Company Announcements

¹ A djusts 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 2025, the Diamond Hill Core Plus Bond Fund was consolidated. During the first quarter of 2024, no Proprietary Funds were consolidated. The "Proprietary Funds" consist of the Diamond Hill Funds, a series of open-end mutual funds, and the Diamond Hill Securitized Credit Fund, a closed-end registered investment company. The Proprietary Fund consolidated during the applicable period is referred to as the "Consolidated Fund." 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 Fund and investment income related to certain other investments.  See the reconciliation to the comparable GAAP financial measure at the end of this earnings release.

Selected Income Statement Data

Three Months Ended March 31,

% Change

Revenue

$         37,116,210

$         36,294,930

2 %

Compensation and related costs, excluding deferred compensation expense (benefit)

18,206,648

18,147,465

— %

Deferred compensation expense (benefit)

(964,655)

3,190,363

NM

Other expenses

6,810,318

6,654,276

2 %

Total operating expenses

24,052,311

27,992,104

(14) %

Net operating income

13,063,899

8,302,826

57 %

Investment income, net

1,119,969

9,365,678

(88) %

Net income before taxes

14,183,868

17,668,504

(20) %

Income tax expense

(3,811,018)

(4,652,571)

(18) %

Net income

10,372,850

13,015,933

(20) %

Net income attributable to redeemable noncontrolling interest

(10,587)

—

NM

Net income attributable to common shareholders

$         10,362,263

$         13,015,933

(20) %

Earnings per share attributable to common shareholders - diluted

$                     3.77

$                     4.62

(18) %

Weighted average shares outstanding - diluted

2,748,568

2,816,839

(2) %

Selected Assets Under Management and Assets Under Advisement Data

Change in AUM and AUA

For the Three Months Ended March 31,

(in millions)

2025

2024

AUM at beginning of the period

$                                   30,012

$                                   27,418

Net cash inflows (outflows)

Proprietary Funds

386

92

Separately managed accounts

(450)

(162)

Collective investment trusts

(303)

170

Other pooled vehicles

(162)

18

(529)

118

Net market appreciation and income

309

2,443

Increase (decrease) during the period

(220)

2,561

AUM at end of the period

29,792

29,979

AUA at end of period

1,804

1,940

Total AUM and AUA at end of period

$                                   31,596

$                                   31,919

Average AUM during the period

$                                   30,351

$                                   28,250

Average AUA during the period

1,914

1,828

Total average AUM and AUA during the period

$                                   32,265

$                                   30,078

Net Cash Inflows (Outflows)
Further Breakdown

For the Three Months Ended 
 March 31,

(in millions)

2025

2024

Net cash inflows (outflows)

Equity

$             (1,289)

$                  (378)

Fixed Income

760

496

$                 (529)

$                    118

Three Months Ended March 31, 2025

(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

$       24,052

$    13,064

$      1,120

$         3,811

$          10,362

$             3.77

35 %

Non-GAAP Adjustments:

  Deferred compensation liability⁽¹⁾

965

(965)

965

—

—

—

(2) %

  Consolidated Fund⁽²⁾

—

40

(1,119)

(287)

(781)

(0.28)

— %

  Other investment income⁽³⁾

—

—

(966)

(260)

(706)

(0.26)

—

Adjusted Non-GAAP basis

$       25,017

$    12,139

$           —

$         3,264

$            8,875

$             3.23

33 %

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 %

⁽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 26.9% for the three months ended March 31, 2025 and 26.3% for the three months ended March 31, 2024.