Westwood Holdings Group, Inc. Reports Second Quarter 2023 Results

Most U.S. Value Strategies Outperformed Their Benchmarks

Positive Large Cap Value Flows Despite Worst May for Industry in 15 Years

21st Anniversary of New York Stock Exchange Listing

DALLAS, Aug. 02, 2023 (GLOBE NEWSWIRE) --  Westwood Holdings Group, Inc. (NYSE: WHG) today reported second quarter 2023 earnings. Significant items for the quarter include:

  • Numerous strategies beat their primary benchmarks, including LargeCap Value, SmallCap Value, MidCap Value, Enhanced Balanced, High Income, Global Real Estate, Select Income and Tactical Growth.
  • Quarterly peer rankings benefited from strong investment performance as High Alpha achieved its second consecutive top eVestment ranking and Platinum, Enhanced Balanced, Global Real Estate and Select Income posted top quartile rankings.
  • Revenues totaled $21.9 million compared with the first quarter's $22.7 million and $15.6 million a year ago. Net income of $2.9 million compared with the first quarter's $0.7 million and a net loss of $0.4 million in 2022's second quarter.
  • The second quarter was impacted by a $4.1 million gain from the change in fair value of contingent consideration.
  • Non-GAAP Economic Earnings of $5.7 million compared with the first quarter's $3.6 million and $1.6 million in last year's second quarter.
  • Westwood held $38.1 million in cash and short-term investments as of June 30, 2023, up $5.8 million from the first quarter. Stockholders' equity totaled $114.1 million and we have no debt.
  • We declared a cash dividend of $0.15 per common share, payable on October 2, 2023 to stockholders of record on September 1, 2023.

Brian Casey, Westwood’s President and CEO, commented, "Today’s investing environment presents plenty of challenges.

But Westwood has a 40 year history with more than half of them as a public company, so we are comfortable confronting and overcoming challenges. We’ve successfully integrated Salient’s talented people and products and now offer even more competitive products to the marketplace. Our Select Income and Global Real Estate strategies scored top 10 percentile rankings in Morningstar while our MLP & Energy Infrastructure mutual fund also stepped up to claim four stars from Morningstar. On the more traditional front, 60% of our US Value products outperformed their benchmarks for the quarter and, despite suffering through the worst month in the industry for large cap value outflows, our institutional Large Cap and SmidCap strategies experienced positive inflows for the quarter.

Distribution remains challenging amid investor uncertainty but our fully integrated sales team is working hard, supported by new technology tools, and set an all-time activity record. We feel sure that the combination of dedicated salespeople armed with an expanded array of competitive products will pay dividends over the coming months."

Revenues were lower than the first quarter on lower performance-based fees. Revenues were higher than last year's second quarter reflecting higher average AUM following the acquisition of Salient Partners' asset management business during the fourth quarter of last year.

Firmwide assets under management and advisement totaled $16.2 billion at quarter end, consisting of assets under management ("AUM") of $15.0 billion and assets under advisement ("AUA") of $1.2 billion.

Second quarter net income of $2.9 million compared to the first quarter's $0.7 million due to changes in the fair value of contingent consideration, offset by lower revenues and higher income taxes. Diluted earnings (loss) per share ("EPS") of $0.36 compared with $0.09 for the first quarter. Non-GAAP Economic Earnings of $5.7 million, or $0.70 per share, compared with $3.6 million, or $0.45 per share, in the first quarter.

Second quarter net income of $2.9 million compared to last year's second quarter net loss of $0.4 million due to changes in the fair value of contingent consideration and higher revenues, partially offset by higher expenses, primarily employee compensation and benefits expenses, following the acquisition of Salient Partners' asset management business in 2022. Diluted EPS was $0.36 compared with a loss of $0.05 per share for 2022's second quarter. Non-GAAP Economic Earnings were $5.7 million, or $0.70 per share, compared with $1.6 million, or $0.20 per share, in the second quarter of 2022.

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 second quarter 2023 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, please register here:


After registering, you will be provided with a dial-in number containing a personalized PIN.

Webcast Link: https://edge.media-server.com/mmc/p/5r2wxumm


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, Energy and Real Assets, Tactical Absolute Return, Income Alternatives and Systematic Equity. Strategies are made 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 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, 2022 and its quarterly report on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023. 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.

Westwood Holdings Group, Inc.
Terry Forbes
Chief Financial Officer and Treasurer
(214) 756-6900

(in thousands, except per share and share amounts)

 Three Months Ended
 June 30, 2023 March 31, 2023 June 30, 2022
Advisory fees:     
Asset-based$16,799  $17,033  $10,980 
Performance-based    555    
Trust fees 5,024   5,031   5,365 
Other, net 122   108   (742)
Total revenues 21,945   22,727   15,603 
Employee compensation and benefits 13,688   14,202   9,133 
Sales and marketing 764   740   509 
Westwood mutual funds 746   732   445 
Information technology 2,566   2,383   1,847 
Professional services 1,355   1,529   832 
General and administrative 3,235   3,046   2,348 
(Gain) loss from change in fair value of contingent consideration (4,078)  (1,060)   
Acquisition expenses    209   887 
Total expenses 18,276   21,781   16,001 
Net operating income (loss) 3,669   946   (398)
Net change in unrealized appreciation (depreciation) on private investments 24      (299)
Net investment income 211   172   5 
Other income 239   372   234 
Income (loss) before income taxes 4,143   1,490   (458)
Income tax provision 1,244   776   (80)
Net income (loss)$2,899  $714  $(378)
Total comprehensive income (loss)$2,899  $714  $(378)
Less: Comprehensive income (loss) attributable to noncontrolling interest 4   21    
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$2,895  $693  $(378)
Earnings (loss) per Westwood Holdings Group, Inc. share:     
Basic$0.36  $0.09  $(0.05)
Diluted$0.36  $0.09  $(0.05)
Weighted average shares outstanding:     
Basic 7,991,228   7,853,921   7,944,212 
Diluted 8,131,333   7,968,504   7,944,212 
Economic Earnings$5,686  $3,587  $1,608 
Economic EPS$0.70  $0.45  $0.20 
Dividends declared per share$0.15  $0.15  $0.15 

(in thousands, except per share and share amounts)

 Six Months Ended
 June 30, 2023 June 30, 2022
Advisory fees:   
Asset-based$33,832  $22,770 
Performance-based 555    
Trust fees 10,055   11,080 
Other, net 230   (1,031)
Total revenues 44,672   32,819 
Employee compensation and benefits 27,890   19,467 
Sales and marketing 1,504   991 
Westwood mutual funds 1,478   1,041 
Information technology 4,949   3,676 
Professional services 2,884   2,352 
General and administrative 6,281   4,388 
(Gain) loss from change in fair value of contingent consideration (5,138)   
Acquisition expenses 209   887 
Total expenses 40,057   32,802 
Net operating income 4,615   17 
Net change in unrealized appreciation (depreciation) on private investments 24   (262)
Net investment income 383   (11)
Other income 611   392 
Income before income taxes 5,633   136 
Income tax provision 2,020   464 
Net income (loss)$3,613  $(328)
Total comprehensive income (loss)$3,613  $(328)
Less: Comprehensive income (loss) attributable to noncontrolling interest 25    
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$3,588  $(328)
Earnings (loss) per share:   
Basic$0.45  $(0.04)
Diluted$0.45  $(0.04)
Weighted average shares outstanding:   
Basic 7,922,954   7,904,911 
Diluted 8,050,298   7,904,911 
Economic Earnings$9,273  $3,502 
Economic EPS$1.15  $0.44 
Dividends declared per share$0.30  $0.30 

(in thousands, except par value and share amounts)

 June 30, 2023 December 31, 2022
Current Assets:   
Cash and cash equivalents$15,229  $23,859 
Accounts receivable 13,609   13,900 
Investments, at fair value 22,894   15,342 
Prepaid income taxes    446 
Other current assets 4,154   4,645 
Total current assets 55,886   58,192 
Investments 7,247   4,455 
Equity method investments 4,180   6,574 
Noncurrent investments at fair value 259   3,027 
Goodwill 39,501   35,732 
Deferred income taxes 1,535   1,762 
Operating lease right-of-use assets 3,972   4,976 
Intangible assets, net 26,889   28,952 
Property and equipment, net of accumulated depreciation of $9,755 and $9,277 1,718   1,828 
Other long-term assets 918   929 
Total long-term assets 86,219   88,235 
Total assets$142,105  $146,427 
Current Liabilities:   
Accounts payable and accrued liabilities$5,780  $5,678 
Dividends payable 1,408   1,745 
Compensation and benefits payable 5,344   8,689 
Operating lease liabilities 1,276   1,502 
Income taxes payable 1,044    
Total current liabilities 14,852   17,614 
Accrued dividends 657   701 
Contingent consideration 7,763   12,901 
Noncurrent operating lease liabilities 3,734   4,563 
Total long-term liabilities 12,154   18,165 
Total liabilities 27,006   35,779 
Stockholders’ Equity:   
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 11,896,226 and outstanding 9,182,770 shares at June 30, 2023; issued 11,527,544 and outstanding 8,881,831 shares at December 31, 2022 119   115 
Additional paid-in capital 200,885   199,914 
Treasury stock, at cost - 2,713,456 shares at June 30, 2023; 2,645,713 shares at December 31, 2022 (85,965)  (85,128)
Retained earnings (accumulated deficit) (959)  (4,253)
Total Westwood Holdings Group, Inc. stockholders’ equity 114,080   110,648 
Noncontrolling interest in consolidated subsidiary 1,019    
Total liabilities and stockholders’ equity$142,105  $146,427 

(in thousands)

 Six Months Ended June 30,
  2023   2022 
Net income (loss)$3,613  $(328)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
Depreciation 346   352 
Amortization of intangible assets 2,063   811 
Net change in unrealized (appreciation) depreciation on investments (499)  1,312 
Stock-based compensation expense 3,372   2,901 
Deferred income taxes 228   (502)
Non-cash lease expense 630   490 
Loss on asset disposition 69    
Gain on remeasurement of lease liabilities (119)   
Fair value change of contingent consideration (5,138)   
Changes in operating assets and liabilities:   
Net sales of trading securities (7,083)  12,370 
Accounts receivable 919   1,862 
Other current assets 1,141   192 
Accounts payable and accrued liabilities (796)  (314)
Compensation and benefits payable (3,345)  (5,597)
Income taxes payable 1,490   (823)
Other liabilities (793)  (585)
Net cash provided by (used in) operating activities (3,902)  12,141 
Acquisition, net of cash acquired (741)   
Purchases of property and equipment (97)  (82)
Net cash used in investing activities (838)  (82)
Purchases of treasury stock    (1,404)
Restricted stock returned for payment of taxes (837)  (626)
Cash dividends (3,053)  (3,264)
Net cash used in financing activities (3,890)  (5,294)
Effect of currency rate changes on cash    4 
Cash and cash equivalents, beginning of period 23,859   15,206 
Cash and cash equivalents, end of period$15,229  $21,975 
Cash paid during the period for income taxes$300  $1,791 
Accrued dividends$2,065  $2,214 
Accrued purchases of treasury stock$  $190 

Reconciliation of Comprehensive Income (Loss) Attributable to Westwood Holdings Group, Inc. to Economic Earnings
(in thousands, except per share and share amounts)

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 (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 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 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 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
 June 30, 2023 March 31, 2023 June 30, 2022
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$2,895 $693 $(378)
Stock-based compensation expense 1,624  1,748  1,521 
Intangible amortization 1,042  1,021  406 
Tax benefit from goodwill amortization 125  125  59 
Economic Earnings$5,686 $3,587 $1,608 
Earnings (loss) per share$0.36 $0.09 $(0.05)
Stock-based compensation expense 0.19  0.21  0.19 
Intangible amortization 0.13  0.13  0.05 
Tax benefit from goodwill amortization 0.02  0.02  0.01 
Economic EPS$0.70 $0.45 $0.20 
Diluted weighted average shares 8,131,333  7,968,504  7,944,212 
   Six Months Ended
   June 30, 2023 June 30, 2022
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.  $3,588 $(328)
Stock-based compensation expense   3,372  2,901 
Intangible amortization   2,063  811 
Tax benefit from goodwill amortization   250  118 
Economic Earnings  $9,273 $3,502 
Earnings (loss) per share  $0.45 $(0.04)
Stock-based compensation expense   0.41  0.37 
Intangible amortization   0.26  0.10 
Tax benefit from goodwill amortization   0.03  0.01 
Economic EPS  $1.15 $0.44 
Diluted weighted average shares   8,050,298  7,904,911