Affiliated Managers Group 2026 Q3 Earnings Call

Good morning, and thank you for joining us today to discuss AMG's results for the third quarter of 2026. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements which could differ from our actual results materially due to a number of factors, including those described in today's earnings press release and our most recent Form 10-K and subsequent filings with the SEC. AMG assumes no obligation to update these statements. Also, please note that nothing on this call constitutes an offer of any products, investment vehicles, or services of any AMG Affiliate. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and reconciliations of any non-GAAP financial measures, including any earnings guidance provided.

In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgen, President and Chief Executive Officer, and Dava Ritchea, Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. Today, AMG reported another quarter of record results. Given the quality of our earnings and the scale of our business, AMG's profile has never been more compelling. AUM, aggregate fees, fee-related earnings, Adjusted EBITDA, Economic earnings per share, and organic flows into alternatives were all at record levels in the third quarter. On a year-to-date basis, AMG generated nearly $1 billion in Adjusted EBITDA and $26 in Economic earnings per share, representing growth of 41% and 56% year-over-year, respectively. To put these impressive results in perspective, in just three quarters, our business generated Economic earnings per share roughly equivalent to what we delivered in all of 2025, and nearly 95% of that was driven by fee-related earnings. AMG also delivered its sixth consecutive quarter of net inflows.

With $21 billion in net inflows in the quarter and $85 billion over the last 18 months, our business continues to generate strong organic growth. These results understate the exceptional momentum in higher-fee, higher-margin alternative strategies, which attracted more than $31 billion in net inflows in the quarter and $150 billion over the past six quarters. Assets under management increased to a record $974 billion, driven by our Affiliates' growth through both net inflows and investment performance, setting the stage for ongoing earnings growth momentum in the fourth quarter and into next year. Given AMG's significant growth, our increasingly attractive alternatives profile, and the compelling valuation of our shares, we stepped up our repurchases meaningfully, deploying $400 million in the quarter and bringing our year-to-date total share repurchases to $775 million.

The momentum across our business is a direct result of the successful execution of our strategy to evolve our earnings profile towards alternatives. After nearly 20 years at AMG, I am very proud of our team's many accomplishments, but the one that stands out the most is the transformational impact of the strategic shift towards alternatives that we embarked on in 2019. In just seven years, we will have evolved from generating less than 35% of our earnings from alternative strategies to nearly 70%. It is a remarkable transformation, underscoring the power of disciplined and deliberate capital allocation and the advantages of our unique business model, particularly our strong cash flow generation and our ability to redeploy that cash to areas of secular growth.

Today, AMG's earnings profile is that of a diversified alternatives business across private markets and liquid alternatives, characterized by high growth, high fee, high margin, and long-duration assets. As we have discussed over recent quarters, four secular trends continue to drive our organic growth profile. First, the accelerating client demand worldwide for secondaries strategies across private markets. Second, the ongoing client demand for infrastructure strategies broadly. Third, the growing appetite for absolute return strategies within client portfolios. Fourth, the continued expansion of tax-aware investing. Together, these four growth areas, secondary solutions, infrastructure, absolute return strategies, and tax-aware strategies, contributed to our record alternative inflows in the quarter and have been the driving force behind the $150 billion in net inflows into our Affiliates' alternative strategies over the past six quarters. Our Affiliates' performance across private markets and liquid alternatives has been outstanding.

With clients increasingly seeking differentiated sources of return and diversification against the backdrop of a more complex market environment, we have high conviction that these strategies can be a powerful growth driver for years to come. More broadly, over the last 12 months, our assets under management have increased by approximately $170 billion, or 21%, including $69 billion as a result of new Affiliate investments. Following an active first half, including the completion of our investments in BBH Credit Partners, HighBrook Investors, and an incremental minority investment in Garda Capital Partners, our investment pipeline remains strong. We are excited to execute on our opportunity set and form additional new partnerships that further diversify our business and drive additional earnings growth. AMG is a strategic partner that can magnify the competitive advantages of partner-owned firms while preserving the very thing that makes them so special, their independence.

