HARTFORD, Conn., July 28, 2017 /PRNewswire/ -- Virtus
Investment Partners, Inc. (NASDAQ: VRTS) today reported financial results for the three months ended June
30, 2017 . The results reflect the acquisition of RidgeWorth Investments that closed on June
1, 2017.
|
Financial Highlights (Unaudited)
|
|
(in millions, except per share data or as noted)
|
|
|
Three Months Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
6/30/2017
|
|
6/30/2016
|
|
Change
|
|
3/31/2017
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
94.1
|
|
|
$
|
80.1
|
|
|
18%
|
|
|
$
|
79.8
|
|
|
18%
|
|
|
Operating expenses
|
$
|
90.9
|
|
|
$
|
71.3
|
|
|
27%
|
|
|
$
|
69.7
|
|
|
30%
|
|
|
Operating income
|
$
|
3.2
|
|
|
$
|
8.7
|
|
|
(64%)
|
|
|
$
|
10.0
|
|
|
(68%)
|
|
|
Operating margin
|
3.4%
|
|
|
10.9%
|
|
|
|
|
12.6%
|
|
|
|
|
Net (loss) income attributable to common stockholders
|
$
|
(2.4)
|
|
|
$
|
8.1
|
|
|
N/M
|
|
|
$
|
10.9
|
|
|
N/M
|
|
|
(Loss) earnings per share - diluted
|
$
|
(0.34)
|
|
|
$
|
0.97
|
|
|
N/M
|
|
|
$
|
1.62
|
|
|
N/M
|
|
|
Weighted average shares outstanding - diluted
|
7.064
|
|
|
8.314
|
|
|
(15%)
|
|
|
6.773
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures (1)
|
|
|
|
|
|
|
|
|
|
|
Revenues, as adjusted
|
$
|
78.6
|
|
|
$
|
62.6
|
|
|
26%
|
|
|
$
|
64.7
|
|
|
21%
|
|
|
Operating expenses, as adjusted
|
$
|
55.9
|
|
|
$
|
45.9
|
|
|
22%
|
|
|
$
|
51.2
|
|
|
9%
|
|
|
Operating income, as adjusted
|
$
|
22.7
|
|
|
$
|
16.7
|
|
|
36%
|
|
|
$
|
13.5
|
|
|
68%
|
|
|
Operating margin, as adjusted
|
28.8%
|
|
|
26.6%
|
|
|
|
|
20.9%
|
|
|
|
|
Net income attributable to common stockholders, as adjusted
|
$
|
13.4
|
|
|
$
|
10.3
|
|
|
30%
|
|
|
$
|
8.6
|
|
|
55%
|
|
|
Earnings per share - diluted, as adjusted
|
$
|
1.61
|
|
|
$
|
1.24
|
|
|
30%
|
|
|
$
|
1.16
|
|
|
39%
|
|
|
Weighted average shares outstanding - diluted, as adjusted
|
8.311
|
|
|
8.314
|
|
|
—%
|
|
|
7.447
|
|
|
12%
|
|
|
|
(1) See the information beginning on page 11 for reconciliations to their
most directly comparable U.S. GAAP measures and other important disclosures
|
|
N/M - Not Meaningful
|
Earnings Summary
The company presents U.S. GAAP earnings information and non-GAAP earnings information in this release. Management believes
that the non-GAAP financial measures presented most accurately reflect the company's operating results from providing investment
management and related services to individuals and institutions and uses these measures to evaluate financial performance.
Non-GAAP financial measures have material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP
measures. Reconciliations of the non-GAAP financial measures to the most comparable U.S. GAAP measures can be found beginning on
page 11 of this earnings release.
|
Asset Flows and Assets Under Management
|
|
(in billions)
|
|
|
Three Months Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
6/30/2017
|
|
6/30/2016
|
|
Change
|
|
3/31/2017
|
|
Change
|
|
Ending long-term assets under management (1)
|
$
|
85.0
|
|
|
$
|
45.2
|
|
|
88%
|
|
|
$
|
48.0
|
|
|
77%
|
|
|
Ending total assets under management
|
$
|
88.6
|
|
|
$
|
45.2
|
|
|
96%
|
|
|
$
|
48.0
|
|
|
84%
|
|
|
Average long-term assets under management (1)
|
$
|
60.7
|
|
|
$
|
44.8
|
|
|
35%
|
|
|
$
|
46.4
|
|
|
31%
|
|
|
Average total assets under management
|
$
|
62.0
|
|
|
$
|
44.8
|
|
|
38%
|
|
|
$
|
46.4
|
|
|
34%
|
|
|
Gross sales
|
$
|
3.5
|
|
|
$
|
2.4
|
|
|
44%
|
|
|
$
|
3.3
|
|
|
6%
|
|
|
Net flows
|
$
|
(0.2)
|
|
|
$
|
(2.2)
|
|
|
91%
|
|
|
$
|
0.5
|
|
|
N/M
|
|
|
|
(1) Excludes assets under management in liquidity strategies, including
open-end mutual funds and institutional accounts
|
|
N/M - Not Meaningful
|
Long-term assets under management of $85.0 billion at June 30, 2017 increased $37.0 billion, or 77 percent, from March 31, 2017 reflecting $35.7 billion
of assets resulting from the acquisition, market appreciation, and modest net outflows. Total assets under management at
June 30, 2017 were $88.6 billion and included $3.6 billion of
liquidity assets.
Total sales of $3.5 billion increased 6 percent sequentially and 44 percent from the prior-year
quarter. The sequential-quarter increase reflects higher sales in open-end funds and institutional, while the year-over-year
increase includes higher sales in all product categories.
Mutual fund sales of $2.3 billion increased sequentially and reflected higher sales in domestic
equity and fixed income products. When compared to the prior-year quarter, mutual fund sales increased 67 percent due to higher
sales in domestic and international equity and fixed income strategies.
Net flows were ($0.2) billion, which include ($0.7) billion from
the acquired business, compared with $0.5 billion sequentially, as net outflows in institutional
and structured products more than offset net inflows in retail separate accounts and ETFs. Net flows improved from ($2.2) billion in the prior-year quarter due to higher sales and lower redemptions in mutual funds, primarily
emerging markets.
Mutual fund net flows in the second quarter were relatively flat compared with ($0.1) billion in
the first quarter and ($2.4) billion in the prior-year quarter. The year-over-year improvement is
due primarily to higher sales and lower redemptions in emerging markets and higher sales in domestic equity and fixed income
strategies.
GAAP Results
Operating income decreased 68 percent sequentially to $3.2 million as higher operating expenses
more than offset higher revenue. Operating expenses included $16.3 million of acquisition and
integration costs, primarily severance and professional fees.
The second quarter net loss per diluted share of ($0.34) included ($1.63) of acquisition and integration costs, ($0.21) of discrete tax expense
adjustments, ($0.14) of acquisition-related amortization of intangible assets, and ($0.11) of incremental interest expense. First quarter earnings per share of $1.62 included $0.71 of unrealized gains on investments, $0.08 of discrete tax expense adjustments, a $0.07 benefit from a lower share
count, ($0.45) of specific employment expenses, and ($0.15) per share
of acquisition and integration costs.
The effective tax rate was 99 percent and included discrete items of $1.5 million,
primarily related to the establishment of a valuation allowance on certain state net operating losses.
