WHAT: Rich Valdés, host of Rich Valdés America at Night on Westwood One, will be covering the Republican National Convention and providing interviews with key party members. SPECIAL GUESTS: About Westwood One NEW YORK, July 14, 2024 (GLOBE NEWSWIRE) -- Dan Bongino, host of The Dan Bongino Show, will be at the Republican National Convention streaming live special coverage in addition to his regularly scheduled syndicated radio show on Westwood One and his daily podcast. Westwood One offers 24-hour news/talk ...

Core Insights - Cumulus Media has announced that Mark Levin will continue to host "The Mark Levin Show" and his podcast for multiple years, along with developing a new original content podcast series [2][10] - Levin has been with Cumulus Media since 2007 and has a significant presence, airing on nearly 400 radio affiliates and reaching major metro markets [3][6] - The Cumulus Podcast Network will exclusively distribute and monetize Levin's podcasts, which include daily and weekend shows [4][7] Company Overview - Cumulus Media is an audio-first media company that delivers content to over a quarter billion people monthly through 401 owned radio stations and a large network of affiliated stations [7][8] - The company provides a range of programming, including sports, news, talk, and entertainment, and offers advertisers local and national advertising performance guarantees [8]

Westwood Holdings Group, Inc. (NYSE:WHG) Q1 2024 Results Conference Call May 1, 2024 4:30 PM ET Company Participants Jill Meyer - SVP, Director of Fiduciary Services Brian Casey - Chief Executive Officer Terry Forbes - Chief Financial Officer Conference Call Participants Macrae Sykes - GAMCO Operator Good day, and thank you for standing by. Welcome to the First Quarter 2024 Westwood Holdings Group Earnings Conference Call [Operator Instructions]. Please be advised that this conference is being recorded. I w ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________________________ FORM 10-Q ____________________________________________________________________________________________________ ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2024 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 193 ...

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- ▪ SMidCap, SmallCap Value, MidCap Value, Platinum, Enhanced Balanced, H ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Westwood Holdings Group, Inc. provides investment advisory, trust, and custodial services, with revenue from AUM and AUA - Westwood Holdings Group, Inc. manages investment assets and provides services through its subsidiaries, Westwood Management Corp., Westwood Advisors, L.L.C., Salient Advisors, L.P., and Westwood Trust[15](index=15&type=chunk) - Revenues are generally derived from fees based on a percentage of assets under management (AUM) and assets under advisement (AUA)[15](index=15&type=chunk) Assets Under Management (AUM) and Assets Under Advisement (AUA) | Metric | Value at Dec 31, 2023 (in billions) | Value at Dec 31, 2022 (in billions) | | :----- | :-------------------- | :-------------------- | | AUM | ~$15.5 billion | ~$14.8 billion | | AUA | ~$1.1 billion | ~$1.3 billion | - In January **2023**, Westwood acquired an additional **32%** interest in Broadmark Asset Management LLC for **$1.2 million**, increasing its ownership to approximately **80%** and gaining a controlling interest[19](index=19&type=chunk) - The company offers five distinct investment capabilities: U.S. Value Equity, Multi-Asset, Energy and Real Assets, Tactical Absolute Return, and Income Alternatives, with four strategies exceeding **$1 billion** in AUM[25](index=25&type=chunk)[27](index=27&type=chunk) - Westwood Trust provides fiduciary and investment services to high net worth individuals, families, non-profit endowments, foundations, and retirement plans, with fees typically based on AUM[49](index=49&type=chunk) - The growth strategy focuses on expanding client relationships, attracting and retaining key employees, growing existing investment strategies, enhancing digital capabilities, fostering wealth management and intermediary distribution, pursuing strategic corporate development, strengthening brand name, and developing/acquiring new investment strategies[64](index=64&type=chunk)[65](index=65&type=chunk)[72](index=72&type=chunk) - The company operates in a highly competitive and regulated environment, facing competition from larger firms, passive investment strategies, and evolving consumer demands for digital interaction[74](index=74&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - As of December **31**, **2023**, approximately **43%** of the workforce was female and **34%** represented minorities, reflecting a culture of diversity and inclusion[88](index=88&type=chunk)[104](index=104&type=chunk) - Westwood's ESG focus is guided by six pillars: Environmental impact, Diversity, equity and inclusion, Community, Responsible investing, Privacy and data protection, and Governance[91](index=91&type=chunk)[97](index=97&type=chunk) [Item 1A. Risk Factors](index=16&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant risks from AUM/AUA fluctuations, competition, regulations, and operations - Revenues are highly dependent on the market value and composition of AUM and AUA, which can fluctuate due to market performance and investment performance[108](index=108&type=chunk) - The investment management industry is highly competitive, with many larger competitors offering lower-fee, passive investment strategies, which could adversely affect Westwood's business[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - The business is subject to extensive and frequently changing federal, state, and non-U.S. regulations, leading to significant compliance costs and potential sanctions for violations[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Operational risks include the substantial cost and time required to introduce new investment strategies, potential damage to reputation, dependence on key employees, and vulnerability to systems failures and cybersecurity threats[118](index=118&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) - A small number of clients account for a substantial portion of fee revenues (approximately **21%** in **2023**), making the business vulnerable to the loss or reduction of these relationships[142](index=142&type=chunk) - Future distributions to common stockholders may include a return of capital, which reduces the asset base and could necessitate future debt or capital infusions[136](index=136&type=chunk) [Item 1B. Unresolved Staff Comments](index=25&type=page&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments to report - No unresolved staff comments[157](index=157&type=chunk) [Item 1C. Cybersecurity](index=25&type=page&id=Item%201C.%20Cybersecurity) Westwood invested significantly in cybersecurity governance, with Board oversight and an Incident Response Team - Westwood has made significant investments in cybersecurity governance, including enhanced control access, firewalls, security systems, employee training, and intrusion monitoring[158](index=158&type=chunk) - Periodic vulnerability assessments are conducted based on technology use, vendor relationships, cybercrime methodologies, and in response to incidents[159](index=159&type=chunk) - The Board of Directors oversees the cybersecurity programs, and management, including the CEO, CFO, President/COO, Information Security Officer, and Chief Compliance Officer, possesses cybersecurity expertise[164](index=164&type=chunk)[166](index=166&type=chunk) - An Incident Response Team (IRT) is responsible for detecting, analyzing, containing, eradicating, and restoring operations in the event of a cybersecurity breach, with timely notification to the Board and affected parties[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Item 2. Properties](index=27&type=section&id=Item%202.