DIAMOND HILL INVESTMENT GROUP, INC. REPORTS RESULTS FOR SECOND QUARTER 2022 AND DECLARES THIRD QUARTER DIVIDEND
Diamond Hill Investment Group (NASDAQ: DHIL) reported Q2 2022 financial results, revealing assets under management (AUM) of $25.8 billion, down from $31.0 billion at year-end 2021. The quarter saw $515 million in net client outflows and revenues of $39 million, a decrease from $45 million in Q2 2021. Net income attributable to common shareholders fell to $4.4 million, down 74% year-over-year, with diluted earnings per share at $1.40. The company declared a $1.50 dividend per share, payable on September 16, 2022, showcasing commitment to shareholder returns despite challenging market conditions.
- Operating profit margin improved to 52%, up from 39% in Q2 2021.
- The company returned $12.4 million to shareholders via share repurchases and $4.7 million in dividends.
- Assets under management decreased significantly by $5.2 billion year-over-year.
- Net client outflows totaled $515 million, contrasting with $550 million of inflows in Q2 2021.
- Net income attributable to common shareholders dropped 74%, indicating weakness in financial performance.
COLUMBUS, Ohio, July 28, 2022 /PRNewswire/ -- Diamond Hill Investment Group, Inc. (NASDAQ: DHIL) today reported unaudited financial results for the second quarter of 2022.
The following are selected highlights for the quarter ended June 30, 2022:
- Assets under management ("AUM") were
$25.8 billion compared to$31.0 billion as of December 31, 2021, and$32.4 billion as of June 30, 2021. - The AUM as of June 30, 2021 included
$3.4 billion in AUM related to our high-yield focused advisory contracts which were sold in the third quarter of 2021. - Average AUM was
$28.2 billion compared to$32.1 billion for the second quarter of 2021. - Net client outflows were
$515 million , compared to$550 million of net inflows for the second quarter of 2021. - Revenue was
$39.0 million , compared to$45.1 million for the second quarter of 2021. - Operating profit margin was
52% compared to39% for the second quarter of 2021. Operating profit margin, as adjusted,6 was40% compared to43% for the second quarter of 2021. - Investment loss was
$17.7 million compared to investment income of$5.9 million for the second quarter of 2021. - Net income attributable to common shareholders was
$4.4 million compared to$16.9 million for the second quarter of 2021. - Earnings per share attributable to common shareholders - diluted was
$1.40 compared to$5.28 for the second quarter of 2021. - Net operating income, as adjusted after tax per diluted share,5 was
$3.77 compared to$4.44 for the second quarter of 2021. - The Company returned
$12.4 million to its shareholders via 69,693 shares repurchased during the quarter and$4.7 million via a$1.50 per share dividend during the quarter.
"Despite the difficult environment during the quarter, our core operating results were resilient," said Heather Brilliant, president and CEO. "Our net income and corresponding earnings per share were impacted significantly by the market downturn, which resulted in large unrealized losses on our corporate investments. While these seed capital investments may cause short-term volatility in our earnings, we believe they are important for the long-term growth of our business."
