What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-08 · 101 added, 71 removed, 293 unchanged (37% of the section changed)

12 unchanged sentences

(ii) inability to achieve the expected benefits of strategic transactions;

(iii) withdrawal, renegotiation or termination of investment advisory agreements;

(iii) withdrawal, renegotiation or termination of investment management agreements;

(iv) damage to our reputation;

19 unchanged sentences

We provide investment management and related services to institutions and individuals.

We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual brand, as well as from select unaffiliated managers for certain of our retail funds.

We use a multi-manager, multi-style approach, offering investment strategies from our investment managers, each having its own distinct investment style, autonomous investment process and individual brand, as well as from select unaffiliated managers for certain of our funds.

By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences.

3 unchanged sentences

We have offerings in various asset classes (equity, fixed income, multi-asset and alternatives), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative).

Our institutional products are offered through institutional separate accounts and commingled accounts, including structured products to a variety of institutional clients.

Our products include open-end funds, closed-end funds and retail separate accounts.

We also provide subadvisory services to other investment advisers.

Our institutional products are offered through institutional separate accounts and commingled accounts, including subadvisory services to other investment advisers and Company sponsored structured products to a variety of institutional clients.

Our retail products include open-end funds, closed-end funds and retail separate accounts.

Our institutional distribution resources include affiliate-specific sales teams primarily focused on the U.S.

11 unchanged sentences

Financial Highlights

▪ Net income per diluted share was $4.10 in the first quarter of 2024, a decrease of $1.11, or 21.3%, compared to net income per diluted share of $5.21 in the first quarter of 2023.

▪ Total sales were $7.6 billion in the first quarter of 2024, an increase of $1.3 billion, or 21.6%, from $6.2 billion in the first quarter of 2023.

Net flows were $(1.2) billion in the first quarter of 2024 compared to net flows of $(1.9) billion in the first quarter of 2023.

▪ Assets under management were $179.3 billion at March 31, 2024, an increase of $24.5 billion, or 15.8%, from March 31, 2023.

▪ Net income per diluted share was $2.43 in the second quarter of 2024, a decrease of $1.67, or 40.7%, compared to net income per diluted share of $4.10 in the second quarter of 2023.

▪ Total sales were $6.1 billion in the second quarter of 2024, a decrease of $1.4 billion, or 19.0%, from $7.6 billion in the second quarter of 2023.

Net flows were $(2.6) billion in the second quarter of 2024 compared to neutral net flows in the second quarter of 2023.

▪ Assets under management were $173.6 billion at June 30, 2024, an increase of $5.3 billion, or 3.1%, from June 30, 2023.

Assets Under Management

At March 31, 2024, total assets under management were $179.3 billion, representing an increase of $24.5 billion, or 15.8%, from March 31, 2023, and an increase of $7.1 billion, or 4.1%, from December 31, 2023.

The increase in total assets under management from March 31, 2023 included $25.7 billion from positive market performance and $7.8 billion from the acquisition of AlphaSimplex Group LLC on April 1, 2023 ("AlphaSimplex"), partially offset by $6.6 billion of net outflows.

At June 30, 2024, total assets under management were $173.6 billion, representing an increase of $5.3 billion, or 3.1%, from June 30, 2023, and an increase of $1.3 billion, or 0.8%, from December 31, 2023.

The increase in total assets under management from June 30, 2023 included $16.9 billion from positive market performance partially offset by $9.2 billion of net outflows.

The increase in total assets under management from December 31, 2023 included $6.2 billion from positive market performance partially offset by $3.9 billion of net outflows.

1 unchanged sentence

The following table summarizes our assets under management by product:

As of March 31, Change

As of June 30, Change

(in millions) 2024 2023 $ %

7 unchanged sentences

retail funds, global funds, ETFs and variable insurance funds.

(2) Includes investment models provided to managed account sponsors.

