Second Quarter 2018
Highlights1
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or
the “Company”) today reported its results for the three months
ended June 30, 2018.
“I am pleased to report that Victory Capital
delivered strong financial performance in the second quarter,” said
David Brown, Chairman and Chief Executive Officer. “Investment
results remained strong with 83% of our AUM outperforming its
respective benchmarks over the trailing one-year period. AUM
increased during the quarter, and we saw a measurable improvement
in our net flows relative to last quarter. We also remained
committed to the prudent execution of our capital management plan
while achieving strong earnings growth and meaningful margin
expansion.
“Total AUM grew to $62.3 billion as of June 30,
2018, which is the result of the improving flow picture and
positive market action. Gross flows for the quarter were strong at
$3.5 billion, while overall net flows were relatively flat at
($102) million. We continued to experience somewhat elevated levels
of client rebalancing activity. However, that was primarily offset
by positive net flows of $524 million into our focus asset classes.
Our ‘won-but-not-funded’ pipeline is healthy as are our overall
sales prospects.
“Sales momentum in our VictoryShares ETFs
remained strong. Net flows into our ETFs were $200 million for the
quarter and $652 million for the first six months of 2018. Our ETFs
have experienced positive net flows every quarter ― and in 37 of
the 38 months ― since we entered the ETF business via the CEMP
acquisition in April 2015. Year over year as of June 30, 2018, our
ETF market share has increased by 55% according to Morningstar.
“Looking ahead, we remain committed to creating
long-term value for our shareholders through the disciplined
execution of our corporate vision, which combines strategic
acquisitions with organic growth. We believe our next generation,
integrated multi-boutique business model is attractive to
investment firms looking for a strategic partner, and we have an
active pipeline of potential M&A opportunities. Our focus is on
identifying and acquiring the ‘growers of the future,’ unique,
innovative products that solve issues for client portfolios. As in
the past, serving the needs of our clients remains our top
priority.”
____________________1 Adjusted measures are non-GAAP financial
measures. An explanation of these non-GAAP financial measures
is included under the heading “Information Regarding Non-GAAP
Financial Measures” at the end of this press release. Please
see the non-GAAP reconciliation tables.
The table below presents AUM, and certain GAAP and non-GAAP
(“adjusted”) financial results.
(in
millions except per share amounts or as otherwise
noted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Assets
Under Management |
|
|
|
|
|
|
|
|
|
|
Ending |
$ |
62,256 |
|
|
$ |
60,855 |
|
|
$ |
56,973 |
|
|
$ |
62,256 |
|
|
$ |
56,973 |
|
|
Average |
|
61,617 |
|
|
|
62,020 |
|
|
|
56,784 |
|
|
|
61,819 |
|
|
|
56,531 |
|
|
|
|
|
|
|
|
|
|
|
|
Flows |
|
|
|
|
|
|
|
|
|
|
Gross |
$ |
3,521 |
|
|
$ |
3,685 |
|
|
$ |
3,953 |
|
|
$ |
7,205 |
|
|
$ |
8,679 |
|
|
Net |
|
(102 |
) |
|
|
(633 |
) |
|
|
(601 |
) |
|
|
(735 |
) |
|
|
(986 |
) |
|
Net flows excluding
Diversified Equity(1) |
|
(102 |
) |
|
|
(633 |
) |
|
|
(314 |
) |
|
|
(735 |
) |
|
|
(368 |
) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Results (GAAP) |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
104.4 |
|
|
$ |
105.0 |
|
|
$ |
100.9 |
|
|
$ |
209.4 |
|
|
$ |
201.6 |
|
|
Revenue realization (in
bps) |
|
68.0 |
|
|
|
68.6 |
|
|
|
71.3 |
|
|
|
68.3 |
|
|
|
71.9 |
|
|
Operating expenses |
|
74.7 |
|
|
|
77.7 |
|
|
|
81.5 |
|
|
|
152.4 |
|
|
|
162.6 |
|
|
Income from
operations |
|
29.7 |
|
|
|
27.3 |
|
|
|
19.4 |
|
|
|
57.0 |
|
|
|
39.0 |
|
|
Operating margin |
|
28.4 |
% |
|
|
26.0 |
% |
|
|
19.3 |
% |
|
|
27.2 |
% |
|
|
19.3 |
% |
|
Net income |
|
18.7 |
|
|
|
10.5 |
|
|
|
2.4 |
|
|
|
29.2 |
|
|
|
6.8 |
|
|
Earnings per diluted
share |
$ |
0.26 |
|
|
$ |
0.16 |
|
|
$ |
0.04 |
|
|
$ |
0.42 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Performance Results (Non-GAAP)(2) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
40.7 |
|
|
$ |
39.8 |
|
|
$ |
36.2 |
|
|
$ |
80.5 |
|
|
$ |
69.8 |
|
|
Adjusted EBITDA
margin |
|
39.0 |
% |
|
|
37.9 |
% |
|
|
35.9 |
% |
|
|
38.4 |
% |
|
|
34.6 |
% |
|
Adjusted net
income |
|
26.6 |
|
|
|
23.1 |
|
|
|
13.9 |
|
|
|
49.6 |
|
|
|
26.9 |
|
|
Tax benefit of goodwill
and acquired intangibles |
|
3.3 |
|
|
|
3.3 |
|
|
|
4.9 |
|
|
|
6.6 |
|
|
|
9.8 |
|
|
Adjusted net income
with tax benefit |
|
29.9 |
|
|
|
26.4 |
|
|
|
18.8 |
|
|
|
56.3 |
|
|
|
36.7 |
|
|
Adjusted net income
with tax benefit per diluted share |
$ |
0.41 |
|
|
$ |
0.40 |
|
|
$ |
0.32 |
|
|
$ |
0.81 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In May
2017, the Company made a decision to exit the Diversified
Equity Franchise; all remaining AUM was transferred to the Munder
Capital Management Franchise to manage beginning May 15,
2017. |
(2)
Adjusted EBITDA and Adjusted Net Income are non-GAAP financial
measures. Reconciliation of each of Adjusted EBITDA and
Adjusted Net Income to net income have been provided in the
non-GAAP reconciliation tables in this press release. An
explanation of these non-GAAP financial measures is included below
under the heading "Information Regarding Non-GAAP Financial
Measures". |
AUM, Flows and Investment Performance
Victory Capital’s AUM increased by $1.4 billion
to $62.3 billion at June 30, 2018, compared to $60.9 billion at
March 31, 2018. The increase was due to market appreciation of $1.5
billion that was modestly offset by net outflows of $0.1 billion.
Gross flows for the second quarter were $3.5 billion.
