AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced
financial results for the quarter ended March 31, 2024.
First Quarter
2024 Financial and Operational
Highlights
- Net income for the quarter was $38.0 million, or $0.51 per
share.
- Adjusted net income for the quarter was $45.2 million, or $0.60
per share, on total revenue of $190.3 million.
- Adjusted EBITDA for the quarter was $65.9 million, or 34.6% of
total revenue.
- Platform assets increased 21.5% year-over-year to $116.9
billion. Quarter-over-quarter platform assets were up 7.3%, due to
market impact net of fees of $6.1 billion and quarterly net flows
of $1.8 billion.
- Year-to-date annualized net flows as a percentage of
beginning-of-year platform assets were 6.8%.
- More than 3,000 new households and 169 new producing advisors
joined the AssetMark platform during the first quarter. In total,
as of March 31, 2024, there were over 9,200 advisors
(approximately 3,200 were engaged advisors) and over 257,000
investor households on the AssetMark platform.
- We realized an 18.6% annualized production lift from existing
advisors for the first quarter, indicating that advisors continued
to grow organically and increase wallet share on our platform.
First Quarter
2024 Key Operating Metrics
|
1Q23 |
|
1Q24 |
|
Variance per year |
Operational
metrics: |
|
|
|
|
|
Platform assets (at period-beginning) (millions of dollars) |
$ |
91,470 |
|
|
$ |
108,929 |
|
|
19.1% |
Net flows (millions of dollars) |
|
1,631 |
|
|
|
1,842 |
|
|
12.9% |
Market impact net of fees (millions of dollars) |
|
3,102 |
|
|
|
6,130 |
|
|
97.6% |
Platform assets (at
period-end) (millions of dollars) |
$ |
96,203 |
|
|
$ |
116,901 |
|
|
21.5% |
Net flows lift (% of beginning
of year platform assets) |
|
1.8 |
% |
|
|
1.7 |
% |
|
(10 bps) |
Advisors (at period-end) |
|
9,319 |
|
|
|
9,280 |
|
|
(0.4)% |
Engaged advisors (at
period-end) |
|
2,976 |
|
|
|
3,208 |
|
|
7.8% |
Assets from engaged advisors
(at period-end) (millions of dollars) |
$ |
88,587 |
|
|
$ |
109,267 |
|
|
23.3% |
Households (at
period-end) |
|
243,775 |
|
|
|
257,162 |
|
|
5.5% |
New producing advisors |
|
166 |
|
|
|
169 |
|
|
1.8% |
Production lift from existing
advisors (annualized %) |
|
18.8 |
% |
|
|
18.6 |
% |
|
(20 bps) |
Assets in custody at ATC (at
period-end) (millions of dollars) |
$ |
70,069 |
|
|
$ |
86,373 |
|
|
23.3% |
ATC client cash (at
period-end) (millions of dollars) |
$ |
3,189 |
|
|
$ |
3,170 |
|
|
(0.6)% |
|
|
|
|
|
|
Financial
metrics: |
|
|
|
|
|
Total revenue (millions of
dollars)* |
$ |
170.3 |
|
|
$ |
190.3 |
|
|
11.7% |
Net income (millions of
dollars) |
$ |
17.2 |
|
|
$ |
38.0 |
|
|
120.9% |
Net income margin (%) |
|
10.1 |
% |
|
|
20.0 |
% |
|
990 bps |
Capital expenditure (millions
of dollars) |
$ |
10.0 |
|
|
$ |
11.9 |
|
|
19.0% |
|
|
|
|
|
|
Non-GAAP financial
metrics: |
|
|
|
|
|
Adjusted EBITDA (millions of
dollars) |
$ |
58.8 |
|
|
$ |
65.9 |
|
|
12.1% |
Adjusted EBITDA margin
(%) |
|
34.5 |
% |
|
|
34.6 |
% |
|
10 bps |
Adjusted net income (millions
of dollars) |
$ |
39.7 |
|
|
$ |
45.2 |
|
|
13.9% |
Note: Percentage variance based on actual numbers, not rounded
resultsAll metrics include Adhesion data, except "New producing
advisors," "Production lift from existing advisors" in 2023 and ATC
related metrics* The Company reclassified $6.3 million representing
the three months 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
March 31, 2023.
