Greetings. Welcome to the Federated Hermes, Inc. Q4 2024 Analyst Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ray Hanley, President of Federated Investors Management Company. You may begin. Thank you, Holly. Good morning and welcome to our call. Leading today's call will be Chris Donahue, Chief Executive Officer and President of Federated Hermes, and Tom Donahue, Chief Financial Officer. Joining us for the Q&A are Saker Nusseibeh, who is the CEO of Federated Hermes Limited, and Debbie Cunningham, the Chief Investment Officer for our Money Markets. During today's call, we will make forward-looking statements, and we want to note that Federated Hermes' actual results may be materially different than the results implied by such statements. Please review the risk disclosures in our SEC filings. No assurance can be given as to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Chris? Thank you, Ray. Good morning. I will review Federated Hermes' business performance, and Tom will comment on our financial results. We ended 2024 with record assets under management of $830 billion, driven by record money market assets of $630 billion. Now, looking first at equities, assets decreased by $4.2 billion from Q3 due mainly to net redemptions of $2.5 billion and FX impact of $1.3 billion. As mentioned last quarter, net redemptions included $1.5 billion from a sub-advised fund that was internalized by the fund sponsor. Q4 saw further improvement in flows from Strategic Value Dividend strategies, both domestic and international. These strategies had Q4 net redemptions of $222 million in the funds and SMA combined, compared to $779 million in Q3. Through January 24th, these strategies have had net sales of $139 million. We also saw continued solid performance of flow results from the MDT fundamental quant strategies in Q4, capping off a strong year. MDT strategies had $13 billion in assets at year-end, up 70% from year-end 2023. MDT fund and SMA strategies had $3.4 billion in net sales in 2024, up from $411 million in 2023. These strategies had about $1.2 billion in net sales in Q4, up from $837 million in Q3. Through January 24th, these strategies have had net sales of $862 million. During the second half of 2024, we expanded the MDT product set by launching four active ETFs and a new collective fund. These funds have assets of approximately $424 million as of January 24th. We have had net sales in 14 equity fund strategies during Q4, including MDT Mid-Cap Growth, MDT Large-Cap Growth, U.S. SMID Equity Fund, MDT All-Cap Core, and the U.S. Strategic Dividend ETF. Looking at our equity fund performance at the end of 2024 and using Morningstar data for trailing three years, 56% of our equity funds were beating peers, and 36% were in the top quartile of their category. For the first three weeks of Q1, combined equity funds and SMAs on the equity side had net sales of $542 million. Now turning to fixed income. Assets decreased by about $2.1 billion in the fourth quarter due mainly to market valuations of about $1 billion and net redemptions of about $950 million. Fixed income funds had Q4 sales of $308 million. Fixed income separate accounts had Q4 net redemptions of $1.3 billion due mainly to redemptions from a large public entity that has regular sizable inflows and outflows. We had 16 fixed income funds with net sales in the fourth quarter, led by Total Return Bond Fund and the Government Ultrashort Fund. Regarding performance at the end of 2024 and using Morningstar data for trailing three years, 45% of the fixed income funds were beating peers, 18% were in the top quartile of their category. For the first three weeks of Q1, combined fixed income funds and SMAs had net redemptions of $28 million. In the alternative private markets category, assets decreased by $1.8 billion in the fourth quarter, mainly due to the impact of FX rates $1.2 billion and net redemptions, which included approximately $547 million related to the previously discussed senior portfolio manager departure in mid-2024. Now we are in the market with our European Direct Lending III, the third vintage of our European direct lending fund. To date, we've closed on approximately $350 million. Target raised $750 million. For information, EDL one raised about $300 million, EDL two raised about $640 million. We're also in the market with the Federated Hermes GPE Innovation Fund Two, the second vintage of our Pan-European growth private equity innovation fund. To date, we've closed on approximately $110 million. The target raised is $300 million, and the first vehicle raised $240 million. We're also working on the European Real Estate Debt Fund, a new pooled European debt fund targeting Q1 first close and planning to continue to market in 2025. Overall target $300 million. We're also launching the Global Private Equity Co-Invest Fund, the sixth vintage of the PEC series. Target raised $500 million, and PECs one to five raised approximately $400 million -$600 million in each fund. Now, we began 2025 with about $3.7 billion in net institutional mandates yet to fund into both funds and separate accounts. Equities expected net additions totaled $1.6 billion, with wins in growth, MDT, and global equity. Approximately $1.5 billion of net total wins is expected to come into private market strategies, including wins in private equity and direct lending. Fixed income expected net additions total about $616 million, with wins in ultra-short