As of June 30, 2018, Victory Capital offered 71
investment strategies through its nine autonomous Investment
Franchises and Solutions Platform. The table below presents
outperformance against benchmarks by AUM and strategies as of June
30, 2018.
|
|
Trailing |
|
Trailing |
|
Trailing |
|
Trailing |
|
|
1-Year |
|
3-Years |
|
5-Years |
|
10-Years |
Percentage
of AUM Outperforming Benchmark |
83 |
% |
|
69 |
% |
|
80 |
% |
|
83 |
% |
Percentage
of Strategies Outperforming Benchmark |
74 |
% |
|
67 |
% |
|
71 |
% |
|
72 |
% |
Second Quarter of 2018 Compared to First Quarter of
2018
For the quarter ended June 30, 2018, GAAP net
income increased 78% to $18.7 million, or $0.26 per diluted share,
compared to GAAP net income of $10.5 million, or $0.16 per diluted
share, for the first quarter of 2018. GAAP operating margin was
28.4% for the quarter compared to 26.0% for the first quarter of
2018. Adjusted Net Income with tax benefit increased 13% to $29.9
million, or $0.41 per diluted share comprised of $0.37 per diluted
share in Adjusted Net Income and $0.04 per diluted share in tax
benefit, compared to $26.4 million, or $0.40 per diluted share
comprised of $0.35 per diluted share in Adjusted Net Income and
$0.05 per diluted share in tax benefit, for the first quarter of
2018.
Adjusted EBITDA and Adjusted EBITDA margin were
$40.7 million and 39.0%, respectively, for the second quarter of
2018, compared to $39.8 million and 37.9% in the first quarter of
2018. Net Income, Adjusted Net Income and Adjusted EBITDA increased
due to operational efficiencies, one-time costs associated with the
debt refinancing recognized in the first quarter and, specific to
Net Income and Adjusted Net Income, lower interest expense in the
second quarter of 2018 as a result of refinancing activities and
debt pre-payments.
- Revenue was $104.4 million, a decline from $105.0 million for
the first quarter of 2018 due to a slight decline in average AUM
and a decrease in the realized fee rate.
- Operating expenses declined to $74.7 million, compared to $77.7
million in the first quarter of 2018 due to operational
efficiencies and one-time costs associated with the debt
refinancing recognized in the first quarter.
Second Quarter of 2018 Compared to
Second Quarter of 2017
For the quarter ended June 30, 2018, GAAP net
income was $18.7 million, or $0.26 per diluted share, compared to
$2.4 million, or $0.04 per diluted share, in the second quarter of
2017. GAAP operating margin increased to 28.4% for the quarter from
19.3% for the second quarter of 2017. Adjusted Net Income with tax
benefit increased 59% to $29.9 million, or $0.41 per diluted share
comprised of $0.37 per diluted share in Adjusted Net Income and
$0.04 per diluted share in tax benefit in the second quarter of
2018, compared to $18.8 million, or $0.32 per diluted share
comprised of $0.24 per diluted share in Adjusted Net Income and
$0.08 per diluted share in tax benefit, in the second quarter of
2017.
Adjusted EBITDA and Adjusted EBITDA margin were
$40.7 million and 39.0%, respectively, for the second quarter of
2018, compared to $36.2 million and 35.9%, respectively, for the
second quarter a year ago. Net Income, Adjusted Net Income and
Adjusted EBITDA increased due to higher revenue coupled with
operational efficiencies, the successful integration of RS
Investments and, specific to Net Income and Adjusted Net Income,
lower interest expense in the second quarter of 2018 as a result of
refinancing activities and debt pre-payments.
- Revenue increased $3.5 million to $104.4 million, compared to
$100.9 million for the second quarter of 2017, due to higher
average AUM, partially offset by a decrease in the realized fee
rate due to asset mix.
- Operating expenses decreased 8% to $74.7 million, compared to
$81.5 million in the second quarter of 2017, primarily due to
operational efficiencies and the successful integration of RS
Investments.
Six Months Ended June 30, 2018 Compared
to Six Months Ended June 30, 2017
For the six months ended June 30, 2018, GAAP net
income was $29.2 million, or $0.42 per diluted share, compared to
$6.8 million, or $0.11 per diluted share, for the comparable six
months of 2017. GAAP operating margin increased to 27.2% for the
six months ended June 30, 2018 from 19.3% for six months ended June
30, 2017. Adjusted Net Income with tax benefit increased 53% to
$56.3 million, or $0.81 per diluted share comprised of $0.72 per
diluted share in Adjusted Net Income and $0.09 per diluted share in
tax benefit for the six months ended June 30, 2018, compared to
$36.7 million, or $0.62 per diluted share comprised of $0.46 per
diluted share in Adjusted Net Income and $0.16 per diluted share in
tax benefit, for the six months ended June 30, 2017.
Adjusted EBITDA and Adjusted EBITDA margin were
$80.5 million and 38.4%, respectively, for the six months ended
June 30, 2018, compared to $69.8 million and 34.6%, respectively,
for the comparable six months a year ago. Net Income, Adjusted Net
Income and Adjusted EBITDA increased due to higher revenue coupled
with operational efficiencies, the successful integration of RS
Investments and, specific to Net Income and Adjusted Net Income,
lower interest expense in the second quarter of 2018 as a result of
refinancing activities and debt pre-payments which were partially
offset by one-time write-offs of debt issuance and debt discount
costs.
- Revenue increased $7.8 million to $209.4 million for the six
months ended June 30, 2018, compared to $201.6 million for the six
months ended June 30, 2017, due to higher average AUM, partially
offset by a decrease in the realized fee rate due to asset
mix.
- Operating expenses for the six months ended June 30, 2018
decreased 6% to $152.4 million, compared to $162.6 million for the
six months ended June 30, 2017, primarily due to operational
efficiencies and the successful integration of RS Investments.
Balance Sheet / Capital
Management
Cash and cash equivalents were $15.2 million at
June 30, 2018, compared to $12.9 million at December 31, 2017.
During the quarter, the Company pre-paid $23.0 million of debt with
cash on hand and increased its revolving credit facility to $100.0
million. The term loan balance at June 30, 2018 was $300.0 million,
a 7% reduction during the quarter. The $100.0 million
revolving credit facility had $100.0 million undrawn as of June 30,
2018.
Subsequent to quarter-end, the Company paid down
an additional $20.0 million of debt, bringing its term loan balance
to $280.0 million at August 7, 2018.
On May 22, 2018, the Company announced a $15.0
million share repurchase program of Class A Common Stock effective
through December 31, 2019. During the quarter, the Company
repurchased 66,112 shares at an average price of $10.89 per share
for a total of $720,259.
