Artisan Partners Asset Management
BUSINESS UPDATE AND FIRST QUARTER 2024 EARNINGS PRESENTATION
BUSINESS PHILOSOPHY & APPROACH
High Value Added Investment Firm
Active Strategies
Autonomous Franchises
Proven Results
Talent Driven
Business Model
Designed for Investment
Talent to Thrive
Managed by Business Professionals
Structured to Align Interests
Thoughtful
Growth
Active Talent Identification
Entrepreneurial Commitment
Focus on Long-Term
Global Demand
Since its founding, Artisan has built its business based upon a consistent philosophy and business model.
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INVESTMENTS-FIRST CULTURE
▪ | Exceptional talent | ▪ | High value-added | ▪ | Assets under management |
▪ | Investment autonomy | ▪ | Differentiated results | ▪ | Long-term clients |
▪ | Degrees of freedom | ▪ | Absolute returns | ▪ | Healthy fee rates |
▪ | Distraction free | ▪ | Alpha over indexes | ▪ | Revenue growth |
▪ | Well resourced | ▪ | Outperform peers | ▪ Free cash flow margins | |
▪ | Economically aligned | ▪ | Difficult to replicate | ▪ | Total shareholder return |
▪ | Patience and time | ▪ | Long-term performance | ▪ | Durable franchises |
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CREDIT PLATFORM
Timeline
2013 - Credit Team Founded
2014 - High Income Strategy Launched
2017 - Credit Opportunities Strategy Launched
2022 - Floating Rate Strategy Launched
2023 - Dislocation Opportunities Fund First Close
Dispersion
ICE BofA US High Yield Index Spread Dispersion: 75th-25th percentile OAS
1,000
800
600
Bps | ||||
400 | ||||
200 | ||||
0 | Jun 2022 | Dec 2022 | Jun 2023 | Dec 2023 |
Dec 2021 |
BB B CC
Source: Artisan Partners/ICE BofA. As of 31 Mar 2024. Based on option-adjusted spreads (OAS) for constituents in the ICE BofA US High Yield Index.
Investment Performance
Average Annual Composite Returns Since Inception Net of Fees
10.24% | ||||||
6.18% | 8.14% | 6.46% | ||||
1.82% | 0.18% | |||||
4.36% | 6.28% | |||||
2.10% | ||||||
High Income | Credit Opportunities | Floating Rate | ||||
(4/1/2014) | (7/1/2017) | (1/1/2022) | ||||
Index Return | Value-Added | |||||
Source: Artisan Partners/ICE BofA/Credit Suisse. Data as of March 31, 2024. See Notes and Disclosures.
Illiquidity Premium
ICE BofA US High Yield Index Constituents
Source: Artisan Partners/ICE BofA. As of 31 Mar 2024. ICE BofA US High Yield Index constituents with a YTW in excess of 50% are not shown. Past performance is not a reliable indicator of future results.
ARTISAN PARTNERS ASSET MANAGEMENT
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PERFORMANCE AND STABILITY OVER TIME
Artisan Strategies with Greater than 10 Year Track Records
Average Annual Returns Since Inception Net of Fees
13.54% | |||||||||||
3.72% | 11.16% | 10.76% | 10.86% | ||||||||
10.34% | |||||||||||
9.58% | 1.53% | ||||||||||
Value-Added | 8.97% | 1.85% | |||||||||
8.57% | |||||||||||
Index | |||||||||||
1.84% | 4.54% | 0.92% | 3.79% | 8.05% | |||||||
3.50% | 1.87% | 6.18% | |||||||||
9.82% | 9.63% | 4.22% | 9.01% | 1.82% | |||||||
8.05% | |||||||||||
7.74% | |||||||||||
6.22% | 6.55% | 6.18% | |||||||||
5.07% | |||||||||||
4.35% | 4.36% | ||||||||||
-0.13% | |||||||||||
U.S. Small- | Non-U.S. | U.S. Mid- | U.S. Mid- | International | Value | Sustainable | Global | Global | Global | High | |
Cap | Growth | Cap | Cap Value | Value | Equity | EM | Opportunities | Value | Equity | Income | |
Growth | Growth | ||||||||||
Years Since Inception | 29 Years | 28 Years | 27 Years | 25 Years | 22 Years | 19 Years | 18 Years | 17 Years | 17 Years | 14 Years | 10 Years |
Longest Tenured PM | 28 Years | 28 Years | 21 Years | 16 Years | 22 Years | 16 Years | 18 Years | 27 Years | 22 Years | 28 Years | 10 Years |
Still Managed by Founding PM | |||||||||||
Data as of March 31, 2024. Sources: Artisan Partners/MSCI/Russell/ICE BofA. Tenure refers to years employed by Artisan Partners. Value added is the percentage by which the average annual net composite return of each strategy has outperformed or underperformed its respective benchmark since inception. Past performance is not indicative of future results. See Notes and Disclosures for more information about how we calculate our investment performance and the benchmarks used.
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METHODICAL PLATFORM EXPANSION
AUM Growth Since Firm Inception by Strategy Vintage
1995-19981999-20022003-20062007-20102011-20142015-20182019-2024
AUM ($billions)
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0 1995 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Artisan Partners.
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TRANSPARENT PREDICTABLE FINANCIAL MODEL
Long-Term Approach to
Growth
Fee Discipline
High Variable Costs and Stable Margins
Strong Cash Flow and
Conservative Balance Sheet
Aligned Interests
Invest in the business with a focus on sustainable long-term growth
Commitment to maintain fee levels supported by value-added strategies
Variable cost structure enhances stability through market volatility
Modest leverage and strong cash generation provide financial stability
Employee incentives aligned with growing and preserving shareholder value
Our financial model has served us well over time and through periods of market volatility.