Webcast and Conference Call Information
As previously announced, on April 25, 2024, AssetMark entered
into an agreement to be acquired by GTCR (the “Transaction”). A
copy of the press release announcing the Transaction can be found
on the investor relations page of AssetMark’s website. Additional
details and information about the Transaction are included in the
Current Report on Form 8-K filed by AssetMark with the Securities
and Exchange Commission ("SEC") on April 25, 2024. The Transaction
is subject to customary closing conditions and required regulatory
approvals and is expected to close in Q4 2024.
Given the announced Transaction, AssetMark will not be hosting
an earnings call and webcast to discuss its first quarter 2024
results and is withdrawing all previously provided financial
guidance. For further information about AssetMark’s financial
performance please refer to AssetMark’s Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2024, which will
be filed subsequently with the SEC.
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
9,200 financial advisors and over 257,000 investor households. As
of March 31, 2024, the company had $116.9 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 Annual Report on Form 10-K for the
year ended December 31, 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 Quarterly Report on Form 10-Q
for the quarter ended March 31, 2024, which is expected to be
filed on May 7, 2024. 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)
|
March 31, 2024 |
|
December 31, 2023 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
247,626 |
|
|
$ |
217,680 |
|
Restricted cash |
|
15,000 |
|
|
|
15,000 |
|
Investments, at fair value |
|
20,573 |
|
|
|
18,003 |
|
Fees and other receivables, net |
|
23,164 |
|
|
|
21,345 |
|
Income tax receivable, net |
|
— |
|
|
|
1,890 |
|
Prepaid expenses and other current assets |
|
15,730 |
|
|
|
17,193 |
|
Total current assets |
|
322,093 |
|
|
|
291,111 |
|
Property, plant and equipment, net |
|
9,201 |
|
|
|
8,765 |
|
Capitalized software, net |
|
113,123 |
|
|
|
108,955 |
|
Other intangible assets, net |
|
681,519 |
|
|
|
684,142 |
|
Operating lease right-of-use assets |
|
19,244 |
|
|
|
20,408 |
|
Goodwill |
|
487,909 |
|
|
|
487,909 |
|
Other assets |
|
23,737 |
|
|
|
19,273 |
|
Total assets |
$ |
1,656,826 |
|
|
$ |
1,620,563 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
278 |
|
|
$ |
288 |
|
Accrued liabilities and other current liabilities |
|
60,430 |
|
|
|
75,554 |
|
Income tax payable, net |
|
8,539 |
|
|
|
— |
|
Total current liabilities |
|
69,247 |
|
|
|
75,842 |
|
Long-term debt, net |
|
93,567 |
|
|
|
93,543 |
|
Other long-term liabilities |
|
20,541 |
|
|
|
18,429 |
|
Long-term portion of operating lease liabilities |
|
24,885 |
|
|
|
26,295 |
|
Deferred income tax liabilities, net |
|
139,072 |
|
|
|
139,072 |
|
Total long-term
liabilities |
|
278,065 |
|
|
|
277,339 |
|
Total liabilities |
|
347,312 |
|
|
|
353,181 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value (675,000,000 shares authorized and
74,399,237 and 74,372,889 shares issued and outstanding as of March
31, 2024 and December 31, 2023, respectively) |
|
74 |
|
|
|
74 |
|
Additional paid-in capital |
|
964,868 |
|
|
|
960,700 |
|
Retained earnings |
|
344,586 |
|
|
|
306,622 |
|
Accumulated other comprehensive loss |
|
(14 |
) |
|
|
(14 |
) |
Total stockholders’
equity |
|
1,309,514 |
|
|
|
1,267,382 |
|
Total liabilities and
stockholders’ equity |
$ |
1,656,826 |
|
|
$ |
1,620,563 |
|
AssetMark Financial Holdings,
Inc.Unaudited Condensed Consolidated Statements of
Comprehensive Income(in thousands, except share and per
share data)
