DIAMOND HILL INVESTMENT GROUP, INC. REPORTS RESULTS FOR FIRST QUARTER 2025 AND DECLARES QUARTERLY DIVIDEND

Rhea-AI Summary

Diamond Hill Investment Group reported its Q1 2025 financial results, showing mixed performance. Total assets under management (AUM) and assets under advisement (AUA) were $31.6 billion, slightly down from $31.9 billion in both December 2024 and March 2024.

Key highlights include:

• Revenue increased 2% to $37.1 million
• Net operating profit margin improved to 35% from 23%
• Net client outflows of $529.0 million, compared to $118.0 million inflows last year
• Earnings per share decreased to $3.77 from $4.62
• Quarterly dividend of $1.50 per share declared

The company's fixed income strategies surpassed $7 billion in AUM, helping offset US equity outflows. CEO Heather Brilliant noted that uncertain economic conditions may continue to impact near-term returns, while maintaining their disciplined investment approach focusing on undervalued investments.

Positive

• Revenue increased 2% YoY to $37.1M in Q1 2025
• Net operating profit margin improved to 35% from 23% YoY
• Adjusted earnings per share rose to $3.23 from $3.00 YoY
• Fixed income strategies surpassed $7B in AUM
• Maintained quarterly dividend of $1.50 per share

Negative

• Net client outflows of $529M vs inflows of $118M in Q1 2024
• Total AUM/AUA declined to $31.6B from $31.9B in Q4 2024
• Net income decreased 20% YoY to $10.4M
• Investment income dropped 88% YoY to $1.1M
• US equity outflows continued in Q1 2025

Insights

Financial Analyst

Diamond Hill reports mixed Q1 results with improved operations but concerning asset outflows, balancing strengths against client retention challenges.

Diamond Hill's Q1 2025 financial results present a nuanced picture with contradictory signals for investors. The company's revenue increased modestly by 2% to $37.1 million, while its net operating profit margin expanded substantially to 35% from 23% in Q1 2024. This impressive margin improvement demonstrates enhanced operational efficiency in their core business.

The headline GAAP figures show net income declined 20% to $10.4 million, with diluted EPS falling 18% to $3.77. However, this decline primarily stems from non-operating factors—particularly the 88% decrease in investment income from $9.4 million to just $1.1 million, which reflects market-related fluctuations rather than core business deterioration.

When examining adjusted metrics that exclude these market-driven variables, Diamond Hill's performance appears more favorable. Adjusted EPS increased 8% from $3.00 to $3.23, while adjusted operating profit margin improved slightly from 32% to 33%.

The most concerning element is net outflows of $529 million, contrasting with $118 million in net inflows during Q1 2024. The breakdown reveals $1.29 billion in equity strategy outflows, partially offset by $760 million in fixed income inflows. This divergent pattern signals a client shift away from equity offerings despite fixed income strategies gaining traction and surpassing $7 billion in AUM.

Despite these outflows, total AUM/AUA remained relatively stable at $31.6 billion compared to $31.9 billion year-over-year, and average AUM/AUA actually increased by approximately 7% to $32.3 billion. The company maintained its capital return program with a $1.50 quarterly dividend and $3.6 million in share repurchases, returning $7.8 million total to shareholders.

The CEO's acknowledgment of an "uncertain economic and market environment" suggests continued challenges ahead, particularly for equity strategies, though the firm has demonstrated resilience through its diversified product offering.

COLUMBUS, Ohio, April 29, 2025 /PRNewswire/ -- Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported unaudited financial results for the first quarter of 2025.

The following are selected highlights for the quarter ended March 31, 2025:

• Assets under management ("AUM") and assets under advisement ("AUA") combined were $31.6 billion, compared to $31.9 billion as of December 31, 2024, and as of March 31, 2024.
• Average AUM and AUA combined were $32.3 billion, compared to $30.1 billion for the first quarter of 2024.
• Net client outflows were $529.0 million, compared to $118.0 million of net inflows for the first quarter of 2024.
• Revenue was $37.1 million, compared to $36.3 million for the first quarter of 2024.
• Net operating profit margin was 35%, compared to 23% for the first quarter of 2024.
• Adjusted net operating profit margin¹ was 33%, compared to 32% for the first quarter of 2024.
• Investment income was $1.1 million, compared to investment income of $9.4 million for the first quarter of 2024.
• Net income attributable to common shareholders was $10.4 million, compared to $13.0 million for the first quarter of 2024.
• Earnings per share attributable to common shareholders - diluted was $3.77, compared to $4.62 for the first quarter of 2024.
• Adjusted earnings per share attributable to common shareholders - diluted² was $3.23, compared to $3.00 for the first quarter of 2024.
• The Company returned approximately $7.8 million to its shareholders - $3.6 million through the repurchase of 24,270 common shares and $4.2 million through a dividend of $1.50 per common share.

"Our differentiated fixed income strategies surpassed $7 billion in AUM in Q1, helping partially offset US equity outflows," said Heather Brilliant, CEO. "The uncertain economic and market environment will likely continue to impact near-term returns for investors across the board. We remain disciplined in seeking investments selling at a discount to underlying value and having patience to wait for that value to be realized."

_____________________________________________

1 Adjusts the financial measure calculated in accordance with U.S. generally accepted accounting principles ("GAAP") for the impact of market movements on the deferred compensation liability and related economic hedges, and the impact of any consolidated funds. During the first quarter of 2025, the Diamond Hill Core Plus Bond Fund was consolidated. During the first quarter of 2024, no Proprietary Funds were consolidated. The "Proprietary Funds" consist of the Diamond Hill Funds, a series of open-end mutual funds, and the Diamond Hill Securitized Credit Fund, a closed-end registered investment company. The Proprietary Fund consolidated during the applicable period is referred to as the "Consolidated Fund." See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.

2 Adjusts the financial measure calculated in accordance with GAAP for the impact of the Consolidated Fund and investment income related to certain other investments.  See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.

Capital Allocation:

The Company's board of directors approved the payment of a regular quarterly cash dividend of $1.50 per common share. The dividend will be paid on June 13, 2025, to the Company's shareholders of record as of the close of business on June 2, 2025.

Selected Income Statement Data
	Three Months Ended March 31,
	2025		2024		% Change
Revenue	$         37,116,210		$         36,294,930		2 %
Compensation and related costs, excluding deferred compensation expense (benefit)	18,206,648		18,147,465		— %
Deferred compensation expense (benefit)	(964,655)		3,190,363		NM
Other expenses	6,810,318		6,654,276		2 %
Total operating expenses	24,052,311		27,992,104		(14) %
Net operating income	13,063,899		8,302,826		57 %
Investment income, net	1,119,969		9,365,678		(88) %
Net income before taxes	14,183,868		17,668,504		(20) %
Income tax expense	(3,811,018)		(4,652,571)		(18) %
Net income	10,372,850		13,015,933		(20) %
Net income attributable to redeemable noncontrolling interest	(10,587)		—		NM
Net income attributable to common shareholders	$         10,362,263		$         13,015,933		(20) %
Earnings per share attributable to common shareholders - diluted	$                     3.77		$                     4.62		(18) %
Weighted average shares outstanding - diluted	2,748,568		2,816,839		(2) %

 

Selected Assets Under Management and Assets Under Advisement Data
	Change in AUM and AUA
	For the Three Months Ended March 31,
(in millions)	2025		2024
AUM at beginning of the period	$                                   30,012		$                                   27,418
Net cash inflows (outflows)
Proprietary Funds	386		92
Separately managed accounts	(450)		(162)
Collective investment trusts	(303)		170
Other pooled vehicles	(162)		18
	(529)		118
Net market appreciation and income	309		2,443
Increase (decrease) during the period	(220)		2,561
AUM at end of the period	29,792		29,979
AUA at end of period	1,804		1,940
Total AUM and AUA at end of period	$                                   31,596		$                                   31,919
Average AUM during the period	$                                   30,351		$                                   28,250
Average AUA during the period	1,914		1,828
Total average AUM and AUA during the period	$                                   32,265		$                                   30,078

 

	Net Cash Inflows (Outflows) Further Breakdown
		For the Three Months Ended   March 31,
(in millions)		2025		2024
Net cash inflows (outflows)
Equity		$             (1,289)		$                  (378)
Fixed Income		760		496
		$                 (529)		$                    118

 

About Diamond Hill:
Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment. An independent active asset manager with significant employee ownership, Diamond Hill's investment strategies include differentiated U.S. and international equity, alternative long-short equity and fixed income.

