VCTR - Earnings call transcript Q4 2019 | Victory Capital Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Victory Capital Holdings, Inc., Fourth Quarter 2019 Conference Call. [Operator Instructions].

I would now like to hand the conference over to Matt Dennis. Please go ahead, sir.

Matthew Dennis

Good morning.

uncertainties. call today's David and discussion include risks the to I'd as turn certain that note contains and I over Brown, to like such, Before forward-looking statements, our Please SEC specific refer factors cause from differ could results that press the those to release projected risk filings more in information our for on to materially actual and forward-looking statements.

they any based on this call made. today, undertake by new assumptions our statements that after website, circumstances events available were this of will us make occur to future we are made of that exist forward-looking be recording date and that a the no which on update While as obligation reflect call statements these or or on we information to forward-looking on

also of principles. these We our business conform financial reporting, to that measures GAAP understanding not most the Relations can our at and on can Investor be believe accessed performance. accounting release the the between In non-GAAP our earnings addition of the this press to comparable found our U.S. in accepted enhance measures tables that be included ir.vcm.com. measures presentation report certain both of and generally these in accompanying the call, which and GAAP Reconciliations measures we non-GAAP website portion do slide in are

David and CEO. Chairman Brown, David? my it's to the to pleasure over Now, call turn

David Brown

Director XXXX Chief as of joined and Earnings Thanks, Matt. Financial I'm Quarter well Chief Officer Good our morning, Administrative as our Relations. Matt of call. Fourth to and by Capital's and Michael welcome Investor today Dennis, Victory Staff Policarpo, President,

acquisition. in detail. fourth full integrated on I review believe the spend will will and it I'll share business a to earnings quarter of Investments few power over turn Then update greater record quarter which for results, I the year our who to demonstrate integration USAA an financial I'm Mike, model. our also the of results the minutes discussing going our

our take I and be will to remarks, Following prepared available questions. Mike, Matt

for diversification, Slide The size, the financial while in business on investing client overview and for levels. many future. begins scale, shareholders year significantly our product X. was We our asset and significantly class, generating outstanding a Victory for results Capital transformational XXXX increased

to the products. the of driven favoring end of industry acquired Solutions full were inflows our from net Total our assets USAA franchise billion XXX% benefited increased and long-term billion. Platform. by acquired inflows $XXX.X Investments year-over-year, fixed grew year by AUM period trends into as well Positive AUM at and during flows XXXX. net $X.X Both priced Solutions income recently competitively as reflecting

As the reminder, average quantitative due to margins strategies integrated strategies our of a fee firm-wide despite the by most on lower-than-average our managing are rates. Solutions This typically we on higher platform. gained than rules-based is our efficiencies earn

flows, positive investment After momentum. with quarter, two fourth amount experience did the strong we by during coupled of to net of net of reflecting positive significant reallocations straight tied long-term billion client franchises, market outflows quarters our performance $X.X a

economic larger net a is rebalancing. continue have despite we of impact the a with relationship often While to reallocation clients outflow, the

reinforces we how is which business, think client about and of view typically activity rebalancing the longer-term our diversification Additionally, a of taking is cyclical it. and importance

superior execution. attributed an third with XXX% the quarter model, point a improvement This XXX results and over business from net EBITDA XXXX. the from record the diluted of is quarter quarter year's last Adjusted XXX combined X% the quarter. income tax the set increased to third also high XX.X% record during a a benefit These with to from the fourth in superior up margin Adjusted basis up quarter, $X.XX be share fourth of of per expansion points basis same our and quarter. can

management USAA capital billion in Management closed principal disciplined million the committed the strategy $XXX July million we company further from of on significantly We remain $X.X when with to ended additional Asset year-end, payments. with debt, X, XXXX. debt to our $XXX acquisition. down year We to reduced we Subsequent

