Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Credit Suisse Capital Markets and Insurance Conference 2017
35 slides from Virtus Investment Partners's conference presentation, Nov 8, 2017
Slide 1: Third Quarter 2017 Presentation
Third Quarter 2017 Presentation VIRTUS INVESTMENT PARTNERS
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 Firm Overview Multi-Boutique Model Product Distribution Financial Review Growth Opportunities Appendix 3
Slide 4: Firm Overview
_VIRTIUS | INVESTMENT PARTNERS FIRM OVERVIEW
Slide 5: Firm Overview
FIRM OVERVIEW We are a distinctive Independent publicly traded asset manager partnership of – Market capitalization of ~$0.8 billion (NASDAQ: VRTS) boutique investment Managing $90.6 billion in a multi-boutique structure managers, singularly committed to the – Flexible model with offerings from
Slide 6: Value Proposition
VALUE PROPOSITION Flexible Multi-Boutique Flexible partnership approach with alignment of interests Asset Manager Preserves affiliate culture, investment process, and brand Shared distribution and support services Diverse, High-Quality Well-diversified across asset classes and investment sty
Slide 7: Multi-Boutique Model
_VIRTUS | INVESTMENT PARTNERS MULTI-BOUTIQUE MODEL
Slide 8: Flexible Multi-Boutique Model
FLEXIBLE MULTI-BOUTIQUE MODEL We have the All the Benefits of a “Multi-Boutique” flexibility, agility, Broad array of differentiated investment strategies and responsiveness Attractive structure for high-quality investment teams and firms of a boutique asset management firm with Greater Efficien
Slide 9: Our Managers
OUR MANAGERS Affiliates* We offer an array of distinctive capabilities from our investment partners Subadvisers * *Virtus has an ownership interest in the firm. 9
Slide 10: Product
_VIRTIUS | INVESTMENT PARTNERS PRODUCT
Slide 11: Diversity of Strategies
DIVERSITY OF STRATEGIES AUM by Manager AUM by Product Type AUM by Asset Class Liquidity3 Alternative & Other4 Other1 Kayne Structured 4% 4% 5% Anderson Products Liquidity3 Vontobel Rudnick 4% Open-End 11% 4% 19% Mutual Domestic Institutional Funds Equity 23% 46% 36% Ceredex 11% Seix (Lev. Fin.) Fixe
Slide 12: Consistent Strong Performance
CONSISTENT STRONG PERFORMANCE Majority of mutual fund AUM has strong investment performance Mutual Fund Assets Under Management % AUM in Top Half of Peer Group1 Morningstar Rating By Assets2 88% Morningstar # of $mm % of Rating Funds AUM AUM 8 $16,804 39% 62% 56% 86% 23 $20,217 47% 95%
Slide 13: Diversity of Performance
DIVERSITY OF PERFORMANCE 31 mutual funds rated 4 or 5 Stars, including the five largest funds 4 and 5 Star Mutual Funds by Asset Class Top 5 Largest Mutual Funds # of AUM2 M’Star Asset Class Fund Funds1 ($B) Rating1 Vontobel Emerging Markets Fixed Income 14 Funds $8.2 4 Opportunities Newfleet Multi-
Slide 14: Distribution
_VIRTIUS | INVESTMENT PARTNERS DISTRIBUTION
Slide 15: Effective Distribution Capabilities
EFFECTIVE DISTRIBUTION CAPABILITIES Retail AUM by Product Type ($64.7B) Institutional AUM by Product Type ($25.9B) Other1 Liquidity Closed- 6% 7% End Structured 10% Products 13% Retail Separate Accounts 20% Open-End Institutional 64% 80% Broad and diversified product offerings make Virtus a Affi
Slide 16: Multi-Channel Retail Approach
MULTI-CHANNEL RETAIL APPROACH MUTUAL FUNDS CLOSED-END FUNDS RETAIL SEPARATE ACCOUNTS VARIABLE INSURANCE FUNDS COLLECTIVE INVESTMENT TRUSTS ETFs Wirehouse Regional Independent/ Private Variable DCIO RIA Bank Insurance Merrill Lynch Janney Ameriprise Citi AXA Fidelity Morgan Stanley Raymond Ja
Slide 17: Financial Review
_VIRTUS | INVESTMENT PARTNERS FINANCIAL REVIEW
Slide 18: Assets Under Management
ASSETS UNDER MANAGEMENT $88.6 $90.6 Long-term Long-Term Liquidity $87.1 assets $85.0 increased 2% from the prior quarter $46.5 $48.0 $45.4 and 87% from the prior year 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 Metrics Equity as % total 57.3% 56.9% 58.3% 49.0% 49.5% Fixed Income as % total 33.9% 34.2%
Slide 19: Asset Flows
ASSET FLOWS Inflows/(Outflows) Generated Inflows Outflows positive net Net flows $4.6 flows in the $3.1 $3.3 $3.5 third quarter $2.6 and on a year-to-date Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 basis ($2.6) ($3.0) ($2.8) ($3.7) ($4.4) Metrics Net Flows1 $0.5 ($0.4) $0.5 ($0.2) $0.2 Inflow Rate2 27.1% 22.5% 2
Slide 20: Non-GAAP Results
NON-GAAP RESULTS Operating Operating Income, As Adjusted margin, as Diluted earnings per share, as adjusted $35.2 adjusted, increased 500 bps from $22.7 the prior $20.3 $18.2 $2.30 quarter and $1.75 $13.5 260 bps from $1.64 $1.61 the prior $1.16 year Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Metrics Net Income,
Slide 21: Capital Position
CAPITAL POSITION Select Non-GAAP Balance Sheet Items Cash and cash equivalents $165 Repurchased 66,244 shares for $7.5 million, representing 0.8% of Investments – seed capital 109 outstanding common shares, as Investments – other 93 adjusted Goodwill and intangible assets, net 477 Contingent con
Slide 22: Growth Opportunities
_VIRTUS | INVESTMENT PARTNERS GROWTH OPPORTUNITIES
Slide 23: Multiple Opportunities for Growth
MULTIPLE OPPORTUNITIES FOR GROWTH Area Growth Opportunities Product Leverage capabilities of current managers Offer existing strategies in other product structures Broaden capabilities with new teams/managers Distribution Increase market share in retail channels Deepen presence in other ch
Slide 24: Summary
SUMMARY Flexible Multi-Boutique Asset Manager Diverse, High-Quality Product Offerings Effective Distribution Capabilities Attractive Financial Profile Multiple Opportunities for Growth 24
Slide 25: Appendix
_VIRTIUS | INVESTMENT PARTNERS APPENDIX
Slide 26: Virtus History
VIRTUS HISTORY Established in the 1990s and Fully Independent Since January 2009 1993 Phoenix Securities Group (subsidiary of former parent, Phoenix Life) acquires National Funds 1995 Merges with Duff & Phelps to create Phoenix Duff & Phelps (later renamed Phoenix Investment Partners (“PXP”)); 40% o
Slide 27: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Q3 2017 U.S. GAAP Distribution and other asset- Consolidated investment Amortization of intangible Restructuring Seed capital and Acquisition and integration Non-GAAP (Unaudited) Basis based expenses products assets and severance CLO
Slide 28: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Q2 2017 Reclassifications Adjustments Distribution and Consolidated Amortization Acquisition and (Unaudited) U.S. GAAP other asset- investment of intangible Restructuring Seed capital and integration Non-GAAP Basis based expenses products assets and severance CLO
Slide 29: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Reclassifications Adjustments Q1 2017 Distribution and Consolidated Amortization Acquisition and U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP (Unaudited) Basis based expenses products assets CLO investments expenses Other
Slide 30: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Q4 2016 Reclassifications Distribution and Consolidated Amortization Adjustments Acquisition and U.S. GAAP other asset- investment of intangible Seed capital and integration Non-GAAP (Unaudited) Basis based expenses products assets CLO investments expenses Other
Slide 31: U.S. GAAP to Non-GAAP Reconciliation
U.S. GAAP TO NON-GAAP RECONCILIATION Q3 2016 Reclassifications Distribution and Consolidated Amortization Adjustments U.S. GAAP other asset- investment of intangible Restructuring Seed capital and Non-GAAP (Unaudited) Basis based expenses products assets and severance CLO investments Other Basis Rev
Slide 32: Footnotes
FOOTNOTES Non-GAAP financial information differ 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 earnings generated fro
Slide 33: Footnotes
FOOTNOTES Components of Acquisition and integration expense and Other for the respective periods are shown in the table below: (Unaudited) Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 YTD:16 YTD:17 Acquistion and Integration Expenses Employment expenses $- $- $- $2,059 $2,275 $- $4,334 Restructuring and severance
Slide 34: Lipper, Morningstar Data
LIPPER, MORNINGSTAR DATA Additional Information on Virtus Funds rated by Morningstar as of 9/30/17: Description Overall 3 yr. 5 yr. 10 yr. Number of 3/4/5 Star Funds 49 44 42 36 Percentage of Assets 96% 92% 88% 96% Number of 4/ 5 Star Funds 31 23 21 26 Percentage of Assets 87% 48% 49% 91% Total Fund
Slide 35: Virtus Investment Partners
VIRTIUS | INVESTMENT PARTNERS
Virtus Investment Partners — Credit Suisse Capital Markets and Insurance Conference 2017 on 6ix