COLUMBUS, Ohio, Feb. 21,
2019 /PRNewswire/ -- Diamond Hill Investment Group, Inc.
(the "Company," "we," "our") (NASDAQ: DHIL) today reported results
for the year ended December 31, 2018. The Company
derives its consolidated revenue and net income from investment
advisory and fund administration services provided by its
subsidiary, Diamond Hill Capital Management, Inc. ("DHCM").
The Company plans to file its Form 10-K later today and we urge
investors to read and consider the information in that filing.
Selected Income
Statement Data
(in thousands, except
per share figures)
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|
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|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Year Ended
December
31,
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
Revenues:
|
|
|
|
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|
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|
|
|
|
|
Investment advisory
|
$
|
32,232
|
|
|
$
|
34,487
|
|
|
(7)%
|
|
$
|
135,318
|
|
|
$
|
132,689
|
|
|
2%
|
Mutual fund administration, net
|
2,214
|
|
|
3,266
|
|
|
(32)%
|
|
10,310
|
|
|
12,513
|
|
|
(18)%
|
Total revenue
|
34,446
|
|
|
37,753
|
|
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(9)%
|
|
145,628
|
|
|
145,202
|
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
14,659
|
|
|
19,443
|
|
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(25)%
|
|
74,372
|
|
|
78,200
|
|
|
(5)%
|
Net operating
income
|
19,787
|
|
|
18,310
|
|
|
8%
|
|
71,256
|
|
|
67,002
|
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
(loss), net
|
(13,488)
|
|
|
4,439
|
|
|
|
|
(6,273)
|
|
|
14,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
taxes
|
6,299
|
|
|
22,749
|
|
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(72)%
|
|
64,983
|
|
|
81,019
|
|
|
(20)%
|
|
|
|
|
|
|
|
|
|
|
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Income tax
provision
|
(4,223)
|
|
|
(10,398)
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(59)%
|
|
(18,669)
|
|
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(29,417)
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(37)%
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Net income
attributable to common
shareholders
|
$
|
4,809
|
|
|
$
|
11,895
|
|
|
(13)%
|
|
$
|
47,376
|
|
|
$
|
49,989
|
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
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Earnings per share -
diluted
|
$
|
1.37
|
|
|
$
|
3.43
|
|
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(60)%
|
|
$
|
13.48
|
|
|
$
|
14.48
|
|
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(7)%
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Operating profit
margin
|
57%
|
|
|
49%
|
|
|
|
|
49%
|
|
|
46%
|
|
|
|
Selected Balance
Sheet Data
(in thousands, except
per share figures)
|
|
|
December
31,
|
|
2018
|
|
2017
|
Total cash and
corporate investments held directly by DHCM
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$
|
196,545
|
|
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$
|
171,339
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Total
assets
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325,728
|
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250,388
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Total
liabilities
|
67,472
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|
|
57,868
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|
Redeemable
noncontrolling interest
|
62,680
|
|
|
20,076
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Shareholders
equity
|
195,576
|
|
|
172,444
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Book value per
share
|
$
|
55.89
|
|
|
$
|
49.69
|
|
|
|
|
|
|
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Change in Assets
Under Management
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|
For the Year Ended
December 31,
|
(in
millions)
|
2018
|
|
2017
|
AUM at beginning of
the year
|
$
|
22,317
|
|
|
$
|
19,381
|
|
Net cash inflows
(outflows)
|
|
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|
proprietary funds
|
(978)
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|
|
843
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|
sub-advised funds
|
(25)
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|
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(164)
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institutional accounts
|
(99)
|
|
|
(254)
|
|
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(1,102)
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|
|
425
|
|
Net market
appreciation (depreciation) and income
|
(2,107)
|
|
|
2,511
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|
Increase (decrease)
during the year
|
(3,209)
|
|
|
2,936
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|
AUM at end of the
year
|
$
|
19,108
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|
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$
|
22,317
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About Diamond Hill:
We are an independent investment management firm with significant
employee ownership and $19.1 billion
in assets under management as of December 31,
2018. We provide investment management services to
institutions and individuals through mutual funds,
institutional separate accounts, an exchange traded fund, and
private investment funds. Our entire investment team shares
the same intrinsic value investment philosophy focused on absolute
returns, and our interests are firmly aligned with our clients
through significant investment in its strategies. For more
information visit www.diamond-hill.com.
