HARTFORD, Conn., Oct. 25, 2019 /PRNewswire/ -- Virtus Investment
Partners, Inc. (NASDAQ: VRTS) today reported financial results for
the three months ended September 30,
2019.
Financial
Highlights (Unaudited) (in millions, except per share
data or as noted)
|
|
|
Three Months
Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
9/30/2019
|
|
9/30/2018
|
|
Change
|
|
6/30/2019
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
146.0
|
|
|
$
|
152.2
|
|
|
(4%)
|
|
$
|
140.5
|
|
|
4%
|
Operating
expenses
|
$
|
110.2
|
|
|
$
|
118.3
|
|
|
(7%)
|
|
$
|
110.4
|
|
|
—%
|
Operating income
(loss)
|
$
|
35.8
|
|
|
$
|
33.9
|
|
|
6%
|
|
$
|
30.1
|
|
|
19%
|
Operating
margin
|
24.5%
|
|
|
22.3%
|
|
|
|
|
21.4%
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$
|
22.0
|
|
|
$
|
24.9
|
|
|
(12%)
|
|
$
|
24.8
|
|
|
(11%)
|
Earnings (loss) per
share - diluted
|
$
|
2.95
|
|
|
$
|
3.19
|
|
|
(8%)
|
|
$
|
3.26
|
|
|
(10%)
|
Weighted average
shares outstanding - diluted
|
8.157
|
|
|
8.456
|
|
|
(4%)
|
|
8.252
|
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Revenues, as
adjusted
|
$
|
127.1
|
|
|
$
|
128.5
|
|
|
(1%)
|
|
$
|
121.0
|
|
|
5%
|
Operating expenses,
as adjusted
|
$
|
79.5
|
|
|
$
|
80.3
|
|
|
(1%)
|
|
$
|
77.3
|
|
|
3%
|
Operating income
(loss), as adjusted
|
$
|
47.7
|
|
|
$
|
48.2
|
|
|
(1%)
|
|
$
|
43.7
|
|
|
9%
|
Operating margin, as
adjusted
|
37.5%
|
|
|
37.5%
|
|
|
|
|
36.1%
|
|
|
|
Net income (loss)
attributable to common stockholders, as adjusted
|
$
|
32.9
|
|
|
$
|
33.2
|
|
|
(1%)
|
|
$
|
30.0
|
|
|
10%
|
Earnings (loss) per
share - diluted, as adjusted
|
$
|
4.03
|
|
|
$
|
3.93
|
|
|
3%
|
|
$
|
3.63
|
|
|
11%
|
Weighted average
shares outstanding - diluted, as adjusted
|
8.157
|
|
|
8.456
|
|
|
(4%)
|
|
8.252
|
|
|
(1%)
|
|
(1) See the
information beginning on page 11 for reconciliations to the most
directly comparable U.S. GAAP measures and other important
disclosures
|
Earnings Summary
The company presents U.S. GAAP and non-GAAP earnings information
in this release. Management believes that the non-GAAP financial
measures presented reflect the company's operating results from
providing investment management and related services to individuals
and institutions and uses these measures to evaluate financial
performance. Non-GAAP financial measures have material limitations
and should not be viewed in isolation or as a substitute for U.S.
GAAP measures. Reconciliations of the non-GAAP financial measures
to the most comparable U.S. GAAP measures can be found beginning on
page 11 of this earnings release.
Assets Under
Management and Asset Flows (in billions)
|
|
|
Three Months
Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
9/30/2019
|
|
9/30/2018
|
|
Change
|
|
6/30/2019
|
|
Change
|
Ending long-term
assets under management (1)
|
$
|
102.8
|
|
|
$
|
103.9
|
|
|
(1%)
|
|
$
|
103.3
|
|
|
—%
|
Ending total assets
under management
|
$
|
104.1
|
|
|
$
|
105.6
|
|
|
(1%)
|
|
$
|
105.0
|
|
|
(1%)
|
Average long-term
assets under management (1)
|
$
|
102.8
|
|
|
$
|
102.3
|
|
|
—%
|
|
$
|
100.5
|
|
|
2%
|
Average total assets
under management
|
$
|
104.5
|
|
|
$
|
104.1
|
|
|
—%
|
|
$
|
102.2
|
|
|
2%
|
Total
sales
|
$
|
4.8
|
|
|
$
|
6.3
|
|
|
(24%)
|
|
$
|
5.1
|
|
|
(7%)
|
Net flows
|
$
|
(1.1)
|
|
|
$
|
0.5
|
|
|
N/M
|
|
$
|
0.1
|
|
|
N/M
|
|
(1) Excludes assets
under management in liquidity strategies, including in certain
open-end mutual funds and institutional accounts
|
N/M - Not
Meaningful
|
Long-term assets under management declined slightly to
$102.8 billion at September 30, 2019 from $103.3 billion at June 30,
2019, as market appreciation during the period was offset by
net outflows primarily related to a $0.9
billion single institutional client redemption. Total assets
under management at September 30,
2019 were $104.1 billion,
including $1.2 billion of assets in
liquidity strategies.
Total sales of $4.8 billion
declined 7% from $5.1 billion in the
second quarter as stronger sales from open-end funds and retail
separate accounts were more than offset by lower institutional
sales. Mutual fund sales increased 19% sequentially to $3.0 billion from $2.5
billion in the second quarter primarily due to higher sales
of emerging markets and domestic mid-cap strategies. Retail
separate accounts sales were $0.8
billion, up 12% sequentially, with growth in both the
intermediary-sold and private client channels. Institutional sales
of $0.9 billion compared with
$1.7 billion in the prior quarter,
which included a $0.9 billion
subadvisory mandate.
Total net flows of ($1.1) billion
compared with $0.1 billion in the
second quarter as positive net flows in retail separate accounts
and exchange traded funds, as well as improved mutual fund net
flows, were more than offset by institutional net outflows.
Institutional net outflows of $1.4
billion were primarily due to a single client redemption
predominantly in bank loans. Mutual fund net flows improved to
($0.2) billion from ($0.7) billion in the prior quarter, with
significantly stronger net flows in emerging markets strategies.
Mutual fund outflows continued to be impacted by bank loans, which
remain out of favor. Net flows in retail separate accounts were
$0.4 billion, up $0.1 billion from the prior quarter due to
stronger sales.
GAAP Results
Operating income increased 19% sequentially to $35.8 million from $30.1
million, primarily reflecting a 4% increase in revenues due
to higher average assets under management. Third quarter operating
expenses included $0.5 million of
restructuring and severance costs compared with $0.3 million in the prior quarter.
Net income per diluted share of $2.95 included ($0.67) of net unrealized losses on investments,
($0.12) of acquisition and
integration costs, ($0.05) of
restructuring and severance costs, and a $0.04 benefit from net realized gains on
investments. Second quarter net income per diluted share of
$3.26 included a $0.32 benefit from net unrealized gains on
investments, ($0.11) of acquisition
and integration costs, ($0.03) of
restructuring and severance costs, and ($0.13) of net realized losses on
investments.
The increased effective tax rate of 30% during the third quarter
compared with 24% in the prior quarter, reflecting a meaningful
change in the valuation allowance related to marketable
securities.
Non-GAAP Results
Revenues, as adjusted, of $127.1
million increased 5% from the prior quarter as a result of a
2% increase in both average long-term assets and the average fee
rate, which benefited from a $1.2
million performance-related fee. Employment expenses, as
adjusted, increased 5% to $60.1
million primarily due to higher profit-based incentive
compensation. Other operating expenses, as adjusted, declined 5%
from the prior quarter, which included $0.8
million for the annual equity grants to the Board of
Directors.
Operating income, as adjusted, and the related margin were
$47.7 million and 38%, respectively,
compared with $43.7 million and 36%,
respectively, in the prior quarter. The increased margin reflected
lower other operating expenses, as adjusted, higher revenues, as
adjusted, and the leveragability of the business.