duration and sustainable investment-grade credit and government bonds. Now, moving to money markets. We reached another record high for money market fund assets at the end of 2024, namely $462 billion, and total money market assets of the aforementioned $630 billion. Total money market assets increased by about $37 billion in Q4, as money market funds added $21 billion and money market separate accounts added $16 billion. Market sentiment around short-term interest rates indicates a higher-for-longer view, which is conducive for growth in money market strategies. Higher rates support a positive view of cash as an asset class. Money market strategies in this environment have attractive yields compared to alternatives like bank deposits and direct investments and T-bills, and commercial paper. Our estimate of money market mutual fund market share, which includes our sub-advised funds, was about 7.22% at the end of 2024, down slightly from about 7.32% at the end of Q3. Now, looking at recent asset totals as of a few days ago, managed assets were approximately $839 billion, including $634 billion in money markets, $83 billion in equities, $100 billion in fixed income, $19 billion in alternative private markets, and $3 billion in multi-assets. Money market mutual fund assets were at $455 billion. Tom? Thanks, Chris. Total revenue for Q4 increased $16.2 million, or 4% from the prior quarter, due mainly to $5.3 million of higher revenue from equity assets and $5.1 million of higher revenue from money market assets. Q4 revenues were reduced by $1.7 million in waivers related to additional fund proxy costs, compared to $5.9 million in fund proxy costs recorded in Q3. Total Q4 carried interest and performance fees were $4.8 million compared to $3.5 million in Q3. Approximately $3.2 million of the Q4 fees were offset by nearly the same amount of compensation expense. The Q4 sub-advised account redemption that Chris mentioned occurred mid-quarter and impacted Q4 revenues by about $627,000. The impact in Q1 and future quarters will be about $1.5 million per quarter. Q4 operating expenses increased by $17.5 million from Q3 due mainly to $13.8 million of FX-related expense increases in the other expense line item as the pound weakened versus the dollar. Compensation and related expense was up slightly from Q3, as higher incentive compensation was largely offset by lower severance expense. Advertising and promotion expense increased due mainly to the timing of our advertising campaign spend. The Q4 tax rate of 25.4% was lower than the expected range. We expect the tax rate to be in the 26%-28% range for 2025. At the end of the year, cash and investments were $641 million. Cash and investments, excluding the portion attributable to non-controlling interest, was $588 million. Now, looking ahead to Q1, certain seasonal factors will impact results. Based on Q4 average asset levels, the impact of fewer days is expected to result in about $9.2 million in lower revenues and about $2 million of lower distribution expenses. In addition, based on an early assessment, compensation and related expenses expected to be higher than Q4 due primarily to about $7 million of seasonally higher expense for stock compensation and payroll taxes. Of course, these items and others, including incentive compensation, will vary based on multiple factors. Holly, we would like to open the call up for questions now. Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we poll for questions. Your first question for today is from Patrick Davitt with Autonomous Research. Hey, good morning, everyone. I'm going to start with a higher-level question on the money market fund market share, excluding the SMAs. It feels like the SMAs are kind of making up what looks like a little bit of market share loss on the fund side. Could you speak to maybe any trends that are going on that would kind of explain why some of the other large money fund complexes, say, at the banks or even other large asset managers like BlackRock, are seeing so much higher fund flows, mutual fund flows than you guys? I appreciate that the SMAs are making up for that, but I'm just curious what dynamics you're seeing there that maybe we can't see from our position. Thank you. I'll talk a little bit, Patrick. Then Debbie will offer some comments. The first thing is I went back and looked over our market share data for the last three years that we've been giving you every quarter, and you averaged all those numbers, and it turns out to be between 7.33% and 7.32%. So looking at it over one quarter where we were a tenth of a percent less, okay, yeah, you could say that's loss of market share. We don't lose any clients in the process, and you see the ebb and flow of big amounts of money from clients. So I don't have any worries about losing market share. I'll let Debbie give you a better pulse of the marketplace response. Thanks, Chris. And I apologize if there's any background noise, but ultimately, I agree 100% with everything that Chris just said. The market share loss is not a loss in the context of clients. It may just be some large flows at year-end, which is one of our most volatile times of the year. What I would say in kind of defense of that position is that, generally speaking, the first quarter of every year on a cyclical basis tends to be the worst from a mutual fund flow basis, and we're not seeing that this year. Now, maybe that'll change. We're only