WESTWOOD HOLDINGS GROUP INC

Previous wording

We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp., Westwood Advisors, L.L.C. and Salient Advisors, LP (each of which is an SEC-registered investment advisor and referred to hereinafter together as "Westwood Management") and Westwood Trust. Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, other mutual funds, individuals and clients of Westwood Trust.

Current wording

We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp., Westwood Advisors, L.L.C. and Salient Advisors, L.P. and Broadmark Asset Management LLC (each of which is an SEC-registered investment advisor and referred to hereinafter together as "Westwood Management") and Westwood Trust. Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, other mutual funds, individuals and clients of Westwood Trust.

Previous wording

Our revenues are generally derived from fees based on a percentage of AUM and AUA, and Westwood Management and Westwood Trust collectively had AUM of approximately $17.0 billion and AUA of approximately $1.0 billion at March 31, 2025. We have established a track record of delivering competitive, risk-adjusted returns for our clients.

Current wording

Our revenues are generally derived from fees based on a percentage of AUM and AUA, and Westwood Management and Westwood Trust collectively had AUM of approximately $17.3 billion and AUA of approximately $0.9 billion at June 30, 2025. We have established a track record of delivering competitive, risk-adjusted returns for our clients.

Previous wording

(Gain) loss from change in fair value of contingent consideration consists of fair value adjustments related to contingent consideration from our 2022 acquisition of Salient, with gains representing reductions in value and losses representing increases in value.

Current wording

(Gain) loss from change in fair value of contingent consideration consists of fair value adjustments related to contingent consideration from our 2022 acquisition of Salient Partners, L.P. (the "Salient Acquisition"), with gains representing reductions in value and losses representing increases in value.

Previous wording

Firm-wide assets under management of $18.0 billion at March 31, 2025 consisted of $17.0 billion of AUM and $1.0 billion of AUA.

Current wording

Firm-wide assets under management of $18.3 billion at June 30, 2025 consisted of $17.3 billion of AUM and $0.9 billion of AUA.

Previous wording

AUM increased $0.8 billion to $17.0 billion at March 31, 2025 compared with $16.2 billion at March 31, 2024. The average of beginning and ending AUM for the first quarter of 2025 was $16.8 billion compared to $15.8 billion for the first quarter of 2024.

Current wording

AUM increased $1.5 billion to $17.3 billion at June 30, 2025 compared with $15.8 billion at June 30, 2024. The average of beginning and ending AUM for the second quarter of 2025 was $17.2 billion compared to $16.0 billion for the second quarter of 2024.

Previous wording

The change in AUM for the three months ended March 31, 2025 was due to net inflows of $0.6 billion offset by market depreciation of $0.3 billion. Net inflows were primarily related to our SmallCap Value strategy.

Current wording

The $0.7 billion increase in AUM for the six months ended June 30, 2025 was due to net inflows of $0.4 billion and market appreciation of $0.3 billion. Net inflows were primarily related to our SmallCap Value strategy.

Previous wording

The change in AUM for the three months ended March 31, 2024 was due to market appreciation of $0.9 billion and net outflows of $0.2 billion. Net outflows were primarily related to our LargeCap Value strategy.

Current wording

The $0.3 billion increase in AUM for the six months ended June 30, 2024 was due to market appreciation of $0.8 billion offset by net outflows of $0.5 billion. Net outflows were primarily related to our LargeCap Value strategy.

Previous wording

remeasurement of contingent consideration due to positive changes in growth projections following asset appreciation and asset flows in the period.

Current wording

Loss from change in fair value of contingent consideration. In 2024 we recorded a loss of $4.8 million upon remeasurement of contingent consideration due to positive changes in growth projections following asset appreciation and asset flows in the period.

Previous wording

Income tax provision. Our effective income tax rate differed from the 21% statutory rate for the three months ended March 31, 2025 due to permanent differences related to executive compensation. Our effective income tax rate differed from the 21% statutory rate for the three months ended March 31, 2024 due to permanent differences between book and tax restricted stock expense based on a decrease in our stock price between the restricted stock grant and vesting date.

Current wording

Income tax provision. Our effective income tax rate differed from the 21% statutory rate for the three months ended June 30, 2025 due to permanent differences related to executive compensation. Our effective income tax rate differed from the 21% statutory rate for the three months ended June 30, 2024 primarily due to permanent differences between book and tax restricted stock expense based on a decrease in our stock price between the restricted stock grant and vesting dates.

