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Diamond Hill
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Investments
FOR IMMEDIATE RELEASE:
Investor Contact:
James F. Laird-Chief Financial Officer
614-255-3353 (jlaird@diamond-hill.com)
DIAMOND HILL INVESTMENT GROUP, INC.
REPORTS RESULTS FOR SECOND QUARTER 2012
Columbus, Ohio - July 27, 2012 - Diamond Hill Investment Group, Inc.
(NASDAQ:DHIL) today reported unaudited results for the quarter ended June 30,
2012. The Company plans to file its Form 10-Q on Friday, August 3, 2012 and we
urge investors to read and consider the information in that filing. Whenever
possible, we will post our report on a Friday afternoon so that investors have
a maximum amount of time to digest the information contained therein.
Three Months Ended June 30,
2012 2011 Change
Revenue $16,160,855 $16,827,523 -4%
Net operating income 5,830,528 5,851,046 0%
Operating margin 36% 35%
Investment return (468,432) 90,362
Net income 3,328,097 3,728,889 -11%
Earnings per share $ 1.07 $ 1.26 -15%
Six Months Ended June 30,
2012 2011 Change
Revenue $32,775,075 $33,277,271 -2%
Net operating income 11,851,068 11,299,585 5%
Operating margin 36% 34%
Investment return 803,299 461,143
Net income 7,939,450 7,360,624 8%
Earnings per share $ 2.59 $ 2.54 2%
As Of
June 30, December 31, June 30,
2012 2011 2011
Assets under management
(millions) $9,164 $8,671 $9,186
Book value per share (a) $10.74 $ 6.03 $8.25
Total outstanding shares 3,152,073 2,995,814 3,002,874
(a) - A $5 per share special dividend was paid in December 2011.
Change in Assets Under Management
For the Three Months Ended June 30,
(in millions) 2012 2011
AUM at beginning of the period $ 9,360 $ 9,250
Net cash inflows (outflows)
proprietary funds 137 (16)
sub-advised funds (15) 41
separate accounts 133 (127)
255 (102)
Net market appreciation (depreciation) and income (451) 38
Decrease during the period (196) (64)
AUM at end of the period $ 9,164 $ 9,186
Change in Assets Under Management
For the Six Months Ended June 30,
(in millions) 2012 2011
AUM at beginning of the period $ 8,671 $ 8,623
Net cash inflows (outflows)
proprietary funds 207 (18)
sub-advised funds (75) 77
separate accounts 20 34
152 93
Net market appreciation and income 341 470
Increase during the period 493 563
AUM at end of the period $ 9,164 $ 9,186
About Diamond Hill:
Diamond Hill is an independent investment management firm with significant
employee ownership and $9.2 billion in assets under management as of
June 30, 2012. The firm provides investment management services to
institutions and individuals through mutual funds, institutional separate
accounts, and private investment funds. Diamond Hill's entire investment team
shares the same intrinsic value investment philosophy focused on absolute
returns, and the firm's interests are firmly aligned with its clients through
significant investment in its strategies.For more information on Diamond
Hill, visit www.diamond-hill.com.
Use of Supplemental Data as Non-GAAP Performance Measure
Net Operating Income After Tax
As supplemental information, we are providing performance measures that are
based on methodologies other than generally accepted accounting principles
("non-GAAP") for "Net Operating Income After Tax" that management uses as
benchmarks in evaluating and comparing the period-to-period operating
performance of Diamond Hill Investment Group, Inc. (the "Company") and its
subsidiaries.
The Company defines "net operating income after tax" as the Company's net
operating income less income tax provision excluding investment return and
the tax impact related to the investment return. The Company believes that
"net operating income after tax" provides a good representation of the
Company's operating performance, as it excludes the impact of investment
return on financial results. The amount of the investment portfolio and
market fluctuations on the investments can change significantly from one
period to another, which can distort the underlying earnings potential of
a company. We also believe "net operating income after tax" is an important
metric in estimating the value of an asset management business. This non-GAAP
measure is provided in addition to net income and net operating income and is
not a substitute for net income or net operating income and may not be
comparable to non-GAAP performance measures of other companies.
Three Months Ended June 30,
(in thousands, except per share data) 2012 2011
Net operating income, GAAP basis $5,831 $5,851
Non-GAAP adjustments:
Tax provision excluding impact
of investment return 2,212 2,179
Net operating income after tax,
non-GAAP basis $3,619 $3,672
Net operating income after tax per
share, non-GAAP basis $ 1.17 $ 1.24
Six Months Ended June 30,
(in thousands, except per share data) 2012 2011
Net operating income, GAAP basis $11,851 $11,300
Non-GAAP adjustments:
Tax provision excluding impact
of investment return 4,416 4,228
Net operating income after tax,
non-GAAP basis $7,435 $7,072
Net operating income after tax per
share, non-GAAP basis $ 2.42 $ 2.44
The tax provision excluding impact of investment return is calculated by
applying the tax rate from the actual tax provision to net operating
income.
The Company's management does not promote that investors consider the above
non-GAAP financial measures alone, or as a substitute for, financial
information prepared in accordance with GAAP.
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Throughout this press release, the Company may make 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,
relating to such matters as anticipated operating results, prospects for
achieving the critical threshold of assets under management, technology
developments, economic trends (including interest rates and market volatility),
expected transactions and acquisitions and similar matters. The words
"believe," "expect," "anticipate," "estimate," "should," "hope," "seek,"
"plan," "intend" and similar expressions identify forward-looking statements
that speak only as of the date thereof. While the Company believes that the
assumptions underlying its forward-looking statements are reasonable,
investors are cautioned that any of the assumptions could prove to be
inaccurate and accordingly, the actual results and experiences of the
Company could differ materially from the anticipated results or other
expectations expressed by the Company in its forward-looking statements.
Factors that could cause such actual results or experiences to differ from
results discussed in the forward-looking statements include, but are not
limited to: the adverse effect from a decline in the securities markets;
a decline in the performance of the Company's products; changes in interest
rates; a general or prolonged downturn in the economy; changes in
government policy and regulation, including monetary policy; changes in the
Company's ability to attract or retain key employees; unforeseen costs and
other effects related to legal proceedings or investigations of
governmental and self-regulatory organizations; and other risks identified
from time-to-time in the Company's other public documents on file with the
U.S. Securities and Exchange Commission.
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325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215
614-255-3333 info@diamond-hill.co
