What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 218 added, 218 removed, 822 unchanged (35% of the section changed)

15 unchanged sentences

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

GAAP revenue, expense and other items for the three and nine months ended September 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 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.

GAAP net income attributable to controlling interests and ENI for the three and nine months ended September 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 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.

Approximately 80% of our management fees for the three months ended September 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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Summary Results of Operations

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,

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

($ in millions, unless otherwise noted) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 vs.

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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 $(0.3) 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.

(3) Excludes severance-related items at Acadian of $(0.3) million and costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended September 30, 2024.

Excludes costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended September 30, 2023.

Excludes severance-related items at Acadian of $(0.8) million, costs associated with the transfer of an insurance policy from our former Parent of $0.9 million, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million for the nine months ended September 30, 2024.

Excludes costs associated with the transfer of an insurance policy from our former parent of $0.9 million for the nine months ended September 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) June 30, 2024 December 31, 2023

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

Acadian Asset Management $ 120.3 $ 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) June 30, 2024 December 31, 2023

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

Developed Markets $ 92.6 $ 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) June 30, 2024 December 31, 2023

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

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

Three Months Ended September 30, Nine Months Ended September 30,

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

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Net flows 0.5 (0.5) 0.9 (0.3)

Market appreciation 2.2 2.3 8.5 6.1

Market appreciation (depreciation) 7.2 (2.0) 15.7 4.1

Ending balance $ 120.3 $ 97.4 $ 120.3 $ 97.4

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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 June 30, Six Months Ended June 30,

($ in billions) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Net flows (0.4) (0.1) (2.7) —

Market appreciation 0.1 0.2 0.7 0.5

Market appreciation (depreciation) 0.8 (0.3) 1.5 0.2

Ending balance $ 11.6 $ 12.0 $ 11.6 $ 12.0

5 unchanged sentences

Net flows 0.5 (1.0) 3.7 (1.3)

Market appreciation 1.8 1.8 6.9 5.2

Market appreciation (depreciation) 6.0 (1.7) 12.9 3.5

Ending balance $ 100.9 $ 79.4 $ 100.9 $ 79.4

11 unchanged sentences

Net flows 0.5 (0.5) 0.9 (0.3)

Market appreciation 2.2 2.3 8.5 6.1

Market appreciation (depreciation) 7.2 (2.0) 15.7 4.1

Ending balance 120.3 97.4 120.3 97.4

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

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

($ in billions) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Net flows 0.5 (0.6) (2.0) (0.4)

Market appreciation 1.6 1.4 5.8 4.0

Market appreciation (depreciation) 4.7 (1.1) 10.5 2.9

Ending balance $ 78.4 $ 65.2 $ 78.4 $ 65.2

4 unchanged sentences

Net flows — 0.1 2.9 0.1

Market appreciation 0.6 0.9 2.7 2.1

Market appreciation (depreciation) 2.5 (0.9) 5.2 1.2

Ending balance $ 41.9 $ 32.2 $ 41.9 $ 32.2

4 unchanged sentences

Net flows 0.5 (0.5) 0.9 (0.3)

Market appreciation 2.2 2.3 8.5 6.1

Market appreciation (depreciation) 7.2 (2.0) 15.7 4.1

Ending balance $ 120.3 $ 97.4 $ 120.3 $ 97.4

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.

At September 30, 2024, our total assets under management were $120.3 billion, an increase of $7.7 billion, or 6.8%, compared to $112.6 billion at June 30, 2024 and an increase of $22.9 billion, or 23.5%, compared to $97.4 billion at September 30, 2023.

The increase in assets under management compared to September 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 September 30, 2024 reflects net market appreciation of $7.2 billion, and net inflows of $0.5 billion.

The change in assets under management during the nine months ended September 30, 2024 reflects net market appreciation of $15.7 billion and net inflows of $0.9 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 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,

For the three months ended September 30, 2024, our net flows were $0.5 billion compared to $(0.5) billion for the three months ended September 30, 2023.

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

For the three months ended September 30, 2024, the annualized revenue impact of the net flows was $6.9 million compared to $(0.3) million for the three months ended September 30, 2023.

