Westwood(WHG) - 2025 Q1 - Quarterly Results

Westwood Holdings Group, Inc. First Quarter 2025 Earnings Release Financial & Operational Highlights The firm reported strong Q1 2025 sales, including a major institutional mandate, and expanded its ETF platform - Firmwide assets under management and advisement totaled $18.0 billion as of Q1 2025, comprising $17.0 billion in AUM and $1.0 billion in AUA[3] - Strategic and operational achievements in Q1 2025 include a significant sub-advisory mandate of nearly $1 billion in the Institutional channel, the best Intermediary channel sales quarter since 2022, and the launch of a new global equity ETF[1][2] Key Financial Metrics | Financial Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenues | $23.3M | $25.6M | $22.7M | | Net Income | $0.5M | $2.1M | $2.3M | | Diluted EPS | $0.05 | $0.24 | $0.27 | | Non-GAAP Economic Earnings | $2.5M | $3.4M | $3.0M | | Non-GAAP Economic EPS | $0.29 | $0.39 | $0.36 | - The company declared a cash dividend of $0.15 per common share, payable on July 1, 2025[4] - As of March 31, 2025, the company held $26.9 million in cash and liquid investments with no debt, and stockholders' equity totaled $119.3 million[4] Condensed Consolidated Statements of Operations Q1 2025 revenues grew year-over-year but fell sequentially due to a lack of performance-based fees Statement of Operations Highlights (in thousands) | (in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Total Revenues | $23,252 | $25,582 | $22,732 | | Asset-based Fees | $17,731 | $18,025 | $16,817 | | Performance-based Fees | $0 | $1,875 | $0 | | Trust Fees | $5,429 | $6,117 | $5,113 | | Total Expenses | $23,320 | $23,021 | $19,791 | | Employee Compensation | $14,501 | $14,090 | $14,711 | | (Gain) on Contingent Consideration | $0 | $1,199 | $(2,949) | | Net Income | $477 | $2,099 | $2,166 | | Diluted EPS | $0.05 | $0.24 | $0.27 | - Revenues decreased quarter-over-quarter primarily due to zero performance-based fees in Q1 2025, compared to $1.9 million in such fees in Q4 2024[14] - The significant variance in net income compared to Q1 2024 is largely attributable to a $2.9 million non-cash gain from contingent consideration recorded in the prior-year period[14] Condensed Consolidated Balance Sheets Total assets and liabilities decreased significantly due to contingent consideration and compensation payments Balance Sheet Highlights (in thousands) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $134,988 | $149,989 | | Cash and cash equivalents | $9,418 | $18,847 | | Investments, at fair value | $19,696 | $27,694 | | Total Liabilities | $13,602 | $27,657 | | Compensation and benefits payable | $2,416 | $10,924 | | Contingent consideration | $0 | $4,657 | | Total Equity | $121,386 | $122,332 | - Cash and cash equivalents decreased by $9.4 million during the quarter, from $18.8 million to $9.4 million[15] - A significant reduction in liabilities was driven by the full payment of contingent consideration ($4.7 million) and a decrease in compensation and benefits payable[15] Condensed Consolidated Statements of Cash Flows The company experienced a net cash outflow driven by operating activities, primarily compensation payments Statement of Cash Flows Highlights (in thousands) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4,900) | $8,133 | | Net cash used in investing activities | $(1,418) | $(3) | | Net cash used in financing activities | $(3,111) | $(2,664) | | Net Change in Cash | $(9,429) | $5,466 | | Cash, end of period | $9,418 | $25,888 | - The significant cash outflow from operating activities was driven by an $8.5 million payment for compensation and benefits and a $4.4 million payment for contingent consideration[16] - Cash used in financing activities included $1.6 million for cash dividends and $1.3 million for restricted stock returned for tax payments[16] Reconciliation of GAAP to Non-GAAP Measures Non-GAAP Economic Earnings are reconciled from GAAP Net Income by adjusting for non-cash and tax-related items - Economic Earnings are defined as GAAP net income adjusted for non-cash equity-based compensation, amortization of intangible assets, and related deferred taxes[17][18] Reconciliation of GAAP Net Income to Economic Earnings (in thousands) | Reconciliation (in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | GAAP Net Income | $478 | $2,056 | $2,296 | | Stock-based compensation | $1,327 | $1,216 | $1,515 | | Intangible amortization | $1,045 | $1,063 | $1,042 | | Other tax adjustments | $(336) | $(958) | $(1,841) | | Economic Earnings | $2,514 | $3,377 | $3,012 | | Economic EPS | $0.29 | $0.39 | $0.36 |