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[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) VIRTUS INVESTMENT PARTNERS, INC. filed its Quarterly Report on Form 10-Q for the period ended March 31, 2024, as a Delaware corporation listed on the NYSE under VRTS and classified as a large accelerated filer - Registrant: **VIRTUS INVESTMENT PARTNERS, INC.**[2](index=2&type=chunk) - Filing Period: **Quarterly period ended March 31, 2024**[2](index=2&type=chunk) Registrant Classification | Classification | Status | | :--------------- | :----- | | Large accelerated filer | ☒ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | [Shares Outstanding](index=2&type=section&id=Shares%20Outstanding) As of May 1, 2024, Virtus Investment Partners, Inc. had 7,127,881 common shares outstanding - Number of shares outstanding of the registrant's common stock was **7,127,881** as of May 1, 2024[4](index=4&type=chunk) [Part I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Virtus Investment Partners, Inc., including the Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Changes in Stockholders' Equity, along with their accompanying notes [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The Condensed Consolidated Balance Sheets show a decrease in total assets and liabilities from December 31, 2023, to March 31, 2024, while total equity attributable to Virtus Investment Partners, Inc. saw a slight increase Key Balance Sheet Data (in thousands) | Item | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :----------------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $123,880 | $239,602 | $(115,722) | (48.3%) | | Investments | $127,448 | $132,696 | $(5,248) | (4.0%) | | Total assets | $3,548,125 | $3,678,629 | $(130,504) | (3.5%) | | Accrued compensation and benefits | $95,591 | $200,837 | $(105,246) | (52.4%) | | Contingent consideration | $66,704 | $90,938 | $(24,234) | (26.6%) | | Debt | $253,008 | $253,412 | $(404) | (0.2%) | | Total liabilities | $2,556,937 | $2,705,471 | $(148,534) | (5.5%) | | Total equity attributable to Virtus Investment Partners, Inc. | $871,652 | $863,926 | $7,726 | 0.9% | | Total equity | $876,003 | $868,289 | $7,714 | 0.9% | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) For the three months ended March 31, 2024, Virtus Investment Partners, Inc. reported an increase in total revenues and operating income compared to the prior year period, primarily driven by higher average assets under management, but net income and diluted EPS decreased due to a significant negative impact from noncontrolling interests Key Operating Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total revenues | $222,042 | $197,874 | $24,168 | 12.2% | | Total operating expenses | $189,736 | $169,295 | $20,441 | 12.1% | | Operating Income (Loss) | $32,306 | $28,579 | $3,727 | 13.0% | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $29,858 | $38,624 | $(8,766) | (22.7%) | | Earnings (Loss) per Share—Diluted | $4.10 | $5.21 | $(1.11) | (21.3%) | - Noncontrolling interests had a significant negative impact of **$(8,009) thousand** in Q1 2024, compared to a positive impact of **$3,981 thousand** in Q1 2023, contributing to the decrease in net income attributable to Virtus[10](index=10&type=chunk)[34](index=34&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) The Condensed Consolidated Statements of Comprehensive Income show that comprehensive income attributable to Virtus Investment Partners, Inc. decreased to $29.8 million in Q1 2024 from $38.7 million in Q1 2023, primarily influenced by the change in net income and a foreign currency translation adjustment Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) | $37,867 | $34,643 | | Foreign currency translation adjustment, net of tax | $(100) | $99 | | Comprehensive income (loss) | $37,767 | $34,742 | | Comprehensive (income) loss attributable to noncontrolling interests | $(8,009) | $3,981 | | Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc. | $29,758 | $38,723 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Virtus Investment Partners, Inc. experienced a net decrease in cash, cash equivalents, and restricted cash of $93.3 million in Q1 2024, an improvement from the $171.0 million decrease in Q1 2023, primarily driven by reduced cash used in financing activities despite continued cash usage in operating and investing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net cash provided by (used in) operating activities | $(34,528) | $(42,959) | $8,431 | (19.6%) | | Net cash provided by (used in) investing activities | $(2,460) | $(13,145) | $10,685 | (81.3%) | | Net cash provided by (used in) financing activities | $(56,146) | $(115,078) | $58,932 | (51.2%) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(93,337) | $(171,002) | $77,665 | (45.4%) | | Cash, cash equivalents and restricted cash, end of period | $247,677 | $418,177 | $(170,500) | (40.8%) | - The decrease in cash used in financing activities was primarily due to a **$43.4 million decrease** in the repayment on borrowings of consolidated investment products (CIP) and a **$16.5 million increase** in net contributions from noncontrolling interests[143](index=143&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)) The Condensed Consolidated Statements of Changes in Stockholders' Equity show an increase in total equity attributable to Virtus Investment Partners, Inc. from $863.9 million at December 31, 2023, to $871.7 million at March 31, 2024, primarily driven by net income, partially offset by cash dividends declared and share repurchases Key Changes in Stockholders' Equity (in thousands) | Item | Three Months Ended March 31, 2024 | | :---------------------------------------------------- | :-------------------------------- | | Balances at December 31, 2023 | $863,926 | | Net income (loss) attributable to Virtus Investment Partners, Inc. | $29,858 | | Foreign currency translation adjustments | $(100) | | Cash dividends declared ($1.90 per common share) | $(14,191) | | Repurchases of common shares | $(4,999) | | Taxes paid on stock-based compensation | $(9,852) | | Stock-based compensation | $7,010 | | Balances at March 31, 2024 | $871,652 | - The company declared a quarterly cash dividend of **$1.90 per common share** in Q1 2024, an increase from $1.65 per common share in Q1 2023[17](index=17&type=chunk)[41](index=41&type=chunk) - The company repurchased **21,108 common shares** for **$5.0 million** during Q1 2024[17](index=17&type=chunk)[42](index=42&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide additional detail and context to the condensed consolidated financial statements, covering the company's organization, accounting policies, revenue recognition, acquisitions, intangible assets, investments, fair value measurements, equity transactions, stock-based compensation, earnings per share, income taxes, debt, commitments, redeemable noncontrolling interests, and consolidation practices [Note 1. Organization and Business](index=11&type=section&id=Note%201.%20Organization%20and%20Business) Virtus Investment Partners, Inc. operates in the investment management industry, providing services to institutions and individuals through a multi-manager, multi-style approach, offering various funds and separate accounts, as well as subadvisory services - Virtus Investment Partners, Inc. operates in the **investment management industry** through its subsidiaries[20](index=20&type=chunk) - The Company provides investment management and related services to institutions and individuals, offering strategies through institutional separate and commingled accounts, and retail products like mutual funds, global funds, ETFs, closed-end funds, and retail separate accounts[21](index=21&type=chunk) [Note 2. Basis of Presentation and Significant Accounting Policies](index=11&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, including normal recurring adjustments, and the company does not anticipate a material impact from new accounting standards under evaluation - Unaudited condensed consolidated financial statements are prepared in accordance with **GAAP for interim financial information**, including normal recurring adjustments[22](index=22&type=chunk) - The Company is evaluating new accounting standards (ASU 2023-07 on Segment Reporting, ASU 2023-09 on Income Taxes, and ASU 2024-01 on Stock Compensation) but does not anticipate a material impact on its consolidated financial statements at this time[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 3. Revenues](index=13&type=section&id=Note%203.