BrightSphere Investment Group Inc. (NYSE:BSIG) Q1 2024 Earnings Call Transcript

BrightSphere Investment Group Inc. (NYSE:BSIG) Q1 2024 Earnings Call Transcript May 4, 2024

BrightSphere Investment Group Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the BrightSphere Investment Group Earnings Conference Call and Webcast for the First Quarter 2024 [Operator Instructions]. Please note that this call is being recorded today, Thursday, May 2, 2024 at 11:00 a.m. Eastern Time. I would now like to turn the meeting over to Melody Huang, SVP Director of Finance and Investor Relations. Please go ahead, Melody.

Melody Huang: Good morning. And welcome to BrightSphere's Conference Call to discuss our results for the First Quarter Ended March 31, 2024. Before we get started, please note that we may make forward-looking statements about our business and financial performance. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information regarding these risks and uncertainties appears in our SEC filings, including the Form 8-K filed today containing the earnings release and our 2023 Form 10-K. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update them as a result of new information or future events.

We may also reference certain non-GAAP financial measures. Information about any non-GAAP measures referenced, including a reconciliation of those measures to GAAP measures can be found on our website, along with the slide deck we will use as part of today's discussion. Finally, nothing herein shall be deemed to be an offer a solicitation to buy any investment products. Suren Rana, our President and Chief Executive Officer, will lead the call. And now I'm pleased to turn the call over to Suren.

Suren Rana: Thank you, Melody. Good morning, everyone, and thanks for joining us today. As usual, I'll cover some of the main highlights on Slide 5 of the deck in my initial remarks, and then we can jump to Q&A. For the first quarter of 2024, we reported ENI per share of $0.44 compared to $0.28 in the first quarter of 2023 and $0.77 in the fourth quarter of 2023. The 57% increase in ENI per share compared to the year ago quarter was primarily driven by increasing management fee revenue due to higher AUM from the market appreciation that we saw over the last 12 months. Our AUM is now $110 billion, 6.5% higher than what we had at the end of 2023. Our EPS also benefited from the share buyback that we started in December 2023, and we have now bought back approximately 10% of our outstanding shares.

Our ENI increase versus the year ago quarter was 48% compared to the 57% increase in EPS that I mentioned earlier. Compared to the fourth quarter of 2023, the ENI and EPS are lower, and that decline was driven by seasonality and timing of performance fee as the majority of our performance fee is typically earned in the fourth quarter. Acadian's investment performance remained strong. As of March 31, 2024, 83%, 91% and 93% of Acadian's strategies by revenue outperformed the respective benchmarks across three, five and 10-year periods. Net client cash flows for the quarter was $0.4 billion as outflows from managed volatility and some other strategies were offset by inflows in other areas. Our growth initiatives are continuing to progress on plan.

Acadian's Equity Alternatives Platform seeded in Q4 of '22, continues to build a strong track record of outperformance. Acadian's Systematic Credit platform's first strategy, US High Yield strategy that was seeded in November 2023 has also started building a good stock record. And in April of 2024, we also seeded the credit platform's second strategy, Global High Yield strategy with another $15 million of seed capital, and that strategy will now start to build a track record. Turning to capital management. We repurchased 3.5 million shares, approximately 9% of our outstanding shares in the first quarter of 2024 or approximately $74 million. We had a cash balance of $102 million as of March 31, '24. During the first quarter of 2024, Acadian drew down on the revolving credit facility and ended the quarter with an outstanding amount of $73 million on the facility.

As we have discussed in prior years, this revolving facility is at the Acadian operating levels, and is repaid from cash from operations at Acadian, not from our corporate cash balance. Acadian draws on the facility at the beginning of the year or first quarter seasonal needs mainly to pay prior year's annual bonuses, and the facility is then paid down fully by year-end from the cash generated from the operations. We expect this year to be no different. I'd like to close my initial remarks with reiterating, that we remain focused on maximizing shareholder value, and we'll continue using our free cash flow to support organic growth and to buy back our shares. I'll now turn the call back to the operator, and I'm happy to answer questions at this point.

Operator: [Operator Instructions] Your first question comes from the line of Glenn Schorr from Evercore.

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