Good morning, everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the first quarter of 2025. Our speakers today are George Aylward, President and CEO, and Mike Angerthal, Chief Financial Officer. Following their prepared remarks, we'll have a Q&A period. Before we begin, please note the disclosures on page two of the slide presentation. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We, as such, are subject to known and unknown risks, uncertainties, including but not limited to, those factors set forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in the statements. In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results. Non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with the GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement, which are available on our website. Now I'd like to turn the call over to George. George?

Thank you, Sean, and good morning, everyone. I'll start today with an overview of the results reported this morning, then give it over to Mike for more detail. Market performance volatility was challenging in the first quarter, leading to lower assets under management. And while we had net outflows, we continue to deliver solid financial and operating results. Key highlights included higher earnings per share over the prior year period, increased sales and fixed income strategies across products, positive net flows in ETFs, very strong relative investment performance especially through the recent volatility, a higher level of share repurchases, and a solid balance sheet at quarter-end providing ongoing flexibility to invest in the business. The markets we've been experiencing continue in the second quarter with a heightened level of uncertainty and volatility, which is a type of environment in which active managers can demonstrate their value. In our equity offering, several of our managers employ high conviction or high-quality orientations that seek to deliver strong investment performance and provide a level of downside protection. On the fixed income side, we offer multiple strategies across a spectrum of credit quality and duration, with products that are attractive in a variety of rate environments. We are pleased with the investment performance our managers have generated. In the first quarter, over 70% of our equity strategies beat their benchmarks, reflecting the benefit of quality active management in challenging markets. Our strategies have also consistently helped with 74% of equity assets meeting benchmarks over the ten-year period. We're pleased that our long-term performance was recognized again by Barron's, which identified us as the number two top fund family for the ten-year period. They also ranked us as the third top fund family in the taxable bond category for 2024. In terms of product development,…

Thank you, George. Good to be with you all this morning. Starting with our results on slide seven, assets under management. Our total assets under management at March 31st were $167.5 billion and represented a broad range of products and asset classes. By product, institutional is our largest category at 34% of AUM. Retail separate accounts including wealth management at 28%, and U.S. retail mutual funds at 27%. The remaining 11% comprises closed-end funds, global funds, and ETFs. We are also diversified within asset classes. In equities between international and domestic and within domestic, well represented among mid, small, and large-cap strategies. And fixed income is well diversified across duration, credit quality, and geography. We continue to have compelling relative investment performance across products and strategies. As of March 31, 71% of rated retail fund assets and 33 funds at four or five stars and 86% were in three, four, or five-star funds. In addition, 61% of fund AUM outperformed the median of their peer groups over the five-year period. ETFs have also had strong performance. With 91% of ETF assets exceeding median peer performance for the three-year period and twelve of our fourteen rated ETFs were rated three, four, or five stars. And as George discussed, recent performance, particularly by our quality equity managers, has been compelling through the first quarter market volatility. With 73% of equity AUM beating benchmarks in the quarter. Turning to slide eight, asset flows. Sales of $6.2 billion compared with $6.4 billion in the fourth quarter as higher sales of fixed income strategies were offset by lower sales across other asset classes. Reviewing by product, institutional sales of $1.5 billion were relatively unchanged from $1.6 billion last quarter as higher fixed income sales, particularly emerging markets debt, were offset by lower alternatives and equity…

Thanks, Mike. We will now take all of your questions. Edie, would you open up the lines, please? Thank you.

And our first question comes from Ben Budish of Barclays. Your line is open.

Hi. Good morning, and thank you for taking the question. Maybe just to start, I think you indicated the fee rate going forward probably gonna be in between the range. Can you provide any more color on where things are kinda shaking out as we get into April? And then wondering if you could also touch on just some of the fee rate changes we saw in the quarter. U.S. Retail funds a little bit lower, ETFs seem to be trending higher. I'm sure there's mix within the mix, but any additional color there would be helpful. Thank you.

Yeah. Hey, Ben. As you know, the fee rate will be impacted by many factors, including the market. Fee rate differential on sales versus redemptions, but the market's impacted the fee rate. Really, the change as you noted on the open-end funds was due to the mix of assets, really, the change from some of the higher fee rate on the equity side to just a slightly lower fee on the fixed income side. Notably, fee rate in and of itself does not have an impact or directly reflect profitability. Still targeting incremental margins in that 50% to 55% range. But just currently, as we look ahead, I do think the range that we talked about is appropriate for modeling. And if there are any updates to that, we'll reflect that and communicate it accordingly.

