HARTFORD, Conn., Feb. 2, 2021 /PRNewswire/ -- Virtus
Investment Partners, Inc. (NASDAQ: VRTS) today reported financial
results for the three months ended December
31, 2020.
Financial
Highlights (Unaudited)
(in millions,
except per share data or as noted)
|
|
|
Three Months
Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
12/31/2020
|
|
12/31/2019
|
|
Change
|
|
9/30/2020
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
171.6
|
|
$
|
146.1
|
|
17%
|
|
$
|
154.8
|
|
11%
|
Operating
expenses
|
$
|
120.7
|
|
$
|
108.3
|
|
11%
|
|
$
|
113.8
|
|
6%
|
Operating income
(loss)
|
$
|
50.9
|
|
$
|
37.8
|
|
35%
|
|
$
|
41.0
|
|
24%
|
Operating
margin
|
29.7%
|
|
25.9%
|
|
|
|
|
26.5%
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$
|
43.3
|
|
$
|
20.8
|
|
108%
|
|
$
|
29.6
|
|
46%
|
Earnings (loss) per
share - diluted
|
$
|
5.40
|
|
$
|
2.83
|
|
91%
|
|
$
|
3.71
|
|
46%
|
Weighted average
shares outstanding - diluted
|
8.026
|
|
8.084
|
|
(1%)
|
|
7.997
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Revenues, as
adjusted
|
$
|
153.5
|
|
$
|
128.4
|
|
20%
|
|
$
|
137.6
|
|
12%
|
Operating expenses,
as adjusted
|
$
|
91.6
|
|
$
|
78.3
|
|
17%
|
|
$
|
83.6
|
|
10%
|
Operating income
(loss), as adjusted
|
$
|
61.9
|
|
$
|
50.1
|
|
24%
|
|
$
|
54.1
|
|
14%
|
Operating margin, as
adjusted
|
40.3%
|
|
39.0%
|
|
|
|
39.3%
|
|
|
Net income (loss)
attributable to common stockholders, as adjusted
|
$
|
41.4
|
|
$
|
34.9
|
|
18%
|
|
$
|
35.9
|
|
15%
|
Earnings (loss) per
share - diluted, as adjusted
|
$
|
5.15
|
|
$
|
4.32
|
|
19%
|
|
$
|
4.49
|
|
15%
|
Weighted average
shares outstanding - diluted, as adjusted
|
8.026
|
|
8.084
|
|
(1%)
|
|
7.997
|
|
—%
|
|
|
(1)
|
See the information
beginning on page 11 for reconciliations to the most directly
comparable U.S. GAAP measures and other important
disclosures
|
Earnings Summary
The company presents U.S. GAAP and non-GAAP earnings information
in this release. Management believes that the non-GAAP financial
measures presented reflect the company's operating results from
providing investment management and related services to individuals
and institutions and uses these measures to evaluate financial
performance. Non-GAAP financial measures have material limitations
and should not be viewed in isolation or as a substitute for U.S.
GAAP measures. Reconciliations of the non-GAAP financial measures
to the most comparable U.S. GAAP measures can be found beginning on
page 11 of this earnings release.
Assets Under
Management and Asset Flows
(in
billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
Three
Months
Ended
|
|
|
|
|
12/31/2020
|
|
12/31/2019
|
|
Change
|
|
9/30/2020
|
|
Change
|
Ending long-term
assets under management (1)
|
$
|
130.7
|
|
$
|
107.7
|
|
21%
|
|
$
|
115.0
|
|
14%
|
Ending total assets
under management
|
$
|
132.2
|
|
$
|
108.9
|
|
21%
|
|
$
|
116.5
|
|
13%
|
Average long-term
assets under management (1)
|
$
|
119.6
|
|
$
|
103.9
|
|
15%
|
|
$
|
111.5
|
|
7%
|
Average total assets
under management
|
$
|
121.1
|
|
$
|
105.1
|
|
15%
|
|
$
|
112.9
|
|
7%
|
Total
sales
|
$
|
8.6
|
|
$
|
4.8
|
|
80%
|
|
$
|
7.6
|
|
13%
|
Net flows
|
$
|
2.6
|
|
$
|
0.3
|
|
N/M
|
|
$
|
1.2
|
|
117%
|
|
|
(1)
|
Excludes assets under
management in liquidity strategies, including in certain open-end
mutual funds and institutional accounts
|
N/M - Not
Meaningful
|
Long-term assets under management increased 14% to $130.7 billion at December
31, 2020 from $115.0 billion
at September 30, 2020 as a result of
$13.4 billion of market appreciation
and $2.6 billion of positive net
flows. Total assets under management at December 31, 2020 were $132.2 billion, including $1.5 billion in liquidity strategies.
Total sales of $8.6 billion
increased by $1.0 billion, or 13%,
from the third quarter as a result of higher sales of open-end
funds, institutional, retail separate accounts, and exchange traded
funds (ETFs). Open-end fund sales of $3.9
billion increased 5% with growth in both equity and fixed
income funds, particularly large- and small-cap domestic equity
strategies and credit-sensitive fixed income. Institutional sales
of $2.3 billion increased 9%,
including contributions from new mandates and existing accounts
across multiple affiliates. Retail separate account sales of
$2.2 billion increased 26% primarily
due to continued growth in the intermediary sold channel.
Net flows of $2.6 billion
increased meaningfully from $1.2
billion in the prior quarter and included positive net flows
in retail separate accounts, open-end funds, institutional, and
ETFs. Retail separate accounts positive net flows of
$1.3 billion included contributions
from both the intermediary sold and private client channels.
Open-end fund net flows of $0.7
billion increased from $0.4
billion in the third quarter and reflected positive net
flows in both equity and fixed income funds. Institutional net
flows of $0.6 billion improved from
net outflows of $0.3 billion in the
prior quarter, which included a single large
redemption.
GAAP Results
Operating income increased 24% to $50.9
million from $41.0 million in
the prior quarter, as an 11% increase in total revenues, due to
higher average assets under management, was partially offset by a
6% increase in total operating expenses, largely due to higher
variable incentive compensation.
Net income attributable to common stockholders of $5.40 per diluted common share included
$1.96 of realized and unrealized
gains on investments and ($1.56) of
fair value adjustments on affiliate noncontrolling interests. Third
quarter net income per diluted share of $3.71 included ($1.09) of fair value adjustments on affiliate
noncontrolling interests, and $0.75
of realized and unrealized losses on investments.
The effective tax rate during the quarter of 19% compared with
23% in the prior quarter, reflecting changes in the valuation
allowances related to marketable securities.
Non-GAAP Results
Revenues, as adjusted, of $153.5
million increased 12% sequentially primarily as a result of
a 7% increase in average assets under management due to market
appreciation and positive net flows. Revenues, as adjusted,
included performance-related fees of $3.7
million, an increase from $2.0
million in the prior quarter.
Employment expenses, as adjusted, increased 11% to $73.5 million largely due to higher variable
incentive compensation. As a percentage of revenues, as adjusted,
employment expenses, as adjusted, were 47.8%, down modestly from
the prior quarter. Other operating expenses, as adjusted, of
$17.1 million increased sequentially
from $16.3 million primarily due to
modestly higher professional fees.
Operating income, as adjusted, and the related margin increased
to $61.9 million and 40.3%,
respectively, from $54.1 million and
39.3% in the prior quarter primarily due to higher revenues, as
adjusted, partially offset by higher employment expenses.
Net income attributable to common stockholders, as adjusted,
which is net of noncontrolling interests, was $5.15 per diluted common share, an increase of
$0.66, or 15%, from $4.49 in the prior quarter. The increase
primarily reflected higher revenues, as adjusted, as a result of
the higher average assets under management.
