Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or
“the Company”) today reported its results for the three and six
months ended June 30, 2019, and announced the initiation of a
quarterly cash dividend. The first dividend of $0.05 per share will
be payable on September 25, 2019, to shareholders of record on
September 10, 2019.
“The decision by our Board of Directors to
initiate a dividend exemplifies the confidence we have in the
strength and durability of our business and underscores our
commitment to enhancing shareholder value,” said David Brown,
Chairman and Chief Executive Officer. “The addition of a cash
dividend adds another component to our capital allocation strategy
while maintaining a primary focus on creating the capital
flexibility needed to participate in the consolidation of our
industry.
“I am also pleased to report that Victory
Capital’s investment and financial results were excellent in the
second quarter. Our Investment Franchises and Solutions Platform
continued to deliver impressive investment performance with 84% of
AUM outperforming respective benchmarks over the trailing five-year
period ended June 30, 2019. Additionally, net flows were positive
at $3.7 billion for the quarter and $2.6 billion through the first
six months of the year. Gross flows were also robust for the
quarter at $7.5 billion.
“AUM for Victory Capital grew to $64.1 billion
as of June 30, 2019. The Company’s AUM as of July 31, 2019,
inclusive of the USAA Asset Management Company acquisition, was
$147.8 billion.
“The completion of the USAA Asset Management
Company acquisition marks a significant milestone for Victory
Capital. It significantly broadens our investment capabilities,
increases our size and scale and expands our distribution platform
with the introduction of a new direct channel focused on USAA
members. Our integration efforts are progressing well, and we
remain on target to achieve total annual cost synergy estimates of
$120 million. This includes $75 million of synergies that were
realized as of July 1, 2019, an additional $25 million expected to
be realized by year-end, and the balance in 2020.
“We believe our growth and evolution as an
organization since becoming a public company demonstrates the
strength of our integrated multi-boutique business model as well as
our ability to successfully execute against our long-term strategic
vision. We intend to continue to grow organically by leveraging our
full suite of products and inorganically through strategic
acquisitions. As in the past, serving the needs of our clients
remains our top priority.”
1The Company reports its financial results in
accordance with generally accepted accounting principles (“GAAP”).
Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and
should not be regarded as an alternative to any measurement under
GAAP. Please see the section “Information Regarding Non-GAAP
Financial Measures” at the end of this press release for an
explanation of Non-GAAP financial measures and a reconciliation to
the nearest GAAP financial measure.
The table below presents AUM, and certain GAAP
and non-GAAP (“adjusted”) financial results. Due to rounding, AUM
values and other amounts in this press release may not add up
precisely to the totals provided.
(in millions except per share amounts or as
otherwise noted)
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, |
|
|
|
March 31, |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Assets Under Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending |
$ |
64,077 |
|
|
$ |
58,119 |
|
|
$ |
62,256 |
|
|
$ |
64,077 |
|
|
$ |
62,256 |
|
Average |
|
60,063 |
|
|
|
57,043 |
|
|
|
61,617 |
|
|
|
58,553 |
|
|
|
61,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
$ |
7,514 |
|
|
$ |
3,038 |
|
|
$ |
3,521 |
|
|
$ |
10,552 |
|
|
$ |
7,205 |
|
Net |
|
3,694 |
|
|
|
(1,105 |
) |
|
|
(102 |
) |
|
|
2,589 |
|
|
|
(735 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Results
(GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2) |
$ |
91.4 |
|
|
$ |
87.5 |
|
|
$ |
104.4 |
|
|
$ |
178.8 |
|
|
$ |
209.4 |
|
Revenue realization (in bps)(2) |
|
61.0 |
|
|
|
62.2 |
|
|
|
68.0 |
|
|
|
61.6 |
|
|
|
68.3 |
|
Operating expenses(2) |
|
68.6 |
|
|
|
65.4 |
|
|
|
74.7 |
|
|
|
134.0 |
|
|
|
152.4 |
|
Income from operations |
|
22.7 |
|
|
|
22.1 |
|
|
|
29.7 |
|
|
|
44.9 |
|
|
|
57.0 |
|
Operating margin(2) |
|
24.9 |
% |
|
|
25.3 |
% |
|
|
28.4 |
% |
|
|
25.1 |
% |
|
|
27.2 |
% |
Net income |
|
14.4 |
|
|
|
14.5 |
|
|
|
18.7 |
|
|
|
28.9 |
|
|
|
29.2 |
|
Earnings per diluted share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.26 |
|
|
$ |
0.40 |
|
|
$ |
0.42 |
|
Cash flow from operations |
|
31.4 |
|
|
|
17.9 |
|
|
|
33.7 |
|
|
|
49.3 |
|
|
|
59.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Performance Results
(Non-GAAP)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
36.6 |
|
|
$ |
33.6 |
|
|
$ |
40.7 |
|
|
$ |
70.2 |
|
|
$ |
80.5 |
|
Adjusted EBITDA margin(2) |
|
40.0 |
% |
|
|
38.4 |
% |
|
|
39.0 |
% |
|
|
39.2 |
% |
|
|
38.4 |
% |
Adjusted net income |
|
24.4 |
|
|
|
21.9 |
|
|
|
26.6 |
|
|
|
46.3 |
|
|
|
49.6 |
|
Tax benefit of goodwill and acquired intangible assets |
|
3.4 |
|
|
|
3.4 |
|
|
|
3.3 |
|
|
|
6.7 |
|
|
|
6.6 |
|
Adjusted net income with tax benefit |
|
27.7 |
|
|
|
25.3 |
|
|
|
29.9 |
|
|
|
53.0 |
|
|
|
56.3 |
|
Adjusted net income with tax benefit per diluted share |
$ |
0.38 |
|
|
$ |
0.35 |
|
|
$ |
0.41 |
|
|
$ |
0.73 |
|
|
$ |
0.81 |
|
1 The Company reports its financial results in
accordance with GAAP. Adjusted EBITDA and Adjusted Net Income are
not defined by GAAP and should not be regarded as an alternative to
any measurement under GAAP. Please see the section “Information
Regarding Non-GAAP Financial Measures” at the end of this press
release for an explanation of Non-GAAP financial measures and a
reconciliation to the nearest GAAP financial measure.
2 On January 1, 2019, the Company adopted ASU
2014-09, “Revenue from Contracts with Customers,” and now records
all Mutual Fund and ETF waivers and expense reimbursements as a
reduction of reported revenue and not as an expense item. Prior
periods have not been restated, as permitted by the Financial
Accounting Standards Board, due to the Company adopting the new
revenue guidance using the modified retrospective method.
AUM, Flows and Investment
Performance
Victory Capital’s AUM increased by 10.3%, or
$6.0 billion, to $64.1 billion at June 30, 2019, compared with
$58.1 billion at March 31, 2019. The increase was due to positive
net flows of $3.7 billion, compounded by market appreciation of
$2.3 billion. Gross flows for the second quarter were $7.5 billion.
For the year-to-date period ended June 30, 2019, the Company
reported positive net flows of $2.6 billion.
As of June 30, 2019, Victory Capital offered 71
investment strategies through its nine autonomous Investment
Franchises and Solutions Platform. The table below presents
outperformance against benchmarks by AUM and strategies as of June
30, 2019.
|
|
|
|
|
|
|
|
|
Trailing |
|
Trailing |
|
Trailing |
|
Trailing |
|
1-Year |
|
3-Years |
|
5-Years |
|
10-Years |
Percentage of AUM Outperforming Benchmark |
74% |
|
81% |
|
84% |
|
89% |
Percentage of Strategies
Outperforming Benchmark |
46% |
|
62% |
|
70% |
|
81% |
|
|
|
|
|
|
|
|
Second Quarter of 2019 Compared to First Quarter
of 2019
Revenue increased 4.5% to $91.4 million, in the
second quarter of 2019, compared with revenue of $87.5 million in
the first quarter. The increase was due to higher average AUM in
the second quarter. Excluding restructuring and integration costs,
operating expenses in the second quarter of 2019 increased 2.3%,
despite average AUM increasing 5.3%, from the first quarter of the
year.
Second quarter GAAP net income was $14.4
million, or $0.20 per diluted share, compared with $14.5 million,
or $0.20 per diluted share, in the first quarter of 2019. GAAP
operating margin was 24.9% for the quarter, compared with 25.3% in
the first quarter of 2019. The decrease was driven by higher
restructuring and integration costs in the year’s second
quarter.
Adjusted net income with tax benefit increased
9.5% to $27.7 million, or $0.38 per diluted share, in the second
quarter, up from $25.3 million, or $0.35 per diluted share, in the
first quarter. Adjusted EBITDA and Adjusted EBITDA margin were
$36.6 million and 40.0%, respectively, for the second quarter of
2019, up from $33.6 million and 38.4%, respectively, in the first
quarter of the year.
Second Quarter of 2019 Compared
to Second Quarter of 2018
Revenue for the quarter ended June 30, 2019,
decreased $13.0 million to $91.4 million, compared with $104.4
million in the second quarter of 2018. Current-year revenue was
negatively impacted by lower average AUM and a lower reported
average fee rate—related to change in business mix and the adoption
of ASU 2014-09 in 2019.
Operating expenses declined 8.2% in the second
quarter of 2019 to $68.6 million, compared with $74.7 million in
the prior-year quarter. This year’s second quarter operating
expenses included $4.6 million of acquisition, restructuring, and
integration costs, compared with $0.4 million of acquisition,
restructuring, and integration costs in the same year-ago quarter.
The year-over-year improvement resulted from lower personnel
expenses, reflecting the Company’s variable cost structure and
sharply lower distribution and other asset-based expenses, which
declined $7.9 million, or 32.9%, compared with last year, due to
the mix of mutual fund assets and share classes and lower average
AUM. Last year’s second-quarter distribution and other asset-based
expenses included $3.3 million of fund waivers and reimbursements
that are no longer included in operating expenses following the
adoption of ASU 2014-09 on January 1, 2019.
GAAP net income of $14.4 million, or $0.20 per
diluted share, in the second quarter of 2019 compared with $18.7
million, or $0.26 per diluted share, in the same quarter last year.
GAAP operating margin was 24.9% in the quarter, compared with 28.4%
in the second quarter of 2018. The lower operating margin was due
to higher acquisition related costs and higher restructuring and
integration costs in 2019.
Adjusted net income with tax benefit was $27.7
million, or $0.38 per diluted share, in the second quarter of 2019,
compared with $29.9 million, or $0.41 per diluted share in the
prior year’s second quarter. Adjusted EBITDA and Adjusted EBITDA
margin were $36.6 million and 40.0%, respectively, for the second
quarter of 2019, compared with $40.7 million and 39.0%,
respectively, for the second quarter one year ago.
Six Months Ended June 30, 2019
Compared to Six Months Ended June 30, 2018
Revenue declined to $178.8 million for the six
months ended June 30, 2019, compared with $209.4 million for the
comparable period ended June 30, 2018, due to lower average AUM and
a decrease in the realized fee rate. Revenue for the first half of
2019 includes a reduction of $8.2 million in mutual fund waivers
and reimbursements due to the adoption of ASU 2014-09 on January 1,
2019, compared with no such reduction of revenue in the prior year.
Operating expenses, for the six months ended June 30, 2019,
declined to $134.0 million, compared with $152.4 million for the
same period in 2018, due to the Company’s variable cost structure
and adoption of ASU 2014-09. All expense categories declined in
2019, except for acquisition related costs and restructuring and
integration costs.
For the six months ended June 30, 2019, GAAP net
income was $28.9 million, or $0.40 per diluted share, compared with
$29.2 million, or $0.42 per diluted share, in the comparable six
months of 2018. GAAP operating margin was 25.1% for the six months
ended June 30, 2019, versus 27.2% for six months ended June 30,
2018. Current-year operating results include $7.4 million in
acquisition, restructuring, and integration costs, compared with
$0.7 million for these same costs in the comparable 2018 period. In
addition, last year’s results include $1.9 million of costs related
to debt issued in the first quarter of 2018.
Adjusted net income with tax benefit was $53.0
million, or $0.73 per diluted share, in the first half of 2019,
comprised of $0.63 per diluted share in adjusted net income and
$0.09 per diluted share in tax benefit. This was down 5.9% from
adjusted net income with tax benefit of $56.3 million, or $0.81 per
diluted per diluted share, comprised of $0.72 per diluted share in
adjusted net income and $0.09 per diluted share in tax benefit, for
the same period in 2018.
Adjusted EBITDA and Adjusted EBITDA margin were
$70.2 million and 39.2%, respectively, for the six months ended
June 30, 2019, compared with $80.5 million and 38.4%, respectively,
for last year’s comparable period.
Balance Sheet / Capital
Management
Cash and cash equivalents, inclusive of
restricted cash, increased $43.8 million, to $95.3 million at June
30, 2019. This was up from $51.5 million at December 31, 2018. On
June 28, 2019, the Company placed $71.9 million into escrow to
partially fund its USAA Asset Management Company acquisition. These
funds are categorized as restricted cash on the Company’s June 30,
2019 balance sheet. During the second quarter, the Company
repurchased an additional 113,297 shares, at an average price of
$17.19 per share, for a total cost of $1.9 million.
After quarter end, on July 1, the Company closed
its previously announced acquisition of the USAA Asset Management
Company and entered into a new $1.1 billion seven-year term loan.
The interest rate on the term loan was set at LIBOR plus 325 basis
points. In addition, the Company established a five-year $100
million senior secured revolving credit facility that remains
undrawn. Since July 1, the Company has reduced outstanding debt
with principal repayments totaling $20.0 million and announced the
initiation of a $0.05 per share quarterly cash dividend.
Conference Call, Webcast and
Slide Presentation
The Company will host a conference call tomorrow
morning, August 13, at 8:00 a.m. ET to discuss the results.
Analysts and investors may participate in the question-and-answer
session. To participate in the conference call, please dial (866)
465-5145 (domestic) or (409) 220-9945 (international), shortly
before 8:00 a.m. ET. A live, listen-only webcast will also be
available via the investor relations section of the Company’s
website at https://ir.vcm.com. Prior to the call, a supplemental
slide presentation that will be used for the conference call will
be available on the Events and Presentations page of the Company’s
investor relations website. For anyone who is unable to join the
live event, an archive of the webcast will be available for replay
shortly after the call concludes.
About Victory
Capital
Victory Capital is a global investment
management firm operating a next-generation, integrated
multi-boutique business model with $147.8 billion in assets under
management as of July 31, 2019.
Victory Capital provides specialized investment
strategies to institutions, intermediaries, retirement platforms
and individual investors, including USAA members through its direct
member channel. Through its Investment Franchises and Solutions
Platform, Victory Capital offers a diverse array of independent
investment approaches and innovative investment vehicles designed
to drive better investor outcomes. This includes actively managed
mutual funds and separately managed accounts, rules-based and
active ETFs, multi-asset class strategies, custom solutions and a
529 College Savings Plan.
For more information, please visit www.vcm.com
or follow us.
TwitterLinkedIn
FORWARD-LOOKING
STATEMENTS
This press release may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements may include, without
limitation, any statements preceded by, followed by or including
words such as “target,” “believe,” “expect,” “aim,” “intend,”
“may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,”
“future,” “objective,” “outlook,” “plan,” “potential,” “predict,”
“project,” “will,” “can have,” “likely,” “should,” “would,” “could”
and other words and terms of similar meaning or the negative
thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond Victory
Capital’s control, as discussed in Victory Capital’s filings with
the SEC, that could cause Victory Capital’s actual results,
performance or achievements to be materially different from the
expected results, performance or achievements expressed or implied
by such forward-looking statements.
Although it is not possible to identify all such
risks and factors, they include, among others, the following:
reductions in AUM based on investment performance, client
withdrawals, difficult market conditions and other factors; the
nature of the Company’s contracts and investment advisory
agreements; the Company’s ability to maintain historical returns
and sustain its historical growth; the Company’s dependence on
third parties to market its strategies and provide products or
services for the operation of its business; the Company’s ability
to retain key investment professionals or members of its senior
management team; the Company’s reliance on the technology systems
supporting its operations; the Company’s ability to successfully
acquire and integrate new companies; the concentration of the
Company’s investments in long-only small- and mid-cap equity and
U.S. clients; risks and uncertainties associated with non-U.S.
investments; the Company’s efforts to establish and develop new
teams and strategies; the ability of the Company’s investment teams
to identify appropriate investment opportunities; the Company’s
ability to limit employee misconduct; the Company’s ability to meet
the guidelines set by its clients; the Company’s exposure to
potential litigation (including administrative or tax proceedings)
or regulatory actions; the Company’s ability to implement effective
information and cyber security policies, procedures and
capabilities; the Company’s substantial indebtedness; the potential
impairment of the Company’s goodwill and intangible assets;
disruption to the operations of third parties whose functions are
integral to the Company’s ETF platform; the Company’s determination
that Victory Capital is not required to register as an "investment
company" under the 1940 Act; the fluctuation of the Company’s
expenses; the Company’s ability to respond to recent trends in the
investment management industry; the level of regulation on
investment management firms and the Company’s ability to respond to
regulatory developments; the competitiveness of the investment
management industry; the dual class structure of the Company’s
common stock; the level of control over the Company retained by
Crestview GP; the Company’s status as an emerging growth company
and a controlled company; and other risks and factors listed under
"Risk Factors" and elsewhere in the Company’s filings with the
SEC.
Such forward-looking statements are based on
numerous assumptions regarding Victory Capital’s present and future
business strategies and the environment in which it will operate in
the future. Any forward-looking statement made in this press
release speaks only as of the date hereof. Except as required by
law, Victory Capital assumes no obligation to update these
forward-looking statements, or to update the reasons actual results
could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future.
Contacts
Investors:Matthew Dennis,
CFADirector, Investor Relations216-898-2412mdennis@vcm.com
Media: Tricia Ross310-622-8226tross@finprofiles.com
Victory Capital and its affiliates are not
affiliated with United Services Automobile Association or its
affiliates. USAA and the USAA logo are registered trademarks and
the USAA logo is a trademark of United Services Automobile
Association and are being used by Victory Capital and its
affiliates under license.
Victory Capital Holdings, Inc.
and SubsidiariesUnaudited
Condensed Consolidated Statements of
Operations(in thousands except
per share data and percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2019 |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees |
$ |
78,042 |
|
|
$ |
74,411 |
|
|
$ |
88,998 |
|
|
$ |
152,453 |
|
|
$ |
178,128 |
|
Fund administration and distribution fees |
|
13,318 |
|
|
|
13,068 |
|
|
|
15,401 |
|
|
|
26,386 |
|
|
|
31,235 |
|
Total revenue |
|
91,360 |
|
|
|
87,479 |
|
|
|
104,399 |
|
|
|
178,839 |
|
|
|
209,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel compensation and benefits |
|
35,542 |
|
|
|
34,501 |
|
|
|
37,140 |
|
|
|
70,043 |
|
|
|
73,943 |
|
Distribution and other asset-based expenses |
|
16,182 |
|
|
|
15,767 |
|
|
|
24,127 |
|
|
|
31,949 |
|
|
|
49,288 |
|
General and administrative |
|
7,087 |
|
|
|
7,087 |
|
|
|
7,088 |
|
|
|
14,174 |
|
|
|
16,144 |
|
Depreciation and amortization |
|
5,263 |
|
|
|
5,222 |
|
|
|
5,931 |
|
|
|
10,485 |
|
|
|
12,343 |
|
Change in value of consideration payable for acquisition of
business |
|
(14 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
(14 |
) |
|
|
(4 |
) |
Acquisition-related costs |
|
2,787 |
|
|
|
2,777 |
|
|
|
(5 |
) |
|
|
5,564 |
|
|
|
(5 |
) |
Restructuring and integration costs |
|
1,788 |
|
|
|
— |
|
|
|
438 |
|
|
|
1,788 |
|
|
|
702 |
|
Total operating expenses |
|
68,635 |
|
|
|
65,354 |
|
|
|
74,715 |
|
|
|
133,989 |
|
|
|
152,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
22,725 |
|
|
|
22,125 |
|
|
|
29,684 |
|
|
|
44,850 |
|
|
|
56,952 |
|
Operating
margin |
|
24.9 |
% |
|
|
25.3 |
% |
|
|
28.4 |
% |
|
|
25.1 |
% |
|
|
27.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other income/(expense) |
|
656 |
|
|
|
1,833 |
|
|
|
8 |
|
|
|
2,489 |
|
|
|
(29 |
) |
Interest expense and other financing costs |
|
(4,520 |
) |
|
|
(4,624 |
) |
|
|
(4,706 |
) |
|
|
(9,144 |
) |
|
|
(11,798 |
) |
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,058 |
) |
Total other income (expense), net |
|
(3,864 |
) |
|
|
(2,791 |
) |
|
|
(4,698 |
) |
|
|
(6,655 |
) |
|
|
(17,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
18,861 |
|
|
|
19,334 |
|
|
|
24,986 |
|
|
|
38,195 |
|
|
|
39,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
(4,478 |
) |
|
|
(4,807 |
) |
|
|
(6,311 |
) |
|
|
(9,285 |
) |
|
|
(9,868 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
14,383 |
|
|
$ |
14,527 |
|
|
$ |
18,675 |
|
|
$ |
28,910 |
|
|
$ |
29,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.21 |
|
|
$ |
0.22 |
|
|
$ |
0.27 |
|
|
$ |
0.43 |
|
|
$ |
0.45 |
|
Diluted |
|
0.20 |
|
|
|
0.20 |
|
|
|
0.26 |
|
|
|
0.40 |
|
|
|
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
67,583 |
|
|
|
67,521 |
|
|
|
67,949 |
|
|
|
67,552 |
|
|
|
64,791 |
|
Diluted |
|
73,521 |
|
|
|
72,282 |
|
|
|
72,135 |
|
|
|
72,962 |
|
|
|
69,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
of common stock |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc.
and SubsidiariesReconciliation of
GAAP to Non-GAAP
Measures(unaudited; in thousands
except per share data and percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income (GAAP) |
$ |
14,383 |
|
|
$ |
14,527 |
|
|
$ |
18,675 |
|
|
$ |
28,910 |
|
|
$ |
29,199 |
|
Income tax expense |
|
(4,478 |
) |
|
|
(4,807 |
) |
|
|
(6,311 |
) |
|
|
(9,285 |
) |
|
|
(9,868 |
) |
Income before
income taxes |
$ |
18,861 |
|
|
$ |
19,334 |
|
|
$ |
24,986 |
|
|
$ |
38,195 |
|
|
$ |
39,067 |
|
Interest expense |
|
3,613 |
|
|
|
3,853 |
|
|
|
4,229 |
|
|
|
7,466 |
|
|
|
12,323 |
|
Depreciation |
|
612 |
|
|
|
571 |
|
|
|
736 |
|
|
|
1,183 |
|
|
|
1,472 |
|
Other business taxes |
|
424 |
|
|
|
555 |
|
|
|
443 |
|
|
|
979 |
|
|
|
818 |
|
Amortization of acquisition-related intangible assets |
|
4,651 |
|
|
|
4,651 |
|
|
|
5,195 |
|
|
|
9,302 |
|
|
|
10,871 |
|
Stock-based compensation |
|
3,321 |
|
|
|
1,478 |
|
|
|
3,968 |
|
|
|
4,799 |
|
|
|
7,290 |
|
Acquisition, restructuring and exit costs |
|
4,575 |
|
|
|
2,777 |
|
|
|
560 |
|
|
|
7,352 |
|
|
|
1,078 |
|
Debt issuance costs |
|
366 |
|
|
|
364 |
|
|
|
361 |
|
|
|
730 |
|
|
|
7,063 |
|
Pre-IPO governance expenses |
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
138 |
|
Earnings/losses from equity method investments |
|
150 |
|
|
|
4 |
|
|
|
202 |
|
|
|
154 |
|
|
|
339 |
|
Adjusted
EBITDA |
$ |
36,573 |
|
|
$ |
33,587 |
|
|
$ |
40,677 |
|
|
$ |
70,160 |
|
|
$ |
80,459 |
|
Adjusted
EBITDA margin |
|
40.0 |
% |
|
|
38.4 |
% |
|
|
39.0 |
% |
|
|
39.2 |
% |
|
|
38.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP) |
$ |
14,383 |
|
|
$ |
14,527 |
|
|
$ |
18,675 |
|
|
$ |
28,910 |
|
|
$ |
29,199 |
|
Adjustment to reflect the
operating performance of the Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business taxes |
|
424 |
|
|
|
555 |
|
|
|
443 |
|
|
|
979 |
|
|
|
818 |
|
Amortization of acquisition-related intangible assets |
|
4,651 |
|
|
|
4,651 |
|
|
|
5,195 |
|
|
|
9,302 |
|
|
|
10,871 |
|
Stock-based compensation |
|
3,321 |
|
|
|
1,478 |
|
|
|
3,968 |
|
|
|
4,799 |
|
|
|
7,290 |
|
Acquisition, restructuring and exit costs |
|
4,575 |
|
|
|
2,777 |
|
|
|
560 |
|
|
|
7,352 |
|
|
|
1,078 |
|
Debt issuance costs |
|
366 |
|
|
|
364 |
|
|
|
361 |
|
|
|
730 |
|
|
|
7,063 |
|
Pre-IPO governance expenses |
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
138 |
|
Tax effect of above adjustments |
|
(3,334 |
) |
|
|
(2,456 |
) |
|
|
(2,631 |
) |
|
|
(5,790 |
) |
|
|
(6,814 |
) |
Adjusted net
income |
$ |
24,386 |
|
|
$ |
21,896 |
|
|
$ |
26,568 |
|
|
$ |
46,282 |
|
|
$ |
49,643 |
|
Adjusted net
income per diluted share |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
$ |
0.37 |
|
|
$ |
0.63 |
|
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit of
goodwill and acquired intangible assets |
$ |
3,361 |
|
|
$ |
3,361 |
|
|
$ |
3,320 |
|
|
$ |
6,722 |
|
|
$ |
6,640 |
|
Tax benefit of
goodwill and acquired intangible assets per diluted
share |
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.04 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income with tax benefit |
$ |
27,747 |
|
|
$ |
25,257 |
|
|
$ |
29,888 |
|
|
$ |
53,004 |
|
|
$ |
56,283 |
|
Adjusted net
income with tax benefit per diluted share |
$ |
0.38 |
|
|
$ |
0.35 |
|
|
$ |
0.41 |
|
|
$ |
0.73 |
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc.
and SubsidiariesUnaudited
Condensed Consolidated Balance
Sheets(In thousands, except for
shares)
|
|
|
|
|
|
|
June 30,2019 |
|
December 31,2018 |
Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
23,410 |
|
|
$ |
51,491 |
|
Restricted cash |
|
71,917 |
|
|
|
— |
|
Receivables |
|
44,184 |
|
|
|
44,120 |
|
Prepaid expenses |
|
3,738 |
|
|
|
2,664 |
|
Investments |
|
16,825 |
|
|
|
13,320 |
|
Property and equipment, net |
|
9,438 |
|
|
|
8,780 |
|
Goodwill |
|
284,108 |
|
|
|
284,108 |
|
Other intangible assets, net |
|
378,378 |
|
|
|
387,679 |
|
Other assets |
|
9,097 |
|
|
|
9,349 |
|
Total
assets |
$ |
841,095 |
|
|
$ |
801,511 |
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
29,879 |
|
|
$ |
20,350 |
|
Accrued compensation and benefits |
|
21,559 |
|
|
|
30,228 |
|
Consideration payable for acquisition of business |
|
6,017 |
|
|
|
5,838 |
|
Deferred tax liability, net |
|
9,286 |
|
|
|
6,212 |
|
Other liabilities |
|
17,616 |
|
|
|
14,478 |
|
Long-term debt(1) |
|
269,787 |
|
|
|
268,857 |
|
Total liabilities |
|
354,144 |
|
|
|
345,963 |
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
Class A common stock, $0.01 par value per share: 2019 - 400,000,000
shares authorized, 16,473,628 shares issued and 15,381,099 shares
outstanding; 2018 - 400,000,000 shares authorized, 15,280,833
shares issued and 14,424,558 shares outstanding |
|
165 |
|
|
|
153 |
|
Class B common stock, $0.01 par value per share: 2019 - 200,000,000
shares authorized, 54,359,620 shares issued and 52,175,783 shares
outstanding; 2018 - 200,000,000 shares authorized, 55,284,408
shares issued and 53,137,428 shares outstanding |
|
544 |
|
|
|
553 |
|
Additional paid-in capital |
|
610,685 |
|
|
|
604,401 |
|
Class A treasury stock, at cost: 2019 -1,092,529 shares; 2018 -
856,275 shares |
|
(11,337 |
) |
|
|
(8,045 |
) |
Class B treasury stock, at cost: 2019 - 2,183,837 shares; 2018 -
2,146,980 shares |
|
(22,160 |
) |
|
|
(21,719 |
) |
Accumulated other comprehensive income (loss) |
|
(20 |
) |
|
|
(86 |
) |
Retained deficit |
|
(90,926 |
) |
|
|
(119,709 |
) |
Total
stockholders' equity |
|
486,951 |
|
|
|
455,548 |
|
Total liabilities
and stockholders' equity |
$ |
841,095 |
|
|
$ |
801,511 |
|
|
|
|
|
|
|
|
|
(1) Balances at June 30, 2019 and December 31, 2018 are
shown net of unamortized loan discount and debt issuance costs in
the amount of $10.2 million and $11.1 million, respectively. The
gross amount of the debt outstanding was $280.0 million for both
periods.
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management(unaudited; in millions
except for percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
% Change from |
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Beginning assets under management |
$ |
58,119 |
|
|
$ |
52,763 |
|
|
$ |
60,855 |
|
|
10% |
|
-4% |
Gross client cash inflows |
|
7,514 |
|
|
|
3,038 |
|
|
|
3,521 |
|
|
147% |
|
113% |
Gross client cash outflows |
|
(3,819 |
) |
|
|
(4,143 |
) |
|
|
(3,623 |
) |
|
-8% |
|
5% |
Net client cash flows |
|
3,694 |
|
|
|
(1,105 |
) |
|
|
(102 |
) |
|
n/m |
|
n/m |
Market appreciation
(depreciation) |
|
2,269 |
|
|
|
6,460 |
|
|
|
1,503 |
|
|
-65% |
|
51% |
Net transfers |
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
n/m |
|
n/m |
Ending assets under
management |
|
64,077 |
|
|
|
58,119 |
|
|
|
62,256 |
|
|
10% |
|
3% |
Average assets under
management |
|
60,063 |
|
|
|
57,043 |
|
|
|
61,617 |
|
|
5% |
|
-3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
|
% Change from |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
2018 |
|
|
Beginning assets under
management |
$ |
52,763 |
|
|
$ |
61,771 |
|
|
|
|
|
-15% |
|
|
Gross client cash inflows |
|
10,552 |
|
|
|
7,205 |
|
|
|
|
|
46% |
|
|
Gross client cash outflows |
|
(7,963 |
) |
|
|
(7,940 |
) |
|
|
|
|
0% |
|
|
Net client cash flows |
|
2,589 |
|
|
|
(735 |
) |
|
|
|
|
n/m |
|
|
Market appreciation
(depreciation) |
|
8,729 |
|
|
|
1,228 |
|
|
|
|
|
611% |
|
|
Net transfers |
|
(4 |
) |
|
|
(8 |
) |
|
|
|
|
n/m |
|
|
Ending assets under
management |
|
64,077 |
|
|
|
62,256 |
|
|
|
|
|
3% |
|
|
Average assets under
management |
|
58,553 |
|
|
|
61,819 |
|
|
|
|
|
-5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management by Asset
Class(unaudited; in
millions)
For the Three Months Ended |
|
By Asset Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global / |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Mid |
|
U.S. Small |
|
Fixed |
|
U.S. Large |
|
Non-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap Equity |
|
Cap Equity |
|
Income |
|
Cap Equity |
|
Equity |
|
Solutions |
|
Commodity |
|
Other |
|
Total |
June 30,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management |
|
$ |
22,169 |
|
|
$ |
14,714 |
|
|
$ |
6,973 |
|
|
$ |
4,117 |
|
|
$ |
5,234 |
|
|
$ |
3,996 |
|
|
$ |
493 |
|
|
$ |
425 |
|
|
$ |
58,119 |
|
Gross client cash inflows |
|
|
2,784 |
|
|
|
729 |
|
|
|
506 |
|
|
|
22 |
|
|
|
333 |
|
|
|
3,092 |
|
|
|
24 |
|
|
|
24 |
|
|
|
7,514 |
|
Gross client cash outflows |
|
|
(1,840 |
) |
|
|
(924 |
) |
|
|
(330 |
) |
|
|
(128 |
) |
|
|
(205 |
) |
|
|
(295 |
) |
|
|
(74 |
) |
|
|
(23 |
) |
|
|
(3,819 |
) |
Net client cash flows |
|
|
944 |
|
|
|
(195 |
) |
|
|
176 |
|
|
|
(106 |
) |
|
|
128 |
|
|
|
2,797 |
|
|
|
(50 |
) |
|
|
1 |
|
|
|
3,694 |
|
Market appreciation
(depreciation) |
|
|
1,090 |
|
|
|
760 |
|
|
|
152 |
|
|
|
101 |
|
|
|
137 |
|
|
|
126 |
|
|
|
(107 |
) |
|
|
10 |
|
|
|
2,269 |
|
Net transfers |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Ending assets under
management |
|
$ |
24,203 |
|
|
$ |
15,278 |
|
|
$ |
7,300 |
|
|
$ |
4,108 |
|
|
$ |
5,498 |
|
|
$ |
6,919 |
|
|
$ |
335 |
|
|
$ |
436 |
|
|
$ |
64,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
20,019 |
|
|
$ |
12,948 |
|
|
$ |
6,836 |
|
|
$ |
3,759 |
|
|
$ |
4,610 |
|
|
$ |
3,767 |
|
|
$ |
469 |
|
|
$ |
355 |
|
|
$ |
52,763 |
|
Gross client cash inflows |
|
|
993 |
|
|
|
992 |
|
|
|
303 |
|
|
|
26 |
|
|
|
365 |
|
|
|
279 |
|
|
|
56 |
|
|
|
25 |
|
|
|
3,038 |
|
Gross client cash outflows |
|
|
(1,786 |
) |
|
|
(1,059 |
) |
|
|
(383 |
) |
|
|
(183 |
) |
|
|
(277 |
) |
|
|
(349 |
) |
|
|
(80 |
) |
|
|
(27 |
) |
|
|
(4,143 |
) |
Net client cash flows |
|
|
(793 |
) |
|
|
(67 |
) |
|
|
(79 |
) |
|
|
(158 |
) |
|
|
88 |
|
|
|
(70 |
) |
|
|
(24 |
) |
|
|
(2 |
) |
|
|
(1,105 |
) |
Market appreciation
(depreciation) |
|
|
2,942 |
|
|
|
1,834 |
|
|
|
216 |
|
|
|
516 |
|
|
|
535 |
|
|
|
297 |
|
|
|
47 |
|
|
|
73 |
|
|
|
6,460 |
|
Net transfers |
|
|
2 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Ending assets under
management |
|
$ |
22,169 |
|
|
$ |
14,714 |
|
|
$ |
6,973 |
|
|
$ |
4,117 |
|
|
$ |
5,234 |
|
|
$ |
3,996 |
|
|
$ |
493 |
|
|
$ |
425 |
|
|
$ |
58,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
24,205 |
|
|
$ |
15,095 |
|
|
$ |
7,311 |
|
|
$ |
4,635 |
|
|
$ |
4,334 |
|
|
$ |
3,563 |
|
|
$ |
1,298 |
|
|
$ |
414 |
|
|
$ |
60,855 |
|
Gross client cash inflows |
|
|
1,125 |
|
|
|
867 |
|
|
|
303 |
|
|
|
103 |
|
|
|
669 |
|
|
|
381 |
|
|
|
46 |
|
|
|
27 |
|
|
|
3,521 |
|
Gross client cash outflows |
|
|
(1,422 |
) |
|
|
(745 |
) |
|
|
(652 |
) |
|
|
(287 |
) |
|
|
(182 |
) |
|
|
(169 |
) |
|
|
(133 |
) |
|
|
(33 |
) |
|
|
(3,623 |
) |
Net client cash flows |
|
|
(297 |
) |
|
|
122 |
|
|
|
(349 |
) |
|
|
(184 |
) |
|
|
487 |
|
|
|
212 |
|
|
|
(87 |
) |
|
|
(6 |
) |
|
|
(102 |
) |
Market appreciation
(depreciation) |
|
|
558 |
|
|
|
773 |
|
|
|
16 |
|
|
|
113 |
|
|
|
(116 |
) |
|
|
40 |
|
|
|
80 |
|
|
|
39 |
|
|
|
1,503 |
|
Net transfers |
|
|
19 |
|
|
|
(19 |
) |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
Ending assets under
management |
|
$ |
24,485 |
|
|
$ |
15,971 |
|
|
$ |
6,978 |
|
|
$ |
4,577 |
|
|
$ |
4,705 |
|
|
$ |
3,815 |
|
|
$ |
1,291 |
|
|
$ |
434 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management by Asset
Class(unaudited; in
millions)
For the Six Months Ended |
|
By Asset Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global / |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Mid |
|
U.S. Small |
|
Fixed |
|
U.S. Large |
|
Non-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap Equity |
|
Cap Equity |
|
Income |
|
Cap Equity |
|
Equity |
|
Solutions |
|
Commodity |
|
Other |
|
Total |
June 30,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management |
|
$ |
20,019 |
|
|
$ |
12,948 |
|
|
$ |
6,836 |
|
|
$ |
3,759 |
|
|
$ |
4,610 |
|
|
$ |
3,767 |
|
|
$ |
469 |
|
|
$ |
355 |
|
|
$ |
52,763 |
|
Gross client cash inflows |
|
|
3,777 |
|
|
|
1,721 |
|
|
|
809 |
|
|
|
48 |
|
|
|
698 |
|
|
|
3,371 |
|
|
|
80 |
|
|
|
49 |
|
|
|
10,552 |
|
Gross client cash outflows |
|
|
(3,626 |
) |
|
|
(1,983 |
) |
|
|
(713 |
) |
|
|
(311 |
) |
|
|
(482 |
) |
|
|
(644 |
) |
|
|
(154 |
) |
|
|
(50 |
) |
|
|
(7,963 |
) |
Net client cash flows |
|
|
151 |
|
|
|
(262 |
) |
|
|
96 |
|
|
|
(263 |
) |
|
|
216 |
|
|
|
2,727 |
|
|
|
(74 |
) |
|
|
(1 |
) |
|
|
2,589 |
|
Market appreciation
(depreciation) |
|
|
4,032 |
|
|
|
2,594 |
|
|
|
368 |
|
|
|
617 |
|
|
|
672 |
|
|
|
424 |
|
|
|
(60 |
) |
|
|
83 |
|
|
|
8,729 |
|
Net transfers |
|
|
2 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Ending assets under
management |
|
$ |
24,203 |
|
|
$ |
15,278 |
|
|
$ |
7,300 |
|
|
$ |
4,108 |
|
|
$ |
5,498 |
|
|
$ |
6,919 |
|
|
$ |
335 |
|
|
$ |
436 |
|
|
$ |
64,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
25,185 |
|
|
$ |
15,308 |
|
|
$ |
7,551 |
|
|
$ |
4,789 |
|
|
$ |
4,105 |
|
|
$ |
3,028 |
|
|
$ |
1,419 |
|
|
$ |
386 |
|
|
$ |
61,771 |
|
Gross client cash inflows |
|
|
2,328 |
|
|
|
1,643 |
|
|
|
696 |
|
|
|
158 |
|
|
|
1,113 |
|
|
|
986 |
|
|
|
173 |
|
|
|
108 |
|
|
|
7,205 |
|
Gross client cash outflows |
|
|
(3,502 |
) |
|
|
(1,667 |
) |
|
|
(1,291 |
) |
|
|
(498 |
) |
|
|
(402 |
) |
|
|
(245 |
) |
|
|
(279 |
) |
|
|
(56 |
) |
|
|
(7,940 |
) |
Net client cash flows |
|
|
(1,174 |
) |
|
|
(24 |
) |
|
|
(595 |
) |
|
|
(340 |
) |
|
|
711 |
|
|
|
741 |
|
|
|
(106 |
) |
|
|
52 |
|
|
|
(735 |
) |
Market appreciation
(depreciation) |
|
|
455 |
|
|
|
706 |
|
|
|
22 |
|
|
|
116 |
|
|
|
(103 |
) |
|
|
6 |
|
|
|
(22 |
) |
|
|
48 |
|
|
|
1,228 |
|
Net transfers |
|
|
19 |
|
|
|
(19 |
) |
|
|
— |
|
|
|
12 |
|
|
|
(8 |
) |
|
|
40 |
|
|
|
— |
|
|
|
(52 |
) |
|
|
(8 |
) |
Ending assets under
management |
|
$ |
24,485 |
|
|
$ |
15,971 |
|
|
$ |
6,978 |
|
|
$ |
4,577 |
|
|
$ |
4,705 |
|
|
$ |
3,815 |
|
|
$ |
1,291 |
|
|
$ |
434 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management by Vehicle(unaudited;
in millions)
For the Three Months Ended |
|
By Vehicle |
|
|
|
|
|
|
|
|
Separate |
|
|
|
|
|
|
|
|
|
|
|
Accounts |
|
|
|
|
|
|
Mutual |
|
|
|
|
|
and Other |
|
|
|
|
|
|
Funds(1) |
|
|
ETFs |
|
Vehicles(2) |
|
Total |
June 30,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management |
|
$ |
33,786 |
|
|
$ |
3,123 |
|
|
$ |
21,210 |
|
|
$ |
58,119 |
|
Gross client cash inflows |
|
|
1,998 |
|
|
|
107 |
|
|
|
5,409 |
|
|
|
7,514 |
|
Gross client cash outflows |
|
|
(2,874 |
) |
|
|
(231 |
) |
|
|
(714 |
) |
|
|
(3,819 |
) |
Net client cash flows |
|
|
(876 |
) |
|
|
(124 |
) |
|
|
4,694 |
|
|
|
3,694 |
|
Market appreciation
(depreciation) |
|
|
1,352 |
|
|
|
94 |
|
|
|
823 |
|
|
|
2,269 |
|
Net transfers |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Ending assets under
management |
|
$ |
34,258 |
|
|
$ |
3,093 |
|
|
$ |
26,726 |
|
|
$ |
64,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
30,492 |
|
|
|
2,956 |
|
|
|
19,315 |
|
|
|
52,763 |
|
Gross client cash inflows |
|
|
2,379 |
|
|
|
242 |
|
|
|
417 |
|
|
|
3,038 |
|
Gross client cash outflows |
|
|
(2,887 |
) |
|
|
(299 |
) |
|
|
(957 |
) |
|
|
(4,143 |
) |
Net client cash flows |
|
|
(508 |
) |
|
|
(58 |
) |
|
|
(540 |
) |
|
|
(1,105 |
) |
Market appreciation
(depreciation) |
|
|
3,801 |
|
|
|
224 |
|
|
|
2,435 |
|
|
|
6,460 |
|
Net transfers |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Ending assets under
management |
|
$ |
33,786 |
|
|
$ |
3,123 |
|
|
$ |
21,210 |
|
|
$ |
58,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
36,989 |
|
|
$ |
2,674 |
|
|
$ |
21,192 |
|
|
$ |
60,855 |
|
Gross client cash inflows |
|
|
2,555 |
|
|
|
296 |
|
|
|
670 |
|
|
|
3,521 |
|
Gross client cash outflows |
|
|
(2,708 |
) |
|
|
(96 |
) |
|
|
(819 |
) |
|
|
(3,623 |
) |
Net client cash flows |
|
|
(153 |
) |
|
|
200 |
|
|
|
(149 |
) |
|
|
(102 |
) |
Market appreciation
(depreciation) |
|
|
963 |
|
|
|
32 |
|
|
|
508 |
|
|
|
1,503 |
|
Net transfers |
|
|
19 |
|
|
|
— |
|
|
|
(19 |
) |
|
|
— |
|
Ending assets under
management |
|
$ |
37,818 |
|
|
$ |
2,906 |
|
|
$ |
21,532 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes institutional and retail share
classes and VIP funds.(2) Includes collective trust funds,
wrap program separate accounts and unified managed accounts or
UMAs.
