Virtus Investment Partners Announces Financial Results for Fourth Quarter 2023
- Total Sales of $6.2B and Net Flows of ($3.8B) indicate significant financial activity.
- Assets Under Management of $172.3B shows a strong financial position.
- Earnings Per Share - Diluted of $4.21 and Earnings Per Share - Diluted, as Adjusted, of $6.11 demonstrate positive financial performance.
- Operating income declined by 13% from the prior quarter.
- Total sales decreased by 14% compared to the same period last year.
- Net flows increased by 12% from the prior quarter.
Insights
The reported financial results of Virtus Investment Partners, Inc. reflect a mixed performance in the context of the investment management industry. A key metric, Assets Under Management (AUM), shows a significant year-over-year increase of 15%, indicating potential growth in the company's market presence and investment capacity. However, this growth is juxtaposed with a notable net outflow of $3.8 billion, which raises concerns about client retention and the competitive landscape. The net outflows, especially in institutional and open-end funds, may suggest a shift in investor sentiment or a reaction to broader market trends.
From a revenue standpoint, the company's operating income saw a 25% increase compared to the same period last year, which is a strong indicator of operational efficiency and cost management. Nonetheless, a decline in net income of 13% year-over-year coupled with a 12% decrease in diluted earnings per share (EPS) suggests that there were significant non-operating factors at play, such as fair value adjustments and CLO issuance expenses, which investors should scrutinize.
The effective tax rate increase could potentially affect future profitability and the reported decrease in working capital by 48% year-over-year might raise concerns about the company's liquidity and short-term financial health. These factors, combined with the share repurchase activity, suggest a strategy focused on returning value to shareholders amidst a challenging operating environment.
Examining Virtus Investment Partners' performance within the broader investment management sector reveals that the company is navigating a complex market dynamic. The increase in AUM is a positive sign, yet the industry is also characterized by intense competition for assets, with investors increasingly sensitive to performance and fee structures. The net outflows experienced by Virtus could be symptomatic of larger industry trends, such as the shift towards passive investment strategies or a response to macroeconomic conditions.
The company's ability to increase its operating margin year-over-year is commendable, yet the decline in total sales by 14% highlights potential challenges in asset acquisition and retention. The mixed performance in retail and institutional segments indicates that the company may need to adjust its strategy to cater to the diverse needs of these client bases. The sales growth in retail separate accounts and open-end funds suggests that there may be opportunities to capitalize on these segments through targeted product offerings and marketing strategies.
Furthermore, the modest decline in non-GAAP earnings per share when adjusted for certain non-operating items provides a clearer picture of the company's core operational performance, which remains relatively stable. This stability is crucial for investor confidence, especially in a market where asset managers are under pressure to demonstrate value amidst shifting investor preferences.
The disclosure of both U.S. GAAP and non-GAAP financial measures is in line with regulatory requirements for transparency and provides investors with a comprehensive view of the company's financial health. The reconciliation of non-GAAP measures to their GAAP counterparts is a critical component for investors to understand the adjustments made and the rationale behind them. This practice aligns with the Securities and Exchange Commission (SEC) guidelines, which emphasize the importance of non-GAAP measures as supplemental information to GAAP results.
The adjustments made to non-GAAP measures, such as excluding fair value adjustments and CLO issuance expenses, are common in the industry and allow for a focus on the company's operating performance. However, investors should be aware that these adjustments can sometimes obscure the impact of significant expenses and should therefore consider both sets of measures when evaluating the company's financial outcomes.
In terms of corporate governance, the share repurchase program and debt repayment strategies indicate a proactive approach to capital management. The reduction in gross debt and the management of net debt to a low multiple of EBITDA demonstrates fiscal responsibility and a commitment to maintaining a strong balance sheet, which is essential for long-term sustainability and investor confidence.
-
Earnings Per Share - Diluted of
$4.21 $6.11
-
Total Sales of
$6.2B $3.8B $172.3B
Financial Highlights (Unaudited) |
|||||||||||||||||
(in millions, except per share data or as noted) |
|||||||||||||||||
|
Three Months Ended |
|
|
|
Three
|
|
|
||||||||||
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues |
$ |
214.6 |
|
|
$ |
198.4 |
|
|
8 |
% |
|
$ |
219.3 |
|
|
(2 |
%) |
Operating expenses |
$ |
175.6 |
|
|
$ |
167.2 |
|
|
5 |
% |
|
