Westwood Holdings Group, Inc. Reports Second Quarter 2024 Results
Westwood Holdings Group, Inc. (NYSE: WHG) reported its Q2 2024 results, highlighting several key developments. The company successfully launched two ETFs: the Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) and the Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI), with net assets of $43 million and $13 million respectively. Quarterly revenues remained flat at $22.7 million compared to Q1, but increased from $21.9 million a year ago. However, the company reported a comprehensive loss of $2.2 million, primarily due to a $3.8 million after-tax charge related to contingent consideration for the 2022 Salient acquisition. Westwood's cash and short-term investments stood at $44.1 million, with no debt. The company declared a cash dividend of $0.15 per common share.
Westwood Holdings Group, Inc. (NYSE: WHG) ha riportato i risultati del secondo trimestre del 2024, evidenziando diversi sviluppi chiave. L'azienda ha lanciato con successo due ETF: il Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) e il Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI), con attivi netti pari a $43 milioni e $13 milioni rispettivamente. I ricavi trimestrali sono rimasti stabili a $22.7 milioni rispetto al primo trimestre, ma sono aumentati rispetto ai $21.9 milioni dell'anno precedente. Tuttavia, l'azienda ha riportato una perdita complessiva di $2.2 milioni, principalmente a causa di un addebito fiscale di $3.8 milioni legato alla considerazione contingente per l'acquisizione di Salient nel 2022. Le disponibilità liquide e gli investimenti a breve termine di Westwood ammontano a $44.1 milioni, senza debiti. L'azienda ha dichiarato un dividendo in contante di $0.15 per azione ordinaria.
Westwood Holdings Group, Inc. (NYSE: WHG) informó sus resultados del segundo trimestre de 2024, destacando varios desarrollos clave. La empresa lanzó con éxito dos ETF: el Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) y el Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI), con activos netos de $43 millones y $13 millones respectivamente. Los ingresos trimestrales se mantuvieron estables en $22.7 millones en comparación con el primer trimestre, pero aumentaron con respecto a los $21.9 millones del año anterior. Sin embargo, la empresa reportó una pérdida integral de $2.2 millones, principalmente debido a un cargo fiscal de $3.8 millones relacionado con la consideración contingente por la adquisición de Salient en 2022. El efectivo e inversiones a corto plazo de Westwood se situaron en $44.1 millones, sin deudas. La empresa declaró un dividendo en efectivo de $0.15 por acción ordinaria.
웨스트우드 홀딩스 그룹 주식회사 (NYSE: WHG)가 2024년 2분기 실적을 발표하며 몇 가지 주요 개발 사항을 강조했습니다. 이 회사는 웨스트우드 살리언트 강화 미드스트림 수익 펀드 (NYSE: MDST)와 웨스트우드 살리언트 강화 에너지 수익 펀드 (NASDAQ: WEEI)라는 두 개의 ETF를 성공적으로 출시했으며, 각각 순자산은 4,300만 달러와 1,300만 달러입니다. 분기 수익은 1분기와 비교하여 2,270만 달러로 평탄하게 유지되었으나, 작년의 2,190만 달러에서 증가했습니다. 그러나 회사는 220만 달러의 포괄적 손실을 기록했으며, 이는 2022년 살리언트 인수와 관련된 380만 달러의 세후 비용 때문입니다. 웨스트우드의 현금과 단기 투자 총액은 4,410만 달러이며, 부채는 없습니다. 회사는 보통주 1주당 0.15달러의 현금 배당금을 선언했습니다.
Westwood Holdings Group, Inc. (NYSE: WHG) a publié ses résultats du deuxième trimestre 2024, mettant en avant plusieurs développements clés. L'entreprise a lancé avec succès deux ETF : le Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) et le Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI), avec des actifs nets de 43 millions de dollars et 13 millions de dollars respectivement. Les revenus trimestriels sont restés stables à 22,7 millions de dollars par rapport au premier trimestre, mais ont augmenté par rapport à 21,9 millions de dollars l'année précédente. Toutefois, l'entreprise a enregistré une perte globale de 2,2 millions de dollars, principalement en raison d'une charge de 3,8 millions de dollars après impôts liée à la rémunération conditionnelle pour l'acquisition de Salient en 2022. Les liquidités et investissements à court terme de Westwood s'élevaient à 44,1 millions de dollars, sans dettes. L'entreprise a déclaré un dividende en espèces de 0,15 dollar par action ordinaire.
