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WESTWOOD HOLDINGS GROUP INC (WHG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenues rose to $25.6M from $23.7M in Q3 and $23.2M in Q4 2023; diluted EPS improved to $0.24 vs $0.01 in Q3 but was below $0.32 in Q4 2023. Non-GAAP Economic EPS was $0.39 (vs $0.13 in Q3, $0.34 in Q4 2023), reflecting higher AUM and performance fees offset by contingent consideration effects and higher incentive comp .
  • Firmwide AUM+AUA ended at $17.6B (AUM $16.6B, AUA $1.0B). The ETF platform (MDST) reached $73M AUM by year-end; Board increased share repurchase authorization by $5.0M (total $5.5M available) and declared a $0.15 dividend payable April 1, 2025 .
  • Operating margin rebounded QoQ (EBIT margin 10.0% vs -2.1% in Q3) on higher revenues and performance fees; net income margin improved to 8.2% vs 0.7% in Q3 but trailed 11.1% in Q4 2023 due to contingent consideration and higher employee expenses .
  • Management sees a robust institutional pipeline and accelerating ETF initiatives via the WEBs partnership (DVSP, DVQQ), positioning the story on product innovation and distribution while maintaining a debt-free balance sheet and $44.6M in cash and liquid investments .
  • Note: S&P Global consensus estimates for Q4 revenue/EPS were unavailable; estimate comparisons are not shown (insufficient coverage).

What Went Well and What Went Wrong

  • What Went Well

    • Revenues and earnings improved QoQ: $25.6M revenue (+8% QoQ) and $0.24 diluted EPS (vs $0.01 in Q3), with Economic EPS up to $0.39, driven by higher average AUM and performance fees .
    • ETF momentum: MDST reached $73M AUM with strong volumes; WEBs partnership launched DVSP and DVQQ expanding product reach and fee rate. CEO: “We successfully launched two innovative ETFs… designed to provide a more stable investment experience… we are looking forward to gaining traction and scale” .
    • Institutional distribution: Won and funded 8 mandates totaling over $600M; pipeline “much improved” vs last year, supporting 2025 opportunities .

  • What Went Wrong

    • YoY EPS down: diluted EPS $0.24 vs $0.32 in Q4 2023 due to changes in fair value of contingent consideration and higher performance-related incentive comp despite revenue growth .
    • Intermediary outflows and AUM net outflows in 2024: intermediary net outflows of $229M in 2024 and AUM net outflows of $0.8B for the year, partially offset by market appreciation .
    • Value strategy headwinds in 2024 market context as growth outperformed; management noted lagging performance “for most of our U.S. value products” during the year despite strong multi-year records .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$23.2 $23.7 $25.6
Net Income ($USD Millions)$2.6 $0.2 $2.1
Diluted EPS ($USD)$0.32 $0.01 $0.24
EBIT Margin % (Operating Income/Revenue)12.2% (2,843/23,229) -2.1% (-494/23,719) 10.0% (2,561/25,582)
Net Income Margin %11.1% (2,583/23,229) 0.7% (159/23,719) 8.2% (2,099/25,582)
Economic EPS ($USD, Non-GAAP)$0.34 $0.13 $0.39

Revenue components ($USD Millions)

ComponentQ4 2023Q3 2024Q4 2024
Advisory fees (Asset-based)$16.7 $17.8 $18.0
Performance-based$0.7 $0.0 $1.4
Trust fees$5.1 $5.4 $5.6
Trust performance-based$0.3 $0.0 $0.5
Other, net$0.4 $0.5 $0.0
Total Revenues$23.2 $23.7 $25.6

Key operating metrics and balance sheet

KPIQ3 2024Q4 2024
Firmwide AUM + AUA ($USD Billions)$17.7 $17.6
AUM ($USD Billions)$16.8 $16.6
AUA ($USD Billions)$1.0 $1.0
Cash & Liquid Investments ($USD Millions)$48.3 $44.6
Stockholders’ Equity ($USD Millions)$118.4 $120.3
Dividend per share ($USD)$0.15 $0.15 (payable 4/1/25)
Share Repurchase Availability ($USD Millions)N/A$5.5 after $5.0M addition

AUM mix (Q4 2024)

SegmentAUM ($USD Billions)Mix (%)
Institutional$8.3 50%
Wealth Management$4.4 26%
Mutual Funds$3.9 24%

Notes:

  • Management remarks in the Q4 call described prior-year Q4 as a “net loss,” but the press release/8‑K show net income of $2.6M and diluted EPS $0.32; treat the press release/8‑K figures as definitive .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Dividend per shareQ1 2025 (payable 4/1/25)$0.15 (ongoing quarterly) $0.15 declared for 4/1/25 Maintained
Share Repurchase AuthorizationOngoingPrior program (unspecified)+$5.0M added; $5.5M total available Raised
Revenue/Margins/OpEx/Tax RateFY/Q4 2024Not providedNot providedMaintained – no quantitative guidance

