COLUMBUS, OHIO - February 29, 2024 - Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported results for the fourth quarter of 2023 and the year ended December 31, 2023. The Company derives its consolidated revenue and net income from investment advisory and fund administration services provided by its subsidiary, Diamond Hill Capital Management, Inc. FOR IMMEDIATE RELEASE: Investor Contact: Tom Line—Chief Financial Officer 614-255-5989 (tline@diamond-hill.com) Media Contact: Lara Hoffmans—Managin ...

Washington, D.C. 20549 United States Securities and Exchange Commission Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) (State of incorporation) Oh ...

United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) (State of incorporation) Ohio 65 ...

Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 United States Securities and Exchange Commission DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) (State of incorporation) OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 Title ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) (State of incorpor ...

United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) | --- | |------------------ ...

United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) | --- | --- | |----------------- ...

[Part I: Financial Information](index=3&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) This section presents the company's consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the reporting period [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements for Q1 2022 show decreased assets and equity, with revenue growth offset by investment losses leading to a significant decline in net income and negative operating cash flow [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$261.4 million** by March 31, 2022, primarily due to reduced cash and accrued incentive compensation liability after annual payments Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Item | March 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $58,779 | $80,550 | | Investments | $161,930 | $166,656 | | Total assets | $261,366 | $286,153 | | **Liabilities & Equity** | | | | Accrued incentive compensation | $9,401 | $37,235 | | Total liabilities | $58,018 | $83,974 | | Total permanent shareholders' equity | $182,610 | $184,423 | | Book value per share | $57.22 | $58.15 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2022 revenue grew **8%** to **$42.3 million**, but a **$7.6 million** net investment loss led to a **33%** decline in net income to **$9.1 million** and reduced diluted EPS Q1 2022 vs Q1 2021 Income Statement (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Revenue | $42,256 | $39,014 | | Net Operating Income | $19,073 | $13,532 | | Investment Income (Loss), Net | $(7,592) | $5,663 | | Net Income Attributable to Common Shareholders | $9,130 | $13,709 | | Diluted EPS | $2.87 | $4.34 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 saw **$13.7 million** net cash used in operations due to incentive payouts, while financing activities used **$9.9 million** for share repurchases and dividends Q1 2022 vs Q1 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,678) | $(15,661) | | Net cash provided by investing activities | $1,834 | $1,588 | | Net cash used in financing activities | $(9,927) | $(4,218) | | Net change in cash | $(21,771) | $(18,291) | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's investment advisory business, accounting policies, revenue recognition, investment composition, compensation, income taxes, and recent corporate actions - The company's revenue is **primarily derived from investment advisory and fund administration services** provided by its wholly-owned subsidiary, Diamond Hill Capital Management, Inc. (DHCM)[16](index=16&type=chunk) Revenue by Source (Q1 2022 vs Q1 2021, in thousands) | Revenue Source | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Proprietary funds | $30,232 | $28,956 | | Separately managed accounts | $7,192 | $6,473 | | Sub-Advised funds | $3,115 | $2,678 | | Model delivery | $1,717 | $907 | - As of March 31, 2022, the company had **$505.9 million in AUM** subject to performance-based fees, with **$1.1 million in unearned fees** based on investment results to date[46](index=46&type=chunk) - On April 26, 2022, the Board of Directors approved a quarterly cash dividend of **$1.50 per share**, payable in June 2022[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 revenue growth driven by higher AUM, net income decline due to investment losses, AUM decrease from market depreciation, and continued capital return through repurchases and dividends [Assets Under Management (AUM)](index=20&type=section&id=Assets%20Under%20Management%20%28AUM%29) Q1 2022 AUM decreased by **$0.7 billion** to **$30.3 billion** due to market depreciation, despite net cash inflows, while average AUM increased **8%** year-over-year AUM Roll-Forward (in