Interest and dividends earned on cash equivalents and seed
capital and CLO investments were $3.5
million, a decline from $3.8
million in the second quarter primarily due to lower
interest income.
Net income attributable to common stockholders, as adjusted,
which is net of noncontrolling interests, was $4.03 per diluted common share, an increase of
$0.40, or 11%, from $3.63 in the prior quarter. The increase
primarily reflected higher operating income, as adjusted.
The effective tax rate, as adjusted, was 27%, which was
unchanged from the prior quarter.
Select Balance
Sheet Items (Unaudited) (in millions)
|
|
|
As
of
|
|
|
|
As
of
|
|
|
|
9/30/2019
|
|
9/30/2018
|
|
Change
|
|
6/30/2019
|
|
Change
|
Cash and cash
equivalents
|
$
|
195.9
|
|
|
$
|
169.0
|
|
|
16%
|
|
$
|
166.0
|
|
|
18%
|
Gross debt
(1)
|
$
|
300.7
|
|
|
$
|
351.5
|
|
|
(14%)
|
|
$
|
315.7
|
|
|
(5%)
|
Redeemable
noncontrolling interests
|
$
|
53.1
|
|
|
$
|
56.3
|
|
|
(6%)
|
|
$
|
53.7
|
|
|
(1%)
|
Total equity
attributable to stockholders
|
$
|
665.7
|
|
|
$
|
643.7
|
|
|
3%
|
|
$
|
651.1
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
Working capital
(2)
|
$
|
158.0
|
|
|
$
|
128.2
|
|
|
23%
|
|
$
|
148.7
|
|
|
6%
|
Net debt (cash)
(3)
|
$
|
104.9
|
|
|
$
|
182.5
|
|
|
(43%)
|
|
$
|
149.7
|
|
|
(30%)
|
|
(1) Excludes deferred
financing costs of $8.7 million, $12.6 million, and $9.6 million as
of September 30, 2019, September 30, 2018, and June 30, 2019,
respectively
|
(2) Defined as cash
and cash equivalents plus accounts receivable, net, less accrued
compensation and benefits, accounts payable and accrued
liabilities, dividends payable and required principal payments due
over the next 12 months including scheduled amortization and an
estimate of the excess cash flow payment; the actual excess cash
flow payment will be measured based on fiscal year 2019 financial
results and the net leverage ratio as of December 31,
2019
|
(3) Defined as gross
debt less cash and cash equivalents
|
Working capital at September 30,
2019 of $158.0 million
increased 6% from June 30, 2019,
reflecting net cash generated from the business partially offset by
debt repayments and return of capital to shareholders.
During the third quarter, the company repurchased 70,949 shares,
or 1% of beginning-of-quarter outstanding common shares, for
$7.5 million.
In August, the company declared a $0.67 per share common stock dividend, an
increase of 22% from the previous quarterly rate.
The company also repaid $15.0
million of debt in the third quarter. The net leverage
ratio, which is net debt to EBITDA (in accordance with the
company's credit agreement), was 0.5x at September 30, 2019, down from 0.7x at
June 30, 2019 and 0.9x at
September 30, 2018.
Conference Call
Management will host an investor conference call on Friday, October 25, at 10
a.m. Eastern to discuss these financial results and related
matters. The webcast of the call can be accessed in the Investor
Relations section of www.virtus.com, or by telephone at
877-930-7765 for callers in the U.S. and Canada or 253-336-7413 for international
callers (Conference ID: 4972338). The presentation that will be
reviewed as part of the conference call will be available prior to
the call in the Investor Relations section of www.virtus.com. A
replay of the call will be available through November 1, 2019 by telephone at 855-859-2056
(U.S. and Canada) or 404-537-3406
(international) (Conference ID: 4972338).
About Virtus Investment Partners
Virtus Investment Partners (NASDAQ: VRTS) is a distinctive
partnership of boutique investment managers singularly committed to
the long-term success of individual and institutional investors.
The company provides investment management products and services
through its affiliated managers and select subadvisers, each with a
distinct investment style, autonomous investment process, and
individual brand. Virtus Investment Partners offers access to a
variety of investment styles across multiple disciplines to meet a
wide array of investor needs. Its affiliates include Ceredex Value
Advisors, Duff & Phelps Investment Management, Kayne Anderson
Rudnick Investment Management, Newfleet Asset Management, Rampart
Investment Management, Seix Investment Advisors, Silvant Capital
Management, Sustainable Growth Advisers, and Virtus ETF Advisers.
Additional information is available at virtus.com.
U.S. GAAP
Condensed Consolidated Statements of Operations
(Unaudited) ($ in thousands, except per share
data)
|
|
|
Three Months
Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
9/30/2019
|
|
9/30/2018
|
|
Change
|
|
6/30/2019
|
|
Change
|
|
9/30/2019
|
|
9/30/2018
|
|
Change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management
fees
|
$
|
120,023
|
|
|
$
|
121,713
|
|
|
(1%)
|
|
$
|
114,591
|
|
|
5%
|
|
$
|
340,532
|
|
|
$
|
325,357
|
|
|
5%
|
|
Distribution and
service fees
|
10,442
|
|
|
13,730
|
|
|
(24%)
|
|
10,617
|
|
|
(2%)
|
|
31,122
|
|
|
39,886
|
|
|
(22%)
|
|
Administration and
transfer agent fees
|
15,280
|
|
|
16,567
|
|
|
(8%)
|
|
15,054
|
|
|
2%
|
|
44,747
|
|
|
48,272
|
|
|
(7%)
|
|
Other income and
fees
|
210
|
|
|
200
|
|
|
5%
|
|
227
|
|
|
(7%)
|
|
761
|
|
|
655
|
|
|
16%
|
|
Total
revenues
|
145,955
|
|
|
152,210
|
|
|
(4%)
|
|
140,489
|
|
|
4%
|
|
417,162
|
|
|
414,170
|
|
|
1%
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
expenses
|
61,282
|
|
|
63,269
|
|
|
(3%)
|
|
58,123
|
|
|
5%
|
|
180,256
|
|
|
178,833
|
|
|
1%
|
|
Distribution and
other asset-based expenses
|
20,927
|
|
|
25,386
|
|
|
(18%)
|
|
21,322
|
|
|
(2%)
|
|
