AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced
financial results for the quarter ended September 30, 2023.
Third Quarter
2023 Financial and Operational
Highlights
- Net income for the quarter was $38.4 million, or $0.52 per
share.
- Adjusted net income for the quarter was $46.0 million, or $0.62
per share, on total revenue of $190.5 million.
- Adjusted EBITDA for the quarter was $66.5 million, or 34.9% of
total revenue.
- Platform assets increased 25.5% year-over-year to $99.6
billion. Quarter-over-quarter platform assets were down 1.2%, due
to negative market impact net of fees of $2.7 billion, partially
offset by quarterly net flows of $1.5 billion.
- Year-to-date annualized net flows as a percentage of
beginning-of-year platform assets were 7.1%.
- More than 3,400 new households and 158 new producing advisors
joined the AssetMark platform during the third quarter. In total,
as of September 30, 2023, there were over 9,300 advisors
(approximately 3,000 were engaged advisors) and over 251,000
investor households on the AssetMark platform.
- We realized an 18.7% annualized production lift from existing
advisors for the third quarter, indicating that advisors continued
to grow organically and increase wallet share on our platform.
“The third quarter was another record quarter for AssetMark,
highlighted by all-time highs across many financial and operating
metrics. We realized our sixth straight quarter of record adjusted
EBITDA, while also expanding margins 90 bps year-over-year to a
record 34.9%. Simply put, the results for the third quarter were
excellent, and we feel we are well on track for the best year in
our company’s history,” said AssetMark CEO Michael Kim. “We are
focused on continued execution of our strategy and three long-term
priorities: hyper growth, accelerated capital deployment and
enhanced scalability, which we believe will create continued value
for our advisors, their clients, and our shareholders.”
Third Quarter
2023 Key Operating Metrics
|
3Q22 |
|
3Q23 |
|
Variance per year |
Operational
metrics: |
|
|
|
|
|
Platform assets (at period-beginning) (millions of dollars) |
$ |
82,127 |
|
|
|
$ |
100,762 |
|
|
|
22.7 |
|
% |
Net flows (millions of dollars) |
|
1,207 |
|
|
|
|
1,543 |
|
|
|
27.8 |
|
% |
Market impact net of fees (millions of dollars) |
|
(3,952 |
) |
|
|
|
(2,708 |
) |
|
|
NM |
Acquisition impact (millions of dollars) |
|
— |
|
|
|
|
— |
|
|
|
NM |
Platform assets (at
period-end) (millions of dollars) |
$ |
79,382 |
|
|
|
$ |
99,597 |
|
|
|
25.5 |
|
% |
Net flows lift (% of beginning
of year platform assets) |
|
1.3 |
|
% |
|
|
1.7 |
|
% |
|
40 bps |
Advisors (at period-end) |
|
8,702 |
|
|
|
|
9,354 |
|
|
|
7.5 |
|
% |
Engaged advisors (at
period-end) |
|
2,601 |
|
|
|
|
2,995 |
|
|
|
15.1 |
|
% |
Assets from engaged advisors
(at period-end) (millions of dollars) |
$ |
72,195 |
|
|
|
$ |
91,900 |
|
|
|
27.3 |
|
% |
Households (at
period-end) |
|
223,098 |
|
|
|
|
251,424 |
|
|
|
12.7 |
|
% |
New producing advisors |
|
159 |
|
|
|
|
158 |
|
|
|
(0.6 |
) |
% |
Production lift from existing
advisors (annualized %) |
|
14.9 |
|
% |
|
|
18.7 |
|
% |
|
380 bps |
Assets in custody at ATC (at
period-end) (millions of dollars) |
$ |
61,539 |
|
|
|
$ |
73,445 |
|
|
|
19.3 |
|
% |
ATC client cash (at
period-end) (millions of dollars) |
$ |
3,510 |
|
|
|
$ |
2,897 |
|
|
|
(17.5 |
) |
% |
|
|
|
|
|
|
Financial
metrics: |
|
|
|
|
|
Total revenue (millions of
dollars) |
$ |
154.7 |
|
|
|
$ |
190.5 |
|
|
|
23.1 |
|
% |
Net income (millions of
dollars) |
$ |
30.1 |
|
|
|
$ |
38.4 |
|
|
|
27.6 |
|
% |
Net income margin (%) |
|
19.5 |
|
% |
|
|
20.1 |
|
% |
|
60 bps |
Capital expenditure (millions
of dollars) |
$ |
9.0 |
|
|
|
$ |
11.6 |
|
|
|
28.9 |
|
% |
|
|
|
|
|
|
Non-GAAP financial
metrics: |
|
|
|
|
|
Adjusted EBITDA (millions of
dollars) |
$ |
52.7 |
|
|
|
$ |
66.5 |
|
|
|
26.2 |
|
% |
Adjusted EBITDA margin
(%) |
|
34.0 |
|
% |
|
|
34.9 |
|
% |
|
90 bps |
Adjusted net income (millions
of dollars) |
$ |
35.0 |
|
|
|
$ |
46.0 |
|
|
|
31.4 |
|
% |
|
Note: Percentage
variance based on actual numbers, not rounded results |
All metrics
include Adhesion data, except "New producing advisors," "Production
lift from existing advisors" and ATC related metrics. |
|
Webcast and Conference Call Information
AssetMark will host a live conference call and webcast to
discuss its third quarter 2023 results. In conjunction with this
earnings press release, AssetMark has posted an earnings
presentation on its investor relations website at
http://ir.assetmark.com. Conference call and webcast details are as
follows:
- Date: November 6, 2023
- Time: 2:00 p.m. PT; 5:00 p.m. ET
- Phone: Listeners can pre-register for the
conference call here:
https://www.netroadshow.com/events/login?show=c8140a9d&confId=55622.
Upon registering, you will be provided with participant dial-in
numbers, passcode and unique registrant ID. In the 10 minutes prior
to the call start time, you may use the conference access
information (dial in number, direct event passcode and registrant
ID) provided in the confirmation email received at the point of
registering to join the call directly.
- Webcast: http://ir.assetmark.com. Please
access the website 10 minutes prior to the start time. The webcast
will be available in recorded form at http://ir.assetmark.com for
14 days from November 6, 2023.
About AssetMark Financial Holdings, Inc.
