Exhibit 99.1 |
First Quarter 2020 Highlights
SAN ANTONIO--(BUSINESS WIRE)--May 11, 2020--Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or “the Company”) today reported financial results for the quarter ended March 31, 2020.
“I am pleased to report Victory Capital generated excellent financial results during the first quarter, despite unprecedented challenges presented by the COVID-19 pandemic,” said David Brown, Chairman and Chief Executive Officer. “Advance preparation proved essential for delivering uninterrupted service to clients and providing safe working conditions for employees. Our comprehensive and thoroughly tested business continuity plan has ensured that all investment activities remain unaffected, and we have been energized by our organization’s ability to seamlessly adapt to challenging circumstances.
“Our cost structure also adjusted in real time with market fluctuations, proving the resiliency of our next-generation business model and contributing to first-quarter results exceeding expectations.
“Four of our investment franchises achieved positive long-term net flows during the quarter, and net outflows from fixed income products held up much better than the industry-wide averages.
“In addition, we took opportunistic action on the capital management front. Early in the quarter, we repriced our term loan to reduce the interest rate spread by 75 basis points. Later in the quarter, we promptly responded to falling interest rates and effectively locked in a rate of 3.465% on the majority of our current debt. At the same time, we maintained a disciplined capital allocation strategy and deployed most of our free cash flow to further reduce debt, while returning some capital to shareholders with steady share repurchases and the cash dividend. Since last year’s origination of the term loan on July 1, we have repaid $217 million and lowered the current outstanding balance to $883 million.
“Looking ahead, we continue to invest to support future growth and remain committed to executing on our strategy to enhance shareholder value. We are still actively evaluating strategic acquisition candidates and conducting due diligence. Persistent market volatility may accelerate industry consolidation and our flexible business model ideally positions us to benefit in this environment. As always, serving the needs of our clients will remain our top priority, and I am more optimistic than ever about our Company’s ability to withstand and thrive in ever-changing market environments.”
1The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of Non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure. |
The table below presents AUM, and certain GAAP and non-GAAP (“adjusted”) financial results. Due to rounding, AUM values and other amounts in this press release may not add up precisely to the totals provided.
(in millions except per share amounts or as otherwise noted) | ||||||||||||
For the Three Months Ended | ||||||||||||
March 31, |
| December 31, |
| March 31, | ||||||||
2020 |
| 2019 |
| 2019 | ||||||||
| Assets Under Management | ||||||||||||
| Ending | $ | 123,779 |
| $ | 151,832 |
| $ | 58,119 |
| |||
| Average | 144,112 |
| 147,867 |
| 57,043 |
| ||||||
| Long-term Flows(2) | ||||||||||||
| Long-term Gross(2) | $ | 7,273 |
| $ | 5,284 |
| $ | 3,038 |
| |||
| Long-term Net(2) | (3,101 | ) | (1,474 | ) | (1,105 | ) | ||||||
| Money Market/Short-term Flows | ||||||||||||
| Money Market/Short-term Gross | $ | 7,652 |
| $ | 4,371 |
| $ | — | ||||
| Money Market/Short-term Net | 201 |
| 85 |
| — | |||||||
| Total Flows | ||||||||||||
| Total Gross | $ | 14,925 |
| $ | 9,655 |
| $ | 3,038 |
| |||
| Total Net | (2,900 | ) | (1,390 | ) | (1,105 | ) | ||||||
| Consolidated Financial Results (GAAP) | ||||||||||||
| Revenue | $ | 204.4 |
| $ | 218.6 |
| $ | 87.5 |
| |||
| Revenue realization (in bps) | 57.1 |
| 58.6 |
| 62.2 |
| ||||||
| Operating expenses | 113.8 |
| 154.4 |
| 65.4 |
| ||||||
| Income from operations | 90.6 |
| 64.2 |
| 22.1 |
| ||||||
| Operating margin | 44.3 | % | 29.4 | % | 25.3 | % | ||||||
| Net income | 57.2 |
| 37.6 |
| 14.5 |
| ||||||
| Earnings per diluted share | $ | 0.77 |
| $ | 0.51 |
| $ | 0.20 |
| |||
| Cash flow from operations | 51.9 |
| 59.7 |
| 17.9 |
| ||||||
| Adjusted Performance Results (Non-GAAP)(1) | ||||||||||||
| Adjusted EBITDA | $ | 91.5 |
| $ | 102.3 |
| $ | 33.6 |
| |||
| Adjusted EBITDA margin | 44.8 | % | 46.8 | % | 38.4 | % | ||||||
| Adjusted net income | 61.7 |
| 66.0 |
| 21.9 |
| ||||||
| Tax benefit of goodwill and acquired intangible assets | 6.7 |
| 6.8 |
| 3.4 |
| ||||||
| Adjusted net income with tax benefit | 68.5 |
| 72.8 |
| 25.3 |
| ||||||
| Adjusted net income with tax benefit per diluted share | $ | 0.92 |
| $ | 0.99 |
| $ | 0.35 |
| |||
____________________ |
|
2 Long-term AUM is defined as total AUM excluding Money Market and short-term assets. |
AUM, Flows and Investment Performance
Victory Capital’s AUM decreased by $28.1 billion to $123.8 billion at March 31, 2020, compared with $151.8 billion at December 31, 2019. The decrease was due to negative market action and net outflows of $25.2 billion and $2.9 billion, respectively. Total gross flows for the first quarter were $14.9 billion. For the first quarter, the Company reported long-term gross flows of $7.3 billion.
