Form 8-K - Current report

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2024

DIAMOND HILL INVESTMENT GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Ohio

000-24498

65-0190407

(State or other jurisdiction of
incorporation)

(Commission File Number)

(I.R.S. Employer
Identification No.)

325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (614) 255-3333

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

DHIL

The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On May 8, 2024, Diamond Hill Investment Group, Inc. (the “Company”) issued a press release reporting its results of operations for the fiscal quarter ended March 31, 2024. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, unless the Company specifically states that the information is to be considered filed under the Exchange Act or incorporates the information by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended. By furnishing the information in this Form 8-K and the attached exhibit, the Company is making no admission as to the materiality of any information in this Form 8-K or the exhibit.

Item 9.01 Financial Statements and Exhibits


Exhibit No.						Description
99.1						Press release issued by the Registrant dated May 8, 2024.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DIAMOND HILL INVESTMENT GROUP, INC.

Date:

May 8, 2024

By:

/s/ Thomas E. Line

Thomas E. Line, Chief Financial Officer and Treasurer

FOR IMMEDIATE RELEASE:


Investor Contact:
Tom Line—Chief Financial Officer
614-255-5989 (tline@diamond-hill.com)


Media Contact:
Lara Hoffmans—Managing Director-Marketing
614-255-5550 (lhoffmans@diamond-hill.com)

DIAMOND HILL INVESTMENT GROUP, INC. REPORTS RESULTS FOR

FIRST QUARTER 2024 AND DECLARES QUARTERLY DIVIDEND

COLUMBUS, Ohio - May 8, 2024 -- Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported unaudited financial results for the first quarter of 2024.

The following are selected highlights for the quarter ended March 31, 2024:

•Assets under management (“AUM”) and assets under advisement (“AUA”) combined were $31.9 billion, compared to $29.2 billion as of December 31, 2023, and $26.7 billion as of March 31, 2023.

•Average AUM and AUA combined were $30.1 billion, compared to $27.3 billion for the first quarter of 2023.

•Net client inflows were $118.0 million, compared to $84.0 million of net inflows for the first quarter of 2023.

•Revenue was $36.3 million, compared to $34.0 million for the first quarter of 2023.

•Net operating profit margin was 23%, compared to 32% for the first quarter of 2023.

•Adjusted net operating profit margin1 was 32%, compared to 35% for the first quarter of 2023.

•Investment income was $9.4 million, compared to $8.1 million for the first quarter of 2023.

•Net income attributable to common shareholders was $13.0 million, compared to $12.7 million for the first quarter of 2023.

•Earnings per share attributable to common shareholders - diluted was $4.62, compared to $4.20 for the first quarter of 2023.

•Adjusted earnings per share attributable to common shareholders - diluted2 was $3.00, compared to $2.81 for the first quarter of 2023.

•The Company returned a total of $17.5 million to its shareholders - $13.3 million through the repurchase of 85,108 common shares and $4.2 million through a dividend of $1.50 per common share.

“Long-term investment performance has continued to improve across many of our strategies,” said Heather Brilliant, CEO. “That performance combined with strong market returns and solid client interest is reflected in our assets under management and advisement. As always we remain focused on generating excellent, long-term client outcomes in all market environments.”

_____________________________________________

1 Adjusts the financial measure calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) for the impact of market movements on the deferred compensation liability and related economic hedges, and the impact of any consolidated funds. During the first quarter of 2024, no Diamond Hill Funds were consolidated; during the first quarter of 2023, the Diamond Hill International Fund was consolidated. The Diamond Hill Fund(s) consolidated during the applicable period are referred to as the “Consolidated Funds.” See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.

2 Adjusts the financial measure calculated in accordance with GAAP for the impact of the Consolidated Funds and investment income related to certain other investments. See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.

Dividend:

The Company’s board of directors approved the payment of a regular quarterly cash dividend of $1.50 per common share. The dividend will be paid on June 14, 2024, to the Company’s shareholders of record as of the close of business on June 3, 2024.

