Artisan Partners Asset Management : 1Q24 Investor Presentation 367.5 KB

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.

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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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