Manning & Napier, Inc. (NYSE:MN) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 05:00 pm ET

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Manning & Napier, Inc. (NYSE:MN) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Paul J. Battaglia

non-operating loss of $1.6 million through June 30th, 2020, driven by the losses reported in the first quarter stemming from the COVID-related volatility. As a result, despite the improvement in operating income, pretax earnings and economic income through June 30th of $3.4 million and $5 million respectively are down from last year. However, economic net income per adjusted share shows an improvement from this time last year as a result of the reduced share count following the exchange transaction.

Looking at the balance sheet. We reported approximately $65 million of cash and investments with no debt. The decrease from March 31 was expected and is entirely attributable to the completion of the annual exchange transaction that we have discussed previously, with approximately $90 million of cash being used to buy back and subsequently retire 60 million private units held by Bill Manning and other legacy shareholders.

The completion of the exchange led to a reduction in the adjusted share count and meaningful accretion for non-selling shareholders. Post-exchange, the adjusted share count of 22 million shares outstanding includes approximately 16 million Class A shares. As of June 30th, our employees and directors own approximately 30% of the adjusted shares, including a portion of the 16 million Class A shares along with unvested equity awards and privately held units.

In closing, as we reflect back on the quarter, we are grateful to our people in everything we've achieved during the challenging circumstances. April started with unprecedented market volatility caused by the pandemic that led to our most active trading period ever. In May, we completed the largest of our annual exchange transactions achieving meaningful accretion for our shareholders. And throughout the quarter, our team worked tirelessly to focus on strategic initiatives, including implementation of a new technology platform, all while working remotely.

We are very proud of how we executed and the results we achieved for clients and shareholders in this environment. We are excited about our positioning for future growth and long-term distribution prospects, but there's still significant work to be done in the near-term, during which time we continue to expect P&L pressure as we navigate this environment.

We expect that flows across channels will continue to be slowed by the uncertainty of the times. While the first phase of our technology platforms will begin to come online during the third quarter, these are multi-year installations that will continue to use resources into 2021. And we continue to evaluate our product and service offerings and back-office processes to identify opportunities to simplify and improve our business. However, this evaluation is complex because of the current status of our technology implementation and the overall environment.

It is our expectation that the pressure on top line growth and earnings that we have faced thus far in 2020 will remain in place for the second half of the year and likely the first part of 2021. It is crucial that the focus be on our clients and on executing our strategic plan during