First Quarter 2021 Highlights
- Total Assets Under Management (AUM) of $154.3 billion
- Long-term gross flows of $6.7 billion; long-term net outflows
of $983 million
- GAAP operating margin of 42.1%
- Adjusted EBITDA margin of 50.2%1
- GAAP net income of $0.88 per diluted share
- Adjusted net income with tax benefit of $1.13 per diluted
share1
- Board authorizes 33% increase in regular quarterly cash
dividend
Headline of release should read: Victory
Capital Reports Record Net Income and Earnings Per Share in First
Quarter (instead of Victory Capital Reports Record Net Income and
Earnings Per Share in First Quarter First Quarter 2021
Highlights). Also, subheadline of release should begin: First
Quarter 2021 Highlights...
The updated release reads:
VICTORY CAPITAL REPORTS RECORD NET INCOME
AND EARNINGS PER SHARE IN FIRST QUARTER
First Quarter 2021 Highlights
- Total Assets Under Management (AUM) of $154.3 billion
- Long-term gross flows of $6.7 billion; long-term net outflows
of $983 million
- GAAP operating margin of 42.1%
- Adjusted EBITDA margin of 50.2%1
- GAAP net income of $0.88 per diluted share
- Adjusted net income with tax benefit of $1.13 per diluted
share1
- Board authorizes 33% increase in regular quarterly cash
dividend
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended March 31, 2021.
“I am pleased to report that Victory Capital is off to a very
strong start in 2021,” said David Brown, Chairman and Chief
Executive Officer. “Investment performance generated on behalf of
clients was excellent across our Investment Franchises and
Solutions platform in the first quarter. At the same time,
long-term gross sales increased 18% from the fourth quarter. Our
long-term net flows were positive in March and the steady
improvement that began in the middle of last year has continued in
the second quarter.
“First quarter operating performance was also exceptional. We
achieved robust GAAP and adjusted profit margins that resulted in
the highest net income and earnings per share for any three-month
period in our Company’s history.
“We continue to generate substantial cash flow, and this allowed
us to reduce our leverage ratio to 1.6x. In February, we repriced
our term loan for the second time since origination, lowering the
interest rate by another 25 basis points. Since the beginning of
last year, we have successfully reduced the interest rate spread on
our debt by 100 basis points.
“In addition to lowering our cost of capital, our strong
financial condition was instrumental in our Board’s decision to
authorize another increase in our quarterly cash dividend. This
represents the fourth consecutive increase in cash dividends
declared since August. With this latest increase, the $0.12 cash
dividend declared today is 140% greater than the dividend announced
in conjunction with last year’s first-quarter results. We have also
continued to repurchase shares as an added means of returning a
portion of excess cash flow to shareholders.
“The acquisition of our newest Investment Franchise, THB Asset
Management, closed and it has been fully integrated onto our
platform. Our distribution teams have begun marketing THB’s
strategies, all of which have exceptional investment performance
track records.
“Investments in our business during the first quarter included
adding executive talent within our Direct Investor Business,
completing the build out of an experienced sales team focusing on
RIAs, multi-family offices, and bank trust departments, and
continuing to invest in data and analytics. All of these
initiatives are designed to enhance our growth over the remainder
of this year and beyond. As always, serving the needs of our
clients remains our top priority.”
1 The 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,
2021
2020
2020
Assets Under Management2
Ending
$
154,331
$
147,241
$
123,779
Average
151,090
139,552
144,112
Long-term Flows3
Long-term Gross
$
6,726
$
5,696
$
7,273
Long-term Net
(983
)
(1,466
)
(3,101
)
Money Market/Short-term Flows
Money Market/Short-term Gross
$
108
$
226
$
7,652
Money Market/Short-term Net
(191
)
(130
)
201
Total Flows
Total Gross
$
6,833
$
5,922
$
14,925
Total Net
(1,174
)
(1,596
)
(2,900
)
Consolidated Financial Results (GAAP)
Revenue
$
212.9
$
200.4
$
204.4
Revenue realization (in bps)
57.2
57.1
57.1
Operating expenses
123.2
122.7
113.8
Income from operations
89.8
77.7
90.6
Operating margin
42.1
%
38.8
%
44.3
%
Net income
65.2
54.9
57.2
Earnings per diluted share
$
0.88
$
0.75
$
0.77
Cash flow from operations
79.6
67.9
51.9
Adjusted Performance Results (Non-GAAP)1
Adjusted EBITDA
$
106.8
$
103.8
$
91.5
Adjusted EBITDA margin
50.2
%
51.8
%
44.8
%
Adjusted net income
76.7
71.8
61.7
Tax benefit of goodwill and acquired intangible assets
6.9
6.8
6.7
Adjusted net income with tax benefit
83.6
78.6
68.5
Adjusted net income with tax benefit per diluted share
$
1.13
$
1.07
$
0.92
__________________________________
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 Includes the transfer in of $547 million
of assets associated with the THB Asset Management acquisition,
which closed on March 1, 2021.
