Virtus Investment Partners : Fourth Quarter 2024 Earnings Release
VRTS
News Release
Virtus Investment Partners Announces Financial Results for Fourth Quarter 2024
Hartford, CT, January 31, 2025 - 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
Three Months Ended
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,
$
33.3
$
30.8
8%
$
41.0
(19%)
Inc.
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,
$
53.5
$
44.8
20%
$
49.6
8%
Inc., as adjusted
Earnings (loss) per share - diluted, as adjusted
$
7.50
$
6.11
23%
$
6.92
8%
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.
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 2.
Assets Under Management and Asset Flows
(in billions)
Three
Months
Three Months Ended
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.
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 3.
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.
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 4.
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
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.
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 5.
Conference Call and Investor Presentation
Management will host an investor conference calland webcaston Friday, January 31, 2025, at 10 a.m. Eastern to discuss these financial results and related matters. The presentationthat will accompany the conference call is available in the Investor Relations section of virtus.com. A replayof 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.
Investor Relations Contact
Sean Rourke
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 6.
U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
Three
Three Months Ended
Months
Twelve Months Ended
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
Distribution and service fees
13,685
13,535
1%
13,567
Administration and shareholder service fees
18,748
18,189
3%
18,560
Other income and fees
1,086
714
52%
1,059
Total revenues
233,494
214,587
9%
227,029
3%
$
773,830
$
711,475
9%
1%
54,692
56,153
(3%)
1%
74,294
73,857
1%
3%
4,133
3,783
9%
3%
906,949
845,268
7%
Operating Expenses
Employment expenses
106,202
Distribution and other asset-based expenses
24,005
Other operating expenses
32,738
Operating expenses of consolidated
investment products
2,923
Restructuring expense
-
99,847
6%
105,555
23,470
2%
24,175
31,164
5%
30,363
2,611
12%
465
133
(100%)
-
1% 432,587
(1%) 96,223
8% 127,526
N/M
6,987
N/M
1,487
404,742 7%
96,802 (1%)
125,871 1%
4,224
65%
824
80%
Change in fair value of contingent consideration
Depreciation expense
Amortization expense
Total operating expenses
Operating Income (Loss)
Other Income (Expense)
1,692
2,330
12,883
182,773
50,721
1,290
31%
(4,000)
1,670
40%
2,330
15,446
(17%)
12,883
175,631
4%
171,771
38,956
30%
55,258
N/M
(5,608)
-%
8,958
-%
56,299
6%
724,459
(8%)
182,490
(5,510)
2%
5,804
54%
61,027
(8%)
693,784
4%
151,484
20%
Realized and unrealized gain (loss) on investments, net
Realized and unrealized gain (loss) of consolidated investment products, net
Other income (expense), net
Total other income (expense), net
Interest Income (Expense)
(2,501)
2,069
341
(91)
4,056
N/M
4,552
449
361%
(5,128)
622
(45%)
548
5,127
N/M
(28)
N/M
3,914
6,525
(40%)
N/M
(14,460)
(2,404)
N/M
(38%)
2,036
(440)
N/M
225%
(8,510)
3,681
N/M
Interest expense
Interest and dividend income
(5,033)
(5,987)
(16%)
(5,807)
3,463
3,673
(6%)
2,913
(13%)
(22,132)
(23,431)
(6%)
19%
12,488
12,458
-%
Interest and dividend income of investments of consolidated investment products
Interest expense of consolidated investment products
Total interest income (expense), net
Income (Loss) Before Income Taxes
Income tax expense (benefit)
Net Income (Loss)
Noncontrolling interests
50,604
53,206
(5%)
50,628
(41,157)
(43,182)
(5%)
(38,063)
7,877
7,710
2%
9,671
58,507
51,793
13%
64,901
19,047
13,294
43%
15,797
39,460
38,499
2%
49,104
(6,166)
(7,665)
(20%)
(8,124)
-%
204,732
8%
(161,192)
(19%)
33,896
(10%)
207,876
21%
55,423
(20%)
152,453
(24%)
(30,707)
197,707
4%
(155,335)
4%
31,399
8%
186,564
11%
45,088
23%
141,476
8%
(10,855)
183%
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.
Earnings (Loss) Per Share - Basic
Earnings (Loss) Per Share - Diluted
Cash Dividends Declared Per Common Share
$
33,294
$
30,834
8%
$
40,980
$
4.75
$
4.30
10%
$
5.80
$
4.66
$
4.21
11%
$
5.71
$
2.25
$
1.90
18%
$
2.25
(19%)
$
121,746
$
130,621
(7%)
(18%)
$
17.19
$
18.02
(5%)
(18%)
$
16.89
$
17.71
(5%)
-%
$
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
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 7.
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
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 8.
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
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
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 9.
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
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
Virtus Investment Partners, Inc. 10.
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
Virtus Investment Partners, Inc. | One Financial Plaza | Hartford, CT 06103 | virtus.com
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Virtus Investment Partners Inc. published this content on January 31, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on January 31, 2025 at 12:08:03.970.