Westwood(US:WHG)2022-10-26 21:30Assets Under Management (AUM) - Assets Under Management (AUM) decreased by $2.3 billion to $11.5 billion as of September 30, 2022, compared to $13.8 billion a year earlier, representing a 17% decline[92] - The average AUM for Q3 2022 was $11.8 billion, down from $14.1 billion in Q3 2021[92] - For the nine months ended September 30, 2022, AUM decreased by $3.0 billion, attributed to market depreciation of $2.6 billion and net outflows of $0.5 billion[97] - The total AUM for Wealth Management decreased by 17% to $3.5 billion as of September 30, 2022, from $4.2 billion a year earlier[92] Revenue and Financial Performance - Total revenues decreased by $2.5 million, or 14%, to $15.4 million for the three months ended September 30, 2022, compared to $17.9 million for the same period in 2021[101] - Asset-based advisory fees decreased by $1.5 million, or 13%, and trust fees decreased by $0.8 million, or 13%, primarily due to lower average AUM[101] - The company’s revenues are primarily derived from investment advisory fees, which are calculated based on a percentage of AUM[79] - The company experienced a significant concentration of revenues from a small number of customers, which poses a risk to its financial stability[74] - Net income for the three months ended September 30, 2022, was a loss of $1.175 million, compared to a net income of $1.879 million for the same period in 2021, representing a 163% decrease[112] - Economic Earnings for the three months ended September 30, 2022, were $800,000, a decrease of 78% from $3.706 million for the same period in 2021[112] Expenses - Employee compensation and benefits decreased by $0.8 million to $9.5 million compared to $10.3 million for 2021, attributed to lower commissions and incentive compensation[102] - Professional services expenses increased by $1.0 million, or 129%, to $1.7 million compared to $0.7 million for 2021, primarily due to expenses related to the pending acquisition of Salient[102] Acquisition - The company announced the acquisition of Salient's asset management business for an upfront payment of $35 million, with potential deferred payments of up to $25 million based on revenue retention and growth targets[77] - The announced acquisition of Salient's asset management business will require an upfront cash payment of $35.0 million upon closing, with deferred payments of up to $25.0 million based on revenue retention and growth targets[114] Cash Flow and Investments - Cash flow provided by operating activities was $15.3 million for the nine months ended September 30, 2022, compared to $21.1 million for the same period in 2021[116] - Cash and short-term investments totaled $74.0 million as of September 30, 2022, down from $80.2 million as of December 31, 2021[119] - The company had no debt as of September 30, 2022, and working capital was $74.6 million[115] Contractual Obligations and Accounting Policies - As of September 30, 2022, there have been no material changes to the company's contractual obligations since December 31, 2021[122] - There have been no significant changes in the company's critical accounting policies and estimates since December 31, 2021[123] - The company refers to recently issued accounting guidance in its Condensed Consolidated Financial Statements[124] - There have been no significant changes in the company's disclosures about market risk since the Annual Report for the year ended December 31, 2021[125] Client Flows - Net client flows for the three months ended September 30, 2022, resulted in outflows of $0.2 billion, primarily from the LargeCap Value strategy[95] - The company reported a market depreciation of $0.4 billion for the three months ended September 30, 2022[95] - Trust fees are generally based on a percentage of AUM and are negotiated separately with each client, contributing to overall revenue[80]