Group 1 - Virtus Investment Partners, Inc. (VRTS) reported preliminary assets under management (AUM) of $163.7 billion for April 2025, reflecting a 2.2% decrease from March 31, 2025, primarily due to net outflows in various fund categories [1] - The company's open-end fund balance decreased by 1.6% to $52.7 billion, while closed-end fund balance slightly declined to $10.2 billion [2] - Institutional accounts balance fell 2.1% to $55.5 billion, and retail separate accounts decreased by 3.4% to $45.3 billion [2] Group 2 - The integrated multi-boutique business model of the company is expected to support its performance in a growing industry, but the decline in AUM raises concerns about future profitability [3] - Elevated operating expenses are anticipated to negatively impact the company's bottom line in the near term [3] - Over the past six months, shares of Virtus Investment have decreased by 26.8%, compared to a 9.4% decline in the industry [4] Group 3 - The company currently holds a Zacks Rank of 4 (Sell) [5] - In comparison, Franklin Resources, Inc. reported a preliminary AUM of $1.53 trillion, showing a marginal decrease due to long-term net outflows [6] - T. Rowe Price Group, Inc. announced a preliminary AUM of $1.56 trillion, reflecting a slight decrease, with equity products totaling $767 billion and fixed income growing by 1% to $198 billion [8]

Financial Performance - Total sales in Q1 2025 were $6.2 billion, a decrease of $1.3 billion, or 17.7%, from $7.6 billion in Q1 2024[95] - Total revenues decreased by 1.9% to $217.9 million for the three months ended March 31, 2025, compared to $222.0 million in the same period of 2024[108] - Net income attributable to Virtus Investment Partners, Inc. decreased by $1.2 million, or 4.1%, to $28.6 million for the three months ended March 31, 2025[108] - Net income per diluted share in Q1 2025 was $4.05, a decrease of $0.05, or 1.2%, from $4.10 in Q1 2024[98] - Operating income in Q1 2025 was $36.6 million, an increase of $4.3 million, or 13.3%, compared to $32.3 million in Q1 2024[98] Assets and Management - Total assets under management as of March 31, 2025, were $167.5 billion, a decrease of $11.8 billion, or 6.6%, from $179.3 billion as of March 31, 2024[96] - Average assets under management for all products in Q1 2025 were $173.6 billion, a slight increase of $232 million, or 0.1%, from $173.4 billion in Q1 2024[104] - Assets under management by product showed a decrease in Open-End Funds by $4.2 billion, or 7.3%, and Institutional Accounts by $7.9 billion, or 12.3%[97] - Market performance negatively impacted total assets under management by $4.1 billion in Q1 2025[100] Expenses - Total operating expenses decreased by $8.4 million, or 4.4%, to $181.3 million for the three months ended March 31, 2025[114] - Employment expenses decreased by $6.1 million, or 5.3%, to $109.1 million for the three months ended March 31, 2025, primarily due to a decrease in profit- and sales-based compensation[115] - Distribution and service fees decreased by $1.3 million, or 9.1%, to $12.8 million for the three months ended March 31, 2025, primarily due to lower sales and average assets under management[111] Cash Flow - Net cash used in operating activities improved by 89.0%, decreasing to $3.8 million for the three months ended March 31, 2025, from $34.5 million in the prior year[138] - Net cash used in investing activities increased by 21.3% to $3.0 million for the three months ended March 31, 2025, compared to $2.5 million in the same period of 2024[139] - Net cash used in financing activities surged by 210.7% to $174.5 million for the three months ended March 31, 2025, up from $56.1 million in the prior year, driven by increased payments on borrowings[140] Tax and Compliance - The estimated effective tax rate for the three months ended March 31, 2025, was 30.6%, up from 18.9% in the same period of 2024, primarily due to changes in valuation allowances related to investment losses[131] - The company remains compliant with all minimum net capital requirements as of March 31, 2025[136] Other Financial Metrics - Interest income increased by $2.6 million, or 28.8%, to $11.4 million for the three months ended March 31, 2025, compared to $8.9 million in the prior year[126] - Other income (expense), net decreased by $13.1 million, or 238.9%, to $(7.6) million for the three months ended March 31, 2025, compared to $5.5 million in the prior year[122] - The average fee earned for Open-End Funds decreased from 49.9 basis points in 2024 to 47.8 basis points in 2025[104] - Average fee rates earned on all products decreased slightly for the three months ended March 31, 2025, compared to the same period in the prior year[106] Equity and Investments - Total equity decreased slightly by 0.6% to $896.2 million as of March 31, 2025, from $901.6 million at December 31, 2024[132] - Investments increased marginally by 0.6% to $119.9 million as of March 31, 2025, from $119.2 million at December 31, 2024[132] - The company had $231.7 million outstanding under a term loan as of March 31, 2025, after repaying $0.7 million during the quarter[141] - The company paid $158.4 million in annual incentive compensation in the first quarter of 2025, compared to $146.1 million in the same period of 2024[134] Investment Strategy - The company operates a multi-manager, multi-style investment strategy, appealing to a diverse range of investors across various asset classes[91]

Assets Under Management (AUM) - AUM decreased to $1675 billion from $1750 billion due to negative market performance and net outflows[12,14] - Average AUM decreased by 5% to $1736 billion[12] - Market performance led to a decrease of $41 billion in AUM[17] - Net outflows contributed to a decrease of $30 billion in AUM[17] Sales and Net Flows - Sales amounted to $62 billion, compared to $64 billion in the prior period[12] - Net flows were ($30) billion, attributed to U S retail funds, institutional accounts, and retail separate accounts[12,19] - Institutional sales were $15 billion, compared to $16 billion in the prior period[21] - Institutional net flows were ($12) billion, compared to ($38) billion in the prior period[21] Financial Performance - Operating income, as adjusted, was $546 million, including $100 million of seasonal expenses[12] - Operating margin, as adjusted, was 276%, or 327% excluding seasonal expenses[12] - Earnings per diluted share, as adjusted, were $573, including seasonal expenses of $101 per share, and increased 6% over the prior-year period[12] - Investment management fees, as adjusted, decreased by 7% due to lower average AUM and lower performance fees[25] Capital Activities - The company repurchased 111200 shares for $200 million and net settled 35178 shares for $61 million[12] - Net debt was $1000 million, or 03x EBITDA[12]

Financial Data and Key Metrics Changes - Total assets under management (AUM) decreased to $167.5 billion as of March 31, primarily due to market performance and net outflows [9][16][20] - Earnings per share (EPS) as adjusted was $5.73, a decline from the previous quarter but an increase of 6% year-over-year [13][28] - Operating income as adjusted was $54.6 million, down from $74.5 million sequentially, largely due to seasonal employment expenses [26][27] Business Line Data and Key Metrics Changes - Institutional AUM accounted for 34% of total AUM, with net outflows of $1.2 billion primarily from large cap equity strategies [16][20] - Retail separate accounts experienced net outflows of $700 million, largely due to the soft closing of a specific equity model offering [10][21] - ETFs saw positive net flows of $300 million, with a year-over-year organic growth rate of 73% [12][20] Market Data and Key Metrics Changes - Total sales for the quarter were $6.2 billion, slightly down from $6.4 billion in the previous quarter, with stable sales across products despite market disruptions [9][19] - Institutional sales remained relatively unchanged at $1.5 billion, while retail separate account sales were also stable at $1.7 billion [19][20] - The average fee rate was 41.7 basis points, consistent with the previous quarter, reflecting a mix of asset classes [22] Company Strategy and Development Direction - The company is focused on expanding its offerings in ETFs, global funds, and retail separate accounts, with several strategies under development [8][9] - Management emphasized the importance of active management in volatile markets, with over 70% of equity strategies outperforming their benchmarks [7][8] - The company aims to maintain a balanced approach to capital management, investing in growth while returning capital to shareholders [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing market volatility and uncertainty, which they believe provides opportunities for active managers to demonstrate value [6][10] - The company remains cautious about investor behavior in light of market conditions, with trends in retail investments remaining consistent [12][20] - Management expressed confidence in their investment performance, with a strong track record recognized by industry rankings [8][18] Other Important Information - The company repurchased approximately 146,000 shares during the quarter, reducing shares outstanding by 3% on a net basis [14][29] - The first quarter typically represents the highest cash utilization due to annual incentives and revenue participation payments [29][30] - The net present value of the tax asset is approximately $112 million, providing a cash tax benefit not included in adjusted EPS [31] Q&A Session Summary Question: Fee rate outlook and changes - Management indicated that the fee rate will be influenced by market conditions and the mix of assets, with a target range of 41 to 42 basis points for modeling purposes [32][34] Question: Capital allocation and share repurchases - Management acknowledged an increase in share repurchases compared to previous quarters, emphasizing the importance of stock performance in capital allocation decisions [36][38] Question: SMAs and capacity constraints - Management confirmed that the soft closing of a successful SMA strategy was a response to market challenges, but they have other strategies available to investors [42][44] - There are no current capacity constraints in other areas of the retail channel, with expectations for growth in mid-cap strategies [45] Question: Monetizing deferred tax assets - Management clarified that they are achieving economic benefits from tax attributes and will continue to provide transparency regarding their value [46][47]

News Release Virtus Investment Partners Announces Financial Results for First Quarter 2025 Hartford, CT, April 25, 2025 - Virtus Investment Partners, Inc. (NYSE: VRTS) today reported financial results for the three months ended March 31, 2025. Financial Highlights (Unaudited) (in millions, except per share data or as noted) | | | | | | | | Three Months | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Three Months Ended | | | | Ended | | | | | 3/31/2025 | | 3/31/2024 | Change | | 12/31/202 ...

FOURTH QUARTER EARNINGS PRESENTATION February 3, 2023 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 ...

THIRD QUARTER EARNINGS PRESENTATION October 26, 2022 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act o ...

Part I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Virtus Investment Partners' unaudited condensed consolidated financial statements for Q2 and H1 2022, covering balance sheets, income statements, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2022, total assets were $3.54 billion, a decrease from $3.93 billion at December 31, 2021, primarily due to reductions in cash and CIP investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $250,530 | $378,921 | | Investments of CIP | $1,990,159 | $2,140,238 | | Goodwill | $347,423 | $338,406 | | **Total assets** | **$3,543,915** | **$3,934,181** | | **Liabilities** | | | | Accrued compensation and benefits | $105,106 | $187,449 | | Debt | $255,832 | $266,346 | | Notes payable of CIP | $1,904,444 | $2,033,617 | | **Total liabilities** | **$2,613,063** | **$2,958,589** | | **Total equity** | **$791,705** | **$836,627** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2022, total revenues decreased to $225.3 million, operating income fell to $56.7 million, and net income attributable to Virtus significantly declined to $17.4 million Q2 and H1 2022 vs 2021 Operating Results (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $225,307 | $244,011 | $477,747 | $460,908 | | Operating Income | $56,670 | $86,411 | $122,222 | $148,553 | | Net Income Attributable to Virtus | $17,402 | $62,967 | $50,461 | $99,555 | | Earnings per Share—Diluted | $2.29 | $7.86 | $6.54 | $12.39 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased to $37.6 million for H1 2022, while cash used in investing and financing activities increased due to acquisitions and share repurchases Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,611 | $239,180 | | Net cash used in investing activities | ($24,442) | ($5,527) | | Net cash used in financing activities | ($240,177) | ($167,645) | | **Net decrease in cash** | **($227,314)** | **$66,008** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the Stone Harbor acquisition, goodwill increase, dividend and share repurchases, and the non-impact of consolidated investment products on net income - On January 1, 2022, the Company completed the acquisition of Stone Harbor Investment Partners, LLC for initial transaction consideration of **$29.4 million**, which included **$8.8 million** in goodwill and **$10.8 million** in definite-lived intangible assets[33](index=33&type=chunk) - Goodwill increased from **$338.4 million** at year-end 2021 to **$347.4 million** at June 30, 2022, primarily due to acquisitions[43](index=43&type=chunk) - The company declared a quarterly cash dividend of **$1.50 per common share** in May 2022 and repurchased **$70.0 million** of its common stock in the first six months of 2022[55](index=55&type=chunk)[56](index=56&type=chunk) - The company consolidates various investment products (CIP), including Collateralized Loan Obligations (CLOs), but this consolidation has no impact on net income attributable to Virtus Investment Partners, Inc. The company's risk is limited to its beneficial interests in these products[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant decline in Q2 2022 financial performance, with diluted EPS falling and AUM decreasing 13.0% due to market performance and net outflows [Overview and Financial Highlights](index=24&type=section&id=Overview%20and%20Financial%20Highlights) The company highlights recent acquisitions of Stone Harbor and Westchester, noting a significant downturn in Q2 2022 with diluted EPS at $2.29 and total net outflows of $4.8 billion - The company completed its acquisition of Stone Harbor Investment Partners on January 1, 2022, adding **$14.7 billion** in AUM, and Westchester Capital Management on October 1, 2021, adding **$5.1 billion** in AUM[108](index=108&type=chunk)[109](index=109&type=chunk) Q2 2022 Financial Highlights vs. Q2 2021 | Metric | Q2 2022 | Q2 2021 | Change | | :--- | :--- | :--- | :--- | | Net Income per Diluted Share | $2.29 | $7.86 | -70.9% | | Total Sales | $7.9B | $9.6B | -17.4% | | Net Flows | ($4.8B) | $1.5B | N/A | | Assets Under Management (EOP) | $155.4B | $178.6B | -13.0% | [Assets Under Management (AUM)](index=25&type=section&id=Assets%20Under%20Management%20(AUM)) Total AUM decreased by 13.0% to $155.4 billion at June 30, 2022, driven by negative market performance and net outflows, particularly in Open-End Funds AUM by Product (in millions) | Product | June 30, 2022 | June 30, 2021 | % Change | | :--- | :--- | :--- | :--- | | Open-End Funds | $59,479 | $76,593 | (22.3)% | | Closed-End Funds | $10,645 | $11,993 | (11.2)% | | Retail Separate Accounts | $35,248 | $40,578 | (13.1)% | | Institutional Accounts | $50,048 | $49,474 | 1.2% | | **Total** | **$155,420** | **$178,638** | **(13.0)%** | Asset Flows by Period (in millions) | Period | Inflows | Outflows | Net Flows | | :--- | :--- | :--- | :--- | | **Q2 2022** | $7,884 | ($12,652) | **($4,768)** | | **Q2 2021** | $9,550 | ($8,096) | **$1,454** | | **H1 2022** | $17,319 | ($24,047) | **($6,728)** | | **H1 2021** | $20,323 | ($16,943) | **$3,380** | AUM by Asset Class (in millions) | Asset Class | June 30, 2022 | June 30, 2021 | % Change | | :--- | :--- | :--- | :--- | | Equity | $84,754 | $113,751 | (25.5)% | | Fixed income | $39,322 | $35,426 | 11.0% | | Multi-asset | $20,261 | $23,668 | (14.4)% | | Alternatives | $11,083 | $5,793 | 91.3% | | **Total** | **$155,420** | **$178,638** | **(13.0)%** | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) For Q2 2022, total revenues fell 7.7% due to lower AUM and sales, while operating expenses increased 7.0% from acquisitions, leading to a 34.4% decrease in operating income Revenue Breakdown (in thousands) | Revenue Source | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Investment management fees | $185,024 | $193,510 | (4.4)% | | Distribution and service fees | $17,159 | $23,450 | (26.8)% | | Administration and shareholder service fees | $21,982 | $25,877 | (15.1)% | | **Total revenues** | **$225,307** | **$244,011** | **(7.7)%** | Operating Expense Breakdown (in thousands) | Expense Category | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Employment expenses | $89,360 | $87,630 | 2.0% | | Distribution and other asset-based expenses | $28,583 | $36,021 | (20.6)% | | Other operating expenses | $31,559 | $21,946 | 43.8% | | Amortization expense | $14,624 | $10,363 | 41.1% | | **Total operating expenses** | **$168,637** | **$157,600** | **7.0%** | - The increase in operating expenses for Q2 and H1 2022 was primarily due to the addition of Stone Harbor and Westchester, which increased employment, other operating, and amortization costs[134](index=134&type=chunk)[137](index=137&type=chunk)[141](index=141&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased to $250.5 million at June 30, 2022, reflecting significant capital uses including incentive compensation, share repurchases, and the Stone Harbor acquisition Key Balance Sheet and Cash Flow Data (in thousands) | Metric | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $250,530 | $378,921 | | Debt | $255,832 | $266,346 | | Total equity | $791,705 | $836,627 | | **Cash Flow (H1 2022 vs H1 2021)** | **H1 2022** | **H1 2021** | | Operating activities | $37,611 | $239,180 | | Investing activities | ($24,442) | ($5,527) | | Financing activities | ($240,177) | ($167,645) | - Major uses of capital in H1 2022 included **$151.6 million** for annual incentive compensation, cash for the Stone Harbor acquisition, **$70.0 million** for share repurchases, and **$33.0 million** for contingent consideration payments[155](index=155&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - At June 30, 2022, **$262.9 million** was outstanding under the Term Loan, and the company had no outstanding borrowings under its **$175.0 million** revolving credit facility[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk disclosures from its 2021 Annual Report, with primary exposures remaining interest rates and securities prices - There were no material changes to the information regarding market risk during the three and six months ended June 30, 2022, from what was disclosed in the Company's 2021 Annual Report on Form 10-K[165](index=165&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2022[167](index=167&type=chunk) - There have been no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company incorporates legal matters by reference from Note 14, stating that current proceedings are not expected to materially affect its financial condition or results - The company incorporates its disclosure on legal proceedings by reference from Note 14 of the financial statements[169](index=169&type=chunk) - Based on current information, the company believes that the outcomes of its legal and regulatory proceedings are not likely, individually or in aggregate, to have a material adverse effect on its financial condition or results[73](index=73&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes to its risk factors from those previously disclosed in its 2021 Annual Report on Form 10-K - There have been no material changes to the Company's risk factors from those previously reported in the 2021 Annual Report on Form 10-K[170](index=170&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased 221,903 shares of common stock, with 932,094 shares remaining available under the repurchase program and no unregistered sales Share Repurchases for Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | — | $ — | | May 2022 | 121,857 | $177.94 | | June 2022 | 100,046 | $183.01 | | **Total** | **221,903** | **N/A** | - As of June 30, 2022, **932,094 shares** remained available for repurchase under the company's share repurchase program[171](index=171&type=chunk) - There were no unregistered sales of equity securities during the quarter[174](index=174&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files - The exhibits filed with the report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and the Cover Page Interactive Data File (iXBRL)[175](index=175&type=chunk)

SECOND QUARTER EARNINGS PRESENTATION July 29, 2022 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of ...

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