Westwood Holdings Group, Inc. Stock

Good day and thank you for standing by. Welcome to the Second Quarter 2026 Westwood Holdings Group Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, John Ehinger, Managing Director, Head of Legal and Compliance.

Thank you and welcome to our second quarter 2026 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-Q for the quarter ended June 30, 2026, 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 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 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 joining us for Westwood's second quarter 2026 earnings call. I'm very pleased to share our results and key developments from the past quarter as well as our outlook for the remainder of the year. Before we dive into the details, I'd like to highlight several key points from the quarter. Our ETF platform surpassed $400 million in assets in July. We closed $147 million in new private capital commitments. The multi-asset and wealth team strategies posted strong long-term rankings, and we're celebrating our 24th anniversary as a public company.

After a shaky start, equity markets rebounded sharply in the second quarter, with the S&P 500 gaining more than 15%, its second strongest quarterly advance since 2020, and the Russell 2000 rose more than 21%. Mega-cap technology and AI infrastructure stocks led much of the advance in April and May, though market leadership broadened out later on to include industrials, healthcare, and financials. A remarkably resilient economy with a 2.1% GDP growth and historically low unemployment rate bolstered investor sentiment, even as inflation, driven largely by rising energy prices tied to the Middle East conflict, reemerged as a key concern and pushed bond yields higher.

Turning to long-term performance, our results over the three-year and longer periods are mixed across strategies, with some notable bright spots. Within our U.S. Value strategies, results have been mixed over longer periods and softer over recent periods. However, our SMidCap strategy ranked in the top third over three- and five-year periods among institutional peers. Our since inception performance and peer rankings remain intact for Large-cap, SMidCap, and Small-cap. Our multi-asset strategies have delivered strong long-term results, with more than half of them ranking in the top third or better against peers over three-year and longer periods.

Multi-Asset Income scores top 12% or better peer rankings for trailing three- and five-year periods, and in the top 1% for 7- and 10-year periods. And our income opportunity strategy ranked in the top third among peers over multiple periods. MLP-focused strategies have done particularly well, with MLP SMA and MLP and Energy Infrastructure achieving top half or better peer rankings over longer-term periods, including a top decile ranking since inception for MLP SMA. Wealth team strategies have also performed well long-term, with enhanced balance ranking in the top third over multiple periods, and thematic innovation and growth has achieved a top 13% ranking since inception.

Despite U.S. Value's recent short-term underperformance, we believe in the durability of our investment approach, regardless of the macro backdrop. Valuations have risen from levels seen earlier in the year, but equity leadership continues to broaden beyond Mega-cap technology into more defensive, quality-oriented sectors such as industrials, healthcare, and financials. Whether corporate earnings and economic growth surprise to the upside or inflation concerns and geopolitical developments cause investors to reassess their appetite for risk, we believe our disciplined focus on high-quality businesses, those with strong free cash flow, recurring earnings, low leverage, and attractive valuations, positions us well to deliver strong long-term results. This is particularly true within the Small-cap space where limited sell-side coverage continues to reward fundamental bottom-up stock selection.

Westwood experienced net outflows this quarter, notably from U.S. Value institutional clients. However, these were anticipated as core equity allocations continued to evolve toward lower fee passive options such as ETFs. To take advantage of this shift in investor preference, we have been strategically positioning the firm for a number of years by investing in three growth areas: ETFs, alternatives, and managed investment solutions. And I'm very pleased to report that we're seeing meaningful pipeline growth across all three of these areas.

Our institutional channel, which includes our private capital business, generated $382 million in gross sales during the quarter, with net outflows of $1.3 billion. Outflows were concentrated in our legacy Large-cap value business, which has been impacted by performance challenges and industry dynamics as investors increasingly shift to passive ETFs. Small-cap value also experienced outflows. However, these were primarily related to a single client consolidating its Small- and Mid-cap allocations into a combined Mid-cap mandate. As a result, assets were redeemed from Small-cap value in June, and our client has already funded a significantly larger allocation into our SMidCap strategy in July.

Managed Investment Solutions clients funded new accounts during the quarter, which brings year-to-date flows to $350 million. Our institutional pipeline remains robust across value and energy strategies, with a significant increase in Managed Investment Solutions, where four new opportunities were added in the second quarter alone. Private Capital completed a very successful co-investment fundraising effort of nearly $147 million for the quarter. Our private markets platform is attracting substantial interest across RIAs, family offices, and independent advisors, building on the brand recognition established through previous successful fundraisers.

Looking ahead, our private capital platform is well positioned to attract institutional investors following recent enhancements to our personnel and organizational structure. We anticipate receiving continued mandates in SMidCap for defined contribution plans, driven by the largest national consultants, and we continue to have constructive conversations regarding our managed investment solutions capability with consultants and prospective investors. Our mutual fund and ETF flows for the quarter included $168 million in gross sales and net outflows of $165 million.

Our Enhanced Midstream, MDST, and Enhanced Energy Income, WEEI ETFs, exceed $370 million in combined assets and continue to win approvals from major national platforms, while our Enhanced Income Opportunity ETF, YLDW, is approaching $35 million in assets and is also beginning to gain platform approvals. Midstream Income also posted a strong Morningstar peer ranking of 20th percentile for the period. Energy and real asset strategies actually led the firm in both gross and net sales during the quarter. Our ETF suite continues to gain momentum, and we expect our platform availability to increase as assets grow. Finally, our Broadmark strategies are also gaining momentum as investors refocus on risk mitigation amid increased market volatility.

Our wealth management team continues to build momentum as we strengthen our multifamily office platform. Client engagement remained elevated through the first half of this year, especially over the summer months, which reflects ongoing market uncertainty and continued demand for proactive planning and thoughtful portfolio oversight. Our advisors have maintained a disciplined, long-term approach to asset allocation, which has helped reinforce client confidence during periods of volatility, while conversations with clients increasingly focus on holistic planning, including tax positioning, liquidity management, and coordination with trust structures, areas where our integrated models are more efficient and continue to resonate.

Operationally, we made further progress on process standardization and cross-functional alignment across our advisory, client service, and trust teams, improving scalability while enhancing the overall client experience. We're also evaluating our technology to ensure that we have a solid foundation going forward. Business activity remains steady, and we continue to prioritize high-quality relationships with long-term potential. Looking ahead, we're focused on refining internal processes, enhancing reporting and communication, and strengthening collaboration to support sustainable growth.

We've just entered into a strategic partnership with ETF Capital Markets Advisors, led by Nicholas Phillips, to provide dedicated capital markets consulting in support of our growing ETF platform. Nicholas has more than 25 years of ETF market making and capital markets experience and will advise on trading, execution, and market structure across our ETF lineup, including our Enhanced Income Series and WEBS-defined volatility ETFs with the goal of enhancing liquidity, pricing, and execution quality for our investors. We are very pleased with our success with our Enhanced Income Series ETFs. They have received tremendous interest from advisors and investors.

We are naturally very excited that our ETF platform has just crossed $400 million in assets under management. Our ETFs offer investors attractive income, combining dividend yield and options premiums from covered calls, while also offering the potential for asset appreciation. Our latest addition, the Enhanced Income Opportunity ETF, YLDW, which we launched at the end of 2025, offers investors current income and capital appreciation from a variety of asset classes and has gotten off to a great start. We currently have three ETFs in the Enhanced Income Series.

The next addition to the series, the Westwood Salient Enhanced Power and Infrastructure ETF, or PWRX, will be truly historic in that it will be the first new ETF to list on the Texas Stock Exchange in mid-September. We believe that the TXSE, located right in our own backyard in Dallas, Texas, is the ideal exchange to list our funds. Texas is widely regarded as the energy capital of the world, and our PWRX investment team located in Houston has decades of combined experience in managing investments along the energy value chain and deep relationships with key players in the energy space. Texas is on track to be one of the largest data center hubs in the United States due to its vast land availability, favorable tax incentives, and robust energy infrastructure.

We have a front row seat to witness the convergence of the explosive growth in AI data center capacity and the resulting tailwinds for power demand. Westwood has deep roots in Texas, and many of the PWRX ETF holdings will be companies we know well and in which we have invested in for years. The opportunity to bring the PWRX ETF to market with our partners at TXSE was a logical choice. TXSE has built its exchange from the ground up, and they've developed an industry-leading lead market maker program offering significant incentives that will lead to excellent market quality, liquidity, and better execution outcomes for investors in PWRX.

Our private capital business has closed $147 million in new commitments across our energy secondaries co-investment platform. We've added four new members to our Energy Secondaries investment team and three members to our Private Capital Operations team, and we continue to build out our private capital infrastructure, including new vendor and technology relationships. Finally, this quarter marks Westwood's 24th anniversary as a publicly traded company. We're very grateful to our shareholders, many of whom have supported us for years, for their continued confidence and partnership as we build for the future.

To summarize, Westwood continued to execute against our long-term strategy, growing our ETF and private capital platforms, while our multi-asset and wealth team strategies posted strong results. While we saw outflows in select institutional value strategies, our pipeline across managed investment solutions, energy, and selected value strategies remains robust. As we mark our 24th anniversary as a public company, we remain confident that we have positioned Westwood well to deliver long-term value for our clients and shareholders. Thank you for your continued support and confidence in Westwood.

I'll now turn the call over to our CFO, Terry Forbes.

Thanks, Brian, and good afternoon, everyone. Today we reported total revenues of $25.3 million for the second quarter of 2026 compared to $25 million in the first quarter and $23.1 million in the prior year's second quarter. Second quarter revenues were consistent with the first quarter. Second quarter revenues were higher than last year's second quarter due to continued growth in our business, particularly from our ETFs and private energy secondaries funds.

Our second quarter income of $1.5 million or $0.17 per share compared with $0.8 million or $0.09 per share in the first quarter on lower compensation expenses offset by higher income taxes and first quarter recognition of gains from our investment in a private bank. Non-GAAP economic earnings were $3 million or $0.33 per share in the current quarter versus $2.8 million or $0.31 per share in the first quarter. Our second quarter income of $1.5 million, or $0.17 per share, compared favorably to last year's second quarter of $1 million, or $0.12 per share, due to higher revenues partially offset by higher compensation and professional services expenses and higher income taxes.

Economic earnings for the quarter were $3 million, or $0.33 per share, compared with $2.8 million or $0.32 per share in the second quarter of 2025. Firm-wide assets under management and advisement totaled $17.9 billion at quarter end, consisting of assets under management of $17 billion and assets under advisement of $1 billion. Assets under management consisted of institutional assets of $8.3 billion, or 49% of the total, wealth management assets of $4.5 billion, or 26% of the total, and mutual fund and ETF assets of $4.2 billion, or 25% of the total.

Over the quarter, our assets under management experienced net outflows of $1.6 billion and market appreciation of $1.2 billion. And our assets under advisement experienced market appreciation of $53 million and net outflows of $4 million. At quarter end, we had cash and investments totaling $56.5 million. Happy to announce that our Board of Directors approved a regular cash dividend of $0.15 per common share, payable on October 1, 2026, to stockholders of record on September 1, 2026.

That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website, reflecting quarterly highlights, as well as discussion of our business, product development, and longer-term trends in revenues and earnings. We thank you for your interest in our company, and we'll open the line to questions.

[Operator Instructions] Our first question is from Mac Sykes of Gabelli Funds.

Congrats on the product innovation. I guess I'd like to get your thoughts a little bit more on the trend in your average fee rate for the firm. I mean, AUM is essentially flat, but you seem to be adding nicely to the ETF bucket, the private capital. So within that mix, it does seem to be additive to the overall fee rate. I was sort of curious as to where you could see that going and the lift there as the mix gets more beneficial.

And then if you could just, for my second question, if you could just remind us, is there embedded carry or performance fees in the secondaries business, and is there loss associated with that in 4Q, or is that kind of on a rolling basis?

Great. Well, first of all, on the fees, we have traditionally had asset-based fees over the course of 41 years. And over the last couple of years, we have added both ETFs and private capital to the mix. And ETFs, in fact, carry a little bit higher fee. But when you're building those businesses and building those ETFs, they have to get to a point of scale where you begin to realize that full fee. In the early years, you'll have some fee waivers in order to keep the expense ratio down. So I expect as we grow the ETF assets, that average fee will grow as well.

As far as the private capital, we could not be more excited about where we are today. We are over $0.5 billion in commitments now to our private capital funds. And those carry an annual management fee of at least 1% and as high as 1.5%. But more importantly, down the road, we hope to achieve carry, and the carry is 10% over an 8% pref or 15% over an 8% pref. And so far, the investments that we have made in our funds have performed exceptionally well.

