Ladies and gentlemen, thank you for standing by. Welcome to the Acadian Asset Management Incorporated Earnings Conference Call and Webcast for the third quarter, 2025. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question and answer session. To be added to the queue, please press the star followed by 1 at any time during the call. If you need to reach an operator, please press the star followed by 0. Please note that this call is being recorded today, Thursday, October 30, 2025 at 11 a.m. Eastern Time. I would now like to turn the meeting over to Melody Huang, Senior Vice President, Director of Finance and Investor Relations. Please go ahead, Melody.

Good morning, and welcome to Acadian Asset Management Inc.'s conference call to discuss our results for the third quarter ended September 30th, 2025. Before we begin the presentation, please note that we may make forward-looking statements about our business and financial performance. Each forward-looking statement is subject to risk and uncertainties that could cause actual results to differ materially from those projected. Additional information regarding this risk and certainties appears in our SEC filings, including the Form 8 file today containing the earnings release, a 2024 Form 10-K and a Form 10-Q for the first and second quarter of 2025. 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 of 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 slides that we will use as part of today's discussion. Finally, nothing here shall be deemed to be an offer or solicitation to buy any investment products. Kelly Young, our President and Chief Executive Officer, will lead a call. And now I'm pleased to turn the call over to Kelly.

Thanks, Melody. Good morning, everyone, and thank you for joining us today. I'm thrilled to share our Q3 2025 results with you as Acadian continues to grow and reach new heights every milestone we hit reflects our team's discipline and dedication in executing the organic growth plan we articulated when i assumed the ceo role at the beginning of the year we remain focused on expanding targeted product and distribution initiatives to deliver long-term growth and shareholder value beginning on slide three Acadian is the only pure play publicly traded systematic manager. Founded in 1986, Acadian has pioneered systematic investing and we continue to lead the space through constant innovation. We have delivered sustained outperformance across various investment strategies and through numerous market cycles. We manage $166.4 billion of AUM and are a pure systematic manager, applying data and cutting-edge techniques to the evaluation of global stocks and corporate bonds. 95% of our strategies by revenue have outperformed benchmarks over a five-year period, with a 4.5% annualised access return. our competitive edge comes from a combination of world-class talent data-driven insights and innovative tools which enable us to generate unique research and risk-adjusted returns that help our clients achieve their long-term investment goals our investment team is comprised of over 100 individuals with a depth and breadth of experience across many disciplines of finance statistics and economics and a shared culture of collaboration and innovation. We're implementing focused product and distribution initiatives to drive sustainable growth, which I will discuss in more detail. Slide four showcases Acadian's Q3 2025 strong performance. Our US GAAP net income attributable to controlling interests was down 11% and EPS was down 7% compared to prior year due to increased operating expenses driven by increased non-cash expenses, representing changes in the value of Acadian LLC equity and profits interests. Our ENI diluted EPS of 76 cents was up 29%, and our adjusted EBITDA was up 12%, driven by significant growth in reoccurring base management fees, as well as share repurchases. We realized $6.4 billion of positive net client cash flows in Q3 of 2025, 4% of beginning period AUM, the second highest in the firm's history, driven by enhanced extension and core strategies such as non-US equities. AUM surged to $166.4 billion as of September 30th, 2025, marking another record high for Acadian. Turning to slide five, Acadian's investment performance track record remained strong despite a more challenging recent period. We have five major implementations which comprise the majority of our assets. As of September 30, 2025, global equity, emerging markets equity, non-US equity, small cap equity and enhanced equity have 100% of assets outperforming benchmarks across three, five and 10 year periods with one minor variation. global equity markets delivered strong returns in q3 of 25 however crowding in lesser quality high beta stocks created a more challenging environment for acadian's fundamentally driven quality orientated approach we've seen these periods before but remain confident in our approach and believe we are well positioned for when markets refocus on company fundamentals slide six details how our disciplined systematic investment process has weathered various market cycles and generated meaningful long-term alpha for our clients our revenue weight five-year annualized return in excessive benchmark was 4.5 as of the end of q3 2025 on a consolidated firm-wide basis our asset weight five-year annualized return in excessive benchmark was 3.5% as of the end of the quarter. By revenue weight, 94% of Acadian's strategies outperformed their respective benchmarks across three, five, and 10-year periods as of September 30, 2025. And by asset weight, 90% of Acadian's strategies outperformed their respective benchmarks across three, five, and 10-year periods. Next, on slide seven, I'd like to focus on Acadian's extensive global distribution platform, which has helped us achieve robust gross sales and will continue to be a major driver of growth in the years ahead. Acadian has had a strong global presence for many years with four offices headquartered in Boston, London, Sydney and Singapore. We have continued to expand our client and distribution team with over 100 experienced professionals serving more than 1,000 client accounts in more than 40 countries. The team has established strong, deep relationships with many institutional clients, as our average client relationship length with top 50 clients is over 10 years. We work with over 40 investment consultants across market segments and geographies, leading to a diverse client base invested across multiple strategies. We have $39 billion of gross sales in the first nine months of 2025, which has surpassed our previous record of annual sales of $21 billion in 2024. In tandem with expanding our distribution capabilities, Acadian's business and product development team have been focused on expanding our strategy and vehicle offerings in high demand and growing areas, where Acadian's systematic approach is particularly well suited. Our current pipeline remains robust after the funding of several large mandate wins in Q3 of 2025. Moving to slide eight, Acadian's standing as a highly regarded institutional asset manager is a testament to our proven investment process, as well as Acadian's world-class investment and distribution teams. We have five clients among the top 20 global asset owners and 24 clients among the top 50 U.S. retirement plans. More than 40% of our assets are from clients invested in multiple Acadian strategies. Our client base is diverse, with 43% of assets managed for clients outside the U.S. We offer over 80 institutional quality funds for investors, and we achieved $39 billion of gross sales in the first nine months of 2025 and reached $166 billion of AUM as of September 30th, 2025. Slide nine highlights the sustained momentum in Acadian's net flows. We realised positive net flows of $6.4 billion in Q3 of 2025, the second highest in the firm's history, representing 4% of beginning period AUM. This quarter's net flows were diverse across products and client types. Both enhanced and extension equities generated strong NCCF and core strategies such as non-US also saw meaningful net inflows. Year-to-date, we've generated net flows of $24 billion. With positive flows of $1.8 billion in 2024, we have now generated seven consecutive quarters of positive net flows. As indicated earlier, our current pipeline remains robust after the funding of a number of significant client wins year-to-date. I'm now going to turn it over to our CFO, Scott Hines, to provide you with more detail on our financial performance this quarter and an update on capital allocation.

