- Earnings Per Share - Diluted of $4.66; Earnings Per Share -
Diluted, as Adjusted, of $7.50
- Total Sales of $6.4B; Net Flows of ($4.8B); Assets Under
Management of $175.0B
Virtus Investment Partners, Inc. (NYSE: VRTS) today reported
financial results for the three months ended December 31, 2024.
Financial Highlights
(Unaudited)
(in millions, except per share data or as
noted)
Three Months Ended
Three Months Ended
12/31/2024
12/31/2023
Change
9/30/2024
Change
U.S. GAAP
Financial Measures
Revenues
$
233.5
$
214.6
9
%
$
227.0
3
%
Operating expenses
$
182.8
$
175.6
4
%
$
171.8
6
%
Operating income (loss)
$
50.7
$
39.0
30
%
$
55.3
(8
%)
Operating margin
21.7
%
18.2
%
24.3
%
Net income (loss) attributable to Virtus
Investment Partners, Inc.
$
33.3
$
30.8
8
%
$
41.0
(19
%)
Earnings (loss) per share - diluted
$
4.66
$
4.21
11
%
$
5.71
(18
%)
Weighted average shares outstanding -
diluted
7.139
7.320
(2
%)
7.176
(1
%)
Non-GAAP
Financial Measures (1)
Revenues, as adjusted
$
212.0
$
193.4
10
%
$
205.1
3
%
Operating expenses, as adjusted
$
137.6
$
129.5
6
%
$
134.7
2
%
Operating income (loss), as adjusted
$
74.5
$
63.9
17
%
$
70.5
6
%
Operating margin, as adjusted
35.1
%
33.0
%
34.4
%
Net income (loss) attributable to Virtus
Investment Partners, Inc., as adjusted
$
53.5
$
44.8
20
%
$
49.6
8
%
Earnings (loss) per share - diluted, as
adjusted
$
7.50
$
6.11
23
%
$
6.92
8
%
(1) See the information beginning on page
10 for reconciliations to the most directly comparable U.S. GAAP
measures and other important disclosures
Earnings Summary
The company presents U.S. GAAP and non-GAAP earnings information
in this release. Management believes that the non-GAAP financial
measures presented reflect the company’s operating results from
providing investment management and related services to individuals
and institutions and uses these measures to evaluate financial
performance. Non-GAAP financial measures have material limitations
and should not be viewed in isolation or as a substitute for U.S.
GAAP measures. Non-GAAP information and reconciliations to the most
comparable U.S. GAAP measures can be found beginning on page 10 of
this earnings release.
Assets Under Management and Asset
Flows
(in billions)
Three Months Ended
Three Months Ended
12/31/2024
12/31/2023
Change
9/30/2024
Change
Ending total assets under management
$
175.0
$
172.3
2
%
$
183.7
(5
%)
Average total assets under management
$
182.1
$
162.7
12
%
$
176.0
3
%
Total sales
$
6.4
$
6.2
3
%
$
6.6
(2
%)
Net flows
$
(4.8
)
$
(3.8
)
28
%
$
(1.7
)
181
%
Total assets under management of $175.0 billion at December 31,
2024 decreased sequentially from $183.7 billion due to net outflows
in institutional accounts and U.S. retail funds as well as negative
market performance, partially offset by positive net flows in
exchange-traded funds (ETFs), global funds, and retail separate
accounts. In addition, the company provided services to $2.3
billion of other fee-earning assets that are not included in assets
under management.
Total sales of $6.4 billion compared with $6.6 billion in the
prior quarter, as higher institutional sales were offset by lower
sales of retail separate accounts. Institutional sales of $1.6
billion increased from $1.2 billion due to higher sales of global
equity and alternative strategies. Retail separate account sales of
$1.8 billion decreased from $2.3 billion due to lower sales in
intermediary sold, primarily small/mid-cap strategies, partially
offset by higher sales in wealth management. Open-end fund sales of
$3.0 billion were essentially unchanged, as higher ETF sales were
offset by lower sales of U.S. retail funds.
Net flows of ($4.8) billion compared with ($1.7) billion in the
prior quarter and included the previously disclosed $3.3 billion
lower-fee partial redemption of an institutional mandate.
Institutional net flows of ($3.8) billion were primarily driven by
the partial redemption and compared with ($1.1) billion in the
prior quarter. Retail separate account net flows of $0.1 billion
compared with $0.4 billion, with positive net flows in both the
intermediary sold channel and in the wealth management business.
Open-end fund net flows of ($1.1) billion compared with ($1.0)
billion in the prior quarter and included positive net flows in
fixed income and small/mid-cap strategies.
GAAP Results
Operating income of $50.7 million decreased 8% from $55.3
million in the prior quarter due to a 6% increase in operating
expenses, partially offset by a 3% increase in revenues, reflecting
higher average assets under management. The increase in operating
expenses was primarily due to an increase in the fair value of
contingent consideration, higher operating expenses of consolidated
investment products and other operating expenses, which included
higher facilities costs and increased travel and marketing
activities. Employment expenses of $106.2 million were essentially
flat with the prior quarter level.