Conference Call, Webcast and Slide
Presentation
The Company will host a conference call and
webcast at 10:00 a.m. Eastern Time today, August 7, 2018, to
discuss its financial results. Analysts and investors may
participate in the question-and-answer session. The call can be
accessed via telephone at (866) 465-5145 (domestic) or (409)
220-9945 (international). Please reference the Victory
Capital Conference Call. A recorded replay of the conference call
will be available shortly after the conclusion of the live call and
can be accessed through August 21, 2018 by dialing (855) 859-2056
(domestic) or (404) 537-3406 (international), and enter the
Conference ID Number 2391246.
A slide presentation relating to the second
quarter 2018 results will be accessible prior to the scheduled
conference call. The slide presentation and webcast of the
conference call can be accessed on the Events and Presentations
page of the Company’s investor relations website at
https://ir.vcm.com.
About Victory Capital
Victory Capital is a global investment
management firm operating a next-generation, integrated
multi-boutique business model with $62.3 billion in assets under
management as of June 30, 2018.
Victory Capital’s differentiated model is
comprised of nine Investment Franchises, each with an independent
culture and investment approach. Additionally, the Company offers a
rules-based Solutions Platform, featuring the VictoryShares ETF
brand, as well as custom and multi-asset class solutions. The
Company’s Investment Franchises and Solutions Platform are
supported by a centralized distribution, marketing and operational
environment, in which the investment professionals can focus on the
pursuit of investment excellence.
Victory Capital provides institutions, financial
advisors and retirement platforms with a variety of asset classes
and investment vehicles, including separately managed accounts,
collective trusts, mutual funds, ETFs, UCITs and UMA/SMA
vehicles.
For more information, please visit
www.vcm.com.
FORWARD-LOOKING
STATEMENTS
This press release may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements may include, without
limitation, any statements preceded by, followed by or including
words such as “target,” “believe,” “expect,” “aim,” “intend,”
“may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,”
“future,” “objective,” “outlook,” “plan,” “potential,” “predict,”
“project,” “will,” “can have,” “likely,” “should,” “would,” “could”
and other words and terms of similar meaning or the negative
thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond Victory
Capital’s control, as discussed in Victory Capital’s filings with
the SEC, that could cause Victory Capital’s actual results,
performance or achievements to be materially different from the
expected results, performance or achievements expressed or implied
by such forward-looking statements.
Although it is not possible to identify all such
risks and factors, they include, among others, the following:
reductions in AUM based on investment performance, client
withdrawals, difficult market conditions and other factors; the
nature of the Company’s contracts and investment advisory
agreements; the Company’s ability to maintain historical returns
and sustain its historical growth; the Company’s dependence on
third parties to market its strategies and provide products or
services for the operation of its business; the Company’s ability
to retain key investment professionals or members of its senior
management team; the Company’s reliance on the technology systems
supporting its operations; the Company’s ability to successfully
acquire and integrate new companies; the concentration of the
Company’s investments in long-only small- and mid-cap equity and
U.S. clients; risks and uncertainties associated with non-U.S.
investments; the Company’s efforts to establish and develop new
teams and strategies; the ability of the Company’s investment teams
to identify appropriate investment opportunities; the Company’s
ability to limit employee misconduct; the Company’s ability to meet
the guidelines set by its clients; the Company’s exposure to
potential litigation (including administrative or tax proceedings)
or regulatory actions; the Company’s ability to implement effective
information and cyber security policies, procedures and
capabilities; the Company’s substantial indebtedness; the potential
impairment of the Company’s goodwill and intangible assets;
disruption to the operations of third parties whose functions are
integral to the Company’s ETF platform; the Company’s determination
that Victory Capital is not required to register as an "investment
company" under the 1940 Act; the fluctuation of the Company’s
expenses; the Company’s ability to respond to recent trends in the
investment management industry; the level of regulation on
investment management firms and the Company’s ability to respond to
regulatory developments; the competitiveness of the investment
management industry; the dual class structure of the Company’s
common stock; the level of control over the Company retained by
Crestview GP; the Company’s status as an emerging growth company
and a controlled company; and other risks and factors listed under
"Risk Factors" and elsewhere in the Company’s filings with the
SEC.
Such forward-looking statements are based on
numerous assumptions regarding Victory Capital’s present and future
business strategies and the environment in which it will operate in
the future. Any forward-looking statement made in this press
release speaks only as of the date hereof. Except as required by
law, Victory Capital assumes no obligation to update these
forward-looking statements, or to update the reasons actual results
could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future.
INVESTOR RELATIONS WEBSITE
Victory Capital may use the Investor Relations
section of its website, https://ir.vcm.com, to disclose material
information to investors and the marketplace as a means of
disclosing material, non-public information and for complying with
disclosure obligations under Regulation Fair Disclosure (“Reg
FD”). Victory Capital encourages investors, the media and
other interested parties to visit its investor relations website
regularly.
