Fourth Quarter 2020 Highlights
- Total Assets Under Management (AUM) of $147.2 billion
- Long-term gross flows of $5.7 billion; long-term net outflows
of $1.5 billion
- GAAP operating margin of 39%
- Record adjusted EBITDA margin of 52%1
- GAAP net income of $0.75 per diluted share
- Record adjusted net income with tax benefit of $1.07 per
diluted share1
- Board authorizes 29% increase in regular quarterly cash
dividend
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
and twelve-months ended December 31, 2020.
“I am pleased to report that Victory Capital ended 2020 with
record-breaking financial performance across a number of metrics,
and we are entering the new year with excellent momentum,” said
David Brown, Chairman and Chief Executive Officer. “Our business
performed well in a very challenging operating environment and
drove adjusted EBITDA margin to a record 52% during the fourth
quarter, resulting in record adjusted quarterly earnings of $1.07
per share1.
“We generated strong cash flow for the quarter. Consistent with
prior guidance, most of the excess cash we generated in 2020 was
allocated to reducing debt. This reduced our leverage ratio to 1.8x
at year end, while enhancing our financial flexibility and balance
sheet capacity for potential future acquisitions.
“Considering our strong financial condition, and no changes to
our long-term capital allocation strategy, the Board authorized the
third consecutive quarterly cash dividend increase. With this
latest increase, our cash dividend has grown by 80% since the
beginning of 2020, while we continued to rapidly de-lever. Taking
into consideration the attractive interest rate on our debt and our
projections for continuing to generate substantial excess cash
flow, we are evaluating an optimal leverage level that balances our
acquisition goals with returning more capital to shareholders in
the form of dividends and share repurchases.
“Our Investment Franchises and Solutions platform continued to
deliver strong investment performance during the quarter. For the
one-, three-, and five-year periods ending December 31, more than
two thirds of our AUM outperformed respective benchmarks. For the
ten-year period, 76% of our AUM outperformed benchmarks.
“Looking ahead, we are on track to close the THB Asset
Management acquisition later in the first quarter. We look forward
to welcoming THB as our tenth Investment Franchise, and integrating
their ESG-focused investment strategies into our integrated
operating and distribution platform. As always, 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
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
For the Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2020
2020
2019
2020
2019
Assets Under Management Ending
$
147,241
$
132,662
$
151,832
$
147,241
$
151,832
Average
139,552
133,096
147,867
136,422
102,719
Long-term Flows(2)
Long-term Gross(2)
$
5,696
$
5,067
$
5,284
$
23,201
$
23,293
Long-term Net(2)
(1,466
)
(2,878
)
(1,474
)
(10,911
)
1,840
Money Market/Short-term Flows
Money Market/Short-term Gross
$
226
$
367
$
4,371
$
12,656
$
8,820
Money Market/Short-term Net
(130
)
(96
)
85
(8,441
)
20
Total Flows
Total Gross
$
5,922
$
5,433
$
9,655
$
35,857
$
32,112
Total Net
(1,596
)
(2,974
)
(1,390
)
(19,352
)
1,860
Consolidated Financial Results (GAAP)
Revenue
$
200.4
$
188.7
$
218.6
$
775.4
$
612.4
Revenue realization (in bps)
57.1
56.4
58.7
56.8
59.6
Operating expenses
122.7
108.1
154.4
460.6
447.8
Income from operations
77.7
80.6
64.2
314.7
164.6
Operating margin
38.8
%
42.7
%
29.4
%
40.6
%
26.9
%
Net income
54.9
55.7
37.6
212.5
92.5
Earnings per diluted share
$
0.75
$
0.76
$
0.51
$
2.88
$
1.26
Cash flow from operations
67.9
61.8
59.7
250.6
227.4
Adjusted Performance Results (Non-GAAP)(1)
Adjusted EBITDA
$
103.8
$
95.6
$
102.3
$
377.3
$
268.8
Adjusted EBITDA margin
51.8
%
50.7
%
46.8
%
48.7
%
43.9
%
Adjusted net income
71.8
66.7
66.0
258.5
172.8
Tax benefit of goodwill and acquired intangible assets
6.8
6.7
6.8
27.0
20.3
Adjusted net income with tax benefit
78.6
73.4
72.8
285.5
193.1
Adjusted net income with tax benefit per diluted share
$
1.07
$
1.00
$
0.99
$
3.87
$
2.63
____________________
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 total AUM increased by 11.0%, or $14.6
billion, to $147.2 billion at December 31, 2020, compared with
$132.7 billion at September 30, 2020. The increase was attributable
to positive market action of $16.2 billion, slightly offset by net
outflows of $1.6 billion. Total gross flows were $5.9 billion for
the fourth quarter and $35.9 billion for the year. Long-term AUM
increased by 11.4%, or $14.7 billion, to $143.7 billion at December
31, 2020, compared with $129.0 billion at September 30, 2020. For
the year, the Company reported long-term gross flows of $23.2
billion and net long-term outflows of $10.9 billion.
