First Quarter 2023 Highlights
- Total Assets Under Management of $158.6 billion1
- Long-term gross flows of $5.8 billion
- Long-term net flows of -$1.2 billion
- GAAP operating margin of 37.0%
- Adjusted EBITDA margin of 49.3%2
- GAAP net income of $0.71 per diluted share
- Adjusted net income with tax benefit of $1.08 per diluted
share2
- Board authorizes regular $0.32 quarterly cash dividend
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended March 31, 2023.
“Our business continues to perform well in an uncertain market
environment that has caused many investors to stay on the
sidelines,” said David Brown, Chairman and Chief Executive Officer.
“In the first quarter, our Adjusted EBITDA Margin continued to be
strong at 49.3%. This was our 11th consecutive quarter of achieving
a margin in excess of 49%, which is industry leading and reflects
our differentiated operating platform. The consistency in our
operating and financial performance is the consequence of superior
execution by our team.
“Comparing to last quarter, we achieved significant improvement
in net flows this quarter. In addition, we generated higher
quarter-over-quarter earnings per diluted share.
“Investment performance remained strong. The majority of our
assets under management performed above respective benchmarks
during the quarter, and half of our mutual fund and ETF assets
under management achieved top-quartile rankings over the trailing
one-year period.
“In March, our Board authorized a new $100 million share
repurchase plan, which gives us significant flexibility with our
capital allocation strategy. During the quarter, we repurchased 1.4
million shares and declared a dividend of $0.32 per share.
“As always, we continue to focus on our top priority, which is
generating strong investment performance and serving our
clients.”
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 March 31, December
31, March 31,
2023
2022
2022
Assets Under Management1 Ending $
158,621
$
152,952
$
178,098
Average
157,817
154,632
176,863
Long-term Flows2 Long-term Gross $
5,848
$
6,502
$
11,012
Long-term Net
(1,235
)
(4,405
)
3,043
Money Market/Short-term Flows Money Market /
Short-term Gross $
241
$
179
$
124
Money Market / Short-term Net
(9
)
(62
)
(53
)
Total Flows Total Gross $
6,089
$
6,681
$
11,136
Total Net
(1,244
)
(4,466
)
2,990
Consolidated Financial Results (GAAP) Revenue $
201.3
$
201.5
$
230.0
Revenue realization (in bps)
51.7
51.7
52.7
Operating expenses
126.8
121.9
128.5
Income from operations
74.6
79.6
101.5
Operating margin
37.0
%
39.5
%
44.1
%
Net income
49.3
52.3
71.3
Earnings per diluted share $
0.71
$
0.74
$
0.97
Cash flow from operations
64.2
67.1
74.8
Adjusted Performance Results (Non-GAAP)3 Adjusted
EBITDA $
99.2
$
100.1
$
114.4
Adjusted EBITDA margin
49.3
%
49.7
%
49.7
%
Adjusted net income
65.6
65.0
81.1
Tax benefit of goodwill and acquired intangible assets
9.5
9.5
9.3
Adjusted net income with tax benefit
75.2
74.5
90.4
Adjusted net income with tax benefit per diluted share $
1.08
$
1.05
$
1.23
________________________
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 AUM increased by $5.7 billion to $158.6
billion at March 31, 2023, compared with $153.0 billion at December
31, 2022. The increase was due to positive market action of $6.9
billion, partially offset by net outflows of $1.2 billion. Total
gross flows for the first quarter were $6.1 billion, including
long-term gross flows of $5.8 billion.
As of March 31, 2023, Victory Capital offered 126 investment
strategies through its 12 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of March 31, 2023.
Percentage of AUM Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
54%
73%
78%
79%
First Quarter 2023 Compared with Fourth Quarter 2022
Revenue decreased $0.2 million to $201.3 million, in the first
quarter, compared with $201.5 million in the fourth quarter, due to
two fewer days in the quarter, partially offset by an increase in
average net assets. GAAP operating margin contracted 250 basis
points in the first quarter to 37.0%, down from 39.5% in the fourth
quarter, due to a non-cash $7.4 million difference in amounts
recorded to the change in fair value of consideration payable for
acquisitions. First quarter GAAP net income declined 6% to $49.3
million, down from $52.3 million in the prior quarter. On a
per-share basis, GAAP net income declined 4% to $0.71 per diluted
share in the first quarter, versus $0.74 per diluted share in the
fourth quarter.
Adjusted net income with tax benefit increased 1% to $75.2
million in the first quarter, up from $74.5 million in the fourth
quarter. On a per-share basis, adjusted net income with tax benefit
increased 3% to $1.08 per diluted share in the first quarter, from
$1.05 per diluted share in the prior quarter. Adjusted EBITDA
decreased $1.0 million to $99.2 million in the first quarter
compared to $100.1 million in the fourth quarter. Adjusted EBITDA
margin contracted 40 basis points in the first quarter of 2023 to
49.3% compared with 49.7% in the prior quarter primarily due to
higher seasonal payroll taxes and benefits.
First Quarter 2023 Compared with First Quarter 2022
Revenue for the three months ended March 31, 2023, declined 12%
to $201.3 million, compared with $230.0 million in the same quarter
of 2022. The decrease was primarily due to lower average AUM and
lower revenue realization. GAAP operating margin was 37.0% in the
first quarter, a 710 basis point contraction from 44.1% in the same
quarter of 2022. Operating expenses decreased 1% to $126.8 million,
compared with $128.5 million in the first quarter of 2022. The
decrease was primarily due to a decrease in incentive compensation
expense as a result of a decline in operating results as well as a
decrease in distribution and other asset-based expenses due
primarily to lower average net assets, partially offset by a $10.9
million increase in amounts recorded to the change in fair value of
consideration payable for acquisitions. GAAP net income declined
31% to $49.3 million, or $0.71 per diluted share, in the first
quarter compared with $71.3 million, or $0.97 per diluted share, in
the same quarter of 2022.
Adjusted net income with tax benefit contracted 17% to $75.2
million, or $1.08 per diluted share, in the first quarter, compared
with $90.4 million, or $1.23 per diluted share in the same quarter
last year. Adjusted EBITDA decreased 13% to $99.2 million, compared
with $114.4 million in the same quarter of 2022. Year-over-year,
adjusted EBITDA margin contracted 40 basis points to 49.3% in the
first quarter of 2023, compared with 49.7% in the same quarter last
year.
Balance Sheet / Capital Management
The total debt outstanding as of March 31, 2023 was
approximately $1,002 million and consisted of an existing term loan
balance of $631 million and the 2021 Incremental Term Loans balance
of $371 million.
During the first quarter, the Company repurchased 1.0 million
shares under its current share repurchase program, which is nearing
completion, and net settled 0.4 million shares. In March 2023, the
Company’s Board of Directors approved a new common stock repurchase
program authorizing the repurchase of up to $100 million of its
common stock. Under the new program, the Company may purchase its
shares from time to time until March 31, 2025.
The Company’s Board of Directors approved a regular quarterly
cash dividend of $0.32 per share. The dividend is payable on June
26, 2023, to shareholders of record on June 12, 2023.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, May 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 $158.6 billion in assets under management as of March 31,
2023. It was ranked No. 55 on the Fortune 100 Fastest-Growing
Companies list for 2022 and is one of only 24 companies to make the
list for the second consecutive year. The Company employs a
next-generation business strategy that combines 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
Business, 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.
Victory Capital is headquartered in San Antonio, Texas, with
offices nationwide and investment professionals in the U.S. and
abroad. To learn more please visit www.vcm.com or follow Victory
Capital 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 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.
From Fortune. © 2022 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 Holdings, Inc.
The Fortune annual list ranks the top performing, publicly
traded companies in revenues, profits and stock returns over the
three-year period ended April 30, 2022.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated
Statements of Operations
(in thousands except per share
data and percentages)
For the Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2022
Revenue Investment management fees $
156,836
$
156,346
$
179,465
Fund administration and distribution fees
44,484
45,169
50,554
Total revenue
201,320
201,515
230,019
Expenses Personnel compensation and benefits
57,602
58,846
64,901
Distribution and other asset-based expenses
37,654
37,634
43,584
General and administrative
12,388
13,389
12,762
Depreciation and amortization
11,680
11,150
10,607
Change in value of consideration payable for acquisition of
business
7,400
—
(3,500
)
Acquisition-related costs
2
85
117
Restructuring and integration costs
29
808
9
Total operating expenses
126,755
121,912
128,480
Income from operations
74,565
79,603
101,539
Operating margin
37.0
%
39.5
%
44.1
%
Other income (expense) Interest income and
other income (expense)
1,544
2,633
(207
)
Interest expense and other financing costs
(14,239
)
(13,327
)
(9,233
)
Gain (loss) on debt extinguishment
—
239
(1,555
)
Total other expense, net
(12,695
)
(10,455
)
(10,995
)
Income before income taxes
61,870
69,148
90,544
Income tax expense
(12,597
)
(16,879
)
(19,271
)
Net income $
49,273
$
52,269
$
71,273
Earnings per share of common stock Basic $
0.73
$
0.77
$
1.04
Diluted
0.71
0.74
0.97
Weighted average number of shares outstanding
Basic
67,288
68,054
68,747
Diluted
69,727
70,685
73,652
Dividends declared per share $
0.32
$
0.25
$
0.25
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 March 31,
December 31, March 31,
2023
2022
2022
Net income (GAAP) $
49,273
$
52,269
$
71,273
Income tax expense
(12,597
)
(16,879
)
(19,271
)
Income before income taxes $
61,870
$
69,148
$
90,544
Interest expense
13,482
12,006
8,724
Depreciation
1,971
1,959
1,954
Other business taxes
384
448
590
Amortization of acquisition-related intangible assets
9,709
9,191
8,656
Stock-based compensation
2,004
2,420
2,633
Acquisition, restructuring and exit costs
8,984
3,997
(844
)
Debt issuance costs
748
935
2,061
Losses from equity method investments
—
—
57
Adjusted EBITDA $
99,152
$
100,104
$
114,375
Adjusted EBITDA margin
49.3
%
49.7
%
49.7
%
Net income (GAAP) $
49,273
$
52,269
$
71,273
Adjustment to reflect the operating performance of the Company
Other business taxes
384
448
590
Amortization of acquisition-related intangible assets
9,709
9,191
8,656
Stock-based compensation
2,004
2,420
2,633
Acquisition, restructuring and exit costs
8,984
3,997
(844
)
Debt issuance costs
748
935
2,061
Tax effect of above adjustments
(5,457
)
(4,247
)
(3,274
)
Adjusted net income $
65,645
$
65,013
$
81,095
Adjusted net income per diluted share $
0.94
$
0.92
$
1.10
Tax benefit of goodwill and acquired intangible
assets $
9,524
$
9,513
$
9,322
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.14
$
0.13
$
0.13
Adjusted net income with tax benefit
$
75,169
$
74,526
$
90,417
Adjusted net income with tax benefit per diluted share
$
1.08
$
1.05
$
1.23
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)
March 31, 2023 December 31, 2022
Assets Cash and cash equivalents $
38,335
$
38,171
Receivables
85,368
84,473
Prepaid expenses
11,561
8,443
Investments, at fair value
28,869
27,266
Property and equipment, net
19,646
21,146
Goodwill
981,805
981,805
Other intangible assets, net
1,304,927
1,314,637
Other assets
57,752
64,958
Total assets $
2,528,263
$
2,540,899
Liabilities and stockholders' equity Accounts
payable and accrued expenses $
58,823
$
50,862
Accrued compensation and benefits
42,975
58,458
Consideration payable for acquisition of business
237,800
230,400
Deferred tax liability, net
111,217
108,138
Other liabilities
42,454
42,117
Long-term debt, net1
986,440
985,514
Total liabilities
1,479,709
1,475,489
Stockholders' equity Common stock, $0.01 par
value per share:2023 - 600,000,000 shares authorized, 81,505,612
shares issued and 66,880,947 shares outstanding; 2022 - 600,000,000
shares authorized, 80,528,137 shares issued and 67,325,534 shares
outstanding
815
805
Additional paid-in capital
711,478
705,466
Treasury stock, at cost: 2023 - 14,624,665 shares; 2022 -
13,202,603 shares
(329,984
)
(285,425
)
Accumulated other comprehensive income
30,374
35,442
Retained earnings
635,871
609,122
Total stockholders' equity
1,048,554
1,065,410
Total liabilities and stockholders' equity $
2,528,263
$
2,540,899
1 Balances at March 31, 2023 and December
31, 2022 are shown net of unamortized loan discount and debt
issuance costs in the amount of $15.3 million and $16.2 million,
respectively. The gross amount of the debt outstanding was $1,001.7
million as of March 31, 2023 and December 31, 2022,
respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under
Management
(unaudited; in millions except
for percentages)
For the Three Months Ended % Change
from March 31, December 31, March 31,
December 31, March 31,
2023
2022
2022
2022
2022
Beginning assets under management $
152,952
$
147,257
$
183,654
4%
-17%
Gross client cash inflows
6,089
6,681
11,136
-9%
-45%
Gross client cash outflows
(7,333
)
(11,147
)
(8,145
)
-34%
-10%
Net client cash flows
(1,244
)
(4,466
)
2,990
-72%
N/A
Market appreciation (depreciation)
6,914
10,492
(8,250
)
-34%
N/A
Realizations and distributions
—
(295
)
(30
)
N/A
N/A
Acquired assets / Net transfers
—
(36
)
(266
)
N/A
N/A
Ending assets under management
158,621
152,952
178,098
4%
-11%
Average assets under management
157,817
154,632
176,863
2%
-11%
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Three Months Ended By Asset
Class
U.S. Mid Cap Equity
U.S. Small Cap Equity
Fixed Income
U.S. Large Cap Equity
Global / Non-U.S.
Equity
Solutions
Alternative
Investments
Total Long-term
Money Market /
Short-term
Total
March 31, 2023 Beginning assets under management $
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
51,507
$
3,663
$
149,649
$
3,302
$
152,952
Gross client cash inflows
1,600
986
1,187
84
378
1,217
397
5,848
241
6,089
Gross client cash outflows
(1,092
)
(873
)
(1,571
)
(384
)
(544
)
(1,778
)
(840
)
(7,083
)
(250
)
(7,333
)
Net client cash flows
508
113
(385
)
(300
)
(166
)
(561
)
(444
)
(1,235
)
(9
)
(1,244
)
Market appreciation (depreciation)
637
423
615
822
920
3,366
96
6,880
34
6,914
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(1
)
9
(48
)
(69
)
(46
)
104
2
(50
)
50
—
Ending assets under management $
29,035
$
15,648
$
26,535
$
11,425
$
14,868
$
54,416
$
3,317
$
155,244
$
3,377
$
158,621
December 31, 2022 Beginning assets under
management $
25,754
$
14,109
$
27,198
$
10,762
$
12,293
$
48,551
$
5,334
$
144,001
$
3,256
$
147,257
Gross client cash inflows
1,442
754
1,342
87
1,025
1,372
479
6,502
179
6,681
Gross client cash outflows
(2,259
)
(1,133
)
(2,694
)
(450
)
(767
)
(1,697
)
(1,907
)
(10,906
)
(241
)
(11,147
)
Net client cash flows
(818
)
(379
)
(1,352
)
(362
)
258
(324
)
(1,427
)
(4,405
)
(62
)
(4,466
)
Market appreciation (depreciation)
2,963
1,378
601
680
1,628
3,166
48
10,464
28
10,492
Realizations and distributions
—
—
—
—
—
—
(295
)
(295
)
—
(295
)
Acquired assets / Net transfers
(8
)
(6
)
(94
)
(106
)
(19
)
114
3
(116
)
80
(36
)
Ending assets under management $
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
51,507
$
3,663
$
149,649
$
3,302
$
152,952
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
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 March
31, 2023 Beginning assets under management $
99,447
$
5,627
$
47,877
$
152,952
Gross client cash inflows
4,546
218
1,325
6,089
Gross client cash outflows
(5,406
)
(233
)
(1,694
)
(7,333
)
Net client cash flows
(860
)
(16
)
(369
)
(1,244
)
Market appreciation (depreciation)
4,650
(47
)
2,311
6,914
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
9
(9
)
—
—
Ending assets under management $
103,246
$
5,555
$
49,819
$
158,621
December 31, 2022 Beginning assets under
management $
96,591
$
5,110
$
45,557
$
147,257
Gross client cash inflows
4,217
378
2,087
6,681
Gross client cash outflows
(7,953
)
(178
)
(3,016
)
(11,147
)
Net client cash flows
(3,736
)
200
(930
)
(4,466
)
Market appreciation (depreciation)
6,620
327
3,546
10,492
Realizations and distributions
—
—
(295
)
(295
)
Acquired assets / Net transfers
(27
)
(9
)
—
(36
)
Ending assets under management $
99,447
$
5,627
$
47,877
$
152,952
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
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/20230504005752/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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