Net income attributable to Virtus Investment Partners, Inc. of
$4.66 per diluted share included ($0.72) of fair value adjustments
to minority interests, ($0.41) of realized and unrealized losses on
investments, ($0.27) of collateralized loan obligation (CLO)
expenses, ($0.17) of fair value adjustments to contingent
consideration, and ($0.09) of acquisition and integration costs.
Net income per diluted share of $5.71 in the prior quarter included
($0.64) of fair value adjustments to minority interests and ($0.10)
of acquisition and integration costs, partially offset by $0.41 of
fair value adjustments to contingent consideration.
The effective tax rate of 33% increased from 24% in the prior
quarter, primarily reflecting an increase in income tax valuation
allowances for net unrealized and realized losses compared with
gains in the prior quarter.
Non-GAAP Results
Revenues, as adjusted, of $212.0 million increased 3% from
$205.1 million in the prior quarter due to a 3% increase in average
assets under management.
Employment expenses, as adjusted, of $104.3 million compared
with $102.5 million in the prior quarter largely due to higher
profit-based variable incentive compensation. Other operating
expenses, as adjusted, of $31.0 million increased from $29.8
million primarily due to increased facilities costs and seasonally
higher distribution related travel activity.
Operating income, as adjusted, of $74.5 million and the related
margin of 35.1% increased from $70.5 million and 34.4%,
respectively, in the prior quarter due to higher investment
management fees that exceeded the modest increase in operating
expenses.
Net income attributable to Virtus Investment Partners, Inc., as
adjusted, per diluted share was $7.50, an increase of 8% from $6.92
in the prior quarter. The increase primarily reflected higher
investment management fees.
The effective tax rate, as adjusted, of 27% was unchanged from
the prior quarter.
Select Balance Sheet Items and Metrics
(Unaudited)
(in millions)
As of
As of
Select Balance
Sheet Items
12/31/2024
12/31/2023
Change
9/30/2024
Change
Cash and cash equivalents
$
265.9
$
239.6
11%
$
195.5
36%
Gross debt (1)
$
236.1
$
258.8
(9%)
$
241.8
(2%)
Contingent consideration (2)
$
63.5
$
90.9
(30%)
$
59.4
7%
Redeemable noncontrolling interests
(3)
$
61.6
$
74.2
(17%)
$
59.0
4%
Total equity exc. noncontrolling
interests
$
897.5
$
864.0
4%
$
889.1
1%
Other
Metrics
Working capital (4)
$
134.5
$
109.1
23%
$
108.5
24%
Net debt (cash) (5)
$
(29.8
)
$
19.2
N/M
$
46.2
N/M
N/M - Not Meaningful
(1) Excludes deferred financing costs of
$3.9 million, $5.4 million, and $4.3 million, as of December 31,
2024, December 31, 2023, and September 30, 2024, respectively
(2) Represents estimated revenue
participation and other contingent payments
(3) Excludes redeemable noncontrolling
interests of consolidated investment products of $45.7 million,
$30.6 million, and $39.1 million as of December 31, 2024, December
31, 2023, and September 30, 2024, respectively
(4) Defined as cash and cash equivalents
plus accounts receivable, net, and deferred compensation related
investments less accrued compensation and benefits excluding
affiliate minority interests, accounts payable and accrued
liabilities, dividends payable, debt principal payments due over
next 12 months and revenue participation obligations due within 12
months
(5) Defined as gross debt less cash and cash equivalents in
accordance with the company's credit agreement
Working capital of $134.5 million at December 31, 2024 increased
from $108.5 million at September 30, 2024, as cash earnings more
than offset return of capital and debt repayment.
During the quarter, the company repurchased 52,176 shares for
$12.5 million and repaid $5.7 million of debt.
Gross debt at December 31, 2024 was $236.1 million, down 2%
sequentially. The company ended the year in a net cash position of
$29.8 million.
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on
Friday, January 31, 2025, at 10 a.m. Eastern to discuss these
financial results and related matters. The presentation that will
accompany the conference call is available in the Investor
Relations section of virtus.com. A replay of the call will be
available in the Investor Relations section for at least one year.
We routinely post important information for investors on the
Investor Relations section of our website and may use this website
as a means of disclosing material, non-public information and for
complying with our disclosure obligations under Regulation FD.
Accordingly, investors should monitor our website, in addition to
following our press releases, SEC filings, public conference calls,
presentations and webcasts. We may also use social media channels
to communicate with our investors and the public about our company,
our products and other matters, and those communications could be
deemed to be material information. The information contained on, or
that may be accessed through, our website or social media channels
are not incorporated by reference into, and are not a part of, this
document.
About Virtus Investment Partners, Inc.