$ |
174.4 |
|
|
1 |
% |
Operating income (loss) |
$ |
39.0 |
|
|
$ |
31.2 |
|
|
25 |
% |
|
$ |
44.9 |
|
|
(13 |
%) |
Operating margin |
|
18.2 |
% |
|
|
15.7 |
% |
|
|
|
|
20.5 |
% |
|
|
||
Net income (loss) attributable to Virtus Investment Partners, Inc. |
$ |
30.8 |
|
|
$ |
35.4 |
|
|
(13 |
%) |
|
$ |
30.9 |
|
|
— |
% |
Earnings (loss) per share - diluted |
$ |
4.21 |
|
|
$ |
4.77 |
|
|
(12 |
%) |
|
$ |
4.19 |
|
|
— |
% |
Weighted average shares outstanding - diluted |
|
7.320 |
|
|
|
7.419 |
|
|
(1 |
%) |
|
|
7.379 |
|
|
(1 |
%) |
Non-GAAP Financial Measures (1) |
|
|
|
|
|
|
|
|
|
||||||||
Revenues, as adjusted |
$ |
193.4 |
|
|
$ |
176.3 |
|
|
10 |
% |
|
$ |
197.5 |
|
|
(2 |
%) |
Operating expenses, as adjusted |
$ |
129.5 |
|
|
$ |
120.2 |
|
|
8 |
% |
|
$ |
130.5 |
|
|
(1 |
%) |
Operating income (loss), as adjusted |
$ |
63.9 |
|
|
$ |
56.1 |
|
|
14 |
% |
|
$ |
67.0 |
|
|
(5 |
%) |
Operating margin, as adjusted |
|
33.0 |
% |
|
|
31.8 |
% |
|
|
|
|
33.9 |
% |
|
|
||
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
44.8 |
|
|
$ |
38.3 |
|
|
17 |
% |
|
$ |
45.8 |
|
|
(2 |
%) |
Earnings (loss) per share - diluted, as adjusted |
$ |
6.11 |
|
|
$ |
5.17 |
|
|
18 |
% |
|
$ |
6.21 |
|
|
(2 |
%) |
Weighted average shares outstanding - diluted, as adjusted |
|
7.320 |
|
|
|
7.419 |
|
|
(1 |
%) |
|
|
7.379 |
|
|
(1 |
%) |
(1) See the information beginning on page 10 for reconciliations to the most directly comparable |
|||||||||||||||||
Earnings Summary
The company presents
Assets Under Management and Asset Flows |
|||||||||||||||||
(in billions) |
|||||||||||||||||
|
Three Months Ended |
|
|
|
Three
|
|
|
||||||||||
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||||
Ending total assets under management |
$ |
172.3 |
|
|
$ |
149.4 |
|
|
15 |
% |
|
$ |
162.5 |
|
|
6 |
% |
Average total assets under management |
$ |
162.7 |
|
|
$ |
148.6 |
|
|
9 |
% |
|
$ |
167.9 |
|
|
(3 |
%) |
Total sales |
$ |
6.2 |
|
|
$ |
7.3 |
|
|
(14 |
%) |
|
$ |
5.8 |
|
|
7 |
% |
Net flows |
$ |
(3.8 |
) |
|
$ |
(3.4 |
) |
|
12 |
% |
|
$ |
(1.5 |
) |
|
N/M |
|
N/M - Not Meaningful |
|||||||||||||||||
Total assets under management of
Total sales increased
Net flows of
GAAP Results
Operating income of
Net income attributable to Virtus Investment Partners, Inc. of
The effective tax rate of
Non-GAAP Results
Revenues, as adjusted, of
Employment expenses, as adjusted, of
Operating income, as adjusted, of
Net income attributable to Virtus Investment Partners, Inc., as adjusted, per diluted share was
The effective tax rate, as adjusted, of
Select Balance Sheet Items (Unaudited) |
|||||||||||||||
(in millions) |
|||||||||||||||
|
As of |
|
|
|
As of |
|
|
||||||||
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||
Cash and cash equivalents |
$ |
239.6 |
|
$ |
338.2 |
|
|
(29 |
%) |
|
$ |
195.4 |
|
23 |
% |
Gross debt (1) |
$ |
258.8 |
|
$ |
261.6 |
|
|
(1 |
%) |
|
$ |
279.5 |
|
(7 |
%) |
Contingent consideration (2) |
$ |
90.9 |
|
$ |
128.4 |
|
|
(29 |
%) |
|
$ |
94.4 |
|
(4 |
%) |
Redeemable noncontrolling interests (3) |
$ |
74.2 |
|
$ |
95.5 |
|
|
(22 |
%) |
|
$ |
70.6 |
|
5 |
% |
Total equity exc. noncontrolling interests |
$ |
864.0 |
|
$ |
817.0 |
|
|
6 |
% |
|
$ |
862.1 |
|
— |
% |
|
|
|
|
|
|
|
|
|
|
||||||
Working capital (4) |
$ |
100.6 |
|
$ |
193.2 |
|
|
(48 |
%) |
|
$ |
105.6 |
|
(5 |
%) |
Net debt (cash) (5) |
$ |
19.2 |
|
$ |
(76.7 |
) |
|
N/M |
|
|
$ |
84.1 |
|
(77 |
%) |
(1) |
Excludes deferred financing costs of |
|
(2) |
Represents estimates of revenue participation and contingent payments |
|
(3) |
Excludes redeemable noncontrolling interests of consolidated investment products of |
|
(4) |
Defined as cash and cash equivalents plus accounts receivable, net, and deferred compensation related investments less accrued compensation and benefits, accounts payable and accrued liabilities, dividends payable, debt principal payments due over next 12 months and revenue participation amounts earned as of the balance sheet date and due within 12 months. As of December 31, 2023, deferred compensation related investments were added to the definition of working capital and prior period amounts have been adjusted to conform to this definition. |
|
(5) |
Defined as gross debt less cash and cash equivalents |
|
| N/M - Not Meaningful | ||
Working capital of
During the quarter, the company repurchased 97,952 shares of common stock for
The company repaid the remaining
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on Friday, February 2, 2024, at 10 a.m. Eastern to discuss these financial results and related matters. The presentation that will accompany the conference call is available in the Investor Relations section of virtus.com. A replay of the call will be available in the Investor Relations section for at least one year.
About Virtus Investment Partners, Inc.
Virtus Investment Partners (NYSE: VRTS) is a distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and institutional investors. We provide investment management products and services from our affiliated managers, each with a distinct investment style and autonomous investment process, as well as select subadvisers. Investment solutions are available across multiple disciplines and product types to meet a wide array of investor needs. Additional information about our firm, investment partners, and strategies is available at virtus.com.