%20Properties) Westwood operates primarily from leased offices in Dallas and Houston, with limited additional spaces elsewhere - Principal operations are conducted from leased office spaces in Dallas, Texas (**38,000** sq ft, lease expires March **2026**) and Houston, Texas (**11,000** sq ft, lease expires September **2029**)[170](index=170&type=chunk) - Additional limited office space is leased in San Francisco, California, and Chicago, Illinois[170](index=170&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) Westwood is subject to various claims and legal proceedings in the ordinary course of business - The company is subject to claims and legal proceedings in the ordinary course of business[172](index=172&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Westwood Holdings Group, Inc - Not applicable[173](index=173&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Westwood's common stock trades on the NYSE, with **190** record holders, and an authorized share repurchase program - Westwood's common stock trades on the New York Stock Exchange under the symbol 'WHG'[176](index=176&type=chunk) - As of December **31**, **2023**, there were approximately **190** record holders of common stock[176](index=176&type=chunk) - The Board of Directors has discretion over cash dividends, subject to Delaware General Corporation Law and Texas law for Westwood Trust[177](index=177&type=chunk)[178](index=178&type=chunk) - A share repurchase program authorized up to **$35.0 million**, with **$1.8 million** remaining as of December **31**, **2023**. No shares were repurchased in **2023**[179](index=179&type=chunk)[180](index=180&type=chunk) Cumulative Five-Year Total Return (Period ended December 31, 2023) | Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Cumulative Five Year Total Return (%) | | :---------------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :-------------------------------- | | Westwood Holdings Group, Inc. | $100.00 | $95.59 | $47.65 | $62.90 | $43.14 | $51.33 | (48.67)% | | Russell 2000 Index | $100.00 | $125.53 | $150.58 | $172.90 | $137.56 | $160.85 | 60.85 % | | S&P U.S. BMI Asset Management & Custody Banks Index | $100.00 | $125.80 | $145.77 | $215.18 | $161.21 | $211.89 | 111.89 % | [Item 6. Reserved](index=29&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Westwood's financial condition and operations, covering revenue, expenses, AUM/AUA, and accounting estimates - Westwood's business model involves managing investment assets and providing services through its subsidiaries, with revenues primarily derived from AUM and AUA[190](index=190&type=chunk)[192](index=192&type=chunk) - The company's investment approach is value-oriented, focusing on companies with high free cash flow, improving returns on equity, and strengthening balance sheets[193](index=193&type=chunk) - **2023** highlights include the integration of Salient's asset management business, the addition of the Managed Investment Solutions team, acquisition of a controlling interest in Broadmark (**80%**), and strong performance in several investment strategies[195](index=195&type=chunk) 2023 Key Financial Highlights | Metric | 2023 Performance | | :----------------------------------- | :--------------- | | AUM (as of Dec 31, 2023) | **$15.5 billion** | | Quarterly average AUM (YoY increase) | **$15.0 billion** (**15%** increase) | | Total Revenue (YoY increase) | **31%** | | Dividends Paid | **$5.5 million** | | Liquid Cash & Short-Term Investments | **$53.1 million** | | Debt | None | [Forward-Looking Statements](index=30&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, noting actual results may differ due to AUM/AUA, competition, and regulatory risks - Statements in the report that are not purely historical facts are forward-looking and subject to inherent uncertainties, risks, and changes in circumstances[187](index=187&type=chunk) - Important factors that could cause actual results to differ include AUM/AUA market value, competitive fee pressures, regulatory changes, cybersecurity, litigation, and the ability to attract and retain qualified personnel[188](index=188&type=chunk) [Overview](index=32&type=section&id=Overview) Westwood Holdings Group, Inc. is an investment asset manager and service provider, with fee-based revenues from AUM and AUA - Westwood manages investment assets and provides services through Westwood Management (investment advisory) and Westwood Trust (trust and custodial services)[190](index=190&type=chunk)[191](index=191&type=chunk) AUM and AUA at December 31, 2023 | Metric | Value (approx.) (in billions) | | :----- | :-------------- | | AUM | **$15.5 billion** | | AUA | **$1.1 billion** | - The company utilizes a 'value' investment style, focusing on companies with high free cash flow, improving returns on equity, and strengthening balance sheets[193](index=193&type=chunk) [2023 Highlights](index=32&type=section&id=2023%20Highlights) In **2023**, Westwood integrated Salient, increased Broadmark ownership, saw AUM growth, and maintained a strong financial position - Integrated Salient's asset management business and added the Managed Investment Solutions team[195](index=195&type=chunk) - Acquired an additional **32%** interest in Broadmark, increasing ownership to approximately **80%**[195](index=195&type=chunk) 2023 Financial and Operational Highlights | Metric | Value / Change (YoY) | | :----------------------------------- | :------------------- | | AUM (as of Dec 31, 2023) | **$15.5 billion** (**5%** increase) | | Quarterly average AUM | **$15.0 billion** (**15%** increase) | | Total Revenue | **31%** increase | | Dividends Paid | **$5.5 million** | | Liquid Cash & Short-Term Investments | **$53.1 million** | | Debt | None | - SMidCap Value, SmallCap Value, MidCap Value, High Alpha, Enhanced Balanced, High Income, Alternative Income, Global Real Estate, and Select Income strategies beat their primary benchmarks[195](index=195&type=chunk) [Revenue and Expense Components](index=32&type=section&id=Revenue%20and%20Expense%20Components) Westwood's revenues are primarily from investment advisory and trust fees, with key expenses including compensation and marketing - Revenues are primarily from investment advisory fees (asset-based and performance-based) and trust fees, with other revenues from seed money investments[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Advisory fees are typically calculated as a percentage of AUM/AUA, paid quarterly in advance or arrears, and recognized as services are rendered[196](index=196&type=chunk) - Trust fees are negotiated per client, generally based on AUM, calculated quarterly in arrears, and recognized within the quarter[197](index=197&type=chunk) - Major expense categories include employee compensation and benefits, sales and marketing, Westwood mutual funds, information technology, professional services, and general and administrative expenses[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Firm-wide Assets Under Management (AUM) and Assets Under Advisement (AUA)](index=34&type=section&id=Firm-wide%20Assets%20Under%20Management%20(AUM)%20and%20Assets%20Under%20Advisement%20(AUA)) Westwood's AUM and AUA totaled **$16.6 billion** at year-end **2023**, with AUM increasing due to market appreciation Firm-wide Assets Under Management (AUM) and Assets Under Advisement (AUA) | Metric | Dec 31, 2023 (in billions) | Dec 31, 2022 (in billions) | Dec 31, 2021 (in billions) | | :----- | :------------------------- | :------------------------- | :------------------------- | | AUM | **$15.5** | **$14.8** | **$14.5** | | AUA | **$1.1** | **$1.3** | **$0.3** | | Total | **$16.6** | **$16.1** | **$14.8** | AUM Changes (Year Ended December 31, 2023) | Category | Change (in millions) | | :---------------- | :------------------- | | Beginning AUM | **$14,779** | | Inflows | **$1,620** | | Outflows | **$(2,898)** | | Net Client Flows | **$(1,278)** | | Market Appreciation | **$1,958** | | End of Period AUM | **$15,459** | AUM Changes (Year Ended December 31, 2022) | Category | Change (in millions) | | :---------------- | :------------------- | | Beginning AUM | **$14,503** | | Inflows | **$1,543** | | Outflows | **$(2,441)** | | Net Client Flows | **$(898)** | | Salient Acquisition | **$2,661** | | Market Depreciation | **$(1,487)** | | End of Period AUM | **$14,779** | AUA Changes (Year Ended December 31, 2023) | Category | Change (in millions) | | :------------------------ | :------------------- | | Beginning AUA | **$1,255** | | Inflows | **$160** | | Outflows | **$(400)** | | Net Client Flows | **$(240)** | | Market Appreciation (Depreciation) | **$64** | | End of Period AUA | **$1,079** | [Results of Operations Analysis](index=36&type=section&id=Results%20of%20Operations%20Analysis) Westwood's total revenues increased by **31%** in **2023**, leading to a net income of **$10.6 million**, a significant improvement Consolidated Statements of Comprehensive Income (Loss) Summary | Metric (in thousands) | 2023 | 2022 | 2021 | | :-------------------- | :---------- | :---------- | :---------- | | Total Revenues | **$89,781** | **$68,681** | **$73,054** | | Total Expenses | **$83,776** | **$73,554** | **$67,095** | | Net Operating Income (Loss) | **$6,005** | **$(4,873)** | **$5,959** | | Income (Loss) before Income Taxes | **$13,443** | **$(5,195)** | **$14,003** | | Net Income (Loss) | **$10,571** | **$(4,628)** | **$9,763** | | Diluted EPS | **$1.17** | **$(0.59)** | **$1.23** | - Total revenues increased by **$21.1 million** (**31%**) in **2023**, primarily due to higher average AUM from the Salient Acquisition, partially offset by a **$1.4 million** decrease in Trust fees[226](index=226&type=chunk) - Total expenses increased by **14%** in **2023**, driven by higher employee compensation (due to increased headcount from Salient Acquisition), sales and marketing, Westwood mutual funds expenses, information technology costs, and general and administrative expenses (due to intangible asset amortization)[227](index=227&type=chunk)[228](index=228&type=chunk) - A **$2.8 million** gain was recorded from the remeasurement of contingent consideration related to the Salient Acquisition, and **$5.0 million** in life insurance proceeds contributed to other income in **2023**[229](index=229&type=chunk)[230](index=230&type=chunk) [Supplemental Financial Information (Economic Earnings and Economic EPS)](index=38&type=section&id=Supplemental%20Financial%20Information%20(Economic%20Earnings%20and%20Economic%20EPS)) Westwood uses non-GAAP Economic Earnings and EPS to evaluate performance, with Economic Earnings increasing by **589%** in **2023** - Economic Earnings and Economic EPS are non-GAAP measures used by management and the Board to evaluate performance, allocate resources, and review dividend policy[237](index=237&type=chunk) - Economic Earnings are defined as Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. plus non-cash equity-based compensation expense, impairment expense, amortization of intangible assets, currency translation adjustment reclassification, and deferred taxes related to goodwill[238](index=238&type=chunk) Economic Earnings and Economic EPS | Metric (in thousands, except per share) | 2023 | 2022 | 2021 | | :-------------------------------------- | :---------- | :---------- | :---------- | | Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. | **$9,520** | **$(4,628)** | **$9,763** | | Economic Earnings | **$18,342** | **$2,663** | **$15,149** | | Economic Earnings per Share | **$2.26** | **$0.45** | **$2.20** | - For **2023**, Economic Earnings increased by **589%** to **$18.3 million**, driven by higher revenues and life insurance proceeds, partially offset by increased expenses from the Salient Acquisition[240](index=240&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Westwood funds operations through cash flow, with **$53.1 million** in liquid assets and no debt - Operations are funded by cash generated from operating activities, with no debt as of December **31**, **2023** and **2022**[243](index=243&type=chunk) Liquidity and Capital Resources (in thousands) | Metric | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------ | :----------- | :----------- | | Cash and cash equivalents | **$20,422** | **$23,859** | | Accounts receivable | **$14,394** | **$13,900** | | Total liquid assets | **$34,816** | **$37,759** | | Investments, at fair value| **$32,674** | **$15,342** | | Cash and short-term investments | **$53,100** | **$39,200** | | Working capital | **$53,600** | **$40,600** | Cash Flow Data (in thousands) | Cash Flow Type | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :---------------------- | :---------- | :---------- | :---------- | | Operating cash flows | **$(1,185)** | **$51,490** | **$19,385** | | Investing cash flows | **$4,112** | **$(33,739)** | **$9,566** | | Financing cash flows | **$(6,364)** | **$(9,103)** | **$(26,806)** | - The decrease in operating cash flow in **2023** was primarily due to net purchases of investments, contrasting with net sales in **2022** to fund the Salient Acquisition[248](index=248&type=chunk) [Cash Dividends](index=41&type=section&id=Cash%20Dividends) The Board declared quarterly cash dividends of **$0.15** per share in **2023** and **2022**, totaling **$0.60** per share annually Cash Dividends Declared Per Share | Year | Dividend Per Share | | :--- | :----------------- | | 2023 | **$0.60** | | 2022 | **$0.60** | - The dividend declared on October **26**, **2022**, was treated as a return of capital for accounting purposes[252](index=252&type=chunk) [Contractual Obligations](index=41&type=section&id=Contractual%20Obligations) Westwood's purchase commitments total **$14.6 million** for IT services, software, and research tools - Purchase commitments primarily consist of outsourced information technology services, software licenses, and financial research tools[254](index=254&type=chunk) Purchase Commitments (in thousands) as of December 31, 2023 | Period | Amount (in thousands) | | :--------------- | :----------- | | Less than 1 year | **$6,519** | | 1-3 years | **$5,674** | | 4-5 years | **$2,444** | | Thereafter | **$0** | | **Total** | **$14,637** | - No material off-balance sheet arrangements exist as of December **31**, **2023**[254](index=254&type=chunk) [Critical Accounting Estimates](index=42&type=section&id=Critical%20Accounting%20Estimates) Financial statements require significant estimates for business combinations, contingent consideration, goodwill, and income taxes - Critical accounting estimates include business combinations (allocating purchase price, valuing tangible and intangible assets), contingent consideration (fair value estimation using Monte Carlo simulations), and consolidation assessments[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) - Goodwill is tested at least annually for impairment at the reporting unit level (Advisory and Trust segments) using qualitative or quantitative assessments[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Accounting for income taxes involves significant judgment in determining the provision, assessing valuation allowances for deferred tax assets, and recognizing uncertain tax positions based on a 'more likely than not' standard[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) [Accounting