You have to remember that what we are buying in a lot of these funds are energy secondaries where we are trying to buy 70% LP interest and 30% GP-led and co-investments at on average $0.70 on the dollar. So we're taking fresh capital and putting into something that is already at a nice discount. We have an energy team in Houston that has been managing energy assets for two decades. So they're able to evaluate quickly the opportunities that are presented to us, and we have had some great success in the investments that we've chosen thus far, and we're very much excited about the upcoming years in terms of carry.

And Mac, just further on that, there is no carry currently reflected in the financials, so we are trending in that direction, but there's nothing that we're reflecting yet.

Does that answer your question, Mac?

Yep, perfect. Thank you.

Okay. I'm showing no further questions at this time. And I would now like to turn it back to Brian Casey, CEO, for closing remarks.

Well, great. In closing, I really want to express my sincere gratitude to those who've supported Westwood over the past 24 years as a public company. In particular, I want to recognize a couple of investing legends, Mario Gabelli and Luther King. Your friendship, counsel, and steadfast support have meant a great deal to me personally and to our entire firm. I'd also like to thank our long-term institutional shareholders, including Allspring and Northstar, whose confidence and partnership over many years has been invaluable. We really appreciate your continued support of Westwood and our strategic vision.

And as we look ahead, we remain focused on innovation and growth. It's particularly encouraging to see that three businesses that did not exist three years ago, managed investment solutions, ETFs, and private capital, have each grown to approximately $500 million in assets or more, and these emerging platforms reflect our ability to identify opportunities, execute with discipline, and build for the future. Our goal in the year ahead is ambitious but achievable, and that's to surpass $1 billion in assets within each of these business lines and continue delivering value for our clients and shareholders.

We're really excited about the upcoming launch of PWRX on the Texas Stock Exchange next month. PWRX is designed to provide investors with access to a portfolio of carefully researched companies that are helping power the growth of artificial intelligence, an area we believe will remain a significant driver of innovation and economic value creation for years to come.

And finally, our transformation of the wealth and trust business is progressing and remains a key strategic priority. We've been encouraged by the feedback from pilot clients regarding our multifamily office offering, which has been overwhelmingly positive. As we continue refining and expanding this model, we believe it'll further strengthen our ability to serve both existing and prospective clients with a highly customized high-value solution. On behalf of everyone at Westwood, thank you for your continued trust and support. We're energized by the opportunities ahead and we remain committed to building a stronger, more diversified, and more valuable company for all stakeholders. If you have any follow-up questions or you want to learn more about Westwood, please reach out to me or Terry. We look forward to speaking to you.

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

Good day, and thank you for standing by. Welcome to the Q1 2026 Westwood Holdings Earnings Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jill Meyer, Director of Fiduciary Services. Please go ahead.

Thank you, and welcome to our first quarter 2026 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-Q for the quarter ended March 31, 2026, 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 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 Chief Executive Officer; and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.

Good afternoon, and thank you for joining us for Westwood's First Quarter 2026 Earnings Call. I'm pleased to share our results and key developments from the quarter as well as our outlook for the remainder of the year. Before going into the details, I would like to highlight a few points from the first quarter.

Our AUM grew to $18.3 billion, up from $17.4 billion at year-end 2025. Our ETF suite of products surpassed $315 million in combined AUM. West II closed at over $300 million and West III fundraising is now underway.

Combined institutional and intermediary gross sales were approximately $529 million. And finally, we completed the sale of Vista Bank, generating a net gain of approximately $2 million. I'll start with a brief overview of our assets under management. Firmwide AUM increased from $17.4 billion at December 31, 2025, to $18.3 billion at March 31, 2026. This growth was driven primarily by our energy and real asset strategies, particularly private energy funds and energy-focused ETFs, which more than offset modest declines in U.S. value equity.

Private fund AUM was the largest contributor, reflecting new commitments and capital deployment in our energy secondaries and co-investment vehicles. This growth was structural in nature rather than market dependent, which we see as a healthy and durable source of AUM diversification.

The first quarter reflected the continuing evolution of our AUM mix. Client allocations are shifting toward income-oriented real asset and private market solutions, driven by macroeconomic forces like energy security concerns, record global infrastructure investments and persistent power demand growth from data centers and AI-linked infrastructure.

Traditional U.S. value equity strategies remain under pressure, although the pace of decline moderated during the quarter. Turning to the market environment. After reaching new all-time highs in late January, U.S. equities quickly faced a reversal. Military actions by the United States and Israel against Iran drove oil prices significantly higher in March, amplifying persistent market uncertainties.

The S&P 500 fell 4.3% for the quarter, while SmallCap and MidCap stocks posted modestly positive returns. The standout story was energy. S&P 500 energy stocks gained more than 38% over the 3-month period, and market leadership continued to broaden out from mega-cap technology towards sectors like materials, utilities, consumer staples and industrials.

The Fed held the funds rate steady in the 3.5% to 3.75% range as fourth quarter annualized GDP growth of 0.7% and lingering inflation kept policymakers on hold. Meanwhile, bond yields edged slightly higher, producing modestly negative returns for the quarter.

With that market backdrop, let me turn to our long-term investment performance. Our results across strategy groups reflect the challenging near-term environment for value-oriented equities, along with several areas of genuine long-term strength that we find very encouraging. Within our U.S. value equity strategies, our SMidCap strategy continues to be a standout, ranking in the top quartile of both its eVestment and Morningstar peer groups over the trailing 3 years, a consistent and well-earned result. On a 10-year basis, our LargeCap value strategy has delivered competitive results relative to peers.

We recognize that parts of U.S. value strategies remain under pressure, but we are actively focused on delivering improved results and have seen some moderation in outflows. Turning to our Multi-Asset strategies. Our results here are really encouraging. Our Multi-Asset income fund ranks in the top decile of its Morningstar peer category over both the trailing 3- and 5-year periods, a strong and consistent performance. And our income opportunity strategy ranks in the top third of Morningstar peers over the trailing 3-year period.

Taken together, half or more of our Multi-Asset strategies are delivering top-tier results over meaningful time horizons. Our Salient Energy and Real Asset strategies delivered solid performance amid a favorable environment for the sector. Our MLP SMA strategy is in the top 1/3 of its eVestment Master Limited Partnership peer group over trailing 3 years and is performing well relative to the Alerian MLP Index on a net of fee basis.

