The following are selected highlights for the quarter ended
- Assets under management (“AUM”) and assets under advisement (“AUA”) combined were
$31.1 billion , compared to$29.2 billion as ofDecember 31, 2023 , and$27.9 billion as ofJune 30, 2023 . - Average AUM and AUA combined were
$31.1 billion , compared to$26.8 billion for the second quarter of 2023. - Net client inflows were
$229.0 million , compared to$103.0 million of net outflows for the second quarter of 2023. - Revenue was
$36.7 million , compared to$33.4 million for the second quarter of 2023. - Net operating profit margin was 33%, compared to 23% for the second quarter of 2023.
- Adjusted net operating profit margin1 was 31%, compared to 30% for the second quarter of 2023.
- Investment loss was
$0.7 million , compared to investment income of$6.3 million for the second quarter of 2023. - Net income attributable to common shareholders was
$8.1 million , compared to$9.4 million for the second quarter of 2023. - Earnings per share attributable to common shareholders – diluted was
$2.93 , compared to$3.18 for the second quarter of 2023. - Adjusted earnings per share attributable to common shareholders – diluted2 was
$2.88 , compared to$2.35 for the second quarter of 2023. - The Company returned a total of
$9.4 million to its shareholders –$5.2 million through the repurchase of 34,941 common shares and$4.2 million through a dividend of$1.50 per common share.
“We are pleased to see continued strong performance and growth in our fixed income strategies, which contributed to an increase in average assets under management and advisement in the first half,” said
_________
1 Adjusts the financial measure calculated in accordance with |
2 Adjusts the financial measure calculated in accordance with GAAP for the impact of the Consolidated Fund(s) and investment income related to certain other investments. See the reconciliation to the comparable GAAP financial measure at the end of this earnings release. |
Dividend:
The Company’s board of directors approved the payment of a regular quarterly cash dividend of
Selected Income Statement Data |
|||||
Three Months Ended |
|||||
2024 |
2023 |
% Change |
|||
Revenue |
$ 36,661,333 |
$ 33,350,637 |
10 % |
||
Compensation and related costs, excluding deferred compensation expense (benefit) |
18,330,666 |
17,399,350 |
5 % |
||
Deferred compensation expense (benefit) |
(869,135) |
1,982,724 |
NM |
||
Other expenses |
7,067,191 |
6,182,380 |
14 % |
||
Total operating expenses |
24,528,722 |
25,564,454 |
(4) % |
||
Net operating income |
12,132,611 |
7,786,183 |
56 % |
||
Investment income (loss), net |
(654,591) |
6,276,708 |
NM |
||
Net income before taxes |
11,478,020 |
14,062,891 |
(18) % |
||
Income tax expense |
(3,352,180) |
(3,893,942) |
(14) % |
||
Net income |
8,125,840 |
10,168,949 |
(20) % |
||
Net income attributable to redeemable noncontrolling interest |
” |
(736,470) |
(100) % |
||
Net income attributable to common shareholders |
$ 8,125,840 |
$ 9,432,479 |
(14) % |
||
Earnings per share attributable to common shareholders – diluted |
$ 2.93 |
$ 3.18 |
(8) % |
||
Weighted average shares outstanding – diluted |
2,769,427 |
2,970,357 |
(7) % |
||
Six Months Ended |
|||||
2024 |
2023 |
% Change |
|||
Revenue |
$ 72,956,263 |
$ 67,341,140 |
8 % |
||
Compensation and related costs, excluding deferred compensation expense |
36,478,131 |
33,762,258 |
8 % |
||
Deferred compensation expense |
2,321,228 |
2,727,235 |
(15) % |
||
Other expenses |
13,721,467 |
12,123,897 |
13 % |
||
Total operating expenses |
52,520,826 |
48,613,390 |
8 % |
||
Net operating income |
20,435,437 |
18,727,750 |
9 % |
||
Investment income, net |
8,711,087 |
14,359,446 |
(39) % |
||
Net income before taxes |
29,146,524 |
33,087,196 |
(12) % |
||
Income tax expense |
(8,004,751) |
(8,815,200) |
(9) % |
||
Net income |
21,141,773 |
24,271,996 |
(13) % |
||
Net income attributable to redeemable noncontrolling interest |
” |
(2,131,965) |
NM |
||
Net income attributable to common shareholders |
$ 21,141,773 |
$ 22,140,031 |
(5) % |
||
Earnings per share attributable to common shareholders – diluted |
$ 7.57 |
$ 7.39 |
2 % |
||
Weighted average shares outstanding – diluted |
2,793,133 |
2,997,574 |
(7) % |
||
Selected Assets Under Management and Assets Under Advisement Data |
|||
Change in AUM and AUA |
|||
For the Three Months Ended |
|||
(in millions) |
2024 |
2023 |
|
AUM at beginning of the period |
$ 29,979 |
$ 24,927 |
|
Net cash inflows (outflows) |
|||
Diamond Hill Funds |
117 |
(200) |
|
Separately managed accounts |
(185) |