%20Revenues) Revenues are recognized when performance obligations are satisfied, with investment management, distribution, and administration fees generally calculated as a percentage of average net assets, and investment management fees increased by 14.5% year-over-year, primarily driven by open-end funds, retail separate accounts, and institutional accounts - Revenues are recognized when control of services is transferred to customers, with fees generally calculated as a percentage of average net assets[28](index=28&type=chunk) Investment Management Fees by Source (in thousands) | Source | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Open-end funds | $78,680 | $71,266 | $7,414 | 10.4% | | Closed-end funds | $14,394 | $14,678 | $(284) | (1.9%) | | Retail separate accounts | $48,981 | $40,079 | $8,902 | 22.2% | | Institutional accounts | $46,305 | $38,455 | $7,850 | 20.4% | | Total investment management fees | $188,360 | $164,478 | $23,882 | 14.5% | [Note 4. Acquisitions](index=13&type=section&id=Note%204.%20Acquisitions) On April 1, 2023, Virtus Investment Partners, Inc. acquired AlphaSimplex Group, LLC for $113.4 million, resulting in the recognition of $48.3 million in goodwill and $55.4 million in intangible assets - On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC for a total purchase price of **$113.4 million**[30](index=30&type=chunk) - The acquisition resulted in the recording of **$48.3 million in goodwill** and **$55.4 million in intangible assets**[30](index=30&type=chunk) [Note 5. Intangible Assets, Net](index=13&type=section&id=Note%205.%20Intangible%20Assets,%20Net) Net intangible assets decreased from $432.1 million at December 31, 2023, to $416.8 million at March 31, 2024, primarily due to $15.3 million in amortization expense, with estimated definite-lived intangible asset amortization for the remainder of 2024 at $41.0 million Intangible Assets, Net (in thousands) | Item | December 31, 2023 | March 31, 2024 | | :-------------------------- | :---------------- | :------------- | | Net Book Value (Definite-Lived) | $389,821 | $374,486 | | Net Book Value (Indefinite-Lived) | $42,298 | $42,298 | | Total Net Book Value | $432,119 | $416,784 | | Intangible amortization (Q1 2024) | N/A | $(15,335) | Estimated Definite-Lived Intangible Asset Amortization (in thousands) | Fiscal Year | Amount | | :---------------- | :----- | | Remainder of 2024 | $40,964 | | 2025 | $51,532 | | 2026 | $50,552 | | 2027 | $47,450 | | 2028 | $41,787 | | 2029 and thereafter | $142,201 | | Total | $374,486 | [Note 6. Investments](index=15&type=section&id=Note%206.%20Investments) Total investments, excluding consolidated investment products (CIP), decreased by 4.0% from $132.7 million at December 31, 2023, to $127.4 million at March 31, 2024, primarily due to a decline in investment securities at fair value, which saw net realized losses of $0.4 million in Q1 2024 Investments (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Investment securities - fair value | $90,497 | $97,304 | | Equity method investments | $23,208 | $22,710 | | Nonqualified retirement plan assets | $13,743 | $12,682 | | Total investments | $127,448 | $132,696 | - The Company recognized net realized losses of **$0.4 million** on investment securities at fair value for the three months ended March 31, 2024, compared to net realized gains of $1.3 million in the prior year period[33](index=33&type=chunk) [Note 7. Fair Value Measurements](index=15&type=section&id=Note%207.%20Fair%20Value%20Measurements) The company's assets measured at fair value, excluding CIP, decreased from $307.2 million at December 31, 2023, to $196.7 million at March 31, 2024, mainly due to a reduction in cash equivalents, while contingent consideration liabilities, categorized as Level 3, decreased by $14.5 million due to payments made during the quarter Assets Measured at Fair Value (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Cash equivalents (Level 1) | $92,458 | $197,240 | | Investment securities - fair value (Level 1) | $90,497 | $97,304 | | Nonqualified retirement plan assets (Level 1) | $13,743 | $12,682 | | Total assets measured at fair value | $196,698 | $307,226 | Contingent Consideration Liabilities (Level 3, in thousands) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Contingent consideration | $41,708 | $56,200 | | Reduction for payments made (Q1 2024) | $(14,492) | N/A | - Contingent consideration liabilities are categorized as **Level 3**, with valuation methodologies using unobservable market data inputs such as revenue growth rates, discount rates (**6%-7%**), and market price of risk adjustments (**7%-9%**)[38](index=38&type=chunk) [Note 8. Equity Transactions](index=17&type=section&id=Note%208.%20Equity%20Transactions) Virtus Investment Partners, Inc. declared a quarterly cash dividend of $1.90 per common share in February 2024 and repurchased 21,108 common shares for $5.0 million during the three months ended March 31, 2024, with 583,437 shares remaining available under its repurchase program - On February 21, 2024, the Company declared a quarterly cash dividend of **$1.90 per common share**[41](index=41&type=chunk) - During Q1 2024, the Company repurchased **21,108 common shares** at a weighted average price of **$236.84 per share**, totaling **$5.0 million**[42](index=42&type=chunk) - As of March 31, 2024, **583,437 shares** remained available for repurchase under the existing program[42](index=42&type=chunk) [Note 9. Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=Note%209.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive income (loss) for Virtus Investment Partners, Inc. shifted from a loss of $(87) thousand at the beginning of the period to a loss of $(187) thousand at March 31, 2024, primarily due to a foreign currency translation adjustment Accumulated Other Comprehensive Income (Loss) (in thousands) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $(87) | $(358) | | Net current-period other comprehensive income (loss) | $(100) | $99 | | Balance at end of period | $(187) | $(259) | - The net current-period other comprehensive loss of **$(100) thousand** in Q1 2024 consisted of foreign currency translation adjustments, net of tax[43](index=43&type=chunk) [Note 10. Stock-Based Compensation](index=17&type=section&id=Note%2010.%20Stock-Based%20Compensation) Stock-based compensation expense increased by 18.8% to $6.8 million for the three months ended March 31, 2024, compared to $5.7 million in the prior year, with 108,658 RSUs granted and 103,849 RSUs settled during the quarter, and unamortized stock-based compensation expense at $45.5 million with a weighted-average remaining contractual life of 1.6 years Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Stock-based compensation expense | $6,831 | $5,749 | $1,082 | 18.8% | Restricted Stock Unit (RSU) Activity (Q1 2024) | RSU Activity | Number of Shares | | :-------------------------- | :--------------- | | Outstanding at December 31, 2023 | 344,717 | | Granted | 108,658 | | Forfeited | (8,333) | | Settled | (103,849) | | Outstanding at March 31, 2024 | 341,193 | - As of March 31, 2024, unamortized stock-based compensation expense for unvested RSUs and PSUs was **$45.5 million** with a weighted-average remaining contractual life of **1.6 years**[50](index=50&type=chunk) [Note 11. Earnings (Loss) Per Share](index=19&type=section&id=Note%2011.%20Earnings%20(Loss)%20Per%20Share) Diluted Earnings Per Share (EPS) for Virtus Investment Partners, Inc. decreased by 21.3% to $4.10 for the three months ended March 31, 2024, compared to $5.21 in the prior year, primarily due to lower net income attributable to the company Earnings Per Share (EPS) (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change ($) | Change (%) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $29,858 | $38,624 | $(8,766) | (22.7%) | | Earnings (Loss) per Share—Basic | $4.19 | $5.33 | $(1.14) | (21.4%) | | Earnings (Loss) per Share—Diluted | $4.10 | $5.21 | $(1.11) | (21.3%) | | Weighted Average Shares Outstanding—Diluted | 7,287 | 7,410 | (123) | (1.7%) | - **1 thousand restricted stock units** were excluded from the diluted EPS computation in Q1 2024 as their effect would be anti-dilutive, compared to 40 thousand in Q1 2023[53](index=53&type=chunk) [Note 12. Income Taxes](index=20&type=section&id=Note%2012.%20Income%20Taxes) The estimated effective tax rate for Virtus Investment Partners, Inc. decreased to 18.9% for the three months ended March 31, 2024, from 20.1% in the prior year, mainly due to excess tax benefits from stock-based compensation and changes in valuation allowances related to unrealized gains on investments Estimated Effective Tax Rate | Period | Estimated Effective Tax Rate | | :-------------------------- | :--------------------------- | | Three Months Ended March 31, 2024 | 18.9% | | Three Months Ended March 31, 2023 | 20.1% | - The lower effective tax rate in Q1 2024 was primarily due to **excess tax benefits** associated with stock-based compensation and the change in valuation allowances related to tax effects of unrealized gains on certain Company investments[55](index=55&type=chunk) [Note 13. Debt](index=20&type=section&id=Note%2013.