10-Q 1 vrts-20220331.htm 10-Q VRTS 03.31.2022 vrts-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-10994
 
vrts-20220331_g1.jpg
VIRTUS INVESTMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 26-3962811
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
One Financial Plaza, Hartford, CT 06103
(Address of principal executive offices, including Zip Code)
(800) 248-7971
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value VRTSThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of shares outstanding of the registrant’s common stock was 7,473,139 as of April 22, 2022.








VIRTUS INVESTMENT PARTNERS, INC.
INDEX
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
"We," "us," "our," the "Company," and "Virtus" as used in this Quarterly Report on Form 10-Q refer to Virtus Investment Partners, Inc., a Delaware corporation, and its subsidiaries.



PART I – FINANCIAL INFORMATION
 
Item 1.    Financial Statements
Virtus Investment Partners, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)March 31,
2022
December 31,
2021
Assets:
Cash and cash equivalents$225,217 $378,921 
Investments116,767 108,890 
Accounts receivable, net124,092 123,873 
Assets of consolidated investment products ("CIP")
Cash and cash equivalents of CIP110,049 206,620 
Cash pledged or on deposit of CIP696 604 
Investments of CIP2,118,608 2,140,238 
Other assets of CIP29,257 44,210 
Furniture, equipment and leasehold improvements, net18,142 12,542 
Intangible assets, net496,709 500,571 
Goodwill347,423 338,406 
Deferred taxes, net18,714 19,204 
Other assets96,192 60,102 
Total assets$3,701,866 $3,934,181 
Liabilities and Equity
Liabilities:
Accrued compensation and benefits$70,646 $187,449 
Accounts payable and accrued liabilities62,335 48,496 
Dividends payable14,398 14,824 
Contingent consideration (Note 4)130,728 162,564 
Debt265,954 266,346 
Other liabilities95,068 60,225 
Liabilities of CIP
Notes payable of CIP1,978,420 2,033,617 
Securities purchased payable and other liabilities of CIP121,346 185,068 
Total liabilities2,738,895 2,958,589 
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interests138,738 138,965 
Equity:
Equity attributable to Virtus Investment Partners, Inc.:
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 11,998,877 shares issued and 7,472,829 shares outstanding at March 31, 2022; and 11,906,747 shares issued and 7,506,151 shares outstanding at December 31, 2021
120 119 
Additional paid-in capital1,273,802 1,276,424 
Retained earnings (accumulated deficit)81,783 60,962 
Accumulated other comprehensive income (loss)(30)20 
Treasury stock, at cost, 4,526,048 and 4,400,596 shares at March 31, 2022 and December 31, 2021, respectively
(539,248)(509,248)
Total equity attributable to Virtus Investment Partners, Inc.816,427 828,277 
Noncontrolling interests7,806 8,350 
Total equity 824,233 836,627 
Total liabilities and equity$3,701,866 $3,934,181 