At December 31, 2020, Victory Capital offered 117 investment
strategies through its nine autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of December 31, 2020.
Percentage of AUM Outperforming Benchmark Trailing
Trailing Trailing Trailing 1-Year
3-Years 5-Years 10-Years
67%
67%
67%
76%
Fourth Quarter 2020 Compared with Third Quarter 2020
Revenue increased 6.2% to $200.4 million, in the fourth quarter,
compared with $188.7 million in the third quarter, reflecting an
increase in average AUM and higher revenue realization as a result
of a change in asset mix. GAAP operating margin retracted 390 basis
points in the fourth quarter to 38.8%, down from 42.7% in the third
quarter. The decrease was attributable to a $9.5 million expense in
the fair value of contingent acquisition payments in the fourth
quarter compared to an expense of $2.0 million in the third
quarter. Fourth quarter GAAP net income decreased 1.5% to $54.9
million, down from $55.7 million in the prior quarter. On a
per-share basis, GAAP net income decreased 1.3% to $0.75 per
diluted share in the fourth quarter, versus $0.76 per diluted share
in the third quarter.
Adjusted net income with tax benefit increased 7% to $78.6
million in the fourth quarter, up from $73.4 million in the third
quarter. On a per-share basis, adjusted net income with tax benefit
increased 7% to $1.07 per diluted share in the fourth quarter, from
$1.00 per diluted share in the prior quarter. Adjusted EBITDA
increased 8.6% to $103.8 million in the fourth quarter, versus
$95.6 million in the third quarter. Adjusted EBITDA margin expanded
110 basis points in the fourth quarter of 2020 to 51.8% compared to
50.7% in the prior quarter.
Fourth Quarter 2020 Compared with Fourth Quarter 2019
Revenue for the three months ended December 31, 2020, decreased
8.3% to $200.4 million, compared to $218.6 million in the same
quarter of 2019. The decrease was primarily due to the combination
of lower average AUM and lower revenue realization rates. GAAP
operating margin was 38.8% in the fourth quarter, a 940 basis point
increase from the 29.4% recorded in the same quarter of 2019
primarily due to the combination of improved operating leverage and
a $10.4 million reduction in expense recorded in the change in the
fair value of contingent acquisition payments from $19.9 million
expense in the fourth quarter 2019 compared to a $9.5 million
expense in the fourth quarter 2020. Operating expenses decreased
20.5% to $122.7 million, compared with $154.4 million in last
year’s fourth quarter. GAAP net income rose 46% to $54.9 million,
or $0.75 per diluted share, in the fourth quarter compared to $37.6
million, or $0.51 per diluted share, in the same quarter of
2019.
Adjusted net income with tax benefit advanced 7.9% to $78.6
million, or $1.07 per diluted share, in the fourth quarter,
compared to $72.8 million, or $0.99 per diluted share in the same
quarter last year. Adjusted EBITDA was relatively flat, increasing
1.5% to $103.8 million, compared with $102.3 million in last year’s
same quarter. Year-over-year, Adjusted EBITDA margin expanded 500
basis points to 51.8% in the fourth quarter of 2020, compared with
46.8% in the same quarter last year.
Year Ended December 31, 2020 Compared with Year Ended
December 31, 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 year ended
December 31, 2020 when compared to the year ended December 31,
2019. Revenue for the year ended December 31, 2020, rose 26.6% to
$775.4 million, compared with $612.4 million in the same period of
2019. The increase was primarily due to higher average AUM as a
result of the acquisition.