(3) Represents assets under management of institutional separate and commingled accounts including structured products.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in millions) 2024 2023 2024 2023

9 unchanged sentences

Beginning balance $ 10,064 $ 10,358 $ 10,026 $ 10,361

Inflows — 20 — 24

Outflows (41) — (41) —

Net flows (41) 20 (41) 24

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in millions) 2024 2023 2024 2023

17 unchanged sentences

(2) Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets from cash management strategies, and the impact of non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/(withdrawals), current income or capital returned by structured products and the use of leverage.

(3) Includes investment models provided to managed account sponsors.

(4) Represents assets under management of institutional separate and commingled accounts including structured products.

1 unchanged sentence

The following table summarizes assets under management by asset class:

As of March 31, Change % of Total

As of June 30, Change % of Total

(in millions) 2024 2023 $ % 2024 2023

4 unchanged sentences

Total $ 173,585 $ 168,316 $ 5,269 3.1 % 100.0 % 100.0 %

(1) Consists of strategies and client accounts with substantial holdings in at least two of the following asset classes:

equity, fixed income and alternatives.

(1) Consists of multi-asset offerings not included in equity, fixed income, and alternatives.

(2) Consists of managed futures, event-driven, real estate securities, infrastructure, long/short and other strategies.

1 unchanged sentence

The following tables summarize the average management fees earned in basis points and average assets under management:

Three Months Ended March 31,

Three Months Ended June 30,

Average Fee Earned

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All Products 42.2 42.2 $ 175,175 $ 162,989

Six Months Ended June 30,

Average Fee Earned

(expressed in basis points)

Average Assets Under

(in millions) (4)

2024 2023 2024 2023

Open-End Funds (1) 50.4 48.5 $ 56,760 $ 55,131

Closed-End Funds 58.6 57.3 9,878 10,323

Retail Separate Accounts (2) 43.6 44.2 45,009 36,375

Institutional Accounts (3) 30.8 31.7 62,620 55,846

All Products 42.0 42.1 $ 174,267 $ 157,675

(1) Represents assets under management of U.S.

retail funds, global funds, ETFs and variable insurance funds.

(2) Includes investment models provided to managed account sponsors.

(3) Represents assets under management of institutional separate and commingled accounts including structured products.

3 unchanged sentences

– Institutional Accounts - average of month-end balances

Average fees earned represent investment management fees, net of revenue-related adjustments, divided by average net assets, excluding the impact of consolidated investment products ("CIP").

Average fees earned represent investment management fees, net of revenue-related adjustments, and excluding the impact of consolidated investment products ("CIP") divided by average net assets.

Revenue-related adjustments are based on specific agreements and reflect the portion of investment management fees passed-through to third-party client intermediaries for services to investors in sponsored investment products.

3 unchanged sentences

Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

The average fee rate earned on all products for the three months ended March 31, 2024 decreased by 0.1 basis points compared to the same period in the prior year primarily due to a shift in asset mix to lower fee assets partially offset by the addition of alternative strategies with higher fee rates from the AlphaSimplex acquisition.

The average fee rate earned on all products was flat for the three and six months ended June 30, 2024 compared to the same periods in the prior year.

Results of Operations

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ % 2024 2023 $ %

6 unchanged sentences

Interest income (expense), net 7,457 5,610 1,847 32.9 % 16,348 15,454 894 5.8 %

Income (loss) before income taxes 46,698 43,346 3,352 7.7 %

Income (loss) before income taxes 37,770 41,090 (3,320) (8.1) % 84,468 84,436 32 N/M

Income tax expense (benefit) 11,748 10,910 838 7.7 % 20,579 19,613 966 4.9 %

Net income (loss) 26,022 30,180 (4,158) (13.8) % 63,889 64,823 (934) (1.4) %

Noncontrolling interests (8,009) 3,981 (11,990) (301.2) %

Noncontrolling interests (8,408) 77 (8,485) N/M (16,417) 4,058 (20,475) N/M

Net Income (Loss) Attributable to Virtus Investment Partners, Inc.

