Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q1 2022 Earnings Presentation
45 slides from Virtus Investment Partners's earnings presentation, Apr 29, 2022
Slide 1: First Quarter Earnings Presentation
FIRST QUARTER EARNINGS PRESENTATION April 29, 2022 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 Quarter ■ Results ■ Q & A Session 3
Slide 4: Overview of Quarter
INVESTMENT PARTNERS OVERVIEW OF QUARTER
Slide 5: First Quarter 2022 Overview
FIRST QUARTER 2022 OVERVIEW Assets and Flows ■ Assets under management (AUM) of $183.3 billion compared with $187.2 billion at December 31st reflecting market depreciation and net outflows, partially offset by the addition of AUM from Stone Harbor ■ Sales increased 8% to $9.4 billion with growth in
Slide 6: Results
INVESTMENT PARTNERS RESULTS
Slide 7: Assets Under Management
ASSETS UNDER MANAGEMENT LOWER PRIMARILY DUE TO MARKET PERFORMANCE U.S. Retail Funds Closed-End Funds ■ AUM of $183.3 billion declined from Institutional Accounts Retail Separate Accounts $187.2 billion at December 31st due to: Global Funds, ETFs, and Variable Insurance Funds – ($16.5) billion of mar
Slide 8: Asset Flows
ASSET FLOWS HIGHER FUND AND INSTITUTIONAL SALES ■ Sales of $9.4 billion, up 8% – Open-end fund sales of $5.0 billion, up 14% due to growth in most strategies – Institutional sales of $2.4 billion, up 16% to second highest level with growth from both new and existing mandates – Retail separate accoun
Slide 9: Investment Management Fees, As Adjusted
INVESTMENT MANAGEMENT FEES, AS ADJUSTED REFLECTS MARKET AND NEW AFFILIATE ■ Investment management fees, as adjusted, decreased by $7.1 million, or 4%, due to lower average fee rate and market depreciation ■ Average fee rate of 41.9 bps compared with 43.7 bps, reflecting – Higher proportion of instit
Slide 10: Employment Expenses, As Adjusted
EMPLOYMENT EXPENSES, AS ADJUSTED SEASONALLY HIGHER ■ Employment expenses, as adjusted, of $101.6 million included $9.7 million of seasonally higher items ■ As a percentage of revenues, as adjusted, employment expenses, as adjusted, were 45.8% – Increased 620 bps points primarily due to seasonal item
Slide 11: Other Operating Expenses, As Adjusted
OTHER OPERATING EXPENSES, AS ADJUSTED INCREASE PRIMARILY REFLECTS NEW AFFILIATE ■ Other operating expenses, as adjusted, of $29.3 million increased $6.5 million, $29.3 or 28%, primarily due to: – Addition of Stone Harbor – $1.3 million of business initiative discrete expenses ■ Other operating expen
Slide 12: Non-GAAP Results
NON-GAAP RESULTS REFLECTS MARKET AND SEASONAL ITEMS ■ Operating margin, as adjusted, of 40.6% Operating Income, As Adjusted compared with 50.2% Diluted earnings per share, as adjusted – Excluding seasonal employment items, operating margin was 45.0% ■ Diluted EPS, as adjusted, of $7.87 compared with
Slide 13: Capital and Select Balance Sheet
CAPITAL AND SELECT BALANCE SHEET INCREASED RETURN OF CAPITAL ■ Working capital of $196.1 million Select Balance Sheet Items: 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22 decreased sequentially from $219.8 Cash and cash equivalents $228 $275 $437 $379 $225 million as net cash generated by the Seed capita
Slide 14: Financial Supplement
INVESTMENT PARTNERS FINANCIAL SUPPLEMENT
Slide 15: Non-GAAP Information: Income Statement
NON-GAAP INFORMATION INCOME STATEMENT 1 (UNAUDITED) Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 Revenues, As Adjusted Investment management fees, as adjusted $163,935 $183,230 $190,029 $203,429 $196,289 $163,935 $196,289 Administration and shareholder service fees, as adjusted 22,621 25,926 26,482 2
Slide 16: Non-GAAP Information: Income Statement (Continued)
NON-GAAP INFORMATION INCOME STATEMENT 1 (CONTINUED) (UNAUDITED) Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 Other Income (Expense), As Adjusted Realized and unrealized gain (loss) on investments, net, as adjusted ($73) $476 $24 ($145) ($455) ($73) ($455) Other income, net, as adjusted 1,771 826 1,00
