect to approximate $22 million. This represents most of the remaining obligation.
Michael Angerthal: In Q1, cash usage will include our annual incentive payments, typically our highest operating cash outlay of the year, and the annual revenue participation payment, which we expect to approximate $22 million, which represents most of the remaining obligation. As previously mentioned, we will make the $200 million payment for Keystone National Group upon closing the transaction. Taking into account that payment and other Q1 activity, we would anticipate net leverage at 31 March of 1.2x EBITDA. With that, let me turn the call back over to George. George?
Mike Angerthal: In Q1, cash usage will include our annual incentive payments, typically our highest operating cash outlay of the year, and the annual revenue participation payment, which we expect to approximate $22 million, which represents most of the remaining obligation. As previously mentioned, we will make the $200 million payment for Keystone National Group upon closing the transaction. Taking into account that payment and other Q1 activity, we would anticipate net leverage at 31 March of 1.2x EBITDA. With that, let me turn the call back over to George. George?
Speaker #2: And as previously mentioned, we will make the $200 million payment for Keystone National upon closing the transaction. Taking into account that payment and other first quarter activity, we would anticipate net leverage at March 31st of $1.2 times EBITDA.
Speaker #2: With that, let me turn the call back over to George. George. Thank you, Mike. We will now take your questions. DeeDee, will you open up the lines,
Speaker #2: With that, let me turn the call back over to George. George. Thank you, Mike. We will now take your questions. DeeDee, will you open up the lines, please?
George Aylward: Thank you, Mike. We will now take your questions. Didi, will you open up the line, please?
George Aylward: Thank you, Mike. We will now take your questions. Didi, will you open up the line, please?
Speaker #3: Yes. 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.
Operator: Yes. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Ben Budish of Barclays. Your line is open.
Operator: Yes. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Ben Budish of Barclays. Your line is open.
Speaker #3: Please stand by while we compile the Q&A roster. And our first question comes from Ben Buddish of Barclays. Your line is
Speaker #3: open. Hi.
Ben Budish: Hi, good morning, and thank you for taking the question. Maybe first, just on the fee rate. You know, Mike, you gave some color on the quarter and the year. Just curious if you could flesh that out a little bit more. What was the driver of the fee rate compression in the quarter? I assume Q1 guidance is kind of based on what you're seeing year to date, and the full year is going to be benefited from Keystone, but just any more color on the underlying dynamics would be helpful.
Ben Budish: Hi, good morning, and thank you for taking the question. Maybe first, just on the fee rate. You know, Mike, you gave some color on the quarter and the year. Just curious if you could flesh that out a little bit more. What was the driver of the fee rate compression in the quarter? I assume Q1 guidance is kind of based on what you're seeing year to date, and the full year is going to be benefited from Keystone, but just any more color on the underlying dynamics would be helpful.
Speaker #4: Good morning, and thank you for taking the question. Maybe first, just on the fee rate, Mike, you gave some color on the quarter and the year.
Speaker #4: Just curious if you could flesh that out a little bit more. What was the driver of the fee rate compression in the quarter? I assume Q1 guidance is kind of based on what you're seeing year to date in the full year is going to be benefited from Keystone, but just any more color on the underlying dynamics would be
Speaker #4: helpful. Yeah.
Michael Angerthal: Yeah, as you know, we've operated our fee rate in a relatively narrow range for quite some time. I think if you normalize the 40.6 basis points in the Q1, you get to about 40.9, just under 41 basis points, as we had some discrete expenses, especially on the ETF side. So normalizing that, you have a kind of flat profile quarter-over-quarter. So we've been able to maintain that. And, you know, looking off of that 40.9, we gave the range in the Q1 of 41 to 42, so you have that level, and we're anticipating, you know, 1 month of impact from Keystone as we're on target for closing on 1 March, as we've talked about.
Mike Angerthal: Yeah, as you know, we've operated our fee rate in a relatively narrow range for quite some time. I think if you normalize the 40.6 basis points in the Q1, you get to about 40.9, just under 41 basis points, as we had some discrete expenses, especially on the ETF side. So normalizing that, you have a kind of flat profile quarter-over-quarter. So we've been able to maintain that. And, you know, looking off of that 40.9, we gave the range in the Q1 of 41 to 42, so you have that level, and we're anticipating, you know, 1 month of impact from Keystone as we're on target for closing on 1 March, as we've talked about.
Speaker #5: And as you know, we've operated our fee rate in a relatively narrow range for quite some time. I think if you normalize the 40.6 basis points in the first quarter, you get to about 40.9, just under 41 basis points as we had some discrete expenses, especially on the ETF side.
Speaker #5: So normalizing that, you have a kind of flat profile quarter over quarter. So we've been able to maintain that. And looking off of that 40.9, we gave the range in the first quarter of 41 to 42, level.