MBST and WEEI, the Westwood Salient Enhanced Midstream Income ETF and the Westwood Salient Enhanced Energy Income ETF continue to provide attractive yields to income-focused investors, consistent with their stated objectives.

Our Tactical Growth mutual fund also delivered positive results while providing capital preservation during the March correction. Looking ahead, we believe market conditions are evolving in a way that increasingly favors our investment philosophy. The broadening of sector leadership out from mega-cap technology stocks toward energy, industrials, utilities and other value-oriented segments is precisely the environment in which our active quality-focused approach has historically excelled.

Geopolitical uncertainty, inflationary pressures from elevated oil prices and potentially slower economic growth all create volatility, but they also create opportunity for disciplined investors like us who prioritize companies with strong cash flow, sound balance sheets and reasonable valuations.

Over the long term and across market cycles, we have consistently demonstrated that quality and value are durable sources of outperformance, and we are well positioned to capitalize on that dynamic as the environment continues to evolve.

Turning to distribution. Our institutional channel reported gross sales of $322 million for the first quarter with net inflows of $32 million. One major highlight was successfully onboarding our first institutional managed investment solutions client, accounting for over $200 million in gross sales, an important validation of the MIS capability we've been building.

Our pipeline remains robust across both value and energy strategies with many new opportunities added during the quarter. We are also initiating SMidCap due diligence with 2 of the largest national consultants, which reflects the attraction of SMidCap's quality and competitiveness.

We expect to see continued momentum in SMidCap Value for defined contribution plans, and we anticipate that our private capital platform will attract increasing institutional interest following significant enhancements we have made to our personnel and organizational structure.

In our intermediary channel, gross sales reached $207 million, led by Energy and Real Assets with net outflows of $34 million. MBST gained approval from its first major wirehouse, a very important distribution milestone, and it continues to receive approvals from major national platforms. YLDW, our Enhanced Income Opportunity ETF, is approaching the $25 million threshold typically required for platform onboarding.

Our Broadmark strategies are gaining traction as investor demand for risk mitigation has increased in the current elevated market volatility environment. And finally, momentum from our West II capital raise is underpinning West III as it attracts early interest from RIAs, family offices and independent advisers.

Moving to our Wealth Management business. We entered 2026 with solid momentum as we continue to strengthen our multifamily office platform. Client engagement remained elevated throughout the quarter, reflecting ongoing market uncertainty and continued demand for proactive planning and thoughtful portfolio oversight. Our advisers maintained a disciplined long-term approach to asset allocation, which helped reinforce client confidence during periods of volatility.

Client conversations are increasingly focused on holistic planning, particularly around tax positioning, liquidity management and coordination with trust structures, areas where our integrated model is optimal. From an operational standpoint, we continue to make progress on process standardization and cross-functional alignment across our advisory, client service and trustee.

Our efforts are improving scalability while enhancing the overall client experience. Business activity remained steady during the quarter, including several notable large inflows from our multifamily office approach. We continue to prioritize high-quality client relationships with significant long-term potential.

Looking ahead, our focus remains on refining internal processes, enhancing reporting and communication and strengthening collaboration across the platform to support sustainable growth. Beyond core business results, I'd like to highlight significant events and milestones achieved during the quarter.

Our Enhanced Income Series ETFs achieved an important milestone as MBST, our Enhanced Midstream Income ETF crossed the $200 million AUM threshold in February, a landmark for a fund that has been in the market for less than 2 years.

Together with WEEI and YLDW, our 3 Enhanced Income Series ETFs have now surpassed $320 million in combined assets. YLDW, the Westwood Enhanced Income ETF we launched last December, represents an important extension of our income ETF platform, being the first of our Multi-Asset strategies to be marketed as an ETF. YLDW combines a disciplined Multi-Asset allocation approach with a strategic covered call overlay, providing investors with a consistent and diversified source of current income plus potential capital appreciation.

It is approaching $25 million in assets. MBST continues to maintain an annualized distribution rate of approximately 10%, consistent with its income generation objective and its recent wirehouse approval is a truly meaningful step in expanding our distribution reach.

We will continue to look for opportunities to expand our ETF lineup with innovative strategies that address investor demands. Our Energy Secondaries business reached an important milestone as Westwood Energy Secondaries Fund II closed with over $300 million in capital commitments, more than double our initial $150 million target.

Since launching our first Energy Secondaries fund in 2023, we have raised nearly $350 million and deployed over $250 million across 2 flagship funds and 3 co-investment vehicles. During the first quarter, we also received commitments for a new co-investment fund focused on an operated upstream platform.

We have commenced fundraising for Westwood Energy Secondaries Fund III and its related co-investment fund, which we expect to market through early 2027, and it's generating substantial early interest. To support this growing platform, we have added team members to our private capital operations team and implemented a new AI-driven technology tool to streamline key operational processes.

We completed the sale of our interest in Vista Bank during the quarter, receiving both cash and a stock consideration that enabled us to recognize a gain of approximately $2 million. In March, we celebrated the 25th anniversary of the Westwood Real Estate Income Fund, marking a quarter century of disciplined investing, durable income generation and a successful active management of publicly traded real estate securities.

Since inception in 2001, the fund has navigated real estate and economic cycles while maintaining a philosophy grounded in fundamental analysis, valuation discipline and rigorous risk management. We're proud of the team that has delivered consistent results for our clients over such a long investment horizon.

Finally, on April 1, 2026, Westwood celebrated its 43rd year in business, a testament to our commitment to clients, our culture of continuous innovation and the dedication of our entire team. We are proud to be one of the very few asset management firms with this depth of history, and we remain committed as always to the principles that have guided us since our founding.

Looking back on the first quarter of 2026, we are encouraged by the strategic progress we have made across our business. Our ETF platform has scaled meaningfully. Our private capital strategy is gaining significant institutional and intermediary traction, and our distribution channels continue to build a healthy pipeline.

The evolving market environment characterized by broader sector leadership, elevated energy prices and a renewed interest in quality and value is one in which we believe Westwood is well positioned to deliver for our clients and shareholders.

With 43 years of experience, a diversified and growing product platform and demonstrated long-term performance in our core strategies, we are confident in our ability to capitalize on the opportunities ahead. Thank you for your continued support and confidence in Westwood. I will now turn the call over to our CFO, Terry Forbes.

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $25 million for the first quarter of 2026 compared to $27.1 million in the fourth quarter and $23.3 million in the prior year's first quarter. First quarter revenues were lower than the fourth quarter due to lower average AUM as well as fourth quarter recognition of performance fees for the prior year.

