Yahoo Finance Westwood Holdings Group Inc (WHG) (Q1 2024) Earnings Call Transcript Highlights: Stability and ...
Total Revenues: $22.7 million for Q1 2024, consistent with Q1 2023 and Q4 2023.
Comprehensive Income: $2.3 million for Q1 2024, or $0.27 per share.
Economic Earnings: $3 million for Q1 2024, or $0.36 per share.
Assets Under Management and Advisement (AUM and AUA): $17.2 billion at the end of Q1 2024.
Dividend: Regular cash dividend of $0.15 per common share, payable on July 1, 2024.
Financial Position: Cash and short-term investments totaled $46.6 million; debt-free balance sheet.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Assets under management and advisement reached $17.1 billion, the highest in six years, indicating strong growth and market confidence.
Launched the Westwood Celiant Enhanced Midstream Income Fund, an active ETF, which has seen trading volumes exceeding expectations and competitive pricing with an all-in expense ratio of 80 basis points.
Strong performance in U.S. Value strategies, with all relevant track records outperforming their benchmarks over multiple time periods, enhancing the company's competitive position in the market.
High client retention rate at 97% in wealth management, supported by targeted engagement efforts and new business initiatives, demonstrating strong client satisfaction and loyalty.
Positive net flows in institutional and intermediary channels, with a healthy pipeline of over $1.3 billion in business opportunities, suggesting potential for future growth.
Negative Points
Reported a modest decline in gross inflows and an increase in net outflows, primarily due to seasonal factors such as tax payments and required distributions.
Experienced mixed performance in debt markets, with fixed income yields at attractive levels but dependent on the trajectory of interest rate changes, adding uncertainty to future performance.
Absolute returns for energy infrastructure were initially weak, although they recovered later in the quarter, indicating potential volatility in this investment category.
Incurred significant expenses related to the launch of new business initiatives, including the ETF and Managed Investment Solutions, which impacted earnings for the quarter.
Despite a solid financial position, faced challenges with seasonal increases in employee compensation and benefits expenses, which affected net earnings compared to the previous quarter.
Q & A Highlights
Q: Could you provide more details on the funded wins in 1Q and upcoming in 2Q? Are they all for the same CIT and strategy? A: Brian Casey - CEO, Westwood Holdings Group Inc: Most of the funded wins are for the CIT, with one small cap separate account also included.
Q: Could you share more about the ETF launch, particularly what you learned from the process and any feedback from investors? A: Brian Casey - CEO, Westwood Holdings Group Inc: The ETF launch was a new venture, focusing on income-oriented strategies with a unique approach of combining a midstream energy portfolio with covered calls to enhance yields. The monthly distribution feature was well-received by advisors and investors. The launch involved significant preparation and marketing, and the initial response has been very positive, with good trading volumes and interest from institutional investors.
Q: What were the financial results for the first quarter of 2024? A: Murray Forbes - CFO, Westwood Holdings Group Inc: The company reported total revenues of $22.7 million, with comprehensive income of $2.3 million, or $0.27 per share. Economic earnings were $3 million, or $0.36 per share. These figures reflect a stable financial performance compared to the previous quarter and significant improvement from the first quarter of the previous year.
Q: How has the asset management sector performed in terms of inflows and outflows? A: Brian Casey - CEO, Westwood Holdings Group Inc: The asset management sector saw net positive inflows in institutional accounts, particularly in SMidCap client account funding. However, there were outflows in large cap and sub-advisory businesses. The company's ETFs and Managed Investment Solutions are expected to attract new capital, balancing the outflows in other areas.
Q: What are the future plans for ETFs and Managed Investment Solutions? A: Brian Casey - CEO, Westwood Holdings Group Inc: Westwood plans to continue expanding its ETF offerings, exploring different exchanges for optimal performance. The company is also building out infrastructure to support its Managed Investment Solutions, expecting to onboard new clients in the coming quarters. These initiatives are part of a broader strategy to diversify offerings and capture new market segments.
Q: Can you discuss any specific client engagement or success stories from the wealth management division? A: Brian Casey - CEO, Westwood Holdings Group Inc: A recent success involved onboarding a young entrepreneur who needed comprehensive wealth and estate planning. By offering a holistic service that included tax optimization and wealth transfer strategies, Westwood was able to consolidate the clients assets and establish a trusted advisory relationship, highlighting the personalized approach of Westwoods wealth management services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