Developments](index=43&type=section&id=Accounting%20Developments) Recent ASUs on Segment Reporting and Income Taxes will impact disclosures but not financial results - ASU **2023-07** (Segment Reporting) requires disclosure of significant segment expenses and other segment items on an annual and interim basis, effective for fiscal years beginning after December **15**, **2023**[383](index=383&type=chunk)[385](index=385&type=chunk) - ASU **2023-09** (Income Taxes) mandates enhanced income tax rate reconciliation and disaggregated disclosures of income taxes paid, effective for annual periods beginning after December **15**, **2024**[386](index=386&type=chunk) - Both ASUs are expected to impact disclosures but not the company's results of operations, cash flows, or financial condition[385](index=385&type=chunk)[386](index=386&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=44&type=page&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Westwood's revenues are highly exposed to market risks from AUM/AUA fluctuations, but the company does not use hedging - Revenues are primarily generated from fees based on AUM and AUA, making them subject to market risks from fluctuations in securities markets and interest rates[275](index=275&type=chunk)[276](index=276&type=chunk) - A hypothetical **10%** decrease in average AUM and AUA for **2023** would have reduced total revenue by approximately **$9 million**[276](index=276&type=chunk) - The company invests corporate capital in financial instruments, exposing it to interest rate risk, but does not use hedging activities or derivative financial instruments[275](index=275&type=chunk)[277](index=277&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=44&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The independent auditor's report and consolidated financial statements are included in Item **15** - The independent registered public accounting firm's report and Consolidated Financial Statements are located in Item **15** of this Report[278](index=278&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=44&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure to report - No changes in or disagreements with accountants on accounting and financial disclosure[279](index=279&type=chunk) [Item 9A. Controls and Procedures](index=44&type=page&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were effective as of December **31**, **2023**, excluding Broadmark, with no material changes - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of December **31**, **2023**, excluding the Broadmark acquisition[280](index=280&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December **31**, **2023**[282](index=282&type=chunk) - Management assessed internal control over financial reporting as effective as of December **31**, **2023**, based on the COSO **2013** framework, excluding Broadmark Asset Management, LLC[285](index=285&type=chunk)[286](index=286&type=chunk) - Broadmark represented approximately **5%** of total revenues and **7%** of total assets of the consolidated financial statements as of December **31**, **2023**[286](index=286&type=chunk) [Item 9B. Other Information](index=46&type=page&id=Item%209B.%20Other%20Information) No other information to report under this item - No other information to report[288](index=288&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=46&type=page&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Westwood Holdings Group, Inc - Not applicable[289](index=289&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=46&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 **2024** Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the **2024** Proxy Statement[291](index=291&type=chunk) [Item 11. Executive Compensation](index=46&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the **2024** Proxy Statement - Information on executive compensation is incorporated by reference from the **2024** Proxy Statement[292](index=292&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=46&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Equity compensation plan and security ownership information is incorporated by reference from the **2024** Proxy Statement - Information on security ownership and related stockholder matters is incorporated by reference from the **2024** Proxy Statement[294](index=294&type=chunk) Equity Compensation Plan Information (as of December 31, 2023) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | — | **$—** | **646,000** | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=46&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 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[295](index=295&type=chunk) [Item 14. Principal Accounting Fees and Services](index=46&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the Proxy Statement[296](index=296&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=47&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) Financial statements and exhibits are listed in their respective indices within this report - Financial statements and schedules are listed in the Index to Financial Statements[298](index=298&type=chunk) - Exhibits required by Item **15** are listed in the Index to Exhibits[299](index=299&type=chunk) SIGNATURES The report is signed by the CEO, CFO, and Board members, affirming their authorization and responsibility - The report is signed by the Chief Executive Officer, Chief Financial Officer and Treasurer, and members of the Board of Directors, duly authorized[302](index=302&type=chunk)[303](index=303&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) INDEX TO FINANCIAL STATEMENTS [Report of Independent Registered Public Accounting Firm (BDO USA, P.C.)](index=50&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, P.C. issued an unqualified opinion on **2023** and **2022** financial statements, identifying contingent consideration valuation as a critical audit matter - BDO USA, P.C. issued an unqualified opinion on the consolidated financial statements for **2023** and **2022**[309](index=309&type=chunk) - The valuation of contingent consideration liabilities was identified as a critical audit matter due to the complexity of the Monte Carlo simulation model and subjective estimates (revenue growth, volatility, discount rates)[314](index=314&type=chunk)[315](index=315&type=chunk) [Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP)](index=52&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(Deloitte%20%26%20Touche%20LLP)) Deloitte & Touche LLP issued an unqualified opinion on **2021** financial statements and served as the predecessor auditor - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for the two years ended December **31**, **2021**[319](index=319&type=chunk) - Deloitte & Touche LLP served as the company's auditor from **2015** and became the predecessor auditor in **2022**[323](index=323&type=chunk) [Consolidated Balance Sheets](index=53&type=section&id=Consolidated%20Balance%20Sheets) Westwood's total assets increased to **$155.2 million** in **2023**, liabilities decreased, and total equity rose to **$122.4 million** Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :---------------------------- | :----------- | :----------- | | **ASSETS** | | | | Cash and cash equivalents | **$20,422** | **$23,859** | | Investments, at fair value | **$32,674** | **$15,342** | | Goodwill | **$39,501** | **$35,732** | | Total assets | **$155,167** | **$146,427** | | **LIABILITIES** | | | | Contingent consideration | **$10,133** | **$12,901** | | Total liabilities | **$32,721** | **$35,779** | | **STOCKHOLDERS' EQUITY** | | | | Total Westwood Holdings Group, Inc. stockholders' equity | **$120,401** | **$110,648** | | Noncontrolling interest | **$2,045** | **$—** | | Total equity | **$122,446** | **$110,648** | - Total