Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q2 2024 Earnings Presentation
45 slides from Virtus Investment Partners's earnings presentation, Jul 26, 2024
Slide 1: Second Quarter Earnings Presentation
SECOND QUARTER EARNINGS PRESENTATION July 26, 2024 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 Quarter ■ Results ■ Q & A Session 3
Slide 4: Overview of Quarter
INVESTMENT PARTNERS. OVERVIEW OF QUARTER
Slide 5: Second Quarter 2024 Overview
SECOND QUARTER 2024 OVERVIEW Assets and Flows ■ Assets under management (AUM) decreased 3% to $173.6 billion due to market performance and net outflows; average AUM increased 1% to $175.2 billion ■ Sales of $6.1 billion compared with $7.6 billion primarily due to lower sales of U.S. retail funds and
Slide 6: Results
INVESTMENT PARTNERS. RESULTS
Slide 7: Assets Under Management
ASSETS UNDER MANAGEMENT LOWER DUE TO MARKET AND FLOWS Institutional Accounts Closed-End Funds ■ AUM of $173.6 billion decreased from $179.3 U.S. Retail Funds Retail Separate Accounts billion due to: Global Funds, ETFs, and Variable Insurance Funds – ($2.6) billion of market performance – ($2.6) bill
Slide 8: Asset Flows
ASSET FLOWS REFLECT INVESTOR PREFERENCES ■ Sales of $6.1 billion decreased from $7.6 billion – Institutional sales of $1.2 billion compared with $1.7 billion – Retail separate account sales of $2.2 billion compared with $2.4 billion; higher private client sales offset by lower intermediary sold – Op
Slide 9: Investment Management Fees, as Adjusted
INVESTMENT MANAGEMENT FEES, AS ADJUSTED HIGHER AVERAGE ASSETS ■ Investment management fees, as adjusted, increased by 2% due to higher average AUM and fee rate ■ Average fee rate of 42.2 bps compared with 41.9 bps – Ex-performance fees, average fee rate of 42.0 bps unchanged from prior quarter norma
Slide 10: Employment Expenses, as Adjusted
EMPLOYMENT EXPENSES, AS ADJUSTED STABLE EXCLUDING SEASONALITY ■ Employment expenses, as adjusted, declined by $8.1 million due to – Impact of prior quarter seasonal items, partially offset by – Higher variable incentives primarily from performance-based stock compensation ■ Employment expenses, as a
Slide 11: Other Operating Expenses, as Adjusted
OTHER OPERATING EXPENSES, AS ADJUSTED REMAIN IN CONSISTENT RANGE ■ Other operating expenses, as adjusted, increased $1.1 million, or 4%, primarily reflecting $0.7 million annual equity grant to Board of Directors ■ Other operating expenses, as adjusted, as a percentage of revenues, as adjusted, of 1
Slide 12: Non-GAAP Results
NON-GAAP RESULTS HIGHER EARNINGS AND MARGIN ■ Operating margin, as adjusted, of 32.5% Operating Income, as Adjusted compared with 28.2%, which included Diluted earnings per share, as adjusted seasonal expenses ■ Interest and dividend income increased $1.2 million, primarily related to interest incom
Slide 13: Capital and Select Balance Sheet
CAPITAL AND SELECT BALANCE SHEET BALANCED CAPITAL MANAGEMENT ■ Working capital of $143.0 million Select Balance Sheet Items: 6/30/23 9/30/23 12/31/23 3/31/24 6/30/24 increased from $123.4 million, as Cash and cash equivalents $201 $195 $240 $124 $183 cash earnings exceeded return of Investments - se
Slide 14: Financial Supplement
INVESTMENT PARTNERS FINANCIAL SUPPLEMENT
Slide 15: Non-GAAP Information: Income Statement
NON-GAAP INFORMATION INCOME STATEMENT1 (UNAUDITED) Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 Revenues, As Adjusted Investment management fees, as adjusted $171,097 $177,387 $174,448 $180,547 $183,670 $328,733 $364,217 Administration and shareholder service fees, as adjusted 18,273 19,064 18,213 18
Slide 16: Non-GAAP Information: Income Statement (Continued)
NON-GAAP INFORMATION INCOME STATEMENT1 (CONTINUED) (UNAUDITED) Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 Other Income (Expense), As Adjusted Realized and unrealized gain (loss) on investments, net, as adjusted ($220) ($297) ($289) $122 ($211) ($280) ($89) Other income, net, as adjusted (847) 128 6
Slide 17: Non-GAAP Information: Balance Sheet
NON-GAAP INFORMATION BALANCE SHEET1 (UNAUDITED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Assets: Cash and cash equivalents $201,462 $195,403 $239,602 $123,880 $183,001 Investments – seed capital 126,119 126,017 144,351 144,682 139,584 Investments – other 117,265 145,449 131,238 128,025 118
