Attached files
| file | filename |
|---|---|
| 8-K - WESTWOOD HOLDINGS GROUP, INC. 8-K - WESTWOOD HOLDINGS GROUP INC | a6691785.htm |
Exhibit 99.1
Westwood Holdings Group, Inc. Reports First Quarter 2011 Results; Assets Under Management Increase 25% Year-over-year to Record $13.3 Billion; Mutual Fund Assets Increase 83% Year-over-year to Record $1.2 Billion
DALLAS--(BUSINESS WIRE)--April 20, 2011--Westwood Holdings Group, Inc. (NYSE: WHG) today reported 2011 first quarter revenues of $17.0 million, net income of $3.5 million and earnings per diluted share of $0.50. This compares to revenues of $13.2 million, net income of $2.9 million and earnings per diluted share of $0.40 in the first quarter of 2010. Economic Earnings were $6.1 million compared to $4.9 million for the first quarter of 2010. Economic Earnings per share (“Economic EPS”) were $0.85 per diluted share compared to $0.74 per diluted share for the first quarter of 2010. (Economic Earnings and Economic EPS are non-GAAP performance measures and are explained and reconciled with the most comparable GAAP numbers in the attached tables.)
Assets under management were $13.3 billion as of March 31, 2011, an increase of 25% compared to $10.6 billion as of March 31, 2010. The increase was primarily due to market appreciation of assets under management, the acquisition of McCarthy Group Advisors in November 2010 and asset inflows from new and existing clients, partially offset by the withdrawal of assets by certain clients. Mutual fund assets were $1.2 billion as of March 31, 2011, an increase of 83% compared to assets of $652 million as of March 31, 2010.
Brian Casey, Westwood’s President & CEO, commented, “We continued to capitalize on the momentum in our business this quarter as assets under management reached another record level. Our investment teams produced performance above the median of the respective peer group across most products and the WHG Funds surpassed $1 billion in assets with continued strong organic growth. We added our sixth and seventh funds to the WHG Funds family with the reorganization of the McCarthy Multi-Cap Stock Fund into the WHG Dividend Growth Fund (WHGDX) and the launch of the WHG SMidCap Plus Fund (WHGPX). We are also pleased that our fellow shareholders today approved an increase in the shares available for our stock incentive plan. We believe this validates the appeal of our shared ownership model; the additional shares will enable us to continue to align the incentives of our employee owners with other shareholders and our clients.”
Westwood’s Board of Directors declared a quarterly cash dividend of $0.35 per common share payable on July 1, 2011 to stockholders of record on June 15, 2011.
Total expenses for the first quarter were $11.4 million compared with $8.7 million for the first quarter of 2010. Economic Expenses were $8.9 million compared with $6.7 million for the first quarter of 2010. (An explanation and reconciliation of Economic Expenses to total expenses is included in the attached tables.)
Westwood will host a conference call to discuss first quarter 2011 results and other business updates at 4:30 p.m. Eastern time today. To join the conference call, dial 866-337-6663 (domestic) or 904-520-5771 (international). The conference call can also be accessed at www.westwoodgroup.com under the Investor Relations tab and will be available for replay through April 27 by dialing 888-284-7564 (domestic) or 904-596-3174 (international) and entering passcode 2591351.
About Westwood
Westwood Holdings Group, Inc. manages investment assets and provides services for its clients through two subsidiaries, Westwood Management Corp. and Westwood Trust. Westwood Management Corp. is a registered investment advisor and provides investment advisory services to corporate pension funds, public retirement plans, endowments, foundations, the WHG Funds, other mutual funds, individuals and clients of Westwood Trust. Westwood Trust provides trust services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Holdings Group, Inc. trades on the New York Stock Exchange under the symbol “WHG.”
For more information on Westwood, please visit www.westwoodgroup.com.
For more information on the WHG Funds, please visit www.whgfunds.com.
