Mast Global Battery Recycling & Production ETF

Third fiscal quarter adjusted EPS was $0.82, up 3% from $0.80 in the prior quarter and down 7% from $0.88 a year ago. GAAP EPS was a loss of $0.01, reflecting a $100.5 million impairment charge on Hexavest; the company also cited $0.07 per share of income and gains on seed capital investments and CLO entities. Consolidated AUM ended at $507 billion, up 9% sequentially; consolidated net inflows were $2.7 billion, or $1.2 billion excluding Parametric overlay services. Annualized internal growth was 2% for both AUM and management fee revenue. Adjusted operating margin was 31.6% versus 30.5% in Q2 and 32.4% in the prior-year quarter; adjusted operating income was up 7% sequentially and down 5% year over year. Average annualized management fee rate was 30.3 bps versus 29.7 bps in Q2 and 31.8 bps a year ago. For forward momentum, management said August flows were back in the range of first-quarter levels excluding overlay, and fourth-quarter pipeline items include a $450 million CLO, $800 million of institutional high-yield mandates, about $700 million of Custom Core equity accounts, and more than $5 billion of overlay and LDI mandates scheduled to fund by the end of October.

Tom Faust said the business has adapted well to remote work and maintained client service through the pandemic. He emphasized that market recovery, improved flows, and product innovation are supporting momentum, especially in fixed income, Calvert, Parametric custom portfolios, and responsible investing. He sounded constructive about the second half of the year, saying the fourth quarter entered with managed assets and run-rate fees above Q3 averages and that the business has “considerable reason for optimism.”

Laurie Hylton focused on the quarter’s financial mechanics: adjusted EPS of $0.82, GAAP loss of $0.01, and a $100.5 million Hexavest impairment that reduced the carrying value to $32.7 million. She said adjusted operating margin was 31.6%, average managed assets rose 1% sequentially, and management fee revenue rose 4% helped by a higher fee rate of 30.3 bps and two additional fee days. She also noted $1 billion of cash, cash equivalents and short-term debt securities, about $280.5 million of seed capital investments, and that the company used $41.2 million of corporate cash to pay the quarterly dividend; she said the company is being careful with liquidity and keeping expenses tightly managed.

Analysts pressed management on the lack of share repurchases, Parametric direct-indexing competition, the durability of performance-related outflows in emerging markets and covered-call strategies, and the strength of fourth-quarter flows. Management said buybacks are being reviewed quarter by quarter with financial flexibility and liquidity the priority, and there are no fixed repurchase “markers.” On competition, Tom Faust said Parametric has not seen a meaningful change in the competitive landscape and believes customization, technology, service and distribution remain hard to replicate. He also said the weak Parametric EM strategy and covered-call products are likely to face continued pressure if performance does not improve, while the fourth quarter flow pipeline appears strong so far.