The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
(in thousands, except per share data)20222021
Revenues
Investment management fees$206,817 $173,269 
Distribution and service fees20,007 20,348 
Administration and shareholder service fees24,344 22,560 
Other income and fees1,272 720 
Total revenues252,440 216,897 
Operating Expenses
Employment expenses105,993 91,759 
Distribution and other asset-based expenses32,846 32,294 
Other operating expenses31,712 19,580 
Operating expenses of consolidated investment products ("CIP")740 559 
Depreciation expense935 1,098 
Amortization expense14,662 9,465 
Total operating expenses186,888 154,755 
Operating Income (Loss)65,552 62,142 
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net(2,982)891 
Realized and unrealized gain (loss) of CIP, net(13,344)(4,687)
Other income (expense), net287 1,771 
Total other income (expense), net(16,039)(2,025)
Interest Income (Expense)
Interest expense(2,279)(2,314)
Interest and dividend income328 136 
Interest and dividend income of investments of CIP20,380 23,876 
Interest expense of CIP(12,088)(14,448)
Total interest income (expense), net6,341 7,250 
Income (Loss) Before Income Taxes55,854 67,367 
Income tax expense (benefit)16,735 15,153 
Net Income (Loss)39,119 52,214 
Noncontrolling interests(6,060)(15,626)
Net Income (Loss) Attributable to Virtus Investment Partners, Inc.$33,059 $36,588 
Earnings (Loss) per Share—Basic$4.38 $4.79 
Earnings (Loss) per Share—Diluted$4.22 $4.54 
Weighted Average Shares Outstanding—Basic7,546 7,633 
Weighted Average Shares Outstanding—Diluted7,839 8,052 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
 Three Months Ended
March 31,
(in thousands)20222021
Net Income (Loss)$39,119 $52,214 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $73 and $ for the three months ended March 31, 2022 and 2021, respectively.
(50)6 
Other comprehensive income (loss)(50)6 
Comprehensive income (loss)39,069 52,220 
Comprehensive (income) loss attributable to noncontrolling interests(6,060)(15,626)
Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc.$33,009 $36,594 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Three Months Ended
March 31,
(in thousands)20222021
Cash Flows from Operating Activities:
Net income (loss)$39,119 $52,214 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense, intangible asset and other amortization15,982 11,214 
Stock-based compensation9,547 7,995 
Amortization of deferred commissions1,471 569 
Payments of deferred commissions(949)(1,253)
Equity in earnings of equity method investments(410)(1,028)
Realized and unrealized (gains) losses on investments, net2,983 (889)
Sales (purchases) of investments, net(7,917)(25)
Deferred taxes, net562 377 
Changes in operating assets and liabilities:
Accounts receivable, net and other assets13,841 (27,102)
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities(120,267)(36,543)
Operating activities of consolidated investment products ("CIP"):
Realized and unrealized (gains) losses on investments of CIP, net12,559 2,066 
Purchases of investments by CIP(259,071)(250,865)
Sales of investments by CIP209,644 377,388 
Net proceeds (purchases) of short-term investments and securities sold short by CIP(14)16,716 
Change in other assets and liabilities of CIP1,145 (683)
Net cash provided by (used in) operating activities(81,775)150,151 
Cash Flows from Investing Activities:
Capital expenditures and other asset purchases(2,510)(2,560)
Acquisition of businesses, net of cash acquired of $8,443
(19,773) 
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net(292)(48)
Net cash provided by (used in) investing activities(22,575)(2,608)
Cash Flows from Financing Activities:
Payment of long-term debt(687)(5,913)
Common stock dividends paid(12,663)(7,117)
Repurchase of common shares(30,000)(4,999)
Stock options exercised 66 
Payment of contingent consideration(33,036) 
Taxes paid related to net share settlement of restricted stock units(13,416)(15,163)
Net contributions from (distributions to) noncontrolling interests(3,734)(19,004)
Financing activities of CIP:
Payments on borrowings by CIP(52,241)(35,543)
Net cash provided by (used in) financing activities(145,777)(87,673)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(56) 
Net increase (decrease) in cash, cash equivalents and restricted cash(250,183)59,870 
Cash, cash equivalents and restricted cash, beginning of period586,145 339,849 
Cash, cash equivalents and restricted cash, end of period$335,962 $399,719 
Non-Cash Investing Activities:
Contingent consideration$1,200 $137,664 
Non-Cash Financing Activities:
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net$(2,986)$ 
Common stock dividends payable$11,259 $6,219 

(in thousands)March 31,
2022
December 31, 2021
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$225,217 $378,921 
Cash of CIP110,049 206,620 
Cash pledged or on deposit of CIP696 604 
Cash, cash equivalents and restricted cash at end of period$335,962 $586,145 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)

