- Earnings Per Share – Diluted of $4.77; Earnings Per Share – Diluted, as Adjusted, of $5.17
- Total Sales of $7.3B; Net Flows of ($3.4B); Assets Under Management of $149.4B
HARTFORD, Conn.–(BUSINESS WIRE)–Virtus Investment Partners, Inc. (NASDAQ: VRTS) today reported financial results for the three months ended December 31, 2022.
|
Financial Highlights (Unaudited) |
|||||||||||||||||
|
|
Three Months Ended |
|
|
|
Three |
|
|
||||||||||
|
|
12/31/2022 |
|
12/31/2021 |
|
Change |
|
9/30/2022 |
|
Change |
||||||||
|
U.S. GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
$ |
198.4 |
|
|
$ |
266.3 |
|
|
(25 |
%) |
|
$ |
210.3 |
|
|
(6 |
%) |
|
Operating expenses |
$ |
167.2 |
|
|
$ |
182.6 |
|
|
(8 |
%) |
|
$ |
166.2 |
|
|
1 |
% |
|
Operating income (loss) |
$ |
31.2 |
|
|
$ |
83.7 |
|
|
(63 |
%) |
|
$ |
44.0 |
|
|
(29 |
%) |
|
Operating margin |
|
15.7 |
% |
|
|
31.4 |
% |
|
|
|
|
20.9 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc. |
$ |
35.4 |
|
|
$ |
49.8 |
|
|
(29 |
%) |
|
$ |
31.7 |
|
|
12 |
% |
|
Earnings (loss) per share – diluted |
$ |
4.77 |
|
|
$ |
6.29 |
|
|
(24 |
%) |
|
$ |
4.25 |
|
|
12 |
% |
|
Weighted average shares outstanding – diluted |
|
7.419 |
|
|
|
7.929 |
|
|
(6 |
%) |
|
|
7.463 |
|
|
(1 |
%) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Non-GAAP Financial Measures (1) |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues, as adjusted |
$ |
176.3 |
|
|
$ |
232.6 |
|
|
(24 |
%) |
|
$ |
185.7 |
|
|
(5 |
%) |
|
Operating expenses, as adjusted |
$ |
120.2 |
|
|
$ |
115.8 |
|
|
4 |
% |
|
$ |
120.8 |
|
|
— |
% |
|
Operating income (loss), as adjusted |
$ |
56.1 |
|
|
$ |
116.8 |
|
|
(52 |
%) |
|
$ |
64.9 |
|
|
(14 |
%) |
|
Operating margin, as adjusted |
|
31.8 |
% |
|
|
50.2 |
% |
|
|
|
|
35.0 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
38.3 |
|
|
$ |
82.1 |
|
|
(53 |
%) |
|
$ |
43.0 |
|
|
(11 |
%) |
|
Earnings (loss) per share – diluted, as adjusted |
$ |
5.17 |
|
|
$ |
10.36 |
|
|
(50 |
%) |
|
$ |
5.76 |
|
|
(10 |
%) |
|
Weighted average shares outstanding – diluted, as adjusted |
|
7.419 |
|
|
|
7.929 |
|
|
(6 |
%) |
|
|
7.463 |
|
|
(1 |
%) |
|
(1) See the information beginning on page 10 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 10 of this earnings release.
|
Assets Under Management and Asset Flows |
|||||||||||||||
|
|
Three Months Ended |
|
|
|
Three |
|
|
||||||||
|
|
12/31/2022 |
|
12/31/2021 |
|
Change |
|
9/30/2022 |
|
Change |
||||||
|
Ending total assets under management |
$ |
149.4 |
|
|
$ |
187.2 |
|
(20%) |
|
$ |
145.0 |
|
|
3 |
% |
|
Average total assets under management |
$ |
148.6 |
|
|
$ |
184.6 |
|
(20%) |
|
$ |
157.1 |
|
|
(5 |
%) |
|
Total sales |
$ |
7.3 |
|
|
$ |
8.7 |
|
(17%) |
|
$ |
5.7 |
|
|
27 |
% |
|
Net flows |
$ |
(3.4 |
) |
|
$ |
— |
|
N/M |
|
$ |
(3.3 |
) |
|
3 |
% |
|
N/M – Not Meaningful |
|||||||||||||||
Total assets under management of $149.4 billion at December 31, 2022 increased from $145.0 billion at September 30, 2022, reflecting market performance and institutional net inflows, partially offset by net outflows in other products. In addition, other fee earning assets of $2.5 billion were unchanged compared with September 30, 2022.