assets increased by **$8.7 million** (**5.9%**) from **2022** to **2023**, primarily due to an increase in investments at fair value and goodwill[326](index=326&type=chunk) - Total liabilities decreased by **$3.1 million** (**8.5%**) from **2022** to **2023**, mainly driven by a reduction in contingent consideration[326](index=326&type=chunk) - Total equity increased by **$11.8 million** (**10.7%**) from **2022** to **2023**, reflecting higher retained earnings and the inclusion of noncontrolling interest[326](index=326&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=54&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total revenues increased by **31%** in **2023**, leading to a net income of **$10.6 million**, a significant improvement Consolidated Statements of Comprehensive Income (Loss) Summary (in thousands, except per share data) | Metric | 2023 (in thousands, except per share data) | 2022 (in thousands, except per share data) | 2021 (in thousands, except per share data) | | :---------------------------- | :---------- | :---------- | :---------- | | Total revenues | **$89,781** | **$68,681** | **$73,054** | | Total expenses | **$83,776** | **$73,554** | **$67,095** | | Net operating income (loss) | **$6,005** | **$(4,873)** | **$5,959** | | Income (loss) before income taxes | **$13,443** | **$(5,195)** | **$14,003** | | Net income (loss) | **$10,571** | **$(4,628)** | **$9,763** | | Diluted EPS | **$1.17** | **$(0.59)** | **$1.23** | - Total revenues increased by **31%** in **2023**, while total expenses increased by **14%**[328](index=328&type=chunk) - Net income in **2023** was **$10.6 million**, a significant turnaround from a net loss of **$4.6 million** in **2022**[328](index=328&type=chunk) [Consolidated Statements of Stockholders' Equity](index=55&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total equity increased to **$122.4 million** in **2023**, driven by net income and stock-based compensation Consolidated Statements of Stockholders' Equity Summary (in thousands) | Account | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :---------------------------------------- | :----------- | :----------- | :----------- | | Total Westwood Holdings Group, Inc. stockholders' equity | **$120,401** | **$110,648** | **$117,906** | | Noncontrolling interest in consolidated subsidiary | **$2,045** | **$—** | **$—** | | Total equity | **$122,446** | **$110,648** | **$117,906** | - Total equity increased by **$11.8 million** in **2023**, driven by net income and stock-based compensation expense, partially offset by dividends and tax-related stock returns[330](index=330&type=chunk) - The acquisition of a noncontrolling interest added **$994 thousand** to equity in **2023**[330](index=330&type=chunk) [Consolidated Statements of Cash Flows](index=56&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow shifted to a **$1.2 million** use in **2023**, with investing providing **$4.1 million** and financing using **$6.4 million** Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Type | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------ | :---------- | :---------- | :---------- | | Net cash provided by (used in) operating activities | **$(1,185)** | **$51,490** | **$19,385** | | Net cash provided by (used in) investing activities | **$4,112** | **$(33,739)** | **$9,566** | | Net cash used in financing activities | **$(6,364)** | **$(9,103)** | **$(26,806)** | | Net increase (decrease) in cash and cash equivalents | **$(3,437)** | **$8,653** | **$2,190** | | Cash and cash equivalents, end of year | **$20,422** | **$23,859** | **$15,206** | - Operating cash flows shifted from a **$51.5 million** provision in **2022** to a **$1.2 million** use in **2023**, mainly due to net purchases of investments[248](index=248&type=chunk)[333](index=333&type=chunk) - Investing cash flows provided **$4.1 million** in **2023**, primarily from life insurance proceeds, while financing activities used **$6.4 million**, largely for cash dividends[249](index=249&type=chunk)[250](index=250&type=chunk)[333](index=333&type=chunk) [Notes to Consolidated Financial Statements](index=57&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The Notes provide detailed disclosures supporting the financial statements, covering business, policies, combinations, and more [Note 1. DESCRIPTION OF THE BUSINESS](index=57&type=section&id=Note%201.%20DESCRIPTION%20OF%20THE%20BUSINESS) Westwood manages investment assets and provides services, with revenue dependent on AUM, and completed Broadmark and Salient acquisitions - Westwood Holdings Group, Inc. manages investment assets and provides services through Westwood Management and Westwood Trust[335](index=335&type=chunk) - Revenue is largely dependent on the total value and composition of assets under management (AUM)[336](index=336&type=chunk) - In January **2023**, Westwood acquired an additional **32%** interest in Broadmark Asset Management LLC for **$1.2 million**, increasing its ownership to approximately **80%** and gaining a controlling interest[338](index=338&type=chunk) - On November **18**, **2022**, Westwood completed the acquisition of Salient Partners' asset management business, expanding into energy infrastructure, tactical absolute return, real estate, and private investments[339](index=339&type=chunk)[340](index=340&type=chunk) [Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=57&type=section&id=Note%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines Westwood's significant accounting policies, including consolidation, investments, revenue, and recent ASUs - Consolidated financial statements include Westwood and its subsidiaries, with intercompany accounts eliminated[342](index=342&type=chunk) - The company assesses each legal entity for consolidation as a Variable Interest Entity (VIE) or Voting Ownership Entity (VOE) based on controlling financial interest[343](index=343&type=chunk)[347](index=347&type=chunk) - Investments are classified as trading securities at fair market value, or at cost minus impairment for those without readily determinable fair value[354](index=354&type=chunk)[357](index=357&type=chunk) - Goodwill is tested at least annually for impairment at the reporting unit level (Advisory and Trust segments)[360](index=360&type=chunk)[361](index=361&type=chunk) - Revenue is recognized when performance obligations (investment management/advisory or trust services) are satisfied, typically over the calendar quarter[367](index=367&type=chunk) - Stock-based compensation expense is recognized over the service period for restricted stock awards, measured at grant date fair value[370](index=370&type=chunk) - Income taxes are accounted for under ASC **740**, requiring recognition of current and deferred tax assets/liabilities, with significant judgment in assessing valuation allowances and uncertain tax positions[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - Business combinations involve allocating purchase price to acquired assets and liabilities at fair value, with contingent consideration estimated using Monte Carlo simulation models[378](index=378&type=chunk)[380](index=380&type=chunk) - Recent accounting pronouncements, ASU **2023-07** (Segment Reporting) and ASU **2023-09** (Income Taxes), are expected to impact disclosures but not financial results[383](index=383&type=chunk)[386](index=386&type=chunk) [Note 3. BUSINESS COMBINATIONS](index=62&type=section&id=Note%203.