Second-Quarter 2022 Highlights
- Total Assets Under Management (AUM) of $154.9 billion1
- Long-term gross flows of $9.2 billion in the second quarter;
$20.2 billion in the year-to-date period
- Long-term net flows of ($0.6) billion in the second quarter;
$2.4 billion of positive long-term net flows in the year-to-date
period
- GAAP operating margin of 55.2%
- Adjusted EBITDA margin of 49.2%2
- GAAP net income of $1.09 per diluted share
- Adjusted net income with tax benefit of $1.11 per diluted
share2
- Board authorizes regular $0.25 quarterly cash dividend
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended June 30, 2022.
“We are adeptly navigating the extraordinary declines in both
the equity and fixed income markets on behalf of our clients,” said
David Brown, Chairman and Chief Executive Officer. “The $20.2
billion of gross long-term flows and the $2.4 billion of positive
net long-term inflows in the first half of 2022 demonstrate the
confidence our clients have in our investment products and the
professionals we have managing them.
“Periods of volatility create unique opportunities for actively
managed strategies and as a result our investment performance
continues to be excellent. As of June 30, the percentage of our AUM
outperforming benchmarks over the respective 3-, 5-, and 10-year
periods was 85%, 79%, and 80%.
“The resiliency of our operating model is also on full display
during these historically challenging market conditions. Our
adjusted EBITDA margin exceeded 49% for the eighth consecutive
quarter. This is a reflection of the overall strength of our
platform and the hard work and dedication of our employees, who
ensure that our clients around the world are receiving superior
service.
“Our operating model also affords us the ability to continue to
reinvest back into our business so we can emerge from this
difficult period as an even stronger organization. At the same
time, we continue to reduce debt and return excess capital to
shareholders. During the second quarter, we repaid $45 million in
debt and returned more capital to shareholders in the form of share
repurchases and cash dividends than in any other quarter in our
history.
“The recent market environment has not slowed our inorganic
growth strategy, and we are currently in various stages of
diligence with multiple acquisition prospects. As always, we
continue to focus on serving our clients, which is our top
priority.”
1 Total AUM includes both discretionary
and non-discretionary client assets.
2 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,
2022
2022
2021
2022
2021
Assets Under Management1 Ending $
154,947
$
178,098
$
161,936
$
154,947
$
161,936
Average
165,703
176,863
158,471
171,283
154,781
Long-term Flows2 Long-term Gross $
9,198
$
11,012
$
9,973
$
20,210
$
16,698
Long-term Net
(630
)
3,043
302
2,413
(681
)
Money Market/Short-term Flows Money Market/Short-term Gross
$
123
$
124
$
102
$
247
$
209
Money Market/Short-term Net
(53
)
(53
)
(126
)
(106
)
(317
)
Total Flows Total Gross $
9,321
$
11,136
$
10,074
$
20,457
$
16,908
Total Net
(683
)
2,990
176
2,307
(998
)
Consolidated Financial Results (GAAP) Revenue $
216.0
$
230.0
$
221.9
$
446.0
$
434.9
Revenue realization (in bps)
52.3
52.7
56.2
52.5
56.7
Operating expenses
96.7
128.5
126.6
225.2
249.8
Income from operations
119.3
101.5
95.3
220.9
185.0
Operating margin
55.2
%
44.1
%
42.9
%
49.5
%
42.5
%
Net income
79.2
71.3
69.3
150.5
134.5
Earnings per diluted share $
1.09
$
0.97
$
0.93
$
2.05
$
1.81
Cash flow from operations
90.2
74.8
84.5
165.1
164.2
Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $
106.2
$
114.4
$
112.2
$
220.6
$
219.1
Adjusted EBITDA margin
49.2
%
49.7
%
50.6
%
49.5
%
50.4
%
Adjusted net income
71.4
81.1
80.3
152.5
157.0
Tax benefit of goodwill and acquired intangible assets
9.3
9.3
6.9
18.6
13.8
Adjusted net income with tax benefit
80.7
90.4
87.2
171.1
170.8
Adjusted net income with tax benefit per diluted share $
1.11
$
1.23
$
1.18
$
2.34
$
2.30
________________________
1 Total AUM includes both discretionary
and non-discretionary client assets.
2 Long-term AUM is defined as total AUM
excluding Money Market and Short-term assets.
3 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.
AUM, Flows and Investment Performance
Victory Capital’s total AUM decreased by 13.0%, or $23.2
billion, to $154.9 billion at June 30, 2022, compared with $178.1
billion at March 31, 2022. The decrease was primarily attributable
to negative market action of $21.7 billion as a result of
volatility and unprecedented pullbacks in the market. Total gross
flows were $9.3 billion for the second quarter and $20.5 billion
for the year-to-date period. For the second quarter and
year-to-date periods, the Company reported total net outflows of
$0.7 billion and net inflows of $2.3 billion, respectively.
As of June 30, 2022, Victory Capital offered 129 investment
strategies through its 12 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of June 30, 2022.
Percentage of AUM
Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
58%
85%
79%
80%
Second Quarter 2022 Compared with First Quarter 2022
Revenue decreased 6.1% to $216.0 million in the second quarter,
compared with $230.0 million in the first quarter, primarily due to
a decrease in average AUM and revenue realization partially offset
by one extra day in the quarter. GAAP operating margin expanded
1,110 basis points in the second quarter to 55.2%, up from 44.1% in
the first quarter primarily due to the combination of a non-cash
$23.1 million difference in amounts recorded to the change in the
fair value of consideration payable for acquisitions as well as
decrease in variable expenses including compensation, distribution
and other asset based expenses. Second quarter GAAP net income
increased 11.1% to $79.2 million, up from $71.3 million in the
prior quarter. On a per-share basis, GAAP net income increased
12.4% to $1.09 per diluted share in the second quarter, versus
$0.97 per diluted share in the first quarter.
Adjusted net income with tax benefit decreased 10.7% to $80.7
million in the second quarter, down from $90.4 million in the first
quarter. On a per-share basis, adjusted net income with tax benefit
decreased 9.8% to $1.11 per diluted share in the second quarter,
from $1.23 per diluted share in the prior quarter. Adjusted EBITDA
decreased 7.2% to $106.2 million in the second quarter, versus
$114.4 million in the first quarter. Adjusted EBITDA margin
contracted 50 basis points in the second quarter of 2022 to 49.2%
compared with 49.7% in the prior quarter.
Second Quarter 2022 Compared with Second Quarter 2021
Revenue for the three months ended June 30, 2022, declined 2.7%
to $216.0 million, compared with $221.9 million in the same quarter
of 2021 as a result of lower revenue realization over the
comparable period.
Operating expenses decreased 23.7% to $96.7 million, compared
with $126.6 million in last year’s second quarter due to a non-cash
$32.3 million difference in amounts recorded to the change in the
fair value of consideration payable for acquisitions. GAAP
operating margin expanded 1,230 basis points to 55.2% in the second
quarter, from 42.9% in the same quarter of 2021. GAAP net income
rose 14.3% to $79.2 million, or $1.09 per diluted share, in the
second quarter compared with $69.3 million, or $0.93 per diluted
share, in the same quarter of 2021.
Adjusted net income with tax benefit decreased 7.4% to $80.7
million, or $1.11 per diluted share, in the second quarter,
compared with $87.2 million, or $1.18 per diluted share in the same
quarter last year. Adjusted EBITDA decreased 5.4% to $106.2
million, compared with $112.2 million in last year’s same quarter.
Year-over-year, adjusted EBITDA margin contracted 140 basis points
to 49.2% in the second quarter of 2022, compared with 50.6% in the
same quarter last year.
Six Months Ended June 30, 2022 Compared with Six Months Ended
June 30, 2021
Revenue for the six months ended June 30, 2022, increased 2.6%
to $446.0 million, compared with $434.9 million in the same period
of 2021. The increase was primarily due to higher average AUM
partially offset by lower revenue realization as a result of the
WestEnd acquisition.
Operating expenses decreased 9.9% to $225.2 million for the six
months ended June 30, 2022, compared with $249.8 million in the
same period in 2021 due to a combination of non-cash $38.3 million
difference in amounts recorded to the change in the fair value of
consideration payable for acquisitions as well as a decrease in
variable expenses, partially offset by continued investments to
support future growth. GAAP operating margin was 49.5% for the six
months ended June 30, 2022, a 700 basis point increase from the
42.5% recorded in the same period in 2021. GAAP net income rose
11.9% to $150.5 million, or $2.05 per diluted share, in the first
six months of 2022 compared with $134.5 million, or $1.81 per
diluted share, in the same period in 2021.
Adjusted net income with tax benefit increased 0.2% to $171.1
million, or $2.34 per diluted share, in the first six months of
2022, compared with $170.8 million, or $2.30 per diluted share in
the same period in 2021. For the six months ended June 30, 2022,
adjusted EBITDA rose 0.7% to $220.6 million, compared with $219.1
million for the same period in 2021. Year-over-year, adjusted
EBITDA margin contracted 90 basis points to 49.5% in the first six
months of 2022, compared with 50.4% in the same period last
year.
Balance Sheet / Capital Management
During the second quarter, the Company reduced outstanding debt
by an additional $45.0 million. The total debt outstanding as of
June 30, 2022 was approximately $1,036 million and consisted of an
existing term loan balance of $646.2 million and the 2021
Incremental Term Loans balance of $390.0 million. Subsequent to
June 30, 2022, we reduced outstanding term loan principal by an
additional $25.6 million through open market term loan debt
repurchases and prepayments.
During the second quarter, the Company repurchased 640 thousand
shares.
The Company’s Board of Directors also approved a regular
quarterly cash dividend of $0.25 per share. The dividend is payable
on September 26, 2022, to shareholders of record on September 12,
2022.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, August
5, 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 (888) 330-3571 (domestic) or
(646) 960-0657 (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 $154.9 billion in assets under management as of June 30, 2022.
It was ranked ninth on Fortune’s list of the 100 Fastest Growing
Companies for 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 12 autonomous Investment Franchises and a Solutions
Platform, Victory Capital offers a wide array of investment
products, including mutual funds, ETFs, separately managed
accounts, alternative investments, third-party ETF model
strategies, collective investment trusts, private funds, and a 529
Education Savings Plan.
For more information, please visit www.vcm.com or follow us:
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 conflict in Ukraine and 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 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.
©2021 Fortune Media IP Limited All rights reserved.
Fortune is a registered trademark of Fortune Media IP Limited and
is used under license. Fortune and Fortune Media IP Limited are not
affiliated with, and do not endorse products or services of,
Victory Capital Management, Inc.
Fortune’s annual list ranks the top performing, publicly traded
companies in revenues, profits and stock returns over the
three-year period ended April 30, 2021.
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,
2022
2022
2021
2022
2021
Revenue Investment management fees $
168,129
$
179,465
$
168,033
$
347,594
$
328,317
Fund administration and distribution fees
47,877
50,554
53,871
98,431
106,536
Total revenue
216,006
230,019
221,904
446,025
434,853
Expenses Personnel compensation and benefits
57,582
64,901
57,462
122,483
116,468
Distribution and other asset-based expenses
40,868
43,584
44,223
84,452
86,326
General and administrative
13,921
12,762
13,713
26,683
27,023
Depreciation and amortization
10,758
10,607
4,694
21,365
9,079
Change in value of consideration payable for acquisition of
business
(26,600
)
(3,500
)
5,700
(30,100
)
8,200
Acquisition-related costs
143
117
422
260
258
Restructuring and integration costs
8
9
422
17
2,475
Total operating expenses
96,680
128,480
126,636
225,160
249,829
Income from operations
119,326
101,539
95,268
220,865
185,024
Operating margin
55.2
%
44.1
%
42.9
%
49.5
%
42.5
%
Other income (expense) Interest income and other
income (expense)
(3,443
)
(207
)
1,932
(3,650
)
4,666
Interest expense and other financing costs
(9,925
)
(9,233
)
(6,155
)
(19,158
)
(13,000
)
Loss on debt extinguishment
(963
)
(1,555
)
(1,146
)
(2,518
)
(3,927
)
Total other income (expense), net
(14,331
)
(10,995
)
(5,369
)
(25,326
)
(12,261
)
Income before income taxes
104,995
90,544
89,899
195,539
172,763
Income tax expense
(25,790
)
(19,271
)
(20,629
)
(45,061
)
(38,291
)
Net income $
79,205
$
71,273
$
69,270
$
150,478
$
134,472
Earnings per share of common stock Basic $
1.16
$
1.04
$
1.02
$
2.19
$
1.98
Diluted
1.09
0.97
0.93
2.05
1.81
Weighted average number of shares outstanding Basic
68,521
68,747
67,776
68,633
67,769
Diluted
72,867
73,652
74,166
73,265
74,155
Dividends declared per share $
0.25
$
0.25
$
0.12
$
0.50
$
0.21
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,
2022
2022
2021
2022
2021
Net income (GAAP) $
79,205
$
71,273
$
69,270
$
150,478
$
134,472
Income tax expense
(25,790
)
(19,271
)
(20,629
)
(45,061
)
(38,291
)
Income before income taxes $
104,995
$
90,544
$
89,899
$
195,539
$
172,763
Interest expense
9,499
8,724
6,086
18,223
13,396
Depreciation
2,102
1,954
1,524
4,056
2,770
Other business taxes
541
590
524
1,131
898
Amortization of acquisition-related intangible assets
8,656
8,656
3,171
17,312
6,309
Stock-based compensation
2,860
2,633
3,124
5,493
7,760
Acquisition, restructuring and exit costs
(24,033
)
(844
)
6,544
(24,877
)
10,933
Debt issuance costs
1,560
2,061
1,304
3,621
4,097
Losses from equity method investments
9
57
65
66
157
Adjusted EBITDA $
106,189
$
114,375
$
112,241
$
220,564
$
219,083
Adjusted EBITDA margin
49.2
%
49.7
%
50.6
%
49.5
%
50.4
%
Net income (GAAP) $
79,205
$
71,273
$
69,270
$
150,478
$
134,472
Adjustment to reflect the operating performance of the Company
Other business taxes
541
590
524
1,131
898
Amortization of acquisition-related intangible assets
8,656
8,656
3,171
17,312
6,309
Stock-based compensation
2,860
2,633
3,124
5,493
7,760
Acquisition, restructuring and exit costs
(24,033
)
(844
)
6,544
(24,877
)
10,933
Debt issuance costs
1,560
2,061
1,304
3,621
4,097
Tax effect of above adjustments
2,604
(3,274
)
(3,667
)
(670
)
(7,499
)
Adjusted net income $
71,393
$
81,095
$
80,270
$
152,488
$
156,970
Adjusted net income per diluted share $
0.98
$
1.10
$
1.08
$
2.08
$
2.12
Tax benefit of goodwill and acquired intangible
assets $
9,327
$
9,322
$
6,918
$
18,649
$
13,836
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.13
$
0.13
$
0.09
$
0.25
$
0.19
Adjusted net income with tax benefit $
80,720
$
90,417
$
87,188
$
171,137
$
170,806
Adjusted net income with tax benefit per diluted share
$
1.11
$
1.23
$
1.18
$
2.34
$
2.30
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.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
June 30, 2022 December 31, 2021 Assets Cash
and cash equivalents $
42,718
$
69,533
Receivables
90,900
104,305
Prepaid expenses
7,760
6,654
Investments, at fair value
29,498
31,724
Property and equipment, net
24,609
25,295
Goodwill
981,805
981,805
Other intangible assets, net
1,332,484
1,349,797
Other assets
57,796
10,633
Total assets $
2,567,570
$
2,579,746
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
45,737
$
62,102
Accrued compensation and benefits
48,308
53,905
Consideration payable for acquisition of business
278,400
309,380
Deferred tax liability, net
90,914
63,120
Other liabilities
48,534
33,388
Long-term debt, net1
1,017,496
1,127,924
Total liabilities
1,529,389
1,649,819
Stockholders' equity Common stock, $0.01 par value
per share:2022 - 600,000,000 shares authorized, 78,361,311 shares
issued and 68,365,862 shares outstanding; 2021 - 600,000,000 shares
authorized, 77,242,372 shares issued and 68,662,779 shares
outstanding
784
772
Additional paid-in capital
685,543
673,572
Treasury stock, at cost: 2022 - 9,995,449 shares; 2021 - 8,579,593
shares
(193,701
)
(153,200
)
Accumulated other comprehensive income
27,175
5,972
Retained earnings
518,380
402,811
Total stockholders' equity
1,038,181
929,927
Total liabilities and stockholders' equity $
2,567,570
$
2,579,746
1 Balances at June 30, 2022 and December
31, 2021 are shown net of unamortized loan discount and debt
issuance costs in the amount of $18.7 million and $23.3 million,
respectively. The gross amount of the debt outstanding was $1,036.2
million as of June 30, 2022 and $1,151.2 million as of December 31,
2021.
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,
2022
2022
2021
2022
2021
Beginning assets under management $
178,098
$
183,654
$
154,331
-3%
15%
Gross client cash inflows
9,321
11,136
10,074
-16%
-7%
Gross client cash outflows
(10,005
)
(8,145
)
(9,898
)
23%
1%
Net client cash flows
(683
)
2,990
176
N/A
N/A
Market appreciation (depreciation)
(21,670
)
(8,250
)
7,703
163%
N/A
Realizations and distributions
—
(30
)
—
N/A
N/A
Acquired assets / Net transfers
(797
)
(266
)
(275
)
200%
190%
Ending assets under management
154,947
178,098
161,936
-13%
-4%
Average assets under management
165,703
176,863
158,471
-6%
5%
For the Six Months
Ended
% Change from
June 30,
June 30,
June 30,
2022
2021
2021
Beginning assets under management $
183,654
$
147,241
25%
Gross client cash inflows
20,457
16,908
21%
Gross client cash outflows
(18,150
)
(17,906
)
1%
Net client cash flows
2,307
(998
)
N/A
Market appreciation (depreciation)
(29,921
)
15,421
N/A
Realizations and distributions
(30
)
—
N/A
Acquired assets / Net transfers
(1,064
)
272
N/A
Ending assets under management
154,947
161,936
-4%
Average assets under management
171,283
154,781
11%
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.
Alternative
Total
Money Market/
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Short-term
Total
June 30, 2022 Beginning assets under management $
30,543
$
18,489
$
33,071
$
14,548
$
15,654
$
58,656
$
4,025
$
174,985
$
3,113
$
178,098
Gross client cash inflows
1,476
701
1,455
126
1,140
2,249
2,051
9,198
123
9,321
Gross client cash outflows
(1,649
)
(1,791
)
(2,743
)
(396
)
(1,090
)
(1,761
)
(397
)
(9,828
)
(177
)
(10,005
)
Net client cash flows
(174
)
(1,090
)
(1,288
)
(270
)
50
488
1,654
(630
)
(53
)
(683
)
Market appreciation (depreciation)
(4,011
)
(2,558
)
(1,575
)
(2,365
)
(2,437
)
(8,652
)
(70
)
(21,669
)
(2
)
(21,670
)
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(2
)
(4
)
(809
)
(56
)
(10
)
(7
)
9
(879
)
82
(797
)
Ending assets under management $
26,356
$
14,837
$
29,398
$
11,857
$
13,257
$
50,485
$
5,617
$
151,807
$
3,140
$
154,947
March 31, 2022 Beginning assets under management $
30,578
$
20,094
$
35,154
$
15,766
$
16,050
$
60,364
$
2,548
$
180,554
$
3,100
$
183,654
Gross client cash inflows
2,433
1,118
1,604
126
1,241
2,802
1,688
11,012
124
11,136
Gross client cash outflows
(1,834
)
(1,352
)
(2,149
)
(383
)
(618
)
(1,475
)
(157
)
(7,969
)
(176
)
(8,145
)
Net client cash flows
599
(235
)
(545
)
(258
)
624
1,327
1,531
3,043
(53
)
2,990
Market appreciation (depreciation)
(655
)
(1,381
)
(1,541
)
(1,083
)
(1,096
)
(2,470
)
(28
)
(8,255
)
5
(8,250
)
Realizations and distributions
—
—
—
—
—
—
(30
)
(30
)
—
(30
)
Acquired assets / Net transfers2
21
11
3
123
77
(565
)
3
(327
)
61
(266
)
Ending assets under management $
30,543
$
18,489
$
33,071
$
14,548
$
15,654
$
58,656
$
4,025
$
174,985
$
3,113
$
178,098
June 30, 20211 Beginning assets under management $
29,156
$
20,230
$
36,813
$
14,448
$
14,894
$
34,709
$
709
$
150,958
$
3,373
$
154,331
Gross client cash inflows
1,412
1,238
1,754
91
1,108
4,056
314
9,973
102
10,074
Gross client cash outflows
(1,940
)
(1,428
)
(2,953
)
(407
)
(562
)
(2,340
)
(41
)
(9,671
)
(228
)
(9,898
)
Net client cash flows
(527
)
(190
)
(1,200
)
(316
)
545
1,716
274
302
(126
)
176
Market appreciation (depreciation)
1,745
616
678
1,253
984
2,431
(7
)
7,700
3
7,703
Acquired assets / Net transfers3
(33
)
(39
)
153
(101
)
(180
)
(81
)
2
(278
)
3
(275
)
Ending assets under management $
30,340
$
20,617
$
36,444
$
15,284
$
16,244
$
38,774
$
978
$
158,682
$
3,254
$
161,936
1 Beginning in January 2022, the Company’s
“Other” asset class has been categorized to Solutions, Fixed
Income, Global / Non-U.S. Equity, and Alternative Investments based
on the underlying investment strategy. Additionally, all assets
managed using alternative investment strategies are now included in
the Company’s Alternative Investments asset class. Prior-period
figures have been adjusted accordingly.
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.
Alternative
Total
Money
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Market
Total
June 30, 2022 Beginning assets under management $
30,578
$
20,094
$
35,154
$
15,766
$
16,050
$
60,364
$
2,548
$
180,554
$
3,100
$
183,654
Gross client cash inflows
3,909
1,819
3,060
251
2,382
5,051
3,739
20,210
247
20,457
Gross client cash outflows
(3,484
)
(3,143
)
(4,893
)
(779
)
(1,708
)
(3,236
)
(554
)
(17,797
)
(353
)
(18,150
)
Net client cash flows
425
(1,325
)
(1,833
)
(528
)
673
1,815
3,185
2,413
(106
)
2,307
Market appreciation (depreciation)
(4,666
)
(3,939
)
(3,116
)
(3,449
)
(3,533
)
(11,122
)
(98
)
(29,923
)
3
(29,921
)
Realizations and distributions
—
—
—
—
(30
)
(30
)
—
(30
)
Acquired assets / Net transfers
19
7
(806
)
68
67
(572
)
12
(1,206
)
143
(1,064
)
Ending assets under management $
26,356
$
14,837
$
29,398
$
11,857
$
13,257
$
50,485
$
5,617
$
151,807
$
3,140
$
154,947
June 30, 20211 Beginning assets under management $
26,230
$
18,368
$
36,639
$
14,230
$
14,141
$
33,676
$
422
$
143,706
$
3,534
$
147,241
Gross client cash inflows
3,154
2,310
3,779
189
1,754
4,894
619
16,698
209
16,908
Gross client cash outflows
(3,794
)
(3,124
)
(4,658
)
(839
)
(1,235
)
(3,663
)
(66
)
(17,379
)
(526
)
(17,906
)
Net client cash flows
(640
)
(814
)
(879
)
(650
)
519
1,231
552
(681
)
(317
)
(998
)
Market appreciation (depreciation)
4,777
2,641
459
1,857
1,739
3,947
1
15,420
1
15,421
Acquired assets / Net transfers
(27
)
423
226
(152
)
(155
)
(80
)
2
236
36
272
Ending assets under management $
30,340
$
20,617
$
36,444
$
15,284
$
16,244
$
38,774
$
978
$
158,682
$
3,254
$
161,936
1 Beginning in January 2022, the Company’s
“Other” asset class has been categorized to Solutions, Fixed
Income, Global / Non-U.S. Equity, and Alternative Investments based
on the underlying investment strategy. Additionally, all assets
managed using alternative investment strategies are now included in
the Company’s Alternative Investments asset class. Prior-period
figures have been adjusted accordingly.
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
Funds(1)
ETFs(2)
Vehicles(3)
Total
June 30, 2022 Beginning assets under management $
118,119
$
5,246
$
54,733
$
178,098
Gross client cash inflows
6,114
608
2,600
9,321
Gross client cash outflows
(7,678
)
(130
)
(2,196
)
(10,005
)
Net client cash flows
(1,565
)
478
404
(683
)
Market appreciation (depreciation)
(13,457
)
(568
)
(7,645
)
(21,670
)
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(800
)
—
2
(797
)
Ending assets under management $
102,297
$
5,155
$
47,494
$
154,947
March 31, 2022 Beginning assets under management $
124,142
$
4,871
$
54,641
$
183,654
Gross client cash inflows
6,590
543
4,003
11,136
Gross client cash outflows
(6,383
)
(69
)
(1,694
)
(8,145
)
Net client cash flows
207
474
2,308
2,990
Market appreciation (depreciation)
(5,964
)
(99
)
(2,187
)
(8,250
)
Realizations and distributions
—
—
(30
)
(30
)
Acquired assets / Net transfers
(266
)
—
—
(266
)
Ending assets under management $
118,119
$
5,246
$
54,733
$
178,098
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 transfers
(229
)
(375
)
329
(275
)
Ending assets under management $
123,164
$
4,354
$
34,418
$
161,936
1 Includes institutional and retail share
classes, money market and VIP funds.
2 Represents only ETF assets held by third
parties. Excludes ETF assets held by other Victory Capital
products.
3 Includes collective trust funds, wrap
program accounts, UMAs, UCITS, private funds and non-U.S. domiciled
pooled vehicles.
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
Funds(1)
ETFs(2)
Vehicles(3)
Total
June 30, 2022 Beginning assets under management $
124,142
$
4,871
$
54,641
$
183,654
Gross client cash inflows
12,704
1,151
6,603
20,457
Gross client cash outflows
(14,061
)
(199
)
(3,890
)
(18,150
)
Net client cash flows
(1,357
)
952
2,712
2,307
Market appreciation (depreciation)
(19,421
)
(667
)
(9,832
)
(29,921
)
Realizations and distributions
(30
)
(30
)
Acquired assets / Net transfers
(1,066
)
—
2
(1,064
)
Ending assets under management $
102,297
$
5,155
$
47,494
$
154,947
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 transfers
(144
)
(375
)
791
272
Ending assets under management $
123,164
$
4,354
$
34,418
$
161,936
1 Includes institutional and retail share
classes, money market and VIP funds.
2 Represents only ETF assets held by third
parties. Excludes ETF assets held by other Victory Capital
products.
3 Includes collective trust funds, wrap
program accounts, UMAs, UCITS, private funds and non-U.S. domiciled
pooled vehicles.
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/20220804005586/en/
Investors: Matthew Dennis, CFA Chief of Staff Director,
Investor Relations 216-898-2412 mdennis@vcm.com
Media: Jessica Davila Director, Global Communications
210-694-9693 jessica_davila@vcm.com
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