%20Debt) Virtus Investment Partners, Inc.'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, with $0.7 million repaid on the Term Loan in Q1 2024, leaving $258.1 million outstanding - The Credit Agreement comprises a **$275.0 million Term Loan** (expiring September 2028) and a **$175.0 million revolving credit facility** (expiring September 2026)[56](index=56&type=chunk) - The Company repaid **$0.7 million** on the Term Loan during Q1 2024, with **$258.1 million** outstanding at March 31, 2024[56](index=56&type=chunk) [Note 14. Commitments and Contingencies](index=20&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) Virtus Investment Partners, Inc. is periodically involved in legal and regulatory proceedings, but management believes the outcomes are not likely to have a material adverse effect on its financial condition, cash flows, or results of operations, given available insurance, indemnities, and reserves - The Company is involved in litigation, arbitration, and regulatory examinations[57](index=57&type=chunk) - A liability is recorded when it is **probable and reasonably estimable**[59](index=59&type=chunk) - Management believes current legal and regulatory proceedings are not likely to have a **material adverse effect** on the Company's results of operations, cash flows, or consolidated financial condition[59](index=59&type=chunk) [Note 15. Redeemable Noncontrolling Interests](index=22&type=section&id=Note%2015.%20Redeemable%20Noncontrolling%20Interests) Redeemable noncontrolling interests increased by 9.8% to $115.2 million at March 31, 2024, from $104.9 million at December 31, 2023, primarily driven by changes in redemption value and net income attributable to noncontrolling interests - Redeemable noncontrolling interests represent third-party investments in the Company's consolidated investment products (CIP) and minority interests in a consolidated affiliate, recorded at estimated redemption value[60](index=60&type=chunk) Redeemable Noncontrolling Interests (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :---------------- | | Balances at December 31, 2023 / Beginning of period | N/A | $104,869 | | Net income (loss) attributable to noncontrolling interests | $7,618 | N/A | | Changes in redemption value | $4,360 | N/A | | Affiliate equity sales (purchases) | $(419) | N/A | | Net subscriptions (redemptions) and other | $3,117 | N/A | | Balances at March 31, 2024 / End of period | $115,185 | N/A | [Note 16. Consolidation](index=22&type=section&id=Note%2016.%20Consolidation) The Company consolidates certain investment products, including Voting Interest Entities (VOEs) like U.S. retail funds and ETFs, and Variable Interest Entities (VIEs) such as Collateralized Loan Obligations (CLOs) and global/private funds, with no impact on net income and risk limited to beneficial interests and fees - The Company consolidates investment products where it has a controlling financial interest (VOEs) or is the primary beneficiary (VIEs)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) - Consolidated Investment Products (CIP) include U.S. retail funds, ETFs, CLOs, and certain global and private funds[64](index=64&type=chunk) - The consolidation and deconsolidation of these investment products have **no impact on the Company's net income (loss)**, and its risk is limited to its beneficial interests and fees[64](index=64&type=chunk) Consolidated CLOs Income and Expenses (in thousands) | Item | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | | Total Income | $49,281 | | Total Expense | $40,510 | | Net Income (Loss) Attributable to CLOs | $8,380 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&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, 2024, covering business overview, financial highlights, detailed analysis of revenues and operating expenses, other income/expense, interest income/expense, income taxes, and liquidity and capital resources, highlighting the impact of market performance and the AlphaSimplex acquisition on AUM and financial results [Cautionary Statement Regarding Forward Looking Statements](index=28&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) This section advises readers that 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, and the company does not undertake to update or revise these statements - The report contains forward-looking statements that are **not guarantees of future results** and involve substantial risks and uncertainty[84](index=84&type=chunk)[85](index=85&type=chunk) - The company does not plan to update or revise forward-looking statements to reflect actual results or changes in circumstances[86](index=86&type=chunk) - Key risks include reductions in assets under management, inability to achieve benefits from strategic transactions, withdrawal of advisory agreements, damage to reputation, and adverse regulatory developments[87](index=87&type=chunk) [Overview](index=28&type=section&id=Overview) Virtus Investment Partners, Inc. provides investment management and related services to institutions and individuals through a multi-manager, multi-style approach, offering diverse investment strategies across various asset classes, geographies, market capitalizations, and styles, generating earnings primarily from asset-based fees - The Company provides investment management and related services to institutions and individuals using a **multi-manager, multi-style approach**[89](index=89&type=chunk) - Investment strategies are offered across equity, fixed income, multi-asset, and alternatives, managed by differentiated investment managers[91](index=91&type=chunk) - Earnings are primarily derived from **asset-based fees** for investment management, fund administration, distribution, and shareholder services[89](index=89&type=chunk) [Financial Highlights](index=30&type=section&id=Financial%20Highlights) Total assets under management (AUM) increased by 15.8% year-over-year to $179.3 billion at March 31, 2024, driven by positive market performance and the AlphaSimplex acquisition, despite net outflows, while diluted EPS decreased by 21.3% to $4.10, and total sales increased by 21.6% to $7.6 billion, with net flows remaining negative at $(1.2) billion Key Financial Highlights | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :------------------------------------------ | :------ | :------ | :--------- | :--------- | | Net income per diluted share | $4.10 | $5.21 | $(1.11) | (21.3%) | | Total sales | $7.6 billion | $6.2 billion | $1.3 billion | 21.6% | | Net flows | $(1.2) billion | $(1.9) billion | $0.7 billion | (36.8%) | | Assets under management (March 31) | $179.3 billion | $154.8 billion | $24.5 billion | 15.8% | - The increase in AUM from March 31, 2023, included **$25.7 billion from positive market performance** and **$7.8 billion from the AlphaSimplex acquisition**, partially offset by $6.6 billion of net outflows[95](index=95&type=chunk) Assets Under Management by Product (in millions) | Product | March 31, 2024 | March 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :------------- | :------------- | :--------- | :--------- | | Open-End Funds | $57,818 | $53,865 | $3,953 | 7.3% | | Closed-End Funds | $10,064 | $10,358 | $(294) | (2.8%) | | Retail Separate Accounts | $46,816 | $37,397 | $9,419 | 25.2% | | Institutional Accounts | $64,613 | $53,229 | $11,384 | 21.4% | | Total | $179,311 | $154,849 | $24,462 | 15.8% | | Average AUM | $173,358 | $152,361 | $20,997 | 13.8% | Asset Flows by Product (Three Months Ended March 31, 2024, in millions) | Product | Inflows | Outflows | Net Flows | | :-------------------------- | :------ | :------- | :-------- | | Open-End Funds | $3,476 | $(4,104) | $(628) | | Closed-End Funds | $0 | $0 | $0 | | Retail Separate Accounts | $2,373 | $(1,695) | $678 | | Institutional Accounts | $1,734 | $(3,022) | $(1,288) | | Total | $7,583 | $(8,821) | $(1,238) | - The average fee rate earned on all products for Q1 2024 decreased by **0.1 basis points** compared to the prior year, primarily due to a shift in asset mix to lower fee assets, partially offset by higher fee rates from the AlphaSimplex acquisition[106](index=106&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Total revenues increased by 12.2% to $222.0 million in Q1 2024, driven by higher average