Virtus Investment Partners (NYSE: VRTS) is a distinctive
partnership of boutique investment managers singularly committed to
the long-term success of individual and institutional investors. We
provide investment management products and services from our
affiliated managers, each with a distinct investment style and
autonomous investment process, as well as select subadvisers.
Investment solutions are available across multiple disciplines and
product types to meet a wide array of investor needs. Additional
information about our firm, investment partners, and strategies is
available at virtus.com.
U.S. GAAP Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except per share data)
Three Months Ended
Three Months Ended
Twelve Months Ended
12/31/2024
12/31/2023
Change
9/30/2024
Change
12/31/2024
12/31/2023
Change
Revenues
Investment management fees
$
199,975
$
182,149
10%
$
193,843
3%
$
773,830
$
711,475
9%
Distribution and service fees
13,685
13,535
1%
13,567
1%
54,692
56,153
(3%)
Administration and shareholder service
fees
18,748
18,189
3%
18,560
1%
74,294
73,857
1%
Other income and fees
1,086
714
52%
1,059
3%
4,133
3,783
9%
Total revenues
233,494
214,587
9%
227,029
3%
906,949
845,268
7%
Operating Expenses
Employment expenses
106,202
99,847
6%
105,555
1%
432,587
404,742
7%
Distribution and other asset-based
expenses
24,005
23,470
2%
24,175
(1%)
96,223
96,802
(1%)
Other operating expenses
32,738
31,164
5%
30,363
8%
127,526
125,871
1%
Operating expenses of consolidate
investment products
2,923
2,611
12%
465
N/M
6,987
4,224
65%
Restructuring expense
—
133
(100%)
—
N/M
1,487
824
80%
Change in fair value of contingent
consideration
1,692
1,290
31%
(4,000
)
N/M
(5,608
)
(5,510
)
2%
Depreciation expense
2,330
1,670
40%
2,330
—%
8,958
5,804
54%
Amortization expense
12,883
15,446
(17%)
12,883
—%
56,299
61,027
(8%)
Total operating expenses
182,773
175,631
4%
171,771
6%
724,459
693,784
4%
Operating Income (Loss)
50,721
38,956
30%
55,258
(8%)
182,490
151,484
20%
Other Income (Expense)
Realized and unrealized gain (loss) on
investments, net
(2,501
)
4,056
N/M
4,552
N/M
3,914
6,525
(40%)
Realized and unrealized gain (loss) of
consolidated investment products, net
2,069
449
361%
(5,128
)
N/M
(14,460
)
(2,404
)
N/M
Other income (expense), net
341
622
(45%)
548
(38%)
2,036
(440
)
N/M
Total other income (expense),
net
(91
)
5,127
N/M
(28
)
225%
(8,510
)
3,681
N/M
Interest Income (Expense)
Interest expense
(5,033
)
(5,987
)
(16%)
(5,807
)
(13%)
(22,132
)
(23,431
)
(6%)
Interest and dividend income
3,463
3,673
(6%)
2,913
19%
12,488
12,458
—%
Interest and dividend income of
investments of consolidated investment products
50,604
53,206
(5%)
50,628
—%
204,732
197,707
4%
Interest expense of consolidated
investment products
(41,157
)
(43,182
)
(5%)
(38,063
)
8%
(161,192
)
(155,335
)
4%
Total interest income (expense),
net
7,877
7,710
2%
9,671
(19%)
33,896
31,399
8%
Income (Loss) Before Income
Taxes
58,507
51,793
13%
64,901
(10%)
207,876
186,564
11%
Income tax expense (benefit)
19,047
13,294
43%
15,797
21%
55,423
45,088
23%
Net Income (Loss)
39,460
38,499
2%
49,104
(20%)
152,453
141,476
8%
Noncontrolling interests
(6,166
)
(7,665
)
(20%)
(8,124
)
(24%)
(30,707
)
(10,855
)
183%
Net Income (Loss) Attributable to
Virtus Investment Partners, Inc.
