Artisan Partners(APAM) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, revenues increased by 6% compared to Q3 2024 and by 19% year-over-year [34][38] - Adjusted operating income rose by 12% sequentially and by 37% compared to the same quarter last year [40] - Assets under management (AUM) at the end of December 2024 were $161 billion, down 4% from the previous quarter but up 7% from the end of 2023 [35] - The weighted average recurring fee rate for the quarter, excluding performance fees, was 68 basis points, while including performance fees, it was 72 basis points [39][40] Business Line Data and Key Metrics Changes - In 2024, 13 out of 25 investment strategies achieved net inflows, with 10 strategies exceeding$ 100 million in inflows [12] - The Denver-based credit team raised $1.7 billion in net inflows, while the Boston-based EMsights Capital Group raised$ 1.9 billion, collectively managing nearly $15 billion across six strategies [15][16] - The fixed income business experienced positive flows for 10 consecutive quarters and 11 consecutive years [36] Market Data and Key Metrics Changes - Average AUM for Q4 2024 was up 2% sequentially and up 18% compared to Q4 2023, with full-year average AUM improving by 15% [36] - The international value fund now represents approximately 25% of the platform, indicating significant growth [52] Company Strategy and Development Direction - The company aims to build its investment platform by developing existing franchises and adding new talent, focusing on high value-added investments [32] - The firm emphasizes capacity management to ensure performance is not compromised, particularly in the international value strategy [56][57] - The company is exploring opportunities in alternative investments, particularly in real estate credit and equity [86][90] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious approach from clients regarding capital allocation due to macroeconomic uncertainties, expecting moderate strategic moves rather than wholesale changes [70][71] - The firm is well-positioned to capture volatility in global markets, which presents active management opportunities [74] Other Important Information - The company declared a quarterly dividend of$ 0.84 per share and a year-end special dividend of $0.50, totaling$ 3.48 per share for 2024, a 25% increase from 2023 [45][46] - The firm has a strong balance sheet with $155 million in seed capital and a$ 100 million unused revolving credit facility [44] Q&A Session Summary Question: Thoughts on organic growth rate and fee rate - Management indicated that foundational assets have contributed to a decrease in fee rates, particularly in fixed income strategies [58] Question: Dividend payout ratio and seed capital needs - The payout ratio is expected to remain in the mid-90% range, with some gains from seed capital realized in 2024 [63] Question: Response to volatility in global and international emerging markets - Management noted a hesitance in client behavior due to macroeconomic factors, expecting only modest changes in asset allocation [70][71] Question: Significant milestones for strategies in 2025 - The Developing World fund will celebrate its 10-year anniversary, and the International Explorer strategy will hit its three-year milestone [82][83] Question: Update on private markets and alternative investments - The firm is methodically building out its investment strategy group and exploring opportunities in alternatives, particularly in real estate [86][90]