Second Quarter 2021 Highlights
- Total Assets Under Management (AUM) of $161.9 billion
- Quarterly long-term gross flows of $10.0 billion; long-term net
inflows of $0.3 billion
- GAAP operating margin of 42.9% and adjusted EBITDA margin of
50.6%1
- GAAP net income of $0.93 per diluted share
- Adjusted net income with tax benefit of $1.18 per diluted
share1
- Board authorizes 25% 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 June 30, 2021.
“During the second quarter and first half, we generated
excellent investment performance for our clients and very strong
financial results for our shareholders,” said David Brown, Chairman
and Chief Executive Officer. “More than 70% of our AUM outperformed
respective benchmarks for the 3-, 5-, and 10-year periods, and we
recorded the fourth consecutive quarter of revenue and earnings
growth, as well as adjusted EBITDA margin of greater than 50%.
“Our organic growth also improved quarter-over-quarter for the
fourth quarter in a row reflecting healthy investor demand for our
investment products. This led to record high gross sales during the
second quarter and resulted in positive long-term net flows.
“Cash flow generated from operations remained robust. The cash
dividend increase announced today marks the fifth consecutive
quarterly increase and reflects our view of the strength of our
business. Over the course of the last five quarters, we have
tripled the cash dividend payable to shareholders. At the same
time, we still allocated the majority of our excess cash flow to
reducing debt as we paid down an additional $57 million of
outstanding debt in the quarter. This was 14% more than in the
first quarter of the year and resulted in our leverage ratio
decreasing to 1.4 times at the end of the quarter.
“Our evaluation of acquisition targets continues and, with the
strength of our balance sheet, we are financially well positioned
to execute on a strategic transaction.
“We continue to make investments in the areas of technology,
data, and distribution which are continuing to yield positive
results. As always, serving 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
For the Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Assets Under Management(2) Ending $
161,936
$
154,331
$
129,070
$
161,936
$
129,070
Average
158,471
151,090
128,927
154,781
136,519
Long-term Flows(3) Long-term Gross $
9,973
$
6,726
$
5,166
$
16,698
$
12,439
Long-term Net
302
(983
)
(3,466
)
(681
)
(6,568
)
Money Market/Short-term Flows Money Market/Short-term Gross
$
102
$
108
$
4,411
$
209
$
12,063
Money Market/Short-term Net
(126
)
(191
)
(8,416
)
(317
)
(8,214
)
Total Flows Total Gross $
10,074
$
6,833
$
9,577
$
16,908
$
24,502
Total Net
176
(1,174
)
(11,882
)
(998
)
(14,782
)
Consolidated Financial Results (GAAP) Revenue $
221.9
$
212.9
$
181.9
$
434.9
$
386.3
Revenue realization (in bps)
56.2
57.2
56.7
56.7
56.9
Operating expenses
126.6
123.2
116.1
249.8
229.9
Income from operations
95.3
89.8
65.8
185.0
156.4
Operating margin
42.9
%
42.1
%
36.2
%
42.5
%
40.5
%
Net income
69.3
65.2
44.7
134.5
101.9
Earnings per diluted share $
0.93
$
0.88
$
0.61
$
1.81
$
1.38
Cash flow from operations
84.5
79.6
69.0
164.2
120.9
Adjusted Performance Results (Non-GAAP)(1) Adjusted EBITDA $
112.2
$
106.8
$
86.3
$
219.1
$
177.8
Adjusted EBITDA margin
50.6
%
50.2
%
47.5
%
50.4
%
46.0
%
Adjusted net income
80.3
76.7
58.3
157.0
120.0
Tax benefit of goodwill and acquired intangible assets
6.9
6.9
6.7
13.8
13.5
Adjusted net income with tax benefit
87.2
83.6
65.1
170.8
133.5
Adjusted net income with tax benefit per diluted share $
1.18
$
1.13
$
0.89
$
2.30
$
1.81
1 The Company reports its financial results in accordance with
GAAP. Adjusted EBITDA and Adjusted Net Income are not defined by
GAAP and should not be regarded as an alternative to any
measurement under GAAP. Please 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 The three months ended June 30, 2021 includes $250 million of
seed capital that USAA liquidated and $25 million related to
Victory’s closure of two mutual funds and an ETF. 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.
