• Westwood Holdings Group, Inc. Reports First Quarter 2022 Results

    ソース: Nasdaq GlobeNewswire / 27 4 2022 15:10:00   America/Chicago

    Multi-Asset's suite of products performed well against benchmarks and peers

    Intermediary and Institutional channels posted positive net flows in the quarter

    DALLAS, April 27, 2022 (GLOBE NEWSWIRE) -- Westwood Holdings Group, Inc. (NYSE: WHG) today reported first quarter 2022 earnings. Significant items include:

    • Revenues totaled $17.2 million vs. the fourth quarter's $19.4 million and $18.3 million a year ago reflecting lower performance fees.
    • LargeCap Value and our three Multi-Asset strategies, Income Opportunity, Total Return and High Income all beat their primary benchmarks for the quarter.
    • Quarterly peer rankings for our Multi-Asset products included Total Return and High Income achieving top third rankings, Income Opportunity ranking 36th and our Income Opportunity Mutual Fund ranking 17th.
    • Net income of $0.1 million vs. $2.8 million in the fourth quarter and $4.1 million in last year's first quarter.
    • Non-GAAP Economic Earnings of $1.9 million compared with the fourth quarter's $4.7 million and $6.3 million a year ago.
    • Westwood held $73.5 million in cash and short-term investments as of March 31, 2022, down $6.7 million from fourth quarter 2021.
    • Stockholders' equity totaled $117.3 million as of March 31, 2022 and we continue to have no debt.
    • We declared a cash dividend of $0.15 per common share, payable on July 1, 2022 to stockholders of record on June 3, 2022.

    Brian Casey, Westwood’s President and CEO, commented, "I am pleased to report that several of our strategies outperformed versus benchmarks and obtained competitive peer rankings despite the difficult market environment we all confronted in the first quarter. Performance remained strong in our Multi-Asset product suite and our flagship strategy, LargeCap Value, continues to improve. We believe that a market refocused on quality and the fundamental strength of companies should provide an opportunity for all of our strategies to outperform. Our institutional and intermediary sales teams continued to build on their 2021 strength, generating positive net cash flows, and our pipelines look promising. Westwood’s solid financial position with over $70 million in cash and no debt continues to be a source of strength that enables us to move forward and grow with confidence."

    Revenues were lower than the fourth quarter reflecting lower performance fees. Revenues were lower than last year's first quarter reflecting lower performance fees, partially offset by higher average assets under management ("AUM").

    AUM of $13.9 billion decreased from $14.5 billion at December 31, 2021, primarily due to market depreciation.

    The first quarter net income of $0.1 million compared unfavorably with $2.8 million in last year's fourth quarter due to lower performance-based revenues. Diluted earnings per share ("EPS") of $0.01 compared with $0.36 for the fourth quarter. Non-GAAP Economic Earnings of $1.9 million, or $0.24 per share, compared with $4.7 million, or $0.59 per share, in the fourth quarter.

    The first quarter net income of $0.1 million compared unfavorably with last year's first quarter of $4.1 million primarily due to lower performance-based revenues and private investment gains in the prior year's first quarter. Diluted EPS was $0.01 compared with $0.52 per share for the first quarter of 2021. Non-GAAP Economic Earnings were $1.9 million, or $0.24 per share, compared with $6.3 million, or $0.79 per share, in the first quarter of 2021.

    Economic Earnings 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 first quarter 2022 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, dial 877-303-6235 (U.S. and Canada) or 631-291-4837 (international). The conference call can also be accessed via our Investor Relations page at westwoodgroup.com and will be available for replay through May 4, 2022 by dialing 855-859-2056 (U.S. and Canada) or 404-537-3406 (international) and entering the passcode 1664499.

    ABOUT WESTWOOD HOLDINGS GROUP

    Westwood Holdings Group, Inc. is an investment management boutique and wealth management firm. Westwood offers high-conviction equity and outcome-oriented solutions to institutional investors, private wealth clients and financial intermediaries. The firm specializes in the following distinct investment capabilities: U.S. Value Equity, Multi-Asset, and Liquid Alternatives, available through separate accounts, the Westwood Funds® family of mutual funds 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 Houston.

    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; our ability to maintain our fee structure in light of competitive fee pressures; our stockholder rights agreement may make it more difficult for others to obtain control over us, even if it would be beneficial to our stockholders; 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; in addition to our stockholder rights agreement, our organizational documents contain provisions that may prevent or deter another group from paying a premium over the market price to our stockholders to acquire our stock; 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; our relationships with investment consulting firms; the impact of the COVID-19 pandemic; 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, 2021 and its quarterly report on Form 10-Q for the quarter ended March 31, 2022. 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
    (in thousands, except per share and share amounts)
    (unaudited)

     Three Months Ended
     March 31, 2022 December 31, 2021 March 31, 2021
    REVENUES:     
    Advisory fees:     
    Asset-based$11,790  $12,081  $10,450 
    Performance-based    1,376   1,959 
    Trust fees 5,715   5,797   6,065 
    Trust performance-based fees    101    
    Other, net (289)  36   (155)
    Total revenues 17,216   19,391   18,319 
    EXPENSES:     
    Employee compensation and benefits 10,334   10,479   11,548 
    Sales and marketing 482   388   230 
    Westwood mutual funds 596   1,084   391 
    Information technology 1,829   1,971   1,992 
    Professional services 1,520   920   1,317 
    General and administrative 2,040   2,181   2,072 
    Total expenses 16,801   17,023   17,550 
    Net operating income 415   2,368   769 
    Realized gains on private investments    327   8,325 
    Net change in unrealized appreciation (depreciation) on private investments 37      (2,326)
    Investment income (16)  306   196 
    Other income 158   212   50 
    Income before income taxes 594   3,213   7,014 
    Income tax expense 544   400   2,913 
    Net income$50  $2,813  $4,101 
    Total comprehensive income$50  $2,813  $4,101 
          
    Earnings per share:     
    Basic$0.01  $0.36  $0.52 
    Diluted$0.01  $0.36  $0.52 
          
    Weighted average shares outstanding:     
    Basic 7,865,174   7,842,867   7,887,044 
    Diluted 7,931,453   7,910,673   7,917,390 
          
    Economic Earnings$1,894  $4,654  $6,288 
    Economic EPS$0.24  $0.59  $0.79 
          
    Dividends declared per share$0.15  $0.15  $0.10 


    WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except par value and share amounts)
    (unaudited)

     March 31, 2022 December 31, 2021
    ASSETS   
    Current Assets:   
    Cash and cash equivalents$21,148  $15,206 
    Accounts receivable 9,738   11,152 
    Investments, at fair value 52,343   65,024 
    Prepaid income taxes 235   233 
    Other current assets 2,407   2,246 
    Total current assets 85,871   93,861 
    Investments 4,455   4,455 
    Noncurrent investments at fair value 4,549   4,513 
    Goodwill 16,401   16,401 
    Deferred income taxes 827   848 
    Operating lease right-of-use assets 4,683   4,868 
    Intangible assets, net 11,506   11,911 
    Property and equipment, net of accumulated depreciation of $8,822 and $8,637 1,967   2,114 
    Other long-term assets 757   634 
    Total long-term assets 45,145   45,744 
    Total assets$131,016  $139,605 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current Liabilities:   
    Accounts payable and accrued liabilities$2,337  $2,637 
    Dividends payable 1,724   1,800 
    Compensation and benefits payable 2,309   9,530 
    Operating lease liabilities 1,469   1,409 
    Income taxes payable 990   466 
    Total current liabilities 8,829   15,842 
    Accrued dividends 492   1,133 
    Noncurrent operating lease liabilities 4,435   4,724 
    Total long-term liabilities 4,927   5,857 
    Total liabilities 13,756   21,699 
    Stockholders’ Equity:   
    Common stock, $0.01 par value, authorized 25,000,000 shares, issued 11,030,410 and outstanding 8,575,451 shares at March 31, 2022; issued 10,658,644 and outstanding 8,253,491 shares at December 31, 2021 110   107 
    Additional paid-in capital 196,564   195,187 
    Treasury stock, at cost - 2,454,959 shares at March 31, 2022; 2,405,154 shares at December 31, 2021 (82,576)  (81,750)
    Retained earnings (accumulated deficit) 3,162   4,362 
    Total stockholders’ equity 117,260   117,906 
    Total liabilities and stockholders’ equity$131,016  $139,605 


    WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
    (unaudited)

     Three Months Ended March 31,
      2022   2021 
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net income$50  $4,101 
    Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
    Depreciation 177   207 
    Amortization of intangible assets 405   406 
    Net change in unrealized depreciation on investments 239   2,432 
    Realized gains on private investments    (8,325)
    Stock-based compensation expense 1,380   1,722 
    Deferred income taxes 21   40 
    Non-cash lease expense 185   307 
    Gain on asset disposition    (148)
    Changes in operating assets and liabilities:   
    Net (purchases) sales of trading securities 12,406   (4,444)
    Accounts receivable 1,414   (2,295)
    Other current assets (283)  23 
    Accounts payable and accrued liabilities (301)  803 
    Compensation and benefits payable (7,221)  (5,026)
    Income taxes payable 524   3,630 
    Other liabilities (226)  (478)
    Net cash provided by (used in) operating activities 8,770   (7,045)
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Sale of investments    9,258 
    Sale of property and equipment    501 
    Purchases of property and equipment (30)  (9)
    Purchases of investments    (15)
    Net cash (used in) provided by investing activities (30)  9,735 
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Purchases of treasury stock (200)  (1,045)
    Restricted stock returned for payment of taxes (626)  (884)
    Cash dividends (1,972)  (801)
    Net cash used in financing activities (2,798)  (2,730)
    Effect of currency rate changes on cash    13 
    NET CHANGE IN CASH AND CASH EQUIVALENTS 5,942   (27)
    Cash and cash equivalents, beginning of period 15,206   13,016 
    Cash and cash equivalents, end of period$21,148  $12,989 
    SUPPLEMENTAL CASH FLOW INFORMATION:   
    Cash paid during the period for income taxes$  $769 
    Accrued dividends$2,216  $1,339 
    Accrued purchases of treasury stock$  $359 


    WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
    Reconciliation of Net Income to Economic Earnings
    (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 and Economic EPS. We provide these measures in addition to, not as a substitute for, net income and earnings per share, which are reported on a GAAP basis. Our management and Board of Directors review Economic Earnings 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 net income or earnings 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 as net income 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 because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.

     Three Months Ended
     March 31, 2022 December 31, 2021 March 31, 2021
    Net income$50  $2,813  $4,101 
    Stock-based compensation expense 1,380   1,375   1,722 
    Intangible amortization 405   406   406 
    Tax benefit from goodwill amortization 59   60   59 
    Economic Earnings$1,894  $4,654  $6,288 
          
    Earnings per share$0.01  $0.36  $0.52 
    Stock-based compensation expense 0.17   0.17   0.21 
    Intangible amortization 0.05   0.05   0.05 
    Tax benefit from goodwill amortization 0.01   0.01   0.01 
    Economic EPS$0.24  $0.59  $0.79 
    Diluted weighted average shares 7,931,453   7,910,673   7,917,390 

     


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