VIRTUS INVESTMENT PARTNERS INC

Previous wording

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 2023 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, resulting from: (i) any reduction in our assets under management; (ii) inability to achieve the expected benefits of strategic transactions; (iii) withdrawal, renegotiation or termination of investment advisory agreements; (iv) damage to our reputation; (v) inability to satisfy financial debt covenants and required payments; (vi) inability to attract and retain key personnel; (vii) challenges from competition; (viii) adverse developments related to unaffiliated subadvisers; (ix) negative changes in key distribution relationships; (x) interruptions, breaches, or failures of technology systems; (xi) loss on our investments; (xii) lack of sufficient capital on satisfactory terms; (xiii) adverse regulatory and legal developments; (xiv) failure to comply with investment guidelines or other contractual requirements; (xv) adverse civil litigation, government investigations, or proceedings; (xvi) unfavorable changes in tax laws or limitations; (xvii) inability to make common stock dividend payments; (xviii) impediments from certain corporate governance provisions; (xix) losses or costs not covered by insurance; (xx) impairment of goodwill or other intangible assets; and other risks and uncertainties. Any occurrence of, or any material adverse change in, one or more risk factors or risks and uncertainties referred to above, in our 2023 Annual Report on Form 10-K, this Quarterly Report on Form 10-Q and our other periodic reports filed with the Securities and Exchange Commission (the "SEC") could materially and adversely affect our operations, financial results, cash flows, prospects and liquidity.

Current wording

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 2023 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, resulting from: (i) any reduction in our assets under management; (ii) inability to achieve the expected benefits of strategic transactions; (iii) withdrawal, renegotiation or termination of investment management agreements; (iv) damage to our reputation; (v) inability to satisfy financial debt covenants and required payments; (vi) inability to attract and retain key personnel; (vii) challenges from competition; (viii) adverse developments related to unaffiliated subadvisers; (ix) negative changes in key distribution relationships; (x) interruptions, breaches, or failures of technology systems; (xi) loss on our investments; (xii) lack of sufficient capital on satisfactory terms; (xiii) adverse regulatory and legal developments; (xiv) failure to comply with investment guidelines or other contractual requirements; (xv) adverse civil litigation, government investigations, or proceedings; (xvi) unfavorable changes in tax laws or limitations; (xvii) inability to make common stock dividend payments; (xviii) impediments from certain corporate governance provisions; (xix) losses or costs not covered by insurance; (xx) impairment of goodwill or other intangible assets; and other risks and uncertainties. Any occurrence of, or any material adverse change in, one or more risk factors or risks and uncertainties referred to above, in our 2023 Annual Report on Form 10-K, this Quarterly Report on Form 10-Q and our other periodic reports filed with the Securities and Exchange Commission (the "SEC") could materially and adversely affect our operations, financial results, cash flows, prospects and liquidity.

Previous wording

We provide investment management and related services to institutions and individuals. We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual brand, as well as from select unaffiliated managers for certain of our retail funds. By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences. Our earnings are primarily from asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution, and shareholder services.

Current wording

We provide investment management and related services to institutions and individuals. We use a multi-manager, multi-style approach, offering investment strategies from our investment managers, each having its own distinct investment style, autonomous investment process and individual brand, as well as from select unaffiliated managers for certain of our funds. By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences. Our earnings are primarily from asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution, and shareholder services.

Previous wording

We offer investment strategies for institutional and individual investors in different investment products and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by differentiated investment managers. We have offerings in various asset classes (equity, fixed income, multi-asset and alternatives), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative). Our institutional products are offered through institutional separate accounts and commingled accounts, including structured products to a variety of institutional clients. Our products include open-end funds, closed-end funds and retail separate accounts. We also provide subadvisory services to other investment advisers.

Current wording

We offer investment strategies for institutional and individual investors in different investment products and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by differentiated investment managers. We have offerings in various asset classes (equity, fixed income, multi-asset and alternatives), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative). Our institutional products are offered through institutional separate accounts and commingled accounts, including subadvisory services to other investment advisers and Company sponsored structured products to a variety of institutional clients. Our retail products include open-end funds, closed-end funds and retail separate accounts.

Previous wording

▪Net income per diluted share was $4.10 in the first quarter of 2024, a decrease of $1.11, or 21.3%, compared to net income per diluted share of $5.21 in the first quarter of 2023.

Current wording

▪Net income per diluted share was $2.43 in the second quarter of 2024, a decrease of $1.67, or 40.7%, compared to net income per diluted share of $4.10 in the second quarter of 2023.

Previous wording

▪Total sales were $7.6 billion in the first quarter of 2024, an increase of $1.3 billion, or 21.6%, from $6.2 billion in the first quarter of 2023. Net flows were $(1.2) billion in the first quarter of 2024 compared to net flows of $(1.9) billion in the first quarter of 2023.

