VRTS 10-K & 10-Q changes, risk factors and insider trading

At December 31, 2024,2025, we had $236.1$399.0 million of total debt outstanding under itsour credit agreement, excluding debt of consolidated investment products ("CIP"), and had no borrowings outstanding under our $175.0$250.0 million revolving credit facility. Under our credit agreement, we are required to use a portion of our cash flow to service interest and make required annual principal payments, which may restrict our cash flow available for other purposes. The credit agreement also contains covenants that may limit our ability to return capital to shareholders. We cannot provide assurances that at all times in the future we will satisfy all such covenants or obtain any required waiver or amendment, in which event all indebtedness could become immediately due. Any or all of the above factors could adversely affect our financial condition or results of operations.

In addition, our computer systems are regularly the target of viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations. The sophistication of cyber threats continues to increase, including through the use of "ransomwareransomware," phishing attacks and phishingartificial attacks,intelligence, and our controls and the preventative actions we take to reduce the risk of cyber incidents and protect our information systems may be insufficient to detect or prevent unauthorized access, cyber-attacks or other security breaches to our systems or those of third parties with whom we do business. Our third-party service providers' systems may also be affected by, or fail, as a result of, catastrophic events, such as fires, floods, hurricanes and tornadoes. A breach of our systems, or of those of third-party service providers, through cyber-attacks or failure to manage and sufficiently secure our technology environment could result in interruptions or malfunctions in the operations of our business, loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by a breach or to recover access to our systems, additional costs to mitigate against future incidents, and litigation costs resulting from an incident. Any of these conditions could have an adverse impact on our business and profitability.

The investment management industry in which we operate is subject to extensive and frequently changing regulation.regulations. We are subject to regulation by the SEC, other federal and state agencies, certain international regulators, as well as FINRA and other self-regulatory organizations. Each of our investment management subsidiaries and unaffiliated subadvisers is registered with the SEC under the Investment Advisers Act. There are various regulatory reform initiatives in the U.S. and other jurisdictions and new regulations or interpretations of existing laws may result in enhanced disclosure obligations which could negatively affect us or materially increase our regulatory burden. Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws require us to spend more time, hire additional personnel, or purchase new technology to comply effectively.

We offer investment strategies for institutional and individual investors in different investment products and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by differentiated investment managers. 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 to a variety of institutional clients through institutional separate accounts and commingled accounts, including subadvisory services to other investment advisers andas Companywell sponsoredas collateral management of structured products. Our retail products include open-end funds, closed-end funds and retail separate accounts.

Our institutional distribution resources include affiliate-specificinvestment manager-specific sales teams primarily focused on the U.S. market, supported by shared consultant relations and U.S. and non-U.S. institutional sales distribution. Our institutional products are marketed through relationships with consultants as well as directly to clients. We target key market segments, including foundations and endowments, corporations, public and private pension plans, sovereign wealth funds and subadvisory relationships.

Our retail distribution resources in the U.S. consist of regional sales professionals, a national account relationship group and specialized teams for retirement and ETFs.exchange traded funds ("ETFs"). Our U.S. retail fundsfunds, ETFs and intermediary sold retail separate accounts are distributed through financial intermediaries. We have broad distribution access in the U.S. retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies. In many of these firms, we have a number of products that are on preferred "recommended" lists and on fee-based advisory programs. Our wealth management business is marketed directly to individual clients by financial advisory teams at our Advisers.investment managers.

▪Total revenues were $906.9$852.9 million in 2024,2025, ana increasedecrease of $61.7$54.1 million, or 7.3%,6.0%, compared to total revenues of $845.3$906.9 million in 2023.2024.

▪Operating income was $182.5$168.7 million, in 2024,2025, ana increasedecrease of $31.0$13.8 million, or 20.5%,7.6%, compared to $151.5$182.5 million in 2023.2024.

▪Net income per diluted share was $16.89$19.97 in 2024,2025, aan decreaseincrease of $0.82,$3.08, or 4.6%,18.2%, compared to net income per diluted share of $17.71$16.89 in 2023.2024.

Total sales were $23.4 billion in 2025, a decrease of $3.3 billion, or 12.4%, from $26.8 billion in 2024, an increase of $0.9 billion, or 3.5%, from $25.9 billion in 2023.2024. Net flows were $(10.418.9) billion in 20242025 compared to net flows of $(7.210.4) billion in 2023.2024.