Speaker #5: And we're anticipating one month of impact from Keystone, as we're on target for closing on March 1st, as we've talked about.
Speaker #5: So when you factor in one month of Keystone in addition to where we ended the fourth quarter, we think that range is appropriate for modeling and represents our ability to keep our fee rate in that narrow range over
Michael Angerthal: So when you factor in one month of Keystone, in addition to where we ended the fourth quarter, you know, we think that that range is appropriate for modeling and represents our ability to keep our fee rate in that narrow range over time.
Mike Angerthal: So when you factor in one month of Keystone, in addition to where we ended the fourth quarter, you know, we think that that range is appropriate for modeling and represents our ability to keep our fee rate in that narrow range over time.
Speaker #5: time. Okay.
Ben Budish: Okay, helpful. And then maybe just a strategic question. I know you just did a transaction, so I apologize that we're already asking you about the next one. But you know, George, in your prepared remarks, you talked about, you know, market-wide headwinds, especially to kind of value-oriented strategies where you over-index. I'm just curious, you know. I understand over the last few years, the line of questioning has probably been more around private markets, private credit. But just as you're thinking about, you know, future transactions, do you see that as an avenue for additional diversification? You know, does it make sense to, you know, broaden your kind of growth equity footprint? And perhaps, could you remind us today, you know, how much of the AUM is more kind of growth versus value-oriented? Thank you.
Ben Budish: Okay, helpful. And then maybe just a strategic question. I know you just did a transaction, so I apologize that we're already asking you about the next one. But you know, George, in your prepared remarks, you talked about, you know, market-wide headwinds, especially to kind of value-oriented strategies where you over-index. I'm just curious, you know. I understand over the last few years, the line of questioning has probably been more around private markets, private credit. But just as you're thinking about, you know, future transactions, do you see that as an avenue for additional diversification? You know, does it make sense to, you know, broaden your kind of growth equity footprint? And perhaps, could you remind us today, you know, how much of the AUM is more kind of growth versus value-oriented? Thank you.
Speaker #4: Helpful. And then maybe just a strategic question. I know you just did a transaction, so I apologize that we're already asking you about the next one.
Speaker #4: But George, in your prepared remarks, you talked about market-wide headwinds especially to kind of value-oriented strategies where you over-index. I'm just curious I understand over the last few years the line of questioning has probably been more around private markets, private credit, but just as you're thinking about future transactions, do you see that as an avenue for additional diversification?
Speaker #4: Does it make sense to broaden your kind of growth equity footprint, and perhaps could you remind us today how much of the AUM is more kind of growth versus value-oriented?
Speaker #4: Thank you.
Speaker #5: Sure. And so, a couple of things. I think as we think about diversification, in addition to diversifying our offerings—right? So, our goal is to provide the building blocks for well-diversified portfolios.
George Aylward: Sure. And, so a couple of things. So I think as we think about diversification in, in addition to diversifying our offerings, right? So our goal is to provide, you know, the building blocks for well-diversified portfolio, so we continue to build those out. But the other area of diversification we also think about a lot is, where our clients are and what channels we're in. So I think when we previously talked about M&A, we've, we've obviously talked about adding compelling, differentiated strategies. We've also said areas of interest to us would include those things that would either broaden our, our, our distribution footprint, particularly outside the US, as well as in other channels where we think there's more opportunity for us to, to garner penetration.
George Aylward: Sure. And, so a couple of things. So I think as we think about diversification in, in addition to diversifying our offerings, right? So our goal is to provide, you know, the building blocks for well-diversified portfolio, so we continue to build those out. But the other area of diversification we also think about a lot is, where our clients are and what channels we're in. So I think when we previously talked about M&A, we've, we've obviously talked about adding compelling, differentiated strategies. We've also said areas of interest to us would include those things that would either broaden our, our, our distribution footprint, particularly outside the US, as well as in other channels where we think there's more opportunity for us to, to garner penetration.
Speaker #5: So we continue to build those out. But the other area of diversification we also think about a lot is where our clients are and what channels we're in.
Speaker #5: So I think when we previously talked about M&A, we've obviously talked about adding compelling differentiated strategies. We've also said areas of interest to us would include those things that would either broaden our distribution footprint, particularly outside the US, as well as in other channels where we think there's more opportunity for us to garner penetration.
George Aylward: In terms of overall strategies, again, a lot of dialogues around private markets, and we do agree that private markets have an important place in a portfolio, but that's not the 100% of the portfolio. So we do continue to think about the other elements of the traditional managers. Right now, as we're living through an overweight towards what I would define as quality-oriented strategies, which include both, you know, core value and growth, but of a quality nature. We do have other managers who are more growth equity. They've been our smaller managers, but I think as we said on a previous call last quarter as well, we've actually seen growth there. They're just unfortunately smaller than our largest managers that have more of that quality orientation.