$X.XX a We of March for share, payable declared shareholders cash per also dividend on XX, of XX. on March record

continue acquired progress on in make disclosed integrating achievement ahead of We our of synergies. the to USAA the exceptional remain previously and we business from schedule cost

we channel the As from growth acquisition XXXX, distribution shifting we through forward traditional focus direct members integrating opportunities selling through with our the and channels. to acquired for to move realizing our USAA look products our

largest Antonio, Finally, we've our our new now completed which home. the move become new headquarters San and has in office into our

continue and of the Our X/X ETFs X. AUM and results as year. Platform X or stars funds mutual in X illustrated Morningstar of ranked end quarter, fourth the Investment was during Slide by as Franchises More our overall than investment Solutions of to excellent deliver the on

We including Sycamore, with the the top USAA mutual fund INCORE, Trivalent. Investments an rank and franchises had ETF multiple X-year Morningstar trailing period, mutual Investments, in RS quintile. in and ranked quintile for funds Munder the top had by

Legacy of outperformed and Over benchmarks. respective period, income AUM the its year three XX% Victory USAA of strategies strategies trailing fixed AUM Capital in XX% in our

year the of XX the our total three for benchmarks of overall end XX% period. AUM of Morningstar stars funds Additionally, rated respective by USAA or as XX X mutual platform, XXXX. income fixed trailing X the outperformed of Across

we highlight outperformed solutions Slide X-, the are producing current illustrates clients benchmarks have our XX-year products seeking and clients results provide. of the our These trailing for and attractive, strategies of X- percentage that the that is their new types over we periods. and platform that X-, X investment

I XX. an Turning acquisition Company. like Management our Asset to of on USAA update to provide Slide would

earlier, few disclosed our ahead a our our remain cost to providing schedule progressing additional integration I transparency areas are spend into and we of growth said on efforts few like previously minutes I on well, down As would synergies. drilling some efforts. and a

investment are directly our Victory. This USAA in the the of to USAA from an interaction products. the promptly for investing foundation one USSA calls place the future in Plan new an Victory. establishing in have that case, This agreement e-mail by guided be in First, prospect expressed success XXX is with channel. referral the to responds we may of or not USAA to visits strengthens member interested who members, important USAA currently all this Mutual long-term products. each the directed ensures directly agreement own component when website, interest or a Having is our place Fund College Savings promoting do USAA In with in referral members our this

Savings and or year we to phases Second, are marketing we in College XXX Plan members. Be it the beginning plan means, actively these Mutual progresses. efforts Funds, are e-mail, as ETFs phone accelerate and to USAA other the through the

recurring of half activations investment For customers. plans year. a in new of automatic we distributed second existing great to increase and realized response with tens the example, We investment of increase the e-mails received designed in of a plan thousands automatic number XXX% the

July up we through period new XX,XXX XXXX. From activated the from which during automatic XX,XXX plans, acquisition the when closed X, same XXXX, was the investment end of members in

Another example quarter. is in the fourth

executed the opened gift those contributions few In a website. also XX% in members we XXX idea. December compared coming through to realized accounts in prior a XXX contributions new thousand as same XX% with consider We of XXX encouraging alone, month a December XXX the the This increase in a year. alone, campaign, resulted e-mail with

are that tangible can and to our new results these still among wallet existing really increase we USAA Victory. encouraging attract share While and members thesis reinforce accounts early,

under staged sampling These test or number have we provide programs similar of campaigns started a cases of types have we of way. a the and executing,

In platform addition, we're developing to channel, new this and and enhance the digital in second quarter products launching efforts. these be marketing we'll technology for new a

Our to the expect, opportunities USAA goal provide exceptional in while to have of come the strike continuing is of accelerating proper the to service members front us. client at level balance growth

member continue effectively members We through center. dedicated our and with serve to contact engage

from with primarily long-tenured center contact Our USAA. Capital is who Victory joined employees, staffed

are and familiar how understand to with serve they members' needs. So

We provide about sales calls solutions. to X. one closed we service an of members taken Each with since approximately is transaction the have their these July financial XXX,XXX converse and opportunity objectives and on the calls

portfolio professionals assistance delivering the college conducting to We financial providing have investment general reviews, no licensed cost member. personalized guidance at and planning

members believe conversations and them. importance We services our with because significant customized provide are the in offering of we these these services value to they validating are members