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Earnings (loss) per share-diluted $ 2.43 $ 4.10 $ (1.67) (40.7) % $ 6.54 $ 9.31 $ (2.77) (29.8) %

In the first quarter of 2024, total revenues increased 12.2% to $222.0 million from $197.9 million in the first quarter of 2023, primarily as a result of increased average assets under management during the current year period compared to the prior year period.

Operating income increased $3.7 million to $32.3 million in the first quarter of 2024 compared to $28.6 million in the first quarter of 2023, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses due to the addition of AlphaSimplex.

N/M = Not Meaningful

In the second quarter of 2024, total revenues increased 5.1% to $224.4 million from $213.5 million in the second quarter of 2023, primarily as a result of increased average assets under management during the current year period compared to the prior year period.

Operating income increased $5.2 million to $44.2 million in the second quarter of 2024 compared to $39.0 million in the second quarter of 2023, due primarily to the aforementioned increased revenue, partially offset by increased operating expenses.

Revenues by source were as follows:

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ % 2024 2023 $ %

11 unchanged sentences

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management agreements, which generally require monthly or quarterly payments.

Investment management fees increased by $23.9 million, or 14.5%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the increase in average assets under management.

Investment management fees increased by $11.7 million, or 6.5%, and $35.6 million, or 10.3% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to the increase in average

assets under management.

Distribution and Service Fees

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and

distribution services.

Distribution and service fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services.

Distribution and service fees decreased by $0.7 million, or 5.1%, and $0.8 million, or 3.0%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to lower sales and average assets under management for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Administration and Shareholder Service Fees

1 unchanged sentence

retail funds, ETFs and certain closed-end funds.

Fund administration and shareholder service fees increased by $0.3 million, or 1.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to the addition of AlphaSimplex.

Fund administration and shareholder service fees remained consistent during the three months ended June 30, 2024 compared to the same period in the prior year and increased by $0.4 million, or 1.1%, for the six months ended June 30, 2024, compared to the same period in the prior year.

The increase for the six-month period was primarily due to the increase in average assets under management of our U.S.

retail funds and ETFs.

Other Income and Fees

Other income and fees primarily represent fees related to other fee-earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge.

Other income and fees remained consistent during the three months ended March 31, 2024, compared to the same period in the prior year.

Other income and fees decreased by $0.2 million, or 14.4%, for the three months ended June 30, 2024, and remained consistent during the six months ended June 30, 2024 compared to the same periods in the prior year.

The decrease during the three-month period is primarily due to lower fees earned on other fee-earning assets and lower fees received for trading and investment services.

Operating Expenses

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ % 2024 2023 $ %

4 unchanged sentences

Other operating expenses of CIP 2,909 360 2,549 708.1 % 3,599 1,060 2,539 239.5 %

Restructuring expense 797 — 797 N/M

Change in fair value of contingent consideration (3,300) (6,800) 3,500 (51.5) % (3,300) (6,800) 3,500 (51.5) %

Restructuring expense 690 — 690 N/M 1,487 — 1,487 N/M

Depreciation expense 2,270 1,485 785 52.9 % 4,298 2,630 1,668 63.4 %

4 unchanged sentences

Employment expenses consist of fixed and variable compensation and related employee benefit costs.

Employment expenses of $115.2 million increased by $16.5 million, or 16.8%, compared to the same period in the prior year primarily due to the addition of AlphaSimplex and an increase in profit- and sales-based compensation in the current year.

Employment expenses of $105.7 million increased by $1.0 million, or 0.9%, for the three months ended June 30, 2024 primarily due to an increase in profit- and sales-based compensation.

Employment expenses increased by $17.5 million, or 8.6%, for the six months ended June 30, 2024, compared to the same period in the prior year primarily due to an increase in profit- and sales-based compensation and the addition of AlphaSimplex.

Distribution and Other Asset-Based Expenses

1 unchanged sentence

These payments are primarily based on assets under management.

Distribution and other asset-based expenses also include the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders.

Distribution and other asset-based expenses also include the amortization of deferred sales commissions related

to up-front commissions on shares sold without a front-end sales charge to shareholders.

The deferred sales commissions are amortized on a straight-line basis over the period commissions are recovered from distribution fee revenues and contingent sales charges received upon redemption of shares.

During the three months ended March 31, 2024, distribution and other asset-based expenses increased $0.6 million, or 2.7%, compared to the same period in the prior year primarily due to an increase in assets under management in share classes that have asset-based distribution and other asset-based expenses.

During the three and six months ended June 30, 2024, distribution and other asset-based expenses decreased by $1.8 million, or 6.9%, and $1.1 million, or 2.3%, respectively, compared to the same periods in the prior year primarily due to decreases in assets under management in share classes that have asset-based distribution and other expenses.

Other Operating Expenses

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs.

Other operating expenses increased $0.6 million, or 2.1%, for the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily attributable to the addition of AlphaSimplex partially offset by lower professional fees in the current year period.

Other operating expenses remained consistent during the three and six months ended June 30, 2024 compared to the same periods in the prior year.

Other Operating Expenses of CIP

Other operating expenses of CIP remained consistent during the three months ended March 31, 2024 compared to the same period in the prior year.

Other operating expenses of CIP increased by $2.5 million, or 708.1%, and $2.5 million, or 239.5%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to the refinancing of two CLOs in the current year periods.

Change in Fair Value of Contingent Consideration

Contingent consideration related to the Company's acquisitions are fair valued on each reporting date incorporating changes in various estimates, including underlying performance estimates, discount rates and the amount of time until the conditions of the contingent payments are achieved.

The change in fair value is recorded in the current period as a gain or loss.

The $3.5 million change in fair value of contingent consideration for the three and six months ended June 30, 2024 compared to the same periods in the prior year was primarily attributable to changes in underlying performance estimates.

Depreciation Expense

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements.

Depreciation expense increased $0.9 million, or 77.1%, for the three months ended March 31, 2024, compared to the respective period in the prior year.

The increase was primarily due to the addition of AlphaSimplex and software and equipment purchases in the prior year and depreciation expense for new office space.

Depreciation expense increased $0.8 million, or 52.9%, and $1.7 million, or 63.4%, for the three and six months ended June 30, 2024, compared to the same periods in the prior year.

The increase during both periods was primarily due to the acceleration of deprecation on leasehold improvements in the current year periods, software and equipment purchases in the current and prior year periods and depreciation expense for new office space.

Amortization Expense

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives.

Amortization expense increased $0.9 million, or 6.6%, for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to the addition of AlphaSimplex.

Amortization expense decreased $0.6 million, or 3.9%, for the three months ended June 30, 2024, compared to the same period in the prior year, primarily due to intangible assets becoming fully amortized during the current year period.

Amortization expense increased by $0.3 million, or 1.1%, for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to the addition of AlphaSimplex intangible assets in the second quarter of the prior year partially offset by intangible assets becoming fully amortized during the current year period.

Other Income (Expense)

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ % 2024 2023 $ %

5 unchanged sentences

Realized and unrealized gain (loss) on investments, net

Realized and unrealized gain (loss) on investments, net changed during the three months ended March 31, 2024 by $0.7 million, compared to the same period in the prior year.

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended June 30, 2024 by $(3.3) million and $(2.5) million, respectively, compared to the same periods in the prior year.

The realized and unrealized gains and losses reflect changes in overall market conditions for the respective periods.

Realized and unrealized gain (loss) of CIP, net

Realized and unrealized gain (loss) of CIP, net changed by $(1.1) million during the three months ended March 31, 2024, compared to the same period in the prior year.

The change for the three months ended March 31, 2024 consisted primarily of unrealized losses of $17.9 million due to changes in market values of leveraged loans, partially offset by changes in unrealized gains of $16.8 million related to the value of the notes payable.

Realized and unrealized gain (loss) of CIP, net changed by $(8.5) million and $(9.6) million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year.