At December 31, 2024,2025, total assets under management were $175.0$159.5 billion, representing ana increasedecrease of $2.7$15.5 billion, or 1.6%,8.9%, from December 31, 2023.2024. The change in total assets under management from December 31, 20232024 included $15.8$(18.9) billion of net outflows partially offset by $5.9 billion from positive market performance, partially offset by $(10.4) billion of net outflows.performance.

(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.

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

–Funds - average daily or weekly balances –Retail Separate Accounts - prior-quarter ending balances –Institutional Accounts - average of month-end balances 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. Fund fees are calculated based on average daily or weekly net assets. Retail separate account feesfees, which includesinclude fees for wealth management accountsaccounts, are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances. Institutional account fees are calculated based on an average of month-end balances, an average of current quarter’s asset values or on a combination of the underlying cash flows and the principal value of the product. Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

(21)Percentage beatingoutperforming benchmark is reported as the percentage of assets under management that have outperformed benchmarks across the indicated periods and does not include assets without benchmarks.periods. Performance is presented on an average annual total return basis for products with a one-, three-, five-,five- and/or ten-year track record, is net of fees for open-end funds, and is measured on a consistent basis relative to the most appropriate benchmarks. Fund investment performance is net of fees. Benchmark indices are unmanaged, their returns do not reflect any fees, expenses or sales charges, and they are not available for direct investment. PastCertain performancestrategies isdo not indicativehave ofstated futurebenchmarks, results.such as wealth management, structured products, and certain other multi-asset accounts and therefore are excluded from the analysis.

In 2024,2025, total revenues increaseddecreased $61.7$54.1 million, or 7.3%,6.0%, to $852.9 million from $906.9 million from $845.3 million in 2023,2024, and operating income increaseddecreased by $31.0$13.8 million, or 20.5%,7.6%, to $168.7 million in 2025 from $182.5 million in 20242024, from $151.5 million in 2023,due primarily to decreased revenues as amentioned result of increased average assets under management during the current year partially offset by an increase in operating expenses.above.

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 increaseddecreased by $62.4$48.8 million, or 8.8%,6.3%, for the year ended December 31, 20242025 compared to the prior year, primarily due to the increase indecreased average assets under management.management and a decreased average fee rate.

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S. retail funds, ETFs and closed-end funds. Fund administration and shareholder service fees remaineddecreased consistentby $1.0 million, or 1.4%, for the year ended December 31, 20242025 compared to the prior year.year primarily due to the decrease in average assets under management of our U.S. retail funds partially offset by increased closed-end fund administrative fees.

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses ofdecreased $432.6by million increased $27.8$31.9 million, or 6.9%,7.4%, fromfor the prioryear yearended December 31, 2025 primarily due to ana increasedecrease in profit- and sales-based compensation and thestock-based addition of AlphaSimplex in April 2023.compensation.

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management. Distribution and other asset-based expenses remaineddecreased consistent$7.2 duringmillion, or 7.5%, for the year ended December 31, 20242025 comparedprimarily due to thedecreases priorin year.assets under management in share classes that have asset-based distribution and other asset-based expenses.

Other operating expenses primarily consist of investment research and technology costs, software application and development expenses, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs. Other operating expenses remainedincreased consistent$2.8 million, or 2.2% during the year ended December 31, 20242025 compared to the prior year.year primarily due to increased legal and professional fees associated with the Keystone acquisition and the refinancing of the Company's credit facility.

Other operating expenses of CIP ofdecreased $7.0 million increased $2.8$1.2 million, or 65.4%,16.8%, from the prior year primarily due to costs incurred related to the refinancing ofactivities threeassociated with two CLOs and issuance of one CLO in the currentprior year.year period.

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 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 change in fair value of contingent consideration for the year ended December 31, 20242025 was primarily attributable to changes in underlying performance estimates.estimates and the passage of time.

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense increaseddecreased $3.2by $1.0 million, or 54.3%,10.8%, for the year ended December 31, 20242025 compared to the prior year primarily due to the prior year acceleration of depreciation on leasehold improvements associated with a terminated lease in the current year period, as well as software and equipment purchases and depreciation expense associated with new office space.lease.

