Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q1 2020 Earnings Presentation
28 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, May 11, 2020
Slide 1: First Quarter 2020 Earnings Presentation
First Quarter 2020 Earnings Presentation May 11, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business s
Slide 3: Agenda
Agenda Topics Business Overview Investment Performance First Quarter 2020 Financial Results Appendix 3
Slide 4: Business Overview
Victory Business Overview
Slide 5: Business Overview
Business Overview BUSINESS • Fully prepared with a thoroughly tested, comprehensive BCP supported by existing technology CONTINUITY • Experiencing no issues with full-load VPN and secure video conferencing PLAN • No interruptions to investment processes, client service, trading, operations, technolo
Slide 6: Business Overview
Business Overview AUM & FLOWS • Total AUM of $123.8Bn at March 31, 2020 ˃ Down 18% from December 31, 2019 ˃ Up 113% from March 31, 2019 • Total net flows -$2.9Bn • Total AUM at April 30, increased to $131.8Bn 1Q FINANCIAL • $0.92 Adjusted Net Income with tax benefit per diluted share HIGHLIGHTS • 44
Slide 7: Acquisition Integration Progress
Business Overview Acquisition Integration Progress May 2020 Growth Enhance Technology Integration Accelerate Direct Closing Digital Platform Marketing Campaign Genesys (Summer 2020) Gained Outside Call System Shelf Space for USAA Branded Pre-Closing Perfected Products Service Levels Transitioned to
Slide 8: Investment Performance
Victory Investment Performance
Slide 9: Commitment to Long-Term Investment Performance
Commitment to Long-Term Investment Performance Total Mutual Total Mutual Funds 39 Funds and ETFs with 4- or 5-Star overall ratings 61% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 79% 80% 80% 69% 67% 60% 55% 60% 48% 44% 41%
Slide 10: Enhancing Shareholder Value with Balance Sheet Flexibility
Enhancing Shareholder Value with Balance Sheet Flexibility Interest Share Repurchases De-leveraging Dividends & Acquisitions Cap Ex Enhancing Shareholder Value by: Maintaining Balance Sheet Flexibility with: • Improving platform with every strategic acquisition • Strategic capital allocation policy
Slide 11: First Quarter 2020 Financial Results
First Quarter 2020 Financial Results 11
Slide 12: First Quarter 2020 Financial Results
First Quarter 2020 Financial Results FIRST • $204MM revenue QUARTER ˃ Down 7% from 4Q 2019 ˃ Up 134% from 1Q 2019 FINANCIAL RESULTS • $0.77 GAAP Earnings per diluted share ˃ Up 51% from 4Q 2019 ˃ Up 285% from 1Q 2019 • $0.92 Adjusted Net Income with tax benefit per diluted share ˃ Down 7% from 4Q 20
Slide 13: Assets Under Management (End of Period)
Assets Under Management (End of Period) $Bn ($mm) • Total AUM of $123.8Bn, at March 31, 2020 Retail Institutional Direct ˃ Down 18% from Dec. 31, 2019 ˃ Up 113% from 1Q 2019 $151.8 $145.8 • Diversified distribution channels $131.8 ˃ Retail $123.8 ˃ Institutional ˃ Direct $64.1 2Q19 3Q19 4Q19 1Q20 Ap
Slide 14: Long-Term Asset Flows
Long-Term Asset Flows $Bn For 1Q 2020 Gross LT Sales Gross LT Redemptions 3/31/18 • Gross LT($mm) sales of $7.3Bn $7.5 $7.5 $7.3 • LT net outflows $3.1Bn $5.3 • Gross total sales of $14.9Bn • Total net outflows of $2.9Bn • Four franchises generated long-term net inflows in 1Q 2020 Operating Metrics
Slide 15: Revenues
Revenues 3/31/18 9/30/17 ($mm) $MM • 1Q 2020 Revenue $204MM $215.0 $218.6 ˃ Down 7%, vs 4Q 2019 $204.4 $105.0 ˃ 1Q Revenue up 134% vs 1Q 2019 $101.1 $91.4 Operating Metrics 2Q19 3Q19 4Q19 1Q20 Average AUM ($Bn) $60.1 $145.9 $147.9 $144.1 Average Fee Rate (bps), as reported 61.0 58.5 58.7 57.1 15
Slide 16: Expenses
Expenses • Total 1Q expenses declined 23% from 4Q 2019 $MM ˃ Total operating expenses down 26% 3/31/18 $180.9 9/30/17 $170.1 o G&A down 19% o Personnel down 12% $130.4 ˃ Non operating expenses up 5% o Interest and financing costs down 28% o Other income down $5.8MM $72.5 Operating Metrics ($MM) 2Q19
Slide 17: Non-GAAP Metrics
Non-GAAP Metrics ($mm) 3/31/18 9/30/17 $MM except per share data • 1Q 2020 Adjusted Net Income (ANI) with tax benefit of $0.92 per diluted $1.20 ANI Tax Benefit ANI with tax benefit per diluted share share $100.0 ˃ Down 7% from 4Q 2019 $0.99 $1.00 ˃ Up 163% from 1Q 2019 $0.91 $0.92 • 1Q 2020 ANI wit
Slide 18: Capital Management
Capital Management ($mm) 3/31/18 9/30/17 • Returned $8.0MM to shareholders in Selected Balance Sheet Items ($MM) 3/31/2020 1Q Cash / Cash Equivalents $37.1 ˃ Repurchased 240K shares in 1Q 2020 Debt (through May 8, further reduced to $883) $914.0 ˃ Cash dividend of $0.05 per Stockholders' Equity $581
Slide 19: Appendix
Appendix 19
Slide 20: Notes and Disclosures
Notes and Disclosures Information Regarding Non-GAAP Financial Measures Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the Company. These measures eliminate the impact of one-time acquisition, restruct
Slide 21: Notes and Disclosures
Notes and Disclosures Information Regarding Non-GAAP Financial Measures (cont.) Adjusted Net Income Adjustments made to GAAP Net Income to calculate Adjusted Net Income, as applicable, are: • Adding back other business taxes; • Adding back amortization expense on acquisition-related intangible asset
Slide 22: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the three months ended, (in thousands) 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 GAAP Net income $ 14,527 $ 14,383 $ 25,992 $ 37,589 $ 57,166 GAAP Income tax expense (4,807) (4,478) (8,058) (10,854) (16,823) GAAP income before taxes 19,334
Slide 23: Consolidated Reconciliations of Adjusted Net Income
Consolidated Reconciliations of Adjusted Net Income For the three months ended, (in thousands, except per-share data) 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 GAAP Net Income $ 14,527 $ 14,383 $ 25,992 $ 37,589 $ 57,166 Other business taxes 555 424 146 359 (3,296) GAAP amortization of acqu
Slide 24: Detailed Reconciliation of 1Q20 Adjusted Net Income
Detailed Reconciliation of 1Q20 Adjusted Net Income (in thousands, except per-share amounts) Adjustments GAAP Amortization Tax Benefit of Other of Acquisition- Acquisition, Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Debt Issuance Total Non-GAAP Acquired Basis Taxes Intangi
Slide 25: Detailed Reconciliation of 4Q19 Adjusted Net Income
Detailed Reconciliation of 4Q19 Adjusted Net Income Adjustments GAAP Amortization of Tax Benefit of Acquisition- Acquisition, Goodwill and U.S. GAAP Other Business Related Stock-Based Restructuring and Debt Issuance Total Non-GAAP Acquired Basis Taxes Intangibles Compensation Exit Costs Costs Adjust
Slide 26: Detailed Reconciliation of 3Q19 Adjusted Net Income
Detailed Reconciliation of 3Q19 Adjusted Net Income Three months ended September 30, 2019 Adjustments (in thousands, except per-share amounts) GAAP Amortization of Tax Benefit of Other Acquisition- Acquisition, Debt Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Issuance Total
Slide 27: Detailed Reconciliation of 2Q19 Adjusted Net Income
Detailed Reconciliation of 2Q19 Adjusted Net Income Three months ended June 30, 2019 Adjustments (in thousands except, per-share amounts) GAAP Amortization of Tax Benefit of Other Acquisition- Acquisition, Debt Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Issuance Total Non-
Slide 28: Notes and Disclosures
Notes and Disclosures As of July 1, 2019, Victory Capital Management Inc. is the investment advisor for USAA Mutual Funds. USAA and the USAA logos are registered trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license. Victory Capit
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