Fourth-Quarter 2023 Highlights
- Total Assets Under Management (AUM) of $166.6 billion1
- Long-term gross flows of $6.6 billion in the quarter
- Long-term net flows of ($1.1) billion in the quarter
- GAAP operating margin of 41.9%
- Adjusted EBITDA margin of 52.3% in the quarter2
- GAAP net income of $0.82 per diluted share
- Adjusted net income with tax benefit of $1.15 per diluted
share2
- Board increased regular quarterly cash dividend by 5% to
$0.335
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
and year ended December 31, 2023.
“We made significant progress in our strategic growth
initiatives during 2023 and continued to validate the effectiveness
and resiliency of our unique operating platform,” said David Brown,
Chairman and Chief Executive Officer. “We invested in our business
via the launching of several new products, enhancing our investment
capabilities in several areas, and expanding our technology
resources across the platform. Concurrently, we also expanded our
profit margin with adjusted EBITDA margin rising 130 basis points
to 50.9% for the year.
“In the final quarter of 2023, both long-term gross and net
flows improved to their best levels in more than a year, which is
encouraging as we begin 2024.
“Our Franchises continued to deliver excellent investment
performance for clients. At year end, the percentage of our AUM
outperforming benchmarks over the respective 3-, 5-, and 10-year
periods was 62%, 84%, and 79%. In addition, 70% of our AUM in
mutual funds and ETFs were rated four or five stars overall by
Morningstar.
“During the fourth quarter, we repurchased an additional 1.8
million shares, increasing the capital returned to shareholders
from repurchases during the year to $158 million. Combined with
cash dividends, we returned $243 million to shareholders in 2023,
an increase of 21% over the previous year, and the most we have
ever returned to our shareholders in our Company’s history.
“Our M&A diligence activities have progressed, and entering
the new year we are optimistic about the prospects for executing on
a transaction aligned with our strategic growth objectives.
“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 Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2023
2023
2022
2023
2022
Assets Under Management1 Ending $
166,611
$
153,506
$
152,952
$
166,611
$
152,952
Average
156,734
161,147
154,632
158,268
164,025
Long-term Flows2 Long-term Gross $
6,557
$
5,255
$
6,502
$
23,251
$
33,313
Long-term Net
(1,134
)
(1,700
)
(4,405
)
(6,176
)
(2,545
)
Money Market/Short-term Flows Money Market / Short-term
Gross $
188
$
193
$
179
$
853
$
621
Money Market / Short-term Net
(47
)
(19
)
(62
)
(391
)
(187
)
Total Flows Total Gross $
6,745
$
5,449
$
6,681
$
24,104
$
33,934
Total Net
(1,181
)
(1,719
)
(4,466
)
(6,567
)
(2,732
)
Consolidated Financial Results (GAAP) Revenue $
205.8
$
209.7
$
201.5
$
821.0
$
854.8
Revenue realization (in bps)
52.1
51.6
51.7
51.9
52.1
Operating expenses
119.5
129.6
121.9
492.6
455.7
Income from operations
86.3
80.0
79.6
328.5
399.1
Operating margin
41.9
%
38.2
%
39.5
%
40.0
%
46.7
%
Net income
55.2
52.0
52.3
213.2
275.5
Earnings per diluted share $
0.82
$
0.77
$
0.74
$
3.12
$
3.81
Cash flow from operations
97.1
91.6
67.1
330.3
335.2
Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $
107.6
$
107.2
$
100.1
$
418.0
$
424.2
Adjusted EBITDA margin
52.3
%
51.1
%
49.7
%
50.9
%
49.6
%
Adjusted net income
67.4
70.3
65.0
269.7
293.8
Tax benefit of goodwill and acquired intangible assets
9.7
9.5
9.5
38.3
37.5
Adjusted net income with tax benefit
77.0
79.8
74.5
307.9
331.2
Adjusted net income with tax benefit per diluted share $
1.15
$
1.18
$
1.05
$
4.51
$
4.58
_________________
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 increased by 8.5%, or $13.1 billion,
to $166.6 billion at December 31, 2023, compared with $153.5
billion at September 30, 2023. The increase was attributable to
$14.3 billion of positive market action partially offset by $1.2
billion in negative net flows.