$
33,294
$
30,834
8%
$
40,980
(19%)
$
121,746
$
130,621
(7%)
Earnings (Loss) Per Share -
Basic
$
4.75
$
4.30
10%
$
5.80
(18%)
$
17.19
$
18.02
(5%)
Earnings (Loss) Per Share -
Diluted
$
4.66
$
4.21
11%
$
5.71
(18%)
$
16.89
$
17.71
(5%)
Cash Dividends Declared Per Common
Share
$
2.25
$
1.90
18%
$
2.25
—%
$
8.30
$
7.10
17%
Weighted Average Shares Outstanding -
Basic
7,012
7,178
(2%)
7,071
(1%)
7,082
7,249
(2%)
Weighted Average Shares Outstanding -
Diluted
7,139
7,320
(2%)
7,176
(1%)
7,210
7,375
(2%)
N/M - Not Meaningful
Assets Under Management - Product and
Asset Class
(in millions)
Three Months Ended
12/31/2023
3/31/2024
6/30/2024
9/30/2024
12/31/2024
By Product (period end):
Open-End Funds (1)
$
56,062
$
57,818
$
55,852
$
58,100
$
56,073
Closed-End Funds
10,026
10,064
9,915
10,432
10,225
Retail Separate Accounts (2)
43,202
46,816
45,672
50,610
49,536
Institutional Accounts (3)
62,969
64,613
62,146
64,600
59,167
Total
$
172,259
$
179,311
$
173,585
$
183,742
$
175,001
By Product (average) (4)
Open-End Funds (1)
$
54,132
$
56,828
$
56,692
$
56,731
$
57,905
Closed-End Funds
9,591
9,862
9,894
10,159
10,452
Retail Separate Accounts (2)
38,665
43,202
46,816
45,672
50,610
Institutional Accounts (3)
60,319
63,466
61,773
63,428
63,121
Total
$
162,707
$
173,358
$
175,175
$
175,990
$
182,088
By Asset Class (period end):
Equity
$
96,703
$
103,501
$
99,224
$
106,784
$
100,792
Fixed Income
37,192
37,037
36,970
39,014
37,696
Multi-Asset (5)
21,411
21,975
21,060
21,619
21,174
Alternatives (6)
16,953
16,798
16,331
16,325
15,339
Total
$
172,259
$
179,311
$
173,585
$
183,742
$
175,001
Assets Under Management - Average
Management Fees Earned (7)
(in basis points)
Three Months Ended
12/31/2023
3/31/2024
6/30/2024
9/30/2024
12/31/2024
By Product:
Open-End Funds (1)
49.7
49.9
50.9
49.7
49.5
Closed-End Funds
58.4
58.7
58.6
58.5
58.8
Retail Separate Accounts (2)
43.3
43.9
43.3
43.7
42.6
Institutional Accounts (3)(8)
33.2
30.8
30.7
31.0
31.9
All Products (8)
42.6
41.9
42.2
41.9
42.0
(1) Represents assets under management of
U.S. retail funds, global funds, exchange-traded funds, and
variable insurance funds
(2) Includes investment models provided to
managed account sponsors
(3) Represents assets under management of
institutional separate and commingled accounts including structured
products
(4) Averages are calculated as
follows:
- Funds - average daily or weekly
balances
- Retail Separate Accounts - prior-quarter
ending balance
- Institutional Accounts - average of
month-end balances in quarter
(5) Consists of multi-asset offerings not
included in equity, fixed income, and alternatives
(6) Consists of managed futures,
event-driven, real estate securities, infrastructure, long/short,
and other strategies
(7) Represents investment management fees,
as adjusted, divided by average assets. Investment management fees,
as adjusted, exclude the impact of consolidated investment products
and are net of revenue-related adjustments. Revenue-related
adjustments are based on specific agreements and reflect the
portion of investment management fees passed through to third-party
client intermediaries for services to investors in sponsored
investment products
(8) Includes performance-related fees, in
basis points, earned during the three months ended as follows:
12/31/2023
3/31/2024
6/30/2024
9/30/2024
12/31/2024
Institutional Accounts
2.2
0.3
0.3
0.4
1.0
All Products
0.8
0.1
0.1
0.1
0.3
Assets Under Management - Asset Flows
by Product
(in millions)
Three Months Ended
Twelve Months Ended
12/31/2023
3/31/2024
6/30/2024
9/30/2024
12/31/2024
12/31/2023
12/31/2024
Open-End Funds (1)
Beginning balance
$
54,145
$
56,062
$
57,818
$
55,852
$
58,100
$
53,000
$
56,062
Inflows
2,940
3,476
2,777
3,118
3,049
11,188
12,420
Outflows
(4,905
)
(4,104
)
(4,120
)
(4,143
)
(4,165
)
(18,526
)
(16,532
)
Net flows
(1,965
)
(628
)
(1,343
)
(1,025
)
(1,116
)
(7,338
)
(4,112
)
Market performance
4,260
2,560
(480
)
3,410
(541
)
8,160
4,949
Other (2)
(378
)
(176
)
(143
)
(137
)
(370
)
2,240
(826
)
Ending balance
$
56,062
$
57,818
$
55,852
$
58,100
$
56,073
$
56,062
$
56,073
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
845
(55
)
453
1,112
Other (2)
(199
)
(201
)
(191
)
(328
)
(153
)
(812
)
(873
)
Ending balance
$
10,026
$
10,064
$
9,915
$
10,432
$
10,225
$
10,026
$
10,225
Retail Separate Accounts (3)
Beginning balance
$
38,665
$
43,202
$
46,816
$
45,672