Dividends:
The Company announced today that its board of directors has approved the payment of a regular quarterly cash dividend of
Selected Income Statement Data | |||||
Three Months Ended June 30, | |||||
2022 | 2021 | % | |||
Revenue | $ 39,021 | $ 45,070 | (13) % | ||
Compensation and related costs, excluding deferred compensation | 17,222 | 18,940 | (9) % | ||
Deferred compensation expense (benefit) | (4,690) | 1,511 | NM | ||
Other expenses | 6,237 | 6,852 | (9) % | ||
Total operating expenses | 18,769 | 27,303 | (31) % | ||
Net operating income | 20,252 | 17,767 | 14 % | ||
Investment income (loss), net | (17,678) | 5,877 | NM | ||
Net income before taxes | 2,574 | 23,644 | (89) % | ||
Income tax expense | (1,358) | (6,017) | (77) % | ||
Net income | 1,216 | 17,627 | (93) % | ||
Net loss (income) attributable to redeemable noncontrolling interest | 3,197 | (762) | NM | ||
Net income attributable to common shareholders | $ 4,413 | $ 16,865 | (74) % | ||
Earnings per share attributable to common shareholders - diluted | $ 1.40 | $ 5.28 | (73) % | ||
Six Months Ended June 30, | |||||
2022 | 2021 | % | |||
Revenue | $ 81,278 | $ 84,084 | (3) % | ||
Compensation and related costs, excluding deferred compensation | 35,869 | 35,755 | — % | ||
Deferred compensation expense (benefit) | (5,869) | 4,614 | NM | ||
Other expenses | 11,953 | 12,416 | (4) % | ||
Total operating expenses | 41,953 | 52,785 | (21) % | ||
Net operating income | 39,325 | 31,299 | 26 % | ||
Investment income (loss), net | (25,270) | 11,540 | NM | ||
Net income before taxes | 14,055 | 42,839 | (67) % | ||
Income tax expense | (4,564) | (10,950) | (58) % | ||
Net income | 9,491 | 31,889 | (70) % | ||
Net loss (income) attributable to redeemable noncontrolling interest | 4,052 | (1,316) | NM | ||
Net income attributable to common shareholders | $ 13,543 | $ 30,573 | (56) % | ||
Earnings per share attributable to common shareholders - diluted | $ 4.27 | $ 9.62 | (56) % | ||
Selected Balance Sheet Data | |||
As of | |||
June 30, 2022 | December 31, 2021 | ||
Total cash and corporate investments held directly by DHCM | $ 154,080 | $ 191,780 | |
Shareholders' equity | 171,121 | 184,423 | |
Book value per share | $ 54.81 | $ 58.15 | |
Change in Assets Under Management | |||
For the Three Months Ended June 30, | |||
(in millions) | 2022 | 2021 | |
AUM at beginning of the period | $ 30,322 | $ 30,582 | |
Net cash inflows (outflows) | |||
proprietary funds | (428) | 260 | |
sub-advised funds | (157) | (99) | |
separately managed accounts | 70 | 389 | |
(515) | 550 | ||
Net market appreciation (depreciation) and income | (4,018) | 1,228 | |
Increase (decrease) during the period | (4,533) | 1,778 | |
AUM at end of the period | $ 25,789 | $ 32,360 | |
Average AUM during the period | $ 28,177 | $ 32,095 | |
Change in Assets Under Management | |||
For the Six Months Ended June 30, | |||
(in millions) | 2022 | 2021 | |
AUM at beginning of the period | $ 31,028 | $ 26,411 | |
Net cash inflows (outflows) | |||
proprietary funds | (255) | 1,987 | |
sub-advised funds | (182) | (57) | |
separately managed accounts | 158 | 214 | |
(279) | 2,144 | ||
Net market appreciation (depreciation) and income | (4,960) | 3,805 | |
Increase (decrease) during the period | (5,239) | 5,949 | |
AUM at end of the period | $ 25,789 | $ 32,360 | |
Average AUM during the period | $ 29,262 | $ 30,146 | |
Net Cash Inflows (Outflows) Further Breakdown For the Three Months Ended June 30, | |||
(in millions) | 2022 | 2021 | |
Net cash inflows (outflows) | |||
Equity | $ (576) | $ 65 | |
Fixed Income | 61 | 485 | |
$ (515) | $ 550 | ||
Net Cash Inflows (Outflows) Further Breakdown For the Six Months Ended June 30, | |||
(in millions) | 2022 | 2021 | |
Net cash inflows (outflows) | |||
Equity | $ (383) | $ 1,200 | |
Fixed Income | 104 | 944 | |
$ (279) | $ 2,144 | ||
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. As of June 30, 2022, Diamond Hill had
Use of Supplemental Data as Non-GAAP Performance Measure
As supplemental information, the Company is providing performance measures that are based on methodologies other than U.S. generally accepted accounting principles ("non-GAAP"). Management believes the non-GAAP measures below are useful measures of its core business activities, are important metrics in estimating the value of an asset management business, and may enable more appropriate peer comparisons. These non-GAAP measures should not be used as a substitute for financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP") and may be calculated differently by other companies. The following schedule reconciles GAAP measures to non-GAAP measures for the three- and six-months ended June 30, 2022, and 2021, respectively.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
