Westwood Holdings Group Inc.

03/04/2026 | Press release | Distributed by Public on 03/04/2026 15:22

Annual Report for Fiscal Year Ending 12/31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis in conjunction with our Consolidated Financial Statements and related notes thereto appearing elsewhere in this Report.
Forward-Looking Statements
Statements in this Report and the Annual Report to Stockholders that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including, without limitation, words such as "anticipate," "forecast", "explore," "believe," "plan," "estimate," "expect," "intend," "should," "potentially," "could," "goal," "may," "target," "designed" and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results, our financial condition, and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others:
•the composition and market value of our AUM and AUA;
•our ability to maintain our fee structure in light of competitive fee pressures;
•risks associated with actions of activist stockholders;
•distributions to our common stockholders have included and may in the future include a return of capital;
•inclusion of foreign company investments in our AUM;
•regulations adversely affecting the financial services industry;
•our ability to maintain effective cybersecurity;
•litigation risks;
•our ability to develop and market new investment strategies successfully;
•our reputation and our relationships with current and potential customers;
•our ability to attract and retain qualified personnel;
•our ability to perform operational tasks;
•our ability to select and oversee third-party vendors;
•our dependence on the operations and funds of our subsidiaries;
•our ability to maintain effective information systems;
•our ability to prevent misuse of assets and information in the possession of our employees and third-party vendors, which could damage our reputation and result in costly litigation and liability for our clients and us;
•our stock is thinly traded and may be subject to volatility;
•competition in the investment management industry;
•our ability to avoid termination of client agreements and the related investment redemptions;
•the significant concentration of our revenues in a small number of customers;
•we have made and may continue to make business combinations as a part of our business strategy, which may present certain risks and uncertainties;
•our relationships with investment consulting firms;
•our ability to identify and execute on our strategic initiatives;
•our ability to declare and pay dividends;
•our ability to fund future capital requirements on favorable terms;
•our ability to properly address conflicts of interest;
•our ability to maintain adequate insurance coverage; and
•our ability to maintain an effective system of internal controls.
Additional factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed under the section entitled "Item 1A. Risk Factors" and elsewhere in this Report. The forward-looking statements are based only on currently available information and speak only as of the date of this Report. We are not obligated and do not undertake an obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this Report or to reflect the occurrence of unanticipated events or otherwise.
Overview
We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp., Westwood Advisors, L.L.C., Salient Advisors, L.P. ("Salient Advisors") and Broadmark Asset Management LLC ("Broadmark"), (each of which is a registered investment adviser ("RIA") registered with the Securities and Exchange Commission ("SEC"), and Salient Capital, L.P., ("SCLP") an SEC-registered broker-dealer and Financial Industry Regulatory Authority ("FINRA") member, collectively referred to hereinafter together as "Westwood Management") and Westwood Trust.
Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, Westwood ETFs, other mutual funds, individuals, private capital funds and clients of Westwood Trust.
Westwood Trust provides trust and custodial services and participation in common trust funds to high net worth individuals and families, and institutions. Our revenues are generally derived from fees based on a percentage of AUM.
SCLP serves as a sub-placement agent for private placements.
Our revenues are generally derived from fees based on a percentage of AUM and AUA, and Westwood Management and Westwood Trust collectively had AUM of approximately $16.5 billion and AUA of approximately $0.9 billion at December 31, 2025. We have established a track record of delivering competitive, risk-adjusted returns for our clients.
With respect to most of our AUM, we utilize a "value" investment style focused on achieving superior long-term, risk-adjusted returns by investing in companies with high levels of free cash flow, improving returns on equity and strengthening balance sheets that are well positioned for growth but whose value is not fully recognized in the marketplace. This investment approach is designed to limit downside during unfavorable periods and provide superior real returns over the long term. Our investment teams have significant industry experience. Our investment team members have average investment experience of over twenty years.
We have built a foundation in terms of personnel and infrastructure to support a much larger business and we have developed investment strategies that we believe will be sought after within our target institutional, wealth management and intermediary markets. Developing new products and growing the organization has resulted in our incurring expenses that, in some cases, have not yet generated significant offsetting revenues. We develop new products that we believe will be in demand by clients and investors, thereby generating new revenue streams for us; however, there is no guarantee that new products will be successful in generating demand and incremental revenues.
2025 Highlights
The following items were reported for the year ended December 31, 2025:
•Launched Westwood Enhanced Income Opportunity ETF (YLDW).
•AUM as of December 31, 2025 was $16.5 billion, consistent with December 31, 2024. Quarterly average AUM increased 5% to $17.1 billion for 2025 versus 2024, which, along with higher revenues from our ETFs and private energy secondaries funds, contributed to a 3% increase in total revenue from 2024.
•Our MLP Total Return, Income Opportunity, Multi-Asset Income, Alternative Income, Credit Opportunities, Westwood Salient Enhanced Midstream Income ETF and Westwood Salient Enhanced Energy Income ETF strategies performed strongly by beating their primary benchmarks for the year.
•We paid $5.4 million of dividends to our common stockholders.
•Our financial position remains strong with liquid cash and investments of $44.1 million and no debt as of December 31, 2025.
Revenues
We derive our revenues from investment advisory fees, trust fees and other revenues. Our advisory fees are generated by Westwood Management, which manages client accounts under investment advisory and sub-advisory agreements. Advisory fees are typically calculated based on a percentage of AUM and AUA and are paid in accordance with the terms of the agreements. Advisory fees are paid quarterly in advance based on AUM on the last day of the preceding quarter, quarterly in
arrears based on AUM on the last day of the quarter just ended or are based on a daily or monthly analysis of AUM for the stated period. We recognize advisory fee revenues as services are rendered. Certain of our clients have a contractual performance-based fee component in their contracts, which generates additional revenues if we outperform a specified index over a specific period of time. We record revenue for performance-based fees at the end of the measurement period. Since our advance paying clients' billing periods coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter, and our Consolidated Financial Statements contain no deferred advisory fee revenues.
Our trust fees are generated by Westwood Trust pursuant to trust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of AUM. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. Trust fees are primarily calculated quarterly in arrears based on a daily average of AUM for the quarter. Since billing periods for most of Westwood Trust's clients coincide with the calendar quarter, revenue is fully recognized within the quarter, and our Consolidated Financial Statements contain no deferred advisory fee revenues.
Our other revenues primarily consist of investment income from seed money investments into new investment strategies.
Employee Compensation and Benefits
Employee compensation and benefits costs generally consist of salaries, sales commissions, incentive compensation, stock-based compensation expense and benefits.
Sales and Marketing
Sales and marketing costs relate to our marketing efforts, including travel and entertainment, direct marketing and advertising costs.
Westwood Funds
Expenses for Westwood funds relate to our marketing, distribution and administration of the Westwood Funds® mutual funds and Westwood ETFs.
Information Technology
Information technology expenses include costs associated with proprietary investment research tools, maintenance and support, computing hardware, software licenses, telecommunications and other related costs.
Professional Services
Professional services expenses generally consist of costs associated with sub-advisory fees, audit, legal and other professional services.
General and Administrative
General and administrative expenses generally consist of costs associated with the lease of office space, amortization, depreciation, insurance, custody expense, Directors' fees, investor relations, licenses and fees, office supplies and other miscellaneous expenses.
(Gain) loss from change in fair value of contingent consideration
(Gain) loss from change in fair value of contingent consideration consists of fair value adjustments related to contingent consideration from the Salient Acquisition, with gains representing reductions in value and losses representing increases in value.
Acquisition expenses
Acquisition expenses consist of costs related to the Salient Acquisition.
Net Change in Unrealized Appreciation on Private Investments
Net change in unrealized appreciation on private investments includes changes in the value of our private equity investments.
Net Investment Income
Net investment income primarily includes interest and dividend income on fixed income securities and money market funds.
Other Income
Other income primarily consists of income from the sublease of a portion of our corporate offices and the receipt of life insurance proceeds.
Firm-wide Assets Under Management
Firm-wide assets under management of $17.4 billion at December 31, 2025 consisted of $16.5 billion of AUM and $0.9 billion of AUA.
AUM of $16.5 billion at December 31, 2025 was consistent with $16.6 billion at December 31, 2024. Quarterly average AUM increased $0.7 billion, up 5%, to $17.1 billion compared with $16.3 billion for 2024. The increase in average AUM was primarily due to the timing of both $1.0 billion of market appreciation in 2025 and inflows.
AUM increased $1.1 billion, or 7%, to $16.6 billion at December 31, 2024 compared to $15.5 billion at December 31, 2023. Quarterly average AUM increased $1.4 billion, up 9%, to $16.3 billion compared with $15.0 billion for 2023. The increase in average AUM was primarily due to $1.9 billion of market appreciation in 2024.
