Westwood(WHG) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Financial statements for June 30, 2025, show total assets at $146.3 million, Q2 2025 net income of $1.0 million, and operating cash flow of $2.4 million for the first six months Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $15,403 | $18,847 | | Total assets | $146,279 | $149,989 | | Total liabilities | $23,921 | $27,657 | | Total stockholders' equity | $122,358 | $122,332 | - Total assets decreased slightly from $150.0 million at year-end 2024 to $146.3 million as of June 30, 2025, driven by a decrease in cash and investments[9] - Total liabilities decreased to $23.9 million from $27.7 million, primarily due to the settlement of contingent consideration and a reduction in compensation and benefits payable[9] Condensed Consolidated Statements of Operations Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $23,120 | $22,688 | $46,372 | $45,420 | | Net Operating Income (Loss) | $868 | $(4,178) | $800 | $(1,237) | | Net Income (Loss) | $1,031 | $(2,213) | $1,508 | $(47) | | Diluted EPS | $0.12 | $(0.27) | $0.17 | $0.01 | - The company returned to profitability in Q2 2025 with a net income of $1.0 million, compared to a net loss of $2.2 million in Q2 2024. This improvement was largely due to the absence of a $4.8 million loss from the change in fair value of contingent consideration recorded in the prior-year period[12] Condensed Consolidated Statements of Stockholders' Equity - For the six months ended June 30, 2025, total equity remained stable at $122.4 million. Key changes included net income of $1.5 million, offset by dividends declared of $2.8 million and the cost of restricted stock returned for tax payments of $1.3 million[14] Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,403 | $11,685 | | Net cash used in investing activities | $(1,455) | $(1,524) | | Net cash used in financing activities | $(4,392) | $(6,813) | | Net change in cash and cash equivalents | $(3,444) | $3,348 | - Net cash from operating activities decreased significantly to $2.4 million in the first half of 2025 from $11.7 million in the prior year, mainly due to payments for contingent consideration ($4.4 million) and a larger decrease in compensation payable[16] Notes to Condensed Consolidated Financial Statements Revenue by Account Type (Six Months Ended June 30, in thousands) | Account Type | 2025 | 2024 | | :--- | :--- | :--- | | Institutional | $20,880 | $19,189 | | Mutual Funds | $13,576 | $13,767 | | Wealth Management | $1,230 | $1,000 | | Trust Fees | $10,498 | $10,340 | | Other, net | $188 | $1,124 | | Total revenues | $46,372 | $45,420 | - The company operates two segments: Advisory and Trust. For the three months ended June 30, 2025, the Advisory segment generated $18.0 million in external revenues, while the Trust segment generated $5.1 million[37][42] - Goodwill remained unchanged at $39.5 million as of June 30, 2025, with $23.1 million allocated to the Advisory segment and $16.4 million to the Trust segment. No impairment was recorded[58][59] - On August 8, 2025, the Board of Directors declared a quarterly cash dividend of $0.15 per share[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 10% YoY AUM increase to $17.3 billion, Q2 2025 revenue growth, and a solid liquidity position of $33.1 million Assets Under Management (AUM) by Category (in millions) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Institutional | $9,241 | $7,649 | 21% | | Wealth Management | $4,176 | $4,184 | 0% | | Mutual Funds | $3,924 | $3,943 | 0% | | Total AUM | $17,341 | $15,776 | 10% | - For the six months ended June 30, 2025, total AUM increased by $0.7 billion, resulting from $0.4 billion in net inflows and $0.3 billion in market appreciation. Net inflows were primarily driven by the SmallCap Value strategy[96] Non-GAAP Economic Earnings Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Attributable to WHG | $1,019 | $(2,243) | $1,497 | $53 | | Adjustments (Stock comp, amortization, etc.) | $1,773 | $2,085 | $3,809 | $2,451 | | Economic Earnings (Loss) | $2,792 | $(508) | $5,306 | $2,504 | - The company's liquidity position as of June 30, 2025, included cash and liquid investments of $33.1 million, down from $44.6 million at the end of 2024[112] Quantitative and Qualitative Disclosures About Market Risk No significant changes in quantitative and qualitative market risk disclosures were reported since the prior annual report - There have been no significant changes in market risk disclosures since the last annual report (Form 10-K for the year ended December 31, 2024)[121] Controls and Procedures Management confirmed effective disclosure controls and procedures with no material changes to internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[122] - There were no changes in internal controls over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, these controls[123] PART II OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - The company reports that there are no legal proceedings[124] Risk Factors No material changes to previously disclosed risk factors were reported since the last annual report - There have been no material changes to the risk factors previously disclosed in the company's Form 10-K[126] Unregistered Sales of Equity Securities and Use of Proceeds No common stock repurchases were made during the three months ended June 30, 2025, under the existing program - The company did not repurchase any of its common stock during the three months ended June 30, 2025[127] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and iXBRL financial data - Exhibits filed with the report include an office lease modification, CEO/CFO certifications (Rule 13a-14(a) and Section 906), and financial statements in iXBRL format[132]