Victory Capital(US:VCTR)2023-03-06 13:28Assets Under Management (AUM) - Assets under management (AUM) decreased by $30.7 billion, or approximately 16.7%, to $153.0 billion as of December 31, 2022, from $183.7 billion at the end of 2021, primarily due to negative market action of $26.5 billion [320]. - AUM by asset class showed a significant decrease in Fixed Income, dropping to $26,353 million in 2022 from $35,154 million in 2021, a decline of approximately 25% [333]. - Total long-term assets decreased to $149,640 million in 2022 from $180,550 million in 2021, reflecting a decline of about 17.1% [333]. - Total AUM decreased by $30.7 billion, or 16.7%, to $152.9 billion as of December 31, 2022, from $183.7 billion at the end of 2021, primarily due to negative market movement and net outflows [342]. - The beginning AUM for the year ended December 31, 2022, was $183.7 billion, with ending AUM at $152.9 billion [339]. - The ending AUM for Mutual Funds was $99.4 billion, for ETFs was $5.6 billion, and for other vehicles was $47.9 billion [339]. Financial Performance - Total revenue for the year ended December 31, 2022, was $854.8 million, compared to $890.3 million for the year ended December 31, 2021 [326]. - Net income for 2022 was $275.5 million, compared to $278.4 million in 2021, while adjusted net income was $293.8 million in 2022, down from $329.0 million in 2021 [326]. - GAAP earnings per diluted share were $3.81 for the year ended December 31, 2022, compared to $3.75 for the same period in 2021 [326]. - Adjusted EBITDA for 2022 was $424.2 million with an adjusted EBITDA margin of 49.6%, compared to $449.0 million and 50.4% in 2021 [326]. - Total revenue for 2022 was $854.8 million, down from $890.3 million in 2021, reflecting a decrease of about 4.9% [329]. - Net income for 2022 was $275.5 million, slightly down from $278.4 million in 2021, indicating a decrease of approximately 1% [329]. - Adjusted EBITDA margin for 2022 was 49.6%, compared to 50.4% in 2021, showing a decline of 0.8 percentage points [329]. - Adjusted Net Income for 2022 was $293,750,000, compared to $329,039,000 in 2021, reflecting a decrease of 10.7% [408]. Cash Flow and Capital Management - The company returned over $200 million to shareholders in 2022 through share repurchases and cash dividends, while reducing debt by $150 million [326]. - Cash provided by operating activities decreased by $41.0 million to $335.2 million in 2022, compared to $376.2 million in 2021, primarily due to a $24.0 million decrease in working capital and a $14.2 million decrease in non-cash items [429]. - Cash used in investing activities significantly decreased by $550.3 million to $6.3 million in 2022, from $556.6 million in 2021, mainly due to prior year cash payments related to acquisitions [431]. - Cash used in financing activities increased by $587.4 million to $360.2 million in 2022, compared to cash provided by financing activities of $227.2 million in 2021, driven by term loan prepayments and stock repurchases [433]. - The company had an undrawn commitment on a revolving credit facility of $100,000,000 as of December 31, 2022 [413]. Market and Client Activity - Long-term gross inflows were $33.3 billion for the year ended December 31, 2022, compared to $27.9 billion for 2021, while long-term net outflows were $2.5 billion in 2022, down from $4.0 billion in 2021 [320]. - Gross client cash inflows for the year ended December 31, 2022, totaled $33.9 billion, while gross client cash outflows were $36.7 billion, resulting in net client cash flows of $(2.7) billion [339]. - The company experienced net inflows of $1.9 billion into its Solutions Platform and $1.7 billion into alternative investment strategies, partially offsetting the outflows [343]. - The company reported gross client cash inflows of $21.2 billion from Mutual Funds, $2.0 billion from ETFs, and $10.7 billion from other vehicles for the year ended December 31, 2022 [339]. Acquisitions and Partnerships - The company completed the acquisition of WestEnd on December 31, 2021, for an estimated purchase price of $716.1 million, which included $475.8 million in cash paid at closing [309]. - The NEC Acquisition was completed on November 1, 2021, for a purchase price of $63.1 million, with potential additional payments of up to $35.0 million based on net revenue growth [312]. - The company entered into a long-term partnership with Spurs Sports & Entertainment in December 2022, granting exclusive naming rights for the new performance center until 2033 [424]. Expenses and Cost Management - Total operating expenses decreased to $455.7 million in 2022 from $516.4 million in 2021 [374]. - Personnel compensation and benefits increased to $238.2 million in 2022 from $234.8 million in 2021 [374]. - Total distribution and other asset-based expenses decreased by $15.3 million, or 8.7%, to $161.1 million in 2022 compared to $176.4 million in 2021 [384]. - General and administrative expenses decreased by $1.3 million, or 2.5%, to $52.4 million in 2022 compared to $53.7 million in 2021 [386]. - Interest expense and other financing costs increased by $19.3 million to $44.0 million in 2022 from $24.7 million in 2021, mainly due to higher debt principal balance [399]. Tax and Regulatory Considerations - The effective tax rate increased by 0.7% from 20.6% in 2021 to 21.3% in 2022, primarily due to increased non-deductible expenses [403]. - Inflation did not have a material effect on consolidated results, but could negatively impact profitability if expense increases are not recoverable [405].