Victory Capital(VCTR)2025-02-07 15:43Financial Data and Key Metrics Changes - Total client assets increased to $176.1 billion, up $9.5 billion or 6% from the end of the previous year [11] - Adjusted earnings per diluted share rose more than 7% to $1.45 in the fourth quarter, a record high, and up 26% from $1.15 in the same quarter last year [11] - Adjusted EBITDA reached $126 million with a margin of 54%, both setting new quarterly records [12][27] - For the full year, revenue reached a record high of $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 $2.6 billion in 2024, indicating strong performance across various channels [14][78] - The non-U.S. AUM is projected to exceed $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]