First Quarter 2020 Highlights
- Total Asset Under Management (AUM) of $123.8 billion
- Long-term gross flows of $7.3 billion; total net outflows of
$2.9 billion
- GAAP operating margin of 44.3% and adjusted EBITDA margin of
44.8%1
- GAAP net income of $0.77 per diluted share, up 285% versus
first quarter 2019
- Adjusted net income with tax benefit of $0.92 per diluted
share, up 163% versus first quarter 20191
- Board authorizes regular quarterly cash dividend of $0.05 per
share
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended March 31, 2020.
“I am pleased to report Victory Capital generated excellent
financial results during the first quarter, despite unprecedented
challenges presented by the COVID-19 pandemic,” said David Brown,
Chairman and Chief Executive Officer. “Advance preparation proved
essential for delivering uninterrupted service to clients and
providing safe working conditions for employees. Our comprehensive
and thoroughly tested business continuity plan has ensured that all
investment activities remain unaffected, and we have been energized
by our organization’s ability to seamlessly adapt to challenging
circumstances.
“Our cost structure also adjusted in real time with market
fluctuations, proving the resiliency of our next-generation
business model and contributing to first-quarter results exceeding
expectations.
“Four of our investment franchises achieved positive long-term
net flows during the quarter, and net outflows from fixed income
products held up much better than the industry-wide averages.
“In addition, we took opportunistic action on the capital
management front. Early in the quarter, we repriced our term loan
to reduce the interest rate spread by 75 basis points. Later in the
quarter, we promptly responded to falling interest rates and
effectively locked in a rate of 3.465% on the majority of our
current debt. At the same time, we maintained a disciplined capital
allocation strategy and deployed most of our free cash flow to
further reduce debt, while returning some capital to shareholders
with steady share repurchases and the cash dividend. Since last
year’s origination of the term loan on July 1, we have repaid $217
million and lowered the current outstanding balance to $883
million.
“Looking ahead, we continue to invest to support future growth
and remain committed to executing on our strategy to enhance
shareholder value. We are still actively evaluating strategic
acquisition candidates and conducting due diligence. Persistent
market volatility may accelerate industry consolidation and our
flexible business model ideally positions us to benefit in this
environment. As always, serving the needs of our clients will
remain our top priority, and I am more optimistic than ever about
our Company’s ability to withstand and thrive in ever-changing
market environments.”
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 refer to 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
March 31,
December 31,
March 31,
2020
2019
2019
Assets Under Management Ending
$
123,779
$
151,832
$
58,119
Average
144,112
147,867
57,043
Long-term Flows(2) Long-term Gross(2)
$
7,273
$
5,284
$
3,038
Long-term Net(2)
(3,101
)
(1,474
)
(1,105
)
Money Market/Short-term Flows Money Market/Short-term Gross
$
7,652
$
4,371
$
—
Money Market/Short-term Net
201
85
—
Total Flows Total Gross
$
14,925
$
9,655
$
3,038
Total Net
(2,900
)
(1,390
)
(1,105
)
Consolidated Financial Results (GAAP) Revenue
$
204.4
$
218.6
$
87.5
Revenue realization (in bps)
57.1
58.6
62.2
Operating expenses
113.8
154.4
65.4
Income from operations
90.6
64.2
22.1
Operating margin
44.3
%
29.4
%
25.3
%
Net income
57.2
37.6
14.5
Earnings per diluted share
$
0.77
$
0.51
$
0.20
Cash flow from operations
51.9
59.7
17.9
Adjusted Performance Results (Non-GAAP)(1) Adjusted EBITDA
$
91.5
$
102.3
$
33.6
Adjusted EBITDA margin
44.8
%
46.8
%
38.4
%
Adjusted net income
61.7
66.0
21.9
Tax benefit of goodwill and acquired intangible assets
6.7
6.8
3.4
Adjusted net income with tax benefit
68.5
72.8
25.3
Adjusted net income with tax benefit per diluted share
$
0.92
$
0.99
$
0.35
____________________ 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
refer to 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 Long-term AUM is defined as total AUM
excluding Money Market and short-term assets.
AUM, Flows and Investment Performance
Victory Capital’s AUM decreased by $28.1 billion to $123.8
billion at March 31, 2020, compared with $151.8 billion at December
31, 2019. The decrease was due to negative market action and net
outflows of $25.2 billion and $2.9 billion, respectively. Total
gross flows for the first quarter were $14.9 billion. For the first
quarter, the Company reported long-term gross flows of $7.3
billion.