assets under management, and operating income also rose by 13.0% to $32.3 million, but net income attributable to Virtus Investment Partners, Inc. decreased by 22.7% due to a significant negative impact from noncontrolling interests, with employment expenses and depreciation seeing notable increases partly due to the AlphaSimplex acquisition Summary Financial Data (in thousands) | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :------------------------------------------ | :------ | :------ | :--------- | :--------- | | Total revenues | $222,042 | $197,874 | $24,168 | 12.2% | | Total operating expenses | $189,736 | $169,295 | $20,441 | 12.1% | | Operating income (loss) | $32,306 | $28,579 | $3,727 | 13.0% | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $29,858 | $38,624 | $(8,766) | (22.7%) | - Investment management fees increased by **$23.9 million (14.5%)** due to higher average assets under management[111](index=111&type=chunk) Operating Expenses (in thousands) | Expense Category | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :------------------------------------------ | :------ | :------ | :--------- | :--------- | | Employment expenses | $115,163 | $98,614 | $16,549 | 16.8% | | Distribution and other asset-based expenses | $24,348 | $23,715 | $633 | 2.7% | | Other operating expenses | $31,375 | $30,730 | $645 | 2.1% | | Restructuring expense | $797 | $0 | $797 | N/M | | Depreciation expense | $2,028 | $1,145 | $883 | 77.1% | | Amortization expense | $15,335 | $14,391 | $944 | 6.6% | | Total operating expenses | $189,736 | $169,295 | $20,441 | 12.1% | - Employment expenses increased primarily due to the **AlphaSimplex acquisition** and higher profit- and sales-based compensation[117](index=117&type=chunk) - Depreciation expense increased significantly (**77.1%**) due to the AlphaSimplex acquisition, software/equipment purchases, and new office space[121](index=121&type=chunk) Interest Income (Expense), Net (in thousands) | Item | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :------------------------------------------ | :------ | :------ | :--------- | :--------- | | Interest expense | $(5,681) | $(5,005) | $(676) | 13.5% | | Interest and dividend income | $3,469 | $3,238 | $231 | 7.1% | | Interest and dividend income of investments of CIP | $51,115 | $46,814 | $4,301 | 9.2% | | Interest expense of CIP | $(40,012) | $(35,203) | $(4,809) | 13.7% | | Total Interest Income (Expense), net | $8,891 | $9,844 | $(953) | (9.7%) | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Virtus Investment Partners, Inc. ended Q1 2024 with $123.9 million in cash and cash equivalents, a significant decrease from $239.6 million at December 31, 2023, with net cash used in operating activities decreasing by 19.6% to $(34.5) million, and net cash used in financing activities decreasing by 51.2% to $(56.1) million, primarily due to reduced CIP borrowings and increased noncontrolling interest contributions Liquidity and Capital Resources Data (in thousands) | Item | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $123,880 | $239,602 | $(115,722) | (48.3%) | | Investments | $127,448 | $132,696 | $(5,248) | (4.0%) | | Debt | $253,008 | $253,412 | $(404) | (0.2%) | | Redeemable noncontrolling interests | $115,185 | $104,869 | $10,316 | 9.8% | | Total equity | $876,003 | $868,289 | $7,714 | 0.9% | Cash Flow Data (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :--------- | | Operating activities | $(34,528) | $(42,959) | $8,431 | (19.6%) | | Investing activities | $(2,460) | $(13,145) | $10,685 | (81.3%) | | Financing activities | $(56,146) | $(115,078) | $58,932 | (51.2%) | - Annual incentive compensation, the largest annual operating cash expenditure, was **$146.1 million** in 2024, up from $142.1 million in 2023[136](index=136&type=chunk) - Net cash used in financing activities decreased primarily due to a **$43.4 million decrease** in repayment on borrowings of CIP and a **$16.5 million increase** in net contributions from noncontrolling interests[143](index=143&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There were no material changes to the Company's critical accounting policies and estimates during the three months ended March 31, 2024, as previously discussed in the 2023 Annual Report on Form 10-K - No material changes in critical accounting policies and estimates occurred during the three months ended March 31, 2024[145](index=145&type=chunk) [Recently Issued Accounting Pronouncements](index=40&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) For a discussion of recently issued accounting standards, refer to Note 2 in the condensed consolidated financial statements - Discussion of recently issued accounting standards is provided in **Note 2** of the condensed consolidated financial statements[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Virtus Investment Partners, Inc. is primarily exposed to market risk from unfavorable movements in interest rates and securities prices, with no material changes to market risk disclosures reported during the three months ended March 31, 2024, compared to the 2023 Annual Report on Form 10-K - The Company is primarily exposed to market risk associated with **unfavorable movements in interest rates and securities prices**[147](index=147&type=chunk) - No material changes to market risk disclosures were reported during Q1 2024[147](index=147&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2024, and concluded they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the period - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** as of March 31, 2024[151](index=151&type=chunk) - No material changes in internal control over financial reporting occurred during the period[152](index=152&type=chunk) [Part II. OTHER INFORMATION](index=42&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&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 Quarterly Report on Form 10-Q - Legal proceedings information is incorporated by reference from **Note 14, 'Commitments and Contingencies,'** in Part I, Item 1[153](index=153&type=chunk) [Item 1A. Risk Factors](index=42&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 2023 Annual Report on Form 10-K - No material changes to the Company's risk factors from those reported in the **2023 Annual Report on Form 10-K**[154](index=154&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, Virtus Investment Partners, Inc. repurchased 21,108 common shares for a total of $5.0 million under its share repurchase program, with 583,437 shares remaining available for repurchase as of March 31, 2024 - During Q1 2024, the Company repurchased **21,108 common shares** under its share repurchase program[157](index=157&type=chunk) Share Repurchases (Q1 2024) | Period | Total shares purchased | Average price paid per share | | :----------------- | :--------------------- | :--------------------------- | | January 1-31, 2024 | — | $— | | February 1-29, 2024 | 9,634 | $232.77 | | March 1-31, 2024 | 11,474 | $240.26 | | Total | 21,108 | N/A | - As of March 31, 2024, **583,437 shares** remained available for repurchase under the program, which has no specified term[155](index=155&type=chunk)[157](index=157&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No directors or officers of Virtus Investment Partners, Inc. adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024 - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024[159](index=159&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, and various Inline XBRL documents - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[160](index=160&type=chunk) [Signatures](index=44&type=section&id=Signatures) [Report Signatures](index=44&type=section&id=Report%20Signatures) The Quarterly Report on Form 10-Q was duly signed on behalf of Virtus Investment Partners, Inc. on May 8, 2024, by Michael A. Angerthal, Executive Vice President and Chief Financial Officer - The report was signed on **May 8, 2024**[163](index=163&type=chunk) - Signed by **Michael A. Angerthal, Executive Vice President and Chief Financial Officer** (Principal Financial Officer and Principal Accounting Officer)[163](index=163&type=chunk)

Virtus Investment Partners, Inc. (NYSE:VRTS) Q1 2024 Earnings Conference Call April 26, 2024 10:00 AM ET Company Participants Sean Rourke - IR George Aylward - President and Chief Executive Officer Mike Angerthal - Executive Vice President and Chief Financial Officer Conference Call Participants Crispin Love - Piper Sandler Michael Cyprys - Morgan Stanley Bradley Hays - TD Cowen Operator Good morning. My name is Dede, and I will be your conference operator today. I would like to welcome everyone to the Virt ...

