Thank you for standing by. And welcome to the AllianceBernstein First Quarter 2022 Earnings Review. At this time, all participants are in a listen-only mode. After the remarks, there will be a question-and-answer session, and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay for two weeks. I would now like to turn the conference over to your host for this call, Head of Investor Relations for AB, Mr. Mark Griffin. Please go ahead.

Thank you, Rayne. Good morning, everyone. And welcome to our first quarter 2022 earnings review. This conference call is being webcast and accompanied by a slide presentation that’s posted in the Investor Relations section of our website, www.alliancebernstein.com. With us today to discuss the company’s results for the quarter are Seth Bernstein, our President and CEO; Bill Siemers, Interim CFO, Controller and Chief Accounting Officer; Kate Burke, COO and Head of Private Wealth. Some of the information we will present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I’d like to point out the Safe Harbor language on slide two of our presentation. You can also find our Safe Harbor language in the MD&A of our 10-Q, which we filed earlier this morning. Under Regulation FD, management may only address questions of material nature, from the investment community, in a public forum. So, please, ask all such questions during this call. Now, I will turn it over to Seth.

Good morning and thank you for joining us today. First quarter results highlighted the resiliency of our globally diversified and differentiated services. Amid turbulent financial markets reflecting challenging inflationary pressures, rising interest rates and geopolitical conflict, AB continue to grow and invest in our future. We gain share in both active equities which grew organically for the ninth quarter in a row and in municipals which grew organically for the seventh consecutive quarter, both bucking industry wide outflows. Offsetting these results was our taxable fixed income business, which saw higher outflows in the face of the worst quarterly fixed income returns in 40 years. In mid-March, we announced the acquisition of CarVal, which provides complimentary private credit capabilities and specific strategy sought by our clients. Combined with CarVal, AB will now have an approximate $50 billion private markets platform. Importantly, we are executing on our growth strategy in partnership with Equitable, which has committed $750 million to CarVal strategies. We look forward to sharing more with you after the transaction closes, which is on track for the third quarter. We grew organically for the seventh quarter in a row, realizing a 1% year-over-year fee rate increase and posted an adjusted operating margin of 31.5%. We delivered 11% year-over-year growth in both adjusted earnings per unit and distributions to unitholders. Let’s get into specifics, starting with the firm-wide overview on slide four. Gross sales were $40.9 billion, up $8 billion or 23% from a year ago, reflecting the funding of a previously disclosed $9.6 billion custom target mandate. Firm-wide active net inflows of $12.2 billion, a 6% annualized organic growth rate, quarter end assets under management of $735 billion rose 5% year-over-year, while declining 6% from the prior quarter and average AUM of $751 billion increased 9% year-over-year and declined 1%…

Thank you, Seth. It’s a pleasure just to discuss our Private Wealth business with you this morning. Within the AB portfolio, Private Wealth is a valuable secularly growing recurring fee business with a stable and growing client base. This business tracks over one-third of AB’s fee-based revenues. To meet our clients growing complexity and investment needs, Private Wealth has been a critical source of capital to commercialize new traditional and alternative services for AB, along with Equitable. There are a few things I would like to highlight for you. Private Wealth has a large opportunity set, as we operate in a profitable and growing market with significant growth potential across the U.S. We have a unique integrated model and as our recent results have shown, we are accelerating growth through a focused four-pronged strategy. We are expanding our platform through accelerated financial advisor hiring and select expansion into high growth markets. We are enhancing our investment platform. We are enriching client engagement. And we are upgrading our technology and infrastructure. We are excited for the robust opportunity ahead. Now let’s get into some specifics starting on slide 13. So from where we operate, the U.S. Private Wealth industry is a massive $38 trillion market, growing at approximately 9% per year inclusive of markets according to Cirilli Associates. Private Wealth is in a uniquely advantaged position situated between the Private Bank channel and the independent RIA. We compete with larger Private Banks with the richness of our investment offerings, wealth planning research and personalized advice model, and yet have the independent feel of an RIA. This unique combination allows us to compete and win in the market with our historically strong, high net worth client base, as well as into the ultra-high net worth segment where we have shown significant wins…