62,013
|
|
|
71,398
|
|
|
(13%)
|
|
Other operating
expenses
|
18,228
|
|
|
20,350
|
|
|
(10%)
|
|
19,174
|
|
|
(5%)
|
|
56,125
|
|
|
56,340
|
|
|
—%
|
|
Operating expenses of
consolidated investment products
|
376
|
|
|
529
|
|
|
(29%)
|
|
2,568
|
|
|
(85%)
|
|
3,395
|
|
|
2,823
|
|
|
20%
|
|
Restructuring and
severance
|
523
|
|
|
—
|
|
|
N/M
|
|
320
|
|
|
63%
|
|
2,019
|
|
|
—
|
|
|
N/M
|
|
Depreciation
expense
|
1,245
|
|
|
1,189
|
|
|
5%
|
|
1,271
|
|
|
(2%)
|
|
3,729
|
|
|
3,304
|
|
|
13%
|
|
Amortization
expense
|
7,587
|
|
|
7,541
|
|
|
1%
|
|
7,583
|
|
|
—%
|
|
22,711
|
|
|
17,601
|
|
|
29%
|
|
Total operating
expenses
|
110,168
|
|
|
118,264
|
|
|
(7%)
|
|
110,361
|
|
|
—%
|
|
330,248
|
|
|
330,299
|
|
|
—%
|
|
Operating Income
(Loss)
|
35,787
|
|
|
33,946
|
|
|
5%
|
|
30,128
|
|
|
19%
|
|
86,914
|
|
|
83,871
|
|
|
4%
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain (loss) on investments, net
|
2
|
|
|
(374)
|
|
|
N/M
|
|
2,039
|
|
|
(100%)
|
|
5,474
|
|
|
1,024
|
|
|
435%
|
|
Realized and
unrealized gain (loss) of consolidated investment products,
net
|
(5,344)
|
|
|
(4,735)
|
|
|
13%
|
|
9,720
|
|
|
N/M
|
|
2,455
|
|
|
(4,255)
|
|
|
N/M
|
|
Other income
(expense), net
|
746
|
|
|
549
|
|
|
36%
|
|
696
|
|
|
7%
|
|
1,892
|
|
|
2,323
|
|
|
(19%)
|
|
Total other income
(expense), net
|
(4,596)
|
|
|
(4,560)
|
|
|
1%
|
|
12,455
|
|
|
N/M
|
|
9,821
|
|
|
(908)
|
|
|
N/M
|
|
Interest Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(4,889)
|
|
|
(5,155)
|
|
|
(5%)
|
|
(5,151)
|
|
|
(5%)
|
|
(15,205)
|
|
|
(13,482)
|
|
|
13%
|
|
Interest and dividend
income
|
863
|
|
|
716
|
|
|
21%
|
|
964
|
|
|
(10%)
|
|
3,017
|
|
|
3,255
|
|
|
(7%)
|
|
Interest and dividend
income of investments of consolidated investment
products
|
30,290
|
|
|
26,596
|
|
|
14%
|
|
29,368
|
|
|
3%
|
|
87,060
|
|
|
71,678
|
|
|
21%
|
|
Interest expense of
consolidated investment products
|
(21,252)
|
|
|
(16,959)
|
|
|
25%
|
|
(31,077)
|
|
|
(32%)
|
|
(72,030)
|
|
|
(46,786)
|
|
|
54%
|
|
Total interest income
(expense), net
|
5,012
|
|
|
5,198
|
|
|
(4%)
|
|
(5,896)
|
|
|
N/M
|
|
2,842
|
|
|
14,665
|
|
|
(81%)
|
|
Income (Loss)
Before Income Taxes
|
36,203
|
|
|
34,584
|
|
|
5%
|
|
36,687
|
|
|
(1%)
|
|
99,577
|
|
|
97,628
|
|
|
2%
|
|
Income tax expense
(benefit)
|
10,844
|
|
|
6,653
|
|
|
63%
|
|
8,788
|
|
|
23%
|
|
23,851
|
|
|
22,641
|
|
|
5%
|
|
Net Income
(Loss)
|
25,359
|
|
|
27,931
|
|
|
(9%)
|
|
27,899
|
|
|
(9%)
|
|
75,726
|
|
|
74,987
|
|
|
1%
|
|
Noncontrolling
interests
|
(1,274)
|
|
|
(933)
|
|
|
37%
|
|
(973)
|
|
|
31%
|
|
(2,969)
|
|
|
(1,619)
|
|
|
83%
|
|
Net Income (Loss)
Attributable to Stockholders
|
24,085
|
|
|
26,998
|
|
|
(11%)
|
|
26,926
|
|
|
(11%)
|
|
72,757
|
|
|
73,368
|
|
|
(1%)
|
|
Preferred stockholder
dividends
|
(2,085)
|
|
|
(2,085)
|
|
|
—%
|
|
(2,084)
|
|
|
—%
|
|
(6,253)
|
|
|
(6,253)
|
|
|
—%
|
|
Net Income (Loss)
Attributable to Common Stockholders
|
$
|
22,000
|
|
|
$
|
24,913
|
|
|
(12%)
|
|
$
|
24,842
|
|
|
(11%)
|
|
$
|
66,504
|
|
|
$
|
67,115
|
|
|
(1%)
|
|
Earnings (Loss)
Per Share - Basic
|
$
|
3.17
|
|
|
$
|
3.47
|
|
|
(9%)
|
|
$
|
3.55
|
|
|
(11%)
|
|
$
|
9.51
|
|
|
$
|
9.33
|
|
|
2%
|
|
Earnings (Loss)
Per Share - Diluted
|
$
|
2.95
|
|
|
$
|
3.19
|
|
|
(8%)
|
|
$
|
3.26
|
|
|
(10%)
|
|
$
|
8.86
|
|
|
$
|
8.67
|
|
|
2%
|
|
Cash Dividends
Declared Per Preferred Share
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
—%
|
|
$
|
1.81
|
|
|
—%
|
|
$
|
5.44
|
|
|
$
|
5.44
|
|
|
—%
|
|
Cash Dividends
Declared Per Common Share
|
$
|
0.67
|
|
|
$
|
0.55
|
|
|
22%
|
|
$
|
0.55
|
|
|
22%
|
|
$
|
1.77
|
|
|
$
|
1.45
|
|
|
22%
|
|
Weighted Average
Shares Outstanding
- Basic (in thousands)
|
6,947
|
|
|
7,175
|
|
|
(3%)
|
|
6,999
|
|
|
(1%)
|
|
6,990
|
|
|
7,195
|
|
|
(3%)
|
|
Weighted Average
Shares Outstanding
- Diluted (in thousands)
|
8,157
|
|
|
8,456
|
|
|
(4%)
|
|
8,252
|
|
|
(1%)
|
|
8,215
|
|
|
8,463
|
|
|
(3%)
|
|
|
N/M - Not
Meaningful
|
Assets Under
Management - Product and Asset Class (in
millions)
|
|
|
Three Months
Ended
|
|
9/30/2018
|
|
12/31/2018
|
|
3/31/2019
|
|
6/30/2019
|
|
9/30/2019
|
By product (period
end):
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
$
|
45,171.8
|
|
|
$
|
37,710.0
|
|
|
$
|
40,632.6
|
|
|
$
|
41,223.5
|
|
|
$
|
41,189.7
|
|
Closed-End
Funds
|
6,342.2
|
|
|
5,956.0
|
|
|
6,553.2
|
|
|
6,653.1
|
|
|
6,815.7
|
|
Exchange Traded
Funds
|
983.4
|
|
|
667.6
|
|
|
1,102.2
|
|
|
1,077.8
|
|
|
1,053.9
|
|
Retail Separate
Accounts
|
16,817.5
|
|
|
14,998.4
|
|
|
17,123.2
|
|
|
18,259.5
|
|
|
18,862.7
|
|
Institutional
Accounts
|
30,960.1
|
|
|
27,445.0
|
|
|
30,514.1
|
|
|
32,056.2
|
|
|
30,951.3
|
|
Structured
Products
|
3,647.8
|
|
|
3,640.3
|
|
|
3,998.0
|
|
|
3,983.7
|
|
|
3,972.3
|
|
Total
Long-Term
|
$
|
103,922.8
|
|
|
$
|
90,417.3
|
|
|
$
|
99,923.3
|
|
|
$
|
103,253.8
|
|
|
$
|
102,845.6
|
|
Liquidity
(2)
|
1,675.1
|
|
|
1,612.5
|
|
|
1,788.6
|
|
|
1,752.7
|
|
|
1,221.3
|
|
Total
|
$
|
105,597.9
|
|
|
$
|
92,029.8
|
|
|
$
|
101,711.9
|
|
|
$
|
105,006.5
|
|
|
$
|
104,066.9
|
|
|
|
|
|
|
|
|
|
|
|
By product
(average) (3)
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
$
|
45,137.1
|
|
|
$
|
41,601.8
|
|
|
$
|
39,531.9
|
|
|
$
|
40,961.3
|
|
|
$
|
41,457.2
|
|
Closed-End
Funds
|
6,386.7
|
|
|
6,235.0
|
|
|
6,258.3
|
|
|
6,550.5
|
|
|
6,648.6
|
|
Exchange Traded
Funds
|
1,035.9
|
|
|
831.2
|
|
|
870.8
|
|
|
1,081.4
|
|
|
1,048.1
|
|
Retail Separate
Accounts
|
15,536.7
|
|
|
16,817.5
|
|
|
14,998.4
|
|
|
17,123.2
|
|
|
18,259.5
|
|
Institutional
Accounts
|
30,583.4
|
|
|
29,171.7
|
|
|
29,353.8
|
|
|
30,771.1
|
|
|
31,462.5
|
|
Structured
Products
|
3,635.7
|
|
|
3,627.2
|
|
|
3,668.3
|
|
|
3,968.2
|
|
|
3,957.2
|
|
Total
Long-Term
|
$
|
102,315.5
|
|
|
$
|
98,284.4
|
|
|
$
|
94,681.5
|
|
|
$
|
100,455.7
|
|
|
$
|
102,833.1
|
|
Liquidity
(2)
|
1,750.3
|
|
|
1,606.7
|
|
|
1,725.5
|
|
|
1,769.5
|
|
|
1,710.2
|
|
Total
|
$
|
104,065.8
|
|
|
$
|
99,891.1
|
|
|
$
|
96,407.0
|
|
|
$
|
102,225.2
|
|
|
$
|
104,543.3
|
|
|
|
|
|
|
|
|
|
|
|
By asset class
(period end):
|
|
|
|
|
|
|
|
|
|
Equity
|
$
|
62,654.4
|
|
|
$
|
53,297.1
|
|
|
$
|
61,781.0
|
|
|
$
|
64,888.0
|
|
|
$
|
65,544.0
|
|
Fixed
Income
|
36,819.9
|
|
|
33,425.2
|
|
|
33,674.4
|
|
|
32,982.5
|
|
|
31,703.9
|
|
Alternatives
(4)
|
4,448.5
|
|
|
3,695.0
|
|
|
4,467.9
|
|
|
5,383.3
|
|
|
5,597.7
|
|
Liquidity
(2)
|
1,675.1
|
|
|
1,612.5
|
|
|
1,788.6
|
|
|
1,752.7
|
|
|
1,221.3
|
|
Total
|
$
|
105,597.9
|
|
|
$
|
92,029.8
|
|
|
$
|
101,711.9
|
|
|
$
|
105,006.5
|
|
|
$
|
104,066.9
|
|
Assets Under
Management - Average Net Management Fees Earned (5)
(in basis points)
|
|
|
Three Months
Ended
|
|
9/30/2018
|
|
12/31/2018
|
|
3/31/2019
|
|
6/30/2019
|
|
9/30/2019
|
All
Products
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
54.3
|
|
|
54.0
|
|
|
54.3
|
|
|
55.4
|
|
|
56.3
|
|
Closed-End
Funds
|
65.9
|
|
|
65.5
|
|
|
64.9
|
|
|
65.0
|
|
|
64.7
|
|
Exchange Traded
Funds
|
13.7
|
|
|
12.6
|
|
|
10.5
|
|
|
12.7
|
|
|
13.4
|
|
Retail Separate
Accounts
|
49.2
|
|
|
47.5
|
|
|
48.1
|
|
|
47.8
|
|
|
47.5
|
|
Institutional
Accounts (6)
|
31.9
|
|
|
29.2
|
|
|
30.6
|
|
|
30.8
|
|
|
31.8
|
|
Structured Products
(6)
|
60.0
|
|
|
36.7
|
|
|
37.1
|
|
|
35.3
|
|
|
37.3
|
|
All Long-Term
Products (6)
|
47.4
|
|
|
45.3
|
|
|
45.6
|
|
|
46.0
|
|
|
46.6
|
|
Liquidity
(2)
|
10.1
|
|
|
9.9
|
|
|
9.9
|
|
|
10.6
|
|
|
10.7
|
|
All
Products
|
46.8
|
|
|
44.7
|
|
|
45.0
|
|
|
45.3
|
|
|
46.0
|
|
|
|
(1) Represents assets
under management of U.S. retail funds, offshore funds and variable
insurance funds
|
(2) Represents assets
under management in liquidity strategies, including in certain
open-end funds and institutional accounts
|
(3) Averages are
calculated as follows:
|
- Funds - average
daily or weekly balances
|
- Retail Separate
Accounts - prior-quarter ending balance or average of month-end
balances in quarter
|
- Institutional
Accounts and Structured Products - average of month-end balances in
quarter
|
(4) Consists of real
estate securities, mid-stream energy securities and master limited
partnerships, options strategies, and other
|
(5) Represents net
investment management fees divided by average assets. Net
investment management fees are investment management fees, as
adjusted, less fees paid to third-party service providers for
investment management related services, which impacted the fee rate
in the three months ended September 30, 2019 for each of Open-End
Funds and All Products by 0.3 basis points
|
(6) Includes
performance-related fees, in basis points, earned during the three
months ended as follows:
|
|
|
9/30/2018
|
|
12/31/2018
|
|
3/31/2019
|
|
6/30/2019
|
|
9/30/2019
|
Institutional
Accounts
|
1.8
|
|
|
0.2
|
|
|
0.5
|
|
|
0.2
|
|
|
1.5
|
|
Structured
Products
|
24.6
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
All Long-Term
Products
|
1.4
|
|
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
0.5
|
|
Assets Under
Management - Asset Flows by Product (in
millions)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
9/30/2018
|
|
12/31/2018
|
|
3/31/2019
|
|
6/30/2019
|
|
9/30/2019
|
|
9/30/2018
|
|
9/30/2019
|
Open-End Funds
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
44,419.3
|
|
|
$
|
45,171.8
|
|
|
$
|
37,710.0
|
|
|
$
|
40,632.6
|
|
|
$
|
41,223.5
|
|
|
$
|
43,077.6
|
|
|
$
|
37,710.0
|
|
Inflows
|
3,807.4
|
|
|
2,888.6
|
|
|
2,999.7
|
|
|
2,510.1
|
|
|
2,981.8
|
|
|
11,947.6
|
|
|
8,491.6
|
|
Outflows
|
(3,465.1)
|
|
|
(6,750.5)
|
|
|
(3,867.4)
|
|
|
(3,214.2)
|
|
|
(3,164.2)
|
|
|
(10,347.9)
|
|
|
(10,245.8)
|
|
Net flows
|
342.3
|
|
|
(3,861.9)
|
|
|
(867.7)
|
|
|
(704.1)
|
|
|
(182.4)
|
|
|
1,599.7
|
|
|
(1,754.2)
|
|
Market
performance
|
464.1
|
|
|
(3,225.9)
|
|
|
3,838.7
|
|
|
1,464.5
|
|
|
(69.2)
|
|
|
704.4
|
|
|
5,234.0
|
|
Other (2)
|
(53.9)
|
|
|
(374.0)
|
|
|
(48.4)
|
|
|
(169.5)
|
|
|
217.8
|
|
|
(209.9)
|
|
|
(0.1)
|
|
Ending
balance
|
$
|
45,171.8
|
|
|
$
|
37,710.0
|
|
|
$
|
40,632.6
|
|
|
$
|
41,223.5
|
|
|
$
|
41,189.7
|
|
|
$
|
45,171.8
|
|
|
$
|
41,189.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed-End
Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
6,295.0
|
|
|
$
|
6,342.2
|
|
|
$
|
5,956.0
|
|
|
$
|
6,553.2
|
|
|
$
|
6,653.1
|
|
|
$
|
6,666.2
|
|
|
$
|
5,956.0
|
|
Inflows
|
12.9
|
|
|
8.2
|
|
|
11.5
|
|
|
8.7
|
|
|
14.0
|
|
|
13.4
|
|
|
34.2
|
|
Outflows
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net flows
|
12.9
|
|
|
8.2
|
|
|
11.5
|
|
|
8.7
|
|
|
14.0
|
|
|
13.4
|
|
|
34.2
|
|
Market
performance
|
124.4
|
|
|
(257.2)
|
|
|
661.9
|
|
|
182.4
|
|
|
246.0
|
|
|
(31.7)
|
|
|
1,090.3
|
|
Other (2)
|
(90.1)
|
|
|
(137.2)
|
|
|
(76.2)
|
|
|
(91.2)
|
|
|
(97.4)
|
|
|
(305.7)
|
|
|
(264.8)
|
|
Ending
balance
|
$
|
6,342.2
|
|
|
$
|
5,956.0
|
|
|
$
|
6,553.2
|
|
|
$
|
6,653.1
|
|
|
$
|
6,815.7
|
|
|
$
|
6,342.2
|
|
|
$
|
6,815.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Traded
Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
1,029.9
|
|
|
$
|
983.4
|
|
|
$
|
667.6
|
|
|
$
|
1,102.2
|
|
|
$
|
1,077.8
|
|
|
$
|
1,039.2
|
|
|
$
|
667.6
|
|
Inflows
|
35.0
|
|
|
29.5
|
|
|
393.8
|
|
|
131.8
|
|
|
93.9
|
|
|
261.0
|
|
|
619.5
|
|
Outflows
|
(100.4)
|
|
|
(106.6)
|
|
|
(46.3)
|
|
|
(116.9)
|
|
|
(54.2)
|
|
|
(235.3)
|
|
|
(217.4)
|
|
Net flows
|
(65.4)
|
|
|
(77.1)
|
|
|
347.5
|
|
|
14.9
|
|
|
39.7
|
|
|
25.7
|
|
|
402.1
|
|
Market
performance
|
50.1
|
|
|
(200.7)
|
|
|
108.3
|
|
|
(4.8)
|
|
|
(36.3)
|
|
|
37.8
|
|
|
67.2
|
|
Other (2)
|
(31.2)
|
|
|
(38.0)
|
|
|
(21.2)
|
|
|
(34.5)
|
|
|
(27.3)
|
|
|
(119.3)
|
|
|
(83.0)
|
|
Ending
balance
|
$
|
983.4
|
|
|
$
|
667.6
|
|
|
$
|
1,102.2
|
|
|
$
|
1,077.8
|
|
|
$
|
1,053.9
|
|
|
$
|
983.4
|
|
|
$
|
1,053.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Separate
Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
14,678.4
|
|
|
$
|
16,817.5
|
|
|
$
|
14,998.4
|
|
|
$
|
17,123.2
|
|
|
$
|
18,259.5
|
|
|
$
|
13,936.8
|
|
|
$
|
14,998.4
|
|
Inflows
|
921.4
|
|
|
701.3
|
|
|
752.6
|
|
|
730.9
|
|
|
819.3
|
|
|
2,359.4
|
|
|
2,302.8
|
|
Outflows
|
(563.1)
|
|
|
(514.9)
|
|
|
(471.5)
|
|
|
(447.1)
|
|
|
(434.6)
|
|
|
(1,924.9)
|
|
|
(1,353.2)
|
|
Net flows
|
358.3
|
|
|
186.4
|
|
|
281.1
|
|
|
283.8
|
|
|
384.7
|
|
|
434.5
|
|
|
949.6
|
|
Market
performance
|
608.7
|
|
|
(2,005.4)
|
|
|
1,895.0
|
|
|
877.2
|
|
|
297.0
|
|
|
1,269.1
|
|
|
3,069.2
|
|
Other (2)
|
1,172.1
|
|
|
(0.1)
|
|
|
(51.3)
|
|
|
(24.7)
|
|
|
(78.5)
|
|
|
1,177.1
|
|
|
(154.5)
|
|
Ending
balance
|
$
|
16,817.5
|
|
|
$
|
14,998.4
|
|
|
$
|
17,123.2
|
|
|
$
|
18,259.5
|
|
|
$
|
18,862.7
|
|
|
$
|
16,817.5
|
|
|
$
|
18,862.7
|
|
Assets Under
Management - Asset Flows by Product (continued) (in
millions)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
9/30/2018
|
|
12/31/2018
|
|
3/31/2019
|
|
6/30/2019
|
|
9/30/2019
|
|
9/30/2018
|
|
9/30/2019
|
Institutional
Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
19,726.6
|
|
|
$
|
30,960.1
|
|
|
$
|
27,445.0
|
|
|
$
|
30,514.1
|
|
|
$
|
32,056.2
|
|
|
$
|
20,815.9
|
|
|
$
|
27,445.0
|
|
Inflows
|
1,484.5
|
|
|
810.8
|
|
|
954.7
|
|
|
1,737.4
|
|
|
850.5
|
|
|
3,332.5
|
|
|
3,542.6
|
|
Outflows
|
(1,604.8)
|
|
|
(1,822.6)
|
|
|
(1,153.9)
|
|
|
(1,258.9)
|
|
|
(2,215.9)
|
|
|
(4,720.3)
|
|
|
(4,628.7)
|
|
Net flows
|
(120.3)
|
|
|
(1,011.8)
|
|
|
(199.2)
|
|
|
478.5
|
|
|
(1,365.4)
|
|
|
(1,387.8)
|
|
|
(1,086.1)
|
|
Market
performance
|
1,184.8
|
|
|
(2,490.5)
|
|
|
3,155.8
|
|
|
1,139.8
|
|
|
526.9
|
|
|
1,498.5
|
|
|
4,822.5
|
|
Other (2)
|
10,169.0
|
|
|
(12.8)
|
|
|
112.5
|
|
|
(76.2)
|
|
|
(266.4)
|
|
|
10,033.5
|
|
|
(230.1)
|
|
Ending
balance
|
$
|
30,960.1
|
|
|
$
|
27,445.0
|
|
|
$
|
30,514.1
|
|
|
$
|
32,056.2
|
|
|
$
|
30,951.3
|
|
|
$
|
30,960.1
|
|
|
$
|
30,951.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
3,684.4
|
|
|
$
|
3,647.8
|
|
|
$
|
3,640.3
|
|
|
$
|
3,998.0
|
|
|
$
|
3,983.7
|
|
|
$
|
3,298.8
|
|
|
$
|
3,640.3
|
|
Inflows
|
—
|
|
|
—
|
|
|
388.8
|
|
|
—
|
|
|
—
|
|
|
421.4
|
|
|
388.8
|
|
Outflows
|
(34.4)
|
|
|
(16.2)
|
|
|
(16.0)
|
|
|
(20.9)
|
|
|
(16.0)
|
|
|
(54.8)
|
|
|
(52.9)
|
|
Net flows
|
(34.4)
|
|
|
(16.2)
|
|
|
372.8
|
|
|
(20.9)
|
|
|
(16.0)
|
|
|
366.6
|
|
|
335.9
|
|
Market
performance
|
39.8
|
|
|
57.0
|
|
|
27.4
|
|
|
56.6
|
|
|
54.4
|
|
|
123.0
|
|
|
138.4
|
|
Other (2)
|
(42.0)
|
|
|
(48.3)
|
|
|
(42.5)
|
|
|
(50.0)
|
|
|
(49.8)
|
|
|
(140.6)
|
|
|
(142.3)
|
|
Ending
balance
|
$
|
3,647.8
|
|
|
$
|
3,640.3
|
|
|
$
|
3,998.0
|
|
|
$
|
3,983.7
|
|
|
$
|
3,972.3
|
|
|
$
|
3,647.8
|
|
|
$
|
3,972.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
89,833.6
|
|
|
$
|
103,922.8
|
|
|
$
|
90,417.3
|
|
|
$
|
99,923.3
|
|
|
$
|
103,253.8
|
|
|
$
|
88,834.5
|
|
|
$
|
90,417.3
|
|
Inflows
|
6,261.2
|
|
|
4,438.4
|
|
|
5,501.1
|
|
|
5,118.9
|
|
|
4,759.5
|
|
|
18,335.3
|
|
|
15,379.5
|
|
Outflows
|
(5,767.8)
|
|
|
(9,210.8)
|
|
|
(5,555.1)
|
|
|
(5,058.0)
|
|
|
(5,884.9)
|
|
|
(17,283.2)
|
|
|
(16,498.0)
|
|
Net flows
|
493.4
|
|
|
(4,772.4)
|
|
|
(54.0)
|
|
|
60.9
|
|
|
(1,125.4)
|
|
|
1,052.1
|
|
|
(1,118.5)
|
|
Market
performance
|
2,471.9
|
|
|
(8,122.7)
|
|
|
9,687.1
|
|
|
3,715.7
|
|
|
1,018.8
|
|
|
3,601.1
|
|
|
14,421.6
|
|
Other (2)
|
11,123.9
|
|
|
(610.4)
|
|
|
(127.1)
|
|
|
(446.1)
|
|
|
(301.6)
|
|
|
10,435.1
|
|
|
(874.8)
|
|
Ending
balance
|
$
|
103,922.8
|
|
|
$
|
90,417.3
|
|
|
$
|
99,923.3
|
|
|
$
|
103,253.8
|
|
|
$
|
102,845.6
|
|
|
$
|
103,922.8
|
|
|
$
|
102,845.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
1,784.9
|
|
|
$
|
1,675.1
|
|
|
$
|
1,612.5
|
|
|
$
|
1,788.6
|
|
|
$
|
1,752.7
|
|
|
$
|
2,128.7
|
|
|
$
|
1,612.5
|
|
Other (2)
|
(109.8)
|
|
|
(62.6)
|
|
|
176.1
|
|
|
(35.9)
|
|
|
(531.4)
|
|
|
(453.6)
|
|
|
(391.2)
|
|
Ending
balance
|
$
|
1,675.1
|
|
|
$
|
1,612.5
|
|
|
$
|
1,788.6
|
|
|
$
|
1,752.7
|
|
|
$
|
1,221.3
|
|
|
$
|
1,675.1
|
|
|
$
|
1,221.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
91,618.5
|
|
|
$
|
105,597.9
|
|
|
$
|
92,029.8
|
|
|
$
|
101,711.9
|
|
|
$
|
105,006.5
|
|
|
$
|
90,963.2
|
|
|
$
|
92,029.8
|
|
Inflows
|
6,261.2
|
|
|
4,438.4
|
|
|
5,501.1
|
|
|
5,118.9
|
|
|
4,759.5
|
|
|
18,335.3
|
|
|
15,379.5
|
|
Outflows
|
(5,767.8)
|
|
|
(9,210.8)
|
|
|
(5,555.1)
|
|
|
(5,058.0)
|
|
|
(5,884.9)
|
|
|
(17,283.2)
|
|
|
(16,498.0)
|
|
Net flows
|
493.4
|
|
|
(4,772.4)
|
|
|
(54.0)
|
|
|
60.9
|
|
|
(1,125.4)
|
|
|
1,052.1
|
|
|
(1,118.5)
|
|
Market
performance
|
2,471.9
|
|
|
(8,122.7)
|
|
|
9,687.1
|
|
|
3,715.7
|
|
|
1,018.8
|
|
|
3,601.1
|
|
|
14,421.6
|
|
Other (2)
|
11,014.1
|
|
|
(673.0)
|
|
|
49.0
|
|
|
(482.0)
|
|
|
(833.0)
|
|
|
9,981.5
|
|
|
(1,266.0)
|
|
Ending
balance
|
$
|
105,597.9
|
|
|
$
|
92,029.8
|
|
|
$
|
101,711.9
|
|
|
$
|
105,006.5
|
|
|
$
|
104,066.9
|
|
|
$
|
105,597.9
|
|
|
$
|
104,066.9
|
|
|
(1) Represents assets
under management of U.S. retail funds, offshore funds and variable
insurance funds
|
(2) Represents
open-end and closed-end fund distributions net of reinvestments,
the net change in assets from liquidity strategies, and the effect
on net flows from non-sales related activities such as asset
acquisitions/(dispositions), seed capital
investments/(withdrawals), structured products reset transactions,
and the use of leverage
|
(3) Represents assets
under management in liquidity strategies, including in certain
open-end funds and institutional accounts
|
Non-GAAP Information and Reconciliations
(in
thousands except per share data)
The following are reconciliations and related notes of the most
comparable U.S. GAAP measure to each non-GAAP measure.
The non-GAAP financial measures included in this release differ
from financial measures determined in accordance with U.S. GAAP as
a result of the reclassification of certain income statement items,
as well as the exclusion of certain expenses and other items that
are not reflective of the earnings generated from providing
investment management and related services. Non-GAAP financial
measures have material limitations and should not be viewed in
isolation or as a substitute for U.S. GAAP measures.
Reconciliation of
Total Revenues, GAAP to Total Revenues, as Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Total revenues,
GAAP
|
$
|
145,955
|
|
|
$
|
152,210
|
|
|
$
|
140,489
|
|
Distribution and
other asset-based expenses (1)
|
(20,927)
|
|
|
(25,386)
|
|
|
(21,322)
|
|
Consolidated
investment products revenues (2)
|
2,110
|
|
|
1,682
|
|
|
1,867
|
|
Total revenues, as
adjusted
|
$
|
127,138
|
|
|
$
|
128,506
|
|
|
$
|
121,034
|
|
Reconciliation of
Total Operating Expenses, GAAP to Operating Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Total operating
expenses, GAAP
|
$
|
110,168
|
|
|
$
|
118,264
|
|
|
$
|
110,361
|
|
Distribution and
other asset-based expenses (1)
|
(20,927)
|
|
|
(25,386)
|
|
|
(21,322)
|
|
Consolidated
investment products expenses (2)
|
(376)
|
|
|
(529)
|
|
|
(2,568)
|
|
Amortization of
intangible assets (3)
|
(7,587)
|
|
|
(7,541)
|
|
|
(7,583)
|
|
Restructuring and
severance (4)
|
(523)
|
|
|
—
|
|
|
(320)
|
|
Acquisition and
integration expenses (5)
|
(1,304)
|
|
|
(4,290)
|
|
|
(1,234)
|
|
Other (6)
|
—
|
|
|
(228)
|
|
|
—
|
|
Total operating
expenses, as adjusted
|
$
|
79,451
|
|
|
$
|
80,290
|
|
|
$
|
77,334
|
|
Reconciliation of
Operating Income (Loss), GAAP to Operating Income (Loss), as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Operating income
(loss), GAAP
|
$
|
35,787
|
|
|
$
|
33,946
|
|
|
$
|
30,128
|
|
Consolidated
investment products (earnings) losses (2)
|
2,486
|
|
|
2,211
|
|
|
4,435
|
|
Amortization of
intangible assets (3)
|
7,587
|
|
|
7,541
|
|
|
7,583
|
|
Restructuring and
severance (4)
|
523
|
|
|
—
|
|
|
320
|
|
Acquisition and
integration expenses (5)
|
1,304
|
|
|
4,290
|
|
|
1,234
|
|
Other (6)
|
—
|
|
|
228
|
|
|
—
|
|
Operating income
(loss), as adjusted
|
$
|
47,687
|
|
|
$
|
48,216
|
|
|
$
|
43,700
|
|
|
|
|
|
|
|
Operating margin,
GAAP
|
24.5%
|
|
|
22.3%
|
|
|
21.4%
|
|
Operating margin, as
adjusted
|
37.5%
|
|
|
37.5%
|
|
|
36.1%
|
|
Reconciliation of Net
Income (Loss) Attributable to Common Stockholders, GAAP to Net
Income (Loss) Attributable
to Common Stockholders, as Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Net income (loss)
attributable to common stockholders, GAAP
|
$
|
22,000
|
|
|
$
|
24,913
|
|
|
$
|
24,842
|
|
Amortization of
intangible assets, net of tax (3)
|
4,803
|
|
|
4,772
|
|
|
4,786
|
|
Restructuring and
severance, net of tax (4)
|
382
|
|
|
—
|
|
|
233
|
|
Acquisition and
integration expenses, net of tax (5)
|
953
|
|
|
3,144
|
|
|
900
|
|
Other, net of tax
(6)
|
2,231
|
|
|
1,836
|
|
|
1,733
|
|
Seed capital and CLO
investments (gains) losses, net of tax (7)
|
2,545
|
|
|
(1,417)
|
|
|
(2,504)
|
|
Net income (loss)
attributable to common stockholders, as adjusted
|
$
|
32,914
|
|
|
$
|
33,248
|
|
|
$
|
29,990
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - diluted
|
8,157
|
|
|
8,456
|
|
|
8,252
|
|
Preferred
stockA
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average
shares outstanding - diluted, as adjusted
|
8,157
|
|
|
8,456
|
|
|
8,252
|
|
|
|
|
|
|
|
Earnings (loss) per
share - diluted, GAAP
|
$
|
2.95
|
|
|
$
|
3.19
|
|
|
$
|
3.26
|
|
Earnings (loss) per
share - diluted, as adjusted
|
$
|
4.03
|
|
|
$
|
3.93
|
|
|
$
|
3.63
|
|
|
A Assumes
conversion of preferred shares to common shares at the 20-day
volume-weighted average common stock price at period end, subject
to a conversion price range of $109.58 to $131.49 per share
resulting in a conversion ratio range of 0.9126 to 0.7605 as of
9/30/2019
|
Reconciliation of
Income (Loss) Before Taxes, GAAP to Income (Loss) Before Taxes, as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Income (loss) before
taxes, GAAP
|
$
|
36,203
|
|
|
$
|
34,584
|
|
|
$
|
36,687
|
|
Consolidated
investment products (earnings) losses (2)
|
(367)
|
|
|
(146)
|
|
|
(223)
|
|
Amortization of
intangible assets (3)
|
7,587
|
|
|
7,541
|
|
|
7,583
|
|
Restructuring and
severance (4)
|
523
|
|
|
—
|
|
|
320
|
|
Acquisition and
integration expenses (5)
|
1,304
|
|
|
4,290
|
|
|
1,234
|
|
Other (6)
|
—
|
|
|
228
|
|
|
—
|
|
Seed capital and CLO
investments (gains) losses (7)
|
2,038
|
|
|
971
|
|
|
(2,446)
|
|
Income (loss) before
taxes, as adjusted
|
$
|
47,288
|
|
|
$
|
47,468
|
|
|
$
|
43,155
|
|
Reconciliation of
Income Tax Expense (Benefit), GAAP to Income Tax Expense (Benefit),
as Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Income tax expense
(benefit), GAAP
|
$
|
10,844
|
|
|
$
|
6,653
|
|
|
$
|
8,788
|
|
Tax impact
of:
|
|
|
|
|
|
Amortization
of intangible assets (3)
|
2,042
|
|
|
2,014
|
|
|
2,050
|
|
Restructuring
and severance (4)
|
141
|
|
|
—
|
|
|
87
|
|
Acquisition
and integration expenses (5)
|
351
|
|
|
1,146
|
|
|
334
|
|
Other
(6)
|
(146)
|
|
|
477
|
|
|
351
|
|
Seed capital
and CLO investments (gains) losses (7)
|
(507)
|
|
|
2,388
|
|
|
58
|
|
Income tax expense
(benefit), as adjusted
|
$
|
12,725
|
|
|
$
|
12,678
|
|
|
$
|
11,668
|
|
|
|
|
|
|
|
Effective tax rate,
GAAPA
|
30.0%
|
|
|
19.2%
|
|
|
24.0%
|
|
Effective tax rate,
as adjustedB
|
26.9%
|
|
|
26.7%
|
|
|
27.0%
|
|
|
A Reflects income tax expense
(benefit), GAAP, divided by income (loss) before taxes,
GAAP
|
B Reflects income tax expense
(benefit), as adjusted, divided by income (loss) before taxes, as
adjusted
|
Reconciliation of
Investment Management Fees, GAAP to Investment Management Fees, as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Investment management
fees, GAAP
|
$
|
120,023
|
|
|
$
|
121,713
|
|
|
$
|
114,591
|
|
Consolidated
investment products fees (2)
|
2,052
|
|
|
1,666
|
|
|
1,837
|
|
Investment management
fees, as adjusted
|
$
|
122,075
|
|
|
$
|
123,379
|
|
|
$
|
116,428
|
|
Reconciliation of
Administration and Transfer Agent Fees, GAAP to Administration and
Transfer Agent Fees, as Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Administration and
transfer agent fees, GAAP
|
$
|
15,280
|
|
|
$
|
16,567
|
|
|
$
|
15,054
|
|
Consolidated
investment products fees (2)
|
49
|
|
|
12
|
|
|
27
|
|
Administration and
transfer agent fees, as adjusted
|
$
|
15,329
|
|
|
$
|
16,579
|
|
|
$
|
15,081
|
|
Reconciliation of
Employment Expenses, GAAP to Employment Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Employment expenses,
GAAP
|
$
|
61,282
|
|
|
$
|
63,269
|
|
|
$
|
58,123
|
|
Acquisition and
integration expenses (5)
|
(1,223)
|
|
|
(1,561)
|
|
|
(1,115)
|
|
Employment expenses,
as adjusted
|
$
|
60,059
|
|
|
$
|
61,708
|
|
|
$
|
57,008
|
|
Reconciliation of
Other Operating Expenses, GAAP to Other Operating Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Other operating
expenses, GAAP
|
$
|
18,228
|
|
|
$
|
20,350
|
|
|
$
|
19,174
|
|
Acquisition and
integration expenses (5)
|
(81)
|
|
|
(2,729)
|
|
|
(119)
|
|
Other (6)
|
—
|
|
|
(228)
|
|
|
—
|
|
Other operating
expenses, as adjusted
|
$
|
18,147
|
|
|
$
|
17,393
|
|
|
$
|
19,055
|
|
Reconciliation of
Total Other Income (Expense), Net, GAAP to Total Other Income
(Expense), Net, as Adjusted:
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Total other income
(expense), net GAAP
|
$
|
(4,596)
|
|
|
$
|
(4,560)
|
|
|
$
|
12,455
|
|
Consolidated
investment products (2)
|
3,593
|
|
|
4,148
|
|
|
(9,211)
|
|
Seed capital and CLO
investments (gains) losses (7)
|
2,038
|
|
|
971
|
|
|
(2,446)
|
|
Total other income
(expense), net as adjusted
|
$
|
1,035
|
|
|
$
|
559
|
|
|
$
|
798
|
|
Reconciliation of
Interest and Dividend Income, GAAP to Interest and Dividend Income,
as Adjusted:
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Interest and dividend
income, GAAP
|
$
|
863
|
|
|
$
|
716
|
|
|
$
|
964
|
|
Consolidated
investment products (2)
|
2,592
|
|
|
3,132
|
|
|
2,844
|
|
Interest and dividend
income, as adjusted
|
$
|
3,455
|
|
|
$
|
3,848
|
|
|
$
|
3,808
|
|
Reconciliation of
Total Noncontrolling Interests, GAAP to Total Noncontrolling
Interests, as Adjusted
|
|
|
Three Months
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
Total noncontrolling
interests, GAAP
|
$
|
(1,274)
|
|
|
$
|
(933)
|
|
|
$
|
(973)
|
|
Consolidated
investment products (2)
|
367
|
|
|
146
|
|
|
223
|
|
Amortization of
intangible assets (3)
|
(742)
|
|
|
(755)
|
|
|
(747)
|
|
Total noncontrolling
interests, as adjusted
|
$
|
(1,649)
|
|
|
$
|
(1,542)
|
|
|
$
|
(1,497)
|
|
Notes to
Reconciliations:
|
1.
|
Distribution and
other asset-based expenses - Primarily payments to
distribution partners for providing services to investors in
sponsored funds and payments to third-party service providers for
investment management-related services. Management believes that
making this adjustment aids in comparing the company's operating
results with other asset management firms that do not utilize
intermediary distribution partners or third-party service
providers.
|
2.
|
Consolidated
investment products - Revenues and expenses generated by
operating activities of mutual funds and CLOs that are consolidated
in the financial statements. Management believes that excluding
these operating activities to reflect net revenues and expenses of
the company prior to the consolidation of these products is
consistent with the approach of reflecting its operating results
from managing third-party client assets.
|
3.
|
Amortization of
intangible assets - Non-cash amortization expense or
impairment expense, if any, attributable to acquisition-related
intangible assets, including any portion that is allocated to
noncontrolling interests. Management believes that making this
adjustment aids in comparing the company's operating results with
other asset management firms that have not engaged in
acquisitions.
|
4.
|
Restructuring and
severance - Certain expenses associated with restructuring
the business, including lease abandonment-related expenses and
severance costs associated with staff reductions, that are not
reflective of the ongoing earnings generation of the business.