AssetMark operates a wealth management platform that powers
independent financial advisors and their clients. Together with our
affiliates Voyant and Adhesion Wealth, we serve advisors of all
models at every stage of their journey with flexible, purpose-built
solutions that champion client engagement and drive efficiency. Our
ecosystem of solutions equips advisors with services and
capabilities that would otherwise require significant investments
of time and money, ultimately enabling them to deliver better
investor outcomes and enhance their productivity, profitability and
client satisfaction.
Founded in 1996 and based in Concord, California, the company
has over 1,000 employees. Today, the AssetMark platform serves over
9,300 financial advisors and over 251,000 investor households. As
of September 30, 2023, the company had $99.6 billion in
platform assets.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding our future financial and
operating performance, which involve risks and uncertainties.
Actual results may differ materially from the results predicted and
reported results should not be considered as an indication of
future performance. Forward-looking statements include all
statements that are not historical facts and can be identified by
terms such as “will,” “may,” “could,” “should,” “believe,”
“expect,” “estimate,” “potential” or “continue,” the negative of
these terms and other comparable terminology that conveys
uncertainty of future events or outcomes. These forward-looking
statements involve known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results to
differ materially from statements made in this presentation,
including our ability to enhance shareholder value, advance our
growth strategy and meet our operating and financial performance
guidance. Other potential risks and uncertainties that could cause
actual results to differ from the results predicted include, among
others, those risks and uncertainties included under the captions
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our Annual Report
on Form 10-K for the year ended December 31, 2022, which is on file
with the Securities and Exchange Commission and available on our
investor relations website at http://ir.assetmark.com. Additional
information will be set forth in our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2023, which is expected to be
filed on November 7, 2023. All information provided in this
presentation is based on information available to us as of the date
of this presentation and any forward-looking statements contained
herein are based on assumptions that we believe are reasonable as
of this date. Undue reliance should not be placed on the
forward-looking statements in this presentation, which are
inherently uncertain. We undertake no duty to update this
information unless required by law.
|
AssetMark Financial Holdings, Inc. |
Unaudited Condensed Consolidated Balance
Sheets |
(in thousands except share data and par value) |
|
|
September 30, 2023 |
|
December 31, 2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
214,754 |
|
|
$ |
123,274 |
|
Restricted cash |
|
14,000 |
|
|
|
13,000 |
|
Investments, at fair value |
|
16,294 |
|
|
|
13,714 |
|
Fees and other receivables, net |
|
20,464 |
|
|
|
20,082 |
|
Income tax receivable, net |
|
— |
|
|
|
265 |
|
Prepaid expenses and other current assets |
|
13,086 |
|
|
|
16,870 |
|
Total current assets |
|
278,598 |
|
|
|
187,205 |
|
Property, plant and equipment, net |
|
7,672 |
|
|
|
8,495 |
|
Capitalized software, net |
|
105,593 |
|
|
|
89,959 |
|
Other intangible assets, net |
|
686,765 |
|
|
|
694,627 |
|
Operating lease right-of-use assets |
|
21,625 |
|
|
|
22,002 |
|
Goodwill |
|
487,353 |
|
|
|
487,225 |
|
Other assets |
|
17,721 |
|
|
|
13,417 |
|
Total assets |
$ |
1,605,327 |
|
|
$ |
1,502,930 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,781 |
|
|
$ |
4,624 |
|
Accrued liabilities and other current liabilities |
|
65,458 |
|
|
|
69,196 |
|
Income tax payable, net |
|
25,755 |
|
|
|
— |
|
Total current liabilities |
|
92,994 |
|
|
|
73,820 |
|
Long-term debt, net |
|
93,519 |
|
|
|
112,138 |
|
Other long-term liabilities |
|
16,666 |
|
|
|
15,185 |
|
Long-term portion of operating lease liabilities |
|
27,539 |
|
|
|
27,924 |
|
Deferred income tax liabilities, net |
|
147,497 |
|
|
|
147,497 |
|
Total long-term
liabilities |
|
285,221 |
|
|
|
302,744 |
|
Total liabilities |
|
378,215 |
|
|
|
376,564 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value
(675,000,000 shares authorized and 74,264,226 and 73,847,596 shares
issued and outstanding as of September 30, 2023 and
December 31, 2022, respectively) |
|
74 |
|
|
|
74 |
|
Additional paid-in capital |
|
955,208 |
|
|
|
942,946 |
|
Retained earnings |
|
271,987 |
|
|
|
183,503 |
|
Accumulated other comprehensive loss |
|
(157 |
) |
|
|
(157 |
) |
Total stockholders’
equity |
|
1,227,112 |
|
|
|
1,126,366 |
|
Total liabilities and
stockholders’ equity |
$ |
1,605,327 |
|
|
$ |
1,502,930 |
|
|
AssetMark Financial Holdings, Inc. |
Unaudited Condensed Consolidated Statements of Income and
Comprehensive Income |
(in thousands, except share and per share data) |
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
2022 |
Revenue: |
|
|
|
|
|
|
|
Asset-based revenue |
$ |
143,840 |
|
|
$ |
128,173 |
|
|
$ |
412,215 |
|
|
$ |
409,498 |
|
Spread-based revenue |
|
37,329 |
|
|
|
21,160 |
|
|
|
112,863 |
|
|
|
30,265 |
|
Subscription-based revenue |
|
3,891 |
|
|
|
3,126 |
|
|
|
11,128 |
|
|
|
9,703 |
|
Other revenue |
|
5,462 |
|
|
|
2,204 |
|
|
|
14,110 |
|
|
|
4,707 |
|
Total revenue |
|
190,522 |
|
|
|
154,663 |
|
|
|
550,316 |
|
|
|
454,173 |
|
Operating expenses: |
|
|
|
|
|
|
|
Asset-based expenses |
|
43,092 |
|
|
|
36,476 |
|
|
|
119,870 |
|
|
|
118,429 |
|
Spread-based expenses |
|
8,492 |
|
|
|
2,142 |
|
|
|
23,052 |
|
|
|
3,188 |
|
Employee compensation |
|
46,613 |
|
|
|
41,589 |
|
|
|
141,623 |
|
|
|
121,852 |
|
General and operating expenses |
|
22,714 |
|
|
|
21,667 |
|
|
|
72,757 |
|
|
|
65,949 |
|
Professional fees |
|
7,369 |
|
|
|
5,877 |
|
|
|
21,134 |
|
|
|
17,104 |
|
Depreciation and amortization |
|
8,965 |
|
|
|
7,961 |
|
|
|
26,077 |
|
|
|
23,141 |
|
Total operating expenses |
|
137,245 |
|
|
|
115,712 |
|
|
|
404,513 |
|
|
|
349,663 |
