Yahoo Finance Virtus Investment Partners Inc (VRTS) (Q1 2024) Earnings Call Transcript Highlights: Strategic ...
Total Assets Under Management (AUM): Increased 4% to $179 billion.
Sales: Increased 22% to $7.6 billion.
Net Outflows: $1.2 billion, an improvement from $3.8 billion in the prior quarter.
Operating Margin: Excluding seasonal expenses, was 33.6%, up 60 basis points from the previous quarter.
Earnings Per Share (EPS): As adjusted was $5.41, down from the previous quarter due to seasonal expenses.
Share Repurchases: Approximately 64,000 shares for $15 million.
Net Debt: Ended the quarter with a modest net debt position.
Investment Management Fees: As adjusted were $180.5 million, up 3%.
Employment Expenses: As adjusted were $111.6 million, increased 15% sequentially.
Other Operating Expenses: As adjusted were $30.2 million, down $1 million from the previous quarter.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Just looking forward on flows, it seems like April to date shaping up to be pretty similar to the first quarter, is that fair? And do you think that's sustainable given some of the volatility we've seen in April to date in markets and rates? Have you been pleased with those flows so far enabled in this backdrop? A: (George Aylward - President, CEO, Director) Yes, the flows in April are trending similar to Q1, with continued strength in SMID and mid-cap strategies and increased interest in less correlated strategies due to market volatility. The composition of flows may shift towards strategies with lower correlation or different fixed income allocations. The trends for retail separate accounts and ETFs are very similar to Q1.
Q: Can you give us your latest views and thoughts on the potential to add additional affiliated managers? M&A was light in 2023. But we could be entering an environment where you could see some more activity here. A: (George Aylward - President, CEO, Director) We continue to engage in active conversations about potential partnerships and acquisitions. Our focus remains on strategic fits that enhance our product capabilities, distribution access, or scale. We are particularly interested in less correlated and liquid alternative strategies, although traditional long-only categories could also be of interest.
Q: Could you talk about the international distribution efforts? How much is that contributing to flows in AUM today? A: (George Aylward - President, CEO, Director) We are optimistic about our non-US institutional opportunities and have seen significant mandates across various strategies internationally. The decision period has lengthened, but we remain positive about the growth in this area.
Q: Could you update us on your overall ETF strategy and the appetite for mutual fund to ETF conversions? A: (George Aylward - President, CEO, Director) Our ETF strategy continues to evolve, particularly towards actively managed strategies in fixed income. We are open to conversions if they make strategic sense, but our focus is on making our strategies available through various vehicles preferred by financial advisers.
Q: How should we think about the cadence of rebuilding the cash balance and priorities for capital deployment between buyback, debt paydown, M&A, etc.? A: (Michael Angerthal - CFO, EVP, Treasurer) The first quarter typically has the highest cash use due to annual incentives and revenue participation payments. Our capital management approach is balanced, focusing on strategic investments, returning capital to shareholders, and maintaining financial health.
Q: Looking at fixed income, how are you thinking about your various strategies and sub-asset classes given the higher for longer environment? A: (George Aylward - President, CEO, Director) We offer a broad spectrum of fixed income strategies that can cater to different market conditions. Our focus is on diversifying income streams for investors and leveraging our strong capabilities in areas like high-yield and emerging market debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