Speaker #5: In terms of overall strategies, again, a lot of the dialogues around private markets—and we do agree that private markets have an important place in a portfolio—but that's not 100% of the portfolio.
George Aylward: In terms of overall strategies, again, a lot of dialogues around private markets, and we do agree that private markets have an important place in a portfolio, but that's not the 100% of the portfolio. So we do continue to think about the other elements of the traditional managers. Right now, as we're living through an overweight towards what I would define as quality-oriented strategies, which include both, you know, core value and growth, but of a quality nature. We do have other managers who are more growth equity. They've been our smaller managers, but I think as we said on a previous call last quarter as well, we've actually seen growth there. They're just unfortunately smaller than our largest managers that have more of that quality orientation.
Speaker #5: So, we do continue to think about the other elements of the traditional managers. Right now, as we're living through an overweight towards what I would define as quality-oriented strategies—which include both core value and growth, but of a quality nature—we do have other managers who are more growth equity.
Speaker #5: They've been our smaller managers, but I think as we said on a previous call, last quarter, as well, we've actually seen growth there. They're just unfortunately smaller than our largest managers that have more of that quality orientation.
Speaker #5: So, a lot of the ETFs and SMAs that we've been launching over the last quarter or two have been in those other kind of growth equity managers.
George Aylward: So a lot of the ETFs and SMAs that we've been launching over the last quarter or two have been in those other kind of growth equity managers, and particularly where we see areas outside of the traditional, you know, US-based, so some non-US strategies as well as that. So we've been focusing in on, like, Silvant, which is not a quality-oriented manager, it's more style agnostic. That has been an area of growth for us, and we've created several ETFs that have already launched, several are in filing. So we continue to work on those strategies. And even within some of our value managers, who are classic value managers, some of them have actually had very strong, compelling performance in the recent quarters, and we look for opportunities to grow those.
George Aylward: So a lot of the ETFs and SMAs that we've been launching over the last quarter or two have been in those other kind of growth equity managers, and particularly where we see areas outside of the traditional, you know, US-based, so some non-US strategies as well as that. So we've been focusing in on, like, Silvant, which is not a quality-oriented manager, it's more style agnostic. That has been an area of growth for us, and we've created several ETFs that have already launched, several are in filing. So we continue to work on those strategies. And even within some of our value managers, who are classic value managers, some of them have actually had very strong, compelling performance in the recent quarters, and we look for opportunities to grow those.
Speaker #5: And particularly where we see areas outside of the traditional U.S. basis, so some non-U.S. strategies as well as that. So we've been focusing in on Silvent, which is not a quality-oriented manager.
Speaker #5: It's more style-agnostic. That has been an area of growth for us, and we've created several ETFs that have already launched, or are filing, so we continue to work on those strategies.
Speaker #5: And even within some of our value managers who are classic value managers, some of them have actually had very strong compelling performance in the recent quarters, and we look for opportunities to grow those.
Speaker #5: So, we'll continue to evaluate other things that we can add through M&A, but again, it wouldn't only be limited to those things which provide another investment strategy.
George Aylward: So we'll continue to evaluate other things that we can add through M&A, but again, it wouldn't only be limited to those things which provide another investment strategy. It could be things that have other strategic elements to help just overall drive growth on the long term.
George Aylward: So we'll continue to evaluate other things that we can add through M&A, but again, it wouldn't only be limited to those things which provide another investment strategy. It could be things that have other strategic elements to help just overall drive growth on the long term.
Speaker #5: It could be things that have other strategic elements to drive growth on the long help just overall term.
Speaker #3: All right. Great. Thank you
Bill Katz: All right, great. Thank you both.
Ben Budish: All right, great. Thank you both.
George Aylward: Mm-hmm. Thank you.
George Aylward: Mm-hmm. Thank you.
Speaker #5: Thank you.
Speaker #2: Thank
Operator: Thank you. And our next question comes from Crispin Love of Piper Sandler. Your line is open.
Operator: Thank you. And our next question comes from Crispin Love of Piper Sandler. Your line is open.
Speaker #2: You. And our next question both comes from Crispin Love of Piper Sandler. Your line is open.
Speaker #3: Thank you. Good morning. I appreciate you taking my question. First, can you share what your software exposure is across your AUM, and then, relatedly, just exposure at Crescent Cove Advisors, given their focus in technology? And just overall thoughts, given the news that's been permeating the headlines this week?
Crispin Love: Thank you. Good morning. Appreciate you taking my question. First, can you share what your software exposure is across your AUM, and then relatedly, just exposure at Crescent Cove Advisors, given their focus in technology, and just overall thoughts, just given the news that's been permeating the headlines this week?
Crispin Love: Thank you. Good morning. Appreciate you taking my question. First, can you share what your software exposure is across your AUM, and then relatedly, just exposure at Crescent Cove Advisors, given their focus in technology, and just overall thoughts, just given the news that's been permeating the headlines this week?
