WESTWOOD HOLDINGS GROUP INC Q1 FY2025 earnings call

• Successfully launched the Westwood LBRTY Global Equity ETF at the end of the quarter. - First ETF, Westwood Salient Enhanced Midstream Income (MDST), reached one-year anniversary with strong traction; second ETF, Enhanced Energy Income (WEEI), nearing one-year anniversary, with asset levels in first two ETFs exceeding $100 million. - Won a significant sub advisory mandate with nearly $1 billion in small cap value. - Texas Stock Exchange (TXSE) Form One application for registration as a National Securities Exchange publicly released by the SEC. - Welcomed two new Board members, Hale Hoak and Katherine Murray. - U.S. value, small cap, mid cap, multi asset, energy strategies showed strong performance in various peer rankings. - Institutional channel had gross sales of $960.5 million and net inflows of $758.8 million; intermediary channel had gross sales of $233.1 million and net inflows of $4.5 million. - Wealth Management business had inflows of $56 million and net flows of -$157 million in first quarter; new CRM system and client portal showing progress. - ETF business momentum with new ETF launches and progress on TXSE registration.

Total revenues for the first quarter of 2025 were $23.3 million. Firm wide assets under management and advisement totaled $18 billion at quarter end, consisting of assets under management of $17 billion and assets under advisement of $1 billion. Assets under management consisted of institutional assets of $9 billion (53% of total), wealth management assets of $4.1 billion (24% of total), and mutual fund assets of $3.9 billion (23% of total). Over the quarter, assets under management experienced net inflows of $0.6 billion and market depreciation of $0.3 billion, while assets under advisement experienced market depreciation of $8 million and net outflows of $1 million.

• Expect continued market uncertainty driven by tariffs and their impact on global economies. - Focus on high-quality businesses positions the firm well. - Institutional channel pipeline remains robust over $1 billion with potential for growth in SMid product. - Anticipate initial funding in 2025 for Managed Investment Solutions (MIS). - Renewed interest in energy in public and private strategies. - MDST ETF eligible for more national broker dealer platforms with potential for exponential growth if successful.

• Market uncertainty driven by uncertainty around tariffs and their impact on global economies. - Potential impact of policy changes on the market.

Q: Could you just give a little more color as to kind of the flows in that strategy? So what's the opportunity going forward as you manage this bucket? And then secondly, are you able to use that headline win as leverage for potentially other mandates as well? I'm just sort of curious as to what the expectations are for sales velocity with that headline.

A: Thanks, Mac. We appreciate your question. That was a very nice win in our small cap product, and it is a sub advisory mandate for a large, well-recognized firm that we're excited to partner with. Certainly, anytime we see headlines like that, it does help us in our overall marketing. And our pipeline now is still over $1 billion with much of that in our SMid product and we continue to see a lot of growth there.

Q: One more thing. I apologize. On the MDST, nice growth there and you mentioned that you're qualified for some of the national platforms. Maybe you could just talk about that next step and expectations for growth in those two vehicles?

A: Sure. Well, we have been working really hard. We hired Chris Duran last year, and he has been terrific in getting us onto a number of platforms. And they all have a little bit different requirements and some depend on volume, some depend on assets under management, some depend on length of track record. And so we've really sorted through all of that and made some great progress. I think we're on 4 or 5 different platforms now, and we're in discussions to make it to some of the bigger platforms, including one of the wires. And if we're successful in doing that, we have the potential to have really exponential growth in that product. So we're super excited about it.