Total gross flows were $6.7 billion in the fourth quarter and
$24.1 billion for the year. Long-term AUM increased by 8.7%, or
$13.0 billion, to $163.3 billion at December 31, 2023, compared
with $150.3 billion at September 30, 2023. For the fourth quarter,
the Company reported long-term gross flows of $6.6 billion and net
long-term outflows of $1.1 billion. For the year-to-date period,
the Company reported long-term gross flows of $23.3 billion and net
long-term outflows of $6.2 billion.
At December 31, 2023, Victory Capital offered 118 investment
strategies through its 11 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of December 31, 2023.
Percentage of AUM
Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
49%
62%
84%
79%
Fourth Quarter 2023 Compared with Third Quarter 2023
Revenue decreased 1.9% to $205.8 million, in the fourth quarter,
compared with $209.7 million in the third quarter, primarily due to
lower average AUM, which decreased 2.7% from $161.1 billion at
September 30, 2023 to $156.7 billion at December 31, 2023. GAAP
operating margin expanded 370 basis points in the fourth quarter to
41.9%, up from 38.2% in the third quarter. The increase was
primarily due to the combination of a non-cash $6.3 million
difference in amounts recorded to the change in the fair value of
consideration payable for acquisitions and a decrease in
depreciation and amortization expense as a result of a write-down
of an intangible asset in the third quarter. Reflecting these lower
non-cash expenses, fourth-quarter GAAP net income increased 6.2% to
$55.2 million, up from $52.0 million in the prior quarter. On a
per-share basis, GAAP net income increased 6.5% to $0.82 per
diluted share in the fourth quarter, versus $0.77 per diluted share
in the third quarter.
Adjusted net income with tax benefit decreased 3.5% to $77.0
million in the fourth quarter, down from $79.8 million in the third
quarter. On a per-share basis, adjusted net income with tax benefit
decreased 2.5% to $1.15 per diluted share in the fourth quarter,
from $1.18 per diluted share in the prior quarter. Adjusted EBITDA
was $107.6 million in the fourth quarter, compared to $107.2
million in the third quarter. Adjusted EBITDA margin expanded 120
basis points in the fourth quarter of 2023 to 52.3%, compared with
51.1% in the prior quarter.
Fourth Quarter 2023 Compared with Fourth Quarter 2022
Revenue for the three months ended December 31, 2023 increased
2.1% to $205.8 million, compared with $201.5 million in the same
quarter of 2022. The increase was primarily due to higher average
AUM, which increased 1.4% to $156.7 billion, compared with $154.6
billion in the same quarter last year. Also contributing was a
slight increase in revenue realization due to a change in asset
mix.
Operating expenses decreased 2.0% to $119.5 million, compared
with $121.9 million in last year’s fourth quarter primarily due to
a $4.9 million decrease in personnel compensation and benefits and
a $3.2 million decrease in depreciation and amortization expense
partially offset by a $4.0 million increase in non-cash difference
in amounts recorded to the change in the fair value of
consideration payable for acquisitions as well as a $3.3 million
increase in general and administrative expense due to unwind costs
associated with the monetization of the Company’s Swap. GAAP
operating margin expanded 240 basis points to 41.9% in the fourth
quarter, from 39.5% in the same quarter of 2022. GAAP net income
increased 5.6% to $55.2 million, or $0.82 per diluted share, in the
fourth quarter compared with $52.3 million, or $0.74 per diluted
share, in the same quarter of 2022.
