BrightSphere Investment Group Inc. (NYSE:BSIG) Q4 2020 Earnings Conference Call February 4, 2021 11:00 AM ET Company Participants Elie Sugarman - Managing Director and Strategic Development Suren Rana - President and Chief Executive Officer Conference Call Participants Craig Siegenthaler - Credit Suisse Michael Cyprys - Morgan Stanley Kenneth Lee - RBC Capital Gayathri Ramkrishnan - Bank of America Chris Harris - Wells Fargo Glenn Schorr - Evercore ISI Yogesh Modak - ClearBridge Michael Cyprys - Morgan Stan ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38979 BRIGHTSPHERE Investment Group Inc. (Exact name of registrant as specified in its charter) Delaware ...

[Explanatory Note](index=4&type=section&id=Explanatory%20Note) The company completed a redomestication in July 2019, becoming a Delaware corporation, and repurchased common stock in Q2 and H1 2020 - BrightSphere Investment Group plc completed a redomestication on July 12, 2019, becoming **BrightSphere Investment Group Inc.**, a Delaware corporation, now the publicly traded parent company[25](index=25&type=chunk) - Existing shares of BrightSphere Investment Group plc were exchanged on a **one-for-one basis** for newly issued common stock of BrightSphere Investment Group Inc. as part of the Redomestication[25](index=25&type=chunk) Common Stock Repurchases (Q2 and H1 2020) | Period | Shares Repurchased | Total Value (millions USD) | | :----------------------------------- | :----------------- | :--------------------- | | Three months ended June 30, 2020 | 2,437,700 | $16.0 | | Six months ended June 30, 2020 | 5,667,962 | $35.3 | [Part I Financial Information](index=5&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes on organization, accounting policies, investments, fair value measurements, variable interest entities, debt, leases, goodwill, commitments, EPS, revenue, AOCI, derivatives, segments, related party transactions, and subsequent events [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing total assets, liabilities, and equity at specific reporting dates Total Assets | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $1,422.8 | | December 31, 2019| $1,419.7 | Total Liabilities | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $1,190.3 | | December 31, 2019| $1,221.3 | Total Equity and Redeemable Non-controlling Interests in Consolidated Funds | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $232.5 | | December 31, 2019| $198.4 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including total revenue, operating income, net income, and basic EPS for the reported periods Three Months Ended June 30 - Key Financials | Metric | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :----------------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Revenue | $174.7 | $207.1 | $(32.4) | (15.6)% | | Operating Income | $26.2 | $46.6 | $(20.4) | (43.8)% | | Net Income Attributable to Controlling Interests | $18.9 | $28.0 | $(9.1) | (32.5)% | | Basic EPS | $0.23 | $0.31 | $(0.08) | (25.8)% | Six Months Ended June 30 - Key Financials | Metric | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :----------------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Revenue | $357.3 | $414.3 | $(57.0) | (13.8)% | | Operating Income | $100.3 | $114.6 | $(14.3) | (12.5)% | | Net Income Attributable to Controlling Interests | $51.5 | $80.7 | $(29.2) | (36.2)% | | Basic EPS | $0.62 | $0.85 | $(0.23) | (27.1)% | [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the total comprehensive income attributable to controlling interests for the three and six months ended June 30 Total Comprehensive Income Attributable to Controlling Interests | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Three Months Ended June 30 | $19.8 | $28.0 | $(8.2) | (29.3)% | | Six Months Ended June 30 | $50.8 | $81.8 | $(31.0) | (37.9)% | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Three Months)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20June%2030,%202020%20and%202019) This section details changes in total equity and redeemable non-controlling interests, including common stock repurchases, for the three months ended June 30 Total Equity and Redeemable Non-controlling Interests in Consolidated Funds | Date | Amount (millions USD) | | :------------- | :---------------- | | June 30, 2020 | $232.5 | | March 31, 2020 | $193.8 | | June 30, 2019 | $103.6 | | March 31, 2019 | $51.6 | Common Stock Repurchases (Three Months Ended June 30) | Period | Shares (millions) | Amount (millions USD) | | :----- | :---------------- | :---------------- | | 2020 | (2.5) | $(16.1) | | 2019 | (0.3) | $(3.3) | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Six Months)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20six%20months%20ended%20June%2030,%202020%20and%202019) This section details changes in total