AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced
financial results for the quarter ended December 31, 2023.
Fourth Quarter
2023 Financial and Operational
Highlights
- Net income for the quarter was $34.6 million, or $0.47 per
share.
- Adjusted net income for the quarter was $44.0 million, or $0.59
per share, on total revenue of $158.2 million.
- Adjusted EBITDA for the quarter was $63.8 million, or 40.3% of
total revenue.
- Platform assets increased 19.1% year-over-year to $108.9
billion. Quarter-over-quarter platform assets were up 9.4%, due to
market impact net of fees of $8.1 billion and quarterly net flows
of $1.3 billion.
- Annual net flows as a percentage of beginning-of-year platform
assets were 6.7%.
- More than 2,600 new households and 154 new producing advisors
joined the AssetMark platform during the fourth quarter. In total,
as of December 31, 2023, there were over 9,300 advisors
(approximately 3,100 were engaged advisors) and over 254,000
investor households on the AssetMark platform.
- We realized a 19.4% annualized production lift from existing
advisors for the fourth quarter, indicating that advisors continued
to grow organically and increase wallet share on our platform.
"In 2023, AssetMark reached new heights and served a
record-breaking 9,300 advisors who used our platform to help more
than 254,000 investor households. We achieved outstanding financial
and operational results, including a record $109 billion in
platform assets. Our annual Net Promoter Score of 72, an all-time
high, is a true testament to AssetMark's positive impact on the
lives of advisors and their clients," said Michael Kim, CEO of
AssetMark. "Looking to 2024, we're committed to doubling down on
our simplified strategy and will continue to deliver an industry
leading experience to advisors focused on flexible, integrated
technology, exceptional service and consulting, and compelling
wealth solutions. I am incredibly excited about the opportunities
ahead."
Fourth Quarter
2023 Key Operating
Metrics
|
4Q22 |
|
4Q23 |
|
Varianceper year |
Operational
metrics: |
|
|
|
|
|
Platform assets (at period-beginning) (millions of dollars) |
$ |
79,382 |
|
|
$ |
99,597 |
|
|
25.5 |
% |
Net flows (millions of dollars) |
|
908 |
|
|
|
1,265 |
|
|
39.3 |
% |
Market impact net of fees (millions of dollars) |
|
4,284 |
|
|
|
8,067 |
|
|
88.3 |
% |
Acquisition impact (millions of dollars) |
|
6,896 |
|
|
|
— |
|
|
NM |
Platform assets (at
period-end) (millions of dollars) |
$ |
91,470 |
|
|
$ |
108,929 |
|
|
19.1 |
% |
Net flows lift (% of beginning
of year platform assets) |
|
1.0 |
% |
|
|
1.4 |
% |
|
40 bps |
Advisors (at period-end) |
|
9,297 |
|
|
|
9,323 |
|
|
0.3 |
% |
Engaged advisors (at
period-end) |
|
2,882 |
|
|
|
3,123 |
|
|
8.4 |
% |
Assets from engaged advisors
(at period-end) (millions of dollars) |
$ |
83,803 |
|
|
$ |
101,335 |
|
|
20.9 |
% |
Households (at
period-end) |
|
241,053 |
|
|
|
254,110 |
|
|
5.4 |
% |
New producing advisors |
|
143 |
|
|
|
154 |
|
|
7.7 |
% |
Production lift from existing
advisors (annualized %) |
|
14.1 |
% |
|
|
19.4 |
% |
|
530 bps |
Assets in custody at ATC (at
period-end) (millions of dollars) |
$ |
66,169 |
|
|
$ |
80,325 |
|
|
21.4 |
% |
ATC client cash (at
period-end) (millions of dollars) |
$ |
3,541 |
|
|
$ |
3,054 |
|
|
(13.8)% |
|
|
|
|
|
|
Financial
metrics: |
|
|
|
|
|
Total revenue (millions of
dollars)* |
$ |
164.0 |
|
|
$ |
158.2 |
|
|
(3.5)% |
Net income (millions of
dollars) |
$ |
25.6 |
|
|
$ |
34.6 |
|
|
35.2 |
% |
Net income margin (%) |
|
15.6 |
% |
|
|
21.9 |
% |
|
630 bps |
Capital expenditure (millions
of dollars) |
$ |
11.3 |
|
|
$ |
11.4 |
|
|
0.9 |
% |
|
|
|
|
|
|
Non-GAAP financial
metrics: |
|
|
|
|
|
Adjusted EBITDA (millions of
dollars) |
$ |
52.9 |
|
|
$ |
63.8 |
|
|
20.6 |
% |
Adjusted EBITDA margin
(%) |
|
32.2 |
% |
|
|
40.3 |
% |
|
810 bps |
Adjusted net income (millions
of dollars) |
$ |
34.3 |
|
|
$ |
44.0 |
|
|
28.3 |
% |
Note: Percentage variance based on actual numbers, not rounded
resultsAll metrics include Adhesion data, except "New producing
advisors," "Production lift from existing advisors" and ATC related
metrics* The Company reclassified $30.5 million representing the
full year of 2023 spread-based expenses to offset spread-based
revenue to account for interest credited to customer accounts on a
net basis during the three months ended December 31, 2023. Expenses
related to interest credited to customer accounts were recorded in
spread-based expense in the prior year and were not material.