Thanks, Kelly. Turning to slide 11, our key gap in E&I performance metrics are summarized here. As previously noted, we manage the business using E&I metrics, which better reflect our underlying operating performance. You can find complete gap to E&I reconciliations in the appendix. Let me now turn to our core business results. Starting on slide 12, Q325 ENI revenue of $136 million increased from Q324 by 12%, primarily due to management fee growth, partially offset by decline in performance fees. Management fees increased 21% from Q324, reflecting a 34% increase in average AUM driven by strong positive NCCFs and market appreciation. Moving to slide 13, in Q325, our ENI operating margin expanded 157 basis points to 33.2% from 31.7% in Q324, driven by increased ENI management fees. Our Q325 operating expense ratio fell 480 basis points year-over-year to 43.3%, reflecting the impact of improved operating leverage. Our Q325 variable compensation ratio decreased to 41.5% in Q325 from 43.3% in Q324. We now expect that our fiscal year 2025 operating expense ratio will be approximately 44 to 46%, while our fiscal year 2025 variable compensation ratio is now expected to be approximately 43 to 45 percent. Turning to slide 14 on capital resources, I'll focus on our strengthened balance sheet and the refinancing of our 275 million senior notes. This morning, we noticed the redemption of these notes that were to mature in July 2026. We'll be funding the redemption with a committed three-year bank term loan and balance sheet cash. The term loan will have a floating rate based on so far and does not require annual mortization or principal payment prior to maturity, and it is prepayable at any time with no fees or costs. We expect the senior notes redemption to be completed and for the term loan to fund around December 1, 2025. As of September 30, 2025, prior to the senior notes refinancing, our gross debt to adjusted EBITDA ratio was 1.4 times, and net debt to adjusted EBITDA ratio was 0.8 times. As adjusted for our senior notes refinancing, our gross debt outstanding declines from $275 million to $200 million, with our gross debt to adjusted EBITDA ratio moving lower to approximately one times and our net debt to adjusted EBITDA ratio to approximately 0.9 times. Stepping back, this refinancing transaction is consistent with our disciplined approach to maximizing shareholder value. It increases our balance sheet flexibility, enables further deleveraging, and enhances cash flows to capital management priorities, including investments in organic growth, share repurchases, and dividends. Moving to slide 15, we have a track record of creating significant value through share buybacks in recent years. Outstanding diluted shares have decreased 58 percent from $86 million in Q419 to $35.8 million in Q325. Over the same period, $1.4 billion in excess capital was returned to stockholders through share buybacks and dividends. During the third quarter of 2025, we repurchased 0.1 million shares, or $5 million of stock, at a volume-weighted average price of $48.58. Amy's board declared an interim dividend of $0.01 per share to be paid on December 24th, 2025 to shareholders of record as of the close of business on December 12th, 2025. Going forward, we expect to continue generating strong free cash flow and deploying excess capital that maximizes shareholder value. I'll now turn the call back over to Kelly.