equity and redeemable non-controlling interests, including common stock repurchases, for the six months ended June 30 Total Equity and Redeemable Non-controlling Interests in Consolidated Funds | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $232.5 | | December 31, 2019| $198.4 | | June 30, 2019 | $103.6 | | December 31, 2018| $176.1 | Common Stock Repurchases (Six Months Ended June 30) | Period | Shares (millions) | Amount (millions USD) | | :----- | :---------------- | :---------------- | | 2020 | (5.7) | $(35.3) | | 2019 | (13.8) | $(183.8) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash flows from operating, investing, and financing activities, along with the net increase or decrease in cash for the six months ended June 30 Six Months Ended June 30 Cash Flows | Activity | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | | :----------------------- | :-------------- | :-------------- | :---------------- | | Operating Activities | $62.0 | $(264.6) | $326.6 | | Investing Activities | $9.1 | $(10.3) | $19.4 | | Financing Activities | $(66.8) | $32.7 | $(99.5) | | Net Increase (Decrease) in Cash | $4.3 | $(242.2) | $246.5 | - Cash and cash equivalents at the end of the period increased to **$125.3 million** in 2020 from $103.3 million in 2019[47](index=47&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1) Organization and Description of the Business](index=14&type=section&id=1)%20Organization%20and%20Description%20of%20the%20Business) This section describes BrightSphere Investment Group Inc. as a global asset management company operating through three reportable segments with a profit-sharing model - BrightSphere Investment Group Inc. is a global asset management company providing investment management services to predominantly institutional investors across U.S. and global equities, fixed income, alternative assets, forestry, and secondary strategies[49](index=49&type=chunk) - The Company operates through three reportable segments: **Quant & Solutions**, **Alternatives**, and **Liquid Alpha**[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - A profit-sharing model is generally utilized with Affiliates, aligning economic interests between BSIG and Affiliate key employees[50](index=50&type=chunk) [2) Basis of Presentation and Significant Accounting Policies](index=15&type=section&id=2)%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This section outlines the preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP, the accounting for redomestication, and the adoption of ASU 2018-13 - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with **U.S. GAAP**, reflecting historical balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows[56](index=56&type=chunk) - The Redomestication on July 12, 2019, was accounted for consistent with a reorganization of entities under common control, with assets and liabilities recorded at their carrying amounts[57](index=57&type=chunk) - The Company adopted **ASU 2018-13, Fair Value Measurement**, on January 1, 2020, which did not have a material impact on its Condensed Consolidated Financial Statements[61](index=61&type=chunk) [3) Investments](index=17&type=section&id=3)%20Investments) This section details the company's total investments and investment income (loss) for the reported periods Total Investments per Condensed Consolidated Balance Sheets | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $357.5 | | December 31, 2019| $376.9 | Total Investment Income (Loss) | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | | :------------------------- | :-------------- | :-------------- | :---------------- | | Three Months Ended June 30 | $6.6 | $2.1 | $4.5 | | Six Months Ended June 30 | $(7.1) | $9.1 | $(16.2) | - Net consolidated Funds' investment gains (losses) increased significantly to **$35.6 million** for the three months ended June 30, 2020, from $(4.5) million in the prior year, and to **$18.4 million** for the six months ended June 30, 2020, from $9.1 million in the prior year[66](index=66&type=chunk) [4) Fair Value Measurements](index=18&type=section&id=4)%20Fair%20Value%20Measurements) This section presents the total fair value assets and their categorization by level, including investments valued using NAV Total Fair Value Assets | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $253.5 | | December 31, 2019| $303.8 | Fair Value Assets by Level (June 30, 2020) | Level | Amount (millions USD) | | :-------------- | :---------------- | | Level I | $120.0 | | Level II | $110.4 | | Level III | $3.0 | | Uncategorized | $20.1 | - Investments in unconsolidated Funds valued using NAV as a practical expedient were **$20.1 million** at June 30, 2020, and $48.2 million at December 31, 2019[75](index=75&type=chunk) [5) Variable Interest Entities](index=22&type=section&id=5)%20Variable%20Interest%20Entities) This