Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q4 2024 Earnings Presentation
45 slides from Virtus Investment Partners's earnings presentation, Jan 31, 2025
Slide 1: Fourth Quarter Earnings Presentation
FOURTH QUARTER EARNINGS PRESENTATION January 31, 2025 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: Fourth Quarter 2024 Overview
FOURTH QUARTER 2024 OVERVIEW Assets and Flows ■ Assets under management (AUM) declined due to net outflows in institutional and open-end funds, as well as negative market performance; outflows included a previously disclosed $3.3 billion lower-fee partial redemption of an institutional mandate – AUM
Slide 6: Results
INVESTMENT PARTNERS RESULTS
Slide 7: Assets Under Management
ASSETS UNDER MANAGEMENT BROADLY DIVERSIFIED Institutional Accounts Closed-End Funds ■ AUM of $175.0 billion declined from U.S. Retail Funds Retail Separate Accounts $183.7 billion due to: Global Funds, ETFs, and Variable Insurance Funds – ($4.8) billion of net flows, and – ($2.9) billion of market p
Slide 8: Asset Flows
ASSET FLOWS IMPACTED BY LARGE LOWER FEE REDEMPTION ■ Sales of $6.4 billion down modestly from prior quarter level $3.3B partial redemption – Institutional sales of $1.6 billion increased from $1.2 billion driven by global equity and alternative strategies – Retail separate account sales of $1.8 bill
Slide 9: Investment Management Fees, as Adjusted
INVESTMENT MANAGEMENT FEES, AS ADJUSTED STABLE FEE RATE AND HIGHER AVERAGE ASSETS ■ Investment management fees, as adjusted, increased by 4% due to higher average AUM ■ Average fee rate relatively unchanged at 42.0 – Includes 0.3 bps of performance fees ■ Average fee rate by product – Institutional:
Slide 10: Employment Expenses, as Adjusted
EMPLOYMENT EXPENSES, AS ADJUSTED LOWER AS A PERCENTAGE OF REVENUES ■ Employment expenses, as adjusted, increased by 2% to $104.3 million due to: – Higher profit-based variable incentive compensation ■ Employment expenses, as adjusted, as a percentage of revenues, as adjusted, were 49.2%, down 80 bps
Slide 11: Other Operating Expenses, as Adjusted
OTHER OPERATING EXPENSES, AS ADJUSTED STABLE RANGE ■ Other operating expenses, as adjusted, increased $1.2 million, or 4%, primarily due to: – Facilities costs; and – Seasonally higher distribution related travel activity ■ Other operating expenses, as adjusted, as a percentage of revenues, as adjus
Slide 12: Non-GAAP Results
NON-GAAP RESULTS HIGHER EARNINGS AND MARGIN ■ Operating margin, as adjusted, of 35.1% Operating Income, as Adjusted increased 70bps from 34.4%; highest Diluted earnings per share, as adjusted since Q2 22 ■ Interest and dividend income, as adjusted of $5.8 million increased from $4.7 million due to h
Slide 13: Capital and Select Balance Sheet
CAPITAL AND SELECT BALANCE SHEET RETURNED CAPITAL AND REPAID DEBT ■ Working capital of $134.5 million Select Balance Sheet Items: 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 increased from $108.5 million as Cash and cash equivalents $240 $124 $183 $196 $266 cash earnings exceeded capital Investments -
Slide 14: Financial Supplement
INVESTMENT PARTNERS FINANCIAL SUPPLEMENT
Slide 15: Non-GAAP Information: Income Statement
NON-GAAP INFORMATION INCOME STATEMENT1 (UNAUDITED) Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 Revenues, As Adjusted Investment management fees, as adjusted $174,448 $180,547 $183,670 $185,487 $192,176 $680,568 $741,880 Administration and shareholder service fees, as adjusted 18,213 18,717 18,331 18,5
Slide 16: Non-GAAP Information: Income Statement (Continued)
