Diamond Hill(DHIL) - 2024 Q2 - Quarterly Report

Revenue and Growth - Total revenue for the three months ended June 30, 2024, was $36.7 million, compared to $33.4 million for the same period in 2023, representing an increase of approximately 9.5%[36] - Revenue from investment advisory services for the six months ended June 30, 2024, was $69.2 million, up from $63.5 million in the same period of 2023, reflecting a growth of about 8.5%[37] - Total revenue for the three months ended June 30, 2024, increased by $3.3 million, or 10%, compared to the same period in 2023, primarily due to a 16% increase in average AUM and AUA[98] - Total revenue for the six months ended June 30, 2024, increased by $5.6 million, or 8%, compared to the same period in 2023, primarily due to a 13% increase in total average AUM and AUA[108] Assets Under Management (AUM) - Total Assets Under Management (AUM) increased to $29.291 billion as of June 30, 2024, representing a 12% increase from $26.066 billion in June 2023[84] - The average AUM during the three months ended June 30, 2024, was $29.206 billion, compared to $25.056 billion in the same period of 2023[91] - The Company’s AUM by product showed a 90% increase in Collective Investment Trusts, rising from $975 million in June 2023 to $1.857 billion in June 2024[84] - Fixed Income AUM increased by 69% to $4.873 billion, driven by significant inflows into the Short Duration Securitized Bond and Core Fixed Income strategies[89] - The Large Cap strategy AUM increased to $17.917 billion, a 6% rise from $16.834 billion in June 2023[88] - The Company noted a 106% increase in International Equity AUM, growing from $65 million to $134 million[87] Financial Performance - Net operating income for the three months ended June 30, 2024, was $12.1 million, a 56% increase from $7.8 million in the same period in 2023[97] - Net income attributable to common shareholders for the three months ended June 30, 2024, was $8.1 million ($2.93 per diluted share), down from $9.4 million ($3.18 per diluted share) in the same period in 2023[100] - The company reported a net operating income of $12,133,000 for the three months ended June 30, 2024, compared to $7,786,000 for the same period in 2023, marking an increase of approximately 56%[131] - Net income attributable to common shareholders for the six months ended June 30, 2024, was $21.1 million ($7.57 per diluted share), compared to $22.1 million ($7.39 per diluted share) in the same period in 2023[109] Expenses and Costs - Total operating expenses for the three months ended June 30, 2024, were $24,529,000, compared to $25,564,000 for the same period in 2023, reflecting a decrease of approximately 4%[131] - Total operating expenses for the six months ended June 30, 2024, were $52,521,000, compared to $48,613,000 for the same period in 2023, reflecting an increase of approximately 8%[132] - Employee compensation and related costs (excluding deferred compensation) increased by $2.7 million, or 8%, to $36.5 million for the six months ended June 30, 2024[113] - General and administrative expenses increased by $1.3 million, or 18%, to $8.4 million, driven by technology support and research management system improvements[115] Investment Performance - The Company reported realized gains of $631,300 for the three months ended June 30, 2024, compared to a loss of $12,598 for the same period in 2023[53] - The company experienced $0.7 million in investment losses for the three months ended June 30, 2024, compared to $6.3 million in investment income for the same period in 2023[100] - The Company recorded a net investment income loss of $(654,591) for the three months ended June 30, 2024, compared to a gain of $6,276,708 for the same period in 2023[53] Shareholder Returns - The Company approved a quarterly cash dividend of $1.50 per share, expected to reduce shareholders' equity by approximately $4.1 million[75] - The company expects to pay a regular quarterly dividend of $1.50 per share, totaling $8.4 million for the first two quarters of 2024[120] - The company repurchased 120,049 common shares for a total of $18.4 million during the six months ended June 30, 2024[119] Tax and Regulatory Matters - The effective income tax rate for the six months ended June 30, 2024, was 27.5%, compared to 26.6% for the same period in 2023[68] - The effective tax rate for the three months ended June 30, 2024, was 29.2%, consistent with the same rate for the three months ended June 30, 2023[134] - The Company did not recognize any interest and penalties related to tax uncertainties during the six months ended June 30, 2024[70] Cash Flow and Liquidity - Net cash provided by operating activities was $6.9 million for the six months ended June 30, 2024, primarily driven by net income of $21.1 million[124] - Cash and cash equivalents, investments, and accounts receivable totaled $164.2 million as of June 30, 2024, compared to $181.8 million as of December 31, 2023[117] - The Company did not borrow under its $25 million line of credit during the six months ended June 30, 2024, and had no outstanding borrowings as of that date[57] Accounting and Estimates - The Company has maintained its critical accounting estimates with no material changes during the quarter ended June 30, 2024[136] - The Company recognizes revenue when performance obligations are satisfied under client contracts, with investment advisory fees recorded as services are performed[35]