Victory Capital(US:VCTR)2021-11-08 21:07Financial Performance - Total revenue for Q3 2021 was $226.29 million, a 20% increase from $188.66 million in Q3 2020[14] - Net income for Q3 2021 reached $74.18 million, up 33% from $55.74 million in Q3 2020[14] - Earnings per share (EPS) for Q3 2021 were $1.09 (basic) and $1.00 (diluted), compared to $0.82 and $0.76 in Q3 2020, marking a 33% and 32% increase respectively[14] - Comprehensive income for Q3 2021 was $75.40 million, compared to $55.16 million in Q3 2020, indicating a 36.7% increase[16] - Net income for the nine months ended September 30, 2021, was $208.6 million, an increase of 32.4% compared to $157.6 million for the same period in 2020[22] - Total revenue for the three months ended September 30, 2021, was $226.29 million, an increase of 20% compared to $188.66 million for the same period in 2020[42] - Adjusted Net Income with tax benefit for the three months ended September 30, 2021, was $92.6 million, compared to $73.4 million for the same period in 2020, marking a year-over-year increase of 26.1%[152] - For the nine months ended September 30, 2021, total revenue was $661.1 million, compared to $575.0 million for the same period in 2020, indicating a year-over-year increase of 15.0%[152] Assets and Liabilities - Total assets as of September 30, 2021, were $1.79 billion, up from $1.73 billion at the end of 2020, reflecting a 3.5% increase[12] - Long-term debt decreased to $633.90 million from $769.01 million at the end of 2020, a reduction of approximately 17.5%[12] - Cash and cash equivalents at the end of the period on September 30, 2021, were $64.7 million, compared to $56.3 million at the end of September 2020[22] - The fair value of financial assets as of September 30, 2021, totaled $41.879 million, with liabilities of $103.1 million primarily from contingent consideration arrangements[78] - The fair value of long-term debt at September 30, 2021, is considered to be its carrying value due to the variable interest rate approximating current market rates[85] Investment Management - Investment management fees increased to $171.36 million in Q3 2021, compared to $137.24 million in Q3 2020, representing a 25% growth[14] - The Company’s investment management fees are calculated as a contractual percentage of assets under management (AUM), which can fluctuate due to market movements[46] - The Company’s revenue recognition is based on the transfer of services to customers, with variable consideration included only when it is probable that a significant reversal will not occur[43] - AUM as of September 30, 2021, was $159.9 billion, a significant increase from $17.9 billion in August 2013[133] - The company completed the acquisition of THB Asset Management on March 1, 2021, which added $547 million in AUM and expanded its investment platform[139] Dividends and Share Repurchases - The company declared dividends of $0.15 per share in Q3 2021, up from $0.06 per share in Q3 2020[14] - Total dividends paid in the nine months ended September 30, 2021, were $25.4 million, an increase from $11.5 million in 2020[22] - The company repurchased common stock totaling $25.9 million during the nine months ended September 30, 2021, compared to $22.8 million in the same period of 2020[22] - The company repurchased 188,525 shares of Class A common stock for $6.3 million during the three months ended September 30, 2021, at an average price of $33.29 per share[110] - Cumulative total of 3,946,187 shares of Class A common stock repurchased at a total cost of $69.6 million, averaging $17.63 per share[110] Costs and Expenses - Total operating expenses for the three months ended September 30, 2021 were $127.3 million, an increase of $19.2 million, or 17.8%, from $108.1 million for the same period in 2020[168] - Personnel compensation and benefits increased by $8.5 million, or 17.9%, to $55.8 million for the three months ended September 30, 2021, from $47.4 million for the same period in 2020[176] - Interest expense for the three months ended September 30, 2021, was $4.0 million, a decrease of 35.9% from $6.2 million in the same period of 2020[107] - Total interest expense and other financing costs for the nine months ended September 30, 2021, was $18.9 million, down 35.4% from $29.3 million in the same period of 2020[107] - Acquisition-related costs for the three months ended September 30, 2021 were $6.0 million, compared to $1.1 million for the same period in 2020[187] Acquisitions - The company completed the acquisition of New Energy Capital Partners on November 1, 2021, expanding its investment franchise to eleven[151] - The company completed the acquisition of THB Asset Management on March 1, 2021, with total assets under management (AUM) acquired amounting to $547 million[25] - The company has entered into a definitive agreement to acquire WestEnd Advisors for an aggregate purchase price of $480 million in cash, with potential earn-out payments of up to $320 million[129] - The company paid $37.5 million in cash for the second annual earn-out period related to the USAA AMCO Acquisition on October 12, 2021[126] Cash Flow - Cash provided by operating activities for the nine months ended September 30, 2021, was $264.1 million, up from $182.7 million in 2020, reflecting a 44.5% increase[22] - The company reduced outstanding debt by $35.0 million for the three months ended September 30, 2021, and by $142.0 million for the nine months ended September 30, 2021, totaling a reduction of $453.8 million since July 1, 2019[208] - The company maintained a $100.0 million revolving credit facility as of September 30, 2021, with approximately $100.0 million undrawn[207] Tax and Regulatory - The provision for income taxes for the three months ended September 30, 2021, was $18.2 million, or 19.7% of pre-tax income, compared to $17.0 million, or 23.4% in the same period of 2020[98] - The effective tax rate for the three months ended September 30, 2021 was 19.7%, down from 23.4% in 2020, primarily due to an increase in excess tax benefits on share-based compensation[197] - The company plans to eliminate its dual-class share structure, pending shareholder approval at a special meeting scheduled for November 19, 2021[28]