2024
ANNUAL REPORT
2024
2023
Change
Revenues
$906.9
$845.3
7%
Revenues, as Adjusted
$820.4
$758.3
8%
Operating Expenses
$724.5
$693.8
4%
Operating Expenses, as Adjusted
$553.1
$518.5
7%
Operating Income
$182.5
$151.5
20%
Operating Income, as Adjusted
$267.3
$239.8
11%
Net Income attributable to Virtus Investment Partners, Inc. $121.7
$130.6
(7%)
Net Income attributable to Virtus Investment Partners, Inc.,
as Adjusted
$189.8
$161.8
17%
Operating Margin
20%
18%
Operating Margin, as Adjusted
33%
32%
Earnings per Share – Diluted
$16.89
$17.71
(5%)
Earnings per Share – Diluted, as Adjusted
$26.33
$21.93
20%
Weighted Average Shares Outstanding –
7,210
7,375
(2%)
Diluted (in thousands)
Ending Assets Under Management
$175,001
$172,259
2%
Per Share Data
Assets Under Management
(in millions)
• U.S. Retail Funds
$46,950
26.8%
• Global Funds
5,208
3.0%
• Exchange-Traded Funds
3,051
1.7%
• Variable Insurance Funds
864
0.5%
• Closed-End Funds
10,225
5.8%
• Retail Separate Accounts
49,536
28.3%
• Institutional Accounts
56,084
32.1%
• Structured Products
3,083
1.8%
TOTAL
$175,001
100%
• Equity
$100,792
57.6%
• Fixed Income
37,696
21.5%
• Multi-Asset2
21,174
12.1%
• Alternatives3
15,339
8.8%
TOTAL
$175,001
100%
(Dollars in millions,
except per share data)
1 Certain supplemental performance measures are provided in addition to, but not as a substitute for, performance measures determined in accordance with GAAP. These supplemental measures
may not be comparable to non-GAAP performance measures of other companies. “Operating Income, as Adjusted,” “Net Income attributable to Virtus Investment Partners, Inc., as Adjusted,”
“Operating Margin, as Adjusted,” and “Earnings per Share - Diluted, as Adjusted” are supplemental non-GAAP measures that net the distribution and administration expenses against the related
revenue and remove certain non-cash and other identified amounts. For our definition of these terms, as well as a reconciliation to GAAP measures, see “Non-GAAP Information and Reconciliations”
in the Supplemental Financial Information, included as an attachment to this annual report after the Form 10-K.
2 Consists of multi-asset offerings not included in equity, fixed income, and alternatives.
3 Consists of managed futures, event-driven, real estate securities, infrastructure, long/short, and other strategies.
This report may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which, by their nature, are subject to significant risks and uncertainties.
Virtus Investment Partners, Inc. intends for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. For a
further discussion, see “Special Note About Forward-Looking Statements” of the attached Form 10-K.
By Product
(12/31/2024)
By Asset Class
(12/31/2024)
Summary of Operations1
Message to Shareholders
Product Quality and Diversification
Thoughtfully expanding offerings allows us to maintain diversified investment
strategies and product structures and increase our competitiveness in key
market segments. We completed product launches in focus areas with the
introduction of: nine retail separate account strategies from seven different
managers; four global funds for non-U.S. investors; and three exchange traded
funds (“ETFs”), including two less-correlated products that further leverage the
capabilities of our managers. The success of this approach was demonstrated
during 2024 as sales of retail separate accounts, ETFs, and global funds
increased from the prior year.
Retail separate account sales increased by 29% to $8.6 billion with positive
net flows that increased by 135% to $1.7 billion;
ETF sales increased by 243% to $1.5 billion and assets under management
(“AUM”) increased by 97% to $3 billion as of December 31, 2024, the
largest percentage increase in AUM for any product category for the year;
and
Global funds sales and net flows both increased by 32%, leading to total
global funds AUM of $5.2 billion as of December 31, 2024.
Our investment managers maintained strong relative investment performance
across products and strategies, with 84% of retail separate account assets and
52% of institutional assets outperformed their respective benchmarks on a five-
year basis and 72% of rated U.S. retail fund assets received a 5- or 4-star Overall
MorningstarTM Rating at December 31, 2024.1
To Our Fellow
Shareholders:
We continued to execute
on our long-term business
plan during 2024, resulting
in an improvement in
financial and operating
outcomes from the prior
year and considerable
progress on foundational
strategic activities, but with
challenging sales and net
flows that reflected industry
trends.
The year brought a complex
market environment
impacted by the challenges
of inflation, fluctuating
interest rates, and
geopolitical tensions which
contributed to volatility.
Momentum investing
dominated U.S. equity
markets more than any
other factor in 2024 as
investors concentrated
on U.S. large-cap equity
strategies, led by mega
cap technology stocks. For
fixed income, as interest
rates began to decline,
there was an increase in
investor appetite for credit
risk, which benefited the
Company with positive
flows in fixed income
strategies.
We met the market
challenges by remaining
focused on strategic growth
through product quality and
diversification, distribution
growth and expansion,
and enhancing operational
efficiencies.
Total Shareholder Return2
January 1, 2009 – December 31, 2024
VRTS
S&P 500
Peer Group Average
12/31/08
12/31/09
12/31/10
12/31/11
12/31/12
12/31/14
12/31/13
12/31/15
12/31/16
12/31/17
12/31/18
12/31/19
12/31/21
12/31/20
12/31/22
12/31/23
400%
-100%
2400%
1900%
1400%
900%
2900%
3400%
12/31/24
519%
761%
2,554%
1 Additional information regarding mutual fund investment performance is included as an attachment to this annual report after the
Form 10-K.
2 The companies that comprise our peer group for TSR comparison are listed in an attachment to this annual report after the Form 10-K.
3 The referenced non-GAAP measures are described and reconciled to GAAP reported amounts in an attachment to this annual report after
the Form 10-K.
Distribution Growth and Expansion
We employ a comprehensive, dedicated multi-market and
multi-channel distribution approach to provide one-point
access to distinctive investment capabilities. Total sales of
$26.8 billion increased by 3% from $25.9 billion in 2023 and
included meaningful increases in retail separate accounts,
ETFs, and global funds.
We had positive net flows for retail separate accounts
in seven of the last eight quarters and our wealth
management business had positive net flows for each
quarter in the past six years; and
We continued to expand non-U.S. opportunities. Global
distribution efforts resulted in 18% of year-end AUM held
by international clients, compared with 10% three years
prior. Sales to non-U.S. clients had a 1.1% net flow rate
compared with net outflows for U.S.-based clients.
Enhancing Operational Efficiencies
Our operating model provides shared support services that
enhance the effectiveness and leveragability of the business.
We have also maintained a disciplined focus on expense
management that led to flat other operating expenses over
the past three years, even with investments in the business
and the addition of new investment managers.
The common operating platform deployment continued
with the build-out of additional performance and risk
analytics and enhanced client reporting capabilities;
The wholesaler coverage model was realigned to increase
productivity and expand support for the RIA channel; and
The structure of international operations was transitioned
to support distribution activities in the U.K. and E.U.
countries.
Financial and Operating Results
The Company reported strong financial results in net
income, as adjusted, and diluted earnings per share (“EPS”)
compared to the prior year. The positive outcomes reflected
market appreciation and the management of expenses,
resulting in margin expansion of 100 basis points.
We ended the year with AUM at $175.0 billion, a 2%
increase over AUM of $172.3 billion at December 31,
2023, as positive market performance across asset
classes offset total net outflows;
Timothy A. Holt
Chairman
George R. Aylward
President and Chief Executive Officer
Our net income attributable to Virtus Investment Partners,
Inc. was $121.7 million compared with $130.6 million in
2023, with related operating margins of 20.1% and 17.9%,
respectively. Net income attributable to Virtus Investment
Partners, Inc., as adjusted, improved by 17% to $189.8
million from $161.8 million and the related operating
margin improved to 32.6% from 31.6%;3 and
EPS, diluted, of $16.89 compared with $17.71 in 2023
and EPS, diluted, as adjusted, of $26.33 increased 20%
from $21.93 in 2023.
Our balanced and prudent approach to capital management
allowed us to invest in growth initiatives, return meaningful
capital to shareholders, and maintain appropriate levels of
working capital and leverage. We increased the quarterly
cash dividend by 18% to $2.25 during the year, the seventh
consecutive annual increase of the dividend, and repurchased
$45.0 million of common shares. As a result, we returned
$117.4 million to shareholders.
The unwavering dedication of everyone in our organization
helped us execute across each primary strategic objective
on behalf of our clients and shareholders. We delivered on
key initiatives ranging from targeted product introductions
for diversification into higher demand areas, repositioning of
distribution resources and strategy to expand opportunities
for our clients, and rationalization of functions and entities to
facilitate future profitable growth.
As we move into 2025, we are optimistic about the
opportunities that lie ahead and remain steadfast in our
mission to be a distinctive and trusted provider of asset
management solutions for individual and institutional
investors. We thank you for your investment in our Company
as we stay focused on strategic priorities, the long-term
growth of the business, and delivering value to shareholders.
Sincerely,
“We have the strategy, resources – and
an unwavering commitment to our
clients – to further grow our business.”
2024 FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
È
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
‘
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 1-10994
VIRTUS INVESTMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)
Delaware
26-3962811
State or other jurisdiction of
incorporation or organization
(I.R.S. Employer
Identification No.)
One Financial Plaza, Hartford, CT 06103
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
(800) 248-7971
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $.01 par value
VRTS
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
È Yes
‘ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
‘ Yes
È No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
È Yes
‘ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
È Yes
‘ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer È
Accelerated filer
‘
Non-accelerated filer
‘
Smaller reporting company ‘
Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
‘ Yes
È No
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold (based on the closing share price as quoted on the New York Stock Exchange) as of the last business day of
the registrant’s most recently completed second fiscal quarter was approximately $1.50 billion. For purposes of this calculation, shares of common
stock held or controlled by executive officers and directors of the registrant have been treated as shares held by affiliates.
There were 6,967,534 shares of the registrant’s common stock outstanding on February 7, 2025.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement that will be filed with the SEC in connection with the 2025 Annual Meeting of Shareholders are
incorporated by reference into Part III of this Form 10-K.
Virtus Investment Partners, Inc.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2024
Page
PART I
Special Note About Forward-Looking Statements
1
Item 1.
Business
2
Item 1A.
Risk Factors
10
Item 1B.
Unresolved Staff Comments
16
Item 1C.
Cybersecurity
16
Item 2.
Properties
17
Item 3.
Legal Proceedings
17
Item 4.
Mine Safety Disclosures
17
PART II
Item 5.
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
18
Item 6.
Reserved
20
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
20
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
33
Item 8.
Financial Statements and Supplementary Data
33
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
34
Item 9A.
Controls and Procedures
34
Item 9B.
Other Information
34
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
35
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
35
Item 11.
Executive Compensation
35
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
35
Item 13.
Certain Relationships and Related Transactions, and Director Independence
36
Item 14.
Principal Accountant Fees and Services
36
PART IV
Item 15.
Exhibits and Financial Statement Schedules
37
Item 16.
Form 10-K Summary
39
"We," "us," "our," the "Company," and "Virtus" as used in this Annual Report on Form 10-K refer to Virtus Investment
Partners, Inc., a Delaware corporation, and its subsidiaries.
PART I
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements that are, or may be considered to be, forward-looking
statements within the meaning of federal securities laws, including Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"); and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and the
Private Securities Litigation Reform Act of 1995, as amended. All statements that are not historical facts, including statements
about our beliefs or expectations, are "forward-looking statements." These statements may be identified by such forward-
looking terminology as "expect," "estimate," "intent," "plan," "intend," "believe," "anticipate," "may," "will," "should,"
"could," "continue," "project," "opportunity," "predict," "would," "potential," "future," "forecast," "guarantee," "assume,"
"likely," "target" or similar statements or variations of such terms.
Our forward-looking statements are based on a series of expectations, assumptions and projections about the
Company and the markets in which we operate, are not guarantees of future results or performance, and involve substantial
risks and uncertainty, including assumptions and projections concerning our assets under management, net asset inflows and
outflows, operating cash flows, business plans and ability to borrow, for all future periods. All forward-looking statements
contained in this Annual Report on Form 10-K are as of the date of this Annual Report on Form 10-K only.
We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual
results may differ materially. We do not undertake or plan to update or revise any such forward-looking statements to reflect
actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this
Annual Report on Form 10-K, even if such results, changes or circumstances make it clear that any forward-looking
information will not be realized. If there are any future public statements or disclosures by us that modify or impact any of
the forward-looking statements contained in or accompanying this Annual Report on Form 10-K, such statements or
disclosures will be deemed to modify or supersede such statements in this Annual Report on Form 10-K.
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 this Annual Report on Form 10-K, resulting from: (i) 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)
impediments from certain corporate governance provisions; (xviii) losses or costs not covered by insurance; (xix) 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 in this Annual Report on Form 10-K and our other periodic
reports filed with the SEC could materially and adversely affect our operations, financial results, cash flows, prospects and
liquidity.
Certain other factors that may impact our continuing operations, prospects, financial results and liquidity, or that
may cause actual results to differ from such forward-looking statements, are discussed or included in the Company's periodic
reports filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to
carefully consider all such factors.
1
Item 1.
Business.
Organization
Virtus Investment Partners, Inc. (the "Company"), a Delaware corporation, commenced operations on November 1,
1995 and became an independent publicly traded company on December 31, 2008.
Our Business
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. Through our multi-manager model, we provide our
investment managers with distribution, business and operational support.
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 strategies are offered
to a variety of institutional clients through institutional separate and commingled accounts, including subadvisory services to
other investment advisers. Our retail investment strategies are provided to individual investors through products consisting
of: mutual funds registered pursuant to the Investment Company Act of 1940, as amended that include U.S. retail funds,
exchange-traded funds ("ETFs"); Undertaking for Collective Investment in Transferable Securities and Qualifying Investor
Funds ("global funds" and collectively with U.S. retail funds and ETFs the "open-end funds"); closed-end funds (collectively
with open-end funds, the "funds"); retail separate accounts sold through intermediaries and wealth advisory services to high-
net-worth clients through our wealth management business.
Our Investment Managers
We provide investment management services through our investment managers who are registered as investment
advisers under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). The investment managers
are responsible for portfolio management activities for our retail and institutional products operating under advisory,
subadvisory or collateral management agreements. We also use the investment management services of select unaffiliated
managers to sub-advise certain of our open- and closed-end funds. We monitor our managers' services by assessing their
performance, style and consistency and the discipline with which they apply their investment process.
2
Investment Manager
Location
Investment Style
Assets
(in billions)
AlphaSimplex
Boston, MA
Systematic Alternatives
$
6.1
Ceredex Value Advisors
Orlando, FL
Value Equity
$
5.2
Duff & Phelps Investment
Management
Chicago, IL
Listed Real Assets
$
12.3
Kayne Anderson Rudnick Investment
Management
Los Angeles, CA
Quality-Focused Equity
$
67.9
Newfleet Asset Management
Hartford, CT
Multi-Sector Fixed Income
$
15.3
NFJ Investment Group
Dallas, TX
Global Value Equity
$
5.8
Seix Investment Advisors
Park Ridge, NJ
Specialty Fixed Income
$
12.6
Silvant Capital Management
Atlanta, GA
Growth Equity
$
2.4
Stone Harbor Investment Partners
New York, NY
Emerging Markets Debt
$
5.4
Sustainable Growth Advisers
Stamford, CT
Global Growth Equity
$
24.9
Virtus Multi-Asset
Hartford, CT
Global Multi-Asset
$
0.1
Virtus Systematic
San Diego, CA
Global Equity
$
0.5
Westchester Capital Management
Valhalla, NY
Event-Driven Alternatives
$
2.7
Zevenbergen Capital Investments (1)
Seattle, WA
Disruptive Growth Equity
$
2.1
(1) Affiliated through ownership of a minority interest.
Summary information regarding our select unaffiliated subadvisers, their respective investment styles and assets
under management as of December 31, 2024 was as follows:
Unaffiliated Subadviser
Investment Style
Assets
(in billions)
Voya Investment Management
Income & Growth and Convertible
$
9.4
Other
Various
$
2.3
Our investment managers, their respective investment styles and assets under management as of December 31,
2024 were as follows:
3
Assets Under Management by Product as of December 31, 2024
Products
(in billions)
Open-end funds (1)
$
56.1
Closed-end funds
10.2
Retail separate accounts (2)
49.5
Institutional accounts (3)
59.2
Total Assets Under Management
$
175.0
(1) Represents assets under management of U.S. retail funds, global funds and exchange traded funds.
(2) Includes investment models provided to managed account sponsors.
(3) Represents assets under management of institutional separate and commingled accounts including structured
products.
Open-End Funds
Our U.S. retail funds are offered in a variety of asset classes, market capitalizations (large, mid and small), styles
(growth, core and value) and investment approaches (fundamental and quantitative). Our ETFs are offered in a range of
actively managed and index-based investment capabilities across multiple asset classes. Our global funds are offered in select
investment strategies to non-U.S. investors. Summary information about our open-end funds by asset class as of
December 31, 2024 was as follows:
Total Assets
(in millions)
U.S. Retail Funds
ETFs
Global Funds
Management Fee
Range % (1)
Equity
Domestic equity
$
19,692
$
161
$
607
2.50 - 0.29
International equity
2,558
12
4
2.50 - 0.49
Specialty equity
2,875
35
26
1.80 - 0.68
Global equity
363
—
1,858
1.85 - 0.55
Fixed Income
Leveraged finance
2,683
301
46
1.70 - 0.38
Multi-sector
6,291
231
2,208
1.85 - 0.21
Hybrid
1,350
1,407
0.80 - 0.57
Emerging markets debt
260
12
383
1.60 - 0.55
Investment grade
624
16
0.50 - 0.17
Multi-Asset (2)
5,535
52
—
0.75 - 0.45
Alternatives (3)
5,583
824
76
1.65 - 0.45
Total Open-End Funds
$
47,814
$
3,051
$
5,208
(1) Represents management fees earned as a percentage of average daily net assets. The percentages represent the
range of management fees paid by the funds, from the highest to the lowest and includes the impact of breakpoints
at which the fees for certain funds decrease as assets in such funds increase. Subadvisory fees paid on funds
managed by unaffiliated subadvisers are not reflected.
(2) Consists of multi-asset offerings not included in equity, fixed income and alternatives.
(3) Consists of managed futures, event-driven, real estate securities, infrastructure, long/short and other strategies.
Our Investment Products
Our assets under management are in open-end funds, closed-end funds, retail separate accounts and institutional
accounts. Our earnings are primarily from asset-based fees charged for services relating to these various products, primarily
investment management, but certain products include fund administration, distribution and shareholder services.
4
Closed-End Funds
Our closed-end funds are offered in a variety of asset classes, each of which is traded on the New York Stock
Exchange. Summary information about our closed-end funds as of December 31, 2024 was as follows:
Asset Class
Total Assets
(in millions)
Management Fee
Range % (1)
Multi-Asset (2)
$
7,309
1.50 - 0.50
Fixed Income
1,375
1.00 - 0.50
Equity
911
1.25
Alternatives (3)
630
1.00
Total Closed-End Funds
$
10,225
(1)
Represents management fees earned as a percentage of average daily net assets. The percentages represent the
range of management fees paid by the funds, from the highest to the lowest and includes the impact of breakpoints
at which the fees for certain funds decrease as assets in such funds increase. Subadvisory fees paid on funds
managed by unaffiliated subadvisers are not reflected.
(2)
Consists of multi-asset offerings not included in equity, fixed income and alternatives.
(3)
Consists of managed futures, event-driven, real estate securities, infrastructure, long/short and other strategies.
Retail Separate Accounts
Intermediary-Sold Managed Accounts
Intermediary-sold managed accounts are individual investment accounts that are contracted through intermediaries
as part of investment programs offered to retail investors.
Wealth Management Accounts
Wealth management accounts are investment accounts offered by certain of our investment managers directly to
individual investors and include wealth advisory services and may utilize third-party investment services.
The following table summarizes our retail separate accounts by asset class as of December 31, 2024:
Total Assets
(in millions)
Intermediary-Sold
Managed Accounts
Wealth Management
Accounts
Equity
Domestic equity
$
38,558
$
515
International equity
77
—
Global equity
443
2
Specialty equity
—
38
Fixed Income
Leveraged finance
1,394
—
Investment grade
200
420
Emerging markets debt
16
—
Multi-Asset (1)
130
7,742
Alternatives (2)
1
—
Total Retail Separate Accounts
$
40,819
$
8,717
(1)
Consists of multi-asset offerings not included in equity, fixed income and alternatives.
(2)
Consists of managed futures, event-drive, real estate securities, infrastructure, long/short and other strategies.
5
Institutional Accounts
Our institutional clients include corporations, multi-employer retirement funds, public employee retirement systems,
foundations and endowments. We also provide subadvisory services to unaffiliated mutual funds. In addition, we act as
collateral manager for collateralized loan obligations ("CLOs").
The following table summarizes our institutional accounts by asset class as of December 31, 2024:
Total Assets
(in millions)
Separate
Accounts
Commingled
Accounts
Equity
Domestic equity
$
21,336
$
446
International equity
1,025
283
Global equity
8,720
247
Fixed Income
Leveraged finance
1,105
3,083
Multi-sector
1,165
—
Emerging markets debt
4,498
—
Investment grade
8,628
—
Alternatives (1)
7,171
1,054
Multi-Asset (2)
406
—
Total Institutional Accounts
$
54,054
$
5,113
(1)
Consists of managed futures, event-driven, real estate securities, infrastructure, long/short and other strategies.
(2)
Consists of multi-asset offerings not included in equity, fixed income and alternatives.
Other Fee Earning Assets
Other fee earning assets include assets for which we provide services for an asset-based fee but do not serve as the
investment adviser. Other fee earning assets are not included in our assets under management. At December 31, 2024, we
had $2.3 billion of other fee earning assets.
Our Investment Management, Administration and Shareholder Services
Our investment management, administration and shareholder service fees earned in each of the last three years
were as follows:
Years Ended December 31,
(in thousands)
2024
2023
2022
Open-end funds
$
317,990
$
305,238
$
335,585
Closed-end funds
59,184
58,136
63,841
Retail separate accounts
209,467
171,357
171,509
Institutional accounts
187,189
176,744
157,404
Total investment management fees
773,830
711,475
728,339
Administration fees
53,257
52,858
61,344
Shareholder service fees
21,037
20,999
24,518
Total
$
848,124
$
785,332
$
814,201
6
Investment Management Fees
We provide investment management services through our investment managers (each an "Adviser") pursuant to
investment management agreements. For our funds, we earn fees based on each fund's average daily or weekly net assets
with certain fee schedules providing for rate declines or "breakpoints" as asset levels increase to certain thresholds. For funds
managed by subadvisers, the day-to-day investment management of the portfolio is performed by the subadviser, which
receives a fee based on a percentage of the management fee. Each fund bears all expenses associated with its operations. In
some cases, to the extent total fund expenses exceed a specified percentage of a fund's average net assets, the Adviser has
agreed to reimburse the fund's expenses in excess of that level.
For intermediary sold retail separate accounts and institutional accounts, investment management fees are
negotiated and based primarily on portfolio size and complexity, individual client requests and investment strategy capacity,
as appropriate. In certain instances, institutional fees may include performance-related fees, generally earned if the returns
on the portfolios exceed agreed upon periodic or cumulative return targets, primarily benchmark indices. Fees for CLOs are
generally calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral
being managed. Fees for wealth management accounts are generally based on a standard fee schedule that provides for rate
declines or “breakpoints” as asset levels increase to certain thresholds.
