2024 Q1 Form 10-K Financial Statement

#000095017024022869 Filed on February 29, 2024

View on sec.gov

Income Statement

Concept 2024 Q1 2023 Q4 2023
Revenue $215.9M $205.8M $821.0M
YoY Change 7.22% 2.12% -3.95%
Cost Of Revenue $36.26M $36.44M $149.6M
YoY Change -3.69% -3.18% -7.14%
Gross Profit $179.6M $169.4M $671.4M
YoY Change 9.73% 3.34% -3.21%
Gross Profit Margin 83.2% 82.29% 81.78%
Selling, General & Admin $73.47M $70.65M $277.3M
YoY Change 4.97% -2.19% -4.57%
% of Gross Profit 40.91% 41.72% 41.3%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $7.601M $7.984M $41.65M
YoY Change -34.92% -28.39% -3.6%
% of Gross Profit 4.23% 4.71% 6.2%
Operating Expenses $131.0M $78.63M $492.6M
YoY Change 3.39% -5.7% 8.09%
Operating Profit $84.81M $90.72M $328.5M
YoY Change 13.74% 12.7% -17.7%
Interest Expense -$16.96M -$12.80M -$52.55M
YoY Change 34.85% 21.01% 14.31%
% of Operating Profit -19.99% -14.1% -16.0%
Other Income/Expense, Net -$12.92M $2.661M -$52.55M
YoY Change 1.78% -2317.5% 7.08%
Pretax Income $71.89M $73.52M $275.9M
YoY Change 16.19% 6.33% -21.18%
Income Tax $16.20M $18.32M $62.75M
% Of Pretax Income 22.54% 24.91% 22.74%
Net Earnings $55.69M $55.21M $213.2M
YoY Change 13.03% 5.62% -22.63%
Net Earnings / Revenue 25.8% 26.83% 25.96%
Basic Earnings Per Share $0.86 $3.22
Diluted Earnings Per Share $0.84 $0.82 $3.12
COMMON SHARES
Basic Shares Outstanding 64.32M 65.99M 66.20M
Diluted Shares Outstanding 65.97M 68.21M

Balance Sheet

Concept 2024 Q1 2023 Q4 2023
SHORT-TERM ASSETS
Cash & Short-Term Investments $79.94M $123.5M $123.5M
YoY Change 108.52% 223.67% 223.67%
Cash & Equivalents $79.94M $123.5M $123.5M
Short-Term Investments
Other Short-Term Assets $7.269M $5.785M $5.785M
YoY Change -37.12% -31.48% -31.48%
Inventory
Prepaid Expenses
Receivables $96.51M $86.13M $86.13M
Other Receivables $699.0K $1.444M $1.444M
Total Short-Term Assets $184.4M $216.9M $216.9M
YoY Change 36.34% 65.46% 65.46%
LONG-TERM ASSETS
Property, Plant & Equipment $17.55M $19.58M $19.58M
YoY Change -10.66% -7.42% -43.32%
Goodwill $981.8M $981.8M
YoY Change 0.0% 0.0%
Intangibles $1.277B $1.282B
YoY Change -2.18% -2.5%
Long-Term Investments $33.52M $31.81M $31.81M
YoY Change 16.12% 16.66% 16.66%
Other Assets
YoY Change
Total Long-Term Assets $2.322B $2.326B $2.326B
YoY Change -2.98% -3.49% -3.49%
TOTAL ASSETS
Total Short-Term Assets $184.4M $216.9M $216.9M
Total Long-Term Assets $2.322B $2.326B $2.326B
Total Assets $2.506B $2.543B $2.543B
YoY Change -0.87% 0.07% 0.07%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $62.02M $56.48M $56.48M
YoY Change 5.44% 11.04% 11.04%
Accrued Expenses $48.52M $55.46M $55.46M
YoY Change 12.91% -5.14% -24.83%
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 $259.9M $329.1M $329.1M
YoY Change -23.46% -3.12% -7.3%
LONG-TERM LIABILITIES
Long-Term Debt $990.2M $989.3M $989.3M
YoY Change 0.38% 0.38% 0.38%
Other Long-Term Liabilities $45.66M $42.50M $42.50M
YoY Change 7.55% 0.91% 58.58%
Total Long-Term Liabilities $1.036B $1.032B $1.032B
YoY Change 0.68% 0.4% 1.92%
TOTAL LIABILITIES
Total Short-Term Liabilities $259.9M $329.1M $329.1M
Total Long-Term Liabilities $1.036B $1.032B $1.032B
Total Liabilities $1.429B $1.490B $1.490B
YoY Change -3.42% 0.96% 0.96%
SHAREHOLDERS EQUITY
Retained Earnings $770.2M $736.9M
YoY Change 21.12% 20.97%
Common Stock $736.3M $729.1M
YoY Change 3.38% 3.23%
Preferred Stock
YoY Change
Treasury Stock (at cost) $457.5M $444.3M
YoY Change 38.65% 55.66%
Treasury Stock Shares
Shareholders Equity $1.077B $1.053B $1.053B
YoY Change
Total Liabilities & Shareholders Equity $2.506B $2.543B $2.543B
YoY Change -0.87% 0.07% 0.07%

