- Earnings Per Share – Diluted of $4.21; Earnings Per Share – Diluted, as Adjusted, of $6.11
- Total Sales of $6.2B; Net Flows of ($3.8B); Assets Under Management of $172.3B
HARTFORD, Conn.–(BUSINESS WIRE)–Virtus Investment Partners, Inc. (NYSE: VRTS) today reported financial results for the three months ended December 31, 2023.
|
Financial Highlights (Unaudited) |
|||||||||||||||||
|
(in millions, except per share data or as noted) |
|||||||||||||||||
|
|
Three Months Ended |
|
|
|
Three |
|
|
||||||||||
|
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||||
|
U.S. GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
$ |
214.6 |
|
|
$ |
198.4 |
|
|
8 |
% |
|
$ |
219.3 |
|
|
(2 |
%) |
|
Operating expenses |
$ |
175.6 |
|
|
$ |
167.2 |
|
|
5 |
% |
|
$ |
174.4 |
|
|
1 |
% |
|
Operating income (loss) |
$ |
39.0 |
|
|
$ |
31.2 |
|
|
25 |
% |
|
$ |
44.9 |
|
|
(13 |
%) |
|
Operating margin |
|
18.2 |
% |
|
|
15.7 |
% |
|
|
|
|
20.5 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc. |
$ |
30.8 |
|
|
$ |
35.4 |
|
|
(13 |
%) |
|
$ |
30.9 |
|
|
— |
% |
|
Earnings (loss) per share – diluted |
$ |
4.21 |
|
|
$ |
4.77 |
|
|
(12 |
%) |
|
$ |
4.19 |
|
|
— |
% |
|
Weighted average shares outstanding – diluted |
|
7.320 |
|
|
|
7.419 |
|
|
(1 |
%) |
|
|
7.379 |
|
|
(1 |
%) |
|
Non-GAAP Financial Measures (1) |
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues, as adjusted |
$ |
193.4 |
|
|
$ |
176.3 |
|
|
10 |
% |
|
$ |
197.5 |
|
|
(2 |
%) |
|
Operating expenses, as adjusted |
$ |
129.5 |
|
|
$ |
120.2 |
|
|
8 |
% |
|
$ |
130.5 |
|
|
(1 |
%) |
|
Operating income (loss), as adjusted |
$ |
63.9 |
|
|
$ |
56.1 |
|
|
14 |
% |
|
$ |
67.0 |
|
|
(5 |
%) |
|
Operating margin, as adjusted |
|
33.0 |
% |
|
|
31.8 |
% |
|
|
|
|
33.9 |
% |
|
|
||
|
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted |
$ |
44.8 |
|
|
$ |
38.3 |
|
|
17 |
% |
|
$ |
45.8 |
|
|
(2 |
%) |
|
Earnings (loss) per share – diluted, as adjusted |
$ |
6.11 |
|
|
$ |
5.17 |
|
|
18 |
% |
|
$ |
6.21 |
|
|
(2 |
%) |
|
Weighted average shares outstanding – diluted, as adjusted |
|
7.320 |
|
|
|
7.419 |
|
|
(1 |
%) |
|
|
7.379 |
|
|
(1 |
%) |
|
(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. Reconciliations of the non-GAAP financial measures 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 |
|
|
||||||||||
|
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||||
|
Ending total assets under management |
$ |
172.3 |
|
|
$ |
149.4 |
|
|
15 |
% |
|
$ |
162.5 |
|
|
6 |
% |
|
Average total assets under management |
$ |
162.7 |
|
|
$ |
148.6 |
|
|
9 |
% |
|
$ |
167.9 |
|
|
(3 |
%) |
|
Total sales |
$ |
6.2 |
|
|
$ |
7.3 |
|
|
(14 |
%) |
|
$ |
5.8 |
|
|
7 |
% |
|
Net flows |
$ |
(3.8 |
) |
|
$ |
(3.4 |
) |
|
12 |
% |
|
$ |
(1.5 |
) |
|
N/M |
|
|
N/M – Not Meaningful |
|||||||||||||||||
Total assets under management of $172.3 billion at December 31, 2023 increased 6% from $162.5 billion at September 30, 2023 primarily due to market performance with positive net flows in retail separate accounts, partially offset by net outflows in institutional and open-end funds. In addition, the company provided services to $2.6 billion of other fee-earning assets.
Total sales increased 7% to $6.2 billion from $5.8 billion in the third quarter due to higher retail sales, with growth in both retail separate accounts and open-end funds. Retail separate account sales of $2.1 billion increased 15% from $1.8 billion led by growth in the private client channel. Open-end fund sales of $2.9 billion increased 9% from $2.7 billion primarily reflecting higher sales of mid-cap, small/mid-cap, and bank loan strategies. Institutional sales of $1.2 billion declined modestly from $1.3 billion in the prior quarter, which included a $0.3 billion collateralized loan obligation (CLO) issuance.
