Good day, ladies and gentlemen and welcome to the Westwood Holdings Group First Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I would like to turn the call over to your host, Julie Gerron, General Counsel. Please go ahead.

Thank you and good afternoon. Welcome to our first quarter 2019 earnings conference call. The following discussion will include forward-looking statements which are subject to known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statements. Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-Q for the quarter ended March 31, 2019 filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on forward-looking statements. In addition, in accordance with the SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today. On the call today, we have Brian Casey, our President and Chief Executive Officer and Terry Forbes, our Chief Financial Officer. I will now turn the call over to our CEO, Brian Casey.

Good afternoon and thank you for taking the time to listen to our first quarter earnings call. As always, I’ll start with comments on the investment teams and environments then finish with comments on our business. In the U.S., we saw a snapback from the fourth quarter’s steep decline and the S&P 500 posted one of the single best quarters in 10 years and the best first quarter in the last 20 years. It was a risk on market fueled by a dovish Fed and more optimism about a trade deal with China and reversed the market’s concerns of the previous quarter. GDP growth appears to be moderating but still positive. The yield curve flattened, in some parts are inverted, which bears watching. Volatility has continued to moderate as well. But similar to last quarter, risk assets like equities remained susceptible to bouts of fear and volatility. While potential market-moving events like the Mueller report and Brexit appeared to be contained for the moment, it is important to remember that these and other events could still disrupt markets. We continue to look for increasing dispersion in returns amongst individual stocks as we move later to the business cycle and various headwinds and tailwinds impact each business differently. Ultimately, we believe that the investing landscape will continue to move towards one that allows active managers to more clearly identify winners and losers. Our U.S. value products benefited from the equity markets rally. All posted positive absolute returns with SmallCap outperforming our larger cap products. Our SmallCap strategy, which just completed its 15th year, delivered over 300 basis points of outperformance against the Russell 2000 value in the first quarter. SmallCap ranks in the top quartile on trailing 3- and 5-year periods and in the top decile over the 7-year and since…

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $23.9 million for the first quarter of 2019, which compared to $26.1 million in the fourth quarter of 2018 and $33.6 million in the prior year’s first quarter. The decrease from the prior year’s fourth quarter was primarily due to lower average assets under management resulting from net outflows. The decrease from the prior year’s first quarter was primarily due to lower average assets under management resulting from net outflows and lower performance-based fees. First quarter net income of $0.4 million or $0.05 per share compared to $5.4 million or $0.64 per share in the fourth quarter of 2018. The prior year fourth quarter benefited from higher asset-based fees and foreign currency transaction gains. Economic earnings, a non-GAAP metric, was $4.1 million or $0.49 per share in the current quarter versus $9.5 million or $1.12 per share in the prior year’s fourth quarter. First quarter net income of $0.4 million or $0.05 per share compared to $8 million or $0.93 per share in the prior year’s first quarter. The decrease primarily related to lower total revenues and a $0.6 million foreign currency loss net of tax, partially offset by lower compensation expenses for reductions and incentive compensation. Economic earnings of $4.1 million for the current quarter or $0.49 per share compared to $12.6 million or $1.48 per share in the first quarter of 2018. Firm-wide assets under management totaled $16.8 billion at quarter end and consisted of institutional assets of $9.2 billion or 55% of the total, wealth management assets of $4.4 billion or 26% of the total and mutual fund assets of $3.2 billion or 19% of the total. Over the year, we experienced net outflows of $1.3 billion and market appreciation of $1.5 billion. Our financial position continues to be very solid with cash and short-term investments at quarter end totaling $102 million and a debt-free balance sheet. I’m happy to announce that our Board of Directors improved a quarterly cash dividend of $0.72 per share payable on July 1, 2019, to stockholders of record on June 7, 2019. This represents an annualized dividend yield of 7.9% as of the closing price on April 22. That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website reflecting first quarter highlights as well as a discussion of our business, product development and longer-term trends in revenues, earnings and dividends. We thank you for your interest in our company, and we’ll open the lines to questions.

