What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-09 · 87 added, 59 removed, 296 unchanged (33% of the section changed)

40 unchanged sentences

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 to a variety of institutional clients through institutional separate accounts and commingled accounts, including subadvisory services to other investment advisers and Company sponsored structured products.

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

5 unchanged sentences

Our retail distribution resources in the U.S.

consist of regional sales professionals, a national account relationship group and specialized teams for retirement and ETFs.

consist of regional sales professionals, a national account relationship group and specialized teams for retirement and exchange traded funds ("ETFs").

retail funds and retail separate accounts are distributed through financial intermediaries.

4 unchanged sentences

Financial Highlights

▪ Total revenues were $217.9 million in the first quarter of 2025, a decrease of $4.1 million, or 1.9%, compared to total revenues of $222.0 million in the first quarter of 2024.

▪ Operating income was $36.6 million in the first quarter of 2025, an increase of $4.3 million, or 13.3%, compared to $32.3 million in the first quarter of 2024.

▪ Net income per diluted share was $4.05 in the first quarter of 2025, a decrease of $0.05, or 1.2%, compared to net income per diluted share of $4.10 in the first quarter of 2024.

▪ Total revenues were $210.5 million in the second quarter of 2025, a decrease of $13.9 million, or 6.2%, compared to total revenues of $224.4 million in the second quarter of 2024.

▪ Operating income was $45.2 million in the second quarter of 2025, an increase of $1.0 million, or 2.3%, compared to $44.2 million in the second quarter of 2024.

▪ Net income per diluted share was $6.12 in the second quarter of 2025, an increase of $3.69, or 151.9%, compared to net income per diluted share of $2.43 in the second quarter of 2024.

Assets Under Management

Total sales were $6.2 billion in the first quarter of 2025, a decrease of $1.3 billion, or 17.7%, from $7.6 billion in the first quarter of 2024.

Net flows were $(3.0) billion in the first quarter of 2025 compared to net flows of $(1.2) billion in the first quarter of 2024.

At March 31, 2025, total assets under management were $167.5 billion, representing a decrease of $11.8 billion, or 6.6%, from March 31, 2024, and a decrease of $7.5 billion, or 4.3%, from December 31, 2024.

The decrease in total assets under management from March 31, 2024 included $12.2 billion from net outflows partially offset by $2.9 billion from positive market performance.

The decrease in total assets under management from December 31, 2024 included $4.1 billion from negative market performance and $3.0 billion from net outflows.

Total sales were $5.6 billion in the second quarter of 2025, a decrease of $0.6 billion, or 9.1%, from $6.1 billion in the second quarter of 2024.

Net flows were $(3.9) billion in the second quarter of 2025 compared to net flows of $(2.6) billion in the second quarter of 2024.

At June 30, 2025, total assets under management were $170.7 billion, representing a decrease of $2.9 billion, or 1.7%, from June 30, 2024, and a decrease of $4.3 billion, or 2.5%, from December 31, 2024.

The decrease in total assets under management from June 30, 2024 included $13.5 billion from net outflows and $2.7 billion from other activity partially offset by $13.3 billion from positive market performance.

The decrease in total assets under management from December 31, 2024 included $6.9 billion from net outflows partially offset by $3.6 billion from positive market performance.

Assets Under Management by Product

The following table summarizes our assets under management by product:

As of March 31, Change

As of June 30, Change

(in millions) 2025 2024 $ %

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

9 unchanged sentences

Beginning balance $ 10,273 $ 10,064 $ 10,225 $ 10,026

Inflows 4 — 9 —

Outflows (2) (41) (42) (41)

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retail funds, global funds and ETFs.

(2) Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets from cash management strategies, and the impact of non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/

(withdrawals), current income or capital returned by structured products and the use of leverage.

(2) Represents open-end and closed-end fund distributions net of reinvestments, the impact of non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/(withdrawals), current income or capital returned by structured

products, and the use of leverage.

(3) Includes investment models provided to managed account sponsors.

2 unchanged sentences

The following table summarizes assets under management by asset class:

As of March 31, Change % of Total

As of June 30, Change % of Total

(in millions) 2025 2024 $ % 2025 2024

5 unchanged sentences

(1) Consists of multi-asset offerings not included in equity, fixed income and alternatives.

(2) Consists of managed futures, event-driven, real estate securities, infrastructure, long/short and other strategies.

(2) Consists of real estate securities, managed futures, event-driven, infrastructure and other strategies.

Average Assets Under Management and Average Fees Earned

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

Three Months Ended March 31,

Three Months Ended June 30,

Average Fee Earned

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All Products 41.3 42.2 $ 166,959 $ 175,175

Six Months Ended June 30,

Average Fee Earned

(expressed in basis points)

Average Assets Under

(in millions) (4)

2025 2024 2025 2024

Open-End Funds (1) 47.3 50.4 $ 54,923 $ 56,760

Closed-End Funds 58.6 58.6 10,235 9,878

Retail Separate Accounts (2) 42.9 43.6 47,979 45,009

Institutional Accounts (3) 31.8 30.8 57,137 62,620

All Products 41.5 42.0 $ 170,274 $ 174,267

(1) Represents assets under management of U.S.

6 unchanged sentences

Fund fees are calculated based on average daily or weekly net assets.

Retail separate account fees, which includes wealth management accounts, are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances.

Retail separate account fees, which includes wealth management accounts, are calculated based on the end

of the preceding or current quarter’s asset values or on an average of month-end balances.

Institutional account fees are calculated based on an average of month-end balances, an average of current quarter’s asset values or on a combination of the underlying cash flows and the principal value of the product.

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 decreased slightly for the three months ended March 31, 2025 compared to the same period in the prior year.

The average fee rate earned decreased for the three and six months ended June 30, 2025 compared to the same periods in the prior year primarily due to a shift in the asset mix in our open-end funds to certain strategies, which have a lower fee rate, partially offset by an increase in average fee rates of our institutional accounts due to the redemptions of lower fee earning assets.

Results of Operations

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2025 2024 $ % 2025 2024 $ %

13 unchanged sentences

Earnings (loss) per share-diluted $ 6.12 $ 2.43 $ 3.69 151.9 % $ 10.15 $ 6.54 $ 3.61 55.2 %

In the first quarter of 2025, total revenues decreased 1.9% to $217.9 million from $222.0 million in the first quarter of 2024, primarily as a result of decreased average fee rates during the current year period compared to the prior year period.

Operating income increased $4.3 million to $36.6 million in the first quarter of 2025 compared to $32.3 million in the first quarter of 2024, due primarily to decreased employment expenses and amortization expense.

In the second quarter of 2025, total revenues decreased 6.2% to $210.5 million from $224.4 million in the second quarter of 2024, primarily as a result of decreased average assets under management.

Operating income increased $1.0 million to $45.2 million in the second quarter of 2025 compared to $44.2 million in the second quarter of 2024, due primarily to decreased employment expenses and amortization expense.

Revenues by source were as follows:

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2025 2024 $ % 2025 2024 $ %

11 unchanged sentences

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 decreased by $2.3 million, or 1.2%, for the three months ended March 31, 2025, compared to the same period in the prior year primarily due to decreased fee rates during the current year period compared to the prior year period.

Investment management fees decreased by $12.2 million, or 6.4%, and $14.4 million, or 3.8%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year primarily due to decreased 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 $1.3 million, or 9.1%, for the three months ended March 31, 2025 compared to the same period in the prior year primarily due to lower sales and average assets under management for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Distribution and service fees decreased by $1.4 million, or 10.8%, and $2.7 million, or 9.9%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year primarily due to lower sales and average assets under management for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Administration and Shareholder Service Fees

1 unchanged sentence

retail funds, ETFs and closed-end funds.

Fund administration and shareholder service fees decreased by $0.7 million, or 3.6% for the three months ended March 31, 2025, compared to the same period in the prior year due to the decrease in average assets under management of our U.S.

Fund administration and shareholder service fees decreased by $0.3 million, or 1.4%, and $0.9 million, or 2.5%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year due to the decrease in average assets under management of our U.S.

retail funds.

Other Income and Fees

Other income and fees primarily represent fees related to other fee-earning assets and marketing fees earned on certain ETFs.

Other income and fees remained consistent during the three months ended March 31, 2025, compared to the same period in the prior year.

Other income and fees primarily represent fees related to other fee-earning assets and certain ETFs.

Other income and fees remained consistent during the three and six months ended June 30, 2025 compared to the same periods in the prior year.

Operating Expenses

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2025 2024 $ % 2025 2024 $ %

4 unchanged sentences

Other operating expenses of CIP 810 2,909 (2,099) (72.2) % 1,810 3,599 (1,789) (49.7) %

Change in fair value of contingent consideration (3,014) (3,300) 286 (8.7) % (3,014) (3,300) 286 (8.7) %

Restructuring expense — 690 (690) (100.0) % — 1,487 (1,487) (100.0) %

4 unchanged sentences

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

Employment expenses of $109.1 million decreased by $6.1 million, or 5.3%, for the three months ended March 31, 2025 primarily due to a decrease in profit- and sales-based compensation.

Employment expenses decreased by $7.6 million, or 7.2%, and $13.7 million, or 6.2%, for the three and six months ended June 30, 2025, respectively, primarily due to a decrease in profit- and sales-based compensation.

Distribution and Other Asset-Based Expenses

1 unchanged sentence

These payments are primarily based on assets under management.

Distribution and other asset-based expenses decreased $1.5 million, or 6.0%, for the three months ended March 31, 2025, primarily due to decreases in assets under management in share classes that have asset-based distribution and other asset-based expenses.

Distribution and other asset-based expenses decreased $1.7 million, or 7.3%, and $3.2 million, or 6.6%, for the three and six months ended June 30, 2025, respectively, primarily due to decreases 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, software application and development expenses, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs.

Other operating expenses increased $1.7 million, or 5.4%, for the three months ended March 31, 2025 compared to the same period in the prior year primarily due to increased rent for lease renewals and costs associated with lease terminations.

Other operating expenses decreased $0.5 million, or 1.5% for the three months ended June 30, 2025 primarily as a result of lower rent expense.

Other operating expenses increased by $1.2 million, or 1.9%, for the six months ended June 30, 2025 compared to the same period in the prior year primarily due to costs associated with lease terminations during the first quarter of 2025.

Other Operating Expenses of CIP

Other operating expenses of CIP increased by $0.3 million, or 44.9% for the three months ended March 31, 2025, compared to the same period in the prior year primarily due to the launch of new funds in the fourth quarter of 2024 and first quarter of 2025.

Other operating expenses of CIP decreased by $2.1 million, or 72.2%, and $1.8 million, or 49.7%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year primarily due to refinancing activities associated with two CLO's in the prior year periods.

Change in Fair Value of Contingent Consideration

Contingent consideration related to the Company's acquisitions are fair valued on each reporting date incorporating 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 change in fair value of contingent consideration for the three and six months ended June 30, 2025 was primarily attributable to changes in underlying performance estimates and the passage of time.

Depreciation Expense

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

Depreciation expense increased $0.3 million, or 15.6%, for the three months ended March 31, 2025, compared

to the same period in the prior year primarily due to software and equipment purchases and the acceleration of depreciation on leasehold improvements associated with a terminated lease in the prior year.

Depreciation expense decreased by $0.3 million, or 11.6%, for the three months ended June 30, 2025 and

remained consistent for the six months ended June 30, 2025, compared to the same periods in the prior year.

The decrease in the three month period is primarily due to the prior year acceleration of depreciation on leasehold improvements associated with a terminated lease, partially offset by an increase as a result of software and equipment purchases.

Amortization Expense

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

Amortization expense decreased $2.4 million, or 15.6%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to intangible assets becoming fully amortized.

Amortization expense decreased $2.3 million, or 14.8%, and $4.6 million, or 15.2%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year, primarily due to intangible assets becoming fully amortized.

Other Income (Expense)

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2025 2024 $ % 2025 2024 $ %

5 unchanged sentences

Realized and unrealized gain (loss) on investments, net

Realized and unrealized gain (loss) on investments, net changed during the three months ended March 31, 2025 by $(4.4) million, compared to the same period in the prior year.

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended June 30, 2025 by $5.5 million and $1.1 million, respectively, compared to the same periods 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 $(9.2) million for the three months ended March 31, 2025, compared to the same period in the prior year.

The change for the three months ended March 31, 2025 consisted primarily of changes in net unrealized and realized losses of $39.3 million, due to changes in market values of leveraged loans, partially offset by unrealized gains of $30.1 million related to the value of the notes payable.

Realized and unrealized gain (loss) of CIP, net changed by $7.7 million and $(1.5) million for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year.

The change for the three months ended June 30, 2025 consisted primarily of changes in net unrealized gains of $14.2 million related to the value of the notes payable, partially offset by net unrealized and realized losses of $6.4 million due to changes in market values of leveraged loans.

The change for the six months ended June 30, 2025 consisted primarily of changes in net unrealized and realized losses of $45.7 million, due to changes in market values of leveraged loans, partially offset by net unrealized gains of $44.2 million related to the value of the notes payable.

Other income (expense), net

Other income (expense), net changed by $0.4 million for the three months ended March 31, 2025, compared to the same period in the prior year primarily due to changes in the gains and losses on our equity method investments.

Other income (expense), net changed by $0.5 million and $1.0 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year due to changes in the gains and losses on our equity method investments, as well as foreign currency gains and losses.

Interest Income (Expense)

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2025 2024 $ % 2025 2024 $ %

6 unchanged sentences

Interest Expense

Interest expense decreased $1.1 million, or 19.7%, for the three months ended March 31, 2025, primarily due to lower average debt outstanding and lower average interest rates during the current year period.

Interest expense decreased $1.0 million, or 18.3%, and $2.1 million, or 19.0%, for the three and six months ended June 30, 2025, respectively, primarily due to lower average debt outstanding and lower average interest rates during the current year periods.

Interest and Dividend Income

Interest and dividend income is earned on cash equivalents and our marketable securities.

Interest and dividend income decreased $0.5 million, or 13.1% during the three months ended March 31, 2025 compared to the same period in the prior year primarily due to lower average interest rates and average investments in the current year period.

Interest and dividend income decreased $0.6 million, or 22.3%, and $1.0 million, or 17.0%, during the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year primarily due to lower average interest rates and average investments in the current year period.

Interest and Dividend Income of Investments of CIP

Interest and dividend income of investments of CIP decreased $3.6 million, or 7.0%, for the three months ended March 31, 2025, compared to the same period in the prior year primarily due to lower average interest rates in the current year period.

Interest and dividend income of investments of CIP decreased $6.3 million, or 12.1%, and $9.9 million, or 9.6%, for the three and six months ended June 30, 2025, respectively, compared to the same period in the prior year primarily due to lower average interest rates in the current year period.

Interest Expense of CIP

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

Interest expense of CIP decreased by $5.5 million, or 13.6% for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to lower average interest rates in the current year period.

Interest expense of CIP decreased by $8.5 million, or 20.2%, and $13.9 million, or 17.0%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year, primarily due to lower average interest rates in the current year period.

Income Tax Expense (Benefit)

The provision for income taxes reflected U.S.

federal, state and local taxes at an estimated effective tax rate of 30.6% and 18.9% for the three months ended March 31, 2025 and 2024, respectively.

The higher estimated effective tax rate for the three months ended March 31, 2025 was primarily due to a change in valuation allowances in the current year related to the tax effects of realized and unrealized losses on Company investments compared to realized and unrealized gains in the prior year.

federal, state and local taxes at an estimated effective tax rate of 25.9% and 24.4% for the six months ended June 30, 2025 and 2024, respectively.

The higher estimated effective tax rate for the six months ended June 30, 2025 was primarily due to a change in valuation allowances in the current year related to the tax effects of lower realized and unrealized gains on Company investments compared to the prior year.

Liquidity and Capital Resources

10 unchanged sentences

Total equity 898,329 901,636 (3,307) (0.4) %

Three Months Ended

March 31, Change

Six Months Ended

June 30, Change

(in thousands, Provided by (Used in);

4 unchanged sentences

Financing activities (226,525) (21,844) (204,681) 937.0 %

At March 31, 2025, we had $135.4 million of cash and cash equivalents and $119.9 million of investments, which included $81.5 million of investment securities, compared to $265.9 million of cash and cash equivalents and $119.2 million of investments, which included $83.8 million of investment securities, at December 31, 2024.

At June 30, 2025, we had $172.2 million of cash and cash equivalents and $120.6 million of investments, which included $82.9 million of investment securities, compared to $265.9 million of cash and cash equivalents and $119.2 million of investments, which included $83.8 million of investment securities, at December 31, 2024.

Uses of Capital

14 unchanged sentences

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

At March 31, 2025, these subsidiaries were in compliance with all minimum net capital requirements.

At June 30, 2025, these subsidiaries were in compliance with all minimum net capital requirements.

Balance Sheet

1 unchanged sentence

Investments consist primarily of investments in our sponsored funds.

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.

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 used in operating activities of $3.8 million for the three months ended March 31, 2025 decreased by $30.7 million from net cash used in operating activities of $34.5 million for the same period in the prior year primarily due to an increase of $27.9 million in net sales of investments by CIP in the current year period.

Net cash provided by operating activities of $72.0 million for the six months ended June 30, 2025 increased by $36.5 million from net cash provided by operating activities of $35.4 million for the same period in the prior year primarily due to an increase of $36.4 million in net sales of investments by CIP in the current year period.

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 of $3.0 million for the three months ended March 31, 2025 increased by $0.5 million from net cash used in investing activities of $2.5 million for the same period in the prior year primarily due to an increase in capital expenditures in the current year.

Net cash used in investing activities of $4.0 million for the six months ended June 30, 2025 was consistent with net cash used in investing activities of $3.8 million for the same period in the prior year.

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 purchases and sales of noncontrolling interests.

Net cash used in financing activities of $174.5 million for the three months ended March 31, 2025 increased by $118.3 million from net cash used of $56.1 million for the same period in the prior year primarily due to an increase of $105.8 million in payments on borrowings by CIP during the current year period and an increase of $15.0 million in repurchases of our common shares during the current year period.

Net cash used in financing activities of $226.5 million for the six months ended June 30, 2025 increased by $204.7 million from net cash used of $21.8 million for the same period in the prior year primarily due to a $173.9 million decrease in net borrowings of CIP and an increase of $32.5 million in repurchases of our common shares during the current year period.

Credit Agreement

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, 2025 and had $235.4 million outstanding under the Term Loan at March 31, 2025.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheets net of related debt issuance costs, which were $3.7 million as of March 31, 2025.

The Company repaid $1.4 million outstanding under the Term Loan during the six months ended June 30, 2025 and had $234.7 million outstanding under the Term Loan at June 30, 2025.

Critical Accounting Policies and Estimates

3 unchanged sentences

A complete description of our significant accounting policies is included in our 2024 Annual Report on Form 10-K.

There were no material changes in our critical accounting policies and estimates in the three months ended March 31, 2025.

There were no material changes in our critical accounting policies and estimates in the three months ended June 30, 2025.

Recently Issued Accounting Pronouncements

2 unchanged sentences

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

During the three months ended March 31, 2025, there were no material changes to the information contained in Part II, Item 7A of the Company's 2024 Annual Report on Form 10-K.

During the three and six months ended June 30, 2025, there were no material changes to the information contained in Part II, Item 7A of the Company's 2024 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