%20BUSINESS%20COMBINATIONS) This note details the Broadmark and Salient acquisitions, including purchase price allocation, goodwill, and intangible assets - In January **2023**, Westwood acquired an additional **32%** interest in Broadmark for **$1.2 million** (net of cash acquired), increasing ownership to **80%** and requiring consolidation[387](index=387&type=chunk) Broadmark Acquisition Purchase Price Allocation (in thousands) | Category | Amount (in thousands) | | :-------------------------------------------- | :---------- | | Total consideration, net of cash acquired | **$1,168** | | Fair value of Westwood's investment in Broadmark before business combination | **$2,417** | | Fair value of noncontrolling interest in Broadmark | **$994** | | Total Identifiable Net Assets | **$382** | | Goodwill | **$4,197** | - Broadmark contributed **$4.4 million** in revenue and **$4.1 million** in net income to Westwood's consolidated statements for **2023**[392](index=392&type=chunk) - The Salient Acquisition, completed November **18**, **2022**, involved **$33.4 million** in cash and **$12.9 million** in estimated contingent consideration, totaling **$46.3 million**[395](index=395&type=chunk) Salient Acquisition Purchase Price Allocation (in thousands) | Category | Amount (in thousands) | | :-------------------------------------------- | :---------- | | Total consideration, net of cash acquired | **$46,320** | | Total Identifiable Net Assets | **$26,989** | | Goodwill | **$19,331** | - Salient Acquisition resulted in **$18.9 million** in identifiable intangible assets (client relationships, trade names, non-compete agreements) with weighted average amortization periods[400](index=400&type=chunk) [Note 4. REVENUE](index=65&type=section&id=Note%204.%20REVENUE) Westwood recognizes revenue from investment advisory and trust services, disaggregated by account type and geographical location - Revenue is recognized when the performance obligation for investment management, advisory, or trust services is satisfied[367](index=367&type=chunk)[408](index=408&type=chunk) - Advisory fees are typically calculated as a percentage of AUM/AUA, with performance-based fees recognized at the end of the measurement period[408](index=408&type=chunk)[411](index=411&type=chunk)[412](index=412&type=chunk) - Trust fees are generally based on a percentage of AUM, calculated quarterly in arrears[413](index=413&type=chunk) Revenue Disaggregated by Account Type (in thousands) | Account Type | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :---------------- | :---------- | :---------- | :---------- | | Institutional | **$37,738** | **$26,653** | **$31,069** | | Mutual Funds | **$29,745** | **$20,245** | **$17,507** | | Wealth Management | **$1,172** | **$805** | **$686** | | Trust Fees | **$20,592** | **$21,686** | **$24,131** | | Other | **$534** | **$(708)** | **$(339)** | | **Total revenues**| **$89,781** | **$68,681** | **$73,054** | Revenue Disaggregated by Geographical Location (in thousands) | Region | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :----- | :---------- | :---------- | :---------- | | U.S. | **$88,676** | **$67,510** | **$70,991** | | Canada | **$1,105** | **$1,171** | **$1,163** | | Europe | **$—** | **$—** | **$900** | | **Total** | **$89,781** | **$68,681** | **$73,054** | [Note 5. SEGMENT REPORTING](index=66&type=section&id=Note%205.%20SEGMENT%20REPORTING) Westwood operates two segments, Advisory and Trust, with performance evaluated by the CEO primarily on fee revenues - Westwood operates two reportable segments: Advisory and Trust, managed based on product/service types and client bases[417](index=417&type=chunk) - The Chief Executive Officer evaluates segment performance primarily on fee revenues[417](index=417&type=chunk) - The Advisory segment includes Westwood Management and Salient, providing investment advisory services[419](index=419&type=chunk) - The Trust segment comprises Westwood Trust, offering trust and custodial services[420](index=420&type=chunk)[422](index=422&type=chunk) Segment Financial Information (in thousands) | Metric (2023) | Advisory (in thousands) | Trust (in thousands) | Westwood Holdings (in thousands) | Eliminations (in thousands) | Consolidated (in thousands) | | :------------------------ | :---------- | :---------- | :---------------- | :----------- | :----------- | | Total revenues | **$75,460** | **$20,870** | **$—** | **$(6,549)** | **$89,781** | | Net income (loss) | **$14,636** | **$1,776** | **$(5,841)** | **$—** | **$10,571** | | Segment assets | **$285,179** | **$46,754** | **$14,256** | **$(191,022)** | **$155,167** | | Segment goodwill | **$23,100** | **$16,401** | **$—** | **$—** | **$39,501** | - All property and equipment were located in the United States as of December **31**, **2023** and **2022**[424](index=424&type=chunk) [Note 6. INVESTMENTS](index=67&type=section&id=Note%206.%20INVESTMENTS) Westwood's investments include strategic stakes, equity method investments, and trading securities at fair value - Strategic investments include InvestCloud (**$4.4 million**) and Vista (**$2.8 million**), measured at cost minus impairment[426](index=426&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) - The investment in Charis was exchanged for Vista shares on April **3**, **2023**[430](index=430&type=chunk) - Investments in Zarvona Energy Fund GP, L.P. and Zarvona Energy Fund II-A, L.P. are accounted for under the equity method[432](index=432&type=chunk) - Broadmark Asset Management LLC, previously an equity method investment, became a consolidated subsidiary in January **2023**[433](index=433&type=chunk) Investments Carried at Fair Value (in thousands) as of December 31, 2023 | Investment Type | Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Estimated Fair Value (in thousands) | | :------------------------ | :---------- | :--------------------- | :---------------------- | :------------------- | | U.S. Government securities| **$22,522** | **$14** | **$(75)** | **$22,461** | | Money market funds | **$5,367** | **$111** | **$—** | **$5,478** | | Equity funds | **$4,295** | **$195** | **$(260)** | **$4,230** | | Equities | **$381** | **$—** | **$(24)** | **$357** | | Exchange-traded bond funds| **$152** | **$—** | **$(4)** | **$148** | | Total trading securities | **$32,717** | **$320** | **$(363)** | **$32,674** | | Private investment fund | **$265** | **$7** | **$(31)** | **$241** | | **Total investments carried at fair value** | **$32,982** | **$327** | **$(394)** | **$32,915** | Equity Method Investments (in thousands) as of December 31, 2023 | Investment Type | Carrying value (in thousands) | Ownership | | :---------------------------- | :------------- | :-------- | | Zarvona Energy Fund GP, L.P. | **$3,565** | **50.0 %** | | Zarvona Energy Fund II-A, L.P.| **$700** | **0.5 %** | | Salient MLP Total Return Fund, L.P. | **$11** | — % | | Salient MLP Total Return TE Fund, L.P. | **$8** | **0.2 %** | | **Total** | **$4,284** | | [Note 7. FAIR VALUE MEASUREMENTS](index=69&type=section&id=Note%207.