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management by Vehicle(unaudited;
in millions)
For the Six Months Ended |
|
By Vehicle |
|
|
|
|
|
|
|
|
Separate |
|
|
|
|
|
|
|
|
|
|
|
Accounts |
|
|
|
|
|
Mutual |
|
|
|
|
and Other |
|
|
|
|
|
Funds(1) |
|
ETFs |
|
Vehicles(2) |
|
Total |
June 30,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management |
|
$ |
30,492 |
|
|
$ |
2,956 |
|
|
$ |
19,315 |
|
|
$ |
52,763 |
|
Gross client cash inflows |
|
|
4,378 |
|
|
|
349 |
|
|
|
5,825 |
|
|
|
10,552 |
|
Gross client cash outflows |
|
|
(5,761 |
) |
|
|
(531 |
) |
|
|
(1,671 |
) |
|
|
(7,963 |
) |
Net client cash flows |
|
|
(1,383 |
) |
|
|
(182 |
) |
|
|
4,154 |
|
|
|
2,589 |
|
Market appreciation
(depreciation) |
|
|
5,153 |
|
|
|
318 |
|
|
|
3,258 |
|
|
|
8,729 |
|
Net transfers |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Ending assets under
management |
|
$ |
34,258 |
|
|
$ |
3,093 |
|
|
$ |
26,726 |
|
|
$ |
64,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under
management |
|
$ |
37,967 |
|
|
$ |
2,250 |
|
|
$ |
21,555 |
|
|
$ |
61,771 |
|
Gross client cash inflows |
|
|
5,181 |
|
|
|
777 |
|
|
|
1,247 |
|
|
|
7,205 |
|
Gross client cash outflows |
|
|
(5,974 |
) |
|
|
(125 |
) |
|
|
(1,841 |
) |
|
|
(7,940 |
) |
Net client cash flows |
|
|
(793 |
) |
|
|
652 |
|
|
|
(594 |
) |
|
|
(735 |
) |
Market appreciation
(depreciation) |
|
|
655 |
|
|
|
4 |
|
|
|
569 |
|
|
|
1,228 |
|
Net transfers |
|
|
(11 |
) |
|
|
— |
|
|
|
3 |
|
|
|
(8 |
) |
Ending assets under
management |
|
$ |
37,818 |
|
|
$ |
2,906 |
|
|
$ |
21,532 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes institutional and retail share classes and VIP
funds.(2) Includes collective trust funds, wrap program
separate accounts and unified managed accounts or UMAs.
Victory Capital Holdings, Inc.
and SubsidiariesAssets Under
Management1(unaudited;
in millions)
|
As
of: |
|
July 31, 2019 |
By Asset Class |
|
|
Fixed Income |
$ |
37,559 |
Solutions |
|
29,806 |
U.S. Mid Cap Equity |
|
26,017 |
U.S. Small Cap Equity |
|
16,868 |
U.S. Large Cap Equity |
|
14,032 |
Global / Non-U.S. Equity |
|
11,713 |
Commodity |
|
251 |
Other |
|
81 |
Total Long-Term
Assets |
$ |
136,327 |
Money Market Assets |
|
11,468 |
Total Assets
Under Management |
$ |
147,795 |
|
|
|
|
|
|
By Vehicle |
|
|
Mutual Funds2 |
$ |
115,065 |
Separate Accounts and Other
Vehicles3 |
|
28,804 |
ETFs |
|
3,926 |
Total Assets
Under Management |
$ |
147,795 |
1 Due to rounding, numbers presented in this table may not add
up precisely to the totals provided.2 Includes institutional and
retail share classes, money market and VIP funds.3 Includes
collective trust funds, wrap program accounts and unified managed
accounts.
Information Regarding Non-GAAP
Financial Measures
Victory Capital uses non-GAAP financial measures
referred to as Adjusted EBITDA and Adjusted Net Income to measure
the operating profitability of the Company. These measures
eliminate the impact of one-time acquisition, restructuring and
integration costs and demonstrate the ongoing operating earnings
metrics of the Company. The Company has included these non-GAAP
measures to provide investors with the same financial metrics used
by management to assess the operating performance of the
Company.
Adjusted EBITDA
Adjustments made to GAAP Net Income to calculate
Adjusted EBITDA, as applicable, are:
- Adding back income tax expense;
- Adding back interest paid on debt and other financing costs,
net of interest income;
- Adding back depreciation on property and equipment;
- Adding back other business taxes;
- Adding back amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense associated with
equity awards issued from pools created in connection with the
management-led buyout and various acquisitions and as a result of
equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions and the
IPO, including restructuring costs;
- Adding back debt issuance cost expense;
- Adding back pre-IPO governance expenses paid to the Company’s
private equity partners that terminated as of the completion of the
IPO; and
- Adjusting for earnings/losses on equity method
investments.
Adjusted Net Income
Adjustments made to GAAP Net Income to calculate
Adjusted Net Income, as applicable, are:
- Adding back other business taxes;
- Adding back amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense associated with
equity awards issued from pools created in connection with the
management-led buyout and various acquisitions and as a result of
any equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions and the
IPO, including restructuring costs;
- Adding back debt issuance cost expense;
- Adding back pre-IPO governance expenses paid to the Company’s
private equity partners that terminated as of the completion of the
IPO; and
- Subtracting an estimate of income tax expense applied to the
sum of the adjustments above.
Tax Benefit of Goodwill and Acquired Intangible Assets
Due to Victory Capital’s acquisitive nature, tax
deductions allowed on acquired intangible assets and goodwill
provide it with additional significant supplemental economic
benefit. The tax benefit of goodwill and intangible assets
represent the tax benefits associated with deductions allowed for
intangible assets and goodwill generated from prior acquisitions in
which the Company received a step-up in basis for tax purposes.
Acquired intangible assets and goodwill may be amortized for tax
purposes, generally over a 15-year period. The tax benefit from
amortization on these assets is included to show the full economic
benefit of deductions for all acquired intangible assets with a
step-up in tax basis.
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