Second-Quarter Highlights
- Total Client Assets of $173.8 billion
- Long-term gross flows of $5.8 billion
- Long-term net flows of ($1.7) billion
- GAAP operating margin of 50.4%
- GAAP net income per diluted share of $1.12
- Adjusted EBITDA margin of 53.0%
- Adjusted net income with tax benefit per diluted share of
$1.31
- Board authorizes an 11% increase in regular quarterly cash
dividend to $0.41
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended June 30, 2024.
“Our most significant development during the first half of 2024
was forging the long-term agreement to become strategic partners
with Amundi,” said David Brown, Chairman and Chief Executive
Officer. “Upon closing, we will be combining Amundi’s US business
into Victory Capital and have reciprocal global exclusive 15-year
distribution agreements. This transaction is extremely compelling
with multiple strategic elements that will make our Company even
better. It is also financially attractive with anticipated
double-digit earnings accretion within a year, and it will
immediately provide us with greater financial flexibility resulting
from the strengthening of our balance sheet.
“During the second quarter, our business continued to perform
exceptionally well. We generated the highest adjusted earnings per
diluted share with tax benefit, adjusted EBITDA, and adjusted
EBITDA margin, for any quarter in our history.
“Our Investment Franchises continued to deliver excellent
investment performance for our clients. Through the end of June,
the percentage of our AUM outperforming benchmarks over the
respective 3-, 5-, and 10-year periods was 60%, 77%, and 79%. In
addition, 68% of our AUM in mutual funds and ETFs was rated four or
five stars overall by Morningstar.
“As a result of our strong cash flow generation, the amount of
cash on our balance sheet increased by 49% during the quarter,
reaching $119 million at the end of June. This combined with the
higher earnings resulted in our net debt to EBITDA ratio declining
to 1.9X. In addition, the Board authorized another 11% increase in
our quarterly cash dividend from $0.37 to $0.41, which will be paid
in September.
“As always, we continue to focus on serving our clients, which
is our top priority.”
1 Total AUM includes both discretionary and
non-discretionary client assets. 2 The Company reports its
financial results in accordance with generally accepted accounting
principles (“GAAP”). Adjusted EBITDA and Adjusted Net Income are
not defined by GAAP and should not be regarded as an alternative to
any measurement under GAAP. Please refer to the section
“Information Regarding Non-GAAP Financial Measures” at the end of
this press release for an explanation of Non-GAAP financial
measures and a reconciliation to the nearest GAAP financial
measure.
The table below presents AUM, and certain GAAP and non-GAAP
(“adjusted”) financial results. Due to rounding, AUM values and
other amounts in this press release may not add up precisely to the
totals provided.
(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,
2024
2024
2023
2024
2023
Assets Under Management1 Ending $
168,681
$
170,342
$
157,161
$
168,681
$
157,161
Average
167,484
163,533
152,925
165,508
152,729
AUM Long-term Flows2 Long-term Gross $
5,813
$
6,952
$
5,491
$
12,764
$
11,339
Long-term Net
(1,701
)
(1,028
)
(1,110
)
(2,729
)
(2,250
)
AUM Money Market/Short-term Flows Money Market / Short-term
Gross $
255
$
236
$
231
$
491
$
472
Money Market / Short-term Net
(43
)
(99
)
(316
)
(142
)
(325
)
AUM Total Flows Total Gross $
6,067
$
7,187
$
5,722
$
13,255
$
11,811
Total Net
(1,744
)
(1,127
)
(1,426
)
(2,871
)
(2,576
)
Consolidated Financial Results (GAAP) Revenue $
219.6
$
215.9
$
204.2
$
435.5
$
405.5
AUM revenue realization (in bps)
52.6
53.0
53.6
52.8
53.4
Operating expenses
109.0
131.0
116.7
240.1
243.5
Income from operations
110.6
84.8
87.5
195.4
162.1
Operating margin
50.4
%
39.3
%
42.9
%
44.9
%
40.0
%
Net income
74.3
55.7
56.7
129.9
105.9
Earnings per diluted share $
1.12
$
0.84
$
0.83
$
1.97
$
1.53
Cash flow from operations
79.7
68.7
77.4
148.4
141.6
Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $
116.5
$
112.4
$
104.0
$
228.9
$
203.2
Adjusted EBITDA margin
53.0
%
52.1
%
50.9
%
52.6
%
50.1
%
Adjusted net income
76.5
72.6
66.4
149.1
132.1
Tax benefit of goodwill and acquired intangible assets
10.1
9.7
9.5
19.9
19.1
Adjusted net income with tax benefit
86.6
82.3
75.9
169.0
151.1
Adjusted net income with tax benefit per diluted share $
1.31
$
1.25
$
1.11
$
2.56
$
2.19
_________________________________
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
2 Long-term AUM is defined as total AUM
excluding Money Market and Short-term assets.