The following table presents our AUM (in millions, except percentages):
As of December 31,
2025 Change 2024 Change 2023
Institutional(1)
$ 8,332 - % $ 8,301 15 % $ 7,215
Wealth Management(2)
4,317 (2) % 4,391 6 % 4,140
Mutual Funds & ETFs(3)
3,890 (1) % 3,915 (5) % 4,104
Total AUM $ 16,539 - % $ 16,607 7 % $ 15,459
(1)Institutional includes (i) separate accounts of corporate pension and profit sharing plans, public employee retirement funds, Taft-Hartley plans, endowments, foundations and individuals; (ii) sub-advisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles, including collective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.
(2)Wealth Management includes assets for which Westwood Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals pursuant to trust or agency agreements and assets for which Westwood Advisors, L.L.C. provides advisory services to high net worth individuals. Investment sub-advisory services are provided for the common trust funds by Westwood Management. For certain assets in this category Westwood Trust provides limited custodial services for a minimal or no fee, viewing these assets as potentially converting to fee-generating managed assets in the future.
(3)Mutual Funds & ETFs include the Westwood Funds®, a family of mutual funds and Westwood ETFs, for which Westwood Management or Salient Advisors serves as advisor. These funds are available to individual investors, institutional investors and wealth management accounts.
Roll-Forward of Assets Under Management
Year Ended December 31, 2025
AUM (in millions) Institutional Wealth Management Mutual
Funds & ETFs 		Total
Beginning of period assets $ 8,301 $ 4,391 $ 3,915 $ 16,607
Client flows:
Inflows 1,457 329 696 2,482
Outflows (1,929) (729) (864) (3,522)
Net client flows (472) (400) (168) (1,040)
Market appreciation (depreciation) 503 326 143 972
Net change 31 (74) (25) (68)
End of period assets $ 8,332 $ 4,317 $ 3,890 $ 16,539
The decrease in AUM for the year ended December 31, 2025 was due to net outflows of $1.0 billion offset by market appreciation of $1.0 billion. Net outflows were primarily related to our LargeCap Value strategy.
Year Ended December 31, 2024
AUM (in millions) Institutional Wealth Management Mutual
Funds & ETFs 		Total
Beginning of period assets $ 7,215 $ 4,140 $ 4,104 $ 15,459
Client flows:
Inflows 1,070 338 663 2,071
Outflows (966) (524) (1,353) (2,843)
Net client flows 104 (186) (690) (772)
Market appreciation (depreciation) 982 437 501 1,920
Net change 1,086 251 (189) 1,148
End of period assets $ 8,301 $ 4,391 $ 3,915 $ 16,607
The increase in AUM for the year ended December 31, 2024 was due to market appreciation of $1.9 billion offset by net outflows of $0.8 billion. Net outflows were primarily related to our LargeCap Value and SmallCap Value strategies.
Year Ended December 31, 2023
AUM (in millions) Institutional Wealth Management
Mutual
Funds
Total
Beginning of period assets* $ 6,968 $ 3,666 $ 4,145 $ 14,779
Client flows:
Inflows 360 446 814 1,620
Outflows (936) (615) (1,347) (2,898)
Net client flows (576) (169) (533) (1,278)
Market appreciation (depreciation) 823 643 492 1,958
Net change 247 474 (41) 680
End of period assets $ 7,215 $ 4,140 $ 4,104 $ 15,459
* Certain assets under management acquired from Salient were reclassified from Mutual Funds to Institutional as of December 31, 2022 to be consistent with the classification of existing assets.
The increase in AUM for the year ended December 31, 2023 was due to market appreciation of $2.0 billion offset by net outflows of $1.3 billion. Net outflows were primarily related to our Income Opportunity, MLP & Energy Infrastructure, LargeCap Value and SmallCap Value strategies.
Roll-Forward of Assets Under Advisement
Years Ended December 31,
AUA (in millions) 2025 2024 2023
Beginning of period assets $ 960 $ 1,079 $ 1,255
Inflows 139 105 160
Outflows (157) (316) (400)
Net client flows (18) (211) (240)
Market appreciation (depreciation) - 92 64
Net change (18) (119) (176)
End of period assets $ 942 $ 960 $ 1,079
Results of Operations
The following table and discussion of our results of operations are based upon data derived from our Consolidated Statements of Operations contained in our Consolidated Financial Statements and should be read in conjunction with these statements included elsewhere in this Report.