Administration Fees
We provide various administrative services to our U.S. retail funds, ETFs and certain closed-end funds. We earn fees
based on each fund's average daily or weekly net assets. These services include: record keeping, preparing and filing
documents required to comply with securities laws, legal administration and compliance services, client service, supervision of
the activities of the funds' service providers, tax services and treasury services as well as providing office space, equipment
and personnel that may be necessary for managing and administering the business affairs of the funds.
Shareholder Service Fees
We provide shareholder services to our U.S. retail funds. We earn fees based on each fund's average daily net assets.
Shareholder services include maintaining shareholder accounts, processing shareholder transactions, preparing filings and
performing necessary reporting, among other things.
Our Distribution Services
Our products are offered through various retail and institutional distribution channels.
Retail
Our retail distribution resources in the U.S. consist of regional sales professionals, a national account relationship
group and specialized teams for retirement and ETFs. Our U.S. retail funds, ETFs and intermediary sold retail separate
accounts are distributed through financial intermediaries. We have broad distribution access in the U.S. retail market, with
distribution partners that include national and regional broker-dealers, independent broker-dealers and registered
investment advisers, banks and insurance companies. In many of these firms, we have a number of products that are on
preferred or "recommended" lists and on fee-based advisory programs.
Our wealth management business is marketed directly to individual clients by financial advisory teams at our
Advisers.
Institutional
Our institutional distribution resources include affiliate-specific institutional sales teams primarily focused on the U.S.
market, supported by shared consultant relations and U.S. and non-U.S. institutional sales distribution. Our institutional
products are marketed through relationships with consultants as well as directly to clients. We target key market segments,
including foundations and endowments, corporations, public and private pension plans, sovereign wealth funds and
subadvisory relationships.
Our Broker-Dealer Services
We operate a broker-dealer that is registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is a member of the Financial Industry Regulatory Authority ("FINRA"). Our broker-dealer serves as the principal
underwriter and distributor of our funds, provides market advisory services to sponsors of retail separate accounts, and is also
a program manager and distributor of a qualified tuition plan under Section 529 of the Internal Revenue Code. Our broker-
7
dealer is subject to, among others, the net capital rule of the Securities and Exchange Commission (the "SEC"), which is
designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers.
Our Competition
The financial services industry is a highly competitive global business. We face significant competition from a wide
variety of financial institutions, including other investment management companies. We also face competition from
proprietary products offered by our distribution partners such as banks, broker-dealers and financial planning firms.
Competition in our businesses is based on several factors, including, among others, product mix and offerings, investment
performance, fees charged, access to distribution channels, service quality and innovation. Our competitors, many of which
are larger than us, offer a wide range of financial and investment management services and products to the same retail,
institutional and high-net-worth investors and accounts that we are seeking to attract.
Our primary source of distribution for retail products is through intermediaries that include third-party financial
institutions such as: major wire-houses; national, regional and independent broker-dealers and financial advisors; banks and
financial planners; and registered investment advisers. Because we rely on these intermediaries, we do not control the
ultimate recommendations given to them by clients and they may recommend competing products. For more information on
our competitive risks, refer to "Risk Factors – Risks Related to Our Industry, Business and Operations."
Our Regulatory Matters
The financial services industry is highly regulated, regulations are complex, and failure to comply with related laws
and regulations can result in the revocation of registrations, the imposition of censures or fines and the suspension or
expulsion of a firm and/or its employees from the industry. In the U.S., we are subject to regulation by the SEC, the U.S.
Commodity Futures Trading Commission ("CFTC"), other federal and state agencies, as well as FINRA and the National Futures
Association ("NFA").
Each of our Advisers is registered as an investment adviser with the SEC under the Investment Advisers Act. The
Investment Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary duties,
compliance and disclosure obligations, and operational and recordkeeping requirements. Certain of our Advisers are also
members of the NFA and are regulated by the CFTC with respect to the management of funds and other products that utilize
futures, swaps, or other CFTC regulated instruments.
Our Advisers manage registered and unregistered funds in the U.S. and other jurisdictions and are subject to the
regulatory requirements in the jurisdiction where those funds are sponsored or offered. In the U.S., the open-end funds, ETFs
and closed-end funds we offer are subject to the Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Investment Company Act governs the operations of registered funds and imposes obligations on their advisers,
including investment restrictions and other governance, compliance, reporting and fiduciary obligations with respect to the
management of those funds.
Our Advisers operating outside of the U.S. are also subject to regulation by various regulatory authorities and
exchanges in the relevant jurisdiction such as directives and regulations in the European Union and other jurisdictions related
to funds, including the Undertakings for the Collective Investment of Transferable Securities ("UCITS") Directive and the
Alternative Investment Fund Managers Directive ("AIFMD"), with respect to depository functions, remuneration policies and
sanctions and other matters. Our global funds are registered with and subject to regulation by the Central Bank of Ireland.
Our broker-dealer, VP Distributors, LLC, is subject to SEC and FINRA rules and regulations, including extensive
regulatory requirements related to sales practices, registration of personnel, compliance and supervision and compensation
and disclosure. Sales and marketing activities of investment management services are also subject to regulation by non-U.S.
authorities in the jurisdictions in which investment management products and services are offered. The ability to transact
business in these jurisdictions and to conduct cross-border activities, is subject to the continuing availability of regulatory
authorizations and exemptions. We have distribution teams that operate in the United Kingdom and Singapore and are
subject to regulation by the Financial Conduct Authority and Monetary Authority of Singapore, respectively.
Virtus Fund Services, LLC is an SEC-registered transfer agent and is subject to the Exchange Act and the rules and
regulations promulgated thereunder. These laws and regulations grant the SEC broad administrative powers to address non-
compliance with regulatory requirements.
8
Human Capital
As of December 31, 2024, we employed 805 employees and operated offices throughout the U.S., and in the U.K. and
Singapore. We strive to attract and retain talented individuals by creating an environment of excellence and opportunity that
serves as a foundation for all employees to reach their potential and make meaningful contributions to the organization.
We offer competitive salaries and a comprehensive suite of benefits, including programs that support wellness,
financial security, and professional development. As part of our offerings, we:
▪
Regularly assess and benchmark our compensation and benefit practices and conduct internal and external pay
comparisons to assist us in ensuring that employees are compensated fairly, equitably and competitively.
▪
Offer career enhancement opportunities to maximize each employee's potential and develop leaders
throughout the organization.
▪
Provide an education assistance program with tuition reimbursement for employees who wish to continue their
education to secure increased responsibility and growth within the organization and in their careers.
▪
Offer benefits that promote financial and personal security including comprehensive medical, dental,
prescription, disability and life insurance coverages as well as an employee assistance program; company match
to employees' 401(k) contributions; and an employee stock purchase plan.
▪
Provide wellness programs that include health screenings and wellness earned premium rebates, as well as paid
time off for vacation, illness, bereavement, parental and family care leave, and volunteer activities.
We rely upon key personnel to manage our business, including senior executives, portfolio managers, securities
analysts, wealth advisers, sales personnel and other professionals. The retention of senior executives and key investment
personnel is material to the management of our business.
Our value as a company derives from the talents and diversity of all employees, and we are committed to creating
and maintaining an environment where every employee is treated with dignity and respect. The collective sum of employees'
backgrounds, unique skills, and life experiences creates an environment where they and the company can achieve the highest
levels of performance. Programs and practices - including those supporting workforce diversity, an inclusive culture,
employee involvement in community activities and corporate philanthropy - are designed to help us deliver on our
commitment to maintaining an organization that is diverse and inclusive for all employees.
▪
As an employer, we prohibit any form of discrimination and have no tolerance for harassment in any form or any
behavior that may contribute to a hostile, intimidating, unwelcoming, and/or inaccessible work environment.
▪
Collaborative efforts with organizations, institutions, and referral sources support us in identifying diverse talent
pools, increasing the diversity of backgrounds and experiences of potential candidates, and engaging with
employees across the organization to raise the awareness of and advance our inclusion efforts.
▪
Community engagement is ingrained into our culture. The Company and employees have supported a wide
We may be considered a fiduciary under the Employee Retirement Income Security Act, as amended (“ERISA”) and
related regulations with respect to certain assets that we manage for benefit plans subject to ERISA. ERISA, the regulations
promulgated thereunder, and the applicable provisions of the Internal Revenue Code impose certain duties on persons who
are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients, and impose monetary penalties for
violations of these provisions. The U.S. Department of Labor, which administers ERISA and regulates, among others,
investment advisers who service retirement plan clients, has been active in proposing and adopting additional regulations
applicable to the investment management industry, some of which are under legal challenge.
Due to the extensive laws and regulations to which we and our Advisers are subject, we devote substantial time,
expense, and effort to remain current on, and to address, legal and regulatory compliance matters. We have established
compliance programs to address regulatory compliance, and we have experienced legal and compliance professionals in place
to address these requirements. We also have established legal and regulatory service providers in each of the countries
where we conduct business. New regulations or interpretations of existing laws may result in enhanced disclosure
obligations. Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws
require us to spend more time, hire additional personnel, or purchase new technology to comply effectively. For more
information about our regulatory environment, refer to “Risk Factors – Legal and Regulatory Risks.”
Our officers, directors and employees may, from time to time, own securities that are also held by one or more of
our funds or strategies offered to clients.
9
range of philanthropic activities that help to enrich and sustain the communities in which we have a business
presence.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all
amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as proxy
statements, are available free of charge on our website located at www.virtus.com as soon as reasonably practicable after
they are filed with, or furnished to, the SEC. Reports, proxy and other information statements and other information
regarding issuers that file electronically with the SEC, including our filings, are also available to the public on the SEC's website
at http://www.sec.gov.
A copy of our Corporate Governance Guidelines, our Code of Conduct and the charters of our Audit Committee,
Compensation Committee, and Governance Committee are posted on our website at http://ir.virtus.com under "Corporate
Governance" and are available in print without charge to any person who requests copies by contacting Investor Relations by
email to: investor.relations@virtus.com or by mail to Virtus Investment Partners, Inc., c/o Investor Relations, One Financial
Plaza, Hartford, CT 06103. The Company may use its website as a distribution channel of material company information.
Financial and other important information regarding the Company is routinely posted on and accessible through the
Company’s website at http://ir.virtus.com. In addition, you may automatically receive email alerts and other information
about the Company when you enroll your email address by visiting http://ir.virtus.com. Information contained on the website
is not incorporated by reference or otherwise considered part of this document.
Item 1A.
Risk Factors.
This section describes some of the potential risks relating to our business. The risks described below are some of the
more important factors that could affect our business. You should carefully consider the risks described below, together with
all of the other information included in this Annual Report on Form 10-K, in evaluating the Company and our common stock. If
any of the risks described below actually occur, our business, revenues, profitability, results of operations, financial condition,
cash flows, reputation and stock price could be materially adversely affected.
RISKS RELATED TO OUR INDUSTRY, BUSINESS AND OPERATIONS
We earn substantially all of our revenues based on assets under management that fluctuate based on many factors,
and any reduction would negatively impact our revenues and profitability.
The majority of our revenues are generated from asset-based fees from investment management products and
services to individuals and institutions. Therefore, if assets under management decline, our fee revenues would decline,
reducing profitability as certain of our expenses are fixed or have contractual terms. Assets under management could decline
due to a variety of factors including, but not limited to, the following:
▪
General domestic and global economic, political and other conditions. Capital, equity and credit markets can experience
substantial volatility. Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty,
changes in laws, trade barriers and tariffs, commodity prices, currency exchange rates, national and international political
circumstances and conflicts, public health issues and other conditions may impact the capital, equity and credit markets.
Employment rates, economic weakness and budgetary challenges in parts of the world, uncertainty regarding
governmental regulations and international trade policies, conflicts such as in Ukraine and the Middle East, concern over
prospects in China and emerging markets, and growing debt for certain countries all indicate that economic and political
conditions remain unpredictable. Portfolios that we manage that are focused on certain geographic markets or industry
sectors may be particularly vulnerable to political, social and economic events in those markets and sectors. Negative,
uncertain or diminishing investor confidence in the markets and/or adverse market conditions as a result of the
conditions listed herein, among others, may decrease investor risk tolerance and negatively impact security prices. Such
impacts could prompt investors to reduce their rate of investment or to partially or fully withdraw from markets, which
could reduce our overall assets under management and have an adverse effect on our revenues, earnings and growth
prospects. In the event of extreme circumstances, including economic, political or business or public health crises, such
as a widespread systemic failure in the global financial system, failures of firms that have significant obligations as
counterparties, we may suffer significant declines in our assets under management and severe liquidity or valuation
issues.
▪
Real or perceived negative absolute or relative performance. Sales and redemptions of our investment strategies can be
10
affected by investment performance relative to established benchmarks or other competing investment strategies.
Negative absolute performance as a result of price declines in securities may also negatively impact our sales and
redemptions and the value of our assets under management. Our investment management strategies are rated, ranked
or assessed by independent third-parties, distribution partners and industry periodicals and services. Third party financial
intermediaries, advisers or consultants may remove our investment products from recommended lists due to poor
performance or for other reasons. These assessments often influence the investment decisions of clients and may lead to
increased withdrawals of assets by existing clients and the inability to attract additional investments from new and
existing clients.
We may engage in strategic transactions that could pose financial or business risks.
We have executed several inorganic transactions over the past years and we regularly evaluate potential
transactions, including acquisitions, consolidations, joint ventures, strategic partnerships, or similar transactions, some of
which could be significant. Our past acquisitions and strategic transactions have led to a significant increase in our assets
under management and an expansion of our product and service offerings. Any transaction may also involve a number of
risks, including underperforming relative to expectations, the loss of customers or personnel, additional demands on our staff,
unanticipated problems regarding integration of operating facilities, technologies and new employees, and the existence of
liabilities or contingencies not disclosed to, or otherwise unknown by, us prior to closing a transaction. Additionally, we
cannot provide assurance that we will continue to be successful in closing on transactions or that we will achieve the
anticipated benefits from a transaction, including such things as revenue, tax benefits or cost synergies.
Our investment management agreements are subject to renegotiation or termination on short notice, which could
negatively impact our business.
Our clients include our sponsored fund investors, represented by boards of trustees or directors (the "fund boards"),
managed account program sponsors, institutional clients, and individual private clients. Our investment management
agreements with these clients may be terminated on short notice and without penalty. As a result, there would be little
impediment for these clients to terminate our agreements. Our clients may renegotiate their investment contracts, or reduce
the assets we manage for them, due to a number of reasons including, but not limited to: poor investment performance; loss
of key investment personnel; a change in the client's or third-party distributors' decision makers; and reputational, regulatory
or compliance issues. The fund boards may deem it to be in the best interests of a fund's shareholders to make decisions
adverse to us, such as reducing the compensation paid to us, requesting that we subsidize fund expenses over certain
thresholds, or imposing restrictions on our management of the fund. Under the Investment Company Act, investment
management agreements automatically terminate in the event of an assignment, which may occur if, among other events, the
Company undergoes a change in control, such as any person acquiring 25% of the voting rights of our common stock. If an
assignment were to occur, we cannot be certain that the funds' boards and shareholders would approve a new investment
management agreement. In addition, investment management agreements for the separate accounts we manage may not be
assigned without the consent of the client. If an assignment occurs, we cannot be certain that the Company will be able to
obtain the necessary approvals or client consents. The withdrawal, renegotiation or termination of any investment
management agreement relating to a material portion of assets under management would have an adverse impact on our
results of operations and financial condition.
Our business could be harmed by any damage to our reputation and lead to a reduction in our revenues and
profitability.
Maintaining a positive reputation with existing and potential clients, the investment community and other
constituencies is critical to our success. Our reputation is vulnerable to many threats that can be difficult or impossible to
control, and costly or impossible to remediate even if they are without merit or satisfactorily addressed. Our reputation may
be impacted by many factors including, but not limited to: poor performance; litigation; conflicts of interests; regulatory
inquiries, investigations or findings; operational failures (including cyber breaches); intentional or unintentional
misrepresentation of our products or services by us or our third-party service providers; material weaknesses in our internal
controls; or employee misconduct or rumors. Any damage to our reputation could impede our ability to attract and retain
clients and key personnel, adversely impact relationships with clients, third-party distributors and other business partners,
and lead to a reduction in the amount of our assets under management, any of which could adversely affect our results of
operations and financial condition.
Our debt agreements contain covenants, required principal repayments and other provisions that could adversely
affect our financial condition or results of operations.
We incur indebtedness for a variety of business reasons, including in relation to financing acquisitions and
transactions. The indebtedness we incur can take many forms including, but not limited to, term loans or revolving lines of
11
credit that customarily contain covenants.
At December 31, 2024, we had $236.1 million of total debt outstanding under its credit agreement, excluding debt of
consolidated investment products ("CIP"), and had no borrowings outstanding under our $175.0 million revolving credit
facility. Under our credit agreement, we are required to use a portion of our cash flow to service interest and make required
annual principal payments, which may restrict our cash flow available for other purposes. The credit agreement also contains
covenants that may limit our ability to return capital to shareholders. We cannot provide assurances that at all times in the
future we will satisfy all such covenants or obtain any required waiver or amendment, in which event all indebtedness could
become immediately due. Any or all of the above factors could adversely affect our financial condition or results of
operations.
We may need to obtain additional capital that may not be available to us in sufficient amounts or on acceptable terms,
which could have an adverse impact on our business.
Our ability to meet our future cash needs is dependent upon our ability to generate or have short-term access to
cash. Although we have generated sufficient cash in the past, we may not do so in the future. We had unused capacity under
our revolving credit facility of $175.0 million as of December 31, 2024. Our ability to access capital markets efficiently
depends on a number of factors, including the state of credit and equity markets, interest rates and credit spreads. At
December 31, 2024, we had $236.1 million in debt outstanding, excluding the notes payable of our CIP for which risk of loss to
the Company is limited to our $111.1 million investment in such products. (See Note 19 of our consolidated financial
statements for additional information on the notes payable of the CIP). We may need to raise capital to fund new business
initiatives in the future, and financing may not be available to us in sufficient amounts, on acceptable terms, or at all. If we
are unable to access sufficient capital on acceptable terms our business could be adversely impacted.
Our business relies on the ability to attract and retain key employees, and the loss of such employees could negatively
affect our financial performance.
The success of our business is dependent to a large extent on our ability to attract and retain key employees, such as
senior executives, portfolio managers, securities analysts and sales personnel. There is significant competition in the job
market for these professionals and compensation levels in the industry are highly competitive. Our industry is also
characterized by the movement of investment professionals among different firms.
If we are unable to continue to attract and retain key employees, or if compensation costs required to attract and
retain key employees increase, our performance, including our competitive position, could be adversely affected.
Additionally, we utilize equity awards as part of our compensation plans and as a means for recruiting and retaining key
employees. Declines in our stock price would result in deterioration of the value of equity awards granted, thus lessening the
effectiveness of using stock-based awards to retain key employees.
In certain circumstances, the departure of key investment personnel could cause higher redemption rates in certain
strategies or the loss of certain client accounts. Any inability to retain key employees, attract qualified employees or replace
key employees in a timely manner could lead to a reduction in the amount of our assets under management, which would
have an adverse effect on our revenues and profitability. In addition, there could be additional costs to replace, retain or
attract new talent that could result in a decrease in our profitability and have an adverse impact on our results of operations
and financial condition.
We operate in a highly competitive industry that may require us to reduce our fees or increase amounts paid to
financial intermediaries, which could result in a reduction of our revenues and profitability.
We face significant competition from a wide variety of financial institutions, including other investment management
companies, as well as from proprietary products offered by our distribution partners such as banks, broker-dealers and
financial planning firms. Competition in our businesses is based on several factors, including investment performance, fees
charged, access to distribution channels and service to financial advisors and clients. Our competitors, many of which are
larger, often offer similar products, use the same distribution sources, offer less expensive products, maintain greater access
to key distribution channels, and have greater resources, geographic footprints and name recognition. Additionally, certain
products and asset classes that we do not currently offer, such as passive or index-based products, are popular with investors.
Existing clients may withdraw their assets in order to invest in these products, and we may be unable to attract additional
investments from existing and new clients, which would lead to a decline in our assets under management and market share.
Our profits are highly dependent on the fees we earn for our products and services. Competition could cause us to
reduce the fees that we charge. If our clients, including our fund boards, were to view our fees as being inappropriately high
12
relative to the market or the returns generated by our investment products, we may choose, or be required, to reduce our fee
levels, or we may experience significant redemptions in our assets under management, which could have an adverse impact
on our results of operations and financial condition.
We utilize unaffiliated firms to provide investment management services and any matters that adversely impact them
or any change in our relationships with them could adversely affect our revenues and profitability.
We utilize unaffiliated subadvisers as investment managers for certain of our retail funds. Because we have no
ownership interests in these firms, we do not control their business activities. Problems stemming from the business
activities of those firms may negatively impact or disrupt their operations or expose them to disciplinary action or
reputational harm. Furthermore, any such matters at these unaffiliated firms may have an adverse impact on our business or
reputation or expose us to regulatory scrutiny, including with respect to our oversight of such firms.
We periodically negotiate provisions and renewals of these relationships, and we cannot provide assurance that such
terms will remain acceptable to us or the unaffiliated firms. These relationships can also be terminated upon short notice
without penalty. In addition, the departure of key employees at unaffiliated subadvisers could cause higher redemption rates
for certain assets under management. An interruption or termination of unaffiliated firm relationships could affect our ability
to market our products and result in a reduction in assets under management, which would have an adverse impact on our
results of operations and financial condition.
We distribute our products through intermediaries and changes in key distribution relationships could reduce our
revenues, increase our costs and adversely affect our profitability.
Our primary source of distribution for retail products is through intermediaries that include third-party financial
institutions such as: major wire-houses; national, regional and independent broker-dealers and financial advisors; banks and
financial planners; and registered investment advisers. We are highly dependent on access to these distribution systems to
raise and maintain assets under management. These distributors are generally not contractually required to distribute our
products and typically offer their clients various investment products and services, including proprietary products and
services, in addition to, and in competition with, our products and services. While we compensate these intermediaries
pursuant to contractual agreements, we may not be able to retain access to these channels at all or at similar pricing.
Increasing competition for these distribution channels could cause our distribution costs to rise, which could have an adverse
effect on our business, revenues and profitability. To the extent that existing or future intermediaries prefer to do business
with our competitors, the sales of our products as well as our market share, revenues and profitability could decline.
We and our third-party service providers rely on numerous technology systems and any business interruption, security
breach, or system failure could negatively impact our business and profitability.
Our technology systems, and those of third-party service providers, are critical to our operations. The ability to
consistently and reliably obtain accurate securities pricing information, process client portfolio and fund shareholder
transactions, and provide reports and other services to clients is an essential part of our business. Any delays or inaccuracies
in obtaining pricing information, processing such transactions or reports, other breaches and errors, and any inadequacies in
other client service could result in reimbursement obligations or other liabilities or alienate clients and potentially give rise to
claims against us. Any failure or interruption of third-party systems, whether resulting from technology or infrastructure
breakdowns, defects or external causes such as fire, natural disaster, computer viruses, acts of terrorism or power
disruptions, or public health events could result in financial loss, negatively impact our reputation and negatively affect our
ability to do business. Although we and our third-party service providers have business continuity and disaster recovery plans
in place, we may nonetheless experience interruptions if a natural or man-made disaster, prolonged power outage, or other
business interruption event were to occur, which could have an adverse impact on our business and profitability.
In addition, our computer systems are regularly the target of viruses or other malicious codes, unauthorized access,
cyber-attacks or other computer-related penetrations. The sophistication of cyber threats continues to increase, including
through the use of "ransomware" and phishing attacks, and our controls and the preventative actions we take to reduce the
risk of cyber incidents and protect our information systems may be insufficient to detect or prevent unauthorized access,
cyber-attacks or other security breaches to our systems or those of third parties with whom we do business. Our third-party
service providers' systems may also be affected by, or fail, as a result of, catastrophic events, such as fires, floods, hurricanes
and tornadoes. A breach of our systems, or of those of third-party service providers, through cyber-attacks or failure to
manage and sufficiently secure our technology environment could result in interruptions or malfunctions in the operations of
our business, loss of valuable information, liability for stolen assets or information, remediation costs to repair damage
caused by a breach or to recover access to our systems, additional costs to mitigate against future incidents, and litigation
costs resulting from an incident. Any of these conditions could have an adverse impact on our business and profitability.