Use of Supplemental Data as Non-GAAP Performance
Measures
As supplemental information, we are providing performance
measures that are based on methodologies other than U.S. generally
accepted accounting principles ("non-GAAP"). We believe the
non-GAAP measures below are useful measures of our core business
activities, are important metrics in estimating the value of an
asset management business, and may enable more appropriate
comparison to our peers. These non-GAAP measures should not
be a substitute for financial measures calculated in accordance
with U.S. generally accepted accounting principles ("GAAP") and may
be calculated differently by other companies. The following
schedule reconciles GAAP measures to non-GAAP measures for the
years ended December 31, 2018 and
2017, respectively.
|
Year Ended
December 31,
|
(in thousands,
except percentages and per share data)
|
2018
|
|
2017
|
Total
revenue
|
$
|
145,628
|
|
|
$
|
145,202
|
|
|
|
|
|
Net operating income,
GAAP basis
|
$
|
71,256
|
|
|
$
|
67,001
|
|
Non-GAAP
adjustments:
|
|
|
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Gains (losses) on deferred
compensation plan investments, net(1)
|
(2,122)
|
|
|
2,382
|
|
Net operating income,
as adjusted, non-GAAP basis(2)
|
69,134
|
|
|
69,383
|
|
Non-GAAP
adjustments:
|
|
|
|
Tax provision on net
operating income, as adjusted, non-GAAP
basis(3)
|
(19,862)
|
|
|
(25,192)
|
|
Net operating income,
as adjusted, after tax, non-GAAP basis(4)
|
$
|
49,272
|
|
|
$
|
44,191
|
|
|
|
|
|
Net operating income,
as adjusted after tax per diluted share, non-GAAP
basis(5)
|
$
|
14.02
|
|
|
$
|
12.80
|
|
Diluted weighted
average shares outstanding, GAAP basis
|
3,515
|
|
|
3,452
|
|
|
|
|
|
Operating profit
margin, GAAP basis
|
49
|
%
|
|
46
|
%
|
Operating profit
margin, as adjusted, non-GAAP basis(6)
|
47
|
%
|
|
48
|
%
|
|
(1)
Gains (losses) on deferred compensation plan investments,
net: The gain (loss) on deferred compensation plan investments,
which increases (decreases) deferred compensation expense included
in operating income, is removed from operating income in the
calculation because it is offset by an equal amount in investment
income (loss) below net operating income on the income statement,
and thus has no impact on net income attributable to the
Company.
|
|
(2) Net
operating income, as adjusted: This non-GAAP measure was
calculated as the Company's net operating income adjusted to
exclude the impact on compensation expense of gains and losses on
investments in the deferred compensation plan.
|
|
(3) Tax
provision on net operating income, as adjusted: This non-GAAP
measure represents the tax provision excluding the impact of
investment related activity and is calculated by applying the tax
rate from the actual tax provision to net operating income, as
adjusted.
|
|
(4) Net
operating income, as adjusted, after tax: This non-GAAP
measure deducts from the net operating income, as adjusted, the tax
provision on net operating income, as adjusted.
|
|
(5) Net
operating income, as adjusted after tax per diluted share: This
non-GAAP measure was calculated by dividing the net operating
income, as adjusted after tax, by diluted weighted average shares
outstanding.
|
|
(6)
Operating profit margin, as adjusted: This non-GAAP measure
was calculated by dividing the net operating income, as adjusted,
by total revenue.
|
Our management does not promote that investors consider the
above non-GAAP financial measures alone, or as a substitute for,
financial information prepared in accordance with GAAP.
Throughout this press release, the Company may make
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, relating to such
matters as anticipated operating results, prospects and levels of
assets under management, technological developments, economic
trends (including interest rates and market volatility), expected
transactions and similar matters. The words "believe," "expect,"
"anticipate," "estimate," "should," "hope," "seek," "plan,"
"intend" and similar expressions identify forward-looking
statements that speak only as of the date thereof. While we
believe that the assumptions underlying our forward-looking
statements are reasonable, investors are cautioned that any of the
assumptions could prove to be inaccurate and accordingly, our
actual results and experiences could differ materially from the
anticipated results or other expectations expressed in our
forward-looking statements. Factors that could cause such actual
results or experiences to differ from results discussed in the
forward-looking statements include, but are not limited to: the
adverse effect from a decline in the securities markets; a decline
in the performance of our products; changes in interest rates;
changes in national and local economic and political
conditions, the continuing economic uncertainty in various
parts of the world; changes in government policy and regulation,
including monetary policy; changes in our ability to attract or
retain key employees; unforeseen costs and other effects related to
legal proceedings or investigations of governmental and
self-regulatory organizations; and other risks identified from
time-to-time in other public documents on file with the U. S.
Securities and Exchange Commission.
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SOURCE Diamond Hill Investment Group, Inc.