No other institutional partner can match our three-decade track record in meeting the needs of and magnifying the opportunities for independent firms, which is why AMG's unique partnership approach continues to strongly resonate with prospective Affiliates. Given our competitive differentiation, our robust capital position, and our pipeline of new prospects, we have a sizable opportunity to drive additional earnings growth and further evolve our business profile by forming new partnerships, as well as investing in and alongside our existing Affiliates. AMG's business is highly diversified across nearly 40 Affiliates operating in private markets, liquid alternatives, and differentiated long-only strategies. This unique business profile generates significant unencumbered cash flow, enabling us to navigate periods of uncertainty and changing market conditions while also making accretive investments in new and existing Affiliates.

In addition, given our forward growth prospects and the strength of our capital position, we have been a buyer of AMG shares in size, repurchasing approximately 2.3 million shares, or 9% of the shares outstanding through the third quarter, and 30% since the beginning of 2024. We expect to continue to take advantage of this truly unique opportunity to invest in industry-leading growth through a diversified alternatives business at an extremely attractive price. That is, we will continue to invest in AMG itself. Our alternatives profile and our ability to invest substantial capital in the areas of highest growth and return across new and existing Affiliates and in our own shares provides us with the opportunity to continue to generate a long-term compound annual growth rate in economic earnings per share of between 15% and 20%, as we have done over the past five years.

Given the ongoing successful execution of our strategy, that growth rate has accelerated. In 2025, we generated growth in economic earnings per share of more than 20%, and we expect that growth rate to more than double to approximately 50% in 2026. As we look ahead, our capital allocation decision-making will continue to be, by far, the most impactful element of our strategy. We expect our cumulative free cash flow over the next five to seven years to approximate our entire current market capitalization, enabling us to continue to strategically evolve AMG's business towards areas of growth in our industry. With our unique partnership-centric, cash-generative, return-focused model, we will continue to deploy that capital with discipline, further diversifying and enhancing our earnings power and our ability to create long-term value for our shareholders. With that, I'll turn it over to Dava.

Thank you, Jay, and good morning, everyone. AMG's outstanding third quarter results reflect the ongoing evolution of our business towards differentiated alternative strategies with durable client demand trends. This strategic evolution continues to expand our earnings base and enhance our earnings quality. Four complementary factors drove our results: strong organic growth, investment performance, growing contributions from recent investments, and the impact of share repurchases. The momentum across these factors, together with our balance sheet strength and financial flexibility, further enhances our ability to continue to execute our growth and capital allocation strategy. In the third quarter, AMG's assets under management ended at a record level of 974 billion, up 3% compared to the prior quarter, driven by strong liquid alternative investment performance and alternative net inflows.

On an LTM basis, AUM increased 21% due to investment performance, strong organic growth in alternative strategies, including record fundraising in private markets, and the addition of new Affiliates. Turning to flows, AMG's Affiliates generated net client cash flows of $21 billion in the quarter, including a record of more than $31 billion in alternatives. Over the last 12 months, firm-wide net client cash flows were $68 billion, representing 9% organic growth, including $113 billion in alternatives, driven by the four key growth areas Jay highlighted: secondaries, infrastructure, absolute return strategies, and tax-aware investing. This activity reflects sustained client demand for liquid alternatives and private market solutions, as well as our Affiliates' reach across the institutional and wealth channels.

Given that many of the strategies attracting assets carry higher fee rates and margins, the impact of these flows on Adjusted EBITDA is approximately 2x what the organic growth rate alone would imply. Private markets were a standout this quarter. Our Affiliates raised $10 billion in the quarter and a record $30 billion over the last 12 months, representing 21% organic growth. Fundraising was broad-based across secondaries, infrastructure, and specialized private market strategies, with contributions from several Affiliates. The diversity across our 11 private markets Affiliates, with $161 billion in total AUM, underpins a more durable fundraising profile and a more consistent organic growth rate over time. Capital raised in these strategies is typically committed to long-duration, locked-up vehicles that generate management fees and the potential for carried interest. AMG participates directly in the margin expansion of these businesses, which provides further uplift to our earnings profile as they grow.