The effective tax rate, as adjusted, was 27%, unchanged from the
prior quarter.
Select Balance
Sheet Items (Unaudited)
(in
millions)
|
|
|
As
of
|
|
|
|
|
As
of
|
|
|
|
|
12/31/2020
|
|
12/31/2019
|
|
Change
|
|
9/30/2020
|
|
Change
|
Cash and cash
equivalents
|
$
|
246.5
|
|
$
|
221.8
|
|
11%
|
|
$
|
202.2
|
|
22%
|
Gross debt
(1)
|
$
|
205.7
|
|
$
|
285.7
|
|
(28%)
|
|
$
|
223.2
|
|
(8%)
|
Redeemable
noncontrolling interests (2)
|
$
|
87.5
|
|
$
|
58.4
|
|
50%
|
|
$
|
74.6
|
|
17%
|
Total equity
attributable to stockholders
|
$
|
711.2
|
|
$
|
675.7
|
|
5%
|
|
$
|
679.1
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
(3)
|
$
|
172.0
|
|
$
|
160.1
|
|
7%
|
|
$
|
159.1
|
|
8%
|
Net debt (cash)
(4)
|
$
|
(40.8)
|
|
$
|
63.9
|
|
N/M
|
|
$
|
21.0
|
|
N/M
|
|
|
(1)
|
Excludes deferred
financing costs of $4.5 million, $7.9 million, and $5.2 million, as
of December 31, 2020, December 31, 2019, and September 30, 2020,
respectively
|
(2)
|
Excludes redeemable
noncontrolling interests of consolidated investment products of
$28.1 million, $5.4 million, and $24.7 million as of December 31,
2020, December 31, 2019, and September 30, 2020,
respectively
|
(3)
|
Defined as cash and
cash equivalents plus accounts receivable, net, less accrued
compensation and benefits, accounts payable and accrued
liabilities, dividends payable and required principal payments due
over the next 12 months, including scheduled amortization and
annual excess cash flow payment
|
(4)
|
Defined as gross debt
less cash and cash equivalents
|
Working capital at December 31,
2020 of $172.0 million
increased 8% from September 30, 2020
as net cash generated from the business was partially offset by
return of capital to shareholders and debt repayments.
During the quarter, the company repurchased 40,076 shares, or
0.5% of beginning-of-quarter outstanding common shares, for
$7.5 million.
The company reduced gross debt in the quarter by $17.5 million, or 8%, to $205.7 million. Cash and cash equivalents at
December 31, 2020 exceeded gross debt
by $41 million.
Agreement with Westchester Capital Management
The company separately announced that it has entered into an
agreement to acquire all of the equity of Westchester Capital
Management, a premier manager of global event-driven alternative
investment strategies with $4.3 billion in assets at
December 31, 2020. The transaction is
expected to close in the second half of the year, subject to
customary closing conditions and approvals by Westchester Capital
Management Funds Board and shareholders.
Partnership with Allianz Global Investors
On February 1, the company
announced the completion of the actions necessary to finalize its
previously announced strategic partnership with Allianz Global
Investors that adds NFJ Investment Group as a newly established
affiliated manager and expands the scope of its investment
offerings for U.S. retail clients with $29.3
billion of assets under management, primarily in open- and
closed-end mutual funds and retail separate accounts, as well as an
additional $3.6 billion of other fee
earning assets at December 31,
2020.
Conference Call
Management will host an investor conference call on Tuesday, February 2, 2021, at 10 a.m. Eastern to discuss these financial
results and related matters. The webcast of the call can be
accessed in the Investor Relations section of www.virtus.com, or by
telephone at 877-930-7765 for callers in the U.S. and Canada or 253-336-7413 for international
callers (Conference ID: 8218508). The presentation that will be
reviewed as part of the conference call will be available prior to
the call in the Investor Relations section of www.virtus.com. A
replay of the call will be available through February 9, 2021 by telephone at 855-859-2056
(U.S. and Canada) or 404-537-3406
(international) (Conference ID: 8218508).
About Virtus Investment Partners
Virtus Investment Partners (NASDAQ: VRTS) is a distinctive
partnership of boutique investment managers singularly committed to
the long-term success of individual and institutional investors.
The company provides investment management products and services
through its affiliated managers and select subadvisers, each with a
distinct investment style, autonomous investment process, and
individual brand. Virtus Investment Partners offers access to a
variety of investment styles across multiple disciplines to meet a
wide array of investor needs. Virtus' affiliates include Ceredex
Value Advisors, Duff & Phelps Investment Management, Kayne
Anderson Rudnick Investment Management, Newfleet Asset Management,
NFJ Investment Group, Seix Investment Advisors, Silvant
Capital Management, and Sustainable Growth Advisers. Additional
information can be found at virtus.com.
U.S. GAAP
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
Twelve
Months Ended
|
|
|
|
12/31/2020
|
|
12/31/2019
|
|
Change
|
|
9/30/2020
|
|
Change
|
|
12/31/2020
|
|
12/31/2019
|
|
Change
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management
fees
|
$
|
144,715
|
|
|
$
|
120,945
|
|
|
20%
|
|
$
|
129,785
|
|
|
12%
|
|
$
|
505,338
|
|
|
$
|
461,477
|
|
|
10%
|
Distribution and
service fees
|
10,279
|
|
|
9,776
|
|
|
5%
|
|
9,797
|
|
|
5%
|
|
38,425
|
|
|
40,898
|
|
|
(6%)
|
Administration and
shareholder service fees
|
16,407
|
|
|
15,137
|
|
|
8%
|
|
15,114
|
|
|
9%
|
|
59,463
|
|
|
59,884
|
|
|
(1%)
|
Other income and
fees
|
245
|
|
|
226
|
|
|
8%
|
|
94
|
|
|
161%
|
|
670
|
|
|
987
|
|
|
(32%)
|
Total
revenues
|
171,646
|
|
|
146,084
|
|
|