NON-GAAP INFORMATION INCOME STATEMENT1 (CONTINUED) (UNAUDITED) Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 Other Income (Expense), As Adjusted Realized and unrealized gain (loss) on investments, net, as adjusted ($289) $122 ($211) $656 ($389) ($866) $178 Other income, net, as adjusted 622 550 597 548
Slide 17: Non-GAAP Information: Balance Sheet
NON-GAAP INFORMATION BALANCE SHEET1 (UNAUDITED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Assets: Cash and cash equivalents $239,602 $123,880 $183,001 $195,533 $265,888 Investments – seed capital 144,351 144,682 139,584 143,901 140,049 Investments – other 131,238 128,025 118,384 140,748 14
Slide 18: Non-GAAP Information: Balance Sheet (Continued)
NON-GAAP INFORMATION BALANCE SHEET1 (CONTINUED) (UNAUDITED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Liabilities and Equity Liabilities: Accrued compensation and benefits $200,837 $95,591 $132,261 $180,078 $224,501 Accounts payable and accrued liabilities 56,047 60,835 47,257 49,618 49,49
Slide 19: U.S. GAAP Information: Income Statement
U.S. GAAP INFORMATION INCOME STATEMENT (UNAUDITED) Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 Revenues Investment management fees $182,149 $188,360 $191,652 $193,843 $199,975 $711,475 $773,830 Distribution and service fees 13,535 14,030 13,410 13,567 13,685 56,153 54,692 Administration and shareholde
Slide 20: U.S. GAAP Information: Income Statement (Continued)
U.S. GAAP INFORMATION INCOME STATEMENT (CONTINUED) (UNAUDITED) Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 Other Income (Expense) Realized and unrealized gain (loss) on investments, net $4,056 $3,416 ($1,553) $4,552 ($2,501) $6,525 $3,914 Realized and unrealized gain (loss) of CIP1, net 449 1,535 (12,
Slide 21: Assets Under Management by Product, Asset Class and Region
ASSETS UNDER MANAGEMENT BY PRODUCT, ASSET CLASS AND REGION 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Assets by Product U.S. Retail Funds $49,064 $50,252 $48,064 $49,219 $46,950 Global Funds 4,560 4,749 4,809 5,343 5,208 Exchange Traded Funds 1,545 1,898 2,108 2,642 3,051 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 12/31/2024 Equity: Domestic Equity $20,460 $— $39,073 $21,782 $81,315 International Equity 2,574 — 77 1,308 3,959 Global Equity 2,221 — 445 8,967 11,633 Spec
Slide 23: Asset Flows: Total
ASSET FLOWS TOTAL 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Total Beginning balance $162,539 $172,259 $179,311 $173,585 $183,742 $149,376 $172,259 Inflows 6,237 7,583 6,137 6,597 6,440 25,857 26,757 Outflows (10,037) (8,821) (8,762) (8,321) (11,286) (33,077) (37,190) Net Flows
Slide 24: Asset Flows by Product
ASSET FLOWS BY PRODUCT 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 U.S. Retail Funds Beginning balance $47,776 $49,064 $50,252 $48,064 $49,219 $47,494 $49,064 Inflows 2,629 2,929 2,291 2,364 2,251 9,944 9,835 Outflows (4,628) (3,906) (3,843) (3,871) (3,925) (17,691) (15,545) Net
Slide 25: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Exchange Traded Funds Beginning balance $1,404 $1,545 $1,898 $2,108 $2,642 $1,226 $1,545 Inflows 105 298 241 450 508 436 1,497 Outflows (46) (28) (43) (59) (64) (258) (194) Net Flows 59 270 198 391 444
Slide 26: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Closed-End Funds Beginning balance $9,472 $10,026 $10,064 $9,915 $10,432 $10,361 $10,026 Inflows — — — — 1 24 1 Outflows — — (41) — — — (41) Net Flows — — (41) — 1 24 (40) Market performance 753 239 83
Slide 27: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Intermediary Sold Managed Accounts2 Beginning balance $31,708 $35,438 $38,610 $37,537 $41,913 $29,160 $35,438 Inflows 1,741 2,171 1,895 1,985 1,526 5,488 7,577 Outflows (1,441) (1,505) (1,465) (1,570)
Slide 28: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Institutional Separate Accounts Beginning balance $56,613 $59,548 $61,253 $58,828 $61,142 $46,908 $59,548 Inflows 1,179 1,734 1,085 943 1,574 7,693 5,336 Outflows (3,406) (3,022) (2,913) (2,349) (5,376
Slide 29: Asset Flows by Asset Class
ASSET FLOWS BY ASSET CLASS 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Domestic Equity Beginning balance $69,978 $77,263 $83,474 $79,679 $86,474 $64,948 $77,263 Inflows 3,023 4,390 3,381 3,185 2,921 10,808 13,877 Outflows (3,704) (4,190) (4,854) (3,954) (6,888) (13,057) (19,886)
Slide 30: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Global Equity Beginning balance $9,478 $10,552 $11,228 $11,224 $11,824 $8,292 $10,552 Inflows 477 318 363 274 525 1,493 1,480 Outflows (407) (203) (443) (289) (601) (1,461) (1,536) Net Flows 70 115
Slide 31: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Leveraged Finance Beginning balance $9,306 $9,083 $8,941 $8,790 $8,990 $10,196 $9,083 Inflows 345 366 364 530 353 1,405 1,613 Outflows (571) (505) (410) (363) (377) (2,460) (1,655) Net Flows (226)
Slide 32: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Investment Grade Beginning balance $9,440 $10,128 $9,969 $10,030 $10,616 $7,029 $10,128 Inflows 194 179 119 302 154 2,902 754 Outflows (232) (258) (155) (239) (256) (1,016) (908) Net Flows (38) (79
Slide 33: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 TY:23 TY:24 Multi-Asset1 Beginning balance $19,937 $21,411 $21,975 $21,060 $21,619 $19,937 $21,411 Inflows 431 335 393 391 360 1,531 1,479 Outflows (613) (455) (544) (1,121) (513) (1,948) (2,633) Net Flows (18
Slide 34: Investment Management Fees: Average Assets by Product
INVESTMENT MANAGEMENT FEES AVERAGE ASSETS1 BY PRODUCT Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 U.S. Retail Funds $47,602 $49,586 $49,104 $48,446 $48,827 $49,099 $48,991 Global Funds 4,262 4,623 4,717 5,110 5,249 3,918 4,925 Exchange Traded Funds 1,431 1,718 1,991 2,303 2,933 1,352 2,236 Variable In
Slide 35: Investment Management Fees: Average Fees Earned by Product
INVESTMENT MANAGEMENT FEES AVERAGE MANAGEMENT FEES EARNED1 BY PRODUCT (IN BASIS POINTS) Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 TY:23 TY:24 U.S. Retail Funds 52.9 52.7 53.0 53.0 53.1 51.8 52.9 Global Funds 30.5 34.6 45.2 35.7 36.2 34.9 37.8 Exchange Traded Funds 4.3 11.8 11.3 12.5 12.4 8.0 12.1 Variable Insur
Slide 36: Reconciliation: U.S. GAAP to Non-GAAP, Q4 2024
RECONCILIATION: U.S. GAAP TO NON-GAAP Q4 2024 (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 37: Reconciliation: U.S. GAAP to Non-GAAP, Q3 2024
RECONCILIATION: U.S. GAAP TO NON-GAAP Q3 2024 (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 38: 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 39: 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 40: 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 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 Restructuring and CLO and related and Non-GAAP Basis products related assets expense inves
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: Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 TY:23 TY:24 Acquisition and Integration Expenses Employment expenses $1,760 $1,042 $1,099 $956 $861 $12,
Slide 45: Investment Partners
INVESTMENT PARTNERS
Virtus Investment Partners — Q4 2024 Earnings Presentation on 6ix