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense decreased $4.7$4.5 million, or 7.7%,8.0%, for the year ended December 31, 20242025 compared to the prior year, primarily due to intangible assets becoming fully amortized during the current year partially offset by the addition of intangible assets related to the AlphaSimplex acquisition in the second quarter of the prior year.amortized.

Realized and unrealized gain (loss) on investments, net changed during the year ended December 31, 20242025 by $2.6$1.9 million as compared to the prior year. The realizedchange andfor the year ended December 31, 2025 is primarily attributable to an increase in unrealized gains anddue losses reflectto changes in overall market conditionsvalues forof theour year.investments.

Other income (expense), net changed by $2.5$1.4 million during the year ended December 31, 20242025 compared to the prior year primarily due to changes in the gains and losses on our equity method investments.investments, as well as foreign currency gains and losses.

Interest expense decreased $1.3$0.7 million, or 5.5%,3.0%, for the year ended December 31, 2024,2025, compared to the prior year primarily due to lower average interest rates during the current year partially offset by higher average debt outstanding during the current year.

Interest and dividend income of investments of CIP increaseddecreased $7.0$17.3 million, or 3.6%,8.4%, compared to the prior year. The increasedecrease is primarily attributable to the addition of a new CLO in the third quarter of 2023 and fourth quarter of 2024, respectively, and higherlower average interest rates duringin the current year.year partially offset by the addition of new CLOs in the fourth quarters of 2024 and 2025.

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP increaseddecreased by $5.9$20.3 million, or 3.8%,12.6%, compared to the prior year. The increasedecrease is primarily attributabledue to lower average interest rates in the current year period partially offset by the addition of new CLOs in the thirdfourth quarterquarters of 20232024 and fourth quarter of 2024.2025.

The provision for income taxes reflected U.S. federal, state and local taxes and foreign taxes at an estimated effective tax rate of 26.7%27.4% and 24.2%26.7% for 20242025 and 2023,2024, respectively. The higher estimated effective tax rate for 20242025 was primarily due to a change in valuation allowances associatedin the current year related to the tax effects of lower realized and unrealized gains on Company investments compared to the prior year, along with realizedthe lossesestablishment of a valuation allowance on thecertain Company's investments as well as lower excessstate tax benefits associated with stock-based compensation.attributes.

In addition to operating activities, other uses of cash could include: (i) investments in organic growth, including seeding or launching new products and expanding distribution; (ii) debt principal payments through scheduled amortization or additional paydowns; (iii) dividend payments to common stockholders; (iv) repurchases of our common stock, or withholding obligations for the net settlement of employee share transactions; (v) investments in our technology infrastructure; (vi) investments in inorganic growth opportunities that may require upfront and/or future payments; (vii) integration costs, including restructuring and severance, related to acquisitions, if any; and (viii) purchases of affiliateinvestment manager equity interests.

Net cash used in operating activities of $67.2 million for 2025 changed by $69.0 million from cash provided by operating activities of $1.8 million forin 2024 decreased by $235.4 million from cash flows provided by operating activities of $237.2 million in 2023 primarily due to an increase of $270.7$44.4 million in net purchases of investments of CIP in the current year period, partially offset byand a $26.1decrease of $25.7 million increase in net sales of investments in the current year.

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 $17.0$47.3 million for 20242025 decreasedincreased by $112.8$30.4 million from net cash used in investing activities of $129.7$17.0 million in 20232024 primarily due to the AlphaSimplexpurchase acquisitionof a minority interest in Crescent Cove in the priorcurrent year.

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 provided by financing activities of $74.9$191.0 million in 20242025 changedincreased by $431.1$116.1 million from net cash usedprovided inby financing activities of $356.1$74.9 million in the prior year primarily due to a $433.5$183.7 million increase in net borrowings as a result of CIP attributable to the refinancing of twoour CLOscredit facility, partially offset by a $25.3 million decrease in net borrowings and the launchpayments of CIP and a new$22.4 CLOmillion decrease in thenet currentcontributions year.from noncontrolling interests.

TheOn Company'sSeptember 26, 2025, the Company refinanced its existing credit agreement by entering into a new agreement (the "Credit Agreement"),. comprisesThe Credit Agreement provides for (i) a $275.0$400.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028,2032, and (ii) a $175.0$250.0 million revolving credit facility with a five-year term expiring in September 2026.2030. A portion of the proceeds of the refinancing have been used to repay the $234.7 million outstanding on the previous term loan. The Company repaidhas $22.8the right, subject to customary conditions specified in the Credit Agreement, to request additional revolving credit facility commitments and additional term loans to be made under the Credit Agreement. The Company had $399.0 million outstanding at December 31, 2025 under the Term Loan during 2024 and had $236.1 million outstanding under the Term Loan at December 31, 2024.Loan. In accordance with Accounting Standards Codification ("ASC") 835, Interest, the amounts outstanding under the Company's Term Loan are presented on the Consolidated Balance Sheet net of related debt issuance costs, which were $3.9$9.0 million as of December 31, 2024.2025.

Noncontrolling interests - Investment Manager represents the minority interests of a majority owned consolidated investment management subsidiary. These minority interests are subject to holder put rights and Company call rights at pre-established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value. The rights are exercisable at pre-established intervals or upon certain conditions, such as retirement. The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in the related noncontrolling interests. The Company, in purchasing equity of the investment management subsidiary, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity. The minority interests in the investment management subsidiary are recorded at estimated redemption value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of Operations within noncontrolling interests.

Contingent payment obligations related to business combinations are remeasured at fair value each reporting date using a simulation model or an income approach valuation technique with the assistance of an independent valuation firm (level 3 fair value measurement). The change in fair value is recorded in the current period as a gain or loss. Gains and losses resulting from changes in the fair value of contingent payment obligations are reflected within change in fair value of contingent consideration on the Consolidated Statements of Operations.

▪Total revenues were $199.5$201.4 million in the firstsecond quarter of 2026, a decrease of $18.4$9.2 million, or 8.4%,4.4%, compared to total revenues of $217.9$210.5 million in the firstsecond quarter of 2025.

▪Operating income was $15.4$27.3 million in the firstsecond quarter of 2026, a decrease of $21.1$17.9 million, or 57.8%,39.6%, compared to $36.6$45.2 million in the firstsecond quarter of 2025.

▪Net income per diluted share was $1.05$6.68 in the firstsecond quarter of 2026, aan decreaseincrease of $3.00,$0.56, or 74.1%,9.2%, compared to net income per diluted share of $4.05$6.12 in the firstsecond quarter of 2025.

Total sales were $5.8$6.1 billion in the firstsecond quarter of 2026, aan decreaseincrease of $0.5 billion, or 7.4%,8.5%, from $6.2$5.6 billion in the firstsecond quarter of 2025. Net flows were $(8.45.6) billion in the firstsecond quarter of 2026 compared to net flows of $(3.03.9) billion in the firstsecond quarter of 2025.

At MarchJune 31,30, 2026, total assets under management were $149.0$152.2 billion, representing a decrease of $18.4$18.5 billion, or 11.0%,10.9%, from MarchJune 31,30, 2025, and a decrease of $10.5$7.3 billion, or 6.6%,4.6%, from December 31, 2025. The decrease in total assets under management from MarchJune 31,30, 2025 primarily included $24.3$26.0 billion from net outflows partially offset by $6.1$7.6 billion from positive market performance and $2.3 billion from the addition of Keystone. The decrease in total assets under management from December 31, 2025 included $8.4$14.1 billion from net outflows andpartially $3.9offset by $5.4 billion from negativepositive market performance partially offset byand $2.3 billion from the addition of Keystone.

The average fee rate earned increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in the prior year primarily due to higher fee rates earned on the assets under management acquired from Keystone partially offset by a shift in the asset mix in our open-end funds to certain strategies, which have a lower fee rate.

In the firstsecond quarter of 2026, total revenues decreased 8.4%4.4% to $199.5$201.4 million from $217.9$210.5 million in the firstsecond quarter of 2025, primarily as a result of decreased average assets under managementmanagement, partially offset by the addition of Keystone. Operating income decreased by $21.1$17.9 million to $15.4$27.3 million in the firstsecond quarter of 2026 compared to $36.6$45.2 million in the firstsecond quarter of 2025, due primarily to an increase in amortization expenses as a result of the Keystone acquisition and decreased revenues as mentioned above.

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 decreased by $17.0$8.6 million, or 9.1%,4.8%, and $25.6 million, or 7.0%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior year primarily due to decreased average assets under management partially offset by the addition of Keystone.management.