%20FAIR%20VALUE%20MEASUREMENTS) This note details fair value measurements, including Level **3** contingent consideration valued using Monte Carlo simulations - Fair value measurements are categorized into a three-tier hierarchy: Level **1** (quoted prices in active markets), Level **2** (observable inputs other than quoted prices), and Level **3** (unobservable inputs)[437](index=437&type=chunk) - Investments in InvestCloud and Vista are measured at cost minus impairment, not included in recurring fair value tables[437](index=437&type=chunk) Assets and Liabilities Measured at Fair Value (in thousands) as of December 31, 2023 | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | NAV (in thousands) | Total (in thousands) | | :-------------------------------------- | :---------- | :------ | :------ | :---- | :---------- | | Investments in trading securities | **$32,674** | **$—** | **$—** | **$—** | **$32,674** | | Private investment fund | **$—** | **$—** | **$—** | **$241** | **$241** | | **Total assets measured at fair value** | **$32,674** | **$—** | **$—** | **$241** | **$32,915** | | Salient Acquisition contingent consideration | **$—** | **$—** | **$10,133** | **$—** | **$10,133** | | **Total liabilities measured at fair value** | **$—** | **$—** | **$10,133** | **$—** | **$10,133** | - Contingent consideration liabilities (Level **3**) were valued at **$10.1 million** as of December **31**, **2023**, using Monte Carlo simulation models based on updated revenue growth projections and financial inputs[440](index=440&type=chunk) Range of Unobservable Inputs for Level 3 Contingent Consideration (December 31, 2023) | Earn-out | Unobservable Input | Low (%) | High (%) | Weighted Average Rate (%) | | :------------------------ | :----------------- | :---- | :---- | :-------------------- | | Revenue Retention earn-out| Discount rate | **11.5%** | **12.0%** | **11.75%** | | | Volatility | **8.3%** | **16.3%** | **11.30%** | | Growth earn-out | Discount rate | **12.8%** | **13.3%** | **13.00%** | | | Volatility | **14.9%** | **24.9%** | **19.90%** | [Note 8. EMPLOYEE BENEFITS](index=71&type=section&id=Note%208.%20EMPLOYEE%20BENEFITS) Westwood's employee benefits include restricted stock awards, mutual fund incentives, and a defined contribution plan - Westwood grants restricted stock to employees and non-employee directors under the Ninth Amended and Restated Stock Incentive Plan, with shares vesting based on service or performance conditions[444](index=444&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Type | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :-------------------------------- | :----- | :----- | :----- | | Service condition restricted stock expense | **$6,479** | **$5,729** | **$5,253** | | Performance-based restricted stock expense | **$39** | **$272** | **$581** | | **Total stock-based compensation expense** | **$6,518** | **$6,001** | **$5,834** | - As of December **31**, **2023**, there was approximately **$9.4 million** of unrecognized compensation cost for restricted stock, expected to be recognized over a weighted-average period of **2.4** years[447](index=447&type=chunk) - Mutual fund incentive awards are annual bonus awards based on mutual fund performance, vesting after approximately two years of service[454](index=454&type=chunk)[457](index=457&type=chunk) - The company offers a defined contribution and profit-sharing plan, including a **401(k)** match of up to **6%** of eligible compensation[458](index=458&type=chunk) [Note 9. INCOME TAXES](index=73&type=section&id=Note%209.%20INCOME%20TAXES) Westwood's **2023** income tax provision was **$2.9 million**, with an effective rate of **23.2%**, and net deferred tax assets of **$0.7 million** Income (Loss) Before Income Taxes by Jurisdiction (in thousands) | Jurisdiction | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :----------- | :---------- | :---------- | :---------- | | U.S. | **$12,419** | **$(5,112)** | **$13,989** | | Canada | **$(27)** | **$(83)** | **$14** | | **Total** | **$12,392** | **$(5,195)** | **$14,003** | Effective Income Tax Rate Reconciliation (in thousands) | Item | 2023 Amount (in thousands) | 2023 Rate (%) | 2022 Amount (in thousands) | 2022 Rate (%) | 2021 Amount (in thousands) | 2021 Rate (%) | | :---------------------------------------- | :---------- | :-------- | :---------- | :-------- | :---------- | :-------- | | Income tax provision computed at US federal statutory rate | **$2,603** | **21.0 %** | **$(1,091)** | **21.0 %** | **$2,935** | **21.0 %** | | State and local income taxes, net of federal income taxes | **$349** | **2.8** | **$128** | **(2.5)** | **$372** | **2.7** | | Stock-based compensation | **$452** | **3.6** | **$319** | **(6.1)** | **$859** | **6.1** | | Other, net | **$(532)** | **(4.2)** | **$(10)** | **0.2** | **$(106)** | **(0.8)** | | **Total income tax expense** | **$2,872** | **23.2 %** | **$(567)** | **10.9 %** | **$4,240** | **30.3 %** | | **Effective income tax rate** | | **23.2 %** | | **10.9 %** | | **30.3 %** | Net Deferred Tax Assets (in thousands) | Category | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------ | :----------- | :----------- | | Total deferred tax assets | **$5,004** | **$5,096** | | Total deferred tax liabilities | **$(4,278)** | **$(3,334)** | | **Net deferred tax assets** | **$726** | **$1,762** | - The company's **2020**, **2021**, and **2022** tax years are open for examination by the IRS, and the gross liability for uncertain tax positions was de minimis at December **31**, **2023**[467](index=467&type=chunk)[468](index=468&type=chunk) [Note 10. EARNINGS (LOSS) PER SHARE](index=75&type=section&id=Note%2010.%20EARNINGS%20(LOSS)%20PER%20SHARE) This note details basic and diluted EPS computation, with diluted EPS at **$1.17** in **2023**, reflecting profitability - Basic EPS is computed by dividing comprehensive income (loss) attributable to Westwood Holdings Group, Inc. by the weighted average number of shares outstanding[469](index=469&type=chunk) - Diluted EPS includes the effect of dilutive restricted stock using the treasury stock method[469](index=469&type=chunk) Earnings (Loss) Per Share (in thousands, except per share and share amounts) | Metric | 2023 (in thousands, except per share and share amounts) | 2022 (in thousands, except per share and share amounts) | 2021 (in thousands, except per share and share amounts) | | :------------------------------------------ | :---------- | :---------- | :---------- | | Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. | **$9,520** | **$(4,628)** | **$9,763** | | Weighted average shares outstanding – basic | **7,964,423** | **7,844,363** | **7,875,395** | | Dilutive potential shares from unvested restricted shares | **147,716** | — | **52,577** | | Weighted average shares outstanding – diluted | **8,112,139** | **7,844,363** | **7,927,972** | | **Earnings (loss) per share: Basic** | **$1.20** | **$(0.59)** | **$1.24** | | **Earnings (loss) per share: Diluted** | **$1.17** | **$(0.59)** | **$1.23** | [Note 11. GOODWILL AND OTHER INTANGIBLE ASSETS](index=76&type=section&id=Note%2011.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill increased to **$39.5 million** in **2023** due to the Broadmark Acquisition, with no impairment losses - Goodwill represents the excess of acquired asset cost over the fair value of assumed liabilities[472](index=472&type=chunk) Goodwill by Segment (in thousands) | Segment | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :------------ | :----------- | :----------- | :----------- | | Trust Segment | **$16,401** | **$16,401** | **$16,401** | | Advisory Segment | **$23,100** | **$19,331** | **$—** | | **Total** | **$39,501** | **$35,732** | **$16,401** | - Goodwill is tested at least annually for impairment; no impairment losses were recorded in **2021**, **2022**, or **2023**[472](index=472&type=chunk) Other Intangible Assets, Net (in thousands) as of December 31, 2023 | Intangible Asset | Weighted Average Amortization Period (years) | Gross Carrying Amount (in thousands) | Accumulated Amortization (in thousands) | Net Carrying Amount (in thousands) | | :-------------------------- | :------------------------------------------- | :-------------------- | :----------------------- | :------------------ | | Client relationships | **15.0** | **$34,397** | **$(12,906)** | **$21,491** | | Internally developed software | **5.8** | **$1,439** | **$(1,258)** | **$181** | | Trade name | **3.0** | **$3,800** | **$(1,372)** | **$2,428** | | Non-compete agreements | **3.0** | **$1,100** | **$(397)** | **$703** | | **Total** | | **$40,736** | **$(15,933)** | **$24,803** | - Amortization expense for intangible assets was **$4.1 million** in **2023**, **$1.9 million** in **2022**, and **$1.6 million** in **2021**[474](index=474&type=chunk) [Note 12. LEASES](index=77&type=section&id=Note%2012.