What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-09 · 291 added, 142 removed, 749 unchanged (37% of the section changed)

1 unchanged sentence

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company”, “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries, excluding discontinued operations.

References to the holding company or “Center” excluding the Affiliates refer to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG.

References to the holding company or “Center” excluding our Affiliate refers to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Affiliates” or an “Affiliate” refer to the asset management firms in which we have or previously had an ownership interest.

References in this Quarterly Report on Form 10-Q to “Acadian” refer to Acadian Asset Management LLC, our sole Affiliate.

References in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent.

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This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and client location, and net flows by segment, client type and client location.

GAAP Results of Operations for the Three Months Ended March 31, 2024 and 2023 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three months ended March 31, 2024 and 2023, as well as key U.S.

GAAP Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three and six months ended June 30, 2024 and 2023, as well as key U.S.

GAAP operating metrics.

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This section also provides a reconciliation between U.S.

GAAP net income attributable to controlling interests and ENI for the three months ended March 31, 2024 and 2023, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses.

GAAP net income attributable to controlling interests and ENI for the three and six months ended June 30, 2024 and 2023, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses.

This section also provides key non-GAAP operating metrics.

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We earn management fees based on assets under management.

Approximately 80% of our management fees for the three months ended March 31, 2024 were calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM.

Approximately 80% of our management fees for the three months ended June 30, 2024 were calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM.

Changes in the levels of our AUM are driven by market investment performance and net client cash flows.

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The sharing of profits in this manner ensures that the economic interests of Acadian key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term.

We view profit sharing as an

attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Equity or profit interests owned by Acadian key employees are awarded as part of their variable compensation arrangement.

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Summary Results of Operations

The following table summarizes our unaudited results of operations for the three months ended March 31, 2024 and 2023:

($ in millions, unless otherwise noted) Three Months Ended March 31,

The following table summarizes our unaudited results of operations for the three and six months ended June 30, 2024 and 2023:

($ in millions, unless otherwise noted) Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 vs.

2023 2024 2023 2024 vs.

Revenue $ 109.0 $ 96.3 $ 12.7 $ 214.7 $ 188.1 $ 26.6

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GAAP operating margin (1)

21.7 % 21.6 % 10 bps

18.9 % 21.2 % (228) bps 20.3 % 21.4 % (111) bps

Earnings per share, basic ($) $ 0.29 $ 0.27 $ 0.02 $ 0.67 $ 0.56 $ 0.11

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ENI operating margin (6)

27.7 % 22.8 % 490 bps

27.1 % 22.2 % 494 bps 27.4 % 22.5 % 492 bps

Economic net income (7)

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GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis.”

(3) Excludes severance-related items at Acadian of $(0.2) million and costs associated with the transfer of an insurance policy from our former parent of $0.2 million for the three months ended March 31, 2024.

Excludes costs associated with the transfer of an insurance policy from our former parent of $0.4 million for the three months ended March 31, 2023.

(3) Excludes severance-related items at Acadian of $(0.3) million, costs associated with the transfer of an insurance policy from our former parent of $0.4 million, and costs associated with the wind-down of the Multi-Asset Class Strategies, or “MACS” business in the standalone format of $1.3 million for the three months ended June 30, 2024.

Excludes costs associated with the transfer of an insurance policy from our former parent of $0.2 million for the three months ended June 30, 2023.

Excludes severance-related items at Acadian of $(0.5) million, costs associated with the transfer of an insurance policy from our former Parent of $0.6 million, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million for the six months ended June 30, 2024.

Excludes costs associated with the transfer of an insurance policy from our former parent of $0.6 million for the six months ended June 30, 2023.

(4) ENI revenue is the ENI measure which corresponds to U.S.

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The following table presents our assets under management as of each of the dates indicated:

($ in billions) March 31, 2024 December 31, 2023

($ in billions) June 30, 2024 December 31, 2023

Acadian Asset Management $ 112.6 $ 103.7

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The following table presents our assets under management by strategy as of each of the dates indicated:

($ in billions) March 31, 2024 December 31, 2023

($ in billions) June 30, 2024 December 31, 2023

Developed Markets $ 87.1 $ 80.7

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The following table shows assets under management by client type as of each of the dates indicated:

($ in billions) March 31, 2024 December 31, 2023

($ in billions) June 30, 2024 December 31, 2023

AUM % of total AUM % of total

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The following table shows assets under management by client location as of each of the dates indicated:

($ in billions) March 31, 2024 December 31, 2023

($ in billions) June 30, 2024 December 31, 2023

AUM % of total AUM % of total

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The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in billions, unless otherwise noted) 2024 2023 2024 2023

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The following table summarizes our asset flows by client type for each of the periods indicated:

($ in billions) Three Months Ended March 31,

($ in billions) Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Beginning balance $ 13.0 $ 11.9 $ 12.8 $ 11.8

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The following table summarizes asset flows by client location for each of the periods indicated:

($ in billions) Three Months Ended March 31,

($ in billions) Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Beginning balance $ 73.0 $ 65.0 $ 69.9 $ 62.7

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Ending balance $ 112.6 $ 99.9 $ 112.6 $ 99.9

At March 31, 2024, our total assets under management were $110.4 billion, an increase of $6.7 billion, or 6.5%, compared to $103.7 billion at December 31, 2023 and an increase of $12.9 billion, or 13.2%, compared to $97.5 billion at March 31, 2023.

The increase in assets under management compared to March 31, 2023 was driven by the equity market appreciation in the last twelve months.

The change in assets under management during the three months ended March 31, 2024 reflects net market appreciation of $6.3 billion and net inflows of $0.4 billion.

At June 30, 2024, our total assets under management were $112.6 billion, an increase of $2.2 billion, or 2.0%, compared to $110.4 billion at March 31, 2024 and an increase of $12.7 billion, or 12.7%, compared to $99.9 billion at June 30, 2023.

The increase in assets under management compared to June 30, 2023 was driven by the equity market appreciation in the last twelve months.

The change in assets under management during the three months ended June 30, 2024 reflects net market appreciation of $2.2 billion, and flat net flows.

The change in assets under management during the six months ended June 30, 2024 reflects net market appreciation of $8.5 billion and net inflows of $0.4 billion.