Selected Income Statement Data




















	Three Months Ended March 31,
	2024		2023		% Change
Revenue	$	36,294,930	$	33,990,503	7%
Compensation and related costs, excluding deferred compensation expense	18,147,465		16,362,908		11%
Deferred compensation expense	3,190,363		744,511		329%
Other expenses	6,654,276		5,941,517		12%
Total operating expenses	27,992,104		23,048,936		21%
Net operating income	8,302,826		10,941,567		(24)%
Investment income, net	9,365,678		8,082,738		16%
Net income before taxes	17,668,504		19,024,305		(7)%
Income tax expense	(4,652,571)		(4,921,258)		(5)%
Net income	13,015,933		14,103,047		(8)%
Net income attributable to redeemable noncontrolling interest	—		(1,395,495)		NM
Net income attributable to common shareholders	$	13,015,933	$	12,707,552	2%

Earnings per share attributable to common shareholders - diluted	$	4.62	$	4.20	10%
Weighted average shares outstanding - diluted	2,816,839		3,025,094		(7)%

Selected Assets Under Management and Assets Under Advisement Data























	Change in AUM and AUA
	For the Three Months Ended March 31,
(in millions)	2024		2023
AUM at beginning of the period	$	27,418	$	24,763
Net cash (outflows) inflows
Diamond Hill Funds	92		110
Separately managed accounts	(162)		84
Collective investment trusts	170		18
Other pooled vehicles	18		(128)
	118		84
Net market appreciation and income	2,443		80
Increase during the period	2,561		164
AUM at end of the period	29,979		24,927
AUA at end of period	1,940		1,776
Total AUM and AUA at end of period	$	31,919	$	26,703

Average AUM during the period	$	28,250	$	25,427
Average AUA during the period	1,828		1,833
Total average AUM and AUA during the period	$	30,078	$	27,260


		Net Cash Inflows (Outflows) Further Breakdown
	For the Three Months Ended March 31,
(in millions)			2024		2023
Net cash inflows (outflows)
Equity			$	(378)	$	(479)
Fixed Income			496		563
			$	118	$	84

About Diamond Hill:

Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term

perspective, capacity discipline and client alignment. An independent active asset manager with significant employee ownership, Diamond Hill’s investment strategies include differentiated U.S. and international equity, alternative long-short equity and fixed income.

325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215 614-255-3333 info@diamond-hill.com

Non-GAAP Financial Measures and Reconciliation

As supplemental information, the Company is providing certain financial measures that are based on methodologies other than GAAP (“non-GAAP”). Management believes the non-GAAP financial measures below are useful measures of the Company’s core business activities, are important metrics in estimating the value of an asset management business, and help facilitate comparisons to Company operating performance across periods. These non-GAAP financial measures should not be used as a substitute for financial measures calculated in accordance with GAAP and may be calculated differently by other companies. The following schedules reconcile the differences between financial measures calculated in accordance with GAAP and non-GAAP financial measures for the three-month periods ended March 31, 2024 and 2023, respectively.





















	Three Months Ended March 31, 2024
(in thousands, except percentages and per share data)	Total operating expenses		Net operating income		Total non-operating income (loss)		Income tax expense(4)		Net income attributable to common shareholders		Earnings per share attributable to common shareholders - diluted		Net operating profit margin
GAAP Basis	$	27,992	$	8,303	$	9,366	$	4,653	$	13,016	$	4.62	23	%
Non-GAAP Adjustments:
Deferred compensation liability(1)	(3,190)		3,190		(3,190)		—		—		—		9	%

Other investment income(3)	—		—		(6,176)		(1,624)		(4,552)		(1.62)		—
Adjusted Non-GAAP basis	$	24,802	$	11,493	$	—	$	3,029	$	8,464	$	3.00	32	%

	Three Months Ended March 31, 2023
(in thousands, except percentages and per share data)	Total operating expenses		Net operating income		Total non-operating income (loss)		Income tax expense(4)		Net income attributable to common shareholders		Earnings per share attributable to common shareholders - diluted		Net operating profit margin
GAAP Basis	$	23,049	$	10,942	$	8,083	$	4,921	$	12,708	$	4.20	32	%
Non-GAAP Adjustments:
Deferred compensation liability (1)	(745)		745		(745)		—		—		—		3	%
Consolidated Fund(2)	—		99		(5,024)		(985)		(2,544)		(0.84)		—
Other investment income(3)	—		—		(2,314)		(646)		(1,668)		(0.55)		—
Adjusted Non-GAAP basis	$	22,304	$	11,786	$	—	$	3,290	$	8,496	$	2.81	35	%

(1) This non-GAAP adjustment removes the compensation expense resulting from market valuation changes in the Company’s deferred compensation plans’ liability and the related net gains/losses on investments designated as an economic hedge against the related liability. Amounts deferred under the deferred compensation plans are adjusted for appreciation/depreciation of investments chosen by participants. The Company believes it is useful to offset the non-operating investment income or loss realized on the hedges against the related compensation expense and remove the net impact to help readers understand the Company’s core operating results and to improve comparability from period to period.