First quarter revenues were higher than last year's first quarter due to the solid growth in our business reflected in higher average AUM and growth from our ETFs and private energy secondaries funds.

Our first quarter income of $0.8 million or $0.09 per share compared with $1.9 million or $0.21 per share in the fourth quarter on lower revenues and higher compensation expenses, offset by a gain from the sale of our investment in a private bank and lower income taxes.

Non-GAAP economic earnings were $2.8 million or $0.31 per share in the current quarter versus $3.3 million or $0.36 per share in the fourth quarter. Our first quarter income of $0.8 million or $0.09 per share compared favorably to last year's first quarter income of $0.5 million due to 2026's higher revenues and gains from our investment in the private bank, offset by higher compensation expenses.

Economic earnings for the quarter were $2.8 million or $0.31 per share compared with $2.5 million or $0.29 per share in the first quarter of 2025. Firmwide assets under management and advisement totaled $18.3 billion at quarter end, consisting of assets under management of $17.3 billion and assets under advisement of $0.9 billion.

Assets under management consisted of institutional assets of $9 billion or 52% of the total, wealth management assets of $4.2 billion or 24% of the total and mutual fund and ETF assets of $4.1 billion or 24% of the total.

Over the quarter, our assets under management experienced net outflows of $50 million and market appreciation of $0.8 billion, and our assets under advisement experienced market appreciation of $48 million and net outflows of $50 million.

Our financial position continues to be solid with cash and liquid investments at quarter end totaling $34.2 million and a debt-free balance sheet. I'm happy to announce that our Board of Directors approved a regular cash dividend of $0.15 per common share payable on July 1, 2026, to stockholders of record on June 1, 2026. That brings our prepared comments to a close.

We encourage you to review our investor presentation we have posted on our website, reflecting quarterly highlights as well as a discussion of our business, product development and longer-term trends in revenues and earnings.

We thank you for your interest in our company, and we'll open the line to questions.

[Operator Instructions] I am showing no questions at this time. I will now turn it over to Brian Casey for closing remarks.

Great. Well, thank you. And I first want to thank our long-term and our new shareholders for approving our entire slate of directors today and all the other items we have on the agenda. Just in closing, our SMidCap performance has remained strong and our pipeline of opportunities has grown to over $1 billion.

Our Managed Investment Solutions pipeline is improving every week, and we're optimistic that we will land our next institutional client in the coming months. We continue to build out our private capital platform, and we're anxious to kick off fundraising for our next fund.

And finally, our ETF platform is seeing strong demand with higher trading volumes and growing AUM, and we're excited to see MBST go fully live tomorrow across one of the major wires. So that should be exciting.

Thanks so much for your time. We appreciate it. Visit westwoodgroup.com or call Terry or I if you have questions. Thanks so much.

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

Thank you for standing by, and welcome to the Westwood Holdings Group, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jill Meyer Corporate Securities, Secretary and Director of Fiduciary Services. Please go ahead.

Thank you, and welcome to our Fourth Quarter 2025 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 31, 2025, and 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 joining Westwood's Fourth Quarter 2025 Earnings Call. I'm looking forward to sharing our full year's results, key developments from the past quarter and a look into what this year holds in store. .

First, here are some of last year's more significant milestones and achievements. Our ETF franchise now exceeds $200 million, including our latest ETF, enhanced income opportunity. In addition, MDST surpassed the $170 million mark in AUM. We closed our second oversubscribed private equity fund, Westwood Energy Secondaries fund with more than $300 million in commitments for the fund and 2 related co-investment funds.

Our managed investment solutions team secured its first institutional client, and we had strong full year sales growth. $25 billion versus $2.1 billion, up 20%. Many key equity indices posted new records last year. However, investors were pulled in different directions during the final quarter. The S&P 500 rose less than 3%, but still ended the year up 18%.

Despite economic headwinds, the U.S. economy did manage to record modest growth against the backdrop of consumer confidence remaining near all-time lows. The Federal Reserve cut short-term rates by 75 basis points from September through December, amid weakening labor market conditions.

Signs of fatigue and the long-running bull market and tech stocks started to appear as investors shifted their focus from the promise of AI towards more tangible near-term financial results. Bond markets generated positive total returns for the year, supported by declining yields.

Several of our investment strategies demonstrated resilience and competitive positioning across multiple time horizons and asset classes. Within U.S. value, our SMidCap strategy is performing well with top third rankings over 3-year rolling periods. Solid results like these are founded upon our disciplined approach to identifying high-quality businesses trading at attractive valuations.

Our multi-asset strategies are demonstrating exceptional long-term strength Credit opportunities has delivered outstanding results, ranking in the top decile among peers over 3- and 5-year periods. Income Opportunity is providing attractive returns, posting competitive peer rankings while delivering consistent income to investors.

Our salient energy and real estate strategies continue to deliver competitive long-term performance. Real estate income ranks in the top third over rolling 3 years and our MLP and midstream strategies have provided strong absolute returns in an environment favorable to energy infrastructure.

Looking ahead, we anticipate continued market uncertainty driven by a variety of economic indicators and policy developments. No matter what happens, we believe our focus on high-quality businesses with strong fundamentals positions us well for the future. As investors broaden their focus beyond mega-cap technology stocks, high-quality companies with low levels of debt, high returns on invested capital and strong management teams should be viewed very favorably.

Against the backdrop of elevated market valuations good companies trading at a discount to market or peers should prove resilient and offer attractive shareholder returns. Turning to distribution. Our team delivered exceptional results last year, demonstrating the appeal of our product lineup and the effectiveness of our distribution strategy. The institutional channel achieved gross sales growth of 36% versus the previous year.

This strong performance reflected our ability to gain traction with institutional investors across multiple strategies, particularly in SMID-cap and small-cap value. Several significant pipeline opportunities advanced last quarter including defined contribution plans with major national consultants.

We are very pleased with the progress being made by our Managed Investment Solutions team. We are holding constructive conversations with clients and prospects regarding customized solutions and we look forward to additional wins early this year. The infrastructure and liquid real asset strategies we launched last year have attracted strong interest from institutional investors seeking alternatives to traditional equity and fixed income allocations.

The intermediary distribution team also achieved outstanding results, posting full year gross sales growth of 32% versus 2024. This was our strongest annual intermediary performance in several years, thanks to the successful execution of our intermediary distribution strategy.

