COLUMBUS, Ohio, Feb. 26, 2025 /PRNewswire/ -- Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported results for the fourth quarter and year ended December 31, 2024.
The following are selected highlights for the year ended December 31, 2024:
- Assets under management ("AUM") and assets under advisement ("AUA") combined were $31.9 billion, compared to $29.2 billion as of December 31, 2023.
- Average AUM and AUA combined were $31.6 billion, compared to $27.3 billion during 2023.
- Net client outflows were $0.3 billion, compared to $0.5 billion of net outflows during 2023.
- Revenue was $151.1 million, compared to $136.7 million in 2023.
- Net operating profit margin was 29% in 2024, compared to 26% in 2023.
- Adjusted net operating profit margin[1] was 32% in 2024 compared to 30% in 2023.
- Investment income was $15.1 million in 2024, compared to investment income of $23.1 million in 2023.
- Net income attributable to common shareholders was $43.2 million, compared to $42.2 million in 2023.
- Earnings per share attributable to common shareholders - diluted was $15.66 in 2024, compared to $14.32 in 2023.
- Adjusted earnings per share attributable to common shareholders - diluted[2] was $12.92, compared to $10.28 in 2023.
- The Company returned approximately $46.8 million to its shareholders - $30.3 million through the repurchase of 195,224 common shares and $16.5 million through dividends totaling $6.00 per common share.
"Our revenue in 2024 benefited from meaningful inflows into our fixed income strategies and strong US market returns, offset in part by US equity outflows," said Heather Brilliant, CEO. "With fixed income assets of $6.2 billion at the end of the year, our long-standing investments in this area have started to pay off, and we saw our adjusted operating margin improve to 32%. We have continued to demonstrate meaningful capital return to shareholders, with $46.8 million returned during the year through share repurchases and dividends."
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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 any consolidated funds. During each of the first three quarters of 2024, no Proprietary Funds were consolidated. The "Proprietary Funds" consist of the Diamond Hill Funds, a series of open-end mutual funds, and the Diamond Hill Securitized Credit Fund, a closed-end registered investment company. During the fourth quarter of 2024, the Diamond Hill Core Plus Bond Fund was consolidated. During the first three quarters of 2023 the Diamond Hill International Fund was consolidated. The Proprietary Fund(s) consolidated during the applicable period are referred to as the "Consolidated Funds." See the reconciliation to the comparable GAAP financial measure at the end of this earnings release. |
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2 Adjusts the financial measure calculated in accordance with GAAP for the impact of the Consolidated Fund(s) 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 has approved the payment of a regular quarterly cash dividend of $1.50 per common share. The dividend will be paid on March 21, 2025, to the Company's shareholders of record as of the close of business on March 10, 2025.
Selected Income Statement Data (in thousands, except per share figures and percentages) |
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| Three Months Ended December 31, |
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| Year Ended December 31, |
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| 2024 |
| 2023 |
| % Change |
| 2024 |
| 2023 |
| % Change |
Revenue | $ 39,121 |
| $ 33,821 |
| 16 % |
| $ 151,095 |
| $ 136,716 |
| 11 % |
Compensation and related costs, excluding deferred compensation expense | 18,602 |
| 19,131 |
| (3) % |
| 74,589 |
| 70,731 |
| 5 % |
Deferred compensation expense | 204 |
| 3,732 |
| (95) % |
| 4,776 |
| 5,600 |
| (15) % |
Other expenses | 7,076 |
| 6,543 |
| 8 % |
| 27,838 |
| 24,881 |
| 12 % |
Total operating expenses | 25,882 |
| 29,406 |
| (12) % |
| 107,203 |
| 101,212 |
| 6 % |
Net operating income | 13,239 |
| 4,415 |
| 200 % |
| 43,892 |
| 35,504 |
| 24 % |
Investment income (loss), net | (3,261) |
| 13,349 |
| NM |
| 15,119 |
| 23,071 |
| (34) % |
Net income before taxes | 9,978 |
| 17,764 |
| (44) % |
| 59,011 |
| 58,575 |
| 1 % |
Income tax expense | (2,586) |
| (4,151) |
| (38) % |
| (15,833) |
| (15,490) |
| 2 % |
Net income | 7,392 |
| 13,613 |
| (46) % |
| 43,178 |
| 43,085 |
| — % |
Net income attributable to redeemable noncontrolling interest | — |
| — |
| NM |
| — |
| (859) |
| NM |
Net income attributable to common shareholders | $ 7,392 |
| $ 13,613 |
| (46) % |
| $ 43,178 |
| $ 42,226 |
| 2 % |
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Earnings per share attributable to common shareholders - diluted | $ 2.73 |
| $ 4.76 |
| (43) % |
| $ 15.66 |
| $ 14.32 |
| 9 % |
Selected Assets Under Management and Assets Under Advisement Data |
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| Change in AUM and AUA |
| For the Year Ended December 31, |
(in millions) | 2024 |
| 2023 |
AUM at beginning of the year | $ 27,418 |
| $ 24,763 |
