0001165002FALSE00011650022023-10-312023-10-31

 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): October 31, 2023
______________________________________________________________________________________________________

WESTWOOD HOLDINGS GROUP, INC.
(Exact name of registrant as specified in charter)
______________________________________________________________________________________________________

Delaware001-3123475-2969997
(State or other jurisdiction(Commission File Number)(IRS Employer Identification No.)
of incorporation)

200 Crescent Court, Suite 1200
Dallas, Texas 75201
(Address of principal executive offices)

(214) 756-6900
(Registrant's 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):

    o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

    o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

    o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

    o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.01 per shareWHGNew York Stock Exchange

Indicate by checkmark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ¨
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨


ITEM 2.02:    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 31, 2023, Westwood Holdings Group, Inc. (“Westwood”) announced its financial results for the quarter ended September 30, 2023, 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, including Exhibit 99.1, 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 $0.15 per common share, payable on January 3, 2024 to stockholders of record on December 1, 2023.

ITEM 9.01:    FINANCIAL STATEMENTS AND EXHIBITS

(d)    Exhibits: The following exhibit is furnished with this report:

Exhibit Number                    Description

104    Cover Page Interactive Date File (embedded within the Inline XBRL document)








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: October 31, 2023

            
WESTWOOD HOLDINGS GROUP, INC.
By:/s/ Murray Forbes III
Murray Forbes III
Chief Financial Officer and Treasurer





whgleftjustallcap6531a06.jpg
Westwood Holdings Group, Inc. Reports Third Quarter 2023 Results
Strong Performance Delivered Across Multiple Strategies
Introduction of Managed Investment Solutions
Westwood Energy Secondaries Fund Launched


Dallas, TX, October 31, 2023 – Westwood Holdings Group, Inc. (NYSE: WHG) today reported third quarter 2023 earnings. Significant items included:
▪SMidCap Value, MidCap Value, Platinum, Dividend Select, Enhanced Balanced, Income Opportunity, High Income and Global Real Estate strategies all beat their primary benchmarks.
▪Our strong investment performance was reflected in quarterly peer rankings with SMidCap Value, MidCap Value, Platinum and Tactical Growth all posting top quartile rankings.
▪Revenues totaled $21.9 million versus the second quarter's $21.9 million and $15.4 million a year ago. Net income of $4.4 million compared with the second quarter's $2.9 million and a net loss of $1.2 million in 2022's third quarter.
▪Our comprehensive income included $4.0 million of life insurance proceeds, partially offset by a $2.5 million charge following an increase in the fair value of contingent consideration, both related to Salient.
▪Non-GAAP Economic Earnings of $6.3 million compared with the second quarter's $5.7 million and $0.8 million in the third quarter of 2022.
▪We launched Managed Investment Solutions, an experienced Chicago-based group that provides customized index solutions to a wide range of clients, and a new private markets strategy called Westwood Energy Secondaries Fund to source energy-related private investments.
▪Westwood held $48.5 million in cash and short-term investments as of September 30, 2023, up $10.4 million from the second quarter. Stockholders' equity totaled $117.8 million and we have no debt.
▪We declared a cash dividend of $0.15 per common share, payable on January 3, 2024 to stockholders of record on December 1, 2023.
Brian Casey, Westwood’s President and CEO, commented, "I want to acknowledge the sudden passing last summer of Chris Guptill, co-founder of Broadmark Asset Management. His long-term partners took over the joint leadership roles they’d shared in preparation for this possibility. As a Key Man in a focused enterprise, an insurance policy was in place, and Chris will long be remembered professionally for his skills as an investor and colleague. On a personal level, we will all miss his dry wit and good-natured demeanor.
We are very pleased with the progress we have made over the past several quarters, especially the integration of relationships and teams from Salient Partners. We are beginning to detect green shoots on the distribution front and we’re looking forward to showcasing our solid investment performance to the marketplace as investors and advisors begin to envisage an environment in which cash is no longer the