Thanks, Kate. It’s a pleasure to be here this morning. Let’s start with the GAAP income statement on slide 26. First quarter GAAP net revenues of $1.1 billion increased 10% from the prior year period. Operating income of $248 million decreased 5% and operating margin of 24.7% decreased by 120 basis points, GAAP EPU of $0.87 in the quarter increased by 7% year-over-year. I will focus my remarks from here on our adjusted results, which remove the effect of certain items that are not considered part of our core operating business. As disclosed in this morning’s earnings release, beginning in the first quarter of 2022, acquisition-related expense add-backs include certain compensation-related expenses, amortization of intangible assets for contracts acquired and accretion expense with respect to contingent payment arrangements. We based our distribution to unitholders on our adjusted results, which we provide in addition to, and not as a substitute for, our GAAP results. Our standard GAAP reporting and reconciliation of GAAP to adjusted results are in our presentation appendix, press release and 10-Q. Our adjusted financial highlights are shown on slide 27, which I will touch on as we talk through the P&L shown on slide 28. On slide 28, beginning with revenues, net revenues of $904 million increased 10% versus the prior year period and were down 12% sequentially. Base fees increased 10% versus the prior year period, reflecting higher average AUM across all three distribution channels, driven by both higher markets and year-over-year net inflows. The first quarter fee rate of 38.9 basis points was up 1% year-over-year and down 1% sequentially. This embeds the $9.6 billion low fee custom target-date mandate added in January. We continue to believe that although our fee rate may be volatile from time-to-time, given the potential for large DC mandates, such as…

Thank you. Your first question comes from Dan Fannon from Jefferies & Company. Your line is open.

Thanks, everyone. This is actually Rick on for Dan. So just on the decline in the Institutional pipeline, so even including the January mandate, if you could expand upon, which segment of the market is showing the biggest decline and where do you see the most engagement with Institutional investors in terms of products and forthcoming demand, that would be helpful? Thanks.

Hi. It’s Seth. Yeah. The backlog is a bit smaller. We have not seen any mandates disappear. We continue to see considerable activity, and as I think we indicated, much of the business we are seeing in booking is in alts and in equities. Equities continues to attract institutional interest and that’s been an important growth area for us. But alts fees in particular, have really been the predominant component of what we are seeing in the backlog and so that is continuing. But I would say that, look, we have had activity levels in the Institutional space really continue to be pretty high, but is there some sort of slowdown, maybe, it could be a little slower in terms of the total activity levels. But they remain pretty active.

Understood. Thanks for the response, Seth.

Your next question comes from Alex Blostein from Goldman Sachs. Your line is open.

Hey. Good morning, guys. Thanks for taking the question. I appreciate the in-depth presentation on the Wealth Management for AllianceBernstein, for sure. So maybe we could start there. I was hoping to sort of dig into a little bit more in terms of why now, obviously, this has been a focus for the company for some time, but it feels like sort of the pillars of growth you have described feels like you starting to -- you are hoping to see some acceleration there. So why increase focus now and as you think about any incremental investment or the any margin drag from either adding new offices or focusing on new headcount on products, how should we think about the impact on profitability from maybe this enhanced initiative?

Hi. Sorry. It’s Kate Burke. Thanks for the question. I think the timing really came from, if you reflect on the slide where we talk about the investments that were made into the platform, both in terms of enhancing the asset allocation and investment solutions that we were offering, particularly as we built out the alternative offering was an important add to the platform, while at the same time really enhancing the wealth strategy and planning advice that we were positioning for both our high net worth and ultra-high net worth clients. We felt like we are at a point where we had a very strong platform and had been piloting, I would say, looking into the ultra-high net worth area really starting to show some progress and wins, which gives us high confidence in our approach to really provide a very unique customized solution to our client base. And given that confidence of what we are seeing in the market, we believe now is the right time to really accelerate again the advisor hiring to take advantage of the strength of the overall platform we are offering. But it does take time for new advisors to become profitable. It can range anywhere from 12 years to three years to four years. We are doing efforts to try to continue to increase that productivity in the early years by establishing partnerships and other ways to try to diminish the impact on margins. But there is -- there will be some impact -- modest impact that we will be working through as we continue to invest in the business.

Got it. Great. Thanks. And then, Seth, maybe one for you, just around dynamics and fixed income markets and we have spoken about that recently just a couple of weeks ago here. But just any thoughts around any green shoots you guys might be seeing in terms of client demand? It feels like the kind of the belly of the curve and the rates have sort of stabilized within a range and I would have thought historically, once we settle in at a higher rate than we were before, that might be increased of that fixed income, more liquid fixed income than what we have seen in prior cycles, but just how close do you think we are to that?

Okay. Thanks, Alex. And look, I think, we are certainly closer to it. I do think that the market is dealing for the first time in a long time with inflation expectations. And I think we are going to need to see CPI roll over, at least the rate of growth of it roll over, before we see significant money beginning to flow back. And look, but the compares are getting easier from a PPI perspective and so I think that is sooner rather than later. I would say this, I think, it also is Fed dependent. The Fed really needs, I think, to deliver on a meaningful increase in May and June in order to stem concerns that inflation is getting out of hand. But as we indicated earlier, and as your point, I think is right, we are beginning to look at outright yields that are really pretty attractive, 7.5%, on our Global High Yield product. Yield to worst is a pretty compelling rate, assuming you don’t imagine credit defaults are going to be gapping up, which we don’t. I think we have quite diverse portfolios. We really try to avoid sector over weights that could imperil the performance of the fund. And so we are beginning to see people sniff around, but it’s not there yet, Alex, and I don’t want to give you that impression. Also, I think if, for us, Asia is more impactful than perhaps for some others and the risk aversion needs to be reduced there as they continue to see challenges in their equity portfolios, particularly in China. I think their desire for income will continue to be there and so I think they will redirect over time as they have in the past into high income, more stable streams like Global High Yield and American Income. So I am more positive, but we are not there yet and I don’t want to give you some notion it’s right around the corner because I don’t see it. What is interesting to me is the people continue to look at our muni business as munis become increasingly attractive. And, look, munis are dealing of exactly the same issue. We see broader outflows, but we have been building share there. And I -- look, it’s not every day, but it’s pretty consistent that we see real activity. So it’s been pretty promising there.

Nice. Okay. Thank you very much.

Your next question comes from John Dunn from Evercore. Your line is open.

Hi, guys. Maybe another one on Private Wealth, I think a few quarters ago you had talked about two different segments. Those in drawdown and maybe younger people putting money to work, and at one point, those were kind of offsetting, I think, we have gotten past that now. But could you contextualize kind of where those two segments are relative to one another?

It’s Kate again. Thank you for that question. What I would say along those lines is we are seeing in terms of where those are coming from, that we are seeing more of the outflows really in spending categories rather than where there -- where people who are continuing to gathering wealth but are also spending it on other things in their lifestyle versus that being what we would view as more of a drawdown category. And then where we are finding success is both in our traditional high net worth client segment and then in the ultra-high net worth space and that is where we are seeing pretty significant acceleration of the growth of our flows there. It’s growing almost at 2 times the average flow of the business over the last couple quarters. So it becomes an increasingly important segment of our client base set that we are continuing to attract and retain.

Got you. And then maybe just on the -- could you update maybe on what you think the pace of Equitable putting their commitments to work in your private market strategy, kind of like what could be the timeframe?

Hi. Let me take that. Look, Equitable committed to put up to $750 million into CarVal strategies that’s in addition to what they are doing for commercial real estate debt and middle market lending activities as well. It’s a pretty active program and we have been deploying pretty significantly for them. Now, let me be clear, some of that is a function of replacement of lower yielding corporates, which we also manage for them for higher yielding stuff. So I think that pace is high and will continue to be in an elevated rate for a while. I can’t give you a specific in terms of quarters or flows.

No. That’s good color. Thanks very much.

Your next question comes from Robert Lee from KBW.

Hi. This is Alex on for Rob. Just wondering if you could just expand a little bit on the costs associated with the Wealth Management expansion and also what the appetite is for any future acquisitions in that space?

Hi. Sure. It’s Kate again. We are not disclosing sort of the numbers associated with the expansion right now. We are -- as we continue to see how our flows persist, we will continue to enhance or moderate the investment in terms of advisor headcount on a go-forward basis. But we are not disclosing additional dollar amount right now associated with the build out.

Hi. It’s Seth. I would also add that, with regard to the M&A issue, we are not -- we have not historically sought to build the Private Wealth business through acquiring other firms. Our model is quite different. We have a very distinctive training program and approach. And so our view is that we are going to grow it organically and some of that is laterally from people in similar businesses, but much of it is from developing them afresh, the FAs we have and we have had an awfully good track record doing that. I’d also say that the mix of Private Wealth business has also been a big beneficiary of the move toward alternatives as well and that is helping absorb some of the costs necessary to expand the business. But we are going to be very thoughtful and purposeful in how we spend and over what time period we spend so as to maintain balance and current profitability versus our growth expectations.

Great. Thank you for taking the questions.

And there’s no further question at this time. Mr. Griffin, I turn the call over back to you.

Thank you, Rayne. Thank you everyone for participating in our conference call this morning. Feel free to contact Investor Relations with any further questions you may have and have a great day. Good-bye.