SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2015
WESTWOOD HOLDINGS GROUP, INC.
(Exact name of registrant as specified in charter)
Delaware | 001-31234 | 75-2969997 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
200 Crescent Court, Suite 1200
Dallas, Texas 75201
(Address of principal executive offices)
(214) 756-6900
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02: | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
In accordance with Securities and Exchange Commission Release No. 34-47583, the following information, which is being furnished pursuant to the requirements of Item 2.02, Results of Operations and Financial Condition, is being reported under Item 7.01, Regulation FD Disclosure.
On April 29, 2015, Westwood Holdings Group, Inc. issued a press release entitled Westwood Holdings Group, Inc. Reports First Quarter 2015 Results; Assets Under Management Increase to a Record $21.7 Billion; Quarterly Net Inflows Total $1.1 Billion, a copy of which is furnished with this Current Report on Form 8-K as Exhibit 99.1.
The information in this Current Report on Form 8-K shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act), as amended, or otherwise subject to the liabilities of that Section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
ITEM 7.01: | REGULATION FD DISCLOSURE |
Westwood announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.50 per common share payable on July 1, 2015 to stockholders of record on June 12, 2015.
ITEM 9.01: | FINANCIAL STATEMENTS AND EXHIBITS |
(d) | Exhibits: The following exhibit is furnished with this report: |
Exhibit Number |
Description | |
99.1 | Press Release dated April 29, 2015, entitled Westwood Holdings Group, Inc. Reports First Quarter 2015 Results; Assets Under Management Increase to a Record $21.7 Billion; Quarterly Net Inflows Total $1.1 Billion. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 29, 2015
WESTWOOD HOLDINGS GROUP, INC. | ||
By: | /s/ Tiffany B. Kice | |
Tiffany B. Kice | ||
Chief Financial Officer and Treasurer |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press Release dated April 29, 2015, entitled Westwood Holdings Group, Inc. Reports First Quarter 2015 Results; Assets Under Management Increase to a Record $21.7 Billion; Quarterly Net Inflows Total $1.1 Billion. |
Exhibit 99.1
Westwood Holdings Group, Inc. Reports First Quarter 2015 Results
Assets Under Management Increase to a Record $21.7 Billion
Quarterly Net Inflows Total $1.1 Billion
Dallas, TX, April 29, 2015 Westwood Holdings Group, Inc. (NYSE: WHG) today reported first quarter 2015 revenues of $29.6 million, a 14% increase compared to revenues of $25.9 million in the first quarter of 2014. First quarter 2015 net income and diluted earnings per share (Diluted EPS) were $5.6 million and $0.71, respectively, and included Woodway transaction costs, net of tax, of $0.5 million, which negatively impacted Diluted EPS by approximately $0.06. Net income and Diluted EPS were $5.6 million and $0.72, respectively, in the first quarter of 2014.
First quarter 2015 non-GAAP Economic Earnings and Non-GAAP Economic Earnings per share (Economic EPS) were $9.4 million and $1.20, respectively, and included Woodway transaction costs, net of tax, of $0.5 million, which negatively impacted Economic EPS by approximately $0.06. Non-GAAP Economic Earnings and Economic EPS were $9.2 million and $1.18, respectively, in the first quarter of 2014.
Highlights and significant items related to our first quarter 2015 results include:
| Revenues increased 14% to $29.6 million compared to the same period last year. |
| Assets under management (AUM) reached a record level of $21.7 billion, with positive quarterly net inflows of $1.1 billion. Assets under advisement, for which we provide portfolio design and oversight, totaled $479 million. |
| Net inflows into The Westwood Funds® family of mutual funds totaled $456 million, representing an organic growth rate of over 12% from year-end. The Funds now account for approximately 20% of our overall AUM. |
| Increased diversification in AUM by investment strategy, with 5 strategies individually exceeding $1 billion in AUM. |
| Our Westwood Global and Emerging Markets team has surpassed $4.5 billion in AUM, less than three years since inception. |
| Non-US clients represent approximately 20% of AUM, up from 3% in 2009. |
On April 1, 2015, Westwood successfully completed the acquisition of Woodway Financial Advisors, which will substantially broaden the geographic reach of our Trust business. Woodways financial results will be consolidated into Westwoods financial results beginning in the second quarter of 2015. Additionally, Woodways AUM will be included in Westwoods AUM at that time.
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Brian Casey, Westwoods President & CEO, commented, We are pleased with the continued strong demand for our Emerging Markets and Income Opportunity strategies, which drove significant net inflows for the quarter and helped push AUM to a record $21.7 billion. We are also very pleased with the successful closing of the Woodway acquisition and look forward to partnering with the Woodway team to provide exceptional service in the growing Houston market.
Westwoods Board of Directors today declared a quarterly cash dividend of $0.50 per common share, payable on July 1, 2015 to stockholders of record on June 12, 2015. At quarter-end, Westwood had $84 million in cash and investments, stockholders equity of $109 million, and no debt.
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.