|
||||||||||||||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||||||||||||
|
Three Months Ended |
|
|
|
Three
|
|
|
|
Twelve Months Ended |
|
|
|||||||||||||||||
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Investment management fees |
$ |
182,149 |
|
|
$ |
163,648 |
|
|
11 |
% |
|
$ |
184,869 |
|
|
(1 |
%) |
|
$ |
711,475 |
|
|
$ |
728,339 |
|
|
(2 |
%) |
Distribution and service fees |
|
13,535 |
|
|
|
14,606 |
|
|
(7 |
%) |
|
|
14,333 |
|
|
(6 |
%) |
|
|
56,153 |
|
|
|
67,518 |
|
|
(17 |
%) |
Administration and shareholder service fees |
|
18,189 |
|
|
|
18,973 |
|
|
(4 |
%) |
|
|
19,069 |
|
|
(5 |
%) |
|
|
73,857 |
|
|
|
85,862 |
|
|
(14 |
%) |
Other income and fees |
|
714 |
|
|
|
1,144 |
|
|
(38 |
%) |
|
|
1,000 |
|
|
(29 |
%) |
|
|
3,783 |
|
|
|
4,660 |
|
|
(19 |
%) |
Total revenues |
|
214,587 |
|
|
|
198,371 |
|
|
8 |
% |
|
|
219,271 |
|
|
(2 |
%) |
|
|
845,268 |
|
|
|
886,379 |
|
|
(5 |
%) |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Employment expenses |
|
99,847 |
|
|
|
87,676 |
|
|
14 |
% |
|
|
101,587 |
|
|
(2 |
%) |
|
|
404,742 |
|
|
|
371,259 |
|
|
9 |
% |
Distribution and other asset-based expenses |
|
23,470 |
|
|
|
24,365 |
|
|
(4 |
%) |
|
|
24,157 |
|
|
(3 |
%) |
|
|
96,802 |
|
|
|
112,612 |
|
|
(14 |
%) |
Other operating expenses |
|
31,164 |
|
|
|
31,811 |
|
|
(2 |
%) |
|
|
30,494 |
|
|
2 |
% |
|
|
125,871 |
|
|
|
126,178 |
|
|
— |
% |
Operating expenses of consolidated investment products |
|
2,611 |
|
|
|
2,481 |
|
|
5 |
% |
|
|
553 |
|
|
372 |
% |
|
|
4,224 |
|
|
|
4,408 |
|
|
(4 |
%) |
Restructuring expense |
|
133 |
|
|
|
— |
|
|
N/M |
|
|
691 |
|
|
(81 |
%) |
|
|
824 |
|
|
|
4,015 |
|
|
(79 |
%) |
|
Change in fair value of contingent consideration |
|
1,290 |
|
|
|
5,120 |
|
|
(75 |
%) |
|
|
— |
|
|
N/M |
|
|
(5,510 |
) |
|
|
8,020 |
|
|
N/M |
||
Depreciation expense |
|
1,670 |
|
|
|
1,088 |
|
|
53 |
% |
|
|
1,504 |
|
|
11 |
% |
|
|
5,804 |
|
|
|
3,923 |
|
|
48 |
% |
Amortization expense |
|
15,446 |
|
|
|
14,609 |
|
|
6 |
% |
|
|
15,382 |
|
|
— |
% |
|
|
61,027 |
|
|
|
58,504 |
|
|
4 |
% |
Total operating expenses |
|
175,631 |
|
|
|
167,150 |
|
|
5 |
% |
|
|
174,368 |
|
|
1 |
% |
|
|
693,784 |
|
|
|
688,919 |
|
|
1 |
% |
Operating Income (Loss) |
|
38,956 |
|
|
|
31,221 |
|
|
25 |
% |
|
|
44,903 |
|
|
(13 |
%) |
|
|
151,484 |
|
|
|
197,460 |
|
|
(23 |
%) |
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Realized and unrealized gain (loss) on investments, net |
|
4,056 |
|
|
|
3,529 |
|
|
15 |
% |
|
|
(1,918 |
) |
|
N/M |
|
|
6,525 |
|
|
|
(12,489 |
) |
|
N/M |
||
Realized and unrealized gain (loss) of consolidated investment products, net |
|
449 |
|
|
|
4,147 |
|
|
(89 |
%) |
|
|
(1,013 |
) |
|
N/M |
|
|
(2,404 |
) |
|
|
(39,296 |
) |
|
(94 |
%) |
|
Other income (expense), net |
|
622 |
|
|
|
(352 |
) |
|
N/M |
|
|
128 |
|
|
386 |
% |
|
|
(440 |
) |
|
|
(153 |
) |
|
188 |
% |
|
Total other income (expense), net |
|
5,127 |
|
|
|
7,324 |
|
|
(30 |
%) |
|
|
(2,803 |
) |
|
N/M |
|
|
3,681 |
|
|
|
(51,938 |
) |
|
N/M |
||
Interest Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest expense |
|
(5,987 |
) |
|
|
(4,512 |
) |
|
33 |
% |
|
|
(6,222 |
) |
|
(4 |
%) |
|
|
(23,431 |
) |
|
|
(13,173 |
) |
|
78 |
% |
Interest and dividend income |
|
3,673 |
|
|
|
2,578 |
|
|
42 |
% |
|
|
2,872 |
|
|
28 |
% |
|
|
12,458 |
|
|
|
4,448 |
|
|
180 |
% |
Interest and dividend income of investments of consolidated investment products |
|
53,206 |
|
|
|
35,889 |
|
|
48 |
% |
|
|
49,803 |
|
|
7 |
% |
|
|
197,707 |
|
|
|
107,325 |
|
|
84 |
% |
Interest expense of consolidated investment products |
|
(43,182 |
) |
|
|
(33,374 |
) |
|
29 |
% |
|
|
(38,218 |
) |
|
13 |
% |
|
|
(155,335 |
) |
|
|
(80,234 |
) |
|
94 |
% |
Total interest income (expense), net |
|
7,710 |
|
|
|
581 |
|
|
N/M |
|
|
8,235 |
|
|
(6 |
%) |
|
|
31,399 |
|
|
|
18,366 |
|
|
71 |
% |
|
Income (Loss) Before Income Taxes |
|
51,793 |
|
|
|
39,126 |
|
|
32 |
% |
|
|
50,335 |
|
|
3 |
% |
|
|
186,564 |
|
|
|
163,888 |
|
|
14 |
% |
Income tax expense (benefit) |
|
13,294 |
|
|
|
13,291 |
|
|
— |
% |
|
|
12,181 |
|
|
9 |
% |
|
|
45,088 |
|
|
|
57,260 |
|
|
(21 |
%) |
Net Income (Loss) |
|
38,499 |
|
|
|
25,835 |
|
|
49 |
% |
|
|
38,154 |
|
|
1 |
% |
|
|
141,476 |
|
|
|
106,628 |
|
|
33 |
% |
Noncontrolling interests |
|
(7,665 |
) |
|
|
9,565 |
|
|
N/M |
|
|
(7,248 |
) |
|
6 |
% |
|
|
(10,855 |
) |
|
|
10,913 |
|
|
N/M |
||
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
$ |
30,834 |
|
|
$ |
35,400 |
|
|
(13 |
%) |
|
$ |
30,906 |
|
|
— |
% |
|
$ |
130,621 |
|
|
$ |
117,541 |
|
|
11 |
% |
Earnings (Loss) Per Share - Basic |
$ |
4.30 |
|
|
$ |
4.87 |
|
|
(12 |
%) |
|
$ |
4.26 |
|
|
1 |
% |
|
$ |
18.02 |
|
|
$ |
15.90 |
|
|
13 |
% |
Earnings (Loss) Per Share - Diluted |
$ |
4.21 |
|
|
$ |
4.77 |
|
|
(12 |
%) |
|
$ |
4.19 |
|
|
— |
% |
|
$ |
17.71 |
|
|
$ |
15.50 |
|
|
14 |
% |
Cash Dividends Declared Per Common Share |
$ |
1.90 |
|
|
$ |
1.65 |
|
|
15 |
% |
|
$ |
1.90 |
|
|
— |
% |
|
$ |
7.10 |
|
|
$ |
6.30 |
|
|
13 |
% |
Weighted Average Shares Outstanding - Basic |
|
7,178 |
|
|
|
7,262 |
|
|
(1 |
%) |
|
|
7,258 |
|
|
(1 |
%) |
|
|
7,249 |
|
|
|
7,391 |
|
|
(2 |
%) |
Weighted Average Shares Outstanding - Diluted |
|
7,320 |
|
|
|
7,419 |
|
|
(1 |
%) |
|
|
7,379 |
|
|
(1 |
%) |
|
|
7,375 |
|
|
|
7,582 |
|
|
(3 |
%) |
N/M - Not Meaningful |
||||||||||||||||||||||||||||
Assets Under Management - Product and Asset Class |
||||||||||||||
(in millions) |
||||||||||||||
|
Three Months Ended |
|||||||||||||
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|||||
By Product (period end): |
|
|
|
|
|
|
|
|
|
|||||
Open-End Funds (1) |
$ |
53,000 |
|
$ |
53,865 |
|
$ |
56,828 |
|
$ |
54,145 |
|
$ |
56,062 |
Closed-End Funds |
|
10,361 |
|
|
10,358 |
|
|
10,166 |
|
|
9,472 |
|
|
10,026 |
Retail Separate Accounts |
|
35,352 |
|
|
37,397 |
|
|
38,992 |
|
|
38,665 |
|
|
43,202 |
Institutional Accounts (2) |
|
50,663 |
|
|
53,229 |
|
|
62,330 |
|
|
60,257 |
|
|
62,969 |
Total |
$ |
149,376 |
|
$ |
154,849 |
|
$ |
168,316 |
|
$ |
162,539 |
|
$ |
172,259 |
|
|
|
|
|
|
|
|
|
|
|||||
By Product (average) (3) |
|
|
|
|
|
|
|
|
|
|||||
Open-End Funds (1) |
$ |
54,870 |
|
$ |
54,141 |
|
$ |
56,120 |
|
$ |
56,511 |
|
$ |
54,132 |
Closed-End Funds |
|
10,389 |
|
|
10,424 |
|
|
10,224 |
|
|
10,001 |
|
|
9,591 |
Retail Separate Accounts |
|
33,381 |
|
|
35,352 |
|
|
37,397 |
|
|
38,992 |
|
|
38,665 |
Institutional Accounts (2) |
|
49,981 |
|
|
52,444 |
|
|
59,248 |
|
|
62,368 |
|
|
60,319 |
Total |
$ |
148,621 |
|
$ |
152,361 |
|
$ |
162,989 |
|
$ |
167,872 |
|
$ |
162,707 |
|
|
|
|
|
|
|
|
|
|
|||||
By Asset Class (period end): |
|
|
|
|
|
|
|
|
|
|||||
Equity |
$ |
81,894 |
|
$ |
87,511 |
|
$ |
91,211 |
|
$ |
87,984 |
|
$ |
96,703 |
Fixed Income |
|
36,903 |
|
|
36,596 |
|
|
38,361 |
|
|
37,352 |
|
|
37,192 |
Multi-Asset (4) |
|
19,937 |
|
|
20,597 |
|
|
20,914 |
|
|
19,937 |
|
|
21,411 |
Alternatives (5) |
|
10,642 |
|
|
10,145 |
|
|
17,830 |
|
|
17,266 |
|
|
16,953 |
Total |
$ |
149,376 |
|
$ |
154,849 |
|
$ |
168,316 |
|
$ |
162,539 |
|
$ |
172,259 |
Assets Under Management - Average Management Fees Earned (6) |
|||||||||
(in basis points) |
|||||||||
|
Three Months Ended |
||||||||
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
By Product: |
|
|
|
|
|
|
|
|
|
Open-End Funds (1) |
47.2 |
|
47.6 |
|
49.3 |
|
51.1 |
|
49.7 |
Closed-End Funds |
57.1 |
|
57.1 |
|
57.6 |
|
58.2 |
|
58.4 |
Retail Separate Accounts |
42.6 |
|
44.2 |
|
44.1 |
|
43.3 |
|
43.3 |
Institutional Accounts (2)(7) |
32.0 |
|
31.8 |
|
31.6 |
|
30.3 |
|
33.2 |
All Products (7) |
41.7 |
|
42.0 |
|
42.2 |
|
42.0 |
|
42.6 |
(1) |
Represents assets under management of |
|||||||||||
(2) |
Represents assets under management of institutional separate and commingled accounts including structured products |
|||||||||||
(3) |
Averages are calculated as follows: |
|||||||||||
- Funds - average daily or weekly balances |
||||||||||||
- Retail Separate Accounts - prior-quarter ending balance |
||||||||||||
- Institutional Accounts - average of month-end balances in quarter |
||||||||||||
(4) |
Consists of strategies and client accounts with substantial holdings in at least two of the following asset classes: equity, fixed income, and alternatives |
|||||||||||
(5) |
Consists of managed futures, event-driven, real estate securities, infrastructure, long/short, and other strategies |
|||||||||||
(6) |
Represents investment management fees, as adjusted, divided by average assets. Investment management fees, as adjusted, exclude the impact of consolidated investment products and are net of revenue-related adjustments. Revenue-related adjustments are based on specific agreements and reflect the portion of investment management fees passed through to third-party client intermediaries for services to investors in sponsored investment products |
|||||||||||
(7) |
Includes performance-related fees, in basis points, earned during the three months ended as follows: |
|||||||||||
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|
||
Institutional Accounts |
0.4 |
|
0.2 |
|
0.2 |
|
0.4 |
|
2.2 |
|
||
All Products |
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.8 |
|
||
Assets Under Management - Asset Flows by Product |
|||||||||||||||||||||||||||
(in millions) |
|||||||||||||||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||||||||||
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|
12/31/2022 |
|
12/31/2023 |
||||||||||||||
Open-End Funds (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance |
$ |
54,454 |
|
|
$ |
53,000 |
|
|
$ |
53,865 |
|
|
$ |
56,828 |
|
|
$ |
54,145 |
|
|
$ |
78,706 |
|
|
$ |
53,000 |
|
Inflows |
|
3,029 |
|
|
|
3,011 |
|
|
|
2,550 |
|
|
|
2,687 |
|
|
|
2,940 |
|
|
|
13,985 |
|
|
|
11,188 |
|
Outflows |
|
(6,839 |
) |
|
|
(4,792 |
) |
|
|
(4,692 |
) |
|
|
(4,137 |
) |
|
|
(4,905 |
) |
|
|
(28,549 |
) |
|
|
(18,526 |
) |
Net flows |
|
(3,810 |
) |
|
|
(1,781 |
) |
|
|
(2,142 |
) |
|
|
(1,450 |
) |
|
|
(1,965 |
) |
|
|
(14,564 |
) |
|
|
(7,338 |
) |
Market performance |
|
2,806 |
|
|
|
2,771 |
|
|
|
2,163 |
|
|
|
(1,034 |
) |
|
|
4,260 |
|
|
|
(15,113 |
) |
|
|
8,160 |
|
Other (2) |
|
(450 |
) |
|
|
(125 |
) |
|
|
2,942 |
|
|
|
(199 |
) |
|
|
(378 |
) |
|
|
3,971 |
|
|
|
2,240 |
|
Ending balance |
$ |
53,000 |
|
|
$ |
53,865 |
|
|
$ |
56,828 |
|
|
$ |
54,145 |
|
|
$ |
56,062 |
|
|
$ |
53,000 |
|
|
$ |
56,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Closed-End Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance |
$ |
10,146 |
|
|
$ |
10,361 |
|
|
$ |
10,358 |
|
|
$ |
10,166 |
|
|
$ |
9,472 |
|
|
$ |
12,068 |
|
|
$ |
10,361 |
|
Inflows |
|
2 |
|
|
|
4 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
|
|
24 |
|
Outflows |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net flows |
|
2 |
|
|
|
4 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
|
|
24 |
|
Market performance |
|
631 |
|
|
|
205 |
|
|
|
(1 |
) |
|
|
(504 |
) |
|
|
753 |
|
|
|
(1,346 |
) |
|
|
453 |
|
Other (2) |
|
(418 |
) |
|
|
(212 |
) |
|
|
(211 |
) |
|
|
(190 |
) |
|
|
(199 |
) |
|
|
(552 |
) |
|
|
(812 |
) |
Ending balance |
$ |
10,361 |
|
|
$ |
10,358 |
|
|
$ |
10,166 |
|
|
$ |
9,472 |
|
|
$ |
10,026 |
|
|
$ |
10,361 |
|
|
$ |
10,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Retail Separate Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance |
$ |
33,381 |
|
|
$ |
35,352 |
|
|
$ |
37,397 |
|
|
$ |
38,992 |
|
|
$ |
38,665 |
|
|
$ |
44,538 |
|
|
$ |
35,352 |
|
Inflows |
|
1,221 |
|
|
|
1,367 |
|
|
|
1,346 |
|
|
|
1,849 |
|
|
|
2,118 |
|
|
|
5,710 |
|
|
|
6,680 |
|
Outflows |
|
(1,651 |
) |
|
|
(1,288 |
) |
|
|
(1,434 |
) |
|
|
(1,524 |
) |
|
|
(1,726 |
) |
|
|
(6,440 |
) |
|
|
(5,972 |
) |
Net flows |
|
(430 |
) |
|
|
79 |
|
|
|
(88 |
) |
|
|
325 |
|
|
|
392 |
|
|
|
(730 |
) |
|
|
708 |
|
Market performance |
|
2,401 |
|
|
|
1,966 |
|
|
|
1,683 |
|
|
|
(652 |
) |
|
|
4,144 |
|
|
|
(8,456 |
) |
|
|
7,141 |
|
Other (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Ending balance |
$ |
35,352 |
|
|
$ |
37,397 |
|
|
$ |
38,992 |
|
|
$ |
38,665 |
|
|
$ |
43,202 |
|
|
$ |
35,352 |
|
|
$ |
43,202 |
|
Institutional Accounts (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance |
$ |
46,993 |
|
|
$ |
50,663 |
|
|
$ |
53,229 |
|
|
$ |
62,330 |
|
|
$ |
60,257 |
|
|
$ |
51,874 |
|
|
$ |
50,663 |
|
Inflows |
|
2,999 |
|
|
|
1,852 |
|
|
|
3,660 |
|
|
|
1,274 |
|
|
|
1,179 |
|
|
|
10,407 |
|
|
|
7,965 |
|
Outflows |
|
(2,162 |
) |
|
|
(2,047 |
) |
|
|
(1,478 |
) |
|
|
(1,648 |
) |
|
|
(3,406 |
) |
|
|
(8,747 |
) |
|
|
(8,579 |
) |
Net flows |
|
837 |
|
|
|
(195 |
) |
|
|
2,182 |
|
|
|
(374 |
) |
|
|
(2,227 |
) |
|
|
1,660 |
|
|
|
(614 |
) |
Market performance |
|
2,976 |
|
|
|
2,906 |
|
|
|
2,440 |
|
|
|
(1,434 |
) |
|
|
5,165 |
|
|
|
(12,168 |
) |
|
|
9,077 |
|
Other (2) |
|
(143 |
) |
|
|
(145 |
) |
|
|
4,479 |
|
|
|
(265 |
) |
|
|
(226 |
) |
|
|
9,297 |
|
|
|
3,843 |
|
Ending balance |
$ |
50,663 |
|
|
$ |
53,229 |
|
|
$ |
62,330 |
|
|
$ |
60,257 |
|
|
$ |
62,969 |
|
|
$ |
50,663 |
|
|
$ |
62,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance |
$ |
144,974 |
|
|
$ |
149,376 |
|
|
$ |
154,849 |
|
|
$ |
168,316 |
|
|
$ |
162,539 |
|
|
$ |
187,186 |
|
|
$ |
149,376 |
|
Inflows |
|
7,251 |
|
|
|
6,234 |
|
|
|
7,576 |
|
|
|
5,810 |
|
|
|
6,237 |
|
|
|
30,293 |
|
|
|
25,857 |
|
Outflows |
|
(10,652 |
) |
|
|
(8,127 |
) |
|
|
(7,604 |
) |
|
|
(7,309 |
) |
|
|
(10,037 |
) |
|
|
(43,736 |
) |
|
|
(33,077 |
) |
Net flows |
|
(3,401 |
) |
|
|
(1,893 |
) |
|
|
(28 |
) |
|
|
(1,499 |
) |
|
|
(3,800 |
) |
|
|
(13,443 |
) |
|
|
(7,220 |
) |
Market performance |
|
8,814 |
|
|
|
7,848 |
|
|
|
6,285 |
|
|
|
(3,624 |
) |
|
|
14,322 |
|
|
|
(37,083 |
) |
|
|
24,831 |
|
Other (2) |
|
(1,011 |
) |
|
|
(482 |
) |
|
|
7,210 |
|
|
|
(654 |
) |
|
|
(802 |
) |
|
|
12,716 |
|
|
|
5,272 |
|
Ending balance |
$ |
149,376 |
|
|
$ |
154,849 |
|
|
$ |
168,316 |
|
|
$ |
162,539 |
|
|
$ |
172,259 |
|
|
$ |
149,376 |
|
|
$ |
172,259 |
|
(1) |
Represents assets under management of |
|
(2) |
Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets from cash management strategies, and the impact of non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/(withdrawals), current income or capital returned by structured products and the use of leverage |
|
(3) |
Represents assets under management of institutional separate and commingled accounts including structured products |
Non-GAAP Information and Reconciliations
(in thousands except per share data)
The non-GAAP financial measures included in this release differ from financial measures determined in accordance with
The following are reconciliations and related notes of the most comparable
|
Three Months Ended |
||||||||||
Revenues |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||||
Total revenues, GAAP |
$ |
214,587 |
|
|
$ |
198,371 |
|
|
$ |
219,271 |
|
Consolidated investment products revenues (1) |
|
2,258 |
|
|
|
2,264 |
|
|
|
2,337 |
|
Investment management fees (2) |
|
(9,933 |
) |
|
|
(9,758 |
) |
|
|
(9,823 |
) |
Distribution and service fees (2) |
|
(13,537 |
) |
|
|
(14,607 |
) |
|
|
(14,334 |
) |
Total revenues, as adjusted |
$ |
193,375 |
|
|
$ |
176,270 |
|
|
$ |
197,451 |
|
Operating Expenses |
|
|
|
|
|
||||||
Total operating expenses, GAAP |
$ |
175,631 |
|
|
$ |
167,150 |
|
|
$ |
174,368 |
|
Consolidated investment products expenses (1) |
|
(2,611 |
) |
|
|
(2,481 |
) |
|
|
(553 |
) |
Distribution and other asset-based expenses (3) |
|
(23,470 |
) |
|
|
(24,365 |
) |
|
|
(24,157 |
) |
Amortization of intangible assets (4) |
|
(15,446 |
) |
|
|
(14,609 |
) |
|
|
(15,382 |
) |
Restructuring expense (5) |
|
(133 |
) |
|
|
— |
|
|
|
(691 |
) |
Deferred compensation and related investments (6) |
|
(925 |
) |
|
|
— |
|
|
|
278 |
|
Acquisition and integration expenses (7) |
|
(3,050 |
) |
|
|
(6,175 |
) |
|
|
(3,013 |
) |
Other (8) |
|
(472 |
) |
|
|
637 |
|
|
|
(379 |
) |
Total operating expenses, as adjusted |
$ |
129,524 |
|
|
$ |
120,157 |
|
|
$ |
130,471 |
|
Operating Income (Loss) |
|
|
|
|
|
||||||
Operating income (loss), GAAP |
$ |
38,956 |
|
|
$ |
31,221 |
|
|
$ |
44,903 |
|
Consolidated investment products (earnings) losses (1) |
|
4,869 |
|
|
|
4,745 |
|
|
|
2,890 |
|
Amortization of intangible assets (4) |
|
15,446 |
|
|
|
14,609 |
|
|
|
15,382 |
|
Restructuring expense (5) |
|
133 |
|
|
|
— |
|
|
|
691 |
|
Deferred compensation and related investments (6) |
|
925 |
|
|
|
— |
|
|
|
(278 |
) |
Acquisition and integration expenses (7) |
|
3,050 |
|
|
|
6,175 |
|
|
|
3,013 |
|
Other (8) |
|
472 |
|
|
|
(637 |
) |
|
|
379 |
|
Operating income (loss), as adjusted |
$ |
63,851 |
|
|
$ |
56,113 |
|
|
$ |
66,980 |
|
|
|
|
|
|
|
||||||
Operating margin, GAAP |
|
18.2 |
% |
|
|
15.7 |
% |
|
|
20.5 |
% |
Operating margin, as adjusted |
|
33.0 |
% |
|
|
31.8 |
% |
|
|
33.9 |
% |
|
Three Months Ended |
||||||||||
Income (Loss) Before Taxes |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||||
Income (loss) before taxes, GAAP |
$ |
51,793 |
|
|
$ |
39,126 |
|
|
$ |
50,335 |
|
Consolidated investment products (earnings) losses (1) |
|
(1,316 |
) |
|
|
(441 |
) |
|
|
(429 |
) |
Amortization of intangible assets (4) |
|
15,446 |
|
|
|
14,609 |
|
|
|
15,382 |
|
Restructuring expense (5) |
|
133 |
|
|
|
— |
|
|
|
691 |
|
Deferred compensation and related investments (6) |
|
(783 |
) |
|
|
— |
|
|
|
212 |
|
Acquisition and integration expenses (7) |
|
3,050 |
|
|
|
6,175 |
|
|
|
3,013 |
|
Other (8) |
|
472 |
|
|
|
(637 |
) |
|
|
379 |
|
Seed capital and CLO investments (gains) losses (9) |
|
(5,078 |
) |
|
|
(3,322 |
) |
|
|
(3,146 |
) |
Income (loss) before taxes, as adjusted |
$ |
63,717 |
|
|
$ |
55,510 |
|
|
$ |
66,437 |
|
Income Tax Expense (Benefit) |
|
|
|
|
|
||||||
Income tax expense (benefit), GAAP |
$ |
13,294 |
|
|
$ |
13,291 |
|
|
$ |
12,181 |
|
Tax impact of: |
|
|
|
|
|
||||||
Amortization of intangible assets (4) |
|
4,202 |
|
|
|
3,988 |
|
|
|
4,209 |
|
Restructuring expense (5) |
|
36 |
|
|
|
— |
|
|
|
189 |
|
Deferred compensation and related investments (6) |
|
(213 |
) |
|
|
— |
|
|
|
58 |
|
Acquisition and integration expenses (7) |
|
830 |
|
|
|
1,686 |
|
|
|
824 |
|
Other (8) |
|
(11 |
) |
|
|
(3,766 |
) |
|
|
276 |
|
Seed capital and CLO investments (gains) losses (9) |
|
(801 |
) |
|
|
(46 |
) |
|
|
441 |
|
Income tax expense (benefit), as adjusted |
$ |
17,337 |
|
|
$ |
15,153 |
|
|
$ |
18,178 |
|
|
|
|
|
|
|
||||||
Effective tax rate, GAAPA |
|
25.7 |
% |
|
|
34.0 |
% |
|
|
24.2 |
% |
Effective tax rate, as adjustedB |
|
27.2 |
% |
|
|
27.3 |
% |
|
|
27.4 |
% |
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 |
|||||||||||
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
|
|
|
|
|
||||||
Net income (loss) attributable to Virtus Investment Partners, Inc., GAAP |
$ |
30,834 |
|
|
$ |
35,400 |
|
|
$ |
30,906 |
|
Amortization of intangible assets, net of tax (4) |
|
10,764 |
|
|
|
9,942 |
|
|
|
10,603 |
|
Restructuring expense, net of tax (5) |
|
97 |
|
|
|
— |
|
|
|
502 |
|
Deferred compensation and related investments (6) |
|
(570 |
) |
|
|
— |
|
|
|
154 |
|
Acquisition and integration expenses, net of tax (7) |
|
2,220 |
|
|
|
4,489 |
|
|
|
2,189 |
|
Other, net of tax (8) |
|
5,689 |
|
|
|
(8,216 |
) |
|
|
5,056 |
|
Seed capital and CLO investments (gains) losses, net of tax (9) |
|
(4,277 |
) |
|
|
(3,276 |
) |
|
|
(3,587 |
) |
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
44,757 |
|
|
$ |
38,339 |
|
|
$ |
45,823 |
|
Weighted average shares outstanding - diluted |
|
7,320 |
|
|
|
7,419 |
|
|
|
7,379 |
|
|
|
|
|
|
|
||||||
Earnings (loss) per share - diluted, GAAP |
$ |
4.21 |
|
|
$ |
4.77 |
|
|
$ |
4.19 |
|
Earnings (loss) per share - diluted, as adjusted |
$ |
6.11 |
|
|
$ |
5.17 |
|
|
$ |
6.21 |
|
|
Three Months Ended |
||||||||
Administration and Shareholder Services Fees |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||
Administration and shareholder service fees, GAAP |
$ |
18,189 |
|
$ |
18,973 |
|
$ |
19,069 |
|
Consolidated investment products fees (1) |
|
24 |
|
|
32 |
|
|
(5 |
) |
Administration and shareholder service fees, as adjusted |
$ |
18,213 |
|
$ |
19,005 |
|
$ |
19,064 |
|
|
|
|
|
|
|
||||
Employment Expenses |
|
|
|
|
|
|||||
Employment expenses, GAAP |
$ |
99,847 |
|
|
$ |
87,676 |
|
$ |
101,587 |
|
Deferred compensation and related investments (6) |
|
(925 |
) |
|
|
— |
|
|
278 |
|
Acquisition and integration expenses (7) |
|
(1,760 |
) |
|
|
— |
|
|
(2,642 |
) |
Other (8) |
|
(472 |
) |
|
|
637 |
|
|
(379 |
) |
Employment expenses, as adjusted |
$ |
96,690 |
|
|
$ |
88,313 |
|
$ |
98,844 |
|
Other Operating Expenses |
|
|
|
|
|
|||||
Other operating expenses, GAAP |
$ |
31,164 |
|
$ |
31,811 |
|
|
$ |
30,494 |
|
Acquisition and integration expenses (7) |
|
— |
|
|
(1,055 |
) |
|
|
(371 |
) |
Other operating expenses, as adjusted |
$ |
31,164 |
|
$ |
30,756 |
|
|
$ |
30,123 |
|
Total Other Income (Expense), Net |
|
|
|
|
|
||||||
Total other income (expense), net GAAP |
$ |
5,127 |
|
|
$ |
7,324 |
|
|
$ |
(2,803 |
) |
Consolidated investment products (1) |
|
1,681 |
|
|
|
(3,782 |
) |
|
|
5,262 |
|
Deferred compensation and related investments (6) |
|
(1,397 |
) |
|
|
— |
|
|
|
518 |
|
Seed capital and CLO investments (gains) losses (9) |
|
(5,078 |
) |
|
|
(3,322 |
) |
|
|
(3,146 |
) |
Total other income (expense), net as adjusted |
$ |
333 |
|
|
$ |
220 |
|
|
$ |
(169 |
) |
Interest and Dividend Income |
|
|
|
|
|
|||||
Interest and dividend income, GAAP |
$ |
3,673 |
|
|
$ |
2,578 |
|
$ |
2,872 |
|
Consolidated investment products (1) |
|
2,158 |
|
|
|
1,111 |
|
|
3,004 |
|
Deferred compensation and related investments (6) |
|
(311 |
) |
|
|
— |
|
|
(28 |
) |
Interest and dividend income, as adjusted |
$ |
5,520 |
|
|
$ |
3,689 |
|
$ |
5,848 |
|
Total Noncontrolling Interests |
|
|
|
|
|
||||||
Total noncontrolling interests, GAAP |
$ |
(7,665 |
) |
|
$ |
9,565 |
|
|
$ |
(7,248 |
) |
Consolidated investment products (1) |
|
1,316 |
|
|
|
441 |
|
|
|
429 |
|
Amortization of intangible assets (4) |
|
(480 |
) |
|
|
(679 |
) |
|
|
(570 |
) |
Other (8) |
|
5,206 |
|
|
|
(11,345 |
) |
|
|
4,953 |
|
Total noncontrolling interests, as adjusted |
$ |
(1,623 |
) |
|
$ |
(2,018 |
) |
|
$ |
(2,436 |
) |
| 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 company sponsored investment products 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 expense - Certain non-recurring expenses associated with restructuring the business, including lease abandonment-related expenses and severance costs associated with staff reductions that are not reflective of ongoing earnings generation of the business. |
|
| 6. | Deferred compensation and related investments - Compensation expense, gains and losses (realized and unrealized), and interest and dividend income related to market performance of deferred compensation and related balance sheet investments. Market performance of deferred compensation plans and related investments can vary significantly from period to period. Management believes that making this adjustment aids in comparing the Company's operating results with prior periods. |
|
| 7. | Acquisition and integration expenses - Expenses that are directly related to acquisition and integration activities. Acquisition expenses include certain transaction related employment expenses, transaction closing costs, change in fair value of contingent consideration, 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 |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||
Employment expenses |
$ |
1,760 |
|
$ |
— |
|
$ |
2,642 |
|
Other operating expenses |
|
— |
|
|
1,055 |
|
|
371 |
|
Change in fair value of contingent consideration |
|
1,290 |
|
|
5,120 |
|
|
— |
|
Total Acquisition and Integration Expenses |
$ |
3,050 |
|
$ |
6,175 |
|
$ |
3,013 |
|
| 8. | 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. Other operating expenses are adjusted for non-capitalized debt issuance costs. Interest expense is adjusted to remove gains on early extinguishment of debt and the write-off of previously capitalized costs associated with the modification 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. 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 |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
|||||||
Employment expense fair value adjustments |
$ |
472 |
|
|
$ |
(637 |
) |
|
$ |
379 |
|
|
Tax impact of adjustments |
|
(128 |
) |
|
|
174 |
|
|
|
(104 |
) |
|
Other discrete tax adjustments |
|
139 |
|
|
|
3,592 |
|
|
|
(172 |
) |
|
Affiliate minority interest fair value adjustments |
|
5,206 |
|
|
|
(11,345 |
) |
|
|
4,953 |
|
|
Total Other |
$ |
5,689 |
|
|
$ |
(8,216 |
) |
|
$ |
5,056 |
|
|
Seed Capital and CLO Related |
||
| 9. | 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 Virtus Investment Partners, Inc., as adjusted, differ from
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 Virtus Investment Partners, Inc., as adjusted, differ from
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 Virtus Investment Partners, Inc., 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 2022 Annual Report on Form 10-K, as supplemented by our periodic filings with the Securities and Exchange Commission (the "SEC"), as well as the following risks and uncertainties resulting from: (i) any reduction in our assets under management; (ii) inability to achieve expected benefits of strategic transactions; (iii) withdrawal, renegotiation or termination of investment advisory agreements; (iv) damage to our reputation; (v) inability to satisfy financial debt covenants and required payments; (vi) inability to attract and retain key personnel; (vii) challenges from competition; (viii) adverse developments related to unaffiliated subadvisers; (ix) negative changes in key distribution relationships; (x) interruptions, breaches, or failures of technology systems; (xi) loss on our investments; (xii) lack of sufficient capital on satisfactory terms; (xiii) adverse regulatory and legal developments; (xiv) failure to comply with investment guidelines or other contractual requirements; (xv) adverse civil litigation, government investigations, or proceedings; (xvi) unfavorable changes in tax laws or limitations; (xvii) inability to make common stock dividend payments; (xviii) impediments from certain corporate governance provisions; (xix) losses or costs not covered by insurance; (xx) impairment of goodwill or other intangible assets; 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 2022 Annual Report on Form 10-K and our other periodic reports filed with 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 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240202303942/en/
Investor Relations Contact
Sean Rourke
(860) 263-4709
sean.rourke@virtus.com
Source: Virtus Investment Partners
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