ContactsInvestors:Lauren Crawford,
310-622-8239lcrawford@finprofiles.com
Media: Tricia Ross, 310-622-8226tross@finprofiles.com
|
|
|
|
|
|
|
|
|
|
Victory Capital
Holdings, Inc. and
Subsidiaries |
Unaudited Condensed Consolidated Statements of
Operations |
(unaudited; in thousands except
shares) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2018 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenue |
|
|
|
|
|
|
|
|
|
Investment management
fees |
$ |
88,998 |
|
|
$ |
89,130 |
|
|
$ |
84,474 |
|
|
$ |
178,128 |
|
|
$ |
168,589 |
|
Fund administration and
distribution fees |
|
15,401 |
|
|
|
15,834 |
|
|
|
16,460 |
|
|
|
31,235 |
|
|
|
33,006 |
|
Total revenue |
|
104,399 |
|
|
|
104,964 |
|
|
|
100,934 |
|
|
|
209,363 |
|
|
|
201,595 |
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
Personnel compensation
and benefits |
|
37,140 |
|
|
|
36,803 |
|
|
|
35,025 |
|
|
|
73,943 |
|
|
|
70,675 |
|
Distribution and other
asset-based expenses |
|
24,127 |
|
|
|
25,161 |
|
|
|
26,544 |
|
|
|
49,288 |
|
|
|
53,425 |
|
General and
administrative |
|
7,088 |
|
|
|
9,056 |
|
|
|
8,261 |
|
|
|
16,144 |
|
|
|
17,182 |
|
Depreciation and
amortization |
|
5,931 |
|
|
|
6,412 |
|
|
|
8,131 |
|
|
|
12,343 |
|
|
|
16,285 |
|
Change in value of
consideration payable for acquisition of business |
|
(4 |
) |
|
|
- |
|
|
|
(25 |
) |
|
|
(4 |
) |
|
|
(25 |
) |
Acquisition-related
costs |
|
(5 |
) |
|
|
- |
|
|
|
228 |
|
|
|
(5 |
) |
|
|
591 |
|
Restructuring and
integration costs |
|
438 |
|
|
|
264 |
|
|
|
3,331 |
|
|
|
702 |
|
|
|
4,461 |
|
Total operating
expenses |
|
74,715 |
|
|
|
77,696 |
|
|
|
81,495 |
|
|
|
152,411 |
|
|
|
162,594 |
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
29,684 |
|
|
|
27,268 |
|
|
|
19,439 |
|
|
|
56,952 |
|
|
|
39,001 |
|
Operating
margin |
|
28.4 |
% |
|
|
26.0 |
% |
|
|
19.3 |
% |
|
|
27.2 |
% |
|
|
19.3 |
% |
|
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
Interest income and
other income/(expense) |
|
8 |
|
|
|
(37 |
) |
|
|
(1,914 |
) |
|
|
(29 |
) |
|
|
(1,569 |
) |
Interest expense and
other financing costs |
|
(4,706 |
) |
|
|
(7,092 |
) |
|
|
(13,843 |
) |
|
|
(11,798 |
) |
|
|
(26,471 |
) |
Loss on debt
extinguishment |
|
- |
|
|
|
(6,058 |
) |
|
|
- |
|
|
|
(6,058 |
) |
|
|
- |
|
Total other income
(expense), net |
|
(4,698 |
) |
|
|
(13,187 |
) |
|
|
(15,757 |
) |
|
|
(17,885 |
) |
|
|
(28,040 |
) |
Income before income
taxes |
|
24,986 |
|
|
|
14,081 |
|
|
|
3,682 |
|
|
|
39,067 |
|
|
|
10,961 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(6,311 |
) |
|
|
(3,557 |
) |
|
|
(1,328 |
) |
|
|
(9,868 |
) |
|
|
(4,194 |
) |
Net
income |
$ |
18,675 |
|
|
$ |
10,524 |
|
|
$ |
2,354 |
|
|
$ |
29,199 |
|
|
$ |
6,767 |
|
Earnings per share -
basic |
$ |
0.27 |
|
|
$ |
0.17 |
|
|
$ |
0.04 |
|
|
$ |
0.45 |
|
|
$ |
0.12 |
|
Earnings per share -
diluted |
|
0.26 |
|
|
|
0.16 |
|
|
|
0.04 |
|
|
|
0.42 |
|
|
|
0.11 |
|
Weighted average shares
outstanding - basic |
|
67,948,732 |
|
|
|
61,599,057 |
|
|
|
54,825,386 |
|
|
|
64,791,435 |
|
|
|
54,819,604 |
|
Weighted average shares
outstanding - diluted |
|
72,135,290 |
|
|
|
66,283,621 |
|
|
|
58,985,367 |
|
|
|
69,352,895 |
|
|
|
58,872,192 |
|
Dividends declared per
share |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital
Holdings, Inc. and
Subsidiaries |
Reconcilation of GAAP to Non-GAAP
Measures |
(unaudited; in thousands except
shares) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2018 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net
income |
$ |
18,675 |
|
|
$ |
10,524 |
|
|
$ |
2,354 |
|
|
$ |
29,199 |
|
|
$ |
6,767 |
|
GAAP income tax
expense |
|
(6,311 |
) |
|
|
(3,557 |
) |
|
|
(1,328 |
) |
|
|
(9,868 |
) |
|
|
(4,194 |
) |
Income before
taxes |
$ |
24,986 |
|
|
$ |
14,081 |
|
|
$ |
3,682 |
|
|
$ |
39,067 |
|
|
$ |
10,961 |
|
Interest expense |
|
4,229 |
|
|
|
8,094 |
|
|
|
12,757 |
|
|
|
12,323 |
|
|
|
24,353 |
|
Depreciation |
|
736 |
|
|
|
736 |
|
|
|
893 |
|
|
|
1,472 |
|
|
|
1,808 |
|
Other business
taxes |
|
443 |
|
|
|
375 |
|
|
|
390 |
|
|
|
818 |
|
|
|
840 |
|
GAAP amortization of
acquisition-related intangibles |
|
5,195 |
|
|
|
5,676 |
|
|
|
7,238 |
|
|
|
10,871 |
|
|
|
14,477 |
|
Stock-based
compensation |
|
3,968 |
|
|
|
3,322 |
|
|
|
3,651 |
|
|
|
7,290 |
|
|
|
5,952 |
|
Acquisition,
restructuring and exit costs |
|
560 |
|
|
|
518 |
|
|
|
5,195 |
|
|
|
1,078 |
|
|
|
7,798 |
|
Debt issuance
costs |
|
361 |
|
|
|
6,702 |
|
|
|
1,914 |
|
|
|
7,063 |
|
|
|
2,828 |
|
Pre-IPO governance
expenses |
|
(3 |
) |
|
|
141 |
|
|
|
312 |
|
|
|
138 |
|
|
|
600 |
|
Earnings/losses from
equity method investments |
|
202 |
|
|
|
137 |
|
|
|
173 |
|
|
|
339 |
|
|
|
173 |
|
Adjusted
EBITDA |
$ |
40,677 |
|
|
$ |
39,782 |
|
|
$ |
36,205 |
|
|
$ |
80,459 |
|
|
$ |
69,790 |
|
Adjusted EBITDA
margin |
|
39.0 |
% |
|
|
37.9 |
% |
|
|
35.9 |
% |
|
|
38.4 |
% |
|
|
34.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
18,675 |
|
|
$ |
10,524 |
|
|
$ |
2,354 |
|
|
$ |
29,199 |
|
|
$ |
6,767 |
|
Adjustment to reflect