Westwood will host a conference call to discuss first quarter 2015 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, dial 877-303-6235 (domestic) or 631-291-4837 (international). The conference call can also be accessed via our Investor Relations page at westwoodgroup.com and will be available for replay through May 6, 2015 by dialing 855-859-2056 (domestic) or 404-537-3406 (international) and entering passcode 14287640.
About Westwood
Westwood Holdings Group, Inc. provides investment management services to institutional investors, private wealth clients and financial intermediaries. With $21.7 billion in assets under management (as of March 31, 2015), the firm offers a range of investment strategies including U.S. equities, Master Limited Partnerships (MLPs), Multi-Asset, Global and Emerging Markets equities, and Global Convertible securities portfolios. Access to these strategies is available through separate accounts, commingled funds, the Westwood Funds® family of mutual funds, and UCITS funds. Westwood benefits from significant, broad-based employee ownership and trades on the New York Stock Exchange under the symbol WHG. Based in Dallas, Westwood also maintains offices in Toronto, Boston, Omaha and Houston.
For more information on Westwood, please visit www.westwoodgroup.com.
For more information on the Westwood Funds, please visit www.westwoodfunds.com.
Forward-looking Statements
Statements in this press release that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including without limitation, words such as anticipate, forecast, believe, plan, estimate, expect, intend, should, could, goal, may, target, designed, on track, comfortable with, optimistic and other similar expressions,
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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: regulations adversely affecting the financial services industry; the composition and market value of our assets under management; competition in the investment management industry; our investments in foreign companies; our ability to develop and market new investment strategies successfully; our ability to pursue and properly integrate acquired businesses; litigation risks; our ability to retain qualified personnel; our relationships with current and potential customers; our ability to properly address conflicts of interest; our ability to maintain adequate insurance coverage; our ability to maintain an effective information systems; our ability to maintain effective cyber security; our ability to maintain an effective system of internal controls; our ability to maintain our fee structure in light of competitive fee pressures; our relationships with investment consulting firms; the significant concentration of our revenues in a small number of customers; and the other risks detailed from time to time in Westwoods SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2014 and its quarterly report on Form 10-Q for the quarter ended March 31, 2015. 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.
# # # #
SOURCE: Westwood Holdings Group, Inc.
(WHG-G)
CONTACT:
Westwood Holdings Group, Inc.
Tiffany B. Kice
Chief Financial Officer and Treasurer
(214) 756-6900
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share and share amounts)
(unaudited)
Three Months Ended | ||||||||||||
March 31, 2015 |
December 31, 2014 |
March 31, 2014 |
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REVENUES: |
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Advisory fees: |
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Asset based |
$ | 23,929 | $ | 23,132 | $ | 20,389 | ||||||
Performance based |
288 | | 363 | |||||||||
Trust fees |
5,150 | 5,064 | 5,028 | |||||||||
Other, net |
241 | 69 | 169 | |||||||||
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Total revenues |
29,608 | 28,265 | 25,949 | |||||||||
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EXPENSES: |
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Employee compensation and benefits |
15,309 | 13,821 | 12,852 | |||||||||
Sales and marketing |
395 | 581 | 287 | |||||||||
Westwood mutual funds |
827 | 578 | 652 | |||||||||
Information technology |
1,037 | 933 | 715 | |||||||||
Professional services |
2,072 | 1,351 | 1,382 | |||||||||
General and administrative |
1,590 | 1,526 | 1,448 | |||||||||
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Total expenses |
21,230 | 18,790 | 17,336 | |||||||||
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Income before income taxes |
8,378 | 9,475 | 8,613 | |||||||||
Provision for income taxes |
2,768 | 3,497 | 3,051 | |||||||||
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Net income |
$ | 5,610 | $ | 5,978 | $ | 5,562 | ||||||
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Other comprehensive income: |
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Foreign currency translation adjustments |
(1,388 | ) | (374 | ) | (354 | ) | ||||||
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Total comprehensive income |
$ | 4,222 | $ | 5,604 | $ | 5,208 | ||||||
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Earnings per share: |
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Basic |
$ | 0.74 | $ | 0.79 | $ | 0.74 | ||||||
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Diluted |
$ | 0.71 | $ | 0.77 | $ | 0.72 | ||||||
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Weighted average shares outstanding: |
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Basic |
7,596,223 | 7,525,438 | 7,474,415 | |||||||||
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Diluted |
7,861,090 | 7,811,770 | 7,751,243 | |||||||||
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Economic Earnings |
$ | 9,416 | $ | 9,687 | $ | 9,169 | ||||||
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Economic EPS |
$ | 1.20 | $ | 1.24 | $ | 1.18 | ||||||
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Dividends declared per share |
$ | 0.50 | $ | 0.50 | $ | 0.44 | ||||||
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
March 31, 2015 (unaudited) |
