Horizon Kinetics (HKHC) Q3 2024 earnings summary

Executive summary

• Completed a reverse merger with Scott's Liquid Gold, marking the first quarterly results call as a public company and expanding into consumer products.

• Celebrated the 30th anniversary, emphasizing a value-oriented, low-turnover investment philosophy and long-term client relationships.

• Managed $8.3 billion in regulatory AUM as of September 30, 2024, with significant holdings in Texas Pacific Land Corporation and proprietary funds.

• Primary revenue sources include management/advisory fees from mutual funds, ETFs, proprietary funds, and separately managed accounts, supplemented by performance and incentive fees.

• Business strategy focuses on niche opportunities and research-driven product development, avoiding mass-market asset classes.

Financial highlights

• 2024 was a transitional year, with a reverse merger and conversion from LLC to C corp, resulting in a significant non-cash deferred tax charge of $59.7 million.

• Total revenue for Q3 2024 was $15.4 million, up 21% from Q3 2023; nine-month revenue was $42.4 million, up from $39.4 million year-over-year.

• Net income for Q3 2024 was $38.2 million, up from $25.5 million in Q3 2023; nine-month net income was $16.7 million, up from $6.9 million year-over-year.

• As of September 30, unearned incentive fees stood at $23.3 million, subject to year-end performance.

• Maintained strong liquidity with no debt and $18.1 million in cash at quarter end.

Outlook and guidance

• Dividend policy set at 70% of operating income plus a substantial portion of performance fees, with potential for a significant year-end dividend if performance fees are realized.

• Management expects unearned performance fees of $23.3 million to be resolved in Q4 2024, subject to market conditions.

• Plans to seed new strategies and products, particularly in emerging or less-liquid asset classes.

• Anticipates continued focus on research-driven, niche investment opportunities as market concentration trends shift.

• Board declared a $0.053 dividend for the quarter, payable December 16, 2024.