3 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 4.9%, or $7.6 billion,
to $161.9 billion at June 30, 2021, compared with $154.3 billion at
March 31, 2021. The increase was primarily attributable to market
action and positive net flows, partially offset by liquidated seed
capital. Total gross flows reached a record $10.1 billion for the
second quarter and $16.9 billion for the year-to-date period.
Long-term AUM increased by 5.1%, or $7.7 billion, to $158.7 billion
at June 30, 2021, compared with $151.0 billion at March 31, 2021.
For the second quarter, the Company reported long-term gross flows
of $10.0 billion and net long-term inflows of $0.3 billion. For the
year-to-date period, the Company reported long-term gross flows of
$16.7 billion and net long-term outflows of $0.7 billion.
At June 30, 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 June 30, 2021.
Percentage of AUM Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
64%
71%
72%
71%
Second Quarter 2021 Compared with First Quarter 2021
Revenue increased 4.2% to $221.9 million, in the second quarter,
compared with $212.9 million in the first quarter, primarily due to
higher average AUM. GAAP operating margin expanded 80 basis points
in the second quarter to 42.9%, up from 42.1% in the first quarter
primarily due to seasonally higher compensation and benefit related
items in the first quarter. Second quarter GAAP net income
increased 6.2% to $69.3 million, up from $65.2 million in the prior
quarter. On a per-share basis, GAAP net income increased 5.7% to
$0.93 per diluted share in the second quarter, versus $0.88 per
diluted share in the first quarter.
Adjusted net income with tax benefit increased 4.3% to $87.2
million in the second quarter, up from $83.6 million in the first
quarter. On a per-share basis, adjusted net income with tax benefit
increased 4.4% to $1.18 per diluted share in the second quarter,
from $1.13 per diluted share in the prior quarter. Adjusted EBITDA
increased 5.1% to $112.2 million in the second quarter, versus
$106.8 million in the first quarter. Adjusted EBITDA margin
expanded 40 basis points in the second quarter of 2021 to 50.6%
compared with 50.2% in the prior quarter.
Second Quarter 2021 Compared with Second Quarter 2020
Revenue for the three months ended June 30, 2021, rose 22.0% to
$221.9 million, compared with $181.9 million in the same quarter of
2020. The increase was primarily due to higher average AUM.
Illustrating the inherent operating leverage in the Company’s
business model, operating expenses increased just 9.1% to $126.6
million, compared with $116.1 million in last year’s second
quarter, reflecting variable operating expenses that rose as a
result of the higher average AUM and earnings as well as continued
investments to support future growth. Due to this improved
operating leverage and a $2.2 million reduction in restructuring
and integration costs in the current year, GAAP operating margin
expanded 670 basis points to 42.9% in the second quarter, from
36.2% in the same quarter of 2020. GAAP net income rose 54.9% to
$69.3 million, or $0.93 per diluted share, in the second quarter
compared with $44.7 million, or $0.61 per diluted share, in the
same quarter of 2020.
Adjusted net income with tax benefit advanced 34.0% to $87.2
million, or $1.18 per diluted share, in the second quarter,
compared with $65.1 million, or $0.89 per diluted share in the same
quarter last year. Adjusted EBITDA rose 30.0% to $112.2 million,
compared with $86.3 million in last year’s same quarter.
Year-over-year, adjusted EBITDA margin expanded 310 basis points to
50.6% in the second quarter of 2021, compared with 47.5% in the
same quarter last year.
Six Months Ended June 30, 2021 Compared with Six Months Ended
June 30, 2020
Revenue for the six months ended June 30, 2021, rose 12.6% to
$434.9 million, compared with $386.3 million in the same period of
2020. The increase was primarily due to higher average AUM.
Displaying the inherent operating leverage in the Company’s
business model, operating expenses increased just 8.7% to $249.8
million for the six months ended June 30, 2021, compared with
$229.9 million in the same period in 2020, reflecting the Company’s
variable operating expenses that rose as a result of the higher
average AUM and earnings as well as continued investments to
support future growth. GAAP operating margin was 42.5% for the six
months ended June 30, 2021, a 200 basis point increase from the
40.5% recorded in the same period in 2020 primarily due to improved
operating leverage. GAAP net income rose 32.0% to $134.5 million,
or $1.81 per diluted share, in the first six months of 2021
compared with $101.9 million, or $1.38 per diluted share, in the
same period in 2020.