December 31, 2014 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 19,607 | $ | 18,131 | ||||
Accounts receivable |
14,840 | 14,540 | ||||||
Investments, at fair value |
64,039 | 79,620 | ||||||
Deferred income taxes |
4,826 | 4,060 | ||||||
Other current assets |
2,538 | 2,413 | ||||||
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Total current assets |
105,850 | 118,764 | ||||||
Goodwill |
11,255 | 11,255 | ||||||
Deferred income taxes |
3,542 | 3,792 | ||||||
Intangible assets, net |
3,340 | 3,430 | ||||||
Property and equipment, net of accumulated depreciation of $2,847 and $2,720 |
2,871 | 2,633 | ||||||
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Total assets |
$ | 126,858 | $ | 139,874 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
$ | 3,694 | $ | 2,334 | ||||
Dividends payable |
4,792 | 4,868 | ||||||
Compensation and benefits payable |
5,284 | 18,504 | ||||||
Income taxes payable |
2,031 | 1,498 | ||||||
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Total current liabilities |
15,801 | 27,204 | ||||||
Accrued dividends |
914 | 1,450 | ||||||
Deferred rent |
1,216 | 1,213 | ||||||
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Total liabilities |
17,931 | 29,867 | ||||||
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Stockholders Equity: |
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Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,280,996 and outstanding 8,467,815 shares at March 31, 2015; issued 9,010,255 and outstanding 8,308,460 shares at December 31, 2014 |
93 | 90 | ||||||
Additional paid-in capital |
125,661 | 119,859 | ||||||
Treasury stock, at cost 813,181 shares at March 31, 2015; 701,795 shares at December 31, 2014 |
(35,893 | ) | (29,028 | ) | ||||
Accumulated other comprehensive loss |
(2,619 | ) | (1,231 | ) | ||||
Retained earnings |
21,685 | 20,317 | ||||||
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Total stockholders equity |
108,927 | 110,007 | ||||||
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Total liabilities and stockholders equity |
$ | 126,858 | $ | 139,874 | ||||
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 5,610 | $ | 5,562 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
145 | 144 | ||||||
Amortization of intangible assets |
90 | 90 | ||||||
Unrealized gains on trading investments |
(119 | ) | (57 | ) | ||||
Stock based compensation expense |
3,678 | 3,479 | ||||||
Deferred income taxes |
(570 | ) | 3,924 | |||||
Excess tax benefits from stock based compensation |
(1,392 | ) | (1,893 | ) | ||||
Net sales of investments trading securities |
15,700 | 19,206 | ||||||
Changes in operating assets and liabilities: |
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Accounts receivable |
(690 | ) | (450 | ) | ||||
Other assets |
42 | 338 | ||||||
Accounts payable and accrued liabilities |
1,285 | (189 | ) | |||||
Compensation and benefits payable |
(12,406 | ) | (13,963 | ) | ||||
Income taxes payable and prepaid income taxes |
2,414 | (1,557 | ) | |||||
Other liabilities |
(6 | ) | (37 | ) | ||||
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Net cash provided by operating activities |
13,781 | 14,597 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(288 | ) | (121 | ) | ||||
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Net cash used in investing activities |
(288 | ) | (121 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Purchases of treasury stock |
(1,289 | ) | (669 | ) | ||||
Restricted stock returned for payment of taxes |
(5,576 | ) | (5,170 | ) | ||||
Excess tax benefits from stock based compensation |
1,392 | 1,893 | ||||||
Cash dividends |
(4,855 | ) | (3,942 | ) | ||||
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Net cash used in financing activities |
(10,328 | ) | (7,888 | ) | ||||
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Effect of currency rate changes on cash |
(1,689 | ) | (78 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
1,476 | 6,510 | ||||||
Cash and cash equivalents, beginning of period |
18,131 | 10,864 | ||||||
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Cash and cash equivalents, end of period |
$ | 19,607 | $ | 17,374 | ||||
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Supplemental cash flow information: |
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Cash paid during the period for income taxes |
$ | 957 | $ | 761 | ||||
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WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Economic Earnings
(in thousands, except per share data and share amounts)
(unaudited)
Three Months Ended | ||||||||||||
March 31, 2015 |
December 31, 2014 |
March 31, 2014 |
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Net Income |
$ | 5,610 | $ | 5,978 | $ | 5,562 | ||||||
Add: Stock based compensation expense |
3,678 | 3,582 | 3,479 | |||||||||
Add: Intangible amortization |
90 | 89 | 90 | |||||||||
Add: Tax benefit from goodwill amortization |
38 | 38 | 38 | |||||||||
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Economic earnings |
$ | 9,416 | $ | 9,687 | $ | 9,169 | ||||||
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Diluted weighted average shares |
7,861,090 | 7,811,770 | 7,751,243 | |||||||||
Economic EPS |
$ | 1.20 | $ | 1.24 | $ | 1.18 |
As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings and Economic Earnings per share (or Economic EPS). We provide these measures in addition to, not as a substitute for, net income and earnings per share, which are reported on a GAAP basis. Management reviews Economic Earnings and Economic EPS to evaluate Westwoods ongoing performance, allocate resources, and review dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP net income or earnings per share, are useful for both management and investors when evaluating Westwoods 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. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent an allocation of the 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.
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