millions) | Period | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Beginning AUM | $31,028 | $26,411 | | Net cash inflows | $237 | $1,744 | | Net market appreciation (depreciation) | $(943) | $2,427 | | **Ending AUM** | **$30,322** | **$30,582** | - Model delivery Assets Under Advisement (AUA), which are not included in AUM, were **$2.1 billion** as of March 31, 2022, up from **$1.4 billion** as of March 31, 2021[109](index=109&type=chunk) [Consolidated Results of Operations](index=23&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2022 revenue rose **8%** to **$42.3 million**, and net operating income increased **41%**, but a **$7.6 million** investment loss led to a **33%** drop in net income to **$9.1 million** - The increase in revenue was primarily due to an **8% increase in average AUM**, partially offset by a decrease in the average advisory fee rate from **0.53% to 0.52%** year-over-year[113](index=113&type=chunk)[118](index=118&type=chunk) - The decrease in net income was primarily due to the impact of **investment losses** in the current period versus investment income in the prior period[116](index=116&type=chunk) GAAP to Non-GAAP Reconciliation (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net operating income, GAAP basis | $19,073 | $13,532 | | Gains (losses) on deferred comp plan | $(1,179) | $3,103 | | **Net operating income, as adjusted (Non-GAAP)** | **$17,894** | **$16,635** | | Operating profit margin, GAAP basis | 45% | 35% | | **Operating profit margin, as adjusted (Non-GAAP)** | **42%** | **43%** | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains **$166.2 million** in working capital, utilized **$9.3 million** for share repurchases and **$4.8 million** for dividends in Q1 2022, and plans to continue its **$1.50 per share** quarterly dividend - The company repurchased **50,104 common shares** for a total of **$9.3 million** during Q1 2022[129](index=129&type=chunk) - A quarterly dividend of **$1.50 per share** was paid in March 2022, totaling **$4.8 million**; the company expects to continue this regular quarterly dividend[130](index=130&type=chunk)[131](index=131&type=chunk) - Working capital was approximately **$166.2 million** as of March 31, 2022, compared to **$168.5 million** at year-end 2021[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in market risk exposures have occurred since December 31, 2021, with further details available in the 2021 Form 10-K - There have been **no significant changes** in the Company's market risk exposures since the December 31, 2021 year end[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls during the quarter - The CEO and CFO concluded that as of the evaluation date, the Company's disclosure controls and procedures are **effective**[158](index=158&type=chunk) - **No changes in internal controls** over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[159](index=159&type=chunk) [Part II: Other Information](index=29&type=section&id=Part%20II%3A%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its consolidated financial statements - There are currently **no pending legal matters** that the Company believes could have a material adverse effect on its consolidated financial statements[160](index=160&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since those disclosed in the 2021 Form 10-K - **No material changes** to the Company's risk factors have occurred since the information disclosed in the 2021 Form 10-K[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2022, the company repurchased **50,104 shares** for **$9.3 million**, with **$44.8 million** remaining under a new **$50.0 million** repurchase program Share Repurchases in Q1 2022 | Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost (in millions) | | :--- | :--- | :--- | :--- | | Jan 2022 | 9,020 | $180.97 | $1.6 | | Feb 2022 | 13,777 | $179.23 | $2.5 | | Mar 2022 | 27,307 | $191.01 | $5.2 | | **Total** | **50,104** | **$185.94** | **$9.3** | - On February 25, 2022, the Board approved a new repurchase program authorizing up to **$50.0 million** of common share repurchases, which will expire in February 2024[163](index=163&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of exhibits filed with the Form 10-Q, including governance documents and certifications

