Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q4 2021 Earnings Presentation
37 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Feb 11, 2022
Slide 1: Fourth Quarter 2021 Earnings Presentation
Fourth Quarter 2021 Earnings Presentation February 11, 2022
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 Quarterly Business Overview Review of Longer-Term Financial Performance Investment Performance Fourth-Quarter 2021 Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Quarterly Business Overview
Quarterly Business Overview STRATEGIC • Closed two strategic growth-oriented acquisitions in Q4 HIGHLIGHTS New Energy Capital o Launched alternative investments platform o Broadens ESG/impact product offering WestEnd Advisors o Fast-growing third-party ETF Model Strategist o Provides entry into
Slide 6: Quarterly Business Overview Cont.
Quarterly Business Overview Cont. DIRECT • Averaging >5K new account registrations per month since acquisition INVESTOR • USAA® 529 Education Savings Plan BUSINESS Positive net flows in Q4 and FY 2021, and since acquiring • Six consecutive quarters of net flow improvement • More than 110K download
Slide 7: Review of Longer-Term Financial Performance
Review of Longer-Term Financial Performance
Slide 8: Long-term Growth & Capital Allocation Strategy
Long-term Growth & Capital Allocation Strategy Share Repurchases Dividends Inorganic Growth & De-leveraging Enhancing Shareholder Value by: Maintaining Balance Sheet Flexibility with: • Improving platform with every strategic acquisition • Capital allocation policy that supports growth strategy • Ev
Slide 9: Review of Longer-Term Financial Performance
Review of Longer-Term Financial Performance Revenue ($MM) GAAP EPS per Diluted Share $890 $3.75 $775 ‘21 vs ‘20 ’18 to ‘21 ‘21 vs ‘20 ’18 to ‘21 $2.88 $612 Annual Growth CAGR Annual Growth CAGR $413 15% 29% $0.90 $1.26 30% 61% VCTR Rankings 2018 2019 2020 2021 2018 2019 2020 2021 9th Overall Adjus
Slide 10: Investment Performance
Victory Ce Investment Performance
Slide 11: Commitment to Long-Term Investment Performance
Commitment to Long-Term Investment Performance Total Mutual Total Mutual Funds 43 Funds and ETFs with 4- or 5-Star overall ratings 64% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 100% 100% 82% 77% 77% 80% 80% 71% 70% 67% 6
Slide 12: Fourth-Quarter 2021 Financial Results
Fourth-Quarter 2021 Financial Results
Slide 13: Fourth-Quarter & Full-Year 2021 Financial Results
Fourth-Quarter & Full-Year 2021 Financial Results • AUM of $183.7Bn as of December 31, 2021 FOURTH Up 15% from Q3 2021 QUARTER Up 25% from Q4 2020 & FULL YEAR • Revenue of $229.1MM in Q4; $890.3MM for full-year FINANCIAL Up 1% from Q3 2021 and up 14% from Q4 2020 RESULTS Up 15% from full-yea
Slide 14: Assets Under Management
Assets Under Management $Bn • AUM of $183.7Bn as of December 31, 2021 Up 15% from Q3 2021 Retail Institutional Direct ($mm) Up 25% from Q4 2020 $183.7 $161.9 $159.9 • Diversified distribution $154.3 Retail Institutional Direct Q1 '21 Q2 '21 Q3 '21 Q4 '21 Assets under management are as of t
Slide 15: Long-Term Asset Flows
Long-Term Asset Flows $Bn • Gross LT sales of $5.5Bn in Q4 Gross Sales Gross Redemptions Net Flows 3/31/18 • Record LT gross sales of $27.9Bn $10.0 ($mm) in 2021 • Multiple franchises/strategies and $6.7 $5.7 $5.5 products generated long-term net inflows in 2021 including: INCORE RS Global Sol
Slide 16: Revenues
Revenues ($mm) 3/31/18 $MM 9/30/17 • Q4 2021 revenue of $229MM $229.1 $221.9 $226.3 Up 1% vs Q3 2021 $212.9 Up 14% vs Q4 2020 $105.0 • Full-year 2021 revenue of $890MM Up 15% vs 2020 Operating Metrics Q1 ‘21 Q2 ‘21 Q3 ‘21 Q4 ‘21 Average AUM ($Bn) $151.1 $158.5 $162.5 $162.3* Average Fee Rate (
Slide 17: Expenses
Expenses Compensation Operating Non-Operating • Q4 2021 total expenses increased $9.7MM Cash compensation, % of revenue* vs Q3 2021 $MM Driven by $4.9MM increase in $143.6 100 acquisition, restructuring and $130.1 $132.0 $133.9 90. integration expense 80. $1.9MM of acquisition / transaction rela
Slide 18: Non-GAAP Metrics
Non-GAAP Metrics ($mm) 3/31/18 $MM except per share data 9/30/17 • 2021 margins are inclusive of investments in: ANI Tax Benefit ANI with tax benefit per diluted share $1.40 Technology $1.25 $1.27 $1.18 $1.20 Distribution $100.0 $1.13 $92.6 $93.7 Data $87.2 $6.9 $7.3 Direct Investor Business
Slide 19: Capital Management
Capital Management Interest Expense and Other ($mm) 3/31/18 Debt ($MM) Financing Costs 9/30/17 ($MM) Selected Balance Sheet Items ($MM) 12/31/2021 $1,151 * Cash / Cash Equivalents $70 $738 $6.8 Debt* $1,151 $681 $646 $6.2 $6.2 $5.9 Stockholders' Equity $930 Diluted Shares Outstanding (MM) 74.0 Net D
Slide 20: Appendix
Appendix
Slide 21: 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 $2.1 billion in total future tax amortization o $525MM in future cash tax savings, assuming 25% tax
Slide 22: 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 23: 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 24: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the three months ended, (in thousands) 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 GAAP Net income $ 54,895 $ 65,202 $ 69,270 $ 74,175 $ 69,742 GAAP Income tax expense (17,681) (17,662) (20,629) (18,181) (15,781) GAAP income before taxes 72
Slide 25: Consolidated Reconciliations of Adjusted Net Income
Consolidated Reconciliations of Adjusted Net Income For the three months ended, (in thousands, except per-share data) 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 GAAP Net Income $ 54,895 $ 65,202 $ 69,270 $ 74,175 $ 69,742 Other business taxes 265 374 524 376 383 GAAP amortization of acquisi
Slide 26: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the twelve months ended, (in thousands) 12/31/2018 12/31/2019 12/31/2020 12/31/2021 GAAP Net income $ 63,704 $ 92,491 $ 212,522 $ 278,389 GAAP Income tax expense (21,207) (28,197) (66,018) (72,253) GAAP income before taxes $ 84,911 $ 120,688 $ 278,
Slide 27: Detailed Reconciliation of Q4 '21 Adjusted Net Income
Detailed Reconciliation of Q4 ‘21 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 28: Detailed Reconciliation of Q3 '21 Adjusted Net Income
Detailed Reconciliation of Q3 ‘21 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 29: Detailed Reconciliation of Q2 '21 Adjusted Net Income
Detailed Reconciliation of Q2 ‘21 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 30: Detailed Reconciliation of Q1 '21 Adjusted Net Income
Detailed Reconciliation of Q1 ‘21 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 Q4 '20 Adjusted Net Income
Detailed Reconciliation of Q4 ‘20 Adjusted Net Income 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 Intangibles Compensation Exit Costs Costs Adjustments Basi
Slide 32: Detailed Reconciliation of 2021 Adjusted Net Income
Detailed Reconciliation of 2021 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 33: Detailed Reconciliation of 2020 Adjusted Net Income
Detailed Reconciliation of 2020 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 34: Detailed Reconciliation of 2019 Adjusted Net Income
Detailed Reconciliation of 2019 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 35: Detailed Reconciliation of 2018 Adjusted Net Income
Detailed Reconciliation of 2018 Adjusted Net Income 35
Slide 36: Notes and Disclosures
Notes and Disclosures Investing involves risk, including the potential loss of principal. There are no assurances that any fund will achieve its stated objective. All data in this presentation, unless otherwise noted, is as of December 31, 2021. Past performance does not guarantee future results. A
Slide 37: Notes and Disclosures
Notes and Disclosures Victory Capital means Victory Capital Management Inc., the investment adviser of the Victory Capital mutual funds, USAA Mutual Funds, VictoryShares ETFs, VictoryShares USAA ETFs, and USAA 529 Education Savings Plan (Plan). Victory Capital mutual funds, USAA Mutual Funds, and th
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