Particular strength was demonstrated in our energy and real asset products which resonated with advisers and clients seeking income and diversification. Our MBSE ETF has now achieved the asset scale required for approval on major broker-dealer platforms and we expect new platform additions this year.

The expanding breadth of our offerings, spanning traditional active strategies, income-focused solutions, tactical approaches and alternative investments positions us well to meet diverse client needs. We continue to invest in our distribution capabilities and the momentum we have built provides a strong runway for growth in 2026.

Throughout last year, we conducted a deep dive within our wealth division to better align our services with the direction of the industry and how we're uniquely positioned to grow our business. Multigenerational families are looking for integrated high-touch guidance that spans investments, planning, trust and legacy needs, all of which represent a great long-term opportunity for Westwood given the strength of our trust company and our long history serving complex Texas families.

As a multifamily office with corporate trustee powers, we are well equipped to understand a family's complete picture and can step in seamlessly when named as executive or successor trustee. Our objective approach, dedicated teams, long-term continuity and rigorous regulatory oversight combined to provide a level of professionalism that is difficult, if not impossible, for individual fiduciaries to match.

While our deep expertise and trust administration allows us to manage complex requirements efficiently and consistently. Throughout the year, we clarified our purpose and vision for our wealth division, rethought our service model and began transitioning to a more coordinated team-based delivery structure designed to enhance consistency and scalability.

We completed a comprehensive assessment of our competitive position and identified opportunities to strengthen long-term economics by attracting new ultra-high net worth families, deepening existing client relationships and aligning pricing with market standards. This marks the early phase of a disciplined multiyear evolution of our wealth division, and we remain focused on enhancing the client experience, improving scalability and positioning our business for sustainable long-term growth that benefits clients, employees and shareholders.

Beyond our core business performance, we achieved several significant milestones last quarter, that strengthen our competitive position and expand our market opportunities. We launched the Westwood Enhanced Income Opportunity ETF. Ticker is YLDW late in the quarter. This offering expands our income-focused ETF lineup and initial acceptance has been strong.

Our flagship MDST ETF, enhanced midstream income surpassed $170 million in AUM validating our differentiated midstream strategy and opening doors to additional platform approvals. With the addition of YLDW, our total ETF franchise now exceeds $200 million in assets, marking an important milestone for Westwood.

We closed Westwood Energy secondaries Fund II on December 31, with over $300 million in capital commitments for the fund and 2 related co-investment funds, double our initial goal. The second fund builds on the success of our inaugural energy secondary strategy and underscores our ability to raise capital and specialized alternative investment strategies.

West 2 allows institutional investors to access secondary market opportunities in the energy sector, complementing our suite of energy investment solutions. Since launching West One, our initial flagship Energy Secondaries fund in 2023, we have raised nearly $350 million and have invested over $250 million across both energy secondary flagship funds and 3 co-investment funds.

As we turn the page on last year and look ahead to this year, we remain confident in our strategic positioning and value proposition. Our diverse range of strategies, expanding ETF platform and robust distribution momentum position us for continued growth. Our achievements last quarter, the launch of YLDW the milestone success of MDSC, closing our second private equity fund and outstanding sales growth across institutional and intermediary channels demonstrate our ability to innovate and execute while maintaining our core strengths in active management.

With assets under management of $17.4 billion, strong competitive performance across multiple strategies and a proven ability to deliver results across market cycles. We are well positioned to capitalize on opportunities as market conditions shift towards active, value-oriented investment approaches.

We are committed to delivering value to clients via high-quality investment solutions and to creating long-term value for shareholders. Thank you for your continued support and confidence in Westwood. I will now turn the call over to our CFO, Terry Forbes.

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $27.1 million for the fourth quarter of 2025 compared to $24.3 million in the third quarter and $25.6 million in the prior year's fourth quarter. .

Revenues increased from the third quarter due to significant investor interest in our exchange traded funds and private energy secondaries funds, along with higher performance fees. Revenues increased from 2024s fourth quarter primarily due to higher average assets under management and higher revenues from our ETFs and private energy secondaries funds, partially offset by lower performance fees.

For fiscal 2025, total revenues of $97.8 million compared to $94.7 million in 2024 driven by higher average assets under management and higher revenues from our ETFs and private energy secondaries funds.

Our fourth quarter income of $1.9 million or $0.21 per share compared to the third quarter's $3.7 million or $0.41 per share due to higher performance-related incentive compensation in the fourth quarter and unrealized depreciation on strategic private investment in the third quarter, offset by higher revenues.

Non-GAAP economic earnings were $3.3 million or $0.36 per share in the current quarter versus $5.7 million or $0.64 per share in the third quarter. Our fourth quarter income of $1.9 million or $0.21 per share compared to the prior year's fourth quarter income of $2.1 million or $0.24 per share as a result of higher revenues and the impact in 2024 of changes in the fair value of contingent consideration, offset by higher performance-related incentive compensation expenses and additional professional services costs.

Economic earnings were $3.3 million or $0.36 per share compared to $3.4 million or $0.39 per share in the fourth quarter of 2024. Our 2025 income was $7.1 million compared to 2024 to $2.2 million on higher revenues, unrealized depreciation on strategic private investments and the impact in 2024 of changes in the fair value of contingent consideration, offset by higher professional service and information technology costs.

Economic earnings for the year were $14.3 million or $1.61 per share compared with $7 million or $0.82 per share in 2024. Firm-wide assets under management and advisement totaled $17.4 billion at quarter end, consisting of assets under management of $16.5 billion and assets under advisement of $0.9 billion.

Assets under management consisted of institutional assets of $8.3 billion or 50% of the total, wealth management assets of $4.3 billion or 26% of the total and mutual fund assets of $3.9 billion or 24% of the total. Over the year, our assets under management experienced net outflows of $1 billion and market appreciation of $1 billion and our assets under advisement experienced net outflows of $18 million. Our financial position continues to be very solid, with cash and liquid investments at quarter end totaling $44.1 million and a debt-free balance sheet.

I'm happy to announce that our Board of Directors approved a regular cash dividend of $0.15 per common share payable on April 1, 2026, to stockholders of record on March 3, 2026. That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website, reflecting quarterly highlights as well as a discussion of our business, product development and longer-term trends in revenues and earnings. We thank you for your interest in our company, and we'll open the line to questions.

[Operator Instructions] This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Brian Casey, CEO, for any further remarks.