Non-GAAP Results
Investment management fees, as adjusted, increased 27 percent sequentially, reflecting the impact of a 31 percent increase in
average long-term assets. Employment expenses, as adjusted, increased 3 percent sequentially and reflect one month of
expenses related to the new employees following the close of the acquisition and higher variable incentive
compensation, which more than offset the impact of seasonal items in the first quarter. Other operating expenses, as adjusted,
increased 30 percent from the prior quarter and included the additional operating expenses from the acquisition, annual equity
grants to the Board of Directors, and higher sales and marketing costs.
Operating income, as adjusted, of $22.7 million increased 68 percent from the first quarter and
included a $5.1 million contribution from the acquired business. Operating margin, as adjusted, was
29 percent, an increase from 21 percent on a sequential basis.
Net income attributable to common stockholders, as adjusted, was $1.61 per diluted common share,
an increase of 39 percent from the first quarter.
The effective tax rate, as adjusted, was 38 percent, which was relatively unchanged from prior periods.
|
Select Balance Sheet Items (Unaudited)
|
|
|
|
(in millions)
|
|
|
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
6/30/2017
|
|
6/30/2016
|
|
Change
|
|
3/31/2017
|
|
Change
|
|
Cash and cash equivalents
|
$
|
127.6
|
|
|
$
|
155.5
|
|
|
(18%)
|
|
|
$
|
235.9
|
|
|
(46%)
|
|
|
Contingent consideration
|
$
|
51.7
|
|
|
$
|
—
|
|
|
N/M
|
|
|
$
|
—
|
|
|
N/M
|
|
|
Debt
|
$
|
248.1
|
|
|
$
|
—
|
|
|
N/M
|
|
|
$
|
—
|
|
|
N/M
|
|
|
Total equity attributable to stockholders
|
$
|
573.6
|
|
|
$
|
466.1
|
|
|
23%
|
|
|
$
|
552.4
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital (1)
|
$
|
49.1
|
|
|
$
|
151.9
|
|
|
(68%)
|
|
|
$
|
224.8
|
|
|
(78%)
|
|
|
Net debt (cash) (2)
|
$
|
184.1
|
|
|
$
|
(155.5)
|
|
|
N/M
|
|
|
$
|
(235.9)
|
|
|
N/M
|
|
|
|
(1) Defined as cash and cash equivalents plus accounts receivable, net,
less accrued compensation and benefits, accounts payable and accrued liabilities, dividends payable, and contingent
consideration
|
|
(2) Defined as gross debt and contingent consideration less cash and cash
equivalents
|
|
N/M - Not Meaningful
|
The acquisition of RidgeWorth Investments closed on June 1, 2017 for total consideration
(excluding working capital adjustments) of $533.9 million, comprising a $472.0 million purchase price for the business and $61.9 million for
balance sheet investments. Consideration at closing of $482.2 million was funded with $457.9 million in cash, including $260.0 million of proceeds from a seven-year
term loan, and $24.3 million in equity/deferred cash. The remaining $51.7
million was recorded as contingent consideration and will be paid in the fourth quarter of 2017.
Conference Call
Virtus Investment Partners management will host an investor conference call on Friday, July 28,
at 10 a.m. Eastern to discuss these financial results and related matters. The webcast of the call can be accessed in the Investor Relations section of www.virtus.com, or by telephone at 877-930-7765 if calling from within the U.S. or 253-336-7413 if calling
from outside the U.S. (Conference ID: 59488524). The presentation that will be reviewed as part of the conference call will be
available prior to the call in the Investor Relations section of www.virtus.com. A replay of the call will be available through August 5, 2017 by
telephone at 855-859-2056 if calling from within the U.S. or 404-537-3406 if calling from outside the U.S. (Conference ID:
59488524).
About Virtus Investment Partners
Virtus Investment Partners (NASDAQ: VRTS) is a
distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and
institutional investors. Virtus offers access to a variety of investment styles across multiple disciplines to meet a wide array
of investor needs, and provides products and services through affiliated managers and select subadvisers, each with a
distinct investment style, autonomous investment process, and individual brand. Its affiliates include Ceredex Value Advisors, Duff & Phelps Investment Management, Kayne Anderson
Rudnick Investment Management, Newfleet Asset
Management, Rampart Investment Management,
Seix Investment Advisors, Silvant Capital Management, and Virtus ETF Solutions. Additional information can be found at virtus.com .
|
U.S. GAAP Condensed Consolidated Statements of Operations
(Unaudited)
|
|
(in thousands, except per share data)
|
|
|
Three Months Ended
|
|
|
|
Three
Months
Ended
|
|
|
|
Six Months Ended
|
|
|
|
6/30/2017
|
|
6/30/2016
|
|
Change
|
|
3/31/2017
|
|
Change
|
|
6/30/2017
|
|
6/30/2016
|
|