3 Long-term AUM is defined as total AUM
excluding Money Market and Short-term assets.
AUM, Flows and Investment Performance
Victory Capital’s AUM increased by $7.1 billion to $154.3
billion at March 31, 2021, compared with $147.2 billion at December
31, 2020. The increase was due to positive market action of $7.7
billion and $547 million of acquired assets, partially offset by
net outflows of $1.2 billion. Total gross flows for the first
quarter were $6.8 billion, including long-term gross flows of $6.7
billion.
As of March 31, 2021, Victory Capital offered 124 investment
strategies through its 10 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of March 31, 2021.
Percentage of AUM Outperforming Benchmark Trailing
Trailing Trailing Trailing 1-Year
3-Years 5-Years 10-Years
64%
69%
72%
75%
First Quarter 2021 Compared with Fourth Quarter 2020
Revenue increased 6% to $212.9 million, in the first quarter,
compared with $200.4 million in the fourth quarter, due to higher
average AUM and a slight increase in revenue realization quarter
over quarter partially offset by two fewer days in the quarter.
GAAP operating margin expanded 330 basis points in the first
quarter to 42.1%, up from 38.8% in the fourth quarter, due to
relatively flat operating expenses and an increase in revenue as a
result of higher average AUM. First quarter GAAP net income rose
19% to $65.2 million, up from $54.9 million in the prior quarter.
On a per-share basis, GAAP net income advanced 17% to $0.88 per
diluted share in the first quarter, versus $0.75 per diluted share
in the fourth quarter.
Adjusted net income with tax benefit increased 6% to $83.6
million in the first quarter, up from $78.6 million in the fourth
quarter. On a per-share basis, adjusted net income with tax benefit
increased 6% to $1.13 per diluted share in the first quarter, from
$1.07 per diluted share in the prior quarter. Adjusted EBITDA
increased 3% to $106.8 million in the first quarter, versus $103.8
million in the fourth quarter. Adjusted EBITDA margin contracted
160 basis points in the first quarter of 2021 to 50.2% compared
with 51.8% in the prior quarter primarily due to higher seasonal
payroll taxes and benefits.
First Quarter 2021 Compared with First Quarter 2020
Revenue for the three months ended March 31, 2021, rose 4% to
$212.9 million, compared with $204.4 million in the same quarter of
2020. The increase was primarily due to higher average AUM.
GAAP operating margin was 42.1% in the first quarter, a 220
basis point decrease from the 44.3% recorded in the same quarter of
2020. Operating expenses increased 8% to $123.2 million, compared
with $113.8 million in last year’s first quarter. The increase was
primarily related to a non-cash, $8.0 million difference in amounts
recorded to the change in the fair value of contingent acquisition
payments. GAAP net income rose 14% to $65.2 million, or $0.88 per
diluted share, in the first quarter compared with $57.2 million, or
$0.77 per diluted share, in the same quarter of 2020.
Adjusted net income with tax benefit advanced 22% to $83.6
million, or $1.13 per diluted share, in the first quarter, compared
with $68.5 million, or $0.92 per diluted share in the same quarter
last year. Adjusted EBITDA rose 17% to $106.8 million, compared
with $91.5 million in last year’s same quarter. Year-over-year,
adjusted EBITDA margin expanded 540 basis points to 50.2% in the
first quarter of 2021, compared with 44.8% in the same quarter last
year.
Balance Sheet / Capital Management
During the first quarter, the Company reduced outstanding debt
by an additional $50.0 million. Subsequent to March 31, 2021, the
Company reduced outstanding debt by $27.0 million, for a total of
$388.8 million, since July 1, 2019.
On February 18, 2021, the Company entered into the Second
Amendment (the “Second Amendment”) to the 2019 Credit Agreement, as
amended, with the other loan parties thereto, Barclays Bank PLC, as
administrative agent, and the Royal Bank of Canada as fronting
bank. The Company refinanced the 2019 Term Loans for a reduced
applicable margin on LIBOR of 25 basis points. The applicable
margin on LIBOR under the repriced term loans is 2.25%, compared to
2.50% under the First Amendment.