George Aylward: So in terms of overall just technology and software exposure?
George Aylward: So in terms of overall just technology and software exposure?
Speaker #5: In terms of overall technology and software exposure—yeah, I
Speaker #3: Yes.
Crispin Love: Yes.
Crispin Love: Yes.
George Aylward: Yeah, I mean, you know, one of the things that has been a drag on the performance of some of our quality-oriented equities is they are just generally, as a rule, underweight areas of technology. So that's why this recent period, you know, in particular yesterday, was actually very good for many of our managers. You know, so generally, I think as a complex, we are underweight exposure to technology, but again, not all technology is created equal, right? So there are some that will actually meet the definition of some of our managers and some will not. And in terms of Crescent Cove, I mean, they're in a different part of the market as it relates to the venture part and the earlier growth opportunities.
George Aylward: Yeah, I mean, you know, one of the things that has been a drag on the performance of some of our quality-oriented equities is they are just generally, as a rule, underweight areas of technology. So that's why this recent period, you know, in particular yesterday, was actually very good for many of our managers. You know, so generally, I think as a complex, we are underweight exposure to technology, but again, not all technology is created equal, right? So there are some that will actually meet the definition of some of our managers and some will not. And in terms of Crescent Cove, I mean, they're in a different part of the market as it relates to the venture part and the earlier growth opportunities.
Speaker #5: That has been a drag on the performance of some of our quality-oriented, I mean, one of the things just generally, as a rule, is underweight areas of technology.
Speaker #5: So that's why this recent period, in particular yesterday, was actually very manager-driven. So generally, I think as a complex, we are underweight exposure to technology, but again, not all technology is created equal, right?
Speaker #5: So, there are some that will actually meet the definition of some of our managers, and some will not. And then, in terms of Crescent Cove, I mean, they're in a different part of the market as it relates to the venture part and the earlier growth opportunities.
George Aylward: So, so again, that is an area of focus for them, and again, I think long term, that continues to be a compelling area of investment. Mike, any other anecdotes you would add?
George Aylward: So, so again, that is an area of focus for them, and again, I think long term, that continues to be a compelling area of investment. Mike, any other anecdotes you would add?
Speaker #5: them. And again, I think long-term that continues to be a compelling area of investment. Mike, any other anecdotes you would
Speaker #5: Add? So I would just—so, again, that is an area of focus for—
Michael Angerthal: I would just say at Crescent, they don't have specific holdings that are at risk of being disintermediated by AI. So as George said, those are early-stage entities. But you highlighted the key point in the existing portfolio for Virtus, we're well underweight some of these software names.
Mike Angerthal: I would just say at Crescent, they don't have specific holdings that are at risk of being disintermediated by AI. So as George said, those are early-stage entities. But you highlighted the key point in the existing portfolio for Virtus, we're well underweight some of these software names.
Speaker #3: say at Crescent, they don't have specific holdings that are at disintermediated by risk of being AI. So as George said, those are early-stage entities.
Speaker #3: But you highlighted the key point in the existing portfolio for Virtus. We're well underweight some of these software
Speaker #3: names. Great.
Crispin Love: Great. Thank you. That's what I thought, but just wanted to make sure, and all very helpful color there. And then can you just dig into the flow picture from the fourth quarter, and then as you look forward, just fourth quarter was very challenging across open-end SMAs institutional. Can you just discuss a little bit what drove the acceleration in negative flows quarter to quarter? The storyline seemed to be roughly similar from the third quarter commentary. And then just as you look at the fourth quarter moving to the first and kind of the longer term outlook, just how you feel about the flows. Thank you.
Crispin Love: Great. Thank you. That's what I thought, but just wanted to make sure, and all very helpful color there. And then can you just dig into the flow picture from the fourth quarter, and then as you look forward, just fourth quarter was very challenging across open-end SMAs institutional. Can you just discuss a little bit what drove the acceleration in negative flows quarter to quarter? The storyline seemed to be roughly similar from the third quarter commentary. And then just as you look at the fourth quarter moving to the first and kind of the longer term outlook, just how you feel about the flows. Thank you.
Speaker #4: Thank you. That's what I thought, but just wanted to make sure and all very helpful color there. And then let's dig into the flow picture from the fourth quarter.
Speaker #4: And then as you look forward, just—fourth quarter was very challenging across open-end SMAs, institutional. Can you just discuss a little bit what drove the acceleration in negative flows quarter to quarter? The storyline seemed to be roughly similar from the third quarter commentary.
Speaker #4: And then, just as you look at the fourth quarter moving to the first, and kind of the flows. Thank you.
Speaker #4: Longer-term outlook—just how you feel about it. Yeah.