As of March 31, 2020, Victory Capital offered 116 investment
strategies through its nine autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of March 31, 2020.
Percentage of AUM
Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
44%
55%
69%
79%
First Quarter 2020 Compared with Fourth Quarter 2019
Revenue decreased 6.5% to $204.4 million, in the first quarter,
compared with $218.6 million in the fourth quarter, reflecting
lower average AUM, one less day in the quarter and a decrease in
average fee rate realization as a result of AUM mix shift. GAAP
operating margin expanded 1,490 basis points in the first quarter
to 44.3%, up from 29.4% in the fourth quarter, due to lower cash
operating expenses and a $4.6 million net benefit in
acquisition-related expenses. In the prior quarter, acquisition
related expenses totaled $22.3 million. Adjusting for the impact of
acquisition-related expenses, quarter-over-quarter expenses
declined $13.7 million, or 10.4%, reflecting the Company’s variable
cost structure. First quarter GAAP net income rose 52% to $57.2
million, up from $37.6 million in the prior quarter. On a per-share
basis, GAAP net income advanced 51% to $0.77 per diluted share in
the first quarter, versus $0.51 per diluted share in the fourth
quarter.
Adjusted net income with tax benefit decreased 6% to $68.5
million in the first quarter, down from $72.8 million in the fourth
quarter. On a per-share basis, adjusted net income with tax benefit
decreased 7% to $0.92 per diluted share in the first quarter, from
$0.99 per diluted share in the prior quarter. Adjusted EBITDA
decreased 11% to $91.5 million in the first quarter, versus $102.3
million in the fourth quarter. Adjusted EBITDA margin contracted
200 basis points in the first quarter of 2020 to 44.8% compared
with 46.8% in the prior quarter.
First Quarter 2020 Compared with First Quarter 2019
Year-over-year results reflect the acquisition of the USAA Asset
Management Company, which closed on July 1, 2019. The acquisition
significantly impacted our financial results for the three months
ended March 31, 2020 when compared to the three months ended March
31, 2019. Revenue for the three months ended March 31, 2020, rose
134% to $204.4 million, compared with $87.5 million in the same
quarter of 2019. The increase was primarily due to higher average
AUM as a result of the acquisition.
GAAP operating margin was 44.3% in the first quarter, a 1900
basis point increase from the 25.3% recorded in the same quarter of
2019 primarily due to improved operating leverage. Operating
expenses increased 74% to $113.8 million, compared with $65.4
million in last year’s first quarter, reflecting the Company’s
larger scale and new call center dedicated to serving USAA members.
GAAP net income rose 294% to $57.2 million, or $0.77 per diluted
share, in the first quarter compared with $14.5 million, or $0.20
per diluted share, in the same quarter of 2019.
Adjusted net income with tax benefit advanced 171% to $68.5
million, or $0.92 per diluted share, in the first quarter, compared
with $25.3 million, or $0.35 per diluted share in the same quarter
last year. Adjusted EBITDA rose 172% to $91.5 million, compared
with $33.6 million in last year’s same quarter. Year-over-year,
adjusted EBITDA margin expanded 640 basis points to 44.8% in the
first quarter of 2020, compared with 38.4% in the same quarter last
year.
Balance Sheet / Capital Management
During the first quarter, the Company reduced outstanding debt
by an additional $38 million. To date, the Company has reduced
total debt by $217 million, since July 1, 2019. On January 21,
2020, the Company repriced its Term Loan, lowering the interest
rate spread by 75 basis points, from 3.25% over LIBOR, to 2.50%
over LIBOR. On March 27, 2020, the Company executed a
floating-to-fixed interest rate swap transaction to effectively fix
the interest rate at 3.465% on $450 million of its outstanding Term
Loan.
Today, the Company’s Board of Directors declared a regular
quarterly cash dividend of $0.05 per share payable on June 25,
2020, to shareholders of record on June 10, 2020.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call this morning, May 11, at
10:00 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 call (877) 823-8673 (domestic) or (647)
689-4067 (international), shortly before 10:00 a.m. ET and
reference the Victory Capital Conference Call. 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 during 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 diversified global asset management firm
with $131.8 billion in assets under management as of April 30,
2020. The Company operates a next-generation business model
combining boutique investment qualities with the benefits of a
fully integrated, centralized operating and distribution
platform.
