Good morning. My name is Deedee, and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners Quarterly Conference Call. The slide presentation for this call is available in the Investor Relations section of the Virtus website at www.virtus.com. This call is being recorded and will be available for replay on the Virtus website. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer period, and instructions will follow at that time. I will now turn the conference to your host, Sean Rourke.

Thanks, Didi, and good morning, everyone. Welcome to Virtus Investment Partners' discussion of our first quarter of 2026 financial and operating results. Joining me today are George Elward, our President and CEO, and Mike Angerthal. Before we begin, I'll refer you to the disclosures on slide two. Today's comments may include forward-looking statements, which involve risks and uncertainties described in our news release and SEC filings. Actual results may be. We will also reference certain non-GAAP financial measures, reconciliations of the most recent financial supplement on our website. Now I'd like to turn the call over to George.

Over a few of the results we reported this morning, and then Mike will provide more detail. The first quarter was challenging from a net flow perspective, reflective, reflecting our meaningful exposure to quality-oriented equity strategies which have remained out of favor, we had several areas of strength during the quarter that were overshadowed, and we also advanced key growth initiatives. Key highlights of the quarter included an 8% increase in sales with growth in U.S. retail funds, separate accounts, and global funds, positive net flows in several strategies including high-conviction growth equity, multi-sector fixed income, listed real assets, and event-driven, positive net flows in ETFs and global funds, expansion into private markets with our investment in Keystone National Group, and continued return of capital, including $10 million of shares. We remained active in broadening our product offerings to meet the evolving client demand and expand our growth opportunities over time. The investment in Keystone on March 1st added a differentiated asset-centric private credit capability, and our sales teams are actively focused on expanding distribution of their compelling strategies to retail and institutional clients, Keystone focuses on senior-secured, amortizing, fixed-rate financings backed by tangible assets. We believe their approach offers attractive stability and defensive characteristics for investors seeking a private credit allocation or a broader income-oriented solution with a different risk profile than many traditional direct lending vehicles. Keystone expands our private market capabilities, which also include those of Crescent Cove, as well as our overall alternative offerings that include managed futures to launch attractive actively managed ETFs, including emerging markets. Looking at our first quarter results, asset center management were $149 billion at March 31st. It was increased 8% to $5.8 billion, with some of our strategies that do not have a quality orientation. By product, we had higher sales of U.S. retail funds, retail separate accounts, and global funds. Retail separate account sales increased 19% with higher sales in each month of the quarter. And on April 1st, we reopened this mid-cap core strategy that had its soft closed in 2024. Total net outflows were $8.4 billion, and across products, the outflows were almost entirely driven by equities. I would note that the majority, over 80%, of the net outflows were in the first two months of the quarter, as net outflows improved significantly in March. Looking at flows across asset classes, the equity net outflows largely reflected the continued style headwind for quality-oriented strategies, including a meaningful institutional global equity redemption and the previously disclosed rebalancing of a lower-fee retail separate account model-only mandate to a passive strategy. Biggest income net flows were essentially break-even for the quarter as positive net flows in multi-sector convertibles and preferreds were offset by net outflows in investment-grade and leveraged finance. Break-even, while alternative strategies had net outflows of point. In terms of what we saw in April, as previously mentioned, overall trends improved over the course of the first quarter, and April flows were more similar to March. For U.S. retail funds, both sales and flows improved in April over March, and ETF sales and net flows were at their highest level since September. For retail separate accounts, while we do not have as much transparency, given a large portion is model only, we do anticipate better flows in the second quarter and are pleased to have recently reopened this mid-cap portion. On the institutional side, known wins actually modestly exceed known redemptions for the first time in a long time, though as always, institutional flows can be very lumpy and hard to predict. To our financial results, the operating margin was 24% and reflected the impact of seasonally higher employment expenses. Excluding those items, the operating margin was 30 per share as adjusted to $5.38, declined from the fourth quarter primarily due to $1.26 per share of seasonal employment expenses. Excluding those items, earnings per share as adjusted declined 6%. Turning to investment performance, as we've previously discussed, recent performance reflects our overweight and quality equity in the first quarter in our equity strategies. Fixed income and alternative strategies have consistently strong performance, with 78% and 71% respectively beating benchmarks for the three-year period. Over the longer 10-year period, 54% of our fixed income and 71% of alternative strategies. In terms of our balance sheet and capital, we ended the quarter with cash and equivalents of $137 million, other investments of $269 million, and $200 million of undrawn capacity on our revolving credit facility. Cash was lowered sequentially as the first quarter of each year is our highest period of cash utilization. Seasonal expenses, cash usage included the $200 million closing payment for the Keystone investment, and $23 million representing the majority of our remaining revenue, which is approximately 73,000 shares for $10 million and paid our quarterly dividend. We continue to have financial flexibility to balance our capital priorities of investing in the business, returning capital shareholders. I'm going to go over to Mike to provide more detail on the print and show results.