Today, the Company’s Board of Directors declared a regular
quarterly cash dividend of $0.12 per share, an increase of 33% over
the fourth quarter 2020. The dividend is payable on June 25, 2021,
to shareholders of record on June 10, 2021.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, May 7,
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 $154.3 billion in assets under management as of March 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 10 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,
2021
2020
2020
Revenue Investment management fees $
160,284
$
147,883
$
146,881
Fund administration and distribution fees
52,665
52,505
57,540
Total revenue
212,949
200,388
204,421
Expenses Personnel compensation and benefits
59,006
53,107
47,571
Distribution and other asset-based expenses
42,103
40,074
54,860
General and administrative
13,310
12,845
11,888
Depreciation and amortization
4,385
4,229
4,050
Change in value of consideration payable for acquisition of
business
2,500
9,500
(5,500)
Acquisition-related costs
(164)
52
(69)
Restructuring and integration costs
2,053
2,898
998
Total operating expenses
123,193
122,705
113,798
Income from operations
89,756
77,683
90,623
Operating margin
42.1%
38.8%
44.3%
Other income (expense) Interest income and other
income (expense)
2,734
3,789
(4,172)
Interest expense and other financing costs
(6,845)
(7,700)
(11,408)
Loss on debt extinguishment
(2,781)
(1,196)
(1,054)
Total other income (expense), net
(6,892)
(5,107)
(16,634)
Income before income taxes
82,864
72,576
73,989
Income tax expense
(17,662)
(17,681)
(16,823)
Net income $
65,202
$
54,895
$
57,166
Earnings per share of common stock Basic $
0.96
$
0.81
$
0.84
Diluted
0.88
0.75
0.77
Weighted average number of shares outstanding Basic
67,761
67,489
67,790
Diluted
74,108
73,682
74,350
Dividends declared per share $
0.09
$
0.07
$
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,
2021
2020
2020
Net income (GAAP) $
65,202
$
54,895
$
57,166
Income tax expense
(17,662)
(17,681)
(16,823)
Income before income taxes $
82,864
$
72,576
$
73,989
Interest expense
7,310
7,432
10,528
Depreciation
1,246
1,107
884
Other business taxes
374
265
(3,296)
Amortization of acquisition-related intangible assets
3,138
3,122
3,166
Stock-based compensation
4,636
3,774
5,372
Acquisition, restructuring and exit costs
4,389
13,904
(1,542)
Debt issuance costs
2,793
1,459
2,389
Earnings from equity method investments
92
193
—
Adjusted EBITDA $
106,842
$
103,832
$
91,490
Adjusted EBITDA margin
50.2%
51.8%
44.8%
Net income (GAAP) $
65,202
$
54,895
$
57,166
Adjustment to reflect the operating performance of the Company
Other business taxes
374
265
(3,296)
Amortization of acquisition-related intangible assets
3,138
3,122
3,166
Stock-based compensation
4,636
3,774
5,372
Acquisition, restructuring and exit costs
4,389
13,904
(1,542)
Debt issuance costs
2,793
1,459
2,389
Tax effect of above adjustments
(3,832)
(5,631)
(1,522)
Adjusted net income $
76,700
$
71,788
$
61,733
Adjusted net income per diluted share $
1.03
$
0.97
$
0.83
Tax benefit of goodwill and acquired intangible
assets $
6,918
$
6,774
$
6,728
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.09
$
0.09
$
0.09
Adjusted net income with tax benefit $
83,618
$
78,562
$
68,461
Adjusted net income with tax benefit per diluted share
$
1.13
$
1.07
$
0.92
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
March 31, 2021 December 31, 2020 Assets
Cash and cash equivalents
$
30,386
$
22,744
Receivables
91,924
88,182
Prepaid expenses
6,776
6,082
Investments, at fair value
26,931
23,493
Property and equipment, net
20,699
18,747
Goodwill
404,750
404,750
Other intangible assets, net
1,160,089
1,162,641
Other assets
8,115
4,090
Total assets
$
1,749,670
$
1,730,729
Liabilities and stockholders' equity
Accounts payable and accrued expenses
$
56,428
$
42,144
Accrued compensation and benefits
34,892
47,278
Consideration payable for acquisition of business
95,000
92,500
Deferred tax liability, net
47,411
37,684
Other liabilities
27,911
34,573
Long-term debt, net1
722,652
769,009
Total liabilities
984,294
1,023,188
Stockholders' equity
Class A common stock, $0.01 par value per share:2021 - 400,000,000
shares authorized, 19,611,469 shares issued and 16,141,937 shares
outstanding; 2020 - 400,000,000 shares authorized, 19,388,671
shares issued and 16,205,689 shares outstanding
196
194
Class B common stock, $0.01 par value per share:2021 - 200,000,000
shares authorized, 55,607,894 shares issued and 51,746,187 shares
outstanding; 2020 - 200,000,000 shares authorized, 54,766,934
shares issued and 51,336,177 shares outstanding
556
548
Additional paid-in capital
653,973
647,602
Class A treasury stock, at cost: 2021 - 3,469,532 shares; 2020 -
3,182,982 shares
(54,966
)
(47,844
)
Class B treasury stock, at cost: 2021 - 3,861,707 shares; 2020 -
3,430,757 shares
(57,996
)
(47,080
)
Accumulated other comprehensive income (loss)
3,311
(7,460
)
Retained earnings
220,302
161,581
Total stockholders' equity
765,376
707,541
Total liabilities and stockholders' equity
$
1,749,670
$
1,730,729
1 Balances at March 31, 2021 and December
31, 2020 are shown net of unamortized loan discount and debt
issuance costs in the amount of $15.6 million and $19.2 million,
respectively. The gross amount of the debt outstanding was $738.2
million as of March 31, 2021 and $788.2 million as of December 31,
2020.
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,
2021
2020
2020
2020
2020
Beginning assets under management $
147,241
$
132,662
$
151,832
11%
-3%
Gross client cash inflows
6,833
5,922
14,925
15%
-54%
Gross client cash outflows
(8,007)
(7,518)
(17,825)
7%
-55%
Net client cash flows
(1,174)
(1,596)
(2,900)
-26%
-60%
Market appreciation (depreciation)
7,718
16,207
(25,153)
-52%
131%
Acquired assets / Net transfers1
547
(33)
—
N/A
N/A
Ending assets under management
154,331
147,241
123,779
5%
25%
Average assets under management
151,090
139,552
144,112
8%
5%
1 The three months ended March 31, 2021
includes the transfer in of $547 million of assets associated with
the THB Asset Management acquisition, which closed on March 1,
2021.
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, 2021
Beginning assets under management
$
26,230
$
18,368
$
36,599
$
14,230
$
13,982
$
34,041
$
257
$
143,706
$
3,534
$
147,241
Gross client cash inflows
1,741
1,072
2,024
98
593
1,143
55
6,726
108
6,833
Gross client cash outflows
(1,854
)
(1,696
)
(1,701
)
(432
)
(648
)
(1,350
)
(28
)
(7,709
)
(299
)
(8,007
)
Net client cash flows
(112
)
(624
)
323
(334
)
(55
)
(207
)
27
(983
)
(191
)
(1,174
)
Market appreciation (depreciation)
3,032
2,024
(219
)
604
700
1,521
57
7,720
(2
)
7,718
Acquired assets / Net transfers1
6
461
73
(52
)
25
1
—
515
32
547
Ending assets under management
$
29,156
$
20,230
$
36,776
$
14,448
$
14,652
$
35,356
$
341
$
150,958
$
3,373
$
154,331
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
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
1 Includes the transfer in of $547 million
of assets associated with the THB Asset Management acquisition,
which closed on March 1, 2021.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Three Months Ended By Vehicle Separate
Accounts and Mutual Other Pooled Funds1
ETFs2 Vehicles3 Total March 31, 2021
Beginning assets under management $
112,998
$
3,976
$
30,267
$
147,241
Gross client cash inflows
5,465
240
1,128
6,833
Gross client cash outflows
(6,293)
(117)
(1,598)
(8,007)
Net client cash flows
(828)
123
(469)
(1,174)
Market appreciation (depreciation)
5,575
343
1,801
7,718
Acquired assets / Net transfers4
85
—
462
547
Ending assets under management $
117,830
$
4,441
$
32,061
$
154,331
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
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
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 accounts, UMAs, UCITS, private funds and other pooled
vehicles.
4 Includes the transfer in of $547 million
of assets associated with the THB Asset Management acquisition,
which closed on March 1, 2021.
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/20210506006099/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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