|
Interest expense |
|
2,305 |
|
|
|
1,560 |
|
|
|
6,789 |
|
|
|
4,207 |
|
Other (income) expense,
net |
|
(2,192 |
) |
|
|
(11 |
) |
|
|
17,385 |
|
|
|
195 |
|
Income before income
taxes |
|
53,164 |
|
|
|
37,402 |
|
|
|
121,629 |
|
|
|
100,108 |
|
Provision for income
taxes |
|
14,779 |
|
|
|
7,293 |
|
|
|
33,145 |
|
|
|
22,440 |
|
Net income |
|
38,385 |
|
|
|
30,109 |
|
|
|
88,484 |
|
|
|
77,668 |
|
Net comprehensive income |
$ |
38,385 |
|
|
$ |
30,109 |
|
|
$ |
88,484 |
|
|
$ |
77,668 |
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
$ |
0.52 |
|
|
$ |
0.41 |
|
|
$ |
1.19 |
|
|
$ |
1.05 |
|
Diluted |
$ |
0.51 |
|
|
$ |
0.41 |
|
|
$ |
1.19 |
|
|
$ |
1.05 |
|
Weighted average number of
common shares outstanding, basic |
|
74,261,667 |
|
|
|
73,842,297 |
|
|
|
74,047,412 |
|
|
|
73,682,881 |
|
Weighted average number of
common shares outstanding, diluted |
|
74,695,260 |
|
|
|
73,844,689 |
|
|
|
74,521,370 |
|
|
|
73,783,858 |
|
|
AssetMark Financial Holdings, Inc. |
Unaudited Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
|
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
88,484 |
|
|
$ |
77,668 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
26,077 |
|
|
|
23,141 |
|
Interest (income) expense, net |
|
(184 |
) |
|
|
607 |
|
Share-based compensation |
|
12,262 |
|
|
|
10,096 |
|
Debt acquisition cost write-down |
|
92 |
|
|
|
130 |
|
Changes in certain assets and
liabilities: |
|
|
|
Fees and other receivables, net |
|
(879 |
) |
|
|
(7,338 |
) |
Receivables from related party |
|
480 |
|
|
|
568 |
|
Prepaid expenses and other current assets |
|
7,751 |
|
|
|
6,732 |
|
Accounts payable, accrued liabilities and other current
liabilities |
|
(675 |
) |
|
|
(12,664 |
) |
Income tax receivable and payable, net |
|
26,020 |
|
|
|
(3,341 |
) |
Net cash provided by operating
activities |
|
159,428 |
|
|
|
95,599 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Purchase of Adhesion
Wealth |
|
(3,000 |
) |
|
|
— |
|
Purchase of investments |
|
(1,936 |
) |
|
|
(2,211 |
) |
Sale of investments |
|
289 |
|
|
|
384 |
|
Purchase of property and
equipment |
|
(1,155 |
) |
|
|
(1,440 |
) |
Purchase of computer
software |
|
(31,871 |
) |
|
|
(26,049 |
) |
Purchase of convertible
notes |
|
(4,275 |
) |
|
|
(8,600 |
) |
Net cash used in investing
activities |
|
(41,948 |
) |
|
|
(37,916 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Proceeds from issuance of
long-term debt, net |
|
— |
|
|
|
122,508 |
|
Proceeds from revolving credit
facility draw down |
|
50,000 |
|
|
|
— |
|
Payments on revolving credit
facility |
|
(50,000 |
) |
|
|
(115,000 |
) |
Payments on term loan |
|
(25,000 |
) |
|
|
(4,688 |
) |
Net cash (used in) provided by
financing activities |
|
(25,000 |
) |
|
|
2,820 |
|
Net change in cash, cash
equivalents, and restricted cash |
|
92,480 |
|
|
|
60,503 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
136,274 |
|
|
|
89,707 |
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
228,754 |
|
|
$ |
150,210 |
|
SUPPLEMENTAL CASH FLOW
INFORMATION |
|
|
|
Income taxes paid, net |
$ |
6,962 |
|
|
$ |
26,176 |
|
Interest paid |
$ |
7,837 |
|
|
$ |
2,714 |
|
Non-cash operating and
investing activities: |
|
|
|
Non-cash changes to right-of-use assets |
$ |
3,360 |
|
|
$ |
3,396 |
|
Non-cash changes to lease liabilities |
$ |
3,360 |
|
|
$ |
3,396 |
|
Explanations and Reconciliations of Non-GAAP Financial
Measures
In addition to our results determined in accordance with U.S.
generally accepted accounting principles (“GAAP”), we believe
adjusted EBITDA, adjusted EBITDA margin and adjusted net income,
all of which are non-GAAP measures, are useful in evaluating our
performance. We use adjusted EBITDA, adjusted EBITDA margin and
adjusted net income to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that such
non-GAAP financial information, when taken collectively, may be
helpful to investors because it provides consistency and
comparability with past financial performance. However, such
non-GAAP financial information is presented for supplemental
informational purposes only, has limitations as an analytical tool
and should not be considered in isolation or as a substitute for,
or superior to, financial information prepared and presented in
accordance with GAAP.
Other companies, including companies in our industry, may
calculate similarly titled non-GAAP measures differently or may use
other measures to evaluate their performance, all of which could
reduce the usefulness of our non-GAAP financial measures as tools
for comparison.
Investors are encouraged to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measures
and not rely on any single financial measure to evaluate our
business.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as EBITDA (net income plus interest
expense, income tax expense, depreciation and amortization and less
interest income), further adjusted to exclude certain non-cash
charges and other adjustments set forth below. Adjusted EBITDA
margin is defined as adjusted EBITDA divided by total revenue.
Adjusted EBITDA and adjusted EBITDA margin are useful financial
metrics in assessing our operating performance from period to
period because they exclude certain items that we believe are not
representative of our core business, such as certain material
non-cash items and other adjustments such as share-based
compensation, strategic initiatives and reorganization and
integration costs. We believe that adjusted EBITDA and adjusted
EBITDA margin, viewed in addition to, and not in lieu of, our
reported GAAP results, provide useful information to investors
regarding our performance and overall results of operations for
various reasons, including:
- non-cash equity grants made to
employees at a certain price and point in time do not necessarily
reflect how our business is performing at any particular time; as
such, share-based compensation expense is not a key measure of our
operating performance; and
- costs associated with acquisitions and
the resulting integrations, debt refinancing, restructuring,
conversions, as well as other non-recurring litigation costs can
vary from period to period and transaction to transaction; as such,
expenses associated with these activities are not considered a key
measure of our operating performance.
