2023 Q1 Form 10-K Financial Statement

#000095017023006124 Filed on March 06, 2023

View on sec.gov

Income Statement

Concept 2023 Q1 2022 Q4 2022
Revenue $201.3M $201.5M $854.8M
YoY Change -12.48% -12.05% -3.98%
Cost Of Revenue $37.65M $37.63M $161.1M
YoY Change -13.61% -16.74% -8.66%
Gross Profit $163.7M $163.9M $693.7M
YoY Change -12.21% -10.9% -2.83%
Gross Profit Margin 81.3% 81.32% 81.15%
Selling, General & Admin $69.99M $72.24M $290.6M
YoY Change -9.88% -4.24% 0.7%
% of Gross Profit 42.76% 44.08% 41.89%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $11.68M $11.15M $43.20M
YoY Change 10.12% 107.1% 129.3%
% of Gross Profit 7.14% 6.8% 6.23%
Operating Expenses $126.8M $83.39M $455.7M
YoY Change -1.34% 3.18% 48.24%
Operating Profit $74.57M $80.50M $399.1M
YoY Change -26.57% -21.93% -1.81%
Interest Expense -$12.57M -$10.57M -$45.97M
YoY Change 34.51% 151.1% 152.08%
% of Operating Profit -16.86% -13.14% -11.52%
Other Income/Expense, Net -$12.70M -$120.0K -$49.08M
YoY Change 15.46% 33.33% 13163.51%
Pretax Income $61.87M $69.15M $350.0M
YoY Change -31.67% -19.15% -0.17%
Income Tax $12.60M $16.88M $74.52M
% Of Pretax Income 20.37% 24.41% 21.29%
Net Earnings $49.27M $52.27M $275.5M
YoY Change -30.87% -25.05% -1.03%
Net Earnings / Revenue 24.47% 25.94% 32.23%
Basic Earnings Per Share $0.73 $4.02
Diluted Earnings Per Share $0.71 $0.74 $3.81
COMMON SHARES
Basic Shares Outstanding 67.58M 68.51M 68.48M
Diluted Shares Outstanding 69.73M 72.27M

Balance Sheet

Concept 2023 Q1 2022 Q4 2022
SHORT-TERM ASSETS
Cash & Short-Term Investments $38.34M $38.17M $38.17M
YoY Change -0.56% -45.1% -45.1%
Cash & Equivalents $38.34M $38.17M $38.17M
Short-Term Investments
Other Short-Term Assets $11.56M $8.443M $8.443M
YoY Change 46.08% 26.89% 26.89%
Inventory
Prepaid Expenses
Receivables $84.88M $82.73M $82.73M
Other Receivables $491.0K $1.747M $1.747M
Total Short-Term Assets $135.3M $131.1M $131.1M
YoY Change -3.5% -27.37% -27.37%
LONG-TERM ASSETS
Property, Plant & Equipment $19.65M $21.15M $34.54M
YoY Change -20.65% -16.4% 36.56%
Goodwill $981.8M $981.8M
YoY Change 0.0%
Intangibles $1.305B $1.315B
YoY Change -2.6%
Long-Term Investments $28.87M $27.27M $27.27M
YoY Change -10.87% -14.05% -16.93%
Other Assets
YoY Change
Total Long-Term Assets $2.393B $2.410B $2.410B
YoY Change -2.59% 0.44% 0.44%
TOTAL ASSETS
Total Short-Term Assets $135.3M $131.1M $131.1M
Total Long-Term Assets $2.393B $2.410B $2.410B
Total Assets $2.528B $2.541B $2.541B
YoY Change -2.64% -1.51% -1.51%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $58.82M $50.86M $50.86M
YoY Change 23.61% -18.1% -18.1%
Accrued Expenses $42.98M $58.46M $73.78M
YoY Change -0.95% 8.45% 36.86%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $339.6M $339.7M $355.0M
YoY Change -14.36% -20.14% -16.54%
LONG-TERM LIABILITIES
Long-Term Debt $986.4M $985.5M $985.5M
YoY Change -6.99% -12.63% -12.63%
Other Long-Term Liabilities $42.45M $42.12M $26.80M
YoY Change -20.03% 26.14% -19.73%
Total Long-Term Liabilities $1.029B $1.028B $1.012B
YoY Change -7.61% -11.51% -12.83%
TOTAL LIABILITIES
Total Short-Term Liabilities $339.6M $339.7M $355.0M
Total Long-Term Liabilities $1.029B $1.028B $1.012B
Total Liabilities $1.480B $1.475B $1.475B
YoY Change -11.23% -10.57% -10.57%
SHAREHOLDERS EQUITY
Retained Earnings $635.9M $609.1M
YoY Change 51.22%
Common Stock $712.3M $706.3M
YoY Change 4.73%
Preferred Stock
YoY Change
Treasury Stock (at cost) $330.0M $285.4M
YoY Change 86.31%
Treasury Stock Shares $14.62M $13.20M
Shareholders Equity $1.049B $1.065B $1.065B
YoY Change
Total Liabilities & Shareholders Equity $2.528B $2.541B $2.541B
YoY Change -2.64% -1.51% -1.51%

