Victory Capital(VCTR)2025-02-07 15:43Financial Data and Key Metrics Changes - Total client assets increased to 9.5 billion or 6% from the end of the previous year [11] - Adjusted earnings per diluted share rose more than 7% to 1.15 in the same quarter last year [11] - Adjusted EBITDA reached 893 million, a 9% increase from 2023 [25] Business Line Data and Key Metrics Changes - The ETF platform, Victory Shares, saw strong sales, contributing to the overall growth in assets under management (AUM) [10] - Victory income investors achieved its fourth consecutive quarter of positive net flows, indicating strong performance in the intermediary channel [31] - The average fee rate was 52.5 basis points in the fourth quarter, up four-tenths of a basis point from the third quarter [34] Market Data and Key Metrics Changes - The Amundi U.S. business reported net long-term flows of 45 billion post-acquisition, with a consistent record of positive net flows since Amundi's acquisition in 2017 [15][16] Company Strategy and Development Direction - The company is on track to close the acquisition of Amundi by the end of the current quarter, with expectations of realizing 100 million in cost synergies by the end of the second year [13] - The focus remains on leveraging the ETF platform and expanding distribution channels to drive organic growth [19][20] - The company is actively exploring M&A opportunities, anticipating significant consolidation in the industry [63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the organic growth profile improving in January and highlighted strong growth in the ETF platform and institutional channels [41][43] - The integration of Amundi is expected to enhance the overall growth trajectory, with a focus on expanding product offerings in non-U.S. markets [61][80] Other Important Information - The company returned a total of 132.4 million to shareholders in the fourth quarter through share repurchases and cash dividends [22] - A new $200 million share repurchase program was authorized by the Board, alongside a 7% increase in the quarterly cash dividend [23][29] Q&A Session Summary Question: What strategies do you expect to be most in favor and contribute the most to organic growth in 2025? - Management highlighted the success of the Victory Shares ETF platform and opportunities in the institutional channel as key growth drivers [41][43] Question: What sort of revenue synergies do you expect from the Amundi deal? - Management noted a 15-year exclusive distribution agreement with Amundi, which is expected to enhance organic growth through the addition of Victory products [44][45] Question: Can you discuss margin differences across different products? - Management explained that over two-thirds of expenses are variable, allowing for significant scale and strong margins across all product lines, including ETFs [51][52] Question: How rapidly can you introduce Victory products in the non-U.S. distribution? - Management indicated that product introductions will occur throughout 2025 and into 2026, leveraging existing Amundi infrastructure [59][61] Question: What is the outlook for potential M&A this year? - Management expressed confidence in participating in industry consolidation, with a strong pipeline of discussions and opportunities [63][64] Question: How should we think about capital allocation going forward? - Management emphasized that accretive acquisitions are the primary focus, while also balancing share repurchases and dividend increases [96][98]