Cashflow Statement

Concept 2024 Q1 2023 Q4 2023
OPERATING ACTIVITIES
Net Income $55.69M $55.21M $213.2M
YoY Change 13.03% 5.62% -22.63%
Depreciation, Depletion And Amortization $7.601M $7.984M $41.65M
YoY Change -34.92% -28.39% -3.6%
Cash From Operating Activities $68.68M $97.09M $330.3M
YoY Change 7.06% 44.71% -1.47%
INVESTING ACTIVITIES
Capital Expenditures $500.0K $769.0K $5.169M
YoY Change -12.59% -19.81% -1.45%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities -$410.0K -$772.0K -$2.672M
YoY Change -57.91% -133.58% 149.25%
Cash From Investing Activities -$910.0K -$1.541M -$7.841M
YoY Change -41.14% -215.0% 24.13%
FINANCING ACTIVITIES
Cash Dividend Paid $22.38M $85.43M
YoY Change 1.24% 23.45%
Common Stock Issuance & Retirement, Net $133.0M
YoY Change 52.77%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -111.3M -80.03M -237.1M
YoY Change 78.24% -17.58% -34.16%
NET CHANGE
Cash From Operating Activities 68.68M 97.09M 330.3M
Cash From Investing Activities -910.0K -1.541M -7.841M
Cash From Financing Activities -111.3M -80.03M -237.1M
Net Change In Cash -43.61M 15.52M 85.38M
YoY Change -26691.46% -154.11% -372.23%
FREE CASH FLOW
Cash From Operating Activities $68.68M $97.09M $330.3M
Capital Expenditures $500.0K $769.0K $5.169M
Free Cash Flow $68.18M $96.32M $325.1M
YoY Change 7.23% 45.65% -1.47%

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<p style="font-size:10pt;margin-top:12pt;font-family:Times New Roman;margin-bottom:12pt;text-align:justify;"><span style="text-transform:uppercase;color:#000000;white-space:pre-wrap;font-weight:bold;font-size:10pt;font-family:Arial;min-width:fit-content;">NOTE 1. Organization and Nature of Business</span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;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="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">On July 1, 2019, the Company completed the acquisition (the “USAA AMCO Acquisition” or “USAA AMCO”) of USAA Asset Management Company 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 included USAA’s mutual fund and ETF businesses and its 529 Education Savings Plan.</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">Victory provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors. With 11 autonomous Investment Franchises and a Solutions Platform, the Company offers a wide array of investment products, including actively and passively managed mutual funds, rules-based and active exchange traded funds (“ETFs”), institutional separate accounts, variable insurance products (“VIPs”), alternative investments, private closed end funds, and a 529 Education Savings Plan. The Company’s strategies are also offered through third-party investment products, including mutual funds, third-party ETF model strategies, retail separately managed accounts (“SMAs”) and unified managed accounts (“UMAs”) through wrap account programs, Collective Investment Trusts (“CITs”), and undertakings for the collective investment in transferable securities (“UCITs”).</span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">VCM is a registered investment adviser and provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds, the mutual fund series of the Victory Portfolios II and the Victory Portfolios III (collectively, the “Victory Funds”), a family of open-end mutual funds, and the VictoryShares (the Company’s ETF brand). 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 (UK) Limited, Victory Capital Digital Assets, LLC and NEC Pipeline LLC. RS Investments (Hong Kong) Limited, VCM’s other wholly-owned subsidiary, ceased operations on May 31, 2023.</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">VCS is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for the Victory Funds, which includes the mutual funds of the Victory Portfolios III (the “Victory Funds III”) and a 529 Education Savings Plan. VCS offers brokerage services to individual investors through an open architecture brokerage platform launched in April 2023. VCS is also the placement agent for certain private funds managed by VCM. VCTA is registered with the SEC as a transfer agent for the Victory Funds III.</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">On November 1, 2021, the Company completed the acquisition of </span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">100</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">% of the equity interests in New Energy Capital Partners (“NEC”). 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. AUM acquired in the NEC acquisition totaled $</span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">0.8</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> billion as of November 1, 2021.</span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">On December 31, 2021, the Company completed the acquisition (“WestEnd Acquisition”) of </span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">100</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">% of the equity interests in WestEnd Advisors, LLC (“WestEnd”). 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. AUM acquired in the WestEnd Acquisition totaled $</span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">19.3</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> billion on December 31, 2021. WestEnd is a wholly-owned subsidiary of Victory Capital Holdings, Inc. and is the Company’s second registered investment adviser.</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-weight:bold;font-size:10pt;font-family:Arial;min-width:fit-content;">Changes in Capital Structure</span><span style="color:#000000;white-space:pre-wrap;font-weight:bold;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;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</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">(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:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;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:10pt;font-family:Arial;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">seven-year</span></span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> term loans in an aggregate principal amount of $</span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">1.1</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> billion and established a </span><span style="font-size:10pt;font-family:Arial;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">five-year</span></span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> revolving credit facility (which was unfunded as of the closing date) with aggregate commitments of $</span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">100.0</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> million.</span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">On December 31, 2021, the Company entered into the Third Amendment to the 2019 Credit Agreement (the “Third Amendment”) and obtained incremental term loans (the “2021 Incremental Term Loans”) in an aggregate principal amount of $</span><span style="font-size:10pt;font-family:Arial;color:#000000;white-space:pre-wrap;min-width:fit-content;">505.0</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> million and used the proceeds to fund the WestEnd Acquisition and to pay fees and expenses incurred in connection therewith. The 2021 Incremental Term Loans will mature in 2028.</span><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;"> </span></p><p style="font-size:10pt;margin-top:6pt;font-family:Times New Roman;margin-bottom:6pt;text-align:justify;"><span style="color:#000000;white-space:pre-wrap;font-size:10pt;font-family:Arial;min-width:fit-content;">Refer to Note 4, Acquisitions, for further information on the WestEnd, NEC and USAA AMCO acquisitions and Note 11, Debt, for additional information on the Company’s debt structure.</span></p>
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