Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q3 2023 Earnings Presentation
28 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Nov 3, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 Earnings Presentation November 3, 2023
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 Investment Performance Third-Quarter Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Business Overview
Business Overview Q3 2023 • Achieved quarter-over-quarter growth: OPERATING & Revenue up 3% FINANCIAL Adjusted EBITDA margin, expanded 20 bps to 51.1% HIGHLIGHTS Adjusted Net Income with tax benefit per diluted share up 6% • Improved long-term net outflows from previous quarter • Increased cas
Slide 6: Investment Performance
Victory Ce Investment Performance
Slide 7: Commitment to Long-Term Investment Performance
Commitment to Long-Term Investment Performance Total Mutual Total Mutual Funds 40 Funds and ETFs with 4- or 5-Star overall ratings 67% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 82% 80% 78% 80% 70% 60% 62% 61% 65% 59% 60%
Slide 8: Long-term Growth & Capital Allocation Strategy
Long-term Growth & Capital Allocation Strategy Dividends De-leveraging Share Repurchases Enhancing Shareholder Value by: Maintaining Balance Sheet Flexibility with: • Improving platform with every strategic acquisition • Capital allocation policy that supports growth strategy • Evolving product set
Slide 9: Third-Quarter 2023 Financial Results
Third-Quarter 2023 Financial Results
Slide 10: Third-Quarter 2023 Financial Results
Third-Quarter 2023 Financial Results THIRD • AUM of $153.5Bn at September 30, 2023 QUARTER Average AUM increased 2.4% in Q3 versus Q2 FINANCIAL • Revenue increased 3% RESULTS • GAAP operating income of $80MM • Adjusted EBITDA increased and margin expanded to 51.1% • GAAP Net Income of $52MM, or $0
Slide 11: Assets Under Management
Assets Under Management $Bn (EOP) Retail Institutional Direct • Well-diversified ($mm)distribution channels and client base $158.6 $161.6 Retail $153.0 $153.5 Institutional Direct • Significant diversification within each channel as well Q4 '22 Q1 '23 Q2 '23 Q3 '23 11
Slide 12: Long-Term Asset Flows
Long-Term Asset Flows $Bn • Asset redemptions slowed for third Gross Sales Gross Redemptions Net Flows consecutive quarter 3/31/18 ($mm) $6.5 $5.8 $5.6 • Multiple franchises generated $5.3 positive long-term net flows for the quarter: WestEnd Advisors RS Global Trivalent Investments New Ener
Slide 13: Revenues
Revenues ($mm) 3/31/18 $MM $204.2 $209.7 $201.5 $201.3 • Highest revenue generated$200 in five quarters • Average fee rate steady $150 and consistent $100 $50 $0 Operating Metrics Q4 ‘22 Q1 ‘23 Q2 ’23 Q3 ‘23 TTM Average AUM ($Bn) $154.6 $157.8 $157.4 $161.1 Average Fee Rate (bps) 51.7 51.7 52.1 51.6
Slide 14: Expenses
Expenses Compensation Operating Non-Operating Cash compensation, % of revenue $MM • Compensation expenses relatively flat $143.8 10 $139.5 quarter-over-quarter $132.4 $129.6 90 • Total GAAP expenses rose, due primarily to an increase in non-cash change in 80 consideration payable for prior acquisiti
Slide 15: Non-GAAP Metrics
Non-GAAP Metrics $MM except per-share data 9/30/17 ($mm) $125.0 ANI Tax Benefit ANI with tax benefit per diluted share$1.30 • Adjusted EBITDA Margin expanded from Q2 $1.18 $1.20 • Highest Adjusted EBITDA$100.0 and $1.11 $1.08 $1.10 Adjusted EBITDA margin in $1.05 trailing four quarters $79.8 $74.5 $
Slide 16: 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) 9/30/2023 Cash / Cash Equivalents $108 $1,002 $1,002 $1,002 $1,002 $14.9 $15.6 $14.2 Debt $1,002 $13.3 Stockholders' Equity $1,076 Diluted Shares Outstanding (MM) 6
Slide 17: Appendix
Appendix
Slide 18: 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 $1.9 billion in total future tax amortization o $470MM in future cash tax savings, assuming 25% tax
Slide 19: 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 20: 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 21: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the three months ended, (in thousands) 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 GAAP Net income $ 72,764 $ 52,269 $ 49,273 $ 56,671 $ 52,007 GAAP Income tax expense (12,582) (16,879) (12,597) (17,924) (13,915) GAAP income before taxes 85,
Slide 22: Consolidated Reconciliations of Adjusted Net Income
Consolidated Reconciliations of Adjusted Net Income For the three months ended, (in thousands, except per-share data) 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 GAAP Net Income $ 72,764 $ 52,269 $ 49,273 $ 56,671 $ 52,007 Other business taxes 539 448 384 382 636 GAAP amortization of acquisit
Slide 23: 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 24: Detailed Reconciliation of Q2 '23 Adjusted Net Income
Detailed Reconciliation of Q2 ‘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 25: Detailed Reconciliation of Q1 '23 Adjusted Net Income
Detailed Reconciliation of Q1 ‘23 Adjusted Net Income (in thousands, except per-share amounts) 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 Intan
Slide 26: Detailed Reconciliation of Q4 '22 Adjusted Net Income
Detailed Reconciliation of Q4 ‘22 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 27: Detailed Reconciliation of Q3 '22 Adjusted Net Income
Detailed Reconciliation of Q3 ‘22 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: 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 September 30, 2023. Past performance does not guarantee future results. C
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