Cashflow Statement

Concept 2023 Q1 2022 Q4 2022
OPERATING ACTIVITIES
Net Income $49.27M $52.27M $275.5M
YoY Change -30.87% -25.05% -1.03%
Depreciation, Depletion And Amortization $11.68M $11.15M $43.20M
YoY Change 10.12% 107.1% 129.3%
Cash From Operating Activities $64.16M $67.09M $335.2M
YoY Change -14.24% -40.17% -10.89%
INVESTING ACTIVITIES
Capital Expenditures $572.0K $959.0K $5.245M
YoY Change -51.36% -125.3% -58.62%
Acquisitions $0.00 $880.0K
YoY Change -100.0% -99.84%
Other Investing Activities -$974.0K $2.299M -$1.072M
YoY Change -62.77% -100.42% -99.8%
Cash From Investing Activities -$1.546M $1.340M -$6.317M
YoY Change -62.47% -100.25% -98.87%
FINANCING ACTIVITIES
Cash Dividend Paid $22.11M $69.20M
YoY Change 27.21% 86.23%
Common Stock Issuance & Retirement, Net $87.07M
YoY Change 275.97%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -62.47M -97.11M -360.2M
YoY Change -38.54% -122.16% -258.52%
NET CHANGE
Cash From Operating Activities 64.16M 67.09M 335.2M
Cash From Investing Activities -1.546M 1.340M -6.317M
Cash From Financing Activities -62.47M -97.11M -360.2M
Net Change In Cash 164.0K -28.68M -31.36M
YoY Change -100.53% -699.79% -167.03%
FREE CASH FLOW
Cash From Operating Activities $64.16M $67.09M $335.2M
Capital Expenditures $572.0K $959.0K $5.245M
Free Cash Flow $63.58M $66.13M $330.0M
YoY Change -13.65% -42.95% -9.23%

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<p style="text-indent:0.0%;font-size:10.0pt;margin-top:12.0pt;font-family:Times New Roman;margin-bottom:0.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);text-transform:uppercase;color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:bold;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">NOTE 1. Organization and Nature of Business</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Victory Capital Holdings, Inc., a Delaware corporation (along with its wholly-owned subsidiaries, collectively referred to as the “Company,” “Victory,” or in the first-person notations of “we,” “us,” and “our”), was formed on February 13, 2013 for the purpose of acquiring Victory Capital Management Inc. (“VCM”) and Victory Capital Services, Inc. (“VCS”), formerly known as Victory Capital Advisers, Inc., which occurred on August 1, 2013. On February 12, 2018, the Company completed the initial public offering (the “IPO”) of its Class A common stock, which trades on the NASDAQ under the symbol “VCTR.”</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On and effective July 1, 2019, the Company completed the acquisition (the “USAA AMCO Acquisition” or “USAA AMCO”) of USAA Asset Management Company (“USAA Adviser”) and Victory Capital Transfer Agency, Inc. (“VCTA”), formerly known as the USAA Transfer Agency Company d/b/a USAA Shareholder Account Services. The USAA AMCO Acquisition includes USAA’s mutual fund and exchange traded fund (“ETF”) businesses and its 529 Education Savings Plan. Refer to Note 4, Acquisitions, for further details on the acquisition.</span><span style="color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> </span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">VCM is a registered investment adviser managing assets through mutual funds, institutional separate accounts, separately managed account products, unified managed account products, third-party ETF model strategies, collective trust funds, private funds, undertakings for the collective investment in transferrable securities, other pooled vehicles and ETFs. VCM also provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds and the mutual fund series of the Victory Portfolios II (collectively, the “Victory Funds”), a family of open-end mutual funds, the VictoryShares (the Company’s ETF brand) and the USAA Mutual Fund Trust, a family of open-end mutual funds (the “USAA Funds”). Additionally, VCM employs all of the Company’s United States investment professionals across its Franchises and Solutions, which are not separate legal entities. VCM’s wholly-owned subsidiaries include RS Investment Management (Singapore) Pte. Ltd., RS Investments (Hong Kong) Limited, RS Investments (UK) Limited, Victory Capital Digital Assets, LLC and NEC Pipeline LLC. VCS is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for the Victory Funds, the USAA Funds and the USAA 529 Education Savings Plan as well as placement agent for certain private funds managed by VCM. VCTA is registered with the SEC as a transfer agent for the USAA Funds.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On March 1, 2021, the Company completed the acquisition of THB Asset Management (“THB”), resulting in THB becoming the Company’s tenth investment franchise. THB manages responsible investment portfolios in the micro-cap, small-cap and mid-cap asset classes, including U.S., global and international strategies. At March 1, 2021, the THB AUM that was acquired totaled $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">547</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> million. Refer to Note 4, Acquisitions, for further details on the acquisition.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On November 1, 2021, the Company completed the acquisition of New Energy Capital Partners (“NEC”), resulting in NEC becoming the Company’s eleventh investment franchise. Founded in 2004 and based in Hanover, New Hampshire, NEC is an alternative asset management firm focused on debt and equity investments in clean energy infrastructure projects and companies. At November 1, 2021, the NEC AUM that was acquired totaled $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">795</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> million. Refer to Note 4, Acquisitions, for further details on the acquisition.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On December 31, 2021, the Company completed the acquisition of WestEnd Advisors, LLC (“WestEnd”), resulting in WestEnd becoming the Company’s twelfth investment franchise. Founded in 2004, and headquartered in Charlotte, North Carolina, WestEnd is an ETF strategist advisor that provides financial advisors with a turnkey, core model allocation strategy for either a holistic solution or complementary source of alpha. The firm offers four primary ETF strategies and one large cap core strategy, all in tax efficient Separately Managed Account (SMA) structures. At December 31, 2021, the WestEnd AUM that was acquired totaled $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">19.3</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> billion. WestEnd is a wholly-owned subsidiary of Victory Capital Holdings, Inc. and is the Company’s second registered investment adviser. Refer to Note 4, Acquisitions, for further details on the acquisition.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:bold;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Changes in Capital Structure</span><span style="color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:bold;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> </span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On February 12, 2018, the Company completed the initial public offering (“IPO”) of its Class A common stock. The Company issued </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">11,700,000</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> shares of Class A common stock at a price of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">13.00</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> per share at the closing of the IPO. On March 13, 2018, the Company issued an additional </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">1,110,860</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> shares of Class A common stock pursuant to the underwriters’ exercise of their option. All shares of common stock outstanding prior to the IPO were immediately converted into Class B common stock at a </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">one</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">-to-one ratio.</span><span style="color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> </span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On September 27, 2021, the Board of Directors approved amendments to the Company’s corporate charter and bylaws to eliminate the Company’s dual-class share structure. On November 19, 2021, the Company’s stockholders voted on and approved an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”), as amended, to eliminate the Company’s dual-class stock structure. The Amendment (i) converted all the shares of Class B Common Stock into an equal number of shares of Class A Common Stock (the “Conversion”), (ii) deleted provisions no longer applicable following the Conversion, (iii) renamed our Class A Common Stock as “Common Stock.”