Well, thank you, John. In closing, we felt like we had a really good year in 2025, but we want to acknowledge the outflows in the fourth quarter, which were disappointing. .

I do want to make a few comments on those. More than 80% of the outflows were from our large-cap value product. And -- that product has really struggled in recent years against a very narrow low-quality market environment. And if you know Westwood, you know that we are always seeking high-quality companies that are improving, that are mispriced and that is not what the market has wanted in the last couple of years. So most of those large cap outflows, in fact, more than 80% of those flows were from 1 sub-advisory client that carries a fee of less than 20 basis points.

So while it's a big number going out the door, it's less impact on revenue. We did have a new client come in yesterday with $200 million, and they will add another $100 million to $200 million over the next couple of months. We also have a new defined contribution plan that will fund on the last day of the first quarter in our SMID product for $450 million -- and that will take our SMID AUM very close to the $2 billion threshold AUM level.

Our pipeline looks great. We have -- we reached another new threshold last night where MDST our midstream enhanced energy income fund crossed the $200 million threshold. We are in the process of due diligence to onboard MDST under 1 of the largest wirehouses which will significantly expand our opportunity set.

So we're very bullish on the ETFs that we started a couple of years ago. So appreciate your time today. I hope everybody enjoys a long weekend. Please visit our website at westwoodgroup.com if you have any questions. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you for standing by, and welcome to Westwood Holdings Group's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Jill Meyer, Chief Legal Counsel. Please go ahead.

Thank you, and welcome to our third quarter 2025 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-Q for the quarter ended September 30, 2025, 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 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 Chief Executive Officer; and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.

Good afternoon, and thank you for joining us for Westwood's Third Quarter 2025 Earnings Call. I'm pleased to share this quarter's results and key developments as well as our outlook for the remainder of the year. Before we dive into the details, I'd like to highlight several key points from the quarter. Our enhanced midstream income ETF, MDST, surpassed $150 million in AUM. We recorded positive net flows in energy and real assets. Our private fundraising continues to exceed our annual goal by a significant margin. WEBs launched 11 new sector ETFs. Income Opportunity maintained its top decile since inception ranking and earned a Morningstar Ratings upgrade to four-stars.

We've all witnessed a broad market rally this quarter, driven by sustained enthusiasm for artificial intelligence, strong corporate earnings and a pivotal interest rate cut by the Federal Reserve. Strength in cyclical areas like industrials and consumer discretionary all pointed to widespread confidence in economic growth. However, large cap gains remain highly concentrated in a handful of mega cap stocks. For small caps, the long-awaited rotation of leadership from large-cap giants to smaller companies finally showed up.

And once the Fed cuts rates in September, the bond market responded by sending treasury yields lower. High-yield and corporate credit outperformed government bonds as recession fears eased and gold broke through $4,000 given the prospect of lower real yields and global U.S. dollar weakness.

Turning to our long-term performance. Our investment professionals delivered solid results across multiple strategies and asset classes. In our U.S. value strategies, our SMidCap strategy continues to post strong rankings and is firmly positioned in the top third over trailing 3-year periods. Our multi-asset strategies continue to deliver compelling results. Our income opportunity and multi-asset income funds achieved top third rankings for the trailing 3-year period and top half over the trailing 5-year period in the Morningstar universe.

Our Income Opportunity Fund, WHGIX, also recently received a Morningstar Ratings upgrade to four stars. Within our salient strategies, our energy products continue to perform very well. Our MLP SMA strategy remains ahead of the Alerian Midstream Index across trailing 3-year and 5-year periods. Enhanced Midstream Income, MDST and Enhanced Energy Income, WEEI, have delivered solid yields to income-focused investors with MDST maintaining an annualized indicated dividend yield exceeding 10%, while WEEI has an indicated dividend yield of over 13%.

As seasoned value investors, we seek to unlock opportunities in mispriced, misunderstood and often less popular names. In times like these, fundamentals are often brushed aside, allowing for emotion and momentum to dominate. But as students of market history know, this stage of the current market cycle typically precedes periods when quality and value regain momentum. On balance, we remain cautiously optimistic with below-trend growth, sticky inflation and elevated market valuations concentrated in a handful of mega cap tech stocks. We believe that investment opportunities are shifting.

Undervalued segments, especially small-cap stocks and the broader value style are beginning to look more attractive. As markets evolve and investors rotate away from the most expensive segments, our focus on high-quality businesses with attractive relative valuations positions us well. Quality and attractive relative value have consistently outperformed across market cycles, and we fully expect this dynamic to reassert itself as the market environment matures.

Our distribution channels delivered impressive results in the third quarter, building on the momentum we've established throughout the year. Year-to-date net sales through September 30 improved versus last year by 17% and by 57% versus 2023. Our intermediary and institutional channels have contributed equally to this performance. Our institutional channel had negative net flows this quarter, primarily driven by sub-advisory business rebalancing. Our pipeline remains robust across value and energy strategies with several new opportunities added during the quarter.

Looking ahead in the institutional space, we anticipate winning more mandates in SMidCap for defined contribution plans, supported by the largest national consultants. We continue to have constructive meetings regarding our managed investment solutions capability, and there's continued interest in our energy offerings for both public and private strategies. We anticipate continued stability with our existing clients as we expand our presence with public plans, OCIOs and single multifamily offices.

The intermediary channel had particular success with our private fundraising initiative, which has so far exceeded our 2025 annual goal by 1.5x through September 30. And our private funds have earned approval on several broker-dealer platforms, further expanding our distribution capabilities. Our energy and real asset strategies continue to lead Westwood in both gross and net sales in 2025, and our enhanced midstream income ETF, MDST continues to gain approvals from major national platforms.

Putting it all together, the tailwinds in energy, combined with the breadth of Westwood offerings are appealing to intermediary clients, particularly in the family office and RIA space. Our well-rounded offerings within the multi-asset and tactical suite of products are well positioned to ride out equity market volatility. Our Wealth Management business is on track to meet our client retention goals for the calendar year. We've reduced costs versus last year, and this trend will continue throughout the rest of the year.

The operational efficiencies we're building will underpin early wins in 2026, and we're continuing to evaluate the best path to enhance our services as we move into 2026. Beyond our core business performance, several transformative initiatives and milestones demonstrate our continued commitment to innovation and strategic growth. Our ETF platform expansion. Our MDST ETF reached a significant milestone, surpassing $150 million in assets under management. MDST was the second best-selling fund compared to peer midstream funds in September, accounting for approximately 30% of midstream product ETF flows.