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Diamond Hill Investment Group (DHIL) offers investment advisory and fund administration services, emphasizing valuation-disciplined active management and AUM-based revenue - Diamond Hill Investment Group, Inc. (DHIL) generates revenue from investment advisory and fund administration services through its wholly-owned subsidiary, Diamond Hill Capital Management, Inc. (DHCM)[13](index=13&type=chunk)[284](index=284&type=chunk) - DHCM's core values include curiosity, ownership, trust, and respect, fostering an environment focused on client success and long-term investment outcomes[14](index=14&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) Assets Under Management (AUM) by Product (2017-2021) | (in millions) | 2021 | 2020 | 2019 | 2018 | 2017 | |:---|:---|:---|:---|:---|:---| | Proprietary funds | $19,802 | $17,615 | $16,148 | $13,440 | $15,974 | | Sub-advised funds | 3,994 | 3,185 | 2,029 | 1,358 | 1,518 | | Separately managed accounts | 7,232 | 5,611 | 5,222 | 4,310 | 4,825 | | **Total AUM** | **$31,028** | **$26,411** | **$23,399** | **$19,108** | **$22,317** | Assets Under Advisement (AUA) from Model Delivery Programs (2017-2021) | (in millions) | 2021 | 2020 | 2019 | 2018 | 2017 | |:---|:---|:---|:---|:---|:---| | Model delivery program AUA | $2,098 | $1,099 | $933 | $476 | $445 | - The company maintains capacity discipline, closing strategies to new clients if size impedes investment return goals. As of December 31, 2021, Large Cap and Small-Mid Cap strategies were closed to most new investors[28](index=28&type=chunk) - In 2021, DHIL expanded its domestic equity line-up and vehicle availability, including a new Large Cap Concentrated mutual fund and collective investment trusts for several strategies. It also launched a private fund focused on micro-cap companies[31](index=31&type=chunk) - DHIL is subject to extensive federal, state, and non-U.S. laws and regulations, including the Advisers Act and the Investment Company Act of 1940, with potential for significant penalties for non-compliance[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The company is highly dependent on contractual relationships with the Funds, which generated approximately **69%**, **75%**, and **77%** of revenues in 2021, 2020, and 2019, respectively[44](index=44&type=chunk)[78](index=78&type=chunk) Workforce Data (as of December 31, 2021) | Metric | Value | |:---|:---| | Full-time equivalent employees | 128 | | Average employee tenure | ~7 years | | Employees with >10 years service | >20% | | 5-year average employee turnover | <9% | | Females on Board of Directors | 42% | | Females in management team | 66% | | Females among employees | 30% | | Racial/ethnic minorities among workforce | ~14% | [ITEM 1A. Risk Factors](index=11&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant business, operational, market, economic, and regulatory risks that could materially impact its financial condition and operations - Poor investment results or adverse ratings of products could diminish investor interest and reduce AUM, negatively impacting revenue and net income[63](index=63&type=chunk)[64](index=64&type=chunk) - The loss of highly skilled key personnel, including portfolio managers and research analysts, could damage reputation, hinder client attraction/retention, and decrease net income due to increased compensation costs or asset loss[65](index=65&type=chunk)[66](index=66&type=chunk) - Intense competition from various financial institutions, including those offering passive index strategies, could lead to market share decline, reduced AUM, and pressure to lower fees, impacting profitability[37](index=37&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Cybersecurity attacks pose a significant operational risk, potentially leading to unauthorized disclosure of sensitive information, disruption of business operations, financial losses, reputational harm, and costly litigation[81](index=81&type=chunk)[82](index=82&type=chunk)[85](index=85&type=chunk) - Revenues are highly dependent on AUM and equity market performance; declines in securities prices, sales, or increased redemptions, or economic/political events, can significantly reduce revenue and net income[99](index=99&type=chunk)[100](index=100&type=chunk) - The company's business is subject to substantial governmental regulation, with frequent changes potentially increasing compliance costs, reducing revenue, and resulting in fines or lawsuits for noncompliance[105](index=105&type=chunk)[106](index=106&type=chunk) [Item 1B. Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[110](index=110&type=chunk) [Item 2. Properties](index=17&type=section&id=Item%202.%20Properties) The company leases a single office space in Columbus, Ohio, for operations and owns no real estate - The company leases its office space at 325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215[111](index=111&type=chunk) - The company does not own any real estate or interests in real estate[112](index=112&type=chunk) [Item 3. Legal Proceedings](index=17&type=section&id=Item%203.%20Legal%20Proceedings) No pending legal matters are expected to materially affect the consolidated financial statements - No legal matters are currently pending that are believed to have a material adverse effect on the consolidated financial statements[113](index=113&type=chunk) [Item 4. Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable[114](index=114&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) DHIL common shares trade on NASDAQ, with a 29% 5-year total return, and the Board approved a dividend increase and a new $50.0 million share repurchase program Cumulative 5-Year Total Return (as of December 31, 2021) | Entity | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | Cumulative 5 Year Total Return | |:---|:---|:---|:---|:---|:---|:---|:---| | Diamond Hill Investment Group, Inc. | $100 | $102 | $77 | $77 | $89 | $129 | 29 % | | Russell Microcap® Index | $100 | $113 | $98 | $120 | $146 | $174 | 74 % | | Peer Group* | $100 | $119 | $86 | $109 | $127 | $159 | 59 % | Quarterly Stock Prices and Dividends (2020-2021) | Quarter ended: | 2021 High Price | 2021 Low Price | 2021 Quarterly Dividend Per Share | 2021 Special Dividend Per Share | 2020 High Price | 2020 Low Price | 2020 Quarterly Dividend Per Share | 2020 Special Dividend Per Share | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | March 31 | $175.00 | $141.51 | $1.00 | — | $144.40 | $81.70 | — | — | | June 30 | $178.79 | $158.59 | $1.00 | — | $122.13 | $86.00 | — | — | | September 30 | $184.60 | $161.00 | $1.00 | — | $128.08 | $111.80 | — | — | | December 31 | $231.22 | $178.75 | $1.00 | $19.00 | $160.00 | $128.01 | — | $12.00 | - The Board approved an increase in the regular quarterly dividend from **$1.00** to **$1.50** per share, effective Q1 2022[122](index=122&type=chunk) Common Share Repurchase Program Activity (Q4 2021) | Period | Total Number of Shares Purchased for Employee Tax Withholdings (a) | Average Price Paid Per Share Purchased Under the Program | Purchase Price of Shares Purchased Under the Program | Aggregate Purchase Price Yet To Be Purchased Under the Program | |:---|:---|:---|:---|:---| | October 1, 2021 through October 31, 2021 | 608 | — | — | $27,831,775 | | November 1, 2021 through November 30, 2021 | — | — | — | $27,831,775 | | December 1, 2021 through December 31, 2021 | — | $184.28 | $276,414 | $27,555,361 | | **Total** | **608** | | **$276,414** | **$27,555,361** | - The 2020 Repurchase Program expired in February 2022, and a new 2022 Repurchase Program was approved, authorizing up to **$50.0 million** in common share repurchases until February 2024[126](index=126&type=chunk)[127](index=127&type=chunk)[201](index=201&type=chunk) [Item 6. Selected Financial Data](index=20&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable, as selected financial data is integrated within other report sections - Selected Financial Data is not applicable[129](index=129&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operations for the past three years, detailing AUM, revenue, expenses, liquidity, and cash flow, noting significant 2021 growth - The performance of U.S. and international equity markets and the U.S. fixed income market directly impacts the company's operations and financial position[131](index=131&type=chunk) - The company aims to deliver market-beating returns over a full market cycle through active management and strict capacity discipline[134](index=134&type=chunk) Key Financial Performance Indicators (2019-2021) | Indicator | 2021 | 2020 | 2019 | |:---|:---|:---|:---| | Ending AUM (in millions) | $31,028 | $26,411 | $23,399 | | Average AUM (in millions) | 30,297 | 21,907 | 21,653 | | Net cash inflows (outflows) (in millions) | 2,123 | 1,529 | (677) | | Total revenue (in thousands) | 182,194 | 126,388 | 136,624 | | Net operating income | 76,258 | 45,538 | 47,935 | | Net operating income, as adjusted (non-GAAP) | $83,340 | $47,757 | $53,912 | | Average advisory fee rate | 0.56 % | 0.54 % | 0.59 % | | Average advisory fee rate, excluding performance fees | 0.52 % | 0.54 % | 0.59 % | | Operating profit margin | 42 % | 36 % | 35 % | | Operating profit margin, as adjusted (non-GAAP) | 46 % | 38 % | 39 % | Consolidated Results of Operations (2019-2021) | (in thousands, except per share amounts and percentages) | 2021 | 2020 | % Change (2021 vs 2020) | 2019 | % Change (2020 vs 2019) | |:---|:---|:---|:---|:---|:---| | Total revenue | $182,194 | $126,388 | 44% | $136,624 | (7)% | | Net operating income | 76,258 | 45,538 | 67% | 47,935 | (5)% | | Investment income, net | 16,381 | 6,585 | 149% | 30,507 | (78)% | | Gain on sale of high yield-focused advisory contracts | 9,000 | — | NM | — | NM | | Income tax expense | 26,050 | 13,958 | 87% | 18,688 | (25)% | | Net income attributable to common shareholders | 74,201 | 38,661 | 92% | 54,959 | (30)% | | Earnings per share attributable to common shareholders (diluted) | $23.34 | $12.03 | 94% | $15.99 | (25)% | | Operating profit margin | 42 % | 36 % | NM | 35 % | NM | - Revenue increased by **$55.8 million** (**44%**) in 2021 compared to 2020, primarily due to a **38%** increase in average AUM and **$11.9 million** in performance-based fees, partially offset by a decrease in the average advisory fee rate[160](index=160&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Net income attributable to common shareholders increased by **92%** to **$74.2 million** (**$23.34** diluted