Victory Capital Holdings, Inc.

Good morning and welcome to the Victory Capital third quarter 2024 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. Victory Capital's actual results may differ materially from these statements. Furthermore, please note that the ultimate completion of a transaction with the Moonday remains subject to certain closing conditions as well as regulatory approvals. 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 slides accompanying this call, both of which are available on the investor relations section 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, Matt. Good morning and welcome to Victory Capital's third quarter 2024 earnings call. I am joined today by Michael Pelicarpo, a President, Chief Financial and Administrative Officer, as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. I will start today by providing an overview of the quarter. After that, I will 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. Quarterly business overview begins on slide five. Continuing with the momentum we had in the first half of the year, our business performed very well during the third quarter. We ended the quarter with total client assets of more than $181 billion, which is the second highest quarter end level in our history. This helped propel revenue and earnings in the period, resulting in new quarterly records for earnings per share, adjusted EBITDA and margin, which expanded to 53.7% in the quarter. In addition to strong business performance, We made excellent progress toward closing this strategic and multifaceted transaction with Amundi. We signed the definitive agreement in July and immediately began working toward closing, which is anticipated to occur in the first quarter of 2025. We filed a proxy in early September for a special meeting of stockholders where our shareholders were asked to approve several proposals related to the transaction. All the proposals were supported by a majority of our shareholders and passed. We greatly appreciate the support as we continue to execute on our growth strategy for the long term. The Amundi U.S. business, which will become our 12th investment franchise upon close, is having a very strong year as well. Based on publicly available data, their mutual fund business has achieved approximately $2 billion of positive net long-term flows in 2024 as of the end of the third quarter. Keep in mind, this does not include their U.S. institutional business, nor does it include their international institutional and retail businesses. Another point of distinction for them is their investment performance, which remains very strong year to date. Their growth in AUM is tracking ahead of what we originally projected due to both better than expected organic growth and market action. On slide six, I would like to take a step back to highlight some key milestones and strategic transactions in our history since our management buyout in July of 2013. Victory Capital has positively evolved from these transactions with enhanced scale and greater diversification of both investment capabilities and distribution channels. Every acquisition we made included several significant strategic elements with the goal of making our company better. When it comes to successful acquisitions in the investment management industry, we have a distinct corporate capability that we feel is advanced and coupled with our proven track record to execute, sets us up well for the consolidation that we believe is just starting in the industry. For investment professionals who are passionate about what they do and want to own their outcome, our ownership coach provides a platform where they can succeed over the long term. Our platform is the ideal permanent home where we create an optimal environment for investment professionals to deliver investment excellence to our clients. While our company has evolved over the years, Our core principles and the long-term strategy for profitable growth have remained unchanged. The necessity for industry consolidation is even more apparent now than when we originally developed our strategy and operating platform, combining boutique-style focused investment management with a centralized, scaled, and effective operating and distribution platform. Our 15-year exclusive distribution agreement with Amundi will make us an even more attractive acquirer of choice for high-quality investment firms, seeking all that we have to offer, plus strong distribution both domestically as well as outside of the U.S. With nearly $300 billion of assets under management and a stronger balance sheet post-closing, we'll be exceptionally well positioned to make additional strategic accretive acquisitions. As I mentioned during our last call in August, I firmly believe we are entering into a period of acceleration when it comes to industry consolidation. We purposefully and specifically designed and built our platform to thrive in this environment. Today, I am more optimistic about our prospects to continue to execute on our proven strategy and continue to move our organization forward in a very positive way. On slide seven, you can see that we have achieved significant operating leverage due to our increasing scale over the years. This has compounded our earnings growth and free cash flow, while also being a meaningful driver of value creation for shareholders. Since we became a public company in 2018, we've grown annualized adjusted EBITDA by $320 million and expanded our adjusted EBITDA margin by more than 1,500 basis points. You can also see from this graphic that our platform is resilient, with margins remaining consistently strong in different market environments. A good example of this was during the COVID pandemic. The market struggled, and it turned out to be one of the more volatile market periods, historically speaking. Even with that as a backdrop, we did not experience margin degradation like many in the industry did. Turning to slide eight, an important metric to many current and prospective shareholders is adjusted earnings per share. You can see that we have more than tripled our adjusted earnings per share with tax benefit over the past six years. This is more than a 20% compound annual growth rate over that period. The growth has been a significant driver of total shareholder returns. This plus our free cash flow provides a capital to fewer growth strategy, also increasing capital returns to shareholders. On slide nine, we've updated our capital allocation details, which remain skewed towards strategic inorganic growth initiatives designed to grow earnings and cash flow and ultimately shareholder value. We ended the quarter with $188 million of cash on the balance sheet, which is up $69 million from the end of June. Due to our proxy process, we were again prohibited from repurchasing shares during the quarter. Now that the proxy process is over, we will evaluate our ability to resume open market share repurchase activity and perform the appropriate analysis around this activity. Moving to slide 11, our investment performance remained strong with 67% of our AUM in mutual funds and ETFs earning overall four or five star ratings. This is broadly diversified, encompassing 43 different products. Over the key three and five-year periods, 60% and 73% of our total AUM outperformed their respective benchmarks. Fourteen of the 16 fixed income funds managed by Victory Income Investors investment franchise are rated either four or five stars overall by Morningstar, which represents 93% of their total AUM. We are very pleased to see this franchise have positive net flows for the year-to-date period and expect continued organic growth given the outlook for interest rates and investors allocating the fixed income asset classes. With that, I will turn the call over to Mike to go through the quarter's financial results in greater detail. Mike?