Market Overview

Westwood Holdings Group, Inc. Reports Fourth Quarter and Fiscal Year 2017 Results


DALLAS, Feb. 08, 2018 (GLOBE NEWSWIRE) -- Westwood Holdings Group, Inc. (NYSE:WHG) today reported fourth quarter revenues of $33.9 million, compared to revenues of $31.1 million in the fourth quarter of 2016 and $33.5 million in the third quarter of 2017. The increases primarily related to higher average assets under management ("AUM") due to market appreciation.

AUM at December 31, 2017 totaled $24.2 billion, up from $21.2 billion and $23.6 billion at December 31, 2016 and September 30, 2017, respectively.

We recorded $3.4 million in incremental income tax expense during the current quarter as a result of the tax reforms enacted in December 2017. This was primarily due to the mandatory deemed repatriation of earnings from our Canadian subsidiary and adjustments to deferred taxes reflecting the decrease in the federal tax rate.

Fourth quarter net income was $2.9 million compared with $7.6 million for the fourth quarter of 2016. The decrease primarily related to the tax reform noted above and higher employee compensation costs related to performance compensation and headcount increases, partially offset by higher total revenues. Diluted earnings per share ("Diluted EPS") of $0.34 compared to $0.92 for the fourth quarter of 2016. Non-GAAP Economic Earnings for the quarter decreased from $12.0 million, or $1.45 per share, in 2016's fourth quarter to $7.6 million, or $0.89 per share, in the fourth quarter of 2017.

Fourth quarter net income totaled $2.9 million compared with $4.1 million in the third quarter of 2017. The decrease was primarily due to the additional income tax expense as noted above, reduced by a one-time $2.5 million legal settlement charge, net of insurance recovery and taxes, which only impacted the third quarter of 2017. Diluted EPS for the quarter of $0.34 compared to $0.49 for the third quarter of 2017. Non-GAAP Economic Earnings for the quarter of $7.6 million, or $0.89 per share, compared to $9.0 million, or $1.07 per share, in the immediately preceding quarter.

Total revenues for fiscal 2017 were $133.8 million compared to $123.0 million in 2016. The increase was due to a $7.7 million increase in asset-based advisory fees and a $1.3 million increase in Trust fees reflecting higher average AUM, coupled with a $0.8 million increase in performance-based advisory fees earned in 2017.

Net income for 2017 totaled $20.0 million, down from 2016's $22.6 million, primarily due to the $2.5 million legal settlement charge and incremental income tax expense, both noted above, partially offset by higher total revenues. Diluted EPS was $2.38 compared with $2.77 for 2016. Economic EPS was $4.63 compared with $5.03 in 2016.

Highlights of our fourth quarter include:

  • Revenues of $33.9 million increased $2.8 million from the fourth quarter of 2016 and were relatively flat with the third quarter of 2017.
  • $3.4 million of incremental income tax expense was recorded related to tax reform.
  • AUM reached a record $24.2 billion.
  • Top quartile performance was achieved by our LargeCap Value and AllCap Value teams.
  • A 10% increase was declared in our quarterly cash dividend rate to $0.68 per common share.

Brian Casey, Westwood's President & CEO, commented, "We were pleased to end the year with strong absolute and relative performance for our U.S. Value strategies. Our LargeCap and AllCap Value strategies delivered top quartile performance in the fourth quarter, while our SmallCap Value strategy finished the year with performance in the top third of its peer group. Looking to 2018, our focus remains, as it has for nearly 35 years, on identifying high-quality businesses with undervalued prospects and downside protection. Additionally, we are pleased to announce that the sale of our Omaha-based private wealth operations closed on January 12, 2018, with cash proceeds of $10.5 million."

Westwood's Board of Directors declared a quarterly cash dividend of $0.68 per common share, payable on April 2, 2018 to stockholders of record on March 9, 2018.  At year end, Westwood had $105.6 million in cash and investments, stockholders' equity of $156.4 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 fourth quarter and fiscal year 2017 results and other business matters at 4:30 p.m. Eastern time today.  To join the conference call, dial 877-303-6235 (U.S. and Canada) or 631-291-4837 (international).  The conference call can also be accessed via our Investor Relations page at and will be available for replay through February 15, 2018 by dialing 855-859-2056 (U.S. and Canada) or 404-537-3406 (international) and entering the passcode 4693546.

About Westwood

Westwood Holdings Group, Inc. provides investment management services to institutional investors, private wealth clients and financial intermediaries. With $24.2 billion in assets under management (as of December 31, 2017), our 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, the Westwood Funds® family of mutual funds, UCITS funds and other pooled vehicles. 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 and Houston.

For more information on Westwood, please visit

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, 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: the composition and market value of our assets under management; regulations adversely affecting the financial services industry; competition in the investment management industry; our assets under management include investments in foreign companies; our ability to develop and market new investment strategies successfully; our relationships with current and potential customers; our ability to retain qualified personnel; our ability to perform operational tasks; our ability to maintain effective cyber security; our ability to identify and execute on our strategic initiatives; our ability to select and oversee third party vendors; our ability to maintain effective information systems; litigation risks; our ability to properly address conflicts of interest; our ability to maintain adequate insurance coverage; 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 Westwood's SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2016 and its quarterly reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017, and September 30, 2017. 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.


Westwood Holdings Group, Inc.
Tiffany B. Kice
Chief Financial Officer and Treasurer
(214) 756-6900

(in thousands, except per share and share amounts)
  Three Months Ended
  December 31,
  September 30,
  December 31,
Advisory fees:          
Asset-based $ 25,576     $ 25,334     $ 23,564  
Trust fees 8,051     7,858     7,515  
Other, net 287     300     13  
Total revenues 33,914     33,492     31,092  
Employee compensation and benefits 16,080     15,601     14,270  
Sales and marketing 595     457     496  
Westwood mutual funds 1,189     977     873  
Information technology 2,291     1,855     1,696  
Professional services 1,421     1,681     915  
Legal settlement     4,009      
General and administrative 2,550     3,160     2,043  
Total expenses 24,126     27,740     20,293  
Income before income taxes 9,788     5,752     10,799  
Provision for income taxes 6,891     1,620     3,222  
Net income $ 2,897     $ 4,132     $ 7,577  
Other comprehensive income (loss):          
  Foreign currency translation adjustments 85     1,297     (606 )
Total comprehensive income $ 2,982     $ 5,429     $ 6,971  
Earnings per share:          
Basic $ 0.35     $ 0.51     $ 0.95  
Diluted $ 0.34     $ 0.49     $ 0.92  
Weighted average shares outstanding:          
Basic   8,181,546       8,171,809       7,988,558  
Diluted   8,546,936       8,420,749       8,261,274  
Economic Earnings $ 7,609     $ 8,990     $ 12,014  
Economic EPS $ 0.89     $ 1.07     $ 1.45  
Dividends declared per share $ 0.68     $ 0.62     $ 0.62  
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