Gross inflows of $3.1 billion in the three months ended September 30, 2024 yielded approximately 57 bps compared to $2.5 billion yielding approximately 51 bps in the year-ago period.

Gross outflows of $(3.5) billion yielded approximately 40 bps in the three months ended September 30, 2024 compared to $(3.9) billion yielding approximately 42 bps in the year-ago period.

For the nine months ended September 30, 2024, our net flows were $0.9 billion compared to $(0.3) billion for the nine months ended September 30, 2023.

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

Reinvested income and distributions of $2.5 billion and $2.7 billion are reflected in the net flows for the nine months ended September 30, 2024 and September 30, 2023, respectively.

For the nine months ended September 30, 2024, the annualized revenue impact of the net flows was $8.1 million compared to $1.6 million for the nine months ended September 30, 2023.

Gross inflows of $15.7 billion in the nine months ended September 30, 2024 yielded approximately 40 bps compared to $6.7 billion yielding approximately 46 bps in the year-ago period.

Gross outflows of $(17.3) billion yielded approximately 37 bps in the nine months ended September 30, 2024 compared to $(9.7) billion yielding approximately 41 bps in the year-ago period.

GAAP Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

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

Three Months Ended September 30, Nine Months Ended September 30,

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

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Operating income 27.0 30.2 (3.2) 70.5 70.4 0.1

Investment income 0.1 0.2 (0.1) 1.0 0.5 0.5

Investment income (loss) 1.5 (0.3) 1.8 2.5 0.2 2.3

Interest income 0.6 1.7 (1.1) 2.8 4.3 (1.5)

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($ in millions) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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 38.5 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.

Average basis points earned on average assets under management were 38.3 bps and 38.4 bps for the three and nine months ended September 30, 2024, respectively, and 37.6 bps and 37.9 bps for the three and nine months ended September 30, 2023.

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

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

Management fees increased $16.8 million, or 17.6%, from $95.3 million for the three months ended September 30, 2023 to $112.1 million for the three months ended September 30, 2024.

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

Average assets under management increased 15.8%, from $100.5 billion for the three months ended September 30, 2023 to $116.4 billion for the three months ended September 30, 2024, mainly due to the positive equity market impact in the past twelve months.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Management fees increased $41.1 million, or 14.7%, from $278.7 million for the nine months ended September 30, 2023 to $319.8 million for the nine months ended September 30, 2024.

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

Average assets under management increase 12.8%, from $98.2 billion for the nine months ended September 30, 2023 to $110.8 billion for the nine months ended September 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 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.

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

Performance fees decreased $(1.1) million, from $11.2 million for the three months ended September 30, 2023 to $10.1 million for the three months ended September 30, 2024, primarily due to a change in 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.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Performance fees increased $2.1 million, from $13.9 million for the nine months ended September 30, 2023 to $16.0 million for the nine months ended September 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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The following table presents the components of U.S.

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,

GAAP compensation expense for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

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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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

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$ 29.4 $ 28.5 $ 83.7 $ 74.4

(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.

(a) For the three and nine months ended September 30, 2024, $29.6 million and $83.6 million, respectively, of variable compensation expense (of the $29.4 million and $83.7 million above) is included within economic net income.

The three months ended September 30, 2024 excludes $(0.3) million of severance-related items at Acadian.

The nine months ended September 30, 2024 excludes $(0.8) 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 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.

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

Compensation and benefits expense increased $16.6 million, or 31.3%, from $53.0 million for the three months ended September 30, 2023 to $69.6 million for the three months ended September 30, 2024.

Fixed compensation and benefits increased $1.4 million, or 6.1%, from $23.1 million for the three months ended September 30, 2023 to $24.5 million for the three months ended September 30, 2024, primarily reflecting the cost of new hires supporting our growth initiatives, and cost of living increases, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Variable compensation increased $0.9 million, or 3.2%, from $28.5 million for the three months ended September 30, 2023 to $29.4 million for the three months ended September 30, 2024.

The increase was primarily attributable to higher pre-bonus profits in the three months ended September 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.

Sales-based compensation increased $2.1 million, or 175.0%, from $1.2 million for the three months ended September 30, 2023 to $3.3 million for the three months ended September 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 $1.6 million, or 106.7%, from $1.5 million for the three months ended September 30, 2023 to $3.1 million for the three months ended September 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.