As of March 31, 2020, Victory Capital offered 116 investment strategies through its nine autonomous Investment Franchises and Solutions Platform. The table below presents outperformance against benchmarks by AUM as of March 31, 2020.
Percentage of AUM Outperforming Benchmark | ||||||
Trailing |
| Trailing |
| Trailing |
| Trailing |
1-Year |
| 3-Years |
| 5-Years |
| 10-Years |
44% |
| 55% |
| 69% |
| 79% |
First Quarter 2020 Compared with Fourth Quarter 2019
Revenue decreased 6.5% to $204.4 million, in the first quarter, compared with $218.6 million in the fourth quarter, reflecting lower average AUM, one less day in the quarter and a decrease in average fee rate realization as a result of AUM mix shift. GAAP operating margin expanded 1,490 basis points in the first quarter to 44.3%, up from 29.4% in the fourth quarter, due to lower cash operating expenses and a $4.6 million net benefit in acquisition-related expenses. In the prior quarter, acquisition related expenses totaled $22.3 million. Adjusting for the impact of acquisition-related expenses, quarter-over-quarter expenses declined $13.7 million, or 10.4%, reflecting the Company’s variable cost structure. First quarter GAAP net income rose 52% to $57.2 million, up from $37.6 million in the prior quarter. On a per-share basis, GAAP net income advanced 51% to $0.77 per diluted share in the first quarter, versus $0.51 per diluted share in the fourth quarter.
Adjusted net income with tax benefit decreased 6% to $68.5 million in the first quarter, down from $72.8 million in the fourth quarter. On a per-share basis, adjusted net income with tax benefit decreased 7% to $0.92 per diluted share in the first quarter, from $0.99 per diluted share in the prior quarter. Adjusted EBITDA decreased 11% to $91.5 million in the first quarter, versus $102.3 million in the fourth quarter. Adjusted EBITDA margin contracted 200 basis points in the first quarter of 2020 to 44.8% compared with 46.8% in the prior quarter.
First Quarter 2020 Compared with First Quarter 2019
Year-over-year results reflect the acquisition of the USAA Asset Management Company, which closed on July 1, 2019. The acquisition significantly impacted our financial results for the three months ended March 31, 2020 when compared to the three months ended March 31, 2019. Revenue for the three months ended March 31, 2020, rose 134% to $204.4 million, compared with $87.5 million in the same quarter of 2019. The increase was primarily due to higher average AUM as a result of the acquisition.
GAAP operating margin was 44.3% in the first quarter, a 1900 basis point increase from the 25.3% recorded in the same quarter of 2019 primarily due to improved operating leverage. Operating expenses increased 74% to $113.8 million, compared with $65.4 million in last year’s first quarter, reflecting the Company’s larger scale and new call center dedicated to serving USAA members. GAAP net income rose 294% to $57.2 million, or $0.77 per diluted share, in the first quarter compared with $14.5 million, or $0.20 per diluted share, in the same quarter of 2019.
Adjusted net income with tax benefit advanced 171% to $68.5 million, or $0.92 per diluted share, in the first quarter, compared with $25.3 million, or $0.35 per diluted share in the same quarter last year. Adjusted EBITDA rose 172% to $91.5 million, compared with $33.6 million in last year’s same quarter. Year-over-year, adjusted EBITDA margin expanded 640 basis points to 44.8% in the first quarter of 2020, compared with 38.4% in the same quarter last year.
Balance Sheet / Capital Management
During the first quarter, the Company reduced outstanding debt by an additional $38 million. To date, the Company has reduced total debt by $217 million, since July 1, 2019. On January 21, 2020, the Company repriced its Term Loan, lowering the interest rate spread by 75 basis points, from 3.25% over LIBOR, to 2.50% over LIBOR. On March 27, 2020, the Company executed a floating-to-fixed interest rate swap transaction to effectively fix the interest rate at 3.465% on $450 million of its outstanding Term Loan.
Today, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable on June 25, 2020, to shareholders of record on June 10, 2020.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call this morning, May 11, at 10:00 a.m. ET to discuss the results. Analysts and investors may participate in the question-and-answer session. To participate in the conference call, please call (877) 823-8673 (domestic) or (647) 689-4067 (international), shortly before 10:00 a.m. ET and reference the Victory Capital Conference Call. A live, listen-only webcast will also be available via the investor relations section of the Company’s website at https://ir.vcm.com. Prior to the call, a supplemental slide presentation that will be used during the conference call will be available on the Events and Presentations page of the Company’s investor relations website. For anyone who is unable to join the live event, an archive of the webcast will be available for replay shortly after the call concludes.
About Victory Capital
Victory Capital is a diversified global asset management firm with $131.8 billion in assets under management as of April 30, 2020. The Company operates a next-generation business model combining boutique investment qualities with the benefits of a fully integrated, centralized operating and distribution platform.
Victory Capital provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors. With nine autonomous Investment Franchises and a Solutions Platform, Victory Capital offers a wide array of investment styles and investment vehicles including, actively managed mutual funds, separately managed accounts, rules-based and active ETFs, multi-asset class strategies, custom-designed solutions and a 529 College Savings Plan.
For more information, please visit www.vcm.com or follow us on: Twitter and LinkedIn.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,” “future,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Victory Capital’s control such as the COVID-19 pandemic and its effect on our business, operations and financial results going forward, as discussed in Victory Capital’s filings with the SEC, that could cause Victory Capital’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements.
Although it is not possible to identify all such risks and factors, they include, among others, the following: reductions in AUM based on investment performance, client withdrawals, difficult market conditions and other factors such as a pandemic; the nature of the Company’s contracts and investment advisory agreements; the Company’s ability to maintain historical returns and sustain its historical growth; the Company’s dependence on third parties to market its strategies and provide products or services for the operation of its business; the Company’s ability to retain key investment professionals or members of its senior management team; the Company’s reliance on the technology systems supporting its operations; the Company’s ability to successfully acquire and integrate new companies; the concentration of the Company’s investments in long-only small- and mid-cap equity and U.S. clients; risks and uncertainties associated with non-U.S. investments; the Company’s efforts to establish and develop new teams and strategies; the ability of the Company’s investment teams to identify appropriate investment opportunities; the Company’s ability to limit employee misconduct; the Company’s ability to meet the guidelines set by its clients; the Company’s exposure to potential litigation (including administrative or tax proceedings) or regulatory actions; the Company’s ability to implement effective information and cyber security policies, procedures and capabilities; the Company’s substantial indebtedness; the potential impairment of the Company’s goodwill and intangible assets; disruption to the operations of third parties whose functions are integral to the Company’s ETF platform; the Company’s determination that Victory Capital is not required to register as an "investment company" under the 1940 Act; the fluctuation of the Company’s expenses; the Company’s ability to respond to recent trends in the investment management industry; the level of regulation on investment management firms and the Company’s ability to respond to regulatory developments; the competitiveness of the investment management industry; the dual class structure of the Company’s common stock; the level of control over the Company retained by Crestview GP; the Company’s status as an emerging growth company and a controlled company; and other risks and factors listed under "Risk Factors" and elsewhere in the Company’s filings with the SEC.
Such forward-looking statements are based on numerous assumptions regarding Victory Capital’s present and future business strategies and the environment in which it will operate in the future. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as required by law, Victory Capital assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
Victory Capital Holdings, Inc. and Subsidiaries Unaudited Consolidated Statements of Operations (in thousands except per share data and percentages) | ||||||||||||
For the Three Months Ended | ||||||||||||
March 31, |
| December 31, |
| March 31, | ||||||||
2020 |
| 2019 |
| 2019 | ||||||||
| Revenue | ||||||||||||
| Investment management fees | $ | 146,881 |
| $ | 158,943 |
| $ | 74,411 |
| |||
| Fund administration and distribution fees | 57,540 |
| 59,611 |
| 13,068 |
| ||||||
| Total revenue | 204,421 |
| 218,554 |
| 87,479 |
| ||||||
| Expenses | ||||||||||||
| Personnel compensation and benefits | 47,571 |
| 54,210 |
| 34,501 |
| ||||||
| Distribution and other asset-based expenses | 54,860 |
| 57,471 |
| 15,767 |
| ||||||
| General and administrative | 11,888 |
| 14,740 |
| 7,087 |
| ||||||
| Depreciation and amortization | 4,050 |
| 5,620 |
| 5,222 |
| ||||||
| Change in value of consideration payable for acquisition of business | (5,500 | ) | 19,900 |
| — | |||||||
| Acquisition-related costs | (69 | ) | 367 |
| 2,777 |
| ||||||
| Restructuring and integration costs | 998 |
| 2,049 |
| — | |||||||
| Total operating expenses | 113,798 |
| 154,357 |
| 65,354 |
| ||||||
| Income from operations | 90,623 |
| 64,197 |
| 22,125 |
| ||||||
| Operating margin | 44.3 | % | 29.4 | % | 25.3 | % | ||||||
| Other income (expense) | ||||||||||||
| Interest income and other income (expense) | (4,172 | ) | 1,598 |
| 1,833 |
| ||||||
| Interest expense and other financing costs | (11,408 | ) | (14,901 | ) | (4,624 | ) | ||||||
| Loss on debt extinguishment | (1,054 | ) | (2,451 | ) | — | |||||||
| Total other expense, net | (16,634 | ) | (15,754 | ) | (2,791 | ) | ||||||
| Income before income taxes | 73,989 |
| 48,443 |
| 19,334 |
| ||||||
| Income tax expense | (16,823 | ) | (10,854 | ) | (4,807 | ) | ||||||
| Net income | $ | 57,166 |
| $ | 37,589 |
| $ | 14,527 |
| |||
| Earnings per share of common stock | ||||||||||||
| Basic | $ | 0.84 |
| $ | 0.56 |
| $ | 0.22 |
| |||
| Diluted | 0.77 |
| 0.51 |
| 0.20 |
| ||||||
| Weighted average number of shares outstanding | ||||||||||||
| Basic | 67,790 |
| 67,633 |
| 67,521 |
| ||||||
| Diluted | 74,350 |
| 73,856 |
| 72,282 |
| ||||||
| Dividends declared per share | $ | 0.05 |
| $ | 0.05 |
| $ | — | ||||
Victory Capital Holdings, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures (unaudited; in thousands except per share data and percentages) | ||||||||||||
For the Three Months Ended | ||||||||||||
March 31, |
| December 31, |
| March 31, | ||||||||
2020 |
| 2019 |
| 2019 | ||||||||
| Net income (GAAP) | $ | 57,166 |
| $ | 37,589 |
| $ | 14,527 |
| |||
| Income tax expense | (16,823 | ) | (10,854 | ) | (4,807 | ) | ||||||
| Income before income taxes | $ | 73,989 |
| $ | 48,443 |
| $ | 19,334 |
| |||
| Interest expense | 10,528 |
| 14,852 |
| 3,853 |
| ||||||
| Depreciation | 884 |
| 1,130 |
| 571 |
| ||||||
| Other business taxes | (3,296 | ) | 359 |
| 555 |
| ||||||
| Amortization of acquisition-related intangible assets | 3,166 |
| 4,490 |
| 4,651 |
| ||||||
| Stock-based compensation | 5,372 |
| 5,724 |
| 1,478 |
| ||||||
| Acquisition, restructuring and exit costs | (1,542 | ) | 24,947 |
| 2,777 |
| ||||||
| Debt issuance costs | 2,389 |
| 2,387 |
| 364 |
| ||||||
| Earnings from equity method investments | — | — | 4 |
| ||||||||
| Adjusted EBITDA | $ | 91,490 |
| $ | 102,332 |
| $ | 33,587 |
| |||
| Adjusted EBITDA margin | 44.8 | % | 46.8 | % | 38.4 | % | ||||||
| Net income (GAAP) | $ | 57,166 |
| $ | 37,589 |
| $ | 14,527 |
| |||
| Adjustment to reflect the operating performance of the Company | ||||||||||||
| Other business taxes | (3,296 | ) | 359 |
| 555 |
| ||||||
| Amortization of acquisition-related intangible assets | 3,166 |
| 4,490 |
| 4,651 |
| ||||||
| Stock-based compensation | 5,372 |
| 5,724 |
| 1,478 |
| ||||||
| Acquisition, restructuring and exit costs | (1,542 | ) | 24,947 |
| 2,777 |
| ||||||
| Debt issuance costs | 2,389 |
| 2,387 |
| 364 |
| ||||||
| Tax effect of above adjustments | (1,522 | ) | (9,477 | ) | (2,456 | ) | ||||||
| Adjusted net income | $ | 61,733 |
| $ | 66,019 |
| $ | 21,896 |
| |||
| Adjusted net income per diluted share | $ | 0.83 |
| $ | 0.89 |
| $ | 0.30 |
| |||
| Tax benefit of goodwill and acquired intangible assets | $ | 6,728 |
| $ | 6,801 |
| $ | 3,361 |
| |||
| Tax benefit of goodwill and acquired intangible assets per diluted share | $ | 0.09 |
| $ | 0.09 |
| $ | 0.05 |
| |||
| Adjusted net income with tax benefit | $ | 68,461 |
| $ | 72,820 |
| $ | 25,257 |
| |||
| Adjusted net income with tax benefit per diluted share | $ | 0.92 |
| $ | 0.99 |
| $ | 0.35 |
| |||
Victory Capital Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (In thousands, except for shares) | ||||||||
March 31, 2020 |
| December 31, 2019 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 37,130 |
| $ | 37,121 |
| ||
| Receivables | 77,610 |
| 95,093 |
| ||||
| Prepaid expenses | 6,709 |
| 4,852 |
| ||||
| Investments | 15,631 |
| 19,076 |
| ||||
| Property and equipment, net | 14,028 |
| 13,240 |
| ||||
| Goodwill | 404,750 |
| 404,750 |
| ||||
| Other intangible assets, net | 1,172,305 |
| 1,175,471 |
| ||||
| Other assets | 3,600 |
| 3,706 |
| ||||
| Total assets | $ | 1,731,763 |
| $ | 1,753,309 |
| ||
| Liabilities and stockholders' equity | ||||||||
| Accounts payable and accrued expenses | $ | 79,111 |
| $ | 89,203 |
| ||
| Accrued compensation and benefits | 33,544 |
| 54,842 |
| ||||
| Consideration payable for acquisition of business | 113,200 |
| 118,700 |
| ||||
| Deferred tax liability, net | 11,134 |
| 5,486 |
| ||||
| Other liabilities | 25,047 |
| 22,668 |
| ||||
| Long-term debt, net(1) | 888,647 |
| 924,539 |
| ||||
| Total liabilities | 1,150,683 |
| 1,215,438 |
| ||||
| Stockholders' equity | ||||||||
| Class A common stock, $0.01 par value per share: 2020 - 400,000,000 shares authorized, 18,508,087 shares issued and 16,582,902 shares outstanding; 2019 - 400,000,000 shares authorized, 18,099,772 shares issued and 16,414,617 shares outstanding | 185 |
| 181 |
| ||||
| Class B common stock, $0.01 par value per share: 2020 - 200,000,000 shares authorized, 54,537,895 shares issued and 51,436,953 shares outstanding; 2019 - 200,000,000 shares authorized, 53,937,394 shares issued and 51,281,512 shares outstanding | 545 |
| 539 |
| ||||
| Additional paid-in capital | 632,468 |
| 624,766 |
| ||||
| Class A treasury stock, at cost: 2020 - 1,925,185 shares; 2019 - 1,685,155 shares | (25,918 | ) | (21,524 | ) | ||||
| Class B treasury stock, at cost: 2020 - 3,100,942 shares; 2019 - 2,655,882 shares | (40,173 | ) | (31,386 | ) | ||||
| Accumulated other comprehensive loss | (4,887 | ) | — | |||||
| Retained earnings (deficit) | 18,860 |
| (34,705 | ) | ||||
| Total stockholders' equity | 581,080 |
| 537,871 |
| ||||
| Total liabilities and stockholders' equity | $ | 1,731,763 |
| $ | 1,753,309 |
| ||
1 Balances at March 31, 2020 and December 31, 2019 are shown net of unamortized loan discount and debt issuance costs in the amount of $25.4 million and $27.5 million, respectively. The gross amount of the debt outstanding was $914 million as of March 31, 2020 and $952 million as of December 31, 2019. |
Victory Capital Holdings, Inc. and Subsidiaries Assets Under Management (unaudited; in millions except for percentages) | ||||||||||||||||||
|
|
|
|
| ||||||||||||||
|
| For the Three Months Ended |
| % Change from | ||||||||||||||
|
| March 31, |
| December 31, |
| March 31, |
| December 31, |
| March 31, | ||||||||
|
| 2020 |
| 2019 |
| 2019 |
| 2019 |
| 2019 | ||||||||
| Beginning assets under management | $ | 151,832 |
| $ | 145,832 |
| $ | 52,763 |
| 4 | % | 188 | % | |||||
| Gross client cash inflows | 14,925 |
| 9,655 |
| 3,038 |
| 55 | % | 391 | % | ||||||||
| Gross client cash outflows | (17,825 | ) | (11,045 | ) | (4,143 | ) | 61 | % | 330 | % | ||||||||
| Net client cash flows | (2,900 | ) | (1,390 | ) | (1,105 | ) | 109 | % | 162 | % | ||||||||
| Market appreciation (depreciation) | (25,153 | ) | 7,389 |
| 6,460 |
| -440 | % | -489 | % | ||||||||
| Acquired assets / Net transfers | — | — | — | 0 | % | 0 | % | |||||||||||
| Ending assets under management | 123,779 |
| 151,832 |
| 58,119 |
| -18 | % | 113 | % | ||||||||
| Average assets under management | 144,112 |
| 147,867 |
| 57,043 |
| -3 | % | 153 | % | ||||||||
Victory Capital Holdings, Inc. and Subsidiaries Assets Under Management by Asset Class (unaudited; in millions) | ||||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended | By Asset Class | |||||||||||||||||||||||||||||||||||||||
Global / | ||||||||||||||||||||||||||||||||||||||||
U.S. Mid | U.S. Small | Fixed | U.S. Large | Non-U.S. | Total | Money Market/ | ||||||||||||||||||||||||||||||||||
Cap Equity | Cap Equity | Income | Cap Equity | Equity | Solutions | Other | Long-term | Short-term | Total | |||||||||||||||||||||||||||||||
| March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||
| Beginning assets under management | $ | 26,347 |
| $ | 17,346 |
| $ | 37,973 |
| $ | 14,091 |
| $ | 12,603 |
| $ | 31,649 |
| $ | 236 |
| $ | 140,245 |
| $ | 11,587 |
| $ | 151,832 |
| ||||||||||
| Gross client cash inflows | 1,474 |
| 1,233 |
| 1,951 |
| 238 |
| 671 |
| 1,695 |
| 11 |
| 7,273 |
| 7,652 |
| 14,925 |
| ||||||||||||||||||||
| Gross client cash outflows | (2,265 | ) | (1,310 | ) | (2,890 | ) | (807 | ) | (684 | ) | (2,394 | ) | (24 | ) | (10,374 | ) | (7,451 | ) | (17,825 | ) | ||||||||||||||||||||
| Net client cash flows | (791 | ) | (77 | ) | (939 | ) | (569 | ) | (13 | ) | (699 | ) | (12 | ) | (3,101 | ) | 201 |
| (2,900 | ) | ||||||||||||||||||||
| Market appreciation (depreciation) | (6,907 | ) | (5,325 | ) | (1,361 | ) | (2,828 | ) | (3,245 | ) | (5,436 | ) | (86 | ) | (25,187 | ) | 34 |
| (25,153 | ) | ||||||||||||||||||||
| Acquired assets / Net transfers | (28 | ) | (59 | ) | (272 | ) | 9 |
| 27 |
| 12 |
| 3 |
| (307 | ) | 307 |
| — | |||||||||||||||||||||
| Ending assets under management | $ | 18,622 |
| $ | 11,885 |
| $ | 35,402 |
| $ | 10,703 |
| $ | 9,372 |
| $ | 25,526 |
| $ | 140 |
| $ | 111,650 |
| $ | 12,129 |
| $ | 123,779 |
| ||||||||||
| December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
| Beginning assets under management | $ | 25,479 |
| $ | 16,266 |
| $ | 37,784 |
| $ | 13,488 |
| $ | 11,532 |
| $ | 29,579 |
| $ | 243 |
| $ | 134,371 |
| $ | 11,460 |
| $ | 145,832 |
| ||||||||||
| Gross client cash inflows | 1,007 |
| 838 |
| 1,608 |
| 266 |
| 433 |
| 1,118 |
| 15 |
| 5,284 |
| 4,371 |
| 9,655 |
| ||||||||||||||||||||
| Gross client cash outflows | (1,642 | ) | (1,142 | ) | (1,684 | ) | (610 | ) | (491 | ) | (1,139 | ) | (52 | ) | (6,758 | ) | (4,286 | ) | (11,045 | ) | ||||||||||||||||||||
| Net client cash flows | (635 | ) | (304 | ) | (76 | ) | (344 | ) | (58 | ) | (21 | ) | (37 | ) | (1,474 | ) | 85 |
| (1,390 | ) | ||||||||||||||||||||
| Market appreciation (depreciation) | 1,505 |
| 1,384 |
| 262 |
| 946 |
| 1,129 |
| 2,091 |
| 32 |
| 7,348 |
| 41 |
| 7,389 |
| ||||||||||||||||||||
| Acquired assets / Net transfers | (3 | ) | — | 3 |
| — | — | 1 |
| — | — | — | — | |||||||||||||||||||||||||||
| Ending assets under management | $ | 26,347 |
| $ | 17,346 |
| $ | 37,973 |
| $ | 14,091 |
| $ | 12,603 |
| $ | 31,649 |
| $ | 236 |
| $ | 140,245 |
| $ | 11,587 |
| $ | 151,832 |
| ||||||||||
| March 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
| Beginning assets under management | $ | 20,019 |
| $ | 12,948 |
| $ | 6,836 |
| $ | 3,759 |
| $ | 4,610 |
| $ | 3,767 |
| $ | 824 |
| $ | 52,763 |
| $ | — | $ | 52,763 |
| |||||||||||
| Gross client cash inflows | 993 |
| 992 |
| 303 |
| 26 |
| 365 |
| 279 |
| 81 |
| 3,038 |
| — | 3,038 |
| |||||||||||||||||||||
| Gross client cash outflows | (1,786 | ) | (1,059 | ) | (383 | ) | (183 | ) | (277 | ) | (349 | ) | (107 | ) | (4,143 | ) | — | (4,143 | ) | |||||||||||||||||||||
| Net client cash flows | (793 | ) | (67 | ) | (79 | ) | (158 | ) | 88 |
| (70 | ) | (26 | ) | (1,105 | ) | — | (1,105 | ) | |||||||||||||||||||||
| Market appreciation (depreciation) | 2,942 |
| 1,834 |
| 216 |
| 516 |
| 535 |
| 297 |
| 120 |
| 6,460 |
| — | 6,460 |
| |||||||||||||||||||||
| Acquired assets / Net transfers | 2 |
| (1 | ) | — | (1 | ) | — | 1 |
| (1 | ) | — | — | — | |||||||||||||||||||||||||
| Ending assets under management | $ | 22,169 |
| $ | 14,714 |
| $ | 6,973 |
| $ | 4,117 |
| $ | 5,234 |
| $ | 3,996 |
| $ | 918 |
| $ | 58,119 |
| $ | — | $ | 58,119 |
| |||||||||||
Victory Capital Holdings, Inc. and Subsidiaries Assets Under Management by Vehicle (unaudited; in millions) | ||||||||||||||||
| For the Three Months Ended | By Vehicle | |||||||||||||||
Separate | ||||||||||||||||
Accounts | ||||||||||||||||
Mutual | and Other | |||||||||||||||
Funds(1) | ETFs(2) | Vehicles(3) | Total | |||||||||||||
| March 31, 2020 | ||||||||||||||||
| Beginning assets under management | $ | 118,605 |
| $ | 4,213 |
| $ | 29,014 |
| $ | 151,832 |
| ||||
| Gross client cash inflows | 13,745 |
| 255 |
| 925 |
| 14,925 |
| ||||||||
| Gross client cash outflows | (15,631 | ) | (461 | ) | (1,733 | ) | (17,825 | ) | ||||||||
| Net client cash flows | (1,886 | ) | (205 | ) | (809 | ) | (2,900 | ) | ||||||||
| Market appreciation (depreciation) | (18,413 | ) | (830 | ) | (5,910 | ) | (25,153 | ) | ||||||||
| Acquired assets / Net transfers | — |
| — |
| — |
| — |
| ||||||||
| Ending assets under management | $ | 98,305 |
| $ | 3,177 |
| $ | 22,296 |
| $ | 123,779 |
| ||||
| December 31, 2019 | ||||||||||||||||
| Beginning assets under management | $ | 114,071 |
| $ | 3,867 |
| $ | 27,894 |
| $ | 145,832 |
| ||||
| Gross client cash inflows | 8,799 |
| 249 |
| 607 |
| 9,655 |
| ||||||||
| Gross client cash outflows | (9,835 | ) | (125 | ) | (1,085 | ) | (11,045 | ) | ||||||||
| Net client cash flows | (1,036 | ) | 124 |
| (478 | ) | (1,390 | ) | ||||||||
| Market appreciation (depreciation) | 5,569 |
| 222 |
| 1,598 |
| 7,389 |
| ||||||||
| Acquired assets / Net transfers | — |
| — |
| — |
| — |
| ||||||||
| Ending assets under management | $ | 118,605 |
| $ | 4,213 |
| $ | 29,014 |
| $ | 151,832 |
| ||||
| March 31, 2019 | ||||||||||||||||
| Beginning assets under management | $ | 30,492 |
| $ | 2,956 |
| $ | 19,315 |
| $ | 52,763 |
| ||||
| Gross client cash inflows | 2,379 |
| 242 |
| 417 |
| 3,038 |
| ||||||||
| Gross client cash outflows | (2,887 | ) | (299 | ) | (957 | ) | (4,143 | ) | ||||||||
| Net client cash flows | (508 | ) | (58 | ) | (540 | ) | (1,105 | ) | ||||||||
| Market appreciation (depreciation) | 3,801 |
| 224 |
| 2,435 |
| 6,460 |
| ||||||||
| Acquired assets / Net transfers | — |
| — |
| — |
| — |
| ||||||||
| Ending assets under management | $ | 33,786 |
| $ | 3,123 |
| $ | 21,210 |
| $ | 58,119 |
| ||||
(1) Includes institutional and retail share classes, money market and VIP funds. |
|
(2) Excludes assets managed for other proprietary product (i.e. funds of funds) in order to adjust for double counting. |
|
(3) Includes collective trust funds, wrap program separate accounts and unified managed accounts or UMAs. |
Victory Capital Holdings, Inc. and Subsidiaries Assets Under Management1 (unaudited; in millions) | ||||
As of: | ||||
| By Asset Class | April 30, 2020 | March 31, 2020 | ||
| Fixed Income | $ 35,476 | $ 35,402 | ||
| Solutions | 27,867 | 25,526 | ||
| U.S. Mid Cap Equity | 21,148 | 18,622 | ||
| U.S. Small Cap Equity | 13,280 | 11,885 | ||
| U.S. Large Cap Equity | 11,880 | 10,703 | ||
| Global / Non-U.S. Equity | 10,213 | 9,372 | ||
| Other | 183 | 140 | ||
| Total Long-Term Assets | $ 120,047 | $ 111,650 | ||
| Money Market/Short-Term Assets | 11,766 | 12,129 | ||
| Total Assets Under Management | $ 131,814 | $ 123,779 | ||
| By Vehicle | ||||
| Mutual Funds2 | 104,372 | 98,305 | ||
| Separate Accounts and Other Vehicles3 | 24,070 | 22,296 | ||
| ETFs | 3,372 | 3,177 | ||
| Total Assets Under Management | $ 131,814 | $ 123,779 | ||
1Due to rounding, numbers presented in these tables may not add up precisely to the totals provided. |
|
2Includes institutional and retail share classes, money market and VIP funds. |
|
3Includes collective trust funds, wrap program accounts and unified managed accounts. |
Information Regarding Non-GAAP Financial Measures
Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the Company. These measures eliminate the impact of one-time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the Company. The Company has included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of the Company.
Adjusted EBITDA
Adjustments made to GAAP Net Income to calculate Adjusted EBITDA, as applicable, are:
Adjusted Net Income
Adjustments made to GAAP Net Income to calculate Adjusted Net Income, as applicable, are:
Tax Benefit of Goodwill and Acquired Intangible Assets
Due to Victory Capital’s acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide it with additional significant supplemental economic benefit. The tax benefit of goodwill and intangible assets represent the tax benefits associated with deductions allowed for intangible assets and goodwill generated from prior acquisitions in which the Company received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangible assets with a step-up in tax basis.
Investors:
Matthew Dennis, CFA
Chief of Staff
Director, Investor Relations
216-898-2412
mdennis@vcm.com
Media:
Tricia Ross
310-622-8226
tross@finprofiles.com