Westwood Holdings Group, Inc. (NYSE: WHG) hat seine Ergebnisse für das zweite Quartal 2024 veröffentlicht und dabei einige wichtige Entwicklungen hervorgehoben. Das Unternehmen hat erfolgreich zwei ETFs lanciert: den Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) und den Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI) mit Nettovermögen von 43 Millionen US-Dollar bzw. 13 Millionen US-Dollar. Die vierteljährlichen Einnahmen blieben mit 22,7 Millionen US-Dollar im Vergleich zum ersten Quartal unverändert, stiegen jedoch im Vergleich zu 21,9 Millionen US-Dollar im Vorjahr. Dennoch meldete das Unternehmen einen umfassenden Verlust von 2,2 Millionen US-Dollar, der hauptsächlich auf eine nachsteuerliche Belastung von 3,8 Millionen US-Dollar im Zusammenhang mit der bedingten Vergütung für die Salient-Akquisition im Jahr 2022 zurückzuführen ist. Der Bargeld- und kurzfristige Investitionsbestand von Westwood belief sich auf 44,1 Millionen US-Dollar, ohne Schulden. Das Unternehmen erklärte eine Bardividende von 0,15 US-Dollar je Stammaktie.
- Successful launch of two new ETFs with combined net assets of $56 million
- Quarterly revenues increased year-over-year from $21.9 million to $22.7 million
- Strong performance of investment strategies with several beating primary benchmarks
- Maintained strong financial position with $44.1 million in cash and no debt
- Declared cash dividend of $0.15 per common share
- Comprehensive loss of $2.2 million compared to income in previous quarter and year-ago quarter
- $3.8 million after-tax charge due to increased fair value of contingent consideration
- Non-GAAP Economic Loss of $0.5 million compared to Economic Earnings in previous periods
- Diluted EPS decreased to $(0.27) from $0.36 in the year-ago quarter
Insights
Westwood Holdings Group's Q2 2024 results present a mixed picture. While the company shows progress in some areas, there are concerns about profitability and growth. Here are the key takeaways:
- Revenue stability: Quarterly revenues remained flat at
$22.7 million compared to Q1, but showed a slight increase from$21.9 million a year ago. This suggests growth momentum. - Profitability challenges: The company reported a comprehensive loss of
$2.2 million , a significant decline from Q1's income of$2.3 million and last year's$2.9 million . This was primarily due to a$3.8 million after-tax charge related to contingent consideration for the Salient acquisition. - Assets under management: Firmwide assets under management and advisement totaled
$16.8 billion , with$15.8 billion in AUM and$1.0 billion in AUA. However, the report doesn't provide comparative figures to assess growth. - Cash position: Westwood held
$44.1 million in cash and short-term investments, down$2.5 million from Q1. While the company remains debt-free, the declining cash position warrants attention. - Dividend: A quarterly dividend of
$0.15 per share was declared, maintaining shareholder returns despite profitability challenges.
The launch of two ETFs and the company's involvement in the Texas Stock Exchange are positive developments, but their financial impact remains to be seen. The investment in Managed Investment Solutions (MIS) could be a growth driver, but it's currently impacting earnings negatively. Investors should closely monitor the company's ability to translate these initiatives into improved financial performance in the coming quarters.
Westwood's Q2 2024 results reveal some interesting strategic moves, but also highlight challenges in translating these into financial success. Let's break it down:
- ETF launches: The introduction of two new ETFs - Westwood Salient Enhanced Midstream Income Fund (MDST) and Westwood Salient Enhanced Energy Income Fund (WEEI) - is a significant step. With net assets of
$43 million and$13 million respectively and high annualized distribution rates of10.7% and11.4% , these products could attract yield-seeking investors in the current market environment. - Investment performance: Several strategies outperforming benchmarks, particularly in value and income-focused areas, is encouraging. This could help in attracting and retaining clients, especially if sustained over time.