We use adjusted EBITDA and adjusted EBITDA margin:
- as measures of operating
performance;
- for planning purposes, including the
preparation of budgets and forecasts;
- to allocate resources to enhance the
financial performance of our business;
- to evaluate the effectiveness of our
business strategies;
- in communications with our board of
directors concerning our financial performance; and
- as considerations in determining
compensation for certain employees.
Adjusted EBITDA and adjusted EBITDA margin have limitations as
analytical tools, and should not be considered in isolation to, or
as substitutes for, analysis of our results as reported under GAAP.
Some of these limitations are:
- adjusted EBITDA and adjusted EBITDA
margin do not reflect all cash expenditures, future requirements
for capital expenditures or contractual commitments;
- adjusted EBITDA and adjusted EBITDA
margin do not reflect changes in, or cash requirements for, working
capital needs;
- adjusted EBITDA and adjusted EBITDA
margin do not reflect interest expense on our debt or the cash
requirements necessary to service interest or principal payments;
and
- the definitions of adjusted EBITDA and
adjusted EBITDA margin can differ significantly from company to
company and as a result have limitations when comparing similarly
titled measures across companies.
Set forth below is a reconciliation from net income, the most
directly comparable GAAP financial measure, to adjusted EBITDA for
the three and nine months ended September 30, 2023 and 2022
(unaudited).
|
Three Months EndedSeptember
30, |
|
Three Months EndedSeptember
30, |
(in thousands except for percentages) |
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
2022 |
Net income |
$ |
38,385 |
|
|
$ |
30,109 |
|
|
20.1 |
|
% |
|
19.5 |
|
% |
Provision for income taxes |
|
14,779 |
|
|
|
7,293 |
|
|
7.8 |
|
% |
|
4.7 |
|
% |
Interest income |
|
(3,186 |
) |
|
|
(849 |
) |
|
(1.7 |
) |
% |
|
(0.5 |
) |
% |
Interest expense |
|
2,305 |
|
|
|
1,560 |
|
|
1.2 |
|
% |
|
1.0 |
|
% |
Depreciation and amortization |
|
8,965 |
|
|
|
7,961 |
|
|
4.7 |
|
% |
|
5.1 |
|
% |
EBITDA |
$ |
61,248 |
|
|
$ |
46,074 |
|
|
32.1 |
|
% |
|
29.8 |
|
% |
Share-based compensation(1) |
|
4,288 |
|
|
|
3,923 |
|
|
2.3 |
|
% |
|
2.5 |
|
% |
Reorganization and integration costs(2) |
|
2,662 |
|
|
|
2,281 |
|
|
1.4 |
|
% |
|
1.5 |
|
% |
Acquisition expenses(3) |
|
195 |
|
|
|
379 |
|
|
0.1 |
|
% |
|
0.2 |
|
% |
Business continuity plan(4) |
|
— |
|
|
|
14 |
|
|
— |
|
|
|
— |
|
|
SEC settlement(5) |
|
(1,673 |
) |
|
|
— |
|
|
(0.9 |
) |
% |
|
— |
|
|
Other (income) expense, net |
$ |
(263 |
) |
|
$ |
(11 |
) |
|
(0.1 |
) |
% |
|
— |
|
|
Adjusted EBITDA |
$ |
66,457 |
|
|
$ |
52,660 |
|
|
34.9 |
|
% |
|
34.0 |
|
% |
|
Nine Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
(in thousands except for percentages) |
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
2022 |
Net income |
$ |
88,484 |
|
|
$ |
77,668 |
|
|
16.1 |
|
% |
|
17.1 |
|
% |
Provision for income taxes |
|
33,145 |
|
|
|
22,440 |
|
|
6.0 |
|
% |
|
4.9 |
|
% |
Interest income |
|
(7,746 |
) |
|
|
(1,107 |
) |
|
(1.4 |
) |
% |
|
(0.2 |
) |
% |
Interest expense |
|
6,789 |
|
|
|
4,207 |
|
|
1.2 |
|
% |
|
0.9 |
|
% |
Depreciation and amortization |
|
26,077 |
|
|
|
23,141 |
|
|
4.7 |
|
% |
|
5.1 |
|
% |
EBITDA |
$ |
146,749 |
|
|
$ |
126,349 |
|
|
26.6 |
|
% |
|
27.8 |
|
% |
Share-based compensation(1) |
|
12,262 |
|
|
|
10,096 |
|
|
2.2 |
|
% |
|
2.2 |
|
% |
Reorganization and integration costs(2) |
|
8,127 |
|
|
|
8,600 |
|
|
1.5 |
|
% |
|
1.9 |
|
% |
Acquisition expenses(3) |
|
368 |
|
|
|
1,313 |
|
|
0.1 |
|
% |
|
0.3 |
|
% |
Business continuity plan(4) |
|
(6 |
) |
|
|
234 |
|
|
— |
|
|
|
0.1 |
|
% |
SEC settlement(5) |
|
18,327 |
|
|
|
— |
|
|
3.3 |
|
% |
|
— |
|
|
Other (income) expense, net |
|
(186 |
) |
|
|
195 |
|
|
— |
|
|
|
— |
|
|
Adjusted EBITDA |
$ |
185,641 |
|
|
$ |
146,787 |
|
|
33.7 |
|
% |
|
32.3 |
|
% |
(1) |
“Share-based compensation” represents granted share-based
compensation in the form of restricted stock unit, stock option and
stock appreciation right grants by us to certain of our directors
and employees. Although this expense occurred in each measurement
period, we have added the expense back in our calculation of
adjusted EBITDA because of its noncash impact. |
(2) |
“Reorganization and integration costs” includes costs related to
our functional reorganization within our Operations, Technology and
Retirement functions as well as duplicate costs related to the
outsourcing of back-office operations functions. While we have
incurred such expenses in all periods measured, these expenses
serve varied reorganization and integration initiatives, each of
which is non-recurring. We do not consider these expenses to be
part of our core operations. |
(3) |
“Acquisition expenses” includes employee severance, transition and
retention expenses, duplicative general and administrative expenses
and other professional fees related to acquisitions. |
(4) |
“Business continuity plan” includes incremental compensation and
other costs that are directly related to a transition to a hybrid
workforce in 2022. |
(5) |
“SEC settlement” represents the amount paid by us pursuant to our
settlement with the SEC discussed in Note 12 of notes to unaudited
condensed consolidated financial statements in our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2023. |
|
|
Set forth below is a summary of the adjustments involved in the
reconciliation from net income and net income margin, the most
directly comparable GAAP financial measures, to adjusted EBITDA and
adjusted EBITDA margin for three and nine months ended
September 30, 2023 and 2022 (unaudited), broken out by
compensation and non-compensation expenses (unaudited).