GAAP operating margin was 40.6% for the year ended December 31,
2020, a 1,370 basis point increase from the 26.9% recorded in the
prior year primarily due to improved operating leverage. Operating
expenses increased 2.9% to $460.6 million for the year ended
December 31, 2020, compared with $447.8 million in the same period
in 2019, reflecting the Company’s larger scale and new contact
center dedicated to serving our direct investor business. During
2020, GAAP net income rose 130% to $212.5 million, or $2.88 per
diluted share compared with $92.5 million, or $1.26 per diluted
share, in the prior year.
Adjusted net income with tax benefit advanced 47.8% to $285.5
million, or $3.87 per diluted share, for the year ended December
31, 2020, compared with $193.1 million, or $2.63 per diluted share
in the prior year. During 2020, adjusted EBITDA rose 40.4% to
$377.3 million, compared with $268.8 million in 2019.
Year-over-year, adjusted EBITDA margin expanded 480 basis points to
48.7% in 2020, compared with 43.9% in the prior year.
Balance Sheet / Capital Management
During the year ended December 31, 2020, the Company reduced
outstanding debt by an additional $163.8 million. Subsequent to
December 31, 2020, the Company reduced outstanding term loan
principal by $32.5 million, for a total debt reduction of $344.3
million since July 1, 2019.
During the fourth quarter, the Company repurchased 271,580
shares, at an average price of $19.72 per share, for a total cost
of $5.4 million.
Today, the Company’s Board of Directors declared a $0.09 per
share quarterly cash dividend, a 29% increase from the $0.07
declared in the prior quarter and the third increase in the past
year. The dividend is payable on March 25, 2021, to shareholders of
record on March 10, 2021.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning,
February 11, 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 call (877) 823-8673
(domestic) or (647) 689-4067 (international), shortly before 8:00
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 $146.2 billion in assets under management as of January 31,
2021. 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
For the Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2020
2020
2019
2020
2019
Revenue Investment management fees
$
147,883
$
137,240
$
158,943
$
562,036
$
466,802
Fund administration and distribution fees
52,505
51,416
59,611
213,315
145,571
Total revenue
200,388
188,656
218,554
775,351
612,373
Expenses
Personnel compensation and benefits
53,107
47,375
54,210
197,158
179,809
Distribution and other asset-based expenses
40,074
39,123
57,471
175,687
146,622
General and administrative
12,845
13,196
14,740
51,218
46,568
Depreciation and amortization
4,229
3,936
5,620
16,381
23,873
Change in value of consideration payable for acquisition of
business
9,500
2,000
19,900
11,300
19,886
Acquisition-related costs
52
1,148
367
1,108
22,317
Restructuring and integration costs
2,898
1,285
2,049
7,786
8,678
Total operating expenses
122,705
108,063
154,357
460,638
447,753
Income from operations
77,683
80,593
64,197
314,713
164,620
Operating margin
38.8
%
42.7
%
29.4
%
40.6
%
26.9
%
Other income (expense)
Interest income and other income (expense)
3,789
1,120
1,598
3,703
6,829
Interest expense and other financing costs
(7,700
)
(8,187
)
(14,901
)
(37,005
)
(40,901
)
Loss on debt extinguishment
(1,196
)
(758
)
(2,451
)
(2,871
)
(9,860
)
Total other income (expense), net
(5,107
)
(7,825
)
(15,754
)
(36,173
)
(43,932
)
Income before income taxes
72,576
72,768
48,443
278,540
120,688
Income tax expense
(17,681
)
(17,027
)
(10,854
)
(66,018
)
(28,197
)
Net income
$
54,895
$
55,741
$
37,589
$
212,522