17%
|
|
154,790
|
|
|
11%
|
|
603,896
|
|
|
563,246
|
|
|
7%
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
expenses
|
73,527
|
|
|
60,265
|
|
|
22%
|
|
67,479
|
|
|
9%
|
|
267,299
|
|
|
240,521
|
|
|
11%
|
Distribution and
other asset-based expenses
|
20,686
|
|
|
20,086
|
|
|
3%
|
|
19,570
|
|
|
6%
|
|
77,010
|
|
|
82,099
|
|
|
(6%)
|
Other operating
expenses
|
17,232
|
|
|
18,238
|
|
|
(6%)
|
|
16,343
|
|
|
5%
|
|
69,896
|
|
|
74,363
|
|
|
(6%)
|
Operating expenses of
consolidated investment products
|
641
|
|
|
620
|
|
|
3%
|
|
1,016
|
|
|
(37%)
|
|
10,585
|
|
|
4,015
|
|
|
164%
|
Restructuring and
severance
|
—
|
|
|
283
|
|
|
(100%)
|
|
735
|
|
|
(100%)
|
|
1,155
|
|
|
2,302
|
|
|
(50%)
|
Depreciation
expense
|
1,100
|
|
|
1,263
|
|
|
(13%)
|
|
1,106
|
|
|
(1%)
|
|
4,660
|
|
|
4,992
|
|
|
(7%)
|
Amortization
expense
|
7,529
|
|
|
7,533
|
|
|
—%
|
|
7,532
|
|
|
—%
|
|
30,127
|
|
|
30,244
|
|
|
—%
|
Total operating
expenses
|
120,715
|
|
|
108,288
|
|
|
11%
|
|
113,781
|
|
|
6%
|
|
460,732
|
|
|
438,536
|
|
|
5%
|
Operating Income
(Loss)
|
50,931
|
|
|
37,796
|
|
|
35%
|
|
41,009
|
|
|
24%
|
|
143,164
|
|
|
124,710
|
|
|
15%
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain (loss) on investments, net
|
5,071
|
|
|
1,570
|
|
|
223%
|
|
2,498
|
|
|
103%
|
|
7,139
|
|
|
7,044
|
|
|
1%
|
Realized and
unrealized gain (loss) of consolidated investment products,
net
|
10,768
|
|
|
(3,657)
|
|
|
N/M
|
|
2,680
|
|
|
302%
|
|
(1,965)
|
|
|
(1,202)
|
|
|
63%
|
Other income
(expense), net
|
1,070
|
|
|
519
|
|
|
106%
|
|
999
|
|
|
7%
|
|
1,876
|
|
|
2,411
|
|
|
(22%)
|
Total other income
(expense), net
|
16,909
|
|
|
(1,568)
|
|
|
N/M
|
|
6,177
|
|
|
174%
|
|
7,050
|
|
|
8,253
|
|
|
(15%)
|
Interest Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(2,692)
|
|
|
(4,268)
|
|
|
(37%)
|
|
(2,877)
|
|
|
(6%)
|
|
(11,894)
|
|
|
(19,473)
|
|
|
(39%)
|
Interest and dividend
income
|
236
|
|
|
827
|
|
|
(71%)
|
|
137
|
|
|
72%
|
|
1,367
|
|
|
3,844
|
|
|
(64%)
|
Interest and dividend
income of investments of
consolidated investment products
|
25,697
|
|
|
28,296
|
|
|
(9%)
|
|
26,088
|
|
|
(1%)
|
|
109,648
|
|
|
115,356
|
|
|
(5%)
|
Interest expense of
consolidated investment products
|
(15,179)
|
|
|
(19,975)
|
|
|
(24%)
|
|
(17,622)
|
|
|
(14%)
|
|
(85,437)
|
|
|
(92,005)
|
|
|
(7%)
|
Total interest income
(expense), net
|
8,062
|
|
|
4,880
|
|
|
65%
|
|
5,726
|
|
|
41%
|
|
13,684
|
|
|
7,722
|
|
|
77%
|
Income (Loss)
Before Income Taxes
|
75,902
|
|
|
41,108
|
|
|
85%
|
|
52,912
|
|
|
43%
|
|
163,898
|
|
|
140,685
|
|
|
16%
|
Income tax expense
(benefit)
|
14,088
|
|
|
11,326
|
|
|
24%
|
|
11,978
|
|
|
18%
|
|
43,935
|
|
|
35,177
|
|
|
25%
|
Net Income
(Loss)
|
61,814
|
|
|
29,782
|
|
|
108%
|
|
40,934
|
|
|
51%
|
|
119,963
|
|
|
105,508
|
|
|
14%
|
Noncontrolling
interests
|
(18,499)
|
|
|
(6,890)
|
|
|
168%
|
|
(11,286)
|
|
|
64%
|
|
(40,006)
|
|
|
(9,859)
|
|
|
306%
|
Net Income (Loss)
Attributable to Stockholders
|
43,315
|
|
|
22,892
|
|
|
89%
|
|
29,648
|
|
|
46%
|
|
79,957
|
|
|
95,649
|
|
|
(16%)
|
Preferred stockholder
dividends
|
—
|
|
|
(2,084)
|
|
|
(100%)
|
|
—
|
|
|
N/M
|
|
—
|
|
|
(8,337)
|
|
|
(100%)
|
Net Income (Loss)
Attributable to Common Stockholders
|
$
|
43,315
|
|
|
$
|
20,808
|
|
|
108%
|
|
$
|
29,648
|
|
|
46%
|
|
$
|
79,957
|
|
|
$
|
87,312
|
|
|
(8%)
|
Earnings (Loss)
Per Share - Basic
|
$
|
5.67
|
|
|
$
|
3.02
|
|
|
88%
|
|
$
|
3.86
|
|
|
47%
|
|
$
|
10.49
|
|
|
$
|
12.54
|
|
|
(16%)
|
Earnings (Loss)
Per Share - Diluted
|
$
|
5.40
|
|
|
$
|
2.83
|
|
|
91%
|
|
$
|
3.71
|
|
|
46%
|
|
$
|
10.02
|
|
|
$
|
11.74
|
|
|
(15%)
|
Cash Dividends
Declared Per Preferred Share
|
$
|
—
|
|
|
$
|
1.81
|
|
|
(100%)
|
|
$
|
—
|
|
|
N/M
|
|
$
|
—
|
|
|
$
|
7.25
|
|
|
(100%)
|
Cash Dividends
Declared Per Common Share
|
$
|
0.82
|
|
|
$
|
0.67
|
|
|
22%
|
|
$
|
0.82
|
|
|
—%
|
|
$
|
2.98
|
|
|
$
|
2.44
|
|
|
22%
|
Weighted Average
Shares Outstanding - Basic
|
7,641
|
|
|
6,881
|
|
|
11%
|
|
7,684
|
|
|
(1%)
|
|
7,620
|
|
|
6,963
|
|
|
9%
|
Weighted Average
Shares Outstanding - Diluted
|
8,026
|
|
|
8,084
|
|
|
(1%)
|
|
7,997
|
|
|
—%
|
|
7,976
|
|
|
8,149
|
|
|
(2%)
|
|
N/M - Not
Meaningful
|
Assets Under
Management - Product and Asset Class
(in
millions)
|
|
|
Three Months
Ended
|
|
12/31/2019
|
|
03/31/2020
|
|
6/30/2020
|
|
9/30/2020
|
|
12/31/2020
|
By product (period
end):
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
$
|
42,870
|
|
|
$
|
33,498
|
|
|
$
|
40,053
|
|
|
$
|
43,369
|
|
|
$
|
49,521
|
|
Closed-End
Funds
|
6,748
|
|
|
5,343
|
|
|
5,639
|
|
|
5,629
|
|
|
5,914
|
|
Exchange Traded
Funds
|
1,156
|
|
|
480
|
|
|
541
|
|
|
543
|
|
|
837
|
|
Retail Separate
Accounts
|
20,414
|
|
|
17,660
|
|
|
22,054
|
|
|
24,727
|
|
|
29,751
|
|
Institutional
Accounts
|
32,635
|
|
|
28,210
|
|
|
34,545
|
|
|
36,596
|
|
|
40,623
|
|
Structured
Products
|
3,903
|
|
|
4,343
|
|
|
4,264
|
|
|
4,163
|
|
|
4,060
|
|
Total
Long-Term
|
$
|
107,726
|
|
|
$
|
89,534
|
|
|
$
|
107,096
|
|
|
$
|
115,027
|
|
|
$
|
130,706
|
|
Liquidity
(2)
|
1,178
|
|
|
1,160
|
|
|
1,365
|
|
|
1,460
|
|
|
1,488
|
|
Total
|
$
|
108,904
|
|
|
$
|
90,694
|
|
|
$
|
108,461
|
|
|
$
|
116,487
|
|
|
$
|
132,194
|
|
|
|
|
|
|
|
|
|
|
|
By product
(average) (3)
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
$
|
41,718
|
|
|
$
|
41,060
|
|
|
$
|
37,198
|
|
|
$
|
42,475
|
|
|
$
|
46,545
|
|
Closed-End
Funds
|
6,639
|
|
|
6,524
|
|
|
5,566
|
|
|
5,742
|
|
|
5,847
|
|
Exchange Traded
Funds
|
1,049
|
|
|
962
|
|
|
554
|
|
|
549
|
|
|
683
|
|
Retail Separate
Accounts
|
18,863
|
|
|
20,414
|
|
|
17,660
|
|
|
22,054
|
|
|
24,727
|
|
Institutional
Accounts
|
31,748
|
|
|
31,534
|
|
|
31,648
|
|
|
36,506
|
|
|
37,746
|
|
Structured
Products
|
3,903
|
|
|
4,191
|
|
|
4,265
|
|
|
4,171
|
|
|
4,068
|
|
Total
Long-Term
|
$
|
103,920
|
|
|
$
|
104,685
|
|
|
$
|
96,891
|
|
|
$
|
111,497
|
|
|
$
|
119,616
|
|
Liquidity
(2)
|
1,195
|
|
|
1,219
|
|
|
1,267
|
|
|
1,393
|
|
|
1,480
|
|
Total
|
$
|
105,115
|
|
|
$
|
105,904
|
|
|
$
|
98,158
|
|
|
$
|
112,890
|
|
|
$
|
121,096
|
|
|
|
|
|
|
|
|
|
|
|
By asset class
(period end):
|
|
|
|
|
|
|
|
|
|
Equity
|
$
|
70,720
|
|
|
$
|
57,180
|
|
|
$
|
73,823
|
|
|
$
|
81,032
|
|
|
$
|
95,590
|
|
Fixed
Income
|
31,186
|
|
|
28,231
|
|
|
28,870
|
|
|
29,603
|
|
|
30,310
|
|
Alternatives
(4)
|
5,820
|
|
|
4,123
|
|
|
4,403
|
|
|
4,392
|
|
|
4,806
|
|
Total
Long-Term
|
$
|
107,726
|
|
|
$
|
89,534
|
|
|
$
|
107,096
|
|
|
$
|
115,027
|
|
|
$
|
130,706
|
|
Liquidity
(2)
|
1,178
|
|
|
1,160
|
|
|
1,365
|
|
|
1,460
|
|
|
1,488
|
|
Total
|
$
|
108,904
|
|
|
$
|
90,694
|
|
|
$
|
108,461
|
|
|
$
|
116,487
|
|
|
$
|
132,194
|
|
Assets Under
Management - Average Management Fees Earned (5)
(in basis
points)
|
|
|
Three Months
Ended
|
|
12/31/2019
|
|
3/31/2020
|
|
6/30/2020
|
|
9/30/2020
|
|
12/31/2020
|
All
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds
(1)
|
57.4
|
|
57.8
|
|
58.4
|
|
59.5
|
|
60.7
|
Closed-End
Funds
|
64.0
|
|
62.8
|
|
61.8
|
|
62.1
|
|
62.2
|
Exchange Traded
Funds
|
22.0
|
|
21.3
|
|
14.1
|
|
13.7
|
|
9.1
|
Retail Separate
Accounts
|
46.8
|
|
50.7
|
|
51.0
|
|
47.6
|
|
48.9
|
Institutional
Accounts (6)
|
31.8
|
|
29.2
|
|
31.3
|
|
31.7
|
|
34.7
|
Structured Products
(6)
|
37.9
|
|
33.9
|
|
26.8
|
|
34.2
|
|
31.1
|
All Long-Term Products
(6)
|
47.0
|
|
46.8
|
|
46.8
|
|
47.0
|
|
48.8
|
Liquidity
(2)
|
8.9
|
|
9.8
|
|
11.8
|
|
12.3
|
|
10.8
|
All
Products
|
46.5
|
|
46.4
|
|
46.3
|
|
46.6
|
|
48.4
|
|
(1)
|
Represents assets
under management of U.S. retail funds, offshore funds and variable
insurance funds
|
(2)
|
Represents assets
under management in liquidity strategies, including in certain
open-end funds and institutional accounts
|
(3)
|
Averages are
calculated as follows:
|
|
- Funds - average
daily or weekly balances
|
|
- Retail Separate
Accounts - prior-quarter ending balance
|
|
- Institutional
Accounts and Structured Products - average of month-end balances in
quarter
|
(4)
|
Consists of real
estate securities, mid-stream energy securities and master limited
partnerships, options strategies, and other
|
(5)
|
Represents investment
management fees divided by average assets. Investment
management fees exclude the impact of consolidated investment
products
|
(6)
|
Includes
performance-related fees, in basis points, earned during the three
months ended as follows:
|
|
12/31/2019
|
|
3/31/2020
|
|
6/30/2020
|
|
9/30/2020
|
|
12/31/2020
|
Institutional
Accounts
|
1.2
|
|
0.8
|
|
0.7
|
|
2.1
|
|
3.9
|
Structured
Products
|
1.5
|
|
—
|
|
—
|
|
—
|
|
—
|
All Long-Term
Products
|
0.4
|
|
0.2
|
|
0.2
|
|
0.7
|
|
1.2
|
Assets Under
Management - Asset Flows by Product
(in
millions)
|
|
|
Three Months
Ended
|
|
|
Twelve
Months Ended
|
|
12/31/2019
|
|
3/31/2020
|
|
6/30/2020
|
|
9/30/2020
|
|
12/31/2020
|
|
|
12/31/2019
|
|
12/31/2020
|
Open-End Funds
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
41,190
|
|
|
$
|
42,870
|
|
|
$
|
33,498
|
|
|
$
|
40,053
|
|
|
$
|
43,369
|
|
|
|
$
|
37,710
|
|
|
$
|
42,870
|
|
Inflows
|
2,343
|
|
|
3,874
|
|
|
4,388
|
|
|
3,755
|
|
|
3,937
|
|
|
|
10,835
|
|
|
15,954
|
|
Outflows
|
(2,784)
|
|
|
(5,471)
|
|
|
(4,005)
|
|
|
(3,368)
|
|
|
(3,223)
|
|
|
|
(13,029)
|
|
|
(16,067)
|
|
Net flows
|
(441)
|
|
|
(1,597)
|
|
|
383
|
|
|
387
|
|
|
714
|
|
|
|
(2,194)
|
|
|
(113)
|
|
Market
performance
|
2,301
|
|
|
(7,730)
|
|
|
6,244
|
|
|
3,004
|
|
|
5,692
|
|
|
|
7,536
|
|
|
7,210
|
|
Other (2)
|
(180)
|
|
|
(45)
|
|
|
(72)
|
|
|
(75)
|
|
|
(254)
|
|
|
|
(182)
|
|
|
(446)
|
|
Ending
balance
|
$
|
42,870
|
|
|
$
|
33,498
|
|
|
$
|
40,053
|
|
|
$
|
43,369
|
|
|
$
|
49,521
|
|
|
|
$
|
42,870
|
|
|
$
|
49,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed-End
Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
6,816
|
|
|
$
|
6,748
|
|
|
$
|
5,343
|
|
|
$
|
5,639
|
|
|
$
|
5,629
|
|
|
|
$
|
5,956
|
|
|
$
|
6,748
|
|
Inflows
|
10
|
|
|
5
|
|
|
—
|
|
|
15
|
|
|
5
|
|
|
|
44
|
|
|
25
|
|
Outflows
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Net flows
|
10
|
|
|
5
|
|
|
—
|
|
|
15
|
|
|
5
|
|
|
|
44
|
|
|
25
|
|
Market
performance
|
26
|
|
|
(1,185)
|
|
|
380
|
|
|
54
|
|
|
364
|
|
|
|
1,116
|
|
|
(387)
|
|
Other (2)
|
(104)
|
|
|
(225)
|
|
|
(84)
|
|
|
(79)
|
|
|
(84)
|
|
|
|
(368)
|
|
|
(472)
|
|
Ending
balance
|
$
|
6,748
|
|
|
$
|
5,343
|
|
|
$
|
5,639
|
|
|
$
|
5,629
|
|
|
$
|
5,914
|
|
|
|
$
|
6,748
|
|
|
$
|
5,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Traded
Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
1,054
|
|
|
$
|
1,156
|
|
|
$
|
480
|
|
|
$
|
541
|
|
|
$
|
543
|
|
|
|
$
|
668
|
|
|
$
|
1,156
|
|
Inflows
|
164
|
|
|
86
|
|
|
74
|
|
|
60
|
|
|
218
|
|
|
|
784
|
|
|
438
|
|
Outflows
|
(62)
|
|
|
(233)
|
|
|
(140)
|
|
|
(35)
|
|
|
(40)
|
|
|
|
(279)
|
|
|
(448)
|
|
Net flows
|
102
|
|
|
(147)
|
|
|
(66)
|
|
|
25
|
|
|
178
|
|
|
|
505
|
|
|
(10)
|
|
Market
performance
|
23
|
|
|
(505)
|
|
|
137
|
|
|
(12)
|
|
|
126
|
|
|
|
90
|
|
|
(254)
|
|
Other (2)
|
(23)
|
|
|
(24)
|
|
|
(10)
|
|
|
(11)
|
|
|
(10)
|
|
|
|
(107)
|
|
|
(55)
|
|
Ending
balance
|
$
|
1,156
|
|
|
$
|
480
|
|
|
$
|
541
|
|
|
$
|
543
|
|
|
$
|
837
|
|
|
|
$
|
1,156
|
|
|
$
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Separate
Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
18,863
|
|
|
$
|
20,414
|
|
|
$
|
17,660
|
|
|
$
|
22,054
|
|
|
$
|
24,727
|
|
|
|
$
|
14,998
|
|
|
$
|
20,414
|
|
Inflows
|
1,012
|
|
|
1,061
|
|
|
1,483
|
|
|
1,727
|
|
|
2,181
|
|
|
|
3,315
|
|
|
6,452
|
|
Outflows
|
(436)
|
|
|
(775)
|
|
|
(654)
|
|
|
(617)
|
|
|
(914)
|
|
|
|
(1,790)
|
|
|
(2,960)
|
|
Net flows
|
576
|
|
|
286
|
|
|
829
|
|
|
1,110
|
|
|
1,267
|
|
|
|
1,525
|
|
|
3,492
|
|
Market
performance
|
976
|
|
|
(3,040)
|
|
|
3,560
|
|
|
1,591
|
|
|
3,757
|
|
|
|
4,045
|
|
|
5,868
|
|
Other (2)
|
(1)
|
|
|
—
|
|
|
5
|
|
|
(28)
|
|
|
—
|
|
|
|
(154)
|
|
|
(23)
|
|
Ending
balance
|
$
|
20,414
|
|
|
$
|
17,660
|
|
|
$
|
22,054
|
|
|
$
|
24,727
|
|
|
$
|
29,751
|
|
|
|
$
|
20,414
|
|
|
$
|
29,751
|
|
Assets Under
Management - Asset Flows by Product (continued)
(in
millions)
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
12/31/2019
|
|
3/31/2020
|
|
6/30/2020
|
|
9/30/2020
|
|
12/31/2020
|
|
12/31/2019
|
|
12/31/2020
|
Institutional
Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
30,951
|
|
|
$
|
32,635
|
|
|
$
|
28,210
|
|
|
$
|
34,545
|
|
|
$
|
36,596
|
|
|
$
|
27,445
|
|
|
$
|
32,635
|
|
Inflows
|
1,235
|
|
|
1,499
|
|
|
3,141
|
|
|
2,075
|
|
|
2,252
|
|
|
4,777
|
|
|
8,967
|
|
Outflows
|
(1,091)
|
|
|
(1,777)
|
|
|
(1,666)
|
|
|
(2,381)
|
|
|
(1,689)
|
|
|
(5,720)
|
|
|
(7,513)
|
|
Net flows
|
144
|
|
|
(278)
|
|
|
1,475
|
|
|
(306)
|
|
|
563
|
|
|
(943)
|
|
|
1,454
|
|
Market
performance
|
1,553
|
|
|
(4,150)
|
|
|
4,877
|
|
|
2,472
|
|
|
3,482
|
|
|
6,377
|
|
|
6,681
|
|
Other (2)
|
(13)
|
|
|
3
|
|
|
(17)
|
|
|
(115)
|
|
|
(18)
|
|
|
(244)
|
|
|
(147)
|
|
Ending
balance
|
$
|
32,635
|
|
|
$
|
28,210
|
|
|
$
|
34,545
|
|
|
$
|
36,596
|
|
|
$
|
40,623
|
|
|
$
|
32,635
|
|
|
$
|
40,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
3,972
|
|
|
$
|
3,903
|
|
|
$
|
4,343
|
|
|
$
|
4,264
|
|
|
$
|
4,163
|
|
|
$
|
3,640
|
|
|
$
|
3,903
|
|
Inflows
|
—
|
|
|
491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
389
|
|
|
491
|
|
Outflows
|
(45)
|
|
|
(42)
|
|
|
(73)
|
|
|
(69)
|
|
|
(81)
|
|
|
(98)
|
|
|
(265)
|
|
Net flows
|
(45)
|
|
|
449
|
|
|
(73)
|
|
|
(69)
|
|
|
(81)
|
|
|
291
|
|
|
226
|
|
Market
performance
|
36
|
|
|
39
|
|
|
33
|
|
|
10
|
|
|
9
|
|
|
173
|
|
|
91
|
|
Other (2)
|
(60)
|
|
|
(48)
|
|
|
(39)
|
|
|
(42)
|
|
|
(31)
|
|
|
(201)
|
|
|
(160)
|
|
Ending
balance
|
$
|
3,903
|
|
|
$
|
4,343
|
|
|
$
|
4,264
|
|
|
$
|
4,163
|
|
|
$
|
4,060
|
|
|
$
|
3,903
|
|
|
$
|
4,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
102,846
|
|
|
$
|
107,726
|
|
|
$
|
89,534
|
|
|
$
|
107,096
|
|
|
$
|
115,027
|
|
|
$
|
90,417
|
|
|
$
|
107,726
|
|
Inflows
|
4,764
|
|
|
7,016
|
|
|
9,086
|
|
|
7,632
|
|
|
8,593
|
|
|
20,144
|
|
|
32,327
|
|
Outflows
|
(4,418)
|
|
|
(8,298)
|
|
|
(6,538)
|
|
|
(6,470)
|
|
|
(5,947)
|
|
|
(20,916)
|
|
|
(27,253)
|
|
Net flows
|
346
|
|
|
(1,282)
|
|
|
2,548
|
|
|
1,162
|
|
|
2,646
|
|
|
(772)
|
|
|
5,074
|
|
Market
performance
|
4,915
|
|
|
(16,571)
|
|
|
15,231
|
|
|
7,119
|
|
|
13,430
|
|
|
19,337
|
|
|
19,209
|
|
Other (2)
|
(381)
|
|
|
(339)
|
|
|
(217)
|
|
|
(350)
|
|
|
(397)
|
|
|
(1,256)
|
|
|
(1,303)
|
|
Ending
balance
|
$
|
107,726
|
|
|
$
|
89,534
|
|
|
$
|
107,096
|
|
|
$
|
115,027
|
|
|
$
|
130,706
|
|
|
$
|
107,726
|
|
|
$
|
130,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
1,221
|
|
|
$
|
1,178
|
|
|
$
|
1,160
|
|
|
$
|
1,365
|
|
|
$
|
1,460
|
|
|
$
|
1,613
|
|
|
$
|
1,178
|
|
Other (2)
|
(43)
|
|
|
(18)
|
|
|
205
|
|
|
95
|
|
|
28
|
|
|
(435)
|
|
|
310
|
|
Ending
balance
|
$
|
1,178
|
|
|
$
|
1,160
|
|
|
$
|
1,365
|
|
|
$
|
1,460
|
|
|
$
|
1,488
|
|
|
$
|
1,178
|
|
|
$
|
1,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
$
|
104,067
|
|
|
$
|
108,904
|
|
|
$
|
90,694
|
|
|
$
|
108,461
|
|
|
$
|
116,487
|
|
|
$
|
92,030
|
|
|
$
|
108,904
|
|
Inflows
|
4,764
|
|
|
7,016
|
|
|
9,086
|
|
|
7,632
|
|
|
8,593
|
|
|
20,144
|
|
|
32,327
|
|
Outflows
|
(4,418)
|
|
|
(8,298)
|
|
|
(6,538)
|
|
|
(6,470)
|
|
|
(5,947)
|
|
|
(20,916)
|
|
|
(27,253)
|
|
Net flows
|
346
|
|
|
(1,282)
|
|
|
2,548
|
|
|
1,162
|
|
|
2,646
|
|
|
(772)
|
|
|
5,074
|
|
Market
performance
|
4,915
|
|
|
(16,571)
|
|
|
15,231
|
|
|
7,119
|
|
|
13,430
|
|
|
19,337
|
|
|
19,209
|
|
Other (2)
|
(424)
|
|
|
(357)
|
|
|
(12)
|
|
|
(255)
|
|
|
(369)
|
|
|
(1,691)
|
|
|
(993)
|
|
Ending
balance
|
$
|
108,904
|
|
|
$
|
90,694
|
|
|
$
|
108,461
|
|
|
$
|
116,487
|
|
|
$
|
132,194
|
|
|
$
|
108,904
|
|
|
$
|
132,194
|
|
|
|
(1)
|
Represents assets
under management of U.S. retail funds, offshore funds and variable
insurance funds
|
(2)
|
Represents open-end
and closed-end fund distributions net of reinvestments, the net
change in assets from liquidity strategies, and the effect on net
flows from non-sales related activities such as asset
acquisitions/(dispositions), seed capital
investments/(withdrawals), structured products reset transactions,
and the use of leverage
|
(3)
|
Represents assets
under management in liquidity strategies, including in certain
open-end funds and institutional accounts
|
Non-GAAP Information and Reconciliations
(in
thousands except per share data)
The following are reconciliations and related notes of the most
comparable U.S. GAAP measure to each non-GAAP measure.
The non-GAAP financial measures included in this release differ
from financial measures determined in accordance with U.S. GAAP as
a result of the reclassification of certain income statement items,
as well as the exclusion of certain expenses and other items that
are not reflective of the earnings generated from providing
investment management and related services. Non-GAAP financial
measures have material limitations and should not be viewed in
isolation or as a substitute for U.S. GAAP measures.
Reconciliation of
Total Revenues, GAAP to Total Revenues, as Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Total revenues,
GAAP
|
$
|
171,646
|
|
|
$
|
146,084
|
|
|
$
|
154,790
|
|
Consolidated
investment products revenues (1)
|
2,581
|
|
|
2,377
|
|
|
2,413
|
|
Investment management
fees (2)
|
(10,403)
|
|
|
(10,304)
|
|
|
(9,770)
|
|
Distribution and
service fees (2)
|
(10,283)
|
|
|
(9,782)
|
|
|
(9,800)
|
|
Total revenues, as
adjusted
|
$
|
153,541
|
|
|
$
|
128,375
|
|
|
$
|
137,633
|
|
Reconciliation of
Total Operating Expenses, GAAP to Operating Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Total operating
expenses, GAAP
|
$
|
120,715
|
|
|
$
|
108,288
|
|
|
$
|
113,781
|
|
Consolidated
investment products expenses (1)
|
(641)
|
|
|
(620)
|
|
|
(1,016)
|
|
Distribution and
other asset-based expenses (3)
|
(20,686)
|
|
|
(20,086)
|
|
|
(19,570)
|
|
Amortization of
intangible assets (4)
|
(7,529)
|
|
|
(7,533)
|
|
|
(7,532)
|
|
Restructuring and
severance (5)
|
—
|
|
|
(283)
|
|
|
(735)
|
|
Acquisition and
integration expenses (6)
|
344
|
|
|
(1,193)
|
|
|
(999)
|
|
Other (7)
|
(580)
|
|
|
(308)
|
|
|
(368)
|
|
Total operating
expenses, as adjusted
|
$
|
91,623
|
|
|
$
|
78,265
|
|
|
$
|
83,561
|
|
Reconciliation of
Operating Income (Loss), GAAP to Operating Income (Loss), as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Operating income
(loss), GAAP
|
$
|
50,931
|
|
$
|
37,796
|
|
$
|
41,009
|
Consolidated
investment products (earnings) losses (1)
|
3,222
|
|
2,997
|
|
3,429
|
Amortization of
intangible assets (4)
|
7,529
|
|
7,533
|
|
7,532
|
Restructuring and
severance (5)
|
—
|
|
283
|
|
735
|
Acquisition and
integration expenses (6)
|
(344)
|
|
1,193
|
|
999
|
Other (7)
|
580
|
|
308
|
|
368
|
Operating income
(loss), as adjusted
|
$
|
61,918
|
|
$
|
50,110
|
|
$
|
54,072
|
|
|
|
|
|
|
Operating margin,
GAAP
|
29.7%
|
|
25.9%
|
|
26.5%
|
Operating margin, as
adjusted
|
40.3%
|
|
39.0%
|
|
39.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net
Income (Loss) Attributable to Common Stockholders, GAAP to Net
Income (Loss) Attributable to Common Stockholders, as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Net income (loss)
attributable to common stockholders, GAAP
|
$
|
43,315
|
|
|
$
|
20,808
|
|
|
$
|
29,648
|
|
Amortization of
intangible assets, net of tax (4)
|
4,739
|
|
|
4,737
|
|
|
4,739
|
|
Restructuring and
severance, net of tax (5)
|
—
|
|
|
206
|
|
|
534
|
|
Acquisition and
integration expenses, net of tax (6)
|
(250)
|
|
|
868
|
|
|
726
|
|
Other, net of tax
(7)
|
12,405
|
|
|
8,193
|
|
|
8,184
|
|
Seed capital and CLO
investments (gains) losses, net of tax (8)
|
(18,847)
|
|
|
93
|
|
|
(7,910)
|
|
Net income (loss)
attributable to common stockholders, as adjusted
|
$
|
41,362
|
|
|
$
|
34,905
|
|
|
$
|
35,921
|
|
Weighted average
shares outstanding - diluted
|
8,026
|
|
|
8,084
|
|
|
7,997
|
|
Weighted average
shares outstanding - diluted, as adjusted
|
8,026
|
|
|
8,084
|
|
|
7,997
|
|
|
|
|
|
|
|
Earnings (loss) per
share - diluted, GAAP
|
$
|
5.40
|
|
|
$
|
2.83
|
|
|
$
|
3.71
|
|
Earnings (loss) per
share - diluted, as adjusted
|
$
|
5.15
|
|
|
$
|
4.32
|
|
|
$
|
4.49
|
|
Reconciliation of
Income (Loss) Before Taxes, GAAP to Income (Loss) Before Taxes, as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Income (loss) before
taxes, GAAP
|
$
|
75,902
|
|
|
$
|
41,108
|
|
|
$
|
52,912
|
|
Consolidated
investment products (earnings) losses (1)
|
(3,292)
|
|
|
(304)
|
|
|
(906)
|
|
Amortization of
intangible assets (4)
|
7,529
|
|
|
7,533
|
|
|
7,532
|
|
Restructuring and
severance (5)
|
—
|
|
|
283
|
|
|
735
|
|
Acquisition and
integration expenses (6)
|
(344)
|
|
|
1,193
|
|
|
999
|
|
Other (7)
|
580
|
|
|
308
|
|
|
368
|
|
Seed capital and CLO
investments (gains) losses (8)
|
(18,798)
|
|
|
311
|
|
|
(8,873)
|
|
Income (loss) before
taxes, as adjusted
|
$
|
61,577
|
|
|
$
|
50,432
|
|
|
$
|
52,767
|
|
Reconciliation of
Income Tax Expense (Benefit), GAAP to Income Tax Expense (Benefit),
as Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Income tax expense
(benefit), GAAP
|
$
|
14,088
|
|
|
$
|
11,326
|
|
|
$
|
11,978
|
|
Tax impact
of:
|
|
|
|
|
|
Amortization of
intangible assets (4)
|
2,055
|
|
|
2,054
|
|
|
2,057
|
|
Restructuring
and severance (5)
|
—
|
|
|
77
|
|
|
201
|
|
Acquisition and
integration expenses (6)
|
(94)
|
|
|
325
|
|
|
273
|
|
Other
(7)
|
706
|
|
|
(247)
|
|
|
868
|
|
Seed capital
and CLO investments (gains) losses (8)
|
49
|
|
|
218
|
|
|
(963)
|
|
Income tax expense
(benefit), as adjusted
|
$
|
16,804
|
|
|
$
|
13,753
|
|
|
$
|
14,414
|
|
|
|
|
|
|
|
Effective tax rate,
GAAPA
|
18.6%
|
|
|
27.6%
|
|
|
22.6%
|
|
Effective tax rate,
as adjustedB
|
27.3%
|
|
|
27.3%
|
|
|
27.3%
|
|
A
|
Reflects income tax
expense (benefit), GAAP, divided by income (loss) before taxes,
GAAP
|
B
|
Reflects income tax
expense (benefit), as adjusted, divided by income (loss) before
taxes, as adjusted
|
Reconciliation of
Administration and Shareholder Service Fees, GAAP to Administration
and Shareholder Service Fees, as Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Administration and
shareholder service fees, GAAP
|
$
|
16,407
|
|
|
$
|
15,137
|
|
|
$
|
15,114
|
|
Consolidated
investment products fees (1)
|
65
|
|
|
52
|
|
|
66
|
|
Administration and
shareholder service fees, as adjusted
|
$
|
16,472
|
|
|
$
|
15,189
|
|
|
$
|
15,180
|
|
Reconciliation of
Employment Expenses, GAAP to Employment Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Employment expenses,
GAAP
|
$
|
73,527
|
|
|
$
|
60,265
|
|
|
$
|
67,479
|
|
Acquisition and
integration expenses (6)
|
515
|
|
|
(1,193)
|
|
|
(999)
|
|
Other (7)
|
(580)
|
|
|
(308)
|
|
|
(368)
|
|
Employment expenses,
as adjusted
|
$
|
73,462
|
|
|
$
|
58,764
|
|
|
$
|
66,112
|
|
Reconciliation of
Other Operating Expenses, GAAP to Other Operating Expenses, as
Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Other operating
expenses, GAAP
|
$
|
17,232
|
|
|
$
|
18,238
|
|
|
$
|
16,343
|
|
Acquisition and
integration expenses (6)
|
(171)
|
|
|
—
|
|
|
—
|
|
Other operating
expenses, as adjusted
|
$
|
17,061
|
|
|
$
|
18,238
|
|
|
$
|
16,343
|
|
Reconciliation of
Total Other Income (Expense), Net, GAAP to Total Other Income
(Expense), Net, as Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Total other income
(expense), net GAAP
|
$
|
16,909
|
|
|
$
|
(1,568)
|
|
|
$
|
6,177
|
|
Consolidated
investment products (1)
|
3,106
|
|
|
1,747
|
|
|
3,490
|
|
Seed capital and CLO
investments (gains) losses (8)
|
(18,798)
|
|
|
311
|
|
|
(8,873)
|
|
Total other income
(expense), net as adjusted
|
$
|
1,217
|
|
|
$
|
490
|
|
|
$
|
794
|
|
Reconciliation of
Interest and Dividend Income, GAAP to Interest and Dividend Income,
as Adjusted:
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Interest and dividend
income, GAAP
|
$
|
236
|
|
|
$
|
827
|
|
|
$
|
137
|
|
Consolidated
investment products (1)
|
898
|
|
|
3,273
|
|
|
641
|
|
Interest and dividend
income, as adjusted
|
$
|
1,134
|
|
|
$
|
4,100
|
|
|
$
|
778
|
|
Reconciliation of
Total Noncontrolling Interests, GAAP to Total Noncontrolling
Interests, as Adjusted
|
|
|
Three Months
Ended
|
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
Total noncontrolling
interests, GAAP
|
$
|
(18,499)
|
|
|
$
|
(6,890)
|
|
|
$
|
(11,286)
|
|
Consolidated
investment products (1)
|
3,292
|
|
|
304
|
|
|
906
|
|
Amortization of
intangible assets (4)
|
(735)
|
|
|
(742)
|
|
|
(736)
|
|
Other (7)
|
12,531
|
|
|
5,554
|
|
|
8,684
|
|
Total noncontrolling
interests, as adjusted
|
$
|
(3,411)
|
|
|
$
|
(1,774)
|
|
|
$
|
(2,432)
|
|
Notes to Reconciliations:
Reclassifications:
1. Consolidated investment
products - Revenues and expenses generated by operating
activities of mutual funds and CLOs that are consolidated in the
financial statements. Management believes that excluding these
operating activities to reflect net revenues and expenses of the
company prior to the consolidation of these products is consistent
with the approach of reflecting its operating results from managing
third-party client assets.
Other Adjustments:
Revenue Related
2. Investment
management/Distribution and service fees - Each of these
revenue line items is reduced to exclude fees passed through to
third-party client intermediaries who own the retail client
relationship and are responsible for distributing the product and
servicing the client. The amount of fees fluctuates each period,
based on a predetermined percentage of the value of assets under
management, and varies based on the type of investment product. The
specific adjustments are as follows:
Investment
management fees - Based on specific agreements, the portion of
investment management fees passed-through to third-party
intermediaries for services to investors in sponsored investment
products.
Distribution
and service fees - Based on distinct arrangements, fees collected
by the company then passed-through to third-party client
intermediaries for services to investors in sponsored investment
products. The adjustment represents all of the company's
distribution and service fees that are recorded as a separate line
item on the condensed consolidated statements of operations.
Management believes that making
these adjustments aids in comparing the company's operating results
with other asset management firms that do not utilize third-party
client intermediaries.
Expense Related
3. Distribution and other
asset-based expenses - Primarily payments to third-party client
intermediaries for providing services to investors in sponsored
investment products. Management believes that making this
adjustment aids in comparing the company's operating results with
other asset management firms that do not utilize third-party client
intermediaries.
4. Amortization of intangible
assets - Non-cash amortization expense or impairment expense,
if any, attributable to acquisition-related intangible assets,
including any portion that is allocated to noncontrolling
interests. Management believes that making this adjustment aids in
comparing the company's operating results with other asset
management firms that have not engaged in acquisitions.
5. Restructuring and
severance - Certain expenses associated with restructuring the
business, including lease abandonment-related expenses and
severance costs associated with staff reductions, that are not
reflective of the ongoing earnings generation of the business.
Management believes that making this adjustment aids in comparing
the company's operating results with prior periods.
6. Acquisition and integration
expenses - Expenses that are directly related to acquisition
and integration activities. Acquisition expenses include
transaction closing costs, certain professional fees, and financing
fees. Integration expenses include costs incurred that are directly
attributable to combining businesses, including compensation,
restructuring and severance charges, professional fees, consulting
fees, and other expenses. Management believes that making these
adjustments aids in comparing the company's operating results with
other asset management firms that have not engaged in
acquisitions.
Components of Acquisition and
Integration Expenses for the respective periods are shown
below:
|
|
|
Three Months
Ended
|
|
|
Acquisition and
Integration Expenses
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
|
|
Employment
expenses
|
$
|
(515)
|
|
|
$
|
1,193
|
|
|
$
|
999
|
|
|
|
Other operating
expenses
|
171
|
|
|
—
|
|
|
—
|
|
|
|
Total Acquisition
and Integration Expenses
|
$
|
(344)
|
|
|
$
|
1,193
|
|
|
$
|
999
|
|
7. Other - Certain expenses
that are not reflective of the ongoing earnings generation of the
business. Employment expenses and noncontrolling interests are
adjusted for fair value measurements of affiliate minority
interests. Interest expense is adjusted to remove gains on early
extinguishment of debt. Income tax expense (benefit) items are
adjusted for uncertain tax positions, changes in tax law, valuation
allowances, and other unusual or infrequent items not related to
current operating results to reflect a normalized effective rate.
Preferred dividends are adjusted as preferred shares were
mandatorily converted into common shares on February 1, 2020 and the non-GAAP weighted
average shares are adjusted to reflect the conversion.
Management believes that making these adjustments aids in comparing
the company's operating results with prior periods.
Components of Other for the
respective periods are shown below:
|
|
|
Three Months
Ended
|
|
|
Other
|
12/31/2020
|
|
12/31/2019
|
|
9/30/2020
|
|
|
Employment expense
fair value adjustments
|
$
|
580
|
|
|
308
|
|
|
$
|
368
|
|
|
|
Tax impact of
employment expense fair value adjustments
|
(158)
|
|
|
(84)
|
|
|
(101)
|
|
|
|
Other discrete tax
adjustments
|
(548)
|
|
|
331
|
|
|
(767)
|
|
|
|
Affiliate minority
interest fair value adjustments
|
12,531
|
|
|
5,554
|
|
|
8,684
|
|
|
|
Preferred stockholder
dividends
|
—
|
|
|
2,084
|
|
|
—
|
|
|
|
Total
Other
|
$
|
12,405
|
|
|
$
|
8,193
|
|
|
$
|
8,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seed Capital and CLO
Related
8. Seed capital and CLO
investments (gains) losses - Gains and losses (realized
and unrealized) of seed capital and CLO investments. Gains and
losses (realized and unrealized) generated by investments in seed
capital and CLO investments can vary significantly from period to
period and do not reflect the company's operating results from
providing investment management and related services. Management
believes that making this adjustment aids in comparing the
company's operating results with prior periods and with other asset
management firms that do not have meaningful seed capital and CLO
investments.
Definitions:
Revenues, as adjusted, comprise the fee revenues
paid by clients for investment management and related services.
Revenues, as adjusted, for purposes of calculating net income
attributable to common stockholders, as adjusted, differ from U.S.
GAAP, namely in excluding the impact of operating activities of
consolidated investment products and reduced to exclude fees
passed-through to third-party client intermediaries who own the
retail client relationship and are responsible for distributing the
product and servicing the client.
Operating expenses, as adjusted, is calculated to
reflect expenses from ongoing continuing operations. Operating
expenses, as adjusted, for purposes of calculating net income
attributable to common stockholders, as adjusted, differ from U.S.
GAAP expenses in that they exclude amortization or impairment, if
any, of intangible assets, restructuring and severance, the effect
of consolidated investment products, acquisition and
integration-related expenses and certain other expenses that do not
reflect the ongoing earnings generation of the business.
Operating margin, as adjusted, is a metric used to
evaluate efficiency represented by operating income, as adjusted,
divided by revenues, as adjusted.
Earnings (loss) per share, as adjusted, represent
net income (loss) attributable to common stockholders, as adjusted,
divided by weighted average shares outstanding, as adjusted, on
either a basic or diluted basis.
Forward-Looking Information
This press release contains statements that are, or may be
considered to be, forward-looking statements. All statements that
are not historical facts, including statements about our beliefs or
expectations, are "forward-looking statements" within the meaning
of The Private Securities Litigation Reform Act of 1995, as
amended. These statements may be identified by such forward-looking
terminology as "expect," "estimate," "intent," "plan," "intend,"
"believe," "anticipate," "may," "will," "should," "could,"
"continue," "project," "opportunity," "predict," "would,"
"potential," "future," "forecast," "guarantee," "assume," "likely,"
"target" or similar statements or variations of such terms.
Our forward-looking statements are based on a series of
expectations, assumptions and projections about the company
and the markets in which we operate, are not guarantees
of future results or performance, and involve substantial risks and
uncertainty including assumptions and projections concerning our
assets under management, net asset inflows and outflows, operating
cash flows, business plans and ability to borrow, for all future
periods. All forward-looking statements are as of the date of this
release only. The company can give no assurance that such
expectations or forward-looking statements will prove to be
correct. Actual results may differ materially.
Our business and our forward-looking statements involve
substantial known and unknown risks and uncertainties, including
those discussed under "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in
our 2019 Annual Report on Form 10-K and as supplemented by any
subsequent Quarterly Report on Form 10-Q, as well as the following
risks and uncertainties resulting from: (i) the on-going effects of
the COVID-19 pandemic and associated global economic disruption;
(ii) general domestic and global economic, political and pandemic
conditions; (iii) any reduction in our assets under management;
(iv) withdrawal, renegotiation or termination of investment
advisory agreements; (v) damage to our reputation; (vi) failure to
comply with investment guidelines or other contractual
requirements; (vii) inability to satisfy financial covenants and
payments related to our indebtedness; (viii) inability to attract
and retain key personnel; (ix) challenges from the competition we
face in our business; (x) adverse regulatory and legal
developments; (xi) unfavorable changes in tax laws or limitations;
(xii) adverse developments related to unaffiliated subadvisers;
(xiii) negative implications of changes in key distribution
relationships; (xiv) interruptions in or failure to provide
critical technological service by us or third parties; (xv)
volatility associated with our common stock; (xvi) adverse civil
litigation and government investigations or proceedings; (xvii)
risk of loss on our investments; (xviii) inability to make
quarterly common stock dividends; (xix) lack of sufficient capital
on satisfactory terms; (xx) losses or costs not covered by
insurance; (xxi) impairment of goodwill or intangible assets;
(xxii) inability to achieve expected acquisition-related benefits;
and other risks and uncertainties. Any occurrence of, or any
material adverse change in, one or more risk factors or risks and
uncertainties referred to above, in our 2019 Annual Report on Form
10-K, our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020 and our other
periodic reports filed with the Securities and Exchange Commission
(the "SEC") could materially and adversely affect our operations,
financial results, cash flows, prospects and liquidity.
Certain other factors that may impact our continuing operations,
prospects, financial results and liquidity, or that may cause
actual results to differ from such forward-looking statements, are
discussed or included in the company's periodic reports filed with
the SEC and are available on our website at www.virtus.com under
"Investor Relations." You are urged to carefully consider all such
factors.
The company does not undertake or plan to update or revise any
such forward-looking statements to reflect actual results, changes
in plans, assumptions, estimates or projections, or other
circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any
forward-looking information will not be realized. If there are any
future public statements or disclosures by us that modify or affect
any of the forward-looking statements contained in or accompanying
this release, such statements or disclosures will be deemed to
modify or supersede such statements in this release.
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SOURCE Virtus Investment Partners, Inc.