3 The Company reports its financial
results in accordance with GAAP. Adjusted EBITDA and Adjusted Net
Income are not defined by GAAP and should not be regarded as an
alternative to any measurement under GAAP. Please refer to the
section “Information Regarding Non-GAAP Financial Measures” at the
end of this press release for an explanation of Non-GAAP financial
measures and a reconciliation to the nearest GAAP financial
measure.
AUM, Flows and Investment Performance
At June 30, 2024, Victory Capital had total client assets of
$173.8 billion, assets under management of $168.7 billion, and
other assets of $5.1 billion. Total AUM decreased by $1.7 billion
to $168.7 billion at June 30, 2024, compared with $170.3 billion at
March 31, 2024. The decrease was due to net outflows of $1.7
billion. Total gross flows for the second quarter were $6.1
billion, including long-term gross flows of $5.8 billion.
As of June 30, 2024, Victory Capital offered 122 investment
strategies through its 11 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of June 30, 2024.
Percentage of AUM
Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
49%
60%
77%
79%
Second Quarter 2024 Compared with First Quarter 2024
Revenue increased 1.7% to $219.6 million in the second quarter,
compared with $215.9 million in the first quarter, primarily due to
higher average AUM over the comparable period. GAAP operating
margin expanded 1,110 basis points in the second quarter to 50.4%,
up from 39.3% in the first quarter primarily due to the combination
of a non-cash $20.4 million difference in amounts recorded to the
change in the fair value of consideration payable for acquisitions
as well as a decrease in compensation related expenses. Second
quarter GAAP net income increased 33.3% to $74.3 million, or $1.12
per diluted share, up from $55.7 million, or $0.84 per diluted
share, in the prior quarter.
Adjusted net income with tax benefit increased 5.3% to $86.6
million, or $1.31 per diluted share in the second quarter, up from
$82.3 million, or $1.25 per diluted share, in the first quarter.
Adjusted EBITDA increased 3.7% to $116.5 million in the second
quarter, versus $112.4 million in the first quarter. Adjusted
EBITDA margin expanded 90 basis points in the second quarter of
2024 to 53.0% compared with 52.1% in the prior quarter.
Second Quarter 2024 Compared with Second Quarter 2023
Revenue for the three months ended June 30, 2024, increased 7.5%
to $219.6 million, compared with $204.2 million in the same quarter
of 2023 as a result of higher average AUM over the comparable
period.
Operating expenses decreased 6.6% to $109.0 million, compared
with $116.7 million in last year’s second quarter due to the
combination of a non-cash $9.7 million difference in amounts
recorded to the change in the fair value of consideration payable
for acquisitions as well as a decrease in depreciation and
amortization expense, partially offset by an increase in
acquisition-related costs. GAAP operating margin expanded 750 basis
points to 50.4% in the second quarter, from 42.9% in the same
quarter of 2023. GAAP net income increased 31.0% to $74.3 million,
or $1.12 per diluted share, in the second quarter compared with
$56.7 million, or $0.83 per diluted share, in the same quarter of
2023.
Adjusted net income with tax benefit increased 14.1% to $86.6
million, or $1.31 per diluted share, in the second quarter,
compared with $75.9 million, or $1.11 per diluted share in the same
quarter last year. Adjusted EBITDA increased 12.0% to $116.5
million, compared with $104.0 million in the same quarter of last
year. Year-over-year, adjusted EBITDA margin expanded 210 basis
points to 53.0% in the second quarter of 2024, compared with 50.9%
in the same quarter last year.
Six Months Ended June 30, 2024 Compared with Six Months Ended
June 30, 2023
Revenue for the six months ended June 30, 2024, increased 7.4%
to $435.5 million, compared with $405.5 million in the same period
of 2023. The increase was primarily due to higher average AUM.
Operating expenses decreased 1.4% to $240.1 million for the six
months ended June 30, 2024, compared with $243.5 million in the
same period in 2023 due to the combination of a non-cash $4.9
million difference in amounts recorded to the change in the fair
value of consideration payable for acquisitions as well as a
decrease in depreciation and amortization expense, partially
offsetting was an increase in acquisition-related costs. GAAP
operating margin was 44.9% for the six months ended June 30, 2024,
a 490 basis point increase from the 40.0% recorded in the same
period in 2023. GAAP net income increased 22.7% to $129.9 million,
or $1.97 per diluted share, in the first six months of 2024
compared with $105.9 million, or $1.53 per diluted share, in the
same period in 2023.