|
|
Three Months Ended September 30, 2023 |
|
Three Months Ended September 30, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
|
$ |
4,288 |
|
|
$ |
— |
|
|
$ |
4,288 |
|
|
$ |
3,923 |
|
|
$ |
— |
|
|
$ |
3,923 |
|
Reorganization and integration
costs(2) |
|
|
1,101 |
|
|
|
1,561 |
|
|
|
2,662 |
|
|
|
829 |
|
|
|
1,452 |
|
|
|
2,281 |
|
Acquisition expenses(3) |
|
|
— |
|
|
|
195 |
|
|
|
195 |
|
|
|
(4 |
) |
|
|
383 |
|
|
|
379 |
|
Business continuity
plan(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
14 |
|
SEC settlement(5) |
|
|
— |
|
|
|
(1,673 |
) |
|
|
(1,673 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (income) expense,
net |
|
|
— |
|
|
|
(263 |
) |
|
|
(263 |
) |
|
|
— |
|
|
|
(11 |
) |
|
|
(11 |
) |
Total adjustments to adjusted
EBITDA |
|
$ |
5,389 |
|
|
$ |
(180 |
) |
|
$ |
5,209 |
|
|
$ |
4,748 |
|
|
$ |
1,838 |
|
|
$ |
6,586 |
|
|
|
Three Months Ended September 30, 2023 |
|
Three Months Ended September 30, 2022 |
(in percentages) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
|
2.3 |
|
% |
|
— |
|
|
|
2.3 |
|
% |
|
2.5 |
|
% |
|
— |
|
|
|
2.5 |
|
% |
Reorganization and integration
costs(2) |
|
0.6 |
|
% |
|
0.8 |
|
% |
|
1.4 |
|
% |
|
0.5 |
|
% |
|
1.0 |
|
% |
|
1.5 |
|
% |
Acquisition expenses(3) |
|
— |
|
|
|
0.1 |
|
% |
|
0.1 |
|
% |
|
— |
|
|
|
0.2 |
|
% |
|
0.2 |
|
% |
Business continuity
plan(4) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
SEC settlement(5) |
|
— |
|
|
|
(0.9 |
) |
% |
|
(0.9 |
) |
% |
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other (income) expense,
net |
|
— |
|
|
|
(0.1 |
) |
% |
|
(0.1 |
) |
% |
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total adjustments to adjusted
EBITDA margin % |
|
2.9 |
|
% |
|
(0.1 |
) |
% |
|
2.8 |
|
% |
|
3.0 |
|
% |
|
1.2 |
|
% |
|
4.2 |
|
% |
(1) |
“Share-based compensation” represents granted share-based
compensation in the form of restricted stock unit, stock option and
stock appreciation right grants by us to certain of our directors
and employees. Although this expense occurred in each measurement
period, we have added the expense back in our calculation of
adjusted EBITDA because of its noncash impact. |
(2) |
“Reorganization and integration costs” includes costs related to
our functional reorganization within our Operations, Technology and
Retirement functions as well as duplicate costs related to the
outsourcing of back-office operations functions. While we have
incurred such expenses in all periods measured, these expenses
serve varied reorganization and integration initiatives, each of
which is non-recurring. We do not consider these expenses to be
part of our core operations. |
(3) |
“Acquisition expenses” includes employee severance, transition and
retention expenses, duplicative general and administrative expenses
and other professional fees related to acquisitions. |
(4) |
“Business continuity plan” includes incremental compensation and
other costs that are directly related to a transition to a hybrid
workforce in 2022. |
(5) |
“SEC settlement” represents the amount paid by us pursuant to our
settlement with the SEC discussed in Note 12 of notes to unaudited
condensed consolidated financial statements in our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2023. |
|
|
|
Nine Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2022 |
(in thousands) |
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
$ |
12,262 |
|
|
$ |
— |
|
|
$ |
12,262 |
|
|
$ |
10,096 |
|
|
$ |
— |
|
|
$ |
10,096 |
|
Reorganization and integration
costs(2) |
|
3,370 |
|
|
|
4,757 |
|
|
|
8,127 |
|
|
|
2,823 |
|
|
|
5,777 |
|
|
|
8,600 |
|
Acquisition expenses(3) |
|
100 |
|
|
|
268 |
|
|
|
368 |
|
|
|
(4 |
) |
|
|
1,317 |
|
|
|
1,313 |
|
Business continuity
plan(4) |
|
— |
|
|
|
(6 |
) |
|
|
(6 |
) |
|
|
(2 |
) |
|
|
236 |
|
|
|
234 |
|
SEC settlement(5) |
|
— |
|
|
|
18,327 |
|
|
|
18,327 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (income) expense,
net |
|
— |
|
|
|
(186 |
) |
|
|
(186 |
) |
|
|
— |
|
|
|
195 |
|
|
|
195 |
|
Total adjustments to adjusted
EBITDA |
$ |
15,732 |
|
|
$ |
23,160 |
|
|
$ |
38,892 |
|
|
$ |
12,913 |
|
|
$ |
7,525 |
|
|
$ |
20,438 |
|
|
Nine Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2022 |
(in percentages) |
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
2.2 |
|
% |
|
— |
|
|
|
2.2 |
|
% |
|
2.2 |
|
% |
|
— |
|
|
|
2.2 |
|
% |
Reorganization and integration
costs(2) |
0.6 |
|
% |
|
0.9 |
|
% |
|
1.5 |
|
% |
|
0.6 |
|
% |
|
1.3 |
|
% |
|
1.9 |
|
% |
Acquisition expenses(3) |
— |
|
|
|
0.1 |
|
% |
|
0.1 |
|
% |
|
— |
|
|
|
0.3 |
|
% |
|
0.3 |
|
% |
Business continuity
plan(4) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
% |
|
0.1 |
|
% |
SEC settlement(5) |
— |
|
|
|
3.3 |
|
% |
|
3.3 |
|
% |
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other (income) expense,
net |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total adjustments to adjusted
EBITDA margin % |
2.8 |
|
% |
|
4.3 |
|
% |
|
7.1 |
|
% |
|
2.8 |
|
% |
|
1.7 |
|
% |
|
4.5 |
|
% |
(1) |
“Share-based compensation” represents granted share-based
compensation in the form of restricted stock unit, stock option and
stock appreciation right grants by us to certain of our directors
and employees. Although this expense occurred in each measurement
period, we have added the expense back in our calculation of
adjusted EBITDA because of its noncash impact. |
(2) |
“Reorganization and integration costs” includes costs related to
our functional reorganization within our Operations, Technology and
Retirement functions as well as duplicate costs related to the
outsourcing of back-office operations functions. While we have
incurred such expenses in all periods measured, these expenses
serve varied reorganization and integration initiatives, each of
which is non-recurring. We do not consider these expenses to be
part of our core operations. |
(3) |
“Acquisition expenses” includes employee severance, transition and
retention expenses, duplicative general and administrative expenses
and other professional fees related to acquisitions. |
(4) |
“Business continuity plan” includes incremental compensation and
other costs that are directly related to a transition to a hybrid