Before moving to Q&A, let me recap some key points. Acadian is competitively positioned as the only pure play, publicly traded, systematic manager with a nearly 40 year track record and competitive edge in systematic investing. Our investment performance track record remains strong this quarter, with more than 94% of strategies by revenue outperforming over three, five and 10 year periods. business momentum continued in q3 of 25 with net inflows of 6.4 billion dollars the second highest in the firm's history and with record aum of 166.4 billion q3 25 financial results included record management fees of 136.1 million dollars up 21% from Q3 of 24. ENI EPS of 76 cents, up 29% from Q3 24. And operating margin expansion to 33.2%, up from 31.7% in Q3 of 24. Finally, capital management remained a focus in the quarter as we repurchased 0.1 million shares, or $5 million of stock, and strengthened our balance sheet with the announced senior notes redemption and term loan refinancing. Acadian is well positioned to continue to drive growth and generate value for shareholders through targeted distribution initiatives and new product offerings. Our talented and dedicated team is acutely focused on achieving these goals and I look forward to building on the momentum we've seen year to date. This concludes my prepared remarks.

At this time, those with questions should leave their phone receiver and press star followed by the number one on their telephone keypad. To cancel a question, please press star one again. Please hold for a brief moment while we compile the Q&A roster. Your first question comes from the line of Kenneth Lee from RBC capital markets. Your line is open.

Hey, good morning. Thanks for taking my question. On the institutional pipeline, you mentioned that it still remains robust. I'm wondering if you could just talk a little bit more around the composition, any particular strategies or strategy buckets that you're seeing demand in from clients? Thanks.

Hi, Ken. It's nice to talk to you again. Yes, as I noted, the pipeline continues to look very robust and you know the themes that I think we've talked about on these calls earlier in the year continue so enhanced equity continues to resonate with a number of our clients particularly I'd say our international clients outside of the US although increasingly within the US and we've seen a real pickup of interest in the second part of this year in our extension strategies I would say that's primarily driven by US clients but again we're starting to see some interest there outside with with non-us investors so those are clearly two themes um that i think have continued through you know through 2025 um and continue to see really robust interest uh in our core strategies where obviously we have you know very long-term attractive track records there and particularly i'd say international equity um clients looking to allocate perhaps to uh to strategies that don't have um aren't sort of us dominated so continuing to see a real interest there. So the pipeline looks very diverse by strategy, continues to look very diverse by client domicile, and we continue to edge closer to that 50-50 split of AUM between U.S. and non-U.S. clients that we have been targeting for some time.

Gotcha. Very helpful there. And just one follow-up, if I may. Any updated around Outlook for capital management. You mentioned plans to redeem the senior notes as well as with the term loan. Relatedly, any plans about how you think about paying down that term loan?

Yep. Hey, Ken, it's Scott. Thanks for joining us this morning. It's good to talk again. In regards to capital management, I think, look, I would anticipate that we'll continue to be pretty athletic in this regard. So we feel really good about the senior notes redemption and landing with the committed financing we have in place with a new term loan A. A lot of flexibility there. And I think you'll see us look every quarter to stare at what's the best answer for our shareholders, recognizing we do have that prioritization as we've spoken about before about organic growth and prioritizing organic growth. And then going from there in terms of return of capital to shareholders. So I think there is a balance. I think we're really well positioned. I think we'll be looking again every quarter. And you saw this quarter. I think that's reflective. We have a lot, as you can see, going on this quarter. Another great quarter of performance, strong free cash flows. But we did have this refinancing. And yet we were still in the market doing share repurchases. So I think that's reflective. Again, my words, I think we're going to be pretty athletic in this regard. Every quarter looking to step into the market when appropriate in terms of share repurchases while still being mindful of that debt position. This was, as you can see, clearly a deleveraged move. We think that's the right position to be in. I would note in this regard that we also upsized our existing revolver. So I think we're march into a place of continuing to have a little less leverage. So, that $200 million term loan A is a lot of flexibility there for us to repay early, no fees or costs associated with that. So, we'll be revisiting that, you know, every quarter. Does that make sense?