only game in town. We are ready to capitalize on the sales momentum that our newest investment team, Managed Investment Solutions, will generate with its unique, customized approach, and launched Westwood Energy Secondaries Fund to access private investments in the energy field. I believe that Westwood has the right products and people in place to take advantage of unfolding market opportunities."
Revenues were comparable to the second quarter. Revenues were higher than last year's third quarter reflecting higher average AUM following the acquisition of Salient Partners' asset management business during the fourth quarter of last year.
Firmwide assets under management and advisement totaled $15.5 billion at quarter end, consisting of assets under management ("AUM") of $14.4 billion and assets under advisement ("AUA") of $1.1 billion.
Third quarter net income of $4.4 million compared to the second quarter's $2.9 million due to the receipt of life insurance proceeds offset by changes in the fair value of contingent consideration. Diluted earnings (loss) per share ("EPS") of $0.41 compared to $0.36 for the second quarter. Non-GAAP Economic Earnings of $6.3 million, or $0.77 per share, compared with $5.7 million, or $0.70 per share, in the second quarter.
Third quarter net income of $4.4 million compared to last year's third quarter net loss of $1.2 million due to higher revenues and insurance proceeds, offset by changes in the fair value of contingent consideration and higher employee compensation and benefits expenses. Revenues and expenses were higher following the acquisition of Salient Partners' asset management business in 2022. Diluted EPS was $0.41 compared with a loss of $0.15 per share for 2022's third quarter. Non-GAAP Economic Earnings were $6.3 million, or $0.77 per share, compared with $0.8 million, or $0.10 per share, in the third quarter of 2022.
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 third quarter 2023 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, please register here:
https://register.vevent.com/register/BI198ee10944264795a68c538221b72c64
After registering, you will be provided with a dial-in number containing a personalized PIN.
Webcast Link: https://edge.media-server.com/mmc/p/96mgehos
ABOUT WESTWOOD HOLDINGS GROUP
Westwood Holdings Group, Inc. is an investment management boutique and wealth management firm. Westwood offers a broad array of investment solutions to institutional investors, private wealth clients and financial intermediaries. The firm specializes in two distinct investment capabilities: U.S. Value Equity and Multi-Asset, which includes Asset Allocation, Energy and Real Assets and Tactical Absolute Return. Westwood’s strategies are made available through separate accounts, the Westwood Funds® family of mutual 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 Houston and San Francisco.
For more information on Westwood, please visit westwoodgroup.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,” “believe,” “expect,” “could,” 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 AUM and AUA; our ability to maintain our fee structure in light of competitive fee pressures; risks associated with actions of activist stockholders; distributions to our common stockholders have included and may in the future include a return of capital; inclusion of foreign company investments in our AUM; regulations adversely affecting the financial services industry; our ability to maintain effective cyber security; litigation risks; our ability to develop and market new investment strategies successfully; our reputation and our relationships with current and potential customers; our ability to attract and retain qualified personnel; our ability to perform operational tasks; our ability to select and oversee third-party vendors; our dependence on the operations and funds of our subsidiaries; our ability to maintain effective information systems; our ability to prevent misuse of assets and information in the possession of our employees and third-party vendors, which could damage our reputation and result in costly litigation and liability for our clients and us; our stock is thinly traded and may be subject to volatility; competition in the investment management industry; our ability to avoid termination of client agreements and the related investment redemptions; the significant concentration of our revenues in a small number of customers; we have made and may continue to make business combinations as a part of our business strategy, which may present certain risks and uncertainties; our relationships with investment consulting firms; our ability to identify and execute on our strategic initiatives; our ability to declare and pay dividends; our ability to fund future capital requirements on favorable terms; 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; 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, 2022 and its quarterly report on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023. 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.
Terry Forbes
Chief Financial Officer and Treasurer
(214) 756-6900


WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share and share amounts)
(unaudited)
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
REVENUES:
Advisory fees:
Asset-based$16,902 $16,799 $10,474 
Trust fees5,063 5,024 5,177 
Other, net(85)122 (245)
Total revenues21,880 21,945 15,406 
EXPENSES:
Employee compensation and benefits12,661 13,688 9,526 
Sales and marketing676 764 335 
Westwood mutual funds872 746 270 
Information technology2,334 2,566 1,939 
Professional services1,009 1,355 1,536 
General and administrative3,298 3,235 2,181 
(Gain) loss from change in fair value of contingent consideration2,483 (4,078)— 
Acquisition expenses— — 701 
Total expenses23,333 18,276 16,488 
Net operating income (loss)(1,453)3,669 (1,082)
Net change in unrealized appreciation (depreciation) on private investments— 24 (249)
Net investment income247 211 104 
Other income5,265 239 206 
Income (loss) before income taxes4,059 4,143 (1,021)
Income tax provision(316)1,244 154 
Net income (loss)$4,375 $2,899 $(1,175)
Total comprehensive income (loss)$4,375 $2,899 $(1,175)
Less: Comprehensive income (loss) attributable to noncontrolling interest1,019 4 — 
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$3,356 $2,895 $(1,175)
Earnings (loss) per Westwood Holdings Group, Inc. share:
Basic$0.42 $0.36 $(0.15)
Diluted$0.41 $0.36 $(0.15)
Weighted average shares outstanding:
Basic8,002,5377,991,2287,794,060
Diluted8,116,7478,131,3337,794,060
Economic Earnings$6,263 $5,686 $800 
Economic EPS$0.77 $0.70 $0.10 
Dividends declared per share$0.15 $0.15 $0.15 





WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share and share amounts)
(unaudited)
Nine Months Ended
September 30, 2023September 30, 2022
REVENUES:
Advisory fees:
Asset-based$50,734 $33,244 
Performance-based555 — 
Trust fees15,118 16,257 
Other, net145 (1,276)
Total revenues66,552 48,225 
EXPENSES:
Employee compensation and benefits40,551 28,993 
Sales and marketing2,180 1,326 
Westwood mutual funds2,350 1,311 
Information technology7,283 5,615 
Professional services3,893 3,888 
General and administrative9,579 6,569 
(Gain) loss from change in fair value of contingent consideration(2,655)— 
Acquisition expenses209 1,588 
Total expenses63,390 49,290 
Net operating income3,162 (1,065)
Net change in unrealized appreciation (depreciation) on private investments24 (511)
Net investment income630 93 
Other income5,876 598 
Income before income taxes9,692 (885)
Income tax provision1,704 618 
Net income (loss)$7,988 $(1,503)
Total comprehensive income (loss)$7,988 $(1,503)
Less: Comprehensive income (loss) attributable to noncontrolling interest1,044 — 
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$6,944 $(1,503)
Earnings (loss) per share:
Basic$0.87 $(0.19)
Diluted$0.86 $(0.19)
Weighted average shares outstanding:
Basic7,949,7737,867,555
Diluted8,072,7397,867,555
Economic Earnings$15,536 $4,302 
Economic EPS$1.92 $0.55 
Dividends declared per share$0.45 $0.45 




WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(unaudited)
September 30, 2023December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents$17,178 $23,859 
Accounts receivable13,174 13,900 
Investments, at fair value31,312 15,342 
Prepaid income taxes423 446 
Other current assets4,129 4,645 
Total current assets66,216 58,192 
Investments7,247 4,455 
Equity method investments4,256 6,574 
Noncurrent investments at fair value259 3,027 
Goodwill39,501 35,732 
Deferred income taxes1,110 1,762 
Operating lease right-of-use assets3,758 4,976 
Intangible assets, net25,846 28,952 
Property and equipment, net of accumulated depreciation of $9,903 and $9,2771,576 1,828 
Other long-term assets982 929 
Total long-term assets84,535 88,235 
Total assets$150,751 $146,427 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities$6,523 $5,678 
Dividends payable1,436 1,745 
Compensation and benefits payable7,261 8,689 
Operating lease liabilities1,286 1,502 
Total current liabilities16,506 17,614 
Accrued dividends784 701 
Contingent consideration10,246 12,901 
Noncurrent operating lease liabilities3,412 4,563 
Total long-term liabilities14,442 18,165 
Total liabilities30,948 35,779 
Stockholders’ Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 11,896,172 and outstanding 9,180,195 shares at September 30, 2023; issued 11,527,544 and outstanding 8,881,831 shares at December 31, 2022119 115 
Additional paid-in capital201,424 199,914 
Treasury stock, at cost - 2,715,977 shares at September 30, 2023; 2,645,713 shares at December 31, 2022(85,990)(85,128)
Retained earnings (accumulated deficit)2,212 (4,253)
Total Westwood Holdings Group, Inc. stockholders’ equity117,765 110,648 
Noncontrolling interest in consolidated subsidiary2,038 — 
Total liabilities and stockholders’ equity$150,751 $146,427 



WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$7,988 $(1,503)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation511 488 
Amortization of intangible assets3,106 1,218 
Net change in unrealized (appreciation) depreciation on investments(499)1,822 
Stock-based compensation expense5,111 4,410 
Deferred income taxes652 (252)
Non-cash lease expense844 800 
Loss on asset disposition69 — 
Gain on remeasurement of lease liabilities(119)— 
Fair value change of contingent consideration(2,655)— 
Gain on insurance settlement(5,000)— 
Changes in operating assets and liabilities:  
Net (purchases) sales of trading securities(15,626)12,149 
Accounts receivable1,355 1,862 
Other current assets1,101 (562)
Accounts payable and accrued liabilities(55)246 
Compensation and benefits payable(1,428)(3,622)
Income taxes payable25 (810)
Other liabilities(1,064)(927)
Net cash provided by (used in) operating activities(5,684)15,319 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired(741)— 
Purchases of property and equipment(119)(123)
Insurance settlement proceeds5,000 — 
Net cash provided by (used in) investing activities4,140 (123)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock— (2,851)
Restricted stock returned for payment of taxes(863)(626)
Cash dividends(4,274)(4,459)
Net cash used in financing activities(5,137)(7,936)
Effect of currency rate changes on cash— 4 
NET CHANGE IN CASH AND CASH EQUIVALENTS(6,681)7,264 
Cash and cash equivalents, beginning of period23,859 15,206 
Cash and cash equivalents, end of period$17,178 $22,470 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes$1,024 $1,807 
Accrued dividends$2,220 $2,280 
Additional operating lease right-of-use assets$— $1,217 



WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
Reconciliation of Comprehensive Income (Loss) Attributable to Westwood Holdings Group, Inc. to Economic Earnings
(in thousands, except per share and share amounts)
(unaudited)
As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings and Economic EPS. We provide these measures in addition to, not as a substitute for, Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. and earnings (loss) per share, which are reported on a GAAP basis. Our management and Board of Directors review Economic Earnings and Economic EPS to evaluate our ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. or earnings (loss) per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.
We define Economic Earnings as Comprehensive income (loss) attributable to Westwood Holdings Group, Inc. 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. Although gains and losses from changes in the fair value of contingent consideration are non-cash, we do not add or subtract those back when calculating Economic Earnings because gains and losses on changes in the fair value of contingent consideration are considered regular following an acquisition. 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.

Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$3,356 $2,895 $(1,175)
Stock-based compensation expense1,739 1,624 1,509 
Intangible amortization1,043 1,042 407 
Tax benefit from goodwill amortization125 125 59 
Economic Earnings$6,263 $5,686 $800 
Earnings (loss) per share$0.41 $0.36 $(0.15)
Stock-based compensation expense0.21 0.190.19
Intangible amortization0.13 0.130.05
Tax benefit from goodwill amortization0.02 0.020.01
Economic EPS$0.77 $0.70 $0.10 
Diluted weighted average shares8,116,7478,131,3337,794,060
Nine Months Ended
September 30, 2023September 30, 2022
Comprehensive income (loss) attributable to Westwood Holdings Group, Inc.$6,944 $(1,503)
Stock-based compensation expense5,111 4,410 
Intangible amortization3,106 1,218 
Tax benefit from goodwill amortization375 177 
Economic Earnings$15,536 $4,302 
Earnings (loss) per share$0.86 $(0.19)
Stock-based compensation expense0.630.57
Intangible amortization0.380.15
Tax benefit from goodwill amortization0.050.02
Economic EPS$1.92 $0.55 
Diluted weighted average shares8,072,7397,867,555

v3.23.3
Cover
Oct. 31, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 31, 2023
Entity Registrant Name WESTWOOD HOLDINGS GROUP, INC.
Entity Tax Identification Number 75-2969997
Entity Incorporation, State or Country Code DE
Entity File Number 001-31234
Entity Address, Address Line One 200 Crescent Court, Suite 1200
Entity Address, City or Town Dallas
Entity Address, State or Province TX
Entity Address, Postal Zip Code 75201
City Area Code (214)
Local Phone Number 756-6900
Written Communications false
Soliciting Material false
Pre-commencement Issuer Tender Offer false
Pre-commencement Tender Offer false
Title of 12(b) Security Common stock, par value $0.01 per share
Trading Symbol WHG
Security Exchange Name NYSE
Entity Central Index Key 0001165002
Amendment Flag false
v3.23.3
Cover
Oct. 31, 2023
Cover [Abstract]  
Document Period End Date Oct. 31, 2023
Entity Registrant Name WESTWOOD HOLDINGS GROUP, INC.
Entity Address, City or Town Dallas
Entity Address, State or Province TX
Entity Address, Postal Zip Code 75201
City Area Code (214)
Local Phone Number 756-6900
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