Management believes that making this adjustment aids in comparing
the company's operating results with prior periods.
|
5.
|
Acquisition and
integration expenses - Expenses that are directly related
to acquisition and integration activities. Acquisition expenses
include transaction closing costs, certain professional fees, and
financing fees. Integration expenses include costs incurred that
are directly attributable to combining businesses, including
compensation, restructuring and severance charges, professional
fees, consulting fees, and other expenses. Management believes that
making these adjustments aids in comparing the company's operating
results with other asset management firms that have not engaged in
acquisitions.
|
|
|
|
Components of
Acquisition and Integration Expenses for the respective periods are
shown below:
|
|
|
|
|
Three Months
Ended
|
|
Acquisition and
Integration Expenses
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
|
Employment
expenses
|
$
|
1,223
|
|
|
$
|
1,561
|
|
|
$
|
1,115
|
|
|
Other operating
expenses
|
81
|
|
|
2,729
|
|
|
119
|
|
|
Total Acquisition
and Integration Expenses
|
$
|
1,304
|
|
|
$
|
4,290
|
|
|
$
|
1,234
|
|
|
|
6.
|
Other -
Certain expenses that are not reflective of the ongoing earnings
generation of the business. In addition, it includes income tax
expense (benefit) items, such as adjustments for uncertain tax
positions, changes in tax law, valuation allowances, and other
unusual or infrequent items not related to current operating
results to reflect a normalized effective rate. Preferred dividends
are adjusted as the shares are mandatorily convertible into common
shares at the end of three years and the non-GAAP weighted average
shares are adjusted to reflect the conversion. Management believes
that making these adjustments aids in comparing the company's
operating results with prior periods.
|
|
|
|
Components of Other
for the respective periods are shown below:
|
|
|
Three Months
Ended
|
|
Other
|
9/30/2019
|
|
9/30/2018
|
|
6/30/2019
|
|
Occupancy related
expenses
|
$
|
—
|
|
|
$
|
228
|
|
|
$
|
—
|
|
|
Tax impact of
occupancy related expenses
|
—
|
|
|
(61)
|
|
|
—
|
|
|
Other discrete tax
adjustments
|
146
|
|
|
(416)
|
|
|
(351)
|
|
|
Preferred stockholder
dividends
|
2,085
|
|
|
2,085
|
|
|
2,084
|
|
|
Total
Other
|
$
|
2,231
|
|
|
$
|
1,836
|
|
|
$
|
1,733
|
|
|
|
7.
|
Seed capital and
CLO investments (gains) losses - Gains and losses
(realized and unrealized) of seed capital and CLO investments.
Gains and losses (realized and unrealized) generated by investments
in seed capital and CLO investments can vary significantly from
period to period and do not reflect the Company's operating results
from providing investment management and related services.
Management believes that making this adjustment aids in comparing
the Company's operating results with prior periods and with other
asset management firms that do not have meaningful seed capital and
CLO investments
|
Definitions:
Revenues, as adjusted, comprise the fee
revenues paid by clients for investment management and related
services. Revenues, as adjusted, for purposes of calculating net
income attributable to common stockholders, as adjusted, differ
from U.S. GAAP revenues in that they are reduced by distribution
and other asset-based expenses that are generally passed through to
external parties, and exclude the effect of consolidated investment
products.
Operating expenses, as adjusted, is
calculated to reflect expenses from ongoing continuing operations.
Operating expenses, as adjusted, for purposes of calculating net
income attributable to common stockholders, as adjusted, differ
from U.S. GAAP expenses in that they exclude amortization or
impairment, if any, of intangible assets, restructuring and
severance, the effect of consolidated investment products,
acquisition and integration-related expenses and certain other
expenses that do not reflect the ongoing earnings generation of the
business.
Operating margin, as adjusted, is a metric
used to evaluate efficiency represented by operating income, as
adjusted, divided by revenues, as adjusted.
Earnings (loss) per share, as
adjusted, represent net income (loss) attributable to
common stockholders, as adjusted, divided by weighted average
shares outstanding, as adjusted, on either a basic or diluted
basis.
Forward-Looking Information
This press release contains statements that are, or may be
considered to be, forward-looking statements. All statements that
are not historical facts, including statements about our beliefs or
expectations, are "forward-looking statements" within the meaning
of The Private Securities Litigation Reform Act of 1995, as
amended. These statements may be identified by such forward-looking
terminology as "expect," "estimate," "intent," "plan," "intend,"
"believe," "anticipate," "may," "will," "should," "could,"
"continue," "project," "opportunity," "predict," "would,"
"potential," "future," "forecast," "guarantee," "assume," "likely,"
"target" or similar statements or variations of such terms.
Our forward-looking statements are based on a series of
expectations, assumptions and projections about the company
and the markets in which we operate, are not guarantees
of future results or performance, and involve substantial risks and
uncertainty including assumptions and projections concerning our
assets under management, net asset inflows and outflows, operating
cash flows, business plans and ability to borrow, for all future
periods. All forward-looking statements are as of the date of this
release only. The company can give no assurance that such
expectations or forward-looking statements will prove to be
correct. Actual results may differ materially.
Our business and our forward-looking statements involve
substantial known and unknown risks and uncertainties, including
those discussed under "Risk Factors," and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in
our 2018 Annual Report on Form 10-K as well as the following risks
and uncertainties: (a) any reduction in our assets under
management; (b) withdrawal, renegotiation or termination of
investment advisory agreements; (c) damage to our reputation; (d)
failure to comply with investment guidelines or other contractual
requirements; (e) inability to satisfy financial covenants and
payments related to our indebtedness; (f) inability to attract and
retain key personnel; (g) challenges from the competition we face
in our business; (h) adverse regulatory and legal developments; (i)
unfavorable changes in tax laws or limitations; (j) adverse
developments related to unaffiliated subadvisers; (k) negative
implications of changes in key distribution relationships; (l)
interruptions in or failure to provide critical technological
service by us or third parties; (m) volatility associated with our
common and preferred stock; (n) adverse civil litigation and
government investigations or proceedings; (o) risk of loss on our
investments; (p) inability to make quarterly common and preferred
stock distributions; (q) lack of sufficient capital on satisfactory
terms; (r) losses or costs not covered by insurance; (s) impairment
of goodwill or intangible assets; (t) inability to achieve expected
acquisition-related benefits; and other risks and uncertainties
described in our 2018 Annual Report on Form 10-K and our filings
with the Securities and Exchange Commission (the "SEC").
Certain other factors that may impact our continuing operations,
prospects, financial results and liquidity, or that may cause
actual results to differ from such forward-looking statements, are
discussed or included in the company's periodic reports filed with
the SEC and are available on our website at www.virtus.com under
"Investor Relations." You are urged to carefully consider all such
factors.
The company does not undertake or plan to update or revise any
such forward-looking statements to reflect actual results, changes
in plans, assumptions, estimates or projections, or other
circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any
forward-looking information will not be realized. If there are any
future public statements or disclosures by us that modify or affect
any of the forward-looking statements contained in or accompanying
this release, such statements or disclosures will be deemed to
modify or supersede such statements in this release.
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SOURCE Virtus Investment Partners, Inc.