Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Document Information [Line Items] | ||
Entity Registrant Name | Victory Capital Holdings, Inc. | |
Entity Central Index Key | 0001570827 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Ex Transition Period | false | |
Entity Interactive Data Current | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Title of 12(b) Security | Class A Common Stock, $0.01 Par Value | |
Trading Symbol | VCTR | |
Security Exchange Name | NASDAQ | |
Entity Tax Identification Number | 32-0402956 | |
Entity File Number | 001-38388 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 15935 La Cantera Parkway | |
Entity Address, City or Town | San Antonio | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78256 | |
City Area Code | 216 | |
Local Phone Number | 898-2400 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,051,788 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 51,758,141 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 30,386 | $ 22,744 |
Receivables | 91,924 | 88,182 |
Prepaid expenses | 6,776 | 6,082 |
Investments, at fair value | 26,931 | 23,493 |
Property and equipment, net | 20,699 | 18,747 |
Goodwill | 404,750 | 404,750 |
Other intangible assets, net | 1,160,089 | 1,162,641 |
Other assets | 8,115 | 4,090 |
Total assets | 1,749,670 | 1,730,729 |
Liabilities and stockholders' equity | ||
Accounts payable and accrued expenses | 56,428 | 42,144 |
Accrued compensation and benefits | 34,892 | 47,278 |
Consideration payable for acquisition of business | 95,000 | 92,500 |
Deferred tax liability, net | 47,411 | 37,684 |
Other liabilities | 27,911 | 34,573 |
Long-term debt, net | 722,652 | 769,009 |
Total liabilities | 984,294 | 1,023,188 |
Stockholders' equity | ||
Additional paid-in capital | 653,973 | 647,602 |
Accumulated other comprehensive income (loss) | 3,311 | (7,460) |
Retained earnings | 220,302 | 161,581 |
Total stockholders' equity | 765,376 | 707,541 |
Total liabilities and stockholders' equity | 1,749,670 | 1,730,729 |
Class A | ||
Stockholders' equity | ||
Common stock | 196 | 194 |
Treasury stock, at cost | (54,966) | (47,844) |
Class B | ||
Stockholders' equity | ||
Common stock | 556 | 548 |
Treasury stock, at cost | $ (57,996) | $ (47,080) |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Class A | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 19,611,469 | 19,388,671 |
Common stock, shares outstanding | 16,141,937 | 16,205,689 |
Treasury stock, shares | 3,469,532 | 3,182,982 |
Class B | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 55,607,894 | 54,766,934 |
Common stock, shares outstanding | 51,746,187 | 51,336,177 |
Treasury stock, shares | 3,861,707 | 3,430,757 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | ||
Total revenue | $ 212,949 | $ 204,421 |
Expenses | ||
Personnel compensation and benefits | 59,006 | 47,571 |
Distribution and other asset-based expenses | 42,103 | 54,860 |
General and administrative | 13,310 | 11,888 |
Depreciation and amortization | 4,385 | 4,050 |
Change in value of consideration payable for acquisition of business | 2,500 | (5,500) |
Acquisition-related costs | (164) | (69) |
Restructuring and integration costs | 2,053 | 998 |
Total operating expenses | 123,193 | 113,798 |
Income from operations | 89,756 | 90,623 |
Other income (expense) | ||
Interest income and other income (expense) | 2,734 | (4,172) |
Interest expense and other financing costs | (6,845) | (11,408) |
Loss on debt extinguishment | (2,781) | (1,054) |
Total other income (expense), net | (6,892) | (16,634) |
Income before income taxes | 82,864 | 73,989 |
Income tax expense | (17,662) | (16,823) |
Net income | $ 65,202 | $ 57,166 |
Earnings per share of common stock | ||
Basic | $ 0.96 | $ 0.84 |
Diluted | $ 0.88 | $ 0.77 |
Weighted average number of shares outstanding | ||
Basic | 67,761 | 67,790 |
Diluted | 74,108 | 74,350 |
Dividends declared per share of common stock | $ 0.09 | $ 0.05 |
Investment Management Fees | ||
Revenue | ||
Total revenue | $ 160,284 | $ 146,881 |
Fund Administration and Distribution Fees | ||
Revenue | ||
Total revenue | $ 52,665 | $ 57,540 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income | $ 65,202 | $ 57,166 |
Other comprehensive income (loss), net of tax | ||
Net unrealized income (loss) on cash flow hedges | 10,773 | (4,820) |
Net unrealized income (loss) on foreign currency translation | (2) | (67) |
Total other comprehensive income (loss), net of tax | 10,771 | (4,887) |
Comprehensive income | $ 75,973 | $ 52,279 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common StockClass A | Common StockClass B | Treasury StockClass A | Treasury StockClass B | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained (Deficit) Earnings |
Balance at beginning of period at Dec. 31, 2019 | $ 537,871 | $ 181 | $ 539 | $ (21,524) | $ (31,386) | $ 624,766 | $ (34,705) | |
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock | 26 | 26 | ||||||
Share conversion - Class B to A | 4 | (4) | ||||||
Repurchase of shares | (4,394) | (4,394) | ||||||
Shares withheld related to net settlement of equity awards | (8,787) | (8,787) | ||||||
Vesting of restricted share grants | 7 | (7) | ||||||
Exercise of options | 1,693 | 3 | 1,690 | |||||
Other comprehensive loss | (4,887) | $ (4,887) | ||||||
Share-based compensation | 5,993 | 5,993 | ||||||
Dividends paid | (3,601) | (3,601) | ||||||
Net income | 57,166 | 57,166 | ||||||
Balance at end of period at Mar. 31, 2020 | 581,080 | 185 | 545 | (25,918) | (40,173) | 632,468 | (4,887) | 18,860 |
Balance at beginning of period at Dec. 31, 2020 | 707,541 | 194 | 548 | (47,844) | (47,080) | 647,602 | (7,460) | 161,581 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock | 44 | 44 | ||||||
Share conversion - Class B to A | 2 | (2) | ||||||
Repurchase of shares | (7,122) | (7,122) | ||||||
Shares withheld related to net settlement of equity awards | (10,916) | (10,916) | ||||||
Vesting of restricted share grants | 9 | (9) | ||||||
Exercise of options | 790 | 1 | 789 | |||||
Other comprehensive loss | 10,771 | 10,771 | ||||||
Share-based compensation | 5,547 | 5,547 | ||||||
Dividends paid | (6,481) | (6,481) | ||||||
Net income | 65,202 | 65,202 | ||||||
Balance at end of period at Mar. 31, 2021 | $ 765,376 | $ 196 | $ 556 | $ (54,966) | $ (57,996) | $ 653,973 | $ 3,311 | $ 220,302 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net income | $ 65,202 | $ 57,166 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for deferred income taxes | 6,269 | 7,182 |
Depreciation and amortization | 4,385 | 4,050 |
Deferred financing costs and derivative and accretion expense | 983 | 1,174 |
Stock-based and deferred compensation | 9,471 | 2,772 |
Change in fair value of contingent consideration obligations | 2,500 | (5,500) |
Unrealized depreciation (appreciation) on investments | (2,720) | 4,971 |
Loss on equity method investment | 92 | |
Loss on debt extinguishment | 2,781 | 1,054 |
Changes in operating assets and liabilities: | ||
Receivables | (6,730) | 16,439 |
Prepaid expenses | (695) | (1,857) |
Other assets | (18) | |
Accounts payable and accrued expenses | 13,573 | (11,760) |
Accrued compensation and benefits | (14,987) | (23,990) |
Other liabilities | (490) | 239 |
Net cash provided by operating activities | 79,634 | 51,922 |
Cash flows from investing activities | ||
Purchases of property and equipment | (393) | (708) |
Purchases of investments | (2,626) | (2,617) |
Sales of investments | 1,909 | 1,091 |
Cost of asset acquisition | (30) | |
Net cash used in investing activities | (1,140) | (2,234) |
Cash flows from financing activities | ||
Repurchase of common stock | (7,661) | (6,020) |
Payments of taxes related to net share settlement of equity awards | (7,614) | (4,431) |
Repayment of long-term senior debt | (50,000) | (38,000) |
Payment of dividends | (6,393) | (3,490) |
Receipt of consideration for acquisition | 649 | |
Net cash used in financing activities | (70,834) | (49,573) |
Effect of changes of foreign exchange rate on cash and cash equivalents | (18) | (106) |
Net increase in cash and cash equivalents | 7,642 | 9 |
Cash and cash equivalents, beginning of period | 22,744 | 37,121 |
Cash and cash equivalents, end of period | 30,386 | 37,130 |
Supplemental cash flow information | ||
Cash paid for interest | 8,096 | 20,112 |
Cash paid for income taxes | 831 | 1,345 |
Class A | ||
Cash flows from financing activities | ||
Issuance of common stock, net of costs | 44 | 26 |
Class B | ||
Cash flows from financing activities | ||
Issuance of common stock, net of costs | $ 790 | $ 1,693 |
Organization and Nature of Busi
Organization and Nature of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Nature of Business | Note 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,” “Victory,” or in the first-person notations of “we,” “us,” and “our”), was formed on February 13, 2013 for the purpose of acquiring Victory Capital Management Inc. (“VCM”) and Victory Capital Services, Inc. (“VCS”), formerly known as Victory Capital Advisers, Inc., on August 1, 2013. On February 12, 2018, the Company completed the initial public offering (the “IPO”) of its Class A common stock, which trades on the NASDAQ under the symbol “VCTR.” On and effective July 1, 2019, the Company completed the acquisition (the “USAA AMCO Acquisition”) of USAA Asset Management Company (“USAA Adviser”) and the Victory Capital Transfer Agency, Inc. (“VCTA”), formerly known as the USAA Transfer Agency Company d/b/a USAA Shareholder Account Services (together with USAA Adviser, the “USAA Acquired Companies”). The USAA AMCO Acquisition includes USAA’s mutual fund and ETF businesses and its 529 College Savings Plan (collectively, the “USAA Mutual Fund Business”). Refer to Note 4, Acquisitions, for further details on the acquisition. On March 1, 2021, the Company completed the acquisition of THB Asset Management (“THB”), resulting in THB becoming the Company’s tenth investment franchise. At March 1, 2021, the THB AUM that was acquired totaled $547 million. THB Refer to Note 4, Acquisitions, for further details on the acquisition. VCM is a registered investment adviser managing assets through mutual funds, institutional separate accounts, separately managed account products, unified managed account products, collective trust funds, private funds, undertakings for the collective investment in transferrable securities, other pooled vehicles and ETFs. 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, the VictoryShares (the Company’s ETF brand), as well as the USAA Mutual Fund Business, which includes the USAA Mutual Fund Trust, a family of open-end mutual funds (the “USAA Funds”). Additionally, VCM employs all of the Company’s United States investment professionals across its Franchises and Solutions, which are not separate legal entities. VCM’s three wholly-owned subsidiaries are RS Investment Management (Singapore) Pte. Ltd., RS Investments (Hong Kong) Limited, and RS Investments (UK) Limited. VCS is registered with the SEC as a limited purpose broker-dealer and serves as distributor and underwriter for the Victory Funds and USAA Funds. VCTA is registered with the SEC as a transfer agent for the USAA Funds. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial condition, results of operations, and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Principles of Consolidation The unaudited condensed consolidated financial statements include the operations of the Company and its wholly-owned subsidiaries, after elimination of all intercompany balances and transactions. On September 20, 2020, the Company acquired a 15% equity interest in Alderwood Partners LLP (“Alderwood”). Alderwood’s operating entity, Alderwood Capital, is a London-based investment advisory firm focused on taking minority stakes in specialist boutique asset management businesses. The Company analyzed its investment in Alderwood under the voting interest model and determined that it would not consolidate Alderwood as it does not have a controlling financial interest. The Company’s involvement with non-consolidated variable interest entities (“VIEs”) include sponsored investment funds. For further discussion regarding VIEs, refer to Note 2, Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2020. Use of Estimates and Assumptions The preparation of the unaudited condensed 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 and the notes. Actual results may ultimately differ materially from those estimates. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. COVID-19 did not have a material adverse effect on the Company’s reported results for the three months ended March 31, 2021. New Accounting Pronouncements Accounting Standards Adopted in 2021 • Internal-Use Software: Effective January 1, 2021, the Company adopted, on a prospective basis, Accounting Standards Update (“ASU”) 2018-15 (“ASU 2018-15”), "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)," which aligns the requirements for capitalizing implementation costs incurred in a service contract hosting arrangement with those of developing or obtaining internal-use software. The adoption had no impact on the Company’s consolidated financial statements. • Subsequent Measurement of Goodwill: Effective January 1, 2021, the Company adopted, on a prospective basis, ASU 2017-04 (“ASU 2017-04”), “Intangibles – Goodwill and Other (Topic 350)” (“ASU 2017-04”) which simplifies the test for goodwill impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (step two) to measure a goodwill impairment charge. Goodwill impairment will be based upon the results of step one of the impairment test, which is defined as the excess of the carrying amount of a reporting unit over its fair value, not to exceed the carrying amount of goodwill allocated to that reporting unit. The adoption had no impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards • Reference Rate Reform: In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, (“ASU 2020-04”), “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 contains optional practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this guidance are effective for all entities through December 31, 2022. The Company is currently evaluating the effect of this new standard on its consolidated financial statements. • Expected Credit Losses: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 creates a new model for determining current expected credit losses (“CECL”) on trade and other receivables, net investments in leases, contract assets and long-term receivables. The CECL impairment model requires companies to consider the risk of loss even if it is remote and to include forecasts of future economic conditions as well as information about past events and current conditions. The effective date for calendar-year public business entities is January 1, 2020. As an emerging growth company (“EGC”), the Company will adopt ASU 2016-13 on January 1, 2023 and is currently reviewing the effect of this new standard on its consolidated financial statements. • Leases: In February 2016, the FASB issued ASU 2016‑02, “Leases (Topic 842)” (the “New Lease Standard”) which supersedes previous lease guidance, Accounting Standards Codification (“ASC”) Topic 840 (“ASC Topic 840”). The New Lease Standard requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) on their balance sheet at the commencement date and recognize expenses on their income statement similar to ASC Topic 840 guidance. In addition, the FASB issued ASU 2018-11, “Leases Targeted Improvements,” which provides a package of practical expedients for entities to apply upon adoption. The effective date for calendar-year public business entities was January 1, 2019. In June 2020, the FASB deferred the effective date of the New Lease Standard for private companies and other companies who had not yet been required to adopt the standard. Due to Victory’s EGC status, the Company will adopt the New Lease Standard on January 1, 2022. Management has assessed and evaluated the Company’s portfolio of active real estate leases and is currently surveying the business for other leases. As outlined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Company has approximately $16.7 million in undiscounted, future minimum cash commitments under net operating leases. The New Lease Standard is expected to result in a gross up on the Consolidated Balance Sheets and to have no material impact to the Consolidated Statements of Operations, liquidity or the Company’s debt covenant compliance under our current credit agreement. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | NOTE 3. Revenue RECOGNITION In accordance with the revenue recognition standard requirements, the following table disaggregates our revenue by type and product: Three Months Ended March 31, (in thousands) 2021 2020 Investment management fees Mutual funds (Victory/USAA Funds) $ 127,746 $ 119,514 ETFs (VictoryShares) 3,454 3,162 Separate accounts and other vehicles 29,541 24,545 Performance-based fees Mutual funds (USAA Funds) (1,439 ) — Separate accounts and other vehicles 982 (340 ) Total investment management fees $ 160,284 $ 146,881 Fund administration and distribution fees Administration fees Mutual funds (Victory/USAA Funds) $ 29,004 $ 29,610 ETFs (VictoryShares) 441 385 Distribution fees Mutual funds (Victory/USAA Funds) 6,938 6,796 Transfer agent fees Mutual funds (USAA Funds) 16,282 20,749 Total fund administration and distribution fees $ 52,665 $ 57,540 Total revenue $ 212,949 $ 204,421 The following table presents balances of receivables: (in thousands) March 31, 2021 December 31, 2020 Customer receivables Mutual funds (Victory/USAA Funds) $ 66,036 $ 60,868 ETFs (VictoryShares) 1,522 1,419 Separate accounts and other vehicles 24,237 22,641 Receivables from contracts with customers 91,795 84,928 Non-customer receivables 129 3,254 Total receivables $ 91,924 $ 88,182 Revenue The Company’s revenue includes fees earned from providing; • investment management services, • fund administration services, • fund transfer agent services, and • fund distribution services. Revenue is recognized for each distinct performance obligation identified in customer contracts when the performance obligation has been satisfied by transferring services to a customer either over time or at the point in time when the customer obtains control of the service. Revenue is recognized in the amount of variable or fixed consideration allocated to the satisfied performance obligation that Victory expects to be entitled to in exchange for transferring services to a customer. Variable consideration is included in the transaction price only when it is probable that a significant reversal of such revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Investment management, fund administration and fund distribution fees are generally considered variable consideration as they are typically calculated as a percentage of AUM. Fund transfer agent fees are also considered variable consideration as they are calculated as a percentage of AUM or based on the number of accounts in the fund. In such cases, the amount of fees earned is subject to factors outside of the Company’s control including customer or underlying investor contributions and redemptions and financial market volatility. These fees are considered constrained and are excluded from the transaction price until the asset values or number of accounts on which the customer is billed are calculated and the value of consideration is measurable. The Company has contractual arrangements with third parties to provide certain advisory, administration, transfer agent and distribution services. Management considers whether we are acting as the principal service provider or as an agent to determine whether revenue should be recorded based on the gross amount payable by the customer or net of payments to third-party service providers, respectively. Victory is considered a principal service provider if we control the service that is transferred to the customer. We are considered an agent when we arrange for the service to be provided by another party and do not control the service. Investment Management Fees Investment management fees are received in exchange for investment management services that represent a series of distinct incremental days of investment management service. Control of investment management services is transferred to the customers over time as these customers receive and consume the benefits provided by these services. Investment management fees are calculated as a contractual percentage of AUM and are generally paid in arrears on a monthly or quarterly basis. Investment management fees are recognized as revenue using a time-based output method to measure progress. Revenue is recorded at month end or quarter end when the value of consideration is measured. The amount of investment management fee revenue varies from one reporting period to another as levels of AUM change (from inflows, outflows and market movements) and as the number of days in the reporting period change. The Company may waive certain fees for investment management services provided to the Victory Funds, USAA Funds, VictoryShares and other pooled investment vehicles and may subsidize certain share classes of the Victory Funds, USAA Funds, VictoryShares and other pooled investment vehicles to ensure that specified operating expenses attributable to such share classes do not exceed a specified percentage. These waivers and reimbursements reduce the transaction price allocated to investment management services and are recognized as a reduction to investment management fees revenue. The amounts due to the Victory Funds, USAA Funds, VictoryShares and other pooled investment vehicles for waivers and expense reimbursements represent consideration payable to customers, which is recorded in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets, and no distinct services are received in exchange for these payments. Performance‑based investment management fees, which include fees under performance fee and fulcrum fee arrangements, are included in the transaction price for providing investment management services. Performance-based investment management fees are calculated as a percentage of investment performance on a client’s account versus a specified benchmark or hurdle based on the terms of the contract with the customer. Performance-based investment management fees are variable consideration and are recognized as revenue when and to the extent that it is probable that a significant reversal of the cumulative revenue for the contractual performance period will not occur. Performance-based investment management fees recognized as revenue in the current period may pertain to performance obligations satisfied in prior periods. Fulcrum fee arrangements include a base investment management fee and a performance fee adjustment, increasing or decreasing the base investment management fee depending on whether the assets being managed experienced better or worse investment performance than the index specified in the customer’s contract. The performance fee adjustment arrangement with certain equity and fixed income USAA Funds took effect on July 1, 2020 and is calculated monthly based on the investment performance of those funds relative to their specified benchmark indexes over the discrete performance period ending with that month. Fund Administration Fees The Company recognizes fund administration fees as revenue using a time-based output method to measure progress. Fund administration fees are determined based on the contractual rate applied to average daily net assets of the Victory Funds, USAA Funds and VictoryShares for which administration services are provided. Revenue is recorded on a monthly basis when the value of consideration is measured using actual average daily net assets and constraints are removed. The Company’s fund administration fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations. The Company has contractual arrangements with a third party to provide certain sub-administration services. We are the primary obligor under the contracts with the Victory Funds, USAA Funds and VictoryShares and have the ability to select the service provider and establish pricing. As a result, fund administration fees and sub-administration expenses are recorded on a gross basis. Fund Transfer Agent Fees The Company recognizes fund transfer agent fees using a time-based output method to measure progress. Fund transfer agent fees are determined based on the contractual rate applied to either the average daily net assets of the USAA Funds for which transfer agent services are provided or number of accounts in the USAA Funds. Revenue is recorded on a monthly basis when the value of consideration is measured using actual average daily net assets or actual number of accounts and constraints are removed. The Company’s fund transfer agent fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations. The Company has contractual arrangements with a third party to provide certain sub-transfer agent services. We are the primary obligor under the transfer agency contracts with the USAA Funds and have the ability to select the service provider and establish pricing. As a result, fund transfer agent fees and sub-transfer agent expenses are recorded on a gross basis. Fund Distribution Fees The Company receives compensation for sales and sales-related