Non-GAAP Financial Measures and Reconciliation

As supplemental information, the Company is providing certain financial measures that are based on methodologies other than GAAP ("non-GAAP").  Management believes the non-GAAP financial measures below are useful measures of the Company's core business activities, are important metrics in estimating the value of an asset management business, and help facilitate comparisons to Company operating performance across periods.  These non-GAAP financial measures are presented for supplemental informational purposes only, should not be used as a substitute for financial measures calculated in accordance with GAAP and may be calculated differently from similarly titled non-GAAP measures used by other companies.  The following schedules reconcile the differences between financial measures calculated in accordance with GAAP and non-GAAP financial measures for the three-month periods ended March 31, 2025 and 2024,respectively. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, as well as the Company's condensed consolidated financial statements and related notes  in its quarterly report on Form 10-Q for the quarter ended March 31, 2025.

	Three Months Ended March 31, 2025
(in thousands, except percentages and per share data)	Total operating expenses		Net operating income		Total non-operating income (loss)		Income tax expense(4)		Net income attributable to common shareholders		Earnings per share attributable to common shareholders - diluted		Net operating profit margin
GAAP Basis	$       24,052		$    13,064		$      1,120		$         3,811		$          10,362		$             3.77		35 %
Non-GAAP Adjustments:
Deferred compensation liability(1)	965		(965)		965		—		—		—		(2) %
Consolidated Fund(2)	—		40		(1,119)		(287)		(781)		(0.28)		— %
Other investment income(3)	—		—		(966)		(260)		(706)		(0.26)		—
Adjusted Non-GAAP basis	$       25,017		$    12,139		$           —		$         3,264		$            8,875		$             3.23		33 %
	Three Months Ended March 31, 2024
(in thousands, except percentages and per share data)	Total operating expenses		Net operating income		Total non-operating income (loss)		Income tax expense(4)		Net income attributable to common shareholders		Earnings per share attributable to common shareholders - diluted		Net operating profit margin
GAAP Basis	$       27,992		$      8,303		$      9,366		$         4,653		$          13,016		$             4.62		23 %
Non-GAAP Adjustments:
Deferred compensation liability (1)	(3,190)		3,190		(3,190)		—		—		—		9 %
Other investment income(3)	—		—		(6,176)		(1,624)		(4,552)		(1.62)		—
Adjusted Non-GAAP basis	$       24,802		$    11,493		$           —		$         3,029		$            8,464		$             3.00		32 %

(1)	This non-GAAP adjustment removes the compensation expense resulting from market valuation changes in the Company's deferred compensation plans' liability and the related net gains/losses on investments designated as an economic hedge against the related liability. Amounts deferred under the deferred compensation plans are adjusted for appreciation/depreciation of investments chosen by participants.  The Company believes it is useful to offset the non-operating investment income or loss realized on the hedges against the related compensation expense and remove the net impact to help readers understand the Company's core operating results and to improve comparability from period to period.
(2)	This non-GAAP adjustment removes the impact that the Consolidated Fund has on the Company's GAAP consolidated statements of income.  Specifically, the Company adds back the operating expenses and subtracts the investment income of the Consolidated Fund.  The adjustment to net operating income represents the operating expenses of the Consolidated Fund, net of the elimination of related management and administrative fees.  The adjustment to net income attributable to common shareholders represents the net income of the Consolidated Fund, net of redeemable non-controlling interests.  The Company believes removing the impact of the Consolidated Fund helps readers understand its core operating results and improves comparability from period to period.
(3)	This non-GAAP adjustment represents the net gains or losses earned on the Company's non-consolidated investment portfolio that are not designated as economic hedges of the Deferred Compensation Plans' liability, non-consolidated seed investments, and other investments.  The Company believes adjusting for these non-operating income or loss items helps readers understand the Company's core operating results and improves comparability from period to period.
(4)	The income tax expense impacts were calculated and resulted in the overall non-GAAP effective tax rates of 26.9% for the three months ended March 31, 2025 and 26.3% for the three months ended March 31, 2024.

