CONCORD, Calif., July 18, 2024 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE:AMK) today announced financial results for the quarter ended June 30, 2024. Second Quarter 2024 Financial and Operational Highlights Net income for the quarter was $32.3 million, or $0.43 per share. Adjusted net income for the quarter was $49.8 million, or $0.66 per share, on total revenue of $198.5 million. Adjusted EBITDA for the quarter was $71.9 million, or 36.2% of total revenue. Platform assets increased 18.5% year-over-year to $119.4 billion. Quarter-over-quarter platform assets were up 2.1%, due to market impact net of fees of $0.8 billion and quarterly net flows of $1.7 billion. Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 6.1%. More than 4,300 new households and 164 new producing advisors joined the AssetMark platform during the second quarter. In total, as of June 30, 2024, there were over 9,200 advisors (approximately 3,200 were engaged advisors) and over 261,000 investor households on the AssetMark platform. We realized a 20.2% annualized production lift from existing advisors for the second quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. In April, we signed a definitive agreement to be acquired by GTCR. The transaction is subject to customary closing conditions and required regulatory approvals and is still expected to close in Q4 2024. Second Quarter 2024 Key Operating Metrics   2Q23   2Q24   Variance per year Operational metrics:           Platform assets (at period-beginning) (millions of dollars) $ 96,203     $ 116,901     21.5 % Net flows (millions of dollars)   1,695       1,703     0.5 % Market impact net of fees (millions of dollars)   2,864       783     (72.7)% Platform assets (at period-end) (millions of dollars) $ 100,762     $ 119,387     18.5 % Net flows lift (% of beginning of year platform assets)   1.9 %     1.6 %   -30 bps Advisors (at period-end)   9,323       9,245     (0.8)% Engaged advisors (at period-end)   3,032       3,238     6.8 % Assets from engaged advisors (at period-end) (millions of dollars) $ 93,109     $ 111,897     20.2 % Households (at period-end)   247,934       261,341     5.4 % New producing advisors   188       164     (12.8)% Production lift from existing advisors (annualized %)   20.2 %     20.2 %   0 bps Assets in custody at ATC (at period-end) (millions of dollars) $ 74,074     $ 88,681     19.7 % ATC client cash (at period-end) (millions of dollars) $ 2,942     $ 2,933     (0.3)%             Financial metrics:           Total revenue (millions of dollars)* $ 175.5     $ 198.5     13.1 % Net income (millions of dollars) $ 32.9     $ 32.3     (1.8)% Net income margin (%)   18.7 %     16.3 %   -240 bps Capital expenditure (millions of dollars) $ 11.2     $ 13.0     16.1 %             Non-GAAP financial metrics:           Adjusted EBITDA (millions of dollars) $ 60.4     $ 71.9     19.0 % Adjusted EBITDA margin (%)   34.4 %     36.2 %   180 bps Adjusted net income (millions of dollars) $ 41.2     $ 49.8     20.9 % Note: Percentage variance based on actual numbers, not rounded resultsAll metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" in 2023 and ATC related metrics*The Company reclassified $7.7 million representing three months of 2023 spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis during the three months ended June 30, 2023. Webcast and Conference Call Information As previously announced, on April 25, 2024, AssetMark entered into an agreement to be acquired by GTCR (the "Transaction"). A copy of the press release announcing the Transaction can be found on the investor relations page of AssetMark's website. Additional details and information about the Transaction are included in the Current Report on Form 8-K filed by AssetMark with the Securities and Exchange Commission ("SEC") on April 25, 2024. The Transaction is subject to customary closing conditions and required regulatory approvals and is expected to close in Q4 2024. Given the announced Transaction, AssetMark will not be hosting an earnings call and webcast to discuss its second quarter 2024 results and is withdrawing all previously provided financial guidance. For further information about AssetMark's financial performance please refer to AssetMark's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024, which is expected to be filed on August 6, 2024 with the SEC. About AssetMark Financial Holdings, Inc. AssetMark operates a wealth management platform that powers independent financial advisors and their clients. Together with our affiliates Voyant and Adhesion Wealth, we serve advisors of all models at every stage of their journey with flexible, purpose-built solutions that champion client engagement and drive efficiency. Our ecosystem of solutions equips advisors with services and capabilities that would otherwise require significant investments of time and money, ultimately enabling them to deliver better investor outcomes and enhance their productivity, profitability and client satisfaction. Founded in 1996 and based in Concord, California, the company has over 1,000 employees. Today, the AssetMark platform serves over 9,200 financial advisors and over 261,000 investor households. As of June 30, 2024, the company had $119.4 billion in platform assets. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance, which involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "will," "may," "could," "should," "believe," "expect," "estimate," "potential" or "continue," the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. Other potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, which is on file with the Securities and Exchange Commission and available on our investor relations website at http://ir.assetmark.com. Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which is expected to be filed on August 6, 2024. All information provided in this press release is based on information available to us as of the date of this press release and any forward-looking statements contained herein are based on assumptions that we believe are reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this press release, which are inherently uncertain. We undertake no duty to update this information unless required by law. AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Balance Sheets (in thousands except share data and par value)     June 30, 2024   December 31, 2023   (unaudited)     ASSETS       Current assets:       Cash and cash equivalents $ 189,682     $ 217,680   Restricted cash   16,000       15,000   Investments, at fair value   21,500       18,003   Fees and other receivables, net   21,552       21,345   Income tax receivable, net   9,783       1,890   Prepaid expenses and other current assets   16,298       17,193   Total current assets   274,815       291,111   Property, plant and equipment, net   9,002       8,765   Capitalized software, net   118,577       108,955   Other intangible assets, net   678,897       684,142   Operating lease right-of-use assets   21,831       20,408   Goodwill   487,909       487,909   Other assets   26,382       19,273   Total assets $ 1,617,413     $ 1,620,563   LIABILITIES AND STOCKHOLDERS' EQUITY       Current liabilities:       Accounts payable $ 645     $ 288   Accrued liabilities and other current liabilities   83,360       75,554   Total current liabilities   84,005       75,842   Long-term debt, net   —       93,543   Other long-term liabilities   21,301       18,429   Long-term portion of operating lease liabilities   27,372       26,295   Deferred income tax liabilities, net   139,072       139,072   Total long-term liabilities   187,745       277,339   Total liabilities   271,750       353,181   Stockholders' equity:       Common stock, $0.001 par value (675,000,000 shares authorized and 74,743,985 and 74,372,889 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)   75       74   Additional paid-in capital   968,702       960,700   Retained earnings   376,900       306,622   Accumulated other comprehensive loss   (14 )     (14 ) Total stockholders' equity   1,345,663       1,267,382   Total liabilities and stockholders' equity $ 1,617,413     $ 1,620,563   AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Comprehensive Income(in thousands, except share and per share data)     Three Months Ended June 30,   Six Months Ended June 30,     2024       2023       2024     2023 Revenue:               Asset-based revenue $ 158,878     $ 137,336     $ 308,862     $ 268,375 Spread-based revenue*   28,853       29,560       58,946       61,559 Subscription-based revenue   4,306       3,693       8,558       7,237 Other revenue   6,454       4,932       12,391       8,648 Total revenue   198,491       175,521       388,757       345,819 Operating expenses:               Asset-based expenses   48,347       39,344       93,200       76,778 Spread-based expenses   341       292       730       585 Employee compensation   51,902       48,099       101,909       95,010 General and operating expenses   27,821       24,354       55,145       50,043 Professional fees   12,732       8,372       18,813       13,765 Depreciation and amortization   10,296       8,684       20,218       17,112 Total operating expenses   151,439       129,145       290,015       253,293 Interest expense   2,202       2,137       4,496       4,484 Other (income) expense, net   (196 )     (288 )     (528 )     19,577 Income before income taxes   45,046       44,527       94,774       68,465 Provision for income taxes   12,732       11,650       24,496       18,366 Net income   32,314       32,877       70,278       50,099 Net comprehensive income $ 32,314     $ 32,877     $ 70,278     $ 50,099 Net income per share attributable to common stockholders:               Basic $ 0.43     $ 0.44     $ 0.94     $ 0.68 Diluted $ 0.43     $ 0.44     $ 0.94     $ 0.67 Weighted average number of common shares outstanding, basic   74,487,417       73,986,326       74,435,341       73,938,510 Weighted average number of common shares outstanding, diluted   75,283,986       74,505,158       75,109,611       74,325,580 *The Company reclassified $7.7 million and $14.0 million from spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis for the three and six months ended June 30, 2023, respectively AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Cash Flows(in thousands)     Six Months Ended June 30,     2024       2023   CASH FLOWS FROM OPERATING ACTIVITIES       Net income $ 70,278     $ 50,099   Adjustments to reconcile net income to net cash provided by operating activities:       Depreciation and amortization   20,218       17,112   Interest expense, net   (321 )     (45 ) Share-based compensation   8,003       7,974   Debt acquisition cost write-down   255       92   Changes in certain assets and liabilities:       Fees and other receivables, net   (457 )     (863 ) Receivables from related party   250       480   Prepaid expenses and other current assets   2,812       2,954   Accounts payable, accrued liabilities and other current liabilities   6,291       13,614   Income tax receivable and payable, net   (7,893 )     14,062   Net cash provided by operating activities   99,436       105,479   CASH FLOWS FROM INVESTING ACTIVITIES       Purchase of Adhesion Wealth   —       (3,000 ) Purchase of investments   (2,099 )     (1,528 ) Sale of investments   179       257   Purchase of property and equipment   (1,530 )     (469 ) Purchase of computer software   (23,302 )     (20,920 ) Purchase of convertible notes   (5,932 )     (4,275 ) Net cash used in investing activities   (32,684 )     (29,935 ) CASH FLOWS FROM FINANCING ACTIVITIES       Payments on term loan   (93,750 )     (25,000 ) Net cash used in financing activities   (93,750 )     (25,000 ) Net change in cash, cash equivalents, and restricted cash   (26,998 )     50,544   Cash, cash equivalents, and restricted cash at beginning of period   232,680       136,274   Cash, cash equivalents, and restricted cash at end of period $ 205,682     $ 186,818   SUPPLEMENTAL CASH FLOW INFORMATION       Income taxes paid, net $ 32,378     $ 4,298   Interest paid $ 4,178     $ 5,736   Non-cash operating and investing activities:       Non-cash changes to right-of-use assets $ 4,183     $ 1,795   Non-cash changes to lease liabilities $ 4,183     $ 1,795     Explanations and Reconciliations of Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe adjusted EBITDA, adjusted EBITDA margin and adjusted net income, all of which are non-GAAP measures, are useful in evaluating our performance. We use adjusted EBITDA, adjusted EBITDA margin and adjusted net income to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that such non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, such non-GAAP ...