Adjusted net income with tax benefit advanced 27.9% to $170.8
million, or $2.30 per diluted share, in the first six months of
2021, compared with $133.5 million, or $1.81 per diluted share in
the same period in 2020. For the six months ended June 30, 2021,
adjusted EBITDA rose 23.2% to $219.1 million, compared with $177.8
million for the same period in 2020. Year-over-year, adjusted
EBITDA margin expanded 440 basis points to 50.4% in the first six
months of 2021, compared with 46.0% in the same period last
year.
Balance Sheet / Capital Management
During the second quarter, the Company reduced outstanding debt
by an additional $57.0 million. Subsequent to June 30, 2021, the
Company reduced outstanding debt by $35.0 million, for a total of
$453.8 million, since July 1, 2019.
The 10b-5 plan expired on May 12, 2021 as it reached its
authorized share repurchase limit of $15 million. On May 13, 2021,
the Company announced that its Board of Directors approved a new
10b-5 plan authorizing the repurchase of up to $15 million of Class
A common stock through December 31, 2022. During the second
quarter, the Company repurchased 288 thousand shares.
Today, the Company’s Board of Directors declared a $0.15 per
share quarterly cash dividend, a 25% increase over the dividend
declared in the prior quarter. The dividend is payable on September
27, 2021, to shareholders of record on September 10, 2021.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, August
6, 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 $161.9 billion in assets under management as of June 30, 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
For the Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Revenue Investment management fees $
168,033
$
160,284
$
130,032
$
328,317
$
276,913
Fund administration and distribution fees
53,871
52,665
51,854
106,536
109,394
Total revenue
221,904
212,949
181,886
434,853
386,307
Expenses Personnel compensation and benefits
57,462
59,006
49,105
116,468
96,676
Distribution and other asset-based expenses
44,223
42,103
41,630
86,326
96,490
General and administrative
13,713
13,310
13,289
27,023
25,177
Depreciation and amortization
4,694
4,385
4,166
9,079
8,216
Change in value of consideration payable for acquisition of
business
5,700
2,500
5,300
8,200
(200
)
Acquisition-related costs
422
(164
)
(23
)
258
(92
)
Restructuring and integration costs
422
2,053
2,605
2,475
3,603
Total operating expenses
126,636
123,193
116,072
249,829
229,870
Income from operations
95,268
89,756
65,814
185,024
156,437
Operating margin
42.9
%
42.1
%
36.2
%
42.5
%
40.5
%
Other income (expense) Interest income and other
income (expense)
1,932
2,734
2,966
4,666
(1,206
)
Interest expense and other financing costs
(6,155
)
(6,845
)
(9,710
)
(13,000
)
(21,118
)
Gain (loss) on debt extinguishment
(1,146
)
(2,781
)
137
(3,927
)
(917
)
Total other expense, net
(5,369
)
(6,892
)
(6,607
)
(12,261
)
(23,241
)
Income before income taxes
89,899
82,864
59,207
172,763
133,196
Income tax expense
(20,629
)
(17,662
)
(14,487
)
(38,291
)
(31,310
)
Net income $
69,270
$
65,202
$
44,720
$
134,472
$
101,886
Earnings per share of common stock Basic $
1.02
$
0.96
$
0.66
$
1.98
$
1.50
Diluted
0.93
0.88
0.61
1.81
1.38
Weighted average number of shares outstanding Basic
67,776
67,761
67,821
67,769
67,806
Diluted
74,166
74,108
73,204
74,155
73,818
Dividends declared per share $
0.12
$
0.09
$
0.05
$
0.21
$
0.10
Victory Capital Holdings, Inc.
and Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures1
(unaudited; in thousands
except per share data and percentages)
For the Three Months
Ended
For the Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2021
2021
2020
2021
2020
Net income (GAAP) $
69,270
$
65,202
$
44,720
$
134,472
$
101,886
Income tax expense
(20,629
)
(17,662
)
(14,487
)
(38,291
)
(31,310
)
Income before income taxes $
89,899
$
82,864
$
59,207
$
172,763
$
133,196
Interest expense
6,086
7,310
8,267
13,396
18,795
Depreciation
1,524
1,246
746
2,770
1,630
Other business taxes
524
374
219
898
(3,077
)
Amortization of acquisition-related intangible assets
3,171
3,138
3,420
6,309
6,586
Stock-based compensation
3,124
4,636
3,068
7,760
8,440
Acquisition, restructuring and exit costs
6,544
4,389
10,105
10,933
8,563
Debt issuance costs
1,304
2,793
1,312
4,097
3,701
Losses from equity method investments
65
92
—
157
—
Adjusted EBITDA $
112,241
$
106,842
$
86,344
$
219,083
$
177,834
Adjusted EBITDA margin
50.6
%
50.2
%
47.5
%
50.4
%
46.0
%
Net income (GAAP) $
69,270
$
65,202
$
44,720
$
134,472
$
101,886
Adjustment to reflect the operating performance of the Company
Other business taxes
524
374
219
898
(3,077
)
Amortization of acquisition-related intangible assets
3,171
3,138
3,420
6,309
6,586
Stock-based compensation
3,124
4,636
3,068
7,760
8,440
Acquisition, restructuring and exit costs
6,544
4,389
10,105
10,933
8,563
Debt issuance costs
1,304
2,793
1,312
4,097
3,701
Tax effect of above adjustments
(3,667
)
(3,832
)
(4,531
)
(7,499
)
(6,053
)
Adjusted net income $
80,270
$
76,700
$
58,313
$
156,970
$
120,046
Adjusted net income per diluted share $
1.08
$
1.03
$
0.80
$
2.12
$
1.63
Tax benefit of goodwill and acquired intangible
assets $
6,918
$
6,918
$
6,745
$
13,836
$
13,473
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.09
$
0.09
$
0.09
$
0.19
$
0.18
Adjusted net income with tax benefit $
87,188
$
83,618
$
65,058
$
170,806
$
133,519
Adjusted net income with tax benefit per diluted share
$
1.18
$
1.13
$
0.89
$
2.30
$
1.81
1 Refer to page 15 for further information regarding the
Company’s non-GAAP financial measures.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
June 30,
2021
December 31, 2020
Assets Cash and cash equivalents $
31,622
$
22,744
Receivables
98,684
88,182
Prepaid expenses
6,230
6,082
Investments, at fair value
29,566
23,493
Property and equipment, net
24,290
18,747
Goodwill
404,750
404,750
Other intangible assets, net
1,156,919
1,162,641
Other assets
4,014
4,090
Total assets $
1,756,075
$
1,730,729
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
51,153
$
42,144
Accrued compensation and benefits
38,885
47,278
Consideration payable for acquisition of business
100,700
92,500
Deferred tax liability, net
51,022
37,684
Other liabilities
30,620
34,573
Long-term debt, net1
667,539
769,009
Total liabilities
939,919
1,023,188
Stockholders' equity Class A common stock, $0.01 par
value per share:2021 - 400,000,000 shares authorized, 19,816,767
shares issued and 16,059,105 sharesoutstanding; 2020 - 400,000,000
shares authorized, 19,388,671 shares issued and 16,205,689shares
outstanding
198
194
Class B common stock, $0.01 par value per share:2021 - 200,000,000
shares authorized, 55,782,820 shares issued and 51,761,697shares
outstanding; 2020 - 200,000,000 shares authorized, 54,766,934
shares issued and 51,336,177shares outstanding
558
548
Additional paid-in capital
659,920
647,602
Class A treasury stock, at cost: 2021 - 3,757,662 shares; 2020 -
3,182,982 shares
(63,290
)
(47,844
)
Class B treasury stock, at cost: 2021 - 4,021,123 shares; 2020 -
3,430,757 shares
(62,925
)
(47,080
)
Accumulated other comprehensive income (loss)
351
(7,460
)
Retained earnings
281,344
161,581
Total stockholders' equity
816,156
707,541
Total liabilities and stockholders' equity $
1,756,075
$
1,730,729
1 Balances at June 30, 2021 and December 31, 2020 are shown net
of unamortized loan discount and debt issuance costs in the amount
of $13.7 million and $19.2 million, respectively. The gross amount
of the debt outstanding was $681.2 million as of June 30, 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
June 30,
March 31,
June 30,
March 31,
June 30,
2021
2021
2020
2021
2020
Beginning assets under management $
154,331
$
147,241
$
123,779
5
%
25
%
Gross client cash inflows
10,074
6,833
9,577
47
%
5
%
Gross client cash outflows
(9,898
)
(8,007
)
(21,459
)
24
%
-54
%
Net client cash flows
176
(1,174
)
(11,882
)
N/A
N/A
Market appreciation (depreciation)
7,703
7,718
17,173
0
%
-55
%
Acquired assets / Net transfers1
(275
)
547
—
N/A
N/A
Ending assets under management
161,936
154,331
129,070
5
%
25
%
Average assets under management
158,471
151,090
128,927
5
%
23
%
For the Six Months
Ended
% Change from
June 30,
June 30,
June 30,
2021
2020
2020
Beginning assets under management $
147,241
$
151,832
-3
%
Gross client cash inflows
16,908
24,502
-31
%
Gross client cash outflows
(17,906
)
(39,284
)
-54
%
Net client cash flows
(998
)
(14,782
)
-93
%
Market appreciation (depreciation)
15,421
(7,979
)
N/A
Acquired assets / Net transfers2
272
—
N/A
Ending assets under management
161,936
129,070
25
%
Average assets under management
154,781
136,519
13
%
1 The three months ended June 30, 2021 includes $250 million of
seed capital that USAA liquidated and $25 million related to
Victory’s closure of two mutual funds and an ETF. 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.