Net flows of ($3.8) billion compared with ($1.5) billion in the third quarter. Institutional net flows of ($2.2) billion compared with ($0.4) billion and included repositioning by several large retirement plan mandates. Retail separate account net flows of $0.4 billion increased from $0.3 billion in the prior quarter, with net inflows in both the intermediary sold and private client channels. Open-end fund net flows of ($2.0) billion compared with ($1.5) billion in the prior quarter due to higher redemptions across strategies but included continued positive net flows in small/mid-cap and global equity strategies.
GAAP Results
Operating income of $39.0 million declined 13% from $44.9 million in the prior quarter due to a 2% decrease in revenues, reflecting lower average assets under management, and a 1% increase in operating expenses. The increase in operating expenses primarily reflected CLO issuance expenses and fair value adjustments to contingent consideration, partially offset by lower employment expenses, primarily variable incentive compensation, and lower distribution and other asset-based expenses.
Net income attributable to Virtus Investment Partners, Inc. of $4.21 per diluted share included ($0.71) of fair value adjustments to affiliate noncontrolling interests, ($0.36) of CLO issuance expense, ($0.18) of acquisition and integration costs, and ($0.13) of fair value adjustments to contingent consideration, partially offset by $0.35 of realized and unrealized gains on investments. Net income per diluted share of $4.19 in the prior quarter included ($0.67) of fair value adjustments to affiliate noncontrolling interests and ($0.30) of acquisition and integration costs.
The effective tax rate of 26% increased from 24% in the prior quarter, primarily reflecting changes in valuation allowances related to marketable securities.
Non-GAAP Results
Revenues, as adjusted, of $193.4 million decreased 2% from $197.5 million in the prior quarter primarily due to 3% lower average assets under management partially offset by higher performance fees.
Employment expenses, as adjusted, of $96.7 million decreased from $98.8 million in the prior quarter primarily due to lower variable incentive compensation. Other operating expenses, as adjusted, of $31.2 million increased from $30.1 million largely due to higher travel and related expenses and increased market data expenses.
Operating income, as adjusted, of $63.9 million and the related margin of 33.0% decreased from $67.0 million and 33.9% in the prior quarter, respectively, due to the lower investment management fees driven by lower average assets under management.
Net income attributable to Virtus Investment Partners, Inc., as adjusted, per diluted share was $6.11, a modest decrease of $0.10, or 2%, from $6.21 in the prior quarter. The decrease primarily reflected lower investment management fees due to lower average assets under management.
The effective tax rate, as adjusted, of 27% was unchanged from the prior quarter.
|
Select Balance Sheet Items (Unaudited) |
|||||||||||||||
|
(in millions) |
|||||||||||||||
|
|
As of |
|
|
|
As of |
|
|
||||||||
|
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
||||||
|
Cash and cash equivalents |
$ |
239.6 |
|
$ |
338.2 |
|
|
(29 |
%) |
|
$ |
195.4 |
|
23 |
% |
|
Gross debt (1) |
$ |
258.8 |
|
$ |
261.6 |
|
|
(1 |
%) |
|
$ |
279.5 |
|
(7 |
%) |
|
Contingent consideration (2) |
$ |
90.9 |
|
$ |
128.4 |
|
|
(29 |
%) |
|
$ |
94.4 |
|
(4 |
%) |
|
Redeemable noncontrolling interests (3) |
$ |
74.2 |
|
$ |
95.5 |
|
|
(22 |
%) |
|
$ |
70.6 |
|
5 |
% |
|
Total equity exc. noncontrolling interests |
$ |
864.0 |
|
$ |
817.0 |
|
|
6 |
% |
|
$ |
862.1 |
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Working capital (4) |
$ |
100.6 |
|
$ |
193.2 |
|
|
(48 |
%) |
|
$ |
105.6 |
|
(5 |
%) |
|
Net debt (cash) (5) |
$ |
19.2 |
|
$ |
(76.7 |
) |
|
N/M |
|
|
$ |
84.1 |
|
(77 |
%) |
|
(1) |
Excludes deferred financing costs of $5.4 million, $6.5 million, and $5.7 million, as of December 31, 2023, December 31, 2022, and September 30, 2023, respectively |
|
|
(2) |
Represents estimates of revenue participation and contingent payments |
|
|
(3) |
Excludes redeemable noncontrolling interests of consolidated investment products of $30.6 million, $18.3 million, and $25.7 million as of December 31, 2023, December 31, 2022, and September 30, 2023, respectively |
|
|
(4) |
Defined as cash and cash equivalents plus accounts receivable, net, and deferred compensation related investments less accrued compensation and benefits, accounts payable and accrued liabilities, dividends payable, debt principal payments due over next 12 months and revenue participation amounts earned as of the balance sheet date and due within 12 months. As of December 31, 2023, deferred compensation related investments were added to the definition of working capital and prior period amounts have been adjusted to conform to this definition. |
|
|
(5) |
Defined as gross debt less cash and cash equivalents |
|
| N/M – Not Meaningful | ||
Working capital of $100.6 million at December 31, 2023 compared with $105.6 million at September 30, 2023, as return of capital and debt repayment offset cash earnings.