- Managed Investment Solutions (MIS): The upcoming launch of MIS in Q3 2024 represents a new growth avenue. The reported positive reception from prospects, including national consultants, is promising but needs to translate into actual client acquisitions and revenue growth.
- Texas Stock Exchange involvement: Being a founding member of the Texas Stock Exchange could provide strategic advantages in terms of visibility and potential new business opportunities in a growing market.
However, these positive developments are overshadowed by profitability issues, primarily due to the Salient acquisition's contingent consideration. The company needs to demonstrate that its strategic initiatives can drive sustainable revenue growth and profitability improvement. The pipeline of unfunded and prospective new clients mentioned in the report title could be important in this regard, but more details would be needed to assess its potential impact.
Investors should watch for concrete signs of these strategies bearing fruit in terms of AUM growth, revenue expansion and a return to profitability in the coming quarters.
Founding Investor in the Texas Stock Exchange
Successful Launch of two Exchange-Traded Funds
Strong Pipeline of Unfunded and Prospective New Clients
DALLAS, July 31, 2024 (GLOBE NEWSWIRE) -- Westwood Holdings Group, Inc. (NYSE: WHG) today reported second quarter 2024 earnings. Significant items included:
- Investment strategies beating their primary benchmarks included LargeCap Value, AllCap Value, Dividend Select, High Income, Credit Opportunities, Real Estate Income, MLP SMA, MLP High Conviction and MLP & Energy Infrastructure.
- MLP SMA, MLP High Conviction and MLP & Energy Infrastructure posted top quartile rankings.
- We launched our first two exchange-traded funds ("ETFs") in the quarter – the Westwood Salient Enhanced Midstream Income Fund (NYSE: MDST) and the Westwood Salient Enhanced Energy Income Fund (NASDAQ: WEEI). The funds’ net assets as of June 30, 2024 were
$43 and$13 million , respectively. The funds are generating high distributable monthly income with annualized distribution rates as of June 27, 2024 of10.7% for MDST and11.4% for WEEI. - Quarterly revenues totaled
$22.7 million flat from the first quarter's$22.7 million and up from$21.9 million a year ago. Comprehensive loss of$2.2 million compared with the first quarter's income of$2.3 million and$2.9 million in 2023's second quarter. - Our comprehensive loss included a
$3.8 million after tax charge following an increase in the fair value of contingent consideration for our 2022 Salient acquisition due to an increased earnout valuation based on revised revenue expectations. - Non-GAAP Economic Loss of
$0.5 million compared with the first quarter's Economic Earnings of$3.0 million and$4.0 million in the second quarter of 2023, both driven primarily by contingent consideration revaluations. - Westwood held
$44.1 million in cash and short-term investments as of June 30, 2024, down$2.5 million from the first quarter. Stockholders' equity totaled$118.5 million and we have no debt. - We declared a cash dividend of
$0.15 per common share, payable on October 1, 2024 to stockholders of record on September 2, 2024.
Brian Casey, Westwood’s CEO, commented, "We are pleased with our continued progress during the second quarter. Our successful launch of two ETFs and additional wins in the traditional institutional business validate the work that we have been doing for the past several years. In addition, we continue to invest in our new Managed Investment Solutions ("MIS") offering and saw a significant turnaround in revenues from Salient and Broadmark products. While both the investment in MIS and the additional consideration to be paid for the Salient and Broadmark businesses were a drain on earnings in the quarter, they represent good news for our investors. We are proud to be a founding member of the Texas Stock Exchange, the only Texas-based publicly-traded asset management and wealth firm listed as a founder of the Texas Stock Exchange. There are great things happening in Texas and we are excited to be a part of the capital formation that will inspire new businesses in the years ahead.
We are also eagerly anticipating the coming launch of our MIS capability planned for the third quarter. We have already conducted many meetings with prospects, including several discussions with premier national consultants. The reception has been overwhelmingly positive so far and we are looking forward to securing new clients for MIS by year end."
Revenues were flat to the first quarter and up from last year's second quarter.