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
Revenue: |
|
|
|
Asset-based revenue |
$ |
149,984 |
|
|
$ |
131,039 |
Spread-based revenue* |
|
30,093 |
|
|
|
31,999 |
Subscription-based revenue |
|
4,252 |
|
|
|
3,544 |
Other revenue |
|
5,937 |
|
|
|
3,716 |
Total revenue |
|
190,266 |
|
|
|
170,298 |
Operating expenses: |
|
|
|
Asset-based expenses |
|
44,853 |
|
|
|
37,434 |
Spread-based expenses |
|
389 |
|
|
|
293 |
Employee compensation |
|
50,007 |
|
|
|
46,911 |
General and operating expenses |
|
27,324 |
|
|
|
25,689 |
Professional fees |
|
6,081 |
|
|
|
5,393 |
Depreciation and amortization |
|
9,922 |
|
|
|
8,428 |
Total operating expenses |
|
138,576 |
|
|
|
124,148 |
Interest expense |
|
2,294 |
|
|
|
2,347 |
Other (income) expense,
net |
|
(332 |
) |
|
|
19,865 |
Income before income
taxes |
|
49,728 |
|
|
|
23,938 |
Provision for income
taxes |
|
11,764 |
|
|
|
6,716 |
Net income |
|
37,964 |
|
|
|
17,222 |
Net comprehensive income |
$ |
37,964 |
|
|
$ |
17,222 |
Net income per share
attributable to common stockholders: |
|
|
|
Basic |
$ |
0.51 |
|
|
$ |
0.23 |
Diluted |
$ |
0.50 |
|
|
$ |
0.23 |
Weighted average number of common shares outstanding, basic |
|
74,383,265 |
|
|
|
73,890,162 |
Weighted average number of common shares outstanding, diluted |
|
75,269,626 |
|
|
|
74,370,353 |
* The Company reclassified $6.3 million representing the three
months 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 March 31, 2023.
AssetMark Financial Holdings,
Inc.Unaudited Condensed Consolidated Statements of
Cash Flows(in thousands)
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
37,964 |
|
|
$ |
17,222 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
9,922 |
|
|
|
8,428 |
|
Interest expense, net |
|
(159 |
) |
|
|
(9 |
) |
Share-based compensation |
|
4,168 |
|
|
|
3,822 |
|
Debt acquisition cost write-down |
|
— |
|
|
|
92 |
|
Changes in certain assets and
liabilities: |
|
|
|
Fees and other receivables, net |
|
(1,578 |
) |
|
|
(1,484 |
) |
Receivables from related party |
|
(241 |
) |
|
|
(400 |
) |
Prepaid expenses and other current assets |
|
2,493 |
|
|
|
1,738 |
|
Accounts payable, accrued liabilities and other current
liabilities |
|
(15,583 |
) |
|
|
3,871 |
|
Income tax receivable and payable, net |
|
10,429 |
|
|
|
5,846 |
|
Net cash provided by operating
activities |
|
47,415 |
|
|
|
39,126 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Purchase of Adhesion
Wealth |
|
— |
|
|
|
(3,000 |
) |
Purchase of investments |
|
(1,562 |
) |
|
|
(824 |
) |
Sale of investments |
|
179 |
|
|
|
66 |
|
Purchase of property and
equipment |
|
(1,071 |
) |
|
|
(220 |
) |
Purchase of computer
software |
|
(10,833 |
) |
|
|
(9,954 |
) |
Purchase of convertible
notes |
|
(4,182 |
) |
|
|
— |
|
Net cash used in investing
activities |
|
(17,469 |
) |
|
|
(13,932 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Payments on term loan |
|
— |
|
|
|
(25,000 |
) |
Net cash used in financing
activities |
|
— |
|
|
|
(25,000 |
) |
Net change in cash, cash
equivalents, and restricted cash |
|
29,946 |
|
|
|
194 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
232,680 |
|
|
|
136,274 |
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
262,626 |
|
|
$ |
136,468 |
|
SUPPLEMENTAL CASH FLOW
INFORMATION |
|
|
|
Income taxes paid, net |
$ |
1,324 |
|
|
$ |
868 |
|
Interest paid |
$ |
2,104 |
|
|
$ |
3,787 |
|
Non-cash operating and
investing activities: |
|
|
|
Non-cash changes to right-of-use assets |
$ |
— |
|
|
$ |
1,742 |
|
Non-cash changes to lease liabilities |
$ |
— |
|
|
$ |
1,742 |
|
|
|
|
|
|
|
|
|
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 ended March 31, 2024 and 2023
(unaudited).