Adjusted net income with tax benefit increased 11.8% to $169.0
million in the first six months of 2024 compared to $151.1 million
in the same period in 2023. On a per-share basis, adjusted net
income with tax benefit increased 16.9% to $2.56 per diluted share
for the six months ended June 30, 2024 compared to $2.19 per
diluted share in the same period in 2023. For the six months ended
June 30, 2024, adjusted EBITDA increased 12.6% to $228.9 million,
compared with $203.2 million for the same period in 2023.
Year-over-year, adjusted EBITDA margin expanded 250 basis points to
52.6% in the first six months of 2024, compared with 50.1% in the
same period last year.
Balance Sheet / Capital Management
The total debt outstanding as of June 30, 2024 was approximately
$992 million and consisted of an existing term loan balance of $625
million and the 2021 Incremental Term Loans balance of $367
million.
The Company’s Board of Directors approved a regular quarterly
cash dividend of $0.41 per share. The dividend is payable on
September 25, 2024, to shareholders of record on September 10,
2024.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, August
9, at 8:00 a.m. ET to discuss the results. Analysts and investors
may participate in the question-and-answer session. To participate
in the conference call, please call (888) 330-3571 (domestic) or
(646) 960-0657 (international), shortly before 8:00 a.m. ET and
reference the Victory Capital Conference Call. A live, listen-only
webcast will also be available via the investor relations section
of the Company’s website at https://ir.vcm.com. Prior to the call,
a supplemental slide presentation that will be used during the
conference call will be available on the Events and Presentations
page of the Company’s investor relations website. For anyone who is
unable to join the live event, an archive of the webcast will be
available for replay shortly after the call concludes.
About Victory Capital
Victory Capital is a diversified global asset management firm
with total assets under management of $168.7 billion, and $173.8
billion in total client assets, as of June 30, 2024. The Company
employs a next-generation business strategy that combines boutique
investment qualities with the benefits of a fully integrated,
centralized operating and distribution platform.
Victory Capital provides specialized investment strategies to
institutions, intermediaries, retirement platforms and individual
investors. With 11 autonomous Investment Franchises and a Solutions
Business, Victory Capital offers a wide array of investment
products and services, including mutual funds, ETFs, separately
managed accounts, alternative investments, third-party ETF model
strategies, collective investment trusts, private funds, a 529
Education Savings Plan, and brokerage services.
Victory Capital is headquartered in San Antonio, Texas, with
offices and investment professionals in the U.S. and around the
world. To learn more please visit www.vcm.com or follow Victory
Capital on Facebook, Twitter, and LinkedIn.
FORWARD-LOOKING STATEMENTS
This earnings release may contain forward-looking statements
within the meaning of applicable U.S. federal and non-U.S.
securities laws. 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 and
include, but are not limited to, statements regarding the proposed
transaction and the outlook for Victory Capital’s or Amundi’s
future business and financial performance. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors beyond Victory Capital’s and Amundi’s control and
could cause Victory Capital’s and Amundi’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: continued
geopolitical uncertainty including the conflicts in Ukraine and
Israel, risks that the conditions to closing the transaction with
Amundi US will be satisfied and the transaction will close on the
anticipated timeline, if at all; risks associated with expected
benefits, or impact on our business, of the proposed transaction,
including our ability to achieve any expected synergies; reductions
in AUM based on investment performance, client withdrawals,
difficult market conditions and other factors such as a pandemic;
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 level of control over the Company retained
by Crestview GP; 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.
Important Additional Information and Where to Find It
This communication discusses the proposed acquisition of Amundi
Holdings US, Inc. (“Amundi US”) by the Company. In connection with
the transaction, the Company intends to file a proxy statement and
certain other documents regarding the transaction with the SEC. The
definitive version of the proxy statement (if and when available)
will be mailed to the Company’s stockholders.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY
OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE
SEC, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTIONS CONTEMPLATED BY THE CONTRIBUTION AGREEMENT AND RELATED
MATTERS.
Investors and security holders may obtain, free of charge,
copies of the proxy statement (when it is available) and other
documents that are filed or will be filed with the SEC by the
Company through the website maintained by the SEC at www.sec.gov or
the Investor Relations portion of the Company's website at
https://ir.vcm.com.