Victory Capital provides specialized investment strategies to
institutions, intermediaries, retirement platforms and individual
investors. With nine autonomous Investment Franchises and a
Solutions Platform, Victory Capital offers a wide array of
investment styles and investment vehicles including, actively
managed mutual funds, separately managed accounts, rules-based and
active ETFs, multi-asset class strategies, custom-designed
solutions and a 529 College Savings Plan.
For more information, please visit www.vcm.com or follow us on:
Twitter and LinkedIn.
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 such as the COVID-19 pandemic and its effect on our
business, operations and financial results going forward, 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 such as a pandemic; 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.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated
Statements of Operations
(in thousands except per share
data and percentages)
For the Three Months
Ended
March 31,
December 31,
March 31,
2020
2019
2019
Revenue Investment management fees
$
146,881
$
158,943
$
74,411
Fund administration and distribution fees
57,540
59,611
13,068
Total revenue
204,421
218,554
87,479
Expenses Personnel compensation and benefits
47,571
54,210
34,501
Distribution and other asset-based expenses
54,860
57,471
15,767
General and administrative
11,888
14,740
7,087
Depreciation and amortization
4,050
5,620
5,222
Change in value of consideration payable for acquisition of
business
(5,500
)
19,900
—
Acquisition-related costs
(69
)
367
2,777
Restructuring and integration costs
998
2,049
—
Total operating expenses
113,798
154,357
65,354
Income from operations
90,623
64,197
22,125
Operating margin
44.3
%
29.4
%
25.3
%
Other income (expense) Interest income and other
income (expense)
(4,172
)
1,598
1,833
Interest expense and other financing costs
(11,408
)
(14,901
)
(4,624
)
Loss on debt extinguishment
(1,054
)
(2,451
)
—
Total other expense, net
(16,634
)
(15,754
)
(2,791
)
Income before income taxes
73,989
48,443
19,334
Income tax expense
(16,823
)
(10,854
)
(4,807
)
Net income
$
57,166
$
37,589
$
14,527
Earnings per share of common stock Basic
$
0.84
$
0.56
$
0.22
Diluted
0.77
0.51
0.20
Weighted average number of shares outstanding Basic
67,790
67,633
67,521
Diluted
74,350
73,856
72,282
Dividends declared per share
$
0.05
$
0.05
$
—
Victory Capital Holdings, Inc.
and Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures
(unaudited; in thousands
except per share data and percentages)
For the Three Months
Ended
March 31,
December 31,
March 31,
2020
2019
2019
Net income (GAAP)
$
57,166
$
37,589
$
14,527
Income tax expense
(16,823
)
(10,854
)
(4,807
)
Income before income taxes
$
73,989
$
48,443
$
19,334
Interest expense
10,528
14,852
3,853
Depreciation
884
1,130
571
Other business taxes
(3,296
)
359
555
Amortization of acquisition-related intangible assets
3,166
4,490
4,651
Stock-based compensation
5,372
5,724
1,478
Acquisition, restructuring and exit costs
(1,542
)
24,947
2,777
Debt issuance costs
2,389
2,387
364
Earnings from equity method investments
—
—
4
Adjusted EBITDA
$
91,490
$
102,332
$
33,587
Adjusted EBITDA margin
44.8
%
46.8
%
38.4
%
Net income (GAAP)
$
57,166
$
37,589
$
14,527
Adjustment to reflect the operating performance of the Company
Other business taxes
(3,296
)
359
555
Amortization of acquisition-related intangible assets
3,166
4,490
4,651
Stock-based compensation
5,372
5,724
1,478
Acquisition, restructuring and exit costs
(1,542
)
24,947
2,777
Debt issuance costs
2,389
2,387
364
Tax effect of above adjustments
(1,522
)
(9,477
)
(2,456
)
Adjusted net income
$
61,733
$
66,019
$
21,896
Adjusted net income per diluted share
$
0.83
$
0.89
$
0.30
Tax benefit of goodwill and acquired intangible
assets
$
6,728
$
6,801
$
3,361
Tax benefit of goodwill and acquired intangible assets per
diluted share
$
0.09
$
0.09
$
0.05
Adjusted net income with tax benefit
$
68,461
$
72,820
$