Slide 18: Non-GAAP Information: Balance Sheet (Continued)
NON-GAAP INFORMATION BALANCE SHEET1 (CONTINUED) (UNAUDITED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Liabilities and Equity Liabilities: Accrued compensation and benefits $117,681 $161,745 $200,837 $95,591 $132,261 Accounts payable and accrued liabilities 39,375 32,740 38,756 44,282 30,275
Slide 19: U.S. GAAP Information: Income Statement
U.S. GAAP INFORMATION INCOME STATEMENT (UNAUDITED) Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 Revenues Investment management fees $179,979 $184,869 $182,149 $188,360 $191,652 $344,457 $380,012 Distribution and service fees 14,132 14,333 13,535 14,030 13,410 28,285 27,440 Administration and sharehol
Slide 20: U.S. GAAP Information: Income Statement (Continued)
U.S. GAAP INFORMATION INCOME STATEMENT (CONTINUED) (UNAUDITED) Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 Other Income (Expense) Realized and unrealized gain (loss) on investments, net $1,717 ($1,918) $4,056 $3,416 ($1,553) $4,387 $1,863 Realized and unrealized gain (loss) of CIP1, net (4,436) (1,0
Slide 21: Assets Under Management by Product, Asset Class and Region
ASSETS UNDER MANAGEMENT BY PRODUCT, ASSET CLASS AND REGION 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Assets by Product U.S. Retail Funds $50,429 $47,776 $49,064 $50,252 $48,064 Global Funds 4,184 4,140 4,560 4,749 4,809 Exchange Traded Funds 1,337 1,404 1,545 1,898 2,108 Variable Insurance
Slide 22: Assets Under Management by Product and Asset Class
ASSETS UNDER MANAGEMENT BY PRODUCT AND ASSET CLASS Open-End Closed-End Retail Separate Institutional Total as of Funds Funds Accounts Accounts 6/30/2024 Equity: Domestic Equity $20,117 $— $35,749 $23,813 $79,679 International Equity 2,939 — 69 1,334 4,342 Global Equity 2,103 — 393 8,728 11,224 Speci
Slide 23: Asset Flows: Total
ASSET FLOWS TOTAL 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Total Beginning balance $154,849 $168,316 $162,539 $172,259 $179,311 $149,376 $172,259 Inflows 7,576 5,810 6,237 7,583 6,137 13,810 13,720 Outflows (7,604) (7,309) (10,037) (8,821) (8,762) (15,731) (17,583) Net Flows
Slide 24: Asset Flows by Product
ASSET FLOWS BY PRODUCT 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 U.S. Retail Funds Beginning balance $48,111 $50,429 $47,776 $49,064 $50,252 $47,494 $49,064 Inflows 2,128 2,382 2,629 2,929 2,291 4,933 5,220 Outflows (4,547) (3,954) (4,628) (3,906) (3,843) (9,109) (7,749) Net F
Slide 25: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Exchange Traded Funds Beginning balance $1,275 $1,337 $1,404 $1,545 $1,898 $1,226 $1,545 Inflows 70 124 105 298 241 207 539 Outflows (41) (52) (46) (28) (43) (160) (71) Net Flows 29 72 59 270 198 47 4
Slide 26: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Closed-End Funds Beginning balance $10,358 $10,166 $9,472 $10,026 $10,064 $10,361 $10,026 Inflows 20 — — — — 24 — Outflows — — — — (41) — (41) Net Flows 20 — — — (41) 24 (41) Market performance (1) (5
Slide 27: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Intermediary Sold Managed Accounts2 Beginning balance $30,675 $31,878 $31,708 $35,438 $38,610 $29,160 $35,438 Inflows 1,065 1,661 1,741 2,171 1,895 2,086 4,066 Outflows (1,268) (1,353) (1,441) (1,505)
Slide 28: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Institutional Separate Accounts Beginning balance $49,528 $58,780 $56,613 $59,548 $61,253 $46,908 $59,548 Inflows 3,660 1,002 1,179 1,734 1,085 5,512 2,819 Outflows (1,478) (1,648) (3,406) (3,022) (2,
Slide 29: Asset Flows by Asset Class
ASSET FLOWS BY ASSET CLASS 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Domestic Equity Beginning balance $69,253 $71,984 $69,978 $77,263 $83,474 $64,948 $77,263 Inflows 2,066 2,731 3,023 4,390 3,381 5,054 7,771 Outflows (3,103) (3,109) (3,704) (4,190) (4,854) (6,244) (9,044) Net
Slide 30: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Global Equity Beginning balance $9,013 $9,835 $9,478 $10,552 $11,228 $8,292 $10,552 Inflows 415 182 477 318 363 834 681 Outflows (249) (367) (407) (203) (443) (687) (646) Net Flows 166 (185) 70 11
Slide 31: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Leveraged Finance Beginning balance $9,836 $9,247 $9,306 $9,083 $8,941 $10,196 $9,083 Inflows 238 544 345 366 364 516 730 Outflows (765) (366) (571) (505) (410) (1,523) (915) Net Flows (527) 178 (
Slide 32: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Investment Grade Beginning balance $7,041 $9,827 $9,440 $10,128 $9,969 $7,029 $10,128 Inflows 2,295 191 194 179 119 2,517 298 Outflows (208) (229) (232) (258) (155) (555) (413) Net Flows 2,087 (38
Slide 33: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 YTD:23 YTD:24 Multi-Asset1 Beginning balance $20,597 $20,914 $19,937 $21,411 $21,975 $19,937 $21,411 Inflows 301 319 431 335 393 781 728 Outflows (461) (412) (613) (455) (544) (923) (999) Net Flows (160) (93) (
Slide 34: Investment Management Fees: Average Assets by Product
INVESTMENT MANAGEMENT FEES AVERAGE ASSETS1 BY PRODUCT Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 U.S. Retail Funds $50,048 $50,000 $47,602 $49,586 $49,104 $49,398 $49,345 Global Funds 3,939 4,261 4,262 4,623 4,717 3,575 4,670 Exchange Traded Funds 1,278 1,382 1,431 1,718 1,991 1,297 1,854 Variable
Slide 35: Investment Management Fees: Average Fees Earned by Product
INVESTMENT MANAGEMENT FEES AVERAGE MANAGEMENT FEES EARNED1 BY PRODUCT (IN BASIS POINTS) Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 YTD:23 YTD:24 U.S. Retail Funds 51.8 53.2 52.9 52.7 53.0 50.5 52.8 Global Funds 30.3 40.8 30.5 34.6 45.2 33.9 39.9 Exchange Traded Funds 9.5 10.1 4.3 11.8 11.3 8.9 11.5 Variable Insu
Slide 36: Reconciliation: U.S. GAAP to Non-GAAP, Q2 2024
RECONCILIATION: U.S. GAAP TO NON-GAAP Q2 2024 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible Restructuring and CLO and related and Non-GAAP Basis products related assets expense invest
Slide 37: Reconciliation: U.S. GAAP to Non-GAAP, Q1 2024
RECONCILIATION: U.S. GAAP TO NON-GAAP Q1 2024 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible Restructuring and CLO and related and Non-GAAP Basis products related assets expense invest
Slide 38: Reconciliation: U.S. GAAP to Non-GAAP, Q4 2023
RECONCILIATION: U.S. GAAP TO NON-GAAP Q4 2023 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible Restructuring and CLO and related and Non-GAAP Basis products related assets expense invest
Slide 39: Reconciliation: U.S. GAAP to Non-GAAP, Q3 2023
RECONCILIATION: U.S. GAAP TO NON-GAAP Q3 2023 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible Restructuring and CLO and related and Non-GAAP Basis products related assets expense invest
Slide 40: Reconciliation: U.S. GAAP to Non-GAAP, Q2 2023
RECONCILIATION: U.S. GAAP TO NON-GAAP Q2 2023 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible and CLO and related and Non-GAAP Basis products related assets investments investments inte
Slide 41: Reconciliation: U.S. GAAP to Non-GAAP, YTD 2024
RECONCILIATION: U.S. GAAP TO NON-GAAP YTD 2024 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible Restructuring and CLO and related and Non-GAAP Basis products related assets expense inves
Slide 42: Reconciliation: U.S. GAAP to Non-GAAP, YTD 2023
RECONCILIATION: U.S. GAAP TO NON-GAAP YTD 2023 (UNAUDITED) Reclassification Other adjustments Deferred Consolidated Amortization Seed capital compensation Acquisition U.S. GAAP investment Revenue of intangible and CLO and related and Non-GAAP Basis products related assets investments investments int
Slide 43: Reconciliation: Footnotes
RECONCILIATION: FOOTNOTES Non-GAAP financial information differs from financial information determined in accordance with U.S. GAAP as a result of the reclassification of certain income statement items, as well as the exclusion of certain expenses and other items that are not reflective of the earni
Slide 44: Reconciliation: Footnotes
RECONCILIATION: FOOTNOTES (UNAUDITED) Components of Acquisition and Integration Expenses and Other for the respective periods are shown in the table below: Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 YTD:23 YTD:24 Acquisition and Integration Expenses Employment expenses $8,183 $2,642 $1,760 $1,042 $1,09
Slide 45: Virtus Investment Partners
3éVIRTUS INVESTM! ENT PARTNERS
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