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S. retail funds, ETFs and traditional closed-end funds. Fund administration and shareholder service fees decreased $0.7 million, or 3.9%3.9%, and $1.4 million, or 3.9%, during the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same periodperiods in the prior year primarily due to the decrease in average assets under management of our U.S. retail funds partially offset by increased closed-end fund administration 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 and decreased by $1.1$1.3 million, or 8.8%,5.4%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior yearyear. The decrease during the six month period is 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.

Other income and fees primarily represent fees related to other fee-earning assets and marketing fees earned on certain ETFs. Other income and fees increased $0.4 million, or 34.9%,36.9%, and $0.8 million, or 35.9%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior year primarily due to increased marketing fees earned on ETFs during the current year period.periods.

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses decreasedincreased by $3.9$4.4 million, or 3.6%,4.5%, and $0.6 million, or 0.3%, for the three and six months ended MarchJune 31,30, 2026, respectively, primarily due to athe decreaseaddition inof profit-Keystone employees and sales-basedan compensationincrease andin stock-based compensation expense partially offset by thea additiondecrease ofin Keystone.incentive compensation.

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management. Distribution and other asset-based expenses decreased $2.4$1.7 million, or 10.3%,7.7%, and $4.1 million, or 9.0%, for the three and six months ended MarchJune 31,30, 2026, respectively, primarily due to decreases in assets under management in share classes that have asset-based distribution and other asset-based expenses.

Other operating expenses consist primarily of investment research and technology costs, software application and development expenses, professional fees, travel and distribution-related costs, rent and occupancy expenses, and other business costs. Other operating expenses increasedremained $3.1 million, or 9.5%,consistent for the three months ended MarchJune 31,30, 2026 and 2025, and increased $2.8 million, or 4.2%, for the six months ended June 30, 2026 compared to the same periodperiods in the prior year primarily due to transaction costs relatedand toongoing costs associated with the Keystone acquisition.acquisition partially offset by decreased rent associated with lease terminations in the prior year.

Other operating expenses of CIP increasedwere by $1.0 million, or 101.5%,consistent for the three months ended MarchJune 31,30, 2026 and 2025, and increased by $1.1 million, or 62.5%, for the six months ended June 30, 2026, compared to the same periodperiods in the prior year primarily due to refinancing activities associated with one CLO in the current year.

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 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 change in fair value of contingent consideration for the three and six months ended MarchJune 31,30, 2026 was primarily attributable to changes in underlying performance estimates and the passage of time.

During the three and six months ended MarchJune 31,30, 2026, the Company incurred $2.9$0.8 million and $3.7 million, respectively, in restructuring expense related to severance costs.

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense decreased by $0.7$0.3 million, or 28.9%,16.3%, for the three months ended MarchJune 31,30, 2026 primarily due to computer equipment in the current year becoming fully depreciated. Depreciation expense decreased $1.0 million, or 23.1%, for the six months ended June 30, 2026, compared to the same period in the prior year primarily due to the prior year acceleration of depreciation on leasehold improvements associated with a terminated lease and a decrease in depreciation expense on computer equipment in the current year due to these assets becoming fully depreciated.

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense increased by $2.2$7.1 million, or 17.2%,54.9%, and $9.3 million, or 36.1%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior year, primarily due to the additional amortization associated with the Keystone acquisition.

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended MarchJune 31,30, 2026 by $1.8$0.6 million and $2.4 million compared to the same periodperiods in the prior year. The change for the three and six months ended MarchJune 31,30, 2026 is primarily attributable to an increase in realized gains due to changes in market values of our investments.

Realized and unrealized gain (loss) of CIP, net changed by $(6.7)$19.6 million and $12.9 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior year. The change for the three months ended MarchJune 31,30, 2026 consisted primarily of changes in net unrealized and realized lossesgains of $19.5$39.8 million due to changes in market values of leveraged loans, partially offset by net unrealized gainslosses of $12.8$20.2 million related to the value of the notes payable. The change for the six months ended June 30, 2026 consisted primarily of changes in net unrealized and realized gains of $20.3 million due to changes in market values of leveraged loans, partially offset by net unrealized losses of $7.4 million related to the value of the notes payable.