Thank you, sir. [Operator Instructions] I show our first question comes from Mac Sykes from Gabelli.

Good afternoon gentlemen. So, congratulations on the press. Sensible Fees seems like it really took off around the different news agencies. I was curious, Brian, about your goals both in the intermediate and long term for this product. I mean do you see it eventually being kind of the flagship aspect of the franchise? Or how do you see it in terms of evolving over maybe 3 years and longer?

Well, first of all, thank you for the congrats. It has been interesting, humbling, amazing really for the last month. We’ve been in 14 major publications. We’ve been embraced by consultants, by Morningstar, by folks that have all said to us that this kind of a fee construct where you only pay if we outperform is the perfect alignment between asset owners and asset managers, and it’s been really refreshing. As far as where it is headed, I think it’s a little too early to tell. We’ve had a lot of good meetings. We’ve had over 20 institutional meetings. We’ve had over 30 intermediary meetings. We found it to be a very positive door opener for us. And as I’ve mentioned throughout my comments, we have spent an enormous amount of money and time building out a robust sales force. And we have more folks out selling. We are backed by an infrastructure that we’ve never had before, and we are putting out thought leadership pieces on a weekly basis. So, I’m very excited about it. It’s highly scalable and something that could be a real game changer for us. But I think it’s a little too early to say just what are the intermediate or longer term goals.

Okay. I appreciate your color on all your investments that you made. It does seem like the pace of IT’s expense fell this quarter. Should we think about 2019 as being a year when the expenses start to taper off a little bit versus the previous years?

I think the expenses in 2019 will be somewhat consistent because as Brian mentioned, we’re still investing in the digital platform as well as we have some overlapping systems running because we have to make sure that we are ready to go live on other systems. So, I don’t think you’re going to see a significant drop-off there.

But I do think that what you will see is there’s a stat out there, which is rather remarkable, and that’s when a firm gets to $35 billion in assets under management, they have roughly 37 different pieces of technology. And we have called literally a dozen or more various pieces of technology. And when we’re done with this, we’re going to have one very stable and efficient platform for most of what we do. We have also wrapped in our annual license fee to include a number of the services that InvestCloud offers and wrapped it all together. So, we’ll get things like a state-of-the-art CRM system. We will get we will benefit from some of the work that they’ve done for other clients in the financial planning area. So, we are really excited to see what our platform looks like when we’re finished. We should have we should be through the first phase of green, which is they use colors when they talk about their products. We should be through that in the next month or so. We are running parallel currently. So as Terry mentioned, that means we’re paying Advent and we’re paying InvestCloud at the same time, but we have to do that to ensure the accuracy of what we’re doing. But we’re excited with what we see. All of our operations folks find the new technology to be really amazing, makes their jobs easier and really much more efficient. The next thing we will see this summer is we will roll out a beta version of Wealth Coach 2.0, which will be our online digital offering for the smaller-tier clients that will then as we will work with that and refine that with friends and family, and then we’ll be able to roll that out in a more meaningful way in the third or early fourth quarter. We will also have a beta of our fully digital platform later this year with the rollout more likely in the first quarter of next year. And that will be a real game changer for not only our high net worth clients but our institutional clients as well. So again, a lot of good things going on, a lot of money spent under the bridge, a little more to spend, but we do see daylight on the other side, and we see a really functional and highly efficient platform.

Great. Thanks for taking my questions.

Thanks, Mac. Appreciate it.

Thank you. [Operator Instructions] I show no further questions in the queue at this time. I’d like to turn the call over to Brian Casey, President and Chief Executive Officer, for closing remarks. Please go ahead.

Great. Well, thanks very much for taking the time to listen to our call. As I said, I know you’ve been disappointed. We’ve been disappointed with our flows recently, but we really do feel like the future is bright. We feel like we’ve made the investments for us to make it to the other side and for us to really thrive and grow in the future and we appreciate your being a shareholder. And please visit our website or give myself or Terry a call if you have any further questions. Have a great afternoon. Thank you.

Thank you, ladies and gentlemen, for attending today’s conference. This concludes the program. You may all disconnect. Good day.