Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Barclays Global Financial Services Conference 2017
36 slides from Virtus Investment Partners's conference presentation, Sep 12, 2017
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference September 12, 2017 Michael A. Angerthal Executive Vice President and Chief Financial Officer
Slide 2: Important Disclosures
IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The Private Secur
Slide 3: Agenda
AGENDA Firm Overview Multi-Boutique Model Product Distribution Financial Review Growth Opportunities Appendix 3
Slide 4: Firm Overview
_VIRTIUS | INVESTMENT PARTNERS FIRM OVERVIEW
Slide 5: Firm Overview
FIRM OVERVIEW We are a distinctive Independent publicly traded asset manager partnership of – Market capitalization of ~$0.8 billion (NASDAQ: VRTS) boutique investment Managing $88.6 billion in a multi-boutique structure managers, singularly committed to the – Flexible model with offerings from
Slide 6: Value Proposition
VALUE PROPOSITION Flexible Multi-Boutique Flexible partnership approach with alignment of interests Asset Manager Preserves affiliate culture, investment process, and brand Shared distribution and support services Diverse, High-Quality Well-diversified across asset classes and investment sty
Slide 7: Multi-Boutique Model
_VIRTUS | INVESTMENT PARTNERS MULTI-BOUTIQUE MODEL
Slide 8: Flexible Multi-Boutique Model
FLEXIBLE MULTI-BOUTIQUE MODEL We have the All the Benefits of a “Multi-Boutique” flexibility, agility, Broad array of differentiated investment strategies and responsiveness Attractive structure for high-quality investment teams and firms of a boutique asset management firm with Greater Efficien
Slide 9: Our Managers
OUR MANAGERS Affiliates* We offer an array of distinctive capabilities from our investment partners Subadvisers * *Virtus has an ownership interest in the firm. 9
Slide 10: Product
_VIRTIUS | INVESTMENT PARTNERS PRODUCT
Slide 11: Diversity of Strategies
DIVERSITY OF STRATEGIES AUM by Manager AUM by Product Type AUM by Asset Class Liquidity3 Alternative & Other4 Other1 Structured Liquidity3 Seix (IG) 4% 5% 5% Products 4% Vontobel 14% 3% Open-End 11% Mutual Domestic Institutional Funds Equity 23% 46% 35% Ceredex 12% Seix (Lev. Fin.) 16% Fixed Income
Slide 12: Consistent Strong Performance
CONSISTENT STRONG PERFORMANCE Majority of mutual fund AUM has strong investment performance Combined Mutual Fund Assets Under Management % AUM in Top Half of Peer Group1 Morningstar Rating By Assets2 81% 83% Morningstar # of $mm % of Rating Funds AUM AUM 10 $15,860 38% 83% 52% 21 $18,981
Slide 13: Diversity of Performance
DIVERSITY OF PERFORMANCE 31 mutual funds rated 4 or 5 Stars, including the five largest funds 4 and 5 Star Mutual Funds by Asset Class Top 5 Largest Mutual Funds # of AUM2 M’Star Asset Class Fund Funds1 ($B) Rating1 Vontobel Emerging Markets Fixed Income 13 Funds $7.9 4 Opportunities Newfleet Multi-
Slide 14: Distribution
_VIRTIUS | INVESTMENT PARTNERS DISTRIBUTION
Slide 15: Effective Distribution Capabilities
EFFECTIVE DISTRIBUTION CAPABILITIES Retail ($63.0B) Institutional ($25.6B) AUM by Product Type Closed-End Other1 4% Liquidity 8% Funds 11% Structured Open-End Products Retail Funds 11% Separate 65% Accounts 20% Institutional 81% The transaction strengthened retail Acquired business added ~$20 bi
Slide 16: Multi-Channel Approach
MULTI-CHANNEL APPROACH MUTUAL FUNDS CLOSED-END FUNDS SEPARATELY MANAGED ACCOUNTS VARIABLE INSURANCE FUNDS COLLECTIVE INVESTMENT TRUSTS ETFs Wirehouse Regional Independent/ Private Variable DCIO RIA Bank Insurance Merrill Lynch Janney Ameriprise Citi AXA Fidelity Morgan Stanley Raymond James
Slide 17: Financial Review
_VIRTUS | INVESTMENT PARTNERS FINANCIAL REVIEW
Slide 18: Assets Under Management
ASSETS UNDER MANAGEMENT $88.6 Acquisition Long-Term Liquidity further $85.0 diversified AUM profile by product $48.0 $45.2 $46.5 $45.4 type and asset class 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 Metrics Equity as % total 58.0% 57.3% 56.9% 58.3% 49.0% Fixed Income as % total 34.2% 33.9% 34.2% 33.1%
Slide 19: Asset Flows
ASSET FLOWS Inflows/(Outflows) Generated Inflows Outflows positive net Net flows flows on a $3.3 $3.5 $3.1 $2.4 $2.6 year-to-date and trailing twelve Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 month basis ($2.6) ($3.0) ($2.8) ($3.7) ($4.6) Metrics Net Flows1 ($2.2) $0.5 ($0.4) $0.5 ($0.2) Inflow Rate2 21.1% 27.1
Slide 20: Non-GAAP Results
NON-GAAP RESULTS Operating Operating Income, As Adjusted income, as Diluted earnings per share, as adjusted $22.7 adjusted, $20.3 increased $18.2 68% from the $16.7 $1.61 prior quarter $1.64 $13.5 $1.75 and 36% $1.16 $1.24 from the prior year Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Metrics Net Income, As Adju
Slide 21: Capital Position
CAPITAL POSITION As of 6/30/2017 Select Non-GAAP Balance Sheet Items Acquisition total consideration of Cash and cash equivalents $128 $533.9 million includes $472.0 Investments – seed capital 104 million for the business and $61.9 million of balance sheet Investments – other 92 investments Debt 2
Slide 22: Projected Tax Benefit
PROJECTED TAX BENEFIT $440.0 Purchased intangibles of $440 million to be amortized over 15 years for tax purposes Creates annual tax expense $168.5 savings of ~$11.0 million1 Tax Shield Tax Benefit $ in millions 1Assuming current Federal tax regulations at 38.3% tax rate 22
Slide 23: Growth Opportunities
_VIRTUS | INVESTMENT PARTNERS GROWTH OPPORTUNITIES
Slide 24: Multiple Opportunities for Growth
MULTIPLE OPPORTUNITIES FOR GROWTH Area Growth Opportunities Product Leverage capabilities of current managers Offer existing strategies in other product structures Broaden capabilities with new teams/managers Distribution Increase market share in retail channels Deepen presence in other ch
Slide 25: Summary
SUMMARY Flexible Multi-Boutique Asset Manager Diverse, High-Quality Product Offerings Effective Distribution Capabilities Attractive Financial Profile Multiple Opportunities for Growth 25
Slide 26: Appendix
_VIRTIUS | INVESTMENT PARTNERS APPENDIX
Slide 27: Virtus History
VIRTUS HISTORY Established in the 1990s and Fully Independent Since January 2009 1993 Phoenix Securities Group (subsidiary of former parent, Phoenix Life) acquires National Funds 1995 Merges with Duff & Phelps to create Phoenix Duff & Phelps (later renamed Phoenix Investment Partners (“PXP”)); 40% o
Slide 28: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Q2 2017 Distribution and Consolidated Amortization Acquisition and U.S. GAAP other asset- investment of intangible Restructuring Seed capital and integration Non-GAAP $ and share counts in thousands, except per share data Basis based
Slide 29: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Distribution and Consolidated Amortization Acquisition and Q1 2017 U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP $ and share counts in thousands, except per share data Basis based expenses prod
Slide 30: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Distribution and Consolidated Amortization Acquisition and Q4 2016 U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP $ and share counts in thousands, except per share data Basis based expenses prod
Slide 31: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Distribution and Consolidated Amortization Q3 2016 U.S. GAAP other asset- investment of intangible Restructuring Seed capital and Non-GAAP $ and share counts in thousands, except per share data Basis based expenses products assets an
Slide 32: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Q2 2016 U.S. GAAP Distribution and other asset- Consolidated investment Amortization of intangible Restructuring Seed capital and Non-GAAP $ and share counts in thousands, except per share data Basis based expenses products assets an
Slide 33: Footnotes
FOOTNOTES Non-GAAP financial measures differ from financial measures determined in accordance with U.S. GAAP as a result of the reclassification of certain income statement items, as well as the exclusion of certain expenses and other items that are not reflective of the earnings generated from prov
Slide 34: Footnotes
FOOTNOTES Components of Acquisition Related Expenses and Other for the respective periods are shown in the table below: Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 YTD:16 YTD:17 Acquistion Related Expenses ($ in thousands) Loss contingency $- $- $- $- $- $- $- Tax impact of loss contingency - - - - - - - Transiti
Slide 35: Lipper, Morningstar Data
LIPPER, MORNINGSTAR DATA Additional Information on Virtus Funds rated by Morningstar as of 6/30/17: Description Overall 3 yr. 5 yr. 10 yr. Number of 3/4/5 Star Funds 51 44 39 38 Percentage of Assets 95% 91% 85% 95% Number of 4/ 5 Star Funds 31 24 19 29 Percentage of Assets 83% 64% 54% 92% Total Fund
Slide 36: Virtus Investment Partners
VIRTIUS | INVESTMENT PARTNERS
Virtus Investment Partners — Barclays Global Financial Services Conference 2017 on 6ix