Full Year 2023 Key
Operating Metrics
|
|
2022 |
|
|
|
2023 |
|
|
Varianceper year |
Operational
metrics: |
|
|
|
|
|
Platform assets (at
period-beginning) (millions of dollars) |
$ |
93,488 |
|
|
$ |
91,470 |
|
|
(2.2)% |
Net flows (millions of dollars) |
|
5,612 |
|
|
|
6,133 |
|
|
9.3 |
% |
Market impact net of fees (millions of dollars) |
|
(14,526 |
) |
|
|
11,326 |
|
|
NM |
Acquisition impact (millions of dollars) |
|
6,896 |
|
|
|
— |
|
|
NM |
Platform assets (at
period-end) (millions of dollars) |
$ |
91,470 |
|
|
$ |
108,929 |
|
|
19.1 |
% |
Net flows lift (% of
beginning-of-year platform assets) |
|
6.0 |
% |
|
|
6.7 |
% |
|
70 bps |
Advisers (at period-end) |
|
9,297 |
|
|
|
9,323 |
|
|
0.3 |
% |
Engaged advisers (at
period-end) |
|
2,882 |
|
|
|
3,123 |
|
|
8.4 |
% |
Assets from engaged advisers
(at period-end) (millions of dollars) |
$ |
83,803 |
|
|
$ |
101,335 |
|
|
20.9 |
% |
Households (at
period-end) |
|
241,053 |
|
|
|
254,110 |
|
|
5.4 |
% |
New producing advisers |
|
690 |
|
|
|
666 |
|
|
(3.5)% |
Production lift from existing
advisers (annualized %) |
|
16.3 |
% |
|
|
19.3 |
% |
|
300 bps |
Assets in custody at ATC (at
period-end) (millions of dollars) |
$ |
66,169 |
|
|
$ |
80,325 |
|
|
21.4 |
% |
ATC client cash (at
period-end) (millions of dollars) |
$ |
3,541 |
|
|
$ |
3,054 |
|
|
(13.8)% |
|
|
|
|
|
|
Financial
metrics: |
|
|
|
|
|
Total revenue (millions of
dollars)* |
$ |
618.3 |
|
|
$ |
708.5 |
|
|
14.6 |
% |
Net income (millions of
dollars) |
$ |
103.3 |
|
|
$ |
123.1 |
|
|
19.2 |
% |
Net income margin (%) |
|
16.7 |
% |
|
|
17.4 |
% |
|
NM |
Capital expenditure (millions
of dollars) |
$ |
38.6 |
|
|
$ |
44.2 |
|
|
14.5 |
% |
|
|
|
|
|
|
Non-GAAP financial
metrics: |
|
|
|
|
|
Adjusted EBITDA (millions of
dollars) |
$ |
199.7 |
|
|
$ |
249.5 |
|
|
24.9 |
% |
Adjusted EBITDA margin
(%) |
|
32.3 |
% |
|
|
35.2 |
% |
|
290 bps |
Adjusted net income (millions
of dollars) |
$ |
130.5 |
|
|
$ |
170.9 |
|
|
31.0 |
% |
Note: Percentage variance based on actual numbers, not rounded
resultsAll metrics include Adhesion data, except "New producing
advisors," "Production lift from existing advisors" and ATC related
metrics* The Company reclassified $30.5 million representing the
full year of 2023 spread-based expenses to offset spread-based
revenue to account for interest credited to customer accounts on a
net basis during the year ended December 31, 2023. Expenses related
to interest credited to customer accounts were recorded in
spread-based expense in the prior year and were not material.
Webcast and Conference Call Information
AssetMark will host a live conference call and webcast to
discuss its fourth 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: February 21, 2024
- 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=a33808da&confId=59484.
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 February 21,
2024.
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 nearly 1,000 employees. Today, the AssetMark platform serves
over 9,300 financial advisors and over 254,000 investor households.
As of December 31, 2023, the company had $108.9 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 advance our growth strategy, deliver an
industry leading experience to advisors 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 Quarterly Report on Form 10-Q for the
quarter ended September 30, 2023, 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 Annual Report on Form 10-K for
the year end December 31, 2023, which is expected to be filed
in mid-March. 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) |
|
December 31 |
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
217,680 |
|
|
$ |
123,274 |
|
Restricted cash |
|
15,000 |
|
|
|
13,000 |
|
Investments, at fair value |
|
18,003 |
|
|
|
13,714 |
|
Fees and other receivables, net |
|
21,345 |
|
|
|
20,082 |
|
Income tax receivable, net |
|
1,890 |
|
|
|
265 |
|
Prepaid expenses and other current assets |
|
17,193 |
|
|
|
16,870 |
|
Total current assets |
|
291,111 |
|
|
|
187,205 |
|
Property, plant and equipment, net |
