Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q1 2023 Earnings Presentation
28 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, May 5, 2023
Slide 1: First Quarter 2023 Earnings Presentation
First Quarter 2023 Earnings Presentation May 5, 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 First-Quarter Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Business Overview
Business Overview Q1 2023 • First-quarter long-term net flows of -$1.2Bn OPERATING & • Adjusted EBITDA margin of 49.3% FINANCIAL HIGHLIGHTS • Adjusted Net Income with tax benefit per diluted share of $1.08 • First-quarter share repurchases totaled 1.4 MM shares, or $44MM • Total capital returned to
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 44 Funds and ETFs with 4- or 5-Star overall ratings 66% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 80% 78% 79% 80% 68% 73% 60% 60% 60% 56% 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: First-Quarter 2023 Financial Results
First-Quarter 2023 Financial Results
Slide 10: First-Quarter 2023 Financial Results
First-Quarter 2023 Financial Results FIRST • AUM of $158.6Bn as of March 31, 2023 QUARTER • Revenue of $201.3MM FINANCIAL • GAAP operating income of $74.6MM RESULTS • Adjusted EBITDA of $99.2MM, 49.3% margin • GAAP Net Income of $49.3MM, or $0.71 per diluted share • Adjusted Net Income with tax bene
Slide 11: Assets Under Management
Assets Under Management $Bn Retail Institutional Direct • Well-diversified ($mm)distribution channels and client base $154.9 $158.6 Retail $153.0 $147.3 Institutional Direct Q2 '22 Q3 '22 Q4 '22 Q1 '23 Assets under management are as of the end of the respective periods shown. 11
Slide 12: Long-Term Asset Flows
Long-Term Asset Flows $Bn Gross Sales Gross Redemptions Net Flows • Multiple franchises generated positive long-term net flows for the 3/31/18 quarter: ($mm) $9.2 RS Global $6.6 $6.5 Sophus $5.8 Sycamore • Positive Q1 long-term net flows in active equity strategies: U.S. Small Cap U.S. Mid
Slide 13: Revenues
Revenues ($mm) 3/31/18 $MM $250 • Average fee rate unchanged from Q4 $216.0 $105.0 $207.3 $201.5 $201.3 • Revenue change from Q4 is $200 attributable to higher average net assets, offset by fewer days in Q1 $150 $100 $50 $0 Operating Metrics Q2 ‘22 Q3 ‘22 Q4 ‘22 Q1 ‘23 Average AUM ($Bn) $165.7 $158.
Slide 14: Expenses
Expenses Compensation Operating Non-Operating Cash compensation, % of revenue • Q1 2023 total GAAP operating expenses increased $4.9MM vs Q4 2022, due $MM $139.5 10 entirely to non-cash expenses $132.4 90 Change in valuation of contingent $121.9 consideration increased Q1 GAAP $111.0 80 operating
Slide 15: Non-GAAP Metrics
Non-GAAP Metrics $MM except per-share data ($mm) 3/31/18 9/30/17 • Margin strength continued with 11th$125.0 ANI Tax Benefit ANI with tax benefit per diluted share $1.40 consecutive quarter of greater than 49% Adjusted EBITDA margin $1.19 $1.11 $1.20 • Margins are inclusive of ongoing $1.08 strategi
Slide 16: Capital Management
Capital Management Interest Expense and Other ($mm) 3/31/18 Debt ($MM) Financing Costs 9/30/17 ($MM) Selected Balance Sheet Items ($MM) 3/31/2023 $14.2 $1,036 $1,017 $1,002 $1,002 $13.3 Cash / Cash Equivalents $38.3 $11.5 $9.9 Debt $1,002 Stockholders' Equity $1,049 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) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 GAAP Net income $ 71,273 $ 79,205 $ 72,764 $ 52,269 $ 49,273 GAAP Income tax expense (19,271) (25,790) (12,582) (16,879) (12,597) GAAP income before taxes 90,
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) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 GAAP Net Income $ 71,273 $ 79,205 $ 72,764 $ 52,269 $ 49,273 Other business taxes 590 541 539 448 384 GAAP amortization of acquisit
Slide 23: 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 24: 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 25: 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 26: Detailed Reconciliation of Q2 '22 Adjusted Net Income
Detailed Reconciliation of Q2 ‘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 Q1 '22 Adjusted Net Income
Detailed Reconciliation of Q1 ‘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 March 31, 2023. Past performance does not guarantee future results. A fun
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