2 The six months ended June 30, 2021 includes the transfer in of
$547 million of assets associated with the THB Asset Management
acquisition, which closed on March 1, 2021 partially offset by $250
million of seed capital that USAA liquidated and $25 million
related to Victory’s closure of two mutual funds and an ETF.
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 June 30, 2021 Beginning
assets under management $
29,156
$
20,230
$
36,776
$
14,448
$
14,652
$
35,356
$
341
$
150,958
$
3,373
$
154,331
Gross client cash inflows
1,412
1,238
1,750
91
1,072
4,370
40
9,973
102
10,074
Gross client cash outflows
(1,940
)
(1,428
)
(2,949
)
(407
)
(541
)
(2,380
)
(27
)
(9,671
)
(228
)
(9,898
)
Net client cash flows
(527
)
(190
)
(1,200
)
(316
)
531
1,991
13
302
(126
)
176
Market appreciation (depreciation)
1,745
616
677
1,253
928
2,419
62
7,700
3
7,703
Acquired assets / Net transfers1
(33
)
(39
)
156
(101
)
(180
)
(126
)
44
(278
)
3
(275
)
Ending assets under management $
30,340
$
20,617
$
36,410
$
15,284
$
15,931
$
39,640
$
460
$
158,682
$
3,254
$
161,936
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 transfers2
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
June 30, 2020 Beginning assets under management $
18,622
$
11,885
$
35,402
$
10,703
$
9,372
$
25,526
$
140
$
111,650
$
12,129
$
123,779
Gross client cash inflows
943
997
1,498
216
436
1,067
10
5,166
4,411
9,577
Gross client cash outflows
(1,511
)
(1,393
)
(2,775
)
(599
)
(575
)
(1,767
)
(12
)
(8,632
)
(12,826
)
(21,459
)
Net client cash flows
(568
)
(396
)
(1,278
)
(383
)
(138
)
(700
)
(3
)
(3,466
)
(8,416
)
(11,882
)
Market appreciation (depreciation)
4,428
2,592
1,503
2,207
1,898
4,479
55
17,159
14
17,173
Acquired assets / Net transfers
2
2
(4
)
(2
)
(1
)
—
3
—
—
—
Ending assets under management $
22,483
$
14,083
$
35,622
$
12,524
$
11,130
$
29,305
$
195
$
125,343
$
3,727
$
129,070
1 The three months ended June 30, 2021 includes $250 million of
seed capital that USAA liquidated and $25 million related to
Victory’s closure of two mutual funds and an ETF.