$
92,491
Earnings per share of common stock
Basic
$
0.81
$
0.82
$
0.56
$
3.14
$
1.37
Diluted
0.75
0.76
0.51
2.88
1.26
Weighted average number of shares outstanding
Basic
67,489
67,743
67,633
67,710
67,616
Diluted
73,682
73,437
73,856
73,719
73,466
Dividends declared per share
$
0.07
$
0.06
$
0.05
$
0.23
$
0.10
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
For the Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2020
2020
2019
2020
2019
Net income (GAAP)
$
54,895
$
55,741
$
37,589
$
212,522
$
92,491
Income tax expense
(17,681
)
(17,027
)
(10,854
)
(66,018
)
(28,197
)
Income before income taxes
$
72,576
$
72,768
$
48,443
$
278,540
$
120,688
Interest expense
7,432
7,497
14,852
33,724
40,706
Depreciation
1,107
814
1,130
3,551
2,995
Other business taxes
265
256
359
(2,556
)
1,484
Amortization of acquisition-related intangible assets
3,122
3,122
4,490
12,830
20,878
Stock-based compensation
3,774
2,806
5,724
15,020
14,849
Acquisition, restructuring and exit costs
13,904
6,996
24,947
29,463
56,751
Debt issuance costs
1,459
1,386
2,387
6,546
13,119
Losses (earnings) from equity method investments
193
—
—
193
(2,683
)
Adjusted EBITDA
$
103,832
$
95,645
$
102,332
$
377,311
$
268,787
Adjusted EBITDA margin
51.8
%
50.7
%
46.8
%
48.7
%
43.9
%
Net income (GAAP)
$
54,895
$
55,741
$
37,589
$
212,522
$
92,491
Adjustment to reflect the operating performance of the Company
Other business taxes
265
256
359
(2,556
)
1,484
Amortization of acquisition-related intangible assets
3,122
3,122
4,490
12,830
20,878
Stock-based compensation
3,774
2,806
5,724
15,020
14,849
Acquisition, restructuring and exit costs
13,904
6,996
24,947
29,463
56,751
Debt issuance costs
1,459
1,386
2,387
6,546
13,119
Tax effect of above adjustments
(5,631
)
(3,642
)
(9,477
)
(15,326
)
(26,770
)
Adjusted net income
$
71,788
$
66,665
$
66,019
$
258,499
$
172,802
Adjusted net income per diluted share
$
0.97
$
0.91
$
0.89
$
3.51
$
2.35
Tax benefit of goodwill and acquired intangible assets
$
6,774
$
6,745
$
6,801
$
26,992
$
20,324
Tax benefit of goodwill and acquired intangible assets per
diluted share
$
0.09
$
0.09
$
0.09
$
0.37
$
0.28
Adjusted net income with tax benefit
$
78,562
$
73,410
$
72,820
$
285,491
$
193,126
Adjusted net income with tax benefit per diluted share
$
1.07
$
1.00
$
0.99
$
3.87
$
2.63
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated Balance
Sheets
(In thousands, except for
shares)
December 31, 2020 December 31, 2019
Assets Cash and cash equivalents
$
22,744
$
37,121
Investment management fees receivable
67,957
74,321
Fund administration and distribution fees receivable
16,971
19,313
Other receivables
3,254
1,459
Prepaid expenses
6,082
4,852
Investments in proprietary funds, at fair value
922
771
Deferred compensation plan investments, at fair value
22,571
18,305
Property and equipment, net
18,747
13,240
Goodwill
404,750
404,750
Other intangible assets, net
1,162,641
1,175,471
Other assets
4,090
3,706
Total assets
$
1,730,729
$
1,753,309
Liabilities and stockholders' equity
Accounts payable
$
1,358
$
271
Accrued compensation and benefits
47,278
54,842
Accrued expenses
40,786
88,932
Consideration payable for acquisition of business
92,500
118,700
Deferred compensation plan liability
22,571
18,305
Deferred tax liability, net
37,684
5,486
Other liabilities
12,002
4,363
Long-term debt(1)
769,009
924,539
Total liabilities
1,023,188
1,215,438
Stockholders' equity:
Class A common stock, $0.01 par value per share: 2020 - 400,000,000
shares authorized, 19,388,671 shares issued and 16,205,689 shares
outstanding; 2019 - 400,000,000 shares authorized, 18,099,772
shares issued and 16,414,617 shares outstanding
194
181
