Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q3 2014 Earnings Presentation
28 slides from Virtus Investment Partners's earnings presentation, Oct 28, 2014
Slide 1: Third Quarter 2014 Earnings Presentation
Third Quarter 2014 Earnings Presentation October 28, 2014 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 Third Quarter Third Quarter Results Closing Remarks Q & A Session Page 3
Slide 4: Overview of Third Quarter
Overview of Third Quarter Page 4
Slide 5: Overview of Third Quarter
Overview of Third Quarter Assets and Flows Long term assets of $59.5 billion, up $6.1 billion or 11% over prior year; positive net flows of $0.5 billion Mutual fund sales of $3.0 billion; fund net flows of $0.7 billion represents a 6.5% organic growth rate1 Financial Results Operating income,
Slide 6: Third Quarter Results
“INVESTMENT PARTNERS <I Third Quarter Results Page 6
Slide 7: Assets Under Management
Assets Under Management Quarterly Trends Commentary Long-Term $61.4 $60.9 Trend reflects positive net flows and Cash Management $57.7 $58.0 market impact $55.0 $59.9 $59.5 $56.1 $56.5 $53.4 Long-term assets increased $6.1 billion or 11% from prior year − Open-end funds of $39.8 billion, up $5.7 bi
Slide 8: Asset Flows
Asset Flows Inflows/(Outflows) Commentary $16.7 Flow trend reflective of market trends, $11.8 product breadth and investment $4.9 $4.6 $4.2 $11.3 performance $4.0 $3.5 $3.5 Gross sales of $3.5 billion; $3.0 billion of open-end fund sales Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 YTD 13 YTD 14 Overall annual
Slide 9: Operating Income, as Adjusted
Operating Income, as Adjusted Quarterly Results Year to Date Commentary $120.2 Increasing profitability driven by positive net flows and cumulative impact of market appreciation $92.6 $44.8 Increase of $6.0 million or 16% from $38.3 $38.8 $35.8 $36.6 prior quarter primarily due to higher revenues,
Slide 10: Investment Management Fees
Investment Management Fees Quarterly Results Year to Date Commentary $225.3 Increasing fees reflect higher average $189.4 assets under management and net fee rate $79.0 Increased $4.5 million, or 6% from prior $71.8 $74.5 $67.1 $71.2 quarter, primarily due to 5% increase in average long-term open-
Slide 11: Employment Expenses
Employment Expenses Quarterly Results Year to Date Commentary Trend reflects growth of business and $105.8 variable incentive plans $98.3 $96.6 $104.4 Decrease of $0.3 million sequentially attributable to lower variable incentive $33.0 $33.5 $35.0 $35.5 $35.2 compensation $33.0 $34.5 $34.6 $32.5
Slide 12: Other Operating Expenses
Other Operating Expenses Quarterly Results Year to Date Commentary Results reflect timing of product, distribution, and operational initiatives $35.0 $32.9 Decrease of $1.8 million or 14% $27.8 $13.1 sequentially primarily due to new $27.3 $10.5 $11.3 product introductions and annual Board $10.5 $
Slide 13: Capital Position
Capital Position Select Balance Sheet Items Commentary 9/30/13 12/31/13 3/31/14 6/30/14 9/30/14 Strong capital position reflects cash flows Cash and cash equivalents $245 $271 $235 $170 $173 from operations and capital activities Investments - seed capital $18 $25 $65 $28 $22 1 Net assets of CSIPs -
Slide 14: Appendix
“INVESTMENT PARTNERS <I Appendix Page 14
Slide 15: GAAP Income Statement
GAAP Income Statement Quarterly Trend and Year-to-Date Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Revenues Investment management fees $67,119 $71,186 $71,792 $74,537 $78,960 $189,371 $225,289 Distribution and service fees 20,322 21,958 22,438 23,940 23,671 57,007 70,049 Administration and transfer
Slide 16: GAAP Income Statement
GAAP Income Statement Quarterly Trend and Year-to-Date Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Other Income (Expense) Realized and unrealized gain (loss) on investments, net 1,285 463 1,846 905 (1,039) 1,887 1,712 Realized and unrealized gain (loss) on investments of 324 5,975 36 6,444 (5,330) (