Additionally, we functionality, added and to chat enable to through is with which goal expanding The members. recently the live communication members their us are some choice. is options of preferred engage by platform

very happy with we is our We evolved are center working has the operation in and envisioned. how way contact

is driver commercial USAA products existing retail, growth the investment Another and institutional through channels. of intermediary distribution substantial our

traction steadily which gaining this sales on longer We a cycle. typically had front, are

list important the will as Morgan that the and last For example, the tax-exempt unfolds. funds similar to for the distribution added Manager continue analyst recommended Victory, Investment see within learned approved Management USAA an This intermediate be fund. Wealth channel Global year to availability Stanley to as expands we successes term a fund we expect month,

to XX. Slide Turning

We enhance the further strategy. our place we we value are to have tools growth shareholder all in confident execute on as

provides to rapidly to shareholder-friendly ability our us we flexibility execute delever future the Our with sheet need balance deals.

By future element scale, of improves critical company. which so increasing that, today's our enhance is and I we simply platform include that our serve make can all how a our and acquisitions mean, better, deals Beyond that current see we we our strategic company in environment, market clients.

see. are evaluate believe encouraged quite and the to management We in-sourcing, set and team's and We we our integrating changes businesses are operating continuing by acquirer look many potential in experience that mind, we acquisitions best-in-class, is forward. acquired any foresee With truly of as that in choice do transactions we we become the completing not the cadence have in for industry. of our opportunity

would the a Mike, the business I benefits spend discussing turn model. over our call of I to to Before minute like

industry an the quo. are a where company are growth companies maintain status We to most in struggling

specifically business unique types is facing was challenges and currently industry. address generally designed Our to our of model the

operating with us our efficiency of multi-boutique structure, platform, integrated our fully the apart. of sets advantages The combined

but scale. control investment solutions process. model not most and entities, separate redundancies multi-boutiques, real of avoids and our is platform. ownership, allowing while our none franchises investment franchise these our each of remain or such challenges. also provides autonomous their adviser, single and operating of share This are company Victory Capital unique in disadvantages as lack controls registered lack part of from facing investment completely Our a partial a We effective to complexity, platform

mitigates complexity. our sharing model revenue franchises our with Additionally,

are significant our offerings have operating product We redundancies sufficient scale. no at and

combination have our Victory these We the to Edge. favorable infrastructure as and started operating our around attributes of referring model

we the likely value team Looking for necessary challenges, model, very ahead, resources management our right the the believe asset the to see also headwinds in see the opportunity. We environment. are well business shareholders are substantial persist. rapidly changing and right in create We great current we industry with the to positioned but this

I'll Now review. to over his turn Mike for it financial

Michael Policarpo

Revenue XX. quarter $XXX Slide the on begins review from XXX% results quarter up financial the The was for of fourth morning. good and XXXX. Dave, Thanks, million,

fee steady to average Our prior prior benefit the points. remained Adjusted $X.XX with year. relative to X% diluted rate XX.X up basis per increased net to quarter-over-quarter the and share, relative XXX% quarter, tax income at

an prior quarter the Adjusted year. EBITDA margins basis points and XXX the relative to grew XXX to to that's prior increase XX.X%, points relative of basis

with cost to We synergies our the record and most earn are fourth acquisition-related ability the achieve of in pleased quickly quarter. margins high

moving We number down will will our the XX%. these be up of are will forward of in continue or for This our guidance timing we investments make in steady, our not are but adjusted confident the on the slightly overall so we investments EBITDA guidance future margin maintaining to fluctuate forward. as business approximately

through ability illustrate the model to measurable up the been flexibility same superior to we business and to in advantages record results have financial and scale margin able significantly the the time, efficiencies. The make our us operating our investments acquisitions. further execution. our model of while gives driving the quickly these necessary maintain deliver At and Moreover, levels

financial Term We cash increase performance future used basis expense of Loan B interest free reduced strategic our points, able to take and are strong for which initiatives. will flow our by reprice XX advantage and to deleveraging

$XX shareholders share million. shareholders dividends, million repurchases total during quarter to $X.X XXXX capital fourth through return to and during to bringing returned also the We

AUM provides through growth a of snapshot XX year-end. Slide our

XX, prior from XXX% Our as AUM $XXX.X of increased December up to billion year.

income mix and Our equities, equities, U.S. class asset of markets. XX% December X% global XX% fixed XX, solutions as XX% money was non-U.S. and

ETFs, the positioned with We vehicles, models. have institutional like market would a market close material fund the expectations assets. $X have that the XXXX, Entering balanced do that that now trust approximately of funds acquisition all on a of Schwab's USAA well-diversified we see UMA portion collective market planned that today, share fund separate environments. reiterate for platform We publicly brokerage a sit to on mutual mix SMA decline also to business. the funds, our following our currently Based classes, well product business is the very information of money managed of expect in and money accounts, billion we business. multiple including I is for available in

mentioned have those when before, lower length to they revenue money AUM we and It subject leave. impact will average increasing our us. market neutral anticipate these profit modestly arm's are market to simply rate we not an while share assets assets levels, As earnings our margin. are arrangement, currently Therefore, any money so fee do

brokerage other the other and these channels money on the assets market the platform. we subject profitability. are assets over These not contribute market and our for market that sharing through grow the to any direct on remaining at direct sit assets On hand, are time. of that Hence, like billion XXX the to $X.X are intend revenue arrangement to assets sit money assets not member sourced risk money

Turning $XX.X with a were XXXX. full These XXXX. We flows channels franchises for Long-term organic our solutions to investment platform flows X.X% growth billion, X flows net year of and strong achieved the having $X.X Slide long-term rate all positive for billion gross XX. year. reflecting at flows of for positive were the across net

strong income reallocations a in class asset positive XX net and during fixed part in performance of for from an ended the momentum. we resulting outflows $X.X XXXX. due long-term and net to client billion December positive investment strong We flows From XX, quarter, experienced saw market perspective, fourth solutions the months long-term

organic Looking initiatives products, direct good is member growers confident ongoing strategies commercially Investments that represent platform weighted product outlook. feel combined remain And high-performing distributing ahead, in we appropriately future. channel, the our diverse, that following on we the our USA comments towards with about of our around growth Dave's

XXXX compared with AUM year up of that Average $XXX.X X% revenues a of end of up quarter, billion $XXX.X our the to increased fourth is provides the to the fourth revenues. quarter XX increased snapshot quarter quarterly for Slide Fourth X% number. million, and approximately XXX% quarter the during from XXXX. and AUM

on Victory Revenue at to restarts of performance achievement saw have waived QX. impact that of from this USAA XX.X slight as July the realization basis certain We positive these opportunity to we Legacy not fees in related the a steady Please part acquisition. the remained products performance fees fees year. are X points. those note, on fulcrum The earn

As from class the will I've average said past, our mix in rates client product fee mix, vary asset mix. time-to-time based and on

decreased successful of debt the Expenses related the costs expenses during XX% the integration of acquisition reduction. XX. QX our administrative X% and platform. from to investments a due interest and by lower USAA to General to reduced decreased a Slide due to in million USAA reduced in expense the by result operating with quarter as onto to leverage the onetime $XXX.X the previous expenses quarter. Nonoperating Turning compared by quarter for million XX% financing debt $XXX.X

element a recorded and estimates. Importantly, expense consistent our are our onetime of our restructuring original base in is integration which model. overall approximately of acquisition-related expenses The XXXX key business variable, remains X/X with

annual quarter, earn-out installments In of expense paid expenses these USAA total represents reflecting $XXX valuation for to million the include the the $XX.X in onetime contingent X higher of a fourth million, to million mark-to-market $XX.X estimate payment. a the each. This be potential noncash of

on acquired As business. the revenue earn-out retention the a based reminder, is associated with

in XX, run have $XXX As rate achieved synergies. XXXX, of December we million annual

the by million. on net business, are in We strategic $XXX XQ additional of momentarily. cost million These the I achieve the of annual investments for will expect $X which touch synergies to total in XXXX synergies

we and of million million onetime end projected quarter, the $XX the $XX exceeding as do Lastly, the costs, not have anticipate of we spent the of amount. of projected

spend We million $XX expect months. the the over to remaining next X

through strides great enhancing servicing product investments to technology, make distribution, growth. support to our continue marketing, client investment future We strategic and in capabilities support,

investing our are efforts web around digital advanced of which in channel, of of to are we our enhancement the technologies. direct and build-out of business platform our specific channels support and evolution mobile analytics of our the areas examples currently Some member the and all

Our in and per EPS up on diluted metrics XX. benefit is per net increased year-over-year. of from margin non-GAAP with and Adjusted share share $X.XX increase the in the quarter fourth from per income $X.XX earnings, are $X.XX shown share third XXXX, of Slide tax and to QX This XXXX. quarter-over-quarter quarter X% an XXX%

XXX% in million, increase million in the for same last ANI up quarter the XXXX. an with quarter QX QX and from over the million tax $XX.X to $XXX.X year. EBITDA quarter X% benefit and Adjusted $XX.X $XX.X increased was for million, of

XX. Slide to turning Finally,

strategically We in repurchased and XXXX. continue deliver to QX. shares plan We in against management XXX,XXX balanced capital our aligned

buyback management program our to approach demonstrates in and business share proactive long-term Our reflects our thoughtful and our strategy. capital confidence

debt our net continuing to at and ratio to run strategy. the reduced on we of to ratio end have rate our forward X.Xx. We EBITDA anticipate as quarter deleveraging the execute look lower that We

January this X.X% our interest loan. over In structure points current and of existing announced the X.XX% Repricing maturity by of from we LIBOR the LIBOR, rate loan. basis over term lowered year, repricing the of XX maintaining while term to spread the

support which $X enhancing our us will million. Our sheet, strengthening interest financial we initiatives. the balance of performance approximately With allowed result in future execute strong to savings inorganic capital repricing, annualized flexibility growth to are

the concludes questions. it for This turn back remarks. operator prepared now over our I to will

Operator

[Operator Instructions].

will with B. question the line come first Binner Randy from Riley. Our of

Randolph Binner

be the cadence of the debt to With acquisition. another of integrating integration people and paydown just of the I acquisitions, kind think. might ahead wanted rapid USAA has of I maybe when talked ask the to about I there thinking people

that So cadence is? of can what you timing remind us

David Brown

excited. what prepared pace But opportunities. X great thought choice we years, We're averaged In the or We we're to when in predict remarks, year or acquisition. I my going the that. is acquisitions, of X. the last we're the so industry. in many really based we've which seeing I referring next think on market, was do probably were we're over every really of our seeing an historical there's to Randy, that acquirer for cadence can't I becoming the We mentioned X

our we've really set and of the opportunity be sheet, going really think, is to -- seeing The strengthening can to forward. what's we of what know, up So delever done in what flexible balance next us on you as the our but to set I reference us transaction, the we for about And to my do. derisk, also is course, really quickly, industry. desire the happening to cadence allows historically given

Randolph Binner

All right. Yes, appreciate quite historical is deal deal. than USAA be guess, the would a larger my I follow-up bit that. I that the

that So is a that fast this be back would larger running might processes along it by even of year the be end could pre-USAA situation EBITDA and you -- move like sheet integration that if other look because you balance kind is the enough to at year? smoothly like seems it that machine you enough your metrics, though it's ready this of

David Brown

Yes.

Operator

the Sachs. Goldman will with question come next line Your Blostein of Alex from

Alexander Blostein

of questions. Couple

you first, could the hoping the So frame was -- USAA. I distribution opportunity versus with

big wallet of of guys assets likely also, on go? to sort of that type most they platform? there And percentage products Victory of the products, Victory's are you gain share on customer So today have maybe is think market what where how for you the the side addressable what could

David Brown

Dave. it's Alex,

members. USAA the XX believe, the on there's I market, million First, -- XX.X of size addressable about

million as close clients members to We X today. have

they're some think opportunity the I we the when of products some be also really but today progress test I clients. have remarks The we information small, that are the feel tangible and shared good -- prepared could remaining today those of making, with think members and potential good really who us as the cases. feel So results the about don't in around we're really

as we're think starting year years about the and So we to come. accelerate this that to

results group will around savings, seen where plan our with we children's we're to say As education. product, good members that. product USAA XXX And is that is we applicable products, college very conversing their far I around as have savings feel with that one for that

other that's we one example something good think that, progress example. we of make a that's obviously products, We good but that really So feel really can that there's with.

Alexander Blostein

And profitability. around Great. second question the just

strong, EBITDA the XX% margin the quarter. over in is quite So obviously

you XX% over supportive, fact why margin up. incremental EBITDA guys investments. term, the curious doing Just the right that, are been the near still obviously, given assets target have markets is are Understanding

how us moving probabilities? the the cost incremental through So maybe to what's enhancements? on this you frame help in of of make XX% potentially kind model margin EBITDA these expect are about what to run as getting And kind needle much you year? the And

Michael Policarpo

acquisition service, client But the going will franchises, platform respect our will we I for you of also of that some about in we talked have range be about we as can investments will phase we quarter ability channel, and on we're stated confident support it. Yes, what of term, to Mike. think next think a areas and investments over the markets. margins we're We inclusive But inorganic that range, investment continuing we mentioned, that. in absent the the thinking would to perspective those really XX%. be the investments be longer to I see as the time well as it's growth, depend a the accomplish. business say, will around invest But the and it from there guidance about Alex, tight to had very expanded the as our up with in QX, making think And distribution of as and an standing tight forward, strong those and XX%, in we the XX%, direct direct about mentioned technology.

Operator

comes from Your line next JPMorgan. of the Worthington Ken with question

Kenneth Worthington

of couple XXXX now about solutions. Maybe You've outflows. pipeline Can of there? a talk first on quarters you the had

the does of next pipeline look couple solutions say, quarters? over, for how the So

David Brown

our grown business. from going in very We April it's Ken, think solutions We're Dave. where started It part it's going really it of we business bigger be happy our XXXX. to back with forward. has a

And -- around we strong. that outcomes. pipeline that think is lot a of have clients the have working we're with We that

client cycle on depends the doing. work and depends the the we're Sometimes, that on sales

be good part pipeline. good that that we we quarter, really a the have. it well quarters, we where have is and products going, a And we the but So with and business. team feel we're think it's feel there portion sometimes, pretty could the of our positioned definitely about We of multiple that really is the about industry that

Kenneth Worthington

Great.

the You referral was you mentioned of could more I us the agreement. is either I long can growth that's again be but maybe would growing, referral, like there's information give turn how to wrong. sense does account any cycle you fairly terms or is the you great. how from the in in referral And if account it but account share, standstill, rates it's business? a information opening? hoping any little And assume know I taking direct business what get short, then So this starting a a number into of sales look direct accounts? is once

David Brown

think we're really USAA opportunities. it's would you the surface shared and those share not detailed They've we working. numbers, It's agreement, referenced we position of some out. is great some to incentivization through the of today just with on more that our beginning it's So we we scratch doing. working envisioned. remarks, the share for pieces earn share with in us pass you those I statistics. that is like really We're We also place. prepared what can we envisioned. what are the a Again, in There's starting not way can I some or been referral in to and the today the just as are to way working referrals that but partners,

service not, expand about reproduce expect. members a USAA and how if with share, And We service better a that a them. the pivoting that in we members we're better the have we'd been focusing started can off wallet job. able be service, to We've grow members working partner how service, really thinking would for to do way towards that and now on

that XXX,XXX to X. guide -- We July That said my converse, calls as have since taken touch prepared calls, is it's I able we've and remarks, been in members XXX,XXX a interact, with point.

for these there's set lot think with of we members work in that think to touch. will and this group And product our we interact channel. a get we to we opportunity So large of a get

Operator

Bank Your line Carrier next of from the question of with Mike America. comes

Michael Carrier

just First, on flows. the

So year and client then based perspective, outflows in I knowing you like some clients you got color Maybe Dave, historical the cyclical on some positive just like some rebalancing. think mentioned for and quarter, affiliates. either the the fourth you'd the

does with how you to maybe, the enough, offset you And given that last? have do Just areas those long some other then in rebalancing? of think momentum focus to solutions, some that there's USAA tend strategic of cyclical

David Brown

Sure.

We have seen fourth of the -- we quarter, reallocations. a level heightened client saw in

I outflow. are is outflows, guidelines investment their in their that sometimes, but policy. that's with net As larger occur is there That said a in a outflow, reallocations, good investment remarks, client a rebalancing prepared or they have we my those if good to actually a as Those, economic relationship the client.

with in market So would heightened cyclical been level Those of a there's we attribute are I perfectly those. definitely are where cycle. in that are to we nature, the fine and but those,

enough we have would that, do to say As yes. absolutely as I far offset

We product a set. have diversified

in really have a by that to income, we solutions we're in of just investment and and and are have set into inflows then be fixed income performance the the opportunity USAA XXXX net opportunity good some products We our our fixed side, getting the the -- direct with forward. in the product traditional pushed channels, encouraged

Michael Carrier

follow-up. just a then And Okay.

little for USAA who's focus guys the then looking on a are affiliates, bit particular of forward deal like organic of looking some the USAA growth strategic driving versus active some for guess, how out maybe potential maybe new the responsible some given of So any opportunities, the for there? And new a areas? from I and you time of like like standpoint,

David Brown

It's is a doing culture. our let to acquisitions part part So our of me management team. that say really start of

I say new for management well growth opportunities finding forward that USAA an successful our would from responsible So in inorganic as being and perspective. team there as opportunity is pushing the

growth isn't size inorganic our starts to we've before, opportunities, scale. it As It company financial does opportunity said our better. better. off at make this company about just isn't and engineering, looking does this make about we start It say, off,

pay to at the set. work we looking I've clients look and communicated disintermediated said What we where willing to that those product. we've always product passive we think what there's win, where use fee fair principles look a where can And opportunity for as portfolios, in and for also the is a they're opportunities. we are less to We for by kind for that products always of be

as opportunities. We said, It interesting in for is searching the I've an are active, those industry. time

for We that have have do. of an I we I become, said believe, acquirer We're want what mindful to as of choice. many earlier, we --

very We also are well creative, and we're experienced.

I think think a ability as growth good really as successful we're doing in capable inorganic at opportunities, make USAA the both. pursue perfectly this to And way of point. we're pursuing to I well the ability So those actually

Operator

Your Kenneth comes the RBC next Lee of question with line from Capital markets.

Kenneth Lee

that client the you product the positioned flows expectations the on to other income highlight of flows the looking And key in one Just like forward, fixed quarter? any redemptions kind net then there net you'd to within your flows. whether key Were or the could net there across that's offerings take on income? of comment demand to being just within And you seen advantage industry? fixed are allow well for any

Michael Policarpo

significant product for fixed Mike. Ken. any offerings. or It's income QX in highlight of No the Sure, flows to

significant. and but to but highlighted momentum respect nothing They've and and activity channels positive markets, equity nothing saw franchises, to in the all point some we think across reallocations the flows I out. with products

fixed the on our to retail growth. direct the forward, we we've It very going both all and capitalizing I just income a are at are about of the like fixed We think franchise. as As having especially as well offers a another positioned markets great look continue well feel far in bucket opportunity, offers X/X us as our strategies lot the distribution income high-performing continue with to organic our in USAA about within income to plus to we assets where now think talked products us Fixed retirement channel today. institutional distribution. and INCORE acquisition across capture as

Kenneth Lee

if I follow-up, one just And Great. may.

going couple digital you you're year. the member the to most It make going that this and of other includes as mentioned. investments and feels to be are investments the terms In of platform, that marketing of direct if efforts a within channel the

check into terms potentially could Or Just year? whether spill just maybe next this time year? it's over wanted to of it on frames,

David Brown

that model that It's technology, this make very investment and but are think Dave. in for as positioned being forward investments there is just the competitive investment platform going service our make see our the not better ability continue that make and our We with we to need to very reinvestment investment those and we redundancies clients and efficient requirement stay be going definitely and to The year, industry. to well data, have at the model in way. to make to transparency, to as we're that investments in do. these better, those is once It's in think ability evolution those said, about we're a with entire forward. continue will and a to change the ability But these moving across and as in to to continually move are an our things faster we investments investments really advantage

Operator

[Operator Instructions].

with Alex the will from Blostein Goldman next Sachs. Your line of question come

Alexander Blostein

priorities Just XXXX. the wanted mix thoughts progress your to on you as of get capital through

see refi. So obviously, nice to loan the

significant thoughts maybe multiple, quite at given need pace here that trading cash to the Does the lowered deleveraging basis both that buyback? the some all still use and XX decelerate You points. just of EBITDA? the delever the earnings and towards around and fact at a stock excess low from some the the cost buyback, the of on by So is

David Brown

with it's that analysis stock. plan. Alex, growth balance the the goal of our around most delevering. being on create agree execute is I'd is to your today, sheet, flexibility But off I to that strategic said, have saying, And you start our we Dave. where the

best don't you flexibility and acquisitions. We the use buyback have know, to think to the gives capital our a a dividend I small a most out those program near go is and the changing small, delever in of create us to sheet that future. as balance see program. do We programs future

Operator

Your Morgan next line with of from will Stanley. Michael come Cyprys question the

Michael Cyprys

I as so to just thinking Just you today, do in operating much the model largely the operating meaningfully guess think model, around outsourced about more on platform your platform from the perspective, classes you capacity an deal a -- margin changing more say, with assets of without asset expense have, an have profile what that bolt-on, and I similar guess, could today to you you how the outsourced company?

Michael Policarpo

talked with Mike. up we outsourced does the lot quickly. the about I allow that Mike, model Yes, it's integrated us and have That pretty platform. operating we've the to scale we model a think have that

that we said, the we lot there the We assets handle. an complexity So types cannot of the with say do business. a about really of level talk asset that isn't that we and

the looking are around, classes have And that kind to complexity us those of take execute asset things programs be settle, are different that would integrate, start but easy upon is those experience to to we slowly different compliance through, are leverage. able we already the there's platform see we and if to we and/or classes at have that to for said, you very walk As trade, to asset geographies. and where the

continue So I continue we're singular on down to, where business platform to comes once really to it's answer scale. think the and a making based we can have the the model investments we

Michael Cyprys

from classes margin, similar terms classes? a Should I the is asset in expect if of take acquisition away to today we sort asset similar you have XX% and what it's similar EBITDA, that, of should assuming

David Brown

Dave. It's

different. a It acquisition variables. each different of on is think I lot depends

the and able grow same away take I business pretty our through over should years think have really to what execute is last we business model. that you significantly acquisitions been few the

forward, As changing. opportunity don't I set that see we look

I also outsourcing platform think built we our grow, have. is the relationships to

partners. great have We

built a as had internal the to really manage platform We also business. well strong

going So within classes new same we well looking in grow universe it any asset or see we in asset the be that at. we're acquisition. classes, really don't limits through be we're feel it forward, geographies, today that And positioned to the new

Michael Cyprys

the question, And follow-up Pace quarter. was things. side a maybe a just the sales like then great. it little bit in on of down Okay, just of looked gross sales

a you think from, here, a or you from around Just curious channel underpenetrated to sales asset share perspective, And any guess, I decline forward do say, look you most you're as where there? class the color perspective? could from

David Brown

reduction. anything on take I take don't quarter or sales, on to from think anything the Either it from the there's wouldn't I -- was there. gross cyclical quarter-over-quarter

I that institutional, around I'd out think a we're to But pretty on well really penetrated to point I be in market retirement the channel, the don't We're our in. side. that there's markets and to focusing on retail working we're get penetration that say we obviously. think direct in want more

Operator

And this we turn any the have remarks. questions to further conference over no at for closing time. back I'll management

David Brown

hope strategy, forward today's to in participating look you We our execute we for you with ongoing I to wonderful Thank of day. a you have continue call. Thank as updates and providing on you. all

Operator

Thank Ladies and you joining, and gentlemen, this concludes all you now may for today's disconnect. call.

Victory Capital (VCTR) 14 Feb 202019 Q4 Earnings call transcript