13
We and certain of our third-party service providers receive and store personal information as well as non-public
business information. Although we and our third-party service providers take precautions, we may still be vulnerable to
hacking or other unauthorized use. A breach of the systems or hardware could result in unauthorized access to our
proprietary business or client data or release of this type of data, which could subject us to legal liability or regulatory action
under data protection and privacy laws, which may result in fines or penalties, the termination of existing client contracts,
costly mitigation activities and harm to our reputation. The occurrence of any of these risks could have an adverse impact on
our business and profitability.
We have significant capital invested in marketable securities, which exposes us to earnings volatility as the value of
these investments fluctuate, as well as risk of capital loss.
We use capital to incubate new investment strategies, introduce new products or to enhance distribution access of
existing products. At December 31, 2024, we had $282.4 million of such investments, comprising $171.3 million of
marketable securities and $111.1 million of net investments in CLOs. These investments are in a variety of asset classes,
including alternatives, fixed income and equity strategies and first-loss tranches of CLO equity. Many of these investments
employ a long-term investment strategy with an optimal investment period spanning several years. Accordingly, during this
investment period, the capital held in these investments may not be available for other corporate purposes without
significantly diminishing our investment return. We cannot provide assurance that these investments will perform as
expected. Increases or decreases in the value of these investments could increase the volatility of our earnings, and an other-
than-temporary or permanent decline in the value of these investments could result in the loss of capital and have an adverse
impact on our results of operations and financial condition.
LEGAL AND REGULATORY RISKS
We are subject to an extensive and complex regulatory environment and changes in regulations or failure to comply
with them could adversely affect our revenues and profitability.
The investment management industry in which we operate is subject to extensive and frequently changing
regulation. We are subject to regulation by the SEC, other federal and state agencies, certain international regulators, as well
as FINRA and other self-regulatory organizations. Each of our investment management subsidiaries and unaffiliated
subadvisers is registered with the SEC under the Investment Advisers Act. There are various regulatory reform initiatives in
the U.S. and other jurisdictions and new regulations or interpretations of existing laws may result in enhanced disclosure
obligations which could negatively affect us or materially increase our regulatory burden. Increased regulations generally
increase our costs, and we could continue to experience higher costs if new laws require us to spend more time, hire
additional personnel, or purchase new technology to comply effectively.
Although we spend extensive time and resources to ensure compliance with all applicable laws and regulations, if we
fail to properly adhere to our policies or modify and update our compliance procedures in a timely manner in this changing
and highly complex regulatory environment, we may be subject to various legal proceedings, including civil litigation,
governmental investigations and enforcement actions that could result in fines, penalties, suspensions of individual
employees, or limitations on particular business activities, any of which could have an adverse impact on our revenues and
profitability.
We manage assets under agreements that have investment guidelines or other contractual requirements and failure to
comply could result in claims, losses, or regulatory sanctions, which could negatively impact our revenues and profitability.
The agreements under which we manage client assets often have established investment guidelines or other
contractual requirements with which we are required to comply in providing our investment management services. Although
we maintain various compliance procedures and other controls to prevent, detect and correct such errors, any failure or
allegation of a failure to comply with these guidelines or other requirement could result in client claims, reputational damage,
withdrawal of assets and potential regulatory sanctions, any of which could have an adverse impact on our revenues and
profitability.
We could be subject to civil litigation and government investigations or proceedings, which could adversely affect our
business.
Many aspects of our business involve substantial risks of liability, and there have been substantial incidences of
litigation and regulatory investigations in the financial services industry in recent years, including customer claims as well as
class action suits seeking substantial damages. From time to time, we and/or our sponsored funds may be named as
defendants or co-defendants in lawsuits or be involved in disputes that involve the threat of lawsuits seeking substantial
damages. We and/or our sponsored funds are also involved from time to time in governmental and self-regulatory
14
We have corporate governance provisions that may make an acquisition of us more difficult.
Certain provisions in our certificate of incorporation and bylaws and Delaware law could discourage, delay or prevent
a merger, acquisition or other change in control even if certain shareholders may consider a change of control to be
beneficial. These provisions could have the effect of making it more difficult for a third party to acquire, or discourage a third
party from attempting to acquire, control of the Company without negotiating with our board of directors. Such provisions
could also limit the price that certain investors might be willing to pay in the future for shares of our common stock, thereby
depressing the market price of our common stock. These provisions, among other things:
▪
Allow our board of directors to issue preferred stock and determine the powers, preferences and rights thereof without
shareholder approval;
▪
Prohibit the Company's ability to engage, under certain circumstances, in business combinations with any interested
shareholder for three years following the date that the shareholder became an interested shareholder;
▪
Require that special meetings of shareholders be called only by the chairperson of our board of directors; and
▪
Contain advance notice procedures that shareholders must comply with to nominate candidates to our board of directors
or present proposals.
GENERAL RISK FACTORS
Our insurance policies may not cover all losses and costs to which we may be exposed, which could adversely impact
our results of operations and financial condition.
We carry insurance in amounts and under terms that we believe are appropriate. Our insurance may not cover all
liabilities and losses to which we may be exposed. Certain insurance coverage may not be available or may be prohibitively
expensive in future periods. As our insurance policies come up for renewal, we may need to assume higher deductibles or pay
higher premiums, which could have an adverse impact on our results of operations and financial condition.
organization investigations and proceedings. (See Item 3. "Legal Proceedings" for further information.)
Any lawsuits, investigations or proceedings could result in reputational damage, loss of clients and assets,
settlements, awards, injunctions, fines, penalties, increased costs and expenses in resolving a claim, diversion of employee
resources and resultant financial losses. Predicting the outcome of such matters is inherently difficult, particularly where
claims are brought on behalf of various classes of claimants or by a large number of claimants, when claimants seek
substantial or unspecified damages, or when investigations or legal proceedings are at an early stage. A substantial judgment,
settlement, fine or penalty could be material to our operating results or cash flows for a particular period, depending on our
results for that period, or could cause us significant reputational harm, which could harm our business prospects.
We depend to a large extent on our business relationships and our reputation to attract and retain clients. As a
result, allegations of improper conduct by private litigants, including investors in our funds, or regulators, whether the
ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our
investment activities or the asset management industry in general, whether or not valid, may harm our reputation. We may
incur substantial legal expenses in defending against proceedings commenced by a client, regulatory authority or other
private litigant. Substantial legal liability levied on us could cause significant reputational harm and have an adverse impact
on our results of operations and financial condition.
We are subject to multiple tax jurisdictions and any changes in tax laws or unanticipated tax obligations could have an
adverse impact on our financial condition, results of operations and cash flow.
We are subject to income as well as non-income-based taxes and are subject to ongoing tax audits, in various
jurisdictions in which we operate. Tax authorities may disagree with certain positions we have taken that may result in the
assessment of additional taxes and/or penalties and interest. We regularly assess the appropriateness of our tax positions
and reporting. We cannot provide assurance that we will accurately predict the outcomes of audits and the actual outcomes
of these audits could be unfavorable. Any changes to tax laws could impact our estimated effective tax rate and tax expense
and could result in adjustments to our treatment of deferred taxes, including the realization or value thereof, which could
have an adverse effect on our business, financial condition and results of operations.
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK
15
Item 1B.
Unresolved Staff Comments.
None.
Item 1C.
Cybersecurity
Cybersecurity Strategy and Risk Management
We maintain a cybersecurity and information protection program that is supported by policies and procedures
designed to protect our systems and assets and the Company’s sensitive or confidential business information, including that
entrusted to us by our clients and business partners. Identifying and assessing cybersecurity risk is integrated into our overall
enterprise risk management (“ERM”) processes. Our ERM processes consider cybersecurity threat risks alongside other
company risks as part of our overall management activities. Cybersecurity risks related to our business are identified and
managed through a multi-faceted approach utilizing various systems, controls, and processes. Our cybersecurity systems,
controls and processes are overseen by our cybersecurity information technology team which is managed by our CISO.
We maintain a layered security architecture as a key part of our infrastructure design and utilize our employees and
managed third-party service providers to help ensure a secure environment and safeguard against a variety of threats
including malware, systems intrusions, unauthorized access, data loss and other security risks. We have implemented various
technology products and associated procedures, including, among others, the following:
▪
Firewall protection, operating system security patches, and multi-factor authentication;
▪
System security agent software, which includes encryption, malware protection, patches and virus definitions;
▪
Monitoring of computer systems for unauthorized use of or access to sensitive information;
▪
Web content filtering;
▪
Web and network vulnerability assessments and penetration testing;
▪
Monitoring emerging laws and regulations related to data protection and information security;
▪
Hosting in-house production systems in geographically dispersed locations that are backed up to alternate
locations; and
▪
Employee cybersecurity awareness training that includes regular phishing simulations.
As part of the above processes, we engage various professional services firms that use external third-party tools to
assess our internal cybersecurity programs and compliance with applicable practices and standards. Our use of these third
parties allows us to leverage specialized knowledge, insights and industry best practices.
The Company’s processes to identify material risks from cybersecurity threats associated with our use of third-party
service providers are included within our service provider management policy. The policy provides guidelines in performing
cyber risk assessments on our critical and material third party service providers during onboarding and periodically thereafter.
The assessment of cybersecurity incidents are integrated as part of the Company's business continuity and disaster
recovery program (“BCDR”). Our BCDR includes an incident response protocol that provides a framework for the assessment,
response, and recovery phases for any business disruption, including cybersecurity incidents. It also incorporates various
event, incident and response teams that comprise the Company's information security, risk management, compliance, legal
and other functions as needed in response to any cybersecurity incidents. Our incident response protocol also provides for
reporting mechanisms to senior management and our Board of Directors ("Board") in the event of a material cybersecurity
incident.
We have not had a cybersecurity incident that has materially affected, or was reasonably likely to, materially affect,
our business strategy, results of operations or financial condition. There are risks from cybersecurity threats that if they were
to occur could materially affect our business strategy, results of operations or financial condition which are further discussed
in Item 1A. “Risk Factors—Risks Related to our Industry, Business and Operations—We and our third-party service providers
We have goodwill and other intangible assets on our balance sheet that could become impaired, which could impact
our results of operations and financial condition.
As of December 31, 2024, the Company had $775.3 million in intangible assets and goodwill. We cannot be certain
that we will realize the value of such intangible assets. Our intangible assets may become impaired as a result of a variety of
factors which could adversely affect our financial condition and results of operations.
16
Item 2.
Properties.
We lease our principal offices, which are located at One Financial Plaza, Hartford, CT 06103. In addition, we lease
office space in California, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Jersey, New York, Texas, Singapore and
the U.K.
Item 3.
Legal Proceedings.
The information set forth in response to Item 103 of Regulation S-K under "Legal Proceedings" is incorporated by
reference from Part II, Item 8. "Financial Statements and Supplementary Data," Note 12 "Commitments and Contingencies" of
this Annual Report on Form 10-K.
Item 4.
Mine Safety Disclosures.
Not applicable.
rely on numerous technology systems and any business interruption, security breach, or system failure could negatively impact
our business and profitability” of this Annual Report on Form 10-K, which should be read in conjunction with the information
in this section.
Cybersecurity Governance
Our Board oversees our risk management processes, including our risks from cybersecurity threats. As part of its
ongoing responsibilities, the Board receives recurring reports from management on the Company’s cybersecurity risk
environment and regularly meets with management to review the risk landscape and discuss the steps taken by management
to monitor and mitigate cyber exposures. In addition, from time to time, our Chief Technology Officer and Chief Information
Security Officer (“CISO”) brief the Board on the cyber-threat landscape, our information security program and other related
information technology topics.
The Company maintains an Enterprise Risk Committee (“ERC”), comprising the Company executives who lead day-to-
day risk management, and whose efforts are supplemented by specific risk-related committees or teams. The ERC is a cross-
functional committee that focuses on identifying and managing operational risk throughout the organization, including
cybersecurity threats. The ERC has integrated cybersecurity into key elements of the Company’s ERM framework, including
our BCDR planning program and service provider management policy, and personnel from our information security, risk
management, compliance and legal groups are a part of the assessment and response team for cybersecurity incidents and
the evaluation of third-party cybersecurity risk.
17
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock is traded on the New York Stock Exchange under the trading symbol "VRTS." As of February 7,
2025, we had 6,967,534 shares of common stock outstanding that were held by approximately 38,000 holders of record.
In making decisions regarding our quarterly dividend, we consider general economic and business conditions, our
strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results,
working capital requirements and anticipated cash needs, contractual restrictions and obligations, legal, tax, regulatory and
other restrictions that may have implications on the payment of distributions by us to our common shareholders or by our
subsidiaries to us, and such other factors as we may deem relevant. We cannot provide any assurances that any distributions,
whether quarterly or otherwise, will continue to be paid in the future.
On February 26, 2025, the Company declared a quarterly cash dividend of $2.25 per common share to be paid on
May 14, 2025 to shareholders of record at the close of business on April 30, 2025.
Issuer Purchases of Equity Securities
An aggregate of 5,680,045 shares of our common stock have been authorized to be repurchased under a share
repurchase program, initially approved in 2010 by our Board of Directors. As of December 31, 2024, 403,312 shares remained
available for repurchase. Under the terms of the program, we may repurchase shares of our common stock from time to time
at our discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending
on price, prevailing market and business conditions. The program, which has no specified term, may be suspended or
terminated at any time.
During the year ended December 31, 2024, we repurchased a total of 201,233 common shares for $45.1 million. The
following table sets forth information regarding our share repurchases in each month during the quarter ended December 31,
2024:
Period
Total number of
shares purchased
Average price
paid per share (1)
Total number of
shares purchased as
part of publicly
announced plans or
programs
Maximum number of
shares that may yet be
purchased under the
plans or programs
October 1—31, 2024
—
$
—
—
455,488
November 1—30, 2024
27,525
$
239.20
27,525
427,963
December 1—31, 2024
24,651
$
239.92
24,651
403,312
Total
52,176
52,176
(1)
Average price paid per share is calculated on a settlement basis and excludes commissions and taxes.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the fourth quarter of fiscal 2024. Shares of our common
stock purchased by participants in our Employee Stock Purchase Plan were delivered to participant accounts via open market
purchases at fair value by the third-party administrator under the plan. We do not reserve shares for this plan or discount the
purchase price of the shares.
Stock Performance Graph
The following graphs compare the five-year and since inception cumulative total shareholder return ("TSR") of the
Company with the performance of the Standard & Poor’s 500 ("S&P 500") Stock Index and a peer group index that consists of
several peer companies (referred to as the "Financial Peer Group") as defined below. The graphs assume an equal investment
in our common stock, the S&P 500 and the Financial Peer Group on December 31, 2019 (five-year TSR) and January 2, 2009
(since inception TSR), respectively, reflect reinvested dividends, and are weighted on a market capitalization basis. Each
reported data point below represents the last trading day of each calendar year. The comparisons in the graphs below are
based upon historical data and are not indicative of, nor intended to forecast, future performance.
18
Five-year TSR Among Virtus, S&P 500 Index and Financial Peer Group
Since Inception TSR Among Virtus, S&P 500 Index and Financial Peer Group
Financial Peer Group: Affiliated Managers Group, Inc., AllianceBernstein Holding L.P., Artisan Partners Asset Management
Inc.*, Acadian Asset Management Inc. (formerly BrightSphere Investment Group Inc.)*, Cohen & Steers, Inc., Federated
Hermes, Inc., Franklin Resources, Inc., Invesco Ltd., Janus Henderson Group Plc*, T. Rowe Price Group, Inc. and Victory Capital
Holdings, Inc.*
*Companies excluded from the since inception TSR table due to lack of comparative performance periods.
19
Item 6.
Reserved
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Our Business
We provide investment management and related services to institutions and individuals. We use a multi-manager,
multi-style approach, offering investment strategies from 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 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.
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
to a variety of institutional clients through institutional separate accounts and commingled accounts, including subadvisory
services to other investment advisers and Company sponsored structured products. Our retail products include open-end
funds, closed-end funds and retail separate accounts.
Our institutional distribution resources include affiliate-specific sales teams primarily focused on the U.S. market,
supported by shared consultant relations and U.S. and non-U.S. institutional sales distribution. Our institutional products are
marketed through relationships with consultants as well as directly to clients. We target key market segments, including
foundations and endowments, corporations, public and private pension plans, sovereign wealth funds and subadvisory
relationships.
Our retail distribution resources in the U.S. consist of regional sales professionals, a national account relationship
group and specialized teams for retirement and ETFs. Our U.S. retail funds and retail separate accounts are distributed
through financial intermediaries. We have broad distribution access in the U.S. retail market, with distribution partners that
include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and
insurance companies. In many of these firms, we have a number of products that are on preferred "recommended" lists and
on fee-based advisory programs. Our wealth management business is marketed directly to individual clients by financial
advisory teams at our Advisers.
Market Developments
The financial markets have a significant impact on the value of our assets under management and on the level of our
sales and net flows. The capital and financial markets experience fluctuation, volatility and declines, which impact investment
returns and asset flows of our investment offerings as well as in investor choices and preferences among investment
products. The changes in our assets under management may also be affected by the factors discussed in Item 1A. "Risk
Factors" of this Annual Report on Form 10-K.
The U.S. and global equity markets increased in value in 2024, as evidenced by increases in major indices as noted in
the following table:
December 31,
As of Change
Index
2024
2023
%
MSCI World Index
3,708
3,169
17.0 %
Standard & Poor's 500 Index
5,882
4,770
23.3 %
Russell 2000 Index
2,250
2,027
11.0 %
Morningstar / LSTA Leveraged Loan 100 Index
2,958
2,721
8.7 %
20
Financial Highlights
▪
Total revenues were $906.9 million in 2024, an increase of $61.7 million, or 7.3%, compared to total revenues of
$845.3 million in 2023.
▪
Operating income was $182.5 million, in 2024, an increase of $31.0 million, or 20.5%, compared to $151.5 million
in 2023.
▪
Net income per diluted share was $16.89 in 2024, a decrease of $0.82, or 4.6%, compared to net income per
diluted share of $17.71 in 2023.
Assets Under Management
Total sales were $26.8 billion in 2024, an increase of $0.9 billion, or 3.5%, from $25.9 billion in 2023. Net flows were
$(10.4) billion in 2024 compared to net flows of $(7.2) billion in 2023.
At December 31, 2024, total assets under management were $175.0 billion, representing an increase of $2.7 billion,
or 1.6%, from December 31, 2023. The change in total assets under management from December 31, 2023 included $15.8
billion from positive market performance, partially offset by $(10.4) billion of net outflows.
Assets Under Management by Product
The following table summarizes our assets under management by product:
As of December 31,
Change
(in millions)
2024
2023
$
%
Open-End Funds (1)
$
56,073
$
56,062
$
11
— %
Closed-End Funds
10,225
10,026
199
2.0 %
Retail Separate Accounts (2)
49,536
43,202
6,334
14.7 %
Institutional Accounts (3)
59,167
62,969
(3,802)
(6.0)%
Total
$
175,001
$
172,259
$
2,742
1.6 %
Average Assets Under Management (4)
$
176,653
$
161,482
$
15,171
9.4 %
(1)
Represents assets under management of U.S. retail funds, global funds and ETFs.
(2)
Includes investment models provided to managed account sponsors.
(3)
Represents assets under management of institutional separate and commingled accounts including structured products.
(4)
Averages are calculated as follows:
–
Funds - average daily or weekly balances
–
Retail Separate Accounts - prior-quarter ending balances
–
Institutional Accounts - average of month-end balances
21
Asset Flows by Product
The following table summarizes asset flows by product:
Beginning balance
$
56,062
$
53,000
Inflows
12,420
11,188
Outflows
(16,532)
(18,526)
Net flows
(4,112)
(7,338)
Market performance
4,949
8,160
Other (2)
(826)
2,240
Ending balance
$
56,073
$
56,062
Closed-End Funds
Beginning balance
$
10,026
$
10,361
Inflows
1
24
Outflows
(41)
—
Net flows
(40)
24
Market performance
1,112
453
Other (2)
(873)
(812)
Ending balance
$
10,225
$
10,026
Retail Separate Accounts (3)
Beginning balance
$
43,202
$
35,352
Inflows
8,621
6,680
Outflows
(6,957)
(5,972)
Net flows
1,664
708
Market performance
4,667
7,141
Other (2)
3
1
Ending balance
$
49,536
$
43,202
Institutional Accounts (4)
Beginning balance
$
62,969
$
50,663
Inflows
5,715
7,965
Outflows
(13,660)
(8,579)
Net flows
(7,945)
(614)
Market performance
5,101
9,077
Other (2)
(958)
3,843
Ending balance
$
59,167
$
62,969
Total
Beginning balance
$
172,259
$
149,376
Inflows
26,757
25,857
Outflows
(37,190)
(33,077)
Net flows
(10,433)
(7,220)
Market performance
15,829
24,831
Other (2)
(2,654)
5,272
Ending balance
$
175,001
$
172,259
Years Ended December 31,
(in millions)
2024
2023
Open-End Funds (1)
(1)
Represents assets under management of U.S. retail funds, global funds and ETFs.
(2)
Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets
from cash management strategies, and the impact of non-sales related activities such as asset
acquisitions/(dispositions), seed capital investments/(withdrawals), current income or capital returned by
structured products and the use of leverage.
(3)
Includes investment models provided to managed account sponsors.
(4)
Represents assets under management of institutional separate and commingled accounts including
structured products.
22
Assets Under Management by Asset Class
The following table summarizes assets under management by asset class:
As of December 31,
Change
% of Total
(in millions)
2024
2023
$
%
2024
2023
Asset Class
Equity
$
100,792
$
96,703
$
4,089
4.2 %
57.6 %
56.2 %
Fixed Income
37,696
37,192
504
1.4 %
21.5 %
21.6 %
Multi-Asset (1)
21,174
21,411
(237)
(1.1)%
12.1 %
12.4 %
Alternatives (2)
15,339
16,953
(1,614)
(9.5)%
8.8 %
9.8 %
Total
$
175,001
$
172,259
$
2,742
1.6 %
100.0 %
100.0 %
(1)
Consists of multi-asset offerings not included in equity, fixed income, and alternatives.
(2)
Consists of managed futures, event-driven, real estate securities, infrastructure, long/short, and other strategies.
Average Assets Under Management and Average Fees Earned
The following table summarizes the average management fees earned in basis points and average assets under
management:
Years Ended December 31,
Average Fee Earned
(expressed in basis points)
Average Assets Under
Management
(in millions) (4)
2024
2023
2024
2023
Products
Open-End Funds (1)
50.0
49.5
$
57,039
$
55,226
Closed-End Funds
58.6
57.8
10,092
10,060
Retail Separate Accounts (2)
43.4
43.7
46,575
37,601
Institutional Accounts (3)
31.1
31.7
62,947
58,595
All Products
42.0
42.2
$
176,653
$
161,482
(1)
Represents assets under management of U.S. retail funds, global funds and ETFs.
(2)
Includes investment models provided to managed account sponsors.
(3)
Represents assets under management of institutional separate and commingled accounts including structured products.
(4)
Averages are calculated as follows:
– Funds - average daily or weekly balances
– Retail Separate Accounts - prior-quarter ending balances
– Institutional Accounts - average of month-end balances
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 which includes wealth management accounts 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.
The average fee rate earned on all products was flat for 2024 compared to the prior year.
