Third-Quarter 2022 Highlights
- Total Assets Under Management (AUM) of $147.3 billion1
- Long-term gross flows of $6.6 billion in the quarter; $26.8
billion YTD
- Long-term net flows of -$553 million in the quarter; $1.9
billion of positive long-term net flows YTD
- GAAP operating margin of 47.6%
- Adjusted EBITDA margin of 50.0%2
- GAAP net income of $1.01 per diluted share
- Adjusted net income with tax benefit of $1.19 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 September 30, 2022.
“Our business continued to perform exceptionally well in a very
challenging market environment,” said David Brown, Chairman and
Chief Executive Officer. “In the third quarter, adjusted EBITDA
margin expanded 80 basis points to 50.0%, up from 49.2% in the
second quarter, resulting in 49.6% for the year-to-date period. We
also returned more capital to our shareholders in the third quarter
than in any quarter in our history.
“Our investment professionals delivered excellent investment
performance to our clients. At quarter end, the percentage of our
AUM outperforming benchmarks over the respective 3-, 5-, and
10-year periods was 81%, 79%, and 80%. In addition, the number of
our mutual funds and ETFs rated four- or five-stars, by
Morningstar, increased to 52 products as of September 30, up from
43 products, at the beginning of the year.
“We repurchased 1.8 million shares during the quarter and 3.2
million shares year to date. Additionally, we reduced debt by $30
million this quarter, increasing year-to-date debt reduction to
$145 million.
“Our long-term net flows are positive $1.9 billion year to date,
through the end of September, and we improved quarter-over-quarter
net long-term flows as well. Looking ahead, we remain optimistic
about our future growth opportunities, despite the difficult market
environment.
“Our acquisition strategy has not changed, and we continue to
search for strategic acquisitions that will make our company
better. As always, we continue to focus on serving our clients,
which is our top priority.”
1 Adjusted measures are non-GAAP
financial measures. An explanation of these non-GAAP financial
measures is included under the heading “Information Regarding
Non-GAAP Financial Measures” at the end of this press release.
Please see the non-GAAP reconciliation tables.
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 Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Assets Under Management1 Ending $
147,257
$
154,947
$
159,889
$
147,257
$
159,889
Average
158,903
165,703
162,469
167,157
157,344
Long-term Flows2 Long-term Gross $
6,601
$
9,198
$
5,689
$
26,812
$
22,388
Long-term Net
(553
)
(630
)
131
1,860
(550
)
Money Market/Short-term Flows Money Market/Short-term Gross
$
194
$
123
$
92
$
441
$
301
Money Market/Short-term Net
(19
)
(53
)
(113
)
(125
)
(430
)
Total Flows Total Gross $
6,796
$
9,321
$
5,781
$
27,253
$
22,689
Total Net
(573
)
(683
)
18
1,734
(980
)
Consolidated Financial Results (GAAP) Revenue $
207.3
$
216.0
$
226.3
$
653.3
$
661.1
Revenue realization (in bps)
51.8
52.3
55.3
52.3
56.2
Operating expenses
108.6
96.7
127.3
333.8
377.1
Income from operations
98.6
119.3
99.0
319.5
284.0
Operating margin
47.6
%
55.2
%
43.7
%
48.9
%
43.0
%
Net income
72.8
79.2
74.2
223.2
208.6
Earnings per diluted share $
1.01
$
1.09
$
1.00
$
3.07
$
2.81
Cash flow from operations
103.1
90.2
99.9
268.1
264.1
Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $
103.6
$
106.2
$
115.0
$
324.1
$
334.1
Adjusted EBITDA margin
50.0
%
49.2
%
50.8
%
49.6
%
50.5
%
Adjusted net income
76.2
71.4
85.6
228.7
242.6
Tax benefit of goodwill and acquired intangible assets
9.3
9.3
6.9
28.0
20.8
Adjusted net income with tax benefit
85.6
80.7
92.6
256.7
263.4
Adjusted net income with tax benefit per diluted share $
1.19
$
1.11
$
1.25
$
3.53
$
3.55
________________________
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 5.0%, or $7.7 billion,
to $147.3 billion at September 30, 2022, compared with $154.9
billion at June 30, 2022. The decrease was primarily attributable
to negative market action of $7.1 billion as a result of volatility
and unprecedented pullbacks in the market. Total gross flows were
$6.8 billion for the third quarter and $27.3 billion for the
year-to-date period. For the third quarter and year-to-date
periods, the Company reported total net outflows of $0.6 billion
and net inflows of $1.7 billion, respectively.
As of September 30, 2022, Victory Capital offered 130 investment
strategies through its 12 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of September 30, 2022.
Percentage of AUM Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
53%
81%
79%
80%
Third Quarter 2022 Compared with Second Quarter 2022
Revenue decreased 4.0% to $207.3 million in the third quarter,
compared with $216.0 million in the second quarter, primarily due
to a decrease in average AUM and revenue realization. Operating
expenses increased 12.4% to $108.6 million, compared with $96.7
million in the second quarter primarily due to a non-cash $16.1
million difference in amounts recorded to the change in the fair
value of consideration payable for acquisitions. GAAP operating
margin contracted 760 basis points in the third quarter to 47.6%,
down from 55.2% in the second quarter. Third quarter GAAP net
income decreased 8.1% to $72.8 million, down from $79.2 million in
the prior quarter. Third quarter GAAP net income benefited from a
lower than normal tax rate as a result of employees exercising
stock options during the period. On a per-share basis, GAAP net
income decreased 7.3% to $1.01 per diluted share in the third
quarter, versus $1.09 per diluted share in the second quarter.
Adjusted net income with tax benefit increased 6.0% to $85.6
million in the third quarter, up from $80.7 million in the second
quarter. On a per-share basis, adjusted net income with tax benefit
increased 7.2% to $1.19 per diluted share in the third quarter,
from $1.11 per diluted share in the prior quarter. Adjusted EBITDA
decreased 2.5% to $103.6 million in the third quarter, versus
$106.2 million in the second quarter. Adjusted EBITDA margin
expanded 80 basis points in the third quarter of 2022 to 50.0%
compared with 49.2% in the prior quarter.
Third Quarter 2022 Compared with Third Quarter 2021
Revenue for the three months ended September 30, 2022, declined
8.4% to $207.3 million, compared with $226.3 million in the same
quarter of 2021 as a result of lower average AUM and revenue
realization over the comparable period.
Operating expenses decreased 14.7% to $108.6 million, compared
with $127.3 million in last year’s third quarter due the
combination of a non-cash $12.9 million difference in amounts
recorded to the change in the fair value of consideration payable
for acquisitions as well as a decrease in acquisition-related
costs. GAAP operating margin expanded 390 basis points to 47.6% in
the third quarter, from 43.7% in the same quarter of 2021. GAAP net
income decreased 1.9% to $72.8 million, or $1.01 per diluted share,
in the third quarter compared with $74.2 million, or $1.00 per
diluted share, in the same quarter of 2021. Third quarter GAAP net
income benefited from a lower than normal tax rate as a result of
employees exercising stock options during the period.
Adjusted net income with tax benefit decreased 7.6% to $85.6
million, or $1.19 per diluted share, in the third quarter, compared
with $92.6 million, or $1.25 per diluted share in the same quarter
last year. Adjusted EBITDA decreased 9.9% to $103.6 million,
compared with $115.0 million in last year’s same quarter.
Year-over-year, adjusted EBITDA margin contracted 80 basis points
to 50.0% in the third quarter of 2022, compared with 50.8% in the
same quarter last year.
Nine Months Ended September 30, 2022 Compared with Nine
Months Ended September 30, 2021
Revenue for the nine months ended September 30, 2022, decreased
1.2% to $653.3 million, compared with $661.1 million in the same
period of 2021. The decrease was primarily due to lower revenue
realization as a result of the WestEnd acquisition partially offset
by higher average AUM.
Operating expenses decreased 11.5% to $333.8 million for the
nine months ended September 30, 2022, compared with $377.1 million
in the same period in 2021. The decrease was due to a non-cash
$51.2 million difference in amounts recorded to the change in the
fair value of consideration payable for acquisitions, and a
decrease in variable expenses, partially offset by continued
investments to support future growth. GAAP operating margin was
48.9% for the nine months ended September 30, 2022, a 590 basis
point increase from the 43.0% recorded in the same period in 2021.
GAAP net income rose 7.0% to $223.2 million, or $3.07 per diluted
share, in the first nine months of 2022 compared with $208.6
million, or $2.81 per diluted share, in the same period in
2021.
Adjusted net income with tax benefit decreased 2.5% to $256.7
million, or $3.53 per diluted share, in the first nine months of
2022, compared with $263.4 million, or $3.55 per diluted share in
the same period in 2021. For the nine months ended September 30,
2022, adjusted EBITDA decreased 3.0% to $324.1 million, compared
with $334.1 million for the same period in 2021. Year-over-year,
adjusted EBITDA margin contracted 90 basis points to 49.6% in the
first nine of 2022, compared with 50.5% in the same period last
year.
Balance Sheet / Capital Management
During the third quarter, the Company reduced outstanding debt
by an additional $30 million, increasing year-to-date debt
reduction to $145 million. The total debt outstanding as of
September 30, 2022 was approximately $1,017 million, exclusive of
$11 million in open market term loan debt repurchases that had yet
to settle. Total outstanding debt consisted of an existing term
loan balance of $642 million and the 2021 Incremental Term Loans
balance of $375 million.
The Company repurchased 1.8 million shares during the third
quarter and 3.2 million shares year to date.
The Company’s Board of Directors also approved a regular
quarterly cash dividend of $0.25 per share. The dividend is payable
on December 23, 2022, to shareholders of record on December 9,
2022.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning,
November 4, 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 $147.3 billion in assets under management as of September 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 Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Revenue Investment management fees $
160,770
$
168,129
$
171,355
$
508,364
$
499,672
Fund administration and distribution fees
46,490
47,877
54,935
144,921
161,471
Total revenue
207,260
216,006
226,290
653,285
661,143
Expenses Personnel compensation and benefits
56,869
57,582
55,837
179,352
172,305
Distribution and other asset-based expenses
39,019
40,868
44,859
123,471
131,185
General and administrative
12,301
13,921
13,795
38,984
40,818
Depreciation and amortization
10,686
10,758
4,377
32,051
13,456
Change in value of consideration payable for acquisition of
business
(10,500
)
(26,600
)
2,400
(40,600
)
10,600
Acquisition-related costs
189
143
6,007
449
6,265
Restructuring and integration costs
56
8
18
73
2,493
Total operating expenses
108,620
96,680
127,293
333,780
377,122
Income from operations
98,640
119,326
98,997
319,505
284,021
Operating margin
47.6
%
55.2
%
43.7
%
48.9
%
43.0
%
Other income (expense) Interest income and other
income (expense)
(1,446
)
(3,443
)
(119
)
(5,096
)
4,547
Interest expense and other financing costs
(11,479
)
(9,925
)
(5,853
)
(30,637
)
(18,853
)
Loss on debt extinguishment
(369
)
(963
)
(669
)
(2,887
)
(4,596
)
Total other income (expense), net
(13,294
)
(14,331
)
(6,641
)
(38,620
)
(18,902
)
Income before income taxes
85,346
104,995
92,356
280,885
265,119
Income tax expense
(12,582
)
(25,790
)
(18,181
)
(57,643
)
(56,472
)
Net income $
72,764
$
79,205
$
74,175
$
223,242
$
208,647
Earnings per share of common stock Basic $
1.06
$
1.16
$
1.09
$
3.25
$
3.08
Diluted
1.01
1.09
1.00
3.07
2.81
Weighted average number of shares outstanding Basic
68,609
68,521
67,980
68,625
67,840
Diluted
71,877
72,867
74,053
72,797
74,162
Dividends declared per share $
0.25
$
0.25
$
0.15
$
0.75
$
0.36
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 Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2022
2022
2021
2022
2021
Net income (GAAP) $
72,764
$
79,205
$
74,175
$
223,242
$
208,647
Income tax expense
(12,582
)
(25,790
)
(18,181
)
(57,643
)
(56,472
)
Income before income taxes $
85,346
$
104,995
$
92,356
$
280,885
$
265,119
Interest expense
10,795
9,499
5,561
29,018
18,957
Depreciation
2,030
2,102
1,693
6,086
4,463
Other business taxes
539
541
376
1,670
1,274
Amortization of acquisition-related intangible assets
8,657
8,656
2,684
25,969
8,993
Stock-based compensation
2,230
2,860
2,851
7,723
10,611
Acquisition, restructuring and exit costs
(7,842
)
(24,033
)
8,425
(32,719
)
19,358
Debt issuance costs
1,064
1,560
960
4,685
5,057
Losses from equity method investments
759
9
70
825
227
Adjusted EBITDA $
103,578
$
106,189
$
114,976
$
324,142
$
334,059
Adjusted EBITDA margin
50.0
%
49.2
%
50.8
%
49.6
%
50.5
%
Net income (GAAP) $
72,764
$
79,205
$
74,175
$
223,242
$
208,647
Adjustment to reflect the operating performance of the Company
Other business taxes
539
541
376
1,670
1,274
Amortization of acquisition-related intangible assets
8,657
8,656
2,684
25,969
8,993
Stock-based compensation
2,230
2,860
2,851
7,723
10,611
Acquisition, restructuring and exit costs
(7,842
)
(24,033
)
8,425
(32,719
)
19,358
Debt issuance costs
1,064
1,560
960
4,685
5,057
Tax effect of above adjustments
(1,163
)
2,604
(3,824
)
(1,833
)
(11,323
)
Adjusted net income $
76,249
$
71,393
$
85,647
$
228,737
$
242,617
Adjusted net income per diluted share $
1.06
$
0.98
$
1.16
$
3.14
$
3.27
Tax benefit of goodwill and acquired intangible
assets $
9,328
$
9,327
$
6,918
$
27,977
$
20,754
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.13
$
0.13
$
0.09
$
0.38
$
0.28
Adjusted net income with tax benefit $
85,577
$
80,720
$
92,565
$
256,714
$
263,371
Adjusted net income with tax benefit per diluted share
$
1.19
$
1.11
$
1.25
$
3.53
$
3.55
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)
September 30, 2022
December 31, 2021
Assets Cash and cash equivalents $
66,669
$
69,533
Receivables
87,534
104,305
Prepaid expenses
7,321
6,654
Investments, at fair value
28,908
31,724
Property and equipment, net
23,124
25,295
Goodwill
981,805
981,805
Other intangible assets, net
1,323,828
1,349,797
Other assets
69,936
10,633
Total assets $
2,589,125
$
2,579,746
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
50,145
$
62,102
Accrued compensation and benefits
52,951
53,905
Consideration payable for acquisition of business
267,900
309,380
Deferred tax liability, net
103,394
63,120
Other liabilities
47,883
33,388
Long-term debt, net1
999,843
1,127,924
Total liabilities
1,522,116
1,649,819
Stockholders' equity Common stock, $0.01 par value
per share:2022 - 600,000,000 shares authorized, 80,288,530 shares
issued and 68,481,824 shares outstanding; 2021 - 600,000,000 shares
authorized, 77,242,372 shares issued and 68,662,779 shares
outstanding
803
772
Additional paid-in capital
699,242
673,572
Treasury stock, at cost: 2022 - 11,806,706 shares; 2021 - 8,579,593
shares
(243,901
)
(153,200
)
Accumulated other comprehensive income
37,121
5,972
Retained earnings
573,744
402,811
Total stockholders' equity
1,067,009
929,927
Total liabilities and stockholders' equity $
2,589,125
$
2,579,746
1 Balances at September 30, 2022 and
December 31, 2021 are shown net of unamortized loan discount and
debt issuance costs in the amount of $17.4 million and $23.3
million, respectively. The gross amount of the debt outstanding was
$1,017.2 million as of September 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
September 30,
June 30,
September 30,
June 30,
September 30,
2022
2022
2021
2022
2021
Beginning assets under management $
154,947
$
178,098
$
161,936
-13%
-4%
Gross client cash inflows
6,796
9,321
5,781
-27%
18%
Gross client cash outflows
(7,368
)
(10,005
)
(5,763
)
-26%
28%
Net client cash flows
(573
)
(683
)
18
-16%
N/A
Market appreciation (depreciation)
(7,066
)
(21,670
)
(2,062
)
-67%
243%
Realizations and distributions
(51
)
—
—
N/A
N/A
Acquired assets / Net transfers
—
(797
)
(3
)
-100%
-100%
Ending assets under management
147,257
154,947
159,889
-5%
-8%
Average assets under management
158,903
165,703
162,469
-4%
-2%
For the Nine Months Ended
% Change from
September 30,
September 30,
September 30,
2022
2021
2021
Beginning assets under management $
183,654
$
147,241
25%
Gross client cash inflows
27,253
22,689
20%
Gross client cash outflows
(25,518
)
(23,669
)
8%
Net client cash flows
1,734
(980
)
N/A
Market appreciation (depreciation)
(36,987
)
13,359
N/A
Realizations and distributions
(80
)
—
N/A
Acquired assets / Net transfers
(1,064
)
269
N/A
Ending assets under management
147,257
159,889
-8%
Average assets under management
167,157
157,344
6%
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
September 30, 2022 Beginning assets under management $
26,356
$
14,837
$
29,398
$
11,857
$
13,257
$
50,485
$
5,617
$
151,807
$
3,140
$
154,947
Gross client cash inflows
1,508
589
1,123
67
742
1,745
827
6,601
194
6,796
Gross client cash outflows
(1,176
)
(939
)
(1,958
)
(269
)
(636
)
(1,315
)
(863
)
(7,155
)
(214
)
(7,368
)
Net client cash flows
333
(349
)
(835
)
(203
)
107
430
(36
)
(553
)
(19
)
(573
)
Market appreciation (depreciation)
(938
)
(404
)
(829
)
(560
)
(1,248
)
(2,930
)
(165
)
(7,074
)
8
(7,066
)
Realizations and distributions
—
—
—
—
—
—
(51
)
(51
)
—
(51
)
Acquired assets / Net transfers
3
26
(536
)
(333
)
178
566
(31
)
(127
)
127
—
Ending assets under management $
25,754
$
14,109
$
27,198
$
10,762
$
12,293
$
48,551
$
5,334
$
144,001
$
3,256
$
147,257
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
September 30, 20211 Beginning assets under management
$
30,340
$
20,617
$
36,444
$
15,284
$
16,244
$
38,774
$
978
$
158,682
$
3,254
$
161,936
Gross client cash inflows
1,217
1,491
1,591
79
536
541
236
5,689
92
5,781
Gross client cash outflows
(1,332
)
(1,315
)
(1,264
)
(359
)
(551
)
(675
)
(62
)
(5,558
)
(205
)
(5,763
)
Net client cash flows
(114
)
175
326
(281
)
(15
)
(134
)
174
131
(113
)
18
Market appreciation (depreciation)
(449
)
(898
)
57
(115
)
(367
)
(294
)
5
(2,061
)
(1
)
(2,062
)
Acquired assets / Net transfers3
21
(32
)
103
(85
)
(21
)
(17
)
1
(30
)
27
(3
)
Ending assets under management $
29,798
$
19,863
$
36,931
$
14,803
$
15,840
$
38,330
$
1,158
$
156,722
$
3,166
$
159,889
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 Nine 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
September 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
5,417
2,408
4,183
318
3,124
6,796
4,566
26,812
441
27,253
Gross client cash outflows
(4,659
)
(4,082
)
(6,851
)
(1,048
)
(2,344
)
(4,551
)
(1,417
)
(24,952
)
(567
)
(25,518
)
Net client cash flows
758
(1,674
)
(2,668
)
(730
)
780
2,246
3,149
1,860
(125
)
1,734
Market appreciation (depreciation)
(5,604
)
(4,343
)
(3,945
)
(4,008
)
(4,781
)
(14,052
)
(263
)
(36,998
)
11
(36,987
)
Realizations and distributions
—
—
—
—
—
—
(80
)
(80
)
—
(80
)
Acquired assets / Net transfers
22
33
(1,342
)
(266
)
245
(6
)
(19
)
(1,334
)
270
(1,064
)
Ending assets under management $
25,754
$
14,109
$
27,198
$
10,762
$
12,293
$
48,551
$
5,334
$
144,001
$
3,256
$
147,257
September 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
4,371
3,800
5,370
268
2,290
5,435
854
22,388
301
22,689
Gross client cash outflows
(5,125
)
(4,439
)
(5,923
)
(1,199
)
(1,786
)
(4,337
)
(128
)
(22,937
)
(732
)
(23,669
)
Net client cash flows
(754
)
(639
)
(553
)
(931
)
504
1,098
726
(550
)
(430
)
(980
)
Market appreciation (depreciation)
4,328
1,743
516
1,741
1,371
3,653
6
13,359
—
13,359
Acquired assets / Net transfers
(6
)
391
329
(237
)
(176
)
(97
)
3
207
62
269
Ending assets under management $
29,798
$
19,863
$
36,931
$
14,803
$
15,840
$
38,330
$
1,158
$
156,722
$
3,166
$
159,889
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
September 30, 2022 Beginning assets under management $
102,297
$
5,155
$
47,494
$
154,947
Gross client cash inflows
4,277
515
2,003
6,796
Gross client cash outflows
(5,689
)
(196
)
(1,484
)
(7,368
)
Net client cash flows
(1,411
)
319
519
(573
)
Market appreciation (depreciation)
(4,290
)
(383
)
(2,393
)
(7,066
)
Realizations and distributions
—
—
(51
)
(51
)
Acquired assets / Net transfers
(5
)
18
(13
)
—
Ending assets under management $
96,591
$
5,110
$
45,557
$
147,257
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
September 30, 2021 Beginning assets under management
$
123,164
$
4,354
$
34,418
$
161,936
Gross client cash inflows
4,256
109
1,416
5,781
Gross client cash outflows
(4,751
)
(23
)
(989
)
(5,763
)
Net client cash flows
(495
)
86
427
18
Market appreciation (depreciation)
(1,242
)
(41
)
(779
)
(2,062
)
Acquired assets / Net transfers
(60
)
(28
)
85
(3
)
Ending assets under management $
121,367
$
4,371
$
34,151
$
159,889
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 Nine Months
Ended
By Vehicle
Separate
Accounts
Mutual
and Other
Funds(1)
ETFs(2)
Vehicles(3)
Total
September 30, 2022 Beginning assets under management $
124,142
$
4,871
$
54,641
$
183,654
Gross client cash inflows
16,981
1,666
8,606
27,253
Gross client cash outflows
(19,750
)
(394
)
(5,374
)
(25,518
)
Net client cash flows
(2,769
)
1,271
3,231
1,734
Market appreciation (depreciation)
(23,712
)
(1,051
)
(12,225
)
(36,987
)
Realizations and distributions
—
—
(80
)
(80
)
Acquired assets / Net transfers
(1,071
)
18
(11
)
(1,064
)
Ending assets under management $
96,591
$
5,110
$
45,557
$
147,257
September 30, 2021 Beginning assets under management
$
112,998
$
3,976
$
30,267
$
147,241
Gross client cash inflows
14,781
589
7,320
22,689
Gross client cash outflows
(16,420
)
(310
)
(6,939
)
(23,669
)
Net client cash flows
(1,640
)
279
381
(980
)
Market appreciation (depreciation)
10,212
520
2,627
13,359
Acquired assets / Net transfers
(204
)
(404
)
876
269
Ending assets under management $
121,367
$
4,371
$
34,151
$
159,889
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/20221103005809/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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