|
|
Three Months Ended March 31, |
|
Three Months Ended March 31, |
(in thousands except for percentages) |
|
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
2023 |
Net income |
|
$ |
37,964 |
|
|
$ |
17,222 |
|
|
20.0% |
|
10.1% |
Provision for income taxes |
|
|
11,764 |
|
|
|
6,716 |
|
|
6.2% |
|
3.9% |
Interest income |
|
|
(4,023 |
) |
|
|
(2,051 |
) |
|
(2.2)% |
|
(1.2)% |
Interest expense |
|
|
2,294 |
|
|
|
2,347 |
|
|
1.2% |
|
1.4% |
Depreciation and amortization |
|
|
9,922 |
|
|
|
8,428 |
|
|
5.2% |
|
5.0% |
EBITDA |
|
$ |
57,921 |
|
|
$ |
32,662 |
|
|
30.4% |
|
19.2% |
Share-based compensation(1) |
|
|
4,168 |
|
|
|
3,822 |
|
|
2.2% |
|
2.2% |
Reorganization and integration costs(2) |
|
|
3,841 |
|
|
|
1,909 |
|
|
2.0% |
|
1.1% |
Acquisition expenses(3) |
|
|
12 |
|
|
|
313 |
|
|
— |
|
0.2% |
Business continuity plan(4) |
|
|
— |
|
|
|
(6 |
) |
|
— |
|
— |
Accrual for SEC settlement(5) |
|
|
— |
|
|
|
20,000 |
|
|
— |
|
11.8% |
Other (income) expense, net |
|
|
(35 |
) |
|
|
88 |
|
|
— |
|
— |
Adjusted EBITDA |
|
$ |
65,907 |
|
|
$ |
58,788 |
|
|
34.6% |
|
34.5% |
(1) “Share-based compensation” represents granted share-based
compensation in the form of restricted stock unit 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) “Accrual for SEC
settlement” represents an accrual that pertains to a settled SEC
matter from 2023 discussed in Note 11 of notes to unaudited
condensed consolidated financial statements in our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2024.
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 ended March 31, 2024
and 2023 (unaudited), broken out by compensation and
non-compensation expenses (unaudited).
|
|
Three Months Ended March 31, 2024 |
|
Three Months Ended March 31, 2023 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Share-based compensation(1) |
|
$ |
4,168 |
|
$ |
— |
|
|
$ |
4,168 |
|
|
$ |
3,822 |
|
$ |
— |
|
|
$ |
3,822 |
|
Reorganization and integration
costs(2) |
|
|
1,532 |
|
|
2,309 |
|
|
|
3,841 |
|
|
|
1,064 |
|
|
845 |
|
|
|
1,909 |
|
Acquisition expenses(3) |
|
|
— |
|
|
12 |
|
|
|
12 |
|
|
|
100 |
|
|
213 |
|
|
|
313 |
|
Business continuity
plan(4) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(6 |
) |
|
|
(6 |
) |
Accrual for SEC
settlement(5) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
20,000 |
|
Other (income) expense,
net |
|
|
— |
|
|
(35 |
) |
|
|
(35 |
) |
|
|
— |
|
|
88 |
|
|
|
88 |
|
Total adjustments to adjusted
EBITDA |
|
$ |
5,700 |
|
$ |
2,286 |
|
|
$ |
7,986 |
|
|
$ |
4,986 |
|
$ |
21,140 |
|
|
$ |
26,126 |
|
|
|
Three Months Ended March 31, 2024 |
|
Three Months Ended March 31, 2023 |
(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) |
|
0.8 |
% |
|
1.2 |
% |
|
2.0 |
% |
|
0.6 |
% |
|
0.5 |
% |
|
1.1 |
% |
Acquisition expenses(3) |
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
% |
|
0.1 |
% |
|
0.2 |
% |
Business continuity
plan(4) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Accrual for SEC
settlement(5) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11.8 |
% |
|
11.8 |
% |
Other (income) expense,
net |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total adjustments to adjusted
EBITDA margin % |
|
3.0 |
% |
|
1.2 |
% |
|
4.2 |
% |
|
2.9 |
% |
|
12.4 |
% |
|
15.3 |
% |
(1) “Share-based compensation” represents granted share-based
compensation in the form of restricted stock unit 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) “Accrual for SEC
settlement” represents an accrual that pertains to a settled SEC
matter from 2023 discussed in Note 11 of notes to unaudited
condensed consolidated financial statements in our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2024.