Other income (expense) remainedchanged consistentby during$(1.9) million and $(2.2) million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same periodperiods in the prior year.year primarily due to noncontrolling interest liability distributions partially offset by changes in the gains on our equity method investments.

Interest expense increased $2.2$2.6 million, or 48.3%,56.0%, and $4.8 million, or 52.1%, for the three and six months ended MarchJune 31,30, 2026, primarily due to increased average debt outstanding during the current year period.periods.

Interest and dividend income is earned on cash equivalents and marketable securities. Interest and dividend income remaineddecreased consistent$0.7 million, or 33.2%, and $0.8 million, or 14.8%, for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in the prior year.year primarily due to lower average interest rates.

Interest and dividend income of investments of CIP increased $1.1$0.7 million, or 2.3%,1.5%, and $1.8 million, or 1.9%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior yearyear, primarily due to the addition of a CLO in the fourth quarter of 2025.2025 partially offset by lower interest rates.

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP increasedremained consistent and decreased by $0.5 million, or 1.4%,0.7%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in the prior year,year. The decrease during the six months ended June 30, 2026 is primarily due to lower interest rates partially offset by the addition of a CLO in the fourth quarter of 2025.

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 53.8%23.5% and 30.6%25.9% for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The higherlower estimated effective tax rate for the threesix months ended MarchJune 31,30, 2026 was primarily due to a change in valuation allowances in the current year related to the tax effects of higher realized and unrealized lossesgains on Company investments compared to the prior year and the rate impact of lower pre-tax income.year.

At MarchJune 31,30, 2026, we had $136.6$176.2 million of cash and cash equivalents and $143.1$139.9 million of investments, which included $53.5$49.7 million of investment securities, compared to $386.5 million of cash and cash equivalents and $157.5 million of investments, which included $76.5 million of investment securities, at December 31, 2025.

Certain of our subsidiaries are registered with the SEC, Central Bank of Ireland, Financial Conduct Authority 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 MarchJune 31,30, 2026, our broker-dealer net capital was significantly greater than the required minimum.

Net cash provided by operating activities of $35.9$93.3 million for the threesix months ended MarchJune 31,30, 2026 changedincreased by $39.7$21.4 million from net cash usedprovided inby operating activities of $3.8$72.0 million for the same period in the prior year primarily due to an increase of $29.2$20.4 million in net sales of investments by CIP and $15.3$20.0 million in net sales of investments by us, partially offset by a $21.9$20.0 million decrease in net income in the current year period.

Cash flows from investing activities consist primarily of acquisitions of businesses, capital expenditures and other investing activities related to our business operations. Net cash used in investing activities of $198.5$199.8 million for the threesix months ended MarchJune 31,30, 2026 increased by $195.5$195.8 million from net cash used in investing activities of $3.0$4.0 million for the same period in the prior year primarily due to the acquisition of Keystone.

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 $40.9$84.4 million for the threesix months ended MarchJune 31,30, 2026 decreased by $133.6$142.1 million from net cash used of $174.5$226.5 million for the same period in the prior year primarily due to aan $102.5increase of $96.1 million increase in net borrowings of CIP and $50.0$29.4 million in net borrowings onby ourus, revolverand a $29.5 million decrease in repurchases of common shares during the current year period.

The Company's credit agreement (the "Credit Agreement") provides for (i) a $400.0 million term loan for the Company with a seven-year term (the "Term Loan") expiring in September 2032, and (ii) a $250.0 million revolving credit facility (the "Revolver") with a five-year term expiring in September 2030. The Company borrowed $50.0 million under the Revolver during the threesix months ended MarchJune 31,30, 2026. TheDuring the six months ended June 30, 2026, the Company repaid $1.0$20.0 million and $2.0 million outstanding under the Revolver and Term LoanLoan, duringrespectively. At June 30, 2026, the threeCompany monthshad ended$30.0 March 31, 2026million and had $398.0$397.0 million outstanding under the Revolver and Term LoanLoan, at March 31, 2026.respectively. In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheets net of related debt issuance costs, which were $8.7$8.4 million as of MarchJune 31,30, 2026.

Our financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates. Actual results will vary from these estimates. A discussion of our critical accounting policies and estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. A complete description of our significant accounting policies is included in our 2025 Annual Report on Form 10-K. There were no material changes in our critical accounting policies and estimates in the three months ended MarchJune 31,30, 2026.