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ASSETS UNDER MANAGEMENT (in billions)
Assets Under Management (AUM)
AUM Average AUM | |||
$142.2 | $154.2 | ||
$135.4 | $139.3 | $140.3 | |
$138.5 | $143.0 | $136.5 | $150.2 | $160.4 |
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | ||
+7% AUM; +10% Avg AUM
+16% AUM; +14% Avg AUM
Net Client Cash Flows1
$(1.2) | $(1.1) | $(0.4) | $(0.5) |
$(1.3) |
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
- Net Client Cash Flows excludes the amount of Artisan Funds' income and capital gain distributions not reinvested.
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ASSETS UNDER MANAGEMENT BY ASSET CLASS ($ in billions)
For the Three Months Ended | |||||||||
March 31, 2024 | |||||||||
Asset Class | Fixed | ||||||||
Equity | Income | Alternative | Firm Total | ||||||
Beginning AUM | $137.4 | $10.0 | $2.8 | $150.2 | |||||
Gross client cash inflows | $4.4 | $1.4 | $0.4 | $6.2 | |||||
Gross client cash outflows | -$6.0 | -$0.4 | -$0.3 | -$6.7 | |||||
Net client cash flows | -$1.6 | $1.0 | $0.1 | -$0.5 | |||||
Artisan Funds' distributions not reinvested | $- | -$0.1 | $- | -$0.1 | |||||
Investment returns and other | $10.3 | $0.2 | $0.3 | $10.8 | |||||
Ending AUM | $146.1 | $11.1 | $3.2 | $160.4 | |||||
Annualized organic growth rate | -5 % | +39 % | +13 % | -1 % | |||||
Ending AUM growth rate | +6 % | +10 % | +16 % | +7 % | |||||
Weighted average management fee | 0.70 % | 0.61 % | 0.82 % | 0.69 % | |||||
AUM mix (as of March 31, 2024) | |||||||||
Client location: | |||||||||
U.S. | 74 % | 93 % | 65 % | 75 % | |||||
Non-U.S. | 26 % | 7 % | 35 % | 25 % | |||||
Vehicle: | |||||||||
Artisan Funds & Global Funds | 46 % | 78 % | 45 % | 48 % | |||||
Separate accounts and other vehicles | 54 % | 22 % | 55 % | 52 % | |||||
Distribution channel: | |||||||||
Institutional | 66 % | 28 % | 55 % | 63 % | |||||
Intermediary | 30 % | 69 % | 43 % | 34 % | |||||
Retail | 4 % | 3 % | 2 % | 3 % |
Equity includes: Mid-Cap Growth, Small-Cap Growth, Mid-Cap Value, Non-U.S. Growth, International Value, Global Opportunities, Global Equity, Value Equity, Global Value, Sustainable Emerging Markets, Global Discovery, Developing
World, Non-U.S.Small-Mid Growth, International Explorer, Select Equity and Value Income strategies. Fixed Income includes: High Income, Floating Rate, Emerging Markets Debt Opportunities and Emerging Markets Local
Opportunities strategies. Alternative includes: Antero Peak, Antero Peak Hedge, China Post-Venture, Credit Opportunities and Global Unconstrained strategies. Weighted average management fee is calculated by dividing annualized investment management fees, excluding performance fees, by the average assets under management for the applicable period. Separate accounts and other vehicles includes traditional separate accounts, as well as Artisan-branded collective investment trusts and Artisan-sponsored unregistered pooled investment funds. The allocation of assets under management by distribution channel involves the use of estimates and the exercise of judgment.
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QUARTERLY FINANCIAL RESULTS ($ in millions, unless otherwise noted)
Revenues | Adjusted Operating Expenses | Adjusted Operating Income | ||||||
Weighted Average Management Fee (in bps) | ||||||||
$234.5 | $249.0 | $264.4 | ||||||
$182.8 | ||||||||
$164.5 | $169.0 | |||||||
70 | 69 | 69 | $70.0 | $80.0 | $81.6 | |||
1Q23 | 4Q23 | 1Q24 | 1Q23 | 4Q23 | 1Q24 | 1Q23 | 4Q23 | 1Q24 | |||||||||||||
+6% | +8% | +2% | |||||||||||||||||||
+13% | +11% | +17% | |||||||||||||||||||
Adjusted Operating Margin | Adjusted Net Income | Adjusted Net Income per Adjusted Share |
29.9% | 32.1% | 30.9% | $0.78 | ||
$61.6 | $0.76 | ||||
$62.8 | |||||
$51.8 | $0.64 |
1Q23 | 4Q23 | 1Q24 | 1Q23 | 4Q23 | 1Q24 | 1Q23 | 4Q23 | 1Q24 | |||||||||||||
-120 | bps | - | 2% | -3% | |||||||||||||||||
+100 | bps | +19% | +19% |
Weighted average management fee is calculated by dividing annualized investment management fees, excluding performance fees, by average assets under management for the applicable period.
Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in Exhibit 2 of our March 2024 earnings release: GAAP operating expense was $186.7M, $172.6M and $166.2M; GAAP operating income was $77.7M, $76.4M and $68.3M; GAAP operating margin was 29.4%, 30.7% and 29.1%; GAAP net income was $59.5M, $64.8M and $50.8M; and GAAP EPS was $0.84, $0.92 and $0.72 for the March 2024, December 2023 and March 2023 quarters, respectively.
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Artisan Partners Asset Management Inc. published this content on 23 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2024 20:07:33 UTC.