the operating performance of the Company |
|
|
|
|
|
|
|
|
|
Other business
taxes |
|
443 |
|
|
|
375 |
|
|
|
390 |
|
|
|
818 |
|
|
|
840 |
|
GAAP amortization of
acquisition-related intangibles |
|
5,195 |
|
|
|
5,676 |
|
|
|
7,238 |
|
|
|
10,871 |
|
|
|
14,477 |
|
Stock-based
compensation |
|
3,968 |
|
|
|
3,322 |
|
|
|
3,651 |
|
|
|
7,290 |
|
|
|
5,952 |
|
Acquisition,
restructuring and exit costs |
|
560 |
|
|
|
518 |
|
|
|
5,195 |
|
|
|
1,078 |
|
|
|
7,798 |
|
Debt issuance
costs |
|
361 |
|
|
|
6,702 |
|
|
|
1,914 |
|
|
|
7,063 |
|
|
|
2,828 |
|
Pre-IPO governance
expenses |
|
(3 |
) |
|
|
141 |
|
|
|
312 |
|
|
|
138 |
|
|
|
600 |
|
Tax effect of above
adjustments |
|
(2,631 |
) |
|
|
(4,183 |
) |
|
|
(7,106 |
) |
|
|
(6,814 |
) |
|
|
(12,348 |
) |
Adjusted net
income |
$ |
26,568 |
|
|
$ |
23,075 |
|
|
$ |
13,948 |
|
|
$ |
49,643 |
|
|
$ |
26,914 |
|
Adjusted net
income per diluted share |
$ |
0.37 |
|
|
$ |
0.35 |
|
|
$ |
0.24 |
|
|
$ |
0.72 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
Tax benefit of
goodwill and acquired
intangibles |
$ |
3,320 |
|
|
$ |
3,320 |
|
|
$ |
4,901 |
|
|
$ |
6,640 |
|
|
$ |
9,792 |
|
Tax benefit of
goodwill and acquired intangibles per diluted share |
$ |
0.04 |
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.09 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income with tax benefit |
$ |
29,888 |
|
|
$ |
26,395 |
|
|
$ |
18,849 |
|
|
$ |
56,283 |
|
|
$ |
36,706 |
|
Adjusted net
income with tax benefit per diluted share |
$ |
0.41 |
|
|
$ |
0.40 |
|
|
$ |
0.32 |
|
|
$ |
0.81 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital
Holdings, Inc. and Subsidiaries |
Unaudited Condensed Consolidated Balance
Sheets |
(In thousands, except for shares) |
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
15,162 |
|
|
$ |
12,921 |
|
Receivables |
|
51,813 |
|
|
|
55,917 |
|
Prepaid
expenses |
|
2,855 |
|
|
|
5,441 |
|
Investments |
|
13,466 |
|
|
|
11,336 |
|
Property and equipment, net |
|
8,975 |
|
|
|
8,844 |
|
Goodwill |
|
284,108 |
|
|
|
284,108 |
|
Other intangible assets, net |
|
397,130 |
|
|
|
408,000 |
|
Other assets |
|
7,735 |
|
|
|
6,055 |
|
Total assets |
$ |
781,244 |
|
|
$ |
792,622 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Accounts
payable and accrued expenses |
$ |
17,356 |
|
|
$ |
21,996 |
|
Accrued
compensation and benefits |
|
23,771 |
|
|
|
29,305 |
|
Consideration
payable for acquisition of business |
|
10,133 |
|
|
|
9,856 |
|
Deferred tax liability, net |
|
4,409 |
|
|
|
4,068 |
|
Other
liabilities |
|
16,929 |
|
|
|
12,989 |
|
Long-term
debt(1) |
|
287,907 |
|
|
|
483,225 |
|
Total
liabilities |
|
360,505 |
|
|
|
561,439 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
Common
stock, $0.01 par value per share: 2018 - no shares
authorized, |
|
– |
|
|
|
572 |
|
issued and outstanding; 2017 - 78,837,300 shares authorized,
57,182,730 |
|
|
|
issued and 55,118,673 shares outstanding |
|
|
|
Class A
common stock, $0.01 par value per share: 2018 - 400,000,000 |
|
130 |
|
|
|
– |
|
shares authorized, 12,971,510 shares issued and 12,905,398
shares |
|
|
|
outstanding; 2017 - no shares authorized, issued and
outstanding |
|
|
|
Class B
common stock, $0.01 par value per share: 2018 - 200,000,000 |
|
570 |
|
|
|
– |
|
shares authorized, 57,059,845 shares issued and 54,995,788
shares |
|
|
|
outstanding; 2017 - no shares authorized, issued and
outstanding |
|
|
|
Additional paid-in capital |
|
595,191 |
|
|
|
435,334 |
|
Class A
treasury stock, at cost: 2018 - 66,112 shares; 2017 - no
shares |
|
(720 |
) |
|
|
– |
|
Class B
treasury stock, at cost: 2018 and 2017 - 2,064,057 shares |
|
(20,899 |
) |
|
|
(20,899 |
) |
Accumulated other comprehensive income |
|
47 |
|
|
|
64 |
|
Retained
deficit |
|
(153,580 |
) |
|
|
(183,888 |
) |
Total
stockholders' equity |
|
420,739 |
|
|
|
231,183 |
|
Total liabilities and stockholders’
equity |
$ |
781,244 |
|
|
$ |
792,622 |
|
|
|
|
|
|
|
|
|
(1) Balance at June 30, 2018 is shown net of unamortized loan
discount and debt issuance costs in the amount of $12.1
million. The gross amount of the debt outstanding was
$300.0 million. |
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc. and
Subsidiaries |
Assets Under Management |
(unaudited; in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
% Change from |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
2018 |
|
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Beginning
assets under management |
$ |
60,855 |
|
|
$ |
61,771 |
|
|
$ |
56,622 |
|
|
-1 |
% |
|
7 |
% |
|
Gross client cash
inflows |
|
3,521 |
|
|
|
3,685 |
|
|
|
3,953 |
|
|
-4 |
% |
|
-11 |
% |
|
Gross client cash
outflows |
|
(3,623 |
) |
|
|
(4,318 |
) |
|
|
(4,554 |
) |
|
-16 |
% |
|
-20 |
% |
Net client
cash flows |
|
(102 |
) |
|
|
(633 |
) |
|
|
(601 |
) |
|
-84 |
% |
|
-83 |
% |
Market
appreciation (depreciation) |
|
1,503 |
|
|
|
(275 |
) |
|
|
952 |
|
|
n/m |
|
58 |
% |
Net
transfers |
|
- |
|
|
|
(8 |
) |
|
|
- |
|
|
n/m |
|
n/m |
Ending
assets under management |
|
62,256 |
|
|
|
60,855 |
|
|
|
56,973 |
