Workflow
Artisan Partners(APAM) - 2025 Q1 - Earnings Call Transcript
APAMArtisan Partners(APAM)2025-04-30 17:00
Filings
Slide

Financial Data and Key Metrics Changes - First quarter results showed a 7% decline in revenues primarily due to the absence of 17millioninperformancefeesfromthepreviousquarter[25]−Adjustedoperatingincomedecreasedby1917 million in performance fees from the previous quarter [25] - Adjusted operating income decreased by 19% sequentially and adjusted operating margin fell by 470 basis points from the previous quarter [25] - Assets under management (AUM) at the end of March were 162 billion, reflecting a slight increase from the previous quarter and the same period last year [26] - Average AUM for the quarter increased by 1% sequentially and 8% year-over-year [27] - Adjusted net income per adjusted share declined by 21% compared to the last quarter but increased by 9% year-over-year [29] Business Line Data and Key Metrics Changes - The firm has seen eleven consecutive quarters of positive fixed income flows, with net client cash outflows of approximately 2.8billioninthefirstquarter[26][27]−Theintermediatedwealthchannelnowaccountsfor602.8 billion in the first quarter [26][27] - The intermediated wealth channel now accounts for 60% of total AUM, with an annualized organic growth rate of 5% over the past five years [27][28] - New strategies launched include the Artisan Global Special Situation strategy and the Artisan franchise strategy, targeting high-value clients [14][17] Market Data and Key Metrics Changes - The firm reported 4.1 billion in market returns, including 1.8billionor110basispointsofreturnsinexcessofbenchmarks[26]−Theinstitutionalbusinesshasfacedpressure,butthefirmbelievesitwillmaintainsolidgrowth,particularlyintheintermediatedwealthchannel[57]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonexpandingitscapabilitiesinfixedincomeandalternatives,particularlyintheretailandinsurancechannels[35]−Thereisastrategicshifttowardstheprivatewealthmarket,withasignificantpresenceandgrowthpotentialidentified[22][23]−Thefirmaimstoalignitsdistributionstructuretobetteraccessandservicetheintermediatedwealthchannel[23][28]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthefirm′sabilitytogeneratelong−termoutcomesdespitecurrentmarketvolatility[24]−Thefirmviewsmarketdisruptionsasopportunitiesforgrowthandexpansion[47]−Thereisanongoingdialogueregardingcapacitymanagement,withpotentialforsomestrategiestoopenupcapacityinthenearfuture[44]OtherImportantInformation−Thecompanydeclaredaquarterlydividendof1.8 billion or 110 basis points of returns in excess of benchmarks [26] - The institutional business has faced pressure, but the firm believes it will maintain solid growth, particularly in the intermediated wealth channel [57] Company Strategy and Development Direction - The company is focused on expanding its capabilities in fixed income and alternatives, particularly in the retail and insurance channels [35] - There is a strategic shift towards the private wealth market, with a significant presence and growth potential identified [22][23] - The firm aims to align its distribution structure to better access and service the intermediated wealth channel [23][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the firm's ability to generate long-term outcomes despite current market volatility [24] - The firm views market disruptions as opportunities for growth and expansion [47] - There is an ongoing dialogue regarding capacity management, with potential for some strategies to open up capacity in the near future [44] Other Important Information - The company declared a quarterly dividend of 0.68 per share, reflecting lower cash generation due to the absence of performance fees [32] - The balance sheet remains strong, with $138 million in seed capital and ample liquidity for future strategies [30] Q&A Session Summary Question: Opportunities in fixed income and alternatives - Management highlighted the potential for growth in fixed income and alternatives, particularly through existing franchises and new strategies [35][36] Question: Normalized expenses and maintaining margins - Management indicated that guidance for the full year remains unchanged, with variable expenses fluctuating with revenues [38][39] Question: Capacity constraints and market movements - Management confirmed ongoing communication about capacity management, with some strategies in soft close mode [44] Question: M&A activity and market opportunities - Management acknowledged numerous opportunities in the market and emphasized a judicious approach to adding capabilities [46][47] Question: Growth in intermediated wealth and strategy mix - Management noted that the long-term asset allocation of client mix differs from institutional, requiring a tailored approach to strategies [66][67] Question: Institutional side and market volatility - Management observed rebalancing activity in the equity space and increased interest in credit strategies amid market volatility [70][72]