Adjusted net income with tax benefit increased 3.4% to $77.0
million in the fourth quarter, up from $74.5 million in the same
quarter last year. On a per share basis, adjusted net income with
tax benefit increased 9.5% to $1.15 per diluted share in the fourth
quarter, from $1.05 per diluted share in the same quarter last
year. Adjusted EBITDA increased 7.4% to $107.6 million in the
fourth quarter, compared with $100.1 million in last year’s same
quarter. Year-over-year, adjusted EBITDA margin expanded 260 basis
points to 52.3% in the fourth quarter of 2023, compared with 49.7%
in the same quarter last year.
Year Ended December 31, 2023 Compared with Year Ended
December 31, 2022
Revenue for the year ended December 31, 2023, declined 4.0% to
$821.0 million, compared with $854.8 million in the same period of
2022. The decrease was primarily due to lower average AUM.
Operating expenses increased 8.1% to $492.6 million for year
ended December 31, 2023, compared with $455.7 million in 2022 due
to a non-cash $63.8 million difference in amounts recorded from the
change in fair value of consideration payable for acquisitions
partially offset by a decrease in variable operating expenses from
lower average AUM and earnings. GAAP operating margin was 40.0% for
the year ended December 31, 2023, a 670 basis point decrease from
the 46.7% recorded in 2022. GAAP net income declined 22.6% to
$213.2 million for the year ended 2023 compared with $275.5 million
in the prior year. GAAP net earnings per share decreased to $3.12
per diluted share in 2023, down from $3.81 per diluted share in
2022.
Adjusted net income with tax benefit decreased 7.0% to $307.9
million for the year ended December 31, 2023, down from $331.2
million in 2022. On a per share basis, adjusted net income with tax
benefit decreased 1.5% to $4.51 per diluted share for the year
ended December 31, 2023, from $4.58 per diluted share in 2022. For
the year ended December 31, 2023, adjusted EBITDA declined 1.5% to
$418.0 million, compared with $424.2 million in 2022.
Year-over-year, adjusted EBITDA margin expanded 130 basis points to
50.9% for the year ended December 31, 2023, compared with 49.6% in
the previous year.
Balance Sheet / Capital Management
The Company ended the year with $124 million of cash on its
balance sheet.
Total debt outstanding as of December 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 fourth quarter, the Company repurchased 1.7 million
shares under the 10b-5 plan and net settled 0.1 million shares. For
the year ended December 31, 2023, the Company repurchased 4.2
million shares under the 10b-5 plan and net settled 0.8 million
shares.
The Company’s Board of Directors also approved a regular
quarterly cash dividend of $0.335 per share. The dividend is
payable on March 25, 2024, to shareholders of record on March 11,
2024.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning,
February 9, 2024, 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 1-888-330-3571
(domestic) or 1-646-960-0657 (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, supplemental materials will be available on the
investor relations section of the Company’s website at
https://ir.vcm.com before the conference call begins. 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 $166.6 billion in assets under management as of December 31,
2023. 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 11 autonomous Investment Franchises and a Solutions
Business, Victory Capital offers a wide array of investment
products and services, including mutual funds, ETFs, separately
managed accounts, alternative investments, third-party ETF model
strategies, collective investment trusts, private funds, a 529
Education Savings Plan, and brokerage services.
Victory Capital is headquartered in San Antonio, Texas, with
offices and investment professionals in the U.S. and around the
world. To learn more please visit www.vcm.com or follow Victory
Capital on Facebook, 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 continued geopolitical uncertainty including the
conflicts in Ukraine and Israel 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; and other risks and factors listed under "Risk
Factors" and elsewhere in the Company’s filings with the SEC.
Such forward-looking statements are based on numerous
assumptions regarding Victory Capital’s present and future business
strategies and the environment in which it will operate in the
future. Any forward-looking statement made in this press release
speaks only as of the date hereof. Except as required by law,
Victory Capital assumes no obligation to update these
forward-looking statements, or to update the reasons actual results
could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated
Statements of Operations
(in thousands except per share
data and percentages)
For the Three Months
Ended
For the Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2023
2023
2022
2023
2022
Revenue Investment management fees $
160,677
$
163,953
$
156,346
$
640,876
$
664,710
Fund administration and distribution fees
45,117
45,735
45,169
180,152
190,090
Total revenue
205,794
209,688
201,515
821,028
854,800
Expenses Personnel compensation and benefits
53,949
54,501
58,846
220,992
238,198
Distribution and other asset-based expenses
36,438
38,160
37,634
149,596
161,105
General and administrative
16,702
13,947
13,389
56,287
52,373
Depreciation and amortization
7,984
12,333
11,150
41,647
43,201
Change in value of consideration payable for acquisition of
business
4,000
10,336
—
23,236
(40,600
)
Acquisition-related costs
83
116
85
217
534
Restructuring and integration costs
320
246
808
595
881
Total operating expenses
119,476
129,639
121,912
492,570
455,692
Income from operations
86,318
80,049
79,603
328,458
399,108
Operating margin
41.9
%
38.2
%
39.5
%
40.0
%
46.7
%
Other income (expense) Interest income and other
income (expense)
3,765
1,452
2,633
8,732
(2,463
)
Interest expense and other financing costs
(16,561
)
(15,580
)
(13,327
)
(61,282
)
(43,964
)
Loss on debt extinguishment
—
—
239
—
(2,648
)
Total other expense, net
(12,796
)
(14,128
)
(10,455
)
(52,550
)
(49,075
)
Income before income taxes
73,522
65,921
69,148
275,908
350,033
Income tax expense
(18,316
)
(13,914
)
(16,879
)
(62,751
)
(74,522
)
Net income $
55,206
$
52,007
$
52,269
$
213,157
$
275,511
Earnings per share of common stock Basic $
0.85
$
0.79
$
0.77
$
3.22
$
4.02
Diluted
0.82
0.77
0.74
3.12
3.81
Weighted average number of shares outstanding Basic
65,309
65,774
68,054
66,202
68,481
Diluted
66,935
67,676
70,685
68,214
72,266
Dividends declared per share $
0.32
$
0.32
$
0.25
$
1.28
$
1.00
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 Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2023
2023
2022
2023
2022
Net income (GAAP) $
55,206
$
52,007
$
52,269
$
213,157
$
275,511
Income tax expense
(18,316
)
(13,914
)
(16,879
)
(62,751
)
(74,522
)
Income before income taxes $
73,522
$
65,921
$
69,148
$
275,908
$
350,033
Interest expense
15,532
14,660
12,006
57,820
41,024
Depreciation
2,273
2,302
1,959
8,842
8,045
Other business taxes
305
636
448
1,707
2,118
Amortization of acquisition-related intangible assets
5,711
10,032
9,191
32,805
35,160
Stock-based compensation
1,503
1,451
2,420
6,496
10,143
Acquisition, restructuring and exit costs
5,586
11,463
3,997
28,982
(28,722
)
Debt issuance costs
3,128
762
935
5,394
5,620
Losses from equity method investments
—
—
—
—
825
Adjusted EBITDA $
107,560
$
107,227
$
100,104
$
417,954
$
424,246
Adjusted EBITDA margin
52.3
%
51.1
%
49.7
%
50.9
%
49.6
%
Net income (GAAP) $
55,206
$
52,007
$
52,269
$
213,157
$
275,511
Adjustment to reflect the operating performance of the Company
Other business taxes
305
636
448
1,707
2,118
Amortization of acquisition-related intangible assets
5,711
10,032
9,191
32,805
35,160
Stock-based compensation
1,503
1,451
2,420
6,496
10,143
Acquisition, restructuring and exit costs
5,586
11,463
3,997
28,982
(28,722
)
Debt issuance costs
3,128
762
935
5,394
5,620
Tax effect of above adjustments
(4,061
)
(6,085
)
(4,247
)
(18,847
)
(6,080
)
Adjusted net income $
67,378
$
70,266
$
65,013
$
269,694
$
293,750
Adjusted net income per diluted share $
1.01
$
1.04
$
0.92
$
3.95
$
4.06
Tax benefit of goodwill and acquired intangible
assets $
9,655
$
9,536
$
9,513
$
38,252
$
37,490
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.14
$
0.14
$
0.13
$
0.56
$
0.52
Adjusted net income with tax benefit $
77,033
$
79,802
$
74,526
$
307,946
$
331,240
Adjusted net income with tax benefit per diluted share
$
1.15
$
1.18
$
1.05
$
4.51
$
4.58
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 Consolidated Balance
Sheets
(In thousands, except for
shares)
December 31, 2023
December 31, 2022
Assets Cash and cash equivalents $
123,547
$
38,171
Investment management fees receivable
71,888
68,347
Fund administration and distribution fees receivable
14,238
14,379
Other receivables
1,444
1,747
Prepaid expenses
5,785
8,443
Investments in proprietary funds, at fair value
534
466
Deferred compensation plan investments, at fair value
31,274
26,800
Property and equipment, net
19,578
21,146
Goodwill
981,805
981,805
Other intangible assets, net
1,281,832
1,314,637
Other assets
10,691
64,958
Total assets $
2,542,616
$
2,540,899
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
56,477
$
50,862
Accrued compensation and benefits
55,456
58,458
Consideration payable for acquisition of business
217,200
230,400
Deferred compensation plan liability
31,274
26,800
Deferred tax liability, net
128,714
108,138
Other liabilities
11,225
15,317
Long-term debt(1)
989,269
985,514
Total liabilities
1,489,615
1,475,489
Stockholders' equity: Common stock; $0.01 par value
per share: 2023 - 600,000,000 shares authorized, 82,404,305 shares
issued and 64,254,714 shares outstanding; 2022 - 600,000,000 shares
authorized, 80,528,137 shares issued and 67,325,534 shares
outstanding
824
805
Additional paid-in capital
728,283
705,466
Treasury stock, at cost: 2023 - 18,149,591 shares; 2022 -
13,202,603 shares
(444,286
)
(285,425
)
Accumulated other comprehensive income
31,328
35,442
Retained earnings
736,852
609,122
Total stockholders' equity
1,053,001
1,065,410
Total liabilities and stockholders’ equity $
2,542,616
$
2,540,899
1 Balances at December 31, 2023 and
December 31, 2022 are shown net of unamortized loan discount and
debt issuance costs in the amount of $12.4 million and $16.2
million, respectively. The gross amount of the debt outstanding was
$1,001.7 million as of December 31, 2023 and 2022,
respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under
Management
(unaudited; in millions except
for percentages)
For the Three Months
Ended
% Change from
December 31,
September 30,
December 31,
September 30,
December 31,
2023
2023
2022
2023
2022
Beginning assets under management $
153,506
$
161,622
$
147,257
-5%
4%
Gross client cash inflows
6,745
5,449
6,681
24%
1%
Gross client cash outflows
(7,926
)
(7,168
)
(11,147
)
11%
-29%
Net client cash flows
(1,181
)
(1,719
)
(4,466
)
-31%
-74%
Market appreciation (depreciation)
14,315
(4,888
)
10,492
N/A
36%
Realizations and distributions
(27
)
—
(295
)
N/A
N/A
Acquired & divested assets / Net transfers1
(2
)
(1,508
)
(36
)
N/A
N/A
Ending assets under management
166,611
153,506
152,952
9%
9%
Average assets under management
156,734
161,147
154,632
-3%
1%
For the Year Ended
% Change from
December 31,
December 31,
December 31,
2023
2022
2022
Beginning assets under management $
152,952
$
183,654
-17%
Gross client cash inflows
24,104
33,934
-29%
Gross client cash outflows
(30,671
)
(36,666
)
-16%
Net client cash flows
(6,567
)
(2,732
)
140%
Market appreciation (depreciation)
21,878
(26,495
)
N/A
Realizations and distributions
(100
)
(376
)
-73%
Acquired & divested assets / Net transfers2
(1,552
)
(1,100
)
41%
Ending assets under management
166,611
152,952
9%
Average assets under management
158,268
164,025
-4%
1 The three months ended September 30,
2023 reflects divested assets of $1.3 billion associated with the
INCORE transaction.
2 The year ended December 31, 2023
reflects divested assets of $1.3 billion associated with the INCORE
transaction.
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
December 31, 2023 Beginning assets under management $
28,235
$
14,650
$
23,790
$
11,596
$
14,807
$
53,998
$
3,222
$
150,298
$
3,208
$
153,506
Gross client cash inflows
1,008
555
1,072
62
1,251
2,110
498
6,557
188
6,745
Gross client cash outflows
(1,548
)
(938
)
(1,890
)
(329
)
(657
)
(1,977
)
(352
)
(7,691
)
(234
)
(7,926
)
Net client cash flows
(541
)
(383
)
(818
)
(267
)
595
133
146
(1,134
)
(47
)
(1,181
)
Market appreciation (depreciation)
2,917
1,698
1,392
1,320
1,387
5,474
91
14,278
38
14,315
Realizations and distributions
—
—
—
—
—
—
(27
)
(27
)
—
(27
)
Acquired & divested assets / Net transfers
(8
)
(6
)
(8
)
(15
)
(16
)
(20
)
(1
)
(74
)
72
(2
)
Ending assets under management $
30,604
$
15,959
$
24,355
$
12,635
$
16,772
$
59,585
$
3,431
$
163,340
$
3,271
$
166,611
September 30, 2023 Beginning assets under management
$
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
55,836
$
3,301
$
158,469
$
3,152
$
161,622
Gross client cash inflows
1,224
458
892
51
392
1,988
249
5,255
193
5,449
Gross client cash outflows
(1,769
)
(920
)
(1,343
)
(282
)
(519
)
(1,720
)
(402
)
(6,955
)
(213
)
(7,168
)
Net client cash flows
(545
)
(462
)
(451
)
(231
)
(126
)
268
(153
)
(1,700
)
(19
)
(1,719
)
Market appreciation (depreciation)
(1,224
)
(547
)
(460
)
(287
)
(451
)
(2,028
)
71
(4,927
)
39
(4,888
)
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired & divested assets / Net transfers 1
(2
)
(5
)
(1,397
)
(57
)
(8
)
(78
)
3
(1,545
)
37
(1,508
)
Ending assets under management $
28,235
$
14,650
$
23,790
$
11,596
$
14,807
$
53,998
$
3,222
$
150,298
$
3,208
$
153,506
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 & divested 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
1 The three months ended September 30,
2023 reflects divested assets of $1.3 billion associated with the
INCORE transaction.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Year 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 December 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
5,090
2,741
4,024
284
2,581
6,937
1,593
23,251
853
24,104
Gross client cash outflows
(5,536
)
(3,859
)
(6,129
)
(1,286
)
(2,304
)
(8,310
)
(2,002
)
(29,426
)
(1,245
)
(30,671
)
Net client cash flows
(446
)
(1,117
)
(2,105
)
(1,002
)
276
(1,373
)
(409
)
(6,176
)
(391
)
(6,567
)
Market appreciation (depreciation)
3,153
1,978
1,595
2,809
2,431
9,494
270
21,729
149
21,878
Realizations and distributions
—
—
—
—
—
—
(100
)
(100
)
—
(100
)
Acquired & divested assets / Net transfers1
5
(4
)
(1,487
)
(145
)
(96
)
(43
)
7
(1,763
)
211
(1,552
)
Ending assets under management $
30,604
$
15,959
$
24,355
$
12,635
$
16,772
$
59,585
$
3,431
$
163,340
$
3,271
$
166,611
December 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
6,859
3,162
5,524
406
4,149
8,169
5,045
33,313
621
33,934
Gross client cash outflows
(6,919
)
(5,214
)
(9,545
)
(1,498
)
(3,111
)
(6,247
)
(3,324
)
(35,858
)
(807
)
(36,666
)
Net client cash flows
(60
)
(2,053
)
(4,020
)
(1,093
)
1,038
1,921
1,721
(2,545
)
(187
)
(2,732
)
Market appreciation (depreciation)
(2,641
)
(2,965
)
(3,345
)
(3,328
)
(3,153
)
(10,887
)
(215
)
(26,533
)
39
(26,495
)
Realizations and distributions
—
—
—
—
—
—
(376
)
(376
)
—
(376
)
Acquired & divested assets / Net transfers
14
27
(1,436
)
(372
)
226
107
(16
)
(1,450
)
350
(1,100
)
Ending assets under management $
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
51,507
$
3,663
$
149,649
$
3,302
$
152,952
1 The year ended December 31, 2023
reflects divested assets of $1.3 billion associated with the INCORE
transaction.
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
December 31, 2023 Beginning assets under management $
101,138
$
4,710
$
47,658
$
153,506
Gross client cash inflows
4,126
343
2,276
6,745
Gross client cash outflows
(5,887
)
(356
)
(1,682
)
(7,926
)
Net client cash flows
(1,761
)
(13
)
593
(1,181
)
Market appreciation (depreciation)
9,466
273
4,577
14,315
Realizations and distributions
—
—
(27
)
(27
)
Acquired & divested assets / Net transfers
(41
)
—
39
(2
)
Ending assets under management $
108,802
$
4,970
$
52,840
$
166,611
September 30, 2023 Beginning assets under management
$
105,916
$
5,193
$
50,513
$
161,622
Gross client cash inflows
3,283
232
1,933
5,449
Gross client cash outflows
(5,119
)
(557
)
(1,492
)
(7,168
)
Net client cash flows
(1,836
)
(324
)
441
(1,719
)
Market appreciation (depreciation)
(2,925
)
(165
)
(1,799
)
(4,888
)
Realizations and distributions
—
—
—
—
Acquired & divested assets / Net transfers4
(17
)
6
(1,497
)
(1,508
)
Ending assets under management $
101,138
$
4,710
$
47,658
$
153,506
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 & divested assets / Net transfers
(27
)
(9
)
—
(36
)
Ending assets under management $
99,447
$
5,627
$
47,877
$
152,952
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.
4 The three months ended September 30,
2023 reflects divested assets of $1.3 billion associated with the
INCORE transaction.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Year Ended By Vehicle Separate
Accounts Mutual and Other Funds1
ETFs2 Vehicles3 Total December 31, 2023
Beginning assets under management $
99,447
$
5,627
$
47,877
$
152,952
Gross client cash inflows
15,594
969
7,542
24,104
Gross client cash outflows
(21,276
)
(1,567
)
(7,828
)
(30,671
)
Net client cash flows
(5,682
)
(599
)
(286
)
(6,567
)
Market appreciation (depreciation)
15,114
(56
)
6,820
21,878
Realizations and distributions
—
—
(100
)
(100
)
Acquired & divested assets / Net transfers4
(77
)
(3
)
(1,471
)
(1,552
)
Ending assets under management $
108,802
$
4,970
$
52,840
$
166,611
December 31, 2022 Beginning assets under management $
124,142
$
4,871
$
54,641
$
183,654
Gross client cash inflows
21,198
2,043
10,692
33,934
Gross client cash outflows
(27,703
)
(572
)
(8,391
)
(36,666
)
Net client cash flows
(6,505
)
1,472
2,302
(2,732
)
Market appreciation (depreciation)
(17,092
)
(724
)
(8,679
)
(26,495
)
Realizations and distributions
—
—
(376
)
(376
)
Acquired & divested assets / Net transfers5
(1,098
)
9
(11
)
(1,100
)
Ending assets under management $
99,447
$
5,627
$
47,877
$
152,952
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.
4 The year ended December 31, 2023
reflects divested assets of $1.3 billion associated with the INCORE
transaction.
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/20240208387209/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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