Since inception, MDST has consistently delivered on its objective to provide a steady stream of monthly income with an annualized distribution rate exceeding 10%. The fund's rapid growth and enthusiastic investor engagement underscore the increasing demand for innovative income-generating strategies in today's evolving market environment. WEBs innovation, Westwood and WEBs Investments launched 11 new sector funds during the quarter. The new WEBs defined volatility sector ETFs, a suite of 11 funds, which apply the defined volatility strategy to individual sectors within the S&P 500.

By expanding this suite, we can offer investors more precise control over risk and sector exposure using a transparent framework that adjusts portfolio exposure based on real-time market volatility. Each fund tracks a defined volatility index created by Syntax with each index providing investment exposure to an underlying select sector SPDR ETF. The WEBs flagship ETFs, DVSP and DVQQ, which launched late last year, demonstrated the effectiveness of a volatility managed approach this past quarter.

These ETFs also implement a rules-based strategy of volatility-adjusted exposure, adding market exposure when volatility is low and reducing market exposure when volatility is high. After underperforming their underlying ETFs, SPY and QQQ during a very choppy first half that experienced elevated market volatility, our defined volatility approach really proved its worth this quarter. As volatility calmed down, DVSP outperformed SPY by 636 basis points and DVQQ outperformed the QQQ by 726 basis points.

In summary, we remain confident in our strategic positioning and the value we provide to our clients. Our year-to-date performance demonstrates meaningful progress with net sales improving. Our diversified platform spanning traditional value strategies, innovative ETF products, energy and real asset solutions, custom index solutions, private investments and wealth management services positions us to take advantage quickly of evolving market dynamics. With strong long-term performance rankings across our multi-asset and energy strategies, growing momentum in both institutional and intermediary channels and innovative new products gaining marketplace traction, we believe Westwood is well positioned to deliver value to our clients and shareholders. Thank you for your continued support and confidence in Westwood. I will now turn the call over to CFO, Terry Forbes.

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $24.3 million for the third quarter of 2025 compared to $23.1 million in the second quarter and $23.7 million in the prior year's third quarter. Revenues were higher than both periods due to higher average assets under management. Our third quarter income of $3.7 million or $0.41 per share compared with $1 million or $0.12 per share in the second quarter on higher revenues and unrealized depreciation on private investments, partially offset by higher income taxes.

Non-GAAP economic earnings were $5.7 million or $0.64 per share in the current quarter versus $2.8 million or $0.32 per share in the second quarter. Our third quarter income of $3.7 million or $0.41 per share compared favorably to last year's third quarter income of $0.1 million due to 2025's higher revenues and unrealized depreciation on private investments and changes in the fair value of contingent consideration in 2024, all partially offset by higher income taxes in 2025.

Economic earnings for the quarter were $5.7 million or $0.64 per share compared with $1.1 million or $0.13 per share in the third quarter of 2024. Firm-wide assets under management and advisement totaled $18.3 billion at quarter end, consisting of assets under management of $17.3 billion and assets under advisement of $1 billion. Assets under management consisted of institutional assets of $9 billion or 52% of the total, wealth management assets of $4.3 billion or 25% of the total and mutual fund and ETF assets of $4 billion or 23% of the total.

Over the quarter, our assets under management experienced net outflows of $0.7 billion and market appreciation of $0.7 billion, and our assets under advisement experienced market appreciation of $30 million and net outflows of $3 million. Our financial position continues to be solid with cash and liquid investments at quarter end totaling $39.2 million and a debt-free balance sheet. Happy to announce that our Board of Directors approved a regular cash dividend of $0.15 per common share payable on January 2, 2026, to stockholders of record on December 1, 2025. That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website, reflecting quarterly highlights as well as a discussion of our business, product development and longer-term trends in revenues and earnings. We thank you for your interest in our company, and we'll open the line to questions.

[Operator Instructions] Our first question comes from the line of Macrae Sykes of GAMCO.

Congratulations on the ETF success. That was where my question is. If you could just talk about how you're leaning into the success to leverage it further at this point. It seems like you're accelerating your inflows. So what are you doing to make that even more fruitful? And is there any capacity constraint with respect to the capital coming in and investing it?

Mac, thanks for your question. Yes, so we have worked really hard to grow our ETF business, and we've done it through a lot of the traditional channels. And as you know, each of the various platforms have different thresholds that you have to meet in order to get your ETF onto the platform. And some of them have fairly low bars where you need $25 million in assets and a certain number of shares traded per day. And some have very high bars with a high level of assets and a lot of shares traded per day. So we've been doing it that way. And we've got, of course, our distribution team is out calling on both RIAs and the platforms. So we've had some success there, and I'm really pleased to report that we are very close to gaining access to one of the largest wirehouse platforms in the world. And we've worked really hard to get there, and we feel confident that, that will happen over the next month or 2.

Thank you. I would now like to turn the conference back to Brian Casey for closing remarks. Sir?

All right. Well, thanks, everyone, for listening to our call today. Certainly, the outflows this quarter were disappointing, but fortunately concentrated in our large cap area, which is our lowest fee product. Our pipeline for new business remains very strong at $1.6 billion. We have a one but not yet funded mandate of close to $450 million for our SMidCap product. Our private fundraising is going exceptionally well, and we'll have more to report to you early next year.

And we continue to look for opportunities to launch ETFs that are income focused and leverage our broad investment capabilities. And performance for our MIS client in real assets and infrastructure product has been excellent, and our prospect list has really grown, and we feel really close to landing our first institutional client.

And then in closing, I do want to acknowledge the passing of our dear friend and colleague, Rolanda Williams. Rolanda joined Westwood 26 years ago as our receptionist. And through her unwavering dedication, sharp intellect and warm spirit, she rose to lead support for our sub-advisory client business and her journey was a testament to her strength, resilience and commitment to excellence, and Rolanda was really more than a colleague. She was a force. Her presence lit up every room, her laughter was contagious and her kindness touched everyone who had the privilege of knowing her. She was deeply loved and her legacy will live on in the hearts of all of us at Westwood, and we extend our heartfelt condolences to her family and loved ones. Rolanda will be profoundly missed but never forgotten. Thanks for listening to our call today. Please reach out to me or Terry, if you need anything.

This concludes today's conference call. Thank you for participating. You may now disconnect.