workforce in 2022. |
(5) |
“SEC settlement” represents the amount paid by us pursuant to our
settlement with the SEC discussed in Note 12 of notes to unaudited
condensed consolidated financial statements in our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2023. |
|
|
Adjusted Net Income
Adjusted net income represents net income before: (a)
share-based compensation expense, (b) amortization of
acquisition-related intangible assets, (c) acquisition and related
integration expenses, (d) restructuring and conversion costs and
(e) certain other expenses. Reconciled items are tax effected using
the income tax rates in effect for the applicable period, adjusted
for any potentially non-deductible amounts. We prepared adjusted
net income to eliminate the effects of items that we do not
consider indicative of our core operating performance. We believe
that adjusted net income, viewed in addition to, and not in lieu
of, our reported GAAP results, provides useful information to
investors regarding our performance and overall results of
operations for various reasons, including the following:
- non-cash equity grants made to
employees at a certain price and point in time do not necessarily
reflect how our business is performing at any particular time; as
such, share-based compensation expense is not a key measure of our
operating performance;
- costs associated with acquisitions and
related integrations, debt refinancing, restructuring and
conversions can vary from period to period and transaction to
transaction; as such, expenses associated with these activities are
not considered a key measure of our operating performance; and
- amortization expenses can vary
substantially from company to company and from period to period
depending upon each company’s financing and accounting methods, the
fair value and average expected life of acquired intangible assets
and the method by which assets were acquired; as such, the
amortization of intangible assets obtained in acquisitions is not
considered a key measure of our operating performance.
Adjusted net income does not purport to be an alternative to net
income or cash flows from operating activities. The term adjusted
net income is not defined under GAAP, and adjusted net income is
not a measure of net income, operating income or any other
performance or liquidity measure derived in accordance with GAAP.
Therefore, adjusted net income has limitations as an analytical
tool and should not be considered in isolation to, or as a
substitute for, analysis of our results as reported under GAAP.
Some of these limitations are:
- adjusted net income does not reflect
all cash expenditures, future requirements for capital expenditures
or contractual commitments;
- adjusted net income does not reflect
changes in, or cash requirements for, working capital needs;
and
- other companies in the financial
services industry may calculate adjusted net income differently
than we do, limiting its usefulness as a comparative measure.
The schedule set forth below presents the Company’s GAAP results
from the Condensed Consolidated Statements of Income (unaudited)
for the three and nine months ended September 30, 2023 and
2022, with certain line items adjusted for the items described
above. Included below is also a reconciliation from net income, the
most directly comparable GAAP financial measure, to adjusted net
income for the three and nine months and years ended
September 30, 2023 and 2022 (unaudited).
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Asset-based revenue |
$ |
143,840 |
|
|
$ |
128,173 |
|
|
$ |
412,215 |
|
|
$ |
409,498 |
|
Spread-based revenue |
|
37,329 |
|
|
|
21,160 |
|
|
|
112,863 |
|
|
|
30,265 |
|
Subscription-based revenue |
|
3,891 |
|
|
|
3,126 |
|
|
|
11,128 |
|
|
|
9,703 |
|
Other revenue |
|
5,462 |
|
|
|
2,204 |
|
|
|
14,110 |
|
|
|
4,707 |
|
Total revenue |
|
190,522 |
|
|
|
154,663 |
|
|
|
550,316 |
|
|
|
454,173 |
|
Operating expenses: |
|
|
|
|
|
|
|
Asset-based expenses |
|
43,092 |
|
|
|
36,476 |
|
|
|
119,870 |
|
|
|
118,429 |
|
Spread-based expenses |
|
8,492 |
|
|
|
2,142 |
|
|
|
23,052 |
|
|
|
3,188 |
|
Adjusted employee compensation(1) |
|
41,224 |
|
|
|
36,841 |
|
|
|
125,891 |
|
|
|
108,939 |
|
Adjusted general and operating expenses(1) |
|
21,118 |
|
|
|
20,509 |
|
|
|
69,654 |
|
|
|
61,873 |
|
Adjusted professional fees(1) |
|
7,209 |
|
|
|
5,186 |
|
|
|
19,218 |
|
|
|
13,850 |
|
Adjusted depreciation and amortization(2) |
|
6,785 |
|
|
|
6,232 |
|
|
|
19,542 |
|
|
|
17,955 |
|
Total adjusted operating
expenses |
|
127,920 |
|
|
|
107,386 |
|
|
|
377,227 |
|
|
|
324,234 |
|
Interest expense |
|
2,305 |
|
|
|
1,560 |
|
|
|
6,789 |
|
|
|
4,207 |
|
Adjusted other expenses,
net(1) |
|
(256 |
) |
|
|
— |
|
|
|
(756 |
) |
|
|
— |
|
Adjusted income before income
taxes |
|
60,553 |
|
|
|
45,717 |
|
|
|
167,056 |
|
|
|
125,732 |
|
Adjusted provision for income
taxes(3) |
|
14,532 |
|
|
|
10,744 |
|
|
|
40,093 |
|
|
|
29,548 |
|
Adjusted net income |
$ |
46,021 |
|
|
$ |
34,973 |
|
|
$ |
126,963 |
|
|
$ |
96,184 |
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
Adjusted earnings per share(4) |
$ |
0.62 |
|
|
$ |
0.47 |
|
|
$ |
1.70 |
|
|
$ |
1.30 |
|
Weighted average number of
common shares outstanding, diluted |
|
74,695,260 |
|
|
|
73,844,689 |
|
|
|
74,521,370 |
|
|
|
73,783,858 |
|
(1) Consists of the adjustments to EBITDA listed in the adjusted
EBITDA reconciliation table above. |
(2) Relates to intangible assets established in connection with
HTSC’s acquisition of our Company in 2016. |
(3) Consists of adjustments to normalize our estimated tax rate in
determining adjusted net income. |
(4) In Q1 2022, we began using the diluted GAAP shares outstanding
given that our restricted stock awards fully vested in 2021
resulting in no material reconciling differences compared to the
adjusted diluted common shares outstanding historically used for
calculating adjusted earnings per share. |
|
Set forth below is a reconciliation from net income, the most
directly comparable GAAP financial measure, to adjusted net income
for the three and nine months ended September 30, 2023 and
2022 (unaudited).