Firmwide assets under management and advisement totaled
Second quarter comprehensive loss of
Second quarter comprehensive loss of
Economic Earnings (Loss) and Economic EPS are non-GAAP performance measures and are explained and reconciled with the most comparable GAAP numbers in the attached tables.
Westwood will host a conference call to discuss second quarter 2024 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, please register here:
https://register.vevent.com/register/BI686aa6f159f6411798a220c88cb93b08
After registering, you will be provided with a dial-in number containing a personalized PIN.
Webcast Link: https://edge.media-server.com/mmc/p/8v6a2uhs
ABOUT WESTWOOD HOLDINGS GROUP
Westwood Holdings Group, Inc. is a focused investment management boutique and wealth management firm.
Founded in 1983, Westwood offers a broad array of investment solutions to institutional investors, private wealth clients and financial intermediaries. The firm specializes in several distinct investment capabilities: U.S. Value Equity, Multi-Asset, Energy & Real Assets, Income Alternatives, Tactical Absolute Return and Managed Investment Solutions, which are available through separate accounts, the Westwood Funds® family of mutual funds, exchange-traded funds ("ETFs") and other pooled vehicles. Westwood benefits from significant, broad-based employee ownership and trades on the New York Stock Exchange under the symbol "WHG." Based in Dallas, Westwood also maintains offices in Chicago, Houston and San Francisco.
For more information on Westwood, please visit westwoodgroup.com.
Forward-looking Statements
Statements in this press release that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including without limitation, words such as “anticipate,” “believe,” “expect,” “could,” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation: the composition and market value of our AUM and AUA; our ability to maintain our fee structure in light of competitive fee pressures; risks associated with actions of activist stockholders; distributions to our common stockholders have included and may in the future include a return of capital; inclusion of foreign company investments in our AUM; regulations adversely affecting the financial services industry; our ability to maintain effective cyber security; litigation risks; our ability to develop and market new investment strategies successfully; our reputation and our relationships with current and potential customers; our ability to attract and retain qualified personnel; our ability to perform operational tasks; our ability to select and oversee third-party vendors; our dependence on the operations and funds of our subsidiaries; our ability to maintain effective information systems; our ability to prevent misuse of assets and information in the possession of our employees and third-party vendors, which could damage our reputation and result in costly litigation and liability for our clients and us; our stock is thinly traded and may be subject to volatility; competition in the investment management industry; our ability to avoid termination of client agreements and the related investment redemptions; the significant concentration of our revenues in a small number of customers; we have made and may continue to make business combinations as a part of our business strategy, which may present certain risks and uncertainties; our relationships with investment consulting firms; our ability to identify and execute on our strategic initiatives; our ability to declare and pay dividends; our ability to fund future capital requirements on favorable terms; our ability to properly address conflicts of interest; our ability to maintain adequate insurance coverage; our ability to maintain an effective system of internal controls; and the other risks detailed from time to time in Westwood’s SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2023 and its quarterly report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, Westwood is not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
SOURCE: Westwood Holdings Group, Inc.
(WHG-G)
CONTACT:
Westwood Holdings Group, Inc.