%20LEASES) Westwood holds operating leases for offices and equipment, with total lease liabilities of **$4.6 million** at year-end **2023** - Westwood has operating leases for corporate offices (terms **1-6** years) and office equipment[476](index=476&type=chunk) - The Houston office lease was extended through September **2029** in **2022**, and new office space was leased in Chicago in **2023**[477](index=477&type=chunk) Lease Costs and Sublease Income (in thousands) | Item | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :-------------- | :----- | :----- | :----- | | Operating lease costs | **$1,512** | **$1,682** | **$1,655** | | Sublease income | **$862** | **$771** | **$602** | Operating Lease Information (in thousands, except years and rates) as of December 31, 2023 | Metric | Amount (in thousands) | | :-------------------------------------- | :---------- | | Operating lease right-of-use assets | **$3,673** | | Operating lease liabilities | **$1,286** | | Non-current lease liabilities | **$3,266** | | **Total lease liabilities** | **$4,552** | | Weighted-average remaining lease term (in years) | **3.3** | | Weighted-average discount rate | **5.7 %** | [Note 13. BALANCE SHEET COMPONENTS](index=78&type=section&id=Note%2013.%20BALANCE%20SHEET%20COMPONENTS) Net property and equipment totaled **$1.4 million** at December **31**, **2023**, including leasehold improvements and computer hardware Property and Equipment, Net (in thousands) | Category | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------------ | :----------- | :----------- | | Leasehold improvements | **$5,173** | **$4,921** | | Furniture and fixtures | **$2,792** | **$2,786** | | Computer hardware and office equipment | **$3,557** | **$3,317** | | Accumulated depreciation | **$(10,078)** | **$(9,196)** | | **Property and equipment, net** | **$1,444** | **$1,828** | [Note 14. COMMITMENTS AND CONTINGENCIES](index=79&type=section&id=Note%2014.%20COMMITMENTS%20AND%20CONTINGENCIES) Westwood's purchase commitments total **$14.6 million** for IT services, software, and research tools - Purchase commitments primarily consist of outsourced information technology services, software licenses, and financial research tools[482](index=482&type=chunk) Purchase Commitments (in thousands) as of December 31, 2023 | Period | Amount (in thousands) | | :--------------- | :----------- | | Total | **$14,637** | | Less than 1 year | **$6,519** | | 1-3 years | **$5,674** | | 4-5 years | **$2,444** | | Thereafter | **$—** | - No material off-balance sheet arrangements exist as of December **31**, **2023**[482](index=482&type=chunk) [Note 15. REGULATORY CAPITAL REQUIREMENTS](index=79&type=section&id=Note%2015.%20REGULATORY%20CAPITAL%20REQUIREMENTS) Westwood Trust exceeded its **$4.0 million** minimum restricted capital, and SCLP exceeded its net capital requirement - Westwood Trust must maintain a minimum restricted capital of **$4.0 million**, exceeding it by approximately **$11.1 million** at December **31**, **2023**[483](index=483&type=chunk) - Westwood Trust's dividend payments are limited by Texas law to undivided profits[484](index=484&type=chunk) - SCLP, a b

Financial Data and Key Metrics Changes - Total revenues for Q4 2023 were $23.2 million, up from $21.9 million in Q3 2023 and $20.5 million in Q4 2022, driven by higher average assets under management following acquisitions [32][33] - Comprehensive income for Q4 2023 was $2.6 million or $0.32 per share, compared to $3.4 million or $0.41 per share in Q3 2023, reflecting higher income taxes [34] - Economic earnings for Q4 2023 were $5.2 million or $0.63 per share, down from $6.3 million or $0.77 per share in Q3 2023, but improved from a loss of $0.7 million or $0.09 per share in Q4 2022 [35][36] Business Line Data and Key Metrics Changes - The wealth management division had strong client retention and its best year of new business in many years, with over $450 million of new and existing client assets [19][20] - The institutional channel experienced net quarterly outflows of $122 million, primarily due to client rebalancing in US value strategies [21] - The intermediary channel had net outflows of $168 million for the quarter, driven by outflows in tactical growth and income opportunity [25] Market Data and Key Metrics Changes - Firm-wide assets under management totaled $16.6 billion at quarter end, consisting of $15.5 billion in assets under management and $1.1 billion in assets under advisement [38] - Assets under management experienced net outflows of $1.3 billion but had market appreciation of $2 billion [40] - The fourth quarter showed a positive shift in investor sentiment, with many stocks posting new highs, indicating a potential change in market dynamics [15][29] Company Strategy and Development Direction - The company is focusing on diversifying its offerings with new initiatives such as Managed Investment Solutions and the Westwood Energy Secondaries Fund [8][10] - There is a strong emphasis on leveraging technology to enhance sales efforts and improve client engagement [43][46] - The company aims to capitalize on the growing interest in energy investments and has seen an increase in institutional inquiries for energy products [24][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2024, anticipating a healthy pipeline and a shift in investor attitudes that could lead to new asset flows [30][29] - The company is prepared to benefit from high-quality equity market rallies while protecting capital during uncertain times [16] - Management noted that the year-end rally provided solid proof of shifting investor sentiment, which could positively impact future performance [15][29] Other Important Information - The Board of Directors approved a regular cash dividend of $0.15 per common share, payable on April 3, 2024 [41] - The company reported a solid financial position with cash and short-term investments totaling $53.1 million and a debt-free balance sheet [40] Q&A Session Summary Question: Focus on marketing and flows post-Salient acquisition - Management highlighted the use of technology to enhance sales efforts and improve visibility into sales activities and flows [43][44][46] Question: Energy fund performance and asset designation - The energy fund will be available through institutional channels, mutual funds, and SMAs, with recent inquiries indicating renewed interest [47][48]

Investor Relations Presentation Westwood Holdings Group, Inc. High-Conviction Investing | Outcome-Oriented Solutions westwoodgroup.com Westwood Overview 2 Investing Where It Counts W Westwood | Delivering on Our Vision AUM1 | $15.5 B Employees3 | 143 Publicly Traded | NYSE: WHG Firm Overview Westwood is a focused investment management boutique and wealth management firm, offering a broad array of investment solutions to institutional investors and financial intermediaries | --- | --- | --- | |-------------- ...

Westwood Holdings Group, Inc. (NYSE:WHG) Q3 2023 Earnings Conference Call October 31, 2023 4:30 PM ET Company Participants Jill Meyer - SVP & Director, Fiduciary Services Brian Casey - CEO Terry Forbes - SVP, CFO & Treasurer Conference Call Participants Mac Sykes - GAMCO Investors Operator Good day, and thank you for standing by. Welcome to the 3Q 2023 Westwood Holdings Group, Inc., earnings conference call. [Operator Instructions]. Please be advised that today's conference is being recorded and would now l ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________________________ FORM 10-Q ____________________________________________________________________________________________________ ☒ 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 ...