Permanent EquityTemporary Equity
 Common StockAdditional
Paid-in
Capital
Retained Earnings (Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury StockTotal
Attributed To
Virtus Investment Partners, Inc.
Non-
controlling
Interests
Total
Equity
Redeemable
Non-
controlling
Interests
(in thousands, except per share data)SharesPar ValueSharesAmount
Balances at December 31, 20207,583,466 $118 $1,298,002 $(135,259)$29 4,207,403 $(451,749)$711,141 $9,799 $720,940 $115,513 
Net income (loss)— — — 36,588 — — — 36,588 75 36,663 15,551 
Foreign currency translation adjustments— — — — 6 — — 6 — 6 — 
Net subscriptions (redemptions) and other— — — — — — — — (557)(557)(18,582)
Cash dividends declared ($0.82 per common share)
— — (6,696)— — — — (6,696)— (6,696)— 
Repurchases of common shares(19,912)— — — — 19,912 (4,999)(4,999)— (4,999)— 
Issuance of common shares related to employee stock transactions86,125 1 65 — — — — 66 — 66 — 
Taxes paid on stock-based compensation— — (15,163)— — — — (15,163)— (15,163)— 
Stock-based compensation— — 8,435 — — — — 8,435 — 8,435 — 
Balances at March 31, 20217,649,679 $119 $1,284,643 $(98,671)$35 4,227,315 $(456,748)$729,378 $9,317 $738,695 $112,482 
Balances at December 31, 20217,506,151 $119 $1,276,424 $60,962 $20 4,400,596 $(509,248)$828,277 $8,350 $836,627 $138,965 
Net income (loss)— — — 33,059 — — — 33,059 (57)33,002 6,117 
Foreign currency translation adjustments— — — — (50)— — (50)— (50)— 
Net subscriptions (redemptions) and other— — — — — — — — (487)(487)(6,344)
Cash dividends declared ($1.50 per common share)
— — — (12,238)— — — (12,238)— (12,238)— 
Repurchases of common shares(125,452)— — — — 125,452 (30,000)(30,000)— (30,000)— 
Issuance of common shares related to employee stock transactions92,130 1 (1)— — — —  —  — 
Taxes paid on stock-based compensation— — (13,414)— — — — (13,414)(13,414)— 
Stock-based compensation— — 10,793 — — — — 10,793 — 10,793 — 
Balances at March 31, 20227,472,829 $120 $1,273,802 $81,783 $(30)4,526,048 $(539,248)$816,427 $7,806 $824,233 $138,738 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Virtus Investment Partners, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Business
Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries.

The Company provides investment management and related services to individuals and institutions. The Company’s retail investment management services are provided to individuals through products consisting of: mutual funds registered pursuant to the Investment Company Act of 1940 ("U.S. retail funds"), as amended; Undertaking for Collective Investment in Transferable Securities ("UCITS") and Qualifying Investor Funds ("QIFs"), collectively "global funds" and collectively with mutual funds, exchange traded funds ("ETFs"), and variable insurance funds, the "open-end funds"; closed-end funds (collectively, with open-end funds, the "funds"); and retail separate accounts. Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. The Company also provides subadvisory services to other investment advisers and serves as the collateral manager for structured products.


2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC"). The Company’s significant accounting policies, which have been consistently applied, are summarized in its 2021 Annual Report on Form 10-K.


3. Revenues
The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's control, such as additional investments, withdrawals and market performance. Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable.

    Revenue Disaggregated by Source    
The following table summarizes investment management fees by source:
 Three Months Ended
March 31,
(in thousands)20222021
Investment management fees
Open-end funds$97,377 $89,120 
Closed-end funds16,940 12,940 
Retail separate accounts49,603 37,512 
Institutional accounts41,991 32,438 
Structured products906 1,259 
Total investment management fees$206,817 $173,269 
    
6


4. Acquisitions
Stone Harbor Investment Partners
On January 1, 2022, the Company completed the acquisition of Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805"). The initial transaction consideration of $29.4 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $8.8 million and definite-lived intangible assets of $10.8 million. The Company expects $19.6 million of the purchase price to be tax deductible over 15 years. The transaction consideration allocation is based upon preliminary information and is subject to change if additional information becomes available. The final fair value of the net assets acquired may result in adjustments to certain assets and liabilities, including goodwill. The revenues and operating income of Stone Harbor were not material to the Company's results of operations for the three months ended March 31, 2022.

Transaction consideration consisted of $28.2 million in cash paid at closing and $1.2 million in contingent consideration recorded at fair value, which represents future potential earn-out payments based on pre-established performance metrics related to revenue retention and revenue growth rates. Future contingent consideration will be paid, if earned, in 2023, 2026 and 2027. The contingent consideration has been accounted for as a liability within contingent consideration on the Company's Condensed Consolidated Balance Sheet.

The following table summarizes the identified acquired assets and liabilities assumed as of the Stone Harbor acquisition date:
January 1, 2022
(in thousands)
Assets:
Cash and cash equivalents
$8,443 
Intangible assets
10,800 
Goodwill
8,846 
Other assets
55,129 
Total Assets
83,218 
Liabilities
Accounts payable and accrued liabilities
53,802 
Total liabilities
53,802 
Total Net Assets Acquired
$29,416 

Identifiable Intangible Assets Acquired
The Company identified and recorded the following intangible assets as a result of the Stone Harbor acquisition:
January 1, 2022
Approximate Fair Value
(in thousands)
Weighted Average of Useful Life
(in years)
Definite-lived intangible assets:
Investment management agreements$6,000 7.3
Trade names1,000 6.0
Software3,800 4.0
Total definite-lived intangible assets$10,800 
The fair value of investment management agreements was estimated using a discounted cash flow method, the fair value of the trade names was estimated using a royalty savings method, and the fair value of the software was estimated using a royalty savings method and replacement cost approach. The Stone Harbor fair value estimates were prepared with the assistance of an independent valuation firm.
7


Westchester Capital Management
On October 1, 2021, the Company completed the acquisition of Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805. The total transaction consideration of $169.3 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. Goodwill of $23.0 million and intangible assets of $144.4 million were recorded as a result of the acquisition. The Company expects $155.6 million of the purchase price to be tax deductible over 15 years. The revenues and operating income of Westchester were not material to the Company's results of operations for the three months ended March 31, 2022.

Transaction consideration consisted of $156.8 million in cash and contingent consideration accounted for as a liability on the Company's Condensed Consolidated Balance sheet, which represents future potential earn-out payments based on pre-established performance metrics related to revenue growth rates. Future contingent consideration payments will be made, if earned, in 2025 and 2026. As of March 31, 2022, the contingent consideration balance was $12.5 million.

AllianzGI Strategic Partnership
On February 1, 2021, the Company finalized a strategic partnership with Allianz Global Investors U.S. LLC ("AllianzGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AllianzGI's open-end, closed-end and retail separate account assets. This transaction was classified as an asset acquisition and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values. Additionally, as part of the strategic partnership, AllianzGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ"). The addition of NFJ was classified as a business combination under ASC 805 and assets acquired were recorded at fair value. Assets acquired primarily consisted of definite-lived intangible assets representing investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ. The revenues and operating income of NFJ were not material to the Company's results of operations for the three months ended March 31, 2022 or 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets from the transaction. Payments are to be made annually on the anniversary of the closing date of the transactions over seven years. Contingent payment obligations related to the NFJ acquisition, which were accounted for in accordance with ASC 805 are remeasured at fair value as of each reporting period-end, with the change in fair value recorded within the Condensed Consolidated Statement of Operations. An estimate of these future payments has been recorded as a liability and included as contingent consideration on the Company's Condensed Consolidated Balance Sheet. A payment of $33.0 million was made in the first quarter of 2022. The estimated value of future revenue participation payments at March 31, 2022 was $117.0 million.


5. Goodwill and Intangible Assets, Net
Activity in goodwill was as follows:
(in thousands)
Balance at December 31, 2021$338,406 
Acquisitions9,017 
Balance at March 31, 2022$347,423 

Below is a summary of intangible assets, net:
Definite-LivedIndefinite-LivedTotal
(in thousands)Gross Book ValueAccumulated AmortizationNet Book ValueNet Book ValueNet Book Value
Balances of December 31, 2021$755,576 $(297,303)$458,273 $42,298 $500,571 
Additions10,800 — 10,800 — 10,800 
Intangible amortization— (14,662)(14,662)— (14,662)
Balances of March 31, 2022$766,376 $(311,965)$454,411 $42,298 $496,709 

8

Definite-lived intangible asset amortization for the remainder of fiscal year 2022 and succeeding fiscal years is estimated as follows:
Fiscal Year
Amount
(in thousands)
Remainder of 2022$43,842 
202357,835 
202452,194 
202547,426 
202646,446 
2027 and thereafter206,668 
Total$454,411 


6. Investments
Investments consist primarily of investments in the Company's sponsored products. The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 16, at March 31, 2022 and December 31, 2021 were as follows:
(in thousands)March 31, 2022December 31, 2021
Investment securities - fair value$88,421 $80,335 
Equity method investments (1)13,495 13,038 
Nonqualified retirement plan assets12,701 13,321 
Other investments2,150 2,196 
Total investments$116,767 $108,890 
(1)     The Company's equity method investments are valued on a three-month lag based upon the availability of financial information. 

Investment Securities - fair value
Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed accounts. The composition of the Company’s investment securities - fair value was as follows:
March 31, 2022December 31, 2021
(in thousands)CostFair ValueCostFair Value
Investment Securities - fair value
Sponsored funds$74,362 $75,722 $63,090 $66,326 
Equity securities10,676 12,699 10,659 14,009 
Total investment securities - fair value$85,038 $88,421 $73,749 $80,335 

For the three months ended March 31, 2022 and March 31, 2021, the Company recognized realized gains of $0.1 million and $0.8 million, respectively, on the sale of its investment securities - fair value.


9

7. Fair Value Measurements
The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of March 31, 2022 and December 31, 2021 by fair value hierarchy level were as follows:

March 31, 2022  
(in thousands)Level 1Level 2Level 3Total
Assets
Cash equivalents$167,311 $ $ $167,311 
Investment securities - fair value
Sponsored funds75,722   75,722 
Equity securities12,699   12,699 
Nonqualified retirement plan assets12,701   12,701 
Total assets measured at fair value$268,433 $ $ $268,433 
Liabilities
Contingent consideration$ $ $70,080 $70,080 
Total liabilities measured at fair value$ $ $70,080 $70,080 

December 31, 2021  
(in thousands)Level 1Level 2Level 3Total
Assets
Cash equivalents$307,277 $ $ $307,277 
Investment securities - fair value
Sponsored funds66,326   66,326 
Equity securities14,009   14,009 
Nonqualified retirement plan assets13,321   13,321 
Total assets measured at fair value$400,933 $ $ $400,933 
Liabilities
Contingent consideration$ $ $88,400 $88,400 
Total liabilities measured at fair value$ $ $88,400 $88,400 

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:

Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager. The fair value of open-end funds is determined based on their published net asset values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Contingent consideration represents liabilities associated with the Company's business combinations. See Note 4 for a discussion of the transactions. The estimated fair values are measured using a simulation model using unobservable market data inputs prepared with the assistance of an independent valuation firm. These liabilities are categorized as Level 3.

10

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:
Three Months Ended
March 31,
(in thousands)20222021
Contingent consideration, beginning of period$88,400 $ 
Additions for acquisition1,200 63,500 
Reduction for payments made(19,520) 
Contingent consideration, end of period$70,080 $63,500 


8. Equity Transactions
Dividends Declared
On February 23, 2022, the Company declared a quarterly cash dividend of $1.50 per common share to be paid on May 13, 2022 to stockholders of record at the close of business on April 29, 2022.

Common Stock Repurchases
During the three months ended March 31, 2022, the Company repurchased 125,452 common shares, at a weighted average price of $239.10 per share, for a total cost, including fees and expenses, of $30.0 million, under its share repurchase program. As of March 31, 2022, 403,997 shares remained available for repurchase. Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.


9. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2022 and 2021 were as follows:
Foreign Currency
Translation Adjustments
(in thousands)
Balance at December 31, 2021$20 
Net current-period other comprehensive income (loss) (1)(50)
Balance at March 31, 2022$(30)
Foreign Currency
Translation Adjustments
(in thousands)
Balance at December 31, 2020$29 
Net current-period other comprehensive income (loss) (1)6 
Balance at March 31, 2021$35 
(1) Consists of foreign currency translation adjustments, net of tax of $73 and $ for the three months ended March 31, 2022 and 2021, respectively


10. Stock-Based Compensation
Pursuant to the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock. At March 31, 2022, 645,198 shares of common stock remain available for issuance of the 3,370,000 shares that are authorized for issuance under the Omnibus Plan.
    
11

Stock-based compensation expense is summarized as follows:
Three Months Ended March 31,
(in thousands)20222021
Stock-based compensation expense$9,547 $7,995 

Restricted Stock Units
Each RSU entitles the holder to one share of common stock when the restriction expires. RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after performance measurement is complete and generally vest in one to three years. Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock.

RSU activity, inclusive of PSUs, for the three months ended March 31, 2022 is summarized as follows: 
Number
of Shares
Weighted Average
Grant Date
Fair Value
Outstanding at December 31, 2021430,730 $138.01 
Granted162,541 $194.78 
Forfeited(68)$222.45 
Settled(153,989)$117.39 
Outstanding at March 31, 2022439,214 $166.24 

For the three months ended March 31, 2022 and 2021, a total of 61,859 and 57,885 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations. The Company paid $13.4 million and $15.2 million for the three months ended March 31, 2022 and 2021, respectively, in minimum employee tax withholding obligations related to RSUs withheld for the net share settlements. These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

During the three months ended March 31, 2022, the Company granted 30,516 PSUs that contain performance-based metrics in addition to a service condition. Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718. Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition. Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.

As of March 31, 2022, unamortized stock-based compensation expense for unvested RSUs and PSUs was $41.1 million with a weighted-average remaining contractual life of 1.3 years.


11. Earnings (Loss) Per Share
Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) attributable to Virtus Investment Partners, Inc. by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method.
12


The computation of basic and diluted EPS is as follows: 
 Three Months Ended March 31,
(in thousands, except per share amounts)2022