Terry Forbes
Chief Financial Officer and Treasurer
(214) 756-6900
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share and share amounts)
(unaudited)
| Three Months Ended | |||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | |||||||||
| REVENUES: | |||||||||||
| Advisory fees: | |||||||||||
| Asset-based | $ | 17,139 | $ | 16,817 | $ | 16,799 | |||||
| Trust fees | 5,227 | 5,113 | 5,024 | ||||||||
| Other, net | 322 | 802 | 122 | ||||||||
| Total revenues | 22,688 | 22,732 | 21,945 | ||||||||
| EXPENSES: | |||||||||||
| Employee compensation and benefits | 13,638 | 14,711 | 13,688 | ||||||||
| Sales and marketing | 755 | 628 | 764 | ||||||||
| Westwood mutual funds | 855 | 721 | 746 | ||||||||
| Information technology | 2,350 | 2,290 | 2,566 | ||||||||
| Professional services | 1,450 | 1,489 | 1,355 | ||||||||
| General and administrative | 3,011 | 2,901 | 3,235 | ||||||||
| (Gain) loss from change in fair value of contingent consideration | 4,807 | (2,949 | ) | (4,078 | ) | ||||||
| Total expenses | 26,866 | 19,791 | 18,276 | ||||||||
| Net operating income (loss) | (4,178 | ) | 2,941 | 3,669 | |||||||
| Net change in unrealized appreciation (depreciation) on private investments | — | — | 24 | ||||||||
| Net investment income | 548 | 455 | 211 | ||||||||
| Other income | 224 | 185 | 239 | ||||||||
| Income (loss) before income taxes | (3,406 | ) | 3,581 | 4,143 | |||||||
| Income tax provision | (1,193 | ) | 1,415 | 1,244 | |||||||
| Net income (loss) | $ | (2,213 | ) | $ | 2,166 | $ | 2,899 | ||||
| Total comprehensive income (loss) | $ | (2,213 | ) | $ | 2,166 | $ | 2,899 | ||||
| Less: Comprehensive income (loss) attributable to noncontrolling interest | 30 | (130 | ) | 4 | |||||||
| Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. | $ | (2,243 | ) | $ | 2,296 | $ | 2,895 | ||||
| Earnings (loss) per Westwood Holdings Group, Inc. share: | |||||||||||
| Basic | $ | (0.27 | ) | $ | 0.28 | $ | 0.36 | ||||
| Diluted | $ | (0.27 | ) | $ | 0.27 | $ | 0.36 | ||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 8,218,596 | 8,099,028 | 7,991,228 | ||||||||
| Diluted | 8,218,596 | 8,392,496 | 8,131,333 | ||||||||
| Economic Earnings | $ | (508 | ) | $ | 3,012 | $ | 3,980 | ||||
| Economic EPS | $ | (0.06 | ) | $ | 0.36 | $ | 0.49 | ||||
| Dividends declared per share | $ | 0.15 | $ | 0.15 | $ | 0.15 | |||||
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share and share amounts)
(unaudited)
| Six Months Ended | |||||||
| June 30, 2024 | June 30, 2023 | ||||||
| REVENUES: | |||||||
| Advisory fees: | |||||||
| Asset-based | $ | 33,956 | $ | 33,832 | |||
| Performance-based | — | 555 | |||||
| Trust fees | 10,340 | 10,055 | |||||
| Other, net | 1,124 | 230 | |||||
| Total revenues | 45,420 | 44,672 | |||||
| EXPENSES: | |||||||
| Employee compensation and benefits | 28,349 | 27,890 | |||||
| Sales and marketing | 1,383 | 1,504 | |||||
| Westwood mutual funds | 1,576 | 1,478 | |||||
| Information technology | 4,640 | 4,949 | |||||
| Professional services | 2,939 | 2,884 | |||||
| General and administrative | 5,912 | 6,281 | |||||
| (Gain) loss from change in fair value of contingent consideration | 1,858 | (5,138 | ) | ||||
| Acquisition expenses | — | 209 | |||||
| Total expenses | 46,657 | 40,057 | |||||
| Net operating income (loss) | (1,237 | ) | 4,615 | ||||
| Net change in unrealized appreciation (depreciation) on private investments | — | 24 | |||||
| Net investment income | 1,003 | 383 | |||||
| Other income | 409 | 611 | |||||
| Income before income taxes | 175 | 5,633 | |||||
| Income tax provision | 222 | 2,020 | |||||
| Net income (loss) | $ | (47 | ) | $ | 3,613 | ||
| Total comprehensive income (loss) | $ | (47 | ) | $ | 3,613 | ||
| Less: Comprehensive income (loss) attributable to noncontrolling interest | (100 | ) | 25 | ||||
| Comprehensive income attributable to Westwood Holdings Group, Inc. | $ | 53 | $ | 3,588 | |||
| Earnings per share: | |||||||
| Basic | $ | 0.01 | $ | 0.45 | |||
| Diluted | $ | 0.01 | $ | 0.45 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 8,158,812 | 7,922,954 | |||||
| Diluted | 8,438,431 | 8,050,298 | |||||
| Economic Earnings | $ | 2,504 | $ | 5,698 | |||
| Economic EPS | $ | 0.30 | $ | 0.71 | |||
| Dividends declared per share | $ | 0.30 | $ | 0.30 | |||
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(unaudited)
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 23,770 | $ | 20,422 | |||
| Accounts receivable | 14,324 | 14,394 | |||||
| Investments, at fair value | 20,364 | 32,674 | |||||
| Prepaid income taxes | 945 | 205 | |||||
| Other current assets | 4,506 | 4,543 | |||||
