Westwood Holdings: Mixed Earnings Call Highlights Growth and Challenges

Westwood Holdings ((WHG)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Westwood Holdings was a mixed bag, showcasing both significant achievements and notable challenges. On the positive side, the company celebrated the launch of new ETFs, a major sub-advisory mandate win, and strong performance in the institutional channel. However, these highlights were tempered by a decline in revenue, net outflows in wealth management, and a decrease in first-quarter income, painting a picture of both success and areas of concern.

Launch of New ETFs

Westwood Holdings announced the launch of the Westwood LBRTY Global Equity ETF, trading under the ticker symbol BFRE. This new ETF is designed to offer a unique approach to global equity investing by limiting exposure to authoritarian regimes, while still maintaining broad market exposure.

Successful Sub Advisory Mandate

A significant highlight for Westwood was securing a sub-advisory mandate valued at nearly $1 billion in small cap value. This mandate was funded towards the end of the quarter, marking a substantial win for the company.

Growth in ETF Business

The company’s ETF business showed promising growth, with the Westwood Salient Enhanced Midstream Income ETF, MDST, celebrating its one-year anniversary. The ETF has gained strong traction among income-seeking investors, contributing to asset levels in the first two ETFs exceeding $100 million.

Strong Institutional Channel Results

Westwood’s institutional channel delivered impressive results in the first quarter, with gross sales reaching $960.5 million and net inflows amounting to $758.8 million, underscoring the channel’s robust performance.

Robust Pipeline Across Strategies

The company reported a robust pipeline across multiple strategies, with continued mandates and SMidCap value for defined contribution plans, driven by the largest national consultants.

Positive Financial Position

Westwood maintains a solid financial position, with cash and liquid investments totaling $26.9 million and a debt-free balance sheet, providing a stable foundation for future growth.

Dividend Declaration

The Board of Directors declared a regular cash dividend of $0.15 per common share, payable on July 01, 2025, reflecting the company’s commitment to returning value to shareholders.

Revenue Decline

Despite the positive developments, Westwood experienced a decline in total revenues for the first quarter of 2025, which were $23.3 million, down from $25.6 million in the previous quarter due to lower performance-based fees.

Net Outflows in Wealth Management

The Wealth Management segment faced challenges, with net flows of minus $157 million in the first quarter of 2025, indicating a need for strategic adjustments.

Market Depreciation Impact

Westwood’s assets under management and advisement were impacted by market depreciation, with a decrease of $0.3 billion and $8 million, respectively.

Decrease in First Quarter Income

First quarter income saw a significant drop, amounting to $0.5 million or $0.05 per share, compared to $2.1 million or $0.24 per share in the fourth quarter, highlighting financial pressures.

Forward-Looking Guidance

Looking ahead, Westwood Holdings remains optimistic about its strategic initiatives and growth prospects. The company highlighted its strong pipeline, strategic expansions, and innovative ETF offerings as key drivers for navigating market uncertainties and achieving continued growth. With assets under management totaling $18 billion at the end of the quarter, Westwood is poised to leverage its strengths in the institutional and intermediary channels to sustain momentum.

In conclusion, Westwood Holdings’ earnings call reflected a balanced narrative of achievements and challenges. While the company celebrated significant wins and strategic advancements, it also faced revenue declines and financial pressures. The forward-looking guidance suggests a focus on leveraging strengths and strategic initiatives to drive future growth, offering a cautiously optimistic outlook for stakeholders.