Slide 17: Non-GAAP Information: Balance Sheet
NON-GAAP INFORMATION BALANCE SHEET 1 (UNAUDITED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 Assets: Cash and cash equivalents $228,260 $275,439 $437,242 $378,921 $225,217 Investments – seed capital 121,690 140,679 144,476 144,660 137,835 Investments – other 66,909 73,723 78,643 86,569 90,139
Slide 18: Non-GAAP Information: Balance Sheet (Continued)
NON-GAAP INFORMATION BALANCE SHEET 1 (CONTINUED) (UNAUDITED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 Liabilities and Equity Liabilities: Accrued compensation and benefits $62,335 $96,509 $139,106 $187,449 $70,646 Accounts payable and accrued liabilities 55,153 45,755 41,716 48,496 62,335
Slide 19: U.S. GAAP Information: Income Statement
U.S. GAAP INFORMATION INCOME STATEMENT (UNAUDITED) Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 Revenues Investment management fees $173,269 $193,510 $201,133 $213,673 $206,817 $173,269 $206,817 Distribution and service fees 20,348 23,450 23,293 23,464 20,007 20,348 20,007 Administration and sharehol
Slide 20: U.S. GAAP Information: Income Statement (Continued)
U.S. GAAP INFORMATION INCOME STATEMENT (CONTINUED) (UNAUDITED) Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 Other Income (Expense) Realized and unrealized gain (loss) on investments, net $891 $2,494 ($504) $1,026 ($2,982) $891 ($2,982) Realized and unrealized gain (loss) of CIP 1, net (4,687) 2,747 (
Slide 21: Assets Under Management by Product and Asset Class
ASSETS UNDER MANAGEMENT BY PRODUCT AND ASSET CLASS 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 Assets by Product U.S. Retail Funds $69,730 $72,746 $70,526 $74,616 $66,554 Global Funds 1,343 1,456 1,399 1,418 4,089 Exchange Traded Funds 1,021 1,260 1,321 1,479 1,448 Variable Insurance Funds 1,
Slide 22: Assets Under Management by Product and Asset Class
ASSETS UNDER MANAGEMENT BY PRODUCT AND ASSET CLASS Open-End Closed-End Retail Separate Institutional Total as of Funds Funds Accounts Accounts 3/31/2022 Equity: Domestic Equity $24,638 $— $31,448 $22,418 $78,504 International Equity 7,318 — 126 1,231 8,675 Global Equity 1,475 — 471 8,634 10,580 Spec
Slide 23: Asset Flows: Total
ASSET FLOWS TOTAL 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Total Beginning balance $132,194 $168,880 $178,638 $177,305 $187,186 $132,194 $187,186 Inflows 10,611 9,550 7,623 8,712 9,435 10,611 9,435 Outflows (8,099) (8,096) (8,126) (8,693) (11,395) (8,099) (11,395) Net Flows 2
Slide 24: Asset Flows by Product
ASSET FLOWS BY PRODUCT 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 U.S. Retail Funds Beginning balance $48,492 $69,730 $72,746 $70,526 $74,616 $48,492 $74,616 Inflows 5,652 4,591 3,555 4,029 4,739 5,652 4,739 Outflows (5,157) (4,864) (4,964) (5,744) (7,858) (5,157) (7,858) Net F
Slide 25: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Exchange Traded Funds Beginning balance $837 $1,021 $1,260 $1,321 $1,479 $837 $1,479 Inflows 175 232 174 211 126 175 126 Outflows (77) (92) (65) (73) (151) (77) (151) Net Flows 98 140 109 138 (25) 98
Slide 26: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Closed-End Funds Beginning balance $5,914 $11,664 $11,993 $11,721 $12,068 $5,914 $12,068 Inflows — — 3 19 8 — 8 Outflows — — — — — — — Net Flows — — 3 19 8 — 8 Market performance 105 514 (114) 718 (19
Slide 27: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Intermediary Sold Managed Accounts Beginning balance $23,852 $31,133 $34,125 $34,974 $37,621 $23,852 $37,621 Inflows 2,494 2,066 1,726 2,045 1,771 2,494 1,771 Outflows (791) (700) (1,103) (999) (1,221
Slide 28: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Institutional ex. Structured Products Beginning balance $40,861 $42,802 $45,604 $45,882 $48,140 $40,861 $48,140 Inflows 1,884 2,302 1,808 2,099 2,449 1,884 2,449 Outflows (1,868) (2,184) (1,727) (1,62
Slide 29: Asset Flows by Asset Class
ASSET FLOWS BY ASSET CLASS 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Domestic Equity Beginning balance $63,680 $77,155 $82,819 $83,331 $87,889 $63,680 $87,889 Inflows 4,896 4,467 3,445 3,596 4,279 4,896 4,279 Outflows (3,818) (3,634) (3,344) (3,013) (4,343) (3,818) (4,343) Net
Slide 30: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Global Equity Beginning balance $9,512 $9,681 $10,623 $11,009 $11,658 $9,512 $11,658 Inflows 501 669 732 1,231 214 501 214 Outflows (617) (404) (308) (298) (230) (617) (230) Net Flows (116) 265 42
Slide 31: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Leveraged Finance Beginning balance $10,730 $11,981 $12,270 $12,210 $12,069 $10,730 $12,069 Inflows 847 684 577 666 1,613 847 1,613 Outflows (450) (434) (623) (755) (1,667) (450) (1,667) Net Flows
Slide 32: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Investment Grade Beginning balance $8,883 $8,509 $8,245 $7,924 $7,177 $8,883 $7,177 Inflows 427 337 274 229 164 427 164 Outflows (366) (601) (572) (933) (545) (366) (545) Net Flows 61 (264) (298)
Slide 33: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 YTD:21 YTD:22 Multi-Asset 1 Beginning balance $12,201 $22,498 $23,668 $23,641 $24,853 $12,201 $24,853 Inflows 561 674 672 583 577 561 577 Outflows (329) (488) (392) (397) (597) (329) (597) Net Flows 232 186 280
Slide 34: Investment Management Fees: Average Assets by Product
INVESTMENT MANAGEMENT FEES AVERAGE ASSETS1 BY PRODUCT Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 U.S. Retail Funds $63,872 $71,599 $72,476 $76,288 $69,133 $63,872 $69,133 Global Funds 1,265 1,411 1,453 1,426 3,902 1,265 3,902 Exchange Traded Funds 890 1,159 1,295 1,387 1,422 890 1,422 Variable Insu
Slide 35: Investment Management Fees: Average Fees Earned by Product
INVESTMENT MANAGEMENT FEES AVERAGE MANAGEMENT FEES EARNED1 BY PRODUCT (IN BASIS POINTS) Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 YTD:21 YTD:22 Total Open-End Funds 53.7 51.7 51.6 53.7 52.2 53.7 52.2 Revenue Related Adjustments (6.2) (5.8) (5.9) (5.2) (5.7) (6.2) (5.7) Total Open-End Funds, Net 47.5 45.9 45.7 4
Slide 36: Reconciliation: U.S. GAAP to Non-GAAP Q1 2022
RECONCILIATION: U.S. GAAP TO NON-GAAP Q1 2022 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manage
Slide 37: Reconciliation: U.S. GAAP to Non-GAAP Q4 2021
RECONCILIATION: U.S. GAAP TO NON-GAAP Q4 2021(UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment managem
Slide 38: Reconciliation: U.S. GAAP to Non-GAAP Q3 2021
RECONCILIATION: U.S. GAAP TO NON-GAAP Q3 2021 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manage
Slide 39: Reconciliation: U.S. GAAP to Non-GAAP Q2 2021
RECONCILIATION: U.S. GAAP TO NON-GAAP Q2 2021 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manage
Slide 40: Reconciliation: U.S. GAAP to Non-GAAP Q1 2021
RECONCILIATION: U.S. GAAP TO NON-GAAP Q1 2021 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manage
Slide 41: Reconciliation: U.S. GAAP to Non-GAAP YTD 2022
RECONCILIATION: U.S. GAAP TO NON-GAAP YTD 2022 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manag
Slide 42: Reconciliation: U.S. GAAP to Non-GAAP YTD 2021
RECONCILIATION: U.S. GAAP TO NON-GAAP YTD 2021 (UNAUDITED) Reclassification Other adjustments Consolidated Amortization Seed capital Acquisition U.S. GAAP investment Revenue of intangible and CLO and Non-GAAP Basis products related assets investments integration Other Basis Revenues Investment manag
Slide 43: Footnotes
FOOTNOTES Non-GAAP financial information differs from financial information 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 fr
Slide 44: Footnotes
FOOTNOTES (UNAUDITED) Components of Acquisition and Integration Expenses and Other for the respective periods are shown in the table below: Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 YTD:21 YTD:22 Acquisition and Integration Expenses Employment expenses $867 $615 $429 $(846) $4,282 $867 $4,282 Other op
Slide 45: Investment Partners
INVESTMENT PARTNERS
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