Printer Friendly

Westwood Holdings Group, Inc. Reports Second Quarter 2010 Results and Declares Quarterly Dividend; Net Income Increases 53% Year-over-year; WHG Funds Assets Increase 75% Year-over-year.

DALLAS -- Westwood Holdings Group, Inc. (NYSE: WHG) today reported 2010 second quarter revenues of $13.2 million, net income of $2.5 million and earnings per diluted share of $0.36. This compares to revenues of $10.0 million, net income of $1.6 million and earnings per diluted share of $0.25 in the second quarter of 2009. Cash earnings were $5.2 million compared to $3.9 million for the second quarter of 2009. Cash earnings per share ("Cash EPS") were $0.76 per diluted share compared to $0.58 per diluted share for the second quarter of 2009. (Cash earnings and Cash EPS are non-GAAP financial measures that are explained and reconciled with the most comparable GAAP financial measures in the attached tables.)

Assets under management were $9.7 billion as of June 30, 2010, an increase of 18% compared to assets under management of $8.2 billion as of June 30, 2009. The increase in assets under management was primarily due to market appreciation of assets under management and asset inflows from new and existing clients, partially offset by the withdrawal of assets by certain clients. The WHG Funds had assets of $652 million as of June 30, 2010, an increase of 75% compared to assets of $372 million as of June 30, 2009.

Westwood's Board of Directors declared a quarterly cash dividend of $0.33 per common share, payable on October 1, 2010 to stockholders of record on September 15, 2010.

Brian Casey, Westwood's President & CEO, commented, "Despite a challenging market, we were pleased to see continued net flows in the Subadvisory channel as well as the WHG Funds. Our assets in the five WHG Funds grew over 75% year-over-year and we continue to have positive momentum."

For the six months ended June 30, 2010, Westwood reported revenues of $26.4 million, net income of $5.4 million and earnings per diluted share of $0.80, compared to revenues of $18.2 million, net income of $2.9 million and earnings per diluted share of $0.43, for the same 2009 period. Cash earnings for the six months ended June 30, 2010 were $10.0 million compared to $6.6 million for the same period in 2009, while Cash EPS for the six months ended June 30, 2010 were $1.48 per diluted share compared to $0.99 per diluted share for the same period in 2009.

Total expenses for the second quarter were $9.3 million compared with $7.5 million for the second quarter of 2009. Cash expenses were $6.6 million compared with $5.2 million for the second quarter of 2009. (An explanation and reconciliation of cash expenses to total expenses is included in the attached tables.) The primary drivers for higher total expenses were increases of $813,000 in incentive compensation due to higher pretax income, $410,000 in restricted stock expense due to additional grants at higher prices than previous grants and $145,000 in salary expense.

Westwood Trust contributed revenue of $3.1 million and net income of $440,000 compared to revenue of $2.3 million and net income of $267,000 in the second quarter of 2009. As of June 30, 2010, Westwood Trust's assets under management were $1.8 billion, an increase of 6% compared to $1.7 billion as of June 30, 2009. The increase in assets under management was primarily due to market appreciation.

Westwood will host a conference call to discuss second quarter 2010 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 July 29 by dialing 888-284-7564 (domestic) or 904-596-3174 (international) and entering passcode 2428141.

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 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 our website at 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; downturn in the financial markets; the passage of 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, 2009 and its quarterly report on Form 10-Q for the quarters ended June 30, 2010 and March 31, 2010. 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 the 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 June 30,


Six months ended June 30,


2010


2009


2010


2009


REVENUES:


Advisory fees


Asset-based


$


10,220


$


7,215


$


20,300


$


13,345


Trust fees


3,107


2,303


6,116


4,724


Other revenues, net


(133


)


454


(6


)


120


Total revenues


13,194


9,972


26,410


18,189


EXPENSES:


Employee compensation and benefits


7,355


5,890


14,151


10,584


Sales and marketing


255


164


388


294


WHG mutual funds


118


103


261


280


Information technology


322


306


649


616


Professional services


527


359


1,099


754


General and administrative


677


646


1,369


1,228


Total expenses


9,254


7,468


17,917


13,756


Income before income taxes


3,940


2,504


8,493


4,433


Provision for income taxes


1,447


874


3,067


1,573


Net income


$


2,493


$


1,630


$


5,426


$


2,860


Earnings per share:


Basic


$


0.38


$


0.26


$


0.83


$


0.46


Diluted


$


0.36


$


0.25


$


0.80


$


0.43


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of June 30, 2010 and December 31, 2009 (in thousands, except par value and share amounts)


June 30, 2010 (unaudited)


December 31, 2009


ASSETS


Current Assets:


Cash and cash equivalents


$


4,655


$


2,879


Accounts receivable


5,816


6,406


Investments, at market value


41,972


42,246


Deferred income taxes


2,391


2,187


Prepaid income taxes


473


-


Other current assets


647


625


Total current assets


55,954


54,343


Goodwill


3,915


3,915


Intangible assets, net


998


1,050


Property and equipment, net of accumulated depreciation of $1,424 and $1,315


422


578


Total assets


$


61,289


$


59,886


LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities:


