Virtus Investment Partners, Inc. (NYSE:VRTS) Q1 2022 Earnings Conference Call April 29, 2022 10:00 AM ET Company Participants Sean Rourke – Vice President, Investor Relations George Aylward – President and Chief Executive Officer Mike Angerthal – Chief Financial Officer Conference Call Participants Sumeet Mody – Piper Sandler Michael Cyprys – Morgan Stanley Operator Good morning. My name is Cherry, and I’ll be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners ...

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, 2021 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 ...

FOURTH QUARTER EARNINGS PRESENTATION February 4, 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 ...

Virtus Investment Partners, Inc. (NYSE:VRTS) Q4 2021 Earnings Conference Call February 4, 2022 10:00 AM ET Company Participants George Aylward – President & Chief Executive Officer Mike Angerthal – Chief Financial Officer Sean Rourke – Investor Relations Conference Call Participants Sumeet Mody – Piper Sandler Michael Cyprys – Morgan Stanley Operator Good morning. My name is Gigi and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners Quarterly Confer ...

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, 2021 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) Delaware 26-3962811 (State or other juri ...

Virtus Investment Partners, Inc. (NYSE:VRTS) Q3 2021 Earnings Conference Call October 27, 2021 10:00 AM ET Company Participants Sean Rourke - Investor Relations George Aylward - President & Chief Executive Officer Mike Angerthal - Chief Financial Officer Conference Call Participants Michael Cyprys - Morgan Stanley Sumeet Mody - Piper Sandler Operator Good morning. My name is Richard and I'll be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners Quarterly Confe ...

THIRD QUARTER EARNINGS PRESENTATION October 27, 2021 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act o ...

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, 2021 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) Delaware 26-3962811 (State or other jurisdict ...

SECOND QUARTER EARNINGS PRESENTATION July 28, 2021 George R. Aylward President and Chief Executive Officer Michael A. Angerthal Executive Vice President and Chief Financial Officer IMPORTANT DISCLOSURES This presentation contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of ...

Part I – Financial Information This section presents the unaudited condensed consolidated financial information, including statements, management's analysis, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Details the company's financial position, including assets, liabilities, and equity at specific dates | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | **Assets:** | | | | Cash and cash equivalents | $228,260 | $246,511 | | Investments | $67,651 | $64,944 | | Accounts receivable, net | $116,160 | $84,499 | | Assets of consolidated investment products ("CIP") | | | | Cash and cash equivalents of CIP | $170,725 | $86,980 | | Investments of CIP | $2,299,607 | $2,333,277 | | Intangible assets, net | $391,187 | $280,264 | | Goodwill | $315,366 | $290,366 | | Total assets | $3,702,159 | $3,466,943 | | **Liabilities and Equity:** | | | | Accrued compensation and benefits | $62,335 | $122,514 | | Contingent consideration (Note 3) | $137,664 | — | | Debt | $195,726 | $201,212 | | Notes payable of CIP | $2,197,695 | $2,190,445 | | Total liabilities | $2,850,982 | $2,630,490 | | Redeemable noncontrolling interests | $112,482 | $115,513 | | Total equity | $738,695 | $720,940 | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Outlines revenues, expenses, net income (loss), and earnings per share over specific periods | (in thousands, except per share data) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenues | $216,897 | $144,566 | | Total operating expenses | $154,755 | $119,964 | | Operating Income (Loss) | $62,142 | $24,602 | | Total other income (expense), net | $(2,025) | $(15,601) | | Total interest income (expense), net | $7,250 | $2,296 | | Income (Loss) Before Income Taxes | $67,367 | $11,297 | | Income tax expense (benefit) | $15,153 | $10,291 | | Net Income (Loss) | $52,214 | $1,006 | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | | Earnings (Loss) per Share—Basic | $4.79 | $(0.58) | | Earnings (Loss) per Share—Diluted | $4.54 | $(0.58) | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Details net income and other comprehensive income (loss) components, leading to total comprehensive income (loss) | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) | $52,214 | $1,006 | | Other comprehensive income (loss), net of tax: | | | | Foreign currency translation adjustment, net of tax | $6 | $(25) | | Other comprehensive income (loss) | $6 | $(25) | | Comprehensive income (loss) | $52,220 | $981 | | Comprehensive (income) loss attributable to noncontrolling interests | $(15,626) | $(5,291) | | Comprehensive Income (Loss) Attributable to Stockholders | $36,594 | $(4,310) | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Summarizes cash flows from operating, investing, and financing activities over specific periods | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $150,151 | $(252,320) | | Net cash provided by (used in) investing activities | $(2,608) | $9,366 | | Net cash provided by (used in) financing activities | $(87,673) | $314,641 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $59,870 | $71,687 | | Cash, cash equivalents and restricted cash, end of period | $399,719 | $393,626 | [Condensed Consolidated Statements of Changes in Equity (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)) Details changes in equity components, including net income, dividends, and other comprehensive income - Total equity attributable to stockholders increased from **$711,141 thousand** at December 31, 2020, to **$729,378 thousand** at March 31, 2021, primarily driven by net income attributable to common stockholders of **$36,588 thousand**, partially offset by cash dividends declared and taxes paid on stock-based compensation[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization and Business](index=10&type=section&id=1.%20Organization%20and%20Business) Describes Virtus Investment Partners, Inc.'s operations in investment management and service offerings - Virtus Investment Partners, Inc. operates in the investment management industry through its subsidiaries, providing investment management and related services to individuals and institutions via various products like U.S. 1940 Act mutual funds, UCITS, ETFs, closed-end funds, retail separate accounts, institutional separate accounts, pooled structures, and subadvisory services[23](index=23&type=chunk)[24](index=24&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Outlines the basis for financial statement preparation and key accounting policies applied - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, including normal recurring adjustments[25](index=25&type=chunk) - The company adopted ASU 2020-01 and ASU 2019-12 on January 1, 2021, neither of which had a material impact on the financial statements[27](index=27&type=chunk)[28](index=28&type=chunk) [3. Revenues](index=10&type=section&id=3.%20Revenues) Details the company's revenue recognition policies and a breakdown of revenue sources - Revenues are recognized when performance obligations are satisfied, typically when control of services is transferred[29](index=29&type=chunk) - Investment management, distribution, and administration fees are generally calculated as a percentage of average net assets and are considered constrained until asset values are determinable at the end of the measurement period[30](index=30&type=chunk) | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Investment management fees | $173,269 | $120,288 | | Distribution and service fees | $20,348 | $9,460 | | Administration and shareholder service fees | $22,560 | $14,653 | | Other income and fees | $720 | $165 | | Total revenues | $216,897 | $144,566 | [4. AllianzGI Strategic Partnership](index=11&type=section&id=4.%20AllianzGI%20Strategic%20Partnership) Discusses the strategic partnership with AllianzGI, including acquired assets and contingent consideration - On February 1, 2021, the Company finalized its strategic partnership with Allianz Global Investors (AllianzGI), becoming the investment adviser, distributor, and/or administrator for certain AllianzGI assets[32](index=32&type=chunk) - This included the addition of NFJ Investment Group as an affiliated manager[32](index=32&type=chunk) - The transaction consideration is contingent, based on a percentage of investment management fees earned over seven years, with an estimated future payment liability of **$137.7 million** as of March 31, 2021[33](index=33&type=chunk) | (in thousands) | February 1, 2021 Approximate Fair Value | Weighted Average Useful Life | | :--------------------------------- | :-------------------------------------- | :--------------------------- | | Definite-lived intangible assets: | | | | Open-end and closed-end fund investment contracts | $101,447 | 13 years | | Retail separate account investment contracts | $17,000 | 6 years | | Trade name | $1,941 | 8 years | | Total definite-lived intangible assets | $120,388 | | | Goodwill | $25,000 | | | Total assets acquired | $145,388 | | [5. Intangible Assets, Net](index=12&type=section&id=5.%20Intangible%20Assets,%20Net) Provides details on intangible assets, including definite-lived and indefinite-lived assets and amortization | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Definite-lived intangible assets, net | $347,671 | $236,748 | | Indefinite-lived intangible assets | $43,516 | $43,516 | | Total intangible assets, net | $391,187 | $280,264 | - Intangible assets, net increased by **$110.9 million** from December 31, 2020, to March 31, 2021, primarily due to additions of **$120.4 million**, largely from the AllianzGI transaction, offset by amortization[35](index=35&type=chunk) | Fiscal Year | Amount (in thousands) | | :---------- | :-------------------- | | Remainder of 2021 | $31,145 | | 2022 | $41,440 | | 2023 | $40,778 | | 2024 | $35,136 | | 2025 | $30,368 | | 2026 and thereafter | $168,804 | | Total | $347,671 | [6. Investments](index=12&type=section&id=6.