|
Three months ended September 30, 2023 |
|
Three months ended September 30, 2022 |
Reconciliation of Non-GAAP Presentation |
GAAP |
|
Adjustments |
|
Adjusted |
|
GAAP |
|
Adjustments |
|
Adjusted |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based revenue |
$ |
143,840 |
|
|
$ |
— |
|
|
$ |
143,840 |
|
|
$ |
128,173 |
|
|
$ |
— |
|
|
$ |
128,173 |
|
Spread-based revenue |
|
37,329 |
|
|
|
— |
|
|
|
37,329 |
|
|
|
21,160 |
|
|
|
— |
|
|
|
21,160 |
|
Subscription-based revenue |
|
3,891 |
|
|
|
— |
|
|
|
3,891 |
|
|
|
3,126 |
|
|
|
— |
|
|
|
3,126 |
|
Other revenue |
|
5,462 |
|
|
|
— |
|
|
|
5,462 |
|
|
|
2,204 |
|
|
|
— |
|
|
|
2,204 |
|
Total revenue |
|
190,522 |
|
|
|
— |
|
|
|
190,522 |
|
|
|
154,663 |
|
|
|
— |
|
|
|
154,663 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based expenses |
|
43,092 |
|
|
|
— |
|
|
|
43,092 |
|
|
|
36,476 |
|
|
|
— |
|
|
|
36,476 |
|
Spread-based expenses |
|
8,492 |
|
|
|
— |
|
|
|
8,492 |
|
|
|
2,142 |
|
|
|
— |
|
|
|
2,142 |
|
Employee compensation(1) |
|
46,613 |
|
|
|
(5,389 |
) |
|
|
41,224 |
|
|
|
41,589 |
|
|
|
(4,748 |
) |
|
|
36,841 |
|
General and operating expenses(1) |
|
22,714 |
|
|
|
(1,596 |
) |
|
|
21,118 |
|
|
|
21,667 |
|
|
|
(1,158 |
) |
|
|
20,509 |
|
Professional fees(1) |
|
7,369 |
|
|
|
(160 |
) |
|
|
7,209 |
|
|
|
5,877 |
|
|
|
(691 |
) |
|
|
5,186 |
|
Depreciation and amortization(2) |
|
8,965 |
|
|
|
(2,180 |
) |
|
|
6,785 |
|
|
|
7,961 |
|
|
|
(1,729 |
) |
|
|
6,232 |
|
Total operating expenses |
|
137,245 |
|
|
|
(9,325 |
) |
|
|
127,920 |
|
|
|
115,712 |
|
|
|
(8,326 |
) |
|
|
107,386 |
|
Interest expense |
|
2,305 |
|
|
|
— |
|
|
|
2,305 |
|
|
|
1,560 |
|
|
|
— |
|
|
|
1,560 |
|
Other expenses, net(1) |
|
(2,192 |
) |
|
|
1,936 |
|
|
|
(256 |
) |
|
|
(11 |
) |
|
|
11 |
|
|
|
— |
|
Income before income
taxes |
|
53,164 |
|
|
|
7,389 |
|
|
|
60,553 |
|
|
|
37,402 |
|
|
|
8,315 |
|
|
|
45,717 |
|
Provision for income
taxes(3) |
|
14,779 |
|
|
|
(247 |
) |
|
|
14,532 |
|
|
|
7,293 |
|
|
|
3,451 |
|
|
|
10,744 |
|
Net income |
$ |
38,385 |
|
|
|
|
$ |
46,021 |
|
|
$ |
30,109 |
|
|
|
|
$ |
34,973 |
|
(1) Consists of the adjustments to EBITDA listed in the adjusted
EBITDA reconciliation table above. |
(2) Relates to intangible assets established in connection with
HTSC’s acquisition of our Company in 2016. |
(3) Consists of adjustments to normalize our estimated tax rate in
determining adjusted net income. |
|
|
Nine months ended September 30, 2023 |
|
Nine months ended September 30, 2022 |
Reconciliation of Non-GAAP Presentation |
GAAP |
|
Adjustments |
|
Adjusted |
|
GAAP |
|
Adjustments |
|
Adjusted |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based revenue |
$ |
412,215 |
|
|
$ |
— |
|
|
$ |
412,215 |
|
|
$ |
409,498 |
|
|
$ |
— |
|
|
$ |
409,498 |
|
Spread-based revenue |
|
112,863 |
|
|
|
— |
|
|
|
112,863 |
|
|
|
30,265 |
|
|
|
— |
|
|
|
30,265 |
|
Subscription-based revenue |
|
11,128 |
|
|
|
— |
|
|
|
11,128 |
|
|
|
9,703 |
|
|
|
— |
|
|
|
9,703 |
|
Other revenue |
|
14,110 |
|
|
|
— |
|
|
|
14,110 |
|
|
|
4,707 |
|
|
|
— |
|
|
|
4,707 |
|
Total revenue |
|
550,316 |
|
|
|
— |
|
|
|
550,316 |
|
|
|
454,173 |
|
|
|
— |
|
|
|
454,173 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based expenses |
|
119,870 |
|
|
|
— |
|
|
|
119,870 |
|
|
|
118,429 |
|
|
|
— |
|
|
|
118,429 |
|
Spread-based expenses |
|
23,052 |
|
|
|
— |
|
|
|
23,052 |
|
|
|
3,188 |
|
|
|
— |
|
|
|
3,188 |
|
Employee compensation(1) |
|
141,623 |
|
|
|
(15,732 |
) |
|
|
125,891 |
|
|
|
121,852 |
|
|
|
(12,913 |
) |
|
|
108,939 |
|
General and operating expenses(1) |
|
72,757 |
|
|
|
(3,103 |
) |
|
|
69,654 |
|
|
|
65,949 |
|
|
|
(4,076 |
) |
|
|
61,873 |
|
Professional fees(1) |
|
21,134 |
|
|
|
(1,916 |
) |
|
|
19,218 |
|
|
|
17,104 |
|
|
|