Participants in the Solicitation
The Company and certain of its directors, executive officers and
other employees may be deemed to be “participants” in the
solicitation of proxies from the Company’s stockholders with
respect to the special meeting of stockholders that will be held to
consider and vote upon the approval of the share issuance in
connection with the proposed acquisition of Amundi US by the
Company. Additional information regarding the identity of the
participants, and their respective direct and indirect interests in
the transaction, by security holdings or otherwise, will be set
forth in the proxy statement and other materials to be filed with
the SEC in connection with the transaction (if and when they become
available). Information relating to the Company’s executive
officers and directors can also be found in the Company’s proxy
statement for its 2024 annual meeting of stockholders, which was
filed with the SEC on March 28, 2024. Investors and security
holders may obtain free copies of these documents using the sources
indicated above.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated
Statements of Operations
(in thousands except per share
data and percentages)
For the Three Months
Ended
For the Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
Revenue Investment management fees $
173,163
$
169,785
$
159,410
$
342,948
$
316,246
Fund administration and distribution fees
46,458
46,072
44,816
92,530
89,300
Total revenue
219,621
215,857
204,226
435,478
405,546
Expenses Personnel compensation and benefits
55,660
59,454
54,940
115,114
112,542
Distribution and other asset-based expenses
36,474
36,263
37,344
72,737
74,998
General and administrative
14,385
14,012
13,250
28,397
25,638
Depreciation and amortization
7,551
7,601
9,650
15,152
21,330
Change in value of consideration payable for acquisition of
business
(8,200
)
12,200
1,500
4,000
8,900
Acquisition-related costs
3,049
1,026
16
4,075
18
Restructuring and integration costs
105
492
—
597
29
Total operating expenses
109,024
131,048
116,700
240,072
243,455
Income from operations
110,597
84,809
87,526
195,406
162,091
Operating margin
50.4
%
39.3
%
42.9
%
44.9
%
40.0
%
Other income (expense) Interest income and other
income (expense)
1,557
3,565
1,971
5,122
3,515
Interest expense and other financing costs
(16,279
)
(16,486
)
(14,902
)
(32,765
)
(29,141
)
Gain (loss) on debt extinguishment
(100
)
—
—
(100
)
—
Total other expense, net
(14,822
)
(12,921
)
(12,931
)
(27,743
)
(25,626
)
Income before income taxes
95,775
71,888
74,595
167,663
136,465
Income tax expense
(21,524
)
(16,197
)
(17,924
)
(37,721
)
(30,521
)
Net income $
74,251
$
55,691
$
56,671
$
129,942
$
105,944
Earnings per share of common stock Basic $
1.15
$
0.86
$
0.85
$
2.01
$
1.58
Diluted
1.12
0.84
0.83
1.97
1.53
Weighted average number of shares outstanding Basic
64,734
64,389
66,466
64,561
66,874
Diluted
66,075
65,972
68,500
66,025
69,037
Dividends declared per share $
0.37
$
0.335
$
0.32
$
0.705
$
0.64
Victory Capital Holdings, Inc.
and Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures1
(unaudited; in thousands
except per share data and percentages)
For the Three Months
Ended
For the Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
Net income (GAAP) $
74,251
$
55,691
$
56,671
$
129,942
$
105,944
Income tax expense
(21,524
)
(16,197
)
(17,924
)
(37,721
)
(30,521
)
Income before income taxes $
95,775
$
71,888
$
74,595
$
167,663
$
136,465
Interest expense
15,468
15,711
14,146
31,179
27,628
Depreciation
2,252
2,269
2,296
4,521
4,267
Other business taxes
414
369
382
783
766
Amortization of acquisition-related intangible assets
5,299
5,332
7,353
10,631
17,062
Stock-based compensation
940
1,327
1,538
2,267
3,542
Acquisition, restructuring and exit costs
(4,520
)
14,705
2,949
10,185
11,933
Debt issuance costs
874
755
756
1,629
1,504
Adjusted EBITDA $
116,502
$
112,356
$
104,015
$
228,858
$
203,167
Adjusted EBITDA margin
53.0
%
52.1
%
50.9
%
52.6
%
50.1
%
Net income (GAAP) $
74,251
$
55,691
$
56,671
$
129,942
$
105,944
Adjustment to reflect the operating performance of the Company
Other business taxes
414
369
382
783
766
Amortization of acquisition-related intangible assets
5,299
5,332
7,353
10,631
17,062
Stock-based compensation
940
1,327
1,538
2,267
3,542
Acquisition, restructuring and exit costs
(4,520
)
14,705
2,949
10,185
11,933
Debt issuance costs
874
755
756
1,629
1,504
Tax effect of above adjustments
(753
)
(5,621
)
(3,244
)
(6,374
)
(8,701
)
Adjusted net income $
76,505
$
72,558
$
66,405
$
149,063
$
132,050
Adjusted net income per diluted share $
1.16
$
1.10
$
0.97
$
2.26
$
1.91
Tax benefit of goodwill and acquired intangible
assets $
10,141
$
9,748
$
9,537
$
19,889
$
19,061
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.15
$
0.15
$
0.14
$
0.30
$
0.28
Adjusted net income with tax benefit $
86,646
$
82,306
$
75,942
$
168,952
$
151,111
Adjusted net income with tax benefit per diluted share
$
1.31
$
1.25
$
1.11
$
2.56
$
2.19
1 The Company reports its financial
results in accordance with GAAP. Adjusted EBITDA and Adjusted Net
Income are not defined by GAAP and should not be regarded as an
alternative to any measurement under GAAP. Please refer to the
section “Information Regarding Non-GAAP Financial Measures” at the
end of this press release for an explanation of Non-GAAP financial
measures and a reconciliation to the nearest GAAP financial
measure.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
June 30, 2024
December 31, 2023
Assets Cash and cash equivalents $
118,970
$
123,547
Receivables
100,660
87,570
Prepaid expenses
6,979
5,785
Investments, at fair value
33,759
31,808
Property and equipment, net
15,599
19,578
Goodwill
981,805
981,805
Other intangible assets, net
1,271,200
1,281,832
Other assets
12,309
10,691
Total assets $
2,541,281
$
2,542,616
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
54,528
$
56,477
Accrued compensation and benefits
54,020
55,456
Consideration payable for acquisition of business
141,200
217,200
Deferred tax liability, net
142,418
128,714
Other liabilities
44,579
42,499
Long-term debt, net1
981,724
989,269
Total liabilities
1,418,469
1,489,615
Stockholders' equity Common stock, $0.01 par value
per share:2024 - 600,000,000 shares authorized, 83,454,313 shares
issued and 64,808,655 shares outstanding; 2023 - 600,000,000 shares
authorized, 82,404,305 shares issued and 64,254,714 shares
outstanding
835
824
Additional paid-in capital
741,490
728,283
Treasury stock, at cost: 2024 - 18,645,658 shares; 2023 -
18,149,591 shares
(464,944
)
(444,286
)
Accumulated other comprehensive income
25,024
31,328
Retained earnings
820,407
736,852
Total stockholders' equity
1,122,812
1,053,001
Total liabilities and stockholders' equity $
2,541,281
$
2,542,616
1 Balances at June 30, 2024 and December
31, 2023 are shown net of unamortized loan discount and debt
issuance costs in the amount of $10.5 million and $12.4 million,
respectively. The gross amount of the debt outstanding was $992.2
million and $1,001.7 million as of June 30, 2024 and December 31,
2023, respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Total Client Assets
(unaudited; in
millions)
For the Three Months
Ended
June 30,
March 31,
June 30,
2024
2024
2023
Beginning AUM $
170,342
$
161,322
$
153,356
Beginning other assets1
5,117
5,289
5,265
Beginning total client assets
175,459
166,611
158,621
AUM net cash flows
(1,744
)
(1,127
)
(1,426
)
Other assets net cash flows
18
(524
)
(996
)
Total client assets net cash flows
(1,727
)
(1,651
)
(2,422
)
AUM market appreciation (depreciation)
83
10,178
5,346
Other assets market appreciation (depreciation)
(40
)
352
192
Total client assets market appreciation (depreciation)
43
10,529
5,537
AUM realizations and distributions
—
—
(73
)
Acquired & divested assets / Net transfers
(1
)
(31
)
(41
)
Ending AUM
168,681
170,342
157,161
Ending other assets
5,094
5,117
4,461
Ending total client assets
173,775
175,459
161,622
Average total client assets2
172,392
168,865
157,372
For the Six Months
Ended
June 30,
June 30,
2024
2023
Beginning AUM $
161,322
$
147,762
Beginning other assets1
5,289
5,190
Beginning total client assets
166,611
152,952
AUM net cash flows
(2,871
)
(2,576
)
Other assets net cash flows
(506
)
(1,091
)
Total client assets net cash flows
(3,377
)
(3,667
)
AUM market appreciation (depreciation)
10,261
12,089
Other assets market appreciation (depreciation)
311
362
Total client assets market appreciation (depreciation)
10,572
12,451
AUM realizations and distributions
—
(73
)
Acquired & divested assets / Net transfers
(31
)
(42
)
Ending AUM
168,681
157,161
Ending other assets
5,094
4,461
Ending total client assets
173,775
161,622
Average total client assets3
170,629
157,595
1 Includes low-fee (2 to 4 bps)
institutional assets, previously reported in the Solutions asset
class within the by asset class table and in Separate Accounts and
Other Pooled Vehicles within the by vehicle table. These assets are
included as part of Victory’s Regulatory Assets Under Management
reported in Form ADV Part 1.
