Eaton Vance Corp. (NYSE:EV) Q1 2020 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 11:00 am ET

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Eaton Vance Corp. (NYSE:EV) Q1 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from Dan Fannon with Jefferies. Your line is open.

Analyst
Dan Fannon

Thank. Yes, can you clarify? I think you Tom, you discussed some of the quarter-to-date flows for certain segments but left out, I think, fixed income and equities and some of the other metrics. So maybe, just given that you did mention bank loans and alternatives, I guess give us a kind of a broader update on the rest of the business.

Executive
Thomas Ewart Faust

Yes. Just to clarify, the only thing I talked about was our mutual fund flows for the period, just continuing the context of improvement. I'm not really prepared to talk about our overall flow trends for the quarter-to-date as that may or may not be a good indicator of what the quarter as a whole will be. I will say generally that in the same way that we had strong flows across the across our businesses in the fourth quarter, we've had good flows for the month-to-date. But it's we're only a little over three weeks into the quarter, so I don't want to talk too specifically about anything other than those couple of exceptions I made in my remarks.

Analyst
Dan Fannon

Okay. And then just a follow-up on kind of expenses and margins. I guess if we think about the last 12 months in the growth of both the beta in the market as well as your flows and essentially margins are flat year-over-year, so can you talk about an environment where you actually could see margin expansion? And then on the contrary, given what's happened more recently with market, how we should think about flexibility if that market tailwind is no longer there for a sustained period.

Executive
Laurie G. Hylton

It's Laurie. I think we've talked a little bit about the pressures that we obviously see in the first quarter. It's difficult when we start the new fiscal year because we've got these seasonal pressures that we see each first quarter. And most of them relate specifically to compensation. We did our best to call those out. I would say, as we're moving into the second quarter, I did call out specifically on stock-based compensation that we would anticipate seeing some level of relief, recognizing that we had some material first quarter retirements that forced us to recognize about $5.5 million of incremental stock-based compensation expense, and we've got some seasonal stuff that happens relating to our employee stock purchase plan and our directors plan that probably will provide us some relief as we move into the second quarter to the tune of about $1 million to $1.5 million. In terms of other operating expenses and the way we're thinking about the year, I think we had been telegraphing fairly clearly that we anticipate we're going to be continuing to make some significant investments in technology. I think that there was some a little bit of first quarter noise associated with normal first quarter events and operations associated primarily with things like charitable giving, which tend to