Diamond Hill(DHIL) - 2025 Q2 - Quarterly Report

Revenue Performance - Total revenue for the three months ended June 30, 2025, was $36,025,931, a decrease of 1.7% compared to $36,661,333 for the same period in 2024[46] - Investment advisory revenue for the six months ended June 30, 2025, was $69,376,677, an increase of 3.0% from $69,192,918 in the same period in 2024[46] - The Company recorded $50,626,206 in total revenue from Proprietary Funds for the six months ended June 30, 2025, compared to $48,417,903 for the same period in 2024, reflecting a growth of 4.5%[46] - Fund administration gross revenue for Q2 2025 was $6,665,238, up from $5,930,195 in Q2 2024, representing a growth of 12.4%[52] - Net fund administration revenue for the first half of 2025 was $3,765,464, slightly up from $3,763,345 in the same period of 2024[52] Financial Position - As of June 30, 2025, accounts receivable from Proprietary Funds were $10.1 million, slightly down from $10.3 million as of December 31, 2024[37] - Cash and cash equivalents as of June 30, 2025, included $11.3 million in demand deposits and $37.7 million in money market mutual funds[36] - Total investments as of June 30, 2025, amounted to $173,497,273, an increase from $159,752,981 as of December 31, 2024, reflecting a growth of 8.6%[61] - The Company has a committed Line of Credit Agreement allowing borrowing up to $25 million, with no borrowings outstanding as of June 30, 2025[71][72] - The carrying value of the right-of-use asset related to the operating lease was approximately $3.6 million, with a lease liability of approximately $6.6 million as of June 30, 2025[80] Investment Performance - DHCM's investment advisory fees are based on assets under management (AUM), which are subject to market fluctuations[48] - The Company reported net investment income of $14,554,685 for Q2 2025, compared to a loss of $654,591 in Q2 2024[63] - The Company’s equity method investments generated a net income of $26,135,916 for Q2 2025, with DHCM's portion being $11,803,043[65] - The Company’s maximum risk of loss related to its investment in DHMF is limited to the carrying value of $23 million as of June 30, 2025[65] - The Company’s fair value investments include $62,035,855 in securities held in Consolidated Funds as of June 30, 2025[69] Shareholder Equity and Compensation - The Company began recording share repurchases as a reduction to retained earnings effective January 1, 2024[23] - As of June 30, 2025, the outstanding restricted shares increased to 268,761, up from 173,120 as of December 31, 2024, reflecting a growth of 55.4%[76] - Total deferred equity compensation related to unvested restricted shares was $33.7 million as of June 30, 2025, with a recognition of compensation expense over the remaining vesting periods totaling $33.7 million[76] - The Company’s deferred compensation liability was $38.5 million as of June 30, 2025, a slight decrease from $39.1 million as of December 31, 2024[79] - The Company maintains a 2025 Equity and Cash Incentive Plan authorizing the issuance of 225,000 DHIL common shares, with 184,222 shares available for grants as of June 30, 2025[73] Tax and Regulatory Matters - The effective income tax rate for the six months ended June 30, 2025, was 27.3%, slightly down from 27.5% in 2024[84] - The Company’s deferred tax assets and liabilities are adjusted for changes in tax laws, with no significant impact anticipated from the recently enacted OBBB Act[56] Earnings and Dividends - Basic earnings per share for the three months ended June 30, 2025, was $5.73, compared to $2.93 for the same period in 2024, representing an increase of 95.5%[89] - The Company declared a quarterly cash dividend of $1.50 per share on July 29, 2025, expected to reduce shareholders' equity by approximately $4.1 million[92] Lease Obligations - Total undiscounted operating lease payments amounted to $8.99 million, with a present value of operating lease liability at $6.58 million as of June 30, 2025[83] - The weighted average discount rate applied to the Company's lease liability was 6.5% as of June 30, 2025[82]