COLUMBUS, Ohio, Feb. 23, 2017 /PRNewswire/ -- Diamond Hill
Investment Group, Inc. (the "Company," "we," "our") (NASDAQ:DHIL) today reported results for the year ended
December 31, 2016. The Company plans to file its Form 10-K later today and we urge investors to read and consider the
information in that filing.
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Summary of Results of Operations
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(in thousands, except per share figures)
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Three Months Ended
December 31,
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Year Ended
December 31,
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|
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2016
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2015
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% Change
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2016
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2015
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% Change
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Revenues:
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Investment advisory(a)
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$
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36,893
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$
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28,021
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32%
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$
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121,645
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$
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107,916
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13%
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Mutual fund administration, net
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3,146
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4,281
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(27)%
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14,458
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16,510
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(12)%
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Total revenue
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40,039
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32,302
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24%
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136,103
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124,426
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9%
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Operating expenses
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20,512
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15,039
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36%
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73,034
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65,706
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11%
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Net operating income
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19,527
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17,263
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13%
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63,069
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58,720
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7%
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Investment income (loss)
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2,522
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973
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7,517
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(737)
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Gain on sale of subsidiary
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—
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—
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2,676
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—
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Income before taxes
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22,049
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18,236
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21%
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|
73,262
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57,983
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26%
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Net income attributable to common
Shareholders
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$
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13,645
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$
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11,655
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17%
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$
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46,052
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$
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37,074
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24%
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Earnings per share - diluted
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$
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3.99
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$
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3.43
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16%
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$
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13.49
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$
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11.03
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22%
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Operating profit margin
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49%
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53%
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46%
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47%
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(a) - Investment advisory revenue in the fourth quarter of 2016 includes
$6.4 million received in connection with the termination of a variable
fee contract.
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Selected Balance Sheet Data
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(in thousands, except per share figures)
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December 31,
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2016
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2015
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Assets
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Cash equivalents and investment portfolio
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$
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165,206
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$
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109,966
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Accounts receivable
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18,605
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18,579
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Deferred taxes
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8,737
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9,206
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Other assets
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7,170
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7,436
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Total assets
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$
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199,718
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$
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145,187
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Liabilities
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46,653
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39,873
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Redeemable noncontrolling interest
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13,841
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—
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Total shareholders' equity
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139,224
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105,314
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Total liabilities and shareholders' equity
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$
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199,718
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$
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145,187
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Book value per share
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$
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40.81
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$
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30.84
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Outstanding shares
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3,412
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3,414
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Change in Assets Under Management
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For the Year Ended December 31,
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(in millions)
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2016
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2015
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AUM at beginning of the year
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$
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16,841
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$
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15,656
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Net cash inflows (outflows)
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proprietary funds
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548
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1,916
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sub-advised funds
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639
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(6)
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institutional accounts
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(1,023)
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(443)
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164
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1,467
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Net market appreciation (depreciation) and income
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2,376
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(282)
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Increase during the year
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2,540
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1,185
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AUM at end of the year
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$
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19,381
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$
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16,841
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About Diamond Hill :
We are an independent investment management firm with significant employee ownership and $19.4
billion in assets under management as of December 31, 2016. We provide investment management services to
institutions and individuals through mutual funds, institutional separate accounts, an exchange traded fund, and private
investment funds. Our entire investment team shares the same intrinsic value investment philosophy focused on absolute
returns, and our interests are firmly aligned with our clients through significant investment in its strategies. For more
information visit www.diamond-hill.com.
Use of Supplemental Data as Non-GAAP Performance Measures
As supplemental information, we are providing performance measures that are based on methodologies other than U.S.
generally accepted accounting principles ("non-GAAP"). We believe the non-GAAP measures below are useful measures of our
core business activities, are important metrics in estimating the value of an asset management business, and may enable more
appropriate comparison to our peers. These non-GAAP measures should not be a substitute for financial measures calculated
in accordance with U.S. generally accepted accounting principles ("GAAP") and may be calculated differently by other
companies. The following schedule reconciles GAAP measures to non-GAAP measures for the years ended December 31, 2016, 2015, and 2014, respectively.
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Year Ended December 31,
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(in thousands, except per share data)
|
2016
|
|
2015
|
|
2014
|
|
Total revenue
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$
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136,103
|
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$
|
124,426
|
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$
|
104,559
|
|
|
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Net operating income, GAAP basis
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$
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63,069
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$
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58,720
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$
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47,460
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Non-GAAP adjustments:
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Gains (losses) on deferred compensation plan investments,
net(1)
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1,837
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(234)
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533
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Net operating income, as adjusted, non-GAAP basis(2)
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64,906
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58,486
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47,993
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Non-GAAP Adjustment:
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Tax provision on net operating income, as adjusted, non-GAAP
basis(3)
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(23,626)
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(21,090)
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(17,900)
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Net operating income, as adjusted, after tax, non-GAAP
basis(4)
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$
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41,280
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$
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37,396
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$
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30,093
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|
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Net operating income, as adjusted after tax per diluted share, non-
GAAP basis(5)
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$
|
12.09
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$
|
11.13
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$
|
9.21
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Diluted weighted average shares outstanding, GAAP basis
|
3,413
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3,360
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3,266
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Operating profit margin, GAAP basis
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46%
|
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47%
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45%
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Operating profit margin, as adjusted, non-GAAP
basis(6)
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48%
|
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47%
|
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46%
|
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(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.
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(2) Net operating income, as adjusted: This non-GAAP
measure was calculated by taking 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 investments.
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(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 the sale of
subsidiary and is calculated by applying the tax rate from the actual tax provision to net operating income, as
adjusted.
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(4) Net operating income, as adjusted after tax:
This non-GAAP measure was calculated by taking the net operating income, as adjusted less the tax provision on net
operating income, as adjusted.
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(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.
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(6) Operating profit margin, as adjusted: This non-GAAP
measure was calculated by dividing the net operating income, as adjusted by total revenue.
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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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/diamond-hill-investment-group-inc-reports-2016-financial-results-300412676.html
SOURCE Diamond Hill Investment Group, Inc.