%20Investments) Describes the company's investment holdings, primarily in sponsored products, and related gains or losses - Investments primarily consist of holdings in the Company's sponsored products[36](index=36&type=chunk) - Total investments increased from **$64.9 million** at December 31, 2020, to **$67.7 million** at March 31, 2021[36](index=36&type=chunk) | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Investment securities - fair value | $40,904 | $39,990 | | Equity method investments (1) | $13,568 | $12,676 | | Nonqualified retirement plan assets | $11,177 | $10,612 | | Other investments | $2,002 | $1,666 | | Total investments | $67,651 | $64,944 | - The Company recognized **$0.8 million** in realized gains on the sale of investment securities-fair value for the three months ended March 31, 2021, compared to **$0.3 million** in realized losses for the same period in 2020[37](index=37&type=chunk) [7. Fair Value Measurements](index=13&type=section&id=7.%20Fair%20Value%20Measurements) Explains the fair value measurement hierarchy for assets and liabilities, categorized into Level 1, 2, and 3 - The Company measures certain assets and liabilities at fair value on a recurring basis, categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :--------- | :------ | :------ | :-------- | | **March 31, 2021 Assets:** | | | | | | Cash equivalents | $178,556 | $— | $— | $178,556 | | Investment securities - fair value | | | | | | Sponsored funds | $26,598 | $— | $— | $26,598 | | Equity securities | $14,303 | $— | $— | $14,303 | | Debt securities | $— | $3 | $— | $3 | | Nonqualified retirement plan assets | $11,177 | $— | $— | $11,177 | | Total assets measured at fair value | $230,634 | $3 | $— | $230,637 | - The Company had no Level 3 investments for the three-month periods ended March 31, 2021 and 2020[44](index=44&type=chunk) [8. Equity Transactions](index=14&type=section&id=8.%20Equity%20Transactions) Details transactions affecting equity, including cash dividends declared and common share repurchases - On February 24, 2021, the Company declared a quarterly cash dividend of **$0.82 per common share**[45](index=45&type=chunk) - During the three months ended March 31, 2021, the Company repurchased **19,912 common shares** at a weighted average price of **$251.07 per share**, totaling **$5.0 million**[46](index=46&type=chunk) - As of March 31, 2021, **702,730 shares** remained available for repurchase under its program[46](index=46&type=chunk) [9. Accumulated Other Comprehensive Income (Loss)](index=14&type=section&id=9.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Outlines changes in accumulated other comprehensive income, primarily from foreign currency translation adjustments | (in thousands) | Foreign Currency Translation Adjustments | | :------------- | :--------------------------------------- | | Balance at December 31, 2020 | $29 | | Foreign currency translation adjustments, net of tax of $— | $6 | | Net current-period other comprehensive income (loss) | $6 | | Balance at March 31, 2021 | $35 | - Accumulated other comprehensive income increased from **$29 thousand** at December 31, 2020, to **$35 thousand** at March 31, 2021, primarily due to foreign currency translation adjustments[47](index=47&type=chunk) [10. Stock-Based Compensation](index=16&type=section&id=10.%20Stock-Based%20Compensation) Provides information on stock-based compensation expense, unamortized amounts, and tax withholding obligations - Stock-based compensation expense for the three months ended March 31, 2021, was **$8.0 million**, a significant increase from **$3.6 million** in the prior year period[49](index=49&type=chunk) - As of March 31, 2021, unamortized stock-based compensation expense for unvested RSUs and PSUs was **$35.2 million**, with a weighted-average remaining contractual life of **1.5 years**[53](index=53&type=chunk) - The Company paid **$15.2 million** in minimum employee tax withholding obligations related to RSUs withheld for net share settlements during the three months ended March 31, 2021, compared to **$3.6 million** in the prior year[51](index=51&type=chunk) [11. Earnings (Loss) Per Share](index=16&type=section&id=11.%20Earnings%20(Loss)%20Per%20Share) Presents the calculation of basic and diluted earnings (loss) per share for common stockholders | (in thousands, except per share amounts) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | | Earnings (Loss) per Share—Basic | $4.79 | $(0.58) | | Earnings (Loss) per Share—Diluted | $4.54 | $(0.58) | - Diluted EPS significantly improved to **$4.54** for the three months ended March 31, 2021, from a loss of **$(0.58)** in the prior year period[56](index=56&type=chunk) [12. Income Taxes](index=17&type=section&id=12.%20Income%20Taxes) Details the company's income tax expense and estimated effective tax rate, including factors influencing changes - The estimated effective tax rate for the three months ended March 31, 2021, was **22.5%**, significantly lower than **91.1%** in the prior year period[59](index=59&type=chunk) - This decrease was primarily due to valuation allowances recorded in the prior year for unrealized losses on certain Company investments[59](index=59&type=chunk) [13. Debt](index=17&type=section&id=13.%20Debt) Describes the company's credit agreement, term loan, revolving credit facility, and debt repayment activities - The Company's credit agreement includes a **$365.0 million** Term Loan expiring in June 2024 and a **$100.0 million** revolving credit facility expiring in June 2022[60](index=60&type=chunk) - As of March 31, 2021, **$199.8 million** remained outstanding under the Term Loan, with no outstanding borrowings under the Credit Facility[60](index=60&type=chunk) - During the three months ended March 31, 2021, the Company repaid **$5.9 million** outstanding under its Term Loan[60](index=60&type=chunk) [14. Commitments and Contingencies](index=18&type=section&id=14.%20Commitments%20and%20Contingencies) Addresses the company's involvement in legal and regulatory matters and their potential financial impact - The Company is involved in various legal and regulatory matters[61](index=61&type=chunk) - While significant judgment is required, the Company believes the outcomes are not likely to have a material adverse effect on its results of operations, cash flows, or financial condition, based on currently available information, insurance coverage, indemnities, and established reserves[62](index=62&type=chunk) [15. Redeemable Noncontrolling Interests](index=18&type=section&id=15.%20Redeemable%20Noncontrolling%20Interests) Explains redeemable noncontrolling interests in consolidated investment products and majority-owned affiliates - Redeemable noncontrolling interests represent third-party investments in the Company's consolidated investment products (CIP) and minority interests in a consolidated majority-owned affiliate, which are subject to holder put rights and Company call rights[63](index=63&type=chunk) | (in thousands) | CIP | Affiliate Noncontrolling Interests | Total | | :------------- | :------- | :--------------------------------- | :-------- | | Balances at December 31, 2020 | $28,061 | $87,452 | $115,513 | | Net income (loss) attributable to noncontrolling interests | $(44) | $1,958 | $1,914 | | Changes in redemption value (1) | $— | $13,637 | $13,637 | | Net subscriptions (redemptions) and other | $(13,594) | $(4,988) | $(18,582) | | Balances at March 31, 2021 | $14,423 | $98,059 | $112,482 | [16. Consolidation](index=19&type=section&id=16.%20Consolidation) Outlines the company's consolidation principles for voting interest entities and variable interest entities - The Company consolidates voting interest entities (VOEs) where it has a controlling financial interest and variable interest entities (VIEs) where it is the primary beneficiary[66](index=66&type=chunk)[67](index=67&type=chunk) - Consolidated Investment Products (CIP) include both VOEs (primarily open-end funds) and VIEs (primarily CLOs)[68](index=68&type=chunk) - The consolidation and deconsolidation of investment products have no impact on net income (loss) attributable to stockholders, and the Company's risk is limited to its beneficial interests and fees generated from these products[68](index=68&type=chunk) | (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------- | :------------- | :---------------- | | Cash and cash equivalents of CIP | $170,725 | $86,980 | | Investments of CIP | $2,299,607 | $2,333,277 | | Notes payable of CIP | $2,197,695 | $2,190,445 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operating results, focusing on AUM, revenue, expenses, and liquidity, highlighting growth drivers [Cautionary Statement Regarding Forward Looking Statements](index=24&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) Advises that the report contains forward-looking information subject to risks and uncertainties, which may not be updated - The report contains forward-looking statements based on expectations, assumptions, and projections, which are not guarantees of future results and involve substantial risks and uncertainties[88](index=88&type=chunk)[89](index=89&type=chunk) - The Company does not undertake to update or revise these statements[90](index=90&type=chunk) - Key risks and uncertainties include reductions in assets under management, inability to achieve acquisition benefits, ongoing effects of COVID-19, withdrawal of advisory agreements, damage to reputation, inability to satisfy financial covenants, and adverse regulatory developments[91](index=91&type=chunk) [Overview](index=24&type=section&id=Overview) Describes Virtus's investment management business, strategic partnerships, and recent financial highlights - Virtus provides investment management and related services to individuals and institutions using a multi-manager, multi-style approach, offering diverse strategies across asset classes, geographies, market capitalizations, and investment styles[93](index=93&type=chunk)[95](index=95&type=chunk) - The Company distributes its retail products through financial intermediaries and institutional services directly to clients and through consultants, targeting various market segments[96](index=96&type=chunk)[97](index=97&type=chunk) - The Company completed a strategic partnership with Allianz Global Investors (AllianzGI) on February 1, 2021, adding **$29.5 billion** in assets under management and establishing NFJ Investment Group as an affiliated manager[100](index=100&type=chunk) - Net income per diluted share was **$4.54** in Q1 2021, a significant improvement from a net loss of **$(0.58)** in Q1 2020[101](index=101&type=chunk) - Total sales increased by **47.4%** to **$10.6 billion**, and net flows turned positive at **$2.4 billion** in Q1 2021[101](index=101&type=chunk) [Assets Under Management](index=26&type=section&id=Assets%20Under%20Management) Details total assets under management, including growth drivers like market performance and strategic transactions - Total assets under management (AUM) reached **$168.9 billion** at March 31, 2021, an **86.2%** increase from March 31, 2020, and a **27.8%** increase from December 31, 2020[102](index=102&type=chunk) - The AUM increase from March 31, 2020, was driven by **$40.5 billion** in positive market performance, **$29.5 billion** from the AGI Transaction, and **$9.2 billion** in positive net flows[102](index=102&type=chunk) | (in millions) | As of March 31, 2021 | As of March 31, 2020 | Change $ | Change % | | :---------------------- | :------------------- | :------------------- | :------- | :------- | | Open-End Funds | $72,164 | $34,361 | $37,803 | 110.0 % | | Closed-End Funds | $11,664 | $5,343 | $6,321 | 118.3 % | | Exchange Traded Funds | $1,021 | $480 | $541 | 112.7 % | | Retail Separate Accounts | $37,244 | $17,660 | $19,584 | 110.9 % | | Institutional Accounts | $42,802 | $28,507 | $14,295 | 50.1 % | | Structured Products | $3,985 | $4,343 | $(358) | (8.2)% | | Total | $168,880 | $90,694 | $78,186 | 86.2 % | | Average Assets Under Management | $154,344 | $105,904 | $48,440 | 45.7 % | [Operating Results](index=26&type=section&id=Operating%20Results) Analyzes total revenues and operating income, highlighting key factors contributing to their changes - Total revenues increased by **50.0%** to **$216.9 million** in Q1 2021 from **$144.6 million** in Q1 2020, primarily due to higher average AUM from positive market performance, net flows, and the AGI Transaction[103](index=103&type=chunk) - Operating income increased by **$37.5 million** to **$62.1 million** in Q1 2021, compared to **$24.6 million** in Q1 2020, driven by the same factors as revenue growth[103](index=103&type=chunk) [Asset Flows by Product](index=27&type=section&id=Asset%20Flows%20by%20Product) Presents a breakdown of asset inflows, outflows, and net flows across various product categories | (in millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Total Beginning balance | $132,194 | $108,904 | | Total Inflows | $10,611 | $7,201 | | Total Outflows | $(8,178) | $(8,574) | | Total Net flows | $2,433 | $(1,373) | | Total Market performance | $4,690 | $(16,574) | | Total Other (3) | $29,563 | $(263) | | Total Ending balance | $168,880 | $90,694 | - Overall net flows turned positive, reaching **$2.4 billion** in Q1 2021, a significant improvement from a net outflow of **$1.4 billion** in Q1 2020[107](index=107&type=chunk)[108](index=108&type=chunk) - This was largely supported by strong inflows in Open-End Funds and Retail Separate Accounts[107](index=107&type=chunk) - Market performance contributed **$4.7 billion** in Q1 2021, a reversal from a negative **$16.6 billion** impact in Q1 2020[108](index=108&type=chunk) [Assets Under Management by Asset Class](index=28&type=section&id=Assets%20Under%20Management%20by%20Asset%20Class) Categorizes assets under management by asset class, showing their distribution and growth | (in millions) | As of March 31, 2021 | As of March 31, 2020 | Change $ | Change % | % of Total 2021 | % of Total 2020 | | :-------------- | :------------------- | :------------------- | :------- | :------- | :-------------- | :-------------- | | Equity | $106,183 | $50,587 | $55,596 | 109.9 % | 62.9 % | 55.8 % | | Fixed income (1) | $35,069 | $26,735 | $8,334 | 31.2 % | 20.8 % | 29.5 % | | Multi-asset (2) | $22,498 | $9,708 | $12,790 | 131.7 % | 13.3 % | 10.7 % | | Alternatives (3) | $5,130 | $3,664 | $1,466 | 40.0 % | 3.0 % | 4.0 % | | Total | $168,880 | $90,694 | $78,186 | 86.2 % | 100.0 % | 100.0 % | - Equity assets under management more than doubled, increasing by **109.9%** to **$106.2 billion**, and now represent **62.9%** of total AUM, up from **55.8%** in the prior year[109](index=109&type=chunk) - Multi-asset strategies showed the highest percentage growth, increasing by **131.7%** to **$22.5 billion**[109](index=109&type=chunk) [Average Assets Under Management and Average Basis Points](index=29&type=section&id=Average%20Assets%20Under%20Management%20and%20Average%20Basis%20Points) Provides average assets under management and average fee rates (basis points) across different product types | Products | Average Fee Earned (basis points) 2021 | Average Fee Earned (basis points) 2020 | Average Assets Under Management (in millions) 2021 | Average Assets Under Management (in millions) 2020 | | :---------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Open-End Funds (1) | 48.0 | 48.5 | $66,247 | $41,992 | | Closed-End Funds | 56.2 | 62.8 | $9,340 | $6,524 | | Exchange Traded Funds | 6.7 | 9.5 | $890 | $962 | | Retail Separate Accounts | 45.7 | 48.7 | $32,118 | $20,414 | | Institutional Accounts | 31.5 | 29.1 | $41,764 | $31,821 | | Structured Products | 38.8 | 33.9 | $3,985 | $4,191 | | All Products | 43.1 | 42.6 | $154,344 | $105,904 | - Average AUM across all products increased by **45.7%** to **$154.3 billion** for the three months ended March 31, 2021, compared to **$105.9 billion** in the prior year period[113](index=113&type=chunk) - The overall average fee earned increased slightly to **43.1 basis points** in Q1 2021 from **42.6 basis points** in Q1 2020, with notable increases in Institutional Accounts and Structured Products, and decreases in Closed-End Funds and ETFs[113](index=113&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Offers a detailed analysis of financial performance, including revenue, expenses, and net income [Summary Financial Data](index=29&type=section&id=Summary%20Financial%20Data) Provides a concise overview of key financial metrics for the current and prior periods | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Investment management fees | $173,269 | $120,288 | $52,981 | 44.0 % | | Other revenue | $43,628 | $24,278 | $19,350 | 79.7 % | | Total revenues | $216,897 | $144,566 | $72,331 | 50.0 % | | Total operating expenses | $154,755 | $119,964 | $34,791 | 29.0 % | | Operating income (loss) | $62,142 | $24,602 | $37,540 | 152.6 % | | Other income (expense), net | $(2,025) | $(15,601) | $13,576 | (87.0)% | | Interest income (expense), net | $7,250 | $2,296 | $4,954 | 215.8 % | | Income (loss) before income taxes | $67,367 | $11,297 | $56,070 | 496.3 % | | Income tax expense (benefit) | $15,153 | $10,291 | $4,862 | 47.2 % | | Net income (loss) | $52,214 | $1,006 | $51,208 | 5,090.3 % | | Noncontrolling interests | $(15,626) | $(5,291) | $(10,335) | 195.3 % | | Net Income (Loss) Attributable to Common Stockholders | $36,588 | $(4,285) | $40,873 | (953.9)% | [Revenues](index=30&type=section&id=Revenues) Details the components of total revenues and their year-over-year changes | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Investment management fees | $173,269 | $120,288 | $52,981 | 44.0 % | | Distribution and service fees | $20,348 | $9,460 | $10,888 | 115.1 % | | Administration and shareholder service fees | $22,560 | $14,653 | $7,907 | 54.0 % | | Other income and fees | $720 | $165 | $555 | 336.4 % | | Total revenues | $216,897 | $144,566 | $72,331 | 50.0 % | - Total revenues increased by **50.0%** year-over-year, primarily driven by a **44.0%** increase in investment management fees due to higher average assets under management, and a **115.1%** increase in distribution and service fees[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Other income and fees saw a substantial **336.4%** increase, mainly due to **$3.4 billion** of other fee-earning assets from the AGI Transaction[121](index=121&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Analyzes the various categories of operating expenses and their changes over time | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Employment expenses | $91,759 | $66,130 | $25,629 | 38.8 % | | Distribution and other asset-based expenses | $32,294 | $19,409 | $12,885 | 66.4 % | | Other operating expenses | $19,580 | $18,885 | $695 | 3.7 % | | Other operating expenses of CIP | $559 | $6,749 | $(6,190) | (91.7) % | | Depreciation expense | $1,098 | $1,258 | $(160) | (12.7) % | | Amortization expense | $9,465 | $7,533 | $1,932 | 25.6 % | | Total operating expenses | $154,755 | $119,964 | $34,791 | 29.0 % | - Total operating expenses increased by **29.0%** to **$154.8 million**, primarily due to higher employment expenses (up **38.8%** from increased profit- and sales-based compensation) and distribution and other asset-based expenses (up **66.4%** from increased sales and AUM)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Other operating expenses of CIP significantly decreased by **91.7%**, mainly due to non-recurring costs associated with a new CLO issuance in the prior year[126](index=126&type=chunk) [Other Income (Expense)](index=32&type=section&id=Other%20Income%20(Expense)) Details non-operating income and expenses, including realized and unrealized gains or losses on investments | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Realized and unrealized gain (loss) on investments, net | $891 | $(7,544) | $8,435 | (111.8)% | | Realized and unrealized gain (loss) of CIP, net | $(4,687) | $(8,669) | $3,982 | (45.9) % | | Other income (expense), net | $1,771 | $612 | $1,159 | 189.4 % | | Total Other Income (Expense), net | $(2,025) | $(15,601) | $13,576 | (87.0)% | - Total other income (expense), net improved significantly by **$13.6 million**, moving from a net expense of **$(15.6) million** in Q1 2020 to **$(2.0) million** in Q1 2021[130](index=130&type=chunk) - This was driven by a positive swing in realized and unrealized gains on investments and increased earnings from equity method investments[131](index=131&type=chunk)[133](index=133&type=chunk) [Interest Income (Expense)](index=32&type=section&id=Interest%20Income%20(Expense)) Analyzes interest income and expense, including components related to consolidated investment products | (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :-------------- | | Interest expense | $(2,314) | $(3,199) | $885 | (27.7) % | | Interest and dividend income | $136 | $752 | $(616) | (81.9) % | | Interest and dividend income of investments of CIP | $23,876 | $29,229 | $(5,353) | (18.3) % | | Interest expense of CIP | $(14,448) | $(24,486) | $10,038 | (41.0) % | | Total Interest Income (Expense), net | $7,250 | $2,296 | $4,954 | 215.8 % | - Total net interest income (expense) increased by **215.8%** to **$7.3 million**, primarily due to a **$10.0 million** decrease in interest expense of CIP (driven by lower variable interest rates and non-recurring amortization in the prior year) and a **$0.9 million** decrease in the Company's own interest expense[134](index=134&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk) - Interest and dividend income decreased by **81.9%** due to lower interest rates on cash, and interest and dividend income of investments of CIP decreased by **18.3%** due to lower interest rates[136](index=136&type=chunk)[137](index=137&type=chunk) [Income Tax Expense (Benefit)](index=33&type=section&id=Income%20Tax%20Expense%20(Benefit)) Discusses the company's income tax expense and the estimated effective tax rate - Income tax expense increased by **47.2%** to **$15.2 million**[116](index=116&type=chunk) - The estimated effective tax rate decreased significantly to **22.5%** in Q1 2021 from **91.1%** in Q1 2020, mainly due to valuation allowances recorded in the prior year for unrealized losses on certain Company investments[139](index=139&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Evaluates the company's ability to meet financial obligations, including cash, debt, and capital requirements [Certain Financial Data](index=33&type=section&id=Certain%20Financial%20Data) Presents key balance sheet and cash flow data relevant to liquidity and capital management | (in thousands) | March 31, 2021 | December 31, 2020 | 2021 vs. 2020 Change | 2021 vs. 2020 % | | :--------------------------------- | :------------- | :---------------- | :------------------- | :-------------- | | **Balance Sheet Data** | | | | | | Cash and cash equivalents | $228,260 | $246,511 | $(18,251) | (7.4)% | | Investments | $67,651 | $64,944 | $2,707 | 4.2 % | | Debt | $195,726 | $201,212 | $(5,486) | (2.7)% | | Redeemable noncontrolling interests | $112,482 | $115,513 | $(3,031) | (2.6)% | | Total equity | $738,695 | $720,940 | $17,755 | 2.5 % | | **Cash Flow Data** | | | | | | Operating Activities | $150,151 | $(252,320) | $402,471 | (159.5)% | | Investing Activities | $(2,608) | $9,366 | $(11,974) | (127.8)% | | Financing Activities | $(87,673) | $314,641 | $(402,314) | (127.9)% | [Overview](index=33&type=section&id=Overview) Provides a summary of the company's cash, investments, and debt positions - As of March 31, 2021, the Company had **$228.3 million** in cash and cash equivalents and **$67.7 million** in investments[141](index=141&type=chunk) - Debt outstanding under the term loan was **$199.8 million**, with no outstanding borrowings under the revolving credit facility[142](index=142&type=chunk) [Uses of Capital](index=34&type=section&id=Uses%20of%20Capital) Outlines the primary and potential uses of the company's capital, including compensation and growth investments - Main uses of capital include employee compensation (especially annual incentive compensation, which was **$96.9 million** in Q1 2021), interest on debt, income taxes, and other operating expenses[143](index=143&type=chunk) - Other potential uses of cash include investments in organic growth, new product launches, debt payments, dividends, share repurchases, infrastructure investments, inorganic growth opportunities, and purchases of affiliate noncontrolling interests[144](index=144&type=chunk) [Capital and Reserve Requirements](index=34&type=section&id=Capital%20and%20Reserve%20Requirements) Details the regulatory capital requirements for the company's broker-dealer subsidiary - The Company's broker-dealer subsidiary is subject to SEC minimum net capital rules, requiring a ratio of 'aggregate indebtedness' to 'net capital' not exceeding **15 to 1**[145](index=145&type=chunk) - As of March 31, 2021, the broker-dealer met these requirements, with net capital significantly greater than the minimum[145](index=145&type=chunk) [Operating Cash Flow](index=34&type=section&id=Operating%20Cash%20Flow) Analyzes net cash provided by or used in operating activities and its key drivers - Net cash provided by operating activities was **$150.2 million** for Q1 2021, a significant change from net cash used of **$252.3 million** in Q1 2020, primarily due to a **$379.0 million** decrease in net purchases of investments by CIP[147](index=147&type=chunk) [Investing Cash Flow](index=34&type=section&id=Investing%20Cash%20Flow) Details net cash provided by or used in investing activities, including capital expenditures - Net cash used in investing activities was **$2.6 million** for Q1 2021, compared to net cash provided of **$9.4 million** in Q1 2020[148](index=148&type=chunk) - The primary activity in Q1 2021 was **$2.6 million** in capital expenditures and other asset purchases[148](index=148&type=chunk) [Financing Cash Flow](index=34&type=section&id=Financing%20Cash%20Flow) Analyzes net cash provided by or used in financing activities, including debt and equity transactions - Net cash used in financing activities was **$87.7 million** for Q1 2021, a change of **$402.3 million** from net cash provided of **$314.6 million** in Q1 2020[149](index=149&type=chunk) - This shift was mainly due to a **$397.4 million** decrease in net borrowings of CIP[149](index=149&type=chunk) [Credit Agreement](index=35&type=section&id=Credit%20Agreement) Describes the terms of the company's credit agreement, including term loan and revolving credit facility - The Credit Agreement includes a **$365.0 million** Term Loan (expiring June 2024) and a **$100.0 million** revolving credit facility (expiring June 2022)[150](index=150&type=chunk) - As of March 31, 2021, **$199.8 million** was outstanding under the Term Loan, with no borrowings under the Credit Facility[150](index=150&type=chunk) [Contractual Obligations](index=35&type=section&id=Contractual%20Obligations) Notes any material changes to the company's contractual obligations since the last reporting period - There have been no material changes to the Company's contractual obligations outside the ordinary course of business since December 31, 2020[151](index=151&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses the significant accounting policies and estimates used in preparing the financial statements - The Company's financial statements rely on estimates in accordance with GAAP[152](index=152&type=chunk) - No material changes occurred in critical accounting policies during the three months ended March 31, 2021[152](index=152&type=chunk) [Recently Issued Accounting Pronouncements](index=35&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Refers to disclosures regarding new accounting standards in the financial statement notes - Refer to Note 2 in the condensed consolidated financial statements for a discussion of accounting standards[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses market risks, primarily from interest rate and securities price fluctuations, with no material changes reported - The Company is primarily exposed to market risk from unfavorable movements in interest rates and securities prices[154](index=154&type=chunk) - There were no material changes to the market risk disclosures during the three months ended March 31, 2021, from those reported in the 2020 Annual Report on Form 10-K[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed disclosure controls and procedures as effective, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective at the reasonable assurance level as of March 31, 2021[155](index=155&type=chunk)[156](index=156&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report[157](index=157&type=chunk) Part II – Other Information This section contains additional information not in financial statements, such as legal proceedings, risk factors, and equity transactions [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates legal proceedings information by reference from Note 14, 'Commitments and Contingencies,' in the financial statements - Legal proceedings information is incorporated by reference from Note 14, 'Commitments and Contingencies,' in the financial statements section[158](index=158&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the company's risk factors have occurred since the 2020 Annual Report on Form 10-K - No material changes to the Company's risk factors have occurred since the 2020 Annual Report on Form 10-K[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common share repurchases and remaining authorization, noting no unregistered equity sales - During the quarter ended March 31, 2021, the Company repurchased **19,912 common shares** at a weighted average price of **$251.07 per share**, totaling **$5.0 million**[161](index=161&type=chunk) - As of March 31, 2021, **702,730 shares** remained available for repurchase under the program, which has no specified term and may be suspended or terminated at any time[160](index=160&type=chunk)[161](index=161&type=chunk) - There were no unregistered sales of equity securities during the period[163](index=163&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including key agreements, certifications, and iXBRL financial statements - Exhibits include the Membership Interest Purchase Agreement with Westchester Capital Management, an offer letter to Richard W. Smirl, and certifications from the CEO and CFO[166](index=166&type=chunk) - Financial statements, including Condensed Consolidated Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Changes in Stockholders' Equity, are provided in iXBRL format[166](index=166&type=chunk) [Signatures](index=39&type=section&id=Signatures) Confirms the report's official signing by Michael A. Angerthal, Executive Vice President and Chief Financial Officer - The report was signed by Michael A. Angerthal, Executive Vice President and Chief Financial Officer, on May 6, 2021[169](index=169&type=chunk)