Thank you, George. Good to be with you all this morning. Starting with our results on slide 7, assets under 158.2. Our AUM continues to be well worth 33% of AUM. As retail funds were up to global funds, within open-end funds, ETF AUM increased to continued strong net flow of international equities, including mid, small, and large cap income offerings diversified across duration, credit quality, and geography. With the addition of Keystone to $0.3 billion of AUM, alternatives now represent over 12% of assets in the last quarter and 9% at $0.8 billion, $0.3 billion in the fourth quarter. The increase was led by sales of equity strategies, which increased to the international and global equity viewing by product two billion versus 1.4 billion last quarter equity and multi-asset say increased too early due to a 30% increase in sales in the intermediary sold channel increased 11% to 3.1 billion of ETF sales fund sales were higher in equities fixed income and multi-asset strategies which month with much of the increase in equity sales in style agnostic and growth strategy point 1 billion last quarter and as previously mentioned the outflows improved meaningfully in reviewing by product institutional net outflows of 3.2 billion were again primarily due to workflows of 3.9 billion which included included positive net funds which include Keystone's tender net flows for the quower results reflect just one month of their sales but a full quarter of redemptions given the funding point three billion of positive net flows, down 3% due to lower average AUM. Average fee rate was 41.9 basis points and included approximately 0.6 basis points of incentive fees from one month. Average fee rate in the range of 43 to 45 basis points is reasonable for the second quarter, reflecting a full quarter of Keystone. The fee rate will vary with market levels and asset quarter trend in employment expenses as adjusted of $106.2 million, increased 11%, reflecting $11.4 million of seasonal employment expenses of annual incentives, comparable year-over-year basis employment expenses. The seasonal items, employment expenses also decreased 58.3% of revenues as adjusted, with the sequential increase primarily due to the season. Excluding those items, employment expenses were 52% of revenues, higher than the fourth quarter largely due to lower revenues whom employment expenses as adjusted will be in the 51 to 53 percent range as a percentage of revenues and at the high end of that range in the second quarter primarily due to the decline in equity assets under results will vary with flows and market performance up modestly from 30.2 million in part to the addition of keystone and is reasonable going forward active keystone Keep in mind that our annual Board of Directors Equity grant operating margin has adjusted of 24%. Including the seasonal employment expenses, the operating margin was just a dividend income declined by $1.4 million due to a lower cash balance reflecting the timing of the keystone investment cash obligations. That a reasonable range for non-controlling interests, which factors updated how we reflect income taxes in our non-GAAP presentation that generates meaningful economic tax. Given the size of this action of realizing the benefit in 2025, the rate of 14% was lower sequentially by approximately 400 basis points due to the impact of the amortization tax on a seasonally lower level of pre-tax income. Beginning with the second quarter, an effective tax rate of 14% to 15% would be reasonable to expend $0.38 per diluted share, which included $1.26 per share of seasonal expenses, compared with $7.16 in the fourth quarter and declined 16% from the prior year, primarily due to lower average AUM. We completed the 56% investment in Keystone for $200 million of additional consideration, a meaningful portion of which is subject to achievement of revenue targets. Contingent consideration. Consideration at March 31st totaled $126 million, reflecting the addition of the Keystone deferred payments of the majority of our remaining revenue participation obligation. With Keystone includes increasing our ownership to 75% with the equity purchases taking place during years 3 through 6 after closing. The estimated value of those purchases is recorded in redeemable non-controlling $131 million. The remaining 25% of Keystone is reflected in the manager non-controlling interest liability, which totaled $152 million. the majority of which represents Keystone equity held by Keystone employees that will be recycled to future generations. At March 31st, for Keystone, $69 million, quarterly dividend, $53,463 shares of common, $50 million draw. Turn the call back over to George. Thank you, Mike.

