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Virtus Investment Partners Announces Financial Results for First Quarter 2024
Financial Highlights (Unaudited) (in millions, except per share data or as noted)
Three Months Ended Three
Months
Ended
---------------------------------------------------------------------------------------------------------------- ----------------------------------------------
3/31/2024 3/31/2023 Change 12/31/2023 Change
---------------------------------------------- ---------------------------------------------- ------------------- ---------------------------------------------- -------------------
U.S. GAAP Financial Measures
-------------------------------------------------------------------------------
Revenues $ 222.0 $ 197.9 12 % $ 214.6 3 %
Operating expenses $ 189.7 $ 169.3 12 % $ 175.6 8 %
Operating income (loss) $ 32.3 $ 28.6 13 % $ 39.0 (17 %)
Operating margin 14.5 % 14.4 % 18.2 %
Net income (loss) attributable to Virtus Investment Partners, Inc. $ 29.9 $ 38.6 (23 %) $ 30.8 (3 %)
Earnings (loss) per share - diluted $ 4.10 $ 5.21 (21 %) $ 4.21 (3 %)
Weighted average shares outstanding - diluted 7.287 7.410 (2 %) 7.320 -- %
Non-GAAP Financial Measures (1)
-------------------------------------------------------------------------------
Revenues, as adjusted $ 200.2 $ 176.9 13 % $ 193.4 4 %
Operating expenses, as adjusted $ 143.8 $ 129.5 11 % $ 129.5 11 %
Operating income (loss), as adjusted $ 56.4 $ 47.4 19 % $ 63.9 (12 %)
Operating margin, as adjusted 28.2 % 26.8 % 33.0 %
Net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted $ 39.4 $ 31.1 27 % $ 44.8 (12 %)
Earnings (loss) per share - diluted, as adjusted $ 5.41 $ 4.20 29 % $ 6.11 (11 %)
(1) See the information beginning on page 10 for reconciliations to the most directly comparable U.S. GAAP measures and other important disclosures
Earnings Summary
The company presents U.S. GAAP and non-GAAP earnings information in this release. Management believes that the non-GAAP financial measures presented reflect the company's operating results from providing investment management and related services to individuals and institutions and uses these measures to evaluate financial performance. Non-GAAP financial measures have material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures. Non-GAAP information and reconciliations to the most comparable U.S. GAAP measures can be found beginning on page 10 of this earnings release.
Assets Under Management and Asset Flows (in billions)
Three Months Ended Three
Months
Ended
---------------------------------------------------------------------------- ----------------------------
3/31/2024 3/31/2023 Change 12/31/2023 Change
---------------------------- ---------------------------- ------------------- ---------------------------- -------------------
Ending total assets under management $ 179.3 $ 154.8 16 % $ 172.3 4 %
Average total assets under management $ 173.4 $ 152.4 14 % $ 162.7 7 %
Total sales $ 7.6 $ 6.2 22 % $ 6.2 22 %
Total assets under management of $179.3 billion at March 31, 2024 increased 4% from $172.3 billion at December 31, 2023 due to market performance and positive net flows in retail separate accounts, partially offset by net outflows in institutional accounts and open-end funds. In addition, the company provided services to $2.7 billion of other fee-earning assets.
Total sales increased 22% to $7.6 billion from $6.2 billion in the fourth quarter as a result of higher sales in all product categories. Institutional sales of $1.7 billion increased 47% from $1.2 billion in the prior quarter. Retail separate account sales of $2.4 billion increased 12% from $2.1 billion led by the intermediary sold channel. Open-end fund sales of $3.5 billion increased 18% from $2.9 billion reflecting higher sales in almost all investment strategies.
Net flows of ($1.2) billion improved from ($3.8) billion in the fourth quarter and included positive net flows in retail separate accounts, ETFs, and global funds. Institutional net flows of ($1.3) billion improved from ($2.2) billion due to higher sales and lower redemptions. Retail separate account net flows of $0.7 billion increased from $0.4 billion in the prior quarter. Open-end fund net flows of ($0.6) billion improved significantly from ($2.0) billion in the prior quarter and included positive net flows in small/mid-cap, global equity, and fixed income strategies.