2 For the three-month periods ending June
30, 2024, March 31, 2024 and June 30, 2023 total client assets
revenue realization was 51.2 basis points, 51.4 basis points and
52.1 basis points, respectively.
3 For the six-month periods ending June
30, 2024 and 2023 total client assets revenue realization was 51.3
basis points and 51.9 basis points, respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Total Assets Under
Management1
(unaudited; in millions except
for percentages)
For the Three Months
Ended
June 30,
March 31,
June 30,
2024
2024
2023
Beginning assets under management $
170,342
$
161,322
$
153,356
Gross client cash inflows
6,067
7,187
5,722
Gross client cash outflows
(7,812
)
(8,314
)
(7,148
)
Net client cash flows
(1,744
)
(1,127
)
(1,426
)
Market appreciation (depreciation)
83
10,178
5,346
Realizations and distributions
—
—
(73
)
Acquired & divested assets / Net Transfers
(1
)
(31
)
(41
)
Ending assets under management
168,681
170,342
157,161
Average assets under management
167,484
163,533
152,925
For the Six Months
Ended
June 30,
June 30,
2024
2023
Beginning assets under management $
161,322
$
147,762
Gross client cash inflows
13,255
11,811
Gross client cash outflows
(16,126
)
(14,386
)
Net client cash flows
(2,871
)
(2,576
)
Market appreciation (depreciation)
10,261
12,089
Realizations and distributions
—
(73
)
Acquired assets / Net transfers
(31
)
(42
)
Ending assets under management
168,681
157,161
Average assets under management
165,508
152,729
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Other Assets
(Institutional)1
(unaudited; in
millions)
For the Three Months
June 30,
March 31,
June 30,
2024
2024
2023
Beginning other assets (institutional) $
5,117
$
5,289
$
5,265
Gross client cash inflows
467
—
100
Gross client cash outflows
(449
)
(524
)
(1,096
)
Net client cash flows
18
(524
)
(996
)
Market appreciation (depreciation)
(40
)
352
192
Realizations and distributions
—
—
—
Acquired & divested assets / Net transfers
—
—
—
Ending other assets (institutional)
5,094
5,117
4,461
Average other assets (institutional)2
4,909
5,332
4,447
For the Six Months
Ended
June 30,
June 30,
2024
2023
Beginning other assets (institutional) $
5,289
$
5,190
Gross client cash inflows
467
100
Gross client cash outflows
(973
)
(1,191
)
Net client cash flows
(506
)
(1,091
)
Market appreciation (depreciation)
311
362
Realizations and distributions
—
—
Acquired & divested assets / Net transfers
—
—
Ending other assets (institutional)
5,094
4,461
Average other assets (institutional)3
5,120
4,866
1 Includes low-fee (2 to 4 bps)
institutional assets, previously reported in the Solutions asset
class within the by asset class table and in Separate Accounts and
Other Pooled Vehicles within the by vehicle table. These assets are
included as part of Victory’s Regulatory Assets Under Management
reported in Form ADV Part 1.
2 For the three-month periods ending June
30, 2024, March 31, 2024 and June 30, 2023 total other assets
(institutional) revenue realization was 3.4 basis points, 3.5 basis
points and 3.6 basis points, respectively.
3 For the six-month periods ending June
30, 2024 and 2023 total other assets (institutional) revenue
realization was 3.5 basis points, respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Three Months Ended
By Asset Class
Global /
U.S. Mid
U.S. Small
Fixed
U.S. Large
Non-U.S.
Alternative
Total
Money Market /
Total
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Short-term
AUM1
June 30, 2024 Beginning assets under management $
32,918
$
16,297
$
24,481
$
13,895
$
18,200
$
57,833
$
3,465
$
167,089
$
3,253
$
170,342
Gross client cash inflows
1,007
559
1,283
67
558
2,035
303
5,813
255
6,067
Gross client cash outflows
(1,659
)
(778
)
(1,508
)
(309
)
(635
)
(2,184
)
(442
)
(7,514
)
(298
)
(7,812
)
Net client cash flows
(652
)
(218
)
(225
)
(241
)
(77
)
(150
)
(139
)
(1,701
)
(43
)
(1,744
)
Market appreciation (depreciation)
(1,247
)
(893
)
116
350
367
1,273
58
24
60
83
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(4
)
(4
)
26
(21
)
(32
)
(21
)
6
(50
)
50
(1
)
Ending assets under management $
31,015
$
15,182
$
24,398
$
13,983
$
18,459
$
58,936
$
3,390
$
165,362
$
3,320
$
168,681
March 31, 2024 Beginning assets under management $
30,604
$
15,959
$
24,355
$
12,635
$
16,772
$
54,296
$
3,431
$
158,051
$
3,271
$
161,322
Gross client cash inflows
1,371
507
1,298
68
1,090
2,165
452
6,952
236
7,187
Gross client cash outflows
(1,845
)
(925
)
(1,367
)
(332
)
(751
)
(2,410
)
(349
)
(7,980
)
(335
)
(8,314
)
Net client cash flows
(474
)
(418
)
(69
)
(264
)
339
(245
)
103
(1,028
)
(99
)
(1,127
)
Market appreciation (depreciation)
2,795
801
176
1,555
1,133
3,749
(75
)
10,135
42
10,178
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(7
)
(45
)
18
(31
)
(44
)
33
5
(69
)
38
(31
)
Ending assets under management $
32,918
$
16,297
$
24,481
$
13,895
$
18,200
$
57,833
$
3,465
$
167,089
$
3,253
$
170,342
June 30, 2023 Beginning assets under management $
29,035
$
15,648
$
26,535
$
11,425
$
14,868
$
49,151
$
3,317
$
149,979
$
3,377
$
153,356
Gross client cash inflows
1,259
743
873
87
559
1,522
449
5,491
231
5,722
Gross client cash outflows
(1,126
)
(1,128
)
(1,324
)
(290
)
(585
)
(1,738
)
(408
)
(6,601
)
(547
)
(7,148
)
Net client cash flows
132
(386
)
(451
)
(204
)
(26
)
(216
)
41
(1,110
)
(316
)
(1,426
)
Market appreciation (depreciation)
824
404
48
954
575
2,490
12
5,307
38
5,346
Realizations and distributions
—
—
—
—
—
—
(73
)
(73
)
—
(73
)
Acquired assets / Net transfers
16
(2
)
(34
)
(4
)
(25
)
(49
)
4
(95
)
53
(41
)
Ending assets under management $
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
51,375
$
3,301
$
154,009
$
3,152
$
157,161
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Six Months Ended
By Asset Class
Global /
U.S. Mid
U.S. Small
Fixed
U.S. Large
Non-U.S.
Alternative
Total
Money Market /
Total
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Short-term
AUM1
June 30, 2024 Beginning assets under management $
30,604
$
15,959
$
24,355
$
12,635
$
16,772
$
54,296
$
3,431
$
158,051
$
3,271
$
161,322
Gross client cash inflows
2,378
1,066
2,581
136
1,648
4,200
755
12,764
491
13,255
Gross client cash outflows
(3,504
)
(1,703
)
(2,874
)
(641
)
(1,386
)
(4,595
)
(791
)
(15,493
)
(632
)
(16,126
)
Net client cash flows
(1,126
)
(637
)
(294
)
(505
)
262
(394
)
(36
)
(2,729
)
(142
)
(2,871
)
Market appreciation (depreciation)
1,548
(92
)
292
1,905
1,501
5,022
(17
)
10,159
102
10,261
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(11
)
(49
)
44
(51
)
(76
)
12
11
(119
)
88
(31
)
Ending assets under management $
31,015
$
15,182
$
24,398
$
13,983
$
18,459
$
58,936
$
3,390
$
165,362
$
3,320
$
168,681
June 30, 20231 Beginning assets under management $
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
46,317
$
3,663
$
144,460
$
3,302
$
147,762
Gross client cash inflows
2,858
1,728
2,060
170
936
2,739
846
11,339
472
11,811
Gross client cash outflows
(2,219
)
(2,001
)
(2,896
)
(675
)
(1,129
)
(3,421
)
(1,248
)
(13,589
)
(797
)
(14,386
)
Net client cash flows
640
(273
)
(836
)
(504
)
(192
)
(683
)
(403
)
(2,250
)
(325
)
(2,576
)
Market appreciation (depreciation)
1,461
827
663
1,775
1,495
5,687
108
12,017
72
12,089
Realizations and distributions
—
—
—
—
—
—
(73
)
(73
)
—
(73
)
Acquired assets / Net transfers
15
7
(82
)
(74
)
(71
)
55
6
(144
)
103
(42
)
Ending assets under management $
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
51,375
$
3,301
$
154,009
$
3,152
$
157,161
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Three Months Ended
By Vehicle
Separate
Accounts
Mutual
and Other
Funds1
ETFs2
Vehicles3
Total AUM4
June 30, 2024 Beginning assets under management $
113,897
$
5,229
$
51,217
$
170,342
Gross client cash inflows
3,553
480
2,034
6,067
Gross client cash outflows
(5,061
)
(178
)
(2,573
)
(7,812
)
Net client cash flows
(1,508
)
302
(539
)
(1,744
)
Market appreciation (depreciation)
385
(91
)
(211
)
83
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(190
)
—
190
(1
)
Ending assets under management $
112,584
$
5,440
$
50,657
$
168,681
March 31, 2024 Beginning assets under management $
108,802
$
4,970
$
47,551
$
161,322
Gross client cash inflows
4,303
451
2,434
7,187
Gross client cash outflows
(5,956
)
(449
)
(1,909
)
(8,314
)
Net client cash flows
(1,653
)
2
525
(1,127
)
Market appreciation (depreciation)
6,796
215
3,167
10,178
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(48
)
43
(26
)
(31
)
Ending assets under management $
113,897
$
5,229
$
51,217
$
170,342
June 30, 2023 Beginning assets under management $
103,246
$
5,555
$
44,554
$
153,356
Gross client cash inflows
3,639
175
1,908
5,722
Gross client cash outflows
(4,863
)
(421
)
(1,864
)
(7,148
)
Net client cash flows
(1,224
)
(246
)
44
(1,426
)
Market appreciation (depreciation)
3,923
(117
)
1,540
5,346
Realizations and distributions
—
—
(73
)
(73
)
Acquired assets / Net transfers
(28
)
—
(13
)
(41
)
Ending assets under management $
105,916
$
5,193
$
46,052
$
157,161
1 Includes institutional and retail share
classes, money market and VIP funds.
2 Represents only ETF assets held by third
parties. Excludes ETF assets held by other Victory Capital
products.
3 Includes collective trust funds, wrap
program accounts, UMAs, UCITS, private funds and non-U.S. domiciled
pooled vehicles.
4 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Six Months Ended
By Vehicle
Separate
Accounts
Mutual
and Other
Funds1
ETFs2
Vehicles3
Total
June 30, 2024 Beginning assets under management $
108,802
$
4,970
$
47,551
$
161,322
Gross client cash inflows
7,856
930
4,468
13,255
Gross client cash outflows
(11,017
)
(627
)
(4,482
)
(16,126
)
Net client cash flows
(3,161
)
304
(14
)
(2,871
)
Market appreciation (depreciation)
7,181
124
2,956
10,261
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(238
)
43
164
(31
)
Ending assets under management $
112,584
$
5,440
$
50,657
$
168,681
June 30, 2023 Beginning assets under management $
99,447
$
5,627
$
42,688
$
147,762
Gross client cash inflows
8,185
393
3,233
11,811
Gross client cash outflows
(10,269
)
(655
)
(3,463
)
(14,386
)
Net client cash flows
(2,084
)
(262
)
(230
)
(2,576
)
Market appreciation (depreciation)
8,573
(164
)
3,680
12,089
Realizations and distributions
—
—
(73
)
(73
)
Acquired assets / Net transfers4
(19
)
(9
)
(13
)
(42
)
Ending assets under management $
105,916
$
5,193
$
46,052
$
157,161
1 Includes institutional and retail share
classes, money market and VIP funds.
2 Represents only ETF assets held by third
parties. Excludes ETF assets held by other Victory Capital
products.
3 Includes collective trust funds, wrap
program accounts, UMAs, UCITS, private funds and non-U.S. domiciled
pooled vehicles.
4 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
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 Company. These measures eliminate the impact
of one-time acquisition, restructuring and integration costs and
demonstrate the ongoing operating earnings metrics of the Company.
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, as applicable, are:
- Adding back income tax expense;
- 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 amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense associated with
equity awards issued from pools created in connection with the
management-led buyout and various acquisitions and as a result of
equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions, including
restructuring costs;
- Adding back debt issuance cost expense;
- Adjusting for earnings/losses on equity method
investments.
Adjusted Net Income
Adjustments made to GAAP Net Income to calculate Adjusted Net
Income, as applicable, are:
- Adding back other business taxes;
- Adding back amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense associated with
equity awards issued from pools created in connection with the
management-led buyout and various acquisitions and as a result of
any equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions, including
restructuring costs;
- Adding back debt issuance cost expense;
- Subtracting an estimate of income tax expense applied to the
sum of the adjustments above.
Tax Benefit of Goodwill and Acquired
Intangible Assets
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 intangible assets represent the tax
benefits associated with deductions allowed for intangible assets
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 intangible assets with a step-up in tax basis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808090434/en/
Investors: Matthew Dennis, CFA Chief of Staff Director,
Investor Relations 216-898-2412 mdennis@vcm.com
Media: Jessica Davila Director, Global Communications
210-694-9693 jessica_davila@vcm.com
Victory Capital (NASDAQ:VCTR)
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