Yeah, that makes sense. That makes sense. Thanks for that color there. And if actually, if I could squeeze one more question in. I really appreciate the detail around global distribution. Just curious, what's been driving the pickup, the meaningful pickup and gross inflows that you've been seeing over the last year or two? Were there any specific initiatives or efforts within the distribution platform, or is it more related to what you're seeing in terms of its client trend?

Sure, yeah, I think it's a bit of both, Ken. i mean we've um you know we've very thoughtfully added resources to our distribution and client service teams um across the globe um to continue to service our clients you know to the best of our abilities and um and obviously continue to focus on on sort of newer channels or channels that have been um under penetrated so i do think that it's a testament to the quality of the team that we've built here we've also very intentionally tried to build out um a suite of pooled funds we have a usage range that works very well for our non-US clients we've continued to build out our Delaware and CIT ranges within the US so again I think making ease of access for clients a lot better and then I do just think as well as we talked about things like enhanced and extensions are capturing the imagination and satisfying a client a client need at the moment so I think it's a combination of all of those things but again being very intentional about you know, adding to an already, you know, incredibly talented team here and being very intentional about that.

Great. Very helpful there. Thanks again.

Thanks. Your next question comes from the line of John Tan of Evercore. Your line is open.

Thanks, guys. Yeah, I wonder, you just talked about, like, the domicile mix of your AUM. Could you remind us of the geographic mix of your investment strategies and then just any change you're seeing in the demand for non-US year or so?

Sure, yeah, nice to talk to you again, John. Yeah, so we have seen a real pickup in interest, I would say, over the last 12 months in international strategies. It's one of our core strategies here, I would say, alongside global and emerging markets, and um is you know our longest track record at the firm so um again acadian is very much known for international investing and we have i think a strong brand advantage there um what's been quite interesting i think for us is not just seeing a pickup in interest of these strategies from our u.s domiciled clients but starting to see some of our non-us clients thinking in this more sort of international or ex-us space um so again i think there are different drivers but that's a That's sort of a newer trend that we've seen, and I certainly think, you know, we're going to benefit from a tailwind there given, you know, our longstanding track record and the, you know, established brand in that space.

Gotcha. And then relatedly, one of your competitors recently said that they've seen others, other managers that kind of pulling back from emerging markets over the past year. Would you agree with that? And, you know, maybe just a little more on emerging markets specifically.

Sure. Yeah, you know, I think if we'd been talking in 2024, I would have probably completely agreed with that statement. I think through this year, we are seeing pockets of interest in emerging. Again, I think, you know, Acadian has been established as an emerging markets manager since the early 1990s. So, again, I think that very strong, robust track record that dates back decades means that perhaps we're kind of front and center when when folks are thinking about systematic exposure to em um i certainly don't think that we're seeing the level of demand that we are in things like you know developed international i think that's that's a fair statement but again i think we're seeing we are seeing some pockets of of interest be on the back of you know two or three years i think of relatively flat demand got it and maybe just one quick modeling one um could you just uh kind of outline the puts and takes of the fee rate from here?

Yeah. Hey, John, it's Scott. Yeah. I mean, as you know, we've, and Callie's already touched on it, we've seen a bit of a transition and it's purposeful given the amount of traction that Enhance specifically has gotten in recent quarters. And, you know, particularly in the second quarter, the prior quarter, when we saw, you know, as you know, another really strong quarter of inflows, particularly in Enhance, you saw a bit of downward pressure on the fee rate. And then for all intents and purposes, we're more of a run rate reflecting those inflows and enhanced in a large way in the second quarter and again in this quarter. As we said prior, in all candor, this is an output and there's a lot of things at work here that are not in our control. So more specifically, you know, broader market levels and where we're seeing client demand. As Kelly said, Enhanced has gotten a lot of traction in recent quarters, and we're staring at the pipeline, as she already articulated, it's still there. However, there are other products, and I would say to be clear that when we think about Enhanced from the start of the year and the management fee rate, and call it upper 30 basis points, it would often be somewhat lower than that. But other products that we are seeing also traction in could be higher than that upper 30s basis points rate. So I say that in that we have seen some chunky installations, and it can move around quarter to quarter. So that's a long way of saying, you know, we have seen this direction of travel closer to the mid-30s range. I think, you know, all else equal, looking at the pipeline today, you could see another basis point to come lower perhaps next quarter, particularly if enhanced materializes the way that we're staring at now at the pipeline. But a few chunky wins and another product, which are very much on the table, could have a different effect. So that's a long way of saying there has been this dynamic. I think you could continue to see a little bit of downward pressure in the fee rate, given the ongoing traction enhanced in the fourth quarter. But I'll tell you, it's not something that, you know, I think we can continue to pencil in necessarily. There's just too many factors at work, particularly when we look at, you know, 2026 and beyond. Hopefully that's of help.

