Second Quarter 2022 Earnings Presentation August 5, 2022 Forward Looking Statements This presentation may contain "forward-looking" statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, competitive position and potential organic and inorganic growth opportunities. Forward-looking statements include all statements that are not hi ...

Financial Data and Key Metrics Changes - Total AUM decreased by $23.2 billion or 13% in the quarter to $154.9 billion at the end of June, bringing the year-to-date decline in AUM to $28.7 billion or 16% lower than at the beginning of the year [19][20] - Revenue of $216 million in the second quarter was 6% lower than in the first quarter and down 3% from the same quarter last year [20][26] - Adjusted EBITDA was $106.2 million in the second quarter, resulting in an adjusted EBITDA margin of 49.2% [22][31] - GAAP net income was $79.2 million or $1.09 per diluted share [23] Business Line Data and Key Metrics Changes - Gross long-term flows totaled $9.2 billion in the quarter, with record first half gross flows of $20.2 billion, up 21% from the first half of last year [9][25] - The Market Neutral Income Fund generated significant positive net asset flows, contributing to the overall positive net long-term flows year-to-date [11][54] - The ETF platform has seen positive flows for seven consecutive quarters, indicating strong demand for diversified investment strategies [10] Market Data and Key Metrics Changes - The first half of 2022 was noted as the worst first half period for public markets in over half a century, yet the company managed to achieve strong performance [7] - The diversification strategy has positioned the company well to manage through the current volatile environment, with a wide range of products suitable for various market conditions [10] Company Strategy and Development Direction - The company continues to invest in growth initiatives despite lower AUM and revenue, maintaining a long-term growth strategy focused on data, technology, marketing, distribution, and personnel [8][31] - The M&A environment remains constructive, with the company actively conducting diligence on multiple prospective deals, emphasizing that every acquisition must enhance the company's capabilities [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current market environment, highlighting strong investment performance and a robust pipeline of potential new business [11][15] - The focus on active management is expected to play a larger role in client portfolios moving forward, as clients reassess their investment strategies in light of changing market conditions [46] Other Important Information - The company returned a total of $34 million to shareholders through share repurchases and dividends, marking a 26% increase from the previous quarter [18] - The company has maintained a flexible approach to capital allocation, balancing debt repayment and share buybacks based on market conditions [19][66] Q&A Session Summary Question: Update on M&A appetite and focus - Management reiterated that their M&A strategy remains unchanged, focusing on transactions that enhance the company [38][41] Question: Current excess capital and deal capacity - Management indicated they do not feel constrained in terms of deal capacity, with various financing options available [42] Question: Client interest and demand rebound - Management noted that clients are rethinking their portfolios and focusing on active management strategies [45][46] Question: Performance of direct investor business - The direct investor business has shown resilience during market disruptions, with positive net flows in the 529 education savings plan [68] Question: Retail separately managed accounts (SMAs) performance - Management highlighted strong performance in retail SMAs, with significant contributions from the WestEnd acquisition [74][77] Question: Inorganic opportunities and pricing - Management observed that bid-ask spreads have narrowed, with sellers more open to structuring deals that share future risks [82]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-38388 Victory Capital Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 32-0402956 (S ...

Victory Capital Holdings, Inc. (NASDAQ:VCTR) Q1 2022 Earnings Conference Call May 6, 2022 8:00 AM ET Company Participants Matthew Dennis - Chief of Staff and Director of Investor Relations David Brown - Chairman and Chief Executive Officer Michael Policarpo - President, Chief Financial and Administrative Officer Conference Call Participants Craig Siegenthaler - Bank of America Kenneth Lee - RBC Capital Markets Alex Blostein - Goldman Sachs Robert Lee - KBW Brennan Hawken - UBS Michael Cyprys - Morgan Stanle ...

First Quarter 2022 Earnings Presentation May 6, 2022 Forward Looking Statements This presentation may contain "forward-looking" statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, competitive position and potential organic and inorganic growth opportunities. Forward-looking statements include all statements that are not histor ...

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Victory Capital Holdings, Inc. is a diversified global asset management firm with $183.7 billion in AUM as of December 31, 2021, operating a unique business model combining boutique investment managers with a centralized platform - Total Assets Under Management (AUM) as of December 31, 2021, was **$183.7 billion** - Victory Capital operates with **12 autonomous Investment Franchises** and a Solutions Platform, offering **130 diversified investment strategies** to institutions, intermediaries, retirement platforms, and individual investors[18](index=18&type=chunk)[19](index=19&type=chunk) - The company's growth strategy is dual-pronged: organic growth through value-added strategies and enhanced existing franchises, and inorganic growth through strategic acquisitions that add high-quality investment teams and expand distribution capabilities[22](index=22&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - Since its management-led buyout in 2013, AUM has grown over **10-fold** from **$17.9 billion** to **$183.7 billion** by December 31, 2021, primarily through seven acquisitions and two minority investments[28](index=28&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces a broad range of risks, including market and investment performance risks tied to AUM fluctuations, business risks related to key personnel and growth, and merger and acquisition risks concerning integration and contingent liabilities - Revenues are substantially based on AUM, making the company highly susceptible to reductions in AUM due to poor investment performance, client withdrawals, or adverse market conditions[131](index=131&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - The company's growth strategy relies heavily on successful strategic acquisitions and integration, which carry risks of unforeseen liabilities, operational strain, and failure to realize anticipated synergies[159](index=159&type=chunk)[184](index=184&type=chunk) - Substantial indebtedness of **$1,151 million** as of December 31, 2021, exposes the company to risks from adverse economic conditions and restrictive covenants, potentially limiting financial flexibility[187](index=187&type=chunk)[188](index=188&type=chunk) - The investment management industry is intensely competitive, with challenges from larger competitors, low entry costs for new firms, and a trend towards lower fees and passive products, which could reduce AUM and net income[235](index=235&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - Operational and cybersecurity risks, including system disruptions, human error, and cyber-attacks, pose significant threats to business continuity, client information confidentiality, and could result in financial losses, regulatory actions, or reputational damage[246](index=246&type=chunk)[248](index=248&type=chunk)[250](index=250&type=chunk) [Item 1B. Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - No unresolved staff comments were reported[271](index=271&type=chunk) [Item 2. Properties](index=49&type=section&id=Item%202.%20Properties) The company leases its principal executive offices in San Antonio, TX, and additional office spaces across several U.S. states and internationally, deeming its current facilities adequate for business needs - The company leases its principal executive offices in San Antonio, TX, and other offices in Brooklyn, OH; Birmingham, MI; Boston, MA; Rocky River, OH; Cincinnati, OH; Charlotte, NC; Denver, CO; Des Moines, IA; Hanover, NH; Norwalk, CT; San Francisco, CA; Singapore; and Hong Kong[271](index=271&type=chunk) - Existing facilities are considered adequate to meet current and future business requirements[271](index=271&type=chunk) [Item 3. Legal Proceedings](index=49&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though it may face legal proceedings and claims in the ordinary course of business - The company is not currently a party to any material legal proceedings[272](index=272&type=chunk) - The company may be subject to legal proceedings and claims in the ordinary course of business[272](index=272&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[273](index=273&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Victory Capital's Class A Common Stock trades on NASDAQ under 'VCTR', and as of December 31, 2021, the company eliminated its dual-class share structure, converting all Class B shares to Class A, resulting in a single class of common stock with identical economic and voting rights - Victory Capital's Class A Common Stock is listed and trades on NASDAQ under the symbol 'VCTR'[274](index=274&type=chunk) - Effective November 23, 2021, the company eliminated its dual-class share structure, converting all Class B common stock into Class A common stock, resulting in a single class of Common Stock with identical economic and