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 Comprehensive Income
(unaudited) for the three months ended March 31, 2024 and
2023, 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 ended March 31, 2024 and 2023
(unaudited).
|
Three Months EndedMarch 31, |
|
|
2024 |
|
|
|
2023 |
|
Revenue: |
|
|
|
Asset-based revenue |
$ |
149,984 |
|
|
$ |
131,039 |
|
Spread-based revenue(1) |
|
30,093 |
|
|
|
31,999 |
|
Subscription-based revenue |
|
4,252 |
|
|
|
3,544 |
|
Other revenue |
|
5,937 |
|
|
|
3,716 |
|
Total revenue |
|
190,266 |
|
|
|
170,298 |
|
Operating expenses: |
|
|
|
Asset-based expenses |
|
44,853 |
|
|
|
37,434 |
|
Spread-based expenses |
|
389 |
|
|
|
293 |
|
Adjusted employee compensation(2) |
|
44,307 |
|
|
|
41,925 |
|
Adjusted general and operating expenses(2) |
|
25,614 |
|
|
|
24,805 |
|
Adjusted professional fees(2) |
|
5,470 |
|
|
|
5,225 |
|
Adjusted depreciation and amortization(3) |
|
7,742 |
|
|
|
6,254 |
|
Total adjusted operating
expenses |
|
128,375 |
|
|
|
115,936 |
|
Interest expense |
|
2,294 |
|
|
|
2,347 |
|
Adjusted other expenses,
net(2) |
|
(297 |
) |
|
|
(223 |
) |
Adjusted income before income
taxes |
|
59,894 |
|
|
|
52,238 |
|
Adjusted provision for income
taxes(4) |
|
14,674 |
|
|
|
12,537 |
|
Adjusted net income |
$ |
45,220 |
|
|
$ |
39,701 |
|
Net income per share attributable
to common stockholders: |
|
|
|
Adjusted earnings per share |
$ |
0.60 |
|
|
$ |
0.53 |
|
Weighted average number of
common shares outstanding, diluted |
|
75,269,626 |
|
|
|
74,370,353 |
|
(1) The Company reclassified $6.3 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
March 31, 2023. (2) Consists of the adjustments to EBITDA listed in
the adjusted EBITDA reconciliation table above.(3) Relates to
intangible assets established in connection with HTSC’s acquisition
of our Company in 2016. (4) Consists of adjustments to normalize
our estimated tax rate in determining adjusted net income.
Set forth below is a reconciliation from net income, the most
directly comparable GAAP financial measure, to adjusted net income
for the three months ended March 31, 2024 and 2023
(unaudited).
|
Three months ended March 31, 2024 |
|
Three months ended March 31, 2023 |
Reconciliation of Non-GAAP Presentation |
GAAP |
|
Adjustments |
|
Adjusted |
|
GAAP |
|
Adjustments |
|
Adjusted |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based revenue |
$ |
149,984 |
|
|
$ |
— |
|
|
$ |
149,984 |
|
|
$ |
131,039 |
|
$ |
— |
|
|
$ |
131,039 |
|
Spread-based revenue(1) |
|
30,093 |
|
|
|
— |
|
|
|
30,093 |
|
|
|
31,999 |
|
|
— |
|
|
|
31,999 |
|
Subscription-based revenue |
|
4,252 |
|
|
|
— |
|
|
|
4,252 |
|
|
|
3,544 |
|
|
— |
|
|
|
3,544 |
|
Other revenue |
|
5,937 |
|
|
|
— |
|
|
|
5,937 |
|
|
|
3,716 |
|
|
— |
|
|
|
3,716 |
|
Total revenue |
|
190,266 |
|
|
|
— |
|
|
|
190,266 |
|
|
|
170,298 |
|
|
— |
|
|
|