(3,254 |
) |
|
|
13,850 |
|
Depreciation and amortization(2) |
|
26,077 |
|
|
|
(6,535 |
) |
|
|
19,542 |
|
|
|
23,141 |
|
|
|
(5,186 |
) |
|
|
17,955 |
|
Total operating expenses |
|
404,513 |
|
|
|
(27,286 |
) |
|
|
377,227 |
|
|
|
349,663 |
|
|
|
(25,429 |
) |
|
|
324,234 |
|
Interest expense |
|
6,789 |
|
|
|
— |
|
|
|
6,789 |
|
|
|
4,207 |
|
|
|
— |
|
|
|
4,207 |
|
Other expenses, net(1) |
|
17,385 |
|
|
|
(18,141 |
) |
|
|
(756 |
) |
|
|
195 |
|
|
|
(195 |
) |
|
|
— |
|
Income before income
taxes |
|
121,629 |
|
|
|
45,427 |
|
|
|
167,056 |
|
|
|
100,108 |
|
|
|
25,624 |
|
|
|
125,732 |
|
Provision for income
taxes(3) |
|
33,145 |
|
|
|
6,948 |
|
|
|
40,093 |
|
|
|
22,440 |
|
|
|
7,108 |
|
|
|
29,548 |
|
Net income |
$ |
88,484 |
|
|
|
|
$ |
126,963 |
|
|
$ |
77,668 |
|
|
|
|
$ |
96,184 |
|
(1) Consists of the adjustments to EBITDA listed in the adjusted
EBITDA reconciliation table above. |
(2) Relates to intangible assets established in connection with
HTSC’s acquisition of our Company in 2016. |
(3) Consists of adjustments to normalize our estimated tax rate in
determining adjusted net income. |
|
Set forth below is a summary of the adjustments involved in the
reconciliation from net income, the most directly comparable GAAP
financial measure, to adjusted net income for three and nine months
ended September 30, 2023 and 2022 (unaudited), broken out by
compensation and non-compensation expenses (unaudited).
|
|
Three Months Ended September 30, 2023 |
|
Three Months Ended September 30, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Net income |
|
|
|
|
|
$ |
38,385 |
|
|
|
|
|
|
$ |
30,109 |
|
Acquisition-related amortization(1) |
|
$ |
— |
|
|
$ |
2,180 |
|
|
|
2,180 |
|
|
$ |
— |
|
|
$ |
1,729 |
|
|
|
1,729 |
|
Expense adjustments(2) |
|
|
1,101 |
|
|
|
83 |
|
|
|
1,184 |
|
|
|
825 |
|
|
|
1,849 |
|
|
|
2,674 |
|
Share-based compensation |
|
|
4,288 |
|
|
|
— |
|
|
|
4,288 |
|
|
|
3,923 |
|
|
|
— |
|
|
|
3,923 |
|
Other (income) expense, net |
|
|
— |
|
|
|
(263 |
) |
|
|
(263 |
) |
|
|
— |
|
|
|
(11 |
) |
|
|
(11 |
) |
Tax effect of adjustments(3) |
|
|
(1,293 |
) |
|
|
1,540 |
|
|
|
247 |
|
|
|
(1,116 |
) |
|
|
(2,335 |
) |
|
|
(3,451 |
) |
Adjusted net income |
|
$ |
4,096 |
|
|
$ |
3,540 |
|
|
$ |
46,021 |
|
|
$ |
3,632 |
|
|
$ |
1,232 |
|
|
$ |
34,973 |
|
|
|
Nine Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Net income |
|
|
|
|
|
$ |
88,484 |
|
|
|
|
|
|
$ |
77,668 |
|
Acquisition-related amortization(1) |
|
$ |
— |
|
|
$ |
6,535 |
|
|
|
6,535 |
|
|
$ |
— |
|
|
$ |
5,186 |
|
|
|
5,186 |
|
Expense adjustments(2) |
|
|
3,470 |
|
|
|
23,346 |
|
|
|
26,816 |
|
|
|
2,817 |
|
|
|
7,330 |
|
|
|
10,147 |
|
Share-based compensation |
|
|
12,262 |
|
|
|
— |
|
|
|
12,262 |
|
|
|
10,096 |
|
|
|
— |
|
|
|
10,096 |
|
Other (income) expense, net |
|
|
— |
|
|
|
(186 |
) |
|
|
(186 |
) |
|
|
— |
|
|
|
195 |
|
|
|
195 |
|
Tax effect of adjustments(3) |
|
|
(3,776 |
) |
|
|
(3,172 |
) |
|
|
(6,948 |
) |
|
|
(3,035 |
) |
|
|
(4,073 |
) |
|
|
(7,108 |
) |
Adjusted net income |
|
$ |
11,956 |
|
|
$ |
26,523 |
|
|
$ |
126,963 |
|
|
$ |
9,878 |
|
|
$ |
8,638 |
|
|
$ |
96,184 |
|
(1) |
Relates to intangible assets established in connection with HTSC’s
acquisition of our Company in 2016. |
(2) |
Consists of the adjustments to EBITDA listed in the adjusted EBITDA
reconciliation table above other than share-based
compensation. |
(3) |
Consists of adjustments to normalize our estimated tax rate in
determining adjusted net income. |
|
|
Contacts Investors:Taylor J. Hamilton, CFAHead
of Investor RelationsInvestorRelations@assetmark.com
Media: Alaina KleinmanHead of PR &
Communicationsalaina.kleinman@assetmark.com
SOURCE: AssetMark Financial Holdings, Inc.
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