George Aylward: Yeah, and as you said, and as we said in our remarks, you know, it was definitely a challenging quarter, right? So our quality—you know, we're overweight, half of our AUMs in quality-oriented equity strategies. They've had the longest period of underperformance versus more momentum types of strategies in decades. That has been quite a challenge. You know, as that culminated in the fourth quarter, again, fourth quarter, a lot of time will there be, you know, either traditional just tax loss harvesting or other repositionings of portfolios for year-end. So it was a higher level of outflows than we had seen previously. But what that means going forward, you know, it's hard to know, right? It all depends on what does that market environment look like, right?
George Aylward: Yeah, and as you said, and as we said in our remarks, you know, it was definitely a challenging quarter, right? So our quality—you know, we're overweight, half of our AUMs in quality-oriented equity strategies. They've had the longest period of underperformance versus more momentum types of strategies in decades. That has been quite a challenge. You know, as that culminated in the fourth quarter, again, fourth quarter, a lot of time will there be, you know, either traditional just tax loss harvesting or other repositionings of portfolios for year-end. So it was a higher level of outflows than we had seen previously. But what that means going forward, you know, it's hard to know, right? It all depends on what does that market environment look like, right?
Speaker #5: in our remarks, it was definitely a And as you said, and as we said challenging quarter, right? So our quality, we're overweight half of our AUMs in quality-oriented equity strategies.
Speaker #5: They've had the longest period of underperformance versus more momentum types of strategies—in decades. That has been quite a challenge. As that culminated in the fourth quarter—again, fourth, be it either quarter—a lot of times, there are traditional just tax-loss harvesting or other repositionings of portfolios for year-end.
Speaker #5: So it was a higher level of outflows than we have seen previously. But what that means going forward, it's hard to know, right? It all depends on what is that market environment look like, right?
Speaker #5: If the market environment that we've seen in the last month and five days were to continue, as I alluded to, that's actually been an incredibly strong environment for some of those same earlier calls, generally when there are strategies.
George Aylward: If the market environment that we've seen in the last month and five days were to continue, as I alluded to, that's actually been an incredibly strong environment for some of those same strategies. I think, as I said on an earlier call, generally, when there's an inflection in the cycle, is usually when you have some of the strongest performance from some of these strategies. It's still way too early. No one knows what that's gonna look like... which goes to an earlier question that I had, is why we continue to focus not only on, you know, the opportunity for when these strategies return to favor, but to continue to look for opportunities to grow our other strategies that don't have the same quality equity kind of orientation.
George Aylward: If the market environment that we've seen in the last month and five days were to continue, as I alluded to, that's actually been an incredibly strong environment for some of those same strategies. I think, as I said on an earlier call, generally, when there's an inflection in the cycle, is usually when you have some of the strongest performance from some of these strategies. It's still way too early. No one knows what that's gonna look like... which goes to an earlier question that I had, is why we continue to focus not only on, you know, the opportunity for when these strategies return to favor, but to continue to look for opportunities to grow our other strategies that don't have the same quality equity kind of orientation.
Speaker #5: And I think, as I said, on an inflection in the cycle, it's usually when you have some of the strongest performance from some of these strategies.
Speaker #5: It's still way too early. No one knows what that's going to look like. Which goes to an earlier question that I had: why do we continue to focus not only on these strategies' return to favor, but continue to look for the opportunity for when opportunities arise to grow our other strategies that don't have the same quality equity kind of orientation.
Speaker #5: So our hope is that the long-term value of the quality-oriented equity strategies will demonstrate itself and people will again avail themselves of those strategies.
George Aylward: So, you know, our hope is that the long-term value of the quality-oriented equity strategies will demonstrate itself, and people will, again, you know, avail themselves of those strategies. But in the meantime, we're looking to grow other areas of the business.
George Aylward: So, you know, our hope is that the long-term value of the quality-oriented equity strategies will demonstrate itself, and people will, again, you know, avail themselves of those strategies. But in the meantime, we're looking to grow other areas of the business.
Speaker #5: But in the meantime, we're looking to grow other areas of the business.
Speaker #3: Great. Thank you. And appreciate you taking my question.
Michael Angerthal: Great. Thank you, and appreciate you taking my question.
Crispin Love: Great. Thank you, and appreciate you taking my question.
Speaker #5: Sure. No, thank
George Aylward: Okay. No, thank you.
George Aylward: Okay. No, thank you.
Speaker #5: you. Thank
Operator: Thank you. Our next question comes from Bill Katz of TD Cowen. Your line is open.
Operator: Thank you. Our next question comes from Bill Katz of TD Cowen. Your line is open.
Speaker #2: you. And our next question comes from Bill Katz of TD Cowan. Your line is
Speaker #2: open. Great.