Note on Forward-looking Statements
Statements in this press release that are not purely historical facts, including statements about our expected future financial position, results of operations or cash flows, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “could,” “goal,” “target,” “designed,” “on track,” “comfortable with,” “optimistic” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation: our ability to identify and successfully market services that appeal to our customers; the significant concentration of our revenues in four of our customers; our relationships with investment consulting firms; our relationships with current and potential customers; our ability to retain qualified personnel; our ability to successfully develop and market new asset classes; our ability to maintain our fee structure in light of competitive fee pressures; competition in the marketplace; downturns in the financial markets; new legislation adversely affecting the financial services industries; interest rates; changes in our effective tax rate; our ability to maintain an effective system of internal controls; and the other risks detailed from time to time in Westwood’s SEC filings, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2010 and its quarterly report on Form 10-Q for the quarter ended March 31, 2011. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, Westwood is not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
| WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||
| (in thousands, except per share data) | ||||||
| (unaudited) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2011 | 2010 | |||||
| REVENUES: | ||||||
| Advisory fees | ||||||
| Asset-based | $ | 13,324 | $ | 10,080 | ||
| Trust fees | 3,357 | 3,009 | ||||
| Other revenues, net | 328 | 127 | ||||
| Total revenues | 17,009 | 13,216 | ||||
| EXPENSES: | ||||||
| Employee compensation and benefits | 8,655 | 6,796 | ||||
| Sales and marketing | 198 | 133 | ||||
| WHG mutual funds | 256 | 143 | ||||
| Information technology | 458 | 327 | ||||
| Professional services | 935 | 572 | ||||
| General and administrative | 888 | 692 | ||||
| Total expenses | 11,390 | 8,663 | ||||
| Income before income taxes | 5,619 | 4,553 | ||||
| Provision for income taxes | 2,070 | 1,620 | ||||
| Net income | $ | 3,549 | $ | 2,933 | ||
| Earnings per share: | ||||||
| Basic | $ | 0.51 | $ | 0.40 | ||
| Diluted | $ | 0.50 | $ | 0.40 | ||
| Dividends declared per share | $ | 0.35 | $ | 0.33 | ||
| WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| As of March 31, 2011 and December 31, 2010 | ||||||||
| (in thousands, except par value and share amounts) | ||||||||
| March 31, 2011 | December 31, | |||||||
| (unaudited) | 2010 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 4,651 | $ | 1,744 | ||||
| Accounts receivable | 8,699 | 7,348 | ||||||
| Investments, at fair value | 39,243 | 43,300 | ||||||
| Deferred income taxes | 1,654 | 2,757 | ||||||
| Other current assets | 1,014 | 733 | ||||||
| Total current assets | 55,261 | 55,882 | ||||||
| Goodwill | 11,281 | 11,281 | ||||||
| Intangible assets, net | 4,994 | 5,119 | ||||||
| Property and equipment, net of accumulated depreciation of $1,621 and $1,542 | 485 | 346 | ||||||
| Total assets | $ | 72,021 | $ | 72,628 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 1,307 | $ | 1,290 | ||||
| Dividends payable | 2,651 | - | ||||||
| Compensation and benefits payable | 3,373 | 9,369 | ||||||
| Income taxes payable | 1 | 173 | ||||||
| Deferred acquisition liability | 941 | 899 | ||||||
| Other current liabilities | 13 | 13 | ||||||
| Total current liabilities | 8,286 | 11,744 | ||||||
| Deferred income taxes | 1,064 | 117 | ||||||
| Dividends payable | 74 | - | ||||||
| Deferred rent | 134 | 90 | ||||||
| Total long-term liabilities | 1,272 | 207 | ||||||
| Total liabilities | 9,558 | 11,951 | ||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $0.01 par value, authorized 25,000,000 shares, issued 8,085,918 and outstanding 7,786,443 shares at March 31, 2011; issued 7,874,873 and outstanding 7,645,678 shares at December 31, 2010 |
81 |
79 |
||||||
| Additional paid-in capital | 68,659 | 65,639 | ||||||
| Treasury stock, at cost – 299,475 shares at March 31, 2011; 229,195 shares at December 31, 2010 |
(11,346 |
) |
(8,749 |
) |
||||
| Accumulated other comprehensive income | 1,462 | 926 | ||||||
| Retained earnings | 3,607 | 2,782 | ||||||
| Total stockholders’ equity | 62,463 | 60,677 | ||||||