Revaluations of Affiliate equity changed by $10.6 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 three months ended September 30, 2023 and increased $9.3 million for the three months ended September 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.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Compensation and benefits expense increased $39.3 million, or 26.1%, from $150.6 million for the nine months ended September 30, 2023 to $189.9 million for the nine months ended September 30, 2024.

Fixed compensation and benefits increased $2.1 million, or 3.0%, from $70.2 million for the nine months ended September 30, 2023 to $72.3 million for the nine months ended September 30, 2024, primarily reflecting the cost of new hires supporting our growth initiatives and cost of living increases, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

Variable compensation increased $9.3 million, or 12.5%, from $74.4 million for the nine months ended September 30, 2023 to $83.7 million for the nine months ended September 30, 2024.

The increase was primarily attributable to higher pre-bonus profits in the nine months ended September 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.

Sales-based compensation increased $2.2 million or 46.8% from $4.7 million for the nine months ended September 30, 2023 to $6.9 million for the nine months ended September 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 $3.5 million, or 89.7%, from $3.9 million for the nine months ended September 30, 2023 to $7.4 million for the nine months ended September 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.

Revaluations of Affiliate equity changed $22.2 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(2.6) million for the nine months ended September 30, 2023 and increased $19.6 million for the nine months ended September 30, 2024.

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

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General and Administrative Expense

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.

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

General and administrative expense increased $3.0 million, or 16.0%, from $18.8 million for the three months ended September 30, 2023 to $21.8 million for the three months ended September 30, 2024.

The increase in general and administrative expenses primarily reflects the impact of foreign currency changes, higher systems and portfolio administrative costs, and our continued investment in growth initiatives and capabilities.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

General and administrative expense increased $3.9 million, or 6.6%, from $59.0 million for the nine months ended September 30, 2023 to $62.9 million for the nine months ended September 30, 2024.

Depreciation and Amortization Expense

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.

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

Depreciation and amortization expense was flat at $4.5 million for each of the three months ended September 30, 2023 and 2024.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Depreciation and amortization expense increased $1.4 million, or 11.0%, from $12.7 million for the nine months ended September 30, 2023 to $14.1 million for the nine months ended September 30, 2024.

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

5 unchanged sentences

Investment Income

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.

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

Investment income (loss) changed $1.8 million, from $(0.3) million for the three months ended September 30, 2023 to $1.5 million for the three months ended September 30, 2024, reflecting the change in returns generated by seed capital investments.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Investment income increased $2.3 million, from $0.2 million for the nine months ended September 30, 2023 to $2.5 million for the nine months ended September 30, 2024, reflecting an increase in returns generated by seed capital investments due to market appreciation.

Interest Income

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.

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

Interest income decreased $(1.1) million, or (64.7)% from $1.7 million for the three months ended September 30, 2023 compared to $0.6 million for the three months ended September 30, 2024.

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

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Interest income decreased $(1.5) million, or (34.9)%, from $4.3 million for the nine months ended September 30, 2023 compared to $2.8 million for the nine months ended September 30, 2024.

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

Interest Expense

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.

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

Interest expense decreased $(0.1) million, or (2.1)%, from $4.8 million for the three months ended September 30, 2023 to $4.7 million for the three months ended September 30, 2024, reflecting a lower balance drawn on the revolving credit facility in the three months ended September 30, 2024.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Interest expense decreased $(0.1) million, or (0.7)%, from $15.1 million for the nine months ended September 30, 2023 compared to $15.0 million for the nine months ended September 30, 2024, reflecting a lower balance drawn on the revolving credit facility in the nine months ended September 30, 2024.

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 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.

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

Income tax expense increased $1.7 million, from $7.7 million for the three months ended September 30, 2023 to $9.4 million for the three months ended September 30, 2024.

The increase in income tax expense primarily relates to an increase in the disallowance of executive compensation deduction in the three months ended September 30, 2024.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023 :

Income tax expense increased $2.8 million, from $18.3 million for the nine months ended September 30, 2023 to $21.1 million for the nine months ended September 30, 2024.

The increase in income tax expense primarily relates to an increase in the disallowance of executive compensation deduction in the nine months ended September 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 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.

