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]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-10994 For the fiscal year ended December 31, 2020 VIRTUS INVESTMENT PARTNERS, INC. or (Exact name of registrant as specified in its charter) Delaware 26-3962811 State or other ...

FOURTH QUARTER EARNINGS PRESENTATION February 2, 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 ...

Financial Data and Key Metrics Changes - The company reported record earnings for 2020, with positive net flows and an organic growth rate of nearly 5% [8] - Operating income as adjusted for Q4 was $61.9 million, with a margin of 40.3%, up from $54.1 million and 39.3% in Q3 [15][45] - Earnings per share as adjusted reached $5.15, a 15% sequential increase [15][47] - The cash balance exceeded gross debt by $41 million at year-end [9][49] Business Line Data and Key Metrics Changes - Long-term assets under management (AUM) increased by nearly $16 billion or 14% to $130.7 billion, driven by market appreciation and positive net flows [10][21] - Positive net flows for the quarter were $2.6 billion, with significant contributions from open-end funds, retail separate accounts, and institutional [11][30] - Open-ended inflows were $0.7 billion, with retail separate accounts reaching a high of $1.3 billion [12][30] Market Data and Key Metrics Changes - The company experienced a 9.2% annualized organic growth rate in net inflows for Q4 [30] - Institutional net flows improved to $0.6 billion, recovering from prior outflows [13] - The partnership with AllianzGI added $29.3 billion in AUM, bringing pro forma AUM to $161.4 billion [17] Company Strategy and Development Direction - The company aims to diversify its investment strategies and enhance its distribution capabilities through partnerships, such as with AllianzGI and Westchester Capital [18][58] - The addition of Westchester Capital is expected to nearly double the assets under management in alternative strategies [54] - The company emphasizes a flexible approach to partnerships, allowing for various transaction structures to align interests effectively [93] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate organic growth despite market volatility, highlighting the importance of a diversified strategy [78][81] - The company anticipates continued strong demand for fixed-income strategies, reflecting a shift in market conditions [80][104] - Management believes the multifaceted approach to growth positions the company well for long-term success [62] Other Important Information - The company repurchased approximately 40,000 shares, reducing common shares outstanding by 0.5% [16][50] - The effective tax rate for the quarter was 27%, consistent with prior periods [46] - The company plans to present a new asset class category, multi-asset, starting in Q1 [25] Q&A Session Summary Question: Clarification on AGI accretion comment - Management confirmed that the expected accretion is based on the current quarterly EPS run rate [64] Question: Underlying flow trends with AGI - Management highlighted the complementary nature of AGI's products and expressed excitement about integrating their strategies into the sales force [66][68] Question: Organic growth outlook for the year - Management indicated a diversified strategy to adapt to changing market conditions, positioning the company for continued organic growth [78][81] Question: Technology leverage at the firm - Management discussed the importance of data and technology in enhancing distribution and supporting affiliates [82][86] Question: Rationale behind Westchester deal structure - Management explained the flexibility in partnership structures and emphasized alignment of interests through profit-sharing [92][94] Question: Demand in CLO business - Management noted no current activity in the CLO market but acknowledged increased interest in the space [101] Question: Fixed-income strategy interest - Management observed a growing interest in fixed-income strategies, particularly in high-yield and credit-sensitive products [104]

Financial Performance - Net income per diluted share was $3.71 in Q3 2020, compared to $2.95 in Q3 2019[105] - Total sales reached $7.6 billion in Q3 2020, an increase of $2.9 billion, or 60.3%, from $4.8 billion in Q3 2019[105] - Total revenues for the three months ended September 30, 2020, were $154.8 million, an increase of $8.8 million, or 6.1%, compared to $145.9 million in the same period of 2019[124] - Net income for the three months ended September 30, 2020, was $40.9 million, representing an increase of $15.6 million, or 61.4%, compared to $25.4 million in the same period of 2019[123] - Total operating expenses for the three months ended September 30, 2020, were $113.8 million, an increase of $3.6 million, or 3.3%, compared to $110.2 million in the same period of 2019[130] Assets Under Management - Assets under management were $116.5 billion as of September 30, 2020, an increase of $12.4 billion, or 11.9%, from September 30, 2019[107] - Average long-term assets under management increased to $104.4 billion for the nine months ended September 30, 2020, up $5.0 billion, or 5.1%, from the prior year[108] - Open-End Funds assets under management increased by $2.2 billion, or 5.3%, to $43.4 billion as of September 30, 2020[110] - Retail Separate Accounts saw a significant increase of $5.9 billion, or 31.1%, to $24.7 billion as of September 30, 2020[110] - Institutional Accounts increased by $5.6 billion, or 18.2%, to $36.6 billion as of September 30, 2020[110] Market Performance - The company experienced market appreciation of $15.2 billion and $7.1 billion in Q2 and Q3 2020, respectively[103] - Market performance contributed $7,119 million to total long-term assets under management for the three months ended September 30, 2020[114] Inflows and Outflows - Open-End Funds experienced net inflows of $387 million for the three months ended September 30, 2020, compared to net outflows of $182 million in the same period of 2019[112] - Retail Separate Accounts saw net inflows of $1,110 million for the three months ended September 30, 2020, compared to $384 million in the same period of 2019[112] - Institutional Accounts had a net outflow of $306 million for the three months ended September 30, 2020, compared to a net outflow of $1,365 million in Q3 2019[112] Fees and Expenses - The average management fee for Open-End Funds increased to 59.5 basis points in Q3 2020 from 56.6 basis points in Q3 2019[119] - The average fee rate for all products increased to 46.6 basis points in Q3 2020 from 46.3 basis points in Q3 2019[119] - Investment management fees increased by $9.8 million, or 8.1%, for the three months ended September 30, 2020, and by $20.1 million, or 5.9%, for the nine months ended September 30, 2020, compared to the same periods in the prior year[125] - Employment expenses increased by $6.2 million, or 10.1%, for the three months ended September 30, 2020, totaling $67.5 million[131] - Distribution and service fees decreased by $0.6 million, or 6.2%, for the three months ended September 30, 2020, compared to the same period in 2019[127] Cash Flow and Debt - Operating cash flow for the nine months ended September 30, 2020 was a net outflow of $380.3 million, an increase of $277.3 million from the prior year[159] - Total debt decreased by $59.8 million, or 21.5%, from $277.8 million at December 31, 2019 to $218.0 million at September 30, 2020[151] - Cash and cash equivalents decreased by $19.6 million, or 8.8%, from $221.8 million at December 31, 2019 to $202.2 million at September 30, 2020[151] - Net cash provided by financing activities increased by $191.9 million to $305.8 million for the nine months ended September 30, 2020, compared to $113.9 million for the same period in 2019[161] Tax and Other Income - The estimated effective tax rate increased to 33.9% for the nine months ended September 30, 2020, compared to 24.0% for the same period in 2019[149] - Other income (expense), net decreased by $1.1 million, or 57.4%, for the nine months ended September 30, 2020 compared to the same period in the prior year[143] - Total other income increased by $10.8 million, or 234.4%, compared to the same period in 2019, reaching $6.2 million[139] Strategic Developments - The company entered into a strategic partnership with Allianz Global Investors, expected to close in Q1 2021[106] - There were no material changes in the company's contractual obligations since December 31, 2019[163] - The company is primarily exposed to market risk associated with unfavorable movements in interest rates and securities prices, with no material changes reported during the three and nine months ended September 30, 2020[166]

Financial Data and Key Metrics Changes - Long-term assets under management (AUM) reached $115 billion, increasing by nearly $8 billion or 7% sequentially due to market appreciation and positive net flows [9][16] - Operating income, as adjusted, was $54.1 million with a margin of 39.3%, up from $40.5 million and 34.3% in the previous quarter [14][31] - Earnings per share, as adjusted, increased 39% sequentially to $4.49, driven by higher revenues and lower operating expenses [14][33] - Net income per share under GAAP was $3.71, compared to $1.43 in the second quarter [34] Business Line Data and Key Metrics Changes - Positive net flows of $1.2 billion were recorded, with retail separate accounts contributing $1.1 billion and open-end funds contributing $0.4 billion [11][12] - Institutional net outflows were $0.3 billion, a decrease from $1.5 billion of inflows in the previous quarter [12] - Sales for the quarter totaled $7.6 billion, marking the second-best quarter of sales despite a sequential decline [10][24] Market Data and Key Metrics Changes - Domestic equity open-end fund net flows were positive $0.6 billion, with a year-to-date total of $1.8 billion, reflecting a 14% annualized organic growth rate [22] - Fixed-income assets declined as a percentage of total AUM to 26%, primarily due to rising equity markets [18] - Institutional net flows were positive over the trailing 12 months, despite a single client redemption in the current quarter [21] Company Strategy and Development Direction - The company is focused on a strategic partnership with Allianz Global Investors, expected to close in early 2021, which will enhance scale and diversify investment strategies [37][38] - The company maintains a balanced approach to capital management, with a 22% increase in quarterly dividends and a 26% reduction in debt over the past year [15][35] - The management emphasizes the importance of differentiated investment strategies and effective distribution to drive organic growth [50][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued positive trends in flows and sales, reflecting strong investment performance and effective distribution [8][13] - The company is well-positioned for future growth opportunities, with a low-leverage balance sheet providing flexibility for potential M&A activities [46][49] - Management highlighted the importance of retaining assets over merely raising them, focusing on long-term client relationships [56] Other Important Information - The company repurchased approximately 54,000 shares, resulting in a 0.7% reduction in shares outstanding [15][36] - The effective tax rate for the quarter was 27%, consistent with the previous quarter [32] Q&A Session Summary Question: Clarification on fee rates - Management confirmed that the fee rates presented are net to Virtus [44] Question: Views on recent M&A activity in the sector - Management stated that while M&A is a tool for growth, their long-term strategy is not solely dependent on it, and they remain selective in pursuing opportunities [46][49] Question: Strength of organic inflows despite sector headwinds - Management attributed the strength to differentiated boutique managers and effective distribution strategies [50][52] Question: Flow profile of Allianz partnership - Management noted that Allianz funds have generally performed well, but specific flow details were not disclosed as they are not Virtus funds [61][64] Question: Institutional sales traction and redemption details - Management clarified that the redemption was due to a client internalizing portfolio management, not performance-related, and highlighted balanced contributions from new mandates [72][73] Question: Opportunities in closed-end fund market - Management expressed optimism about closed-end funds as a compelling product structure and indicated ongoing exploration of opportunities in that space [75] Question: International distribution strategy - Management emphasized the importance of growing the non-U.S. client base and the flexibility in their distribution approach [80][82] Question: Performance of SGA business post-transaction - Management reported that SGA has exceeded expectations in terms of performance and client asset management [84] Question: Growth opportunities from Allianz transaction - Management highlighted the addition of compelling products and the establishment of a new boutique affiliate as key growth areas [86]

THIRD QUARTER EARNINGS PRESENTATION October 23, 2020 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 VIRTUS INVESTMENT PARTNERS, INC. (Exact name of registrant as specified in its charter) Delaware 26-3962811 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One Financial Plaza, Hartford, CT 06103 (Address of principal executive offices, including Zip Code) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ...

Financial Data and Key Metrics Changes - Long-term assets under management (AUM) increased by nearly $18 billion or 20% to $107.1 billion as of June 30, driven by market appreciation and positive net flows [12][20] - Operating income as adjusted was $40.5 million with a margin of 34.3%, up from $40.1 million and 31.5% in the previous quarter [18][36] - Earnings per share as adjusted decreased by 2% to $3.24, primarily due to lower revenues [38] Business Line Data and Key Metrics Changes - Positive net flows for the quarter totaled $2.5 billion, with strong contributions from various asset classes [14][23] - Open-end net flows were positive at $0.4 billion, with domestic equity leading the way [15][25] - Retail separate accounts saw positive net flows of $0.8 billion, marking 18 consecutive quarters of positive flows [15][24] - Institutional net flows were positive at $1.5 billion, reflecting the attractiveness of the investment strategies [16][112] Market Data and Key Metrics Changes - Total sales for the quarter reached $9.1 billion, a 30% sequential increase and 77% year-over-year growth [27] - Domestic equity net flows were positive at $1.2 billion, a significant improvement from the previous quarter [25] - Fixed income fund net outflows improved to $0.3 billion from $1.4 billion in the first quarter [26] Company Strategy and Development Direction - The company announced a strategic partnership with Allianz Global Investors, expected to add approximately $24 billion in AUM and enhance fund offerings and distribution capabilities [11][43] - The partnership is structured to align interests without requiring upfront payments, focusing on growth and profitability [50][84] - The company aims to leverage existing infrastructure to maximize growth opportunities and maintain a balanced capital structure [66][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong organic growth rate of 11% annualized and the broad-based contributions across product categories [9][23] - The management highlighted the importance of maintaining relationships and adapting to a work-from-home environment to sustain sales momentum [75][76] - Future expectations include continued positive trends in sales and net flows, with a focus on sustainable growth and long-term value creation [70][112] Other Important Information - The company repurchased approximately 75,000 shares, representing about 1% of shares outstanding, and reduced debt by 25% over the past year [19][40] - The effective tax rate as adjusted for the quarter was 27%, down from 29% in the prior quarter [37] Q&A Session Summary Question: Background on the Allianz partnership - Management characterized the partnership as a growth-oriented collaboration rather than a transaction, emphasizing alignment of interests [55][56] Question: Expected incremental margin from the partnership - The expected incremental margin is projected to be in the range of 50% to 60%, leveraging existing infrastructure [60][61] Question: Impact of the partnership on debt levels - The partnership is structured to ensure that payments will be a subset of revenues earned, maintaining a favorable capital structure [66][67] Question: Institutional sales composition - Institutional sales included both new mandates and significant contributions from existing clients, indicating broad-based growth [108][112] Question: Retail separate accounts performance - Retail separate accounts have seen 17 consecutive quarters of positive flows, driven by strong investment performance across multiple distribution platforms [116]