Total sales of $7.3 billion increased 27% from $5.7 billion in the prior quarter reflecting higher sales in all product categories. Institutional sales of $3.0 billion increased from $1.5 billion largely due to an additional funding into a domestic growth equity mandate and the issuance of a collateralized loan obligation (CLO). Open-end fund sales of $3.0 billion increased 5%, with higher sales of equity, fixed income, and alternative strategies. Retail separate account sales of $1.2 billion increased 4% primarily due to investment grade fixed income.
Net outflows of $3.4 billion compared with $3.3 billion in the prior quarter, as positive institutional net flows were more than offset by net outflows in retail products. Institutional net flows of $0.8 billion compared with net flows of ($0.4) billion in the prior quarter and have been positive in eight of the last nine quarters. Open-end fund net outflows of $3.8 billion increased from $2.8 billion in the prior quarter due to higher redemptions across asset classes reflecting market trends. Retail separate account net outflows of $0.4 billion compared with $0.2 billion in the prior quarter and included net outflows in the intermediary sold channel partially offset by continued net inflows in private client.
GAAP Results
Operating income of $31.2 million declined from $44.0 million in the prior quarter due to a 6% decrease in total revenues and a 1% increase in total operating expenses. Revenues declined primarily due to lower average assets under management. The increase in operating expenses primarily reflected fair value adjustments to contingent consideration partially offset by the impact of restructuring expenses in the prior quarter. Operating expenses were also impacted by a modest decrease in employment expenses, due to lower variable incentive compensation, and a 2% increase in other operating expenses primarily due to acquisition and integration costs.
Net income attributable to Virtus Investment Partners, Inc. of $4.77 per diluted common share included $1.53 of fair value adjustments to affiliate noncontrolling interests and $0.78 of net realized and unrealized gains on investments, partially offset by ($1.03) of CLO issuance expenses, ($0.50) of fair value adjustments to contingent consideration, and ($0.41) of discrete tax adjustments. Net income per diluted share of $4.25 in the prior quarter included ($1.12) of net realized and unrealized losses on investments, primarily consolidated investment products, and ($0.54) of restructuring expenses, partially offset by $0.73 of fair value adjustments to affiliate noncontrolling interests. The fair value adjustments to affiliate non-controlling interests are the result of updating minority-held equity to current value while fair value adjustments to contingent consideration reflect updated expectations of future payments.
The effective tax rate of 34% increased from 28% in the prior quarter, primarily reflecting discrete tax adjustments partially offset by changes in the valuation allowances related to marketable securities.
Non-GAAP Results
Revenues, as adjusted, of $176.3 million declined from $185.7 million in the prior quarter due to lower average assets under management.
Employment expenses, as adjusted, of $88.3 million decreased from $88.7 million as lower profit- and sales-based variable compensation was partially offset by an increase in estimates of investment performance-related compensation, the impact of which was offset in other income, as adjusted. Other operating expenses, as adjusted, of $30.8 million compared with $31.1 million in the prior quarter, which included $1.0 million of transaction related expenses. Excluding the transaction expenses, the sequential increase was due to higher sales and marketing activity as well as efficiency and distribution initiatives. Operating income, as adjusted, of $56.1 million and the related margin of 31.8% declined from $64.9 million and 35.0%, respectively, primarily due to lower investment management fees.
Net income attributable to Virtus Investment Partners, Inc., as adjusted, per diluted common share was $5.17, a decrease of $0.59, or 10%, from $5.76 in the prior quarter. The decline primarily reflected lower investment management fees due to lower average assets under management.
The effective tax rate, as adjusted, of 27% was unchanged from the prior quarter.