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

Consolidated Funds’ revenue increased $0.1 million, from $0.8 million for the three months ended September 30, 2023 to $0.9 million for the three months ended September 30, 2024.

Consolidated Funds’ expense decreased $(0.6) million, from $0.8 million for the three months ended September 30, 2023 to $0.2 million for the three months ended September 30, 2024.

Net consolidated Funds’ investment gain increased $3.3 million from $0.7 million for the three months ended September 30, 2023 to $4.0 million for the three months ended September 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.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023 :

Consolidated Funds’ revenue decreased $(0.8) million, from $2.8 million for the nine months ended September 30, 2023 to $2.0 million for the nine months ended September 30, 2024.

Consolidated Funds’ expense decreased $(2.3) million, from $2.7 million for the nine months ended September 30, 2023 to $0.4 million for the nine months ended September 30, 2024.

Net consolidated Funds’ investment gain increased $4.7 million from $1.8 million for the nine months ended September 30, 2023 to $6.5 million for the nine months ended September 30, 2024.

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

1 unchanged sentence

The following table shows our key U.S.

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,

GAAP operating metrics for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

19 unchanged sentences

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

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.

GAAP operating margin is 21.5% for the three months ended September 30, 2024, 28.4% for the three months ended September 30, 2023, 20.5% for the nine months ended September 30, 2024, and 24.0% for the nine months ended September 30, 2023.

(2) Excludes consolidated Funds’ expense of $0.2 million for the three months ended September 30, 2024, $0.8 million for the three months ended September 30, 2023, $0.4 million for the nine months ended September 30, 2024, and $2.7 million for the nine months ended September 30, 2023.

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

(4) Excludes consolidated Funds’ revenue of $0.9 million for the three months ended September 30, 2024, $0.8 million for the three months ended September 30, 2023, $2.0 million for the nine months ended September 30, 2024, and $2.8 million for the nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

3 unchanged sentences

3.1 1.5 7.4 3.9

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

Operating (income) loss of consolidated Funds (0.7) — (1.6) (0.1)

Operating income before Affiliate key employee distributions

35 unchanged sentences

Reconciliation of U.S.

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,

GAAP Net Income to Economic Net Income for the Three and Nine Months Ended September 30, 2024 and 2023

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

Three Months Ended September 30, Nine Months Ended September 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)

9 unchanged sentences

$ 22.2 $ 19.3 $ 56.8 $ 43.1

(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,

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

4 unchanged sentences

Financing costs 1.1 0.3 2.5 1.0

Net seed/co-investment gains and financing $ (0.2) $ (0.1) $ (1.4) $ (0.9)

Net seed/co-investment (gains) losses and financing $ (3.0) $ 0.1 $ (4.4) $ (0.8)

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

(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.

(2) The three months ended September 30, 2024 includes severance-related items at Acadian of $(0.3) million and costs associated with the transfer of an insurance policy from our former parent of $0.3 million.

The three months ended September 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.3 million.

The nine months ended September 30, 2024 includes severance-related items at Acadian of $(0.8) million, costs associated with the transfer of an insurance policy from our former parent of $0.9 million, and costs associated with the wind-down of the MACS business in the standalone format of $1.3 million.

The nine months ended September 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.9 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 and six months ended June 30, 2024 and 2023:

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

GAAP revenue to ENI revenue for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

4 unchanged sentences

The following table identifies the components of ENI revenue:

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

15 unchanged sentences

The following table reconciles U.S.

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

12 unchanged sentences

ENI operating expense $ 53.9 $ 47.4 $ 154.9 $ 145.7

(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.

(1) The three months ended September 30, 2024 includes $(0.3) million of severance-related items at Acadian and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended September 30, 2023 includes $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2024 includes $(0.8) million of severance-related items at Acadian, $0.9 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 nine months ended September 30, 2023 includes $0.9 million costs associated with the transfer of an insurance policy from our former parent.

(2) The three and nine months ended September 30, 2024 excludes $(0.3) million and $(0.8) million, respectively, of severance-related items at Acadian that is included within restructuring costs.

The nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

7 unchanged sentences

The following table reconciles U.S.

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

11 unchanged sentences

ENI fixed compensation and benefits $ 24.5 $ 23.1 $ 72.3 $ 70.2

(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.