25,257
Adjusted net income with tax benefit per diluted share
$
0.92
$
0.99
$
0.35
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
March 31, 2020
December 31, 2019
Assets Cash and cash equivalents
$
37,130
$
37,121
Receivables
77,610
95,093
Prepaid expenses
6,709
4,852
Investments
15,631
19,076
Property and equipment, net
14,028
13,240
Goodwill
404,750
404,750
Other intangible assets, net
1,172,305
1,175,471
Other assets
3,600
3,706
Total assets
$
1,731,763
$
1,753,309
Liabilities and stockholders' equity Accounts payable
and accrued expenses
$
79,111
$
89,203
Accrued compensation and benefits
33,544
54,842
Consideration payable for acquisition of business
113,200
118,700
Deferred tax liability, net
11,134
5,486
Other liabilities
25,047
22,668
Long-term debt, net(1)
888,647
924,539
Total liabilities
1,150,683
1,215,438
Stockholders' equity Class A common stock, $0.01 par
value per share: 2020 - 400,000,000 shares authorized, 18,508,087
shares issued and 16,582,902 shares outstanding; 2019 - 400,000,000
shares authorized, 18,099,772 shares issued and 16,414,617 shares
outstanding
185
181
Class B common stock, $0.01 par value per share: 2020 - 200,000,000
shares authorized, 54,537,895 shares issued and 51,436,953 shares
outstanding; 2019 - 200,000,000 shares authorized, 53,937,394
shares issued and 51,281,512 shares outstanding
545
539
Additional paid-in capital
632,468
624,766
Class A treasury stock, at cost: 2020 - 1,925,185 shares; 2019 -
1,685,155 shares
(25,918
)
(21,524
)
Class B treasury stock, at cost: 2020 - 3,100,942 shares; 2019 -
2,655,882 shares
(40,173
)
(31,386
)
Accumulated other comprehensive loss
(4,887
)
—
Retained earnings (deficit)
18,860
(34,705
)
Total stockholders' equity
581,080
537,871
Total liabilities and stockholders' equity
$
1,731,763
$
1,753,309
1 Balances at March 31, 2020 and December
31, 2019 are shown net of unamortized loan discount and debt
issuance costs in the amount of $25.4 million and $27.5 million,
respectively. The gross amount of the debt outstanding was $914
million as of March 31, 2020 and $952 million as of December 31,
2019.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under
Management
(unaudited; in millions except
for percentages)
For the Three Months
Ended
% Change from
March 31,
December 31,
March 31,
December 31,
March 31,
2020
2019
2019
2019
2019
Beginning assets under management
$
151,832
$
145,832
$
52,763
4
%
188
%
Gross client cash inflows
14,925
9,655
3,038
55
%
391
%
Gross client cash outflows
(17,825
)
(11,045
)
(4,143
)
61
%
330
%
Net client cash flows
(2,900
)
(1,390
)
(1,105
)
109
%
162
%
Market appreciation (depreciation)
(25,153
)
7,389
6,460
-440
%
-489
%
Acquired assets / Net transfers
—
—
—
0
%
0
%
Ending assets under management
123,779
151,832
58,119
-18
%
113
%
Average assets under management
144,112
147,867
57,043
-3
%
153
%
Victory Capital Holdings, Inc.
and Subsidiaries
Assets 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.
Total
Money Market/
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Other
Long-term
Short-term
Total
March 31, 2020 Beginning assets under management
$
26,347
$
17,346
$
37,973
$
14,091
$
12,603
$
31,649
$
236
$
140,245
$
11,587
$
151,832
Gross client cash inflows
1,474
1,233
1,951
238
671
1,695
11
7,273
7,652
14,925
Gross client cash outflows
(2,265
)
(1,310
)
(2,890
)
(807
)
(684
)
(2,394
)
(24
)
(10,374
)
(7,451
)
(17,825
)
Net client cash flows
(791
)
(77
)
(939
)
(569
)
(13
)
(699
)
(12
)
(3,101
)
201
(2,900
)
Market appreciation (depreciation)
(6,907
)
(5,325
)
(1,361
)
(2,828
)
(3,245
)
(5,436
)
(86
)
(25,187
)
34
(25,153
)
Acquired assets / Net transfers
(28
)
(59
)
(272
)
9
27
12
3
(307
)
307
—
Ending assets under management
$
18,622
$
11,885
$
35,402
$
10,703
$
9,372
$
25,526
$
140
$
111,650
$
12,129
$
123,779
December 31, 2019 Beginning assets under management
$
25,479
$
16,266
$
37,784
$
13,488
$
11,532
$
29,579
$
243
$
134,371
$
11,460
$
145,832
Gross client cash inflows
1,007