|
8,765 |
|
|
|
8,495 |
|
Capitalized software, net |
|
108,955 |
|
|
|
89,959 |
|
Other intangible assets, net |
|
684,142 |
|
|
|
694,627 |
|
Operating lease right-of-use assets |
|
20,408 |
|
|
|
22,002 |
|
Goodwill |
|
487,909 |
|
|
|
487,225 |
|
Other assets |
|
19,273 |
|
|
|
13,417 |
|
Total assets |
$ |
1,620,563 |
|
|
$ |
1,502,930 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
288 |
|
|
$ |
4,624 |
|
Accrued liabilities and other current liabilities |
|
75,554 |
|
|
|
69,196 |
|
Total current liabilities |
|
75,842 |
|
|
|
73,820 |
|
Long-term debt, net |
|
93,543 |
|
|
|
112,138 |
|
Other long-term liabilities |
|
18,429 |
|
|
|
15,185 |
|
Long-term portion of operating lease liabilities |
|
26,295 |
|
|
|
27,924 |
|
Deferred income tax liabilities, net |
|
139,072 |
|
|
|
147,497 |
|
Total long-term
liabilities |
|
277,339 |
|
|
|
302,744 |
|
Total liabilities |
|
353,181 |
|
|
|
376,564 |
|
Commitments and
contingencies |
|
— |
|
|
|
— |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value (675,000,000 shares authorized and
74,372,889 and 73,847,596 shares issued and outstanding as of
December 31, 2023 and 2022, respectively) |
|
74 |
|
|
|
74 |
|
Additional paid-in capital |
|
960,700 |
|
|
|
942,946 |
|
Retained earnings |
|
306,622 |
|
|
|
183,503 |
|
Accumulated other comprehensive loss |
|
(14 |
) |
|
|
(157 |
) |
Total stockholders’
equity |
|
1,267,382 |
|
|
|
1,126,366 |
|
Total liabilities and
stockholders’ equity |
$ |
1,620,563 |
|
|
$ |
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 Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Asset-based revenue |
$ |
141,268 |
|
|
$ |
124,684 |
|
|
$ |
553,483 |
|
$ |
534,182 |
|
Spread-based revenue* |
|
7,399 |
|
|
|
33,144 |
|
|
|
120,262 |
|
|
63,409 |
|
Subscription-based revenue |
|
4,051 |
|
|
|
3,317 |
|
|
|
15,179 |
|
|
13,020 |
|
Other revenue |
|
5,465 |
|
|
|
2,988 |
|
|
|
19,575 |
|
|
7,695 |
|
Total revenue |
|
158,183 |
|
|
|
164,133 |
|
|
|
708,499 |
|
|
618,306 |
|
Operating expenses: |
|
|
|
|
|
|
|
Asset-based expenses |
|
42,550 |
|
|
|
35,671 |
|
|
|
162,420 |
|
|
154,100 |
|
Spread-based expenses* |
|
(21,808 |
) |
|
|
4,994 |
|
|
|
1,244 |
|
|
8,182 |
|
Employee compensation |
|
48,993 |
|
|
|
44,478 |
|
|
|
190,616 |
|
|
166,330 |
|
General and operating expenses |
|
25,545 |
|
|
|
24,173 |
|
|
|
98,302 |
|
|
90,122 |
|
Professional fees |
|
5,718 |
|
|
|
8,082 |
|
|
|
26,852 |
|
|
25,186 |
|
Depreciation and amortization |
|
9,467 |
|
|
|
8,008 |
|
|
|
35,544 |
|
|
31,149 |
|
Total operating expenses |
|
110,465 |
|
|
|
125,406 |
|
|
|
514,978 |
|
|
475,069 |
|
Interest expense |
|
2,319 |
|
|
|
2,313 |
|
|
|
9,108 |
|
|
6,520 |
|
Other (income) expense,
net |
|
(438 |
) |
|
|
(238 |
) |
|
|
16,947 |
|
|
(43 |
) |
Income before income
taxes |
|
45,837 |
|
|
|
36,652 |
|
|
|
167,466 |
|
|
136,760 |
|
Provision for income
taxes |
|
11,202 |
|
|
|
11,059 |
|
|
|
44,347 |
|
|
33,499 |
|
Net income |
|
34,635 |
|
|
|
25,593 |
|
|
|
123,119 |
|
|
103,261 |
|
Change in fair value of
convertible notes receivable, net |
|
143 |
|
|
|
(157 |
) |
|
|
143 |
|
|
(157 |
) |
Net comprehensive income |
$ |
34,778 |
|
|
$ |
25,436 |
|
|
$ |
123,262 |
|
$ |
103,104 |
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
$ |
0.47 |
|
|
$ |
0.35 |
|
|
$ |
1.66 |
|
$ |
1.40 |
|
Diluted |
$ |
0.46 |
|
|
$ |
0.35 |
|
|
$ |
1.65 |
|
$ |
1.40 |
|
Weighted average number of
common shares outstanding, basic |
|
74,309,970 |
|
|
|
73,847,371 |
|
|
|
74,113,591 |
|
|
73,724,341 |
|
Weighted average number of
common shares outstanding, diluted |
|
74,565,589 |
|
|
|
73,943,318 |
|
|
|
74,438,332 |
|
|
73,872,828 |
|
* The Company reclassified $30.5 million representing the full
year of 2023 spread-based expenses to offset spread-based revenue
to account for interest credited to customer accounts on a net
basis during the three months and year ended December 31, 2023.
Expenses related to interest credited to customer accounts were
recorded in spread-based expense in the prior year and were not
material.
