0001165002
FALSE
0001165002
2024-05-01
2024-05-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 1, 2024
________________________________________________________________________________
______________________
WESTWOOD HOLDINGS GROUP, INC.
(Exact name of registrant as specified in charter)
________________________________________________________________________________
______________________
Delaware 001-31234 75-2969997
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
200 Crescent Court, Suite 1200
Dallas
,
Texas
75201
(Address of principal executive offices)
(214)
756-6900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (
see
General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common stock, par value $0.01 per share WHG New York Stock Exchange
Indicate by checkmark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
..
If an emerging growth company, indicate by checkmark if the registrant has
elected not to use the extended transition period for complying with any new
revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act.
..
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ITEM 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On
May 1, 2024
, Westwood Holdings Group, Inc. ("Westwood") announced its financial results
for the quarter ended March 31, 2024, a copy of which is furnished with this
Current Report on Form 8-K as Exhibit 99.1.
The information in this Current Report on Form 8-K, including Exhibit 99.1,
shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act"), as amended, or otherwise
subject to the liabilities of that Section, nor shall it be incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as otherwise expressly stated in such filing.
ITEM 7.01: REGULATION FD DISCLOSURE
Westwood announced today that its Board of Directors has approved the payment
of a quarterly cash dividend of $0.15 per common share, payable on July 1,
2024 to stockholders of record on June 3, 2024.
ITEM 9.01: FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits: The following exhibit is furnished with this report:
Exhibit Number Description
99.1
Press Release Dated May 1, 2004
104 Cover Page Interactive Date File (embedded within the Inline XBRL
document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 1, 2024
WESTWOOD HOLDINGS GROUP, INC.
By: /s/ Murray Forbes III
Murray Forbes III
Chief Financial Officer and Treasurer
Westwood Holdings Group, Inc. Reports First Quarter 2024 Results
Strong Performance across Westwood's suite of products
Successful Launch of MDST on the NYSE (April, 2024)
Successful Launch of WEEI on NASDAQ (May, 2024)
Dallas, TX, May 1, 2024 - Westwood Holdings Group, Inc. (NYSE: WHG) today
reported first quarter 2024 earnings. Significant items included:
SMidCap, SmallCap Value, MidCap Value, Platinum, Enhanced Balanced, High
Income, Credit Opportunities and Global Real Estate strategies all beat their
primary benchmarks.
SmidCap and Enhanced Balanced posted top quartile rankings.
The prospectus for our first actively-managed Exchange-Traded Funds ("ETFs")
went effective in March and both ETFs were launched early in the second
quarter.
Quarterly revenues totaled $22.7 million versus the fourth quarter's $23.2
million and $22.7 million a year ago. Comprehensive income of $2.3 million
compared with the fourth quarter's $2.6 million and $0.7 million in 2023's
first quarter.
Our comprehensive income included a $2.3 million after tax gain following a
decrease in the fair value of contingent consideration for our 2022 Salient
acquisition.
Non-GAAP Economic Earnings of $3.0 million compared with the fourth quarter's
$3.6 million and $1.7 million in the first quarter of 2023.
Westwood held $46.6 million in cash and short-term investments as of March 31,
2024, down $6.5 million from the fourth quarter. Stockholders' equity totaled
$121.8 million and we have no debt.
We declared a cash dividend of $0.15 per common share, payable on July 1, 2024
to stockholders of record on June 3, 2024.
Brian Casey, Westwood's CEO, commented, "To promote future growth, significant
investments were made during the quarter to facilitate the second quarter's
successful listing of two ETFs and to build necessary infrastructure to launch
Managed Investment Solutions ("MIS") later this year. As noted above, many of
our products turned in performances ahead of their respective benchmarks and
our assets under management ("AUM") and assets under advisement ("AUA")
reached $17.2 billion, our highest level over the past six years."
Revenues were comparable to the fourth quarter and last year's first quarter.
Firmwide assets under management and advisement totaled $17.2 billion,
consisting of AUM of $16.2 billion and AUA of $1.0 billion.
First quarter comprehensive income of $2.3 million compared to the fourth
quarter's $2.6 million due to higher employee compensation and benefits
expense offset by changes in the fair value of contingent consideration.
Diluted earnings per share ("EPS") of $0.27 compared to $0.32 for the fourth
quarter. Non-
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GAAP Economic Earnings of $3.0 million, or $0.36 per share, compared with $3.6
million, or $0.43 per share, in the fourth quarter.
First quarter comprehensive income of $2.3 million compared to last year's
first quarter net income of $0.7 million due to changes in the fair value of
contingent consideration offset by higher income taxes. Diluted EPS of $0.27
compared with $0.09 per share for 2023's first quarter. Non-GAAP Economic
Earnings were $3.0 million, or $0.36 per share, compared with $1.7 million, or
$0.22 per share, in the first quarter of 2023.
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 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/BI525615f3be7946a8be8bb4934ce4eb68
After registering, you will be provided with a dial-in number containing a
personalized PIN.
Webcast Link: https://edge.media-server.com/mmc/p/ckyaak4u
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(R) 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
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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
quarter ended March 31, 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
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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, 2024 December 31, 2023 March 31, 2023
REVENUES:
Advisory fees:
Asset-based $ 16,817 $ 16,657 $ 17,033
Performance-based - 710 555
Trust fees 5,113 5,124 5,031
Trust performance-based - 349 -
fees
Other, net 802 389 108
Total revenues 22,732 23,229 22,727
EXPENSES:
Employee compensation 14,711 12,367 14,202
and benefits
Sales and 628 810 740
marketing
Westwood 721 783 732
mutual funds
Information 2,290 2,367 2,383
technology
Professional 1,489 1,239 1,529
services
General and 2,901 2,933 3,046
administrative
(Gain) loss from change in fair (2,949) (113) (1,060)
value of contingent consideration
Acquisition - - 209
expenses
Total expenses 19,791 20,386 21,781
Net operating 2,941 2,843 946
income
Net change in unrealized appreciation - (18) -
(depreciation) on private investments
Net investment 455 561 172
income
Other income 185 365 372
Income before 3,581 3,751 1,490
income taxes
Income tax 1,415 1,168 776
provision
Net income $ 2,166 $ 2,583 $ 714
Total comprehensive $ 2,166 $ 2,583 $ 714
income
Less: Comprehensive income attributable (130) 7 21
to noncontrolling interest
Comprehensive income attributable $ 2,296 $ 2,576 $ 693
to Westwood Holdings Group, Inc.
Earnings per Westwood
Holdings Group, Inc. share:
Basic $ 0.28 $ 0.32 $ 0.09
Diluted $ 0.27 $ 0.32 $ 0.09
Weighted average
shares outstanding:
Basic 8,099,028 8,007,896 7,853,921
Diluted 8,392,496 8,184,736 7,968,504
Economic $ 3,012 $ 3,554 $ 1,718
Earnings
Economic $ 0.36 $ 0.43 $ 0.22
EPS
Dividends declared $ 0.15 $ 0.15 $ 0.15
per share
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(unaudited)
March 31, 2024 December 31, 2023
ASSETS
Current Assets:
Cash and cash $ 25,888 $ 20,422
equivalents
Accounts 15,178 14,394
receivable
Investments, 20,667 32,674
at fair value
Prepaid - 205
income taxes
Other current 4,750 4,543
assets
Total current 66,483 72,238
assets
Investments 7,247 7,247
Equity method 4,519 4,284
investments
Noncurrent investments 241 241
at fair value
Goodwill 39,501 39,501
Deferred 1,570 726
income taxes
Operating lease 3,404 3,673
right-of-use assets
Intangible 23,761 24,803
assets, net
Property and equipment, net of accumulated 1,272 1,444
depreciation of $9,421 and $10,078
Other long-term 1,044 1,010
assets
Total long-term 82,559 82,929
assets
Total assets $ 149,042 $ 155,167
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and $ 6,846 $ 6,130
accrued liabilities
Dividends payable 1,384 1,692
Compensation and 2,949 9,539
benefits payable
Operating lease 1,406 1,286
liabilities
Income taxes 2,035 -
payable
Total current 14,620 18,647
liabilities
Accrued dividends 663 675
Contingent 7,184 10,133
consideration
Noncurrent operating 2,820 3,266
lease liabilities
Total long-term 10,667 14,074
liabilities
Total liabilities 25,287 32,721
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 12,125,042 and 122 119
11,856,737, respectively and outstanding 9,330,762 and 9,140,760, respectively
Additional 201,899 201,622
paid-in capital
Treasury stock, at cost - 2,794,280 (86,930) (85,990)
and 2,715,977, respectively
Retained earnings 6,749 4,650
Total Westwood Holdings Group, 121,840 120,401
Inc. stockholders' equity
Noncontrolling interest in 1,915 2,045
consolidated subsidiary
Total liabilities and $ 149,042 $ 155,167
stockholders' equity
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,166 $ 714
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation 174 176
Amortization of intangible assets 1,042 1,021
Net change in unrealized (appreciation) depreciation on investments (632) (369)
Stock-based compensation expense 1,515 1,748
Deferred income taxes (844) (136)
Non-cash lease expense 269 320
Loss on asset disposition - 69
Fair value change of contingent consideration (2,949) (1,060)
Changes in operating assets and liabilities:
Net (purchases) sales of trading securities 12,404 47
Accounts receivable (784) (657)
Other current assets (242) (17)
Accounts payable and accrued liabilities 719 141
Compensation and benefits payable (6,591) (5,612)
Income taxes payable 2,240 881
Other liabilities (354) (445)
Net cash provided by (used in) operating activities 8,133 (3,179)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired - (1,168)
Purchases of property and equipment (3) (84)
Net cash used in investing activities (3) (1,252)
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted stock returned for payment of taxes (940) (837)
Cash dividends (1,724) (1,840)
Net cash used in financing activities (2,664) (2,677)
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,466 (7,108)
Cash and cash equivalents, beginning of period 20,422 23,859
Cash and cash equivalents, end of period $ 25,888 $ 16,751
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ 9 $ 32
Accrued dividends $ 2,047 $ 1,972
Additional operating lease right-of-use assets $ - $ 1,217
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
Reconciliation of Comprehensive Income Attributable to Westwood Holdings
Group, Inc. 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, Comprehensive income
attributable to Westwood Holdings Group, Inc. 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 Comprehensive
income attributable to Westwood Holdings Group, Inc. 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 Comprehensive income 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 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 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 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, 2024 December 31, 2023 March 31, 2023
Comprehensive income attributable to Westwood Holdings Group, Inc. $ 2,296 $ 2,576 $ 693
Stock-based compensation expense 1,515 1,407 1,748
Intangible amortization 1,042 1,043 1,021
Tax benefit from goodwill amortization 125 125 125
Tax impact of adjustments to GAAP comprehensive income (1,966) (1,597) (1,869)
Economic Earnings $ 3,012 $ 3,554 $ 1,718
Earnings per share $ 0.27 $ 0.31 $ 0.09
Stock-based compensation expense 0.18 0.17 0.21
Intangible amortization 0.13 0.13 0.13
Tax benefit from goodwill amortization 0.01 0.02 0.02
Tax impact of adjustments to GAAP comprehensive income (0.23) (0.20) (0.23)
Economic EPS $ 0.36 $ 0.43 $ 0.22
Diluted weighted average shares 8,392,496 8,184,736 7,968,504
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