[PART I – FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Virtus Investment Partners, Inc. for the three months ended March 31, 2022, and comparative periods, including balance sheets, statements of operations, comprehensive income, cash flows, and changes in stockholders' equity, along with detailed notes explaining accounting policies, acquisitions, investments, and other financial details - **The financial statements are unaudited and prepared in accordance with GAAP** for interim financial information, containing only normal recurring adjustments[26](index=26&type=chunk) - **Operating results for the three months ended March 31, 2022, are not necessarily indicative** of the results expected for the full year ending December 31, 2022[26](index=26&type=chunk) [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Presents the company's financial position, assets, liabilities, and equity as of the specified dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | Change | | :----------------------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $225,217 | $378,921 | $(153,704) | | Investments | $116,767 | $108,890 | $7,877 | | Total assets | $3,701,866 | $3,934,181 | $(232,315) | | Accrued compensation and benefits | $70,646 | $187,449 | $(116,803) | | Contingent consideration | $130,728 | $162,564 | $(31,836) | | Total liabilities | $2,738,895 | $2,958,589 | $(219,694) | | Total equity | $824,233 | $836,627 | $(12,394) | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Details the company's revenues, expenses, and net income for the specified periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenues | $252,440 | $216,897 | $35,543 | 16.4% | | Total operating expenses | $186,888 | $154,755 | $32,133 | 20.8% | | Operating Income (Loss) | $65,552 | $62,142 | $3,410 | 5.5% | | Total other income (expense), net | $(16,039) | $(2,025) | $(14,014) | 692.0% | | Income (Loss) Before Income Taxes | $55,854 | $67,367 | $(11,513) | (17.1)% | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $33,059 | $36,588 | $(3,529) | (9.6)% | | Earnings (Loss) per Share—Diluted | $4.22 | $4.54 | $(0.32) | (7.0)% | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Reports the company's net income and other comprehensive income (loss) for the specified periods Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) | $39,119 | $52,214 | | Other comprehensive income (loss), net of tax | $(50) | $6 | | Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc. | $33,009 | $36,594 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net cash provided by (used in) operating activities | $(81,775) | $150,151 | $(231,926) | (154.5)% | | Net cash provided by (used in) investing activities | $(22,575) | $(2,608) | $(19,967) | 765.6% | | Net cash provided by (used in) financing activities | $(145,777) | $(87,673) | $(58,104) | 66.3% | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(250,183) | $59,870 | $(310,053) | (517.9)% | | Cash, cash equivalents and restricted cash, end of period | $335,962 | $399,719 | $(63,757) | (15.9)% | - The **$231.9 million** decrease in operating cash flow was primarily due to a **$192.7 million** reduction in sales of investments by consolidated investment products (CIP) and increased compensation and benefit payments[148](index=148&type=chunk) - **Investing cash flow was significantly impacted** by the cash paid for the Stone Harbor acquisition in Q1 2022[149](index=149&type=chunk) - Financing cash flow increased due to **$33.0 million** in contingent consideration payments and a **$16.7 million** increase in net borrowings of CIP[150](index=150&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Outlines changes in the company's equity, including net income, dividends, and share repurchases Condensed Consolidated Statements of Changes in Stockholders' Equity Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :---------------------------------------------------- | :------------- | :---------------- | | Total equity attributable to Virtus Investment Partners, Inc. | $816,427 | $828,277 | | Net income (loss) attributable to Virtus Investment Partners, Inc. | $33,059 | N/A | | Cash dividends declared ($1.50 per common share in 2022) | $(12,238) | N/A | | Repurchases of common shares | $(30,000) | N/A | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations and disclosures for the condensed consolidated financial statements [Note 1. Organization and Business](index=10&type=section&id=1.%20Organization%20and%20Business) Describes the company's organizational structure and primary business activities - **Virtus provides investment management and related services** to individuals and institutions[25](index=25&type=chunk) - **The company offers retail investment management services** through mutual funds, global funds (UCITS, QIFs), ETFs, variable insurance funds, closed-end funds, and retail separate accounts[25](index=25&type=chunk) - **Institutional services are offered via separate accounts and pooled/commingled structures**, and the company also provides subadvisory services and acts as collateral manager for structured products[25](index=25&type=chunk) [Note 2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Explains the basis of financial statement preparation and key accounting policies - **Financial statements are unaudited and prepared under GAAP** for interim information, with normal recurring adjustments[26](index=26&type=chunk) - **Operating results for Q1 2022 are not indicative of the full year 2022**[26](index=26&type=chunk) - **Significant accounting policies are consistent** with those in the 2021 Annual Report on Form 10-K[27](index=27&type=chunk) [Note 3. Revenues](index=10&type=section&id=3.%20Revenues) Details the sources and recognition policies for the company's revenues - **Revenues are recognized upon satisfaction of performance obligations**, typically when control of services is transferred to customers[28](index=28&type=chunk) - **Investment management, distribution, and administration fees are generally calculated as a percentage of average net assets**, which are variable and subject to market factors[28](index=28&type=chunk) Investment Management Fees by Source (in thousands) | Source | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Open-end funds | $97,377 | $89,120 | | Closed-end funds | $16,940 | $12,940 | | Retail separate accounts | $49,603 | $37,512 | | Institutional accounts | $41,991 | $32,438 | | Structured products | $906 | $1,259 | | Total investment management fees | $206,817 | $173,269 | [Note 4. Acquisitions](index=11&type=section&id=4.%20Acquisitions) Provides information on recent business acquisitions and their financial impact - On January 1, 2022, Virtus acquired Stone Harbor Investment Partners for **$29.4 million**, including **$8.8 million** in goodwill and **$10.8 million** in definite-lived intangible assets[30](index=30&type=chunk)[32](index=32&type=chunk) - On October 1, 2021, Virtus acquired Westchester Capital Management for **$169.3 million**, recording **$23.0 million** in goodwill and **$144.4 million** in intangible assets[35](index=35&type=chunk) - On February 1, 2021, Virtus finalized a strategic partnership with AllianzGI, establishing NFJ Investment Group and becoming the adviser/distributor for **$29.5 billion** of AllianzGI's assets[37](index=37&type=chunk)[103](index=103&type=chunk) Stone Harbor Identified Intangible Assets Acquired (January 1, 2022) | Intangible Asset | Approximate Fair Value (in thousands) | Weighted Average Useful Life (in years) | | :----------------------------- | :---------------------------------- | :-------------------------------------- | | Investment management agreements | $6,000 | 7.3 | | Trade names | $1,000 | 6.0 | | Software | $3,800 | 4.0 | | Total definite-lived intangible assets | $10,800 | N/A | [Note 5. Goodwill and Intangible Assets, Net](index=12&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets,%20Net) Summarizes the company's goodwill and intangible assets, including amortization schedules Goodwill Activity (in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance at December 31, 2021 | $338,406 | | Acquisitions | $9,017 | | Balance at March 31, 2022 | $347,423 | Intangible Assets, Net Summary (in thousands) | Metric | December 31, 2021 | March 31, 2022 | | :-------------------------- | :---------------- | :------------- | | Definite-Lived Net Book Value | $458,273 | $454,411 | | Indefinite-Lived Net Book Value | $42,298 | $42,298 | | Total Net Book Value | $500,571 | $496,709 | Estimated Definite-Lived Intangible Asset Amortization (in thousands) | Fiscal Year | Amount | | :---------------- | :----- | | Remainder of 2022 | $43,842 | | 2023 | $57,835 | | 2024 | $52,194 | | 2025 | $47,426 | | 2026 | $46,446 | | 2027 and thereafter | $206,668 | | Total | $454,411 | [Note 6. Investments](index=13&type=section&id=6.