Understood. Maybe a follow-up just on the capital allocation side. You bought more shares in the quarter than you had in the past several quarters. I know you're always cognizant of liquidity in your stock, but curious what your appetite is just kinda given the recent share performance and market backdrop.

Yeah. So, I mean, as you commented, we always evaluate our alternative uses of capital every quarter. And one of the factors we do evaluate is our relative perspective on how our stock is trading. And as you correctly know, we did increase the amount of repurchases. We did compared to prior quarters. So that will continue to be a factor as we sort of decide what the next repurchase levels will be. But, you know, currently, as Mike indicated in his comments, we're still at low levels of leverage, we're currently generating a lot of cash flow, again, and while we do invest in the business, we do think return of capital is critical. And, again, we're very cognizant of our perspective on how that stock is trading. So that absolutely will figure into how our decisions on what to do in the next few quarters.

Alright. Understood. Thanks for taking my questions. Thank you.

Thank you. And our next question comes from Bill Katz of TD Cowen. Your line is open.

Great. Thanks very much. So just following with the SMAs, has been a nice driver for you over the last number of quarters and it flipped negative. And I think you mentioned in this quarter, you mentioned that you had soft closed a vehicle. You show size how big that vehicle is? What percentage of the 2024 flows that represents. And as you look across your broader SMA platform, are there any other vehicles that might be facing some kind of capacity constraints?

Yeah. So for SMAs, that has been an area where we've consistently had growth over a period of time. And as we indicated, one of the strategies that have been very successful, there was an appropriate soft closing of that. And that was coincident then, obviously, then with the challenges in the market in the first quarter. Right? So whenever we have a strategy that we put through a soft close, our goal is really just to then encourage investors to consider other alternative or similar strategy. And in that case, we actually have very similar strategies that was this makeup core. We have other very attractive strategies as well in the SMID and the mid-cap. Again, we were trying to do that in the quarter of a little bit of volatility and uncertainty in terms of how investors should behave. But our offerings are generally broad-based. As indicated in the last quarter, we've incubated and launched several new strategies. Some of my comments in the beginning of today's call, I indicated that we've done some additional structural changes in terms of enhancing our ability to expand the number of fixed income SMAs. So we continue to be focused on taking advantage of the fact that we have been successful with SMAs and their growth and then continuing to just make more offerings available through them. For the specifics on the strategies capacity, Mike?

Yeah. I think we feel good about capacity and don't have any specific capacity constraints on other areas in the retail channel. And I think what we've been pleased with is moving up in the capitalization. We've seen mid-cap, looking year over year on the sales in mid-cap, they're up meaningfully. And we've been able to at other times increase larger capitalizations as we've soft closed other products, whether it's small cap or now SMID cap. So we've seen and had success in moving up the capitalization and feel very good about mid-cap, both on the core specifically on the core side and there is significant available capacity in that area. We do expect that to be a contributor to growth going forward.

Okay. And then just maybe a big picture question. I know we've chatted about this over the last couple of quarters. And I think usually when you make any kind of strategic change, it tends to be in the first quarter of the New Year. And just what's your latest thinking in terms of trying to better monetize the deferred tax asset by transitioning that to a potentially lower effective tax rate as it affects adjusted earnings from here?

Yeah. I think you're referring to the tax attributes in the presentation of those tax attributes. I don't necessarily know if it's monetizing the tax attributes. It's more of a reporting factor because we are achieving the economic benefit from those tax attributes. We did provide just the latest context around that on an NPV basis. I think it comes out to around $16 a share. And we've talked about there being a divergence in practice where some industry participants will modify and adjust their tax rate and estimate that and lower their tax rate. So we do continue to evaluate it. It's important to us to provide transparency because there is real value that we do achieve from those tax benefits. So we'll continue to evaluate and ensure we think we're providing the appropriate transparency to ensure investors with describe the value that we know is there. And on a sort of adjusting it from an EPS basis, it does come out as, like, $2.50 per year. So if you wanna, you know, just do the math that extends on a per share basis rather than thinking of it as an asset, it's about $2.50 per share. We'll continue to provide that transparency and ensure investors are aware that that is an area that does provide value in the cash flow generation of the business.

Great. Thank you very much.

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Mr. Aylward.

Great. Well, thank you so much. And, again, as always, I want to thank everyone today for joining us. And encourage you to reach out if you have any other further questions. Thank you.

That concludes today's call. Thank you for participating, and you may now disconnect.