Why Victory Capital Holdings Inc (NASDAQ: VCTR) stock is falling

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Victory Capital Holdings Inc (NASDAQ: VCTR) stock lost over 6.2% on 13th August 2019 (As of 12:14 pm GMT-4; Source: Google finance) after the company posted mixed results for the second quarter of FY 19 and announced the initiation of a quarterly cash dividend. The company had reported the adjusted revenue growth of $91.4 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $93.8 million. VCTR in the second quarter of FY 19 has reported the adjusted earnings per share of 38 cents.

The first dividend of $0.05 per share will be payable on September 25, 2019, to shareholders of record on September 10, 2019. Victory Capital’s AUM increased by 10.3% to $64.1 billion at June 30, 2019, compared to $58.1 billion at March 31, 2019. The increase was due to positive net flows of $3.7 billion, compounded by market appreciation of $2.3 billion. Gross flows for the second quarter were $7.5 billion. The company has reported the adjusted net income with tax benefit of $27.7 million in the second quarter of 2019, compared with $29.9 million, in the prior year’s second quarter. Adjusted EBITDA and Adjusted EBITDA margin were $36.6 million and 40.0%, respectively, for the second quarter of 2019, compared with $40.7 million and 39.0%, respectively, for the second quarter one year ago.

Further, the completion of the USAA Asset Management Company acquisition is a significant milestone for Victory Capital. It significantly broadens the investment capabilities, increases the size and scale and expands the distribution platform with the introduction of a new direct channel focused on USAA members. The integration efforts are progressing well, and the company remain on target to achieve total annual cost synergy estimates of $120 million. This includes $75 million of synergies that were realized as of July 1, 2019, an additional $25 million expected to be realized by year-end, and the balance in 2020.

Additionally, Cash and cash equivalents, inclusive of restricted cash, increased $43.8 million, to $95.3 million at June 30, 2019. This was up from $51.5 million at December 31, 2018. During the second quarter, the Company repurchased an additional 113,297 shares, at an average price of $17.19 per share, for a total cost of $1.9 million.

 

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