Bill Katz: Great. Excuse me. Thank you very much for taking the questions. So first question is just in terms of the Keystone transaction. Now that you've had a little more time to interact with the management team post the announcement from a few weeks ago, can you talk a little bit about maybe any kind of refined go-to-market opportunity? I think you spoke to potentially leveraging it through your distribution channel and/or institutional, which makes a ton of sense. But just where do you see the greatest opportunity for that growth, by channel, by geography? I'd love to hear your perspective on that. Thank you.
Bill Katz: Great. Excuse me. Thank you very much for taking the questions. So first question is just in terms of the Keystone transaction. Now that you've had a little more time to interact with the management team post the announcement from a few weeks ago, can you talk a little bit about maybe any kind of refined go-to-market opportunity? I think you spoke to potentially leveraging it through your distribution channel and/or institutional, which makes a ton of sense. But just where do you see the greatest opportunity for that growth, by channel, by geography? I'd love to hear your perspective on that. Thank you.
Speaker #3: Excuse me. Thank you very much for taking the questions. So, first question is just in terms of the Keystone transaction. Now that you've had a little more time to interact with the management team post the announcement from a few weeks ago, can you talk a little bit about maybe any kind of refined go-to-market opportunity?
Speaker #3: I think you spoke to potentially leveraging it through your distribution channel and/or institutional, which makes a ton of sense. But just—where do you see the greatest opportunity for that growth, by channel or by geography?
Speaker #3: I'd love to hear your perspective on that. Thank you.
George Aylward: Yeah, no, great. Great question. And we've had lots of conversations with management, and prior to and post-transaction, and I think one of the joint goals is the excitement that we all have about the opportunity to leverage what they currently have and have been very successful with in the wealth management channel, with our broader distribution resources. So our sales teams have spent multiple sessions being trained and prepped, and they're all very excited and very eager to introduce those capabilities to not only our existing relationships, but as well as other relationships that we can more easily develop now that we have access to this. So we think there's a great opportunity set going forward.
George Aylward: Yeah, no, great. Great question. And we've had lots of conversations with management, and prior to and post-transaction, and I think one of the joint goals is the excitement that we all have about the opportunity to leverage what they currently have and have been very successful with in the wealth management channel, with our broader distribution resources. So our sales teams have spent multiple sessions being trained and prepped, and they're all very excited and very eager to introduce those capabilities to not only our existing relationships, but as well as other relationships that we can more easily develop now that we have access to this. So we think there's a great opportunity set going forward.
Speaker #5: And we've had lots of conversations with management and prior to and post-transaction. And I think one of the joint goals is the excitement that we all have about the leverage what they currently have and have been opportunity to very successful with in the wealth management channel with our Yeah.
Speaker #5: Teams have spent multiple—no, great. Great question. Teams have spent multiple sessions being trained and prepped, and they're all very excited and very eager to introduce those capabilities to not only our existing relationships, but as well as other relationships that we can more easily develop now that we have access to this.
Speaker #5: So we think there's a great opportunity set going forward. We do think the approach that they take on the private credit side, which is asset-based in nature as opposed to the direct lending, is a very differentiated approach.
George Aylward: We do think the approach that they take on the private credit side, which is asset-based in nature, as opposed to the direct lending, is a very differentiated approach. Their main vehicle does not utilize the higher level of leverage that some of the competitors do. So we think there's a great opportunity. And the fund they have is already retail ready. It's already being utilized by wealth management firms. As I said in the prepared remarks, we believe we can accelerate that meaningfully. So that does create what would logically be the earliest opportunity set, right? Is to leverage what they've already built. It is already attractive in the wealth management space, but just through the more extensive resources that we currently have.
George Aylward: We do think the approach that they take on the private credit side, which is asset-based in nature, as opposed to the direct lending, is a very differentiated approach. Their main vehicle does not utilize the higher level of leverage that some of the competitors do. So we think there's a great opportunity. And the fund they have is already retail ready. It's already being utilized by wealth management firms. As I said in the prepared remarks, we believe we can accelerate that meaningfully. So that does create what would logically be the earliest opportunity set, right? Is to leverage what they've already built. It is already attractive in the wealth management space, but just through the more extensive resources that we currently have.
Speaker #5: Their main vehicle does not utilize the higher level of leverage that some of the competitors do. So we think there's a great opportunity. The fund they have is already retail-ready.
Speaker #5: It's already being utilized by wealth management firms. As I said in the prepared remarks, we believe we can accelerate that meaningfully. So that does create what would logically be the earliest opportunity set, right?
Speaker #5: It's to leverage what they've already built and what is already attractive in the wealth management space, but just through the more extensive resources that we currently have.
Speaker #5: But as I also mentioned, we think there are some really interesting opportunities on the institutional side, where this strategy—again, as a complement to other types of private credit—could be very compelling.