FIRST QUARTER EARNINGS PRESENTATION April 26, 2024 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 of ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) This section provides an overview of Q1 2024 financial highlights, including GAAP and non-GAAP performance, key earnings metrics, sales, net flows, and assets under management [Q1 2024 Financial Highlights (Unaudited)](index=1&type=section&id=Q1%202024%20Financial%20Highlights%20%28Unaudited%29) Virtus Investment Partners reported Q1 2024 financial results, with GAAP and non-GAAP metrics showing revenue and adjusted operating income growth, while GAAP net income and diluted EPS declined year-over-year Q1 2024 Key Financial Metrics (Million USD, except per share data) | Metric | March 31, 2024 | March 31, 2023 | Y/Y Change | December 31, 2023 | Q/Q Change | | :---------------------------------------------------------- | :------------- | :------------- | :--------- | :---------------- | :--------- | | **U.S. GAAP Financial Metrics** | | | | | | | Revenue | $222.0 | $197.9 | 12 % | $214.6 | 3 % | | Operating Expenses | $189.7 | $169.3 | 12 % | $175.6 | 8 % | | Operating Income (Loss) | $32.3 | $28.6 | 13 % | $39.0 | (17 %) | | Operating Margin | 14.5 % | 14.4 % | | 18.2 % | | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $29.9 | $38.6 | (23 %) | $30.8 | (3 %) | | Diluted EPS | $4.10 | $5.21 | (21 %) | $4.21 | (3 %) | | **Non-GAAP Financial Metrics (1)** | | | | | | | Adjusted Revenue | $200.2 | $176.9 | 13 % | $193.4 | 4 % | | Adjusted Operating Expenses | $143.8 | $129.5 | 11 % | $129.5 | 11 % | | Adjusted Operating Income (Loss) | $56.4 | $47.4 | 19 % | $63.9 | (12 %) | | Adjusted Operating Margin | 28.2 % | 26.8 % | | 33.0 % | | | Adjusted Net Income (Loss) Attributable to Virtus Investment Partners, Inc. | $39.4 | $31.1 | 27 % | $44.8 | (12 %) | | Adjusted Diluted EPS | $5.41 | $4.20 | 29 % | $6.11 | (11 %) | [Earnings Summary](index=1&type=section&id=Earnings%20Summary) The company achieved diluted EPS of $4.10 and adjusted diluted EPS of $5.41 in Q1 2024, with total sales of $7.6 billion, net outflows of $1.2 billion, and AUM of $179.3 billion - Diluted EPS was **$4.10**; adjusted diluted EPS was **$5.41**[3](index=3&type=chunk) - Total sales reached **$7.6 billion**; net outflows were **$1.2 billion**; and assets under management (AUM) stood at **$179.3 billion**[3](index=3&type=chunk) [Assets Under Management and Asset Flows](index=2&type=section&id=Assets%20Under%20Management%20and%20Asset%20Flows) This section details the company's AUM and asset flows, including an overview of net flows, AUM breakdown by product and asset class, average management fees, and asset flows by product category [Overview of AUM and Net Flows](index=2&type=section&id=Overview%20of%20AUM%20and%20Net%20Flows) As of March 31, 2024, total AUM reached **$179.3 billion**, growing 4% quarter-over-quarter due to market performance and retail separate account net inflows, with total sales up 22% and significantly improved net outflows Assets Under Management and Asset Flows (Billion USD) | Metric | March 31, 2024 | March 31, 2023 | Y/Y Change | December 31, 2023 | Q/Q Change | | :------------------------- | :------------- | :------------- | :--------- | :---------------- | :--------- | | Total AUM at Period End | $179.3 | $154.8 | 16 % | $172.3 | 4 % | | Average Total AUM | $173.4 | $152.4 | 14 % | $162.7 | 7 % | | Total Sales | $7.6 | $6.2 | 22 % | $6.2 | 22 % | | Net Flows | ($1.2) | ($1.9) | (37 %) | ($3.8) | (68 %) | - As of March 31, 2024, total AUM was **$179.3 billion**, a **4% increase** from **$172.3 billion** on December 31, 2023, primarily driven by market performance and net inflows into retail separate accounts, partially offset by net outflows from institutional accounts and open-end funds[4](index=4&type=chunk) - Total sales increased **22% quarter-over-quarter** to **$7.6 billion**, with growth across all product categories, including institutional sales up **47% to $1.7 billion**, retail separate accounts up **12% to $2.4 billion**, and open-end funds up **18% to $3.5 billion**[5](index=5&type=chunk) - Net outflows improved from **($3.8 billion)** in the prior quarter to **($1.2 billion)**, with positive net inflows in retail separate accounts, ETFs, and global funds; institutional net outflows improved from **($2.2 billion)** to **($1.3 billion)**, and open-end fund net outflows significantly improved from **($2.0 billion)** to **($0.6 billion)**[6](index=6&type=chunk) [Assets Under Management - By Product and Asset Class](index=7&type=section&id=Assets%20Under%20Management%20-%20Product%20and%20Asset%20Class) At quarter-end, the company's AUM by product category showed growth in open-end funds, retail separate accounts, and institutional accounts, while by asset class, equity AUM significantly increased, with fixed income and alternative investments slightly decreasing End-of-Period AUM by Product Category (Million USD) | Product Category | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | March 31, 2024 | | :------------------- | :------------- | :------------ | :----------------- | :---------------- | :------------- | | Open-End Funds | $53,865 | $56,828 | $54,145 | $56,062 | $57,818 | | Closed-End Funds | $10,358 | $10,166 | $9,472 | $10,026 | $10,064 | | Retail Separate Accounts | $37,397 | $38,992 | $38,665 | $43,202 | $46,816 | | Institutional Accounts | $53,229 | $62,330 | $60,257 | $62,969 | $64,613 | | **Total** | **$154,849** | **$168,316** | **$162,539** | **$172,259** | **$179,311** | End-of-Period AUM by Asset Class (Million USD) | Asset Class | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | March 31, 2024 | | :------------------- | :------------- | :------------ | :----------------- | :---------------- | :------------- | | Equity | $87,511 | $91,211 | $87,984 | $96,703 | $103,501 | | Fixed Income | $36,596 | $38,361 | $37,352 | $37,192 | $37,037 | | Multi-Asset | $20,597 | $20,914 | $19,937 | $21,411 | $21,975 | | Alternative Investments | $10,145 | $17,830 | $17,266 | $16,953 | $16,798 | | **Total** | **$154,849** | **$168,316** | **$162,539** | **$172,259** | **$179,311** | [Assets Under Management - Average Management Fees Earned](index=8&type=section&id=Assets%20Under%20Management%20-%20Average%20Management%20Fees%20Earned) In Q1 2024, the average management fee rate for all products was **41.9 basis points**, a slight decrease from the prior quarter, with closed-end funds having the highest rate, institutional accounts the lowest, and a significant decline in institutional performance-related fees Average Management Fee Rates by Product Category (Basis Points) | Product Category | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | March 31, 2024 | | :------------------- | :------------- | :------------ | :----------------- | :---------------- | :------------- | | Open-End Funds | 47.6 | 49.3 | 51.1 | 49.7 | 49.9 | | Closed-End Funds | 57.1 | 57.6 | 58.2 | 58.4 | 58.7 | | Retail Separate Accounts | 44.2 | 44.1 | 43.3 | 43.3 | 43.9 | | Institutional Accounts | 31.8 | 31.6 | 30.3 | 33.2 | 30.8 | | **All Products** | **42.0** | **42.2** | **42.0** | **42.6** | **41.9** | Performance-Related Fees (Basis Points) | Product Category | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | March 31, 2024 | | :------------------- | :------------- | :------------ | :----------------- | :---------------- | :------------- | | Institutional Accounts | 0.2 | 0.2 | 0.4 | 2.2 | 0.3 | | **All Products** | **0.1** | **0.1** | **0.1** | **0.8** | **0.1** | [Assets Under Management - Asset Flows by Product](index=9&type=section&id=Assets%20Under%20Management%20-%20Asset%20Flows%20by%20Product) In Q1 2024, the company's total net outflows were **$1.238 billion**, a significant improvement from the prior quarter, with retail separate accounts achieving positive net inflows of **$678 million**, while open-end funds and institutional accounts remained in net outflow, though with reduced magnitudes Asset Flows by Product Category (Million USD) | Metric | Open-End Funds | Closed-End Funds | Retail Separate Accounts | Institutional Accounts | Total | | :----------------- | :------------- | :--------------- | :----------------------- | :--------------------- | :----------- | | Beginning Balance | $56,062 | $10,026 | $43,202 | $62,969 | $172,259 | | Inflows | $3,476 | $0 | $2,373 | $1,734 | $7,583 | | Outflows | ($4,104) | $0 | ($1,695) | ($3,022) | ($8,821) | | Net Flows | ($628) | $0 | $678 | ($1,288) | ($1,238) | | Market Performance | $2,560 | $239 | $2,936 | $3,001 | $8,736 | | Other | ($176) | ($201) | $0 | ($69) | ($446) | | Ending Balance | $57,818 | $10,064 | $46,816 | $64,613 | $179,311 | [Financial Performance (GAAP & Non-GAAP)](index=3&type=section&id=Financial%20Performance%20%28GAAP%20%26%20Non-GAAP%29) This section presents the company's Q1 2024 financial performance, detailing both GAAP and non-GAAP results, including revenue, operating income, expenses, and diluted EPS, highlighting key adjustments and drivers [GAAP Results](index=3&type=section&id=GAAP%20Results) In Q1 2024, GAAP operating income decreased **17% quarter-over-quarter** to **$32.3 million**, primarily due to revenue growth being offset by increased operating expenses, with diluted net EPS at **$4.10** including several non-recurring adjustments, and the effective tax rate falling to **19%** - Operating income was **$32.3 million**, a **17% decrease** from the prior quarter, as a **3% increase** in revenue (reflecting higher average AUM) was offset by an **8% increase** in operating expenses[8](index=8&type=chunk) - Diluted net EPS was **$4.10**, including fair value adjustments to minority interests in affiliates (**-$0.69**), amortization of early lease termination costs (**-$0.12**), and acquisition and integration costs (**-$0.11**), partially offset by realized and unrealized gains on investments (**+$0.76**)[9](index=9&type=chunk) - The effective tax rate decreased from **26%** in the prior quarter to **19%**, primarily reflecting changes in valuation allowances related to marketable securities[10](index=10&type=chunk) U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited, Thousand USD, except per share data) | Metric | March 31, 2024 | March 31, 2023 | Y/Y Change | December 31, 2023 | Q/Q Change | | :---------------------------------------------------------- | :------------- | :------------- | :--------- | :---------------- | :--------- | | **Revenue** | | | | | | | Investment Management Fees | $188,360 | $164,478 | 15 % | $182,149 | 3 % | | Distribution and Service Fees | $14,030 | $14,153 | (1 %) | $13,535 | 4 % | | Administrative and Shareholder Service Fees | $18,678 | $18,359 | 2 % | $18,189 | 3 % | | Other Revenue and Fees | $974 | $884 | 10 % | $714 | 36 % | | **Total Revenue** | **$222,042** | **$197,874** | **12 %** | **$214,587** | **3 %** | | **Operating Expenses** | | | | | | | Employment Expenses | $115,163 | $98,614 | 17 % | $99,847 | 15 % | | Distribution and Other Asset-Based Expenses | $24,348 | $23,715 | 3 % | $23,470 | 4 % | | Other Operating Expenses | $31,375 | $30,730 | 2 % | $31,164 | 1 % | | Operating Expenses of Consolidated Investment Products | $690 | $700 | (1 %) | $2,611 | (74 %) | | Restructuring Expenses | $797 | — | N/M | $133 | 499 % | | Change in Fair Value of Contingent Consideration | — | — | N/M | $1,290 | (100 %) | | Depreciation Expense | $2,028 | $1,145 | 77 % | $1,670 | 21 % | | Amortization Expense | $15,335 | $14,391 | 7 % | $15,446 | (1 %) | | **Total Operating Expenses** | **$189,736** | **$169,295** | **12 %** | **$175,631** | **8 %** | | **Operating Income (Loss)** | **$32,306** | **$28,579** | **13 %** | **$38,956** | **(17 %)** | | **Other Income (Expense)** | | | | | | | Net Realized and Unrealized Gains (Losses) on Investments | $3,416 | $2,670 | 28 % | $4,056 | (16 %) | | Net Realized and Unrealized Gains (Losses) of Consolidated Investment Products | $1,535 | $2,596 | (41 %) | $449 | 242 % | | Net Other Income (Expense) | $550 | ($343) | N/M | $622 | (12 %) | | **Total Net Other Income (Expense)** | **$5,501** | **$4,923** | **12 %** | **$5,127** | **7 %** | | **Interest Income (Expense)** | | | | | | | Interest Expense | ($5,681) | ($5,005) | 14 % | ($5,987) | (5 %) | | Interest and Dividend Income | $3,469 | $3,238 | 7 % | $3,673 | (6 %) | | Interest and Dividend Income from Investments of Consolidated Investment Products | $51,115 | $46,814 | 9 % | $53,206 | (4 %) | | Interest Expense of Consolidated Investment Products | ($40,012) | ($35,203) | 14 % | ($43,182) | (7 %) | | **Total Net Interest Income (Expense)** | **$8,891** | **$9,844** | **(10 %)** | **$7,710** | **15 %** | | **Income (Loss) Before Income Taxes** | **$46,698** | **$43,346** | **8 %** | **$51,793** | **(10 %)** | | Income Tax Expense (Benefit) | $8,831 | $8,703 | 1 % | $13,294 | (34 %) | | **Net Income (Loss)** | **$37,867** | **$34,643** | **9 %** | **$38,499** | **(2 %)** | | Noncontrolling Interests | ($8,009) | $3,981 | N/M | ($7,665) | 4 % | | **Net Income (Loss) Attributable to Virtus Investment Partners, Inc.** | **$29,858** | **$38,624** | **(23 %)** | **$30,834** | **(3 %)** | | Basic EPS | $4.19 | $5.33 | (21 %) | $4.30 | (3 %) | | Diluted EPS | $4.10 | $5.21 | (21 %) | $4.21 | (3 %) | | Cash Dividends Declared Per Common Share | $1.90 | $1.65 | 15 % | $1.90 | — % | | Weighted Average Shares Outstanding - Basic | 7,119 | 7,245 | (2 %) | 7,178 | (1 %) | | Weighted Average Shares Outstanding - Diluted | 7,287 | 7,410 | (2 %) | 7,320 | — % | [Non-GAAP Results](index=3&type=section&id=Non-GAAP%20Results) In Q1 2024, adjusted revenue grew **4% quarter-over-quarter** to **$200.2 million**, driven by increased average AUM, but adjusted operating income and diluted EPS declined quarter-over-quarter due to seasonal employment expenses and higher variable incentive compensation - Adjusted revenue was **$200.2 million**, a **4% increase** from the prior quarter, primarily due to a **7% increase** in average AUM, partially offset by lower performance fees[11](index=11&type=chunk) - Adjusted employment expenses were **$111.6 million**, an increase from the prior quarter, primarily due to **$10.9 million** in seasonal expenses (mainly payroll taxes and benefits related to the timing of annual incentive payments) and higher variable incentive compensation[12](index=12&type=chunk) - Adjusted operating income was **$56.4 million**, with a related margin of **28.2%**, a decrease from the prior quarter, primarily due to seasonal employment expenses, partially offset by higher investment management fees and lower other operating expenses[13](index=13&type=chunk) - Adjusted diluted net EPS attributable to Virtus Investment Partners, Inc. was **$5.41**, an **11% decrease** from the prior quarter, primarily reflecting **$1.11 per share** in seasonal expenses, partially offset by increased adjusted revenue and lower adjusted other operating expenses[14](index=14&type=chunk) [Balance Sheet & Capital Management](index=4&type=section&id=Balance%20Sheet%20%26%20Capital%20Management) This section provides an overview of the company's balance sheet and capital management activities, including key asset and liability items, working capital, debt levels, and share repurchase activities [Select Balance Sheet Items (Unaudited)](index=4&type=section&id=Select%20Balance%20Sheet%20Items%20%28Unaudited%29) As of March 31, 2024, the company's cash and cash equivalents significantly decreased, but working capital grew quarter-over-quarter, total debt remained stable, and net debt substantially increased to **$134.2 million**, with **$5 million** in share repurchases during the quarter Select Balance Sheet Items (Million USD) | Metric | March 31, 2024 | March 31, 2023 | Y/Y Change | December 31, 2023 | Q/Q Change | | :-------------------------------------- | :------------- | :------------- | :--------- | :---------------- | :--------- | | Cash and Cash Equivalents | $123.9 | $213.4 | (42 %) | $239.6 | (48 %) | | Total Debt (1) | $258.1 | $260.9 | (1 %) | $258.8 | — % | | Contingent Consideration (2) | $66.7 | $101.2 | (34 %) | $90.9 | (27 %) | | Redeemable Noncontrolling Interests (3) | $80.0 | $88.2 | (9 %) | $74.2 | 8 % | | Total Equity Excluding Noncontrolling Interests | $871.7 | $837.9 | 4 % | $864.0 | 1 % | | Working Capital (4) | $123.4 | $208.3 | (41 %) | $109.1 | 13 % | | Net Debt (Cash) (5) | $134.2 | $47.5 | 183 % | $19.2 | N/M | - Working capital was **$123.4 million**, an increase from **$109.1 million** on December 31, 2023, as earnings exceeded capital returns[16](index=16&type=chunk) - During the quarter, the company repurchased **21,108 shares** for **$5.0 million** and net settled an additional **42,588 shares** for **$9.9 million**[17](index=17&type=chunk) - As of March 31, 2024, net debt was **$134.2 million**, or **0.4x** EBITDA[17](index=17&type=chunk) [Non-GAAP Information and Reconciliations](index=10&type=section&id=Non-GAAP%20Information%20and%20Reconciliations) This section provides comprehensive non-GAAP information, including detailed reconciliation tables from GAAP to non-GAAP metrics, explanatory notes for each adjustment, and clear definitions of the non-GAAP measures used [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliation tables adjusting U.S. GAAP financial metrics to non-GAAP measures, including revenue, operating expenses, operating income, income before taxes, income tax expense, and net income attributable to Virtus Investment Partners, Inc., aiming to offer a clearer view of the company's core investment management operations Revenue Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :-------------------------------------- | :------------- | :------------- | :---------------- | | Total Revenue, GAAP | $222,042 | $197,874 | $214,587 | | Revenue of Consolidated Investment Products (1) | $2,544 | $2,750 | $2,258 | | Investment Management Fees (2) | ($10,316) | ($9,561) | ($9,933) | | Distribution and Service Fees (2) | ($14,032) | ($14,154) | ($13,537) | | **Adjusted Total Revenue** | **$200,238** | **$176,909** | **$193,375** | Operating Expenses Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :-------------------------------------- | :------------- | :------------- | :---------------- | | Total Operating Expenses, GAAP | $189,736 | $169,295 | $175,631 | | Expenses of Consolidated Investment Products (1) | ($690) | ($700) | ($2,611) | | Distribution and Other Asset-Based Expenses (3) | ($24,348) | ($23,715) | ($23,470) | | Amortization of Intangible Assets (4) | ($15,335) | ($14,391) | ($15,446) | | Restructuring Expenses (5) | ($797) | — | ($133) | | Deferred Compensation and Related Investments (6) | ($1,249) | ($572) | ($925) | | Acquisition and Integration Costs (7) | ($1,042) | ($965) | ($3,050) | | Other (8) | ($2,444) | $592 | ($472) | | **Adjusted Total Operating Expenses** | **$143,831** | **$129,544** | **$129,524** | Operating Income (Loss) Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :-------------------------------------- | :------------- | :------------- | :---------------- | | Operating Income (Loss), GAAP | $32,306 | $28,579 | $38,956 | | Consolidated Investment Products (Gains) Losses (1) | $3,234 | $3,450 | $4,869 | | Amortization of Intangible Assets (4) | $15,335 | $14,391 | $15,446 | | Restructuring Expenses (5) | $797 | — | $133 | | Deferred Compensation and Related Investments (6) | $1,249 | $572 | $925 | | Acquisition and Integration Costs (7) | $1,042 | $965 | $3,050 | | Other (8) | $2,444 | ($592) | $472 | | **Adjusted Operating Income (Loss)** | **$56,407** | **$47,365** | **$63,851** | Income (Loss) Before Income Taxes Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :-------------------------------------- | :------------- | :------------- | :---------------- | | Income (Loss) Before Income Taxes, GAAP | $46,698 | $43,346 | $51,793 | | Consolidated Investment Products (Gains) Losses (1) | ($1,819) | ($1,412) | ($1,316) | | Amortization of Intangible Assets (4) | $15,335 | $14,391 | $15,446 | | Restructuring Expenses (5) | $797 | — | $133 | | Deferred Compensation and Related Investments (6) | ($400) | ($344) | ($783) | | Acquisition and Integration Costs (7) | $1,042 | $965 | $3,050 | | Other (8) | $2,444 | ($592) | $472 | | Seed Capital and CLO Investment (Gains) Losses (9) | ($7,333) | ($10,140) | ($5,078) | | **Adjusted Income (Loss) Before Income Taxes** | **$56,764** | **$46,214** | **$63,717** | Income Tax Expense (Benefit) Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :-------------------------------------- | :------------- | :------------- | :---------------- | | Income Tax Expense (Benefit), GAAP | $8,831 | $8,703 | $13,294 | | Tax Impact: | | | | | Amortization of Intangible Assets (4) | $3,993 | $4,025 | $4,202 | | Restructuring Expenses (5) | $208 | — | $36 | | Deferred Compensation and Related Investments (6) | ($104) | ($96) | ($213) | | Acquisition and Integration Costs (7) | $271 | $270 | $830 | | Other (8) | $1,056 | $1,745 | ($11) | | Seed Capital and CLO Investment (Gains) Losses (9) | $529 | ($1,722) | ($801) | | **Adjusted Income Tax Expense (Benefit)** | **$14,784** | **$12,925** | **$17,337** | Net Income (Loss) Attributable to Virtus Investment Partners, Inc. Reconciliation (Thousand USD) | Metric | March 31, 2024 | March 31, 2023 | December 31, 2023 | | :---------------------------------------------------------- | :------------- | :------------- | :---------------- | | Net Income (Loss) Attributable to Virtus Investment Partners, Inc., GAAP | $29,858 | $38,624 | $30,834 | | Amortization of Intangible Assets, Net of Tax (4) | $10,863 | $9,687 | $10,764 | | Restructuring Expenses, Net of Tax (5) | $589 | — | $97 | | Deferred Compensation and Related Investments (6) | ($296) | ($248) | ($570) | | Acquisition and Integration Costs, Net of Tax (7) | $771 | $695 | $2,220 | | Other, Net of Tax (8) | $5,476 | ($9,236) | $5,689 | | Seed Capital and CLO Investment (Gains) Losses, Net of Tax (9) | ($7,862) | ($8,418) | ($4,277) | | **Adjusted Net Income (Loss) Attributable to Virtus Investment Partners, Inc.