AssetMark Financial Holdings,
Inc.Unaudited Condensed Consolidated Statements of
Cash Flows(in thousands) |
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net income |
$ |
34,635 |
|
|
$ |
25,593 |
|
|
$ |
123,119 |
|
|
$ |
103,261 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
9,467 |
|
|
|
8,008 |
|
|
|
35,544 |
|
|
|
31,149 |
|
Interest (income) expense, net |
|
(157 |
) |
|
|
(66 |
) |
|
|
(341 |
) |
|
|
541 |
|
Deferred income taxes |
|
(9,132 |
) |
|
|
(6,673 |
) |
|
|
(9,132 |
) |
|
|
(6,673 |
) |
Share-based compensation |
|
4,126 |
|
|
|
3,780 |
|
|
|
16,388 |
|
|
|
13,876 |
|
Debt acquisition cost write-down |
|
— |
|
|
|
— |
|
|
|
92 |
|
|
|
130 |
|
Changes in certain assets and
liabilities: |
|
|
|
|
|
|
|
Fees and other receivables, net |
|
(855 |
) |
|
|
(3,380 |
) |
|
|
(1,734 |
) |
|
|
(10,718 |
) |
Receivables from related party |
|
— |
|
|
|
— |
|
|
|
480 |
|
|
|
568 |
|
Prepaid expenses and other current assets |
|
(3,014 |
) |
|
|
(4,386 |
) |
|
|
4,737 |
|
|
|
2,346 |
|
Income tax receivable and payable, net |
|
(27,506 |
) |
|
|
9,414 |
|
|
|
(1,486 |
) |
|
|
6,073 |
|
Accounts payable, accrued liabilities and other liabilities |
|
7,681 |
|
|
|
12,412 |
|
|
|
7,006 |
|
|
|
(252 |
) |
Net cash provided by operating
activities |
|
15,245 |
|
|
|
44,702 |
|
|
|
174,673 |
|
|
|
140,301 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
Purchase of Adhesion Wealth,
net of cash received |
|
— |
|
|
|
(43,861 |
) |
|
|
(3,000 |
) |
|
|
(43,861 |
) |
Purchase of convertible
notes |
|
(1,159 |
) |
|
|
(1,700 |
) |
|
|
(5,434 |
) |
|
|
(10,300 |
) |
Purchase of investments |
|
(393 |
) |
|
|
(481 |
) |
|
|
(2,329 |
) |
|
|
(2,692 |
) |
Sale of investments |
|
167 |
|
|
|
534 |
|
|
|
456 |
|
|
|
918 |
|
Purchase of property and
equipment |
|
(1,698 |
) |
|
|
(1,621 |
) |
|
|
(2,853 |
) |
|
|
(3,061 |
) |
Purchase of computer
software |
|
(9,602 |
) |
|
|
(9,947 |
) |
|
|
(41,473 |
) |
|
|
(35,996 |
) |
Net cash used in investing
activities |
|
(12,685 |
) |
|
|
(57,076 |
) |
|
|
(54,633 |
) |
|
|
(94,992 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from issuance of
long-term debt, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
122,508 |
|
Payments on revolving credit
facility |
|
— |
|
|
|
— |
|
|
|
(50,000 |
) |
|
|
(115,000 |
) |
Payments on term loan |
|
— |
|
|
|
(1,562 |
) |
|
|
(25,000 |
) |
|
|
(6,250 |
) |
Proceeds from credit facility
draw down |
|
— |
|
|
|
— |
|
|
|
50,000 |
|
|
|
— |
|
Proceeds from exercise of
stock options |
|
1,366 |
|
|
|
— |
|
|
|
1,366 |
|
|
|
— |
|
Net cash (used in) provided by
financing activities |
|
1,366 |
|
|
|
(1,562 |
) |
|
|
(23,634 |
) |
|
|
1,258 |
|
Net change in cash, cash
equivalents, and restricted cash |
|
3,926 |
|
|
|
(13,936 |
) |
|
|
96,406 |
|
|
|
46,567 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
228,754 |
|
|
|
150,210 |
|
|
|
136,274 |
|
|
|
89,707 |
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
232,680 |
|
|
$ |
136,274 |
|
|
$ |
232,680 |
|
|
$ |
136,274 |
|
SUPPLEMENTAL CASH FLOW
INFORMATION |
|
|
|
|
|
|
|
Income taxes paid, net |
$ |
47,558 |
|
|
$ |
7,461 |
|
|
$ |
54,520 |
|
|
$ |
33,637 |
|
Interest paid |
$ |
2,110 |
|
|
$ |
1,373 |
|
|
$ |
9,947 |
|
|
$ |
4,087 |
|
Non-cash operating, investing,
and financing activities: |
|
|
|
|
|
|
|
Non-cash changes to right-of-use assets |
$ |
— |
|
|
$ |
379 |
|
|
$ |
3,360 |
|
|
$ |
3,775 |
|
Non-cash changes to lease liabilities |
$ |
— |
|
|
$ |
379 |
|
|
$ |
3,360 |
|
|
$ |
3,775 |
|
Non-cash change in fair value of convertible notes |
$ |
143 |
|
|
$ |
(157 |
) |
|
$ |
143 |
|
|
$ |
(157 |
) |
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 months and year ended December 31, 2023 and 2022
(unaudited).
|
|
Three Months Ended December 31, |
|
Three Months Ended December 31, |
(in thousands except for percentages) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
|
$ |
34,635 |
|
|
$ |
25,593 |
|
|
21.9 |
% |
|
15.6 |
% |
Provision for income taxes |
|
|
11,202 |
|
|
|
11,059 |
|
|
7.1 |
% |
|
6.7 |
% |
Interest income |
|
|
(3,617 |
) |
|
|
(1,557 |
) |
|
(2.3)% |
|
(1.0)% |
Interest expense |
|
|
2,319 |
|
|
|
2,313 |
|
|
1.4 |
% |
|
1.4 |
% |
Amortization and depreciation |
|
|
9,467 |
|
|
|
8,008 |
|
|
6.0 |
% |
|
4.9 |
% |
EBITDA |
|
$ |
54,006 |
|
|
$ |
45,416 |
|
|
34.1 |
% |
|
27.6 |
% |
Share-based compensation(1) |
|
|
4,126 |
|
|
|
3,780 |
|
|
2.6 |
% |
|
2.3 |
% |
Reorganization and integration costs(2) |
|
|
4,817 |
|
|
|
1,818 |
|
|
3.0 |
% |
|
1.1 |
% |
Acquisition expenses(3) |
|
|
959 |
|
|
|
2,098 |
|
|
0.6 |
% |
|
1.3 |
% |
Business continuity plan(4) |
|
|
— |
|
|
|
(173 |
) |
|
— |
|
|
(0.1)% |
Other (income) expense, net |
|
|
(79 |
) |
|
|
(60 |
) |
|
— |
|
|
— |
|
Adjusted EBITDA |
|
$ |
63,829 |
|
|
$ |
52,879 |
|
|
40.3 |
% |
|
32.2 |
% |
|
Year Ended December 31, |
|
Year Ended December 31, |
(in thousands except for percentages) |
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
123,119 |
|
|
$ |
103,261 |
|
|
17.4 |
% |
|
16.7 |
% |
Provision for income taxes |
|
44,347 |
|
|
|
33,499 |
|
|
6.3 |
% |
|
5.4 |
% |
Interest income |
|
(11,363 |
) |
|
|
(2,664 |
) |
|
(1.6)% |
|
(0.4)% |
Interest expense |
|
9,108 |
|
|
|
6,520 |
|
|
1.3 |
% |
|
1.1 |
% |
Amortization and depreciation |
|
35,544 |
|
|
|
31,149 |
|
|
5.0 |
% |
|
5.0 |
% |
EBITDA |
$ |
200,755 |
|
|
$ |
171,765 |
|
|
28.4 |
% |
|
27.8 |
% |
Share-based compensation(1) |
|
16,388 |
|
|
|
13,876 |
|
|
2.3 |
% |
|
2.2 |
% |
Reorganization and integration costs(2) |
|
12,944 |
|
|
|
10,418 |
|
|
1.8 |
% |
|
1.7 |
% |
Acquisition expenses(3) |
|
1,327 |
|
|
|
3,411 |
|
|
0.1 |
% |
|
0.6 |
% |
Business continuity plan(4) |
|
(6 |
) |
|
|
61 |
|
|
— |
|
|
— |
|
SEC settlement(5) |
|
18,327 |
|
|
|
— |
|
|
2.6 |
% |
|
— |
|
Other (income) expense, net |
|
(265 |
) |
|
|
135 |
|
|
— |
|
|
— |
|
Adjusted EBITDA |
$ |
249,470 |
|
|
$ |
199,666 |
|
|
35.2 |
% |
|
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 months and year ended
December 31, 2023 and 2022 (unaudited), broken out by
compensation and non-compensation expenses (unaudited).
|
|
Three Months Ended December 31, 2023 |
|
Three Months Ended December 31, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
|
$ |
4,126 |
|
|
$ |
— |
|
|
$ |
4,126 |
|
|
$ |
3,780 |
|
|
$ |
— |
|
|
$ |
3,780 |
|
Reorganization and integration
costs(2) |
|
|
2,534 |
|
|
|
2,283 |
|
|
|
4,817 |
|
|
|
1,512 |
|
|
|
306 |
|
|
|
1,818 |
|
Acquisition expenses(3) |
|
|
839 |
|
|
|
120 |
|
|
|
959 |
|
|
|
4 |
|
|
|
2,094 |
|
|
|
2,098 |
|
Business continuity
plan(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(173 |
) |
|
|
(173 |
) |
Other (income) expense,
net |
|
|
— |
|
|
|
(79 |
) |
|
|
(79 |
) |
|
|
— |
|
|
|
(60 |
) |
|
|
(60 |
) |
Total adjustments to adjusted
EBITDA |
|
$ |
7,499 |
|
|
$ |
2,324 |
|
|
$ |
9,823 |
|
|
$ |
5,296 |
|
|
$ |
2,167 |
|
|
$ |
7,463 |
|
|
|
Three Months Ended December 31, 2023 |
|
Three Months Ended December 31, 2022 |
(in percentages) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
|
2.6 |
% |
|
— |
|
|
2.6 |
% |
|
2.3 |
% |
|
— |
|
|
2.3 |
% |
Reorganization and integration
costs(2) |
|
1.6 |
% |
|
1.4 |
% |
|
3.0 |
% |
|
0.9 |
% |
|
0.2 |
% |
|
1.1 |
% |
Acquisition expenses(3) |
|
0.5 |
% |
|
0.1 |
% |
|
0.6 |
% |
|
— |
|
|
1.3 |
% |
|
1.3 |
% |
Business continuity
plan(4) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1)% |
|
(0.1)% |
Other (income) expense,
net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total adjustments to adjusted
EBITDA margin % |
|
4.7 |
% |
|
1.5 |
% |
|
6.2 |
% |
|
3.2 |
% |
|
1.4 |
% |
|
4.6 |
% |
(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.
|
Year Ended December 31, 2023 |
|
Year Ended December 31, 2022 |
(in thousands) |
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
$ |
16,388 |
|
|
$ |
— |
|
|
$ |
16,388 |
|
|
$ |
13,876 |
|
|
$ |
— |
|
|
$ |
13,876 |
|
Reorganization and integration
costs(2) |
|
5,904 |
|
|
|
7,040 |
|
|
|
12,944 |
|
|
|
4,335 |
|
|
|
6,083 |
|
|
|
10,418 |
|
Acquisition expenses(3) |
|
939 |
|
|
|
388 |
|
|
|
1,327 |
|
|
|
— |
|
|
|
3,411 |
|
|
|
3,411 |
|
Business continuity
plan(4) |
|
— |
|
|
|
(6 |
) |
|
|
(6 |
) |
|
|
(2 |
) |
|
|
63 |
|
|
|
61 |
|
SEC settlement(5) |
|
— |
|
|
|
18,327 |
|
|
|
18,327 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (income) expense,
net |
|
— |
|
|
|
(265 |
) |
|
|
(265 |
) |
|
|
— |
|
|
|
135 |
|
|
|
135 |
|
Total adjustments to adjusted
EBITDA |
$ |
23,231 |
|
|
$ |
25,484 |
|
|
$ |
48,715 |
|
|
$ |
18,209 |
|
|
$ |
9,692 |
|
|
$ |
27,901 |
|
|
Year Ended December 31, 2023 |
|
Year Ended December 31, 2022 |
(in percentages) |
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
2.3 |
% |
|
— |
|
|
2.3 |
% |
|
2.2 |
% |
|
— |
|
|
2.2 |
% |
Reorganization and integration
costs(2) |
0.8 |
% |
|
1.0 |
% |
|
1.8 |
% |
|
0.7 |
% |
|
1.0 |
% |
|
1.7 |
% |
Acquisition expenses(3) |
0.1 |
% |
|
— |
|
|
0.1 |
% |
|
— |
|
|
0.6 |
% |
|
0.6 |
% |
Business continuity
plan(4) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
SEC settlement(5) |
— |
|
|
2.6 |
% |
|
2.6 |
% |
|
— |
|
|
— |
|
|
— |
|
Other (income) expense,
net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total adjustments to adjusted
EBITDA margin % |
3.2 |
% |
|
3.6 |
% |
|
6.8 |
% |
|
2.9 |
% |
|
1.6 |
% |
|
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 months and year ended December 31, 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 months and year ended December 31, 2023
and 2022 (unaudited).
|
Three Months EndedDecember
31, |
|
Year Ended December 31 |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Asset-based revenue |
$ |
141,268 |
|
|
$ |
124,684 |
|
|
$ |
553,483 |
|
|
$ |
534,182 |
|
Spread-based revenue(4) |
|
7,399 |
|
|
|
33,144 |
|
|
|
120,262 |
|
|
|
63,409 |
|
Subscription-based revenue |
|
4,051 |
|
|
|
3,317 |
|
|
|
15,179 |
|
|
|
13,020 |
|
Other revenue |
|
5,465 |
|
|
|
2,988 |
|
|
|
19,575 |
|
|
|
7,695 |
|
Total revenue |
|
158,183 |
|
|
|
164,133 |
|
|
|
708,499 |
|
|
|
618,306 |
|
Operating expenses: |
|
|
|
|
|
|
|
Asset-based expenses |
|
42,550 |
|
|
|
35,671 |
|
|
|
162,420 |
|
|
|
154,100 |
|
Spread-based expenses(4) |
|
(21,808 |
) |
|
|
4,994 |
|
|
|
1,244 |
|
|
|
8,182 |
|
Adjusted employee compensation(1) |
|
41,494 |
|
|
|
39,182 |
|
|
|
167,385 |
|
|
|
148,121 |
|
Adjusted general and operating expenses(1) |
|
23,573 |
|
|
|
23,927 |
|
|
|
93,227 |
|
|
|
85,800 |
|
Adjusted professional fees(1) |
|
5,287 |
|
|
|
6,101 |
|
|
|
24,505 |
|
|
|
19,951 |
|
Adjusted depreciation and amortization(2) |
|
7,287 |
|
|
|
6,198 |
|
|
|
26,829 |
|
|
|
24,153 |
|
Total adjusted operating
expenses |
|
98,383 |
|
|
|
116,073 |
|
|
|
475,610 |
|
|
|
440,307 |
|
Interest expense |
|
2,319 |
|
|
|
2,313 |
|
|
|
9,108 |
|
|
|
6,520 |
|
Adjusted other (income) expenses,
net(1) |
|
(359 |
) |
|
|
(178 |
) |
|
|
(1,115 |
) |
|
|
(178 |
) |
Adjusted income before income
taxes |
|
57,840 |
|
|
|
45,925 |
|
|
|
224,896 |
|
|
|
171,657 |
|
Adjusted provision for income
taxes(3) |
|
13,883 |
|
|
|
11,650 |
|
|
|
53,976 |
|
|
|
41,198 |
|
Adjusted net income |
$ |
43,957 |
|
|
$ |
34,275 |
|
|
$ |
170,920 |
|
|
$ |
130,459 |
|
Net income per share attributable
to common stockholders: |
|
|
|
|
|
|
|
Adjusted earnings per share |
$ |
0.59 |
|
|
$ |
0.46 |
|
|
$ |
2.30 |
|
|
$ |
1.77 |
|
Weighted average number of common
shares outstanding, diluted |
|
74,565,589 |
|
|
|
74,943,318 |
|
|
|
74,438,332 |
|
|
|
73,872,828 |
|
(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) The Company
reclassified $30.5 million from spread-based expenses to offset
spread-based revenue to account for interest credited to customer
accounts on a net basis for the three months and year ended
December 31, 2023. Expenses related to interest credited to
customer accounts were recorded in spread-based expense in prior
periods and were not material.