one month into this first quarter, but ultimately, we think that's a very positive trend. Helpful. Thanks. And then, as a quick follow-up, obviously rebuilding a fairly large cash balance, stock price has been range-bound, but you've ratcheted down the repurchase quite a bit. So maybe update us on how you're thinking about repurchases through the lens of the range-bound price and now much higher cash balance again. Thank you. Patrick, looking backwards, ratchet down, okay, we were buying the stock as it was going up, and then right as soon as we weren't allowed to buy anymore, the stock went down. And these are all fit into our models of which tell us that because of our belief in the growth of the firm, the price is still significantly undervalued. So we have to do two things: look at it on a high level and say, "Should we be buying stock?" The answer to that is yes. And then we get every day to get to decide, "Okay, is today better to buy or tomorrow better to buy?" And I think that's really how we would characterize the quarter, which I don't really view ratcheted down, and we expect to buy in 2025. Thank you. Your next question is from Ken Worthington with J.P. Morgan. Hi, good morning. Thanks for taking my question. This is Michael Cho. I'm in for Ken today. I just wanted to follow up on the money market discussion. You called out the change in rate backdrop in your opening remarks, higher for longer rates. And I guess, do you envision flows strengthening from here for your money fund business? And I think, Debbie, you called out the start of the year seems to be strong on the mutual fund side. And so I guess I'm just trying to understand or better appreciate how you envision the money fund business here and the higher for longer backdrop, as well as maybe some of your ultra-short products as well, which seem to make up a considerable portion of the business. Thank you. Once again, we'll double-pin that answer. I'll go first. When you have rates as they are and going down and having a better relationship to the deposit rates, we believe the retail trade continues to be a very, very good trade. The institutional trade is available for institutions that are doing things not exactly for getting the extra basis point. So to us, that means we still have a positive attitude about the money fund business. To an owner-operator, even though the rates didn't drop so fast that you created a big push for institutional business, even though that didn't happen, to an owner-operator, this is still a great time for money funds because they are a great advantage in the marketplace. And that's why I said it gives a lot of credence to cash as an asset class. Remember, and I've said this before, if you have a five-handle, it's total nirvana. If you have a four-handle, it's delightful on a money fund. At a three-handle, the clients are still quite sanguine about being there, but the war is still between the advisor who's worried about missing out and trying to convince the customer to maybe move up. You have in the marketplace a lot of people recognizing that cash deserves more than a 10 or 20 or 100 basis point type return, and that comes from a lot of factors: competitive, legal, regulatory, etc. That sets a good stage for our business. Debbie? I wholeheartedly agree. I think maybe a couple of things to add with regard to that. When you look at the expected terminal rate in the current environment versus where it was six months ago in the second in the latter half of 2024, it's 50 basis points higher. It's substantially higher. And the expectations with what might happen from an inflationary standpoint, the stickiness of it from a growth standpoint with the new administration's policies, I think, again, allow us to be very comfortable that the nirvana maybe doesn't start to happen again. I am not a believer of a tightening later in the year, although there are some in the market that are. But the delightful aspect of it, I think, is still there. And ultimately, when you have additional users that have come into the market over the course of the last two-plus years, they're not leaving. More than likely, they're going to increase their balances because their own cash is increasing from a standpoint of their balance sheet and what they're receiving with a good economic backdrop to have invested in this asset class. Our outlook continues to be maybe not percentage growth that exceeds what we saw in 2023 and 2024, but certainly continued substantial growth in the sector. Great. Thanks for all that, Color. If I could just switch gears for a second, I just want to touch on ESG and your very sustainable sustainability fund. I mean, with seemingly less focus on kind of broader ESG products in recent years and maybe even more so now, can you just kind of remind us and talk through how some of your ESG and sustainability products like global equity or global ESG and various impact funds might be positioned in the market in the years ahead? Thanks. I will talk about that from the point of view of the acquisition and a broader element than the questions you're asking. Saker and Debbie will comment on those funds. When we did the Hermes acquisition back in 2018, we had already decanted through a lot of good legal work that you can say yes to fiduciaries while using ESG so long as you are focused on the risk-reward and the returns to the underlying investor. And therefore, we continue doing that because these are good tools, additional information and analysis that assist portfolio managers and teams in making investment decisions. And this is what we still believe. Now, I'll let Saker comment on some of the funds that you mentioned. Thank you, Chris. So just to reiterate an essential point about how one uses the terms. At the old Hermes, which is Federated Hermes Limited, we have always used ESG as a factor as part of our sustainability study to help us achieve better financial return in the long term. Now, we also live in a different part of the world with different market expectations and different requirements. And there are some people in Europe who also want specific funds which are not just aiming for outright returns but aiming for specific outcomes. We do not consider these to be mainstream ESG funds. We consider these to be thematic funds. Then going back to answering your question, as far as the main funds, Global ESG, for example, that continues to do well, and it continues to see interest from clients because ultimately, clients either are buying it because performance is good or because they want the double materiality which for them is important. If you look at the same thing in our fixed income funds, the SDG Fixed Income Fund continues to see interest. If you look at the Thematic Funds, these have ebbs and flows depending on what the advisors in Europe are advising the clients to go into the funds and, of course, are affected with the risk-on-risk-off element. The lack of the strength of flows, we've seen this come back, but in the last year or so, had more to do with the risk-off sentiment in Europe than it did with the funds specifically. So as far as we're concerned, the funds are doing exactly what the clients want. They're giving back the returns exactly as the clients want, and they abide by what the regulators want both here and in the U.S. because they are fulfilling the fiduciary duty of trying to achieve the best financial outcome with the exception of very specific thematic funds sold in Europe for specific outcomes. Great. Thank you so much. Your next question for today is from Dan Fannon with Jefferies. Hi, this is Trevor Donahue for Dan. For my first question, can you speak to the priorities of spending in 2025 and where it's differing from last year and how we should think about the rate of growth for those investments? Sure. I think I've already addressed comp, at least for the first quarter, compensation because of the payroll and bonus and recalibrating incentive comp, at least first quarter-wise, and into the future there. If things are going great, we'll be paying more there. Same thing on the distribution side. We reflected that fewer days in Q1 will knock that down a little bit, but that's on an asset basis from the fourth quarter, and we expect to raise more assets. The distribution line will go up. On the systems and communication line, I would say we expect to have a step up there somewhere around on a quarterly basis, about $3 million, and that would be into each quarter into the future, and that's market data and technology spending related, and the rest of the areas, I really don't have much change expectation. Of course, the other line, the infamous other line with FX, and remember, we are hedging our expenses in London. And so when the pound goes down, it doesn't really affect us because then we pay less pounds overall for our expenses in London. So over a year basis, we're hedged, basically. I can't control the non-operating line with our seed money and whether that goes up or down. And the tax, I think we already addressed the tax line. The reason why it was up, I'm sorry, the reason why the tax rate was down a little bit was because the stock price was up. And so as we had vestings, that caused the tax rate to go down. So that was a benefit. Great. I appreciate the color there. And then for my follow-up, on alternative products, the overall market interest has been pretty strong. Are there certain areas of the firm you guys view as subscale? And what specific areas would you guys like to invest in or areas or regions? Would you please repeat that? It got garbled. Yeah, yeah. So on alternative products, the overall market interest has been pretty strong. What areas within the firm are viewed as subscale? And are there specific areas or regions that you guys are looking to expand? Okay. Yes, there are a couple of areas that are interesting to us that are subscale. One would be infrastructure, where we're interested in improving that situation. And then another one is in real estate, where we don't do any of it in the U.S. And we've talked about that on these calls for a number of times, where we would be willing to expand to be able to do the kinds of things that Chris Taylor and his team have done on the U.K. side, especially with King's Cross, Paradise Circus, and Birmingham, and other places to do those kinds of regeneration projects in the U.S. So those would be two where I would say we'd love to get past or get greater size and activity. The ones where, even though we may be small, like in direct lending, it's a couple of billion, but we still have great opportunities, as I've mentioned. And on the PE side, we're looking at very good opportunities with the numbers that I mentioned. I don't have to go over them again. So we're pretty strong there. Another one, depending on how you count it, is trade finance, which is the short end of private credit. And there's a lot of interest in that across the globe. I was out with clients in Hong Kong and Singapore two weeks ago, and this is a very, very interesting opportunity on the trade finance side. And so that's another one where, again, it's about 2 billion, but we've got good records, good projects, and good opportunities with clients. Great. Thank you. Your next question is from Robert Halaby with TD Cowen. Good morning. This is Robert Halaby for Bill Katz. And thank you for taking the question. Follow-up on the last private markets question. Just given capital markets activity is accelerating, what is your near-term outlook for realizations in the portfolio? And when do you expect the fundraising with respect to the funds that you mentioned could start to offset these distributions? Thank you. I'm going to let Saker take a swing at that pitch. Thank you, Chris. So the answer is we are distributing as we speak and raising assets as we speak. The whole point about having PEC 6 following PEC 1 to 5 is as PEC 5 pays out, PEC 6 comes in and raises new capital. It's the nature of capital markets. If you look at direct lending, we paid off payback. And actually, I think making more than that. And we're in exactly where we are in the cycle. And of course, returning assets to the clients is a sign of success because it shows that we have made a success of whether it's in private equity, whether it's in infrastructure, whether it's in direct lending. So returning assets to the clients is a sign of success and then triggers more flows coming our way. So we're in the midst of the cycle, and we're pleased with what we're seeing. And more importantly, our clients are pleased with what we're seeing and coming up to re-up. A lot of the money that we raise are re-ups from old clients across our strategies, which tells you we're in a good place. I hope that answers the question. That's helpful. Thank you very much. Your next question for today is from John Dunn with Evercore ISI. Thank you. Great to see Strategic Value Dividend improving and flipping positive so far this year. But can you kind of contextualize how people think about that fund and the demand for it, given the backdrop of markets and rates? Yes. The way this product is presented is as a dividend fund with an idea towards growing dividends. A lot of times, historically, because this fund will be either at the top of the chart or the bottom of the chart because it doesn't belong in the class where the charts put it, people will tend to buy it because it's at the top of the chart, not for the right reason that it's a dividend fund looking for growth in dividends. One of the interesting things about the dynamic here is that even when the fund last year was in negative flows, the Strategic Dividend ETF was gaining traction. And so someone buying that particular aspect of strategic dividend shows you that they understand that it is a dividend fund. So today, many of the people coming in are looking at this as a stepping stone into the market. You get a good yield, and yet you do participate in the market. And if there's a broadening out, you get paid a dividend along the way. And so this fund is turning up pretty good numbers right now. Got it. And then is there any kind of chunky institutional mandates you could point to that might be at risk? And then just more broadly, what areas of institutional are you worried could be at risk? The first thing is on the institutional side, we're on a short leash everywhere. So is everybody. Basically, even though the institutions say they're there for however long, they have the right to pull the money at any time for any reason or for no reason. So I can't say that we're not at risk anywhere. But it's not like the kind of risk you're talking about where we're worried about losing something. But I'm going to let Ray talk about that for a second. Sure, John. When we give our pipeline numbers, so the 3.8, that's net of any known redemptions coming through the institutional side, which could be in a separate account or in a fund. Sometimes they're using funds, and the known redemptions were very, very low this quarter. We don't have really visibility to any material redemptions on the institutional side. Now, as Chris says, I mean, that can always change, and then you have clients like we talked about, the large public entity that on a regular basis, they may not tell us there's a redemption coming, but they have cash come in and they use cash, and so you have those kind of swings, but at this point, in terms of visibility, there's not anything material out there from an outflow standpoint. On the other hand, the inflow pipeline continues to build, in particular for the MDT strategies, which have, as noted in the remarks, really accelerated in terms of gross sales, net sales, asset growth, getting strong institutional interests. They make up the big increase we had in our equity pipeline wins for the institutional side. That was driven by MDT, and we have a bunch of other ones that are bubbling around that aren't in that number yet that we're very optimistic about, and some of those being of good size. Thanks very much. We have reached the end of the question and answer session, and I will now turn the call over to Ray for closing remarks. Thank you, Holly. That concludes our call. Thank you for joining us today. Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.