2 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 Six 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 June 30, 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
3,154
2,310
3,774
189
1,664
5,513
95
16,698
209
16,908
Gross client cash outflows
(3,794
)
(3,124
)
(4,651
)
(839
)
(1,188
)
(3,729
)
(55
)
(17,379
)
(526
)
(17,906
)
Net client cash flows
(640
)
(814
)
(877
)
(650
)
476
1,784
40
(681
)
(317
)
(998
)
Market appreciation (depreciation)
4,777
2,641
458
1,857
1,628
3,940
119
15,420
1
15,421
Acquired assets / Net transfers1
(27
)
423
229
(152
)
(155
)
(125
)
44
236
36
272
Ending assets under management $
30,340
$
20,617
$
36,410
$
15,284
$
15,931
$
39,640
$
460
$
158,682
$
3,254
$
161,936
June 30, 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
2,416
2,230
3,449
454
1,107
2,762
21
12,439
12,063
24,502
Gross client cash outflows
(3,776
)
(2,703
)
(5,665
)
(1,406
)
(1,259
)
(4,161
)
(36
)
(19,007
)
(20,277
)
(39,284
)
Net client cash flows
(1,360
)
(473
)
(2,217
)
(952
)
(152
)
(1,399
)
(15
)
(6,568
)
(8,214
)
(14,782
)
Market appreciation (depreciation)
(2,479
)
(2,733
)
142
(621
)
(1,347
)
(956
)
(32
)
(8,027
)
48
(7,979
)
Acquired assets / Net transfers
(25
)
(57
)
(276
)
7
26
12
6
(307
)
307
—
Ending assets under management $
22,483
$
14,083
$
35,622
$
12,524
$
11,130
$
29,305
$
195
$
125,343
$
3,727
$
129,070
1 The six months ended June 30, 2021 includes the transfer in of
$547 million of assets associated with the THB Asset Management
acquisition, which closed on March 1, 2021 partially offset by $250
million of seed capital that USAA liquidated and $25 million
related to Victory’s closure of two mutual funds and an ETF.
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
Funds1
ETFs2
Vehicles3
Total
June 30, 2021 Beginning assets under management $
117,830
$
4,441
$
32,061
$
154,331
Gross client cash inflows
5,060
239
4,775
10,074
Gross client cash outflows
(5,376
)
(169
)
(4,353
)
(9,898
)
Net client cash flows
(317
)
70
423
176
Market appreciation (depreciation)
5,879
218
1,606
7,703
Acquired assets / Net transfers4
(229
)
(375
)
329
(275
)
Ending assets under management $
123,164
$
4,354
$
34,418
$
161,936
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 transfers5
85
—
462
547
Ending assets under management $
117,830
$
4,441
$
32,061
$
154,331
June 30, 2020 Beginning assets under management $
98,305
$
3,177
$
22,296
$
123,779
Gross client cash inflows
8,621
90
866
9,577
Gross client cash outflows
(19,726
)
(214
)
(1,519
)
(21,459
)
Net client cash flows
(11,104
)
(124
)
(653
)
(11,882
)
Market appreciation (depreciation)
13,229
409
3,535
17,173
Acquired assets / Net transfers
—
—
—
—
Ending assets under management $
100,430
$
3,462
$
25,179
$
129,070
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 non-U.S. domiciled pooled vehicles.
4 The three months ended June 30, 2021 includes $250 million of
seed capital that USAA liquidated and $25 million related to
Victory’s closure of two mutual funds and an ETF.
5 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
Vehicle
(unaudited; in
millions)
For the Six Months Ended By Vehicle Separate
Accounts Mutual and Other Funds1
ETFs2 Vehicles3 Total June 30, 2021
Beginning assets under management $
112,998
$
3,976
$
30,267
$
147,241
Gross client cash inflows
10,525
479
5,904
16,908
Gross client cash outflows
(11,669
)
(286
)
(5,950
)
(17,906
)
Net client cash flows
(1,145
)
193
(46
)
(998
)
Market appreciation (depreciation)
11,454
561
3,406
15,421
Acquired assets / Net transfers4
(144
)
(375
)
791
272
Ending assets under management $
123,164
$
4,354
$
34,418
$
161,936
June 30, 2020 Beginning assets under management $
118,605
$
4,213
$
29,014
$
151,832
Gross client cash inflows
22,366
345
1,790
24,502
Gross client cash outflows
(35,357
)
(675
)
(3,252
)
(39,284
)
Net client cash flows
(12,990
)
(330
)
(1,462
)
(14,782
)
Market appreciation (depreciation)
(5,185
)
(421
)
(2,374
)
(7,979
)
Acquired assets / Net transfers
—
—
—
—
Ending assets under management $
100,430
$
3,462
$
25,179
$
129,070
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 non-U.S. domiciled pooled vehicles.
4 The six months ended June 30, 2021 includes the transfer in of
$547 million of assets associated with the THB Asset Management
acquisition, which closed on March 1, 2021 partially offset by $250
million of seed capital that USAA liquidated and $25 million
related to Victory’s closure of two mutual funds and an ETF.
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/20210805005870/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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