Market appreciation or depreciation reported in current and prior periods includes changes in equity prices, as well as the impact from exchange rate fluctuations on our foreign-denominated AUM.

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dollar changes relative to other currencies.

For the three months ended March 31, 2024, our net flows were $0.4 billion compared to $0.1 billion for the three months ended March 31, 2023.

The change in net flows during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by increased sales in the three months ended March 31, 2024.

Reinvested income and distributions of $0.8 billion and $0.9 billion are reflected in the net flows for the three months ended March 31, 2024 and March 31, 2023, respectively.

For the three months ended March 31, 2024, the annualized revenue impact of the net flows was $(0.2) million compared to $1.0 million for the three months ended March 31, 2023.

Gross inflows of $4.3 billion in the three months ended March 31, 2024 yielded approximately 40 bps compared to $2.2 billion yielding approximately 41 bps in the year-ago period.

Gross outflows of $(4.7) billion yielded approximately 44 bps in the three months ended March 31, 2024 compared to $(3.0) billion yielding approximately 39 bps in the year-ago period.

GAAP Results of Operations for the Three Months Ended March 31, 2024 and 2023

GAAP results of operations were as follows for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

For the three months ended June 30, 2024, our net flows were flat compared to $0.1 billion for the three months ended June 30, 2023.

Reinvested income and distributions of $0.8 billion and $0.9 billion are reflected in the net flows for the three months ended June 30, 2024 and June 30, 2023, respectively.

For the three months ended June 30, 2024, the annualized revenue impact of the net flows was $1.4 million compared to $0.9 million for the three months ended June 30, 2023.

Gross inflows of $8.3 billion in the three months ended June 30, 2024 yielded approximately 33 bps compared to $2.0 billion yielding approximately 46 bps in the year-ago period.

Gross outflows of $(9.1) billion yielded approximately 32 bps in the three months ended June 30, 2024 compared to $(2.8) billion yielding approximately 43 bps in the year-ago period.

For the six months ended June 30, 2024, our net flows were $0.4 billion compared to $0.2 billion for the six months ended June 30, 2023.

The change in net flows during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by increased sales in the six months ended June 30, 2024.

Reinvested income and distributions of $1.6 billion and $1.8 billion are reflected in the net flows for the six months ended June 30, 2024 and June 30, 2023, respectively.

For the six months ended June 30, 2024, the annualized revenue impact of the net flows was $1.2 million compared to $1.9 million for the six months ended June 30, 2023.

Gross inflows of $12.6 billion in the six months ended June 30, 2024 yielded approximately 35 bps compared to $4.2 billion yielding approximately 44 bps in the year-ago period.

Gross outflows of $(13.8) billion yielded approximately 36 bps in the six months ended June 30, 2024 compared to $(5.8) billion yielding approximately 41 bps in the year-ago period.

GAAP Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

GAAP results of operations were as follows for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions, unless otherwise noted) 2024 2023 Increase

(Decrease) 2024 2023 Increase

GAAP Statement of Operations (1)

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($ in millions) Three Months Ended

June 30, Six Months Ended

GAAP Statement of Operations 2024 2023 2024 2023

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Our management fees are a function of the fee rates charged to our clients, which are typically expressed in basis points, and the levels of our assets under management.

Average basis points earned on average assets under management were 38.2 bps for the three months ended March 31, 2024 and 38.1 bps for the three months ended March 31, 2023.

The overall weighted average fee rate increase for the three months ended March 31, 2024 is the result of changes in the mix of assets under management caused by market movements and client flows.

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Management fees increased $11.6 million, or 12.8%, from $90.6 million for the three months ended March 31, 2023 to $102.2 million for the three months ended March 31, 2024.

The increase was due to higher levels of average assets under management.

Average assets under management increased 11.6%, from $96.4 billion for the three months ended March 31, 2023 to $107.6 billion for the three months ended March 31, 2024, mainly due to the positive equity market in the past twelve months.

Average basis points earned on average assets under management were 38.5 bps and 38.3 bps for the three and six months ended June 30, 2024, respectively, and 38.1 bps for the three and six months ended June 30, 2023.

The overall weighted average fee rate increase for the three and six months ended June 30, 2024 is the result of changes in the mix of assets under management caused by market movements and client flows.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Management fees increased $12.7 million, or 13.7%, from $92.8 million for the three months ended June 30, 2023 to $105.5 million for the three months ended June 30, 2024.

The increase was driven by higher levels of average assets under management.

Average assets under management increased 12.7%, from $97.9 billion for the three months ended June 30, 2023 to $110.3 billion for the three months ended June 30, 2024, mainly due to the positive equity market impact in the past twelve months.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Management fees increased $24.3 million, or 13.2%, from $183.4 million for the six months ended June 30, 2023 to $207.7 million for the six months ended June 30, 2024.

The increase was driven by higher levels of average assets under management.

Average assets under management increased 12.3%, from $97.1 billion for the six months ended June 30, 2023 to $109.0 billion for the six months ended June 30, 2024, mainly due to the positive equity market in the past twelve months.

Performance Fees

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Performance fees are typically shared with our Affiliate key employees through various contractual compensation and profit-sharing arrangements.

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Performance fees increased $2.6 million, from $0.5 million for the three months ended March 31, 2023 to $3.1 million for the three months ended March 31, 2024, primarily due to strong performance relative to market in certain strategies.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Performance fees increased $0.6 million, from $2.2 million for the three months ended June 30, 2023 to $2.8 million for the three months ended June 30, 2024, primarily due to strong performance relative to benchmarks in certain strategies.

Performance fees can be variable and are contractually triggered based on investment performance results over agreed upon time periods.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Performance fees increased $3.2 million, from $2.7 million for the six months ended June 30, 2023 to $5.9 million for the six months ended June 30, 2024, primarily due to strong performance relative to benchmarks in certain strategies.

Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.

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general and administrative expenses;

amortization of acquired intangible assets;

depreciation and amortization charges;

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The following table presents the components of U.S.