170,298 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Asset-based expenses |
|
44,853 |
|
|
|
— |
|
|
|
44,853 |
|
|
|
37,434 |
|
|
— |
|
|
|
37,434 |
|
Spread-based expenses |
|
389 |
|
|
|
— |
|
|
|
389 |
|
|
|
293 |
|
|
— |
|
|
|
293 |
|
Employee compensation(2) |
|
50,007 |
|
|
|
(5,700 |
) |
|
|
44,307 |
|
|
|
46,911 |
|
|
(4,986 |
) |
|
|
41,925 |
|
General and operating expenses(2) |
|
27,324 |
|
|
|
(1,710 |
) |
|
|
25,614 |
|
|
|
25,689 |
|
|
(884 |
) |
|
|
24,805 |
|
Professional fees(2) |
|
6,081 |
|
|
|
(611 |
) |
|
|
5,470 |
|
|
|
5,393 |
|
|
(168 |
) |
|
|
5,225 |
|
Depreciation and amortization(3) |
|
9,922 |
|
|
|
(2,180 |
) |
|
|
7,742 |
|
|
|
8,428 |
|
|
(2,174 |
) |
|
|
6,254 |
|
Total operating expenses |
|
138,576 |
|
|
|
(10,201 |
) |
|
|
128,375 |
|
|
|
124,148 |
|
|
(8,212 |
) |
|
|
115,936 |
|
Interest expense |
|
2,294 |
|
|
|
— |
|
|
|
2,294 |
|
|
|
2,347 |
|
|
— |
|
|
|
2,347 |
|
Other expenses, net(2) |
|
(332 |
) |
|
|
35 |
|
|
|
(297 |
) |
|
|
19,865 |
|
|
(20,088 |
) |
|
|
(223 |
) |
Income before income taxes |
|
49,728 |
|
|
|
10,166 |
|
|
|
59,894 |
|
|
|
23,938 |
|
|
28,300 |
|
|
|
52,238 |
|
Provision for income
taxes(4) |
|
11,764 |
|
|
|
2,910 |
|
|
|
14,674 |
|
|
|
6,716 |
|
|
5,821 |
|
|
|
12,537 |
|
Net income |
$ |
37,964 |
|
|
|
|
$ |
45,220 |
|
|
$ |
17,222 |
|
|
|
$ |
39,701 |
|
(1) The Company reclassified $6.3 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
March 31, 2023. (2) Consists of the adjustments to EBITDA listed in
the adjusted EBITDA reconciliation table above.(3) Relates to
intangible assets established in connection with HTSC’s acquisition
of our Company in 2016. (4) 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 months ended
March 31, 2024 and 2023 (unaudited), broken out by
compensation and non-compensation expenses (unaudited).
|
|
Three Months Ended March 31, 2024 |
|
Three Months Ended March 31, 2023 |
(in thousands) |
|
Compensation |
|
Non-Compensation |
|
Total |
|
Compensation |
|
Non-Compensation |
|
Total |
Net income |
|
|
|
|
|
$ |
37,964 |
|
|
|
|
|
|
$ |
17,222 |
|
Acquisition-related amortization(1) |
|
$ |
— |
|
|
$ |
2,180 |
|
|
|
2,180 |
|
|
$ |
— |
|
|
$ |
2,174 |
|
|
|
2,174 |
|
Expense adjustments(2) |
|
|
1,532 |
|
|
|
2,321 |
|
|
|
3,853 |
|
|
|
1,164 |
|
|
|
21,052 |
|
|
|
22,216 |
|
Share-based compensation |
|
|
4,168 |
|
|
|
— |
|
|
|
4,168 |
|
|
|
3,822 |
|
|
|
— |
|
|
|
3,822 |
|
Other (income) expense, net |
|
|
— |
|
|
|
(35 |
) |
|
|
(35 |
) |
|
|
— |
|
|
|
88 |
|
|
|
88 |
|
Tax effect of adjustments(3) |
|
|
(1,397 |
) |
|
|
(1,513 |
) |
|
|
(2,910 |
) |
|
|
(1,197 |
) |
|
|
(4,624 |
) |
|
|
(5,821 |
) |
Adjusted net income |
|
$ |
4,303 |
|
|
$ |
2,953 |
|
|
$ |
45,220 |
|
|
$ |
3,789 |
|
|
$ |
18,690 |
|
|
$ |
39,701 |
|
(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 4 2024 まで 5 2024
AssetMark Financial (NYSE:AMK)
過去 株価チャート
から 5 2023 まで 5 2024