George Aylward: But as I also mentioned, we think there's some really interesting opportunities on the institutional side, where this strategy, again, as a complement to other types of private credit, could be very compelling. So overall, we, you know, we entered into this transaction because we thought there was a great combination that could create some long-term growth. The teams that are responsible for driving that growth are all very excited about this opportunity, so we're gonna continue to refine that. And as Mike alluded to, you know, we're on target for, you know, our closing transaction date, and we're getting everything prepared in advance of that. So our sales teams will...
George Aylward: But as I also mentioned, we think there's some really interesting opportunities on the institutional side, where this strategy, again, as a complement to other types of private credit, could be very compelling. So overall, we, you know, we entered into this transaction because we thought there was a great combination that could create some long-term growth. The teams that are responsible for driving that growth are all very excited about this opportunity, so we're gonna continue to refine that. And as Mike alluded to, you know, we're on target for, you know, our closing transaction date, and we're getting everything prepared in advance of that. So our sales teams will...
Speaker #5: So, overall, we entered into this transaction because we thought there was a great combination that could create some long-term growth. The teams that are responsible for driving that growth are all very excited about this opportunity.
Speaker #5: So we're going to continue to refine that. And as Mike alluded to, we're on target for our closing transaction date, and we're getting everything prepared in advance of that.
Speaker #5: So our sales teams will—we’re not waiting to close, to get educated, and do our planning—but all of the plans are in place, and the material and everything.
George Aylward: We're not waiting to close to get educated and do our planning, but all of the plans are in place and the material and everything, so we're very excited and look forward to closing on the transaction.
George Aylward: We're not waiting to close to get educated and do our planning, but all of the plans are in place and the material and everything, so we're very excited and look forward to closing on the transaction.
Speaker #5: So we're very excited and look forward to closing on the transaction.
Speaker #3: Okay, thank you. And just a follow-up and a clarification. On the follow-up, I was wondering if you could speak a little bit to maybe the capital deployment priorities, and how that might be shifting given you have Keystone and Crescent sort of in the wings here.
Bill Katz: Okay, thank you. And just a follow-up and a clarification. On the follow-up, I was wondering if you could speak a little bit to maybe the capital deployment priorities and how that might be shifting, given you have Keystone and Crescent sort of in the wings here, versus how the stock has been behaving. I appreciate the buyback. But any sort of shift in your allocation thought process? And then on the deal pipeline, sorry, not to say, "What have you done for me lately?" But how does that pipeline look today, you know, net of the Keystone and Crescent transactions? Thank you.
Bill Katz: Okay, thank you. And just a follow-up and a clarification. On the follow-up, I was wondering if you could speak a little bit to maybe the capital deployment priorities and how that might be shifting, given you have Keystone and Crescent sort of in the wings here, versus how the stock has been behaving. I appreciate the buyback. But any sort of shift in your allocation thought process? And then on the deal pipeline, sorry, not to say, "What have you done for me lately?" But how does that pipeline look today, you know, net of the Keystone and Crescent transactions? Thank you.
Speaker #3: Versus how the stock has been behaving. I appreciate the buyback. But any sort of shift in your allocation thought process? And then on the deal pipeline, sorry not to say what have you done for me lately, but how does that pipeline look today?
Speaker #3: Net of the Keystone and Crescent transactions?
Speaker #3: you. Sure.
George Aylward: Sure. In terms of priorities, again, we always take a balanced approach, and in different periods, we'll either overemphasize repurchases, we'll overemphasize investments in organic growth, and we always look to maintain a reasonable level of leverage. So I wouldn't say, you know... Right now, having just completed two transactions, Mike has spoken to our upcoming obligations, which we will need to satisfy, but we will continue to place an emphasis on other areas such as repurchases, which generally we have a long history of continued stock repurchase program, with periodic pauses when we have other capital needs, as well as a dividend. We do think the dividend is an important element of return to shareholders.
George Aylward: Sure. In terms of priorities, again, we always take a balanced approach, and in different periods, we'll either overemphasize repurchases, we'll overemphasize investments in organic growth, and we always look to maintain a reasonable level of leverage. So I wouldn't say, you know... Right now, having just completed two transactions, Mike has spoken to our upcoming obligations, which we will need to satisfy, but we will continue to place an emphasis on other areas such as repurchases, which generally we have a long history of continued stock repurchase program, with periodic pauses when we have other capital needs, as well as a dividend. We do think the dividend is an important element of return to shareholders.
Speaker #5: In terms of priorities, again, we always take a balanced approach. And in different periods, we'll either overemphasize, repurchases, we'll overemphasize investments in organic growth, and we always look to maintain a reasonable level of leverage.
Speaker #5: Right now, having just completed two SOI transactions, Mike has spoken to our upcoming obligations, which we will need to satisfy, but we will continue to place an emphasis on other areas such as repurchases.
Speaker #5: We generally have a long history of a continued stock repurchase program, with periodic pauses when we have other capital needs. As well as the dividend—we do think the dividend is an important element of return to shareholders.