23
Percentage of Assets Under Management (1)
Beating Benchmark (2)
Asset Class
1-Year
3-Year
5-Year
10-Year
Equity
25%
18%
55%
75%
Fixed Income
81%
58%
79%
72%
Alternatives
54%
49%
91%
96%
(1)
Excludes closed-end funds, wealth management accounts, structured products and certain other multi-asset strategies.
(2)
Percentage beating benchmark is reported as the percentage of assets under management that have outperformed
benchmarks across the indicated periods and does not include assets without benchmarks. Performance is
presented on an average annual total return basis for products with a one-, three-, five-, and/or ten-year track
record, is net of fees for open-end funds, and is measured on a consistent basis relative to the most appropriate
benchmarks. Benchmark indices are unmanaged, their returns do not reflect any fees, expenses or sales charges,
and they are not available for direct investment. Past performance is not indicative of future results.
As of December 31, 2024, 32 of 70, or 46%, of our rated U.S. retail funds received an overall rating of 4 or 5 stars
representing 71% of our total U.S. retail fund assets under management (1). By comparison, 32.5% of Morningstar's fund
population is given a 4- or 5-star rating (2).
(1)
Assets under management excludes non-rated funds. Based on institutional-class shares, except for funds without I
shares, for which A shares were used, or if A share rating is higher than I shares. Past performance is not indicative
of future results.
(2)
Morningstar ratings are based on risk-adjusted returns. Strong ratings are not indicative of positive fund
performance.
Results of Operations - December 31, 2024 compared to December 31, 2023
A discussion of our results of operations for the year ended December 31, 2023 compared to the year ended
December 31, 2022 may be found in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2023, which specific discussion is
incorporated herein by reference.
Summary Financial Data
Years Ended December 31,
Change
(in thousands)
2024
2023
$
%
Investment management fees
$
773,830
$
711,475
$
62,355
8.8 %
Other revenue
133,119
133,793
(674)
(0.5)%
Total revenues
906,949
845,268
61,681
7.3 %
Total operating expenses
724,459
693,784
30,675
4.4 %
Operating income (loss)
182,490
151,484
31,006
20.5 %
Total other income (expense), net
(8,510)
3,681
(12,191)
(331.2)%
Total interest income (expense), net
33,896
31,399
2,497
8.0 %
Income (loss) before income taxes
207,876
186,564
21,312
11.4 %
Income tax expense (benefit)
55,423
45,088
10,335
22.9 %
Net income (loss)
152,453
141,476
10,977
7.8 %
Noncontrolling interests
(30,707)
(10,855)
(19,852)
182.9 %
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.
$
121,746
$
130,621
$
(8,875)
(6.8)%
Earnings (loss) per share-diluted
$
16.89
$
17.71
$
(0.82)
(4.6)%
In 2024, total revenues increased $61.7 million, or 7.3%, to $906.9 million from $845.3 million in 2023, and operating
income increased by $31.0 million, or 20.5%, to $182.5 million in 2024 from $151.5 million in 2023, primarily as a result of
increased average assets under management during the current year partially offset by an increase in operating expenses.
Investment Performance
The following table presents a summary of investment performance by asset class measured by the percentage of
assets under management exceeding their relevant benchmarks as of December 31, 2024:
24
Revenues
Revenues by source were as follows:
Years Ended December 31,
Change
(in thousands)
2024
2023
$
%
Investment management fees
Open-end funds
$
317,990
$
305,238
$
12,752
4.2 %
Closed-end funds
59,184
58,136
1,048
1.8 %
Retail separate accounts
209,467
171,357
38,110
22.2 %
Institutional accounts
187,189
176,744
10,445
5.9 %
Total investment management fees
773,830
711,475
62,355
8.8 %
Distribution and service fees
54,692
56,153
(1,461)
(2.6)%
Administration and shareholder service fees
74,294
73,857
437
0.6 %
Other income and fees
4,133
3,783
350
9.3 %
Total Revenues
$
906,949
$
845,268
$
61,681
7.3 %
Investment Management Fees
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 $62.4 million, or 8.8%, for the year ended December 31, 2024 compared to the
prior year, primarily due to the increase in average assets under management.
Distribution and Service Fees
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 $1.5 million, or 2.6%, for the year ended December 31, 2024
compared to 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.
Administration and Shareholder Service Fees
Administration and shareholder service fees represent fees earned for fund administration and shareholder services
from our U.S. retail funds, ETFs and closed-end funds. Fund administration and shareholder service fees remained consistent
for the year ended December 31, 2024 compared to the prior year.
Other Income and Fees
Other income and fees primarily represent fees related to other fee-earning assets and marketing fees earned on
certain ETFs. Other income and fees increased $0.4 million, or 9.3%, for the year ended December 31, 2024 compared to the
prior year, primarily due to increased marketing fees earned during the current year.
25
Operating Expenses
Operating expenses by category were as follows:
Years Ended December 31,
Change
(in thousands)
2024
2023
$
%
Operating expenses
Employment expenses
$
432,587
$
404,742
$
27,845
6.9 %
Distribution and other asset-based expenses
96,223
96,802
(579)
(0.6)%
Other operating expenses
127,526
125,871
1,655
1.3 %
Other operating expenses of CIP
6,987
4,224
2,763
65.4 %
Change in fair value of contingent consideration
(5,608)
(5,510)
(98)
1.8 %
Restructuring expense
1,487
824
663
80.5 %
Depreciation expense
8,958
5,804
3,154
54.3 %
Amortization expense
56,299
61,027
(4,728)
(7.7)%
Total operating expenses
$
724,459
$
693,784
$
30,675
4.4 %
Employment Expenses
Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment
expenses of $432.6 million increased $27.8 million, or 6.9%, from the prior year primarily due to an increase in profit- and
sales-based compensation and the addition of AlphaSimplex in April 2023.
Distribution and Other Asset-Based Expenses
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 remained consistent during the year ended December 31, 2024
compared to the prior year.
Other Operating Expenses
Other operating expenses primarily consist of investment research and technology costs, software application and
development expenses, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other
business costs. Other operating expenses remained consistent during the year ended December 31, 2024 compared to the
prior year.
Other Operating Expenses of CIP
Other operating expenses of CIP of $7.0 million increased $2.8 million, or 65.4%, from the prior year primarily due to
costs incurred related to the refinancing of three CLOs and issuance of one CLO in the current year.
Change in Fair Value of Contingent Consideration
Contingent consideration related to the Company's acquisitions are fair valued on each reporting date incorporating
changes in various estimates, including underlying performance estimates, discount rates and amount of time until the
conditions of the contingent payments are achieved. The change in fair value is recorded in the current period as a gain or
loss. The change in fair value of contingent consideration for the year ended December 31, 2024 was primarily attributable to
changes in underlying performance estimates.
Depreciation Expense
Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold
improvements. Depreciation expense increased $3.2 million, or 54.3%, for the year ended December 31, 2024 compared to
the prior year primarily due to the acceleration of depreciation on leasehold improvements associated with a terminated
lease in the current year period, as well as software and equipment purchases and depreciation expense associated with new
office space.
Amortization Expense
Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives.
Amortization expense decreased $4.7 million, or 7.7%, for the year ended December 31, 2024 compared to the prior year,
primarily due to intangible assets becoming fully amortized during the current year partially offset by the addition of
26
intangible assets related to the AlphaSimplex acquisition in the second quarter of the prior year.
Other Income (Expense), net
Other Income (Expense), net by category were as follows:
Years Ended December 31,
Change
(in thousands)
2024
2023
$
%
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net $
3,914
$
6,525
$
(2,611)
(40.0)%
Realized and unrealized gain (loss) of CIP, net
(14,460)
(2,404)
(12,056)
501.5 %
Other income (expense), net
2,036
(440)
2,476
(562.7)%
Total Other Income (Expense), net
$
(8,510) $
3,681
$
(12,191)
(331.2)%
Realized and Unrealized Gain (Loss) on Investments, net
Realized and unrealized gain (loss) on investments, net changed during the year ended December 31, 2024 by $2.6
million as compared to the prior year. The realized and unrealized gains and losses reflect changes in overall market
conditions for the year.
Realized and Unrealized Gain (Loss) of CIP, net
Realized and unrealized gain (loss) of CIP, net changed $12.1 million compared to the prior year primarily due to
changes in net unrealized and realized losses of $38.0 million, due to changes in market values of leveraged loans partially
offset by unrealized gains of $25.9 million related to the value of the notes payable.
Other Income (Expense), net
Other income (expense), net changed by $2.5 million during the year ended December 31, 2024 compared to the
prior year primarily due to changes in the gains and losses on our equity method investments.
Interest Income (Expense), net
Interest Income (Expense), net by category were as follows:
Years Ended December 31,
Change
(in thousands)
2024
2023
$
%
Interest Income (Expense)
Interest expense
$
(22,132) $
(23,431) $
1,299
(5.5)%
Interest and dividend income
12,488
12,458
30
0.2 %
Interest and dividend income of investments of CIP
204,732
197,707
7,025
3.6 %
Interest expense of CIP
(161,192)
(155,335)
(5,857)
3.8 %
Total Interest Income (Expense), net
$
33,896
$
31,399
$
2,497
8.0 %
Interest Expense
Interest expense decreased $1.3 million, or 5.5%, for the year ended December 31, 2024, compared to the prior year
primarily due to lower average debt outstanding during the current year.
Interest and Dividend Income
Interest and dividend income is earned on cash equivalents and our marketable securities. Interest and dividend
income remained consistent during the year ended December 31, 2024 compared to the prior year.
Interest and Dividend Income of Investments of CIP
Interest and dividend income of investments of CIP increased $7.0 million, or 3.6%, compared to the prior year. The
increase is primarily attributable to the addition of a new CLO in the third quarter of 2023 and fourth quarter of 2024,
respectively, and higher average interest rates during the current year.
Interest Expense of CIP
Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP increased by
$5.9 million, or 3.8%, compared to the prior year. The increase is primarily attributable to the addition of new CLOs in the
27
third quarter of 2023 and fourth quarter of 2024.
Income Tax Expense (Benefit)
The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 26.7%
and 24.2% for 2024 and 2023, respectively. The higher estimated effective tax rate for 2024 was primarily due to a change in
valuation allowances associated with realized losses on the Company's investments as well as lower excess tax benefits
associated with stock-based compensation.
Effects of Inflation
Inflationary pressures can result in increases to our costs, especially to the extent that large expense components
such as service provider, data and compensation are impacted. To the degree that these expense increases are not
recoverable or cannot be counterbalanced through pricing increases due to the competitive environment, our profitability
could be negatively impacted. In addition, the value of the assets that we manage may be negatively impacted if inflationary
expectations result in a rising interest rate environment. Declines in the values of these assets under management could lead
to reduced revenues as management fees are generally earned as a percentage of assets under management.
Liquidity and Capital Resources
Certain Financial Data
The following tables summarize certain financial data relating to our liquidity and capital resources:
December 31,
Change
(in thousands)
2024
2023
$
%
Balance Sheet Data
Cash and cash equivalents
$
265,888
$
239,602
$
26,286
11.0 %
Investments
119,216
132,696
(13,480)
(10.2)%
Contingent consideration
63,505
90,938
(27,433)
(30.2)%
Debt
232,130
253,412
(21,282)
(8.4)%
Redeemable noncontrolling interests
107,282
104,869
2,413
2.3 %
Total equity
901,636
868,289
33,347
3.8 %
Years Ended December 31,
Change
(in thousands)
provided by (used in)
2024
2023
$
%
Cash Flow Data
Operating activities
$
1,755
$
237,157
$ (235,402)
(99.3)%
Investing activities
(16,951)
(129,732)
112,781
(86.9)%
Financing activities
74,947
(356,113)
431,060
(121.0)%
Overview
At December 31, 2024, we had $265.9 million of cash and cash equivalents and $119.2 million of investments, which
included $83.8 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.
Uses of Capital
Our operating expenses consist of employee compensation and related benefit costs and other operating expenses,
which primarily consist of costs related to distribution, investment research and data, occupancy, software application and
development and professional fees, as well as interest on our indebtedness and income taxes. Annual incentive
compensation, our largest annual operating cash expenditure, is paid in the first quarter of the year. In 2024 and 2023, we
paid approximately $146.1 million and $142.1 million, respectively, in incentive compensation earned during the years ended
December 31, 2023 and 2022, respectively.
In addition to operating activities, other uses of cash could include: (i) investments in organic growth, including
seeding or launching new products and expanding distribution; (ii) debt principal payments through scheduled amortization
or additional paydowns; (iii) dividend payments to common stockholders; (iv) repurchases of our common stock, or
28
Consolidation
The consolidated financial statements include the accounts of the Company, its subsidiaries and investment products
that are consolidated. Voting interest entities ("VOEs") are consolidated when we are considered to have a controlling
withholding obligations for the net settlement of employee share transactions; (v) investments in our technology
infrastructure; (vi) investments in inorganic growth opportunities that may require upfront and/or future payments; (vii)
integration costs, including restructuring and severance, related to acquisitions, if any; and (viii) purchases of affiliate equity
interests.
Capital and Reserve Requirements
Certain of our subsidiaries are registered with the SEC, Central Bank of Ireland, Financial Conduct Authority or other
regulators that subject them to certain rules regarding minimum net capital. Failure to meet these requirements could result
in adverse consequences to us, including additional reporting requirements, or interruption of our business. At December 31,
2024, our broker-dealer net capital was significantly greater than the required minimum.
Balance Sheet
Cash and cash equivalents consist of cash in banks and money market fund investments. Investments consist
primarily of investments in our sponsored funds. CIP represent investment products for which we provide investment
management services and where we have either a controlling financial interest or are considered the primary beneficiary of
an investment product that is considered a variable interest entity.
Operating Cash Flow
Net cash provided by operating activities of $1.8 million for 2024 decreased by $235.4 million from cash flows
provided by operating activities of $237.2 million in 2023 primarily due to an increase of $270.7 million in net purchases of
investments of CIP in the current year period, partially offset by a $26.1 million increase in net sales of investments in the
current year.
Investing Cash Flow
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 $17.0 million for 2024 decreased by $112.8 million from net
cash used in investing activities of $129.7 million in 2023 primarily due to the AlphaSimplex acquisition in the prior year.
Financing Cash Flow
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 provided by financing activities of $74.9 million in 2024 changed by $431.1 million from net cash used in financing
activities of $356.1 million in the prior year primarily due to a $433.5 million increase in net borrowings of CIP attributable to
the refinancing of two CLOs and the launch of a new CLO in the current year.
Credit Agreement
The Company's credit agreement (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 $22.8 million outstanding under the Term Loan during 2024 and had $236.1
million outstanding under the Term Loan at December 31, 2024. In accordance with ASC 835, Interest, the amounts
outstanding under the Company's Term Loan are presented on the Consolidated Balance Sheet net of related debt issuance
costs, which were $3.9 million as of December 31, 2024.
Recently Issued Accounting Pronouncements
For a discussion of accounting standards, see Part II, Item 8, "Financial Statements and Supplementary Data," Note 2
"Summary of Significant Accounting Policies."
Critical Accounting Policies and Estimates
Our consolidated financial statements and the accompanying notes are prepared in accordance with accounting
principles generally accepted in the United States of America, which requires the use of estimates. Actual results will vary
from these estimates. Management believes the following critical accounting policies are important to understanding our
results of operations and financial position.
29
Noncontrolling Interests
Noncontrolling interests - CIP
Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as
redeemable noncontrolling interests on the Consolidated Balance Sheets because investors in those products are able to
request withdrawal at any time.
Noncontrolling interests - Investment Manager
Noncontrolling interests - Investment Manager represents the minority interests of a majority owned consolidated
investment management subsidiary. These minority interests are subject to holder put rights and Company call rights at pre-
established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered
redeemable at other than fair value. The rights are exercisable at pre-established intervals or upon certain conditions, such as
retirement. The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in
the related noncontrolling interests. The Company, in purchasing equity of the investment management subsidiary, has the
option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any
purchased equity. The minority interests in the investment management subsidiary are recorded at estimated redemption
value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance Sheets, and any
changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of Operations within
noncontrolling interests.
Goodwill
As of December 31, 2024, the carrying value of goodwill was $397.1 million. Goodwill represents the excess of the
acquisition purchase price over the fair value of identified net assets and liabilities acquired. We have one reporting unit for
purposes of assessing the carrying value of goodwill. Goodwill impairment testing is performed at least annually or whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. If we determine that the
carrying value of the reporting unit is less than the fair value, a second step of the goodwill impairment test is performed to
measure the amount of impairment loss, if any. We completed our annual goodwill impairment assessment as of October 31,
2024, and no impairment was identified. For purposes of this assessment, we considered various qualitative factors including,
but not limited to, certain indicators of fair value (e.g., market capitalization and market multiplies for asset managers) and
determined that it was more likely than not that the fair value of our reporting unit was greater than its carrying value. Only a
significant decline in the fair value of our reporting unit would indicate that an impairment may exist.
Indefinite-Lived Intangible Assets
As of December 31, 2024, the carrying value of indefinite-lived intangible assets was $42.3 million. Indefinite-lived
intangible assets comprise certain fund investment management agreements and trade names. We perform indefinite-lived
intangible asset impairment tests annually, or more frequently, should circumstances change, which could reduce the fair
value of indefinite-lived intangible assets below their carrying value. We completed our annual impairment assessment of
financial interest, which is typically present when we own a majority of the voting interest in an entity or otherwise have the
power to govern the financial and operating policies of the entity.
We evaluate any variable interest entities ("VIEs") in which we have a variable interest for consolidation. A VIE is an
entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without
additional financial support or (ii) where, as a group, the holders of the equity investment at risk do not possess: (x) the power
through voting or similar rights to direct the activities that most significantly impact the entity's economic performance; (y)
the obligation to absorb expected losses or the right to receive expected residual returns of the entity; or (z) proportionate
voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of
an investor with disproportionately fewer voting rights. If an entity has any of these characteristics, it is considered a VIE and
is consolidated by its primary beneficiary, which is the entity that has both the power to direct the activities that most
significantly impact the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits
from, the VIE that could potentially be significant to the VIE.
CIP includes both VOEs, made up primarily of open-end funds in which we hold a controlling financial interest, and
VIEs, which primarily consist of CLOs of which we are considered the primary beneficiary. The consolidation and
deconsolidation of these investment products have no impact on net income (loss) attributable to stockholders. Our risk with
respect to these investment products is limited to our beneficial interests in these products. We have no right to the benefits
from, and do not bear the risks associated with, these investment products beyond our investments in, and fees generated
from, these products.
30
Definite-Lived Intangible Assets
As of December 31, 2024, the carrying value of definite-lived intangible assets was $335.9 million. Definite-lived
intangible assets comprise certain investment management agreements, trade names and non-competition agreements. We
monitor the useful lives of definite-lived intangible assets and revise the useful lives, if necessary, based on the circumstances.
Significant judgment is required in estimating the period that these assets will contribute to our cash flows and the pattern
over which these assets will be consumed. A change in the remaining useful life of any of these assets could have a significant
impact on amortization expense. All amortization expense is calculated on a straight-line basis. Impairment testing is
performed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If we
were to determine that the carrying value of the definite-lived intangible assets was less than the sum of the undiscounted
cash flows expected to result from the asset, we would quantify the impairment using a discounted cash flow model.
Revenue Recognition
Our revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is
transferred to customers. Investment management fees, distribution and service fees, and administration and shareholder
service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net
asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's
control, such as additional investments, withdrawals and market performance. Because of this, these fees are considered
constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are
generally determinable.
Investment Management Fees
We provide investment management services pursuant to investment management agreements through our
investment advisers (each an "Adviser"). Investment management services represent a series of distinct daily services that
are performed over time. Fees earned on funds are based on each fund's average daily or weekly net assets and are generally
calculated and received on a monthly basis. For funds managed by unaffiliated subadvisers, we record investment
management fees net of the subadvisory fees since we are deemed to be an agent of the fund as it relates to the services they
perform, with our performance obligation being to arrange for the provision of that service and not control the specified
service before it is performed. Amounts paid to unaffiliated subadvisers for the years ended December 31, 2024, 2023 and
2022 were $45.4 million, $54.7 million and $77.0 million, respectively.
Retail separate account fees are generally earned based on the end of the preceding or current quarter's asset
values. Institutional account fees are generally earned based on an average of month-end balances. In certain instances,
institutional fees may include performance related fees that are based on investment returns relative to benchmarks. Fees
for structured finance products consist of senior, subordinated and, in certain instances, incentive management fees. Senior
and subordinated management fees are based on the end of the preceding quarter par value of the collateral managed with
subordinated fees being earned only after certain portfolio criteria are met. Incentive fees on CLOs are typically a percentage
of the excess cash flows available to holders of subordinated notes, above a threshold level internal rate of return.
We rely on service providers to provide information for the pricing of the underlying investment securities for the
asset values that drive our investment management fees and our assets under management. Our service providers have
formal valuation policies and procedures over the valuation of investments.
Distribution and Service Fees
Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and
distribution services. These fees primarily consist of an asset-based fee that is paid by the fund over a period of years to cover
allowable sales and marketing expenses for the fund or front-end sales charges that are based on a percentage of the offering
price. Asset-based distribution and service fees are primarily based on percentages of the average daily net asset value and
are paid monthly pursuant to the terms of the respective distribution and service fee contracts.
Distribution and service fees represent two performance obligations comprised of distribution and related
shareholder servicing activities. Distribution services are generally satisfied upon the sale of a fund share. Shareholder
these assets as of October 31, 2024, and no impairments were identified. For purposes of this assessment, we considered
various qualitative factors for the investment management agreement intangible assets including, but not limited to, changes
in (i) assets under management, (ii) operating margins, and (iii) net cash flows generated, and we determined that it was more
likely than not that the fair value of indefinite-lived intangible assets was greater than their carrying value. Only a significant
decline in the fair value of the indefinite-lived intangible assets would indicate that an impairment may exist.
31
Administration & Shareholder Service Fees
We provide administrative fund services to our U.S. retail funds, ETFs and closed-end funds and shareholder services
to our U.S. retail funds. Administration and shareholder services are performed over time. We earn fees for these services,
which are calculated and paid monthly, based on each fund's average daily or weekly net assets. Administrative fund services
include: record keeping, preparing and filing documents required to comply with securities laws, legal administration and
compliance services, customer service, supervision of the activities of the funds' service providers, tax services and treasury
services. We also provide office space, equipment and personnel that may be necessary for managing and administering the
business affairs of the funds. Shareholder services include maintaining shareholder accounts, processing shareholder
transactions, preparing filings and performing necessary reporting.
Other Income and Fees
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.
Accounting for Income Taxes
We account for income taxes in accordance with ASC 740, Income Taxes, which requires recognition of the amount of
taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for temporary differences
between the tax basis of assets and liabilities and the reported amounts on the Consolidated Financial Statements. We
recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained,
based on the technical merits of the position. The tax benefits recognized are measured based on the largest benefit that has
a greater than 50% likelihood of being realized upon ultimate settlement. We record interest and penalties related to income
taxes as a component of income tax expense.
Significant judgment is required in determining the provision for income taxes and, in particular, any valuation
allowance that is recorded against our deferred tax assets. The methodology for determining the realizability of deferred tax
assets includes consideration of taxable income in prior carryback year(s), if carryback is permitted under the tax law, as well
as consideration of the reversal of deferred tax liabilities that are in the same period and jurisdiction and are of the same
character as the temporary differences that gave rise to the deferred tax assets. Our methodology also includes estimates of
future taxable income from operations, as well as the expiration dates and amounts of carryforwards related to net operating
losses and capital losses. These estimates are projected through the life of the related deferred tax assets based on
assumptions that we believe to be reasonable and consistent with demonstrated operating results. Changes in future
operating results not currently forecasted may have a significant impact on the realization of deferred tax assets. Valuation
allowances are provided when it is determined that it is more likely than not that the benefit of deferred tax assets will not be
realized.