section provides details on the assets and liabilities of consolidated and unconsolidated Variable Interest Entities (VIEs), including the maximum risk of loss for unconsolidated VIEs Consolidated VIEs Assets and Liabilities | Date | Total Assets (millions USD) | Total Liabilities (millions USD) | | :--------------- | :---------------------- | :--------------------------- | | June 30, 2020 | $227.6 | $4.2 | | December 31, 2019| $205.2 | $6.2 | - The assets of consolidated VIEs belong to investors and are not available for use by the Company, and any debt has no recourse to the Company's general credit[83](index=83&type=chunk) Unconsolidated VIEs | Date | Assets (millions USD) | Liabilities (millions USD) | Maximum Risk of Loss (millions USD) | | :--------------- | :---------------- | :--------------------- | :------------------------------ | | June 30, 2020 | $6,428.3 | $4,261.7 | $23.2 | | December 31, 2019| $6,625.5 | $4,320.6 | $23.9 | [6) Borrowings and Debt](index=24&type=section&id=6)%20Borrowings%20and%20Debt) This section outlines the company's total borrowings, including carrying and fair values, third-party debt details, and compliance with debt covenants Total Borrowings | Date | Carrying Value (millions USD) | Fair Value (millions USD) | | :--------------- | :------------------------ | :-------------------- | | June 30, 2020 | $545.7 | $546.5 | | December 31, 2019| $568.8 | $588.6 | Third Party Borrowings (June 30, 2020) | Type | Carrying Value (millions USD) | Interest Rate | Maturity | | :------------------------ | :------------------------ | :------------ | :--------------- | | Revolving credit facility | $130.0 | LIBOR + 1.50% | August 22, 2022 | | 4.80% Senior Notes Due 2026 | $272.6 | 4.80% | July 27, 2026 | | 5.125% Senior Notes Due 2031| $121.4 | 5.125% | August 1, 2031 | - The Company was in compliance with its debt covenants at June 30, 2020, with a third-party borrowings to trailing twelve months Adjusted EBITDA ratio of **2.2x** (limit 3.0x) and an interest coverage ratio of **7.8x** (minimum 4.0x)[358](index=358&type=chunk)[362](index=362&type=chunk) [7) Leases](index=25&type=section&id=7)%20Leases) This section details operating lease costs, weighted average remaining lease term, discount rate, and total operating lease liabilities Operating Lease Costs | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Three Months Ended June 30 | $4.1 | $3.5 | $0.6 | 17.1% | | Six Months Ended June 30 | $7.9 | $6.9 | $1.0 | 14.5% | - The weighted average remaining lease term was **11.8 years** for the six months ended June 30, 2020, compared to 5 years in the prior year, with a weighted average discount rate of **3.47%** (vs. 4.11% in 2019)[93](index=93&type=chunk) - Total operating lease liabilities were **$124.9 million** at June 30, 2020[94](index=94&type=chunk) [8) Goodwill and Intangible Assets](index=26&type=section&id=8)%20Goodwill%20and%20Intangible%20Assets) This section provides information on goodwill balances, impairment charges, and definite-lived acquired intangibles, including amortization expense Goodwill | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $258.2 | | December 31, 2019| $274.6 | - A goodwill impairment charge of **$16.4 million** was recognized for the Copper Rock reporting unit (Liquid Alpha segment) for the six months ended June 30, 2020, due to a decline in assets under management[98](index=98&type=chunk) Definite-lived Acquired Intangibles (Client Relationships) | Date | Net Book Value (millions USD) | | :--------------- | :------------------------ | | June 30, 2020 | $60.6 | | December 31, 2019| $64.1 | - Amortization expense for definite-lived acquired intangibles was **$1.9 million** for the three months ended June 30, 2020, and **$3.5 million** for the six months ended June 30, 2020[103](index=103&type=chunk) [9) Commitments and Contingencies](index=30&type=section&id=9)%20Commitments%20and%20Contingencies) This section details the company's unfunded commitments, guarantees, and the absence of material accruals for claims or legal proceedings - The Company had unfunded commitments of approximately **$39 million** to invest in co-investments as of June 30, 2020, to be funded through fiscal 2022[111](index=111&type=chunk) - A **$2.5 million** guaranty for an Affiliate's office space security deposit was entered into in January 2020, expiring in 2022[113](index=113&type=chunk) - No material accruals for claims, legal proceedings, or foreign tax contingencies were recorded as of June 30, 2020[114](index=114&type=chunk)[116](index=116&type=chunk) [10) Earnings Per Share](index=31&type=section&id=10)%20Earnings%20Per%20Share) This section presents the basic and diluted earnings per share attributable to controlling interests and the weighted average common stock outstanding Earnings Per Share (Basic & Diluted) Attributable to Controlling Interests | Period | 2020 (per share USD) | 2019 (per share USD) | Change (per share USD) | Change (%) | | :------------------------- | :--------------- | :--------------- | :----------------- | :--------- | | Three Months Ended June 30 | $0.23 | $0.31 | $(0.08) | (25.8)% | | Six Months Ended June 30 | $0.62 | $0.85 | $(0.23) | (27.1)% | - Weighted average common stock outstanding (basic) decreased to **80.4 million shares** for the three months ended June 30, 2020 (from 91.5 million in 2019), and to **82.8 million shares** for the six months ended June 30, 2020 (from 94.6 million in 2019)[121](index=121&type=chunk) - Employee options to purchase **7,474,000 shares** were excluded from diluted EPS computation for both periods as they were antidilutive[123](index=123&type=chunk) [11) Revenue](index=32&type=section&id=11)%20Revenue) This section details management and performance fees, highlighting the impact of average AUM changes on revenue Management Fees | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Three Months Ended June 30 | $170.7 | $205.9 | $(35.2) | (17.1)% | | Six Months Ended June 30 | $349.2 | $413.4 | $(64.2) | (15.5)% | Performance Fees | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | | :------------------------- | :-------------- | :-------------- | :---------------- | | Three Months Ended June 30 | $0.3 | $(2.2) | $2.5 | | Six Months Ended June 30 | $1.3 | $(5.0) | $6.3 | - Average AUM (excluding equity-accounted Affiliate) decreased by **21.6%** for the three months and **16.4%** for the six months ended June 30, 2020, primarily due to equity market decline and the Vanguard subadvisory reallocation in Q4 2019[232](index=232&type=chunk)[233](index=233&type=chunk) [12) Accumulated Other Comprehensive Income (Loss)](index=34&type=section&id=12)%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This section presents the accumulated other comprehensive income (loss) balances and components, including foreign currency translation adjustments and derivative amortization Accumulated Other Comprehensive Income (Loss) | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $(18.2) | | December 31, 2019| $(17.5) | | June 30, 2019 | $(19.8) | | December 31, 2018| $(20.9) | - Foreign currency translation adjustment for the six months ended June 30, 2020, was **$(1.8) million**[134](index=134&type=chunk) - Amortization related to derivative securities (before tax) for the six months ended June 30, 2020, was **$1.5 million**[134](index=134&type=chunk) [13) Derivatives and Hedging](index=36&type=section&id=13)%20Derivatives%20and%20Hedging) This section describes the company's use of Treasury rate lock contracts for interest rate risk management and the reclassification of related balances to interest expense - The Company uses Treasury rate lock contracts as cash flow hedges to manage interest rate risk for future debt issuances[139](index=139&type=chunk) - As of June 30, 2020, a balance of **$(19.2) million** (net of tax) from a settled Treasury rate lock contract was recorded in accumulated other comprehensive income (loss) and is being reclassified to interest expense over the life of the issued debt[140](index=140&type=chunk) - Approximately **$3.2 million** is expected to be reclassified to interest expense over the next twelve months[140](index=140&type=chunk) [14) Segments](index=37&type=section&id=14)%20Segments) This section identifies the company's three business segments and explains the use of Economic Net Income (ENI) as the primary performance measure - The Company operates through three business segments: **Quant & Solutions**, **Alternatives**, and **Liquid Alpha**[143](index=143&type=chunk) - Economic Net Income (ENI) is the primary measure used by management for measuring performance and allocating resources to the segments[145](index=145&type=chunk)[318](index=318&type=chunk) - ENI adjustments to U.S. GAAP include reclassifications and exclusions of non-cash, non-economic expenses, or reflections of cash benefits not recognized under U.S. GAAP[145](index=145&type=chunk)[318](index=318&type=chunk) [15) Related Party Transactions](index=41&type=section&id=15)%20Related%20Party%20Transactions) This section details loans provided to affiliate employees and their expected repayment schedule Loans to Affiliate Employees | Date | Amount (millions USD) | | :--------------- | :---------------- | | June 30, 2020 | $11.8 | | December 31, 2019| $16.1 | - These loans are expected to be repaid by **2022**[163](index=163&type=chunk) [16) Subsequent Events](index=41&type=section&id=16)%20Subsequent%20Events) This section reports on significant events occurring after the reporting period, including the divestiture of Copper Rock Capital Partners LLC and the agreement to sell Barrow, Hanley, Mewhinney & Strauss, LLC - BrightSphere Inc. divested its equity interests in Copper Rock Capital Partners LLC on **July 24, 2020**, with no significant impact on the Condensed Consolidated Financial Statements[164](index=164&type=chunk) - An agreement was made on **July 26, 2020**, to sell the Company's interests in Barrow, Hanley, Mewhinney & Strauss, LLC for **$319 million cash**, expected to close in Q4 2020[165](index=165&type=chunk) - Barrow Hanley contributed **$17.5 million** to the Company's net income attributable to controlling interests for the six months ended June 30, 2020[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, liquidity, and other factors affecting future results, including an overview of segments, business economics, performance measurement using non-GAAP ENI, U.S. GAAP results, non-GAAP segment analysis, capital resources, liquidity, and critical accounting policies [Overview](index=43&type=section&id=Overview) This section provides an overview of BrightSphere's global asset management business, its operating segments, profitability drivers, recent divestitures, and the impact of the COVID-19 pandemic - BrightSphere is a diversified, global asset management company operating through three business segments: **Quant & Solutions**, **Alternatives**, and **Liquid Alpha**, with seven affiliate firms[173](index=173&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk) - The company's profitability is affected by the level and composition of average assets under management (AUM), fee rates, and its profit-sharing expense structure, which aligns economic interests with Affiliate key employees[183](index=183&type=chunk)[185](index=185&type=chunk) - Recent developments include the announced divestiture of Copper Rock Capital Partners LLC (**July 24, 2020**) and Barrow, Hanley, Mewhinney & Strauss, LLC (**July 26, 2020**)[179](index=179&type=chunk)[180](index=180&type=chunk) - The **COVID-19 pandemic** has significantly impacted the global economy and financial markets, creating heightened uncertainty for the company's business operations and financial results[182](index=182&type=chunk) [U.S. GAAP Results of Operations for the Three and Six Months Ended June 30, 2020 and 2019](index=57&type=section&id=U.S.%20GAAP%20Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202020%20and%202019) This section summarizes the company's U.S. GAAP financial performance, including revenue, net income, EPS, assets under management, and net client cash flows for the reported periods Summary Results of Operations (U.S. GAAP Basis) | Metric | Q2 2020 (millions USD) | Q2 2019 (millions USD) | H1 2020 (millions USD) | H1 2019 (millions USD) | | :----------------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Revenue | $174.7 | $207.1 | $357.3 | $414.3 | | Net Income Attributable to Controlling Interests | $18.9 | $28.0 | $51.5 | $80.7 | | Basic EPS | $0.23 | $0.31 | $0.62 | $0.85 | Assets Under Management (AUM) at Period End | Date | Amount (billions USD) | | :--------------- | :---------------- | | June 30, 2020 | $181.0 | | June 30, 2019 | $225.0 | Net Client Cash Flows (billions USD) | Period | 2020 | 2019 | | :------------------------- | :---- | :---- | | Three Months Ended June 30 | $(1.7) | $(1.1) | | Six Months Ended June 30 | $(0.7) | $(1.4) | [Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis](index=68&type=section&id=Non-GAAP%20Supplemental%20Performance%20Measure%20%E2%80%94%20Economic%20Net%20Income%20and%20Segment%20Analysis) This section introduces Economic Net Income (ENI) as a non-GAAP measure for evaluating financial performance, presenting ENI, ENI revenue, and ENI operating margin for the reported periods - Economic Net Income (ENI) is a non-GAAP measure used by management to evaluate financial performance and make operational decisions, reflecting underlying economic earnings by excluding non-cash or non-recurring items and reclassifying certain U.S. GAAP items[280](index=280&type=chunk)[281](index=281&type=chunk)[285](index=285&type=chunk) Economic Net Income (ENI) | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Three Months Ended June 30 | $32.9 | $41.0 | $(8.1) | (19.8)% | | Six Months Ended June 30 | $67.2 | $80.2 | $(13.0) | (16.2)% | ENI Revenue (millions USD) | Period | 2020 | 2019 | Change (millions USD) | Change (%) | | :------------------------- | :---- | :---- | :---------------- | :--------- | | Three Months Ended June 30 | $172.5| $204.6| $(32.1) | (15.7)% | | Six Months Ended June 30 | $353.1| $410.3| $(57.2) | (13.9)% | ENI Operating Margin | Period | 2020 | 2019 | Change (bps) | | :------------------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 34.3% | 35.8% | (152) | | Six Months Ended June 30 | 33.6% | 34.5% | (89) | [Capital Resources and Liquidity](index=85&type=section&id=Capital%20Resources%20and%20Liquidity) This