Summary of Affiliated Managers Group (AMG) Conference Call - December 09, 2025 Company Overview - **Company**: Affiliated Managers Group (NYSE: AMG) - **Industry**: Asset Management - **Key Focus**: Transition towards alternative investment capabilities, which now represent over 50% of EBITDA [2][4][6] Core Points and Arguments Business Evolution and Strategy - AMG has successfully pivoted towards alternative investments, with alternatives now comprising approximately 55% of EBITDA, aiming for two-thirds in the coming years [2][4][6][8] - The growth in alternatives is driven by both organic growth and strategic acquisitions, with a focus on independent firms that align with AMG's investment strategy [5][6][7] - AMG has made four new investments and one strategic partnership in alternatives this year, contributing to the growth of its affiliate base [7][8] Acquisition Strategy - AMG's acquisition strategy focuses on smaller deals, typically with an enterprise value between $250 million and $1 billion, investing 20%-60% of the economics of the business [15][16][17] - The company emphasizes maintaining the independence of its affiliates while providing strategic support, including business development and product innovation [13][14] Organic Growth - Liquid alternatives have seen a significant turnaround, with AQR being a major contributor, managing approximately $45 billion in assets [18][19][21] - AMG has observed positive flows in liquid alternatives, with total alternative flows exceeding $50 billion, two-thirds of which are from liquid alts [21][22] - AQR's tax-aware strategies are highlighted as a durable trend, addressing the needs of high-net-worth individuals and wealth advisors [22][25][26] Private Markets - AMG's private markets strategy is focused on specialized areas, with Pantheon being a key affiliate [33][34] - The company aims to leverage its scale to provide unique access to differentiated return streams in private markets [35][36] Financial Performance and Capital Allocation - AMG has reduced its share count by approximately 40% over the last five years, indicating a strong capital return strategy through share repurchases [42][44] - The company anticipates continued share repurchases, viewing its current share price as attractive [47][48] - Performance fees have averaged around $150 million annually, with potential for growth as the business evolves [51][52] Outlook for 2026 - AMG expects continued momentum in alternative flows, with higher fees and margins contributing positively to earnings [56][57] - The company is not yet ready to provide specific guidance for 2026 but acknowledges a step function increase in flows and net effects from new investments [58][59] Additional Important Insights - AMG's unique position as a one-stop shop for various differentiated return streams allows it to capitalize on the trend of institutional LPs consolidating their relationships with fewer managers [35][36] - The company is exploring new product offerings in private markets, including structured credit and multi-asset products [39][40] This summary encapsulates the key points discussed during the conference call, highlighting AMG's strategic focus on alternatives, acquisition strategy, organic growth, financial performance, and outlook for the future.

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $228 million, a decline of 12% year over year, primarily due to lower performance fees and a comparison to a one-time private market catch-up fee from the previous year [20][21] - Economic earnings per share were $5.2, reflecting a 3% year-over-year decline, influenced by a $77 million write-down on certain mutual fund assets [21][22] - The company expects adjusted EBITDA for the second quarter to be between $210 million and $225 million, based on current AUM levels [22] Business Line Data and Key Metrics Changes - The private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions [13] - Liquid alternatives saw record net inflows of $10 billion, driven mainly by tax-aware solutions, marking the strongest quarterly flow number in liquid alternatives in the company's history [14][15] - The company experienced net outflows of approximately $14 billion in equities, reflecting industry headwinds [15] Market Data and Key Metrics Changes - The company generated a record $14 billion in net client cash inflows into alternative strategies, which offset outflows from the long-only business [5][6] - The ongoing market volatility has created opportunities for high-quality investment teams to differentiate themselves, particularly in equities [44] Company Strategy and Development Direction - The company is focusing on strategic capital allocation towards areas of secular growth, particularly in private markets and liquid alternatives [5][6] - Three new partnerships were announced in 2025, with a total commitment of approximately $700 million, expected to be accretive to earnings and improve organic growth [6][10] - The company aims to evolve its business mix towards alternatives, anticipating that alternatives will represent over 50% of earnings in the future [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate incremental shareholder value over time, supported by a strong capital position and a diverse business model [11][25] - The company remains committed to disciplined capital allocation, with plans to repurchase approximately $400 million in shares for the full year, subject to market conditions [25] - Management highlighted the importance of the U.S. Wealth channel and the ongoing demand for alternative products, which is expected to drive future growth [66] Other Important Information - The company has a strong liquidity position and a long-dated capital structure, enabling it to execute its growth strategy effectively [23] - The expected proceeds from the Peppertree