The change for the three months ended June 30, 2024 consisted primarily of changes in unrealized losses of $32.1 million related to the value of the notes payable, partially offset by net unrealized and realized gains of $23.6 million due to changes in market values of leveraged loans.

The change for the six months ended June 30, 2024 consisted primarily of changes in unrealized losses of $15.3 million related to the value of the notes payable, partially offset by net unrealized and realized gains of $5.7 million due to changes in market values of leveraged loans.

Other income (expense), net

Other income (expense), net changed by $0.9 million during the three months ended March 31, 2024, compared to the same period in the prior year primarily due to changes in the gains and losses on our equity method investments.

Other income (expense), net changed by $1.4 million and $2.3 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to changes in the gains and losses on our equity method investments.

Interest Income (Expense)

1 unchanged sentence

Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ % 2024 2023 $ %

6 unchanged sentences

Interest Expense

Interest expense increased $0.7 million, or 13.5%, during the three months ended March 31, 2024, compared to the same period in the prior year due primarily to higher average interest rates during the current year period.

Interest expense decreased $0.6 million, or 9.7%, for the three months ended June 30, 2024 and remained consistent during the six months ended June 30, 2024.

The decrease during the three-month period was primarily due to lower average debt outstanding during the current year period.

Interest and Dividend Income

Interest and dividend income increased $0.2 million, or 7.1%, during the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily attributable to both higher interest earned on cash balances and a higher average investment balance in the current year period compared to the prior year period.

Interest and dividend income remained consistent during the three and six months ended June 30, 2024 compared to the same periods in the prior year.

Interest and Dividend Income of Investments of CIP

Interest and dividend income of investments of CIP increased $4.3 million, or 9.2%, for the three months ended March 31, 2024, compared to the same period in the prior year.

The increase was primarily due to higher average interest rates during the current year period and the addition of a CLO in the third quarter of 2023.

Interest and dividend income of investments of CIP increased $4.5 million, or 9.4%, and $8.8 million, or 9.3% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year.

The increases were primarily due to the addition of a CLO in the third quarter of 2023 and higher average interest rates during the current year periods.

Interest Expense of CIP

Interest expense of CIP represents interest expense on the notes payable of CIP.

Interest expense of CIP increased by $4.8 million, or 13.7%, for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to higher average interest rates and the addition of a CLO in the third quarter of 2023.

Interest expense of CIP increased by $3.2 million, or 8.3%, and $8.0 million, or 10.9% for the three and six months ended June 30, 2024, compared to the same periods in the prior year primarily due to the addition of a CLO in the third quarter of 2023 and higher average interest rates in the current year periods.

Income Tax Expense (Benefit)

The provision for income taxes reflected U.S.

federal, state and local taxes at an estimated effective tax rate of 18.9% and 20.1% for the three months ended March 31, 2024 and 2023, respectively.

The lower estimated effective tax rate for the three months ended March 31, 2024 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

federal, state and local taxes at an estimated effective tax rate of 24.4% and 23.2% for the six months ended June 30, 2024 and 2023, respectively.

The higher estimated effective tax rate for the six months ended June 30, 2024 was primarily due to a change in excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

Liquidity and Capital Resources

10 unchanged sentences

Total equity 872,118 868,289 3,829 0.4 %

Three Months Ended

March 31, Change

Six Months Ended

June 30, Change

(in thousands) 2024 2023 $ %

4 unchanged sentences

Financing activities (21,844) (210,727) 188,883 (89.6) %

At March 31, 2024, we had $123.9 million of cash and cash equivalents and $127.4 million of investments, which included $90.5 million of investment securities, compared to $239.6 million of cash and cash equivalents and $132.7 million of investments, which included $97.3 million of investment securities, at December 31, 2023.

At June 30, 2024, we had $183.0 million of cash and cash equivalents and $122.3 million of investments, which included $86.2 million of investment securities, compared to $239.6 million of cash and cash equivalents and $132.7 million of investments, which included $97.3 million of investment securities, at December 31, 2023.

