Good day and welcome to the Westwood Holdings Group Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jill Meyer, Senior Vice President, Legal and Compliance. Please go ahead.

Thank you and welcome to our fourth quarter 2023 earnings conference call. The following discussion will include forward-looking statements that 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-K for the year ended December 31st, 2023, that will be filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, 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 SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to those comparable GAAP measures is included at the end of our press release issued earlier today. On the call today, we have Brian Casey, our Chief Executive Officer, and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.

Good afternoon and thanks for listening to our fourth quarter earnings call. First, I'll start with some highlights for the quarter. Several multi-asset strategies, income opportunity, total return, high income, and alternative income delivered strong Morningstar peer rankings in the top quartile for the fourth quarter. US Value products were mixed with strong performance in SmallCap value, while our other products struggled to keep up with the surging indices. As we celebrate the 1-year anniversary of our Salient acquisition, one of the standouts has been the Westwood Salient Select Income Fund, which finished in the top decile for the quarter and well into the top quartile for the year. The fund has benefited from good security selection and a shifting market preference to real estate preferred securities versus bank preferreds. We announced two significant new initiatives last quarter to grow and diversify our offerings. First, we recruited a talented team to establish a new product offering known as Managed Investment Solutions. Based in Chicago, the team has worked together at two previous employers for more than a decade. They had great success creating an actively designed portfolio of creative solutions for clients in the wealth management, factor base, thematic, index alpha, and quantitatively managed sectors. We are hard at work building the analytical and operational support systems needed for this business and excited for the possibilities. Second, we launched our first in-house managed private investment fund, the Westwood Energy Secondaries Fund. We raised over $34 million to invest in 12 energy funds. We've called 75% of the capital and expect to have the remaining capital invested in the first half of this year. We're excited to establish what we hope is a strong first fund to build on for future fund offerings. Markets rallied from late October onwards for a…

Thanks Brian and good afternoon everyone. Today, we reported total revenues of $23.2 million for the fourth quarter of 2023 compared to $21.9 million in the third quarter and $20.5 million in the prior year's fourth quarter. The increase from the prior year was principally due to higher average assets under management following the acquisition of Salient Partners Asset Management business in November 2022 and the acquisition of Broadmark Asset Management in early 2023. The increase from the prior quarter was a result of higher performance fees. For fiscal 2023, total revenues of $89.8 million compared to $68.7 million, also driven by additional assets under management from our recent acquisitions. Our fourth quarter comprehensive income of $2.6 million or $0.32 per share compared to the third quarter's $3.4 million or $0.41 per share, reflecting receipt of life insurance proceeds in the third quarter and higher income taxes in the fourth quarter, partially offset by higher revenues. Non-GAAP economic earnings were $5.2 million or $0.63 per share in the current quarter versus $6.3 million or $0.77 per share in the third quarter. Our fourth quarter comprehensive income of $2.6 million or $0.32 per share compared to the prior year's fourth quarter net loss of $3.1 million or $0.40 per share due to higher revenues and lower acquisition expenses, partially offset by higher employee expenses and income taxes. Economic earnings were $5.2 million or $0.63 per share compared with economic losses of $0.7 million or $0.09 per share in the fourth quarter of 2022. Our 2023 comprehensive income of $9.5 million compared to 2022's loss of $4.6 million on higher revenues, insurance proceeds, lower acquisition expenses, and changes in the fair market value of contingent consideration, partially offset by higher costs for employee compensation, information technology, and general and administrative activities, following…

Thank you. At this time, we'll conduct a question-and-answer session. [Operator Instructions] Our first question comes from Mac Sykes with GAMCO. Your line is open.

Good afternoon everyone.

Hello Mac.

Hi Mac.

You've been around the business for a long time and certainly a lot of things were going on last year in terms of the intermediated channel, et cetera. I just wanted to know that you've set up the firm with the corporates to Salient as well, you have a number of kind of marketing strategies in place. Do you think from 30,000 fee how are you thinking about the evolution of sort of really starting to focus on resources at the firm to enhance the marketing and flows, different products, et cetera? I mean, it's just more of a high level, where you see the firm really focusing going forward in terms of the different channels and the opportunity set for Westwood at this point?

Sure. Thanks for your question, Mac. So, one of the things that we've employed after the acquisition of Salient is a lot of technology in the sales area. We were very fortunate that Salient had spent a lot of money to build a sales force-enabled distribution network that allows us to see activity, we can see where our intermediary salespeople are, who they're seeing. It allows us to see our flows when money is coming in, when it's going out. That's all pretty basic stuff, but it's very expensive for a firm our size to build. So, that has been a huge lift for us. And then we've added a number of other different technologies to try to enhance the sales effort. We use Dakota Marketplace to help us make better use of our time to understand when we have portfolio managers traveling to make sure that we're calling on everybody in that particular area, making really good use of their time. We use a system by Tiffin [ph] called AMP, where we can actually download our prospects into their AI-enabled machine that allows us to really cultivate prospects. We use another system that tells us who's reading our information and when and how long they spend on it so that when we're reaching out to prospects, we have a much better handle on who's actually interested and the various strategies that we have. So, we continue to use technology to our advantage. We've been able to cut out a little bit of expense on some of the legacy stuff that we've had with the addition of the new Salient tool. So, it's pretty exciting.

And on the energy fund, will that come through the institutional channel in terms of the performance fees and the asset designation or is that through the wealth? How is that being put on your financial?

Yes. So, we have -- we do have institutional business in the energy area. And we actually got our first inbound institutional energy inquiry in the fourth quarter for the first time in probably five years. So, we're excited about that. We also have the energy products available through mutual fund as well as SMAs. And the SMAs are in a number of the very large wire houses. So, we have good penetration there and so it's widely available across the channels.

Great. Thank you.

Thank you. That concludes the question-and-answer session. At this time, I would like to turn the call back to Brian Casey for closing remarks.

Okay. Well, thanks everybody. We appreciate you listening today. We're sure excited about our progress and as I mentioned in the call, we've got a number of wins in our SMidCap product, actually five new clients that will be close to $400 million in new assets that will fund in the next 30 to 60 days. And in addition to that, we had a nice SmallCap win of $33 million. The pipeline remains strong and we have another pending SMid final decision in the next 30 days for a very large Fortune 100 company. All of these products carry a fee of 50 basis points or more. In addition to that, we've got about three RFPs in process. And most importantly, our meeting activity is really increasing across the country. Adrian Helfert, who's Head of our Multi-Asset business; and David Friedman, who works in our Intermediary Group, they did 44 meetings last week in four days in New York City, which is, I think, an all-time record. So, meetings are picking up, RFPs have picked up, pipeline is good, and we're finally able to report some good wins to start the year. So, thanks again, everybody, for listening to the call today and happy Valentine's. Please look at westwoodgroup.com if you have any questions or reach out to Terry or myself. Have a great afternoon.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.