Previous wording

As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings and Economic EPS. We provide these measures in addition to, not as a substitute for, income attributable to Westwood Holdings Group, Inc. and earnings per share, which are reported on a GAAP basis. Our management and Board of Directors review Economic Earnings and Economic EPS to evaluate our ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP income attributable to Westwood Holdings Group, Inc. or earnings per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.

Current wording

As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings (Loss) and Economic EPS. We provide these measures in addition to, not as a substitute for, income (loss) attributable to Westwood Holdings Group, Inc. and earnings (loss) per share, which are reported on a GAAP basis. Our management and Board of Directors review Economic Earnings (Loss) and Economic EPS to evaluate our ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP income (loss) attributable to Westwood Holdings Group, Inc. or earnings (loss) per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.

Previous wording

We define Economic Earnings as income attributable to Westwood Holdings Group, Inc. plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. Although gains and losses from changes in the fair value of contingent consideration are non-cash, we do not add or subtract those back when calculating Economic Earnings because gains and losses on changes in the fair value of contingent consideration are considered regular following an acquisition. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.

Current wording

We define Economic Earnings (Loss) as income (loss) attributable to Westwood Holdings Group, Inc. plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings (Loss) because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. Although gains and losses from changes in the fair value of contingent consideration are non-cash, we do not add or subtract those back when calculating Economic Earnings (Loss) because gains and losses on changes in the fair value of contingent consideration are considered regular following an acquisition. In addition, we do not adjust Economic Earnings (Loss) for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings (Loss) divided by diluted weighted average shares outstanding.

Previous wording

The following tables (in thousands, except share and per share amounts) provide a reconciliation of income attributable to Westwood Holdings Group, Inc. to Economic Earnings and Economic Earnings by segment. We have included the tax impact of adjustments for all periods presented.

Current wording

The following tables (in thousands, except share and per share amounts) provide a reconciliation of income attributable to Westwood Holdings Group, Inc. to Economic Earnings (Loss) and Economic Earnings (Loss) by segment. We have included the tax impact of adjustments for all periods presented.

Previous wording

We had cash and liquid investments of $26.9 million and $44.6 million as of March 31, 2025 and December 31, 2024, respectively.

Current wording

We had cash and liquid investments of $33.1 million and $44.6 million as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

During the three months ended March 31, 2025, cash flow used in operating activities was $4.9 million, which included net sales of investments of $8.0 million and reductions in compensation and benefits payable of $8.5 million and contingent consideration of $4.4 million following the final payment for the revenue retention earn-out. During the three months ended March 31, 2024, cash flow provided by operating activities was $8.1 million, which included net sales of investments of $12.4 million and a reduction in compensation and benefits payable of $6.6 million.

Current wording

During the six months ended June 30, 2025, cash flow provided by operating activities was $2.4 million, which included net sales of investments of $8.0 million, reductions in compensation and benefits payable of $5.2 million and contingent consideration of $4.4 million following the final payment for the revenue retention earn-out. During the six months ended June 30, 2024, cash flow provided by operating activities was $11.7 million, which included net sales of current investments of $11.4 million, partially to pay compensation and benefits payable, and a reduction in compensation and benefits payable of $4.2 million.

Previous wording

Cash flow used in investing activities during the three months ended March 31, 2025 was related to the purchase of investments and internally developed software. Cash flow used in investing activities during the three months ended March 31, 2024 was related to the acquisition of property and equipment.

Current wording

Cash flow used in investing activities during the six months ended June 30, 2025 was related to the purchase of investments and internally developed software. Cash flow used in investing activities during the six months ended June 30, 2024 was related to the purchase of investments.

Previous wording

Cash flows used in financing activities of $3.1 million for the three months ended March 31, 2025 reflected the payment of dividends, deferred contingent consideration payments and restricted stock returned for the payment of taxes. Cash flows used in financing activities of $2.7 million for the three months ended March 31, 2024 reflected the payment of dividends and restricted stock returned for the payment of taxes.

Current wording

Cash flows used in financing activities of $4.4 million for the six months ended June 30, 2025 reflected the payment of dividends, restricted stock returned for the payment of taxes and deferred contingent consideration payments. Cash flows used in financing activities of $6.8 million for the six months ended June 30, 2024 reflected the payment of dividends, deferred contingent consideration payments, purchases of treasury stock and restricted stock returned for the payment of taxes.

Previous wording

"Investments, at fair value" in the accompanying Condensed Consolidated Balance Sheets. At March 31, 2025, Westwood Trust had approximately $9.9 million in excess of its minimum capital requirement.

Current wording

"Investments, at fair value" in the accompanying Condensed Consolidated Balance Sheets. At June 30, 2025, Westwood Trust had approximately $11.9 million in excess of its minimum capital requirement.