(a) The three months ended September 30, 2024 includes $(0.3) million of severance-related items at Acadian.

The nine months ended September 30, 2024 includes $(0.8) 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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 and six months ended June 30, 2024 and 2023.

The following table shows our key non-GAAP operating metrics for the three and nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

26 unchanged sentences

GAAP operating income to ENI operating earnings:

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

14 unchanged sentences

ENI earnings after Affiliate key employee distributions $ 35.6 $ 29.1 $ 89.9 $ 68.6

(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.

(a) The three months ended September 30, 2024 includes $(0.3) million of severance-related items at Acadian and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended September 30, 2023 includes $0.3 million of costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2023 includes $0.9 million of costs associated with the transfer of an insurance policy from our former parent.

(b) The three and nine months ended September 30, 2024 excludes $(0.3) million and $(0.8) million, respectively, of severance-related items at Acadian.

The nine months ended September 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 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.

GAAP operating margin, excluding the effect of consolidated Funds, is 21.5% for the three months ended September 30, 2024, 28.4% for the three months ended September 30, 2023, 20.5% for the nine months ended September 30, 2024, and 24.0% for the nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

10 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

15 unchanged sentences

(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 $59.1 million as of June 30, 2024 and $41.4 million as of December 31, 2023, including direct investments in consolidated Funds.

The value of our seed capital investments was $90.6 million as of September 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) June 30,

($ in millions) September 30,

2024 December 31,

10 unchanged sentences

The corporate head office expenses are not allocated to the Company’s business segment but the CODM does consider the cost structure of the corporate head office when evaluating the financial performance of our segment.

The primary measure used by the CODM in measuring performance and allocating resources to the segments is ENI.

The primary measure used by the CODM in measuring performance and allocating resources to the segment is ENI.

We define economic net income for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions.

13 unchanged sentences

Segment ENI Revenue

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,

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

Three Months Ended September 30,

($ in millions) 2024 2023

4 unchanged sentences

ENI revenue $ 122.2 $ 122.2 $ 106.5 $ 106.5

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,

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

Nine Months Ended September 30,

($ in millions) 2024 2023

5 unchanged sentences

Quant & Solutions Segment ENI Revenue

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.

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

Quant & Solutions ENI revenue increased $15.7 million, or 14.7%, from $106.5 million for the three months ended September 30, 2023 to $122.2 million for the three months ended September 30, 2024.

The increase was mainly attributable to 17.6% higher management fees driven by higher average AUM resulting from positive equity markets in the past twelve months, slightly offset by lower performance fees.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Quant & Solutions ENI revenue increased $43.2 million, or 14.8%, from $292.6 million for the nine months ended September 30, 2023 to $335.8 million for the nine months ended September 30, 2024.

The increase was attributable to 14.7% higher management fees driven by higher average AUM resulting from positive equity markets in the past twelve months and higher performance fees due to strong performance relative to market in certain strategies.

Segment ENI Expense

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,

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

Three Months Ended September 30,

($ in millions) 2024 2023

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$ 82.0 $ 4.6 $ 86.6 $ 73.3 $ 4.1 $ 77.4

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,

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

Nine Months Ended September 30,

($ in millions) 2024 2023

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Quant & Solutions Segment ENI Expense

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.

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

Quant & Solutions ENI operating expense increased $5.9 million, or 13.4%, from $44.0 million for the three months ended September 30, 2023 to $49.9 million for the three months ended September 30, 2024.

The increase was driven by 26.1% higher ENI general and administrative expense reflecting the impact of foreign currency changes, higher systems and portfolio administration costs, and our continued investment in growth initiatives and capabilities.

Quant & Solutions ENI fixed compensation and benefits expense increased 5.6%, reflecting the cost of new hires supporting our growth initiatives and cost of living increases, partially offset by cost savings realized from restructuring at our Affiliate in late 2023.

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.

Quant & Solutions ENI variable compensation expense increased 4.3% 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 September 30, 2024.

Affiliate key employee distributions attributable to Quant & Solutions increased 106.7%.

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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 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.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Quant & Solutions ENI operating expense increased $8.4 million, or 6.2%, from $134.9 million for the nine months ended September 30, 2023 to $143.3 million for the nine months ended September 30, 2024.