| Total current assets | 63,909 | 72,238 | |||||
| Investments | 8,747 | 7,247 | |||||
| Equity method investments | 4,578 | 4,284 | |||||
| Noncurrent investments at fair value | 1,825 | 241 | |||||
| Goodwill | 39,501 | 39,501 | |||||
| Deferred income taxes | 773 | 726 | |||||
| Operating lease right-of-use assets | 3,127 | 3,673 | |||||
| Intangible assets, net | 22,729 | 24,803 | |||||
| Property and equipment, net of accumulated depreciation of | 1,144 | 1,444 | |||||
| Other long-term assets | 1,041 | 1,010 | |||||
| Total long-term assets | 83,465 | 82,929 | |||||
| Total assets | $ | 147,374 | $ | 155,167 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 5,312 | $ | 6,130 | |||
| Dividends payable | 1,394 | 1,692 | |||||
| Compensation and benefits payable | 5,322 | 9,539 | |||||
| Operating lease liabilities | 1,406 | 1,286 | |||||
| Total current liabilities | 13,434 | 18,647 | |||||
| Accrued dividends | 782 | 675 | |||||
| Contingent consideration | 10,176 | 10,133 | |||||
| Noncurrent operating lease liabilities | 2,516 | 3,266 | |||||
| Total long-term liabilities | 13,474 | 14,074 | |||||
| Total liabilities | 26,908 | 32,721 | |||||
| Stockholders’ Equity: | |||||||
| Common stock, | 123 | 119 | |||||
| Additional paid-in capital | 202,064 | 201,622 | |||||
| Treasury stock, at cost – 2,880,626 and 2,715,977, respectively | (88,005 | ) | (85,990 | ) | |||
| Retained earnings | 4,339 | 4,650 | |||||
| Total Westwood Holdings Group, Inc. stockholders’ equity | 118,521 | 120,401 | |||||
| Noncontrolling interest in consolidated subsidiary | 1,945 | 2,045 | |||||
| Total liabilities and stockholders’ equity | $ | 147,374 | $ | 155,167 | |||
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net income (loss) | $ | (47 | ) | $ | 3,613 | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
| Depreciation | 326 | 346 | |||||
| Amortization of intangible assets | 2,074 | 2,063 | |||||
| Net change in unrealized (appreciation) depreciation on investments | (1,004 | ) | (499 | ) | |||
| Stock-based compensation expense | 2,912 | 3,372 | |||||
| Deferred income taxes | (47 | ) | 228 | ||||
| Non-cash lease expense | 546 | 630 | |||||
| Loss on asset disposition | — | 69 | |||||
| Gain on remeasurement of lease liabilities | — | (119 | ) | ||||
| Fair value change of contingent consideration | 1,858 | (5,138 | ) | ||||
| Net (purchases) sales of trading securities | 11,430 | (7,083 | ) | ||||
| Accounts receivable | 70 | 919 | |||||
| Other current assets | 2 | 1,141 | |||||
| Accounts payable and accrued liabilities | (814 | ) | (796 | ) | |||
| Compensation and benefits payable | (4,217 | ) | (3,345 | ) | |||
| Income taxes payable | (740 | ) | 1,490 | ||||
| Other liabilities | (664 | ) | (793 | ) | |||
| Net cash provided by (used in) operating activities | 11,685 | (3,902 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Acquisition, net of cash acquired | — | (741 | ) | ||||
| Purchases of property and equipment | (24 | ) | (97 | ) | |||
| Purchases of investments | (1,500 | ) | — | ||||
| Net cash used in investing activities | (1,524 | ) | (838 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Purchases of treasury stock | (1,075 | ) | — | ||||
| Restricted stock returned for payment of taxes | (940 | ) | (837 | ) | |||
| Payment of contingent consideration in acquisition | (1,815 | ) | — | ||||
| Cash dividends | (2,983 | ) | (3,053 | ) | |||
| Net cash used in financing activities | (6,813 | ) | (3,890 | ) | |||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 3,348 | (8,630 | ) | ||||
| Cash and cash equivalents, beginning of period | 20,422 | 23,859 | |||||
| Cash and cash equivalents, end of period | $ | 23,770 | $ | 15,229 | |||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
| Cash paid during the period for income taxes | $ | 1,008 | $ | 300 | |||
| Accrued dividends | $ | 2,176 | $ | 2,065 | |||
WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
Reconciliation of Comprehensive Income (Loss) Attributable to Westwood Holdings Group, Inc. to Economic Earnings (Loss)
(in thousands, except per share and share amounts)
(unaudited)
As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings (Loss) and Economic EPS. We provide these measures in addition to, not as a substitute for, Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. and earnings (loss) per share, which are reported on a GAAP basis. Our management and Board of Directors review Economic Earnings (Loss) and Economic EPS to evaluate our ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. or earnings (loss) per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.
We define Economic Earnings (Loss) as Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings (Loss) because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. Although gains and losses from changes in the fair value of contingent consideration are non-cash, we do not add or subtract those back when calculating Economic Earnings (Loss) because gains and losses on changes in the fair value of contingent consideration are considered regular following an acquisition. In addition, we do not adjust Economic Earnings (Loss) for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings (Loss) divided by diluted weighted average shares outstanding.
| Three Months Ended | |||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | |||||||||
| Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. | $ | (2,243 | ) | $ | 2,296 | $ | 2,895 | ||||
| Stock-based compensation expense | 1,397 | 1,515 | 1,624 | ||||||||
| Intangible amortization | 1,032 | 1,042 | 1,042 | ||||||||
| Tax benefit from goodwill amortization | 156 | 125 | 125 | ||||||||
| Tax impact of adjustments to GAAP comprehensive income (loss) | (850 | ) | (1,966 | ) | (1,706 | ) | |||||
| Economic Earnings (Loss) | $ | (508 | ) | $ | 3,012 | $ | 3,980 | ||||
| Earnings (loss) per share | $ | (0.27 | ) | $ | 0.27 | $ | 0.36 | ||||
| Stock-based compensation expense | 0.17 | 0.18 | 0.19 | ||||||||
| Intangible amortization | 0.12 | 0.13 | 0.13 | ||||||||
| Tax benefit from goodwill amortization | 0.02 | 0.01 | 0.02 | ||||||||
| Tax impact of adjustments to GAAP comprehensive income (loss) | (0.10 | ) | (0.23 | ) | (0.21 | ) | |||||
| Economic EPS | $ | (0.06 | ) | $ | 0.36 | $ | 0.49 | ||||
| Diluted weighted average shares | 8,218,596 | 8,392,496 | 8,131,333 | ||||||||
| Six Months Ended | |||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||
| Comprehensive income attributable to Westwood Holdings Group, Inc. | $ | 53 | $ | 3,588 | |||||||
| Stock-based compensation expense | 2,912 | 3,372 | |||||||||
| Intangible amortization | 2,074 | 2,063 | |||||||||
| Tax benefit from goodwill amortization | 281 | 250 | |||||||||
| Tax impact of adjustments to GAAP comprehensive income | (2,816 | ) | (3,575 | ) | |||||||
| Economic Earnings | $ | 2,504 | $ | 5,698 | |||||||
| Earnings per share | $ | 0.01 | $ | 0.45 | |||||||
| Stock-based compensation expense | 0.35 | 0.41 | |||||||||
| Intangible amortization | 0.24 | 0.26 | |||||||||
| Tax benefit from goodwill amortization | 0.03 | 0.03 | |||||||||
| Tax impact of adjustments to GAAP comprehensive income | (0.33 | ) | (0.44 | ) | |||||||
| Economic EPS | $ | 0.30 | $ | 0.71 | |||||||
| Diluted weighted average shares | 8,438,431 | 8,050,298 | |||||||||
FAQ
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