Years ended December 31,
(in thousands, except percentages)
2025 Change 2024 Change 2023
Revenues:
Advisory fees:
Asset-based $ 74,722 7 % $ 69,755 4 % $ 67,391
Performance-based 874 (37) 1,393 10 1,265
Trust fees 21,560 1 21,422 6 20,242
Trust performance-based fees 260 (46) 482 38 349
Other revenues, net 346 (79) 1,669 213 534
Total revenues 97,762 3 94,721 6 89,781
Expenses:
Employee compensation and benefits 56,686 1 56,011 6 52,918
Sales and marketing 2,744 3 2,668 (11) 2,990
Westwood funds 4,258 31 3,254 4 3,133
Information technology 10,894 13 9,662 - 9,650
Professional services 6,917 26 5,468 7 5,132
General and administrative 11,290 (5) 11,947 (5) 12,512
(Gain) loss from change in fair value of contingent consideration - (100) 4,881 (276) (2,768)
Acquisition expenses - NM - (100) 209
Total expenses 92,789 (1) 93,891 12 83,776
Net operating income 4,973 499 830 (86) 6,005
Net change in unrealized appreciation on private investments 1,932 100 - (100) 6
Net investment income 1,655 (24) 2,183 83 1,191
Other income 1,117 11 1,002 (84) 6,241
Income before income taxes $ 9,677 141 % $ 4,015 (70) % $ 13,443
Income tax provision 2,600 44 1,804 (37) 2,872
Net income $ 7,077 220 % $ 2,211 (79) % $ 10,571
Less: Income (loss) attributable to noncontrolling interest 19 (575) % (4) (100) % 1,051
Income attributable to Westwood Holdings Group, Inc. $ 7,058 219 % $ 2,215 (77) % $ 9,520
NM - Not meaningful
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Total Revenues. Total revenues increased $3.0 million, or 3%, to $97.8 million compared to $94.7 million for 2024. The increase was attributable to higher average assets under management and higher revenues from our ETFs and private energy secondaries funds.
Westwood funds. Westwood fund expenses increased 31% to $4.3 million compared to $3.3 million for 2024, primarily due to increased administration and distribution expenses related to our ETFs, driven by higher fund assets.
Information technology. Information technology costs increased 13% to $10.9 million compared to $9.7 million in 2024, primarily due to additional investment resource tools and software licenses.
Professional services.Professional services expense increased $1.4 million, or 26%, to $6.9 million in 2025 primarily due to additional consulting costs.
(Gain) loss from change in fair value of contingent consideration. In 2025 we did not adjust our contingent consideration from the 2022 Salient Acquisition as the specific revenue thresholds were not met.
Net change in unrealized appreciation on private investments.In 2025 we recorded an unrealized gain of approximately $2.0 million for our investment in TXSE following observable price changes.
Provision for Income Taxes. The effective tax rate was 26.9% for 2025 compared to 44.9% for 2024. Our income tax rate differed from the 21% statutory tax rate due to permanent differences due to executive compensation and the impact of state and local taxes.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Total Revenues. Total revenues increased $4.9 million, or 6%, to $94.7 million compared to $89.8 million for 2023. The increase was attributable to higher average assets under management.
Employee Compensation and Benefits.Employee compensation and benefits expenses increased primarily due to higher performance-related incentive compensation following increased AUM balances and additional headcount.
(Gain) loss from change in fair value of contingent consideration. We recorded a loss of $4.9 million upon the remeasurement of contingent consideration for the Salient Acquisition, due to positive changes in growth projections following asset appreciation and asset flows in the period.
Provision for Income Taxes. The effective tax rate was 44.9% for 2024 compared to 23.2% for 2023. Our income tax rate differed from the 21% statutory tax rate due to permanent differences between book and tax restricted stock expense based on a decrease in our stock price between the restricted stock grant and vesting date, along with the impact of state and local taxes.
Supplemental Financial Information
As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings and Economic EPS. We provide these measures in addition to, not as a substitute for, income (loss) attributable to Westwood Holdings Group, Inc. and earnings (loss) per share, which are reported on a GAAP basis. Our management and Board review Economic Earnings and Economic EPS to evaluate our ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP income (loss) attributable to Westwood Holdings Group, Inc. or earnings (loss) per share, are useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.