(173) |
|
Collective investment trusts |
247 |
(134) |
|
Other pooled vehicles |
50 |
404 |
|
229 |
(103) |
||
Net market appreciation (depreciation) and income |
(917) |
1,242 |
|
Increase (decrease) during the period |
(688) |
1,139 |
|
AUM at end of the period |
29,291 |
26,066 |
|
AUA at end of period |
1,843 |
1,788 |
|
Total AUM and AUA at end of period |
$ 31,134 |
$ 27,854 |
|
Average AUM during the period |
$ 29,206 |
$ 25,056 |
|
Average AUA during the period |
1,866 |
1,792 |
|
Total average AUM and AUA during the period |
$ 31,072 |
$ 26,848 |
|
Change in AUM and AUA |
|||
For the Six Months Ended |
|||
(in millions) |
2024 |
2023 |
|
AUM at beginning of the period |
$ 27,418 |
$ 24,763 |
|
Net cash inflows (outflows) |
|||
Diamond Hill Funds |
209 |
(89) |
|
Separately managed accounts |
(347) |
(89) |
|
Collective investment trusts |
417 |
(116) |
|
Other pooled vehicles |
68 |
276 |
|
347 |
(18) |
||
Net market appreciation and income |
1,526 |
1,321 |
|
Increase during the period |
1,873 |
1,303 |
|
AUM at end of the period |
29,291 |
26,066 |
|
AUA at end of period |
1,843 |
1,788 |
|
Total AUM and AUA at end of period |
$ 31,134 |
$ 27,854 |
|
Average AUM during the period |
$ 28,652 |
$ 25,269 |
|
Average AUA during the period |
1,833 |
1,818 |
|
Total average AUM and AUA during the period |
$ 30,485 |
$ 27,087 |
Net Cash Inflows (Outflows) Further Breakdown |
|||||||
For the Three Months Ended |
For the Six Months Ended |
||||||
(in millions) |
2024 |
2023 |
2024 |
2023 |
|||
Net cash inflows (outflows) |
|||||||
Equity |
$ (345) |
$ (237) |
$ (722) |
$ (716) |
|||
Fixed Income |
574 |
134 |
1,069 |
698 |
|||
$ 229 |
$ (103) |
$ 347 |
$ (18) |
||||
About Diamond Hill:
Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment. An independent active asset manager with significant employee ownership, Diamond Hill’s investment strategies include differentiated
Non-GAAP Financial Measures and Reconciliation
As supplemental information, the Company is providing certain financial measures that are based on methodologies other than GAAP (“non-GAAP”). Management believes the non-GAAP financial measures below are useful measures of the Company’s core business activities, are important metrics in estimating the value of an asset management business, and help facilitate comparisons to Company operating performance across periods. These non-GAAP financial measures should not be used as a substitute for financial measures calculated in accordance with GAAP and may be calculated differently by other companies. The following schedules reconcile the differences between financial measures calculated in accordance with GAAP and non-GAAP financial measures for the three-month and six-month periods ended
Three Months Ended |
|||||||||||||
(in thousands, except percentages and per share data) |
Total operating expenses |
Net operating income |
Total non-operating income (loss) |
Income tax expense(4) |
Net income attributable to common shareholders |
Earnings per share attributable to common shareholders – diluted |
Net operating profit margin |
||||||
GAAP Basis |
$ 24,529 |
$ 12,133 |
$ (655) |
$ 3,352 |
$ 8,126 |
$ 2.93 |
33 % |
||||||
Non-GAAP Adjustments: |
|||||||||||||
Deferred compensation liability(1) |
869 |
(869) |
869 |
” |
” |
” |
(2) % |
||||||
Other investment income(3) |
” |
” |
(214) |
(62) |
(152) |
(0.05) |
” |
||||||
Adjusted Non-GAAP basis |
$ 25,398 |
$ 11,264 |
$ ” |
$ 3,290 |
$ 7,974 |
$ 2.88 |
31 % |
||||||
Three Months Ended |
|||||||||||||
(in thousands, except percentages and per share data) |
Total operating expenses |
Net operating income |
Total non-operating income (loss) |
Income tax expense(4) |
Net income attributable to common shareholders |
Earnings per share attributable to common shareholders – diluted |
Net operating profit margin |
||||||
GAAP Basis |
$ 25,564 |
$ 7,786 |
$ 6,277 |
$ 3,894 |
$ 9,432 |
$ 3.18 |
23 % |
||||||
Non-GAAP Adjustments: |
|||||||||||||
Deferred compensation liability(1) |
(1,983) |
1,983 |
(1,983) |
” |
” |
” |
7 % |
||||||
Consolidated Funds(2) |
” |
110 |
(2,393) |
(452) |
(1,095) |
(0.37) |
” |
||||||
Other investment income(3) |
” |
” |
(1,901) |
(555) |
(1,346) |
(0.46) |
” |
||||||
Adjusted Non-GAAP basis |
$ 23,581 |
$ 9,879 |
$ ” |
$ 2,887 |
$ 6,991 |
$ 2.35 |
30 % |
||||||
Six Months Ended |
|||||||||||||
(in thousands, except percentages and per share data) |
Total operating expenses |
Net operating income |
Total non-operating income (loss) |
Income tax expense(4) |
Net income attributable to common shareholders |
