Diamond Hill(US:DHIL)2025-10-30 12:17Revenue Performance - For the three months ended September 30, 2025, total revenue was $37.4 million, an increase from $39.0 million for the same period in 2024, reflecting a decrease of approximately 4.2%[44] - For the nine months ended September 30, 2025, total revenue was $110.5 million, compared to $112.0 million for the same period in 2024, indicating a decline of about 1.3%[44] - Revenue from Proprietary Funds for the three months ended September 30, 2025, was $26.6 million, up from $25.4 million in 2024, representing an increase of approximately 4.8%[44] Accounts Receivable and Investments - As of September 30, 2025, accounts receivable from Proprietary Funds amounted to $10.5 million, slightly up from $10.3 million as of December 31, 2024[35] - The total investments as of September 30, 2025, amounted to $174,691,493, an increase from $159,752,981 as of December 31, 2024, reflecting a growth of 9.5%[58] - As of September 30, 2025, the Company held $30,909,036 in fair value investments within consolidated funds, down from $35,583,162 as of December 31, 2024, a decrease of 13.5%[58] Financial Position - The Company had $1.0 million in demand deposits and $42.0 million in money market mutual funds as of September 30, 2025, compared to $1.3 million and $40.3 million, respectively, as of December 31, 2024[34] - The Company has a committed Line of Credit Agreement allowing for borrowings up to $25 million, with no borrowings outstanding as of September 30, 2025[67][68] - The Company’s maximum risk of loss related to its investment in DHMF is limited to the carrying value of $23.7 million as of September 30, 2025[62] Revenue Sources and Advisory Fees - The Company operates in a single business segment, providing investment advisory and fund administration services, with no single client accounting for more than 10% of total revenue[33][31] - Investment advisory fees are primarily based on assets under management (AUM), which fluctuate with market conditions, impacting revenue recognition[46][45] - DHCM's investment advisory contracts have a single performance obligation, with fees based on AUM, which are variable and subject to market fluctuations[45][46] Fund Administration Revenue - For the three months ended September 30, 2025, gross fund administration revenue was $7,149,254, compared to $6,402,818 for the same period in 2024, representing an increase of 11.7%[50] - Net fund administration revenue for the nine months ended September 30, 2025, was $5,545,295, slightly down from $5,551,702 in 2024, indicating a decrease of 0.1%[50] Income and Earnings - The Company reported net investment income of $8,493,730 for the three months ended September 30, 2025, compared to $9,668,961 for the same period in 2024, showing a decrease of 12.1%[60] - The Company's equity method investments had a net income of $15,630,429 for the three months ended September 30, 2025, with DHCM's portion being $6,272,816[62] - Basic earnings per share for the three months ended September 30, 2025, was $4.99, compared to $5.35 for the same period in 2024, reflecting a decrease of 6.7%[86] Shareholder Equity and Dividends - The Company approved a regular quarterly cash dividend of $1.50 per common share and a special dividend of $4.00 per share, expected to reduce shareholders' equity by approximately $14.9 million[89][90] - As of September 30, 2025, the outstanding restricted shares increased to 275,933 from 173,120 as of December 31, 2024, reflecting a growth of 59.5%[73] - Total deferred equity compensation related to unvested restricted shares was $32.8 million as of September 30, 2025, with a recognition of compensation expense over the remaining vesting periods totaling $32.76 million[73] Tax and Compensation - The effective income tax rate for the nine months ended September 30, 2025, was 26.7%, slightly down from 27.0% in the same period of 2024[81] - The Company anticipates that the recently enacted OBBB Act will not significantly affect its projected annual effective tax rate for 2025[53] - The Company’s deferred compensation liability increased to $40.5 million as of September 30, 2025, up from $39.1 million as of December 31, 2024[76] Lease Liabilities and Expenses - Total lease liability as of September 30, 2025, was approximately $6.5 million, with a present value of operating lease liability of $6.5 million[80][77] - The Company recorded total lease and operating expenses of $743,489 for the nine months ended September 30, 2025, compared to $682,755 for the same period in 2024, representing an increase of 8.9%[80] - The weighted average discount rate applied to the Company's lease liability was 6.5% as of September 30, 2025[79]