Set forth below is a reconciliation from net income, the most
directly comparable GAAP financial measure, to adjusted net income
for the three months and year ended December 31, 2023 and 2022
(unaudited).
|
Three months ended December 31, 2023 |
|
Three months ended December 31, 2022 |
Reconciliation of Non-GAAP Presentation |
GAAP |
|
Adjustments |
|
Adjusted |
|
GAAP |
|
Adjustments |
|
Adjusted |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based revenue |
$ |
141,268 |
|
|
$ |
— |
|
|
$ |
141,268 |
|
|
$ |
124,684 |
|
|
$ |
— |
|
|
$ |
124,684 |
|
Spread-based revenue(4) |
|
7,399 |
|
|
|
— |
|
|
|
7,399 |
|
|
|
33,144 |
|
|
|
— |
|
|
|
33,144 |
|
Subscription-based revenue |
|
4,051 |
|
|
|
— |
|
|
|
4,051 |
|
|
|
3,317 |
|
|
|
— |
|
|
|
3,317 |
|
Other revenue |
|
5,465 |
|
|
|
— |
|
|
|
5,465 |
|
|
|
2,988 |
|
|
|
— |
|
|
|
2,988 |
|
Total revenue |
|
158,183 |
|
|
|
— |
|
|
|
158,183 |
|
|
|
164,133 |
|
|
|
— |
|
|
|
164,133 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based expenses |
|
42,550 |
|
|
|
— |
|
|
|
42,550 |
|
|
|
35,671 |
|
|
|
— |
|
|
|
35,671 |
|
Spread-based expenses(4) |
|
(21,808 |
) |
|
|
— |
|
|
|
(21,808 |
) |
|
|
4,994 |
|
|
|
— |
|
|
|
4,994 |
|
Employee compensation(1) |
|
48,993 |
|
|
|
(7,499 |
) |
|
|
41,494 |
|
|
|
44,478 |
|
|
|
(5,296 |
) |
|
|
39,182 |
|
General and operating expenses(1) |
|
25,545 |
|
|
|
(1,972 |
) |
|
|
23,573 |
|
|
|
24,173 |
|
|
|
(246 |
) |
|
|
23,927 |
|
Professional fees(1) |
|
5,718 |
|
|
|
(431 |
) |
|
|
5,287 |
|
|
|
8,082 |
|
|
|
(1,981 |
) |
|
|
6,101 |
|
Depreciation and amortization(2) |
|
9,467 |
|
|
|
(2,180 |
) |
|
|
7,287 |
|
|
|
8,008 |
|
|
|
(1,810 |
) |
|
|
6,198 |
|
Total operating expenses |
|
110,465 |
|
|
|
(12,082 |
) |
|
|
98,383 |
|
|
|
125,406 |
|
|
|
(9,333 |
) |
|
|
116,073 |
|
Interest expense |
|
2,319 |
|
|
|
— |
|
|
|
2,319 |
|
|
|
2,313 |
|
|
|
— |
|
|
|
2,313 |
|
Other expenses, net(1) |
|
(438 |
) |
|
|
79 |
|
|
|
(359 |
) |
|
|
(238 |
) |
|
|
60 |
|
|
|
(178 |
) |
Income before income taxes |
|
45,837 |
|
|
|
12,003 |
|
|
|
57,840 |
|
|
|
36,652 |
|
|
|
9,273 |
|
|
|
45,925 |
|
Provision for income
taxes(3) |
|
11,202 |
|
|
|
2,681 |
|
|
|
13,883 |
|
|
|
11,059 |
|
|
|
591 |
|
|
|
11,650 |
|
Net income |
$ |
34,635 |
|
|
|
|
$ |
43,957 |
|
|
$ |
25,593 |
|
|
|
|
$ |
34,275 |
|
(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) The Company
reclassified $30.5 million from spread-based expenses to offset
spread-based revenue to account for interest credited to customer
accounts on a net basis for the three months ended December 31,
2023. Expenses related to interest credited to customer accounts
were recorded in spread-based expense in prior periods and were not
material.
