Diamond Hill Investment Group, Inc. Reports Results For Second Quarter 2017

Three Months Ended June 30,

2017

2016

Change

Revenue

$

35,542,541

$

32,669,435

    Net operating income

15,966,748

14,699,249

9%

    Operating margin

45

%

45

%

Investment income

3,024,729

692,666

Net income attributable to common shareholders

12,638,439

9,714,552

30%

Earnings per share attributable to common shareholders - diluted

$

3.66

$

2.84

29%

Six Months Ended June 30,

2017

2016

Change

Revenue

$

70,581,614

$

63,126,924

12%

    Net operating income

31,708,222

28,403,682

12%

    Operating margin

45

%

45

%

Investment income

6,905,973

1,439,888

Net income attributable to common shareholders

25,395,334

18,980,215

34%

Earnings per share attributable to common shareholders - diluted

$

7.38

$

5.58

32%

As Of

June 30, 2017

December 31, 2016

June 30, 2016

Assets under management (millions)

$

20,924

$

19,381

$

17,584

Book value per share

$

49.37

$

40.81

$

37.55

Total outstanding shares

3,457,775

3,411,556

3,425,389

Change in Assets Under Management

For the Three Months Ended June 30,

(in millions)

2017

2016

AUM at beginning of the period

$

20,333

$

17,391

Net cash inflows (outflows)

    proprietary funds

389

194

    sub-advised funds

(54)

(15)

    institutional accounts

(142)

(106)

193

73

Net market appreciation and income

398

120

Increase during the period

591

193

AUM at end of the period

$

20,924

$

17,584

Change in Assets Under Management

For the Six Months Ended June 30,

(in millions)

2017

2016

AUM at beginning of the period

$

19,381

$

16,841

Net cash inflows (outflows)

    proprietary funds

698

551

    sub-advised funds

(132)

(55)

    institutional accounts

(207)

(66)

359

430

Net market appreciation and income

1,184

313

Increase during the period

1,543

743

AUM at end of the period

$

20,924

$

17,584

Three Months Ended
 June 30,

Six Months Ended
 June 30,

(in thousands, except percentages and per share data)

2017

2016

2017

2016

Total revenue

$

35,543

$

32,669

$

70,582

$

63,127

Net operating income, GAAP basis

$

15,967

$

14,699

$

31,708

$

28,404

Non-GAAP adjustment:

Gains (losses) on deferred compensation plan investments, net⁽¹⁾

436

32

1,021

207

Net operating income, as adjusted, non-GAAP basis⁽²⁾

16,403

14,731

32,729

28,611

Non-GAAP adjustment:

Tax provision on net operating income, as adjusted, non-GAAP
basis⁽³⁾

(5,203)

(5,383)

(10,613)

(10,351)

Net operating income, as adjusted, after tax, non-GAAP basis⁽⁴⁾

$

11,200

$

9,348

$

22,116

$

18,260

Net operating income, as adjusted after tax per diluted share, non-
GAAP basis⁽⁵⁾

$

3.25

$

2.74

$

6.43

$

5.37

Diluted weighted average shares outstanding, GAAP basis

3,449

3,415

3,441

3,403

Operating profit margin, GAAP basis

45

%

45

%

45

%

45

%

Operating profit margin, as adjusted, non-GAAP basis⁽⁶⁾

46

%

45

%

46

%

45

%

⁽¹⁾Gains (losses) on deferred compensation plan investments, net: The gain (loss) on deferred compensation plan investments, which increases (decreases) deferred compensation expense included in operating income, is removed from operating income in the calculation because it is offset by an equal amount in investment income (loss) below net operating income on the income statement, and thus has no impact on net income attributable to the Company.

⁽²⁾Net operating income, as adjusted: This non-GAAP measure was calculated by taking the Company's net operating income adjusted to exclude the impact on compensation expense of gains and losses on investments in the deferred compensation plan.

⁽³⁾Tax provision on net operating income, as adjusted: This non-GAAP measure represents the tax provision excluding the impact of investment related activity and is calculated by applying the tax rate from the actual tax provision to net operating income, as adjusted.

⁽⁴⁾Net operating income, as adjusted, after tax: This non-GAAP measure was calculated by taking the net operating income, as adjusted, less the tax provision on net operating income, as adjusted.

⁽⁵⁾Net operating income, as adjusted after tax per diluted share: This non-GAAP measure was calculated by dividing the net operating income, as adjusted after tax, by diluted weighted average shares outstanding.

⁽⁶⁾ Operating profit margin, as adjusted: This non-GAAP measure was calculated by dividing the net operating income, as adjusted, by total revenue.