We define Economic Earnings as income (loss) attributable to Westwood Holdings Group, Inc. plus non-cash equity-based compensation expense, impairment expense, amortization of intangible assets, currency translation adjustment reclassification, deferred taxes related to goodwill and the tax impact of adjustments to GAAP income (loss). Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. Although gains and losses from changes in the fair value of contingent consideration are non-cash, we do not add or subtract those back when calculating Economic Earnings because gains and losses on changes in the fair value of contingent consideration are considered regular following an acquisition. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.
Non-GAAP financial measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are that they can have a material impact on the equivalent GAAP measures or they may be calculated differently by other companies.
We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement. We believe that providing non-GAAP diluted net earnings per share and non-GAAP Income (loss) in addition to the related GAAP measures provides greater transparency to the information used in our financial and operational decision-making.
For the year ended December 31, 2025, our Economic Earnings increased by 105% to $14.3 million compared with $7.0 million for the year ended December 31, 2024. 2025 Economic Earnings was impacted by higher 2025 revenues and losses from changes in the fair value of contingent consideration in 2024.
The following table provides a reconciliation of income (loss) attributable to Westwood Holdings Group, Inc. to Economic Earnings:
For the years ended December 31,
(in thousands, except percentages and per share data)
2025 Change 2024 Change 2023 Change 2022 Change 2021
Income (loss) attributable to Westwood Holdings Group, Inc. $ 7,058 219 % $ 2,215 (77) % $ 9,520 (306) % $ (4,628) (147) % $ 9,763
Stock-based compensation expense 5,148 (7) 5,537 (15) 6,518 9 6,001 3 5,834
Intangible amortization 3,945 (5) 4,148 - 4,149 120 1,889 16 1,624
Tax benefit from goodwill amortization 533 57 340 (32) 500 66 302 27 237
Tax impact of adjustments to GAAP net income (loss) (2,388) (55) (5,275) 125 (2,345) 160 (901) (61) (2,309)
Economic Earnings $ 14,296 105 % $ 6,965 (62) % $ 18,342 589 % $ 2,663 (82) % $ 15,149
Economic Earnings per Share $ 1.61 96 % $ 0.82 (64) % $ 2.26 402 % $ 0.45 (80) % $ 2.20
The following tables provide Economic Earnings (Loss) by segment:
For the years ended December 31,
(in thousands, except percentages)
2025 Change 2024 Change 2023 Change 2022 Change 2021
Advisory net income $ 19,862 13 % $ 17,653 30 % $ 13,585 23 % $ 11,010 (34) % $ 16,783
Stock-based compensation expense 3,106 (17) 3,762 (16) 4,456 16 3,847 15 3,347
Intangible amortization 2,543 (5) 2,665 - 2,674 633 365 183 129
Tax benefit from goodwill amortization 297 186 104 NM 262 NM 66 NM -
Tax impact of adjustments to GAAP net income (1,483) (58) (3,500) 46 (2,404) (38) (3,865) 44 (2,679)
Economic Earnings $ 24,325 18 % $ 20,684 11 % $ 18,573 63 % $ 11,423 (35) % $ 17,580
For the years ended December 31,
(in thousands, except percentages)
2025 Change 2024 Change 2023 Change 2022 Change 2021
Trust net income $ 2,910 6 % $ 2,756 55 % $ 1,777 78 % $ 1,000 (82) % $ 5,660
Stock-based compensation expense 47 (36) 74 (77) 326 (31) 471 (37) 743
Intangible amortization 1,359 - 1,359 - 1,359 (1) 1,379 - 1,378
Tax benefit from goodwill amortization 236 - 236 (1) 238 1 236 - 237
Tax impact of adjustments to GAAP net income (369) (53) (780) 84 (424) (46) (779) (27) (1,060)
Economic Earnings $ 4,183 15 % $ 3,645 11 % $ 3,276 42 % $ 2,307 (67) % $ 6,958
For the years ended December 31,
(in thousands, except percentages)
2025 Change 2024 Change 2023 Change 2022 Change 2021
Other net loss $ (15,714) (14) % $ (18,194) 211 % $ (5,842) (65) % $ (16,638) 31 % $ (12,680)
Stock-based compensation expense 1,995 17 1,701 (2) 1,736 3 1,683 (3) 1,744
Intangible amortization 43 (65) 124 (15) 146 1 145 24 117
Tax impact of adjustments to GAAP net income (loss) (536) (46) (995) (320) 453 (88) 3,743 162 1,430
Economic Earnings (Loss) $ (14,212) (18) % $ (17,364) 395 % $ (3,507) (68) % $ (11,067) 18 % $ (9,389)
Liquidity and Capital Resources
As of December 31,
Balance Sheet Data (in thousands) 2025 2024
Cash and cash equivalents $ 26,249 $ 18,847
Accounts receivable 16,751 14,453
Total liquid assets $ 43,000 $ 33,300
Liquid investments $ 17,887 $ 25,748
Historically we have funded our operations and cash requirements with cash generated from operating activities. We may also use cash from operations to pay dividends to our stockholders or for deferred contingent consideration payments. We had no debt as of December 31, 2025 and 2024. The changes in net cash provided by operating activities generally reflect changes in earnings plus the effects of non-cash items and changes in working capital, including liquidation of investments used to cover current liabilities. Changes in working capital, especially accounts receivable and accounts payable, are generally the result of timing differences between collection of fees billed and payment of operating expenses.