|
Year Ended December 31, 2023 |
|
Year Ended December 31, 2022 |
Reconciliation of Non-GAAP Presentation |
GAAP |
|
Adjustments |
|
Adjusted |
|
GAAP |
|
Adjustments |
|
Adjusted |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based revenue |
$ |
553,483 |
|
$ |
— |
|
|
$ |
553,483 |
|
|
$ |
534,182 |
|
|
$ |
— |
|
|
$ |
534,182 |
|
Spread-based revenue(4) |
|
120,262 |
|
|
— |
|
|
|
120,262 |
|
|
|
63,409 |
|
|
|
— |
|
|
|
63,409 |
|
Subscription-based revenue |
|
15,179 |
|
|
— |
|
|
|
15,179 |
|
|
|
13,020 |
|
|
|
— |
|
|
|
13,020 |
|
Other revenue |
|
19,575 |
|
|
— |
|
|
|
19,575 |
|
|
|
7,695 |
|
|
|
— |
|
|
|
7,695 |
|
Total revenue |
|
708,499 |
|
|
— |
|
|
|
708,499 |
|
|
|
618,306 |
|
|
|
— |
|
|
|
618,306 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based expenses |
|
162,420 |
|
|
— |
|
|
|
162,420 |
|
|
|
154,100 |
|
|
|
— |
|
|
|
154,100 |
|
Spread-based expenses(4) |
|
1,244 |
|
|
— |
|
|
|
1,244 |
|
|
|
8,182 |
|
|
|
— |
|
|
|
8,182 |
|
Employee compensation(1) |
|
190,616 |
|
|
(23,231 |
) |
|
|
167,385 |
|
|
|
166,330 |
|
|
|
(18,209 |
) |
|
|
148,121 |
|
General and operating expenses(1) |
|
98,302 |
|
|
(5,075 |
) |
|
|
93,227 |
|
|
|
90,122 |
|
|
|
(4,322 |
) |
|
|
85,800 |
|
Professional fees(1) |
|
26,852 |
|
|
(2,347 |
) |
|
|
24,505 |
|
|
|
25,186 |
|
|
|
(5,235 |
) |
|
|
19,951 |
|
Depreciation and amortization(2) |
|
35,544 |
|
|
(8,715 |
) |
|
|
26,829 |
|
|
|
31,149 |
|
|
|
(6,996 |
) |
|
|
24,153 |
|
Total operating expenses |
|
514,978 |
|
|
(39,368 |
) |
|
|
475,610 |
|
|
|
475,069 |
|
|
|
(34,762 |
) |
|
|
440,307 |
|
Interest expense |
|
9,108 |
|
|
— |
|
|
|
9,108 |
|
|
|
6,520 |
|
|
|
— |
|
|
|
6,520 |
|
Other expenses, net(1) |
|
16,947 |
|
|
(18,062 |
) |
|
|
(1,115 |
) |
|
|
(43 |
) |
|
|
(135 |
) |
|
|
(178 |
) |
Income before income taxes |
|
167,466 |
|
|
57,430 |
|
|
|
224,896 |
|
|
|
136,760 |
|
|
|
34,897 |
|
|
|
171,657 |
|
Provision for income
taxes(3) |
|
44,347 |
|
|
9,629 |
|
|
|
53,976 |
|
|
|
33,499 |
|
|
|
7,699 |
|
|
|
41,198 |
|
Net income |
$ |
123,119 |
|
|
|
$ |
170,920 |
|
|
$ |
103,261 |
|
|
|
|
$ |
130,459 |
|
(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) The Company
reclassified $30.5 million from spread-based expenses to offset
spread-based revenue to account for interest credited to customer
accounts on a net basis for the year ended December 31, 2023.
Expenses related to interest credited to customer accounts were
recorded in spread-based expense in prior periods and were not
material.
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 months and year
ended December 31, 2023 and 2022 (unaudited), broken out by
compensation and non-compensation expenses (unaudited).
|
|
Three Months Ended December 31, 2023 |
|
Three Months Ended December 31, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Net income |
|
|
|
|
|
$ |
34,635 |
|
|
|
|
|
|
$ |
25,593 |
|
Acquisition-related amortization(1) |
|
$ |
— |
|
|
$ |
2,180 |
|
|
|
2,180 |
|
|
$ |
— |
|
|
$ |
1,810 |
|
|
|
1,810 |
|
Expense adjustments(2) |
|
|
3,373 |
|
|
|
2,403 |
|
|
|
5,776 |
|
|
|
1,516 |
|
|
|
2,227 |
|
|
|
3,743 |
|
Share-based compensation |
|
|
4,126 |
|
|
|
— |
|
|
|
4,126 |
|
|
|
3,780 |
|
|
|
— |
|
|
|
3,780 |
|
Other (income) expense, net |
|
|
— |
|
|
|
(79 |
) |
|
|
(79 |
) |
|
|
— |
|
|
|
(60 |
) |
|
|
(60 |
) |
Tax effect of adjustments(3) |
|
|
(1,799 |
) |
|
|
(882 |
) |
|
|
(2,681 |
) |
|
|
(1,335 |
) |
|
|
744 |
|
|
|
(591 |
) |
Adjusted net income |
|
$ |
5,700 |
|
|
$ |
3,622 |
|
|
$ |
43,957 |
|
|
$ |
3,961 |
|
|
$ |
4,721 |
|
|
$ |
34,275 |
|
|
|
Year Ended December 31, 2023 |
|
Year Ended December 31, 2022 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Net income |
|
|
|
|
|
$ |
123,119 |
|
|
|
|
|
|
$ |
103,261 |
|
Acquisition-related amortization(1) |
|
$ |
— |
|
|
$ |
8,715 |
|
|
|
8,715 |
|
|
$ |
— |
|
|
$ |
6,996 |
|
|
|
6,996 |
|
Expense adjustments(2) |
|
|
6,843 |
|
|
|
25,749 |
|
|
|
32,592 |
|
|
|
4,333 |
|
|
|
9,557 |
|
|
|
13,890 |
|
Share-based compensation |
|
|
16,388 |
|
|
|
— |
|
|
|
16,388 |
|
|
|
13,876 |
|
|
|
— |
|
|
|
13,876 |
|
Other (income) expense, net |
|
|
— |
|
|
|
(265 |
) |
|
|
(265 |
) |
|
|
— |
|
|
|
135 |
|
|
|
135 |
|
Tax effect of adjustments(3) |
|
|
(5,575 |
) |
|
|
(4,054 |
) |
|
|
(9,629 |
) |
|
|
(4,370 |
) |
|
|
(3,329 |
) |
|
|
(7,699 |
) |
Adjusted net income |
|
$ |
17,656 |
|
|
$ |
30,145 |
|
|
$ |
170,920 |
|
|
$ |
13,839 |
|
|
$ |
13,359 |
|
|
$ |
130,459 |
|
(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.
AssetMark Financial (NYSE:AMK)
過去 株価チャート
から 5 2024 まで 6 2024
AssetMark Financial (NYSE:AMK)
過去 株価チャート
から 6 2023 まで 6 2024