Current wording

▪Total sales were $6.1 billion in the second quarter of 2024, a decrease of $1.4 billion, or 19.0%, from $7.6 billion in the second quarter of 2023. Net flows were $(2.6) billion in the second quarter of 2024 compared to neutral net flows in the second quarter of 2023.

Previous wording

▪Assets under management were $179.3 billion at March 31, 2024, an increase of $24.5 billion, or 15.8%, from March 31, 2023.

Current wording

▪Assets under management were $173.6 billion at June 30, 2024, an increase of $5.3 billion, or 3.1%, from June 30, 2023.

Previous wording

At March 31, 2024, total assets under management were $179.3 billion, representing an increase of $24.5 billion, or 15.8%, from March 31, 2023, and an increase of $7.1 billion, or 4.1%, from December 31, 2023. The increase in total assets under management from March 31, 2023 included $25.7 billion from positive market performance and $7.8 billion from the acquisition of AlphaSimplex Group LLC on April 1, 2023 ("AlphaSimplex"), partially offset by $6.6 billion of net outflows. The increase in total assets under management from December 31, 2023 included $8.7 billion from positive market performance partially offset by $1.2 billion of net outflows.

Current wording

At June 30, 2024, total assets under management were $173.6 billion, representing an increase of $5.3 billion, or 3.1%, from June 30, 2023, and an increase of $1.3 billion, or 0.8%, from December 31, 2023. The increase in total assets under management from June 30, 2023 included $16.9 billion from positive market performance partially offset by $9.2 billion of net outflows. The increase in total assets under management from December 31, 2023 included $6.2 billion from positive market performance partially offset by $3.9 billion of net outflows.

Previous wording

(3)Averages are calculated as follows:

Current wording

(4)Averages are calculated as follows:

Previous wording

(3)Averages are calculated as follows:

Current wording

(4)Averages are calculated as follows:

Previous wording

Average fees earned represent investment management fees, net of revenue-related adjustments, divided by average net assets, excluding the impact of consolidated investment products ("CIP"). Revenue-related adjustments are based on specific agreements and reflect the portion of investment management fees passed-through to third-party client intermediaries for services to investors in sponsored investment products. Fund fees are calculated based on average daily or weekly net assets. Retail separate account fees are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances. Institutional account fees are calculated based on an average of month-end balances, an average of current quarter’s asset values or on a combination of the underlying cash flows and the principal value of the product. Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

Current wording

Average fees earned represent investment management fees, net of revenue-related adjustments, and excluding the impact of consolidated investment products ("CIP") divided by average net assets. Revenue-related adjustments are based on specific agreements and reflect the portion of investment management fees passed-through to third-party client intermediaries for services to investors in sponsored investment products. Fund fees are calculated based on average daily or weekly net assets. Retail separate account fees are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances. Institutional account fees are calculated based on an average of month-end balances, an average of current quarter’s asset values or on a combination of the underlying cash flows and the principal value of the product. Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

Previous wording

In the first quarter of 2024, total revenues increased 12.2% to $222.0 million from $197.9 million in the first quarter of 2023, primarily as a result of increased average assets under management during the current year period compared to the prior year period. Operating income increased $3.7 million to $32.3 million in the first quarter of 2024 compared to $28.6 million in the first quarter of 2023, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses due to the addition of AlphaSimplex.

Current wording

In the second quarter of 2024, total revenues increased 5.1% to $224.4 million from $213.5 million in the second quarter of 2023, primarily as a result of increased average assets under management during the current year period compared to the prior year period. Operating income increased $5.2 million to $44.2 million in the second quarter of 2024 compared to $39.0 million in the second quarter of 2023, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses.

Previous wording

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management agreements, which generally require monthly or quarterly payments. Investment management fees increased by $23.9 million, or 14.5%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the increase in average assets under management.

Current wording

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management agreements, which generally require monthly or quarterly payments. Investment management fees increased by $11.7 million, or 6.5%, and $35.6 million, or 10.3% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to the increase in average assets under management.

Previous wording

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services. Distribution and service fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Current wording

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services. Distribution and service fees decreased by $0.7 million, or 5.1%, and $0.8 million, or 3.0%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to lower sales and average assets under management for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Previous wording

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S. retail funds, ETFs and certain closed-end funds. Fund administration and shareholder service fees increased by $0.3 million, or 1.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the addition of AlphaSimplex.

Current wording

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S. retail funds, ETFs and certain closed-end funds. Fund administration and shareholder service fees remained consistent during the three months ended June 30, 2024 compared to the same period in the prior year and increased by $0.4 million, or 1.1%, for the six months ended June 30, 2024, compared to the same period in the prior year. The increase for the six-month period was primarily due to the increase in average assets under management of our U.S. retail funds and ETFs.

Previous wording

Other income and fees primarily represent fees related to other fee-earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge. Other income and fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Current wording

Other income and fees primarily represent fees related to other fee-earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge. Other income and fees decreased by $0.2 million, or 14.4%, for the three months ended June 30, 2024, and remained consistent during the six months ended June 30, 2024 compared to the same periods in the prior year. The decrease during the three-month period is primarily due to lower fees earned on other fee-earning assets and lower fees received for trading and investment services.

Previous wording

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses of $115.2 million increased by $16.5 million, or 16.8%, compared to the same period in the prior year primarily due to the addition of AlphaSimplex and an increase in profit- and sales-based compensation in the current year.

Current wording

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses of $105.7 million increased by $1.0 million, or 0.9%, for the three months ended June 30, 2024 primarily due to an increase in profit- and sales-based compensation. Employment expenses increased by $17.5 million, or 8.6%, for the six months ended June 30, 2024, compared to the same period in the prior year primarily due to an increase in profit- and sales-based compensation and the addition of AlphaSimplex.

Previous wording

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management. Distribution and other asset-based expenses also include the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders. The deferred sales commissions are amortized on a straight-line basis over the period commissions are recovered from distribution fee revenues and contingent sales charges received upon redemption of shares. During the three months ended March 31, 2024, distribution and other asset-based expenses increased $0.6 million, or 2.7%, compared to the same period in the prior year primarily due to an increase in assets under management in share classes that have asset-based distribution and other asset-based expenses.

Current wording

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management. Distribution and other asset-based expenses also include the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders. The deferred sales commissions are amortized on a straight-line basis over the period commissions are recovered from distribution fee revenues and contingent sales charges received upon redemption of shares. During the three and six months ended June 30, 2024, distribution and other asset-based expenses decreased by $1.8 million, or 6.9%, and $1.1 million, or 2.3%, respectively, compared to the same periods in the prior year primarily due to decreases in assets under management in share classes that have asset-based distribution and other expenses.

Previous wording

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs. Other operating expenses increased $0.6 million, or 2.1%, for the three months ended March 31, 2024, compared to the same period in the prior year. The increase was primarily attributable to the addition of AlphaSimplex partially offset by lower professional fees in the current year period.

Current wording

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs. Other operating expenses remained consistent during the three and six months ended June 30, 2024 compared to the same periods in the prior year.

Previous wording

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense increased $0.9 million, or 77.1%, for the three months ended March 31, 2024, compared to the respective period in the prior year. The increase was primarily due to the addition of AlphaSimplex and software and equipment purchases in the prior year and depreciation expense for new office space.

Current wording

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense increased $0.8 million, or 52.9%, and $1.7 million, or 63.4%, for the three and six months ended June 30, 2024, compared to the same periods in the prior year. The increase during both periods was primarily due to the acceleration of deprecation on leasehold improvements in the current year periods, software and equipment purchases in the current and prior year periods and depreciation expense for new office space.

Previous wording

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense increased $0.9 million, or 6.6%, for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to the addition of AlphaSimplex.

Current wording

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense decreased $0.6 million, or 3.9%, for the three months ended June 30, 2024, compared to the same period in the prior year, primarily due to intangible assets becoming fully amortized during the current year period. Amortization expense increased by $0.3 million, or 1.1%, for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to the addition of AlphaSimplex intangible assets in the second quarter of the prior year partially offset by intangible assets becoming fully amortized during the current year period.

Previous wording

Realized and unrealized gain (loss) on investments, net changed during the three months ended March 31, 2024 by $0.7 million, compared to the same period in the prior year. The realized and unrealized gains and losses reflect changes in overall market conditions for the respective periods.

Current wording

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended June 30, 2024 by $(3.3) million and $(2.5) million, respectively, compared to the same periods in the prior year. The realized and unrealized gains and losses reflect changes in overall market conditions for the respective periods.

Previous wording

Realized and unrealized gain (loss) of CIP, net changed by $(1.1) million during the three months ended March 31, 2024, compared to the same period in the prior year. The change for the three months ended March 31, 2024 consisted primarily of unrealized losses of $17.9 million due to changes in market values of leveraged loans, partially offset by changes in unrealized gains of $16.8 million related to the value of the notes payable.

Current wording

Realized and unrealized gain (loss) of CIP, net changed by $(8.5) million and $(9.6) million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year. The change for the three months ended June 30, 2024 consisted primarily of changes in unrealized losses of $32.1 million related to the value of the notes payable, partially offset by net unrealized and realized gains of $23.6 million due to changes in market values of leveraged loans. The change for the six months ended June 30, 2024 consisted primarily of changes in unrealized losses of $15.3 million related to the value of the notes payable, partially offset by net unrealized and realized gains of $5.7 million due to changes in market values of leveraged loans.

Previous wording

Other income (expense), net changed by $0.9 million during the three months ended March 31, 2024, compared to the same period in the prior year primarily due to changes in the gains and losses on our equity method investments.

Current wording

Other income (expense), net changed by $1.4 million and $2.3 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to changes in the gains and losses on our equity method investments.

Previous wording

Interest and dividend income of investments of CIP increased $4.3 million, or 9.2%, for the three months ended March 31, 2024, compared to the same period in the prior year. The increase was primarily due to higher average interest rates during the current year period and the addition of a CLO in the third quarter of 2023.

Current wording

Interest and dividend income of investments of CIP increased $4.5 million, or 9.4%, and $8.8 million, or 9.3% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year. The increases were primarily due to the addition of a CLO in the third quarter of 2023 and higher average interest rates during the current year periods.

Previous wording

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP increased by $4.8 million, or 13.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to higher average interest rates and the addition of a CLO in the third quarter of 2023.

Current wording

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP increased by $3.2 million, or 8.3%, and $8.0 million, or 10.9% for the three and six months ended June 30, 2024, compared to the same periods in the prior year primarily due to the addition of a CLO in the third quarter of 2023 and higher average interest rates in the current year periods.

Previous wording

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 18.9% and 20.1% for the three months ended March 31, 2024 and 2023, respectively. The lower estimated effective tax rate for the three months ended March 31, 2024 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

Current wording

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 24.4% and 23.2% for the six months ended June 30, 2024 and 2023, respectively. The higher estimated effective tax rate for the six months ended June 30, 2024 was primarily due to a change in excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

Previous wording

At March 31, 2024, we had $123.9 million of cash and cash equivalents and $127.4 million of investments, which included $90.5 million of investment securities, compared to $239.6 million of cash and cash equivalents and $132.7 million of investments, which included $97.3 million of investment securities, at December 31, 2023.

Current wording

At June 30, 2024, we had $183.0 million of cash and cash equivalents and $122.3 million of investments, which included $86.2 million of investment securities, compared to $239.6 million of cash and cash equivalents and $132.7 million of investments, which included $97.3 million of investment securities, at December 31, 2023.

Previous wording

Net cash used in operating activities of $34.5 million for the three months ended March 31, 2024 decreased by $8.4 million from net cash used in operating activities of $43.0 million for the same period in the prior year primarily due to an increase in cash from higher net income and an increase of $17.1 million in net sales of investments by CIP in the current year period partially offset by an increase in payments in incentive compensation in the current year.

Current wording

Net cash provided by operating activities of $35.4 million for the six months ended June 30, 2024 decreased by $66.7 million from net cash provided by operating activities of $102.1 million for the same period in the prior year primarily due to a decrease of $48.0 million in net sales of investments by CIP in the current year period and an increase in payments of incentive compensation in the current year.

Previous wording

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations. Net cash used in investing activities of $2.5 million for the three months ended March 31, 2024 decreased by $10.7 million from net cash used in investing activitiesof $13.1 million for the same period in the prior year primarily due to cash paid for an equity method investment in the prior year period that did not reoccur in the current year period.

Current wording

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations. Net cash used in investing activities of $3.8 million for the six months ended June 30, 2024 decreased by $119.4 million from net cash used in investing activities of $123.2 million for the same period in the prior year primarily due to the AlphaSimplex acquisition in the prior year.

Previous wording

Cash flows from financing activities consist primarily of transactions related to our common shares, issuance and repayment of debt by us and CIP, payments of contingent consideration and purchases and sales of noncontrolling interests. Net cash used in financing activities of $56.1 million for the three months ended March 31, 2024 decreased by $58.9 million from net cash used in investing activities of $115.1 million for the same period in the prior year primarily due to a $43.4 million decrease in the repayment on borrowings of CIP and a $16.5 million increase in net contributions from noncontrolling interests.

Current wording

Cash flows from financing activities consist primarily of transactions related to our common shares, issuance and repayment of debt by us and CIP, payments of contingent consideration and purchases and sales of noncontrolling interests. Net cash used in financing activities of $21.8 million for the six months ended June 30, 2024 decreased by $188.9 million from net cash used of $210.7 million for the same period in the prior year primarily due to a $222.6 million increase in net borrowings of CIP attributable to the refinancing of two CLOs in the current period partially offset by the prior year period $50.0 million borrowing on the credit facility as part of the AlphaSimplex acquisition.

Previous wording

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026. The Company repaid $0.7 million outstanding under the Term Loan during the three months ended March 31, 2024 and had $258.1 million outstanding under the Term Loan at March 31, 2024. In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $5.1 million as of March 31, 2024.

Current wording

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026. The Company repaid $6.4 million outstanding under the Term Loan during the six months ended June 30, 2024 and had $252.4 million outstanding under the Term Loan at June 30, 2024. In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $4.8 million as of June 30, 2024.