GAAP Results
Operating income of $32.3 million declined 17% from $39.0 million in the prior quarter as a 3% increase in revenues, reflecting higher average assets under management, was more than offset by an 8% increase in operating expenses. The increase in operating expenses was primarily due to higher employment expenses as a result of seasonal employment items and higher variable incentive compensation, partially offset by lower operating expenses of consolidated investment products and lower fair value adjustments to contingent consideration. Other operating expenses were nearly flat sequentially.
Net income attributable to Virtus Investment Partners, Inc. of $4.10 per diluted share included ($0.69) of fair value adjustments to affiliate minority interests, ($0.12) of amortization related to an early lease termination fee, and ($0.11) of acquisition and integration costs, partially offset by $0.76 of realized and unrealized gains on investments. Net income per diluted share of $4.21 in the prior quarter included ($0.76) of fair value adjustments to affiliate minority 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.
The effective tax rate of 19% decreased from 26% in the prior quarter, primarily reflecting changes in valuation allowances related to marketable securities.
Non-GAAP Results
Revenues, as adjusted, of $200.2 million increased 4% from $193.4 million in the prior quarter primarily due to 7% higher average assets under management partially offset by lower performance fees.
Employment expenses, as adjusted, of $111.6 million increased from $96.7 million in the prior quarter due to $10.9 million of seasonal expenses, primarily payroll taxes and benefits related to the timing of annual incentive payments, in addition to higher variable incentive compensation. Other operating expenses, as adjusted, of $30.2 million decreased from $31.2 million.
Operating income, as adjusted, of $56.4 million and the related margin of 28.2% decreased from $63.9 million and 33.0% in the prior quarter, respectively, due to the seasonal employment expenses, partially offset by higher investment management fees and lower other operating expenses.
Net income attributable to Virtus Investment Partners, Inc., as adjusted, per diluted share was $5.41, a decrease of 11% from $6.11 in the prior quarter. The decrease primarily reflected $1.11 per share of seasonal expenses, partially offset by higher revenues, as adjusted, and lower other operating expenses, as adjusted.
The effective tax rate, as adjusted, of 26% compared with 27% in the prior quarter.
Select Balance Sheet Items (Unaudited) (in millions)
As of As of
------------------------------------------------------------ --------------------
3/31/2024 3/31/2023 Change 12/31/2023 Change
-------------------- -------------------- ------------------- -------------------- -------------------
Cash and cash equivalents $ 123.9 $ 213.4 (42 %) $ 239.6 (48 %)
Gross debt (1) $ 258.1 $ 260.9 (1 %) $ 258.8 -- %
Contingent consideration (2) $ 66.7 $ 101.2 (34 %) $ 90.9 (27 %)
Redeemable noncontrolling interests (3) $ 80.0 $ 88.2 (9 %) $ 74.2 8 %
Total equity exc. noncontrolling interests $ 871.7 $ 837.9 4 % $ 864.0 1 %
Working capital (4) $ 123.4 $ 208.3 (41 %) $ 109.1 13 %
(1) Excludes deferred financing costs of $5.1 million, $6.3 million, and $5.4 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively Excludes deferred financing costs of $5.1 million, $6.3 million, and $5.4 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively (2) Represents estimates of revenue participation and contingent payments Represents estimates of revenue participation and contingent payments (3) Excludes redeemable noncontrolling interests of consolidated investment products of $35.2 million, $18.4 million, and $30.6 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively Excludes redeemable noncontrolling interests of consolidated investment products of $35.2 million, $18.4 million, and $30.6 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively (4) Defined as cash and cash equivalents plus accounts receivable, net, and deferred compensation related investments less accrued compensation and benefits excluding affiliate minority interests, accounts payable and accrued liabilities, dividends payable, debt principal payments due over next 12 months and revenue participation amounts earned as of the balance sheet date and due within 12 months. As of March 31, 2024, minority interests liabilities accounted for as accrued compensation were removed from the definition of working capital and prior periods have been adjusted to conform to this definition. Defined as cash and cash equivalents plus accounts receivable, net, and deferred compensation related investments less accrued compensation and benefits excluding affiliate minority interests, accounts payable and accrued liabilities, dividends payable, debt principal payments due over next 12 months and revenue participation amounts earned as of the balance sheet date and due within 12 months. As of March 31, 2024, minority interests liabilities accounted for as accrued compensation were removed from the definition of working capital and prior periods have been adjusted to conform to this definition. (5) Defined as gross debt less cash and cash equivalents Defined as gross debt less cash and cash equivalents
Working capital of $123.4 million at March 31, 2024 compared with $109.1 million at December 31, 2023, as earnings more than offset return of capital.
During the quarter, the company repurchased 21,108 shares for $5.0 million and net settled an additional 42,588 shares for $9.9 million.
Net debt was $134.2 million, or 0.4x EBITDA, at March 31, 2024.
Conference Call and Investor Presentation
Management will host an investor conference call and webcast on Friday, April 26, 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
Months
Ended
-------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------
3/31/2024 3/31/2023 Change 12/31/2023 Change
------------------------------------------------------ ------------------------------------------------------ ------------------- ----------------------------------------------- -------------------
Revenues
Investment management fees $ 188,360 $ 164,478 15 % $ 182,149 3 %
Distribution and service fees 14,030 14,153 (1 %) 13,535 4 %
Administration and shareholder service fees 18,678 18,359 2 % 18,189 3 %
Other income and fees 974 884 10 % 714 36 %
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
222,042 197,874 12 % 214,587 3 %
Total revenues
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Operating Expenses
Employment expenses 115,163 98,614 17 % 99,847 15 %
Distribution and other asset-based expenses 24,348 23,715 3 % 23,470 4 %
Other operating expenses 31,375 30,730 2 % 31,164 1 %
Operating expenses of consolidated investment products 690 700 (1 %) 2,611 (74 %)
Restructuring expense 797 -- N/M 133 499 %
Change in fair value of contingent consideration -- -- N/M 1,290 (100 %)
Depreciation expense 2,028 1,145 77 % 1,670 21 %
Amortization expense 15,335 14,391 7 % 15,446 (1 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
189,736 169,295 12 % 175,631 8 %
Total operating expenses
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Operating Income (Loss) 32,306 28,579 13 % 38,956 (17 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net 3,416 2,670 28 % 4,056 (16 %)
Realized and unrealized gain (loss) of consolidated investment products, net 1,535 2,596 (41 %) 449 242 %
Other income (expense), net 550 (343 ) N/M 622 (12 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
5,501 4,923 12 % 5,127 7 %
Total other income (expense), net
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Interest Income (Expense)
Interest expense (5,681 ) (5,005 ) 14 % (5,987 ) (5 %)
Interest and dividend income 3,469 3,238 7 % 3,673 (6 %)
Interest and dividend income of investments of consolidated investment products 51,115 46,814 9 % 53,206 (4 %)
Interest expense of consolidated investment products (40,012 ) (35,203 ) 14 % (43,182 ) (7 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
8,891 9,844 (10 %) 7,710 15 %
Total interest income (expense), net
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Income (Loss) Before Income Taxes 46,698 43,346 8 % 51,793 (10 %)
Income tax expense (benefit) 8,831 8,703 1 % 13,294 (34 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Net Income (Loss) 37,867 34,643 9 % 38,499 (2 %)
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Noncontrolling interests (8,009 ) 3,981 N/M (7,665 ) 4 %
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. $ 29,858 $ 38,624 (23 %) $ 30,834 (3 %)
==================== ============== ==================== ==================== ============== ==================== ==================== ======= ====================
Earnings (Loss) Per Share - Basic $ 4.19 $ 5.33 (21 %) $ 4.30 (3 %)
==================== ============== ==================== ==================== ============== ==================== ==================== ======= ====================
Earnings (Loss) Per Share - Diluted $ 4.10 $ 5.21 (21 %) $ 4.21 (3 %)
==================== ============== ==================== ==================== ============== ==================== ==================== ======= ====================
Cash Dividends Declared Per Common Share $ 1.90 $ 1.65 15 % $ 1.90 -- %
==================== ============== ==================== ==================== ============== ==================== ==================== ======= ====================
Weighted Average Shares Outstanding - Basic 7,119 7,245 (2 %) 7,178 (1 %)
==================== ============== ==================== ==================== ============== ==================== ==================== ======= ====================
N/M - Not Meaningful
Assets Under Management - Product and Asset Class (in millions)
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024
------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------
By Product (period end):
Open-End Funds (1) $ 53,865 $ 56,828 $ 54,145 $ 56,062 $ 57,818
Closed-End Funds 10,358 10,166 9,472 10,026 10,064
Retail Separate Accounts 37,397 38,992 38,665 43,202 46,816
Institutional Accounts (2) 53,229 62,330 60,257 62,969 64,613
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
$ 154,849 $ 168,316 $ 162,539 $ 172,259 $ 179,311
Total
==================== ========== ==================== ========== ==================== ========== ==================== ========== ==================== ==========
By Product (average) (3)
Open-End Funds (1) $ 54,141 $ 56,120 $ 56,511 $ 54,132 $ 56,828
Closed-End Funds 10,424 10,224 10,001 9,591 9,862
Retail Separate Accounts 35,352 37,397 38,992 38,665 43,202
Institutional Accounts (2) 52,444 59,248 62,368 60,319 63,466
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
$ 152,361 $ 162,989 $ 167,872 $ 162,707 $ 173,358
Total
==================== ========== ==================== ========== ==================== ========== ==================== ========== ==================== ==========
By Asset Class (period end):
Equity $ 87,511 $ 91,211 $ 87,984 $ 96,703 $ 103,501
Fixed Income 36,596 38,361 37,352 37,192 37,037
Multi-Asset (4) 20,597 20,914 19,937 21,411 21,975
Alternatives (5) 10,145 17,830 17,266 16,953 16,798
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Assets Under Management - Average Management Fees Earned (6) (in basis points)
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024
-------------------- -------------------- -------------------- -------------------- --------------------
By Product:
Open-End Funds (1) 47.6 49.3 51.1 49.7 49.9
Closed-End Funds 57.1 57.6 58.2 58.4 58.7
Retail Separate Accounts 44.2 44.1 43.3 43.3 43.9
Institutional Accounts (2)(7) 31.8 31.6 30.3 33.2 30.8
(1) Represents assets under management of U.S. retail funds, global funds, exchange-traded funds, and variable insurance funds 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 Represents assets under management of institutional separate and commingled accounts including structured products
(3) Averages are calculated as follows: Averages are calculated as follows:
- Funds - average daily or weekly balances - Funds - average daily or weekly balances - Funds - average daily or weekly balances
- Retail Separate Accounts - prior-quarter ending balance - Retail Separate Accounts - prior-quarter ending balance - Retail Separate Accounts - prior-quarter ending balance
- Institutional Accounts - average of month-end balances in quarter - Institutional Accounts - average of month-end balances in quarter - 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 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 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 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
3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024
--------- --------- --------- ---------- ---------
Institutional Accounts Institutional Accounts Institutional Accounts 0.2 0.2 0.4 2.2 0.3
Assets Under Management - Asset Flows by Product (in millions)
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Open-End Funds (1)
Beginning balance $ 53,000 $ 53,865 $ 56,828 $ 54,145 $ 56,062
Inflows 3,011 2,550 2,687 2,940 3,476
Outflows (4,792 ) (4,692 ) (4,137 ) (4,905 ) (4,104 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Net flows (1,781 ) (2,142 ) (1,450 ) (1,965 ) (628 )
Market performance 2,771 2,163 (1,034 ) 4,260 2,560
Other (2) (125 ) 2,942 (199 ) (378 ) (176 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Ending balance $ 53,865 $ 56,828 $ 54,145 $ 56,062 $ 57,818
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
Closed-End Funds
Beginning balance $ 10,361 $ 10,358 $ 10,166 $ 9,472 $ 10,026
Inflows 4 20 -- -- --
Outflows -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Net flows 4 20 -- -- --
Market performance 205 (1 ) (504 ) 753 239
Other (2) (212 ) (211 ) (190 ) (199 ) (201 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Ending balance $ 10,358 $ 10,166 $ 9,472 $ 10,026 $ 10,064
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
Retail Separate Accounts
Beginning balance $ 35,352 $ 37,397 $ 38,992 $ 38,665 $ 43,202
Inflows 1,367 1,346 1,849 2,118 2,373
Outflows (1,288 ) (1,434 ) (1,524 ) (1,726 ) (1,695 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Net flows 79 (88 ) 325 392 678
Market performance 1,966 1,683 (652 ) 4,144 2,936
Other (2) -- -- -- 1 --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Institutional Accounts (3)
Beginning balance $ 50,663 $ 53,229 $ 62,330 $ 60,257 $ 62,969
Inflows 1,852 3,660 1,274 1,179 1,734
Outflows (2,047 ) (1,478 ) (1,648 ) (3,406 ) (3,022 )
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Net flows (195 ) 2,182 (374 ) (2,227 ) (1,288 )
Market performance 2,906 2,440 (1,434 ) 5,165 3,001
Other (2) (145 ) 4,479 (265 ) (226 ) (69 )
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Ending balance $ 53,229 $ 62,330 $ 60,257 $ 62,969 $ 64,613
==================== ======= ==================== ==================== ======= ==================== ==================== ======= ==================== ==================== ======= ==================== ==================== ======= ====================
Total
Beginning balance $ 149,376 $ 154,849 $ 168,316 $ 162,539 $ 172,259
Inflows 6,234 7,576 5,810 6,237 7,583
Outflows (8,127 ) (7,604 ) (7,309 ) (10,037 ) (8,821 )
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Net flows (1,893 ) (28 ) (1,499 ) (3,800 ) (1,238 )
Market performance 7,848 6,285 (3,624 ) 14,322 8,736
Other (2) (482 ) 7,210 (654 ) (802 ) (446 )
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
(1) Represents assets under management of U.S. retail funds, global funds, exchange-traded funds, and variable insurance funds 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 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
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 3/31/2024 3/31/2023 12/31/2023
----------------------------------------------- ----------------------------------------------- -----------------------------------------------
Total revenues, GAAP $ 222,042 $ 197,874 $ 214,587
Consolidated investment products revenues (1) 2,544 2,750 2,258
Investment management fees (2) (10,316 ) (9,561 ) (9,933 )
Distribution and service fees (2) (14,032 ) (14,154 ) (13,537 )
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Operating Expenses
Total operating expenses, GAAP $ 189,736 $ 169,295 $ 175,631
Consolidated investment products expenses (1) (690 ) (700 ) (2,611 )
Distribution and other asset-based expenses (3) (24,348 ) (23,715 ) (23,470 )
Amortization of intangible assets (4) (15,335 ) (14,391 ) (15,446 )
Restructuring expense (5) (797 ) -- (133 )
Deferred compensation and related investments (6) (1,249 ) (572 ) (925 )
Acquisition and integration expenses (7) (1,042 ) (965 ) (3,050 )
Other (8) (2,444 ) 592 (472 )
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Operating Income (Loss)
Operating income (loss), GAAP $ 32,306 $ 28,579 $ 38,956
Consolidated investment products (earnings) losses (1) 3,234 3,450 4,869
Amortization of intangible assets (4) 15,335 14,391 15,446
Restructuring expense (5) 797 -- 133
Deferred compensation and related investments (6) 1,249 572 925
Acquisition and integration expenses (7) 1,042 965 3,050
Other (8) 2,444 (592 ) 472
-------------------- ------ -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Operating income (loss), as adjusted $ 56,407 $ 47,365 $ 63,851
==================== ====== ==================== ==================== ============== ==================== ==================== ====== ====================
Operating margin, GAAP 14.5 % 14.4 % 18.2 %
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Taxes 3/31/2024 3/31/2023 12/31/2023
---------------------------------------------- ------------------------------------------------------ ----------------------------------------------
Income (loss) before taxes, GAAP $ 46,698 $ 43,346 $ 51,793
Consolidated investment products (earnings) losses (1) (1,819 ) (1,412 ) (1,316 )
Amortization of intangible assets (4) 15,335 14,391 15,446
Restructuring expense (5) 797 -- 133
Deferred compensation and related investments (6) (400 ) (344 ) (783 )
Acquisition and integration expenses (7) 1,042 965 3,050
Other (8)