Acadian Asset Management Inc. Q4 FY2024 earnings call

• Acadian releases earnings as a stand - alone company for the first time. - Fourth quarter and full - year 2024 results were outstanding with significant growth in ENI and adjusted EBITDA. - Investment performance was strong with most strategies outperforming benchmarks. - Has a robust distribution platform with over 90 experienced professionals serving more than 1,000 accounts in 40 countries and generated record gross sales in 2024. - Four key product initiatives for future growth: enhanced equity, extensions equity, systematic credit and equity alternatives platforms, with progress made in each.

In the fourth quarter of 2024, AAMI achieved the highest level of quarterly ENI EPS in the firm’s history. ENI per share was $1.30 compared to $0.77 in the fourth quarter of 2023, a 69% increase. ENI for the fourth quarter of 2024 was $49 million, a $16 million increase from the prior year, primarily driven by higher ENI management fee revenue and higher incentive fees. Adjusted EBITDA of $73 million was up 41% from Q4 of 2023. For the full year 2024, ENI was $106 million, an increase of 40% from the prior year, and adjusted EBITDA was $177 million, a 32% increase from the prior year. Record ENI EPS of $2.76 for the full year represented a 55% increase compared to 2023. Net client cash flows for the fourth quarter of 2024 were positive by $900 million, and total positive NCCF were $1.8 billion in 2024, the first positive annual net flow since 2019, driven by Acadian’s highest ever gross sales year of $21 billion in 2024.

• Expect the four key product initiatives (enhanced equity, extensions equity, systematic credit and equity alternatives platforms) to drive future growth. - Anticipate strong momentum in enhanced equity strategies which offer risk - adjusted returns and can satisfy broader investment demand. - See potential for substantial AUM growth in systematic credit and equity alternatives platforms as they continue to incubate track records.

• Forward - looking statements are 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, our 2023 Form 10 - K and our Form 10 - Q for each of the first, second, and third quarters of 2024.

Q: Just want to get a better sense of whether there are any specific strategies that drove the positive net flows that you saw in the quarter there?

A: Yes, what was really exciting about Q4 sales and sales for 2024 was the breadth of strategies that clients funded. Saw clear growth in both enhanced equities and our extension strategies recently, but also saw substantial assets moving into a number of our more traditional core strategies as well where we are gaining market share in a number of areas.

Q: I wonder if you could just help us frame out the longer - term AUM opportunity, specifically for Acadian for these kind of strategies, how much growth could you see AUM grow over time there? And then somewhat relatedly, what’s sort of the fee rate opportunity here?

A: We’re very pleased with the progress in these initiatives. On systematic credit, the opportunities could be substantial over time with large mandates as we incubate track records. On the equity alternatives platform, multi - strategy has been popular and there’s substantial upside in terms of AUM growth. With respect to fees, on the credit side, fees may be a little lower versus blended fees across the business, and on the equity alternatives and hedge fund platform, expect to see much higher average fees versus traditional core strategy.

Q: Given the cash on balance sheet, I wonder if you could just talk a little bit more about potential cash needs for this coming year and I think you have an upcoming note maturity as well, any plans around that?

A: The balance sheet is very strong and the business generates good free cash flow. We haven’t got pre - allocations in mind. As the senior note matures next year, we’ll start looking into refinancing options for that note and want to be prudent in terms of maintaining good leverage ratios and financial flexibility there and focusing on what makes most sense for shareholder value.

Q: Just wondering if you could maybe provide some color on composition and the magnitude of the pipeline, maybe frame that how – frame that versus how it was like 3 months to 6 months ago?

A: We have a very strong robust pipeline across a number of different strategies and a very strong unfunded pipeline that we expect to see clients fund over the next one to two quarters. The pipeline picked up quite significantly through the second half of 2024 going into 2025 and is more robust even than six months ago, with breadth of strategies from enhanced and extensions to traditional core equity strategies and niche areas like small cap