The increase was driven by 9.8% higher ENI general and administrative expense primarily due to higher outside services, systems, and portfolio administrative costs, reflecting our continued investment in growth initiatives and capabilities, partially offset by lower consultant costs.

Quant & Solutions ENI fixed compensation and benefits expense increased 2.8%, reflecting the cost of new hires supporting our growth initiatives and cost of living increases, partially offset by cost savings realized from restructuring in late 2023.

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.

Quant & Solutions ENI variable compensation expense increased 13.1% 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 nine months ended September 30, 2024.

Affiliate key employee distributions attributable to Quant & Solutions increased 89.7%.

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Other ENI Expense

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.

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

Other ENI operating expense increased $0.6 million, or 17.6%, from $3.4 million for the three months ended September 30, 2023 to $4.0 million for the three months ended September 30, 2024.

The increase was driven by 22.2% higher general and administrative expense driven by an increase in legal costs.

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.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Other ENI operating expense increased $0.8 million, or 7.4%, from $10.8 million for the nine months ended September 30, 2023 to $11.6 million for the nine months ended September 30, 2024.

The increase was driven by 8.8% higher general and administrative expense driven by an increase in legal costs and 5.9% higher fixed compensation and benefit expense due to cost of living and employee benefit increases driven by inflation.

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

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All amounts presented exclude consolidated Funds:

Six Months Ended June 30,

Nine Months Ended September 30,

($ in millions) 2024 2023

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(1) Excludes consolidated Funds.

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.

Comparison for the nine months ended September 30, 2024 and 2023

Net cash from operating activities increased $23.3 million, from net cash provided of $35.8 million for the nine months ended September 30, 2023 to net cash provided of $59.1 million for the nine months ended September 30, 2024, driven by changes in net income offset by changes in operating assets and liabilities period-over-period.

In the nine months ended September 30, 2024, net cash from investing activities changed by $(37.1) million, from $(11.2) million used in the nine months ended September 30, 2023 to $(48.3) million used in the nine months ended September 30, 2024, driven by higher net purchases of investment securities and lower fixed asset additions in the nine months ended September 30, 2024.

Net cash from financing activities decreased $114.3 million, from $10.2 million provided in the nine months ended September 30, 2023 to $(104.1) million used in the nine months ended September 30, 2024, primarily due to the repayment of revolving credit facility borrowings and higher share repurchases in the nine months ended September 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 and six months ended June 30, 2024 and 2023.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2024 2023 2024 2023

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$ 22.2 $ 19.3 $ 56.8 $ 43.1

(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.

(1) The three months ended September 30, 2024 includes $(0.3) million of severance-related items at Acadian and $0.3 million of costs associated with the transfer of an insurance policy from our former parent.

The three months ended September 30, 2023 includes $0.3 million of costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.9 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) June 30,

($ in millions) September 30,

2024 December 31,

2 unchanged sentences

$140 million revolving credit facility (1)

$ 36.0 $ — Variable rate March 7, 2025

$ — $ — Variable rate August 29, 2027

Total revolving credit facility $ — $ —

2 unchanged sentences

Total third party borrowings $ 274.2 $ 273.9

(1) On August 29, 2024, Acadian’s $125 million revolving credit facility was terminated and replaced with a new $140 million revolving credit facility.

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 (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.

On August 29, 2024, Acadian, Royal Bank of Canada, Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., the Bank of New York Mellon, Bank of America N.A., as an issuing bank, 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 Acadian’s revolving credit facility dated as of March 7, 2022 (the “Prior Credit Agreement”).

The maturity date of the Prior Credit Agreement was March 7, 2025, and the maturity date of the Acadian Credit Agreement is August 29, 2027.

Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1%, plus, in each case an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio.

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

At September 30, 2024, Acadian’s Leverage Ratio was 0.0x and Acadian’s Interest Coverage Ratio was 69.8x.

Other Compensation Liabilities

1 unchanged sentence

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

September 30,

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 $54.8 million and $101.3 million on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, respectively.

Additionally, we have recorded accrued incentive compensation of $84.0 million and $101.3 million on the Condensed Consolidated Balance Sheets as of September 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