Net cash inflows (outflows) |
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Proprietary Funds | 726 |
| (599) |
Separately managed accounts | (1,269) |
| (416) |
Collective investment trusts | 403 |
| 153 |
Other pooled vehicles | (149) |
| 368 |
| (289) |
| (494) |
Net market appreciation and income | 2,883 |
| 3,149 |
Increase during the year | 2,594 |
| 2,655 |
AUM at end of the year | 30,012 |
| 27,418 |
AUA at end of the year | 1,913 |
| 1,746 |
Total AUM and AUA at end of the year | $ 31,925 |
| $ 29,164 |
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Average AUM during the year | $ 29,718 |
| $ 25,552 |
Average AUA during the year | 1,892 |
| 1,769 |
Total average AUM and AUA during the year | $ 31,610 |
| $ 27,321 |
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| Net Cash Inflows (Outflows) Further Breakdown |
| For the Year Ended December 31 |
(in millions) | 2024 |
| 2023 |
Net cash inflows (outflows) |
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Equity | $ (2,544) |
| $ (1,865) |
Fixed Income | 2,255 |
| 1,371 |
| $ (289) |
| $ (494) |
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. For more information visit www.diamond-hill.com.
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 are presented for supplemental informational purposes only, should not be used as a substitute for financial measures calculated in accordance with GAAP and may be calculated differently from similarly titled non-GAAP measures used by other companies. The following schedules reconcile the differences between financial measures calculated in accordance with GAAP and non-GAAP financial measures for 2024 and 2023. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, as well as the Company's consolidated financial statements and related notes in its annual report on Form 10-K for the year ended December 31, 2024.
| Year Ended December 31, 2024 |
(in thousands, except percentages and per share data) | Total
operating
expenses |
| Net
operating
income |
| Total non-
operating
income |
| Income tax
expense(4) |
| Net income
attributable
to common
shareholders |
| Earnings per
share
attributable
to common
shareholders
- diluted |
| Net
operating
profit
margin |
GAAP Basis | $ 107,203 |
| $ 43,892 |
| $ 15,119 |
| $ 15,833 |
| $ 43,178 |
| $ 15.66 |
| 29 % |
Non-GAAP Adjustments: |
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Deferred compensation liability(1) | (4,776) |
| 4,776 |
| (4,776) |
| — |
| — |
| — |
| 3 % |
Consolidated Fund(2) | — |
| 28 |
| 199 |
| 61 |
| 165 |
| 0.06 |
| — |
Other investment income(3) | — |
| — |
| $ (10,542) |
| (2,825) |
| (7,717) |
| (2.80) |
| — |
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Adjusted Non-GAAP Basis | $ 102,427 |
| $ 48,696 |
| — |
| $ 13,069 |
| $ 35,626 |
| $ 12.92 |
| 32 % |
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| Year Ended December 31, 2023 |
(in thousands, except percentages and per share data) | Total
operating
expenses |
| Net
operating
income |
| Total non-
operating
income |
| Income tax
expense(4) |
| Net income
attributable
to common
shareholders |
| Earnings per
share
attributable
to common
shareholders
- diluted |
| Net
operating
profit
margin |
GAAP Basis | $ 101,212 |
| $ 35,504 |
| $ 23,071 |
| $ 15,490 |
| $ 42,226 |
| $ 14.32 |
| 26 % |
Non-GAAP Adjustments: |
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Deferred compensation liability(1) | (5,600) |
| 5,600 |
| (5,600) |
| — |
| — |
| — |
| 4 % |
Consolidated Fund(2) | — |
| 330 |
| (4,148) |
| (793) |
| (2,166) |
| (0.73) |
| — |
Other investment income(3) | — |
| — |
| $ (13,323) |
| (3,571) |
| (9,752) |
| (3.31) |
| — |
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Adjusted Non-GAAP Basis | $ 95,612 |
| $ 41,434 |
| — |
| $ 11,126 |
| $ 30,308 |
| $ 10.28 |
| 30 % |
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(1) This non-GAAP adjustment removes the compensation expense resulting from market valuation changes in the Company's deferred compensation plans' liability and the related net gains/losses on investments designated as an economic hedge against the related liability. Amounts deferred under the deferred compensation plans are adjusted for appreciation/depreciation of investments chosen by participants. The Company believes it is useful to offset the non-operating investment income or loss realized on the hedges against the related compensation expense and remove the net impact to help readers understand the Company's core operating results and to improve comparability from period to period. |
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(2) This non-GAAP adjustment removes the impact that the Consolidated Fund has on the Company's GAAP consolidated statements of income. Specifically, the Company adds back the operating expenses and subtracts the investment income of the Consolidated Fund. The adjustment to net operating income represents the operating expenses of the Consolidated Fund, net of the elimination of related management and administrative fees. The adjustment to net income attributable to common shareholders represents the net income of the Consolidated Fund, net of redeemable non-controlling interests. The Company believes removing the impact of the Consolidated Fund helps readers understand its core operating results and improves comparability from period to period. |