Class B common stock, $0.01 par value per share: 2020 - 200,000,000
shares authorized, 54,766,934 shares issued and 51,336,177 shares
outstanding; 2019 - 200,000,000 shares authorized, 53,937,394
shares issued and 51,281,512 shares outstanding
548
539
Additional paid-in capital
647,602
624,766
Class A treasury stock, at cost: 2020 - 3,182,982 shares; 2019 -
1,685,155 shares
(47,844
)
(21,524
)
Class B treasury stock, at cost: 2020 - 3,430,757 shares; 2019 -
2,655,882 shares
(47,080
)
(31,386
)
Accumulated other comprehensive loss
(7,460
)
—
Retained earnings (deficit)
161,581
(34,705
)
Total stockholders' equity
707,541
537,871
Total liabilities and stockholders’ equity
$
1,730,729
$
1,753,309
1 Balances at December 31, 2020 and December 31, 2019 are shown
net of unamortized loan discount and debt issuance costs in the
amount of $19.2 million and $27.5 million, respectively. The gross
amount of the debt outstanding was $788.2 million as of December
31, 2020 and $952.0 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
December 31,
September 30,
December 31,
September 30,
December 31,
2020
2020
2019
2020
2019
Beginning assets under management
$
132,662
$
129,070
$
145,832
3
%
-9
%
Gross client cash inflows
5,922
5,433
9,655
9
%
-39
%
Gross client cash outflows
(7,518
)
(8,408
)
(11,045
)
-11
%
-32
%
Net client cash flows
(1,596
)
(2,974
)
(1,390
)
-46
%
15
%
Market appreciation (depreciation)
16,207
6,566
7,389
147
%
119
%
Acquired assets / Net transfers
(33
)
—
—
N/A
N/A
Ending assets under management
147,241
132,662
151,832
11
%
-3
%
Average assets under management
139,552
133,096
147,867
5
%
-6
%
For the Year Ended
% Change from
December 31,
December 31,
December 31,
2020
2019
2019
Beginning assets under management
$
151,832
$
52,763
188
%
Gross client cash inflows
35,857
32,112
12
%
Gross client cash outflows
(55,209
)
(30,252
)
82
%
Net client cash flows
(19,352
)
1,860
N/A
Market appreciation (depreciation)
14,794
16,065
-8
%
Acquired assets / Net transfers
(33
)
81,143
N/A
Ending assets under management
147,241
151,832
-3
%
Average assets under management
136,422
102,719
33
%
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
December 31, 2020 Beginning assets under management
$
22,540
$
14,453
$
35,848
$
13,242
$
11,974
$
30,767
$
207
$
129,031
$
3,631
$
132,662
Gross client cash inflows
968
1,167
1,581
94
897
981
8
5,696
226
5,922
Gross client cash outflows
(1,939
)
(1,323
)
(1,626
)
(472
)
(674
)
(1,119
)
(9
)
(7,161
)
(356
)
(7,518
)
Net client cash flows
(971
)
(156
)
(45
)
(377
)
222
(138
)
(1
)
(1,466
)
(130
)
(1,596
)
Market appreciation (depreciation)
4,657
4,102
756
1,415
1,803
3,413
53
16,198
9
16,207
Acquired assets / Net transfers
5
(31
)
40
(51
)
(17
)
—
(3
)
(57
)
24
(33
)
Ending assets under management
$
26,230
$
18,368
$
36,599
$
14,230
$
13,982
$
34,041
$
257
$
143,706
$
3,534
$
147,241
September 30, 2020
Beginning assets under management
$
22,483
$
14,083
$
35,622
$
12,524
$
11,130
$
29,305
$
195
$
125,343
$
3,727
$
129,070
Gross client cash inflows
760
1,061
1,470
147
463
1,155
11
5,067
367
5,433
Gross client cash outflows
(1,890
)
(1,175
)
(1,850
)
(753
)
(568
)
(1,694
)
(16
)
(7,944
)
(463
)
(8,408
)
Net client cash flows
(1,129
)
(114
)
(380
)
(606
)
(105
)
(539
)
(5
)
(2,878
)
(96
)
(2,974
)
Market appreciation (depreciation)
1,259
591
607
1,141
948
2,001
19
6,566
1
6,566
Acquired assets / Net transfers
(73
)
(107
)
(2
)
182
1
—
(1
)
—
—
—
Ending assets under management
$
22,540
$
14,453
$
35,848
$
13,242
$
11,974
$
30,767
$
207
$
129,031
$
3,631
$
132,662
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
