Victory Capital Holdings, Inc.

Good morning, and welcome to the Victory Capital first quarter 2023 earnings conference call. All callers are in a 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 risk 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 earnings 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.bcm.com. It's now my pleasure to turn the call over to David Brown, Chairman and CEO.

David? Thanks, Matt. Good morning and welcome to Victory Capital's first quarter 2023 earnings conference call. I'm joined today by Michael Pelicarpo, 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 first quarter. After that, I will turn the call over to Mike to review the financial results in detail. Following our prepared remarks, Mike, Matt, and I will be available to take your questions. The quarterly business overview begins on slide five. We generated strong financial results to start out the 2023 year. Average AUM increased for the first time in three quarters as the markets rebounded modestly and we achieved significant improvement in long-term net flows compared with the prior quarter. The improving net flow trajectory has also continued entering the second quarter. In April, we had an institutional redemption from a single client that totaled approximately $1.1 billion. You will see the impact of this in our April AUM release, which is scheduled for next week. This specific redemption was invested in a purely passive strategy managed by our solutions team with a fee of less than three basis points. and it was consequently not making any measurable margin contribution. Absent this redemption, we've achieved relatively flat net long-term flows thus far in the second quarter as of today. Our margin stayed strong, coming in at 49.3% this quarter, which is industry-leading and demonstrates the defensibility of our margins in this challenging market environment. Our margin durability is the result of our differentiated operating platform, combined with the determined daily execution by our team. Adjusted net income with tax benefit rose to $1.08 per diluted share in the quarter, up from $1.05 per diluted share in the previous quarter. Return of capital to shareholders continued to be robust to start the year. First, we repurchased more VCTR shares this quarter versus last quarter. We spent $44 million on the share repurchases and paid out $22 million in cash dividends for a total capital return of approximately $66 million in the quarter. As a reminder, in the first quarter, the Board increased the cash dividend by 28%, which is maintained in the current quarter. Our long-term margin guidance remains unchanged at 49%. Our guidance takes into account ongoing strategic investments in our business, which we continue to make. A good example of this is last month we launched Victory Capital Invest, which is our new marketplace brokerage platform. This is an open architecture brokerage platform which provides significantly more product choice and flexibility to existing and new direct investor clients. We are also continuing to make strategic investments in other areas of the business aimed at better harnessing data and enhancing our technology capabilities, adding distribution and marketing resources, and continuing to hire new talent. All these investments will help us grow our business in the future and all the associated costs are in our current operating margins and our guidance going forward. Turning to slide seven, the excellent investment performance we deliver on behalf of our clients was sustained during the first quarter. At quarter end, 44 of our mutual funds and ETFs had four or five-star overall ratings from Morningstar. These products with four or five stars account for two-thirds of our assets under management in mutual funds and ETFs. Additionally, approximately three-quarters of our total assets under management outperform benchmarks for the three-, five-, and 10-year measurement periods as of March 31. During the quarter, several of our mutual funds moved into the top quartile relative to their peer group, according to Morningstar. These included our Victory Income Fund as well as the Victory Tax-Exempt Short-Term Bond Fund. In total, 95% of fund assets under management managed by Victory Income Investors, this is the rebranded former USAA investments franchise, is diversified across 14 funds that have earned current overall ratings of four or five stars. Net flows into these products improved significantly in the first quarter. With excellent investment performance coupled with what we believe to be a better flow environment emerging for fixed income as we move through this year and into 2024, the opportunity for growth here is quite exciting. Across all asset classes, half of our mutual fund and ETF assets under management ranked in the top quartile for the trailing 12-month period. Over the 5- and 10-year period, 65% of our fund assets assets under management ranked in the top quartile, with more than 20% ranked in the top decile. This excellent investment performance highlights another advantage of our differentiated operating model, which removes all non-core investment activities at the investment franchise level. By relieving our investment professionals of these, we enable them to spend a majority of their time managing client assets. We believe this enhances investment performance over longer periods of time. Turning to slide eight, cash flow generation remained strong to start the year. We remain opportunistic with our share repurchase activity again this quarter, given the overall market and specifically our share price. We believe there is a significant amount of value that is not currently reflected in our current share price. With that in mind, we chose not to pay down any additional debt in the quarter and plan to remain flexible and nimble with our capital allocation strategy as we move through 2023. We are also continuing to conduct diligence on multiple acquisition opportunities. It is important to state that we are not deviating from our proven approach to make our company better through acquisitions. We remain patient and selective as we evaluate opportunities that can enhance shareholder value over the long term. With that, I'll turn it over to Mike for more details on the quarter's financials. Mike?