Artisan Partners(US:APAM)2025-04-30 17:00Financial Data and Key Metrics Changes - First quarter results reflected a 7% decline in revenues primarily due to the absence of $17 million in performance fees from the previous quarter [27] - Adjusted operating income decreased by 19% sequentially, with a 470 basis point decrease in adjusted operating margin from the fourth quarter [27] - Assets under management (AUM) at the end of March stood at $162 billion, slightly up from the previous quarter and year ago, reflecting $4.1 billion in market returns [28] - Adjusted net income per adjusted share declined by 21% compared to the last quarter but was up 9% year-over-year [31] Business Line Data and Key Metrics Changes - The firm has seen eleven consecutive quarters of positive fixed income flows, with average AUM for the quarter up 1% sequentially and 8% year-over-year [29] - Net client cash outflows during the quarter were approximately $2.8 billion, including a $1.2 billion outflow from a separate account rebalancing within the mid-cap growth strategy [28] - The intermediated wealth channel now accounts for 60% of total AUM, with an annualized organic growth rate of 5% over the past five years [30] Market Data and Key Metrics Changes - The firm has a significant presence in the intermediated wealth market, with approximately 172 relationships of over $50 million, and 117 clients invested in three or more strategies [24][55] - The institutional business has faced pressure, but the firm believes it will maintain solid growth, particularly as it expands into credit and alternatives [57] Company Strategy and Development Direction - The company is focused on expanding its distribution structure to better access and service the intermediated wealth channel, aligning interests between investment talent, clients, and the firm [24][25] - The firm has evolved from a long-only public equity manager to a multi-asset class investment platform, increasing the number of investment strategies from 12 to 27 since 2013 [8] - The company aims to continue leveraging market volatility as an opportunity for growth, particularly in fixed income and alternative strategies [38][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the firm's ability to generate successful long-term outcomes for clients and shareholders, emphasizing the importance of maintaining a stable investment environment [25] - The management highlighted the potential for growth in the intermediated wealth channel, particularly among family offices and other high-net-worth clients [64] - There is an ongoing dialogue regarding capacity management, with some strategies in soft close mode, but potential for capacity openings in the near future [45][46] Other Important Information - The company declared a quarterly dividend of $0.68 per share for the March 2025 quarter, reflecting lower cash generation due to the absence of performance fees [35] - The balance sheet remains strong, with $138 million in seed capital and ample liquidity for future strategies [32] Q&A Session Summary Question: Opportunities in fixed income and alternatives in retail or insurance channels - Management highlighted the potential for growth in fixed income and alternatives, particularly through existing franchises and new strategies [37][38] Question: Normalized expenses and maintaining margins - Management indicated that guidance for the full year remains unchanged, with variable expenses fluctuating with revenues and long-term incentive compensation guidance intact [40][41] Question: Capacity constraints in strategies - Management noted that some strategies are in soft close mode, but there may be opportunities for capacity adjustments based on market conditions [45][46] Question: M&A activity and market opportunities - Management acknowledged the active market for M&A and team lift-outs, emphasizing a judicious approach to adding capabilities [47][48] Question: Growth opportunities in intermediated wealth - Management discussed the growth in intermediated wealth relationships and the alignment of distribution to support this growth [54][55] Question: Institutional business outlook amid market volatility - Management observed rebalancing activity in the equity space and increased interest in credit strategies, with a focus on communication with clients [70][71]