Diamond Hill Investment Group, Inc. Reports 2015 Financial Results

Company Release - 2/25/2016 4:15 PM ET

COLUMBUS, Ohio, Feb. 25, 2016 /PRNewswire/ -- Diamond Hill Investment Group, Inc.  (the "Company," "we," "our") (NASDAQ: DHIL) today reported results for the year ended December 31, 2015.

 

Summary of Results of Operations

(in thousands, except per share figures)



Three Months Ended
 December 31,




Year Ended

December 31,




2015


2014


% Change


2015


2014


% Change

Revenues:












    Investment advisory

$

28,021



$

24,509



14%


$

107,916



$

89,901



20%

    Mutual fund administration, net

4,281



3,962



8%


16,510



14,658



13%

    Total revenue

32,302



28,471



13%


124,426



104,559



19%













Operating expenses

15,039



10,240



47%


65,706



57,099



15%

Net operating income

17,263



18,231



(5)%


58,720



47,460



24%













Investment income (loss)

973



2,073





(737)



2,906
















Income before taxes

18,236



20,304



(10)%


57,983



50,366



15%

Net income

$

11,655



$

12,553



(7)%


$

37,074



$

31,581



17%













Earnings per share - diluted

$

3.43



$

3.81



(10)%


$

11.03



$

9.67



14%

Operating profit margin

53

%


64

%




47

%


45

%



 

 

Selected Balance Sheet Data

(in thousands, except per share figures)



December 31,


2015


2014

Assets




    Cash equivalents and investment portfolio

$

109,966



$

81,205


    Accounts receivable

18,579



16,514


    Deferred taxes

9,206



5,659


    Other assets

7,436



4,331


    Total assets

$

145,187



$

107,709






Liabilities

39,873



33,390






Total shareholders' equity

105,314



74,319






Total liabilities and shareholders' equity

$

145,187



$

107,709






Book value per share(a)

$

30.84



$

22.40


Outstanding shares

3,414



3,318


 

(a) -

A $5 per share special dividend was paid in December 2015 and a $4 per share special dividend was paid in December 2014.

 


Change in Assets Under Management


For the Year Ended December 31,

(in millions)

2015


2014

AUM at beginning of the year

$

15,656



$

12,186


Net cash inflows (outflows)




    proprietary funds

1,916



1,618


    sub-advised funds

(6)



166


    institutional accounts

(443)



478



1,467



2,262


Net market appreciation (depreciation) and income

(282)



1,208


Increase during the year

1,185



3,470


AUM at end of the year

$

16,841



$

15,656


 

About Diamond Hill:
We are an independent investment management firm with significant employee ownership and $16.8 billion in assets under management as of December 31, 2015.  We provide investment management services to institutions and individuals through mutual funds, institutional separate accounts, 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 Measure
Net Operating Income After Tax

As supplemental information, we are providing performance measures that are based on methodologies other than generally accepted accounting principles ("non-GAAP") for "Net Operating Income After Tax" that management uses as a benchmark in evaluating and comparing the period-to-period operating performance of the Company and subsidiaries.

The Company defines "net operating income after tax" as the Company's net operating income less income tax provision,  excluding investment related activity and the tax impact of the investment related activity. The Company believes that "net operating income after tax" provides a good representation of the Company's operating performance, as it excludes the impact of investment related activity on financial results. The amount of the investment portfolio and market fluctuations on the investments can change significantly from one period to another, which can distort the underlying earnings potential of a company. We also believe "net operating income after tax" is an important metric in estimating the value of an asset management business. This non-GAAP measure is provided in addition to net income and net operating income and is not a substitute for net income or net operating income and may not be comparable to non-GAAP performance measures of other companies.

 


 Year Ended December 31,

 (in thousands, except per share data)

2015


2014

 Net operating income, GAAP basis

$

58,720



$

47,460


 Non-GAAP adjustments:




    Tax provision excluding impact of investment income (loss)

(21,174)



(17,701)


 Net operating income after tax, non-GAAP basis

$

37,546



$

29,759






 Net operating income after tax per diluted share, non-GAAP basis

$

11.17



$

9.11


 

The tax provision excluding impact of investment related activity is calculated by applying the tax rate from the actual provision to net operating income.

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.

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