GAAP compensation expense for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

GAAP compensation expense for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Sales-based compensation (2)

2.0 1.6 3.6 3.5

Variable compensation (3)

27.9 22.7 54.3 45.9

Affiliate key employee distributions (4)

2.1 1.2 4.3 2.4

Non-cash Affiliate key employee equity revaluations (5)

5.9 (0.7) 10.3 (1.3)

GAAP compensation and benefits expense

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Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

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$ 27.9 $ 22.7 $ 54.3 $ 45.9

(a) For the three months ended March 31, 2024, $26.6 million of variable compensation expense (of the $26.4 million above) is included within economic net income, which excludes $(0.2) million of variable compensation associated with restructuring at Acadian.

(a) For the three and six months ended June 30, 2024, $27.4 million and $54.0 million, respectively, of variable compensation expense (of the $27.9 million and $54.3 million above) is included within economic net income.

The three months ended June 30, 2024 excludes $(0.3) million of severance-related items at Acadian and costs associated with the wind-down of the MACS business in the standalone format of $0.9 million.

The six months ended June 30, 2024 excludes $(0.5) million of severance-related items at Acadian and costs associated with the wind-down of the MACS business in the standalone format of $0.9 million.

(4) Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests.

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Fluctuations in compensation and benefits expense for the periods presented are discussed below.

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Compensation and benefits expense increased $9.0 million, or 18.3%, from $49.1 million for the three months ended March 31, 2023 to $58.1 million for the three months ended March 31, 2024.

Fixed compensation and benefits increased $0.1 million, or 0.4%, from $23.4 million for the three months ended March 31, 2023 to $23.5 million for the three months ended March 31, 2024, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Variable compensation increased $3.2 million, or 13.8%, from $23.2 million for the three months ended March 31, 2023 to $26.4 million for the three months ended March 31, 2024.

The increase was primarily attributable to higher pre-bonus profits in the three months ended March 31, 2024.

Sales-based compensation decreased $(0.3) million or (15.8)% from $1.9 million for the three months ended March 31, 2023 to $1.6 million for the three months ended March 31, 2024, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions increased $1.0 million, or 83.3%, from $1.2 million for the three months ended March 31, 2023 to $2.2 million for the nine months ended March 31, 2024, driven by higher operating earnings in the three months ended March 31, 2024.

Revaluations of Affiliate equity changed $5.0 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(0.6) million for the three months ended March 31, 2023 and increased $4.4 million for the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Compensation and benefits expense increased $13.7 million, or 28.2%, from $48.5 million for the three months ended June 30, 2023 to $62.2 million for the three months ended June 30, 2024.

Fixed compensation and benefits increased $0.6 million, or 2.5%, from $23.7 million for the three months ended June 30, 2023 to $24.3 million for the three months ended June 30, 2024, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Variable compensation increased $5.2 million, or 22.9%, from $22.7 million for the three months ended June 30, 2023 to $27.9 million for the three months ended June 30, 2024.

The increase was primarily attributable to higher pre-bonus profits in the three months ended June 30, 2024 at our Affiliate, partially offset by changes in deferred compensation expense earned on current and prior year performance fee revenues, of which the Affiliate’s share is determined by a contractual split and recognized as compensation expense over a vesting period.

The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings.

Sales-based compensation increased $0.4 million, or 25.0%, from $1.6 million for the three months ended June 30, 2023 to $2.0 million for the three months ended June 30, 2024, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions increased $0.9 million, or 75.0%, from $1.2 million for the three months ended June 30, 2023 to $2.1 million for the three months ended June 30, 2024.

Affiliate key employee distributions for certain tiers of equity are calculated after an earnings threshold is met, whereby no distributions are made to these equity holders when earnings are below the threshold.

The change in Affiliate key employee distributions during the current period is driven by higher operating earnings in the current period and the leveraged nature of this distribution share.

Revaluations of Affiliate equity changed by $6.6 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(0.7) million for the three months ended June 30, 2023 and increased $5.9 million for the three months ended June 30, 2024.

For certain tiers of Affiliate equity, revaluations are calculated based on earnings above a threshold.

The change in the revaluation in the current period is driven by higher earnings period over period, including earnings over the threshold for certain Affiliate equity.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Compensation and benefits expense increased $22.7 million, or 23.3%, from $97.6 million for the six months ended June 30, 2023 to $120.3 million for the six months ended June 30, 2024.

Fixed compensation and benefits increased $0.7 million, or 1.5%, from $47.1 million for the six months ended June 30, 2023 to $47.8 million for the six months ended June 30, 2024, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Variable compensation increased $8.4 million, or 18.3%, from $45.9 million for the six months ended June 30, 2023 to $54.3 million for the six months ended June 30, 2024.

The increase was primarily attributable to higher pre-bonus profits in the six months ended June 30, 2024 at our Affiliate, partially offset by changes in deferred compensation expense earned on current and prior year performance fee revenues, of which the Affiliate’s share is determined by a contractual split and recognized as compensation expense over a vesting period.

The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings.

Sales-based compensation increased $0.1 million or 2.9% from $3.5 million for the six months ended June 30, 2023 to $3.6 million for the six months ended June 30, 2024, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions increased $1.9 million, or 79.2%, from $2.4 million for the six months ended June 30, 2023 to $4.3 million for the six months ended June 30, 2024.

The change in Affiliate key employee distributions during the current period is driven by higher operating earnings and the leveraged nature of this distribution share.

Revaluations of Affiliate equity changed $11.6 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(1.3) million for the six months ended June 30, 2023 and increased $10.3 million for the six months ended June 30, 2024.

For certain tiers of Affiliate equity, revaluations are calculated based on earnings above a threshold.

The change in the revaluation in the current period is driven by higher earnings period over period, including earnings over the threshold for certain Affiliate equity.

General and Administrative Expense

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

General and administrative expense increased $1.6 million, or 8.7%, from $18.4 million for the three months ended March 31, 2023 to $20.0 million for the three months ended March 31, 2024.

The increase was primarily due to higher systems, outside services and portfolio administrative costs, as well as our continued investment in growth initiatives and capabilities.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

General and administrative expense decreased $(0.7) million, or (3.2)%, from $21.8 million for the three months ended June 30, 2023 to $21.1 million for the three months ended June 30, 2024.

The decrease in general and administrative expenses primarily reflects lower consultant costs and the impact of foreign currency changes.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

General and administrative expense increased $0.9 million, or 2.2%, from $40.2 million for the six months ended June 30, 2023 to $41.1 million for the six months ended June 30, 2024.

The increase was primarily due to higher systems, outside services and portfolio administrative costs, and our continued investment in growth initiatives and capabilities, partially offset by lower consultant costs and the impact of foreign currency changes.

Depreciation and Amortization Expense

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Depreciation and amortization expense increased $0.8 million, or 21.1%, from $3.8 million for the three months ended March 31, 2023 to $4.6 million for the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Depreciation and amortization expense increased $0.6 million, or 13.6%, from $4.4 million for the three months ended June 30, 2023 to $5.0 million for the three months ended June 30, 2024.

The increase was due to additional software and technology investments in the business.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Depreciation and amortization expense increased $1.4 million, or 17.1%, from $8.2 million for the six months ended June 30, 2023 to $9.6 million for the six months ended June 30, 2024.

The increase was primarily attributable to additional software and technology investments in the business.

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Investment Income

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Investment income increased $0.6 million, from $0.3 million for the three months ended March 31, 2023 to $0.9 million for the three months ended March 31, 2024, reflecting an increase in returns generated by seed capital investments due to market appreciation.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Investment income (loss) decreased $(0.1) million or (50.0)%, from $0.2 million for the three months ended June 30, 2023 to $0.1 million for the three months ended June 30, 2024, reflecting the change in returns generated by seed capital investments.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Investment income increased $0.5 million, or 100.0%, from $0.5 million for the six months ended June 30, 2023 to $1.0 million for the six months ended June 30, 2024, reflecting an increase in returns generated by seed capital investments due to market appreciation.

Interest Income

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Interest income increased $0.2 million, or 18.2%, from $1.1 million for the three months ended March 31, 2023 compared to $1.3 million for the three months ended March 31, 2024.

The increase was due to an increases in short-term investment returns in the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Interest income decreased $(0.6) million, or (40.0)% from $1.5 million for the three months ended June 30, 2023 compared to $0.9 million for the three months ended June 30, 2024.

The decrease was due to lower average cash balances and decreases in short-term investment returns in the three months ended June 30, 2024.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Interest income decreased $(0.4) million, or (15.4)%, from $2.6 million for the six months ended June 30, 2023 compared to $2.2 million for the six months ended June 30, 2024.

The decrease was due to lower average cash balances and decreases in short-term investment returns in the six months ended June 30, 2024.

Interest Expense

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Interest expense increased $0.1 million, or 2.0%, from $4.9 million for the three months ended March 31, 2023 to $5.0 million for the three months ended March 31, 2024, reflecting an increase in interest rates on the revolving credit facility in the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Interest expense decreased $(0.1) million, or (1.9)%, from $5.4 million for the three months ended June 30, 2023 to $5.3 million for the three months ended June 30, 2024, reflecting a lower balance drawn on the revolving credit facility in the three months ended June 30, 2024.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Interest expense remained unchanged, at $10.3 million for the six months ended June 30, 2024 and 2023, respectively.

GAAP Income Tax Expense

1 unchanged sentence

Our effective tax rate could be impacted in the future by these items as well as further changes in tax laws and regulations in jurisdictions in which we operate.

Three months ended March 31, 2024 compared to three months ended March 31, 2023 :

Income tax expense increased $1.0 million, from $5.1 million for the three months ended March 31, 2023 to $6.1 million for the three months ended March 31, 2024.

The increase in income tax expense primarily relates to the increase in income before income taxes during the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Income tax expense increased $0.1 million, from $5.5 million for the three months ended June 30, 2023 to $5.6 million for the three months ended June 30, 2024.

The increase in income tax expense primarily relates to changes in discrete tax items, partially offset by a decrease in income before income taxes attributable to controlling interests in the three months ended June 30, 2024.

Six months ended June 30, 2024 compared to six months ended June 30, 2023 :

Income tax expense increased $1.1 million, from $10.6 million for the six months ended June 30, 2023 to $11.7 million for the six months ended June 30, 2024.

The increase in income tax expense primarily relates to the increase in income before income taxes attributable to controlling interests in the six months ended June 30, 2024.

GAAP Consolidated Funds

The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

Three months ended March 31, 2024 compared to three months ended March 31, 2023 :

Consolidated Funds’ revenue decreased $(0.3) million, from $0.7 million for the three months ended March 31, 2023 to $0.4 million for the three months ended March 31, 2024.

Consolidated Funds’ expense decreased $(0.6) million, from $0.7 million for the three months ended March 31, 2023 to $0.1 million for the three months ended March 31, 2024.

Net consolidated Funds’ investment gain increased $0.9 million from $0.8 million for the three months ended March 31, 2023 to $1.7 million for the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Consolidated Funds’ revenue decreased $(0.6) million, from $1.3 million for the three months ended June 30, 2023 to $0.7 million for the three months ended June 30, 2024.

Consolidated Funds’ expense decreased $(1.1) million, from $1.2 million for the three months ended June 30, 2023 to $0.1 million for the three months ended June 30, 2024.

Net consolidated Funds’ investment gain increased $0.5 million from $0.3 million for the three months ended June 30, 2023 to $0.8 million for the three months ended June 30, 2024.

These movements relate to the underlying activity of our consolidated Funds.

Six months ended June 30, 2024 compared to six months ended June 30, 2023 :

Consolidated Funds’ revenue decreased $(0.9) million, from $2.0 million for the six months ended June 30, 2023 to $1.1 million for the six months ended June 30, 2024.

Consolidated Funds’ expense decreased $(1.7) million, from $1.9 million for the six months ended June 30, 2023 to $0.2 million for the six months ended June 30, 2024.

Net consolidated Funds’ investment gain increased $1.4 million from $1.1 million for the six months ended June 30, 2023 to $2.5 million for the six months ended June 30, 2024.

These movements relate to the underlying activity of our consolidated Funds.

GAAP Operating Metrics

The following table shows our key U.S.

GAAP operating metrics for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

GAAP operating metrics for the three and six months ended June 30, 2024 and 2023.