|
Select Balance Sheet Items (Unaudited) |
|||||||||||||||||
|
|
As of |
|
|
|
As of |
|
|
||||||||||
|
|
12/31/2022 |
|
12/31/2021 |
|
Change |
|
9/30/2022 |
|
Change |
||||||||
|
Cash and cash equivalents |
$ |
338.2 |
|
|
$ |
378.9 |
|
|
(11 |
%) |
|
$ |
309.2 |
|
|
9 |
% |
|
Gross debt (1) |
$ |
261.6 |
|
|
$ |
274.3 |
|
|
(5 |
%) |
|
$ |
262.3 |
|
|
— |
% |
|
Contingent consideration (2) |
$ |
128.4 |
|
|
$ |
162.6 |
|
|
(21 |
%) |
|
$ |
133.6 |
|
|
(4 |
%) |
|
Redeemable noncontrolling interests (3) |
$ |
95.5 |
|
|
$ |
126.5 |
|
|
(25 |
%) |
|
$ |
108.3 |
|
|
(12 |
%) |
|
Total equity exc. noncontrolling interests |
$ |
817.0 |
|
|
$ |
828.3 |
|
|
(1 |
%) |
|
$ |
799.2 |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Working capital (4) |
$ |
180.6 |
|
|
$ |
219.8 |
|
|
(18 |
%) |
|
$ |
195.2 |
|
|
(7 |
%) |
|
Net debt (cash) (5) |
$ |
(76.7 |
) |
|
$ |
(104.6 |
) |
|
(27 |
%) |
|
$ |
(47.0 |
) |
|
63 |
% |
|
(1) Excludes deferred financing costs of $6.5 million, $8.0 million, and $6.8 million, as of December 31, 2022, December 31, 2021, and September 30, 2022, respectively |
|||||||||||||||||
Working capital of $180.6 million at December 31, 2022 declined from $195.2 million at September 30, 2022 as an investment in a newly issued CLO and return of capital to shareholders more than offset cash earnings.
During the quarter, the company returned $10.0 million to shareholders through the repurchase of 53,320 shares of common stock.
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on Friday, February 3, 2023, 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 (NASDAQ: 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.
|
U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
|
Three |
|
|
|
Twelve Months Ended |
|
|
||||||||||||||
|
|
12/31/2022 |
|
12/31/2021 |
|
Change |
|
9/30/2022 |
|
Change |
|
12/31/2022 |
|
12/31/2021 |
|
Change |
||||||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investment management fees |
$ |
163,648 |
|
|
$ |
213,673 |
|
|
(23%) |
|
$ |
172,850 |
|
|
(5%) |
|
$ |
728,339 |
|
|
$ |
781,585 |
|
|
(7%) |
|
Distribution and service fees |
|
14,606 |
|
|
|
23,464 |
|
|
(38%) |
|
|
15,746 |
|
|
(7%) |
|
|
67,518 |
|
|
|
90,555 |
|
|
(25%) |
|
Administration and shareholder service fees |
|
18,973 |
|
|
|
27,615 |
|
|
(31%) |
|
|
20,563 |
|
|
(8%) |
|
|
85,862 |
|
|
|
102,531 |
|
|
(16%) |
|
Other income and fees |
|
1,144 |
|
|
|
1,510 |
|
|
(24%) |
|
|
1,102 |
|
|
4% |
|
|
4,660 |
|
|
|
4,563 |
|
|
2% |
|
Total revenues |
|
198,371 |
|
|
|
266,262 |
|
|
(25%) |
|
|
210,261 |
|
|
(6%) |
|
|
886,379 |
|
|
|
979,234 |
|
|
(9%) |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Employment expenses |
|
87,676 |
|
|
|
91,496 |
|
|
(4%) |
|
|
88,230 |
|
|
(1%) |
|
|
371,259 |
|
|
|
358,230 |
|
|
4% |
|
Distribution and other asset-based expenses |
|
24,365 |
|
|
|
36,032 |
|
|
(32%) |
|
|
26,818 |
|
|
(9%) |
|
|
112,612 |
|
|
|
141,039 |
|
|
(20%) |
|
Other operating expenses |
|
31,811 |
|
|
|
25,808 |
|
|
23% |
|
|
31,096 |
|
|
2% |
|
|
126,178 |
|
|
|
90,134 |
|
|
40% |
|
Operating expenses of consolidated investment products |
|
2,481 |
|
|
|
1,705 |
|
|
46% |
|
|
538 |
|
|
361% |
|
|
4,408 |
|
|
|
3,562 |
|
|
24% |
|
Restructuring expense |
|
— |
|
|
|
— |
|
|
N/M |
|
|
4,015 |
|
|
(100%) |
|
|
4,015 |
|
|
|
— |
|
|
N/M |
|
Change in fair value of contingent consideration |
|
5,120 |
|
|
|
12,400 |
|
|
(59%) |
|
|
— |
|
|
N/M |
|
|
8,020 |
|
|
|
12,400 |
|
|
(35%) |
|
Depreciation expense |
|
1,088 |
|
|
|
906 |
|
|
20% |
|
|
938 |
|
|
16% |
|
|
3,923 |
|
|
|
3,900 |
|
|
1% |
|
Amortization expense |
|
14,609 |
|
|
|
14,262 |
|
|
2% |
|
|
14,609 |
|
|
—% |
|
|
58,504 |
|
|
|
44,481 |
|
|
32% |
|
Total operating expenses |
|
167,150 |
|
|
|
182,609 |
|
|
(8%) |
|
|
166,244 |
|
|
1% |
|
|
688,919 |
|
|
|
653,746 |
|
|
5% |
|
Operating Income (Loss) |
|
31,221 |
|
|
|
83,653 |
|
|
(63%) |
|
|
44,017 |
|
|
(29%) |
|
|
197,460 |
|
|
|
325,488 |
|
|
(39%) |
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized and unrealized gain (loss) on investments, net |
|
3,529 |
|
|
|
1,026 |
|
|
244% |
|
|
(2,493 |
) |
|
N/M |
|
|
(12,489 |
) |
|
|
3,907 |
|
|
N/M |
|
Realized and unrealized gain (loss) of consolidated investment products, net |
|
4,147 |
|
|
|
2,980 |
|
|
39% |
|
|
(8,440 |
) |
|
N/M |
|
|
(39,296 |
) |
|
|
(1,761 |
) |
|
N/M |
|
Other income (expense), net |
|
(352 |
) |
|
|
632 |
|
|
N/M |
|
|
(659 |
) |
|
(47%) |
|
|
(153 |
) |
|
|
4,230 |
|
|
N/M |
|
Total other income (expense), net |
|
7,324 |
|
|
|
4,638 |
|
|
58% |
|
|
(11,592 |
) |
|
N/M |
|
|
(51,938 |
) |
|
|
6,376 |
|
|
N/M |
|
Interest Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest expense |
|
(4,512 |
) |
|
|
(2,322 |
) |
|
94% |
|
|
(3,557 |
) |
|
27% |
|
|
(13,173 |
) |
|
|
(9,240 |
) |
|
43% |
|
Interest and dividend income |
|
2,578 |
|
|
|
793 |
|
|
225% |
|
|
1,013 |
|
|
154% |
|
|
4,448 |
|
|
|
1,364 |
|
|
226% |
|
Interest and dividend income of investments of consolidated investment products |
|
35,889 |
|
|
|
20,765 |
|
|
73% |
|
|
28,644 |
|
|
25% |
|
|
107,325 |
|
|
|
90,080 |
|
|
19% |
|
Interest expense of consolidated investment products |
|
(33,374 |
) |
|
|
(18,056 |
) |
|
85% |
|
|
(20,356 |
) |
|
64% |
|
|
(80,234 |
) |
|
|
(60,398 |
) |
|
33% |
|
Total interest income (expense), net |
|
581 |
|
|
|
1,180 |
|
|
(51%) |
|
|
5,744 |
|
|
(90%) |
|
|
18,366 |
|
|
|
21,806 |
|
|
(16%) |
|
Income (Loss) Before Income Taxes |
|
39,126 |
|
|
|
89,471 |
|
|
(56%) |
|
|
38,169 |
|
|
3% |
|
|
163,888 |
|
|
|
353,670 |
|
|
(54%) |
|
Income tax expense (benefit) |
|
13,291 |
|
|
|
27,458 |
|
|
(52%) |
|
|
10,754 |
|
|
24% |
|
|
57,260 |
|
|
|
90,835 |
|
|
(37%) |
|
Net Income (Loss) |
|
25,835 |
|
|
|
62,013 |
|
|
(58%) |
|
|
27,415 |
|
|
(6%) |
|
|
106,628 |
|
|
|
262,835 |
|
|
(59%) |
|
Noncontrolling interests |
|
9,565 |
|
|
|
(12,173 |
) |
|
N/M |
|
|
4,265 |
|
|
124% |
|
|
10,913 |
|
|
|
(54,704 |
) |
|
N/M |
|
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
$ |
35,400 |
|
|
$ |
49,840 |
|
|
(29%) |
|
$ |
31,680 |
|
|
12% |
|
$ |
117,541 |
|
|
$ |
208,131 |
|
|
(44%) |
|
Earnings (Loss) Per Share – Basic |
$ |
4.87 |
|
|
$ |
6.54 |
|
|
(26%) |
|
$ |
4.33 |
|
|
12% |
|
$ |
15.90 |
|
|
$ |
27.13 |
|
|
(41%) |
|
Earnings (Loss) Per Share – Diluted |
$ |
4.77 |
|
|
$ |
6.29 |
|
|
(24%) |
|
$ |
4.25 |
|
|
12% |
|
$ |
15.50 |
|
|
$ |
26.01 |
|
|
(40%) |
|
Cash Dividends Declared Per Common Share |
$ |
1.65 |
|
|
$ |
1.50 |
|
|
10% |
|
$ |
1.65 |
|
|
—% |
|
$ |
6.30 |
|
|
$ |
4.64 |
|
|
36% |
|
Weighted Average Shares Outstanding – Basic |
|
7,262 |
|
|
|
7,623 |
|
|
(5%) |
|
|
7,308 |
|
|
(1%) |
|
|
7,391 |
|
|
|
7,672 |
|
|
(4%) |
|
Weighted Average Shares Outstanding – Diluted |
|
7,419 |
|
|
|
7,929 |
|
|
(6%) |
|
|
7,463 |
|
|
(1%) |
|
|
7,582 |
|
|
|
8,003 |
|
|
(5%) |
|
N/M – Not Meaningful |
|||||||||||||||||||||||||
|
Assets Under Management – Product and Asset Class |
||||||||||||||
|
|
Three Months Ended |
|||||||||||||
|
|
12/31/2021 |
|
03/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|||||
|
By Product (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
78,706 |
|
$ |
73,149 |
|
$ |
59,479 |
|
$ |
54,454 |
|
$ |
53,000 |
|
Closed-End Funds |
|
12,068 |
|
|
12,060 |
|
|
10,645 |
|
|
10,146 |
|
|
10,361 |
|
Retail Separate Accounts |
|
44,538 |
|
|
40,824 |
|
|
35,248 |
|
|
33,381 |
|
|
35,352 |
|
Institutional Accounts (2) |
|
51,874 |
|
|
57,309 |
|
|
50,048 |
|
|
46,993 |
|
|
50,663 |
|
Total |
$ |
187,186 |
|
$ |
183,342 |
|
$ |
155,420 |
|
$ |
144,974 |
|
$ |
149,376 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Product (average) (3) |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
80,303 |
|
$ |
75,537 |
|
$ |
65,592 |
|
$ |
60,185 |
|
$ |
54,870 |
|
Closed-End Funds |
|
12,043 |
|
|
11,762 |
|
|
11,405 |
|
|
10,971 |
|
|
10,389 |
|
Retail Separate Accounts |
|
41,528 |
|
|
44,538 |
|
|
40,824 |
|
|
35,248 |
|
|
33,381 |
|
Institutional Accounts (2) |
|
50,693 |
|
|
58,269 |
|
|
53,560 |
|
|
50,668 |
|
|
49,981 |
|
Total |
$ |
184,567 |
|
$ |
190,106 |
|
$ |
171,381 |
|
$ |
157,072 |
|
$ |
148,621 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Asset Class (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Equity |
$ |
116,546 |
|
$ |
102,989 |
|
$ |
84,754 |
|
$ |
78,034 |
|
$ |
81,894 |
|
Fixed Income |
|
34,261 |
|
|
45,418 |
|
|
39,322 |
|
|
36,910 |
|
|
36,903 |
|
Multi-Asset (4) |
|
24,853 |
|
|
23,415 |
|
|
20,261 |
|
|
19,364 |
|
|
19,937 |
|
Alternatives (5) |
|
11,526 |
|
|
11,520 |
|
|
11,083 |
|
|
10,666 |
|
|
10,642 |
|
Total |
$ |
187,186 |
|
$ |
183,342 |
|
$ |
155,420 |
|
$ |
144,974 |
|
$ |
149,376 |
|
Assets Under Management – Average Management Fees Earned (6) |
|||||||||
|
|
Three Months Ended |
||||||||
|
|
12/31/2021 |
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
By Product: |
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1) |
48.5 |
|
46.5 |
|
46.2 |
|
46.8 |
|
47.2 |
|
Closed-End Funds |
55.5 |
|
58.4 |
|
56.9 |
|
57.0 |
|
57.1 |
|
Retail Separate Accounts |
44.6 |
|
43.6 |
|
42.9 |
|
42.2 |
|
42.6 |
|
Institutional Accounts (2)(7) |
32.6 |
|
31.5 |
|
30.6 |
|
31.3 |
|
32.0 |
|
All Products (7) |
43.7 |
|
41.9 |
|
41.2 |
|
41.5 |
|
41.7 |
|
(1) Represents assets under management of U.S. retail funds, global funds, exchange traded funds, and variable insurance funds |
|||||||||
|
(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) Includes strategies with substantial holdings in at least two of the following asset classes: equity, fixed income, and alternatives |
|||||||||
|
(5) Consists of 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: |
|||||||||
|
|
12/31/2021 |
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
Institutional Accounts |
0.5 |
|
0.5 |
|
0.3 |
|
0.2 |
|
0.4 |
|
All Products |
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
Assets Under Management – Asset Flows by Product |
|||||||||||||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||||||||||
|
|
12/31/2021 |
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
12/31/2021 |
|
12/31/2022 |
||||||||||||||
|
Open-End Funds (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
74,365 |
|
|
$ |
78,706 |
|
|
$ |
73,149 |
|
|
$ |
59,479 |
|
|
$ |
54,454 |
|
|
$ |
51,608 |
|
|
$ |
78,706 |
|
|
Inflows |
|
4,346 |
|
|
|
4,956 |
|
|
|
3,120 |
|
|
|
2,880 |
|
|
|
3,029 |
|
|
|
19,158 |
|
|
|
13,985 |
|
|
Outflows |
|
(5,943 |
) |
|
|
(8,378 |
) |
|
|
(7,643 |
) |
|
|
(5,689 |
) |
|
|
(6,839 |
) |
|
|
(21,525 |
) |
|
|
(28,549 |
) |
|
Net flows |
|
(1,597 |
) |
|
|
(3,422 |
) |
|
|
(4,523 |
) |
|
|
(2,809 |
) |
|
|
(3,810 |
) |
|
|
(2,367 |
) |
|
|
(14,564 |
) |
|
Market performance |
|
2,282 |
|
|
|
(6,907 |
) |
|
|
(9,000 |
) |
|
|
(2,012 |
) |
|
|
2,806 |
|
|
|
6,308 |
|
|
|
(15,113 |
) |
|
Other (2) |
|
3,656 |
|
|
|
4,772 |
|
|
|
(147 |
) |
|
|
(204 |
) |
|
|
(450 |
) |
|
|
23,157 |
|
|
|
3,971 |
|
|
Ending balance |
$ |
78,706 |
|
|
$ |
73,149 |
|
|
$ |
59,479 |
|
|
$ |
54,454 |
|
|
$ |
53,000 |
|
|
$ |
78,706 |
|
|
$ |
53,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Closed-End Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
11,721 |
|
|
$ |
12,068 |
|
|
$ |
12,060 |
|
|
$ |
10,645 |
|
|
$ |
10,146 |
|
|
$ |
5,914 |
|
|
$ |
12,068 |
|
|
Inflows |
|
19 |
|
|
|
8 |
|
|
|
24 |
|
|
|
157 |
|
|
|
2 |
|
|
|
22 |
|
|
|
191 |
|
|
Outflows |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net flows |
|
19 |
|
|
|
8 |
|
|
|
24 |
|
|
|
157 |
|
|
|
2 |
|
|
|
22 |
|
|
|
191 |
|
|
Market performance |
|
718 |
|
|
|
(196 |
) |
|
|
(1,250 |
) |
|
|
(531 |
) |
|
|
631 |
|
|
|
1,223 |
|
|
|
(1,346 |
) |
|
Other (2) |
|
(390 |
) |
|
|
180 |
|
|
|
(189 |
) |
|
|
(125 |
) |
|
|
(418 |
) |
|
|
4,909 |
|
|
|
(552 |
) |
|
Ending balance |
$ |
12,068 |
|
|
$ |
12,060 |
|
|
$ |
10,645 |
|
|
$ |
10,146 |
|
|
$ |
10,361 |
|
|
$ |
12,068 |
|
|
$ |
10,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Retail Separate Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
41,528 |
|
|
$ |
44,538 |
|
|
$ |
40,824 |
|
|
$ |
35,248 |
|
|
$ |
33,381 |
|
|
$ |
29,751 |
|
|
$ |
44,538 |
|
|
Inflows |
|
2,240 |
|
|
|
2,022 |
|
|
|
1,288 |
|
|
|
1,179 |
|
|
|
1,221 |
|
|
|
9,215 |
|
|
|
5,710 |
|
|
Outflows |
|
(1,125 |
) |
|
|
(1,394 |
) |
|
|
(1,977 |
) |
|
|
(1,418 |
) |
|
|
(1,651 |
) |
|
|
(4,085 |
) |
|
|
(6,440 |
) |
|
Net flows |
|
1,115 |
|
|
|
628 |
|
|
|
(689 |
) |
|
|
(239 |
) |
|
|
(430 |
) |
|
|
5,130 |
|
|
|
(730 |
) |
|
Market performance |
|
1,895 |
|
|
|
(4,342 |
) |
|
|
(4,887 |
) |
|
|
(1,628 |
) |
|
|
2,401 |
|
|
|
6,124 |
|
|
|
(8,456 |
) |
|
Other (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,533 |
|
|
|
— |
|
|
Ending balance |
$ |
44,538 |
|
|
$ |
40,824 |
|
|
$ |
35,248 |
|
|
$ |
33,381 |
|
|
$ |
35,352 |
|
|
$ |
44,538 |
|
|
$ |
35,352 |
|
|
Institutional Accounts (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
49,691 |
|
|
$ |
51,874 |
|
|
$ |
57,309 |
|
|
$ |
50,048 |
|
|
$ |
46,993 |
|
|
$ |
44,921 |
|
|
$ |
51,874 |
|
|
Inflows |
|
2,107 |
|
|
|
2,449 |
|
|
|
3,452 |
|
|
|
1,507 |
|
|
|
2,999 |
|
|
|
8,101 |
|
|
|
10,407 |
|
|
Outflows |
|
(1,625 |
) |
|
|
(1,623 |
) |
|
|
(3,032 |
) |
|
|
(1,930 |
) |
|
|
(2,162 |
) |
|
|
(7,404 |
) |
|
|
(8,747 |
) |
|
Net flows |
|
482 |
|
|
|
826 |
|
|
|
420 |
|
|
|
(423 |
) |
|
|
837 |
|
|
|
697 |
|
|
|
1,660 |
|
|
Market performance |
|
1,438 |
|
|
|
(5,012 |
) |
|
|
(7,657 |
) |
|
|
(2,475 |
) |
|
|
2,976 |
|
|
|
5,697 |
|
|
|
(12,168 |
) |
|
Other (2) |
|
263 |
|
|
|
9,621 |
|
|
|
(24 |
) |
|
|
(157 |
) |
|
|
(143 |
) |
|
|
559 |
|
|
|
9,297 |
|
|
Ending balance |
$ |
51,874 |
|
|
$ |
57,309 |
|
|
$ |
50,048 |
|
|
$ |
46,993 |
|
|
$ |
50,663 |
|
|
$ |
51,874 |
|
|
$ |
50,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
177,305 |
|
|
$ |
187,186 |
|
|
$ |
183,342 |
|
|
$ |
155,420 |
|
|
$ |
144,974 |
|
|
$ |
132,194 |
|
|
$ |
187,186 |
|
|
Inflows |
|
8,712 |
|
|
|
9,435 |
|
|
|
7,884 |
|
|
|
5,723 |
|
|
|
7,251 |
|
|
|
36,496 |
|
|
|
30,293 |
|
|
Outflows |
|
(8,693 |
) |
|
|
(11,395 |
) |
|
|
(12,652 |
) |
|
|
(9,037 |
) |
|
|
(10,652 |
) |
|
|
(33,014 |
) |
|
|
(43,736 |
) |
|
Net flows |
|
19 |
|
|
|
(1,960 |
) |
|
|
(4,768 |
) |
|
|
(3,314 |
) |
|
|
(3,401 |
) |
|
|
3,482 |
|
|
|
(13,443 |
) |
|
Market performance |
|
6,333 |
|
|
|
(16,457 |
) |
|
|
(22,794 |
) |
|
|
(6,646 |
) |
|
|
8,814 |
|
|
|
19,352 |
|
|
|
(37,083 |
) |
|
Other (2) |
|
3,529 |
|
|
|
14,573 |
|
|
|
(360 |
) |
|
|
(486 |
) |
|
|
(1,011 |
) |
|
|
32,158 |
|
|
|
12,716 |
|
|
Ending balance |
$ |
187,186 |
|
|
$ |
183,342 |
|
|
$ |
155,420 |
|
|
$ |
144,974 |
|
|
$ |
149,376 |
|
|
$ |
187,186 |
|
|
$ |
149,376 |
|
(1) Represents assets under management of U.S. retail funds, global funds, exchange traded funds, and variable insurance funds
(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 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.
The following are reconciliations and related notes of the most comparable U.S. GAAP measure to each non-GAAP measure:
|
|
Three Months Ended |
||||||||||
|
Revenues |
12/31/2022 |
|
12/31/2021 |
|
9/30/2022 |
||||||
|
Total revenues, GAAP |
$ |
198,371 |
|
|
$ |
266,262 |
|
|
$ |
210,261 |
|
|
Consolidated investment products revenues (1) |
|
2,264 |
|
|
|
2,374 |
|
|
|
2,243 |
|
|
Investment management fees (2) |
|
(9,758 |
) |
|
|
(12,567 |
) |
|
|
(11,070 |
) |
|
Distribution and service fees (2) |
|
(14,607 |
) |
|
|
(23,465 |
) |
|
|
(15,748 |
) |
|
Total revenues, as adjusted |
$ |
176,270 |
|
|
$ |
232,604 |
|
|
$ |
185,686 |
|
|
Operating Expenses |
|
|
|
|
|
||||||
|
Total operating expenses, GAAP |
$ |
167,150 |
|
|
$ |
182,609 |
|
|
$ |
166,244 |
|
|
Consolidated investment products expenses (1) |
|
(2,481 |
) |
|
|
(1,705 |
) |
|
|
(538 |
) |
|
Distribution and other asset-based expenses (3) |
|
(24,365 |
) |
|
|
(36,032 |
) |
|
|
(26,818 |
) |
|
Amortization of intangible assets (4) |
|
(14,609 |
) |
|
|
(14,262 |
) |
|
|
(14,609 |
) |
|
Restructuring expense (5) |
|
— |
|
|
|
— |
|
|
|
(4,015 |
) |
|
Acquisition and integration expenses (6) |
|
(6,175 |
) |
|
|
(14,454 |
) |
|
|
— |
|
|
Other (7) |
|
637 |
|
|
|
(374 |
) |
|
|
486 |
|
|
Total operating expenses, as adjusted |
$ |
120,157 |
|
|
$ |
115,782 |
|
|
$ |
120,750 |
|
|
|
|
|
|
|
|
||||||
|
Operating Income (Loss) |
|
|
|
|
|
||||||
|
Operating income (loss), GAAP |
$ |
31,221 |
|
|
$ |
83,653 |
|
|
$ |
44,017 |
|
|
Consolidated investment products (earnings) losses (1) |
|
4,745 |
|
|
|
4,079 |
|
|
|
2,781 |
|
|
Amortization of intangible assets (4) |
|
14,609 |
|
|
|
14,262 |
|
|
|
14,609 |
|
|
Restructuring expense (5) |
|
— |
|
|
|
— |
|
|
|
4,015 |
|
|
Acquisition and integration expenses (6) |
|
6,175 |
|
|
|
14,454 |
|
|
|
— |
|
|
Other (7) |
|
(637 |
) |
|
|
374 |
|
|
|
(486 |
) |
|
Operating income (loss), as adjusted |
$ |
56,113 |
|
|
$ |
116,822 |
|
|
$ |
64,936 |
|
|
|
|
|
|
|
|
||||||
|
Operating margin, GAAP |
|
15.7 |
% |
|
|
31.4 |
% |
|
|
20.9 |
% |
|
Operating margin, as adjusted |
|
31.8 |
% |
|
|
50.2 |
% |
|
|
35.0 |
% |
|
Three Months Ended |
|||||||||||
|
Income (Loss) Before Taxes |
12/31/2022 |
|
12/31/2021 |
|
9/30/2022 |
||||||
|
Income (loss) before taxes, GAAP |
$ |
39,126 |
|
|
$ |
89,471 |
|
|
$ |
38,169 |
|
|
Consolidated investment products (earnings) losses (1) |
|
(441 |
) |
|
|
(517 |
) |
|
|
478 |
|
|
Amortization of intangible assets (4) |
|
14,609 |
|
|
|
14,262 |
|
|
|
14,609 |
|
|
Restructuring expense (5) |
|
— |
|
|
|
— |
|
|
|
4,015 |
|
|
Acquisition and integration expenses (6) |
|
6,175 |
|
|
|
14,454 |
|
|
|
— |
|
|
Other (7) |
|
(637 |
) |
|
|
374 |
|
|
|
(486 |
) |
|
Seed capital and CLO investments (gains) losses (8) |
|
(3,322 |
) |
|
|
(1,285 |
) |
|
|
5,363 |
|
|
Income (loss) before taxes, as adjusted |
$ |
55,510 |
|
|
$ |
116,759 |
|
|
$ |
62,148 |
|
Contacts
Investor Relations
Sean Rourke
(860) 263-4709
[email protected]
