Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 28, 2019 | Jun. 29, 2018 | |
Entity Registrant Name | Victory Capital Holdings, Inc. | ||
Entity Central Index Key | 0001570827 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 132,343,390 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Class A | |||
Entity Common Stock, Shares Outstanding | 14,555,975 | ||
Class B | |||
Entity Common Stock, Shares Outstanding | 52,940,026 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 51,491 | $ 12,921 |
Investment management fees receivable | 37,980 | 42,264 |
Fund administration and distribution fees receivable | 3,153 | 3,925 |
Other receivables | 2,987 | 9,728 |
Prepaid expenses | 2,664 | 5,441 |
Available-for-sale securities, at fair value | 601 | 677 |
Trading securities, at fair value | 12,719 | 10,659 |
Property and equipment, net | 8,780 | 8,844 |
Goodwill | 284,108 | 284,108 |
Other intangible assets, net | 387,679 | 408,000 |
Other assets | 9,349 | 6,055 |
Total assets | 801,511 | 792,622 |
Liabilities and stockholders' equity | ||
Accounts payable | 607 | 327 |
Accrued compensation and benefits | 30,228 | 29,305 |
Accrued expenses | 19,743 | 21,669 |
Deferred compensation plan liability | 12,719 | 10,659 |
Consideration payable for acquisition of business | 5,838 | 9,856 |
Deferred tax liability, net | 6,212 | 4,068 |
Other liabilities | 1,759 | 2,330 |
Long-term debt | 268,857 | 483,225 |
Total liabilities | 345,963 | 561,439 |
Stockholders' equity: | ||
Common Stock | 572 | |
Additional paid-in capital | 604,401 | 435,334 |
Accumulated other comprehensive income (loss) | (86) | 64 |
Retained deficit | (119,709) | (183,888) |
Total stockholders’ equity | 455,548 | 231,183 |
Total liabilities and stockholders’ equity | 801,511 | 792,622 |
Class A | ||
Stockholders' equity: | ||
Common Stock | 153 | |
Treasury stock, at cost | (8,045) | |
Class B | ||
Stockholders' equity: | ||
Common Stock | 553 | |
Treasury stock, at cost | $ (21,719) | $ (20,899) |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 0 | 78,837,300 |
Common stock, shares issued | 0 | 57,182,730 |
Common stock, shares outstanding | 0 | 55,118,673 |
Class A | ||
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 400,000,000 | 0 |
Common stock, shares issued | 15,280,833 | 0 |
Common stock, shares outstanding | 14,424,558 | 0 |
Treasury stock, shares | 856,275 | 0 |
Class B | ||
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 200,000,000 | 0 |
Common stock, shares issued | 55,284,408 | 0 |
Common stock, shares outstanding | 53,137,428 | 0 |
Treasury stock, shares | 2,146,980 | 2,064,057 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||
Investment management fees | $ 352,683 | $ 343,811 | $ 248,482 |
Fund administration and distribution fees | 60,729 | 65,818 | 49,401 |
Total revenue | 413,412 | 409,629 | 297,883 |
Expenses | |||
Personnel compensation and benefits | 145,880 | 144,111 | 122,615 |
Distribution and other asset-based expenses | 94,680 | 103,439 | 77,497 |
General and administrative | 30,005 | 33,996 | 26,628 |
Depreciation and amortization | 23,277 | 29,910 | 30,405 |
Change in value of consideration payable for acquisition of business | (37) | (294) | (378) |
Acquisition-related costs | 4,346 | 2,094 | 6,619 |
Restructuring and integration costs | 742 | 6,205 | 10,012 |
Total operating expenses | 298,893 | 319,461 | 273,398 |
Income from operations | 114,519 | 90,168 | 24,485 |
Other income (expense) | |||
Interest income and other income/(expense) | (2,856) | (2,913) | 1,086 |
Interest expense and other financing costs | (20,694) | (48,467) | (34,642) |
Loss on debt extinguishment | (6,058) | (330) | |
Total other income (expense), net | (29,608) | (51,710) | (33,556) |
Income/(loss) before income tax (expense)/benefit | 84,911 | 38,458 | (9,071) |
Income tax (expense)/benefit | (21,207) | (12,632) | 3,000 |
Net income/(loss) | $ 63,704 | $ 25,826 | $ (6,071) |
Earnings (loss) per share of common stock | |||
Earnings per share—basic | $ 0.96 | $ 0.47 | $ (0.12) |
Earnings per share—diluted | $ 0.90 | $ 0.43 | $ (0.12) |
Weighted average number of shares outstanding | |||
Weighted average shares outstanding—basic | 66,295,240 | 54,930,852 | 50,017,712 |
Weighted average shares outstanding—diluted | 70,510,536 | 59,577,348 | 50,017,712 |
Dividends declared per share of common stock | $ 2.42 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||
Net income/(loss) | $ 63,704 | $ 25,826 | $ (6,071) |
Other comprehensive income/(loss), net of tax | |||
Net unrealized income/(loss) on available-for-sale securities | (110) | 64 | 18 |
Net unrealized income on cash flow hedges | 462 | 49 | |
Net unrealized gain/(loss) on foreign currency translation | (40) | 75 | (62) |
Total other comprehensive income/(loss), net of tax | (150) | 601 | 5 |
Comprehensive income/(loss) | $ 63,554 | $ 26,427 | $ (6,066) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common StockClass A | Common StockClass B | Common StockPre-IPO | Treasury StockClass A | Treasury StockClass B | Treasury StockPre-IPO | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Deficit | Class A | Class B | Total |
Balance at beginning of period at Dec. 31, 2015 | $ 471 | $ (3,992) | $ 321,326 | $ (542) | $ (67,834) | $ 249,429 | ||||||
Balance at beginning of period (in shares) at Dec. 31, 2015 | 47,066,744 | (499,478) | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of common stock | $ 92 | 94,429 | 94,521 | |||||||||
Issuance of common stock (in shares) | 9,206,095 | |||||||||||
Class A common stock offering costs | (210) | (210) | ||||||||||
Repurchase of shares | $ (12,253) | (12,253) | ||||||||||
Repurchase of shares | (1,220,051) | |||||||||||
Vesting of restricted share grants | $ 2 | (2) | ||||||||||
Vesting of restricted share grants (in shares) | 259,988 | |||||||||||
Equity awards modified to liabilities | (2,316) | (2,316) | ||||||||||
Equity awards modified to liabilities (in shares) | (27,506) | |||||||||||
Other comprehensive income (loss) | 5 | 5 | ||||||||||
Share-based compensation | 8,520 | 8,520 | ||||||||||
Dividend | (627) | (627) | ||||||||||
Net income/(loss) | (6,071) | (6,071) | ||||||||||
Balance at end of period at Dec. 31, 2016 | $ 565 | $ (16,245) | 421,747 | (537) | (74,532) | 330,998 | ||||||
Balance at end of period (in shares) at Dec. 31, 2016 | 56,505,321 | (1,719,529) | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of common stock | $ 3 | 3,190 | 3,193 | |||||||||
Issuance of common stock (in shares) | 296,363 | |||||||||||
Repurchase of shares | $ (4,654) | (4,654) | ||||||||||
Vesting of restricted share grants | $ 4 | (4) | ||||||||||
Vesting of restricted share grants (in shares) | 389,106 | (344,528) | ||||||||||
Equity awards modified to liabilities | (1,553) | (1,553) | ||||||||||
Equity awards modified to liabilities (in shares) | (8,060) | |||||||||||
Other comprehensive income (loss) | 601 | 601 | ||||||||||
Share-based compensation | 11,693 | 11,693 | ||||||||||
Dividend | (135,171) | (135,171) | ||||||||||
Excess tax benefits realized on stock-based compensation | 261 | 261 | ||||||||||
Other | (11) | (11) | ||||||||||
Net income/(loss) | 25,826 | 25,826 | ||||||||||
Balance at end of period at Dec. 31, 2017 | $ 572 | $ (20,899) | 435,334 | 64 | (183,888) | $ 231,183 | ||||||
Balance at end of period (in shares) at Dec. 31, 2017 | 57,182,730 | (2,064,057) | 0 | 0 | 55,118,673 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of common stock | $ 128 | 156,421 | $ 156,549 | |||||||||
Issuance of common stock (in shares) | 12,810,860 | |||||||||||
Class A common stock offering costs | (4,553) | (4,553) | ||||||||||
Redesignation of common stock | $ 572 | $ (572) | $ (20,899) | $ 20,899 | ||||||||
Redesignation of common stock, (in shares) | 57,184,766 | (57,184,766) | (2,064,057) | 2,064,057 | ||||||||
Share conversion - Class B to A | $ 25 | $ (25) | ||||||||||
Share conversion - Class B to A (in shares) | 2,467,192 | (2,467,192) | ||||||||||
Repurchase of shares | $ (8,045) | (8,045) | ||||||||||
Repurchase of shares | (856,275) | (82,923) | ||||||||||
Shares withheld related to net settlement of equity awards | $ (820) | (820) | ||||||||||
Vesting of restricted share grants | $ 2 | (2) | ||||||||||
Vesting of restricted share grants (in shares) | 215,594 | 2,036 | ||||||||||
Exercise of options | $ 4 | 1,248 | 1,252 | |||||||||
Exercise of options (in shares) | 351,503 | |||||||||||
Shares issued under 2018 ESPP | 26 | 26 | ||||||||||
Shares issued under 2018 ESPP (in shares) | 2,781 | |||||||||||
Fractional shares retired | (2) | (2) | ||||||||||
Fractional shares retired (in shares) | (263) | |||||||||||
Other comprehensive income (loss) | (150) | (150) | ||||||||||
Share-based compensation | 15,417 | 15,417 | ||||||||||
Dividend | (831) | (831) | ||||||||||
Net income/(loss) | 63,704 | 63,704 | ||||||||||
Balance at end of period at Dec. 31, 2018 | $ 153 | $ 553 | $ (8,045) | $ (21,719) | 604,401 | $ (86) | (119,709) | $ 455,548 | ||||
Balance at end of period (in shares) at Dec. 31, 2018 | 15,280,833 | 55,284,408 | (856,275) | (2,146,980) | 14,424,558 | 53,137,428 | 0 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Cumulative effect adjustment for adoption of ASU 2016-09 | $ 512 | $ 1,306 | $ 1,818 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net income/(loss) | $ 63,704 | $ 25,826 | $ (6,071) |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for deferred income taxes | 4,116 | 11,191 | (3,080) |
Depreciation and amortization | 23,277 | 29,910 | 30,405 |
Deferred financing costs and derivative and accretion expense | 2,875 | 6,606 | 4,792 |
Share-based and deferred compensation | 17,346 | 17,179 | 12,022 |
Change in fair value of contingent consideration obligations | (37) | (294) | (378) |
Loss on other receivable | 998 | 4,429 | |
Unrealized depreciation (appreciation) on investments | 2,872 | (620) | (394) |
Loss on equity method investment | 730 | 427 | |
Loss on debt extinguishment | 6,058 | 330 | |
Changes in operating assets and liabilities: | |||
Investment management fees receivable | 4,284 | 1,333 | (4,411) |
Fund administration and distribution fees receivable | 772 | 679 | (895) |
Other receivables | 5,640 | 21,456 | 98 |
Prepaid expenses | (215) | (1,231) | 1,304 |
Other assets | 57 | 79 | (7) |
Accounts payable | 278 | (3,550) | 2,299 |
Accrued compensation and benefits | 931 | (10,607) | 2,178 |
Accrued expenses | 261 | (5,701) | 3,520 |
Deferred compensation plan liability | (48) | (181) | (17) |
Other liabilities | 446 | (1,092) | (1,825) |
Net cash provided by operating activities | 134,345 | 96,169 | 39,540 |
Cash flows from investing activities | |||
Purchases of property and equipment | (2,546) | (5,105) | (1,164) |
Disposal of property and equipment due to restructuring | 3,006 | 12 | |
Purchases of trading securities | (7,704) | (9,567) | (4,991) |
Sales of trading securities | 2,772 | 5,166 | 2,585 |
Purchases of available-for-sale securities | (71) | (111) | (355) |
Sales of available-for-sale securities | 79 | 1,290 | |
Equity method investment | (4,000) | (2,000) | (3,025) |
Purchase and sale of options | (21) | ||
Acquisition of business, net of cash acquired | (204,413) | ||
Net cash used in investing activities | (11,549) | (8,532) | (210,082) |
Cash flows from financing activities | |||
Issuance of common stock, net of costs | 3,193 | 89,259 | |
Repurchase of common stock | (8,178) | (4,654) | (10,529) |
Payment of Class A common stock deferred offering costs | (4,287) | ||
Payments of taxes related to net share settlement of equity awards | (510) | ||
Issuance of Class A common stock under 2018 ESPP | 26 | ||
Payment of equity awards modified to liabilities | (1,836) | (4,632) | |
Excess tax benefits on share-based compensation | 261 | ||
Proceeds from long-term senior debt | 359,100 | 125,000 | 129,975 |
Proceeds from draw on line of credit | 3,500 | ||
Repayment of draw on line of credit | (3,500) | ||
Payment of debt financing fees | (2,508) | (1,733) | (5,854) |
Repayment of long-term senior debt | (579,750) | (63,877) | (21,013) |
Repayment of promissory note | (575) | (575) | (479) |
Payment of dividends | (831) | (135,171) | (627) |
Payment of consideration for acquisition | (4,447) | (8,381) | (7,761) |
Net cash (used in) provided by financing activities | (84,161) | (91,273) | 171,839 |
Effect of changes of foreign exchange rate on cash and cash equivalents | (65) | 116 | |
Net increase (decrease) in cash and cash equivalents | 38,570 | (3,520) | 1,297 |
Cash and cash equivalents, beginning of period | 12,921 | 16,441 | 15,144 |
Cash and cash equivalents, end of period | 51,491 | 12,921 | 16,441 |
Supplemental cash flow information | |||
Cash paid for interest | 17,530 | 41,489 | 29,393 |
Cash paid for income taxes | 17,993 | 758 | 495 |
Supplemental disclosure of non-cash items | |||
Promissory note issued for repurchase of common stock and equity awards | $ 1,724 | ||
Class A | |||
Cash flows from financing activities | |||
Issuance of common stock, net of costs | 156,549 | ||
Class B | |||
Cash flows from financing activities | |||
Issuance of common stock, net of costs | $ 1,250 | ||
Payment of Class A common stock deferred offering costs | $ (300) |
Organization and Nature of Busi
Organization and Nature of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Nature of Business | |
Organization and Nature of Business | 1. Organization and Nature of Business Victory Capital Holdings, Inc., a Delaware corporation (along with its wholly-owned subsidiaries, collectively referred to as “the Company”) was formed on February 13, 2013 for the purpose of acquiring Victory Capital Management Inc. (“VCM”) and Victory Capital Advisers, Inc. (“VCA”), which occurred on August 1, 2013. VCM is a registered investment adviser managing assets through open-end mutual funds, separately managed accounts, unified management accounts, ETFs, collective trust funds, wrap separate account programs and UCITs. VCM also provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds, Victory Institutional Funds and the mutual fund series of the Victory Portfolios II (collectively, “the Victory Funds”), a family of open-end mutual funds, and the VictoryShares (the Company’s ETF brand). VCM additionally employs all of the Company’s U.S. investment professionals across its Franchises and Solutions, which are not separate legal entities. VCM’s three wholly-owned subsidiaries include RS Investment Management (Singapore) Pte. Ltd., RS Investments (Hong Kong) Limited, and RS Investments (UK) Limited. VCA is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for the Victory Funds. On September 21, 2018, the Company entered into the Harvest Purchase Agreement, whereby the Company agreed to purchase 100% of the equity interests of Harvest, an asset management company specializing in yield enhancement overlay, risk reduction, alternative beta and absolute return investment strategies. The Harvest Acquisition is expected to close in the second quarter of 2019 and is subject to the receipt of a specified level of client consents, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which termination was received on November 6, 2018, and other closing conditions. On November 6, 2018, the Company entered into the USAA Stock Purchase Agreement, whereby the Company agreed to purchase 100% of the outstanding common stock of USAA Asset Management Company (“AMCO”) and USAA Transfer Agency Company d/b/a USAA Shareholder Account Services (the “USAA Acquired Companies”). The USAA AMCO Acquisition includes AMCO’s mutual fund and ETF businesses and the USAA 529 College Savings Plan. Upon the closing of the USAA AMCO Acquisition, Victory will have the rights to offer products and services using the USAA brand and AMCO’s investment teams will continue serving the investment needs of the military community and their families. The USAA AMCO Acquisition is expected to close around the end of the second quarter of 2019 and is subject to, among other things, the receipt of a specified level of client consents, the expiration or termination of the applicable waiting period under the HSR Act, the absence of any material adverse effect as defined in the USAA Stock Purchase Agreement on the business of the USAA Acquired Companies, and other customary closing conditions. Changes in Capital Structure On February 12, 2018, the Company completed the initial public offering (“IPO”) of its Class A common stock, which trades on NASDAQ under the symbol “VCTR”. The Company issued 11,700,000 shares of Class A common stock at a price of $13.00 per share at the closing of the IPO. On March 13, 2018, the Company issued an additional 1,110,860 shares of Class A common stock pursuant to the underwriters’ exercise of their option. The net proceeds totaled $156.5 million: $143.0 million received at the closing of the IPO and $13.5 million received at the subsequent closing of the underwriters’ exercise of their option, after deducting in each case underwriting discounts. In connection with the IPO, the following transactions were completed: · The Company’s certificate of incorporation was amended and restated to, among other things, provide for Class A common stock and Class B common stock, specify voting rights for the Class A common stock and Class B common stock, establish a classified board of directors and adopt the 2018 Stock Incentive Plan and 2018 Employee Stock Purchase Plan. · All shares of common stock outstanding prior to the IPO were immediately converted into Class B common stock at a one-to-one ratio. · A substantial majority of the Company’s employee stockholders entered into an Employee Shareholders’ Agreement, pursuant to which they granted an irrevocable voting proxy with respect to the shares of the Company’s common stock they acquired from the Company, and any shares they may acquire from or be granted by the Company in the future, to the Employee Shareholders Committee. The current members of the Employee Shareholders Committee are the Chief Executive Officer, the President, Chief Financial Officer and Chief Administrative Officer and the President, Investment Franchises. On February 12, 2018, concurrently with the closing of the IPO, the Company entered into a credit agreement (the “Existing Credit Agreement”) under which the Company received seven-year term loans in an original aggregate principal amount of $360.0 million and established a five-year revolving credit facility (which was unfunded as of closing) with original aggregate commitments of $50.0 million. Net proceeds received from the IPO and the Existing Credit Agreement together with cash on hand were used to repay all indebtedness outstanding under the credit agreement dated as of October 31, 2014 (as amended) (the “2014 Credit Agreement”) on February 12, 2018. On May 3, 2018, the Existing Credit Agreement was amended to increase aggregate commitments for the revolving credit facility from $50.0 million to $100.0 million. On September 21, 2018, in connection with executing the Harvest Purchase Agreement, the Company entered into the Harvest Commitment Letter for an incremental senior secured term loan facility under the Existing Credit Agreement. On November 6, 2018, in connection with executing the USAA Stock Purchase Agreement, the Company entered into the USAA AMCO Credit Facilities Commitment Letter. See Note 3 to the audited consolidated financial statements for additional information on the Harvest Purchase Agreement and USAA Stock Purchase Agreement and Note 10 for additional information on the Company’s current debt structure, the Harvest Commitment Letter and USAA AMCO Credit Facilities Commitment Letter. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation The Company prepares its consolidated financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). All dollar amounts, except per share data in the text and tables herein, are stated in thousands unless otherwise indicated. Retroactive Adjustments for Common Stock Split The Company's Board of Directors and stockholders approved a 175.194 for 1 stock split of the Company's common stock on February 1, 2018. All common share and common per share amounts in the consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this stock split (see Notes 13, 14 and 17). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. The Company evaluates entities in which it invests and investment funds that it sponsors to determine whether the Company has a controlling financial interest in these entities and is required to consolidate them. A controlling financial interest generally exists if 1) the Company holds greater than 50% voting interest in entities controlled through voting interests or if 2) the Company has the ability to direct significant activities of a fund not controlled through voting interests (a variable interest entity or VIE) and the obligation to absorb losses of and/or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company's involvement with non‑consolidated sponsored investment funds that are considered VIEs include providing investment advisory services, fund administration and distribution services and/or holding a minority interest. At December 31, 2018, 2017 and 2016, the Company's investments in and maximum risk of loss related to unconsolidated sponsored VIE investment funds totaled $ 12.9 million, $ 10.9 million and $ 5.6 million respectively which are included in available‑for‑sale securities and trading securities in the consolidated balance sheets. The Company has not provided financial support to these entities outside the ordinary course of business, which includes assuming operating expenses of funds for competitive or contractual reasons through fee waivers and fund expense reimbursements. The Company does not consolidate the sponsored investment funds in which it had an equity investment as it holds a minority interest, does not direct significant activities of these funds and does not have the right to receive benefits nor the obligation to absorb losses that could potentially be significant to these funds. During 2018, the Company’s involvement with other non‑consolidated VIEs included an equity method investment and put and call option arrangements with Cerebellum. The put and call option arrangements ended in the first quarter of 2018. The Company’s maximum risk of loss associated with Cerebellum totaled $9.0 million and $6.0 million at December 31, 2018 and December 31, 2017, respectively, which includes the $9.0 million investment at December 31, 2018 and as of December 31, 2017, $5.0 million investment and $1.0 million exposure under the put option for the purchase of additional equity. See Note 12. The Company applies the equity method of accounting to investments where it does not hold a controlling equity interest but has the ability to exercise significant influence over operating and financial matters. In the event that management identifies an other than temporary decline in the estimated fair value of an equity method investment to an amount below its carrying value, the investment is written down to its estimated fair value. Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may ultimately differ from those estimates and the differences may be material. Revenue Recognition Investment Management Fees Investment management fees are accrued as earned and are calculated as a contractual percentage of assets under management and advisement (AUM) and vary as levels of AUM change from inflows, outflows and market movement and with number of days in a reporting period. Any investment management fees collected in advance are deferred and recognized as income over the period earned. Waivers of investment management fees from affiliated funds are included in investment management fees in the consolidated statements of operations. In 2018, 2017 and 2016, the amount of waivers of investment management fees from affiliated funds was immaterial. Performance‑based investment management fees, which includes fees payable under fulcrum fee arrangements, are accrued only when the performance period is complete, the amount of revenue is no longer subject to adjustment and collectability is reasonably assured. Performance-based investment management fees are recorded in investment management fees in the consolidated statements of operations. In 2018 and 2017, the Company recognized $1.9 million and $1.2 million of performance-based investment management fees, respectively. In 2016 the Company recognized an immaterial amount of performance‑based investment management fees. Fund Administration Fees Fund administration fees are accrued on a monthly basis and are determined based on the contractual rate applied to average daily net assets of the Victory Funds for which administration services are provided. The Company is the primary obligor and has the ability to select the service provider and establish pricing and therefore, records fund administration fees and expenses on a gross basis. The fair value of AUM of the Victory Funds is primarily determined using quoted market prices or independent third‑party pricing services or broker price quotes. In limited circumstances, a quotation or price evaluation is not readily available from a pricing service. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. The same prescribed valuation process is used to price securities in separate accounts and other vehicles for which a quotation or price evaluation is not readily available from a pricing service. For the periods presented, a de minimis amount of the AUM was priced in this manner. Fund Distribution Fees The Company’s introducing broker-dealer VCA adopted ASU 2014-09 on January 1, 2018 and updated the following policies. (a) Revenue Recognition VCA receives compensation for sales and sales-related services promised under distribution contracts with the Victory Funds. There are no direct costs incurred to obtain these contracts. Direct costs incurred to fulfill services under the distribution contracts include sales commissions paid to third party dealers for the sale of Class C Shares. Revenue is measured in an amount that reflects the consideration to which VCA expects to be entitled in exchange for providing distribution services. Distribution fees are generally calculated as a percentage of average net assets in the Victory Funds. VCA’s performance obligation is satisfied when control of the services is transferred to customers, which is upon investor subscription or redemption. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of VCA’s control including investor behavior and activity and market volatility and is recognized as these uncertainties are resolved. VCA may recognize distribution fee revenue in the current period that pertains to performance obligations satisfied in prior periods, as it represents variable consideration and is recognized as uncertainties are resolved. VCA has contractual arrangements with third parties to provide certain distribution services. Management considers whether VCA is acting as the principal service provider or as an agent to determine whether its revenue should be recorded based on the gross amount payable by the Victory Funds or net of payments to third-party service providers, respectively. VCA is considered a principal service provider if it controls the service that is transferred to the customer. VCA is considered an agent when it arranges for the service to be provided by another party and does not control the service. Substantially all of VCA’s revenue is recorded gross of payments made to third parties. VCA’s distribution fee revenue totaled $37.3 million, $43.5 million and $32.