We had cash and liquid investments of $44.1 million and $44.6 million as of December 31, 2025 and 2024, respectively.
Westwood Trust is required by the Texas Finance Code to maintain cash and investments in an amount equal to the minimum restricted capital of $4.0 million. Restricted capital is included in "Investments at fair value" in the accompanying Consolidated Balance Sheets. At December 31, 2025, Westwood Trust had approximately $13.2 million in excess of its minimum capital requirement.
For the years ended December 31,
Cash Flow Data (in thousands) 2025 2024 2023
Operating cash flows $ 18,922 $ 21,122 $ (1,185)
Investing cash flows (3,666) (4,613) 4,112
Financing cash flows (7,854) (18,084) (6,364)
During 2025, cash flow provided by operating activities was $18.9 million, compared to $21.1 million during 2024 and cash used in operating activities of $1.2 million during 2023. The decrease of $2.2 million from 2024 to 2025 primarily reflected the final contingent consideration payment related to the Salient Acquisition. The increase of $22.3 million from 2023 to 2024 primarily reflected the net sales of investments in 2024 compared to net purchases of investments in 2023.
Cash flow used in investing activities in 2025 and 2024 primarily related to the purchases of strategic investments, compared to cash flow provided by investing activities in 2023 related to the receipt of life insurance proceeds offset by the Broadmark Acquisition.
Cash used in financing activities was $7.9 million in 2025 compared to $18.1 million and $6.4 million in 2024 and 2023, respectively. The change from 2024 to 2025 related to 2025 noncontrolling interest activity, 2024 payments for contingent consideration for the Salient Acquisition and treasury stock purchases in 2024. The change from 2023 to 2024 primarily related to contingent consideration payments.
Our future liquidity and capital requirements will depend upon numerous factors, including results of operations, the timing and magnitude of capital expenditures or strategic initiatives, our dividend policy and other business and risk factors described under "Item 1A. Risk Factors" in this Report. We believe that current cash and liquid investment balances plus cash generated from operations will be sufficient to meet the operating and capital requirements of our ordinary business operations through at least the next twelve months, however there can be no assurance that we will not require additional financing within this time frame. Failure to raise needed capital on attractive terms, if at all, could have a material adverse effect on our business, financial condition and results of operations.
Cash Dividends
The following table summarizes dividends declared during 2025 and 2024:
2025 Dividends
Declaration Date Record Date Paid Date Dividend Per Share
February 12, 2025 (1)
March 3, 2025 April 1, 2025 $0.15
April 30, 2025 June 2, 2025 July 1, 2025 $0.15
August 8, 2025 September 2, 2025 October 1, 2025 $0.15
October 30, 2025 December 1, 2025 January 2, 2026 $0.15
$0.60
2024 Dividends
Declaration Date Record Date Paid Date Dividend Per Share
February 14, 2024 (1)
March 1, 2024 April 3, 2024 $0.15
May 1, 2024 (1)
June 3, 2024 July 1, 2024 $0.15
July 31, 2024 (1)
September 2, 2024 October 1, 2024 $0.15
October 30, 2024 (1)
December 2, 2024 January 3, 2025 $0.15
$0.60
(1) This dividend was treated for accounting purposes as a return of capital.
