VIRTUS INVESTMENT PARTNERS, INC. Q3 FY2024 earnings call

Overview: Strong operating and financial performance in Q3 with higher sequential sales, positive net flows in retail separate accounts, ETFs, and global funds, attractive investment performance, and an operating margin at the highest level in two years. ### Assets under management: Total assets under management rose 6% to $183.7 billion due to market performance and positive net flows. Average assets under management increased slightly. ### Sales and net flows: Sales increased 7% with growth in all product categories. Net outflows improved, with positive net flows in retail separate accounts, ETFs, and global funds. Open-end fund net outflows improved due to fixed income strategies. ### Financial results: Operating margin was 34.4%, up from 32.5% sequentially. Earnings per share adjusted was $6.92, the highest since Q1 2022. ### Capital management: Increased share buyback to $15 million, raised quarterly dividend for the 7th consecutive year, and had a modest net debt position.

Total assets under management increased 6% to $183.7 billion due to market performance and positive net flows in retail separate accounts, ETFs, and global funds. Sales increased 7% to $6.6 billion with growth in each product category. Net outflows improved to $1.7 billion from $2.6 billion in the prior quarter. Operating margin was 34.4%, the highest in two years, driven by higher investment management fees and lower expenses. Earnings per share as adjusted was $6.92, up 6% from the second quarter.

Flows: Retail separate accounts, global funds, and ETFs continue to have positive net flows in October. For institutional, known redemptions for Q4 exceed wins but revenue impact is neutral. ### Expenses: Other operating expenses are expected to remain around the $30 million level, with ongoing cost streamlining efforts. ### Product development: Active in introducing new products, including an actively managed ETF from Kayne Anderson Rudnick and an actively managed private credit CLO ETF from Sykes.

Actual results may differ materially from forward-looking statements due to known and unknown risks and uncertainties, including those in SEC filings, such as market volatility, client reallocations, and competitive pressures.

Q: Detail on Q4 flows and adjusted other OpEx A: Continued positive flows in retail separates, ETFs, and global funds in October; adjusted other operating expenses are expected to remain around the $30 million level with ongoing cost streamlining efforts.

Q: Inorganic growth and M&A A: Focus on organic growth in retail separate accounts, ETFs, and global funds; M&A looks to add capabilities not currently in the family of managers, particularly in private markets.

Q: Institutional pipeline and capital allocation A: Institutional outflows due to client reallocations; capital allocation balances dividend increases, share buybacks, and business investment while maintaining financial flexibility