Accounts payable and accrued liabilities


$


1,119


$


995


Dividends payable


2,468


2,359


Compensation and benefits payable


4,988


6,273


Income taxes payable


-


823


Deferred acquisition liability


924


900


Other current liabilities


12


11


Total current liabilities


9,511


11,361


Deferred acquisition liability


818


796


Deferred income taxes


153


238


Deferred rent


183


273


Total long-term liabilities


1,154


1,307


Total liabilities


10,665


12,668


Stockholders' Equity:


Common stock, $0.01 par value, authorized 25,000,000 shares, issued 7,682,112 and outstanding 7,471,943 shares at June 30, 2010; issued 7,308,812 and outstanding 7,151,472 shares at December 31, 2009


77


73


Additional paid-in capital


53,326


47,741


Treasury stock, at cost - 210,169 shares at June 30, 2010; 157,340 shares at December 31, 2009


(8,081


)


(6,026


)


Accumulated other comprehensive income


877


1,559


Retained earnings


4,425


3,871


Total stockholders' equity


50,624


47,218


Total liabilities and stockholders' equity


$


61,289


$


59,886


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)


For the six months ended June 30,


2010


2009


CASH FLOWS FROM OPERATING ACTIVITIES:


Net income


$


5,426


$


2,860


Adjustments to reconcile net income to net cash provided by operating activities:


Depreciation


142


119


Amortization of intangible assets


52


-


Fair market valuation of deferred acquisition liabilities


46


-


Unrealized (gains) and losses on investments


87


(347


)


Restricted stock amortization


4,540


3,722


Deferred income taxes


78


(348


)


Excess tax benefits from stock-based compensation


(701


)


(471


)


Net sales (purchases) of investments - trading securities


(26


)


1,305


Change in operating assets and liabilities:


Accounts receivable


590


7,427


Other assets


(27


)


91


Accounts payable and accrued liabilities


124


(240


)


Compensation and benefits payable


(1,285


)


(4,778


)


Income taxes payable


(417


)


(462


)


Other liabilities


(35


)


(25


)


Net cash provided by operating activities


8,594


8,853


CASH FLOWS FROM INVESTING ACTIVITIES:


Purchases of money market funds - available for sale


(24,626


)


(28,269


)


Sales of money market funds - available for sale


23,790


25,709


Purchase of property and equipment


(35


)


(44


)


Net cash used in investing activities


(871


)


(2,604


)


CASH FLOWS FROM FINANCING ACTIVITIES:


Purchase of treasury stock


(2,055


)


(869


)


Excess tax benefits from stock-based compensation


701


471


Cash dividends


(4,763


)


(4,237


)


Proceeds from exercise of stock options


170


-


Net cash used in financing activities


(5,947


)


(4,635


)


NET INCREASE (DECREASE) IN CASH


1,776


1,614


Cash and cash equivalents, beginning of period


2,879


3,498


Cash and cash equivalents, end of period


$


4,655


$


5,112


Supplemental cash flow information:


Cash paid during the period for income taxes


$


3,406


$


2,383


Issuance of restricted stock, net


14,383


7,018


Reconciliation of Net Income to Cash Earnings and Total Expenses to Cash Expenses (in thousands, except per share data and share amounts) (unaudited)


Three Months Ended June 30


%


2010


2009


Change


Net Income


$


2,493


$


1,630


53


%


Add: Restricted stock expense


2,649


2,239


18


Add: Intangible amortization


26


-


-


Add: Deferred taxes on goodwill


9


-


-


Cash earnings


$


5,177


$


3,869


34


Diluted weighted average shares


6,839,414


6,638,613


3


Cash earnings per share


$


0.76


$


0.58


31


Total expenses


$


9,254


$


7,468


24


Less: Restricted stock expense


(2,649


)


(2,239


)


18


Less: Intangible amortization


(26


)


-


-


Cash expenses


$


6,579


$


5,229


26


%


Six Months Ended June 30


%


2010


2009


Change


Net Income


$


5,426


$


2,860


90


%


Add: Restricted stock expense


4,540


3,722


22


Add: Intangible amortization


53


-


-


Add: Deferred taxes on goodwill


19


-


-


Cash earnings


$


10,038


$


6,582


53


Diluted weighted average shares


6,797,338


6,630,030


3


Cash earnings per share


$


1.48


$


0.99


49


Total expenses


$


17,917


$


13,756


30


Less: Restricted stock expense


(4,540


)


(3,722


)


22


Less: Intangible amortization


(53


)


-


-


Cash expenses


$


13,324


$


10,034


33


%


As supplemental information, we are providing non-GAAP performance measures that we refer to as cash earnings, cash earnings per share (or Cash EPS), and cash 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 cash earnings, Cash EPS and cash 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 cash earnings as net income plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. We define cash 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 cash earnings or deduct it when calculating cash 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 cash earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Cash EPS represents cash earnings divided by diluted weighted average shares outstanding.

(WHG-G)
COPYRIGHT 2010 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2010 Gale, Cengage Learning. All rights reserved.

 
Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1U7TX
Date:Jul 22, 2010
Words:11448
Previous Article:CF Industries Holdings, Inc. Declares Third Quarter Dividend; Dividend Payable August 31, 2010 to Stockholders of Record August 13, 2010.
Next Article:Dover Downs Gaming & Entertainment, Inc. Quarterly Earnings Conference Call Announcement.
Topics:

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters