- Earnings Per Share – Diluted of $5.21; Earnings Per Share – Diluted, as Adjusted, of $4.20
- Total Sales of $6.2B; Net Flows of ($1.9B); Assets Under Management of $154.8B
HARTFORD, Conn.–(BUSINESS WIRE)–Virtus Investment Partners, Inc. (NASDAQ: VRTS) today reported financial results for the three months ended March 31, 2023.
Financial Highlights (Unaudited)
(in millions, except per share data or as noted)
|
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
||||||||||
|
|
3/31/2023 |
|
3/31/2022 |
|
Change |
|
12/31/2022 |
|
Change |
||||||||
|
U.S. GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
$ |
197.9 |
|
|
$ |
252.4 |
|
|
(22 |
%) |
|
$ |
198.4 |
|
|
— |
% |
|
Operating expenses |
$ |
169.3 |
|
|
$ |
186.9 |
|
|
(9 |
%) |
|
$ |
167.2 |
|
|
1 |
% |
|
Operating income (loss) |
$ |
28.6 |
|
|
$ |
65.6 |
|
|
(56 |
%) |
|
$ |
31.2 |
|
|
(8 |
%) |
|
Operating margin |
|
14.4 |
% |
|
|
26.0 |
% |
|
|
|
|
15.7 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc. |
$ |
38.6 |
|
|
$ |
33.1 |
|
|
17 |
% |
|
$ |
35.4 |
|
|
9 |
% |
|
Earnings (loss) per share – diluted |
$ |
5.21 |
|
|
$ |
4.22 |
|
|
23 |
% |
|
$ |
4.77 |
|
|
9 |
% |
|
Weighted average shares outstanding – diluted |
|
7.410 |
|
|
|
7.839 |
|
|
(5 |
%) |
|
|
7.419 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Non-GAAP Financial Measures (1) |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues, as adjusted |
$ |
176.9 |
|
|
$ |
221.9 |
|
|
(20 |
%) |
|
$ |
176.3 |
|
|
— |
% |
|
Operating expenses, as adjusted |
$ |
129.5 |
|
|
$ |
131.9 |
|
|
(2 |
%) |
|
$ |
120.2 |
|
|
8 |
% |
|
Operating income (loss), as adjusted |
$ |
47.4 |
|
|
$ |
90.1 |
|
|
(47 |
%) |
|
$ |
56.1 |
|
|
(16 |
%) |
|
Operating margin, as adjusted |
|
26.8 |
% |
|
|
40.6 |
% |
|
|
|
|
31.8 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
31.1 |
|
|
$ |
61.7 |
|
|
(50 |
%) |
|
$ |
38.3 |
|
|
(19 |
%) |
|
Earnings (loss) per share – diluted, as adjusted |
$ |
4.20 |
|
|
$ |
7.87 |
|
|
(47 |
%) |
|
$ |
5.17 |
|
|
(19 |
%) |
|
Weighted average shares outstanding – diluted, as adjusted |
|
7.410 |
|
|
|
7.839 |
|
|
(5 |
%) |
|
|
7.419 |
|
|
— |
% |
(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
(in billions)
|
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
||||||||||
|
|
3/31/2023 |
|
3/31/2022 |
|
Change |
|
12/31/2022 |
|
Change |
||||||||
|
Ending total assets under management |
$ |
154.8 |
|
|
$ |
183.3 |
|
|
(16 |
%) |
|
$ |
149.4 |
|
|
4 |
% |
|
Average total assets under management |
$ |
152.4 |
|
|
$ |
190.1 |
|
|
(20 |
%) |
|
$ |
148.6 |
|
|
3 |
% |
|
Total sales |
$ |
6.2 |
|
|
$ |
9.4 |
|
|
(34 |
%) |
|
$ |
7.3 |
|
|
(14 |
%) |
|
Net flows |
$ |
(1.9 |
) |
|
$ |
(2.0 |
) |
|
(5 |
%) |
|
$ |
(3.4 |
) |
|
(44 |
%) |
N/M – Not Meaningful
Total assets under management of $154.8 billion at March 31, 2023 increased from $149.4 billion at December 31, 2022 due to market performance and retail separate account net inflows partially offset by net outflows in other products. In addition, other fee-earning assets of $2.6 billion increased from $2.5 billion at December 31, 2022.
Total sales of $6.2 billion compared with $7.3 billion in the fourth quarter, as higher retail separate account sales were more than offset by lower institutional sales due to a large funding in the prior quarter. Open-end fund sales of $3.0 billion were essentially unchanged, as higher sales of equity strategies were offset by lower fixed income and alternative sales. Retail separate account sales of $1.4 billion increased 12% primarily due to small/mid cap equity strategies. Institutional sales of $1.9 billion compared with $3.0 billion in the prior quarter, which included a large funding and the issuance of a collateralized loan obligation (CLO).
Net flows of ($1.9) billion improved from ($3.4) billion in the prior quarter due to a lower level of redemptions in all products. Open-end fund net flows of ($1.8) billion improved from ($3.8) billion due to lower redemptions across all asset classes and included net inflows in small/mid cap, emerging markets, and large cap equity strategies. Retail separate account net flows of $0.1 billion compared with ($0.4) billion in the prior quarter due to higher sales and lower redemptions, with continued net inflows in the private client channel. Institutional net flows of ($0.2) billion compared with $0.8 billion in the prior quarter due to lower sales, which included the large funding and CLO issuance in the fourth quarter.
GAAP Results
Operating income of $28.6 million declined from $31.2 million in the prior quarter due to a 1% increase in total operating expenses with revenues essentially unchanged. The increase in operating expenses included $11.4 million of seasonal employment items partially offset by lower fair value adjustments to contingent consideration, operating expenses of consolidated investment products, other operating expenses, and variable incentive compensation.
Net income attributable to Virtus Investment Partners, Inc. of $5.21 per diluted common share included $0.93 of fair value adjustments to affiliate noncontrolling interests and $0.64 of net realized and unrealized gains on investments. Net income per diluted share of $4.77 in the prior quarter included $1.53 of fair value adjustments to affiliate noncontrolling interests, $0.78 of net realized and unrealized gains on investments, ($1.03) of CLO issuance expenses, ($0.50) of fair value adjustments to contingent consideration, and ($0.41) of discrete tax adjustments. The fair value adjustments to affiliate non-controlling interests and contingent consideration reflected current estimated value and expectations of future payments.
The effective tax rate of 20% decreased from 34% in the prior quarter, primarily reflecting changes in valuation allowances related to marketable securities and other discrete tax adjustments.
Non-GAAP Results
Revenues, as adjusted, of $176.9 million increased modestly from $176.3 million in the prior quarter, as higher average assets and fee rate were partially offset by two fewer days in the quarter.
Employment expenses, as adjusted, of $98.6 million increased from $88.3 million due to $11.4 million of seasonal items, primarily payroll taxes and benefits related to the timing of annual incentive payments, partially offset by lower variable incentive compensation. Other operating expenses, as adjusted, of $29.8 million declined from $30.8 million in the prior quarter largely due to lower professional fees and seasonally lower travel and related activity. Operating income, as adjusted, of $47.4 million and the related margin of 26.8% declined from $56.1 million and 31.8%, respectively, due to the seasonal employment expenses, partially offset by lower other operating expenses and lower variable incentive compensation.
Net income attributable to Virtus Investment Partners, Inc., as adjusted, per diluted common share was $4.20, a decrease of $0.97, or 19%, from $5.17 in the prior quarter. The decline primarily reflected the seasonal items.
The effective tax rate, as adjusted, of 28% compared with 27% in the prior quarter.
Select Balance Sheet Items (Unaudited)
(in millions)
|
|
As of |
|
|
|
As of |
|
|
||||||||
|
|
3/31/2023 |
|
3/31/2022 |
|
Change |
|
12/31/2022 |
|
Change |
||||||
|
Cash and cash equivalents |
$ |
213.4 |
|
$ |
225.2 |
|
(5 |
%) |
|
$ |
338.2 |
|
|
(37 |
%) |
|
Gross debt (1) |
$ |
260.9 |
|
$ |
273.6 |
|
(5 |
%) |
|
$ |
261.6 |
|
|
— |
% |
|
Contingent consideration (2) |
$ |
101.2 |
|
$ |
130.7 |
|
(23 |
%) |
|
$ |
128.4 |
|
|
(21 |
%) |
|
Redeemable noncontrolling interests (3) |
$ |
88.2 |
|
$ |
129.3 |
|
(32 |
%) |
|
$ |
95.5 |
|
|
(8 |
%) |
|
Total equity exc. noncontrolling interests |
$ |
837.9 |
|
$ |
816.5 |
|
3 |
% |
|
$ |
817.0 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Working capital (4) |
$ |
184.4 |
|
$ |
196.1 |
|
(6 |
%) |
|
$ |
180.6 |
|
|
2 |
% |
|
Net debt (cash) (5) |
$ |
47.5 |
|
$ |
48.4 |
|
(2 |
%) |
|
$ |
(76.7 |
) |
|
N/M |
|
(1) Excludes deferred financing costs of $6.3 million, $7.7 million, and $6.5 million, as of March 31, 2023, March 31, 2022, and December 31, 2022, respectively
(2) Represents estimates of revenue participation and contingent payments
(3) Excludes redeemable noncontrolling interests of consolidated investment products of $18.4 million, $9.4 million, and $18.3 million as of March 31, 2023, March 31, 2022, and December 31, 2022, respectively
(4) Defined as cash and cash equivalents plus accounts receivable, net, 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
(5) Defined as gross debt less cash and cash equivalents
N/M – Not Meaningful
Working capital of $184.4 million at March 31, 2023 increased modestly from $180.6 million at December 31, 2022.
During the quarter, the company net settled 70,716 shares of common stock for $12.2 million to satisfy employee tax obligations.
Acquisition of AlphaSimplex
As previously disclosed, on April 1, 2023 the company completed its acquisition of AlphaSimplex, a leading manager of quantitative alternative investment solutions. Consideration of $130.0 million was financed with existing balance sheet resources including $50.0 million drawn from the company’s revolving credit facility.
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on Friday, April 28, 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)
(in thousands, except per share data)
|
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
||||||||||
|
|
3/31/2023 |
|
3/31/2022 |
|
Change |
|
12/31/2022 |
|
Change |
||||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
||||||||
|
Investment management fees |
$ |
164,478 |
|
|
$ |
206,817 |
|
|
(20 |
%) |
|
$ |
163,648 |
|
|
1 |
% |
|
Distribution and service fees |
|
14,153 |
|
|
|
20,007 |
|
|
(29 |
%) |
|
|
14,606 |
|
|
(3 |
%) |
|
Administration and shareholder service fees |
|
18,359 |
|
|
|
24,344 |
|
|
(25 |
%) |
|
|
18,973 |
|
|
(3 |
%) |
|
Other income and fees |
|
884 |
|
|
|
1,272 |
|
|
(31 |
%) |
|
|
1,144 |
|
|
(23 |
%) |
|
Total revenues |
|
197,874 |
|
|
|
252,440 |
|
|
(22 |
%) |
|
|
198,371 |
|
|
— |
% |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
||||||||
|
Employment expenses |
|
98,614 |
|
|
|
105,993 |
|
|
(7 |
%) |
|
|
87,676 |
|
|
12 |
% |
|
Distribution and other asset-based expenses |
|
23,715 |
|
|
|
32,846 |
|
|
(28 |
%) |
|
|
24,365 |
|
|
(3 |
%) |
|
Other operating expenses |
|
30,730 |
|
|
|
31,712 |
|
|
(3 |
%) |
|
|
31,811 |
|
|
(3 |
%) |
|
Operating expenses of consolidated investment products |
|
700 |
|
|
|
740 |
|
|
(5 |
%) |
|
|
2,481 |
|
|
(72 |
%) |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
— |
|
|
N/M |
|
|
|
5,120 |
|
|
(100 |
%) |
|
Depreciation expense |
|
1,145 |
|
|
|
935 |
|
|
22 |
% |
|
|
1,088 |
|
|
5 |
% |
|
Amortization expense |
|
14,391 |
|
|
|
14,662 |
|
|
(2 |
%) |
|
|
14,609 |
|
|
(1 |
%) |
|
Total operating expenses |
|
169,295 |
|
|
|
186,888 |
|
|
(9 |
%) |
|
|
167,150 |
|
|
1 |
% |
|
Operating Income (Loss) |
|
28,579 |
|
|
|
65,552 |
|
|
(56 |
%) |
|
|
31,221 |
|
|
(8 |
%) |
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
||||||||
|
Realized and unrealized gain (loss) on investments, net |
|
2,670 |
|
|
|
(2,982 |
) |
|
N/M |
|
|
|
3,529 |
|
|
(24 |
%) |
|
Realized and unrealized gain (loss) of consolidated investment products, net |
|
2,596 |
|
|
|
(13,344 |
) |
|
N/M |
|
|
|
4,147 |
|
|
(37 |
%) |
|
Other income (expense), net |
|
(343 |
) |
|
|
287 |
|
|
N/M |
|
|
|
(352 |
) |
|
(3 |
%) |
|
Total other income (expense), net |
|
4,923 |
|
|
|
(16,039 |
) |
|
N/M |
|
|
|
7,324 |
|
|
(33 |
%) |
|
Interest Income (Expense) |
|
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
(5,005 |
) |
|
|
(2,279 |
) |
|
120 |
% |
|
|
(4,512 |
) |
|
11 |
% |
|
Interest and dividend income |
|
3,238 |
|
|
|
328 |
|
|
N/M |
|
|
|
2,578 |
|
|
26 |
% |
|
Interest and dividend income of investments of consolidated investment products |
|
46,814 |
|
|
|
20,380 |
|
|
130 |
% |
|
|
35,889 |
|
|
30 |
% |
|
Interest expense of consolidated investment products |
|
(35,203 |
) |
|
|
(12,088 |
) |
|
191 |
% |
|
|
(33,374 |
) |
|
5 |
% |
|
Total interest income (expense), net |
|
9,844 |
|
|
|
6,341 |
|
|
55 |
% |
|
|
581 |
|
|
N/M |
|
|
Income (Loss) Before Income Taxes |
|
43,346 |
|
|
|
55,854 |
|
|
(22 |
%) |
|
|
39,126 |
|
|
11 |
% |
|
Income tax expense (benefit) |
|
8,703 |
|
|
|
16,735 |
|
|
(48 |
%) |
|
|
13,291 |
|
|
(35 |
%) |
|
Net Income (Loss) |
|
34,643 |
|
|
|
39,119 |
|
|
(11 |
%) |
|
|
25,835 |
|
|
34 |
% |
|
Noncontrolling interests |
|
3,981 |
|
|
|
(6,060 |
) |
|
N/M |
|
|
|
9,565 |
|
|
(58 |
%) |
|
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
$ |
38,624 |
|
|
$ |
33,059 |
|
|
17 |
% |
|
$ |
35,400 |
|
|
9 |
% |
|
Earnings (Loss) Per Share – Basic |
$ |
5.33 |
|
|
$ |
4.38 |
|
|
22 |
% |
|
$ |
4.87 |
|
|
9 |
% |
|
Earnings (Loss) Per Share – Diluted |
$ |
5.21 |
|
|
$ |
4.22 |
|
|
23 |
% |
|
$ |
4.77 |
|
|
9 |
% |
|
Cash Dividends Declared Per Common Share |
$ |
1.65 |
|
|
$ |
1.50 |
|
|
10 |
% |
|
$ |
1.65 |
|
|
— |
% |
|
Weighted Average Shares Outstanding – Basic |
|
7,245 |
|
|
|
7,546 |
|
|
(4 |
%) |
|
|
7,262 |
|
|
— |
% |
|
Weighted Average Shares Outstanding – Diluted |
|
7,410 |
|
|
|
7,839 |
|
|
(5 |
%) |
|
|
7,419 |
|
|
— |
% |
N/M – Not Meaningful
Assets Under Management – Product and Asset Class
(in millions)
|
|
Three Months Ended |
|||||||||||||
|
|
3/31/2022 |
|
06/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
3/31/2023 |
|||||
|
By Product (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
73,149 |
|
$ |
59,479 |
|
$ |
54,454 |
|
$ |
53,000 |
|
$ |
53,865 |
|
Closed-End Funds |
|
12,060 |
|
|
10,645 |
|
|
10,146 |
|
|
10,361 |
|
|
10,358 |
|
Retail Separate Accounts |
|
40,824 |
|
|
35,248 |
|
|
33,381 |
|
|
35,352 |
|
|
37,397 |
|
Institutional Accounts (2) |
|
57,309 |
|
|
50,048 |
|
|
46,993 |
|
|
50,663 |
|
|
53,229 |
|
Total |
$ |
183,342 |
|
$ |
155,420 |
|
$ |
144,974 |
|
$ |
149,376 |
|
$ |
154,849 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Product (average) (3) |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
75,537 |
|
$ |
65,592 |
|
$ |
60,185 |
|
$ |
54,870 |
|
$ |
54,141 |
|
Closed-End Funds |
|
11,762 |
|
|
11,405 |
|
|
10,971 |
|
|
10,389 |
|
|
10,424 |
|
Retail Separate Accounts |
|
44,538 |
|
|
40,824 |
|
|
35,248 |
|
|
33,381 |
|
|
35,352 |
|
Institutional Accounts (2) |
|
58,269 |
|
|
53,560 |
|
|
50,668 |
|
|
49,981 |
|
|
52,444 |
|
Total |
$ |
190,106 |
|
$ |
171,381 |
|
$ |
157,072 |
|
$ |
148,621 |
|
$ |
152,361 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Asset Class (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Equity |
$ |
102,989 |
|
$ |
84,754 |
|
$ |
78,034 |
|
$ |
81,894 |
|
$ |
87,511 |
|
Fixed Income |
|
45,418 |
|
|
39,322 |
|
|
36,910 |
|
|
36,903 |
|
|
36,596 |
|
Multi-Asset (4) |
|
23,415 |
|
|
20,261 |
|
|
19,364 |
|
|
19,937 |
|
|
20,597 |
|
Alternatives (5) |
|
11,520 |
|
|
11,083 |
|
|
10,666 |
|
|
10,642 |
|
|
10,145 |
|
Total |
$ |
183,342 |
|
$ |
155,420 |
|
$ |
144,974 |
|
$ |
149,376 |
|
$ |
154,849 |
Assets Under Management – Average Management Fees Earned (6)
(in basis points)
|
|
Three Months Ended |
||||||||
|
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
3/31/2023 |
|
By Product: |
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1) |
46.5 |
|
46.2 |
|
46.8 |
|
47.2 |
|
47.6 |
|
Closed-End Funds |
58.4 |
|
56.9 |
|
57.0 |
|
57.1 |
|
57.1 |
|
Retail Separate Accounts |
43.6 |
|
42.9 |
|
42.2 |
|
42.6 |
|
44.2 |
|
Institutional Accounts (2)(7) |
31.5 |
|
30.6 |
|
31.3 |
|
32.0 |
|
31.8 |
|
All Products (7) |
41.9 |
|
41.2 |
|
41.5 |
|
41.7 |
|
42.0 |
(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) 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 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:
|
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
3/31/2023 |
|
Institutional Accounts |
0.5 |
|
0.3 |
|
0.2 |
|
0.4 |
|
0.2 |
|
All Products |
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
Assets Under Management – Asset Flows by Product
(in millions)
|
|
Three Months Ended |
||||||||||||||||||
|
|
3/31/2022 |
|
6/30/2022 |
|
9/30/2022 |
|
12/31/2022 |
|
3/31/2023 |
||||||||||
|
Open-End Funds (1) |
|
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance |
$ |
78,706 |
|
|
$ |
73,149 |
|
|
$ |
59,479 |
|
|
$ |
54,454 |
|
|
$ |
53,000 |
|
|
Inflows |
|
4,956 |
|
|
|
3,120 |
|
|
|
2,880 |
|
|
|
3,029 |
|
|
|
3,011 |
|
|
Outflows |
|
(8,378 |
) |
|
|
(7,643 |
) |
|
|
(5,689 |
) |
|
|
(6,839 |
) |
|
|
(4,792 |
) |
|
Net flows |
|
(3,422 |
) |
|
|
(4,523 |
) |
|
|
(2,809 |
) |
|
|
(3,810 |
) |
|
|
(1,781 |
) |
|
Market performance |
|
(6,907 |
) |
|
|
(9,000 |
) |
|
|
(2,012 |
) |
|
|
2,806 |
|
|
|
2,771 |
|
|
Other (2) |
|
4,772 |
|
|
|
(147 |
) |
|
|
(204 |
) |
|
|
(450 |
) |
|
|
(125 |
) |
|
Ending balance |
$ |
73,149 |
|
|
$ |
59,479 |
|
|
$ |
54,454 |
|
|
$ |
53,000 |
|
|
$ |
53,865 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Closed-End Funds |
|
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance |
$ |
12,068 |
|
|
$ |
12,060 |
|
|
$ |
10,645 |
|
|
$ |
10,146 |
|
|
$ |
10,361 |
|
|
Inflows |
|
8 |
|
|
|
24 |
|
|
|
157 |
|
|
|
2 |
|
|
|
4 |
|
|
Outflows |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net flows |
|
8 |
|
|
|
24 |
|
|
|
157 |
|
|
|
2 |
|
|
|
4 |
|
|
Market performance |
|
(196 |
) |
|
|
(1,250 |
) |
|
|
(531 |
) |
|
|
631 |
|
|
|
205 |
|
|
Other (2) |
|
180 |
|
|
|
(189 |
) |
|
|
(125 |
) |
|
|
(418 |
) |
|
|
(212 |
) |
|
Ending balance |
$ |
12,060 |
|
|
$ |
10,645 |
|
|
$ |
10,146 |
|
|
$ |
10,361 |
|
|
$ |
10,358 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Retail Separate Accounts |
|
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance |
$ |
44,538 |
|
|
$ |
40,824 |
|
|
$ |
35,248 |
|
|
$ |
33,381 |
|
|
$ |
35,352 |
|
|
Inflows |
|
2,022 |
|
|
|
1,288 |
|
|
|
1,179 |
|
|
|
1,221 |
|
|
|
1,367 |
|
|
Outflows |
|
(1,394 |
) |
|
|
(1,977 |
) |
|
|
(1,418 |
) |
|
|
(1,651 |
) |
|
|
(1,288 |
) |
|
Net flows |
|
628 |
|
|
|
(689 |
) |
|
|
(239 |
) |
|
|
(430 |
) |
|
|
79 |
|
|
Market performance |
|
(4,342 |
) |
|
|
(4,887 |
) |
|
|
(1,628 |
) |
|
|
2,401 |
|
|
|
1,966 |
|
|
Ending balance |
$ |
40,824 |
|
|
$ |
35,248 |
|
|
$ |
33,381 |
|
|
$ |
35,352 |
|
|
$ |
37,397 |
|
|
Institutional Accounts (3) |
|
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance |
$ |
51,874 |
|
|
$ |
57,309 |
|
|
$ |
50,048 |
|
|
$ |
46,993 |
|
|
$ |
50,663 |
|
|
Inflows |
|
2,449 |
|
|
|
3,452 |
|
|
|
1,507 |
|
|
|
2,999 |
|
|
|
1,852 |
|
|
Outflows |
|
(1,623 |
) |
|
|
(3,032 |
) |
|
|
(1,930 |
) |
|
|
(2,162 |
) |
|
|
(2,047 |
) |
|
Net flows |
|
826 |
|
|
|
420 |
|
|
|
(423 |
) |
|
|
837 |
|
|
|
(195 |
) |
|
Market performance |
|
(5,012 |
) |
|
|
(7,657 |
) |
|
|
(2,475 |
) |
|
|
2,976 |
|
|
|
2,906 |
|
|
Other (2) |
|
9,621 |
|
|
|
(24 |
) |
|
|
(157 |
) |
|
|
(143 |
) |
|
|
(145 |
) |
|
Ending balance |
$ |
57,309 |
|
|
$ |
50,048 |
|
|
$ |
46,993 |
|
|
$ |
50,663 |
|
|
$ |
53,229 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total |
|
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance |
$ |
187,186 |
|
|
$ |
183,342 |
|
|
$ |
155,420 |
|
|
$ |
144,974 |
|
|
$ |
149,376 |
|
|
Inflows |
|
9,435 |
|
|
|
7,884 |
|
|
|
5,723 |
|
|
|
7,251 |
|
|
|
6,234 |
|
|
Outflows |
|
(11,395 |
) |
|
|
(12,652 |
) |
|
|
(9,037 |
) |
|
|
(10,652 |
) |
|
|
(8,127 |
) |
|
Net flows |
|
(1,960 |
) |
|
|
(4,768 |
) |
|
|
(3,314 |
) |
|
|
(3,401 |
) |
|
|
(1,893 |
) |
|
Market performance |
|
(16,457 |
) |
|
|
(22,794 |
) |
|
|
(6,646 |
) |
|
|
8,814 |
|
|
|
7,848 |
|
|
Other (2) |
|
14,573 |
|
|
|
(360 |
) |
|
|
(486 |
) |
|
|
(1,011 |
) |
|
|
(482 |
) |
|
Ending balance |
$ |
183,342 |
|
|
$ |
155,420 |
|
|
$ |
144,974 |
|
|
$ |
149,376 |
|
|
$ |
154,849 |
|
(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 |
3/31/2023 |
|
3/31/2022 |
|
12/31/2022 |
||||||
|
Total revenues, GAAP |
$ |
197,874 |
|
|
$ |
252,440 |
|
|
$ |
198,371 |
|
|
Consolidated investment products revenues (1) |
|
2,750 |
|
|
|
2,354 |
|
|
|
2,264 |
|
|
Investment management fees (2) |
|
(9,561 |
) |
|
|
(12,838 |
) |
|
|
(9,758 |
) |
|
Distribution and service fees (2) |
|
(14,154 |
) |
|
|
(20,008 |
) |
|
|
(14,607 |
) |
|
Total revenues, as adjusted |
$ |
176,909 |
|
|
$ |
221,948 |
|
|
$ |
176,270 |
|
|
Operating Expenses |
|
|
|
|
|
||||||
|
Total operating expenses, GAAP |
$ |
169,295 |
|
|
$ |
186,888 |
|
|
$ |
167,150 |
|
|
Consolidated investment products expenses (1) |
|
(700 |
) |
|
|
(740 |
) |
|
|
(2,481 |
) |
|
Distribution and other asset-based expenses (3) |
|
(23,715 |
) |
|
|
(32,846 |
) |
|
|
(24,365 |
) |
|
Amortization of intangible assets (4) |
|
(14,391 |
) |
|
|
(14,662 |
) |
|
|
(14,609 |
) |
|
Deferred compensation and related investments (5) |
|
(572 |
) |
|
|
— |
|
|
|
— |
|
|
Acquisition and integration expenses (6) |
|
(965 |
) |
|
|
(6,667 |
) |
|
|
(6,175 |
) |
|
Other (7) |
|
592 |
|
|
|
(122 |
) |
|
|
637 |
|
|
Total operating expenses, as adjusted |
$ |
129,544 |
|
|
$ |
131,851 |
|
|
$ |
120,157 |
|
|
|
|
|
|
|
|
||||||
|
Operating Income (Loss) |
|
|
|
|
|
||||||
|
Operating income (loss), GAAP |
$ |
28,579 |
|
|
$ |
65,552 |
|
|
$ |
31,221 |
|
|
Consolidated investment products (earnings) losses (1) |
|
3,450 |
|
|
|
3,094 |
|
|
|
4,745 |
|
|
Amortization of intangible assets (4) |
|
14,391 |
|
|
|
14,662 |
|
|
|
14,609 |
|
|
Deferred compensation and related investments (5) |
|
572 |
|
|
|
— |
|
|
|
— |
|
|
Acquisition and integration expenses (6) |
|
965 |
|
|
|
6,667 |
|
|
|
6,175 |
|
|
Other (7) |
|
(592 |
) |
|
|
122 |
|
|
|
(637 |
) |
|
Operating income (loss), as adjusted |
$ |
47,365 |
|
|
$ |
90,097 |
|
|
$ |
56,113 |
|
|
|
|
|
|
|
|
||||||
|
Operating margin, GAAP |
|
14.4 |
% |
|
|
26.0 |
% |
|
|
15.7 |
% |
|
Operating margin, as adjusted |
|
26.8 |
% |
|
|
40.6 |
% |
|
|
31.8 |
% |
|
|
Three Months Ended |
|||||||||
|
Income (Loss) Before Taxes |
3/31/2023 |
|
3/31/2022 |
|
12/31/2022 |
|||||
|
Income (loss) before taxes, GAAP |
$ |
43,346 |
|
|
$ |
55,854 |
|
$ |
39,126 |
|
|
Consolidated investment products (earnings) losses (1) |
|
(1,412 |
) |
|
|
806 |
|
|
(441 |
) |
|
Amortization of intangible assets (4) |
|
14,391 |
|
|
|
14,662 |
|
|
14,609 |
|
|
Deferred compensation and related investments (5) |
|
(344 |
) |
|
|
— |
|
|
— |
|
|
Acquisition and integration expenses (6) |
|
965 |
|
|
|
6,667 |
|
|
6,175 |
|
|
Other (7) |
|
(592 |
) |
|
|
122 |
|
|
(637 |
) |
|
Seed capital and CLO investments (gains) losses (8) |
|
(10,140 |
) |
|
|
10,735 |
|
|
(3,322 |
) |
|
Income (loss) before taxes, as adjusted |
$ |
46,214 |
|
|
$ |
88,846 |
|
$ |
55,510 |
|
|
Income Tax Expense (Benefit) |
|
|
|
|
|
||||||
|
Income tax expense (benefit), GAAP |
$ |
8,703 |
|
|
$ |
16,735 |
|
|
$ |
13,291 |
|
|
Tax impact of: |
|
|
|
|
|
||||||
|
Amortization of intangible assets (4) |
|
4,025 |
|
|
|
3,974 |
|
|
|
3,988 |
|
|
Deferred compensation and related investments (5) |
|
(96 |
) |
|
|
— |
|
|
|
— |
|
|
Acquisition and integration expenses (6) |
|
270 |
|
|
|
1,807 |
|
|
|
1,686 |
|
|
Other (7) |
|
1,745 |
|
|
|
2,603 |
|
|
|
(3,766 |
) |
|
Seed capital and CLO investments (gains) losses (8) |
|
(1,722 |
) |
|
|
(1,041 |
) |
|
|
(46 |
) |
|
Income tax expense (benefit), as adjusted |
$ |
12,925 |
|
|
$ |
24,078 |
|
|
$ |
15,153 |
|
|
|
|
|
|
|
|
||||||
|
Effective tax rate, GAAPA |
|
20.1 |
% |
|
|
30.0 |
% |
|
|
34.0 |
% |
|
Effective tax rate, as adjustedB |
|
28.0 |
% |
|
|
27.1 |
% |
|
|
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
|
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
|
|
|
|
|
|||||
|
Net income (loss) attributable to Virtus Investment Partners, Inc., GAAP |
$ |
38,624 |
|
|
$ |
33,059 |
|
$ |
35,400 |
|
|
Amortization of intangible assets, net of tax (4) |
|
9,687 |
|
|
|
9,952 |
|
|
9,942 |
|
|
Deferred compensation and related investments (5) |
|
(248 |
) |
|
|
— |
|
|
— |
|
|
Acquisition and integration expenses, net of tax (6) |
|
695 |
|
|
|
4,860 |
|
|
4,489 |
|
|
Other, net of tax (7) |
|
(9,236 |
) |
|
|
2,007 |
|
|
(8,216 |
) |
|
Seed capital and CLO investments (gains) losses, net of tax (8) |
|
(8,418 |
) |
|
|
11,776 |
|
|
(3,276 |
) |
|
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
31,104 |
|
|
$ |
61,654 |
|
$ |
38,339 |
|
|
Weighted average shares outstanding – diluted |
|
7,410 |
|
|
|
7,839 |
|
|
7,419 |
|
|
|
|
|
|
|
|
|||||
|
Earnings (loss) per share – diluted, GAAP |
$ |
5.21 |
|
|
$ |
4.22 |
|
$ |
4.77 |
|
|
Earnings (loss) per share – diluted, as adjusted |
$ |
4.20 |
|
|
$ |
7.87 |
|
$ |
5.17 |
|
Contacts
Investor Relations
Sean Rourke
(860) 263-4709
[email protected]