Other Q4 press releases: Westwood Financial leadership transition (Dec 4, 2024) – organizational change at an affiliated real estate firm; no direct financial guidance impact cited for WHG .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
ETF platform expansionQ2: Launched MDST & WEEI; MDST approaching $50M AUM . Q3: Formed WEBs partnership with Ben Fulton to expand defined volatility ETFs .Q4: WEBs launched DVSP & DVQQ; MDST reached $73M AUM with strong volumes .Accelerating product innovation and distribution .
Institutional pipeline/mandatesQ2: Won-but-not-funded ~$400M; pipeline >$1.5B . Q3: Pipeline nearly $2B; institutional net inflows; new SMID mandates .Q4: Won and funded 8 mandates totaling >$600M; improved pipeline vs last year .Strengthening sales execution .
Wealth ManagementQ2: Net outflows $89M; team hires . Q3: Net outflows $44M; leadership transition announced .Q4: Uptick in net flows in Q4; new client portal and CRM rollout .Improving flows and client experience .
Energy strategiesQ2: Positive flows; launched energy-focused ETFs . Q3: Energy strategies net inflows; MDST crossing critical thresholds .Q4: MDST scaled to $73M; continuing focus on energy income strategies .Gaining traction .
Technology/client experienceQ2: Alt asset tracking; client events .Q4: Launched new client portal and CRM; enhancements scheduled .Execution progress .
Macro backdropQ2: Rates stable; narrow equity leadership . Q3: Fed cut 50bp; curve normalized; small/mid caps outperformed .Q4: Fed funds reduced by 100bp in 2H; growth > value; caution yet optimistic outlook .More accommodative policy tone in remarks .

Management Commentary

  • CEO strategic message: “Our enhanced capabilities in energy and real estate income strategies have broadened our product reach while improving our average fee rate… We successfully launched two innovative ETFs… and we are looking forward to gaining traction and scale. Lastly, our pipeline for our traditional business is much improved… we anticipate healthy opportunities for 2025 and beyond.” .
  • Distribution success: “Our institutional team won and funded 8 mandates totaling over $600 million last year… ETF initiatives continued with MDST reaching $73 million in assets by year-end amidst strong trading volumes.” .
  • Platform build-out: “We successfully launched on time our new client portal at year-end… implemented a comprehensive client relationship management system… expect to complete this rollout this quarter.” .
  • Capital returns: “We bought back 108,225 shares for approximately $1.34 million during the past year” and maintained quarterly cash dividend at $0.15 per share .

Q&A Highlights

  • The Q4 2024 earnings call did not include analyst Q&A; the operator confirmed no questions were received .
  • Management reiterated dividend ($0.15), strong balance sheet ($44.6M cash and liquid investments; no debt), and focus on landing the first MIS client and scaling the ETF platform .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q4 2024 revenue and EPS was unavailable; as a result, beat/miss vs. estimates cannot be shown. Coverage appears limited for WHG at this time (data not returned from S&P Global).
  • Implication: Near-term estimate revisions may be muted due to limited coverage; internal drivers (AUM trends, performance fees, and ETF scaling) are likely to matter more for sentiment until coverage deepens.

Key Takeaways for Investors

  • Momentum turning: Revenue +10% YoY and +8% QoQ; EBIT margin recovered to 10.0% from -2.1% in Q3; Economic EPS up to $0.39, indicating stronger core performance despite non-cash contingent consideration impacts .
  • Product catalysts: WEBs DVSP/DVQQ launches broaden addressable market; MDST’s $73M AUM and strong volumes underpin near-term distribution wins; watch for additional ETF products and platform listings .
  • Distribution and pipeline: Eight mandates funded (> $600M) and improved pipeline support 2025 inflows; institutional mix at 50% of AUM positions WHG to monetize performance with higher fee rates .
  • Capital allocation: Added $5.0M to buyback authorization ($5.5M total available) and maintained $0.15 dividend; debt-free with $44.6M cash & liquid investments provides flexibility for growth and returns .
  • Risks: YoY EPS compression vs Q4 2023 due to contingent consideration revaluation and higher incentive comp; intermediary outflows ($229M in 2024) and AUM net outflows ($0.8B) warrant monitoring .
  • Trading lens: Near-term stock reactions likely tied to visibility on ETF AUM scaling, institutional mandate funding cadence, and continued operating margin improvement; buyback activity offers downside support .
  • Watch items: First MIS client onboarding, additional WEBs launches, performance fee cadence, and any expansion of sell-side coverage to improve estimate comparability .