What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 77 added, 117 removed, 287 unchanged (40% of the section changed)

11 unchanged sentences

(i) any reduction in our assets under management;

(ii) inability to achieve the expected benefits of our strategic transactions;

(ii) inability to achieve the expected benefits of strategic transactions;

(iii) withdrawal, renegotiation or termination of investment advisory agreements;

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We provide investment management and related services to institutions and individuals.

We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual brand, as well as from select unaffiliated subadvisers for certain of our retail funds.

By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences.

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We have offerings in various asset classes (equity, fixed income, multi-asset and alternatives), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative).

Our institutional products are offered through separate accounts and pooled or commingled structures to a variety of institutional clients.

Our retail products include open-end funds, closed-end funds and retail separate accounts.

We also provide subadvisory services to other investment advisers and serve as the collateral manager for structured products.

Our institutional products are offered through institutional separate accounts and commingled accounts, including structured products to a variety of institutional clients.

Our products include open-end funds, closed-end funds and retail separate accounts.

We also provide subadvisory services to other investment advisers.

Our institutional distribution resources include affiliate-specific sales teams primarily focused on the U.S.

market, supported by shared consultant relation support and non-U.S.

institutional distribution.

market, supported by shared consultant relations and U.S.

institutional sales distribution.

Our institutional products are marketed through relationships with consultants as well as directly to clients.

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Financial Highlights

▪ Net income per diluted share was $4.19 in the third quarter of 2023, a decrease of $0.06, or 1.4%, compared to net income per diluted share of $4.25 in the third quarter of 2022.

▪ Total sales were $5.8 billion in the third quarter of 2023, an increase of $0.1 billion, or 1.5%, from $5.7 billion in the third quarter of 2022.

Net flows were $(1.5) billion in the third quarter of 2023 compared to net flows of $(3.3) billion in the third quarter of 2022.

▪ Assets under management were $162.5 billion at September 30, 2023, an increase of $17.6 billion, or 12.1%, from September 30, 2022.

On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC ("AlphaSimplex") for $113.4 million in cash at closing, including $50.0 million drawn from the Company's revolving credit facility.

At September 30, 2023, the Company had repaid $30.0 million of the amount drawn on the credit facility.

▪ Net income per diluted share was $4.10 in the first quarter of 2024, a decrease of $1.11, or 21.3%, compared to net income per diluted share of $5.21 in the first quarter of 2023.

▪ Total sales were $7.6 billion in the first quarter of 2024, an increase of $1.3 billion, or 21.6%, from $6.2 billion in the first quarter of 2023.

Net flows were $(1.2) billion in the first quarter of 2024 compared to net flows of $(1.9) billion in the first quarter of 2023.

▪ Assets under management were $179.3 billion at March 31, 2024, an increase of $24.5 billion, or 15.8%, from March 31, 2023.

Assets Under Management

At September 30, 2023, total assets under management were $162.5 billion, representing an increase of $17.6 billion, or 12.1%, from September 30, 2022, and an increase of $13.2 billion, or 8.8%, from December 31, 2022.

The increase from September 30, 2022 was due to $19.3 billion of positive market performance and $7.8 billion from the acquisition of AlphaSimplex, partially offset by $6.8 billion of net outflows.

The increase from December 31, 2022 was due to $10.5 billion in positive market performance and $7.8 billion from the acquisition of AlphaSimplex, partially offset by $3.4 billion of net outflows.

At March 31, 2024, total assets under management were $179.3 billion, representing an increase of $24.5 billion, or 15.8%, from March 31, 2023, and an increase of $7.1 billion, or 4.1%, from December 31, 2023.

The increase in total assets under management from March 31, 2023 included $25.7 billion from positive market performance and $7.8 billion from the acquisition of AlphaSimplex Group LLC on April 1, 2023 ("AlphaSimplex"), partially offset by $6.6 billion of net outflows.