Change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees
|
$
|
74,062
|
|
|
$
|
58,192
|
|
|
27%
|
|
|
$
|
59,271
|
|
|
25%
|
|
|
$
|
133,333
|
|
|
$
|
115,836
|
|
|
15%
|
|
|
Distribution and service fees
|
10,439
|
|
|
12,167
|
|
|
(14%)
|
|
|
10,783
|
|
|
(3%)
|
|
|
21,222
|
|
|
24,645
|
|
|
(14%)
|
|
|
Administration and transfer agent fees
|
9,476
|
|
|
9,499
|
|
|
—%
|
|
|
8,981
|
|
|
6%
|
|
|
18,457
|
|
|
19,497
|
|
|
(5%)
|
|
|
Other income and fees
|
155
|
|
|
227
|
|
|
(32%)
|
|
|
741
|
|
|
(79%)
|
|
|
896
|
|
|
402
|
|
|
123%
|
|
|
Total revenues
|
94,132
|
|
|
80,085
|
|
|
18%
|
|
|
79,776
|
|
|
18%
|
|
|
173,908
|
|
|
160,380
|
|
|
8%
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment expenses
|
42,992
|
|
|
33,065
|
|
|
30%
|
|
|
39,641
|
|
|
8%
|
|
|
82,633
|
|
|
69,042
|
|
|
20%
|
|
|
Distribution and other asset-based expenses
|
15,764
|
|
|
17,432
|
|
|
(10%)
|
|
|
15,323
|
|
|
3%
|
|
|
31,087
|
|
|
35,533
|
|
|
(13%)
|
|
|
Other operating expenses
|
20,236
|
|
|
12,457
|
|
|
62%
|
|
|
13,226
|
|
|
53%
|
|
|
33,462
|
|
|
23,222
|
|
|
44%
|
|
|
Operating expenses of consolidated investment products
|
473
|
|
|
4,618
|
|
|
(90%)
|
|
|
642
|
|
|
(26%)
|
|
|
1,115
|
|
|
5,807
|
|
|
(81%)
|
|
|
Restructuring and severance
|
8,894
|
|
|
2,391
|
|
|
272%
|
|
|
—
|
|
|
N/M
|
|
|
8,894
|
|
|
2,391
|
|
|
272%
|
|
|
Depreciation and other amortization
|
776
|
|
|
776
|
|
|
—%
|
|
|
664
|
|
|
17%
|
|
|
1,440
|
|
|
1,638
|
|
|
(12%)
|
|
|
Amortization expense
|
1,813
|
|
|
603
|
|
|
201%
|
|
|
233
|
|
|
N/M
|
|
|
2,046
|
|
|
1,254
|
|
|
63%
|
|
|
Total operating expenses
|
90,948
|
|
|
71,342
|
|
|
27%
|
|
|
69,729
|
|
|
30%
|
|
|
160,677
|
|
|
138,887
|
|
|
16%
|
|
|
Operating Income
|
3,184
|
|
|
8,743
|
|
|
(64%)
|
|
|
10,047
|
|
|
(68%)
|
|
|
13,231
|
|
|
21,493
|
|
|
(38%)
|
|
|
Other (Expense) Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and unrealized gain on investments, net
|
1,287
|
|
|
3,281
|
|
|
(61%)
|
|
|
297
|
|
|
333%
|
|
|
1,584
|
|
|
2,623
|
|
|
(40%)
|
|
|
Realized and unrealized (loss) gain on investments of
consolidated investment products, net
|
(1,424)
|
|
|
3,678
|
|
|
N/M
|
|
|
4,444
|
|
|
N/M
|
|
|
3,020
|
|
|
6,208
|
|
|
(51%)
|
|
|
Other income, net
|
47
|
|
|
(15)
|
|
|
N/M
|
|
|
646
|
|
|
(93%)
|
|
|
693
|
|
|
213
|
|
|
225%
|
|
|
Total other (expense) income, net
|
(90)
|
|
|
6,944
|
|
|
N/M
|
|
|
5,387
|
|
|
N/M
|
|
|
5,297
|
|
|
9,044
|
|
|
(41%)
|
|
|
Interest (Expense) Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(3,739)
|
|
|
(129)
|
|
|
N/M
|
|
|
(243)
|
|
|
N/M
|
|
|
(3,982)
|
|
|
(261)
|
|
|
N/M
|
|
|
Interest and dividend income
|
446
|
|
|
619
|
|
|
(28%)
|
|
|
188
|
|
|
137%
|
|
|
634
|
|
|
892
|
|
|
(29%)
|
|
|
Interest and dividend income of investments of consolidated
investment products
|
5,102
|
|
|
4,278
|
|
|
19%
|
|
|
5,656
|
|
|
(10%)
|
|
|
10,758
|
|
|
9,445
|
|
|
14%
|
|
|
Interest expense of consolidated investment products
|
(2,995)
|
|
|
(5,668)
|
|
|
47%
|
|
|
(2,857)
|
|
|
(5%)
|
|
|
(5,852)
|
|
|
(6,400)
|
|
|
9%
|
|
|
Total interest (expense) income, net
|
(1,186)
|
|
|
(900)
|
|
|
(32%)
|
|
|
2,744
|
|
|
N/M
|
|
|
1,558
|
|
|
3,676
|
|
|
(58%)
|
|
|
Income Before Income Taxes
|
1,908
|
|
|
14,787
|
|
|
(87%)
|
|
|
18,178
|
|
|
(90%)
|
|
|
20,086
|
|
|
34,213
|
|
|
(41%)
|
|
|
Income tax expense
|
1,880
|
|
|
6,087
|
|
|
(69%)
|
|
|
4,433
|
|
|
(58%)
|
|
|
6,313
|
|
|
13,643
|
|
|
(54%)
|
|
|
Net Income
|
28
|
|
|
8,700
|
|
|
(100%)
|
|
|
13,745
|
|
|
(100%)
|
|
|
13,773
|
|
|
20,570
|
|
|
(33%)
|
|
|
Noncontrolling interests
|
(333)
|
|
|
(612)
|
|
|
46%
|
|
|
(718)
|
|
|
54%
|
|
|
(1,051)
|
|
|
(119)
|
|
|
N/M
|
|
|
Net (Loss) Income Attributable to Stockholders
|
(305)
|
|
|
8,088
|
|
|
N/M
|
|
|
13,027
|
|
|
N/M
|
|
|
12,722
|
|
|
20,451
|
|
|
(38%)
|
|
|
Preferred stockholder dividends
|
(2,084)
|
|
|
—
|
|
|
N/M
|
|
|
(2,084)
|
|
|
—%
|
|
|
(4,168)
|
|
|
—
|
|
|
N/M
|
|
|
Net (Loss) Income Attributable to Common Stockholders
|
$
|
(2,389)
|
|
|
$
|
8,088
|
|
|
N/M
|
|
|
$
|
10,943
|
|
|
N/M
|
|
|
$
|
8,554
|
|
|
$
|
20,451
|
|
|
(58%)
|
|
|
(Loss) Earnings Per Share - Basic
|
$
|
(0.34)
|
|
|
$
|
0.99
|
|
|
N/M
|
|
|
$
|
1.67
|
|
|
N/M
|
|
|
$
|
1.26
|
|
|
$
|
2.48
|
|
|
(49%)
|
|
|
(Loss) Earnings Per Share - Diluted
|
$
|
(0.34)
|
|
|
$
|
0.97
|
|
|
N/M
|
|
|
$
|
1.62
|
|
|
N/M
|
|
|
$
|
1.22
|
|
|
$
|
2.43
|
|
|
(50%)
|
|
|
Cash Dividends Declared Per Preferred Share
|
$
|
1.81
|
|
|
$
|
—
|
|
|
N/M
|
|
|
$
|
1.81
|
|
|
—%
|
|
|
$
|
3.63
|
|
|
$
|
—
|
|
|
N/M
|
|
|
Cash Dividends Declared Per Common Share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
—%
|
|
|
$
|
0.45
|
|
|
—%
|
|
|
$
|
0.90
|
|
|
$
|
0.90
|
|
|
—%
|
|
|
Weighted Average Shares Outstanding - Basic
|
7,064