Slide 17: Schedule of Non-GAAP Information
Schedule of Non-GAAP Information Quarterly Trend and Year-to-Date Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Revenues, GAAP basis $100,409 $106,498 $107,871 $112,749 $117,841 $282,717 $338,461 Less: Distribution and administration expenses 25,253 26,653 27,737 29,646 29,180 71,133 86,563 Consolidat
Slide 18: Condensed Balance Sheet
Condensed Balance Sheet Quarter-end Trend 9/30/13 12/31/13 3/31/14 6/30/14 9/30/14 Assets Cash and cash equivalents $244,683 $271,014 $234,795 $170,367 $172,709 Cash of consolidated sponsored investment products 43 531 2,543 361 1,055 Cash pledged or on deposit of consolidated sponsored - - - 11,958
Slide 19: Condensed Balance Sheet
Condensed Balance Sheet Quarter-end Trend 9/30/13 12/31/13 3/31/14 6/30/14 9/30/14 Liabilities and Equity Accrued compensation and benefits $39,410 $53,140 $18,349 $29,784 $42,924 Accounts payable and accrued liabilities 25,779 29,912 29,169 33,131 33,389 Dividends payable - - - 4,179 4,229 Other li
Slide 20: Schedule of Marketable Securities
Schedule of Marketable Securities Market Q3:14 Value at Mark-to- Investment Benchmark Index 9/30/14 Market Investments - Seed Capital: Emerging Markets Equity Income MSCI Emerging Markets Index $5.5 ($0.2) International Small Cap SMA MSCI AC World Ex U.S. Small Cap Index 5.1 (0.6) Portable Yield Str
Slide 21: AUM and Average Net Management Fees Earned
AUM and Average Net Management Fees Earned Quarterly Trend and Year-to-Date: By Product Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 By Product (period end) Mutual Funds – Long-Term Open-End $34,173.0 $36,367.7 $37,347.0 $39,819.1 $39,838.8 $34,173.0 $39,838.8 Mutual Funds – Closed-End 6,379.4 6,499.
Slide 22: Assets Under Management
Assets Under Management Quarterly Trend and Year-to-Date: All Product Flows and AUM By Asset Class Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 All Product Flows Beginning balance $52,653.0 $55,007.0 $57,739.6 $58,011.2 $61,394.3 $45,537.0 $57,739.6 Inflows 4,869.1 4,619.7 4,249.2 4,018.3 3,514.3 16,
Slide 23: Assets Under Management
Assets Under Management Asset Flows – By Product Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Mutual Funds – Long-Term Open-End Beginning balance $32,351.2 $34,173.0 $36,367.7 $37,347.0 $39,819.1 $25,827.1 $36,367.7 Inflows 4,256.0 4,061.1 3,641.3 3,148.5 3,034.5 15,036.5 9,824.3 Outflows (3,125.3) (
Slide 24: Assets Under Management
Assets Under Management Asset Flows – By Product (Continued) Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Variable Insurance Funds Beginning balance $ 1,250.8 $ 1,286.8 $ 1,311.8 $1,286.6 $1,305.5 $ 1,295.7 $1,311.8 Inflows 13.1 13.5 11.6 20.9 20.7 35.2 53.2 Outflows (59.4) (59.3) (55.5) (53.3) (59.3
Slide 25: Assets Under Management
Assets Under Management Long-Term Open-End Asset Flows – By Asset Class Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Mutual Funds – Domestic Equity Beginning balance $8,170.7 $9,446.0 $11,092.1 $11,575.7 $12,189.5 $6,459.2 $11,092.1 Inflows 1,239.8 1,288.7 1,160.9 907.7 813.8 3,205.4 2,882.4 Outflows
Slide 26: Assets Under Management
Assets Under Management Long-Term Open-End Asset Flows – By Asset Class (Continued) Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 YTD:13 YTD:14 Mutual Funds – Taxable Bond Beginning balance $10,222.5 $10,297.2 $10,425.1 $10,646.1 $11,003.2 $8,686.3 $10,425.1 Inflows 984.4 990.4 991.2 1,013.2 905.3 4,318.8 2,909.7 O
Slide 27: Footnotes to Schedule of Non-GAAP Information
Footnotes to Schedule of Non-GAAP Information The company reports its financial results on a Generally Accepted Accounting Principles (GAAP) basis; however management believes that evaluating the company's ongoing operating results may be enhanced if investors have additional non-GAAP financial meas
Slide 28: Virtus Investment Partners
VIRTUS | INVESTMENT PARTNERS
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