(in thousands, except percentages and per share data) | 2022 | 2021 | 2022 | 2021 | |||
Total revenue | $ 39,021 | $ 45,070 | $ 81,278 | $ 84,084 | |||
Net operating income, GAAP basis | $ 20,252 | $ 17,767 | $ 39,325 | $ 31,299 | |||
Non-GAAP adjustment: | |||||||
Gains (losses) on deferred compensation plan investments, net(1) | (4,690) | 1,511 | (5,869) | 4,614 | |||
Net operating income, as adjusted, non-GAAP basis(2) | 15,562 | 19,278 | 33,456 | 35,913 | |||
Non-GAAP adjustment: | |||||||
Tax provision on net operating income, as adjusted, non-GAAP | (3,662) | (5,070) | (8,432) | (9,471) | |||
Net operating income, as adjusted, after tax, non-GAAP basis(4) | $ 11,900 | $ 14,208 | $ 25,024 | $ 26,442 | |||
Net operating income, as adjusted after tax per diluted share, non- | $ 3.77 | $ 4.44 | $ 7.90 | $ 8.32 | |||
Diluted weighted average shares outstanding, GAAP basis | 3,153 | 3,197 | 3,169 | 3,177 | |||
Operating profit margin, GAAP basis | 52 % | 39 % | 48 % | 37 % | |||
Operating profit margin, as adjusted, non-GAAP basis(6) | 40 % | 43 % | 41 % | 43 % | |||
(1) Gains (losses) on deferred compensation plan investments, net: The gain (loss) on deferred compensation plan investments, |
(2) Net operating income, as adjusted: This non-GAAP measure represents the Company's net operating income adjusted to |
(3) Tax provision on net operating income, as adjusted: This non-GAAP measure represents the tax provision, excluding the |
(4) Net operating income, as adjusted, after tax: This non-GAAP measure deducts from the net operating income, as adjusted, |
(5) Net operating income, as adjusted after tax per diluted share: This non-GAAP measure was calculated by dividing the net |
(6) Operating profit margin, as adjusted: This non-GAAP measure was calculated by dividing the net operating income, as |
The Company does not recommend that investors consider the above non-GAAP financial measures alone, or as a substitute for, financial information prepared in accordance with GAAP.
Throughout this press release, Diamond Hill may make forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to such matters as anticipated operating results, prospects and levels of assets under management, technological developments, economic trends (including interest rates and market volatility), expected transactions and similar matters. The words "believe," "expect," "anticipate," "estimate," "should," "hope," "seek," "plan," "intend" and similar expressions identify forward-looking statements that speak only as of the date thereof. While we believe that the assumptions underlying our forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and, accordingly, our actual results and experiences could differ materially from the anticipated results or other expectations expressed in our forward-looking statements.
Factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements are discussed under "Item 1A. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as under "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. These factors include, but are not limited to: the adverse effect from a decline in the securities markets; a decline in the performance of our products; the effect of national, regional, and global economic conditions generally, including the effects of the COVID-19 pandemic and the actions taken in connection therewith; political uncertainty caused by, among other things, political parties, economic nationalist sentiments, and tensions surrounding the current socioeconomic landscape; changes in interest rates; changes in national and local economic and political conditions; the continuing economic uncertainty in various parts of the world; changes in government policy and regulation, including monetary policy; changes in our ability to attract or retain key employees; unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations; and other risks identified from time-to-time in other public documents on file with the Securities and Exchange Commission.
In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Diamond Hill or any other persons, that our 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 Diamond Hill and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.
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SOURCE Diamond Hill Investment Group, Inc.
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