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Year 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 December 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
4,144
4,458
6,499
695
2,467
4,898
40
23,201
12,656
35,857
Gross client cash outflows
(7,605
)
(5,201
)
(9,140
)
(2,631
)
(2,501
)
(6,974
)
(60
)
(34,112
)
(21,097
)
(55,209
)
Net client cash flows
(3,460
)
(742
)
(2,641
)
(1,936
)
(34
)
(2,076
)
(21
)
(10,911
)
(8,441
)
(19,352
)
Market appreciation (depreciation)
3,436
1,959
1,505
1,935
1,403
4,457
40
14,736
58
14,794
Acquired assets / Net transfers
(93
)
(195
)
(239
)
139
10
10
3
(364
)
331
(33
)
Ending assets under management
$
26,230
$
18,368
$
36,599
$
14,230
$
13,982
$
34,041
$
257
$
143,706
$
3,534
$
147,241
December 31, 2019
Beginning assets under management
$
20,019
$
12,948
$
6,836
$
3,759
$
4,610
$
3,767
$
823
$
52,763
$
—
$
52,763
Gross client cash inflows
5,663
3,338
6,489
480
1,457
5,696
171
23,293
8,820
32,112
Gross client cash outflows
(6,663
)
(4,194
)
(4,186
)
(1,419
)
(1,538
)
(3,079
)
(375
)
(21,453
)
(8,800
)
(30,252
)
Net client cash flows
(1,000
)
(856
)
2,303
(939
)
(81
)
2,617
(204
)
1,840
20
1,860
Market appreciation (depreciation)
5,511
3,728
1,158
1,263
1,609
2,739
(29
)
15,980
85
16,065
Acquired assets / Net transfers
1,817
1,526
27,677
10,007
6,465
22,525
(356
)
69,662
11,482
81,143
Ending assets under management
$
26,347
$
17,346
$
37,973
$
14,091
$
12,603
$
31,649
$
236
$
140,245
$
11,587
$
151,832
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
December 31, 2020 Beginning assets under management
$
102,921
$
3,488
$
26,254
$
132,662
Gross client cash inflows
4,555
129
1,238
5,922
Gross client cash outflows
(6,194
)
(98
)
(1,225
)
(7,518
)
Net client cash flows
(1,639
)
31
13
(1,596
)
Market appreciation (depreciation)
11,780
457
3,969
16,207
Acquired assets / Net transfers
(64
)
—
31
(33
)
Ending assets under management
$
112,998
$
3,976
$
30,267
$
147,241
September 30, 2020
Beginning assets under management
$
100,430
$
3,462
$
25,179
$
129,070
Gross client cash inflows
4,251
18
1,164
5,433
Gross client cash outflows
(6,847
)
(139
)
(1,421
)
(8,408
)
Net client cash flows
(2,596
)
(121
)
(257
)
(2,974
)
Market appreciation (depreciation)
5,151
147
1,269
6,566
Acquired assets / Net transfers
(63
)
—
63
—
Ending assets under management
$
102,921
$
3,488
$
26,254
$
132,662
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
(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 Management by
Vehicle
(unaudited; in
millions)
For the Year Ended By Vehicle Separate
Accounts Mutual and Other Funds(1)
ETFs(2) Vehicles(3) Total December 31,
2020 Beginning assets under management
$
118,605
$
4,213
$
29,014
$
151,832
Gross client cash inflows
31,172
492
4,192
35,857
Gross client cash outflows
(48,398
)
(913
)
(5,898
)
(55,209
)
Net client cash flows
(17,226
)
(420
)
(1,705
)
(19,352
)
Market appreciation (depreciation)
11,746
183
2,864
14,794
Acquired assets / Net transfers
(127
)
—
94
(33
)
Ending assets under management
$
112,998
$
3,976
$
30,267
$
147,241
December 31, 2019
Beginning assets under management
$
30,492
$
2,956
$
19,315
$
52,763
Gross client cash inflows
21,560
843
9,709
32,112
Gross client cash outflows
(25,239
)
(914
)
(4,099
)
(30,252
)
Net client cash flows
(3,679
)
(71
)
5,610
1,860
Market appreciation (depreciation)
10,990
544
4,531
16,065
Acquired assets / Net transfers
80,802
782
(441
)
81,143
Ending assets under management
$
118,605
$
4,213
$
29,014
$
151,832
(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.
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/20210210005722/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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