838
1,608
266
433
1,118
15
5,284
4,371
9,655
Gross client cash outflows
(1,642
)
(1,142
)
(1,684
)
(610
)
(491
)
(1,139
)
(52
)
(6,758
)
(4,286
)
(11,045
)
Net client cash flows
(635
)
(304
)
(76
)
(344
)
(58
)
(21
)
(37
)
(1,474
)
85
(1,390
)
Market appreciation (depreciation)
1,505
1,384
262
946
1,129
2,091
32
7,348
41
7,389
Acquired assets / Net transfers
(3
)
—
3
—
—
1
—
—
—
—
Ending assets under management
$
26,347
$
17,346
$
37,973
$
14,091
$
12,603
$
31,649
$
236
$
140,245
$
11,587
$
151,832
March 31, 2019 Beginning assets under management
$
20,019
$
12,948
$
6,836
$
3,759
$
4,610
$
3,767
$
824
$
52,763
$
—
$
52,763
Gross client cash inflows
993
992
303
26
365
279
81
3,038
—
3,038
Gross client cash outflows
(1,786
)
(1,059
)
(383
)
(183
)
(277
)
(349
)
(107
)
(4,143
)
—
(4,143
)
Net client cash flows
(793
)
(67
)
(79
)
(158
)
88
(70
)
(26
)
(1,105
)
—
(1,105
)
Market appreciation (depreciation)
2,942
1,834
216
516
535
297
120
6,460
—
6,460
Acquired assets / Net transfers
2
(1
)
—
(1
)
—
1
(1
)
—
—
—
Ending assets under management
$
22,169
$
14,714
$
6,973
$
4,117
$
5,234
$
3,996
$
918
$
58,119
$
—
$
58,119
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Three Months Ended
By Vehicle
Separate
Accounts
Mutual
and Other
Funds(1)
ETFs(2)
Vehicles(3)
Total
March 31, 2020 Beginning assets under management
$
118,605
$
4,213
$
29,014
$
151,832
Gross client cash inflows
13,745
255
925
14,925
Gross client cash outflows
(15,631
)
(461
)
(1,733
)
(17,825
)
Net client cash flows
(1,886
)
(205
)
(809
)
(2,900
)
Market appreciation (depreciation)
(18,413
)
(830
)
(5,910
)
(25,153
)
Acquired assets / Net transfers
—
—
—
—
Ending assets under management
$
98,305
$
3,177
$
22,296
$
123,779
December 31, 2019 Beginning assets under management
$
114,071
$
3,867
$
27,894
$
145,832
Gross client cash inflows
8,799
249
607
9,655
Gross client cash outflows
(9,835
)
(125
)
(1,085
)
(11,045
)
Net client cash flows
(1,036
)
124
(478
)
(1,390
)
Market appreciation (depreciation)
5,569
222
1,598
7,389
Acquired assets / Net transfers
—
—
—
—
Ending assets under management
$
118,605
$
4,213
$
29,014
$
151,832
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
Acquired assets / Net transfers
—
—
—
—
Ending assets under management
$
33,786
$
3,123
$
21,210
$
58,119
(1) Includes institutional and retail
share classes, money market and VIP funds.
(2) Excludes assets managed for other
proprietary product (i.e. funds of funds) in order to adjust for
double counting.
(3) Includes collective trust funds, wrap
program separate accounts and unified managed accounts or UMAs.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under
Management1
(unaudited; in
millions)
As of:
By Asset Class
April 30, 2020
March 31, 2020
Fixed Income
$ 35,476
$ 35,402
Solutions
27,867
25,526
U.S. Mid Cap Equity
21,148
18,622
U.S. Small Cap Equity
13,280
11,885
U.S. Large Cap Equity
11,880
10,703
Global / Non-U.S. Equity
10,213
9,372
Other
183
140
Total Long-Term Assets
$ 120,047
$ 111,650
Money Market/Short-Term Assets
11,766
12,129
Total Assets Under Management
$ 131,814
$ 123,779
By Vehicle Mutual Funds2
104,372
98,305
Separate Accounts and Other Vehicles3
24,070
22,296
ETFs
3,372
3,177
Total Assets Under Management
$ 131,814
$ 123,779
1Due to rounding, numbers presented in
these tables may not add up precisely to the totals provided.
2Includes institutional and retail share
classes, money market and VIP funds.
3Includes 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, including
restructuring costs;
- Adding back debt issuance cost expense;
- 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, including
restructuring costs;
- Adding back debt issuance cost expense;
- 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200511005181/en/
Investors: Matthew Dennis, CFA Chief of Staff Director,
Investor Relations 216-898-2412 mdennis@vcm.com
Media: Tricia Ross 310-622-8226 tross@finprofiles.com
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