Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Westwood Holdings Group, Inc Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Ms. Julie Gerron, General Counsel and Chief Compliance Officer. Ma'am, you may begin.

Thank you. Good afternoon and welcome to our Fourth Quarter 2017 Earnings Conference Call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking statements. Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-Q for the quarter ended December 31, 2017, that is filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on forward-looking statements. In addition, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today. On the call today, we have Brian Casey, our President and Chief Executive Officer and Tiffany Kice, our Chief Financial Officer. I will now turn the call over to Brian Casey, our CEO.

Thanks, Julie and thanks to all of you for taking the time to listen to our fourth quarter and fiscal year earnings call. With respect to the fourth quarter and fiscal year, I'll start our call today with comments on the investment environment and more specifically from our three distinct investment teams. The fourth quarter closed the year with a big rally, leading up to the year-end tax cuts and completed an extraordinary year, which consisted of positive returns for the S&P 500 in all 12 months of the year. Globally, equity markets were also strong and led by emerging, markets as measured by the MSCI Emerging Markets Index, which posted a return of 37%. Our key strategies, those with over $1 billion in assets under management fared well in these markets with over two-thirds of our key strategies beating their respective benchmarks in 2017. Domestic markets in the US saw large caps speed small caps and growth over value for the calendar year. The ongoing market shift towards earnings growth as a key differentiator was welcome news for Westwood portfolios and both our large cap and small cap strategies posted strong relative performance versus their benchmark and peer groups for the year. Westwood’s large cap value finished the year ranked in the 12th percentile in the investment large cap value equity universe and small cap finished in the top third of the small cap value equity manager peer group and second percentile for the trailing seven years. Concentrated large cap continued its outperformance and finished with a one and three year track record in the third percentile of its investment large cap value peer group universe. Westwood’s midcap showed improvement in 2017 and posted results that were ahead of the Russell 2500 value index, but below the core Russell…

Thanks, Brian and good afternoon, everyone. Today, we reported total revenues of 33.9 million for the fourth quarter of 2017, compared to 31.1 million in the prior year’s fourth quarter and 33.5 million in the third quarter of 2017. The increase is primarily related to higher average assets under management in the current quarter. Fourth quarter net income was 2.9 million or $0.34 per share compared to 7.6 million or $0.92 per share in the prior year’s fourth quarter. The decrease was primarily driven by a 3.4 million incremental tax expense that we recorded due to tax reform negatively impacting diluted EPS by $0.39 per share. Additionally, net income was impacted by higher compensation costs, partially offset by an increase in total revenues. Fourth quarter net income of 2.9 million or $0.34 per share compared to 4.1 million or $0.49 per share in the third quarter of 2017. The decrease was primarily driven by the incremental tax expense previously mentioned, offset by the legal settlement that we recorded in the third quarter. Economic earnings, a non-GAAP metric, was 7.6 million or $0.89 per share compared to 12 million or $1.45 per share in the prior year's fourth quarter and 9 million or $1.07 per share in the third quarter of 2017. For fiscal 2017, total revenues of 133.8 million compared to 123 million in 2016, primarily related to higher average assets under management in the current year and an increase in performance based advisory fees. Net income of 20 million or $2.38 per share compared to 22.6 million or $2.77 per share in the prior year. This was primarily due to the 2.5 million legal settlement charge recorded in the third quarter and the incremental income tax expense both negatively impacting diluted EPS by $0.70 per share, partially offset by…

[Operator Instructions] And our first question comes from the line of Mac Sykes with Gabelli.

Brian, could you provide an update on where you may be looking to expand your investment offerings in ’18? And then as a follow-up, any specific areas of distribution that you may be looking to accelerate next year off of some positive signs in ’17?

Sure. So I'm excited to talk to you a little bit more about a new product that we have. We hired somebody who is a seasoned portfolio manager who has a product that is designed to generate income. It's called flexible income and that product, we started as a comingled fund at our trust company on January the 1. In his prior life, this was a five star fund at his predecessor firm and he is a very experienced person and we'll be rolling that out later this year as we get all the ducks in a row. So we're excited about that. As far as increased distribution, we have spent a lot of time on the private wealth side really thinking about ways that we can enhance our model as we shift from more of a product sale to one that is more advice and planning and there's a lot of nuances that go with that, but we have recently hired a financial planner in Dallas and we have a couple in Houston and that model I think will continue to evolve over time. There's lots of economic growth here in the great state of Texas and lots of people that need our help. So we expect that to continue to grow. And beyond that, it's just the normal blocking and tackling. We have an institutional group that does a great job that exceeded their sales goal last year. We're going to have a higher goal this year and try to go after it.

And then you mentioned the digitize initiative and I was just curious, maybe if you could provide some more detail on -- maybe the high level at this point, just on what the efforts might mean to clients as well as shareholders.

Sure. So, I would say as an industry, we are woefully under invested in technology and most of the platforms that we all use are really old platforms and clients of today are used to what we've been giving them. But when we look out at the world and we realize that in seven years 75% of the world are going to be millennials of the workforce and they demand a much different level of service. They want to be able to access things through their phone. They don't want to wait for a statement in the mail or by email. So that really is a profound change in the way that information is delivered and we are working very diligently to ultimately have a platform where all of our investment operations, our performance reporting, our data and our trust systems are all speaking to one another in a digital environment, so that we're able to create, not only a statement that people will, I think, really value, but will be able to customize it and in fact get to the point where a user can customize it. So that's what I'm talking about by digitization. If you look at our website, we've completely redone our website. I think it has a much better look and feel, but more importantly, the guts of it now are able to support social media. So as we put out thought leadership pieces either a white paper or something that we think is valuable, we're able to put that out in the hands of people through the various social media outlets.

[Operator Instructions] And I'm showing no further questions at this time. I would now like to turn the call back to Mr. Brian Casey for closing remarks.

Well, thanks everybody for taking a minute to listen. We had, it looks like a challenging day in the market today, but as I say to everyone, it's a good buying opportunity. So have a great afternoon. Thanks for being here. We appreciate you being a shareholder.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.