Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q3 2024 Earnings Presentation
34 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Nov 8, 2024
Slide 1: Third-Quarter 2024 Earnings Presentation
Third-Quarter 2024 Earnings Presentation November 8, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “e
Slide 3: Agenda
Agenda Quarterly Business Overview Investment Performance Third-Quarter 2024 Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Business Overview
Business Overview Total client assets of $181.1bn Q3 2024 Adjusted earnings per diluted share with tax benefit of $1.35 Operating & Long-term gross flows of $5.9bn, net flows of -$2.6bn Financial Adjusted EBITDA of $121.3 million Highlights Adjusted EBITDA margin of 53.7% Signed Definiti
Slide 6: Evolution of Victory Capital
Evolution of Victory Capital Proven track record of successful acquisitions in an evolving and consolidating Asset Management Industry 2013 2015 2017 2019 2024 MBO - July 2013 Victory Income Investors Sycamore Newbridge Sophus IPO - Feb 2018 Nasdaq: VCTR • Acquisition of Trivalent US Business Integr
Slide 7: Growth of Adjusted EBITDA & Margin Expansion
Growth of Adjusted EBITDA & Margin Expansion Quarterly Adjusted EBITDA up 206% Adjusted EBITDA Margin Expanded 1,580 bps 55% 53.7% $140 $121 MILLION 50% $120 $100 45% Adjusted EBITDA Margin Adjusted EBITDA $80 40% 37.9% $60 $40 MILLION 35% $40 30% $20 $0 25% 7
Slide 8: Growth of Adjusted EPS with Tax Benefit
Growth of Adjusted EPS with Tax Benefit Strong history of EPS growth Quarterly Adjusted EPS with Tax Benefit up 203% $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 8
Slide 9: Long-Term Growth & Capital Allocation Strategy
Long-Term Growth & Capital Allocation Strategy Enhancing Shareholder Value by: Enhancing Balance Sheet Flexibility with: Improving platform with every strategic acquisition Capital allocation policy that supports growth strategy Evolving product set to drive organic growth Strong free cash f
Slide 10: Investment Performance
J Victory Capital Investment Performance
Slide 11: Commitment to Long-Term Investment Performance
Commitment to Long-Term Investment Performance 43 Total Mutual Funds and ETFs with 4- or 5-Star overall ratings 67% Total Mutual Funds and ETFs AUM with 4- or 5-Star overall ratings AUM outperforming benchmarks Strategies outperforming benchmarks 80% 77% 73% 63% 61% 58% 60% 60% 48% 46% 40% 20% 0% 1-
Slide 12: Third-Quarter 2024 Financial Results
Third-Quarter 2024 Financial Results
Slide 13: Third-Quarter 2024 Financial Results
Third-Quarter 2024 Financial Results Revenue of $225.6MM GAAP Operating Income of $120.4MM GAAP Operating margin of 53.3% Third-Quarter GAAP Net Income of $1.24 per diluted share Financial Adjusted EBITDA of $121.3 million Results Adjusted EBITDA margin of 53.7% Adjusted Net Income wit
Slide 14: Total Client Assets
Total Client Assets Total Client Assets at Period End ($Bn) Well-diversified Retail Institutional Direct distribution channels and client base 181.1 Retail 175.5 173.8 166.6 Institutional Direct Significant diversification within each channel Q4 '23 Q1 '24 Q2 '24 Q3 '24 14
Slide 15: Long-Term AUM Flows
Long-Term AUM Flows Multiple Investment Long-Term AUM Asset Flows ($Bn) Franchises generated positive long-term net flows 3/31/18 Gross Flows Gross Redemptions Net Flows for the quarter: Victory Income Investors RS Global Sophus VictoryShares And, for the YTD period: Victory Income Inv
Slide 16: Revenue
Revenue Total Revenue ($MM) Revenue increased 219.6 225.6 3% from previous 215.9 quarter 205.8 $200 8% increase from Q3 2023 $150 Slight average fee rate decline due to product, vehicle, and asset mix $100 $50 $0 Operating Metrics Q4 ’23 Q1 ‘24 Q2 ‘24 Q3 ‘24 Average Total AUM ($Bn) 151.9 163.5
Slide 17: Expenses
Expenses Total Expenses ($MM) Q3 ‘24 total operating expenses decreased Compensation Operating Non-Operating 3% vs Q2 ’24 Cash compensation, % of revenue Lower GAAP non- cash compensation 144.0 120.0% 132.3 expense on reversal 123.8 118.1 100.0% of accrual for contingent earnout 80.0% payments 6
Slide 18: Non-GAAP Metrics
Non-GAAP Metrics 9/30/17 $MM (except per-share data) Record quarterly diluted ANI Tax Benefit ANI with tax benefit per diluted share earnings per share of $1.35 $1.35 $1.31 $1.40 $125.0 Record Adjusted $1.25 EBITDA and Adjusted $1.15 89.0 $1.20 EBITDA Margin 86.6 $100.0 82.3 Highest level of 7
Slide 19: Capital Management
Capital Management ($mm) 3/31/18 9/30/17 Selected Balance Sheet Items 09/30/2024 Interest Expense and Other Debt ($MM) Financing Costs ($MM) Cash / Cash Equivalents ($MM) 188 16.6 16.5 16.3 16.4 Debt ($MM) 992 1,002 1,002 992 992 Stockholders' Equity ($MM) 1,175 Diluted Shares Outstanding (MM) 66.1
Slide 20: Appendix
J VictoryC Appendix
Slide 21: Shareholder Value Creation since IPO
Shareholder Value Creation since IPO October 31, 2024 0.7 Cash Dividends $59.93 Per Share Total Shareholder $60.00 0.6 Stock Price Return of 427% $50.00 0.5 $40.00 $0.44 $0.41 0.4 $0.37 $30.00 $0.34 IPO - Feb. 7, 2018 $0.32 $0.32 $0.32 $0.32 0.3 $0.25 $0.25 $0.25 $0.25 $13.00 $20.00 0.2 $0.17 $0.15
Slide 22: Ongoing and Future Cash-Tax Benefits
Ongoing and Future Cash-Tax Benefits Section 338(h)(10) Election • Stepped up cost basis of acquired indefinite lived intangible assets is deductible for corporate income tax purposes over 15 years o $1.7Bn in total future tax amortization o $436MM in future cash tax savings, assuming 25% tax rate o
Slide 23: 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 24: 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 25: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the three months ended, (in thousands except percentages) 09/30/2023 12/31/2023 03/31/2024 06/30/2024 09/30/2024 GAAP Net income $ 52,007 $ 55,206 $ 55,691 $ 74,251 $ 81,983 GAAP Income tax expense (13,915) (18,316) (16,197) 21,524 (25,517) GAAP in
Slide 26: Historical Reconciliations of Adjusted EBITDA
Historical Reconciliations of Adjusted EBITDA For the three months ended, (in thousands except percentages) 3/31/2018 6/30/2018 9/30/2018 12/18/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 GAAP Net income $ $ $ $ 13,915 $ 14,527 $ 14,383 $ 25,992 $ 37,589 $ 57,166 $ 44
Slide 27: Consolidated Reconciliations of Adjusted Net Income
Consolidated Reconciliations of Adjusted Net Income For the three months ended, (in thousands, except per-share data) 09/30/2023 12/31/2023 03/31/2024 06/30/2024 09/30/2024 GAAP Net Income $ 52,007 $ 55,206 $ 55,691 $ 74,251 $ 81,983 Other business taxes 636 305 369 414 366 GAAP amortization of acqu
Slide 28: Historical Reconciliations of Adjusted Net Income
Historical Reconciliations of Adjusted Net Income 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 GAAP Net Income $ 10,524 $ 18,675 $ 20,590 $ 13,915 $ 14,527 $ 14,383 $ 25,992 $ 37,589 $ 57,166 $ 44,720 $ 55,741 Other business taxes 37
Slide 29: Detailed Reconciliation of Q3 '24 Adjusted Net Income
Detailed Reconciliation of Q3 ‘24 Adjusted Net Income Three months ended September 30, 2024 (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 Tot
Slide 30: Detailed Reconciliation of Q2 '24 Adjusted Net Income
Detailed Reconciliation of Q2 ‘24 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 Intan
Slide 31: Detailed Reconciliation of Q1 '24 Adjusted Net Income
Detailed Reconciliation of Q1 ‘24 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 Intan
Slide 32: Detailed Reconciliation of Q4 '23 Adjusted Net Income
Detailed Reconciliation of Q4 ‘23 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 Intan
Slide 33: Detailed Reconciliation of Q3 '23 Adjusted Net Income
Detailed Reconciliation of Q3 ‘23 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 Intan
Slide 34: Notes and Disclosures
Notes and Disclosures Investing involves risk, including the potential loss of principal. There are no assurances that any fund or strategy will achieve its stated objective. All data in this presentation, unless otherwise noted, is as of September 30, 2024. Past performance does not guarantee futur