%20Investments) Details the composition and fair value of the company's investment portfolio Investments Composition (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Investment securities - fair value | $88,421 | $80,335 | | Equity method investments | $13,495 | $13,038 | | Nonqualified retirement plan assets | $12,701 | $13,321 | | Other investments | $2,150 | $2,196 | | Total investments | $116,767 | $108,890 | - Realized gains on investment securities - fair value were **$0.1 million** for Q1 2022, down from **$0.8 million** in Q1 2021[43](index=43&type=chunk) [Note 7. Fair Value Measurements](index=14&type=section&id=7.%20Fair%20Value%20Measurements) Explains the methodologies and classifications for fair value measurements of assets and liabilities Assets Measured at Fair Value (excluding CIP, in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Cash equivalents (Level 1) | $167,311 | $307,277 | | Investment securities - fair value (Level 1) | $88,421 | $80,335 | | Nonqualified retirement plan assets (Level 1) | $12,701 | $13,321 | | Total assets measured at fair value | $268,433 | $400,933 | Liabilities Measured at Fair Value (excluding CIP, in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Contingent consideration (Level 3) | $70,080 | $88,400 | | Total liabilities measured at fair value | $70,080 | $88,400 | - **Contingent consideration liabilities are measured using a simulation model** with unobservable market data inputs and are categorized as Level 3[47](index=47&type=chunk) Reconciliation of Level 3 Contingent Consideration (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $88,400 | $0 | | Additions for acquisition | $1,200 | $63,500 | | Reduction for payments made | $(19,520) | $0 | | Ending balance | $70,080 | $63,500 | [Note 8. Equity Transactions](index=15&type=section&id=8.%20Equity%20Transactions) Describes significant equity-related activities, including dividends and share repurchases - A quarterly cash dividend of **$1.50** per common share was declared on February 23, 2022, payable on May 13, 2022[49](index=49&type=chunk) - During Q1 2022, the company repurchased **125,452** common shares at a weighted average price of **$239.10** per share, totaling **$30.0 million**[50](index=50&type=chunk) - As of March 31, 2022, **403,997** shares remained available for repurchase under the program[50](index=50&type=chunk) [Note 9. Accumulated Other Comprehensive Income (Loss)](index=15&type=section&id=9.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Reports changes in the company's accumulated other comprehensive income or loss Changes in Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :------------------------------------------ | :------------- | :---------------- | | Balance at period end | $(30) | $20 | | Net current-period other comprehensive income (loss) | $(50) | N/A | [Note 10. Stock-Based Compensation](index=15&type=section&id=10.%20Stock-Based%20Compensation) Details the company's stock-based compensation plans and associated expenses Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Stock-based compensation expense | $9,547 | $7,995 | - **645,198** shares of common stock remain available for issuance under the Omnibus Plan as of March 31, 2022[52](index=52&type=chunk) - During Q1 2022, **162,541** RSUs were granted, and **153,989** were settled[55](index=55&type=chunk) - Unamortized stock-based compensation expense for unvested RSUs and PSUs was **$41.1 million** as of March 31, 2022, with a weighted-average remaining contractual life of **1.3 years**[57](index=57&type=chunk) [Note 11. Earnings (Loss) Per Share](index=16&type=section&id=11.%20Earnings%20(Loss)%20Per%20Share) Presents the calculation of basic and diluted earnings per share Earnings (Loss) Per Share (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $33,059 | $36,588 | | Earnings (Loss) per Share—Basic | $4.38 | $4.79 | | Earnings (Loss) per Share—Diluted | $4.22 | $4.54 | | Weighted Average Shares Outstanding—Diluted | 7,839 | 8,052 | - **21 thousand** restricted stock units were excluded from diluted EPS computation in Q1 2022 due to their anti-dilutive effect[60](index=60&type=chunk) [Note 12. Income Taxes](index=17&type=section&id=12.%20Income%20Taxes) Provides information on the company's income tax expense and effective tax rate - The estimated effective tax rate for Q1 2022 was **30.0%**, compared to **22.5%** for Q1 2021[62](index=62&type=chunk) - **The higher tax rate in Q1 2022 was mainly due to valuation allowances** for tax effects of unrealized losses on company investments[62](index=62&type=chunk) [Note 13. Debt](index=17&type=section&id=13.%20Debt) Details the company's debt obligations and credit facilities - The company's Credit Agreement includes a **$275.0 million** Term Loan expiring in September 2028 and a **$175.0 million** revolving credit facility expiring in September 2026[63](index=63&type=chunk) - At March 31, 2022, **$273.6 million** was outstanding under the Term Loan, and no borrowings were outstanding under the revolving credit facility[63](index=63&type=chunk) [Note 14. Commitments and Contingencies](index=17&type=section&id=14.%20Commitments%20and%20Contingencies) Outlines the company's legal and contractual commitments and potential liabilities - **The company is involved in litigation, arbitration, and regulatory inquiries** related to its activities as an employer, issuer, investor, investment adviser, broker-dealer, or taxpayer[64](index=64&type=chunk)[65](index=65&type=chunk) - **Liabilities are recorded when probable and reasonably estimable**; otherwise, disclosures are made if a loss is reasonably possible[66](index=66&type=chunk) - **Management believes current legal and regulatory outcomes are not likely to have a material adverse effect** on operations, cash flows, or financial condition, but acknowledges inherent unpredictability[66](index=66&type=chunk) [Note 15. Redeemable Noncontrolling Interests](index=18&type=section&id=15.%20Redeemable%20Noncontrolling%20Interests) Explains the nature and valuation of redeemable noncontrolling interests - **Redeemable noncontrolling interests represent third-party investments** in CIP and minority interests in a consolidated affiliate[67](index=67&type=chunk) - **Minority interests in the affiliate are subject to holder put rights and company call rights**, exercisable at pre-established intervals or conditions, and are recorded at estimated redemption value[67](index=67&type=chunk) Redeemable Noncontrolling Interests (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :------------------------------------------ | :------------- | :---------------- | | Balances at period end | $138,738 | $138,965 | | Net income (loss) attributable to noncontrolling interests | $1,594 | N/A | | Changes in redemption value | $4,523 | N/A | [Note 16. Consolidation](index=18&type=section&id=16.%20Consolidation) Describes the company's consolidation policies for variable interest entities and voting interest entities - **The company consolidates VOEs (majority voting interest) and VIEs (primary beneficiary), primarily CLOs**[70](index=70&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - **Consolidation and deconsolidation of investment products do not impact net income** attributable to Virtus Investment Partners, Inc.[73](index=73&type=chunk) - **The company's risk related to consolidated investment products is limited** to its beneficial interests and fees generated[73](index=73&type=chunk) Consolidated Investment Products (CIP) Balances (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :------------------------------------------ | :------------- | :---------------- | | Cash and cash equivalents of CIP | $110,049 | $206,620 | | Investments of CIP | $2,118,608 | $2,140,238 | | Notes payable of CIP | $1,978,420 | $2,033,617 | - At March 31, 2022, the company consolidated **six CLOs**, holding **$2.0 billion** in bank loan investments and **$2.2 billion** in notes payable[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2022, highlighting key business activities, financial performance, and liquidity. It discusses the impact of recent acquisitions, trends in assets under management, revenue and expense drivers, and cash flow changes [Cautionary Statement Regarding Forward Looking Statements](index=23&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) Warns that the report contains forward-looking statements subject to risks and uncertainties - **The report contains forward-looking statements**, which are not guarantees of future results and involve substantial risks and uncertainty[91](index=91&type=chunk)[92](index=92&type=chunk) - **Actual results may differ materially from forward-looking statements** due to various known and unknown risks, including those discussed under "Risk Factors"[93](index=93&type=chunk)[94](index=94&type=chunk) - **The company does not undertake to update or revise any forward-looking statements**[93](index=93&type=chunk) [Overview](index=23&type=section&id=Overview) Provides a general description of the company's business model, strategies, and recent key developments - **Virtus provides investment management and related services** to individuals and institutions through a multi-manager, multi-style approach[96](index=96&type=chunk) - **The company offers diverse investment strategies** across asset classes (equity, fixed income, multi-asset, alternative), geographies, market capitalizations, styles, and investment approaches[97](index=97&type=chunk) - Key acquisitions include Stone Harbor Investment Partners (Jan 2022, **$14.7 billion AUM** at Dec 2021) and Westchester Capital Management (Oct 2021, **$5.1 billion AUM**)[101](index=101&type=chunk)[102](index=102&type=chunk) - The AllianzGI strategic partnership (Feb 2021) established NFJ Investment Group and added **$29.5 billion** of assets[103](index=103&type=chunk) Financial Highlights (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | Change | % Change | | :-------------------------------- | :------ | :------ | :----- | :------- | | Net income per diluted share | $4.22 | $4.54 | $(0.32) | (7.0)% | | Total sales | $9.4B | $10.6B | $(1.2B) | (11.1)% | | Net flows | $(2.0)B | $2.5B | $(4.5B) | (180.0)% | | Assets under management (March 31) | $183.3B | $168.8B | $14.5B | 8.6% | [Assets Under Management by Product](index=25&type=section&id=Assets%20Under%20Management%20by%20Product) Presents a breakdown of assets under management by various product types Assets Under Management by Product (in millions) | Product | As of March 31, 2022 | As of March 31, 2021 | Change ($) | Change (%) | | :---------------------- | :------------------- | :------------------- | :--------- | :--------- | | Open-End Funds | $73,149 | $73,185 | $(36) | 0.0% | | Closed-End Funds | $12,060 | $11,664 | $396 | 3.4% | | Retail Separate Accounts | $40,824 | $37,244 | $3,580 | 9.6% | | Institutional Accounts | $57,309 | $46,787 | $10,522 | 22.5% | | Total | $183,342 | $168,880 | $14,462 | 8.6% | | Average AUM | $190,106 | $154,344 | $35,762 | 23.2% | [Asset Flows by Product](index=26&type=section&id=Asset%20Flows%20by%20Product) Details the net asset flows for different product categories over the period Asset Flows by Product (Three Months Ended March 31, in millions) | Product | 2022 Net Flows | 2021 Net Flows | 2022 Market Performance | 2021 Market Performance | | :---------------------- | :------------- | :------------- | :---------------------- | :---------------------- | | Open-End Funds | $(3,422) | $693 | $(6,907) | $1,228 | | Closed-End Funds | $8 | $0 | $(196) | $105 | | Retail Separate Accounts | $628 | $1,803 | $(4,342) | $2,141 | | Institutional Accounts | $826 | $16 | $(5,012) | $1,216 | | Total Net Flows | $(1,960) | $2,512 | $(16,457) | $4,690 | - Total inflows decreased to **$9.4 billion** in Q1 2022 from **$10.6 billion** in Q1 2021, while outflows increased to **$11.4 billion** from **$8.1 billion**[110](index=110&type=chunk) [Assets Under Management by Asset Class](index=27&type=section&id=Assets%20Under%20Management%20by%20Asset%20Class) Categorizes assets under management by different asset classes Assets Under Management by Asset Class (in millions) | Asset Class | As of March 31, 2022 | As of March 31, 2021 | Change ($) | Change (%) | % of Total (2022) | % of Total (2021) | | :---------------- | :------------------- | :------------------- | :--------- | :--------- | :------------------ | :------------------ | | Equity | $102,989 | $106,183 | $(3,194) | (3.0)% | 56.2% | 62.9% | | Fixed income | $45,418 | $35,069 | $10,349 | 29.5% | 24.8% | 20.8% | | Multi-asset | $23,415 | $22,498 | $917 | 4.1% | 12.8% | 13.3% | | Alternatives | $11,520 | $5,130 | $6,390 | 124.6% | 6.2% | 3.0% | | Total | $183,342 | $168,880 | $14,462 | 8.6% | 100.0% | 100.0% | [Average Assets Under Management and Average Fees Earned](index=27&type=section&id=Average%20Assets%20Under%20Management%20and%20Average%20Fees%20Earned) Compares average assets under management and average fee rates across product types Average Assets Under Management and Average Fee Earned | Product | Average Fee Earned (2022 bps) | Average Fee Earned (2021 bps) | Average AUM (2022 millions) | Average AUM (2021 millions) | | :---------------------- | :---------------------------- | :---------------------------- | :-------------------------- | :-------------------------- | | Open-End Funds | 46.5 | 47.5 | $75,537 | $67,137 | | Closed-End Funds | 58.4 | 56.2 | $11,762 | $9,340 | | Retail Separate Accounts | 43.6 | 45.7 | $44,538 | $32,118 | | Institutional Accounts | 31.5 | 32.1 | $58,269 | $45,749 | | All Products | 41.9 | 43.1 | $190,106 | $154,344 | - **The decrease in the average fee rate was primarily due to lower fee rates** earned on assets acquired from the AGI Relationship and Stone Harbor[117](index=117&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including revenues, expenses, and net income Summary Financial Data (Three Months Ended March 31, in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Total revenues | $252,440 | $216,897 | $35,543 | 16.4% | | Total operating expenses | $186,888 | $154,755 | $32,133 | 20.8% | | Operating income (loss) | $65,552 | $62,142 | $3,410 | 5.5% | | Other income (expense), net | $(16,039) | $(2,025) | $(14,014) | 692.0% | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $33,059 | $36,588 | $(3,529) | (9.6)% | Revenues by Source (Three Months Ended March 31, in thousands) | Revenue Source | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Investment management fees | $206,817 | $173,269 | $33,548 | 19.4% | | Distribution and service fees | $20,007 | $20,348 | $(341) | (1.7)% | | Administration and shareholder service fees | $24,344 | $22,560 | $1,784 | 7.9% | | Other income and fees | $1,272 | $720 | $552 | 76.7% | | Total revenues | $252,440 | $216,897 | $35,543 | 16.4% | - Investment management fees increased by **19.4%** due to a **$35.8 billion** (**23.2%**) increase in average AUM from acquisitions[120](index=120&type=chunk) - Distribution and service fees decreased by **1.7%** due to lower sales for open-end funds in share classes with such fees, impacted by market performance and net outflows[121](index=121&type=chunk) Operating Expenses by Category (Three Months Ended March 31, in thousands) | Expense Category | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------- | :----- | :----- | :--------- | :--------- | | Employment expenses | $105,993 | $91,759 | $14,234 | 15.5% | | Distribution and other asset-based expenses | $32,846 | $32,294 | $552 | 1.7% | | Other operating expenses | $31,712 | $19,580 | $12,132 | 62.0% | | Amortization expense | $14,662 | $9,465 | $5,197 | 54.9% | | Total operating expenses | $186,888 | $154,755 | $32,133 | 20.8% | - Employment expenses increased by **15.5%** primarily due to the addition of Stone Harbor and Westchester[125](index=125&type=chunk) - Other operating expenses increased by **62.0%** due to discrete business initiative professional fees and the Transactions[127](index=127&type=chunk) - Amortization expense increased by **54.9%** due to additional amortization associated with the Transactions[130](index=130&type=chunk) Other Income (Expense), Net (Three Months Ended March 31, in thousands) | Category | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Realized and unrealized gain (loss) on investments, net | $(2,982) | $891 | $(3,873) | (434.7)% | | Realized and unrealized gain (loss) of CIP, net | $(13,344) | $(4,687) | $(8,657) | 184.7% | | Other income (expense), net | $287 | $1,771 | $(1,484) | (83.8)% | | Total Other Income (Expense), net | $(16,039) | $(2,025) | $(14,014) | 692.0% | - Realized and unrealized gain (loss) of CIP, net, worsened by **$8.7 million**, primarily due to increased unrealized losses on leveraged loans, partially offset by changes in unrealized gains on notes payable[133](index=133&type=chunk) Interest Income (Expense), Net (Three Months Ended March 31, in thousands) | Category | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Interest expense | $(2,279) | $(2,314) | $35 | (1.5)% | | Interest and dividend income | $328 | $136 | $192 | 141.2% | | Interest and dividend income of investments of CIP | $20,380 | $23,876 | $(3,496) | (14.6)% | | Interest expense of CIP | $(12,088) | $(14,448) | $2,360 | (16.3)% | | Total Interest