voting rights[275](index=275&type=chunk) Equity Securities Purchases (Q4 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plans or Programs | | :------------------ | :--------------------- | :--------------------------- | :------------------------------------------------------------- | | October 1-31, 2021 | 45,260 | $36.28 | 45,260 | | November 1-30, 2021 | 60,255 | $36.06 | 23,355 | | December 1-31, 2021 | 53,685 | $35.26 | 53,685 | | **Total** | **159,200** | **$35.85** | **122,300** | - The quarterly cash dividend increased by approximately **143%** in 2021, from **$0.07 per share** in Q4 2020 to **$0.17 per share** in Q4 2021[280](index=280&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Victory Capital's financial condition, results of operations, liquidity, and cash flows for the year ended December 31, 2021, highlighting AUM growth, strong investment performance, and key financial metrics - AUM increased by **$36.5 billion (24.7%)** to **$183.7 billion** at December 31, 2021, primarily due to **$20.3 billion** from net acquired assets and **$20.6 billion** from market appreciation, partially offset by **$4.5 billion** in net outflows[306](index=306&type=chunk) Key Financial Highlights (2021 vs. 2020) | Metric | 2021 (in millions) | 2020 (in millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Total Revenue | $890.3 | $775.4 | +14.8% | | Net Income | $278.4 | $212.5 | +31.0% | | GAAP Diluted EPS | $3.75 | $2.88 | +30.2% | | Adjusted EBITDA | $449.0 | $377.3 | +19.0% | | Adjusted EBITDA Margin | 50.4% | 48.7% | +1.7 pp | | Adjusted Net Income | $329.0 | $258.5 | +27.3% | - Investment performance was strong, with **64%** of strategies by AUM outperforming their benchmarks over a one-year period, and **77%**, **82%**, and **77%** over three, five, and ten-year periods, respectively[308](index=308&type=chunk) - The company completed three acquisitions in 2021: THB Asset Management (March 1), New Energy Capital (November 1), and WestEnd Advisors (December 31), significantly expanding its investment platform and alternative asset capabilities[294](index=294&type=chunk)[296](index=296&type=chunk)[300](index=300&type=chunk) [Item 7A. Qualitative and Quantitative Disclosures Regarding Market Risk](index=74&type=section&id=Item%207A.%20Qualitative%20and%20Quantitative%20Disclosures%20Regarding%20Market%20Risk) The company's revenues are highly sensitive to market risk, as they are primarily based on AUM, with fluctuations significantly impacting revenues, and it also faces exchange rate and interest rate risks, partially mitigated by an interest rate swap - A **10%** increase or decrease in AUM would cause an annualized revenue change of approximately **$103.0 million**, based on a weighted-average fee rate of **56 basis points** for 2021[433](index=433&type=chunk) - Approximately **9%** of AUM is invested in non-U.S. securities, exposing the company to foreign currency exchange risk, where a **10%** change in the U.S. dollar's value could impact revenues by about **$10.1 million**[436](index=436&type=chunk)[437](index=437&type=chunk) - The company uses a floating-to-fixed interest rate swap to hedge **$450 million** of its outstanding Term Loan, fixing the rate at **3.215%** through July 2026, to manage interest rate risk[439](index=439&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=76&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for Victory Capital Holdings, Inc. and its subsidiaries for the years ended December 31, 2021, 2020, and 2019, including balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes Consolidated Balance Sheet Highlights (as of Dec 31, 2021 vs. 2020) | Metric (in thousands) | 2021 | 2020 | | :-------------------- | :---------- | :---------- | | Total Assets | $2,579,746 | $1,730,729 | | Total Liabilities | $1,649,819 | $1,023,188 | | Total Stockholders' Equity | $929,927 | $707,541 | | Cash and Cash Equivalents | $69,533 | $22,744 | | Long-term Debt, net | $1,127,924 | $769,009 | Consolidated Statements of Operations Highlights (Year Ended Dec 31) | Metric (in thousands) | 2021 | 2020 | 2019 | | :-------------------- | :---------- | :---------- | :--------- | | Total Revenue | $890,265 | $775,351 | $612,373 | | Total Operating Expenses | $516,420 | $460,638 | $447,753 | | Income from Operations | $373,845 | $314,713 | $164,620 | | Net Income | $278,389 | $212,522 | $92,491 | | Diluted EPS | $3.75 | $2.88 | $1.26 | Consolidated Statements of Cash Flows Highlights (Year Ended Dec 31) | Metric (in thousands) | 2021 | 2020 | 2019 | | :-------------------- | :---------- | :---------- | :--------- | | Net cash provided by operating activities | $376,196 | $250,616 | $227,384 | | Net cash used in investing activities | $(556,588) | $(12,340) | $(849,812) | | Net cash provided by (used in) financing activities | $227,217 | $(252,696) | $608,016 | - Goodwill increased significantly from **$404.75 million** in 2020 to **$981.81 million** in 2021, primarily due to the NEC and WestEnd acquisitions[650](index=650&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=126&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure matters - No changes in or disagreements with accountants on accounting and financial disclosure were reported[748](index=748&type=chunk) [Item 9A. Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2021, and internal control over financial reporting was also deemed effective, with no material changes identified - As of December 31, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[750](index=750&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2021, providing reasonable assurance regarding financial reporting reliability[751](index=751&type=chunk) - No changes in internal control over financial reporting were identified during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[752](index=752&type=chunk) [Item 9B. Other Information](index=127&type=section&id=Item%209B.%20Other%20Information) The company reported no other information required by this item - No other information was reported under this item[754](index=754&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=128&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the 2022 annual meeting of shareholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of shareholders[755](index=755&type=chunk) [Item 11. Executive Compensation](index=128&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for the 2022 annual meeting of shareholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of shareholders[756](index=756&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=128&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information regarding security ownership of certain beneficial owners and management, and related shareholder matters, is incorporated by reference from the company's definitive proxy statement for the 2022 annual meeting of shareholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of shareholders[757](index=757&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=128&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's definitive proxy statement for the 2022 annual meeting of shareholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of shareholders[758](index=758&type=chunk) [Item 14. Principal Accountant Fees and Services](index=128&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for the 2022 annual meeting of shareholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of shareholders[759](index=759&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=129&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the exhibits and financial statement schedules filed as part of the Form 10-K, including the financial statements, various corporate documents, and agreements - The financial statements are contained in Item 8 of Part II of this report[762](index=762&type=chunk) - A detailed exhibit index is provided, listing corporate documents, plans, agreements, and certifications[761](index=761&type=chunk) [Item 16. Form 10‑K Summary](index=129&type=section&id=Item%2016.%20Form%2010%E2%80%91K%20Summary) The company did not provide a separate Form 10-K summary - No Form 10-K Summary was provided[760](index=760&type=chunk) [Signatures](index=133&type=section&id=Signatures) The report is duly signed on behalf of Victory Capital Holdings, Inc. by its Chief Executive Officer and Chairman, David C. Brown, and President, Chief Financial Officer, and Chief Administrative Officer, Michael D. Policarpo, along with other directors, as of March 14, 2022 - The report was signed by David C. Brown (CEO and Chairman) and Michael D. Policarpo (President, CFO, and CAO) on March 14, 2022[768](index=768&type=chunk)[769](index=769&type=chunk)

Financial Data and Key Metrics Changes - Total AUM increased to $183.7 billion, up 25% year-over-year and 15% from the previous quarter [12][32] - Record revenue of $890 million for the year, a 15% increase from 2020, with Q4 revenue reaching $229.1 million, a 14% increase year-over-year [28][36] - Adjusted net income with tax benefit per diluted share was $1.27 in Q4 and $4.82 for the year, reflecting a 25% improvement from 2020 [12][30] Business Line Data and Key Metrics Changes - The direct investor business showed material improvement with new account registrations growing steadily, achieving net flow positive for the 529 plan since its acquisition in 2019 [13][14] - Gross long-term sales reached a record $27.9 billion in 2021, a 20% increase from the previous record in 2020, with long-term net flows improving by 64% year-over-year [33][34] Market Data and Key Metrics Changes - The company experienced net outflows in Q4 due to two large one-time redemptions, but was net flow positive in November and had modest outflows in December [33][52] - The average realized fee rate was 56.0 basis points in Q4, with expectations of a decrease due to the acquisition of WestEnd Advisors, which has a lower average fee rate [35][36] Company Strategy and Development Direction - The company aims to continue its growth strategy through acquisitions, having closed two strategic acquisitions in Q4 2021, and plans to maintain a similar pace in 2022 [7][25] - The elimination of the dual-class share structure is expected to enhance eligibility for inclusion in major indexes, potentially leading to increased buying from index funds [15][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current operating environment, noting that market volatility could benefit active managers and create opportunities for capturing assets in motion [72] - The company plans to maintain its adjusted EBITDA margin guidance of approximately 49% for 2022, despite ongoing investments in growth initiatives [38][75] Other Important Information - The company returned over $134 million to shareholders since its IPO, with a 178% increase in the cash dividend declared [19][41] - Employee ownership is significant, with approximately 20% of the company owned by employees, reflecting a strong ownership culture [22][23] Q&A Session Summary Question: Update on WestEnd Advisors acquisition and cross-sell opportunities - The acquisition is progressing well, with successful cross-selling and distribution opportunities being explored [44][45] Question: Potential for large index ETF and fund buying post dual-class structure elimination - The company anticipates eligibility for inclusion in the Russell 2000 and expects net buying from index funds in the next year [47][48] Question: Clarification on unusual outflows in October - Management indicated that the outflows were one-time events and expressed confidence in the momentum moving into 2022 [52][52] Question: Impact of market volatility on M&A conversations - Management noted that market volatility has not impacted M&A discussions, which are focused on improving business access and scalability [55][56] Question: Capital deployment priorities and dividend increase interpretation - The dividend increase is not indicative of a change in policy; excess capital will primarily be used for debt reduction [66][67] Question: Incremental margins for WestEnd Advisors - Integration onto the existing platform is expected to yield margins at parity or higher than current margins [68][69] Question: Guidance on expense trends post-pandemic - The company maintains its margin guidance and expects expenses to remain consistent, with ongoing investments in growth [74][75]

Fourth Quarter 2021 Earnings Presentation February 11, 2022 Forward Looking Statements This presentation may contain "forward-looking" statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, competitive position and potential organic and inorganic growth opportunities. Forward-looking statements include all statements that are not ...

Financial Performance - Total revenue for Q3 2021 was $226.29 million, a 20% increase from $188.66 million in Q3 2020[14] - Net income for Q3 2021 reached $74.18 million, up 33% from $55.74 million in Q3 2020[14] - Earnings per share (EPS) for Q3 2021 were $1.09 (basic) and $1.00 (diluted), compared to $0.82 and $0.76 in Q3 2020, marking a 33% and 32% increase respectively[14] - Comprehensive income for Q3 2021 was $75.40 million, compared to $55.16 million in Q3 2020, indicating a 36.7% increase[16] - Net income for the nine months ended September 30, 2021, was $208.6 million, an increase of 32.4% compared to $157.6 million for the same period in 2020[22] - Total revenue for the three months ended September 30, 2021, was $226.29 million, an increase of 20% compared to $188.66 million for the same period in 2020[42] - Adjusted Net Income with tax benefit for the three months ended September 30, 2021, was $92.6 million, compared to $73.4 million for the same period in 2020, marking a year-over-year increase of 26.1%[152] - For the nine months ended September 30, 2021, total revenue was $661.1 million, compared to $575.0 million for the same period in 2020, indicating a year-over-year increase of 15.0%[152] Assets and Liabilities - Total assets as of September 30, 2021, were $1.79 billion, up from $1.73 billion at the end of 2020, reflecting a 3.5% increase[12] - Long-term debt decreased to $633.90 million from $769.01 million at the end of 2020, a reduction of approximately 17.5%[12] - Cash and cash equivalents at the end of the period on September 30, 2021, were $64.7 million, compared to $56.3 million at the end of September 2020[22] - The fair value of financial assets as of September 30, 2021, totaled $41.879 million, with liabilities of $103.1 million primarily from contingent consideration arrangements[78] - The fair value of long-term debt at September 30, 2021, is considered to be its carrying value due to the variable interest rate approximating current market rates[85] Investment Management - Investment management fees increased to $171.36 million in Q3 2021, compared to $137.24 million in Q3 2020, representing a 25% growth[14] - The Company’s investment management fees are calculated as a contractual percentage of assets under management (AUM), which can fluctuate due to market movements[46] - The Company’s revenue recognition is based on the transfer of services to customers, with variable consideration included only when it is probable that a significant reversal will not occur[43] - AUM as of September 30, 2021, was $159.9 billion, a significant increase from $17.9 billion in August 2013[133] - The company completed the acquisition of THB Asset Management on March 1, 2021, which added $547 million in AUM and expanded its investment platform[139] Dividends and Share Repurchases - The company declared dividends of $0.15 per share in Q3 2021, up from $0.06 per share in Q3 2020[14] - Total dividends paid in the nine months ended September 30, 2021, were $25.4 million, an increase from $11.5 million in 2020[22] - The company repurchased common stock totaling $25.9 million during the nine months ended September 30, 2021, compared to $22.8 million in the same period of 2020[22] - The company repurchased 188,525 shares of Class A common stock for $6.3 million during the three months ended September 30, 2021, at an average price of $33.29 per share[110] - Cumulative total of 3,946,187 shares of Class A common stock repurchased at a total cost of $69.6 million, averaging $17.63 per share[110] Costs and Expenses - Total operating expenses for the three months ended September 30, 2021 were $127.3 million, an increase of $19.2 million, or 17.8%, from $108.1 million for the same period in 2020[168] - Personnel compensation and benefits increased by $8.5 million, or 17.9%, to $55.8 million for the three months ended September 30, 2021, from $47.4 million for the same period in 2020[176] - Interest expense for the three months ended September 30, 2021, was $4.0 million, a decrease of 35.9% from $6.2 million in the same period of 2020[107] - Total interest expense and other financing costs for the nine months ended September 30, 2021, was $18.9 million, down 35.4% from $29.3 million in the same period of 2020[107] - Acquisition-related costs for the three months ended September 30, 2021 were $6.0 million, compared to $1.1 million for the same period in 2020[187] Acquisitions - The company completed the acquisition of New Energy Capital Partners on November 1, 2021, expanding its investment franchise to eleven[151] - The company completed the acquisition of THB Asset Management on March 1, 2021, with total assets under management (AUM) acquired amounting to $547 million[25] - The company has entered into a definitive agreement to acquire WestEnd Advisors for an aggregate purchase price of $480 million in cash, with potential earn-out payments of up to $320 million[129] - The company paid $37.5 million in cash for the second annual earn-out period related to the USAA AMCO Acquisition on October 12, 2021[126] Cash Flow - Cash provided by operating activities for the nine months ended September 30, 2021, was $264.1 million, up from $182.7 million in 2020, reflecting a 44.5% increase[22] - The company reduced outstanding debt by $35.0 million for the three months ended September 30, 2021, and by $142.0 million for the nine months ended September 30, 2021, totaling a reduction of $453.8 million since July 1, 2019[208] - The company maintained a $100.0 million revolving credit facility as of September 30, 2021, with approximately $100.0 million undrawn[207] Tax and Regulatory - The provision for income taxes for the three months ended September 30, 2021, was $18.2 million, or 19.7% of pre-tax income, compared to $17.0 million, or 23.4% in the same period of 2020[98] - The effective tax rate for the three months ended September 30, 2021 was 19.7%, down from 23.4% in 2020, primarily due to an increase in excess tax benefits on share-based compensation[197] - The company plans to eliminate its dual-class share structure, pending shareholder approval at a special meeting scheduled for November 19, 2021[28]

Victory Capital Management, Inc. (NASDAQ:VCTR) Q3 2021 Earnings Conference Call November 5, 2021 8:00 AM ET Company Participants Matthew Dennis - CoS, Director of IR David Brown - Chairman, CEO Michael Policarpo - President, CF & AO Conference Call Participants Robert Lee - KBW Alex Blostein - Goldman Sachs Cullen Johnson - B. Riley Securities Kenneth Lee - RBC Capital Markets Owen Lau - Oppenheimer Michael Cyprys - Morgan Stanley Ken Worthington - JPMorgan Operator Good morning, and welcome to the Victory ...