Victory Capital Holdings, Inc. (NASDAQ:VCTR) Q4 2019 Earnings Conference Call - Final Transcript

Feb 12, 2020 • 08:00 am ET

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Victory Capital Holdings, Inc. (NASDAQ:VCTR) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Victory Capital Holdings, Inc. Fourth Quarter 2019 Conference Call. [Operator Instructions]

I would now like to hand the conference over to Matt Dennis. Please go ahead, sir.

Executive
Matthew Dennis

Good morning. Before I turn the call over to David Brown, I'd like to note that today's discussion contains forward-looking statements, and as such, includes certain risks and uncertainties. Please refer to our press release and our SEC filings for more information on specific risk factors that could cause actual results to differ materially from those projected in the forward-looking statements.

While a recording of this call will be made available by us on our website, any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these forward-looking statements to reflect new information or future events that occur or circumstances that exist after the date on which they were made.

In addition to U.S. GAAP reporting, we also report certain financial measures that do not conform to Generally Accepted Accounting Principles. We believe these 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 the tables that can be found in our earnings press release and in the slide presentation accompanying this call, both of which can be accessed on the Investor Relations portion of our website at ir.vcm.com.

Now, it is my pleasure to turn the call over to David Brown, Chairman and CEO, David?

Executive
David C. Brown

Thanks, Matt. Good morning, and welcome to Victory Capital's fourth Quarter 2019 Earnings Call. I'm joined today by Michael Policarpo Our President, Chief Financial and Administrative Officer; as well as Matt Dennis, our Chief of Staff and Director of Investor Relations.

I'm going to spend a few minutes discussing our record fourth quarter results, which I believe demonstrate the earnings power of our integrated business model. I'll also share an update on the integration of the USAA Investments acquisition. Then I will turn it over to Mike, who will review our financial results for the quarter and full year in greater detail. Following our prepared remarks, Mike, Matt, and I will be available to take questions.

The business overview begins on Slide 5. 2019 was a transformational year for Victory Capital on many levels. We significantly increased our size, scale, asset class, product and client diversification, while generating outstanding financial results for our shareholders and investing significantly for the future. Total AUM grew to $151.8 billion at the end of 2019.

AUM increased by 188% year-over-year, reflecting acquired assets and long-term net inflows of $1.8 billion. Positive flows during the full year period were driven by net inflows into our recently acquired USAA Investments franchise as well as our Solutions platform. Both benefited from industry trends favoring fixed income at competitively priced solutions products.

As a reminder, the margins we earn on most of our solution strategies are