EPS) in 2021, driven by increased revenues, higher investment income, and a **$9.0 million** gain from the sale of High Yield-Focused Advisory Contracts[164](index=164&type=chunk)[167](index=167&type=chunk) - The company's liquidity is strong, with cash flows from operating activities as the main source. Primary uses of cash include operating expenses and seed capital for new investment strategies[198](index=198&type=chunk)[199](index=199&type=chunk) Cash Dividends Paid (2019-2021) | Year | Total Dividends Per Share | |:---|:---| | 2021 | $23.00 | | 2020 | $12.00 | | 2019 | $9.00 | Contractual Obligations (as of December 31, 2021) | | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | |:---|:---|:---|:---|:---|:---|:---|:---| | Operating lease obligations | $2,028,581 | $624,179 | $624,179 | $624,179 | $156,044 | $— | $— | | Purchase obligations | 7,099,679 | 3,960,575 | 1,670,814 | 709,138 | 706,027 | 53,125 | — | | Deferred compensation obligations | 37,348,294 | 3,474,351 | 3,911,526 | 4,288,132 | 4,942,954 | 2,262,332 | 18,468,999 | | **Total** | **$46,476,554** | **$8,059,105** | **$6,206,519** | **$5,621,449** | **$5,805,025** | **$2,315,457** | **$18,468,999** | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Revenues and net income are highly sensitive to AUM and market values, with investments subject to price risk, where a 10% change significantly impacts fair value - The majority of the company's revenue and net income are directly impacted by the value of its AUM and financial market values[244](index=244&type=chunk) - Investments in company funds are sensitive to market risk, specifically price risk, which can lead to potential future loss of value[245](index=245&type=chunk) Market Risk Sensitivity (as of December 31, 2021) | | Fair Value as of December 31, 2021 | Fair Value Assuming a Hypothetical 10% Increase | Fair Value Assuming a Hypothetical 10% Decrease | |:---|:---|:---|:---| | Equity investments | $115,079,799 | $126,587,779 | $103,571,819 | | Fixed Income investments | 51,576,202 | 56,733,822 | 46,418,582 | | **Total** | **$166,656,001** | **$183,321,601** | **$149,990,401** | [Item 8. Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements and the independent auditor's unqualified opinion on financial statements and internal controls, with detailed notes - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2021, and on the effectiveness of internal control over financial reporting as of December 31, 2021[253](index=253&type=chunk)[254](index=254&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) Consolidated Balance Sheets (as of December 31, 2021 and 2020) | ASSETS | 2021 | 2020 | |:---|:---|:---| | Cash and cash equivalents | $80,550,393 | $98,478,202 | | Investments | 166,656,001 | 128,401,136 | | Accounts receivable | 20,443,562 | 17,805,864 | | Prepaid expenses | 2,555,296 | 2,977,759 | | Income taxes receivable | — | 256,538 | | Property and equipment, net of depreciation | 6,100,599 | 6,740,396 | | Deferred taxes | 9,847,552 | 8,437,446 | | **Total assets** | **$286,153,403** | **$263,097,341** | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Liabilities | | | | Accounts payable and accrued expenses | $8,588,713 | $8,002,303 | | Accrued incentive compensation | 37,235,418 | 28,400,000 | | Deferred compensation | 37,348,294 | 33,241,952 | | Income taxes payable | 801,740 | — | | **Total liabilities** | **83,974,165** | **69,644,255** | | Redeemable noncontrolling interest | 17,756,336 | 9,372,333 | | Permanent Shareholders' Equity | | | | Common stock, no par value | 80,434,049 | 80,810,946 | | Deferred equity compensation | (15,268,705) | (14,748,118) | | Retained Earnings | 119,257,558 | 118,017,925 | | **Total permanent shareholders' equity** | **184,422,902** | **184,080,753** | | **Total liabilities and shareholders' equity** | **$286,153,403** | **$263,097,341** | | Book value per share | $58.15 | $58.09 | Consolidated Statements of Income (Years Ended December 31, 2021, 2020, and 2019) | | 2021 | 2020 | 2019 | |:---|:---|:---|:---| | REVENUES: | | | | | Investment advisory | $170,137,609 | $119,125,230 | $128,009,409 | | Mutual fund administration, net | 12,056,228 | 7,262,488 | 8,614,971 | | **Total revenue** | **182,193,837** | **126,387,718** | **136,624,380** | | OPERATING EXPENSES: | | | | | Compensation and related costs, excluding deferred compensation expense | 73,591,327 | 58,291,670 | 60,264,117 | | Deferred compensation expense | 7,082,153 | 2,218,898 | 5,976,938 | | General and administrative | 14,020,836 | 11,002,572 | 13,277,843 | | Sales and marketing | 7,659,423 | 5,999,846 | 5,867,297 | | Mutual fund administration | 3,581,960 | 3,336,575 | 3,302,767 | | **Total operating expenses** | **105,935,699** | **80,849,561** | **88,688,962** | | **NET OPERATING INCOME** | **76,258,138** | **45,538,157** | **47,935,418** | | Investment income, net | 16,381,216 | 6,584,849 | 30,507,375 | | Gain on