transaction are approximately $240 million, which will enhance the company's ability to continue capital allocation towards strategic growth areas [24] Q&A Session Summary Question: What drives the decision to part with one of the affiliates, especially in private markets? - Management stated that the partnership model is centered around supporting affiliates' independence, and any strategic decisions are mutually agreed upon. The recent liquidity events highlight the underlying business value of affiliates [30][34] Question: Can you discuss the diversity of flows in liquid alternatives and the outlook? - Management noted that liquid alternatives had a standout quarter with $10 billion in net inflows, driven by tax-aware solutions, and emphasized the strong positioning of high-quality liquid alternative firms to deliver excellent risk-adjusted returns [39][41] Question: What are the dynamics in the equity market regarding investor allocations? - Management acknowledged headwinds in equities but noted opportunities for high-quality investment teams to differentiate themselves, particularly with a focus on quality-oriented and defensive approaches [44][46] Question: Can you clarify the 8% accretion from new investments? - Management confirmed that the 8% accretion is based on economic earnings per share and is expected to begin in 2026, following the completion of the Peppertree and Qualitas transactions [50][51] Question: How is the distribution expansion for existing products going? - Management highlighted the growth of alternatives AUM on the U.S. Wealth platform and the successful launch of new products, indicating a strong pipeline for future product development [63][67]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported adjusted EBITDA of $228 million, a decline of 12% year-over-year, primarily due to lower performance fee earnings and a comparison to a one-time private market catch-up fee from the previous year [21][22] - Economic earnings per share were $5.2, reflecting a 3% year-over-year decline, influenced by a $77 million write-down related to certain mutual fund assets [22] - The company expects adjusted EBITDA for Q2 2025 to be between $210 million and $225 million, based on current AUM levels [23] Business Line Data and Key Metrics Changes - The company generated a record $14 billion in net client cash inflows into alternative strategies, which offset outflows from the long-only business [5] - Private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions [14] - Liquid alternatives saw net inflows of $10 billion, driven mainly by tax-aware solutions, marking the strongest quarterly flow number in liquid alternatives in the company's history [15][16] Market Data and Key Metrics Changes - The company experienced net outflows of approximately $14 billion in equities, reflecting industry headwinds [17] - Multi-asset and fixed income net flows were flat during the quarter, indicating a stable but challenging environment for these asset classes [17] Company Strategy and Development Direction - The company is focusing on strategic capital allocation towards areas of secular growth, particularly in alternatives, to achieve sustained organic growth [5][6] - New partnerships have been established with Northbridge, Verition, and Qualitas Energy, expected to add approximately $18 billion in AUM across liquid alternatives and private markets [10][11] - The company aims to enhance its competitive position by investing in high-quality independent firms and expanding its capabilities in product development and distribution [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate incremental shareholder value over time, despite recent market volatility [12] - The company anticipates that the contribution from alternatives will further increase, with expectations that alternatives will represent over 50% of earnings in the future [55] - The ongoing demand for investments in renewable energy and energy transition assets is highlighted as a critical driver for future growth [8] Other Important Information - The company repurchased $173 million in shares during Q1 2025 and plans to repurchase approximately $400 million for the full year, subject to market conditions [25][26] - The balance sheet remains strong, with a liquidity position supported by a $1.25 billion undrawn revolver [24] Q&A Session Summary Question: What drives the decision to part with one of the affiliates, especially in private markets? - Management clarified that the strategy remains unchanged, focusing on partnerships with independent firms. Decisions to evolve relationships are mutually agreed upon and reflect the affiliates' changing circumstances [29][32][34] Question: Can you discuss the diversity of flows in liquid alternatives and the outlook? - Management noted that liquid alternatives had a standout quarter with $10 billion in net inflows, primarily driven by tax-aware solutions, and expressed confidence in the continued attractiveness of high-quality liquid alternative firms [37][40] Question: What are the dynamics in the equity market regarding investor allocations? - Management acknowledged headwinds in equities but noted opportunities for high-quality investment teams to differentiate themselves, particularly with a focus on quality-oriented strategies [42][44] Question: Can you clarify the expected 8% accretion from new investments? - Management confirmed that the 8% accretion is based on annualized economic earnings per share, expected to begin in 2026, following the completion of the PepperTree sale and other investments [47][50] Question: How is the distribution expansion for existing products going? - Management highlighted the growth of alternatives AUM on the U.S. Wealth platform and the successful launch of new products, indicating a strong pipeline for future product development [58][62]