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(3) This non-GAAP adjustment represents the net gains or losses earned on the Company's non-consolidated investment portfolio that are not designated as economic hedges of the deferred compensation plans' liability, non-consolidated seed investments, and other investments. The Company believes adjusting for these non-operating income or loss items helps readers understand the Company's core operating results and improves comparability from period to period. |
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(4) The income tax expense impacts were calculated and resulted in an overall non-GAAP effective tax rate of 26.8% for 2024, and 2023. |
The Company does not recommend that investors consider the above non-GAAP financial measures alone, or as a substitute for, financial information prepared in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
Throughout this press release, the Company may make "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, as amended (the "PSLR Act"), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are provided under the "safe harbor" protection of the PSLR Act of 1995. Forward-looking statements include, but are not limited to, statements regarding anticipated operating results, prospects and levels of AUM or AUA, technological developments, economic trends (including interest rates and market volatility), expected transactions and similar matters. The words "may," "believe," "expect," "anticipate," "target," "goal," "project," "estimate," "guidance," "forecast," "outlook," "would," "will," "continue," "likely," "should," "hope," "seek," "plan," "intend," and variations of such words and similar expressions identify forward-looking statements. Similarly, descriptions of the Company's objectives, strategies, plans, goals, or targets are also forward-looking statements. Forward-looking statements are based on the Company's expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. While the Company believes that the assumptions underlying its forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and, accordingly, the Company's actual results and experiences may differ materially from the anticipated results or other expectations expressed in its forward-looking statements.
Factors that may cause the Company's actual results or experiences to differ materially from results discussed in forward-looking statements are discussed under Part I, Item 1A (Risk Factors) and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These factors include, but are not limited to: (i) any reduction in the Company's AUM or AUA; (ii) withdrawal, renegotiation, or termination of investment advisory agreements; (iii) damage to the Company's reputation; (iv) failure to comply with investment guidelines or other contractual requirements; (v) challenges from the competition the Company faces in its business; (vi) challenges from industry trends towards lower fee strategies and model portfolio arrangements; (vii) adverse regulatory and legal developments; (viii) unfavorable changes in tax laws or limitations; (ix) interruptions in or failure to provide critical technological service by the Company or third parties; (x) adverse civil litigation and government investigations or proceedings; (xi) failure to adapt to or successfully incorporate technological changes, such as artificial intelligence, into the Company's business; (xii) risk of loss on the Company's investments; (xiii) lack of sufficient capital on satisfactory terms; (xiv) losses or costs not covered by insurance; (xv) a decline in the performance of the Company's products; (xvi) changes in interest rates and inflation; (xvii) changes in national and local economic and political conditions; (xviii) the continuing economic uncertainty in various parts of the world; (xix) the effects of pandemics and the actions taken in connection therewith; (xx) political uncertainty caused by, among other things, political parties, economic nationalist sentiments, tensions surrounding the current socioeconomic landscape; and (xxi) other risks identified from time-to-time in the Company's public documents on file with the U.S. Securities and Exchange Commission.
In light of the significant uncertainties in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its expectations, objectives and plans will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company and speak only as of the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect it. The Company assumes no obligation to update any forward-looking statements after the date they are made whether as a result of new information, future events or developments or otherwise, except as required by law, although it may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties.
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SOURCE Diamond Hill Investment Group, Inc.