Earnings per share attributable to common shareholders – diluted |
Net operating profit margin |
||||||
GAAP Basis |
$ 52,521 |
$ 20,435 |
$ 8,711 |
$ 8,005 |
$ 21,142 |
$ 7.57 |
28 % |
||||||
Non-GAAP Adjustments: |
|||||||||||||
Deferred compensation liability(1) |
(2,321) |
2,321 |
(2,321) |
” |
” |
” |
3 % |
||||||
Other investment income(3) |
” |
” |
(6,390) |
(1,757) |
(4,633) |
(1.66) |
” |
||||||
Adjusted Non-GAAP basis |
$ 50,200 |
$ 22,756 |
$ ” |
$ 6,248 |
$ 16,509 |
$ 5.91 |
31 % |
||||||
Six Months Ended |
|||||||||||||
(in thousands, except percentages and per share data) |
Total operating expenses |
Net operating income |
Total non-operating income (loss) |
Income tax expense(4) |
Net income attributable to common shareholders |
Earnings per share attributable to common shareholders – diluted |
Net operating profit margin |
||||||
GAAP Basis |
$ 48,613 |
$ 18,728 |
$ 14,359 |
$ 8,815 |
$ 22,140 |
$ 7.39 |
28 % |
||||||
Non-GAAP Adjustments: |
|||||||||||||
Deferred compensation liability (1) |
(2,727) |
2,727 |
(2,727) |
” |
” |
” |
4 % |
||||||
Consolidated Funds(2) |
” |
209 |
(7,418) |
(1,447) |
(3,630) |
(1.21) |
” |
||||||
Other investment income(3) |
” |
” |
(4,214) |
(1,201) |
(3,013) |
(1.01) |
” |
||||||
Adjusted Non-GAAP basis |
$ 45,886 |
$ 21,664 |
$ ” |
$ 6,167 |
$ 15,497 |
$ 5.17 |
32 % |
||||||
(1) This non-GAAP adjustment removes the compensation expense resulting from market valuation changes in the Company’s deferred compensation plans’ liability and the related net gains/losses on investments designated as an economic hedge against the related liability. Amounts deferred under the deferred compensation plans are adjusted for appreciation/depreciation of investments chosen by participants. The Company believes it is useful to offset the non-operating investment income or loss realized on the hedges against the related compensation expense and remove the net impact to help readers understand the Company’s core operating results and to improve comparability from period to period.
(2) This non-GAAP adjustment removes the impact that the Consolidated Fund has on the Company’s GAAP consolidated statements of income. Specifically, the Company adds back the operating expenses and subtracts the investment income of the Consolidated Fund. The adjustment to net operating income represents the operating expenses of the Consolidated Fund, net of the elimination of related management and administrative fees. The adjustment to net income attributable to common shareholders represents the net income of the Consolidated Fund, net of redeemable non-controlling interests. The Company believes removing the impact of the Consolidated Fund helps readers understand its core operating results and improves comparability from period to period.
(3) This non-GAAP adjustment represents the net gains or losses earned on the Company’s non-consolidated investment portfolio that are not designated as economic hedges of the deferred compensation plans’ liability, non-consolidated seed investments, and other investments. The Company believes adjusting for these non-operating income or loss items helps readers understand the Company’s core operating results and improves comparability from period to period.
(4) The income tax expense impacts were calculated and resulted in the overall non-GAAP effective tax rates of 29.2% for the three months ended
The Company does not recommend that investors consider non-GAAP financial measures alone, or as a substitute for, financial information prepared in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
Throughout this press release, the Company may make “forward-looking statements” within the meaning of the
Factors that may cause the Company’s actual results or experiences to differ materially from results discussed in forward-looking statements are discussed under Part I, Item 1A (Risk Factors) and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended
In light of the significant uncertainties in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its expectations, objectives and plans will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company and speak only as of the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect it. The Company assumes no obligation to update any forward-looking statements after the date they are made, whether as a result of new information, future events or developments or otherwise, except as required by law, although it may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties.
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