During the quarter, the company repurchased 97,952 shares of common stock for $20.0 million. For the full year 2023, the company repurchased 223,807 shares for $45.0 million and reduced shares outstanding by 1%.
The company repaid the remaining $20.0 million balance of the revolving credit facility during the quarter. Net debt was $19.2 million, or 0.1x EBITDA, at December 31, 2023.
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on Friday, February 2, 2024, 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.
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 |
|
|
|
Twelve Months Ended |
|
|
|||||||||||||||||
|
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|
9/30/2023 |
|
Change |
|
12/31/2023 |
|
12/31/2022 |
|
Change |
|||||||||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Investment management fees |
$ |
182,149 |
|
|
$ |
163,648 |
|
|
11 |
% |
|
$ |
184,869 |
|
|
(1 |
%) |
|
$ |
711,475 |
|
|
$ |
728,339 |
|
|
(2 |
%) |
|
Distribution and service fees |
|
13,535 |
|
|
|
14,606 |
|
|
(7 |
%) |
|
|
14,333 |
|
|
(6 |
%) |
|
|
56,153 |
|
|
|
67,518 |
|
|
(17 |
%) |
|
Administration and shareholder service fees |
|
18,189 |
|
|
|
18,973 |
|
|
(4 |
%) |
|
|
19,069 |
|
|
(5 |
%) |
|
|
73,857 |
|
|
|
85,862 |
|
|
(14 |
%) |
|
Other income and fees |
|
714 |
|
|
|
1,144 |
|
|
(38 |
%) |
|
|
1,000 |
|
|
(29 |
%) |
|
|
3,783 |
|
|
|
4,660 |
|
|
(19 |
%) |
|
Total revenues |
|
214,587 |
|
|
|
198,371 |
|
|
8 |
% |
|
|
219,271 |
|
|
(2 |
%) |
|
|
845,268 |
|
|
|
886,379 |
|
|
(5 |
%) |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Employment expenses |
|
99,847 |
|
|
|
87,676 |
|
|
14 |
% |
|
|
101,587 |
|
|
(2 |
%) |
|
|
404,742 |
|
|
|
371,259 |
|
|
9 |
% |
|
Distribution and other asset-based expenses |
|
23,470 |
|
|
|
24,365 |
|
|
(4 |
%) |
|
|
24,157 |
|
|
(3 |
%) |
|
|
96,802 |
|
|
|
112,612 |
|
|
(14 |
%) |
|
Other operating expenses |
|
31,164 |
|
|
|
31,811 |
|
|
(2 |
%) |
|
|
30,494 |
|
|
2 |
% |
|
|
125,871 |
|
|
|
126,178 |
|
|
— |
% |
|
Operating expenses of consolidated investment products |
|
2,611 |
|
|
|
2,481 |
|
|
5 |
% |
|
|
553 |
|
|
372 |
% |
|
|
4,224 |
|
|
|
4,408 |
|
|
(4 |
%) |
|
Restructuring expense |
|
133 |
|
|
|
— |
|
|
N/M |
|
|
691 |
|
|
(81 |
%) |
|
|
824 |
|
|
|
4,015 |
|
|
(79 |
%) |
|
|
Change in fair value of contingent consideration |
|
1,290 |
|
|
|
5,120 |
|
|
(75 |
%) |
|
|
— |
|
|
N/M |
|
|
(5,510 |
) |
|
|
8,020 |
|
|
N/M |
||
|
Depreciation expense |
|
1,670 |
|
|
|
1,088 |
|
|
53 |
% |
|
|
1,504 |
|
|
11 |
% |
|
|
5,804 |
|
|
|
3,923 |
|
|
48 |
% |
|
Amortization expense |
|
15,446 |
|
|
|
14,609 |
|
|
6 |
% |
|
|
15,382 |
|
|
— |
% |
|
|
61,027 |
|
|
|
58,504 |
|
|
4 |
% |
|
Total operating expenses |
|
175,631 |
|
|
|
167,150 |
|
|
5 |
% |
|
|
174,368 |
|
|
1 |
% |
|
|
693,784 |
|
|
|
688,919 |
|
|
1 |
% |
|
Operating Income (Loss) |
|
38,956 |
|
|
|
31,221 |
|
|
25 |
% |
|
|
44,903 |
|
|
(13 |
%) |
|
|
151,484 |
|
|
|
197,460 |
|
|
(23 |
%) |
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Realized and unrealized gain (loss) on investments, net |
|
4,056 |
|
|
|
3,529 |
|
|
15 |
% |
|
|
(1,918 |
) |
|
N/M |
|
|
6,525 |
|
|
|
(12,489 |
) |
|
N/M |
||
|
Realized and unrealized gain (loss) of consolidated investment products, net |
|
449 |
|
|
|
4,147 |
|
|
(89 |
%) |
|
|
(1,013 |
) |
|
N/M |
|
|
(2,404 |
) |
|
|
(39,296 |
) |
|
(94 |
%) |
|
|
Other income (expense), net |
|
622 |
|
|
|
(352 |
) |
|
N/M |
|
|
128 |
|
|
386 |
% |
|
|
(440 |
) |
|
|
(153 |
) |
|
188 |
% |
|
|
Total other income (expense), net |
|
5,127 |
|
|
|
7,324 |
|
|
(30 |
%) |
|
|
(2,803 |
) |
|
N/M |
|
|
3,681 |
|
|
|
(51,938 |
) |
|
N/M |
||
|
Interest Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest expense |
|
(5,987 |
) |
|
|
(4,512 |
) |
|
33 |
% |
|
|
(6,222 |
) |
|
(4 |
%) |
|
|
(23,431 |
) |
|
|
(13,173 |
) |
|
78 |
% |
|
Interest and dividend income |
|
3,673 |
|
|
|
2,578 |
|
|
42 |
% |
|
|
2,872 |
|
|
28 |
% |
|
|
12,458 |
|
|
|
4,448 |
|
|
180 |
% |
|
Interest and dividend income of investments of consolidated investment products |
|
53,206 |
|
|
|
35,889 |
|
|
48 |
% |
|
|
49,803 |
|
|
7 |
% |
|
|
197,707 |
|
|
|
107,325 |
|
|
84 |
% |
|
Interest expense of consolidated investment products |
|
(43,182 |
) |
|
|
(33,374 |
) |
|
29 |
% |
|
|
(38,218 |
) |
|
13 |
% |
|
|
(155,335 |
) |
|
|
(80,234 |
) |
|
94 |
% |
|
Total interest income (expense), net |
|
7,710 |
|
|
|
581 |
|
|
N/M |
|
|
8,235 |
|
|
(6 |
%) |
|
|
31,399 |
|
|
|
18,366 |
|
|
71 |
% |
|
|
Income (Loss) Before Income Taxes |
|
51,793 |
|
|
|
39,126 |
|
|
32 |
% |
|
|
50,335 |
|
|
3 |
% |
|
|
186,564 |
|
|
|
163,888 |
|
|
14 |
% |
|
Income tax expense (benefit) |
|
13,294 |
|
|
|
13,291 |
|
|
— |
% |
|
|
12,181 |
|
|
9 |
% |
|
|
45,088 |
|
|
|
57,260 |
|
|
(21 |
%) |
|
Net Income (Loss) |
|
38,499 |
|
|
|
25,835 |
|
|
49 |
% |
|
|
38,154 |
|
|
1 |
% |
|
|
141,476 |
|
|
|
106,628 |
|
|
33 |
% |
|
Noncontrolling interests |
|
(7,665 |
) |
|
|
9,565 |
|
|
N/M |
|
|
(7,248 |
) |
|
6 |
% |
|
|
(10,855 |
) |
|
|
10,913 |
|
|
N/M |
||
|
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. |
$ |
30,834 |
|
|
$ |
35,400 |
|
|
(13 |
%) |
|
$ |
30,906 |
|
|
— |
% |
|
$ |
130,621 |
|
|
$ |
117,541 |
|
|
11 |
% |
|
Earnings (Loss) Per Share – Basic |
$ |
4.30 |
|
|
$ |
4.87 |
|
|
(12 |
%) |
|
$ |
4.26 |
|
|
1 |
% |
|
$ |
18.02 |
|
|
$ |
15.90 |
|
|
13 |
% |
|
Earnings (Loss) Per Share – Diluted |
$ |
4.21 |
|
|
$ |
4.77 |
|
|
(12 |
%) |
|
$ |
4.19 |
|
|
— |
% |
|
$ |
17.71 |
|
|
$ |
15.50 |
|
|
14 |
% |
|
Cash Dividends Declared Per Common Share |
$ |
1.90 |
|
|
$ |
1.65 |
|
|
15 |
% |
|
$ |
1.90 |
|
|
— |
% |
|
$ |
7.10 |
|
|
$ |
6.30 |
|
|
13 |
% |
|
Weighted Average Shares Outstanding – Basic |
|
7,178 |
|
|
|
7,262 |
|
|
(1 |
%) |
|
|
7,258 |
|
|
(1 |
%) |
|
|
7,249 |
|
|
|
7,391 |
|
|
(2 |
%) |
|
Weighted Average Shares Outstanding – Diluted |
|
7,320 |
|
|
|
7,419 |
|
|
(1 |
%) |
|
|
7,379 |
|
|
(1 |
%) |
|
|
7,375 |
|
|
|
7,582 |
|
|
(3 |
%) |
|
N/M – Not Meaningful |
||||||||||||||||||||||||||||
|
Assets Under Management – Product and Asset Class |
||||||||||||||
|
(in millions) |
||||||||||||||
|
|
Three Months Ended |
|||||||||||||
|
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|||||
|
By Product (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
53,000 |
|
$ |
53,865 |
|
$ |
56,828 |
|
$ |
54,145 |
|
$ |
56,062 |
|
Closed-End Funds |
|
10,361 |
|
|
10,358 |
|
|
10,166 |
|
|
9,472 |
|
|
10,026 |
|
Retail Separate Accounts |
|
35,352 |
|
|
37,397 |
|
|
38,992 |
|
|
38,665 |
|
|
43,202 |
|
Institutional Accounts (2) |
|
50,663 |
|
|
53,229 |
|
|
62,330 |
|
|
60,257 |
|
|
62,969 |
|
Total |
$ |
149,376 |
|
$ |
154,849 |
|
$ |
168,316 |
|
$ |
162,539 |
|
$ |
172,259 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Product (average) (3) |
|
|
|
|
|
|
|
|
|
|||||
|
Open-End Funds (1) |
$ |
54,870 |
|
$ |
54,141 |
|
$ |
56,120 |
|
$ |
56,511 |
|
$ |
54,132 |
|
Closed-End Funds |
|
10,389 |
|
|
10,424 |
|
|
10,224 |
|
|
10,001 |
|
|
9,591 |
|
Retail Separate Accounts |
|
33,381 |
|
|
35,352 |
|
|
37,397 |
|
|
38,992 |
|
|
38,665 |
|
Institutional Accounts (2) |
|
49,981 |
|
|
52,444 |
|
|
59,248 |
|
|
62,368 |
|
|
60,319 |
|
Total |
$ |
148,621 |
|
$ |
152,361 |
|
$ |
162,989 |
|
$ |
167,872 |
|
$ |
162,707 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
By Asset Class (period end): |
|
|
|
|
|
|
|
|
|
|||||
|
Equity |
$ |
81,894 |
|
$ |
87,511 |
|
$ |
91,211 |
|
$ |
87,984 |
|
$ |
96,703 |
|
Fixed Income |
|
36,903 |
|
|
36,596 |
|
|
38,361 |
|
|
37,352 |
|
|
37,192 |
|
Multi-Asset (4) |
|
19,937 |
|
|
20,597 |
|
|
20,914 |
|
|
19,937 |
|
|
21,411 |
|
Alternatives (5) |
|
10,642 |
|
|
10,145 |
|
|
17,830 |
|
|
17,266 |
|
|
16,953 |
|
Total |
$ |
149,376 |
|
$ |
154,849 |
|
$ |
168,316 |
|
$ |
162,539 |
|
$ |
172,259 |
|
Assets Under Management – Average Management Fees Earned (6) |
|||||||||
|
(in basis points) |
|||||||||
|
|
Three Months Ended |
||||||||
|
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|
By Product: |
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1) |
47.2 |
|
47.6 |
|
49.3 |
|
51.1 |
|
49.7 |
|
Closed-End Funds |
57.1 |
|
57.1 |
|
57.6 |
|
58.2 |
|
58.4 |
|
Retail Separate Accounts |
42.6 |
|
44.2 |
|
44.1 |
|
43.3 |
|
43.3 |
|
Institutional Accounts (2)(7) |
32.0 |
|
31.8 |
|
31.6 |
|
30.3 |
|
33.2 |
|
All Products (7) |
41.7 |
|
42.0 |
|
42.2 |
|
42.0 |
|
42.6 |
|
(1) |
Represents assets under management of U.S. retail funds, global funds, exchange traded funds, and variable insurance funds |
|||||||||||
|
(2) |
Represents assets under management of institutional separate and commingled accounts including structured products |
|||||||||||
|
(3) |
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 |
||||||||||||
|
(4) |
Consists of strategies and client accounts with substantial holdings in at least two of the following asset classes: equity, fixed income, and alternatives |
|||||||||||
|
(5) |
Consists of managed futures, event-driven, real estate securities, infrastructure, long/short, and other strategies |
|||||||||||
|
(6) |
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 |
|||||||||||
|
(7) |
Includes performance-related fees, in basis points, earned during the three months ended as follows: |
|||||||||||
|
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|
||
|
Institutional Accounts |
0.4 |
|
0.2 |
|
0.2 |
|
0.4 |
|
2.2 |
|
||
|
All Products |
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.8 |
|
||
|
Assets Under Management – Asset Flows by Product |
|||||||||||||||||||||||||||
|
(in millions) |
|||||||||||||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||||||||||
|
|
12/31/2022 |
|
3/31/2023 |
|
6/30/2023 |
|
9/30/2023 |
|
12/31/2023 |
|
12/31/2022 |
|
12/31/2023 |
||||||||||||||
|
Open-End Funds (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
54,454 |
|
|
$ |
53,000 |
|
|
$ |
53,865 |
|
|
$ |
56,828 |
|
|
$ |
54,145 |
|
|
$ |
78,706 |
|
|
$ |
53,000 |
|
|
Inflows |
|
3,029 |
|
|
|
3,011 |
|
|
|
2,550 |
|
|
|
2,687 |
|
|
|
2,940 |
|
|
|
13,985 |
|
|
|
11,188 |
|
|
Outflows |
|
(6,839 |
) |
|
|
(4,792 |
) |
|
|
(4,692 |
) |
|
|
(4,137 |
) |
|
|
(4,905 |
) |
|
|
(28,549 |
) |
|
|
(18,526 |
) |
|
Net flows |
|
(3,810 |
) |
|
|
(1,781 |
) |
|
|
(2,142 |
) |
|
|
(1,450 |
) |
|
|
(1,965 |
) |
|
|
(14,564 |
) |
|
|
(7,338 |
) |
|
Market performance |
|
2,806 |
|
|
|
2,771 |
|
|
|
2,163 |
|
|
|
(1,034 |
) |
|
|
4,260 |
|
|
|
(15,113 |
) |
|
|
8,160 |
|
|
Other (2) |
|
(450 |
) |
|
|
(125 |
) |
|
|
2,942 |
|
|
|
(199 |
) |
|
|
(378 |
) |
|
|
3,971 |
|
|
|
2,240 |
|
|
Ending balance |
$ |
53,000 |
|
|
$ |
53,865 |
|
|
$ |
56,828 |
|
|
$ |
54,145 |
|
|
$ |
56,062 |
|
|
$ |
53,000 |
|
|
$ |
56,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Closed-End Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
10,146 |
|
|
$ |
10,361 |
|
|
$ |
10,358 |
|
|
$ |
10,166 |
|
|
$ |
9,472 |
|
|
$ |
12,068 |
|
|
$ |
10,361 |
|
|
Inflows |
|
2 |
|
|
|
4 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
|
|
24 |
|
|
Outflows |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net flows |
|
2 |
|
|
|
4 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
|
|
24 |
|
|
Market performance |
|
631 |
|
|
|
205 |
|
|
|
(1 |
) |
|
|
(504 |
) |
|
|
753 |
|
|
|
(1,346 |
) |
|
|
453 |
|
|
Other (2) |
|
(418 |
) |
|
|
(212 |
) |
|
|
(211 |
) |
|
|
(190 |
) |
|
|
(199 |
) |
|
|
(552 |
) |
|
|
(812 |
) |
|
Ending balance |
$ |
10,361 |
|
|
$ |
10,358 |
|
|
$ |
10,166 |
|
|
$ |
9,472 |
|
|
$ |
10,026 |
|
|
$ |
10,361 |
|
|
$ |
10,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Retail Separate Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
