PR Newswire
COLUMBUS, Ohio, August 3, 2023
COLUMBUS, Ohio, August 3, 2023 /PRNewswire/ --Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported unaudited financial results for the second quarter of 2023.
The following are selected highlights for the quarter ended June 30, 2023:
- Assets under management ("AUM") and assets under advisement ("AUA") combined were $27.9 billion as of June 30, 2023, compared to $26.6 billion as of December 31, 2022, and $27.6 billion as of June 30, 2022.
- Average AUM and AUA combined were $26.8 billion, compared to $30.1 billion for the second quarter of 2022.
- Net client outflows were $103.0 million, compared to $515.0 million of net outflows for the second quarter of 2022.
- Revenue was $33.4 million, compared to $39.0 million for the second quarter of 2022.
- Operating profit margin was 23%, compared to 52% for the second quarter of 2022. Adjusted operating profit margin1 was 30%, compared to 40% for the second quarter of 2022.
- Investment income was $6.3 million, compared to an investment loss of $17.7 million for the second quarter of 2022.
- Net income attributable to common shareholders was $9.4 million, compared to $4.4 million for the second quarter of 2022.
- Earnings per share attributable to common shareholders - diluted was $3.18, compared to $1.40 for the second quarter of 2022.
- Adjusted earnings per share attributable to common shareholders - diluted2 was $2.35, compared to $3.80 for the second quarter of 2022.
- The Company returned $14.7 million to shareholders - $10.3 million through the repurchase of 62,584 shares and $4.4 million through a quarterly cash dividend of $1.50 per share.
"While our 2Q revenue and operating margin were impacted by lower average assets under management and advisement during the quarter, strong markets and improved long-term performance helped deliver improvement by quarter end," said Heather Brilliant, CEO. "Our efforts to diversify are showing promise as we continue to see inflows in fixed income, which unfortunately were offset by equity outflows."
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1 Adjusts the financial measure calculated in accordance with U.S. generally accepted accounting principles ("GAAP") for the impact of market movements on the deferred compensation liability and related economic hedges, and the impact of the Diamond Hill International Fund and the Diamond Hill Large Cap Concentrated Fund (together, the "Consolidated Funds"). See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.
2 Adjusts the financial measure calculated in accordance with GAAP for the impact of the Consolidated Funds 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 $1.50 per share. The dividend will be paid on September 15, 2023, to the Company's shareholders of record as of August 31, 2023.
Selected Income Statement Data | |||||
Three Months Ended June 30, | |||||
2023 | 2022 | % Change | |||
Revenue | $ 33,350,637 | $ 39,021,114 | (15) % | ||
Compensation and related costs, excluding deferred compensation expense (benefit) | 17,399,350 | 17,222,243 | 1 % | ||
Deferred compensation expense (benefit) | 1,982,724 | (4,690,393) | NM | ||
Other expenses | 6,182,380 | 6,237,752 | (1) % | ||
Total operating expenses | 25,564,454 | 18,769,602 | 36 % | ||
Net operating income | 7,786,183 | 20,251,512 | (62) % | ||
Investment income (loss), net | 6,276,708 | (17,677,873) | NM | ||
Net income before taxes | 14,062,891 | 2,573,639 | 446 % | ||
Income tax expense | (3,893,942) | (1,357,875) | 187 % | ||
Net income | 10,168,949 | 1,215,764 | 736 % | ||
Net (income) loss attributable to redeemable noncontrolling interest | (736,470) | 3,197,122 | NM | ||
Net income attributable to common shareholders | $ 9,432,479 | $ 4,412,886 | 114 % | ||
Earnings per share attributable to common shareholders - diluted | $ 3.18 | $ 1.40 | 127 % | ||
Six Months Ended June 30, | |||||
2023 | 2022 | % Change | |||
Revenue | $ 67,341,140 | $ 81,277,500 | (17) % | ||
Compensation and related costs, excluding deferred compensation expense (benefit) | 33,762,258 | 35,869,137 | (6) % | ||
Deferred compensation expense (benefit) | 2,727,235 | (5,868,949) | NM | ||
Other expenses | 12,123,897 | 11,952,761 | 1 % | ||
Total operating expenses | 48,613,390 | 41,952,949 | 16 % | ||
Net operating income | 18,727,750 | 39,324,551 | (52) % | ||
Investment income (loss), net | 14,359,446 | (25,270,130) | NM | ||
Net income before taxes | 33,087,196 | 14,054,421 | 135 % | ||
Income tax expense | (8,815,200) | (4,563,641) | 93 % | ||
Net income | 24,271,996 | 9,490,780 | 156 % | ||
Net (income) loss attributable to redeemable noncontrolling interest | (2,131,965) | 4,052,058 | NM | ||
Net income attributable to common shareholders | $ 22,140,031 | $ 13,542,838 | 63 % | ||
Earnings per share attributable to common shareholders - diluted | $ 7.39 | $ 4.27 | 73 % | ||
Selected Assets Under Management and Assets Under Advisement Data | |||
Change in Assets Under Management | |||
(in millions) | 2023 | 2022 | |
AUM at beginning of the period | $ 24,927 | $ 30,322 | |
Net cash (outflows) inflows | |||
Diamond Hill Funds | (200) | (428) | |
Separately managed accounts | (173) | 70 | |
Collective investment trusts | (134) | (1) | |
Other pooled vehicles | 404 | (156) | |
(103) | (515) | ||
Net market appreciation (depreciation) and income | 1,242 | (4,018) | |
Increase (decrease) during the period | 1,139 | (4,533) | |
AUM at end of the period | 26,066 | 25,789 | |
AUA at end of period | 1,788 | 1,785 | |
Total AUM and AUA at end of period | $ 27,854 | $ 27,574 | |
Average AUM during the period | $ 25,056 | $ 28,177 | |
Average AUA during the period | 1,792 | 1,948 | |
Total average AUM and AUA during the period | $ 26,848 | $ 30,125 | |
Change in Assets Under Management | |||
(in millions) | 2023 | 2022 | |
AUM at beginning of the period | $ 24,763 | $ 31,028 | |
Net cash (outflows) inflows | |||
Diamond Hill Funds | (89) | (256) | |
Separately managed accounts | (89) | 158 | |
Collective investment trusts | (116) | (5) | |
Other pooled vehicles | 276 | (176) | |
(18) | (279) | ||
Net market appreciation (depreciation) and income | 1,321 | (4,960) | |
Increase (decrease) during the period | 1,303 | (5,239) | |
AUM at end of the period | 26,066 | 25,789 | |
AUA at end of period | 1,788 | 1,785 | |
Total AUM and AUA at end of period | $ 27,854 | $ 27,574 | |
Average AUM during the period | $ 25,269 | $ 29,262 | |
Average AUA during the period | 1,818 | 2,043 | |
Total average AUM and AUA during the period | $ 27,087 | $ 31,305 | |
Net Cash (Outflows) Inflows Further Breakdown | |||
(in millions) | 2023 | 2022 | |
Net cash (outflows)inflows | |||
Equity | $ (237) | $ (576) | |
Fixed Income | 134 | 61 | |
$ (103) | $ (515) | ||
Net Cash (Outflows) Inflows Further Breakdown | |||
(in millions) | 2023 | 2022 | |
Net cash (outflows) inflows | |||
Equity | $ (716) | $ (383) | |
Fixed Income | 698 | 104 | |
$ (18) | $ (279) | ||
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 U.S. and international equity, alternative long-short equity and fixed income.
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 financial measures calculated in accordance with GAAP to non-GAAP financial measures for the three- and six-month periods ended June 30, 2023 and 2022, respectively.
Three Months Ended June 30, 2023 | |||||||||||||
(in thousands, except percentages | Operating | Net | Non- | Income tax | Net income | Earnings | Operating | ||||||
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 % | ||||||
Three Months Ended June 30, 2022 | |||||||||||||
(in thousands, except percentages | Operating | Net | Non- | Income tax | Net income | Earnings per | Operating | ||||||
GAAP Basis | $ 18,770 | $ 20,252 | $ (17,678) | $ 1,358 | $ 4,413 | $ 1.40 | 52 % | ||||||
Non-GAAP Adjustments: | |||||||||||||
Deferred compensation liability(1) | 4,690 | (4,690) | 4,690 | — | — | — | (12) % | ||||||
Consolidated Funds(2) | — | 120 | 10,031 | 1,634 | 5,320 | 1.69 | — | ||||||
Other investment income(3) | — | — | 2,957 | 695 | 2,262 | 0.71 | — | ||||||
Adjusted Non-GAAP basis | $ 23,460 | $ 15,682 | $ — | $ 3,687 | $ 11,995 | $ 3.80 | 40 % | ||||||
Six Months Ended June 30, 2023 | |||||||||||||
Operating | Net | Non- | Income tax | Net income | Earnings per | Operating | |||||||
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 | |||||||||