|
|
|
8,170
|
|
|
(14%)
|
|
|
6,542
|
|
|
8%
|
|
|
6,804
|
|
|
8,257
|
|
|
(18%)
|
|
|
Weighted Average Shares Outstanding - Diluted
|
7,064
|
|
|
8,314
|
|
|
(15%)
|
|
|
6,773
|
|
|
4%
|
|
|
7,020
|
|
|
8,410
|
|
|
(17%)
|
|
|
|
N/M - Not Meaningful
|
|
Assets Under Management - Product and Asset Class
|
|
(in millions)
|
|
|
Three Months Ended
|
|
Jun 30, 2016
|
|
Sep 30, 2016
|
|
Dec 31, 2016
|
|
Mar 31, 2017
|
|
Jun 30, 2017
|
|
By product (period end):
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1)
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
24,716.8
|
|
|
$
|
41,452.8
|
|
|
Closed-End Funds
|
6,959.6
|
|
|
6,887.3
|
|
|
6,757.4
|
|
|
6,814.3
|
|
|
6,707.2
|
|
|
Exchange Traded Funds
|
399.4
|
|
|
460.6
|
|
|
596.8
|
|
|
863.3
|
|
|
968.8
|
|
|
Retail Separate Accounts
|
7,407.2
|
|
|
7,924.8
|
|
|
8,473.5
|
|
|
9,312.1
|
|
|
12,351.1
|
|
|
Institutional Accounts
|
4,920.0
|
|
|
5,376.6
|
|
|
5,492.7
|
|
|
5,711.3
|
|
|
20,639.1
|
|
|
Structured Products
|
669.7
|
|
|
623.8
|
|
|
613.1
|
|
|
602.0
|
|
|
2,899.8
|
|
|
Total Long-Term
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
85,018.8
|
|
|
Liquidity (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,570.6
|
|
|
Total
|
45,169.7
|
|
|
46,539.5
|
|
|
45,366.3
|
|
|
48,019.8
|
|
|
88,589.4
|
|
|
|
|
|
|
|
|
|
|
|
|
By product (average) (2)
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1)
|
$
|
25,537.7
|
|
|
$
|
25,149.9
|
|
|
$
|
24,223.1
|
|
|
$
|
24,157.6
|
|
|
$
|
30,651.6
|
|
|
Closed-End Funds
|
6,659.9
|
|
|
6,853.4
|
|
|
6,668.9
|
|
|
6,786.1
|
|
|
6,809.6
|
|
|
Exchange Traded Funds
|
371.9
|
|
|
426.0
|
|
|
490.1
|
|
|
759.2
|
|
|
900.8
|
|
|
Retail Separate Accounts
|
7,015.0
|
|
|
7,413.6
|
|
|
7,898.6
|
|
|
8,463.6
|
|
|
10,143.7
|
|
|
Institutional Accounts
|
4,831.6
|
|
|
5,044.2
|
|
|
5,400.8
|
|
|
5,603.2
|
|
|
10,795.1
|
|
|
Structured Products
|
392.3
|
|
|
643.4
|
|
|
614.2
|
|
|
603.3
|
|
|
1,392.9
|
|
|
Total Long-Term
|
$
|
44,808.4
|
|
|
$
|
45,530.5
|
|
|
$
|
45,295.7
|
|
|
$
|
46,373.0
|
|
|
$
|
60,693.7
|
|
|
Liquidity (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,328.6
|
|
|
Total
|
$
|
44,808.4
|
|
|
$
|
45,530.5
|
|
|
$
|
45,295.7
|
|
|
$
|
46,373.0
|
|
|
$
|
62,022.3
|
|
|
|
|
|
|
|
|
|
|
|
|
By asset class (period end):
|
|
|
|
|
|
|
|
|
|
|
Equity
|
$
|
26,206.9
|
|
|
$
|
26,669.5
|
|
|
$
|
25,822.3
|
|
|
$
|
27,990.5
|
|
|
$
|
41,672.6
|
|
|
Fixed Income
|
15,450.6
|
|
|
15,756.8
|
|
|
15,523.6
|
|
|
15,908.7
|
|
|
39,102.1
|
|
|
Alternatives (4)
|
3,512.2
|
|
|
4,113.2
|
|
|
4,020.4
|
|
|
4,120.6
|
|
|
4,244.1
|
|
|
Liquidity (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,570.6
|
|
|
Total
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
88,589.4
|
|
|
Assets Under Management - Average Net Management Fees Earned
(5)
|
|
(in basis points)
|
|
|
Three Months Ended
|
|
Jun 30, 2016
|
|
Sep 30, 2016
|
|
Dec 31, 2016
|
|
Mar 31, 2017
|
|
Jun 30, 2017
|
|
Total Products
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1)
|
49.4
|
|
|
50.1
|
|
|
50.5
|
|
|
50.5
|
|
|
50.7
|
|
|
Closed-End Funds
|
65.4
|
|
|
65.9
|
|
|
66.5
|
|
|
66.2
|
|
|
65.8
|
|
|
Exchange Traded Funds
|
36.2
|
|
|
32.4
|
|
|
24.6
|
|
|
31.7
|
|
|
27.2
|
|
|
Retail Separate Accounts
|
55.2
|
|
|
53.2
|
|
|
52.8
|
|
|
53.9
|
|
|
49.7
|
|
|
Institutional Accounts
|
37.1
|
|
|
37.0
|
|
|
37.7
|
|
|
37.2
|
|
|
32.7
|
|
|
Structured Products
|
24.9
|
|
|
76.3
|
|
|
32.9
|
|
|
33.5
|
|
|
33.5
|
|
|
All Long-Term Products
|
51.1
|
|
|
51.8
|
|
|
51.2
|
|
|
51.3
|
|
|
48.3
|
|
|
Liquidity (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.4
|
|
|
All Products
|
51.1
|
|
|
51.8
|
|
|
51.2
|
|
|
51.3
|
|
|
47.5
|
|
|
|
(1)
|
Represents assets under management of U.S. 1940 Act mutual funds and
Undertakings for Collective Investments in
Transferable Securities ("UCITS")
|
|
(2)
|
Averages are calculated as follows:
|
|
- Funds - average daily or weekly balances
|
|
- Retail Separate Accounts - prior quarter ending balance or average of
month-end balances in quarter
|
|
- Institutional Accounts - average of month-end balances in
quarter
|
|
(3)
|
Represents assets under management in liquidity strategies, including
open-end funds and institutional accounts
|
|
(4)
|
Consists of real estate securities, master-limited partnerships, options
strategies, and other
|
|
(5)
|
Represents net investment management fees divided by average assets. Net
investment management fees are
investment management fees, as adjusted, less fees paid to third-party service providers for investment management
related services, which impacted the fee rate in the three months ended June 30, 2017 for Open-End Funds and All
Products by 0.8 and 0.5 basis points, respectively.
