VIRTUS INVESTMENT PARTNERS INC
For the period ended May 14, 2025. Filed Apr 2, 2025.
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May 14, 2025 · Filed Apr 2, 2025
Contents
Appendix A
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 eachnon-GAAP measure.
Non-GAAP financial information differs from financial information 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. Management uses these measures to evaluate the company’s financial performance and operational decision-making. Management believes that thesenon-GAAP financial measures, when presented together with directly comparable U.S. GAAP measures, are useful to investors and other interested parties to provide additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management. Non-GAAP financial information has 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:
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Total revenues, GAAP | $906,949 | $845,268 | $886,379 |
| Consolidated investment products revenues (1) | 9,665 | 9,824 | 9,162 |
| Distribution and other asset-based fees (2) | (96,223) | (96,802) | (112,612) |
| Total revenues, as adjusted | $820,391 | $758,290 | $782,929 |
Reconciliation of Total Operating Expenses, GAAP to Operating Expenses, as Adjusted:
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Total operating expenses, GAAP | $724,459 | $693,784 | $688,919 |
| Consolidated investment products expenses (1) | (6,987) | (4,224) | (4,408) |
| Distribution and other asset-based expenses (3) | (96,223) | (96,802) | (112,612) |
| Amortization of intangible assets (4) | (56,299) | (61,027) | (58,504) |
| Restructuring expense (5) | (1,487) | (824) | (4,015) |
| Deferred compensation and related investments (6) | (2,085) | (1,966) | — |
| Acquisition and integration expenses (7) | 1,650 | (10,193) | (16,603) |
| Other (8) | (9,963) | (210) | 1,001 |
| Total operating expenses, as adjusted | $553,065 | $518,538 | $493,778 |
Reconciliation of Operating Income, GAAP to Operating Income, as Adjusted:
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Operating income, GAAP | $182,490 | $151,484 | $197,460 |
| Consolidated investment products operating income (1) | 16,652 | 14,048 | 13,570 |
| Amortization of intangible assets (4) | 56,299 | 61,027 | 58,504 |
| Restructuring expense (5) | 1,487 | 824 | 4,015 |
| Deferred compensation and related investments (6) | 2,085 | 1,966 | — |
| Acquisition and integration expenses, net of tax (7) | (1,650) | 10,193 | 16,603 |
| Other (8) | 9,963 | 210 | (1,001) |
| Operating income, as adjusted | $267,326 | $239,752 | $289,151 |
| Operating margin, GAAP | 20.1% | 17.9% | 22.3% |
| Operating margin, as adjusted | 32.6% | 31.6% | 36.9% |
Reconciliation of Net Income Attributable to Common Stockholders, GAAP to Net Income Attributable to Common Stockholders, as adjusted
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Net income attributable to Virtus Investment Partners, Inc., GAAP | $121,746 | $130,621 | $117,541 |
| Amortization of intangible assets, net of tax (4) | 40,453 | 41,829 | 39,764 |
| Restructuring expense, net of tax (5) | 1,099 | 599 | 2,933 |
| Seed capital and CLO investments, net of tax (9) | 1,065 | (16,842) | 39,662 |
| Deferred compensation and related investments (6) | 99 | (1,097) | — |
| Acquisition and integration expenses, net of tax (7) | (1,213) | 7,401 | 12,089 |
| Other, net of tax (8) | 26,565 | (744) | (16,827) |
| Net income attributable to Virtus Investment Partners, Inc., as adjusted | $189,814 | $161,767 | $195,162 |
| Weighted Average Shares Outstanding—Diluted | 7,210 | 7,375 | 7,582 |
| Weighted Average Shares Outstanding—Diluted, as adjustedA | 7,210 | 7,375 | 7,582 |
| Earnings Per Share—Diluted, GAAP | $16.89 | $17.71 | $15.50 |
| Earnings Per Share—Diluted, as adjusted | $26.33 | $21.93 | $25.74 |
| A | Reflects dilutive impact to shares in all periods; differs from GAAP basis in periods of a GAAP earnings loss, if any |
|---|
Notes to Reconciliations:
Reclassifications:
| 1. | Consolidated investment products - Revenues and expenses generated by operating activities of 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. |
Other Adjustments:
Revenue Related
| 2. | Investment management/Distribution and service fees - Each of these revenue line items is reduced to exclude fees passed through to third-party client intermediaries who own the retail client relationship and are responsible for distributing company sponsored investment products and servicing the client. |
The amount of fees fluctuates each period, based on a predetermined percentage of the value of assets under management, and varies based on the type of investment product. The specific adjustments are as follows:
Investment management fees - Based on specific agreements, the portion of investment management fees passed-through to third-party intermediaries for services to investors in sponsored investment products.
Distribution and service fees - Based on distinct arrangements, fees collected by the company then passed-through to third-party client intermediaries for services to investors in sponsored investment products. The adjustment represents all of the company’s distribution and service fees that are recorded as a separate line item on the condensed consolidated statements of operations.
Management believes that making these adjustments aids in comparing the company’s operating results with other asset management firms that do not utilize third-party client intermediaries.
Expense Related
| 3. | Distribution and other asset-based expenses - Primarily payments to third-party client intermediaries for providing services to investors in sponsored investment products. Management believes that making this adjustment aids in comparing the company’s operating results with other asset management firms that do not utilize third-party client intermediaries. |
| 4. | Amortization of intangible assets - Non-cash amortization expense or impairment expense, if any, attributable to acquisition-related intangible assets, including any portion that is allocated to noncontrolling interests. 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. |
| 5. | Restructuring expense - Certain non-recurring expenses associated with restructuring the business, including lease abandonment-related expenses and severance costs associated with staff reductions that are not reflective of ongoing earnings generation of the business. Management believes that making this adjustment aids in comparing the company’s operating results with prior periods. |
| 6. | Deferred compensation and related investments - Compensation expense, gains and losses (realized and unrealized), and interest and dividend income related to market performance of deferred compensation and related balance sheet investments. Market performance of deferred compensation plans and related investments can vary significantly from period to period. Management believes that making this adjustment aids in comparing the Company’s operating results with prior periods. |
| 7. | Acquisition and integration expenses - Expenses that are directly related to acquisition and integration activities. Acquisition expenses include certain transaction related employment expenses, transaction closing costs, change in fair value of contingent consideration, certain 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 below:
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Acquisition and Integration Expenses | |||
| Employment expenses | $3,958 | $12,585 | $4,542 |
| Other operating expenses | — | 3,118 | 4,041 |
| Change in fair value of contingent consideration | (5,608) | (5,510) | 8,020 |
| Total Acquisition and Integration Expenses | $(1,650) | $10,193 | $16,603 |
| 8. | Other - Certain expenses that are not reflective of the ongoing earnings generation of the business. Employment expenses and noncontrolling interests are adjusted for fair value measurements of affiliate minority interests. Other operating expenses are adjusted for non-capitalized debt issuance costs. Interest expense is adjusted to remove gains on early extinguishment of debt and the write-off of previously capitalized costs associated with the modification of debt. Income tax expense (benefit) items are adjusted for uncertain tax positions, changes in tax law, valuation allowances, and other unusual or infrequent items not related to current operating results to reflect a normalized effective rate. 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 below:
| Twelve Months Ended | |||
|---|---|---|---|
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |
| Other | |||
| Non-capitalized debt issuance costs | $6,501 | $— | $— |
| Employment expense fair value adjustments | 4,681 | 210 | (1,001) |
| (Gain)/loss on extinguishment of debt | (1,219) | — | — |
| Tax impact of adjustments | (2,624) | (53) | 272 |
| Other discrete tax adjustments | 412 | (2,585) | 92 |
| Affiliate minority interest fair value adjustments | 18,814 | 1,684 | (16,190) |
| Total Other | $26,565 | $(744) | $(16,827) |
Seed Capital and CLO Related
| 9. | Seed capital and CLO investments (gains) losses - Gains and losses (realized and unrealized) of seed capital and CLO investments. Gains and losses (realized and unrealized) 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 Virtus Investment Partners, Inc., as adjusted, differ from U.S. GAAP, namely in excluding the impact of operating activities of consolidated investment products and reduced to exclude fees passed through to third-party client intermediaries who own the retail client relationship and are responsible for distributing the product and servicing the client.
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 Virtus Investment Partners, Inc., as adjusted, differ from U.S. GAAP expenses in that they exclude amortization or impairment, if any, of intangible assets, restructuring and severance, the effect of consolidated 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 (loss) per share, as adjusted, represent net income (loss) attributable to Virtus Investment Partners, Inc., as adjusted, divided by weighted average shares outstanding, as adjusted, on either a basic or diluted basis.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.