Virtus Investment Partners (VRTS) investor relations material

Executive summary

• Assets under management (AUM) increased to $152.2 billion, up 2% sequentially, driven by positive market performance and institutional inflows, despite continued net outflows in quality-oriented equities.

• Total sales rose 5% to $6.1 billion, with notable growth in institutional, wealth management, and ETF channels; alternatives saw a $1.0 billion boost from a large institutional inflow.

• Net outflows improved to $5.6 billion from $8.4 billion, with positive net flows in alternatives, fixed income, and multi-asset strategies.

• Diluted EPS was $6.68, with adjusted EPS at $5.54, reflecting strong investment gains and lower operating expenses.

• Continued expansion of product offerings, including new actively managed ETFs, and ongoing return of capital to shareholders while reducing debt.

Financial highlights

• Adjusted operating income was $47.9 million, up from $43.8 million, with an adjusted operating margin of 26.1% (28.2% excluding a $3.8 million discrete non-cash expense).

• Adjusted EPS was $5.54, or $5.97 excluding the discrete item, up from $5.38 in the prior quarter.

• Investment management fees, as adjusted, increased 1% due to a higher average fee rate of 43.1 bps, despite a 3% decline in average AUM.

• Employment expenses, as adjusted, declined to $102.1 million, but included a $3.8 million non-cash stock-based award expense.

• Net income attributable to shareholders was $45.3 million (GAAP) and $37.6 million (adjusted), with an effective tax rate of 13% (adjusted).

Outlook and guidance

• U.S. retail fund sales and net flows in July are tracking more favorably than Q2, with ETF net flows continuing at a similar pace.

• Institutional sales pipeline is the strongest in a year, diversified across managers and strategies.

• Expectation to issue a new CLO later in the year, typically sized at $300–$400 million.

• Effective tax rate expected in the 13–14% range for upcoming quarters.

• Management cautioned on ongoing outflows in quality-oriented equities and competitive industry dynamics.