(2) This non-GAAP adjustment removes the impact that the Consolidated Fund has on the Company’s GAAP consolidated statements of income. Specifically, the Company adds back the operating expenses and subtracts the investment income of the Consolidated Fund. The adjustment to net operating income represents the operating expenses of the Consolidated Fund, net of the elimination of related management and administrative fees. The adjustment to net income attributable to common shareholders represents the net income of the Consolidated Fund, net of redeemable non-controlling interests. The Company believes removing the impact of the Consolidated Fund helps readers understand its core operating results and improves comparability from period to period.

(3) This non-GAAP adjustment represents the net gains or losses earned on the Company’s non-consolidated investment portfolio that are not designated as economic hedges of the deferred compensation plans’ liability, non-consolidated seed investments, and other investments. The Company believes adjusting for these non-operating income or loss items helps readers understand the Company’s core operating results and improves comparability from period to period.

(4) The income tax expense impacts were calculated and resulted in the overall non-GAAP effective tax rates of 26.3% for the three months ended March 31, 2024, and 27.9% for the three months ended March 31, 2023.

The Company does not recommend that investors consider non-GAAP financial measures alone, or as a substitute for, financial information prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

Throughout this press release, the Company may make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, as amended (the “PSLR Act”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are provided under the “safe harbor” protection of the PSLR Act of 1995. Forward-looking statements include, but are not limited to, statements regarding anticipated operating results, prospects and levels of AUM or AUA, technological developments, economic trends (including interest rates and market volatility), expected transactions and similar matters. The words “may,” “believe,” “expect,” “anticipate,” “target,” “goal,” “project,” “estimate,” “guidance,” “forecast,” “outlook,” “would,” “will,” “continue,” “likely,” “should,” “hope,” “seek,” “plan,” “intend,” and variations of such words and similar expressions identify forward-looking statements. Similarly, descriptions of the Company’s objectives, strategies, plans, goals, or targets are also forward-looking statements. Forward-looking statements are based on the Company’s expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. While the Company believes that the assumptions underlying its forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and, accordingly, the Company’s actual results and experiences may differ materially from the anticipated results or other expectations expressed in its forward-looking statements.

Factors that may cause the Company’s actual results or experiences to differ materially from results discussed in forward-looking statements are discussed under Part I, Item 1A (Risk Factors) and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. These factors include, but are not limited to: (i) any reduction in the Company’s AUM or AUA; (ii) withdrawal, renegotiation, or termination of investment advisory agreements; (iii) damage to the Company’s reputation; (iv) failure to comply with investment guidelines or other contractual requirements; (v) challenges from the competition the Company faces in its business; (vi) challenges from industry trends towards lower fee strategies and model portfolio arrangements; (vii) adverse regulatory and legal developments; (viii) unfavorable changes in tax laws or limitations; (ix) interruptions in or failure to provide critical technological service by the Company or third parties; (x) adverse civil litigation and government investigations or proceedings; (xi) failure to adapt to or successfully incorporate technological changes, such as artificial intelligence, into the Company’s business; (xii) risk of loss on the Company’s investments; (xiii) lack of sufficient capital on satisfactory terms; (xiv) losses or costs not covered by insurance; (xv) a decline in the performance of the Company’s products; (xvi) changes in interest rates and inflation; (xvii) changes in national and local economic and political conditions; (xviii) the continuing economic uncertainty in various parts of the world; (xix) the after-effects of the COVID-19 pandemic and the actions taken in connection therewith; (xx) political uncertainty caused by, among other things, political parties, economic nationalist sentiments, tensions surrounding the current socioeconomic landscape; and (xxi) other risks identified from time-to-time in the Company’s public documents on file with the U.S. Securities and Exchange Commission.

In light of the significant uncertainties in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its expectations, objectives and plans will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company and speak only as of the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect it. The Company assumes no obligation to update any forward-looking statements after the date they are made, whether as a result of new information, future events or developments or otherwise, except as required by law, although it may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties.

325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215 614-255-3333 info@diamond-hill.com

Cover Page Cover Page	May 08, 2024
Cover [Abstract]
Entity Central Index Key	0000909108
Title of 12(b) Security	Common Stock, no par value
Document Period End Date	May 08, 2024
Entity Registrant Name	DIAMOND HILL INVESTMENT GROUP, INC.
Entity Incorporation, State or Country Code	OH
Document Type	8-K
Entity File Number	000-24498
Entity Tax Identification Number	65-0190407
Entity Address, Address Line One	325 John H. McConnell Blvd, Suite 200
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43215
City Area Code	614
Local Phone Number	255-3333
Trading Symbol	DHIL
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Amendment Flag	false