Uses of Capital

13 unchanged sentences

Certain of our subsidiaries are registered with the SEC, Central Bank of Ireland (CBI) or other regulators that subject them to certain rules regarding minimum net capital.

Failure to meet these requirements could result in adverse consequences to us, including additional reporting requirements, or interruption of our business.

At March 31, 2024, these subsidiaries were in compliance with all minimum net capital requirements.

Failure to meet these requirements could result in adverse consequences

to us, including additional reporting requirements, or interruption of our business.

At June 30, 2024, these subsidiaries were in compliance with all minimum net capital requirements.

Balance Sheet

1 unchanged sentence

Investments consist primarily of investments in our sponsored funds.

CIP represent investment products for which we provide investment

management services and where we have either a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

CIP represent investment products for which we provide investment management services and where we have either a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

Operating Cash Flow

Net cash used in operating activities of $34.5 million for the three months ended March 31, 2024 decreased by $8.4 million from net cash used in operating activities of $43.0 million for the same period in the prior year primarily due to an increase in cash from higher net income and an increase of $17.1 million in net sales of investments by CIP in the current year period partially offset by an increase in payments in incentive compensation in the current year.

Net cash provided by operating activities of $35.4 million for the six months ended June 30, 2024 decreased by $66.7 million from net cash provided by operating activities of $102.1 million for the same period in the prior year primarily due to a decrease of $48.0 million in net sales of investments by CIP in the current year period and an increase in payments of incentive compensation in the current year.

Investing Cash Flow

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations.

Net cash used in investing activities of $2.5 million for the three months ended March 31, 2024 decreased by $10.7 million from net cash used in investing activities of $13.1 million for the same period in the prior year primarily due to cash paid for an equity method investment in the prior year period that did not reoccur in the current year period.

Net cash used in investing activities of $3.8 million for the six months ended June 30, 2024 decreased by $119.4 million from net cash used in investing activities of $123.2 million for the same period in the prior year primarily due to the AlphaSimplex acquisition in the prior year.

Financing Cash Flow

Cash flows from financing activities consist primarily of transactions related to our common shares, issuance and repayment of debt by us and CIP, payments of contingent consideration and purchases and sales of noncontrolling interests.

Net cash used in financing activities of $56.1 million for the three months ended March 31, 2024 decreased by $58.9 million from net cash used in investing activities of $115.1 million for the same period in the prior year primarily due to a $43.4 million decrease in the repayment on borrowings of CIP and a $16.5 million increase in net contributions from noncontrolling interests.

Net cash used in financing activities of $21.8 million for the six months ended June 30, 2024 decreased by $188.9 million from net cash used of $210.7 million for the same period in the prior year primarily due to a $222.6 million increase in net borrowings of CIP attributable to the refinancing of two CLOs in the current period partially offset by the prior year period $50.0 million borrowing on the credit facility as part of the AlphaSimplex acquisition.

Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026.

The Company repaid $0.7 million outstanding under the Term Loan during the three months ended March 31, 2024 and had $258.1 million outstanding under the Term Loan at March 31, 2024.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $5.1 million as of March 31, 2024.

The Company repaid $6.4 million outstanding under the Term Loan during the six months ended June 30, 2024 and had $252.4 million outstanding under the Term Loan at June 30, 2024.

Critical Accounting Policies and Estimates

3 unchanged sentences

A complete description of our significant accounting policies is included in our 2023 Annual Report on Form 10-K.

There were no material changes in our critical accounting policies and estimates in the three months ended March 31, 2024.

There were no material changes in our critical accounting policies and estimates in the three months ended June 30, 2024.

Recently Issued Accounting Pronouncements

For a discussion of accounting standards, see Note 2 in our condensed consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

The Company is primarily exposed to market risk associated with unfavorable movements in interest rates and securities prices.

During the three months ended March 31, 2024, there were no material changes to the information contained in Part II, Item 7A of the Company's 2023 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis