Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries AssetMark Reports $91.5B Platform Assets for Fourth Quarter 2022 By: AssetMark, Inc. via GlobeNewswire February 22, 2023 at 16:15 PM EST CONCORD, Calif., Feb. 22, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter and full year ended December 31, 2022. Fourth Quarter 2022 Financial and Operational Highlights Net income for the quarter was $25.6 million, or $0.35 per share.Adjusted net income for the quarter was $34.3 million, or $0.46 per share, on total revenue of $164.1 million.Adjusted EBITDA for the quarter was $52.9 million, or 32.2% of total revenue.Platform assets decreased 2.2% year-over-year to $91.5 billion. Quarter-over-quarter platform assets were up 15.2%, due to adding $6.9 billion from the acquisition of Adhesion Wealth, market impact net of fees of $4.3 billion, and quarterly net flows of $908 million.Annual net flows as a percentage of beginning-of-year platform assets were 6.0%.More than 17,900 new households and 143 new producing advisors joined the AssetMark platform during the fourth quarter. In total, as of December 31, 2022, there were over 9,200 advisors (approximately 2,900 were engaged advisors) and over 241,000 investor households on the AssetMark platform.We realized a 14.1% annualized production lift from existing advisors for the fourth quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “AssetMark continued its evolution from a TAMP to a holistic, full-service wealth management platform oriented around what advisors need to deliver resilient investor outcomes while successfully growing their practices. In 2022, we served more advisors and investors than ever before, supporting over 9,200 advisors who used our platform to help more than 241,000 investor households. We achieved record financial and operational results and matched our all-time high in our annual Net Promoter Score. Despite a challenging macro-environment, we truly made a difference in the lives of our advisors and their clients. 2022 was a strong year at AssetMark,” said Natalie Wolfsen, CEO of AssetMark. “We are well positioned to help our advisors grow in 2023 and beyond, which in turn will help AssetMark grow. I could not be more excited about the opportunity ahead.” Fourth Quarter 2022 Key Operating Metrics 4Q22 4Q21 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)79,382 86,826 (8.6%)Net flows (millions of dollars)908 2,949 (69.2%)Market impact net of fees (millions of dollars)4,284 3,713 15.4%Acquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)1.0%4.0%(300 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors143 215 (33.5%)Production lift from existing advisors (annualized %)14.1%24.6%(1,050 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)164 144 14.3%Net income (millions of dollars)25.6 12.4 107.2%Net income margin (%)15.6%8.6%700 bpsCapital expenditure (millions of dollars)11.3 8.0 41.0% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)52.9 38.3 38.0%Adjusted EBITDA margin (%)32.2%26.7%550 bpsAdjusted net income (millions of dollars)34.3 24.7 38.9%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Full Year 2022 Key Operating Metrics 2022 2021 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)93,488 74,520 25.5%Net flows (millions of dollars)5,612 9,934 (43.5%)Market impact net of fees (millions of dollars)(14,526)9,034 NMAcquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)6.0%13.3%(730 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors690 811 (14.9%)Production lift from existing advisors (annualized %)16.3%24.2%(790 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)618 530 16.6%Net income (millions of dollars)103.3 25.7 302.3%Net income margin (%)16.7%4.8%1,190 bpsCapital expenditure (millions of dollars)38.6 34.7 11.5% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)199.7 157.2 27.0%Adjusted EBITDA margin (%)32.3%29.6%270 bpsAdjusted net income (millions of dollars)130.5 103.3 26.3%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its fourth quarter 2022 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: February 22, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=5acca13d&confId=46295. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial-in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from February 22, 2023. About AssetMark Financial Holdings, Inc. AssetMark is a leading provider of extensive wealth management and technology solutions that power independent financial advisors and their clients. Through AssetMark, Inc., its investment advisor subsidiary registered with the Securities and Exchange Commission, AssetMark operates a platform that comprises fully integrated technology, personalized and scalable service and curated investment platform solutions designed to make a difference in the lives of advisors and their clients. AssetMark had $91.5 billion in platform assets as of December 31, 2022 and has a history of innovation spanning more than 25 years. 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. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this press release, including our business strategies, our operating and financial performance and general market, economic and business conditions. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, 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 Annual Report on Form 10-K for the year ended December 31, 2022, which is expected to be filed in mid-March. All information provided in this 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) December 31, 2022 2021ASSETS Current assets: Cash and cash equivalents $123,274 $76,707Restricted cash 13,000 13,000Investments, at fair value 13,714 14,498Fees and other receivables, net 20,082 9,019Income tax receivable, net 265 6,276Prepaid expenses and other current assets 16,870 14,673Total current assets 187,205 134,173Property, plant and equipment, net 8,495 8,015Capitalized software, net 89,959 73,701Other intangible assets, net 694,627 695,093Operating lease right-of-use assets 22,002 22,469Goodwill 487,225 447,864Other assets 13,417 2,090Total assets $1,502,930 $1,383,405LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,624 $2,613Accrued liabilities and other current liabilities 69,196 56,249Total current liabilities 73,820 58,862Long-term debt, net 112,138 115,000Other long-term liabilities 15,185 16,468Long-term portion of operating lease liabilities 27,924 28,316Deferred income tax liabilities, net 147,497 155,373Total long-term liabilities 302,744 315,157Total liabilities 376,564 374,019Commitments and contingencies — —Stockholders' equity: Common stock, $0.001 par value (675,000,000 shares authorized and 73,847,596 and 73,562,717 shares issued and outstanding as of December 31, 2022 and 2021, respectively) 74 74Additional paid-in capital 942,946 929,070Retained earnings 183,503 80,242Accumulated other comprehensive loss (157) —Total stockholders' equity 1,126,366 1,009,386Total liabilities and stockholders' equity $1,502,930 $1,383,405 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income(in thousands, except share and per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Employee compensation 44,478 45,901 166,330 196,701General and operating expenses 24,173 20,342 90,122 72,941Professional fees 8,082 7,464 25,186 21,813Depreciation and amortization 8,008 8,080 31,149 37,929Total operating expenses 125,406 122,381 475,069 481,647Interest expense 2,313 953 6,520 3,559Other expenses, net (238) 24 (43) 106Income before income taxes 36,652 20,226 136,760 44,987Provision for income taxes 11,059 7,875 33,499 19,316Net income 25,593 12,351 103,261 25,671Change in fair value of convertible notes receivable, net (157) — (157) —Net comprehensive income $25,436 $12,351 $103,104 $25,671Net income (loss) per share attributable to common stockholders: Basic $0.35 $0.18 $1.40 $0.36Diluted $0.35 $0.17 $1.40 $0.35Weighted average number of common shares outstanding, basic 73,847,371 73,242,802 73,724,341 72,137,174Weighted average number of common shares outstanding, diluted 73,943,318 73,441,555 73,872,828 72,399,213 AssetMark Financial Holdings, Inc. Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $25,593 $12,351 $103,261 $25,671 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,008 8,080 31,149 37,929 Interest expense, net (66) 160 541 700 Deferred income taxes (6,673) (1,788) (6,673) (1,562)Share-based compensation 3,780 5,558 13,876 53,637 Debt acquisition cost write-down — — 130 — Changes in certain assets and liabilities: Fees and other receivables, net (3,380) 757 (10,718) 163 Receivables from related party — — 568 (91)Prepaid expenses and other current assets (4,386) (2,406) 2,346 2,460 Accounts payable, accrued liabilities and other liabilities 12,412 7,486 (252) 7,500 Income tax receivable, net 9,414 4,878 6,073 2,570 Net cash provided by operating activities 44,702 35,076 140,301 128,977 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion, net of cash received (43,861) — (43,861) — Purchase of Voyant, net of cash received — 75 — (124,161)Purchase of convertible notes receivable (1,700) — (10,300) — Purchase of investments (481) (569) (2,692) (3,004)Sale of investments 534 660 918 833 Purchase of property and equipment (1,621) (855) (3,061) (1,507)Purchase of computer software (9,947) (7,129) (35,996) (33,145)Net cash used in investing activities (57,076) (7,818) (94,992) (160,984)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — — 122,508 — Payments on revolving credit facility — — (115,000) (35,000)Payments on long-term debt (1,562) — (6,250) — Proceeds from credit facility draw down — — — 75,000 Proceeds from exercise of stock options — 1 — 95 Net cash provided by (used in) financing activities (1,562) 1 1,258 40,095 Net change in cash, cash equivalents, and restricted cash (13,936) 27,259 46,567 8,088 Cash, cash equivalents, and restricted cash at beginning of period 150,210 62,448 89,707 81,619 Cash, cash equivalents, and restricted cash at end of period $136,274 $89,707 $136,274 $89,707 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net $7,461 $3,819 $33,637 $19,796 Interest paid $1,373 $958 $4,087 $2,828 Non-cash operating, investing, and financing activities: Non-cash changes to right-of-use assets $379 $2,109 $3,775 $933 Non-cash changes to lease liabilities $379 $2,109 $3,775 $933 Common stock issued in acquisition of business $— $— $— $24,910 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 financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, litigation and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Three Months Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $25,593 $12,351 15.6% 8.6%Provision for income taxes 11,059 7,875 6.7% 5.5%Interest income (1,557) (21) (1.0)% — Interest expense 2,313 953 1.4% 0.7%Amortization/depreciation 8,008 8,080 4.9% 5.6%EBITDA $45,416 $29,238 27.6% 20.4%Share-based compensation(1) 3,780 5,558 2.3% 3.9%Reorganization and integration costs(2) 1,818 2,722 1.1% 1.9%Acquisition expenses(3) 2,098 446 1.3% 0.3%Business continuity plan (4) (173) 324 (0.1)% 0.2%Other (income) expense (60) 24 — — Adjusted EBITDA $52,879 $38,312 32.2% 26.7% Year Ended December 31, Year Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $103,261 $25,671 16.7% 4.8%Provision for income taxes 33,499 19,316 5.4% 3.6%Interest income (2,664) (137) (0.4)% — Interest expense 6,520 3,559 1.1% 0.7%Amortization/depreciation 31,149 37,929 5.0% 7.2%EBITDA $171,765 $86,338 27.8% 16.3%Share-based compensation(1) 13,876 53,637 2.2% 10.1%Reorganization and integration costs(2) 10,418 10,816 1.7% 2.0%Acquisition expenses(3) 3,411 5,682 0.6% 1.1%Business continuity plan (4) 61 460 — 0.1%Office closures(5) — 167 — — Other (income) expense 135 106 — — Adjusted EBITDA $199,666 $157,206 32.3% 29.6% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for the three months and years ended December 31, 2022 and 2021, broken out by compensation and non-compensation expenses (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $3,780 $— $3,780 $5,558 $— $5,558 Reorganization and integration costs(2) 1,512 306 1,818 979 1,743 2,722 Acquisition expenses(3) 4 2,094 2,098 38 408 446 Business continuity plan (4) — (173) (173) 162 162 324 Other (income) expense — (60) (60) — 24 24 Total adjustments to adjusted EBITDA $5,296 $2,167 $7,463 $6,737 $2,337 $9,074 Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.3% — 2.3% 3.9% — 3.9%Reorganization and integration costs(2) 0.9% 0.2% 1.1% 0.7% 1.2% 1.9%Acquisition expenses(3) — 1.3% 1.3% — 0.3% 0.3%Business continuity plan (4) — (0.1)% (0.1)% 0.1% 0.1% 0.2%Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 3.2% 1.4% 4.6% 4.7% 1.6% 6.3% Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $13,876 $— $13,876 $53,637 $— $53,637 Reorganization and integration costs(2) 4,335 6,083 10,418 5,396 5,420 10,816 Acquisition expenses(3) — 3,411 3,411 1,441 4,241 5,682 Business continuity plan (4) (2) 63 61 174 286 460 Office closures(5) — — — — 167 167 Other (income) expense — 135 135 — 106 106 Total adjustments to adjusted EBITDA $18,209 $9,692 $27,901 $60,648 $10,220 $70,868 Year Ended December 31, 2022 Year Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.2% — 2.2% 10.1% — 10.1%Reorganization and integration costs(2) 0.7% 1.0% 1.7% 1.0% 1.0% 2.0%Acquisition expenses(3) — 0.6% 0.6% 0.2% 0.7% 0.9%Business continuity plan (4) — — — — — — Office closures(5) — — — — — — Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 2.9% 1.6% 4.5% 11.3% 1.7% 13.0% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We have historically not used adjusted net income for internal management reporting and evaluation purposes; however, we believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expense can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three months and years ended December 31, 2022 and 2021, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Adjusted employee compensation(1) 39,182 39,163 148,121 136,052Adjusted general and operating expenses(1) 23,927 18,874 85,800 65,072Adjusted professional fees(1) 6,101 6,619 19,951 19,568Adjusted depreciation and amortization(2) 6,198 5,126 24,153 18,790Total adjusted operating expenses 116,073 110,376 440,307 391,745Interest expense 2,313 953 6,520 3,559Adjusted other (income) expenses, net(1) (178) — (178) —Adjusted income before income taxes 45,925 32,255 171,657 134,995Adjusted provision for income taxes(3) 11,650 7,580 41,198 31,723Adjusted net income $34,275 $24,675 $130,459 $103,272Net income per share attributable to common stockholders: Adjusted earnings per share(4) $0.46 $0.33 $1.77 $1.40Weighted average number of common shares outstanding, diluted(4) 73,943,318 74,746,770 73,872,828 73,947,311 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. (4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $124,684 $— $124,684 $137,533 $— $137,533 Spread-based revenue 33,144 — 33,144 2,055 — 2,055 Subscription-based revenue 3,317 — 3,317 3,209 — 3,209 Other revenue 2,988 — 2,988 787 — 787 Total revenue 164,133 — 164,133 143,584 — 143,584 Operating expenses: Asset-based expenses 35,671 — 35,671 40,227 — 40,227 Spread-based expenses 4,994 — 4,994 367 — 367 Employee compensation(1) 44,478 (5,296) 39,182 45,901 (6,738) 39,163 General and operating expenses(1) 24,173 (246) 23,927 20,342 (1,468) 18,874 Professional fees(1) 8,082 (1,981) 6,101 7,464 (845) 6,619 Depreciation and amortization(2) 8,008 (1,810) 6,198 8,080 (2,954) 5,126 Total operating expenses 125,406 (9,333) 116,073 122,381 (12,005) 110,376 Interest expense 2,313 — 2,313 953 — 953 Other (income) expenses, net (238) 60 (178) 24 (24) — Income before income taxes 36,652 9,273 45,925 20,226 12,029 32,255 Provision for income taxes(3) 11,059 591 11,650 7,875 (295) 7,580 Net income $25,593 $34,275 $12,351 $24,675 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Year Ended December 31, 2022 Year Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $534,182 $— $534,182 $512,188 $— $512,188 Spread-based revenue 63,409 — 63,409 8,568 — 8,568 Subscription-based revenue 13,020 — 13,020 6,381 — 6,381 Other revenue 7,695 — 7,695 3,162 — 3,162 Total revenue 618,306 — 618,306 530,299 — 530,299 Operating expenses: Asset-based expenses 154,100 — 154,100 150,836 — 150,836 Spread-based expenses 8,182 — 8,182 1,427 — 1,427 Employee compensation(1) 166,330 (18,209) 148,121 196,701 (60,649) 136,052 General and operating expenses(1) 90,122 (4,322) 85,800 72,941 (7,869) 65,072 Professional fees(1) 25,186 (5,235) 19,951 21,813 (2,245) 19,568 Depreciation and amortization(2) 31,149 (6,996) 24,153 37,929 (19,139) 18,790 Total operating expenses 475,069 (34,762) 440,307 481,647 (89,902) 391,745 Interest expense 6,520 — 6,520 3,559 — 3,559 Other (income) expenses, net (43) (135) (178) 106 (106) — Income before income taxes 136,760 34,897 171,657 44,987 90,008 134,995 Provision for income taxes(3) 33,499 7,699 41,198 19,316 12,407 31,723 Net income $103,261 $130,459 $25,671 $103,272 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $25,593 $12,351 Acquisition-related amortization(1) $— $1,810 1,810 $— $2,954 2,954 Expense adjustments(2) 1,516 2,227 3,743 1,180 2,313 3,493 Share-based compensation 3,780 — 3,780 5,558 — 5,558 Other (income) expense — (60) (60) — 24 24 Tax effect of adjustments(3) (1,335) 744 (591) (277) 572 295 Adjusted net income $34,275 $24,675 Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $103,261 $25,671 Acquisition-related amortization(1) $— $6,996 6,996 $— $19,139 19,139 Expense adjustments(2) 4,333 9,557 13,890 7,012 10,114 17,126 Share-based compensation 13,876 — 13,876 53,637 — 53,637 Other (income) expense — 135 135 — 106 106 Tax effect of adjustments(3) (4,370) (3,329) (7,699) (1,648) (10,759) (12,407)Adjusted net income $130,459 $103,272 (1) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
AssetMark Reports $91.5B Platform Assets for Fourth Quarter 2022 By: AssetMark, Inc. via GlobeNewswire February 22, 2023 at 16:15 PM EST CONCORD, Calif., Feb. 22, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter and full year ended December 31, 2022. Fourth Quarter 2022 Financial and Operational Highlights Net income for the quarter was $25.6 million, or $0.35 per share.Adjusted net income for the quarter was $34.3 million, or $0.46 per share, on total revenue of $164.1 million.Adjusted EBITDA for the quarter was $52.9 million, or 32.2% of total revenue.Platform assets decreased 2.2% year-over-year to $91.5 billion. Quarter-over-quarter platform assets were up 15.2%, due to adding $6.9 billion from the acquisition of Adhesion Wealth, market impact net of fees of $4.3 billion, and quarterly net flows of $908 million.Annual net flows as a percentage of beginning-of-year platform assets were 6.0%.More than 17,900 new households and 143 new producing advisors joined the AssetMark platform during the fourth quarter. In total, as of December 31, 2022, there were over 9,200 advisors (approximately 2,900 were engaged advisors) and over 241,000 investor households on the AssetMark platform.We realized a 14.1% annualized production lift from existing advisors for the fourth quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “AssetMark continued its evolution from a TAMP to a holistic, full-service wealth management platform oriented around what advisors need to deliver resilient investor outcomes while successfully growing their practices. In 2022, we served more advisors and investors than ever before, supporting over 9,200 advisors who used our platform to help more than 241,000 investor households. We achieved record financial and operational results and matched our all-time high in our annual Net Promoter Score. Despite a challenging macro-environment, we truly made a difference in the lives of our advisors and their clients. 2022 was a strong year at AssetMark,” said Natalie Wolfsen, CEO of AssetMark. “We are well positioned to help our advisors grow in 2023 and beyond, which in turn will help AssetMark grow. I could not be more excited about the opportunity ahead.” Fourth Quarter 2022 Key Operating Metrics 4Q22 4Q21 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)79,382 86,826 (8.6%)Net flows (millions of dollars)908 2,949 (69.2%)Market impact net of fees (millions of dollars)4,284 3,713 15.4%Acquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)1.0%4.0%(300 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors143 215 (33.5%)Production lift from existing advisors (annualized %)14.1%24.6%(1,050 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)164 144 14.3%Net income (millions of dollars)25.6 12.4 107.2%Net income margin (%)15.6%8.6%700 bpsCapital expenditure (millions of dollars)11.3 8.0 41.0% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)52.9 38.3 38.0%Adjusted EBITDA margin (%)32.2%26.7%550 bpsAdjusted net income (millions of dollars)34.3 24.7 38.9%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Full Year 2022 Key Operating Metrics 2022 2021 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)93,488 74,520 25.5%Net flows (millions of dollars)5,612 9,934 (43.5%)Market impact net of fees (millions of dollars)(14,526)9,034 NMAcquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)6.0%13.3%(730 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors690 811 (14.9%)Production lift from existing advisors (annualized %)16.3%24.2%(790 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)618 530 16.6%Net income (millions of dollars)103.3 25.7 302.3%Net income margin (%)16.7%4.8%1,190 bpsCapital expenditure (millions of dollars)38.6 34.7 11.5% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)199.7 157.2 27.0%Adjusted EBITDA margin (%)32.3%29.6%270 bpsAdjusted net income (millions of dollars)130.5 103.3 26.3%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its fourth quarter 2022 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: February 22, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=5acca13d&confId=46295. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial-in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from February 22, 2023. About AssetMark Financial Holdings, Inc. AssetMark is a leading provider of extensive wealth management and technology solutions that power independent financial advisors and their clients. Through AssetMark, Inc., its investment advisor subsidiary registered with the Securities and Exchange Commission, AssetMark operates a platform that comprises fully integrated technology, personalized and scalable service and curated investment platform solutions designed to make a difference in the lives of advisors and their clients. AssetMark had $91.5 billion in platform assets as of December 31, 2022 and has a history of innovation spanning more than 25 years. 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. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this press release, including our business strategies, our operating and financial performance and general market, economic and business conditions. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, 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 Annual Report on Form 10-K for the year ended December 31, 2022, which is expected to be filed in mid-March. All information provided in this 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) December 31, 2022 2021ASSETS Current assets: Cash and cash equivalents $123,274 $76,707Restricted cash 13,000 13,000Investments, at fair value 13,714 14,498Fees and other receivables, net 20,082 9,019Income tax receivable, net 265 6,276Prepaid expenses and other current assets 16,870 14,673Total current assets 187,205 134,173Property, plant and equipment, net 8,495 8,015Capitalized software, net 89,959 73,701Other intangible assets, net 694,627 695,093Operating lease right-of-use assets 22,002 22,469Goodwill 487,225 447,864Other assets 13,417 2,090Total assets $1,502,930 $1,383,405LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,624 $2,613Accrued liabilities and other current liabilities 69,196 56,249Total current liabilities 73,820 58,862Long-term debt, net 112,138 115,000Other long-term liabilities 15,185 16,468Long-term portion of operating lease liabilities 27,924 28,316Deferred income tax liabilities, net 147,497 155,373Total long-term liabilities 302,744 315,157Total liabilities 376,564 374,019Commitments and contingencies — —Stockholders' equity: Common stock, $0.001 par value (675,000,000 shares authorized and 73,847,596 and 73,562,717 shares issued and outstanding as of December 31, 2022 and 2021, respectively) 74 74Additional paid-in capital 942,946 929,070Retained earnings 183,503 80,242Accumulated other comprehensive loss (157) —Total stockholders' equity 1,126,366 1,009,386Total liabilities and stockholders' equity $1,502,930 $1,383,405 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income(in thousands, except share and per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Employee compensation 44,478 45,901 166,330 196,701General and operating expenses 24,173 20,342 90,122 72,941Professional fees 8,082 7,464 25,186 21,813Depreciation and amortization 8,008 8,080 31,149 37,929Total operating expenses 125,406 122,381 475,069 481,647Interest expense 2,313 953 6,520 3,559Other expenses, net (238) 24 (43) 106Income before income taxes 36,652 20,226 136,760 44,987Provision for income taxes 11,059 7,875 33,499 19,316Net income 25,593 12,351 103,261 25,671Change in fair value of convertible notes receivable, net (157) — (157) —Net comprehensive income $25,436 $12,351 $103,104 $25,671Net income (loss) per share attributable to common stockholders: Basic $0.35 $0.18 $1.40 $0.36Diluted $0.35 $0.17 $1.40 $0.35Weighted average number of common shares outstanding, basic 73,847,371 73,242,802 73,724,341 72,137,174Weighted average number of common shares outstanding, diluted 73,943,318 73,441,555 73,872,828 72,399,213 AssetMark Financial Holdings, Inc. Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $25,593 $12,351 $103,261 $25,671 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,008 8,080 31,149 37,929 Interest expense, net (66) 160 541 700 Deferred income taxes (6,673) (1,788) (6,673) (1,562)Share-based compensation 3,780 5,558 13,876 53,637 Debt acquisition cost write-down — — 130 — Changes in certain assets and liabilities: Fees and other receivables, net (3,380) 757 (10,718) 163 Receivables from related party — — 568 (91)Prepaid expenses and other current assets (4,386) (2,406) 2,346 2,460 Accounts payable, accrued liabilities and other liabilities 12,412 7,486 (252) 7,500 Income tax receivable, net 9,414 4,878 6,073 2,570 Net cash provided by operating activities 44,702 35,076 140,301 128,977 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion, net of cash received (43,861) — (43,861) — Purchase of Voyant, net of cash received — 75 — (124,161)Purchase of convertible notes receivable (1,700) — (10,300) — Purchase of investments (481) (569) (2,692) (3,004)Sale of investments 534 660 918 833 Purchase of property and equipment (1,621) (855) (3,061) (1,507)Purchase of computer software (9,947) (7,129) (35,996) (33,145)Net cash used in investing activities (57,076) (7,818) (94,992) (160,984)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — — 122,508 — Payments on revolving credit facility — — (115,000) (35,000)Payments on long-term debt (1,562) — (6,250) — Proceeds from credit facility draw down — — — 75,000 Proceeds from exercise of stock options — 1 — 95 Net cash provided by (used in) financing activities (1,562) 1 1,258 40,095 Net change in cash, cash equivalents, and restricted cash (13,936) 27,259 46,567 8,088 Cash, cash equivalents, and restricted cash at beginning of period 150,210 62,448 89,707 81,619 Cash, cash equivalents, and restricted cash at end of period $136,274 $89,707 $136,274 $89,707 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net $7,461 $3,819 $33,637 $19,796 Interest paid $1,373 $958 $4,087 $2,828 Non-cash operating, investing, and financing activities: Non-cash changes to right-of-use assets $379 $2,109 $3,775 $933 Non-cash changes to lease liabilities $379 $2,109 $3,775 $933 Common stock issued in acquisition of business $— $— $— $24,910 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 financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, litigation and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Three Months Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $25,593 $12,351 15.6% 8.6%Provision for income taxes 11,059 7,875 6.7% 5.5%Interest income (1,557) (21) (1.0)% — Interest expense 2,313 953 1.4% 0.7%Amortization/depreciation 8,008 8,080 4.9% 5.6%EBITDA $45,416 $29,238 27.6% 20.4%Share-based compensation(1) 3,780 5,558 2.3% 3.9%Reorganization and integration costs(2) 1,818 2,722 1.1% 1.9%Acquisition expenses(3) 2,098 446 1.3% 0.3%Business continuity plan (4) (173) 324 (0.1)% 0.2%Other (income) expense (60) 24 — — Adjusted EBITDA $52,879 $38,312 32.2% 26.7% Year Ended December 31, Year Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $103,261 $25,671 16.7% 4.8%Provision for income taxes 33,499 19,316 5.4% 3.6%Interest income (2,664) (137) (0.4)% — Interest expense 6,520 3,559 1.1% 0.7%Amortization/depreciation 31,149 37,929 5.0% 7.2%EBITDA $171,765 $86,338 27.8% 16.3%Share-based compensation(1) 13,876 53,637 2.2% 10.1%Reorganization and integration costs(2) 10,418 10,816 1.7% 2.0%Acquisition expenses(3) 3,411 5,682 0.6% 1.1%Business continuity plan (4) 61 460 — 0.1%Office closures(5) — 167 — — Other (income) expense 135 106 — — Adjusted EBITDA $199,666 $157,206 32.3% 29.6% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for the three months and years ended December 31, 2022 and 2021, broken out by compensation and non-compensation expenses (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $3,780 $— $3,780 $5,558 $— $5,558 Reorganization and integration costs(2) 1,512 306 1,818 979 1,743 2,722 Acquisition expenses(3) 4 2,094 2,098 38 408 446 Business continuity plan (4) — (173) (173) 162 162 324 Other (income) expense — (60) (60) — 24 24 Total adjustments to adjusted EBITDA $5,296 $2,167 $7,463 $6,737 $2,337 $9,074 Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.3% — 2.3% 3.9% — 3.9%Reorganization and integration costs(2) 0.9% 0.2% 1.1% 0.7% 1.2% 1.9%Acquisition expenses(3) — 1.3% 1.3% — 0.3% 0.3%Business continuity plan (4) — (0.1)% (0.1)% 0.1% 0.1% 0.2%Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 3.2% 1.4% 4.6% 4.7% 1.6% 6.3% Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $13,876 $— $13,876 $53,637 $— $53,637 Reorganization and integration costs(2) 4,335 6,083 10,418 5,396 5,420 10,816 Acquisition expenses(3) — 3,411 3,411 1,441 4,241 5,682 Business continuity plan (4) (2) 63 61 174 286 460 Office closures(5) — — — — 167 167 Other (income) expense — 135 135 — 106 106 Total adjustments to adjusted EBITDA $18,209 $9,692 $27,901 $60,648 $10,220 $70,868 Year Ended December 31, 2022 Year Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.2% — 2.2% 10.1% — 10.1%Reorganization and integration costs(2) 0.7% 1.0% 1.7% 1.0% 1.0% 2.0%Acquisition expenses(3) — 0.6% 0.6% 0.2% 0.7% 0.9%Business continuity plan (4) — — — — — — Office closures(5) — — — — — — Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 2.9% 1.6% 4.5% 11.3% 1.7% 13.0% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We have historically not used adjusted net income for internal management reporting and evaluation purposes; however, we believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expense can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three months and years ended December 31, 2022 and 2021, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Adjusted employee compensation(1) 39,182 39,163 148,121 136,052Adjusted general and operating expenses(1) 23,927 18,874 85,800 65,072Adjusted professional fees(1) 6,101 6,619 19,951 19,568Adjusted depreciation and amortization(2) 6,198 5,126 24,153 18,790Total adjusted operating expenses 116,073 110,376 440,307 391,745Interest expense 2,313 953 6,520 3,559Adjusted other (income) expenses, net(1) (178) — (178) —Adjusted income before income taxes 45,925 32,255 171,657 134,995Adjusted provision for income taxes(3) 11,650 7,580 41,198 31,723Adjusted net income $34,275 $24,675 $130,459 $103,272Net income per share attributable to common stockholders: Adjusted earnings per share(4) $0.46 $0.33 $1.77 $1.40Weighted average number of common shares outstanding, diluted(4) 73,943,318 74,746,770 73,872,828 73,947,311 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. (4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $124,684 $— $124,684 $137,533 $— $137,533 Spread-based revenue 33,144 — 33,144 2,055 — 2,055 Subscription-based revenue 3,317 — 3,317 3,209 — 3,209 Other revenue 2,988 — 2,988 787 — 787 Total revenue 164,133 — 164,133 143,584 — 143,584 Operating expenses: Asset-based expenses 35,671 — 35,671 40,227 — 40,227 Spread-based expenses 4,994 — 4,994 367 — 367 Employee compensation(1) 44,478 (5,296) 39,182 45,901 (6,738) 39,163 General and operating expenses(1) 24,173 (246) 23,927 20,342 (1,468) 18,874 Professional fees(1) 8,082 (1,981) 6,101 7,464 (845) 6,619 Depreciation and amortization(2) 8,008 (1,810) 6,198 8,080 (2,954) 5,126 Total operating expenses 125,406 (9,333) 116,073 122,381 (12,005) 110,376 Interest expense 2,313 — 2,313 953 — 953 Other (income) expenses, net (238) 60 (178) 24 (24) — Income before income taxes 36,652 9,273 45,925 20,226 12,029 32,255 Provision for income taxes(3) 11,059 591 11,650 7,875 (295) 7,580 Net income $25,593 $34,275 $12,351 $24,675 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Year Ended December 31, 2022 Year Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $534,182 $— $534,182 $512,188 $— $512,188 Spread-based revenue 63,409 — 63,409 8,568 — 8,568 Subscription-based revenue 13,020 — 13,020 6,381 — 6,381 Other revenue 7,695 — 7,695 3,162 — 3,162 Total revenue 618,306 — 618,306 530,299 — 530,299 Operating expenses: Asset-based expenses 154,100 — 154,100 150,836 — 150,836 Spread-based expenses 8,182 — 8,182 1,427 — 1,427 Employee compensation(1) 166,330 (18,209) 148,121 196,701 (60,649) 136,052 General and operating expenses(1) 90,122 (4,322) 85,800 72,941 (7,869) 65,072 Professional fees(1) 25,186 (5,235) 19,951 21,813 (2,245) 19,568 Depreciation and amortization(2) 31,149 (6,996) 24,153 37,929 (19,139) 18,790 Total operating expenses 475,069 (34,762) 440,307 481,647 (89,902) 391,745 Interest expense 6,520 — 6,520 3,559 — 3,559 Other (income) expenses, net (43) (135) (178) 106 (106) — Income before income taxes 136,760 34,897 171,657 44,987 90,008 134,995 Provision for income taxes(3) 33,499 7,699 41,198 19,316 12,407 31,723 Net income $103,261 $130,459 $25,671 $103,272 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $25,593 $12,351 Acquisition-related amortization(1) $— $1,810 1,810 $— $2,954 2,954 Expense adjustments(2) 1,516 2,227 3,743 1,180 2,313 3,493 Share-based compensation 3,780 — 3,780 5,558 — 5,558 Other (income) expense — (60) (60) — 24 24 Tax effect of adjustments(3) (1,335) 744 (591) (277) 572 295 Adjusted net income $34,275 $24,675 Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $103,261 $25,671 Acquisition-related amortization(1) $— $6,996 6,996 $— $19,139 19,139 Expense adjustments(2) 4,333 9,557 13,890 7,012 10,114 17,126 Share-based compensation 13,876 — 13,876 53,637 — 53,637 Other (income) expense — 135 135 — 106 106 Tax effect of adjustments(3) (4,370) (3,329) (7,699) (1,648) (10,759) (12,407)Adjusted net income $130,459 $103,272 (1) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc.
CONCORD, Calif., Feb. 22, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter and full year ended December 31, 2022. Fourth Quarter 2022 Financial and Operational Highlights Net income for the quarter was $25.6 million, or $0.35 per share.Adjusted net income for the quarter was $34.3 million, or $0.46 per share, on total revenue of $164.1 million.Adjusted EBITDA for the quarter was $52.9 million, or 32.2% of total revenue.Platform assets decreased 2.2% year-over-year to $91.5 billion. Quarter-over-quarter platform assets were up 15.2%, due to adding $6.9 billion from the acquisition of Adhesion Wealth, market impact net of fees of $4.3 billion, and quarterly net flows of $908 million.Annual net flows as a percentage of beginning-of-year platform assets were 6.0%.More than 17,900 new households and 143 new producing advisors joined the AssetMark platform during the fourth quarter. In total, as of December 31, 2022, there were over 9,200 advisors (approximately 2,900 were engaged advisors) and over 241,000 investor households on the AssetMark platform.We realized a 14.1% annualized production lift from existing advisors for the fourth quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “AssetMark continued its evolution from a TAMP to a holistic, full-service wealth management platform oriented around what advisors need to deliver resilient investor outcomes while successfully growing their practices. In 2022, we served more advisors and investors than ever before, supporting over 9,200 advisors who used our platform to help more than 241,000 investor households. We achieved record financial and operational results and matched our all-time high in our annual Net Promoter Score. Despite a challenging macro-environment, we truly made a difference in the lives of our advisors and their clients. 2022 was a strong year at AssetMark,” said Natalie Wolfsen, CEO of AssetMark. “We are well positioned to help our advisors grow in 2023 and beyond, which in turn will help AssetMark grow. I could not be more excited about the opportunity ahead.” Fourth Quarter 2022 Key Operating Metrics 4Q22 4Q21 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)79,382 86,826 (8.6%)Net flows (millions of dollars)908 2,949 (69.2%)Market impact net of fees (millions of dollars)4,284 3,713 15.4%Acquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)1.0%4.0%(300 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors143 215 (33.5%)Production lift from existing advisors (annualized %)14.1%24.6%(1,050 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)164 144 14.3%Net income (millions of dollars)25.6 12.4 107.2%Net income margin (%)15.6%8.6%700 bpsCapital expenditure (millions of dollars)11.3 8.0 41.0% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)52.9 38.3 38.0%Adjusted EBITDA margin (%)32.2%26.7%550 bpsAdjusted net income (millions of dollars)34.3 24.7 38.9%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Full Year 2022 Key Operating Metrics 2022 2021 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)93,488 74,520 25.5%Net flows (millions of dollars)5,612 9,934 (43.5%)Market impact net of fees (millions of dollars)(14,526)9,034 NMAcquisition impact (millions of dollars)6,896 - NMPlatform assets (at period-end) (millions of dollars)91,470 93,488 (2.2%)Net flows lift (% of beginning of year platform assets)6.0%13.3%(730 bps)Advisors (at period-end)9,297 8,649 7.5%Engaged advisors (at period-end)2,882 2,858 0.8%Assets from engaged advisors (at period-end) (millions of dollars)83,803 86,385 (3.0%)Households (at period-end)241,053 209,900 14.8%New producing advisors690 811 (14.9%)Production lift from existing advisors (annualized %)16.3%24.2%(790 bps)Assets in custody at ATC (at period-end) (millions of dollars)66,169 71,320 (7.2%)ATC client cash (at period-end) (millions of dollars)3,541 2,932 20.7% Financial metrics: Total revenue (millions of dollars)618 530 16.6%Net income (millions of dollars)103.3 25.7 302.3%Net income margin (%)16.7%4.8%1,190 bpsCapital expenditure (millions of dollars)38.6 34.7 11.5% Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)199.7 157.2 27.0%Adjusted EBITDA margin (%)32.3%29.6%270 bpsAdjusted net income (millions of dollars)130.5 103.3 26.3%Note: Percentage variance based on actual numbers, not rounded results All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its fourth quarter 2022 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: February 22, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=5acca13d&confId=46295. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial-in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from February 22, 2023. About AssetMark Financial Holdings, Inc. AssetMark is a leading provider of extensive wealth management and technology solutions that power independent financial advisors and their clients. Through AssetMark, Inc., its investment advisor subsidiary registered with the Securities and Exchange Commission, AssetMark operates a platform that comprises fully integrated technology, personalized and scalable service and curated investment platform solutions designed to make a difference in the lives of advisors and their clients. AssetMark had $91.5 billion in platform assets as of December 31, 2022 and has a history of innovation spanning more than 25 years. 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. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this press release, including our business strategies, our operating and financial performance and general market, economic and business conditions. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, 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 Annual Report on Form 10-K for the year ended December 31, 2022, which is expected to be filed in mid-March. All information provided in this 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) December 31, 2022 2021ASSETS Current assets: Cash and cash equivalents $123,274 $76,707Restricted cash 13,000 13,000Investments, at fair value 13,714 14,498Fees and other receivables, net 20,082 9,019Income tax receivable, net 265 6,276Prepaid expenses and other current assets 16,870 14,673Total current assets 187,205 134,173Property, plant and equipment, net 8,495 8,015Capitalized software, net 89,959 73,701Other intangible assets, net 694,627 695,093Operating lease right-of-use assets 22,002 22,469Goodwill 487,225 447,864Other assets 13,417 2,090Total assets $1,502,930 $1,383,405LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,624 $2,613Accrued liabilities and other current liabilities 69,196 56,249Total current liabilities 73,820 58,862Long-term debt, net 112,138 115,000Other long-term liabilities 15,185 16,468Long-term portion of operating lease liabilities 27,924 28,316Deferred income tax liabilities, net 147,497 155,373Total long-term liabilities 302,744 315,157Total liabilities 376,564 374,019Commitments and contingencies — —Stockholders' equity: Common stock, $0.001 par value (675,000,000 shares authorized and 73,847,596 and 73,562,717 shares issued and outstanding as of December 31, 2022 and 2021, respectively) 74 74Additional paid-in capital 942,946 929,070Retained earnings 183,503 80,242Accumulated other comprehensive loss (157) —Total stockholders' equity 1,126,366 1,009,386Total liabilities and stockholders' equity $1,502,930 $1,383,405 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income(in thousands, except share and per share data) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Employee compensation 44,478 45,901 166,330 196,701General and operating expenses 24,173 20,342 90,122 72,941Professional fees 8,082 7,464 25,186 21,813Depreciation and amortization 8,008 8,080 31,149 37,929Total operating expenses 125,406 122,381 475,069 481,647Interest expense 2,313 953 6,520 3,559Other expenses, net (238) 24 (43) 106Income before income taxes 36,652 20,226 136,760 44,987Provision for income taxes 11,059 7,875 33,499 19,316Net income 25,593 12,351 103,261 25,671Change in fair value of convertible notes receivable, net (157) — (157) —Net comprehensive income $25,436 $12,351 $103,104 $25,671Net income (loss) per share attributable to common stockholders: Basic $0.35 $0.18 $1.40 $0.36Diluted $0.35 $0.17 $1.40 $0.35Weighted average number of common shares outstanding, basic 73,847,371 73,242,802 73,724,341 72,137,174Weighted average number of common shares outstanding, diluted 73,943,318 73,441,555 73,872,828 72,399,213 AssetMark Financial Holdings, Inc. Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $25,593 $12,351 $103,261 $25,671 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,008 8,080 31,149 37,929 Interest expense, net (66) 160 541 700 Deferred income taxes (6,673) (1,788) (6,673) (1,562)Share-based compensation 3,780 5,558 13,876 53,637 Debt acquisition cost write-down — — 130 — Changes in certain assets and liabilities: Fees and other receivables, net (3,380) 757 (10,718) 163 Receivables from related party — — 568 (91)Prepaid expenses and other current assets (4,386) (2,406) 2,346 2,460 Accounts payable, accrued liabilities and other liabilities 12,412 7,486 (252) 7,500 Income tax receivable, net 9,414 4,878 6,073 2,570 Net cash provided by operating activities 44,702 35,076 140,301 128,977 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion, net of cash received (43,861) — (43,861) — Purchase of Voyant, net of cash received — 75 — (124,161)Purchase of convertible notes receivable (1,700) — (10,300) — Purchase of investments (481) (569) (2,692) (3,004)Sale of investments 534 660 918 833 Purchase of property and equipment (1,621) (855) (3,061) (1,507)Purchase of computer software (9,947) (7,129) (35,996) (33,145)Net cash used in investing activities (57,076) (7,818) (94,992) (160,984)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — — 122,508 — Payments on revolving credit facility — — (115,000) (35,000)Payments on long-term debt (1,562) — (6,250) — Proceeds from credit facility draw down — — — 75,000 Proceeds from exercise of stock options — 1 — 95 Net cash provided by (used in) financing activities (1,562) 1 1,258 40,095 Net change in cash, cash equivalents, and restricted cash (13,936) 27,259 46,567 8,088 Cash, cash equivalents, and restricted cash at beginning of period 150,210 62,448 89,707 81,619 Cash, cash equivalents, and restricted cash at end of period $136,274 $89,707 $136,274 $89,707 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net $7,461 $3,819 $33,637 $19,796 Interest paid $1,373 $958 $4,087 $2,828 Non-cash operating, investing, and financing activities: Non-cash changes to right-of-use assets $379 $2,109 $3,775 $933 Non-cash changes to lease liabilities $379 $2,109 $3,775 $933 Common stock issued in acquisition of business $— $— $— $24,910 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 financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, litigation and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Three Months Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $25,593 $12,351 15.6% 8.6%Provision for income taxes 11,059 7,875 6.7% 5.5%Interest income (1,557) (21) (1.0)% — Interest expense 2,313 953 1.4% 0.7%Amortization/depreciation 8,008 8,080 4.9% 5.6%EBITDA $45,416 $29,238 27.6% 20.4%Share-based compensation(1) 3,780 5,558 2.3% 3.9%Reorganization and integration costs(2) 1,818 2,722 1.1% 1.9%Acquisition expenses(3) 2,098 446 1.3% 0.3%Business continuity plan (4) (173) 324 (0.1)% 0.2%Other (income) expense (60) 24 — — Adjusted EBITDA $52,879 $38,312 32.2% 26.7% Year Ended December 31, Year Ended December 31, (in thousands except for percentages) 2022 2021 2022 2021 Net income $103,261 $25,671 16.7% 4.8%Provision for income taxes 33,499 19,316 5.4% 3.6%Interest income (2,664) (137) (0.4)% — Interest expense 6,520 3,559 1.1% 0.7%Amortization/depreciation 31,149 37,929 5.0% 7.2%EBITDA $171,765 $86,338 27.8% 16.3%Share-based compensation(1) 13,876 53,637 2.2% 10.1%Reorganization and integration costs(2) 10,418 10,816 1.7% 2.0%Acquisition expenses(3) 3,411 5,682 0.6% 1.1%Business continuity plan (4) 61 460 — 0.1%Office closures(5) — 167 — — Other (income) expense 135 106 — — Adjusted EBITDA $199,666 $157,206 32.3% 29.6% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for the three months and years ended December 31, 2022 and 2021, broken out by compensation and non-compensation expenses (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $3,780 $— $3,780 $5,558 $— $5,558 Reorganization and integration costs(2) 1,512 306 1,818 979 1,743 2,722 Acquisition expenses(3) 4 2,094 2,098 38 408 446 Business continuity plan (4) — (173) (173) 162 162 324 Other (income) expense — (60) (60) — 24 24 Total adjustments to adjusted EBITDA $5,296 $2,167 $7,463 $6,737 $2,337 $9,074 Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.3% — 2.3% 3.9% — 3.9%Reorganization and integration costs(2) 0.9% 0.2% 1.1% 0.7% 1.2% 1.9%Acquisition expenses(3) — 1.3% 1.3% — 0.3% 0.3%Business continuity plan (4) — (0.1)% (0.1)% 0.1% 0.1% 0.2%Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 3.2% 1.4% 4.6% 4.7% 1.6% 6.3% Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) $13,876 $— $13,876 $53,637 $— $53,637 Reorganization and integration costs(2) 4,335 6,083 10,418 5,396 5,420 10,816 Acquisition expenses(3) — 3,411 3,411 1,441 4,241 5,682 Business continuity plan (4) (2) 63 61 174 286 460 Office closures(5) — — — — 167 167 Other (income) expense — 135 135 — 106 106 Total adjustments to adjusted EBITDA $18,209 $9,692 $27,901 $60,648 $10,220 $70,868 Year Ended December 31, 2022 Year Ended December 31, 2021 (in percentages) Compensation Non-Compensation Total Compensation Non-Compensation Total Share-based compensation(1) 2.2% — 2.2% 10.1% — 10.1%Reorganization and integration costs(2) 0.7% 1.0% 1.7% 1.0% 1.0% 2.0%Acquisition expenses(3) — 0.6% 0.6% 0.2% 0.7% 0.9%Business continuity plan (4) — — — — — — Office closures(5) — — — — — — Other (income) expense — — — — — — Total adjustments to adjusted EBITDA margin % 2.9% 1.6% 4.5% 11.3% 1.7% 13.0% (1) “Share-based compensation” represents granted share-based compensation in the form of RSA, restricted stock unit, stock option, and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2) “Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3) “Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions. (4) “Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a primarily remote workforce in 2021, and a transition to a hybrid workforce in 2022, and other costs due to the COVID-19 pandemic.(5) “Office closures” represents one-time expenses related to closing facilities. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We have historically not used adjusted net income for internal management reporting and evaluation purposes; however, we believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expense can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three months and years ended December 31, 2022 and 2021, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021Revenue: Asset-based revenue $124,684 $137,533 $534,182 $512,188Spread-based revenue 33,144 2,055 63,409 8,568Subscription-based revenue 3,317 3,209 13,020 6,381Other revenue 2,988 787 7,695 3,162Total revenue 164,133 143,584 618,306 530,299Operating expenses: Asset-based expenses 35,671 40,227 154,100 150,836Spread-based expenses 4,994 367 8,182 1,427Adjusted employee compensation(1) 39,182 39,163 148,121 136,052Adjusted general and operating expenses(1) 23,927 18,874 85,800 65,072Adjusted professional fees(1) 6,101 6,619 19,951 19,568Adjusted depreciation and amortization(2) 6,198 5,126 24,153 18,790Total adjusted operating expenses 116,073 110,376 440,307 391,745Interest expense 2,313 953 6,520 3,559Adjusted other (income) expenses, net(1) (178) — (178) —Adjusted income before income taxes 45,925 32,255 171,657 134,995Adjusted provision for income taxes(3) 11,650 7,580 41,198 31,723Adjusted net income $34,275 $24,675 $130,459 $103,272Net income per share attributable to common stockholders: Adjusted earnings per share(4) $0.46 $0.33 $1.77 $1.40Weighted average number of common shares outstanding, diluted(4) 73,943,318 74,746,770 73,872,828 73,947,311 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. (4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months and years ended December 31, 2022 and 2021 (unaudited). Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $124,684 $— $124,684 $137,533 $— $137,533 Spread-based revenue 33,144 — 33,144 2,055 — 2,055 Subscription-based revenue 3,317 — 3,317 3,209 — 3,209 Other revenue 2,988 — 2,988 787 — 787 Total revenue 164,133 — 164,133 143,584 — 143,584 Operating expenses: Asset-based expenses 35,671 — 35,671 40,227 — 40,227 Spread-based expenses 4,994 — 4,994 367 — 367 Employee compensation(1) 44,478 (5,296) 39,182 45,901 (6,738) 39,163 General and operating expenses(1) 24,173 (246) 23,927 20,342 (1,468) 18,874 Professional fees(1) 8,082 (1,981) 6,101 7,464 (845) 6,619 Depreciation and amortization(2) 8,008 (1,810) 6,198 8,080 (2,954) 5,126 Total operating expenses 125,406 (9,333) 116,073 122,381 (12,005) 110,376 Interest expense 2,313 — 2,313 953 — 953 Other (income) expenses, net (238) 60 (178) 24 (24) — Income before income taxes 36,652 9,273 45,925 20,226 12,029 32,255 Provision for income taxes(3) 11,059 591 11,650 7,875 (295) 7,580 Net income $25,593 $34,275 $12,351 $24,675 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Year Ended December 31, 2022 Year Ended December 31, 2021 Reconciliation of Non-GAAP Presentation GAAP Adjustments Adjusted GAAP Adjustments Adjusted Revenue: Asset-based revenue $534,182 $— $534,182 $512,188 $— $512,188 Spread-based revenue 63,409 — 63,409 8,568 — 8,568 Subscription-based revenue 13,020 — 13,020 6,381 — 6,381 Other revenue 7,695 — 7,695 3,162 — 3,162 Total revenue 618,306 — 618,306 530,299 — 530,299 Operating expenses: Asset-based expenses 154,100 — 154,100 150,836 — 150,836 Spread-based expenses 8,182 — 8,182 1,427 — 1,427 Employee compensation(1) 166,330 (18,209) 148,121 196,701 (60,649) 136,052 General and operating expenses(1) 90,122 (4,322) 85,800 72,941 (7,869) 65,072 Professional fees(1) 25,186 (5,235) 19,951 21,813 (2,245) 19,568 Depreciation and amortization(2) 31,149 (6,996) 24,153 37,929 (19,139) 18,790 Total operating expenses 475,069 (34,762) 440,307 481,647 (89,902) 391,745 Interest expense 6,520 — 6,520 3,559 — 3,559 Other (income) expenses, net (43) (135) (178) 106 (106) — Income before income taxes 136,760 34,897 171,657 44,987 90,008 134,995 Provision for income taxes(3) 33,499 7,699 41,198 19,316 12,407 31,723 Net income $103,261 $130,459 $25,671 $103,272 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016. (3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization, and share-based compensation beginning in 2022. Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $25,593 $12,351 Acquisition-related amortization(1) $— $1,810 1,810 $— $2,954 2,954 Expense adjustments(2) 1,516 2,227 3,743 1,180 2,313 3,493 Share-based compensation 3,780 — 3,780 5,558 — 5,558 Other (income) expense — (60) (60) — 24 24 Tax effect of adjustments(3) (1,335) 744 (591) (277) 572 295 Adjusted net income $34,275 $24,675 Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands) Compensation Non-Compensation Total Compensation Non-Compensation Total Net income $103,261 $25,671 Acquisition-related amortization(1) $— $6,996 6,996 $— $19,139 19,139 Expense adjustments(2) 4,333 9,557 13,890 7,012 10,114 17,126 Share-based compensation 13,876 — 13,876 53,637 — 53,637 Other (income) expense — 135 135 — 106 106 Tax effect of adjustments(3) (4,370) (3,329) (7,699) (1,648) (10,759) (12,407)Adjusted net income $130,459 $103,272 (1) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3) Consists of the provision for income taxes under U.S. GAAP and the estimated tax impact of expense adjustments and acquisition-related amortization. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc.