Virtus Investment Partners (VRTS) Q4 2024 earnings summary

Executive summary

• Delivered strong financial and operating performance in Q4 2024, with positive net flows in ETFs, global funds, and retail separate accounts, despite overall net outflows due to a $3.3B partial institutional redemption.

• Adjusted operating margin reached 35.1%, the highest in over two years, and adjusted EPS hit $7.50, up 8% sequentially and up at least 20% year-over-year.

• Continued to introduce new products, especially in ETFs and global funds, and ended the year with a net cash position and significant financial flexibility.

• Capital returned to shareholders through share repurchases, increased dividends, and term loan repayments.

Financial highlights

• Assets under management (AUM) ended at $175.0B, down 5% sequentially but up 2% year-over-year, impacted by net outflows and market performance.

• Q4 sales were $6.4B; total net outflows were $4.8B, mainly due to the $3.3B partial institutional redemption.

• Adjusted revenues for Q4 2024 were $212.0M, up from $205.1M in Q3; adjusted operating income was $74.5M, up 6% sequentially.

• Adjusted EBITDA for Q4 2024 was $88M; gross debt to EBITDA improved to 0.7x.

• Adjusted EPS was $7.50, up 8% from Q3 and up at least 20% year-over-year.

Outlook and guidance

• Expect continued positive flows in fixed income and ETFs, with January ETF AUM already up to $3.4B.

• Average fee rate expected to remain in the 41-42 basis point range, with $3-5M in annual performance fees.

• Employment expenses anticipated to be 49-51% of revenues, with Q1 including seasonal increases.

• Other operating expenses projected at $30-32M per quarter.

• Non-U.S. clients represented 18% of AUM, with organic growth for the third consecutive year.