Victory Capital Holdings, Inc.

Good morning and welcome to the Victory Capital third quarter 2022 earnings conference call. All callers are in listen-only mode. Following the company's prepared remarks, there will be a question and answer session. I will now turn the call over to Mr. Matthew Dennis, Chief of Staff and Director of Investor Relations. Please go ahead, Mr. Dennis.

Thank you. Before I turn the call over to David Brown, I would like to remind you that during today's conference call, we may make a number of forward-looking statements. Please note that Victory Capital's actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release that was issued after the market closed yesterday disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance. Reconciliations between these non-GAAP measures and the most comparable GAAP measures are included in tables that can be found in our press release and in the slide presentation accompanying this call, both of which are available on the investor relations portion of our website at ir.vcm.com. It's now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

Thanks. Good morning and welcome to Victory Capital's third quarter 2022 earnings conference call. I'm joined today by Michael Pellicarpo, our President, Chief Financial and Administrative Officer, as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. I'll start today by providing an overview of the quarter and year-to-date period. Then we'll cover our investment performance, which continues to be very strong. After that, I will highlight our increasing capital return to shareholders and then turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, Mike, Matt, and I will be available to take your questions. The quarterly business overview begins on slide five. The equity and debt markets both continued their decline in the third quarter. Through the first nine months of this year, investors utilizing a traditional 60-40 portfolio allocation are enduring the largest drawdown since 1937 to put in perspective how challenging the markets have been. Despite the current market environment, our business performed exceptionally well, and that was very evident in the financial results we reported yesterday. While IUM and revenues were expectedly lower given the markets, adjusted EBITDA margin expanded to 50% in the third quarter, which was the ninth consecutive quarter above our 49% long-term guidance. This resulted in near-to-date adjusted EBITDA margin widening to 49.6%. The margins in our business are industry-leading and a testament to our business model. The most important in this equation is the excellent people we have operating our business. Quite simply, I believe we have the best group of employees in the industry here at Victory, and that, to me, is very evident in the performance of our company during these markets. Sales activity remained brisk with $6.6 billion of gross long-term sales in the quarter, which is 16% higher than during the same quarter last year, and up 29% from the same quarter of 2020. This is primarily a result of past investments we've made to build out and enhance our distribution capabilities, combined with a well-diversified product set, which we have consistently expanded over the years. To that end, in October, we further expanded our product set with the launch of the Victory Shares West End U.S. Sector ETF, ticker MODL. It delivers an investment approach that mirrors West End Advisors' existing U.S. sector strategy in a single ETF vehicle, increasing the availability of this strategy to a broader group of investors. Year-to-date gross sales reached a record $26.8 billion for the first nine months of 2022, which also highlights the experience and hard work of the individuals on our distribution and marketing teams. Net long-term flows improved from the second quarter of the year, resulting in positive year-to-date net long-term flows of $1.9 billion. West End Advisors has had positive long-term flows every month since we closed the transaction at the end of 2021. Additionally, our Victory Shares ETF business recorded its eighth straight quarter of positive long-term flows. Moreover, our institutional distribution channels have had positive net flows year-to-date as well. This is just a sample of some of the green shoots around flows we are seeing within our business during these volatile times. The swift upward movement in interest rates and the resulting significant outflows in most fixed income asset classes that have occurred year-to-date present a great opportunity once interest rates stabilize to increase market share by capturing a lot of the assets that have left on the way back. Our USAA fixed income franchise is well positioned to increase market share given their relative outperformance. Through the end of September, 83% and 96% of the USAA fixed income AUM has outperformed the respective benchmarks over the three and five year periods. And over an entire 10-year business cycle, 100% of this AUM has outperformed benchmarks. This is a well-resourced team that has an excellent long-term track record and already manages a sizable amount of assets. We also generated higher quarter-over-quarter adjusted net income with tax benefit per diluted share. In addition to supporting our industry-leading margins, our flexible cost structure affords us the ability to sustain investments in our strategic growth initiatives. We are very pleased to have the financial wherewithal to continue to reinvest in our business during all markets. Our business model is very durable in any market environment and has proven to be very resilient under the current market conditions. The build-out of our digital marketplace continues to make nice progress. We are looking forward to introducing more investor options and features to broaden and enhance the products and services available in our direct investor business. We expect to roll these enhancements out during the course of next year. Turning to slide seven, you can see the strong investment performance we deliver on behalf of our clients has continued in the quarter. The end of September, we had 52 mutual funds in ETFs with four or five-star overall ratings for Morningstar. This is up from 50 funds at the end of June, 44 funds at the end of March, and 43 funds at the beginning of the year and reflects our ability to generate excellent risk-adjusted returns for clients in a volatile market environment. These 52 funds account for more than two-thirds of our AUM and mutual funding ETFs. Looking at total AUM, 81% and 79% of our total AUM outperform benchmarks for the critical three- and five-year measurement periods as of September 30th. We believe this excellent performance will help augment future net flow activity. Cash flow generation remains strong in the quarter. We increased share repurchases in the quarter and acquired 1.8 million shares. This is a record amount for a quarter and aligns with our capital allocation strategy of being flexible and opportunistic. On our last call, we discussed striking a balance between debt reduction and share repurchases and the flexibility we have to pivot quickly should we see an opportunity. To be clear, we are still committed to reducing debt aggressively to support our acquisition strategy. This should be apparent in the amount of debt we've reduced so far this year and most recently this quarter. That said, we flexed towards more share repurchases in the third quarter for a few reasons. First, We believe that our current share price did not reflect the full value of our company and that it is a good use of our capital to purchase our shares at what we perceive as a discount to its full value. Second, we believe our debt is relatively cheap given our hedge and the existing structure of the non-hedge set. We will continue to be opportunistic and adjust our strategy to current market conditions as we move forward. From an acquisition perspective, we are not dissuaded by the current market environment and continue to be very active in evaluating opportunities. There are a lot of conversations happening, and I'm encouraged by what we have seen. With the current market volatility, there is a lot of merit in being patient and measured, but also having the resources and the wherewithal to execute when the opportunity is right. I feel we have balanced these two important principles and look forward to continuing our success in acquiring high-quality companies like we did in 2021 with the closing of three acquisitions. With that, I will turn it over to Mike for more details on the quarter's financials. Mike?