sale of high yield-focused advisory contracts | 9,000,000 | — | — | | **NET INCOME BEFORE TAXES** | **101,639,354** | **52,123,006** | **78,442,793** | | Income tax expense | (26,049,815) | (13,957,868) | (18,688,474) | | **NET INCOME** | **75,589,539** | **38,165,138** | **59,754,319** | | Net loss (income) attributable to redeemable noncontrolling interest | (1,388,930) | 495,407 | (4,795,295) | | **NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS** | **$74,200,609** | **$38,660,545** | **$54,959,024** | | Earnings per share attributable to common shareholders | | | | | Basic | $23.34 | $12.03 | $15.99 | | Diluted | $23.34 | $12.03 | $15.99 | | Weighted average shares outstanding | | | | | Basic | 3,179,497 | 3,214,564 | 3,436,574 | | Diluted | 3,179,497 | 3,214,564 | 3,436,641 | Consolidated Statements of Cash Flows (Years Ended December 31, 2021, 2020, and 2019) | | 2021 | 2020 | 2019 | |:---|:---|:---|:---| | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | Net Income | $75,589,539 | $38,165,138 | $59,754,319 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | Depreciation | 1,281,420 | 992,836 | 1,164,207 | | Share-based compensation | 7,415,170 | 7,739,320 | 9,081,421 | | Increase in accounts receivable | (2,666,551) | (582,502) | (5,021,516) | | Change in current income taxes | 1,058,278 | 3,592,561 | (6,617,780) | | Change in deferred income taxes | (1,410,106) | 1,949,407 | 1,079,247 | | Gain on sale of high yield-focused advisory contracts | (9,000,000) | — | — | | Net gain on investments | (10,878,658) | (3,005,441) | (21,058,463) | | Net change in securities held by Consolidated Funds | (50,430,607) | 3,179,362 | 6,286,645 | | Increase in accrued incentive compensation | 9,365,224 | 5,180,849 | 3,516,639 | | Increase in deferred compensation | 4,106,342 | 2,899,748 | 7,954,330 | | Other changes in assets and liabilities | 1,882,186 | (338,793) | 827,194 | | **Net cash provided by operating activities** | **26,312,237** | **59,772,485** | **56,966,243** | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | Purchase of property and equipment | (1,104,981) | (2,450,421) | (707,790) | | Purchase of Company sponsored investments | (21,395,411) | (14,852,892) | (14,351,062) | | Proceeds from sale of Company sponsored investments | 40,764,891 | 25,715,013 | 48,637,779 | | Net cash on deconsolidation of Company sponsored investments | — | — | (22,723,853) | | Proceeds from sale of high yield-focused advisory contracts | 9,000,000 | — | — | | **Net cash provided by investing activities** | **27,264,499** | **8,411,700** | **10,855,074** | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | Value of shares withheld related to employee tax withholding | (1,625,413) | (1,947,456) | (1,390,482) | | Payment of dividends | (72,960,976) | (37,976,714) | (30,275,867) | | Net subscriptions (redemptions) received from redeemable noncontrolling interest holders | 10,298,891 | (4,311,084) | 11,340,880 | | Repurchase of common stock | (7,820,315) | (18,646,982) | (38,749,654) | | Proceeds received under employee stock purchase plan | 603,268 | — | — | | **Net cash used in financing activities** | **(71,504,545)** | **(62,882,236)** | **(59,075,123)** | | CASH AND CASH EQUIVALENTS | | | | | Net change during the year | (17,927,809) | 5,301,949 | 8,746,194 | | At beginning of year | 98,478,202 | 93,176,253 | 84,430,059 | | At end of year | $80,550,393 | $98,478,202 | $93,176,253 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=56&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) No changes in or disagreements with accountants on accounting and financial disclosures were reported - There are no changes in or disagreements with accountants on accounting and financial disclosures[379](index=379&type=chunk) [Item 9A. Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[380](index=380&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December 31, 2021[381](index=381&type=chunk) - Management assessed and concluded that the company's internal control over financial reporting was effective as of December 31, 2021[384](index=384&type=chunk)[385](index=385&type=chunk) [Item 9B. Other Information](index=57&type=section&id=Item%209B.%20Other%20Information) No other information required by this item was reported - No other information is reported under this item[387](index=387&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=57&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[388](index=388&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement[390](index=390&type=chunk) [Item 11. Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the 2022 Proxy Statement - Information on executive compensation is incorporated by reference from the 2022 Proxy Statement[391](index=391&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Security ownership and equity compensation plan information is incorporated by reference from the 2022 Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement[392](index=392&type=chunk)[394](index=394&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Proxy Statement[394](index=394&type=chunk) [Item 14. Principal Accounting Fees and Services](index=58&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2022 Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the 2022 Proxy Statement[395](index=395&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits, with schedules omitted as information is in the financial statements or notes - Financial statements are referenced from Part II, Item 8[397](index=397&type=chunk) - All financial statement schedules are omitted as the required information is included in the accompanying financial statements or notes[397](index=397&type=chunk) - A comprehensive list of exhibits, including organizational documents, agreements, and certifications, is provided[397](index=397&type=chunk)[398](index=398&type=chunk) [Item 16. Form 10-K Summary](index=60&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company does not provide a separate Form 10-K summary - No Form 10-K Summary is provided[400](index=400&type=chunk) [Signatures](index=61&type=section&id=Signatures) The report is signed by the CEO, CFO, Controller, and Directors, affirming compliance with the Securities Exchange Act of 1934 - The report is signed by Heather E. Brilliant (CEO and President), Thomas E. Line (CFO and Treasurer), Jeffrey J. Cook (Controller), and several Directors, dated February 25, 2022[402](index=402&type=chunk)[403](index=403&type=chunk)

Part I: Financial Information [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, highlighting significant revenue and net income growth from AUM and performance fees [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (Unaudited) | Account | 9/30/2021 ($) | 12/31/2020 ($) | | :--- | :--- | :--- | | **Total Assets** | **316,744,019** | **263,097,341** | | Cash and cash equivalents | 98,580,247 | 98,478,202 | | Investments | 167,692,971 | 128,401,136 | | **Total Liabilities** | **75,319,635** | **69,644,255** | | **Total Shareholders' Equity** | **228,056,910** | **184,080,753** | | Book value per share | 71.89 | 58.09 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income (Unaudited) | Metric | Three Months Ended 9/30/2021 ($) | Three Months Ended 9/30/2020 ($) | Nine Months Ended 9/30/2021 ($) | Nine Months Ended 9/30/2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **55,054,554** | **31,175,755** | **139,138,640** | **91,350,429** | | Net Operating Income | 28,320,989 | 9,969,599 | 59,619,985 | 37,462,427 | | Gain on sale of advisory contracts | 9,000,000 | 0 | 9,000,000 | 0 | | **Net Income** | **24,875,795** | **11,140,583** | **56,764,946** | **22,250,694** | | **Diluted EPS** | **8.03** | **3.30** | **17.66** | **7.52** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended 9/30/2021 ($) | Nine Months Ended 9/30/2020 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 15,319,993 | 38,202,042 | | Net cash provided by (used in) investing activities | (543,374) | 10,693,754 | | Net cash used in financing activities | (14,674,574) | (24,318,377) | | **Net change in Cash and Cash Equivalents** | **102,045** | **24,577,419** | | Cash and cash equivalents at end of period | 98,580,247 | 117,753,672 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial results, including significant performance fees, advisory contract sale, and post-quarter dividend declarations - In Q3 2021, the company recognized **$11.9 million** in performance-based fees as a significant agreement reached its first five-year measurement term. No such fees were recorded in the comparable 2020 period[57](index=57&type=chunk)[52](index=52&type=chunk) - On July 30, 2021, the company sold its high yield-focused advisory contracts to Brandywine Global for an initial cash payment of **$9.0 million**, which was recognized as a gain. An additional **$13.0 million** in payments is contingent on future net revenue[98](index=98&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - Subsequent to the quarter end, on October 26, 2021, the Board approved a special cash dividend of **$19.00 per share** and a regular Q4 dividend of **$1.00 per share**. The company also expects to increase its regular quarterly dividend to **$1.50 per share** starting in Q1 2022[103](index=103&type=chunk)[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant financial performance growth in Q3 and YTD 2021, driven by AUM increase, performance fees, and strong liquidity [Assets Under Management](index=21&type=section&id=Assets%20Under%20Management) Assets Under Management (AUM) as of September 30 | Metric | 2021 (million $) | 2020 (million $) | % Change | | :--- | :--- | :--- | :--- | | **Total AUM** | **29,186** | **22,283** | **31%** | | Proprietary funds | 18,750 | 14,761 | 27% | | Sub-advised funds | 3,665 | 2,750 | 33% | | Separately managed accounts | 6,771 | 4,772 | 42% | - For the nine months ended September 30, 2021, AUM increased by **$2.8 billion**, primarily due to market appreciation and net inflows of **$2.4 billion**, partially offset by the sale of high yield-focused advisory contracts which reduced AUM by **$3.5 billion**[121](index=121&type=chunk)[118](index=118&type=chunk) - Net cash inflows for the nine months ended September 30, 2021, were **$2.36 billion**, a significant improvement from **$580 million** in the same period of 2020. Equity strategies saw inflows of **$1.18 billion**, reversing outflows of **$540 million** from the prior year[120](index=120&type=chunk)[118](index=118&type=chunk) [Consolidated Results of Operations](index=25&type=section&id=Consolidated%20Results%20of%20Operations) Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 ($M) | Q3 2020 ($M) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | 55.1 | 31.2 | 77% | | Net Operating Income | 28.3 | 10.0 | 184% | | Net Income Attributable to Common Shareholders | 25.6 | 10.6 | 143% | | Diluted EPS | 8.03 | 3.30 | 143% | - Q3 2021 revenue growth was driven by a **39% increase** in average AUM and **$11.9 million** in performance-based fees, which were not present in Q3 2020[127](index=127&type=chunk) - For the nine months ended September 30, 2021, net income attributable to common shareholders rose **131%** to **$56.2 million**, driven by higher revenue, a **$9.0 million** gain on the sale of advisory contracts, and improved investment income[147](index=147&type=chunk)[126](index=126&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's working capital increased to **$213.5 million** as of September 30, 2021, from **$168.9 million** at year-end 2020, reflecting strong operating cash flows[165](index=165&type=chunk) - During the first nine months of 2021, the company repurchased **$7.5 million** of its common stock. As of September 30, 2021, **$27.8 million** remained available for repurchase under the current program[160](index=160&type=chunk) - The company paid **$9.5 million** in regular quarterly dividends during the first nine months of 2021. A significant special dividend of **$19.00 per share** and a regular Q4 dividend of **$1.00 per share** were approved post-quarter end, totaling approximately **$63.4 million**[161](index=161&type=chunk)[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no significant changes in its market risk exposures since the end of the fiscal year 2020 - There have been no significant changes in the Company's market risk exposures since the December 31, 2020 year-end report[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - Management concluded that as of September 30, 2021, the Company's disclosure controls and procedures are effective[193](index=193&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[194](index=194&type=chunk) Part II: Other Information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently party to any material legal proceedings - There are currently no pending legal matters that the Company believes could have a material adverse effect on its consolidated financial statements[195](index=195&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to its risk factors from those disclosed in its 2020 Form 10-K - There have been no material changes to the Company's risk factors from the information disclosed in the 2020 Form 10-K[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchase of 31,468 common shares for approximately $5.6 million during Q3 2021 Share Repurchases for Q3 2021 | Period | Total Shares Purchased (Public Program) | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | August 2021 | 17,096 | 177.99 | | September 2021 | 14,372 | 178.99 | | **Total Q3** | **31,468** | **178.44** | - Through September 30, 2021, the Company has repurchased a total of **173,616 shares** for **$22.2 million** under the 2020 Repurchase Program[201](index=201&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) The company entered a new employment agreement with CEO Heather E. Brilliant, modifying her compensation structure - On October 26, 2021, the Company entered into a new employment agreement with CEO Heather E. Brilliant, which supersedes her 2019 agreement[204](index=204&type=chunk) - Key terms of the new agreement include: - Annual base salary of **$400,000** - Eligibility for an annual incentive award with a target of **$1,750,000** - Eligibility for an annual equity bonus with a target of **$600,000** through October 2024, and **$1,200,000** thereafter[205](index=205&type=chunk)[208](index=208&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, the new employment agreement for the CEO, required certifications by the CEO and CFO, and XBRL data files - Key exhibits filed with this report include the Employment Agreement for CEO Heather E. Brilliant (Exhibit 10.1), and CEO and CFO certifications required by Rule 13a-14(a) (Exhibits 31.1 and 31.2)[214](index=214&type=chunk)