Contingent Consideration
We periodically enter into contingent payment arrangements in connection with our business combinations or asset
purchases. In contingent payment arrangements, we agree to pay additional transaction consideration to the seller based on
future performance. We estimate the value of future payments of these potential future obligations at the time a business
combination or asset purchase is consummated. Liabilities under contingent payment arrangements are recorded within
contingent consideration on the Consolidated Balance Sheets.
Contingent payment obligations related to business combinations are remeasured at fair value each reporting date
using a simulation model with the assistance of an independent valuation firm (level 3 fair value measurement). The change
in fair value is recorded in the current period as a gain or loss. Gains and losses resulting from changes in the fair value of
contingent payment obligations are reflected within change in fair value of contingent consideration on the Consolidated
Statements of Operations.
Contingent payment obligations related to our asset purchases, if estimable and probable of payment, are initially
servicing activities are generally services satisfied over time.
We distribute our open-end funds through third-party financial intermediaries that comprise national, regional and
independent broker-dealers. These third-party financial intermediaries provide distribution and shareholder service activities
on our behalf. We pay related distribution and service fees to these third-party financial intermediaries for these services as
we consider ourselves the principal in these arrangements since we have control of the services prior to the services being
transferred to the customer. These payments are classified within distribution and other asset-based expenses.
32
Loss Contingencies
The likelihood that a loss contingency exists is evaluated using the criteria of ASC 450, Contingencies, and an accrued
liability is recorded if the likelihood of a loss is considered both probable and reasonably estimable at the date of the
consolidated financial statements.
We believe that we have considered relevant circumstances that we may be currently subject to, and the
consolidated financial statements accurately reflect our reasonable estimate of the results of our operations, financial
condition and cash flows for the years presented.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
Market Risk
Substantially all of our revenues are derived from investment management, distribution and service, and
administration and shareholder service fees, which are all based on the market value of assets under management.
Accordingly, a decline in the market value of assets under management would cause our revenues and income to decline.
We are also subject to market risk due to a decline in the market value of our investments, which consist of
marketable securities and our net interests in CIP. The following table summarizes the impact of a 10% increase or decrease
in the fair values of these financial instruments:
December 31, 2024
(in thousands)
Fair Value
10% Change
Investment securities - fair value (1)
$
83,771
$
8,377
Our net interest in CIP (2)
199,720
19,972
Total Investments subject to Market Risk
$
283,491
$
28,349
(1)
If a 10% increase or decrease in fair values were to occur, it would result in a corresponding increase or decrease in our
pre-tax earnings.
(2)
These represent our direct investments in investment products that are consolidated. Upon consolidation, these direct
investments are eliminated, and the assets and liabilities of CIP are consolidated on the Consolidated Balance Sheet,
together with a noncontrolling interest balance representing the portion of the CIP owned by third parties. If a 10%
increase or decrease in the fair values of our direct investments in CIP were to occur, it would result in a corresponding
increase or decrease in our pre-tax earnings.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. At December 31, 2024, we were exposed to interest rate risk as a result of approximately
$180.1 million of investments in fixed- and floating-rate income products, which include our net interests in CIP. We
considered a hypothetical 100 basis point change in interest rates and determined that the fair value of our fixed income
investments could change by an estimated $2.4 million.
At December 31, 2024, we had $236.1 million outstanding under our Term Loan. The applicable margin on amounts
outstanding under the Credit Agreement is 2.25%, in the case of SOFR-based loans, and 1.25%, in the case of an alternate
base rate loan. Given our borrowings are floating rate, we considered a hypothetical 100 basis point change in the base rate
of our outstanding borrowings and determined that annual interest expense would change by an estimated $2.4 million,
either an increase or decrease, depending on the direction of the change in the base rate.
Item 8.
Financial Statements and Supplementary Data.
The audited consolidated financial statements, including the Report of Independent Registered Public Accounting
Firm required by this item are presented under Item 15 "Exhibits and Financial Statement Schedules" beginning on page F-1 of
this Annual Report on Form 10-K.
recorded at their estimated value and reviewed every reporting period for changes. Any changes to the estimated value are
recorded as an update of the initial acquisition cost of the asset with a corresponding change to the estimated contingent
payment obligation on the Consolidated Balance Sheets.
33
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act)
that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange
Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that
such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure. Because of the inherent limitations, any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the
desired control objectives.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-
K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective at the reasonable assurance level as of December 31, 2024, the end of the period covered by this
Annual Report on Form 10-K.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)
under the Exchange Act) that occurred during the three months ended December 31, 2024 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of
the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policy or procedures may
deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, our management has conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2024 based on the criteria established in the Internal Control-Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our
management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our internal control over
financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by
Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report, which is included in
Item 15 "Exhibits and Financial Statement Schedules" of this Annual Report on Form 10-K.
Item 9B.
Other Information.
During the three months ended December 31, 2024, none of the Company's directors or officers (as defined in Rule
16a-1(f) of the Securities Exchange Act of 1934, as amended), adopted, terminated or modified a Rule 10b5-1 trading
arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the
Securities Act of 1933, as amended).
34
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10.
Directors, Executive Officers and Corporate Governance.
Information required by this Item 10 is incorporated herein by reference to our definitive proxy statement for our
2025 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act (the "2025 Proxy
Statement").
We have adopted a written Code of Conduct that applies to all of our directors, officers and employees, including our
principal executive officer, principal financial officer and principal accounting officer. We are committed to the highest
standards of ethical and professional conduct, and the Code of Conduct provides guidance on how to uphold these standards.
The Code of Conduct is available on our website at www.virtus.com, in the Investor Relations section, under the heading
“Corporate Governance.” We intend to post any substantive amendments to, or waivers of, the Code of Conduct applicable
to our principal executive officer, principal financial officer, principal accounting officer, or directors on our website.
We have adopted an insider trading policy regarding securities transactions (the "Insider Trading Policy") that applies
to all directors, officers, employees, consultants, and contractors of the Company and its subsidiaries, as well as the Company
itself. We believe that the Insider Trading Policy is reasonably designed to promote compliance with insider trading laws,
rules and regulations with respect to the purchase, sale and/or other dispositions of our securities, as well as the applicable
rules and regulations of the New York Stock Exchange. A copy of the Insider Trading Policy is filed as Exhibit 19 to this Annual
Report on Form 10-K.
Item 11.
Executive Compensation.
Information required by this Item 11 is incorporated herein by reference to the 2025 Proxy Statement.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information required by Item 403 of Regulation S-K is incorporated herein by reference to the 2025 Proxy Statement.
The following table sets forth information as of December 31, 2024 with respect to compensation plans under which
shares of our common stock may be issued:
EQUITY COMPENSATION PLAN INFORMATION
(a)
(b)
(c)
Plan Category
Number of
securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights (1)
Number of
securities remaining
available for future
issuance
under equity
compensation plans
(excluding securities
reflected
in column (a))
Equity compensation plans approved by security holders (2)
317,489
$
—
828,882
Equity compensation plans not approved by security
holders
—
—
—
Total
317,489
$
—
828,882
(1)
The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit awards ("RSUs")
35
since recipients of such awards are not required to pay an exercise price to receive the shares subject to these awards.
(2)
Represents shares of our common stock issuable upon the vesting of RSUs outstanding under the Company's Omnibus Incentive and
Equity Plan (the "Omnibus Plan"). Of the 3,825,000 maximum number of shares of our common stock authorized for issuance under
the Omnibus Plan, 132,159 shares of common stock have been issued on a cumulative basis in the form of direct grants to directors.
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
Information required by this Item 13 is incorporated herein by reference to the 2025 Proxy Statement.
Item 14.
Principal Accountant Fees and Services.
Information required by this Item 14 is incorporated herein by reference to the 2025 Proxy Statement.
36
PART IV
Item 15.
Exhibits and Financial Statement Schedules.
(a)(1)
Financial Statements: The following Report of Independent Registered Public
Accounting Firm and Consolidated Financial Statements of Virtus are included in
this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations for the Years Ended December 31, 2024,
2023 and 2022
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2024, 2023 and 2022
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 2024, 2023 and 2022
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024,
2023 and 2022
Notes to Consolidated Financial Statements
(a)(2)
Financial Statement Schedules:
All financial statement schedules have been omitted because the required information is either presented on the
consolidated financial statements or the notes thereto or is not applicable or required.
37
(a)(3)
Exhibits:
The following exhibits are filed herewith or incorporated herein by reference:
(2)
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1
Membership Interest Purchase Agreement by and among the Registrant, Westchester Capital Management,
LLC, Westchester Capital Partners, LLC, LPC Westchester, LP, MTSWCM Holdings, LLC, RDBWCM Holdings, LLC,
and the Individual Equityholders (as defined therein), dated February 1, 2021 (incorporated by reference to
Exhibit 2.4 of the Registrant’s Annual Report on Form 10-K, filed February 26, 2021).
(3)
Articles of Incorporation and Bylaws
3.1
Third Amended and Restated Certificate of Incorporation of the Registrant, dated May 17, 2023 (incorporated
by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K, filed May 18, 2023).
3.2
Amended and Restated Bylaws of the Registrant, as amended on May 17, 2023 (incorporated by reference to
Exhibit 3.2 of the Registrant's Current Report on Form 8-K, filed May 18, 2023).
3.3
Certificate of Designations of Series A Non-Voting Convertible Preferred Stock and Series B Voting Convertible
Preferred Stock of the Registrant, dated October 31, 2008 (incorporated by reference to Exhibit 4.2 of the
Registrant's Amendment No. 2 to Form 10, filed November 14, 2008).
3.4
Certificate of Amendment of the Certificate of Designations of Series A Non-Voting Convertible Preferred
Stock and Series B Voting Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit
3.1 of the Registrant's Quarterly Report on Form 10-Q, filed August 13, 2009).
3.5
Certificate of Designations of Series C Junior Participating Preferred Stock of the Registrant, dated
December 29, 2008 (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K,
filed January 2, 2009).
3.6
Certificate of Designations of 7.25% Series D Mandatory Convertible Preferred Stock of the Registrant
(incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K, filed February 1,
2017).
(4)
Instruments Defining the Rights of Security Holders including Indentures
4.1
Description of the Registrant's Common Stock (incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form 8-A, filed January 12, 2024).
(10)
Material Contracts
10.1+
Change in Control Agreement between George R. Aylward and the Registrant, effective as of December 31,
2008 (incorporated by reference to Exhibit 10.4 of the Registrant's Amendment No. 4 to Form 10, filed
December 19, 2008).
10.2+
Amended and Restated Virtus Investment Partners, Inc. Omnibus Incentive and Equity Plan (incorporated by
reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K, filed May 16, 2024).
10.3+
Virtus Investment Partners, Inc. Non-Qualified Excess Investment Plan, effective as of November 1, 2008
(incorporated by reference to Exhibit 10.6 of the Registrant's Amendment No. 2 to Form 10, filed
November 14, 2008).
10.4+
First Amendment to the Virtus Investment Partners, Inc. Non-Qualified Excess Investment Plan, effective as of
February 1, 2010 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-
Q, filed May 4, 2010).
10.5+
Amendment Two to the Virtus Investment Partners, Inc. Non-Qualified Excess Investment Plan, effective as of
January 1, 2024 (incorporated by reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K
filed February 28, 2024).
10.6+
Virtus Investment Partners, Inc. Amended and Restated Executive Severance Allowance Plan, effective as of
February 2, 2009 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K,
filed February 4, 2009).
10.7+
Form of Non-Qualified Stock Option Agreement under the Virtus Investment Partners, Inc. Omnibus Incentive
and Equity Plan (incorporated by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q,
filed May 13, 2009).
10.8+
Form of Restricted Stock Unit Grant Agreement under the Virtus Investment Partners, Inc. Amended and
Restated Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant's
Quarterly Report on Form 10-Q filed May 9, 2023).
10.9+
Form of Performance Share Unit Grant Agreement under the Virtus Investment Partners, Inc. Amended and
Restated Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.2 of the Registrant's
Quarterly Report on Form 10-Q filed May 9, 2023).
Exhibit
Number
Exhibit Description
38
10.10+
Form of Indemnity Agreement (incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report on
Form 10-K, filed February 27, 2023).
10.11+
Offer Letter from the Registrant to Barry M. Mandinach dated April 4, 2014 (incorporated by reference to
Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q, filed May 7, 2014).
10.12+
Offer Letter from the Registrant to Richard W. Smirl dated April 7, 2021 (incorporated by reference to Exhibit
10.1 of the Registrant's Quarterly Report on Form 10-Q filed May 6, 2021).
10.13
Amended and Restated Credit Agreement, dated as of September 28, 2021, by and among Virtus Investment
Partners, Inc. as borrower, Morgan Stanley Senior Funding, Inc. as administrative agent, and the Lenders
party thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed
October 4, 2021).
10.14
Amendment No. 1, dated June 20, 2023, to the Amended and Restated Credit Agreement, dated as of
September 28, 2021, by and among Virtus Investment Partners, Inc. as borrower, Morgan Stanley Senior
Funding, Inc. as administrative agent, and the Lenders party thereto (incorporated by reference to Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q filed August 9, 2023).
(19)
Insider Trading Policies and Procedures
19.1*
Insider Trading Policy.
Exhibit
Number
Exhibit Description
(21)
Subsidiaries of the Registrant
21.1*
Virtus Investment Partners, Inc. Subsidiaries List.
(23)
Consents of Experts and Counsel
23.1*
Consent of Independent Registered Public Accounting Firm.
31.1*
Certifications of Registrant's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2*
Certifications of Registrant's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1#
Certifications of Registrant's Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
97.1
Incentive Compensation Clawback Policy (incorporated by reference to Exhibit 97.1 to the Registrant's Annual
Report on Form 10-K, filed February 28, 2024).
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)
+
Management contract, compensatory plan or arrangement.
*
Filed herewith.
#
This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into
any filing under the Securities Act or the Exchange Act.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information
or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them
for that purpose. In particular, any representations and warranties made by the Company in these agreements or other
documents were made solely within the specific context of the relevant agreement or document and may not describe the
actual state of affairs at the date they were made or at any other time.
Item 16.
Form 10-K Summary.
None.
39
Virtus Investment Partners, Inc.
By:
/S/
MICHAEL A. ANGERTHAL
Michael A. Angerthal
Executive Vice President
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities indicated as of February 28, 2025.
/S/
TIMOTHY A. HOLT
/S/
GEORGE R. AYLWARD
Timothy A. Holt
Director and Non-Executive Chairman
George R. Aylward
President, Chief Executive Officer and Director
(Principal Executive Officer)
/S/
PETER L. BAIN
/S/
SUSAN S. FLEMING
Peter L. Bain
Director
Susan S. Fleming, Ph.D.
Director
/S/
PAUL G. GREIG
/S/
MELODY L. JONES
Paul G. Greig
Director
Melody L. Jones
Director
/S/
W. HOWARD MORRIS
/S/
JOHN C. WEISENSEEL
W. Howard Morris
Director
John C. Weisenseel
Director
/S/
MICHAEL A. ANGERTHAL
Michael A. Angerthal
Executive Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 28, 2025
40
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2024 and 2023
F-6
Consolidated Statements of Operations for the Years Ended December 31, 2024, 2023, and 2022
F-7
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023 and 2022
F-8
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2024, 2023 and 2022
F-9
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022
F-10
Notes to Consolidated Financial Statements
F-12
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Virtus Investment Partners, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Virtus Investment Partners, Inc. and subsidiaries (the
"Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income,
changes in stockholders’ equity, and cash flow, for each of the three years in the period ended December 31, 2024, and the
related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control
over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility
is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
F-2
•
We tested the design and operating effectiveness of controls over management’s valuation of the contingent
consideration liability.
•
We held discussions with accounting personnel and management regarding the revenue projections utilized in the
valuation models. We evaluated whether the business assumptions used were appropriate and reasonable and
confirmed that the products included in the revenue projections utilized in the valuation models agreed to those
within the respective acquisition agreements.
•
For the AllianzGI acquisition, we evaluated the methodology used to calculate the estimated value of the contingent
payment obligations to confirm it was appropriate for an asset acquisition and confirmed that the amounts recorded
were based on the revenue projections and the contractual payment rate. We further evaluated whether the
business assumptions used were appropriate and reasonable.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Contingent Consideration – Refer to Notes 2 and 7 to the financial statements
Critical Audit Matter Description
The Company periodically enters into contingent payment arrangements in connection with its business combinations or
asset acquisitions.
Contingent payment obligations related to business combinations are recorded at fair value upon acquisition and are
remeasured at fair value each reporting date. During the year, the contingent payment obligations associated with the 2021
acquisitions of NFJ Investment Group (“NFJ”) and Westchester Capital Management (“Westchester”) were valued to reflect
remeasurement and payments made, if applicable, and changes were recorded in the current period as a change in fair value
of contingent consideration on the consolidated statements of operations. Management uses simulation models to determine
the fair value of the Company's estimated contingent liability given the variable nature of the arrangements and the
significant management judgments in estimating revenue growth rates, discount rates, and the market price of risk
adjustment.
Contingent payment obligations related to asset acquisitions, if estimable and probable of payment, are initially recorded at
their estimated value and reviewed every reporting period for changes. During the year, the contingent payment obligations
associated with the 2021 asset acquisition as part of the strategic partnership with Allianz Global Investors (“AllianzGI”) was
valued to reflect remeasurement and payments made, if applicable, and changes were recorded in the current period as
adjustments to the initial acquisition cost, recorded as intangible assets, on the consolidated balance sheet.
The valuations of the AllianzGI, NFJ and Westchester contingent payment obligations use unobservable inputs and reflect
management’s own judgments about the assumptions market participants would use in pricing the liabilities. Auditing the
estimates involved a high degree of auditor judgment and an increased extent of effort. With the assistance of our internal
fair value specialists, for the fair value of the business combination contingent consideration, we evaluated management’s
judgments utilized within the simulation model related to revenue growth rates, discount rates, and the market price of risk
adjustment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of the contingent consideration liability for the AllianzGI, NFJ and Westchester
acquisitions included the following, among others:
F-3
•
With the assistance of our internal fair value specialists, we performed the below procedures related to the NFJ and
Westchester contingent consideration liability:
–
We evaluated the valuation methodology used by management to determine whether they were consistent
with generally accepted accounting policies.
–
We estimated the fair value of the contingent liability through the preparation of independent simulation
models developed from the underlying acquisition agreements and using independently sourced input data.
We compared the fair value estimate produced by our independent model to the model prepared by
management.
–
We evaluated the appropriateness of management’s selection of guideline public companies used for
market rate and risk volatility assumptions and the discount rates used by management in the simulation
model.
•
We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.
Consolidation — Consolidation of Investment Products – Refer to Notes 2 and 19 to the financial statements
Critical Audit Matter Description
The Company is required to consolidate investment products to which it provides investment management services when it
(1) has a majority voting interest in an investment product that is a voting interest entity (VOE) or otherwise has the power to
govern the financial and operating policies of the entity; or (2) it is considered the primary beneficiary of an investment
product that is a variable interest entity (VIE). Management is required to evaluate whether an investment product is a VOE or
a VIE upon its initial involvement with the investment product, or the occurrence of a reconsideration event. This assessment
involves management’s judgment and is determined based on a variety of factors including the capital structure of the
investment product, the investment product’s activities, the equity investment at risk, and the proportionate voting and
economic interests of the investors in the investment product including the Company.
For each investment product that is considered a VIE, management performs a primary beneficiary analysis to determine if it
holds a controlling financial interest in the investment product. A controlling financial interest is defined as (a) the power to
direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb
losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could
potentially be significant to the VIE. Management’s evaluation of these two criteria involves judgments to analyze the
governing documents of the investment product. The level of judgment required may vary in significance based on the
complexity of the voting rights and structure economic interests of the investment product and the facts and circumstances of
the Company’s investment. This required a high degree of auditor judgment and an increased extent of effort to evaluate
management’s conclusions related to the power criterion and the economics criterion, including characterizing rights as
protective or participating and evaluating all variable interests for the potential significance of economic exposure in the
entity.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to testing the consolidation assessment of VIEs included the following, among others:
•
We tested the design and operating effectiveness of controls over management’s review of the consolidation
analysis of new or modified investment products during the year.
F-4
•
We read and analyzed the governing documents (including the collateral management agreement, preference share
subscription agreement and credit agreement, if applicable) of each investment product to assess management’s
conclusions. Our procedures included evaluating the following:
–
Key facts included in management’s consolidation analysis are consistent with the governing documents and
the Company’s interests in the investment products;
–
Relevant terms impacting the consolidation analysis under GAAP were considered including the evaluation
of whether the investment product is a VOE or VIE;
–
Judgments made by management based on the capital structure of the investment product, the investment
product’s activities, the equity investment at risk, and the proportionate voting and economic interests of
the investors in the investment product including the Company were appropriate;
–
The determined primary beneficiary of those investment products possesses both (1) the power to direct
activities of the VIE and (2) the obligation to absorb losses or the right to receive benefits from the VIE.
/s/ DELOITTE & TOUCHE LLP
Hartford, Connecticut
February 28, 2025
We have served as the Company's auditor since 2018.
F-5
Virtus Investment Partners, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
December 31,
2024
December 31,
2023
Assets:
Cash and cash equivalents
$
265,888
$
239,602
Investments
119,216
132,696
Accounts receivable, net
117,207
109,076
Assets of consolidated investment products ("CIP")
Cash and cash equivalents of CIP
133,694
100,732
Cash pledged or on deposit of CIP
727
680
Investments of CIP
2,270,717
2,082,713
Other assets of CIP
174,371
43,235
Furniture, equipment and leasehold improvements, net
22,718
26,216
Intangible assets, net
378,229
432,119
Goodwill
397,098
397,098
Deferred taxes, net
23,206
25,024
Operating lease right-of-use assets
57,131
63,229
Other assets
34,292
26,209
Total assets
$
3,994,494
$
3,678,629
Liabilities and Equity
Liabilities:
Accrued compensation and benefits
$
224,501
$
200,837
Accounts payable and accrued liabilities
49,492
56,047
Contingent consideration
63,505
90,938
Debt
232,130
253,412
Operating lease liabilities
70,037
78,142
Other liabilities
15,932
13,329
Liabilities of CIP
Notes payable of CIP
2,171,946
1,922,243
Securities purchased payable and other liabilities of CIP
158,033
90,523
Total liabilities
2,985,576
2,705,471
Commitments and Contingencies (Note 12)
Redeemable noncontrolling interests
107,282
104,869
Equity:
Equity attributable to Virtus Investment Partners, Inc.:
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 12,243,880 shares issued and
6,967,147 shares outstanding at December 31, 2024 and 12,163,228 shares issued and 7,087,728 shares
outstanding at December 31, 2023, respectively
122
122
Additional paid-in capital
1,319,108
1,300,999
Retained earnings (accumulated deficit)
268,221
207,356
Accumulated other comprehensive income (loss)
(364)
(87)
Treasury stock, at cost, 5,276,733 and 5,075,500 shares at December 31, 2024 and December 31, 2023,
respectively
(689,594)
(644,464)
Total equity attributable to Virtus Investment Partners, Inc.
897,493
863,926
Noncontrolling interests
4,143
4,363
Total equity
901,636
868,289
Total liabilities and equity
$
3,994,494
$
3,678,629
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Virtus Investment Partners, Inc.
Consolidated Statements of Operations
Years Ended December 31,
(in thousands, except per share data)
2024
2023
2022
Revenues
Investment management fees
$
773,830
$
711,475
$
728,339
Distribution and service fees
54,692
56,153
67,518
Administration and shareholder service fees
74,294
73,857
85,862
Other income and fees
4,133
3,783
4,660
Total revenues
906,949
845,268
886,379
Operating Expenses
Employment expenses
432,587
404,742
371,259
Distribution and other asset-based expenses
96,223
96,802
112,612
Other operating expenses
127,526
125,871
126,178
Other operating expenses of consolidated investment products ("CIP")
6,987
4,224
4,408
Change in fair value of contingent consideration
(5,608)
(5,510)
8,020
Restructuring expense
1,487
824
4,015
Depreciation expense
8,958
5,804
3,923
Amortization expense
56,299
61,027
58,504
Total operating expenses
724,459
693,784
688,919
Operating Income (Loss)
182,490
151,484
197,460
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net
3,914
6,525
(12,489)
Realized and unrealized gain (loss) of CIP, net
(14,460)
(2,404)
(39,296)
Other income (expense), net
2,036
(440)
(153)
Total other income (expense), net
(8,510)
3,681
(51,938)
Interest Income (Expense)
Interest expense
(22,132)
(23,431)
(13,173)
Interest and dividend income
12,488
12,458
4,448
Interest and dividend income of investments of CIP
204,732
197,707
107,325
Interest expense of CIP
(161,192)
(155,335)
(80,234)
Total interest income (expense), net
33,896
31,399
18,366
Income (Loss) Before Income Taxes
207,876
186,564
163,888
Income tax expense (benefit)
55,423
45,088
57,260
Net Income (Loss)
152,453
141,476
106,628
Noncontrolling interests
(30,707)
(10,855)
10,913
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.
$
121,746
$
130,621
$
117,541
Earnings (Loss) per Share-Basic
$
17.19
$
18.02
$
15.90
Earnings (Loss) per Share-Diluted
$
16.89
$
17.71
$
15.50
Weighted Average Shares Outstanding-Basic
7,082
7,249
7,391
Weighted Average Shares Outstanding-Diluted
7,210
7,375
7,582
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Virtus Investment Partners, Inc.
Consolidated Statements of Comprehensive Income
Years Ended December 31,
(in thousands)
2024
2023
2022
Net Income (Loss)
$
152,453
$
141,476
$
106,628
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $95, $(96) and $135 for the years
ended December 31, 2024, 2023 and 2022, respectively
(277)
271
(378)
Other comprehensive income (loss)
(277)
271
(378)
Comprehensive income (loss)
152,176
141,747
106,250
Comprehensive (income) loss attributable to noncontrolling interests
(30,707)
(10,855)
10,913
Comprehensive income (loss) attributable to Virtus Investment Partners, Inc.
$
121,469
$
130,892
$
117,163
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Virtus Investment Partners, Inc.
Consolidated Statements of Changes in Stockholders' Equity
Permanent Equity
Temporary
Equity
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Total
Attributed
To Virtus
Investment
Partners, Inc.
Non-
controlling
Interests
Total
Equity
Redeemable
Non-
controlling
Interests
(in thousands, except share data)
Shares
Par Value
Shares
Amount
Balances at December 31, 2021
7,506,151
$
119
$ 1,276,424
$
60,962
$
20
4,400,596
$ (509,248)
$
828,277
$
8,350
$ 836,627
$
138,965
Net income (loss)
—
—
—
117,541
—
—
—
117,541
(765)
116,776
(10,148)
Foreign currency translation adjustments, net of tax
of $135
—
—
—
—
(378)
—
—
(378)
—
(378)
—
Net subscriptions (redemptions) and other
—
—
2,035
—
—
—
2,035
(1,668)
367
(15,099)
Cash dividends declared ($6.30 per common share)
—
—
—
(48,242)
—
—
(48,242)
—
(48,242)
—
Repurchase of common shares
(451,097)
—
—
—
—
451,097
(90,000)
(90,000)
—
(90,000)
—
Issuance of common shares related to employee
stock transactions
126,500
1
(1)
—
—
—
—
—
—
—
—
Taxes paid on stock-based compensation
—
—
(16,830)
—
—
—
—
(16,830)
—
(16,830)
—
Stock-based compensation
—
—
24,616
—
—
—
—
24,616
—
24,616
—
Balances at December 31, 2022
7,181,554
$
120
$ 1,286,244
$
130,261
$
(358)
4,851,693
$ (599,248)
$
817,019
$
5,917
$ 822,936
$
113,718
Net income (loss)
—
—
—
130,621
—
—
—
130,621
70
130,691
10,785
Foreign currency translation adjustments, net of tax
of $(96)
—
—
—
—
271
—
—
271
—
271
—
Net subscriptions (redemptions) and other
—
—
3,188
—
—
—
3,188
(1,624)
1,564
(19,634)
Cash dividends declared ($7.10 per common share)
—
—
—
(53,526)
—
—
(53,526)
—
(53,526)
—
Repurchase of common shares
(223,807)
—
—
—
—
223,807
(45,216)
(45,216)
—
(45,216)
—
Issuance of common shares related to employee
stock transactions
129,981
2
(2)
—
—
—
—
—
—
—
—
Taxes paid on stock-based compensation
—
—
(13,774)
—
—
—
—
(13,774)
—
(13,774)
—
Stock-based compensation
—
—
25,343
—
—
—
—
25,343
—
25,343
—
Balances at December 31, 2023
7,087,728
$
122
$ 1,300,999
$
207,356
$
(87)
5,075,500
$ (644,464)
$
863,926
$
4,363
$ 868,289
$
104,869
Net income (loss)
—
—
—
121,746
—
—
—
121,746
769
122,515
29,938
Foreign currency translation adjustments, net of tax
of $95
—
—
—
—
(277)
—
—
(277)
—
(277)
—
Net subscriptions (redemptions) and other
—
—
5,249
—
—
—
5,249
(989)
4,260
(27,525)
Cash dividends declared ($8.30 per common share)
—
—
—
(60,881)
—
—
—
(60,881)
—
(60,881)
—
Repurchase of common shares
(201,233)
—
—
—
—
201,233
(45,130)
(45,130)
—
(45,130)
—
Issuance of common shares related to employee
stock transactions
80,652
—
—
—
—
—
—
—
—
—
—
Taxes paid on stock-based compensation
—
—
(11,681)
—
—
—
—
(11,681)
—
(11,681)
—
Stock-based compensation
—
—
24,541
—
—
—
—
24,541
—
24,541
—
Balances at December 31, 2024
6,967,147
$
122
$ 1,319,108
$
268,221
$
(364)
5,276,733
$ (689,594)
$
897,493
$
4,143
$ 901,636
$
107,282
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Virtus Investment Partners, Inc.
Consolidated Statements of Cash Flow
Cash Flows from Operating Activities:
Net income (loss)
$ 152,453
$
141,476
$
106,628
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense, intangible asset and other amortization
69,002
70,046
68,557
Stock-based compensation
32,841
26,825
24,042
Equity in earnings of equity method investments
(2,713)
198
(187)
Realized and unrealized (gains) losses on investments, net
(2,795)
(6,132)
13,105
Distributions from equity method investments
5,387
2,327
2,244
Change in fair value of contingent consideration
(5,608)
(5,510)
8,020
Deferred taxes, net
7,120
1,394
(1,960)
Lease termination
(1,318)
—
3,222
Changes in operating assets and liabilities:
Sales (purchases) of investments, net
26,114
(16)
(9,309)
Accounts receivable, net and other assets
8,834
5,388
35,483
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities
(23,166)
3,863
(47,379)
Operating activities of consolidated investment products ("CIP"):
Realized and unrealized (gains) losses on investments of CIP, net
5,279
(4,664)
36,054
Purchases of investments by CIP
(1,468,615)
(1,264,708)
(939,017)
Sales of investments by CIP
1,196,438
1,263,580
820,497
Net proceeds (purchases) of short-term investments and securities sold short by CIP
49
(261)
(13)
Change in other assets and liabilities of CIP
(2,073)
1,666
6,813
Amortization of discount on notes payable of CIP
4,526
1,685
5,870
Net cash provided by (used in) operating activities
1,755
237,157
132,670
Cash Flows from Investing Activities:
Capital expenditures and other asset purchases
(5,579)
(8,821)
(6,582)
Purchase of equity method investment
—
(11,645)
—
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net
(11,372)
(267)
(308)
Acquisition of business, net of cash acquired of $4,395 and $8,443 for the years ended December
31, 2023 and 2022, respectively
—
(108,999)
(20,577)
Net cash provided by (used in) investing activities
(16,951)
(129,732)
(27,467)
Cash Flows from Financing Activities:
Borrowings on credit agreement
—
50,000
—
Repayments on credit agreement
(22,750)
(52,750)
(12,750)
Payment of contingent consideration
(24,234)
(27,179)
(33,036)
Repurchase of common shares
(44,868)
(45,000)
(90,000)
Common stock dividends paid
(58,123)
(52,047)
(47,254)
Taxes paid related to net share settlement of restricted stock units
(11,681)
(13,774)
(16,830)
Affiliate equity sales (purchases)
(29,015)
(20,784)
(11,089)
Net contributions from (distributions to) noncontrolling interests
32,822
6,080
(5,527)
Financing activities of CIP
Borrowings by CIP
1,016,232
269,260
306,296
Payments on borrowings by CIP
(783,436)
(469,919)
(191,867)
Net cash provided by (used in) financing activities
74,947
(356,113)
(102,057)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(456)
523
(112)
Net increase (decrease) in cash and cash equivalents
59,295
(248,165)
3,034
Cash, cash equivalents and restricted cash, beginning of year
341,014
589,179
586,145
Cash, cash equivalents and restricted cash, end of year
$ 400,309
$
341,014
$
589,179
Years Ended December 31,
(in thousands)
2024
2023
2022
F-10
Supplemental Disclosure of Cash Flow Information
Interest paid
$
20,260
$
22,307
$
11,134
Income taxes paid, net
56,379
31,160
74,313
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Common stock dividends payable
15,676
13,467
11,850
Contingent consideration
—
—
1,200
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net
(31,255)
(7,170)
(338)
Years Ended December 31,
(in thousands)
2024
2023
2022
December 31,
(in thousands)
2024
2023
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents
$
265,888
$
239,602
Cash of consolidated investment products
133,694
100,732
Cash pledged or on deposit of consolidated investment products
727
680
Cash, cash equivalents and restricted cash at end of year
$
400,309
$
341,014
The accompanying notes are an integral part of these consolidated financial statements.
F-11
1. Organization and Business
Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in
the investment management industry through its subsidiaries.
The Company provides investment management and related services to institutions and individuals. The Company's
investment strategies are offered to institutional clients through institutional separate and commingled accounts, including
subadvisory services to other investment advisers and Company sponsored structured products. The Company’s retail
investment management services are provided to individuals through products consisting of: mutual funds registered
pursuant to the Investment Company Act of 1940, as amended that include U.S. retail funds, exchange-traded funds ("ETFs");
Undertaking for Collective Investment in Transferable Securities and Qualifying Investor Funds ("global funds" and collectively
with U.S. retail funds and ETFs the "open-end funds"); closed-end funds (collectively with open-end funds, the "funds"); retail
separate accounts sold through intermediaries and wealth advisory services to high net worth clients through our wealth
management business.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the
Company, its subsidiaries and investment products that are consolidated. A voting interest entity ("VOE") is consolidated
when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a
majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the
entity.
The Company evaluates any variable interest entity ("VIE") in which the Company has a variable interest for
consolidation. A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance
its own activities without additional financial support, or (ii) where, as a group, the holders of the equity investment at risk do
not possess any one of the following: (a) the power through voting or similar rights to direct the activities that most
significantly impact the entity's economic performance, (b) the obligation to absorb expected losses or the right to receive
expected residual returns of the entity, or (c) proportionate voting and economic interests and where substantially all of the
entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights. If an
entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary. The
primary beneficiary is the entity that has both the power to direct the activities that most significantly impact the VIE's
economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could
potentially be significant to the VIE. See Note 19 for additional information related to the consolidation of investment
products. Intercompany accounts and transactions have been eliminated.
Certain prior period balances on the Consolidated Balance Sheets and Consolidated Statements of Cash Flow have
been reclassified to conform to the current period presentation. These changes had no effect on net income, total
comprehensive income, total assets, or total liabilities and equity as previously reported:
•
Dividends payable has been reclassified to accounts payable and accrued liabilities;
•
Operating lease right-of-use assets and Operating lease liabilities have been reclassified from other assets and other
liabilities, respectively, as separate financial statement line items; and
•
Certain immaterial operating cash flow line items were condensed with other operating cash flow line items
Noncontrolling Interests
Noncontrolling interests - CIP
Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as
redeemable noncontrolling interests on the Consolidated Balance Sheets because investors in those products are able to
request withdrawal at any time.
Noncontrolling interests - Investment Manager
Noncontrolling interests - Investment Manager represents the minority interests of a majority owned consolidated
investment management subsidiary. See Note 18 for further discussion.
Virtus Investment Partners, Inc.
Notes to Consolidated Financial Statements
F-12
Use of Estimates
The preparation of the consolidated financial statements requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at
the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and
prudent. Actual results could differ from those estimates.
Segment Information
Accounting Standards Codification ("ASC") 280, Segment Reporting, establishes disclosure requirements relating to
operating segments in annual and interim financial statements. Operating segments are defined as components of an
enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision
maker ("CODM") in deciding how to allocate resources to the segment and assess its performance. The Company's Chief
Executive Officer is the Company's CODM. The Company operates in one business segment, namely as an asset manager
providing investment management and related services for individual and institutional clients. Although the Company
provides disclosures regarding assets under management and other asset flows by product, the Company's determination
that it operates in one business segment is based on the fact that the same investment professionals manage both retail and
institutional products, operational resources support multiple products, such products have the same or similar regulatory
framework and the Company's CODM the Company's financial performance on a consolidated level.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and money market fund investments.
Restricted Cash
The Company considers cash and cash equivalents of CIP and cash pledged or on deposit of CIP to be restricted as it
is not available to the Company for its general operations.
Investments
Investment Securities - Fair Value
Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed
accounts and are carried at fair value in accordance with ASC 320, Investments-Debt and Equity Securities ("ASC 320"), and
Topic 321, Investments-Equity Securities ("ASC 321"). These securities are marked to market based on the respective publicly
quoted net asset values of the funds or market prices of the equity securities or bonds. Transactions in these securities are
recorded on a trade date basis. Any unrealized appreciation or depreciation on investment securities is reported on the
Consolidated Statement of Operations within realized and unrealized gain (loss) on investments.
Equity Method Investments
Equity method investments consist of Company investments in noncontrolled entities, where the Company does not
hold a controlling financial interest but has the ability to significantly influence operating and financial matters. Equity
method investments are accounted for in accordance with ASC 323, Investments-Equity Method and Joint Ventures. Under
the equity method of accounting, the Company's share of the noncontrolled entities' net income or loss is recorded in other
income (expense), net on the Consolidated Statements of Operations. Distributions received reduce the Company's
investment. The investment is evaluated for impairment if events or changes indicate that the carrying amount exceeds its
fair value. If the carrying amount of an investment does exceed its fair value and the decline in fair value is deemed to be
other-than-temporary, an impairment charge will be recorded.
Non-qualified Retirement Plan Assets and Liabilities
The Company has a non-qualified retirement plan (the "Excess Incentive Plan") that allows certain employees to
voluntarily defer compensation. Assets held in trust, which are considered investment securities, are included in investments
at fair value in accordance with ASC 820, Fair Value Measurement ("ASC 820"); the associated obligations to participants,
which approximate the fair value of the associated assets, are included in other liabilities on the Consolidated Balance Sheets.
See Note 6 for additional information related to the Excess Incentive Plan.
Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements are recorded at cost. Depreciation is computed using the
Notes to Consolidated Financial Statements—(Continued)
F-13
Leases
The Company leases office space and equipment under various leasing arrangements. In accordance with ASC 842,
Leases, the Company's leases are evaluated and classified as either financing leases or operating leases, as appropriate. The
Company recognizes a lease liability and a corresponding right of use ("ROU") asset on the commencement date of any lease
arrangement. The lease liability is initially measured at the present value of the future lease payments over the lease term
using the rate implicit in the arrangement or, if not readily determinable, the Company's incremental borrowing rate. The
Company determines its incremental borrowing rate through market sources, including relevant industry rates. A ROU asset
is measured initially as the value of the lease liability plus initial direct costs and prepaid lease payments, and less lease
incentives received. Lease expense is recognized on a straight-line basis over the lease term and is recorded within other
operating expenses on the Consolidated Statement of Operations.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price of business combinations over the identified assets and
liabilities acquired. In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill is not amortized. The
Company has a single reporting unit for the purpose of assessing potential impairments of goodwill. An impairment analysis
of goodwill is performed annually or more frequently, if warranted by events or changes in circumstances affecting the
Company's business. The Company follows Accounting Standards Update ("ASU") 2011-08, Testing Goodwill for Impairment,
which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances
leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
If, after assessing the totality of events or circumstances, it is determined that it is not more likely than not that the fair value
of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The
Company's 2024 and 2023 annual goodwill impairment analysis did not result in any impairment charges.
Definite-lived intangible assets are comprised of certain investment management agreements, trade names, non-
competition agreements and software. These assets are amortized on a straight-line basis over the estimated useful lives of
such assets, which range from 4 to 16 years. Definite-lived intangible assets are evaluated for impairment on an ongoing basis
whenever events or circumstances indicate that the carrying value of the definite-lived intangible asset may not be
recoverable. The Company determines if impairment has occurred by comparing estimates of future undiscounted cash flows
to the carrying value of assets. Assets are considered impaired, and an impairment is recorded, if the carrying value exceeds
the expected future undiscounted cash flows.
Indefinite-lived intangible assets are comprised of certain trade names and fund investment management
agreements. These assets are tested for impairment annually or when events or changes in circumstances indicate the assets
might be impaired. The Company follows ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which
provides the option to perform a qualitative assessment of indefinite-lived intangible assets other than goodwill for
impairment to determine if additional impairment testing is necessary. The Company's 2024 and 2023 annual indefinite-lived
intangible assets impairment analysis did not result in any impairment charges.
Contingent Consideration
The Company periodically enters into contingent payment arrangements in connection with its business
combinations or asset purchases. In contingent payment arrangements, the Company agrees to pay additional transaction
consideration to the seller based on future performance. The Company estimates the value of future payments of these
potential future obligations at the time a business combination or asset purchase is consummated. Liabilities under
contingent payment arrangements are recorded within contingent consideration on the Consolidated Balance Sheets.
Contingent payment obligations related to business combinations are remeasured at fair value each reporting date
using a simulation model with the assistance of an independent valuation firm and approved by management (level 3 fair
value measurement). The change in fair value is recorded in the current period as a gain or loss. Gains and losses resulting
from changes in the fair value of contingent payment obligations are reflected within change in fair value of contingent
consideration on the Consolidated Statements of Operations.
Contingent payment obligations related to asset purchases, if estimable and probable of payment, are initially
Notes to Consolidated Financial Statements—(Continued)
straight-line method over the estimated useful lives of three to seven years for furniture and office equipment and three
years for computer equipment and software. Leasehold improvements are depreciated over the shorter of the remaining
estimated lives of the related leases or useful lives of the improvements. Major renewals or betterments are capitalized, and
recurring repairs and maintenance are expensed as incurred.
F-14
Treasury Stock
Treasury stock is accounted for under the cost method and is included as a deduction from equity on the
Stockholders' Equity section of the Consolidated Balance Sheets. Upon any subsequent resale, the treasury stock account is
reduced by the cost of such stock.
Revenue Recognition
The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of
the services is transferred to clients. Investment management fees, distribution and service fees, and administration and
shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed.
The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the
Company's control, such as additional investments, withdrawals and market performance. Because of this, these fees are
considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset
values are generally determinable.
Investment Management Fees
The Company provides investment management services pursuant to investment management agreements through
its investment advisers. Investment management services represent a series of distinct daily services that are performed over
time. Fees earned on funds are based on each fund's average daily or weekly net assets and are generally calculated and
received on a monthly basis. For funds managed by unaffiliated subadvisors, the Company records fees net of the
subadvisory fees, as the Company is deemed to be the agent as it relates to the services performed by unaffiliated
subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the
specified service before it is performed. Amounts paid to unaffiliated subadvisers for the years ended December 31, 2024,
2023 and 2022 were $45.4 million, $54.7 million and $77.0 million, respectively.
Retail separate account fees are generally earned based on the end of the preceding or current quarter's asset
values. Institutional account fees are generally earned based on an average of daily or month-end balances or the current
quarter's asset values. Fees for structured finance products are generally earned at a contractual fee rate applied against the
end of the preceding quarter par value of the total collateral being managed.
Distribution and Service Fees
Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and
distribution services. Depending on the fund type or share class, these fees primarily consist of an asset-based fee that is paid
by the fund over a period of years to cover allowable sales and marketing expenses, or front-end sales charges that are based
on a percentage of the offering price. Asset-based distribution and service fees are primarily earned as percentages of the
average daily net assets value and are paid monthly pursuant to the terms of the respective distribution and service fee
contracts.
Distribution and service fees represent two performance obligations comprised of distribution and related
shareholder servicing activities. Distribution services are generally satisfied upon the sale of a fund share. Shareholder
servicing activities are generally services satisfied over time.
The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national,
regional and independent broker-dealers. These unaffiliated financial intermediaries provide distribution and shareholder
service activities on behalf of the Company. The Company passes related distribution and service fees to these unaffiliated
financial intermediaries for these services and considers itself the principal in these arrangements since it has control of the
services prior to the services being transferred to the customer. These payments are classified within distribution and other
asset-based expenses.
Administration and Shareholder Service Fees
The Company provides administrative fund services to its U.S. retail funds, and certain of its closed-end funds and
shareholder services to its open-end funds. Administration and shareholder services are performed over time. The Company
earns fees for these services, which are calculated and paid monthly, based on each fund's average daily or weekly net assets.
Notes to Consolidated Financial Statements—(Continued)
recorded at their estimated value and reviewed every reporting period for changes. Any changes to the estimated value are
recorded as an update of the initial acquisition cost of the asset with a corresponding change to the estimated contingent
payment obligation on the Consolidated Balance Sheets.
F-15
Other Income and Fees
Other income and fees primarily represent fees related to other fee earning assets and marketing fees earned on
certain ETFs.
Stock-based Compensation
The Company accounts for stock-based compensation expense in accordance with ASC 718, Compensation—Stock
Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense for share-based
awards based on the estimated fair value on the date of grant.
Restricted stock units ("RSUs") are stock awards that entitle the holder to receive shares of the Company's common
stock as the award vests over time or when certain performance metrics are achieved. The fair value of each RSU award is
based on the fair market value price on the date of grant unless it contains a performance metric that is considered a "market
condition." Compensation expense for RSU awards is recognized ratably over the vesting period on a straight-line basis. The
value of RSUs that contain a performance metric ("PSUs") is determined based on (i) the intrinsic value method for awards
that contain a performance metric that represent a "performance condition" in accordance with ASC 718 and (ii) the Monte
Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.
Compensation expense for PSU awards that contain a market condition is fixed at the date of grand and will not be adjusted
in future periods based upon the achievement of the market condition. Compensation expense for PSU awards with a
performance condition is recorded each period based upon a probability assessment of the expected outcome of the
performance metric with a final adjustment upon measurement at the end of the performance period.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires
recognition of the amount of taxes payable or refundable for the current year as well as deferred tax assets and liabilities for
temporary differences between the tax basis of assets and liabilities and the reported amounts on the Consolidated Financial
Statements.
The Company's methodology for determining the realizability of deferred tax assets includes consideration of taxable
income in prior carryback year(s), if carryback is permitted under the tax law, as well as consideration of the reversal of
deferred tax liabilities that are in the same period and jurisdiction and are of the same character as the temporary differences
that gave rise to the deferred tax assets. The Company's methodology also includes estimates of future taxable income from
its operations as well as the expiration dates and amounts of carry-forwards related to net operating losses and capital losses.
These estimates are projected through the life of the related deferred tax assets based on assumptions that the Company
believes to be reasonable and consistent with demonstrated operating results. Unanticipated changes in future operating
results may have a significant impact on the realization of deferred tax assets. Valuation allowances are provided when it is
determined that it is more likely than not that the benefit of deferred tax assets will not be realized.
Comprehensive Income
The Company reports all changes in comprehensive income on the Consolidated Statements of Changes in
Stockholders' Equity and the Consolidated Statements of Comprehensive Income. Comprehensive income includes net
income (loss) and foreign currency translation adjustments (net of tax).
Earnings (Loss) per Share
Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share. Basic EPS is computed
by dividing net income (loss) attributable to Virtus Investment Partners, Inc. by the weighted-average number of common
shares outstanding for the period, excluding dilution for potential common stock issuances. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common
stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as
determined under the if-converted method.
Notes to Consolidated Financial Statements—(Continued)
Administrative fund services include: record keeping, preparing and filing documents required to comply with securities laws,
legal administration and compliance services, customer service, supervision of the activities of the funds' service providers,
tax services and treasury services. The Company also provides office space, equipment and personnel that may be necessary
for managing and administering the business affairs of the funds. Shareholder services include maintaining shareholder
accounts, processing shareholder transactions, preparing filings and performing necessary reporting.
F-16
Fair Value Measurements and Fair Value of Financial Instruments
ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a valuation hierarchy based
upon the transparency of inputs used in the valuation of an asset or liability. The Financial Accounting Standards Board (the
"FASB") defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly
transaction between market participants at the measurement date. Classification within the hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels as
follows:
Level 1—Unadjusted quoted prices for identical instruments in active markets. Level 1 assets and liabilities may
include debt securities and equity securities that are traded in an active exchange market.
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are
observable in active markets. Level 2 inputs may include observable market data such as closing market prices provided by
independent pricing services after considering factors such as the yields or prices of comparable investments of comparable
quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as
to values from dealers and general market conditions. In addition, pricing services may determine the fair value of equity
securities traded principally in foreign markets when it has been determined that there has been a significant trend in the U.S.
equity markets or in index futures trading. Level 2 assets and liabilities may include debt and equity securities, purchased
loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant
unobservable market data inputs.
Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable in active exchange markets.
Recent Accounting Pronouncements
New Accounting Standards Implemented
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This standard updates reportable
segment disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit
or loss and provides new segment disclosure requirements for entities with a single reportable segment. This standard is
effective for annual filings of fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning
after December 15, 2024. Early adoption is permitted, with the amendments to be applied retrospectively to all prior periods
presented in the financial statements. The Company adopted this standard in this annual filing. See Note 17 for a discussion
of the Company's segment information.
In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of
Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are
within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning
after December 15, 2024. Early adoption is permitted. The Company adopted this standard in this annual filing. The
adoption of this standard did not have a material impact on the Company's consolidated financial statements.
New Accounting Standards Not Yet Implemented
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). This standard updates income tax
disclosure requirements by requiring disaggregated information about a reporting entity's effective tax rate reconciliation as
well as information on income taxes paid. This standard is effective for fiscal years beginning after December 15, 2024. Early
adoption is permitted. The Company has evaluated the impact of adopting this standard and, at this time, does not anticipate
it will have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40). The standard requires enhanced disclosures of certain expense captions
presented on the face of the Consolidated Income Statement. This standard is effective for fiscal years beginning after
December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted
with amendments to be applied either prospectively or retrospectively to any or all prior periods presented in the financial
statements. The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not
anticipate it will have a material impact on its consolidated financial statements.
Notes to Consolidated Financial Statements—(Continued)
F-17
3. Revenues
Investment Management Fees by Source
The following table summarizes investment management fees by source:
Years Ended December 31,
(in thousands)
2024
2023
2022
Investment management fees
Open-end funds
$
317,990
$
305,238
$
335,585
Closed-end funds
59,184
58,136
63,841
Retail separate accounts
209,467
171,357
171,509
Institutional accounts
187,189
176,744
157,404
Total investment management fees
$
773,830
$
711,475
$
728,339
No Company clients or sponsored funds provided 10 percent or more of the Company's investment management,
administration and shareholder service fee revenues in the preceding three years.
4. Acquisitions
AlphaSimplex Group, LLC
On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC ("AlphaSimplex"), which was
accounted for in accordance with ASC 805, Business Combinations ("ASC 805"). The total purchase price paid of
$113.4 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date
of the acquisition. Goodwill of $48.3 million and intangible assets of $55.4 million were recorded for the acquisition.
5. Goodwill and Other Intangible Assets
Activity in goodwill was as follows:
Years Ended December 31,
(in thousands)
2024
2023
Balance, beginning of period
$
397,098
$
348,836
Acquisitions
—
48,262
Balance, end of period
$
397,098
$
397,098
Below is a summary of intangible assets, net:
Definite-Lived
Indefinite-
Lived
Total
(in thousands)
Gross Book
Value
Accumulated
Amortization
Net Book
Value
Net Book
Value
Net Book
Value
Balances of December 31, 2022
$
756,028
$
(355,807) $
400,221
$
42,298
$
442,519
Additions
55,400
—
55,400
—
55,400
Adjustments
(4,773)
—
(4,773)
—
(4,773)
Intangible amortization
—
(61,027)
(61,027)
—
(61,027)
Balances of December 31, 2023
806,655
(416,834)
389,821
42,298
432,119
Adjustments
2,409
—
2,409
—
2,409
Intangible amortization
—
(56,299)
(56,299)
—
(56,299)
Balances of December 31, 2024
$
809,064
$
(473,133) $
335,931
$
42,298
$
378,229
Notes to Consolidated Financial Statements—(Continued)
F-18
Definite-lived intangible asset amortization for the next five and succeeding fiscal years is estimated as follows:
Fiscal Year
Amount
(in thousands)
2025
$
51,777
2026
50,797
2027
47,695
2028
42,033
2029
36,440
2030 and thereafter
107,189
Total
$
335,931
At December 31, 2024, the weighted average estimated remaining amortization period for definite-lived intangible
assets was 7.5 years.
6. Investments
Investments consist primarily of investments in the Company's sponsored products. The Company's investments,
excluding the assets of CIP discussed in Note 19, at December 31, 2024 and 2023, were as follows:
December 31,
(in thousands)
2024
2023
Investment securities - fair value
$
83,771
$
97,304
Equity method investments (1)
20,286
22,710
Nonqualified retirement plan assets
15,159
12,682
Total investments
$
119,216
$
132,696
(1) The Company's equity method investments are valued on a three-month lag based upon the
availability of financial information.
Investment Securities - Fair Value
Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed
accounts. The composition of the Company's investment securities - fair value was as follows:
December 31, 2024
December 31, 2023
(in thousands)
Cost
Fair
Value
Cost
Fair
Value
Investment Securities - fair value:
Sponsored funds
$
63,220
$
63,296
$
80,794
$
77,433
Equity securities
17,406
19,019
16,353
19,871
Debt securities
1,457
1,456
—
—
Total investment securities - fair value
$
82,083
$
83,771
$
97,147
$
97,304
For the years ended December 31, 2024, 2023 and 2022, the Company recognized net realized gains of $3.8 million
and $2.1 million, and a net realized loss of $1.4 million, respectively, related to its investment securities - fair value.
Equity Method Investments
The Company's equity method investments primarily consist of a minority investment in an investment manager and
an investment in a limited partnership. For the years ended December 31, 2024, 2023 and 2022, distributions from equity
method investments were $5.4 million, $2.3 million and $2.2 million, respectively. The remaining capital commitment for one
of the Company's equity method investments at December 31, 2024 was $0.2 million.
Nonqualified Retirement Plan Assets
The Company's Excess Incentive Plan allows certain employees to voluntarily defer compensation. The Company
Notes to Consolidated Financial Statements—(Continued)
F-19
December 31, 2024
(in thousands)
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
225,736
$
—
$
—
$
225,736
Investment securities - fair value
Sponsored funds
63,296
—
—
63,296
Equity securities
19,019
—
—
19,019
Debt securities
—
1,456
—
1,456
Nonqualified retirement plan assets
15,159
—
—
15,159
Total assets measured at fair value
$
323,210
1,456
$
—
$
324,666
Liabilities
Contingent consideration
$
—
$
—
$
36,100
$
36,100
Total liabilities measured at fair value
$
—
$
—
$
36,100
$
36,100
December 31, 2023
(in thousands)
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
197,240
$
—
$
—
$
197,240
Investment securities - fair value
Sponsored funds
77,433
—
—
77,433
Equity securities
19,871
—
—
19,871
Nonqualified retirement plan assets
12,682
—
—
12,682
Total assets measured at fair value
$
307,226
$
—
$
—
$
307,226
Liabilities
Contingent consideration
$
—
$
—
$
56,200
$
56,200
Total liabilities measured at fair value
$
—
$
—
$
56,200
$
56,200
The following is a discussion of the valuation methodologies used for the Company's assets and liabilities measured
at fair value.
Cash equivalents represent investments in money market funds. Cash investments in money market funds are
valued using published net asset values and are classified as Level 1.
Sponsored funds represent investments in open-end funds and closed-end funds for which the Company acts as the
investment manager. The fair values of U.S. retail funds and global funds are determined based on their published net asset
values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing
Notes to Consolidated Financial Statements—(Continued)
holds the Excess Incentive Plan assets in a rabbi trust, which is subject to the claims of the Company's creditors in the event of
the Company's bankruptcy or insolvency. Each participant is responsible for designating investment options for their
contributions, and the ultimate distribution paid to each participant reflects any gains or losses on the assets realized while in
the trust. Assets held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in
accordance with ASC 320, Investments - Debt Securities; the associated obligations to participants are included in other
liabilities on the Consolidated Balance Sheets.
7. Fair Value Measurements
The Company's assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of
CIP discussed in Note 19, as of December 31, 2024 and 2023 by fair value hierarchy level were as follows:
F-20
price on the exchange on which they are traded and are categorized as Level 1.
Equity securities represent securities traded on active markets, are valued at the official closing price (typically the
last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.
Debt securities Debt securities represent investments in corporate and government bonds. The fair values of
corporate and government bonds traded on active markets are valued at the official closing price on the exchange on which
the securities are primarily traded and are categorized as Level 1. Debt securities for which closing prices are not readily
available or are deemed to not reflect readily available market prices, and are valued using an independent pricing service, are
categorized as Level 2.
Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan
whose fair value is determined based on their published net asset value and are categorized as Level 1.
Contingent consideration represents liabilities associated with contingent payment arrangements made in
connection with the Company's business combinations. In these contingent payment arrangements, the Company agrees to
pay additional transaction consideration to the seller based on future performance. Contingent consideration is remeasured
at fair value each reporting date using a simulation model with the assistance of an independent valuation firm and approved
by management and are categorized as Level 3.
The following table presents a reconciliation of beginning and ending balances of the Company's contingent
consideration liabilities:
(in thousands)
2024
2023
Contingent consideration, beginning of year
$
56,200
$
78,100
Reduction for payments made
(14,492)
(16,390)
Increase (reduction) of liability related to re-measurement of fair value
(5,608)
(5,510)
Contingent consideration, end of year
$
36,100
$
56,200
The contingent consideration related to the Westchester Capital Management transaction as of December 31, 2024
was $1.9 million, measured using an options pricing model valuation technique. The most significant unobservable inputs
used relate to revenue growth rates, discount rates (range of 6.3% - 6.4%) and the market price of risk adjustment (7.3%).
The NFJ Investment Group contingent consideration liability as of December 31, 2024 was $34.2 million, measured using an
options pricing model valuation technique. The most significant unobservable inputs used relate to the revenue growth rates,
discount rates (range of 6.3% - 6.4%) and the market price of risk adjustment (6.5%).
Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the
short-term nature of these instruments.
8. Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements, net were as follows:
December 31,
(in thousands)
2024
2023
Leasehold improvements
$
27,321
$
26,710
Furniture and office equipment
17,150
15,459
Computer equipment and software
8,101
6,671
Subtotal
52,572
48,840
Accumulated depreciation and amortization
(29,854)
(22,624)
Furniture, equipment and leasehold improvements, net
$
22,718
$
26,216
Notes to Consolidated Financial Statements—(Continued)
F-21
9. Leases
All of the Company's leases qualify as operating leases and consist primarily of leases for office facilities, which have
remaining initial lease terms ranging from 0.1 to 13.6 years and a weighted average remaining lease term of 11.3 years. The
Company has options to renew certain of its leases for periods ranging from 3.0 to 10.0 years, depending on the lease. None
of the Company's renewal options were considered reasonably assured of being exercised and, therefore, were excluded from
the initial lease term used to determine the Company's right-of-use asset and lease liability. The Company's right-of-use asset
and lease liability on the Consolidated Balance Sheets at December 31, 2024 were $57.1 million and $70.0 million,
respectively. The weighted average discount rate used to measure the Company's lease liability was 6.8% at December 31,
2024.
Lease expense totaled $15.1 million, $14.7 million and $14.0 million for fiscal years 2024, 2023 and 2022,
respectively. Cash payments relating to operating leases during 2024 were $25.7 million.
Lease liability maturities as of December 31, 2024 were as follows:
Fiscal Year
Amount
(in thousands)
2025
$
12,187
2026
9,324
2027
8,582
2028
6,399
2029
8,373
Thereafter
61,625
Total lease payments
106,490
Less: Imputed interest
36,453
Present value of lease liabilities
$
70,037
10. Income Taxes
The components of the provision for income taxes were as follows:
Years Ended December 31,
(in thousands)
2024
2023
2022
Current
Federal
$
37,536
$
33,523
$
40,113
State
10,767
10,171
19,107
Total current tax expense (benefit)
48,303
43,694
59,220
Deferred
Federal
5,164
789
(1,506)
State
1,956
605
(454)
Total deferred tax expense (benefit)
7,120
1,394
(1,960)
Total expense (benefit) for income taxes
$
55,423
$
45,088
$
57,260
Notes to Consolidated Financial Statements—(Continued)
F-22
Years Ended December 31,
(in thousands)
2024
2023
2022
Tax at statutory rate
$
43,654
21 % $
39,178
21 % $
34,416
21 %
State taxes, net of federal benefit
10,040
5 %
9,240
5 %
14,736
9 %
Excess tax benefits related to share-based
compensation
(220)
— %
(1,767)
(1)%
(2,792)
(1)%
Nondeductible compensation
2,246
1 %
2,106
1 %
2,356
1 %
Effect of net (income) loss attributable to
noncontrolling interests
(2,348)
(1)%
(2,299)
(1)%
(1,435)
(1)%
Change in valuation allowance
73
— %
(1,547)
(1)%
9,596
6 %
Other, net
1,978
1 %
177
— %
383
— %
Income tax expense (benefit)
$
55,423
27 % $
45,088
24 % $
57,260
35 %
The provision for income taxes reflects U.S. federal, state and local taxes at an effective tax rate of 27%, 24% and
35% for the years ended December 31, 2024, 2023 and 2022, respectively. The Company's tax position for the years ended
December 31, 2024, 2023 and 2022 was impacted by changes in the valuation allowance related to the unrealized and
realized gains and losses on the Company's investments.
Deferred taxes resulted from temporary differences between the amounts reported on the consolidated financial
statements and the tax basis of assets and liabilities. The tax effects of temporary differences were as follows:
December 31,
(in thousands)
2024
2023
Deferred tax assets:
Intangible assets
$
18,809
$
19,206
Net operating losses
9,180
10,754
Compensation accruals
17,173
19,614
Lease liability
17,698
19,009
Investment in sponsored products
8,801
11,643
Capital losses
7,748
6,139
Investment in partnerships
8,058
2,188
Gross deferred tax assets
87,467
88,553
Valuation allowance
(16,612)
(16,539)
Gross deferred tax assets after valuation allowance
70,855
72,014
Deferred tax liabilities:
Intangible assets
(29,642)
(26,746)
Right of use asset
(14,406)
(15,677)
Fixed assets
(3,042)
(4,197)
Other
(559)
(370)
Gross deferred tax liabilities
(47,649)
(46,990)
Deferred tax assets, net
$
23,206
$
25,024
At each reporting date, the Company evaluates the positive and negative evidence used to determine the likelihood
of realization of its deferred tax assets. The Company maintained a valuation allowance in the amount of $16.6 million and
$16.5 million at December 31, 2024 and 2023, respectively, relating to deferred tax assets on items of a capital nature as well
as certain state deferred tax assets.
As of December 31, 2024, the Company had net operating loss carry-forwards for federal income tax purposes
Notes to Consolidated Financial Statements—(Continued)
The following presents a reconciliation of the provision (benefit) for income taxes computed at the federal statutory
rate to the provision (benefit) for income taxes recognized on the Consolidated Statements of Operations for the years
indicated:
F-23
Activity in unrecognized tax benefits were as follows:
Years Ended December 31,
(in thousands)
2024
2023
2022
Balance, beginning of year
$
856
$
856
$
1,235
Decrease related to tax positions taken in prior years
(214)
(214)
(593)
Increase related to positions taken in the current year
214
214
214
Balance, end of year
$
856
$
856
$
856
If recognized, $0.7 million of the $0.9 million gross unrecognized tax benefit balance at December 31, 2024 would
favorably impact the Company's effective income tax rate. The Company does not expect any significant changes to its
liability for unrecognized tax benefits during the next 12 months.
The Company recognizes interest and penalties related to income tax matters within income tax expense. The
Company recorded no interest or penalties related to unrecognized tax benefits at December 31, 2024, 2023 and 2022.
The earliest federal tax year that remains open for examination is 2021. The earliest open years in the Company's
major state tax jurisdictions are 2010 for Connecticut and 2021 for all of the Company's remaining state tax jurisdictions.
11. Debt
Credit Agreement
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 $22.8 million outstanding under the Term Loan in 2024 and
had $236.1 million outstanding at December 31, 2024 under the Term Loan. In accordance with ASC 835, Interest, the
amounts outstanding under the Company's Term Loan are presented on the Consolidated Balance Sheet net of related debt
issuance costs, which were $3.9 million as of December 31, 2024.
Amounts outstanding under the Credit Agreement bear interest at an annual rate equal to, at the option of the
Company, either SOFR (adjusted for reserves) for interest periods of one, three or six months (or, solely in the case of the
revolving credit facility, if agreed to by each relevant Lender, 12 months) or an alternate base rate, in either case plus an
applicable margin. The applicable margins are 2.25%, in the case of SOFR-based loans, and 1.25%, in the case of alternate
base rate loans. Interest is payable quarterly in arrears with respect to alternate base rate loans and on the last day of each
interest period with respect to SOFR-based loans (but, in the case of any SOFR-based loan with an interest period of more
than three months, at three-month intervals). The Credit Agreement contains SOFR and other subsequent benchmark
successor provisions.
The terms of the Credit Agreement require the Company to pay a quarterly commitment fee on the average unused
amount of the revolving credit facility. The fee is initially set at 0.50% and following the first delivery of certain financial
reports, will range from 0.375% to 0.50%, based on the secured net leverage ratio of the Company as of the last day of the
preceding fiscal quarter, as reflected in such financial reports.
The Term Loan amortizes at the rate of 1.00% per annum payable in equal quarterly installments on the last day of
each calendar quarter, commencing on December 31, 2021. In addition, the Credit Agreement requires that the Term Loan be
Notes to Consolidated Financial Statements—(Continued)
represented by a $5.2 million deferred tax asset. The related federal net operating loss carry-forwards are scheduled to begin
to expire in the year 2031. As of December 31, 2024, the Company had state net operating loss carry-forwards, varying by
subsidiary and jurisdiction, represented by a $3.9 million deferred tax asset. Certain state net operating loss carry-forwards
are scheduled to begin to expire in 2025.
Internal Revenue Code Section 382 ("Section 382") limits tax deductions for net operating losses, capital losses and
net unrealized built-in losses after there is a substantial change in ownership in a corporation's stock involving a 50-
percentage point increase in ownership by 5% or larger stockholders. At December 31, 2024, the Company had pre-change
losses represented by deferred tax assets totaling $5.7 million that are subject to Section 382 limits. The utilization of these
assets is subject to an annual limitation of $1.1 million.
F-24
Fiscal Year
Amount
(in thousands)
2025
$
2,750
2026
2,750
2027
2,750
2028
227,813
$
236,063
12. Commitments and Contingencies
Legal Matters
The Company is involved from time to time in litigation and arbitration, as well as examinations, inquiries and
investigations by various regulatory bodies, involving its compliance with, among other things, securities laws, client
investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting its products
and other activities.
The Company records a liability when it believes that it is both probable that a liability has been incurred and the
amount of the liability can be reasonably estimated. Significant judgment is required in both the determination of probability
and the determination as to whether a loss is reasonably estimable. Based on information currently available, available
insurance coverage, indemnities and established reserves, the Company believes that the outcomes of its legal and regulatory
proceedings are not likely, either individually or in the aggregate, to have a material adverse effect on the Company's results
of operations, cash flows or consolidated financial condition. However, in the event of unexpected subsequent
developments, and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no
assurance that its assessment of any legal matter will reflect the ultimate outcome, and an adverse outcome in certain
matters could have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or
annual periods.
Notes to Consolidated Financial Statements—(Continued)
mandatorily prepaid with (i) 50% of the Company’s excess cash flow on an annual basis, stepping down to 25% if the
Company’s secured net leverage ratio declines to 2:1 or below and stepping down to 0% if the Company’s secured net
leverage ratio declines below 1.5:1; (ii) 50% of the net proceeds of certain asset sales, casualty or condemnation events,
subject to customary reinvestment rights; and (iii) 100% of the proceeds of any indebtedness incurred to refinance the term
loans or other refinancing indebtedness as well as indebtedness incurred other than indebtedness permitted to be incurred
by the Credit Agreement. At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce
the commitment under the facility in minimum specified increments or prepay loans in whole or in part, subject to the
payment of breakage fees with respect to SOFR-based loans and, in the case of any term loans that are prepaid in connection
with a "repricing transaction" occurring within the six-month period following the closing date of the Credit Agreement, a
1.00% premium.
The Credit Agreement contains customary affirmative and negative covenants, including covenants that affect,
among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or
dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends
and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend
documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, subject to
customary exceptions, thresholds, qualifications and "baskets." In addition, the Credit Agreement contains a financial
performance covenant that is only applicable when greater than 35% of the revolving credit facility is outstanding, requiring a
maximum leverage ratio, as of the last day of each of the four fiscal quarter periods, of no greater than the levels set forth in
the Credit Agreement.
Future minimum Term Loan payments (exclusive of any mandatory excess cash-flow repayments) as of December 31,
2024 were as follows:
F-25
13. Equity Transactions
Dividends
During the first and second quarters of the year ended December 31, 2024, the Board of Directors declared quarterly
cash dividends on the Company's common stock of $1.90 each. During the third and fourth quarters of the year ended
December 31, 2024, the Board of Directors declared quarterly cash dividends on the Company's common stock of $2.25 each.
Total dividends declared on the Company's common stock were $60.9 million for the year ended December 31, 2024.
At December 31, 2024, $20.0 million was included as dividends payable in liabilities on the Consolidated Balance
Sheet representing the fourth quarter dividends to be paid on February 12, 2025 for common stock shareholders of record as
of January 31, 2024.
On February 26, 2025, the Company declared a quarterly cash dividend of $2.25 per common share to be paid on
May 14, 2025 to shareholders of record at the close of business on April 30, 2025.
Common Stock Repurchases
During the year ended December 31, 2024, the Company repurchased 201,233 common shares at a weighted
average price of $222.94 per share, for a total cost, including fees and expenses, of $45.1 million under its share repurchase
program. As of December 31, 2024, 403,312 shares remain available for repurchase. Under the terms of the program, the
Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases,
privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business
conditions. The program, which has no specified term, may be suspended or terminated at any time.
14. Retirement Savings Plan
The Company sponsors a defined contribution 401(k) retirement plan (the "401(k) Plan") covering all employees who
meet certain age and service requirements. Employees may contribute a percentage of their eligible compensation into the
401(k) Plan, subject to certain limitations imposed by the Internal Revenue Code. The Company matches employees'
contributions at a rate of 100% of employees' contributions up to the first 5.0% of the employees' compensation contributed
to the 401(k) Plan. The Company's matching contributions were $8.7 million, $8.3 million and $7.4 million in 2024, 2023 and
2022, respectively.
15. Stock-Based Compensation
Equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and
unrestricted shares of common stock, may be granted to officers, employees and directors of the Company pursuant to the
Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan"). At December 31, 2024, 828,882 shares of common stock
remain available for issuance of the 3,825,000 shares that are authorized for issuance under the Omnibus Plan.
Stock-based compensation expense is summarized as follows:
Years Ended December 31,
(in thousands)
2024
2023
2022
Stock-based compensation expense
$
32,841
$
26,825
$
24,042
Restricted Stock Units
Each RSU entitles the holder to one share of common stock when the restriction expires. RSUs may be time-vested
or performance-contingent PSUs that convert into RSUs after performance measurement is complete and generally vest in
one to three years. Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued
from treasury stock.
Notes to Consolidated Financial Statements—(Continued)
F-26
RSU activity, inclusive of PSUs, for the year ended December 31, 2024 is summarized as follows:
Number
of shares
Weighted Average
Grant Date
Fair Value
Outstanding at December 31, 2023
344,717
$
204.48
Granted
128,375
$
234.57
Forfeited
(27,210) $
194.76
Settled
(128,393) $
233.20
Outstanding at December 31, 2024
317,489
$
205.86
The grant-date intrinsic value of RSUs granted during the year ended December 31, 2024 was $30.1 million.
Years Ended December 31,
(in millions, except per share values)
2024
2023
2022
Weighted-average grant-date fair value per share
$
234.57
$
160.74
$
194.46
Fair value of RSUs vested
$
29.9
$
24.8
$
23.8
For the years ended December 31, 2024, 2023 and 2022, a total of 50,910, 79,516 and 79,471 RSUs, respectively,
were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations
and for which the Company paid $11.7 million, $13.8 million and $16.8 million, respectively, in minimum employee tax
withholding obligations. These net share settlements had the effect of share repurchases by the Company as they reduced
the number of shares that would have otherwise been issued as a result of the vesting.
During the years ended December 31, 2024 and 2023, the Company granted 29,276 and 44,583 PSUs, respectively,
that contain performance-based metrics in addition to a service condition. Compensation expense for PSUs is generally
recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value
method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC
718, Stock Compensation ("ASC 718") and (ii) the Monte Carlo simulation valuation model for awards that contain a "market
condition" performance metric under ASC 718. Compensation expense for PSU awards that contain a market condition is
fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition.
Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability
assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the
performance period.
As of December 31, 2024 and 2023, unamortized stock-based compensation expense for unvested RSUs and PSUs
was $27.9 million and $30.3 million, respectively, with a weighted average remaining contractual life of 1.1 years and 1.1
years, respectively. The Company did not capitalize any stock-based compensation expenses during the years ended
December 31, 2024, 2023 and 2022.
Employee Stock Purchase Plan
The Company offers an employee stock purchase plan that allows employees to purchase shares of common stock on
the open market at market price through after-tax payroll deductions. The initial transaction fees are paid for by the
Company and shares of common stock are purchased on a quarterly basis. The Company does not reserve shares for this plan
or discount the purchase price of the shares.
Notes to Consolidated Financial Statements—(Continued)
F-27
16. Earnings (Loss) Per Share
The computation of basic and diluted EPS is as follows:
Years Ended December 31,
(in thousands, except per share amounts)
2024
2023
2022
Net Income (Loss)
$
152,453
$
141,476
$
106,628
Noncontrolling interests
(30,707)
(10,855)
10,913
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.
$
121,746
$
130,621
$
117,541
Shares (in thousands):
Basic: Weighted-average number of shares outstanding
7,082
7,249
7,391
Plus: Incremental shares from assumed conversion of dilutive instruments
128
126
191
Diluted: Weighted-average number of shares outstanding
7,210
7,375
7,582
Earnings (Loss) per Share—Basic
$
17.19
$
18.02
$
15.90
Earnings (Loss) per Share—Diluted
$
16.89
$
17.71
$
15.50
The following table details the securities that have been excluded from the above computation of weighted-average
number of shares for diluted EPS, because the effect would be anti-dilutive.
Years Ended Years Ended December 31,
(in thousands)
2024
2023
2022
Restricted stock units and stock options
1
2
33
Total anti-dilutive securities
1
2
33
17. Segments
ASC 280 establishes disclosure requirements relating to operating segments in annual and interim financial
statements. Operating segments are defined as components of an enterprise about which separate financial information is
available that is regularly evaluated by the CODM in deciding how to allocate resources to the segment and assess its
performance. The Company's Chief Executive Officer is the Company's CODM. The Company operates in one business
segment, namely as an asset manager providing investment management and related services for individual and institutional
clients. Although the Company provides disclosures regarding assets under management and other asset flows by product,
the Company's determination that it operates in one business segment is based on the fact that the same investment
professionals manage both retail and institutional products, operational resources support multiple products, such products
have the same or similar regulatory framework and the Company's CODM reviews the Company's financial performance on a
consolidated level.
The key GAAP measure of segment profit or loss that the CODM uses to evaluate the Company’s financial
performance and allocate resources of the Company is net income, as reported on the Company’s Consolidated Statements of
Operations. In addition, the CODM uses net income in deciding whether to reinvest profits or allocate profits to other uses of
capital, such as for acquisitions or to pay dividends. All expense categories on the Consolidated Statements of Operations are
significant and there are no other significant segment expenses that would require disclosure. Assets provided to the CODM
are consistent with those reported on the Consolidated Balance Sheets.
18. Redeemable Noncontrolling Interests
Redeemable noncontrolling interests
Minority interests held in a majority-owned investment management subsidiary are subject to holder put rights and
Company call rights at pre-established multiples of earnings before interest, taxes, depreciation and amortization and, as
such, are considered redeemable at other than fair value. The rights are exercisable at pre-established intervals or upon
certain conditions, such as retirement. The put and call rights are not legally detachable or separately exercisable and are
deemed to be embedded in the related noncontrolling interests. The Company, in purchasing equity of the investment
management subsidiary, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash
flow associated with any purchased equity. The minority interests in the investment management subsidiary are recorded at
estimated redemption value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance
Notes to Consolidated Financial Statements—(Continued)
F-28
Sheets, and any changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of
Operations within noncontrolling interests.
Redeemable noncontrolling interests for the year ended December 31, 2024 included the following amounts:
(in thousands)
CIP
Noncontrolling
Interests -
Investment
Manager
Total
Balance at December 31, 2023
$
30,643
$
74,226
$
104,869
Net income (loss) attributable to noncontrolling interests
3,267
6,991
10,258
Changes in redemption value (1)
—
19,680
19,680
Total net income (loss) attributable to noncontrolling interests
3,267
26,671
29,938
Affiliate equity sales (purchases)
—
(29,015)
(29,015)
Net subscriptions (redemptions) and other
11,757
(10,267)
1,490
Balance at December 31, 2024
$
45,667
$
61,615
$
107,282
(1)
Relates to noncontrolling interests redeemable at other than fair value.
Equity awards of majority-owned investment management subsidiary
The Company also issues equity-based profit-interest awards of the investment manager to certain of its employees,
with certain awards having up to a three-year vesting period when issued. These profit-interest awards are subject to holder
put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization,
with certain awards also subject to pre-established thresholds. The profit-interest awards are accounted for as cash settled
liability awards under ASC 718, with changes in value at each reporting date recognized as compensation expense over the
requisite service period if any, in the Company’s Consolidated Statements of Operations. The awards are classified as a
liability within accrued compensation and benefits on the Consolidated Balance Sheets until the award is settled.
Additionally, these profit-interest awards have a right to participate in distributions of the affiliate which are recorded as
compensation expense in the Company’s Consolidated Statements of Operations.
Accrued compensation associated with these awards was $19.4 million and $8.2 million at December 31, 2024 and
2023, respectively. Compensation expense related to these awards totaled $8.2 million and $1.1 million for the years ended
December 31, 2024 and 2023, respectively.
19. Consolidation
The consolidated financial statements include the accounts of the Company, its subsidiaries and investment products
that are consolidated. A VOE is consolidated when the Company is considered to have a controlling financial interest, which is
typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern
the financial and operating policies of the entity.
In the normal course of its business, the Company sponsors various investment products, some of which are
consolidated by the Company. CIP includes both VOEs, made up primarily of U.S. retail funds and ETFs in which the Company
holds a controlling financial interest, and VIEs, which consist of collateralized loan obligations ("CLO") and certain global and
private funds ("GF") of which the Company is considered the primary beneficiary. The consolidation and deconsolidation of
these investment products have no impact on the Company's net income (loss). The Company's risk with respect to these
investment products is limited to its beneficial interests in these products. The Company has no right to the benefits from,
and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees
generated from, these products.
Notes to Consolidated Financial Statements—(Continued)
F-29
The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the
Consolidated Balance Sheets as of December 31, 2024 and 2023:
As of December 31,
2024
2023
VOEs
VIEs
VOEs
VIEs
(in thousands)
CLOs
GFs
CLOs
GFs
Cash and cash equivalents
$
5,179
$
125,995
$
3,247
$
1,223
$
98,101
$
2,088
Investments
40,678
2,141,626
88,413
30,985
1,972,342
79,386
Other assets
403
172,707
1,261
174
41,985
1,076
Notes payable
—
(2,171,946)
—
—
(1,922,243)
—
Securities purchased payable and other
liabilities
(4,271)
(151,922)
(1,840)
(740)
(89,167)
(616)
Noncontrolling interests
(12,452)
(4,143)
(33,215)
(7,316)
(4,363)
(23,327)
Net interests in CIP
$
29,537
$
112,317
$
57,866
$
24,326
$
96,655
$
58,607
Consolidated CLOs
The majority of the Company's CIP that are VIEs are CLOs. A majority-owned consolidated private fund, whose
primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included. At
December 31, 2024, the Company consolidated seven CLOs. The financial information of CLOs is included on the Company's
consolidated financial statements on a one-month lag based upon the availability of their financial information.
Investments of CLOs
The CLOs held investments of $2.1 billion at December 31, 2024, consisting of bank loan investments that comprise
the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries. These
bank loan investments mature at various dates between 2025 and 2033 and generally pay interest at SOFR plus a spread.
Notes Payable of CLOs
The CLOs held notes payable with a total value, at par, of $2.4 billion at December 31, 2024, consisting of senior
secured floating rate notes payable with a par value of $2.2 billion and subordinated notes with a par value of $244.9 million.
These note obligations bear interest at variable rates based on SOFR plus a pre-defined spread.
The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i)
ownership in the subordinated notes and (ii) accrued management fees. The secured notes of the consolidated CLOs have
contractual recourse only to the related assets of the CLO and are classified as financial liabilities. Although these beneficial
interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13,
Consolidation (Topic 810) ("ASU 2014-13"), results in the net assets of the consolidated CLOs shown above to be equivalent to
the beneficial interests retained by the Company at December 31, 2024, as shown in the table below:
(in thousands)
Subordinated notes
$
111,079
Accrued investment management fees
1,238
Total Beneficial Interests
$
112,317
Notes to Consolidated Financial Statements—(Continued)
F-30
The following table represents income and expenses of the consolidated CLOs included on the Company's
Consolidated Statements of Operations for the period indicated:
Year Ended
December 31, 2024
(in thousands)
Income:
Realized and unrealized gain (loss), net
$
(16,450)
Interest income
197,314
Total Income
$
180,864
Expenses:
Other operating expenses
$
6,178
Interest expense
161,192
Total Expense
167,370
Noncontrolling interests
(769)
Net Income (loss) attributable to CLOs
$
12,725
The following table represents the Company's own economic interests in the consolidated CLOs, which are
eliminated upon consolidation:
Year Ended
December 31, 2024
(in thousands)
Distributions received and unrealized gains (losses) on the
subordinated notes held by the Company
$
3,824
Investment management fees
8,901
Total Economic Interests
$
12,725
Fair Value Measurements of CIP
The assets and liabilities of CIP measured at fair value on a recurring basis as of December 31, 2024 and 2023 by fair
value hierarchy level were as follows:
As of December 31, 2024
(in thousands)
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
127,695
$
—
$
—
$
127,695
Debt investments
—
2,239,924
6,676
2,246,600
Equity investments
22,993
111
1,013
24,117
Total assets measured at fair value
$
150,688
$
2,240,035
$
7,689
$
2,398,412
Liabilities
Notes payable
$
—
$
2,171,946
$
—
$
2,171,946
Short sales
356
—
—
356
Total liabilities measured at fair value
$
356
$
2,171,946
$
—
$
2,172,302
Notes to Consolidated Financial Statements—(Continued)
F-31
As of December 31, 2023
(in thousands)
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
98,101
$
—
$
—
$
98,101
Debt investments
241
2,012,760
36,616
2,049,617
Equity investments
32,642
8
446
33,096
Total assets measured at fair value
$
130,984
$
2,012,768
$
37,062
$
2,180,814
Liabilities
Notes payable
$
—
$
1,922,243
$
—
$
1,922,243
Short sales
518
—
—
518
Total liabilities measured at fair value
$
518
$
1,922,243
$
—
$
1,922,761
The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company's CIP
measured at fair value.
Level 1 assets represent cash investments in money market funds and debt and equity investments that are valued
using published net asset values or the official closing price on the exchange on which the securities are traded.
Level 2 assets represent most debt securities (including bank loans) and certain equity securities (including non-U.S.
securities), for which closing prices are not readily available or are deemed to not reflect readily available market prices, and
are valued using an independent pricing service. Debt investments, other than bank loans, are valued based on quotations
received from independent pricing services or from dealers who make markets in such securities. Bank loan investments,
which are included as debt investments, are generally priced at the average mid-point of bid and ask quotations obtained
from a third-party pricing service. Fair value may also be based upon valuations obtained from independent third-party
brokers or dealers utilizing matrix pricing models that consider information regarding securities with similar characteristics.
Level 3 assets include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based
on pricing models used by market makers in the security. These securities are valued using unadjusted prices from an
independent pricing service.
Level 1 liabilities consist of short sales transactions in which a security is sold that is not owned or is owned but there
is no intention to deliver, in anticipation that the price of the security will decline. Short sales are recorded on the Condensed
Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.
Level 2 liabilities consist of notes payable issued by CLOs and are measured using the measurement alternative in
ASU 2014-13. Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the
fair value of the beneficial interests held by the Company, and (ii) the carrying value of any beneficial interests that represent
compensation for services. The fair value of the beneficial interests held by the Company is based on third-party pricing
information without adjustment.
The securities purchased payable at December 31, 2024 and 2023 approximated fair value due to the short-term
nature of the instruments.
Notes to Consolidated Financial Statements—(Continued)
F-32
The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable
inputs were used to determine fair value:
Year Ended December 31,
(in thousands)
2024
2023
Level 3 Investments of CIP (1)
Balance at beginning of period
$
37,062
$
43,581
Purchases
2,062
6,213
Sales
(43,179)
(21,784)
Realized and unrealized gains (losses), net
459
(791)
Transfers to Level 2
(120,916)
(120,536)
Transfers from Level 2
132,201
130,379
Balance at end of period
$
7,689
$
37,062
(1) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without
adjustment. Transfers in and/or out of levels are reflected when significant inputs, including market inputs or
performance attributes, used for the fair value measurement become observable/unobservable at period end.
Nonconsolidated VIEs
The Company serves as the collateral manager for other CLOs that are not consolidated. The assets and liabilities of
these CLOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership of, nor holds any
notes issued by, the CLOs, and provides neither recourse nor guarantees. The Company has determined that the investment
management fees it receives for serving as collateral manager for these CLOs did not represent a variable interest as (i) the
fees the Company earns are compensation for services provided and are commensurate with the level of effort required to
provide the investment management services, (ii) the Company does not hold other interests in the CLOs that individually, or
in the aggregate, would absorb more than an insignificant amount of the CLOs' expected losses or receive more than an
insignificant amount of the CLOs' expected residual return, and (iii) the investment management arrangement only includes
terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.
The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary
beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most
significantly impact the entities' economic performance. At December 31, 2024, the carrying value and maximum risk of loss
related to the Company's interest in these VIEs was $27.0 million.
Notes to Consolidated Financial Statements—(Continued)
F-33
Exhibit 31.1
CERTIFICATION UNDER SECTION 302
I, George R. Aylward, certify that:
1. I have reviewed this Annual Report on Form 10-K of Virtus Investment Partners, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 28, 2025
/S/
GEORGE R. AYLWARD
George R. Aylward
President, Chief Executive Officer and Director
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION UNDER SECTION 302
I, Michael A. Angerthal, certify that:
1. I have reviewed this Annual Report on Form 10-K of Virtus Investment Partners, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 28, 2025
/S/
MICHAEL A. ANGERTHAL
Michael A. Angerthal
Executive Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Exhibit 32.1
CERTIFICATIONS OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of Virtus Investment Partners, Inc. (the “Company”) for the period
ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of
the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 28, 2025
/S/
GEORGE R. AYLWARD
George R. Aylward
President, Chief Executive Officer and Director
(Principal Executive Officer)
/S/
MICHAEL A. ANGERTHAL
Michael A. Angerthal
Executive Vice President, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
[THIS PAGE INTENTIONALLY LEFT BLANK]
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 each non-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 these non-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%
S-1
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.
S-2
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.
S-3
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.
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Additional Information Regarding Mutual Fund Investment Performance
Additional information on Virtus Funds rated by Morningstar for the period ending December 31, 2024:
Description
Overall
3 yr.
5 yr.
10 yr.
Number of 3/4/5 Star Funds
54
45
45
47
Percentage of Assets
90%
75%
82%
91%
Number of 4/5 Star Funds
32
23
27
30
Percentage of Assets
72%
41%
60%
75%
Total Funds
70
70
66
62
Data quoted represents past performance. Past performance does not guarantee future results. Current
performance may be lower or higher than the performance data quoted. Investing involves risk, including the
possible loss of principal. The value of your investment will fluctuate over time and you may gain or lose money.
Morningstar Ratings:
The Morningstar RatingTM for funds, or “star rating,” is calculated for managed products (including mutual funds,
variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts)
with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single
population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that
accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward
variations and rewarding consistent performance. The top 10% of products in each product category receive
5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom
10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of
the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.
The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year
rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for
120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to
the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all
three rating periods. Ratings do not take into account the effects of sales charges and loads. A fee was paid to
Morningstar to license the use of the Stars, Rankings, and Ratings.
© 2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar
and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses
arising from any use of this information. Past performance is no guarantee of future results.
Strong ratings are not indicative of positive fund performance. Absolute performance for some funds was negative.
For complete investment performance, please visit virtus.com.
Please carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. For this and
other information about the Virtus Mutual Funds, call 1-800-243-4361 or visit virtus.com for a prospectus. Read it
carefully before you invest or send money.
Virtus Mutual Funds are distributed by VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment
Partners, Inc.
S-5
Peer Companies Utilized for Comparative Financial Results
▪
Acadian Asset Management Inc.*
▪
Affiliated Managers Group, Inc.
▪
AllianceBernstein Holding L.P.
▪
Artisan Partners Asset Management Inc.
▪
Cohen & Steers, Inc.
▪
Federated Hermes, Inc.
▪
Franklin Resources, Inc.
▪
Janus Henderson Group plc
▪
Invesco Ltd.
▪
T. Rowe Price Group, Inc.
▪
Victory Capital Holdings, Inc.
*
Formerly known as BrightSphere Investment Group Inc.
S-6
Board of Directors
George R. Aylward
President and Chief Executive Officer
Virtus Investment Partners
Peter L. Bain2
President, Chief Executive Officer and Director (Retired)
OM Asset Management
(Now known as Acadian Asset Management)
Susan S. Fleming, Ph.D.1,3
Keynote Speaker and Executive Educator
Paul G. Greig1
Chairman of the Board (Retired)
Opus Bank
Timothy A. Holt 2,3
Non-Executive Chairman of the Board of Directors
Senior Vice President and Chief Investment Officer
(Retired) Aetna, Inc.
Melody L. Jones2,3
Founder
32-80 Advisors
W. Howard Morris1
President and Chief Investment Officer
The Prairie & Tireman Group
John C. Weisenseel1
Senior Vice President and Chief Financial Officer (Retired)
AllianceBernstein LP
1 Audit Committee
2 Compensation Committee
3 Governance Committee
Principal Corporate Officers
George R. Aylward
President, Chief Executive Officer and Director
Michael A. Angerthal
Executive Vice President
Chief Financial Officer and Treasurer
Elizabeth A. Lieberman
Executive Vice President
Chief Human Resources Officer
Barry M. Mandinach
Executive Vice President
Head of Distribution
Andra C. Purkalitis
Executive Vice President
Chief Legal Officer, General Counsel and Corporate Secretary
Richard W. Smirl
Executive Vice President
Chief Operating Officer
Investment Managers
Directors and Officers
AlphaSimplex Group, LLC
alphasimplex.com
Ceredex Value Advisors LLC
ceredexvalue.com
Duff & Phelps Investment Management Co.
dpimc.com
Kayne Anderson Rudnick Investment Management, LLC
kayne.com
Newfleet Asset Management
newfleet.com
NFJ Investment Group, LLC
nfjinv.com
Seix Investment Advisors
seixadvisors.com
Silvant Capital Management LLC
silvantcapital.com
Stone Harbor Investment Partners
shipemd.com
Sustainable Growth Advisers, LP
sgadvisers.com
Virtus ETF Solutions
virtus.com/investment-partners/virtus-etf-solutions
Virtus Multi-Asset
virtus.com/investment-partners/virtus-multi-asset
Virtus Systematic
virtus.com/investment-partners/virtus-systematic
Westchester Capital Management, LLC
westchestercapitalmanagement.com
For More Information
To receive additional information about Virtus
Investment Partners and access to other
shareholder services, visit Investor Relations in the
“Our Story” section of our website at virtus.com, or
contact us at:
Virtus Investment Partners, Inc.
Investor Relations
One Financial Plaza
Hartford, CT 06103
Telephone: 800-248-7971 (Option 2)
Fax: 413-774-1714
Email: investor.relations@virtus.com
For more information on Virtus ETFs, Retail
Separate Accounts, UCITS, Mutual Funds or other
products, call your financial representative or visit
us at virtus.com.
Security Listing
The common stock of Virtus Investment Partners, Inc.
is traded on the New York Stock Exchange under the
symbol “VRTS.”
Transfer Agent and Registrar
For information or assistance regarding your account,
please contact our transfer agent and registrar:
Virtus Investment Partners
c/o Broadridge Corporate Issuer Solutions, Inc.
P.O. Box 1342
Brentwood, NY 11717
Toll-free (within U.S.): 866-205-7273
Foreign Shareowners: 413-775-6091
Website:
shareholder.broadridge.com/VRTS
Email:
Virtus.Investment.Partners@virtus.com
Annual Meeting of Shareholders
Shareholders are invited to attend the 2025 Annual
Meeting of Shareholders on Wednesday, May 14,
2025 at 9:00 a.m. EDT at the company’s offices, One
Financial Plaza, 19th Floor, Hartford, Connecticut.
Shareholder Information
VIRTUS INVESTMENT PARTNERS | 2024 ANNUAL REPORT