Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q2 2022 Earnings Presentation
30 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Aug 5, 2022
Slide 1: Second Quarter 2022 Earnings Presentation
Second Quarter 2022 Earnings Presentation August 5, 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 Investment Performance Second-Quarter Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Quarterly Business Overview
Quarterly Business Overview 2022 Q2 AND • Difficult first-half market conditions FIRST-HALF • Operating model is performing well OPERATING & Second-quarter Adjusted EBITDA margin of 49.2%, 49.5% YTD FINANCIAL Continuing to reinvest in the business: HIGHLIGHTS o Data o Technology o Marketing o Di
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 50 Funds and ETFs with 4- or 5-Star overall ratings 68% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 100% 100% 85% 79% 80% 80% 80% 73% 71% 67% 6
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: Second-Quarter 2022 Financial Results
Second-Quarter 2022 Financial Results
Slide 10: Second-Quarter 2022 Financial Results
Second-Quarter 2022 Financial Results SECOND • AUM of $154.9Bn as of June 30, 2022 QUARTER • Revenue of $216MM FINANCIAL • Q2 GAAP operating income of $119MM, operating margin of >55% RESULTS • Q2 Adjusted EBITDA of $106.2MM • Q2 Adjusted EBITDA margin of 49.2% • Q2 GAAP Net Income of $79.2MM, or $1
Slide 11: Assets Under Management
Assets Under Management $Bn • Well diversified distribution and client base Retail Retail Institutional Direct ($mm) Institutional $183.7 $178.1 Direct $159.9 $154.9 Q3 '21 Q4 '21 Q1 '22 Q2 '22 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 • Multiple franchises / strategies Gross Sales Gross Redemptions Net Flows generated positive long-term net inflows for the quarter and / or YTD 3/31/18 $20.2 period including: ($mm) RS Global Sophus $11.0 Sycamore $9.2 THB $5.7 $5.5 WestEnd Solutions VictoryS
Slide 13: Revenues
Revenues ($mm) 3/31/18 $MM • Average fee rate realization reduction in 2022 reflects mix shift primarily due to WestEnd $250 acquisition $226.3 $105.0 $229.1 $230.0 $216.0 $200 $150 $100 $50 $0 Operating Metrics Q3 ‘21 Q4 ’21 Q1 ‘22 Q2 ‘22 Average AUM ($Bn) $162.5 $162.3 $176.9 $165.7 Average Fee Ra
Slide 14: Expenses
Expenses Compensation Operating Non-Operating • Q2 2022 total expenses decreased $28MM Cash compensation, % of revenue* vs Q1 2022 $MM Expense base calibrating as $143.6 10 $133.9 $139.5 designed 90 Lower operating expenses driven by $111.0 80 11% reduction in compensation expense as well as red
Slide 15: Non-GAAP Metrics
Non-GAAP Metrics $MM except per-share data ($mm) 3/31/18 9/30/17 • Margin strength continued during$125.0 ANI Tax Benefit ANI with tax benefit per diluted share $1.40 market volatility $1.25 $1.27 $1.23 • YTD adjusted EBITDA margin of $1.11 $1.20 49.5% $100.0 $93.7 • Margins are inclusive of ongoing
Slide 16: Capital Management
Capital Management Interest Expense and Other ($mm) 3/31/18 Debt ($MM) Financing Costs 9/30/17 ($MM) Selected Balance Sheet Items ($MM) 6/30/2022 $9.9 Cash / Cash Equivalents $43 $1,151 $9.2 $1,081 $1,036 Debt $1,036 $5.9 $6.2 $646 Stockholders' Equity $1,038 Diluted Shares Outstanding (MM) 72.9 Net
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 $2.1 billion in total future tax amortization o $525MM 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) 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 GAAP Net income $ 69,270 $ 74,175 $ 69,742 $ 71,273 $ 79,205 GAAP Income tax expense (20,629) (18,181) (15,781) (19,271) (25,790) GAAP income before taxes 89,
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) 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 GAAP Net Income $ 69,270 $ 74,175 $ 69,742 $ 71,273 $ 79,205 Other business taxes 524 376 383 590 541 GAAP amortization of acquisit
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 June 30, 2022. Past performance does not guarantee future results. A fund
Slide 30: 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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