|
|
2 |
% |
|
9 |
% |
Average
assets under management |
|
61,617 |
|
|
|
62,020 |
|
|
|
56,784 |
|
|
-1 |
% |
|
9 |
% |
Net client
cash flows excluding Diversified Equity |
|
(102 |
) |
|
|
(633 |
) |
|
|
(314 |
) |
|
-84 |
% |
|
-68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
% Change from |
|
|
|
|
June 30, |
|
June 30, |
|
|
|
June 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
2017 |
|
|
|
Beginning
assets under management |
$ |
61,771 |
|
|
$ |
54,965 |
|
|
|
|
12 |
% |
|
|
|
Gross client cash
inflows |
|
7,205 |
|
|
|
8,679 |
|
|
|
|
-17 |
% |
|
|
|
Gross client cash
outflows |
|
(7,940 |
) |
|
|
(9,665 |
) |
|
|
|
-18 |
% |
|
|
Net client
cash flows |
|
(735 |
) |
|
|
(986 |
) |
|
|
|
-25 |
% |
|
|
Market
appreciation (depreciation) |
|
1,228 |
|
|
|
2,994 |
|
|
|
|
-59 |
% |
|
|
Net
transfers |
|
(8 |
) |
|
|
- |
|
|
|
|
n/m |
|
|
Ending
assets under management |
|
62,256 |
|
|
|
56,973 |
|
|
|
|
9 |
% |
|
|
Average
assets under management |
|
61,819 |
|
|
|
56,531 |
|
|
|
|
9 |
% |
|
|
Net client
cash flows excluding Diversified Equity |
|
(735 |
) |
|
|
(368 |
) |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc. and
Subsidiaries |
|
Assets Under Management by Asset
Class |
|
(unaudited; in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
By Asset Class |
|
|
|
|
U.S. Mid Cap Equity |
|
U.S. Small Cap Equity |
|
Fixed Income |
|
U.S. Large Cap Equity |
|
Global / Non-U.S. Equity |
|
Solutions |
|
Commodity |
|
Other |
|
Total |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
24,205 |
|
|
$ |
15,095 |
|
|
$ |
7,311 |
|
|
$ |
4,635 |
|
|
$ |
4,334 |
|
|
$ |
3,563 |
|
|
$ |
1,298 |
|
|
$ |
414 |
|
|
$ |
60,855 |
|
|
|
Gross client cash
inflows |
|
|
1,125 |
|
|
|
867 |
|
|
|
303 |
|
|
|
103 |
|
|
|
669 |
|
|
|
381 |
|
|
|
46 |
|
|
|
27 |
|
|
|
3,521 |
|
|
|
Gross client cash
outflows |
|
|
(1,422 |
) |
|
|
(745 |
) |
|
|
(652 |
) |
|
|
(287 |
) |
|
|
(182 |
) |
|
|
(169 |
) |
|
|
(133 |
) |
|
|
(33 |
) |
|
|
(3,623 |
) |
|
Net client
cash flows |
|
|
(297 |
) |
|
|
122 |
|
|
|
(349 |
) |
|
|
(184 |
) |
|
|
487 |
|
|
|
212 |
|
|
|
(87 |
) |
|
|
(6 |
) |
|
|
(102 |
) |
|
Market
appreciation (depreciation) |
|
|
558 |
|
|
|
773 |
|
|
|
16 |
|
|
|
113 |
|
|
|
(116 |
) |
|
|
40 |
|
|
|
80 |
|
|
|
39 |
|
|
|
1,503 |
|
|
Net
transfers |
|
|
19 |
|
|
|
(19 |
) |
|
|
- |
|
|
|
13 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13 |
) |
|
|
- |
|
|
Ending
assets under management |
|
|
24,485 |
|
|
|
15,971 |
|
|
|
6,978 |
|
|
|
4,577 |
|
|
|
4,705 |
|
|
|
3,815 |
|
|
|
1,291 |
|
|
|
434 |
|
|
|
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
25,185 |
|
|
$ |
15,308 |
|
|
$ |
7,551 |
|
|
$ |
4,789 |
|
|
$ |
4,105 |
|
|
$ |
3,028 |
|
|
$ |
1,419 |
|
|
$ |
386 |
|
|
$ |
61,771 |
|
|
|
Gross client cash
inflows |
|
|
1,203 |
|
|
|
776 |
|
|
|
394 |
|
|
|
55 |
|
|
|
443 |
|
|
|
606 |
|
|
|
127 |
|
|
|
81 |
|
|
|
3,685 |
|
|
|
Gross client cash
outflows |
|
|
(2,080 |
) |
|
|
(922 |
) |
|
|
(640 |
) |
|
|
(211 |
) |
|
|
(220 |
) |
|
|
(77 |
) |
|
|
(146 |
) |
|
|
(22 |
) |
|
|
(4,318 |
) |
|
Net client
cash flows |
|
|
(877 |
) |
|
|
(146 |
) |
|
|
(246 |
) |
|
|
(156 |
) |
|
|
223 |
|
|
|
529 |
|
|
|
(19 |
) |
|
|
59 |
|
|
|
(633 |
) |
|
Market
appreciation (depreciation) |
|
|
(103 |
) |
|
|
(67 |
) |
|
|
6 |
|
|
|
3 |
|
|
|
14 |
|
|
|
(34 |
) |
|
|
(102 |
) |
|
|
8 |
|
|
|
(275 |
) |
|
Net
transfers |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
|
|
(8 |
) |
|
|
40 |
|
|
|
- |
|
|
|
(39 |
) |
|
|
(8 |
) |
|
Ending
assets under management |
|
|
24,205 |
|
|
|
15,095 |
|
|
|
7,311 |
|
|
|
4,635 |
|
|
|
4,334 |
|
|
|
3,563 |
|
|
|
1,298 |
|
|
|
414 |
|
|
|
60,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
21,555 |
|
|
$ |
14,556 |
|
|
$ |
7,756 |
|
|
$ |
5,285 |
|
|
$ |
3,482 |
|
|
$ |
1,970 |
|
|
$ |
1,770 |
|
|
$ |
248 |
|
|
$ |
56,622 |
|
|
|
Gross client cash
inflows |
|
|
2,307 |
|
|
|
652 |
|
|
|
387 |
|
|
|
69 |
|
|
|
155 |
|
|
|
299 |
|
|
|
70 |
|
|
|
14 |
|
|
|
3,953 |
|
|
|
Gross client cash
outflows |
|
|
(1,841 |
) |
|
|
(1,036 |
) |
|
|
(486 |
) |
|
|
(523 |
) |
|
|
(303 |
) |
|
|
(56 |
) |
|
|
(275 |
) |
|
|
(34 |
) |
|
|
(4,554 |
) |
|
Net client
cash flows |
|
|
466 |
|
|
|
(384 |
) |
|
|
(99 |
) |
|
|
(454 |
) |
|
|
(148 |
) |
|
|
243 |
|
|
|
(205 |
) |
|
|
(20 |
) |
|
|
(601 |
) |
|
Market
appreciation (depreciation) |
|
|
369 |
|
|
|
281 |
|
|
|
122 |
|
|
|
- |
|
|
|
271 |
|
|
|
48 |
|
|
|
(159 |
) |
|
|
20 |
|
|
|
952 |
|
|
Net
transfers |
|
|
- |
|
|
|
- |
|
|
|
(71 |
) |
|
|
(6 |
) |
|
|
- |
|
|
|
(34 |
) |
|
|
15 |
|
|
|
96 |
|
|
|
- |
|
|
Ending
assets under management |
|
|
22,390 |
|
|
|
14,453 |
|
|
|
7,708 |
|
|
|
4,825 |
|
|
|
3,605 |
|
|
|
2,227 |
|
|
|
1,421 |
|
|
|
344 |
|
|
|
56,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc. and
Subsidiaries |
|
Assets Under Management by Asset
Class |
|
(unaudited; in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
By Asset Class |
|
|
|
|
U.S. Mid Cap Equity |
|
U.S. Small Cap Equity |
|
Fixed Income |
|
U.S. Large Cap Equity |
|
Global / Non-U.S. Equity |
|
Solutions |
|
Commodity |
|
Other |
|
Total |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
25,185 |
|
|
$ |
15,308 |
|
|
$ |
7,551 |
|
|
$ |
4,789 |
|
|
$ |
4,105 |
|
|
$ |
3,028 |
|
|
$ |
1,419 |
|
|
$ |
386 |
|
|
$ |
61,771 |
|
|
|
Gross client cash
inflows |
|
|
2,328 |
|
|
|
1,643 |
|
|
|
696 |
|
|
|
158 |
|
|
|
1,113 |
|
|
|
986 |
|
|
|
173 |
|
|
|
108 |
|
|
|
7,205 |
|
|
|
Gross client cash
outflows |
|
|
(3,502 |
) |
|
|
(1,667 |
) |
|
|
(1,291 |
) |
|
|
(498 |
) |
|
|
(402 |
) |
|
|
(245 |
) |
|
|
(279 |
) |
|
|
(56 |
) |
|
|
(7,940 |
) |
|
Net client
cash flows |
|
|
(1,174 |
) |
|
|
(24 |
) |
|
|
(595 |
) |
|
|
(340 |
) |
|
|
711 |
|
|
|
741 |
|
|
|
(106 |
) |
|
|
52 |
|
|
|
(735 |
) |
|
Market
appreciation (depreciation) |
|
|
455 |
|
|
|
706 |
|
|
|
22 |
|
|
|
116 |
|
|
|
(103 |
) |
|
|
6 |
|
|
|
(22 |
) |
|
|
48 |
|
|
|
1,228 |
|
|
Net
transfers |
|
|
19 |
|
|
|
(19 |
) |
|
|
- |
|
|
|
12 |
|
|
|
(8 |
) |
|
|
40 |
|
|
|
- |
|
|
|
(52 |
) |
|
|
(8 |
) |
|
Ending
assets under management |
|
|
24,485 |
|
|
|
15,971 |
|
|
|
6,978 |
|
|
|
4,577 |
|
|
|
4,705 |
|
|
|
3,815 |
|
|
|
1,291 |
|
|
|
434 |
|
|
|
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
20,083 |
|
|
$ |
14,090 |
|
|
$ |
7,726 |
|
|
$ |
5,921 |
|
|
$ |
3,460 |
|
|
$ |
1,602 |
|
|
$ |
1,882 |
|
|
$ |
202 |
|
|
$ |
54,965 |
|
|
|
Gross client cash
inflows |
|
|
4,516 |
|
|
|
1,901 |
|
|
|
890 |
|
|
|
137 |
|
|
|
363 |
|
|
|
646 |
|
|
|
178 |
|
|
|
48 |
|
|
|
8,679 |
|
|
|
Gross client cash
outflows |
|
|
(3,714 |
) |
|
|
(2,237 |
) |
|
|
(1,074 |
) |
|
|
(1,234 |
) |
|
|
(775 |
) |
|
|
(103 |
) |
|
|
(480 |
) |
|
|
(48 |
) |
|
|
(9,665 |
) |
|
Net client
cash flows |
|
|
802 |
|
|
|
(336 |
) |
|
|
(184 |
) |
|
|
(1,097 |
) |
|
|
(412 |
) |
|
|
543 |
|
|
|
(302 |
) |
|
|
- |
|
|
|
(986 |
) |
|
Market
appreciation (depreciation) |
|
|
1,504 |
|
|
|
699 |
|
|
|
239 |
|
|
|
7 |
|
|
|
557 |
|
|
|
116 |
|
|
|
(174 |
) |
|
|
46 |
|
|
|
2,994 |
|
|
Net
transfers |
|
|
1 |
|
|
|
- |
|
|
|
(73 |
) |
|
|
(6 |
) |
|
|
- |
|
|
|
(34 |
) |
|
|
15 |
|
|
|
97 |
|
|
|
- |
|
|
Ending
assets under management |
|
|
22,390 |
|
|
|
14,453 |
|
|
|
7,708 |
|
|
|
4,825 |
|
|
|
3,605 |
|
|
|
2,227 |
|
|
|
1,421 |
|
|
|
344 |
|
|
|
56,973 |
|
|
|
|
|
Victory Capital Holdings, Inc. and
Subsidiaries |
|
Assets Under Management
by Vehicle |
|
(unaudited; in millions) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
By Vehicle |
|
|
|
|
Mutual Funds(1) |
|
ETFs |
|
Separate Accounts and Other
Vehicles(2) |
|
Total |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
36,989 |
|
|
$ |
2,674 |
|
|
$ |
21,192 |
|
|
$ |
60,855 |
|
|
|
Gross client cash
inflows |
|
|
2,555 |
|
|
|
296 |
|
|
|
670 |
|
|
|
3,521 |
|
|
|
Gross client cash
outflows |
|
|
(2,708 |
) |
|
|
(96 |
) |
|
|
(819 |
) |
|
|
(3,623 |
) |
|
Net client
cash flows |
|
|
(153 |
) |
|
|
200 |
|
|
|
(149 |
) |
|
|
(102 |
) |
|
Market
appreciation (depreciation) |
|
|
963 |
|
|
|
32 |
|
|
|
508 |
|
|
|
1,503 |
|
|
Net
transfers |
|
|
19 |
|
|
|
- |
|
|
|
(19 |
) |
|
|
- |
|
|
Ending
assets under management |
|
$ |
37,818 |
|
|
$ |
2,906 |
|
|
$ |
21,532 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
37,967 |
|
|
$ |
2,250 |
|
|
$ |
21,555 |
|
|
$ |
61,771 |
|
|
|
Gross client cash
inflows |
|
|
2,626 |
|
|
|
481 |
|
|
|
578 |
|
|
|
3,685 |
|
|
|
Gross client cash
outflows |
|
|
(3,266 |
) |
|
|
(29 |
) |
|
|
(1,023 |
) |
|
|
(4,318 |
) |
|
Net client
cash flows |
|
|
(640 |
) |
|
|
452 |
|
|
|
(445 |
) |
|
|
(633 |
) |
|
Market
appreciation (depreciation) |
|
|
(307 |
) |
|
|
(28 |
) |
|
|
60 |
|
|
|
(275 |
) |
|
Net
transfers |
|
|
(31 |
) |
|
|
- |
|
|
|
22 |
|
|
|
(8 |
) |
|
Ending
assets under management |
|
$ |
36,989 |
|
|
$ |
2,674 |
|
|
$ |
21,192 |
|
|
$ |
60,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
35,640 |
|
|
$ |
1,267 |
|
|
$ |
19,715 |
|
|
$ |
56,622 |
|
|
|
Gross client cash
inflows |
|
|
2,954 |
|
|
|
278 |
|
|
|
721 |
|
|
|
3,953 |
|
|
|
Gross client cash
outflows |
|
|
(3,024 |
) |
|
|
- |
|
|
|
(1,530 |
) |
|
|
(4,554 |
) |
|
Net client
cash flows |
|
|
(70 |
) |
|
|
278 |
|
|
|
(809 |
) |
|
|
(601 |
) |
|
Market
appreciation (depreciation) |
|
|
563 |
|
|
|
33 |
|
|
|
356 |
|
|
|
952 |
|
|
Net
transfers |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Ending
assets under management |
|
$ |
36,133 |
|
|
$ |
1,578 |
|
|
$ |
19,262 |
|
|
$ |
56,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes institutional and retail share classes and VIP funds. |
|
|
|
|
|
|
(2) Includes collective trust funds, wrap program separate
accounts and unified managed accounts or UMAs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Victory Capital Holdings, Inc. and
Subsidiaries |
|
Assets Under Management by
Vehicle |
|
(unaudited; in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
By Vehicle |
|
|
|
|
Mutual Funds(1) |
|
ETFs |
|
Separate Accounts and Other
Vehicles(2) |
|
Total |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
37,967 |
|
|
$ |
2,250 |
|
|
$ |
21,555 |
|
|
$ |
61,771 |
|
|
|
Gross client cash
inflows |
|
|
5,181 |
|
|
|
777 |
|
|
|
1,247 |
|
|
|
7,205 |
|
|
|
Gross client cash
outflows |
|
|
(5,974 |
) |
|
|
(125 |
) |
|
|
(1,841 |
) |
|
|
(7,940 |
) |
|
Net client
cash flows |
|
|
(793 |
) |
|
|
652 |
|
|
|
(594 |
) |
|
|
(735 |
) |
|
Market
appreciation (depreciation) |
|
|
655 |
|
|
|
4 |
|
|
|
569 |
|
|
|
1,228 |
|
|
Net
transfers |
|
|
(11 |
) |
|
|
- |
|
|
|
3 |
|
|
|
(8 |
) |
|
Ending
assets under management |
|
$ |
37,818 |
|
|
$ |
2,906 |
|
|
$ |
21,532 |
|
|
$ |
62,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
Beginning
assets under management |
|
$ |
33,975 |
|
|
$ |
906 |
|
|
$ |
20,085 |
|
|
$ |
54,965 |
|
|
|
Gross client cash
inflows |
|
|
6,899 |
|
|
|
596 |
|
|
|
1,184 |
|
|
|
8,679 |
|
|
|
Gross client cash
outflows |
|
|
(6,659 |
) |
|
|
(2 |
) |
|
|
(3,004 |
) |
|
|
(9,665 |
) |
|
Net client
cash flows |
|
|
240 |
|
|
|
594 |
|
|
|
(1,820 |
) |
|
|
(986 |
) |
|
Market
appreciation (depreciation) |
|
|
1,923 |
|
|
|
78 |
|
|
|
993 |
|
|
|
2,994 |
|
|
Net
transfers |
|
|
(5 |
) |
|
|
- |
|
|
|
5 |
|
|
|
- |
|
|
Ending
assets under management |
|
$ |
36,133 |
|
|
$ |
1,578 |
|
|
$ |
19,262 |
|
|
$ |
56,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes institutional and retail share classes and VIP funds. |
|
|
|
|
|
|
(2) Includes collective trust funds, wrap program separate
accounts and unified managed accounts or UMAs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 business. These measures
eliminate the impact of one-time acquisition, restructuring and
integration costs and demonstrate the ongoing operating earnings
metrics of the business. The Company has included these non-GAAP
measures to provide investors with the same financial metrics used
by management to assess the operating performance of the
Company.
Adjusted EBITDA
Adjustments made to GAAP Net Income to calculate
Adjusted EBITDA are:
- Adding back GAAP income tax;
- Adding back interest paid on debt and other financing costs net
of interest income;
- Adding back depreciation on property and equipment;
- Adding back other business taxes;
- Adding back GAAP amortization of acquisition-related
intangibles;
- Adding back the expense associated with stock-based
compensation associated with equity issued from pools that were
created in connection with the management-led buyout with Crestview
GP from KeyCorp, the Munder Acquisition and the RS Acquisition and
as a result of any equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions and the
IPO, including expenses associated with third-party advisors, proxy
solicitations of mutual fund shareholders for transaction consents,
vendor contract early termination costs, impairment of receivables
recorded in connection with an acquisition and severance, retention
and transaction incentive compensation;
- Adding back debt issuance costs;
- Adding back pre-IPO governance expenses paid to the Company’s
private equity partners that terminated as of the completion of the
IPO; and
- Adjusting for earnings/losses on equity method
investments.
Adjusted Net Income
Adjustments made to GAAP Net Income to calculate
Adjusted Net Income are:
- Adding back other business taxes;
- Adding back GAAP amortization of acquisition-related
intangibles;
- Adding back the expense associated with stock-based
compensation associated with equity issued from pools that were
created in connection with the management-led buyout with Crestview
GP from KeyCorp, the Munder Acquisition and the RS Acquisition and
as a result of any equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions and the
IPO, including expenses associated with third-party advisors, proxy
solicitations of mutual fund shareholders for transaction consents,
vendor contract early termination costs, impairment of receivables
recorded in connection with an acquisition and severance, retention
and transaction incentive compensation;
- Adding back debt issuance costs;
- Adding back pre-IPO governance expenses paid to the Company’s
private equity partners that terminated as of the completion of the
IPO; and
- Subtracting an estimate of income tax expense on the
adjustments.
Tax Benefit of Goodwill and Acquired
Intangibles
Due to Victory Capital’s acquisitive nature, tax
deductions allowed on acquired intangible assets and goodwill
provide it with additional significant supplemental economic
benefit. The tax benefit of goodwill and intangibles
represents the tax benefits associated with deductions allowed for
intangibles and goodwill generated from prior acquisitions in which
the Company received a step-up in basis for tax purposes. Acquired
intangible assets and goodwill may be amortized for tax purposes,
generally over a 15-year period. The tax benefit from amortization
on these assets is included to show the full economic benefit of
deductions for all acquired intangibles with a step-up in tax
basis.
Victory Capital (NASDAQ:VCTR)
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