Speaker #5: I believe we've had eight annual dividend increases, so that will continue to be something that we prioritize. And as we've always said for M&A, that really is related to only when we have an opportunity that we truly believe is of strategic value to build long-term shareholder value, and relative to our other alternatives.
George Aylward: I believe we've had 8 annual dividend increases, so that will continue to be something that we prioritize. And as we've always said for M&A, that really is related to only when we have an opportunity that we truly believe is of strategic value to build long-term shareholder value and relative to our other alternatives. In terms of that pipeline, and again, having just completed 2, which as I assume you understand, took a lot of our time, there are still opportunities that are out there. We still continue to evaluate and consider....
George Aylward: I believe we've had 8 annual dividend increases, so that will continue to be something that we prioritize. And as we've always said for M&A, that really is related to only when we have an opportunity that we truly believe is of strategic value to build long-term shareholder value and relative to our other alternatives. In terms of that pipeline, and again, having just completed 2, which as I assume you understand, took a lot of our time, there are still opportunities that are out there. We still continue to evaluate and consider....
Speaker #5: In terms of that pipeline, and again, having just completed two, which is I assume you understand took a lot of our time, there are still that are opportunities that are out there.
Speaker #5: We still continue to evaluate and consider. But as always, we'll only evaluate and move forward with something if we truly believe it's additive in terms of the capability; it's additive in terms of broadening our distribution footprint; or in other areas such as increases in scale—this is a scale business.
George Aylward: But as always, we'll only evaluate and move forward with something if we truly believe it's additive in terms of the capability, it's additive in terms of broadening our distribution footprint, or in other areas, such as, you know, increases in scale, dramatic. This is a scale business, so that is something that we also consider as much.
George Aylward: But as always, we'll only evaluate and move forward with something if we truly believe it's additive in terms of the capability, it's additive in terms of broadening our distribution footprint, or in other areas, such as, you know, increases in scale, dramatic. This is a scale business, so that is something that we also consider as much.
Speaker #5: So, that is something that we also consider as much.
Speaker #3: Okay. And just one clarification from Mike. Just in terms of the guidance, I think I picked them all up. I may have just not heard, or it didn't come out.
Bill Katz: Okay, and just one clarification for Mike, just in terms of the guidance. I think I picked them all up. I may have just not heard or it; it didn't come out. For Q1, how should we think about the comp ratio? I appreciate the seasonal dynamic, but any sense in the ratio, just given some of the moving parts between the top line and the comp line?
Bill Katz: Okay, and just one clarification for Mike, just in terms of the guidance. I think I picked them all up. I may have just not heard or it; it didn't come out. For Q1, how should we think about the comp ratio? I appreciate the seasonal dynamic, but any sense in the ratio, just given some of the moving parts between the top line and the comp line?
Speaker #3: For the first quarter, how should we think about the comp ratio? I appreciate the seasonal dynamic, but any sense in the ratio? Just give me some of the moving parts between the top line and the comp line.
Speaker #2: Yeah. As you know, the seasonal items do come forward in the first quarter. But our 49% to 51% range is appropriate for the first quarter.
Michael Angerthal: Yeah, I, as you know, the seasonal items do come forward in Q1. But our 49% to 51% range is appropriate for Q1, and then moving forward, we talked about 50 to 52 once we feather in Keystone.
Mike Angerthal: Yeah, I, as you know, the seasonal items do come forward in Q1. But our 49% to 51% range is appropriate for Q1, and then moving forward, we talked about 50 to 52 once we feather in Keystone.
Speaker #2: And then, moving forward, we talked about 50 to 52 once we feather in Keystone.
Speaker #3: Okay. Sorry if I missed it. Thank you for taking the questions.
Bill Katz: Okay. Sorry if I missed it. Thank you for taking the questions.
Bill Katz: Okay. Sorry if I missed it. Thank you for taking the questions.
Speaker #2: Thank
Speaker #2: you. Thank you.
Michael Angerthal: Thank you.
Mike Angerthal: Thank you.
Operator: Thank you. That concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.
Operator: Thank you. That concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.
Speaker #1: That concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.
Speaker #4: Okay. Well, I want to thank everyone again, as always, for joining us, and certainly encourage you to reach out if there are any further questions.
George Aylward: Okay. Well, I wanna thank everyone again, as always, for joining us, and I certainly encourage you to reach out if there's any other further questions. Thank you very much.
George Aylward: Okay. Well, I wanna thank everyone again, as always, for joining us, and I certainly encourage you to reach out if there's any other further questions. Thank you very much.
Speaker #4: Thank you very much.
Operator: That concludes today's call. Thank you for participating, and you may now disconnect.
Operator: That concludes today's call. Thank you for participating, and you may now disconnect.