$
50,610
$
35,352
$
43,202
Inflows
2,118
2,373
2,172
2,260
1,816
6,680
8,621
Outflows
(1,726
)
(1,695
)
(1,688
)
(1,829
)
(1,745
)
(5,972
)
(6,957
)
Net flows
392
678
484
431
71
708
1,664
Market performance
4,144
2,936
(1,631
)
4,507
(1,145
)
7,141
4,667
Other (2)
1
—
3
—
—
1
3
Ending balance
$
43,202
$
46,816
$
45,672
$
50,610
$
49,536
$
43,202
$
49,536
Institutional Accounts (4)
Beginning balance
$
60,257
$
62,969
$
64,613
$
62,146
$
64,600
$
50,663
$
62,969
Inflows
1,179
1,734
1,188
1,219
1,574
7,965
5,715
Outflows
(3,406
)
(3,022
)
(2,913
)
(2,349
)
(5,376
)
(8,579
)
(13,660
)
Net flows
(2,227
)
(1,288
)
(1,725
)
(1,130
)
(3,802
)
(614
)
(7,945
)
Market performance
5,165
3,001
(549
)
3,790
(1,141
)
9,077
5,101
Other (2)
(226
)
(69
)
(193
)
(206
)
(490
)
3,843
(958
)
Ending balance
$
62,969
$
64,613
$
62,146
$
64,600
$
59,167
$
62,969
$
59,167
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
(3,800
)
(1,238
)
(2,625
)
(1,724
)
(4,846
)
(7,220
)
(10,433
)
Market performance
14,322
8,736
(2,577
)
12,552
(2,882
)
24,831
15,829
Other (2)
(802
)
(446
)
(524
)
(671
)
(1,013
)
5,272
(2,654
)
Ending balance
$
172,259
$
179,311
$
173,585
$
183,742
$
175,001
$
172,259
$
175,001
(1) Represents assets under management of
U.S. retail funds, global funds, exchange-traded funds, and
variable insurance funds
(2) Represents open-end and closed-end
fund distributions net of reinvestments, the net change in assets
from cash management strategies, and the impact of non-sales
related activities such as asset acquisitions/(dispositions), seed
capital investments/(withdrawals), current income or capital
returned by structured products and the use of leverage
(3) Includes investment models provided to
managed account sponsors
(4) Represents assets under management of
institutional separate and commingled accounts including structured
products
Non-GAAP Information and Reconciliations (in thousands
except per share data)
The non-GAAP financial measures included in this release differ
from financial measures 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 from providing
investment management and related services. Management uses these
measures to evaluate the company’s financial performance and
operational decision-making. Management believes that these
non-GAAP financial measures, when presented together with directly
comparable U.S. GAAP measures, are useful to investors and other
interested parties to provide additional insight, promote
transparency and allow for a more comprehensive understanding of
the information used by management. Please see the Notes to
Reconciliations on page 12 for additional information on how these
measures reflect the company’s operating results. Non-GAAP
financial measures have material limitations and should not be
viewed in isolation or as a substitute for U.S. GAAP measures.
Also, the non-GAAP financial measures referenced in this release
may not be comparable to the similarly titled measures used by
other companies.
The following are reconciliations and related notes of the most
directly comparable U.S. GAAP measure to each non-GAAP measure:
Three Months Ended
Revenues
12/31/2024
12/31/2023
9/30/2024
Total revenues, GAAP
$
233,494
$
214,587
$
227,029
Consolidated investment products revenues
(1)
2,524
2,258
2,271
Investment management fees (2)
(10,317)
(9,933)
(10,606)
Distribution and service fees (2)
(13,688)
(13,537)
(13,569)
Total revenues, as adjusted
$
212,013
$
193,375
$
205,125
Operating Expenses
Total operating expenses, GAAP
$
182,773
$
175,631
$
171,771
Consolidated investment products expenses
(1)
(2,923)
(2,611)
(465)
Distribution and other asset-based
expenses (3)
(24,005)
(23,470)
(24,175)
Amortization of intangible assets (4)
(12,883)
(15,446)
(12,883)
Restructuring expense (5)
—
(133)
—
Deferred compensation and related
investments (6)
65
(925)
(937)
Acquisition and integration expenses
(7)
(2,553)
(3,050)
3,044
Other (8)
(2,914)
(472)
(1,698)
Total operating expenses, as adjusted
$
137,560
$
129,524
$
134,657
Operating Income (Loss)
Operating income (loss), GAAP
$
50,721
$
38,956
$
55,258
Consolidated investment products
(earnings) losses (1)
5,447
4,869
2,736
Amortization of intangible assets (4)
12,883
15,446
12,883
Restructuring expense (5)
—
133
—
Deferred compensation and related
investments (6)
(65)
925
937
Acquisition and integration expenses
(7)
2,553
3,050
(3,044)
Other (8)
2,914
472
1,698
Operating income (loss), as adjusted
$
74,453
$
63,851
$
70,468
Operating margin, GAAP
21.7 %
18.2 %
24.3 %
Operating margin, as adjusted
35.1 %
33.0 %
34.4 %
Three Months Ended
Income (Loss) Before Taxes
12/31/2024
12/31/2023
9/30/2024
Income (loss) before taxes, GAAP
$
58,507
$
51,793
$
64,901
Consolidated investment products
(earnings) losses (1)
(235)
(1,316)
(2,251)
Amortization of intangible assets (4)
12,883
15,446
12,883
Restructuring expense (5)
—
133
—
Deferred compensation and related
investments (6)
501
(783)
(512)
Acquisition and integration expenses
(7)
2,553
3,050
(3,044)
Other (8)
2,914
472
1,698
Seed capital and CLO investments (gains)
losses (9)
(1,966)
(5,078)
(3,074)
Income (loss) before taxes, as
adjusted
$
75,157
$
63,717
$
70,601
Income Tax Expense (Benefit)
Income tax expense (benefit), GAAP
$
19,047
$
13,294
$
15,797
Tax impact of:
Amortization of intangible assets (4)
3,423
4,202
3,434
Restructuring expense (5)
—
36
—
Deferred compensation and related
investments (6)
133
(213)
(136)
Acquisition and integration expenses
(7)
678
830
(811)
Other (8)
(124)
(11)
(135)
Seed capital and CLO investments (gains)
losses (9)
(3,185)
(801)
668
Income tax expense (benefit), as
adjusted
$
19,972
$
17,337
$
18,817
Effective tax rate, GAAPA
32.6%
25.7%
24.3%
Effective tax rate, as adjustedB
26.6%
27.2%
26.7%
A Reflects income tax expense (benefit),
GAAP, divided by income (loss) before taxes, GAAP
B Reflects income tax expense (benefit),
as adjusted, divided by income (loss) before taxes, as adjusted
Net Income (Loss) Attributable to Virtus Investment Partners,
Inc.
Net income (loss) attributable to Virtus
Investment Partners, Inc.
$
33,294
$
30,834
$
40,980
Amortization of intangible assets, net of
tax (4)
9,433
10,764
9,419
Restructuring expense, net of tax (5)
—
97
—
Deferred compensation and related
investments (6)
368
(570)
(376)
Acquisition and integration expenses, net
of tax (7)
1,875
2,220
(2,233)
Other, net of tax (8)
7,330
5,689
5,595
Seed capital and CLO investments (gains)
losses, net of tax (9)
1,219
(4,277)
(3,742)
Net income (loss) attributable to Virtus
Investment Partners, Inc., as adjusted
$
53,519
$
44,757
$
49,643
Weighted average shares outstanding -
diluted
7,139
7,320
7,176
Earnings (loss) per share - diluted,
GAAP
$
4.66
$
4.21
$
5.71
Earnings (loss) per share - diluted, as
adjusted
$
7.50
$
6.11
$
6.92
Three Months Ended
Administration and Shareholder Services
Fees
12/31/2024
12/31/2023
9/30/2024
Administration and shareholder service
fees, GAAP
$
18,748
$
18,189
$
18,560
Consolidated investment products fees
(1)
3
24
19
Administration and shareholder service
fees, as adjusted
$
18,751
$
18,213
$
18,579
Employment Expenses
Employment expenses, GAAP
$
106,202
$
99,847
$
105,555
Deferred compensation and related
investments (6)
65
(925)
(937)
Acquisition and integration expenses
(7)
(861)
(1,760)
(956)
Other (8)
(1,141)
(472)
(1,144)
Employment expenses, as adjusted
$
104,265
$
96,690
$
102,518
Other Operating Expenses
Other operating expenses, GAAP
$
32,738
$
31,164
$
30,363
Other (8)
(1,773)
—
(554)
Other operating expenses, as adjusted
$
30,965
$
31,164
$
29,809
Total Other Income (Expense),
Net
Total other income (expense), net GAAP
$
(91)
$
5,127
$
(28)
Consolidated investment products (1)
1,197
1,681
5,729
Deferred compensation and related
investments (6)
812
(1,397)
(1,423)
Seed capital and CLO investments (gains)
losses (9)
(1,966)
(5,078)
(3,074)
Total other income (expense), net as
adjusted
$
(48)
$
333
$
1,204
Interest and Dividend Income
Interest and dividend income, GAAP
$
3,463
$
3,673
$
2,913
Consolidated investment products (1)
2,568
2,158
1,849
Deferred compensation and related
investments (6)
(246)
(311)
(26)
Interest and dividend income, as
adjusted
$
5,785
$
5,520
$
4,736
Total Noncontrolling Interests
Total noncontrolling interests, GAAP
$
(6,166)
$
(7,665)
$
(8,124)
Consolidated investment products (1)
235
1,316
2,251
Amortization of intangible assets (4)
(27)
(480)
(30)
Other (8)
4,292
5,206
3,762
Total noncontrolling interests, as
adjusted
$
(1,666)
$
(1,623)
$
(2,141)
Notes to
Reconciliations:
Reclassifications:
1. Consolidated investment products
- Revenues and expenses generated by operating activities of mutual
funds and CLOs that are consolidated in the financial statements.
Management believes that excluding these operating activities to
reflect net revenues and expenses of the company prior to the
consolidation of these products is consistent with the approach of
reflecting its operating results from managing third-party client
assets.
Other Adjustments:
Revenue Related
2. Investment management/Distribution and
service fees - Each of these revenue line items is reduced
to exclude fees passed through to third-party client intermediaries
who own the retail client relationship and are responsible for
distributing company sponsored investment products and servicing
the client. The amount of fees fluctuates each period, based on a
predetermined percentage of the value of assets under management,
and varies based on the type of investment product. The specific
adjustments are as follows:
Investment management
fees - Based on specific agreements, the portion of
investment management fees passed through to third-party
intermediaries for services to investors in sponsored investment
products.
Distribution and
service fees - Based on distinct arrangements, fees
collected by the company then passed through to third-party client
intermediaries for services to investors in sponsored investment
products. The adjustment represents all of the company's
distribution and service fees that are recorded as a separate line
item on the condensed consolidated statements of operations.
Management believes that making these
adjustments aids in comparing the company's operating results with
other asset management firms that do not utilize third-party client
intermediaries.
Expense Related
3. Distribution and other asset-based
expenses - Primarily payments to third-party client
intermediaries for providing services to investors in sponsored
investment products. Management believes that making this
adjustment aids in comparing the company’s operating results with
other asset management firms that do not utilize third-party client
intermediaries.
4. Amortization of intangible
assets - Non-cash amortization expense or impairment
expense, if any, attributable to acquisition-related intangible
assets, including any portion that is allocated to noncontrolling
interests. Management believes that making this adjustment aids in
comparing the company’s operating results with other asset
management firms that have not engaged in acquisitions.
5.Restructuring expense - Certain
non-recurring expenses associated with restructuring the business,
including lease abandonment-related expenses and severance costs
associated with staff reductions that are not reflective of ongoing
earnings generation of the business.
6. Deferred compensation and related
investments - Compensation expense, gains and losses
(realized and unrealized), and interest and dividend income related
to market performance of deferred compensation and related balance
sheet investments. Market performance of deferred compensation
plans and related investments can vary significantly from period to
period. Management believes that making this adjustment aids in
comparing the Company's operating results with prior periods.
7. Acquisition and integration
expenses - Expenses that are directly related to acquisition
and integration activities. Acquisition expenses include certain
transaction related employment expenses, transaction closing costs,
change in fair value of contingent consideration, certain
professional fees, and financing fees. Integration expenses include
costs incurred that are directly attributable to combining
businesses, including compensation, restructuring and severance
charges, professional fees, consulting fees, and other expenses.
Management believes that making these adjustments aids in comparing
the company’s operating results with other asset management firms
that have not engaged in acquisitions.
Components of Acquisition and Integration
Expenses for the respective periods are shown below:
Three Months Ended
Acquisition and Integration
Expenses
12/31/2024
12/31/2023
9/30/2024
Employment expenses
$
861
$
1,760
$
956
Change in fair value of contingent
consideration
1,692
1,290
(4,000)
Total Acquisition and Integration
Expenses
$
2,553
$
3,050
$
(3,044)
8. Other - Certain expenses that
are not reflective of the ongoing earnings generation of the
business. Employment expenses and noncontrolling interests are
adjusted for fair value measurements of affiliate minority
interests. Other operating expenses are adjusted for amortization
of lease termination fees and transition related expense (benefit).
Interest expense is adjusted to remove gains on early
extinguishment of debt and the write-off of previously capitalized
costs associated with the modification of debt. Income tax expense
(benefit) items are adjusted for uncertain tax positions, changes
in tax law, valuation allowances, and other unusual or infrequent
items not related to current operating results to reflect a
normalized effective rate. Management believes that making these
adjustments aids in comparing the company’s operating results with
prior periods.
Components of Other for the respective
periods are shown below:
Three Months Ended
Other
12/31/2024
12/31/2023
9/30/2024
Employment expense fair value
adjustments
$
1,141
$
472
$
1,144
Amortization of lease termination fees
1,773
—
1,773
Transition related expense (benefit)
—
—
(1,219)
Tax impact of adjustments
(774)
(128)
(453)
Other discrete tax adjustments
898
139
588
Affiliate minority interest fair value
adjustments
4,292
5,206
3,762
Total Other
$
7,330
$
5,689
$
5,595
Seed Capital and CLO Related
9. Seed capital and CLO investments
(gains) losses - Gains and losses (realized and unrealized)
of seed capital and CLO investments. Gains and losses (realized and
unrealized) generated by investments in seed capital and CLO
investments can vary significantly from period to period and do not
reflect the company’s operating results from providing investment
management and related services. Management believes that making
this adjustment aids in comparing the company’s operating results
with prior periods and with other asset management firms that do
not have meaningful seed capital and CLO investments.
Definitions:
Revenues, as adjusted, comprise the fee revenues paid by
clients for investment management and related services. Revenues,
as adjusted, for purposes of calculating net income attributable to
Virtus Investment Partners, Inc., as adjusted, differ from U.S.
GAAP, namely in excluding the impact of operating activities of
consolidated investment products and reduced to exclude fees passed
through to third-party client intermediaries who own the retail
client relationship and are responsible for distributing the
product and servicing the client.
Operating expenses, as adjusted, is calculated to reflect
expenses from ongoing continuing operations. Operating expenses, as
adjusted, for purposes of calculating net income attributable to
Virtus Investment Partners, Inc., as adjusted, differ from U.S.
GAAP expenses in that they exclude amortization or impairment, if
any, of intangible assets, restructuring and severance, the effect
of consolidated investment products, acquisition and
integration-related expenses and certain other expenses that do not
reflect the ongoing earnings generation of the business.
Operating margin, as adjusted, is a metric used to
evaluate efficiency represented by operating income, as adjusted,
divided by revenues, as adjusted.
Earnings (loss) per share, as adjusted, represent net
income (loss) attributable to Virtus Investment Partners, Inc., as
adjusted, divided by weighted average shares outstanding, as
adjusted, on either a basic or diluted basis.
Forward-Looking Information
This press release 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 Securities Litigation Reform Act of 1995, as
amended, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These statements may be identified by such forward-looking
terminology as “expect,” “estimate,” “intent,” “plan,” “intend,”
“believe,” “anticipate,” “may,” “will,” “should,” “could,”
“continue,” “project,” “opportunity,” “predict,” “would,”
“potential,” “future,” “forecast,” “guarantee,” “assume,” “likely,”
“target” or similar statements or variations of such terms.
Our forward-looking statements are based on a series of
expectations, assumptions and projections about the company and the
markets in which we operate, are not guarantees of future results
or performance, and involve substantial risks and uncertainty
including assumptions and projections concerning our assets under
management, net asset inflows and outflows, operating cash flows,
business plans, and ability to borrow, for all future periods. All
forward-looking statements are as of the date of this release only.
The company can give no assurance that such expectations or
forward-looking statements will prove to be correct. Actual results
may differ materially.
Our business and our forward-looking statements involve
substantial known and unknown risks and uncertainties, including
those discussed under "Risk Factors" and "Management’s Discussion
and Analysis of Financial Condition and Results of Operations" in
our 2023 Annual Report on Form 10-K, as supplemented by our
periodic filings with the Securities and Exchange Commission (the
"SEC"), as well as the following risks and uncertainties resulting
from: (i) any reduction in our assets under management; (ii)
inability to achieve expected benefits of strategic transactions;
(iii) withdrawal, renegotiation or termination of investment
management agreements; (iv) damage to our reputation; (v) inability
to satisfy financial debt covenants and required payments; (vi)
inability to attract and retain key personnel; (vii) challenges
from competition; (viii) adverse developments related to
unaffiliated subadvisers; (ix) negative changes in key distribution
relationships; (x) interruptions, breaches, or failures of
technology systems; (xi) loss on our investments; (xii) lack of
sufficient capital on satisfactory terms; (xiii) adverse regulatory
and legal developments; (xiv) failure to comply with investment
guidelines or other contractual requirements; (xv) adverse civil
litigation, government investigations, or proceedings; (xvi)
unfavorable changes in tax laws or limitations; (xvii) inability to
make common stock dividend payments; (xviii) impediments from
certain corporate governance provisions; (xix) losses or costs not
covered by insurance; (xx) impairment of goodwill or other
intangible assets; and other risks and uncertainties. Any
occurrence of, or any material adverse change in, one or more risk
factors or risks and uncertainties referred to above, in our 2023
Annual Report on Form 10-K, and our other periodic reports filed
with the SEC could materially and adversely affect our operations,
financial results, cash flows, prospects and liquidity.
Certain other factors that may impact our continuing operations,
prospects, financial results and liquidity, or that may cause
actual results to differ from such forward-looking statements, are
discussed or included in the company’s periodic reports filed with
the SEC and are available on our website at virtus.com under
“Investor Relations.” You are urged to carefully consider all such
factors.
The company does not undertake or plan to update or revise any
such forward-looking statements to reflect actual results, changes
in plans, assumptions, estimates or projections, or other
circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any
forward-looking information will not be realized. If there are any
future public statements or disclosures by us that modify or affect
any of the forward-looking statements contained in or accompanying
this release, such statements or disclosures will be deemed to
modify or supersede such statements in this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250131882790/en/
Investor Relations Sean Rourke (860) 263-4709
sean.rourke@virtus.com
Virtus Investment Partners (NYSE:VRTS)
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