** | **$39,399** | **$31,104** | **$44,757** | [Notes to Reconciliations](index=12&type=section&id=Notes%20to%20Reconciliations) This section details the reclassifications and adjustments in non-GAAP reconciliations, including consolidated investment products, investment management/distribution service fees, intangible asset amortization, restructuring, deferred compensation, acquisition and integration costs, and seed capital and CLO investment gains/losses, aiming for a clearer view of operating performance - Consolidated Investment Products: Excludes revenues and expenses from the operating activities of mutual funds and CLOs consolidated in the financial statements to reflect the company's operating results from managing third-party client assets[31](index=31&type=chunk) - Investment Management/Distribution and Service Fees: Deducts fees paid to third-party intermediaries who own retail client relationships and are responsible for product distribution and client servicing[32](index=32&type=chunk)[33](index=33&type=chunk) - Amortization of Intangible Assets: Excludes non-cash amortization or impairment charges related to acquisition-related intangible assets to aid comparison with other asset managers that have not made acquisitions[36](index=36&type=chunk) - Restructuring Expenses: Excludes non-recurring expenses related to business restructuring, such as lease abandonment charges and severance costs[36](index=36&type=chunk) - Deferred Compensation and Related Investments: Adjusts compensation expense, gains and losses, and interest and dividend income related to the market performance of deferred compensation and related balance sheet investments[36](index=36&type=chunk) - Acquisition and Integration Costs: Excludes expenses directly related to acquisition and integration activities, including deal-related employment expenses, transaction closing costs, changes in fair value of contingent consideration, professional fees, and financing costs[36](index=36&type=chunk)[37](index=37&type=chunk) - Other: Adjusts for certain expenses that do not reflect the ongoing profitability of the business, such as fair value measurement of minority interests in affiliates, non-capitalized debt issuance costs, amortization of lease termination fees, and tax adjustments unrelated to current operating results[37](index=37&type=chunk) - Seed Capital and CLO Investment (Gains) Losses: Excludes realized and unrealized gains and losses on seed capital and CLO investments, which are highly volatile and do not reflect the company's operating results from providing investment management and related services[38](index=38&type=chunk) [Definitions of Non-GAAP Measures](index=14&type=section&id=Definitions%20of%20Non-GAAP%20Measures) This section defines key non-GAAP financial measures used by the company, including adjusted revenue, adjusted operating expenses, adjusted operating margin, and adjusted EPS, which aim to better reflect the ongoing operating performance of the core investment management business - Adjusted Revenue: Refers to fee revenues paid by clients for investment management and related services, excluding the impact of operating activities of consolidated investment products, and deducting fees paid to third-party client intermediaries[39](index=39&type=chunk) - Adjusted Operating Expenses: Refers to expenses incurred from ongoing operations, excluding amortization or impairment of intangible assets, restructuring and severance charges, the impact of consolidated investment products, acquisition and integration-related costs, and other expenses not reflecting the ongoing profitability of the business[40](index=40&type=chunk) - Adjusted Operating Margin: An efficiency measure representing adjusted operating income divided by adjusted revenue[41](index=41&type=chunk) - Adjusted Earnings (Loss) Per Share: Refers to adjusted net income (loss) attributable to Virtus Investment Partners, Inc. divided by the adjusted weighted average shares outstanding (basic or diluted)[42](index=42&type=chunk) [Company Information & Forward-Looking Statements](index=5&type=section&id=Company%20Information%20%26%20Forward-Looking%20Statements) This section provides an overview of Virtus Investment Partners, details regarding investor conference calls, and important disclosures about forward-looking statements, including associated risks and the company's policy on updates [About Virtus Investment Partners, Inc.](index=5&type=section&id=About%20Virtus%20Investment%20Partners%2C%20Inc.) Virtus Investment Partners is a unique partnership of boutique investment managers dedicated to providing diverse investment management products and services across various disciplines and product types for individual and institutional investors - Virtus Investment Partners (NYSE: VRTS) is a unique partnership of boutique investment managers dedicated to the long-term success of individual and institutional investors[20](index=20&type=chunk) - The company offers investment management products and services through its affiliated managers and select subadvisers, each with distinct investment styles and autonomous investment processes to meet a wide range of investor needs[20](index=20&type=chunk) [Conference Call and Investor Presentation](index=5&type=section&id=Conference%20Call%20and%20Investor%20Presentation) Management will host an investor conference call and webcast on April 26, 2024, to discuss financial results and related matters, with presentation materials and a replay available on the company's investor relations website - Management will host an investor conference call and webcast on Friday, April 26, 2024, at 10:00 a.m. Eastern Time, to discuss financial results[19](index=19&type=chunk) - The conference presentation will be available in the investor relations section of virtus.com, where a replay of the call will also be available for at least one year[19](index=19&type=chunk) [Forward-Looking Information](index=15&type=section&id=Forward-Looking%20Information) This press release contains forward-looking statements based on expectations, assumptions, and projections about the company and market, which are not guarantees of future results or performance and involve significant risks and uncertainties, with no commitment to update or revise any such statements - This press release contains forward-looking statements based on a range of expectations, assumptions, and projections about the company and the market, which are not guarantees of future results or performance and involve significant risks and uncertainties[43](index=43&type=chunk)[44](index=44&type=chunk) - The business and forward-looking statements involve significant known and unknown risks and uncertainties, including AUM reductions, failure to realize expected benefits from strategic transactions, termination of investment advisory agreements, reputational harm, inability to satisfy debt covenants, inability to attract and retain key personnel, competitive challenges, technology system disruptions, investment losses, and regulatory and legal developments[45](index=45&type=chunk) - The company does not undertake or plan to update or revise any forward-looking statements to reflect actual results, plans, assumptions, estimates, or projections, or other circumstances occurring after the date of this release[47](index=47&type=chunk)

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, 2023 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 ...

Virtus Investment Partners, Inc. (NYSE:VRTS) Q4 2023 Earnings Conference Call February 2, 2024 10:00 AM ET Company Participants Sean Rourke - IR George Aylward - President &| CEO Michael Angerthal - CFO Conference Call Participants Crispin Love - Piper Sandler Bradley Hays - TD Cowan Michael Cyprys - Morgan Stanley Operator Good morning. My name is Dede, and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners Quarterly Conference Call. The slide prese ...

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, 2023 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) (State or other jurisdiction of incorpor ...

Virtus Investment Partners, Inc. (NYSE:VRTS) Q3 2023 Results Conference Call October 27, 2023 10:00 AM ET Company Participants Sean Rourke - IR George Aylward - President and CEO Mike Angerthal - CFO Conference Call Participants Michael Cyprys - Morgan Stanley Operator Good morning. My name is Dede, and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the Investor Relat ...

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, 2023 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) (State or other jurisdiction of incorporation ...