Yeah, it is. Gotcha. Thanks very much.

Your next question comes from the line of Michael Cypress of Morgan Stanley. Your line is now open.

Hi, good morning, Kelly, Scott. Question for you on the platform today. Clearly a lot of momentum with your enhanced and extension strategies, but when you look at the platform, are there any capabilities, geographies, any areas that are lacking today that could, no pun intended, enhance your value proposition with clients?

And just curious how you're thinking about inorganic versus, you know, organic initiatives as you look out from here. yeah hi nice to speak to you again michael um yes as you know as you've noticed them enhancing extensions have been a great story for us as have as have our core capabilities and i think being able to um support clients as they're looking at you know different points on the risk curve has been you know very helpful for us from from a business and organic growth um standpoint you know we haven't touched on systematic credit but i think as you know we've been we very actively have built out an offering there um you know i think still perhaps over the medium term where we expect to see um you know much larger flows there um we're coming up on our two-year anniversary of our longest running strategy in that space next month um so as i sort of as we think about you know pivoting away from perhaps some of that equity exposure although i do feel you know much more comfortable now than a couple of years ago with how diversified that is across the risk spectrum across geographies um you know systematic credit is also something that the team is is very focused on having some really interesting conversations with existing and prospective clients there as systematic becomes um you know gains traction and is gaining attention in the in the credit space so i think for us in over the sort of short to medium term that's going to continue to be a strong area of focus and again are hopeful that we see, you know, assets follow those strong track records that we're building, be it that, you know, we're still sub two years on those track records as we sit here today.

And then just on the systematic fixed income, maybe you could elaborate on how that's contributing today, how you think about that evolving over the next couple of years, what are some of the steps you're taking around to build that out?

And do you feel you have the capabilities on the fixed income front, systematic capabilities capabilities to capture the opportunity set yes absolutely i mean we have um we hired a gentleman scott richardson to run this initiative three and a half years ago who comes with an extraordinary pedigree uh in both equity and fixed income investing um so scott has built out and hand picked i think an outstanding team here today of a dozen or so people that have um and again we feel very well placed um we've been very intentional about how we have gone to market with these strategies. As I say, our longest US high yield strategy will hit its two year anniversary next month, closely followed by our global high yield and our US investment grade strategies all between a year and two years. So I think, you know, again, we are, we've certainly built very intentionally built the capability, those track records are still in, I'd say, incubation stage, but not early incubation, I think much more midterm. We know in fixed income, again, the expectations around returns are that much smaller than they are in equities. And so those three-year track records, I do think, are going to be very important milestones for clients to gain comfort. But certainly, when I look at the team that Scott has built, when I look at how integrated that is with the existing research team, the infrastructure of the firm here, I think we're going to be very well placed, you know, over the medium to long term in terms of generating, you know, meaningful, meaningful returns for our investors and meaningful cash flows as well. So, again, I feel very, you know, I feel very confident about it as we sit here today, but with all the caveats that, again, I think in this type of asset class, you know, three years is clearly the benchmark that clients will be looking for in terms of gaining comfort. But I do think that what Scott and the team have done in terms of building, you know, very consistent, positive performance, you know, month over month, quarter over quarter, is starting, you know, to really resonate. So, again, I feel very confident, you know, where we are today and the expectations of that platform, you know, being able to manage 10, 20 plus billion certainly is the capability there over time. I just think and say that those three-year track records are going to be perhaps more important here than they might be in, you know, some other more adjacent areas of our equity business great thanks so much as a reminder please press star one on your telephone keypad to ask a question and this concludes our question and answer session i'd like to turn the conference call back over to kelly young well thank you everyone for joining us today and i wish you all a great day thank you