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is recorded in fund administration and distribution fees on the consolidated statements of operations. (b) Prepaid C Share Commissions VCA may pay upfront sales commissions to dealers and institutions that sell Class C shares of the participating Victory Funds at the time of such sale. Upfront sales commission payments with respect to Class C shares equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution. When VCA makes an upfront payment to a dealer or institution for the sale of Class C shares, VCA capitalizes the cost of such payment, which is recorded in prepaid expenses on the consolidated balance sheets, and amortizes the cost over a 12 month period, the estimated period of benefit. Distribution and Other Asset‑Based Expenses Distribution and other asset‑based expenses include broker dealer distribution, platform distribution, sub‑administration, and sub‑advisory expenses. These expenses are accrued on a monthly basis and are generally calculated as a percentage of AUM and vary as levels of AUM change from inflows, outflows and market movement and with the number of days in the month. Also included in distribution and other asset‑based expenses are middle office expenses. Middle office expenses are accrued on a monthly basis and vary with changes in mutual fund, institutional and wrap separate account AUM levels, the number of accounts and volume of account transaction activity. Restructuring and Integration Costs In connection with business combinations, asset purchases and changes in business strategy, the Company incurs costs integrating investment platforms, products and personnel into existing systems, processes and service provider arrangements and restructuring the business to capture operating expense synergies. In the case of business combinations, these costs are incurred after the closing date. These costs include severance‑related expenses related to one‑time benefit arrangements and contract termination costs. A liability for restructuring costs is recognized only after management has developed a formal plan to which it has committed. The costs included in the restructuring liability are those costs that are either incremental or incurred as a direct result of the plan, or are the result of a continuing contractual obligation with no continuing economic benefit to the Company, or a penalty incurred to cancel the contractual obligation. Severance expense is recorded when management has committed to a plan for a reduction in workforce, the plan has been communicated to employees and it is unlikely that there will be significant changes to the plan. Contract termination liabilities are recorded for contract termination costs when the Company terminates a contract or stops using the product or service covered by the contract. Contract termination liabilities are recognized and measured at fair value. Contract termination costs are recorded in restructuring and integration costs in the consolidated statements of operations. A rollforward of restructuring and integration liabilities for 2018, 2017 and 2016 appears below. (in millions) 2018 2017 2016 Liability balance, beginning of period $ 0.1 $ 7.4 $ 5.0 Severance expense RS Investments — 0.5 7.4 Other 0.7 0.3 — Contract termination expense RS Investments — 5.0 2.4 Integration costs — 0.4 0.2 Restructuring and integration costs 0.7 6.2 10.0 Settlement of liabilities (0.7) (13.5) (7.6) Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 Accrued expenses $ 0.1 $ 0.1 $ 6.9 Other liabilities — — 0.5 Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 Cash and Cash Equivalents Cash and cash equivalents consist of cash at banks, money market accounts and funds and short‑term liquid investments with original maturities of three months or less at the time of purchase. For the Company and certain subsidiaries, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. Investments Available‑For‑Sale Securities Available‑for‑sale securities include investments in affiliated mutual funds and are recorded in available‑for‑sale securities in the consolidated balance sheets. Investments in available‑for‑sale securities are carried at fair value. Changes in fair value are recognized as a component of other comprehensive income/(loss) until the securities are sold. Unrealized holdings gains or losses (to the extent such losses are considered temporary) are reported net of deferred tax as a separate component of accumulated other comprehensive income/(loss) until realized. Upon disposition, the gain or loss on the security is reclassified from other comprehensive income/(loss) to other income/(expense) in the consolidated statements of operations. The cost of securities sold is determined using the specific identification method. Dividend income is accrued on the declaration date and is included in other income in the consolidated statements of operations. Transactions are recorded on a trade‑date basis. The Company periodically reviews each individual security that is in an unrealized loss position to determine if the impairment is other‑than‑temporary. Factors that are considered in determining whether other‑than‑temporary declines in value have occurred include the severity and duration of the unrealized loss and the Company's ability and intent to hold the security for a length of time sufficient to allow for recovery of such unrealized losses. Impairment charges are recorded in other income (expense) in the consolidated statements of operations. No impairments were recognized as a result of such review in the years ended December 31, 2018, 2017 and 2016. Trading Securities Trading securities include investments in affiliated and third party mutual funds held in a rabbi trust under a deferred compensation plan. Trading securities are recorded at fair value in the consolidated balance sheets. Changes in value in trading securities are recognized by the Company in other income/(expense) in the consolidated statements of operations. The Company's available‑for‑sale and trading securities are valued through the use of quoted market prices available in an active market, which is the net asset value of the funds. Derivative Financial Instruments The Company evaluates financial instruments and other contracts to determine if the arrangement meets the characteristics of a derivative under ASC 815 and the criteria to use hedge accounting. Hedging instruments Derivatives are recorded as other assets and other liabilities on the balance sheet and are measured at fair value. To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the hedged item. If the Company's derivatives qualify as cash flow hedges, the effective portion of fluctuations in the fair value of the derivatives are recorded in accumulated other comprehensive income/(loss) and reclassified, as adjustments to interest expense, as the underlying hedged item impacts the consolidated statements of operations. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in the consolidated statements of operations. If a cash flow hedge is terminated or is no longer considered to be effective, hedge accounting is discontinued prospectively. If the derivative continues to exist, future changes in fair value are accounted for in the consolidated statements of operations unless the derivative is re‑designated in a new qualifying hedge relationship. For the period from December 2014 to December 2017, the Company used interest rate cap derivatives to manage interest rate risk related to a portion of its long-term debt. The Company assessed ongoing effectiveness for these interest rate cap derivatives, which were designated as cash flow hedges, based on total changes in the cap's cash flows and by reviewing whether there had been any changes in the critical terms of the cap or transaction being hedged or any adverse changes in the counterparty's credit. No hedge ineffectiveness was recorded in the years ended December 31, 2017 and 2016. The Company’s interest rate cap derivatives expired on December 31, 2017. Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation and amortization is computed using the straight‑line method over the estimated useful lives of the related assets, generally three to ten years. Improvements to leased property are amortized on a straight‑line basis over the lesser of the useful life of the improvements or the term of the applicable lease. When assets are sold or retired, the related cost and accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in other income (expense) in the consolidated statements of operations. Gains and losses resulting from the sale or disposal of assets as part of a restructuring plan are included in restructuring and integration costs in the consolidated statements of operations. The cost of repairs and maintenance are expensed as incurred. Equipment and leasehold improvements are tested for impairment whenever changes in facts or circumstances indicate that the carrying amount of an asset may not be recoverable. Segment Reporting The Company operates in one business segment that provides investment management services and products to institutional and intermediary clients. The Company's determination that it has one operating segment is based on the fact that the Chief Operating Decision Maker reviews the Company's financial performance on an aggregate level. Goodwill Goodwill represents the excess cost of the acquisition over the fair value of net assets acquired in a business combination. For goodwill impairment testing purposes, the Company has determined that there is only one reporting unit. The Company tests goodwill for impairment on an annual basis, or more frequently if facts and circumstances indicate that goodwill may be impaired. Factors that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the Company's use of the acquired assets in a business combination or strategy for the Company's overall business, and significant negative industry or economic trends. The Company conducts the annual impairment assessment as of October 1st. The Company uses a qualitative approach to test for potential impairment of goodwill. If, after considering various factors, management determines that it is more likely than not that goodwill is impaired, a two‑step process to test for and measure impairment is performed which begins with an estimation of the fair value of the Company by considering discounted cash flows. The assumptions used to estimate fair value include management's estimates of future growth rates, operating cash flows, discount rates and terminal value. These assumptions and estimates can change in future periods based on market movement and factors impacting the expected business performance. Changes in assumptions or estimates could materially affect the determination of the fair value of the Company. If the present value of future expected cash flows falls below the recorded book value of equity, the Company's goodwill would be considered impaired. Intangible Assets Intangible assets acquired by the Company outside of a business combination are initially recognized and measured based on the Company's cost to acquire the intangible assets. If a group of assets is acquired, the cost is allocated to individual assets based on their relative fair value. Intangible assets acquired in a business combination are initially recognized and measured at fair value. In valuing these assets, the Company makes assumptions regarding useful lives and projected growth rates, and significant judgment is required. Definite‑lived intangible assets represent the value of acquired customer relationships in institutional separate accounts, collective funds, intermediary wrap separate account (wrap SMA) and unified managed account/model (UMA) programs. Definite‑lived intangible assets also include intellectual property, advisory contracts that do not have a sufficient history of annual renewal, definite-lived trade name assets and non‑competition agreements. The Company amortizes definite‑lived identifiable intangible assets on a straight‑line basis over a period that is shorter than the asset's economic life as the pattern of economic benefit cannot be reliably determined. Management periodically evaluates the remaining useful lives and carrying values of the intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the definite‑lived intangible assets, the Company compares the carrying value of the asset to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. The Company writes off the cost and accumulated amortization balances for all fully amortized intangible assets. Indefinite‑lived intangible assets include trade names and contracts for advisory and distribution services where the Company expects to, and has the ability to continue to manage these funds indefinitely, the contracts have annual renewal provisions, and there is a high likelihood of continued renewal based on historical experience. Trade names are considered indefinite‑lived intangible assets when they are expected to generate cash flows indefinitely. Indefinite‑lived intangible assets are reviewed for impairment annually as of October 1st using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an indefinite‑lived intangible asset is impaired. In addition, periodically management reconsiders whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows. The Company estimates the fair value of the indefinite‑lived intangible asset and compares it to the book value of the asset to determine whether an impairment charge is necessary. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value. Investment Management Fees Receivable and Fund Administration and Distribution Fees Receivable Investment management fees receivable include investment management fees due from the Victory Funds and VictoryShares and investment management fees due from non-affiliated parties. Fund administration and distribution fees receivable include fund administration and fund distribution fees due from the Victory Funds and VictoryShares. Provision for credit losses on these receivables is made in amounts required to maintain an adequate allowance to cover anticipated losses. All investment management fees receivable and fund administration and distribution fees receivable were determined to be collectible as of December 31, 2018, 2017 and 2016, and accordingly, no reserve for credit losses and no provision for credit losses were recognized as of and for the years ended December 31, 2018, 2017 and 2016. Other Receivables Other receivables primarily include income and other taxes receivable and amounts due to the Company under a contract with a third party acquired in the RS Acquisition. All amounts included in other receivables were determined to be collectible as of December 31, 2018, 2017 and 2016. Share‑Based Compensation Compensation expense related to share‑based payments is measured at the grant date based on the fair value of the award. The fair value of each option granted is estimated using the Black‑Scholes option valuation model. The Black‑Scholes option valuation model incorporates assumptions as to dividend yield, expected volatility, an appropriate risk‑free interest rate and the expected life of the option. The fair value of restricted share awards with service based vesting conditions and performance based vesting conditions is based on the market price of our stock on the date of grant. The fair value of restricted share awards subject to market conditions is estimated based on a probability-weighted expected value analysis. Compensation expense is recognized on a straight‑line basis over the total vesting period of the award for the service portion of restricted share awards and stock option awards. Compensation expense is recognized on an accelerated basis over the derived service period for awards that vest based on market conditions and on an accelerated basis over the requisite service period for awards with performance conditions if it is probable that the performance conditions will be satisfied. Compensation expense is adjusted for actual forfeitures in the period the forfeiture occurs. The corresponding credit for restricted share and stock option compensation expense is recorded to additional paid in capital. Earnings Per Share The calculation of basic earnings per share is based on the weighted average number of shares of the Company’s common stock, Class A common stock and Class B common stock outstanding during the period. Diluted earnings per share is similar to basic earnings per share, but adjusts for the dilutive effect of the potential issuance of incremental shares of all classes of the Company’s common stock. The Company had vested and unvested stock options and unvested restricted stock grants outstanding during the periods presented and applies the treasury stock method to these securities in its calculation of diluted earnings per share. The treasury stock method assumes that the proceeds of exercise are used to purchase common stock at the average market price for the period. The Company does not have any participating securities that would require the use of the two‑class method of computing earnings per share. Deferred Financing Fees The costs of obtaining term loan financing are capitalized in long‑term debt in the consolidated balance sheets and amortized to interest expense and other financing costs in the consolidated statements of operations over the term of the respective financing using the effective interest method. The costs of obtaining revolving line of credit financing are capitalized in other assets in the consolidated balance sheets and amortized to interest expense and other financing costs in the consolidated statements of operations on a straight‑line basis over the term of the facility. Debt Modification Gains and losses on debt modifications that are considered extinguishments are recognized in current earnings. Debt modifications that are not considered extinguishments are accounted for prospectively through yield adjustments, based on the revised terms. Legal fees and other costs incurred with third parties that are directly related to debt modifications are expensed as incurred and generally are included in general and administrative expense in the consolidated statements of operations. In 2018, the Company expensed $1.9 million in costs related to debt modifications upon entering into the Existing Credit Agreement. In 2017, the Company expensed $1.2 million in costs related to debt modifications upon the issuance of Incremental Term Loan 3 to fund the 2017 Special Dividend and an additional $1.0 million in costs related to debt modifications upon the 2017 Debt Refinancing. During 2016, the Company expensed $0.8 million in costs related to debt modifications upon the issuance of Incremental Term Loan 2 to finance the RSIM acquisition, which were included in acquisition-related costs in the consolidated statements of operations. The analysis as to whether a modification of debt is an extinguishment or modification is performed on a creditor‑by‑creditor basis. See Note 10 for information on debt refinancings and modifications. Leases The Company currently leases office space and equipment under various leasing arrangements. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Leases are classified as either capital leases or operating leases, as appropriate. Lease agreements that are classified as operating leases may contain renewal options, rent escalation clauses or other inducements provided by the landlord. Rent expense is accrued to recognize lease escalation provisions and inducements provided by the landlord, if any, on a straight‑line basis over the lease term commencing when the Company obtains the right to control the use of the leased property. Rent expense is included in general and administrative expense in the consolidated statements of operations. Treasury Stock Acquisitions of treasury stock are recorded at cost. Treasury stock held is reported as a deduction from stockholders' equity in the consolidated balance sheets. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a specific‑identification basis. Additional paid‑in capital from treasury stock transactions is increased as the Company reissues treasury stock for more than the cost of the shares. If the Company issues treasury stock for less than its cost, additional paid‑in capital from treasury stock transactions is reduced to no less than zero. Once this account is at zero, any further required reductions are recorded to retained deficit in the consolidated balance sheets. Foreign Currency Transactions The financial statements of RSSI, RSHK and RSUK, which operate outside of the United States (U.S.), are measured using the local currency as the functional currency. Adjustments to translate those statements into U.S. dollars are recorded in other comprehensive income/(loss) (OCI), which were immaterial in amount at December 31, 2018, 2017 and 2016. Transactions denominated in currencies other than the functional currency are recorded using the exchange rate on the date of the transaction. Exchange differences arising on the settlement of financial assets and liabilities are recorded in other income/(expense) in the consolidated statements of operations. Foreign exchange gains and losses for the years ended December 31, 2018, 2017 and 2016 were immaterial. Income Taxes Income taxes are accounted for using the assets and liability method as required by ASC 740, Income Taxes (ASC 740). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax liabilit |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions | |
Acquisition | 3. Acquisitions CEMP Acquisition Consideration for the CEMP Acquisition included a total of $10.7 million in base payments and a total of $3.1 million in earn‑out payments to be made to sellers following each of the first four anniversaries of the closing date. Each annual base payment is fixed in amount, with the amounts increasing over the four-year period. The earn‑out payments are calculated as a fixed percentage of the net revenue earned by the Company on the CEMP business over the twelve-month period ending on each of the first four anniversaries of the CEMP closing date. The acquisition date fair value of the base payment liability was determined by discounting the four required annual payments by the Company's pre‑tax cost of debt. The liability is being accreted to the amount of cash to be paid in the future. The Company paid sellers a total of $4.4 million, $2.7 million and $1.3 million in base payments and earn out payments in 2018, 2017 and 2016. The final base payment and earn-out payment will be paid by the third quarter of 2019. As of December 31, 2018, 2017 and 2016, the earn‑out liability was valued at $0.7 million, $1.2 million and $1.5 million, respectively, and total consideration payable to sellers for the CEMP Acquisition was $5.8 million and $9.9 million, respectively, which is recorded in consideration payable for acquisition of business on the consolidated balance sheets. RS Acquisition At the time of the RS Acquisition, which closed on July 29, 2016, the Company recorded a $25.6 million receivable for cash flows expected to be received from a third party under an agreement signed by RS Investments with that party for the transfer of certain separate accounts in 2014. Pursuant to this agreement, Victory was entitled to receive earn‑out payments from the buyer in the form of revenue share on the transferred separate accounts through December 31, 2018. The Company assessed the collectability of the receivable on a periodic basis. During 2018 and 2017, the Company recorded losses of $1.0 million and $4.4 million, respectively, recorded in interest income and other income/(expense) in the consolidated statements of operations and in loss on other receivable in the consolidated statement of cash flows, to write down this receivable to the estimated fair value of the remaining cash flows expected to be received under the earn-out arrangement. The Company collected $6.6 million and $10.3 million of this receivable in 2018 and 2017, respectively. At December 31, 2018 and 2017, the receivable totaled $0.9 million and $8.4 million, respectively, which is recorded in other receivables in the consolidated balance sheets. In January 2019, the Company collected the final amount due on this receivable of $0.9 million. The Company’s consolidated financial statements for 2016 include RS Investments’ operating results from the date of acquisition through December 31, 2016. Pro forma unaudited revenue and net loss for 2016, giving effect to the Company’s acquisition of RS Investments as if the acquisition had occurred on January 1, 2015, was $381.1 million and $22.1 million, respectively. The historical consolidated financial information of the Company and RS Investments for 2016 were adjusted to give effect to pro forma events that were directly attributable to the transaction, factually supportable and expected to have continuing impact on the combined results. The pro forma unaudited revenue and net loss amounts for 2016 were calculated after adjusting the results of RS Investments to reflect additional interest expense and income taxes as well as intangible asset amortization that would have been charged assuming the fair value adjustments had been applied on January 1, 2015. In addition, the Company’s and RS Investments’ results were adjusted to remove incentive compensation, legal fees and mutual fund proxy costs directly attributable to the acquisition. For the period from July 30, 2016 to December 31, 2016, RS Investments’ revenue was $53.4 million. Net income attributable to RS Investments for this period is impractical to determine as the Company did not prepare discrete financial information at that level. Harvest Acquisition On September 21, 2018, the Company entered into the Harvest Purchase Agreement, whereby the Company has agreed to purchase 100% of the equity interests of Harvest, an asset management company specializing in yield enhancement overlay, risk reduction, alternative beta and absolute return investment strategies. The Harvest Acquisition is expected to close in the second quarter of 2019 and is subject to the receipt of a specified level of client consents, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which termination was received on November 6, 2018, and other closing conditions. Harvest Purchase Agreement Subject to the adjustments described below, the aggregate purchase price (the “Harvest Purchase Price”) to be paid by the Company for Harvest is (i) $255 million in cash paid at the closing of the transaction (the “Harvest Closing”), (ii) 1,565,370 shares of the Company’s Class B common stock, which equated to $15 million based on a volume-weighted average price per share of $9.5824 at September 21, 2018, to be paid at the Harvest Closing, (iii) $30.75 million in Class B Common Stock, issued in four equal installments at the end of each of the first four quarters following the Harvest Closing, and (iv) contingent earn-out payments based on the net revenue (as calculated under the Harvest Purchase Agreement) of the Harvest business in calendar years 2021, 2022 and 2023. The shares of Class B Common Stock included in the Harvest Purchase Price will be issued at a volume-weighted average price per share as defined in the Harvest Purchase Agreement. The net revenue targets that must be achieved by the Harvest business in order for the maximum earnout to be paid are predicated on more than 30% of annual revenue growth by the Harvest business for the five years following the Harvest Closing. A maximum of $100 million in earnout payments is achievable for each of calendar years 2021, 2022 and 2023, with such maximum number subject to certain adjustments. To receive any earnout for a given calendar year, the Harvest business must achieve a minimum of $51 million in net revenue for such calendar year, and to achieve the maximum earnout, the Harvest business must achieve at least $112 million in net revenue for calendar year 2021, $145.7 million in net revenue for calendar year 2022, and $189.4 million in net revenue for calendar year 2023, subject to certain “catch-up” provisions. The Harvest Purchase Agreement provides that the Harvest Purchase Price will be reduced if Harvest does not obtain client consents relating to the assignment of Harvest investment advisory contracts representing revenues equal to at least 95% of a baseline revenue amount. The Harvest Purchase Price is subject to adjustments for working capital and debt, unpaid transaction expenses, accrued bonuses and commissions and other specified pre-closing Harvest liabilities relating to the Harvest Closing. The Harvest Purchase Price is also subject to a customary post-closing adjustment and true-up payment for consents obtained in the ninety days following the Harvest Closing. Adjustments to the Harvest Purchase Price will reduce both the cash and equity portions of the Harvest Purchase Price. The Harvest Purchase Agreement contains customary termination rights for the Company and Harvest, including in the event the Harvest Acquisition is not consummated on or before June 11, 2019. USAA AMCO Acquisition On November 6, 2018, the Company entered into the USAA Stock Purchase Agreement, whereby the Company agreed to purchase 100% of the outstanding common stock of the USAA Acquired Companies. The USAA AMCO Acquisition includes AMCO’s mutual fund and ETF businesses and the USAA 529 College Savings Plan. Upon the closing of the USAA AMCO Acquisition, Victory will have the rights to offer products and services using the USAA brand and AMCO’s investment teams will continue serving the investment needs of the military community and their families. USAA Stock Purchase Agreement Subject to the adjustments described below and in the USAA Stock Purchase Agreement, the aggregate purchase price (the “USAA Stock Purchase Price”) to be paid by the Company for the shares of the USAA Acquired Companies is (i) $850 million in cash (the “Base Purchase Price”) paid at the closing of the USAA AMCO Acquisition (the “USAA Closing”) and (ii) contingent payments based on AMCO’s annual revenue as calculated under the USAA Stock Purchase Agreement attributable to all “non-managed money”-related assets under management in each of the first four years following the USAA Closing. A maximum of $150 million ($37.5 million per year) in contingent payments in respect of “non-managed money”-related assets is achievable over the four-year period. To receive any contingent payment in respect of “non-managed money”-related assets for a given year, annual revenue from “non-managed money”-related assets must be at least 80% of the revenue run-rate as calculated under the USAA Stock Purchase Agreement of AMCO’s “non-managed money”-related assets under management as of the Closing, and to achieve the maximum contingent payment for a given year, such annual revenue must total at least 100% of that Closing revenue run-rate. Annual contingent payments in respect of “non-managed money”-related assets are subject to certain “catch-up” provisions set forth in the USAA Stock Purchase Agreement. The USAA Stock Purchase Agreement provides that the Base Purchase Price will be reduced if AMCO does not obtain client consents (“Consents”) related to the assignment of AMCO’s investment advisory contracts representing revenues equal to at least 95% of a baseline revenue amount (the “Run Rate Threshold”). The Base Purchase Price is subject to working capital and debt adjustments as well as reductions for certain unpaid transaction expenses, accrued bonuses and commissions and other specified liabilities of AMCO, in each case as of immediately prior to Closing. The Base Purchase Price is also subject to a customary post-Closing adjustment, as well as a true-up payment in respect of Consents obtained in the 180 days following the USAA Closing. The USAA AMCO Acquisition is expected to close around the end of the second quarter of 2019 and is subject to, among other things, the receipt of a specified level of Consents, the expiration or termination of the applicable waiting period under the HSR Act, which termination was received on December 3, 2018, the absence of any material adverse effect as defined in the USAA Stock Purchase Agreement on the business of the USAA Acquired Companies, and other customary closing conditions. The USAA Stock Purchase Agreement contains customary termination rights for the Company and USAA Capital Corporation, parent of the USAA Acquired Companies, including in the event the USAA AMCO Acquisition is not consummated on or before August 3, 2019. Acquisition-related costs Costs related to acquisitions are summarized below and include legal and filing fees, advisory services, mutual fund proxy voting costs and other one‑time expenses related to the transactions. These costs were expensed in 2018, 2017 and 2016 and are included in acquisition‑related costs in the consolidated statements of operations. Acquisition-related costs (in millions) 2018 2017 2016 RS Acquisition $ — $ 0.4 $ 6.4 USAA AMCO Acquisition 3.1 — — Harvest Acquisition 1.1 — — Other 0.1 1.7 0.2 $ 4.3 $ 2.1 $ 6.6 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements The Company determines the fair value of certain financial and nonfinancial assets and liabilities. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value determinations utilize a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the fair value hierarchy contains three levels: · Level 1—Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets. · Level 2—Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the asset or liability being measured. · Level 3—Valuation inputs are unobservable and significant to the fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability. The table below shows assets measured at fair value on a recurring basis: As of December 31, 2018 (in thousands) Total Level 1 Level 2 Level 3 Financial Liabilities Contingent Consideration Arrangements $ (716) $ — $ — $ (716) Total Financial Liabilities $ (716) $ — $ — $ (716) As of December 31, 2017 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Contingent Consideration Arrangements $ (1,195) $ — $ — $ (1,195) Total Financial Liabilities $ (1,195) $ — $ — $ (1,195) Contingent consideration arrangements at December 31, 2018 and 2017 consist of the CEMP earn‑out payment liability, which is included in consideration payable for acquisition of business in the consolidated balance sheets. Level 3 inputs were utilized to determine fair value, or the present value of the expected future settlement, of the contingent consideration arrangement (see Note 3). Changes in the fair value of the liability, realized or unrealized, are recorded in earnings and are included in change in value of consideration payable for acquisition of business in the consolidated statements of operations. Significant unobservable inputs used in the fair value calculation for this obligation include discount rates and growth assumptions. Four scenarios were used in formulating the growth rate assumptions with varying levels of revenue growth and were probability‑weighted. An increase to the discount rate would result in a lower fair value, while an increase to growth rate assumptions would result in a higher fair value. Contingent Consideration (in thousands) Arrangements Balance, December 31, 2016 $ (1,523) CEMP change in fair value measurement 294 CEMP year 2 earn-out payment 34 Balance, December 31, 2017 $ (1,195) CEMP change in fair value measurement 37 CEMP year 3 earn-out payment 442 Balance, December 31, 2018 $ (716) There were no transfers between any of the Level 1, 2 and 3 categories in the fair value measurement hierarchy for the years ended December 31, 2018 and 2017. The Company recognizes transfers at the end of the reporting period. The net carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value due to the short‑term nature of these assets and liabilities. The fair value of the Company's long-term debt at December 31, 2018 is considered to be its carrying amount as Company entered into the Existing Credit Agreement in February 2018 (see Note 10). Level 2 inputs are utilized to determine the fair value of the Company's long‑term debt. The fair value of investments measured using the net asset value practical expedient at December 31, 2018 and 2017 totaled $13.3 million and $11.3 million respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | 5. Related‑Party Transactions The Company considers certain funds that it manages, including the Victory Funds, the VictoryShares and the Victory Collective Funds, to be related parties as a result of the Company's advisory relationship. The Company receives investment management, administrative, distribution and compliance fees in accordance with contracts that VCM and VCA have with the Victory Funds. The Company also receives investment management fees from the VictoryShares and Victory Collective Funds under VCM's advisory contracts with these funds and administrative fees under VCM’s administration contracts with the VictoryShares. Under the terms of monitoring agreements with affiliates of two shareholders of the Company, the Company paid fees for monitoring services, which are included in general and administrative expense in the consolidated statements of operations. These monitoring agreements terminated upon the completion of the IPO. Balances and transactions involving related parties are included in the consolidated balance sheets and consolidated statements of operations are summarized below. Included in receivables (fund administration and distribution fees) are amounts due from the Victory Funds for compliance services and expense reimbursements. Included in fund administration and distribution fees are amounts earned for compliance services. Realized gains and losses on investments in the Victory Funds classified as available-for-sale securities are included in interest income and other income/(expense) in the consolidated statements of operation. Included in the other liabilities in the consolidated balance sheets is the remaining amount payable for a promissory note the Company issued in March 2016 for $1.7 million for amounts due upon repurchase of Company common stock from a shareholder. As of December 31, (in thousands) 2018 2017 Related party assets Receivables (investment management fees) $ 19,612 $ 23,027 Receivables (fund administration and distribution fees) 3,153 3,925 Investments (Available-for-sale securities, fair value) 601 677 Investments (Trading securities, at fair value) 12,343 10,248 Total $ 35,709 $ 37,877 Related party liabilities Accounts payable and accrued expenses (fund reimbursements) $ 2,300 $ 1,155 Other liabilities (promissory note) 96 671 Total $ 2,396 $ 1,826 Year ended December 31, (in thousands) 2018 2017 2016 Related party revenue Investment management fees $ 261,538 $ 254,318 $ 171,112 Fund administration and distribution fees 60,729 65,818 49,401 Total $ 322,267 $ 320,136 $ 220,513 Related party expense Distribution and other asset-based expenses (fund reimbursements) $ 12,902 $ 11,896 $ 10,342 General and administrative 135 1,203 1,150 Total $ 13,037 $ 13,099 $ 11,492 Related party other income (expense) Interest expense and other income/(expense) $ (2,834) $ 589 $ 224 Interest expense and other financing costs (promissory note) (18) (39) (42) Total $ (2,852) $ 550 $ 182 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
Investments. | |
Investments | 6. Investments As of December 31, 2018 and 2017, the Company held both available‑for‑sale securities and trading securities. Available‑for‑sale investments consist entirely of seed capital investments in certain Victory sponsored mutual funds. Trading securities are held under a deferred compensation plan and include Victory sponsored and third party mutual funds. Available‑For‑Sale Securities A summary of the cost and fair value of investments classified as available-for-sale is as follows: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of December 31, 2018 $ 666 $ 6 $ (71) $ 601 As of December 31, 2017 595 82 — 677 Unrealized gains and losses on available for sale investments are recorded, net of tax, to accumulated other comprehensive income/(loss). Upon sale, accrued unrealized gains or losses are reclassed out of accumulated comprehensive income/(loss) (see Note 19), and realized gains and losses are recognized in the consolidated statements of operations as other income (expense). Proceeds and realized gains and losses recognized during 2018, 2017 and 2016 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the year ending December 31, 2018 $ — $ — $ — For the year ending December 31, 2017 79 15 — For the year ending December 31, 2016 1,290 78 (27) Trading Securities A summary of the cost and fair value of investments classified as trading securities is as follows: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of December 31, 2018 $ 14,874 $ 5 $ (2,160) $ 12,719 As of December 31, 2017 9,978 950 (269) 10,659 Unrealized gains and losses on trading securities are recorded in earnings in other income (expense). Sales of trading investments throughout the year result in realized gains or losses that are recognized in the consolidated statements of operations as other income (expense). Proceeds and realized gains and losses recognized in 2018, 2017 and 2016 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the Year Ended December 31, 2018 $ 2,772 $ 37 $ (73) For the Year Ended December 31, 2017 5,166 159 (34) For the Year Ended December 31, 2016 2,585 64 (72) |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consisted of the following as of December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Equipment, Purchased Software and Implementation Costs $ 17,071 $ 14,685 Leasehold Improvements 3,209 2,720 Furniture and Fixtures 1,541 1,501 Total 21,821 18,906 Accumulated Depreciation and Amortization (13,041) (10,062) Total Property and Equipment, Net $ 8,780 $ 8,844 Depreciation and amortization expense for property and equipment was $3.0 million, $3.6 million, and $3.2 million for the years ended December 31, 2018, 2017, and 2016, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 8. Goodwill and Other Intangible Assets The table below shows changes in the goodwill balance from December 31, 2017 to December 31, 2018: As of December 31, (in thousands) 2018 2017 Balance, beginning of period $ 284,108 $ 284,108 Goodwill recorded in acquisition — — Balance, end of period $ 284,108 $ 284,108 There were no impairments to goodwill recognized during the years ended December 31, 2018, 2017 or 2016. Identifiable Intangible Assets In the third quarter of 2018, the Company determined that the estimated useful life had changed for the $1.1 million CEMP trade name indefinite-lived intangible asset as a result of rebranding the Company’s proprietary CEMP volatility weighted indexes as NASDAQ Victory volatility weighted indexes. The Company estimated the fair value of the trade name intangible asset before updating the useful life and concluded no impairment was present. The Company began amortizing this intangible asset in July 2018. A summary of definite‑lived intangible assets by type is as follows: Fund Intellectual Customer Advisory Trade Property/ (in thousands) Relationships Contracts Names Other Totals Gross Book Value — 12/31/17 $ 123,200 $ 2,368 $ — $ 7,177 $ 132,745 2017 Accumulated Amortization (84,309) (2,105) — (6,062) (92,476) 2017 Net Book Value—12/31/17 $ 38,891 $ 263 $ — $ 1,115 $ 40,269 Weighted Average Useful Life (years) 1.6 0.3 — 0.6 1.5 Gross Book Value—12/31/18 $ 123,200 $ 2,368 $ 1,132 $ 7,177 $ 133,877 2018 Accumulated Amortization (103,207) (2,368) (283) (6,940) (112,798) 2018 Net Book Value—12/31/18 $ 19,993 $ — $ 849 $ 237 $ 21,079 Weighted Average Useful Life (years) 0.8 — 1.5 0.2 0.8 Amortization expense for definite‑lived intangible assets for the years ended December 31, 2018, 2017 and 2016, was $20.3 million, $26. 3 million and $27. 2 million, respectively, and is recorded in depreciation and amortization within the consolidated statements of operations. There were no impairments to definite-lived intangible assets recognized in 2018, 2017 or 2016. Estimated amortization expense for definite‑lived intangible assets for each of the five succeeding years is as follows: (in thousands) Totals 2019 $ 16,114 2020 3,262 2021 1,703 2022 — 2023 — $ 21,079 A summary of indefinite‑lived intangible assets by type is as follows: Fund Advisory and Distribution Trade (in thousands) Contracts Names Totals Balance—12/31/16 $ 342,900 $ 24,832 $ 367,732 Additions or Transfers — — — Balance—12/31/17 $ 342,900 $ 24,832 $ 367,732 Additions or Transfers — (1,132) (1,132) Balance—12/31/18 $ 342,900 $ 23,700 $ 366,600 There were no impairments to indefinite-lived intangible assets recognized in 2018, 2017 or 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | 9. Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted. The Tax Act significantly revised the U.S. corporate income tax law by, among other things, decreasing the federal corporate income tax rate from 35% to 21% effective January 1, 2018. As a result of the reduction in the corporate income tax rate, the Company was required to remeasure its deferred tax assets and deferred tax liabilities on the enactment date using the new rate. At December 31, 2017, the Company’s accounting for the income tax effects of the Tax Act was not complete, as it had yet to collect all the necessary data to complete the analysis of the effect of the Tax Act on the underlying deferred taxes. In 2017, the Company applied the guidance in SAB 118 and recorded a provisional credit to federal tax expense of $2.4 million from remeasuring deferred tax assets and deferred tax liabilities due to the Tax Act. As of December 31, 2018, the Company has completed the accounting for the tax effects of the Tax Act, and no adjustments to the provisional amounts recorded in 2017 were necessary during 2018. The provision for income taxes consists of the following for the years ended December 31, 2018, 2017 and 2016: (in thousands) 2018 2017 2016 Current tax expense (benefit): Federal $ 13,130 $ 640 $ (3) State 3,944 779 93 Foreign 17 22 (10) Total current tax expense 17,091 1,441 80 Deferred tax expense (benefit): Federal 3,577 9,162 (2,728) State 549 2,010 (388) Foreign (10) 19 36 Total deferred tax expense (benefit) 4,116 11,191 (3,080) Income tax expense (benefit) $ 21,207 $ 12,632 $ (3,000) The effective tax rate for the years ended December 31, 2018, 2017 and 2016 differs from the U.S. federal statutory rate primarily as a result of certain non‑deductible expenses and state and local income taxes, and for 2017, due to the remeasurement of net deferred tax liabilities upon enactment of the Tax Act. 2018 2017 2016 Federal income tax at U.S. statutory rate 21.0 % 35.0 % 35.0 % State income tax rate, net of federal tax benefit 4.1 % 4.0 % 1.2 % Change of state income tax rate, net of federal tax benefit 0.1 % (0.2) % 0.5 % Excess tax benefits on share-based compensation (0.5) % — % — % Remeasurement of deferred taxes due to Tax Act — % (6.3) % — % Non-deductible expenses 0.2 % 0.8 % (3.1) % Foreign taxes and other 0.1 % (0.4) % (0.6) % Income tax expense 25.0 % 32.9 % 33.0 % Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax reporting purposes. In assessing the realization of deferred tax assets, management considers the reversal of deferred tax liabilities as well as projections of future taxable income during the periods in which temporary differences are expected to reverse. Based on the consideration of these facts, the Company believes it is more likely than not that all of its gross deferred tax assets will be realized in the future, and as a result has not recorded a valuation allowance on these amounts as of December 31, 2018 and 2017. The components of deferred income tax assets and deferred tax liabilities were as follows at December 31, 2018 and 2017: (in thousands) 2018 2017 Deferred tax assets Definite-lived intangibles $ 18,725 $ 16,078 Share-based compensation expense 9,041 5,271 Acquisition-related costs 4,483 4,118 Deferred compensation 3,185 2,738 Loss on other receivable — 1,119 Restructuring expenses 962 1,033 Contingent consideration arrangements 248 273 CEMP goodwill 574 468 AMT credit carryforward — 492 Unrealized loss on deferred compensation investments 536 — Loss on equity method investment 283 — Other 92 — Total deferred tax assets $ 38,129 $ 31,590 Deferred tax liabilities Indefinite-lived intangibles $ 41,302 $ 30,939 Debt issuance costs 1,101 2,573 Depreciation 1,282 1,239 Prepaid expenses 161 139 CEMP base payments interest expense 36 125 Change in value of consideration payable for acquisition of business 459 454 Unrealized gain on deferred compensation investments — 175 Other — 14 Total deferred tax liabilities 44,341 35,658 Net deferred tax liability $ (6,212) $ (4,068) As of December 31, 2017, for Federal tax purposes, the Company had net operating loss carryforwards of $5.5 million all of which were utilized during the year ended December 31, 2018. As of December 31, 2018, the Company had no net operating loss carryforwards. The Company has analyzed its tax positions for all open years (December 31, 2017, 2016, 2015, 2014 and 2013) and has concluded that no additional provision for income tax is required in the financial statements. The Company did not record any amounts at December 31, 2018, 2017 or 2016 related to uncertain tax positions or tax contingencies. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Debt | 10. Debt 2018 Debt Refinancing On February 12, 2018, concurrently with the closing of the IPO, the Company entered into the Existing Credit Agreement under which the Company received seven‑year term loans in an original aggregate principal amount of $360.0 million and established a five‑year revolving credit facility (which was unfunded as of closing) with original aggregate commitments of $50.0 million. On May 3, 2018, the Existing Credit Agreement was amended to increase aggregate commitments for the revolving credit facility from $50.0 million to $100.0 million. Net proceeds of $355.9 million from the term loans under the Existing Credit Agreement and $143.0 million from the IPO, as well as cash on hand of $0.8 million, were used to repay all of the indebtedness outstanding under the 2014 Credit Agreement ($499.7 million of term loans) on February 12, 2018. The 2014 Credit Agreement was terminated on this date. Original issue discount was $0.9 million for the term loans under the Existing Credit Agreement and $0.3 million for the revolving credit facility under the Existing Credit Agreement. The Company incurred a total of $3.7 million in arranger fees and other third party costs related to the Existing Credit Agreement: $1.8 million was recorded as debt issuance costs and $1.9 million was expensed in general and administrative expense in the consolidated statements of operations as costs related to modified debt. The Company recognized a $6.1 million loss on debt extinguishment, which consisted of the write-off of $4.2 million in unamortized debt issuance costs and $1.9 million in unamortized debt discount. In conjunction with the May 3, 2018 amendment to the Existing Credit Agreement, the Company incurred $0.4 million in original issue discount and legal and other fees which were recorded as debt issuance costs in other assets in the consolidated balance sheets. The Existing Credit Agreement Term loans under the Existing Credit Agreement amortize at a rate of 1.00% per annum. Mandatory prepayments of term loans are required on an annual basis, starting with the year ending December 31, 2019, with a percentage of annual excess cash flow ranging from 0% to 50% depending on the Company’s first lien leverage ratio. Mandatory prepayments of term loans are also required with all or a portion of net cash proceeds of certain asset sales, casualty or condemnation events and with the proceeds of certain incurrences of indebtedness. At any time the Company may terminate commitments under the revolving credit facility in full or in part or prepay term loans in whole or in part, subject to the payment of LIBOR breakage fees, if any. Term loans under the Existing Credit Agreement have an interest rate of LIBOR plus 2.75%. The Existing Credit Agreement contains customary affirmative and negative covenants, including but not limited to, covenants that affect the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, make distributions and dividends. The Existing Credit Agreement also requires a certain maximum first lien leverage ratio, measured as of the last day of each fiscal quarter on which outstanding borrowings under the revolving credit facility exceed 35.0% of the commitments. Obligations under the Existing Credit Agreement are guaranteed by all of the Company’s domestic subsidiaries other than VCA (the Guarantors) and are secured by substantially all of the assets of the Company and the Guarantors, subject in each case to certain customary exceptions. The components of long-term debt in the consolidated balance sheets at December 31, 2018 and 2017 appear below. Effective (in thousands) 2018 2017 Interest Rate Due October 2021, 6.82% interest rate $ — $ 499,750 7.73% Due February 2025, 5.55% interest rate 280,000 — 6.22% Term loan principal outstanding 280,000 499,750 Unamortized debt issuance costs (7,629) (11,442) Unamortized debt discount (3,514) (5,083) Long-term debt $ 268,857 $ 483,225 As of December 31, 2018, the term loans under the Existing Credit Agreement had an interest period of three months and the interest rate was 5.55% per annum. Including the impact of amortization of debt issuance costs and original issue discount described herein, the effective yield for term loans under the Existing Credit Agreement as of December 31, 2018 was 6.22% per annum. The Company repaid $37.0 million, $23.0 million and $20.0 million of the outstanding term loans under the Existing Credit Agreement in the first quarter, second quarter and third quarter of 2018, respectively for a total of $80.0 million repaid during the year ended December 31, 2018. Debt issuance costs related to the Term Loans totaled $21 .6 million and $19.9 million at December 31, 2018 and 2017 and are reflected net of accumulated amortization and loss on debt extinguishment of $14.0 million and $8.5 million respectively. Debt issuance costs of $2.0 million and $1.1 million related to the Revolver Commitments are included in other assets in the consolidated balance sheets and are reflected net of accumulated amortization and loss on debt extinguishment of $1.2 million and $0.7 million as of December 31, 2018 and 2017, respectively. Debt discount related to the Term Loans totaled $9.2 million and $8.3 million at December 31, 2018 and 2017 and are reflected net of accumulated amortization and loss on debt extinguishment of $5.7 million and $3.2 million respectively. The components of interest expense and other financing costs on the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016 appear below. (in thousands) 2018 2017 2016 Interest expense $ 17,289 $ 41,569 $ 29,544 Amortization of debt issuance costs 1,708 3,657 2,749 Amortization of debt discount 700 1,544 999 Interest rate cap expense — 767 327 CEMP base payment accretion expense 467 638 718 Other 530 292 305 Total $ 20,694 $ 48,467 $ 34,642 The Harvest Commitment Letter In connection with entering into the Harvest Purchase Agreement, on September 21, 2018, the Company entered into the Harvest Commitment Letter with Royal Bank of Canada (“RBC”) and Barclays Bank PLC (“Barclays”), pursuant to which RBC and Barclays have committed to provide, and have agreed to arrange and syndicate, an incremental senior secured term loan facility under the Existing Credit Agreement in an initial aggregate principal amount of up to $265 million (the “Harvest Facility”). The proceeds of the Harvest Facility, together with cash on the Company’s balance sheet at Harvest Closing, will be used by the Company to fund a portion of the Harvest Purchase Price and to pay fees and expenses incurred in connection with the Harvest Acquisition and the Harvest Facility, unless the Company finances the Harvest Acquisition with proceeds from the USAA AMCO Term Loan Facility described below. The availability of the Harvest Facility is subject to the satisfaction of certain customary conditions precedent. Neither the closing of the Harvest Facility, nor the receipt of any other financing, is a condition to the Harvest Closing. If the Company finances the Harvest Acquisition with proceeds from the USAA AMCO Term Loan Facility, it will not borrow under the Harvest Commitment Letter or enter into the Harvest Facility. USAA AMCO Credit Facilities Commitment Letter In connection with entering into the USAA Stock Purchase Agreement, on November 6, 2018, the Company entered into the USAA AMCO Credit Facilities Commitment Letter with Barclays and RBC , pursuant to which Barclays and RBC have committed to provide, and have agreed to arrange and syndicate, a new seven-year senior secured first lien term loan facility (the “USAA AMCO Term Loan Facility”) in an aggregate principal amount of up to $1.395 billion and a new five-year senior secured first lien revolving credit facility (together with the USAA AMCO Term Loan Facility, the “USAA AMCO Credit Facilities”) in an aggregate principal amount of up to $100 million. Proceeds from the USAA AMCO Term Loan Facility, together with cash on the Company’s balance sheet, will be used to refinance in full all debt outstanding under the Company’s Existing Credit Agreement, finance the USAA AMCO Acquisition and finance the above mentioned Harvest Acquisition, thus effectively replacing the Harvest Commitment Letter. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives | |
Derivatives | 11. Derivatives Interest Rate Caps The interest rate caps that the Company entered into under the terms of the 2014 Credit Agreement expired on December 31, 2017 as per their original contractual terms. The 2014 Credit Agreement required at least 50% of the initial principal outstanding of $295 million on the Term Loan to be protected from interest rate fluctuations for a period of at least two years. The Company entered into two interest rate caps, one in late 2014 and one in early 2015, to manage interest rate exposure on 50% of the initial principal outstanding on the Term Loan for a three year period expiring December 31, 2017. The caps were designated as cash flow hedges of the variability in expected future cash flows on the Term Loan based on fluctuations in 3‑month LIBOR above 1.50%. The caps were considered to be perfectly effective as all critical terms of the interest rate caps completely match the hedged forecasted interest on the Term Loan. For the year end December 31, 2017, $0.8 million of interest expense was recognized in the consolidated statements of operations. The impact on other comprehensive income (loss) and earnings for 2016 was immaterial. |
Equity Method Investment
Equity Method Investment | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investment | |
Equity Method Investment | 12. Equity Method Investment In December 2016, the Company acquired a 7.6% ownership interest in Cerebellum. Cerebellum is an investment management firm that develops machine learning‑focused technology to invent and manage investment strategies. The Company’s ownership interest in Cerebellum was 19.6% and 11.9% as of December 31, 2018 and 2017, respectively. As the Company does not have the ability to direct significant activities of Cerebellum and does not have the right to receive benefits nor the obligation to absorb losses that could potentially be significant to Cerebellum, the Company does not consolidate Cerebellum. Given the level of ownership interest in Cerebellum, the fact that Cerebellum maintains specific ownership accounts for the investors, which makes Cerebellum more like a limited partnership, and the Company's influence through assignment of one of eight board positions, the Company accounts for its investment in Cerebellum using the equity method of accounting. As of December 31, 2018, the Company's equity investment in Cerebellum totaled $7.9 million, which is net of $0.7 million and $0.4 million of losses recorded in 2018 and 2017, respectively, under the equity method of accounting. Losses from equity method investments are recorded in interest income and other income/(expense) in the consolidated statements of operations. Equity method investments are recorded in other assets in the consolidated balance sheets. The Company's equity investment in Cerebellum was $4.6 million as of December 31, 2017, which was net of losses of $0.4 million, and was $3.0 million as of December 31, 2016. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity | |
Equity | 13. Equity Equity Structure Until the closing of the Company’s IPO on February 12, 2018, the Company had one class of common stock with a par value of $0.01 per share. Holders of this common stock were entitled to one vote per share. With the closing of the Company’s IPO, the Company’s authorized capital stock consists of 400,000,000 shares of Class A common stock, $0.01 par value per share, 200,000,000 shares of Class B common stock, $0.01 par value per share, and 10,000,000 shares of “blank check” preferred stock, $0.01 par value per share. The Company incurred offering costs of $4.6 million related to the IPO and underwriter option exercise, of which $2.9 million of legal, accounting and other costs were included in prepaid expenses in the consolidated balance sheets at December 31, 2017 and were subsequently reclassified to equity issuance costs upon closing of the IPO. The Company paid $0.3 million and $4.3 million of these offering costs in 2017 and 2018, respectively. All shares of common stock outstanding, all shares of common stock held as treasury stock and all unvested restricted shares of common stock outstanding prior to the IPO were redesignated as shares of Class B common stock with a par value of $0.01 per share upon completion of the IPO. The first shares of Class A common stock were issued in the IPO; no shares of preferred stock were issued as of December 31, 2018. The rights of the holders of Class A common stock and Class B common stock are identical, except voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes. Holders of the Company’s Class A common stock and Class B common stock will generally vote together as a single class, unless otherwise required by law or the Company’s amended and restated certificate of incorporation. Each share of our Class B common stock is convertible into one share of the Company’s Class A common stock at any time, at the option of the holder, and will convert automatically upon termination of employment by an employee shareholder and upon transfers (subject to certain exceptions). Shares of our Class B common stock will convert automatically into shares of our Class A common stock at a one to one ratio upon the date the number of shares of Class B common stock then outstanding (including unvested restricted shares) is less than 10% of the aggregate number of shares of Class A common stock and Class B common stock outstanding (including unvested restricted shares). Share Repurchase Program On May 22, 2018, the Company’s board of directors authorized the Company to repurchase up to an aggregate of $15.0 million of the Company’s Class A common stock. These repurchases may be made in privately negotiated transactions, through block trades, pursuant to open market purchases, or pursuant to any trading plan adopted in compliance with Rule 10b5-1. The manner, timing, share number and price of the repurchases will be determined by the Company, subject to market conditions, applicable securities laws, alternative investment opportunities and other factors. The Company is not required to acquire any particular amount of Class A common stock, and the share repurchase program may be modified, suspended or terminated at any time. As of December 31, 2018, a total of 856,275 shares of Class A common stock had been repurchased under the share repurchase program at a total cost of $8.0 million and an average cost of $9.40 per share, and $7.0 million was available for future repurchases. The repurchase program expires on December 31, 2019. |
Share Based Compensation
Share Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Share Based Compensation | |
Share Based Compensation | 14. Share‑Based Compensation Equity Incentive Plans Until the IPO was completed, equity-based awards were issued to executives, directors and key employees of the Company under the Victory Capital Holdings, Inc. Equity Incentive Plan (the “2013 Plan”) and the Outside Director Equity Incentive Plan (the “Director Plan”). In connection with the IPO, the Company’s board of directors adopted, and the Company’s stockholders approved, the Victory Capital Holdings, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), and the Victory Capital Holdings, Inc. 2018 Employee Stock Purchase Plan (the “2018 ESPP”), each of which became effective upon the completion of the IPO. The 2018 Plan authorizes the grant of non-qualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other awards that may be settled in or based upon shares of the Company’s Class A common stock or Class B common stock, collectively, the Shares, though the Company currently intends to grant these awards based upon shares of Class B common stock. As the 2018 Plan took effect upon completion of the IPO, no further grants will be made under the 2013 Plan. A total of 3,372,484 shares of either Class A or Class B common stock, or any combination thereof, as determined by the Compensation Committee are reserved for and available for issuance under the 2018 Plan. Shares underlying awards that are settled in cash, expire or are canceled, forfeited or otherwise terminated without delivery to a participant will again be available for issuance under the 2018 Plan. Shares withheld or surrendered in connection with the payment of an exercise price of an award or to satisfy tax withholding will again become available for issuance under the 2018 Plan. In June 2018, the Compensation Committee of the Company’s board of directors approved the terms and conditions for the 2018 ESPP offering. A total of 350,388 shares of Class A common stock is available to issue under the 2018 ESPP. The offering runs for eighteen months, from July 1, 2018 to December 31, 2019, and includes three six month offering periods. Shares of Class A common stock will be purchased at three month calendar intervals at a 5 percent discount from the market price on the purchase date, which is the last day of each calendar quarter during the offering. Amounts purchased by an individual may not exceed $25,000 worth of stock in any given calendar year. The 2018 ESPP is a non-compensatory plan and includes no option features other than employees may change their contributions or withdraw from the plan once during each six month offering period during a specified time approved by the Company. All U.S.-based employees may participate in the 2018 ESPP. As of December 31, 2018, 245,948 restricted share grants and 2,362 stock option awards had been issued under the 2018 Plan, and 2,781 shares of Class A common stock had been issued under the 2018 ESPP Plan. All stock option awards are considered non‑qualified. For certain stock option awards granted on July 29, 2016, fifty percent of the shares of common stock subject to each option vest based on service and the remaining fifty percent of the shares of common stock subject to each option vest upon satisfaction of various performance conditions. For all other stock option awards granted prior to 2018, sixty percent of the shares of common stock subject to each option vest based on service; the remaining forty percent of the shares of common stock subject to each option vest upon satisfaction of various performance conditions. As of December 31, 2018, stock option awards to purchase an aggregate of 9,070,052 shares of common stock had been granted and were outstanding, and restricted share awards for 2,997,856 shares of common stock had been granted and were unvested. As of December 31, 2017, stock option awards to purchase an aggregate of 9,078,728 shares of common stock and restricted share awards for 1,293,107 shares of common stock had been granted and were outstanding. As of December 31, 2016, stock option awards to purchase an aggregate of 8,669,475 shares of common stock and restricted share awards for 1,536,977 shares of common stock had been granted and were outstanding. Current Year Grants and Activity On January 1, 2018, the Company issued grants for 1,678,743 restricted shares of common stock and stock option awards for 357,256 shares of common stock under the 2013 Plan. Grants for 1,609,857 restricted shares of common stock consisted of time-vested restricted shares (50%) and restricted shares that vest in three equal installments based on market conditions (achievement of certain share price targets) (50%). The time-vested portion of the restricted share awards vest over a three to five year period. For the remaining grants of 68,886 restricted shares of common stock, the shares vest based on service over a four year period. For the grants of restricted shares with market conditions, the shares vest over the derived service period of three to five years. For the stock option awards granted on January 1, 2018, sixty percent of the shares of common stock subject to each option vest based on service over a four year period; the remaining forty percent of the shares of common stock subject to each option vest upon satisfaction of various performance conditions. In the period following the IPO through December 31, 2018, the Company issued grants for 30,834 restricted shares of common stock that were fully vested on the grant date, grants for 202,883 restricted shares of common stock that vest over three years and 12,231 restricted shares of common stock that vest over four years. In addition, the Company issued stock option awards for 2,362 shares of common stock. Fifty percent of the shares of common stock subject to this option award vest based on service over a three year period; the remaining fifty percent of the shares of common stock subject to this option award vest upon achievement of certain performance and market conditions. Activity during the years ended December 31, 2018, 2017 and 2016 related to stock option awards and restricted stock awards is shown in the tables below. Shares Subject to Stock Option Awards Year to Date Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd Avg wtd Avg wtd Avg wtd grant-date exercise grant-date exercise grant-date exercise fair value price Units fair value price Units fair value price Units Outstanding at beginning of period $ 3.66 $ 5.71 9,078,728 $ 3.40 $ 4.90 8,669,475 $ 2.93 $ 3.30 6,530,181 Granted 6.51 14.25 359,618 6.14 13.52 774,357 4.27 7.91 2,961,655 Forfeited 6.39 14.00 (16,791) 3.02 3.81 (132,972) 3.09 3.70 (286,793) Exercised 3.01 3.56 (351,503) 2.54 2.45 (73,406) — — — Modified to liability to be cash settled — — — 2.61 2.62 (158,726) 2.67 2.74 (535,568) Outstanding at end of the period $ 3.79 $ 6.12 9,070,052 $ 3.66 $ 5.71 9,078,728 $ 3.40 $ 4.90 8,669,475 Vested $ 3.35 $ 4.76 6,653,228 $ 3.17 $ 4.19 5,731,647 $ 2.93 $ 3.43 3,493,018 Unvested 5.00 9.88 2,416,824 4.49 8.31 3,347,081 3.71 5.89 5,176,457 Total intrinsic value of options exercised in 2018 and 2017 was $2.3 million and $0.8 million, respectively Restricted Stock Awards For Year Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd fair value Units fair value Units fair value Units Unvested at beginning of period $ 11.82 1,293,107 $ 9.48 1,018,228 $ 5.84 378,769 Granted 13.77 1,924,691 13.52 623,165 10.27 833,574 Vested 10.42 (217,630) 7.99 (339,701) 5.79 (194,115) Forfeited 14.27 (2,312) 8.81 (8,585) — — Unvested at end of period $ 13.17 2,997,856 $ 11.82 1,293,107 $ 9.48 1,018,228 Director Plan Restricted Stock Awards For Year Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd fair value Units fair value Units fair value Units Unvested at beginning of period $ — — $ 5.71 49,230 $ 5.71 114,927 Granted — — — — — — Vested — — 5.71 (49,230) 5.71 (65,697) Forfeited — — — — — — Unvested at end of period $ — — $ 5.71 — $ 5.71 49,230 Share‑based compensation expense for equity awards is measured at the grant date, based on the estimated fair value of the award, and recognized over the requisite employee service period. Stock option awards have a ten year contractual life. For awards granted after the IPO, the Company used the Class A common stock closing price on the grant date as the grant date fair value of the stock. The fair value of stock option awards was determined using a number of inputs including expected volatility, which was based on a consideration of the average volatility of companies in the same or similar lines of business adjusted for differing levels of leverage and the Company’s volatility for the post-IPO period. For restricted share awards granted on March 31, 2017 and July 1, 2017, fifty percent of the shares vest on the third anniversary of the grant date and the remaining fifty percent vest upon achievement of certain share prices for the Company's stock. For restricted share awards granted on July 29, 2016 and certain stock option awards granted on July 31, 2017 and July 29, 2016, the restricted shares and the service portion of the stock option awards vest ratably at 20% per year over a five‑year period. The remaining restricted stock awards issued prior to 2018, including restricted stock awards granted on March 10, 2017, and service portion of all other stock option awards vest ratably at 25% over a four‑year period from date of grant. The performance portion of certain stock option awards granted on July 31, 2017 and July 29, 2016 vest based on achievement of revenue and AUM levels related to specific investment franchises. For all other stock option awards awarded prior to 2018, the performance portion of the awards vests upon the Company's achievement of certain revenue, assets under management, and earnings before interest, taxes, depreciation and amortization levels. The grant date fair value of stock option awards with service and performance conditions is computed using Black‑Scholes option pricing framework. The grant date fair value of stock option awards granted during 2018, 2017 and upon the Company's RS Acquisition in 2016 was computed using the following assumptions as of the date of the grant: January 1, 2018 2017 July 29, 2016 Stock price at time of grant $ 14.27 $ 13.51 $ 10.27 Exercise price $ 14.27 $ 13.51 $ 10.27 Expected volatility 50% Risk free rate 2.27% Expected average years to exit 5 5 5 The Company used both a market approach and income approach to estimate the current stock price used in the valuation of restricted share and stock option awards in 2017. The market approach considered the then current EBITDA multiples and price/earnings multiples of comparable public companies. The income approach considered management's forecast of operating results, a long-term growth rate and a discount rate. The results of the market and income approach were weighted in developing the estimate of fair value. The current stock price used in the valuation of equity awards granted on July 29, 2016 with the RS Acquisition was the price per share used for all equity issued on that date. The expected life of the options granted in 2017 and 2016 was based on the average holding period for a private equity investment. The risk free interest rate was based on the yield for the U.S. Treasury coupon strip with a maturity date equal to the expected life of the award. As the Company's common shares were not publicly traded in 2017 and 2016, the Company calculated expected volatility based on an average volatility of companies in the same or similar lines of business adjusted for differing levels of leverage. Award Modifications 2018 and 2017 Modifications In the third and fourth quarter of 2018 and fourth quarter of 2017, the Company's board of directors approved modifications to a limited number of stock option awards to revise performance conditions to be achieved for vesting. These modifications resulted in an adjustment to share-based compensation expense of an immaterial amount. In the first quarter of 2018, the Company revised the estimate of time it expected to take to achieve the performance conditions on certain performance-vested restricted share awards. In the fourth quarter of 2018 and 2017, the Company revised the estimate of the time it was expected to take to achieve performance conditions on certain stock option awards. Cumulative catch up adjustments were recorded in each case so that the cumulative recognized share-based compensation cost on the performance options was equal to what would have been recognized had the new estimate been used since the grant date. 2016 Modifications On July 29, 2016, the Company's board of directors approved a modification to outstanding options issued on or after October 31, 2014 and prior to the RSIM acquisition providing that 50% of the performance options were deemed to be vested. As a result of accelerated vesting on these awards, the Company recognized an additional $0.5 million in expense related to options that vested on July 29, 2016 that the Company had previously not expected to vest. The incremental expense was calculated using the fair value per unit on the vesting date. The Company also established a new vesting schedule for all remaining unvested performance options issued prior to July 29, 2016 to align with the combined company's financial projections. No other terms and conditions for stock option awards issued prior to July 29, 2016 were modified (i.e. the exercise price per option or term of the option). The Company considered it probable that both the original and modified performance options would vest and calculated that the per share option fair value immediately prior to the modification based on current circumstances was approximately the same as the per share option fair value of the award immediately following the modification. Share-based compensation expense not yet recognized at July 31, 2016 related to the remaining 50% of the performance options under awards granted between October 31, 2014 and July 29, 2016 is being recognized over the period of time it is expected to take to achieve the performance conditions. No cumulative catch up adjustment was recorded as the period of time expected to take to achieve the performance conditions did not change. For options granted prior to October 31, 2014, the Company revised the estimate of time it expected to take to achieve the performance conditions as modified on July 29, 2016 on the remaining unvested options. A cumulative catch up adjustment was recorded so that the cumulative recognized compensation costs on these performance options was equal to what would have been recognized had the new estimate been used since the grant date. Dividend Payments In February 2017, the Company declared and paid a special dividend (2017 Special Dividend) of $2.19 per share. Holders of restricted shares that were unvested at the time the 2017 Special Dividend was declared are paid the 2017 Special Dividend when the restricted shares vest. The strike price per share for all stock option awards granted prior to February 2017 was reduced by $2.19 under the anti-dilution provisions of the stock option grant agreements. In December 2017, the Company declared a dividend of $0.23 per share (December 2017 Dividend). Holders of restricted stock awards that were unvested at the time the December 2017 Dividend was declared are paid the December 2017 Dividend when the restricted stock vests. Holders of stock options that were unvested at the time the December 2017 Dividend was declared receive a cash bonus equivalent of $0.23 per share when the stock options vest. As of December 31, 2018, 2017 and 2016, the amount of cash bonuses and distributions related to all dividends previously declared on restricted shares and options expected to vest in the future totaled $1.8 million, $2.0 million and $0.8 million, respectively, which is not recorded as a liability as of the balance sheet date. A liability will be recorded for these cash bonuses and dividends when the restricted shares and options vest. Share-based Compensation Expense The Company recorded $15.2 million of share-based compensation expense related to the 2013 Plan and 2018 Plan in 2018 and $11.8 million and $8.8 million of share-based compensation expense related to the 2013 Plan in 2017 and 2016, respectively, in personnel compensation and benefits expense in the consolidated statements of operations. The related tax benefits were $3.8 million, $4.6 million and $3.2 million for fiscal years 2018, 2017, and 2016, respectively. In 2018, the Company did not recognize any share-based compensation expense related to the Director Plan. In 2017 and 2016, the Company recognized Director Plan share-based compensation expense of $0.2 million and $0.4 million, respectively, which is recorded in general and administrative expense. As of December 31, 2018, the Company expects to recognize total share-based compensation expense of $35.8 million over a weighted average period of 2.0 years. The total fair value of restricted share awards vested during the years ended December 31, 2018, 2017 and 2016 was $2.0 million, $4.6 million and $2.0 million respectively; the fair value of restricted share awards vested under the Director Plan was $0.7 million in 2017 and 2016. The aggregate intrinsic value of stock options currently exercisable at December 31, 2018, 2017 and 2016 was $36.3 million, $57.8 million and $35.2 million respectively. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Commitments | 15. Commitments The Company leases office space and equipment under operating leases expiring at various dates. The Company has the right to renew or extend the leases under the agreements for certain non‑headquarter office spaces. Future calendar year minimum lease payments under the leases are as follows, all dollars are in thousands: 2019 $ 4,404 2020 4,128 2021 3,386 2022 2,442 2023 1,396 Thereafter 1,314 $ 17,070 Rent expense for the years ended December 31, 2018, 2017 and 2016 was $4.6 million, $ 7.3 million, and $ 5.9 million, respectively, and is included in general and administrative expense in the consolidated statements of operations. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans | |
Employee Benefit Plans | 16. Employee Benefit Plans The Company maintains a defined contribution 401(k) Plan (the 401(k) Plan), covering substantially all employees who have met the eligibility requirements. The 401(k) Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 and the Economic Growth and Tax Relief Reconciliation Act of 2001. In 2018, 2017 and 2016 the Company recognized expense of $2.5 million, $2.4 million and $1.9 million in employer matched contributions, respectively. The Company sponsors a deferred compensation plan for key investment professionals and executives as a means to reward and motivate them. The Company purchases mutual funds as directed by the plan participants to fund its related obligations. Such securities are held in a rabbi trust for the participants, and under the terms of the trust agreement, the assets of the trust are available to satisfy the claims of the Company's general creditors in the event of bankruptcy. Gains and losses from fluctuations in value of deferred compensation plan investments are included in interest income and other income (expense) in the consolidated statements of operations and are offset entirely by the corresponding changes in value of the deferred compensation liability, which are included in personnel compensation and benefits in the consolidated statements of operations. Investments held under the deferred compensation plan are recorded as trading securities in the consolidated balance sheets. Components of deferred compensation plan-related expense appear below. (in millions) 2018 2017 2016 Employee compensation $ 3.0 $ 3.1 $ 1.5 Employer contributions 0.7 0.8 0.7 Change in value of deferred compensation plan liability (1.6) 1.3 0.6 Total $ 2.1 $ 5.2 $ 2.8 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per Share | |
Earnings Per Share | 17. Earnings Per Share The computation of basic and diluted earnings per share is as follows: Year Ended December 31, (in thousands except per share amounts) 2018 2017 2016 Net income/(loss) $ 63,704 $ 25,826 $ (6,071) Shares: Basic: Weighted average number of shares outstanding 66,295,240 54,930,852 50,017,712 Plus: Incremental shares from assumed conversion of dilutive instruments 4,215,296 4,646,496 — Diluted: Weighted average number of shares outstanding 70,510,536 59,577,348 50,017,712 Earnings per share: Basic $ 0.96 $ 0.47 $ (0.12) Diluted $ 0.90 $ 0.43 $ (0.12) For the years ended December 31, 2018, 2017 and 2016, there were 1,738,813, 434,656 and 6,614,274 outstanding instruments, respectively, excluded from the above computations of weighted average shares for diluted EPS because the effects would be anti‑dilutive. Holders of non‑vested share‑based compensation awards do not have rights to receive nonforfeitable dividends on the shares covered by the awards. |
Net Capital Requirements
Net Capital Requirements | 12 Months Ended |
Dec. 31, 2018 | |
Net Capital Requirements | |
Net Capital Requirements | 18. Net Capital Requirements VCA is subject to the SEC Uniform Net Capital Rule (Rule 15c3‑1 under the Exchange Act) administered by the SEC and FINRA, which requires the maintenance of minimum net capital, as defined, and requires that the ratio of aggregate indebtedness to net capital, cannot exceed 15 to 1. Net capital and the related net capital requirement may fluctuate on a daily basis. At December 31, 2018, VCA had net capital under the Rule 15c3‑1 of $2.3 million which was $2.1 million in excess of its minimum required net capital of $0.2 million. At December 31, 2017, VCA had net capital under Rule 15c3‑1 of $2.3 million, which was $2.1 million in excess of its minimum required net capital of $0.2 million. The Company's ratio of aggregate indebtedness to net capital at December 31, 2018 and 2017 was 1.14 to 1 and 1.55 to 1 respectively. Capital requirements may limit the amount of cash available for dividend from VCA to the parent company. VCA's cash and cash equivalents is generally not available for corporate purposes. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | 19. Accumulated Other Comprehensive Loss The following table presents changes in accumulated other comprehensive income/(loss) by component for the years ending December 31, 2018, 2017, and 2016, all dollars are in thousands. Cumulative Available-for-sale Cash Flow Translation Securities (a) Hedges (b) Adjustment Total Balance, December 31, 2015 $ (31) $ (511) $ — $ (542) Other comprehensive income/(loss) before reclassification and tax 28 (254) (100) (326) Tax impact (9) 98 38 127 Reclassification adjustments, before tax (2) 327 — 325 Tax impact 1 (122) — (121) Net current period other comprehensive income/(loss) 18 49 (62) 5 Balance, December 31, 2016 $ (13) $ (462) $ (62) $ (537) Other comprehensive income/(loss) before reclassification and tax 121 (20) 122 223 Tax impact (48) 7 (47) (88) Reclassification adjustments, before tax (15) 767 — 752 Tax impact 6 (292) — (286) Net current period other comprehensive income 64 462 75 601 Balance, December 31, 2017 $ 51 $ — $ 13 $ 64 Other comprehensive loss before reclassification and tax (147) — (53) (200) Tax impact 37 — 13 50 Reclassification adjustments, before tax — — — — Tax impact — — — — Net current period other comprehensive loss (110) — (40) (150) Balance, December 31, 2018 $ (59) $ — $ (27) $ (86) (a) Reclassifications out of AOCL related to available-for-sale securities are recorded in interest income and other income/(expense) (b) Reclassifications out of AOCL related to cash flow hedges are recorded in interest expense and other financing costs |
Selected Quarterly Information
Selected Quarterly Information | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Information (Unaudited) | |
Selected Quarterly Information (Unaudited) | 20. Selected Quarterly Information (Unaudited) The following table presents unaudited quarterly financial results for 2018 and 2017, all dollars are in thousands except per share data as noted. These quarterly results reflect all normal recurring adjustments that management considers necessary for a fair statement of the results. Revenues and net income can vary significantly from quarter to quarter due to our business activities and acquisitive nature. For the Quarters Ended March 31, 2018 June 30, 2018 Sep 30, 2018 Dec 31, 2018 Total revenue $ 104,964 $ 104,399 $ 108,082 $ 95,967 Operating expenses 77,696 74,715 76,272 70,210 Income from operations 27,268 29,684 31,810 25,757 Net income 10,524 18,675 20,590 13,915 Basic earnings per share $ 0.17 $ 0.27 $ 0.30 $ 0.21 Diluted earnings per share $ 0.16 $ 0.26 $ 0.29 $ 0.19 For the Quarters Ended March 31, 2017 June 30, 2017 Sep 30, 2017 Dec 31, 2017 Total revenue $ 100,661 $ 100,934 $ 102,388 $ 105,646 Operating expenses 81,099 81,495 78,147 78,720 Income from operations 19,562 19,439 24,241 26,926 Net income 4,413 2,354 7,850 11,209 Basic earnings per share $ $ 0.04 $ 0.14 $ 0.20 Diluted earnings per share $ $ 0.04 $ 0.13 $ 0.19 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company prepares its consolidated financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). All dollar amounts, except per share data in the text and tables herein, are stated in thousands unless otherwise indicated. |
Retroactive Adjustments for Common Stock Split | Retroactive Adjustments for Common Stock Split The Company's Board of Directors and stockholders approved a 175.194 for 1 stock split of the Company's common stock on February 1, 2018. All common share and common per share amounts in the consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this stock split (see Notes 13, 14 and 17). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. The Company evaluates entities in which it invests and investment funds that it sponsors to determine whether the Company has a controlling financial interest in these entities and is required to consolidate them. A controlling financial interest generally exists if 1) the Company holds greater than 50% voting interest in entities controlled through voting interests or if 2) the Company has the ability to direct significant activities of a fund not controlled through voting interests (a variable interest entity or VIE) and the obligation to absorb losses of and/or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company's involvement with non‑consolidated sponsored investment funds that are considered VIEs include providing investment advisory services, fund administration and distribution services and/or holding a minority interest. At December 31, 2018, 2017 and 2016, the Company's investments in and maximum risk of loss related to unconsolidated sponsored VIE investment funds totaled $ 12.9 million, $ 10.9 million and $ 5.6 million respectively which are included in available‑for‑sale securities and trading securities in the consolidated balance sheets. The Company has not provided financial support to these entities outside the ordinary course of business, which includes assuming operating expenses of funds for competitive or contractual reasons through fee waivers and fund expense reimbursements. The Company does not consolidate the sponsored investment funds in which it had an equity investment as it holds a minority interest, does not direct significant activities of these funds and does not have the right to receive benefits nor the obligation to absorb losses that could potentially be significant to these funds. During 2018, the Company’s involvement with other non‑consolidated VIEs included an equity method investment and put and call option arrangements with Cerebellum. The put and call option arrangements ended in the first quarter of 2018. The Company’s maximum risk of loss associated with Cerebellum totaled $9.0 million and $6.0 million at December 31, 2018 and December 31, 2017, respectively, which includes the $9.0 million investment at December 31, 2018 and as of December 31, 2017, $5.0 million investment and $1.0 million exposure under the put option for the purchase of additional equity. See Note 12. The Company applies the equity method of accounting to investments where it does not hold a controlling equity interest but has the ability to exercise significant influence over operating and financial matters. In the event that management identifies an other than temporary decline in the estimated fair value of an equity method investment to an amount below its carrying value, the investment is written down to its estimated fair value. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may ultimately differ from those estimates and the differences may be material. |
Revenue Recognition | Revenue Recognition Investment Management Fees Investment management fees are accrued as earned and are calculated as a contractual percentage of assets under management and advisement (AUM) and vary as levels of AUM change from inflows, outflows and market movement and with number of days in a reporting period. Any investment management fees collected in advance are deferred and recognized as income over the period earned. Waivers of investment management fees from affiliated funds are included in investment management fees in the consolidated statements of operations. In 2018, 2017 and 2016, the amount of waivers of investment management fees from affiliated funds was immaterial. Performance‑based investment management fees, which includes fees payable under fulcrum fee arrangements, are accrued only when the performance period is complete, the amount of revenue is no longer subject to adjustment and collectability is reasonably assured. Performance-based investment management fees are recorded in investment management fees in the consolidated statements of operations. In 2018 and 2017, the Company recognized $1.9 million and $1.2 million of performance-based investment management fees, respectively. In 2016 the Company recognized an immaterial amount of performance‑based investment management fees. Fund Administration Fees Fund administration fees are accrued on a monthly basis and are determined based on the contractual rate applied to average daily net assets of the Victory Funds for which administration services are provided. The Company is the primary obligor and has the ability to select the service provider and establish pricing and therefore, records fund administration fees and expenses on a gross basis. The fair value of AUM of the Victory Funds is primarily determined using quoted market prices or independent third‑party pricing services or broker price quotes. In limited circumstances, a quotation or price evaluation is not readily available from a pricing service. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. The same prescribed valuation process is used to price securities in separate accounts and other vehicles for which a quotation or price evaluation is not readily available from a pricing service. For the periods presented, a de minimis amount of the AUM was priced in this manner. Fund Distribution Fees The Company’s introducing broker-dealer VCA adopted ASU 2014-09 on January 1, 2018 and updated the following policies. (a) Revenue Recognition VCA receives compensation for sales and sales-related services promised under distribution contracts with the Victory Funds. There are no direct costs incurred to obtain these contracts. Direct costs incurred to fulfill services under the distribution contracts include sales commissions paid to third party dealers for the sale of Class C Shares. Revenue is measured in an amount that reflects the consideration to which VCA expects to be entitled in exchange for providing distribution services. Distribution fees are generally calculated as a percentage of average net assets in the Victory Funds. VCA’s performance obligation is satisfied when control of the services is transferred to customers, which is upon investor subscription or redemption. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of VCA’s control including investor behavior and activity and market volatility and is recognized as these uncertainties are resolved. VCA may recognize distribution fee revenue in the current period that pertains to performance obligations satisfied in prior periods, as it represents variable consideration and is recognized as uncertainties are resolved. VCA has contractual arrangements with third parties to provide certain distribution services. Management considers whether VCA is acting as the principal service provider or as an agent to determine whether its revenue should be recorded based on the gross amount payable by the Victory Funds or net of payments to third-party service providers, respectively. VCA is considered a principal service provider if it controls the service that is transferred to the customer. VCA is considered an agent when it arranges for the service to be provided by another party and does not control the service. Substantially all of VCA’s revenue is recorded gross of payments made to third parties. VCA’s distribution fee revenue totaled $37.3 million, $43.5 million and $32.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is recorded in fund administration and distribution fees on the consolidated statements of operations. (b) Prepaid C Share Commissions VCA may pay upfront sales commissions to dealers and institutions that sell Class C shares of the participating Victory Funds at the time of such sale. Upfront sales commission payments with respect to Class C shares equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution. When VCA makes an upfront payment to a dealer or institution for the sale of Class C shares, VCA capitalizes the cost of such payment, which is recorded in prepaid expenses on the consolidated balance sheets, and amortizes the cost over a 12 month period, the estimated period of benefit. |
Distribution and Other Asset Based Expenses | Distribution and Other Asset‑Based Expenses Distribution and other asset‑based expenses include broker dealer distribution, platform distribution, sub‑administration, and sub‑advisory expenses. These expenses are accrued on a monthly basis and are generally calculated as a percentage of AUM and vary as levels of AUM change from inflows, outflows and market movement and with the number of days in the month. Also included in distribution and other asset‑based expenses are middle office expenses. Middle office expenses are accrued on a monthly basis and vary with changes in mutual fund, institutional and wrap separate account AUM levels, the number of accounts and volume of account transaction activity. |
Restructuring and Integration Costs | Restructuring and Integration Costs In connection with business combinations, asset purchases and changes in business strategy, the Company incurs costs integrating investment platforms, products and personnel into existing systems, processes and service provider arrangements and restructuring the business to capture operating expense synergies. In the case of business combinations, these costs are incurred after the closing date. These costs include severance‑related expenses related to one‑time benefit arrangements and contract termination costs. A liability for restructuring costs is recognized only after management has developed a formal plan to which it has committed. The costs included in the restructuring liability are those costs that are either incremental or incurred as a direct result of the plan, or are the result of a continuing contractual obligation with no continuing economic benefit to the Company, or a penalty incurred to cancel the contractual obligation. Severance expense is recorded when management has committed to a plan for a reduction in workforce, the plan has been communicated to employees and it is unlikely that there will be significant changes to the plan. Contract termination liabilities are recorded for contract termination costs when the Company terminates a contract or stops using the product or service covered by the contract. Contract termination liabilities are recognized and measured at fair value. Contract termination costs are recorded in restructuring and integration costs in the consolidated statements of operations. A rollforward of restructuring and integration liabilities for 2018, 2017 and 2016 appears below. (in millions) 2018 2017 2016 Liability balance, beginning of period $ 0.1 $ 7.4 $ 5.0 Severance expense RS Investments — 0.5 7.4 Other 0.7 0.3 — Contract termination expense RS Investments — 5.0 2.4 Integration costs — 0.4 0.2 Restructuring and integration costs 0.7 6.2 10.0 Settlement of liabilities (0.7) (13.5) (7.6) Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 Accrued expenses $ 0.1 $ 0.1 $ 6.9 Other liabilities — — 0.5 Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash at banks, money market accounts and funds and short‑term liquid investments with original maturities of three months or less at the time of purchase. For the Company and certain subsidiaries, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. |
Investments | Investments Available‑For‑Sale Securities Available‑for‑sale securities include investments in affiliated mutual funds and are recorded in available‑for‑sale securities in the consolidated balance sheets. Investments in available‑for‑sale securities are carried at fair value. Changes in fair value are recognized as a component of other comprehensive income/(loss) until the securities are sold. Unrealized holdings gains or losses (to the extent such losses are considered temporary) are reported net of deferred tax as a separate component of accumulated other comprehensive income/(loss) until realized. Upon disposition, the gain or loss on the security is reclassified from other comprehensive income/(loss) to other income/(expense) in the consolidated statements of operations. The cost of securities sold is determined using the specific identification method. Dividend income is accrued on the declaration date and is included in other income in the consolidated statements of operations. Transactions are recorded on a trade‑date basis. The Company periodically reviews each individual security that is in an unrealized loss position to determine if the impairment is other‑than‑temporary. Factors that are considered in determining whether other‑than‑temporary declines in value have occurred include the severity and duration of the unrealized loss and the Company's ability and intent to hold the security for a length of time sufficient to allow for recovery of such unrealized losses. Impairment charges are recorded in other income (expense) in the consolidated statements of operations. No impairments were recognized as a result of such review in the years ended December 31, 2018, 2017 and 2016. Trading Securities Trading securities include investments in affiliated and third party mutual funds held in a rabbi trust under a deferred compensation plan. Trading securities are recorded at fair value in the consolidated balance sheets. Changes in value in trading securities are recognized by the Company in other income/(expense) in the consolidated statements of operations. The Company's available‑for‑sale and trading securities are valued through the use of quoted market prices available in an active market, which is the net asset value of the funds. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates financial instruments and other contracts to determine if the arrangement meets the characteristics of a derivative under ASC 815 and the criteria to use hedge accounting. Hedging instruments Derivatives are recorded as other assets and other liabilities on the balance sheet and are measured at fair value. To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the hedged item. If the Company's derivatives qualify as cash flow hedges, the effective portion of fluctuations in the fair value of the derivatives are recorded in accumulated other comprehensive income/(loss) and reclassified, as adjustments to interest expense, as the underlying hedged item impacts the consolidated statements of operations. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in the consolidated statements of operations. If a cash flow hedge is terminated or is no longer considered to be effective, hedge accounting is discontinued prospectively. If the derivative continues to exist, future changes in fair value are accounted for in the consolidated statements of operations unless the derivative is re‑designated in a new qualifying hedge relationship. For the period from December 2014 to December 2017, the Company used interest rate cap derivatives to manage interest rate risk related to a portion of its long-term debt. The Company assessed ongoing effectiveness for these interest rate cap derivatives, which were designated as cash flow hedges, based on total changes in the cap's cash flows and by reviewing whether there had been any changes in the critical terms of the cap or transaction being hedged or any adverse changes in the counterparty's credit. No hedge ineffectiveness was recorded in the years ended December 31, 2017 and 2016. The Company’s interest rate cap derivatives expired on December 31, 2017. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Depreciation and amortization is computed using the straight‑line method over the estimated useful lives of the related assets, generally three to ten years. Improvements to leased property are amortized on a straight‑line basis over the lesser of the useful life of the improvements or the term of the applicable lease. When assets are sold or retired, the related cost and accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in other income (expense) in the consolidated statements of operations. Gains and losses resulting from the sale or disposal of assets as part of a restructuring plan are included in restructuring and integration costs in the consolidated statements of operations. The cost of repairs and maintenance are expensed as incurred. Equipment and leasehold improvements are tested for impairment whenever changes in facts or circumstances indicate that the carrying amount of an asset may not be recoverable. |
Segment Reporting | Segment Reporting The Company operates in one business segment that provides investment management services and products to institutional and intermediary clients. The Company's determination that it has one operating segment is based on the fact that the Chief Operating Decision Maker reviews the Company's financial performance on an aggregate level. |
Goodwill | Goodwill Goodwill represents the excess cost of the acquisition over the fair value of net assets acquired in a business combination. For goodwill impairment testing purposes, the Company has determined that there is only one reporting unit. The Company tests goodwill for impairment on an annual basis, or more frequently if facts and circumstances indicate that goodwill may be impaired. Factors that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the Company's use of the acquired assets in a business combination or strategy for the Company's overall business, and significant negative industry or economic trends. The Company conducts the annual impairment assessment as of October 1st. The Company uses a qualitative approach to test for potential impairment of goodwill. If, after considering various factors, management determines that it is more likely than not that goodwill is impaired, a two‑step process to test for and measure impairment is performed which begins with an estimation of the fair value of the Company by considering discounted cash flows. The assumptions used to estimate fair value include management's estimates of future growth rates, operating cash flows, discount rates and terminal value. These assumptions and estimates can change in future periods based on market movement and factors impacting the expected business performance. Changes in assumptions or estimates could materially affect the determination of the fair value of the Company. If the present value of future expected cash flows falls below the recorded book value of equity, the Company's goodwill would be considered impaired. |
Intangible Assets | Intangible Assets Intangible assets acquired by the Company outside of a business combination are initially recognized and measured based on the Company's cost to acquire the intangible assets. If a group of assets is acquired, the cost is allocated to individual assets based on their relative fair value. Intangible assets acquired in a business combination are initially recognized and measured at fair value. In valuing these assets, the Company makes assumptions regarding useful lives and projected growth rates, and significant judgment is required. Definite‑lived intangible assets represent the value of acquired customer relationships in institutional separate accounts, collective funds, intermediary wrap separate account (wrap SMA) and unified managed account/model (UMA) programs. Definite‑lived intangible assets also include intellectual property, advisory contracts that do not have a sufficient history of annual renewal, definite-lived trade name assets and non‑competition agreements. The Company amortizes definite‑lived identifiable intangible assets on a straight‑line basis over a period that is shorter than the asset's economic life as the pattern of economic benefit cannot be reliably determined. Management periodically evaluates the remaining useful lives and carrying values of the intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the definite‑lived intangible assets, the Company compares the carrying value of the asset to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. The Company writes off the cost and accumulated amortization balances for all fully amortized intangible assets. Indefinite‑lived intangible assets include trade names and contracts for advisory and distribution services where the Company expects to, and has the ability to continue to manage these funds indefinitely, the contracts have annual renewal provisions, and there is a high likelihood of continued renewal based on historical experience. Trade names are considered indefinite‑lived intangible assets when they are expected to generate cash flows indefinitely. Indefinite‑lived intangible assets are reviewed for impairment annually as of October 1st using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an indefinite‑lived intangible asset is impaired. In addition, periodically management reconsiders whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows. The Company estimates the fair value of the indefinite‑lived intangible asset and compares it to the book value of the asset to determine whether an impairment charge is necessary. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value. |
Investment Management Fees Receivable and Fund Administration and Distribution Fees Receivable | Investment Management Fees Receivable and Fund Administration and Distribution Fees Receivable Investment management fees receivable include investment management fees due from the Victory Funds and VictoryShares and investment management fees due from non-affiliated parties. Fund administration and distribution fees receivable include fund administration and fund distribution fees due from the Victory Funds and VictoryShares. Provision for credit losses on these receivables is made in amounts required to maintain an adequate allowance to cover anticipated losses. All investment management fees receivable and fund administration and distribution fees receivable were determined to be collectible as of December 31, 2018, 2017 and 2016, and accordingly, no reserve for credit losses and no provision for credit losses were recognized as of and for the years ended December 31, 2018, 2017 and 2016. |
Other Receivables | Other Receivables Other receivables primarily include income and other taxes receivable and amounts due to the Company under a contract with a third party acquired in the RS Acquisition. All amounts included in other receivables were determined to be collectible as of December 31, 2018, 2017 and 2016. |
Share Based Compensation | Share‑Based Compensation Compensation expense related to share‑based payments is measured at the grant date based on the fair value of the award. The fair value of each option granted is estimated using the Black‑Scholes option valuation model. The Black‑Scholes option valuation model incorporates assumptions as to dividend yield, expected volatility, an appropriate risk‑free interest rate and the expected life of the option. The fair value of restricted share awards with service based vesting conditions and performance based vesting conditions is based on the market price of our stock on the date of grant. The fair value of restricted share awards subject to market conditions is estimated based on a probability-weighted expected value analysis. Compensation expense is recognized on a straight‑line basis over the total vesting period of the award for the service portion of restricted share awards and stock option awards. Compensation expense is recognized on an accelerated basis over the derived service period for awards that vest based on market conditions and on an accelerated basis over the requisite service period for awards with performance conditions if it is probable that the performance conditions will be satisfied. Compensation expense is adjusted for actual forfeitures in the period the forfeiture occurs. The corresponding credit for restricted share and stock option compensation expense is recorded to additional paid in capital. |
Earnings per share | Earnings Per Share The calculation of basic earnings per share is based on the weighted average number of shares of the Company’s common stock, Class A common stock and Class B common stock outstanding during the period. Diluted earnings per share is similar to basic earnings per share, but adjusts for the dilutive effect of the potential issuance of incremental shares of all classes of the Company’s common stock. The Company had vested and unvested stock options and unvested restricted stock grants outstanding during the periods presented and applies the treasury stock method to these securities in its calculation of diluted earnings per share. The treasury stock method assumes that the proceeds of exercise are used to purchase common stock at the average market price for the period. The Company does not have any participating securities that would require the use of the two‑class method of computing earnings per share. |
Deferred Financing Fees | Deferred Financing Fees The costs of obtaining term loan financing are capitalized in long‑term debt in the consolidated balance sheets and amortized to interest expense and other financing costs in the consolidated statements of operations over the term of the respective financing using the effective interest method. The costs of obtaining revolving line of credit financing are capitalized in other assets in the consolidated balance sheets and amortized to interest expense and other financing costs in the consolidated statements of operations on a straight‑line basis over the term of the facility. |
Debt Modification | Debt Modification Gains and losses on debt modifications that are considered extinguishments are recognized in current earnings. Debt modifications that are not considered extinguishments are accounted for prospectively through yield adjustments, based on the revised terms. Legal fees and other costs incurred with third parties that are directly related to debt modifications are expensed as incurred and generally are included in general and administrative expense in the consolidated statements of operations. In 2018, the Company expensed $1.9 million in costs related to debt modifications upon entering into the Existing Credit Agreement. In 2017, the Company expensed $1.2 million in costs related to debt modifications upon the issuance of Incremental Term Loan 3 to fund the 2017 Special Dividend and an additional $1.0 million in costs related to debt modifications upon the 2017 Debt Refinancing. During 2016, the Company expensed $0.8 million in costs related to debt modifications upon the issuance of Incremental Term Loan 2 to finance the RSIM acquisition, which were included in acquisition-related costs in the consolidated statements of operations. The analysis as to whether a modification of debt is an extinguishment or modification is performed on a creditor‑by‑creditor basis. See Note 10 for information on debt refinancings and modifications. |
Leases | Leases The Company currently leases office space and equipment under various leasing arrangements. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Leases are classified as either capital leases or operating leases, as appropriate. Lease agreements that are classified as operating leases may contain renewal options, rent escalation clauses or other inducements provided by the landlord. Rent expense is accrued to recognize lease escalation provisions and inducements provided by the landlord, if any, on a straight‑line basis over the lease term commencing when the Company obtains the right to control the use of the leased property. Rent expense is included in general and administrative expense in the consolidated statements of operations. |
Treasury Stock | Treasury Stock Acquisitions of treasury stock are recorded at cost. Treasury stock held is reported as a deduction from stockholders' equity in the consolidated balance sheets. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a specific‑identification basis. Additional paid‑in capital from treasury stock transactions is increased as the Company reissues treasury stock for more than the cost of the shares. If the Company issues treasury stock for less than its cost, additional paid‑in capital from treasury stock transactions is reduced to no less than zero. Once this account is at zero, any further required reductions are recorded to retained deficit in the consolidated balance sheets. |
Foreign Currency Transactions | Foreign Currency Transactions The financial statements of RSSI, RSHK and RSUK, which operate outside of the United States (U.S.), are measured using the local currency as the functional currency. Adjustments to translate those statements into U.S. dollars are recorded in other comprehensive income/(loss) (OCI), which were immaterial in amount at December 31, 2018, 2017 and 2016. Transactions denominated in currencies other than the functional currency are recorded using the exchange rate on the date of the transaction. Exchange differences arising on the settlement of financial assets and liabilities are recorded in other income/(expense) in the consolidated statements of operations. Foreign exchange gains and losses for the years ended December 31, 2018, 2017 and 2016 were immaterial. |
Income Taxes | Income Taxes Income taxes are accounted for using the assets and liability method as required by ASC 740, Income Taxes (ASC 740). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax liabilities are generally attributable to indefinite‑lived intangible assets and depreciation. Deferred tax assets are generally attributable to definite‑lived intangible assets, stock compensation, deferred compensation and federal, state and foreign loss carryforwards and the benefit of uncertain tax positions. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company assesses whether a valuation allowance should be established against its deferred income tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. The assessment considers, among other matters, the nature, frequency and severity of recent operating results, forecasts of future profitability, the duration of statutory carry back and carry forward periods and the Company's experience with tax attributes expiring unused. Changes in circumstance could cause the Company to revalue its deferred tax balances with the resulting change impacting the consolidated statements of operations in the period of the change. The Company records income tax liabilities pursuant to ASC 740, which prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de‑recognition, classification of interest and penalties, accounting in interim periods, disclosure and transition. For tax positions meeting a "more‑likely‑than‑not" threshold, the amount recognized in the financial statements is the largest amount of benefit greater than 50% likely of being sustained. The more‑likely‑than‑not threshold must continue to be met in each reporting period to support continued recognition of the benefit. The Company's accounting policy with respect to interest and penalties related to tax uncertainties is to classify these amounts as income taxes. Certain income tax effects of the Tax Cuts and Jobs Act enacted in December 2017 ("Tax Act") were reflected in the Company’s financial results in accordance with Staff Accounting Bulletin No. 118 (SAB 118), which provides SEC staff guidance regarding the application of ASC Topic 740 in the reporting period in which the Tax Act became law. See also Note 9 for further detail. |
Loss Contingencies | Loss Contingencies The Company continuously reviews any investor, client, employee or vendor complaints and pending or threatened litigation. The Company evaluates the likelihood that a loss contingency exists under the criteria of applicable accounting standards through consultation with legal counsel and records a loss contingency, inclusive of legal costs, if the contingency is probable and reasonably estimable at the date of the financial statements. |
Business Combinations | Business Combinations The Company accounts for business combinations under the acquisition method of accounting and allocates the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values are determined in accordance with the guidance in ASC 820 based on valuations performed by the Company and independent valuation specialists. |
Contingent and Deferred Payment Arrangements | Contingent and Deferred Payment Arrangements The Company periodically enters into contingent and/or deferred payment arrangements in connection with its business combinations. Liabilities under contingent and deferred payment arrangements are recorded in consideration payable for acquisition of business in the consolidated balance sheets. In contingent payment arrangements, the Company agrees to pay additional consideration to the sellers based on future performance, such as future net revenue levels. The Company estimates the fair value of these potential future obligations at the time a business combination is consummated and records a liability in the consolidated balance sheet at estimated fair value. In deferred payment arrangements, the Company records a liability in the consolidated balance sheet for the estimated fair value, which is the present value, of the future payments as of the acquisition date. If the Company's expected payments under contingent payment obligations subsequently change, the obligation is reduced or increased in the current period resulting in a gain or loss, respectively. Gains and losses resulting from changes to expected payments under contingent payment obligations are reflected in change in value of consideration payable for acquisition of business in the consolidated statements of operations. The Company accretes deferred payment obligations to their expected payment amounts over the period covered by the arrangement. Accretion expense related to deferred payment obligations is reflected in interest expense and other financing costs in the consolidated statements of operations and totaled $0.5 million, $0. 6 million and $0.7 million in 2018, 2017 and 2016, respectively. |
Equity Award Modifications | Equity Award Modifications When changes are made to the terms of an equity award that result in a change in the fair value of the equity award immediately before and after the change, the Company applies modification accounting, treating the change as an exchange of the original award for a new award. The calculation of the incremental value associated with the modified award is based on the excess of the fair value of the modified award over the fair value of the original award measured immediately before its terms are modified. |
Reclassifications | Reclassifications Certain reclassification adjustments have been made to conform prior periods’ consolidated financial statements and notes to the consolidated financial statements to the current year presentation for comparative purposes. This includes the presentation of treasury stock as Class B treasury stock at December 31, 2017 on the consolidated balance sheets. |
Adoption of New Accounting Standards and Recent Accounting Pronouncements | Adoption of New Accounting Standards ASU 2016-09 Compensation – Stock Compensation (Topic 718) was issued by the FASB in March 2016 to reduce the cost and complexity of reporting on employee share-based payments and to address the tax reporting, forfeitures, and expected term related to equity awards. ASU 2016-09 eliminates the requirement that excess tax benefits be realized through a reduction in income taxes payable before the benefits can be recognized. The Company adopted ASU 2016-09 on January 1, 2018 using a modified retrospective transition method. A one-time credit to retained earnings of $1.3 million was recorded as the cumulative-effect adjustment for excess tax benefits not previously recognized and to adjust compensation cost on equity awards outstanding at January 1, 2018 as if the Company had previously accounted for forfeitures as they occurred. With the adoption of ASU 2016-09, the Company now recognizes the income tax effects of share-based compensation in income tax expense, which may cause significant fluctuations in the reported amount of income tax expense in the consolidated statements of operations and the effective tax rate as restricted shares vest and stock options are exercised. In addition, upon adoption of ASU 2016-09, the Company made the election to account for forfeitures of equity awards as they occur. The Company elected to adopt the amendment related to the cash flow presentation of excess tax benefits prospectively and prior periods have not been adjusted. ASU 2017-09 was issued by the FASB in May 2017 to clarify when changes in the terms or conditions of a share-based payment award qualify for accounting treatment as a modification. The Company adopted ASU 2017-09 on January 1, 2018 and will apply the new guidance prospectively to awards modified after January 1, 2018. The adoption had no significant impact on the Company’s consolidated financial statements for the year ended December 31, 2018. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606, as amended), which supersedes existing revenue recognition guidance. ASU 2014-09 and all subsequent amendments related to ASU 2014-09 (the “new revenue guidance") requires the following steps when recognizing revenue: 1) identify the contract with the customer 2) identify performance obligations in the contract 3) determine the transaction price 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when or as performance obligations are satisfied. The new revenue guidance requires additional disclosures related to the nature, amount, timing and uncertainty of revenue from customer contracts. ASU 2014-09 may be adopted by using one of two methods 1) retrospective application to each prior reporting period presented or 2) a modified retrospective approach, requiring the standard be applied only to the most current period presented, with the cumulative effect of initially applying the standard recognized at the date of initial application. The new revenue guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, for non-emerging growth companies, and for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, for the Company. The Company's implementation assessment included the identification of revenue within the scope of the guidance, as well as the review of terms and conditions of a sample of revenue contracts covering a broad range of vehicles and products. The Company adopted ASU 2014-09 effective January 1, 2019, using the modified retrospective approach, and no cumulative effect adjustment was required to be recorded. The Company determined that the new guidance did not have a material impact on the timing of recognition of the Company’s revenue. The most significant impact from adopting the new guidance was a change to a net presentation of certain fund expense reimbursements which were previously presented on a gross basis. These fund expense reimbursements totaled $12.9 million in 2018 and were recorded in distribution and other asset-based expenses in the consolidated statements of operations. Effective January 1, 2019, fund expense reimbursements are recorded in investment management fees on the consolidated statements of operations. The Company’s introducing broker-dealer VCA adopted the new revenue guidance effective January 1, 2018. VCA receives compensation for sales and sales-related services promised under distribution contracts with the Victory Funds. There are no direct costs incurred to obtain these contracts. Direct costs incurred to fulfill services under the distribution contracts include sales commissions paid to third party dealers for the sale of Class C Shares. There was no change to how VCA records revenue from contracts with customers and accounts for costs incurred to fulfill services under distribution contracts from adoption of the new revenue guidance. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities". This update requires equity securities to be measured at fair value and changes in the fair value of equity securities to be recognized in net income. The update is effective for fiscal years beginning after December 15, 2017 for non-emerging growth companies and for fiscal years beginning after December 31, 2018 for the Company. The Company adopted ASU 2016-01 on January 1, 2019, and the adoption had an immaterial impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 is amended by ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20, which FASB issued in January 2018, July 2018, July 2018 and December 2018, respectively (collectively, the amended ASU 2016-02). The amended ASU 2016-02 requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. The amended ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amended ASU 2016-02 also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. A modified retrospective transition approach is used when adopting the amended ASU 2016-02, which includes a number of optional practical expedients that entities may elect to apply. The amended ASU will be effective for fiscal years beginning after December 15, 2018 for non-emerging growth companies and for fiscal years beginning after December 15, 2019 for the Company. The Company is currently evaluating the impact on its financial statements of adopting this standard. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments". The update provides guidance on certain cash flow statement classifications that were previously unclear or lacked specific guidance. The classifications addressed in the update include debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investees. The update is effective for fiscal years beginning after December 15, 2017 for non-emerging growth companies and for fiscal years beginning after December 15, 2018 for the Company. The Company is in the process of analyzing how the new rules will impact financial reporting. In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and other (Topic 350), Simplifying the Test for Goodwill Impairment”. The standard eliminates Step 2 from the goodwill impairment test. Under the amended guidance, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss cannot exceed the total amount of goodwill allocated to the reporting unit. The new guidance is effective for the Company’s fiscal year that begins after December 15, 2020 and requires a prospective approach to adoption. Early adoption is permitted for interim or annual goodwill impairment tests. Upon adoption, the new guidance will impact the Company’s consolidated financial statements and related disclosures only in the event there is goodwill impairment. In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". ASU 2018-02 allows companies to reclassify tax effects stranded in accumulated other comprehensive income/(loss) as a result of tax reform to retained earnings/(deficit). The guidance is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. The Company adopted ASU 2018-02 on January 1, 2019, and the adoption had an immaterial impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05 incorporating guidance from SEC Staff Accounting Bulletin (SAB) 118 into Accounting Standards Codification 740 on income taxes. SAB 118 addresses situations where companies are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (the “Tax Act”) in the period of enactment. See Note 9 for more information on the Company’s accounting for the income tax effects of the Tax Act. On October 4, 2018, as part of Rule 3-04 of Regulation S-X, the SEC published amended rules requiring an analysis of changes in stockholders’ equity for the current and comparative quarter and year to date periods in financial statements included in quarterly reports on Form 10-Q. The new rule took effect on November 5, 2018. To provide transition relief, the SEC’s Division of Corporation Finance issued a Compliance and Disclosure Interpretation stating that the SEC staff will not object if a filer’s first presentation of the changes in stockholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments. The Company will begin including an analysis of changes in stockholders’ equity for the current and comparative quarter in its financial statements included on Form 10-Q for the quarter ending March 31, 2019. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies | |
Summary of rollforward of restructuring and integration liabilities | (in millions) 2018 2017 2016 Liability balance, beginning of period $ 0.1 $ 7.4 $ 5.0 Severance expense RS Investments — 0.5 7.4 Other 0.7 0.3 — Contract termination expense RS Investments — 5.0 2.4 Integration costs — 0.4 0.2 Restructuring and integration costs 0.7 6.2 10.0 Settlement of liabilities (0.7) (13.5) (7.6) Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 Accrued expenses $ 0.1 $ 0.1 $ 6.9 Other liabilities — — 0.5 Liability balance, end of period $ 0.1 $ 0.1 $ 7.4 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions | |
Summary of acquisition related cost | Acquisition-related costs (in millions) 2018 2017 2016 RS Acquisition $ — $ 0.4 $ 6.4 USAA AMCO Acquisition 3.1 — — Harvest Acquisition 1.1 — — Other 0.1 1.7 0.2 $ 4.3 $ 2.1 $ 6.6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Summary of fair value measured at fair value on a recurring basis | As of December 31, 2018 (in thousands) Total Level 1 Level 2 Level 3 Financial Liabilities Contingent Consideration Arrangements $ (716) $ — $ — $ (716) Total Financial Liabilities $ (716) $ — $ — $ (716) As of December 31, 2017 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Contingent Consideration Arrangements $ (1,195) $ — $ — $ (1,195) Total Financial Liabilities $ (1,195) $ — $ — $ (1,195) |
Summary of contingent consideration | Contingent Consideration (in thousands) Arrangements Balance, December 31, 2016 $ (1,523) CEMP change in fair value measurement 294 CEMP year 2 earn-out payment 34 Balance, December 31, 2017 $ (1,195) CEMP change in fair value measurement 37 CEMP year 3 earn-out payment 442 Balance, December 31, 2018 $ (716) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Summary of related party transactions | As of December 31, (in thousands) 2018 2017 Related party assets Receivables (investment management fees) $ 19,612 $ 23,027 Receivables (fund administration and distribution fees) 3,153 3,925 Investments (Available-for-sale securities, fair value) 601 677 Investments (Trading securities, at fair value) 12,343 10,248 Total $ 35,709 $ 37,877 Related party liabilities Accounts payable and accrued expenses (fund reimbursements) $ 2,300 $ 1,155 Other liabilities (promissory note) 96 671 Total $ 2,396 $ 1,826 Year ended December 31, (in thousands) 2018 2017 2016 Related party revenue Investment management fees $ 261,538 $ 254,318 $ 171,112 Fund administration and distribution fees 60,729 65,818 49,401 Total $ 322,267 $ 320,136 $ 220,513 Related party expense Distribution and other asset-based expenses (fund reimbursements) $ 12,902 $ 11,896 $ 10,342 General and administrative 135 1,203 1,150 Total $ 13,037 $ 13,099 $ 11,492 Related party other income (expense) Interest expense and other income/(expense) $ (2,834) $ 589 $ 224 Interest expense and other financing costs (promissory note) (18) (39) (42) Total $ (2,852) $ 550 $ 182 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Available For Sale Securities | |
Gain (Loss) on Investments [Line Items] | |
Summary of the cost and fair value of investments | Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of December 31, 2018 $ 666 $ 6 $ (71) $ 601 As of December 31, 2017 595 82 — 677 |
Summary of proceeds and realized gains and losses | Sale Realized (in thousands) Proceeds Gains (Losses) For the year ending December 31, 2018 $ — $ — $ — For the year ending December 31, 2017 79 15 — For the year ending December 31, 2016 1,290 78 (27) |
Trading Securities. | |
Gain (Loss) on Investments [Line Items] | |
Cost and fair value of investments | Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of December 31, 2018 $ 14,874 $ 5 $ (2,160) $ 12,719 As of December 31, 2017 9,978 950 (269) 10,659 |
Summary of proceeds and realized gains and losses | Sale Realized (in thousands) Proceeds Gains (Losses) For the Year Ended December 31, 2018 $ 2,772 $ 37 $ (73) For the Year Ended December 31, 2017 5,166 159 (34) For the Year Ended December 31, 2016 2,585 64 (72) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Summary of property and equipment | Property and equipment consisted of the following as of December 31, 2018 and 2017: As of December 31, (in thousands) 2018 2017 Equipment, Purchased Software and Implementation Costs $ 17,071 $ 14,685 Leasehold Improvements 3,209 2,720 Furniture and Fixtures 1,541 1,501 Total 21,821 18,906 Accumulated Depreciation and Amortization (13,041) (10,062) Total Property and Equipment, Net $ 8,780 $ 8,844 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | |
Summary of changes in goodwill | The table below shows changes in the goodwill balance from December 31, 2017 to December 31, 2018: As of December 31, (in thousands) 2018 2017 Balance, beginning of period $ 284,108 $ 284,108 Goodwill recorded in acquisition — — Balance, end of period $ 284,108 $ 284,108 |
Summary of definite lived intangible assets | Fund Intellectual Customer Advisory Trade Property/ (in thousands) Relationships Contracts Names Other Totals Gross Book Value — 12/31/17 $ 123,200 $ 2,368 $ — $ 7,177 $ 132,745 2017 Accumulated Amortization (84,309) (2,105) — (6,062) (92,476) 2017 Net Book Value—12/31/17 $ 38,891 $ 263 $ — $ 1,115 $ 40,269 Weighted Average Useful Life (years) 1.6 0.3 — 0.6 1.5 Gross Book Value—12/31/18 $ 123,200 $ 2,368 $ 1,132 $ 7,177 $ 133,877 2018 Accumulated Amortization (103,207) (2,368) (283) (6,940) (112,798) 2018 Net Book Value—12/31/18 $ 19,993 $ — $ 849 $ 237 $ 21,079 Weighted Average Useful Life (years) 0.8 — 1.5 0.2 0.8 |
Summary of estimated amortization expense for definite lived intangible assets | Estimated amortization expense for definite‑lived intangible assets for each of the five succeeding years is as follows: (in thousands) Totals 2019 $ 16,114 2020 3,262 2021 1,703 2022 — 2023 — $ 21,079 |
Schedule of indefinite-lived intangible assets by type | Fund Advisory and Distribution Trade (in thousands) Contracts Names Totals Balance—12/31/16 $ 342,900 $ 24,832 $ 367,732 Additions or Transfers — — — Balance—12/31/17 $ 342,900 $ 24,832 $ 367,732 Additions or Transfers — (1,132) (1,132) Balance—12/31/18 $ 342,900 $ 23,700 $ 366,600 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Summary of provision for income taxes | (in thousands) 2018 2017 2016 Current tax expense (benefit): Federal $ 13,130 $ 640 $ (3) State 3,944 779 93 Foreign 17 22 (10) Total current tax expense 17,091 1,441 80 Deferred tax expense (benefit): Federal 3,577 9,162 (2,728) State 549 2,010 (388) Foreign (10) 19 36 Total deferred tax expense (benefit) 4,116 11,191 (3,080) Income tax expense (benefit) $ 21,207 $ 12,632 $ (3,000) |
Summary of effective tax rate | 2018 2017 2016 Federal income tax at U.S. statutory rate 21.0 % 35.0 % 35.0 % State income tax rate, net of federal tax benefit 4.1 % 4.0 % 1.2 % Change of state income tax rate, net of federal tax benefit 0.1 % (0.2) % 0.5 % Excess tax benefits on share-based compensation (0.5) % — % — % Remeasurement of deferred taxes due to Tax Act — % (6.3) % — % Non-deductible expenses 0.2 % 0.8 % (3.1) % Foreign taxes and other 0.1 % (0.4) % (0.6) % Income tax expense 25.0 % 32.9 % 33.0 % |
Summary of components of deferred income tax assets and liabilities | (in thousands) 2018 2017 Deferred tax assets Definite-lived intangibles $ 18,725 $ 16,078 Share-based compensation expense 9,041 5,271 Acquisition-related costs 4,483 4,118 Deferred compensation 3,185 2,738 Loss on other receivable — 1,119 Restructuring expenses 962 1,033 Contingent consideration arrangements 248 273 CEMP goodwill 574 468 AMT credit carryforward — 492 Unrealized loss on deferred compensation investments 536 — Loss on equity method investment 283 — Other 92 — Total deferred tax assets $ 38,129 $ 31,590 Deferred tax liabilities Indefinite-lived intangibles $ 41,302 $ 30,939 Debt issuance costs 1,101 2,573 Depreciation 1,282 1,239 Prepaid expenses 161 139 CEMP base payments interest expense 36 125 Change in value of consideration payable for acquisition of business 459 454 Unrealized gain on deferred compensation investments — 175 Other — 14 Total deferred tax liabilities 44,341 35,658 Net deferred tax liability $ (6,212) $ (4,068) |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Schedule of components of long-term debt | Effective (in thousands) 2018 2017 Interest Rate Due October 2021, 6.82% interest rate $ — $ 499,750 7.73% Due February 2025, 5.55% interest rate 280,000 — 6.22% Term loan principal outstanding 280,000 499,750 Unamortized debt issuance costs (7,629) (11,442) Unamortized debt discount (3,514) (5,083) Long-term debt $ 268,857 $ 483,225 |
Schedule of components of interest expense and other financing costs | (in thousands) 2018 2017 2016 Interest expense $ 17,289 $ 41,569 $ 29,544 Amortization of debt issuance costs 1,708 3,657 2,749 Amortization of debt discount 700 1,544 999 Interest rate cap expense — 767 327 CEMP base payment accretion expense 467 638 718 Other 530 292 305 Total $ 20,694 $ 48,467 $ 34,642 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share Based Compensation | |
Summary of activity related to stock option awards and restricted stock awards | Shares Subject to Stock Option Awards Year to Date Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd Avg wtd Avg wtd Avg wtd grant-date exercise grant-date exercise grant-date exercise fair value price Units fair value price Units fair value price Units Outstanding at beginning of period $ 3.66 $ 5.71 9,078,728 $ 3.40 $ 4.90 8,669,475 $ 2.93 $ 3.30 6,530,181 Granted 6.51 14.25 359,618 6.14 13.52 774,357 4.27 7.91 2,961,655 Forfeited 6.39 14.00 (16,791) 3.02 3.81 (132,972) 3.09 3.70 (286,793) Exercised 3.01 3.56 (351,503) 2.54 2.45 (73,406) — — — Modified to liability to be cash settled — — — 2.61 2.62 (158,726) 2.67 2.74 (535,568) Outstanding at end of the period $ 3.79 $ 6.12 9,070,052 $ 3.66 $ 5.71 9,078,728 $ 3.40 $ 4.90 8,669,475 Vested $ 3.35 $ 4.76 6,653,228 $ 3.17 $ 4.19 5,731,647 $ 2.93 $ 3.43 3,493,018 Unvested 5.00 9.88 2,416,824 4.49 8.31 3,347,081 3.71 5.89 5,176,457 Total intrinsic value of options exercised in 2018 and 2017 was $2.3 million and $0.8 million, respectively Restricted Stock Awards For Year Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd fair value Units fair value Units fair value Units Unvested at beginning of period $ 11.82 1,293,107 $ 9.48 1,018,228 $ 5.84 378,769 Granted 13.77 1,924,691 13.52 623,165 10.27 833,574 Vested 10.42 (217,630) 7.99 (339,701) 5.79 (194,115) Forfeited 14.27 (2,312) 8.81 (8,585) — — Unvested at end of period $ 13.17 2,997,856 $ 11.82 1,293,107 $ 9.48 1,018,228 Director Plan Restricted Stock Awards For Year Ended December 31, 2018 2017 2016 Avg wtd Avg wtd Avg wtd fair value Units fair value Units fair value Units Unvested at beginning of period $ — — $ 5.71 49,230 $ 5.71 114,927 Granted — — — — — — Vested — — 5.71 (49,230) 5.71 (65,697) Forfeited — — — — — — Unvested at end of period $ — — $ 5.71 — $ 5.71 49,230 |
Summary of grant date fair value of stock option awards is computed using Black Scholes option pricing framework | January 1, 2018 2017 July 29, 2016 Stock price at time of grant $ 14.27 $ 13.51 $ 10.27 Exercise price $ 14.27 $ 13.51 $ 10.27 Expected volatility 50% Risk free rate 2.27% Expected average years to exit 5 5 5 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Summary of future calendar year minimum lease payments | Future calendar year minimum lease payments under the leases are as follows, all dollars are in thousands: 2019 $ 4,404 2020 4,128 2021 3,386 2022 2,442 2023 1,396 Thereafter 1,314 $ 17,070 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans | |
Summary of components of deferred compensation plan-related expense | (in millions) 2018 2017 2016 Employee compensation $ 3.0 $ 3.1 $ 1.5 Employer contributions 0.7 0.8 0.7 Change in value of deferred compensation plan liability (1.6) 1.3 0.6 Total $ 2.1 $ 5.2 $ 2.8 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings per Share | |
Summary of computation of basic and diluted earnings per share | Year Ended December 31, (in thousands except per share amounts) 2018 2017 2016 Net income/(loss) $ 63,704 $ 25,826 $ (6,071) Shares: Basic: Weighted average number of shares outstanding 66,295,240 54,930,852 50,017,712 Plus: Incremental shares from assumed conversion of dilutive instruments 4,215,296 4,646,496 — Diluted: Weighted average number of shares outstanding 70,510,536 59,577,348 50,017,712 Earnings per share: Basic $ 0.96 $ 0.47 $ (0.12) Diluted $ 0.90 $ 0.43 $ (0.12) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss | |
Summary of changes in accumulated other comprehensive income/(loss) by component | Cumulative Available-for-sale Cash Flow Translation Securities (a) Hedges (b) Adjustment Total Balance, December 31, 2015 $ (31) $ (511) $ — $ (542) Other comprehensive income/(loss) before reclassification and tax 28 (254) (100) (326) Tax impact (9) 98 38 127 Reclassification adjustments, before tax (2) 327 — 325 Tax impact 1 (122) — (121) Net current period other comprehensive income/(loss) 18 49 (62) 5 Balance, December 31, 2016 $ (13) $ (462) $ (62) $ (537) Other comprehensive income/(loss) before reclassification and tax 121 (20) 122 223 Tax impact (48) 7 (47) (88) Reclassification adjustments, before tax (15) 767 — 752 Tax impact 6 (292) — (286) Net current period other comprehensive income 64 462 75 601 Balance, December 31, 2017 $ 51 $ — $ 13 $ 64 Other comprehensive loss before reclassification and tax (147) — (53) (200) Tax impact 37 — 13 50 Reclassification adjustments, before tax — — — — Tax impact — — — — Net current period other comprehensive loss (110) — (40) (150) Balance, December 31, 2018 $ (59) $ — $ (27) $ (86) (a) Reclassifications out of AOCL related to available-for-sale securities are recorded in interest income and other income/(expense) (b) Reclassifications out of AOCL related to cash flow hedges are recorded in interest expense and other financing costs |
Selected Quarterly Information
Selected Quarterly Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Information (Unaudited) | |
Summary of unaudited quarterly financial results | For the Quarters Ended March 31, 2018 June 30, 2018 Sep 30, 2018 Dec 31, 2018 Total revenue $ 104,964 $ 104,399 $ 108,082 $ 95,967 Operating expenses 77,696 74,715 76,272 70,210 Income from operations 27,268 29,684 31,810 25,757 Net income 10,524 18,675 20,590 13,915 Basic earnings per share $ 0.17 $ 0.27 $ 0.30 $ 0.21 Diluted earnings per share $ 0.16 $ 0.26 $ 0.29 $ 0.19 For the Quarters Ended March 31, 2017 June 30, 2017 Sep 30, 2017 Dec 31, 2017 Total revenue $ 100,661 $ 100,934 $ 102,388 $ 105,646 Operating expenses 81,099 81,495 78,147 78,720 Income from operations 19,562 19,439 24,241 26,926 Net income 4,413 2,354 7,850 11,209 Basic earnings per share $ $ 0.04 $ 0.14 $ 0.20 Diluted earnings per share $ $ 0.04 $ 0.13 $ 0.19 |
Organization and Nature of Bu_2
Organization and Nature of Business (Details) | Nov. 06, 2018 | Sep. 21, 2018 |
Harvest | ||
Acquisitions | ||
Equity interest to be acquired (as a percent) | 100.00% | |
USAA AMCO | ||
Acquisitions | ||
Equity interest to be acquired (as a percent) | 100.00% |
Organization and Nature of Bu_3
Organization and Nature of Business - Initial Public Offering (Details) $ / shares in Units, $ in Millions | Mar. 13, 2018USD ($)shares | Feb. 12, 2018USD ($)$ / sharesshares | May 03, 2018USD ($) |
Term Loans | |||
Sale of Stock | |||
Debt Term | 7 years | ||
Debt Instrument, Face Amount | $ 360 | ||
Credit Agreement | |||
Sale of Stock | |||
Anticipated write-off of unamortized debt discount and debt issuance costs | $ 4.2 | ||
Revolving Credit Facility | |||
Sale of Stock | |||
Debt Term | 5 years | ||
Amount of revolving credit facility | $ 50 | $ 100 | |
IPO | |||
Sale of Stock | |||
Proceeds received from issuance of shares | $ 156.5 | ||
Conversion ratio of common stock to Class B common stock | 1 | ||
IPO | Class A | |||
Sale of Stock | |||
Number of shares issued | shares | 11,700,000 | ||
Share price | $ / shares | $ 13 | ||
Proceeds received from issuance of shares | $ 143 | ||
Underwriter's Option | Class A | |||
Sale of Stock | |||
Number of shares issued | shares | 1,110,860 | ||
Proceeds received from issuance of shares | $ 13.5 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) $ in Millions | Feb. 01, 2018 | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Retroactive Adjustments for Common Stock Split | ||||
Stock split | 175.194 | |||
Variable Interest Entities | ||||
Maximum risk of loss related to unconsolidated sponsored VIE investment funds | $ 12.9 | $ 10.9 | $ 5.6 | |
Revenue Recognition | ||||
Performance-based investment management fees | 1.9 | 1.2 | ||
Broker-dealer distribution fee revenue | 37.3 | 43.5 | $ 32.7 | |
Cerebellum Capital, LLC | ||||
Variable Interest Entities | ||||
Maximum risk of loss related to unconsolidated sponsored VIE investment funds | 9 | 6 | ||
Maximum exposure, put option | 1 | |||
Investment in unconsolidated VIE and maximum exposure, investment | $ 9 | $ 5 |
Significant Accounting Polici_5
Significant Accounting Policies - Additional disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring and Integration Costs | |||
Restructuring and integration costs | $ 742 | $ 6,205 | $ 10,012 |
Rollforward of restructuring and integration liabilities | |||
Liability balance, beginning of year | 100 | 7,400 | 5,000 |
Integration costs | 400 | 200 | |
Restructuring and integration costs | 742 | 6,205 | 10,012 |
Settlement of liabilities | (700) | (13,500) | (7,600) |
Liability balance, end of year | 100 | 100 | 7,400 |
Accrued expenses | |||
Rollforward of restructuring and integration liabilities | |||
Liability balance, beginning of year | 100 | 6,900 | |
Liability balance, end of year | 100 | 100 | 6,900 |
Other liabilities. | |||
Rollforward of restructuring and integration liabilities | |||
Liability balance, beginning of year | 500 | ||
Liability balance, end of year | 500 | ||
Severance expense | RSIM | |||
Rollforward of restructuring and integration liabilities | |||
Severance expense and contract termination expense | 500 | 7,400 | |
Severance expense | Other | |||
Rollforward of restructuring and integration liabilities | |||
Severance expense and contract termination expense | $ 700 | 300 | |
Contract termination expense | RSIM | |||
Rollforward of restructuring and integration liabilities | |||
Severance expense and contract termination expense | $ 5,000 | $ 2,400 |
Significant Accounting Polici_6
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Jan. 01, 2018 | |
Recent Accounting Pronouncements | ||
Cumulative effect adjustment for adoption of ASU 2016-09 | $ 1,818 | |
ASU 2016-09 | ||
Recent Accounting Pronouncements | ||
Cumulative effect adjustment for adoption of ASU 2016-09 | $ 1,300 | |
ASU 2014-09 | ||
Recent Accounting Pronouncements | ||
Upfront sales commissions that may be paid to dealers and institutions with respect to Class C shares | 1.00% | |
Amortization period for upfront sales commissions paid to dealers and institutions | 12 months | |
ASU 2014-09 | Adjustment | ||
Recent Accounting Pronouncements | ||
Fund expense reimbursemnets | $ 12,900 |
Significant Accounting Polici_7
Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($)segment | |
Investments | |||
Impairments of investments | $ 0 | $ 0 | $ 0 |
Segment Reporting | |||
Number of Operating Segments | segment | 1 | 1 | 1 |
Goodwill. | |||
Number of Reporting Units | segment | 1 | 1 | 1 |
Intangible Assets | |||
Impairments to indefinite lived intangible assets | $ 0 | $ 0 | $ 0 |
Accounts Receivable | |||
Reserve for credit losses | 0 | 0 | 0 |
Provision for credit losses | 0 | 0 | 0 |
Contingent and Deferred Payment Arrangements | |||
Accretion expense related to deferred payment obligations | $ 500,000 | $ 600,000 | $ 700,000 |
Minimum | |||
Property and Equipment | |||
Estimated useful lives | 3 years | 3 years | |
Maximum | |||
Property and Equipment | |||
Estimated useful lives | 10 years | 10 years |
Significant Accounting Polici_8
Significant Accounting Policies - Debt Modification (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Existing Credit Agreement | |||
Debt Modification | |||
Costs expensed related to debt modifications | $ 1.9 | ||
Incremental Term Loan 3 | |||
Debt Modification | |||
Costs expensed related to debt modifications | $ 1.2 | ||
2017 Debt Refinancing | |||
Debt Modification | |||
Costs expensed related to debt modifications | $ 1 | ||
Incremental Term Loan 2 | |||
Debt Modification | |||
Costs expensed related to debt modifications | $ 0.8 |
Acquisition (Details)
Acquisition (Details) - CEMP - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquisitions | ||||
Payments to acquire business | $ 10.7 | |||
Earn out liability | $ 0.7 | $ 1.2 | $ 1.5 | $ 3.1 |
Earnout period | 4 years | |||
Base and earn-out payments made | 4.4 | 2.7 | $ 1.3 | |
Future base payments | $ 5.8 | $ 9.9 |
Acquisitions - RSIM acquisition
Acquisitions - RSIM acquisition (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jul. 29, 2016 | |
Acquisitions | |||||||||||||
Loss from acquired receivable | $ 998 | $ 4,429 | |||||||||||
Allocation of the purchase price | |||||||||||||
Goodwill | $ 284,108 | $ 284,108 | $ 284,108 | 284,108 | 284,108 | $ 284,108 | |||||||
Unaudited pro forma information | |||||||||||||
Total revenue | 95,967 | $ 108,082 | $ 104,399 | $ 104,964 | 105,646 | $ 102,388 | $ 100,934 | $ 100,661 | 413,412 | 409,629 | 297,883 | ||
RSIM | |||||||||||||
Unaudited pro forma information | |||||||||||||
Revenue | 381,100 | ||||||||||||
Net loss | $ 22,100 | ||||||||||||
Total revenue | $ 53,400 | ||||||||||||
RSIM Acquired Receivable | |||||||||||||
Acquisitions | |||||||||||||
Acquired receivable outstanding | $ 900 | $ 8,400 | 900 | 8,400 | $ 25,600 | ||||||||
Loss from acquired receivable | 1,000 | 4,400 | |||||||||||
Amount collected from acquired receivable | $ 6,600 | $ 10,300 |
Acquisition - Harvest Acquisiti
Acquisition - Harvest Acquisition (Details) - Harvest $ / shares in Units, $ in Thousands | Sep. 21, 2018USD ($)item$ / sharesshares |
Acquisitions | |
Earnout period | 5 years |
Equity interest to be acquired (as a percent) | 100.00% |
Cash to be paid at closing | $ 255,000 |
The percentage of annual revenue growth assumed to calculate annual earnout targets | 30.00% |
Advisory contract revenue hurdle for no purchase price adjustment based on consents | 95.00% |
Post-closing adjustment period | 90 days |
Maximum | RBC and Barclays | |
Acquisitions | |
Principal amount | $ 265,000 |
Class B | |
Acquisitions | |
Equity consideration to be transferred at closing (in shares) | shares | 1,565,370 |
Equity consideration to be paid at closing | $ 15,000 |
Weighted average share price (in dollars per share) | $ / shares | $ 9.5824 |
Expected quarterly amount of equity interests to be paid after closing | $ 30,750 |
Number of quarterly installments | item | 4 |
2021 | |
Acquisitions | |
The maximum future annual earnout payments | $ 100,000 |
Minimum annual net revenue required to achieve an earnout | 51,000 |
The minimum annual net revenue required to achieve the maximum earnout | 112,000 |
2022 | |
Acquisitions | |
The maximum future annual earnout payments | 100,000 |
Minimum annual net revenue required to achieve an earnout | 51,000 |
The minimum annual net revenue required to achieve the maximum earnout | 145,700 |
2023 | |
Acquisitions | |
The maximum future annual earnout payments | 100,000 |
Minimum annual net revenue required to achieve an earnout | 51,000 |
The minimum annual net revenue required to achieve the maximum earnout | $ 189,400 |
Acquisition - USAA Acquisition
Acquisition - USAA Acquisition (Details) - USAA Asset Management and USAA Shareholder Account Services $ in Millions | Nov. 06, 2018USD ($)item |
Acquisitions | |
Equity interest to be acquired (as a percent) | 100.00% |
Cash to be paid at closing | $ 850 |
Number of annual contingent payments | item | 4 |
Maximum aggregate contingent payment | $ 150 |
Maximum annual contingent payment | $ 37.5 |
Period of time over which contingent payments will be made | 4 years |
Minimum revenue run rate required to earn any contingent payment (as a percent) | 80.00% |
Minimum revenue run rate required to earn maximum contingent payment (as a percent) | 100.00% |
Advisory contract revenue hurdle for no purchase price adjustment based on consents | 95.00% |
Post-closing adjustment period | 180 days |
Acquisitions - Acquisition-rela
Acquisitions - Acquisition-related costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Acquisitions | |||
Acquisition related costs | $ 4,346 | $ 2,094 | $ 6,619 |
RSIM | |||
Acquisitions | |||
Acquisition related costs | 400 | 6,400 | |
USAA Asset Management and USAA Shareholder Account Services | |||
Acquisitions | |||
Acquisition related costs | 3,100 | ||
Harvest | |||
Acquisitions | |||
Acquisition related costs | 1,100 | ||
Other | |||
Acquisitions | |||
Acquisition related costs | $ 100 | $ 1,700 | $ 200 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Financial Liabilities | |||
Balance, Contingent Consideration Arrangements | $ (716) | $ (1,195) | $ (1,523) |
Total Financial Liabilities | (716) | (1,195) | |
Level 3 | |||
Financial Liabilities | |||
Balance, Contingent Consideration Arrangements | (716) | (1,195) | |
Total Financial Liabilities | $ (716) | $ (1,195) |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial Liabilities | |||
Balance, Contingent Consideration Arrangements | $ (716) | $ (1,195) | $ (1,523) |
CEMP change in fair value measurement | 37 | 294 | $ 378 |
CEMP earn-out payment | 442 | 34 | |
Transfers between levels | 0 | 0 | |
Fair Value Measured at NAV Per Share | |||
Financial Liabilities | |||
Investments | $ 13,300 | $ 11,300 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |
Related Party Transactions | ||||||||||||
Promissory note issued to shareholder | $ 1,700 | |||||||||||
Related party assets | ||||||||||||
Receivables (Investment management fees) | $ 37,980 | $ 42,264 | $ 37,980 | $ 42,264 | ||||||||
Receivables (Fund administration and distribution fees) | 3,153 | 3,925 | 3,153 | 3,925 | ||||||||
Investments (Available-for-sale securities, fair value) | 601 | 677 | 601 | 677 | ||||||||
Investments (Trading securities, at fair value) | 12,719 | 10,659 | 12,719 | 10,659 | ||||||||
Related party liabilities | ||||||||||||
Accounts payable and accrued expenses (fund reimbursements) | 19,743 | 21,669 | 19,743 | 21,669 | ||||||||
Other liabilities (promissory note) | 1,759 | 2,330 | 1,759 | 2,330 | ||||||||
Related party revenue | ||||||||||||
Investment management fees | 352,683 | 343,811 | $ 248,482 | |||||||||
Fund administration and distribution fees | 60,729 | 65,818 | 49,401 | |||||||||
Total revenue | 95,967 | $ 108,082 | $ 104,399 | $ 104,964 | 105,646 | $ 102,388 | $ 100,934 | $ 100,661 | 413,412 | 409,629 | 297,883 | |
Related party expense | ||||||||||||
Distribution and other asset-based expenses (fund reimbursements) | 12,902 | 11,896 | 10,342 | |||||||||
General and administrative | 135 | 1,203 | 1,150 | |||||||||
Total | 13,037 | 13,099 | 11,492 | |||||||||
Related party other income (expense) | ||||||||||||
Interest expense and other income/(expense) | (2,834) | 589 | 224 | |||||||||
Interest expense and other financing costs (promissory note) | (18) | (39) | (42) | |||||||||
Total | (2,852) | 550 | 182 | |||||||||
VCH | ||||||||||||
Related party assets | ||||||||||||
Receivables (Investment management fees) | 19,612 | 23,027 | 19,612 | 23,027 | ||||||||
Receivables (Fund administration and distribution fees) | 3,153 | 3,925 | 3,153 | 3,925 | ||||||||
Investments (Available-for-sale securities, fair value) | 601 | 677 | 601 | 677 | ||||||||
Investments (Trading securities, at fair value) | 12,343 | 10,248 | 12,343 | 10,248 | ||||||||
Total | 35,709 | 37,877 | 35,709 | 37,877 | ||||||||
Related party liabilities | ||||||||||||
Accounts payable and accrued expenses (fund reimbursements) | 2,300 | 1,155 | 2,300 | 1,155 | ||||||||
Other liabilities (promissory note) | 96 | 671 | 96 | 671 | ||||||||
Total | $ 2,396 | $ 1,826 | 2,396 | 1,826 | ||||||||
Related party revenue | ||||||||||||
Investment management fees | 261,538 | 254,318 | 171,112 | |||||||||
Fund administration and distribution fees | 60,729 | 65,818 | 49,401 | |||||||||
Total revenue | $ 322,267 | $ 320,136 | $ 220,513 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments | |||
Available-for-sale securities, at fair value | $ 601 | $ 677 | |
Available For Sale Securities | |||
Investments | |||
Cost | 666 | 595 | |
Gross unrealized gains | 6 | 82 | |
Gross unrealized losses | 71 | ||
Available-for-sale securities, at fair value | $ 601 | 677 | |
Proceeds and realized gains and losses recognized | |||
Sale Proceeds | 79 | $ 1,290 | |
Realized gains | $ 15 | 78 | |
Realized losses | $ 27 |
Investments - Trading Securitie
Investments - Trading Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments | |||
Trading securities, at fair value | $ 12,719 | $ 10,659 | |
Trading Securities. | |||
Investments | |||
Cost | 14,874 | 9,978 | |
Gross unrealized gains | 5 | 950 | |
Gross unrealized losses | 2,160 | 269 | |
Trading securities, at fair value | 12,719 | 10,659 | |
Proceeds and realized gains and losses recognized | |||
Sale Proceeds | 2,772 | 5,166 | $ 2,585 |
Realized gains | 37 | 159 | 64 |
Realized losses | $ 73 | $ 34 | $ 72 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment | |||
Property and equipment, gross | $ 21,821 | $ 18,906 | |
Accumulated Depreciation and Amortization | (13,041) | (10,062) | |
Total Property and Equipment, Net | 8,780 | 8,844 | |
Depreciation | 3,000 | 3,600 | $ 3,200 |
Equipment, Purchased Software and Implementation Costs | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 17,071 | 14,685 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 3,209 | 2,720 | |
Furniture and fixtures | |||
Property, Plant and Equipment | |||
Property and equipment, gross | $ 1,541 | $ 1,501 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the goodwill balance | |||
Balance, beginning of period | $ 284,108 | $ 284,108 | |
Goodwill recorded in acquisition | 0 | 0 | |
Balance, end of period | 284,108 | 284,108 | $ 284,108 |
Impairments of goodwill | $ 0 | $ 0 | $ 0 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | |
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | $ 133,877 | $ 132,745 | ||
Accumulated Amortization | (112,798) | (92,476) | ||
Net Book Value | $ 21,079 | $ 40,269 | ||
Weighted Average Useful Life (years) | 9 months 18 days | 1 year 6 months | ||
Amortization expense for definite lived intangible assets | $ 20,300 | $ 26,300 | $ 27,200 | |
Impairments to definite lived intangible assets | 0 | 0 | $ 0 | |
Estimated amortization expense for definite lived intangible assets | ||||
2019 | 16,114 | |||
2020 | 3,262 | |||
2021 | 1,703 | |||
2022 | 0 | |||
2023 | 0 | |||
Customer Relationships | ||||
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | 123,200 | 123,200 | ||
Accumulated Amortization | (103,207) | (84,309) | ||
Net Book Value | $ 19,993 | $ 38,891 | ||
Weighted Average Useful Life (years) | 9 months 18 days | 1 year 7 months 6 days | ||
Advisory and distribution contracts with Victory Funds | ||||
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | $ 2,368 | $ 2,368 | ||
Accumulated Amortization | $ (2,368) | (2,105) | ||
Net Book Value | $ 263 | |||
Weighted Average Useful Life (years) | 0 years | 3 months 18 days | ||
Trade Name | ||||
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | $ 1,132 | |||
Accumulated Amortization | (283) | |||
Net Book Value | $ 849 | |||
Weighted Average Useful Life (years) | 1 year 6 months | 0 years | ||
Intellectual Property/Other | ||||
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | $ 7,177 | $ 7,177 | ||
Accumulated Amortization | (6,940) | (6,062) | ||
Net Book Value | $ 237 | $ 1,115 | ||
Weighted Average Useful Life (years) | 2 months 12 days | 7 months 6 days | ||
CEMP | Trade Name | ||||
Identifiable Intangible Assets | ||||
Gross Book Value - Beginning balance | $ 1,100 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Indefinite-lived Intangible Assets | |||
Indefinite-lived Intangible Assets, Beginning Balance | $ 367,732 | $ 367,732 | |
Additions or Transfers | (1,132) | ||
Indefinite-lived Intangible Assets, Ending Balance | 366,600 | 367,732 | $ 367,732 |
Impairments to indefinite lived intangible assets | 0 | 0 | 0 |
Advisory and distribution contracts with Victory Funds | |||
Indefinite-lived Intangible Assets | |||
Indefinite-lived Intangible Assets, Beginning Balance | 342,900 | 342,900 | |
Indefinite-lived Intangible Assets, Ending Balance | 342,900 | 342,900 | 342,900 |
Trade Name | |||
Indefinite-lived Intangible Assets | |||
Indefinite-lived Intangible Assets, Beginning Balance | 24,832 | 24,832 | |
Additions or Transfers | (1,132) | ||
Indefinite-lived Intangible Assets, Ending Balance | $ 23,700 | $ 24,832 | $ 24,832 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Federal income tax at U.S. statutory rate | 21.00% | 35.00% | 35.00% |
Provisional credit to federal tax expense | $ (2.4) |
Income Taxes - Components Of In
Income Taxes - Components Of IncomeTax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current tax expense (benefit): | |||
Federal | $ 13,130 | $ 640 | $ (3) |
State | 3,944 | 779 | 93 |
Foreign | 17 | 22 | (10) |
Total current tax expense (benefit) | 17,091 | 1,441 | 80 |
Deferred tax expense (benefit): | |||
Federal | 3,577 | 9,162 | (2,728) |
State | 549 | 2,010 | (388) |
Foreign | (10) | 19 | 36 |
Total deferred tax expense (benefit) | 4,116 | 11,191 | (3,080) |
Income tax benefit/(expense) | $ 21,207 | $ 12,632 | $ (3,000) |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective tax rate | |||
Federal income tax at U.S. statutory rate | 21.00% | 35.00% | 35.00% |
State income tax rate, net of federal tax benefit | 4.10% | 4.00% | 1.20% |
Change of state income tax rate, net of federal tax benefit | 0.10% | (0.20%) | 0.50% |
Excess tax benefits on share-based compensation | (0.50%) | ||
Remeasurement of deferred taxes due to Tax Act | (6.30%) | ||
Non‑deductible expenses | 0.20% | 0.80% | (3.10%) |
Foreign taxes and other | 0.10% | (0.40%) | (0.60%) |
Income tax expense (benefit) | 25.00% | 32.90% | 33.00% |
Income Taxes - Deferred income
Income Taxes - Deferred income tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Definite-lived intangible assets | $ 18,725 | $ 16,078 |
Share-based compensation expense | 9,041 | 5,271 |
Acquisition-related costs | 4,483 | 4,118 |
Deferred compensation | 3,185 | 2,738 |
Loss on other receivable | 1,119 | |
Restructuring expenses | 962 | 1,033 |
Contingent consideration arrangements | 248 | 273 |
CEMP goodwill | 574 | 468 |
AMT credit carryforward | 492 | |
Unrealized loss on deferred compensation investments | 536 | |
Loss on equity method investment | 283 | |
Other | 92 | |
Total deferred tax assets | 38,129 | 31,590 |
Deferred tax liabilities: | ||
Indefinite-lived intangible assets | 41,302 | 30,939 |
Debt issuance costs | 1,101 | 2,573 |
Depreciation | 1,282 | 1,239 |
Prepaid expenses | 161 | 139 |
CEMP base payments interest expense | 36 | 125 |
Change in value of consideration payable for acquisition of business | 459 | 454 |
Unrealized gain on deferred compensation investments | 175 | |
Other | 14 | |
Total deferred tax liabilities | 44,341 | 35,658 |
Net deferred tax liability | $ (6,212) | $ (4,068) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 36 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
Net operating loss carryforward balance | $ 0 | $ 5,500 |
Additional provision for income tax | $ 0 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | May 03, 2018 | Mar. 13, 2018 | Feb. 12, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt | |||||||||
Debt Issuance cost expensed | $ 1,708 | $ 3,657 | $ 2,749 | ||||||
Loss on debt extinguishment | 6,058 | 330 | |||||||
Dividends paid | 831 | 135,171 | $ 627 | ||||||
Revolving Credit Facility | |||||||||
Debt | |||||||||
Debt Term | 5 years | ||||||||
Amount of revolving credit facility | $ 100,000 | $ 50,000 | |||||||
Credit Agreement | |||||||||
Debt | |||||||||
Repayments of debt | 499,700 | ||||||||
Loss on debt extinguishment | 6,100 | ||||||||
Write-off of unamortized debt discount and debt issuance costs | 4,200 | ||||||||
Write-off of unamortized debt discount | $ 1,900 | ||||||||
Revolving Credit Facility | |||||||||
Debt | |||||||||
Debt Term | 5 years | ||||||||
Amount of revolving credit facility | 100,000 | $ 50,000 | |||||||
Term Loans | |||||||||
Debt | |||||||||
Debt Term | 7 years | ||||||||
Principal amount | $ 360,000 | ||||||||
Net proceeds from issuance of debt | 355,900 | ||||||||
Cash on hand for term loan repayment | 800 | ||||||||
Repayments of debt | $ 20,000 | $ 23,000 | $ 37,000 | 80,000 | |||||
Original issue discount | 900 | $ 3,514 | $ 5,083 | ||||||
Arranger and legal costs expensed | 3,700 | ||||||||
Debt Issuance cost capitalized | $ 400 | $ 1,800 | |||||||
Amortization rate (as a percent) | 1.00% | ||||||||
Term Loans | London Interbank Offered Rate (LIBOR) | |||||||||
Debt | |||||||||
Base Spread | 2.75% | ||||||||
Term Loans | Revolving Credit Facility | |||||||||
Debt | |||||||||
Original issue discount | $ 300 | ||||||||
Maximum first lien leverage ratio on last day of quarter (as a percent) | 35.00% | ||||||||
Term Loans | General and Administrative Expense. | |||||||||
Debt | |||||||||
Debt Issuance cost expensed | $ 1,900 | ||||||||
Minimum | Term Loans | |||||||||
Debt | |||||||||
Mandatory prepayments, annual excess cash flows, effective December 31, 2019 (as a percent) | 0.00% | ||||||||
Maximum | Term Loans | |||||||||
Debt | |||||||||
Mandatory prepayments, annual excess cash flows, effective December 31, 2019 (as a percent) | 50.00% | ||||||||
IPO | |||||||||
Debt | |||||||||
Proceeds received from issuance of shares | $ 156,500 | ||||||||
Class A | IPO | |||||||||
Debt | |||||||||
Proceeds received from issuance of shares | $ 143,000 |
Debt - Component of Long Term D
Debt - Component of Long Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Feb. 12, 2018 | Dec. 31, 2017 | |
Debt | ||||||
Long-term debt | $ 268,857 | $ 483,225 | ||||
Revolving Credit Facility | ||||||
Debt | ||||||
Debt issuance costs, gross | 2,000 | 1,100 | ||||
Accumulated amortization | 1,200 | 700 | ||||
Term Loans | ||||||
Debt | ||||||
Principal outstanding | 280,000 | 499,750 | ||||
Unamortized debt issuance costs | (7,629) | (11,442) | ||||
Long-term debt | $ 268,857 | 483,225 | ||||
Principal amount | $ 360,000 | |||||
Effective yield | 6.22% | |||||
Repayments of debt | $ 20,000 | $ 23,000 | $ 37,000 | $ 80,000 | ||
Debt issuance costs, gross | 21,600 | 19,900 | ||||
Accumulated amortization | 14,000 | 8,500 | ||||
Debt discount, net | 3,514 | $ 900 | 5,083 | |||
Due October 2021, 6.82% interest rate | ||||||
Debt | ||||||
Principal outstanding | $ 499,750 | |||||
Fixed interest rate (as a percent) | 6.82% | |||||
Effective interest rate (as a percent) | 7.73% | |||||
Accumulated amortization | $ 3,200 | |||||
Debt discount, net | $ 8,300 | |||||
Due February 2025, 5.55% interest rate | ||||||
Debt | ||||||
Principal outstanding | $ 280,000 | |||||
Fixed interest rate (as a percent) | 5.55% | |||||
Effective interest rate (as a percent) | 6.22% | |||||
Accumulated amortization | $ 5,700 | |||||
Debt discount, net | $ 9,200 |
Debt - Component of Interest Ex
Debt - Component of Interest Expense and Other Financing Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt | |||
Interest expense | $ 17,289 | $ 41,569 | $ 29,544 |
Amortization of debt issuance costs | 1,708 | 3,657 | 2,749 |
Amortization of debt discount | 700 | 1,544 | 999 |
Interest rate cap expense | 767 | 327 | |
CEMP base payment accretion expense | 467 | 638 | 718 |
Other | 530 | 292 | 305 |
Total | $ 20,694 | $ 48,467 | $ 34,642 |
Debt - Harvest Commitment Lette
Debt - Harvest Commitment Letter and USAA AMCO Credit Facilities Commitment Letter (Details) - USD ($) $ in Millions | Nov. 06, 2018 | Feb. 12, 2018 | Sep. 21, 2018 |
Term Loans | |||
Debt | |||
Debt Term | 7 years | ||
Principal amount | $ 360 | ||
USAA Asset Management and USAA Shareholder Account Services | USAA AMCO Term Loan Facility | |||
Debt | |||
Debt Term | 7 years | ||
Principal amount | $ 1,395 | ||
USAA Asset Management and USAA Shareholder Account Services | USAA AMCO Credit Facilities | |||
Debt | |||
Debt Term | 5 years | ||
Maximum borrowing capacity | $ 100 | ||
Harvest | Maximum | RBC and Barclays | |||
Debt | |||
Principal amount | $ 265 |
Derivatives (Details)
Derivatives (Details) $ in Thousands | Oct. 31, 2014USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015item | Mar. 31, 2015item | Dec. 31, 2014item |
Derivatives | ||||||
Interest rate cap expense | $ 767 | $ 327 | ||||
Interest Rate Caps | ||||||
Derivatives | ||||||
Minimum percentage of term loan principal required to be protected from rate fluctuations | 50.00% | |||||
Term loan principal | $ 295,000 | |||||
Minimum required rate fluctuation protection period | 2 years | |||||
Number of instruments | item | 2 | 1 | 1 | |||
Remaining term | 3 years | |||||
Maximum rate of variability in expected future cash flows on fluctuations | 1.50% | |||||
Interest rate cap expense | $ 800 |
Equity Method Investment (Detai
Equity Method Investment (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)position | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Equity Method Investment | |||
Purchase of equity method investment | $ 4,000 | $ 2,000 | $ 3,025 |
Losses recorded under the equity method of accounting | $ (730) | $ (427) | |
Cerebellum | |||
Equity Method Investment | |||
Ownership interest (as a percent) | 19.60% | 11.90% | 7.60% |
Company’s influence in number of board positions | position | 1 | ||
Total number of board positions | position | 8 | ||
Equity method investment | $ 7,900 | $ 4,600 | $ 3,000 |
Losses recorded under the equity method of accounting | $ (700) | $ (400) |
Equity (Details)
Equity (Details) | Feb. 12, 2018USD ($)item$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)item$ / sharesshares | May 22, 2018USD ($) |
Pre-IPO Number of classes of common stock | item | 1 | |||
Common stock, par value | $ / shares | $ 0.01 | |||
Common stock, shares authorized | shares | 0 | 78,837,300 | ||
Preferred stock, shares authorized | shares | 10,000,000 | |||
Preferred stock, par value | $ / shares | $ 0.01 | |||
Preferred stock, shares issued | shares | 0 | |||
Number of votes for each share of common stock | item | 1 | |||
Conversion basis of Class B Shares into Class A shares | $ 1 | |||
Threshold for number of class B shares as a percent of the aggregate class A shares for conversion | 10.00% | |||
Offering costs | $ 4,287,000 | |||
Stock issuance costs included in prepaid expenes | $ 2,900,000 | |||
Class A | ||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | shares | 400,000,000 | 400,000,000 | 0 | |
Number of votes for each share of common stock | item | 1 | |||
Authorized amount for share repurchase program | $ 15,000,000 | |||
Number of shares acquired | shares | 856,275 | |||
Average cost of acquired shares (in dollars per share) | $ / shares | $ 9.40 | |||
Cost of acquired shares | $ 8,000,000 | |||
Remaining authorized amount for share repurchase program | $ 7,000,000 | |||
Class B | ||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | shares | 200,000,000 | 200,000,000 | 0 | |
Number of votes for each share of common stock | item | 10 | |||
Offering costs | $ 300,000 | |||
IPO | ||||
Legal, accounting and other costs included in offering costs | $ 4,600,000 |
Share Based Compensation (Detai
Share Based Compensation (Details) | Jan. 01, 2018itemshares | Jul. 31, 2017 | Mar. 10, 2017 | Jul. 29, 2016 | Jun. 30, 2018USD ($)itemshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares |
Restricted shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 1,924,691 | 623,165 | 833,574 | |||||
Vested (in shares) | (217,630) | (339,701) | (194,115) | |||||
Vesting percentage | 25.00% | |||||||
Vesting period from grant date | 5 years | 4 years | 5 years | |||||
Restricted stock granted and unvested | 2,997,856 | 1,293,107 | 1,536,977 | |||||
Fair market value of shares | $ | $ 2,000,000 | $ 4,600,000 | $ 2,000,000 | |||||
Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted (in shares) | 359,618 | 774,357 | 2,961,655 | |||||
Total number of options granted | 9,070,052 | 9,078,728 | 8,669,475 | |||||
Vesting percentage | 25.00% | |||||||
Vesting period from grant date | 4 years | |||||||
Stock options | Vesting based on performance | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 50.00% | |||||||
Stock options | Vesting based on service | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 50.00% | |||||||
Vesting period from grant date | 3 years | |||||||
Certain restricted shares and stock option awards | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 20.00% | 20.00% | ||||||
Vesting period from grant date | 5 years | 5 years | ||||||
Annual shares vesting percentage | 20.00% | 20.00% | ||||||
2013 Plan | Restricted shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 1,678,743 | |||||||
2013 Plan | Restricted shares | Time-vested and performance-vested | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 1,609,857 | |||||||
2013 Plan | Restricted shares | Vesting based on time | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage of share instruments issued | 50.00% | |||||||
2013 Plan | Restricted shares | Vesting based on time | Minimum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period from grant date | 3 years | |||||||
2013 Plan | Restricted shares | Vesting based on time | Maximum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period from grant date | 5 years | |||||||
2013 Plan | Restricted shares | Vesting based on performance | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage of share instruments issued | 50.00% | |||||||
Vesting installments | item | 3 | |||||||
2013 Plan | Restricted shares remaining | Vesting based on service | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 68,886 | |||||||
Vesting period from grant date | 4 years | |||||||
2013 Plan | Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of options granted | 357,256 | |||||||
2013 Plan | Stock options | Vesting based on performance | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 40.00% | |||||||
2013 Plan | Stock options | Vesting based on service | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 60.00% | |||||||
Vesting period from grant date | 4 years | |||||||
2018 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares authorized | 3,372,484 | |||||||
2018 Plan | Vest over four years | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period from grant date | 4 years | |||||||
2018 Plan | Restricted shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 245,948 | |||||||
2018 Plan | Restricted shares | Cliff vesting | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 30,834 | |||||||
2018 Plan | Restricted shares | Vest over three years | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 202,883 | |||||||
Vesting period from grant date | 3 years | |||||||
2018 Plan | Restricted shares | Vest over four years | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of restricted shares granted | 12,231 | |||||||
2018 Plan | Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Total number of options granted | 2,362 | |||||||
Director Plan | Restricted shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vested (in shares) | (49,230) | (65,697) | ||||||
Fair market value of shares | $ | $ 700,000 | $ 700,000 | ||||||
2018 ESPP | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares authorized | 350,388 | |||||||
Number of shares issued | 2,781 | |||||||
Term of the offering period | 18 months | |||||||
Number of offering periods | item | 3 | |||||||
Term of individual offering periods | 6 months | |||||||
Term established for purchasing stock under the employee stock purchase plan | 3 months | |||||||
Discount percentage | 5.00% | |||||||
Maximum dollar amount of shares that can be purchased by an individual in any given calendar year | $ | $ 25,000 | |||||||
Number of times a participant may make change or withdrawal from plan during a term | item | 1 |
Share Based Compensation - Stoc
Share Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 31, 2017 | Jul. 01, 2017 | Mar. 31, 2017 | Jul. 29, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Share Based Compensation | |||||||
Performance-based vesting percent based on issue date | 50.00% | ||||||
Stock options | |||||||
Share Based Compensation | |||||||
Contractual life | 10 years | ||||||
Avgwtd grant-date fair value | |||||||
Outstanding at the beginning of period | $ 3.66 | $ 3.40 | $ 2.93 | ||||
Granted (in dollars per share) | 6.51 | 6.14 | 4.27 | ||||
Forfeited (in dollars per share) | 6.39 | 3.02 | 3.09 | ||||
Exercised (in dollars per share) | 3.01 | 2.54 | |||||
Modified to liability to be cash settled (in dollars per share) | 2.61 | 2.67 | |||||
Outstanding at the end of period | 3.79 | 3.66 | 3.40 | ||||
Vested (in dollars per share) | 3.35 | 3.17 | 2.93 | ||||
Nonvested (in dollars per share) | 5 | 4.49 | 3.71 | ||||
Avg wtd exercise price | |||||||
Outstanding at the beginning of period | 5.71 | 4.90 | 3.30 | ||||
Granted (in dollars per share) | 14.25 | 13.52 | 7.91 | ||||
Forfeited (in dollars per share) | 14 | 3.81 | 3.70 | ||||
Exercised (in dollars per share) | 3.56 | 2.45 | |||||
Modified to liability to be cash settled (in dollars per share) | 2.62 | 2.74 | |||||
Outstanding at the end of the period | 6.12 | 5.71 | 4.90 | ||||
Vested (in dollars per share) | 4.76 | 4.19 | 3.43 | ||||
Nonvested (in dollars per share) | $ 9.88 | $ 8.31 | $ 5.89 | ||||
Total intrinsic value of options exercised | $ 2.3 | $ 0.8 | |||||
Units | |||||||
Outstanding at the beginning of period | 9,078,728 | 8,669,475 | 6,530,181 | ||||
Granted (in shares) | 359,618 | 774,357 | 2,961,655 | ||||
Forfeited (in shares) | (16,791) | (132,972) | (286,793) | ||||
Exercised | (351,503) | (73,406) | |||||
Modified to liability to be cash settled (in shares) | (158,726) | (535,568) | |||||
Outstanding at the end of the period | 9,070,052 | 9,078,728 | 8,669,475 | ||||
Vested (in shares) | 6,653,228 | 5,731,647 | 3,493,018 | ||||
Nonvested (in shares) | 2,416,824 | 3,347,081 | 5,176,457 | ||||
Certain stock option awards | Vesting based on service | |||||||
Share Based Compensation | |||||||
Annual shares vesting percentage | 50.00% | ||||||
Certain stock option awards | Vesting based on performance | |||||||
Share Based Compensation | |||||||
Annual shares vesting percentage | 50.00% | ||||||
All other stock option awards | Vesting based on service | |||||||
Share Based Compensation | |||||||
Annual shares vesting percentage | 60.00% | ||||||
All other stock option awards | Vesting based on performance | |||||||
Share Based Compensation | |||||||
Annual shares vesting percentage | 40.00% | ||||||
Restricted shares | |||||||
Share Based Compensation | |||||||
Time-based vesting percent based on 3 years from issue date | 50.00% | 50.00% | |||||
Performance-based vesting percent based on issue date | 50.00% | 50.00% | |||||
Restricted stock granted and unvested | 2,997,856 | 1,293,107 | 1,536,977 | ||||
Certain restricted shares and stock option awards | |||||||
Share Based Compensation | |||||||
Annual shares vesting percentage | 20.00% | 20.00% |
Share Based Compensation - Rest
Share Based Compensation - Restricted Stock Awards (Details) - Restricted shares - $ / shares | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Avg wtd grant-date fair value | ||||
Unvested at beginning of period | $ 11.82 | $ 11.82 | $ 9.48 | $ 5.84 |
Granted | 13.77 | 13.52 | 10.27 | |
Vested | 10.42 | 7.99 | 5.79 | |
Forfeited | 14.27 | 8.81 | ||
Unvested at end of period | $ 13.17 | $ 11.82 | $ 9.48 | |
Units | ||||
Unvested at beginning of period | 1,293,107 | 1,293,107 | 1,018,228 | 378,769 |
Granted (in shares) | 1,924,691 | 623,165 | 833,574 | |
Vested (in shares) | (217,630) | (339,701) | (194,115) | |
Forfeited (in shares) | (2,312) | (8,585) | ||
Unvested at end of period | 2,997,856 | 1,293,107 | 1,018,228 | |
2013 Plan | ||||
Units | ||||
Granted (in shares) | 1,678,743 | |||
2018 Plan | ||||
Units | ||||
Granted (in shares) | 245,948 | |||
Director Plan | ||||
Avg wtd grant-date fair value | ||||
Unvested at beginning of period | $ 5.71 | $ 5.71 | $ 5.71 | $ 5.71 |
Vested | 5.71 | 5.71 | ||
Unvested at end of period | $ 5.71 | $ 5.71 | ||
Units | ||||
Unvested at beginning of period | 49,230 | 114,927 | ||
Vested (in shares) | (49,230) | (65,697) | ||
Unvested at end of period | 49,230 |
Share Based Compensation - Fair
Share Based Compensation - Fair Value of Stock Option Awards (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 31, 2017 | Mar. 10, 2017 | Jul. 29, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Share Based Compensation | |||||
Performance-based vesting percent based on issue date | 50.00% | ||||
Grant date fair value of stock option awards computed using Black Scholes option pricing framework | |||||
Additional expense related to options vested that Company had previously not expected to vest | $ 0.5 | ||||
Stock options | |||||
Share Based Compensation | |||||
Expiration period | 10 years | ||||
Vesting percentage per year | 25.00% | ||||
Vesting period from grant date | 4 years | ||||
Grant date fair value of stock option awards computed using Black Scholes option pricing framework | |||||
Stock price at time of grant | $ 10.27 | $ 14.27 | $ 13.51 | ||
Exercise price | $ 10.27 | $ 14.27 | $ 13.51 | ||
Expected volatility | 50.00% | 50.00% | 50.00% | ||
Risk free rate | 1.10% | 2.27% | 2.22% | ||
Expected average years to exit | 5 years | 5 years | 5 years | ||
Certain restricted shares and stock option awards | |||||
Share Based Compensation | |||||
Annual shares vesting percentage | 20.00% | 20.00% | |||
Vesting percentage per year | 20.00% | 20.00% | |||
Vesting period from grant date | 5 years | 5 years |
Share Based Compensation - Divi
Share Based Compensation - Dividend Payments (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share Based Compensation | |||||
Amount of cash bonuses and distributions related to all dividends previously declared on unvested shares | $ 1.8 | $ 2 | $ 0.8 | ||
Common Stock, Dividends, Per Share, Declared | $ 2.42 | ||||
Total share based compensation expense expects to recognize | 35.8 | ||||
2013 Plan | |||||
Share Based Compensation | |||||
Stock based compensation expense | $ 11.8 | 8.8 | |||
2018 and 2013 Plans | |||||
Share Based Compensation | |||||
Stock based compensation expense | 15.2 | ||||
Tax benefit related to stock-based compensation | 3.8 | 4.6 | 3.2 | ||
Director Plan | General and Administrative Expense. | |||||
Share Based Compensation | |||||
Stock based compensation expense | $ 0.2 | 0.4 | |||
Restricted shares | |||||
Share Based Compensation | |||||
Special dividend paid | $ 2.19 | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.23 | 2.19 | |||
Reduction in strike price per share | $ 2.19 | ||||
Cash bonus equivalent | $ 0.23 | $ 0.23 | |||
Total fair value of restricted share awards vested | 2 | $ 4.6 | 2 | ||
Restricted shares | Director Plan | |||||
Share Based Compensation | |||||
Total fair value of restricted share awards vested | 0.7 | 0.7 | |||
Stock options | |||||
Share Based Compensation | |||||
Aggregate intrinsic value of stock options currently exercisable | $ 57.8 | $ 36.3 | $ 57.8 | $ 35.2 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Future calendar year minimum lease payments | |||
2019 | $ 4,404 | ||
2020 | 4,128 | ||
2021 | 3,386 | ||
2022 | 2,442 | ||
2023 | 1,396 | ||
Thereafter | 1,314 | ||
Total | 17,070 | ||
Rent expense | $ 4,600 | $ 7,300 | $ 5,900 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Benefit Plans | |||
Expense of employer matched contributions | $ 2.5 | $ 2.4 | $ 1.9 |
Employee Benefit Plans - Deferr
Employee Benefit Plans - Deferred Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred Compensation Arrangement | |||
Change in value of deferred compensation plan liability | $ (48) | $ (181) | $ (17) |
Deferred Compensation Plan | |||
Deferred Compensation Arrangement | |||
Employee compensation | 3,000 | 3,100 | 1,500 |
Employer contributions | 700 | 800 | 700 |
Change in value of deferred compensation plan liability | (1,600) | 1,300 | 600 |
Total | $ 2,100 | $ 5,200 | $ 2,800 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Computation of basic and diluted earnings per share | |||||||||||
Net income | $ 63,704 | $ 25,826 | $ (6,071) | ||||||||
Shares: | |||||||||||
Basic: Weighted average number of shares outstanding | 66,295,240 | 54,930,852 | 50,017,712 | ||||||||
Plus: Incremental shares from assumed conversion of dilutive instruments | 4,215,296 | 4,646,496 | 0 | ||||||||
Diluted: Weighted average number of shares outstanding | 70,510,536 | 59,577,348 | 50,017,712 | ||||||||
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ 0.21 | $ 0.30 | $ 0.27 | $ 0.17 | $ 0.20 | $ 0.14 | $ 0.04 | $ 0.08 | $ 0.96 | $ 0.47 | $ (0.12) |
Diluted (in dollars per share) | $ 0.19 | $ 0.29 | $ 0.26 | $ 0.16 | $ 0.19 | $ 0.13 | $ 0.04 | $ 0.08 | $ 0.90 | $ 0.43 | $ (0.12) |
Number of shares excluded from the computations of weighted average shares for diluted EPS because the effects would be anti dilutive | 1,738,813 | 434,656 | 6,614,274 |
Net Capital Requirements (Detai
Net Capital Requirements (Details) $ in Millions | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Net Capital Requirements | ||
Net capital | $ 2.3 | $ 2.3 |
Excess net capital | 2.1 | 2.1 |
Minimum net capital requirement | $ 0.2 | $ 0.2 |
Ratio of aggregated indebtedness to net capital | 1.14 | 1.55 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in accumulated other comprehensive income/(loss) by component | |||
Balance at beginning of period | $ 231,183 | $ 330,998 | $ 249,429 |
Net current period other comprehensive income/(loss) | (150) | 601 | 5 |
Balance at end of period | 455,548 | 231,183 | 330,998 |
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive income/(loss) by component | |||
Balance at beginning of period | 64 | (537) | (542) |
Other comprehensive income/(loss) before reclassification and tax | (200) | 223 | (326) |
Tax impact | 50 | (88) | 127 |
Reclassification adjustments, before tax | 752 | 325 | |
Tax impact | (286) | (121) | |
Net current period other comprehensive income/(loss) | (150) | 601 | 5 |
Balance at end of period | (86) | 64 | (537) |
Available-for-sale Securities | |||
Changes in accumulated other comprehensive income/(loss) by component | |||
Balance at beginning of period | 51 | (13) | (31) |
Other comprehensive income/(loss) before reclassification and tax | (147) | 121 | 28 |
Tax impact | 37 | (48) | (9) |
Reclassification adjustments, before tax | (15) | (2) | |
Tax impact | 6 | 1 | |
Net current period other comprehensive income/(loss) | (110) | 64 | 18 |
Balance at end of period | (59) | 51 | (13) |
Cash Flow Hedges | |||
Changes in accumulated other comprehensive income/(loss) by component | |||
Balance at beginning of period | (462) | (511) | |
Other comprehensive income/(loss) before reclassification and tax | (20) | (254) | |
Tax impact | 7 | 98 | |
Reclassification adjustments, before tax | 767 | 327 | |
Tax impact | (292) | (122) | |
Net current period other comprehensive income/(loss) | 462 | 49 | |
Balance at end of period | (462) | ||
Cumulative Translation Adjustment | |||
Changes in accumulated other comprehensive income/(loss) by component | |||
Balance at beginning of period | 13 | (62) | |
Other comprehensive income/(loss) before reclassification and tax | (53) | 122 | (100) |
Tax impact | 13 | (47) | 38 |
Net current period other comprehensive income/(loss) | (40) | 75 | (62) |
Balance at end of period | $ (27) | $ 13 | $ (62) |
Selected Quarterly Informatio_2
Selected Quarterly Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unaudited quarterly financial results | |||||||||||
Total revenue | $ 95,967 | $ 108,082 | $ 104,399 | $ 104,964 | $ 105,646 | $ 102,388 | $ 100,934 | $ 100,661 | $ 413,412 | $ 409,629 | $ 297,883 |
Operating expenses | 70,210 | 76,272 | 74,715 | 77,696 | 78,720 | 78,147 | 81,495 | 81,099 | 298,893 | 319,461 | 273,398 |
Income/(loss) from operations | 25,757 | 31,810 | 29,684 | 27,268 | 26,926 | 24,241 | 19,439 | 19,562 | 114,519 | 90,168 | 24,485 |
Net income/(loss) | $ 13,915 | $ 20,590 | $ 18,675 | $ 10,524 | $ 11,209 | $ 7,850 | $ 2,354 | $ 4,413 | $ 63,704 | $ 25,826 | $ (6,071) |
Earnings per share—basic | $ 0.21 | $ 0.30 | $ 0.27 | $ 0.17 | $ 0.20 | $ 0.14 | $ 0.04 | $ 0.08 | $ 0.96 | $ 0.47 | $ (0.12) |
Earnings per share—diluted | $ 0.19 | $ 0.29 | $ 0.26 | $ 0.16 | $ 0.19 | $ 0.13 | $ 0.04 | $ 0.08 | $ 0.90 | $ 0.43 | $ (0.12) |