We will now take your questions. Dee Dee, would you open up the lines, please?

Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Crispin Love of Piper Sandler.

Thank you. Good morning. I appreciate you taking my questions. First, in the release and also on the call, you called out the 26% increase in sales of equity strategies. Can you dig into that a little further? Was that partially buying the dip in the quarter, especially the March improvement inflows, and then just any specific areas, value, growth, value or growth. I'm just curious if you can detail that a little bit more and if that's continued in April.

Sure. So, again, while we've highlighted the fact that the majority of our equity AUM and strategy orientation from the managers that have grown the business over the years, that we had other strategies that did not have those same orientations and they were many of them were obviously a little smaller and had not previously you know been areas where we that is those have been the strategies that we have continued to focus on and try to find additional opportunities for them so we were very pleased that was some of our strategies which include some of the high conviction strategies some of the more style agnostic strategies or the The other growth that we've recently made available in SMAs has increased our focus on some of the other wrappers they're in, and including launching some ETFs recently, you may have noticed, that are not with our quality-oriented strategies. Those have been the big drivers of that increase in assets. We hope that that will continue. Again, still fully believe that the quality-orientation strategies will come back into favor as well. again, we have been focused on those other strategies, which have been smaller, but now they have been growing and, you know, particularly, again, in the retail separate accounts. And very recently now, there'll be anything you would add, other?

Yeah, I think you'd hit on retail separate accounts.

Great. Thank you. My second question is on net outflows, and you might have hit on a little bit of the answer just then, but net outflows remain elevated, especially so over the last few quarters. So curious on the longer term trajectory that needs to be done. What needs to be done for that to improve first on a macro level and then on a micro level? On the micro side, it looks like you're making some progress there on some of those strategies outside of the quality orientation. But I'm just trying to get to, okay, how do you get closer or more progress closer to more neutral? And I also, I appreciate the comments on the improvement in March and April, but just thinking more on a longer-term, broad basis on flows.

Sure, yeah, and I'll start with just reiterating, again, the large percentage of the outflows, and again, we highlighted the two specific large mandates that drove that were in the earlier data, that April had been at a significantly lower level than, again, I think there's a couple of factors for the quality-oriented strategies, again, as the cycle eventually will turn. we see that as a good opportunity. We do actually believe that there are currently certain investors, particularly more of the institutional investors, that are fully cognizant of how out of favor growth equity, quality-oriented equity is, and are looking, hopefully looking at this as the opportunity, because inevitably at the turn of the cycle is usually when many managers, including ours, have generated some of their better performance. So we see that as an opportunity year we have spent a consider those other strategies from the first question which is really for those individuals that are not interested in quality orientation in particular having more of our style agnostic or other growth strategies or and again we've we started to see some of that traction it's nice those managers have compelling investment for our wholesaler forces strategy I think there's a great opportunity for that to be utilized and we definitely see that as another area of continued opportunity for us to to raise additional assets and again that would then hopefully complement what will eventually be the return of the higher level of demand for the quality oriented stress one of the reductions in our flows over the last few just the absence of having sales in that closed strategy so I think we commented that we're we're pleased to have that strategy because again our quality oriented strategies you know some of our best-selling strategies great thank you

appreciate taking my question thank you thank you and as a reminder if you have a question please press star 1 1 this concludes our question-and-answer session I would now like to turn the conference back over to mr. ailward

Okay, well, thank you very much, and I want to thank everyone today for joining us. I would certainly encourage you to reach out if you have any other further questions, and have a great day. Thank you very much.

That concludes today's call. Thank you for participating, and you may now disconnect.