Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Q1 2024 Earnings Presentation
45 slides from Virtus Investment Partners's earnings presentation, Apr 26, 2024
Slide 1: First Quarter Earnings Presentation
FIRST QUARTER EARNINGS PRESENTATION April 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: First Quarter 2024 Overview
FIRST QUARTER 2024 OVERVIEW Assets and Flows ■ Assets under management (AUM) increased 4% to $179.3 billion primarily due to market performance; average AUM increased 7% to $173.4 billion ■ Growth in all products increased sales 22% to $7.6 billion for highest quarter of sales since Q2 2022 ■ Net fl
Slide 6: Results
INVESTMENT PARTNERS RESULTS
Slide 7: Assets Under Management
ASSETS UNDER MANAGEMENT INCREASED DUE TO MARKET PERFORMANCE Institutional Accounts Closed-End Funds ■ AUM of $179.3 billion increased from $172.3 U.S. Retail Funds Retail Separate Accounts billion due to: Global Funds, ETFs, and Variable Insurance Funds – $8.7 billion of market performance – ($1.2)
Slide 8: Asset Flows
ASSET FLOWS HIGHER SALES IN ALL PRODUCTS ■ Sales of $7.6 billion increased 22% with growth in all products – Institutional sales of $1.7 billion increased from $1.2 billion – Retail separate account sales of $2.4 billion increased 12% for highest level since Q1 21 – Open-end fund sales of $3.5 billi
Slide 9: Investment Management Fees, As Adjusted
INVESTMENT MANAGEMENT FEES, AS ADJUSTED HIGHER AVERAGE ASSETS ■ Investment management fees, as adjusted, increased by 3% due to higher average assets under management partially offset by lower performance fees ■ Average fee rate of 42.0 bps excluding 0.1 bps of performance fees and (0.2) bps of disc
Slide 10: Employment Expenses, As Adjusted
EMPLOYMENT EXPENSES, AS ADJUSTED RATIO STABLE EX-SEASONAL ITEMS ■ Employment expenses, as adjusted, of Seasonal Expenses $111.6 million included $10.9 million of seasonally higher expenses $100.7 ■ Employment expenses, as adjusted, as $87.3 a percentage of revenues, as adjusted, were 55.7% – Increas
Slide 11: Other Operating Expenses, As Adjusted
OTHER OPERATING EXPENSES, AS ADJUSTED RELATIVELY FLAT ■ Other operating expenses, as adjusted, of $30.2 million decreased $1.0 million, or 3%, reflecting ongoing expense discipline ■ Other operating expenses, as adjusted, as a percentage of revenues, as adjusted, decreased to 15.1% from 16.1% % of R
Slide 12: Non-GAAP Results
NON-GAAP RESULTS HIGHER EX-SEASONAL ITEMS ■ Operating margin, as adjusted, of 28.2% Operating Income, as Adjusted compared with 33.0% Diluted earnings per share, as adjusted – Excluding the seasonal expenses, operating margin was 33.6%, up 60 basis points ■ Diluted EPS, as adjusted, of $5.41 compare
Slide 13: Capital and Select Balance Sheet
CAPITAL AND SELECT BALANCE SHEET BALANCED CAPITAL MANAGEMENT ■ Working capital of $123.4 million Select Balance Sheet Items: 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 increased from $109.1 million Cash and cash equivalents $213 $201 $195 $240 $124 Investments - seed capital1 $128 $126 $126 $144 $145
Slide 14: Financial Supplement
INVESTMENT PARTNERS FINANCIAL SUPPLEMENT
Slide 15: Non-GAAP Information: Income Statement
NON-GAAP INFORMATION INCOME STATEMENT1 (UNAUDITED) Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 Revenues, As Adjusted Investment management fees, as adjusted $157,636 $171,097 $177,387 $174,448 $180,547 $157,636 $180,547 Administration and shareholder service fees, as adjusted 18,389 18,273 19,064 18
Slide 16: Non-GAAP Information: Income Statement (Continued)
NON-GAAP INFORMATION INCOME STATEMENT1 (CONTINUED) (UNAUDITED) Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 Other Income (Expense), As Adjusted Realized and unrealized gain (loss) on investments, net, as adjusted ($60) ($220) ($297) ($289) $122 ($60) $122 Other income, net, as adjusted (343) (847) 12
Slide 17: Non-GAAP Information: Balance Sheet
NON-GAAP INFORMATION BALANCE SHEET1 (UNAUDITED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 Assets: Cash and cash equivalents $213,424 $201,462 $195,403 $239,602 $123,880 Investments – seed capital 127,707 126,119 126,017 144,351 144,682 Investments – other 104,767 117,265 145,449 131,238 128
Slide 18: Non-GAAP Information: Balance Sheet (Continued)
NON-GAAP INFORMATION BALANCE SHEET1 (CONTINUED) (UNAUDITED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 Liabilities and Equity Liabilities: Accrued compensation and benefits $69,103 $117,681 $161,745 $200,837 $95,591 Accounts payable and accrued liabilities 38,564 39,375 32,740 38,756 44,282
Slide 19: U.S. GAAP Information: Income Statement
U.S. GAAP INFORMATION INCOME STATEMENT (UNAUDITED) Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 Revenues Investment management fees $164,478 $179,979 $184,869 $182,149 $188,360 $164,478 $188,360 Distribution and service fees 14,153 14,132 14,333 13,535 14,030 14,153 14,030 Administration and sharehol
Slide 20: U.S. GAAP Information: Income Statement (Continued)
U.S. GAAP INFORMATION INCOME STATEMENT (CONTINUED) (UNAUDITED) Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 Other Income (Expense) Realized and unrealized gain (loss) on investments, net $2,670 $1,717 ($1,918) $4,056 $3,416 $2,670 $3,416 Realized and unrealized gain (loss) of CIP1, net 2,596 (4,436)
Slide 21: Assets Under Management by Product, Asset Class and Region
ASSETS UNDER MANAGEMENT BY PRODUCT, ASSET CLASS AND REGION 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 Assets by Product U.S. Retail Funds $48,111 $50,429 $47,776 $49,064 $50,252 Global Funds 3,615 4,184 4,140 4,560 4,749 Exchange Traded Funds 1,275 1,337 1,404 1,545 1,898 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 3/31/2024 Equity: Domestic Equity $21,451 $— $36,350 $25,673 $83,474 International Equity 3,155 — 70 1,452 4,677 Global Equity 2,065 — 402 8,761 11,228 Speci
Slide 23: Asset Flows: Total
ASSET FLOWS TOTAL 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Total Beginning balance $149,376 $154,849 $168,316 $162,539 $172,259 $149,376 $172,259 Inflows 6,234 7,576 5,810 6,237 7,583 6,234 7,583 Outflows (8,127) (7,604) (7,309) (10,037) (8,821) (8,127) (8,821) Net Flows (1,8
Slide 24: Asset Flows by Product
ASSET FLOWS BY PRODUCT 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 U.S. Retail Funds Beginning balance $47,494 $48,111 $50,429 $47,776 $49,064 $47,494 $49,064 Inflows 2,805 2,128 2,382 2,629 2,929 2,805 2,929 Outflows (4,562) (4,547) (3,954) (4,628) (3,906) (4,562) (3,906) Net F
Slide 25: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Exchange Traded Funds Beginning balance $1,226 $1,275 $1,337 $1,404 $1,545 $1,226 $1,545 Inflows 137 70 124 105 298 137 298 Outflows (119) (41) (52) (46) (28) (119) (28) Net Flows 18 29 72 59 270 18 2
Slide 26: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Closed-End Funds Beginning balance $10,361 $10,358 $10,166 $9,472 $10,026 $10,361 $10,026 Inflows 4 20 — — — 4 — Outflows — — — — — — — Net Flows 4 20 — — — 4 — Market performance 205 (1) (504) 753 23
Slide 27: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Intermediary Sold Managed Accounts Beginning balance $29,160 $30,675 $31,878 $31,708 $35,438 $29,160 $35,438 Inflows 1,021 1,065 1,661 1,741 2,171 1,021 2,171 Outflows (1,159) (1,268) (1,353) (1,441)
Slide 28: Asset Flows by Product (Continued)
ASSET FLOWS BY PRODUCT (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Institutional Separate Accounts Beginning balance $46,908 $49,528 $58,780 $56,613 $59,548 $46,908 $59,548 Inflows 1,852 3,660 1,002 1,179 1,734 1,852 1,734 Outflows (2,047) (1,478) (1,648) (3,406) (3,
Slide 29: Asset Flows by Asset Class
ASSET FLOWS BY ASSET CLASS 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Domestic Equity Beginning balance $64,948 $69,253 $71,984 $69,978 $77,263 $64,948 $77,263 Inflows 2,988 2,066 2,731 3,023 4,390 2,988 4,390 Outflows (3,141) (3,103) (3,109) (3,704) (4,190) (3,141) (4,190) Net
Slide 30: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Global Equity Beginning balance $8,292 $9,013 $9,835 $9,478 $10,552 $8,292 $10,552 Inflows 419 415 182 477 318 419 318 Outflows (438) (249) (367) (407) (203) (438) (203) Net Flows (19) 166 (185) 7
Slide 31: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Leveraged Finance Beginning balance $10,196 $9,836 $9,247 $9,306 $9,083 $10,196 $9,083 Inflows 278 238 544 345 366 278 366 Outflows (758) (765) (366) (571) (505) (758) (505) Net Flows (480) (527)
Slide 32: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Investment Grade Beginning balance $7,029 $7,041 $9,827 $9,440 $10,128 $7,029 $10,128 Inflows 222 2,295 191 194 179 222 179 Outflows (347) (208) (229) (232) (258) (347) (258) Net Flows (125) 2,087
Slide 33: Asset Flows by Asset Class (Continued)
ASSET FLOWS BY ASSET CLASS (CONTINUED) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 YTD:23 YTD:24 Multi-Asset1 Beginning balance $19,937 $20,597 $20,914 $19,937 $21,411 $19,937 $21,411 Inflows 480 301 319 431 335 480 335 Outflows (462) (461) (412) (613) (455) (462) (455) Net Flows 18 (160) (93
Slide 34: Investment Management Fees: Average Assets by Product
INVESTMENT MANAGEMENT FEES AVERAGE ASSETS1 BY PRODUCT Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 U.S. Retail Funds $48,747 $50,048 $50,000 $47,602 $49,586 $48,747 $49,586 Global Funds 3,210 3,939 4,261 4,262 4,623 3,210 4,623 Exchange Traded Funds 1,316 1,278 1,382 1,431 1,718 1,316 1,718 Variable
Slide 35: Average Management Fees Earned by Product
INVESTMENT MANAGEMENT FEES AVERAGE MANAGEMENT FEES EARNED1 BY PRODUCT (IN BASIS POINTS) Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 YTD:23 YTD:24 U.S. Retail Funds 49.2 51.8 53.2 52.9 52.7 49.2 52.7 Global Funds 38.4 30.3 40.8 30.5 34.6 38.4 34.6 Exchange Traded Funds 8.4 9.5 10.1 4.3 11.8 8.4 11.8 Variable Insur
Slide 36: 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 37: 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 38: 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 39: 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 40: Reconciliation: U.S. GAAP to Non-GAAP Q1 2023
RECONCILIATION: U.S. GAAP TO NON-GAAP Q1 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: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 YTD:23 YTD:24 Acquisition and Integration Expenses Employment expenses $— $8,183 $2,642 $1,760 $1,042 $—
Slide 45: Investment Partners
INVESTMENT PARTNERS
Virtus Investment Partners — Q1 2024 Earnings Presentation on 6ix