33,381 |
|
|
$ |
35,352 |
|
|
$ |
37,397 |
|
|
$ |
38,992 |
|
|
$ |
38,665 |
|
|
$ |
44,538 |
|
|
$ |
35,352 |
|
|
Inflows |
|
1,221 |
|
|
|
1,367 |
|
|
|
1,346 |
|
|
|
1,849 |
|
|
|
2,118 |
|
|
|
5,710 |
|
|
|
6,680 |
|
|
Outflows |
|
(1,651 |
) |
|
|
(1,288 |
) |
|
|
(1,434 |
) |
|
|
(1,524 |
) |
|
|
(1,726 |
) |
|
|
(6,440 |
) |
|
|
(5,972 |
) |
|
Net flows |
|
(430 |
) |
|
|
79 |
|
|
|
(88 |
) |
|
|
325 |
|
|
|
392 |
|
|
|
(730 |
) |
|
|
708 |
|
|
Market performance |
|
2,401 |
|
|
|
1,966 |
|
|
|
1,683 |
|
|
|
(652 |
) |
|
|
4,144 |
|
|
|
(8,456 |
) |
|
|
7,141 |
|
|
Other (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
Ending balance |
$ |
35,352 |
|
|
$ |
37,397 |
|
|
$ |
38,992 |
|
|
$ |
38,665 |
|
|
$ |
43,202 |
|
|
$ |
35,352 |
|
|
$ |
43,202 |
|
|
Institutional Accounts (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
46,993 |
|
|
$ |
50,663 |
|
|
$ |
53,229 |
|
|
$ |
62,330 |
|
|
$ |
60,257 |
|
|
$ |
51,874 |
|
|
$ |
50,663 |
|
|
Inflows |
|
2,999 |
|
|
|
1,852 |
|
|
|
3,660 |
|
|
|
1,274 |
|
|
|
1,179 |
|
|
|
10,407 |
|
|
|
7,965 |
|
|
Outflows |
|
(2,162 |
) |
|
|
(2,047 |
) |
|
|
(1,478 |
) |
|
|
(1,648 |
) |
|
|
(3,406 |
) |
|
|
(8,747 |
) |
|
|
(8,579 |
) |
|
Net flows |
|
837 |
|
|
|
(195 |
) |
|
|
2,182 |
|
|
|
(374 |
) |
|
|
(2,227 |
) |
|
|
1,660 |
|
|
|
(614 |
) |
|
Market performance |
|
2,976 |
|
|
|
2,906 |
|
|
|
2,440 |
|
|
|
(1,434 |
) |
|
|
5,165 |
|
|
|
(12,168 |
) |
|
|
9,077 |
|
|
Other (2) |
|
(143 |
) |
|
|
(145 |
) |
|
|
4,479 |
|
|
|
(265 |
) |
|
|
(226 |
) |
|
|
9,297 |
|
|
|
3,843 |
|
|
Ending balance |
$ |
50,663 |
|
|
$ |
53,229 |
|
|
$ |
62,330 |
|
|
$ |
60,257 |
|
|
$ |
62,969 |
|
|
$ |
50,663 |
|
|
$ |
62,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance |
$ |
144,974 |
|
|
$ |
149,376 |
|
|
$ |
154,849 |
|
|
$ |
168,316 |
|
|
$ |
162,539 |
|
|
$ |
187,186 |
|
|
$ |
149,376 |
|
|
Inflows |
|
7,251 |
|
|
|
6,234 |
|
|
|
7,576 |
|
|
|
5,810 |
|
|
|
6,237 |
|
|
|
30,293 |
|
|
|
25,857 |
|
|
Outflows |
|
(10,652 |
) |
|
|
(8,127 |
) |
|
|
(7,604 |
) |
|
|
(7,309 |
) |
|
|
(10,037 |
) |
|
|
(43,736 |
) |
|
|
(33,077 |
) |
|
Net flows |
|
(3,401 |
) |
|
|
(1,893 |
) |
|
|
(28 |
) |
|
|
(1,499 |
) |
|
|
(3,800 |
) |
|
|
(13,443 |
) |
|
|
(7,220 |
) |
|
Market performance |
|
8,814 |
|
|
|
7,848 |
|
|
|
6,285 |
|
|
|
(3,624 |
) |
|
|
14,322 |
|
|
|
(37,083 |
) |
|
|
24,831 |
|
|
Other (2) |
|
(1,011 |
) |
|
|
(482 |
) |
|
|
7,210 |
|
|
|
(654 |
) |
|
|
(802 |
) |
|
|
12,716 |
|
|
|
5,272 |
|
|
Ending balance |
$ |
149,376 |
|
|
$ |
154,849 |
|
|
$ |
168,316 |
|
|
$ |
162,539 |
|
|
$ |
172,259 |
|
|
$ |
149,376 |
|
|
$ |
172,259 |
|
|
(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) |
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. Non-GAAP financial measures have material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures.
The following are reconciliations and related notes of the most comparable U.S. GAAP measure to each non-GAAP measure:
|
|
Three Months Ended |
||||||||||
|
Revenues |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||||
|
Total revenues, GAAP |
$ |
214,587 |
|
|
$ |
198,371 |
|
|
$ |
219,271 |
|
|
Consolidated investment products revenues (1) |
|
2,258 |
|
|
|
2,264 |
|
|
|
2,337 |
|
|
Investment management fees (2) |
|
(9,933 |
) |
|
|
(9,758 |
) |
|
|
(9,823 |
) |
|
Distribution and service fees (2) |
|
(13,537 |
) |
|
|
(14,607 |
) |
|
|
(14,334 |
) |
|
Total revenues, as adjusted |
$ |
193,375 |
|
|
$ |
176,270 |
|
|
$ |
197,451 |
|
|
Operating Expenses |
|
|
|
|
|
||||||
|
Total operating expenses, GAAP |
$ |
175,631 |
|
|
$ |
167,150 |
|
|
$ |
174,368 |
|
|
Consolidated investment products expenses (1) |
|
(2,611 |
) |
|
|
(2,481 |
) |
|
|
(553 |
) |
|
Distribution and other asset-based expenses (3) |
|
(23,470 |
) |
|
|
(24,365 |
) |
|
|
(24,157 |
) |
|
Amortization of intangible assets (4) |
|
(15,446 |
) |
|
|
(14,609 |
) |
|
|
(15,382 |
) |
|
Restructuring expense (5) |
|
(133 |
) |
|
|
— |
|
|
|
(691 |
) |
|
Deferred compensation and related investments (6) |
|
(925 |
) |
|
|
— |
|
|
|
278 |
|
|
Acquisition and integration expenses (7) |
|
(3,050 |
) |
|
|
(6,175 |
) |
|
|
(3,013 |
) |
|
Other (8) |
|
(472 |
) |
|
|
637 |
|
|
|
(379 |
) |
|
Total operating expenses, as adjusted |
$ |
129,524 |
|
|
$ |
120,157 |
|
|
$ |
130,471 |
|
|
Operating Income (Loss) |
|
|
|
|
|
||||||
|
Operating income (loss), GAAP |
$ |
38,956 |
|
|
$ |
31,221 |
|
|
$ |
44,903 |
|
|
Consolidated investment products (earnings) losses (1) |
|
4,869 |
|
|
|
4,745 |
|
|
|
2,890 |
|
|
Amortization of intangible assets (4) |
|
15,446 |
|
|
|
14,609 |
|
|
|
15,382 |
|
|
Restructuring expense (5) |
|
133 |
|
|
|
— |
|
|
|
691 |
|
|
Deferred compensation and related investments (6) |
|
925 |
|
|
|
— |
|
|
|
(278 |
) |
|
Acquisition and integration expenses (7) |
|
3,050 |
|
|
|
6,175 |
|
|
|
3,013 |
|
|
Other (8) |
|
472 |
|
|
|
(637 |
) |
|
|
379 |
|
|
Operating income (loss), as adjusted |
$ |
63,851 |
|
|
$ |
56,113 |
|
|
$ |
66,980 |
|
|
|
|
|
|
|
|
||||||
|
Operating margin, GAAP |
|
18.2 |
% |
|
|
15.7 |
% |
|
|
20.5 |
% |
|
Operating margin, as adjusted |
|
33.0 |
% |
|
|
31.8 |
% |
|
|
33.9 |
% |
|
|
Three Months Ended |
||||||||||
|
Income (Loss) Before Taxes |
12/31/2023 |
|
12/31/2022 |
|
9/30/2023 |
||||||
|
Income (loss) before taxes, GAAP |
$ |
51,793 |
|
|
$ |
39,126 |
|
|
$ |
50,335 |
|
|
Consolidated investment products (earnings) losses (1) |
|
(1,316 |
) |
|
|
(441 |
) |
|
|
(429 |
) |
|
Amortization of intangible assets (4) |
|
15,446 |
|
|
|
14,609 |
|
|
|
15,382 |
|
|
Restructuring expense (5) |
|
133 |
|
|
|
— |
|
|
|
691 |
|
|
Deferred compensation and related investments (6) |
|
(783 |
) |
|
|
— |
|
|
|
212 |
|
|
Acquisition and integration expenses (7) |
|
3,050 |
|
|
|
6,175 |
|
|
|
3,013 |
|
|
Other (8) |
|
472 |
|
|
|
(637 |
) |
|
|
379 |
|
|
Seed capital and CLO investments (gains) losses (9) |
|
(5,078 |
) |
|
|
(3,322 |
) |
|
|
(3,146 |
) |
|
Income (loss) before taxes, as adjusted |
$ |
63,717 |
|
|
$ |
55,510 |
|
|
$ |
66,437 |
|
Contacts
Investor Relations Contact
Sean Rourke
(860) 263-4709
[email protected]
