Diamond Hill Investment Group, Inc. Reports Results For Second Quarter 2017

Company Release - 7/26/2017 4:15 PM ET

COLUMBUS, Ohio, July 26, 2017 /PRNewswire/ -- Diamond Hill Investment Group, Inc. (the "Company," "we," "our") (NASDAQ: DHIL) today reported unaudited results for the quarter ended June 30, 2017 and filed its Form 10-Q.


Three Months Ended June 30,




2017


2016


Change

Revenue

$

35,542,541



$

32,669,435



9%

    Net operating income

15,966,748



14,699,249



9%

    Operating margin

45

%


45

%



Investment income

3,024,729



692,666




Net income attributable to common shareholders

12,638,439



9,714,552



30%

Earnings per share attributable to common shareholders - diluted

$

3.66



$

2.84



29%








Six Months Ended June 30,




2017


2016


Change

Revenue

$

70,581,614



$

63,126,924



12%

    Net operating income

31,708,222



28,403,682



12%

    Operating margin

45

%


45

%



Investment income

6,905,973



1,439,888




Net income attributable to common shareholders

25,395,334



18,980,215



34%

Earnings per share attributable to common shareholders - diluted

$

7.38



$

5.58



32%

Diamond Hill Investment Group logo

 


As Of


June 30, 2017


December 31, 2016


June 30, 2016

Assets under management (millions)

$

20,924



$

19,381



$

17,584


Book value per share

$

49.37



$

40.81



$

37.55


Total outstanding shares

3,457,775



3,411,556



3,425,389


 


Change in Assets Under Management


For the Three Months Ended June 30,

(in millions)

2017


2016

AUM at beginning of the period

$

20,333



$

17,391


Net cash inflows (outflows)




    proprietary funds

389



194


    sub-advised funds

(54)



(15)


    institutional accounts

(142)



(106)



193



73


Net market appreciation and income

398



120


Increase during the period

591



193


AUM at end of the period

$

20,924



$

17,584







Change in Assets Under Management


For the Six Months Ended June 30,

(in millions)

2017


2016

AUM at beginning of the period

$

19,381



$

16,841


Net cash inflows (outflows)




    proprietary funds

698



551


    sub-advised funds

(132)



(55)


    institutional accounts

(207)



(66)



359



430


Net market appreciation and income

1,184



313


Increase during the period

1,543



743


AUM at end of the period

$

20,924



$

17,584


About Diamond Hill:
We are an independent investment management firm with significant employee ownership and $20.9 billion in assets under management as of  June 30, 2017.  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 Measure

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 three and six months ended June 30, 2017 and 2016, respectively.


Three Months Ended
 June 30,


Six Months Ended
 June 30,

(in thousands, except percentages and per share data)

2017


2016


2017


2016

Total revenue

$

35,543



$

32,669



$

70,582



$

63,127










Net operating income, GAAP basis

$

15,967



$

14,699



$

31,708



$

28,404


Non-GAAP adjustment:








Gains (losses) on deferred compensation plan investments, net(1)

436



32



1,021



207


Net operating income, as adjusted, non-GAAP basis(2)

16,403



14,731



32,729



28,611


Non-GAAP adjustment:








Tax provision on net operating income, as adjusted, non-GAAP
basis(3)

(5,203)



(5,383)



(10,613)



(10,351)


Net operating income, as adjusted, after tax, non-GAAP basis(4)

$

11,200



$

9,348



$

22,116



$

18,260










Net operating income, as adjusted after tax per diluted share, non-
GAAP basis(5)

$

3.25



$

2.74



$

6.43



$

5.37


Diluted weighted average shares outstanding, GAAP basis

3,449



3,415



3,441



3,403










Operating profit margin, GAAP basis

45

%


45

%


45

%


45

%

Operating profit margin, as adjusted, non-GAAP basis(6)

46

%


45

%


46

%


45

%

 

(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 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.

(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 was calculated by taking the net operating income, as adjusted, less 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, 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 our actual results to differ materially from the results referred to in the forward-looking statements we make in this Quarterly Report on Form 10-Q and in our press releases are discussed under "Item 1A. Risk Factors" and elsewhere in the 2016 Annual Report and 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 SEC.

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SOURCE Diamond Hill Investment Group, Inc.

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