|
|
Assets Under Management - Asset Flows by Product
|
|
(in millions)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
|
|
3/31/2017
|
|
6/30/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
Open-End Funds (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
26,536.0
|
|
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
24,716.8
|
|
|
$
|
28,882.1
|
|
|
$
|
23,432.8
|
|
|
Inflows
|
1,351.9
|
|
|
1,882.5
|
|
|
1,642.3
|
|
|
2,032.7
|
|
|
2,253.9
|
|
|
3,545.3
|
|
|
4,286.6
|
|
|
Outflows
|
(3,799.8)
|
|
|
(2,139.4)
|
|
|
(2,384.2)
|
|
|
(2,134.7)
|
|
|
(2,278.6)
|
|
|
(8,594.1)
|
|
|
(4,413.3)
|
|
|
Net flows
|
(2,447.9)
|
|
|
(256.9)
|
|
|
(741.9)
|
|
|
(102.0)
|
|
|
(24.7)
|
|
|
(5,048.8)
|
|
|
(126.7)
|
|
|
Market performance
|
887.5
|
|
|
736.5
|
|
|
(1,021.2)
|
|
|
1,444.5
|
|
|
1,212.3
|
|
|
1,183.4
|
|
|
2,656.8
|
|
|
Other (2)
|
(161.8)
|
|
|
(27.0)
|
|
|
(70.5)
|
|
|
(58.5)
|
|
|
15,548.4
|
|
|
(202.9)
|
|
|
15,489.9
|
|
|
Ending balance
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
24,716.8
|
|
|
$
|
41,452.8
|
|
|
$
|
24,813.8
|
|
|
$
|
41,452.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed-End Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
6,543.6
|
|
|
$
|
6,959.6
|
|
|
$
|
6,887.3
|
|
|
$
|
6,757.4
|
|
|
$
|
6,814.3
|
|
|
$
|
6,222.3
|
|
|
$
|
6,757.4
|
|
|
Inflows
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Outflows
|
(103.3)
|
|
|
—
|
|
|
—
|
|
|
(81.6)
|
|
|
(31.2)
|
|
|
(103.3)
|
|
|
(112.8)
|
|
|
Net flows
|
(103.3)
|
|
|
—
|
|
|
—
|
|
|
(81.6)
|
|
|
(31.2)
|
|
|
(103.3)
|
|
|
(112.8)
|
|
|
Market performance
|
481.7
|
|
|
(63.3)
|
|
|
(44.8)
|
|
|
280.8
|
|
|
16.4
|
|
|
903.0
|
|
|
297.2
|
|
|
Other (2)
|
37.6
|
|
|
(9.0)
|
|
|
(85.1)
|
|
|
(142.3)
|
|
|
(92.3)
|
|
|
(62.4)
|
|
|
(234.6)
|
|
|
Ending balance
|
$
|
6,959.6
|
|
|
$
|
6,887.3
|
|
|
$
|
6,757.4
|
|
|
$
|
6,814.3
|
|
|
$
|
6,707.2
|
|
|
$
|
6,959.6
|
|
|
$
|
6,707.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Traded Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
353.6
|
|
|
$
|
399.4
|
|
|
$
|
460.6
|
|
|
$
|
596.8
|
|
|
$
|
863.3
|
|
|
$
|
340.8
|
|
|
$
|
596.8
|
|
|
Inflows
|
52.8
|
|
|
66.9
|
|
|
200.8
|
|
|
265.7
|
|
|
185.1
|
|
|
115.1
|
|
|
450.8
|
|
|
Outflows
|
(20.8)
|
|
|
(19.6)
|
|
|
(50.6)
|
|
|
(23.0)
|
|
|
(51.3)
|
|
|
(54.6)
|
|
|
(74.3)
|
|
|
Net flows
|
32.0
|
|
|
47.3
|
|
|
150.2
|
|
|
242.7
|
|
|
133.8
|
|
|
60.5
|
|
|
376.5
|
|
|
Market performance
|
17.4
|
|
|
19.4
|
|
|
(2.9)
|
|
|
34.6
|
|
|
(8.5)
|
|
|
3.8
|
|
|
26.1
|
|
|
Other (2)
|
(3.6)
|
|
|
(5.5)
|
|
|
(11.1)
|
|
|
(10.8)
|
|
|
(19.8)
|
|
|
(5.7)
|
|
|
(30.6)
|
|
|
Ending balance
|
$
|
399.4
|
|
|
$
|
460.6
|
|
|
$
|
596.8
|
|
|
$
|
863.3
|
|
|
$
|
968.8
|
|
|
$
|
399.4
|
|
|
$
|
968.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Separate Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
7,021.1
|
|
|
$
|
7,407.2
|
|
|
$
|
7,924.8
|
|
|
$
|
8,473.5
|
|
|
$
|
9,312.1
|
|
|
$
|
6,784.4
|
|
|
$
|
8,473.5
|
|
|
Inflows
|
444.2
|
|
|
516.1
|
|
|
466.0
|
|
|
689.2
|
|
|
656.2
|
|
|
843.4
|
|
|
1,345.4
|
|
|
Outflows
|
(314.6)
|
|
|
(182.0)
|
|
|
(296.0)
|
|
|
(297.9)
|
|
|
(455.7)
|
|
|
(678.9)
|
|
|
(753.6)
|
|
|
Net flows
|
129.6
|
|
|
334.1
|
|
|
170.0
|
|
|
391.3
|
|
|
200.5
|
|
|
164.5
|
|
|
591.8
|
|
|
Market performance
|
246.5
|
|
|
189.9
|
|
|
376.3
|
|
|
453.8
|
|
|
341.6
|
|
|
457.3
|
|
|
795.4
|
|
|
Other (2)
|
10.0
|
|
|
(6.4)
|
|
|
2.4
|
|
|
(6.5)
|
|
|
2,496.9
|
|
|
1.0
|
|
|
2,490.4
|
|
|
Ending balance
|
$
|
7,407.2
|
|
|
$
|
7,924.8
|
|
|
$
|
8,473.5
|
|
|
$
|
9,312.1
|
|
|
$
|
12,351.1
|
|
|
$
|
7,407.2
|
|
|
$
|
12,351.1
|
|
|
Assets Under Management - Asset Flows by Product (Continued)
|
|
(in millions)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
|
|
3/31/2017
|
|
6/30/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
Institutional Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
4,848.3
|
|
|
$
|
4,920.0
|
|
|
$
|
5,376.6
|
|
|
$
|
5,492.7
|
|
|
$
|
5,711.3
|
|
|
$
|
4,799.7
|
|
|
$
|
5,492.7
|
|
|
Inflows
|
224.9
|
|
|
612.5
|
|
|
321.7
|
|
|
277.7
|
|
|
357.1
|
|
|
411.1
|
|
|
634.8
|
|
|
Outflows
|
(292.0)
|
|
|
(207.2)
|
|
|
(263.5)
|
|
|
(191.9)
|
|
|
(612.1)
|
|
|
(568.6)
|
|
|
(804.0)
|
|
|
Net flows
|
(67.1)
|
|
|
405.3
|
|
|
58.2
|
|
|
85.8
|
|
|
(255.0)
|
|
|
(157.5)
|
|
|
(169.2)
|
|
|
Market performance
|
144.1
|
|
|
56.4
|
|
|
63.7
|
|
|
138.3
|
|
|
168.1
|
|
|
292.5
|
|
|
306.4
|
|
|
Other (2)
|
(5.3)
|
|
|
(5.1)
|
|
|
(5.8)
|
|
|
(5.5)
|
|
|
15,014.7
|
|
|
(14.7)
|
|
|
15,009.2
|
|
|
Ending balance
|
$
|
4,920.0
|
|
|
$
|
5,376.6
|
|
|
$
|
5,492.7
|
|
|
$
|
5,711.3
|
|
|
$
|
20,639.1
|
|
|
$
|
4,920.0
|
|
|
$
|
20,639.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
348.6
|
|
|
$
|
669.7
|
|
|
$
|
623.8
|
|
|
$
|
613.1
|
|
|
$
|
602.0
|
|
|
$
|
356.0
|
|
|
$
|
613.1
|
|
|
Inflows
|
316.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
316.3
|
|
|
—
|
|
|
Outflows
|
(13.5)
|
|
|
(45.2)
|
|
|
(11.6)
|
|
|
(16.7)
|
|
|
(224.0)
|
|
|
(13.5)
|
|
|
(240.7)
|
|
|
Net flows
|
302.8
|
|
|
(45.2)
|
|
|
(11.6)
|
|
|
(16.7)
|
|
|
(224.0)
|
|
|
302.8
|
|
|
(240.7)
|
|
|
Market performance
|
9.5
|
|
|
3.9
|
|
|
6.7
|
|
|
10.3
|
|
|
13.5
|
|
|
9.5
|
|
|
23.8
|
|
|
Other (2)
|
8.8
|
|
|
(4.6)
|
|
|
(5.8)
|
|
|
(4.7)
|
|
|
2,508.3
|
|
|
1.4
|
|
|
2,503.6
|
|
|
Ending balance
|
$
|
669.7
|
|
|
$
|
623.8
|
|
|
$
|
613.1
|
|
|
$
|
602.0
|
|
|
$
|
2,899.8
|
|
|
$
|
669.7
|
|
|
$
|
2,899.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
47,385.3
|
|
|
$
|
45,366.3
|
|
|
Inflows
|
2,390.1
|
|
|
3,078.0
|
|
|
2,630.8
|
|
|
3,265.3
|
|
|
3,452.3
|
|
|
5,231.2
|
|
|
6,717.6
|
|
|
Outflows
|
(4,544.0)
|
|
|
(2,593.4)
|
|
|
(3,005.9)
|
|
|
(2,745.8)
|
|
|
(3,652.9)
|
|
|
(10,013.0)
|
|
|
(6,398.7)
|
|
|
Net flows
|
(2,153.9)
|
|
|
484.6
|
|
|
(375.1)
|
|
|
519.5
|
|
|
(200.6)
|
|
|
(4,781.8)
|
|
|
318.9
|
|
|
Market performance
|
1,786.7
|
|
|
942.8
|
|
|
(622.2)
|
|
|
2,362.3
|
|
|
1,743.4
|
|
|
2,849.5
|
|
|
4,105.7
|
|
|
Other (2)
|
(114.3)
|
|
|
(57.6)
|
|
|
(175.9)
|
|
|
(228.3)
|
|
|
35,456.2
|
|
|
(283.3)
|
|
|
35,227.9
|
|
|
Ending balance
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
85,018.8
|
|
|
$
|
45,169.7
|
|
|
$
|
85,018.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,570.6
|
|
|
—
|
|
|
3,570.6
|
|
|
Ending balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,570.6
|
|
|
$
|
—
|
|
|
$
|
3,570.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
47,385.3
|
|
|
$
|
45,366.3
|
|
|
Inflows
|
2,390.1
|
|
|
3,078.0
|
|
|
2,630.8
|
|
|
3,265.3
|
|
|
3,452.3
|
|
|
5,231.2
|
|
|
6,717.6
|
|
|
Outflows
|
(4,544.0)
|
|
|
(2,593.4)
|
|
|
(3,005.9)
|
|
|
(2,745.8)
|
|
|
(3,652.9)
|
|
|
(10,013.0)
|
|
|
(6,398.7)
|
|
|
Net flows
|
(2,153.9)
|
|
|
484.6
|
|
|
(375.1)
|
|
|
519.5
|
|
|
(200.6)
|
|
|
(4,781.8)
|
|
|
318.9
|
|
|
Market performance
|
1,786.7
|
|
|
942.8
|
|
|
(622.2)
|
|
|
2,362.3
|
|
|
1,743.4
|
|
|
2,849.5
|
|
|
4,105.7
|
|
|
Other (2)
|
(114.3)
|
|
|
(57.6)
|
|
|
(175.9)
|
|
|
(228.3)
|
|
|
39,026.8
|
|
|
(283.3)
|
|
|
38,798.5
|
|
|
Ending balance
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
88,589.4
|
|
|
$
|
45,169.7
|
|
|
$
|
88,589.4
|
|
|
|
|
(1)
|
Represents assets under management of U.S. 1940 Act mutual funds and
Undertakings for Collective Investment in Transferable Securities ("UCITS")
|
|
(2)
|
Represents open-end and closed-end mutual fund distributions, net of
reinvestments, net flows from non-sales related activities such as asset acquisitions/(dispositions), marketable
securities investments/
(withdrawals), the impact on assets from the use of leverage, and the net change in assets for liquidity
strategies
|
|
Non-GAAP Information and Reconciliations
|
|
(in thousands except per share data)
|
|
|
The following are reconciliations and related notes of the most comparable
U.S. GAAP measure to each non-GAAP measure.
|
|
|
The non-GAAP financial measures included in this release differ from
financial measures determined in accordance with U.S. GAAP as a result of the reclassification of certain income
statement items, as well as the exclusion of certain expenses and other items that are not reflective of the earnings
generated from providing investment management and related services. Non-GAAP financial measures have material
limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures.
|
|
|
Reconciliation of Total Revenues, GAAP to Total Revenues, as
Adjusted:
|
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Total revenues, GAAP
|
$
|
94,132
|
|
|
$
|
80,085
|
|
|
$
|
79,776
|
|
|
Distribution and other asset-based expenses (1)
|
(15,764)
|
|
|
(17,432)
|
|
|
(15,323)
|
|
|
Consolidated investment products revenues (2)
|
236
|
|
|
(27)
|
|
|
286
|
|
|
Total revenues, as adjusted
|
$
|
78,604
|
|
|
$
|
62,626
|
|
|
$
|
64,739
|
|
|
|
Reconciliation of Total Operating Expenses, GAAP to Operating Expenses,
as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Total operating expenses, GAAP
|
$
|
90,948
|
|
|
$
|
71,342
|
|
|
$
|
69,729
|
|
|
Distribution and other asset-based expenses (1)
|
(15,764)
|
|
|
(17,432)
|
|
|
(15,323)
|
|
|
Consolidated investment products expenses (2)
|
(473)
|
|
|
(4,618)
|
|
|
(642)
|
|
|
Amortization of intangible assets (3)
|
(1,813)
|
|
|
(603)
|
|
|
(233)
|
|
|
Restructuring and severance (4)
|
(255)
|
|
|
(2,391)
|
|
|
—
|
|
|
Acquisition and integration expenses (5)
|
(16,327)
|
|
|
—
|
|
|
(1,629)
|
|
|
Other (6)
|
(374)
|
|
|
(358)
|
|
|
(669)
|
|
|
Total operating expenses, as adjusted
|
$
|
55,942
|
|
|
$
|
45,940
|
|
|
$
|
51,233
|
|
|
|
Reconciliation of Operating Income, GAAP to Operating Income, as
Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Operating income, GAAP
|
$
|
3,184
|
|
|
$
|
8,743
|
|
|
$
|
10,047
|
|
|
Consolidated investment products earnings (2)
|
709
|
|
|
4,591
|
|
|
928
|
|
|
Amortization of intangible assets (3)
|
1,813
|
|
|
603
|
|
|
233
|
|
|
Restructuring and severance (4)
|
255
|
|
|
2,391
|
|
|
—
|
|
|
Acquisition and integration expenses (5)
|
16,327
|
|
|
—
|
|
|
1,629
|
|
|
Other (6)
|
374
|
|
|
358
|
|
|
669
|
|
|
Operating income, as adjusted
|
$
|
22,662
|
|
|
$
|
16,686
|
|
|
$
|
13,506
|
|
|
|
|
|
|
|
|
Operating margin, GAAP
|
3.4%
|
|
|
10.9%
|
|
|
12.6%
|
|
|
Operating margin, as adjusted
|
28.8%
|
|
|
26.6%
|
|
|
20.9%
|
|
|
|
Reconciliation of Net (Loss) Income Attributable to Common Stockholders,
GAAP to Net Income Attributable to Common Stockholders, as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Net (loss) income attributable to common stockholders, GAAP
|
$
|
(2,389)
|
|
|
$
|
8,088
|
|
|
$
|
10,943
|
|
|
Amortization of intangible assets, net of tax (3)
|
1,124
|
|
|
371
|
|
|
143
|
|
|
Restructuring and severance, net of tax (4)
|
158
|
|
|
1,470
|
|
|
—
|
|
|
Acquisition and integration expenses, net of tax (5)
|
11,540
|
|
|
—
|
|
|
1,001
|
|
|
Other, net of tax (6)
|
3,779
|
|
|
220
|
|
|
2,209
|
|
|
Seed capital and CLO investments (earnings) losses, net of tax
(7)
|
(859)
|
|
|
149
|
|
|
(5,679)
|
|
|
Net income attributable to common stockholders, as adjusted
|
$
|
13,353
|
|
|
$
|
10,298
|
|
|
$
|
8,617
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic
|
7,064
|
|
|
8,170
|
|
|
6,542
|
|
|
Preferred stockA
|
1,045
|
|
|
—
|
|
|
675
|
|
|
Weighted Average Shares Outstanding - Basic, as adjusted
|
8,109
|
|
|
8,170
|
|
|
7,217
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Diluted
|
7,064
|
|
|
8,314
|
|
|
6,773
|
|
|
Preferred stockA
|
1,045
|
|
|
—
|
|
|
674
|
|
|
Restricted stock units
|
202
|
|
|
—
|
|
|
—
|
|
|
Weighted Average Shares Outstanding - Diluted, as adjusted
|
8,311
|
|
|
8,314
|
|
|
7,447
|
|
|
|
|
|
|
|
|
(Loss) Earnings Per Share - Basic, GAAP
|
$
|
(0.34)
|
|
|
$
|
0.99
|
|
|
$
|
1.67
|
|
|
(Loss) Earnings Per Share - Diluted, GAAP
|
$
|
(0.34)
|
|
|
$
|
0.97
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
Earnings Per Share - Basic, as adjusted
|
$
|
1.65
|
|
|
$
|
1.26
|
|
|
$
|
1.19
|
|
|
Earnings Per Share - Diluted, as adjusted
|
$
|
1.61
|
|
|
$
|
1.24
|
|
|
$
|
1.16
|
|
|
|
A Assumes conversion of preferred shares to common shares at the
20 day volume-weighted average common stock price as of period end, subject to a conversion price range of $110 to $132
per share, resulting in a conversion ratio range of 0.9091 to 0.7576
|
|
|
Reconciliation of Income Before Taxes, GAAP to Income Before Taxes, as
Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Income before taxes, GAAP
|
$
|
1,908
|
|
|
$
|
14,787
|
|
|
$
|
18,178
|
|
|
Consolidated investment products (earnings) (2)
|
(333)
|
|
|
(612)
|
|
|
(718)
|
|
|
Amortization of intangible assets (3)
|
1,813
|
|
|
603
|
|
|
233
|
|
|
Restructuring and severance (4)
|
255
|
|
|
2,391
|
|
|
—
|
|
|
Acquisition and integration expenses (5)
|
18,613
|
|
|
—
|
|
|
1,629
|
|
|
Other (6)
|
374
|
|
|
358
|
|
|
669
|
|
|
Seed capital and CLO investments (earnings) (7)
|
(1,096)
|
|
|
(781)
|
|
|
(5,967)
|
|
|
Income before taxes, as adjusted
|
$
|
21,534
|
|
|
$
|
16,746
|
|
|
$
|
14,024
|
|
|
|
Reconciliation of Income Tax Expense, GAAP to Income Tax Expense, as
Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Income tax expense, GAAP
|
$
|
1,880
|
|
|
$
|
6,087
|
|
|
$
|
4,433
|
|
|
Tax impact of:
|
|
|
|
|
|
|
Amortization of intangible assets (3)
|
689
|
|
|
232
|
|
|
90
|
|
|
Restructuring and severance (4)
|
97
|
|
|
921
|
|
|
—
|
|
|
Acquisition and integration expenses (5)
|
7,073
|
|
|
—
|
|
|
628
|
|
|
Other (6)
|
(1,321)
|
|
|
138
|
|
|
544
|
|
|
Seed capital and CLO investments (earnings) (7)
|
(237)
|
|
|
(930)
|
|
|
(288)
|
|
|
Income tax expense, as adjusted
|
$
|
8,181
|
|
|
$
|
6,448
|
|
|
$
|
5,407
|
|
|
|
|
|
|
|
|
Effective tax rate, GAAPA
|
98.5%
|
|
|
41.2%
|
|
|
24.4%
|
|
|
Effective tax rate, as adjustedB
|
38.0%
|
|
|
38.5%
|
|
|
38.6%
|
|
|
A Reflects income tax expense, GAAP, divided by income before
taxes, GAAP
|
|
B Reflects income tax expense, as adjusted, divided by income
before taxes, as adjusted
|
|
|
Reconciliation of Investment Management Fees, GAAP to Investment
Management Fees, as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Investment management fees, GAAP
|
$
|
74,062
|
|
|
$
|
58,192
|
|
|
$
|
59,271
|
|
|
Consolidated investment products fees (2)
|
210
|
|
|
(88)
|
|
|
242
|
|
|
Investment management fees, as adjusted
|
$
|
74,272
|
|
|
$
|
58,104
|
|
|
$
|
59,513
|
|
|
|
Reconciliation of Administration and Transfer Agent Fees,
GAAP to Administration and Transfer Agent Fees, as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Administration and transfer agent fees, GAAP
|
$
|
9,476
|
|
|
$
|
9,499
|
|
|
$
|
8,981
|
|
|
Consolidated investment products fees (2)
|
19
|
|
|
49
|
|
|
34
|
|
|
Administration and transfer agent fees, as adjusted
|
$
|
9,495
|
|
|
$
|
9,548
|
|
|
$
|
9,015
|
|
|
|
Reconciliation of Employment Expenses, GAAP to Employment Expenses, as
Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Employment expenses, GAAP
|
$
|
42,992
|
|
|
$
|
33,065
|
|
|
$
|
39,641
|
|
|
Acquisition and integration expenses (5)
|
(2,059)
|
|
|
—
|
|
|
—
|
|
|
Employment expenses, as adjusted
|
$
|
40,933
|
|
|
$
|
33,065
|
|
|
$
|
39,641
|
|
|
|
Reconciliation of Restructuring and Severance, GAAP to Restructuring and
Severance, as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Restructuring and severance, GAAP
|
$
|
8,894
|
|
|
$
|
2,391
|
|
|
$
|
—
|
|
|
Restructuring and severance (4)
|
(255)
|
|
|
(2,391)
|
|
|
—
|
|
|
Acquisition and integration expenses (5)
|
(8,639)
|
|
|
—
|
|
|
—
|
|
|
Restructuring and severance, as adjusted
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Reconciliation of Other Operating Expenses, GAAP to Other Operating
Expenses, as Adjusted:
|
|
|
Three Months Ended
|
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Other operating expenses, GAAP
|
$
|
20,236
|
|
|
$
|
12,457
|
|
|
$
|
13,226
|
|
|
Acquisition and integration expenses (5)
|
(5,629)
|
|
|
—
|
|
|
(1,629)
|
|
|
Other (6)
|
(374)
|
|
|
(358)
|
|
|
(669)
|
|
|
Other operating expenses, as adjusted
|
$
|
14,233
|
|
|
$
|
12,099
|
|
|
$
|
10,928
|
|
|
Notes to Reconciliations:
|
|
|
1.
|
Distribution and other asset-based expenses - Primarily payments to
third-party distribution partners and third-party service providers for providing services to investors in our sponsored
funds and payments to third-party service providers for investment management-related services. Management believes that
making this adjustment aids in comparing the company's operating results with other asset management firms that do not
utilize intermediary distribution partners or third-party service providers.
|
|
2.
|
Consolidated investment products - Revenues and expenses generated by
operating activities of majority-owned mutual funds and CLOs that are consolidated in the financial statements.