</span><span style="color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> </span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On July 1, 2019, concurrent with the USAA AMCO Acquisition, the Company (i) entered into the 2019 Credit Agreement, (ii) repaid all indebtedness outstanding under the 2018 Credit Agreement and (iii) terminated the 2018 Credit Agreement. The 2019 Credit Agreement was entered into among the Company, as borrower, the lenders from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent, pursuant to which the Company obtained </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">seven-year</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> term loans in an aggregate principal amount of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">1.1</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> billion and established a </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">five-year</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> revolving credit facility (which was unfunded as of the closing date) with aggregate commitments of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">100.0</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> million.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On January 17, 2020, the Company entered into the First Amendment to the 2019 Credit Agreement. Pursuant to the First Amendment, the Company refinanced the existing term loans (the “2019 Term Loans”) with replacement term loans (the “2020 Term Loans”) in an aggregate principal amount of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">952.0</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> million. The 2020 Term Loans provided for substantially the same terms as the 2019 Term Loans, including the same maturity date of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">July 1, 2026</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">, except that the </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">2020 Term Loans provided for a reduced applicable margin on the London Interbank Offered Rate (“LIBOR”) of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">75</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> basis point</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">s. The applicable margin on LIBOR under the 2020 Term Loans was </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">2.50</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">%, compared to </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">3.25</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">% under the 2019 Term Loans.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On February 18, 2021, the Company entered into the Second Amendment (the “Second Amendment”) to the 2019 Credit Agreement, as amended, with the other loan parties thereto, Barclays Bank PLC, as administrative agent, and the Royal Bank of Canada as fronting bank. Pursuant to the Second Amendment, the Company refinanced the 2020 Term Loans with replacement term loans in an aggregate principal amount of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">755.7</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> (the “Repriced Term Loans”). The Repriced Term Loans provide for substantially the same terms as the 2020 Term Loans, including the same maturity date of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">July 1, 2026</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">, except that the </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Repriced Term Loans provide for a reduced applicable margin on LIBOR of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">25</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> basis points</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">. The applicable margin on LIBOR under the Repriced Term Loans is </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">2.25</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">%, compared to </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">2.50</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">% under the 2020 Terms Loans.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On December 31, 2021, the Company entered into the Third Amendment to the Credit Agreement (the “Third Amendment”), dated as of July 1, 2019 (as amended by the First Amendment to Credit Agreement, dated as of January 17, 2020, and the Second Amendment to Credit Agreement, dated as of February 18, 2021) with the guarantors party thereto, Barclays Bank PLC, as administrative agent, and the lenders party thereto from time to time. Pursuant to the Third Amendment, the Company obtained incremental term loans (the “2021 Incremental Term Loans”) in an aggregate principal amount of $</span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">505.0</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> million and used the proceeds to fund the WestEnd Acquisition of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">100</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">% of the equity interests of WestEnd and to pay fees and expenses incurred in connection therewith. </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">The 2021 Incremental Term Loans will mature in 2028 and will bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves and subject to a </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">50</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> basis point floor) plus a margin of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">2.25</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">% or an alternate base rate plus a margin of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">1.25</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">%. The 2021 Incremental Term Loans will amortize at a rate of </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">1.00</span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">% per annum.</span></span><span style="color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> </span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">On September 23, 2022, the Company entered into the </span><span style="font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on the Repriced Term Loans and 2021 Incremental Term Loans from LIBOR to a rate based on SOFR plus a ten-basis point credit spread adjustment.</span></span><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;"> There was no change to the applicable margin on the referenced rate as a result of the Fourth Amendment.</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Refer to Note 4, Acquisitions, for further information on the USAA AMCO and WestEnd Acquisitions and Note 11, Debt, for additional information on the Company’s debt structure.</span></p>
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<p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:bold;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">Use of Estimates and Assumptions</span></p><p style="text-indent:0.0%;font-size:10.0pt;margin-top:6.0pt;font-family:Times New Roman;margin-bottom:6.0pt;text-align:justify;"><span style="background-color:rgba(0,0,0,0);color:rgba(0,0,0,1);white-space:pre-wrap;font-weight:normal;font-size:10.0pt;font-family:&quot;Arial&quot;, sans-serif;min-width:fit-content;">The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may ultimately differ from those estimates and the differences may be material.</span></p>
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