Contractual Obligations
Purchase commitments
Our purchase commitments primarily consist of outsourced information technology services, software licenses and commitments for financial research tools. As of December 31, 2025, our purchase commitments for the next five years and thereafter were as follows (in thousands):
Payments due in:
Total Less than 1 year 1-3 years 4-5 years Thereafter
Purchase commitments(1)
$ 14,276 $ 6,652 $ 6,962 $ 662 $ -
(1) A "purchase commitment" is defined as an agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms, including (a) fixed or minimum quantities to be purchased; (b) fixed, minimum or variable price provisions; and (c) the approximate timing of the transaction. The above purchase commitments exclude agreements that are cancelable without significant penalty.
Critical Accounting Estimates
The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent losses and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we often must make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. We believe the following are areas where the degree of judgment and complexity in determining amounts recorded in our Consolidated Financial Statements make accounting estimates critical.
Business Combinations
Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed. In a business combination, we allocate the purchase price to the acquired business' identifiable assets and liabilities at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill.
The assets acquired and liabilities assumed in our business combinations consist of acquired working capital and finite-lived and indefinite-lived intangible assets. The carrying value of acquired working capital approximates its fair value, given the short-term nature of these assets and liabilities. We estimated the fair value of finite-lived and indefinite-lived intangible assets acquired using a discounted cash flow approach, which included an analysis of the future cash flows expected to be generated by such assets and the risk associated with achieving such cash flows. The key assumptions used in the discounted cash flow model include the discount rate that is applied to the discretely forecasted future cash flows to calculate the present value of those cash flows and the estimate of future cash flows attributable to the acquired intangible assets, which include revenues, operating expenses and taxes. Our estimates are inherently uncertain and subject to refinement. As a result, during the
measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of assets acquired and liabilities assumed, with the corresponding offset to goodwill.
Contingent Consideration
When an acquisition includes future contingent consideration on achieving certain milestones, the Company estimates the earn-out fair value using Monte Carlo simulation models. The Monte Carlo simulations considered assumptions including revenue volatility, risk free rates, discount rates and payment discount rates. The projected contingent payment is discounted back to the current period using a discounted cash flow model. Increases or decreases in projected revenues, probabilities of payment, discount rates or projected payment dates may result in higher or lower fair value measurements. Fluctuations in any of the inputs may result in a significantly lower or higher fair value measurement. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date, and the fair value of the contingent consideration is remeasured at each subsequent reporting period with any change in fair value recognized as income or expense within the Consolidated Statements of Operations. For the years ended December 31, 2025 and 2024, changes in growth projections, due to increases in AUM and AUA values, and volatility assumptions were the primary drivers of changes in our fair value estimates.
Goodwill
Goodwill is tested at least annually for impairment. We assess the recoverability of the carrying amount of goodwill either qualitatively or quantitatively as of July 1 of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We test more frequently if indicators are present or changes in circumstances suggest that impairment may exist. These indicators include declines in revenues, earnings or cash flows, or the development of a material adverse change in the business climate.
We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, which is referred to as a component. We have identified two reporting units, which are consistent with our reporting segments: Advisory and Trust. The Company is not required to calculate the fair value of a reporting unit unless we determine that it is more likely than not that its fair value is less than the carrying amount. We assess goodwill for impairment using either a qualitative or quantitative assessment.
The qualitative goodwill impairment assessment requires evaluating factors, based on the weight of evidence, to determine whether a reporting unit's carrying value would more likely than not exceed its fair value. As part of our goodwill qualitative testing process, we evaluate various factors that are specific to the reporting unit as well as industry and macroeconomic factors in order to determine whether they are reasonably likely to have a material impact on the fair value of our reporting units. Based on the qualitative analyses performed in 2025, we concluded that there were no changes that were reasonably likely to cause the fair value of the Advisory and Trust reporting units to be less than those reporting unit's carrying values, and determined that there was no impairment of our goodwill. In the event we were to determine that a reporting unit's carrying value would more likely than not exceed its fair value, quantitative testing would be performed comparing carrying values to estimated fair values.
The quantitative analysis requires a comparison of each reporting unit's carrying value to the fair value of the respective unit. If the carrying value exceeds the fair value, an impairment charge is recorded based on that difference.
We completed our most recent annual goodwill impairment assessment during the third quarter of 2025 and determined that no goodwill impairment related to the Advisory or Trust segment was required. There was no goodwill impairment for either segment during the years ended December 31, 2025, 2024 or 2023.
Accounting Developments
See Note 2 "Summary of Significant Accounting Policies" to our Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" for a description of any new accounting standards and their anticipated effects on our Consolidated Financial Statements.
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