The Company does not recommend that investors consider non-GAAP financial measures alone, or as a substitute for, financial information prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

Throughout this press release, the Company may make "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, as amended (the "PSLR Act"), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Such statements are provided under the "safe harbor" protection of the PSLR Act of 1995.  Forward-looking statements include, but are not limited to, statements regarding anticipated operating results, prospects and levels of AUM or AUA, technological developments, economic trends (including interest rates and market volatility), expected transactions and similar matters. The words "may," "believe," "expect," "anticipate," "target," "goal," "project," "estimate," "guidance," "forecast," "outlook," "would," "will," "continue," "likely," "should," "hope," "seek," "plan," "intend," and variations of such words and similar expressions identify forward-looking statements.  Similarly, descriptions of the Company's objectives, strategies, plans, goals, or targets are also forward-looking statements.  Forward-looking statements are based on the Company's expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors.  While the Company believes that the assumptions underlying its forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and, accordingly, the Company's actual results and experiences may differ materially from the anticipated results or other expectations expressed in its forward-looking statements.

Factors that may cause the Company's actual results or experiences to differ materially from results discussed in forward-looking statements are discussed under Part I, Item 1A (Risk Factors) and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.  These factors include, but are not limited to: (i) any reduction in the Company's AUM or AUA; (ii) withdrawal, renegotiation, or termination of investment advisory agreements; (iii) damage to the Company's reputation; (iv) failure to comply with investment guidelines or other contractual requirements; (v) challenges from the competition the Company faces in its business; (vi) challenges from industry trends towards lower fee strategies and model portfolio arrangements; (vii) adverse regulatory and legal developments; (viii) unfavorable changes in tax laws or limitations; (ix) interruptions in or failure to provide critical technological service by the Company or third parties; (x) adverse civil litigation and government investigations or proceedings; (xi) failure to adapt to or successfully incorporate technological changes, such as artificial intelligence ("AI"), into the Company's business; (xii) risk of loss on the Company's investments; (xiii) lack of sufficient capital on satisfactory terms; (xiv) losses or costs not covered by insurance; (xv) a decline in the performance of the Company's products; (xvi) changes in interest rates and inflation; (xvii) changes in national and local economic and political conditions; (xviii) the continuing economic uncertainty in various parts of the world; (xix) the effects of pandemics and the actions taken in connection therewith; (xx) political uncertainty caused by, among other things, political parties, economic nationalist sentiments, tensions surrounding the current socioeconomic landscape; (xxi) changes in trade policy, including new tariffs and retaliatory measures, by the U.S. and other countries; and (xxii), other risks identified from time-to-time in the Company's public documents on file with the SEC.

In light of the significant uncertainties in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its expectations, objectives and plans will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company and speak only as of the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect it.  The Company assumes no obligation to update any forward-looking statements after the date they are made, whether as a result of new information, future events or developments or otherwise, except as required by law, although it may do so from time to time.  The Company does not endorse any projections regarding future performance that may be made by third parties.

View original content to download multimedia:https://www.prnewswire.com/news-releases/diamond-hill-investment-group-inc-reports-results-for-first-quarter-2025-and-declares-quarterly-dividend-302441528.html

SOURCE Diamond Hill Investment Group, Inc.

FAQ

What was Diamond Hill's (DHIL) Q1 2025 earnings per share?

Diamond Hill reported diluted earnings per share of $3.77 for Q1 2025, compared to $4.62 in Q1 2024, representing an 18% decrease. However, adjusted earnings per share increased to $3.23 from $3.00 year-over-year.

How much dividend will DHIL pay in June 2025?

Diamond Hill will pay a quarterly cash dividend of $1.50 per common share on June 13, 2025, to shareholders of record as of June 2, 2025.

What caused Diamond Hill's net client outflows in Q1 2025?

Diamond Hill experienced net client outflows of $529 million in Q1 2025, primarily due to $1.289 billion in equity outflows, partially offset by $760 million in fixed income inflows. Their fixed income strategies surpassed $7 billion in AUM during the quarter.

How much did Diamond Hill return to shareholders in Q1 2025?

Diamond Hill returned approximately $7.8 million to shareholders in Q1 2025, consisting of $3.6 million through the repurchase of 24,270 common shares and $4.2 million through dividend payments.

What is Diamond Hill's (DHIL) total assets under management as of March 2025?

Diamond Hill reported combined assets under management (AUM) and assets under advisement (AUA) of $31.6 billion as of March 31, 2025, slightly down from $31.9 billion in December 2024.