section analyzes the company's cash flows from operating and financing activities, Adjusted EBITDA, and its ability to fund operations and capital requirements Cash Provided by (Used in) Operating Activities (excluding consolidated Funds) | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | | :----------------------- | :-------------- | :-------------- | :---------------- | | Six Months Ended June 30 | $62.6 | $(229.5) | $292.1 | Net Cash Used in Financing Activities (excluding consolidated Funds) | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | | :----------------------- | :-------------- | :-------------- | :---------------- | | Six Months Ended June 30 | $(68.2) | $(8.6) | $(59.6) | Adjusted EBITDA | Period | 2020 (millions USD) | 2019 (millions USD) | Change (millions USD) | Change (%) | | :------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Three Months Ended June 30 | $53.9 | $63.4 | $(9.5) | (15.0)% | | Six Months Ended June 30 | $110.1 | $122.3 | $(12.2) | (10.0)% | - The Company believes its available cash, cash equivalents, and future proceeds from the sale of Barrow Hanley will be sufficient to fund current operations and capital requirements for at least the next twelve months[355](index=355&type=chunk) [Critical Accounting Policies and Estimates](index=88&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that there have been no significant changes to the critical accounting policies and estimates previously disclosed - There have been no significant changes to the critical accounting policies and estimates disclosed in the Company's most recent Form 10-K for the year ended December 31, 2019[365](index=365&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's revenues are highly sensitive to market risk, particularly AUM depreciation, as management fees are asset-based. A hypothetical 10% change in overall AUM would result in an annual change of approximately $26.2 million in post-tax economic net income. Equity market risk, foreign currency risk, and interest rate risk are the primary market risks affecting the business - The Company's revenues and net income are directly related to the value of its assets under management (AUM) and investment performance, making them susceptible to market depreciation and client withdrawals[371](index=371&type=chunk) - A hypothetical **10% increase or decrease** in the value of overall AUM would cause an annualized change of approximately **$72.4 million** in gross management fee revenues and **$26.2 million** in post-tax economic net income[374](index=374&type=chunk) - Equity markets-based AUM (**$144.0 billion**) is the largest component, with a 10% change impacting annualized management fee revenue by **$52.3 million** and post-tax ENI by **$19.9 million**[376](index=376&type=chunk) - Foreign currency denominated AUM (**$87.0 billion**) has a 10% change impact of **$33.9 million** on annualized management fee revenue and **$13.1 million** on post-tax ENI[377](index=377&type=chunk) - Interest rate risk on the **$130 million** Credit Facility borrowings: a hypothetical 10% change in interest rates would result in a **$0.3 million** change to interest expense during the six months ended June 30, 2020[379](index=379&type=chunk) [Item 4. Controls and Procedures](index=92&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective as of June 30, 2020. No material changes in internal control over financial reporting occurred during the quarter - The effectiveness of the Company's disclosure controls and procedures was evaluated and concluded to be **effective** as of June 30, 2020[381](index=381&type=chunk) - There have been **no material changes** in internal control over financial reporting during the quarter ended June 30, 2020[382](index=382&type=chunk) [Part II Other Information](index=93&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=93&type=section&id=Item%201.%20Legal%20Proceedings) The company and its Affiliates are subject to various claims and legal proceedings in the ordinary course of business, but management does not currently believe these will result in material liabilities to its consolidated financial condition, future results of operations, or cash flow - The Company and its Affiliates are subject to claims, legal proceedings, and other contingencies in the ordinary course of their business activities[385](index=385&type=chunk) - Management does not currently believe that, in the aggregate, these matters will result in liabilities material to the Company's consolidated financial condition, future results of operations, or cash flow[385](index=385&type=chunk) [Item 1A. Risk Factors](index=93&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, or its Annual Report on Form 10-K for the year ended December 31, 2019 - No material changes in the risk factors described in the Company's Quarterly Report on Form 10-Q for March 31, 2020, or its Annual Report on Form 10-K for December 31, 2019[386](index=386&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=93&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 2,437,700 shares of common stock for approximately $16.0 million during the three months ended June 30, 2020, under its publicly announced share repurchase program. As of June 30, 2020, $243.5 million remained available under the program Common Stock Repurchases (Three Months Ended June 30, 2020) | Period | Shares Purchased | Average Price per Share (USD) | Total Value (millions USD) | | :----------------- | :--------------- | :---------------------- | :--------------------- | | April 1-30, 2020 | 1,905,700 | $6.26 | $11.9 | | May 1-31, 2020 | 532,000 | $7.65 | $4.1 | | June 1-30, 2020 | — | — | — | | **Total** | **2,437,700** | **$6.56** | **$16.0** | - As of June 30, 2020, **$243.5 million** remained available to repurchase shares under the $600.0 million program authorized in February 2016 and amended in April 2018[387](index=387&type=chunk) [Item 6. Exhibits](index=93&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Equity Purchase Agreement for Barrow Hanley, amended organizational documents, employment agreements, and certifications from the principal executive and financial officers - Exhibit 2.1 includes the Equity Purchase Agreement for Barrow, Hanley, Mewhinney & Strauss, LLC, dated **July 26, 2020**[388](index=388&type=chunk) - Exhibits 31.1 and 31.2 are certifications of the Company's principal executive officer and principal financial officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a) (Section 302 of Sarbanes-Oxley Act)[390](index=390&type=chunk) - Exhibits 32.1 and 32.2 are certifications of the Company's principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act)[390](index=390&type=chunk) [SIGNATURES](index=95&type=section&id=SIGNATURES) This section confirms the signing of the report by the President and Chief Executive Officer and the Senior Vice President and Principal Financial Officer - The report was signed on **August 10, 2020**, by Suren Rana, President and Chief Executive Officer, and Christina Wiater, Senior Vice President and Principal Financial Officer[395](index=395&type=chunk)

Contact: Elie Sugarman ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the Second Quarter Ended June 30, 2020 and Other Business Updates • U.S. GAAP earnings per share of $0.23 for the quarter, compared to $0.31 for Q2'19 • ENI earnings per share of $0.41 for the quarter, compared to $0.45 for Q2'19 • Announced divestiture of Barrow Hanley and Copper Rock; enhances pro forma organic growth profile, reduces debt and enables share repurchases, which could be accretive to EN ...

BrightSphere Investment Group, Inc. (NYSE:BSIG) Q2 2020 Earnings Conference Call August 6, 2020 11:00 AM ET Company Participants Elie Sugarman - MD, Strategic Development Suren Rana - President & CEO Conference Call Participants Craig Siegenthaler - Credit Suisse Mike Carrier - Bank of America Merrill Lynch Michael Cyprys - Morgan Stanley Robert Lee - KBW Chris Harris - Wells Fargo Kenneth Lee - RBC Capital Markets Patrick Toma - Autonomous Research John Dunn - Evercore Operator Ladies and gentlemen, thank ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38979 BRIGHTSPHERE Investment Group Inc. (Exact name of registrant as specified in its charter) Delaware 47-1 ...

Contact: Investor Relations ir@bsig.com (617) 369-7300 BrightSphere Reports Financial and Operating Results for the First Quarter Ended March 31, 2020 • U.S. GAAP earnings per share of $0.38 for the quarter, compared to $0.54 for Q1'19 • ENI earnings per share of $0.40 for the quarter, compared to $0.40 for Q1'19 • Net client cash flows ("NCCF") for the quarter of $1.0 billion, positive for the first time since Q1'18 • Repurchases of 5.5 million shares at an average price of $6.14 per share through May 6, 2 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-38979 BrightSphere Investment Group Inc. (Exact name of registrant as specified in its charter) Delaware 47-1121020 (State or other j ...

BrightSphere Investment Group Inc. (NYSE:BSIG) Q4 2019 Results Earnings Conference Call February 6, 2020 11:00 AM ET Company Participants Brett Perryman - Head, IR Guang Yang - President and CEO Suren Rana - CFO Conference Call Participants Craig Siegenthaler - Credit Suisse Kenneth Lee - RBC Chris Harris - Wells Fargo Securities Michael Carrier - Bank of America Merrill Lynch Robert Lee - KBW John Dunn - Evercore Patrick Davitt - Autonomous Michael Cyprys - Morgan Stanley Operator Ladies and gentlemen, tha ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36683 BRIGHTSPHERE Investment Group Inc. (Exact name of registrant as specified in its charter) Delaware ...