| Total liabilities and stockholders’ equity | $ | 72,021 | $ | 72,628 | ||||
| WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| For the three months | ||||||||
| ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 3,549 | $ | 2,933 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 67 | 78 | ||||||
| Amortization of intangible assets | 125 | 26 | ||||||
| Fair value adjustment of deferred acquisition liabilities | 42 | 46 | ||||||
| Unrealized gains on trading investments | (227 | ) | (84 | ) | ||||
| Restricted stock amortization | 2,383 | 1,891 | ||||||
| Deferred income taxes | 1,761 | 1,045 | ||||||
| Excess tax benefits from stock based compensation | (548 | ) | (643 | ) | ||||
| Net sales of investments – trading securities | 5,109 | 982 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,351 | ) | 144 | |||||
| Other current assets | (281 | ) | (273 | ) | ||||
| Accounts payable and accrued liabilities | 17 | 96 | ||||||
| Compensation and benefits payable | (5,996 | ) | (3,554 | ) | ||||
| Income taxes payable and prepaid income taxes | 447 | 33 | ||||||
| Other liabilities | 71 | (17 | ) | |||||
| Net cash provided by operating activities | 5,168 | 2,703 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of available for sale investments | - | (10,196 | ) | |||||
| Sales of available for sale investments | - | 11,516 | ||||||
| Purchase of property and equipment | (233 | ) | (16 | ) | ||||
| Net cash (used in)/provided by investing activities | (233 | ) | 1,304 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Purchase of treasury stock | (2,597 | ) | (2,055 | ) | ||||
| Excess tax benefits from stock based compensation | 548 | 643 | ||||||
| Cash dividends | 1 | (2,360 | ) | |||||
| Proceeds from exercise of stock options | 20 | 57 | ||||||
| Net cash used in financing activities | (2,028 | ) | (3,715 | ) | ||||
| NET INCREASE (DECREASE) IN CASH | 2,907 | 292 | ||||||
| Cash and cash equivalents, beginning of period | 1,744 | 2,879 | ||||||
| Cash and cash equivalents, end of period | $ | 4,651 | $ | 3,171 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the period for income taxes | $ | 33 | $ | 541 | ||||
| Reconciliation of Net Income to Economic Earnings and Total Expenses to Economic Expenses | |||||||||||
| (in thousands, except per share data and share amounts) | |||||||||||
| (unaudited) | |||||||||||
|
Three Months Ended
March 31 |
% |
||||||||||
| 2011 | 2010 | Change | |||||||||
| Net Income |
$ |
3,549 |
$ | 2,933 | 21 | % | |||||
| Add: Restricted stock expense | 2,383 | 1,891 | 26 | ||||||||
| Add: Intangible amortization | 125 | 26 | 381 | ||||||||
| Add: Tax benefit from goodwill amortization | 52 | 9 | 478 | ||||||||
| Economic earnings | $ | 6,109 | $ | 4,859 | 26 | ||||||
| Diluted weighted average shares | 7,166,577 | 6,544,118 | 10 | ||||||||
| Economic earnings per share | $ | 0.85 | $ | 0.74 | 15 | ||||||
| Total expenses | $ | 11,390 | $ | 8,663 | 31 | ||||||
| Less: Restricted stock expense | (2,383 | ) | (1,891 | ) | 26 | ||||||
| Less: Intangible amortization | (125 | ) | (26 | ) | 381 | ||||||
| Economic expenses | $ | 8,882 | $ | 6,746 | 32 | % | |||||
As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings, Economic Earnings per share (or Economic EPS), and Economic Expenses. We provide these measures in addition to, not as a substitute for, net income, earnings per share and total expenses, which are reported on a GAAP basis. Management and our Board of Directors review Economic Earnings, Economic EPS and Economic Expenses to evaluate Westwood’s ongoing performance, allocate resources and review dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP net income, earnings per share and total expenses, are useful for both management and investors when evaluating Westwood’s underlying operating and financial performance and its available resources. We do not advocate that investors consider these non-GAAP measures without considering financial information prepared in accordance with GAAP.
We define Economic Earnings as net income plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. We define Economic Expenses as total expenses less non-cash equity-based compensation expense and amortization of intangible assets. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings or deduct it when calculating Economic Expenses because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.
(WHG-G)
CONTACT:
Westwood Holdings Group, Inc.
Bill Hardcastle, 214-756-6900