WHG Westwood

Julie Gerron SVP, General Counsel, Chief Compliance Officer & Corporate Secretary
Brian Casey President, CEO & Director
Murray Forbes SVP, CFO & Treasurer
Macrae Sykes Gabelli Funds
Call transcript
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Thank you for standing by, and welcome to the First Quarter 2021 Westwood Holdings Group, Inc. Earnings Conference Call. [Operator Instructions]. I'd now like to introduce your host for today's program, Julie Gerron, Senior Vice President, General Counsel and Chief Compliance Officer. Please go ahead.

Julie Gerron

to quarter welcome call. earnings and you, our XXXX first conference Thank which results following statements, those risks, and factors, forward-looking will contemplated uncertainties cause are other The statements. include known by which the discussion different be to materially subject forward-looking to and may from actual unknown

could ended the Exchange Form and forward-looking Securities as We the difference well in a such our with is March issued filed included Additional is information update events any cause release that obligation no today, revise concerning result future publicly in for statements, Commission. earlier quarter the XX-Q to XX, otherwise. factors that a information, XXXX, our press undertake as or of or new whether as

forward-looking You are statements. cautioned not to on reliance place undue

rules to earlier the the comparable included accordance financial economic end press In non-GAAP of our of is issued SEC measures, most share and today. reconciliation addition, economic per our at earnings in concerning GAAP measures earnings the with release

we today, the call our our I turn now call and President will Chief to Financial the Brian Forbes, Officer; Executive have over Casey. Terry On Chief Officer. and Casey, Brian

Brian Casey

Thanks flows some the meet in X positive, which to afternoon. in highlight quarter, efforts some of about success spoken we sales them, quarterly I've earnings efforts moved to for are best doing items our for net several that. ways far. And have management listed to I this time quarter, capping more by taking I years. quarter so our call. listen Good to to today's presented the our Last challenges our asset time the industry. Among

is AUM our driven remains $X.X capacity. high-performing pipeline at SmallCap business billion, new mostly by Our strong institutional wins, approaching strategy very

sent Financial the few of started our most investment coaster markets COVID us a About I have that comments year home. on ago, First, continued a last year. roller performance.

in business and with financial observers provide expectation is the impetus widespread reopenings economies up our Now showing globe, this are that we, along to around will asset powerful prices. convinced market a

meme and Given benefit surmise high as SPACs, got with small stocks, risk-taking year beta cyclical the assets as the bonds we've that investors along backdrop, most riskiest cheap junk would favored investors rise this seen most, and underway. securities

strategies Our this environment underperformed. challenged and U.S. value in were

LargeCap On with positive rebalancings this value quarter. in net to side, $XXX flows the bright contributing selected enjoyed million client the strategy

We managed wins X-star continue our a Morningstar. fund, remains rated see to fund potential by for account separately and WHGLX mutual

the been expect SMidCap had Our strategy net high addition with a fundamentals through we driver inflows, also institutional Markets XXXX. in reemerging beta new short-lived, lead $XX and and client to the valuations growth historically of over have volatility positive the million favoring markets client. rebalances of and key as earnings

$XXX this Our strategy Net despite SmallCap positive mandates, including separate exceeded for a low-quality by account so for securities. million, preference the year flows quarter net product the from institutional flows market's team. new with along remains and inflows favored clients far our intermediary positive speculative current generated

the To lead capacity. U.S. we Our in Based crosscurrents bit approaching SmallCap SmallCap current soft moving fundings, which will now product strategy capacity strong to that well. headwinds our be the lately, quality a historically current and our appreciated believe and down, finish delivering at approach die with companies on our known To as quite we to new alpha alpha value the can market as earnings outperforming mutates low-quality to an We we believe a where value, environment process quarter. be the group, in will up Multi-Asset on at and for. into new XXXX actively several generation we strategies it's Aggregate matter our leading of financial quarter. funded strategies. committed perform where XXX, will largest this positions integrity finishing durable our and companies our In interest investment of Bloomberg play and outperform. maintain conditions, our strong security and Bond strategy, the it's After mandates, team's also fixed S&P assets, Index. helped our has Barclays an monitor all nicely of income benchmark, XX% expect opportunities, of close overweight another strongly, solid XX% strategy selection equities of this ahead XXXX quarter are Income won seen outperformance, to versus SmallCap Opportunity, intersection that posted now

the top fund X and mutual decile X-star X, quintile XX group a remains time XX Morningstar periods WHGIX X trailing fund, year in periods. over and its in top and mutual over Our ranks and peer year

add slow income performance we new this correspondingly, for opportunity distribution opportunities optimism of and income prospect As positive to has strategy. and momentum our opportunities outflows improved, have posted sense intermediary inflows seen

the opportunity on income of As Adrian this track under of franchise. leadership excited the build record and for to the team are we Helfert, the future continues broader

added Barclays ahead all records Our has rates solid WLVIX, since Index. return, The star relative and products, strong of track total income, S&P delivered and other positive absolute to XX% as XX% the Bond performance XXX, the Multi-Asset Westwood coming the under fund Multi-Asset the return of income alternative fund, opportunities, with X Aggregate finished benchmark our Bloomberg wing total Morningstar performance. their credit team. it and quarter high

Morningstar WHGHX in our X-star over fund, welcome, rising XXX, and over for in provided. our performance time Investor remains issuance XXXX at X traditional income points. the most at by with WMNIX it the products, levered it fund uncorrelated basis top points basis Aggregate show X, a X-star trailing with year high Bond decile Index it X-year performance XX% in interest a up WHGHX income, delivered fund over trailing investment-grade X XXX periods. Alternative managing and income borrowers high quartile the strategy, strong benchmark, team the alternative produced highly up new net by strategy XXXX, period. Multi-Asset beat quarter. this highest high-yield top and points launched absolute S&P we results clients, and quarter quarterly companies given is returns Morningstar basis with advantage began High Bloomberg has nearly XX% its to rates, Our the Credit a many XXX Barclays performance taken absolute headwinds ever posted remains has for level the recorded. complex income, have interest first fixed and even below in returns, Credit the markets faced traditionally XXX opportunity worth since

participating selected taken has issuances with risk-reward team by attractive characteristics. Our in advantage new

Russell to continue XXX well. quarter, SmallCap basis strategies record growth index. LargeCap growth over on is a its benchmark equity of ahead our Systematic systematic strong Our strategy points posted and track building perform growth X,XXX the

growth, performance SmallCap evaluate the record potential this track we mutual continue and later new to offer to our year. a Given fund

asset Multi-Asset Our securities. classes take benefiting products inefficiencies positioned with of mispriced dislocations while advantage to suite of across from market remains well

for As have we marketplaces. risk records eliminated lower different greater better the using to fixed returns Higher strategies these produce areas correlations, track by income. build strategies, our which outcomes. Multi-Asset are and rates achieved and can Stable diversification them of present we to different with excited be

the and on ample Although implementing flows companies years Shifting time execution markets team industries, risk-adjusted the lows, deliver producing increase goals for and closer positive investment in have returns institutional strong we our asset a to fulfilling X for generally in recovered XXXX returns. large continue of sales from delivered and in net quarter. slowing us specific result intermediary. strategy began first the outflows dispersion the XXXX inflows, to superior and distribution, for team's experienced provide our opportunities to across this potential to institutional both intermediary will XXXX bringing classes, We for and

net and $XXX over Our strategies its well quarter, was inflows as LargeCap best were mandates million for group Inflows $XXX client last quarter. flows institutional thrilled client in deliver client left as by outflows us of were rebalances which funding rebalances since Institutional won with million and SmallCap driven our year. of XXXX. over $XXX quarterly new offset loss, quarter million to by this from one flows partially of SmallCap positive the

$XXX this mandates is delivered products potential $XXX Our million, a larger number over by from several winning strong of fourth is partially netted flows outflows of positive of risen Intermediary using offset is quarter, regard, million. growing also up XX% the and increasing as opportunity activity, the year, on advisers our In inflows of some of new million, has team focused nearly flows intermediary face-to-face substantially and spread gauge strategies. meeting activity this Search this meeting with activity quarter. increases. activity sales healthy our strong is $XXX pipeline

expanded particularly continue that expected demand. pleased are with several not funded one note these to this most SmallCap, wins our mandates competitive are Multi-Asset in has of strategies book institutional and and large SMidCap are quarter. to in but We fund new yet and be our to

uses remains which X-star are strategy institutional is in channel income We process selling Multi-Asset, In SMidCap the research investment fund similar a fund. SmallCap, the platform. and as the intermediary the to same a space and opportunity well in rated positioning

Turning to wealth management.

Our Dallas prospecting Houston teams both quarter. client servicing for to and net experienced the and new They efforts customers. outflows their and enhanced flows have reach in manage

its remainder of is has plans Dallas result planning new rollout ensure pipelines of to poised enhance with this The team COVID and business have return an spearheading financial interactions, and team Dallas in our Houston efforts. in and are to place, prospects. the activities effort clients face-to-face Our more of of Both and the year. conduct the inflows believe estate attractive for their reopening planner development vaccines, have comprehensive recently meaningful advisers our offices, a will the our to Houston added we

quarter, high-quality, market posted has the equity high some the return strategy strong X.X%. index. gained office managed focus of expense Houston alpha outperformed designed the the of select Russell trailing select nearly X,XXX to Russell achieve and our as worth March, created business. Dividend for outcomes nearly results on talking Our net far a and managing return by the of of spent High XX% rose XX.X%. are high last side I and now XX%, measured Last our about the out the X time in clients, outpacing X,XXX strategies, alpha quarter which are tax-efficient year

and excess of the further back sublease prices, stock value. global the very will of the recently dividend, advantage space trajectory We office transitioned shares made our significant below our now savings. with the in generate of of have in to reflecting at drops price attractive in Aviva reduced back share to Dallas, annual half maintain completed reinstated buy more part We XX,XXX some for business. confidence took our pleased our our convertibles which to intra-quarter purchases team growth investors, our We're than book of headcount,

have sheet, $XX.X stands of which enables new strength of short-term they million years. at in business opportunities stock take business financial long summarize net $XXX and quarter, to themselves. maintained as us now cash present This strong and to advantage and We investments. largest appropriate actions opportunities a balance of To had the inflows take pipeline several million in other the buyback we

More importantly, quarter. accounts yet fund the or client open one quarter new should next funded but not this early and

We very normalcy. throughout the increase to in nation, vaccinations our by and encouraged to we're return daily looking a are forward

to and in and our bonds Reopening clients. become our we working for X, our I we call efforts collaborate, and be our a As everyone to maintaining CFO. you now team, offices learn can't is office listening. plan trust, the environment when and the close can each part will over community employees forever vital. other Terry our home, wait. And atmosphere our that. to July other environment have changed serve from work culture clients create be fully work our the supports way and best Westwood will we to support, colleagues turn for Thank from face-to-face, Forbes, better involvement flexible of employees' very to each our we has and that efficient collaboration, on work of back with Though COVID

Murray Forbes

higher average a quarter. compared higher in Brian, Thanks, assets higher the quarter revenues year's management year's prior fourth as result for of of we $XX.X XXXX the in first first performance-based afternoon, under $XX.X fees. million were reported principally first XXXX million Today, the to everyone. quarter million good of total fourth $XX.X the last than and and Revenues of and quarter, quarter and

to per $X.XX million income and Non-GAAP million or per partially gains net the due of current of million income operating in or $X.XX the $X.X realized as earnings well $X.X of investments the $X.XX fourth net share or exceeded $X.X quarter share higher $X.X quarter economic primarily private income fourth million expenses offset $X.XX in on net per First versus million share revenues, as higher were taxes. per in share $X.X or by quarter. quarter,

with management end totaled in and per or in of higher of to billion income gains exceeded the First XX% of per net operating the for by billion the or private revenues, $X.XX the $X.X of of partially quarter assets of mutual $XX.X $X.XX or of institutional under Firm-wide per or quarter offset the primarily as compared or first of million net $X.X million million due $X.X assets income quarter million total, share income $X.XX at net prior billion of of share assets $X.X earnings total. of well taxes. quarter year's and consisted or share XXXX. management XX% as XX% higher fund $X.X per assets investments quarter, the on realized or total $X.X and expenses wealth billion Economic $X.XX $X.X million share $X.X first was

of $XXX Over the market appreciation experienced $XXX of inflows quarter, net million. and we million

short-term company, to quarter in discussion trends $XX.X questions. on that our That the as brings Happy you approved dividend $X.XX line be X.X% as to a the our of continues of position in Directors presentation price per product XXXX. This cash Board We quarterly highlights record and our debt-free to a investments well you business, review thank annualized of a and interest share, to yield financial announce of investor revenues X, Our July million XX. reflecting close. an our your at We balance encourage open quarter prepared a represents dividend cash X, on sheet. our we'll solid totaling earnings. longer-term with as on end June payable to development, comments website of XXXX, closing posted and very of to and for our first and April on stockholders


[Operator Instructions].

of Mac Our line first from Sykes question Gabelli. comes the from

Macrae Sykes

quarter. nice Brian,

had questions. just X I So quick

the constraints soft accounts? just the on on separate First, strategies, retail the for you versus close institutional clarify SmallCap could

Brian Casey


we manage RFPs some flows which will for those will carefully. have honor. we we then So very queue institutional, in And

open be As intermediary for in business far the folks goes, or for as space. retail transact intermediary to will to we be able

fund So mutual the will open. remain

Macrae Sykes

comp that continued And little the little more funds a Was a thing. I And reflection rose that a next you quarter then a on comp the and progress, line quarter. assume push that this which would the good of sales activity? pipeline bit is assuming pressure the line, better get

Brian Casey


fund did the we rise, quarter, hopefully. revenue So unfunded to and this do significant expect wins

it. third the we're and we've won Sometimes some pieces significant business, they bleed into but quarter, of excited about

far comp tandem goes, As on as it line sales. in yes, a on as will based folks of rise those commission result the are that who are paid


answer I'd Instructions]. the program [Operator and of hand Brian today's remarks. to conclude And to this further for any program. like question Casey does the session back

Brian Casey

Well, and or Westwood. for day further listen. free it's more of for earnings. any thanks, interest have on busy everybody, to in information presentation. a your Relations time Investor for filings questions. if the taking our you know I Please our visit myself call Thanks any for to Feel Terry,


today's in program. This for gentlemen, participation does Thank and your you, conference. the ladies conclude

now day. may Good disconnect. You