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

17 unchanged sentences

GAAP Affiliate key employee distributions ratio (3)

9.5 % 5.6 % 9.2 % 5.6 %

(1) Excluding the effect of Funds’ consolidation in the applicable periods, the U.S.

GAAP operating margin is 21.5% for the three months ended March 31, 2024, and 21.7% for the three months ended March 31, 2023.

(2) Excludes consolidated Funds’ expense of $0.1 million for the three months ended March 31, 2024, and $0.7 million for the three months ended March 31, 2023.

(3) Excludes the effect of Funds consolidation for the three months ended March 31, 2024 and 2023.

(4) Excludes consolidated Funds’ revenue of $0.4 million for the three months ended March 31, 2024, and $0.7 million for the three months ended March 31, 2023.

GAAP operating margin is 18.5% for the three months ended June 30, 2024, 21.4% for the three months ended June 30, 2023, 19.9% for the six months ended June 30, 2024, and 21.5% for the six months ended June 30, 2023.

(2) Excludes consolidated Funds’ expense of $0.1 million for the three months ended June 30, 2024, $1.2 million for the three months ended June 30, 2023, $0.2 million for the six months ended June 30, 2024, and $1.9 million for the six months ended June 30, 2023.

(3) Excludes the effect of Funds consolidation for the three and six months ended June 30, 2024 and 2023.

(4) Excludes consolidated Funds’ revenue of $0.7 million for the three months ended June 30, 2024, $1.3 million for the three months ended June 30, 2023, $1.1 million for the six months ended June 30, 2024, and $2.0 million for the six months ended June 30, 2023.

(5) The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Affiliate key employee distributions

Operating (income) loss of consolidated Funds (0.3) —

2.1 1.2 4.3 2.4

Operating income of consolidated Funds (0.6) (0.1) (0.9) (0.1)

Operating income before Affiliate key employee distributions

22.1 21.5 46.9 42.5

Variable compensation 27.9 22.7 54.3 45.9

13 unchanged sentences

• We exclude the effect of Funds’ consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders.

• We include within management fee revenue any fees paid to Affiliate by consolidated Funds.

• We include within management fee revenue any fees paid to our Affiliate by consolidated Funds.

• We include our share of earnings from our equity-accounted Affiliate within other income in ENI revenue, rather than investment income.

17 unchanged sentences

Reconciliation of U.S.

GAAP Net Income to Economic Net Income for the Three Months Ended March 31, 2024 and 2023

The following table reconciles net income attributable to controlling interests to economic net income for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

GAAP Net Income to Economic Net Income for the Three and Six Months Ended June 30, 2024 and 2023

The following table reconciles net income attributable to controlling interests to economic net income for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

4 unchanged sentences

Capital transaction costs

0.1 0.1 0.2 0.2

Seed/Co-investment (gains) losses and financings (1)

(0.2) (0.1) (1.4) (0.9)

Tax benefit of goodwill and acquired intangibles deductions 0.4 0.3 0.8 0.7

Discontinued operations attributable to controlling interests and restructuring (2)

1.4 0.2 1.4 0.6

ENI tax normalization

0.6 0.6 0.6 0.7

Tax effect of above adjustments, as applicable (3)

(2.0) 0.2 (2.9) 0.4

Economic net income

$ 17.2 $ 12.0 $ 34.6 $ 23.8

(1) The net return on seed/co-investment (gains) losses and financings for the three months ended March 31, 2024 and 2023 is shown in the following table:

Three Months Ended March 31,

(1) The net return on seed/co-investment (gains) losses and financings for the three and six months ended June 30, 2024 and 2023 is shown in the following table:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

6 unchanged sentences

* The blended rate is based on the weighted average rate of the long-term debt.

(2) The three months ended March 31, 2024 includes severance-related items at Acadian of $(0.2) million and costs associated with the transfer of an insurance policy from our former parent of $0.2 million.

The three months ended March 31, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.4 million.

(2) The three months ended June 30, 2024 includes severance-related items at Acadian of $(0.3) million, costs associated with the transfer of an insurance policy from our former parent of $0.4 million, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The three months ended June 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.2 million.

The six months ended June 30, 2024 includes severance-related items at Acadian of $(0.5) million, costs associated with the transfer of an insurance policy from our former parent of $0.6 million, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The six months ended June 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(3) Reflects the sum of lines (i), (ii), (iii), (iv) and the restructuring component of line (vi) multiplied by the 27.3% U.S.

7 unchanged sentences

The following table reconciles U.S.

GAAP revenue to ENI revenue for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

GAAP revenue to ENI revenue for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

1 unchanged sentence

Exclude revenue from consolidated Funds attributable to non-controlling interests

(0.7) (1.3) (1.1) (2.0)

ENI revenue $ 108.3 $ 95.0 $ 213.6 $ 186.1

The following table identifies the components of ENI revenue:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Performance fees (2)

2.8 2.2 5.9 2.7

ENI revenue $ 108.3 $ 95.0 $ 213.6 $ 186.1

10 unchanged sentences

The following table reconciles U.S.

GAAP operating expense to ENI operating expense for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

GAAP operating expense to ENI operating expense for the three and six months ended June 30, 2024 and 2023.

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Non-cash key employee equity and profit interest revaluations

(5.9) 0.7 (10.3) 1.3

Restructuring costs (1)

(1.4) (0.3) (1.4) (0.7)

Funds’ operating expense (0.1) (1.2) (0.2) (1.9)

5 unchanged sentences

ENI operating expense $ 51.5 $ 51.2 $ 101.0 $ 98.3

(1) The three months ended March 31, 2024 includes $(0.2) million of severance-related items at Acadian and $0.2 million of costs associated with the transfer of an insurance policy from our former parent.

The three months ended March 31, 2023 includes $0.4 million costs associated with the transfer of an insurance policy from our former parent.

(2) The three months ended March 31, 2024 excludes $(0.2) million severance-related items at Acadian that is included within Restructuring costs.

(1) The three months ended June 30, 2024 includes $(0.3) million of severance-related items at Acadian, $0.4 million costs associated with the transfer of an insurance policy from our former parent, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The three months ended June 30, 2023 includes $0.2 million costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2024 includes $(0.5) million of severance-related items at Acadian, $0.6 million of costs associated with the transfer of an insurance policy from our former parent, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The six months ended June 30, 2023 includes $0.6 million costs associated with the transfer of an insurance policy from our former parent.

(2) The three and six months ended June 30, 2024 excludes $(0.3) million and $(0.5) million, respectively, of severance-related items at Acadian that is included within restructuring costs.

Each of the three and six months ended June 30, 2024 excludes $0.9 million of costs associated with the wind-down of the MACS business in the standalone format that is included within restructuring costs.

The following table identifies the components of ENI operating expense:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

General and administrative expenses (2)

22.6 23.1 44.0 43.0

Depreciation and amortization 4.6 4.4 9.2 8.2

2 unchanged sentences

The following table reconciles U.S.

GAAP compensation and benefits expense for the three months ended March 31, 2024 and 2023 to ENI fixed compensation and benefits expense:

Three Months Ended March 31,

GAAP compensation and benefits expense for the three and six months ended June 30, 2024 and 2023 to ENI fixed compensation and benefits expense:

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

1 unchanged sentence

Non-cash key employee equity and profit interest revaluations excluded from ENI

(5.9) 0.7 (10.3) 1.3

Sales-based compensation reclassified to ENI general & administrative expenses

(2.0) (1.6) (3.6) (3.5)

Affiliate key employee distributions

Restructuring expenses 0.2 —

(2.1) (1.2) (4.3) (2.4)

Restructuring expenses (a)

(0.5) — (0.3) —

Variable compensation

1 unchanged sentence

ENI fixed compensation and benefits $ 24.3 $ 23.7 $ 47.8 $ 47.1

(a) The three months ended June 30, 2024 includes $(0.3) million of severance-related items at Acadian and costs associated with the wind-down of the MACS business in the standalone format of $0.9 million.

The six months ended June 30, 2024 includes $(0.5) million of severance-related items at Acadian, and costs associated with the wind-down of the MACS business in the standalone format of $0.9 million.

(2) The following table reconciles U.S.

GAAP general and administrative expense to ENI general and administrative expense:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

5 unchanged sentences

Key Non-GAAP Operating Metrics

The following table shows our key non-GAAP operating metrics for the three months ended March 31, 2024 and 2023.

The following table shows our key non-GAAP operating metrics for the three and six months ended June 30, 2024 and 2023.

We present these metrics because they are the measures our management uses to evaluate the profitability of our business and are useful to investors because they represent the key drivers and measures of economic performance within our business model.

1 unchanged sentence

GAAP measure:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

17 unchanged sentences

Affiliate key employee distributions

$ 2.1 $ 1.2 $ 4.3 $ 2.4

ENI operating earnings (1)

1 unchanged sentence

ENI Affiliate key employee distributions ratio (7)

7.1 % 5.7 % 7.3 % 5.7 %

(1) ENI operating earnings represents ENI earnings before Affiliate key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation.

2 unchanged sentences

GAAP operating income to ENI operating earnings:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

4 unchanged sentences

Restructuring costs (a)

1.4 0.3 1.4 0.7

Affiliate key employee distributions 2.1 1.2 4.3 2.4

Variable compensation 27.4 22.7 54.0 45.9

Funds’ operating (income) loss (0.3) —

Funds’ operating income (0.6) (0.1) (0.9) (0.1)

ENI earnings before variable compensation 56.8 43.8 112.6 87.8

4 unchanged sentences

ENI earnings after Affiliate key employee distributions $ 27.3 $ 19.9 $ 54.3 $ 39.5

(a) The three months ended March 31, 2024 includes $(0.2) million of severance-related items at Acadian and $0.2 million of costs associated with the transfer of an insurance policy from our former parent.

The three months ended March 31, 2023 includes $0.4 million of costs associated with the transfer of an insurance policy from our former parent.

(b) The three months ended March 31, 2024 excludes $(0.2) million severance-related items at Acadian.

(a) The three months ended June 30, 2024 includes $(0.3) million of severance-related items at Acadian, $0.4 million costs associated with the transfer of an insurance policy from our former parent, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The three months ended June 30, 2023 includes $0.2 million of costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2023 includes $0.6 million of costs associated with the transfer of an insurance policy from our former parent.

(b) The three and six months ended June 30, 2024 excludes $(0.3) million and $(0.5) million, respectively, of severance-related items at Acadian.

Each of the three and six months ended June 30, 2024 excludes $0.9 million of costs associated with the wind-down of the MACS business in the standalone format.

(2) The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business.

1 unchanged sentence

GAAP operating margin.

GAAP operating margin, excluding the effect of consolidated Funds, is 21.5% for the three months ended March 31, 2024, and 21.7% for the three months ended March 31, 2023.

GAAP operating margin, excluding the effect of consolidated Funds, is 18.5% for the three months ended June 30, 2024, 21.4% for the three months ended June 30, 2023, 19.9% for the six months ended June 30, 2024, and 21.5% for the six months ended June 30, 2023.

The ENI operating margin is important because it gives investors an understanding of the profitability of the total business relative to revenue, irrespective of the ownership position which we have in our Affiliate.

24 unchanged sentences

The following table reconciles the United States statutory tax to tax on economic net income:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

3 unchanged sentences

federal and state statutory rates (2)

(6.5) (4.5) (13.1) (8.9)

Other reconciling tax adjustments (0.1) 0.1 (0.1) 0.1

4 unchanged sentences

(1) Includes interest income and third-party ENI interest expense, as shown in the following table:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

3 unchanged sentences

Other ENI interest expense exclusions (a)

0.9 0.4 1.6 0.8

ENI net interest expense (3.5) (3.5) (6.5) (6.9)

ENI earnings after Affiliate key employee distributions (b)

27.3 19.9 54.3 39.5

Pre-tax economic net income $ 23.8 $ 16.4 $ 47.8 $ 32.6

2 unchanged sentences

Refer to “—Key Non-GAAP Operating Metrics” for a reconciliation from U.S.

GAAP operating income (loss) to ENI earnings after Affiliate key employee distributions.

GAAP operating income to ENI earnings after Affiliate key employee distributions.

(2) Taxed at U.S.

1 unchanged sentence

(3) The economic net income effective tax rate is calculated by dividing the tax on economic net income by pre-tax economic net income.

The value of our seed capital investments was $43.2 million as of March 31, 2024 and $41.4 million as of December 31, 2023, including direct investments in consolidated Funds.

The value of our seed capital investments was $59.1 million as of June 30, 2024 and $41.4 million as of December 31, 2023, including direct investments in consolidated Funds.

Total seed capital investments represents our seed capital invested within our Affiliate’s investment products.

The following table reconciles the investments balance per our Condensed Consolidated Balance Sheets to the total value of our seed capital investments as of each of the dates indicated:

($ in millions) December 31,

($ in millions) June 30,

2024 December 31,

26 unchanged sentences

Segment ENI Revenue

The following table identifies the components of segment ENI revenue for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table identifies the components of segment ENI revenue for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

($ in millions) 2024 2023

4 unchanged sentences

ENI revenue $ 108.3 $ 108.3 $ 95.0 $ 95.0

The following table identifies the components of segment ENI revenue for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

($ in millions) 2024 2023

Quant & Solutions Total Quant & Solutions Total

Management fees $ 207.7 $ 207.7 $ 183.4 $ 183.4

Performance fees

5.9 5.9 2.7 2.7

ENI revenue $ 213.6 $ 213.6 $ 186.1 $ 186.1

Quant & Solutions Segment ENI Revenue

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Quant & Solutions ENI revenue increased $14.2 million, or 15.6%, from $91.1 million for the three months ended March 31, 2023 to $105.3 million for the three months ended March 31, 2024.

The increase was attributable to 12.8% higher management fees, driven by higher average AUM and higher performance fees that are variable and are contractually triggered based on investment performance results over agreed upon time periods.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Quant & Solutions ENI revenue increased $13.3 million, or 14.0%, from $95.0 million for the three months ended June 30, 2023 to $108.3 million for the three months ended June 30, 2024.

The increase was mainly attributable to 13.7% higher management fees driven by higher average AUM resulting from positive equity markets in the past twelve months.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Quant & Solutions ENI revenue increased $27.5 million, or 14.8%, from $186.1 million for the six months ended June 30, 2023 to $213.6 million for the six months ended June 30, 2024.

The increase was attributable to 13.2% higher management fees driven by higher average AUM resulting from positive equity markets in the past twelve months and higher performance fees that are variable and are contractually triggered based on investment performance results over agreed upon time periods.

Segment ENI Expense

The following table identifies the components of segment ENI expense for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table identifies the components of segment ENI expense for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

($ in millions) 2024 2023

6 unchanged sentences

Total ENI operating expenses

$ 47.7 $ 3.8 $ 51.5 $ 47.3 $ 3.9 $ 51.2

Variable compensation

3 unchanged sentences

Total expenses

$ 76.6 $ 4.4 $ 81.0 $ 70.5 $ 4.6 $ 75.1

The following table identifies the components of segment ENI expense for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

($ in millions) 2024 2023

Quant & Solutions Other Total Quant & Solutions Other Total

Fixed compensation & benefits

$ 44.2 $ 3.6 $ 47.8 $ 43.6 $ 3.5 $ 47.1

General and administrative expense 40.0 4.0 44.0 39.1 3.9 43.0

Depreciation and amortization

9.2 — 9.2 8.2 — 8.2

Total ENI operating expenses $ 93.4 $ 7.6 $ 101.0 $ 90.9 $ 7.4 $ 98.3

Variable compensation

52.8 1.2 54.0 44.5 1.4 45.9

Affiliate key employee distributions

4.3 — 4.3 2.4 — 2.4

Total expenses $ 150.5 $ 8.8 $ 159.3 $ 137.8 $ 8.8 $ 146.6

Quant & Solutions Segment ENI Expense

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Quant & Solutions ENI operating expense increased $2.1 million, or 4.8%, from $43.6 million for the three months ended March 31, 2023 to $45.7 million for the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Quant & Solutions ENI operating expense increased $0.4 million, or 0.8%, from $47.3 million for the three months ended June 30, 2023 to $47.7 million for the three months ended June 30, 2024.

The increase was driven by 2.7% higher ENI fixed compensation and benefits expense.

Quant & Solutions ENI fixed compensation and benefits expense increased 2.7% reflecting cost of living increases and the cost of new hires supporting our growth initiatives, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Quant & Solutions ENI general and administrative expense decreased (1.9)% due to lower consulting costs.

Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period.

The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings.

Quant & Solutions ENI variable compensation expense increased 21.8% as a result of higher earnings before variable compensation, partially offset by changes in deferred compensation expense earned on current and prior year performance fee revenues in the three months ended June 30, 2024.

Affiliate key employee distributions attributable to Quant & Solutions increased 75.0%.

The change in Affiliate key employee distributions during the current period is driven by higher operating earnings and the leveraged nature of this distribution share.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Quant & Solutions ENI operating expense increased $2.5 million, or 2.8%, from $90.9 million for the six months ended June 30, 2023 to $93.4 million for the six months ended June 30, 2024.

The increase was driven by 2.3% higher ENI general and administrative expense primarily due to higher systems, outside services, and portfolio administrative costs and continued investment in growth initiatives and capabilities.

Quant & Solutions ENI fixed compensation and benefits expense was unchanged at $21.6 million for the three months ended March 31, 2024 and 2023, respectively, reflecting cost of living increases and the cost of new hires supporting our growth initiatives, offset by cost savings realized from restructuring in late 2023.

Quant & Solutions ENI fixed compensation and benefits expense increased 1.4% reflecting cost of living increases and the cost of new hires supporting our growth initiatives, offset by cost savings realized from restructuring in late 2023.

Quant & Solutions ENI variable compensation expense increased 15.6% as a result of higher earnings before variable compensation in the three months ended March 31, 2024.

Affiliate key employee distributions attributable to Quant & Solutions increased 83.3%, as a result of higher operating earnings, impacted by the leveraged nature of the distribution share.

The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings.

Quant & Solutions ENI variable compensation expense increased 18.7% as a result of higher earnings before variable compensation, partially offset by changes in deferred compensation expense earned on current and prior year performance fee revenues in the six months ended June 30, 2024.

Affiliate key employee distributions attributable to Quant & Solutions increased 79.2%.

The change in Affiliate key employee distributions during the current period is driven by higher operating earnings and the leveraged nature of this distribution share.

Other ENI Expense

Three months ended March 31, 2024 compared to three months ended March 31, 2023:

Other ENI operating expense increased $0.3 million, or 8.6%, from $3.5 million for the three months ended March 31, 2023 to $3.8 million for the three months ended March 31, 2024.

Three months ended June 30, 2024 compared to three months ended June 30, 2023:

Other ENI operating expense decreased $(0.1) million, or (2.6)%, from $3.9 million for the three months ended June 30, 2023 to $3.8 million for the three months ended June 30, 2024.

The decrease was driven by (4.5)% lower general and administrative expense resulting from cost-saving initiatives.

Other ENI variable compensation expense decreased (14.3)% due to lower non-cash equity compensation amortization at the corporate head office.

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Other ENI operating expense increased $0.2 million, or 2.7%, from $7.4 million for the six months ended June 30, 2023 to $7.6 million for the six months ended June 30, 2024.

The increase was driven by 2.9% higher fixed compensation and benefit expense due to cost of living and employee benefit increases driven by inflation and 2.6% higher general and administrative expense driven by an increase in rent expense.

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All amounts presented exclude consolidated Funds:

Three Months Ended March 31,

Six Months Ended June 30,

($ in millions) 2024 2023

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(1) Excludes consolidated Funds.

Comparison for the three months ended March 31, 2024 and 2023

Net cash from operating activities decreased $(5.0) million, from net cash used of $34.3 million for the three months ended March 31, 2023 to net cash used of $39.3 million for the three months ended March 31, 2024, driven by changes in net income offset by changes in operating assets and liabilities period-over-period.

In the three months ended March 31, 2024, net cash from investing activities increased by $4.2 million, from $(5.6) million used in the three months ended March 31, 2023 to $(1.4) million used in the three months ended March 31, 2024, driven by higher net sales of investment securities and lower fixed asset additions in the three months ended March 31, 2024.

Net cash from financing activities decreased $89.2 million, from $85.5 million provided in the three months ended March 31, 2023 to $(3.7) million used in the three months ended March 31, 2024, primarily due to the repayment of third party borrowings and higher share repurchases in the three months ended March 31, 2024.

Comparison for the six months ended June 30, 2024 and 2023

Net cash from operating activities decreased $(1.9) million, from net cash provided of $7.3 million for the six months ended June 30, 2023 to net cash provided of $5.4 million for the six months ended June 30, 2024, driven by changes in net income offset by changes in operating assets and liabilities period-over-period.

In the six months ended June 30, 2024, net cash from investing activities changed by $(8.1) million, from $(10.7) million used in the six months ended June 30, 2023 to $(18.8) million used in the six months ended June 30, 2024, driven by higher net purchases of investment securities and lower fixed asset additions in the six months ended June 30, 2024.

Net cash from financing activities decreased $97.4 million, from $35.7 million provided in the six months ended June 30, 2023 to $(61.7) million used in the six months ended June 30, 2024, primarily due to higher share repurchases in the six months ended June 30, 2024.

Supplemental Liquidity Measure — Adjusted EBITDA

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The following table reconciles our U.S.

GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three and six months ended June 30, 2024 and 2023.

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2024 2023 2024 2023

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Non-cash compensation costs, including revaluation of Affiliate key employee-owned equity and profit interests

6.1 (0.2) 10.8 (0.6)

Gain on seed and co-investments (1.0) (0.5) (2.8) (1.6)

Restructuring expenses (1)

0.9 0.2 0.9 0.6

Capital transaction costs — — — —

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Depreciation and amortization (2)

(4.7) (4.8) (9.6) (8.8)

Tax on economic net income (6.6) (4.4) (13.2) (8.8)

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$ 17.2 $ 12.0 $ 34.6 $ 23.8

The three months ended March 31, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.4 million.

(1) The three months ended June 30, 2024 includes $(0.3) million of severance-related items at Acadian, $0.4 million of costs associated with the transfer of an insurance policy from our former parent, and costs associated with the wind-down of the MACS business in the standalone format of $0.9 million.

The three months ended June 30, 2023 includes $0.2 million of costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(2) Includes non-cash equity-based award amortization expense.

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The following table summarizes our financing arrangements as of the dates indicated:

($ in millions) March 31,

($ in millions) June 30,

2024 December 31,

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Revolving Credit Facility

On March 7, 2022, Acadian, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (“Acadian Credit Agreement”), which replaced our revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”).

On March 7, 2022, Acadian, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced our revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”).

The maturity date of the Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025.

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Under the Acadian Credit Agreement, the ratio of Acadian’s third-party borrowings to Acadian’s trailing twelve months Adjusted EBITDA, as defined by the Acadian Credit Agreement (the “Leverage Ratio”), cannot exceed 2.5x and the ratio of Acadian’s trailing twelve months Adjusted EBITDA to Acadian’s interest expense (the “Interest Coverage Ratio”) must be not less than 4.0x.

At March 31, 2024, Acadian’s Leverage Ratio was 0.5x and Acadian’s Interest Coverage Ratio was 57.6x.

At June 30, 2024, Acadian’s Leverage Ratio was 0.2x and Acadian’s Interest Coverage Ratio was 61.9x.

Other Compensation Liabilities

Other compensation liabilities principally consist of cash-settled Affiliate equity and profit interests liabilities held by certain Affiliate key employees, and voluntary deferred compensation plans.

The following table summarizes our other long-term liabilities as of each of the dates indicated:

The following table summarizes our other compensation liabilities as of each of the dates indicated:

2024 December 31,

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There is a voluntary deferral plan investment balance included in investments on the Condensed Consolidated Balance Sheets that corresponds to this deferral liability.

Additionally, we have recorded accrued incentive compensation of $30.2 million and $101.3 million on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively.

Additionally, we have recorded accrued incentive compensation of $54.8 million and $101.3 million on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, respectively.

Included within the accrued incentive compensation balance is the vested portion of Acadian’s deferred compensation pool.

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis