Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q1 2017 Earnings Presentation
40 slides from Virtus Investment Partners's earnings presentation, Apr 28, 2017
Slide 1: First Quarter 2017 Earnings Presentation
First Quarter 2017 Earnings Presentation April 28, 2017 George R. Aylward President and Chief Executive Officer 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 Overview of First Quarter RidgeWorth Update First Quarter Results Appendix 3
Slide 4: Overview of First Quarter
_VIRTUS | INVESTMENT PARTNERS OVERVIEW OF FIRST QUARTER
Slide 5: Overview of First Quarter
OVERVIEW OF FIRST QUARTER Assets and Flows Assets under management increased 6% sequentially to $48.0 billion Total sales of $3.3 billion increased $0.6 billion, or 24%, from $2.6 billion in the fourth quarter Positive net flows of $0.5 billion reflect an organic growth rate of 4.6% annualized
Slide 6: RidgeWorth Update
RIDGEWORTH UPDATE Closing and Integration Financing, both equity and debt, in place Significant progress in client consent process Execution on integration plan proceeding as expected Business Results Positive total net flows of $0.5 billion; inflows in institutional and mutual funds Reven
Slide 7: First Quarter Results
_VIRTUS | INVESTMENT PARTNERS FIRST QUARTER RESULTS
Slide 8: Assets Under Management
ASSETS UNDER MANAGEMENT Quarterly Trends Commentary Trend reflects impact of net flows and $48.0 $45.7 $45.2 $46.5 $45.4 market performance Sequential increase of $2.6 billion, or 6%, primarily reflects market appreciation of $2.4 billion and net inflows of $0.5 billion Sequential changes by pro
Slide 9: Asset Flows
ASSET FLOWS Inflows/ (Outflows) Commentary Net flows Flows reflect market trends, product breadth and investment performance Sales increased $0.6 billion, or 24%, $3.3 $3.3 sequentially due to higher mutual fund, $2.8 $3.1 $2.8 $2.4 $2.6 SMA, and ETF sales Redemptions decreased $0.3 billion, or
Slide 10: Investment Management Fees, As Adjusted
INVESTMENT MANAGEMENT FEES, AS ADJUSTED Quarterly Results Year to Date Commentary Investment management fees reflect changes in average assets and net fee rate Sequential increase of $0.2 million due $60.6 $59.3 $59.5 to: $57.7 $58.1 $57.7 $59.5 − 2% increase in average assets under management ref
Slide 11: Employment Expenses, As Adjusted
EMPLOYMENT EXPENSES, AS ADJUSTED Quarterly Results Year to Date Commentary Trend reflects staffing levels and variable incentive plans Current quarter included $4.9 million of specific employment expense items: $39.6 $39.6 $36.0 − Seasonal compensation expenses of $36.0 $33.1 $33.1 $33.5 $3.4 mill
Slide 12: Other Operating Expenses, As Adjusted
OTHER OPERATING EXPENSES, AS ADJUSTED Quarterly Results Year to Date Commentary Results reflect timing of product, distribution, and operational initiatives Decrease of $0.8 million, or 7%, sequentially reflects lower sales and $12.1 $11.7 marketing costs $10.4 $10.9 $10.9 $10.9 $10.4 Other oper
Slide 13: Non-GAAP Results
NON-GAAP RESULTS Quarterly Results Year to Date Commentary Profitability impacted by net flows, market Operating Income, As Adjusted performance and leveragability of the Diluted earnings per share, as adjusted business Diluted EPS, as adjusted, of $1.16 included: − ($0.41) per share of specific e
Slide 14: Capital Position
CAPITAL POSITION Select Non-GAAP Balance Sheet Items Commentary 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 Cash and cash equivalents $50 $156 $165 $65 $236 Seed capital investments 1 $281 $174 $179 $180 $175 Capital position reflects share repurchases Investments - other 2 $52 $38 $38 $29 $31 and cash
Slide 15: Appendix
_VIRTIUS | INVESTMENT PARTNERS Appendix
Slide 16: Non-GAAP Income Statement Information
NON-GAAP INCOME STATEMENT INFORMATION Quarterly Trend and Year-to-Date Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Revenues, As Adjusted Investment management fees, as adjusted $57,735 $58,104 $60,551 $59,279 $59,513 $57,735 $59,513 Distribution and service fees, as adjusted 12,502 12,179 12,122 11,
Slide 17: Non-GAAP Income Statement Information (continued)
NON-GAAP INCOME STATEMENT INFORMATION Quarterly Trend and Year-to-Date (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Other Income (Expense), As Adjusted Realized and unrealized gain (loss) on investments, net, as ($5) $94 $51 $1 $0 ($5) $0 adjusted Other income, net, as adjusted 228 (15) 2
Slide 18: U.S. GAAP Income Statement
U.S. GAAP INCOME STATEMENT Quarterly Trend and Year-to-Date Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Revenues Investment management fees $57,644 $58,192 $60,398 $58,996 $59,271 $57,644 $59,271 Distribution and service fees 12,478 12,167 12,116 11,489 10,783 12,478 10,783 Administration and transf
Slide 19: U.S. GAAP Income Statement (continued)
U.S. GAAP INCOME STATEMENT Quarterly Trend and Year-to-Date (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Other Income (Expense) Realized and unrealized gain (loss) on investments, net ($658) $3,281 $961 $1,398 $297 ($658) $297 Realized and unrealized gain (loss) on investments of 295 3,09
Slide 20: Condensed Non-GAAP Balance Sheet
1 CONDENSED NON-GAAP BALANCE SHEET Quarter-end Trend 3/31/16 6/30/16 9/30/16 12/31/16 03/31/17 Assets: Cash and cash equivalents $50,402 $155,532 $165,421 $64,588 $235,930 Investments – seed capital 280,929 174,130 179,105 180,085 174,810 Investments – other 51,136 38,362 38,385 29,083 30,714 Total
Slide 21: Condensed Non-GAAP Balance Sheet (continued)
1 CONDENSED NON-GAAP BALANCE SHEET Quarter-end Trend (continued) 3/31/16 6/30/16 9/30/16 12/31/16 03/31/17 Liabilities and Equity Liabilities: Accrued compensation and benefits $15,035 $26,242 $37,813 $47,885 $16,519 Accounts payable and accrued liabilities 20,563 20,448 21,429 25,176 30,365 Dividen
Slide 22: Assets Under Management
ASSETS UNDER MANAGEMENT Quarterly Trend and Year-to-Date Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Ending Assets by Product Open-End Funds $25,560.3 $23,854.9 $24,302.7 $22,501.0 $23,768.0 $25,560.3 $23,768.0 Variable Insurance Funds $975.7 $958.9 $963.7 $931.8 $948.8 $975.7 $948.8 Total – Open-En
Slide 23: Average Net Fees and Assets
AVERAGE NET FEES AND ASSETS Quarterly Trend and Year-to-Date Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Average Net Management Fees (1) (In basis points, annualized) Open-End Funds 47.1 49.2 49.7 50.0 50.1 47.1 50.1 Variable Insurance Funds 53.2 55.4 61.8 62.4 61.2 53.2 61.2 Total Open-End Funds 47
Slide 24: Asset Flow Detail
ASSET FLOW DETAIL Quarterly Trend and Year-to-Date: All Product Flows Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 All Product Flows Beginning balance $47,385.3 $45,651.2 $45,169.7 $46,539.5 $45,366.3 $47,385.3 $45,366.3 Inflows 2,841.1 2,390.1 3,078.0 2,630.8 3,265.3 2,841.1 3,265.3 Outflows (5,469.
Slide 25: Asset Flow Detail
ASSET FLOW DETAIL Asset Flows – Quarterly Trend and Year-to-Date by Product Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Open-End Funds Beginning balance $27,865.8 $25,560.3 $23,854.9 $24,302.7 $22,501.0 $27,865.8 $22,501.0 Inflows 2,186.4 1,344.5 1,869.3 1,635.3 2,025.9 2,186.4 2,025.9 Outflows (4,7
Slide 26: Asset Flow Detail
ASSET FLOW DETAIL Asset Flows – Quarterly Trend and Year-to-Date by Product (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Closed-End Funds Beginning balance $6,222.3 $6,543.6 $6,959.6 $6,887.3 $6,757.4 $6,222.3 $6,757.4 Inflows - - - - - - - Outflows - (103.3) - - (81.6) - (81.6) Net Flows
Slide 27: Asset Flow Detail
ASSET FLOW DETAIL Asset Flows – Quarterly Trend and Year-to-Date by Product (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Intermediary Sold Managed Accounts Beginning balance $3,985.7 $4,151.5 $4,462.7 $4,888.9 $5,403.5 $3,985.7 $5,403.5 Inflows 295.9 337.5 418.0 348.7 480.9 295.9 480.9 Ou
Slide 28: Asset Flow Detail
ASSET FLOW DETAIL Asset Flows – Quarterly Trend and Year-to-Date by Product (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Institutional Accounts Beginning balance $4,799.7 $4,848.3 $4,920.0 $5,376.6 $5,492.7 $4,799.7 $5,492.7 Inflows 186.2 224.9 612.5 321.7 277.7 186.2 277.7 Outflows (276.
Slide 29: Asset Flow Detail by Asset Class
ASSET FLOW DETAIL Open-End Asset Flows – Quarterly Trend and Year-to-Date by Asset Class Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Domestic Equity Funds Beginning balance $4,349.0 $4,213.5 $3,985.1 $3,958.9 $3,823.2 $4,349.0 $3,823.2 Inflows 120.6 227.3 244.1 254.0 372.2 120.6 372.2 Outflows (576.
Slide 30: Asset Flow Detail by Asset Class (continued)
ASSET FLOW DETAIL Open-End Asset Flows – Quarterly Trend and Year-to-Date by Asset Class (continued) Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Taxable Bond Funds Beginning balance $8,990.8 $8,752.3 $8,736.5 $8,869.9 $8,709.3 $8,990.8 $8,709.3 Inflows 518.6 418.3 473.7 564.6 713.9 518.6 713.9 Outfl
Slide 31: U.S. GAAP to Non-GAAP Reconciliation – Q1 2017
U.S. GAAP TO NON-GAAP RECONCILIATION – Q1 2017 Reclassifications Adjustments Distribution and Consolidated Amortization Acquisition and U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP Basis based expenses products assets CLO investments expenses Other Basis Reve
Slide 32: U.S. GAAP to Non-GAAP Reconciliation – Q4 2016
U.S. GAAP TO NON-GAAP RECONCILIATION – Q4 2016 Reclassifications Adjustments Distribution and Consolidated Amortization Acquisition and U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP Basis based expenses products assets CLO investments expenses Other Basis Reve
Slide 33: U.S. GAAP to Non-GAAP Reconciliation – Q3 2016
U.S. GAAP TO NON-GAAP RECONCILIATION – Q3 2016 Reclassifications Adjustments Distribution and Consolidated Amortization U.S. GAAP other asset- investment of intangible Restructuring Seed capital and Non-GAAP Basis based expenses products assets and severance CLO investments Other Basis Revenues Inve
Slide 34: U.S. GAAP to Non-GAAP Reconciliation – Q2 2016
U.S. GAAP TO NON-GAAP RECONCILIATION – Q2 2016 Reclassifications Adjustments Distribution and Consolidated Amortization U.S. GAAP other asset- investment of intangible Restructuring Seed capital and Non-GAAP Basis based expenses products assets and severance CLO investments Other Basis Revenues Inve
Slide 35: U.S. GAAP to Non-GAAP Reconciliation – Q1 2016
U.S. GAAP TO NON-GAAP RECONCILIATION – Q1 2016 Reclassifications Adjustments Distribution and Consolidated Amortization U.S. GAAP other asset- investment of intangible Seed capital and Non-GAAP Basis based expenses products assets CLO investments Other Basis Revenues Investment management fees $ 57,
Slide 36: 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 37: Footnotes
FOOTNOTES Components of Other for the respective periods are shown in the table below: Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 YTD:16 YTD:17 Other ($ in thousands) System transition expenses $414 $358 $445 $611 $669 $414 $669 Tax impact of transition expenses (159) (138) (166) (230) (258) (159) (258) Discrete
Slide 38: RidgeWorth Update
RIDGEWORTH UPDATE Assets Under Management and Fee Rate by Product Structured Mutual Funds SMAs Institutional Products Total Assets under management at March 31, 2017 Total $17,462 $3,102 $19,257 $2,487 $42,308 Less: Liquidity (1,486) (118) (4,970) - (6,574) Long-Term $15,976 $2,984 $14,287 $2,487 $3
Slide 39: RidgeWorth Mutual Funds
RIDGEWORTH MUTUAL FUNDS Additional Information on RidgeWorth Funds rated by Morningstar as of 3/31/17: Description Overall 3 yr. 5 yr. 10 yr. Number of 3/4/5 Star Funds 24 19 20 21 Percentage of Assets 100% 89% 90% 99% Number of 4/ 5 Star Funds 14 7 5 17 Percentage of Assets 86% 65% 55% 94% Total Fu
Slide 40: VIRTIUS |
VIRTIUS | INVESTMENT PARTNERS
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