Income (Expense), net | $6,341 | $7,250 | $(909) | (12.5)% | - Interest and dividend income of investments of CIP decreased by **14.6%** due to lower interest earned from consolidated CLOs[138](index=138&type=chunk) - Interest expense of CIP decreased by **16.3%** due to lower average debt balances of CIP[139](index=139&type=chunk) - Income tax expense increased by **10.4%** due to a higher effective tax rate (**30.0%** in 2022 vs. **22.5%** in 2021), primarily from valuation allowances on unrealized losses[140](index=140&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, investments, debt, and overall financial flexibility Liquidity and Capital Resources Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $225,217 | $378,921 | $(153,704) | (40.6)% | | Investments | $116,767 | $108,890 | $7,877 | 7.2% | | Contingent consideration | $130,728 | $162,564 | $(31,836) | (19.6)% | | Debt | $265,954 | $266,346 | $(392) | (0.1)% | | Total equity | $824,233 | $836,627 | $(12,394) | (1.5)% | Cash Flow Data (Three Months Ended March 31, in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Operating activities | $(81,775) | $150,151 | $(231,926) | (154.5)% | | Investing activities | $(22,575) | $2,608 | $(19,967) | 765.6% | | Financing activities | $(145,777) | $(87,673) | $(58,104) | 66.3% | - Main uses of capital include employee compensation (**$151.6 million** paid in Q1 2022), other operating expenses, interest on debt, and income taxes[143](index=143&type=chunk)[144](index=144&type=chunk) - **The broker-dealer subsidiary maintained a ratio of aggregate indebtedness to net capital below the maximum allowed**, with net capital significantly greater than the minimum[146](index=146&type=chunk) - The company repaid **$0.7 million** under its Term Loan in Q1 2022, with **$273.6 million** outstanding at March 31, 2022[151](index=151&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Highlights key accounting policies and estimates that require significant management judgment - **No material changes occurred in critical accounting policies and estimates** during Q1 2022[153](index=153&type=chunk) [Recently Issued Accounting Pronouncements](index=33&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) References disclosures on new accounting standards and their potential impact - **Refer to Note 2** in the condensed consolidated financial statements for a discussion of accounting standards[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is associated with unfavorable movements in interest rates and securities prices. There were no material changes to this information from the 2020 Annual Report on Form 10-K during Q1 2022 - **The company is primarily exposed to market risk** from unfavorable movements in interest rates and securities prices[155](index=155&type=chunk) - **No material changes to market risk disclosures were reported** in Q1 2022 compared to the 2020 Annual Report on Form 10-K[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Details management's evaluation of disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Assesses the effectiveness of the company's disclosure controls and procedures - **Disclosure controls and procedures are designed to ensure timely and accurate reporting** of information required by the Exchange Act[156](index=156&type=chunk) - **Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective** at the reasonable assurance level as of March 31, 2022[157](index=157&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports on any material changes in the company's internal control over financial reporting - **No material changes in internal control over financial reporting occurred** during Q1 2022[158](index=158&type=chunk) [PART II – OTHER INFORMATION](index=33&type=section&id=Part%20II.%20OTHER%20INFORMATION) Provides information on legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 14 "Commitments and Contingencies" in Part I, Item 1 of this report - **Legal proceedings information is incorporated by reference** from Note 14 "Commitments and Contingencies" in Part I, Item 1[159](index=159&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those previously reported in its 2021 Annual Report on Form 10-K - **No material changes to the company's risk factors were reported** from the 2021 Annual Report on Form 10-K[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2022, the company repurchased 125,452 common shares for $30.0 million under its share repurchase program, leaving 403,997 shares available. No unregistered sales of equity securities occurred - The company repurchased **125,452** common shares for **$30.0 million** during Q1 2022 under its share repurchase program[161](index=161&type=chunk)[163](index=163&type=chunk) - As of March 31, 2022, **403,997** shares remained available for repurchase[161](index=161&type=chunk)[163](index=163&type=chunk) - **No unregistered sales of equity securities occurred** during the period[165](index=165&type=chunk) Share Repurchases (Q1 2022) | Period | Total shares purchased | Average price paid per share | Total shares purchased as part of plans | Maximum shares available for repurchase | | :------------------ | :--------------------- | :--------------------------- | :-------------------------------------- | :-------------------------------------- | | January 1-31, 2022 | 0 | $0 | 0 | 529,449 | | February 1-28, 2022 | 52,895 | $255.08 | 52,895 | 476,554 | | March 1-31, 2022 | 72,557 | $227.46 | 72,557 | 403,997 | | Total | 125,452 | N/A | 125,452 | N/A | [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, interactive data files, and other required documents - **Exhibits include certifications (CEO, CFO), interactive data files (iXBRL), and other financial statements**[167](index=167&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report is duly signed on behalf of Virtus Investment Partners, Inc. by Michael A. Angerthal, Executive Vice President and Chief Financial Officer, on May 10, 2022 - **The report was signed by Michael A. Angerthal, Executive Vice President and Chief Financial Officer, on May 10, 2022**[170](index=170&type=chunk)

Virtus Investment Partners, Inc. (NYSE:VRTS) Q1 2022 Earnings Conference Call April 29, 2022 10:00 AM ET Company Participants Sean Rourke – Vice President, Investor Relations George Aylward – President and Chief Executive Officer Mike Angerthal – Chief Financial Officer Conference Call Participants Sumeet Mody – Piper Sandler Michael Cyprys – Morgan Stanley Operator Good morning. My name is Cherry, and I’ll be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners ...

Assets Under Management (AUM) and Flows - AUM decreased to $183.3 billion, compared to $187.2 billion at the end of the previous quarter, due to market depreciation and net outflows, but was partially offset by the addition of Stone Harbor's AUM[9, 15] - Sales increased by 8% to $9.4 billion, driven by growth in open-end funds and institutional sales[9, 21] - Net outflows were $2.0 billion, primarily due to open-end fund outflows, which were partially offset by positive net flows in institutional and retail separate accounts[9, 21] - The net outflow rate was (4.2)%[21] Financial Performance (Adjusted) - Operating income was $90.1 million, including $9.7 million of seasonal employment items[10] - Operating margin was 40.6%, or 45.0% excluding seasonal items[10] - Earnings per diluted share were $7.87, with a ($0.91) impact from seasonal items[10] - Investment management fees decreased by $7.1 million, or 4%, due to a lower average fee rate and market depreciation[23] - The average fee rate was 41.9 bps, compared to 43.7 bps in the prior quarter[23] Capital Activities - The company repurchased or net settled 187,311 shares for $43.4 million[10] - Acquisition and revenue participation payments totaled $61.2 million[10] - Net debt was $48 million, representing 0.1x EBITDA[10]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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 1-10994 VIRTUS INVESTMENT PARTNERS, INC. (Exact name of registrant as specified in its charter) Delaware 26-3962811 State or other ...

FOURTH QUARTER EARNINGS PRESENTATION February 4, 2022 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 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: 001-10994 VIRTUS INVESTMENT PARTNERS, INC. (Exact name of registrant as specified in its charter) Delaware 26-3962811 (State or other juri ...

THIRD QUARTER EARNINGS PRESENTATION October 27, 2021 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 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: 001-10994 VIRTUS INVESTMENT PARTNERS, INC. (Exact name of registrant as specified in its charter) Delaware 26-3962811 (State or other jurisdict ...

Part I – Financial Information This section presents the unaudited condensed consolidated financial information, including statements, management's analysis, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Details the company's financial position, including assets, liabilities, and equity at specific dates | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | **Assets:** | | | | Cash and cash equivalents | $228,260 | $246,511 | | Investments | $67,651 | $64,944 | | Accounts receivable, net | $116,160 | $84,499 | | Assets of consolidated investment products ("CIP") | | | | Cash and cash equivalents of CIP | $170,725 | $86,980 | | Investments of CIP | $2,299,607 | $2,333,277 | | Intangible assets, net | $391,187 | $280,264 | | Goodwill | $315,366 | $290,366 | | Total assets | $3,702,159 | $3,466,943 | | **Liabilities and Equity:** | | | | Accrued compensation and benefits | $62,335 | $122,514 | | Contingent consideration (Note 3) | $137,664 | — | | Debt | $195,726 | $201,212 | | Notes payable of CIP | $2,197,695 | $2,190,445 | | Total liabilities | $2,850,982 | $2,630,490 | | Redeemable noncontrolling interests | $112,482 | $115,513 | | Total equity | $738,695 | $720,940 | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Outlines revenues, expenses, net income (loss), and earnings per share over specific periods | (in thousands, except per share data) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenues | $216,897 | $144,566 | | Total operating expenses | $154,755 | $119,964 | | Operating Income (Loss) | $62,142 | $24,602 | | Total other income (expense), net | $(2,025) | $(15,601) | | Total interest income (expense), net | $7,250 | $2,296 | | Income (Loss) Before Income Taxes | $67,367 | $11,297 | | Income tax expense (benefit) | $15,153 | $10,291 | | Net Income (Loss) | $52,214 | $1,006 | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | | Earnings (Loss) per Share—Basic | $4.79 | $(0.58) | | Earnings (Loss) per Share—Diluted | $4.54 | $(0.58) | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Details net income and other comprehensive income (loss) components, leading to total comprehensive income (loss) | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) | $52,214 | $1,006 | | Other comprehensive income (loss), net of tax: | | | | Foreign currency translation adjustment, net of tax | $6 | $(25) | | Other comprehensive income (loss) | $6 | $(25) | | Comprehensive income (loss) | $52,220 | $981 | | Comprehensive (income) loss attributable to noncontrolling interests | $(15,626) | $(5,291) | | Comprehensive Income (Loss) Attributable to Stockholders | $36,594 | $(4,310) | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Summarizes cash flows from operating, investing, and financing activities over specific periods | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $150,151 | $(252,320) | | Net cash provided by (used in) investing activities | $(2,608) | $9,366 | | Net cash provided by (used in) financing activities | $(87,673) | $314,641 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $59,870 | $71,687 | | Cash, cash equivalents and restricted cash, end of period | $399,719 | $393,626 | [Condensed Consolidated Statements of Changes in Equity (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)) Details changes in equity components, including net income, dividends, and other comprehensive income - Total equity attributable to stockholders increased from **$711,141 thousand** at December 31, 2020, to **$729,378 thousand** at March 31, 2021, primarily driven by net income attributable to common stockholders of **$36,588 thousand**, partially offset by cash dividends declared and taxes paid on stock-based compensation[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization and Business](index=10&type=section&id=1.%20Organization%20and%20Business) Describes Virtus Investment Partners, Inc.'s operations in investment management and service offerings - Virtus Investment Partners, Inc. operates in the investment management industry through its subsidiaries, providing investment management and related services to individuals and institutions via various products like U.S. 1940 Act mutual funds, UCITS, ETFs, closed-end funds, retail separate accounts, institutional separate accounts, pooled structures, and subadvisory services[23](index=23&type=chunk)[24](index=24&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Outlines the basis for financial statement preparation and key accounting policies applied - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, including normal recurring adjustments[25](index=25&type=chunk) - The company adopted ASU 2020-01 and ASU 2019-12 on January 1, 2021, neither of which had a material impact on the financial statements[27](index=27&type=chunk)[28](index=28&type=chunk) [3. Revenues](index=10&type=section&id=3.%20Revenues) Details the company's revenue recognition policies and a breakdown of revenue sources - Revenues are recognized when performance obligations are satisfied, typically when control of services is transferred[29](index=29&type=chunk) - Investment management, distribution, and administration fees are generally calculated as a percentage of average net assets and are considered constrained until asset values are determinable at the end of the measurement period[30](index=30&type=chunk) | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Investment management fees | $173,269 | $120,288 | | Distribution and service fees | $20,348 | $9,460 | | Administration and shareholder service fees | $22,560 | $14,653 | | Other income and fees | $720 | $165 | | Total revenues | $216,897 | $144,566 | [4. AllianzGI Strategic Partnership](index=11&type=section&id=4.%20AllianzGI%20Strategic%20Partnership) Discusses the strategic partnership with AllianzGI, including acquired assets and contingent consideration - On February 1, 2021, the Company finalized its strategic partnership with Allianz Global Investors (AllianzGI), becoming the investment adviser, distributor, and/or administrator for certain AllianzGI assets[32](index=32&type=chunk) - This included the addition of NFJ Investment Group as an affiliated manager[32](index=32&type=chunk) - The transaction consideration is contingent, based on a percentage of investment management fees earned over seven years, with an estimated future payment liability of **$137.7 million** as of March 31, 2021[33](index=33&type=chunk) | (in thousands) | February 1, 2021 Approximate Fair Value | Weighted Average Useful Life | | :--------------------------------- | :-------------------------------------- | :--------------------------- | | Definite-lived intangible assets: | | | | Open-end and closed-end fund investment contracts | $101,447 | 13 years | | Retail separate account investment contracts | $17,000 | 6 years | | Trade name | $1,941 | 8 years | | Total definite-lived intangible assets | $120,388 | | | Goodwill | $25,000 | | | Total assets acquired | $145,388 | | [5. Intangible Assets, Net](index=12&type=section&id=5.%20Intangible%20Assets,%20Net) Provides details on intangible assets, including definite-lived and indefinite-lived assets and amortization | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Definite-lived intangible assets, net | $347,671 | $236,748 | | Indefinite-lived intangible assets | $43,516 | $43,516 | | Total intangible assets, net | $391,187 | $280,264 | - Intangible assets, net increased by **$110.9 million** from December 31, 2020, to March 31, 2021, primarily due to additions of **$120.4 million**, largely from the AllianzGI transaction, offset by amortization[35](index=35&type=chunk) | Fiscal Year | Amount (in thousands) | | :---------- | :-------------------- | | Remainder of 2021 | $31,145 | | 2022 | $41,440 | | 2023 | $40,778 | | 2024 | $35,136 | | 2025 | $30,368 | | 2026 and thereafter | $168,804 | | Total | $347,671 | [6. Investments](index=12&type=section&id=6.%20Investments) Describes the company's investment holdings, primarily in sponsored products, and related gains or losses - Investments primarily consist of holdings in the Company's sponsored products[36](index=36&type=chunk) - Total investments increased from **$64.9 million** at December 31, 2020, to **$67.7 million** at March 31, 2021[36](index=36&type=chunk) | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Investment securities - fair value | $40,904 | $39,990 | | Equity method investments (1) | $13,568 | $12,676 | | Nonqualified retirement plan assets | $11,177 | $10,612 | | Other investments | $2,002 | $1,666 | | Total investments | $67,651 | $64,944 | - The Company recognized **$0.8 million** in realized gains on the sale of investment securities-fair value for the three months ended March 31, 2021, compared to **$0.3 million** in realized losses for the same period in 2020[37](index=37&type=chunk) [7. Fair Value Measurements](index=13&type=section&id=7.%20Fair%20Value%20Measurements) Explains the fair value measurement hierarchy for assets and liabilities, categorized into Level 1, 2, and 3 - The Company measures certain assets and liabilities at fair value on a recurring basis, categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :--------- | :------ | :------ | :-------- | | **March 31, 2021 Assets:** | | | | | | Cash equivalents | $178,556 | $— | $— | $178,556 | | Investment securities - fair value | | | | | | Sponsored funds | $26,598 | $— | $— | $26,598 | | Equity securities | $14,303 | $— | $— | $14,303 | | Debt securities | $— | $3 | $— | $3 | | Nonqualified retirement plan assets | $11,177 | $— | $— | $11,177 | | Total assets measured at fair value | $230,634 | $3 | $— | $230,637 | - The Company had no Level 3 investments for the three-month periods ended March 31, 2021 and 2020[44](index=44&type=chunk) [8. Equity Transactions](index=14&type=section&id=8.%20Equity%20Transactions) Details transactions affecting equity, including cash dividends declared and common share repurchases - On February 24, 2021, the Company declared a quarterly cash dividend of **$0.82 per common share**[45](index=45&type=chunk) - During the three months ended March 31, 2021, the Company repurchased **19,912 common shares** at a weighted average price of **$251.07 per share**, totaling **$5.0 million**[46](index=46&type=chunk) - As of March 31, 2021, **702,730 shares** remained available for repurchase under its program[46](index=46&type=chunk) [9. Accumulated Other Comprehensive Income (Loss)](index=14&type=section&id=9.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Outlines changes in accumulated other comprehensive income, primarily from foreign currency translation adjustments | (in thousands) | Foreign Currency Translation Adjustments | | :------------- | :--------------------------------------- | | Balance at December 31, 2020 | $29 | | Foreign currency translation adjustments, net of tax of $— | $6 | | Net current-period other comprehensive income (loss) | $6 | | Balance at March 31, 2021 | $35 | - Accumulated other comprehensive income increased from **$29 thousand** at December 31, 2020, to **$35 thousand** at March 31, 2021, primarily due to foreign currency translation adjustments[47](index=47&type=chunk) [10. Stock-Based Compensation](index=16&type=section&id=10.%20Stock-Based%20Compensation) Provides information on stock-based compensation expense, unamortized amounts, and tax withholding obligations - Stock-based compensation expense for the three months ended March 31, 2021, was **$8.0 million**, a significant increase from **$3.6 million** in the prior year period[49](index=49&type=chunk) - As of March 31, 2021, unamortized stock-based compensation expense for unvested RSUs and PSUs was **$35.2 million**, with a weighted-average remaining contractual life of **1.5 years**[53](index=53&type=chunk) - The Company paid **$15.2 million** in minimum employee tax withholding obligations related to RSUs withheld for net share settlements during the three months ended March 31, 2021, compared to **$3.6 million** in the prior year[51](index=51&type=chunk) [11. Earnings (Loss) Per Share](index=16&type=section&id=11.%20Earnings%20(Loss)%20Per%20Share) Presents the calculation of basic and diluted earnings (loss) per share for common stockholders | (in thousands, except per share amounts) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | | Earnings (Loss) per Share—Basic | $4.79 | $(0.58) | | Earnings (Loss) per Share—Diluted | $4.54 | $(0.58) | - Diluted EPS significantly improved to **$4.54** for the three months ended March 31, 2021, from a loss of **$(0.58)** in the prior year period[56](index=56&type=chunk) [12. Income Taxes](index=17&type=section&id=12.%20Income%20Taxes) Details the company's income tax expense and estimated effective tax rate, including factors influencing changes - The estimated effective tax rate for the three months ended March 31, 2021, was **22.5%**, significantly lower than **91.1%** in the prior year period[59](index=59&type=chunk) - This decrease was primarily due to valuation allowances recorded in the prior year for unrealized losses on certain Company investments[59](index=59&type=chunk) [13. Debt](index=17&type=section&id=13.%20Debt) Describes the company's credit agreement, term loan, revolving credit facility, and debt repayment activities - The Company's credit agreement includes a **$365.0 million** Term Loan expiring in June 2024 and a **$100.0 million** revolving credit facility expiring in June 2022[60](index=60&type=chunk) - As of March 31, 2021, **$199.8 million** remained outstanding under the Term Loan, with no outstanding borrowings under the Credit Facility[60](index=60&type=chunk) - During the three months ended March 31, 2021, the Company repaid **$5.9 million** outstanding under its Term Loan[60](index=60&type=chunk) [14. Commitments and Contingencies](index=18&type=section&id=14.%20Commitments%20and%20Contingencies) Addresses the company's involvement in legal and regulatory matters and their potential financial impact - The Company is involved in various legal and regulatory matters[61](index=61&type=chunk) - While significant judgment is required, the Company believes the outcomes are not likely to have a material adverse effect on its results of operations, cash flows, or financial condition, based on currently available information, insurance coverage, indemnities, and established reserves[62](index=62&type=chunk) [15. Redeemable Noncontrolling Interests](index=18&type=section&id=15.%20Redeemable%20Noncontrolling%20Interests) Explains redeemable noncontrolling interests in consolidated investment products and majority-owned affiliates - Redeemable noncontrolling interests represent third-party investments in the Company's consolidated investment products (CIP) and minority interests in a consolidated majority-owned affiliate, which are subject to holder put rights and Company call rights[63](index=63&type=chunk) | (in thousands) | CIP | Affiliate Noncontrolling Interests | Total | | :------------- | :------- | :--------------------------------- | :-------- | | Balances at December 31, 2020 | $28,061 | $87,452 | $115,513 | | Net income (loss) attributable to noncontrolling interests | $(44) | $1,958 | $1,914 | | Changes in redemption value (1) | $— | $13,637 | $13,637 | | Net subscriptions (redemptions) and other | $(13,594) | $(4,988) | $(18,582) | | Balances at March 31, 2021 | $14,423 | $98,059 | $112,482 | [16. Consolidation](index=19&type=section&id=16.%20Consolidation) Outlines the company's consolidation principles for voting interest entities and variable interest entities - The Company consolidates voting interest entities (VOEs) where it has a controlling financial interest and variable interest entities (VIEs) where it is the primary beneficiary[66](index=66&type=chunk)[67](index=67&type=chunk) - Consolidated Investment Products (CIP) include both VOEs (primarily open-end funds) and VIEs (primarily CLOs)[68](index=68&type=chunk) - The consolidation and deconsolidation of investment products have no impact on net income (loss) attributable to stockholders, and the Company's risk is limited to its beneficial interests and fees generated from these products[68](index=68&type=chunk) | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Cash and cash equivalents of CIP | $170,725 | $86,980 | | Investments of CIP | $2,299,607 | $2,333,277 | | Notes payable of CIP | $2,197,695 | $2,190,445 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operating results, focusing on AUM, revenue, expenses, and liquidity, highlighting growth drivers [Cautionary Statement Regarding Forward Looking Statements](index=24&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) Advises that the report contains forward-looking information subject to risks and uncertainties, which may not be updated - The report contains forward-looking statements based on expectations, assumptions, and projections, which are not guarantees of future results and involve substantial risks and uncertainties[88](index=88&type=chunk)[89](index=89&type=chunk) - The Company does not undertake to update or revise these statements[90](index=90&type=chunk) - Key risks and uncertainties include reductions in assets under management, inability to achieve acquisition benefits, ongoing effects of COVID-19, withdrawal of advisory agreements, damage to reputation, inability to satisfy financial covenants, and adverse regulatory developments[91](index=91&type=chunk) [Overview](index=24&type=section&id=Overview) Describes Virtus's investment management business, strategic partnerships, and recent financial highlights - Virtus provides investment management and related services to individuals and institutions using a multi-manager, multi-style approach, offering diverse strategies across asset classes, geographies, market capitalizations, and investment styles[93](index=93&type=chunk)[95](index=95&type=chunk) - The Company distributes its retail products through financial intermediaries and institutional services directly to clients and through consultants, targeting various market segments[96](index=96&type=chunk)[97](index=97&type=chunk) - The Company completed a strategic partnership with Allianz Global Investors (AllianzGI) on February 1, 2021, adding **$29.5 billion** in assets under management and establishing NFJ Investment Group as an affiliated manager[100](index=100&type=chunk) - Net income per diluted share was **$4.54** in Q1 2021, a significant improvement from a net loss of **$(0.58)** in Q1 2020[101](index=101&type=chunk) - Total sales increased by **47.4%** to **$10.6 billion**, and net flows turned positive at **$2.4 billion** in Q1 2021[101](index=101&type=chunk) [Assets Under Management](index=26&type=section&id=Assets%20Under%20Management) Details total assets under management, including growth drivers like market performance and strategic transactions - Total assets under management (AUM) reached **$168.9 billion** at March 31, 2021, an **86.2%** increase from March 31, 2020, and a **27.8%** increase from December 31, 2020[102](index=102&type=chunk) - The AUM increase from March 31, 2020, was driven by **$40.5 billion** in positive market performance, **$29.5 billion** from the AGI Transaction, and **$9.2 billion** in positive net flows[102](index=102&type=chunk) | (in millions) | As of March 31, 2021 | As of March 31, 2020 | Change $ | Change % | | :---------------------- | :------------------- | :------------------- | :------- | :------- | | Open-End Funds | $72,164 | $34,361 | $37,803 | 110.0 % | | Closed-End Funds | $11,664 | $5,343 | $6,321 | 118.3 % | | Exchange Traded Funds | $1,021 | $480 | $541 | 112.7 % | | Retail Separate Accounts | $37,244 | $17,660 | $19,584 | 110.9 % | | Institutional Accounts | $42,802 | $28,507 | $14,295 | 50.1 % | | Structured Products | $3,985 | $4,343 | $(358) | (8.2)% | | Total | $168,880 | $90,694 | $78,186 | 86.2 % | | Average Assets Under Management | $154,344 | $105,904 | $48,440 | 45.7 % | [Operating Results](index=26&type=section&id=Operating%20Results) Analyzes total revenues and operating income, highlighting key factors contributing to their changes - Total revenues increased by **50.0%** to **$216.9 million** in Q1 2021 from **$144.6 million** in Q1 2020, primarily due to higher average AUM from positive market performance, net flows, and the AGI Transaction[103](index=103&type=chunk) - Operating income increased by **$37.5 million** to **$62.1 million** in Q1 2021, compared to **$24.6 million** in Q1 2020, driven by the same factors as revenue growth[103](index=103&type=chunk) [Asset Flows by Product](index=27&type=section&id=Asset%20Flows%20by%20Product) Presents a breakdown of asset inflows, outflows, and net flows across various product categories | (in millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Total Beginning balance | $132,194 | $108,904 | | Total Inflows | $10,611 | $7,201 | | Total Outflows | $(8,178) | $(8,574) | | Total Net flows | $2,433 | $(1,373) | | Total Market performance | $4,690 | $(16,574) | | Total Other (3) | $29,563 | $(263) | | Total Ending balance | $168,880 | $90,694 | - Overall net flows turned positive, reaching **$2.4 billion** in Q1 2021, a significant improvement from a net outflow of **$1.4 billion** in Q1 2020[107](index=107&type=chunk)[108](index=108&type=chunk) - This was largely supported by strong inflows in Open-End Funds and Retail Separate Accounts[107](index=107&type=chunk) - Market performance contributed **$4.7 billion** in Q1 2021, a reversal from a negative **$16.6 billion** impact in Q1 2020[108](index=108&type=chunk) [Assets Under Management by Asset Class](index=28&type=section&id=Assets%20Under%20Management%20by%20Asset%20Class) Categorizes assets under management by asset class, showing their distribution and growth | (in millions) | As of March 31, 2021 | As of March 31, 2020 | Change $ | Change % | % of Total 2021 | % of Total 2020 | | :-------------- | :------------------- | :------------------- | :------- | :------- | :-------------- | :-------------- | | Equity | $106,183 | $50,587 | $55,596 | 109.9 % | 62.9 % | 55.8 % | | Fixed income (1) | $35,069 | $26,735 | $8,334 | 31.2 % | 20.8 % | 29.5 % | | Multi-asset (2) | $22,498 | $9,708 | $12,790 | 131.7 % | 13.3 % | 10.7 % | | Alternatives (3) | $5,130 | $3,664 | $1,466 | 40.0 % | 3.0 % | 4.0 % | | Total | $168,880 | $90,694 | $78,186 | 86.2 % | 100.0 % | 100.0 % | - Equity assets under management more than doubled, increasing by **109.9%** to **$106.2 billion**, and now represent **62.9%** of total AUM, up from **55.8%** in the prior year[109](index=109&type=chunk) - Multi-asset strategies showed the highest percentage growth, increasing by **131.7%** to **$22.5 billion**[109](index=109&type=chunk) [Average Assets Under Management and Average Basis Points](index=29&type=section&id=Average%20Assets%20Under%20Management%20and%20Average%20Basis%20Points) Provides average assets under management and average fee rates (basis points) across different product types | Products | Average Fee Earned (basis points) 2021 | Average Fee Earned (basis points) 2020 | Average Assets Under Management (in millions) 2021 | Average Assets Under Management (in millions) 2020 | | :---------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Open-End Funds (1) | 48.0 | 48.5 | $66,247 | $41,992 | | Closed-End Funds | 56.2 | 62.8 | $9,340 | $6,524 | | Exchange Traded Funds | 6.7 | 9.5 | $890 | $962 | | Retail Separate Accounts | 45.7 | 48.7 | $32,118 | $20,414 | | Institutional Accounts | 31.5 | 29.1 | $41,764 | $31,821 | | Structured Products | 38.8 | 33.9 | $3,985 | $4,191 | | All Products | 43.1 | 42.6 | $154,344 | $105,904 | - Average AUM across all products increased by **45.7%** to **$154.3 billion** for the three months ended March 31, 2021, compared to **$105.9 billion** in the prior year period[113](index=113&type=chunk) - The overall average fee earned increased slightly to **43.1 basis points** in Q1 2021 from **42.6 basis points** in Q1 2020, with notable increases in Institutional Accounts and Structured Products, and decreases in Closed-End Funds and ETFs[113](index=113&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Offers a detailed analysis of financial performance, including revenue, expenses, and net income [Summary Financial Data](index=29&type=section&id=Summary%20Financial%20Data) Provides a concise overview of key financial metrics for the current and prior periods | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Investment management fees | $173,269 | $120,288 | $52,981 | 44.0 % | | Other revenue | $43,628 | $24,278 | $19,350 | 79.7 % | | Total revenues | $216,897 | $144,566 | $72,331 | 50.0 % | | Total operating expenses | $154,755 | $119,964 | $34,791 | 29.0 % | | Operating income (loss) | $62,142 | $24,602 | $37,540 | 152.6 % | | Other income (expense), net | $(2,025) | $(15,601) | $13,576 | (87.0)% | | Interest income (expense), net | $7,250 | $2,296 | $4,954 | 215.8 % | | Income (loss) before income taxes | $67,367 | $11,297 | $56,070 | 496.3 % | | Income tax expense (benefit) | $15,153 | $10,291 | $4,862 | 47.2 % | | Net income (loss) | $52,214 | $1,006 | $51,208 | 5,090.3 % | | Noncontrolling interests | $(15,626) | $(5,291) | $(10,335) | 195.3 % | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | $40,873 | (953.9)% | [Revenues](index=30&type=section&id=Revenues) Details the components of total revenues and their year-over-year changes | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Investment management fees | $173,269 | $120,288 | $52,981 | 44.0 % | | Distribution and service fees | $20,348 | $9,460 | $10,888 | 115.1 % | | Administration and shareholder service fees | $22,560 | $14,653 | $7,907 | 54.0 % | | Other income and fees | $720 | $165 | $555 | 336.4 % | | Total revenues | $216,897 | $144,566 | $72,331 | 50.0 % | - Total revenues increased by **50.0%** year-over-year, primarily driven by a **44.0%** increase in investment management fees due to higher average assets under management, and a **115.1%** increase in distribution and service fees[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Other income and fees saw a substantial **336.4%** increase, mainly due to **$3.4 billion** of other fee-earning assets from the AGI Transaction[121](index=121&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Analyzes the various categories of operating expenses and their changes over time | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Employment expenses | $91,759 | $66,130 | $25,629 | 38.8 % | | Distribution and other asset-based expenses | $32,294 | $19,409 | $12,885 | 66.4 % | | Other operating expenses | $19,580 | $18,885 | $695 | 3.7 % | | Other operating expenses of CIP | $559 | $6,749 | $(6,190) | (91.7) % | | Depreciation expense | $1,098 | $1,258 | $(160) | (12.7) % | | Amortization expense | $9,465 | $7,533 | $1,932 | 25.6 % | | Total operating expenses | $154,755 | $119,964 | $34,791 | 29.0 % | - Total operating expenses increased by **29.0%** to **$154.8 million**, primarily due to higher employment expenses (up **38.8%** from increased profit- and sales-based compensation) and distribution and other asset-based expenses (up **66.4%** from increased sales and AUM)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Other operating expenses of CIP significantly decreased by **91.7%**, mainly due to non-recurring costs associated with a new CLO issuance in the prior year[126](index=126&type=chunk) [Other Income (Expense)](index=32&type=section&id=Other%20Income%20(Expense)) Details non-operating income and expenses, including realized and unrealized gains or losses on investments | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Realized and unrealized gain (loss) on investments, net | $891 | $(7,544) | $8,435 | (111.8)% | | Realized and unrealized gain (loss) of CIP, net | $(4,687) | $(8,669) | $3,982 | (45.9) % | | Other income (expense), net | $1,771 | $612 | $1,159 | 189.4 % | | Total Other Income (Expense), net | $(2,025) | $(15,601) | $13,576 | (87.0)% | - Total other income (expense), net improved significantly by **$13.6 million**, moving from a net expense of **$(15.6) million** in Q1 2020 to **$(2.0) million** in Q1 2021[130](index=130&type=chunk) - This was driven by a positive swing in realized and unrealized gains on investments and increased earnings from equity method investments[131](index=131&type=chunk)[133](index=133&type=chunk) [Interest Income (Expense)](index=32&type=section&id=Interest%20Income%20(Expense)) Analyzes interest income and expense, including components related to consolidated investment products | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Interest expense | $(2,314) | $(3,199) | $885 | (27.7) % | | Interest and dividend income | $136 | $752 | $(616) | (81.9) % | | Interest and dividend income of investments of CIP | $23,876 | $29,229 | $(5,353) | (18.3) % | | Interest expense of CIP | $(14,448) | $(24,486) | $10,038 | (41.0) % | | Total Interest Income (Expense), net | $7,250 | $2,296 | $4,954 | 215.8 % | - Total net interest income (expense) increased by **215.8%** to **$7.3 million**, primarily due to a **$10.0 million** decrease in interest expense of CIP (driven by lower variable interest rates and non-recurring amortization in the prior year) and a **$0.9 million** decrease in the Company's own interest expense[134](index=134&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk) - Interest and dividend income decreased by **81.9%** due to lower interest rates on cash, and interest and dividend income of investments of CIP decreased by **18.3%** due to lower interest rates[136](index=136&type=chunk)[137](index=137&type=chunk) [Income Tax Expense (Benefit)](index=33&type=section&id=Income%20Tax%20Expense%20(Benefit)) Discusses the company's income tax expense and the estimated effective tax rate - Income tax expense increased by **47.2%** to **$15.2 million**[116](index=116&type=chunk) - The estimated effective tax rate decreased significantly to **22.5%** in Q1 2021 from **91.1%** in Q1 2020, mainly due to valuation allowances recorded in the prior year for unrealized losses on certain Company investments[139](index=139&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Evaluates the company's ability to meet financial obligations, including cash, debt, and capital requirements [Certain Financial Data](index=33&type=section&id=Certain%20Financial%20Data) Presents key balance sheet and cash flow data relevant to liquidity and capital management | (in thousands) | March 31, 2021 | December 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :------------- | :---------------- | :------------------- | :-------------- | | **Balance Sheet Data** | | | | | | Cash and cash equivalents | $228,260 | $246,511 | $(18,251) | (7.4)% | | Investments | $67,651 | $64,944 | $2,707 | 4.2 % | | Debt | $195,726 | $201,212 | $(5,486) | (2.7)% | | Redeemable noncontrolling interests | $112,482 | $115,513 | $(3,031) | (2.6)% | | Total equity | $738,695 | $720,940 | $17,755 | 2.5 % | | **Cash Flow Data** | | | | | | Operating Activities | $150,151 | $(252,320) | $402,471 | (159.5)% | | Investing Activities | $(2,608) | $9,366 | $(11,974) | (127.8)% | | Financing Activities | $(87,673) | $314,641 | $(402,314) | (127.9)% | [Overview](index=33&type=section&id=Overview) Provides a summary of the company's cash, investments, and debt positions - As of March 31, 2021, the Company had **$228.3 million** in cash and cash equivalents and **$67.7 million** in investments[141](index=141&type=chunk) - Debt outstanding under the term loan was **$199.8 million**, with no outstanding borrowings under the revolving credit facility[142](index=142&type=chunk) [Uses of Capital](index=34&type=section&id=Uses%20of%20Capital) Outlines the primary and potential uses of the company's capital, including compensation and growth investments - Main uses of capital include employee compensation (especially annual incentive compensation, which was **$96.9 million** in Q1 2021), interest on debt, income taxes, and other operating expenses[143](index=143&type=chunk) - Other potential uses of cash include investments in organic growth, new product launches, debt payments, dividends, share repurchases, infrastructure investments, inorganic growth opportunities, and purchases of affiliate noncontrolling interests[144](index=144&type=chunk) [Capital and Reserve Requirements](index=34&type=section&id=Capital%20and%20Reserve%20Requirements) Details the regulatory capital requirements for the company's broker-dealer subsidiary - The Company's broker-dealer subsidiary is subject to SEC minimum net capital rules, requiring a ratio of 'aggregate indebtedness' to 'net capital' not exceeding **15 to 1**[145](index=145&type=chunk) - As of March 31, 2021, the broker-dealer met these requirements, with net capital significantly greater than the minimum[145](index=145&type=chunk) [Operating Cash Flow](index=34&type=section&id=Operating%20Cash%20Flow) Analyzes net cash provided by or used in operating activities and its key drivers - Net cash provided by operating activities was **$150.2 million** for Q1 2021, a significant change from net cash used of **$252.3 million** in Q1 2020, primarily due to a **$379.0 million** decrease in net purchases of investments by CIP[147](index=147&type=chunk) [Investing Cash Flow](index=34&type=section&id=Investing%20Cash%20Flow) Details net cash provided by or used in investing activities, including capital expenditures - Net cash used in investing activities was **$2.6 million** for Q1 2021, compared to net cash provided of **$9.4 million** in Q1 2020[148](index=148&type=chunk) - The primary activity in Q1 2021 was **$2.6 million** in capital expenditures and other asset purchases[148](index=148&type=chunk) [Financing Cash Flow](index=34&type=section&id=Financing%20Cash%20Flow) Analyzes net cash provided by or used in financing activities, including debt and equity transactions - Net cash used in financing activities was **$87.7 million** for Q1 2021, a change of **$402.3 million** from net cash provided of **$314.6 million** in Q1 2020[149](index=149&type=chunk) - This shift was mainly due to a **$397.4 million** decrease in net borrowings of CIP[149](index=149&type=chunk) [Credit Agreement](index=35&type=section&id=Credit%20Agreement) Describes the terms of the company's credit agreement, including term loan and revolving credit facility - The Credit Agreement includes a **$365.0 million** Term Loan (expiring June 2024) and a **$100.0 million** revolving credit facility (expiring June 2022)[150](index=150&type=chunk) - As of March 31, 2021, **$199.8 million** was outstanding under the Term Loan, with no borrowings under the Credit Facility[150](index=150&type=chunk) [Contractual Obligations](index=35&type=section&id=Contractual%20Obligations) Notes any material changes to the company's contractual obligations since the last reporting period - There have been no material changes to the Company's contractual obligations outside the ordinary course of business since December 31, 2020[151](index=151&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses the significant accounting policies and estimates used in preparing the financial statements - The Company's financial statements rely on estimates in accordance with GAAP[152](index=152&type=chunk) - No material changes occurred in critical accounting policies during the three months ended March 31, 2021[152](index=152&type=chunk) [Recently Issued Accounting Pronouncements](index=35&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Refers to disclosures regarding new accounting standards in the financial statement notes - Refer to Note 2 in the condensed consolidated financial statements for a discussion of accounting standards[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses market risks, primarily from interest rate and securities price fluctuations, with no material changes reported - The Company is primarily exposed to market risk from unfavorable movements in interest rates and securities prices[154](index=154&type=chunk) - There were no material changes to the market risk disclosures during the three months ended March 31, 2021, from those reported in the 2020 Annual Report on Form 10-K[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed disclosure controls and procedures as effective, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective at the reasonable assurance level as of March 31, 2021[155](index=155&type=chunk)[156](index=156&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report[157](index=157&type=chunk) Part II – Other Information This section contains additional information not in financial statements, such as legal proceedings, risk factors, and equity transactions [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates legal proceedings information by reference from Note 14, 'Commitments and Contingencies,' in the financial statements - Legal proceedings information is incorporated by reference from Note 14, 'Commitments and Contingencies,' in the financial statements section[158](index=158&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the company's risk factors have occurred since the 2020 Annual Report on Form 10-K - No material changes to the Company's risk factors have occurred since the 2020 Annual Report on Form 10-K[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common share repurchases and remaining authorization, noting no unregistered equity sales - During the quarter ended March 31, 2021, the Company repurchased **19,912 common shares** at a weighted average price of **$251.07 per share**, totaling **$5.0 million**[161](index=161&type=chunk) - As of March 31, 2021, **702,730 shares** remained available for repurchase under the program, which has no specified term and may be suspended or terminated at any time[160](index=160&type=chunk)[161](index=161&type=chunk) - There were no unregistered sales of equity securities during the period[163](index=163&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including key agreements, certifications, and iXBRL financial statements - Exhibits include the Membership Interest Purchase Agreement with Westchester Capital Management, an offer letter to Richard W. Smirl, and certifications from the CEO and CFO[166](index=166&type=chunk) - Financial statements, including Condensed Consolidated Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Changes in Stockholders' Equity, are provided in iXBRL format[166](index=166&type=chunk) [Signatures](index=39&type=section&id=Signatures) Confirms the report's official signing by Michael A. Angerthal, Executive Vice President and Chief Financial Officer - The report was signed by Michael A. Angerthal, Executive Vice President and Chief Financial Officer, on May 6, 2021[169](index=169&type=chunk)

Assets Under Management (AUM) and Flows - AUM increased sequentially by 28% to $168.9 billion, driven by the addition of AllianzGI (AGI) assets, market appreciation, and positive net flows[11, 19] - Sales increased sequentially by 19% to $10.6 billion due to higher sales of open-end funds and retail separate accounts[11, 23] - Net flows were $2.4 billion, representing 7.5% annualized organic growth, with positive net flows in retail separate accounts, open-end funds, exchange traded funds, and institutional accounts[11, 23] - Multi-asset AUM represented 13.3% of total AUM, up 410 bps sequentially, including the $6.5 billion Virtus AllianzGI Income & Growth Fund[19] Financial Performance - Operating income, as adjusted, was $78.0 million, including $9.4 million of seasonal employment expenses[12] - Operating margin, as adjusted, was 41.6%, up 130 bps sequentially; excluding seasonal items, the operating margin was 46.6%[12] - Earnings per diluted share, as adjusted, increased sequentially by $1.63, or 32%, to $6.78; seasonal items impacted earnings by ($0.85)[12] - Investment management fees, as adjusted, increased sequentially by $27.1 million, or 20%, to $187.3 million due to higher average AUM[28] Capital Activities and Balance Sheet - The company net settled 57,885 shares for $15.1 million and repurchased an additional 19,912 shares for $5.0 million[13] - Debt was reduced by $5.9 million, continuing consistent quarterly debt reduction[13] - Working capital increased sequentially by 23% to $211 million due to cash generation and capital activities[44, 45] - A revenue participation liability of $137.7 million was recorded related to the AllianzGI partnership[44, 45]