Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q1 2014 Earnings Presentation
29 slides from Virtus Investment Partners's earnings presentation, Apr 30, 2014
Slide 1: First Quarter 2014 Earnings Presentation
First Quarter 2014 Earnings Presentation April 30, 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 First Quarter First Quarter Results Closing Remarks Q & A Session Page 3
Slide 4: Overview of First Quarter
Overview of First Quarter Page 4
Slide 5: First Quarter Highlights
First Quarter Highlights Sales and Flows Total sales of $4.2 billion, down sequentially and from prior year consistent with market trends and investor preferences Mutual fund sales of $3.6 billion represent 41% annualized sales rate; above industry average Fund net flows of $0.3 billion repres
Slide 6: Virtus Alternative Funds
Virtus Alternative Funds Provides individual investors with access to top-rated alternatives managers through open-end funds that offer liquidity, governance, transparency and affordability Leverages Virtus’ extensive retail distribution and consultative approach to supporting financial advisors
Slide 7: First Quarter Results
“INVESTMENT PARTNERS <I First Quarter Results Page 7
Slide 8: Assets Under Management
Assets Under Management Quarterly Trends Commentary Long-Term Cash Management $57.7 $58.0 Positive trend driven by net flows and $55.0 $1.6 $1.5 $51.2 $52.7 $1.6 $56.1 $56.5 market appreciation $1.8 $53.4 $1.8 $50.9 $49.4 Long-term assets increased $7.1 billion or 14% from prior year and $0.4 bill
Slide 9: Asset Flows
Asset Flows Inflows/(Outflows) Commentary $6.2 $6.2 Flow trend reflective of market trends, $5.6 $4.9 product breadth, investment performance, $4.6 $4.2 $4.2 and sales effectiveness Gross sales in the quarter of $4.2 billion; $3.6 billion of open-end fund Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 YTD 13 YTD 1
Slide 10: Operating Income, as Adjusted
Operating Income, as Adjusted Quarterly Results Year to Date Commentary Increasing profitability driven by cumulative $38.3 impact of positive net flows and market $35.8 $36.6 $36.6 appreciation $31.7 Increase of $11.5 million from prior year $25.1 $25.1 reflects cumulative impact to AUM and reven
Slide 11: Investment Management Fees
Investment Management Fees Quarterly Results Year to Date Commentary Increasing fees reflect higher average assets under management and net fee rate $71.2 $71.8 $71.8 earned $67.1 $64.5 $57.8 $57.8 Fees increased $0.6 million, or 1% from prior quarter, primarily due to 2% increase in average long-
Slide 12: Employment Expenses
Employment Expenses Quarterly Results Year to Date Commentary Trend reflects growth of business and variable nature of incentive plans Employment expenses increased $1.5 $35.0 $35.0 $32.4 $32.9 $33.0 $33.5 $32.4 million sequentially due to: $34.5 $34.5 $31.8 $32.3 $32.5 $33.0 - Incremental payroll
Slide 13: Other Operating Expenses
Other Operating Expenses Quarterly Results Year to Date Commentary Stable range of other operating expenses reflects leveragability of business model $37.8 Increase of $1.5 million or 18% over $10.3 $10.5 $10.5 $10.5 prior year quarter primarily related to: $9.0 $8.5 $9.0 - Additional investment r
Slide 14: Capital Position
Capital Position Select Balance Sheet Items Commentary 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14 Strong capital position reflects cash flows Cash and cash equivalents $46 $71 $245 $271 $235 from operations and issuance of common 1 Investments - other $5 $4 $4 $4 $29 equity Investments - seed capital
Slide 15: Appendix
“INVESTMENT PARTNERS <I Appendix Page 15
Slide 16: GAAP Income Statement
GAAP Income Statement Quarterly Trend and Year-to-Date Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Revenues Investment management fees $57,777 $64,475 $67,119 $71,186 $71,792 $57,777 $71,792 Distribution and service fees 17,361 19,324 20,322 21,958 22,438 17,361 22,438 Administration and transfer ag
Slide 17: GAAP Income Statement
GAAP Income Statement Quarterly Trend and Year-to-Date Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Other Income (Expense) Realized and unrealized gain (loss) on trading securities, net 825 (223) 1,285 463 1,846 825 1,846 Realized and unrealized gain (loss) on investments of 372 (3,156) 324 5,975 36
Slide 18: Schedule of Non-GAAP Information
Schedule of Non-GAAP Information Quarterly Trend and Year-to-Date Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Revenues, GAAP Basis $86,168 $96,140 $100,409 $106,498 $107,871 $86,168 $107,871 Less: Distribution and administration expenses 21,628 24,252 25,253 26,653 27,737 21,628 27,737 Consolidated
Slide 19: Condensed Balance Sheet
Condensed Balance Sheet Quarter-end Trend 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14 Assets Cash and cash equivalents $45,874 $70,851 $244,683 $271,014 $234,795 Cash and cash equivalents of consolidated sponsored 57 34 43 531 2,543 investment products Investments 25,252 27,830 29,287 37,258 102,490 In
Slide 20: Condensed Balance Sheet
Condensed Balance Sheet Quarter-end Trend 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14 Liabilities and Stockholders’ Equity Accrued compensation and benefits $18,103 $26,590 $39,410 $53,140 $18,349 Accounts payable and accrued liabilities 25,138 25,801 25,779 29,912 29,169 Debt 15,000 15,000 - - - Other
Slide 21: Schedule of Marketable Securities
Schedule of Marketable Securities Market Value at Fund Benchmark Index 3/31/14 Investments - Other: Multi-Sector Short Term Bond BofA Merrill Lynch 1-2.99 Year Medium Quality Corporate Bonds Index $13.6 Low Duration Income Barclays U.S. Intermediate Government/Credit Bond Index 12.6 DNP Select Incom
Slide 22: AUM and Average Net Management Fees Earned
AUM and Average Net Management Fees Earned Quarterly Trend and Year-to-Date: By Product Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 By Product (period end) Mutual Funds – Long-Term Open-End $30,552.5 $32,351.2 $34,173.0 $36,367.7 $37,347.0 $30,552.5 $37,347.0 Mutual Funds – Closed-End 6,621.0 6,422.
Slide 23: Assets Under Management
Assets Under Management Quarterly Trend and Year-to-Date: All Product Flows and AUM By Asset Class Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 All Product Flows Beginning balance $45,537.0 $51,207.7 $52,653.0 $55,007.0 $57,739.6 $45,537.0 $57,739.6 Inflows 6,242.0 5,595.8 4,869.1 4,619.7 4,249.2 6,2
Slide 24: Assets Under Management
Assets Under Management Asset Flows – By Product Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Mutual Funds – Long-Term Open-End Beginning balance $25,827.1 $30,552.5 $32,351.2 $34,173.0 $36,367.7 $25,827.1 $36,367.7 Inflows 5,710.6 5,069.9 4,256.0 4,061.1 3,641.3 5,710.6 3,641.3 Outflows (2,155.0) (2
Slide 25: Assets Under Management
Assets Under Management Asset Flows – By Product (Continued) Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Variable Insurance Funds Beginning balance $ 1,295.7 $ 1,317.8 $ 1,250.8 $ 1,286.8 $ 1,311.8 $ 1,295.7 $ 1,311.8 Inflows 9.8 12.3 13.1 13.5 11.6 9.8 11.6 Outflows (61.0) (65.7) (59.4) (59.3) (55.
Slide 26: Assets Under Management
Assets Under Management Long-Term Open-End Asset Flows – By Asset Class Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Mutual Funds - Domestic Equity Beginning balance $6,459.2 $7,448.8 $8,170.7 $9,446.0 $11,092.1 $6,459.2 $11,092.1 Inflows 794.1 1,171.5 1,239.8 1,288.7 1,160.9 794.1 1,160.9 Outflows (
Slide 27: Assets Under Management
Assets Under Management Long-Term Open-End Asset Flows – By Asset Class (Continued) Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 YTD:13 YTD:14 Mutual Funds – Taxable Bond Beginning balance $8,686.3 $9,853.0 $10,222.5 $10,297.2 $10,425.1 $8,686.3 $10,425.1 Inflows 1,731.9 1,602.5 984.4 990.4 991.2 1,731.9 991.2 Out
Slide 28: 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 29: Virtus Investment Partners
VIRTUS | INVESTMENT PARTNERS
Virtus Investment Partners — Q1 2014 Earnings Presentation on 6ix