The increase in total assets under management from December 31, 2023 included $8.7 billion from positive market performance partially offset by $1.2 billion of net outflows.

Assets Under Management by Product

The following table summarizes our assets under management by product:

As of September 30, Change

As of March 31, Change

(in millions) 2024 2023 $ %

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023

9 unchanged sentences

Beginning balance $ 10,026 $ 10,361

Inflows — 157 24 189

Outflows — — — —

Net flows — 4

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023

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The following table summarizes assets under management by asset class:

As of September 30, Change % of Total

As of March 31, Change % of Total

(in millions) 2024 2023 $ % 2024 2023

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The following tables summarize the average management fees earned in basis points and average assets under management:

Three Months Ended September 30,

Average Fee Earned

(expressed in basis points)

Average Assets Under

(in millions) (3)

2023 2022 2023 2022

Open-End Funds (1) 51.1 46.8 $ 56,511 $ 60,185

Closed-End Funds 58.2 57.0 10,001 10,971

Retail Separate Accounts 43.3 42.2 38,992 35,248

Institutional Accounts (2) 30.3 31.3 62,368 50,668

All Products 42.0 41.5 $ 167,872 $ 157,072

Nine Months Ended September 30,

Three Months Ended March 31,

Average Fee Earned

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Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

The average fee rate earned on all products for the three and nine months ended September 30, 2023 increased by 0.5 basis points and 0.6 basis points, respectively, compared to the same periods in the prior year primarily due to the addition of alternative strategies with higher fee rates from the AlphaSimplex acquisition.

The average fee rate earned on all products for the three months ended March 31, 2024 decreased by 0.1 basis points compared to the same period in the prior year primarily due to a shift in asset mix to lower fee assets partially offset by the addition of alternative strategies with higher fee rates from the AlphaSimplex acquisition.

Results of Operations

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Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

(in thousands) 2024 2023 $ %

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Earnings (loss) per share-diluted $ 4.10 $ 5.21 $ (1.11) (21.3) %

In the third quarter of 2023, total revenues increased 4.3% to $219.3 million from $210.3 million in the third quarter of 2022, primarily as a result of the addition of AlphaSimplex.

Operating income increased $0.9 million to $44.9 million in the third quarter of 2023 compared to $44.0 million in the third quarter of 2022, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses due to the addition of AlphaSimplex.

In the first quarter of 2024, total revenues increased 12.2% to $222.0 million from $197.9 million in the first quarter of 2023, primarily as a result of increased average assets under management during the current year period compared to the prior year period.

Operating income increased $3.7 million to $32.3 million in the first quarter of 2024 compared to $28.6 million in the first quarter of 2023, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses due to the addition of AlphaSimplex.

Revenues by source were as follows:

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

(in thousands) 2024 2023 $ %

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Investment Management Fees

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management contracts, which generally require monthly or quarterly payments.

Investment management fees increased by $12.0 million, or 7.0%, and decreased $35.4 million, or 6.3%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The increase for the three months ended September 30, 2023 was primarily due to the addition of AlphaSimplex.

The decrease for the nine months ended September 30, 2023 was primarily due to lower average assets under management, partially offset by the addition of AlphaSimplex.

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management agreements, which generally require monthly or quarterly payments.

Investment management fees increased by $23.9 million, or 14.5%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the increase in average assets under management.

Distribution and Service Fees

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services.

Distribution and service fees decreased by $1.4 million, or 9.0%, and $10.3 million, or 19.5%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year, primarily due to lower average assets for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and

distribution services.

Distribution and service fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Administration and Shareholder Service Fees

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S.

retail funds and certain of our closed-end funds.

Fund administration and shareholder service fees decreased by $1.5 million, or 7.3%, and $11.2 million, or 16.8%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year primarily due to the decrease in average assets under management in open-end funds during the periods as a result of market performance and net outflows.

retail funds, ETFs and certain closed-end funds.

Fund administration and shareholder service fees increased by $0.3 million, or 1.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the addition of AlphaSimplex.

Other Income and Fees

Other income and fees primarily represent fees related to other fee-earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge.

Other income and fees decreased by $0.1 million, or 9.3%, and $0.4 million, or 12.7%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The decline was primarily due to lower redemption income as well as the decline in average other fee-earning assets in the current year periods.

Other income and fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Operating Expenses

1 unchanged sentence

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

(in thousands) 2024 2023 $ %

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Other operating expenses of CIP 690 700 (10) (1.4) %

Restructuring expense 691 4,015 (3,324) (82.8) % 691 4,015 (3,324) (82.8) %

Change in fair value of contingent consideration — — — — % (6,800) 2,900 (9,700) (334.5) %

Restructuring expense 797 — 797 N/M

Depreciation expense 2,028 1,145 883 77.1 %

1 unchanged sentence

Total operating expenses $ 189,736 $ 169,295 $ 20,441 12.1 %

N/M - Not meaningful

Employment Expenses

Employment expenses consist of fixed and variable compensation and related employee benefit costs.

Employment expenses for the three and nine months ended September 30, 2023 were $101.6 million and $304.9 million, respectively, which represented an increase of $13.4 million, or 15.1%, and $21.3 million, or 7.5%, respectively, compared to the same periods in the prior year.

The increases were primarily due to the addition of AlphaSimplex, which includes retention payments to employees as part of the transaction consideration that were classified as employment expense.

Employment expenses of $115.2 million increased by $16.5 million, or 16.8%, compared to the same period in the prior year primarily due to the addition of AlphaSimplex and an increase in profit- and sales-based compensation in the current year.

Distribution and Other Asset-Based Expenses

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The deferred sales commissions are amortized on a straight-line basis over the period commissions are recovered from distribution fee revenues and contingent sales charges received upon redemption of shares.

During the three and nine months ended September 30, 2023, distribution and other asset-based expenses decreased $2.7 million, or 9.9%, and $14.9 million, or 16.9%, respectively, compared to the same periods in the prior year primarily due to a decrease in assets under management in share classes that have asset-based distribution and other asset-based expenses.

During the three months ended March 31, 2024, distribution and other asset-based expenses increased $0.6 million, or 2.7%, compared to the same period in the prior year primarily due to an increase in assets under management in share classes that have asset-based distribution and other asset-based expenses.

Other Operating Expenses

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs.

Other operating expenses decreased $0.6 million, or 1.9%, and increased $0.3 million, or 0.4%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The decrease in the three-month period ended September 30, 2023 was

primarily attributable to lower legal expenses and other third-party support costs partially offset by the addition of AlphaSimplex.

The increase for the nine-month period ended September 30, 2023 was primarily due to the addition of AlphaSimplex, partially offset by a decrease in other third-party support costs.

Other operating expenses increased $0.6 million, or 2.1%, for the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily attributable to the addition of AlphaSimplex partially offset by lower professional fees in the current year period.

Other Operating Expenses of CIP

Other operating expenses of CIP remained consistent during the three and nine months ended September 30, 2023 compared to the respective periods in the prior year.

Change in Fair Value of Contingent Consideration

Contingent consideration related to the Company's acquisitions are fair valued on each reporting date taking into consideration changes in various estimates, including underlying performance estimates, discount rates and amount of time until the conditions of the contingent payments are achieved.

The change in fair value is recorded in the current period as a gain or loss.

The $9.7 million change in fair value of contingent consideration for the nine months ended September 30, 2023 compared to the respective period in the prior year was primarily attributable to changes in underlying performance estimates and discount rates.

Other operating expenses of CIP remained consistent during the three months ended March 31, 2024 compared to the same period in the prior year.

Depreciation Expense

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements.

Depreciation expense increased $0.6 million, or 60.3%, and $1.3 million, or 45.8%, for the three and nine months ended September 30, 2023, respectively, compared to the respective periods in the prior year.

The increases were primarily due to the addition of AlphaSimplex, as well as software and equipment purchases made in the current year periods.

Depreciation expense increased $0.9 million, or 77.1%, for the three months ended March 31, 2024, compared to the respective period in the prior year.

The increase was primarily due to the addition of AlphaSimplex and software and equipment purchases in the prior year and depreciation expense for new office space.

Amortization Expense

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives.

Amortization expense increased $0.8 million, or 5.3%, and $1.7 million, or 3.8%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year, primarily due to the addition of AlphaSimplex.

Amortization expense increased $0.9 million, or 6.6%, for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to the addition of AlphaSimplex.

Other Income (Expense)

1 unchanged sentence

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

(in thousands) 2024 2023 $ %

5 unchanged sentences

Realized and unrealized gain (loss) on investments, net

Realized and unrealized gain (loss) on investments, net changed during the three and nine months ended September 30, 2023 by $0.6 million and $18.5 million, respectively, compared to the same periods in the prior year.

Realized and unrealized gain (loss) on investments, net changed during the three months ended March 31, 2024 by $0.7 million, compared to the same period in the prior year.

The realized and unrealized gains and losses reflect changes in overall market conditions for the respective periods.

Realized and unrealized gain (loss) of CIP, net

Realized and unrealized gain (loss) of CIP, net changed by $7.4 million and $40.6 million during the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The change for the three months ended September 30, 2023 consisted primarily of unrealized gains of $41.8 million due to changes in market values of leveraged loans, partially offset by changes in unrealized losses of $34.4 million related to the value of the notes payable.

The change for the nine months ended September 30, 2023 consisted primarily of unrealized gains of $124.8 million due to changes in market values of leveraged loans, partially offset by changes in unrealized losses of $84.2 million related to the value of the notes payable.

Realized and unrealized gain (loss) of CIP, net changed by $(1.1) million during the three months ended March 31, 2024, compared to the same period in the prior year.

The change for the three months ended March 31, 2024 consisted primarily of unrealized losses of $17.9 million due to changes in market values of leveraged loans, partially offset by changes in unrealized gains of $16.8 million related to the value of the notes payable.

Other income (expense), net

Other income (expense), net changed by $0.8 million and $1.3 million during the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year primarily due to changes in the gains and losses on our equity method investments.

Other income (expense), net changed by $0.9 million during the three months ended March 31, 2024, compared to the same period in the prior year primarily due to changes in the gains and losses on our equity method investments.

Interest Income (Expense)

1 unchanged sentence

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

(in thousands) 2024 2023 $ %

6 unchanged sentences

Interest Expense

Interest expense increased $2.7 million, or 74.9%, and $8.8 million, or 101.4%, during the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The increases were attributable to higher average interest rates and higher average debt balances during the current year periods.

Interest expense increased $0.7 million, or 13.5%, during the three months ended March 31, 2024, compared to the same period in the prior year due primarily to higher average interest rates during the current year period.

Interest and Dividend Income

Interest and dividend income increased $1.9 million, or 183.5%, and $6.9 million, or 369.8%, during the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The increases were primarily attributable to higher interest earned on cash balances during the current year periods compared to the prior year periods.

Interest and dividend income increased $0.2 million, or 7.1%, during the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily attributable to both higher interest earned on cash balances and a higher average investment balance in the current year period compared to the prior year period.

Interest and Dividend Income of Investments of CIP

Interest and dividend income of investments of CIP increased $21.2 million, or 73.9%, and $73.1 million, or 102.3%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The increases were primarily due to higher average interest rates during the current year periods and the addition of a CLO in the third and fourth quarter of 2023 and 2022, respectively.

Interest and dividend income of investments of CIP increased $4.3 million, or 9.2%, for the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily due to higher average interest rates during the current year period and the addition of a CLO in the third quarter of 2023.

Interest Expense of CIP

Interest expense of CIP represents interest expense on the notes payable of CIP.

Interest expense of CIP increased $17.9 million, or 87.7%, and $65.3 million, or 139.3%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in the prior year.

The increases during the three and nine months ended September 30, 2023 were primarily due to higher average interest rates and the addition of a CLO in the third and fourth quarter of 2023 and 2022 respectively.

Interest expense of CIP increased by $4.8 million, or 13.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to higher average interest rates and the addition of a CLO in the third quarter of 2023.

Income Tax Expense (Benefit)

The provision for income taxes reflected U.S.

federal, state and local taxes at an estimated effective tax rate of 23.6% and 35.2% for the nine months ended September 30, 2023 and 2022, respectively.

The lower estimated effective tax rate for the nine months ended September 30, 2023 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

The higher effective tax rate in the prior-year period was due to valuation allowances recorded for the tax effects of unrealized losses on certain of our investments.

federal, state and local taxes at an estimated effective tax rate of 18.9% and 20.1% for the three months ended March 31, 2024 and 2023, respectively.

The lower estimated effective tax rate for the three months ended March 31, 2024 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

Liquidity and Capital Resources

1 unchanged sentence

The following table summarizes certain financial data relating to our liquidity and capital resources:

September 30, 2023 December 31, 2022 Change

2024 December 31, 2023 Change

(in thousands) $ %

6 unchanged sentences

Total equity 876,003 868,289 7,714 0.9 %

Nine Months Ended

September 30, Change

Three Months Ended

March 31, Change

(in thousands) 2024 2023 $ %

4 unchanged sentences

Financing activities (56,146) (115,078) 58,932 (51.2) %

At September 30, 2023, we had $195.4 million of cash and cash equivalents and $152.3 million of investments, which included $118.5 million of investment securities, compared to $338.2 million of cash and cash equivalents and $100.3 million of investments, which included $77.0 million of investment securities, at December 31, 2022.

At March 31, 2024, we had $123.9 million of cash and cash equivalents and $127.4 million of investments, which included $90.5 million of investment securities, compared to $239.6 million of cash and cash equivalents and $132.7 million of investments, which included $97.3 million of investment securities, at December 31, 2023.

Uses of Capital

Our main uses of capital related to operating activities comprise employee compensation and related benefit costs, other operating expenses, which primarily consist of investment research, technology costs, professional fees, distribution and occupancy costs, interest on our indebtedness and income taxes.

Annual incentive compensation, which is one of the largest annual operating cash expenditures, is typically paid in the first quarter of the year.

In the first quarters of 2023 and 2022, we paid $142.1 million and $151.6 million, respectively, in incentive compensation earned during the years ended December 31, 2022 and 2021, respectively.

Our operating expenses consist of employee compensation and related benefit costs and other operating expenses, which primarily consist of investment research, technology costs, professional fees, distribution and occupancy costs, as well as interest on our indebtedness and income taxes.

Annual incentive compensation, our largest annual operating cash expenditure, is paid in the first quarter of the year.

In 2024 and 2023, we paid $146.1 million and $142.1 million, respectively, in incentive compensation earned during the years ended December 31, 2023 and 2022, respectively.

In addition to operating activities, other uses of cash could include:

(i) investments in organic growth, including seeding or launching new products and expanding distribution;

(ii) debt principal payments through scheduled amortization, excess cash flow payment requirements or additional paydowns;

(ii) debt principal payments through scheduled amortization or additional paydowns;

(iii) dividend payments to common stockholders;

(iv) repurchases of our common stock, or withholding obligations for the net settlement of employee share transactions;

(v) investments in our infrastructure;

(v) investments in our technology infrastructure;

(vi) investments in inorganic growth opportunities that may require upfront and/or future payments;

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Capital and Reserve Requirements

We operate an SEC registered broker-dealer subsidiary that is subject to certain rules regarding minimum net capital.

Certain of our subsidiaries are registered with the SEC, Central Bank of Ireland (CBI) or other regulators that subject them to certain rules regarding minimum net capital.

Failure to meet these requirements could result in adverse consequences to us, including additional reporting requirements, or interruption of our business.

At September 30, 2023, our broker-dealer net capital was significantly greater than the required minimum.

At March 31, 2024, these subsidiaries were in compliance with all minimum net capital requirements.

Balance Sheet

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Investments consist primarily of investments in our sponsored funds.

CIP represent investment products for which we provide investment management

services and where we either have a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

CIP represent investment products for which we provide investment

management services and where we have either a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

Operating Cash Flow

Net cash provided by operating activities of $229.8 million for the nine months ended September 30, 2023 increased by $75.0 million from net cash provided by operating activities of $154.9 million for the same period in the prior year primarily due to an increase of $129.9 million in net sales of investments by CIP.

Net cash used in operating activities of $34.5 million for the three months ended March 31, 2024 decreased by $8.4 million from net cash used in operating activities of $43.0 million for the same period in the prior year primarily due to an increase in cash from higher net income and an increase of $17.1 million in net sales of investments by CIP in the current year period partially offset by an increase in payments in incentive compensation in the current year.

Investing Cash Flow

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations.

Net cash used in investing activities was $127.3 million for the nine months ended September 30, 2023 compared to net cash used in investing activities of $25.7 million in the same period for the prior year.

The increase in cash used in investing activities during the nine months ended September 30, 2023 compared to the prior year period was primarily due to the acquisition of AlphaSimplex.

Net cash used in investing activities of $2.5 million for the three months ended March 31, 2024 decreased by $10.7 million from net cash used in investing activities of $13.1 million for the same period in the prior year primarily due to cash paid for an equity method investment in the prior year period that did not reoccur in the current year period.

Financing Cash Flow

Cash flows from financing activities consist primarily of transactions related to our common shares, issuance and repayment of debt by us and CIP, payments of contingent consideration and changes to noncontrolling interests.

Net cash used in financing activities decreased by $33.2 million to $285.8 million for the nine months ended September 30, 2023 from $319.0 million for the nine months ended September 30, 2022.

The net change was primarily due to a $55.0 million decrease in share repurchases and an increase of $30.0 million in net borrowings on the credit agreement in the current year, partially offset by a $54.9 million increase on the repayment on borrowings of CIP.

Net cash used in financing activities of $56.1 million for the three months ended March 31, 2024 decreased by $58.9 million from net cash used in investing activities of $115.1 million for the same period in the prior year primarily due to a $43.4 million decrease in the repayment on borrowings of CIP and a $16.5 million increase in net contributions from noncontrolling interests.

Credit Agreement

The Company's credit agreement (the "Credit Agreement"), most recently amended on June 20, 2023, changing the base interest rate from LIBOR to SOFR, comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026.

During the nine months ended September 30, 2023, the Company repaid $30.0 million and $2.1 million outstanding under the revolving credit facility and Term Loan, respectively.

At September 30, 2023, $20.0 million and $259.5 million were outstanding under the revolving credit facility and Term Loan, respectively.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $5.7 million as of September 30, 2023.

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026.

The Company repaid $0.7 million outstanding under the Term Loan during the three months ended March 31, 2024 and had $258.1 million outstanding under the Term Loan at March 31, 2024.

Critical Accounting Policies and Estimates

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A complete description of our significant accounting policies is included in our 2023 Annual Report on Form 10-K.

There were no material changes in our critical accounting policies and estimates in the three months ended September 30, 2023.

There were no material changes in our critical accounting policies and estimates in the three months ended March 31, 2024.

Recently Issued Accounting Pronouncements

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The Company is primarily exposed to market risk associated with unfavorable movements in interest rates and securities prices.

During the three and nine months ended September 30, 2023, there were no material changes to the information contained in Part II, Item 7A of the Company's 2022 Annual Report on Form 10-K.

During the three months ended March 31, 2024, there were no material changes to the information contained in Part II, Item 7A of the Company's 2023 Annual Report on Form 10-K.

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