Management believes that excluding these operating activities to reflect net revenues and expenses of the company prior
to the consolidation of these products is consistent with the approach of reflecting its operating results from managing
third-party client assets.
|
|
3.
|
Amortization of intangible assets - Non-cash amortization expense or
impairment expense, if any, attributable to acquisition-related intangible assets. Management believes that making this
adjustment aids in comparing the company's operating results with other asset management firms that have not engaged in
acquisitions.
|
|
4.
|
Restructuring and severance - Certain expenses associated with
restructuring the business, including lease abandonment-related expenses and severance costs associated with staff
reductions, that are not reflective of the ongoing earnings generation of the business. Management believes that making
this adjustment aids in comparing the company's operating results with prior periods.
|
|
5.
|
Acquisition and integration expenses - Expenses that are directly related
to acquisition and integration activities. Acquisition expenses include transaction closing costs, professional fees and
financing fees. Integration expenses include costs incurred that are directly attributable to combining businesses,
including compensation, restructuring and severance charges, professional fees, consulting fees and other expenses.
Management believes that making these adjustments aids in comparing the company's operating results with other asset
management firms that have not engaged in acquisitions.
|
|
|
|
Components of Acquisition and Integration expenses for the respective
periods are shown in the table below:
|
|
|
|
|
Three Months Ended
|
|
Acquisition Related Expenses
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
Employment expenses
|
$
|
2,059
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restructuring and severance
|
8,639
|
|
|
—
|
|
|
—
|
|
|
Other operating expenses
|
5,629
|
|
|
—
|
|
|
1,629
|
|
|
Total Acquisition Operating Expenses
|
16,327
|
|
|
—
|
|
|
1,629
|
|
|
Interest expense
|
2,286
|
|
|
—
|
|
|
—
|
|
|
Total Acquisition Related Expenses
|
$
|
18,613
|
|
|
$
|
—
|
|
|
$
|
1,629
|
|
|
|
|
6.
|
Other - Certain expenses that are not reflective of the ongoing earnings
generation of the business. In addition, it includes income tax expense (benefit) items, such as adjustments for
uncertain tax positions, valuation allowances and other unusual or infrequent items not related to current operating
results to reflect a normalized effective rate. Preferred dividends are adjusted as the shares are mandatorily
convertible into common shares at the end of three years and the non-GAAP weighted average shares are adjusted
to reflect the conversion. Management believes that making these adjustments aids in comparing the company's
operating results with prior periods.
|
|
|
|
Components of Other for the respective periods are shown in the table
below:
|
|
|
|
|
Three Months Ended
|
|
Other
|
6/30/2017
|
|
6/30/2016
|
|
3/31/2017
|
|
System transition expenses
|
$
|
374
|
|
|
$
|
358
|
|
|
$
|
669
|
|
|
Tax impact of system transition expenses
|
(141)
|
|
|
(138)
|
|
|
(258)
|
|
|
Discrete tax adjustments
|
1,462
|
|
|
—
|
|
|
(286)
|
|
|
Preferred stockholder dividends
|
2,084
|
|
|
—
|
|
|
2,084
|
|
|
Total Other
|
$
|
3,779
|
|
|
$
|
220
|
|
|
$
|
2,209
|
|
|
|
|
7.
|
Seed capital and CLO investments earnings (losses) - Gains and losses
(realized and unrealized), dividends and interest income generated by seed capital and CLO investments. Earnings or
losses generated by investments in seed capital and CLO investments can vary significantly from period to period and do
not reflect the company's operating results from providing investment management and related services. Management
believes that making this adjustment aids in comparing the company's operating results with prior periods and with other
asset management firms that do not have meaningful seed capital and CLO investments.
|
Definitions:
Revenues, as adjusted, comprise the fee revenues paid by clients for investment management and related
services. Revenues, as adjusted, for purposes of calculating net income attributable to common stockholders, as adjusted, differ
from U.S. GAAP revenues in that they are reduced by distribution and other asset-based expenses that are generally passed through
to external parties, and exclude the impact of consolidated sponsored investment products.
Operating expenses, as adjusted, is calculated to reflect expenses from ongoing continuing operations.
Operating expenses, as adjusted, for purposes of calculating net income attributable to common stockholders, as adjusted, differ
from U.S. GAAP expenses in that they exclude amortization or impairment, if any, of intangible assets, restructuring and
severance, the impact of consolidated sponsored investment products, acquisition and integration-related expenses and certain
other expenses that do not reflect the ongoing earnings generation of the business.
Operating margin, as adjusted, is a metric used to evaluate efficiency represented by operating income, as
adjusted, divided by revenues, as adjusted.
Earnings per share, as adjusted, represent net income attributable to common stockholders, as adjusted,
divided by weighted average shares outstanding, on either a basic or diluted basis.
Forward-Looking Information
This press release 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 1995. These statements may be identified by such forward-looking
terminology as "expect," "estimate," "plan," "intend," "believe," "anticipate," "may," "will," "should," "could," "continue,"
"project," or similar statements or variations of such terms.
Our forward-looking statements are based on a series of expectations, assumptions and projections about our company, are not
guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections
concerning our assets under management, cash inflows and outflows, operating cash flows, our ability to expand distribution and
product offerings, and future credit facilities, for all forward periods. All of our forward-looking statements are as of the
date of this release only. The company can give no assurance that such expectations or forward-looking statements will prove to
be correct. Actual results may differ materially.
Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including those
discussed under "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in
our 2016 Annual Report on Form 10-K as well as the following risks and uncertainties: (a) any reduction in our assets under
management; (b) the withdrawal, renegotiation or termination of investment advisory agreements; (c) damage to our reputation; (d)
failure to comply with investment guidelines or other contractual requirements; (e) the inability to attract and retain key
personnel; (f) challenges from the competition we face in our business; (g) adverse regulatory and legal developments; (h)
unfavorable changes in tax laws or limitations; (i) adverse developments related to unaffiliated subadvisers; (j) negative
implications of changes in key distribution relationships; (k) interruptions in or failure to provide service by third parties;
(l) volatility associated with our common stock; (m) adverse civil litigation and government investigations or proceedings; (n)
the risk of loss on our investments; (o) the inability to make quarterly distributions; (p) the lack of sufficient capital on
satisfactory terms; (q) liabilities and losses not covered by insurance; (r) the inability to satisfy financial covenants; (s)
the inability to achieve expected acquisition-related financial benefits and synergies; and other risks and uncertainties
described in our 2016 Annual Report on Form 10-K or in any of our filings with the Securities and Exchange Commission
("SEC").
Certain other factors which may impact our continuing operations, prospects, financial results and liquidity, or which may
cause actual results to differ from such forward-looking statements, are discussed or included in the company's periodic reports
filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to carefully consider all such factors.
The company does not undertake or plan to update or revise any such forward-looking statements to reflect actual results,
changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any forward-looking information will not be realized. If there are any
future public statements or disclosures by us which modify or impact any of the forward-looking statements contained in or
accompanying this release, such statements or disclosures will be deemed to modify or supersede such statements in this
release.
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SOURCE Virtus Investment Partners, Inc.