services promised under distribution contracts with the Victory Funds and USAA Funds. Revenue is measured in an amount that reflects the consideration to which the Company 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 and USAA Funds. The Company’s performance obligation is satisfied at the point in time 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, the Company 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. The Company’s distribution fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations. The Company has contractual arrangements with third parties to provide certain distribution services. The Company is the primary obligor under the contracts with the Victory Funds and USAA Funds and has the ability to select the service provider and establish pricing. Substantially all of the Company’s revenue is recorded gross of payments made to third parties. Costs Incurred to Obtain or Fulfill Customer Contracts The Company is required to capitalize certain costs directly related to the acquisition or fulfillment of a contract with a customer. Victory has not identified any sales-based compensation or similar costs that meet the definition of an incremental cost to acquire a contract and as such we have no intangible assets related to contract acquisitions. Direct costs incurred to fulfill services under the Company’s distribution contracts include sales commissions paid to third party dealers for the sale of Class C Shares. The Company 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 the Company makes an upfront payment to a dealer or institution for the sale of Class C shares, the Company capitalizes the cost of such payment, which is recorded in Prepaid expenses in the unaudited Condensed Consolidated Balance Sheets and amortizes the cost over a 12-month period, the estimated period of benefit. Valuation of Assets Under Management The fair value of assets under management of the Victory Funds, USAA Funds and VictoryShares 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. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 4. ACQUISITIONS THB Acquisition On March 1, 2021, the Company completed the acquisition of certain assets of THB Asset Management (“THB”), including without limitation, (i) certain investment advisory and business contracts, (ii) certain books and records, (iii) the investment performance track record, and (iv) all business intellectual property and proprietary software, and hired the THB investment team, resulting in THB becoming the Company’s tenth investment franchise. At March 1, 2021, the THB AUM that was acquired totaled $547 million. THB Because substantially all of the fair value of the acquired assets was concentrated in a single identifiable asset, the transaction was accounted for as an asset acquisition. Estimated acquisition costs of $0.6 million were allocated to a definite-lived customer relationship intangible asset. USAA AMCO Acquisition On and effective July 1, 2019, the Company completed the USAA AMCO Acquisition which expanded and diversified the Company’s investment platform and increased the Company’s size and scale. The acquisition also provided the Company the rights to offer products and services using the USAA brand and the opportunity to offer its products to USAA members through a direct distribution channel. A maximum of $150.0 million ($37.5 million per year) in contingent payments is payable to sellers based on the annual revenue of USAA Adviser attributable to all “non-managed money”-related AUM in each of the first four years following the closing. 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 Stock Purchase Agreement) of the USAA Adviser’s “non-managed money”-related assets under management as of the closing date, and to achieve the maximum contingent payment for a given year, such annual revenue must total at least 100% of that closing date 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 estimated fair value of contingent consideration payable to sellers is determined using the real options method. Revenue related to “non-managed money” assets is simulated in a risk-neutral framework to calculate expected probability-weighted earn out payments, which are then discounted from the expected payment dates at the relevant cost of debt. Significant assumptions and inputs include the “non-managed money” revenue projected annual growth rate, the market price of risk, which adjusts the projected revenue growth rate to a risk-neutral expected growth rate, revenue volatility and discount rate. The market price of risk and revenue volatility are based on data for comparable companies. As the contingent consideration represents a subordinate, unsecured claim of the Company, the Company assesses a discount rate which incorporates adjustments for credit risk and the subordination of the contingent consideration. Significant inputs to the valuation of contingent consideration payable to sellers as of March 31, 2021 and December 31, 2020 are as follows and are approximate values: March 31, 2021 December 31, 2020 Non-managed money revenue average annual growth rate 3 % 3 % Market price of risk 7 % 7 % Revenue volatility 16 % 16 % Discount rate 3 % 3 % Years remaining in earn out period 2.6 2.9 Undiscounted estimated remaining earn out payments in millions $99.6 - $112.5 $97.7 - $112.5 The estimated fair value of contingent consideration payable to sellers is recorded in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets and was estimated at $95.0 million at March 31, 2021 as compared to $92.5 million at December 31, 2020. The increase in the liability of $2.5 million in the first quarter of 2021 was recorded in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations. 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 are included in acquisition-related costs in the unaudited Condensed Consolidated Statements of Operations. Acquisition-related costs Three Months Ended March 31, (in thousands) 2021 2020 USAA AMCO Acquisition $ 10 $ (124 ) Other (174 ) 55 Total acquisition-related costs $ (164 ) $ (69 ) 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. The following table presents the rollforward of restructuring and integration liabilities, which are recorded in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets, for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, (in millions) 2021 2020 Liability balance, beginning of period $ 1.0 $ 3.0 Severance expense - USAA AMCO 1.6 — Integration costs - THB 0.1 — Integration costs - USAA AMCO 0.4 1.0 Total restructuring and integration costs 2.1 1.0 Settlement of liabilities (1.7 ) (1.5 ) Liability balance, end of period $ 1.4 $ 2.5 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 5. 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 liabilities measured at fair value on a recurring basis. As of March 31, 2021 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Interest Rate Swap Asset $ 4,226 $ - $ 4,226 $ - Total Financial Assets $ 4,226 $ - $ 4,226 $ - Financial Liabilities Interest Rate Swap Liability $ - $ - $ - $ - Contingent Consideration Arrangements (95,000 ) - - (95,000 ) Total Financial Liabilities $ (95,000 ) $ - $ - $ (95,000 ) As of December 31, 2020 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Interest Rate Swap Asset $ - $ - $ - $ - Total Financial Assets $ - $ - $ - $ - Financial Liabilities Interest Rate Swap Liability $ (10,006 ) $ - $ (10,006 ) $ - Contingent Consideration Arrangements (92,500 ) - - (92,500 ) Total Financial Liabilities $ (102,506 ) $ - $ (10,006 ) $ (92,500 ) The interest rate swap (the “Swap”) asset and liability represent amounts receivable or payable under a million of the outstanding Term Loan balance through the Term Loan’s maturity in July 2026. The fair value of the Swap is included in the unaudited Condensed Balance Sheets in other assets at March 31, 202 1 and in other liabilities as of December 31, 2020 . Pricing is determined based on a third party, model-derived valuation in which all significant inputs are observable in active markets (Level 2). Refer to Note 1 4 , Derivatives, for further detail on the Swap. The contingent consideration arrangement liabilities represent the USAA AMCO Acquisition estimated earn-out payment liability, which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets. Refer to Note 4, Acquisitions, for further details related to the contingent consideration arrangement. Significant unobservable inputs for the option pricing model used to determine the estimated fair value of the USAA AMCO Acquisition earn-out payment liability include the “non-managed money” revenue projected growth rate, revenue volatility, market price of risk and discount rate. An increase in market price of risk, discount rate and revenue volatility results in a lower fair value for the earn-out payment liability, while an increase in the projected growth rate for “non-managed money” revenue results in a higher fair value for the earn-out payment liability. Refer to Note 4, Acquisitions, for further details related to the valuation of contingent consideration payable related to the USAA AMCO Acquisition. Changes in the fair value of contingent consideration arrangement liabilities, realized or unrealized, are recorded in earnings and are included in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations. The following table presents the change in contingent consideration arrangement liabilities for the three months ended March 31, 2021. (in thousands) Contingent Consideration Liabilities Balance, December 31, 2020 $ (92,500 ) USAA AMCO change in fair value measurement (2,500 ) Balance, March 31, 2021 $ (95,000 ) There were no transfers between any of the Level 1, 2 and 3 categories in the fair value measurement hierarchy from December 31, 2020 to March 31, 2021. The Company recognizes transfers at the end of the reporting period. The net carrying value of accounts receivable and accounts payable approximates fair value due to the short‑term nature of these assets and liabilities. The fair value of our long-term debt at March 31, 2021 is considered to be its carrying value as the interest rate on the bank debt is variable and approximates current market rates. As a result, Level 2 inputs are utilized to determine the fair value of our long‑term debt. The fair value of the Company’s money market investment ($10.1 million within cash and cash equivalents), investments in proprietary funds and deferred compensation plan investments are measured using Level 1 inputs, which are the market prices for shares in these open-end mutual funds . |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | NOTE 6. Related-Party Transactions The Company considers certain funds that it manages, including the Victory Funds, the USAA Funds, the VictoryShares, collective trust funds that it sponsors (the “Victory Collective Funds”) and certain other pooled investment vehicles, to be related parties as a result of our advisory relationship. The Company receives investment management, administrative, distribution and compliance fees in accordance with contracts that VCM and VCS have with the Victory Funds and the USAA Funds and has invested a portion of its balance sheet cash in the USAA Treasury Money Market Fund and earns interest on the amount invested in this fund. The Company receives investment management, administrative and compliance fees in accordance with contracts that VCM has with the VictoryShares. We also receive investment management fees from the Victory Collective Funds and certain other pooled investment vehicles under VCM’s advisory contracts with these funds. In addition, VCTA receives fees for transfer agency services under contracts with the USAA Funds and sub-transfer agency services under contracts with the Victory Funds for member class shares. Director fees payable by the Company in cash and contributions made under the Director Deferred Compensation Plan for non-employee members of our Board of Directors are included in general and administrative expense in the unaudited Condensed Consolidated Statements of Operations. The table below presents balances and transactions involving related parties included in the unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Operations. • Included in cash and cash equivalents is cash held in the USAA Treasury Money Market Fund. • Included in receivables (fund administration and distribution fees) are amounts due from the Victory Funds and USAA Funds for compliance services and amounts due from the USAA Funds and Victory Funds for transfer agent and sub-transfer agent services. • Included in revenue (fund administration and distribution fees) are amounts earned for compliance services, transfer agent services and sub-transfer agent services. • Realized and unrealized gains and losses and dividend income on investments in the Victory Funds and USAA Funds classified as investments in proprietary funds and deferred compensation plan investments and dividend income on investments in the USAA Treasury Money Market Fund are recorded in interest income and other income (expense) in the unaudited Condensed Consolidated Statements of Operations. • Amounts due to the Victory Funds, USAA Funds, VictoryShares and certain other pooled investment vehicles for waivers of investment management fees and reimbursements of fund operating expenses are included in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets and represent consideration payable to customers. (in thousands) March 31, 2021 December 31, 2020 Related party assets Cash and cash equivalents $ 10,089 $ 10,088 Receivables (investment management fees) 50,569 46,958 Receivables (fund administration and distribution fees) 19,097 16,971 Investment in proprietary funds, fair value 979 922 Deferred compensation plan investments, fair value 25,447 22,062 Total $ 106,181 $ 97,001 Related party liabilities Accounts payable and accrued expenses (fund reimbursements) $ 6,126 $ 5,978 Total $ 6,126 $ 5,978 Three Months Ended March 31, (in thousands) 2021 2020 Related party revenue Investment management fees $ 133,294 $ 124,312 Fund administration and distribution fees 52,665 57,540 Total $ 185,959 $ 181,852 Related party expense General and administrative $ 130 $ — Total $ 130 $ — Related party other (expense) income Interest income and other (expense) income $ 2,675 $ (4,798 ) Total $ 2,675 $ (4,798 ) |
Investments
Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments Debt And Equity Securities [Abstract] | |
Investments | NOTE 7. Investments At March 31, 2021 and December 31, 2020, the Company had investments in proprietary funds and deferred compensation plan investments. Investments in proprietary funds consist entirely of seed capital investments in certain Victory Funds and USAA Funds. Deferred compensation plan investments are held under deferred compensation plans and include Victory Funds, USAA Funds and third-party mutual funds. Unrealized and realized gains and losses on investments in proprietary funds and deferred compensation plan investments are recorded in earnings as interest income and other income (expense). Investments in Proprietary Funds The following table presents a summary of the cost and fair value of investments in proprietary funds: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of March 31, 2021 $ 759 $ 221 $ (1 ) $ 979 As of December 31, 2020 758 164 — 922 Proceeds from sales of investments in proprietary funds and realized gains and losses recognized during the three months ended March 31, 2021 and 2020 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the three months ended March 31, 2021 $ 19 $ — $ — For the three months ended March 31, 2020 — — — Deferred Compensation Plan Investments The following table presents a summary of the cost and fair value of deferred compensation plan investments: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of March 31, 2021 $ 21,983 $ 4,114 $ (145 ) $ 25,952 As of December 31, 2020 21,205 1,725 (359 ) 22,571 Proceeds from sales of deferred compensation plan investments and realized gains and losses recognized during the three months ended March 31, 2021 and 2020 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the three months ended March 31, 2021 $ 1,890 $ 89 $ (28 ) For the three months ended March 31, 2020 1,091 20 (46 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8. Income Taxes The effective tax rate for the three months ended March 31, 2021 and 2020 differs from the United States federal statutory rate primarily as a result of state and local income taxes, excess tax benefits on share-based compensation and certain non-deductible expenses, and for 2020, expense related to increasing the liability for previously unrecorded state tax benefits. For the three months ended March 31, 2021 and 2020, the provision for income taxes was $17.7 million and $16.8 million, or 21.3% and 22.7%, of pre-tax income respectively. The effective tax rate for the three months ended March 31, 2021 was lower than the effective tax rate for the same period in 2020 mainly due to higher excess tax benefits on share-based compensation. No valuation allowance was recorded for deferred tax assets in the period ended March 31, 2021 and 2020. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 9. Debt 2020 Debt Repricing On January 17, 2020, the Company entered into the First Amendment (the “First Amendment”) to the 2019 Credit Agreement with the other loan parties thereto, Barclays Bank PLC, as administrative agent, and the Royal Bank of Canada as fronting bank. The Company refinanced the 2019 term loans for a reduced applicable margin on LIBOR of 75 basis points. After the January 2020 repricing, the applicable margin on LIBOR was 2.50%, compared to 3.25% under the 2019 term loans. 2021 Debt Repricing On February 18, 2021, the Company entered into the Second Amendment (the “Second Amendment”) to the 2019 Credit Agreement Repriced Term Loans provide for a reduced applicable margin on LIBOR of 25 basis points. The applicable margin on LIBOR under the Repriced Term Loans is %, compared to 2.50 % under the Existing Term Loans. The following table summarizes the components of long-term debt in the unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020: (in thousands) March 31, 2021 December 31, 2020 Effective Interest Rate Term Loans Due July 2026, 2.73% interest rate $ — $ 788,239 3.17 % Due July 2026, 2.44% interest rate 738,239 — 2.84 % Term loan principal outstanding 738,239 788,239 Unamortized debt issuance costs (9,780 ) (12,065 ) Unamortized debt discount (5,807 ) (7,165 ) Long-term debt, net $ 722,652 $ 769,009 The 2019 Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the 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 thereunder (excluding certain letters of credit), of no greater than 3.80 to 1.00. As of March 31, 2021, there were no outstanding borrowings under the revolving credit facility and the Company was in compliance with its financial performance covenant. A total of $50.0 million of the outstanding term loans under the 2019 Credit Agreement was repaid in the first quarter of 2021. Refer to Note 16, Subsequent Events, for information related to term loan activity subsequent to March 31, 2021. During the three months ended March 31, 2020 and 2021, the Company incurred costs of $ million and $0.4 million related to the First Amendment and Second Amendment, respectively, which were recorded in general and administrative expense in the unaudited Condensed Consolidated Statements of Operations. The Company recognized a $1.1 million loss on debt extinguishment in the first quarter of 2020 due to repayments of term loan principal, consisting of the write-off of $0.7 million and $0.4 million of unamortized debt issuance costs and debt discount, respectively. The Company recognized a $2.8 million loss on debt extinguishment in the first quarter of 2021 due to the Second Amendment and repayments of term loan principal, consisting of the write-off of $1.8 million and $1.0 million of unamortized debt issuance costs and debt discount, respectively. Interest Expense The following table summarizes the components of interest expense and other financing costs in the unaudited Condensed Consolidated Statements of Operations for the periods ended March 31, 2021 and 2020: For the Three Months Ended March 31, (in thousands) 2021 2020 Interest expense $ 4,929 $ 10,056 Amortization of debt issuance costs 662 781 Amortization of debt discount 321 392 Interest rate swap expense 818 — Other 115 179 Total $ 6,845 $ 11,408 |
Equity
Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Equity | NOTE 10. Equity Shares Rollforward The following tables present the changes in the number of shares of common stock issued and repurchased (in thousands): Shares of Common Stock Issued Shares of Treasury Stock Class A Class B Class A Class B Balance, December 31, 2020 19,389 54,767 (3,183 ) (3,431 ) Issuance of shares 1 — — — Share conversion - Class B to A 221 (221 ) — — Repurchase of shares — — (287 ) — Vesting of restricted share grants — 953 — — Exercise of options — 109 — — Shares withheld related to net settlement of equity awards — — — (431 ) Balance, March 31, 2021 19,611 55,608 (3,470 ) (3,862 ) Shares of Common Stock Issued Shares of Treasury Stock Class A Class B Class A Class B Balance, December 31, 2019 18,100 53,937 (1,685 ) (2,656 ) Issuance of shares 2 — — — Share conversion - Class B to A 406 (406 ) — — Repurchase of shares — — (240 ) — Vesting of restricted share grants — 719 — — Exercise of options — 288 — — Shares withheld related to net settlement of equity awards — — — (445 ) Balance, March 31, 2020 18,508 54,538 (1,925 ) (3,101 ) Share Repurchase Program In November 2020, the Company’s Board of Directors authorized a share repurchase program whereby the Company may repurchase up to an additional $15.0 million of the Company’s Class A common stock in the open market or in privately negotiated transactions. The amount and timing of purchases under the share repurchase program authorized in November 2020 will depend on a number of factors, including the price and availability of the Company’s shares, trading volume, capital availability, Company performance and general economic and market conditions. The program can be suspended or discontinued at any time and expires when $15 million shares of Class A common stock have been repurchased or on December 31, 2022. During the three months ended March 31, 2021, the Company repurchased 286,550 shares of Class A common stock at a total cost of $7.1 million for an average price of $24.85 per share and $5.0 million was available for future repurchases under the current share repurchase program. As of March 31, 2021, a cumulative total of 3,469,532 shares of Class A common stock had been repurchased under programs authorized by the Company’s Board of Directors at a total cost of $55.0 million for an average price of $15.84 per share. Dividend Payments Dividends paid during the three months ended March 31, 2021 totaled $6.5 million and included $6.1 million for the March 2021 quarterly dividend and $0.4 million in cash bonuses and distributions related to dividends previously declared upon vesting of restricted stock and stock option awards. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | NOTE 11. Share‑Based Compensation During the three months ended March 31, 2021, the Company issued restricted stock awards for 231,568 shares of common stock, of which awards for 9,568 shares were fully vested on the grant date and awards for 222,000 shares vest based on service over a three year period. Stock option award and restricted stock award activity during the three months ended March 31, 2021 and 2020 was as follows: Shares Subject to Stock Option Awards Three Months Ended March 31, 2021 2020 Avg wtd Avg wtd Avg wtd Avg wtd grant-date exercise grant-date exercise fair value price Units fair value price Units Outstanding at beginning of period $ 3.91 $ 6.50 6,865,101 $ 3.83 $ 6.27 7,880,167 Forfeited 5.12 10.19 (69,989 ) 6.32 13.80 1,708 Exercised 4.28 7.23 (109,237 ) 3.74 5.89 (287,565 ) Outstanding at end of period $ 3.89 $ 6.45 6,685,875 $ 3.84 $ 6.28 7,594,310 Vested $ 3.81 $ 6.20 6,254,734 $ 3.67 $ 5.75 6,659,406 Unvested 5.11 10.07 431,141 5.04 10.05 934,904 Restricted Stock Awards Three Months Ended March 31, 2021 2020 Avg wtd grant- Avg wtd grant- date fair value Units date fair value Units Unvested at beginning of period $ 14.99 2,827,008 $ 14.29 3,215,619 Granted 26.49 231,568 16.62 276,981 Vested 14.61 (952,696 ) 14.14 (719,531 ) Forfeited 15.24 (47,301 ) 16.07 (2,390 ) Unvested at end of period $ 16.45 2,058,579 $ 14.62 2,770,679 At March 31, 2021 and December 31, 2020, the amount of cash bonuses and distributions related to dividends previously declared on unvested and outstanding restricted share awards and stock options totaled $1.0 million and $1.2 million, respectively, which was 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. The Company recorded $5.5 million and $6.0 million of share-based compensation expense during the three months ended March 31, 2021 and 2020, respectively, in personnel compensation and benefits in the unaudited Condensed Consolidated Statements of Operations. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 12. Earnings Per Share The following table sets forth the reconciliation of basic earnings per share and diluted earnings per share from net income for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, (in thousands except per share amounts) 2021 2020 Net income $ 65,202 $ 57,166 Shares: Basic 67,761 67,790 Plus 6,347 6,560 Diluted 74,108 74,350 Earnings per share Basic: $ 0.96 $ 0.84 Diluted: $ 0.88 $ 0.77 There were no outstanding instruments excluded from the computation of weighted average shares for diluted earnings per share because the effect would be anti-dilutive for the three months ended March 31, 2021. Outstanding instruments excluded from the computation of weighted average shares for diluted earnings per share because the effect would be anti-dilutive totaled 31 thousand shares for the three months ended March 31, 2020. Holders of non-vested share-based compensation awards do not have rights to receive nonforfeitable dividends on the shares covered by the awards. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | NOTE 13. Accumulated Other Comprehensive Income (Loss) The following table presents changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2021 and 2020. Cumulative Cash Flow Translation (in thousands) Hedges (a) Adjustment Total Balance, December 31, 2020 $ (7,573 ) $ 113 $ (7,460 ) Other comprehensive income (loss) before reclassification and tax 13,414 (3 ) 13,411 Tax impact (3,260 ) 1 (3,259 ) Reclassification adjustments, before tax 818 — 818 Tax impact (199 ) — (199 ) Net current period other comprehensive income (loss) 10,773 (2 ) 10,771 Balance, March 31, 2021 $ 3,200 $ 111 $ 3,311 Balance, December 31, 2019 $ — $ — $ — Other comprehensive loss before reclassification and tax (6,318 ) (88 ) (6,406 ) Tax impact 1,498 21 1,519 Net current period other comprehensive loss (4,820 ) (67 ) (4,887 ) Balance, March 31, 2020 $ (4,820 ) $ (67 ) $ (4,887 ) (a) Reclassifications out of accumulated other comprehensive income (loss) related to cash flow hedges are recorded in interest expense and other financing costs. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivatives | NOTE 14. DERIVATIVES Interest Rate Swaps On March 27, 2020, the Company entered into the Swap to manage interest rate risk associated with a portion of its floating-rate long-term debt. The Company does not purchase or hold any derivative instruments for trading or speculative purposes. Under the terms of the Swap, the Company pays interest at a fixed rate of interest on a quarterly basis and receives interest at the three-month LIBOR rate in effect for that quarter. The notional value, fixed rate of interest and expiration date of the Swap as of March 31, 2021 were $450 million – 0.965% – July 1, 2026. Refer to Note 5, Fair Value Measurements, for additional disclosures regarding fair value measurements. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how the Company reflects the change in fair value of the derivative instrument. A derivative qualifies for hedge accounting treatment if, at inception, it meets defined correlation and effectiveness criteria. These criteria require that the anticipated cash flows and/or changes in fair value of the hedging instrument substantially offset those of the position being hedged. The Swap is assessed for effectiveness and continued qualification for hedge accounting on a quarterly basis. For the three months ended March 31, 2021 and since inception, the Swap was deemed to be highly effective. The Swap is designated as a cash flow hedge. Accordingly, the Swap is measured at fair value with mark-to-market gains or losses deferred and included in accumulated other comprehensive income (loss), net of tax, to the extent the hedge is determined to be effective. Gains or losses from the Swap are reclassified to interest expense in the same period during which the hedged transaction affects earnings. The amount payable to the Swap counterparty at March 31, 2021 of $0.8 million is recorded in other liabilities on the unaudited Condensed Consolidated Balance Sheets. All derivative instruments are recorded on the unaudited Condensed Consolidated Balance Sheets at fair value as an asset (if the derivative is in a gain position) or a liability (if the derivative is in a loss position). On March 31, 2021, the Swap had a fair value of $4.2 million and was recorded in other assets. On December 31, 2020, the Swap had a fair value of $10.0 million and was recorded in other liabilities. The following table summarizes the classification of the Swap in the unaudited Condensed Consolidated Balance Sheets and the notional amount at March 31, 2021 and December 31, 2020 (in thousands): Balance Sheets Description March 31, 2021 December 31, 2020 Other assets (Other liabilities) Fair value of interest rate swap $ 4,226 $ (10,006 ) Notional amount 450,000 450,000 The following tables summarize the effects of the Swap in the unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31 Statement of Operations Description 2021 2020 Interest expense and other financing costs Loss reclassified from AOCI(L) $ 818 $ — Three Months Ended March 31 Statements of Comprehensive Income Description 2021 2020 Other comprehensive income (loss) Income (loss) recognized in AOCI(L), net of tax $ 10,773 $ (4,820 ) |
Equity Method Investment
Equity Method Investment | 3 Months Ended |
Mar. 31, 2021 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Equity Method Investment | NOTE 15. EQUITY METHOD INVESTMENT On September 20, 2020, the Company acquired, through a wholly owned subsidiary, a 15% interest voting share and income share in Alderwood. Alderwood’s operating entity, Alderwood Capital, is a London-based investment advisory firm focused on taking minority stakes in specialist boutique asset management businesses. The Company has commitments to contribute additional capital of $4.5 million to Alderwood and $50 million to a private fund to be launched by Alderwood, subject to certain terms and conditions, which include receipt of required regulatory approvals from the Financial Conduct Authority of the United Kingdom and obtaining an agreed amount of aggregate legally binding commitments from investors in the private fund. On March 8, 2021, the Company announced that Alderwood Capital had received authorization from the Financial Conduct Authority of the United Kingdom and that Alderwood’s private fund had been formally launched to institutional investors. The Company analyzed its investment in Alderwood under the voting interest model and determined that it does not have a controlling financial interest over Alderwood and should not consolidate under the voting interest model. Given the level of ownership interest in Alderwood, which is an English limited liability partnership, and the fact that Alderwood will maintain specific ownership accounts for investors, the Company accounts for its investment in Alderwood using the equity method of accounting. Equity method investments are recorded in other assets in the unaudited Condensed Consolidated Balance Sheets. At March 31, 2021 and December 31, 2020, the Company’s equity method investment in Alderwood totaled $1.4 million. Gains and losses from equity method investments are recorded in interest income and other income (expense) in the unaudited Condensed Consolidated Statements of Operations. For the three months ended March 31, 2021, losses from equity method investments were not material to our consolidated results of operations ($0 for the three months ended March 31, 2020). |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16. SUBSEQUENT EVENTS Subsequent to March 31, 2021, the Company repaid $27 million of outstanding term loans for a total debt reduction of $388.8 million since July 1, 2019. On May 6, 2021, our Board of Directors declared a quarterly cash dividend of $0.12 per share on Victory common stock. The dividend is payable on June 25, 2021, to stockholders of record on June 10, 2021. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial condition, results of operations, and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the operations of the Company and its wholly-owned subsidiaries, after elimination of all intercompany balances and transactions. On September 20, 2020, the Company acquired a 15% equity interest in Alderwood Partners LLP (“Alderwood”). Alderwood’s operating entity, Alderwood Capital, is a London-based investment advisory firm focused on taking minority stakes in specialist boutique asset management businesses. The Company analyzed its investment in Alderwood under the voting interest model and determined that it would not consolidate Alderwood as it does not have a controlling financial interest. The Company’s involvement with non-consolidated variable interest entities (“VIEs”) include sponsored investment funds. For further discussion regarding VIEs, refer to Note 2, Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2020. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the unaudited condensed 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 and the notes. Actual results may ultimately differ materially from those estimates. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. COVID-19 did not have a material adverse effect on the Company’s reported results for the three months ended March 31, 2021. |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Adopted in 2021 • Internal-Use Software: Effective January 1, 2021, the Company adopted, on a prospective basis, Accounting Standards Update (“ASU”) 2018-15 (“ASU 2018-15”), "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)," which aligns the requirements for capitalizing implementation costs incurred in a service contract hosting arrangement with those of developing or obtaining internal-use software. The adoption had no impact on the Company’s consolidated financial statements. • Subsequent Measurement of Goodwill: Effective January 1, 2021, the Company adopted, on a prospective basis, ASU 2017-04 (“ASU 2017-04”), “Intangibles – Goodwill and Other (Topic 350)” (“ASU 2017-04”) which simplifies the test for goodwill impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (step two) to measure a goodwill impairment charge. Goodwill impairment will be based upon the results of step one of the impairment test, which is defined as the excess of the carrying amount of a reporting unit over its fair value, not to exceed the carrying amount of goodwill allocated to that reporting unit. The adoption had no impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards • Reference Rate Reform: In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, (“ASU 2020-04”), “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 contains optional practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this guidance are effective for all entities through December 31, 2022. The Company is currently evaluating the effect of this new standard on its consolidated financial statements. • Expected Credit Losses: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 creates a new model for determining current expected credit losses (“CECL”) on trade and other receivables, net investments in leases, contract assets and long-term receivables. The CECL impairment model requires companies to consider the risk of loss even if it is remote and to include forecasts of future economic conditions as well as information about past events and current conditions. The effective date for calendar-year public business entities is January 1, 2020. As an emerging growth company (“EGC”), the Company will adopt ASU 2016-13 on January 1, 2023 and is currently reviewing the effect of this new standard on its consolidated financial statements. • Leases: In February 2016, the FASB issued ASU 2016‑02, “Leases (Topic 842)” (the “New Lease Standard”) which supersedes previous lease guidance, Accounting Standards Codification (“ASC”) Topic 840 (“ASC Topic 840”). The New Lease Standard requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) on their balance sheet at the commencement date and recognize expenses on their income statement similar to ASC Topic 840 guidance. In addition, the FASB issued ASU 2018-11, “Leases Targeted Improvements,” which provides a package of practical expedients for entities to apply upon adoption. The effective date for calendar-year public business entities was January 1, 2019. In June 2020, the FASB deferred the effective date of the New Lease Standard for private companies and other companies who had not yet been required to adopt the standard. Due to Victory’s EGC status, the Company will adopt the New Lease Standard on January 1, 2022. Management has assessed and evaluated the Company’s portfolio of active real estate leases and is currently surveying the business for other leases. As outlined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Company has approximately $16.7 million in undiscounted, future minimum cash commitments under net operating leases. The New Lease Standard is expected to result in a gross up on the Consolidated Balance Sheets and to have no material impact to the Consolidated Statements of Operations, liquidity or the Company’s debt covenant compliance under our current credit agreement. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Type and Product | In accordance with the revenue recognition standard requirements, the following table disaggregates our revenue by type and product: Three Months Ended March 31, (in thousands) 2021 2020 Investment management fees Mutual funds (Victory/USAA Funds) $ 127,746 $ 119,514 ETFs (VictoryShares) 3,454 3,162 Separate accounts and other vehicles 29,541 24,545 Performance-based fees Mutual funds (USAA Funds) (1,439 ) — Separate accounts and other vehicles 982 (340 ) Total investment management fees $ 160,284 $ 146,881 Fund administration and distribution fees Administration fees Mutual funds (Victory/USAA Funds) $ 29,004 $ 29,610 ETFs (VictoryShares) 441 385 Distribution fees Mutual funds (Victory/USAA Funds) 6,938 6,796 Transfer agent fees Mutual funds (USAA Funds) 16,282 20,749 Total fund administration and distribution fees $ 52,665 $ 57,540 Total revenue $ 212,949 $ 204,421 |
Schedule of Balances of Receivables from Contracts with Customers | The following table presents balances of receivables: (in thousands) March 31, 2021 December 31, 2020 Customer receivables Mutual funds (Victory/USAA Funds) $ 66,036 $ 60,868 ETFs (VictoryShares) 1,522 1,419 Separate accounts and other vehicles 24,237 22,641 Receivables from contracts with customers 91,795 84,928 Non-customer receivables 129 3,254 Total receivables $ 91,924 $ 88,182 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Summary of Significant Inputs to Valuation of Contingent Consideration Payable | Significant inputs to the valuation of contingent consideration payable to sellers as of March 31, 2021 and December 31, 2020 are as follows and are approximate values: March 31, 2021 December 31, 2020 Non-managed money revenue average annual growth rate 3 % 3 % Market price of risk 7 % 7 % Revenue volatility 16 % 16 % Discount rate 3 % 3 % Years remaining in earn out period 2.6 2.9 Undiscounted estimated remaining earn out payments in millions $99.6 - $112.5 $97.7 - $112.5 |
Summary of Business Acquisition Related Cost | Acquisition-related costs Three Months Ended March 31, (in thousands) 2021 2020 USAA AMCO Acquisition $ 10 $ (124 ) Other (174 ) 55 Total acquisition-related costs $ (164 ) $ (69 ) |
Summary of Rollforward of Restructuring and Integration Liabilities | The following table presents the rollforward of restructuring and integration liabilities, which are recorded in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets, for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, (in millions) 2021 2020 Liability balance, beginning of period $ 1.0 $ 3.0 Severance expense - USAA AMCO 1.6 — Integration costs - THB 0.1 — Integration costs - USAA AMCO 0.4 1.0 Total restructuring and integration costs 2.1 1.0 Settlement of liabilities (1.7 ) (1.5 ) Liability balance, end of period $ 1.4 $ 2.5 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Measured at Fair Value on Recurring Basis | The table below shows liabilities measured at fair value on a recurring basis. As of March 31, 2021 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Interest Rate Swap Asset $ 4,226 $ - $ 4,226 $ - Total Financial Assets $ 4,226 $ - $ 4,226 $ - Financial Liabilities Interest Rate Swap Liability $ - $ - $ - $ - Contingent Consideration Arrangements (95,000 ) - - (95,000 ) Total Financial Liabilities $ (95,000 ) $ - $ - $ (95,000 ) As of December 31, 2020 (in thousands) Total Level 1 Level 2 Level 3 Financial Assets Interest Rate Swap Asset $ - $ - $ - $ - Total Financial Assets $ - $ - $ - $ - Financial Liabilities Interest Rate Swap Liability $ (10,006 ) $ - $ (10,006 ) $ - Contingent Consideration Arrangements (92,500 ) - - (92,500 ) Total Financial Liabilities $ (102,506 ) $ - $ (10,006 ) $ (92,500 ) |
Summary of Change in Contingent Consideration Arrangement Liabilities | The following table presents the change in contingent consideration arrangement liabilities for the three months ended March 31, 2021. (in thousands) Contingent Consideration Liabilities Balance, December 31, 2020 $ (92,500 ) USAA AMCO change in fair value measurement (2,500 ) Balance, March 31, 2021 $ (95,000 ) |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Summary of Related-Party Transactions | (in thousands) March 31, 2021 December 31, 2020 Related party assets Cash and cash equivalents $ 10,089 $ 10,088 Receivables (investment management fees) 50,569 46,958 Receivables (fund administration and distribution fees) 19,097 16,971 Investment in proprietary funds, fair value 979 922 Deferred compensation plan investments, fair value 25,447 22,062 Total $ 106,181 $ 97,001 Related party liabilities Accounts payable and accrued expenses (fund reimbursements) $ 6,126 $ 5,978 Total $ 6,126 $ 5,978 Three Months Ended March 31, (in thousands) 2021 2020 Related party revenue Investment management fees $ 133,294 $ 124,312 Fund administration and distribution fees 52,665 57,540 Total $ 185,959 $ 181,852 Related party expense General and administrative $ 130 $ — Total $ 130 $ — Related party other (expense) income Interest income and other (expense) income $ 2,675 $ (4,798 ) Total $ 2,675 $ (4,798 ) |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Proprietary Funds | |
Gain (Loss) on Securities [Line Items] | |
Summary of Cost and Fair Value of Investments in Proprietary Funds | The following table presents a summary of the cost and fair value of investments in proprietary funds: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of March 31, 2021 $ 759 $ 221 $ (1 ) $ 979 As of December 31, 2020 758 164 — 922 |
Summary of Proceeds from Sales of Investments in Proprietary Funds and Realized Gains and Losses Recognized | Proceeds from sales of investments in proprietary funds and realized gains and losses recognized during the three months ended March 31, 2021 and 2020 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the three months ended March 31, 2021 $ 19 $ — $ — For the three months ended March 31, 2020 — — — |
Deferred Compensation Plan Investments | |
Gain (Loss) on Securities [Line Items] | |
Summary of Cost and Fair Value of Deferred Compensation Plan Investments | The following table presents a summary of the cost and fair value of deferred compensation plan investments: Gross Unrealized Fair (in thousands) Cost Gains (Losses) Value As of March 31, 2021 $ 21,983 $ 4,114 $ (145 ) $ 25,952 As of December 31, 2020 21,205 1,725 (359 ) 22,571 |
Summary of Proceeds from Sales of Deferred Compensation Plan Investments and Realized Gains and Losses Recognized | Proceeds from sales of deferred compensation plan investments and realized gains and losses recognized during the three months ended March 31, 2021 and 2020 are as follows: Sale Realized (in thousands) Proceeds Gains (Losses) For the three months ended March 31, 2021 $ 1,890 $ 89 $ (28 ) For the three months ended March 31, 2020 1,091 20 (46 ) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Components of Long-Term Debt | The following table summarizes the components of long-term debt in the unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020: (in thousands) March 31, 2021 December 31, 2020 Effective Interest Rate Term Loans Due July 2026, 2.73% interest rate $ — $ 788,239 3.17 % Due July 2026, 2.44% interest rate 738,239 — 2.84 % Term loan principal outstanding 738,239 788,239 Unamortized debt issuance costs (9,780 ) (12,065 ) Unamortized debt discount (5,807 ) (7,165 ) Long-term debt, net $ 722,652 $ 769,009 |
Schedule of Components of Interest Expense and Other Financing Costs | The following table summarizes the components of interest expense and other financing costs in the unaudited Condensed Consolidated Statements of Operations for the periods ended March 31, 2021 and 2020: For the Three Months Ended March 31, (in thousands) 2021 2020 Interest expense $ 4,929 $ 10,056 Amortization of debt issuance costs 662 781 Amortization of debt discount 321 392 Interest rate swap expense 818 — Other 115 179 Total $ 6,845 $ 11,408 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Changes in Number of Shares of Common Stock Issued and Repurchased | The following tables present the changes in the number of shares of common stock issued and repurchased (in thousands): Shares of Common Stock Issued Shares of Treasury Stock Class A Class B Class A Class B Balance, December 31, 2020 19,389 54,767 (3,183 ) (3,431 ) Issuance of shares 1 — — — Share conversion - Class B to A 221 (221 ) — — Repurchase of shares — — (287 ) — Vesting of restricted share grants — 953 — — Exercise of options — 109 — — Shares withheld related to net settlement of equity awards — — — (431 ) Balance, March 31, 2021 19,611 55,608 (3,470 ) (3,862 ) Shares of Common Stock Issued Shares of Treasury Stock Class A Class B Class A Class B Balance, December 31, 2019 18,100 53,937 (1,685 ) (2,656 ) Issuance of shares 2 — — — Share conversion - Class B to A 406 (406 ) — — Repurchase of shares — — (240 ) — Vesting of restricted share grants — 719 — — Exercise of options — 288 — — Shares withheld related to net settlement of equity awards — — — (445 ) Balance, March 31, 2020 18,508 54,538 (1,925 ) (3,101 ) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Schedule of Activity Related to Stock Options Awards and Restricted Stock Awards | Stock option award and restricted stock award activity during the three months ended March 31, 2021 and 2020 was as follows: Shares Subject to Stock Option Awards Three Months Ended March 31, 2021 2020 Avg wtd Avg wtd Avg wtd Avg wtd grant-date exercise grant-date exercise fair value price Units fair value price Units Outstanding at beginning of period $ 3.91 $ 6.50 6,865,101 $ 3.83 $ 6.27 7,880,167 Forfeited 5.12 10.19 (69,989 ) 6.32 13.80 1,708 Exercised 4.28 7.23 (109,237 ) 3.74 5.89 (287,565 ) Outstanding at end of period $ 3.89 $ 6.45 6,685,875 $ 3.84 $ 6.28 7,594,310 Vested $ 3.81 $ 6.20 6,254,734 $ 3.67 $ 5.75 6,659,406 Unvested 5.11 10.07 431,141 5.04 10.05 934,904 Restricted Stock Awards Three Months Ended March 31, 2021 2020 Avg wtd grant- Avg wtd grant- date fair value Units date fair value Units Unvested at beginning of period $ 14.99 2,827,008 $ 14.29 3,215,619 Granted 26.49 231,568 16.62 276,981 Vested 14.61 (952,696 ) 14.14 (719,531 ) Forfeited 15.24 (47,301 ) 16.07 (2,390 ) Unvested at end of period $ 16.45 2,058,579 $ 14.62 2,770,679 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of Basic Earnings Per Share and Diluted Earnings Per Share | The following table sets forth the reconciliation of basic earnings per share and diluted earnings per share from net income for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, (in thousands except per share amounts) 2021 2020 Net income $ 65,202 $ 57,166 Shares: Basic 67,761 67,790 Plus 6,347 6,560 Diluted 74,108 74,350 Earnings per share Basic: $ 0.96 $ 0.84 Diluted: $ 0.88 $ 0.77 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component | The following table presents changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2021 and 2020. Cumulative Cash Flow Translation (in thousands) Hedges (a) Adjustment Total Balance, December 31, 2020 $ (7,573 ) $ 113 $ (7,460 ) Other comprehensive income (loss) before reclassification and tax 13,414 (3 ) 13,411 Tax impact (3,260 ) 1 (3,259 ) Reclassification adjustments, before tax 818 — 818 Tax impact (199 ) — (199 ) Net current period other comprehensive income (loss) 10,773 (2 ) 10,771 Balance, March 31, 2021 $ 3,200 $ 111 $ 3,311 Balance, December 31, 2019 $ — $ — $ — Other comprehensive loss before reclassification and tax (6,318 ) (88 ) (6,406 ) Tax impact 1,498 21 1,519 Net current period other comprehensive loss (4,820 ) (67 ) (4,887 ) Balance, March 31, 2020 $ (4,820 ) $ (67 ) $ (4,887 ) (a) Reclassifications out of accumulated other comprehensive income (loss) related to cash flow hedges are recorded in interest expense and other financing costs. |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Classification of Swap in Unaudited Condensed Consolidated Balance Sheets and the Notional Amount | The following table summarizes the classification of the Swap in the unaudited Condensed Consolidated Balance Sheets and the notional amount at March 31, 2021 and December 31, 2020 (in thousands): Balance Sheets Description March 31, 2021 December 31, 2020 Other assets (Other liabilities) Fair value of interest rate swap $ 4,226 $ (10,006 ) Notional amount 450,000 450,000 |
Summary of Effects of Swap in Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | The following tables summarize the effects of the Swap in the unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31 Statement of Operations Description 2021 2020 Interest expense and other financing costs Loss reclassified from AOCI(L) $ 818 $ — Three Months Ended March 31 Statements of Comprehensive Income Description 2021 2020 Other comprehensive income (loss) Income (loss) recognized in AOCI(L), net of tax $ 10,773 $ (4,820 ) |
Organization and Nature of Bu_2
Organization and Nature of Business - Additional Information (Details) $ in Millions | Mar. 01, 2021USD ($) |
THB Acquisition | |
Subsidiary Sale Of Stock [Line Items] | |
Asset under management acquired | $ 547 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 20, 2020 |
Significant Accounting Policies [Line Items] | |||
Future minimum cash commitments under operating leases | $ 16.7 | ||
Accounting Standards Update 2018-15 | |||
Significant Accounting Policies [Line Items] | |||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | ||
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2021 | ||
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true | ||
Accounting Standards Update 2017-04 | |||
Significant Accounting Policies [Line Items] | |||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | ||
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2021 | ||
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true | ||
Cerebellum | Alderwood Partners LLP | |||
Significant Accounting Policies [Line Items] | |||
Equity interest percentage | 15.00% |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue by Type and Product (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of revenue | ||
Total revenue | $ 212,949 | $ 204,421 |
Investment Management Fees | ||
Disaggregation of revenue | ||
Total revenue | 160,284 | 146,881 |
Investment Management Fees | Mutual Funds | ||
Disaggregation of revenue | ||
Total revenue | 127,746 | 119,514 |
Investment Management Fees | ETF's | ||
Disaggregation of revenue | ||
Total revenue | 3,454 | 3,162 |
Investment Management Fees | Separate Accounts and Other Vehicles | ||
Disaggregation of revenue | ||
Total revenue | 29,541 | 24,545 |
Performance-based Investment Fees | Mutual Funds | ||
Disaggregation of revenue | ||
Total revenue | (1,439) | |
Performance-based Investment Fees | Separate Accounts and Other Vehicles | ||
Disaggregation of revenue | ||
Total revenue | 982 | (340) |
Administration Fees | Mutual Funds | ||
Disaggregation of revenue | ||
Total revenue | 29,004 | 29,610 |
Administration Fees | ETF's | ||
Disaggregation of revenue | ||
Total revenue | 441 | 385 |
Fund Distribution Fees | Mutual Funds | ||
Disaggregation of revenue | ||
Total revenue | 6,938 | 6,796 |
Transfer Agent Fees | Mutual Funds | ||
Disaggregation of revenue | ||
Total revenue | 16,282 | 20,749 |
Fund Administration and Distribution Fees | ||
Disaggregation of revenue | ||
Total revenue | $ 52,665 | $ 57,540 |
Revenue - Schedule of Balances
Revenue - Schedule of Balances of Receivables from Contracts with Customers (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Disaggregation of revenue | ||
Receivables from contracts with customers | $ 91,795 | $ 84,928 |
Non-customer receivables | 129 | 3,254 |
Total receivables | 91,924 | 88,182 |
Mutual Funds | ||
Disaggregation of revenue | ||
Receivables from contracts with customers | 66,036 | 60,868 |
ETF's | ||
Disaggregation of revenue | ||
Receivables from contracts with customers | 1,522 | 1,419 |
Separate Accounts and Other Vehicles | ||
Disaggregation of revenue | ||
Receivables from contracts with customers | $ 24,237 | $ 22,641 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Class C | |
Disaggregation of revenue | |
Upfront sales commission percentage | 1.00% |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) | Mar. 01, 2021 | Jul. 01, 2019 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2020 |
Acquisitions | ||||||
Consideration payable for acquisition of business | $ 95,000,000 | $ 92,500,000 | $ 92,500,000 | |||
Change in fair value of contingent consideration obligations | 2,500,000 | $ (5,500,000) | ||||
THB Acquisition | ||||||
Acquisitions | ||||||
Asset under management acquired | $ 547,000,000 | |||||
THB Acquisition | Customer Relationship | ||||||
Acquisitions | ||||||
Estimated acquisition costs allocated to definite- lived intangible asset | $ 600,000 | |||||
USAA AMCO | ||||||
Acquisitions | ||||||
Maximum aggregate contingent payment | $ 150,000,000 | 112,500,000 | $ 112,500,000 | |||
Maximum annual contingent payment | $ 37,500,000 | $ 37,500,000 | ||||
Period of time over which contingent payments will be made | 4 years | |||||
Contingent consideration threshold percentage | 80.00% | |||||
Annual revenue percentage requirement to achieve the maximum contingent payment | 100.00% | |||||
Business combination, earnout payments | $ 37,500,000 | |||||
Years remaining in earn out period | 2 years 7 months 6 days | 3 years | 2 years 10 months 24 days | |||
Consideration payable for acquisition of business | $ 95,000,000 | $ 92,500,000 | $ 92,500,000 | |||
Change in fair value of contingent consideration obligations | $ 2,500,000 |
Acquisitions - Summary of Signi
Acquisitions - Summary of Significant Inputs to Valuation of Contingent Consideration Payable (Details) - USAA AMCO - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2020 | |
Acquisitions | |||
Non-managed money revenue average annual growth rate | 3.00% | 3.00% | |
Market price of risk | 7.00% | 7.00% | |
Revenue volatility | 16.00% | 16.00% | |
Discount rate | 3.00% | 3.00% | |
Years remaining in earn out period | 2 years 7 months 6 days | 3 years | 2 years 10 months 24 days |
Minimum | |||
Acquisitions | |||
Undiscounted estimated remaining earn out payments in millions | $ 99.6 | $ 97.7 | |
Maximum | |||
Acquisitions | |||
Undiscounted estimated remaining earn out payments in millions | $ 112.5 | $ 112.5 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisition Related Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Acquisitions | ||
Acquisition-related costs | $ (164) | $ (69) |
USAA AMCO | ||
Acquisitions | ||
Acquisition-related costs | 10 | (124) |
Other | ||
Acquisitions | ||
Acquisition-related costs | $ (174) | $ 55 |
Acquisitions - Summary of Rollf
Acquisitions - Summary of Rollforward of Restructuring and Integration Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Rollforward of restructuring and integration liabilities | ||
Liability balance, beginning of period | $ 1,000 | $ 3,000 |
Restructuring and integration costs | 2,053 | 998 |
Settlement of liabilities | (1,700) | (1,500) |
Liability balance, end of period | 1,400 | 2,500 |
USAA AMCO | ||
Rollforward of restructuring and integration liabilities | ||
Severance expense | 1,600 | |
Integration costs | 400 | $ 1,000 |
THB Acquisition | ||
Rollforward of restructuring and integration liabilities | ||
Integration costs | $ 100 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Financial Assets | ||
Interest Rate Swap Asset | $ 4,226 | |
Total Financial Assets | 4,226 | |
Financial Liabilities | ||
Interest Rate Swap Liability | $ (10,006) | |
Contingent Consideration Arrangements | (95,000) | (92,500) |
Total Financial Liabilities | (95,000) | (102,506) |
Level 2 | ||
Financial Assets | ||
Interest Rate Swap Asset | 4,226 | |
Total Financial Assets | 4,226 | |
Financial Liabilities | ||
Interest Rate Swap Liability | (10,006) | |
Total Financial Liabilities | (10,006) | |
Level 3 | ||
Financial Liabilities | ||
Contingent Consideration Arrangements | (95,000) | (92,500) |
Total Financial Liabilities | $ (95,000) | $ (92,500) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 27, 2020 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Transfers between levels | $ 0 | $ 0 | |
Cash and Cash Equivalents | Level 1 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Investments, fair value | 10,100,000 | ||
Interest Rate Swap | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Notional amount | $ 450,000,000 | $ 450,000,000 | $ 450,000,000 |
Rate of interest | 3.465% |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Change in Contingent Consideration Arrangement Liabilities (Details) - Contingent Consideration Liabilities $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Beginning balance | $ (92,500) |
Ending balance | (95,000) |
USAA AMCO | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Change in fair value measurement | $ (2,500) |
Related-Party Transactions - Su
Related-Party Transactions - Summary of Related-Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Related party assets | |||
Cash and cash equivalents | $ 30,386 | $ 22,744 | |
Related party revenue | |||
Total revenue | 212,949 | $ 204,421 | |
Investment Management Fees | |||
Related party revenue | |||
Total revenue | 160,284 | 146,881 | |
Fund Administration and Distribution Fees | |||
Related party revenue | |||
Total revenue | 52,665 | 57,540 | |
VCH | |||
Related party assets | |||
Cash and cash equivalents | 10,089 | 10,088 | |
Receivables (investment management fees) | 50,569 | 46,958 | |
Receivables (fund administration and distribution fees) | 19,097 | 16,971 | |
Investment in proprietary funds, fair value | 979 | 922 | |
Deferred compensation plan investments, fair value | 25,447 | 22,062 | |
Total | 106,181 | 97,001 | |
Related party liabilities | |||
Accounts payable and accrued expenses (fund reimbursements) | 6,126 | 5,978 | |
Total | 6,126 | $ 5,978 | |
Related party revenue | |||
Total revenue | 185,959 | 181,852 | |
Related party expense | |||
General and administrative | 130 | ||
Total | 130 | ||
Related party other (expense) income | |||
Interest income and other (expense) income | 2,675 | (4,798) | |
Total | 2,675 | (4,798) | |
VCH | Investment Management Fees | |||
Related party revenue | |||
Total revenue | 133,294 | 124,312 | |
VCH | Fund Administration and Distribution Fees | |||
Related party revenue | |||
Total revenue | $ 52,665 | $ 57,540 |
Investments - Summary of Cost a
Investments - Summary of Cost and Fair Value of Investments in Proprietary Funds (Details) - Proprietary Funds - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule Of Available For Sale Securities [Line Items] | ||
Cost | $ 759 | $ 758 |
Gross Unrealized Gains | 221 | 164 |
Gross Unrealized (Losses) | (1) | |
Investments in proprietary funds, at fair value | $ 979 | $ 922 |
Investments - Summary of Procee
Investments - Summary of Proceeds from Sales of Investments in Proprietary Funds and Realized Gains and Losses Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Proceeds and realized gains and losses recognized | ||
Sale Proceeds | $ 1,909 | $ 1,091 |
Proprietary Funds | ||
Proceeds and realized gains and losses recognized | ||
Sale Proceeds | $ 19 |
Investments - Summary of Cost_2
Investments - Summary of Cost and Fair Value of Deferred Compensation Plan Investments (Details) - Deferred Compensation Plan Investments - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Schedule Of Trading Securities And Other Trading Assets [Line Items] | ||
Cost | $ 21,983 | $ 21,205 |
Gross Unrealized Gains | 4,114 | 1,725 |
Gross Unrealized (Losses) | (145) | (359) |
Trading securities, at fair value | $ 25,952 | $ 22,571 |
Investments - Summary of Proc_2
Investments - Summary of Proceeds from Sales of Deferred Compensation Plan Investments and Realized Gains and Losses Recognized (Details) - Deferred Compensation Plan Investments - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Proceeds and realized gains and losses recognized | ||
Sale Proceeds | $ 1,890 | $ 1,091 |
Realized Gains | 89 | 20 |
Realized (Losses) | $ (28) | $ (46) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 17,662,000 | $ 16,823,000 |
Federal income tax at U.S. statutory rate | 21.30% | 22.70% |
Valuation allowance, deferred tax assets | $ 0 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Feb. 18, 2021 | Jan. 17, 2020 | Jul. 01, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||||||
Loss on debt extinguishment | $ 2,781,000 | $ 1,054,000 | ||||
Write-off of unamortized debt issuance costs | 9,780,000 | $ 12,065,000 | ||||
Write-off of debt discount | 5,807,000 | $ 7,165,000 | ||||
General and Administrative Expense | ||||||
Debt Instrument [Line Items] | ||||||
Cost incurred | 900,000 | 400,000 | ||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding borrowing | $ 0 | |||||
2020 Debt Repricing Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate description | 2019 term loans for a reduced applicable margin on LIBOR of 75 basis points | |||||
Basis spread on variable rate, increase (decrease) | 0.75% | |||||
2020 Debt Repricing Term Loans | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Base spread (as a percent) | 2.50% | |||||
Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of debt | $ 50,000,000 | |||||
Loss on debt extinguishment | 2,800,000 | 1,100,000 | ||||
Write-off of unamortized debt issuance costs | 1,800,000 | 700,000 | ||||
Write-off of debt discount | $ 1,000,000 | $ 400,000 | ||||
Term Loans | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Base spread (as a percent) | 2.50% | 3.25% | ||||
Repriced Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate description | Repriced Term Loans provide for a reduced applicable margin on LIBOR of 25 basis points. | |||||
Basis spread on variable rate, increase (decrease) | 0.25% | |||||
Principal amount | $ 755,700,000 | |||||
Debt maturity date | 2026-07 | |||||
Repriced Term Loans | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Base spread (as a percent) | 2.25% | |||||
Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum percentage of borrowings for revolving credit facility as a percent of total commitments | 35.00% | |||||
Maximum first lien leverage ratio on last day of quarter (as a percent) | 380.00% |
Debt - Schedule of Components o
Debt - Schedule of Components of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | $ (9,780) | $ (12,065) | |
Unamortized debt discount | (5,807) | (7,165) | |
Long-term debt, net | 722,652 | 769,009 | |
Term Loans | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 738,239 | 788,239 | |
Unamortized debt issuance costs | (1,800) | $ (700) | |
Unamortized debt discount | (1,000) | $ (400) | |
Due July 2026, 2.73% interest rate | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 788,239 | ||
Effective interest rate (as a percent) | 3.17% | ||
Due July 2026, 2.44% interest rate | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 738,239 | ||
Effective interest rate (as a percent) | 2.84% |
Debt - Schedule of Components_2
Debt - Schedule of Components of Long-Term Debt (Parenthetical) (Details) | Mar. 31, 2021 | Dec. 31, 2020 |
Due July 2026, 2.44% interest rate | ||
Debt Instrument [Line Items] | ||
Fixed interest rate (as a percent) | 2.44% | |
Due July 2026, 2.73% interest rate | ||
Debt Instrument [Line Items] | ||
Fixed interest rate (as a percent) | 2.73% |
Debt - Schedule of Components_3
Debt - Schedule of Components of Interest Expense and Other Financing Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Debt Disclosure [Abstract] | ||
Interest expense | $ 4,929 | $ 10,056 |
Amortization of debt issuance costs | 662 | 781 |
Amortization of debt discount | 321 | 392 |
Interest rate swap expense | 818 | |
Other | 115 | 179 |
Total | $ 6,845 | $ 11,408 |
Equity - Schedule of Changes in
Equity - Schedule of Changes in Number of Shares of Common Stock Issued and Repurchased (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Common Stock | Class A | ||
Balance at beginning of period (in shares) | 19,389 | 18,100 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Issuance of shares | 1 | 2 |
Share conversion - Class B to A | 221 | 406 |
Balance at end of period (in shares) | 19,611 | 18,508 |
Common Stock | Class B | ||
Balance at beginning of period (in shares) | 54,767 | 53,937 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Share conversion - Class B to A | (221) | (406) |
Vesting of restricted share grants | 953 | 719 |
Exercise of options | 109 | 288 |
Balance at end of period (in shares) | 55,608 | 54,538 |
Treasury Stock | Class A | ||
Balance at beginning of period (in shares) | (3,183) | (1,685) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Repurchase of shares | (287) | (240) |
Balance at end of period (in shares) | (3,470) | (1,925) |
Treasury Stock | Class B | ||
Balance at beginning of period (in shares) | (3,431) | (2,656) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Shares withheld related to net settlement of equity awards | (431) | (445) |
Balance at end of period (in shares) | (3,862) | (3,101) |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Nov. 30, 2020 | |
Average cost of acquired shares (in dollars per share) | $ 15.84 | |
Remaining authorized amount for share repurchase program | $ 55 | |
Total dividends | 6.5 | |
Dividends paid | 6.1 | |
Special dividends paid | $ 0.4 | |
Class A | ||
Authorized amount for share repurchase program | $ 15 | |
Common stock shares repurchased | 286,550 | 15,000,000 |
Average cost of acquired shares (in dollars per share) | $ 24.85 | |
Future repurchase program current share | 5,000,000 | |
Number of shares acquired | 3,469,532 | |
Cost of acquired shares | $ 7.1 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Amount of cash bonuses and distributions related to all dividends previously declared on unvested shares | $ 0.4 | ||
Stock based compensation expense | $ 5.5 | $ 6 | |
Restricted Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total number of restricted shares granted | 231,568 | 276,981 | |
Vested (in shares) | 952,696 | 719,531 | |
Restricted Shares | Vest Over Three Years | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total number of restricted shares granted | 222,000 | ||
Vested (in shares) | 9,568 | ||
Vesting period from grant date | 3 years | ||
Stock Options and Restricted Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Amount of cash bonuses and distributions related to all dividends previously declared on unvested shares | $ 1 | $ 1.2 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Activity Related to Stock Options Awards and Restricted Stock Awards (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock Options | ||
Avg wtd grant-date fair value | ||
Outstanding at beginning of period | $ 3.91 | $ 3.83 |
Forfeited | 5.12 | 6.32 |
Exercised | 4.28 | 3.74 |
Outstanding at end of period | 3.89 | 3.84 |
Vested | 3.81 | 3.67 |
Unvested | 5.11 | 5.04 |
Avg wtd exercise price | ||
Outstanding at beginning of period | 6.50 | 6.27 |
Forfeited | 10.19 | 13.80 |
Exercised | 7.23 | 5.89 |
Outstanding at end of period | 6.45 | 6.28 |
Vested | 6.20 | 5.75 |
Unvested | $ 10.07 | $ 10.05 |
Units | ||
Outstanding at beginning of period | 6,865,101 | 7,880,167 |
Forfieted | (69,989) | |
Reversal of Forfeited | 1,708 | |
Exercised | (109,237) | (287,565) |
Outstanding at end of period | 6,685,875 | 7,594,310 |
Vested | 6,254,734 | 6,659,406 |
Unvested | 431,141 | 934,904 |
Restricted Shares | ||
Avg wtd grant-date fair value | ||
Unvested at beginning of period | $ 14.99 | $ 14.29 |
Granted | 26.49 | 16.62 |
Vested | 14.61 | 14.14 |
Forfeited | 15.24 | 16.07 |
Unvested at end of period | $ 16.45 | $ 14.62 |
Units | ||
Unvested at beginning of period | 2,827,008 | 3,215,619 |
Granted | 231,568 | 276,981 |
Vested | (952,696) | (719,531) |
Forfeited | (47,301) | (2,390) |
Unvested at end of period | 2,058,579 | 2,770,679 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Reconciliation of Basic Earnings Per Share and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share Reconciliation [Abstract] | ||
Net income | $ 65,202 | $ 57,166 |
Shares: | ||
Basic: Weighted average number of shares outstanding | 67,761 | 67,790 |
Plus: Incremental shares from assumed conversion of dilutive instruments | 6,347 | 6,560 |
Diluted: Weighted average number of shares outstanding | 74,108 | 74,350 |
Earnings per share | ||
Basic: | $ 0.96 | $ 0.84 |
Diluted: | $ 0.88 | $ 0.77 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Number of shares excluded from the computations of weighted average shares for diluted earnings per share because the effects would be anti dilutive | 0 | 31,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance at beginning of period | $ 707,541 | $ 537,871 |
Total other comprehensive income (loss), net of tax | 10,771 | (4,887) |
Balance at end of period | 765,376 | 581,080 |
Cash Flow Hedges | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance at beginning of period | (7,573) | |
Other comprehensive income (loss) before reclassification and tax | 13,414 | (6,318) |
Tax impact | (3,260) | 1,498 |
Reclassification adjustments, before tax | 818 | |
Tax impact | (199) | |
Total other comprehensive income (loss), net of tax | 10,773 | (4,820) |
Balance at end of period | 3,200 | (4,820) |
Cumulative Translation Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance at beginning of period | 113 | |
Other comprehensive income (loss) before reclassification and tax | (3) | (88) |
Tax impact | 1 | 21 |
Total other comprehensive income (loss), net of tax | (2) | (67) |
Balance at end of period | 111 | (67) |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance at beginning of period | (7,460) | |
Other comprehensive income (loss) before reclassification and tax | 13,411 | (6,406) |
Tax impact | (3,259) | 1,519 |
Reclassification adjustments, before tax | 818 | |
Tax impact | (199) | |
Total other comprehensive income (loss), net of tax | 10,771 | (4,887) |
Balance at end of period | $ 3,311 | $ (4,887) |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Mar. 27, 2020 | |
Derivative [Line Items] | |||
Amount payable to swap | $ 10,006,000 | ||
Interest Rate Swap Asset | $ 4,226,000 | ||
Other Liabilities | |||
Derivative [Line Items] | |||
Amount payable to swap | 800,000 | 10,000,000 | |
Other Assets | |||
Derivative [Line Items] | |||
Interest Rate Swap Asset | 4,200,000 | ||
Interest Rate Swap | |||
Derivative [Line Items] | |||
Notional amount | $ 450,000,000 | 450,000,000 | $ 450,000,000 |
Fixed interest rate (as a percent) | 0.965% | ||
Expiration date of swap | Jul. 1, 2026 | ||
Interest Rate Swap | Other Liabilities | |||
Derivative [Line Items] | |||
Amount payable to swap | $ 10,006,000 | ||
Interest Rate Swap | Other Assets | |||
Derivative [Line Items] | |||
Interest Rate Swap Asset | $ 4,226,000 |
Derivatives - Summary of Classi
Derivatives - Summary of Classification of Swap in Unaudited Condensed Consolidated Balance Sheets and the Notional Amount (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 27, 2020 |
Derivative [Line Items] | |||
Fair value of interest rate swap | $ 4,226,000 | ||
Fair value of interest rate swap | $ (10,006,000) | ||
Other Assets | |||
Derivative [Line Items] | |||
Fair value of interest rate swap | 4,200,000 | ||
Other Liabilities | |||
Derivative [Line Items] | |||
Fair value of interest rate swap | (800,000) | (10,000,000) | |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Notional amount | 450,000,000 | 450,000,000 | $ 450,000,000 |
Interest Rate Swap | Other Assets | |||
Derivative [Line Items] | |||
Fair value of interest rate swap | $ 4,226,000 | ||
Interest Rate Swap | Other Liabilities | |||
Derivative [Line Items] | |||
Fair value of interest rate swap | $ (10,006,000) |
Derivatives - Summary of Effect
Derivatives - Summary of Effects of Swap in Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative [Line Items] | ||
Loss reclassified from AOCI(L) | $ 6,845 | $ 11,408 |
Net unrealized income (loss) on cash flow hedges | 10,773 | (4,820) |
Interest Rate Swap | Reclassified from AOCI(L) | Other Comprehensive Income (Loss) | Cash Flow Hedges | ||
Derivative [Line Items] | ||
Net unrealized income (loss) on cash flow hedges | 10,773 | $ (4,820) |
Interest Rate Swap | Interest Expense and Other Financing Costs | ||
Derivative [Line Items] | ||
Loss reclassified from AOCI(L) | $ 818 |
Equity Method Investment - Addi
Equity Method Investment - Additional Information (Details) - Cerebellum - USD ($) $ in Thousands | Sep. 20, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Alderwood Partners LLP | ||||
Schedule Of Equity Method Investments [Line Items] | ||||
Equity interest percentage | 15.00% | |||
Equity method commitments to contribute additional capital | $ 4,500 | |||
Equity method investment | $ 1,400 | $ 1,400 | ||
Loss from equity method investment | $ 0 | $ 0 | ||
Private Fund | ||||
Schedule Of Equity Method Investments [Line Items] | ||||
Equity method commitments to contribute additional capital | $ 50,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | May 06, 2021 | May 07, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | May 07, 2021 |
Subsequent Event [Line Items] | |||||
Dividends declared per share of common stock | $ 0.09 | $ 0.05 | |||
Term Loans | |||||
Subsequent Event [Line Items] | |||||
Repayments of debt | $ 50 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared per share of common stock | $ 0.12 | ||||
Dividends, date of declared | May 6, 2021 | ||||
Dividends payable date | Jun. 25, 2021 | ||||
Dividends payable, date of record | Jun. 10, 2021 | ||||
Subsequent Event | Term Loans | |||||
Subsequent Event [Line Items] | |||||
Repayments of debt | $ 27 | $ 388.8 |